Nachas and Generational Continuity

We just returned from an extended-family trip to the Czech Republic and it's capital, Prague. Prague is unique in Europe from a Jewish perspective as it is perhaps the only place that Hitler and the Nazis did not pillage and destroy. The Nazis, unfortunately and tragically did wipe out 80+% of the Jews of Prague.

On shabbat we davened (prayed) at the oldest extant synagogue in continuous use in the world, The Old-New Shul otherwise known as the Alt-Noy Shul. The Alt-Noy Shul was the seat of the famous Maharal of Prague , one of the greatest Torah scholars and community leaders of the last 500 years. The Maharal is also the protagonist in the famous Golem story and the one who brought the Golem to life.

The the Alt-Noy Shul dates back to the early 1400s and it has true gothic architecture but, more importantly, the walls ooze authenticity and years of Jewish tradition and continuity . I cannot explain it in words but davening (praying) there 3 times on shabbat was a uniquely connected and connecting experience. This was especially true on a family trip, where we ourselves were three generations sitting together in this historic shul.

Two of my sons had the unique privilege to participate. My 6 year old son Moshe was asked to drink the kiddush wine on Friday night. Standing tall on the old wood benches, he said amen loudly, smilingly drinking wine from the rabbi's kiddush cup while my father and I looked on. I only wish I could have caught a photo but his pride is etched in my mind. (ed. The picture above was snuck after shabbat in the same place, without the wine and no flash)

On shabbat morning, my 13 year old Chaim read the haftara from the 600 year old stone bima, surrounded by family (including mother and grandmother peeking through the portholes from the women's section) and current and former generations of Prague's Jews who toiled to upkeep the Shul, its customs and traditions in the face of oppression and assimilation over the centuries. His loud voice and the consoling words of the haftara of Aniya So'ara reverberating off the cement and stone arched ceilings with their great acoustics still rings in my ears. I wish I had a video camera but the nachas of seeing my son read from the same bima as the Maharal likely did replays in my mind all the time. Timeless Nachas. I wish you all the same.

Having More Children is Good for the Economy

Mark Thoma and Paul Krugman take off after newly announced Presidential Candidate Rick Perry this morning, claiming that the relative economic stability and job growth in Texas is suigeneris and do not indicate that conservative economic policies create jobs. Krugman almost mocks Perry saying that his economic policies are predicated on miracles, clearly a reference to Perry's Evangelical faith that the liberal Krugman clearly finds disturbing. Says Krugman:

"The Texas Unmiracle, by Paul Krugman, Commentary, NY Times: ...Rick Perry,... governor of Texas, has announced that he is running for president. And we already know what his campaign will be about: faith in miracles.
Some of these miracles will involve things that you’re liable to read in the Bible. But ... his campaign will probably center on a more secular theme: the alleged economic miracle in Texas, which, it’s often asserted, sailed through the Great Recession almost unscathed thanks to conservative economic policies. And Mr. Perry will claim that he can restore prosperity to America by applying the same policies at a national level."

A different part of Krugman's post caught my eye because I think it is similar to the economic story in Israel and why Israel has also been a relatively stable ship in an otherwise stormy economic sea. Says Krugman again:

So where does the notion of a Texas miracle come from? Mainly from ... faster population growth than the rest of America — about twice as fast since 1990. Several factors underlie this rapid population growth: a high birth rate, immigration from Mexico, and inward migration of Americans from other states...

In my opinion, there is a strong correlation between population growth/birth rates and economic growth in mature economies (even though much research (here, Here)debates this). The research in my opinion, takes too short a view of the phenomenon. Slowing birth rates help per capita income and disposable income for a time which leads to "economic growth" but it sets in motion the dynamics for slowing economic growth when the population peaks and begins to gray. It is not an accident that Europe is slowing to an economic crawl because you can find nary a child in a park in any European city. The US is slowing down because birth rates in the US have come down over the last 40 years but they are still in much better shape than Europe and Japan (two very stagnant/declining economies). It is not an accident that Baby Boomers coincided with economic growth.

Harry Dent points this trend out well in his demographic-biased economic analysis of boom and busts. Says Dent:

"Economic boom times are associated with increasing size of the mid-forties population and bust times are associated with a decreasing size of this population."

