Pro Commerce

Gratitude to Arabs for Israel

I think Israel should quietly have a ceremony to thank the Arab world for the success of Israel.

Why?  The Arab world is tribal, pre-industrial, generally uneducated and is living outside of the past 400 years of history. Consequently, the Arab world does little except incite useless hate of Israel, support technologically inept Arab Armies, reject every form of diplomatic concessions offered them and remain technically backward countries.

The oil emirates are a farce.  Worse than a mirage on a shifting sand dune...the Arabs can't build, repair or maintain their mirage by themselves.

With this cluster of 100 million neighboring buffoons, Israel has had time to learn technology, learn to organize their society into an effective technological force and most importantly to field the world's best Army. 

If Israel, god forbid, had started in Mongolia, Kansas or Australia, it would still be a backward socialist agricultural theocracy.

Advice for Israel

I've advised two governments on how to increase commercial growth; Japan and Sweden.

In the case of Japan I focused on the need for a society to draw from a global market of talent. A dynamic economy needs creative immigration.  Japan could only do that by creating a base of operations in Hawaii. Japan, the long stretch of islands, has never been a comfortable place for immigrants. The Japanese government chose not to follow my recommendations, they were politically unfeasible, but several major companies did follow my advice and establish research facilities in Hawaii: Sony, Fujitsu, Mitsui, Matsushita, Epson and Uniden.  Creative foreigners working for Japanese companies are now comfortable living in Hawaii.

In Sweden my work was stunningly successful and my work directly created the major source of Swedish small business exports over two decades starting in 1981.  My approach was copied in France and Germany.  Germany copied my Swedish model and actually exported it back to the United States as part of the German Marshall Fund.

The Swedish model was based on the 1,000 businesses I worked with when I created the Briarpatch Network in the San Francisco Bay Area. The model had new and small businesses learn together cooperatively in a network to overcome the main hurdles of the first two years in business. The survival rate was stunning: 90% survived over five years.

I doubt that Israel could accept the advice I gave to Japan. Tel Aviv is great fun, but could not handle a large 100k non-Jewish global immigrant population.  At present Israeli's start major businesses in America to get the benefit of immigrant workers.  These businesses (400 on the U.S. stock markets) could become sources of Israeli growth with the right Israeli tax policies...that may someday happen.

I don't know how Israel would respond to the advice and training I gave Sweden.

Unspeakable truth

Twitter: Sorry to tell you. The Federal Reserve system is dead, dead, dead.

If you Google the following: 'federal reserve failed dead finished useless', you won't get any hits.

The Fed a failure. The Fed is a giant stinking dead t-rex in the room that nobody is willing to discuss.

The Federal Reserve was created 96 years ago, it didn't do anything to avoid the 1929-41 depression and bank failures.  It was changed after WWII and worked fairly well for 57 years. 

Now it has totally failed again.  Our two largest banks are worth so little they can be bought for the price of a tall building or a medium sized hospital....I mean both of our previously largest banks (Citi and B of A) are kaput. Hundreds of other banks had to be bailed out. Not only that, but every retirement portfolio, public and private, is now worth half of its Summer 2007 value. Half.

The Federal Reserve System failed.  I said it.  Let's hear some more honest people say it.

Healthcare reality

Twitter: Will national health-care solve any significant problems?

Just in case there is someone out there who believes that a national health insurance policy would be good for commerce and reduce health care costs, we have the word of the Congressional Budget Office (Democratic controlled) to show us that none of that is true.  Here is Greg Mankiw on the report.

My contribution to my readers is to point out the brilliant choice of the number of uninsured workers, 40 million. Forty is the perfect number, because half of those so-called uninsured earn over $40,000 a year and half of those are under 40 year old males.  Most so-called uninsured can afford insurance but consider it too expensive for their true medical risks.

They certainly don't need a national healthcare plan.

