Pro Commerce

Simple test

Are you intelligent, open minded and able to recognize candor when you see it. Or are you blinded by ideology?

The test involves FIRST reading the New York Times description of George W. Bush's final press conference. 

Now compare it to the Wall Street Journal version which I have included below.  Both are about the same length, fairly short.

 By JOHN D. MCKINNON, WASHINGTON -- President George W. Bush called a surprise farewell news conference Monday to give an accounting of his time in office, making new concessions to his critics while offering sometimes-emotional defenses of his handling of Iraq, Hurricane Katrina and the war against terrorism.

President George W. Bush speaks during his final news conference at the White House press room.

During Monday's 47-minute morning news conference, Mr. Bush recalled the urgency that he and his aides felt after the attacks of Sept. 11, 2001, as they searched for the proper responses, and hinted that his critics at home were only adding to the problems.

"You remember what it was like right after September the 11th around here?" he asked. "People were saying, 'How come they didn't see it? How come they didn't connect the dots?' Do you remember what the environment was like in Washington? I do. When people were hauled up in front of Congress and members of Congress were asking questions about, 'How come you didn't know this, that or the other?' And then we started putting, you know, policy in place, legal policy in place, to connect the dots. And all of a sudden people were saying, 'How come you're connecting the dots?'"

As a result, he said, "In terms of the decisions that I have made to protect the homeland, I wouldn't worry about popularity," he said. "What I would worry about is the Constitution of the United States, and putting plans in place that makes it easier to find out what the enemy is thinking, because all these debates will matter not if there is another attack on the homeland." 

During his final press conference as commander in chief, President Bush reflects on his eight years in office. He spoke on a range of topics, including the economy, the Israeli-Hamas conflict in Gaza and his actions concerning Hurricane Katrina.

He denied that the U.S. has lost moral standing around the world as a result of its response to 9/11, except among "some of the elite." He added that "people still understand America stands for freedom, that America is -- is a country that provides such great hope."

Mr. Bush also defended the administration's response to Hurricane Katrina in 2005. The huge storm unleashed flooding that devastated New Orleans. He said he has "thought long and hard" about the hurricane response, but concluded that he would have hindered rescue efforts if he had personally visited the stricken area sooner -- a sore point for critics.

He added later that the administration's broader response had been misjudged. "You know, people said, 'But the federal response was slow,'" Mr. Bush recalled. "Don't tell me the federal response was slow when there was 30,000 people pulled off roofs right after the storm passed....That's a pretty quick response."

He conceded that other aspects could "have been done better," an apparent admission that the federal effort to tend to other victims -- such as those in the Superdome -- was inadequate.

In other areas, Mr. Bush was conciliatory to his critics. He termed the Abu Ghraib prison scandal in Iraq "a huge disappointment," while the failure to find weapons of mass destruction in Iraq was "a significant disappointment" given intelligence assessments. He repeated his admission that the "Mission Accomplished" banner on a U.S. aircraft carrier "sent the wrong message."

"I don't know if you want to call those mistakes or not, but they were -- things didn't go according to plan, let's put it that way," he said.

He also acknowledged that the administration made a mistake in 2005 in seeking to overhaul Social Security. He said the White House should have pursued immigration reform instead. His push for Social Security personal accounts fell flat amid bipartisan opposition.

Mr. Bush had warm words for President-elect Barack Obama, calling him "a very smart and engaging person" and wishing him the best as he assumes office Jan. 20.

Offering a personal reflection on the extraordinary -- sometimes exhausting -- times in which he has led, Mr. Bush spoke of the pressure that comes with the office, predicting that "there'll be a moment when the responsibilities of the president land squarely on his [Mr. Obama's] shoulders....All I know is he's going to feel it. There'll be a moment when he feels it."

But he held out hope for the Obama administration's prospects, despite the tough economic times and the constant threat of a terrorist attack on U.S. soil. "President-elect Obama will find, you know, as he makes these tough calls and tough decisions, that he'll be supported by a lot of really good people that care -- care about the country as well," Mr. Bush said.

The president said Mr. Obama's election reflects a welcome breakthrough for U.S. race relations. "I consider myself fortunate to have a front-row seat on what is going to be a historic moment for the country" when Mr. Obama is inaugurated, Mr. Bush said. "It's going to be an amazing, amazing moment."

