Michael Phillips

Gods of Commerce


Reliability: Very likely is A+ ... highly doubtful is D-

I love commerce.

The marriage of commerce and technology is by definition the "modern world."

Commerce and technology thrive on three values: Meritocracy, diversity and openness.

Heroes of Commerce

Harold Geneen

Morita, Akio

Louis V. Gerstner, Jr

Sanford I. Weill

Jeffrey Bezos

Almost Heroes of Commerce

Jeffrey Bezos


Joeseph Williams

Gratuitous Advice




Daniel W. Drezner

Daniel Pipes

Catherine Campbell

Gaiko Forum

Stephan Sharkansky

My list of more

public intellectuals
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July 2003

June 2003

May 2003

April 2003

March 2003

February 2003

January 2003

December 2002

8/19/03 MsBlast.exe

The following extra long blog was put up after a week of writing it on a computer infected with the MsBlaster virus. I was in Japan and I couldn't upload to the web. I'm back in San Francisco, now.

MsBlast.exe is 6K in size, is swarming on the internet, doesn't need to be opened, destroys all memory and clipboards, can not be deleted with Windows nor with the del command in MsDos. It also sends email.

A little admiration may be warranted. A 6K program destroys a 123Meg OS program. That is five orders of magnitude difference in size. A 6K program destroys 123Meg program. Imagine a fly destroying a 747 jetliner, that is also 5 orders of magnitude difference.

8/19/03 CoMRoT

This is my Consumer Monopoly Rejection Thesis; CoMRot is the acronym.

I was moved to think about CoMRot at Roppongi Hills, a giant new development here in Tokyo. The shopping area is exciting. Roughly five stories of 200 shops, restaurants and a movie multiplex with the same movie starting at 20-minute intervals. I would guess there is around a million square feet of retail. All of this is inside a 54-story building next to a Hyatt Grand hotel, in a major shopping and nightclub district with a surfeit of sculpture and wild architecture.

What is appealing about Roppongi Hills is that the shop layout is close to total chaos, much like the suk in an ancient Arab village, like the ancient commercial Chinese town in the old part of Kowloon even like the twisting streets of Old Jerusalem. The front of one store will face the side of another, or face to face or at a 45-degree angle. Twisting halls, bridges and few straight paths between businesses. Currently there are 200,000 shoppers per weekend.

I think the appeal of Roppongi Hills shopping is the sense that the businesses are genuinely independent of each other and that there is no God like hand governing the businesses. No God like architect running the show and no God like monopolist designing the consumer experience.

I think the appeal of independent retailers situated in apparent chaos gives a sense of genuine independence. The conventional model is a shopping mall with straight streets and proper rows of shops. I think this traditional orderliness of a mall is perceived as rigid and overly determined, almost monopolistic.

The idea of CoMRot is reinforced when I remember that two months ago I went into the Syufy brotherís new Century 20 multiplex in Daly City. I was carrying a coffee cup and asked the ticket taker if I could bring the cup in. ìYes, of courseî was the answer. Everyone coming into the multiplex seemed to bring in food: pizza, hamburgers, coffee, popcorn etc. The multiplex has a food center with a large selection of standard priced movie food. But most people were buying food outside and bringing it in. The food the customers seemed so happy to bring in comes from the many small fast food outlets on the first floor of the building. (The rental money from the first floor stores outside the theater goes to the Syufy brothers just as does the food in the multiplex lobby.)

In Roppongi Hills customers appreciate the chaotic layout of the stores; disorderly. In Daly City the customers seem to feel that bringing food in to a multiplex is an act of defiance of a monopoly environment.

Consumer Monopoly Rejection is what I call both of them.

8/19/03 Peter Schwartz wrong,

I recently saw that futurist Peter Schwartz of the Global Business Network (he is an acquaintance of mine) is predicting life spans of 150 years in the next 50 years. Peter apparently based the prediction on the view that lifespan has increase from 45 years old in the 1800ís to 75 years old in the 1900ís. Peter suggests it can double again.

Wrong data Peter. For several millennia before the 1900ís the average life span for men who survived to age 21 was to live until age 65.

