Pro Commerce

How I Succeeded

How did I carry out three projects in San Francisco out of many that I will describe in the future?

*The oldest, most successful high end vegetarian restaurant in America.

*The beautiful East Bay Bridge.

* A gorgeous small park.

The oldest, most successful high end vegetarian restaurant in America is Greens in Fort Mason; already 47 years old and thriving. Always listed in San Francisco’s top ten restaurants.

That is what I was going to write about and will do so later.  In searching the web I find no real history of the modern Ft. Mason. An important history that is unknown. All I could find was this:

Fort Mason Center, a nonprofit organization, partnered with 

the GGNRA and opened in 1977. It was the first conversion 

of a military base to peacetime use and as such, has served

as a national model. Each year more than 1.5 millions visitors 

connect with arts and culture on the historic waterfront campus. 

Through special events and resident organizations, Fort Mason 

Center offers musical and theatrical performances, exhibits,

workshops, and classes that inspire and foster creativity for 

visitors of all ages. Within the historic warehouses are free

museums, a bookstore, classes, restaurants, and theaters. 

It began in 1977 when a mature and attractive woman, Ann Howell, came to me and said that the lower part of Ft. Mason, buildings and wharfs, were going to be made a public facility, part of the Golden Gate National Recreation area, the first military facility in an urban area to become public.  

She wanted to apply for the role as operator. She had gathered the names of 110 non-profits, nearly all the hippy groups that came to a Kohotec celebration that had been held in the Civic Auditorium across from City Hall in late 1973.The Fort was going to be given to a non-profit.  So I told Ann to form a non-profit 501:c3 organization and suggested some prominent names of my friends for the board. Ann did everything I told her to and to my complete astonishment she won the property. 

The reason a sweet innocent inexperienced woman won the management of Ft. Mason was probably that the man who had to decide, Bill, was beleaguered by the most powerful organizations, the University of California, the U.S. Congress, the U.C. Med School, giant hospitals and City Departments.  He was under extraordinary pressure.  Probably hated it.  So, out of pique and revenge he gave the Fort to Ann and her hippy gang.Ann and her boyfriend moved into one of the three giant empty office buildings and started renting the other spaces to 60 non-profits that she could find on her Kohoutek list. Everyone wanted a 50 cent per square foot rent.

When it had been nearly filled up, with an eclectic collection, she asked for more advice.  I said then that she needed a center for the entire community to converge on to create a durable and stable community.  A restaurant with a coffee shop, in the mornings, and a copy shop.

She didn’t know how to get a non-profit restaurant. So I said I’d do it.

I chose a location: the old Army vehicle repair shop.  I went to two dear friends. Dick Baker, the Abbott of the San Francisco Zen Center who ran several non-profit businesses, the most successful being Tassajara Resort. I showed him the site and he was excited to run a vegetarian restaurant in a beautiful location with a view of the Golden Gate Bridge. I then went to Rudy Hurwich, another good friend, president of the non-profit Fort Mason board. He supported the idea.

Three problems that had to be solved.  First the concrete floor was covered in oil that could never be cleaned. Problem solved by California State architect and friend Sim Van der Ryn, who made a new floor 4 feet up which also gave a view out the windows to every table. Second, a fine diner needs wine. The Zen Center voted to make a beer and wine license an exemption to Buddhist tradition, worthwhile.

Third, a great chef was needed. Abbott Baker got a great Zen cook, Debbie Madison, to spend a year studying with pre-eminent chef Alice Waters. The first chef, Debbie, published many cook and food books over the coming years. The two successor chefs have been equally great. The current one, Katie Reicher, continues the tradition as a genius.

Finally, I introduced a marketing idea I had first developed 15 years earlier: to create a grand opening and a loyal customer base.  Everyone within range of S.F. Zen Center and friends of friends were invited to a two month crowded opening.  That came to nearly 10,000 people.  Many were given complimentary wine and meals. Greens was full from then to now.

