Pro Commerce

Financial repair work

In thinking about what is needed to repair our financial system I keep four real-world facts in mind.

1) At the beginning of the 20th Century the greatest market volatility was agricultural and banks provided 80% of all business capital. At the beginning of the 21st Century the Real Estate market is the greatest source of volatility and banks provide less than 20% of all business capital.

2) The Federal Reserve system has only worked for a few decades of its existence.  The Fed was created in 1913, was irrelevant to bank failures in the 1930s,  didn't have functioning market tools until 1948, was effective only in the mid-1950s to 1970s, had no effect on 1970s stagflation, didn't prevent the Savings & Loan failures of the mid-1980s, never gained effective control over bank financed derivatives,  and had no mitigating impact on the 2008 financial collapse.

3) The American financial reforms have little positive effect when initially introduced and often have negative consequences.  The Saving and Loan collapse of 1985 lead to the reclassification of all S & Ls as banks.  In the guise of banks, the former  S & L s failed again in 2008.  The two government agencies designed to protect mortgage generators and holders both failed (Freddy and Fannie).

4) A superior institutional leader is not protection against financial problems.  Only a well designed institution is capable of avoiding financial crisis. While the world was on the gold standard no nation could escape the contagion of recession and depression regardless of the government leaders.  The same has been true in 2008, (with the exception of China). A repair of the financial system must be built into institutions and not be reliant on superior leaders.

With these caveats in mind, long term financial stability is going to require several institutional components.  

First is the decoupling of the financial system from the commercial production system.  In the present environment banks begin calling corporate loans as soon as the banks see their own capital decline.  This is a direct transmission of financial problems to the commercial world.  When financial markets begin to fail corporations are immediately forced to reduce output, reduce staff and increase unemployment. The solution is to establish several large banks that are federally underwritten and (a) can not reduce or call corporate loans unless the underlying assets supporting the loans are declining. (b) These same banks would be required to make only fully secured traditional bank loans, without participation (no sharing of profits or gains from the loans) in the loans. (c) These same banks would have non-interest paying deposit accounts insured up to $1 billion.

Second is creation of a multi-tiered risk and regulatory system. The key element is to create tier one, the level with the lowest risk, similar to treasury notes, bills and bonds. This would be a government insurance and regulatory package that would guarantee pensions, insurance policies, annuities, credit unions and comparable funds that operate at minimal risk levels.  The regulatory authority would pre-approve all financial types of instruments that could be used by the insured funds.

Together, these institutional creations will create a relatively stable financial environment for corporations and individuals.  It would de-couple financial crises from the commercial world and would offer consumers and citizens a realm of personal security.

A separate blog deals with fraud in the system and executive compensation.

For policy makers

The following three posts are for American financial policy makers.  I wrote them for one of my clients.

If you are merely an intelligent, creative, wonderful reader of this blog....please accept my apologies for the lack of humor or irony, in advance.

Naked bicycle riders parade

 Don't miss this parade next year, if you are coming to the U.S. in the late Spring. 

In Seattle, on the Saturday nearest the Summer Solstice, there is a parade in the Fremont neighborhood that is led off by half an hour of naked bike riders painted to look as if they have clothes on.

My comment on the parade is that this Lefty parade gets much right and one key ingredient wrong. The right things about this parade are that (1) it limits everything to no motors (except the rock band electric-generator) which means nearly everything is handmade by locals, (2) there are no commercial floats and (3) no politicians or candidates.  All of which brings the parade and the excitement much closer to a bacchanal and less like a moving advertisement.  I like bacchanalia.

The shortcoming is the blind Lefty Ludditism also bans any signage.  The consequence is that there is virtually no way to know the institutional structures behind the parade participants.  You don't know which bars got their patrons to support them and march, which Norwegian clubs really have loyal members, which high school has a good band, etc.

Institutions are important to intelligent people.

Two groups got through the blind Lefty Luddite rules: the Hari Krishnas who marched chanting their highly recognizable chant and a group of Masons who carried cardboard cut outs of calipers, triangles and compasses.  Good going, you rebels who know the true spirit of bacchanalia.

Anti-Dowdist movement

If you think that George W. Bush and Sarah Palin received fair treatment from the press in the past, you need read no further.  If you saw treatment even resembling 'fair,' stop here.

