when her mother began fidg-eting. “I was like, ‘Mom, bum-blebees don’t sting!’ ” says Ms.Trullinger, a 30-year-old SoulCycle instructor in New York.

“And then she got stung.”Weddings on picturesque

farms are hot. But rusticbeauty comes with a price.Couples and guests must bravethe elements and the animals:curious cattle, farm vermin,barnyard smells, and the occa-sional spitting llama.

Ms. Trullinger’s 2014 nup-tials were at a barn in upstateNew York, one of the manyfarm venues in America wherecouples are tying the knot.Last year, 15% of weddingswere at a barn, farm or ranch,up from 2% in 2009, accordingto a survey by wedding-plan-ning site The Knot.

Laura Merli was at a barn-wedding reception outsideBoston two years ago, waiting

PleaseturntopageA12

Anna Trullinger’s weddingday was going perfectly. Hermother and five bridesmaidshad finished buttoning hergown, and she was nearly readyto appear before the groom.

Then the bumblebees at-tacked.

Attracted to the bouquets,they got trapped in the fabricof the bridesmaids’ dresses.Ms. Trullinger lost patience

BY LAINE HIGGINS

BarnWeddings Are Hot, but Mind the Party Animalsi i i

Farm nuptials can feature abiding odors, spitting llamas, tipsy deer

North Korea operatives have soughtto use U.S. technology and social medianetworks to evade U.S.-led sanctionsand generate income, taking advantageof many of the same shortcomings thatallowed Russians to interfere in the2016 election.

Cloaking their identities, the North Ko-reans have been able to advertise jobsand find clients on job-search exchangessuch as Upwork and Freelancer.com. Theyhave developed software using the Micro-

soft-owned site Github, communicatedover the Slack messaging service andasked for payments via Paypal. They haveburnished their fake credentials with pro-files on LinkedIn and touted fake opera-tions with Facebook pages.

In short, North Korea has exploitedthe kinds of vulnerabilities that have

By Wenxin Fan, TomWrightand Alastair Gale

IN PURSUIT OFA BILLIONAIREMYSTERY MAN

EXCHANGE, B1

� Kleiner Perkins is split-ting in two, a surprise rup-ture that is indicative of thechanging fortunes in theventure-capital industry. A1�Theater chain AMC raised$600million fromSilver Lakeand repurchased roughly athird of the controlling stakeheld by China’s Wanda. B1�TheU.S. is probingDen-mark’s largest bank over al-legations of massive money-laundering flows fromRussiaand former Soviet states. A8� The San Francisco Fednamed its research direc-tor, Mary Daly, to becomeits new president. A3� The NLRB proposed roll-ing back a ruling that madeit easier for contractors andworkers at franchised busi-nesses to form unions. A5� Russia’s central bankraised rates, moving to de-fend the ruble againstmarketvolatility and inflation.A12� Turkey’s Erdoganwarnedhe wouldn’t tolerate higherlending rates for long, chal-lenging the central bank. A12�Major stock indexes edgedhigher, notchingweekly gainsas fears over trade abated.B12� Staples agreed to buy of-fice-supplies firm Essendantin a $482.7 million deal. B3

What’sNews

CONTENTSBooks..................... C7-12Food.................... D10-12Heard on Street...B14Obituaries................. A6Opinion.............. A13-15Sports........................ A16

Style & Fashion D2-6Technology............... B4Travel....................... D7-9U.S. News............ A2-5Weather................... A16Wknd Investor....... B5World News..... A8-12

s 2018 Dow Jones & Company, Inc.All Rights Reserved

>

Manafort pleaded guiltyto two federal crimes

and agreed to cooperate withMueller’s probe, a dramaticturnaround for the ex-Trumpcampaign chairman.A1, A2� Florence started its slowmarch across the Southeast,forcing the rescue of hundredsfrom floodwaters and claim-ing at least four lives. A1, A4�Administration officialsconsidered replacing FEMA’schief—who faces an inquiry—as Florence developed. A5� Supreme Court nomineeKavanaugh denied an allega-tion that he engaged in sexualmisconduct in high school.A3� The governor of Massa-chusetts declared a stateof emergency, a day after agas utility’s pipeline trig-gered dozens of fires. A3�North Korea operativeshave sought to use U.S. tech-nology and social media net-works to evade U.S.-led sanc-tions and generate income.A1� The U.S. is convening acoalition to expand surveil-lance of ships smugglingfuel to North Korea. A11� Syria has been holdingoff on an offensive, as Tur-key urges armed groups toevacuate Idlib province. A8� Beijing and the Vaticanare set to end a long struggleover who chooses the leadersof Catholicism in China. A11

World-Wide

Business&Finance

Get ReadyFor the NextFinancial Crisis

OPINION, A15

Volunteers helped rescue children from their flooded home on Friday in James City, N.C. Hundreds called for emergency rescues in the area.

CHIP

SOMODEVILLA

/GETT

YIM

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WSJTHEWALL STREET JOURNALWEEKEND

THE HUMAN PROMISE OF THEAI REVOLUTION

REVIEWalexander skarsgård

WSJ. MAGAZINE* * * * * * * * SATURDAY/SUNDAY, SEPTEMBER 15 - 16, 2018 ~ VOL. CCLXXII NO. 64 WSJ.com HHHH $5 .00

WASHINGTON — PaulManafort pleaded guilty to twofederal crimes and agreed tocooperate with prosecutors, adramatic turnaround for theformer Trump campaign chair-man who now becomes a po-tential asset for special counselRobert Mueller’s investigation.

Mr. Manafort, who has longstruck a defiant posture to-ward Mr. Mueller, becomes thefifth associate of PresidentTrump’s to plead guilty in con-nection with the special coun-sel’s probe, which is examining,among other things, any poten-tial coordination between Mos-cow and Trump campaign offi-cials in 2016.

None of Mr. Manafort’scrimes that he admitted Fri-day—or was convicted of in aseparate trial in Virginia lastmonth—relate to such coordina-tion. But his cooperation agree-ment is far-reaching, requiringhim to be “fully debriefed,” pro-vide relevant materials, “partic-ipate in undercover activities”and testify whenever requestedby Mr. Mueller’s office.

Mr. Manafort could helpPleaseturntopageA2

BY ARUNA VISWANATHA

ManafortAgrees toCooperateIn Plea

brought heightened political scrutiny tothe technology platforms, suggestinghow easy it is for Pyongyang to usetools of the digital economy to avoidsanctions aimed at halting information-technology trade with the country.

These details come from a Wall StreetJournal investigation into a North Koreanbusiness based in China that has beenbuilding mobile games, apps, bots andother products for clients in the U.S. and

PleaseturntopageA10

Kleiner Perkins Caufield &Byers is splitting in two, a sur-prise rupture that reflects thestoried venture-capital firm’sstruggle to balance makingsmaller bets on young startupsand jumbo investments in com-panies on the cusp of initialpublic offerings.

The Silicon Valley firm’sgrowth-investment team fo-cused on later-stage funding isleaving the firm, spurred partlyby internal differences over in-vesting strategy and resultingin the departure of famed for-mer Morgan Stanley analystMary Meeker. The split is thefirm’s most striking move in itsfour decades, restoring it to itssmaller, early-stage roots, bestknown for initial bets in Googleand Amazon.com Inc

The move is indicative of thechanging fortunes in venturecapital, as funds over the yearsballooned to levels not seensince the dot-com boom andstartups stayed private longerwith money that in past eraswould have been raised in thepublic markets. Big firms suchas Kleiner have sought to wran-gle both ends of the startup

PleaseturntopageA6

BY TOMIO GERON

KleinerPerkinsTo DivideAmid Rift

THE FALL 50:ELEMENTSOF STYLE

OFF DUTY, D1

Florence is downgraded toa tropical storm, with

widespread heavy rainfall

About 750,000 withoutpower Friday, with up to3 million outages expected

Officials warn residentsabout dangerous conditions;‘This could be our Harvey’

Storm Slams Carolinas

INSIDE

� New details emerge aboutUkraine lobbying...................... A2

Tech’s NewHeadache: North KoreaHiding behind fake social-media profiles, North Koreans sell IT services to snag hard currency

Expected inches of rain through Monday night

Potential storm surge through Monday

Each dot = 2,000 people

10 inches

1-6 feet More than 6 feet

8 6More than:

Source: NOAA THEWALL STREET JOURNAL.

Winston-Salem

Wilmington

Charleston

Myrtle Beach

Charlotte

Raleigh

Columbia

NORTH CAROLINANORTH CAROLINA

SOUTH CAROLINASOUTH CAROLINA

VIRGINIA

GEORGIA

Florence’sprojectedpath

8 a.m.Saturday

8 a.m.Sunday

8 p.m.Saturday

Pee Dee River

NEW BERN, N.C.—Florencestarted its slow march acrossthe Southeast Friday, poundingNorth Carolina with rain, forc-ing hundreds of people to berescued from floodwaters andclaiming at least five lives.

The storm, which madelandfall near WrightsvilleBeach, N.C., at about 7:15 a.m.,began what could be a day-slong deluge in the region,with rain forecast to poten-tially reach 40 inches in someareas. About 750,000 peoplewere without power and about210,000 were staying in 170shelters in the Carolinas. Thestorm made landfall just 2miles from where it was ex-pected and it remains to beseen if its impact is as fore-casters fear.

At least five people havedied in storm conditions inthe state, according to author-ities. The deaths include two

PleaseturntopageA4

BY ERIN AILWORTHAND VALERIE BAUERLEIN

� FEMA chief under scrutiny... A5� Track Florence at WSJ.com

A2 | Saturday/Sunday, September 15 - 16, 2018 * * * * * * * * THEWALL STREET JOURNAL.

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U.S. NEWS

The value of coastal homesin Virginia, North Carolina andSouth Carolina has risen $150billion over the past five years.A Page One article Fridayabout Hurricane Florence in-correctly said $150 million.

Neuroscientists reported ina study published in NatureBiotechnology that experimen-tal software trained on record-ings from seven patients withbrain implants can decode vari-ations in mood. A U.S. News ar-ticle Tuesday about mood re-

search omitted the firstreference to the study, whichcontained details about thenumber of patients studied andthe fact that the patients hadbrain implants.

Stuff Media LLC producespodcasts including “Stuff YouShould Know.” In some editionsFriday, a Business News articleabout iHeartMedia Inc.’s ac-quisition of Stuff Media mis-stated the show’s name as“How Stuff Works.” In othereditions, it misspelled the name

as “Stuff You Shoild Know.”

Puerto Rico in August up-dated the official death tollfrom Hurricane Maria to 2,975.A WSJ. Magazine article in theSeptember Men’s Style issuechef José Andrés’s efforts tofeed victims of the hurricanewent to print before the up-dated tally was released, and itcontained only an earlier gov-ernment tally of 64 deaths andan estimate from a recentstudy of possibly more than5,000 deaths.

Readers can alert The Wall Street Journal to any errors in news articles by emailing wsjcontact@wsj.com or by calling888-410-2667.

CORRECTIONS� AMPLIFICATIONS

had been convicted last monthby a federal jury in Virginia ofnot reporting to tax authoritiesmore than $16 million heearned between 2010 to 2014for political consulting work inUkraine, and he faced eight to10 years in prison. He has beenin jail since June.

He would have risked moreprison time with a second trialthat was to start Monday oncharges of conspiring againstthe U.S., conspiring to laundermoney, failing to register for-eign lobbying work, misleadingthe government and obstruc-tion of justice.

Mr. Manafort now faces asmuch as 10 additional yearsbased on his plea. But prosecu-tors agreed to request a lessersentence if Mr. Manafort pro-vides them with substantial as-sistance.

After Friday’s court hearing,Manafort attorney Kevin Down-ing told reporters Mr. Manafort“accepted responsibility” and“wanted to make sure his familywas able to remain safe and livea good life.”

Mr. Manafort’s longstandingresistance to federal prosecu-tors, even while other figurespleaded guilty, had drawn

praise from Mr. Trump, whocalled his previous trial “sad”and at one point lauded Mr.Manafort for having “refused to‘break’ - make up stories in or-der to get a ‘deal.’ ”

Mr. Manafort now joins for-mer Trump national securityadviser Mike Flynn and othersin cooperating with Mr. Muel-ler. Three other longtimeTrump confidants, including hisformer personal lawyer, Mi-chael Cohen, have provided in-formation to prosecutors inNew York in a campaign-fi-nance investigation that hasimplicated the president.

Mr. Manafort, in connectionwith Friday’s agreement, agreedto forfeit some of his multimil-lion-dollar homes, as well asfunds in multiple bank ac-counts.

The cases against Mr.Manafort have focused on hiswork for former UkrainianPresident Viktor Yanukovych,who was ousted and fled toRussia in 2014.

As part of the plea, Mr.Manafort said the Ukraine workincluded shaping U.S. percep-tion of Mr. Yanukovych and hispro-Russia party.

He helped pay a law firm $4

million for its work on a reportused to bolster Ukraine’s prose-cution of Mr. Yanukovych’s po-litical rival, Yulia Tymoshenko.But he used offshore accountsto pay the firm so Ukrainecould falsely assert the reportcost $12,000, according to thecourt document.

Mr. Manafort also usedcharges of anti-Semitism to tryto tarnish the image of Ms. Ty-moshenko, and then turn Jew-ish sentiment against theObama administration in theU.S., the court document says.

He spread stories, for exam-ple, that an Obama cabinetmember who had criticized Mr.Yanukovych “was supportinganti-Semitism because the offi-cial supported Tymoshenko,who in turn had formed a politi-cal alliance with a Ukraine partythat espoused anti-Semiticviews,” the court papers said.

He planted that idea with themedia, according to the docu-ment. “I have someone pushingit on the NY Post. Bada bingbada boom,” he told a colleague,referring to the New York news-paper, the document said.

—Andrew Duehren, RebeccaBallhaus and Peter Nicholascontributed to this article.

prosecutors as they piece to-gether information about Rus-sia and whether Mr. Trump ob-structed justice by firingFederal Bureau of InvestigationDirector James Comey in May2017. For one thing, Mr.Manafort is the first person tocooperate with Mr. Mueller whoalso attended a June 2016 meet-ing at Trump Tower that hasdrawn the special counsel’s in-terest. That session includedMr. Manafort; Donald TrumpJr.; Mr. Trump’s son-in-lawJared Kushner; and several Rus-sians who had promised incrim-inating information about Dem-ocrat Hillary Clinton.

Mr. Trump has denied anywrongdoing, and in a brief tele-phone interview Friday saidthat the Manafort case hadnothing to do with him. “I gothit with an artificial witch huntthat should never have hap-pened,” Mr. Trump said.

Still, that the former cam-paign chairman is now cooper-ating with the special counsel islikely to heighten the legal andpolitical pressure on Mr. Trump,less than two months beforemidterm elections.

Mr. Manafort, appearing incourt Friday, admitted to con-spiring against the U.S. and ob-structing justice.

“I plead guilty,” he saidsoftly as he faced the judge, af-ter one of Mr. Mueller’s prose-cutors gave a lengthy recitationof Mr. Manafort’s misdeedsthat included leading an effortfor years that lobbied Washing-ton officials on behalf of theUkraine government withoutreporting it.

Mr. Manafort, 69 years old,

ContinuedfromPageOne

ManafortAgrees toHelp Probe

THE NUMBERS | By Jo Craven McGinty

How to Account for Temperature ExtremesWhen tem-

peraturesturn sizzlinghot or gla-cially cold,averages may

obscure the extremes.That’s a problem for com-

panies eager to account forthe effect weather has on de-mands for energy, whichpeak when temperaturessoar or plummet.

So instead of relying onaverages, the companies usea metric that captures thevariability.

It’s called degree days.

D egree days are thedifference in oneday between the aver-

age temperature and an arbi-trary threshold, usually 65degrees Fahrenheit. Whenthe daily average is hotterthan 65 degrees, buildingsneed air conditioning; whenit’s colder, they need heat.

On a warm day, with adaily average of 75 degrees,the difference from thethreshold is 10 cooling de-gree days. On a cool day,with a daily average of 55degrees, the difference is 10heating degree days.

Over a span of time—per-haps a month or a season—

degree days can be summedup to look at the impact ofthe daily extremes. Thelarger the number, thegreater the energy demand.

To understand how the in-formation communicated bydegree days differs from thatof averages, consider NewYork City.

So far this year, the dailyaverage temperature mea-sured at LaGuardia Airportis 58.6 degrees Fahrenheit,or about 1 degree above nor-mal. At the same time, therehave been 1,425 cooling de-gree days, which is 411above normal.

“That’s a pretty large de-parture given that the yearas a whole is not that muchwarmer than average,” saidJake Crouch, a climate scien-tist with the National Cen-ters for Environmental Infor-mation.

The result suggests build-ings near LaGuardia havehad to use more energy thanusual to stay cool this year.

In this case, the differencebetween the average temper-ature and the number of de-gree days is explained bycolder-than-normal daysearly in the year followed byhotter-than-normal dayslater on. The average con-

cealed the extremes. But thesum of the degree days re-vealed them.

Two decades ago, Enron,Koch Energy and Aquila En-ergy realized they could le-verage this kind of informa-tion, according to BradHoggatt, chief portfolio man-ager for MSI Guaranteed-Weather and past presidentof the Weather Risk Manage-ment Association.

They focused on usingweather data as the basis for

risk indexes, and in 1999, theChicago Mercantile Ex-change, or CME, began trad-ing weather derivatives.

The contracts allow com-panies to hedge against therisk of weather-related lossesby paying a premium to sell-ers who assume the risk.

In a typical transaction, ifa specified threshold is ex-ceeded, the buyer of the de-rivative receives a paymentfrom the seller. The amountof the payment is deter-

mined in advance. If thethreshold isn’t exceeded, theseller keeps the premium.

T oday, the notionalvalue of weather fu-tures and options

traded on the Chicago Mer-cantile Exchange is approxi-mately $362 million, accord-ing to a CME spokesman.

The size of the over-the-counter market is unknown,but the National WeatherService estimates it has amarket value of $7 billion.

“The notional value ofCME traded contracts isprobably dwarfed by oneOTC contract,” said DavidWhitehead, the co-chief exec-utive officer at weatherX-change and SpeedwellWeather, a consulting firmthat helps companies accessindex-based weather riskprotection.

A recent example suggestshe’s right.

In 2013, the World Bankhelped the Uruguayan state-owned hydroelectric powercompany purchase $450 mil-lion in climate insurance toprotect against droughts andhigh oil prices. The premiumwasn’t disclosed, and the in-surance wasn’t triggered be-fore the contract expired.

Now, weather protectioncan be purchased in the formof derivatives or parametricinsurance, which, unlike tra-ditional insurance, doesn’t in-demnify the loss but insteadmakes a predetermined pay-ment after a triggering event.

Up to 75% of weathertrading still involves the en-ergy sector, according toMartin Malinow, president ofSompo Global Weather, butother sectors, including agri-culture, construction andtravel have emerged, andcontracts may now be basedon temperature, precipita-tion, wind speed, solar radia-tion or other weather-relatedyardsticks.

In the U.S., the data arepublicly available from theNational Centers for Environ-mental Information and insome cases date to the1700s. Similar data, assem-bled for the weather riskmarket by companies such asSpeedwell Weather, are avail-able from other countries.

“This is a global market inevery continent outside ofAntarctica, whether it’s NorthAmerica, Europe, Asia, Africa,Australia or South America,”Mr. Whitehead said. “Peopleare hedging their weatherrisk everywhere.”

Heating and cooling degree days atLaGuardia Airport, 2018

A Better MeasureDegree days are a measure of the variation in degrees froma baseline temperature.

Source: NOAA's National Centers forEnvironmental Information THEWALL STREET JOURNAL.

60

0

10

20

30

40

50

degree days

J F M A M J J A

Heating CoolingDegree days:

Average heatingdegree days

Average coolingdegree days

court documents Friday, Mr.Manafort mentions having “or-ganized and leveraged” visitsto Washington by former Pol-ish President Aleksander Kwas-niewski and former ItalianPrime Minister Roman Prodi,who he says also signed op-edscasting Ukraine as an “impor-tant global strategic partner tothe U.S.” Mr. Manafort alsomakes repeated references to athird member of the groupcalled “AG,” an apparent refer-ence to former Austrian Chan-cellor Alfred Gusenbauer.

The plea agreement says Mr.Manafort arranged for the for-mer European officials to bepaid more than €2 million ($2.3million) from 2012 to 2014.

In the fall of 2012, at Mr.Manafort’s behest, members ofthe Hapsburg Group contactedU.S. senators to lobby them tostall a resolution critical ofMr. Yanukovych’s treatment offormer Prime Minister YuliaTymoshenko, his political ri-val. The effort ultimatelyfailed, and the Senate ap-proved the resolution.

Starting in 2006, Mr.Manafort and his associateRichard Gates—who pleadedguilty earlier this year tocharges related to the Ukrainework and was a witness forprosecutors in Mr. Manafort’sfirst trial—engaged in a multi-million-dollar lobbying cam-paign for Mr. Yanukovych, whowas seeking to burnish his im-age as a Europe-oriented leaderdespite close ties to Moscow.

To help with their Ukrainework, Mr. Manafort hired ahalf-dozen lobbying and lawfirms in Washington, includingthe Podesta Group, MercuryLLC and Skadden, Arps, Slate,Meagher & Flom LLP. Thecourt documents say the firmshired by Mr. Manafort werepaid a total of at least $11 mil-lion for their efforts.

Mr. Manafort took mea-sures to conceal his client’srole in the lobbying efforts. “Itis very important we have noconnection,” he told his lobby-ists in 2013, according to thedocuments.

WA S H I N G T ON—P a u lManafort, President Trump’sformer campaign chairman, ac-knowledged new details on Fri-day about his work on behalf ofa former Ukrainian president—and his efforts to keep thatwork secret—as he pleadedguilty to criminal charges aris-ing from special counsel RobertMueller’s investigation.

In court documents associ-ated with his guilty plea, Mr.Manafort said his work for Vik-tor Yanukovych, the Ukrainianpresident who was ousted be-fore fleeing to Russia in 2014,included “an all-out campaignto try to kill” congressional ef-forts to criticize his client.

A key part of Mr.Manafort’s effort, according tothe documents, was workingwith former European leadersto lobby U.S. policy makers.The prominent Europeans,whom Mr. Manafort referredto as the Hapsburg Group, lob-bied members of Congress andthe administration withoutdisclosing that they were be-ing paid by Ukraine.

In a June 2012 “eyes only”memo, Mr. Manafort said thegoal was to “assemble a smallgroup of high-level” Europeanofficials who could act “infor-mally and without any visiblerelationship with the govern-ment of Ukraine.”

The group included a for-mer Austrian chancellor, Ital-ian prime minister and Polishpresident. In memos to Mr.Yanukovych included in the

BY REBECCA BALLHAUSAND JULIE BYKOWICZ

Manafort DetailsUkraine Lobbying

Ex-President Viktor Yanukovych

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Paul Manafort, at the podium, as depicted in a courtroom sketch from his plea-agreement hearing Friday in Washington, D.C.

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U.S. NEWS

Patient and advocacygroups filed a lawsuit seekingto block the Trump adminis-tration’s plan to let people buyless-expensive health insur-ance that doesn’t comply withthe Affordable Care Act.

The suit, filed Friday in U.S.District Court for the Districtof Columbia, takes aim at oneof the central planks of the ad-ministration’s plan to roll backthe Obama-era health law, af-ter Congress failed to repeal itlast year.

The Trump administrationrule finalized in August loos-ens restrictions on a type ofcoverage known as short-termmedical insurance—low-costplans that cover a limited pe-riod with less-expansive bene-fit offerings, which are subjectto fewer consumer protectionregulations. The plans don’thave to cover people with pre-existing conditions, and insur-ers can charge higher premi-ums based on a consumer’shealth status.

The lawsuit filed by organi-zations including the Ameri-can Psychiatric Associationand AIDS United argues thatthe rule runs contrary to theACA and will harm patients byresulting in higher costs forthose with medical conditions.

“The only practical differ-ence between these plans andcomprehensive insurance,then, is that they need notcomply with the ACA’s protec-tion requirements and cancherry pick healthier consum-ers—the precise practice pro-hibited by the ACA,” accordingto the lawsuit.

The lawsuit was filedagainst Health and HumanServices, the Treasury Depart-ment and the Labor Depart-ment, their agency heads, andthe Justice Department.

In a statement, HHSspokeswoman Caitlin Oakleysaid the plans “are an impor-tant option for people in cer-tain circumstances, and theTrump administration is com-mitted to delivering greateraccess to more affordablechoices to the men and womenleft out by Obamacare.”

The Justice Department de-clined to comment. The Trea-sury Department and LaborDepartment didn’t immedi-ately respond to requests tocomment.

The plan to allow for aproliferation of less robustbut cheaper health plans soldon the individual insurancemarket has been widely ex-pected to siphon off younger,healthier people who now buycoverage on the ACA’s ex-changes. Health analysts havesaid that will cause insurersto raise premiums on the ex-changes because younger,healthier consumers areneeded to offset the costs ofolder, sicker and more expen-sive individuals.

The result, they have said,will be a two-tiered market forpeople who buy their own cov-erage and don’t get it fromfederal programs or employ-ers—with higher costs forthose with pre-existing healthissues. They have also said theplans will leave some consum-ers with huge costs if they de-velop a medical condition thatisn’t covered.

The Trump administrationand Republicans, however, havepraised the rule as a way to pro-vide relief to people who don’tget subsidies to offset premiumcosts on the exchanges. Costshave risen sharply for these in-dividuals, and Republicanslargely say insurance-coveragerequirements imposed by theACA are to blame.

The lawsuit is the latest ina spate of litigation that seeksto block changes that willweaken the health law.

Lawsuits have also beenfiled against new requirementsin Kentucky and Arkansas thatmandate many Medicaid recip-ients work and participate incommunity service to retain orget benefits. In July, a dozenattorneys general filed a law-suit to block the Trump ad-ministration from expandingaccess to a type of associationhealth plan that doesn’t com-ply with all the ACA consumerprotections.

BY STEPHANIE ARMOUR

TrumpPlanFor CheapInsuranceFaces Suit

of many of her colleagues. Shetold the St. Louis Fed in a pod-cast this year she lived on herown as a teenager anddropped out of high school.She earned a GED and thenwent to college.

“I’m a roundabout person,apparently, a crooked-pathkind of person,” Ms. Daly saidin the podcast. She added,“I’m just fundamentally inter-ested in how monetary policyinteracts with people’s lives,and importantly, I think aboutmyself as a macro labor econ-omist who thinks about themacroeconomy and monetarypolicy and how we achieve thedual mandate, which is lowand stable prices and full em-ployment.”

She noted she has a specialsensitivity for those outsidethe majority. “I’m openly gay.I’m female” and come from alower-income family, Ms. Dalysaid. “I don’t think I’ve everfelt like I was in the majority.”That has caused her to con-sider other views, she said.

Ms. Daly earned a Ph.D. ineconomics from Syracuse Uni-versity in 1994. She got hermaster’s degree at the Univer-sity of Illinois Urbana–Cham-paign in 1987 and her bache-lor’s at the University ofMissouri-Kansas City in 1985.

She has been a frequentpublic speaker and writer oneconomic issues, but her mon-etary-policy views aren’t wellknown. She will become bankpresident as the Fed is gradu-ally raising short-term interestrates amid an active debateover how far to lift them.

Ms. Daly will vote at the in-terest-rate-setting FederalOpen Market Committee meet-ings this year once she takesoffice, and will regain that sta-tus in 2021 because of the cen-tral bank’s rotation system.

Colleagues said Ms. Dalyhas played important rolesseeking to promote diversitywithin the Fed system and theeconomics profession, which isdominated by white men.

In an interview with TheWall Street Journal in April,Ms. Daly said improving diver-sity within the Fed systemalso meant taking a broaderfocus to recruitment effortsbeyond race and gender.

“It means making sure ourpeople don’t all come fromStanford, Harvard and Berke-ley,” she said. “I’ve seen somany people who didn’t havea pedigree background whohave been able to step up andmake contributions here.”

—Nick Timiraoscontributed to this article.

The Federal Reserve Bankof San Francisco named its re-search director, Mary Daly, tobecome its new president, amove that adds diversity tothe central bank’s top ranks.

She will take up the newpost Oct. 1, succeeding JohnWilliams, who helmed the SanFrancisco Fed from 2011 untilleaving this year to becomepresident of the New York Fed.

Ms. Daly, 55 years old, hasworked at the San FranciscoFed since 1996, starting out asa staff economist before risingthrough the ranks, becomingresearch director in 2017. Shehas focused her work on la-bor-market issues, a timely in-terest as Fed policy makersstruggle to understand why astrong job market hasn’tspurred better wage gains andhigher rates of inflation.

With Ms. Daly’s promotion,three of the 12 regional Fedbanks will be led by women.One of three Fed governors isfemale. The Atlanta Fed’s pres-ident is the first ever African-American regional bank presi-dent in the central bank’scentury of existence.

Ms. Daly’s journey to thetop of her profession didn’tfollow the same path as that

BY MICHAEL S. DERBY

Fed Bank Pick Defies OddsThe San Francisco Fed chose Mary Daly, its research director, as its president. Ms. Daly, a high-school dropout from a lower-income family, took a circuitous path to the top of her profession.

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Eversource Energy to take overthe effort of restoring utilityservice to the area, after he andother officials expressed frus-tration with Columbia Gas’s re-sponse to the incident.

“We won’t know the causefor some time yet but the ini-tial focus is on over-pressur-ization of a gas main,” said aspokeswoman for the Massa-chusetts State Fire Marshal.

Columbia Gas, a unit of util-ity NiSource Inc., had beendoing maintenance work in thearea. NiSource shares plungedmore than 11% on Friday as in-vestors worried about govern-ment fines and lawsuits.

The company, which isworking with investigators, re-leased a statement calling thefatality a “tragic incident.”

A team from the NationalTransportation Safety Board,which investigates major pipe-line accidents as well as trans-portation incidents, headed toMassachusetts on Friday. It

joined a state and federal in-vestigation that was mobiliz-ing in Lawrence, a dense cityon the Merrimack River, andthe two other suburbs about25 miles north of Boston.

Some residents and law-makers, meanwhile, on Fridaycriticized the lack of informa-

tion being released to the pub-lic about what happened, whois to blame and when theproblems would be fixed.

Michael Pangione, who livesin North Andover and owns in-surance agencies in the area,said the limited information iskeeping the community on

edge. Some residents who ini-tially feared they were under aterrorist attack Thursday werewondering if their local infra-structure is safe.

U.S. officials said there cur-rently is no reason to suspectthat foul play is to blame.

Companies deliver naturalgas for cooking, home heatingand other uses to customersvia a network of small pipelinesburied under streets. Thesedistribution lines are kept un-der a relatively low pressure sothat gas flows easily whenneeded. A substantial increasein the pressure on the linecould have forced unwantedamounts of gas into homes.

If NiSource is found liable,it could face substantial fines.

NiSource, an Indiana-basedutility with a market value of$10 billion, provides naturalgas and electricity to 4 millioncustomers in seven states inthe Midwest and Northeast. Ithas been fined seven times

since 2010 by Massachusetts’Department of Public Utilities,totaling $100,000, for im-proper pressure testing, corro-sion control, faulty paperworkand other infractions.

In the latest incident, the cas-cade of erupting fires and explo-sions started to hit Lawrence,Andover and North Andover atabout 4:30 p.m. Thursday.Homes crumbled, roofs flew offand debris rained down on cars.

Leonel Rondon, 18 yearsold, died in Lawrence when achimney tore off a house andcollapsed onto the car he wasparked in, according to the Es-sex County District Attorney’sOffice.

On Friday, thousands ofpeople remained unable to re-turn home, while crews visitedthe residences of 8,600 af-fected customers to shut offgas meters and conduct safetyinspections.

—Dustin Volzcontributed to this article.

BOSTON—A day after a gasutility’s pipeline triggereddozens of fires that killed oneperson and injured nearly 25,Massachusetts Gov. CharlieBaker declared a state ofemergency and directed an-other company to take overthe restoration work.

Federal and state investiga-tors were trying to determinewhat caused more than 60fires and explosions on Thurs-day afternoon, turning threesuburban communities into ascene that a local fire chiefsaid “looked like Armageddon.”

Preliminary indicationswere that too much naturalgas was pumped into a five-mile section of pipe owned byColumbia Gas, causing thecombustible fuel to leak intohomes in Lawrence, Andoverand North Andover.

On Friday, Mr. Baker ordered

BY JENNIFER LEVITZAND RUSSELL GOLD

Pipe Pressure Eyed in Gas BlastsResidents looked over a home in Lawrence, Mass., north of Boston, on Friday that was among those destroyed in more than 60 fires and explosions the previous day.

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nee has already been vetted indetail by federal authorities.Mrs. Feinstein didn’t respondto the GOP allegations.

Judiciary Committee Chair-man Sen. Chuck Grassley (R.,Iowa) on Friday released a let-ter from 65 women who knewJudge Kavanaugh when he at-tended high school between1979 and 1983.

“For the entire time wehave known Brett Kavanaugh,he has behaved honorably andtreated women with respect.We strongly believe it is im-portant to convey this infor-mation to the Committee atthis time,” the women said inthe letter.

The unexpected episodecomes amid a bitterly partisanbattle over the makeup of theSupreme Court. If confirmed,Judge Kavanaugh, who nowserves on a federal appealscourt, would succeed JusticeAnthony Kennedy, a maverickconservative who sided withthe court’s liberal wing on is-sues including gay rights.

Judge Kavanaugh’s writtenopinions over more than a de-cade suggest he would bemore conservative than Jus-tice Kennedy, a shift thatcould move the court to theright for decades.

Democrats remain angrythat Republicans preventedPresident Obama from fillingthe high-court vacancy createdby the death of Justice An-tonin Scalia in 2016, a slotthat was later filled by Presi-dent Trump’s first nomineeNeil Gorsuch.

They also view Judge Ka-vanaugh skeptically because ofhis work for independentcounsel Kenneth Starr’s inves-tigation of President Clinton,as well as his service as a law-yer in the George W. BushWhite House.

WASHINGTON—SupremeCourt nominee Brett Ka-vanaugh on Friday denied anallegation that he engaged insexual misconduct in highschool, a day after the allega-tion surfaced and a top Demo-crat said she referred the mat-ter to federal investigators.

“I categorically and un-equivocally deny this allega-tion,” Judge Kavanaugh said ina written statement releasedthrough the White House. “Idid not do this back in highschool or at any time.”

The judge’s statement cameafter The Wall Street Journaland other organizations re-ported Thursday on the allega-tion. That was prompted by abrief statement from Sen. Di-anne Feinstein (D., Calif.) say-ing she had referred an issuerelating to Judge Kavanaughto investigative authorities.

Mrs. Feinstein didn’t spec-ify the nature of the issue, buta person familiar with thematter said the allegation in-volved a claim that Judge Ka-vanaugh and a friend duringtheir teenage years pulled agirl into a room at a partyagainst her wishes and at-tempted to assault her.

Mrs. Feinstein, the topDemocrat on the Senate Judi-ciary Committee, on Thursdaysaid the alleged victim“strongly requested confiden-tiality, declined to come for-ward or press the matter fur-ther, and I have honored thatdecision.”

Republicans have criticizedMrs. Feinstein for raising theissue on the eve of Judge Ka-vanaugh’s confirmation andquestioned Democrats’ motiva-tions. They have also defendedthe judge and noted the nomi-

BY BRENT KENDALLAND KRISTINA PETERSON

Kavanaugh DeniesSex-Abuse Claim,GOPDefends Him

Toomuchnaturalgaspumpedintoapipemayhavecontributedtodeadly incident.

A4 | Saturday/Sunday, September 15 - 16, 2018 P W L C 10 11 12 H T G K B F A M 1 2 3 4 5 6 7 8 9 O I X X * * * * * * * * THEWALL STREET JOURNAL.

U.S. NEWS

Storm water floods a house inSwansboro N.C., above, aswinds and water damage ahighway off Harkers Island,left. Below, rescue workersevacuate a family in New Bern,N.C., and people shine aflashlight at Comfort Suites inWilmington. Below left, awoman reacts after learning atree toppled onto her familymembers’ house, killing twopeople and injuring a third, inWilmington.

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from Hurricane Matthew in2016, he said.

If the current forecastshold, many regions could see“a flood of biblical propor-tions,” said Rick Neuherz, ahydrologist with the NationalWeather Service. “This couldbe our Harvey.”

New Bern, N.C., quickly be-came a trouble spot as flood-waters rose. In New Bern,along the Neuse River, emer-gency responders pulled offsome 200 rescues overnightand Friday morning, and about

150 people were still awaitinghelp, city spokeswoman Col-leen Roberts said. The entirearea had lost electricity.

The area’s storm surge hadreached 9 feet downtown andwater was up over the tops ofstreet signs, said Capt. DonaldGurkin with the Greenville,N.C., Fire-Rescue, who was inNew Bern as part of a statetask force. “Our guys aretired.”

Clara Phillips, who lives inthe Brices Creek area of NewBern, sat on her screened-in

back porch on Friday, watch-ing as the wind pushed treesto and fro. Two pines had al-ready fallen and an oak lookedlikely to drop on her neigh-bor’s home.

“We have a birch that weplanted two years ago thatlooks like it’s doing calisthen-ics,” she said. “It’s just touch-ing its toes and standing up.”

Down the coast in Jackson-ville, N.C., emergency respond-ers evacuated 62 people froma hotel early Friday morning.Portions of the hotel’s roof col-

lapsed and cinder blocks thatare part of the hotel began tocrumble.

Meanwhile, by early after-noon Friday in South Carolina,tens of thousands of residentswere without power in HorryCounty, which includes MyrtleBeach. The rest of the statebraced for widespread outagesand flooding.

In Florence County, officialsordered residents along BlackCreek and the Lynches Riverto evacuate by noon Saturday,because of the risk of flooding.

Early Friday afternoon, withwater levels still low, residentsstill appeared to be in place inthe area, parts of which arethickly forested and accessibleonly by dirt roads.

Near the landfall site inWrightsville Beach, N.C.,Mayor Bill Blair said he foundlittle damage on his initialend-to-end tour of the 4 mile-long barrier island on Fridaymorning. But by the late after-noon, ocean waves hadbreached the dunes andwashed over roads, and somedocks were completely sub-merged. An $11 million invest-ment to widen the beach byabout 100 yards last winterwas largely washed away.

Mayor Blair said the arrivalof the backside of the stormcoincided with high tide, cre-ating a massive surge of waterwithin hours.

“When you see the movieswith the tsunami pushing thewater right up all at once?” hesaid. “It was kind of like that.It was just scary.”

—Jon Kamp, Zolan Kanno-Youngs, Rebecca DavisO’Brien, Russell Gold

and Jacob Bungecontributed to this article.

people killed in Lenoir County,and a mother and infant killedin Wilmington, N.C., when atree fell on a home, accordingto North Carolina Gov. RoyCooper’s office. A woman inPender County also died whena fallen tree prevented emer-gency crews from reachingher while she suffered a heartattack, a county spokeswomansaid.

Entire communities couldbe “wiped away” by historicflooding, Mr. Cooper said Fri-day. “The storm is going tocontinue its violent grindacross our state for days.”

“We’re all kind of waiting.There’s a little bit of appre-hension as you can imagine,”said Major Mark Craddockwith the Salvation Army ofCape Fear, who was hunkereddown with about 30 others atthe organization’s shelter indowntown Wilmington.

The National HurricaneCenter downgraded Florenceto a tropical storm due to itsslow wind speed Friday after-noon but didn’t change itswarnings of storm surges,flooding and heavy rainfall.

President Trump is expectedto travel to areas affected bythe hurricane next week, theWhite House said Friday.

To help with power out-ages, utility companies stagednearly 40,000 workers on theoutskirts of the storm, waitinguntil it is safe enough to movein. Utility poles were piled upalongside Interstate 95 to re-place those snapped by windsand debris.

Between one million andthree million power outagesare expected, warned Duke En-ergy Corp., the large powerprovider based in Charlotte. Itwarned that the hardest-hitcommunities could wait weeksfor the power to come back on.

The Southeast’s big indus-tries battened down. Meatcompanies including TysonFoods Inc., Smithfield FoodsInc., Pilgrim’s Pride Corp. andWayne Farms LLC shut downoperations from Pennsylvania

to North Carolina and Virginia.While some meat processorsshifted production to plantsoutside the storm’s path, inother cases processing wasput on hold altogether. Farm-ers worked to protect live-stock and waste lagoons fromheavy rains.

The disruption in NorthCarolina—the second-largestpork producing state—meantabout 135,000 fewer hogs wereslaughtered than forecast ear-lier in the week, according toArcher Financial Services,helping to boost wholesalepork prices.

The projected rainfall couldpresent a problem for thepower industry’s 26 coal-ashponds in the Carolinas. Utili-ties were monitoring these fa-cilities, which store toxicwaste from coal-burningpower plants. A heavy rainthat caused the ponds to over-flow could create an environ-mental catastrophe.

Ryan Maue, a meteorologistat weather.us, said the stormwill dump approximately 10trillion gallons of water onNorth Carolina, about a quar-ter of the annual total. That’sroughly double the rainfall

ContinuedfromPageOne

StormSlamsCarolinas

Communications and travelcompanies took steps to keepthe region connected as out-ages were expected.

Wireless carriers deployedbackup generators and engi-neers to areas likely to be hardhit. Some prepared to deploydrones to provide temporarycoverage after the storm.

Verizon Wireless removedspeed limits on service for allfirst responders in East Coaststates from Florida to Mary-land, said Nicola Palmer, chiefnetwork officer. The companycame under fire in August aftera fire department fighting firesin California said their connec-

already provides real-time up-dates for government agen-cies, scraping thousands ofvideocameras to assess roadconditions.

All four major U.S. wirelesscarriers lifted data limits oroverage charges for subscrib-ers in the path of the storm.

Sprint Corp. and AT&T saidthey would waive call, text anddata overage fees throughSept. 25 for customers in ar-eas affected by the storm.AT&T also extended paymentdue dates for customers of itspay-as-you-go brand, Cricket,who may be unable to get tostores to pay their bills be-

cause of the storm.T-Mobile and Verizon have

also said they would providefree calling, texting and datato customers in areas affectedby the storm.

Airlines operated reducedschedules. While flights willcontinue to be scuttled overthe weekend and into nextweek amid forecasts for con-tinued heavy rain and flood-ing, carriers are looking toramp back up in some areas.

Delta Air Lines Inc. has can-celed nearly 200 flights as aresult of the storm but said itis planning to restart opera-tions as early as Saturday af-

ternoon from airports includ-ing Fayetteville, N.C., andMyrtle Beach, S.C.

American Airlines GroupInc. canceled 300 flights onWednesday and Thursday andcalled off 670 more throughMonday, but is also preparingto resume flying in areas thatwere hit by the storm.

Southwest Airlines Co. saidit plans to resume operationsat some airports Saturday andothers Sunday.

Airlines said the storm’s im-pact so far has been limited.The biggest effects are beingfelt at regional airports alongthe coast. Florence appears to

have veered away from Char-lotte, N.C., American’s second-largest hub, and American hascontinued to fly there.

American canceled 340flights Friday—about 5% of itsschedule. During a winterstorm March 2, by compari-son, the airline canceled about25% of its flights. On July 23,it canceled 626 flights due tothunderstorms.

Delta has continued to fly afull schedule at Raleigh-Durhaminternational airport and evenadded a few flights there to helppeople evacuate, as its weathermodel indicated the airportwould be operating safely.

tions had been throttled.She said, in an email, that

their network is withstandingthe storm so far and has staffon site in storm-hardened fa-cilities throughout the area.They have backup facilitiesready to deploy if needed.

Defense communicationsspecialist Harris Corp. openedup its military-spec onlinetracker of road conditions topublic use after Florence madelandfall. Harris’s Helios tool

By Alison Sider,Sarah Krouse

and Doug Cameron

Telecom Firms, Airlines Strive to Keep Region Connected

Entire communitiescould be ‘wipedaway’ by flooding,said Gov. Cooper.

THEWALL STREET JOURNAL. * * * * * * * Saturday/Sunday, September 15 - 16, 2018 | A5

U.S. NEWS

ECONOMY

U.S. Consumers AreUpbeat About Future

Americans are feeling betterabout the economy in part be-cause they have a rosier view ofthe future, a factor that couldsupport spending and outputgrowth later this year.

Consumer sentiment in Sep-tember jumped to the second-highest level since 2004—behindonly the reading in March of thisyear—according to a Universityof Michigan survey released Fri-day. The recent gain was in partdue to future expectationsreaching a 14-year high.

Meanwhile, sales at U.S. retailstores, websites and restaurantsrose 0.1% in August from theprior month, the Commerce De-partment said. The soft gaincame after an upward revision toJuly’s already strong reading. Re-tail spending was up 6.6% froma year earlier in August, welloutpacing the rate of inflation.

The Michigan survey did flaggrowing concerns about the im-pact recent tariffs might haveon the economy, but LaraRhame, chief U.S. economist atFS Investments, said she hasyet to see evidence that tradedisputes are altering what shop-pers put in their baskets.

—Eric Morath

LABOR

NLRB Pushes toRescind Union Ruling

The National Labor RelationsBoard proposed rolling back anObama-era job ruling that madeit easier for contractors andworkers at franchised businessesto form unions and collectivelybargain with big corporations.

On Thursday, the body over-seeing union-employer disputesreleased a proposal to abandona 2015 decision by the prior,Democratic-controlled board thatruled a company could be heldliable if it illegally interfered withworkers’ rights to organize aunion, even if those employeesdidn’t directly work for the firm.

Business groups applaudedthe move, while others said thestandard for holding companiesliable for employment practicesshould evolve as the economyevolves.

—Lauren Weber

CALIFORNIA

Net-Neutrality BillFaces FCC Threat

Ajit Pai, the chairman of theFederal Communications Commis-sion suggested he might take le-gal action to block California’s net-neutrality bill, ratcheting up a high-profile clash over internet policy.

California’s legislature passedits net-neutrality legislation inlate August, after the FCC rolledback similar federal rules thathad been adopted during theObama administration. Net-neu-trality rules generally prohibit in-ternet providers from unfairly fa-voring some internet traffic.

The Obama-era rules gener-ally have been supported by biginternet companies that contendthey help preserve online com-petition. Internet providers havefought them, arguing they repre-sent a government overreachthat could stifle innovation andinvestment.

—John D. McKinnonand Alejandro Lazo

NEBRASKA

Ex-Doctor SentencedTo Death for Murders

A former doctor convicted inthe revenge killings of four peo-ple connected to a Nebraskamedical school was sentencedFriday to death.

A three-judge panel handeddown the sentence against An-thony Garcia, 45 years old, ofTerre Haute, Ind. Mr. Garcia wasconvicted in two attacks that oc-curred five years apart on familiesconnected to Creighton UniversitySchool of Medicine in Omaha,where Mr. Garcia once worked.

In 2008, Mr. Garcia fatallystabbed 11-year-old ThomasHunter, the son of university fac-ulty member William Hunter, offi-cials said. Mr. Garcia also was con-victed of killing the housekeeper.

In 2013, another Creighton pa-thology doctor, Roger Brumback,and his wife, Mary, were killed intheir Omaha home. Police recog-nized similarities in the deaths,and Mr. Garcia was arrested. Thekillings were motivated by Mr.Garcia’s long-simmering rage overbeing fired in 2001 by Dr. Hunterand Dr. Brumback from theCreighton medical school’s resi-dency program, prosecutors said.

—Associated Press

U.S. WATCH

year, the people said.Mr. Long declined, through

a spokeswoman, to commenton Friday. He has previouslydenied any wrongdoing, andhe didn’t attend a pair ofFEMA news conferences Fri-day afternoon about thestorm.

The White House has begundiscussing potential replace-ments for Mr. Long, a senior

White House official said.At a media briefing on

Thursday, Mr. Long said he“would never intentionally runa program incorrectly” andpledged to cooperate with theinvestigation, and that he andthe agency were “100% fo-cused” on the approachingstorm. “That’s exactly whereour attention needs to be fromthe standpoint of the life

safety mission,” he said.The Department of Home-

land Security inspector gen-eral is also reviewing commu-nications between Mr. Longand a FEMA contractor thatappear to include discussionsabout future employment, saidone of the people briefed onthe investigation. Investiga-tors are also looking into anaccident involving an SUV,owned by the federal govern-ment and used to transportthe director, that wasn’t prop-erly reported, the person said.

Mr. Long was informed lastfall by DHS attorneys and theinspector general that his tripshome violated the law, thepeople said. The inspectorgeneral’s office has told ad-ministration officials that theytailed Mr. Long’s caravan todetermine whether he was us-ing federal resources to returnhome despite the warnings,the person briefed on the in-vestigation said.

The inspector general’s finalreport is expected in the com-ing days, but preliminary find-ings have been shared withDHS Secretary Kirstjen Nielsen,administration officials said.

The existence of the investiga-tion was earlier reported by Po-litico on Thursday.

Ms. Nielsen brought detailsof the preliminary findings toMr. Long and urged him to re-sign if the allegations were ac-curate, one administration of-ficial said. Another officialfamiliar with the situation dis-puted that the secretary madethat suggestion to Mr. Long.

A DHS spokesman declinedto address the allegations, re-ferring questions to the in-spector general’s office. Thatoffice didn’t respond to re-quests to comment.

“We are fully focused onpreparing for and recoveringfrom Hurricane Florence,” DHSspokesman Tyler Houlton said.“The secretary is confident inthe leadership at FEMA.”

Senior White House officialsdiscussed replacing Mr. Longin the past several days, ac-cording to one person familiarwith the matter. White Housechief of staff John Kelly ulti-mately decided to leave Mr.Long in place until the final re-port was available, the personsaid. A White House spokes-woman declined to comment.

WASHINGTON—As Hurri-cane Florence was forming inthe Atlantic, senior Trump ad-ministration officials consid-ered replacing the head ofFederal Emergency Manage-ment Agency amid allegationsthat he misused resourcestraveling to his home in NorthCarolina, according to peoplefamiliar with the matter.

FEMA Administrator BrockLong is the target of an inter-nal investigation looking intofrequent travel between thenation’s capital and his homein Hickory, N.C., according topeople briefed on the probe.The investigation includedsurveilling Mr. Long as he wasdriven 400 miles each way onhis commute, the people said.

