Pro Commerce

Public Accommodation

Yes, I have been censored on Facebook and Twitter. I consider it an honor.  Just as I considered it an honor when I was placed on the first ‘No-Fly’ list.  I even had my friends throw a party in my honor and present me with a medal to celebrate my ‘No-Fly’ distinguished award.

Therefore I enter this discussion of how I, an honest reputable prominent, successful
American can be censored by two billion-dollar corporations in the 21st Century.

The whole debate on the mechanisms necessary to enforce the 1st Amendment to the Constitution and eliminate political censorship on public media seems to be based on a lack of understanding of the history of commerce.

The basic law that is being violated is the law of public accommodation, a law that is more than 2,300 years old.  The law was created by the Roman legislature two centuries before the CE common era to deal with the problem of ferries across rivers in Roman territory.  Ferry boat operators seem to have been applying their own discretion to what people and goods they would transport across rivers.  This stifled trade and created rewards and punishments that were entirely arbitrary, in the hands of a vital service.  

The Roman public accommodations law required ferry boat operators to carry everyone who wished to travel.

Now that law is obvious and our generation seems able to ignore an obvious reality.

I hear statements like ‘these are private companies.’  What is the relevance of that? None.  

Even private membership clubs such as the San Francisco Olympic Club, which was men only, before the 1970s was forced to open for lunch to women because business lunches were an important part of conducting business in San Francisco. That obvious and decent legal ruling applied to all lunch clubs with 200 or more members.  

Yes, that puts me in agreement with the U.S. Supreme Court in the Jack Phillips (definitely no relation) case, whose bakery wouldn’t sell a cake for a gay wedding. He is open for business; he can always su bcontract baking a specific cake to another baker.

In order to settle the big tech censorship issue Congress can insert the words ‘political opinions’ into Title II of the Civil Rights Act. 

42 U.S.C. §2000a (a)All persons shall be entitled to the full and equal enjoyment of the goods, services, facilities, privileges, advantages, and accommodations of any place of public accommodation, as defined in this section, without discrimination on the ground of race, color, religion, political opinions or national origin.

If there is any question that a public media site open to the public is covered by the law here is the paragraph that makes that issue clear: 

42 U.S.C. § 2000a(c) For purposes of this section, "commerce" means travel, trade, traffic, commerce, transportation, or communication…

That settles the issue.   Get two words inserted into existing law.  Get a court order against these behemoth buffoons.

Cooperation

I had two eggs for breakfast this morning.  It took the joint efforts of over one million people, cooperating to get me those two clean, safe, fresh eggs.

How do I get the number ‘millions?’ 

Start with the grocery, with its stockers, checkout staff, administrators; It took minutes or seconds of each of their work schedules to provide the two eggs safely.

Then there is the dairy sales and delivery staff and administrators, the thousands of people in the warehouses, trucking companies and finally the single farm with thousands of chickens that requires a whole ladder of workers and staff. 

Then there are entire industries that bring the food to the chicken farm for the chickens and the growers in many thousands of farms that provide that chicken food.  None of this counts the infrastructure that needs constant work to provide the electricity, water, gas and telecom. Tens of thousands of people are required to just do the daily maintenance.  There is also a government structure involving inspectors, regulators and lawyers.

This reality has shaped my life.  No ordinary Lefty and few others can see this picture clearly and honestly. Two stark realities are the backdrop for appreciation of this million person effort: Commerce and tradition.

Modern commerce is a global cooperative decent mechanism to create most of the world we live in.  Commerce is the mutual voluntary beneficial exchange of goods and services that use a standard of accounting and pricing (money). I was the person that made this financial exchange a global possibility ( international credit cards.)  All the underlined words are significant because commerce is the most extraordinary development of the human species that allows humans to survive and generally thrive as a large and extended species.  

Although the species has internal wars, the general species survival is made possible by commerce.  In contrast to the warring element, commerce is cooperative and allows the extraordinary diversity of the species to work together and cooperate.  During the past century there have been many experiments in state- based planned regimented exchange systems. The USSR, Mao’s China, North Korea, Cuba, Venezuela, North Vietnam and Cambodia. All were failures. Total failures with mass murder and starvation.

That is the first reality that honest people need to recognize and appreciate.

The second reality is that the human species builds social institutions slowly over time that allow for commercial and non-commercial cooperation.  These include legal structures, family structures, language, traditions, dance, criminal reward and punishment structures, personal identities and dozens more that are invisible and substantive but not recognized. 

Compare an American environment to that of a tribal Palestinian or Wolof in Senegal. The American is generally monogamous, willing to work long hours, tolerant of a wide range of other people's behavior, very unlikely to commit a crime but when he does there is a complex impersonal structure with millions of people involved to evaluate his behavior and punish him if warranted. He buys merchandise and services from the entire planet and there are large populations of fellow humans cooperatively involved to assure the safety and contractual delivery of his purchases.  He has educational and health facilities readily available to him as well as access to abundant and varied food, housing and transport.

What is evident, to anyone willing to consider the matter honestly, is that the environment of an American has developed over hundreds and even thousands of years from the two tablets of Moses in Sinai to the mobile telephone transmitters within hundreds of feet of his presence anywhere. All these institutions have evolved. They were social group constructions and they were hard to come by.  They are built on tradition. Tradition includes engineering that has a thousand years of testing and failures to build on. 

The individual who thinks he can change, improve or modify these social creations is seriously befuddled.

Innovation

I just finished reading Matt Ridley’s book on innovation. An excellent summary of the issue. How innovation occurs and, importantly, how it is continually opposed and stifled.

I’ve spent many decades as a business consultant for a large number of businesses, mostly small.  I have lived in the innovation capital of the world, the San Francisco Bay Area.

I‘ve personally been an innovator in a dozen realms. Best known as the father of MasterCard, the source of the first international money.

There is very little to add to Ridley’s work. But I do have several things to add.

Let’s begin with reality.  Some things are physical impossibilities where popular misconceptions intrude on invention.

The airplane was modeled on the flight of birds, which is the dominant metaphor of flight. But butterflies also fly and can fly many miles just by riding on the small wind shear and turbulence near the surface in the lower atmosphere.  That turbulence is why personal flying devices don’t work, even though they were forecast every year of my life. The turbulence in the atmosphere near the surface keeps turning the man with a jetpack on his back upside down.

Ridley doesn’t see that diversity is an important ingredient in innovation. I don’t mean the stupid diversity of melanin, the real diversity of insight and experience which is what urban areas genuinely contribute to and what is found in abundance in immigrant societies like America and Israel.  

My best example of diversity of experience is Mr. Yuzawa, a middle-aged man who worked as a perfume salesman in Tokyo. He came to me with an observation; one particular scent was not in the Japanese perfume repertoire but was common in American perfumes. Mr. Yuzawa had lived overseas for many years. He personally liked the scent and wanted to know ‘Would the Japanese buy it?’ 

I had him concoct and bottle it and try it out in a high-end Shinjuku department store with a wide selection of perfumes and known for its diverse clientele.  He did and it quickly became a major selling scent copied by all the big Japanese perfume brands.  

Three lessons here.  

• The man knew his domestic products and he knew the international market too. Diversity of experience.
• The new product was introduced at a high-end store. Many products start among high income customers and work their way down the social gradient. 
• Openness to novelty is more likely in a diverse product array than in a brand or chain store model.

In a similar vein; three 1970s San Francisco women opened a shop to market their own distinct body products with their own hippy designs.  Along came a British woman who stole the whole kit-and-kaboodle, names, products and designs, turning it into a successful international network of stores: the Body Shop.  She later bought the rights from the three women.

Ridley does see freedom as an innovation element. But it isn’t freedom, it is the absence of social oppression.  San Francisco and the Bay Area have generated hundreds of major global businesses, not just in the digital world, because San Francisco, in particular, has a very weak government and the social hierarchy has always been feeble, compared to Boston and the East Coast.