The Dowd in the blog title refers to Maureen Dowd, who does a regular op-ed for the New York Times.  Read her pieces and you will see the ultimate in snooty, mean-spirited, elitist, bitchiness, with a touch of arrogant, nose in the air, humor. You don't have to believe me.  The elitist press and her friends describe her the same way.  They are proud of Maureen and love to feed her gossip at Upper Manhattan cocktail parties.

I believe, and I predict, that Sarah Palin intends to gather the popular sentiment of America into a new movement that I call Anti-Dowdism.  Palin is the perfect leader for such a movement.   Sarah Palin is a mother, deeply blue collar working class and good looking. She already has the support of roughly 40% of the public based on 2008 polls.  If she runs on an anti-Dowd platform, I believe she will become the modern version of Andrew Jackson.

I think she only needs to start each speech with a selection of the previous week's venomous attacks on her. She can be the tar baby that the hatred of the Left punches and finds that it only destroys them.  

The American public does not like the bile that comes out of the mainstream press when it is attacking the American military, decent hard working people or American religiosity.  That American distaste for the media is, I believe, more than enough to build a modern movement.  I believe it has been tapped before by Truman, Eisenhower, Nixon, Reagan, Perot and G. W. Bush.

Like Andrew Jackson

Just a brief refresher on American history.  Andrew Jackson was the first president elected by popular vote in the states.  Several states had replaced chosen electors with citizen voting.  It was widely recognized at the time (and abhorred) as the first upset of the elites. In Jackson's second election most states had replaced elite electors with popular vote and Jackson won overwhelmingly.

You might note, because my readers are far above average, that the recent Democratic primary had overtones of popular votes in most states going for one candidate (Hillary) and the party caucus elites going for someone else..... who won.

(Continued in the next blog.)

Powerful movie

I saw a classic movie that came highly recommended by friends.  Since it was made by Mike Judge (pro commerce hero) I couldn't miss it: Idiocracy.  It is about a below average man and woman who survive into the future where everyone is slightly dumber than the current crop of Americans.

What is so great is to see an entire Congress, President and the entire American population in the thrall of an absurd idea that is promoted by popular media. That is what the movie is about. 

Of course the movie idea that is absurd is that Gatorade is a good nutrient for plants.

The current absurd idea promoted by the media universally and voiced by the American Congress, President and most of the public is that a tiny rise in CO2 (half of 10th of a percentage point) is bad for 99% of life forms that were created by CO2 over the past 2 billion years.

My three eras

When history looks back on the data and paraphernalia left behind, the historians will observe that I lived through three out of six of the most significant changes in data recording and retrieval.

The three I missed out on were the printing press with movable type, the camera (and subsequent movie version) and sound recording.  What I lived through were carbon copies, xerography and the Internet. 

When I was in the Army, everything I typed had to be done on seven carbon copies.  With the brief advent of the electric typewriter that number went to 12. I don't mean to slight the Dictaphone, the mimeograph or ditto machines.

What an astounding contribution has been made to history during my lifetime and in the prior half century in the recording of data, both trivial and significant.

Realpolitik

I try to stay out of issues where I have no relevant contribution and am likely to offend my Lefty readers.  If there are any left.

In this case, I just have an observation about a left-over social institution.

When George W. Bush came to power, the opposition to his foreign policy was from a group who publicly consider their position to be Realpolitik (pronounced re-AL-politeek).

Most of the opposition to Bush joined the Obama foreign policy team.  A few have admitted they were wrong about the successful Bush Iraq War, but most haven't. Self-honesty is not their strong suit.

The current administration is following in the path of Realpolitik in sending a kind note to Iran's tyrant Khamenei before the election, in delaying more than a week in criticizing his cruelty to defenders of democracy and in offering a warm hand to Hugo Chavez, the Castro brother and Daniel Ortega. Now the administration is supporting wannabe tyrant Manuel Zelaya.It is time to tell my readers what Realpolitik is about.

Realpolitik is first attributed to Metternich as a form of cold-blooded national self interest.  In the Cold War, realpolitik became American policy in dealing with the USSR. The policy meant that America supported all enemies of the USSR even (and most often) when they were tyrants.   Realpolitik for sixty years has meant supporting tyrants. When applied against communism, the Left hated realpolitik.

Realpolitik is now back in style with the current administration and its foreign policy advisors. That is clearly what we are doing now.  American foreign policy is being driven by the dregs, remnants and romantic nostalgia for the old Cold War.  We support tyrants out of a misplaced sentimentalism.  

Woe to the sorry citizens of the many nations who don't like their tyrannical leaders, until this administration is replaced.