Investigators have told ad-ministration officials that Mr.Long, while under surveillance,often left agency headquarterson Thursdays and traveledhome with a caravan of federalworkers, who stayed in nearbyhotels for the long weekend,the people said. He has spentabout 150 days in North Caro-lina since he took the job last

BY MICHAEL C. BENDER

FEMA Chief Faces an InvestigationFEMA’s Brock Long, second from right, is the target of a probe into frequent travel between Washington and his North Carolina home.

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The administrationweighed removingLong as Florencewas developing.

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alonewon’t ensure they’llprosper in the future.

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A6 | Saturday/Sunday, September 15 - 16, 2018 * * * * * * THEWALL STREET JOURNAL.

STAN BROCK193 6 — 20 1 8

Cowboy Gave Up Lasso,Delivered Health Care to Poor

I n his younger days, Stan Brockdidn’t seem very fond of hisown species.

After dropping out of school inEngland at 16, he found work as aranch hand in British Guiana andlearned that “solitude suited me,”as he wrote later. His most tenderthoughts were for the humming-birds, jaguars and other game hediscovered in the wilds.

When the TV show “Wild King-dom” hired him as a co-host in1968, it was for his ability to sub-due and sympathize with the wild-est of beasts. In 1974, he ran 165miles across Florida to raisemoney for a zoo. The only thingthat scared him, he once said, wasmarriage.

Yet it was for his own kind thatMr. Brock eventually devoted hislife. After founding the Tennessee-based nonprofit Remote Area Med-ical in 1985, he began deliveringbasic medical services to people inMexico and other low-incomecountries. He soon discovered anenormous unmet need for thoseservices among the uninsured inthe U.S.

His organization, RAM, sincethe early 1990s has allotted mostof its resources to organizing mo-bile clinics in the U.S., staffed byvolunteers providing free medicaland dental treatment. RAM esti-mates it has cared for more than740,000 people in a dozen coun-tries since its founding 33 yearsago.

“We see countless really, reallysad cases on these expeditionswhere people have their entiremouth infected and full of rottenand broken teeth,” Mr. Brock tolda local newspaper in 2000. “Wealso encounter people who havenever seen an eye doctor before.”

Mr. Brock died Aug. 29 at RAM’sheadquarters in Rockford, Tenn.He was 82 and had recently suf-fered a stroke. Having given up

most belongings, he slept on agrass mat next to his desk atRAM’s office, colleagues said. Hesubsisted mainly on fruit, vegeta-bles and porridge.

M r. Brock, who also starredin movies including “Es-cape From Angola” and for

years did hundreds of sit-ups andchin-ups daily, retained his Britishaccent and dashing looks in oldage. He wore khaki bush outfitswith epaulettes, similar to those hesported during “Wild Kingdom”episodes while lassoing a waterbuffalo or being chased by a griz-zly bear.

Stanley Edmunde Brock wasborn April 21, 1936, in Preston,England. His father was a civil ser-vant. As a boy, Stan was fascinatedby tales of animals and remoteplaces. He loathed school and re-called having been “strangled by astiff white collar, black tie, graydrainpipe trousers and an ill-fit-ting jacket.”

After leaving school at 16, hemade an ocean voyage to BritishGuiana, now Guyana, on the north-ern coast of South America. His fa-ther worked in the colonial govern-ment. Stan found work on the vast

BY JAMES R. HAGERTY

videotape. Only one of them,Twentieth Century-Fox, re-sponded.

Mr. Blay made a deal with Foxto buy home-video rights for“M*A*S*H,” “The French Connec-tion” and 48 other movies. Soon,his Magnetic Video Corp. wasselling them across America at aretail price of $50. Rivals rushedto catch up.

Mr. Blay sold his firm to Fox in1979 for $7.2 million, then workedfor Norman Lear on anotherhome-video venture. The big op-portunity turned out to be video-tape rentals, not sales. Both weredoomed by the Internet, but Mr.Blay had secured his place inmovie history. He died Aug. 24 inBonita Springs, Fla., at age 81.

—James R. Hagerty

OBITUARIES

the $92 billion SoftBank VisionFund upending the late-stage in-vesting landscape. Meanwhile,nimble, early-stage seed inves-tors that specialize in specificsectors have proliferated.

Fundraising rounds by thehottest startups are now in-tense competitions that oftenpit early-stage investors againstthose who focus on later-stagedeals. Those investors’ differingstrategies can spur conflicts,particularly when the investorsbelong to different practices ofthe same firm.

At Kleiner such tensionsflared up in recent years, accord-ing to people familiar with its in-ner workings. It became a two-headed operation that wouldclash internally over whetherthe late-stage fundwould investin the early-stage fund’s portfo-lio companies and propel theirgrowth, according to a personfamiliar with the fund.

Ms. Meeker and the growthteam, though, preferred to findtheir investments, often meet-ing with early-stage companiesand drawing the ire of the otherside of Kleiner in the process,the person said. A spokesper-son for the firm denied the twopractices feuded.

“We believe specializationand focus is increasingly key,”Ms. Meeker said in an interviewearlier this week.

—Yuliya Chernovaand Eliot Brown

contributed to this article.

Mary Meeker, a general partner of Kleiner Perkins, will help form a new growth-focused firm.

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market, adding growth funds tocapture larger pre-IPO dealsthat traditional early-stage ve-hicles weren’t designed for.

At Kleiner, tensions brewedbetween the two sides of thefirm over investing approaches,particularly as the flagshipearly-stage fund’s hits havebeen meager, relegating thefirm’s once-stellar returns to amiddling rank in the market,according to people familiarwith the matter.

Ms. Meeker joined Kleiner’sgrowth team in 2010 and isknown in part for her annual In-ternet Trends Report. She, alongwith growth-stage investorsMoodRowghani andNoahKnaufand talent partner Juliet de Bau-bigny, will form a new firm—whose namewasn’t announced—and will raise funds separately.The remaining core firmwill fo-cus on early-stage deals.

Kleiner led the late-1990sdot-com frenzy with invest-ments in Netscape, Amazon,Google and others, but it betbig on clean technology yearslater with little reward, andmissed out on early invest-

ContinuedfromPageOne

VentureFirm PlansTo Split Up

Dadanawa cattle ranch near theBrazilian border, where he sharedlodgings with bats and learnedhow to herd and rope cattle bywatching the other workers, mem-bers of the Wapishana tribe.

He surprised them by learningto cope with harsh conditions, in-cluding clouds of biting flies that“swarmed into eyes, ears and nos-trils like wind-blown sand,” as heput it in a 1969 memoir, later re-published as “All the CowboysWere Indians.”

He created his own backyardmenagerie, including jaguars, oce-lots and a 500-pound tapir. Hiswriting about those animals, pub-lished in books and magazines,caught the interest of televisionproducers in Britain and the U.S.

In 1968, he accepted an offer tobecome a co-host of “Mutual ofOmaha’s Wild Kingdom,” alongsideMarlin Perkins. Part of his role wasto use his lasso skills to capturewild animals in Africa. “It justseemed a rather interesting chal-lenge,” he said later.

During his ranching days, hehad noted the lack of medical carefor people in remote places andvowed to do something about it.He finally pursued that mission in1985 with the founding of RAM. “Itstarted out small with just apickup truck and a couple of dentalchairs and some eye-exam equip-ment,” he recalled in one video in-terview. “Pretty soon it just grewand grew and grew.”

Mr. Brock, whose survivors in-clude a brother in New Zealand,continued flying airplanes and rid-ing horses into his 80s. He hatedasking for donations to his cause.“I’m the world’s worst fundraiser,”he told the Knoxville (Tenn.) NewsSentinel. “I never ask people formoney. People like what we do andthey send money. And we’re eter-nally grateful for that.”

� Read a collection of in-depthprofiles at WSJ.com/Obituaries

ANDRE BLAY1 937 — 20 1 8

Home-Video Boom PaidOff for Entrepreneur

I n 1977, Andre Blay owned acompany in suburban Detroitwith 12 employees. He made

corporate training videos and au-dio tapes featuring the hits ofNeil Diamond or Carole King sungby someone else. But Mr. Blay,who was 40, saw something muchbigger over the horizon: homevideo.

Sony Corp. and other Japaneseelectronics firms were rampingup production of home video re-corders. The idea was to let peo-ple record TV shows and watchthem later. Mr. Blay figured peo-ple might also buy their own cop-ies of movies.

At a library, he found the ad-dresses of seven big movie stu-dios. He sent them letters, offer-ing to distribute their films on

ADR IAN SWIRE1 93 2 — 20 1 8

Old China Hand BetOn Hong Kong’s Future

A s Britain prepared to handHong Kong back to Chinain 1997, few Westerners

had more at stake than the Swirefamily of Britain, whose holdingsincluded control of the colony’sleading airline, Cathay Pacific,and large swaths of real estate.

At the helm of John Swire &Sons Ltd. was Adrian Swire, afifth-generation leader of theLondon-based conglomerate. Hebelieved Hong Kong “had a futureand that we must continue to in-vest,” he wrote later. “This wasnot the general view of the chat-tering classes and was consideredby many to be naïve.”

He cultivated ties with Chineseleaders, and Swire sold stakes inaviation businesses to mainlandChinese partners in 1996. Those

ties helped Cathay Pacific keep itslanding rights in Hong Kong.

Swire increased its invest-ments on the mainland as a prop-erty developer, bottler of Coca-Cola, sugar refiner, operator ofbakeries and distributor of icecream. It hedged by increasing in-vestments elsewhere, includingrefrigerated warehouses in theU.S., shipping and services to theoffshore-oil industry, and real es-tate in Miami, where two yearsago it opened the Brickell CityCentre, a $1 billion residential, of-fice, shopping and dining com-plex.

Mr. Swire, who died Aug. 24 inLondon at the age of 86, was aprivate pilot and owned a WorldWar II Spitfire fighter.

—James R. Hagerty

FROM PAGE ONE

ments in some of the genera-tion-defining internet firms in-cluding Facebook Inc. andTwitter Inc. Around 2010, itsought to boost its profile in in-ternet investing, hiring Ms.Meeker and pushing money intomore mature companies.

In recent years, the growthteam has made lucrative betson later-stage startups such asUber Technologies Inc., music-streaming service Spotify AB,payments company Square Inc.,and fitness-bike maker PelotonInteractive Inc. But its early-stage investment team hasn’tkept pace.

Kleiner informed its limitedpartners about the split on Fri-day morning, catching some ofthe investors off guard, thoughnot totally surprised givenchanges the firm has made inrecent years, said one partnerin the firm. Most recently,Kleiner brought on two newearly-stage partners, MamoonHamid and Ilya Fushman.

The venture-capital industryalso has gone through rapidchanges with large firms such as

The twomaininvestment teamshave clashed atKleiner Perkins.

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A8 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

NATO Secretary-General Jens Stoltenberg met with Secretary ofState Mike Pompeo and other officials during his Washington trip.

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top administration officialshave jetted around Europe,pressing regulators to moreaggressively police financialflows out of Russia. He visitedDenmark in August.

The endgame in Syria’snorth is complicated by sev-eral foreign interests, but thestakes are particularly highfor Turkey. Idlib is home toan estimated three millionSyrian people, and Turkeyworries a military offensivewould push many of them to-ward its borders.

By maintaining a footholdin Idlib, Turkey also aims toplay a role in shaping Syria’spostwar politics and rebuild-ing its shattered economy.

An Assad regime offensiveon Idlib would position Rus-sia and Turkey on oppositeends of the conflict, withRussian air power poised totarget areas containing Turk-ish troops.

Turkey has sent reinforce-

ments to Morek in northernHama, on the southern bor-der of Idlib province, whereit operates an observationpoint by a vital highway thatruns from Damascus toAleppo through Idlib.

Still, a direct military con-frontation between Russiaand Turkey appears unlikely,say Western diplomats.

Russia and Turkey cooper-ate diplomatically and have,along with Iran, establishedso-called de-escalation zonesacross Syria, including Idlib.Turkey hasn’t beefed up itslimited manpower and equip-ment at the two observationposts near Jish al-Shughourin western Idlib that are ex-pected to come under attackfirst.

“I think the Russians arenot happy with the Turkishposition, but they also valuethe relationship so much Idon’t think they want tojeopardize it entirely,” saidAsli Aydintabas, a Turkey ex-pert at the European Councilon Foreign Relations.

Russia says hard-line mili-tants in Idlib pose a threat totheir troops in Syria, includ-ing with armed drones. Toaddress such concerns, Tur-key has proposed a plan toevacuate rebels to bufferzones in Afrin and Jarablusoverseen by groups that An-kara regards as moderates.

Idlib is home to an esti-mated 10,000 to 15,000 fight-ers from groups that Russia,Turkey and the U.S. consider

terrorists. It also is a base fortens of thousands of moremoderate anti-Assad fighterssupported by Turkey.

Turkey hasn’t said how itwill persuade rebels, such asthe extremist group HayatTahrir al-Sham, to disarm.Previous attempts havefailed, and the looming offen-sive is causing frictionsamong militants.

Several Western officialswatching Syria estimatethere are a few thousand “ir-reconcilable” militants inIdlib who will refuse anyevacuation.

Rare public protests lastweek against the expected of-fensive have forced HayatTahrir al-Sham, a former alQaeda affiliate known as the

Nusra Front, to soften itsstance toward the local popu-lation, said an opposition ac-tivist based in the border re-gion near Turkey. In a voicemessage put out on socialmedia, a leader of the group,Abu Akramah al-Urduni, en-couraged his followers to bekinder to citizens of Idlib.

“We don’t want it to comeout in Western media thatthe people oppose us, andthat the people brought downour banner and stomped onit,” the message said.

In August, Turkey desig-nated the group as a terroristorganization, following simi-lar moves earlier in the yearfrom the U.S. and the U.N.

—Dion Nissenbaumcontributed to this article.

WORLD NEWS

Syria has been holding off,at least temporarily, on anoffensive to retake the lastmajor opposition strongholdin the country, as tensionsgrow between Turkey and itsally Russia.

Turkey has been trying topersuade armed groups toevacuate Idlib province toavert a fight that the UnitedNations has said threatens tocreate the worst humanitar-ian catastrophe of the 21stcentury.

Russian and Syrian forceshave carried out a few dozenairstrikes over the past cou-ple of weeks but appearedstill to be preparing forcesfor a joint ground offensive.

“It seems there is some-what of a pause,” said oneU.S. defense official withknowledge of developmentsin Syria. “There’s a feelingthat they are not sure thatthey are ready to go for-ward.”

Russia’s envoy for Syria,Alexander Lavrentiev, saidthis past week that a peacefulresolution in Idlib was stillpossible—if Turkey managesto separate the moderate op-position from extremists. “Itis possible to abstain fromusing military force,” he said.

Western governmentsshare the view that the prov-ince shouldn’t remain a ha-ven for terrorists, but theyhaven’t proposed an alterna-tive to the Syrian regime’smilitary offensive. The U.S.has indicated it would inter-vene in Idlib if Mr. Assad’sforces used chemical weap-ons.

Turkey has been fortifyingits positions in the provincewith troops and tanks andgathering its forces on itsown borders to deter Syriancivilians fleeing the fighting,following talks last week inTehran with Syrian PresidentBashar al-Assad’s key back-ers—Iran and Russia.

BY SUNE ENGEL RASMUSSENAND NAZIH OSSEIRAN

Turkey Tries to Forestall Syria OffensiveAnkara is aiming topersuade armedgroups to evacuateIdlib to avert assault

A crowd displayed Syrian revolution flags during protests in Maraat Numan, part of Idlib province, which is the last opposition stronghold in the country.

EPA

/SHUTT

ERSTO

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U.S. law-enforcement agen-cies are probing Denmark’slargest bank over allegationsof massive money-launderingflows from Russia and formerSoviet states, according to aperson familiar with the mat-ter and documents reviewedby The Wall Street Journal.

The Justice Department,Treasury Department and Se-curities and Exchange Com-mission are each examiningDanske Bank AS after a confi-dential whistleblower com-plaint was filed to the SECmore than two years ago, theperson said. The continuingprobes are related to transac-tions at Danske’s tiny Estonianbranch over several yearsthrough 2015. The Journal re-ported earlier this month that

the bank is studying $150 bil-lion that flowed through ac-counts of non-Estonian ac-count holders at the branch.

The whistleblower com-plaint identified DeutscheBank AG and Citigroup Inc.,both overseen by U.S. regula-tors, as involved with transac-tions into and out of DanskeBank’s Estonian branch.Deutsche Bank acted as a cor-respondent bank for Danske,handling dollar wire transfers.Citigroup’s Moscow office wasinvolved in some of the trans-fers through Danske Bank’s Es-tonian branch, the person fa-miliar with the probes said.

A spokesman for Danskesaid the bank often talks toregulators. “However, as ageneral rule, we do not com-ment,” the spokesman said.

Spokesmen for DeutscheBank and Citigroup declined tocomment. The SEC, Justice De-partment and Treasury Depart-ment declined to comment.

Danish and Estonian au-thorities have shared informa-tion with U.S. counterparts, ac-cording to several Europeanofficials familiar with the mat-ter. “There is cooperation, theyare watching it very closely,”one of these people said.

Estonian officials are inves-tigating 26 former Danske em-ployees, from low-level staff tothe former branch CEO. Theyare accused of helping launder$230 million from an allegedfraud committed in Russia.

“In this particular case, it’sclearly dirty money fromcrime,” said Marek Vahing, Es-tonia’s state prosecutor.

Treasury Assistant Secre-tary for Terrorist FinancingMarshall Billingslea visited Es-tonia in May. Russian illicittransactions into Europe werea particular concern, accord-ing to people aware of thosediscussions, who said Danskewas mentioned only in pass-ing. Mr. Billingslea and other

“It is critical that theyshore up their anti-money-laundering regimes and thatthey clamp down and tightendown on how they regulatemoney coming out of Russia,”Mr. Billingslea told a Senatepanel last month.

“There’s an enormousamount of money that is stillbeing exfiltrated from Russiaby both organized crime andcronies surrounding Putin,” hetold senators, many of whomare seeking to levy new sanc-tions against Moscow.

U.S. involvement in the casegreatly raises the stakes forDanske Bank. It is already facinginvestigations in Denmark andEstonia over the allegations.

Danske’s share price hasdropped sharply this year asthe extent of the money-laun-dering probe has becomeclearer. Costs to insure againstDanske’s debt, some of whichis issued in U.S. markets, havejumped in recent weeks.

The U.S. Treasury can re-strict the supply of U.S. dollarsto foreign banks accused oflaundering money, a rarelyused penalty known as the“death-blow sanction” becauseit can send a lender into col-lapse. So far, the Treasury hasmostly used that cudgelagainst small lenders, includ-ing a now-liquidating Latvianbank accused of handling bil-lions of dollars for Russianarms traders and North Ko-rea’s missile program.

The Treasury and JusticeDepartment can also choose tofine a bank, punishing thecompany but sparing its cus-tomers, who could lose theirdeposits if the bank collapsed.

Danske last year initiatedan internal investigation intoits Estonian branch’s activityand is scheduled to release itsown report into money-laun-dering issues next week.

—Ian Talleycontributed to this article.

U.S. Probes Danish Bank Over Russia Money FlowsNordic FallDanske Bank share price

THEWALL STREET JOURNAL.Source: SIX

Note: 1 Danish krone = $0.16

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Danish kroner

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By BradleyHope, PatriciaKowsmann

and Drew Hinshaw

ance defense efforts, and ques-tioning the alliance's mutual-defense clause.

Both the Obama and Trumpadministrations have pressedEuropean countries to reversepost-Soviet Union military-spending reductions and in-crease spending. NATOmemberstates agreed in 2014 to reach amilitary-spending target equalto 2% of their gross domesticproduct within 10 years. TheU.S. military budget, at about$700 billion, constitutesroughly 3.5% of GDP.

Mr. Trump has complainedthat not enough countriesmeet the 2% mark and hassuggested that the 2% target istoo low.

Of 29 NATO members, eightspend at or above 2% of theirGDP on defense, including theU.S.

Alongside that debate, theU.S. also is enmeshed in tradeand tariff disputes with anumber of trading partners

within the NATO family, in-cluding Canada and Germany.

The squabbling spilled intopublic view at a recent NATOsummit, when Mr. Trumpvoiced support for the alliancebut also warned that the U.S.

could go its own way if othermember states didn’t increasetheir military contributions.

Despite the differences, Mr.Stoltenberg said, assessmentsof NATO’s value “need to takeinto account the devastatingloss of life and the ruinouseconomic costs of a major warin Europe.”

Rather than challenging Mr.

Trump’s criticisms of NATO,Mr. Stoltenberg expressedgratitude for the increased fo-cus that has been placed onburden-sharing among na-tions. Member countries’ mili-tary spending has been risingfor four consecutive years, hesaid, after trending downwardbefore Russia’s invasion ofUkraine in 2014.

Mr. Stoltenberg emphasizedthe defensive nature of the al-liance, dismissing contentionsthat the actions of membercountries on NATO’s easternflank could draw membersinto a conflict.

In July, Mr. Trump chal-lenged the notion of collectivedefense, suggesting that “ag-gressive” actions by Montene-gro, the newest NATO member,could pull the U.S. into a war.

Article 5 of the North Atlan-tic Treaty states that “an armedattack against one or more[members] shall be consideredan attack against them all.”

WASHINGTON—The NorthAtlantic Treaty Organizationembodies a “vital trans-Atlan-tic bond,” its secretary-generalsaid Friday, arguing the alli-ance is based on values thatmust withstand economic andpolitical disputes among itsmember states.

During a speech at the Heri-tage Foundation, a conserva-tive think tank in Washington,Jens Stoltenberg said NATO“guarantees our prosperity, oursecurity and our freedom.”

“Yes, we have our differ-ences, and robust debates,” hesaid. “But two World Wars, aCold War, and the ongoingfight against terrorism havetaught us that we are farstronger together than apart.”

President Trump has calledthe U.S. adherence to NATO intoquestion by repeatedly criticiz-ing other member countries fornot contributing enough to alli-

BY COURTNEY MCBRIDE

NATO Chief Extols Collective Defense

NATO ‘guaranteesour prosperity, oursecurity and ourfreedom.’

A10 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

him were North Korean.They took his identity with-

out his knowledge and startedbuilding an online presence, Mr.Qian said, setting up accountsunder his name on Free-lancer.com and Upwork and us-ing the accounts, which in-cluded Mr. Ri’s email, to bid forprogramming jobs.

The group also set up pro-files for Mr. Qian on Facebookand LinkedIn, calling him a com-puter programmer who at-tended elite Tsinghua Universityin Beijing. In fact, he took culi-nary studies in South Korea.

Mr. Ri appears to have usedhis own email to open a Face-book account in the name of ProDos, with an Asian woman as itsprofile picture. He also set up aTwitter account, @multicpu, inwhich, in an exchange with aU.S. programmer, he identifiedhimself alternately as QianDongguang or Pro Dos.

Ranga Bandara, a Sri Lankanprogrammer, said he was con-tacted on Freelancer.com by“Qian Dongguang” about devel-oping an app for an Indian firmcalled Siteabook. Mr. Bandarasaid he believed he was dealingwith a Chinese programmercalled Pro Dos. He said he builtthe app and is still owed $800.

The owner of Siteabook,Manikandan Krishnan, said a

South and North Korean officials attending a ceremony for the opening of a new liaison office in the North Korean border city of Kaesong.

RYUSEUNG-IL/ZUMAPRESS

WORLD NEWS

subcontractor had hired peoplehe thought were Chinese.

By this year, Mr. Ri’s grouphad begun impersonating SQTechnologies Inc., a Boston-based company with an app forinformation about health issues.SQ was co-founded by FahSathirapongsasuti, a Thai citizenliving in the U.S. who has de-grees from Harvard and Stan-ford universities, and who even-tually shut down the company.

The North Korean group cop-ied SQ’s website with a slightlydifferent URL and set up agroup in Slack impersonatingSQ executives, according to in-terviews with programmers thegroup hired. Mr. Ri’s email isused extensively in the fake SQ,and fake SQ pages also used pic-tures of Ri’s group. The groupalso set up fake profiles on Up-work and LinkedIn, pretendingto be programmers from theU.S., Japan and elsewhere.

As business came in, theNorth Korean group searchedfor coders to handle app devel-opment, graphic design andother tasks. “SQ Technology is ano B.S company,” said a hiringpost on Freelancer.com. Someclients who agreed to do workfor the group said they felt reas-sured by seeing Facebook,LinkedIn and other profiles.

LinkedIn Lead NinjaFlorida marketing firm

LinkedIn Lead Ninja was amongthose that hired the fake SQ.The firm was looking for pro-grammers to help build a botthat would “scrape” LinkedIn tofind marketing leads. It said ithired the fake SQ on Upwork.

Mr. Ri’s group contacteda data expert from Pakistan onUpwork and offered him $3,500a month to code for projects, in-cluding the LinkedIn Lead Ninjabot, said the Pakistani man,Dharmindar Devsidas. Mr. Ri’sgroup also connected with pro-grammers from South Korea, In-dia and elsewhere, according tothe programmers, using SQTechnologies profiles on Up-work and Freelancer.com.

Mr. Devsidas and program-mers said they were interviewedvia Slack by a person they be-lieved was the SQ co-founder.They said they were enticed bypromises of a work visa to moveto the U.S.

Mr. Devsidas began workingon code for the LinkedIn LeadNinja project via GitHub, whichallows users to collaborate re-motely. Work hours weretracked by an account Mr. Ri setup using his email address, ac-cording to screen shots pro-vided by one programmer.

The programmers said theyalso worked on other projects,including a bot to facilitate bulkpurchases on Canadian e-com-merce platform Shopify; a web-site for a U.S. job-search com-pany; and a graphic-designproject for Mr. Ward, the Aus-tralian entrepreneur, who wastrying to get a website built fora wholesale shopping firm. Thejobs paid from a few hundred tothousands of dollars.

Some programmers grewsuspicious. Mr. Devsidas said he

was told by purported SQ Tech-nologies executives not to com-municate with other coders inSlack. He found the prohibitionstrange and decided to ignore it.

By this summer, Mr. Devsidassaid, he had learned that, likehim, other programmersweren’t getting paid. Program-mers interviewed by the Journalsaid the same.

When Mr. Devsidas reportedthe alleged fraud to Slack, a cus-tomer-service representa-tive suggested he contact locallaw enforcement, according tomessages seen by the Journal.Slack declined to comment onthe matter.

Mr. Devsidas reached out toMr. Fah, the SQ Technologiesco-founder, who was receivingangry emails from other unpaidworkers. Mr. Fah said he re-ported the matter to the U.S.Federal Bureau of Investigation.

Mr. Fah tried to figure outwho was behind the ruse. Whenhe reached out to names affili-ated with the fake SQ Technolo-gies, he received a responsefrom someone describing him-self as Indian. The person saidhe couldn’t pay the program-mers because he was “verypoor,” and would shut downSQ Technologies’ activities.

When Mr. Fah said he was intouch with the FBI, the personwrote back, “Does FBI come toIndia as well? I don’t like it.”

A Journal inquiry to the per-son’s email wasn’t answered.The FBI declined to comment.

In the end, the North Koreangroup made thousands of dol-lars from LinkedIn Lead Ninja,paid via Paypal, without finish-ing the bot project, the Floridacompany said. Coders said theygot nothing.

Dane Richardson, an execu-tive at LinkedIn Lead Ninja, saidthe company was “shocked andastounded” to learn its pro-grammers weren’t who itthought they were. LinkedInLead Ninja shut down work withthe fake SQ Technologies with-out losing client data, said Mr.Richardson, whose title is “chiefproblem solver.”

Meanwhile, Mr. Ri in She-nyang appears to be multitask-ing with other businesses, in-cluding a reincarnationof Everyday-Dude.com, the sub-scription internet-television ser-vice, under a new name andmarketing it through Facebookand LinkedIn pages.

A new page teased viewerswith content related to Euro-pean soccer clubs and theWorldCup in Russia. By mid-July itwas touting promotions such asa “15 Days Free Trial Version”that promised “The Joy of Any-time, Anywhere.” Facebook shutit down later in the month.

Later, a LinkedIn user—fea-turing the same photo as one ona shuttered Pro Dos Facebookpage—began to look at a Jour-nal reporter’s Linkedin profile.

The user claimed to have at-tended a university in HongKong. The university said it hadnever heard of the person.

—Ian Talley and AndrewJames contributed to this

article.

elsewhere.“It never crossed my mind”

that North Koreans operated anIT business online, said DonaldWard, an Australian entrepre-neur, when shown that a pro-grammer he hired to redesign awebsite, who he thought wasJapanese, was actually part of aNorth Korean crew operating innortheastern China, near thecity of Shenyang.

The Journal discoveredthe Shenyang business after re-viewing computers and otherdevices belonging to a NorthKorean operative arrested inMalaysia for suspected involve-ment in last year’s murder ofNorth Korean leader Kim JongUn’s half-brother. A car that fer-ried the alleged killers awayfrom the Kuala Lumpur airportwas registered to the North Ko-rean operative, according to Ma-laysian investigators. The opera-tive, who denied wrongdoing,was deported.

The operative’s electronic de-vices showed he had communi-cated with the Shenyang groupabout money-making venturesfor North Korea, using vocabu-lary found only in the north’s di-alect of the Korean language.

For North Korea, finding newbusiness ventures has been cru-cial since the United Nationslast year tightened sanctions.The U.S. Treasury Departmentwarned in July that North Kore-ans working abroad were sellingIT services and hiding behindfront companies and the ano-nymity provided by freelancingwebsites.

Interviews with clients, plusrecords on Freelancer.com, helpdetail at least tens of thousandsof dollars earned by the She-nyang group. In total, North Ko-rea may be pulling in millionsfrom software developmentwith numerous fake social-me-dia profiles, say experts whotrack North Korean activity.“It’s a big chunk of change” forNorth Korea, said AndreaBerger, of the James MartinCenter for NonproliferationStudies in Monterey, Calif.

Everyday-DudeA man called Ri Kwang Won

appears to be at the heart of theoperation in Shenyang. Amongother indications, his name ap-peared in the cellphones andcomputers of the North Koreanoperative arrested in connectionwith the killing in the KualaLumpur airport. That operativereached out to Mr. Ri about aplan, which didn’t get off theground, to hack software formedical imaging from a U.S.company and resell it to hospi-tals elsewhere.

The Malaysia-based opera-tive’s phones included an emailaddress saved under Mr. Ri’s

ContinuedfromPageOne

PyongyangEarns CashOn IT Jobs

SEOUL—North and SouthKorea opened a liaison officenorth of the demilitarizedzone on Friday, an unprece-dented step for political coop-eration between the sides thatcomes as talks between Wash-ington and Pyongyang havestalled.

The office, which some crit-ics have described as a de factoembassy, will facilitate round-the-clock face-to-face communi-cation, providing Seoul andPyongyang with a concrete sym-bol of an engagement campaignthat began this year. Each sidewill have 15 to 20 staffers at thefacility, according to an agree-ment they signed Friday.

But the move risks irking U.S.officials, who are seeking tomaintain sanctions pressure onPyongyang and worry that eco-nomic cooperation between theKoreas threatens to outpaceprogress on North Korean denu-clearization, undermining U.S.leverage in the nuclear talks.

South Korea’s foreign minis-ter told a legislative hearing lastmonth that Seoul and Washing-ton were working to resolve“differences in understanding”on the liaison office, among

other matters.The same day, State Depart-

ment spokeswoman HeatherNauert said that the U.S. wouldexamine whether the liaison of-fice violates sanctions on NorthKorea. State Department offi-cials haven’t said publiclywhether the office constitutes asanctions violation.

The office in the North Ko-rean city of Kaesong has beendogged by concerns aboutwhether Seoul’s provision ofelectricity and other supplies tothe site risks breaching UnitedNations sanctions that capNorth Korean oil imports andprohibit imports of coal and nat-ural gas. The sanctions furtherban the creation of “cooperativeentities” with North Korea with-out an exemption.

Seoul officials have said thatthe office doesn’t violate sanc-tions and that they have closelycoordinated with the U.S. in es-tablishing it. “All supplies,equipment, and electricity pro-vided to the liaison office arefor the convenience of our staff,and do not confer upon NorthKorea any economic benefit,” astatement from South Korea’sUnification Ministry said.

A ministry spokeswoman de-clined to comment on whetherSeoul would provide oil to the

site and said she couldn’t sayhow much the South had spentto set up the office becausethose costs would be calculatedat a later date.

As a detente on the penin-sula blossomed this year,South Korean President MoonJae-in pushed for increasedeconomic cooperation with theNorth to advance relations,ease military tensions and es-tablish a permanent peace.The liaison office fulfills acommitment he and North Ko-

rean leader Kim Jong Un madeat their first summit meetingin April; they are due to meetagain in Pyongyang next week.

The U.S. has signaled misgiv-ings about the pace with whichthe left-leaning Moon adminis-tration is seeking to engagewith Pyongyang economically.

On Thursday, the top U.S.military commander in SouthKorea, Gen. Vincent Brooks, saidhe had approved a South Koreanrequest to supply materials forrepairing cross-border commu-

nication lines and to construct acommunications building onNorth Korea’s east coast. Whileneither was directly related tothe liaison office, Gen. Brookssaid that Seoul had wanted tosend “more than enough” mate-rial to the North and that its re-quest had been highly unusual.

As head of the U.N. Com-mand that oversees the KoreanWar armistice, Gen. Brooksmust approve any shipments ofmaterial to the North.

In the case of the Kaesong of-

fice, the arrangement could vio-late U.N. sanctions “dependingon the amount of supplies im-ported,” said Cha Du-hyeogn, avisiting research fellow at theAsan Institute for Policy Studieswho advised a conservative for-mer president.

Officials at the liaison officeplan to meet weekly. A spokes-man for Seoul’s Unification Min-istry said this week that hehopes the office will facilitatedenuclearization talks betweenthe U.S. and North Korea.

BY ANDREW JEONGAND DASL YOON

Koreas OpenLiaison OfficeIn Sign of Thaw

n am e—mu l t i c p u@o u t -look.com—from which the Jour-nal was able to identify morethan 50 fake social-media pro-files and websites set up by Mr.Ri and his group.

Saved in a computer of thearrested operative was a Chi-nese phone number for Mr. Ri. Aman who answered a call to thatnumber identified himself as RiKwang Won, speaking in Chi-nese with a Korean accent. Heacknowledged being involvedwith software for medical imag-ing, as well as with an internettelevision business called Ev-eryday-Dude.com, but declinedto answer further questions.

A Facebook page for Every-day-Dude.com, showing pack-ages with hundreds of pro-grams, was taken down minuteslater as a reporter was viewingit. Pages of some of the ac-count’s more than 1,000 Face-book friends also disappeared.

Facebook said it had noknowledge of North Koreans us-ing its platform but is commit-ted to rooting out profiles usingfalse names. It suspended nu-merous North Korea-linked ac-counts identified by the Journal,including one that Facebooksaid appeared not to belong to areal person. After it closed thataccount, another profile, withidentical friends and photos,soon popped up.

LinkedIn confirmed that pro-files identified by the Journalwere fake and said at least twohad been restricted. Upwork,which runs a site where free-lance programmers gather, saidit prohibits use by North Kore-ans and is dedicated to fightingfraud. Several Upwork accountstraced to the Shenyang crewnow are offline.

Freelancer.com, the operatorof a similar business, said it wasinvestigating suspect accountsbut didn’t see ties to North Ko-rea. It closed one account forspamming. Slack, the messagingservice through which the NorthKorean crew communicated,

Four men in Shenyang, China, in a photo on a device of a North Korean deported by Malaysia afterthe 2017 airport murder of North Korean leader Kim Jong Un’s half brother. Three of their pictureswere used in social-media profiles linked to a Shenyang web-programming business. It isn’t knownif they knew of the use of their photos. Below, a scene in Shenyang, which is in northeast China.

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said it takes appropriate actionwhen notified of problems. Pay-pal and Twitter declined tocomment. Github didn’t respondto requests for comment.

Not much is known about Mr.Ri in Shenyang, a gritty Chinesecity of 10 million near the NorthKorean border. Mr. Ri’s modusoperandi appears to have ofteninvolved impersonating othersonline to create social-mediaprofiles through which to mar-ket business services.

The Chinese Foreign Ministrysaid it wasn’t aware of details ofthe business as described to it.

Qian Dongguang, a Chinesecitizen of ethnic Korean descent,said he came into contact withMr. Ri in 2016, when Mr. Ri per-suaded him to help set up acompany to sell what Mr. Ricalled North Korean medical im-aging software. “They told meit’s important and that I need tokeep it secret,” said Mr. Qian.He said Mr. Ri and others with

The North Koreansused fake socialmedia profiles tobring in business.

THEWALL STREET JOURNAL. * * * * * * Saturday/Sunday, September 15 - 16, 2018 | A11

to emphasize patriotism.The Chinese leadership has

been engaged for years in acampaign to diminish the in-fluence of the Dalai Lama, whoremains popular among Tibet-ans despite nearly six decadesin exile. It has also ramped upa mass detention program forMuslims in its northwest re-gion of Xinjiang, where Beijingis worried about violent sepa-ratism fanned by militant Is-lam. Giving the Vatican toomuch say risks setting a bad

precedent in Beijing’s eyes.The Vatican had hoped to

sign the deal in the spring, butneeded several more months toovercome resistance from someChinese Catholics, one of thepersons familiar with the mat-ter said. In particular, thebishop of the southeastern dio-cese of Shantou balked at step-ping aside in favor of an excom-municated bishop as part of theagreement, this person said.

—Kersten Zhangcontributed to this article.

A train factory in Qingdao, Shandong province. The slowdown complicates China’s trade fight with the U.S.

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not for centuries but millen-nia,” said Sandro Magister, aVatican expert who writes forItaly’s L’Espresso magazine.“The church has managed tofree itself from control of sov-ereigns and governments onecclesiastical matters such asthe naming of bishops, butnow this achievement is clam-orously contradicted by theagreement with China.”

The pact with the Vaticancould still fall through or bedelayed due to unforeseen

events, one of the people famil-iar with the matter said. Thetwo sides are close to signingeven though China’s govern-ment has recently intensified acrackdown on Christians andother religious groups, throughmeasures including closingchurches and removing reli-gious symbols such as crossesand the domes of mosques.The deal is expected to stircriticism of the pope alreadyunder fire from within and out-side the church for his han-

dling of clerical sexual abuse.In practice, China’s Commu-

nist Party is unlikely to give upcontrol over any religion, evenCatholicism, which has rela-tively few adherents in China.Chinese President Xi Jinpinghas launched a program to“Sinicize” all religions to makesure they don’t offer alternateviewpoints to the CommunistParty. As part of that policy,Beijing is strengthening itssway over clerical appoint-ments and religious teachings

WORLD NEWS

Japan. Special quarters, what’sknown as the Enforcement Co-ordination Center, have beencreated on the ship for the op-erations.

The coalition, not previ-ously disclosed, will includethe U.K., Australia, New Zea-land and Canada—the U.S.’spartners in the Five-Eyes intel-ligence alliance—as well asJapan and South Korea. Franceis contributing at least oneperson for now.

Coalition countries are alsocontributing warships and mili-tary surveillance aircraft tobetter spot illicit shipments.

The expanded surveillancewill allow more “bridge-to-bridge” communications be-tween allied ships and sus-pected smuggling ships—known jokingly inside themilitary as having “scarlet let-ters” for their alleged mis-deeds. Sanctions violators willno longer be able to plead igno-

rance, another military officialsaid: “ ‘I didn’t know’ is no lon-ger an excuse.”

The new coalition isn’t nec-essarily a precursor to moreaggressive interdictions, suchas boarding suspected ships orforcing vessels into allied ports,officials said. Some critics ofthe sanctions program havelobbied for more-assertive en-forcement as denuclearizationtalks between Washington andPyongyang have stalled.

Ships confirmed to besmuggling goods to North Ko-rea are blacklisted by the U.N.Security Council, denying themaccess to ports of any U.N.-member country.

The efforts follow a Maysummit in Singapore betweenPresident Trump and NorthKorean leader Kim Jong Un inan effort to denuclearize theKorean Peninsula. Diplomaticefforts have since stalled butthe two countries are trying to

revive them.While most sanctions-bust-

ing surveillance focuses onPyongyang’s revenue-generat-ing exports of coal, weaponsand labor and its illicit cyberactivities, imports of refinedpetroleum are among Washing-

ton’s biggest North Korea wor-ries. A critical lubricant for theNorth Korean economy, theyalso drive its military.

The Security Council, led bythe U.S., late last year cappedannual imports at 500,000 bar-rels. But North Korea exceededthe cap within the first five

months of 2018, according toU.S. intelligence.

The sanctions evasion wasaided by Russian and Chineseships that transferred black-market fuel into North Koreanvessels on the high seas toavoid detection, according toU.S. intelligence. Between Janu-ary and May, two dozen NorthKorean ships made 89 deliver-ies of refined petroleum intoNorth Korean ports, accordingto U.S. intelligence provided tothe U.N. and reviewed by TheWall Street Journal. The deliv-eries were from high-seastransfers, most from eitherRussian or Chinese ships, U.S.officials said.

Some of those deliveriesmay have carried volumes al-lowed under the U.N. sanc-tions. But many of the ships,according to the Journal’s re-view of U.S. intelligence andpublic information, loadedtheir fuel on the high seas in

violation of international bans,had been blacklisted by the Se-curity Council before the deliv-eries were made, and would beviolating the sanctions by car-rying volumes that put NorthKorea over its quota.

The North Korean ship ChonMyong 1, for example, deliveredup to 190,000 barrels of refinedpetroleum to North Korea’sWonsan port in May, twomonths after being sanctionedby the U.N. The blacklisted NamSan 8 delivered up to 218,000barrels of fuel into the Nampoport in May. That vessel waslater caught by Japan’s Minis-try of Defense conducting amidnight fuel transfer in theEast China Sea on July 31.

U.S. officials have expressedincreasing frustration at whatthey characterize as easingsanctions oversight by Russiaand China. Both countries saythey are implementing the U.N.bans.

WASHINGTON—The U.S. isconvening a multinational co-alition to significantly expandsurveillance of ships smugglingfuel to North Korea in violationof United Nations sanctions,American military officials said.

The coalition is the firstunified international effort tomonitor the ship traffic in theyear since the Trump adminis-tration launched its “maxi-mum-pressure” sanctions cam-paign, aimed at strong-armingNorth Korea into abandoningits nuclear and missile pro-grams. Surveillance efforts un-til now have been a hodge-podge of intelligence-sharing,U.S. officials said.

More than 50 personnelfrom allied countries will behosted aboard the USS BlueRidge, an American commandship stationed in Yokosuka,

BY GORDON LUBOLDAND IAN TALLEY

Allies to Step Up North Korea Surveillance

China and the Vatican areset to sign a landmark agree-ment this month ending a longstruggle between Beijing’sCommunist rulers and thepope over who chooses theleaders of Catholicism in theworld’s most populous coun-try, according to two peoplefamiliar with the matter.

Reactions to the deal, whichgives both sides a say in ap-pointing the church’s bishops inChina, are likely to be sharplydivided, with some hailing adiplomatic coup by the Vaticanthat draws China closer to theWest and others warning of animportant defeat for the princi-ple of religious freedom.

The deal would include thefirst official recognition by Bei-jing that the pope is the headof the Catholic Church inChina. In return, Pope Franciswould formally recognizeseven excommunicated Chinesebishops who were appointedby the Communist governmentwithout Vatican approval.

“It is a baby step by Chinatoward recognizing some ofthe framework of the Westernworld,” said Francesco Sisci,an Italian who teaches interna-tional relations at China Ren-min University in Beijing. “Itdoesn’t go as far as recogniz-ing what we in the West callreligious freedom but it is adegree of religious autonomy.”

Others, including some U.S.diplomats, are concerned thepope is ceding a strong influ-ence over church leadership toan avowedly atheist authori-tarian regime.

“This is a strange stepbackward on terrain overwhich the church has fought,

Beijing and Vatican to Sign Agreement Over Bishops

An attendee waved a Chinese flag as Pope Francis arrived in early June for his weekly general audience in St. Peter’s Square at the Vatican.

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BEIJING—Investment infactories, railways and otherprojects in China so far thisyear has grown at the slowestpace in more than a quarter-century, pointing to challengesin government efforts to ar-rest an economic slowdown.

Fixed-asset investment out-side rural households rose5.3% in the January-Augustperiod from a year earlier, theNational Bureau of Statisticssaid Friday. The rate was the

most sluggish since 1992,when the investment datawere first available, accordingto data provider Wind.

Economists had expectedthe pace to at least match the5.5% rate recorded from Janu-ary to July, given that the gov-ernment has been encouragingmore investment. While in-vestment in property andmanufacturing held steady, in-frastructure investment—a keypart of the government’s pro-

gram to prevent a slippage ingrowth—remained weak, ac-cording to the official statis-tics.

“If investment, especiallyinfrastructure investment,fails to recover in September,the risk on economic growthwould be very large,” said Sh-uang Ding, an economist atStandard Chartered.

A slowing economy is com-plicating Beijing’s trade fightwith the U.S., worrying Chi-

nese leaders that a protractedbattle would further hitgrowth. China’s CommerceMinistry said Thursday it hasreceived an invitation from theU.S. to resume negotiations.

The Wall Street Journal re-ported earlier that TreasurySecretary Steven Mnuchin hadreached out to his Chinesecounterparts to give Beijinganother chance to stave offnew tariffs on $200 billion inChinese exports.

Mr. Ding said that local gov-ernments should have receivedextra funds following a delugein bond-issuance last month,but that the money is probablystill sitting in bank accounts,waiting to be spent on localprojects.

Other indicators releasedFriday paint a mixed picture ofthe economy. Value-added in-dustrial output rose 6.1% inAugust from a year earlierwhile retail sales climbed9.0%—both slightly higher thantheir July rates and strongerthan economists’ expectations.

Beijing has sent inconsis-tent messages about its poli-cies, according to some econo-mists, and that may be givinglocal governments pause. Be-fore growth worries promptedthe recent efforts to boost in-frastructure spending, Beijingspent two years pressuring lo-cal governments to curtaildebt and excess industrial ca-pacity, and it hasn’t com-pletely backed off those goals.

—Liyan Qi and Grace Zhu

China Fails to Reverse Investment Slowdown

U.S.-led coalitionwill unify efforts tomonitor shipmentsthat defy sanctions.

By Francis X. Roccain Rome and Eva Dou

in Beijing

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as much as 5.5% by the end ofnext year, above its 4% target.

To help stabilize the ruble,the central bank will stop buy-ing foreign currency this year,Ms. Nabiullina said. The rubleis down more than 14% againstthe dollar this year, althoughit rose 0.7% following the ratedecision on Friday.

Markets reacted positivelyto what they saw as the asser-tion of Ms. Nabiullina’s inde-pendence. The country’s bench-mark 2-year bonds due in 2020rose slightly following the ratedecision. Moscow’s main stockindex rose 1% Friday.

“With this decision Nabiul-lina is showing she’s preparedto make decisive decisions toreact to tactical challengesthat are arising in the mar-kets,” said Oleg Kouzmin, chiefRussia economist at invest-ment bank Renaissance Capi-tal. “Her mandate is strongand she continues to enjoy themarket’s trust.”

—Jon Sindreu in Londoncontributed to this article.

7.5%The Bank of Russia’s key interestrate after Friday’s increase.

MOSCOW—Russia’s centralbank raised interest rates Fri-day, moving to defend the ru-ble against market volatilityand inflation as global inves-tors question the outlook foremerging-market economiesand the possibility of freshU.S. sanctions.

The Bank of Russia raised itskey interest rate to 7.5% from7.25%, ending a series of cutsthat brought it down from apeak of 17% at the end of 2014that was introduced in thewake of earlier sanctions im-posed by the U.S. and Europe.

The increase eased investorconcerns over the bank’s free-dom to act in maintaining Rus-sia’s macroeconomic stability.In recent weeks, PresidentVladimir Putin’s prime minis-ter and chief economic adviserboth suggested lending ratesshould fall to boost growth.

The bank’s move endedweeks of speculation over thecourse of Russia’s monetarypolicy. For some analysts, itpointed to central bank chiefElvira Nabiullina’s willingnessto act when confronted withthreats to economic stability,even when that meant goingagainst the wishes of Mr. Pu-tin’s economic team.

“Our goal is to meet the in-flation target, this is the es-sence of our independence,” Ms.Nabiullina told reporters inMoscow after the rate decision.“There’s a growing uncertaintyover sanctions against Russia,the growing geopolitical riskshave increased the outflow ofcapital from emerging markets.”

She said she would considerfurther increases this year ifthe inflationary pressurescaused by a rising sales tax andcurrency depreciation don’tsubside. The central bank ex-pects inflation to accelerate to

BY ANATOLY KURMANAEVAND PAUL HANNON

Russia RaisesInterest RateTo Boost Ruble

Bank Governor Elvira Nabiullina

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Bountiful Harvest

A fisherman totes his big catch near a port in Mogadishu, Somalia.

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jumped to 18% last month. An-alysts welcomed it, saying itwould help cool off a creditboom that pushed the Turkisheconomy into overdrive.

The Turkish president,however, said the decision wasmisguided because, in hisview, higher rates only harmthe economy.

“There is your indepen-dence,” Mr. Erdogan toldmembers of his Justice & De-velopment ruling party in atelevised speech from Ankara.“We will now see what the re-sults of this independence are.This is my period of patience,this patience has a limit.”

In his 15 years at the helmof Turkey, Mr. Erdogan hasroutinely clashed with central-bank governors over monetarypolicy, calling interest rates“tools of exploitation” and attimes vetoing rate increases.

The standoff comes at aparticularly sensitive juncturebecause increasing global

trade frictions and the U.S.Federal Reserve’s tightening ofmonetary policy have drivenmoney away from riskiercountries and into the relativesafety of U.S. assets.

Some analysts said Mr. Er-dogan’s comments risked hin-dering the Turkish economy’srecovery.

“Had Mr. Erdogan not madethis intervention, we wouldhave envisaged a more pro-nounced lira rally from here,”Tatha Ghose, an analyst atGerman lender CommerzbankAG, said in a research note.