Ridley sees openness and cross fertilization as a source of innovation.  I found it to be much more: cooperation is the transcendent value involved.  

When the open, ideologically ‘loving’ hippies came to me for business advice I helped them form a network of similar open businesses, the Briarpatch Network. Ordinary start-ups have a 20% survival rate over three years.  The Briarpatch Network of cooperating, open businesses had an 80% survival rate over five years.  Virtually all the early Briarpatch businesses were innovations.  Some became national and global models, most remained local and their innovations didn’t propagate. That is the nature of innovation.

The most important ingredient in innovation that Ridley senses but doesn’t discuss is the absence of an hereditary elite class. America always had a much weaker class structure than anything in Europe and greatly benefited from the vast opening of the West.  An hereditary elite  has maintained the status quote as a survival necessity.  Europe from the 1600s in Holland to the 1800s in England had a colonial empire where the Dutch and English (and French) innovators could escape to for experimentation and where innovation could thrive.  

My own views on the nature of commerce which emphasizes openness, diversity and cooperation is in a book I dramatically called The Most Important Book in Human History.  I called it this because I see the real elements of innovation and successful commerce in serious jeopardy in the current American political and cultural milieu.  

Summary

My friend and editor, David S., has been sending me libertarian reading material.  And I have read a lot.  A major focus, recently, has been on the way the Global Internet may make libertarianism more salient.  Bitcoin has added to the tumult.  

I disagree.

My adult life has been focused on how social systems work. You can see some of my work on my 300 public radio programs; Social Thought, free.

There are weighty problems with libertarian thought.

First, we are all raised in a culture, usually by parents. We are pretty much formed by early adolescence in a particular culture.  Nearly all of us stop learning by age 23, we have been formed by that time, because we are simians. We can move to a different nation state before adolescence and usually adjust to the new nation state and much of its culture. Child rearing is an institution that is central to our being, our core identity.  The child-rearing institutions can not be discarded or changed by political intent.

Second, the vast institutions that we call ‘America’ are the cumulative development of many refinements and evolutions over many centuries; millennia.  We are not aware of 98% of them. The child-rearing institutions can not be changed and modified by volition.

I have suggested some minor modifications to ‘America’ in the form of a sortition form of political selection. That would change the type of characters who manage our government.  Important but not major.

Third, our current American ruling class disaster, ‘the swamp’ is the by-product of a change that occurred in the period 1955 to 1965. Politics can’t reverse it.

We lost the hereditary elite that moderated our ruling class before that period.  The free form melange that we were left with, after 1965, allowed meritocracy to thrive but simultaneously promoted the second most powerful American organization, unions, that then ascended to power.  The triumphant union values are anti-meritocratic and anti-individual. Anti-American.

Fourth, the brief reign of Donald Trump showed that the most vital missing ingredient in our current society are pro-commerce values.  Trump has shown us that the majority of Americans support a pro-commerce value system.  But our dominant current political system, the ‘swamp’ is antithetical to commerce.

Trumpism is what we need today.  It is not a political ideology.  It is a worldview that is outside the current political spectrum.

Summarizing, we have in America a finely evolved social system; equitable, innovative, vigorous and vital for human well-being.  What we need today is not political change or new politics. We need a pro-commerce world view.

Econ Lessons from Covid

I was trained as an economist but have never practiced as one.  

I’ve observed three unexpected economic phenomena from the Covid lockdown. 

First, about 50% of the labor force works for businesses with 50 or less employees.  These businesses, 50 and under, were the most hard hit by the Covid restrictions. These include sole proprietors, grooming, exercise, yoga-type classes and much retail such as flower stores and restaurants.  Total employment in the U.S. in 2019 was 163 million people. For the whole Covid year of 2020 that dropped by 2 million to an average of 161 million.  

The GDP for 2019 was $21.4 trillion and the total for 2020 was $21 trillion. 

Lesson: The 2 million people who worked in 2019 but not in 2020, due to Covid restrictions, produced 1.9% of America’s GDP.  Nearly all of them were in businesses with under 50 employees and were considered ‘non-essential’ by the Covid definition.

Large businesses with economies of scale turn out to be the main source of U.S. productive wealth.

The U.S. economy is very robust and barely affected by a pandemic.

Second, the U.S. economy generates net income from overseas. This is regardless of the domestic economic output.  Roughly 2.4% of our GDP comes from our net foreign dealings.  This net income from overseas was constant in 2020, which explains why areas receiving income from the global Internet in places like California, particularly San Francisco and the S.F. Peninsula saw tax revenues and home prices rise.

Third, the Trump deregulation was a long-term power in stimulating the economy.  There is no convincing evidence of this. I have only two weak pieces of confirmation.

• One is my thirty years of consulting to over 1,500 small businesses and roughly 500 larger companies.  It is clear to me that regulatory restrictions are a significant  burden on business growth and innovation. 
• Another is my knowledge of business cycles dating back to the Civil War.  The current recovery is 132 months long, so far. The longest American recovery, indisputably.  The longest previous recovery was 120 months from 1991 to 2001. That previous recovery was generated by the end of the Cold War that released vast resources from the U.S. military. 

American Commerce

There have been several bursts of American commerce over the past 170 years.

Four factors have caused this: Escape from the elites in the U.S., Innovation, the End of the U.S. Elite and Market size.

As I have pointed for several decades, the elites of the world have repressed innovation. Elites are the prime beneficiaries of the status quo.  They have preferred, everywhere, to maintain their elite status by passing on wealth and power in commerce to their eldest sons.  

The Great Western opening in the U.S. from 1830 to 1940 allowed the second sibling and other siblings of the East Coast elite to move West.  In Europe the vast new British, Dutch and French empires allowed the escape of the elite offspring to success in the far flung colonies.  This was most important in India.  In the colonies new channels of commerce were opened by entrepreneurial offspring which created vigorous companies and brought new commodities and new markets to Europe. The most important singular example was Hong Kong. 

The 19th century saw the first great expansion of commerce. With global economic growth in orders of magnitude.  The same was especially true for the U.S. with its unbridled free population.

The extraordinary growth of global commerce stimulated innovation in the application of non-human power to textile manufacturing, transportation and farming. Retailing saw the invention of department stores, new foods and new materials on a vast scale.  The ‘corporation’ was created based on new extraordinary economies of scale along with an associated whole range of new financial instruments.  

Europe saw the exodus of millions of people, non-elites, to create new wealth of the U.S. 

Historically unprecedented new wealth exploded in the U.S. and much of Europe for the new railroad owners, the new financiers and many of the old elite families.  A colossal global middle class was created for the first time in the U.S. and much of Europe.

The combination of fresh markets and innovation created a distinct unique new world of commerce. Automobile, steel and oil industries exploded at the beginning of the 20th century.  Much of the great new commercial wealth brought the U.S. to global preeminence. The demands of World War I expanded commerce even further within the global trading system.

The innovations in sanitation that began in the U.S. in the 1840s spread around the globe and with new drugs in the 1940s and 1950s led to a population explosion from a billion people to many billions.

World War II left much of Europe destroyed and the newly positioned American suzerainty to standardize trade norms and trading rules across the globe.  The best example is the American airline industry and global use of English in the airport world. The same was true for telephone, media and accounting standards.

The greatest historical commercial explosion arrived in the early 1950s with the rise of non-elite business leaders and the subsequent, 1960s, fall of the American elite. The resulting expansion of American technological rules of trade and a new meritocratic business class led to a detonation of global commerce with America as the commanding power.

The adoption of American technology brought Japan into world-class levels of commerce with further expansion of global commerce.

From the 1960s to 2000 the entire shape of American commerce changed with the top 50 corporations becoming a wholly new top 500 corporations and a steady growth of finance in the American stock markets.  Fortunes were made in the new markets for Walmart, transport companies, computer software and a thousand other businesses.

The American innovations in computers and the associated global Internet, by the 21st century, brought a novel world market to the fore.  The global market that is reached by the Internet created a fresh commercial boom in the new century with still more fortunes.  Billionaires emerged by the thousands.