Global hegemon

We Americans sometimes forget that, even after the 2008 financial meltdown, we are still 10 times more powerful than any other nation.

The world should be grateful for the hegemonic nature of America.  Ten times more powerful in the size and power and reach of our military than any other nation. That is an order of magnitude greater than anyone else.

I say the world should be grateful for one reason: America is generally incompetent.  The global klutz.

(1) We have a completely dysfunctional intelligence system despite putting hundreds of billions into satellites and other technology.  Most intel agencies still don't talk to each other or to other competent intel agencies in the world.

How do I know this?  Because the most effective intel available in America is ex-pats, visitors and immigrants and nobody ever collects information from them.  Many immigrants can pick up a phone and answer any intelligence question by talking to one of their friends.

(2) Our State Department is hopelessly incompetent.  The State Department was opposed to the creation of Israel, an act that required vision, and State remains 60 years later an enemy of Israel, our only solid ally in the world. State always supports the UN despite the fact that it has long been the main arm of the 4th Reich. The State Department fought the three greatest positive global realignments in world history (a) the Nixon-Kissinger China breakthrough (b) the Reagan-Bush defeat of the Soviet Union and (c) Bush's military success in Iraq, nearly wiped out by incompetent State Department men on the job.

(3) Our military never misses an opportunity to fail.  The DOD is still trying to fight the Soviet Cold War, did a miserable job in follow-up for Iraq in both wars and, with a budget 200 times greater than the Israel Defense Force, has rarely been able to do one fourth what the IDFdoes. Again an order of magnitude difference.

Summary: With America as the global hegemon, the only hazard is that the incompetent giant may step on something by accident.

Cooking hypothesis

Last month we were introduced to a book by Richard Wrangham, an evolutionary biologist.  Wrangham, now at Harvard, argues that humans are the first species to evolve as a direct consequence of technology.  He says that a human predecessor developed the ability to make fire on command and as a consequence homo habilis or one of our ancestors was able to vastly increase the available calories in the environment since meat and greens are more digestible cooked. We have neither the teeth nor the guts to survive on either without cooking.

I ordinarily scoff at the field of evolutionary biology because the theses advanced are based on untestable theorems.  Not so with Wrangham's.  At the moment I can't find a good source, but there must be one on the earliest evidence of a fire pit and flints.  When we find such evidence it will be a way to positively support Wrangham's very interesting thesis.

I can't sit still

This is the press release I sent to the media yesterday about today's action:

Press Release

Re: Member sues California Academy of Sciences over global warming

Contact: Michael Phillips........

Date of Court hearing: Tuesday June 30 at 1:30

Location of Court: San Francisco Superior Court (Small Claims) Dept. 506 5th Floor, 400 McAllister St.

The California Academy of Sciences is being sued by a member of the museum for not using science in the global warming exhibit. 

The member is Michael Phillips a business consultant, author and expert witness on business and environmental issues.  Mr. Phillips is quoted as saying:

"Children get the wrong idea of science when they see the Global Warming exhibit.  They are told that each child must personally change their lifestyle, eat vegetarian and ride bicycles when they get older,  to keep the effects of humans from over heating the planet, raising the oceans and killing baby polar bears. (I'm not kidding)

"The whole exhibit, taking up a large part of the main floor, is based on a 20 year old theory, from Jim Hansen, and doesn't present any conflicting scientific evidence."

"One wall map shows a large northern polar island that is all ice. The map shows no name for the island. In the real world the island is named Greenland; the island got its Green name in 900 AD because the global temperature was high enough at the time for Greenland to grow wheat, rye, barley and trees.

"Most children will be interested in science when it is based on careful analysis of data, serious arguments, open discussions and testing of theories against new technologies.  That is not true of the California Academy of Science exhibit. In the case of the Human caused Global Warming theory the new technologies to test against are satellite data and vast ocean measurements.  None of the new technology data is offered at the Global Warming exhibit because it contradicts the Hansen theory."

Mr. Phillips wants his $159 family membership returned and an apology for presenting an inadequate pseudo-scientific display on the main display floor.
----------------------------------------------
The outcome:

Judge orders case dismissed with prejudice against the California Academy of Sciences. Academy refunds my membership money and will do the same for any other member who objects to the absence of scientific data in the global warming exhibit.

 First article in the S.F. Examiner. TV coverage on S.F.  KTVU Channel 2.

