Pro Commerce

Cindy's rant

I have grand-daughters who are occasionally in classes with other children who have a variety of emotional problems.  These other kids are put in classes to "mainstream" them. To help them deal with their lack of social skills.

At fairly regular intervals my grand-daughters complain that the "special needs" kids are disruptive and make the class an exercise in futility. 

My sympathy in these cases are with the teachers who have their classes disrupted.

I have a close friend who has been a special-ed teacher all her life.  I think she might agree with me that too often parents of special-ed kids demand that their children be "mainstreamed" without regard for the other kids in the mainstream classes.

I stand here (actually sit) to say that kids can be taught all the fundamental skills of social behavior without having to be put in regular classes to be disruptive.  I've known some parents of special-ed kids who were superb at teaching their kids manners.

By manners I mean all the classic manners: never interrupt another person when they are talking; say please and thank you all the time, listen to and look at other people in the eye when they are talking; adjust your voice to the circumstances; etc.. you know the drill.  Most six year olds can learn these lessons. 

Social manners should be fully ingrained before "mainstreaming".

Cross burning

I am personally offended by the frequent picketing of the private homes of public figures (Senator Feinstein and Congresswoman Pelosi are constantly picketed at their homes).

I am an activist and I can say it would be costly to protect myself from such tactics and very intimidating to me, friends and family.

This tactic was originally endorsed and promoted by Saul Alinsky, idol of Barack Obama (an intimate friend of my mother's).

I believe it is not protected by the First Amendment. The most recent case on this issue was Virginia v. Black et all, a cross burning case.

The U.S. Supreme Court found that "a state, consistent with the First Amendment, may ban cross burning carried out with the attempt to intimidate." In so doing, the Court created a new area of constitutionally unprotected speech for "true threats." Under that carve-out, "a State may choose to prohibit only those forms of intimidation that are most likely to inspire fear of bodily harm."

Those words describe pickets in front of a private home to me.  I rest my case.  Lets get our states to ban political picketing in front of private homes.

Sand lover

Call me dingy but I couldn't help notice this photo. 

It is a photo of an unknown woman and an ostrich.  Ostriches are the English metaphor for hiding one's head in the sand.... blind indifference to reality.

The woman has the stereotypical face of a pacifist (don't ask me to justify that comparison,  I've known over 50 pacifists and most of the women had some features like this photo image).

Pacifists are people with their heads in the sand.  They started out failing in the U.S. civil war where they had supporters on both sides: failure.

In the twentieth century they have Gandhi a man who used the threat of supporting Hitler as his pacifist tool. Not a hero to the families of dead Jews and Brits.  We had British pacifists opposing any war against Hitler. 

In Kosovo, an entire population of Albanians was trained in pacifist tactics by David Hartsough.   Pristina was 100% operated by pacifists.  All the Albanian pacifists (90% of the population) in  1999 were driven out of the country in the Serb invasion and were only able to return home after the American led bombing of Belgrade.

In Iraq before the second American invasion, pacifists put themselves on top of important buildings.  They were protecting Saddam Hussein who killed his associates in wood chippers and lit 200 oil wells on fire to create the greatest human caused natural disaster in history.

In Sri Lanka, a Buddhist country, the pacifist had no positive effect.  The recently finished civil war against the Tamils was won by military might.

Pacifists have been active in the Israeli-Arab conflict.  Always on the side of Jew-haters, never on the side of the Jewish defenders of civilians.

Failure at every turn. Pacifism, the ideology of ostriches.

Walnut Creek non-riot

I think the demonstration called the Pro-Mehserle Protest in Walnut Creek CA. July 19th was an historic turning point.

The issue was about a BART police officer who shot a black teenager and was found guilty of involuntary manslaughter.  There was a massive, mostly black, demonstration in Oakland against the verdict (apparently the demonstrators wanted a 2nd Degree murder finding, instead of 3rd degree, if they even knew what the issue was). There was some rioting but Oakland was well prepared.

This is the first time I've heard of white people (mostly) assembled to support a white policeman in a white locale (Walnut Creek) in direct response against a black (mostly) protest in a black locale (Oakland). (Video here and here.)

This was an historic turning point for two important reasons. First, I think we have a population of activists who now consider the insult "racist" to be toothless.  Everyone who went to this rally knew that they would be called "racist" and they came anyway.  I believe that the "racist" epithet has become toothless and ineffective.  This protest says so.