Abbott Baker was responsible for the aesthetics of Greens. I later contributed the welcoming values to other restaurants and food events, knowing that more food related business was good for Greens.  Business is not competition, it is synthesis.

Two of my ideas were not adopted by Greens.  One was to give people who wanted ‘left over’ containers, one out of five people, a high quality freezer box with the name Greens on it.  Greens already had enough business. The second was to designate a small room, the Steve Jobs room, where Steve ate regularly and had his wedding night meal.  No one else liked the idea.

How did I create this historically important exemplar?  

The most important was my vast network of friends and associates.

My personal reputation as someone who is good at business as a: former banker, creator of MasterCard, open to new ideas and a receptive non-judgmental listener. 

Someone who doesn’t seek personal credit for my many accomplishments.

Retainer of vast collections of trivial information. I stayed awake when I was in the Army and we listened to lectures and saw movies during my reserve duty special trips to Fort Mason from 1962 to 1967. 

Finally, I pay close attention to how society works.

 

Measuring Global Temperatures

There are two serious problems in measuring global temperatures.

1. The first is that an average is usually meant to be based on a ‘normal distribution.’  But any temperature measure of the earth’s surface is not a normal distribution. Therefore the measures of mean, skew and variance are off the mark.

The Earth’s total surface is roughly 200 million square miles.  Of this 14 million square miles is the ice of Antarctica and the Arctic, which is always at 32 degrees Fahrenheit. That means 7% of the Earth is the same minimum temperature. Not a normal distribution.  Ice does not go below freezing temperature.

The land mass not covered in ice is 40 million square miles. That is 20% with widely fluctuating temperature.  The remaining 73% is ocean which cannot freeze, setting a lower temperature boundary of 32 degrees.  Definitely not a normal distribution for the surface of the planet.

I’ve swum at the equator so the upper temperature of the ocean is below 80 degrees.  The ocean is always within a 50 degree range.  Again, not a normal distribution. The average ocean temperature for the globe is 61 degrees Fahrenheit. Which is close to the midpoint of 80 plus 32 which is 56 degrees. 

My calculation of the global surface temperature based on satellites and balloons is 57 degrees, which has been steady since 1950.

2. The second problem in measuring the surface temperature of the earth is also that it is not a ‘normal’ distribution.  The bottom temperature that can be measured is very sticky around 32 degrees Fahrenheit.  On the 20% that is land mass the temperature can rise to any number or drop to any number, but the remaining 80% of the Earth is bounded on the bottom by the 32 degrees.  That is a very bottom truncated distribution.

This means that the global average can rise faster than it can fall. Making the surface temperature more sensitive to the volcano rises than to any factors that will lower it.

Summary: because the global temperature is not normal, because it is truncated at the bottom 32 degrees Fahrenheit, global temperature can rise faster than it can fall, it will have erratic measurements over time. Global surface temperature will rise rapidly for volcano events such as Pinatubo in 1991 but fall slowly thereafter.  The potential for overstating a global temperature rise is significant but largely a statistical anomaly.

Unions Seriously Harm

One important lesson from the Palisades fire is that rich people or people who form their own fire district can hire a private fire fighting company.  A real estate developer in Palisades did just that and saved his entire shopping mall.

Now that everyone knows that urban entities like Los Angeles County and the California State government are incompetent at the most fundamental government functions, private companies will take on the relevant work.  Rich people and rich populations will hire them in the future.  Equity be damned.

How does that one example matter so much? 
We will now see hundreds of private firefighting businesses created to be alternatives to the politically controlled standard municipal fire departments and water supplies. People who can afford private government functions will no longer tolerate low quality public service to them.

The same has been increasingly true in education.  Parents have always paid for parochial schools in hopes of getting better or safer education for their children and they have paid for private schools in hopes of better education.  Homeschooling is an alternative for those who can’t afford private schools.  The public schools are controlled, nearly everywhere, by unions which make good education impossible with firing provisions and promotions that are irrational.

Most people don’t know how unions have seriously harmed fire and police departments.  Fire departments are three times too large.  They were never cut back when the causes of home fires were reduced due to safer bedding, the decline in smoking and better home-building electric and gas codes.  Making public fire departments far too expensive.

