General Michael V. Hayden was director of the Central Intelligence Agency from 2006 to 2009. Prior, he served as the country’s first Principal Deputy Director of National Intelligence and was the highest-ranking intelligence officer in the armed forces. From 1999 to 2005 he was Director of the National Security Agency.
General Hayden recently sat down with Ed Orgon, Torrenzano’s president, to discuss threats facing our nation, our businesses, and each other.
Ed A. Orgon: General Hayden, we really appreciate your time for this important discussion on national security, business security and personal security. Given what we all hear --- relentlessly --- about threats to our national security and personal safety, how do you see the landscape, what do you see as the greatest threats and what can we personally do to protect our businesses and ourselves?
Ed A. Orgon: General Hayden, we really appreciate your time for this important discussion on national security, business security and personal security. Given what we all hear --- relentlessly --- about threats to our national security and personal safety, how do you see the landscape, what do you see as the greatest threats and what can we personally do to protect our businesses and ourselves?
General Hayden: Ed, for the first time this past year when people in government, in the kind of jobs I used to have, testified in open session to both Congressional Intelligence committees, called the World Wide Threat Briefing all of them said cyber was the greatest threat. And I agree.
When I was NSA director and later head of the CIA, I was asked, “What are your priorities?” And, I would answer CT, CP, ROW, (Counter Terrorism, Counter Proliferation, Rest of the World), this Washington DC alphabet soup. But now, everyone is, very appropriately, focused on the cyber danger.
EAO: When you consider cyber danger, is that range from criminals for monetary gain to the vulnerability of the electrical grid?
General Hayden: Actually, all of the above, unfortunately. And the way I generally outline the taxonomy is: a series of cyber sins and a series of cyber sinners.
Let me give you a sense, first, of all the sins. Overwhelmingly --- right now --- the primary sin is people out there stealing your stuff. It is your pin number, it is your credit card number, if you are an industry it is your intellectual property, it is your trade secrets. If you are a state actor, it is going after another state’s secrets and so on. Fundamentally, the evil going on out there right now is just theft of thought, theft of intellectual property, in one form or another. But there is also another series of bad things happening out there.
And here you have bad actors, either instead of or in addition to stealing your stuff they want to disrupt your network, for whatever reason, they want to punish you. They want to take your network down, they want to manipulate your data, and they want to delay, destroy, degrade or deny you your information. So you have got theft, disruption, and then we, as a species, we have just got our toe or maybe a whole foot in the water to actually use cyber-weapons to create effects, not on the network but to create effects in physical space. In other words, to use a cyber-weapon to create physical destruction.
The best example of that is something called Stuxnet, which was almost certainly done by a nation state because it is just too hard to do from your garage. It caused 1,000 centrifuges at Natanz in Iran to self-destruct. So those are the sins.
EAO: There were news reports that were driven by the CIA, under your direction. Is that true?
General Hayden: Actually, the best answer to that question is that it would be irresponsible for somebody of my background to even speculate on that.
So we have theft, disruption and destruction. Now who does that? There are three layers. First layer, nation states, China, and you can lash China up to the threat. When in doubt, it is the Chinese coming after your intellectual property, alright.
EO: Now when they are coming after intellectual property, that applies probably as much to our nation or it applies to businesses?
General Hayden: Oh no, and that is the point. See here is the reality – what is the right word, the real conundrum here, the real difficulty, it is – you have a nation state actor, China, going after secrets. And they are not my secrets, me being the CIA. My secret is kind of okay; I can take on a nation state. The Chinese are not doing that, well they might be trying but they are not being successful. But the Chinese, a powerful nation state, are not attacking just the U.S. Government; they are going after U.S. enterprise. That is not a fair fight. That playing field is not level and you’ve now got the resources of a nation state coming after private American businesses.
EAO: So what’s the answer for American business then? Should they expect the American Government to protect them or do they have to go it alone?
General Hayden: They should expect the American Government to protect them but let me assure you it won’t.
This is a really fundamental issue of American political values. We, as a people, have not yet decided what it is we want the government to do or what it is we will let the government do to protect us in the cyberworld.
EAO: Please expand on that.
General Hayden: I’ve headed up a couple of intelligent agencies and even in physical space there’s still some rough edges as to what it is we want the government to do…or what it is we’ll let the government do. In cyberspace there’s no precedent. We’ve got no rules.
I use this example. I’ve got a backpack and I carry my materials in…so I go to a speech and I get to this point in my speech and I say…you know if I walk out of here when we’re all done and I’ve got my backpack and I’m in front of the hotel waiting to be picked up to go to the airport and a local police car comes screeching to halt in front of me and the policeman jumps out and says hey, open that bag, I tell audiences I would probably respond with the two word monosyllabic English phrase, which probably translates to "I think not."
General Hayden: But if I had gotten in a car and gone on to the airport and gone through the TSA checkpoint the kid there says hey sir, open your bag, guess what? We all open our bag…my point being…although some of this sometimes gets contentious we’ve kind of figured it out. Government can’t do that. The government can do this.
We don’t have that in the cyber domain. So here’s the punch line, our government is late to need; it will be permanently late to need. The kinds of things we have a right to expect our government to do to protect us in physical space, it will not do in cyberspace.
EAO: That’s a pretty bleak assessment…
General Hayden: It is.
EAO: What’s the solution?
General Hayden: Step up private industry. You’re far more on your own here than maybe you should be or certainly you expect it to be. In this domain, individuals, institutions, enterprises are going to have to defend themselves far more than we think we have to defend ourselves against physical threat. Look you have a foreign power come up the Houston Ship channel with a submarine, I’m betting on the Navy. You’ve got a foreign power coming up the Houston Ship channel on that fiberoptic cable at the bottom of the channel, the Navy isn’t coming.
EAO: With your deep experience in intelligence agencies you now advise companies and corporations, specifically on these types of issues. What are the two or three things you can enumerate that have to be considered?
General Hayden: What I do is I generally put on a white board the traditional risk equation, folks like you and me with military experience, we know about this.
Risk is equal to the threat times your vulnerability to the threat, times the consequence of a successful attack. (R = T x V x C). And then I tell the audience…practically the entire history of cyber security has been in V. Now just think back to your own experience. All the things you know about in cyber security, firewall, patches, McAfee, Symantec, Shrink-wrap products…
EOA: Go on...
General Hayden: …you go ahead and load good passwords, cyber hygiene it’s all about V all right. It’s about reducing your vulnerability. The phrase experts use is --reduce your attack surfaces.
Well here’s the story. If you and I are perfect and I mean 1.0 perfect in V we will keep out of our system the lower 80% of those people who are attacking it. Guaranteed we don’t keep the higher 20% out, V is not sufficient. So the history of cyber defense has been in V. The present of cyber defense is in C, consequence or put more accurately consequence management and here the premise is we’re not betting the farm on the perimeter defense and preventing someone from coming in --- they’re getting in.
I work with the Chertoff Group, occasionally, clients come in and say, “Hey you know…another industry, another company in our industry just got a phone call from the FBI, oh, really bad stuff and we want to engage you guys to see if we’ve been penetrated.” And Ed, the answer we give them is, you’ve been penetrated, let me give you an address so you can write us our check.
Seriously, current thought is you’re penetrated. Get over it. Survive while penetrated. Operate while under attack. Wrap your most precious data more tightly then your less precious data. Respond to the attack. Under V it’s prevention. Under C and this is where we are now it’s resiliency. All right. They’re in but it’s okay. I know they're in, I’m boxing them off, I’m continuing to work. Right now a tremendous amount of private sector energy is in consequence management.
Now there’s one other factor T, threat. In the physical world you push T down by saying touch me, I’m going to hit you so hard your whole family is going to fall down…
It’s a little harder to do in cyberspace. So where the energy in T now in cyberspace, and this is quite remarkable, the energy is in threat intelligence, and I’m not talking about the government. I’m talking about private companies and it’s remarkable. This is cyber threat intelligence. It is not intelligence-light. It is intelligence. You’ve got private companies out there…web crawling, port scanning, having foreign national employees assume personae in Ukrainian chat rooms in order to find out what’s going on. So what happens if you engage one of these cyber threat intelligence companies they can actually tell you who’s most likely to come after you for what purposes and what tools they have generally been associated with, which then makes it…
EAO: Which makes it easier for you to do V and C…?
General Hayden: Right. Because you’re now not trying to defend yourself against all abstract threats for all abstract purposes. You’ve got some specifics here. It’s been an epiphany for me, I’ve been out of the government almost exactly five years. The amount of energy now in the private sector for cyber security is just amazing.
God Bless the American system. Here we have a reality where the government’s not going to show up and guess what? American business is stepping in.
EAO: Outstanding. Given that cyber threat, let’s spend a little time speaking about the top-of-mind, visible physical threat. You once said to me the wolf is always banging at the door…is he still?
General Hayden: Yep…and let me do it on two levels. Let’s talk about the terrorism threat in physical space and then the terrorists who are in cyberspace. The terrorist threat in physical space, frankly the reason we’ve been successful—if you ask me was it the TSA line, ah, it’s okay. Was it the 215 program, yeah, it’s not bad okay but fundamentally Ed, the reason we’ve been successful is we are one mean enemy.
EAO: Please expand on that thought.
General Hayden: Well, I don’t think the people who attacked us 12 years ago expected us to do what we did. We’ve come after them with a vengeance. There’s quite a bit of scholarly research that says when you really anger a democracy it really gets tough…and they angered this democracy. We have had a relentless campaign against the Al-Qaeda group responsible for 911. That’s what I call Al-Qaeda Prime, in Pakistan and Afghanistan. Two incredibly different presidents I might add.