Second, there is a growing number of activists who know that in a moment of high violent tension that police response is volatile and dangerous. (Oscar Grant, the black teen victim, was part of a violent group of black teenagers who were fighting and intimidating everyone around them on a inner city train... when the police arrived and the teens continued to fight).

Put simply, many people are coming to understand that: if you are part of a marauding gang (particularly if you are black wearing gang clothes) and you get into a ruckus with the police, where they think the situation is dangerous to them, you (you stupid ass) might get badly hurt or killed.

It is historic for both points to converge and be made public. "Racist" is a dead epithet and citizens are beginning to know that police can be confused and self-protective in dangerous environments. (See Rory Miller, Meditations on Violence who calls such situations toxic hormone cocktails)

Intuit again

I'm sad to say, I was right two years ago when I called Intuit, home of Quicken, a corrupt and dishonest company.

I got a notice via email that Quicken has an online backup storage system.  Sounded good to me, as I currently use a USB stick with the past four years stored on it.... to take to the IRS office if they ever call me.

Then I went to the website and looked for the price.  It is not there.  You have to find the right click-through to find the price.  Now right off the bat that is the act of a sleazy company.  An accounting firm that hides the prices from you.  They may be the perfect firm for Enron, MCI or Bernie Madoff but not for me.

When I found the price, $9.99 per year I was flat out insulted.  An accounting firm that thinks a one thousandth percent discount from $10.00 will confuse or motivate a human being that needs a bookkeeping service.... has to be the employment home of idiots.

So far Google doesn't have a cloud accounting system.  Even a simple one for personal checking and credit card accounting would put Quicken out of business in less than a year.  A simple one for business accounting, as is used in Europe, would put Intuit out of business in two years.

Manufacturing jobs

A recent argument broke out in the press about a long running ideology: that America needs manufacturing. 

The most recent effusion came from Andy Grove arguing that manufacturing provides jobs for the kind of people who are out of work right now in the U.S.

The trouble is that Andy Grove forgets his own history.  Intel rapidly moved its factories to Idaho, Arizona, Colorado and Oregon.  At that point they had run out of Americans willing to work hard.  I'm serious.  They ran out of Americans willing to do careful, precise work and work hard.

So Intel, and many others moved manufacturing to Taiwan, China, Singapore and other parts of Asia. It was not the wages, it was the ability of the employees to work hard and care about their work.

Some auto makers have found hard working manual laborers in the U.S. south where there are no labor unions.  But that market is nearly exhausted.

Let us be frank.  When the military abandoned a gigantic airfield and base in Alameda in the middle of Oakland, nobody in their right mind suggested that it become a center of manufacturing. The number of competent hard working potential employees in Oakland is nil.  Nearly an entire city with few people willing to work hard.  An entire city that is looking for a bureaucratic government retirement posting.  Just like most of the rest of urban America.

You think this sounds racist?  Then explain why the Nummi automobile plant failed last year. 

Toyota wanted to manufacture autos in the U.S. and try their very successful management skills.  For political reasons, Toyota joined up with GM to open the experimental Nummi plant.

Nummi failed for one reason: the unionized labor force was stupid.  The labor force was so stupid that when GM pulled out of the plant (to cover union retirement funds in Detroit) the remaining labor force refused to lower wages to keep the plant running.  Having no jobs was better than cutting wages.  That is the labor force we have in the U.S. and why manufacturing long ago moved elsewhere.

We might need manufacturing but the point is moot.  We don't have manufacturing workers.

Golden goose killer

Do you remember the fable of the goose that laid golden eggs?  The story is very simple: a couple had a goose that laid a golden egg every day.  There are countless embellishments on the story about how they got the goose and how they sold the eggs but the key part of the story is that they figured they could get all the gold if they killed the goose and opened the insides.  They killed the goose and found nothing unusual inside the goose.

The traditional moral of the story is to chide the couple for being impatient or greedy.

That is wrong.  The moral of the story is, obviously, don't think you know what creates wealth.  I repeat: the obvious moral of the golden goose killer story is: don't think you know what creates wealth.

The Left has had absurd ideas about the sources of wealth for centuries: imperialism, exploitation of the poor, fraud, white collar crime and monopoly.  The Left never understands that commerce is not a zero sum game.

Because the Left is so wrong about the sources of wealth, they never know when they are golden goose killers.

I live in a world in which most of the people are golden goose killers.  That is certainly true of most Lefties, union advocates and particularly the elected officials of San Francisco.

The golden geese are often our most innovative corporations: WalMart, Target, Starbucks, Haliburton, Bank of America, Goldman Sachs, McDonald's, Fidelity, AIG, Toyota and Walgreens.