Put two and two together: unions in schools, fire departments, police and other government services and their control of urban governments have made urban government services inadequate and incompetent.  

People with money will create their own private government services.

Ann Landers and Israel

Longtime readers know my view of my own Judaism.  We Jews are the chosen people. Chosen to help humankind be ‘better.’  Jews are hated because they have been able to read, write, and do math for 3,000 years and virtually nobody else can or could.  They have also been good at commerce, globally. And yes, those skills have included most Jewish women.

Israel’s role today is to continue the roles Jews have played in society for millennia.  To improve medicine, technology, food and day to day life. Israel is the moral leader in its military behavior and in countless social issues.  Menachim Begin was the true founder of the country, a moral giant.  Bibi Netanyahu is one of the greatest men in human history, an incomparable leader for all time.

So what does this have to do with Ann Landers?  Ann’s real name was Esther Lederer and her sister (Dear Abby) was Esther Phillips.  Both Jews which is the point of this blog.

I started reading Ann’s column when she started in the Chicago Sun Times and I started at the University of Chicago in Fall 1955. 

The total readership of Ann and Abby reached two thirds of the adult population of America for several decades.  The advice they gave concerned all aspects of daily moral life. To put it simply, America’s moral life for an important part of the 20th century came from two Jewish women.  That, to me, is the work of the ‘chosen people.’

Another Jewish moral advisor was Ruth Westheimer, Dr. Ruth. She was a powerful moral teacher to Americans for two decades, reaching audiences nearly as large as Dear Ann and Dear Abby at times. Her focus had more sexuality in it.

The demand of ‘the chosen people’ is to be moral leaders for all time.  Not an enviable burden.

I Was There

I was there at the beginning of the Beatnik movement, the hippie movement, and the Whole Earth Catalog.

The Beats were mostly in New York and San Francisco.  I went to the U. of Chicago, in the geographic middle, in August of 1955 and was in the male dormitories in 1957 for six months. For reasons I still don’t understand, I was a widely known radical organizer with a sweatshirt, blue jeans, disheveled hair and a full beard. The Beats were visible in the youth population of the time.  As they traveled from Coast to Coast they stopped in Chicago at the University where I got them dorm rooms to stay in.  I knew about a dozen of the Beats at the time.  An article in Time magazine in 1959 said I was one of the Beats.

When I returned to San Francisco in 1960 to go to grad school at U.C. Berkeley in economics, my wife, Helen, and I lived in San Francisco on Broadway a few blocks from North Beach. The Beat scene was centered around City Lights bookstore owned by Lawrence Ferlinghetti. There were five other Beat businesses.  The most important was a small restaurant at approximately 575 Pacific Ave. that had a monk’s bowl of rice and meat and some veggies. Across the street at the Columbus Tower was a street level window with a few seats that had a chrome Italian espresso machine, the first I ever had in the U.S. In the next block North on Columbus was a second-hand bookstore, a bar on what is now Jack Kerouac Alley and City Lights. In the next block of Grant across Broadway was The Saloon where heavy beatnik drinkers hung out.

In 1963 Salli Rasberry arrived with her boyfriend. They went immediately to North Beach where the Beats had created a jazz and comedy scene. Raz, whom I didn’t meet for seven years,  moved to Masonic Boulevard in the Haight-Ashbury. Jazz was the overlap of the two youth cultures. Both smoked pot. The Beats had speed which was sold to students and truckers.  Raz and her bunch, later called hippies, soon got LSD from the gang around Stanford that got it from psych researchers.

The Beats were a little older than Raz and her bunch; most were in their mid to late 20’s.  The Beats wore d ark clothes and had long hair.  Their view of the world was summarized perfectly in Ginsberg’s poem, Howl. Grim, rejectionist and hopeless.

Raz and her crowd were also rejectionist about the stultifying society around us, but they were ecstatic, joyful, optimistic, and full of color and vitality. Their clothes were rainbow-exciting, their music loud and wild. They intended to change everything.  Starting with food, sex, and living arrangements.

