Little Stories (Using Poker as a Metaphor)

Early in The Making of the President 1972, the fourth and final (formal) installment of Theodore H. White’s series on presidential elections, White discusses the monumental decision of Richard Nixon’s administration to end the free conversion of U.S. dollars to gold at a fixed value -- i.e., the removal of the gold standard.

This event happened quite abruptly, going into effect on August 15, 1971. It was announced that night by the president in a televised speech that also listed several other significant economic measures, including another huge one to impose wage and price controls (a 90-day freeze).

Together these measures are sometimes referred to as the “Nixon shock,” which politically speaking helped Nixon immensely in the way it produced immediate effects (helping the economy avoid a downturn during the following election year) while also giving the impression that Nixon had done something meaningful -- had acted, not sat by passively -- in response to a coming economic crisis. (That latter point is one White fleshes out in the section). Meanwhile the longer-term effects are still being debated (and are beyond the scope of this post).

There’s one moment early in the discussion where White is rapidly explaining how much the world had changed in the quarter-century following WWII. Following the war, the U.S. was by default in the position of providing economic and trading stability to the rest of the world. “Other nations’ money might fluctuate in value with the tides of world trade,” explains White, “but they would fluctuate only in relation to each other, while at the center stood the U.S. dollar, rigid, its strength firmly socketed in gold.”

By the early 1970s, though, the economic supremacy of the U.S. was no longer quite so unamiguous. Other countries’ economies had built back up to the point of being competitive, in part (explains White) because of the U.S. having been generous with aid over those years. “So strong was America in those days that its overpowering investment in science and fundamental research was thrown open to the entire world,” writes White, who also notes other forms of civilian aid to foreign countries.

That’s when White uses a poker metaphor to describe the situation, and in fact it’s a familiar one to those of us who know our Nixon.

“Uncle Sam sat like a winning poker player at the head of the table, giving away chips to the losers, even tipping his hand when necessary just to keep the game going,” writes White.

I say this is a familiar comparison, because Nixon himself used this exact analogy in a speech he subsequently gave on September 9, 1971 to the House Chamber at the Capitol in which he addressed the country’s economy and its relationship to other countries.

Like White, Nixon in the speech points out the “nearly $150 billion in foreign aid, economic and military, over the past 25 years” the U.S. had doled out, then turns to talk of how the U.S. “will remain a good and generous nation -- but the time has come to give a new attention to America’s own interests here at home.”

“Fifteen years ago a prominent world statesman put this problem that we confronted then in a very effective way,” says Nixon. “He commented to me that world trade was like a poker game in which the United States then had all the chips, and that we had to spread them around so that others could play. What he said was true in the 1940’s. It was partially true in the fifties and, also, even partially true in the early sixties. It is no longer true today. We have generously passed out the chips. Now others can play on an equal basis -- and we must play the game as we expect and want them to do. We must play, that means, the best we know how. The time has passed for the United States to compete with one hand tied behind her back.”

I’m not completely sure, but I believe the statesman to whom Nixon refers might be Winston Churchill, who did play poker occasionally (including once famously with Harry Truman). (The reference to 15 years before suggests one of RN’s meetings with Churchill when Ike’s VP.) In any event, it’s essentially the same point White makes, although White doesn’t quote or allude to the speech to Congress when he makes the analogy (making it seem perhaps as though he’d come up with it on his own).

Incidentally, Nixon and his aides can be heard on the White House tapes discussing this passage a lot both before and after the speech.

A couple of days before, Raymond K. Price (a Nixon speechwriter) isn’t so sure about it, saying “it’s a good image... uh... the poker game,” but adding “there would be some people who would think it inappropriate to talk in terms of a poker game.” But Nixon responds “it would be inappropriate if Harry Truman did it, but it’s not for me. See, most people don’t think I play poker.”

This was true. Nixon’s poker-playing background wasn’t a secret -- in fact, it had been described at length in a Life magazine cover story about “The Young Nixon” in November 1970 -- but it wasn’t nearly as well known among most of the public as was Truman’s penchant for poker.

