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Bergs Review of Soros for Magills Lit Survey 2002

By Eddie Austin,2014-06-17 23:40
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Bergs Review of Soros for Magills Lit Survey 2002 ...

Soros: The Life and Times of a Messianic Billionaire

    Author: Michael T. Kaufman (…)

Publisher: Knopf (New York). 344 pp. $ 27.50

    Type of Work: Biography, Current Affairs, Economics

Kaufman chronicles the childhood, career, and philanthropy of George Soros, telling the

    story of how the financier’s frustrated intellectual aspirations led him to do good in the

    world

    Kaufman’s biography of financier George Soros begins with a sales pitch. According to

    its introduction, two main ingredients make the book special. First is the fact of Soros’

    cooperation in preparing the book. After nixing other would-be biographers’ attempts to

    gather firsthand information, the introduction explains, Soros agreed to help Kaufman by

    sitting for interviews, providing personal photos, and encouraging friends and associates

    to do the same. By drawing on unique source material, Kaufman proposes that his

    portrait of Soros will penetrate more deeply than other accounts of the financier’s life do.

The second selling point emphasized in the introduction of Soros is the author’s

    willingness to criticize his subject. Kaufman describes how Soros, in agreeing to

    cooperate with the project, insisted that the book include a disclaimer attesting to the

    book’s status as an “unofficial” biography. To underscore that Kaufman and Soros spurn the practice of hagiography, Kaufman quotes himself telling Soros (and Soros approving)

    that his book will not shy away from unflattering aspects of the Soros story.

At the end of the book, Kaufman reveals that he was unable to gather information from

    most of the people closest to Soros. And the critical distance he promised earlier gives

    way to soberly articulated adulation. In spite of this, the facts of Soros’ life turn out to be

    so compelling that the validity of the biographer’s introductory remarks about his

    relationship with Soros turns out not to matter much. Simply by collecting and reporting

    the facts, Kaufman’s work conveys a captivating story covering important ideas and key

    historical moments of the late twentieth century. Soros’ experiences in World War II, his

    unusual mix of strategy and intuition in dealing with financial risk, and his humanitarian

    motives for proposing sweeping policy changes on a global scale, provide numerous

    points of departure for pondering age old questions about how the world works and the

    meaning of life. Kaufman’s Soros proceeds chronologically through the particulars.

Soros was born in 1930 to a family of Hungarian Jews who owned property, had two

    maids, and enjoyed a leisurely but not extravagant lifestyle. Soros describes his father as

    someone who “did not have a real job but just made money.” [p24] Instead of long hours

    at the office, Soros’ father worked for himself and spent much of his time talking to his

    two sons, educating them about world events, telling subtly moralistic stories, and trying to instill in them a sense of great ambition.

    Then the events of World War II intruded into the Hungarian family’s otherwise idyllic way of life. Against the backdrop of private tennis lessons, intellectually stimulating poolside repartee, and carefree summers on Lupa Island in the middle of the Danube, the disturbing murmurs of imminent war became impossible to ignore. One of the first personal consequences for the Soros family caused by world events was their name change -- from Schwartz to Soros. After searching for a satisfactory non-Jewish replacement for “Schwartz,” the family in 1936 settled on the name Soros, which means “will soar” in Esperanto.

    Making due in an increasingly dangerous environment, the Soros family took extraordinary measures to survive while carrying on with life in remarkably graceful fashion. The family paid to have a special hideout constructed. They devised coded communication schemes. They procured fake identities. They even went to the trouble of dispersing themselves geographically (in order to reduce the risk of being discovered by the Nazis), using elaborate means of secret communications to stay in contact. Rather than shrinking in the face of the human horror brought upon the community where the Soroses had once lived peacefully, 70-year old Soros recollects the challenge of surviving World War II, and later escaping from behind the Iron Curtain, in surprisingly fond terms. From his vantage point, Soros remembers the harrowing experiences of half a century ago as having brought meaning and excitement to his otherwise prosaic adolescent life. Pitted against a concrete adversary and engaged in a high-stakes struggle, the challenges of surviving struck young George as thrilling, fulfilling a deep-felt need for involvement in a process of righting moral wrongs.