Hygiene played a role in average lifespan after 1850. Before 1850 infant mortality, childhood disease and maternal death were major killers. When hygiene improved, everyoneís life span remained the same, about 65, but the early death numbers declined rapidly. The consequence, in numbers, was the average life span appeared to rise.

Antibiotics came on the scene in the 1940ís and average lifespan got a genuine ten year boost to an average of age 75.

Peter, you would have known this if you had read any of my writing on why the population explosion ended. Hygiene created extensions of life, as hygiene spread around the world, and that in turn created the population explosion. Hygiene improvements and medical effects finally played themselves out in the 1980ís, which ended the population explosion in most of the world.

8/19/03 Future Lifespan

American lifespan is going to begin declining in about ten years.

Lifespan in America is currently increasing because of several medical improvements: survival of males with heart disease because of paramedic innovations developed in the Korean War and cancer survival in women due to anti-hormone drugs.

The current extension of lifespan will begin to reverse in ten years and we will see a genuine decline after that.

The increase in obesity in America (body mass index over 30) that began in the early 1980ís and rapidly grew to 30% of the population by the mid 1990ís hit first in the critical age range of 35-50 years old. This rise in obesity will begin to hit the lifespan measurements in 2010 and become visible to demographers before 2015. Obesity reduces average lifespan by six years. Six years of average lifespan is an order-of-magnitude large number.

This decline in lifespan will help reduce projected Social Security transfer payments but will have negative effects on Medicare unless major changes in Medicare coverage is implemented soon.

8/19/03 Divergence in telecom

The different way that cultures handle credit is combining with technological change to create a noticeable divergence in the way the world handles telecom.

Technological and cultural interaction resulted in different outcomes in railroads over a century. It will happen much faster and possibly with great effect in telecom.

Today Japan has a precisely operated passenger railway systems with tens of thousands of trains running over every square kilometer of the country on a precise minute-by-minute schedule. Japan has high-speed trains that cover the length of the country at speeds up to 350 kilometers per hour.

Europe has a railway system that runs about 2/3rds as well as the Japanese. Europe has only the TGV from Paris to Lyon as a high-speed train. The TGV runs 2/3rds as fast as the Japanese Shinkansen and the TGV has seats that are smaller than the worst airline coach class seat.

The U.S. is entirely a railway freight based system. Even passenger trains are run as part of the freight system.

Telecom today, 2003, is diverging. The Japanese interact with portable Internet phones, talking to each other all the time, sending messages and email all the time and actively using the Internet itself on their portable phones. Office computers are a minor part of the Internet picture.

Europeans have a greater use of computers in their homes and make greater use of the home and office computers for Internet access and email. Europeans use their phones to talk extensively and like the Japanese they use their portable phones for Internet messaging.

Americans use their home and office computers almost exclusively as their means for Internet access and email. Portable phones are used largely for voice interaction.

Commerce on the web is diverging based on different cultural credit patterns.

The Japanese donít use credit cards. Japanese make virtually no purchases over the Internet with the exception of purchases under a dollar that go on their phone bill and a few purchases over a dollar that are paid for in cash on delivery of the goods to a convenience store.

Europeans also donít use credit cards. Their mobile phones are occasionally used for small machine transactions, like vending machines and highway tolls. Otherwise the Internet is used for rare purchases that are paid for with wire transfers between the parties.

Americans use credit cards actively, including use on the Internet. Purchases under five dollars are rare on the Internet in America but credit cards are becoming universal for larger purchases on the Internet.

Corporations use wire transfers on the Internet in Japan and Europe and pay by check in the U.S.

Implications: It is clear to me that the Internet is going to become a commercial enterprise in the U.S. long before it is commercially viable in Japan or Europe. The commercial importance will grow in the U.S. and shape the technology. Other non-commercial uses will shape telecom technology in Japan and Europe.

The three telecom systems can be expected diverge technologically as the mechanisms for usage increasingly differ. The Japanese are already heavily using photo exchanges on their portable phones while no one else use the photo Internet technology.

8/19/03 Political Debate

Does political debate learn from new empirical information?

