Pro Commerce

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.

Eureka! One of Two

I have put the last two pieces together in the puzzle.  

The puzzle is how an animal as limited as humans can build such a beautiful and complex society as we have today. The two pieces I have just found are ‘cargo cult’ and ‘empiricism.’  Other parts of the puzzle I have found during my life and can be found in my eleven books and my blogs.

Let’s begin with the ‘cargo cult.’

I have been baffled by the existence of Dubai and Abu Dhabi. How can a Bedouin tribe build a modern functioning city?  The answer is a cargo cult with oil/gas, steel and concrete instead of bamboo.

‘Empiricism’ comes from Yoram Hazony, who figured out that what created the modern dichotomy between Jefferson and Hamilton was that the former was a platonist and the latter was an empiricist.  That is the missing piece in the evolution of the modern world.

The modern world was created by modern commerce,  I have spent my life trying to understand how this highly improbable system came about.  Now I know.

First came the Jews who focused an entire tribe on the idea of a unitary god.  That created a coherent group who had to debate and understand how the world around us could have been created by a single entity. The Jews mastered writing and debate which elevated empirical wisdom and recording of that wisdom along with education to create an historic chain of learning.  We Jews have been the social lubricant of empiricism throughout history.

Second came the European Catholic Church which slowly, over a millennium, enforced the idea and institution of a marriage that demanded the isolated and efficient nuclear family.  Tribes could not create the global world of colonialism.

Third came Columbus, Kepler and Galileo, who used empiricism to begin the discovery of the world around them.  Immediately following these great technologists was the Dutch Republic, the first home of Protestantism and modern global commerce. 

Fourth were the pioneers of the empirical world, mostly in England after the Dutch invaded it.  Newton, Adam Smith, Priestly and James Watt.

Fifth was the creation of the modern commercial national structure by Hamilton and Franklin.

Sixth were the Colonial world, the Masonic Order and the Great American West that allowed for the destruction of the hereditary elite and the freedom of the other siblings to emerge.

Seventh, the discovery of Bessemer steel and oil, the key physical ingredients of the modern world.

Eighth was World War II, which caused the collapse of the American hereditary elite in 1960 that in turn made the spread of the modern innovative corporation and meritocracy a global reality.

Now I have it.  That is the modern world.  Just add the cargo cult and we see how the world of modern commerce became established.  Totally fortuitous.

The world of Modern Commerce, the world that I discovered, has allowed countless individual small-minded humans to cooperate and share their small units of knowledge to create magnificent technology and complex institutions.

Let us hope, that my greatest fear, that the world of Plato, Descartes, Jefferson, Kant, Marx and the Wokies will not destroy what we have accidentally created.

Seizing Private Property Internationally

Maybe I’m a little sensitive in some way that most people aren’t.

When the U.S. orders a local government of a foreign country to seize a Russian oligarich’s yacht or jet it doesn’t seem right to me.

When our country was founded, we created a navy to protect American ships in the Mediterranean that were being captured by pirates.  Now we are the pirates.

In the case of the capture of jet planes the legal excuse is our existing military export laws.  The plane was built a decade ago and re-sold several times.

I have no idea, nor do I care, about the legal basis for this crude behavior.  It seems to violate every core idea of the international maritime laws and laws of air space.

It seems reckless.  Russia has already denied entry to a list of U.S. government officials in retaliation.  Russia and her allies could do much more harm.

I find it hard to imagine that any American who owns a ship, a yacht, an airplane or a piece of property that could be confiscated by a foreign country will go to sleep in comfort tonight.

Am I the only person who thinks that this sort of behavior on an international scale is contrary to core American ideals? The potential revenge consequences of this policy are incredibly stupid.

Jews and Money (2 of 2)

I am the first prominent Jew to give public money advice.  My book is The Seven Laws of Money.  What is the connection?  (The original edition is the only unabridged version)

After eight years of community organizing including creating a graduate student organization at the U. of California Berkeley, a friend, Salli Rasberry, asked for advice on raising money for her first hippie homeschooling organization.  That is the origin of the book The Seven Laws of Money.