EAO: So when President George W. Bush stood at the World Trade Center and said The World Will Hear Us…that was not only his…but a commitment the current President has also continued…
General Hayden: Yes. In fact the current President, despite all that rhetoric in the campaign in 2007, 2008, the current President has actually doubled down on a bunch of stuff. When you have two Presidents --- so different --- do this…it means it’s America, it’s not George Bush, it’s not Barack Obama…
General Hayden: There’s a wonderful quote in Der Spiegel, with this latest kerfuffle about American surveillance and so on. At the height of all this, there the German Magazine expressing great disappointment and dismay. They said something along the lines this was George Bush. And that they always thought that there was another America, a better America and now they knew there is only one America. Personally, I actually felt good about that.
EAO: Well it’s similar to when 9/11 occurred you know. We were in the city and I still remember standing outside and…watching the news board coming around Time Square, the news reader and we would be standing there with all sorts of different people, different races, ages, whatever and it was unity…
General Hayden: Yes. Now let me talk a little more about terrorism…and terrorists.
In cyber, there aren’t any, and I can’t explain it. There is no evidence of terrorist groups and we’re talking primarily Al-Qaeda here…
There’s no evidence of them attempting to use a cyber weapon to create the effects they want to create. I can’t explain it. They are not cyber stupid. They use the Web. They use the Web to recruit, to train, to raise money, to proselytize but so far they’ve not used the Web to try to create that disruption or destruction that we talked about.
EAO: Is it coming?
General Hayden: I don’t know. These guys are --- I was going to say philosophically driven --- but that’s not true, they’re theologically driven and there’s almost this compulsion to create what I would flippantly call physically pleasing destruction. I mean the Al-Qaeda game plan—the primordial instinct is a mass casualty attack against an iconic target.
The World Trade Center again and again. The Pentagon. Airliners and so on. They may just not find it theologically satisfying to shut down the eastern power grid…again, pure speculation.…but they haven’t done it…
Now keep in mind. These guys are planning this from a cave. This is not the most sophisticated enemy in the world.
EAO: That said, that’s a very good point because we tend to give them super human powers because of what they did achieve a few times.
In sum, what would you advise people like myself, our clients, our people who may be reading this interview, the average everyday American, what are you going to advise for him or her?
General Hayden: Let me focus on the cyber question because in a very real way that is the one threat that actually gets to you personally.
Now look, sooner or later, if the Iranians get a nuclear weapon, that's a big deal. It’s going to affect you and me but it’s a bank shot and it’s going to take multiple caroms before it affects your life.
But the cyber thing, that’s that E-mail that you thought was from your daughter-in-law with the hyperlink that you’re not quite sure whether you should click on or not click on, that’s you, that’s personal and that’s now…
We all just have to get a lot smarter on cyber defense. Look there’s no perfect defense but…like the old joke, two men running away from the bear saying we’ll never out run this bear and the guy says I’m not trying to outrun the bear, I’m just trying to outrun you…
… in other words we’ve got to make ourselves tougher targets than the next guy.
Frankly, as selfish as that seems, if we’re all doing that we’re raising the water level of defense and making it more difficult for adversaries to come after us. I should add that for the most part this cyber weapon has been a sophisticated worm or bug or Trojan horse. That’s no longer the case.
The real cyber weapon now, unfortunately, against you and me…is you and me. What cyber adversaries are doing is social engineering you and me. I mean there’s so much of you and me out there in ones and zeros, they can discover fairly intimate details of who we are and then they can craft an E-mail and look, I’ve gotten this. I got an E-mail that for all intents and purposes looks like it’s come from my daughter-in-law and says, “awesome check this out” and then there’s a hyperlink. Well that hyperlink’s a weapon.
I click on it, I’m done. We all have to be very, very careful that we don’t allow these adversaries to turn ourselves into their unwitting accomplices. You do that—you really do begin to sweep away an awful lot of the dangers.
Diana B. Henriques, an award-winning financial journalist, is the author of The Wizard of Lies, a New York Times bestseller about the Bernie Madoff scandal, and three other books on business history. As a writer for The New York Times, she has largely specialized in investigative reporting on white-collar crime, market regulation and corporate governance.
Following is a conversation she had recently with Richard Torrenzano:
Richard Torrenzano: Why did you decide to go into journalism -- and then investigative journalism -- which is a real specialty?
Diana Henriques: I got hooked on journalism very young. I was 13 years old. I was participating in a Junior Achievement program in my hometown of Roanoke, Virginia. The local newspaper sponsored a teen page. A bunch of us high school kids put together a page of the paper every Saturday. We sold the ads, we took the pictures, we wrote the stories. That got me interested in writing.
Before that point, I thought I would be a psychologist or a lawyer. The old guy who was our overseer – the TV listings editor – found a spot for me in the newsroom to do some revisions on a story I was working on. It was right in the slump between the afternoon paper being put to bed and the morning paper starting to gear up. As I was working at this big old oak desk with one of those huge typewriters that rolled up out of the desk, the newsroom came alive around me. The teletype machine was dinging. The pneumatic tubes were thumping. Kids in newsrooms today have no idea what I am talking about when I describe these things. I fell in love. I just fell in love with that environment. It seemed like the most exciting place I could possibly spend time.
RT: Those exciting sounds are all gone now.
DH: I know. Newsrooms now sound like insurance company offices. It is grim! But you know, I did a fun thing with a kindergarten class once to show them what old newsrooms were like. I had them tap on chair backs to mimic the typewriters. We rang little bells to make it sound like the teletypes. It was a symphony, really -- the symphony of the newsroom.
Once I got into newspapering, it was just really serendipity that led me into the investigative side. I had a very supportive editor at the Trenton Times in New Jersey. We received a news tip that none of us could understand…about a local revenue bond authority and perhaps some political skullduggery going on there. That editor encouraged me to pursue it. I was hooked. That more or less became my brief for the rest of my life. Really, that was my first taste of what I did not even know at the time to call white-collar crime. Now white-collar crime is really my franchise.
RT: Let’s stay with investigative journalism just a tad longer. When you began a lifetime ago, how has investigative journalism changed during that time?
DH: That is a great question. It was created very self-consciously. That kind of enterprise reporting obviously has been done for 150 years. Ida Tarbell and her groundbreaking work on Standard Oil back at the beginning of the twentieth century was investigative reporting.
There was a time in the ‘70s when investigating bad guys began to seem really dangerous. In fact, Don Bolles, a reporter out in Arizona, was killed while working on an investigative story that appeared to have links to organized crime. In the aftermath of that, reporters and editors across the country decided quite self-consciously that if we did not step in and continue Bolles’s work that we were all vulnerable.
It would seem like all you have to do is eliminate the reporter and you have eliminated the story. We were determined not to have that happen. The organization Investigative Reporters and Editors, IRE, was formed in the aftermath of that. While not a charter member, I think I was a second year member. I have been active in it ever since.
It started with a very utilitarian self-protective idea. In one way, it has become much easier. The Internet, for all the damage it has done to the organizations that sponsor and pay for investigative journalism, has really made it so much easier.
When I first started out in this business, if you wanted to get the goods on a publicly traded company, the New York Times was rich enough to have an account with one of the vendors who could deliver boxes of paper financial statements to you. I would spend about $5000 a month on my NYT column just ordering documents.
Most organizations could not do that. They could not afford it. It was a rich paper’s game. It really required an investigation effort that was expensive and time-consuming. Now that playing field has been totally leveled. That has made it easier.
RT: You see the personal pressure – the violence – on investigative reporters, but also in smaller cities, smaller newspapers are underfinancial pressure publications in today’s economic climate.
DH: That is true. The financial pressures that hit the industry have hit especially hard at investigative reporting. It would be easy. Believe me, for several years we all were on the brink of despair about what would happen to this crucial watchdog function of journalism. I am somewhat encouraged, Rich, to see what is happening. The emergence of non-profit organizations, foundation-sponsored research, organizations that are partnering with existing news organizations do really top flight investigative reporting. One of them, ProPublica, was honored with a Pulitzer Prize. If you told me ten years ago that there would be a website – a nonprofit investigative website that did not even have a regular place to publish its stuff – that would win a Pulitzer Prize. I would have said, oh you are dreaming. That is ridiculous. We are there. We have gotten there very quickly.
The Center for Investigative Journalism, work that Lowell Bergman is doing out at UCLA Berkeley’s Journalism School, I could rattle off a whole number of them. This is likely to be the future of investigative journalism. It is going to be a coalition of the willing. It is going to be a coalition of people who are determined to keep it alive, and who are going to work with the mainstream legacy press and television to find an audience for it.
RT: What is the biggest story you’ve chased in your career?
DH: I think the Bernie Madoff case obviously has to rank near the top just because of the sheer scale of the betrayal ... the emotional impact it had on the country, and really, the world.
It came at a time when everyone was feeling betrayed by Wall Street. Wall Street is an abstraction. Then this guy betrayed everyone he knew and everyone who loved and trusted him. He is the poster child for what seemed like a whole era of betrayal on the Street.
RT: Let us talk about The Wizard of Lies, your best-selling book on the subject. When you tackle a book you have to be inspired. You have to have something inside you, which is saying “I have to do this.” What was your “I have to do this”?
DH: From the very day that story broke, by nightfall we knew that Bernie Madoff had betrayed everyone who trusted him and was turned in by his own two sons. He had trusted them to sit quietly until he executed some more chores, and then would quietly turn himself in through his lawyer. That was Shakespearian. It really was almost biblical the level of personal betrayal. I think it was the family drama from the very first moment that hooked me.
I could see that this fraud was different. I covered dozens of Ponzi schemes. I mean one of the fun parts of my business is I get to meet a lot of Ponzi schemers. This was different.
RT: Is it scale and magnitude?