By the end of the 20th century, a commercial revolution in China brought a fresh global trading force to the market with Japanese technology and a whole new Chinese domestic leviathan.

That is where we stand today.  

The happiest era

I was eight years old at the end of World War II.  I have lived in the happiest era in human history. My life has been bountiful.  I’ve travelled the world for seven decades in the modern world of global airlines and lived many years abroad. The whole planetary adventure was at a cost of one or two earlier transAtlantic steamship trips.

I’ve owned homes, raised successful and happy children who have raised spectacular children of their own.  We have all had medical confrontations that would have maimed or killed us in the era before I was born. Our health has thrived.

I’ve lived fully in the era and enjoyed telecommunications, computers, private airplanes, a wide range of technologies, the abundance of food and the most exquisite culinary joys ever known to mankind.

I have created many new businesses, including creating Mastercard the basis for the first global currency. Which I used to travel from the old villages of Indian untouchables to open markets with European goods in the most remote inner towns of Cameroon.

I lived in San Francisco, the capital of the hippie world, as a healthy male, during the twenty year sexual freedom experiment.

I uniquely enjoyed the prosperous world around me.  I got to wallow in the abundance. I earned my own living from age 17.   My only financial inheritance was under $40,000 when I was 37 years old. I supported my parents in their old age.  For most of my life I was self employed and did what I wanted everyday and every hour. I had many hundreds of beloved friends (and still have many) and an abundance of fascinating lovers.

Nothing I did has been secret.  I’ve written more than a dozen books based on my experiences and over five thousand blogs.

This has been possible for only one reason: I have lived in America during the most successful commercial period in world history.  The Cold War kept the Marxist anti-American Left out of power in America during those decades.

I believe anyone, with an adventurous nature, born during my lifetime could have enjoyed what I have. My last book was an homage to the sources of America’s commercial triumph. The Most Important Book in Human History.  It explains for all who are willing to listen; the sources of American innovation and greatness. Our meritocracy.

Blessed is he who appreciates what we have, understands it’s exceptional nature, its fragility and fights to protect it for our children.

The caravan and decent commerce

This is the beginning of November and a horde of more than 10,000 people are travelling from Central America to the U.S.

Some people have suggested that these people should turn around, overthrow their own governments and create their own decent economic society like ours.

This is where my analysis in The Most Important Book in Human History comes into play.  Few people understand why this horde can not go back and re-create the U.S. The U.S. was an anomaly.

A modern commercial society requires widespread meritocracy.  All Latin American countries have extensive hereditary elites that blocks meritocracy.  I have seen this in Guatemala where the elite all live in one neighborhood.  Nobody knows how to get rid of an hereditary elite. Communists in
Russia, China, Cuba and Cambodia have tried by murdering them.  That seems to have failed.

America was an accident of a large continent and  World War II that promoted meritocracy. England had the far reaches of an empire, where the meritocratic sons were sent to be administrators.  Israel has a unique military that is hi-tech and needs meritocracy.

We have no answers.  Chile may be an example of open commercial markets bringing jobs and modernity to an otherwise traditional ‘patron’ society. Chileans get modernity but no innovation.

No one has an answer, that I know of.

What worries me and why start-ups won’t in Paris.

The real problem in the world is that modernity was an accident.  

We don’t appreciate that.  So comments like ‘the arc of justice bends towards…’ reflects all the forces of government, tribalism, hereditary status and status quo that kept the modern world from happening for the past 2,000 years.

Tribalism and hereditary elites have been and still are the powerful forces in the world that have maintained the status quo all this time.  Science and its real driver, technology, will not change the world enough to create or maintain the atmosphere of modernity and modern commerce.

Note that a brilliant computer was built by the Greeks nearly 2500 years ago (antikythera) and that didn’t bring about modernity or modern commerce.  The same is true for moveable type, paper, gunpower, number theory, decimal fractions, modern math, diabetes treatment, modern geology and astronomy that date back hundreds and thousands of years in China with no sign of modernity or modern commerce.

Science and technology don’t have their own momentum in a society that is tribal like most of the human groups on the planet.  It certainly has no chance in well developed societies with hereditary elites like most of the rest of the world; where the elites maintain the status quo like Paris.

It requires that humans be free from tribalism and hereditary elites.

England provided the first escape with the management of their commercial empire which sent talented men outside of the hereditary elite off to faraway places where their talent emerged.  Then America did the same with its rebellion and the great freedom of moving Westward to an open continent. Hereditary elites were thwarted and modernity had a chance to thrive.   None of that can be duplicated again.  America, the stepchild of England, and its commercial empire, will not happen again.  It can not happen in a settled static world.

Israel is the closest modern similarity to America and It may have a problem escaping an hereditary elite in such a small territory. Israeli's coming to America's West Coast may be a source of survival.

Nowhere in the world can you create a start-up culture like America. Nowhere like the San Francisco Bay area, the West, where there is no hereditary elite, where the Westward escaping hippies brought optimism and a love of commerce and innovation.

The 'arc of history' is filled with (1) the death culture of Marxism (tribalism converted to government tyranny), government regulation and (2) social climbing that is almost biological and perpetuates hereditary elites.

The accident of America can be destroyed by government regulation which the ancient forces of tribalism and the modern Left seem to carry in their genes.  Modern commerce can come to an end.  The human desire for status quo can do it.  Envy helps too.

I’ve done business consulting with several thousands business, many start-ups.  Every day businesses struggle with government regulation and entrepreneurs typically quit from exhaustion.  Not from new technology and new competition but from the exhaustion of coping with endlessly stifling government regulation.

Donald Trump the first real businessman to become president explained the black death of government regulation in his speech in Poland in 2017. 

That is why I worry about the survival of modern commerce.  The greatest and most beneficent accident to befall the human species.

Poverty

One of the standard complaints about modern commerce is that it creates large differences in the living conditions of the ‘haves and have not's.  Between the successful middle class nearly everywhere and the persistent poor found in  almost all prosperous nations.

This is a serious confusion of two separate and independent factors.

Modern commerce rewards some disproportionately more than others.  The distribution of wealth and income is a steep curve with a tiny percent of any nation's people at the top and the majority at the bottom.  Much like the natural world where there are billions, maybe trillions of insects and only millions of  creatures larger than humans.  Where there are billions of dandelions and only millions of large trees.

But this observation leads to confusion.  What modern commerce creates is the divergent distribution of wealth and income, it is government that determines the number of any nation’s population that lives in poverty.    The best example is Singapore, an island like nation, with five and a half million citizens in a super-successful modern commercial world with no poverty. No poverty because the government decrees that there is to be ‘no poverty’.

Some Scandinavian countries have little measurable poverty and virtually no visible poverty while being successful modern commercial nations.

Poverty is the responsibility of government, not modern commerce which generates abundance but does not determine its final distribution.

Evolution of business

I have explained that the modern world is the by-product of modern commerce.  Not science, technology, medicine, economic growth, government, capital or religion…. It is only the by-product of  modern commerce.

I have shown that modern commerce is made up of three distinct types of business; trade, clientry and industry.  Only industry has created and been an integral part of modernity.

The distinct attributes of modernity and the sources of vigor for modern commerce are meritocracy, diversity and openness.  These developed in nations with institutions of law and finance that made trust pervasively available with their structural openness (courts and banks). That modernity was able to thrive in the world of aggressive colonial trade and the expansion of the American West where the meritocratic sons of fortune could escape their hereditary elite families.  Lastly, the mixture of institutions that favored openness among strangers (Free Masonry) that promoted meritocratic values and generated life in truly diverse urban communities were the fertilizer for the thriving of modern commerce.

All of this is new to most people.  It is also fairly obvious to most people when they reflect on it.

There is a less visible reason that modern commerce is a stunningly successful human creation which has brought us such extraordinary benefits in such a short time (two hundred years). That reason is that modern commerce is driven by evolution of the Darwinian type.