The Turkish lira, whichjumped 5% against the dollarin the wake of Thursday’s ratedecision, was flat in Europeantrading on Friday.

At stake, economists say, iswhether Mr. Erdogan will al-low the Turkish economy toslow down. They say that afteryears of high, credit-fueledgrowth, a chilling period isnecessary to help break a spi-

raling inflation cycle underwhich employees seek higherwages to offset higher con-sumer prices.

That is far from certain. Mr.Erdogan won re-election inJune on the promise to createa bigger and more prosperousTurkey, with a steady flow ofcheap loans feeding a dynamiceconomy. With regional elec-tions due in March, the presi-dent is loath to alienate corevoters from the country’s co-hort of small entrepreneurs,who would be hit hard by pro-longed high-rate policies.

“We will plan and acceler-ate investments that are closeto finishing,” Mr. Erdogan saidin his speech Friday.

With days to go before heunveils his plan, Mr. Albayrakrevealed little, saying onlythat it would be focused onfighting inflation and explainhow the government will di-rect the economy towardhigher exports.

ISTANBUL—President Re-cep Tayyip Erdogan warned hewouldn’t tolerate higher lend-ing rates for very long, on Fri-day challenging the centralbank and raising the stakes onan economic plan meant tocalm the country’s currencycrisis.

Finance Minister Berat Al-bayrak—Mr. Erdogan’s son-in-law—is due to present theplan Thursday to explain howTurkey will deal with thetremors caused by a 38% dropin the Turkish lira against thedollar this year.

The central bank jacked upits benchmark interest rate bymore than 6 percentage pointsthis past Thursday, bringing itabove inflation for the firsttime in a decade.

Mr. Albayrak said the moveproved the central bank wasindependent and committed tofighting inflation, which

BY DAVID GAUTHIER-VILLARS

Erdogan Assails Central BankPresident Recep Tayyip Erdogan, speaking to his ruling-party members on Friday, said he was losing patience with rate increases.

How now vow cow?

The cows there did take itupon themselves to bear wit-ness to the vows at one wed-ding after they broke free fromtheir pasture. “They were moo-ing like you’d read about, justMOOOO,” Ms. Salem-Leascasays. “It kind of stalled thewedding for a little bit.”

One bride planning for herwedding at the Barn at SilverOaks Estate in Winthrop, Maine,asked that three cows she raisedon her family’s nearby farm bethere for her big day, say venueowners Gene and Veronica Car-bona. She disinvited her belovedbovines at the last minute, Mr.Carbona says, upon realizingthey “make such a mess.”

A pair of wedding crashersshowed up last September atthe Barn at Silver Oaks Estatewhen about 200 guests weregrooving to Justin Timberlake’s“Can’t Stop the Feeling!” on the

dance floor inside. “Here weare having a perfect wedding,”says the venue’s Mr. Carbona,“and in walk two deers, rightinto the barn, the mother and alittle baby fawn.”

They “stopped on the dancefloor and were hopping aroundto the music,” he says. Uponfurther investigation, he con-cluded the interlopers were“seven sheets to the wind”from eating fermented appleson the property.

The Broadturn Farm, an op-erational dairy farm with awholesale vegetable and flowerbusiness in Scarborough, Maine,moves working livestock faraway from the wedding barn onweekends with weddings toprevent smells mingling.

Some attendees seek out theroaming cattle, says ownerStacy Brenner. “A lot of thetimes the guests will be havingtheir cocktails and they’ll wantto stand next to the cows anddo an Instagram.”

Even cattle shooed off froma wedding barn can leave olfac-tory mementos, says weddingphotographer Jayna Watkins,who says she has shot about 15barn weddings since openingher business outside Knoxville,Tenn., in 2012. “Even if they’vecleaned up the barn and every-thing and set it up as a venuefor this one day,” she says, “you

can’t quite get rid of all the ani-mal and the smells that comealong with that.”

While taking portraits undera barn doorway last summeroutside Knoxville, Ms. Watkinsheard a squeaking noise. “Iasked if it was someone’s cell-phone and they said, ‘no that’sbarn mice.’ ”

“I jetted out of there realquick,” she says. “They thoughtit was hilarious, but I’m not afarmer, I don’t know! I’m onlyin barns at weddings.”

New wedding barns havesprung up across the country inrecent years—restored, relo-cated or newly built to host nup-tials. Wedding-planning websiteRusticBride.com lists over 3,000“rustic” venues in 50 states.

Modern wedding barns canstray far from their roots—

decked out with chandeliers,central heating and air condi-tioning, professional-gradekitchens for caterers and reno-vated bathrooms. Many have noanimals near the premises,their owners having take painsto get rid of critters.

Greg and Deborah Link are intheir fifth year of holding wed-dings at their Hardy Farm nearthe Maine-New Hampshire bor-der, charging $4,000 to $7,500for their whitewashed barn. Thebarn had been vacant of farmanimals since the 1920s, Mr.Link says, but they had to “chaseout the squirrels and the bats.”

Brad Beskin, 35, and GarrettBurnett, 30, didn’t set out towed in a barn but hosted theirblack-tie nuptials at the BrodieHomestead, a self-described“urban barn” in Austin, Texas,

in July after falling in love withits dramatic high ceilings.

“It really was just a rusticshell for something very mod-ern and elegant inside and thatwas sort of the juxtapositionwe were going for,” Mr. Beskinsays. “That’s where the barn-yard theme stopped.”

Starting next year, coupleswill be able to bring the barn tothem, thanks to Tentwood, astartup outside Seattle whoserentable pop-up barn goes for$6,000 a weekend.

Kelsey Von Stubbe, whofounded the company in 2017and is accepting 2019 bookings,says she hasn’t gotten requeststo include farm animals. A cou-ple did ask to set up the mobilebarn at Seattle Center so theirbarn-wedding backdrop wouldinclude the Space Needle.

Anna Trullinger and bridesmaids amid a bee attack on her wedding day at a farm venue.

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to take the stage for a comedictribute to the couple when shewandered over to greet the lla-mas in nearby pens.

“I thought me and this llamahad this connection of sorts. Itcame over to me, it looked meright in the face,” says Ms.Merli, 30, a New York projectmanager and part-time come-dian. “And it just spit with suchan intense force…It prettymuch drenched me.”

She didn’t have time tofreshen up before performing,but other guests didn’t seemsurprised at her appearance,she says, because they “knewthe improv group was gonna bekind of weird.”

A common request at the Sa-lem Cross Inn’s restored 18th-century wedding barn: the cows.The West Brookfield, Mass.,venue can’t prearrange cattlecameos, because “they movefrom pasture to pasture,” saysco-owner Martha Salem-Leasca.“We can’t really control it.”

ContinuedfromPageOne

CrittersCrash BarnWeddings

SOUTH SUDAN

Fighting Erupts TwoDays After Accord

Fighting has broken out inSouth Sudan two days after thewarring sides signed what the gov-ernment called a “final final” peacedeal to end the civil war. Each sideblames the other for the attacks.

Clashes erupted Friday whengovernment troops stormedbases in Lainya and Kajo Kejicounties, said opposition spokes-man Lam Paul Gabriel. “Thatmeans the regime is not seriousabout the peace,” he said.

The government called the ac-cusations “propaganda.” The at-tacks were instigated by oppositionforces that emerged from hidingalong the Ugandan border andwere trying to reclaim territory,said spokesman Lul Roai Koang.

—Associated Press

YEMEN

Battles in Port CityThreaten Millions

A recent bout of fighting be-tween Yemeni government forcesbacked by a Saudi-led coalitionand Shiite rebels around the RedSea port city of Hodeidah couldjeopardize shipments of 46,000tons of wheat expected to arrivewithin the next 10 days, the WorldFood Program said Friday.

The latest offensive began lastweek following the failure of whatwas hoped to be renewed peacetalks in Geneva. It was concen-trated in the eastern and south-ern entrances to the city, which isconsidered the lifeline of Yemen.

The fighting could affectWFP’s ability to supply up to 3.5million people in dire need forone month, a spokesman said.

—Associated Press

BRAZIL

Commercial WhalingProposal Is Defeated

Members of the InternationalWhaling Commission defeated aJapanese proposal to reinstatecommercial whaling at a meet-ing in Brazil on Friday.

The commission suspendedcommercial whaling in the1980s, but Japan argued thatstocks have recovered suffi-ciently for the ban to be liftedand that no good reason existsto maintain a measure that wasmeant to be temporary. Othercountries argued that manywhale populations are still vul-nerable and that whaling increas-ingly is seen as unacceptable.

Japan’s proposal was de-feated Friday by a vote of 41-27in Florianopolis, Brazil.

—Associated Press

THAILAND

U.S. Sanctions ThaiCompany for Iran Ties

The U.S. sanctioned a Thaiaviation firm for working withIran’s blacklisted Mahan Air, partof a larger campaign to shutdown an airline Washington hasaccused of ferrying weapons andfighters into Syria in support ofPresident Bashar al-Assad.

In sanctioning the Bangkok-based My Aviation Co. Ltd., theU.S. is targeting the global oper-ations of Iran’s largest airline.U.S. officials fear Mr. Assadcould launch another chemical-weapons attack. A spokesmanfor Iran’s mission to the U.N.,said Mahan Air “is a legitimateair carrier company.” Mahan Airand My Aviation didn’t respondto requests to comment.

—Ian Talley

FROM PAGE ONE

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Cambridge, Mass.

L ike many young people,Nathan Glazer was once asocialist. After enrollingat New York’s City Collegein 1940, Mr. Glazer, whose

parents were Lithuanian Jewish im-migrants, joined the radical wing ofa Zionist group called Avukah.Looking back, he says, its ideologywasn’t so profound—“somethingabout Jewish and Arab proletarianscoming together” against Britishimperialism in Palestine.

City College in the 1930s and’40s was a politically active havenfor aspiring Jewish scholars, whoseadmission to Columbia and otherIvy League schools was restrictedby quotas. This was the milieu thatincubated the “New York intellectu-als,” a loose cohort of left-wing,anti-Soviet writers and thinkers—including Daniel Bell, Irving Howeand Irving Kristol—who shapedAmerican intellectual life in themid-20th century.

Mr. Glazer, 95, is one of the lastliving members of this group. Asyoung radicals often do, he driftedrightward as he grew older. Aftercollege, he decided “America wouldbe fine if it was more like Sweden.”Then he concluded “it can’t be, it’stoo diverse.” Now he has doubtsabout social democracy altogether:“It runs into its own problems.”

But Mr. Glazer, a professor emer-itus of sociology at Harvard, driftedonly as far as the political center.He is sometimes labeled a “neocon-servative,” like Kristol or NormanPodhoretz. But he tells me he’snever voted Republican except oncein Massachusetts, as a protestagainst “the fact that some Ken-nedy was being elected from thedistrict again and again.”

Mr. Glazer’s interest in Jewishidentity deepened after World WarII and the Holocaust. It eventuallydrew him to the wider question ofhow the U.S. accommodates ethnicpluralism, to which he devotedmuch of his career. His best-knownwork, “Beyond the Melting Pot”—written with Daniel Patrick Moyni-han and published in 1963—de-scribed the limits of “assimilation”for Jews, Puerto Ricans, Irish, Ital-ians and blacks in midcentury NewYork City.

Moynihan and Mr. Glazer arguedthat ethnic identities—especially“those not close to the Anglo-Saxoncenter,” as they put it—tend to per-sist in the U.S., shaping politics andsocial life for generations. Ethnicgroups “became interest groups,”Mr. Glazer says, “not on the basis ofethnicity but on the basis of theiroccupational concentrations. Whenyou’re talking about the ItalianAmericans,” for example, “you’retalking about the sanitation men’sunion.” The Irish were the police,the Jews the small shopkeepers,“and so on.” Ethnic residential clus-ters also persisted for decades,even after Congress severely re-

stricted immigrationfrom Southern andEastern Europe in 1924.

Ethnic politics hasexisted throughoutAmerican history, asthe country absorbedsuccessive waves ofimmigrants. But Mr.Glazer sees contempo-rary identity politics assomething new—anoffspring of the civil-rights movement.“What happened wasblack identity becamethe model. It becamethe model for a revivalof feminism,” Mr.Glazer says. “It becamethe model for all kindsof groups.”

Many sociologists ofMr. Glazer’s generationexpected that blackAmericans after civilrights would follow thepattern of ethnic Euro-peans: They would con-tinue to face discrimi-nation and retain someethnic distinctiveness,but the process of inte-gration would be possi-ble without state inter-ference like quotas orset-asides. “We didn’t think ofblacks in the North as we thoughtof blacks in the South,” Mr. Glazersays. “The blacks in the South haveto be freed from a political oppres-sion—separate schools, separatepublic facilities.”

Mr. Glazer hoped the Northernmodel of race relations couldspread to the South after civilrights. Instead, liberals beganthinking about race in the Northalong Southern lines—an unfortu-nate turn, in Mr. Glazer’s view. “Ikept on fighting the word ‘segrega-tion’ of blacks in the North,” hesays. Northern blacks “didn’t havemoney, they lived where theycould.” But they “were not segre-gated in schools; they were concen-trated because that’s where theywere”—just as ethnic neighbor-hoods in midcentury New York hadschools that were heavily PuertoRican or Italian.

The degree of discriminationagainst blacks under Jim Crow wasunparalleled. Yet elite opinionblurred the distinction between thecontentious ethnic pluralism de-picted in “Beyond the Melting Pot”and legally mandated white su-premacy. America’s identity prob-lem “became merged, North andSouth,” Mr. Glazer says. New ethnicgroups, although they faced differ-ent obstacles, replicated the lan-guage, tactics and institutions thathad successfully liberated Southernblacks.

As an example, Mr. Glazer cites“the last big fight over microag-gression, I suppose, or misappro-priation—over this Indian figure in‘The Simpsons.’ ” He means Apu,owner of the Kwik-E-Mart conve-nience store and subject of a 2017documentary, “The Problem WithApu,” which condemns the cartooncharacter as an invidious stereo-type. Fifty years ago, “who wouldargue about what you thought ofIndian immigrants?” Mr. Glazerasks. “There weren’t enough of

them to think about.” Now SouthAsians, along with myriad othergroups, have been assimilated intothe civil-rights tradition.

Mr. Glazer sees today’s racialpreferences in college admissionsas a legacy of this expansion of thecivil-rights model, which has comeunder strain as new immigrantgroups join the fold. A few milesfrom where we sit, unintended con-tradictions of this system are com-ing to a head as Harvard defends it-self in a lawsuit whose Asian-American plaintiffs allege they arethe victims of discrimination.

In Mr. Glazer’s view, preferenceshave expanded far beyond theiroriginal purpose, which was to liftblacks. “The only legitimacy for af-firmative action,” he says, “was tomake up for the fact that they wereenslaved, or more or less treated asenslaved for a very long time there-after.” He adds that “we nevermade it up, and there is no way ofmaking it up”—and observes thattoday even many black beneficia-ries of affirmative action “have atleast one white parent” or are im-migrants from Africa. “We aren’tdoing much for the people we aretrying to do something for.”

I ronically, the civil-rights move-ment’s central idea, colorblind-ness, precluded policies to help

blacks in particular. Instead theyhad to be justified in ethnically-neutral terms, such as helping mi-norities in general, or promoting di-versity. Mr. Glazer worries that theAsian plaintiffs suing Harvard aremisusing the civil-right’s era’s “no-discrimination dictum,” whose pur-pose was recompense for Jim Crow.

Moreover, he sympathizes withthe idea of trying to achieve someethnic balance at elite schools—notwithstanding the discriminationhe faced as a Jewish college appli-cant nearly eight decades ago. “Ithink it would have been bad forthe country if the Ivy League had

maintained a purelymeritocratic basis foradmissions,” he says.“The Jews would haverisen to 40% or some-thing.” As “nationalinstitutions,” theseschools “had to berepresentative nation-ally in some way.” Mr.Glazer believes IvyLeague admissionspreferences oftenwent too far—espe-cially in medicalschools, where thequotas were some-times as low as 5%.But his pragmaticview of ethnic com-promise balances mer-itocratic fairness withother values.

Comparisons be-tween anti-Jewish dis-crimination then andanti-Asian discrimina-tion now are compli-cated by the diversitywithin the latter cate-gory: “The Asiangroup—we are talkingabout Indians, we aretalking about Filipinos,we are talking aboutChinese, Japanese.

There is such mixed history.” Still,Mr. Glazer is troubled by reportsthat Harvard admissions officersgave low “personality ratings” toAsian applicants they’d never met.And he admires the California Insti-tute of Technology, which ignoresrace in favor of a model of diversitythat consists in “having enoughparticle physicists to match the the-oretical mathematicians,” as Mr.Glazer says with a laugh. Caltech’sstudent body is 43% Asian.

In Mr. Glazer’s ideal world, pri-vate institutions would have leewayto practice racial preferences ornot, in accord with their publicmission. But by now that kind ofpluralistic approach has grownhard to sustain because “govern-ment has gotten too deeply in-volved.” With Congress funding bil-lions of dollars of research andstudent loans, and federal regula-tors statute-bound to scrutinizecampuses for discrimination, “thedistinction between public andnonpublic has become meaning-less,” Mr. Glazer says. Federal lawmandates colorblindness, so thecourts will have to continue tyingthemselves in knots if they are topermit racial preferences.

What about the politics of allthis? Mr. Glazer doubts the issuewill drive Asian-American voters tothe GOP. “I think the Democraticposition on immigration will out-weigh Asian-American concernabout discrimination in collegeadmissions.”

Yet he disagrees with liberalswho insist opposition to immigra-tion is born primarily of “racism”—which he understands the old-fash-ioned way as the view that someraces are inherently superior. In-stead he emphasizes the economicchanges that have affected thewhite working class. “It’s a terribledivorce that’s occurred” he says,“between those who get educatedand who lead stable lives” andthose who don’t. He does not be-

lieve that a “nationalist” fear thatimmigrants “are changing a tradi-tional American society, its culture,its norms, its language” is in itselfbigoted. But he remains confidentin “the power of American cultureto integrate new immigrantgroups,” and he doubts the radicalrestrictionism advocated by someon the right is economically or po-litically practicable.

Mr. Glazer is a critic of PresidentTrump, but a temperate one. He be-lieves Mr. Trump has benefitedfrom white identity politics, ap-pealing to the “merged white eth-nic classes,” but regards compari-sons with 1930s Europe as absurd.“I saw the real fascism,” Mr. Glazersays. “I don’t see any relationship—I just don’t.” He dismisses claimsthat Mr. Trump’s clashes with theintelligence community and law en-forcement amount to a bid to de-stroy democracy. “I can’t get inter-ested in the Mueller thing,” Mr.Glazer says, “in part because I amso against what previous specialcounsels did, particularly in theClinton case.”

He believes anti-Semitism in theU.S. has been all but eliminated inhis lifetime, and adds: “I don’t seeit connected to Trump—if hisdaughter marries a Jew and con-verts, if his grandchildren are beingraised as Jews and no one cares.”As for open racists and anti-Sem-ites who describe themselves as“alt-right”: “I don’t think anybodyin the alt-right these days is goingto get elected.”

Mr. Trump has made the presi-dency “a very undignified posi-tion,” Mr. Glazer says. “It’s too bad,because it was a grand position.”But he thinks the country can with-stand it, and he cites the AdamSmith quip that there is “a greatdeal of ruin in a nation.”

A s a visiting professor at theUniversity of California,Berkeley, in 1964, Mr. Glazer

arrived at a similar middle groundamid the “free-speech movement.”He engaged extensively with radicalstudents and sought to understandtheir demands. He wrote later thattheir campaign for social reformwas overwhelmed by a desire for“the humiliation of others,” and“for the destruction of authority—any authority, whether necessaryand worthwhile or not.” Yet he op-posed Gov. Ronald Reagan’s 1967decision to fire the president of theUC system: “Like ex-communistsand Trotskyists who go only as faras being social democrats, ratherthan going all the way to the righton politics, I thought that was farenough.”

Mr. Glazer thinks today’s campusactivists are characterized by a“discomfort at discussion thatlooks seriously” at important socialissues—just as the Berkeley revolts,in their later stages, ended up seek-ing to silence opposing ideas. Yethe thinks today’s student protest-ers are likely to be less successfulthan their 1960s predecessors inpushing society leftward. Perhapsinstead they will put off sympathiz-ers and thereby help produce morecentrists like Mr. Glazer.

Mr. Willick is an assistant editorialfeatures editor at the Journal.

Eight Decades of Ethnic Dilemmas

TERRYSHOFF

NER

An iconic sociologist onthe problems of groupidentity, affirmative actionand Donald Trump.

THE WEEKEND INTERVIEW with Nathan Glazer | By Jason Willick

OPINION

Minnesota Is a House Divided on TrumpPierz, Minn.

Amid a parade offiretrucks, Model Tsand Shriners drivinggo-karts, Pete Stau-ber is running—liter-ally—for Congress.As the processionrolls through thistown of 1,350 duringPierz Oktoberfest(held, naturally, at

the end of August), Mr. Stauber, 52,has to jog to keep up. That’s becausehe so frequently stops to shake ahand, to explain he’s the Republicancandidate in the Eighth Congressio-nal District, and to add that he hopeshe has your vote.

The final finish line on Nov. 6 isweeks away, but Mr. Stauber appearsin good political shape given thatNortheast Minnesota is historicallyDemocratic territory. The Eighth Dis-trict includes the Great Lakes’ busiestport, Duluth, as well as the state’sIron Range, where thousands stillwork mining and processing taconiteore. In 70 years, the GOP candidatehas won here only once.

What may change that is DonaldTrump. The district’s center of grav-ity has shifted slightly in recent de-cades, as Duluth lost population andthe Twin Cities suburbs crawled fur-ther up the map. Still, NortheastMinnesota went for Mr. Trump by 16points in 2016 after PresidentObama won it by 6 in 2012, one of

the largest swings in the country.Now the president’s blue-collar ap-

peal is helping make the congressio-nal seat competitive, at least for acertain kind of Republican. Mr. Stau-ber, a retired Duluth police officer,was at one point the president of hisunion, Local 363, and he opposesright-to-work laws. He backs Presi-dent Trump’s 25% steel tariffs to thehilt. “The Chinese steel dumpingshould have been dealt with decadesago,” he says. “It devastated our IronRange and our mining industry.” Thesplash photo on Mr. Stauber’s web-site shows him riding with Mr.Trump in “The Beast,” the presiden-tial limo, before a June rally in Du-luth attended by 8,000.

When Mr. Stauber jumped into therace last summer, he expected to facean incumbent Democrat, Rep. Rick No-lan. Then in February the congress-man announced he would retire. In-stead the Democratic candidate is JoeRadinovich, 32, a onetime state law-maker who managed Mr. Nolan’s lastcampaign and worked as the Minne-apolis mayor’s chief of staff.

One point of contention, splittingDemocrats, is a pair of proposals tomine copper and nickel in SuperiorNational Forest. The Obama adminis-tration, in its waning days, moved toblock mining within about 365 squaremiles. “It was purely political,” Mr.Stauber says, “and it was the biggestassault on our way of life.” WhenPresident Trump came to town, he

pledged to reverse the ban. Mr. Radi-novich, who defeated explicitly anti-mining Democrats in the primary, hassaid he thinks the work can go onwithout hurting the environment. Buthe seems much more comfortabletalking up Medicare for all.

A poll this week puts Mr. Radi-novich in the lead, 44% to 43%, wellwithin the margin of error. Politicsaside, Mr. Stauber has a compellingstory: He once played minor-league

hockey and then minded four kidswhile his wife deployed to Iraq withthe Air National Guard. If any part ofblue Minnesota is open to a TrumpRepublican, it’s the Iron Range.

In the state as a whole, however,Mr. Trump’s approval since Inaugura-tion Day has dropped 17 points. This isa problem for Republicans in placeslike the Second District, anchored inthe suburbs south of the Twin Cities.Though it’s a somewhat purple area,Republicans had held the seat tightlysince 2002. The GOP contender in2016, Jason Lewis, was expected toflame out, given incendiary commentsfrom his 20-year career in talk radio.

Critics dubbed him “mini-Trump.” Hewon by 1.8 points. But that year’s bal-lot also featured a perennial candidateon the populist left, running under theIndependence Party, who took 8%.

Mr. Lewis has worked to build alegislative record. He wrote bipartisanbills on criminal-justice reform and ispushing a legislative amendment toforce the Twin Cities’ regional gov-ernment, the appointed MetropolitanCouncil, to have at least one electedmember. “They’re raising taxes andspending all their money on very ex-pensive light-rail lines,” Mr. Lewissays. “We don’t have the density forthat sort of transit, and yet what suf-fers is roads in the Second District.”He defends a disputed plan to replaceparts of the Enbridge Pipeline, whichfeeds oil to the state’s largest refin-ery: “I think it’s good policy. I thinkit’s safer than truck or rail, so I’m allin favor of it.”

Yet old tape from his talk-radiodays continues to surface. In July,CNN posted a clip from 2012. “Itused to be that women were held toa little bit of a higher standard,” Mr.Lewis mused. “Now are we beyondthose days, where a woman can be-have as a slut, but you can’t call hera slut?” Last month BuzzFeedquoted a 2013 show on which Mr.Lewis argued that if courts ruled gaymarriage to be covered by the EqualProtection Clause of the 14thAmendment, it would “undo the en-tire state criminal code”—because,

among other examples, “when wepass a law against rape, you’re nottreating a rapist equal.”

Mr. Lewis’s stock defense is that hewas paid to be provocative. He insistssuch comments don’t reflect the Ja-son Lewis voters recall listening to allthose years. Is more tape forthcom-ing? “Who knows?” he says. “Person-ally, I don’t care, because I don’t thinkit’s going to work. It’s too clever byhalf. But who knows who’s got what?”Radio stations, he explains, don’tkeep long archives, and neither doeshe. “Once you leave their employ-ment—zzzip—they erase it. So I don’thave the show,” he says. “You realizehow much server space I’d have tohave for 20 years of radio?”

The Democratic candidate, AngieCraig, is the same one Mr. Lewis beatin 2016. A former HR executive at acompany that made pacemakers, shewas raised in Arkansas and still has ahint of Southern accent. So far, hersoft-focus ads center on family lifewith her wife and four sons. And if,as November nears, the Democratswant to talk about talk radio?

Mr. Lewis is defiant. “I’d rathertalk about Enbridge Pipeline, aboutthe Met Council, about a rising tide ofeconomic growth,” he says. “If theywant to dig up old radio clips, andthey think they can win a congressio-nal seat that way, let ’em do it.”

Mr. Peterson is a member of theJournal’s editorial board.

Republicans might takethe Democratic strongholdof Duluth, while cedingthe Twin Cities suburbs.

CROSSCOUNTRYBy KylePeterson

A14 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

Some Feel It’s About Time for a U.S. RetreatIn “The Cost of American Retreat”

(Review, Sept. 8), Robert Kagan writesthat the policies of the Trump andObama administrations “have more incommon than either would like to ad-mit.” This is a brave statement tomake knowing that the author will beseen as politically incorrect on bothsides of the aisle.

Both sides are failing to look atdeeper patterns that are the source ofconditions that give rise to distrust,fragmentation and resentment. Intheir own way, these “opposing” view-points fuel the same contemporarycultural fire that produces confusionand despair. Mr. Kagan’s article en-courages a broader way of looking atthe shifting balances and influences inour world order.

BRUCE SCHNEIDERKingston, N.Y.

Mr. Kagan rightly points to all theeconomic progress European and

Asian countries made after World WarII, but without the Marshall Plan theywould not even have been able to per-form basic functions of government.The U.S.S.R. no longer exists andChina has emerged as our chief rival.The only thing that has remained con-stant is America’s footing the greaterpart of the bill for military defense,while nations we protect continue togrow rich at our expense.

The cost of protecting the bordersof its empire eventually led to the fallof Rome. We are in a similar position.The nations of the world that we aresupposed to protect are going theirown way, while we continue to spendand spend in the name of preservingan alliance that is no longer even nec-essary. As this situation continues, wewill have less and less, and thosecountries that once looked up to uswill look somewhere else.

EDWARD D. LASKYHonolulu

LETTERS TO THE EDITOR

Letters intended for publication shouldbe addressed to: The Editor, 1211 Avenueof the Americas, New York, NY 10036,or emailed to wsj.ltrs@wsj.com. Pleaseinclude your city and state. All lettersare subject to editing, and unpublishedletters can be neither acknowledged norreturned.

“Honey, don’t take it personally.It’s just a stage he’s going through.”

THEWALL STREET JOURNAL

Intergenerational Equity on Pensions Is HardIn her Sept. 6 letter New York City

Chief Actuary Sherry Chan explainsthat the goal of public-pension fundingshould be to produce level employercontributions over time, and that gov-ernments need to make their contribu-tions as public workers do.

Alas, such ideals are often notachieved. Despite New York havingmade virtually all of its required actu-arial contributions, and the reason-able actuarial calculations of Ms. Chanand her predecessor, New York’s con-tributions increased from 5% of cov-ered payroll in 2000 to 39% in 2015.So much for level contributions andintergenerational equity.

Contributions skyrocketed primar-ily because of poor asset returns. Be-cause S & P 500 stocks have earnedless than 4% a year so far this centurycompared with the 7% currently as-sumed for funding purposes, the city’splans’ combined funded status de-clined from more than 100% in 2000to less than 70% in 2015, despite the

massive contribution increases. In-vesting less heavily in stocks wouldreduce contribution volatility.

Another obstacle is that employeecontributions are, in effect, guaran-teed a return equal to the assumedfunding rate (e.g., 7%). If employeecontributions earn less, taxpayersmust make up the difference. Nowherein the free marketplace can such guar-antees be found.

The solution is to shift employeecontributions from these defined-bene-fit plans to defined-contribution plans,where employees bear the investmentrisk rather than taxpayers. The surviv-ing employer-funded defined-benefitplans would have less generous benefitformulas and pose less risk to taxpay-ers. Of course, collective bargaining,statutory and constitutional obstaclesto such reform must be surmounted,but without such changes our public-pension woes will likely worsen.ROBERT J. SARTORIUS, ASA, MAAA, FCA

Palm Beach Gardens, Fla.

Large-Scale Korea Military Exercises a MustMichael O’Hanlon is right to be

concerned that large-scale militaryexercises can be misinterpreted bythe DPRK (Democratic People’s Re-public of [North] Korea). The solu-tion to this problem is good com-munication between the U.S. andROK (Republic of [South] Korea)governments and the DPRK and Chi-nese governments (“A Better Wayto Prepare for War in Korea,” op-ed,Sept. 5).

Forces defending the ROK need tohold large-scale, land-forces exer-cises to practice how they wouldhave to maneuver to repel an inva-sion from the larger army of theDPRK. Organization of the forces torepel an invasion would be above thebrigade level. Maneuvering at the di-vision, corps and army levels areskills that need to be practiced ifthey are to be available in time ofneed. ROK forces have the size to dothe job (aiming for 38 active and re-serve divisions in a reorganizationunder way) but they need to practicerealistically. U.S. forces need to prac-

tice with them, and we need to prac-tice moving and integrating rein-forcements from outside the KoreanPeninsula.

These types of exercises are ex-pensive but necessary to maintainingthose skills. The fact that the U.S.Army infrequently conducts large-scale land-forces exercises doesn’tmean that the ROK should emulatethem. The DPRK knows how effectivethese exercises are and that is thereason they want them stopped.

STEPHEN WEEKSHouston

Pepper ...And Salt

Imparting the Obvious andUseful to Clueless Scholars

Regarding David Gelernter’s “TenThings They Didn’t Tell You at Fresh-man Orientation” (op-ed, Sept. 4)and the Letters of Sept. 10 in reply:I’ve been teaching classes in personalfinance for 21 years and it has beenmy experience that students are basi-cally clueless in even the basics ofmanaging their own personal finan-cial affairs. This skill is vital for themto become informed and productiveadults in a fast-paced world, finan-cial or otherwise. On the first day ofclass I give my students a guarantee:When they finish this class, they willknow more about personal financethan 99% of their peers on this cam-pus, or on any other campus. On thelast day of the class, they unani-mously agree and confess how scaryit would be to go into the workingworld not knowing how to handletheir own personal finances.

Many have told me this is the mostuseful and informative class they havetaken in their entire college careerand question why it is not a gradua-tion requirement.

DICK VERRONEUniversity of North Carolina

WilmingtonWilmington, N.C.

Unmask Attempted BribersRegarding your editorial “You

Can’t Bribe Susan Collins” (Sept. 12):It would be satisfyingly ironic if thecrowdfunding website were hackedand the 37,425 participants’ nameswere made public.

HUNTER CLARKSONColumbia, S.C.

The Dirt and Delay Playbook

A reliable rule of modern politics, espe-cially SupremeCourt politics, is to thinklower. Really low.That’s our advice aswe

learnmore about the last-min-ute accusation that Democratsare floating against Brett Ka-vanaugh. The timeline of thisugly disclosure suggests it’spart of a calculated if desper-ate strategy to delay a confir-mation vote past the November election.

The New Yorker on Friday offered more de-tails on the accusation fromawomanwhoclaimsMr. Kavanaugh had “attempted to force himselfon her” at a party when the two were in highschool in the early 1980s. Yes, high school. Thestorywas published a day after Senator DianneFeinstein, ranking Democrat on the JudiciaryCommittee, announced that she had “informa-tion” aboutMr. Kavanaugh that she had sharedwith the FBI.

Ms. Feinstein purported to take the high roadof offering no details and protecting thewoman’s privacy. But someone took the low roadof providing theNewYorker details of the accu-sation contained in a letter from the woman toMs. Feinstein. The unidentified woman allegesthat Mr. Kavanaugh “held her down,” coveredhermouthwith his hand, andwith amale class-mate turned up the music so she couldn’t beheard. “She was able to free herself,” the NewYorker reported.

The magazine was given these details withenough time to contact someone close to thewoman. The reporters also had time to contactthemale classmatewho said hehad “no recollec-tion” of the incident. For the record, Mr. Ka-vanaugh “categorically and unequivocally” de-nies the allegation.

The timeline here is damning about Demo-cratic motivations. The New Yorker says thewoman first approachedDemocrats in July. YetMs. Feinstein didn’t ask about the accusationin her meeting with Judge Kavanaugh, didn’task about it at the hearing, and no Democratsasked about it in their 1,278 written follow-up

questions after the hearing.Sowhynow?Aswewrote Friday, the charita-

ble explanation is thatMs. Feinstein didn’t thinkit worthy enough of investiga-tion but finally bowed underpressure from her colleagues.She’s running for re-electionagainst a left-wing Democratwho is pounding her for notstopping Mr. Kavanaugh and

onFriday hit her for a “failure of leadership” forwaiting to disclose the allegations.

This is the explanation implied by the NewYorker reporters, who compareMs. Feinstein toJoe Biden’s supposed failure to get tough onClarence Thomas after Anita Hill’s last-minuteaccusations in 1991. The idea thatMr. Bidenwassoft is hilarious. Democrats were vicious.

But if you think lower,waiting to drop the let-ter is right out of theAnitaHill playbook.Her ac-cusationwas also sprung shortly before a confir-mation vote and prodded Democrats to hold asecond hearing, when Justice Thomas crediblydenied her claims.

The letter gambit looks like an attempt to cre-ate a similar #MeToo uproar that would forceRepublicans to delay the hearing. If nothing else,such a delay might spare Democratic Senatorsrunning in Trump states from having to take adifficult confirmation vote. NoDemocrats havecalled for a newhearing, but let’s seewhatDem-ocratic media say this weekend.

The accuser remainedunidentified onFriday,but even if she comes forward the accusation istoo distant, too disputed and too late in the day.It also doesn’t fit everything elsewe knowaboutMr. Kavanaugh’s behavior across his 53 years.Nofewer than 65 women who knew the judge inhigh school sent a letter to the Senate Friday at-testing that “he has always treatedwomenwithdecency and respect.”

Republicans can strike a blow against thissleazy, late-hit politics by sticking to their time-line and confirming JudgeKavanaugh so he cantake the bench when the Court begins its fallterm on October 1.

Democrats want topush a Kavanaugh

vote past Election Day.

The Manafort Plea

S pecial Counsel Robert Mueller on Fri-day finally squeezed all the resistanceout of Paul Manafort. The former

Trump campaign chairmanagreed to cooperate withprosecutors, but the impor-tant question is whether heknows anything about the al-leged Donald Trump-Russiacollusion tale that made Mr.Manafort a target.

As with his conviction last month on othercharges, Mr. Manafort’s Friday guilty plea con-cerns his business as a political fixer long be-fore he worked for the Trump campaign. Hecopped to two conspiracy charges, thoughprosecutors dropped five others ranging frommoney laundering to false statements. Thedeal spares Mr. Manafort a second trial andimposes a 10-year cap on prison time on all ofthe charges against him. He also agreed to for-feit four homes and other assets and cooperatewith the Mueller probe.

Mr. Manafort had long resisted Mr. Muel-ler’s full-court legal squeeze, which includeda raid onMr. Manafort’s home, prison time andsolitary confinement before trial, and dozensof charges that could have put him behind barsfor the rest of his life. The previous verdictsand the prospect of more convictions andmounting legal bills appear to have pushed Mr.Manafort to plead guilty.

And who knows? Maybe Mr. Manafort willbe the Rosetta Stone of the Trump-Russia nar-rative, even if there’s still no evidence that heis. The longtime Beltway lobbyist has consis-tently said he has no information to offer onRussia since there was no collusion.

This is supported by the House and SenateIntelligence Committees, which investigatedMr. Manafort and found no evidence of anelection conspiracy. On Friday Politico re-ported that a source close to the Manafort le-gal team repeated that “the cooperation agree-

ment does not involve the Trump campaign.. . . There was no collusion with Russia.”

The Manafort plea follows the end of thelegal line for another sup-posed collusion canary:George Papadopoulos. Theone-time junior Trump aidewas recently sentenced to 14days in jail for lying to theFBI about some dates. Mr.

Mueller’s team had asked for as much as sixmonths of jail time.

When Mr. Papadopoulos pleaded guilty lastyear and agreed to cooperate with Mr. Mueller,the press had also portrayed the 31-year-oldas the key to the collusion narrative. But in hispost-sentencing media appearances, the starwitness has offered nothing that is incriminat-ing against his former colleagues. Unless Mr.Mueller is compiling a set of so far unknownfacts, Mr. Papadopoulos looks more like a hap-less young man who didn’t understand howruthless prosecutors and the FBI can be whenthey want to squeeze you.

Mr. Mueller has convicted several formerTrump associates, but the charges have allbeen for lying to the FBI or corrupt businesspractices unrelated to the 2016 Trump cam-paign. None show any connection between theTrump campaign and Russia’s meddling in thepresidential campaign or hacking of Demo-cratic emails.

The good news for the White House is thatthe Manafort deal removes the prospect fora second trial as a media fixation during thefall election campaign. If Mr. Mueller followsJustice Department guidelines, which he isobliged to do, he will now postpone any prose-cutions through Election Day.

Leaks or other news about his investigationwill undermine public confidence in a probethat has already wandered far from its originalRussia remit and has now lasted 16 monthswithout a resolution.

The former Trump aideagrees to cooperate.

But what does he know?

The Vatican’s China Syndrome

Imagine if Donald Trump insisted that theCatholic church give him the right to choosethe list ofmen fromwhich Romewould se-

lect American bishops. Ridicu-lous. So why does it makemore sense for the Vatican toconcede that right to Commu-nist leaders in China?

That’s the key Catholicconcession in a far-reachingdeal between Rome and the Vatican an-nounced Friday. The Vatican has agreed to rec-ognize as legitimate seven Chinese priestswho had been excommunicated by Rome foraccepting their bishop hats without Vaticanapproval. Two bishops who had remainedfaithful to Rome will retire to make room forbishops more to Chinese President Xi Jin-ping’s liking. In exchange, Beijing will offi-cially recognize the pope as head of the Catho-lic church in China, something it has resistedfor decades.

Give China credit for shrewdness. It under-stands that bishops are at the heart of the Cath-olic hierarchy as heirs to the early apostles.Over its history the church has sometimes beencoerced into deals giving governments a vetoover the appointment of a particular bishop, but

letting a hostile regime come upwith the entirecandidate pool puts Rome in the junior role. IfRome vetoes one of China’s choices, the seat

goes empty.Whywould Chinacare?

This deal has been long inthe making and comes as Mr.Xi is in the midst of a crack-down on Christianity andother organized religions and

is closing or tearing down churches andmosques. Perhaps the Vatican calculated thatwith oppression gettingworse, even a bad agree-mentmight carve out some breathing room forits faithful on the Chinese mainland.

The deal at least doesn’t include the restora-tion of diplomatic relations, and thus it doesn’trequire the Vatican to break its ties to Taiwan.But this may be only a matter of time. To haveany credibility with rank-and-file Catholics, thechurch would have to settle its religious dis-putes with Beijing before it granted the favorof diplomatic recognition.

Many Westerners over the centuries havegone to Beijing and come home claiming theyhad negotiated a great deal—only to find laterthey’d been had. On the evidence so far, the Vat-ican is joining this unfortunate list.

Rome gives Beijingthe power to selectits slate of bishops.

REVIEW & OUTLOOK

OPINION

Rubio Is Right, It’s YourOwn Social Security Money

Regarding John F. Cogan’s “Ru-bio’s Family-Leave Benefit Will Gothe Way of All Entitlements,” op-ed,Sept. 5): It’s my money, and I needit now! Sen. Marco Rubio’s proposalis essentially an early reimburse-ment of FICA taxes paid. This is animportant distinction from the of-ten-abused disability benefit pro-gram which has generally been paidwith someone else’s money. In thiscircumstance, there is a guardraillimiting benefits to the Social Secu-rity payer and his or her finite sumof benefits.

An expansion of the early use ofSocial Security would be an expan-sion of liberty. Theoretically, SocialSecurity is a form of forced savings,so why shouldn’t payers have earlyaccess to their benefits, if they sochoose?

IAN MCCLINTICHouston

THEWALL STREET JOURNAL. * * * * Saturday/Sunday, September 15 - 16, 2018 | A15

I t’s the 10th anniversary of theLehman Brothers debacle. Dowe need reminding that debtcrises take place when marketsunderwrite and buy too much

bad debt? Yes.The 2008 crisis was clearly visi-

ble before it struck. So is the nextone. The short-term fixes producedby America’s broken political sys-tem failed miserably to reduce debt.Instead they substantially increased,nationalized and redistributed it—from household mortgages to sover-eign, corporate and consumer bal-ance sheets. We may be about toexperience the consequences of pil-ing on more debt to solve a debtcrisis.

Anyone who followed housingmarkets could see what was cominga decade ago. Speculators with thelowest credit scores were buyingmore homes than they cared to oc-cupy—financed with deferred inter-est and sometimes no money down.Those mortgages were securitized,pooled together in CDOs, “collateral-ized debt obligation” funds that is-sued small slices of equity leveragedwith huge debt tranches backed bypools of mortgages.

Investors in CDO debt couldn’tknow the credit risk they were as-suming. How could they perform duediligence on thousands of mort-gages? Fund sponsors and placementagents reassured investors andcredit-rating firms that “housingprices never go down, so mortgagesdon’t default.” One Wall Street par-ticipant recently told me thatMoody’s “stress case” assumed homeprices would rise “only” 4% to 5%annually.

Buying credit-default-swap pro-tection to short this assumption wasnearly free (19 basis points for super-senior AAA-rated bonds), probablythe most asymmetric trade ever. Iknow, because the Xerion hedge fundI managed did it in 2006, applyinglessons learned in structured financeasset management, when we were of-fered and declined the opportunity tosponsor and manage one of the firstmortgage-backed CDOs in 1998.

Wall Street firms started out serv-

Get Ready for the Next Financial Crisis

ing their traditional and essentialpurpose of intermediating capitalduring the mortgage boom. But whenyield-seeking institutions filled theircapacity for mortgage CDO notes, thebankers convinced their firms towarehouse the leftovers on their ownbalance sheets to keep the gravy trainof placement revenues on the tracks.Managements bought the bankers’never-default narrative, and the fi-nancial system paid the price.

Investor appetite, and the indus-try’s legitimacy, ultimately relied oninvestment-grade ratings for the CDOnotes conferred by government-certi-fied credit-rating firms Moody’s,Fitch and Standard & Poor. But theywere hired by the placement agentsand fund sponsors. Guess how muchindependent work did they did, andon whose models they relied?

A sophisticated few CDO investorswisely laid off the risks for a nominalfee to regulated insurers like AIG andfinancial-guarantee insurance compa-nies such as MBIA and AMBAC. Some“first loss” investors in CDO equityeven cleverly hedged by shorting notessenior to their position. It was freemoney for everyone—until it wasn’t.When Lehman was left to fail, the en-suing contagion and panic left the Fedand other sovereign balance sheets asthe lenders of last resort.

Decision-making leadership across

society has great technical expertise.Its incentives are another question.But the finance industry’s marketdiscipline maximizes efficiency, aim-ing to produce the most revenue atthe lowest cost. That led profession-als throughout the system—spon-sors, placement agents, credit-ratingfirms and investors—to take the easyway out. Nobody bears specific re-sponsibility for the last crisis. Every-one does: It was an entire industryecosystem built on mindless heuris-tics, shortcuts and failures of com-mon-sense investment diligence.

Talented Fed and Treasury leader-ship saved the day. Congress, para-lyzed by partisan bickering, failed. Itbarely managed to enact the triage ofthe Troubled Asset Recovery Pro-gram, authorizing the Treasury topurchase defaulted bonds. Then itspent years blaming and vilifying“Wall Street,” only to restrict its crit-ical market-making and liquidity-pro-viding functions while leaving thecredit-rating firms and their conflict-laden model untouched. Lawmakersachieved nothing else meaningful inthe eight following years.

The Obama White House did res-cue the car industry, but only by im-pairing senior secured creditors andenriching the unions, which weresubordinated unsecured creditors,with billions of dollars in equity, re-pudiating decades of basic bank-ruptcy law. The main burden of post-crisis government response fell bydefault to the Federal Reserve.

At least the Trump administrationhas moved on to reducing businessregulations and cutting corporate taxrates, giving American companies anincentive to repatriate and investoverseas profits, a chance to do more

than buy back stock with the savings.Call it fiscal easing. This should helpthe innovative, small businesses thatcreate most of the economy’s newjobs. But it won’t be enough; Trumpfiscal easing will probably be remem-bered as another kick-the-can pallia-tive, paid for by adding trillions tothe national debt.

In the past decade, total globaldebt (sovereign, corporate and house-hold) has spiked nearly 75%. This in-cludes a doubling of sovereign debt,from $29 trillion to $60 trillion, ac-cording to a recent McKinsey report.Total corporate debt increased by78% over the same decade, to $66trillion. Bank loan volumes have beenstable, although low-quality “cove-nant lite” loans have dominated. Bondmarkets have filled in, with nonfinan-cial bonds outstanding up 172%, from$4.3 trillion to $11.7 trillion. McKinseysays 40% of U.S. companies are ratedone notch above “junk” or lower, andthe Bank for International Settle-ments estimates 10% of legacy com-panies in the developed world are“zombies,” meaning earnings beforeinterest and taxes don’t cover interestexpenses.

This is what zero interest ratesand quantitative easing havewrought—more debt and lowercredit quality. Yield-starved inves-tors were happy to look the otherway and refinance dubious credits solong as rates were low and they hadno better alternative. Small wondercentral banks are glacially unwind-ing their balance sheets and raisingrates. But higher rates are coming,possibly heralding a tsunami ofcredit defaults. Why should that bein this disinflationary environment,when software and service technolo-

gies are displacing capital and laborfrom industry and keeping costslow? Simply: more supply, and de-clining demand for U.S. Treasurys,whether the Fed raises policy ratesor not.

The U.S. owes $21.5 trillion ofTreasury debt, the majority of whichis scheduled to be refinanced in thenext eight years, disregarding the ad-ditional $1 trillion required by the2017 tax reform and an estimated$100 trillion of unfunded entitlementspending ahead. The Fed still owns$2.324 trillion it bought from banksas part of quantitative easing, whichwill need to be refinanced at maturity.Foreign sovereigns own $6.5 trillion,40% of which is in the hands of China,Japan and Saudi Arabia.

China and Japan are increasinglyrefinancing their own debt. As Chinacontinues its transition from exportsto domestic consumption and buysits oil in its “petro yuan” straightfrom Saudi Arabia, while the U.S.buys less Saudi oil, Riyadh and Bei-jing have less appetite for U.S. Trea-surys. Finally, the European CentralBank’s anticipated policy normaliza-tion suggests Europe too will becompeting with the Fed for buyers insovereign refinancing markets. Is itprudent to assume that private insti-tutions will pick up the slack?

Cautious as the Fed may be aboutraising short-term interest rates, andeven should economic growth natu-rally slow as the one-time spike offiscal easing subsides, supply-de-mand dynamics suggest the “belly”of the U.S. Treasury curve is headedhigher. If the 10-year Treasury, thereference rate for corporate bonds,surpasses 3.25%, much less ap-proaches its long-term average yieldof 4.5%, “lend and pretend” refinanc-ing could stop cold.

When credit turns, stocks havenever been far behind. The longest-ever bull market may be closer toending than we think—and that couldbe the least of our problems.

Mr. Arbess is CEO of Xerion In-vestments.

By Daniel J. Arbess

CATE

GILLO

N/G

ETT

YIM

AGES

The post-2008 fixes piledon more debt. And whenrates rise and credit turns,equity won’t be far behind.

OPINION

The U.S. Is Rich, So Storms Are WorseWhy Donald Trumpopened a discus-sion of the numberof deaths from lastyear’s HurricaneMaria in PuertoRico just as a stormwas descending onNorth Carolina isone of those strate-gic mysteries thatmight yield to an

icky stroll around Mr. Trump’s brain.He’s wrong that researchers who

estimated nearly 3,000 deaths insome way connected to Maria weremotivated by anti-Trump animus.He’s not wrong that such motivesapply to many in the media whotout such estimates.

To reach the shocking number ofMaria deaths they did, expertslooked for excess deaths above thenormal trend, then attributed theseto the storm’s aftermath. We can ar-gue about the utility of such statisti-cal exercises but it gives little in-sight into what’s happening now inthe American coastline’s encounterwith Hurricane Florence.