    In 1947, Soros’ escaped to London. Instead of feeling relief, though, he was unhappy, finding little success in school, struggling to attract women, and missing the excitement of his daily fight for survival in Hungary. With an undistinguished academic record reflecting a particular weakness in mathematics, Soros unsuccessfully attempted to enter the London School of Economics. Persevering, he later made it in after re-taking the entrance exams multiple times. Once admitted and enrolled, he discovered he was under-whelmed with the field of economics, attracted to the academic style of argument more than its substance. Nonetheless, Soros entertained real intellectual aspirations and struggled to write in the genre of academic philosophy his whole life long.

    One person who genuinely aroused Soros’ intellect at the London School of Economics was Karl Popper, a pre-eminent figure in the philosophy of science. Arguing that policy should aim to minimize “avoidable harm” rather than maximize happiness, and that self-

    correcting democratic processes characteristic of “open societies” were the best political mechanism for minimizing avoidable harm, Popper’s ideas inspired Soros’ life-long

    passion for political and policy analysis, in both abstract and concrete terms. Although Soros was not a memorable student in Popper’s eyes, their interaction left a lasting impression on Soros, symbolized by the names he chose for the philanthropic groups he

    founded later in life using the phrase “Open Society,” borrowed from Popper’s famous work, The Open Society and Its Enemies (1945).

    Eventually, Soros finished an economics degree at London School of Economics and began working in an unglamorous capacity for a distributor of leather hand bags. Following his previous jobs working as a dishwasher, waiter, and agricultural laborer, this prosaic entry into the business world was a genuine, if modest, improvement. Soros was hardly satisfied with his accomplishments, however, and worried that he had let his parents down by not accomplishing more. After several years of fabricating leather goods, book-keeping, and working in low-level sales positions, Soros decided he would try to enter the financial sector. He found it difficult to break into the “club” that was the London financial scene, but eventually landed a job in America as an arbitrage trader, thanks to the help of a friend whose father owned a small brokerage firm on Wall Street. In 1956, he arrived in New York.

    From the time of his arrival until 1973, Soros worked as a broker and financial analyst, gradually gaining the confidence of his superiors and his clients by making a long string of profitable deals. Some of those deals involved buying under-valued European securities and selling them for considerably more in New York as U.S. markets began to realize the value of those firms’ assets. Other deals involved the innovative un-bundling

    of securities issued by American firms combining equity and debt. A number of Soros’ deals benefited from his prescience in identifying emerging trends and foreseeing the reversal of well-established trends. Rather than viewing financial markets as rational and perfectly competitive, Soros’ strategy focused on imperfections in the market, situations where market prices did not correctly reflect underlying value.

    In 1973, Soros left the brokerage firm he was working for and founded the Soros Fund. A hedge fund modeled after the ones he had managed while working for various brokerage houses, the Soros Fund went on to achieve legendary success. One dollar invested in the Soros Fund at its inception would have been worth more than $390 in 1998, representing an annual rate of return in excess of 27%. There were several years in which the fund’s annual return topped 100%, and also unusually long streaks without losses.

The Soros Fund’s outstanding record of performance did not make its leader instantly

    famous, however. Bordering on superstitious, he avoided the limelight -- at least until 1985 after he forced the Central Bank of England to devalue the British pound and tried to improve his public image in Britain. From the beginning till the end, Soros seems to have had a reputation among his associates for being unusual compared to other financial leaders and rich men in his appreciation of philosophy and his seeming disdain for the trappings of wealth.

According to Kaufman, Soros’ wealth was fully invested in his fund throughout much if

    not all of its lifetime and therefore grew at an even faster rate than the fund itself because of management fees he collected from the other investors in his fund. Although he was amassing considerable personal wealth, his lifestyle was not flamboyant. He was

described as being both arrogant and shy. Noting Soros’ cool demeanor, one associate

    reported that Soros never once raised his voice while at work, finding alternative means

    to metabolize stress, often dealing with adversity by redoubling his efforts to compete

    hard.