On Thursday night, Mr. Bush plans to deliver a farewell address to Americans. He is expected to look back on his time in the Oval Office and the changes the country has made. In addition, he is expected to offer his assessment of the biggest challengers the nation faces and recommendations on how best to meet them.

As for the political future, he said Republicans can recover from their recent setbacks, as they did after Barry Goldwater's defeat in 1964. But to do so they must become more inclusive.

"We've just got to make sure our message is broad-gauged and compassionate and that we care about people's lives and we've got a plan to help them improve their lives," he said.

As for himself, Mr. Bush suggested he is likely to stay involved in policy matters, including a planned book. "I'm a Type A personality," he said. "I just can't envision myself, you know, the big straw hat and Hawaiian shirt sitting on some beach."

6 Rules to keep your money

In this era of Bernie Madoffs there are a few simple rules that can keep my readers safe from out-right money fraud.  I have been a consultant to parties involved in more than three major financial frauds.

1. No investment that YOU can get returns anything much better than the average in the market. If it does, it is a fraud.

2. If anyone could make a lot of money investing, they sure as hell will not let anyone else in on the deal...they can make a fortune by themself.  Don't believe any other explanation of why you are getting in on a great deal.

3. Nobody is your friend in the investment world unless you went to elementary school with them, married them, or gave birth to them.  Even then you should be doubtful unless you have seen their own bank account for the past five years.

4. There has never been a situation where putting up a small amount of your money will help you or someone else get back a 100 fold increase in the money. Never, never, never.

5. If you don't fully understand an investment mechanism, understand it so well you could do it yourself, don't put your money in it. Nobody is too dumb to understand a financial investment mechanism. Don't accept secret or trade secret as a reason you can't be exposed to the financial mechanism. Secret and trade secret are code words for fraud.

6. Always ask yourself whether the financial idea you are offered could work for hundreds of people.  Pyramid schemes don't work past the first ten people.  Bernie Madoff's puts and calls system couldn't have worked for 20 real accounts.

White House/Estate tax

I love the fact that Mrs. Obama has her mother living in the White House. Now that is something totally human that I can connect with and so can most of black America.

I'm also glad to see that she rejected the foodie fanatics who wanted her to eat local.  The foodie fanatics probably wanted the White House garden to grow watermelon and rejected all the food the rest of America enjoys: pineapple, oranges, bananas, blueberries, coffee, chocolate, hundreds of species of fish, and everything that grows in Mexico and the Southern Hemisphere.  Goodbye and good riddance to the foodies.

Lastly, you couldn't guess from the Pro Commerce title of this blog that I don't object to the estate tax.  The estate tax is the least distorting of all taxes, it has no negative effect on commerce.  Having an estate tax just means (1) that con-artists don't get as much to work with.  19 out of 20 heirs and heiress's lose their inherited money quickly, commonly to wives and con artists; (2) Heirs and heiress's will find it harder to move to San Francisco and cast their radical Lefty vote here (we already have three time too many heirs and heiress's). (3) Only dysfunctional families get taxed...which is good for the business world (see the next paragraph).

Nobody has to pay the estate tax if they either give their money to a charitable group, or pass it on to their children via a partnership.  However, only a functional family can pass on money via a partnership. If you get along with your children you can give them anything in the form of a partnership.

That is the rub because the offspring (heirs) get real control of the assets while the parent is still alive. Dysfunctional families can't pass on assets via partnerships because they don't trust each other.

The estate tax is a tax on dysfunctional families.

Enough is enough

I sent the following letter to the Wall Street Journal:

"Please stop calling the Madoff story a Ponzi Scheme.

If Bernie Madoff used a scheme he would have stashed away $25 billion.  He didn't, he probably has a personal net one-thousandth of that amount.  This was no scheme, Madoff didn't even charge management fees.

Bernie Madoff is a man who found he could give people back part of their own money, keep his accounting secret and people loved him.  Any one who was with him for more than eight years at 12% per year pay-out got their own money back.

Bernie Madoff found a respected Long Island accounting firm that could be counted on to use standard accounting methods and do a lousy job and he quickly found that the Securities and Exchange Commission was incompetent over long stretches of time."

Not a Ponzi scheme It is that simple and that clear.

No degrees of separation

I figured it out this morning.

If you read five blogs, you are getting the same basic Internet news and data as nearly everyone else who reads five or more blogs.  There is no degree of separation among any of us. All of us blog readers have the same news and data base...worldwide for English.