We can't know for sure how the golden goose produces golden eggs, but we know that higher taxes, progressive taxation and trade barriers are promoted by the golden geese killers.

Yoram Hazony

Yoram Hazony, a brilliant Israeli intellectual, whom I fully respect, has made the claim that the intractable hatred of Israel (Jew hate) that is found extensively on the Left and throughout Europe is subject to two intellectual forces. 

One, is Kant's essay on Perpetual Peace that most Europeans and Lefties accept.... that nationhood is an evil that must be avoided or eliminated. Europeans now believe they have achieved that with the European Union.  This thesis demands that Israel should disappear as a state. States are anathema to peace.

Two, is Thomas Kuhn's Structure of Scientific Revolution, in which Kuhn shows that major concepts and paradigms such as Kant's anti-nationhood, only lose power when its supporters die off.

Therefore Israel needs to train a new generation in a new concept/paradigm and wait for the current generation of Israel-Jew-haters to die off.

I would argue directly against the Kant thesis.

I would argue that Kant's view of the nation-state is based on an immature historic view. In the idea forming period of his life there were no modern nation states, only empires old and new. The United States was an experiment late in his life.  The same is true for Marxism; historically immature ideas based on a nearly non-existent world of modern commerce that was yet to arrive.

If Kant is a serious problem and belief in the European Union is also a serious problem, then arguments in support of the nation-state are necessary. 

The most powerful argument in favor of the nation-state becomes Israel itself, as a bastion of self-defense.  Other examples are Tibet, which had no effective defense or alliances.  South Korea, which has alliances now.  Singapore. Sri Lanka. Even Kuwait.

It is important to distinguish the value of the nation-state for self defense purposes from other organizational alliances. The EU has been a failure at ending the nation-state.

There are needs for defensive alliances such as NATO and there is a need for economic alliances such as WTO, NAFTA and the EU. These are all built on the underlying nation-states.

Europeans need to be reminded that the European denial of the right of Israel to self-defense is part of a thousand year long tradition of denying the right of self-defense to Jews.

More on high unemployment

As I spend more time thinking about the unusual nature of our current economy with a slow growing GNP and high unemployment, I have to go further than I did in yesterday's blog and in an earlier blog.

I am not an economist, economics is not now and never has been an explanatory source when it comes to commerce.  I am the first person to think about and write about the nature of commerce. 

There are three types of commerce: trade, industrial and clientric.  Trade thrives in any environment, the goal is profit from each single sale.  Industrial commerce and clientric commerce, on the other hand, thrive only in an environment with a stable long term horizon. 

Industrial commerce is concerned with lowering costs by expanding markets and innovating production. Industrial commerce can only start and grow within a stable long term horizon.

Clientric commerce is built on lifetime relations between the business and clients...a priori requiring long term stability.

I pointed out yesterday that loans to small business have been very slow and were severely impacted by the 2008 financial crash.  Small businesses usually create jobs for the least productive part of the labor force. 

Large and medium size companies provide most jobs. Firms with 500 employees or more provide exactly half of all jobs in the U.S.

Small businesses (excluding sole proprietors), twenty or fewer employees, provide 20% of the jobs in the U.S. This is a key job creating sector.

The other big force that keeps commerce from creating jobs may be my newly coined term: the FDR Syndrome.  From 1932 to 1940 unemployment in the U.S. (page 4) was high ranging from 20% to 38%. FDR created a climate of financial and commercial uncertainty.  That is the FDR Syndrome.

Financial and commercial uncertainty is what is happening today as Congress meddles with four pillars of the U.S. economy.  The four pillars are autos, residential housing, construction and healthcare.  Autos are under government supervision, so is residential housing both are in a realm of high uncertainty; construction was most impacted by the stimulus in unknown ways (probably disrupting long term markets) and healthcare is under a black cloud of uncertainty. 

The combination of weak lending to small business and government created uncertainty for all business could be the explanation for high unemployment.

Employment and banking

I may be unique in having a viable explanation of the current high unemployment in the face of a robust and growing economy.  A non-political explanation.

To understand my position you need to know two historic facts.

The first fact is that Japan has had virtually no unemployment (under 2% as measured by international standards) since the mid-1950s.  Japan achieved this fifty year success after studying the issue, discovering that small business absorbs the hard to employ and then Japan created a strategy to protect and expand small businesses.