You have to keep having kids to have more and more 40 year olds. If you have less children in the next generation, you will have a contraction!

The same is true in Israel where the birth rate stands at 2.96 children per family, well above the replacement rate, and the economy has come through the global economic crisis better than most just like Texas. The obvious economic reasons are that there are more consumers buying and more available labor that keeps labor costs under control. The less obvious reasons in my opinion are that those having more children are fundamentally more optimistic about the future, less prone to Malthusian depression or self pity. You are also forced to work harder and be more productive to feed all those mouths.

Call it faith in the future, the miracle of birth or whatever you want Mr. Krugman but it could be that the long term future belongs to those countries and even states that are most fruitful and multiply both their brood and economies.

*If anyone has research showing positive long term correlation and causality between higher birth rates and economic growth, please post in comments.

From Rothschild to the Kotel: A Tisha B'av of Unity: משדרות רוטשילד לכותל, תשעה באב של אחדות

I spent the evening of Tisha B'av with the tent protest on Rothschild Street in Tel Aviv. I brought 3 of my children and 4 of their teenage friends to what was a very different Tisha B'av experience than any of us had before. I read Megillat Eicha on the "floor" and we followed with my good friend Hili Tropper telling over the story of Kamtza and Bar Kamtza from the Talmud. An incredible discussion and yearning for unity emerged. See the videos below (in Hebrew). I ended the day by going to the Western Wall (the Kotel for mincha). There too there was unity on display, albeit with a very different group of people than on Rothschild the night before. The singing (video below) in unison was inspiring as well. May this all be a sign of Am Yisrael coming together again as one. Amen.

נדדתי בליל תשעה באב למחאת האוהלים בשדרות רוטשילד בתל אביב. הבאתי איתי 3 מילדי ו4 מחבריהם בגילאי הבגרות למה שרק אפשר לקרוא חווית תשעה באב לגמרי אחרת. קראתי מגילת איכה על רצפת רוטשילד שמסביב יהודים יקרים שלחלקם, אם לא רובם, זה היה קריאת המגילה הראשונה בחייהם שלא לדבר על צום. אחרי קריאת המגילה ידידי הטוב חילי טרופר סיפר את סיפור קמצא ובר קמצא שמחמת אירוע זה לפי חז"ל נחרבה בית המקדש השני. בעקבות הסיפור התפתח דיון ער ומעניין על ישראל העכשווית שכללה כמיהה אמיתית לאחדות. ראו את הסרטונים למטה. למחרת גמרנו את הצום בתפילת מנחה בכותל המערבי. גם שם האחדות חגגה עם קבוצה לגמרי אחרת של יהודים מאלה שהיו ברוטשילד בליל ט באב. השירה ביחד היה מרגש במיוחד. יהי ררצון שאחדות זה יסמן עתיד מאוחד יותר לכל עם ישראל. אמן!

וזה מה שכתבה אחת החברות של ביתי

אתמול,ערב תשעה באב נסענו אני וחברותי עם אבא של חברה שלי לרח רוטשילד בתל אביב למחאת האהלים המפורסמת קראנו מגילת איכה כמו כל ערב תשעה באב ואחר כך קראנו יחד את הסיפור של קמצא ובר קמצא שעל פי

המסורת היהודית נחרב בי המקדש בגללו -הסיפור שמתאר הרבה שנאה השפלה והלבנת פנים ברבים.

אתמול,ערב תשעה באב ערב שאנו מתאבלים על חורבן בית המקדש שנחרב בגלל שנאת חינם ויבנה בגלל אהבת חינם הרגשתי אהבת חינם,הרגשתי עם ישראל מאוחד מתמיד..כל העם היה שם!כל המגזרים..דתיים וחילונים מזרחים ואשכנזים וכולם התאחדו סביב קריאת המגילה כולם שמעו בהשתוקקות את הסיפור של קמצא ובר קמצא . לאחר מכן היתה אפשרות לכל אחד לאמר את דעתו ומה שהוא חושב וכמעט כל אחד שדיבר שיבח את העם שלנו,שיבח את הסיטואציה בה כולם היו יחד,התאחדו למטרה

דווקא בערב זה ערב שמתאבלים על ההשלכות של חוסר בית מקדש כמו הקרע בעם דווקא אתמול הרגשתי שהעם שלנו מאוחד יותר מתמיד.. עלינו לדעת שהרצון לאיחוד הוא הדדי ,גם הקיבוצניקים וגם המתנחלים גם השמאלנים וגם הימנים גם הדתיים וגם החילונים כולם בעד סדר חדש ובירור מחודש כולם בעד איחוד ופחות שנאה וסטיגמות...