DH: It is partly that. Obviously, it was the largest Ponzi scheme in history - a billion in paper wealth wiped away. It was the first “global” Ponzi scheme. Victims spread all around the world, which had never happened before. In many ways, it was a historic marker in terms of fraud.
It was an unusual Ponzi scheme in that it did not promise sky-high returns, which is what we always think of as a Ponzi scheme. Double your money in 20 days. They were nice steady returns. But most of Madoff’s victims would have done better in the Magellan Fund. It was not one of those red-flag-waving Ponzi schemes. In many ways, it was intellectually interesting as a fraud and as a Ponzi scheme. It broke new ground. But it was the personal story that held me.
It was the personal art of this man who had been so respected on Wall Street. I had known him. I quoted him. I interviewed him on stories about the changing market structure back in the eighties and the nineties. He was a key advocate of the modernization forces that helped reshape NASDAQ. He was a regular consultant to regulators. I had interviewed him or his brother, Peter, two or three times over those years. He was in my Rolodex.
When I saw that he had been arrested and that the fraud was of enormous magnitude, it was just a total disconnect for me. Then the personal pieces began to fall into place: His sons turning him in; his wife standing by his side and thereby becoming estranged from her sons.
The sons and the wife becoming these utter pariahs in the social setting…that typically did not happen to white-collar criminals. In the past, you left the family alone. Even the families of organized crime figures were generally left alone by the media. This was, again, new ground but new ground in a very personal and very dramatic way.
RT: If you take a step back, what effect do you think this had on the American culture and the American scene? What effect did it have on Wall Street? Most importantly, did it have any effect on regulators?
DH: I wish I could be more sanguine about its effect. I hope that it has had the effect on the country…of making people more skeptical. Certainly in the talks I have given over the past two years – there have been more than 100 of them around the country – that is what I hammer away at. You think you know what a Ponzi schemer looks like, but you do not. You think you know what a Ponzi scheme sounds like, but you do not. I am hoping that the average investor is a little bit savvier about avoiding Ponzi schemes.
For Wall Street, my hope would have been that they would have emerged from this experience with a better understanding of the need to blow the whistle on their own members. After Madoff’s arrest, countless private fund managers, business consultants, and private bankers came forward. They said, “Oh, I knew all along about Bernie. I kept my clients out. I never believed in him.” I am saying, “And you kept quiet? You got your clients out and let everybody else’s clients go down?”
That failure to police itself, that failure to blow the whistle not just on Madoff suspicions, but for Heaven’s sake, on ridiculously risky mortgage-backed securities, on sloppy foreclosure practices and on dubious accounting. People all knew these things were going on. There was no big secret about what was happening in the lead-up to the financial crisis of 2008. Yet, Wall Street felt no obligation.
RT: If you go back 20 years, a generation to the mid-eighties, we saw similar issues with Boesky and Levine, with Drexel Burnham going down. It was a tragedy then. Madoff being the head of a firm was the same kind of tragedy in some ways.
DH: It was a tragedy certainly for the Madoff family, for all of the employees who worked there and had built their careers around that organization, as with Drexel and as with the Boesky shop.
What is troubling to me is not that you have these outliers. You always have. There have always been the people on Wall Street who are going to push the envelope. They are going to figure that that particular law does not apply exactly to this specific circumstance and to me.
It’s the cultural climate that scares me. What we saw in the decade before the crash of 2008 seems to me far more systemic. It is far more structural. There was a culture that took over…one that valued market share and profit above morality and ethics to a degree that I had never seen before in my personal career or read about in modern history. You have to go back to the Gilded Age, the Robber Barons, to see the kind of structural misbehavior that has emerged today.
RT: Wall Street seems to have its scandal du jour each decade. What should people be looking at? What should people be concerned with about this decade?
DH: One of my concerns is that despite the obvious failures of deregulation, the lunacy of thinking that sophisticated institutional investors could look out for themselves and regulators could focus on other things. That idea was blown out of the water in 2008. But it still raises its ugly head. I mean it is like you need to drive a stake in the heart of this notion that the markets will police themselves. The markets apparently think that that is somebody else’s job. I tend to agree with them. I think it is somebody else’s job. It is the regulator’s job.
What I see regulators doing as they have just done is making fraud easier. It is just that simple. The JOBS Act, for example, supposedly “jump-starts” our small businesses … That invites small flimsy companies that may exist nowhere but on paper to use the Internet -- oh, man, the powerful Internet, the global worldwide web -- to raise money. From whom? It is from people who surf the net. It is fraught with opportunities for mischief. Frankly, I am waiting for the frauds to evolve. I will be looking closely for them.
RT: The fraud, like our society, has gone global.
DH: It has gone global, and it has gone high-tech. I mean, the penny stock frauds – Heavens, we have had those since the 1950s. They cycle in and out. You have the boiler rooms and those pump and dump schemes. I have covered dozens and dozens of those. Take that out of the old cold calling, phone bank, boiler rooms out on Long Island or out in Denver. Now, turn that into an internet-driven sales pitch. It puts penny stock fraud on steroids. I am afraid that is what we are going to see with these new changes.
RT: Could you see this happening in another industry?
DH: Do not forget how interconnected Wall Street and Main Street have become. I mean we are all our own pension fund managers now with our 401K plans. The idea that investing on Wall Street is an elite activity, an activity for specialists like brain surgery or nuclear physics, is gone. We all have to find our way around the markets. To me, that means the markets must be more intelligently regulated. It is not that they should be less regulated.
The fact is that the average middle-class saver who hopes for a retirement, the working class employee who works for a retirement, has to be involved in the market. To me, it is the perfect storm. You have a market that demonstrated in 2008 a massive failure of not just self-regulation but self-control and self-restraint.
Then you have millions, hundreds of millions of people around the world – the emerging middle classes in the UK and China – you have people who are desperate to save and put their money to work for them just as they are working hard. They encounter this culture. We have to do something about that.
I wish I could be more cheerful about where we go post-Madoff and post-2008. But it amazes me, frankly, how quickly the demand for investor protection and the political concern about investor protection has evaporated. All you hear now in Washington is cut the budget. Cut the budget. De-regulate. I saw that movie. I know how it ends. It does not end well. I think we really need to change the conversation and change the script so that individual investor protection has a much higher priority and a much bigger share of the conversation.
RT: Tell me about your next book?
DH: I am “not at liberty to divulge” yet! There are actually a number of issues that have emerged out of my Madoff research that intrigue me. One of them is this “blowing the whistle” idea. This is the reluctance of Wall Street to blow the whistle, the role of whistle-blowers, and how it is changing. I find myself fascinated by the whistle-blower world and some of the issues it poses for society. Do not be surprised if you see me looking around in that area.
One of the longest running and most entertaining voices on the crowded New York radio dial and one of television’s wittiest talking heads, Mark is on the 2013 list of the 100 most important talk hosts in the world. His broadcasts are filled with lively conversation, colorful wit, savvy insight into current events, and an insiders look at the rich, powerful and famous.
Mark can be heard on WOR in New York weekdays from 10 a.m. to noon.
Following is a conversation he had recently with Richard Torrenzano:
Richard Torrenzano: Tell me a little bit about some of the trends happening in broadcasting and radio right now.
Mark Simone: Well, first of all radio is not dead as people think it is. I know digital is taking over everything on earth, but if you were around during Hurricane Sandy, when the lights went out, nobody said, ‘quick put on Pandora.’
There is always, always a place for radio. It is the only live medium that works … in fact; it worked during Hurricane Sandy when nothing else did. No TV station on the air only AM radio. FM went off the air, because most of their antennas are in the middle of Manhattan, so it was the AM that stayed on the air.
A portable battery radio is sometimes all you have in the most extreme of emergencies. That always keeps radio alive … that and cars. As long as you are in a car, it is very hard to watch TV even with the Google Glasses, if you are watching anything visual while you are driving, there is going to be a lot of accidents, so that technology would end very fast.
There are trends in normal circumstances to listen online. More and more people listen on their cellphones. I would say half our audience is listening on a cellphone right now or smartphone or on a table. TuneIn radio is a great app, iHeartRadio is probably the best one. You put that on your phone with all your favorites and you have your whole radio dial there.
Most people don’t even own a standard radio anymore. If you go to Radio Shack and ask for a radio, they will look at you funny and go ask a manager what that thing is. But radio connects you to the best content provider -- whether through the traditional set or via your smartphone.
RT: Now you just changed stations. Some of your listening audience will follow you and some of it will be new, what are your listeners most concerned about in their lives today? What do you think they want to hear more about today?
MS: Well, let’s start with what they do not want to hear about. We just went through a long cycle of political talk, Rush Limbaugh was the king, Sean Hannity. These two guys are still great and their audiences are so huge they will last forever. All those other shows have crumbled and died. It is now an era where people do not want nonstop political talk, they don't want nonstop arguing, they don't want a lot of shouting, they don't want to go into the minutia of every issue.
It is like any market. You have a bubble that bursts at some point and talk radio just zeroed in on politics. That bubble went for about 20 years or something, so now that bubble has kind of burst. The new talk radio has to talk about everything else in the world. You still do politics, obviously people care about the big issues, but that is 5 to 10 minutes of every hour. They also want to know where to eat, what is on television, they want to know how to get along with their wife and everything else, lifestyle and everything else has become important.
RT: How do you make those judgments? How do you determine what you put on the show each day? You have a pretty large show to produce every day.
MS: Gut instinct is the most important thing. You have to think of what is interesting to everybody and sometimes it can be the simplest thing, a rude waiter story in the newspaper. Sometimes you just see something online about…just something you know would annoy everybody or interesting information. People love details. They like to know how things happen, the inside story of any little thing.
RT: So gossip has gotten bigger?