Second fact, at the turn of the 20th Century banks provided nearly 90% of all business finance and 100% of small business financing.  At the turn of the 21st Century banks provided only 20% of total business financing (the rest is bonds, stocks, insurance companies and retirement funds) and more than 40% of financing for small businesses (including credit card financing).

Currently loans to small businesses are still at the contracted level they fell to in mid-2008 during the finance crisis.

Put these two together and we can see that the absence of expanded finance for small business is one major element that is keeping unemployment high.

No expansion of bank financing for small business, no expansion of the job market for the unemployed.

The most recent $30 billion Congressional Act to deal with this problem was removed today.

Fruit machines

There are several surprising things to say about these Dole banana dispensing machines.

First, I frequently rank the U.S., Japan and Israel as the driving forces of modern commerce.  The engines pull the train. Other countries think they make a contribution to commercial innovation, but, in my eyes they are very limited.  Japan does the deep pioneering work, like the first real hybrid automobile engines (not like the American version which is just a big starting motor) and the brilliant innovations in marketing such as the banana vending machine. 

Second, the valuable use of a brand name, such as Dole, is that it can be a guarantee of quality, as is the case for Sony, Hitachi and Lexus. A Dole banana can be trusted to be ripe and not over ripe.

Third, you'll note that these are bundles of bananas.  Clearly not for eating in public, something the Japanese rarely do.  These bananas are add-ons to a grocery shopping trip... just a little more convenient. 

They are probably the beginning of a series of fresh grocery vending machines.

Comet Kohoutek

I notice a very distinct gap in the Internet view of history.  (I was looking because of the last blog.)

In early 1973 a comet named Kohoutek was predicted to be a giant comet dramatically visible from earth.

The hippies, who were apocalyptic at the core, began to anticipate Kohoutek and planned a large festival in San Francisco for the Fall of 1973. I was there, at the Civic Auditorium (later renamed).  There were over 250 booths representing nearly every hippy organization and cohort.  Well over 50,000 people attended in the few days the event was open.

One of the most amazing outcomes of this Kohoutek festival was Ann Howell, an older hippy with a Southern drawl, who got 78 organizations to sign-up for a repeat of the festival.

Ann, three years later, contacted this group of rag-tag hippy organizations to form a non-profit to take over the abandoned Army base at Fort Mason; Fort Mason Foundation.  Ann submitted a bid for the site when public bids were being accepted to manage the property.  Ann won. I couldn't believe it at the time.

Ann and her boy friend, Ralph, moved into one of the empty buildings (building B second floor) with nearly half a million square feet to rent and created the modern version of Fort Mason... the model for many urban arts centers in America and other parts of the world.

Fort Mason

In an earlier blog I mentioned an art gallery and art scene that is being opened in the Akihabara section of Tokyo.

Here is an interesting twist.  A specially designed bus to tour the area around the gallery that is intended to be an arts related district.

Which leads me to think about the effect that Fort Mason had on San Francisco. Fort Mason was conceived and implemented by Ann Howell, an older hippy.  Started with more than sixty arts related organizations, located at Fort Mason, it had very low rent. I suspect that Fort Mason contributed to the vitality of San Francisco in the following two decades.

I can't support that thesis but I hope some day there will be a competent method of measuring the contribution of Fort Mason to economic vigor.

I also wish to plea for the proper recognition of important original creators.  Ann Howell conceived and created Fort Mason, a brilliant first step in urban use of abandoned Army Bases.  The official bureaucratic website doesn't give her credit.

AARP

I particularly dislike the AARP.  Here is an example of the disgraceful AARP behavior that shapes my attitudes.

In this article that appears in the AARP official magazine, we have nothing but lies and distortion.

The main lie is the suggestion that there is a long term funding problem with Social Security, the monthly payment that goes to recipients of the many Social Security programs. Modifications were made to the funding and payout for Social Security in the mid 1980s and the program was made entirely solvent into the foreseeable future (50 years).  No data was missing at the time.

The funding problem that has arisen since then, and faces us now, are the costs of Medicare especially with the Bush addition of drug coverage.  Medical costs in the U.S. have risen at astounding rates (triple the rest of our expenses).  That is the problem with Medicare. The liars at AARP never, never let the reader know what the problem is.

Then to be just plain nasty, the AARP distorts the record of Congressman Paul Ryan, the man who is most widely respected on this subject in the entire Congress.

Old fashion tab games

The San Francisco Airport had an exhibition of gambling over the past century.

Many people under forty years of age would not have recognized the cardboard gambling devices that were common in bars.  To push a nail into a hole or to pull a tab cost a coin or two.  From a dime to a quarter and the winnings were in the $10 to $50 range.

