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Book Review
Peter G. Peterson's Memoir |
Having gotten involved in the controllership of property management companies, I became interested in their best tools and practices, researched, and discovered that Blackstone, which Pete Peterson founded, is America's largest landlord. I figured, if anyone knows good property management, Blackstone must.
I was delighted to learn about Peterson's company because I had seen the Peter G. Peterson Foundation's film "I.O.U.S.A." (below). It turns out that the Foundation was endowed with the $1B proceeds from Blackstone's Initial Public Offering.
So I learned about Mr. Peterson in a round-about way: from the Foundation, to an interest in property management which led to Blackstone, and to the rest of his life story, which affirms observations about the immigrant experience I made earlier this year, in a piece I wrote about Axiology by way of reaction to Hillary Clinton's DNC speech.
Conventional Wisdom would have us suppose that poverty is systemic, passed on from one generation to the next. But in Mr. Peterson's case, in three short generations his family catapulted from poverty in Greece that was so severe that they had neither running water, electricity, nor shoes (when his grandparents needed to protect their feet they improvised, making sandals out of old tires; normally they went barefoot), to working night and day for decades at a family diner in Nebraska, to Billionaire.
That's an example to emulate; and I am sure that if more of us did, the United States would be in much better economic shape than it is.
I was delighted to learn about Peterson's company because I had seen the Peter G. Peterson Foundation's film "I.O.U.S.A." (below). It turns out that the Foundation was endowed with the $1B proceeds from Blackstone's Initial Public Offering.
So I learned about Mr. Peterson in a round-about way: from the Foundation, to an interest in property management which led to Blackstone, and to the rest of his life story, which affirms observations about the immigrant experience I made earlier this year, in a piece I wrote about Axiology by way of reaction to Hillary Clinton's DNC speech.
Conventional Wisdom would have us suppose that poverty is systemic, passed on from one generation to the next. But in Mr. Peterson's case, in three short generations his family catapulted from poverty in Greece that was so severe that they had neither running water, electricity, nor shoes (when his grandparents needed to protect their feet they improvised, making sandals out of old tires; normally they went barefoot), to working night and day for decades at a family diner in Nebraska, to Billionaire.
That's an example to emulate; and I am sure that if more of us did, the United States would be in much better economic shape than it is.
Peterson's other books, which I've also read
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Here are a some noteworthy lessons I got from the book:
Now his ethos is solving America's debt which to him means raising taxes on fat cats like himself, and reforming entitlement programs like Social Security and health care related things. From his own experience he offers the example of how a solution to his back problem was not the $14,000 surgery the surgeons wanted to sell him, but a much less costly program of epidurals, exercise, and a hip replacement (333). His favorite word is Sacrifice and his least favorite word is Entitlement.
His own life lessons:
When I was in the Marines in the 1980s there was a popular ad: "When E.F. Hutton talks, people listen" (below). So when the drill instructors wanted our attention instead of "Eyeballs!" they'd bark, "E.F. Hutton!" and we'd all shout, "CLICK, SIR!"
Now in 2016, I'd have to say that the E.F. Huttons of our time are men like Pete Peterson and Warren Buffett. How can they not be worthy of our respect? They've proven themselves.
Pete, thanks for writing this book. I hope you'll read this review, that we'll meet some day, that you'll let me buy you dinner, and that we can discuss next steps in achieving your goal of helping America solve its economic challenges.
Until then I remain very respectfully yours,
Kris Freeberg, Economist
Making End$ Meet
[email protected]
(360) 224-4322
- The Entitlement / Edowment distinction. This is the single thread that runs through all of his books. His father valued Endowment: preparing to benefit and support future generations. Our culture values Entitlement: living for the moment and burdening future generations with today's costs. In a very small nutshell, he says the remedy to our economic problems is to shift what our culture values from Entitlement to Endowment. Tall order, but not impossible.
- From the beginning, in his dad's diner at Kearney, there are many endearing anecdotes about coping with life during The Great Depression: resourcefulness, voluntary philanthropy, and extreme thrift including weekly family baths in used bath water, in which only Dad enjoyed hot fresh water. Following a pecking order, Peterson wondered whether the youngest child was more clean before or after the bath. In many ways life was grim. He lost his baby sister, causing his mom to fall into deep depression for years, and there wasn't much affection. One gets the sense that affection, and the leisure that makes it possible, was an economic luxury that the family didn't feel it could afford.
- The discovery that there was a larger world out there, when Peterson accepted a job where he earned more as a boy than his father earned as a man, and when he discovered through social encounters (made possible by his dad's financial support, hard work, and sacrifice) that over dinner it was possible to have purposeful conversations, both pursuing goals and having fun at the same time.
- Surprising educational experiences. While his fraternity experience at M.I.T. was a farce, he stumbled upon the University of Chicago Business School (of Milton Friedman's fame) through a night course opportunity in an unglamorous venue at a nondescript location, which he chose because it just happened to be walking distance from work. The MBA he earned there was a game-changer.
- He mastered contact management before there was CRM software to support it. He was assiduous about keeping a Rolodex, and using it.