Although he apparently thrived on competition, Soros viewed the business of making

    money as little more than a game -- not a real passion. Philosophy remained Soros’ true

    passion throughout most of his career. Commenting on the Soros’ investing style, some saw Soros’ detached demeanor as a personal asset that allowed him to swiftly accept

    defeat, selling off losing financial positions rather than falling into the trap of hanging on

    too long hoping to catch a turn-around. But others described Soros’ financial decision

    making as entirely emotional. Rather than exemplifying the ideal of a cool, systematic

    and self-disciplined investor, Soros’ son Robert describes his father’s investing as

    reflecting difficult-to-justify impulses for which he would invent rationalizations after the

    fact:[p140]

     My father will sit down and give you theories to explain why he does

    this or that. But I remember seeing it as a kid and thinking, Jesus

    Christ, at least half of this is bullshit. I mean, you know the reason he

    changes his position on the market or whatever is because his back

    starts killing him. It has nothing to do with reason. … [He] is living

    in a constant state of not exactly denial, but rationalization of his

    emotional state. And it’s very funny.

The final section of Kaufman’s biography focuses on Soros’ philanthropy. Kaufman’s

    reporting of Soros’ generosity, his successes, and his honest acknowledgement of

    philanthropic failures, is perhaps the most interesting episode in the Soros story.

    Although Soros has been compared to Andrew Carnegie and John D. Rockefeller as

    individuals who have amassed riches and established an impressive record of

    philanthropy, the particulars of Soros’ involvement with his unique charitable causes

    stands out.

For example, Soros’ money went to the Solidarity labor movement which eventually

    broke the Soviet-backed Communist Party’s grip on power in Poland. And Soros sent

    more than 1,000 photo copy machines to Hungary where, under Soviet rule, copiers were

    kept under strict control to prevent the dissemination of anti-establishment literature. In

    Russia, Soros created a grant-giving organization to support scientists whose salaries in

    the post-Soviet era were well below the poverty line.

Initiating his giving to Russia (then the U.S.S.R.) in 1986, Soros, by 2000, contributed

    close to $350 million per year. Indeed, in 2000, there were 47 Soros-sponsored

    programs operating in 156 Russian cities whose 1,010 employees oversaw the

    disbursement of funds to five million direct beneficiaries. Soros was also active in

    sponsoring independent Chinese scholarship that, he hoped, would put pressure on the

    mainland Chinese regime. He spent money in South Africa as well, helping poor families

    obtain loans to finance homes, and creating scholarships for black Africans to attend

    college. Soros founded a new university -- Central European University -- in Prague. He

saved lives in Sarajevo in 1994 and 1995 by financing a water project that allowed

    ordinary citizens to access water without getting shot at. Soros also took an interest in

    U.S. policy funding campaigns to decriminalize drug use, supporting end-of-life policy

    initiatives, and initiating small-scale community revitalization projects in the ghettos of

    Baltimore.

Having been snubbed by a Jewish charity after he was injured while working a menial

    job in London, Soros was never fond of charities and doubted whether philanthropists

    actually did much good. In particular, he disliked the bureaucracy surrounding many

    charities and the pious and self-promoting manner in which some rich people give money.

    Instead of becoming like the philanthropists he despised, Soros aimed to achieve quick

    results with non-permanent philanthropic organizations that were designed to dissolve

    once certain goals were met. His manner of giving also aimed to avoid calling attention

    to itself.

Judging from his self-deprecating comments, his writings on the subjects of fairness and

    systems of government, not to mention his astonishing financial commitment to helping

    the downtrodden, Soros is convincing in asserting that his motives are genuine. His

    distinct ethos emerges clearly in Kaufman’s portrait, in spite of the book’s clichéd and

    repetitive prose. Kaufman’s work is perhaps most valuable in chronicling the elaborate

    story of Soros’ giving which, because of Soros’ desire not to self-promote, has received

    incomplete coverage elsewhere. The Soros story will be remembered for generations to

    come, not only because of the man’s outstanding feats, but because of his insistence that

    ideas matter. Soros’ actions and ideas resonate on one point above all else -- that naïve

    faith in “market competition” should be eschewed in favor of strictly enforced

    international rules requiring big players like himself to play fairly.

Nathan Berg

Sources for Further Study: Sunday March 10, 2002

    Business Week (MARCH 4, 2002)

    http://www.businessweek.com/magazine/content/02_09/b3772027.htm

    The Observer (March 10, 2002)

    http://www.observer.co.uk/Print/0,3858,4371310,00.html

    Author Biography: Michael T. Kaufman was a reporter, editor, columnist, and foreign correspondent during his 40 years with the New York Times. He has won a George Polk

    Award for his journalism and was a Guggenheim Fellow.

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