In 1719 in Florence the main intellectual debate was between the supporters of Spinoza/Bayle who had to defend their materialist view of the universe from the Derham/John Ray advocates of the universe by-design. The same debate that public schools have to deal with today in spite of empirical evidence supporting evolution by survival of the fittest.

( Aside: I prefer the word fittingest to fittest. It is my improvement on survival of the fittest that is wrong terminology. Species survive because they fit their environment the best not because they are fittest, meaning more fit than other species in general. The wrong terminology, fittest instead of fittingest seems to have generated the nonsensical ideas of Social Darwinism. No one could have defended Arians or white people because of the survival of the fittingest. Arians don't fit into their environment better than other people).

Florence was late getting into the debate that had occurred fifty years earlier in Holland and thirty years earlier in Scandinavia and England. Even intellectually backward France had debated it twenty years earlier.

My question goes to the anti-abortion debate.

Has anyone introduced into the anti-abortion debate the important new empirical evidence that a large part of the crime wave of the late 1980ís and early 90ís was caused by unwanted children conceived in the period before abortion became legal in the U.S.?

The evidence on the matter is the best sociological evidence that exists and has been vetted and debated for six years.

Tens of thousands of Americans were murdered by the children of women who couldnít get abortions. My rough estimate of the number of fully developed and educated human beings murdered between 1982 and 1992 is 90,000.

I have never heard the anti-abortionists having to defend the 90,000 wanton murders of innocent adults. Those adults were killed by the children of women who couldnít get abortions in the 1960ís in the U.S.

08/10/03 Class in America

I explained to a friend that the term empire has been nonsense since the fall of the Soviet Union (article on this in Newsweek) and that class was even more out dated (few Americans are born into a class). To keep a record of this historic change, the decline of class, I decided to buy an old copy of the last New York Social Register, which I assumed was published in 1960.

To my surprise, local Social Registers did disappear in the early 1960's but the Social Register Association that published the New York and Boston Social Registers created a national version that survived into the 1970's. When it failed it was taken over by the Forbes family. The national edition currently lists 25,000 families -- 2,200 in California.

Now it appears that even the national edition is a money loser at $100 per copy and is likely to disappear this year.

So much for class in America.

08/7/03 Today's answer

The answer I got today about the reality of Japanese economic data is: the data is real. What you see is a healthy growing Tokyo (40 million people in a contiguous area) and a declining rest-of-Japan. Tokyo is an efficient, well-trained dense population that is trading with the world just like many other international cities that grow while the hinterlands suffer. Think of Bangalore, which is booming, and the neighboring areas of Tamil Nadu and Mysore, which are untouched.

08/6/03 Gini says

The Gini index is a measure of income inequality. The concept came from a 19th Century Italian economist Corrado Gini. An Internet cross-national index of Gini measures is on the Nationmaster.com site. (It is very incomplete.)

The Gini index is theoretically from 1 to 100. 1 would be where 50% of the population had 50% of the income and 100 where 1% had 99% of the income. Nicaragua and Sierra Leone have high Gini's, around 60. Japan and Sweden are low at 24.

The lesson I get from the Nationmaster.com site is not (1) that the U.S. has one of the highest amounts of family income inequality in the world, which it does have, right up there with Russia among the G8 nations, nor (2) that Japan is at the bottom with the least family income inequality. Scandinavian countries and Holland would be down near Japan.

The lesson I get is that third world countries and oil-rich countries have the very worst Gini indices. Third world countries and oil-rich countries have the worst income inequality with large poor populations. Our great American middle class is what industrial commerce has created; what is more important is that we have 90% of our society in this middle class, even with a few million people earning a thousand or ten thousand times as much as the average family, when the alternative is having a gigantic poverty class, a tiny middle-class and even greater family income inequality.

The American Gini is 42 and the worst the U.S could grow to be is about 43. The best the U.S. Gini could drop to is probably 35 (Canada is 32), but the necessary progressive taxation of assets (yes, assets would have to be taxed) to reach 35 would cause a civil war. The few reliable Gini measurements for poor countries are in the mid 50s. The economic lesson is that the quickest way to get rid of poverty is not income redistribution; it is creating a middle class.