Here is how it works.  I read 5-10 blogs or blog-like sources.  Each of them does the same, which is the reason I pick the ones I read.  In just 8 to the 5th power we have 32,000 blog and news readers who are certainly reading the few hundred thousand relevant blogs. The reality is that some of the blog and newspeople  just one degrees away from me are reading 10-15 sources, which gets us to 250,000 blog-news sources in just 4 degrees away from me, total. Four degrees and we have the entire English newsworld.

Please understand, having the same data and news sources does not result in the same opinions.  Opinionated data come to us through different channels as well as being filtered by our own ideology. Our own favorite blogs sort the raw data and news into forms that fit our ideology (or worldview).

I tested my thesis.  Only a sample of one is needed. 

I asked a regular Lefty blog reader if he knew about the civil war in Gaza.  Of course he did and he knew that Hamas was shooting Fatah men in the leg and killing many of them.  That is why nobody in the West Bank has even thrown a rock at Israel.

Why is this a good test?  Because, as of today, the mainstream media hasn't seen this story yet. Every blog reader knows about it.

Here are the blogs and news sources I read everyday:

Bookwormroom: a great writer who reads many dozens of blogs and articles daily, including British.
Commentary (contentions): the best thinking and scanning in the blog world.
Jerusalem Post: the first newspaper in the world to live by Internet viewership.
Debka: insider Middle East news, 50% accurate, the rest untestable.
Weakness with a Twist: my son's brilliant insights.
American Thinker: Occasional good source for scanning the Right side Internet.
Wall Street Journal (subscription): a prime source, the only national medium not afraid of numbers.
David Brooks, William Kristol and Virginia Postrel.

I also get email summaries from friends who scan the NYTimes, LA Times and Washington Post and cover Washington D.C., Tel Aviv and Tokyo gossip.

Anthropomorphizing

No comment needed for this, seen at a motel in the San Francisco Castro district.

Macho and machito

The machito guys (I only overheard their conversations) in the cigar bar a few nights back talked about football, golf, dogs (probably large ones), beer and gadgets.

Why have I created the word machito to compare to the traditional macho? Traditional macho was talk about cars by guys who could fix cars, talk about guns by guys who could use them and about chicks by guys who probably were terrible lovers.

There is probably some feminization of men going on that I will get around to writing about some day.  This is just my first stab at it.

I find that men who work with their hands using tools other than a keyboard or massage oil tend to be macho in the traditional sense.  I hang out with dozens of gay guys so I have a sense of what isn't macho.  However, plenty of openly gay guys are macho.  Often they don't show it because it isn't good for picking up every guy one might want to have sex with.

One of my gay friends is an ice hockey player, several others drive racing motorcycles and love of powerful cars is not uncommon. Several are contractors and superb carpenters. Only one even looks at the sports pages.

Macho, when I finally think about it is the willingness to defend others physically.  It is derived from the warrior ethic. 

Women tell me not to stand between a mother and her children when they are threatened.  That may be true, but that is defense. In threatening public situations, I have seen 20 men step forward to physically defend another person for every 1 woman I have seen do it. Protecting children is probably not macho or warrior.

Most of my gay friends lack that warrior willingness to use his own body to protect another person.  That could be the macho I don't see in the guys who talk about 'football, golf, dogs (probably large ones), beer and gadgets.' Macho is warrior self abnegation on behalf of others.

Have I got the difference between macho and machito?

The S.F. Chronicle doomed

The Seattle PI just gave its staff 60 days notice.  The PI is owned by the Hearst Corp. which also owns the money losing S.F. Chronicle.

A reasonable guess gives the S.F. Chronicle only a few more months.

It felt good

I went to the Pro/anti Israel rally at the San Francisco Civic Center today.

There were 250 pro-Israel demonstrators and 600 anti.  The police did a good job of keeping the groups separate and being professional.

The anti's were wallowing in hatred. Much younger than the pro side of the street.

I enjoyed the pro-Israel crowd.  It felt good to know that for the first time in 1,000 years Jews can gather safely and defend their rights without the hatred around us being a serious threat.  We must thank the America of 2009 after eight wonderful years with the Jew's best friend in history as the American president.

Changed my name

When I order espresso the name I give to be called when the espresso is ready has been Condi.  For eight years I have been Condi; most baristas have no idea I am referring to Dr. Condoleezza Rice. 