What is interesting about this photo is the humor.  The setting is a tropical beach, the 1940s bathing beauty as the image of bounty.  This tab game has two tabs removed in a humorous location.

Bounty, is a chocolate bar made by Mars but the brand, similar to Mounds, is not sold in the U.S.

Wayfare Tavern

It would be silly for me to review a restaurant I like in San Francisco.  Nearly all of my readers are outside of San Francisco; half are outside the United States.  And, you may not like some of the foods I liked best at Wayfare: bone marrow and calamari.

But the dinner had elements that are legitimate to write about. The restaurant makes an effort to update recipes from 110+ years ago.  The interior design theme is a very masculine downtown men's fine restaurant from a long gone era. It has a small pool room.

What we forget, or some may not have known, is that the extraordinary revival of delicious food that began in 1976 in Berkeley with the Buttercup Bakery, Alice Waters, Tassajara bread and all the hippy coop food stores, followed much later by the French Laundry, was the second great food awakening.  The same thing had happened in the late 1890's in San Francisco.  The food then was alive and exciting with dozens of dishes invented in that milieu that became standard American favorites. (Banana pudding, Hangtown fry, baked avocado with crab Louie salad, Baked Alaska and Oysters Rockefeller.)

It also true that a great re-awakening of cocktails has recently occurred in San Francisco.  I saw the first invention at the Rohan Lounge (3809 Geary) around 2000 when the owner started using Japanese shochu as the basis for cocktails.  Shochu is liquor but is classified as wine by California.  As a consequence, other bars with just a beer and wine license, copied the Rohan innovation.  We had an explosion of innovation in cocktails.

I've read countless articles from the East Coast by East Coasters who think everything was invented there.  I mean everything from Grateful Dead rock to openly gay bars, to contemporary food and cocktails.  I wrote about the East Coast syndrome last month.

Summary of my blogs July 1 to 15

You are rich because you live in the U.S.; you are productive because you live in the U.S. and the U.S. economy is healthy at this time.

The best and the brightest are flocking to San Francisco.  Here is evidence.

Rational thought has certain elements that are formal: one is that data is falsifiable.  I give an example of an abstract idea about an intangible that I tested.

My blog is about the nature and qualities of our world as created by commerce.  Because of my unique experience in commerce I focus on elements that promote and retard commerce that others don't see.

Flying car

This continues to be an issue for me because it shows the persistence of a bad idea.

Airplanes are subject to the laws of aerodynamics in spades. Autos rarely are. Here is the latest flying car. It weighs about 1,800 pounds with a driver (pilot?).

Someone is out of their mind.

In my neighborhood, in the Spring, we get wind gusts up to 60 mph and on the San Francisco Bay Bridge that is a sustained cross-wind wind speed many days of the year as any motorcyclist will tell you.

This car will be flying over the edge of the bridge with its wings folded up. Suicide into the Bay.

Why you are so rich?

A friend asked last night: "How come I get paid for what looks to me like doing nothing?" He was concerned that total manufacturing in China will outstrip the U.S. in a few years (not per capita). He is an overseas bureaucrat.

Three things are happening and virtually no one can explain it. I'll try. First trade, second specialization, third, the vast market.

If two people trade, your warm jacket (because you are always hot) for my business card holder, we are both better off and we have increased each of our wealth. If we specialize, you start making and selling jackets and I start buying business card holders wholesale and sell them retail, we are specializing and making our products available to many people and making them better off (wealthier). Lastly, because billions of people are specializing in what they do, they are reducing costs dramatically. A few million farmers in the U.S. can produce enough food to feed the world comfortably. One Iowa farmer in a few weeks work can feed 600 families year round with his specialized crops and equipment.

What you do can be valuable. I don't know. The whole world of workers makes each of us rich. Most of us are productive because we do something that reduces costs and increases output. It is often hard to see how we contribute.

Of course, millions of people are in jail and prison, millions more run the system that finds them, puts them in jail and prison and maintains them. That is a total waste which we all pay for. The same is true for vast bureaucracies, many union work forces and most healthcare which just gives us pills for our self caused problems.

Axis of food

When we think of the Middle East, most of my readers have a great deal of subtlety in their sense of the cultural differences. We think of Syria (Alawite controlled) as different from Iran (mostly Persian) as different from Turkey (mostly Turkic).

But are we right?  A close look at the table with food on it suggests that the food in all of the Middle East is virtually identical. Maybe the core tribal similarities and the uniform food reflect a greater homogeneity than we see at first glance.