Autobahn not here

Thanks to the (Democrat-union caused) California State budget debacle, many Californians know they can drive as fast as they want.  The Highway Patrol officers are sitting in their offices and in coffee shops discussing ways to avoid being laid off and ways to get on disability.

So I joined the crowd driving at 80+ miles per hour.  What I found, while driving faster than usual on one of our newest freeways is that American freeways are technically pathetic. 

I was driving the same Japanese car I drove on the autobahn from Berlin to Vienna a few years ago.  I went over 115 mph on the autobahn.  At that speed in California I would have flown off the road at the many poorly banked turns and would have flipped over at many of the poorly maintained surface obstructions.

I've done a few blogs on America's distorted, contorted, incompetent and hodge-podge construction engineering and associated environmental absurdities.  This is just one more example.

My calculations on natural gas and solar

Please help me, I can't believe my results. Natural gas is an order of magnitude cheaper that solar voltaic.

I want to compare solar voltaic cost per kilowatt hour to natural gas per kilowatt hour.  Here is my data page and the sources.

Since solar panels generate electricity when the sun is shining and cost almost nothing after the panels are installed, the kilowatt per hour cost is based only on amortizing the cost of the installed panels over their lifetime.  Or for a solar array concentrating the power in the desert it is the same on a larger scale, plus maintenance and delivery to the grid.

For natural gas it is the price the utility pays on the open market for millions of BTUs of gas delivered through existing gas pipe lines to existing generators to existing power lines.

The best I can find is that solar voltaic costs roughly $.25 per kilowatt hour based on the amortized life of the system. Sometime in the future it could cost $.17 per kilowatt hour if technology creates significant cost reductions. 

Natural gas now costs, from most utilities, under $.08 per kilowatt hour and that is based on an earlier market price of natural gas at $12.00 per mmbtu.  That seems to be a mark-up over the most efficient generating system of 100%.  So at current low $3.50 mmbtu natural gas market prices, with the same utility mark-up, that should be $.024 per kilowatt hour.

Summary: currently solar voltaic costs ten times natural gas per kilowatt hour and considering the best future technology for solar voltaic it might be as low as 7 times as much.  With the natural gas reserves of the world expanding at astounding rates (see my earlier blog) solar voltaic is never going to get close to natural gas in price. Never!

Confederate gentleman

I am sorry to say it but I believe that we have a tragic president.

He is like a confederate gentleman after the Civil War who believes that his cause was morally right and will someday be appreciated for its decency and noble vision.

The Civil War is to the Confederacy what the 20th Century is to post-communist Lefty views. In both eras, the Confederates and the Lefties failed to recognize that they were defeated militarily and morally.

When President Obama praises the peaceful intentions of Arab Islam, he is joining the ranks of the 4th Reich, just as the Confederate gentleman was joining the ranks of pro-slavery advocates when he defended the great honor of Southern womanhood.

When President Obama and his State Department pressure Israel to bow to his moral certainty about his Middle Eastern program, he is like the Jim Crow South that rejected the introduction of public schools for both whites and former slaves that the Northern government (called carpet-baggers) offered the squalid, uneducated Southern society. Like the Arab Islamic middle east which wants to stay the way it is, the South also wanted to keep its citizens uneducated. Supporting Arabs over Israel is supporting the slave side of the modern battle.

When the President champions socialized medicine, he is deliberately suppressing the most productive medical system on the planet, just as the post-Civil War southern gentleman created Jim Crow laws to suppress the rise of a commercial and industrial society below the Mason-Dixon line

.... and when the President offers an outstretched hand to Cuba and other communist tyrants, he supports the whole cause of human slavery in those societies where citizens and their offspring are never allowed to chose their own lives or leave the country.

I see President Obama as a tragic cross between Woodrow Wilson, Princeton president from the Democratic anti-black South, and Jimmy Carter, an Annapolis graduate, coward and former Governor of the most Confederate Southern state, Georgia.

Don't count on Economic 101 part 3

It is common in my circle of friends to say that many of our problems and failed government policies arise from inadequate economics education.

I say 'nonsense.'   Nobody who is teaching standard economics is teaching the kind of lessons that are relevant to the issues of what helps commerce thrive and what hurts commerce.

Take three examples: (1) Chains vs local stores (covered earlier), (2) big companies bad effects (covered earlier) and (3) raising local business taxes. In all three cases, studying economics gives you unreasonable or wrong answers.

(3) Raising local business taxes is generally seen by economics as neutral. It is taught as a matter of creating a new business cost that is passed on to the consumer. This is usually false and worse over time. It can be true only if neither the customers nor the businesses can leave the locale. 