MS: Gossip is big, but they have to learn something while they are listening, so it is not just the gossip, but they have to find out some inside details, like the inside scoop. If you are going to talk about some celebrity that did something, give them some details, some real information, the juicy stuff.
RT: How do you balance what you think your audience wants with what you feel they should be hearing about?
MS: Well, one thing about talk radio, you cannot turn the page, you cannot click on what you want when you want it, so you have to be pretty good at knowing what to start with and what to end with.
The layout of a show has changed. In the old days you actually did a radio show: beginning, middle, end. You cannot do that anymore. In the digital world there is no beginning, middle or end. You used to start a show by going through a five minute laundry list of what was on the show. You would tell them that coming up at 4:30 we are going to have this guy on, and then at 5:30 we are going to have this guy on and at 6:00 we are going to talk about this. You cannot do that anymore.
In the digital world the second that show starts, you better start talking about something. People don't care what you have an hour and a half from now and nobody cares what is on in 20 minutes. All they want to know is what you got right now. A lot of this is due to the DVR world … where it is up to you what you want to watch and you do not wait for anything. Even in the Hulu world and the Netflix world, people are watching without commercials, without interruptions, they are clicking on whatever they want to watch, they are shutting it off as soon as it is boring.
RT: What impact has social media had on somebody like yourself who is a known personality or on the stations for that matter?
MS: Social media has had a big effect on a lot of media. All the music stations have to really get busy with their social media; TV shows have to get busy making social media part of the show. In talk radio it is not that necessary, because no one ever stopped to realize, talk radio is the original social media. It is the original Facebook. It is the original Twitter. It is people calling up talking about…just the same as Facebook…what they had for lunch, telling you about their trip, what they are mad about, commenting on politics.
RT: Talking over the neighbor’s fence or down the hall.
MS: Yes, exactly. I have never seen anything on Facebook that was not traditionally a talk radio caller.
RT: What topics do you think are important that the mass media have not covered enough?
MS: Well, the inherent problem with mass media is just that … it is too mass. They look for something that applies to everybody. It is one of the problems with talk radio becoming national. Every show is syndicated, every show is national with the exception of what we do now at WOR. Go back to local radio, so suddenly we can talk about what is going on in SoHo or how bad the Long Island expressway is and the traffic. One thing about Rush Limbaugh and all these shows they have to worry about making sure the issue applies in Oklahoma, applies in Texas, applies in New York City and nothing always does.
RT: How do you determine if there is something on the show you do not want to talk about?
MS: There are certain little tricks to decide if something is relevant for air. There was one of the greatest programs of all time that had a rule, everything was in threes. For instance, any topic had to appeal to three totally different demographic groups or three different types of groups.
Let’s say there is a guy that lives right in the middle of Manhattan; a woman on the South Shore of Staten Island and another guy that lives way off in the suburbs of Connecticut. Connecticut’s not so worried about the problems at PS89 or gang violence in the city like the other two may be, so you try to find something that applies to all three groups.
RT: It is basically about life.
MS: Yeah, and if you are talking about the hottest club in the Meatpacking district, you have now a 25 year old who will be right there with you, but a 45 year old has limited interest. And the 65 year old is probably not interested at all. So, you better tackle it from an angle that could appeal to all three groups.
RT: You’ve booked a broad array of people from all walks of life in the last year or two. Who are your one or two most favorite guests?
MS: I was just talking to someone about this. The worst question you could ask a great talk show host is, who is your favorite guest, because if you have had thirty thousand guests and you have done 20 years of shows, if there is a favorite guest, you really have a problem.
But there are certain guests who are just natural born guests. Regis Philbin for example. You just say hello and it is going to be funny. Don Rickles is another like that. He just takes off. Larry King says hello and you will get a hundred great stories.
Politicians are the worst if they hold office at that moment, because every word they say is triple - vetted before it comes out of their mouth.
The worst guest in the world was Ed Koch as mayor, because he was so careful about everything he said.
RT: Now you were one of the last guys to interview Ed Koch.
MS: Yes, Ed Koch, when he left office, suddenly was the most fascinating guest ever, because it was like he’d finally taken a dose of truth serum. He could say everything he wanted to say.
RT: As you look at this year, anything popping out at you in terms of politics or pop culture or sports that you think will become a normal part of your show for the next couple of months?
MS: Everybody is now sick of every politician, Republican, Democrat that we…both sides … have come to realize that. Because we are so tough on anybody trying to get elected ... the press would go after them, they would dig into them, they would tear them apart...we scared away all the greatest talent from politics.
Steve Jobs’ dream was to go into politics. If you read Walter Isaacson’s book it was finally explained to him, he would never survive. They would go after him, his terrible relationship with his daughter, the bad things in his life, so we lost him. I know Lee Iacocca did not go into politics, because he did not want his personal life torn apart. Jack Welsh did not want to go through it.
Because of this we lost all the greatest talents in America. We now in politics you have Anthony Weiner. You now have Mitch McConnell. Would anybody hire John Boehner to run their company? Would anybody hire Harry Reid or Nancy Pelosi to run their company? You have the worst collection of mediocrity in politics and everybody is now starting to realize this, so I think everybody will rise up now and want to do something about this.
RT: With the gridlock in Washington, the state of politics, do you see people getting more involved in government issues?
MS: Not so much on the issues, people just get angrier and angrier and will show that at the polls. I think you will see people imposing term limits and starting to throw out everybody. A lot of people watch CNBC or Bloomberg and they watch these CEOs -- all day long they are interviewing CEOs -- and they're just amazed at how smart these people are, how bright these people are, how competent these people are. Then you switch over to FOX or MSNBC and the politicians come on and you are amazed at how stupid these people are, how mediocre these people are, how untrustworthy these people are and you start to realize we gotta to do something about this.
RT: Does that frighten you?
MS: Of course. Take a great statesman like Pat Moynihan or Everett Dirksen and then look at Chuck Schumer. They just look weasley; they look like they spend every waking second on the phone with a donor and fundraising. You look at Pelosi and Weiner, and we ask ourselves how did we end up with these people?
RT: And Weiner is changing the shape of the election dramatically at least on the democratic side.
MS: Look at Anthony Weiner. It used to be you had to do something and turn your life around to come back from scandal. Nixon took years. Jimmy Carter…just to make up for his bad presidency was out there with a hammer building houses for five years. Weiner stays at home for a year and thinks that’s all he has to do. Babysit for a year and a half and he’s paid his price and now he can come back.
RT: And say, “I made a mistake and I am sorry.” Without doing anything he has a very good percentage of the vote. Most of it is name recognition I suspect.
MS: It is name recognition, but if you think about that, for two years nobody on this earth would hire Anthony Weiner. He could not find any kind of job. Nobody would hire him and now he comes to us and we are supposed to hire him for Mayor of New York.
RT: Well, no one has hired him yet.
RT: One last question. Is there anything that you want to talk about I have not asked you?
MS: I think you are going to see talk radio have a big resurgence on the radio dial, because most of the music listeners are leaving. They are the ones going to Pandora; they are the ones going to iTunes. So, more and more morning shows…and even some afternoon shows…are now completely talk.
Lord Tim Bell is the Chairman of Bell Pottinger Private, the third largest public relations agency in the UK.
Lord Bell is a world renowned advertising and public relations executive. He worked in several advertising agencies before helping to found Saatchi and Saatchi in 1970, where he was Chief Executive. He then set up Lowe Bell Communications in 1987 and became Chairman of Chime Communications in 1994.
Instrumental in Conservative election campaigns, he is seen as a founder of the modern PR industry. Lord Bell was knighted in 1990 and made a life peer as Baron Bell of Belgravia in the City of Westminster in 1998.
Following is a conversation he had recently with Richard Torrenzano:
Richard Torrenzano: Tim, tell me a little bit about the current economic conditions in the UK and Europe. What are you anticipating for 2013?
Lord Tim Bell: Economic conditions in 2012 were truly terrible with much gloom, doom and poor statistics. So much rubbish about the Eurozone: who was going to default and who was not. In the end, the Germans would bail everybody out.
The stock market and business prospects were very negative.
Most companies were saving money and keeping it … rather than investing. Those companies which were making profits had very low cash conversion rates. Everybody just basically closed their shutters. They stopped hiring new people. They stopped growing. They stopped expanding. They stopped investing in their business and just walked around moaning.
RT: What do you foresee for ’13?
LTB: The gloom is lifting a little bit. But we do not have a government. We have a gerrymandering coalition that does not have authority or any real influence. There is very little direction or leadership coming from the UK government.
The leaders of British economic life - the banks - are in total disarray. Everybody thinks they are completely corrupt. Nobody is being punished for the appalling things they did in the 2008 financial crisis. Everybody is very dissatisfied by it.
I think it will get better in 2013, but not a lot ... unless one or two of the things that people have pushed very hard for actually do come to fruition. For example, shale gases.
We have enormous reserves of shale gas in the British Isles. We have extracted them easily through fracking. But, the government is very timid. Finally, at the end of last year it approved a start again to fracking, but only on a very limited basis. If we got on it, we actually could produce 25 percent of our domestic gas consumption.
There are a lot of things like that. They have issues about airport capacity. There is the very constant, long-term debate going on about whether we should have more runways at Heathrow or build a new airport. It is completely obvious that we need to build a new airport.
But, this is a government that does not want to upset anybody. In the words of the immortal Lady Thatcher, “You cannot make an omelet without breaking eggs.”
RT: You took your company private last year. Did that action work well?
LTB: It has worked extremely well, in three ways.
First, we managed to keep virtually all the business of the company we bought except one account. The only account we lost we replaced a week later. That went very well.
We run the company much more efficiently. We have a very high cash conversion rate. We have already paid off a million British pounds of the ten million pounds we borrowed.