Darwinian evolution is composed of two elements: change in the existing conditions and selection of the desirable changes.  That is a perfect description of modern commerce. Business is constantly in flux and constantly moving in the direction that favors individual needs, tastes and desires.

Everything in modern commerce evolves.  The 1,000 square foot local food outlet in 1860 with barrels of goods and a proprietor has evolved into a vast chain of supermarkets with hundreds of thousands of square feet each, tens of thousands of packaged goods and hundreds of thousands of employees.  The airplane has evolved from a one person kite using a one cylinder gasoline engine with wing and tail controls to a 400 person behemoth that flies thousands of miles at hundreds of miles per hour in all weather as part of a global corporation transporting millions of strangers every month.

Businesses evolve.  They are born in the flux of market changes, sometimes infinitely small like a river changing its course.  They grow then they appeal to customers and they die when they become part of a bigger consumer driven corporation or they shut their door.  In the United States at the beginning of the 21st Century there were over half a million new businesses started and only one-third of them survived ten years. Evolution gives new life to the world of commerce and continually improves the lives of its beneficiaries.

Commerce in the modern world thrives on evolution and creates a wonderful variety of products, services and livelihoods.  Just as evolution creates a nearly infinite variety of species in the natural world from which we all enjoy the benefits and some distresses; it does the same in the modern commercial world.

Pro commerce history

There were many elements that went into the first successful trading nation.  Holland in the 1600’s was the first major global trading nation.  Trading posts had been developed on sea lanes by the Phoenicians, the Vikings, the Chinese, the Viennese and specifically in the North Sea region by the Frisians (the main source of the English language).  Bookkeeping, a vital element came from Milan.

Holland, focused on Amsterdam, in the 1600’s was the source of government bonds markets, international shipping insurance, the stock market and other open bidding markets and importantly salaried tax collectors (source of trustworthy tax collection).  The Dutch were a unique people on the planet.  They had created a representative democracy with elections of many offices; the Dutch Republic united the Netherlands with seven provinces.  It was founded in 1581.  

The Dutch were noted by all visitors in the 1600’s as the most egalitarian people on the planet.  They were also the most tolerant.  They had absorbed the Jewish exiles of the Spanish Inquisition of Spain and Portugal.  Amsterdam in the 1600’s was the center of technology, the center of the Enlightenment and the center of publishing in all of Europe.  (See Jonathan I Israel's, The Dutch Republic) 

The Dutch military conquered England in 1688 and transferred all the major financial institutions to England where the Dutch Head of State, William of Orange and his wife, became the King and Queen of England, William III and Mary.  With the English Parliament that welcomed them, they create the Bill of Rights of 1689 the major source of modern English law.

Holland was prosperous in the 1600’s as was its settlement in the American colonies, New Amsterdam later New York.  New York became the source of most American financial institutions and with the creation of the United States and the American Constitution it became a central financial force.  New York’s representative Alexander Hamilton played a major role in building modern financial ideas into the structure of the united 13 colonies.

England with a much larger population, with the Dutch financial tools, became the largest global trading nation from 1700 until 1945.

In the history of commerce these two giant international commonwealth’s, England and Holland, generated an entire future generation of entrepreneurs and giant trading businesses.  The Dutch and British colonies were gigantic new markets and training stations for homeland officials.  The colonies created entrepots were the second and third sons of the hereditary elites could find important positions of power.  The beginnings of meritocracy.  The colonial cities also provided great ‘diversity’ in the commercial meaning of that term.  Colonial networks were the origins of modern commerce.  Colonies created markets for Dutch, British and other local goods and the navies to transport them.

England is considered the original home of the Industrial Revolution as water power and steam power were introduced to accelerate wool, cotton and ceramic production lines. The revolution soon moved to the rapidly expanding United States in the 1850’s with the expansion of the West that allowed the meritocratic offspring of the Colonial States hereditary elites to open the vast new reaches of America along with the commercial settlements created by the soaring number of immigrants from the entire world.

Three other ingredients played a role in this historic development of industry.   

The original Free Mason Grand Lodge was founded in London about 1720 and spread around the world by the end of the 1700’s.  Free Masonary became the home of diverse men who could trust each other.  It became the backbone of trust and finance for the Industrial Revolution and its expansion in the 1800’s provided finance for the American frontier.  

The second was the application of the new technologies of animal husbandry and horticulture to farming in the mid-to-late 1700’s in England and Holland which increased production dramatically creating free labor to supply the emerging Industrial Revolution factories.

Third and last was the widespread publication of Adam Smith’s Wealth of Nations which helped leaders and thinkers understand the nature of the explosion of industrial production and trade that surrounded them.

The industrial revolution, in retrospect was the convergence of many small but critical elements to the three major elements I have identified.  Meritocracy had to emerge from within societies ruled by hereditary elites.  The Dutch and British colonial system made this possible.  In America, the vast Western expansion made this possible even more so.

The diversity necessary for commercial creativity and technological innovation was also a by-product of this international mingling of people and cultures in the many urban cities of the colonies.

Lastly, the emergence of safe spaces for open and tolerant men of diverse backgrounds and the institutions of modern commerce that they fostered  was essential.  Democracy was vital as were the Free Masons and similar institutions that the Dutch, English and Americans promoted.

Modern commerce needs openness.

A synonym for openness is honesty.  I have always preferred to talk in terms of openness because ‘honesty’ is the absence of deceit.   Openness is a condition where deceit can not even take root.  A small difference but I prefer the open environment to one that depends on ‘honest’ people being honest all the time.

Why would modern commerce need and promote openness?

The true underlying requirement for modern commerce is trust.  Openness is the way to create trust over a broad array of circumstances.  Commerce is carried out over vast distances and between untrusting people.  

The original form of trade appears to have been one tribe putting its goods on a river bank and another tribe putting its goods on the opposite river bank.  No trust was needed.  The buyers on each side of the river were allowed to return to their side when the trade was considered acceptable by both sides.

Currency was a way to make trade easier by exchanging a universal coin, gold, for the goods and services.  Little trust was needed.  Stories about drug gangs selling merchandise for money then keeping both the drugs and the money are common fare in the world of fiction.  Mostly fiction. Currency works fine,  for most transactions, in lieu of trust, but more complex transactions such as shipping require more.

This is why some tribes with strong internal trust were able to carry on trade over long distances for several millennium.  Phoenicians, Jews, Chinese families and the West African Fulani tribe became long distance intermediaries. A tribal member was present at each end of the transaction to verify the transaction.  

More complex transactions over time required legal documents and courts.  Both these elements required openness.  The lawyers had to follow established published legal standards and the court records had to be public as well.  The same became true of insurance contracts, stock exchanges and entire legal systems.  All of these institutions required openness to be the basis for trust in commercial transactions.

The early days of modern commerce were built on all these open institutions, bond markets, stock markets, legal systems, contracts and trade treaties. As corporations emerged in commerce in the 1850’s laws and public filings became the form of openness.  Today, openness in securities filings and banking transactions are vital for the survival and expansion of modern commerce.

It is hard for us to remember that every commercial institution plays a role in keeping the level of trust high for modern commerce.  Banks guarantee the safety of their checks, credit cards and bank accounts.  So does everyone else we give credit cards and checks to.   These businesses are subject to openness at some level of audit, government examination and reputation.

The most important role of openness is inside of businesses.  No one could run a business if they can’t fully trust every other person in the business, and expect openness about all management relations.  If a manager gives directions to a peer or subordinate who fails to carry out the directions or report back accurately, then that person is forced out of the business and/or are other people who fail to report the breach.  New people are not hired in the first place if the aura of deceptive behavior hangs over them.

Openness is a core value that is generated in modern commercial markets and is necessary inside modern commercial business.

I am the person who made international currency possible with the development of multi-bank issued credit cards that allow modern people to travel the world and buy and sell goods and services.  That whole system is based on the long history of interbank trust which in turn is built on interbank openness.  For the first few decades of bank credit cards, they all used an 'Interbank' symbol.