Child psychology: luxury job

I had occasion to recently meet a child psychologist and sit in her office.  What a scam child psychology is.  The main pretend clients are the children of parents who are getting divorced.  But the kids are not the real clients. The real clients are the parents trying to assuage their guilt.

No one is around to test the effectiveness of child psychology treatments.  If the sessions aren't working the kids have trouble getting out of the therapy.  The parents start and stop the therapy at their own will, which has nothing to do with the kids. 

In one case I know of, the kid, decades later, went for a social visit to his former child psychologist.  The psychologist wouldn't even bother to talk to the former child client.  Why should he?  The kid was never the real client and whether the kid did well or not had nothing to do with the child psychologist's practice.

Advertising bubble is upon us

Twitter: Are the terms advertising, marketing and listing confusing?

In 1984 Salli Rasberry and I published the first edition of Marketing Without Advertising, we are now working on the seventh edition. Chapter one says something that had never before been publicly stated and with fact that had never been said by anyone else since: Advertising doesn't work. The $150 billion spent annually on advertising in the U.S. is part of an hysterical bubble that is based on no reality.

A major part of the current collapse of many businesses is due to the slow understanding of what we said in 1984.

First I have to explain what advertising is and why it doesn't work. I make a distinction between advertising and listing.  A listing is placing marketing information where a potential customer is looking for it.  Examples are: Yellow Pages, click-throughs on Google, signs on stores, Wednesday newspaper ads for food and Macys' sales and giveaway maps. Almost everything else, placed where potential customers have to ignore the marketing material is advertising.

Advertising is somewhat effective (1) when directed at tourists who had few other good sources of information (before the Internet), (2) children who are fairly gullible and (3) employees of the advertiser who learn from the advertising message what their company is directing at the public.

Small businesses, 98% of the time, find advertising useless, which is what I learned early on and led me to first teach the course Marketing Without Advertising and then to write the book.

Back to the bursting advertising bubble.  I think Google and click-through Internet listings have raised the question in the minds of all business people about the ineffectiveness of advertising.  That has led to a rapid decline in advertising in magazines and newspapers and a decline in advertising overall. 

On the other-hand click-through Internet listings work miracles for many businesses, so does good Google placement and effective websites. Craigslist works because it is broken down into tiny geographic neighborhoods where you know whether you can drive over and pick up the object for sale.

I've had over two thousand clients in my long consulting career...I haven't made any of this up.  The advertising doesn't work and the advertising bubble has burst.

Added related note: 73 million people have and use TIVO...mostly to avoid the intrusive advertising that destroys most TV programs.

Paper calendars

Twitter: Why haven't paper calendars been replaced electronically?

We all seem to have calendars and scheduling programs on our phones and computers, often sync'd up.

I just want to point out that no program is yet very good for complex scheduling.

Several of my friends are in the business of coordinating complex projects and leading even more complex business lives.  They use computers and phone schedulers but they also use paper scheduling such as Time Managers. (see photo)

The reason is simple.  Paper allows for notes, footnotes, symbols, cross-outs, writing on the backs of pages, micro notes and much more while always giving a sense of total time because the size of the page remains the same.

From the evidence I have, we are a long long way from having scheduling programs that can compete with paper.

Education the 2nd biggest

San Francisco has announced that its largest industry is tourism which is estimated to generate $8 billion a year in gross revenues for San Francisco businesses.  That includes $2 billion in convention revenues.

I would like to suggest San Francisco's second largest business and revenue producer.  I am reluctant to mention this because the City political leaders, deeply influenced by 17th Century union thinking, are unable to understand that taxes can be self-defeating propositions in the commercial world.

It is a simple fact of physics and commerce that if two locations have equal advantages and one has greater disadvantages then objects and businesses will migrate, if they are free to migrate, to the location with fewer disadvantages.  In the case of San Francisco, relative to its neighbors and other comparable cities, the disadvantage is local taxes. Nearly all the large corporations in San Francisco in 1965 have long since left San Francisco (some failed, the rest left).