The book came from a spontaneous conversation in my living room in 1970.  The original transcript was a 12-page typed version that my secretary reprinted in a few dozen copies.  

One day, months later, I saw her putting ten copies in a big envelope which she took from a large box of a few hundred copies.  I knew at that moment to expect a phone call from a major publisher.  The first call was Penguin, the second was Knopf and the third was Random House.  

After writing the book, with Rasberry, I formed a publishing company and contracted Random House to do the distribution.  The first edition sold 75,000 copies.  From there on, many editions were published, most were abridged, including a few classic editions from Shambhala Press.  Every hippie I met, from 1974 on beamed with joy to tell me that they had a copy.

The influence of the book is hard to measure.  If you have ever heard the phrase ‘Do what you love and the money will come,’  ‘ Live your passion,’ ‘Your work should be your passion,’ or any variation of this.   It comes from the 1st Law of Money: Do it!  Money will come when you are doing the right thing.

Not only has the insight by me become a mantra-meme for the entire human world, but you won’t find anything close to it before 1974.  Also note the global ad version from Nike: “Do it.”

Moreover, the idea of seven laws seems to also have become a mantra-meme.  The number of book titles that are a variation of this are in the thousands. Only one earlier book title exists (from 1906 about rabbits.) The original idea of seven laws came from Charles Roll, the poet in the book calling himself Jug and Candle who claimed he knew of the model from Chinese literature.

My original views on money were widely accepted by the world of hippies.  The hippies were a large multi-million person revolutionary group whose ideas were spread to every corner of the planet. 

The Jewish connection is discussed in the previous blog.  Being a Jew and finding a large community (hippies) with similar values was the synthesis that generated my unique money advice.

Jews and Commerce (1 of 2)

I am the first prominent Jew to give public business advice.  What is the connection? 

Let's start with my background in banking.  I knew from my seven years in banking that banks have little to do with business.  Banks lend only to sure things.  They prefer to lend on a gold mine in a secure stable country.  The mine can’t be moved and has a gigantic market.  Everything else is less appealing and is measured by the certainty of repayment within a year.  That is banking; most people never get the chance to learn that.

U.S. government loans to businesses are irrelevant (SBA). No real entrepreneur has the patience to do the paperwork.

Loans to small businesses and new businesses come from family, friends and from my experience in Japan loans also come from suppliers and landlords.  

People who start businesses are known and appreciated by the people personally close to them.  Several clients, after a few years in business, have said to me ‘Does it ever get any easier? Ten new problems everyday?’  My answer “No. If you don't like it, quit and become an employee.”

My first client was a bar-restaurant.  I looked at the successful ones I knew in San Francisco and observed that they all opened with big crowds of friends for the first few months. Word of mouth was the only issue.  Booze was generous at the openings. That was the advice I gave.  The three owners were already supplying meals to airlines and knew how to run a profitable kitchen. That client took my advice and went on to open a chain of 80 locations.

In San Francisco, I already had a reputation as a banker and founder of MasterCard when I opened an office to help small businesses in 1971.  The first day 12 clients arrived at the same time and I realized that they could help each other.  They were hippies and loved the freedom that small business offered.  They were open-kind of people and were each part of a generous community.

That set the groundwork for my future success in giving advice.  Of my first 600 clients, 80% were still in business five years after opening.  That compared to the traditional business norm of 2 out of 3 failures in the first 3 years.  Orders of magnitude of difference.

The core of my advice was always built around community. Look at the headline of this blog. Meritocracy, diversity and openness; these are necessary to create a community, these are what make businesses work.  Nepotism, favoritism and tribalism just don’t work for business in America.

That understanding comes from my Jewish tradition.  Torah, the core Jewish sacred text, is a document that is open to community interpretation and debate.  The debate has gone on for 2,000 years and is called the Talmud.  Orthodox Jews (all Jews before 1850) read all the debates of that 2,000 years and learned the logic of debate: clear innovative thinking, lived experience,  community and openness. 

