Pro Commerce

Kerry denounces followers

As I pointed out in an earlier blog, John Kerry is in a Lose-Lose situation in the debates because the entire Left has been calling W. Bush stupid for four years. I've heard it from my family members and close friends ad infinitum. Now they get punished.

Kerry found a solution. Insult your followers by saying the Left doesn't know what its all about. Don't you Lefties know that W. Bush is smart? The Left must have been idiots to say W. Bush was stupid for all those years. Hear it from the boss on ABC in Bal Harbour, FL:

Asked if he thought Bush were smart, Kerry said: "Absolutely. He's a very clever debater. ... He's president. Anybody who doubts that somebody who isn't smart as president doesn't know what it's all about."

Esthetics for the day

This is one of my favorite photos from Shanghai. The righthand part of the image is a shot of the same flower bicycle from the back. Click to enlarge.

No longer a Jew

I am no longer a Jew.

I am an Israeli-American.

Jews are the people of Palestine who were driven out of Palestine between 200 BCE and 70 CE. As exiles Jews developed a religious system built around synagogues and rabbis. My parents and ancestors were Jews, exiles from Palestine who survived 2000 years in Diaspora.

Theodore Herzl talked about the end of Jewry with the creation of a State of Israel. Many thinkers have seen this coming.

My realization is that the State of Israel, that I can call home, came into being during the past twelve months, the Hebrew year 5764. What happened is that Israelis in 5764, came to realize that they do not now and never will share a state with the Arabs who live adjacent to them. Israel is an international state, not a Middle Eastern state.

The death of this false idea of Israel, as a land shared with Arabs, was the birth of a new Israel. Israelis lifted a horrific, false ideology from their shoulders and became optimistic, energetic and to put it mildly, a new people. I am one of them.

Jews will disappear over the next several decades as they come to realize the reality of their circumstances. Jews will note (from the Passover service) that I refer to Jews and their circumstances not including myself. I am no longer an exile, no longer in Diaspora; I am an Israeli-American.

I was wrong again

Yesterday I went to Rainbow Grocery in San Francisco. Rainbow, a workers coop in the Mission District, is still running strong.

I predicted a year and a half ago that Rainbow would fail (slowly) after a segment of its anti-Semitic employees decided to ban Israeli products and carried out their decision.

The Jewish Community outcry resulted in picketing, poor press for Rainbow, a public apology and, six months later, a change of policy to keep a segment of anti-Semitic employees from destroying the whole business on their own.

I expected the damage from the anti-Semitic employee uprising to be more serious and long term. It doesn’t appear to have been.

Its Against the Law

David Unowsky violated Phillips’ Law of Small Business Expansion.

Today’s Wall Street Journal has an article by Cynthia Crossen titled: Mismanagement Closes a Bookstore: Popular Independent Held Its Own With Superstores; Overextension, Debt Fatal.

The owner of the store, Ruminator Books, had great success in battling the superstores, B&N, Borders and Amazon in St. Paul for 30 years. Then he decided to open a new store in a new location in Minneapolis. He had to close both stores after three years of losing money.

Phillips’ Law of Small Business Expansion is: Never expand to two stores. Expansion can only be done with three or more stores. Phillips’ Law doesn’t make sense, but commerce is not about sense, it’s about reality.

The reality is that a second store takes too much owner/management time. A third store requires the owner to hire three real managers and to be the owner/CEO. The marginal cost of paying three managers as opposed to the owner being one of the managers and hiring an assistant manager at the second store, is always less.

Let David Unowsky say it in his own words, and in the words of everyone who has failed with two stores: “It was beyond my level of competence. I wasn’t wired to run two bookstores”.

David, no owner/manager has the managerial time and skill to run two stores. Don’t blame yourself.

Baby prices fall

I love that headline. Many ethicists have dreaded the day when a price index on babies is published. It doesn’t bother me.

I’ve talked with many American parents at airports and in airplanes coming from Guatemala and China with adorable newly adopted children. I also know several with children from Russia. I’ve been talking to such parents for about five years.

What I notice is that the price of an adopted baby has been dropping rapidly. Five years ago, the price of a total transaction to adopt, including airfare, was in the $30,000 plus range.

A month ago in China, I met a couple that was on their second adopted child and the cost, including travel, adoption and bribes was under $10,000.