Two reasons for using the name Condi.  First, I am in a gay neighborhood and Michael is the 4th most common name after Scott, Paul and Bruce. If I used Michael I would be hearing my name incessantly. 

Second, I chose Condi because I admire her.  Most people have never appreciated the extraordinary accomplishment of this black woman in the world, not just in America. She, like the only other real black who made it to the top, Justice Thomas, went from the bottom of our society to the top in a quarter of a century by the power of her deep personal merit. Both did it in the face of hatred and bigotry by the entire Left wing of America.

Since Condi showed that she has gone native a few weeks ago (and done much worse), I am now, 'Ariel' after the inert body that was formerly the magnificent Ariel Sharon. Condi went native, meaning she was absorbed by the mandarins of the State Department, as shown by her use of the word 'proportional' in the current Israeli (wholly justified and belated) defense action in Gaza.  The mandarins have owed their allegiance to to the UN for 60 years not to the U.S., unfortunately.  We need our own State Department.

Corruption on the commission

In talking about the different nature of bribery between Illinois and California, in a conversation with a former member of a the commission that I testify before, I got the story of several bribery attempts, one of which was fascinating.

The former commissioner tells about a boring hearing in San Diego about a rate increase for the local utility.  A lovely woman lawyer for the utility sat down next to the commissioner's wife in the audience and started talking about how boring the session was. 

The lawyer finally suggested that she and the commissioner's wife leave and go shopping.

I realized that on a shopping spree one woman could easily buy the other woman $50,000 in gift merchandise. That would be quick efficient bribery.

With friends like these

Two articles I want to call to your attention in today's Wall Street Journal. 

One is an op-ed by Edward Luttwak ( I interviewed him..a great guy) pointing out (1) that Israel did win the 2006 war against Hezbollah.... who has consequently refused to help Hamas in any way. (2) The Israeli strategy that spares civilians in every way possible has resulted in vast cooperation by Gazans who have given Israel the intelligence information needed to find Hamas targets of people, offices and weapons.  Lastly, I'll add, even the remaining 1.5 million Arabs in the West Bank have done nothing to help the Gazans.  With only Lefty intellectual friends in the U.S. and the whole Left in Europe as allies, the Gazans are really screwed.

Two, Carl Bialik gives us numbers on porta-potties we'll all need to remember.  Looks like the crowd for the coming Inaugural will need between a low estimate of one porta-potty per 50 people and a high of one per 100.  The actual number available will be more like one per 200.  A standing crowd is estimated to take up 5 square feet per person. Many expect this year's crowd will make a porta-potty waste mess.

Expect to get a good porta-potty number after the Inaugural.

Advice to Meg

Meg Whitman is running for governor of California in 2010.  I've run campaigns (never run one at the gubernatorial level) and I offer my advice.

First, you will probably be running against Jerry Brown.  If it looks like Brown will easily win the Democratic primary, you should make sure that another person in the Democratic primary paints Brown with the hippy label and the anti- Prop 8 (Prop 8 de-legalized gay marriage).  Neither issue will hurt him in the Demo primary but the mud will stick on him.  The great Nixon campaign manager, Murray Chotiner, taught me and others willing to listen, to get the mud smeared on the opposition candidate in his primary, never throw mud in a general election.

It might also be possible in the primary for an Oakland black to say Brown was a terrible mayor of Oakland.

Second, your job is to get Southern California and Latino votes.  I would start right now and get on two Latino Art boards and get them one hell of a lot of money...to have important Latino art shows in the South that everyone knows about. 

That is all it will take to win.

Simple living and pro commerce

There is a connection between pro commerce and simple living.  In my book (with Rasberry) Honest Business I emphasize the importance of starting a business with capital that is borrowed from friends and family and keeping the costs low as well as keeping the capital in a business small.  Simple living is the way to start a business.

Here (WSJ subscribers) is Seth Tibbott who started Tofurkey that is in every supermarket these days (sold 275,000 roasts in 2007).

'You started the business .. officially in 1982 by borrowing money from your brother and mother. How did you keep things going after that?

"I tried to live as cheaply as I could in the beginning. In 1984, I built a tree house which I lived in until 1992. I paid $25 a week to a guy who was renting the trees out for that express purpose. I had a wood stove, a phone and hot and cold running water."

Seth is my simple living- pro commerce hero.