Maybe we are all wrong.

Reasonable question

How can I be considered productive in the world?

Many people wonder if their daily activities and lives justify the amount of resources they have available to them: flying to a vacation anywhere, driving a wonderful car, living in comfortable surroundings, having unlimited food to enjoy....etc. Many people think about this, especially, when comparing their lives to lesser fortunate people including third world populations.

The answer is two fold.  First, it is the nation you live in.  Second it is your special role in that nation. 

The nation we live in is extremely productive.  We, in the U.S., have all the elements that help commerce thrive: a meritocracy found nowhere else on the planet, a social bias and laws that favor openness and honesty, a love of markets and technology and one of the most diverse populations on the planet.  Those elements mean prosperity, of which each member gets a part.

How you are productive in this society is not necessarily apparent. If you are a trust fund offspring, a criminal, a bum or a stay at home blogger your contribution may be hard to imagine.

Productivity is a scale from -10 to +10.  Some people are +10 like Steve Jobs and Mancur Olson.

Some are -10 like murderers and arsonists.  Some are +2's, people who make others happy (and more productive) like actors and healers. 

Because there are people in the minus side of productivity, there are many people who are in the zero category like prison guards and most of the criminal justice system.

Any individual may be on the positive side of the scale.  It is hard to know until they have lived there whole life and plenty of time has passed to see their contribution.

Alice in what?

I must be 'out-of-it', way out.  I put the most recent DVD of Alice in Wonderland in my TV and sat back expecting a stoned or semi-stoned fantasy. 

What I got was a standard Tim Burton semi-scary movie.  The imagery is similar to other Burton films ( The Nightmare Before Christmas and Sleepy Hollow).  I have grand children and I know that most of them would be frightened by the Burton version of Alice until they reach age of 12. Before that I would expect nightmares.

Read the online original by Lewis Caroll.  It is definitely a stoner story as the hippies quickly recognized.

Don't confuse it with the Tim Burton version which mashes together Caroll's Alice with its sequel Through the Looking Glass and turns a stoner story into a 'bad-trip'.

What actors think

Like many people I am occasionally baffled by the utter preposterousness of Hollywood actors and assorted Hollywood denizens as they proclaim their politics on the world stage.

One of the weirdest is Sean Penn who champions demons like Fidel Castro and Hugo Chavez.  His most outrageous act was a visit to Saddam Hussein shortly before American forces invaded the second time. 

Sean Penn was singing the praises of Saddam at the same time, we now know, Saddam was putting his enemies into wood chippers at many of his 50 palaces.

I think I have an explanation for this weirdness. Actors, like Sean Penn, think that tyrants are just acting their parts.

Most actors and their peers just don't live in a real world.

Steve Jobs merit badge

I know that Steve Jobs (CEO of Apple Corp.) has a large and fanatic following. Call me a recent fan.

I want to point out two of his particularly original contributions to society, via commerce.

The first has to be the Apple Store.  My friend, Stuart, took me to what he called the 'community center', on 3rd Street in Santa Monica.  It was the Apple Store.  Packed to the walls with young people, as these stores are found to be packed everywhere.  Jobs has found a home for an entire generation ... the Apple Store is a brilliant invention of a community center.

The second has to be the Apple apps store online.  The apps are created by nearly everyone and will become the future of nearly all products in the future, from toasters to race cars. They have changed our lives and will do so even more aggressively in the future.

Congratulations Steve.

Time to look at the economy

We have seen a 15% drop in the financial markets in the past two months.  Is that meaningful?  I know its painful for many people and unemployment seems high.

The 40% drop in the Summer of 2008 slowed down the economy but it was insignificant on an annual basis. 2007 and 2008 had the same annual GDP ($14.3 trillion) and 2009 showed modest growth.  Therefore this year's 15% financial market drop should have little effect on the economy.

But is it more serious? 

I see four negatives.  One is the always pending attack on Iran that is anticipated by the financial markets in negative terms. Second, we could be hurt by our own protectionism.  Third, the stimulus might have hurt. The other is the possibility that we are in a Kondrafieff wave decline.

I can't predict the Iranian issue.  I think the negative repercussions of a Straits of Hormuz oil spike are already fully discounted (the price of securities is too low in general and incorporates the Iranian scenario).

The second is the blow-back from the malicious protectionism of the Democrats and our ideologically backward President.  I don't see that as a major factor.  Maybe a few hundred billion in penalties, but that is not much. Protectionism is stupid but not having much impact.