Now the reason appears in today’s Wall Street Journal. The article sub-title is “Some Domestic Agencies Say They Now Have More Babies Than Applicants”.

The reason, according to the writer, Suein L. Hwang, is that there are more open adoptions. That means the birth mother knows the adopting parents and vice-versa. This has apparently led to more mothers willing to put their children up for adoption.

Secrecy losses another battle in the centuries long battle against openness. (Openness is a key attribute of success in commerce).

Black political problem

Chip Johnson, a black columnist for the S.F.Chronicle, brings us the up-to-date news that the Black community is having a difficult political problem.

The Bush administration has been giving money to Black churches for social outreach and many Black churches appreciate the money and support. Bush may be getting the political credit he deserves.

Moreover, my connections in the Black community tell me there is a genuine Black shift to Pres. Bush underway.

What I love most about this political shift is that it is an interesting paradox. The Black community is now and has always been focused on its churches. The Black community, because of its 1950-70’s migration out of the rural South deserves some help in socializing in the urban North.

The Democrats cannot help in the effective way that the Bush Republicans can, because the Democrats are wed to a church-state separation. The Democrats church-state separation makes it nearly impossible for them to help the very constituency they most fervently claim to be helping.

Kerry No-Win Set-Up

Sen. John Kerry has been set up for a no-win debate this Thursday. He has been set up by the Lefties over the past four years.

I want to digress for a moment. I have paid a attention to the issue of honesty and dishonesty for many years. My 1982 book was titled Honest Business. (Friends often asked me whether it was fiction.)

The problem with dishonesty is that it has long-term negative consequences out of proportion to the initial act of dishonesty. Israel now has the Golan Heights (and will never give it back to Syria) because of Egyptian dishonesty.

In 1967, in the 6 Day War, the president of Egypt, Gamal Abdal Nasser, forced the Jordanian King into joining him in stating that the U.S. had attacked Egypt, not the Israeli Air Force (because his 600 plane air force was destroyed on the ground in a few hours by the Israelis without any help). The lie was intended to draw the USSR into the war. The consequence of this big lie, which is still taught to every Arab child to this day, was that it made U.S. President Lyndon Johnson so angry that the U.S. made no effort to call for a cease-fire, which it could have gotten immediately. The six-day delay in a cease-fire effort gave the Golan Heights to Israel. Permanently.

Back to the point. Lefties have been saying W. Bush is “stupid” for four years. (They obviously didn’t watch the Gore-Bush debates in 2000, which were just re-broadcast on Cspan.) The consequence of this Lefty dishonesty is that John Kerry is in a loss-loss situation in this coming Thursday's debate. (I know that many Lefties are self-deceptive and actually believe this stupid nonsense. When I was part of the left we used to say the same thing about Reagan).

Sen. Kerry automatically loses the debates because Bush will not look stupid. Kerry also loses if he sounds too academic, elitist or anything else that might be used to show he is smarter than President Bush.

The Left has handed Bush a certain win. The certain win in the 2004 debates are the consequence of Lefty dishonesty. The dishonest and delusional statements that I’ve heard, several hundred times a year, for the past four years, that W. Bush is stupid automatically hurt Senator John Kerry in the 2004 debates.

Earthquake rumbles on

The earthquake from the Israel-Russia agreement two weeks ago, rumbles on. See my blog.

The following quote comes from Haaretz today.

According to reports in the Arab world, the leaders of Hamas and other organizations have sought permission to move to Iran, Qatar and Bahrain, fearing the long arm of Israeli intelligence services.

Al-Hayat also quoted diplomatic sources in Europe on Friday saying the secret service of an unnamed Arab country had transfered a great deal of information on the Hamas leadership abroad to the Mossad intelligence agency at the request of its chief, Meir Dagan.

Following my lead, you can guess that the so called unnamed Arab country is Russia.

Heroes

I read The Image: A Guide to Pseudo-Events in America by Daniel J. Boorstin this summer.

At the time Boorstin wrote the book in the early 1960’s the destruction of heroes was fully underway. We didn’t have a word like pathography but many were being written.

Boorstin also looked at the issue of celebrities, people who were appealing because they were famous.