North Beach was the primary overlap of Beats and hippies.  On a personal basis they met at a house off Kings Mountain on the road over the top, from Palo Alto to Pescadero.  It was a fairly large primitive house just a mile west of SkyLonda coffee shop. That was where Hippies, the Rainbow Bus, Kesey, the Beats, and the outlaw gang of Hell's Angels bikers hung out.  I went there twice with Portola Institute (the core of the Whole Earth Catalog) friends to hang out.

I was well known in the hippie crowd as the banker at Bank of America from 1964 to 1966 and later as VP of the Bank of California who invited all the hippie movers and shakers to a Japanese lunch on Fridays from 1967 to 1970. When the first Trips festival was organized by the Beats and Stewart Brand in January 1966 at the Longshoreman's Hall, Stewart asked me to handle the ticket sales and money collection at the door.

I collected the money for an hour, but the whole scene was too exciting and too many of my friends were there, so I asked the one person I trusted, Bill Graham, to take over the door for me.

I finally met Rasberry officially in Spring 1971 at the Demise Party of the Whole Earth Catalog. We had met many times but that night we sat on a bale of hay talking from 3 am till sunrise at 7am and became lifelong friends.

This is a good place to point out to the historians of the future that the political Left never was connected to the hippie movement.  Hippies joined all the parades of the anti-Vietnam era for the dancing and music.  I know because I knew the Lefty organizers.  I started the Graduate Student Union at U.C. Berkeley and Mario Savio was my Treasurer in 1963. He became famous in 1964.  

Tom Hayden used my living room in San Francisco to try and organize the East Coast media to cover a hippie be-in in Golden Gate Park.  I was opposed to any official publicity and stopped it.

Abbie Hoffman was a colleague who helped me put on a fundraiser for some forgotten cause but he pulled out when stoned and paranoid. I handled the gate myself and returned the money to anyone who wanted it.

 

Where the Ultra Rich Came From

The ultra-rich, our billionaires, are in for a great deal of antagonism.  However, only a few hundred people know where they came from and no one seems to have written about it.

I see two sources, and a combination of the two.  

A). One came from the genius of Harold Geneen, who became President of International Telephone and Telegraph Company in 1959. He proceeded to create and run the first genuine ‘conglomerate.’  Within a decade he had bought 350 companies in 80 countries.  He had experience as a runner at the NY Stock Exchange and as an accountant.  Geneen created the corporation market. Corporations are now bought and sold like cars and shoes.

After Geneen showed it could be done, corporations became marketable objects.  Geneen managed his acquisition by standardized financial statements and careful top- level supervision.

After Geneen showed it could be done, corporations became market objects just like any other good on the market. Buying and selling corporations and making improvements in the operations became a source of riches for anyone who was good at it. 

Three lines of development extended from Geneen’s invention.

1.  First, corporate takeovers. The best known name in this field is Carl Icahn. Icahn began in the early 1980’s. In a corporate takeover, a shareholder buys enough stock and gets enough votes to take over a company and change top management.  With improved share value the company is sold by the takeover shareholder.
2.  The consulting firm, Bain, founded in 1971, found many other corporations that could be improved but refused to make the profitable changes Bain suggested. Bain then had Mitt Romney and Orit Gadiesh form a company in 1991, Bain Capital, for the purpose of buying corporations and making managerial improvements and then selling the corporations.
3. The third line of development was the creation of special purpose funds to imitate Bain Capital and raise funds in the stock market. The largest three, called private equity, are BlackRock, Apollo, and KKR. With combined assets worth $2 trillion.

As can be seen in the examples above, the stock market has been an important source of capital to realize the net gains in corporate value as the corporations improve operating performance.

B.) The stock market has been a more direct source of gain for the dozen or so entrepreneurs who created giant companies de novo. The unique source of stock market wealth has been the special stock holding status of founders.  