This may be a lesson for Iraq and Palestine.

08/5/03 The subject of privacy

The subject of privacy came up in a discussion here in Tokyo a few days ago. I mentioned that I foresee a four tiered identity classification coming in the U.S. out of the next big terror attack. The response in our discussion was about the loss of privacy that an identity classification system would create. An identity system will not be put in place until we have functional bio-measures (like a DNA sample) and we are far from having reliable and quick bio-measures.

I want to examine the issue here because it is primarily a commercial issue. We already have the rudiments of a four tiered identity classification in place. Tier Four are people with security clearances for their work, national security, industrial security (think badges for getting into buildings), military officers or license holders, such as my pilots license, or an MD. These are people trusted for a wide range of functions. Turning Tier Four into a general category of high trust isn't hard because Tier Four people are a self-selected group, with a long personal (but public) history required for entry into their trust category. (Tier Four will not keep out spies).

Tier Three is a gigantic class of people based on the line that divides Tier Three from Tier Two. The line is credit. If you are inside the circle of credit you can rent a car or truck, buy on the internet and do a hundred and one things that people without credit can't do. Since I personally helped draw this line I am particularly familiar with it. Tier Three people are also self-selected. They are in Tier Three because of their public behavior. They pay their bills on time, or pretty close to on time. This is commercial behavior and public. When you screw-up on credit you have plenty of Federal laws on the books to fix your credit records. Awkward and time consuming but you can get the record straight.

Tier Two is not a voluntary category. It is everyone who has no credit or bad credit. It would also be a default category for tourists and young people. It is possible to move from Tier Two to Tier Three by making a public record that supports credit worthiness or proves other behavior that suggests social reliability.

Tier One is an involuntary category. It includes people in jail and in prison. It includes people on the lam, and people who have outstanding warrants. It includes people who have no ID papers and people who don't want to have ID's.

Now where is the privacy problem?

There are occasionally excessive bureaucratic problems. Five million people are on a bank list, banned for five years from opening a checking account because they failed to pay overdraft penalties in a three-month period. Cashing their payroll checks cost these five million people 15% in fees. Many people are on this for no good reason of their own and there is no legal route to getting off the list.

I worked on this problem a few years ago and found a way off for blacks in Oakland and LA who belong to one of the major black churches. But that does not deal with the real national problem.

07/29/03- 18:45 Book Review

The Dutch Republic: Its Rise, Greatness, and Fall 1477-1806 by Jonathan Israel


Jonathan Israel and his book on The Dutch Republic are for intellectuals what Shakespeare and King Lear are for English Literature aficionados: the core reading.

Israel's The Dutch Republic explains where modernity came from. Modernity came from Holland. Holland gave us its democracy and the key components of modern commerce. Holland's urbanity created our modern world. Holland was the source of modernity in science, technology, the arts, intellectual thought and urban life. Our modern world has a single direct ancestor in Amsterdam circa 1640.

I've put my complete review on a separate page.

07/26/03- 18:45 California B- to D-

In the event my readers didn't notice it or didn't understand it, the rating on California bonds fell, yesterday, from A to BBB. In high school grade terms that means going from B- to D- and will cost us Californians roughly $1 billion per year in increased interest payments.

Some people think bond ratings play a direct role in politics. If you've read A Free Nation Deep in Debt: The Financial Roots of Democracy by James Macdonald (Author) you would have plenty of evidence over a two century period to support your belief.

Since the Democrats have had total control of the State government for the last five years, that would suggest trouble for the California Democrats in the coming few years.

To add to that real possibility there is the also the possibility of Arnold becoming governor. Arnold is apparently huge among Latino voters - the major swing vote in future California elections.

I'm predicting that Davis will be recalled by a 10 point margin and that Arnold will win by a better than 5 point margin.

See July Archive

8/10/03 B- The reason the N.Koreans want nuclear weapons is to protect themselves against the S. Koreans and reduce the massive army that N.Korea is keeping at a high cost.

email: mp@well.com