Announcing the “Adam Smith, Esq.” Monthly Book Review

Announcing the “Adam Smith, Esq.” Monthly Book Review 

I’m pleased to announce what will be a new, regular feature here on "Adam
Smith, Esq.:"  The Monthly Book Review.

What’s the Monthly Book Review all about?  Here’s what I have in mind:

• I’ll review a book that has at least a tangential relationship to the fundamental
  subject of our conversation at "Adam Smith, Esq.," although I reserve
  the right to push our mental boundaries a bit farther afield.   Primarily,
  I envision covering books on (non-academic) economics, on prominent figures
  in the law or pieces of legal history, and also the occasional volume that
  just begs for wider attention.  Reader nominations for books I might
  review are more
  than welcome, but as always I reserve the right to choose what I’ll write
  about and, as they say, "the decision of the judges is final."
• The reviews will be archived, cunningly enough, under the new "Book Reviews
  (Monthly)" category.
• I have zero financial interest in promoting any of the books I’ll be selecting,
  and neither my choice of books to cover nor what I have to say is remotely
  for sale.  I may seek a sponsor of this feature, but even if I do they
  will have no influence over the selection of books or, needless to say, the
  content of my reviews.
• A quick synopsis of each month’s book review will appear as well in the
  monthy e-newsletter—yet another reason to sign
  up if you haven’t already.

So, without further preface, to this month’s review.

"Spoiling for a Fight:  The Rise of Eliot Spitzer," by
Brooke Masters, is this month’s subject. 

Who is Brooke Masters?  According to the dust jacket:

"Brooke Masters is
a staff writer for The
Washington Post,
based in New York, where she writes about financial services and white-collar
crime. She has reported on the trials of Martha Stewart, Frank Quattrone, and
Bernard Ebbers. In her sixteen years at the Post, she has also covered
criminal justice, education, and politics. A graduate of Harvard University
and the London School of Economics, she lives in Mamaroneck, New York, with
her husband and two children."

Brooke Masters is also the quintessentially even-handed, reportorial, journalistic
author:  Even-handed to a fault.  Indeed, the book’s greatest failing
is that she never draws her own conclusions about Spitzer; the typical reader
will probably come away with precisely the view of Spitzer that they started
with, an abdication of the author’s prerogative to offer a reasoned opinion
on a topic they have presumably become intimately familiar with.

But back to Spitzer:  In 2003, Stephen Cutler, then head of the SEC’s
Enforcement Division, offered a roast of Spitzer, quoting from an email Spitzer
purportedly sent to the Almighty:  "Dear God," he began, "it’s my understanding
that you are everywhere, including, apparently, the State of New York.  As
I read the Stamp Act of 1785, you are subject to regulation and taxation by
the state of New York."

The barb scores two points:  Spitzer has a preternaturally broad view
of his powers, and often relies on dusty and obscure statutes to achieve his
ends (most famously, New York State’s amazingly capacious 1921 Martin Act,
an all-purpose anti-fraud enactment). 

Since the odds are staggering, barring some inconceivable meltdown between
now and November, that Spitzer will be the next Governor of my home state of
New York, it would be nice to learn who he really is.  Is he, on the one
hand, a crusader who has stepped into a regulatory vacuum to uphold the rights
of consumers and investors or, as detractors would have it, an overzealous
and arrogant bully with a personal agenda that tramples the rights of defendants—and
who is famously unsuccessful whenever he actually has to go to court, as opposed
to conducting his prosecutions by press release and showboating press conferences?  Good
question.  While it may be unfair for Masters to duck the question, I
can sympathize from one perspective, at least:  When if Spitzer becomes
Governor, he’ll have to face a milieu completely and utterly different than
any one he seems to have inhabited heretofore, meaning balanced budgets and
legislative compromise.

Masters begins with what you discover is one of the best parts of the entire
book:  Spitzer’s upbringing.  His father, the son of an Austrian
Jewish immigrant, was a self-made real estate millionaire, and Eliot and his
two siblings grew up in the affluent Riverdale section of the Bronx (in the
eyes of some, a spiritual annex of the Upper West Side), enrolled in private
schools and submersed in progressive politics.  As a teenager, his reading
tastes embraced Foreign
Affairs, but not Playboy.   What life must have been
like in Chez Spitzer growing up is perhaps best captured by a Princeton classmate
of Spitzer’s who later recounted that he had never studied as hard for a Princeton
exam as he had for "dinner with the Spitzers." 

After Princeton and
Harvard Law, he joined the office of Manhattan District Attorney Robert Morgenthau,
and his appetite for the prosecutor’s zealous reformist life was born.   And
he takes to it like a true natural.

Fabulously revealing was his keynote speech before Instituional Investor magazine’s
annual awards dinner for top research analysts in November, 2001 at the Ritz-Carlton
in Battery Park, just as the scale of the spectacular dot-com implosion was
becoming clear.   Preparing for the speech, his office spent weeks
compiling every buy or sell recommendation is sued by the analysts to be honored
and built a database to determine how individual i nvestors would have fared
by following every one.  You can imagine the result.

Came the event, and Spitzer waded right in: 

"When measured by the performance of their stock recommendations,
only one of this year’s fifty-one first-team all-stars included in the study
ranked first in their sector…  More than 40% of this year’s first-team
all-stars did not perform as well as the average analyst for their sector."

As things went downhill from there, more than one guest departed muttering things
along the lines of "I’m not going to sit here and listen to this s—."

He may have bearded the lion in its own den, so to speak, but at least you
can say this for him:  He had the goods.

This may, indeed, be the source of Spitzer’s evident political appeal.  People
seem to sense that he stands for something he believes in, and that, whatever
his shortcomings, he doesn’t vacillate and doesn’t lack vision. 

Is Spitzer in the tradition of Louis Brandeis, or of Teddy Roosevelt and
other turn of the century trust-busters who were Republicans, and presumably
pro-business in their hearts?  Is
he trying to save capitalism from itself?  Masters points out that Spitzer
has written in The
New Republic that
the future of the Democratic Party depends on its ability "to promote government
as a supporter of free markets, not simply a check on them," and that Spitzer
describes himself as a "pragmatic liberal" or "progressive—by
which I mean an effort to create opportunity within the market environment."

Spitzer keeps a framed photo of TR in his office, and when asked why, responds:  "I
invoke him for the notion that capitalists understand when the market needs
to be tamed."

Fascinating, brilliant, intense, and driven:  Precisely the ingredients
for saints, and for madmen.