I have little to contribute to the idea of heroes. It has been pointed out that there is a close relationship of hero to war and the return of heroes at 9/11 as a signal point in the start of a new war.

What I want to point out, with only two dots on my regression line, is that Ronald Reagan’s death and weeklong mourning was not because he was an unassailable president, but because he was a celebrity who became a powerful politician. Reagan was a Teflon president; he was always unassailable in office. Reagan was a celebrity to start with.

I believe the same is true of Governor Arnold Schwarzenegger. He is a Teflon governor. He is Teflon because he was a celebrity to start with.

The combination of being a celebrity and being a popular politician seems to me, to be the basis for a new type of hero.

A celebrity who becomes a public servant becomes a hero.

Earthquake in global politics

On Monday September 13th the Russian Foreign Minister Sergey Lavrov, signed an agreement with Israel in Jerusalem. I mentioned this agreement in an earlier blog.

The Israel-Russian agreement is an earthquake in global politics. I now know some of the secret elements of the agreement. The first step, which began before the actual signing, was an exchange of security training personnel who flew to Moscow to train Russian airline security people. The second step is the exchange of intelligence information. This is a complex step but it has begun with exchanges on a list of names of the top threats to both countries. A much later, fifth step, involves joint military training exercises.

Already in two weeks since the signed agreement, Syria has pulled back troops from Beirut to inside Syria and Russia has offered to put Hamas and Hezbollah on the U.N. terrorist list.

The earthquake is just beginning.

One of the sources of current speculation is about the meaning of Putin’s “I was wrong” statement. Was he referring to the Russian government? Is he thinking about creating a Singapore-like model with commerce free, the appearance of a democracy and the reality of a tight tyrannical control?

Was Putin thinking about Iraq? Does he buy the magnet theory that Iraq has been a magnet for terrorists where they can be fought with military personnel? If he believes the magnet theory we will see Russian troops soon in Iraq.

(The image on the right is interesting...you can click on it).

Where is Edwards?

Friends and columnists are asking, “Where is Edwards?”

The answer is: he is hiding since he and Kerry offended the most effective and powerful politician in Washington (Cheney). How does Cheney get this leverage over Edwards?

Answer: Cheney has arranged it so that if Edwards comes out of hiding, both the House and Senate are ready to Barbecue him. Both houses have committees with tort reform bills ready to vote on and a long list of prominent witnesses who have been damaged by a medical liability case. Neither Edwards nor Kerry want tort reform to be made a big issue.

That is how hardball politics is played in Washington.

Bush could win in California

The latest poll in California shows Kerry 12 points ahead of Bush.

I just made a bet, with a knowledgeable politico, where I get 2 to 1 for betting on Bush to win California.

I see two things. First, this election is a mirror image of incumbent Nixon versus anti-war McGovern in 1972, a landslide where McGovern only carried one small state. It also resembles the incumbent Reagan versus Mondale in 1984, another landslide where Mondale only carried one small state.

Don’t worry. Kerry won’t get the worst voting result in U.S. history. That spot belongs to Alfred Landon who carried no states in 1936 against incumbent Franklin Roosevelt.

Second, I see a big shift in the components of the California race. Most Latinos and women will vote in smaller numbers because Kerry has not aroused them and some of the remainder will vote for Nader as a protest against this election where they don’t feel they had a chance.

Importantly, Latinos and women both have been strong Democrat supporters and national data show a decided swing toward Bush.

There is a visible shift among Latinos and women toward Bush. Those two groups comprise a large part of the California electorate.

I think Bush has a 40% chance of winning California. My thesis will be evident if we see George W. and Governor Arnold campaigning together in the last few weeks.

Unchurched

The respondent to my last blog was among the many people who think of W. Bush as a religious zealot.

I presume these people are unchurched and don’t know the difference between W. Bush who is a Methodist and Jimmy Carter and Bill Clinton who were Baptists.

I am a Jew who was the business manager of Glide Memorial United Methodist Church for eleven years. I worked closely with half-a-dozen Methodist ministers in addition to two Methodist bishops. I know the difference between Methodists and Baptists. I will presume to explain it to you unchurched.

Methodists have a three-century long history of social responsibility, a highly developed public moral value system and, most importantly, a well-developed moral conscience. The Methodist church has a structure and significant moral restraints on each practicing Methodist minister.