San Francisco's second largest business is capable of migrating away from San Francisco (slowly over time) if the City political leaders read my blog and decide to tax the business.  So don't mention this blog to anyone with political connections or aspirations in San Francisco.

San Francisco's second largest industry is education.  My estimate puts the gross revenue to the education industry, excluding public schools K-12 and City College, at $2.6 billion a year.

(I exclude public schools because every locale has public schools, most have community colleges.)

That is larger than any other industry in San Francisco except tourism. This number does not include housing and food that students pay for, which would add another $.7 billion bringing the total to $3.3 billion. There is also a multiplier effect of this revenue but that is not included. 

At any one moment, one out of three residents of San Francisco is taking a class at one of the three major universities, one of the law schools, art institutes, professional training schools or any of the myriad university extension classes, yoga classes, art, language, drama, dance and martial arts classes.One out of ten workers is teaching a class.

Again, please, this is for your eyes only if you live in San Francisco.  If the City politicians had this data they would inadvertently set out to destroy this industry, with their ideological blindness.  I did this research in preparation for advising one of my clients.  It is not proprietary but it is sensitive.

Put power in your life

Twitter: How can anyone get an honest assessment of themselves?

I mentioned a course I taught a few years back that gave people immense individual power.  I only did it once when I realized it directly helped two women to find, catch and marry rich men. Others in the class used their power in more ways acceptable to me. I won't do it again.

I promised to describe the class.

The course ran over four months meeting once each month.  I began by showing the members how to keep accurate financial records and explaining the importance of financial information in giving one honest feedback about one's behavior.  

The second meeting I looked at the financial data the students brought and re-explained what keeping complete records was about since only bookkeepers get it right the first time.  Self deception is the subject of the second meeting along with corrective directions.

The third meeting, the third month, most people get the data right and we begin analysis. Good financial data is, for a person, like being naked. We discuss spending that is out of control, spending that shows real emotional priorities and re-examine imaginary versus tangible life goals.  Everyone then sets financial goals for their fourth month.

By the fourth meeting the class is empowered and beginning to make changes in their life.  Self understanding has increased dramatically and personal power is evident.

While I will never do the course again, if I did, I would have a follow-up six months later to review the impact.

As I said in an earlier blog: I will not give people power again...too many people abuse it.

Where's the glamor?

Something reminded me of William Agee and I began to wonder what happened to the glamor of being a CEO.

William Agee is the wunderkind who married his college girl friend in his freshman year and returned to life in Boise.  After an MBA at Harvard he quickly made it to the top of the corporate ladder at Bendix by age 38.  As CEO he had six successful years at Bendix leading an acquisitions splurge and doubling the stock price.  Agee's public fame came from his attachment (and later marriage to) a newly hired fellow MBA who became Agee's main counselor and public companion, Mary Cunningham.

That is the core of the glamorous story. 

Bendix lost a takeover battle and Agee was sent packing. Apparently 30 years later William and Mary are still married and have children living in Napa Valley. Boring ending.

Blog measurement

My readers, who have blogs, should know that the professional media placement folks I deal with use Quantcast to measure website traffic.  It is free to sign up for, has very good analytics and only requires a small, unnoticeable piece of code. 

Quantcast matches the raw data I get from Six Apart (my blogsite administrators) but has much more; international, gender and most importantly monthly data that I find useful (and reassuring).

What is the name for this era?

Twitter: What category of business describes your cell phone? None.

I think the name of our era and the name of a large category of businesses will be the same; when we get the right name. 

To understand the issue look at your cellphone.  You paid for the physical phone which is about 20% material, 20% patents and royalty, 50% software and 10% design.  You pay monthly (plenty) for the data/voice service. The service is data transmission infrastructure capital costs and maintenance, a heavy component of software, patents, licenses and corporate administration.

