Irving Berlin’s life is illustrative of the fact that those companies or individuals who take the speculative approach do not necessarily undertake the risks willingly, but rather by force of circumstance. Since the terms of trade are usually set by the more financially powerful party, the less financially powerful party is often compelled to assume risk that it would otherwise not choose to accept. That power asymmetry can result in certain intriguing unintended consequences, as Berlin’s success illustrates.
Berlin was born in late 19th century Russia and his family emigrated from there to the U.S. when he was a child. He was raised on Cherry Street in the Lower East Side of New York City. In the last years of the 19th century, Cherry Street was one of the most notorious streets on the Lower East Side. In Jacob Riis’s classic book How the Other Half Lives, Cherry Street is mentioned very frequently as a crime ridden, dismal area.
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