My book (with Rasberry) Marketing Without Advertising is based on the direct observation of over a thousand client businesses where I saw the financial books.  It is empirical.  Like technology. The book sold more copies than all but two other non-academic books on marketing in English; nearly half a million copies over 6 editions in 20 years.   Look at the glowing comments on the Amazon book page from every reliable business media source.

Because the core of my advice came from my experience with hippies, I was able to see that the key factor in success was their love of business.  Their motive for getting up and going to work every day was their love of business and their sense of responsibility to their community, to their employees, to their friends and to their customers. A little different from Adam Smith’s views 250 years ago.

I saw clearly that 90% of building a successful business was cooperation, not competition. Cooperation with suppliers, workers, customers and everyone on whom the business depends.  Cooperation is built on openness and the concomitant trust.

I also wrote an earlier book (with Rasberry) called Honest Business.  I learned over a few years that ‘honest’ had too narrow a meaning.  Many people are ‘honest’ but that alone doesn't generate trust.  ‘Openness’ was the correct broader term when discussing commerce and trust.

Both my parents came from business families.  But my father was a rabbi who was not good at business.  My mother was the one who transmitted to me the values of candor, clear empirical thinking and trust.  Her family were the founders of Ethical Culture, an 1880s German sect of Judaism.

Summary: it has been my Jewish background that values (1) clear empirically based thinking and (2) the centrality of community.  Together they create the trust that underlies successful commerce.  This view has made my business advice useful. Commerce is based on cooperation which is based on trust.

Understanding Commerce: for business supporters

My brother, who is a city planner, pointed out to me that city planners and most other people in government and politics have no idea why there are empty retail stores. They have no idea why retail stores open or close.  The same is true for commerce in general.  So I wrote this explanation:

The basic reality of commerce is: Commerce is a weed.  You have to make great efforts to keep it from thriving.

I was in Sweden in 1980 at the request of the government: I was brought in to generate small business. As I shuttled around the countryside, I noticed many new 20 story residential buildings in clusters with no retail businesses within miles. I saw that there was no space designed on the bottom floors for businesses,

I mentioned this to my hosts.

On a trip years later, to the same areas, it was different. The first floors of all the buildings had been remodeled for business.  There were laundries, drug stores, copy shops, shoe repairs, clothing stores and every other form of retail. Commerce was flourishing. 

Just give commerce space and permission and it will thrive. 

That is the theme of this writing.  The concept of permission turns out to be vast and complex. Governments, ordinances, bureaucracies, technocrats, public sentiment, morality, ideology and countless details conspire to keep business from existing, expanding or surviving. 

I’ve written this after consulting with and working with over 2,000 businesses over fifty years.  I’ve worked with every type and size of business from a one-person graphic artist to a global airline. I’ve written one of the best-selling books on marketing in the English language, Marketing Without Advertising.

I recently sat at a dinner with six business people. When the subject of their businesses came up they were vivid and emphatic about how their businesses and business expansion was nearly impossible because of government restrictions, permits and barriers. Everyone who associates with business people will recognize this reality.

Some ethnicities have a greater degree of trade skills in their population.

 A person who travels the world can't help but notice one fact of business that I can't leave out of any writing about commerce: some ethnic people have a greater propensity for commerce.  

Southeastern Chinese are in business nearly everywhere in Asia. The Lebanese (descendants of the Phoenicians) are business people everywhere they live.  Fulani tribes-people from Western Africa, as well as some Nigerian tribes, are in trade everywhere. Every Arab city and town has a booming local market. Everywhere a Frenchman goes you will find a great bakery and a flower shop. Jews were once driven out of most cities in Europe by the Catholic Church, riling up the townspeople over local hardships; the Church blamed the Jews.  Just as frequently the town’s rulers would later invite the Jews back because commerce and a decent life was not possible without them.

Today, in the few countries where Jews are welcomed, they are a core part of commerce. (I’m a Jew.) This photo is of a retail street in Tel Aviv.

Because so many ethnic peoples are adept at commerce, almost anywhere that commerce is welcome, where international diversity thrives, there will be people who can contribute.

Laws, bans and overreaching ordinances of all sorts stifle business.