The stimulus created jobs for a few million of the 10 million government employees and some highway workers at a cost of several million dollars per job.  But we waste money like that all the time and it has no effect.  It may have cost a few hundred billion in wasted resources but that again is trivial.

Lastly, I learned about the Kondratieff wave in econ grad school.  It is a long 50 year wave, 25 years from peak to trough.  Since the modern economy is less than 150 years old, there hasn't been much time to observe such waves. As I look at the clear trough in 1930-40 I try to get a 50 year cycle to fit the data in the meantime (70 years) and I can't.  So I dismiss that concern.

There are three monumental positives. Our labor force is very productive these days, benefiting from two decades of productive gains from computers, the Internet, telecom, our global expansion and transportation.

We are in the midst of much greater productivity increases from the latest changes in the Internet, global specialization and in telecom improvements.

Lastly we are on the cusp of bountiful, cheap natural gas energy.

The financial markets should do well in the next twelve months.

Time to laugh

The San Francisco Board of Supervisor has moved from trying to set international policy with really stupid Lefty pronouncements to something more in their purview.

San Francisco now requires retailers of cell phones to post the amount of microwave radiation from phones they sell.  The maximum is probably 25 milliwatts, which is the equivalent of hanging a AAA battery from your hat.(Or the amount of radiation on your left leg from ordinary radio and TV transmission)  Is this a danger?  Of course not.  We in the U.S. have gone from 1,000 to 250,000,000 cell phone users in 15 years with many people taking their phones to bed with them.

I wrote about this a few months ago. Here is the data from the National Cancer Center.  A slight decrease in brain cancer or neurological cancer in that fifteen years.

I looked for the brain cancer data on WolframAlpha and got great stuff.  The people who get brain cancer in the U.S. are fairly young, average age is 51 years, (so it doesn't increase with age or cell phone usage), hits heavier men less but heavier women more and taller women more and particularly women on Medicare; Latinos are the most likely victims. That data is funny, if you think cell phones are the cause.

Our Board has done little harm with this legislation but it will make them a permanent joke among intelligent people and anyone who can read data.

If you want to know who these irradiated airhead Supervisors are, here is a list.

Singles

In the last blog I included a map of the Internet migration of Ivy leaguers to San Francisco.  There is a different kind of confirmation of San Francisco's status as the emerging Internet Center.

I've been going to restaurants, dances and  public gathering spots lately and the most dramatic change I have seen lately  (confirmed by two single hetero men) is the large number of single woman in San Francisco.  It is very noticeable. 

It turns out that some public metrics must be saying the same because a network news site found the same data.  In this study, San Francisco is listed as the number one city for hetero singles.  (It has long been the place for gay men, Oakland for lesbians.)

Single women must have some way of getting the word that SF is where the new jobs are and men too.

So far, the Internet explosion is the second major change happening in San Francisco that the political class is too dumb and incompetent to recognize.  Fortunately. 

The Internet explosion is the secondary effect of politicians driving all big business out of the city, which lowered commercial rents to the point where peninsula commercial rents are higher than S.F. Also the junky commercial space in SF is more desirable for nerds than the high quality space on the peninsula.

(Thanks Alex.)

The migrant map

This is one of the most useful maps I have seen. Where are people moving in the United States and roughly who are they? This interactive map was apparently produced by the IRS or from IRS data.

Right off the bat, you can see that well to do New Yorkers and New Englanders are still moving to Southern Florida, Dade County. At the same time, because the job market is so bleak in Florida, the young people are fleeing to everywhere else in the U.S., mostly, not to big cities.

There is a similar pattern in Southern California and Las Vegas. People moving in for retirement and management jobs while younger people are fleeing in much larger numbers for the hinterlands because jobs have disappeared ... they are going everywhere but not big cities.

The most interesting pattern I see is newly educated Ivy Leaguers migrating from the upper East Coast to San Francisco and the S.F. peninsula for Internet and computer jobs. The people who are leaving are going to second tier Internet and computer jobs in Seattle, Boulder, Atlanta and Houston-Dallas.

A careful look at incoming migrants to Reno and Las Vegas show that wealthy people are leaving California to escape high personal income taxes. The Democratic California legislature will ignore that migration at all of our peril. A fellow I met is buying condos between the University and the Reno airport and reselling them to escaped high income Californians who want to get Utah residency.

Germany joins the chorus

This article from the Jerusalem Post is too shocking for my readers to miss. Unanimous German vote that Jews have no right to self-defense.