Then after the speech the tapes reveal Charles Colson and Bob Haldeman congratulating him for the speech as a whole and the poker passage in particular. It’s a “catch line,” as Colson calls it -- that is, a memorable image or metaphor that sticks with the listener and thus conveys the message more effectively. “Even kids understand that,” says Haldeman of the reference to having “generously passed out the chips.”

“Kids play games, you know?” says Haldeman. “That’s the thing my family was talking about, the chips,” adds Colson. “It’s vivid and it’s illustrative and they understand it... and that hit a hell of a [nerve].”

“I can’t emphasize too strongly about this,” Nixon interrupts. “Every damn speech I’ve made, that what people remember... [you say] ‘What the hell do they remember about that speech?’ They remember the little stories. They remember the story about the chips, right...? It’s the little stories, the illustrations, that people... uh, people love.”

The line does convey the idea, no doubt. It’s memorable, too, which is why when reading White I immediately recognized it.

Image: Richard Nixon Foundation.

On the Economy & the 2009 WSOP

We’re getting close, peoples. Just a week more and satellites get crankin’ at the Rio. On Wednesday, May 27th, Event No. 1, the Casino Employees Event, a $500 buy-in no-limit hold’em tourney, gets started. Then on Thursday at noon the real World Series of Poker begins with the “Special 40th Annual No-Limit Hold’em” event (Event No. 2), that $40,000 buy-in event everyone’s been talking about for weeks now.

Then all hell breaks loose.

One new event starts each day from Wed. through Sat. next week. Then the following week, we’ll slip into the routine of having two separate events start each day, meaning there will usually be around five or six different tournaments going on at once, with a couple of final tables each day.

Am noticing that on Wednesday, June 3rd there will be a whopping seven different events going on, including three final tables, all starting at 2 p.m. Vegas time. (I think that has to be a record.) I don’t see any other days on the 2009 schedule with seven events running. It’s the conclusion of that $1,000 buy-in no-limit hold’em Event No. 4, the “stimulus special,” that’s causing the pile-up there, I believe. That’s a four-day event, though really five days as it will have a couple of day ones.

So whaddya think? Too many events? There are 57 bracelets being awarded at this year’s WSOP (a new record). Is the WSOP spreading itself too thin?

Everyone’s wonderin’ about the numbers, specifically whether recent economic woes might affect turnouts. Casino revenues have certainly experienced a significant downturn. The Las Vegas Sun reported in late January that casino revenues had decreased markedly in 2008, and that the trend was expected to continue in 2009. A more recent article over on PokerNews Daily reports how Nevada has seen fifteen straight months of decline in gaming revenues (when months are compared year over year), with the drop-offs over the last six months ranging from 11.61% (March 2008 to March 2009) to 22.33% (October 2007 to October 2008).

There was another interesting article over on Poker News Daily yesterday in which Dan Stewart, the owner of PokerScout (that site that tracks traffic on all of the sites), is interviewed regarding the current health of online poker.

That article appears to have been specifically occasioned by the recent spate of overlays in Full Tilt Poker’s FTOPS XII, including an eye-popping $200,000-plus overlay in the $2.5 million-guaranteed Main Event. According to Stewart, Full Tilt’s decision to run a “mini-FTOPS” alongside the regular FTOPS -- mirroring the main events with similar events costing one-tenth the buy-ins -- appears to have affected turnouts for the big events. Says Stewart, the decision to run a mini-FTOPS was a “mini-disaster” that “cannibalized the business from the big tournaments.” Of course, Stewart also points out that Full Tilt nevertheless is doing just fine, as is the rest of the online poker world, which is “quite healthy” clicking along at an overall 30% increase in revenue over last year.

So live casino games are hurting. But online poker is as healthy as its ever been. What about the WSOP?

There was some discussion of the economy and its possible effect on the WSOP on last week’s episode of The Poker Beat (the 5/14/09 show). The consensus there seemed to be that the currently ailing economy would not have much effect on turnouts.

