Pro Commerce

Overlooked Economics

Oil price rise causing inflation

In 1974 we faced an OPEC oil embargo that raised the price of oil and immediately created domestic U.S. inflation.  That Inflation continued for 12 years and at one point in 1980 reached a 12% rise in the CPI measure of inflation.  

This was the first of its kind oil price- caused inflation.  One-of-a-kind events are seldom the basis for new economic thinking.

The same thing has happened again in 2021. It is time to think about the issue of oil prices and inflation.

I think that oil prices play a unique role in the economy. Oil and gas consumption is only 2% of the GDP so it should have a trivial impact.  However it is a component of nearly every other component of the GDP ranging from exports, to fertilizer, to chemicals, plastics, energy, construction and transportation.

Therefore the price of oil has a multiplier effect on the economy and a long- term residual effect.  The unexplained impact of a substantial price rise lasting for many years is novel.  My guess is that oil prices have a ratchet effect on the economy.  ‘Ratchet’ means that a price rise does not disappear or resolve to a lower level because of union restrictions on wage decreases and other rigidities in the market.  Furthermore an oil price increase, over a few years, brings into play large investments in the oil and gas industry which themselves have an inflationary consequence because of their magnitude.

We shall see.  In 2021 incoming President Biden declared an end to the fracking style of oil and gas drilling and immediately doubled the price of crude oil. This is 2022 with more than a year of inflation and the high inflation rate continues.  If it continues for several more years, we can conclude that the price of oil is a key long-term ratchet multiplier in inflation.

Global money pipes go to the Bay Area

There is an obvious pattern in global money flows that I don’t see discussed anywhere else.  I see it because of the rapidly increasing wealth in the San Francisco Bay area that is not restrained by any taxes or other repressive economic forces.  

The global internet is operating based on patented technology, software and many physical products that are owned by major corporations in the S.F. Bay Area. Companies such as Intel, Oracle, Adobe, Cisco, Salesforce, Google and Apple are a key part of the global internet and the computer/phone infrastructure. The money they earn flows directly to their headquarters before being distributed everywhere else that there are owners, suppliers and employees.

That means that when a 16- year old boy in Nur-Sultan, Kazakhstan uses his phone he is paying for the wireless connection, the phone, the internet, all the programs and apps on the phone. A part of his payment consistently goes to the San Francisco Bay area. The same is true for every phone everywhere on the planet from Iceland to Delhi to Cape Horn.  That money is pouring in. It has been pouring in for several decades and may continue for another decade.  

This is the new form of invisible colonialism where wealth from the entire planet flows to the power of U.S. tech corporations.  Most of whom happen to be headquartered in the S.F. Bay area.

Longest Economic Rise Without a Decline

Number 2 above is probably the reason for the 12-year long continuous rise in the U.S. economic growth is the longest continuous rise in the recorded history of the GDP. 

American Tyranny Started Long Ago

I am most recently disturbed by new regulations that require Venmo and Zelle to report to the IRS all transactions over $600 and require my crypto bank to report all transactions over $10,000.  

I am an ordinary American citizen who has never been to prison, never been convicted of a crime, served in the Army and paid over a million dollars in taxes (property, sales, income, excise and many other kinds of taxes.)  So what right does the U.S. government have to observe ordinary activities of my daily life? None. The ‘tyrannical’ bastards.

Tyranny is here in America. Tyranny is the best descriptor, it is generally defined as:

• Identification of Enemies/Scape goats as a Unifying Lefty Cause The Left is rallied into a frenzy over Trump and Trump supporters.
• Controlled Mass Media Sometimes the media is indirectly controlled by government, sympathetic media spokespeople and executives. Censorship is very common.
• Religion and Government are Intertwined
  The common religion of Green Eschatology is used as a tool to manipulate public opinion. Religious green rhetoric and terminology is common from government leaders, even when the major tenets of the green religion are diametrically opposed to the government's policies or actions.
• Corporate Power is Protected
  The Wall Street, media and business aristocracy of this nation often are the ones who put the government leaders into power, creating a mutually beneficial business/government relationship and power elite.
• Rampant Cronyism and Corruption
  The Left almost always is governed by groups of friends and associates who appoint each other to government positions and use governmental power and authority to protect their friends from accountability. It is not uncommon for national agencies to be used for personal power. 
• Fraudulent Elections
  Sometimes elections in places like Detroit and Chicago are a complete sham. Other times elections are manipulated by smear campaigns against opposition candidates, use of legislation to control voting numbers or political district boundaries, and manipulation of the media. Some local Lefty governments typically use their judiciaries to manipulate or control elections.

American tyranny started for me in the early 1960’s when DDT was a banned chemical. Universally banned.  I found hair lice on a partner and tried to buy 10% DDT powder.  Banned. It was the most effective treatment for hair lice. Today every public school in America has a hair lice problem because of this over wrought ban.  Mosquito-borne diseases in Africa continue out of control after 60 years because of the ban. Bans don’t need to be total.

Then lead was universally banned.  It was banned from paint and the most effective hull paint for boats that worked against barnacles was included in the ban. Bans don’t need to be total.

By the end of the 20th century the most effective anti-cramp pills used by millions of dancers was banned.  Then in the early 21st century an acid reduction pill for indigestion was banned with millions of users after decades of use.  

The FDIC, a government agency created to insure banks and to keep banks stable, banned banks from opening bank accounts for businesses that were stigmatized. That included marijuana businesses, companies lending money to blacks (pay-day lenders), firearms companies and a dozen others.

There seems to be no end to the government bans on personal living arrangements.  We were forbidden to buy incandescent light bulbs (2007.)  The government banned moth balls we used to protect our wool sweaters.  Banned natural gas hook-ups to all new homes in California eliminating gas stoves, gas furnaces for homes, gas hot water heaters and gas clothes dryers.  

People working for private U.S. corporations were to be fired unless they got mandatory vaccinations. On this outrage, the U.S. Supreme Court intervened to stop enforcement.

When we get a better word, I will use it. Until then, ‘American Tyranny’ is in full force.

Wokeism Escaped From Prison

The butt-showing male pants came out of prison, as did the angry-at-women-and-the-world, rap.  The same is true for wokeism. 

I personally have never been a prison inmate, I only spent a few hours in jail after a political demonstration and visited at a recidivist prison near Tokyo. I had many acquaintances in the Prisoners Union.

It is pretty clear that many popular values come out of the black experience in American prisons including wokeism.  

• Wokies believe in systemic racism. They only mean anti-black racism.  In a society where blacks are 12% of the population they are more than 50% of the male prison population.  Prisoners, just looking around their daily life come to the systemic racism conclusion.
• White supremacy has the same origins.  There are plenty of black prison guards but the system is usually run by whites. So is the judicial system.
• Wokies are angry at economic differences. Hatred of economic success, is bred in prison where communalism is the way of life.  In prison nearly everything from food, to clothing, to bedding to TV and showers are nearly all the same.  Every little difference is a source of friction. As the seminal work, Animal Farm, makes clear: “some are more equal than others.” Hatred of the rich is normal for prisoners and ex-prisoners.
• Wokies are hostile to merit.  In prison only power and gangs have meaning.  Merit is meaningless and irrelevant.
• Wokies are miserable people and deeply believe in the human-caused global warming eschatology.  Prison is an unhappy life for many people who are generally angry at the world that has incarcerated them. This attitude spills out of prison to wokies.
• Prison generates a strong belief that the police are openly hostile to blacks.

Wokeism has escaped from prison, brought to the world by the black male underclass via the modern Left.

On Giving Business Advice

The subject of my wonderful friend, Ed Roberts, came up today.  Ed died in 1995 and I wrote an obituary the following year.  You might enjoy reading the obituary I wrote.  It is important.  I wrote it because I knew the world would never understand who Ed was and why he was the most influential person of the 20th century.