כך שהמצב שלנו דיי טוב..כי את הצעד הגדול כבר עשינו ,כולנו רוצים להיות יחד וכמובן להמשיך ולהוקיר בשוני אבל אסור שהשוני הזה ימנע ממנו לאהוב את השני באהבת חינם אמיתית

ע. כ.

Alignment of Interests Requires New and Different Metrics

Umair Haque wrote quite the blog entitled "How to Build A 21st Century Investment Bank" that I posted a fairly long comment on and that I now want to expand into a post. I am still waiting for Umair's feedback that I hope will come soon.

Umair opened with,

"Let's admit it. Finance as we know it is, despite the protestations of your friendly local narcisisstically sociopathic investment banker, pretty much useless to people, society, and humanity. It's an engine of crisis and instability (when it's not a motive force of dumbification and social fracture)--far from a lever of human prosperity, it's more a bulldozer of great achievement."

He then proceeds to lay out some very rough (by his own admission) examples of more socially and financially responsible deals and financings. Here are two examples from Umair's post:

I (CEO) receive options as part of my compensation package. If my company seriously harms people, communities, or society, my options vest, my shares are sold, and the proceeds go to charity.

I (community) buy a product from you (bank). Indexed to authentic measures of human prosperity, it pays out if the needle doesn't move upwards. Call it "stagnation insurance".

Umair - It is important to recreate investment banking to focus on the total cost of financing. It is absolutely necessary to realign incentives from net profit-based short term profits on an institutional level and annual bonus on a personal level to something that better reflects a holistic long term view of value/profit.

However, in order to do that, I think it would be most important if you focused on two things:
1. A measure or metric that can be used to determine the value or profit that investment banks, banks or financial institutions create and how that will impact institutional value and personal financial reward (that is still the fastest way to motivate a shift).
2. We need a killer app that proves the total-value view of banking or investment banking. This would be a killer product on which the thesis of holistic value and profits can be measured and rewards delivered based on it.

I would humbly suggest that an initial killer app could be social mortgages. What if we aligned incentives for banks/brokers etc with the home buyers such that bankers were bonused based on the home buyer successfully paying of his mortgage rather than the profits from interest and foreclosures. That would be long term focused and would align interests. Further, we could tap social nets to help people pay off parts of their mortgage when the goings get tough and encourage the banker/broker to help recruit the social circle because he too wants to get the mortgage paid down over time. So by changing one metric of success from short term profits to a simple metric like successful mortgage payoff , we could see a total-value benefit. Fewer people would lose their homes to foreclosures, be stressed by usurious short term interest rates etc. Total net cash profit of a corporation is such a crude measurement tool.

In fact, we need to align incentives and metrics of success on both a micro and macro economic level. As I look out now at the protests sweeping Israel in what could be the first very peaceful Eudaimonic revolution (to use one of Umair's terms), It behooves us all to rethink alignment of our economy to more shared goals. This needs new metrics. If it can;t be measured it will be tough to improve it and coalesce around a goal. The retrenchment of the economy and of mutual social responsibility should be a clarion call for rethinking te types of taxes/revenues we want to raise as well as the people and things society should spend on. It is a unique crisis that we can ill-afford to squander like Obama has squandered it in the USA since 2008. We can use taxes in a positive way to tax short term unproductive economic activities (say day trading) and provide tax incentives on disruptive and enriching goals from sustainable agriculture to exports to long term investment in disruptive technology. But we need to be able to measure our aligned-success with new holistic measurements.

So the key is metrics. If we can fashion total-value or holistic-profit metrics that align incentives and interests between financier and financee then we can begin to change this industry and economies for the betterment of society and business. I for one would love if Umair would work with the lab and develop these metrics product by product in financial services.

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I wrote a now anachronistic post asking why we need banks at all a few years back http://seekingalpha.com/article/120207-why-do-we-need-banks-at-all