Trust is the core value of modern commerce that allows a tribes-woman in the back woods of Cameroon to sell her goods in Charleston South Carolina.  Trust is based on a vast series of institutions that rely on openness.

Inaugural speech

A number of people have asked me to comment on President Trump’s inaugural address.  It has a great deal to do with modern commerce in America.  Everything to do with the future of modern commerce in the world.

The picture on the right comes from my wonderful friend Ann who gestured like this while watching the Trump inaugural: “this man has balls this big.”

He began with “We, the citizens of America, are now joined in a great national effort to rebuild our country and to restore its promise for all of our people.

"Together, we will determine the course of America and the world for years to come.”

He is serious having said this every day for a year during the election campaign.  

Of course he put himself in the tradition of Andrew Jackson with his bold attack on the dias: “today we are not merely transferring power from one administration to another, or from one party to another -- but we are transferring power from Washington, D.C. and giving it back to you, the American People.”

What is true about this inaugural is that the core of America and modern commerce is the desire and ability to get things done.  We are a building, strong and determined people.  At least half of us are.

A true American, Trump, is unique in his ability to say: “America will start winning again, winning like never before.

"We will bring back our jobs. We will bring back our borders. We will bring back our wealth. And we will bring back our dreams.

"We will build new roads, and highways, and bridges, and airports, and tunnels, and railways all across our wonderful nation.”

Nothing is more American, the land of modern commerce, than the determination to dream, build and act.  The Golden Gate Bridge, 2 miles long, took less than 3 years to build in 1938.  The newly built Eastern span of the Bay Bridge is also 2 miles long and took 11 years to build in 2013.  

America has lost its dreams, perverted its competence, disappeared in a quagmire of hopeless Climate Armageddon.  We have become a nation of wimps, cowards, environmental reviews and pathetic pussys.

In his inaugural address, President Trump has called for a renewal of the America that created world prosperity and he offers our way of life as a light that will “shine as an example for everyone to follow.”

Great speech, and Donald Trump clearly wrote it himself like Lincoln at a similar time when American values were nearly lost.

Never run out of jobs

There are many cultures that contribute to the growth and vitality of modern commerce (Israel and Japan are notable) but America is the elephant in the room. America has had two extraordinary efflorescences.  A baby boom after the Civil War and a larger one after WWII called the Hippy Revolution.

There will always be new work for humans so long as the American spirit survives. The hippies embodied much of the essence of America. They were dirty like Vikings (as opposed to Japanese), believed in  ‘tabla rasa’ inborn goodness of people.  They were optimistic but had a religion of Armageddon.  They wanted to make the world in their image and many of them were doers.

The hippies found that 20 people could live on the earnings of one person and they did. 19 got stoned, hung-out and wandered the world. They, like others, had no reason to work.  

Hippies started their own businesses to change the world and over time the few founders hired the rest as employees.  The hippies created much of the modern world from the organic food revolution to alternative fuels, to robust bicycles, to new fabrics, health, education, new music, pleasure drugs and even the personal computer. Much more of course.

The hippie efflorescence of core Americanism makes sure that a few people will always create new industries to employ many others.

What you can see for yourself about commerce

I have made very little progress in teaching the world that modern commerce is the only source of wealth, health and prosperity.

So now I am looking around me to try and teach simple lessons about modern commerce.

Lesson 1.  Modern commerce is the superior human mechanism for social improvement.  It is built on the fundamentals of Darwinian evolution.  There is constant change underway and the best survival traits are the ones that survive. Businesses that serve your needs survive.

Walk down the street with your eyes open.  You will notice many retail storefronts ‘for rent’, a few new businesses being built and remodelled and a few storefronts converted to other uses such as apartments or garages.

What you are seeing is small sample of the constant and vast churning of new business being formed and businesses failing and going out of business.  Now consider the fact that the retail businesses you are seeing comprise about 4 million out of 8 million businesses. Every year half a million of these are started and half a million go out of business.  That is Darwinian evolution.  Survival of the ones that serve customers the best.

Lesson 2.  No government operations ever go out of business.  They just grow like cancer.  

In 1941 there was 1 government employee for every 30 Americans.  That includes Federal, State and Local.  Now there are 2 government employee for every 30 Americans.  Nearly double the number of government employees per person. (excludes military).

Summary: modern commerce is evolutionary, constantly adapting to the environment. Government is cancerous, malignant with unstoppable growth.

How to teach pro commerce issues

I have been trying to teach the core issues of modern commerce for nearly 20 years.  I have to think back about what I’ve learned.

I have seen some movement in the intellectual world in the direction I want.  So I can offer a few minor observations.

Nobody understands the necessity for using the phrase ‘modern commerce’ or ‘pro commerce’ so we have to be patient with the misnomers capitalism, business and the free market.

The two ideas that are getting through to the understanding of modern commerce are the connection between individual freedom and meritocracy.  That is an important step that has taken 20 years.

Fortunately these are both positive values for Americans.  Americans consider their personal freedom to be a unique and desirable quality of living.  It has many meanings which need to be fleshed out.

Individual freedom should slowly grow to be understood as living with the ability to lead a complex, multifaceted life that is self organized.  That really doesn’t exist for most of the world, nor does it have meaning for the many Americans who see life as a job or a career with the freedom existing on weekends and in retirement.

The notion of an authentic person is also a growing concept but it hasn’t been connected to the idea of a self organized life. And the need for modern commerce in a society with individual freedom.

I am delighted to see the concept of meritocracy emerging among thinkers, recently.  It is probably the strongest value that Americans can connect with that is a core part of modern commerce.

Most people have no idea how narrow the world of meritocracy is.  It simply doesn’t exist anywhere that tribal or family cohesion is paramount.  That includes all of Africa, Islam, India, China and in the hereditary elites in the rest of the world.  It is good to connect meritocracy to modern commerce but it may be impossible to get people to understand that it is limited to very few societies.

Lastly, the idea of modern commerce as a Darwinian form of evolution is still limited to the phrase ‘creative destruction’ without any sense that thousands of businesses are merging, failing and expanding every day.  The dynamics are not visible. Only one or two of the top 100 companies of 1960 even exists today and only a handful are still in the top 100.

Hopefully, progress in understanding more about modern commerce is underway.

Definitely no SETI

SETI is the extravagant science project to search the heavens for signs of intelligent life elsewhere in the universe.

Imagine the arrogance of a human being able to say that there are not and never will be signals from ‘intelligent life’.  I am that arrogant that I can say for certain there are not now and never will be another species capable of sending signals out into the universe.

How can I be so certain?  Because I am one of the few living people who understand how we came to be.

• We modern humans, who can send signals to each other over great distances are the byproduct of modern commerce which barely exists on this planet and is very fragile.

• Among the trillions of species on earth for several billion years there are only 7 billion humans alive today.  The total is 100 trillion species years. And we are the only ones with the potential for technology.

• Of that 7 billion, since the beginning of modern commerce in 1800 there have been less than a few billion such humans in only a few million square miles who have participated in modern commerce with sufficient competence to read, write, do numbers and create technology necessary for long distance communication.  Maybe one billion.

• Of that billion, only a tiny fraction had the social attributes necessary to generate technology and operate it.  That fraction needed to operate in
• a meritocracy
• with a non-tribal group of peers,
• in an environment that supports individual initiative
• supports free markets
• operate in a nation with a weak, free individual oriented government
• and in a large collection of friendly cooperative members of the species.

Even today that number of people of our species may be under 100 million.  And we have been at this level of technology and functioning for only about 100 years.  

Since only a few people, maybe 100, understand what created this extraordinary time in modern commerce and hundreds of millions of people (Lefties worldwide) are trying to destroy it, I don’t think we can expect this miracle to occur anywhere else in the universe.

I can say with certainty that it hasn’t and it won’t.