Portfolio updates

I've mentioned two portfolios over the years.  The first, in Jan 2004 was a humorous non-PC portfolio made up of the evil corporate empire of that year: Citicorp, Microsoft, Hallibuton, Walmart, Starbucks and MacDonalds. Well the non-PC is down 9% in five years while the Dow is down 15%.

The second portfolio I recommended is made up of one U.S. index ETF, one Japanese index ETF, one Asian index excluding Japan and a European index ETF.  I recommended it in January 2007.  In the subsequent two years my recommended portfolio went down 43% while the Dow went down only 30%.  Diversifying internationally has not been helpful at this point.

The world of finance is not diversified, in fact, the world has the flu when the U.S. has a cold.

Good debate and good business

LG has started hiring for debate skills according to its CEO Nam Yong.

I met one of my good friends when I was a judge at a debate contest in Tokyo.

Debate contest....what is that?

That was the idea of Matsumoto, Michihiro who was a TV commentator and avid fan of America.  It was his belief that the success of American business comes from our ability to argue with each other, in a business setting, without losing our civility or our friendship.  He believed that vigorous confrontation of ideas was the best way to develop new ideas and new solutions. Japanese never argue.  Never, without losing a friend.  So Matsumoto san was trying to teach the Japanese how to argue peacefully.

I agree with him and his analysis.  We Americans either overlook this positive quality of ours or deny its importance.

What brings up the issue is that a South Korean corporate giant, LG has started hiring foreigners into top management with the intention of provoking open debate.  Here is the article in Businessweek.

International cheat

One of my wonderful readers had a problem of international fraud.  The reader, like half my readers, lives outside the U.S.  He ordered some second hand equipment that he bought online and had shipped to him.  The company that sold the equipment sent crap but the cost of shipping it back exceeded the value of the heavy equipment and the seller ignored all pleas for recompense.  Not much to do.  My reader asked what I would do about this fraud.

First, if I were ever going to be in the town where the fraud operates his business I would buy a local baseball bat and break his knees, especially since my appearance is unknown to the fraud.

If that is not possible or acceptable then I would begin a letter writing campaign with two key components: first use real letters, snail mail, addressed to real individuals; second target a dozen official people.  With enough targets there is likely to be action.  Each letter must be in clear English and directed at motivating the recipient.

Example: I would write to the local District Attorney pointing out that a successful local fraud operator, unrestrained unpunished, will attract other fraud operators to the same town and create future problems.

Example: Write to the local Congressman pointing out that other members of Congress and people in the Executive Branch could very well start looking into the types of fraud in the congressional district exemplified by this fraudulent exporter.

Got the idea?  My experience is that enough letters, including local press will get action.  Don't waste a stamp on the Better Business Bureau or the Chamber of Commerce...99% will do nothing or worse pass your letter on to the fraudulent operator.

Goodbye Wedgwood

Many business historians consider Wedgwood the first industrial company.  It started producing dinnerware on a large scale in the late 1770s.  Wedgwood Ltd. lived until 1986 and was bought-out by Waterford Crystal.

Waterford-Wedgwood died yesterday.  The longest running success in industrial commerce...240 years.

I don't believe Wedgwood was the first company to produce products on an industrial scale, that was never a unique accomplishment.  I believe the genius of Wedgwood was industrial marketing.  All products in England in 1770 had to pay to sell their products to the Royal House (it is true today 'Purveyors to the Queen' label is still for sale). So Josiah Wedgwood made a set of dinnerware for the Empress of Russia (whether she paid for it or not is unknown).  He displayed the set in London along with great publicity.  He started selling copies by the thousands all over Europe.

Marketing genius and a testament to the power of an unsullied brand name.

Steve Jobs appreciation

I don't have an Iphone, Ipod nor a portable mac.  Nevertheless I appreciate the technological, aesthetic and managerial genius of Steve Jobs.  We are fortunate that the two founders of Apple included one with such great managerial potential.  I believe we should be praising Job's genius and extraordinary contribution to commerce while he is alive. He uniquely deserves it.

All praise and gratitude to Steve Jobs.

My personal sources tell me that modern medicine isn't helping Jobs.  He is often seen eating ice cream on the Peninsula because it is the only way he can get enough calories...which he is still not getting.

Tribal gatherings

Many readers may know about the remnant hippie Summer camping-fests call the Rainbow Family gatherings.