As San Francisco has demonstrated, over a 50 year period, this is always false.

 (a) Every single important business (more than 25 large companies) that originated in San Francisco over 1.5 centuries have moved first their production operation out of the city and then moved their white collar staff out of the city. This has always been due to local taxes that are relatively higher than the new locations. Given time, even giant companies are mobile. 

(b) New businesses that can start somewhere else, where relative taxes are lower, do so.  Over 90 new biotech start-ups that have been generated by research labs in San Francisco, in the past 20 years, have started outside the city of San Francisco.

(c) Many businesses find that customers will drive outside the city of San Francisco (were business taxes are lower) to businesses that are created on the city border for lower prices.  Some business near the border on the San Francisco side fail promptly, such as the Stonestown Mall (now in bankruptcy) that couldn't compete with new malls in adjacent (a few 100 meters away) Daly City.

(d) All businesses that are part of a supply chain outside the locale will move because their customers can buy outside the local high tax area.  600 production shops in clothing immediately left San Francisco after a new health tax and minimum wage law were put in place.

Higher local taxes can always drive away business, some in the short run, all in the long run.

I like it

I have no earthly reason to tell my readers about a product except that I occasionally come across one that I particularly like.  In my book Marketing Without Advertising (see adjacent blog), I point out that it is people who both (1) love your product and (2) know something about the product qualities that create a good recommendation and generate a real and durable market.

In this case I am recommending a French press that you combine coffee and hot water and force the water through a paper filter. It is called an Aeropress.  I use it for espressos but you can add hot water and have an Americano. 

Mine came from my son (see his blog site, he is reporting on his trip to investigate the history of martial arts in Taiwan).  I gave one to my daughter and her husband in Seattle who are fanatics about coffee. 

I don't deal with coffee or wine like the aficionados but I have been having daily morning espresso at North Beach and Castro District cafes since 1978.

Idiot headlines

Most of my readers live far away from San Francisco and California and don't care that either of these political entities have to slash their bloated budgets.

But those of us who live in such budget cutting regions are treated to endless headlines of imminent social catastrophe:  "Poison control centers to be closed", "Starving children programs slashed","Senior protection to be eliminated", "Orphans and bedridden to be thrown out", "Fire fighting to end soon" .......and so forth.

I call these idiot headlines because they are created by American politicians who assume voters are idiots.  It is identical to Iranian mullahs and Arab leaders who always say that public unrest is caused by America, Israel and the CIA.

Reality not allowed. Don't expect to read headlines in a budget slashing period that could be sensible such as: "First class flying by bureaucrats to be restricted", "20 administrative coordinators and liaison specialists may lose jobs", "agricultural audit teams may lose one or two members",  "county fairs to close one hour earlier".

Don't count on Economics 101 part 2

It is common in my circle of friends to say that many of our problems and failed government policies arise from inadequate economics education.

I say 'nonsense.'   Nobody who is teaching standard economics is teaching the kind of lessons that are relevant to the issues of what helps commerce thrive and what hurts commerce.

Take three examples: (1) Chains vs local stores (covered earlier), (2) big companies bad effects and (3) raising local business taxes. In all three cases, studying economics gives you unreasonable or wrong answers.

(2) Economics teaching about big business focuses on the benefits of economies of scale and the problems of monopoly. An irrelevant combination.The prevailing Lefty mime is that big business is bad per se. The Lefty mime is not challenged by Econ 101.

The reality is that big business has brought many benefits to the world and America.  Overwhelming benefits.

(a) big business brings technological standardization which is necessary for large scale services such as air traffic, telecommunications, standardized health conventions for travelers, common accounting practices that make investments possible and a dozen other items.  Tell the economics students to go live in a world without these benefits of big businesses.

(b) As pointed out in an earlier blog, big companies are not monopolistic and powerful they fail at an astoundingly high rate.  Big companies are fragile and the most important reason they fail so fast and often is the radical impact of changing technology.  The whole concept of monopoly, except where supported and protected by government, is an outmoded irrelevant idea.

It happened before

I can't keep quiet while Iranians risk their lives for democracy.  There is plenty we Americans can do.  One act would be to use a TV satellite to broadcast back to the Iranians the images, blogs and other Internet news we are getting from within Iran.

The most obvious observation about the current situation is that those of us who get our news from the Internet know from dozens of reliable sources that the Iranian government is raining terror on the citizenry.  Murder, slaughter. The rest of the world has to depend on the mainstream media that, in its demand for getting news from its own employees (hiding in their offices), is completely unreliable.