That religious background describes the roots of W. Bush’s moral strength quite well.

Baptists and neo-Baptists have no common moral conscience, no common public moral tenets. The Baptist movement is based on small churches built around charismatic preachers. There is no formal structure to the Baptist movement. They have contentious conventions with no power over any of their preachers.

The religious zealots who have been president are Jimmy Carter and Bill Clinton. The moral failings of these two men are of historic proportion.

W. Bush is not of the same religious nor moral persuasion as these two predecessors.

Why campaign so hard?

I have wondered why Bush is campaigning so hard, when he has had the re-election sewed-up for months.

He loves campaigning, but I don’t think that is the main reason.

I think Bush has a strategy. His second term could be a lame duck affair with little happening. I think he is campaigning because he wants to be a strong president and pass even more legislation than he did in his first term.

To pass fresh new legislation (his package of bills is radical) he needs a Congressional majority and both Houses in debt to him. He can do that by campaigning for the critical Senate and House races.

That is what he is doing. He did it in the 2002 off-year Congressional election.

Bush can win big in the Senate in South Dakota, South Carolina, Pennsylvania, Oklahoma and Florida. The Bush coattails can create a filibuster-proof Senate and a 30 seat plurality in the House.

I get my data from Business Week Sept 27th (Democrats: A Hill Too Far? )

Where is Dan Drezner?

Where is Dan Drezner when we need him?

The so called October Surprise happened at the end of August when terrorists in Beslan shot escaping children in the back. That changed the American political polls from the earlier status where the economy was the top issue to the current status where terrorism is the top issue and jumped W. Bush’s standing by a large number of points.

It also led to President Putin saying he had been “wrong” in his previous position on terrorism and led to the beginning of an intense Russian engagement with Israel. Russia’s chief security men immediately went to Israel, Israeli security personnel immediately flew to Moscow and the Russian foreign minister went to Jerusalem to ink a secret agreement with Israel on Monday this week.

Dan Drezner should tell us what this means.

It would appear to me that this is a major shift in world politics. Russia may be joining the U.S. in Iraq by the end of the year. Russia, the main supplier of nuclear power plants to Iran may put pressure on Hezbollah. Russia may begin supporting Israel on its fence and other self-defense measures.

Dan, what does this mean?

Wrong again

In a comment on an earlier blog that I posted yesterday I said “I wish there could be a discussion somewhere about the moral abortion that occurred when Carter publicly attacked America for going to war against a tyrant.”

I was talking about ex-president Jimmy Carter and his public position opposing the second war against Saddam Hussein. Carter was the first ex-president to publicly attack the U.S. government.

I was wrong. There has apparently been extensive discussion behind the scenes about Carter’s disgrace of the presidency.

The invisible discussion is visible in a comment by David Frum in a book review in the September Commentary. “….former President Jimmy Carter, whose speech accepting the 2003 Nobel peace prize—during which Carter denounced on foreign soil the foreign policies of President Bush—may have been the most disgraceful act by an ex-President since John Tyler took a seat in the Confederate Congress”.

John Tyler, known as the “accidental president” because William Henry Harrison died one month after taking office, from pneumonia. Tyler was a divisive president who played an important role in causing the Civil War, in much the same way Carter contributed to the current WW4.

Carter's disgrace will be more evident in the future, after President Bush is out of office. When the future American president (of either party) needs the public support of ex-presidents to back up a bipartisan position, the new president will face the problem of inviting both ex-president W. Bush and Carter, the man who attacked him. Don't expect W. Bush to associate with Carter the moral pit bull with rabies.

We all lose because of Jimmy Carter's deep moral failures.

Thinking like a general

Am I thinking too much like a general?

We are in WW4, a war against terrorism. We have many battles scattered around the world as suggested by the name WW4. Our worst threat is the use of nuclear weapons by terrorists.

In my book, we have two operational engagements intended to create stable nations where once chaos or terrorist threat was thriving (Afghanistan and Iraq). Both locations serve the goal of drawing non-state combatants into direct military battles, where we have a 10 to 1 outcome advantage in battle. In both battles the enemy is fighting to keep us from having elections. A rather bizarre military goal for an enemy, historically speaking. But a good basis for us to fight and a likely battle to be won. Essentially we are drawing the enemy into the type of battle where the enemy loses large numbers and we lose small numbers. Moreover, the battle occurs far away from our home front.