Pro commerce issues

There are an increasing number of people writing about the wonders of pro commerce.  All of them recognize the profound importance to society and the awesome power of commerce for good.  Some recognize the individual benefits that I have singled out.

Because my pro commerce stance does not come from intellectual meandering, it looks different.  My pro commerce stance comes from experience; it comes from actual operating businesses; several thousand of them.

I have found two elements of commerce than others have not found.  First is the tripartite nature of commerce and second is the good-values direction of commerce.

There are three categories of commerce.  

• The most ancient is ‘trade’.  A stand alone business is usually involved in trade.  A flower shop.  Each transaction is the end goal; it must have enough margin of surplus revenue to keep the seller in business and renew the inventory.
• Another ancient one is ‘clientry’.  A doctor or engineer are practicing clientry. Their goal is to provide the best service appropriate to the client for the lifetime of the client.
• The newest and most potent is ‘industry’. This form of commerce is based on reducing costs.  Cost reduction is achieved by increased scale; large scale of production, large scale of marketing, technological improvements and managerial competence.  It is found in every chain store operation and factory.

Commerce actually thrives when it incorporates four values: meritocracy, diversity, openness and preference for markets.

• Meritocracy means employing the most qualified person for the job or function.  This is not the case where tribalism prevails or nepotism dominates.
• Diversity of human resources results in the greatest productive output of any business.  Diversity refers to different skills and viewpoints and has nothing to do with gender or skin color.  Diversity is what cities have to offer and why commerce has always thrived in urban areas.
• Openness is vital to any commercial operation.  People who work together must be open with each other.  Secrecy between workers and hostility are counterproductive.  The same is true for all relations with suppliers, advisers and consultants.  Openness is vital for learning, shared competence and innovation.
• Lastly modern commerce thrives on markets.  Markets allow for survival of the superior and are an excellent form of communication and education.

The greatest sum total benefit of modern commerce is that it allows each individual human to grow and develop to their greatest potential.  In pre-commercial societies there are less than 100 occupations and labor practices.  In modern commerce there are an infinite number of livelihoods and ways of life. Room for every talent and genius.

The gig economy

A word from the future.  

I have lived in the ‘gig economy’ for the past forty years.  I often had a supplementary salary.  Nearly all my real income came from clients, speeches and royalties.  For me, it has been a gig economy.  It has given me vast freedom to do what I want with my time and my passions.

Of course that is what the troglodytes in the Democrat Party don’t want people to have.   I listen to Robert Reich and Hillary Clinton rail against the gig economy.  People who are so scared of life and still think we are in the 18th Century with precarious daily sustenance.... that only a salary can protect us from the monsters of daily life.

The reality of the gig economy is the extraordinary freedom ordinary people can have if they choose.  We can work when we want, doing what we want, and working for and with people we want to work with.  What a refreshing change from office politics and working with all the boring schmucks who people the world of salary life.  

We giggers improve our skills, develop new talents and understand self management.  Things not possible in the world of salaries and offices.  We don’t have bosses running our lives and determining our destiny.  We work for ourselves and our lives are in our hands.  

We vacation when we want.  We act like the richest of the rich with a deep sense of security that is never found in retirees on a fixed income.

If you can’t handle freedom, and most people can’t, don’t be in the gig economy.  But for god’s sake don’t try to close off that option for the rest of us.  Please don't use the political tyranny that is the basis for the Leftist view of the world to lock us into the archaic world of salaries and retirement pensions.

Merry old England

I’m constantly asking myself how much abuse can commerce in America take before it stops working or is so degraded as to be minimal?

I am first looking at Britain after WWII.  Led brilliantly by Winston Churchill during the war, the nation immediately elected a pure socialist government led by Clement Attlee and Aneurin Bevan in 1945.

England immediately bought all the large industry with government bonds, socialized medicine and created a communist five year plan.  Every functioning private industry was nationalized from steel and autos to transportation and telecom. Most of coal was nationalized.  

England remained a highly stratified hereditary class society, so most of the hereditary elite remained in their top management positions.  The creaky old industrial world just got more creaky and unable to innovate.

This communist model lasted until Churchill was returned to power in 1951. Because the election was close and the government coalition only lasted until 1955, Churchill was unable to undo much of  the socialization that had been completed.  Britain remained a socialist backwater until Margaret Thatcher in the 1980’s made an effort to reverse the damage of socialism.

England was a major auto, coal, steel, clothing and pharmaceutical powerhouse before WWII.  After the war it was insignificant and has remained so since then.  It lost its empire as a source of exports but gained the wealth of the commonwealth as the natives moved to London and made it a wealthy and vibrant center.  Only London.

In summary, England is evidence that a vital commercial society can be reduced to economic ruble for nearly a century after sufficient socialization of industry.  England is not a pure case because WWII did a great deal of damage to the capital of the country. Much of that was offset by the U.S. Marshall Plan aid.  The second problem with a pure case example is that the hereditary elite remained in control of the society and that makes commerce ineffective under any circumstances.

In any case, a valid conclusion can be drawn: a sufficiently powerful central government can destroy commerce, especially if meritocracy has never had a chance.  England today is coasting along. As is most of the rest of the world, on the driving  power of the United States which continues to generate innovation and vigorous global commerce.

P.S. A powerful sign of modern commercial failure is found in England: half the resident Jews have left since 1990.

Internet skills and Tokyo

I’m really not comfortable with people telling me how the Internet is changing lives when there is no measurable observation.

I have some good measurements. For over 25 years I have had guests visiting me in Tokyo and staying in my home. Tokyo has no straight lines or corners to the streets (except in one dense business area). The rest of the city is as chaotic as a Moroccan suk or Mumbai.

Except that it has an infinitely complex subway system and impossible bus system that makes London look like a 3 year old’s puzzle. It is all high-tech with glitz and trains that run 2 minutes apart on tight published schedules.

For 25 years I have had to give the 80+ guests a folder of maps, travel brochures and guidebooks for everything. So they can get around Tokyo and find things they want to do.

It usually took 3 or 4 days before my friends were confident enough to find their way home. Some never got that confidence in a week.

Starting two years ago, that was over. Now all the guests arrive with their smart phones and can figure Tokyo out right away. My three granddaughters arrived late on a Sunday night, and Monday night they walked home on two different routes that were complex. With their phones and websites they planned every day by themselves with no help. The same with the next guest who did it all by himself. Every day.

Now that is what the Internet can really do. Make a truly complex and inaccessible problem in the real world… totally accessible. Quickly.

Business is the next big thing

Some techie has started a blog with the title ‘business is the next big thing’. Meaning to me, that this is a good time to correct the record. This dude wants business to be more socially responsible and sustainable. I can’t respond to the sustainable part. The word has no meaning unless one prefers life without steel, airplanes, cargo ships, bananas and restaurants. Paleo, real paleo is sustainable.

It is hard or impossible to understand the nature of business unless one has worked with dozens of small businesses and extracted the core operating rules. I’ve overdone it with over two thousand businesses of all sizes. And an open mind.

The core principles are in the upper panel of this blog. Meritocracy, diversity and openness.

A modern business will fail if it hires a brother, a sister-in-law or uncle to do serious work. Meritocracy only thrives in modern commerce (and the modern American and Israeli military). Since it is the only way people become fully developed as humans, it is clearly the only socially responsible and decent form of human organization.

Diversity is what is never appreciated about modern business. Not diversity of skin color or genitals which is not diversity but absurdity. Diversity of viewpoint and experience are what make businesses vital and successful. Modern commerce brings unique humans together and promotes vigorous interaction and development. A Muslim Pakistani can work with an atheist Texan. Again, a unique quality of modern commerce not found in any other institution.

Lastly, openness. An analog for honesty. Commerce is often seen only in terms of competition between businesses and based on trade secrets. Non-sense. Everyday business is based on trust and openness. Orders are shipped, advisors advise seriously, people work together amicably, internal theft is negligible, businesses help each other everyday, receivables are received and trade organizations work for their common interests.