Many of the companies who provide this telecom device and its services are among the top global corporations: AT&T, Microsoft, Siemens, Nokia, Sony, Samsung and Oracle.  However, the device and its service has no category of its own.  It is variously listed in: (1) networks and communications equipment, (2) telecommunications, (3) computers, (4) electronics, electrical equipment (5) retail and (6) entertainment.

When we finally get a name for this category, say 'metatech', this will also be the 'metatech-era when 'metatech' began to be a dominant form of business not six sub-categories.

Another simple test

Twitter: I want global warming but I'm not getting it.

If you know a human-caused-global warming believer, here is a test to propose (don't get hit or antagonize a friend): name one established scientist who has presented the human-caused-global warming evidence in a clear coherent argument.

I don't believe such a person exists. 

Here is your rebuttal person: William Happer, Princeton Physicist who headed the U.S. climate change research agency at the time James Hansen was causing an uproar.  Happer testified before the Senate last Wednesday.  He is clear, logical and consequently convincing.

Stunning alternative view

Twitter: Blame the price of oil 2007-08

This is the most stunning alternative view of what happened to our economy and finances I've seen.  Reynolds says, and shows, that it was the price of oil that wreaked havoc. This is stolen from the current Claremont Review of Books.

Alan Reynolds

"This recession is not just a U.S. problem, not just about housing, and not just financial. Consider each point, in turn:

Germany, France, Italy, Japan, Singapore, and Hong Kong fell into recession in the second quarter (arguably before the United States and United Kingdom) when the price of oil rose as high as $145 a barrel. This was no coincidence. Soaring oil prices raise the cost of production and distribution for many industries, and reduce real household incomes and therefore consumption.

In 1983, economist James Hamilton of U.C. San Diego showed that "all but one of the U.S. recessions since World War Two have been preceded...by a dramatic increase in the price of crude petroleum." By the year 2000 we had been through nine dramatic spikes in the price of oil, every one of which was soon followed by recession. Writing in the Financial Times on January 2, 2008, I suggested that "the U.S. economy is likely to slip into recession because of higher energy costs alone, regardless of what the Fed does" (and regardless of housing too).

Ten months later (November 8), the Economist noted that, "All three previous recessions came after housing booms and oil shocks." They were talking about the U.K., but could have been talking about the U.S. Yet housing slumps can be a consequence of recession rather than a major cause. The housing bust in places like Detroit and Cleveland was not preceded by a boom.

Aside from hot spots in California, Nevada, Arizona, and Florida, the American housing boom was less exuberant than many others. On December 6, 2007, the Economist revealed that housing prices had increased 102% over the previous decade in the U.S., but 144% in France, 159% in Australia, 190% in Spain, 213% in Britain, and 240% in Ireland.

When the U.S. economy began to contract in 2008, the biggest drop in housing starts was behind us. Falling residential investment subtracted more than a percentage point from real GDP growth in 2006 and 2007, but only half a point in the second and third quarters of 2008. By the second quarter of 2008, home prices were lower than a year earlier in ten states, according to the Office of Federal Housing Enterprise Oversight (OFHEO), but higher in 26 states.

Unbearable increases in the world prices of oil and metals are a better explanation of the recession's geographical and industrial breadth, regardless of the added problems with housing and finance. And that, in turn, means falling prices of oil and metals are sowing the seeds for recovery in 2009—including a housing recovery.

What about finance? The November 10, 2008 issue of Business Week said, "Despite the government's best efforts, it may be 2010 before U.S. banks are willing to lend freely again." But bank lending was flat or down only between April and July of 2008. After that, the Fed's weekly H.8 report showed bank loans rising steadily from $6.91 trillion in July to $7.27 trillion by late October. The sudden bankruptcy of Lehman Brothers caused money market funds to shun commercial paper for the few weeks ending October 1, but nonfinancial commercial paper outstanding rose 9% in the following five weeks. Interest rates on interbank loans (Libor) came down too. Even if more credit was a sensible solution to excessive debt, the "credit crisis" has been exaggerated.