In the meantime, the greatest threat, Libya, has reacted with an unconditional surrender of nuclear weapons. A superb victory, viewed from the overall battlefront.

We have also won three other victories during these early WW4 battles. We created a stable government in Liberia with no loss of troops and good allied support. We carried out regime change in Haiti at a modest cost with a good outcome and an alliance with France. We negotiated an armistice in a nuclear standoff between two of our allies Pakistan and India.

So far, so good.

Chinese style inventions

My photos of Shanghai came back today and there are two Chinese social inventions to report. The first is on the right. You can click to enlarge the photo. The woman bicyclist is wearing a common visor that can be pushed up and serve as a sunshade. She is also wearing a white sleeve cover that goes from her wrists around her back and covers her arms, shoulders and blouse. This visor and sleeve cover are protection against a variety of bicycle hazards including exhaust and dust. A common sight.

The man on the left, I call Mr. Cool. He is tying his shirt up into a knot in front of his breast plate which is cooling on this hot day. Is this a style which will catch on globally? It certainly is cool and we saw, maybe, a dozen men using this style.

Not advising NSC

I am not currently advising the National Security Council.

If I were advising the NSC, I would report that China is a paper tiger. Now is the time to plan for a military action that will denuclearize North Korea and scare Iran into denuclearizing.

I would plan now for a date shortly after Japan has its first stage anti-missile defense operational. At that point, a few months from now, I would move as large a naval force as possible into the Sea of Japan and the Yellow Sea. Yes, I know the Yellow Sea is shallow and the Sea of Japan is constricted at all points. Once in place I would do a test firing, at a real rocket target, of the Japanese defense system.

I would expect North Korea to promptly capitulate and Iran to do the same. I would have a back-up military plan to launch a month long air attack on the North Korean troops on the 38th parallel, with special American and allied troops being flown into Japanese and Okinawan bases. I expect no counter reaction.

Frankly, I’m counting on China to know that China can’t fight any body. It has no target and would be forced, in a worst case, to take control of North Korea under tentative U.N. supervision.

The logic of this action is that we are in the early stage of WW4 and we can’t let any of the belligerents get nuclear weapons.

Thoughts after reading...

Thoughts after reading the historic Podhoretz article described in the blog just below.

This article will become a center of widespread intellectual discussion and will undercut the intellectual Lefty anti-American charade as much as the Republican Convention undercut the Lefty anti-American emotional charade.

I have been predicting an outsized Bush re-election since May for two reasons. First the polls are making the same error they made in California, where I predicted the extraordinary Schwarzenegger victory before his campaign began. The polls are not getting a decent sample with their use of a tiny response rate from telephone land lines. This incorrect sample seems to exclude democracy oriented independents.

Second, I am confident that as Deaniacs get close to the election they will see that Kerry can’t win. The Deaniacs will defect to Nader in large numbers as a show of principle.

I would love to be on the team preparing the TV post election analysis. I would use the Podhoretz article to explain in twenty-five words that we are in WW4 and America knows it. The show would continue by showing how WW4 was largely provoked by the defeatist anti-American Left during Vietnam, best exemplified by recently defeated Democratic candidate Kerry as an anti-war activist (show footage of Kerry testifying about American atrocities in Viet Nam).

WW4 was encouraged by the actions of presidential coward, Jimmy Carter, who gave victory to the Iranian hostage takers (show footage of hostages and then cut to Jimmy Carter sitting next of Michael Moore at the Democratic convention). Lastly, explain how Bill Clinton refused to listen to his FBI and CIA directors about the need to use force against the WW4 enemies (show Clinton with Michael Moore). Lastly show Michael Moore giving a speech excoriating America, cut to voice over and show the Democratic leaders with Moore at the Democratic Convention and at his film opening in D.C.

Historic article

You get to read an historic article.

I read it, printed on paper, and can truly say that it is the most important historic document I have held in my hands in my life. The historic article is written by the leading global public intellectual of our lives, Norman Podhoretz. Podhoretz is the editor of Commentary and founder of neoconservatism nearly forty years ago. The article appears in this month’s Commentary and is also online. The title is aptly: World War IV: How It Started, What It Means, and Why We Have to Win

If you read the article with the wild excitement I had reading it, you only need to read to the end of his description of the four pillars of the Bush Doctrine. That is enough to understand why the Republican Convention so galvanized America and why President Bush will be re-elected by the widest margin in American history.