What I remembered today was a lesson Ed Roberts taught me, inadvertently, about giving business advice.   The first lesson about advice I learned in my late 20’s, which applies to all of life: Never give something unless it is requested.  That applies to everything. (Gifts for birthdays, holidays and when visiting are implicitly asked for by custom.)  It certainly applies to advice; wait for a request.

Sometime in the 1980’s Ed asked for help.  He was running the World Institute on Disability which he and Judy Heumann had created. He was dissatisfied with his ability to get work done.

I went to Oakland and did my standard due diligence research on his office operations. I found three or four changes Ed could make that would increase productivity.  Normally I would expect the boss of an organization to put in a few extra hours of work to implement my recommendations. 

Ed was in a wheelchair with a motor that also pumped air into his lungs.  He could only move two fingers. After work Ed would go straight into his iron lung at home.

I was stunned when I realized that I always gave advice that required extra work by people for whom extra work would pay off generously.

That was not possible for Ed.  He couldn’t do extra work.  

I rethought my advice.  I came up with small incremental changes in the way Ed worked that would result in long-term changes. 

An example was having his staff post a daily and weekly list of projects they were all working on. That example created more esprit de corps and common effort with a better sense of priorities and deadlines.

From that I learned to think of business advice that didn’t require extra hours and extra work for the boss.  

That remains good advice for a business consultant. 

Coffee with Alex

Alex is visiting, on an annual trek from Canada. Our conversations are hours long.  My real close friends are defined by their interest in the world, everything, not just the issues that impinge on their lives.  None of my close friends were on the Railroad to Retirement (salaried jobs they were doing to earn a pension.)  They were all learning every day, rethinking all that they knew and recasting their experiences in novel ways.

Alex said there were two unique and important things he has learned from me over the years. Simple Living and the Culture of Commerce.

My view of simple living is not the traditional religious one. My view is that having few objects in one's life means freedom, fundamental freedom.  It means not having to earn a reliable or substantial living.  I haven’t had a real job with health insurance, pensions or office hours since my 20’s.  Owning objects means that their existence clutters up the mind. I regularly had house sales to rid myself of possessions; and I tried to lead a life with 200 possessions. I had three children which was possible despite my possession austerity.  I gave out annual Simple Living Awards to the people around me who understood and lived the freedom of simple living. I wrote a book Simple Living Investments subtitled  For a Truly Secure and Adventurous Old Age.

Concomitant with my views on simple living, I see commerce as the source of daily vitality, excitement in life, meaningful life values, community and significant social contributions.

I have worked with over a thousand businesses of all sizes in eight countries. Commerce is often considered competitive, which it is in a positive, healthy way (lowering prices and improving quality) but the daily operation of commerce is 99% cooperation with suppliers, landlords, customers, employees and the whole community.

The hippies saw commerce as a vehicle for making society better.  We have much to be grateful to the hippies for.  If you love mountain biking, windsurfing, ski boarding or skateboarding, you have hippie entrepreneurs to thank. If you use the modern desktop computer and any of its common programs, thank the hippies. Most of the organic food business and agriculture was pioneered by hippies and their organic retail ideas.  The same goes for the clothing world from running shoes, jeans to work and outdoor gear.  All these were businesses I worked with in their inception and early growth.

Commerce is the backbone of modern society, it is where radically different kinds of people work together to produce new and important improvements in our lives.  It is the door to opportunity for every kind of person and personality. Commerce is the invisible hand of health and opportunity for all.

Commerce is not bad when it is big.  Three women clients of mine developed an innovative  personal body care business in the Bay Area. Their entire business, in every detail, was copied by a British woman who took their business model worldwide. It is the Body Shop. It is still fun and original.

To reiterate: for a life of freedom, choose simple living. For a life of vitality and meaning chose a deep commitment to commerce.