John Caldwell is now a regular co-host on TPB. Unfortunately, I won’t be working with Caldwell this summer as he is no longer with PokerNews, although I’m sure I’ll see him out there somewhere along the way. According to Caldwell, the WSOP tends to thrive no matter what the economy is doing, being, as he calls it, “the exception to the rule.” He goes on to point out that “the prestige and the cachet of the event sort of insulate it from... the [failing] economy.... Now, it may be an issue in certain specific events... [but] I don’t think it’s going to be much of a factor [overall].”

Caldwell is probably right, although I do think it will be interesting to watch how the field sizes in the $1,500-$2,500 events compare to those of the $5,000, $10,000, and higher buy-in events. The smaller buy-in events are always much more popular, but I wonder if perhaps we’ll see an even more severe “class difference” happening this year, with just the same 200-300 players turning up for the higher buy-in events, while the hoi polloi stick with the smaller buy-in tourneys. (Sort of a WSOP and a mini-WSOP, in a sense.)

I, for one, am hoping for big fields and a highly successful WSOP, although I know it could turn out otherwise. Selfish, I know, as a thriving poker economy certainly is good news for someone like me.

In any event, it’s gonna be a busy time for your humble gumshoe, no matter how the turnouts turn out.

Economics Is Hard

Over the weekend Vera and I attended a dinner party and had a good time socializing with several folks from different walks of life. I had perhaps met one or two of those present prior to Saturday evening, and so did a lot of introducing of myself and what I do as I met the other two dozen who were in attendance.

I’ve written before (more than once) about how the “poker side” of my existence -- the “Shamus” side -- usually doesn’t come up in these contexts. However, among this crowd Vera knew several folks and through her a couple of those were aware of my poker playing and writing. So there were a few occasions during the night when I did chat a bit about poker with people who asked.

At one point, after the desserts had been eaten and some of us were lingering around the table, one partygoer said she was tired of everyone talking constantly about the economy. She turned to me and said “Let’s talk about poker,” a kind of conscious ploy to get away from commiserating about the country’s financial woes.

However, she immediately followed that with a question about how the economic downturn was affecting poker. I answered with a two-sentence summary of the situation, noting that while many in the poker world were talking about the economy and asking the same question, people were still playing.

From there, someone brought up how he’d found a new inexpensive wine recently that really was quite good. Jokes were made about how the wine was even better after the first couple of glasses, then the conversation moved along to other examples of comparison shopping with an eye toward saving a buck.

My little summary of how the recession (as all now seem comfortable calling it) is affecting poker was inadequate, for sure, though accurate enough, I think. Certainly the situation is much different among the live games than it is online, and there are probably important distinctions to be made between high, middle, and low stakes players, too. But it is reasonable to say “people are still playing,” I think. And, if one wished to venture such predictions, it would be reasonable to add that people will always play. More or less, anyway.

By coincidence, this morning I read through Nolan Dalla’s two-part column over on PokerNews Daily titled “What the Economic Crash of 2008 Means for Poker.” Dalla, of course, is the co-author of the Stu Ungar biography One of a Kind and current Media Director for the WSOP.

For his column, Dalla asked eight people to comment on the issue, each of whom possessed different credentials that could be said to afford some specific preparation to speak to the issue intelligently. The group comprises “an attorney, a former management consultant turned author, a tax accountant, a psychologist, a high-tech consultant, a computer programmer, a college professor, a former online poker executive, and a casino industry observer.” Sort of like that party I attended, with people coming from a variety of backgrounds to gather around the table, so to speak.

The first contributor, a Washington D.C. attorney named Ken Adams, observes that “any business that depends on discretionary consumer spending is in trouble, whether it is a manufacturer or a service business.” Adams really does not address poker directly that much in his response, but you can read between the lines here. Money used to play poker is mostly (not entirely) “discretionary consumer spending” and so, I suppose, poker could be “in trouble,” generally speaking.

Interestingly (to me), he sounds a lot like the folks at my dinner party when he says a grocery store owner with whom he played poker told him people are “buying cheaper, low-profit store brands and specials rather than the premium (higher profit) brands and items.”