After the mid point in the article, Podhoretz goes on to describe how the divisive Left has nearly destroyed America and how the Left openly invited WW4.

You know you're back in San Francisco

You know you're back in San Francisco when:

9:10 am Sunday in front of Peets at 16th & Market a woman in an electric wheelchair with a fuzzy hat and fairly dirty clothes says:"I need money, I'm cold, I'm hungry, my battery is dead, I'm locked out of my house, my cat is sick....." etc.

9:25 in line at Safeway 13th & Market. Same woman in line to buy a 24 pack of beer. Nothing else.

9:35 I take this photo at 13th and Dolores with the pack of beer under the woman's legs and the woman waves, giving the peace symbol with her two fingers.

Late travel photos

Byline: San Francisco

There were several interesting technological devices that I couldn't fully report on because I had serious computer difficulties while in Tokyo and China. I'm home and now able to post the photos. You can click on all the photos to see them in a larger size.

The first photo on the right is a stroller with two extra wheels on the back so an additional child can ride along standing up.

The second photo, on the left, is of a bicycle with a very small supplimentary gasoline powered single cyclinder engine. I only saw this one in Beijing and never saw another like it. Maybe experimental.

The third, photo on the right, was a car parking/stacking rack in Beijing. The cars are stacked up three high. The two tiers of rack that lift the cars up, sink down into the ground when not holding a car. The sequence of the cars must always be the first one in is on the top, the last one in is on the bottom.

The next photo on the left is one of three McDonalds experiments in Shanghai called McCafe. I have no idea whether Starbucks is doing well in China but there are many in Shanghai, purportedly run by the South Korean partners of Starbucks/Seattle. A coffee shop, clean and well lighted, is a place for people to meet, discuss business and read. Private space in China appears to be less available than in Japan or South Korea.

Product endorsement

I want to endorse a product that relates to my travels.

I have had a pair of shoes for one year that are very comfortable (in the photo on the right). These shoes were the only ones I took for a month in Tel Aviv, for five weeks in Tokyo and two weeks in China. I walked over three hundred miles in those three trips. My shoes are still in good shape and they feel wonderful.

The brand is Tsubo. They have a website. Tsubo shoes appear to have been designed by two Brits who work in Southern California. I recommend the shoes highly.

Biological imperative of democracy

I may be the first person to have discovered the biological imperative of democracy.

I am not alone in concluding that there are no biological limits on human culture. In an earlier blog called Con-silly-ence I agreed with the powerful argument by Richard Rorty that there are no significant biological limits on human culture.

Since then I've given the subject somemore thought. There is one fact of biology that bears on human culture and it may be the single most relevant biological fact. Important genetic traits, especially those concerning intelligence, mental talents and disposition are randomly distributed in each successive generation. That is a biological fact that results from sexual selection.

The probability that any child randomly chosen from a hospital nursery will have the same or stronger traits for creating a successful business than the biological child of Bill Gates, Larry Ellison or Andy Grove is exactly 50%. This is an inalienable biological fact. Each generation returns to the norm.

Our own children are no more likely to inherit mental traits and dispositions than any other child. (To parents this never seems true). This biological reality is probably the only one that affects culture. It means that in the meritocratic world of industrial commerce, nepotism doesn't work. Hiring members of your family, passing your business on to your child is feudal and futile. The sample of families businesses that have failed in the second or third generation provides ample evidence of this biological fact.

This point gets to my fundamental, and I believe new, insight.

The triumph of democracy may be solely due to this biological fact, since hereditary heirs to power rapidly degenerate to incompetence. Kingship, Singaporian politics, Saudi Arabia, and Syria have no future. Nepotism is always a failure.

Democracy can be defined simply as the transmission of political power without disruption by vesting the power of continuity in political bodies that are independent of the central executive authority (legislatures, states, courts and other agencies). Democracy sidesteps the biological imperative that each generation of offspring have a normative distribution of mental talents and dispostions.