North Carolina is not an island.Its people and their state are notbroke. In many cases, its potentialvictims aren’t even present, ridingout the storm at a hotel or relative’shouse in another state. Their utilityinfrastructure is not crumbling andout of date. Help will pour down theinterstate highways in the form ofpower crews, food, water and firstresponders. The electricity will berestored in days, not months.

Barack Obama had been presidentfor eight years and Mr. Trump foreight months when Maria hit. In anon-politicized discussion on the“PBS NewsHour” on Wednesday, Mr.Obama’s former head of emergencymanagement said the problem isn’twho is president, but how Congresslegislates for emergency response.

The questions are two: What kindof more realistic provision shouldwe make in advance of an emer-

gency, including hiring full-time vs.part-time responders? Perhapsequally important, how should aidbe conditioned so it doesn’t becomean artificial incentive to live andbuild in high-risk places?

A 2016 study published in theStanford Law Review pointed outwhat everybody in Washington qui-etly knows: “We call weather-relatedcatastrophes ‘natural disasters,’ butthe losses” are often due to “ques-tionable government policies.”

On this principle, Congress hasstruggled for decades to reform theNational Flood Insurance Program,which long ago turned into a per-verse subsidy for coastal develop-ment.

Or as Bob Sheets, then-head ofthe National Hurricane Center, saidafter 1979’s Hurricane Frederic: “Itwas like an urban renewal programout there.”

As the respected insurance con-sultancy AIR Worldwide put it in2015, not climate change but “thegrowing number and value ofcoastal properties is the largest fac-tor impacting hurricane risk today.”A whopping $17 trillion in propertynow exists inside the U.S. storm-surge zone.

Maria-style, one could even legiti-mately ask how many have died overthe decades as a result of artificialsubsidies for Americans to locate inharm’s way.

An interesting archaeologicalstudy finds that, starting in the firstcentury A.D., post-Neolithic Ger-mans raised “dwelling mounds” andconstructed dikes in response to ris-ing seas and “storm-flood levels.”

Compare this with the U.S. responseof rushing in with federal dollars torebuild so the next storm will al-ways have something bigger andmore expensive to knock down.

Which brings us to the dilemmathat preoccupied Wednesday’s PBSdiscussion. Why is there insufficientmoney budgeted in advance for pre-dictable hurricane relief and re-building, but an endless gusher afterthe fact?

The real answer went unmen-tioned. If money were budgeted be-forehand, taxpayers elsewherewould be able to see and debatehow much they are spending to sup-port the lifestyle choices of peopleon the coasts.

Where is Al Gore when you needhim? Oh, right, the climate crowdhas become enamored of coastal de-velopment because it creates a con-stituency for doing something aboutclimate change. Well, not exactly fordoing something about climatechange, but for throwing money atcoastal dwellers and calling them“victims of climate change” for thebenefit of generating media cover-age of climate politics.

There will be harrowing and he-roic stories out of this week’s Hurri-cane Florence. You will see them onevery news site and cable newschannel. Major storms are charis-matic events. They afford greatfootage, which feeds a false sensa-tion in viewers that storms have be-come more frequent and more pow-erful. Meanwhile, tragedies befallAmericans every day for which thefederal government does not showerthem with aid because CNN is notpresent.

Even so, fiscal despair is not inorder. Practical steps toward livingrationally like the post-NeolithicGermans are still possible. Thesecould begin with Congress quantify-ing for the American people howmuch they are forking over annuallyto entice their fellow citizens to livenear the beach.

Donald Trump’s thoughtprocesses may be amystery, but betterhurricane policy isn’t.

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Peggy Noonan is on leave and willreturn on Oct. 6.

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The Satirist Who Mocked the Kremlin—and Russian Character

‘I have been instructed to in-form you,” an official toldVladimir Voinovich in 1980,

“that the patience of the Soviet au-thorities and the people has come toan end.” The official, a district boss,loomed over Voinovich, who wrotethat he imagined the next step wouldbe execution on the spot. Instead hewas stripped of citizenship andforced into exile near Munich for “de-faming the motherland.”

Voinovich, who died July 27 at 85,returned to the Soviet Union in 1990.Eventually he was hailed as Russia’sgreatest living writer. But he neverlost the qualities that wore out theSoviet regime’s patience. His singulargift was to see things as they are. Inhis most famous work, “The Life andExtraordinary Adventures of PrivateIvan Chonkin,” he depicted the Sovietpeople, personified by a bumblingRed Army private, not as heroicbuilders of communism, but as inno-cents buffeted by forces they didn’tunderstand.

At an army lecture, the first ques-tion is: “Why is our army called a‘people’s army’?” The answer: “Be-cause it serves the people.” Nextquestion: “Who do the armies of thecapitalist countries serve?” “A cliqueof capitalists.”

Chonkin raises his hand and asks ifit is true that Stalin had two wives.

He is immediately assigned to guarda plane that has crashed near a col-lective farm where, disillusioned withpolitics, he spends his time talking toa horse. “If you say the wrong thingto a person you can get yourself inhot water,” he observes, “but no mat-ter what you say to a horse, he’ll ac-cept it.”

After the fall of communism,Voinovich was asked if it was stillpossible to write satire in Russia. Heinsisted it was. “The Soviet Unionwas a giant mental hospital,” he ex-plained, “but it was an organizedmental hospital. Now the inmateshave been told that they can do what-ever they want.”

In all his writing, Voinovich was afoe of the underlying totalitarianmentality. His essay “The Only Cor-rect World View,” part of a 1985 col-lection, describes a woman who saidshe would have strangled the terror-ists who killed Czar Alexander II in1881. Voinovich said that in 1881 shewould have been throwing bombsalongside her intended victim. “Youdon’t know yourself well enough,” hetold her. “These days it’s fashionableto be a confirmed monarchist. Butback then it was fashionable to throwbombs at the czar. And given yourcharacter, there’s no question youwould have been with the bombthrowers.”

The tragedy of present-day Russiafor Voinovich was that the transitionfrom socialism to capitalism wasn’taccompanied by a change in people’scharacter. In his book “Moscow2042,” published in 1986, he de-scribed a new Russian regime run bystate security and based not on Marx-ism-Leninism but on the teachings ofthe Orthodox Church. Like Russia to-day, the regime tells its citizens theyare surrounded by “three rings of

hostility.” The first is the former So-viet republics; the second, the formerSoviet satellites; the third, the West—the former “capitalist enemy.”

Voinovich never finished schooland was rejected when he applied toa Moscow literary institute. But hehad worked as a railway laborer andconstruction worker and knew thespirit of Russia firsthand. He pre-dicted in the 1980s, while he was stillin exile, that the Soviet Union wouldface radical change because the au-thorities were “doing stupid things.”

In recent years, he predicted the

collapse of Vladimir Putin’s regime forthe same reason. “All branches ofpower are working as one and ap-proaching some sort of explosion,” hesaid in an interviewwith Radio Libertyin 2012. “That explosion will definitelycome because it isn’t possible to upsetsuch a large—and daily growing—number of people day after day.”

Voinovich was fully aware of theregime’s ability to hide reality. But healso believed that in the long run, liescan work only in a closed system. “Anaked person only seems natural in asauna,” he said. “When he goes out

into the street, people will eitherlaugh at him or stone him.”

Voinovich’s death deprived Russiaof a powerful defender of the dignityof the individual. But as repressiongrows, his influence is likely to in-crease. Russian society is too devel-oped for the regime that has been im-posed on it. Voinovich’s insights, likehis example, offer hope that it willnot long endure.

Mr. Satter is author of “Age of De-lirium: the Decline and Fall of the So-viet Union.”

By David Satter

Vladimir Voinovich wasexiled by the Soviets andlater hailed as his nation’sgreatest living writer.

A16 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

SPORTS

them on.”Two of the men who have held the Wat-

ford job since 2014 are already elsewhere inthe Premier League: Slavisa Jokanovic atFulham and Marco Silva at Everton.

Watford’s solution has been to minimizethe guy in the dugout’s role. In fact, Watforddoesn’t even call him a manager. He is thehead coach. The sum total of Gracia’s techni-cal responsibilities is to organize practice,send out the team for matches, and directthose 90 minutes. Nothing else falls withinhis purview. The club’s infrastructure, fromscouting networks to the academy, is run bymore permanent staff.

Watford doesn’t need to look far to be re-minded of how important this is. Arsenal,which practices next door to Watford’straining ground in Hertfordshire, is cur-rently untangling itself from 22 years as Ar-sène Wenger’s empire. Not only did he havefinal say over every aspect of the club, downto its travel plans, he was a one-man reposi-tory of its institutional knowledge until heleft last spring.

“When you start something you alwaysthink you will be good but you do not knowif you will be able to achieve four wins in arow,” Gracia said. “We are enjoying it. Weknow in the future the competition will putus in our place.”

WeatherShown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.

City Hi Lo W Hi Lo W City Hi Lo W Hi Lo WToday Tomorrow Today Tomorrow

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Anchorage 61 51 pc 58 50 shAtlanta 91 73 s 84 71 rAustin 85 72 r 91 73 tBaltimore 79 66 sh 78 70 cBoise 78 49 s 77 45 sBoston 76 64 pc 79 62 sBurlington 83 65 c 85 66 sCharlotte 78 71 r 76 71 rChicago 82 67 s 85 67 sCleveland 84 69 pc 84 67 pcDallas 88 73 pc 91 74 tDenver 94 61 s 91 62 sDetroit 84 66 s 84 66 sHonolulu 86 73 sh 85 75 pcHouston 89 75 t 92 75 tIndianapolis 86 70 pc 85 68 sKansas City 87 66 s 86 66 sLas Vegas 101 77 s 101 76 sLittle Rock 90 70 s 90 71 pcLos Angeles 85 64 s 83 61 pcMiami 91 78 t 91 79 tMilwaukee 78 63 s 78 64 sMinneapolis 89 70 pc 87 69 sNashville 91 72 s 83 70 sNew Orleans 94 78 t 94 79 tNew York City 77 66 pc 79 68 sOklahoma City 83 70 t 84 70 pc

Omaha 91 68 s 88 68 sOrlando 93 78 pc 91 77 tPhiladelphia 80 66 pc 82 68 pcPhoenix 109 81 s 105 81 sPittsburgh 83 65 pc 80 66 pcPortland, Maine 72 60 s 76 61 sPortland, Ore. 68 55 r 66 48 shSacramento 78 51 s 79 53 sSt. Louis 89 71 s 90 70 sSalt Lake City 93 61 s 87 56 sSan Francisco 66 54 pc 68 55 pcSanta Fe 86 52 s 87 53 sSeattle 65 55 r 63 51 rSioux Falls 89 69 s 87 69 sWash., D.C. 81 69 sh 79 72 sh

Amsterdam 65 52 pc 69 55 pcAthens 86 69 s 88 71 sBaghdad 107 80 s 107 79 sBangkok 87 76 t 91 78 tBeijing 79 55 c 80 56 pcBerlin 68 51 pc 71 54 pcBrussels 68 49 pc 71 53 pcBuenos Aires 72 57 r 70 55 rDubai 110 90 s 106 89 sDublin 61 54 r 65 49 shEdinburgh 57 52 r 62 48 sh

Frankfurt 71 47 pc 76 51 pcGeneva 74 52 pc 80 56 sHavana 88 73 pc 89 73 pcHong Kong 95 81 pc 87 78 rIstanbul 80 67 s 82 69 sJakarta 93 74 sh 93 74 pcJerusalem 80 66 s 82 66 sJohannesburg 84 53 pc 85 55 sLondon 70 54 pc 72 56 cMadrid 88 62 pc 85 63 tManila 85 80 r 88 78 shMelbourne 60 41 sh 56 43 cMexico City 73 56 t 71 55 tMilan 84 66 t 82 65 pcMoscow 70 57 s 67 44 shMumbai 88 79 pc 88 78 pcParis 71 49 pc 76 52 pcRio de Janeiro 80 70 t 79 69 pcRiyadh 108 81 s 106 82 sRome 81 66 pc 81 65 pcSan Juan 88 78 t 87 78 shSeoul 80 70 pc 80 64 cShanghai 88 75 pc 87 78 tSingapore 86 78 t 85 78 cSydney 86 47 s 61 48 sTaipei City 89 81 r 93 80 cTokyo 76 72 sh 84 73 shToronto 81 65 pc 81 65 sVancouver 60 53 r 60 51 shWarsaw 69 49 pc 68 51 pcZurich 70 48 pc 75 52 s

Today Tomorrow

U.S. Forecasts

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Las VegasWHEN THE FINAL BELL rang af-ter Saul “Canelo” Alvarez and Gen-nady “GGG” Golovkin fought for 12bruising rounds last year, bothboxers raised their arms in victory.

But neither fighter was able tocelebrate, as the battle for su-premacy in the middleweight divi-sion ended in a controversial splitdraw.

Amid loud boos inside the T-Mobile Arena in Las Vegas thatnight, announcer Jim Lampley onthe HBO pay-per-view broadcastechoed the thoughts of many box-ing analysts at the time: “A drawis a result that should be accept-able to boxing fans because itmeans we get to see it again,”Lampley said.

Rematches are supposed to begold in boxing, and Alvarez’s pro-moter Oscar De La Hoya andGolovkin’s promoter Tom Loefflerhoped Canelo-GGG would becomea franchise event on a crowdedsports calendar. They envisionedthat the matchup of contrastingstyles between an attacking fighter(Golovkin) and a skilled counter-puncher (Alvarez) would producenot just one, but multiple bouts as

the fighters became familiar toU.S. sports audiences.

But nearly a year later, ques-tions remain on whether a secondbout between Mexico’s Alvarez(49-1-2, 34 KOs) and Kazakhstan’sGolovkin (38-0-1, 34 KOs) will gen-erate the same interest as the firstfight.

The first bout was also over-shadowed by the boxing spectaclebetween Floyd Mayweather Jr. andUFC star Conor McGregor thattook place only a few weeks ear-lier, and generated 4.3 million pay-per-view buys. Yet Alvarez vs.Golovkin held its own, drawing 1.3million pay-per-view buys, withtickets in Las Vegas selling outmonths before the fight.

But fan interest for Saturday’srematch has been lukewarm, withtickets still available as late as lastweek. (The bout was announced asa sellout at Wednesday’s newsconference.)

Tony Walker, vice president ofpay-per-view at HBO Sports, saidhe expected a similar amount ofPPV buys as the first fight, with90% of the purchases likely tocome on the day of the fight.

Although the two fighters ini-tially agreed to fight again onCinco de Mayo weekend in Las Ve-

gas, a fight on May 5 did not takeplace—and the reason for the de-lay highlights another challengefor the rematch. In late February,Alvarez failed a pair of drug testsadministered by the VoluntaryAnti-Doping Agency (VADA). Hetested positive for the banned sub-stance clenbuterol, which Alvarezblamed on his consumption of con-taminated beef while training inMexico. As a result, Alvarez wasgiven a six-month suspension bythe Nevada Athletic Commission.

“This was my mistake for notreading up on the risks, not re-searching more, more on the sub-ject, on what’s going on with thebeef in Mexico,” Alvarez toldESPN. “But I didn’t do anything in-tentionally. I didn’t do anything totry to enhance my performance.”

If it isn’t clear that the audienceis interested in this bout, thefighters are.

“There’s still some lingeringthings from the first fight. Thefighters have a lot at stake here,”Walker said.

In the first fight, Judge Ada-laide Byrd scored it 118-110 for Al-varez, while Dave Moretti gaveGolovkin the 115-113 edge. Thethird judge, Don Trella, had it114-114 and the fight ended in a

draw.Byrd’s card, in particular, drew

scrutiny as Golovkin was awardedonly two rounds on her scorecard,despite being the aggressor andlanding more punches (218 to 169)in the bout, according to Compu-Box. In the aftermath, Byrd wasgiven a break and not assigned an-other fight by the Nevada AthleticCommission for the remainder of2017.

While the two fighters appearedto share a mutual respect for eachother during the promotion of thefirst bout—even sitting down for abattle of “Rock ‘Em Sock ‘Em Ro-bots” at The Wall Street Journaloffices in New York—there was nojoint promotional tour this timewith Alvarez having limited mediaavailability and Golovkin continu-ally taking shots at Alvarez’s faileddrug tests.

“No one is bigger than thesport. Boxing is about workinghard and giving a fair and honestfight,” Golovkin said. “I know whoI am and I know who Canelo is,and what he has become.”

Loeffler said he didn’t think thedrama outside the ring has hurtthe fight but blames the initialcancellation of the rematch for thetepid fan interest.

“I think some of it had to dowith a lot of fans being disap-pointed with the Cinco de Mayofight being canceled. A lot of fansmade flight reservations, hotel res-ervations, and then they were bit-terly disappointed,” he said. None-theless, Loefller said he thoughtthe fight was still on track to ex-ceed the revenue of the first fightdue to the wider appeal interna-tionally.

If all this drama sounds familiarto boxing fans, it is because an ee-rily similar thing occurred nearlytwo decades ago.

In 1999, Lennox Lewis landed218 more punches than EvanderHolyfield in their heavyweight uni-fication bout yet the three judgesat ringside were unable to reach aconsensus and the fight was de-clared a draw.

“This is what is killing boxing,”the late trainer Emanuel Steward,who was in Lewis’s corner for thebout, said at the time.

The heavyweight clash drew 1.2million pay-per-view buys, whichat the time was the second-highestboxing PPV event that didn’t in-volve Mike Tyson. Eight monthslater, Lewis and Holyfield foughtagain. The rematch drew only850,000 PPV buys.

BOXING

The Rivalry That Turned BitterAfter a year of trash talk and controversy, Saul ‘Canelo’ Alvarez and Gennady ‘GGG’ Golovkin are set to face off again

BY JIM CHAIRUSMI

The first bout between Gennady ‘GGG’ Golovkin, left, and Saul ‘Canelo’ Alvarez ended in a controversial split draw in September 2017. The rematch takes place Saturday in Las Vegas.

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SOCCER

WATFORD’SSURVIVAL

Watford, EnglandMOST TEAMS that start a Premier Leagueseason with four wins in four matcheswould consider setting their sights high. AtWatford, the out-of-the-way club onceowned by Elton John in a quiet suburb ofLondon, the mission is a little more modest.

More than anything else, the joint leaderof the Premier League just wants to stay inthe Premier League.

“Outside of the top six or top seven, Ithink any team is capable of being rele-gated,” Watford chief executive Scott Dux-bury said. “The first instinct is to survive.We’re never so arrogant to think that wecan’t be relegated.”

Watford only returned to England’s topflight three years ago after nearly a decadespent careening around the second tier.Nothing about it screams Premier Leaguemainstay, from its 21,000-seat stadium to abudget that the likes of Manchester Unitedmight find hidden between its couch cush-ions. But Watford has found surprising sta-bility by dismantling one of English soccer’slongest-running institutions: the cult of themanager.

Javi Gracia, hired last January, is Wat-ford’s fifth coach in four years. At any otherclub, that kind of turnover would be a recipefor relegation—particularly in a leaguewhere the men in the dugout average lessthan 18 months of employment at a time.Here, it’s simply built into the model.

“Coaches have a limited shelf life,” Dux-bury said. “They will either be extremelysuccessful and move on. Or, unfortunately,they won’t work out and we have to move

BY JOSHUA ROBINSON

Watford is off to a fast Premier League start.

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THEWALL STREET JOURNAL. **** SATURDAY/SUNDAY, SEPTEMBER 15 - 16, 2018 | B1

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ATIONBYMICHAELGILLE

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AMC Entertainment HoldingsInc. raised $600 million from pri-vate-equity firm Silver Lake Part-ners and repurchased roughly athird of the controlling stake heldby a Chinese conglomerate, mark-ing a major ownership shift forthe movie-theater owner.

Dalian Wanda Group Co.’s par-tial exit comes as Chinese regula-tors have aimed to limit Chinesecompanies’ investments abroad.The Beijing-based conglomerateacquired a majority stake in AMCsix years ago in a deal valued at$2.6 billion. It now owns abouthalf.

Chinese regulators told somestate-owned banks in June of lastyear that Wanda’s overseas dealsdidn’t comply with restrictions.

AMC Chief Executive AdamAron said in an interview Fridaythat Beijing’s push to get Chinesecompanies to invest at homerather than abroad made AMC in-vestors worry that “Wanda mightdecide to sell a lot of shares inthe market quickly.”

“We never thought they woulddo anything that would harmAMC’s public shareholders, butwe’ve been living this naggingconcern about overhang for 15months,” Mr. Aron said.

In 2017, shares of AMC declined55%. This year, they have climbedby about a third. On Friday, thestock fell 1.5% to $19.80.

PleaseturntopageB2

BY ALLISON PRANG

The online-only television bun-dles that have lured away cable-TVcustomers with rock-bottom pricesmight not stay that low for long.

AT&T Inc.’s DirecTV Nowstreaming service recently raisedits basic channel plan by $5 overthe summer, bringing its startingmonthly cost to $40. Chief Execu-tive Randall Stephenson this weeksaid the company is consideringadditional price increases for theservice.

“We moved the price up and, be-ing a very price-sensitive market,we fully expected to see a consider-able number of customers dropoff,” Mr. Stephenson said in an in-terview Wednesday. “We haven’tseen that. The consumers, it’s obvi-ous that they’re finding value inthe platform.”

Streaming services like DirecTVNow, Sling TV, PlayStation Vue andYouTube TV added millions of cus-tomers last year by promising bigsavings over traditional cable andsatellite-TV subscriptions. Slingsold its channel package for $20.

DirecTV Now’s basic price is “forthe long haul probably still toolow,” Mr. Stephenson said. He saidthe service has been unprofitable,and the company wants to steerthe most frugal customers to itsslimmer WatchTV service, whichcarries no sports channels and isprofitable.

Mr. Stephenson said WatchTVcould offer a range of packagesfrom $15 to $25 a month to appealto more people. “We’ll exit thisyear with a very different lookingportfolio,” he said.

Market leader SlingTV this sum-mer raised the price of its basicpackage by $5 to $25 a month, withits owner Dish Network Inc. blam-ing higher channel programmingfees.

“Our team works hard to negoti-ate fair programming deals, withthe goal of keeping your price aslow as possible,” Dish executiveWarren Schlichting said in a blogpost. “Programming fees, however,

PleaseturntopageB2

BY DREW FITZGERALD

OnlineTV GetsPricierSling TV, DirecTV Noware raising their rates

prisingly rare and far apart. So in-vestors who react to what they per-ceive as short-term signals are likely,most of the time, to be basing their

THEBILLION-DOLLARMYSTERYMAN

Armed with a seemingly bottomlesssupply of liquid cash, an unassumingMalaysian named Jho Low stagedthe ultimate Las Vegas party.

Who was he?

BY TOM WRIGHTAND BRADLEY HOPE

Driverless DreamOur self-driving futureseems increasingly

far off B4

Boiling OverAn activist investorstrains family ties

at Campbell Soup B8

China FirmPulls BackFrom AMCInvestmentWanda now ownshalf of theater chain

EXCHANGEBUSINESS | FINANCE | TECHNOLOGY | MANAGEMENT

DJIA 26154.67 À 8.68 0.03% NASDAQ 8010.04 g 0.05% STOXX600 377.85 À 0.4% 10-YR. TREAS. g 8/32 , yield 2.992% OIL $68.99 À $0.40 GOLD $1,195.00 g $7.00 EURO $1.1622 YEN 112.05

The Chairman Suites, at $25,000 per night, werethe most opulent the Palazzo had to offer, with a poolterrace overlooking the Strip. But the host didn’t planto spend much time in the room that night; Mr. Lowhad a much grander celebration in store for his 31stbirthday. This was just the preparty for his inner cir-cle, who had jetted in from across the globe. Guzzlingchampagne, the guests, an eclectic mix of celebritiesand hangers-on, buzzed around Mr. Low as more peo-ple arrived. Swizz Beatz, the hip-hop producer andhusband of Alicia Keys, conversed animatedly with Mr.Low. At one point, Leonardo DiCaprio arrived along-side Benicio Del Toro to talk to Mr. Low about somefilm ideas.

What did the guests make of their host? To many atthe gathering, Mr. Low cut a mysterious figure. Hailingfrom Malaysia, a small Southeast Asian country, Mr. Low had a

PleaseturntopageB7

Actor LeonardoDiCaprio,musicianPharrellWilliams,producer SwizzBeatz, Jho Low,heiress ParisHilton, realityTV star KimKardashianand rapperKanye West allattended theVegas party.

Las Vegas, Nov. 3-4, 2012Around 6 p.m. on a warm, cloudless November

night, Pras Michél, a former member of the ’90ship-hop trio the Fugees, approached one of theChairman Suites on the fifth floor of the Palazzohotel. He knocked and the door opened, revealinga rotund man, dressed in a black tuxedo, whoflashed a warm smile. The man, glowing slightlywith perspiration, was known to his friends asJho Low, and he spoke in the soft-voiced lilt com-mon to Malaysians. “Here’s my boy,” Mr. Lowsaid, embracing the rapper.

Next month, therespected investorHoward Marks iscoming out with anew book, “Masteringthe Market Cycle,”whose title might in-

spire many readers to scour it forevidence that short-term markettiming can work.

They will look in vain. Youshould scale back or crank up thelevel of risk you take in the mar-kets, says Mr. Marks—but onlywhen signs of euphoria or despairbecome extreme. The more oftenyou do change your stance, theless likely you are to be relying onvalid indicators.

To be sure, Mr. Marks warned inearly 2007 that the mortgage mar-ket was overheating. In October2008, with the stock and bond mar-kets in free-fall, he wrote: “Whenothers conduct their affairs with ex-cessive negativism, it’s worth beingpositive.” As a result, Oaktree Capi-tal Management, the Los Angeles-based investment firm that Mr.Marks co-founded and co-chairs,largely avoided the buy-high-sell-low behavior that devastated somany other investors during the fi-nancial crisis a decade ago.

As Mr. Marks explains in his book,markets typically move in big, multi-year cycles. The turning points canbe recognizable, but they are sur-

You Can Time the Market—Just Not All of the Time

Adapted from “Billion Dollar Whale: The Man Who FooledWall Street, Hollywood and the World” by Wall Street Journalreporters Tom Wright and Bradley Hope, to be publishedTuesday in the U.S. by Hachette Books.

HOWARD MARKS

moves on little more than noise.Worse, many investors—individu-

als and professionals alike—taketheir own current emotions as indi-

PleaseturntopageB6

THE INTELLIGENT INVESTOR | JASON ZWEIG

Howard Marks’sdrawing shows that

stocks will eventuallyfall when they getexpensive (1). But

even when investorsknow stocks are

becoming overvalued(2), it’s hard to knowwhat they’ll do in the

short run.

1

2

B2 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

THE SCORETHE BUSINESS WEEK IN 7 STOCKS

DUKE ENERGY CORP.Hurricane Florence made landfall Friday, putting aspotlight on stocks and sectors that stand to be af-fected. Duke Energy, a utility with a big presence inthe Carolinas, fell 0.6% Friday and was down 0.9%

for the week as investors braced for costly repairs. Mean-while, home-improvement retailers Lowe’s Cos. and HomeDepot Inc. were up 3.9% and 1.4% on the week, respectively,as investors anticipated a post-storm sales boost.

�DUK0.6%

STOCKS AFFECTED BY HURRICANE FLORENCESource: SIX

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%

Mon. Tues. Wed. Thurs. Fri.

DukeEnergy

HomeDepot

Lowe’s

Out on TopCustomers are fleeing traditional cableand satellite service despite recent priceincreases in online TV.

THEWALL STREET JOURNAL.Source: UBS

*2Q-4Q 2018 are estimates. †Doesn't includesubscription video on demand services like AmazonPrime, CBS All Access, Netflix

125million

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With MoviePassStruggling, Rivals AreEntering the Picture

As MoviePass has struggled, theatercompanies and other competitors havesensed a business opportunity and aremoving quickly to satisfy the public’snewfound appetite for subscriptionmovie tickets.

Last month, MoviePass limited its 3million subscribers to three films amonth, from as many as 31 previously,and restricted the number of titlesavailable for tickets—while still charging$9.95 a month. The changes were madeto stanch the financial bleeding of itsearlier business model. Meanwhile, com-petitors have sprung up to snatch ashare of the users disgruntled by thechanges, saying they have learned fromMoviePass’s woes.

Sinemia Inc., a rival service, an-nounced a sale that offers three moviesa month at $9.99. Its chief executive,Rifat Oguz, said in the past moviegoerscomplained his company’s service wastoo expensive compared to MoviePass.Now, they can try both at essentiallythe same cost and see which they pre-fer, he said.

Sinemia’s business, which launchedin 2014 and operates in five countries,is profitable today, Mr. Oguz said, be-cause it took a longer-term approachwith reasonable pricing. He said whenMoviePass slashed its prices last Au-gust it was overwhelmed by the sud-den wave of customers.

Mr. Oguz said movie-ticket subscrip-tion services are here to stay because

the casual moviegoer tends to be “moreshow-time oriented, show-time loyal,”rather than favoring specific theaters orstudios.

Movie exhibitors also have consid-ered or implemented their own services.AMC Entertainment Holdings Inc., thelargest U.S. cinema chain, in June intro-duced a $19.95 monthly offering ofthree movies a week at its theaters.

Although pricier, AMC Stubs A-List,as the service is known, had attractedmore than 260,000 subscribers as ofAugust. Executives of MoviePass andits parent company, Helios & MathesonAnalytics Inc., were unavailable for com-ment, according to a spokesman. AsMoviePass struggled, Helios &Matheson shares swooned.

MoviePass’s financial problems havebeen compounded by technical snafus,such as available showings disappearingfrom the app without notice, and by thesteps the service has taken againstfraudulent uses of its payment systems.

To head off potential problems,MoviePass has steered users to a smallnumber of theaters that have elec-tronic-ticketing partnerships with theservice. Some subscribers have had todrive dozens of miles to the closesttheater, while for others venues arecompletely out of reach.

—Benjamin Din

UnsubscribedShares in MoviePass parent companyHelios & Matheson Analytics

THEWALL STREET JOURNAL.Source: SIX

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Friday2.1 cents

APPLE INC.The theme of Apple’s annualproduct showcase? Biggerand pricier. The company un-veiled three iPhones that willfeature the largest displays inthe device’s history, while

also bumping up the price of the high-and low-end phones. The company alsointroduced a smartwatch with a 30%larger display than previous models aswell as an FDA-approved sensor capableof taking electrocardiograms. Still,shares sank 1.2% on Wednesday.Shares also fell 1.3% on Monday afterPresident Trump pressed the companyto shift production to the U.S. fromChina to avoid paying tariffs.

�AAPL1.2%

The Beijing-based conglomerate acquired a majority stake in AMC six years ago in a deal valued at $2.6 billion.

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only go one direction, and that’s up!”The price increases reflect how

skinny TV bundles are getting girth-ier as they add more channels. ASling TV spokeswoman said thecompany plans to add more channelsfrom Discovery Inc. later this yearwithout raising prices.

Alphabet Inc.’s YouTube TV ser-vice, which carries cable channelsand went live last year at $35 amonth, raised its price to $40 earlierthis year after it tacked on addi-tional channels like TNT and TBS.

The higher prices have also nar-rowed the value gap between newand traditional TV, since cord-cut-ters must still pay for broadbandservice. Cable-TV packages still costmore than their online imitators,though cable companies often chargehigher rates for stand-alone broad-band service as an enticement tobundle internet and video.

For example, Comcast Corp.’swebsite currently offers new cus-tomers a bundle with 125 TV chan-nels and broadband service for $70a month for 12 months, rising to $90in the second year of the 2-year con-tract. For a broadband-only service,with a slower internet connection,Comcast’s starting price is $40 amonth, rising to $75 after 12 months.

Price increases at the low end ofthe live TV market aren’t deterringnew customers. More than nine mil-lion subscribers will be usingstreaming services by the end of thisyear, growing to 24 million by 2022,according to estimates from invest-ment bank UBS AG. A UBS surveyfound most customers had switchedto the services to save money.

“The fact that consumers can’t af-ford the [traditional cable-TV] bun-dle is the main issue,” said CharterCommunications Inc. Chief ExecutiveTom Rutledge this week at a Gold-man Sachs Group investor confer-ence. Still, he said the idea that thetraditional cable TV market is “fall-ing apart” is overblown.

“The traditional model is gradu-ally declining,” he said.

ContinuedfrompageB1

AMC said Friday that SilverLake invested $600 million inconvertible notes and in turnAMC spent about $421 million ofthose proceeds to buy back about24.1 million of Wanda’s Class Bshares.

AMC also said it would use$160 million to pay its Class Aand Class B shareholders a spe-cial dividend of $1.55 a share.

B. Riley FBR senior analystEric Wold said in a note that Fri-day’s news was a positive for anumber of reasons, including re-ducing concern over Wanda’s in-tentions. He also said he wouldn’tbe surprised if more Chinesecompanies with overseas invest-ments sold stakes in public com-panies.

Earlier this year, Chinese com-pany HNA Group Co. exited an in-vestment in U.S.-based HiltonWorldwide Holdings Inc. that hadbeen valued at more than $6 bil-lion.

According to Mr. Aron, Wandahas told AMC that its sale of thetheater company’s shares satis-fies Wanda’s cash needs and thatthe Chinese company expects tokeep AMC shares for a “consider-able time.”

As part of the deal with SilverLake, the private-equity firm alsowould get a seat on AMC’s board,which will be filled by managingdirector Lee Wittlinger. AMC,which is based in Leawood, Kan.,said it would also choose a newindependent director “with sup-port” from Silver Lake.

The unsecured convertiblenotes used in the deal will be duein 2024. They would convert toClass A shares at $20.50, or$18.95 following the special divi-dend. Assuming a full conversionof the notes, Wanda would own38% of AMC shares, AMC said. Itadded that Silver Lake “gener-ally” has to wait a year beforeconverting the notes.

ContinuedfrompageB1

ALTRIA GROUP INC.The Food and Drug Adminis-tration chief said he is con-sidering pulling all flavored e-cigarettes from the U.S.market, pending makers’plans for curbing surging use

among teenagers. “The availability of e-cigarettes cannot come at the expenseof addicting a new generation of youthonto nicotine,” said Dr. Scott Gottlieb.The announcement lifted shares of tra-ditional tobacco companies, which havelost market share amid the rise of e-cig-arettes. Altria, which makes Marlboro,rose 6.7% Wednesday, while U.S.-listedshares of Camel maker British AmericanTobacco PLC were up 5.9%.

�MO6.7%

ALIBABA GROUP HOLDING LTD.Chinese e-commerce tycoonJack Ma, in a letter to Ali-baba shareholders publishedon his 54th birthday, said hewould step down as execu-tive chairman after the 2020

annual shareholders meeting and handover control of the tech giant to currentChief Executive Daniel Zhang. AlthoughMr. Ma’s successor has a proven trackrecord at Alibaba—he is credited for es-tablishing Singles’ Day, the one-day in-ternet shopping bonanza that has be-come an annual phenomenon in China—investors were wary of the powertransition. The company’s American de-positary receipts fell 3.7% Monday.

�BABA3.7%

ACTIVISION BLIZZARD INC.With the latest version of itsmost popular videogame,“Call of Duty,” set to launchin October, Activision Blizzardhas put “Fortnite” in itscrosshairs. On Monday the

gaming company rolled out a live betaversion of “Call of Duty: Black Ops 4Blackout” that features a new multi-player mode that Benchmark analystMike Hickey says could win back gam-ers who became obsessed with Fortnite,the popular online multiplayer shootinggame, in recent months. “We believeBlackout will be a potentially massivehit,” he said. Activision Blizzard stockrose 7.1% on Tuesday.

�ATVI7.1%

SNAP INC.A month after reporting itsfirst quarterly decline in dailyusers, Snap learned it willlose one of its top executives:Chief Strategy Officer ImranKhan. His departure is the

latest in a string of executive exits in fi-nance, sales and product at the social-media company in recent months.Shares fell 1.9% Monday in the wake ofthe news and continued their slide witha 7% dive on Wednesday after BTIGdowngraded Snap’s stock to “sell” from“neutral,” citing concerns with Chief Ex-ecutive Evan Spiegel’s product vision.“We do not believe the pain is over,”BTIG analyst Richard Greenfield said.

�SNAP1.9%

UNITED PARCEL SERVICE INC.With the holiday shippingseason on the way, UPS islooking beyond low-margin,high-volume customers likeAmazon.com Inc. in a bid toboost profitability. At an in-

vestor conference Thursday, executiveslaid out a plan to cater to small busi-nesses, which often pay higher shippingrates than their larger counterparts, andhealth-care companies, whose productshave more time-sensitive commitmentsthat cost more. UPS also said it wouldraise surcharges on large packages toimprove revenue per piece. Shares deliv-ered a 2.9% decline on Thursday.

—Laine Higgins

�UPS2.9%

DalianWandaCuts StakeIn AMC

Cord-CuttingIs BecomingLess of aDealAs Rates Rise

eign actors and allegations of politi-cal bias. Mr. Trump has complainedthat Google’s search results are“rigged.” Google has said its searchresults don’t account for ideologicalviewpoints.

The company was criticized bylawmakers last month after it de-clined to send Alphabet Chief Execu-tive Larry Page for a hearing on elec-tion interference that also includedtestimony from Facebook Inc. ChiefOperating Officer Sheryl Sandbergand Twitter Inc. CEO Jack Dorsey.

In response to the video, whichwas published by the conservativewebsite Breitbart, Google said: “At aregularly scheduled all-hands meet-ing, some Google employees and ex-ecutives expressed their own per-sonal views in the aftermath of along and divisive election season. Ev-eryone at Google has been able tofreely express their opinions at these

meetings.”“Nothing was said at that meet-

ing, or any other meeting, to suggestthat any political bias ever influencesthe way we build or operate ourproducts,” the company said in awritten statement.

During the 2016 meeting, EileenNaughton, vice president of Google’speople operations, said, “I think it’sfairly obvious that Google leanslargely liberal and Democratic.” Shewas among several executives whoexpressed frustration with Mr.Trump’s win, while also urging em-ployees to respect the democraticprocess.

Kent Walker, Google’s legal chief,said populist movements like thosethat propelled Mr. Trump’s campaignwere driven by xenophobia and ha-tred. “We do think that history is onour side,” he said.

During the meeting, several

Google employees took aim at thecompany’s technology, accusingGoogle of helping amplify conspiracytheories and fake stories about can-didates within some groups of You-Tube and search engine users. “CanGoogle do anything to try to figurethis out?” one employee in the crowdasked.

Chief Executive Sundar Pichai saidGoogle would do more to understandthe potential negative effects of thecompany’s algorithms on the varietyof information shown to users, andMr. Walker acknowledged the powerof Google’s platform.

“While it may be that the internetand globalization were part of thecause of this problem, we are alsofundamentally an essential part ofthe solution to this problem,” Mr.Walker said.

—Douglas MacMillan and LaurenWeber contributed to this article.

A newly surfaced video thatshows Google executives lamentingthe 2016 presidential election in anall-staff meeting days after PresidentTrump’s victory offers a glimpse

into how the tech giant discusses po-litical issues with employees andcomes as Silicon Valley faces accusa-tions of stifling conservative voices.

“Most people here are pretty upsetand pretty sad because of the elec-tion,” Sergey Brin, Alphabet Inc.president and Google co-founder, saidin opening the employee town-hallmeeting in November 2016. “Myself,as an immigrant and a refugee, I cer-tainly find this election deeply offen-sive, and I know many of you do too.”

Google is increasingly under scru-tiny on many issues, including dataprivacy, election interference by for-

BY RACHEL FEINTZEIGAND KELSEY GEE

Video Reveals Reaction at Google to 2016 Election

THEWALL STREET JOURNAL. * * * * * * Saturday/Sunday, September 15 - 16, 2018 | B3

hopes to demonstrate momen-tum and attract more publicattention to plans for hisrocket and its associatedspacecraft, intended to be big-ger than a superjumbo airliner.As described previously by Mr.Musk, the BFR would be largerand more powerful than anyrocket in history.

Revised proposals for bothwere unveiled earlier this year,at which time Mr. Musk indi-cated he hoped to use the com-

bination to take private pas-sengers, and ultimately U.S.astronauts, toward the moonand deeper into space.

But the latest developmentalso highlights Mr. Musk’s con-trarian, sometimes unpredict-able streak, as well as the fre-quently shifting outlines of hismanned space-transportationstrategy. In early 2017, Mr.Musk shocked the aerospacecommunity by announcing hisintention to send two space

tourists, who also weren’tidentified, around the moon bythe end of this year. Thosetrailblazing flights were sup-posed to use a human-ratedversion of the company’s exist-ing Dragon spacecraft on topof a Falcon Heavy rocket—a27-engine behemoth in whichSpaceX has invested close to$1 billion. At the time, veteranindustry officials expresseddoubts about the timetable.

The first Falcon Heavy

Staples Inc. agreed to ac-quire office-supplies companyEssendant Inc. in a deal worth$482.7 million in cash, a com-bination that would strengthenone of the world’s largest of-fice-solutions providers.

After previously resistingovertures from Staples, Essen-dant said Monday that asweetened offer from the of-fice-supplies retailer of $12.80a share was superior to theone it had pending with Genu-ine Parts Co.

Genuine Parts, a supplier ofautomotive parts as well as of-fice products, had three daysto change its offer but saidMonday it wouldn’t make anew offer and expected thedeal agreement to end.

Staples said Friday it wouldpay the $12 million breakupfee to Genuine Parts as part ofits agreement with Essendant.

Staples, based in Framing-ham, Mass., was acquired ayear ago by Sycamore Part-ners, a private-equity firm thatowns about 11% of Essendant,according to FactSet.

The Staples proposal hasmet with some resistance fromEssendant shareholder PzenaInvestment Management,which insisted that the Genu-ine Parts offer was still supe-rior. As of June 30, Pzena wasEssendant’s largest share-holder, with 4.87 millionshares, for a 12.9% stake.

Essendant, based in Deer-field, Ill., agreed in April tocombine with S.P. Richards,Genuine Parts’ office-productsbusiness.

When the deal was an-nounced, the companies saidthe transaction valued S.P.Richards at about $680 mil-lion.

Shares of Essendant, whichrose 1.6% to $12.81 on Friday,have climbed by more than athird this year.

BY KIMBERLY CHIN

StaplesWins BidTo AcquireEssendant

United Technologies Corp.Chief Executive Greg Hayessaid that he expects to closethe $23 billion acquisition ofRockwell Collins Inc. by theend of the month, and that inthe meantime the industrialconglomerate is forging aheadwith plans for a possiblebreakup.

The deal was announced ayear ago and Mr. Hayes said inMay that he expected it toclose in June or July, leadingto speculation that regulatorswere raising questions. Tradetensions with China have alsoled to fear that the deal couldbecome a negotiating chip inthe larger trade controversy.

“The regulatory process inChina has gone as well as wecould have expected,” Mr.Hayes said at a Morgan Stan-ley conference Friday.

The delay was caused bythe need to sell a business unitas part of the deal, but itreached an agreement to sellthose operations to France’sSafran SA this month.

Chinese regulators arewaiting for the U.S. JusticeDepartment to approve thedeal, he said, which is ex-pected soon.

Mr. Hayes noted the com-pany isn’t waiting for the dealto close to evaluate its portfolio.

The company has previ-ously talked about a possiblethree-way split with its aero-space business, includingRockwell Collins, combiningwith jet engine maker Pratt &Whitney. The Otis elevatorbusiness would be separate, aswould its Climate, Controls &Security division, which ownsCarrier air conditioners.

Activist investor Bill Ack-man’s Pershing Square CapitalManagement LP and DanielLoeb’s Third Point LLC havebeen pushing the company topursue a split.

A decision about the pro-cess is expected within 60days, Mr. Hayes said.

BY THOMAS GRYTA

RockwellDeal Is onTrack, SaysUTC Chief

SpaceX’s BFR rocket, not yet ready for a test flight, aims to ferry space tourists around the Moon.

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BUSINESS NEWS

WASH INGTON—Ama -zon.com Inc. Chief ExecutiveJeff Bezos tries never toschedule a meeting before 10a.m.

“I go to bed early, I get upearly, I like to putter in themorning” reading the newspa-per, drinking a cup of coffeeand eating breakfast with hischildren, he told an audienceThursday. Mr. Bezos schedules“high IQ” meetings beforelunch, and tries to finish mak-ing his tough decisions by 5p.m.

Mr. Bezos said his primaryjob each day as a senior execu-tive is to make a small numberof high-quality decisions. Thatmeans getting eight hours ofsleep, too. “I think better, Ihave more energy, my mood’sbetter.”

If he slept less, he couldmake more decisions. But itwouldn’t be worth it. “If I havethree good decisions a day,that’s enough,” he said. “Theyshould just be as high qualityas I can make them.”

The insight into Mr. Bezos’philosophy on time manage-ment came as the Amazonfounder addressed a crowd ofroughly 1,400 at a dinner eventThursday hosted by the Eco-nomic Club of Washington, D.C.

He reminisced on the earlydays of Seattle-based Amazonand the lessons he learnedover the years as he went fromfounding the online bookstorein his garage to overseeing amassive company with severalmajor business lines and of-fices around the world.

That explosive growth

helped push Amazon last weekto become the second U.S.company after Apple Inc. toreach a $1 trillion marketvalue, if only briefly. The busi-ness’s success also has madeMr. Bezos the richest person inthe world.

It is a title Mr. Bezos said hehas never sought. “I wouldmuch rather if they said like,‘inventor Jeff Bezos’ or ‘entre-preneur Jeff Bezos’ or ‘fatherJeff Bezos.’ Those kinds ofthings are much more mean-ingful to me,” he told the audi-ence.

While Amazon’s stock iscurrently near record levels, hesaid he continues to tell em-ployees what he has told themin more than two decades ofall-hands meetings.

“When the stock is up 30%in a month, don’t feel 30%smarter, because when thestock is down 30% in a month,it’s not going to feel so good tofeel 30% dumber—and that’swhat happens,” Mr. Bezos said.

He pointed to a quote bylegendary investor BenjaminGraham, who said in the shortterm the stock market is a vot-ing machine. In the long term,it is a weighing machine.

“What you need to do is op-erate your company in such away, knowing that you will beweighed one day,” he said.“Never spend any time think-ing about the daily stock price.I never do.”

Mr. Bezos said he alsolearned the importance of clar-ity when choosing a name forhis company. He initiallywanted to name his onlinestartup Cadabra, as in the oldmagician’s term “abracadabra.”When he called to speak with alawyer about incorporating thecompany, the attorney misun-derstood the name as cadaver.“I was like, OK, that’s not go-ing to work.”

About three months later,

he changed it to Amazon:“Earth’s biggest river, earth’sbiggest selection,” he said.

Mr. Bezos spent time in hisappearance Thursday talkingabout one of his favorite top-ics: the customer.

When he considered how toexpand Amazon beyond its ini-tial book, music and videobusinesses, he emailed a ran-dom group of 1,000 customers,asking them what else theywanted to buy on his site.Most responded with whateverthey needed to purchase in themoment, like windshield wip-ers. “I thought to myself, ‘Wecan sell anything this way,’” hesaid.

Mr. Bezos said he wouldbring many of his business-leadership lessons to his newBezos Day One Fund, an-nounced Thursday, which is tobe funded with an initial $2billion to help homeless fami-lies and to form a new networkof preschools in low-incomeareas.

Day One refers to one of Mr.Bezos’s key management chal-lenges: how to keep a companyin startup mode. “It’s hard toremember for you guys, but forme it was like yesterday that Iwas driving the packages tothe post office myself and hop-ing one day we could afford aforklift,” he said.

BY LAURA STEVENS

A Few Life Lessons From BezosAvoid meetings before10 a.m., get eight hoursof sleep, Amazon chieftells D.C. audience

Amazon Chief Executive Jeff Bezos earlier this month

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One of the nation’s largestsports and entertainmentcompanies is taking a crack atscalping.

EBay Inc.’s StubHub is outas the official ticket resellerfor Anschutz EntertainmentGroup’s venues, including theLos Angeles Staples Center, asit turns to its ticketing subsid-iary AXS as its preferred re-sale site, according to thecompanies.

The new arrangement,which also rolls out AXS’s dig-ital ticket technology to 30 ofAEG’s venues and sports fran-chises in the U.S., is intendedto give performers, teams andvenues more control over howand for how much tickets aresold and resold—and to allowthem to realize more of thetrue market value of theirtickets.

The deal is the latest signof the collapsing distinctionbetween the primary and sec-ondary ticket markets—that is,when tickets are first sold forface value versus when theyare resold by brokers or fans,often at a markup. Offering re-sale tickets means an event israrely declared “sold out.”

“You never want to be in asituation where you have toturn away a fan because youdon’t have something to sellthem,” says AXS Chief Execu-tive Bryan Perez.

Live Nation EntertainmentInc.’s Ticketmaster has beenincreasingly aggressive aboutpresenting shoppers with amix of face-value seats andtickets being offered for re-sale. That has helped siphon

market share from resale siteslike StubHub, whose contractwith AEG expired this summer.

That market share is lucra-tive: A ticketing company willtypically collect around $3 ona ticket sold for face value; theprofit on the secondary mar-ket can be nearly a quarter ofwhat the ticket is sold for, ac-cording to people in the indus-try.

The resale market is mas-sive. Some 3,000 to 4,000 tick-

ets are resold for any givenmajor sporting game and thebest seats at a concert can beresold for many times theirface value.

With the rise of the second-ary market—worth some $15billion a year, according to in-dustry estimates—the primaryseller of the tickets is effec-tively relegated to a middle-man role, with contact with adwindling share of the peopleactually attending events.

When brokers snap up swathsof tickets and resell them onother sites, the primary tick-eter as well as the artist orteam don’t know who buysthem or how much they paid.They also don’t get a cut ofthe final, market-value sale.

To be able to track tickets—and the people buying them—AXS says it will now tie everyticket sold to the purchaser’sidentity. Each customer willhave their own AXS account

through which tickets can bebought, sold or transferred toother customers.

That means that venues,teams and artists can know alot more about who is walkingin the door at events.

“This lets you go fromknowing a third of the peoplein the building to potentiallyeverybody in the building re-gardless of if they bought it onprimary or on resale,” Mr.Perez says.