We did that by spreading our wings. We went overseas a lot: to Africa and the Middle East, and to Asia.
In a world where you can fly and communicate on mobile phones and through the computer...you do not need all these great physical presences. We have a sort of commando team, which we fly into different places. That has been very successful.
RT: What markets in Asia? Why are you attracted to the Asian market at this time?
LTB: We set up an office in Singapore about 18 months ago as a joint venture. We have now bought out the joint venture partner and have sent Piers Pottinger, my partner down to Singapore to run it. He is looking at Hong Kong, Malaysia, Indonesia, the Philippines, and Thailand in the same way that we look at expanding across Europe.
We were attracted to this region for three reasons:
First, it is an area of fast growth in all of those markets.
Second, it is extremely immature in its communications’ capabilities.
Third, is in this particular case, Piers is very knowledgeable and experienced doing business in the Asian market.
RT: The UK won’t conduct an election until 2015. Do you see any early opinions forming?
LTB: Well, at the moment if you look at the opinion polls, you would assume there is going to be a landslide victory for the Labor Party. But you can never really tell. There is a very important difference because every single British government since World War II has won the next election. Not necessarily the same prime minister, but the same party.
This is a coalition government that will not be standing at the next election. There is only one government that was not reelected, which was Ted Heath’s government in 1970, which was a terrible government. Probably the worst we have had in my lifetime.
At the moment, it would be clearly a Labor victory. However, not a Labor victory with any enthusiasm. But a Labor victory because the other two parties will be criticized for what has happened during the period of coalition.
RT: Tell us a little bit about the changes you have seen as a giant global pillar of communications. What are you predicting for the next couple of years?
LTB: Well, the diversity of the media, both online and offline, make it more and more difficult to achieve any significant impact. You cannot reach a large chunk of the audience at the same time. You have to do it over a long period across a whole range of distribution channels, including a hell of a lot of Internet channels. It is difficult to produce the kind of ideas that capture people’s imagination.
Communication practitioners have to learn to develop high impact campaigns based around a very core idea that they can execute in all sorts of different ways. Somehow make it have a cumulative effect; which used to only be achieved by running a commercial at all times. Now, you have got to program lots of different things.
No one really knows how many times it takes to have an impact. One of the core parts of that now is public relations. You are able to sell an idea to the media and pay for it through websites and advertising, and so on.
Advertising on the mobile platform will grow dramatically. The quality of the advertisements hopefully will improve. At the moment they are nearly all rubbish.
We will see a lot more sports sponsorships because everyone realizes that sports is one of the most important things in people’s lives. Associating ourselves with it gets you huge credibility with the consumer audience. However, people will attend less sporting events. We have just too many world championships – too many rugby matches, and football matches, and American football matches, and tennis matches, and so on.
RT: Other than the media, what do you foresee for the next few years in business?
LTB: The problem is the digital world has not learned the difference between volume and quality. The digital world adds everything up in numbers, how many hits and all that stuff. What they do not measure is whether or not it has any effect on their audience. It is not doing that well. They do not want to be good at doing that ... because it would spoil an awful lot of their cost calculations.
The digital world speaks only to itself. It does not speak to anybody else. It has even invented a new language so that nobody else can talk to them.
Inevitably, that means that there are myths and strange things. Companies end up participating in the digital world simply because they feel they have to be current -- their competitors do it -- not because it produces measurable results. That has always been one of the most important motivations in growing the activity of the business.
But, people will start to see through the digital experience. I am sure that offline media will diminish. I do not think viewing will diminish, but the number of television stations may because there is not enough money to support them.
Almost all of these great big digital businesses, whether it is Twitter or Facebook are really not buoyant. They are regarded as disappointing. That is because it is all measured by quantity and not by quality.
RT: Changing subjects; give us a view today of the United States from England’s or Europe’s perspective?
LTB: Well, I am a Conservative. You would not expect me to be full of joy that America is being turned into a European socialist country. It is a great disappointment to me that the Republicans are so absolutely useless at arguing their cause and just get distracted by utter trivia.
They do not argue that core values of America are small government, and low tax, individual liberty, and so on; which is what Romney should have been talking about. Not the ridiculous nonsense that he went through trying to rubbish a bloke who is admired.
I think from here what we see is an American loss of self-confidence. I think the sort of failure to properly resolve Iraq, and Afghanistan, and so on has been very unhelpful. We think America does not really know what its place in the world is anymore.
It does not know whether it is a free market, individual liberty, entrepreneurial country; or if it has turned slowly into one of those countries where 50 percent of the population lives off handouts from the other 50 percent.
RT: The UK will see an extension of the Royal Family this year. Any views or thoughts on that?
LTB: Well, I find all of that stuff utterly boring, and dull, and irritating. I know I am going to have to put up with months of pictures of the baby, intimate details on how it was conceived, and born. It is utterly and excruciatingly boring.
RT: Has there been a different approach by the media since Diana, Princess of Wales died?
LTB: What changed it was the Jubilee, the sheer quality of the Queen.
The Diana period was a very bad period. Of course, the Labor government and the appalling Tony Blair fed the country some kind of loathing of the Royal Family over their supposed ‘getting rid’ of Princess Diana. It is very difficult to answer why people become famous, is it not? Most people are only famous for 15 minutes as Andy Warhol said. But some people, just simply because of the role they occupy, stay famous for a long time. She has managed to stay famous even after her death.
RT: Have you been active in the House of Lords? What are the two or three key issues they are going to face in the next year or so?
LTB: Well, I voted a lot, but I do not speak very much because it is a coalition. I cannot bear the liberal Democrats who are our partners there. They disagree with us and we disagree with them. It is a rather hostile environment, but we all do as we’re told when it comes to voting. I do not think the House of Lords will have any influence over anything. It is part of the process, but it is not a process on its own. It is sort of required to endorse or question all the things that it does…But I do not think it is going to make any difference to the outcome of our economic or social divide.
It is a pity, too. It was a great institution which was ruined by Harold Wilson and then damaged even further by subsequent prime ministers.
RT: What is something you find interesting today?
LTB: Sky Television is running a series of promos. Like little bits and pieces during the programs instead of commercials. Two of them are the economic editor of Sky talking about the state of America in which he says America used to be the great bastion of free enterprise, and success, and power. Now, it is rundown, and broken, and in sharp contrast to the Clinton years, perhaps. I slightly disagree with that.
The only question being asked is how is Obama going to fix America? I’ll be amazed if the American ambassador -- when we get one -- does not go trudge to the Sky’s headquarters and shout at them. It is doing terrible damage to the reputation of America. It is like every day there is a commercial running saying America is broke. It is extraordinary that nobody is doing anything about it.
There are things going on, but people are just not interpreting them properly.
America is the most important country in the world from my way of thinking and my life. There could not be a better place to prosper. That is no longer as true as it was, but it is still true. But I do think it is tragic watching the Americans not understand their strengths; playing to the wrong things. I think it is very sad.
Alan Capper is a leading international journalist and the president of the Foreign Press Association of New York.
Following is a conversation he had recently with Richard Torrenzano:
Question: How much input do you have with U.S. business leaders in terms of your importance as a foreign journalist?
AC: I would say that is one of the things that the Foreign Press Association does quite successfully. We can create opportunities for our members to talk to corporations and vice versa. So for example: with Proctor and Gamble, a worldwide company, it would be very difficult for an individual journalist to go to meet the CEO of Proctor and Gamble. If on the other hand, we put together 50 journalists from around the world to talk to the CEO of Proctor, that’s more achievable and efficient. We do that kind of thing. It’s an easier way to get access.
Question: What is the biggest challenge foreign media faces operating in the U.S.?
Alan Capper: To understand the country is the first thing. You can’t just come here with a small briefing. You need to understand the political structure of the U.S. which is very hard to understand for most foreign journalists. The strengths and weaknesses of the economy, the vast differences in the U.S. by geography, East Coast – West Coast, states, and so on. It is so much bigger than most of the countries where the journalists come from, with the exception of India or China obviously.
There’s also a need to understand U.S. history. Some foreign journalists, especially from Europe, would say “Oh it doesn’t have any history; it’s only 300 years old.” That isn’t true. It has a very rich and diverse history. Look at the role of African Americans alone, for example.
Question: Do you think social media impacts the way the foreign media covers the U.S.?
AC: It’s been massive. Absolutely massive. And also we are seeing a change in some of the correspondents that we’re having here now. We have bloggers who are foreign correspondents; they are not what we would have had 20 years ago. Also in terms of information to the foreign press when they are here, it’s essential. It’s an essential information source, the whole viral nature of it.
Question: What’s your viewpoint of citizen journalism? I know you have talked about Occupy Wall Street, but let's discuss the whole concept of citizen journalism.
AC: I don’t see it as journalism we can depend upon, journalism that’s going to be crusading, exposing, accurately detailed, inside scoop journalism. I don’t see that because I still believe that journalism is a profession that needs to be taught.
Question: As in the old days?
AC: As in current days. We, the Foreign Press Association, give five scholarships a year to foreign students, studying journalism in the United States. And so, you know if you visit the Columbia School of Journalism, or NYU or any of them there’s a whole range of disciplines being taught to make you professional.
It’s art, it’s a craft. It also has issues of integrity, huge issues at that. And just to say “I’m a journalist. I’m setting myself up to be this.” I don’t think that cuts it in an increasingly complex and difficult world.
We have news hitting us from a thousand different sources that we didn’t have before. So we don't have to watch the evening news anymore, but what is the most dependable news? The most dependable news must be from people who are professionally able to find it, assess it and deliver it.
Question: Speaking of the evening news, why do you think so little time is spent covering international news and business on the evening news?