The issue of reliable news is the problem several men had in the 1940s trying to get the American national media to call attention to the Holocaust.  No media would report the Holocaust because they had no employees on site who could confirm the information.*

1944 is too similar to today.  The standards of reliable news for the mainstream media means that the media is completely unreliable at the time it is needed most.

A perverse twist on the Middle East is that many salaried trusted Arab journalists have been dishonest, corrupt and fabricated stories and videos which were treated as reliable by the mainstream media.  Having salaried employees is in fact not a guarantee of reliability.

Fortunately, the Internet is letting a major part of every society know the terror that is unfolding. 

*Reference Hillel Kook. Rapoport. Here is another .  Lastly there is wikipedia.

Don't count on economics 101

It is common in my circle of friends to say that many of our problems and failed government policies arise from inadequate economics education.

I say 'nonsense.'   Nobody who is teaching standard economics is teaching the kind of lessons that are relevant to the issues of what helps commerce thrive and what hurts commerce.

Take three examples: (1) Chains vs local stores, (2) Big companies bad effects and (3) Raising local business taxes. In all three cases, studying economics gives you unreasonable or wrong answers.

(1) What economics says about chains vs. local stores is wrong. Economics classes teach that chains can buy goods and services for less because of economies of scale and consequently undercut local store prices.

This is true about buying but wrong about the effect on smaller competitors as I've pointed out in an earlier blog.

(a) The arrival of Starbucks in San Francisco increased the number and quality (early hours) of local coffee shops dramatically.  The new chain arrival brings innovation to the marketplace which attracts new customers.

(b) In many cases, the new chain is directed at a market that has never been adequately served (an example is Target with low priced products for lower middleclass homes) and the new chain brings many new local stores servicing the new market. Without the new chain, low income people suffer higher prices than in areas where the chain operates.

(c) Chains often bring massive new product selections (Home Depot and Lowes) that expands the market (for home repairs), that gives local stores an advantage of geographic convenience for the expanding local market.

Points  (2) and (3) are in future blogs.
It is not more Economics 101 teaching that we need, it is more pro commerce understanding.

Personal coffee

A common question I get is 'Why hasn't tea been a success like coffee?'  My answer is the same as I gave to a conference of tea business people: (1) Tea is priced in hopelessly obscure ways.  Coffee is by the pound and the quarter pound: simple. (2) Coffee is a powerful stimulant and tea is more on the sedative side. Americans, now and far into the future, are going to love stimulants. (3) Coffee rode the recent wave of increased working hours and high productivity.

 

At the Tea conference, after giving my standard and very popular marketing talk, I answered the question you see above, with the response I have given above.  From that moment on, I was persona-non-grata at the conference.  People usually crowd around me asking questions.  Only one or two people did. I really wasn't very popular with that candid answer.

 Now what is the future of coffee?  My brother reports a shop in Ketchum, Idaho where you taste an array of coffees, find the blend and roast you like and the shop gives you a number to use in ordering Your Blend online. 

Dunhill tobacco in New york used to do that with pipe tobacco.  I had my own blend in those days (and I had cigars too).  My storage locker on 5th Avenue was just next to Jack Kennedy's.

Back to the subject. Coffee.  If anyone can find a way to duplicate the coffee tasting and personal blending that the store in Ketchum uses, and do it all online, it should catch on.

Images of wind turbulence

Roughly a month ago I wrote a blog on why we don't have flying cars or jet packs for our backs.

The core reason for both is air turbulence that occurs near the ground (and higher up) and results in complete differences of wind direction at intervals as small as a foot apart.

I finally took the time to go down to the tall flag pole that the San Francisco Exploratorium put up near Aquatic Park that demonstrates this truth.  I made a very short video on a windy day that shows the extent and severity of horizontal wind shear. The wind vanes are about 12 inches apart.
 

Multi-generational slavery

I can see from the reply to my blog about the nations that discovered multi-generational slavery that many well educated people actually don't know about this.

Slavery has existed throughout recorded history and certainly for some time before writing.  Slavery was a humane alternative to killing your enemies in warfare, and in many instances it was socially productive.  Of course many peoples made rotten slaves so it was imperative to kill them when they were caught.

Until roughly 1610, most slaves who had children could expect their children to be freed or to escape.  So we didn't have much multi-generational slavery.  What changed in the early 17th Century was the discovery of skin color.