BY ANNE STEELE

AEG Seeking a Piece of StubHub’s Action

launched successfully earlierthis year. But just the day be-fore, Mr. Musk revealed therocket already was in dangerof being relegated to a backuprole regarding future humanflights.

Months later, a SpaceXspokesman confirmed thelate-2018 timetable for the lu-nar-tourist mission hadslipped to at least mid-2019and likely longer.

Now, company leaders seemto have moved closer to scrap-ping those specific FalconHeavy ambitions altogether, byaiming to use that rocket al-most exclusively for unmannedmissions such as launchingcommercial or military satel-lites. Mr. Musk appears fo-cused on accelerating BFR de-velopment as part of hishuman-exploration agenda.

As he has before, the bil-lionaire entrepreneur, who alsoruns electric-vehicle makerTesla Inc., may end up con-founding naysayers, even if ittakes longer than anticipated.In May, Thomas Mueller, themanager who has been incharge of designing every oneof the company’s rockets, tolda space conference in Los An-geles he was devoting essen-tially all his time to the BFR.

Elon Musk’s SpaceX, dem-onstrating its founder andchief executive’s penchant forshowmanship, announced thatit had signed up the first pri-vate passenger seeking to flyaround the moon. But the com-pany provided no timetable orother details about the plan.

In a message on Twitter onThursday, closely held SpaceExploration TechnologiesCorp. said the mission is slatedto use its largest rocket,dubbed the BFR, which is stillunder development and, ac-cording to some industry offi-cials, may be at least a year ortwo from an initial test flight.Others speculated that, basedon SpaceX’s history, the BFRmay not launch humans untilthe middle of the next decade.

In the message, however,SpaceX described the latestplan as “an important step to-ward enabling access for ev-eryday people who dream oftraveling to space.” The iden-tity of the passenger and otherspecifics are expected to bedisclosed Monday.

Thursday’s two-sentencestatement—which caught anumber of space experts offguard—suggests Mr. Musk

BY ANDY PASZTOR

Fly Me to the Moon: SpaceX Claims First Passenger

The company is out as the official ticket reseller for Anschutz Entertainment Group’s venues, including the Los Angeles Staples Center.

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B4 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

IWANBAAN(2)

breweries, event spaces and places to host

history tours, raise bees and showcase art.

“People used to...call them eyesores,” said

Jill Jedlicka, executive director of Buffalo-Ni-

agara Waterkeeper, a nonprofit that tends to

this section of the Buffalo River. “And now

people are embracing them.”

Last September, South Africa’s Zeitz Mu-

seum of Contemporary Art Africa opened in a

complex of 42

grain silos on

Cape Town’s wa-

terfront. The 187-

foot-tall complex

was the tallest

structure in sub-

Saharan Africa

when it was built in the 1920s, but it hadn’t

been used for 16 years. V&A Waterfront, a

joint venture between Growthpoint Properties

and South Africa’s government employees’

pension fund that owns the site, decided

against demolishing it in 2010, said develop-

ment director Mark Noble.

London designer Thomas Heatherwick

was brought in to handle the revamp in 2011.

As part of a $40 million overhaul, the silos

became the museum’s grand atrium. Other

proposals “largely turned their back on the

grain silo building,” said Mr. Noble, but

Heatherwick Studio’s plan “inverted that and

made it the hero, the center, a cathedral.”

—Lynn Freehill-Maye

TECHNOLOGY

Self-driving cars generally relyon the lidar detection system,whose lasers can be foiled by in-clement weather. “It doesn’t rain awhole lot there and there’s nosnow,” Mr. Fairfield says. Chandleralso has less than 4,000 peopleper square mile, making it about1/20th as dense as Manhattan.

Mr. Fairfield notes that Waymois also constantly training its vehi-cles under far more difficult condi-tions. But this tells us nothingabout when self-driving technologywill come to places with actualseasons, less-than-perfect roads orhigher population density.

Over a lifetime of driving, hu-mans become expert at countlesssubtasks, from noticing dis-tracted pedestrians to question-ing the judgment of constructionworkers waving them through awork site. While much has beenmade of the total number ofmiles that various self-drivingsystems have racked up, conquer-ing these little annoyances actu-ally requires an enormousamount of intellectual labor bymany teams of engineers.

While auto makers and inves-tors are pouring huge sums intothis field, competition is likely toremain thin until this results inanother Waymo’s worth of efforton the technology. Waymo hasbeen at it since 2009, with some

of the best-compensated engineerson earth.

Even when (or if) we get aworking, go-anywhere self-drivingsystem, we would face myriad le-gal and behavioral challenges, saysMeredith Broussard, author of “Ar-tificial Unintelligence: How Com-puters Misunderstand the World.”

When a Tesla slammed into theback of a stopped firetruck at 60miles an hour, the driver sued theauto maker, claiming the companymisrepresented the capability ofits Autopilot software. Who is lia-ble when a self-driving car getsinto an accident? We have yet toresolve the issue, which couldlead to a sea change in how weinsure vehicles.

It’s also not true that we musttransition to self-driving cars be-cause human-piloted ones are solethal, Prof. Broussard says. Count-less innovations have made carsradically safer since the 1950s andcontinue to do so. Meanwhile, newdistractions, such as smartphones,can be addressed more cheaply,without resorting to full autonomy.

Our love affair with self-drivingcars is a form of “techno-chauvin-ism,” Prof. Broussard says. “It’sthe idea that technology is alwaysthe highest and best solution, andis superior to the people-basedsolution.”

While we work all of that out,we’ll also need to start spendingbig money refashioning our cities,bike lanes and sidewalks so thatthey are friendlier to self-drivingvehicles. This would have to coin-cide with the rollout of wide-spread and robust 5G wireless in-ternet that could power a massivevehicle-to-vehicle communicationsinfrastructure. If every car drivenby every human was tracked,along with every autonomous ve-hicle, then perhaps humans andmachines could share the road.

After all, it’s not keeping to alane that’s hard. It’s predictingwhat all those capricious and dis-tracted human drivers aroundyou might do next. That’s whatkeeps the computer programmersup at night.

Relentless Hype Collides With

Driverless RealityThe bubble around autonomous cars turns into a ‘trough of disillusionment’

as our self-driving future appears increasingly far off

KEYWORDS | CHRISTOPHER MIMS

DOUGCHAYKA

don’t yet know how to pull off acomputer driver that can performas well or better than a human un-der all conditions.

It turns out that the humanability to build mental models isn’tsomething that current AI can justlearn, no matter how much datait’s fed. And even once we havethe technology, we’ll still have todeal with all those unpredictablehumans in cars, on bikes andscooters, and on foot. The moreself-driving vehicles hit the road,the more pressing the safety con-cerns and legal and regulatory is-sues will become.

This means worries—mainly inacademic circles—that America’struck drivers will face “eroding jobquality” because of autonomy arepremature. It means cities don’tyet need to wonder what will be-come of their mass transit. And itmeans Uber and Lyft aren’t likelyto ditch human drivers soon, andtheir investors should value themaccordingly.

In the meantime, we’ll have toadjust to the reality that autono-mous driving could be headed fornarrower—but still transforma-tive—applications. And if our de-sire for driverless taxis and deliv-ery vans is strong enough, wemight need to create dedicatedroads for them.

Cars can’t learn to drive simply

by being trained on data about howreal humans do it, no matter howmuch data you have, says GaryMarcus, New York University pro-fessor and former head of Uber’s AIdivision. “That’s why companieslike Waymo have to break [selfdriving] into pieces that can be en-gineered rather than treating it likeone giant data problem,” he adds.

In Chandler, Ariz., Waymo actu-ally set up a self-driving car ser-vice. It deserves credit for solvingan enormously difficult problem—creating a driverless, fully autono-mous taxi service. But the companyaccomplished this in part by care-fully constraining the circumstancesunder which their vehicles drive.

The service only operates in anarea the team has thoroughlymapped. Chandler is “well laid outand has modern roads and condi-tions,” says Nathaniel Fairfield,principal software engineer atWaymo.

A prediction that self-driving cars would ‘allbut end’ car ownershipby 2025 now seemsborderline ridiculous.

Mercedes-Benzunveiled its dream ofa fully autonomousmultipurpose vehiclethis past week. Theannouncement wasfull of buzzwords—

the modular Vision Urbanetic “en-ables on-demand, sustainable andefficient movement of people andgoods” and “reduces traffic flows,relieves inner-city infrastructuresand contributes to an improvedquality of urban life.”

Hardly a week goes by withoutfresh signposts that our self-driv-ing future is just around the cor-ner. Only it’s probably not. It willlikely take decades to come to frui-tion. (Even a car like this Mer-cedes is more a sketch of what’s tocome than an actual blueprint.)And many of the companies thatbuilt their paper fortunes on theidea we’d get there soon are al-ready adjusting their strategies tofit this reality.

Uber, for example, recentlyclosed its self-driving truck project,and suspended road testing self-driving cars after one of its vehi-cles killed a pedestrian. Uber’schief executive even announced hewould be open to partnering withits biggest competitor in self-driv-ing tech, Alphabet Inc. subsidiaryWaymo. Meanwhile, Waymo CEOJohn Krafcik recently said it will be“longer than you think” for self-driving vehicles to be everywhere.

“Self-driving technology hasthe potential to make our roadssafer and cities more livable, butit will take a lot of hard work, andtime, to get there,” says an Uberspokeswoman.

In the past two years, Tesla CEOElon Musk planned, then scrappeda coast-to-coast autonomous roadtrip. And Lyft CEO John Zimmer’s2016 prediction that self-drivingcars would “all but end” car owner-ship by 2025 now seems borderlineridiculous.

There are many reasons theself-driving tech industry has sud-denly found itself in this “troughof disillusionment,” and chiefamong them is the technology. We

In the early 20th century, mod-

ernist artists and architects, in-

cluding Le Corbusier, were fas-

cinated by the tall, stark

cylinders of grain elevators.

The structures—round towers

of concrete or steel, colloqui-

ally called silos—were typically

built along city waterfronts or

railway lines. In the U.S. alone,

more than 9,400 grain storage facilities

still stand, according to the Department of

Agriculture. Hundreds or even thousands

have fallen into disuse, as grain-shipping

routes have shifted.

Demolishing a grain elevator can cost mil-

lions of dollars because of their heft and size.

So instead of destroying them, cities around

the world are repurposing these remnants of

their agricultural pasts to draw tourists and

shoppers. In recent years, cultural institutions,

visitor bureaus and artists have turned the el-

evator complexes into money-making attrac-

tions, from museums and luxury hotels to

shopping venues and art installations.

In downtown Waco, Texas, former HGTV

stars Chip and Joanna Gaines built a retail

compound around two 120-foot-tall steel si-

los. In Quebec City, a free nightly light show

is presented across the 2,000 square feet of

grain towers along its waterfront.

In Buffalo, N.Y., the city has turned hun-

dreds of old silos along the Buffalo River into

Abandoned grain silos in Cape Town, South Africa, became the grand atrium of the Zeitz

Museum of Contemporary Art Africa. Above right, an exterior view of the museum.

Grain Elevators Reach NewHeights

Of�icial Sponsor of TheWall Street Journal’s The Future of Everything

THEWALL STREET JOURNAL. * * * * Saturday/Sunday, September 15 - 16, 2018 | B5

ten use other individuals who useother individuals to hold assets.Finding the true owner is a toughnut to crack, unlike in the West,”he says.

The crackdown also had draw-backs, making financial life difficultfor many of the roughly 4 millionU.S. citizens living abroad. Unlikemost countries, the U.S. taxes citi-zens on income earned both athome and abroad. Often expatriateswere stunned to find they could beconsidered tax cheats under the ex-pansive U.S. law and that compli-ance would be onerous.

WEEKEND INVESTOR

for no prosecution. Since 2009,more than 56,000 U.S. taxpayersin the program have paid $11.1 bil-lion to resolve their issues.

To be sure, the U.S. crackdownhasn’t reached everywhere—nota-bly Asia.

Edward Robbins, a criminal taxlawyer in Los Angeles formerlywith the IRS and Justice Depart-ment, attributes the enforcementgap to the widespread use of hu-man beings, rather than structureslike trusts, to shield account own-ership in Asia.

“In the Far East, individuals of-

MIKELJA

SO

$220 million offshore.In many cases, a taxpayer can

owe a penalty of half a foreign ac-count’s value, if it’s greater than$10,000 and it’s not reported tothe Treasury Department. Ty War-ner, the billionaire creator ofBeanie Babies plush toys, paid$53.6 million for hiding an accountwith more than $100 million.

The IRS capitalized on taxcheats’ fears of detection with itsOffshore Voluntary DisclosureProgram, the limited amnestythat’s ending. It hit confessorswith large penalties in exchange

Hiding moneyfrom the U.S. govern-ment is a lot harderthan it used to be.

On Sept. 28, theInternal RevenueService will end its

program allowing American taxcheats with secret offshore ac-counts to confess them and avoidprison. In a statement, the IRSsaid it’s closing the program be-cause of declining demand.

But the agency vowed to keeppursuing people hiding money off-shore and said it will offer themanother route to compliance.

What a difference a decademakes.

Before 2008, an American citi-zen could often walk into a Swissbank, deposit millions of dollars,and walk out confident that thefunds were safe and hidden fromUncle Sam, says Mark Matthews,a lawyer with Caplin & Drysdalewho formerly headed the IRS’scriminal division.

Now, he says, “Americans hidingmoney abroad have to go to smallislands with sketchy advisers andless reliable financial systems.”

The reason: a historic crack-down on the longstanding problemof U.S. taxpayers hiding money off-shore. U.S. officials ramped it upafter a whistleblower revealed thatsome Swiss banks saw U.S. taxevasion as a profit center andwere sending bankers onto U.S.soil to hunt for clients.

The defining moment came in2008, when Justice Departmentprosecutors took Swiss banking gi-ant UBS AG to court and managedto pierce the veil of Swiss bank se-crecy. In 2009, UBS agreed to pay$780 million and turn over infor-mation on hundreds of U.S. custom-ers to avoid criminal prosecution.

The Justice Department repeatedthe UBS strategy, with variations,for scores of other banks and finan-cial firms in Switzerland, Israel,Liechtenstein and the Caribbean. Sofar, institutions have paid about $6billion and turned over once-sacro-sanct customer information. Moremajor settlements are still to come.

Prosecutors also successfullypursued more than 150 individualshiding money abroad. Some defen-dants earned jail time, and manypaid dearly—a total of more than$500 million so far. Dan Horsky, aretired business professor andstartup investor, appears to havehanded over the largest amount:$125 million for hiding more than

Hidden TreasureSince 2008, U.S. officials havereaped more than $17 billionfrom cracking down on secretoffshore accounts.

*Including $19.94 million from asset managersSources: Department of Justice; InternalRevenue Service (limited amnesty)

THEWALL STREET JOURNAL.

Amounts paid by

Credit Suisse Group$2.6 billion

UBS$780million

Julius BaerGroup$547M

Other banks andasset managers*$1.65B

IndividualsInstitutions

From the IRS's limited-amnesty program$11.1 billion

In connection with criminal prosecutionsAt least $500 million

Bank LeumiGroup$400M

In reaction, more than 25,000expats have given up U.S. citizen-ship since 2008, with some payinga stiff exit tax. Others are workingto get Congress to change the tax-ation of nonresidents.

For expats and others, the IRSnow offers a compliance programwith lesser penalties, or none, foroffshore-account holders whodidn’t willfully cheat. About65,000 taxpayers have entered theprogram, and the IRS says it willremain open for now.

Current and would-be taxcheats should take seriously theIRS’s vow to keep pursuing secretoffshore accounts, says BryanSkarlatos, a criminal tax lawyerwith Kostelanetz & Fink who hashandled more than 1,500 offshoredisclosures to the IRS.

Although the IRS’s staffing isway down, he says, the agency andthe Justice Department have farbetter tools for detecting and com-bating evasion than 10 years ago.

Among these agencies’ tools arethe Fatca law, which requires for-eign firms to report informationon American account holders. Thislaw is providing the IRS withstreams of useful information it’susing in prosecutions. This weekbrought the first guilty plea for aviolation of Fatca rules by a for-mer executive of a bank in Hun-gary and the Caribbean.

The IRS is also mining datafrom foreign bank settlements andwhistleblower information. Thepayment of $104 million to UBSwhistleblower Bradley Birkenfeld,apparently the largest ever, has in-spired other informers.

To detect clusters of cheats, U.S.officials now can use a “John Doesummons” to force firms to re-lease information on a class ofcustomers suspected of evadingtaxes—even if their identitiesaren’t known, and even if the in-formation isn’t in the U.S.

This strategy has been so suc-cessful that the IRS has broadenedits use to identify possible taxcheats using cryptocurrencies.

“More than ever, there’s noplace to hide,” says Mr. Skarlatos.

The IRS’s message, saysone criminal tax lawyer:‘More than ever, there’sno place to hide.’

The IRS Is Still Coming for You,Offshore Tax Cheats

The government is ending a program designed to recover hiddenmoney,but it hasn’t given up its pursuit of concealed funds

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sion-fund client in the fall of 2008.Trying to get the pension fund toinvest more, Mr. Marks empha-sized how the crisis was creatingcurrent bargain prices and, thus,high potential future returns.

As Mr. Marks demonstrated thatOaktree’s investors would stillmake money in one doomsday sce-nario after another, each more direthan the last, the pension officerkept interjecting, “But what if it’sworse than that?”

That was an epiphany, Mr. Markstells me: “When there’s no assump-tion you can make that the onlook-ers consider bad enough, thingsmust be too bad to be true.”

Today, neither stocks nor bondsare cheap overall, but they aren’t sodrastically overvalued “that this isthe time for maximum defense,”says Mr. Marks. “Nor are prices solow and the outlook so good thatyou should be aggressive.” Youshould expect returns over the nextfive years or so to be “low or nega-tive in most asset classes.”

Imagine a continuum from 0 to100, he says, with 0 being com-pletely out of the market and 100being completely in using aggres-sive techniques like investing withborrowed money.

“Each of us, based on our under-standing of ourselves, should have anormal position between 0 and 100.So, vis-à-vis our normal position,where should we be now? I thinktoday we should be moderatelytilted toward defense.”

in 2014 and pushed fiscal conserva-tism and financial transparency onthe country, while restructuringabout $25 billion of governmentdebt, bringing the country back tofinancial stability.

“She handled a very difficult situa-tion extremely well,“ said Kurt Volker,the U.S. special representative forUkraine, of her time as finance minis-ter. “Like anyone in her positionwould, she faced criticism, whether itwas about her being too strict finan-cially or being too American.”

The limelight has also been harshsince Ms. Jaresko moved to PuertoRico last year with her teenagedaughter.

Puerto Rico’s Senate President

construction came slowly, highlight-ing the scale of the problems Ms.Jaresko faces in fixing Puerto Rico’sdysfunctional economy and dilapi-dated power utility. Ms. Jaresko re-booted fiscal reform talks with localpoliticians this spring but encoun-tered stauncher resistance to aus-terity measures because so manypeople on the island were strugglingwith the storm’s aftermath.

Born to Ukrainian-American par-ents in a Chicago suburb, Ms. Jar-esko became a U.S. diplomat inUkraine after the Soviet Union col-lapsed. Later, she managed invest-ment funds there. She becameknown as “the iron lady” when shebecame Ukraine’s finance minister

ity over the island and brokereddeals with bond funds who own 40%of the island’s $73 billion in munici-pal bond debt accumulated throughyears of borrowing.

Her efforts are closely watchedby investors. Puerto Rico becamethe largest municipal bond restruc-turing ever when the U.S. territoryentered a court-supervised restruc-turing akin to a bankruptcy in May2017. Its bonds are widely held byindividuals nationwide, mostlythrough mutual funds, and the han-dling of the island’s record default iswidely seen as a watershed eventfor the nearly $4 trillion market forU.S. municipal bonds. The resolutioncould offer clues to how officialscould deal with defaults all over theworld, as concerns mount that ris-ing interest rates will hit other gov-ernments that have borrowed exten-sively, from Argentina to Chicago.

The U.S. Congress kicked off theprocess in Puerto Rico when itpassed legislation allowing the com-monwealth to seek bankruptcy courtprotection last year. Bankruptcy wasmeant to allow Puerto Rico to cutits debts, revamp its decrepit powerutility known as Prepa and balancea budget bloated by high public-sec-tor employment.

The oversight board tasked withthese jobs chose Ms. Jaresko as itsdirector in March 2017. Six monthsinto her tenure, Hurricane Maria hitthe island, causing mass deaths anddevastation that left many withoutelectricity for months. Relief and re-

Natalie Jaresko has facedalmost constant criticismsince taking the helm ofPuerto Rico’s federaloversight board 18months ago. Investors

and politicians on the mainland at-tack her for pushing reforms tooslowly, while those on the islandblast her austerity measures andcriticize her $625,000 annual salary.Lawyers and bankers involved in therestructuring—all men—call herblunt and brusque.

“I’m getting used to it,” said Ms.Jaresko, 53, who restructuredUkraine’s finances in 2016 as thatcountry’s finance minister and nowis looking to do the same in PuertoRico. “With all due respect, the chal-lenges in this situation are as great,or greater than, in Ukraine, which ismuch larger and has been attackedand occupied by Russia.”

The project to revamp PuertoRico’s economy is at a critical junc-ture as the board shifts from factfinding and economic forecasting toactually enacting the debt restruc-turings and structural reformsneeded to stabilize the island’s fi-nancial health. Ms. Jaresko aims toinstall policies she hopes will re-verse more than a decade of eco-nomic stagnation on the island, butsuch measures are politically unpop-ular, especially after the devastationcaused by Hurricane Maria last year.

Ms. Jaresko scored much-neededwins in August when she won a keylegal ruling establishing her author-

FINANCE

RemakingPuerto Rico’s Economy

Natalie Jaresko has broad powers to revamp the island’s finances,but critics ask why the austerity has to start before the storm recovery is over

Natalie Jaresko worked to restructure Ukraine’s finances before taking a similar job in Puerto Rico. Her new job may be the harder one, she says.

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In market extremes, ‘everything about our human makeup conspires tomake us do the wrong thing,’ warns investor Howard Marks.

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Thomas Rivera Schatz attacked hersalary as exorbitant when it wasdisclosed and has frequently pillo-ried her in the media since then.

U.S. members of Congress up-braided her in private for not pres-suring Puerto Rico Gov. RicardoRosselló harder on reforms, said astaffer on the U.S. House Committeeon Natural Resources, which has ju-risdiction over Puerto Rico.

Bondholders lambasted her forbeing too slow to broker a deal withthem and for exacting as much debtreduction as possible without forcingcomparable budget cuts on Puerto

Rico’s government. Ms. Jareskospent much of her time this summerwith advisers working on restructur-ings of $17.5 billion of bonds issuedby its sales-tax authority and about$9 billion in Prepa debt.

Puerto Rico’s government andthe oversight board negotiated afiscal plan in April that calls for ex-pense reductions through health-care and labor-law reforms, govern-ment staff cuts and subsidyreductions, among other measures.The local Senate rejected the laborreforms required by the plan in Julyand Ms. Jaresko is now compellingthe government to cut spending inother areas to make up the differ-ence and balance its budget.

Ms. Jaresko and the board havefailed to communicate to the elec-torate the need to stabilize the is-land’s finances to revive economicactivity, says former Puerto RicoSenate President Eduardo Bhatia.“She’s a smart woman...but theyhaven’t been able to communicatewhy we have to do certain thingsbefore something worse comes,”Mr. Bhatia said

On the mainland, Ms. Jaresko isfinally winning some fans. Her re-cent deals with bondholders and in-creasingly confrontational approachwith local politicians are hopefulsigns, the House staffer said.

“We’re finally seeing what wehad wanted to see for two years,”the staffer said, while acknowledg-ing her agenda is unpopular on theisland. “She’s going to be one ofthe most vilified people on the is-land if she pushes through thesebudget changes.”

Gov. Rosselló wants the budgetcuts proposed by Ms. Jaresko tocome after growth policies like in-frastructure investment have timeto boost the economy, said ChristianSobrino, the governor’s representa-tive to the board.

“If the oversight board insists onits version of the budget, it’s goingto lead to a government shutdownthat’s going to put creditors and thepublic of Puerto Rico at risk,” Mr.Sobrino said.

This month, she says she willshift to working on reforms in areaslike the electricity sector, businessregulation and welfare with Gov.Rosselló and the Puerto Rico Senate.Those talks may be overshadowedby the ongoing fiscal fight betweenthe board and the government.

“Although the work I do is notpleasant, something has to change,”Ms. Jaresko says. Her role as light-ning rod for public fury about thatchange comes with the territory, shesays, because it gives politicianssomeone to blame “for making deci-sions that might be difficult, or evenimpossible, otherwise.”

‘Although the workI do is not pleasant,something has tochange.’

BY MATT WIRZ

cators of the market’s future moves.In an interview, Mr. Marks, 72

years old, grabs a piece of paper.With a practiced hand, he draws along, swooping series of ups anddowns that slope up the page fromlower left to upper right. Withthree swift pen-strokes he draws adiagonal and two parallel linesthat bisect all the curves. He scrib-bles “FAIR” on the central line, tomark the normal zone of decentvalue. Below it he writes “CHEAP”;above, he writes “RICH,” to showwhen assets are overpriced.

In the top right, as the curve ofthe market sweeps up and into thezone of RICH, Mr. Marks draws alittle box to show the short-termfluctuation of prices. So what willhappen next? He scribbles a fan ofthree dotted lines: one going up,one flattening out, one falling.

Mr. Marks admits his book is akind of tug of war between hiscertainty that “we don’t knowwhat the future holds” and his be-lief that “we can identify wherethe market stands in its cycle.”

By studying how the economy,

ContinuedfrompageB1

Rare TimesFor TimingThe Market

the markets and the psychology ofinvestors all move in long cycles ofexpansion and contraction, Mr.Marks and Oaktree have been betterable to cut back risk near marketpeaks and ramp it up near marketbottoms, he says.

But Mr. Marks doesn’t think youcan use that sort of understandingto go all-in or all-out of marketsagain and again. He likes thebook’s subtitle—“Getting the Oddson Your Side”—better than its ti-tle, he quips.

“Recent performance doesn’ttell us anything we can rely onabout the short-term future,” hesays, “but it does tell us some-thing about the longer-term proba-bilities or tendencies.”

He pokes a finger again at thesketch he has made.

“Everything about our humanmakeup conspires to make us dothe wrong thing,” he says. “Mostpeople get excited at the highs anddepressed at the lows instead of be-ing able to buy low and sell high.That’s the human failing.”

In his book, Mr. Marks describesa conversation he had with a pen-

Markets typically movein big, multiyear cycles.Turning points are rareand far apart.

THEWALL STREET JOURNAL. * * * * Saturday/Sunday, September 15 - 16, 2018 | B7

EXCHANGE

round face that was still boyish,with glasses, red cheeks, and barelya hint of facial hair. His unremark-able appearance was matched by anawkwardness and lack of ease inconversation, which the beautifulwomen around Mr. Low took to beshyness. Polite and courteous, henever seemed fully in the moment,often cutting short a conversationto take a call on one of his half adozen cellphones.

But despite Mr. Low’s unassum-ing appearance, word was that hewas loaded—maybe a billionaire.Guests murmured to each otherthat he was the money behind Mr.DiCaprio’s latest movie, “The Wolfof Wall Street,” which was stillfilming. Mr. Low’s bashful man-ners belied a hard core of ambi-tion the like of which the worldrarely sees. Look more closely,and Mr. Low wasn’t so muchtimid as quietly calculating, as ifcomputing every human interac-tion, sizing up what he could pro-vide for someone and what they,in turn, could do for him. Despitehis age, Mr. Low had a weirdgravitas, allowing him to hold hisown in a room of grizzled WallStreet bankers or pampered Hol-lywood types. For years, he hadmethodically cultivated thewealthiest and most powerfulpeople on the planet. The boldstrategy had placed him in theirorbit and landed him a seat herein the Palazzo. Now, he was theone doling out favors.

The night at the Palazzomarked the apex of Mr. Low’s as-cendancy. The guest list for hisbirthday included Hollywoodstars, top bankers from GoldmanSachs, and powerful figures fromthe Middle East. In the aftermathof the U.S. financial crisis, they allwanted a piece of Mr. Low. PrasMichél had lost his place in thelimelight since the Fugees dis-banded, but was hoping to rein-vent himself as a private-equityinvestor, and Mr. Low held out thepromise of funding. Some celebri-ties had received hundreds ofthousands of dollars in appear-ance fees from Mr. Low just toturn up at his events, and theywere keen to keep him happy.

But even those stars couldn’treally claim to know Mr. Low’sstory. If you entered “Jho Low”into Google, very little came up.Some people said he was anAsian arms dealer. Others claimedhe was close to the prime minis-ter of Malaysia. Or maybe he in-herited billions from his Chinesegrandfather. Casino operators andnightclubs refer to their highestrollers as “whales,” and one thingwas certain about Mr. Low: He

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In Pursuit ofA BillionaireMystery Man

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was the most extravagant whalethat Vegas, New York, and St.Tropez had seen in a long time—maybe ever.

A few hours later, just after 9p.m., Mr. Low’s guests began thejourney to the evening’s mainevent. As the limousines drove upthe Strip, it was clear theyweren’t heading to the desert, assome guests thought, insteadpulling up at what looked like agiant aircraft hangar, speciallyconstructed on a vacant parcel ofland. Among those present wasRobin Leach, who for decades, ashost of the TV show “Lifestyles ofthe Rich and Famous,” had chron-icled the spending of rappers,Hollywood stars, and old-moneydynasties. But that was the 1980sand 1990s, and nothing had pre-pared him for the intemperanceof the night. A gossip columnistfor the Las Vegas Sun, Mr. Leachwas among the few guests whohad gleaned some details of whatwas coming. “Wicked whispersEXCLUSIVE: Britney Spears flyinginto Vegas tomorrow for secretconcert, biggest big bucks privateparty ever thrown,” he tweeted.

One puzzling requirement of Mr.Leach’s invitation was that he couldwrite about the party, but not namethe host. He had made his careerfrom the desire of rich people tobrag about their affluence; whatmade this guy want to spend somuch cash in secret? he wondered.A nightlife veteran, Mr. Leach wasstunned by the audacity of the con-struction on the site. As he sur-veyed the arch of the party venue,which was ample enough to house aFerris wheel, carousel, circus tram-poline, cigar lounge, and plushwhite couches scattered through-out, he did some calculations. Oneside was circus themed, with theother half transformed into an ul-trachic nightclub.

It must have cost millions, Mr.Leach estimated. Here were newlovers Kanye West and Kim Kar-dashian canoodling under a canopy;Paris Hilton and heartthrob RiverViiperi whispering by a bar; actorsBradley Cooper and Zach Galifiana-kis, on a break from filming “TheHangover Part III,” laughed as theytook in the scene. “We’re used toextravagant parties in Las Vegas,but this was the ultimate party,”Mr. Leach said. “I’ve never been toone like it.”

Mr. Low was careful not tooverlook his less well-knownfriends and key business contacts.Among the guests were TimLeissner, a German-born bankerwho was a star deal maker forGoldman Sachs in Asia. There

Goldman Sachsbankers mingled withHollywood stars at JhoLow’s birthday party.

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Britney Spears reportedlyearned a six-figure sum forjumping out of a cake andsinging ‘Happy Birthday’ to JhoLow at the Las Vegas party.

he gambled well into the brightlight of Sunday afternoon.

This was the world built byJho Low.

“While you were sleeping, oneChinese billionaire was havingthe party of the year,” began anarticle on the website of local ra-dio station KROQ two days later,mistaking Mr. Low’s nationality.It referred to him as “Jay Low.”It wasn’t the first time Mr. Low’sname seeped into the tabloids orwas associated with extrava-gance—and it wasn’t the last—but the Vegas birthday party wasa peak moment in his strange andeventful life.

Many of those who came acrossMr. Low wrote him off as a big-talking scion of a rich Asian family.Few people asked questions abouthim, and those who bothered to doso discovered only fragments of thereal person. But Mr. Low wasn’t thechild of wealth, at least not thekind that would finance a celebrity-studded party. His money camefrom a series of events that are sounlikely, they appear made up.Even today, the scale of what heachieved—the global heists he issuspected of having pulled off, al-lowing him to pay for that night’sparty and much, much more—ishard to fathom.

Mr. Low might have hailed fromMalaysia, but his was a 21st-cen-tury global scheme. His alleged co-conspirators came from theworld’s wealthiest 0.1%, the richestof the rich, or people who aspiredto enter its ranks: young Ameri-cans, Europeans and Asians whostudied for M.B.A.s together, tookjobs in finance, and partied in NewYork, Las Vegas, London, Cannesand Hong Kong. The backdrop wasthe global financial crisis, whichhad sent the U.S. economy plum-meting into recession, adding tothe allure of a spendthrift Asianbillionaire like Mr. Low.

Armed with more liquid cashthan possibly any individual in his-tory, Mr. Low infiltrated the veryheart of U.S. power. He was enabledby his obscure origins and the factthat people had only a vague notionof Malaysia. If he claimed to be aMalaysian prince, then it was true.The heir to a billion-dollar fortune?Sure, it might be right, but nobodyseemed to care. Not Leonardo Di-Caprio and Martin Scorsese, whowere promised tens of millions ofdollars to make films. Not Paris Hil-ton, Jamie Foxx and other starswho were paid handsomely to ap-pear at events. Not Jason Straussand Noah Tepperberg, whose night-club empire was thriving. Not thesupermodels on whom Mr. Low lav-ished multimillion-dollar jewelry.Not the Wall Street bankers whomade tens of millions of dollars inbonuses. And certainly not Mr.Low’s protector, Malaysian PrimeMinister Najib Razak.

Mr. Low’s purported scheme in-volved the purchase of storied com-panies, friendships with the world’smost celebrated people, trysts withextraordinarily beautiful women,and even a visit to the WhiteHouse—most of all, it involved anextraordinary and complex manipu-lation of global finance. The FBI isstill attempting to unravel exactlywhat occurred. Billions of dollars inMalaysian government money,raised with the help of GoldmanSachs, is believed to have disap-peared into a Byzantine labyrinth ofbank accounts, offshore companies,and other complex financial struc-tures. Tim Leissner, who left Gold-man in 2016, is now in plea-dealtalks with U.S. authorities. Goldmanhas said it had no way of knowingthere might be fraud surroundingthe Malaysian government funds.

As the scheme began to crashdown around them, Malaysia’sprime minister turned his back ondemocracy in a failed attempt tocling to power. After a stunningelection loss in May, he is now un-der arrest and facing charges in-cluding money laundering. He hasdenied wrongdoing.

Wanted for questioning by theFBI, Mr. Low is a fugitive movingbetween Hong Kong, Macau andmainland China as Malaysia seekshis arrest. Through a spokesman, hemaintains his innocence.

“Billion Dollar Whale: The ManWho Fooled Wall Street, Hollywoodand the World” is the result of threeyears of research, drawing on inter-views with more than 100 people inmore than a dozen countries. Everyanecdote is based on the recollec-tions of multiple sources and insome cases backed up by photo-graphs, videos and other documen-

tation. The authors reviewed tensof thousands of documents, in-cluding public court recordsand confidential investigativeand financial records, as wellas hundreds of thousands ofemails provided to authoritiesduring the course of probingthe case. They also relied onofficial allegations con-tained in the U.S. JusticeDepartment’s civil asset-forfeiture cases, as well ascourt proceedings in Singa-

pore and official reports bySwiss authorities.

In just a few years,the Malaysian ex-panded his universe toinclude Hollywood roy-alty and internationalbankers.

Jho Low’sNetwork

Noah Tepperbergand Jason StraussNightlife impresarios

Paris HiltonFrequent guest at JhoLow’s parties

Najib RazakFormer prime minister ofMalaysia

Swizz BeatsRapper and hip-hop pro-ducer

Tim LeissnerFormer star Goldman Sachsbanker in Asia

Martin ScorseseDirector of ‘The Wolf ofWall Street’

Leonardo DiCaprioActor, star of ‘The Wolf ofWall Street,’ friend ofJho Low

were whispers among Wall Streetbankers about the huge profitsGoldman had been making in Ma-laysia, hundreds of millions ofdollars arranging bonds for astate investment fund, but theyhadn’t reached insular Hollywood.

The crowd was already livelywhen Jamie Foxx started off theshow with a video projected onhuge screens. It featured friendsof Mr. Low from around theworld, each dancing a bit of thehit song “Gangnam Style.” As thevideo ended, Psy, the South Ko-rean singer who had shot to star-dom that year for “GangnamStyle,” played the song live as thecrowd erupted. Over the follow-ing hour and a half, there wereperformances from Redfoo andthe Party Rock Crew, BustaRhymes, Q-Tip, Pharrell, andSwizz Beatz, with Ludacris andChris Brown, who debuted thesong “Everyday Birthday.” DuringQ-Tip’s session, a drunk Mr. Di-Caprio got on stage and rappedalongside him. Then, a giant fauxwedding cake was wheeled onstage. After a few moments, Brit-ney Spears, wearing a skimpy,gold-colored outfit, burst out and,joined by dancers, serenaded Mr.Low with “Happy Birthday.” Eachof the performers earned a fatcheck, with Ms. Spears reportedlytaking a six-figure sum for herbrief cameo.

Then the gifts. The nightlifeimpresarios who helped set upthe party, Noah Tepperberg andJason Strauss, stopped the musicand took a microphone. Mr. Lowhad spent tens of millions of dol-lars in their clubs Marquee, TAO,and LAVO over the past fewyears, just as the financial crisishit and Wall Street high rollerswere feeling the pinch. He wastheir No. 1 client, and they dideverything to ensure other night-club owners didn’t steal himaway. As Messrs. Tepperberg andStrauss motioned to staff, abright red Lamborghini wasdriven out into the middle of themarquee. Someone gave not onebut three high-end Ducati motor-cycles. Finally, a ribbon-wrapped$2.5 million Bugatti Veyron waspresented by Szen Low to hisbrother.

Just after12:20 a.m.,the sky lit upwith fireworks.Partying wentinto the earlyhours, with per-formances byUsher, DJ Chuckie,and Kanye West. Sur-rounded by celebritiesand friends, Mr. Low piledinto a limousine and brought theparty back to the Palazzo, where

B8 | Saturday/Sunday, September 15 - 16, 2018 * * * * * * THEWALL STREET JOURNAL.

As a teenager in Pueblo, Colo., Mr. Diaz faced a choice: earn hiscollege degree by studying telecommunications with the U.S. Navyor by becoming a jet-engine mechanic for the U.S. Air Force—his“Coke-bottle glasses” disqualified him from his dream of pilotingfighter jets. He chose the Navy at the urging of his mother andstarted down a 30-year career path in information technologythat eventually led to Cisco’s C-suite. Stints at Intelligent Electron-ics and Silicon Graphics in the late 1990s led to another major lifechoice in 2000: become CIO of a startup or join Cisco as a seniormanager to redesign the whole web architecture. His wife, Gema,whose energy he credits as a source of inspiration throughouttheir marriage, encouraged him to pick Cisco and its establishedreputation. Here, four trusted advisers.

— Laine Higgins

GuillermoDiaz Jr.Chief information officer and senior

vice president, Cisco Systems

Age 53Education Bachelor of sci-ence in business administra-tion from Regis University

Family Four children—Jorge, 30; Karen, 28;Guillermo III 27; and Ricky, 17

Career highlights Directorof global Network Servicesfor Silicon Graphics; seniordirector of IT for IntelligentElectronics; manager oftelecommunications for AlzaCorp.

Fun fact As a 14-year-old,Mr. Diaz was a martial-artsnational champion. He holdsa black belt in tae kwon do

Favorite book “The Speed ofTrust” by Stephen M. R. Covey

What time does your alarmgo off on weekdays: I ammy own alarm at 5:30 a.m.

PERSONAL BOARD OF DIRECTORSThe trusted advisers of top business leaders

CISCO

SYSTE

MS

STRATEGY

Strawbridge and Dorrance, theperson added. Ms. Malone hasn’tshared her thinking as widely, theperson said.

Mr. Strawbridge urged his cous-ins to shake up Campbell’s man-agement and strategy in recentyears, the person said. Campbell’sacquisition of snack maker Sny-der’s-Lance this year, a shift thatdrastically increased the com-pany’s debt, caused Mr. Straw-bridge to lose patience andprompted him to work with ThirdPoint, the person said. The com-pany has said snacks are an inte-gral part of its current strategy,and proceeds from planned saleswill help it reduce debt.

Mr. Strawbridge and Third Point

believe a sale or the continued ex-istence of Campbell as a stand-alone company under new leader-ship could work, The Wall StreetJournal has reported.

“Board members have refusedto engage in meaningful conversa-tions,” Mr. Strawbridge said lastmonth in a financial filing. Only anew board “free of the need to de-fend past actions and other legacyissues” can objectively weigh asale, he said. He and Third Pointsay Campbell’s plan to revitalizeits soup sales and divest itself oftwo businesses isn’t ambitiousenough. Campbell shares are down16% this year. Mr. Loeb wants toput Mr. Strawbridge back on theboard. Mr. Strawbridge didn’t re-

turn calls seeking comment. ThirdPoint declined to comment.

Other family-owned companieshave sold out to larger rivals aftergenerations of independence. In2008, Mars Inc. and Warren Buf-fett’s Berkshire Hathaway Inc. or-chestrated a deal to acquire Wm.Wrigley Jr. Co. for more than $22billion. Rupert Murdoch’s NewsCorp acquired Dow Jones & Co.,publisher of The Wall Street Jour-nal, from the Bancroft family in2007 for around $5 billion.

In 1897, John Dorrance, a chem-ist whose uncle at the time wasrunning the company, invented amethod for removing water fromsoups to allow them to be trans-ported more cheaply. He went on

Lucy SernaMother

Mr. Diaz considershis mother thechairwoman ofhis personalboard. Raised insouthern Colo-rado, Mrs. Sernawas one of thefirst in her familyto get a collegedegree. She se-cured a telecom-munications jobat a time whenfew womenworked in tech-nology and sheinstilled a strongwork ethic in herchildren.

RickGoldsbyIndependent mar-keting director atTeam National

When Mr. Diazjoined IntelligentElectronics early inhis career, he re-lated to other em-ployees with easeand didn’t considerhis people skills inneed of sharpen-ing. Mr. Goldsby,his boss at thetime, “put a finerpoint that I shouldleverage that andthe power ofteams—whetherthey reported tome or not—that Icould bring peopletogether.”

RebeccaJacobyFormer SVP ofoperations atCisco

Mr. Diaz says thefellow Pueblo na-tive “pushed me toa level where I ei-ther didn’t reallysee or didn’t knowI had.” In 2005,Ms. Jacoby encour-aged him to transi-tion from IT to thesales and market-ing side of Cisco’sservices businessto gain a broaderperspective. Mr.Diaz credits thatexperience for hisrise to CIO, the roleMs. Jacoby heldfor nine years.

Lance PerryVice president ofcustomer strategyand success atCisco

Mr. Diaz creditsMr. Perry, hisonetime boss inthe infrastructuredepartment, withencouraging andshaping hisleadership skills.“One of thethings that Lancealways says is‘leaders are themessage.’ ”

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Mary Alice Malone

*Family members who aren't board members aren't required to disclose their stakes when they are less than 5% of the company's shares

Sources: FactSet (shares); public records; newspaper archives. Photos: Clockwise from top left: Getty Images (4);PMC (2); AP Images Roque Ruiz/THEWALL STREET JOURNAL.

John T. Dorrance

Campbell Soupvoting trust with7.87% of shares

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died 1989

died 2017

died 1977

sold stake in 1996

15.41%

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2.77%died 1953

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died 1965

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Elinor

John T. Jr.

GeorgeStrawbridge, Jr.

Margaret

Ethel

Charlotte

Hopevan Beuren

BennettDorrance

DorranceHamilton

Diana Norris Wister*

Charlotte Weber*

Tristram Colket*

Archboldvan Beuren

Barbaravan Beuren

S. Matthews V.Hamilton, Jr.

MargaretDuprey

N. PeterHamilton

John T. Dorrance III

Andreavan Beuren

Too many cooks?Heirs to Campbell Soup inventor ownat least 45% of company's stock

Activist investor DanielLoeb is testing the co-hesion of the familythat has controlledCampbell Soup Co. formore than a century

with his push to unseat the boardand potentially sell the company.

Mr. Loeb’s campaign to replacethe soup maker’s board, an-nounced last week, needs backingfrom descendants of John T. Dor-rance, the inventor of Campbell’scondensed soup. The family holdsat least 45% of the company’sstock. Additionally, two-thirds ofshareholders would need to ap-prove the full sale that Mr. Loebhas called for, according to Camp-bell’s charter.

Activists rarely take oncompanies that are controlled byfamilies, partly because of thechallenges inherent in unseatingmultiple heirs who sometimes havecompeting interests. Mr. Loeb, too,faces a situation in which the mul-tigenerational Dorrance family isdivided into factions, althoughhe already has one familymember in his camp.

George Strawbridge Jr., aformer board member andgrandson of the inventor,revealed he held a 2.8%stake in August and isworking with Mr. Loeb’shedge fund, Third PointLLC, to make changesat the company. Mr.Strawbridge, an 80-year-old owner ofthoroughbred horses,supports Mr. Loeb’splan to appoint anew board, whichwould remove two ofhis cousins and a sec-ond cousin who aredirectors.

Two of them, sib-lings Mary Alice Ma-lone, 68, and BennettDorrance, 72, are alsograndchildren of JohnDorrance, and each ownsabout a sixth of the com-pany, according to FactSet.Ms. Malone’s stake is worthabout $2.13 billion and herbrother’s about $1.85 billion.

Campbell’s current directors be-lieve the company’s plan to sell itsinternational and fresh-food busi-nesses, announced after Messrs.Loeb and Strawbridge disclosed acombined 8.4% stake in the com-pany last month, would make itmore attractive to a potentialbuyer, a person familiar with thecompany said. Ms. Malone didn’trespond to calls seeking comment.Mr. Dorrance, through his wife, de-clined to comment.

A third group of family mem-bers that had previously pushedfor a sale holds roughly 7.9% ofCampbell through a trust and aseat on the board held by Archboldvan Beuren, a great-grandson ofthe condensed-soup inventor. Arepresentative for the CampbellSoup Co. Voting Trust trust didn’trespond to a request to comment.

Some family members feel theirlegacy has been tarnished in recentyears by poor management, said aperson familiar with their thinking.“There’s not as much to be proudabout right now,” the person said.

Mr. Strawbridge, a Campbellboard member until 2009, spokeoccasionally with his cousin, Ben-nett Dorrance, over the yearsabout the company’s direction, thisperson said. They often disagreed,but there still may be some roomfor agreement between Messrs.

to buy up all the stock in Camp-bell, leaving the company to hisfuture grandchildren when he diedin 1930.

The family retained majorityownership when Campbell wentpublic in 1954. Jack Dorrance, theinventor’s son and one of five chil-dren, became chairman and con-trolled the largest chunk of shares.When he died in 1989, that stakewent to his three children: Ms. Ma-lone, Bennett Dorrance, and John“Ippy” Dorrance III.

Around that time, Campbell washurt by rapid expansion of itsproduct line and overextensionoverseas. Three other grandchil-dren of the inventor, Dorrance“Dodo” Hamilton, Hope “Happy”van Beuren, and Diana Straw-bridge Norris Wister pushed tosell the company.

Bennett Dorrance was workingat the time as a real-estate devel-oper in Arizona. Mr. Strawbridge,the son of the inventor’s daughter,Margaret, was running the Buf-falo Sabres professional hockeyteam and racing thorough-breds. They and Ms. Maloneworked together to keep thecompany under familycontrol. They lobbied tohire David Johnson, anexperienced consumer-products executive whoturned around Camp-bell’s sales and profitas chief executivefrom 1990 to 1997.

The three heirswho had pushed fora sale combinedtheir shares into atrust in 1990. In aregulatory filing atthe time, they saidthey supported Mr.Johnson’s efforts toimprove the com-pany’s profitability butbelieved that the bestinterests of the share-holders would be servedby selling Campbell. WhileCampbell’s success under

Mr. Johnson quelled the dis-agreement for several years,

their rift with the cousins whowanted to keep Campbell inde-

pendent didn’t heal.“When you are accustomed to

having everything your way be-cause of your family and wealth,you don’t forgive easily,” BennettDorrance said at a 1995 conferenceof the Family Firm Institute inScottsdale, Ariz., according toFamily Business Magazine.

By 2000, Campbell was in finan-cial trouble again. Then-CEO DaleMorrison resigned. Other foodcompanies were merging, puttingpressure on Campbell to do thesame. This time, more familymembers appeared open to a sale.

When rival Bestfoods consid-ered acquiring Campbell for about$16 billion in 2000, The WallStreet Journal reported that theDorrance heirs supported a sale.The deal fell apart when UnileverPLC bought Bestfoods. Campbellbrought in Doug Conant as CEO,and he drove Campbell to betterreturns for the next decade. Pres-sure on Campbell to improve itsbusiness has resurfaced.

Some of the inventor’s heirs,including Ippy Dorrance, havesince cashed out their shares.Other family members still holdsmaller stakes that they aren’trequired to disclose, making thefamily’s total ownership likelymore than 45% of Campbellshares, the company said.

At Campbell Soup, FamilyTensions

Come to a BoilActivist investor Daniel Loeb’s campaign to unseat the board exposes

the challenges of taking on a family-controlled company

BY ANNIE GASPARRO AND CARA LOMBARDO

B12 | Saturday/Sunday, September 15 - 16, 2018 * * * * * * THEWALL STREET JOURNAL.

Deutsche Bank AG renewedthe contract of the head of itsinvestment bank, GarthRitchie, during a supervisory-board meeting Friday, accord-ing to a person familiar withthe matter.

Mr. Ritchie was named solehead of the investment bankearlier this year, after servingas head of global markets andco-head of investment bank-ing.

The Wall Street Journal re-ported in April that Mr.Ritchie had discussions withDeutsche Bank’s chairman andothers about potentially leav-ing the bank as soon as thisyear. Days later, he was namedsole investment-banking chiefin an overhaul that includedthe naming of a new chief ex-ecutive, Christian Sewing.

Mr. Ritchie’s current man-agement-board term expires atthe end of this year. The su-pervisory board renewed hiscontract for five years in aunanimous vote at a meetingin Hamburg on Friday, the per-son said.