If you are trying to promote commerce where you are, you have a major task before you.  Commerce, retail and all else, is thwarted by every possible barrier -- barriers far beyond the most fervid imagination.  

In general laws and regulations keep businesses out of your city, state or jurisdiction.  Mormons in Utah and a few surrounding states, for years, kept coffee shops, liquor stores and businesses that depend on the sale of liquor, like Trader Joe's, out of their area. Liquor has been a big issue in governing the operation of business, including grocery stores and bars, all over the U.S. for over a century.

Liquor is only one category of business that is regulated heavily and often taxed to extremes. Smoking and sex are in the same category. As is dancing, gaming (from bowling and racing to gambling) and comic books, even a wide range of foods are treated as sins.  In California foie gras, live chickens, eggs from small nests and the meat from a dozen animals are banned in commerce. Even the hair of many animals are banned from sale. Children’s used toys, unless tested for lead with expensive test equipment, are banned from sale.

Thousands of businesses are stillborn because of these rules and ordinances.

The use of a wide range of chemicals, common in industry, are outright banned for urban business.  Carbon tetrachloride, a solvent used in cleaning many goods ranging from clothing to mechanical equipment, is banned.  That eliminates rapid cleaning services, antique clock repair and a wide range of cleaning and maintenance services. Most of these chemicals can be used with care and discretion safely.

The use of chrome, silver and mercury are often banned, consequently, along with antique repair, tinning and many kinds of plating businesses.  Again, these elements can be used with care and discretion safely.

This is just the beginning of laws and regulations that eliminate scores and hundreds of businesses, small and large.

One might argue that many of these regulations are for the health protection of the public.  A community that wants commerce would substitute outright bans for negotiated boards, hearings, mediation, special courts and arbitration for people who want to do businesses safely related to these ordinances. Safety can be assured without outright bans.

Small claims courts have generally become the friends of business.  They should be a permanent component of a friendly business climate. Individuals bring their complaints to small claims courts.  I've noticed that for nearly every small claim I've observed, the court finds in favor of the business, supplier or contractor. The reason is that the naive buyer often has no idea of the costs or difficulties involved in a remodel or repair project and is dissatisfied regardless of the laws of physics or engineering possibilities.

Leaving the generalities of business culture, I will use a number of San Francisco legislative disasters that have created empty store-fronts and vast numbers of business closures. I live in San Francisco where the political class has been hostile to commerce for over a century.

Businesses have trouble surviving despite open government hostility.

Business failure is common.  Once a business has started, it may close simply because the market doesn't exist or the market changes rapidly. This is far less likely with a franchise or a chain, which is often derided by local government hostility.  

Businesses close because owners get old, owners get bored, owners get sick and often the arduous work of dealing with ordinances (endless ‘paperwork’) drives business people mad.  Business can be isolating and insufferable as well as rewarding and enjoyable.

I often tell business owners that when things get too tough, they can quit and get a job.

High rent is a false explanation for business failure.

San Francisco citizens often blame greedy landlords for all the empty stores. This simply makes no sense.

There are government charts that show the component costs of most operating businesses (business costs).  If one looks at retail, rent is in the range of 7% of total costs. Wages can be from 25% to 40% with taxes and insurance on top of that.  San Francisco has a minimum wage, a required health insurance plan and required vacation and child-birth set asides which directly affect major costs of doing any business.  But the politicians and the citizenry never see the connections, they look at the 7% rising not at the 25-40% that is forced up by laws: they keep harping on greedy landlords like they see in villainous movies.

Getting started in business is uniquely hard.

Probably the two greatest barriers to starting a business in San Francisco are the permitting process which in the case of a small ice creamery took 3 years and a rule against chain-stores that requires extra approvals. 

In the permit process, it is hard for bureaucrats to understand that a new business entrepreneur will have to pay rent for all the time the business is unopened.  Ordinary people, the kind that start small businesses, can’t afford months or even years of rent for a business that hasn't started. Cut the permit process to weeks or a month at most. 