Commerce is 95% cooperation and camaraderie and 5% competition of the kind that is found in sports. Where else do people behave that way? Nowhere.

Business is not the next big thing. It is the only big thing and has been for 200 years.

Pounds per mile per dollar

I owe a debt to Michael Adams who responded to an earlier blog about the central role America has played in the explosion of modern global commerce.  Mr. Adams sent me to a book by Jane Jacobs called Systems of Survival.  I have always loved Jacobs' writings, she is still an influential mind.

In her Survival book, Jacobs does an excellent job of distinguishing the ethics of commerce from that of government.  Everything she writes is clear and explicit.  However it applies to the period before 1800, maybe because she worked in Canada which is not part of the modern industrial explosion (Canada is nearly all extractive).  When we get to the modern commercial world we need to add the other element of my blog headline: meritocracy.  The replacement of tribes and families and hereditary hierarchy are central to our modern prosperity and technology.

In my mind my addition of meritocracy to Jacob’s list of commercial elements was still not sufficient to explain our global prosperity.  I finally had to add another element to my list to distinguish the world of 1800 from the world of 1900.  Speed and cost in moving heavy loads. 

This video of downtown San Francisco in 1905 is what stimulated my thinking.  Nearly everything is at the speed of a fast walking person.  When I was a child, cable cars only stopped at a few locations, otherwise men jumped on and off the moving car at about 9 miles per hour. That was the speed of everything downtown.  Today it is still about the same speed except for the underground rail line.

When did the world outside of downtown change?  It came with the steam driven railroads dating from 1850.  Speed picked-up with autos, ships and trucks in about 1910. Then again with airplanes in the 1950s at the same time freeways came into regular use.  The final uptick in speed and weight came with 18 wheel trucks, cargo containers and the complete FedEx and UPS systems in the 1980s.  

I see this increase in speed as a function of weight and cost.   A man can carry 60 pounds for 4 miles in an hour at $12 current dollars. That is 1.25 pounds per mile per $1 per hour.

A horse pulling a wagon is 1,000 pounds for 6 miles in an hour at the price of one man at $12 and one horse at $1.40 per hour.  That is 167 pounds per mile at $13.40 per hour, or 12.5 pounds per mile per $1 per hour.  The horse and wagon are about 10 times more efficient.

Rail freight costs about 80 pounds per mile at $1 per hour. A rail car goes about 30 miles in an hour. The rail is faster and costs one 6th the amount of a cart and horse.

It is this considerable decrease in transport cost from 12.5 pounds per mile per $1 per hour for a cart and horse to 80 pounds per mile at $1 per hour.

In 150 years we have reduced the costs of cargo by a factor of 6.4.  It now costs less than 16% of what it did then.  That steady reduction in the cost of goods dramatically increased the size of markets, reducing the costs of production too.  Transport costs declined and increased market size and that in turn reduced the costs of production.  Our modern commercial bounty owes much to this specific transport technology.

Air freight express is 3 pounds per mile at $1 per hour.   Air freight goes about 350 miles in an hour.  While air freight is only a little more efficient per mile per $1 than a man walking with a back pack, we wouldn't be eating strawberries from Chile if we waited 15 months for men to carry them to us.

I must now add transport efficiency to the panoply of factors giving us the modern world.

Also a note.  Our dense urban areas have not benefited much from the transport efficiency factor.  I can run across San Francisco in about twice the time it takes to go by car.  

How important is the American lesson?

I spend a lot of time thinking about modern commerce, both currently and in terms of its history.

Since I start out with a different perspective I am generating a different origin.  As can be seen from the title of this blog page I find no comfort in the words 'capitalism' or 'free market'.  To me the former is Marxist haberdashery and the second is ideology.

Modern commerce has three components: trade, industry and clientry.  Each with a different history. Industry began roughly two hundred years ago.  Trade and clientry are as old as cities. Though both have evolved to suit the modern industrial world.

Modern industrial commerce requires four sub-systems to work effectively: meritocracy, diversity, openness and a preference for markets.

It is on these observations that I look back at history and see a different story than most others.  

While I have focused, in the past, on the institutions that came out of 17th Century Holland and migrated to England for the 18th Century, I have moved on.  All the institutions created in Holland were vital.  Holland gave us Amsterdam, with a Protestant optimism,  with a high level of meritocracy, a great sense of egalitarianism,  an extraordinarily high level of diversity with Jews from Spain and traders from everywhere in Europe,especially the liberal Hanseatic lands, a high level of honesty in trade dealings and many original open markets for goods of all kinds including financial goods.

I also recognize the importance of the Masonic order and the innovations in food and husbandry in England.

Nevertheless, it is the three outrageous lessons of America that I look to as the source of modern industrial vitality.  First in the 19th Century then again in the 20th Century.  America and only America brought us this vast treasure of modernity.

• First meritocracy needed a fertile ground.  America and the English colonies  provided that. America and the colonies are where the dissidents and children who didn’t gain from primogenitor moved. They were heavily meritocratic.
• During the 19th and 20th Century they have come from every land on the globe to America.  The meritocratic escaped the feudal, static and tribal societies that constitute most of the earth.
• By 1960, America had dissolved the hereditary elite.  They and their ‘blue books’ were replaced at the tops of corporate America by the meritocratic men who rose to the top in the WWII military.

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• Second, meritocratic families enjoyed the vast open frontiers of America.  They could leave the hereditary elites behind in Boston and New York and move to Seattle, San Francisco, Salt Lake City….everywhere in the West.  There they found the greatest freedom on the planet.  No government, just opportunity.  They slowly created government, democratic government, from the ground up.  Unlike the kingdoms of the world, the grass roots of American democracy favored meritocracy and commerce.
• This happened again in the 1970’s with the confluence of expanded immigration, reduced tariff barriers and the outlaw world of hippies who loved commerce and openness.

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• Lastly, from the earliest days of the 13 States to the great Western expansion, government in America has been weak and grass roots in nature.  This was true in the hippy home of San Francisco too.  This has always been true in America and it allows for incipient new businesses to emerge.

• We can see from the treatment of Uber and Airbnb around the world that government is hostile to modern commerce.  Weak government is an important ingredient in the prosperity of commerce.

God bless America.  She is the fountainhead of modern commerce and global wealth.  Not one iota of the American ‘grace’ was planned.  It was mostly good fortune.

Matt Ridley again

Matt Ridley has published a second great book.  The Evolution of Everything: How New Ideas Emerge.

I’ve recommended Ridley twice before and summarized his material on commerce in his first book here and in a speech he gave here.

Ridley is a brilliant pro commerce author, maybe the only other one.  He gives credit to Deirdre McCloskey for her comparable genius on this pro commerce issue.

Evolution is a long book.  The greatness about the book is that Ridley shows us that both the free market mechanism and Darwinism are the same evolutionary mechanism.

Neither require a god, a direction, a meaning or a designer.  Both are the same mechanism: survival applied to variation.  

Ridley does a wonderful job of reminding us that evolution is what happens not just with biology but also with nearly everything in the human world.  He goes into detail with free market evolution that creates languages, weapons, cities and businesses that we can all see.  He shows that it also includes morals (look at how arranged marriage has evolved into cohabitation and gay marriage), as well as money, education and most importantly: technology.

The book has done one important thing: made me think about the broad scope of human subject matter that evolves.

Unfortunately, Ridley is not a good writer.  He mixes all his personal prejudices, most of which I agree with, into this broad subject.  That is distracting and weakens his argument.

It is now time to think much more broadly about evolution and especially the limits of evolution.  

Governments, bureaucracies and states don’t seem to evolve, because they survive despite their inept and incompetent and inappropriate functions.  They always fail but they survive despite that fact.  What can we say about that?

Politics and commerce

Both politics and the ‘trade’ part of commerce are very old.  These institutions have survived for one reason: they fit perfectly in a zero sum society.