- Something really striking to me was how effective his old-school sales methods were. Without describing them verbatim, I was struck by how he used techniques that both Chris Smith and Jeff Fox have done such a good job of detailing in their work. He empathized; he dollarized; he picked up the damn phone; and he went deep in his business relationships, focusing on long-term quality, solid agreements, friendly business practices, and doing well by doing good. Considering how brutal places like Chicago, Washington D.C. and New York can be, I was amazed by his success at remaining friendly, at proving how nice guys can win. As America's largest landlord, he certainly has.
- At the same time he's hardly naive. He has dealt with some truly nasty characters including murderous racists in Chicago in the 1960s, Richard Nixon and his cronies, Russian spies, crooked Wall Street scoundrels, and Holocaust deniers including the President of Iran, Mahmoud Ahmadinejad, whom he faced and silenced by introducing him to an eyewitness of Dachau (page 317).
- He has a fantastic sense of humor, collecting oxymorons like "House Ethics Committee", "Social Security Trust Fund", and "Charismatic Accountant", and poking fun at himself about his tendency to write books nobody wants to read ("Once you put it down you won't be able to pick it up" etc.). I especially enjoyed the jokes on page 335.
- His view of wealth: "It was clear to me by then that the real money was made by people who invested in, owned, and built businesses, not by people like lawyers, consultants, and financial advisors who sold their expertise and their brains and bodies by the hour or by the project" (page 204).
- He was brave and humble enough to seek therapy when he felt he needed it. In his words, ". . . self-exploration grows from the confidence that you can handle what you find" (212). From this therapy he learned to stop being a perfectionist. He came to notice the opportunity cost involved in pushing from good to perfect, that a lot more value can be created by being content with good, and spending that effort taking something else from mediocre to good. There's a Pareto Principle at work with perfectionism: the final 20% from Good to Perfect entails 80% of the whole effort. It's wiser to spend that 80% making other things good than trying to make good things perfect.
- He remained frugal and humble, occupying a 150 square foot office at Lehman Brothers and wearing a $35 Timex wrist watch because he liked the big numbers and the illumined dial. (I feel the same way about my car . . . .)
- Like many, he spent most of his life resisting his Greek Orthodox heritage but, in the final analysis, he comes to see how he benefited from it. It turns out the clear moral compass his father instilled in him accounts for his ability to avoid and survive the hazards that have ruined the lives of so many other people in high places, and contribute to his overall success.
- I picked up a few useful vocabulary words like "moribund" and "sclerotic."
- He built Blackstone by using his sterling reputation to secure financing that enabled him and his partner to buy bargain real estate from the Resolution Trust Corporation (RTC), created by Congress in 1989, when it had taken over properties lost during the S&L crisis (294). Lemonade from lemons.
- Although he's a Republican, he thinks independently and speaks his own mind. For example he objected vehemently to Ronald Reagan's budget that, in so many words, he found delusional. (For myself, I find no difference between him and Democrat Warren Buffett. As far as I can tell they're both on the same page and worthy of the utmost respect. Both consider themselves "fat cats" and say they should be taxed more than they are. The question isn't whether; the question is how.)
- When he retired, as a billionaire, he became depressed. Let that sink in for a moment. A billionaire. Depressed . . . . So he studied what other billionaires were doing and found they were all philanthropists. That's when he decided to develop his foundation, and his depression subsided. Instructive.
Now his ethos is solving America's debt which to him means raising taxes on fat cats like himself, and reforming entitlement programs like Social Security and health care related things. From his own experience he offers the example of how a solution to his back problem was not the $14,000 surgery the surgeons wanted to sell him, but a much less costly program of epidurals, exercise, and a hip replacement (333). His favorite word is Sacrifice and his least favorite word is Entitlement.
His own life lessons:
- Follow the advice of Adam Smith: exercise your comparative advantages.
- Don't be intellectually lazy.
- Pitch in. Do something.
- Pick your battles carefully, with an eye to personal satisfaction. He enjoyed his work; and because he enjoyed it, he excelled.
- Travel light. That means, no moral compromise. If a deal or job opportunity is laden with moral compromises, walk away. Most of the time he did, and when he didn't, he regretted it.
- Balance work and personal life. He failed at this most of his life, following the example of his workaholic dad. In the end, in his marriage to Joan Cooney, the maker of Sesame Street, he figured it out.
- Vet job opportunities carefully. Do careful due diligence on prospective employers. Scrutinize them more than they scrutinize you.
When I was in the Marines in the 1980s there was a popular ad: "When E.F. Hutton talks, people listen" (below). So when the drill instructors wanted our attention instead of "Eyeballs!" they'd bark, "E.F. Hutton!" and we'd all shout, "CLICK, SIR!"
Now in 2016, I'd have to say that the E.F. Huttons of our time are men like Pete Peterson and Warren Buffett. How can they not be worthy of our respect? They've proven themselves.
Pete, thanks for writing this book. I hope you'll read this review, that we'll meet some day, that you'll let me buy you dinner, and that we can discuss next steps in achieving your goal of helping America solve its economic challenges.
Until then I remain very respectfully yours,
Kris Freeberg, Economist
Making End$ Meet
[email protected]
(360) 224-4322