The chain store issue is quite different. It is very important. Chain stores have multiple survival advantages. They have knowledge about their business and its operation that allow it to survive where other similar operations can’t.  The same is true for pricing. They have a variety of economies of scale that allow them to operate at lower costs and often sell at a lower price than non-chains. 

From a local point of view chains have an even greater advantage.  I noticed this many times. Tourists will venture down a street or into a neighborhood where they see a chain-store they know.  The familiarity gives them a sense of safety. This may not be true for some adventurous tourists, but it is true for most.  All retail businesses benefit from the tourist foot traffic that national or global chain stores provide.

This brings us to magnet stores.  

Shopping malls have often been built around a magnet store.  A magnet store is a well known store that has a broad base of customers and national promotion. It is important to point out that a magnet store of yesteryear may not be a magnet store today.  Once it was Sears, today it may be Apple.

Neighborhoods also need magnet stores.  Government employees may not be current on business issues.  In San Francisco, a number of blocks on the main street of Market had been dead and dangerous for years.  A new store was willing to move into the center of the commercial dead zone. It was Frye’s an electronic mother-ship that every techie loves.  Frye’s needed a large parking area, 90 cars. The city planners would only permit a 45 car lot. So Frye’s never moved in and the street continues to be undeveloped and dangerous to this day.  The idea that an established business can be told, by bureaucrats and politicians, the right size for its parking lot, for its sales floor or any other business function, is absurd. Businesses know their operating functions; bureaucrats don’t.  

Exactly the same thing happened with a Trader Joe’s store in a gay neighborhood.  Trader Joe’s is a magnet store and would have revitalized a six block gay area. But insufficient parking based on bureaucratic rules kept the store from ever opening.

This is a good place to mention a related issue. Banks. In several locations I watched a small unique retailer create an entire thriving neighborhood.  In one case it was a women’s clothing design store; in another it was a specialty furniture store. An entire neighborhood grew around these stores, feeding on the high foot traffic of these magnet creative supernovas.

In both cases a bank bid up the rent on these magnet stores and drove them out. In less than a year, both neighborhoods died.  Banks have a bidding advantage because of bizarre bookkeeping. Loans are assets and customer deposits are liabilities. For a bank, owning or renting a store goes on the asset side of the ledger.  This can get the bank more money from the Federal Reserve to lend or can count as capital and allow it to legally grow larger. A strange subsidy, but one that can destroy neighborhoods. 

A vital neighborhood can die over many years. One reason can be the time-of-day traffic.  Union Street in San Francisco failed after decades of success and vigor. It became a bar and restaurant street. That is nearly all evening business.  So the daytime stores disappeared and all that was left were nail shops and low end tourist trinket shops.

Clean and safe are terribly important for retail business.

Street people started clustering and filthing-up 18th Street near the Castro district in the evening and at night, driving away the restaurant and bar customers. 

Dirty streets, scary people, chain gates on stores can destroy a retail neighborhood.  Shopping is an exciting, enjoyable, fanciful experience. Any downer can destroy it; especially for tourists who tend to be cautious in the first place.

I started a tourist bus service that took visitors to many unusual ethnic neighborhoods and let them out to wander around for a short time.  The consequence was that the neighborhoods where my buses went and stopped, rapidly began to have thriving retail. Those same neighborhoods soon had walking tours that further enlarged the retail range of stores.

I mentioned street people and other perceived dangerous people, earlier.  These are bad for business and businesses close soon after they become a visible problem.

Picture a block with businesses on both sides of the street but 5 of them are empty. There are several dimensions to look at the problem. Retail is about fun and pleasure.

Is the neighborhood dangerous?  On a scale of zero where you find graffiti, filth, homeless people and iron security gates to 10 where stores sell candy and flowers; there are outside coffee shops, colorful clothing stores, exciting signage and a store with a line of people outside.  What is the number for this neighborhood? Probably close to 10. Does it look dangerous (zero) or fun (ten)?

A neighborhood with a zero rating will not attract desirable foot traffic and will not be opening new retail stores or even keep existing ones alive.  Conversely, the street focused on retail fun with abundant customers will find empty stores are rented quickly.