By the time of the U.S. presidential election, the multi-causal global recession was half over. Because unemployment is a lagging indicator, unfortunately, we won't hear that the recession has ended in 2009 until at least another few months have passed."

Alan Reynolds is a senior fellow at the Cato Institute and the author of Income and Wealth (Greenwood Press).

See Reynolds' additional observation below in comments.

Roddick Prize

Twitter: Totally new heroes of our time.

It is time to create the Andy Roddick-Wallenberg prize. 

In an era where the world has become the 4th Reich, when the United Nations is the fount of Hitler's hate-Jew ideology, it is incumbent upon all the remaining people on the planet who are not Nazis and Nazi sympathizers to support the rare non-Jews who stand up to the 4th Reich.

Andy Roddick was the first tennis player to publicly refuse to play in Hitler's tennis tournament in Dubai because the World Tennis Association wimped out and allowed Dubai to ban a Jewish Israeli player, Shahar Peer. Andy Roddick is a hero on the level of Raoul Wallenberg. He is the first non-Jewish person to stand up to the 4th Reich, just as Wallenberg stood up to the 3rd Reich.

The Roddick-Wallenberg Prize should be large, it should be annual and it should be held in many different locations to make the point that standing up to the 4th Reich is important, courageous and far more important than the countless other prizes that reward people with far less courage and little significance to the future of the world.

In the future, attendees at the Jew-hate fests on most American campuses, at hate fests in European union meetings and at the hate fests in nearly every Lefty-Green caucus outside the United States... there will be eyes looking for the brave successors of Andy Roddick.  These eyes will be ready to rise up and publicly tell the world about the new heroes we desperately need.

Hudson landing strip

We pilots love material like this.  The key to this re-enactment is real time, exactly, with air traffic controllers' New York accents.

Remember that during this few minutes, the pilot and co-pilot tell the cabin crew to prepare to ditch, try to re-start the engines, and go through a long check list including the key: closing all openings to the outside.  All while talking to the Air traffic controllers.

The piece ends with the controller saying 'say again' to a plane that is now in the Hudson.  Listen to the cool voice of Sully:
A real business selling for profit work made this video reconstruction.  They deserve credit.  Scene Systems.

Kristol v Brooks

If you have noticed, William Kristol is no longer writing op-ed pieces at the NYTimes, he is now at the Washington Post.  David Brooks is still at the NYTimes, their only current conservative writer.

I believe I know the reason why Brooks is still at the NYTimes and Kristol isn't.  The two conservative intellectuals divided on the core issue most important to the NYTimes and the issue that has divided America for 150 years.

We are divided between the self defined elites and the rest of the people.  Brooks is a conservative with, as he says, the elite views of Edmund Burke. Kristol is a conservative who believes that the power of America resides in the restless, boystrous, innovative, entrepreneurial power of the broad swath of people.

The final test of the difference came during the last presidential campaign when Kristol supported and extolled the genuine humanity and passions of Alaska Governor Palin and Brooks excoriated her. The NYTimes came down on Brooks side...emphatically.

Sarah Palin is the current and future litmus test of America's elite and elite wannabees versus the rest of the boystrous American people.

To know how right-on this analysis is think how the elite hated 'cowboy' G.W. Bush and said how stupid he was, how he sounded like Texas. There was the perpetual mainstream media Lefty elite claim that Bush never read any books. Pure elitism and elite wannabee-ism.

That is why William Kristol is no longer at the Times and Brooks is; my view anyway.

Postscript: Dr. Laura, the wildly popular highly moralistic radio talk show host, came out in Agust 2008, opposed to McCain because Gov. Palin's daughter was pregnant and unmarried.  Since that time Dr. Laura has lost audience share.  Maybe there is a connection. Americans are not so harshly judgemental.