This is to let you know about a mountain-man gathering that exists and that it has many parallels. 

There is also the gigantic Buffalo Chip motorcycle gathering that John and Cindy McCain visited during the 2008 campaign.

Are all these modern geographic gatherings a replica of the Chattaqua tradition or a new emerging response to community and conviviality?

Please join me

We have a new and unique situation to think about.  Please join me in thinking about this fascinating, extraordinary, morally difficult, new human phenomenon.  It is distinctly human as no other species is known to do this.

I am talking about the Hamas/Hezbollah Arab use by warriors of their own children and families as sacrifice.  I use the image of a Hoplite warrior going into battle with his 6 year old living daughter strapped to the front of his shield.

This simple but horrible Hoplite image clarifies the issue.

First, this may be a very good strategy.  It may initially force your enemy to think of themselves as a parent.  That may slow-down and confuse the enemy.  In most wars before 1950 soldiers wasted 50% or more of their ammunition firing over the heads of their enemies, they were reluctant to kill a fellow man.

Second, it may guarantee that the enemy will be reluctant to fight in a future war after having had many post-battle nightmares about killing children.

Third, the tactic may garner social opprobrium against the enemy in the rare instances where social may be a restraint and the enemy.

There are likewise several counter-productive elements to the child sacrifice tactic.

First, you may convince your enemy that you are not human.  Warriors may be more willing to kill dangerous non-humans.

Second,  you may lose the support and number of your own forces much more rapidly than when this tactic is not used.

Third, you may lose the support of your own civilian forces much more rapidly than without the use of this tactic.

Fourth, there may be a readily applicable counter tactic: the enemy my offer safe passage to all mothers and children, and children alone, who are specifically unwilling to be used at shields.

(That last idea is a good one...I'll send it to my military friends in Israel.)

Mnemonics

Regular readers have heard my rant on the futility of expecting much from physical studies of the brain.  One thing we know about how the brain actually works will make it obvious that no physical examination of brain functions will have much promise.

We know from mnemonics that the brain sorts what little selective memory it does create into connected categories.  That is how we memorize and how memory training works.  You remember faces, speeches, names by connecting them to other well established memories (images, jokes, faces, locations..etc.)

The classic great story tellers memorized each part of a story standing in front of a column in the Colosseum, moving on to the next column for each new part. The story was remembered in sequence by walking around the imaginary Colosseum in the story teller's mind.

How can we ever expect to see that the image of a redheaded named 'Jamie' is connected in the brain to a wonderful sunrise? We can't.

Nor can we expect to see the process in action.

History?

I can't find or recall an instance in history where thousands of parents at a time offered their families to the enemy to be killed; their little boys, babies and little girls; the parents are consciously choosing to do this.

Many American civilizations have asked parents, one at a time, to offer their virgin daughters for religious sacrifices. 

Most tribes in the world have offered their member's wives and daughters to visiting men for the visitors to have sex. 

Many millions of men have sacrificed themselves in warfare; individually and in large groups.  Officers have sent their adult male subordinates to be killed.

A few suicidal parents have killed their spouse and children along with themselves.

In the past several decades we have seen, what I believe to be the first instances, where parents offer their children to the enemy. Hamas Arabs and Hezbollah Arabs are doing that right now.  Hamas and Hezbollah members are placing military infra-structure, including rocket launchers and explosives in or adjacent to private homes with children living in them. These Arab parents are consciously offering their children to the enemy to kill.

This is the equivalent of a warrior strapping his 6 year old daughter onto the front of his shield as he attacks the enemy with his sword.

Isn't this new?  Has anyone written or talked about the historic deviance we are seeing. 

Interesting conversation

This morning at coffee my old friend Capt. M was there as well as a person I hadn't met before, Dr. D.  Capt M is a fraud investigator in DC and Dr. D. is a young man, retired from his own brokerage firm.

Dr. D. knew Bernie Madoff, used his firm for trading and was on his boat at Boca Ratan. Capt M has worked many SEC cases and knows all the people involved in investigations.

Conclusion: The SEC left Madoff alone because he was such a big and respected name. Madoff was only forced to confess because the stock market was tumbling and a few people were pulling their money out of Madoff's accounts.  Madoff's accounting firm was insignificant, on Long Island, with only three people who were easily misled by the simple accounting shell game Madoff used.