AC: It’s very much a peculiarity of the American evening news. If you go to any other country, half the news broadcast is going to be about foreign news, because they – at least in Europe for example, they want to cover other European news outside their own – Germany, France, etc. So here, this world unto yourself is so huge that that is the prime consideration. What’s happening here? And indeed, very often they are the biggest stories.
Question: What do you think is going to be the biggest international story for 2012?
AC: Obviously the U.S. Presidential election. There is this incredulity about the way American politics works. So I think covering Obama, is he going to be re-elected? What is he doing and can he really do anything to alter the course of the economy? And look at the Republican nominee at the moment.
The U.S. economy of course is the huge subject because it affects everyone else. So goes the rest of the world. I did some television reporting to an Iranian station, with Press TV and they didn’t censor anything that was said but what was interesting was that they would normally start with a question that was potentially critical like “Mr. Capper, the Daily Telegraph in London says that the American economic juggernaut has now passed its prime and America is in steep decline. Do you agree with that or not?” That kind of thing.
I would come back and say, “You know the American economy is like a 22 wheel truck going down a highway. It thunders down and occasionally has to slow down or even pull over, but it’s always going to be there and it’s a monster. And it’s going to still be the most important economy in the world.” You know that was the thing. They really didn’t want to hear that.
But that was what I gave to them. What would be interesting would be if it were an Iranian journalist doing that and saying that. Would they want to publish that view? I’m not sure. I managed to get it across but the interest was – the economy, the economy.
Question: What are the differences about a story that would appeal to a non-U.S. reader – someone who’s reading in Germany, or someone who’s reading in New York. From an editor’s point of view?
AC: The Chinese are going to be just as interested in the U.S. economy as anyone here is when we open WSJ in the morning. So I think that the “only in America” stories are very popular in foreign media, especially in Europe because in some sense it gives a kind of superiority, you know? Because America is so huge and so dominant -- and the British are the worst of all -- or the best of all at this. Like, I’m trying to think of a trivial example. Oh let’s say the Coney Island hot dog eating contest.
That might make a paragraph in a column called “Only in America".
Question: Do members of the foreign press receive briefings on U.S. government policies or operations issues on a regular basis?
AC: Yes, it’s very efficient. The Foreign Press Center was set up by the State Department and it issues official documents. So for example, I get the State of the Union address on my computer, two hours before the President actually delivers it. It’s embargoed but you have it. And other briefing papers from the various departments.
Question: So foreign reporters get the same considerations as U.S. journalists?
AC: Yes, if you are registered. Which by the way, being a citizen journalist is a lot more difficult actually. Because you don’t have any official accreditation.
Question: There’s no accreditation? You don’t have a press pass or anything.
AC: No, you can be a freelance, nothing wrong with that, as long as you can provide proof of published material or radio broadcast tapes, that kind of thing. You can be accredited, but obviously if you are attached you do have somewhat more prestige and credibility.
Question: A collective opportunity...
AC: Yes, it’s more valuable for the CEO. Their time is extremely valuable and we respect that. We’ve had some very successful meetings.
Question: Now what would you say, in all your years in journalism, was your favorite, or most challenging, interesting assignment?
AC: One of the most interesting for me personally was the end of Concorde flights.
It was a moment in history anyway. I’d flown on Concorde a few times – I was very fortunate. I had a call from the studio that I was working with – that was LBC and ITN – and they said, “I want you to cover the last flight of the Concorde.” Right? “Okay what do you want? Do you want nostalgia?” “Well, it’s a news story, you know.” And I said, “I’d like to do it on the basis of comparing the nostalgia about it ending with the hostility of its arrival in the first place,” that would be the way to do it.
And so, I duly went out to JFK. They laid on some terrific facilities for us but we were on the roof of the building at five in the morning, freezing cold. There was a whole mixture of people – former aircrew, lots and lots of press, we had a chance to see the VIP guests going in. And there I was, waiting for the take off. “Yes she’s going to begin to taxi now”. The plane was in front of us, the pilots leaning out with Union Jacks, everyone waving. And you felt quite something, like this was a moment.
Especially being British. I found myself, almost in the Hindenberg school of broadcasting, you know saying, “Now she has finally lifted off, she’s winging her way westwards over New York, the city that never wanted her to be here is now mourning her,” and thinking, “actually this is quite historic.”
Question: What is your perspective on the state of journalism today?
AC: I’m optimistic when I talk to students. But we’re going through such a profound change of everything. Everything in our lives is changing, it’s almost impossible to see. There’s no doubt there’s been a dumbing down; there’s been a falling of standards and I see that continuing.
Question: Do you attribute that to 24/7 – get it first – type reporting?
AC: Yes, we always had that but I do see that more so now. Journalistic ethics have suffered with all of this. I worked for the Daily Express and they had a big sign in the newsroom, it said: “Make it fast, make it accurate, and make it right.” That’s simple stuff but now, look at what’s happened with News International, what’s come out from that. It’s so competitive, if you are going to stay alive as a news organization you are going to have something special - you’ve got to get the extra, you’ve got to get the story. If you can’t get it, you are pressured to make it up or whatever; those ethical breaches have come in big time. We’ve always had bad journalism. But I think now we’re also losing a lot of the good stuff.
Nouriel Roubini is the co-founder and chairman of Roubini Global Economics, an independent, global macroeconomic and market strategy research firm, has extensive policy experience as well as broad academic credentials. He is a professor of economics at New York University's Stern School of Business. Roubini.com, has been named one of the best economics web resources by BusinessWeek,Forbes, The Wall Street Journal and The Economist.
Following is a conversation he had recently with Richard Torrenzano:
Richard Torrenzano: Does being named one of the 100 Top Global Thinkers by Foreign Policy magazine put added pressure on you to consistently provide accurate, "prophetic" analyses?
Nouriel Roubini: My role is not one of a traditional forecaster, as I see myself as someone who can thoughtfully analyze the global economy and markets and make assessments about the direction of the global economy over the medium to long term. I'm not in the business of day to day forecasting. I enjoy what I do. Therefore, I feel comfortable with having had many honors and discussing the big policy issues of the time.
RT: You were dubbed "Dr. Doom," when you predicted the housing bubble and the recession. When you made that prediction, did you think it would create such uproar?
NR: No. At that time I was starting to analyze the global economy. I talked about emerging markets, the financial crisis in the U.S. I made mention of many vulnerable policies, macro-financial and otherwise. Therefore, I was not fully aware of the consequences of making that particular call. In this line of business you're as good as your last prediction. It's not just me. I have a team of almost 100 people working with me all over the world. We analyze what's going on in the global economy, financial markets and link it to our assessment of geo-political risk as well. This is teamwork and something we do all the time.
RT: In a Financial Times article you wrote, "The U.S. economy is a fiscal train wreck waiting to happen that risks ushering in period of minimal growth, high unemployment and deflationary pressure." To jump start the current economic recovery, if you were to advise the President, what would you say?
NR: There are many things we need to do. On one side we need fiscal discipline over time because these budget deficits are unsustainable.
Paradoxically, in the short term the economic recovery is weak and anemic we need to shorten stimulus somehow to spread the need for a shortened stimulus within the purpose of consolidation. If you can commit to that fiscal consolidation over the medium term, then if you need to borrow stimulus in the short term, no one's going to punish you. Second, I would say that the conditions of the labor markets are still very weak with the unemployment rate almost close to 9%. Anything we can do to jump start hiring by firms is going to be useful.
RT: In a recent interview with CNBC-TV you said, "It's pretty clear the housing market has already double dipped." How can the housing market recover? What needs to be accomplished there before we see a full recovery in that marketplace in the U.S.?
NR: The biggest and most critical thing in the housing market is that there are still millions of households who cannot pay their mortgages. The more homes that go into foreclosure the more the supply, the more prices go down, and the more people are in negative equity. There will be more people walking away from their homes and losing them. One way to deal with the housing problem is to reduce the face value of the mortgages as a way of maintaining people in their homes. Of course, that would imply losses for the banks who made the loans and for the investor who bought the debt. The alternative will be one of further defaults in the millions of foreclosures and ongoing housing and real estate recession.
RT: If we look to another part of the world, particularly China, India and Brazil, you predicted they will collectively grow at 6% this year. That is more than triple the 21/2 plus % for developing economies. What are the emerging economies doing that the U.S. can learn from?
NR: First of all their potential growth is much higher than advanced economies because they're starting with a lower level of per capita income so traditionally emerging markets grow faster. However, I think these emerging markets learn from their own crises as well as crises in Asia and Latin America by fixing their financial system, cleaning up their banks and better supervision and regulations of the financial system.
RT: Let's stay with China and India for a second. In a recent Bloomberg interview you stated India's economy may expand more than China's in the next decade. Why are you so bullish on India versus China?
NR: For a number of reasons. First, while I did say India may grow faster than China, but that's conditional on accelerating a wide range of structural reforms India has to do. The one important difference between China and India is the Chinese model has been one of exponential growth and industrialization, where consumption is only one third of demand. In India domestic consumption is about two thirds of demand.
China depends very much on the U.S. being able and willing to be the consumer of personal assets or expending more of its income running ever larger surplus deficits so that China could be the producer of first and last resort surplus options.
Now this model of growth of China is broken. Because of the excess debt of the U.S. we need to spend less, consume less, import less to deleverage. China depends on the growth of the U.S. and exports. While in India you have more domestic demand that is dynamic and growing very fast. Over the next decade actually the big challenge that China is going to face is to switch demand from export towards domestic consumption.
RT: In terms of economic crisis you wrote, "Traders and bankers must be compensated in a way that aligns their interests with those of shareholders." How would you accomplish that?