 There are two pieces of evidence of this recognition of skin color that I am aware of.  First is the archaeology of Jamestown.  In the early years of Jamestown all slaves slept in the same house as the owners, they lived and ate together.  Within a few decades separate houses were built for the African slaves who no longer ate with the English owners or the white servants in the main house.  Skin color had been recognized.

Every century for eight hundred years, the Jews of Europe, Spain and Baghdad had sent a few emissaries to visit the Jews of Ethiopia and maintain contact.  In the early 17th Century, for the first time the emissaries reported that the Ethiopians had dark skin.

It was the common popular recognition of dark skin color that made it possible for Africans with dark skin to be kept as slaves for multi-generations.  Escape for a black slave was nearly impossible. The few free blacks, in America, always dressed elegantly and carried papers to prove they were not runaway slaves, simply based on their skin color. 

The modern version of white multi-generational slavery was first noticed by me in this blog, when I realized that the inhabitants of all communist countries have been multi-generational slaves because they can never leave their countries nor choose how to lead their lives.

We are really an accident

The combination of 50 separate states under one national Constitution is truly an accident that is great for commerce but could never have happened anywhere else or under any other circumstances.

We are an exceptional nation but entirely an accident.  Our Constitution is the only real constitution in the world.  It was self imposed at a time when the notion of a constitution to limit government was in vogue. That vogue passed away.  No other people ever chose to protect or entangle themselves with such a constitution. And a Bill of Rights.

Yet for us, the Constitution has created a text centered people, just like the Diaspora Jews.  The Jews had the text center of the Torah, the sacred words forever to be debated and reinterpreted.  For 2,000 years the Jews have been without a government, a disconnected but coherent people studying a sacred text from the past and living in the present under a wide range of circumstances always re-interpreting the sacred text. 

The same is true for Americans. Our sacred Constitution holds us together despite having a weak, and at times incompetent, central government, trying to cope with 13-50 separate state governments.

Our separate states slowly conferred power on the central government, but never very much.  To this day we have a weak central government compared to most other industrial governments.  Look at the 2008 financial crisis and the fact that we still have no rational plan to remedy that pathetic national incompetence. We probably never will remedy our incompetence.  Remember that the 1913 Federal Reserve didn't have teeth until the 1950s. It is still ineffective and completely failed our financial structure in 2008.

Had this American socio-political experiment occurred anywhere else, but safely sequestered across two large oceans, the neighboring countries would have taken advantage and swooped in for control.  This would have destroyed America many times as the states and the national government squabbled (1812, 1846, 1863, 1898, 1916, 1939, 1953, 1963, 1973).

Truly an accident but a fortuitous one for those of us who love commerce.

Presidential libraries and you

A friend of mine and I have been throwing out old files and records.  Thinking about his files, since I know the many lifetime feats he will be remembered for in history, I was able to apply the same principles to myself. I'm throwing out a lot of files.

There is are two simple principles I have been forced to confront based on my extensive historical biographical reading: (1) Your are remembered for only a few major contributions and (2) No matter how much data you leave behind, everyone will still be speculating on the sources of your personality and identity.

Some of the great writers and prolific correspondents are not better appreciated because of their massive records, such as John Adams, Dewitt Clinton or John Hancock.  Conversely some of the greats such as Alexander Hamilton, General Grant and Abraham Lincoln left modest personal correspondence, that historians squabble over incessantly. In these cases we know who they were and why they were great.

The other examples to support my two rules are numerous.

The same goes for Presidential libraries.  Harry Truman, Richard Nixon and Ronald Reagan will be considered great men for a long time without regard to what is in the presidential libraries.

Conversely, Lyndon Johnson will be seen as a political hack, Bill Clinton will always be seen as a weak egotistical man and Billy Carter's brother Jimmy, as an anti-Semitic, Evangelical nut case and a pathetic coward.

Feel free to throw out all files and records except for those that bear on some of the intricacies of your two or three major contributions.

Forget everything that explains who and why you are.  No one will get it right or everyone will.

Natural gas era

I wrote this blog a week ago, before the trip I'm currently on to Seattle.  Yesterday's Wall Street Journal changed the whole circumstance.  The public now knows about our gas reserves.  Here is the small article: 

The amount of natural gas available for production in the U.S. has soared 58% in the past four years, driven by a drilling boom and the discovery of huge new gas fields in Texas, Louisiana and Pennsylvania, a new study says.