That continuity of power, independent of families and nepotism (biology) will inherently, over time, provide the continuity that allows commerce to thrive. Thriving commerce in turn creates great and powerful nations.

Democracy in an age of industrial commerce therefore has a great advantage and democracies will thrive in the environment of modernity. Democracy becomes the biological imperative.

There is one interesting violation of the rule that proves the rule: The survival of the Japanese monarchy. The Japanese monarcy can be simply explained by the fact that the Japanese emperor has no power. The emperor system has survived in Japan for 2,300 years because it provides the continuity to confer power on the real political heirs who have climbed the political ladder with Darwinian infighting to become the daimyos (the real political power holders).

Global pattern

Byline: San Francisco

To follow up on my last entry, I found the August 4th Business Week when I got home, which had the top 100 global brands. Here are the numbers based on my last blog about the dominance of the U.S. and Japan for the rest of this century and the secondary role of Europe.

Top 100 global brands: U.S., (Britain & Holland 7) 70; Japan & (So. Korea 1) 7; all of Europe 20 (Europe includes booze and fashion).

China and the future

Byline: Shanghai

I am humble about this blog for two reasons. I've only been in China two weeks, a rather short time, and I need several more weeks to digest and think about what I've seen. My brain is overloaded with sensate impressions.

I've been forced to rethink three issues. First, China has little or no sense of maintenance or cleanliness (they do sweep a great deal); does maintenance follow industrialization, is it a prerequisite to industrial commerce or is it irrelevant?

Second, how strong does the desire for “progress” have to be to generate and tolerate the social disruptions of industrial commerce? More than half of China is still agrarian. China has been deliberately holding back its modernization, probably because most people don't want the disruption associated with industrial commerce.

Deng's idea of limiting commercial growth to the coastal provinces was a good solution to the problem of disruption. Coastal development generates income, produces the goods and services the hinterlands want and the disruption is constrained.

Third, are Singapore and Taiwan relevant models for China? Singapore has the political tyranny without much diversity, but Taiwan had both the Japanese and American institutions to build on. How do they relate? Neither has significant industrial commerce, mostly trade and foreign factories.

What I see in China:

On the necessities of industrial commerce -- diversity, market orientation and bias toward technology -- China has plenty of all three. There are as many different faces in Shanghai as in the United States. Market orientation – the coastal Chinese are the world's original traders, who also love technology.

On the other two key requisites for industrial commerce, China has close to none. The other two are meritocracy and openness. Openness, they just don't have -- may never have. One employee will never pass on his knowledge to a co-worker voluntarily. Nearly all knowledge is kept secret or closely guarded. You find a job or an apartment by connections. You deal with the government the same way.

Merit -- The problems of the labor force are not just agricultural where people work four months and earn enough to go home for a year. The labor concensus is that the best job is government, the second best is a government company and the least desirable is a private company. Jobs are given and promotions are much too often based on family and tong connections. China invented meritocratic examinations for the mandarin class, but everywhere I look I see a highly stratified society holding on to family and tong structures at the expense of everything else. Commerce may be making it worse.

Tentative conclusions: In the 21st Century, we will see much of the world, the parts that are connected to airports, looking much more modern, and similar, in terms of the wide variety of trade goods. There will continue to be factories located everywhere to produce the trade goods. Trade goods now include airports, apartment buildings and skyscrapers).

The driving engines of this world will be America and Japan -- the two societies with the greatest meritocracy and openness. They will long remain number one and two. Europe has too much strong government and too many ancient hierarchies to be innovative; it will lag well behind the two leaders. After Europe will come all the trade societies, including China, Russia and India.

I expect little or no industrial commerce (think global corporations) in trade societies, except as the trade societies are able to borrow from the industrial engines.

Exceptions to these generalities are the English speaking nations. Also exceptions are the Dutch and tiny Israel, both of which are already linked to the U.S as Korea and Taiwan are linked to Japan.

Travel Blog

Byline: Shanghai

I don’t need to write a travel log, people like Dave Barry and Ian Buruma do a much better job. If I were to write a travel log, it would be much more like Dave Barry. Everytime I see a new building with a giant lobby, I jokingly suggest that the whole building was erected just so there could be a fancy new restaurant. The Chinese love to eat and they love gigantic fancy restaurants.