NR: I think about the system where your bonus is not given to you right away, but it's accrued to you. Then two or three years down the line we'll see whether under this adjustment basis whether the investments you made were profitable, in which case you get your bonus. If you don't because you took much risk, then your bonus doesn't come.
RT: Talk to me a little bit about the American economy and how you see things unfolding over next two to five years.
NR: I see them unfolding potentially in the right direction; if, and that is a big if, we follow the right policies. If we don't have the right policies, they could actually be worse.
The ideal scenario is one in which we deal with our fiscal problems; we deal with cleaning up the financial system. We invest in our people, education and skills. We invest in the infrastructure. We become more productive; we become more efficient. We become more competitive. The dollar probably has to weaken.
With historic economic growth after we have cleaned up our balance sheet in the private and public sector, there are a lot of opportunities: entrepreneurship, private development, venture capital and start-ups. The leadership in the U.S. has many factors that can lead to robust economic growth potentially in a few years. Also our political system is blocked – the gridlock in Congress. There is division and lack of bi-partisanship which may lead to another outcome, where we don't have the right policies where we may have a decade of mediocre economic growth.
RT: If we were to do the right policies, do you think we're going to revert back at least economically to where we were? Or do you think the new level of the economy with a higher level of unemployment, people saving more, people not spending as much where we're going to be for the next two to five years?
NR: For the next two to five years probably economic growth is going to remain anemic because we did all this balance sheet repair; spend less, consume less in the private and public sector to save more and to reduce our debt ratio. Without the balance sheet repair, then the basis for strong economic growth down the line is there. But I'll say that, yes, we're in the new normal which at best is going to be for economic recovery.
Whenever you have a crisis driven by finance, too much debt and leverage, the recovery tends to be for a number of years relatively below trend, subpar, anemic because you have this painful process of a balance sheet repair and leveraging. Probably, that's unavoidable, but it puts the basis for a strong and resilient recovery further down the line if the right policies are implemented.
Alan Guarino leads the Global Financial Technology and Electronic Trading Practice at Korn/Ferry International. He graduated from the US Military Academy at West Point and has an MBA in Management. He is the author of, "Smart is Not enough!" (Wiley 2007). The book challenges conventional wisdom on what it takes to be an outstanding executive.
Following is a conversation he had recently with Richard Torrenzano:
Question: With the myriad of leadership theories out there, which is most relevant today?
AG: Transformational Leadership (TL) is the best theory for today’s environment. TL focuses on appealing to the heart of the employee to inspire achievement. This approach pulls out what I call the employee’s discretionary energy - the energy employees possess in excess of the minimum needed to keep their jobs. When employees are effectively led, they give all they have, not just what is needed to stay employed.
RT: Leaders: born or made?
AG: Leaders are made from the stuff they were born with. Most people can be effective leaders but few can be exceptional. Like any other talent, those born with leadership potential must learn to use it effectively; so in this way leaders are “made” from the sum of their experience and, hopefully, good training.
RT: What is the most important trait a leader must possess to achieve long-term success and why?
AG: Integrity. Dishonesty is eventually exposed! Dishonest people also lack strength of character and no one can lead without strength of character. Employees and boards of directors all need to be able to trust the organization’s leadership. When people learn that a leader is not direct, honest and forthcoming, all is lost and people begin to hold back, develop cliques, and form dysfunctional alliances designed to create security.
RT: In your public appearances you’ve asserted CEOs need to behave in an unimpeachable manner. Isn’t that holding them to a higher standard than society in general?
AG: The question is whether boards should tolerate bad CEO behavior if a company’s financial performance is strong. But it eventually leads to a death spiral – the numbers won’t hold up and by the time the numbers turn to show the businesses' faults, it’s too late.
Bad CEO behavior creates a dysfunctional environment that leads to employee defections, a lack of pride in the organization, and a general breakdown of leadership. When these things happen, the numbers quickly tank. Great CEOs are people of character and any deviation results in eventual decline of the organization. Look at the public examples of what happens when leaders behave badly – Nixon, Spitzer, etc.
RT: It seems the U.S. military is far ahead of corporate America when it comes to cutting-edge leadership development? Why is that?
AG: The U.S. military, the individual services and their educational institutions, such as the United States Military Academy were remade from the crisis of Vietnam when the military lost its sense of integrity and needed to re-think its leadership model.
From this the all-volunteer military, specifically the Army, was born.
Volunteers need to be led in ways that will inspire them to continue in the military as a career. They also require more autonomy and more opportunities to grow than do enlistees who were forced into service. As such, the Army built a significant honor/integrity education program and delivered it across the force with a leadership model oriented on individual decision making and getting authority and decision making to the lowest levels of the organization. They called this “power down.” What’s amazing is that this was happening in the mid-1970s and 1980s when corporate America was still fairly bloated with the “organization man” and extremely hierarchical.
Volunteer soldiers don’t just follow orders – if you are to lead them toward a career of military service, they need to be inspired.
RT: Which are the toughest organizations to lead?
AG: Peer organizations are toughest to lead. If you can get your peers to follow you, you are gifted. This applies to volunteer organizations as well - charity boards, industry groups and the like. In business, professional services businesses are the toughest – leading consultants is often referred to as cat herding. It takes a special leader to muster these individual thinkers to a common pursuit.
RT: What are the critical skills needed for 21st century business leaders?
AG: Innovation and creativity --- with the ability to execute plans are the key skills needed in 21st century leaders. Western businesses only advantage will be invention – labor, manufacturing and infrastructure is less expensive in the East. So, Western businesses need to be the great innovator to remain leaders.
RT: Can large company CEOs learn from entrepreneurial leaders?
AG: Yes. They can learn how to build cultures of action, invention, pride, and customer focus. Smaller companies get people to work harder and for less money than they would accept in a larger company. Why? Because the employee feels another form of currency – I call this Triple E-P, employees feel: Engaged, Empowered, Excited, and Proud.
RT: You’ve run start-up businesses, commanded a company as an Army Captain and currently chair the board of a not-for-profit here in New York. Please comment on the leadership experience you have most enjoyed and their differences?
AG: Leading a company in the U.S. Army is like no other leadership experience in the world. Neither Jack Welch, nor the founders of Google could possibly experience the thrill of that leadership role. As a military officer you are building a team of people willing to put their lives at risk for the benefit of others! They must follow you from a technical, tactical, strategic, personal, and faithful/loyal perspective in order to be successful – that is total leadership and is unequaled in the business and not-for-profit world.
RT: How can you tell if someone is truly a successful leader? Does charisma play any role in leadership?
AG: Charisma is a raw material that has a role in success, but becomes empty if other abilities are absent. A successful leader is measured by the results he/she gets from others and from the following of loyal employees they gather over their years of leadership. Every other measure is fleeting - numbers, market leadership, products invented etc. Leaders bond with and build people. The people who respect and learn from them are the measure of the leader.
Frank Zarb served as "Energy Czar" during President Ford's administration, holding dual appointments in the Energy Resources Council and the Federal Energy Administration. He later became chairman and CEO of the National Association of Securities Dealers (NASD) and head of the NASD's stock exchange, the NASDAQ Stock Market. Currently he is a Managing Director of Hellman & Friedman.
Following is a conversation he had recently with Richard Torrenzano:
Richard Torrenzano: What's been right, what's been wrong with U.S. energy policy over the last 10 to 20 years?
Frank Zarb: There has not been an energy policy in the U.S. in over two decades. That’s the biggest public policy failure in our lifetime, because the public sector refuses to face up to the needs of U.S. energy.
While I can't tell you anything good about U.S. energy policy, I can tell you some good things about the marketplace that has raised prices, increased production, and encouraged alternative energy sources, but not nearly fast enough. So despite the lack of a government policy, the marketplace has done okay.
RT: Is there excessive profiting in the energy business?
FZ: Talk of excess profits during peak periods for the most part is driven by politics, not by economic analysis. It's been cyclical, with pricing of crude oil, particularly. That drives the rest of the energy sector and for the most part that pricing is in the hands of non-U.S. producers and the world economy. I think there has been a reasonable job done of taking the high-end profits and putting them back into new capital. That's exactly what you want.
RT: What percentage today of our oil comes from North America and what percentage comes from overseas?
FZ: 40% - 60%. Sixty percent from non-North American sources.
RT: Is the U.S. vulnerable to an oil embargo or disruption?
FZ: We are very vulnerable. Just consider -- we now import nine million barrels a day, half of it from unfriendly parts of the world. Think about some kind of military action in the Straits of Hormuz that would reduce the amount of oil available to this country by one and a half to two million barrels a day. That in itself could produce enough economic disruption, particularly on the East and West Coasts to substantially hurt global economic peace.
RT: What kind of reserves exist today that could be put into the hands of people and business? How long would those reserves really last?
FZ: Strategic reserves probably have 90 days worth of production. We started that in 1975 when I was in government to ensure our military had access to fuel in the event of a disruption in Middle Eastern oil flow. Keep in mind, however, that oil has to be piped to a refinery, refined and piped to where it's needed, and it's only a small backstop; an important one, but small.
RT: What are the objectives of a good U.S. energy policy?
FZ: Several. In the short term you have the energy security question. You have to have a plan that will reduce oil imported from unfriendly parts of the world as soon as you can. That should be articulated in barrels per day. If we import nine million barrels per day now, a reasonable objective would be to import only six million barrels per day in ten years.
RT: Ten years is a long time away.
FZ: It's a long time away, but it's energy. You have to think in terms of 10 or 20 years, because in 20 years you have to be moving toward alternative forms of energy. Non-oil and natural gas based energy will be taking on a substantially higher burden of our energy needs. On the other hand, for tomorrow and the next several years, the only organization ensuring energy security is our military. Like it or not, that's what it is.