Germany, one of the last friends of Israel in Europe, has joined the 'kill the Jews' chorus of Europeans for the second time in a century. Not leading the charge this time. Forget the bullshit about 'never again', it is happening again with an out-in-the-open vengeance.

When I say we are living in the 4th Reich period, many readers think I am too extreme.

I have said repeatedly here that a thousand years of denying Jews the right to self-defense is the prelude to killing them.  That is exactly what the German Bundestag has voted unanimously. 

Iran knows how the Europeans feel about Jews.  Now the Europeans are blasting their message to the world.

Shocking.

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Rabbi Shmuley Boteach finally comes around to this position in the Washington Post.

Counter-selling

One of the most powerful tool in sales is counter-selling. It is the implication that your potential purchase is either over-the-top or is going to exceed your expectations.

Counter selling takes these two forms. I once asked a salesman if the glue on a hook I was about to buy for the shower would be strong enough. His reply was "if you are renting, you had better get your landlord's approval for this hook.... it might be too hard to get off the tile.'

A friend of mine was about to buy a mink stole for his new girl friend at Saks. He asked the sales woman 'Would you be impressed with this stole as a present?' She replied: 'Frankly, with the combination of the Saks wrapping and the lushness of the fur, I would worry that you are too interested in me.'

Karl Popper my god

Karl Popper is the man who defined science for my generation and probably several more. His book The Logic of Scientific Discovery was published before I was born (1934) and translated by him into English in the late 1950s. I read it in the early 1960's.

Popper defined science as the cumulative testing of falsifiable hypotheses. So all scientific statements must be made in a falsifiable form. Yes: "Ice transforms to water at 0 degrees C". No: "Global climate is changing".

Any experiment with humans must be double blind with a control group. Double blind means the person doing the experiment can not know which subjects are in the control group and which aren't. The control group must be as identical as possible to the test group.

I have spent 50 years designing research experiments. It is always difficult and requires imagination. I rarely see good research done anywhere.

I want to report one of my most unusual experiments. This is from an earlier blog: In 1985 I debated Dr. Peter Sherrill, who later became one of my closest friends, over the issue of classic random sample versus a Kinsey 100% group sample. The debate was public, in a California Public Utilities Commission meeting room. I was on one end of a ten-foot table representing Public Advocates and Peter was at the other end representing Field Research and Pacific Bell.

Two experts on survey research brought together to resolve a thorny issue of public concern.

In 1984, some Mexican labor activists reported to Robert Gnaizda (Public Advocates) that farm workers in Salinas had monthly phone bills of $32, with every feature from call forwarding to three-way calling. None of these farm workers could speak English.

Gnaizda phoned around the state and found that the same phenomenon was occurring in Chinese and Vietnamese communities.

What was happening was later proved in utility hearings. Pacific Bell sales people, who had strong prize incentives for signing up customers, would sign up a customer for the maximum phone package of $32 anytime the sales person reached a person who didn’t speak English. Don’t speak English … you just bought $32 a month of technical phone services.

The public debate was between Dr. Sherrill (photo on left) and me over the issue of measuring the extent of the marketing abuse damage. How many people had been signed up for services without knowing what was going on?

Dr. Sherrill made the argument that classic random phone sampling with multi-lingual interviewers would find the correct answer. I argued that the most reliable method would be a 100% in-person sample of ethnic groups. The survey money would be paid to the ethnic organizations for 100% turnout and participation of their members. This is the Kinsey sampling method.

We were both persuasive or maybe we both weren’t. Pacific Bell was ordered to do both kinds of sampling to find how many people had been cheated and how much money had been falsely taken from non-English speakers.

Dr. Sherrill (Peter) and I designed and agreed upon the questionnaire.

The day arrived when the computer printouts from both surveys were ready. Peter and I sat down in a Corey Canapary & Galanis Research office (they had done my ethnic group survey) near Union Square. We looked at the responses to the first question. Then the second question, then all the questions on the first page, then we rapidly went through the entire printout.

The answers were the same from the two distinctly different survey methods. I don’t mean the same in a statistical sense, I mean the same in the sense of being one or two points different on every single question.

Peter and I were stunned. As professionals we reverted to the term “robust data” meaning the truth will out regardless of the method. But we were still stunned at the nearly identical outcomes.

This research in 1985 was probably the most careful, thorough and reliable proof that the Kinsey research method was excellent. Superb.

Peter and my research results were never publish in a survey research journal.

Oh yes, Pacific Bell had to pay $60 million in refunds and $16 million in penalties.

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Top photo Popper, bottom photo Kinsey.