Mr. Ritchie has worked atDeutsche Bank since 1996 and

warded industrials lately aftermany manufacturers reportedstrong second-quarter earn-ings despite the threat of tar-iffs hurting global demand.

Additionally, data earlierthis past week showed a gaugeof U.S. business prices in Au-gust clocked the first monthlydecline in about a year and a

half, a potentially positive signfor consumer-facing firmscombating higher costs. Somecommodity prices have fallenlately, a potential boon for

many industrial companies.Some analysts think

strength in the U.S. economycould continue to underpinmanufacturing stocks, even as

trade discussions continue.“We’re focusing more on

domestic demand,” said Benja-min Lau, chief investment offi-cer of Apriem Advisors, whohas been slightly overweightindustrials this year.

Signs that the U.S. is willingto compromise with Canada,the European Union and Chinaon trade after reaching a dealwith Mexico have also helpedsentiment in the sector, ana-lysts say. The Trump adminis-tration is giving Beijing an-other chance to try to staveoff new tariffs on $200 billionin Chinese exports, asking topofficials for a fresh round oftrade talks this month, TheWall Street Journal reportedearlier this week.

Third-quarter earnings sea-son will mark a crucial periodfor industrial shares, with in-vestors increasingly lookingfor sectors cheaper than thebroader market that can stillpost consistent sales growth.

However, cautious com-ments from industry execu-tives or weaker-than-expectedresults could send the groupspiraling again, putting pres-sure on other sectors to pickup the slack.

After machinery manufac-turer Caterpillar warned inApril that first-quarter resultscould prove to be a “high-wa-ter mark” for the year, inves-tors have been looking forsigns that the group can sus-tain recent growth.

“We think that the sectormay have derated enough thatcontinued strength in earningsfrom here can help drive up-side,” Morgan Stanley analystssaid in a recent note to clients.

MARKETS NEWS

Beaten-down shares of in-dustrial firms are starting tobounce back, supporting majorU.S. stock indexes even as sec-tors including technologywobble.

The S&P 500 industrialssector has risen 4.8% in thepast month, making it thebest-performing of thebroader index’s 11 groups inthat span and lifting it up 2.3%despite recent swings in themarket’s best-performing sec-tors. It has risen in nine of thepast 11 weeks and is at itshighest level since February.

The Dow Jones IndustrialAverage has also outper-formed recently, earlier thismonth narrowing the gap onthe S&P 500 to its lowest levelsince July. The blue-chip indexis up 5.8% for the year, com-pared with the S&P 500’s 8.7%.

The Dow industrials’ stabil-ity marks a shift from earlierin 2018, when trade tensionsand worries about higher com-modity costs battered manu-facturers. Data Friday showedU.S. industrial output rosemore than expected in August,lifted by strong utility andmotor-vehicle production.

Industrial stocks have beenamong the market’s worst-performing sectors in the pastsix months even with the U.S.economy growing at its quick-est pace in years, so some an-alysts think more strong datacould give the group a furtherboost. Figures from last monthshowed July output from fac-tories, mines and utilities wasweaker than expected.

Yet investors have re-

BY AMRITH RAMKUMAR

Battered Industrial Shares Get NewWind

Some analysts think strength in the U.S. economy could continue to underpin manufacturing stocks, even as trade discussions continue.

CALLAGHANO’HARE/B

LOOMBERGNEWS

session to discuss corporatestrategy, structure, perfor-mance and management. Thebank’s top executives will alsopresent business assessmentsand answer questions.

Persistent management un-certainty and defections havecomplicated a troubled turn-around at Germany’s biggestlender, which faces specula-tion about whether it mightmerge with rival Commerz-bank AG.

Representatives of thebanks haven’t directly com-mented on the speculation;people close to the lendersand government officials in re-cent months have consideredsuch a merger possible,though not imminent.

Deutsche Bank may alsohave a new investor in comingmonths as embattled Chineseconglomerate HNA Group Co.plans to unload its entire 7.6%

has served on the manage-ment board since January2016.

Deutsche Bank’s supervi-sory board, which hires, firesand oversees the lender’s topexecutives, was meeting intothe weekend for an annual

stake in the bank as part of aplan to shrink its global foot-print, the Journal has re-ported.

Mr. Ritchie, a South Africanlongtime equities-trading ex-ecutive, oversees DeutscheBank’s biggest division by rev-enue and, historically, itsprofit engine. But the invest-ment bank has struggled tomaintain market share in arange of trading and advisorybusinesses. The consistentstream of banker, trader andsenior-management depar-tures has further fueled inves-tor concern about future prof-its.

Mr. Ritchie is one of ninemanagement-board members,down from 12 before the CEOchange earlier this year. He’sone of two presidents directlyunder the CEO; the other isKarl von Rohr, the bank’s chiefadministrative officer.

BY JENNY STRASBURG

Head of Deutsche Investment Bank to Stay

Garth Ritchie had earlier been in discussions about potentially leaving the German bank.

KRISZTIANBOCS

I/KRISZTIANBOCS

I/BLO

OMBERGNEWSNEWS

Major indexes edged higherFriday, notching weekly gainsas fears about an escalation intrade disputes abated.

“What’s driving intradayvolatility and choppiness inthe market? It’s going to betrade,” said Shawn Cruz, whomanages trading strategy atTD Ameritrade.

The Dow Jones IndustrialAverage rose 8.68 points, orless than 0.1%, to 26154.67.The S&P 500 ticked up 0.80point to 2904.98, a day afterthe index notched its biggestgain in two weeks on Thurs-day. The Nasdaq Compositeslipped 3.67 points to 8010.04,though it joined the other two

major indexes in postingweekly gains.

One driver of stocks’ ad-vances this week was technol-ogy companies, which hadbeen one of the prior week’sbiggest decliners.

“It’s good day, bad day withthe chip sector, and you stillhave Facebook and Google un-der regulatory scrutiny, butthe theme in tech is still posi-tive. You’re still getting goodearnings reports,” said DanMorgan, senior portfolio man-ager at Synovus Trust.

This week, technology com-panies in the S&P 500 rose1.8%, with the PHLX Semicon-ductor Index up 1.1%. Appleshares have risen 1.1% thisweek after the company an-nounced a new lineup of mo-

bile devices.Consumer companies de-

clined Friday after U.S. retail-sales data showed Americanconsumers reined in theirspending in August, taking abreather after very strongsales growth in July. The datacome as U.S. wages rose in Au-gust, with private-sectorhourly wages growing 2.9%from a year earlier, the fastestpace since mid-2009.

“If that’s not translatinginto retail spending, retailerswill feel the brunt of thatmove” as it costs more to paytheir employees, Mr. Cruz said.

The Stoxx Europe 600 rose0.4%. Shares in Danske Bankfell 1% after The Wall StreetJournal reported that U.S. law-enforcement agencies are prob-

ing Denmark’s largest bankover allegations of money-laundering flows from Russiaand former Soviet states.

Japan’s Nikkei closed at itshighest level since early Feb-ruary, ending its best weeksince July.

Softness in the dollar andstabilization in emerging mar-kets has helped improve inves-tors’ risk appetite.

Shoqat Bunglawala, head ofthe global portfolio solutionsgroup for EMEA and Asia Pa-cific at Goldman Sachs AssetManagement, said he is cau-tious on emerging markets inthe short term because of is-sues stemming from sentimentand volatility, but in the me-dium term is still very positiveon broader emerging markets.

BY RIVA GOLDAND CORRIE DRIEBUSCH

Declining TradeWorries Buoy Major Stock Indexes

10-minute intervals

Chip DipSemiconductor stocks fell in recent trading sessions,but were on pace to end the week higher.PHLX Semiconductor Index

THEWALL STREET JOURNAL.Source: SIX

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THEWALL STREET JOURNAL. * * * * Saturday/Sunday, September 15 - 16, 2018 | B13

MARKETS NEWS

U.S. government bondprices fell Friday, briefly push-ing the yield on the 10-yearnote above 3% for the firsttime since early August, as in-vestors’ appetite for Treasurys

was once againtested by fore-casts for higherinterest ratesand continued

strength in the U.S. economy.The yield on the benchmark

10-year Treasury note brieflyreached as high as 3.001%early in the U.S. trading ses-sion.

It settled at 2.992%, com-pared with 2.964% Thursday.

Yields, which rise as bondprices fall, have climbed in re-cent weeks, as factors con-straining their rise, includingconcerns about trade tensionsand emerging-market econo-mies, have receded.

At the same time, forcespushing them higher, such assolid U.S. economic data, haveremained in place.

The 10-year yield’s move to3% will bring increased scru-tiny to the bond market, withinvestors watching to seewhether the yield can breakthrough a level that has previ-ously acted as a ceiling thisyear.

The 10-year Treasury yieldis of great importance to theglobal economy, serving asbenchmark for a range of in-terest rates used by consum-ers, businesses and govern-ments.

The yield has moved above3% on a few occasions thisyear, only to quickly fall backdown again, ensuring that thecredit environment for con-sumers and businesses re-mains relatively favorable,even as the Federal Reservehas steadily raised short-terminterest rates.

BY SAM GOLDFARB

Yield on10-YearNote FlirtsWith 3%

CREDITMARKETS

ume in Citi Match during theperiod the SEC reviewed, theagency said.

In addition, the affiliatefailed to tell customers thatnearly half of the orders inCiti Match were routed to andexecuted in other trading ven-ues. Some customers receivednotices saying trades weremade in Citi Match when theyweren’t, according to the SEC.

“All trading venues, regard-less of their trade volume,must ensure that their usershave accurate information,particularly about key issueslike order routing,” said Jo-seph Sansone, chief of the SECenforcement division’s marketabuse unit.

Citigroup agreed to the set-tlement without admitting ordenying the SEC’s findings. Aspokeswoman for Citigroupsaid the company was pleasedto have the matter resolved.

their intentions.Such investors are often

wary of letting high-frequencytraders see their orders, fear-ing the traders will infer alarge buyer or seller is atwork. That can cause thespeedy trader to adjust itsprice quotes in response, andthe investor getting a worseprice for its transaction.

In the Citi example, the us-ers of the dark pool, such asmutual fund and retirementfund advisers, paid what theSEC called a “relatively highcommission rate” that wasgenerally a penny per share totrade in Citi Match.

One PowerPoint presenta-tion frequently used to marketCiti Match said “No High Fre-quency Flow,” the SEC said.

However, two high-fre-quency trading firms ac-counted for more than 17% ofall transactions by dollar vol-

Citigroup Inc. will pay reg-ulators $12.9 million to settlecharges related to its opera-tion of a “dark pool” tradingplatform called Citi Match.

The Securities and Ex-change Commission said theCiti affiliate that marketed CitiMatch misled users betweenat least December 2011 andJune 2014 by informing themthat high-frequency tradersweren’t permitted to trade inthe pool.

Dark pools are private, off-exchange stock-trading venuesthat arrange transactionswithout broadcasting their us-ers’ orders to the broadermarket. They are often usedby big investors that want tobuy or sell large quantities ofshares without tipping offother market players about

BY MICAH MAIDENBERGAND ALEXANDER OSIPOVICH

Citi Fined Over Its ‘Dark Pool’

demand points to a possibleand eventual global supplysqueeze, in part because U.S.oil sanctions against Iran willcontinue to have a bigger ef-fect over the coming weeks

Oil prices rebounded Fridayfrom big losses a day earlieras investors eyed strongglobal demand, shrinkingcrude exports from Iran and

low U.S. in-ventories.

L i g h t ,sweet crude

for October delivery ended0.6% higher at $68.99 a barrelon the New York MercantileExchange. The U.S. benchmarkoil price ended the weeknearly 2% higher than where itbegan. Brent crude, the globalbenchmark, slipped 0.1% to$78.09 a barrel.

The latest oil market reportfrom the International EnergyAgency released Thursday“painted a rather bullish pic-ture,” said JBC Energy.

The report showed globaloil demand increased byaround 100,000 barrels a dayin 2017, 2018, and 2019, JBCEnergy noted.

That continued strength in

BY DAN MOLINSKIAND CHRISTOPHER ALESSI

and months, said Gene McGil-lian, vice president of researchat Tradition Energy.

Oil’s move on Friday, Mr.McGillian said, is a result of“the combination of demand

improving next year and thereduced exports from Iran,plus, this week’s inventory re-port on U.S. crude stocks thatwere at a 3½ year low.”

The federal Energy Infor-

mation Administration onWednesday reported U.S. com-mercial crude-oil inventoriesfell by 5.3 million barrels lastweek to 396 million barrels,the lowest since 2015.

Oil prices pared some oftheir gains Friday afternoonafter a report from oilfield-services company BakerHughes that showed the totalnumber of active oil rigs in theU.S. jumped by seven in thelatest week, to 867. Despitethe weekly bump, the total re-mains hemmed inside a rathertight, four-month-old rangebetween 858 and 869.

Despite Friday’s rise inprices, Alfonso Esparza, senioranalyst at foreign-exchangetrading group Oanda, said oilfaces some headwinds in thecoming days and weeks, espe-cially as the dollar begins torebound from a nearly six-week low.

“Geopolitical factors likethe U.S.-China trade tensionswill continue to put downwardpressure on crude prices,” Mr.Esparza said.

Oil Prices Bounce Back on Strong Demand

Labor Department report thatshowed average hourly earn-ings rose 2.9% in the 12-monthperiod ended in August, thefastest since 2009.

The increase in wages ishappening after 95 consecu-tive months of job growth—much of it near or slightly be-low the 200,000 monthlymark.

A Commerce Departmentreport Friday presented amixed picture on retail sales.Purchases at retail stores andrestaurants rose 0.1% from theprior month to a seasonallyadjusted $509 billion in Au-gust, well below the 0.4% in-crease economists surveyed byThe Wall Street Journal hadexpected.

Still, revised data showedretail sales rose 0.7% in July,up from an initially reported0.5% increase.

The U.S. dollar rose Fridayafter data showed that con-sumers are increasingly confi-dent in their outlook for theeconomy.

The WSJDollar Index,which mea-sures the U.S.

currency against a basket of 16others, climbed 0.4% to 89.59.

The dollar rose after theUniversity of Michigan said itspreliminary index of U.S. con-sumer sentiment had movedup to its second-highest read-ing since 2004. The indexmeasured 100.8 this month, upfrom August’s final reading of96.2. Economists in a WallStreet Journal survey pre-dicted 86.1.

The improvement in senti-ment comes after last week’s

BY DANIEL KRUGER

Dollar Rises Despite MixedPicture on Retail Spending

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B14 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

A Reality Check forThe Retail RevivalSlowing sales growth raises questions

BY JUSTIN LAHART

About that retail revival. Itmight be less powerful than inves-tors think.

Strong second-quarter resultsfrom many retailers bolstered theoptimistic view that industry bullshave been spinning this year.Stores have finally started to figureout Amazon.com, developing clicksand mortar strategies that arehelping them defend their turfagainst the online giant. It is partof why stocks of retailers have beenamong the year’s best performers.

But Friday’s retail sales reportsuggests that the third quartermight not be as rosy as the sec-ond. The Commerce Departmentreported that overall sales rosejust 0.1% in August from a monthearlier, after rising 0.7% in July.That was the slimmest gain sinceJanuary, when sales declined.

The sales report hardly countsas a death knell for the Americanconsumer, but it does suggest thatthe very strong retail sales figuresfrom the three months ended inJuly, which coincides with the fis-cal second quarter for most retail-ers, weren’t sustainable.

The details of the report rein-

Surveys suggest Walmart has been aggressive on prices lately.

RETA

IL:TIMOTH

YFA

DEK/B

LOOMBERGNEWS;BOTO

X:GETT

YIM

AGES

The Worst Is Over forGeneric-Drug Stocks

There are signs that the industry’slong stock-market nightmare is ending

BY CHARLEY GRANT

RBC Capital Markets. That is im-portant for investors; considerthat Teva trades at less thaneight times forward earnings. In-clude debt however, and its valu-ation of 10 times Ebitda looksmore expensive.

While those moves have re-sulted in lowered short-term prof-itability, they have made it easierto generate growth in the future.As Mr. Stanicky, who anticipatedthe sector’s downturn back in2016, put it, “The result of the de-cline in earnings we have seenover the last couple of years is ul-timately going to be a positive.”

While generic approvals couldset another record this fiscal year,the rate of growth is slowing fromrecent years. And applications areactually behind last year’s pace.

Investors shouldn’t expect an im-mediate stock surge; for one thing,the price-fixing investigation is stillopen. And the sector likely needsmore time to reduce debt.

But this time, patience shouldpay off: Years of ugliness havehelped create a much prettierpicture.

PeakingApproved generic-drug applications

Fiscal year ends Sept. 30.Source: Food and Drug Administration

THEWALL STREET JOURNAL.

492

651

763719

FY2015 '16 '17 '18through Aug.

Car sales in China have shiftedinto reverse, but figuring how ex-posed the world’s biggest automakers are to the world’s biggestcar market is almost impossible.

Most major car makers havedone very well in China, includingthrough joint ventures with Chi-nese peers. Nissan and Volkswagenget nearly a quarter of their pretaxprofit from those businesses, andGeneral Motors isn’t far behind.

What the car companies don’ttell investors is how much theyearn from exports, royalties andparts sales in China, which can besignificant and aren’t fully dis-closed.

The same goes for the rarecases where there are losses. Forexample, the depth of Ford’s Chinaproblem isn’t visible in its jointventure, which roughly broke evenin the second quarter. Comingclean about its actual exposure,Ford said it lost $483 million inChina in the quarter, largely be-cause it is selling fewer importedExplorers and spending more todesign new models to be sold bythe JV. Ford’s stock has fallen 11%since the July revelation as inves-tors have brought down theirprofit forecasts for 2018.

After years of rapid growth, theChinese market is far larger thanits counterparts in the West, withmore than 24 million cars sold lastyear compared with roughly 17million in the U.S. and 15 million inthe European Union. But sales fell7% in August compared with ayear earlier, according to theChina Passenger Car Association,following declines of 6% in Julyand 3% in June.

The numbers are likely to getworse. Sales last fall were boostedby tax incentives, and a crackdownon lending has hurt the lower endof the car market. The trade feud

with the U.S., which led to highertariffs on U.S.-built cars exportedto China in July, will also likelyweigh on sales.

The slowdown makes it impor-tant to understand how muchmoney global car giants like Gen-eral Motors and Volkswagen earnin China. Unfortunately, the com-plexity of flows between the com-panies’ Chinese joint ventures andtheir wholly owned operationsmakes this impossible to work outprecisely. It is likely that globalcar makers use the opacity to playdown Chinese profits in their ac-counts because investors see themas risky or to avoid extra scrutinyfrom the government.

Companies need to better dis-close sales from imports of high-end cars to China’s wealthy coastalmarkets, parts sales to joint ven-tures and royalties from them fordesigns. For the German brands,these profits are almost certainlygreater than those of their jointventures. Brokerage Bernstein esti-mates that China contributedroughly €5.5 billion ($6.4 billion)in profit, or more than 40% of thetotal, to both BMW and Daimler’sMercedes-Benz last year. Con-versely, we wouldn’t know the ex-tent of Ford’s Chinese travails ifthe auto maker hadn’t spelledthem out.

The Germans have the most tolose in China, but have been pro-tected from the slowdown by theirstrong brands. For them, the tar-iffs on U.S.-built cars exported tothe country are a bigger problem.A decision to split the cost of thetariff with its Chinese customerswill hit BMW’s profits by roughly€300 million this year, while Daim-ler blamed the tariffs in part for aJune profit warning.

Mass-market global manufactur-ers like GM and Nissan may strug-gle more with the deterioratingmarket backdrop. GM warned in

July that its Chinese JV would facemore competition in the secondhalf. And the weaker Chinese cur-rency is a problem for everyone.

Car makers aren’t the only onesoverexposed to China. Luxurygroups like Moët Hennessy LouisVuitton LVMH and Gucci-ownerKering typically make between

30% and 40% of their sales fromChinese consumers. Because salesare growing faster in China thanelsewhere, the industry’s growth iseven more dependent on the coun-try. This became clear in late 2015,when the yuan devaluation madeChinese consumers cautious andhandbag sales suddenly hit a wall.

The difference is that investorsknow how important China is tomakers of fancy bags and watches.Most of the world’s automotive gi-ants offer no indication of howmuch is at stake. As warning signsmount, car makers shouldn’t waitfor a Ford-style collapse to bringthe market up to speed.

EXCHANGE

HEARD ONTHESTREET

FINANCIAL ANALYSIS & COMMENTARY

Car Makers Have aLot to Lose in ChinaBut how much precisely? Investors need a better idea ofwhat’s at stake as the world’s largest auto market slows

BY STEPHEN WILMOT

Chinese joint-venture net profitsas a share of group pretax profits*

Fragile China

THEWALL STREET JOURNAL.

China's monthly car salesChange from a year earlier

Unit car sales in ChinaJan.-July '18 vs. Jan.-July '17

*last financial year†Renault-Nissan-MitsubishiSources: the companies (joint ventures); Wind Info, China Passenger Car Association (change); CarSalesBase (sales)

VW

Nissan

GM

Ford

Daimler

BMW

Toyota

FCA

Tesla

24%

23

17

11

9

6

3

1

0

30

–10

–5

0

5

10

15

20

25

%

2014 ’15 ’16 ’17 ’18

Hyundai-Kia

Daimler

Alliance†

Toyota

VW Group

GM

BMWGroup

PSA

Honda

Ford

FCA

30–30% –20 –10 0 10 20

Car sales have started to slow in China. Ford revealed it lost $483 million in the country in the second quarter.

DAMIR

SAGOLJ/R

EUTE

RS

force this sense. Department storesales fell 1% in August after gain-ing 1.4% in July. Furniture andhome-furnishing store sales fell0.3% after a flat reading a monthearlier. And apparel and accessorystore sales slipped 1.7% after gain-ing 2.2%.

Online sales appear to havemoderated as well. Nonstore retailsales—a category dominated byAmazon—increased by 0.7% in Au-gust, versus a July gain of 1.5%.Even so, nonstore retailers’ shareof sales excluding auto dealers,gasoline stations and restaurantsand bars climbed slightly to a re-cord 19.1% from 19%. So Amazon isstill making inroads.

And the competition amongother retailers remains intense.Price surveys conducted byWolfe Research analyst ScottMushkin show that Walmart hasbeen aggressive on prices, hold-ing them steady and in somecases reducing them. Thursday’sinflation report from the LaborDepartment showed that apparelprices slipped by 1.6% in Augustfrom a month earlier.

Anybody who thinks retailingsuddenly became easy could be infor a big disappointment.

Look carefully, and there aresigns that the generic-drug indus-try’s long stock-market nightmareis ending. A poorly timed dealspree left the big players with toomuch debt as drug prices got hit,causing many stocks to fall by halfor more.

Prices declined faster than usualbecause of consolidation amongU.S. drug buyers and Trump ad-ministration policies that encour-aged new generic-drug applica-tions, which creates morecompetition. Through August, theFood and Drug Administration ap-proved 719 applications in the cur-rent fiscal year, which ends in Sep-tember. The agency approved 763and 651 applications last year andin 2016, respectively.

That hit to pricing power cameright as the largest manufacturersmade expensive acquisitions. All ofwhich resulted in too much debtand accelerated the fall in shareprices. A Department of Justice in-vestigation into price fixing in theindustry added to the misery.

Even after a recent rally,shares of Teva PharmaceuticalIndustries are down by nearly70% from the 2015 high, whileMylan has dropped about 50%since then. But managementteams have responded appropri-ately to the trouble. Measuresincluded shutting down unprof-itable drug production in theU.S. and using free cash flow topay down debt.

Those measures have set theindustry up for a rebound. Forstarters, three of the five largestU.S. generic-drug companies willreduce their leverage to less thanthree times earnings before inter-est, taxes, depreciation and amor-tization by the end of next year,according to Randall Stanicky at

OVERHEARDBotox isn’t just for baby

boomers. That has long beenthe view of Allergan, whichmakes the antiwrinkle treat-ment.Next up, millennials, the old-

est of whom are now ap-proaching 40. Allergan an-nounced at an investorpresentation that it will beginrunning a new ad campaign forBotox called “Bo-curious.” Theads are still under develop-ment, but a concept reelshown Friday included musicfrom Katy Perry’s 2008 hit “IKissed a Girl.” Potential cus-tomers viewing the ad likelywon’t need any medical treat-ment to raise their eyebrows.The ad fits with Allergan’s

effort to boost sales of Botoxby marketing it to youngerpeople and to men. After all,total Botox sales reachednearly $1 billion in the secondquarter, so generating addi-tional growth will take someeffort.Still, using the term Bo-curi-

ous to get these people inter-ested in Botox is curious on itsown. The phrase invokes theterm “bicurious,” defined by theUrban Dictionary as an “intenseinterest in bisexuality.”That is certainly one way to

get people of all ages and gen-ders talking.

THEWALL STREET JOURNAL. **** SATURDAY/SUNDAY, SEPTEMBER 15 - 16, 2018 | C1

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AI REVOLUTION

REVIEWInfernal VisionsPeople have feared Hellfor thousands of years.

Do we still? C5

CULTURE | SCIENCE | POLITICS | HUMOR

Win With Willkie!What happens when a roguebusinessman hijacks theRepublican Party?Books C7

LAW

Themodern SupremeCourt has becomemore powerful, andmore partisan, thanthe founders everintended. C3

we will lose the ability to understand or control them.Which vision to accept? I’d say neither. They simply aren’t possible based

on the technology we have today or any breakthroughs that might be aroundthe corner. Both scenarios would require “artificial general intelligence”—thatis, AI systems that can handle the incredible diversity of tasks done by the hu-man brain. Making this jump would require several fundamental scientificbreakthroughs, each of which may take many decades, if not centuries.

The real battles that lie ahead will lack the apocalyptic drama of Holly-wood blockbusters, but they will disrupt the structure of our eco-nomic and political systems all the same. Looming before us in thecoming decades is an AI-driven crisis of jobs, inequality and mean-ing. The new technology will wipe out a huge portion of work aswe’ve known it, dramatically widening the wealth gap and posinga challenge to the human dignity of us all.

This unprecedented disruption requires no new scientific break-throughs in AI, just the application of existing technology to newproblems. It will hit many white-collar professionals just as hard asit hits blue-collar factory workers.

Despite these immense challenges, I remain hopeful. If handledwith care and foresight, this AI crisis could present an opportu-nity for us to redirect our energy as a society to more humanpursuits: to taking care of each other and our communities. Tohave any chance of forging that future, we must first under-stand the economic gauntlet that we are about to pass through.

Many techno-optimists and historians would argue thatPleaseturntothenextpage

“AI can letus injectmore prideand dignityinto workfocused onenhancingour com-munities.

This essay is adapted from Dr. Lee’s new book,“AI Superpowers: China, Silicon Valley and the New World Or-der,” which will be published by Houghton Mifflin Harcourt onSept. 25. He is the Chairman and CEO of Sinovation Venturesand the former president of Google China.

InsideCULTURE

Sell touristtrinkets tosurvive? Somebooksellers onthe storied banks of the Seineare declaring jamais! C4

NapTimeJason Gay relishesdaytime shut-eye.Convincing hiskindergartner isanother matter.C6

TECHNOLOGY

Tesla, theMan

The electriccar’s namesakewas brilliant atinvention, awfulat business. C3

Artificial intelligence is atechnology that sparks the

human imagination. What will ourfuture look like as we come to sharethe earth with intelligent machines?Our minds gravitate to extremes, tothe sharply contrasting visions thathave captured public attention anddivided much of the technologicalcommunity. As a longtime AI re-searcher and venture capitalist inChina and the U.S., I’ve observedthese two camps across continentsand over many decades.

Utopians believe that once AI farsurpasses human intelligence, it willprovide us with near-magical toolsfor alleviating suffering and realiz-ing human potential. In thisvision, super-intelligent AIsystems will so deeply un-

derstand the universe that they will act as omnipotent oracles, an-swering humanity’s most vexing questions and conjuring brilliant so-lutions to problems such as disease and climate change.

But not everyone is so optimistic. The best-known member ofthe dystopian camp is the technology entrepreneur Elon Musk,who has called super-intelligent AI systems “the biggest risk weface as a civilization,” comparing their creation to “summoningthe demon.” This group warns that when humans create self-improving AI programs whose intellect dwarfs our own,

Artificialintelligence will

radically disrupt theworld of work, but

the right policychoices can make ita force for a morecompassionatesocial contract.

By Kai-Fu Lee

Õ

“Pepper,” a robot manufactured by SoftBank

Robotics, is designed to interact with human beings.

C2 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

Max Fleischer’s animated stu-dio released a cartoon titled“Crazy Town,” featuring BettyBoop and her boyfriend takinga trip to a topsy-turvy land.With birds swimming in a lakeand fish flying in the sky, thecouple perform the song,“Let’s Go Crazy.” (A somewhatsimilar cartoon called “Crazy-town” was released by HarveyFilms in 1953.)

“Crazytown” also has beenused as an affectionate moni-ker for hometowns. Starting inthe early 1960s, the San Fran-cisco columnist Herb Caenwould sometimes use “Crazy-town, USA” as the dateline forhis columns as a way of pok-ing fun at the bizarre and un-predictable goings-on in hisbeloved “Baghdad by the Bay.”

Most of the time, however,“crazytown,” like “crazy” itself,maintains a strong pejorativewhiff of mental instability. (The“crazy” slur has recently beencritiqued as an example of“ableist language,” as it deni-grates the mentally ill.) If Mr.Kelly did use the word to de-scribe the White House, it’s asafe bet that he wasn’t likeninghis workplace to an entertain-ing carnival attraction. S

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bounty generated by AI to doubledown on what separates us from ma-chines: human empathy and love.

Such a revolution in how we re-late to work will require a rethinkfrom all corners of society. In theprivate sector, instead of simplyviewing AI as a means for cost-cut-ting through automation, businessescan create new jobs by seeking outsymbiosis between AI optimizationsand the human touch. This will beespecially powerful in areas such ashealth care and education, where AIcan produce crucial insights butonly humans can deliver them withcare and compassion.

Beyond the private sector, govern-ments across the world need to startthinking now about how to use theriches generated by AI to rewrite thesocial contract and reorient oureconomies to promoting humanflourishing.

At the center of this vision, Iwould suggest, there needs to bewhat I call the Social Investment Sti-pend, a respectable government sal-ary for those who devote their timeto three categories of activities: carework, community service and educa-tion. These activities would form thepillars of a new social contract, re-warding socially beneficial activitiesjust as we now reward economicallyproductive activities. The idea is sim-ple: to inject more ambition, prideand dignity into work focused on en-hancing our communities.

Care work could include parentingor home schooling of young children,assisting aging parents or helping afriend with mental or physical dis-abilities live life to the full. Servicework would focus on much of thecurrent work of nonprofit and volun-teer groups: leading after-school pro-grams, guiding tours at parks or col-lecting oral histories from elders inour communities. Supported educa-tion activities could range from pro-fessional training for the jobs of theAI age to taking classes that turn ahobby into a career.

The participation requirements ofthe stipend wouldn’t be designed todictate the lives of citizens. Therewould be a wide enough range ofchoices for all workers who havebeen displaced by AI. The more peo-ple-oriented could opt for care work,the ambitious could enroll in high-tech training, and others could takeup community-service work.

By requiring some social contribu-tion to receive the stipend, we wouldfoster a public philosophy far differ-ent from the laissez-faire individual-ism of universal basic income. Pro-viding a stipend in exchange forparticipation in community-buildingactivities carries a clear message:Collective effort from people acrosssociety allowed us to reach this pointof economic abundance, and now wemust use that abundance to recom-mit ourselves to one another and toour humanity.

Many difficult questions remain tobe answered, of course, before wecould consider implementing such asweeping and idealistic policy. Theurgency to create, and the ability topay for, a far-reaching Social Invest-ment Stipend will depend on the paceand nature of AI’s economic impact.But the humanistic values it embod-ies can serve as a guide while we nav-igate the treacherous waters that lieahead. We may yet be able to harnessthe full potential of both machinesthat think and humans who love. FR

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productivity gains from new technol-ogy almost always produce benefitsthroughout the economy, creatingmore jobs and prosperity than be-fore. But not all inventions are cre-ated equal. Some changes replaceone kind of labor (the calculator),and some disrupt a whole industry(the cotton gin). Then there are tech-nological changes on a grander scale.These don’t merely affect one task orone industry but drive changesacross hundreds of them. In the pastthree centuries, we’ve only reallyseen three such inventions: thesteam engine, electrification and in-formation technology.

Looking at this smaller data set,we have a mixed bag of economicimpacts. The steam engine and elec-trification created more jobs thanthey destroyed, in part by breakingdown the work of one craftsman intosimpler tasks done by dozens of fac-tory workers. But information tech-nology (and the associated automa-tion of factories) is often cited byeconomists as a prime culprit in theloss of U.S. factory jobs and widen-ing income inequality.

The AI revolution will be of the magnitude of the Indus-trial Revolution—but probably larger and definitely faster.Where the steam engine only took over physical labor, AIcan perform both intellectual and physical labor. Andwhere the Industrial Revolution took centuries to spreadbeyond Europe and the U.S., AI applications are alreadybeing adopted simultaneously all across the world.

AI’s main advantage over humans lies in its ability todetect incredibly subtle patterns within large quantitiesof data and to learn from them. While a human mortgageofficer will look at only a few relatively crude measureswhen deciding whether to grant you a loan (your creditscore, income and age), an AI algorithm will learn fromthousands of lesser variables (what web browser you use,how often you buy groceries, etc.). Taken alone, the pre-dictive power of each of these is minuscule, but added to-gether, they yield a far more accurateprediction than the most discerningpeople are capable of.

For cognitive tasks, this ability tolearn means that computers are nolonger limited to simply carrying outa rote set of instructions written byhumans. Instead, they can continu-ously learn from new data and per-form better than their human pro-grammers. For physical tasks, robotsare no longer limited to repeatingone set of actions (automation) butinstead can chart new paths based onthe visual and sensor data they takein (autonomy).

Together, this allows AI to takeover countless tasks across society:driving a car, diagnosing a disease orproviding customer support. AI’s su-perhuman performance of these taskswill lead to massive increases in pro-ductivity. According to a June 2017 study by the consultingfirm PwC, AI’s advance will generate $15.7 trillion in addi-tional wealth for the world by 2030. This is great news forthose with access to large amounts of capital and data. It’svery bad news for anyone who earns their living doingsoon-to-be-replaced jobs.

There are, however, limits to the abilities of today’s AI,and those limits hint at a hopeful path forward. While AIis great at optimizing for a highly narrow objective, it isunable to choose its own goals or to think creatively. Andwhile AI is superhuman in the coldblooded world of num-bers and data, it lacks social skills or empathy—the abilityto make another person feel understood and cared for.Analogously, in the world of robotics, AI is able to handlemany crude tasks like stocking goods or driving cars, butit lacks the delicate dexterity needed to care for an elderlyperson or infant.

What does that mean for workers who fear being re-placed? Jobs that are asocial and repetitive, such as fast-food preparers or insurance adjusters, are likely to betaken over in their entirety. For jobs that are repetitivebut social, such as bartenders and doctors, many of thecore tasks will be done by AI, but there remains an inter-

Continuedfromthepriorpage

active component that people willcontinue to perform. The jobs thatwill be safe, at least for now, arethose well beyond the reach of AI’scapabilities in terms of creativity,strategy and sociability, from socialworkers to CEOs.

Even where AI doesn’t destroy jobsoutright, however, it will exacerbateinequality. AI is inherently monopolis-tic: A company with more data andbetter algorithms will gain ever moreusers and data. This self-reinforcingcycle will lead to winner-take-all mar-kets, with one company making mas-sive profits while its rivals languish.

A similar consolidation will occuracross professions. The jobs thatwill remain relatively insulated fromAI fall on opposite ends of the in-come spectrum. CEOs, home carenurses, attorneys and hairstylistsare all in “safe” professions, but thepeople in some of these professionswill be swimming in the riches ofthe AI revolution while others com-pete against a vast pool of desper-ate fellow workers.

We can’t know the precise shapeand speed of AI’s impact on jobs, butthe broader picture is clear. This willnot be the normal churn of capital-ism’s creative destruction, a processthat inevitably arrives at a new equi-librium of more jobs, higher wagesand better quality of life for all. Manyof the free market’s self-correctingmechanisms will break down in an AIeconomy. The 21st century may bring

a new caste system, split into a plu-tocratic AI elite and the powerlessstruggling masses.

Recent history has shown us justhow fragile our political institutionsand social fabric can be in the face ofdisruptive change. If we allow AI eco-nomics to run their natural course,the geopolitical tumult of recentyears will look like child’s play.

On a personal and psychologicallevel, the wounds could be evendeeper. Society has trained most ofus to tie our personal worth to thepursuit of work and success. In thecoming years, people will watch al-gorithms and robots easily outma-neuver them at tasks they’ve spenta lifetime mastering. I fear thatthis will lead to a crushing feelingof futility and obsolescence. Atworst, it will lead people to ques-tion their own worth and what itmeans to be human.

So what can be done?This grim vision is shared by many

technologists in Silicon Valley, and ithas sent them casting about for solu-tions. As the architects and profiteersof the AI age, they feel a mix of genu-ine social responsibility and fear ofbeing targeted when the pitchforkscome out. In their rush for a quick fix,many of the techno-elite have seizedon the idea of a universal basic in-come: an unconditional, government-provided cash stipend to allow everycitizen to meet their basic needs.

I can see the appeal. UBI is exactlywhat Silicon Valley entrepreneurslove: an elegant technical solution totangled social problems. UBI can bethe magic wand that lets them wishaway the messy complexities of hu-man psychology and get back tobuilding the technologies that “makethe world a better place,” while mak-ing them rich. It’s an approach thatmaps well onto how they tend toview society: as a collection of “us-ers” rather than as citizens, custom-ers and human beings.

We can do better. Some form ofguaranteed income may indeed benecessary, but if we allow such sup-port to be the endgame, we will missthe opportunity presented by thistransformative technology. Instead ofsimply falling back on an economicpainkiller like a universal basic in-come, we should use the economic

REVIEW

A NewSocialContract

an insane asylum. An article inthe June 15, 1895 issue of theMontana newspaper the Ana-conda Standard was headlined“Sent to Crazytown” and de-scribed a trial in which a localman was institutionalized afterbeing judged of unsound mind.

Soon “crazytown” began tobe used more broadly for wild,chaotic situations, as amongenthusiastic sports fans. A1907 account in a newspaperfrom Elmira, N.Y., told of awild caravan for a local base-ball team descending on Bing-hamton, under the headline,“Train Load of SupportersWent to Crazytown.”

In 1913, Luna Park, a largeamusement park in New York’s

Coney Island,opened up anew attractioncalled “Crazy-town.” “It isnot meant fora repetition of

New York, but is an altogetherdifferent sort of Crazytown,”the New York Sun reported,noting that it was populated byMother Goose characters with“various adventures preparedfor the visitors,” including a“cyclone cellar” and a slide intoa haystack. By 1916, travelingcarnivals were featuring theirown sideshow versions of “Cra-zytown.”

One notable use of the ex-pression came in 1932, when

John Kellylooks on asPresidentTrump fieldsquestions onMay 4.

BOB WOODWARD’S book“Fear,” a bombshell account ofa White House in chaos underPresident Trump, was pub-lished this week. But a fewdays earlier, one of its mostshocking revelations had al-ready made headlines, thanksto a preview by the Washing-

ton Post. Mr. Woodwardquotes White House chief ofstaff John Kelly as saying ofthe president, “He’s an idiot.It’s pointless to try to convincehim of anything. He’s gone offthe rails. We’re in Crazytown.”

A Name forAsylums,Then for aWild Ride,Then ...

In a statement, Mr. Kelly de-nied calling Mr. Trump an “id-iot,” but did not say specifi-cally whether he and fellowWhite House staffers were, infact, in “Crazytown.”

The word attributed to Mr.Kelly has a history dating backto the late 19th century as ajocular expression to describea place or situation that seemsto lack sanity.

The first part of the com-pound, “crazy,” goes back to the1570s, based on an old use ofthe verb “craze” to mean “shat-ter, break into pieces.” (“Crazyquilt” still maintains the senseof cracking under pressure,since the quilt’s patchwork de-sign resembles pottery madewith a cracked glaze.) “Craze”

came to be applied to aperson with broken-down health, particu-larly the mental kind,who could be describedwith the adjectives“crazed” and “crazy.”

Especially in American usage,“crazy” spread to cover not justpeople but foolish or disorderlystates of affairs.

When “crazy” first gotgrafted to “town,” it was some-times used as the nickname of

[Crazytown]

WORD ONTHE STREET

BENZIMMER

”Han” (above)

and “Sophie”

(below) are

robots

developed by

Hanson

Robotics.

THEWALL STREET JOURNAL. * * * * Saturday/Sunday, September 15 - 16, 2018 | C3

framers of the Constitution clearly regarded slaves asproperty, and therefore the Missouri Compromise (1819)and the Compromise of 1850 were unconstitutional. Thismeant that the federal government had no authority tolimit the expansion of slavery in the western territories,in effect endorsing its anomalous persistence within theAmerican republic. The ruling in Dred Scott deepened thesectional divide that led to the Civil War, and legal schol-ars and historians have long considered it one of theworst Supreme Court decisions in American history.

Almost a century later, the Supreme Court in Brown v.Board of Education (1954) landed squarely on the otherside of the racial divide, striking down the legal doctrineof “separate but equal” that the justices had upheld as ajustification for racial segregation in Plessy v. Ferguson(1896). The Court thus placed segregation on the perma-nent defensive at a time when a clear majority of thewhite citizenry in the former Confederacy was fiercelyopposed to racial integration. If only in retrospect, theBrown decision signaled a crucial shift in the role of theCourt, the first step on its way to becoming the dominantbranch of the federal government in deciding the direc-tion of domestic policy.

The judicial revolution launched by Brown proceededin a liberal direction for nearly 30 years. The liberal wavewas based on the belief that the justices were interpret-ing a “living Constitution” that obliged them to adjust itsmeaning to evolving standards of justice. The liberalagenda expanded the rights of criminal suspects, broad-ened the definition of free speech and, in Griswold v.Connecticut (1965), discovered a new right to privacy.Most controversially, building on that principle, the Courtaffirmed a woman’s right to abortion during the first tri-mester in Roe v. Wade (1973).

Then came the conservative wave. Itbegan in July 1985, with an address byAttorney General Edwin Meese endors-ing the judicial theory of “originalism,”a conservative doctrine with radical im-plications. Originalists claimed that con-temporary standards of justice cannottake precedence over the values thatprevailed when the Constitution waswritten and ratified. All those liberalprecedents were suddenly vulnerable be-cause they violated the “original mean-ing” of the Constitution. One of the se-ductive appeals of the originalistpersuasion was the claim to derive itsjudicial insights from the founders, whoallegedly enjoyed privileged access toeternal truths.

The awkward fact about the landmarkdecisions of the conservative court wasthat the eternal truths consistentlyaligned with the Republican agenda, justas the decisions of the liberal court hadaligned with the Democratic agenda. InBush v. Gore (2001), the Court’s conser-vative majority read the tea leaves of abaffling Florida statue to award thepresidency to George W. Bush. In Dis-trict of Columbia v. Heller (2008), theCourt overturned two centuries of legalprecedents to find that the SecondAmendment sanctioned an almost un-limited right to own a gun. Then, in Citi-zens United v. Federal Election Commis-sion (2010), the Court overturned acentury of precedents to find that fed-

eral restrictions on corporate contributions to “election-eering communication” were unconstitutional violationsof the First Amendment right to free speech.

In sum, since Brown we have watched the SupremeCourt bend the law in two different directions, landing onone side or the other of the political spectrum based onwhich political party could command a 5-4 majority. Theonly difference between the two sides is that liberals aretransparent about their political agenda, while conserva-tives, using originalism to make problematic claims of de-tachment, are not. Small wonder that recent confirmationhearings of the Senate Judiciary Committee have becometelevision spectacles in which nominees appear as magi-cians who have no idea how the rabbit got into the hat.

What we are really witnessing, however, in the Ka-vanaugh hearings is the scene in “The Wizard of Oz”when Dorothy draws back the curtain. The nominationand appointment process has become so transparentlypartisan and thoroughly politicized that no exalted imageof the Supreme Court as a uniquely American version ofthe Oracle at Delphi is sustainable any longer.

Perhaps we can take comfort in realizing that we areputting away childish things. For just as it was always de-lusional to believe that tongues of divine fire appearedover the heads of those 55 men gathered in Philadelphiaso long ago, it was equally fanciful to believe that all con-troversial questions could be resolved by a tribunal of el-ders endowed with a preternatural affinity for the truth.

And as we understandably shed a few tears over thedeath of our Delphic delusion, we might gain some sem-blance of solace by realizing—originalists take note—thatwe are recovering the original intent of the founders.None of them claimed to be oracles, and they thoughtthat anyone claiming such status was a charlatan or dem-agogue.

Where does that leave us? As citizens, we need tolower our expectations and realize that the SupremeCourt cannot perform the impossible and otherworldlymission it has been assigned in our time. All justicesshould take a vow of humility, content themselves withincremental reforms of the law except on rare occasions,and thereby place the burden on Congress to perform itsconstitutional task of shaping the direction of domesticpolicy, as the founders intended.

Mr. Ellis is the author of many books on the foundingera, including “American Dialogue: The Founders andUs,” which will be published by Knopf on Oct. 16.

JOHNS.DYKES

“Alljusticesshouldtake avow ofhumility.

It is now received wisdom that perhaps the singlemost important power of the American presidentis the nomination of justices to the SupremeCourt. In today’s debate over the nomination ofJudge Brett Kavanaugh, both sides agree that the

future direction of the American republic is at stake, be-cause the next appointment will determine the politicaltilt of a judicial body that has become the ultimate arbi-ter of the laws under which we live.

Most members of America’s founding generationwould have regarded this situation as strange. If you readthe debates among the delegates at the ConstitutionalConvention of 1787, and then read their prescriptions forjudicial power in Article III of the Constitution, it be-comes clear that the last thing the 39 signers of the docu-ment wanted was for the Supreme Court to become su-preme. They expected that status to belong to Congress,and a majority thought that each branch of governmentshould decide the scope of its own authority. The last lo-cation the framers of the Constitution wished to placesovereignty in the government they created was the Su-preme Court, the most unrepresentative body and theone most removed from the wellspring of ultimate au-thority in “the People.”

For most of American history, the Supreme Court onlyinfrequently stepped forward to redefine the politicallandscape in decisive fashion. The two most conspicuousoccasions both involved the great American tragedy ofrace.

In Dred Scott v. Sandford (1857), the Court attemptedto provide a legal resolution of the politically unsolvableproblem of slavery. The majority opinion argued that the

BY JOSEPH J. ELLIS

The Supreme Court WasNever Meant to Be Political

Since the 1950s, the justices have become ever more powerful and partisan. It’s time tostop expecting them to be the ultimate arbiters of domestic law.

A HUNDRED YEARS before ElonMusk sent a Tesla car into outerspace and then took the electric-ve-hicle company and its stock on aroller-coaster ride, that name wasmade famous for a time by anotherlarger-than-life tech visionary—Nikola Tesla himself, arguably hisera’s greatest inventor and most ill-fated entrepreneur.

The original Tesla was in someways a strange choice to be a name-sake for a company looking to over-come obstacles and achieve ground-breaking business success. True, hepioneered many of technologies thatstill power and light the world (alter-nating current, the electric inductionmotor, fluorescent and neon bulbs),and he was awarded more than 300patents.

But Tesla died virtually pennilessin a New York hotel room in 1943, af-ter failing to capitalize on his majorinnovations while others won for-tunes and Nobel Prizes by buildingon his work. Until the revival ofTesla’s name in recent years, it hadsunk into near-obscurity except

among electrical engineers.Where did this patron saint of in-

novation go wrong? The disappoint-ing career of the Serbian-born engi-neer is a cautionary tale, highlightingdestructive habits and tendenciesthat kept him from realizing his mostambitious projects.

Lone-wolf behavior: Tesla fre-quently left jobs over disputes anddidn’t build a lasting, loyal teamaround him. After starting his careeras chief electrician for the Budapesttelephone exchange in 1881, he gothis big break by being asked to fixpower plants in Paris for ThomasEdison’s company. The firm broughthim to New York City, but he soonquit because of a disagreement abouthis bonus.

While trying to interest Americaninvestors in his idea of an alternat-ing-current (AC) motor, he started aTesla company of his own, makingarc lamps, which were already nearlyobsolete predecessors to the incan-descent bulb. The older technologydidn’t hold his interest and his inves-tors forced him out, with only worth-less stock certificates in hand.

Lack of follow-up: Early on, Tesla

Lessons FromTesla (the Man,Not the Car)BY JOHN F. WASIK

REVIEW

tended to flitamong projects.He never stuckaround longenough to reaprewards, leavingcredit and op-portunities toothers.

Around 1890,he designed the basic circuits for aradio apparatus, which he called anoscillator. He applied for patents anddemonstrated a radio-controlled boatin Madison Square Garden, but hefailed to commercialize these innova-tions. Guglielmo Marconi would berecognized for inventing radio andwon the 1909 Nobel Prize for related

research. The Supreme Court eventu-ally awarded the foundational pat-ents to Tesla, vindicating his work,but only after his death.

In 1894, Tesla also experimentedwith X-rays and produced what hecalled “shadowgraphs.” But he tookthat work no further and insteadsent his images to the German physi-cist Wilhelm Roentgen, who was alsoworking on the technology. Roentgenpublished his own findings the nextyear and eventually won the first No-bel Prize for physics.

Financial naiveté: The industrial-ist George Westinghouse financedthe building of Tesla’s motor and al-ternating current system, buyingTesla’s patents in exchange for a lu-

crative royalty agreement.Tesla showcased the tech-nology at the ColumbianExposition in Chicago in1893 and again at thepower station he designedat Niagara Falls, theworld’s first major hydro-electric plant. But whenthe enormous cost of thewiring threatened to bank-rupt Westinghouse, Teslatore up the royalty con-tract, which would havemade him one of the rich-est men in the world. Hewas never able to replaceit and lacked the capital tosustain his later projects.