RT: What are those competing factors to energy policy? How do you view them?
FZ: Competing factors have been there all along. The consumer wants cheap energy and a lot of it. The producer wants to get paid and wants the ability to produce where he can produce. The environmentalist wants to preserve the environment. The politician wants to tell the voter that they can have cheap energy and not destroy the environment in any way, shape, or form. Then you've got the extreme producer who wants to dig holes wherever they want. It's a mess of individual interests without leadership.
RT: Do you think any President or administration can provide that leadership?
FZ: I think the right President, with the right mix in Congress, could. When I was in government as the Energy Czar, we were completing the first embargo and then Congress lost interest in doing anything. I went to see my oversight chairman, Senator Henry (Scoop) Jackson. I said to him, “Senator, what do we have to do to get Congress moving again?” and he said, “Do you know how to make another embargo?” His point was, without a real crisis, the body politic will not get things done.
RT: How long would it take to implement a sound strategic policy?
FZ: Twenty years, if we started right now. It would be over several administrations. The current administration is talking about going forward with some nuclear power and building one or two nuclear plants. But if you're going to do that, you've got to approach nuclear power on a much broader base than this administration, although I applaud what it has done.
RT: Some of the risks are obvious, but what are the long-term risks of not having a workable energy policy?
FZ: The short and long term risks are substantial harm to our economy, affecting the ability to grow and increase productivity. Energy is economic blood. If energy isn't available at a reasonable economic cost, then you can't grow an economy.
RT: What role do you really think all these new clean energy technologies can play in taking us off our oil reliance? Obviously, there are a lot of technologies in many different areas. What seem to be the most important areas to you?
FZ: The electric current today consumed in the United States is something like 3.7 trillion kilowatt hours. Solar energy is probably 23 percent of that. Wind power is probably 8 percent of that. We have a long way to go before these other technologies take over. The electric car is a great step forward, but it reduces an insignificant portion of the gasoline usage. It's going to take 20 to 30 years for that evolution to take.
RT: They could make some real dents, I would think, over the next five to seven years in solar energy and wind power, no?
FZ: It depends on how big a dent you're talking about. If you're talking about going from 1 percent to 3 percent; sure, but not much more than that. First of all, the economics doesn't usually work. The economics of solar and wind, which are terrific, are currently heavily subsidized.
RT: Is that because the technology is not really advanced enough?
FZ: Not as advanced as it can be. When you compete with high-priced oil, it gets a real boost. When it competes with low-priced oil and gas, it struggles.
RT: How safe do you think nuclear power is today versus how plants were built 20 or 30 years ago?
FZ: A lot safer. The French have done it right for years. A very high proportion, if not 100%, of their electricity comes from nuclear power plants. The federal oversight has gotten extremely good in that sector. It's always a concern, but I think it is well under control. Keep in mind that people complain about nuclear waste, but the military probably produces more nuclear waste than all the utilities put together.
RT: How many more nuclear plants in the United States do we need and how long does it take a plant to come online once the shovel is in the ground?
FZ: Under current conditions, it's an eight to ten year project, including getting the shovel in the ground and fielding your first lawsuit. It's still a very messy procedure.
RT: What kind of issues or surprises do you think the U.S. energy industry is going to face in the next five years?
FZ: You will again have a spike in prices or several spikes in prices. They'll come about by any number of things. It could be a terror attack on some oil fields somewhere in the world. I worry a lot about disruption in the U.S. oil flow, particularly from the Middle East, which if you're a terrorist; you've got to be thinking about how you get that done.
On the upside, you'll see some interesting breakthroughs in the advancing technology, such as nuclear, solar, and wind power.
Sal Sodano, former chairman and chief executive officer of the American Stock Exchange (Amex) and vice chairman of the National Association of Securities Dealers (NASD), possesses a deep interest and appreciation of business education. He served as Dean of Hofstra University's School of Business from 2006-2010. He remains active at the university as the Senior Executive Advisor to the President and the Arthur Sorin Distinguished Teaching Fellow in Business.
Following is a conversation he had recently with Richard Torrenzano:
Richard Torrenzano: Why the renewed focus today on business education?
Sal Sodano: Simple: What may have been okay a few years ago obviously is not okay today. There needs to be a new mindset as to how we look at challenges, how we lead in today's environment, and quite frankly, how we come up with new ideas to become successful in today's environment.
With the change in the environment and all the failures, certainly in the financial services industry, we have to reexamine what potential leaders and managers need, in terms of tools to be able to lead in today's economic environment.
RT: Do businesses and business schools need to communicate better?
SS: For a business school to really be successful they have to balance traditional academics with business practitioners. Many business schools do not openly embrace practitioners in the classroom as teachers. There has to be a better balance between academia and practice. Schools ought to employ the executive-in-residence concept, using someone who is viewed as successful in what they do in business. Have someone spend a semester, even a year or two in the school, working with the faculty to give them a better understanding of what is happening currently in the business world, and more importantly, get them in the classroom. Let the students have access to real decision-makers and achievers.
RT: What important skills do today's MBAs need to learn?
SS: Clearly all the traditional blocking and tackling skills, such as finance, accounting and marketing will never go away. Those are the basic building blocks of how business works. The soft skills, the skills that will help someone climb the ladder and become more successful, the ability to communicate effectively, be a team player, and motivate people, those need to be emphasized.
There are very few schools right now that focus on the soft skills as part of the curriculum. We're just now focusing on a formal approach to bringing these soft skills into the curriculum, so that when someone has completed their graduate program it's not just a technical program. Then they will have a complete portfolio of skills.
Our Management Department and I try to get students to understand there's a big difference between teaching management and teaching leadership. You can manage and not be a good leader. You can lead and not be the best manager. They're not the same thing. The goal is to blend those two concepts into one person. An outstanding leader is someone who can motivate, take charge, someone people want to follow and hopefully manages well.
RT: Let's talk about the Zarb School of Business at Hofstra. What did you do there that was new and innovative? How is that helping an MBA student get a job and be better positioned for that job?
SS: We anticipate what direction and curve business is taking to provide programs for students so they're ready to take advantage of those opportunities.
For example, we have new programs such as an MBA in Sports and Entertainment Management. There aren't many of those around. We think there will be some opportunities in those fields coming up, so we have put programs in place within the past few years.
A perfect example of trying to anticipate and be ahead of the curve is a program that's gaining traction at the university now. We have a Master of Science in Quantitative Finance. It sounds pretty fancy. It focuses on quantitative methods, math and statistical analysis in the understanding of finance. Now what does that mean?
It means students who complete this program will be very qualified to do what's required not only in a Wall Street type job, but in government regulatory agencies, risk management industries, compliance officers, as well as a trader dealing with whatever security or commodity you're interested in.
RT: You have a trading floor at Hofstra?
SS: We have the largest, most sophisticated, Bloomberg-based trading floor of any college campus anywhere in the world.
We have 35 trading posts, access to the latest information in all the markets like equities, fixed income, commodities, and money markets. We have mock trading systems built into our trading room with professional money managers and traders from Wall Street who work with our faculty and students, perform trading contests and mock trade programs right in the business school.
When our students compete in open outcry and electronic trading they regularly rank as the top 10 students in the country. The reason is the competency of our faculty, as well as the success of our alumni in the Wall Street world and their ability to be on the campus trading floor with our students. This is world class, so you put that all together and it's a tough combination to beat.
RT: Executives complain about MBA's graduating business school as weak writers. Do you agree with that and are you doing anything to address this issue?
SS: I absolutely agree with that and I think it has to do with two main factors. Today's generation is very different, in terms of communications style, than current business leaders. We would write memos to communicate with one another. We would be in front of each other with eye-to-eye, communications, but students today live in a world of the iPhones and tablets, and texting.
The language is different and the words are different. The ability of students to be at ease with someone face-to-face is markedly less because they just don't do it. Leaders today are concerned that the new graduates are not as comfortable and capable in all aspects of communication; primarily because young kids text.
On top of that, the outstanding graduate education that's in this country has given rise to a huge influx of students from other countries enrolling in U.S. graduate programs. That, in and of itself, gives rise to cultural differences. Their command of the English language may not be as strong. All these can cause significant challenges for students entering today's job market and their employers.
RT: How much demand do you see for MBA law degrees?
SS: Not as much as you would think. You would think that everyone, including attorneys, would want to have the best skill set to make them the most valuable to their firms. You want to round out your legal education with a business education. There is a program that does exist currently, but we have only seen modest growth in that area.
RT: There have always been MBAs in the entrepreneurial world. With the lack of demand for jobs in the corporate arena, as well as the problematic job market, is there more interest in entrepreneurship?
SS: That is an absolute and very positive trend we are seeing right now. The Entrepreneurship Program at Hofstra continues to grow. It's actually the fastest growing program in our business school. More and more students are interested in working for themselves, starting their own business, being a sole proprietor.
As a matter of fact, in a class I taught I asked students that question and to my amazement more than one-third of them told me they were going to work in their family businesses or start their own.
That is vastly different from when I graduated in the late 70s. You almost automatically assumed everyone who graduated was going to Wall Street or a company like IBM. It's a very different mindset today. Young students see a lack of loyalty in employers, and in many instances, the harshness of economic realities where you can just be cut without reason or loyalty. Many people are not happy with that, or quite frankly; do not want to be involved in that type of environment.
RT: As you look out over the next three to five or seven years at the better business schools in this country, what are the surprises you're going to see?
SS: You're probably going to see a change in mindset from purely professional training.
You'll see more integration of pure, analytical thinking skills, almost the type of skills you would develop in a liberal arts school by taking general type courses that develop your curiosity and your general analytic ability. Without a doubt, there needs to be a lot more work done on the interpersonal skills, communication and team work.