Other commentators address the situation faced by poker more specifically. Three others contribute to part one of Dalla’s column. Nick Christensen, reviewer of over 250 poker books and poker author himself, offers a near-term forecast for Vegas casinos. Dr. Arthur Rebar, a psychologist, actually focuses more on economics in his response, suggesting that poker won’t be as affected as, say, slots, which are generally frequented by those of a lower income, though more so than other table games played by “high rollers.” Poker pro Perry Friedman then offers a few general observations, including the idea that tourneys will suffer less than cash games.

Dan Goldman, former VP of Marketing for PokerStars, kicks off part two of the column with a guarded, so-far-so-good assessment, correctly stating that for now “traffic on the two leading online poker sites, PokerStars and Full Tilt Poker, seem to be unaffected.” But this situation will likely change, says Goldman. Dr. David Croson, an economist, then offers some advice to casinos trying to market to stretched-thin customers. Poker author Lou Krieger shares some anecdotes from his travels that confirm the notion that we aren’t seeing major effects yet, though may soon enough. Finally, tax expert and poker author Russ Fox focuses his comments on current legal issues and the government’s stubbornness regarding online poker.

Like the rest of our culture, the “poker economy” is many-layered, making it difficult to generalize about its overall fate. Still, it is interesting (and hard to resist) occasionally making the attempt to assign it some sort of coherent character. Kind of like when we sit at a table looking out at nine different opponents, each of whom has his or her own particular style, then try nonetheless to characterize “the game.”

I guess trying to draw such conclusions is more than just interesting -- it is necessary. But hard to do.

The Not-So-Super System

In The Biggest Game in Town, Al Alvarez often refers to the high rollers he encounters there in Vegas in 1981 as living outside “the system.” The desire to get to that place where the various worries and concerns that plague the rest of us don’t exist is presented as a primary motivator for many of the players Alvarez sketches for us.

For example, Alvarez speaks to Jack Straus, who’d go on to win the World Series of Poker Main Event in 1982. Straus talks about his father who managed a packing plant, and spells out to Alvarez how life was presented to his father. Back in the 30s when his father began his career, Straus explains, “‘you were told you should work until you were sixty-five, then retire on two hundred a month.’” Unfortunately for Straus’s dad, he died at age 58 and thus never got the chance to enjoy the (modest) fruits of his labor.

Alvarez adds “Straus took that lesson to heart and ordered his life according to two principles: to stay outside the system and to use his talents to enjoy life while he could.”

To live outside of “system” or the “straight world” is an ideal Alvarez connects with the American “romance of personal liberty.” Ever since Jefferson et al. put down in words that bit about “life, liberty, and the pursuit of happiness,” the yearning to declare anew one’s independence has been an essential part of the American mindset.

Such is further evidenced by the more successful players Alvarez encounters, those who “pride themselves on the fact that they survive spectacularly well outside the system: no bosses or government bureaucrats on their backs telling them what they should do and how they should do it, no routine that is not of their own choosing, no success that is not the result of their own unaided talents. Also no failure.”

The latter point refers to that “different ordering of reality” Alvarez attributes to the high roller. As long as one remains outside of the “system,” one cannot fail. One could call it a different kind of “system,” I suppose, and indeed there are those in the book -- like Jack Binion -- who characterize high-stakes gambling with “straight world” analogies, saying it’s like “a high-risk, high-return investment that is also fun to do.” But that’s just a way to make it make sense to those of us still in the “system,” I think.

Writing here following this incredible stretch of days for the American economy (and the world markets, generally speaking), it is hard not to imagine any of us being able to think we’re fully “outside the system.” The Dow Jones’ 2,000-point tumble over the last week (a precipitous drop of 20%) affects us all. Like most of you, I’m fairly clueless about the byzantine machinations of how exactly the relative health of the stock market and banking system affects the various accounts in which my moneys reside.

But I know I’m affected. I’m in the “system.”

And with the signing into law last week of the ominously-titled Emergency Economic Stabilization Act of 2008 -- giving the Treasury Dept. the ability to purchase troubled assets from financial institutions -- it appears as though whatever happens next we’re all destined to become even further ensnared in the “system.” A place where not only is it impossible to pretend there is “no failure,” but where failure seems to be an accepted premise.

Best of luck to us all.