The report, due to be released Thursday by the nonprofit Potential Gas Committee, concludes that the U.S. has 2,074 trillion cubic feet of natural gas still in the ground, or nearly a century's worth of production at current rates. That's a 35.4% jump over the committee's previous estimate, in 2007, of 1,532 trillion cubic feet, the biggest increase in the committee's 44-year history.

999 people out of 1,000 didn't know about the natural gas finds that open a new era, (aside from the few more who read yesterday's news).

There have been massive new discoveries of natural gas in the United States and Canada in the past year, particularly due to new extraction from shale technologies.  The discoveries have been so massive that the price of natural gas has fallen in one year from $13.7 Mcf to $3.51.  Part of that price decline is also a decline in global demand.

I could not find the single Web source to show the magnitude of the expansion in the natural gas reserves in the U.S. before yesterday. I am still unable to read the core data on estimates of reserves, since the field is arbitrarily arcane. But I am getting many reports from friends in the fuel industry and in the related utility industry who expect the U.S. experience to be projected to Canada and the world.

What does this mean?  Since a new car can be put on the market using natural gas for the same price as a new petroleum burning car, the U.S. can make a rapid shift to 50% natural gas in autos and electric energy, with just domestic natural gas, in as little as four years. It means:

(1) With just existing market forces (forget the government and subsidies) and expanding natural gas reserves, we are in for an era when the oil producers in the Middle East will be significantly diminished in power.  We Americans can go back to driving big SUVs and loving it.

(2) When foreign car companies offer the natural gas option, for big cars, the new tiny gasoline cars made by Government Motors will be scrap.

(3) We are entering a new era of long term low energy prices.  The Lefties and PC Enviros will have to find something else to be unhappy about. Some other contagious paranoia.

I don't carry coins

What is evidence of a significant trend? 

So far I have not carried change for about four years.  Now when I mention it, here in the Greater San Francisco Bay Area, I have found several other men who say they are doing the same thing.  I will have to check this out with other people in my coming travels around the U.S.

I am able to go without coins for two reasons.  First, nearly 100% of my daily expenses are on my charge card. Second the rare exceptions, where I use cash and get change, are so infrequent I can't remember what they are, but when I get change I feel comfortable leaving the nickels and dimes on the counter, throwing the pennies away and putting the quarters in a small dish for use on the local buses.  Other people say they throw the whole lot in a jar and collect on it every few years at a coin counting concession machine.

Is this a trend yet?

New Zealand joins the world

I have several attentive blog readers who often make comments and occasionally refer to my blog on their intellectually rich blogs.  They are in New Zealand. Thank you guys.

What I wonder is whether the advent of the Internet has brought a bunch of intelligent people, in distant lands, into the global intellectual dialog.  I think so and I think we should all be grateful.

Its hard to censor the Internet

The uprising in Tehran is good evidence that you can't censor the Internet. 

A government can shut down Youtube, Facebook and many other sites but that immediately communicates the reality of the censorship and the weakness of the government. 

The publishers of the New York Times can ignore a story and its readers are unlikely to know. Shutting down an Internet service is visible censorship.

However, access to email, cell phones and online images can't be stopped.

(1) The Internet is a new source of freedom that neither Iran nor China can stop and

(2) The cowardice of all the Western leaders to assail Iranian repression, is a reality that can not be ignored. 

Nuclear bombs in Iran, even before deployment, have already been effective against the President of the U.S. and all of Europe.

Michael Pollan moment

I had a Michael Pollan moment the other day while reading the ingredients on a package.  Michael Pollan, for those living on another planet, is the goody-goody food nut who tells adoring NPR audiences to eat only what your grandmother ate and only buy it if the farmer brought it to market, bicycling and carrying it on her back.

I had bought a package of Parmesan cheese shreds a few days earlier and sprinkled it on my Chilean grown cauliflower (give me veggies with good mileage under their belt).  It is sold at Safeway (give me really big chain stores) as a veggie topping.  I often put Parmesan on my veggies for flavor and texture.

The package said in the ingredients box that the cheese shreds were made from soy beans with Parmesan flavoring.  It tasted great. Really!

I enjoyed my lunch even more knowing that I was offending some elitist NPR food snobs, while supporting a Chilean farmer, hundreds of businessmen and some laboratory geniuses who are inventing delicious new flavorings and new uses for soy beans.

P.S. George Washington Carver invented three hundred new uses for peanuts. (But he was black so Pollan fans might eat some of his laboratory offerings.)