The lawyers in Silicon Valley who created the corporate structure of many of the extraordinarily successful high-tech companies, made sure the founders and the early investors got an extraordinary proportion of the wealth generated by the stock in these companies.  This modality is the source of many of the extraordinary fortunes of the top founding entrepreneurs.

The Democrat Party is Gone

The Democrat Party was gone, officially, in 2020 when it could not field a single viable candidate.  

Of course people still vote the way their parents did.  It can go on for a few years as it did with the Whigs.

There were three Democrat Party pseudo candidates: Kamala Harris, Joe Biden and Bernie Sanders.  Harris got less than 5% in national polls.  Five percent is the minimum that can be measured with survey research.  Biden had run for president several times before and the party leaders had kicked him out as a known idiot, exposed plagiarist, and crook. Sanders was not and had never been a Democrat. He said, every day of his life, he was a Socialist.

Faced with this choice the party leaders chose Biden as their candidate and Harris as their VP. They then used the dying party machines in Michigan and Pennsylvania and the political naivete of Trump in Georgia to win for Biden-Harris.

The Democrats, under Biden, then proceeded to finish off the Democrat Party for good. 

The Democrat Party proceeded, for the first time in American history, to bring half a dozen legal cases against the opposing party with a real and popular candidate. 

The Democrats elected no candidate in the 2024 primaries.

Over the nine years that Trump was on the political scene, the national media changed.  From 75% of the major media trusted by Democrat Party voters to less than 55%. From 35% trusted by Republicans to 15%.  A whole new media and audience grew up among voters in America.

The many outrages against Trump and the Republicans were only necessary because the Democrats had nothing else to offer, no viable issues or candidates. 

I won’t list the dozen outrages initiated by the Democrat Party because a Democrat reading the list wouldn't believe that the list represents the first time such an array of nonsense has ever been used in American politics. It happened because the Democrat Party is finished.  Historically finished.

Sometime in the next four years, a new party will replace the Democrats.

Better Economics

I earned a PhD in economics at UC Berkeley but never got the degree because: I lacked the two languages required at the time, the entire department was in love with Fidel Castro while I was on the campaign staff of Richard Nixon and I had my doubts about many parts of the economics teachings.  

I left Berkeley and over the next six months I wrote my doctoral thesis on why economic theory was wrong about ‘capital.’  I wrote a 60 page thesis that ‘capital is really just plain knowledge applied to a specific instance.  I used Robinson Crusoe as the model.  I submitted my paper to the leading journal, the American Economic Review, where it was accepted for publication.  The editor wanted the paper reduced to 40 pages.  Being arrogant, I never did the editing.  My view of ‘capital’ has become the norm in the succeeding 60 years.

Now I’m ready to correct what else is wrong with economics.

First, the core terminology of economics is wrong. Communism, Socialism, and Capitalism are meaningless empty words. The world operates on commerce. There are three forms of commerce: Trade, Industry and Clientry. 

Most of the tribal world is involved in trade.  Each trading unit aims to make a single sale with enough margin in the sale price over the original object purchase price to cover the trader’s operating costs until the next object purchase and sale can occur. Sometimes there is credit involved and sometimes there is a three-way exchange.  The largest companies in the world, such as Mitsubishi and Sumitomo Trading use three-way trades and credit.

Industry is a complex hierarchical structure of workers whose goal is to maximize output and minimize costs. Minimizing costs is usually done by operating at scales that economize the operational expenses. Entire nations and societies can be organized to allow as many businesses as possible to operate at efficient scales.  Transportation, information, and communication can be optimized for an industrial society.

Lastly, there is clientry.  An interstitial form of commerce where businesses are organized to satisfy a small number of customers with highly personalized services for long periods of time.  These include lawyers, designers, dentists, and banks.

Capital, as I explained in my 1964 paper on the subject, is highly specific knowledge often embedded in some material form.  Small boats coming into the San Francisco Bay have fathometers to measure the water depth along with maps and tide tables.  All of those are capital that has replaced strings and sounding.  But capital still remains in the form of pilot boats and human bay pilots for large ships where navigation still requires complex and changing human knowledge.