Shanghai has become a city in the past twenty years, thanks to Deng Xiaoping. There are over a hundred thousand two story residential buildings, tens of thousands of new 4-6 story residential (six stories is the maximum walk-up) buildings, many thousands of new 20-40 story residential buildings and a few thousand new 40-60 story commercial buildings scattered over forty square miles. Most noticeable are a few hundred buildings of 70-100 stories. At the current rate of growth in buildings, the city will look more like Hong Kong and Manhattan than like any other city.

Travel logs can’t help but describe, scream about and elaborate on the low low prices of everything in the markets and the abundance of goods. (Subways are 25 cents, roundtrip to the airport on the Mag-Lev train is $10). My job is to explain why everything is so cheap.

The cheapness of so many goods in China allows Chinese to buy everything they have dreamed of: clothing, shoes, abundant food, fridges, washing machines, running hot water, toilets, bicycles and in many cases, autos. Great sharing and distributing of resources.

Everything is cheap because China has linked their RMB currency to the dollar directly. ($1 equals 12.5 RMB) President Bush has complained, mildly, that the RMB should be freed from the dollar. The complaints will grow in the future.

Tying the RMB to the dollar means everything that is imported to China is expensive and everything that is sold locally and exported is cheap, cheap, cheap. China also forces all foreign companies to manufacture in China, usually with a Chinese partner.

What are the consequences of this policy of tying the RMB to the dollar?

The Chinese get to buy everything local cheaply but individuals have little money to spend on high priced imports. The money China earns from an export driven economy is used to build the tens of thousands of 20-40 story residential buildings everywhere for the Chinese to live in, and the thousands of tall commercial buildings to promote industry. Chinese are getting the housing and industry they want.

The world benefits from cheap Chinese goods and one great consequence is near zero inflation. On the otherhand the costs of building supplies, steel and energy (read oil and gas) rise rapidly around the world. S.F. Bay Area residents will pay in the form of $ billions extra for the cost of the steel in the new Bay Bridge. China is nearly using up all the scrap steel on the planet.

One of the commercial strokes of genius in this picture is Wal-Mart, which plans to open hundreds of stores in China and already has dozens. That genius now allows Wal-Mart to sell the Chinese consumers low cost local goods directly, without importing and to use Wal-Mart's profits to build thousands of acres of Wal-Mart owned buildings in China.

Ikea, with a store in Beijing and Shanghai is following in the same path.

Runs in the family

Byline: Shanghai

I am not the first member of my family to be censored by China. My son's website was censored for several years after he visited China. I also find that China has not made this a personal matter --- other locations at blogs.com are also blocked.

What runs in the family is a highly relevant issue for me and this blog. I have concluded that there are no biological limits on human culture. I wrote a blog on 8/23 called Con-silly-ence which I can't refer you to because I can't see my own blog site from China. I repeat, there are no biological limits on human culture.

There is one fact of biology that bears on human culture and it may be the single most relevant biological fact. Important genetic traits, especially those concerning intelligence, mental talents and disposition are randomly distributed. That is a biological fact, resulting from sexual selection.

The probability that any child randomly chosen from a hospital nursery will have the same or stronger traits for creating a successful business than the biological child of Bill Gates, Larry Ellison or Andy Grove is exactly 50%. This is an inalienable biological fact.

Our own children are no more likely to inherit mental traits and dispositions than any other child. This biological reality is probably the only one that affects culture. It means that in the meritocratic world of industrial commerce, nepotism doesn't work. Hiring members of your family, passing your business on to your child is feudal and futile.

The triumph of democracy may be solely due to this biological fact, since hereditary heirs to power rapidly degenerate to incompetence. Kingship, Singaporian politics, Saudi Arabia, and Syria have no future. Nepotism is always a failure.

The survival of the Japanese monarchy can be simply explained by the fact that the Japanese emperor has no power. The emperor system has survived in Japan for 2,300 years because it provides the continuity to confer power on the real political heirs who climb the political ladder with Darwinian infighting.

The question of nepotism arises because I am in China to find out whether China will ever be a great economic power. Nepotism is a key element because this society, built entirely on family, clan and tong, cannot be an industrial giant if it relies on nepotism.

That will be one of the key subjects when I finish my research on China. I'll report next week.