Politics is the allocation of zero sum resources, mostly political power.  It exists wherever humans convene.  Tribes use their complex and intimate networks to constantly re-allocate resources.  (He lost a leg hunting for all of us, we will provide his widow with food.) It can escalate to warfare as it has throughout most of history; particularly when zero sum becomes negative sum. (In drought years the Zuni raided their Pueblo neighbors.)  

The trade component of commerce is almost as old.  It is an effort to allocate zero sum resources to improve resource allocation to get more mutual satisfaction, voluntarily.  (The Zuni traded corn for clay pottery with neighbors.  The Zuni were good at irrigation, others had good mines for clay.)

Thanks to commerce, which uses many unnatural and non tribal elements, such as meritocracy, diversity, technology and open markets, most of us now live in a positive sum world.

Politics and modern commerce constantly come into conflict because one is dealing with the older zero sum world and commerce IS the modern positive sum world.

 

Communist medicine

It is clear to me that the revolutions in medicine and surgery in the past century are entirely the by-product of commerce.  Demonstrating this is a different matter.

Therefore I ask the question: in a century of communism, has any communist country ever developed a significant medical or surgical innovation?  

The Russian communist revolution was nearly 100 years ago.  Over a billion people have lived in communist countries in that 100 years.  Yet no significant medical or surgical innovation has been developed.  

The first life saving innovation was the X-ray.  X-ray equipment was developed in Britain, Germany and the United States.  X-ray machines created General Electric.

From that point, until the end of WWII those three countries were the source of all medical, dental and surgical innovation.  After WWII the locus of such innovation moved almost entirely to the U.S.

The communist countries were always parasites, using innovation that originated in the commercial countries.  Cuba and North Vietnam are still 50 years behind the rest of the medical world.

With the advent of socialized medicine in post WWII Europe, innovation stagnated and nearly all medical and surgical innovation moved to the United States.  The most radical innovation began with the Salk polio vaccine.  Radical emergency medicine was developed on the American battlefield in the Vietnam War. Tamoxifen, the first successful pill treatment for breast cancer came from Britain. One of the great surgical innovations is the catheter lab; developed slowly mostly in the U.S. in the post WWII era.

Commerce and positive mortality and morbidity correlate perfectly.  Commerce is the source of modern health.

 

Today's America is an anti-commerce disgrace

Commerce is fundamentally about meritocracy and diversity. Meritocracy is about individuals. No one can do a particular job better because they are a member of a 'protected victim class'. That goes for teaching black history or being a professional football player. Merit goes only to individuals not to tribes, families or class.

That is even more true of diversity. Diversity is about individual uniqueness not about being a member of a 'protected victim class'. A good group of fashion designers will be made up of people with a wide range of talents including differing esthetic tastes, not different sexual appetites.

The same is true of an engineering team where diversity means different training and a variety of experience. Bell Labs was the greatest research institution on the planet because of the wide range of geniuses that came from every society on the planet. Certainly not based on melanin level or sexual preferences or gender.

Today in America, the Left has adopted a very totalitarian anti-commerce value of arranging society to reflect 'protected victim classes' differences in all institutions ranging from CEO's, boards of directors, employment to home ownership and educational outcomes.

Everything except sports such as football and basketball where the stupidity of this idea is obvious.

This idea of 'protected victim class' is a fairly new one. The idea of equal outcomes for all 'protected victim classes' is even newer.

We have always had hated outside groups: Chinamen, Irish, Jews. The idea of 'victim groups' was first promoted by the American Communist Party in the 1930's trying to divide Americans and gain membership. It gained currency on the Left in the early 1960's as civil rights became a source of political power for 'civil rights victims'. The Left learned that treating all blacks as a class of victims gave the Left power.

That led to the increased fracturing of society with the rise of the women's movement as a 'protected victim class' in the late 1960's. Academia took the lead in expanding the 'false authenticity idea' with black studies departments in the 1970's. The idea has continued to expand ever since then.

The evil of this idea is most visible in the election of an unskilled, untrained, incompetent man as president, and his re-election based on his skin color. The evil was most visible when he asked the black members of Congress to boycott one of the greatest leaders of a democracy to address Congress, and most black Congress-members did boycott PM Netanyahu. Solely based on their own skin color.

It is a sad day in America when a woman who has high melanin becomes 'black' and a 'woman' only when she changes her political party affiliation to Democrat. I'm thinking of Condoleezza Rice a Republican who is not considered either 'black' or a 'woman'.

On the other hand, only Republicans are real people. Democrats are members of 'protected victim classes' with no real personal attributes.

We went wrong when the Left adopted the American Communist Party definition of human group differences: victim classes.

Does commerce need democracy?

There are two parts of this blog. One is on commerce and democracy the other deals with current democracy politics.

What is the relationship of commerce and democracy? I have no final answer. It is historically too early to tell. We have seen an explosion of democracy in my lifetime. From four dozen democracies before WWII, to four score today. A democracy has regular elections and the government involves more than one party. Power is moved to new people based on popular vote.

Some clearly new democracies are Taiwan, So. Korea, most of East Europe, Chile and Mexico. A few that aren't include Russia, China, India and Singapore.

The thriving commercial centers of the world are all democracies, deep democracies, non-extractive economies, like the U.S., Holland, Israel, Germany and Japan.

The problem examples are China, India, Singapore and Turkey. India is problematic because it has a few cities that are thriving commercially with third world socialist infra-structure. China is problematic because it is a thriving commercial society with no democracy. Singapore, where the brilliant Lee Quan Yew, founder, just died, is a thriving commercial center with a socialist infra-structure and very little democracy. Turkey is doing well economically but has gone from a democracy to an Islamic tyranny.

A few healthy commercial societies are socialist, like Canada, Sweden and Denmark. These are very white societies without an indolent black population.

In my lifetime it is possible to say that successful commerce thrives in democracies, but can also do well in other unique situations. A stronger statement isn't possible at this time.

Now politics. The American president Obama, has done something unique in world history. He is the first leader of a great democracy to publicly criticize another democracy. Obama has virulently criticized Israel for 5 years and after the most recent election in Israel has viciously criticized Israel and its re-elected leader.

This act is significant for one reason other than its historic first. An American president clearly shows he dislikes 'democracy'. A democracy is the creation of its people. To criticize a democracy for the results of its election is to say in the clearest possible language that the people of that democracy are not competent to create and run a government.

Further proof that this American president dislikes 'democracy' is his reaction to the 2014 mid-term election where the president's Democrat party was routed at every level of government in the most decisive overthrow election in a century. He promptly signed executive actions to override the new legislators and announced a refusal to work with the newly elected officials.

We have a stunning anomaly: the elected leader of democracy who publicly dislikes 'democracy'.

Modernity

My son recently suggested that most people confuse modernity with commerce. I am trying to create an original connection between commerce and authenticity. 'Modernity' is confusing the issue.

I think the confusion is real. But commerce is substantive and has distinct attributes. Modernity is a vague conception with no stable attributes. At best we can say that modernity is opposition to tradition or rejection of tradition with an overlay of anti-traditional religion.

The reason for the confusion between modernity and commerce is the historic emergence of both at roughly the same time. This emergence was caused by commerce that brought us mass produced elegant dinner ware and stationary steam engines for power supplies. Both are none traditional. Both replace traditional ways of life.

Commerce sprouted a new world of health, abundance, vigor, pragmatism, novelty, technology and the opening for personal authenticity because it is a meritocratic world.

Modernity is merely a commentary on the new commercial world in the form of the arts, architecture and secular consumption values.

To summarize: two hundred years ago commerce brought to the world a new day, a new way of living. It was called 'modern'. Since then the term 'modernity' has been applied as a commentary on commerce. But 'modernity' is neither meritocratic, since it flows from the mouths of anyone, nor is it tied to technology since it is often approved of by Luddites.

Modernity is a rejection of tradition.

Commerce is just commerce moving in its pragmatic way; lowering costs and expanding markets.