Bob on ITT and Harold Geneen

Harold Geneen the CEO of International Telephone and Telegraph has long been a hero of mine.  He ran one of the earliest diversified international conglomerates, from 1959 to 1977 and was successful. He raised revenue from $1 million a year to $15 billion and bought 350 companies.

He was also a simple liver.  Rather than have homes and travel with a suitcase.  He had hotel rooms in the major cities where he operated and had each one stocked with appropriate clothes. In the final decade of his life he lived in the Plaza in Manhattan working on deals.

I met a major subaltern of Geneen's at a party. Bob was in top management almost from the beginning of Geneen's rein. Bob served in Europe at first and later ran a major part of the Asian segment of the conglomerate.

 What I learned:  Geneen wasn't necessarily prompt.  He might come to a meeting an hour late in the morning but the meeting could go to mid-night.  There was nothing special about the reports required from the divisions, they were both financial and marketing projections.  Big future sales were recorded by multiplying the size of the sale by the probability of getting the contract (Bayesian math).  Most of the relevant big business had to do with building telephone systems or airport landing systems. Very heavy on the political operative side.  Capital allocation was the by-product of intense discussion by all the top managers.  Research allocation was handled the same way.  One of the most brilliant research allocations was toward making fiber-optic cables, where ITT was far ahead of everyone else.

ITT failed towards the end of the 1970s.  Bob mentioned how hard it was to bid against Siemens, Erickson and Nippon Electric.  He mentioned the 1977 Foreign Corrupt Practices Act that punished American based companies for using bribes in getting contracts.  I think that law, for good or bad, wiped out ITT and probably many other companies. 

Siemens recently got a severe penalty for using bribes.  A quarter of a century later Europe is finally meeting minimal American ethical standard.  Too bad so few lovers of Euro-socialism understand that reality.

Brain drugs

A professor from Stanford Law, Hank Greely has announced that he favors no restrictions on the use of brain enhancing drugs.

My response: piddle.

Steroids and other pharmaceuticals can enhance physical strength and speed but no pharmaceutical will ever improve the productivity of the brain. Why? 

Because the brain is an organ that has minor, mundane functions in humans.  The mind is the important human capacity and the mind is embedded in the institutions that are only reflected in the brain. Language is an institution, money is an institution and neither of these function with one brain or a dozen brains...they require an entire society.

I pay little attention to neuro-science for the same reason that I say piddle about brain enhancing drugs.

Careful mapping of everything in the brain, in the future, will be much like having a bus route or a bus schedule.  In Tokyo such routes and schedules are useful because the underlying system they reflect is fully functional.  In Dakar, Senegal such bus routes and schedules tell you nothing the bus system is African. How the underlying system works is the relevant issue and that is outside the bounds of study.  Even more outside the bounds when the brain has little relationship to the mind.

Sgt. Rory Miller

Some of you know that my son is a martial arts teacher, a true master.  I read his blog.

He has taken an interest in Sgt. Rory Miller, who wrote a reportedly insightful book (I haven't read it) Meditations on Violence.

I am reading Sgt. Miller's blog these days.  He is somewhere in the Middle East on a secret martial project. 

The most amazing thing about Miller's blog is that he is a powerful, open and creative mind who derives his deep and valuable insights from the world of surprise and violence.

We shouldn't find this unexpected.  I identify with him because my material on pro commerce is the by-product of my open mind applied to a vast experience in unusual business roles that few other people have experienced.

Miller is in the same situation.  An open mind immersed in a wide range of unusual experiences that few other people have ever experienced.

Needless to say, I rather talk to a person who walked across Africa at age 25 than to a tenured professor at Harvard.

Philip Anschutz, a business hero

One of the most extraordinary businessmen alive today is Philip Anschutz.  He is in a league with Rupert Murdoch, except that Anschutz owns everything privately with no outside stock investors and he can avoid nearly all publicity.

Rupert Murdoch has created new TV networks, an impossible task, and successful satellite stations.  A man of great foresight and boldness.

Philip Anschutz has created two entirely new businesses.  One is the new free daily newspaper in the San Francisco Bay Area and the DC metro area (Examiner).  The other is a network of entertainment businesses.  He has put together sports teams, sports stadiums, ticket selling agencies, movie theaters and performance arts agencies into a single successful holding company. 

To be bold in business is one thing.  To be bold and successful deserves the highest order of honor.