Look at the 3 main differences between a dead street and a vital one:

•  Accessibility.  Good transportation to the area. Sufficient parking, on and off the street. A walking street with bright interesting windows where carrying packages is not difficult, seats and water fountains are available. All good.
•  Safety is perceived.  The area is well lighted, including open store-fronts with familiar international brands.  Ordinary people are visible everywhere as well as a good mix of ages including young and old.

•  Fun looks possible. At least there are windows that elicit curiosity.  Blank walls, garage entrances, and bureaucratic facilities are rare. Is there street life, like shoe shine stands, ice cream outlets or knife sharpening trucks?

Let’s go back to the initial issues. Can this retail street be appealing in an area that has a strong anti-commerce environment where retail permits are difficult and slow to obtain, where food retailing is limited by arduous inspections and costly kitchen requirements, where popular stores and retail competition is quashed?  Can ordinary people afford to start a risky business with limited capital? Especially since ordinary people with limited capital are the ones likely to start innovative retail. 

Lastly, laws, regulations, zoning and ordinances eliminated the many kinds of businesses that people need and use in their ordinary life like laundries, repair shops, technical stores, specialty items, fast food, etc. Are signage rules so onerous that they make it hard to find the type of business customers are looking for?

Finally, is your area openly hostile to large business, like San Francisco is?  Nearly 500 global businesses have started in San Francisco and been driven out over the past 150 years (Southern Pacific, Bank of America, Charles Schwab, Bechtel, McKesson, AT&T are examples.) Many small businesses will not start in an area knowing their growth will later be treated with punishment and penalties.

It's a Big Accident

I’ve been reading many books on sexual selection in humans and its relation to human nature.

There is no reason to list the books; they are all wrong. Wrong. Sure the selfish gene uses us to reproduce itself.  That doesn’t require or indeed generate a ‘human nature.’  We have many biological relatives such as the chimps, gorillas and bonobos but none have the global diversity of mating and child rearing that humans have.  There is no general human nature to homo sapiens.  

Christianity and Marxism and many other theologies purport to understand human nature and propose to improve it.  That is the biggest fallacy of human history and the reason for the current human tragedy.

We got to the modern world by a series of five historically unique accidents.

• The Roman Catholic Church in Europe promoted monogamy which weakened the existing tribal structure and permitted the development of individuals. An accident restricted to large parts of Europe.
• The rise of Protestantism in Northern Europe drove the Inquisition that forced the Jews from Spain and Portugal to move to Holland where their trading and other skills combined with the Dutch engineering society, generated from dam building, to generate the technology for global trade and many of the commercial innovations required for trade. Another accident.
• The Dutch invaded England and brought their technology and commercial innovations to a large semi-educated population which used the novel Dutch financial tools to create a global navy and a colonial empire. Including the colonies in America. An accident of poor governing by James II.
• The colonies offered an escape for innovative individuals from the oppressive hereditary first son primogenitor system. The innovative American colonists from six different backgrounds (D. H. Fischer’s Albion Seed plus the Dutch/Jews of Manhattan and the African slaves) knew they had to survive together. So they created the great compromise, the American Constitution. Truly an accident that didn’t happen in Canada or Australia.
• All this plus the great fertile open West created the firmament for the development of modern commerce beginning in the 1840’s. Definitely fortuitous.

Modern commerce, the incredible accident of human history, has allowed the fruition of technology but most importantly for the first time in human history it has created a diverse society where humans can cooperate and work together.  

The people who work in Peet’s Coffee shop where I go, and the customers who join me there, can get along; though in their original home countries they would kill each other.  That is the accident and miracle of modern commerce.

Modern commerce is such an extraordinary historic event that the ability for diverse humans to live and work together has been copied worldwide. The second (the first was fire) human social invention that has become global.  So readily duplicated that even an Arab/Bedouin tribal society has been able to create the herculean cities of Abu Dhabi and Dubai on their tribal land.

Because modern commerce was the result of five accidents, with no theology to underlie it, it is not understood nor appreciated by the human species including the wokies of America who are currently in the process of destroying it.

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.