Increasing tunnel vi-

sion: Tesla ultimately de-voted most of his efforts to

a wireless transmitting project thatnever proved out. He bought land in1901 and began building a lab and anearly 200-foot tower near Shore-ham, N.Y. But in a few years heburned through his investors’ initialfunds and his own. By his own ad-mission, writing in 1919, he “suffereda complete collapse” when he ran outof resources for the project. Eventu-ally, his tower was torn down andsold for scrap to help pay his out-standing hotel bill at the Waldorf As-toria.

Mr. Wasik is the author of “Light-ning Strikes: Timeless Lessons inCreativity from the Life and Workof Nikola Tesla” (2016). S

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is roughly equivalent to France’s minimumwage, just over €1,500 ($1,730). In a badmonth, he says, he might bring in less than€500, from which he has to cover expenseslike his merchandise and social-security taxes.

Mr. Callais became a bouquiniste instead ofmusician, he said, because he didn’t want tohave a boss anymore. He can get by becausehe and his wife, a sculptor, own their apart-ment across the river in the heart of Paris; shelargely supports the couple.

“The biggest luxury is freedom,” said thewild-haired Mr. Callais, noting that he had re-cently opened late to take in an exhibit first atthe Pompidou Center.

Unesco has recognized Paris’s riverfrontas part of the world’s cultural heritage since

1991. But Mr. Callais says that enshrining thestatus of bouquinistes would encourage cityauthorities to enforce more strictly the rulesthat limit the vendors’ display of non-printedmaterial to one box out of four. He alsowants the city to allow bigger stalls and pro-vide better lighting to let bouquinistes stayopen later in the evening.

Not everyone agrees with Mr. Callais’s callfor purity. Mr. Robert argues that curtailingsouvenir sales could drive many bouquinistesout of business. “We need to be hybrids,” hesaid. “Being on a list won’t keep us alive.”

Getting recognized by Unesco could takeyears. Since 2015, the body has limited coun-tries to nominating only one candidate for thelist every two years, leading to a backlog. Italso isn’t clear how much help a Unesco des-ignation would give bouquinistes: Intangible-heritage listings don’t create legal obligationsfor governments. But Mr. Callais, who insistshe isn’t out to stop all sale of tourist goods,says that a listing would help to reinforce theliterary roots of his profession.

Bouquinistes have a good shot eventuallyof at least making it onto France’s list. “Lookat the number of films in which bouquinistesare in the backdrop. Look at the number ofphotographs, of paintings,” said IsabelleChave, a chief heritage curator at the Frenchculture ministry. “We have very tangible proofof their impact on Paris.”

Jérôme Callais has been selling usedbooks from his green kiosk near thePont Neuf bridge in Paris for nearlythree decades. These days, he says,passersby would rather fiddle with

their smartphones than browse his wares.Books have been sold from wooden cases

perched along the banks of the River Seinefor centuries, in perhaps the most celebrateddisplay of the country’s bibliophile tradition.But now even France is falling out of lovewith the printed page. The internet is forcingthe closure of bricks-and-mortar bookstoresacross the country. Paris’s open-air booksell-ers, icons of the city and its reading culture,are also struggling to adjust.

Mr. Callais and the city’sother 200-some riverfront book-mongers, or bouquinistes, findthemselves at a crossroads.Some have donned the mantleof free-market realists, pushingaside some of their books tomake room for more profitabletourist knickknacks like MonaLisa magnets, baguette-shapedbottle openers and Eiffel Towerkeychains.

For his part, Mr. Callais hopesto arrest the march of the mar-ket with a classically French ap-proach: an appeal for conserva-tion. He wants his professionrecognized by Unesco (theUnited Nations Educational, Sci-entific and Cultural Organiza-tion) as an “intangible culturalheritage,” like Belgian beer, Mon-golian calligraphy and Braziliansamba. Such recognition, he says,would encourage the stricter ap-plication of rules limiting whatthe bouquinistes can sell.

The first big test for Mr. Cal-lais’s initiative comes on Oct. 1,when a committee at France’sculture ministry is set to con-sider new applications forFrance’s national intangible-her-itage list, including Mr. Callais’s24-page submission.

“We are integral to the soulof the city,” said Mr. Callais, aformer classical double-bassistwho has been buying usedbooks since he was a child. “Ifwe don’t protect our profession, there willonly be souvenir stands on the riverfront. Wewill be replaced by miniature Eiffel Towers.”

The profession traces its existence back toat least the 17th century. By 1723, France’sdictionary of commerce described “poorbooksellers” displaying their wares along thePont Neuf. The practice spread, and in thelate 19th century, Paris authorities began let-ting sellers leave book crates on the riversideparapet overnight for a small fee. Today, thecity licenses the bouquinistes’ 28-foot plotsfor free, provided the booksellers agree,among other things, to run their stalls per-sonally at least three days a week.

The mere existence of an open-air book mar-ket in central Paris is a testament to the writ-ten word’s place at the heart of French culture.A century ago, foreign writers such as JamesJoyce and Ernest Hemingway flocked to thecity, where they found an early audience for

their seminal works. French teachers still havetheir students recite texts from memory, andnovelist Victor Hugo remains a national hero.

In 2017, the French bought nearly twice asmany printed books per capita as Americans,according to a comparison of sales figuresfrom market researcher GfK and book trackerNPD BookScan.

On the riverfront, the titles for sale rangefrom the controversial Michel Houellebecqnovel “Submission” to a 1951 edition of thechildren’s classic “Le Petit Prince.” Pascal Cor-seaux, a bouquiniste who recently displayed an1859 book called “Probity Rewarded” with agold-embossed cover, says that customers—even ones who don’t read French—often makepurchases to decorate their bookshelves.

But the ground is shifting. Whileretail sales of printed books haveticked upward in the U.S., sales inFrance have fallen 7.3% from theirlatest peak in 2012 to just under300 million copies in 2017, accord-ing to GfK France. People increas-ingly purchase even their physicalbooks online, accounting for 20% ofthe total in 2017, up from 10% in2009, according to figures from the

French culture ministry.In Paris, the number of bookstores, while

high by U.S. standards, has fallen by one-thirdsince 2000 to 703 last year, according to theParis Urbanism Agency.

With no rent to pay, bouquinistes are insome ways insulated from the fallout. Theirranks haven’t significantly thinned, but somestalls open less frequently, and the punishingmarket pressures are forcing others to changehow they do business.

Declining sales caused Francis Robert, a39-year veteran of the trade, to devote one ofhis four crates overlooking the Seine to sell-ing magnets, keychains and Eiffel Tower stat-uettes. The trinkets generate 75% of his prof-its. “It’s more than a crisis. It’s reality,” hesaid as he sold a magnet to a passerby. “Tosave the books, we need to sell tourism.”

Mr. Callais has resisted hawking touristsouvenirs, but in his best months his revenue

Somebouqinisteshave givenmagnets andother souvenirtrinkets asignificantshare of theirdisplay space.

BY SAM SCHECHNER

REVIEW

Gyroscopes,Pulsars and thePower of Spin

“IF MORE ATTENTIONwere paid to the intelli-gent examination of tops,there would be greater ad-vances in mechanical engi-

neering and a great many indus-tries…and our knowledge of Light, andRadiant Heat, and other Electromag-netic Phenomena would extend muchmore rapidly than it does.”

Thus opens a charming and instruc-tive book, “Spinning Tops and Gyro-scopic Motion,” by the Irish engineerand mathematician John Perry, whodied in 1920. It is based on a popularlecture that he gave in 1890. I recentlycame across an old Dover Press edi-tion while browsing at a used bookstore in New Hampshire. After readingthe first few pages, I was hooked.

The book is only 79 pages long (plusappendices). It contains 58 drawingsbut no equations. It weaves togetherdemonstrations—which you have toimagine—and explanations. The tech-nique is to build up gradually from sim-ple situations to more complicatedones, so that each bite is digestible.

Perry devotes much of the book tothe gyroscope—basically a top mountedin a frame, so that it can spin freely.The most amazing thing about gyro-scopes is the simple but profound factthat they lock into a particular orienta-tion. A rapidly spinning gyro resists at-tempts to change the direction of itsaxis, even as you carry it from oneplace to another. A gyro’s axis thusserves as a reference, enabling you totell which way you’re pointing.

By contrast, no simple device canlock into your position in space. To getyour location, the best you can do is tokeep track of your varying accelerationsover time and calculate to determinehow much you’ve moved. Alternatively,the satellites that empower your GPScan do that work, and then your devicetriangulates to determine your position.

When Perry was writing, gyrocom-passes were cutting-edge, immaturetechnology. Today they’re a staple ofnautical navigation. The axis of anorth-pointing gyro appears to slowlyreorient, but its direction actually re-mains fixed as the Earth’s rotation car-ries the observer with it. More gener-ally, the use of gyros has blossomedinto the field of inertial guidance. Air-planes and spacecraft would be lost (or,more accurately, dizzy) without them.

The Earth itself is a giant gyro, ro-tating daily. The near-constant tilt ofits axis—23.5 degrees relative to theplane of its orbit around the Sun—leadsto the predictable cycle of our seasons.Some of the most interesting objects inastrophysics are pulsars, which are rap-idly spinning neutron stars. And nowwe’re beginning to observe, in spinningblack holes, the embodied gyroscopicmotion of geometry itself.

At the other extreme of size, wefind gyroscopic motion in the heart ofmatter. Electrons, photons and mostother fundamental particles have anintrinsic “spin.” Rotation is an essen-tial part of their being, on the samefooting as their mass. These little guysmake ideally perfect gyros, sincethey’re insulated from friction.

Using lasers, magnetic fields andsome newer tricks with quantum entan-glement, we’re learning how to grip andreorient the axes of these elemental gy-ros. A revolution in quantum technologyis emerging from our improving abilityto manipulate the spins of photons andelectrons (and atomic nuclei).

One of the charms of old books thatmake predictions is that you can seewhether they got it right. John Perrylooks prescient. After reading throughhis book in one sitting, I found that Iwasn’t done with it. It kept tugging atmy mind, and I kept coming back to it.As a practicing quantum mechanic, I’maccustomed to thinking about spinthrough equations. Bringing that ab-stract variable to life, as an aspect ofstrange but wonderfully tangible ob-jects, has opened a new perspectiveand suggested new questions. Whetherit will lead to anything important, Idon’t know. In any case, I’m askingSanta to bring me some high-qualitytops and gyros.

WILCZEK’S UNIVERSE

FRANK WILCZEK The Storied BookstallsOf Paris Fight for Survival

Bouquinistes along the River Seine seek protection as ‘intangible heritage.’

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Jérôme Callais sets up his book stall near Paris’s Pont Neuf. He is leading an effort to preserve the literary character of the stalls.

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depths. By the Middle Ages, Hell wasa cornerstone of Christian doctrine.Parish priests delivered sermonsabout the awful torments awaitingsinners; theologians such as ThomasAquinas argued that the blessed inHeaven rejoiced in the suffering ofthe damned; and Dante Alighericomposed his towering poem “TheInferno,” which depicts Hell as an ef-ficient bureaucracy shaped like a de-scending funnel, with Satan trappedin ice at the very bottom.

It was widely believed that thefear of Hell helped to lead souls toHeaven. In an effort to avoid theflames, believers would avoid sinfulbehavior and embrace lives of virtue.But the concept of Hell also hasplayed a vital cathartic function insocieties rife with injustice, provid-ing the grim satisfaction that tyran-nical leaders, corrupt priests andother evildoers would not escapeGod’s judgment in the world tocome. As the Book of Wisdom says,“The mighty will be mightily tor-mented.”

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REVIEW

When a BerryPatch BecomesA Free Buffet

EDMONDEHARO

In March 2018, Pope Francis allegedlydenied the existence of Hell and theendless suffering of the damned in aprivate talk with his friend EugenioScalfari, a left-wing journalist, who

published his account of their conversation inthe Italian newspaper La Repubblica. The re-sponse to Scalfari’s article was immediate andexplosive. How could the pope deny such afundamental teaching of the Catholic Church?The New Testament is clear on this doctrine.God created Hell for Satan and the rebel an-gels, but there was plenty of room to torturewith fire and brimstone everyone who had re-jected Jesus Christ as the Son of God: “This isthe second death, the lake of fire” (Revela-tions 20:14). For their part, Vatican officialsdenied that Scalfari represented the pope’sviews about Hell accurately, dismissing thejournalist’s article as “the fruit of his recon-struction.”

If true, Francis’ doubts about the existenceof Hell would continue the reconsideration ofthe afterlife begun with much less fanfare byhis predecessor, Pope Benedict XVI. In 2007,Pope Benedict quietly abolished the conceptof Limbo, the otherworldly destination of ba-bies who die before their baptism. The reportof the Vatican Theological Commission onLimbo was hopeful that God would, in fact,save unbaptized babies rather than havethem linger for eternity on the threshold ofHell, as Catholics had believed for centuries.The shuttering of Limbo was a victory forthose who believe that God’s mercy and loveshould trump his terrible judgment. Is ittime, then, for the Catholic Church to fore-close on Hell as well?

By any measure, Hell is a cruel and oppres-sive concept: a place where sinners suffer un-speakable torments for all eternity for sinscommitted during their mortal lives. It has along history that predates Christianity by morethan a millennium. Many ancient societies inthe Near East told stories that hinted at the ter-rible fate awaiting unjust souls in the afterlife.In Homer’s “Odyssey,” the Greek hero Odysseusvisits the underworld of the dead, where heglimpses the torments of individuals who of-fended the gods. These include parched andfamished Tantalus, from whom food and wateralways retreated whenever he tried to consumethem, and Sisyphus, doomed to roll a massiveboulder up a hillside, only to watch it teeter androll back before it ever reached the top.

Early Christians appropriated this litera-ture of suffering, composing harrowing storiesof human souls escorted by angels to witnessthe torture of those imprisoned in the infernalFI

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BY SCOTT G. BRUCE

ASK ARIELY

DAN ARIELY

Dear Dan,I have a farm wherepeople come to pickblueberries, and Icharge $3 per pound.

The problem is that people thinkit is an open buffet and eat a lotof blueberries while in the field,and then they come back to thepayment station with just $3worth of blueberries. Without be-ing rude, how can I let them knowthat they are stealing? —Michelle

I must admit that when I’vepicked blueberries I too ate afew in the process. It’s just sotempting that I think it’s inhu-man to ask people not to eat any.So if we accept that people willeat some blueberries in the pro-cess of picking, maybe the bestapproach is to charge an en-trance fee to cover the cost ofthe snacking. But make sure tocall it an entrance fee and not asnacking fee—otherwise people

will try to maximizetheir benefit byeating evenmore blue-berries.

Dear Dan,Conventional wis-dom says that whenproviding criticism, youshould use a “compliment sand-wich,” that is, say somethingnice, give the critique and thenend with something nice again.Have there been any studies re-garding the effectiveness of thispractice? It seems to me that theperson may just hear and re-member the positive parts, andthat the impact of the criticismwould be lost. —Andrew

“Compliment sandwiches” cer-tainly feel less painful than sheercritiques—but they don’t seem tobe particularly effective. Accord-ing to a study by Jay Parkes, SaraAbercrombie and TeresitaMcCarty, published in 2013 in thejournal Advances in Health Sci-ences Education, people who re-ceived “compliment sandwiches”were more likely to believe thatthe feedback would improve theirperformance. But they didn’t ac-tually do any better than thosewho received more straightfor-ward criticism. The good news isthat the sandwich method did notget them to perform any worse ei-ther—it just made no difference.It is really hard to change peo-ple’s behavior, and a single pieceof feedback is not going to domuch, no matter how it isphrased.

Dear Dan,I teach computer science 101, andI’ve recently started thinking ofways to get students to begintheir work earlier in the semes-ter. Research has shown that ifthey start earlier, they are likelyto put more time into their proj-ect and get a better grade. Iwonder if it would be useful tosend a daily email reminder ask-ing the students to start workingon their project today. What doyou think? —Kristin

A daily reminder is a good start,and it should certainly help thestudents to get going. But itwould be even more powerful togive concrete instructions andmake use of social comparison.What if the email didn’t just askthem to work on their project to-day but specifically told them tospend 30 minutes on it? Youcould also tell them somethingabout the work habits of studentswho do well in the class—for ex-ample, “Historically, the studentswho got an A in this class startedworking ontheir projectsearly andworked onthem consis-tentlythroughoutthe semester.”

Have aquestionfor Dan?EmailAskAriely@wsj.com

Hell lost some of its purchase onhumankind in the 19th century, whennew scientific theories such as Dar-winism eroded the authority of theBible and the tides of sentimentturned against God’s wrath in favorof His mercy. But Hell remains apowerful concept in the early 21stcentury. According to a 2014 surveyby the Pew Research Center, morethan 50 percent of American adultsstill believe in the existence of aplace “where people who have ledbad lives and die without beingsorry are eternally punished.” Un-surprisingly, very few of them be-lieve that they themselves will endup there when they die.

At the same time, Hell has be-come a powerful metaphor for themost extreme suffering and squalorin this world. Vasily Grossman, aRed Army war correspondent, en-tered the extermination camp ofTreblinka at the end of World WarII. When he contemplated the suffer-ing of the hundreds of thousands ofJews who had died in its gas cham-bers and were burned in its ovens,his only point of comparison for de-scribing the atrocities was Dante’s“Inferno.” But the horrors of litera-ture paled before the reality of suchcruelty: “Not even Dante, in his Hell,saw scenes like this.”

Has Hell outlived its usefulness tomodern society? Probably not. Thedoctrine still serves Christianity asit has for centuries, as a frighteningdeterrent to sinful behavior. We stillhope that wicked people and corruptleaders will get their just deserts inthe world to come.

In some distant, better future, theforeclosure of Hell will be an impor-tant step in the maturation of hu-man communities that can mete outjustice on their own, without super-natural aid. In the meantime, Hell ishere to stay. Will Pope Francis evictthe Devil and his minions and liber-ate the numberless, tortured soulsclawing at the walls of their burningcells? Don’t count on it. There isn’ta hope in Hell.

Dr. Bruce is professor of history atFordham University and the editorof “The Penguin Book of Hell,”published this month by PenguinClassics.

Out of theDoghouse

AS A TRIBUTE to his late Spitz dog, who used to over-heat during humid summers, Japanese architect Hiro-shi Naito created a stylish “dog cooler” from an undu-lating array of ice-filled tubes. It is one of hundreds ofinnovative pet structures featured in a new book,“Pet-tecture” (Phaidon, $24.95), by Tom Wainwright.

The designs combine beauty and practicality, as in thepentagonal Negura bed (left), created by the Tokyo firm

Natural Slow, and theCurvynest (below) byTaiwan-basedCatswall Design.

Pets only startedto benefit from highdesign in the 21stcentury, says Mr.Wainwright. Thesedays, he says, petbeds and playthingsare “constructed tostandards equivalentto, and sometimesexceeding, those forhuman architectureand furnishings.”

—Alexandra Wolfe

A 13th-century depiction of Hell, from the ceiling of the Baptistery of San Giovanni in Florence, Italy.

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spirituality, seeking out churches to try to find agood fit.

He also applied for work with humanitarian or-ganizations. About a dozen rejected him, untilMercy Ships, a faith-based fleet of floating hospi-tals that provides free medical care to the poor,offered him a volunteer role in Liberia. For twoyears, he paid $500 a month to serve as a photo-journalist, documenting the work of Mercy Ships.

Onboard, he learned that many of the healthproblems he encountered stemmed from uncleanwater supplies. When his tour finished in 2006,he decided that he wanted to launch his owncharity to provide poor communities with cleanwater.

It was a slow start. “In some ways, on paper,I would be uniquely unqualified to ever start acharity,” he says. “It would be like if you ran intosomeone at a nightclub high on cocaine youwouldn’t say, ‘This guy’s going to raise a third ofa billion dollars for charity,’ you’d say, ‘This guyis a joke.’”

He read the book “Nonprofit Kit for Dummies”and emailed the president of Charity Navigator,which assesses charities, to ask for advice aboutpotential partners. He also turned to contactsfrom his nightclub life. On Mercy Ships, he hadstarted a personal blog and sent an email news-letter about his work to 15,000 contacts who hadpreviously received his club promotional notices.Some asked how they could help, and he calledon them when he started working on his watercharity. He traveled around the country meetingwith potential donors, “convincing people Iwasn’t crazy.”

On his 31st birthday, he launched Charity: Wa-ter with a party that raised $15,000 to help fundhis first water projects in Uganda.

The group has no full-time hydrologists or civilengineers. Instead it funds local groups who digwells, build rainwater catchers and set up waterpurifiers or other systems. Staffers at Charity:Water identify and oversee the projects.

One such initiative was a multiyear effort inEthiopia to provide clean water to more than twomillion people in rural communities who werefacing a water shortage. Another project helpedpeople in Rwanda build water systems for fami-lies, health facilities and schools. In Cambodia, aproject installed water treatment systems in peo-ple’s houses.

Mr. Harrison says that his own religious beliefshelp to motivate his charity work but that Char-ity: Water isn’t a religious organization. He cur-rently attends a small community church near hishome in Manhattan.

He says that some of the skills he learned inhis nightclub promoting days carry over into hischarity work. “The skill that I really learned wasstorytelling and promoting, and I was promotingthe idea that if you get past the velvet rope andspend all of your money buying expensive cham-pagne and being with beautiful people then yourlife has meaning,” he says. “I changed that storyto say…‘If you’re working to end needless suffer-ing around the world then your life has meaningand purpose.’”

Many of his efforts have centered on trying tomake giving to charity seem cool and fun. “Somuch of traditional charity is based on shame andguilt,” he says, citing commercials featuring chil-dren and animals in extreme need. “It’s as if Nikewas telling people they were fat and lazy, soplease buy our gear and go for a run.”

He tries to use technology in novel ways to tella positive story about his group’s work, creating,for instance, virtual reality videos chronicling vil-lages’ reactions to water projects. He has also setup Twitter accounts for some of the group’s well-drilling rigs, to send out news about their prog-ress. This year’s fundraising gala on Dec. 1 in SanFrancisco will feature a 350-foot screen showingfootage shot by drones from villages the grouphopes to help, in an effort to make the eveningfeel like it’s taking place in virtual reality.

His old life feels foreign now, he says. Recently,he and his wife, a former employee of Charity:Water, arrived at a nightclub at 11:30 p.m. andwere surprised to find it nearly empty. He was soout of practice that he had forgotten that mostpeople didn’t show up until after midnight. Sinceleaving that world 14 years ago, he says, “I’venever even thought about going back.”

I lovednappingbefore itwas cool.But trytellingthat to afive-

year-old.

MY SON has started kindergar-ten, and he’s already got abeef: He doesn’t want to nap.Apparently, there’s a desig-nated midday “rest time” inclass. Each student rolls outhis or her own yoga mat andrelaxes and maybe gets a fewminutes of shut-eye—or atleast daydreams of Lego cas-tles and gummy-worms pizza.

My child is not feeling it.“I hate naps,” he said.

“Please tell them I don’t wantto nap.”

I love my son. I would doanything for him. Still, I haveto level with him: Kid, when

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REVIEW

Smart managers know the wis-dom of a well-placed nap. Ari-anna Huffington, who built a

media empire, now ad-vises executives toput down theirphones and laptopsand hit the hay.

Meanwhile, nap-ping is becoming abusiness itself. Youmay have read inthis newspaperabout “sleep pod”stations that haveopened aroundNew York and

other cities to giveweary workers a comfy,

quiet place to rest. You have topay for those, however, andpersonally, I’m not sure why I’dpay for a nap when I can justfall asleep on the train. I maywake up in Coney Island, butlook, it’s a free nap.

I do think you have to keepyour napping reasonable. Sci-ence says a 20-minute nap willgive you the boost you need.An hour is probably the lon-gest reasonable stretch. Take a

two-hour nap, and you’re liableto have a nightmare thatyou’re being chased by a chain-saw-wielding maniac from thehuman resources department.You’ll wake up under yourdesk, covered in sweat.

My son possesses no suchanxieties. He is five, and hisbiggest worry of the day iswhether or not his kid sister isplaying with his pet lizardwhile he’s not around. He hasthe energy of a hyper-caffein-ated golden retriever. He doesnot covet a nap. He thinks napsare for babies.

I’m going to have a talk withhim. I don’t expect him to startsnoozing every day on com-mand. Personally, I can’t imag-ine taking a group nap on thefloor of a classroom. (If youwork at an office that doesgroup naps, it may be time toconsider a new job.)

But naps are not for babies.I think his kindergarten teach-ers are imparting some impor-tant wisdom.

Nap when you can. The restof life is exhausting enough. JA

MESYA

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Advice toThe NextGeneration:Nap WhenYou Can

someone offers you a nap,take one.

Listen to usadults. A life with amandatory nap isprobably the happi-est kind of life. Ifthe Journal came toall of its employeeswith an office napprogram, I’d be thefirst to sign on. I’d napin my chair. I’d nap undermy desk. I’d defi-nitely nap in anymeeting that tookplace after 2 p.m.

(I actually workfrom home a lot, wherenaps are sometimes on themenu, I’ll confide. Just don’ttell my editors. On secondthought, do tell them. Theyshould be taking naps them-selves. Let’s normalize thenap!)

I’ve loved naps since beforethey were all trendy and cool,but there’s now a growing sci-ence around the benefits ofeven brief sleep in the middleof the day. “Dozens of studies

have shown that grabbing afew Zs in the daylight hours ishealthy,” Heidi Mitchell wrotein the Journal last year. Napsturn out to be good for atten-tiveness and energy. They re-lieve sleep debt. They alsomake you incredibly handsome.OK, I made that last one up.

The business world has fi-nally caught on. The days of la-beling office nappers as lazygood-for-nothings are over.

JASONGAY

The breaking point for Scott Harrison came at the

end of 2003 while he was partying in the resort townof Punta del Este in Uruguay. A nightclub promoter atthe time, Mr. Harrison was there with his model girl-friend, surrounded by fireworks and magnums of Dom

Perignon. But looking out at his rented megayacht, he wonderedwhy, at age 28, he was so unhappy.

“I saw there would never be enough money, enough girls, enoughstatus,” he recalls thinking. “My tombstone was going to read, ‘Herelies Scott Harrison, who has gotten over a million people wasted.’”

When he got home to New York, he sought to make changes.“The big question I was asking myself,” he now says, “was ‘Whatwould the opposite of my life look like?’”

Today, at 43, he is the founder of the clean-water nonprofit Char-ity: Water. The organization has raised $320 million in 12 years tohelp provide clean drinking water to 8.5 million people from Africato Asia to Central America. He’s written a memoir, called “Thirst,”

that comes out Oct. 2.Mr. Harrison grew up in New Jersey’s Hunter-

don County, the son of churchgoing parents. Hismother suffered from carbon monoxide poisoningafter a leak in their home, and a young Mr. Harri-son spent much of his time caring for her as shestruggled with her health afterward.

Initially, he thought he might become a doctor,but when he went on to New York University, hepursued a degree in journalism and got drawninto the city’s nightlife. “I went from the virtuouskid who didn’t smoke and didn’t curse to thenightclub kid, and I was all in,” he says.

He became a successful nightclub promoter,but ultimately found himself unsatisfied. In 2004,following his New Year’s epiphany in Uruguay, hequit his job and discovered a renewed interest in

A turn from nightclubs to philanthropy

“I sawtherewouldnever beenoughmoney,enoughgirls,enoughstatus.”

WEEKEND CONFIDENTIAL | ALEXANDRA WOLFE

Scott Harrison

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WHAT HAPPENSwhen a roguebusinessman hi-jacks a Republicancampaign? That is

one of the questions that David Lever-ing Lewis asks in his insightful, dis-ciplined biography of the 1940Republican candidate for president,Wendell Willkie. Willkie lost theelection, but along the way heshifted the parameters of debateover the war in Europe, replacingthe question “Should we engage?” to“When should we engage?”

As Mr. Lewis shows in “The Im-probable Wendell Willkie,” the 1940election wasn’t the only time thatWillkie startled America into newthinking. Particularly notable were hisdrives to rein in Franklin Roosevelt’sNew Deal, advance civil rights and setup a system for postwar geopoliticalgovernance. The unlikely Hoosierproved to be, as Mr. Lewis says, an“extraordinary internationalist.”

In Mr. Lewis’s telling, Willkieemerges as the kind of figure who ismissing on the political stage today:the classical liberal, who stands forindividual rights at home and willfight tyranny abroad. Classical liberal-ism, Mr. Lewis suggests, was part ofthe family DNA. Willkie’s forebearshad come to the U.S. in the mid-19thcentury from the province of Saxony,then governed by a Prussian regime“of asphyxiating political repression,”in Mr. Lewis’s phrase. Willkie’s father,Herman, would remember beingthrashed on the family doorstep,when he was a toddler, by a Prussianofficer who had stumbled over him.

The family settled in Indiana, andHerman Willkie eventually took upthe law, marrying Henrietta Trisch,also of German descent, who was oneof the first women admitted to theIndiana bar. The Willkies were “sil-ver” Democrats and once hosted Wil-liam Jennings Bryan in their home.When the neighborhood kids shoutedMcKinley slogans, Willkie and hisbrothers shouted back: “Free Silverfor Freedom and Bryan.”

As for Wendell, after graduatingfrom Indiana University, he enteredlaw school there and took a degreebefore joining up in 1917, when theU.S. entered World War I. After thewar, his father suggested that hebecome a part of the family’s law firmin Elwood, Ind., but Henrietta did notapprove. “Her advice,” Mr. Lewiswrites, “was to seek a wider, morechallenging forum.”

And so the young lawyer startedworking in Akron, Ohio, for HarveyFirestone, a fan of Calvin Coolidgewho thought Willkie would “never

back to the 14% range, and the coun-try was tired of waiting for the NewDeal to deliver recovery. In a career-boosting evening on radio’s “TownHall of the Air,” Willkie and Rooseveltprotégé Robert Jackson debated thetopic of business-government co-operation. The name “New Deal”sounded good, Willkie said, butdescribed a game in which the gov-ernment held all the cards. It was a“catchword” that would “obscureanalysis for 50 years.” The eveningproved to be a triumph. Willkie’sheretofore sheepish fellow utilityheads began to criticize the New Dealas well, including executives at Gen-eral Electric, whose leadership haddallied with progressivism.

As the possibility of a third FDRterm loomed, voters sought an alter-native to both Roosevelt and thetraditional Republican Party, one ofwhose candidates was the isolation-ist Sen. Robert Taft of Ohio. Willkie,“the man who talked back,” providedthe alternative. He joined the Repub-licans and bullied Roosevelt evenmore into the interventionist camp.“Every time Mr. Roosevelt damnsHitler and says we ought to helpdemocracies in every way we canshort of war,” Willkie said, “wedouble-damn Hitler.”

Newsmen and voters liked whatthey saw in the shambling Willkie,whom the writer Rebecca Westdescribed as having “the well-orga-

amount to much” since he was aDemocrat. From his perch at the Fire-stone tire company, Willkie spotted abusiness sector with more possibilitiesthan even autos—electricity. New Yorkor Chicago might glow, but ruralAmerica waited to be wired. “TheSouth,” as it was said at the time, “istired of living in thedark.”

First as counsel andthen as chairman ofthe conglomerate Com-monwealth & Southern,Willkie structured anunwieldy utility, thenowned by multiple pri-vate parties, so that itmight tap capital mar-kets and go public. Hewagered that, in a fewyears, Commonwealth &Southern would achieveeconomies of scale and offer lowprices in the regions it served, notleast in the Tennessee Valley. Even inthe 1930s, Americans used more elec-tricity almost every year. Thereseemed to be no barrier to this trans-formative industry.

Until Franklin Roosevelt threw oneup. In 1933 the president made thecenterpiece of his New Deal theTennessee Valley Authority, a newfederal entity designed to oversee notonly the installation of a hydropowerdam system but also the establish-ment of a model town featuring vari-

ous social programs—creating, it washoped, a little social-democraticutopia. The TVA commenced as apilot project, and the administrationpromised that, when it came to elec-tricity, it would partner with privatecompanies. Yet the laws that gov-erned the TVA rigged electricity

prices, so much so thatthe TVA threatened pri-vate competitors.

By 1935, Willkie beganto speak up, criticizingthe TVA’s power graband tallying the cost itimposed on Depression-strapped taxpayers. TheTennessee River, Willkiequipped, “waters fivestates and drains the na-tion.” Nor, Willkie noted,were utilities the onlybusiness threatened by

the New Deal. The more popularRoosevelt grew, the more belligerenthe became, promising to show busi-ness aristocrats that, in government,they had met “their master.” Early on,FDR had told the nation that it hadnothing to fear but “fear itself,” yetthe New Deal, Willkie said, brought a“new fear” evoked by “the hostileattitude of government itself.” “Fewbusinessmen,” Mr. Lewis writes,“would have thrown down the gaunt-let with such forcefulness.”

The year 1937 brought Willkie’smoment. Unemployment was heading

Abusinessmanwho challengedbig government(and a popularpresident) andthen urged thecountry to fighttyranny abroad.

Spy vs. SpiesABritish agent at thered-hotcenterofSoviet

intelligence C9 BOOKS Unjust DessertsThepainand suffering

of the Jell-Oheiresses C11

nized balkiness of a healthy bear.”The press in particular, viewing theGOP’s prospects, preferred Willkie toprosecutor Thomas Dewey of NewYork. (At the time, Dewey was only 38years old: Roosevelt adviser HaroldIckes joked that Dewey had “thrownhis diaper into the ring.”) NormanThomas, the socialist candidate, com-mented acidly that Willkie both“agreed with Mr. Roosevelt’s entireprogram of social reform and said itwas leading to disaster.” Nonetheless,after multiple rounds, Willkie won theGOP nomination. As Time magazinesummed up: “While Tom Dewey, withbravado, was fumbling with the topicof foreign affairs, while Taft appearedto be running toward the wrong goalposts, Willkie seized the ball.”

In the event, “the barefoot boyfrom Wall Street” carried only 10states to Roosevelt’s 38. But thepower of Willkie’s arguments forcedthe Republican Party away from iso-lationism, and the Willkie movementshamed Roosevelt into softening hisanti-business stance.

Mr. Lewis gives special attention tothe short, exciting stretch betweenWillkie’s 1940 defeat and his 1944death at the age of 52. Willkie hadalways favored the underdog, evensuccessfully representing before theSupreme Court a Communist Partyofficial who sought to regain hisrevoked citizenship. As chairman of

PleaseturntopageC8

The ImprobableWendell WillkieBy David Levering Lewis

Liveright, 371 pages, $28.95

BY AMITY SHLAES

The GreatDisruptor

GRANGER

NEW FROM AMERICA’S MOSTINFLUENTIAL ASTROPHYSICISTNEW FROM AMERICA’S MOSTINFLUENTIAL ASTROPHYSICIST

“Enlightening.”—Walter Isaacson,

author of Steve Jobs and Professor of History, Tulane University

“Enlightening.”—Walter Isaacson,

author of Steve Jobs and Professor of History, Tulane University

“Phenomenal.”—William E. Burrows,

author of This New Ocean: The Story of the First Space Age

“Phenomenal.”—William E. Burrows,

author of This New Ocean: The Story of the First Space Age

“A much-needed readfor both policymakers and the public.”

—Joan Johnson-Freese,Professor of National Security Affairs, Naval War College

“A much-needed readfor both policymakers and the public.”

—Joan Johnson-Freese,Professor of National Security Affairs, Naval War College

“Indispensable andmind-blowing.”—Walter LaFeber,

Tisch Distinguished Professor Emeritus, Cornell University

“Indispensable andmind-blowing.”—Walter LaFeber,

Tisch Distinguished Professor Emeritus, Cornell University

“Wide-rangingand provocative.”—John M. Logsdon,

Professor Emeritus, Space Policy Institute, George Washington University

“Wide-rangingand provocative.”—John M. Logsdon,

Professor Emeritus, Space Policy Institute, George Washington University

N E I L

DE GRAS SE

TYSON

N E I L

DE GRAS SE

TYSON

A S T RO P H Y

S I C S

f o r P E O PL E i n

a H U RRY

A S T RO P H Y

S I C S

f o r P E O PL E i n

a H U RRY

#1 New York Times Bestseller

#1 New York Times Bestseller

C8 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

Twentieth Century Fox in theearly 1940s, Willkie hosted Wal-ter White of the NAACP at agathering of studio executives toargue for giving blacks the kindof credible heroic roles normallyallotted to white characters. Will-kie joined Eleanor Roosevelt inestablishing Freedom House, theinternational watchdog of oppres-sion around the world. He foughtfor the integration of the armedforces. He proved the merit of theargument that, as Mr. Lewis putsit, “the health of the market econ-omy was codependent with a justsocial contract.”

In 1942 Roosevelt tapped Will-kie as his goodwill ambassador,dispatching his former opponenton a world tour. At the time, Sta-lin and Chiang Kai-shek were ourallies, and Willkie sought to con-vince them that they could unitewith the U.S., after the war, undersome form of Woodrow Wilson’sLeague of Nations. (Taft, here pre-scient, was more cautious.) It is

ContinuedfrompageC7

that international organizationsdeliver freedom and prosperity,simply don’t hold up. Willkie’seffort to revive the League ofNations gave rise to the corrupt,flawed United Nations.

What Mr. Lewis misses is thatthe better Willkie was the Willkieof 1937 or 1938, the one who sup-ported business and individualfreedom and called evil by itsname. By campaigning againstthe TVA, Willkie showed that itwas possible for CEOs, notoriouscowards, to speak up and checkgovernment incursions.

It is an irony of history that, inthe early 1960s, GE fired RonaldReagan as its spokesman and TVhost because, in a speech, hecited the Tennessee Valley Au-thority as an example of intrusivebig government. But by that time,the power company had trainedReagan in market economics andplaced him before hundreds ofaudiences on national tours. Rea-gan had internalized enoughWillkie-style economics to suc-ceed where Willkie had failed—in a presidential campaign.

Miss Shlaes is the author of“Coolidge” and “The ForgottenMan: A New History of theGreat Depression.”

Walls: A History ofCivilizationin Blood and BrickBy David Frye

Scribner, 292 pages, $28

BY FELIPE FERNÁNDEZ-ARMESTO

REMUS GOT intofatal trouble for de-riding his brother’sfirst effort to builda wall around

Rome: Livy says he fell when hetried to jump over it; others sayRomulus killed him. Ever since,border boundaries have beenridiculed, punctured, climbed over,subverted, outflanked, blasted,cannibalized for more constructivepurposes, or abandoned and leftto subside on their own. TheBerlin Wall went theway of those of Nin-eveh and Tyre. Butscoffers today makePresident Trump’sproposed southernborder wall look—ifpossible—even sillierthan it is. Walls oftenwork.

That is why theEurasian steppe isfringed to the southwith barriers de-signed to forestall horsemen.Even feeble, permeable orundermanned walls slow foes:In Roman Britain, Hadrian’swall worked because it impededthe livestock-rustling that wasthe main motive of northerninvaders Mountain-top com-munities, despite the advantageof altitude, have often cappedtheir peaks with additional,artificial defenses, and havewalled off productive valleysagainst attack.

In forests, it is more importantto clear spaces to keep approach-ers under observation: even so,no self-respecting Roman generalwould venture into the woodswithout surrounding his campwith—as every schoolboy whoread his Caesar once knew—“arampart and a ditch.” The currentproliferation of border walls is inline with most historical expe-rience. Even anti-wall liberalssometimes cannily gate theircommunities against their un-desirables.

in “Walls: A History of Civiliza-tion in Blood and Brick,” DavidFrye tells the story of all thesesorts of barriers with eloquenceand panache, from the third mil-lennium B.C. to early moderntimes, when he deserts his ram-

parts and takes aRemus-like leap tothe 20th-century. Acomprehensive his-tory of walls wouldtake in even moretopics: It might startwith paleolithic drivelanes for game, andcorrals that served ashunters’ aids; includethe internal wallsthat often dividedmedieval cities; and

cover the Enlightenment critiqueof city walls. A book about wallscould even deal with alternativesto walls, such as bunkers in theMaori wars, or trenches andminefields.

Mr. Frye’s book may be incom-plete but he is enviably good atturning historical and archaeol-ogical evidence into vivid prose,and his writing is as clear as onany wall. Yet every virtue seemsto overspill into a neighboringvice. Trenchancy becomes dogma-

tism, when, for instance, the au-thor insists that wall-builders areaverse to warfare and victims of“a chronic failure of confidence,”or when he repeatedly dismissesclaims that walls are raised forpurposes other than defense ormotives other than fear.

What about pride of posses-sion, vainglory, revulsion fromoutsiders, self-satisfaction, purity,boundary marking, and the “irra-tional whims” that Mr. Frye ad-mits some people have, especiallyChinese emperor Shi Huang, wholonged for immortality and built awall to help his empire achieve it.

When the author simplifies, heoverdoes it: The Silk Road, hesays, “was born” when EmperorWu built a wall. Humor slips intoflippancy: Tolstoy’s remark thatRussians want to be Cossacks“may well have been true,” Mr.Frye quips, “even if they wereonly trying to escape an assignedreading of War and Peace.” Andthe author too credulously swal-lows ancient exaggerations ofSpartan primitivism or lubri-ciously celebrates seraglios thou-sands strong—like Sui Yang-ti’s,in “a labyrinthine pavilion wherehe could privately pursue hisaphrodisiac-driven sexual desire.All this is to say nothing of thewomen he forced to haul hisenormous barges . . . their pun-ishment for not making the cutfor his harem.” Such figures areonly credible for female hos-tages—not sexual partners—evenof the most energetic tyrant.

Desperately seeking coherence,the author blunders into a binaryworld-view, divided betweencivilized softies and pugnaciousprimitives, wallers and warriors.This dichotomy is unconvincingeven in hands as deft as Edward

Gibbon or Ibn Battuta. Contraryto Mr. Frye’s belief that those whobuild walls don’t want war, seden-tarism exacerbated and extendedwarfare, by boosting competitionfor cultivable land, and requiredforces to be raised to compelwork and guard warehouses.

In cities, people did not becomemore peaceful than previously, butmore specialized. Mr. Frye real-izes, as he puts it, that “maleinhabitants of walled communities. . . learned to dabble in other pur-suits” than combat—which seemsrather ungenerous to classicalthinkers and artists—but he doesnot credit soldiery as one of thespecialized vocations sedentarylife encouraged. The author alsoignores the martial virtues thatcontinued to resound in, say,Roman poetry, or in military exer-cises that kept armies of peasantsand citizens in the field.

In short, Mr. Frye’s book be-longs to that underappreciatedcategory: good but wrong. Onething the author is right about,however, is the effectiveness ofwalls against unwanted outsiders,except in extraordinary times,when refugees flood uncontain-ably. The Berlin Wall worked for along time. It fell, but successorsproliferate because for govern-ments that feel threatened bymigrants (or by the effects ofmigrants on voters), they justifyinvestment. Mr. Trump’s wall willnever be built, not because it isbound to fail, but because bordersecurity costs already suffer fromdiminishing returns, and becausefor most of the time economics,not politics, determines the paceof migration.

Mr. Fernández-Armesto is aprofessor at Notre Dame.

. . . And Stay Out!

The currentproliferationof borderwalls is in linewith mosthistoricalexperience.

Heart: A HistoryBy Sandeep Jauhar

Farrar, Straus & Giroux, 269 pages, $27

BY LAURA KOLBE

THE CARDIOLOGIST Sandeep Jauharhas become a Dante of modernmedicine, with his earlier memoirs,“Intern” (2008) and “Doctored”(2014), casting the progress from

training to career as a path studded with suffering,indignity and ethical hazard. His latest book,“Heart: A History,” is something of a “Paradiso,”pointing to the field’s brightest and noblest starswhile recognizing just how much darkness is stillleft in the firmament.

Contemporary cardiology, Dr. Jauhar notes, iscoming off a perhaps unrepeatable century ofsuccess. Since 1950, deaths from cardiovasculardisease have declined by 60% in the U.S.—meaningthat, every year, more than a million Americanswho would have died under midcentury caresurvive. Today a host of advances—drugs thatlower cholesterol and blood pressure, implantabledefibrillators, catheterizations to unclog arteries,and even heart transplants—have turned manyforms of heart diseaseinto manageableillnesses rather thandeath sentences.

Now, however, Dr.Jauhar believes that thefield “in its current formmight have reached thelimits of what it can doto prolong life.” Foryears, hospitals haveraced to decrease “door-to-balloon time”—thedelay from arrival to thedeployment of a cathe-ter for patients sufferingheart attacks—on the dictum that “time ismuscle,” with cardiac cells suffocating by theminute. Yet a 2013 study found that, beyond acertain point, additional rapidity may not increasesurvival. New and much-lauded (and pricey) drugsfor heart failure improve mortality and hospital-ization rates by only a few percentage points. Andthe number of cardiac transplants performed an-nually has stagnated. Where do we go from here?

Poignant and chattily erudite, “Heart” shuttlesbetween scholarship and memoir to relate thiscontinuing epic, the uneasy companionship be-tween humans and our most metaphorized organ.Dr. Jauhar offers brief biographies of luminaries—such as John Gibbon, inventor of the heart-lungmachine, and Werner Forssmann, pioneer ofcardiac catheterization—that are sympathetic butnot hagiographic.

Yet if medicine is to advance, it may be drivenless by single superstar intellects than by methodsof intensive and searching inclusivity. Dr. Jauhardiscusses the famous Framingham Heart Study, inwhich researchers have followed residents of aMassachusetts town since 1948 to detect diseasepatterns, in one early example of learning from anentire population. Though flawed in its assumptionthat the results from its mostly white, middle-classsubjects would be applicable world-wide, it pro-vided the first evidence of smoking and cholesterolas risks for heart disease.

But we can do better. The Masala study ofSouth Asians in the U.S. (mentioned in a footnotein Mr. Jauhar’s book) seeks to answer similarquestions, this time for a group that other studieshave excluded, underrepresented or buried understatistical noise. Many South Asians who die ofheart attacks have no risk factors at all under theFramingham model. What such “mystery” casesneed is less a super-sleuth than sustained epidemi-ologic attention.

Where “Heart” shines is in charting anothercrucial shift that sounds like a throwback butmight well be cardiology’s next wave: attending tothe mind-body problem. Interest in the connectionbetween so-called affective traits and heart diseaselanguished after the discrediting of the 1950s“type-A personality” hypothesis—essentially, apsychological profile invented by a pair of cardiol-ogists in a rather improvisatory attempt to explainwhy so many executives had heart attacks.

While results of this early personality-typingresearch proved shaky, a more rigorous 1981 studyfound that a startling number of patients with life-threatening arrhythmias had suffered acutepsychological stress the day of their attacks. ThisJuly, a small but provocative study demonstratedbetter outcomes for patients who had been pre-scribed an antidepressant after a heart attack.

Dr. Jauhar is careful to couch these findings inpolitically neutral terms, but they are ripe formore polemical interpretations. To a libertarian-minded reader, they are evidence that patients canincreasingly be captains of their cardiologic fate,that self-knowledge and proactive managementcan mean survival. (Cardiac rehab centers thatused to be long walls of treadmills are now just aslikely to have yoga mats, meditation rooms andtalk therapy.) To a progressive reader, such mind-body data shows that chronic stressors such asinequality and prejudice are not just unfair butliterally poisonous to the heart.

What’s clear to all, though, is that, as Mr. Jauharwrites: “We will need to shift to a new paradigm,one focused on prevention—turning down thefaucet rather than mopping up the floor.”

Dr. Kolbe is a resident physician in internal medi-cine at Brigham and Women’s Hospital in Boston.

Acardiologistsurveys his fieldandworries thatwe ‘might havereached thelimits’ ofwhatwe candoto prolong life.

LUCASSCHIFRES/G

ETT

YIM

AGES

TREMENDOUSThe Great Wall of China

near Beijing.

GRANGER

WendellWillkie

this “extraordinary international-ist” whomMr. Lewis likes best. Toread Mr. Lewis is to be led tothink that only after 1940 didWillkie fully see the light.

Or, one might counter, fall intodarkness. For in fact Willkie’stour proved a farce. Addled byvanity and alcohol, he missteppedwherever he alighted. In Russia,he echoed Lincoln Steffens. “Rus-sia is an effective society,” hepronounced. “It works.” In China,he counseled Chiang Kai-shek toemulate not Commonwealth &Southern but the Five Year Plansof Soviet Russia. Stalin, Willkiesaid, knew how to exploit “mass-production technique.”

Not long beforeMao made China atotalitarian prison,Willkie, like others,allowed himself tobe convinced byMao’s ally ZhouEnlai that Chinesecommunism wassomehow gentle andmight be more “anational and agrar-ian awakening thanan international orproletarian conspir-acy.” (Willkie laterreversed himself on

such comments.) During the Chi-nese part of his travels, Willkiegave a great deal of attention toMadame Chiang Kai-shek, whodrew him to a secret apartmentin Chongqing and charmed himso thoroughly that he invited herto return with him to America.

The book that Willkie pro-duced after his trip, “One World,”sold more than a million copieswithin months. Its most com-pelling section is Willkie’s casefor global communication andagainst protectionism: “We shutourselves away from world tradeby excessive tariff barriers,” hewrote. But other Willkie conten-tions, especially his argument

CAMPAIGN TRAILCheyenne, Wyo.,

July 1940.

‘Something there is that doesn’t love a wall, / That wants it down.’ —ROBERT FROST

At theBleedingEdge

BOOKS

THEWALL STREET JOURNAL. * * * * Saturday/Sunday, September 15 - 16, 2018 | C9

BY STEPHEN BUDIANSKY

BOOKS‘He had two lives: one open, seen and known by all who cared to know . . . and the other running its course in secret.’ —ANTON CHEKHOV

WHAT MAKES aperson betray hiscountry?

For many ofthe spies who

worked for the Soviets at the dawn ofthe Cold War, the motivation was anaive but sincere commitment to thecommunist cause. Klaus Fuchs, JuliusRosenberg and the other atomic spieswere convinced they were promotingworld peace by handing Moscow thesecrets of the Manhattan Project.

By the 1980s, when the brutaltruths about the Soviet regime hadbecome too well known for much ro-manticism to be left about theworker’s paradise, the KGB reliedmostly on the simpler motive ofmoney. Navy communi-cations technician JohnWalker received morethan $1 million for sup-plying the cipher keys tohigh-level codes used onU.S. nuclear submarines.CIA officer Aldrich Ames,desperate to support ademanding and expen-sive new young wife, hadtaken $4.6 million fromthe Russians in exchangefor details of Americanespionage operations in-side the Soviet Union—including theidentities of at least 10 highly placedsources within the Soviet governmentwho were executed as a result.