Since John D. Rockefeller created a business in the 1880’s turning crude oil into gasoline, and gasoline and its derivatives have been the prime medium that underlies modern commerce.  Since OPEC and the oil producing members throttled the oil production of its members in 1973 the price of oil is demonstrably the foundation of inflation.  Standard economic teaching associates U.S. excess of government spending over tax revenue as the source of inflation.  This may be true in some cases as post WWI in Germany and in many South American banana republics, and in the 1800's due to gold discoveries but oil price is the modern source of inflation.

Interest rates may be the long term cost of capital in individual investment cases but the interest rate set by national banks can’t be.  Many countries in the 1990s and 2000s have had zero or minus national interest rates and Japan had a decade-long deflation. Neither resulted in infinite or massive investment.  Interest rate, for investment purposes, seems to be set by banks and investors in an international market place.

There is no capitalism, there is only commerce.

Capital is knowledge in some physical form.

Oil is the basis of modern society and the rise in the price of oil is inflation.

National interest rate is not the time value of long term investments.

Biden Almost Killed Me

In the Fall of 1991, I was riding in a taxi down K Street in Washington, D.C. on a Saturday when the Senate hearings on Judge Thomas were underway.  I was going to a board meeting of a group I was associated with for seven years. A global third world funding project called Appropriate Technology International.

The driver was an Arab speaker with the radio tuned to the Senate hearings.  Anita Hill was testifying about the day she was with Thomas who had a can of Coke in his hand and he joked that there was a pubic hair on the can. The driver asked me what “pubic” was? I said it was hair from her pussy. He drove the cab into the center divide and just missed killing us on a tree before pulling back into the right lane.

How was Joe Biden responsible for this?  He was on the Senate committee and had met the previous weekend with Thomas to tell him the whole hearing would be a “breeze.”  Biden knew all along that Hill was a sneak witness against Thomas.

Japanese Think Tank

I’ve worked for several think tanks around the world.  American, French, Dutch, and Swedish but the most unique and interesting was the one in Japan where I was a partner.  It was called Dynax and there were only two of us principals.  

For the first few years, in the early 1990’s, we had a translator since neither Takakawa san nor I spoke the other’s language well. After three years we found we understood each other, he speaking English poorly and me speaking Japanese equally poorly, but slowly we understood each other, perfectly.

The three most interesting jobs we worked on were for a giant department store chain and a coalition of three giant companies including the Sumitomo Group.

The chain wanted research on the tastes of 14-16 year-old girls.  We started with in person research at youth concerts but quickly gave that up.  What we settled on was ‘Aunt Suki’ a sign-up program for high school girls in the Tokyo area.  A subject sheet was mailed to the girls each week for them to call in on Monday and Wednesday to share their opinions with Aunt Suki on some specific subject, such as lipstick, bras, shoes or hairdos. Then on Tuesday and Thursday they would call in to get a summary of Aunt Suki’s opinions on the previous day’s calls.  The client got a monthly summary.

The second research, in the mid-1990s, predicted what was going to happen when computers and communication got so good that most workers could do most of their work at home. We did a few test runs in Yokohama with a few giant company departments.  We had our own version of Zoom.  We saw that all the low-level workers were fairly comfortable for three to four days at home.  Most mid-level workers worked a few days at home, a few days in a satellite office and one day at headquarters.  Management needed to be at the head office most of the time.

The third project was the most interesting, for the same group of giant company clients. 

There was concern among management that many experts and outsiders were used throughout their companies but management felt their expertise was not fully utilized.

We developed a methodology for deeper understanding of classroom talks. 

Each student had a handful of 3x5 cards.  As they listened to the talk the students made simple notes.  At the end, with the guest speaker gone, the class walked to the board at the front and put their notes on a large branching tree of the speaker's subject. They were summarizing the talk with their notes, showing the history of what they heard on the board.

Greater attention, accuracy and understanding were the outcome.  Over months and with different groups practicing the technique, the process got better and better.