But for a surprising number of de-fectors and double agents, the decisionto switch allegiance has always re-sided more in the realm of psychologythan ideology or finance. As Ben Mac-intyre observes in “The Spy and theTraitor,” the world of the professionalspy attracts people with a predisposi-tion to egotism, romantic fantasy anddeception, then intensifies those feel-ings with its rules of secrecy and itsculture of hidden power. “A degree ofintellectual snobbery is common tomost” spies, he writes, “the secretsense of knowing important things.”Equally common is a sense of loneli-ness and resentment toward the samesystem. “All spies crave undetected in-fluence, that secret compensation: theruthless exercise of private power.”

Mr. Macintyre’s earlier book “ASpy Among Friends” (2014) painted afascinating psychological portrait ofthe most famous of the “CambridgeFive” spies recruited by the KGB inBritain, Kim Philby. As familiar as thestory of Philby was by then, it offereda new and deeply insightful expla-nation of the pathological blend ofnarcissism, upper-class British privi-lege and addiction to danger andmanipulation that, far more thanPhilby’s self-professed adherence tocommunism, drove him to betray hiscountry and his colleagues.

In retelling the story of Oleg Gordi-evsky, a KGB officer who spied for Brit-ain from 1974 until his exposure byAldrich Ames in 1985, Mr. Macintyre isalso traveling well-worn ground. Butfor a number of reasons “The Spy andthe Traitor” is far less successful inoffering a new understanding of themindset of the double agent.

The most dramatic episode of Mr.Gordievsky’s life as a spy was hisbreathtaking 1985 escape from Mos-

with a decisive part in avertingnuclear catastrophe, by convincingPrime Minister Thatcher and Presi-dent Ronald Reagan that a paranoidSoviet leadership genuinely believedthe West was planning a surprisenuclear attack, but here the evidenceis much more impressionistic and notwholly convincing.

O ne of the shortcomings ofnearly all true-life spy tales isthat the primary source is

inevitably the spy himself. Many longpassages in Mr. Macintyre’s book thatrecount his conversations and thoughtsare taken directly from Mr. Gordi-evsky’s earlier memoir. The authorrarely questions his rationalizationsand explanations, and the few freshquotations he gleans from 100 hours ofmore-recent taped interviews soundperfunctory and well-rehearsed.

Mr. Gordievsky lacks the flamboy-ance of Philby, which makes for a lessinteresting psychological portrait inany event: He comes across as aslightly arrogant, self-centered andemotionally shallow man, oblivious tothe harm he caused others and inca-

pable of admitting that his desire toenjoy the materialistic comforts of theWest was an important factor in hismix of motives.

Only at the end does Mr. Macintyreprobe a bit more deeply, drawing oninsights offered by Mr. Gordievsky’sex-wife Leila and his former KGBcolleagues. Mr. Gordievsky’s decision toleave Leila and his two young daugh-ters behind when he fled is revealed tobe due to his fear that she—the daugh-ter of a KGB general—would turn himin if he told her the truth about hisdouble life. (MI6 was prepared tosmuggle the entire family out.)

Though they were eventually re-united in England after intense pres-sure from the West for his family’s re-lease, the marriage quickly fell apart.As Leila explains, her husband simplyexpected her to resume her old role ofdutiful wife, without showing a hintof understanding what a terribleplace he had left her in by his escape.“From his point of view he was mysavior. But who put me in the shit-hole?” she said. “He was so bloodyRussian.” Those who had worked withhim in the KGB—including old col-

The Spy and the TraitorBy Ben Macintyre

Crown, 358 pages, $28

cow just as the ax was about to fall. Anelaborate procedure had been workedout by British intelligence for Mr.Gordievsky to send word if he everneeded to get out the country quickly.Every Tuesday at 7:30 p.m., an MI6officer working under diplomaticcover would drive past a Moscowbread shop near Mr. Gordievsky’sapartment. The distress signal was forMr. Gordievsky to be standing by thecurb, wearing a gray cap and holdinga plastic Safeway shopping bag. To lethim know the message had been re-ceived and the escape operation wason, the officer would then walk pastthe same spot holding a Harrods bagwhile eating a Mars or Kit Kat bar.

Ominously summoned back to Mos-cow shortly after his appointment asthe KGB’s London rezident, or chief ofstation, he arrived back home to hisworst nightmare, finding himself un-der deep suspicion. He was repeatedlyinterrogated as the KGB tried to ex-

tract a confession; onTuesday July 16, 1985, hewas there in front of thebread shop, and fourdays later, at a carefullyreconnoitered spot nearthe Finnish border, hewas hustled into thetrunk of the car of aBritish diplomat anddriven safely across theborder. John le Carrécould not have done bet-ter justice to all the de-tails of spy tradecraft

(brush-contacts, secret recognitionsignals, countersurveillance tactics)that went into the daring operation.

The story of his hair’s-breadthescape was told with great brio andin vivid detail by Mr. Gordievsky him-self in the opening chapter to his1995 memoir, “Next Stop Execution.”Mr. Macintyre adds some new dramato his retelling, thanks to the extraor-dinary access he gained to the MI6officers involved in the operation.Many in MI6 considered the wholeplan not only ridiculous, but insane.Particularly entertaining is Mr. Mac-intyre’s inside account of the furiousobjections of the newly appointedBritish ambassador, who learned ofthe operation just as he was about totake up the post that was to be thecapstone to a long diplomatic career.“It’s an absolute bloody disaster,” heshouted. “I’ve got to leave for Mos-cow tomorrow and in a week I’ll beback again.” He was overruled byPrime Minister Margaret Thatcher,who was adamant that Britain musthonor its promise to a man who hadrisked his life and do everything inits power to save him, never mindthe diplomatic consequences.

From interviews on the Russianside, the author also gleans some pre-viously unknown details, includingthat the escape was greatly aided bypolitical infighting that prevented theKGB from employing its most experi-enced surveillance operatives to keeptrack of Mr. Gordievsky in Moscow,allowing him to reach Britain beforethe KGB even knew he was gone.

Mr. Macintyre engages in a certainamount of hyperbole in describingMr. Gordievsky as “one of the mostvaluable spies in history,” and theevents of his book “the greatest es-pionage story of the cold war.” Mr.Gordievsky’s value as a double agentwas principally in identifying Sovietagents in the West in the spy vs. spygame. Mr. Macintyre credits him also

leagues and close personal friends—came under a cloud of suspicion, too,their lives and careers ruined.

Like other Soviet defectors, Mr.Gordievsky cast his decision to spyfor the West as an act of high-mindedprinciple, particularly after the 1968invasion of Czechoslovakia opened hiseyes to the brutality and lies of theSoviet system. But as one formercolleague is quoted near the end ofthe book, “It’s true that Oleg was adissident. But who in the USSR in hissober mind wouldn’t be a dissident inthe 1980s? . . . The majority of us inthe London rezidentura were a bunchof dissidents to different degrees, andwe all liked life in the West. But itwas only Oleg who turned out to be atraitor.” As Mr. Macintyre notes, thisformer colleague “spent the rest ofhis life wondering why Gordievskyhad taken the leap into betrayal.”

It is the question that the reader isleft wondering, too.

Mr. Budiansky’s latest book is “CodeWarriors: NSA’s Codebreakers andthe Secret Intelligence War Againstthe Soviet Union.”

Inside theMind of a Double Agent

SURVEILLANCE Photos taken by Danish intelligence agents during Oleg Gordievsky’s visits to Copenhagen.

AsKGB agentstailed him,Gordievsky washustled intothe trunk of adiplomat’s carand driven overthe border.

CROWN

In 2013, Jessica Donati arrived in Kabul at the tail end of the U.S.’s transfer of

security to the Afghanistan government. Despite the dangers, she traveled

with and without military escort to report on the country’s dramatic upsurge in

violence. Over the next four years, Ms. Donati provided WSJ readers the full

scope of the unending corruption, bombings and kidnappings that has

encapsulated America’s longest war.

Real journalists and real news from America’s most trusted newspaper.

WATCHHERSTORYATWSJ.COM/JESSICA

The Face of Real News

#TheFaceOfRealNewsJESSICA DONATIFOREIGN CORRESPONDENT

© 2018 Dow Jones & Company, Inc. All rights reserved. 6DJ6260

C10 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

By thefinalvolumeof hisepicof the

mundane,the

authorseemsfed upwithbeingtrappedin hisownmind.

FICTIONSAM SACKS

TRANSGRESSION IS a fragilereed on which to base a literarystyle, if only because time andfamiliarity have a way ofmaking the shocking seemcommonplace. When Karl OveKnausgaard published the firstbook of his six-volume confes-sional novel “My Struggle” inNorway in 2009 (it appeared inthe U.S. in 2012), co-opting thetitle of the most notorious bookever written for a meticulouschronicle of an averageNorwegian’s upbringing, familylife and emergence as a writerwas an act of brazen effrontery,a grenade tossed into the staidprecincts of literary fiction. Butnow, as the immense finalvolume appears in English, Mr.Knausgaard’s series has becomeso well known and influentialthat its title passes withoutcomment. In the way of allcountercultural fashions, whatwas scathingly ironic hasbecome de rigueur.

And why not? Everyone has apersonal struggle, after all, andaccording to the trend thatprioritizes raw experience abovestorytelling craft, every personalstruggle is worthy of a book.This philosophy was alreadyaxiomatic in the genre of thememoir, but no one has donemore than Mr. Knausgaard topopularize it in the novel,emboldening a floodtide offollowers that include SheilaHeti, Ben Lerner, Elif Batumanand Keith Gessen. In a typicallymeandering lecture delivered in

2017 and now published underthe title “Inadvertent” (Yale,

92 pages, $18), Mr. Knausgaardsays he was attracted to theidea of mining his own life—ofdepicting his friends and familyand re-creating real events—because “there was somethingunheard-of about it . . . it was ina sense forbidden.” Innumerablereviews and author profiles havefollowed each successive install-ment of “My Struggle.” It’s safeto say that the technique isn’tunheard-of anymore.

“My Struggle: Book 6”

(Archipelago, 1,157 pages, $33)

is Mr. Knausgaard’s reckoningwith the consequences of hisproject. The book opens in 2009in the days preceding thepublication of Book 1. (In acheeky metafictional nod to theseries’s fundamental egotism,the first scene recounts his tripto sit for an author photograph.)The conflict arises when henervously emails the manuscriptto the unsuspecting people whoappear in it, hoping to get theirapproval before it’s loosed onthe public. Some give Karl Ovetheir tentative blessings, but nothis uncle Gunnar, who’s enragedby the portrayal of Karl Ove’sfather—Book 1 centers on thesqualid circumstances of hisdeath—and threatens a lawsuit.Meanwhile, Karl Ove’s wife,Linda, has gone to visit a friend,so the scenes follow his dayscaring for their three smallchildren as he contemplates thehorror of a public scandal.

The narrative continues fromthere, steadily swallowing its tailuntil it catches up to the writingof Book 6. The trademark of “MyStruggle” is its microscopicdegree of detail. Every meal,every visit to the playground,every trip to the grocery store isfaithfully recorded for pos-terity—during one checkout we

learn Karl Ove’s PIN code—justas a historian might recount theminutes of some world-changingevent. Because it’s part of hisdaily ritual, Mr. Knausgaardannotates his writing process.As “My Struggle” becomes acontroversial sensation,straining his marriage andcutting into his householdresponsibilities, he beginscomposing with manic speed ina desperate effort to put thething behind him. Book 5, whichis 656 pages, he writes in eightweeks—“by then I really didn’tgive a damn.”

Book 6, too, bears the marksof blind haste. For all its lengthand elaboration, it feels oddlycursory, like an assignmentpounded out on the bus before

class. In “Inadvertent,” Mr.Knausgaard describes atechnique that resembles theautomatic writing of the Beats:“I simply [don’t] have time tothink, to plan or to calculate.”This is the logical end point ofthe autobiographical novel—itbecomes indistinguishable froma personal diary. Any creativefreedoms the form seems topromise are belied by Mr.Knausgaard’s evidentimpatience with the daily choreof transcribing his memorieslike an overworked office clerk.He’s fed up with being trappedinside his own consciousness,and so is the reader. Aren’tbooks supposed to help usescape that condition?

The lack of objectivitybedevils the book’s mostinteresting portion. Smack inthe middle is a 400-plus pageaccount of the youth of AdolfHitler, accompanied by a closereading of “Mein Kampf.” Theessay, which takes extendeddigressions to discuss the workof Paul Celan and KnutHamsun, the paintings ofClaude Lorrain and J.M.W.Turner, and much else, isrigorous, stimulating, andentirely untrustworthy. Why isit here? The answer, obviously,is that Mr. Knausgaard wants toinvestigate his similarities withthe mass murderer from whomhe borrows his title. Thus helays selective emphasis onbiographical details thatresonate with his own. We read

of a man scarred by his bullyingfather; a frustrated artist fueledby grandiose “fantasies he goesto great lengths to preservefrom any confrontation withreality”; a narcissist committedto romantic self-mythologizing.Having failed to touch thesublime in painting, Mr.Knausgaard suggests, Hitlerturned to war.

It’s not that Mr. Knausgaarddenies Hitler’s anti-Semitism,but because it isn’t a trait thathe shares he has comparativelylittle to say about it. Yet aHitler who isn’t primarilyanimated by race hatred is notHitler at all. A strangelyincomplete interpretation ofhistory results, one shaped toconform to the author’sreflection.

It’s only at the extreme endof Book 6 that circumstancesjar Mr. Knausgaard from theruts of self-absorption. Linda,who is herself a novelist, suffersa frightening manic-depressiveepisode and has to be hospital-ized. The crisis suddenly castsall the torments and anxietiesthat fueled the series in a newlight, making them seem minorand preening. “Her struggle hadbeen very different from mine;hers had been life or death.”This is a moving self-rebuke,but how late in the day itarrives! After six books andsome 3,800 pages Mr.Knausgaard has finallyrecognized the reality of aperson other than himself.

The End of a Monstrous Struggle

TWO BY KARL OVEKNAUSGAARD

My Struggle: Book 6Translated by Don Bartlett& Martin Aitken

InadvertentTranslated by Ingvild Burkey

Between Dog and WolfBy Elske Rahill (2013)

1 “Between Dog and Wolf”is an unflinchingexposition of thetumultuous lives of three

students from Trinity College inDublin. A triptych of narrativesin first-, second- and third-person voices reveals a danger-pitted and darkly charged socialand sexual landscape whereyoung people obsess about theirbodies, their voices and theirperformances. Not here thecarefree days and joyfullyintoxicated nights of classicallydescribed studentdom; theterrain between adolescenceand adulthood being negotiatedby the haughty, world-wearyCassandra, the malleable andtraumatized Helen and theporn-addled misogynist Oisín iscreviced and slyly shifting. Withnods to tragic Greek and Celticmyth and in language so finelyturned that the reader istempted at times to readsentences aloud for theirvibrancy and lyrical cadence,Elske Rahill transforms thehideous pressures exerted onher characters from within andwithout into a story that willstrike terror into the hearts ofparents of college-age children.

The Ginger ManBy J.P. Donleavy (1955)

2 Also at Trinity, but in aDublin perched on thewashed-out edge ofpostwar Europe—a place

both burgeoning andcontracting, liberating andstifling—one of literature’smost lovable antiheroes,Sebastian Dangerfield, isstudying law on the G.I. Bill.“All I want / is one break /which is not / my neck,” quoththe charming, impecuniousrogue in one of J.P. Donleavy’strademark chapter-closingverses. And it’s hard not to rootfor Dangerfield, even as hedivests himself of all husbandly,fatherly and scholarlyobligations in order to rompand raunch unfettered to hiswounded heart’s content. Andwounded he is: For all hisexcesses, his ceaselessseductions, his froth and

and, as a member of its quizteam, to compete on“University Challenge.” Briangrew up watching the televisionquiz show with his father who,it seems, worked himself todeath as a traveling salesman.Brian’s first-person narrative islensed through his grief for hisfather, his feelings of love andguilt toward his mother, hisbewilderment at theunknowable ways of the upperclasses: “But like my dad usedto say, the crucial thing aboutan education is . . . the doors itopens, because otherwiseknowledge, in and of itself, is ablind alley, especially fromwhere I’m sitting, here, on alate-September Wednesdayafternoon, in a factory thatmakes toasters.” DavidNicholls’s account of Brian’sattempts to find himself as astudent, a lover, a quiz-teamstar and a citizen of the worldoutside England’s Southend isboth poignant and side-splittingly funny.

The Lesser BohemiansBy Eimear McBride (2016)

5 Eily has traveled toLondon from Ireland tostudy drama. Like manyother first-year students,

she harbors concerns aboutlosing her virginity, which shesoon does via a casual flingwith Stephen, a baggage-heavy,burnt-out actor more thantwice her age. Their initiallyfacile relationship quicklydeepens and becomes allconsuming. Eimear McBridedescribes their assignationsintimately but obliquely: Muchof the physical act is left to theimagination. And yet the pagesof this novel, written in asublimely fractured stream-of-consciousness style, aresaturated with sex, with themoments that surround the actof lovemaking, evoked in waysthat perfectly reflect the placebetween conscious thought andarticulation: “Pity the finished.We do and lie quietremembering which body’s his,which is mine. Well, I’ve neverexperienced anything quite likethat, he says.” And neither willreaders of this bewitchingnovel.

FIVE BEST NOVELS ABOUT COLLEGE DAYS

Donal RyanThe author, most recently, of ‘From a Low and Quiet Sea’

braggadocio, and for all thesavage hilarity of this wild andpicaresque tale, “The GingerMan” is at its core a novelabout sadness. It has about it,as John Banville remarked, a“sense of sweet and delicatemelancholy that clings to thepages,” equal parts defiant andregretful, and gloriously,extraordinarily human. As heconducts a chaotic disquisitionon life, searching always forthat “silent minute” where hecan be “bled of his seed, rid ofhis mind,” Dangerfield willmake you roar with laughtereven as he breaks your heart.

On BeautyBy Zadie Smith (2005)

3 E.M. Forster echoesstrongly throughout thisbeautifully arrangednovel involving clashes

of beliefs, cultures, classes andegos, set on the fictionalcampus of Wellington Collegeoutside of Boston. Centered ontwo families, the devoutlyliberal Belseys and thefundamentalist ChristianKippses, “On Beauty” concernsitself with all the variegatedand messy stuff of lives lived.Comic and gently biting, itexplores the uneasy relationshipbetween the principles we holdsacrosanct and our ability tohonor them. Zadie Smith sets

scenes like no other writer atwork today and fills them withcharacters and conversationsthat pulsate with a bottomlessenergy. “Throughout theirfriendship, Claire had satirizedhis scrupulous intellectualism,just as he had teased her abouther artistic ideals. It was her oldjoke that Howard was onlyhuman in a theoretical sense.”In a perfect metamoment, Ms.Smith strolls into the novel as avisiting writer at Wellington,and so assures readers that sheincludes herself on the honorroll of the affectionatelymocked.

Starter for TenBy David Nicholls (2003)

4 “Starter for Ten” is themost relatable campusnovel I’ve ever read.When I went to college

in 1994, at the age of 18, I wasfull of knowledge andcompletely clueless. Some of myidiocy was knocked from me bya constant procession of smallshocks about the way the worldoutside my rural market townactually worked. And so it is forthe hapless Brian Jackson, asmall-town working-class ladwith a penchant for trivia andquiz shows, who leaves hisdead-end friends and lovingwidowed mother for gongs andglory at a prestigious university

A.Y.OWEN/THELIFE

PICTU

RECO

LLEC

TION/G

ETT

YIM

AGES

BOOKS‘I applied for the University of Life. Didn’t get the grades.’ —DAVID NICHOLLS

BY EMILY BOBROW

MARK BRUMFELD is angry. At 31he is jobless, jilted and deep indebt. His hopes of becoming ahard-hitting journalist founderedwhen magazines traded investi-

gative features for tips on wearing a pocketsquare. His Ph.D. in literature left him with whop-ping credit-card bills. He can no longer affordNew York, particularly after blowing his savingson an engagement ring his girlfriend rejected. So,with a head full of rage and his tail between hislegs, he moves in with his parents in suburbanBaltimore. There, in the basement bedroom of hisyouth, he spawns the Boomer Boomers, a revolu-tionary group of unemployed millennials whoaccuse baby boomers of selfishly clinging to allthe good jobs. “They were meant to retire at theage of sixty-five,” Mark declares in the first ofmany homemade videos to go viral. “And theyhave not retired. They have not.”

Intergenerational warfare, sparked by the unfor-giving economics of the new millennium, is a greatpremise for a novel. With “Boomer1” Daniel Tordayis clearly enjoying himself. He tells the story ofMark and his burgeoning movement from thepoints of view of Mark, his mother, Julia, and hisgirlfriend, Cassie. All inhabit a world rife withconspicuous winners and losers.

Mark, for example, can trace his revolutionaryfervor to the realization that he would never liveas comfortably as his former professor—a boomerwhose books sell poorly but who somehow owns aBrooklyn Heights brownstone. Cassie, meanwhile,lucks into a cushy job in the “Native ContentDivision” of a media startup called RazorWire,where she edits advertiser-backed clickbait. (Mr.Torday nicely skewers the way “content” nowtends to describe material that is content-free.) Atparties, fellow millennials kvetch over the need “torelease the palsied prehensile claw of the babyboomers from the scarce resources in thiscountry.” That these would-be radicals nursebourgeois aspirations and prize their parents’music is something they conveniently overlook.

For a book animated by the gripes of youngpeople, it is interesting that the most fully realizedcharacter here is Julia. Mark’s mother, a gifted folkmusician, cuts a lonely figure, having traded herdreams of traveling the world as a fiddler toinstead become a suburban housewife. Her storyhighlights some of the fatuousness of makingbroad generational generalizations, not leastbecause most female boomers have had lessagency than their daughters. She also poignantlyillustrates the slow but steady creep of time, andthe way “old” age often arrives as a surprise.

Mr. Torday has written this book with verve, but itwould have been nice if he had slowed down a bit.Mark and Cassie’s relationship feels rushed, and someof their choices seemmore convenient than plausible.Still, “Boomer1” is a sharp, bright and often amusingsnapshot of this unwieldy economic moment.

Ms. Bobrow, a former editor for the Economist,is a journalist based in New York.

Boomer1By Daniel Torday

St. Martin’s, 342 pages, $27.99

RetireOr We’llRetire You

THEWALL STREET JOURNAL. * * * * Saturday/Sunday, September 15 - 16, 2018 | C11

BY MOIRA HODGSON

ACHEERY, JIGGLINGbowl of Jell-O is, inthe words of the oldadvertising slogan,America’s Most Fa-

mous Dessert. But Allie Row-bottom’s memoir of her family,heirs to the Jell-O fortune, is nei-ther sweet nor wistfully nostalgic.It is a dark, disturbing story of pa-triarchy, oppression and sickness,alternating with a meticulouslyresearched feminist history of theJell-O business and its marketingcampaigns directed at women.

Jell-O brand gelatin is madefrom boiling the hides of animals(usually cows and pigs) processedfor their meat. The first Jell-Ofactory opened in 1897 in the townof LeRoy, in upstate New York, andMs. Rowbottom’s great-great-great-uncle bought the business for $450in 1899. Twenty-six years later, itwas sold for $67 million.

In LeRoy, Ms. Rowbottom writes,“Trucks arrived each week heapedwith the dusty remnants of tissueand bone, ready to be mixed withsweetness and dye to make thefirst Jell-O flavors—strawberry,raspberry, orange, or lemon.” Foryears the water from the factoryran into the town’s creek, turning itdifferent colors from the dyes (thebusiness was moved to Delawarein 1964).

As the 20th century progressedand cooks who worked in privatehomes left them for more lucrativefactory jobs, women in middle-classfamilies saw Jell-O as a quick andeasy dessert that they could makethemselves. For their edification,the company published booklets ofsimple instructions and recipes. Ms.Rowbottom writes: “How sweet andcunning these booklets were, teach-ing women all over America how tomake the perfect Christmas fruitmold, Cherry Cheese Charmer,cranberry squares; teaching womenhow to mold their Jell-O, so pliable,so good; teaching them how tomold themselves to match it, pli-able and good.”

Norman Rockwell (who else?)was the artist hired to depict thevirtues of the Jell-O girl. In theprint ads, “it was important that

Father sit at the head of the table,dispensing wisdom; it was imper-ative that Mother serve healthy,well-balanced meals. Mental andphysical nutrition must be tendedto. And Jell-O was here to help, tonourish and cajole, to serve as thecenterpiece of social order.”

Ms. Rowbottom contends thatthe Jell-O Company had boughtinto “the myth of patriarchy bybuilding a fortune predicated onthe myth of domesticity and the re-duction of a woman’s worth to herculinary concoctions.” Her mother,Mary, called patriarchy the “Jell-Ocurse” and was convinced that thiscurse had plagued female membersof her family with repression,trauma and sickness. Mary believedpatriarchy had made her ownmother, Midge, suppress her long-cherished artistic ambitions inorder to raise children, and that ithad also caused her (when Marywas 14) to die of cancer. Patriarchy

led doctors to dismiss Mary’s ownphysical complaints as “hysteria,”failing to diagnose her cancer untillate.

Ms. Rowbottom begins her storyin a hospital room where she isfeeding her sick mother spoonfulsof Jell-O, the only food she can eat.(She hates the stuff!) The twowomen watch a television newsreport about a group of 18 girls inthe same LeRoy where Jell-O hadbeen founded who fell victim in2011 to debilitating tics andtwitches. Ms. Rowbottom and hermother become obsessed by thestory of these girls whose ailmentswere eventually diagnosed as “masspsychogenic illness” and “conver-sion disorder,” the transformationof emotional stress into physicalsymptoms.

While some believed the girls’“mystery illness” was indeed emo-tional, others thought it might havebeen caused by a toxic element in

Jell-O Girls:A Family HistoryBy Allie Rowbottom

Little, Brown, 277 pages, $28

the town, such asthe chemicals fromthe Jell-O factorythat had long flowedthrough the creek.(In Europe boxesnow come with a la-bel warning of possi-ble carcinogenic in-gredients, includingRed Dye No. 40.)

Mary, Ms. Row-bottom writes,believed the girls inLeRoy suffered“because they livedbeneath the weightof an insular andconservative com-munity, one that wasitself colored byJell-O, which wasitself cursed by itscomplicity in con-forming and moldingwomen.” To Marythese girls, withtheir Tourette’s-liketwitching, “expressin the present therepression of thepast. They embodythe disappointmentof a life in whichsatisfaction stemswholly from a well-manicured lawn, awe l l -man icuredhand, well-behavedchildren; checkingand savings accounts

well balanced and safe; a perfectJell-O salad, so light and clean andwholesome.”

Like her mother before her,Mary succumbs to cancer, but onlyafter a 23-year struggle. Ms. Row-bottom’s accounts of her illness areharrowing and hard to read. In2015, shortly before Mary died athome at age 70, Ms. Rowbottommade her a ceremonial dessert con-sisting of a mass of black-cherryJell-O topped with Reddi-wip andcandles. Mary came into the roomclad in a fluffy white bathrobe andfestive paper crown, and she andher daughter slowly walked “arm inarm toward the kitchen table,where a jiggling birthday moldwaited, offering, inviting, the lastmeal she’d ever eat.”

Ms. Hodgson is the author of“It Seemed Like a Good Idea atthe Time: My Adventures in Lifeand Food.”

They Broke the Mold

SWEETS Advertisement by Norman Rockwell, printed in the Saturday Evening Postbeginning in October 1923.

THEKRAFT

HEINZCO

MPA

NY

BOOKS‘We spend our entire lives avoiding Jell-O but it is always there at the end, waiting.’ —JOHN GRISHAM

MYSTERIESTOMNOLAN

CHRISTOPHER MARLOWECobb, an American abroad in1915, is the resourceful heroof Robert Olen Butler’s“Paris in the Dark”

(Mysterious Press, 231

pages, $26). The alienatedson of a famous stageactress, Cobb plays several

roles in his life. As “Kit” Cobb, he’s a foreigncorrespondent for a Chicago newspaper. Butas Josef Wilhelm Jäger—and sometimesJoseph Hunter—he disguises himself as awriter for a syndicate of American German-language publications. Why the need to blurhis identity? Because he’s also a secret agentworking for the United States government.

Mr. Butler’s fourth entry in his Cobb seriesfinds the hero in Paris before America hasentered the Great War. The journalist-agent’scovert assignment is to find and neutralizethe (presumably German) terrorist who hasbegun exploding bombs in Parisian night-spots. The obvious place to start lookingwould be among the refugees flooding intothe capital—most of whom, a French officialtells Cobb, are victims worthy of compassion.But some of them are “wolves in immigrantclothing . . . each . . . a potential weapon farmore effective than any Zeppelin.”

Along the way, Cobb makes the acquain-tance of some young American volunteerambulance drivers—and becomes involvedwith a caring and spirited nurse. One of thepleasures of Mr. Butler’s series lies in how

the author brings anearlier era to suchconvincing life throughdetails, attitudes andreactions at once realisticand surprising. “Paris inthe Dark,” with its ironictwists, is a bit reminiscentof Somerset Maugham’sWorld War I espionagetales, and Kit Cobb canhold his own withMaugham’s Ashenden orany other fictional spy.

Andrew Gross’s “ButtonMan” (Minotaur, 371

pages, $27.99) takes placefor the most part in New

York in the 1930s and unfolds with theurgency of a vintage black-and-white moviefrom Warner Bros. Its supporting cast in-cludes real-life figures, such as the gangstersLouis “Lepke” Buchalter and Dutch Schultzand the prosecutor Thomas Dewey. But itsmain character is Morris Raab (born Rabi-shevsky), a stubborn Lower East Side kid with“a whole lot of moxie” who becomes one ofthe most successful garment men in the city.

Trouble looms in the form of Lepke,another Lower East Side native who seizescontrol of existing garment-trade unions andturns them into instruments of extortion.Those who oppose him suffer grievous injuryor death. Crusader Dewey wants Raab tospill what he knows about Lepke’s illegalacts. But Raab is scornful at first: “What is ityou want to know? How the cops are all paidoff and don’t lift a finger against him? Howthe DA’s office has Lepke’s own men insideit?” But when Lepke strikes too close tohome, Raab signs onto Dewey’s team.

Mr. Gross’s direct style is full of sentimentbut never maudlin and well-suited to scenesof violent action. Young Raab learns early tocultivate “zip,” that ineffable quality ofsharpness and drive. “Button Man” hasplenty of zip—and a lot of moxie, too.

No one could say of “CharlesgateConfidential” (Hard Case Crime, 383 pages,

$22.99), the impressive debut novel by filmcritic Scott Von Doviak, that it lacks gump-tion. This inventive chronicle of an audaciousBoston art theft and its prolonged aftermathunfolds in alternating chapters on threedifferent chronological tracks—1946, 1986and 2014. Piecing the story and its large casttogether can seem like solving a three-dimensional jigsaw puzzle in the mirror.But the challenge is a worthy one, and thefinished product is immensely enjoyable.

Central to the saga is the Charlesgate Hotel,a turn-of-the-century structure fallen, by 1946,on seedy times. Dave T, who runs an illegalpoker game there, cooks up a scheme to robthe Isabella Stewart Gardner Museum—alsoin Boston—and coerces two brothers intohelping. When the duo beat him to his ownplan to double-cross them, the multimillion-dollar spoils go missing—and stay so fordecades. In 1986, by which time the Charles-gate has become a college dormitory, journal-ism student Tommy Donnelly researches amultipart history of the building for the schoolpaper. The pieces he writes have a ripplinginfluence on police detective Martin Coleman’s2014 investigation into the murder of a realtorinside an empty unit at the Charlesgate, nowan upscale condominium complex.

Mr. Von Doviak finds the appropriate tonefor every occasion in this unpredictablenovel, whose moods range from hard-boiledto slapstick to gothic. Even the author’safterword is entertaining, ending with thesentence: “Please tell all your friends to buythis book.” Consider it done.

Taking aJourneyInto the Past

THIS WEEK

Paris in theDarkBy RobertOlen Butler

Button ManBy AndrewGross

CharlesgateConfidentialBy ScottVon Doviak

Yiddishstoriesaren’t soold, butthey

have thefeelingof

comingfrom along

time ago.

LISTEN HERE, children, doyou want to know some-thing? Once upon a time inthe 20th century there werestorytellers who wrote onlyin Yiddish. They were menand women such as JacobKreplak (1885-1945), LeonElbe (1879-1928) and RachelShabad (1898-1974), and theydreamed up stories abouttalking mushrooms and flyingsnakes and boys with skinlike diamonds and the loneli-ness of the moon. If youwanted to read the storiesyou couldn’t, unless you knewYiddish, but what? Now youcan read them, because DavidStromberg and some otherscholars have translated thestories for the first time foran illustrated book called “In

the Land of Happy Tears”

(Delacorte, 168 pages,

$17.99), which is good forchildren 10 and older.

It’s like this. The storiesaren’t so old, but they havethe feeling of coming from along time ago. If you’ve everread folk or fairy tales, thenyou know that some parts aredetailed, some parts arevague, and dramatic thingshappen. For example, JacobReisfeder (1890-c. 1942) tellsabout a little boy who argueswith a king to save his toybrass samovar from beingmelted down to make bullets.The boy has “blond hair andblue eyes that were unusuallylovely and intelligent,” andhis samovar is “artfully madeand decorated with red silkribbons and fringed paperstreamers.” You know thatthe boy is going to be OK. Butwhat about the two foolishministers who work for KingYuhavit? (He’s called Yuhavit“because after almost everythird word, he’d say, ‘Thereyou have it.’ ”) Nothing goodhappens to them, that’s what.When Moyshe Nadir(1885-1943) tells that story,everybody dies in the end:

“And now everything isas it should be.”

And don’t evenask how manyunexpected turnsof fate there arein this book!Adult twins knockeach other out ina twisted game of

copycat. A boy whotears the legs off

grasshoppers and wringsthe necks of sparrows getsthe shock of his life. Ajealous guest gets paralyzedby his own wickedness at a

rabbi’s fancy dinner party.“The world reflected in theirstories is not always simple,but its manifold inhabitantsare never altogetherdiscouraged,” Mr. Strombergexplains in his introduction.“Theirs is a land where hap-piness comes with tears—andwhere even tears are happy.”

Paul of Tarsus didn’t speakYiddish, because it hadn’tdeveloped yet, but heprobably spoke Greek andAramaic and some Latin, andcould write in Hebrew, too.In the chatty, color-washedpages of Chris Raschka’sepistolary picture book“Paul Writes (a Letter)”

(Eerdmans, 40 pages, $17)

we meet the apostle as abalding old man (see left). Anote of introduction presentsthe Christian saint as “afaithful and learned manwho, in the middle of his life,began to believe in the storyof the life and teachings ofJesus,” which, while true, isa rather bland way ofpresenting one of history’smost sensational conversions.In the New Testament, thezealous Christian-hunter thenknown as Saul gets knockeddown and blinded by a light

from heaven, hears a voiceasking “Saul, Saul, why areyou persecuting Me?” anddoesn’t regain his sight forthree days, at which point hedevotes the rest of his life toevangelizing.

In Mr. Raschka’s excerptsfrom the Pauline missives, hecaptures the famous convert’smingling of the personaland the theological usinginformal, even playfullanguage. “Dear Friends inCorinth,” he has Paul writeat one point. “Don’t beold lumps of bread. Be newlumps of bread.” The warmreds and golds that fill thepages of Paul’s letter writingas he travels around theMediterranean give way togloomier blues midwaythrough the book, when hehas to compose from behindbars. “Don’t be ashamed ofwhat you believe in,” Paulwrites to Timothy, in thisgentle, engaging book for6- to 8-year-olds. “It has beendifficult for me too, and nowI am a prisoner in Rome.”

“There is always morethan meets the eye when itcomes to creatures of allkinds,” Kate Gardner writesin “Lovely Beasts” (Balzer +

Bray, 48 pages, $17.99), apicture book filled with soft-edged illustrations by HeidiSmith and soft surprisesabout the nature of a dozendifferent animals. “Fierce”would seem to capture theglowering mountain gorillawe first encounter. Turn thepage, though, and he iscradling a baby: “Papa.” Brieflines of text elaborate eachanimal’s unlooked-for quali-ties in this captivating collec-tion for children ages 3-8.

Unexpected Turns of Fate

CHILDREN’SBOOKSMEGHAN

COX GURDON

THIS WEEK

In the Land ofHappy TearsBy David Stromberg et. al.

Paul Writes (a Letter)By Chris Raschka

Lovely BeastsBy Kate GardnerIllustrated by Heidi Smith

EERDMANS

C12 | Saturday/Sunday, September 15 - 16, 2018 * * * * THEWALL STREET JOURNAL.

HardcoverNonfictionTITLEAUTHOR / PUBLISHER

THISWEEK

LASTWEEK

Girl,Wash Your Face 1 1Rachel Hollis/Thomas Nelson

21 Lessons for the 21st Century 2 NewYuval Noah Harari/Spiegel & Grau

The Russia Hoax 3 3Gregg Jarrett/Broadside Books

StrengthsFinder 2.0 4 4Tom Rath/Gallup Press

Magnolia Table 5 6Joanna Gaines & Marah Stets/William Morrow & Co.

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THISWEEK

LASTWEEK

The Subtle Art of Not Giving a F*ck 6 5Mark Manson/Harper

The RestlessWave 7 2John McCain/Simon & Schuster

Educated 8 7Tara Westover/Random House

12 Rules for Life 9 10Jordan B. Peterson/Random House Canada

Every Day Is Extra 10 NewJohn Kerry/Simon & Schuster

HardcoverFictionTITLEAUTHOR / PUBLISHER

THISWEEK

LASTWEEK

DogMan: Lord of the Fleas 1 1Dav Pilkey/Graphix

Leverage in Death (Book 47) 2 NewJ. D. Robb/St. Martin’s Press

In His Father’s Footsteps 3 NewDanielle Steel/Delacorte Press

TheHate UGive 4 4Angie Thomas/Balzer & Bray/Harperteen

Texas Ranger 5 2James Patterson/Little, Brown and Company

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THISWEEK

LASTWEEK

The President IsMissing 6 5J. Patterson & B. Clinton/Little, Brown and Company

Dark Sentinel 7 NewChristine Feehan/Berkley Books

DogMan and Cat Kid 8 7Dav Pilkey/Graphix

Depth ofWinter 9 NewCraig Johnson/Viking

The Fall of Gondolin 10 3J.R.R. Tolkien/Houghton Mifflin

Methodology

NPDBookScangatherspoint-of-salebookdata frommore than16,000 locationsacross theU.S.,representingabout85%of thenation’sbooksales.Print-bookdataproviders includeallmajorbooksellers (now inclusiveofWalmart) andwebretailers, and foodstores. E-bookdataprovidersincludeallmajor e-book retailers. Freee-booksandthosesold for less than99centsareexcluded.The

fictionandnonfiction lists inall formatsincludeadult, youngadult, and juveniletitles; thebusiness list includesonlyadult titles. The combined lists tracksalesby title acrossall print ande-book

formats; audiobooksareexcluded.ReferquestionstoAdam.Kirsch@wsj.com.

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Sapiens 1 –Yuval Noah Harari/HarperCollins Publishers

Girl,Wash Your Face 2 1Rachel Hollis/Thomas Nelson, Inc.

Educated 3 2Tara Westover/Random House Publishing Group

Quiet 4 –Susan Cain/Crown/Archetype

21 Lessons for the 21st Century 5 NewYuval Noah Harari/Random House Publishing Group

Small Fry 6 NewLisa Brennan-Jobs/Grove/Atlantic, Inc.

In Order to Live 7 –Yeonmi Park/Penguin Publishing Group

The Reason I Jump 8 –Naoki Higashida/Random House Publishing Group

Wild 9 –Cheryl Strayed/Knopf Doubleday Publishing Group

Not in Front of the Corgis 10 –Brian Hoey/Biteback Publishing, Ltd.

NonfictionCombinedTITLEAUTHOR / PUBLISHER

THISWEEK

LASTWEEK

Girl,Wash Your Face 1 1Rachel Hollis/Thomas Nelson

Sapiens 2 –Yuval Noah Harari/Harper Perennial

Educated 3 3Tara Westover/Random House

21 Lessons for the 21st Century 4 NewYuval Noah Harari/Spiegel & Grau

The Russia Hoax 5 4Gregg Jarrett/Broadside Books

Small Fry 6 NewLisa Brennan-Jobs/Grove Press

The Subtle Art of Not Giving a F*ck 7 5Mark Manson/Harper One

The RestlessWave 8 2John McCain & Mark Salter/Simon & Schuster

YouAre a Badass 9 6Jen Sincero/Running Press Adult

12 Rules for Life 10 9Jordan B. Peterson/Random House Canada

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Leverage in Death (Book 47) 1 NewJ. D. Robb/St. Martin’s Press

Dark Sentinel 2 NewChristine Feehan/Penguin Publishing Group

In His Father’s Footsteps 3 NewDanielle Steel/Random House Publishing Group

Crazy Rich Asians 4 2Kevin Kwan/Knopf Doubleday Publishing Group

HerMother’s Grave 5 –Lisa Regan/Bookouture

Field of Bones 6 NewJ. A. Jance/HarperCollins Publishers

Depth ofWinter 7 NewCraig Johnson/Penguin Publishing Group

China Rich Girlfriend 8 4Kevin Kwan/Knopf Doubleday Publishing Group

Y is for Yesterday 9 –Sue Grafton/Penguin Publishing Group

Flirtingwith Forever 10 NewKendall Ryan/Kendall Ryan

FictionCombinedTITLEAUTHOR / PUBLISHER

THISWEEK

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Leverage in Death (Book 47) 1 NewJ. D. Robb/St. Martin’s Press

DogMan: Lord of the Fleas 2 1Dav Pilkey/Graphix

Crazy Rich Asians 3 2Kevin Kwan/Anchor Books

In His Father’s Footsteps 4 NewDanielle Steel/Delacorte Press

Dark Sentinel 5 NewChristine Feehan/Berkley Books

ToAll the Boys I’ve Loved Before 6 3Jenny Han/Simon & Schuster Books for Young Readers

China Rich Girlfriend 7 5Kevin Kwan/Anchor Books

Depth ofWinter 8 NewCraig Johnson/Viking

Rich People Problems 9 8Kevin Kwan/Anchor Books

Field of Bones 10 NewJ. A. Jance/William Morrow & Company

HardcoverBusinessTITLEAUTHOR / PUBLISHER

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StrengthsFinder 2.0 1 1Tom Rath/Gallup Press

Emotional Intelligence 2.0 2 3Travis Bradberry & Jean Greaves/TalentSmart

ExtremeOwnership 3 5Jocko Willink & Leif Babin/St. Martin’s Press

TotalMoneyMakeover 4 7Dave Ramsey/Thomas Nelson

Bad Blood 5 8John Carreyrou/Knopf Publishing Group

The Five Dysfunctions of a Team 6 4Patrick Lencioni/Jossey-Bass

Winners TakeAll 7 2Anand Giridharadas/Knopf Publshing Group

The Energy Bus 8 6Jon Gordon/Wiley

Principles: Life andWork 9 –Ray Dalio/Simon & Schuster

Creative Selection 10 NewKen Kocienda/St. Martin’s Press

Best-Selling Books | Week Ended Sept. 9With data from NPD BookScan

Schumann: The Faces andthe MasksBy Judith Chernaik

Knopf, 349 pages, $30

BY MICHAEL O’DONNELL

PICTURE A MAN swoon-ing and raging with allthe passions of youth.Every problem is acrisis, each feeling an

ocean. His commitment to politicaland artistic freedom yields only to theirrepressible truths of love andbeauty. Put that exhausting spirit tomusic and you have the tragicRomantic composer Robert Schu-mann. His diaries repeatedly refer tothe worst day or night or week of hislife. He spent his free time wanderingthe countryside and yearning. In thefirst of several autobiographies, hewrote: “Already in my eighth year—ifone can believe it—I learned to knowthe art of love.” The superintendent’sdaughter Emilie was his paramour.

Today’s reader might confront sucha person and ask him to calm down.Yet Schumann (1810-56) not onlyembodied the spirit of his age, he con-verted his existential anguish and ro-mantic ardor to music. He composedsome of his best work while longingfor his future wife, Clara Wieck,whose father forbade their union.Likewise, Schumann wrote his finestsongs in the Lieder tradition by quit-ting his desk and taking to the hills.As Judith Chernaik relates in “Schu-mann: The Faces and the Masks,” hestopped composing at the piano andbegan crafting songs “while takingwalks in which the poems assumedmelodic shape.” The accompanimentscame later, upon returning home.

Ms. Chernaik, an American whohas lived and taught in London formore than 30 years, is well-positioned to undertake a biographyof Schumann, even though the path iswell-trod. (Several other biographiesin English as well as the composer’scollected letters have appeared in thepast decade.) A novelist and aca-demic specialist on the poetry ofShelley, she is an enthusiastic studentof Schumann’s music and a finechronicler of his turbulent life. “TheFaces and the Masks” is a well-proportioned, highly readable biogra-phy for general readers that estab-lishes Schumann as a man thoroughlyof his time.

The book’s greatest contribution isto situate Schumann in a remarkablefraternity of 19th-century composers.He knew and admired contemporariesfrom Chopin to Liszt, but his most im-portant colleague was Felix Mendels-sohn, who earned fame before hisyounger friend and did all he could topromote Schumann’s works. Theywere “two sensitive, prickly compos-ers of genius,” Ms. Chernaik writes.“Schumann admired Mendelssohnabove all other musicians, but therewere recurrent tensions,” including“an insidious mixture of envy and

resentment.” Mendelssohn served asgodfather to one of Schumann’s chil-dren and was namesake to another.The two composers fell out for ambig-uous reasons that may have had to dowith anti-Semitism. Yet Schumannwas devastated by Mendelssohn’sdeath and served as a pallbearer tothe man he called “a true God.”

Still, no relationship in Schumann’slife can compare with the remarkablepartnership he shared with his wife,Clara, a composer and virtuosoconcert pianist. The two were child-hood playmates; Schumann tookpiano lessons from Clara’s father,Friedrich Wieck. Schumann’s ownperforming career was cut short whenhe injured three of his fingers with acontraption meant to strengthen thehand. Yet, unlike Clara, he lackednatural brilliance at the piano and so

decided to devote himself to compo-sition. Wieck steadfastly opposed thecourtship, which took place beforeSchumann had earned a name forhimself. The obstacles Wieck placedin the way of the two lovers can makehim seem almost a cartoon villain.Schumann even successfully sued himfor defamation, landing his futurefather-in-law a short prison sentence.

Ms. Chernaik casts new light onWieck’s motivations. She quotes froma previously unpublished letter con-firming the reason for the paterfamil-ias’s divorce from Clara’s mother,Mariane. The cause was infidelity. Theletter to Wieck from Mariane’s fatherreads: “Never would I have believedthat Mariane could sink so low . . .and I cannot understand even nowhow she can have become what shenow is. My God! Must I and my dear

wife in our old age live through suchdisgrace from a child whom I raisedwith so much care?”

Ms. Chernaik writes that this be-trayal may have motivated Wieck’simplacable hostility to a match be-tween Clara and Schumann. “Was itpossible that Clara, his darling, hiscreature, had inherited her mother’slow character? He could not bear thethought that having lost her mother,he would now lose his daughter.”Some will write this off as specu-lation or armchair psychology—but itis certainly plausible. In any event,the letter is a remarkable discovery.

Once the couple had united, Claraserved as breadwinner by concertiz-ing across Europe, leaving her be-loved husband the freedom to com-pose. She was his greatest champion,and the two artists’ devotion to each

PASSIONATE Robert Schumann circa 1835.

other is extraordinary. Their arrange-ment left Clara less time for her owncomposing, but Ms. Chernaik insiststhat her choices were hers alone:“Although it has been fashionable toconsider her a victim of contempo-rary attitudes toward women com-posers, it was her own decision toput Schumann’s needs as both a manand an artist ahead of her own. Shewas always the stronger of the two,and her fame as the greatest womanpianist in Europe far outshone Schu-mann’s uncertain reputation.”

Schumann worked with all thefury of a Romantic: quickly, in pas-sionate, frenetic bursts. Many of hisworks have entered the standardconcert repertoire, including the songcycle “Dichterliebe” (“A Poet’s Love”),the exquisite piano trios, the foursymphonies (especially the “Rhe-nish”), and the concertos for celloand piano. Yet in later years, asmental illness began to appear, hiscompositions became uneven. Andthroughout his composing life, hecould seem overwhelmed by admira-tion for his forebears. He labored inthe shadow of Schubert’s songs,

Beethoven’s symphonies, and Bach’sand Chopin’s works for keyboard. Ms.Chernaik is an ardent admirer ofSchumann’s music and asserts thateach of his compositions bears hisown stamp. It is possible for that tobe true and also to say that Schu-mann’s corpus lacks the shine ofutter originality that characterizesthe very greatest musical artists.

Yet no one can disagree that hisvoice was silenced prematurely. In1854 a syphilitic infection from 25years earlier led to a mental break-down, attempted suicide and eventualcommitment in an asylum, whereSchumann slowly succumbed togeneral paralysis. He died in agonytwo years later, at age 46. And yet inhis final months, the two greatthemes of his life brought comfort:Clara’s undying love and affection,and the fellowship of other musi-cians, in this case, the young Jo-hannes Brahms. (Brahms visited theailing composer and comforted Clara,even falling in love with her, andlater the two edited and presentedSchumann’s complete works.) Still, itwas a terrible end to Schumann’sstory—and also terribly Romantic.

Mr. O’Donnell is a lawyer in theChicago area. His writing hasappeared in the New York Times,the Atlantic and the Nation.

ADreamer at the Piano

Schumann not onlyembodied the spirit ofhis age, he convertedhis existential anguishand romantic ardorto music.

BOOKS‘[Music] is the most romantic of all the arts—one might almost say, the only genuinely romantic one—for its sole subject is the infinite.’ —E.T.A . HOFFMANN

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