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

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May 2003

April 2003

March 2003

February 2003

January 2003

December 2002

06/29/03- 18:45 Idea for a debate

Carol P. came up with this idea: A debate between Condi Rice and Hillary Clinton.

I suggest that it could happen with an online talking heads image and sound bites from public tapes. I hope someone does it.

06/29/03 - 16:00 Old America and New America

The following idea owes its origin to Sec'ty Rumsfeld and my friend Alex:

Old America

New America





Harvard, U.C. Berkeley

U. of Chicago, Stanford


Grim: the sky is falling

America: great global leader


Class Warfare

Diversity, less government

Political figures

Hillary Clinton

Condi Rice

Popular culture

Always Politically Incorrect

Entertainment is for fun


We're ashamed

Great idea, great nation


Unions good; NAFTA and WTO Bad

Free Trade helps everyone

Tax rich people?

Income equality is right path

Time to party and get a life

Foreign Affairs

France is right

Asia is the future

06/28/03 Party change in the U.S.

The political parties have changed for the second time in my life.

In the early 1960's I was president of the Young Republicans in San Francisco and worked on the Rockefeller presidential campaign. The Republican party had been the party of Lincoln for a century. I had been a civil rights activist since 1955.

The Democratic party in Congress was controlled by the Dixiecrats through the seniority system as well as by big city bosses like Chicago's Mayor Daley and labor unions that were strongly opposed to opening their membership to "negroes". President Kennedy and his brother Robert did as little as possible to help the civil rights movement in the South.

Then the first party change began.

Over the next six years the two parties changed positions. I was driven out of the Republican party by the rising power and clear victory of the vehement anti-communist Baptists. The five million Southern blacks who had migrated to Chicago, Detroit, D.C. and New York over the previous decade had become aligned with the Democrats. The Democrats kicked the Dixiecrats out of the party.

The Republicans, with Richard Nixon campaigning for president on a new Southern strategy, aligned itself with the Dixiecrats.

The two parties have been re-aligned since the late 1960's with the anti-communist Baptists in control of the Republican party and nearly all Blacks in the Democratic party.

Now the second change in parties has occurred. A fresh reversal.

Gov. George W. Bush was vetted by old-line 1950's Republicans like George Schultz and Donald Rumsfeld. Gov. Bush was pronounced acceptable and educable. He was given the most experienced political team ever to come to D.C. VP. Cheney and Sec. Rumsfeld had served in government for 30 years each, starting early with Democratic Senator "Scoop" Jackson.

The new team, our current president and his advisors, rapidly gathered the reins of power and created a formidable Republican, middle of the road political power base in the administrative branch. With the mid-term Senate victory of 2002, they nearly secured control over the anti-communist Baptist controlled Republicans in the Senate. They have not gained control of this same group in the House.

Using the new found Adminsitrative power and the highly refined political skills of old-line masters, the 1950's Republicans are planning to regain control of the entire party with the 2004 election. Their message is: "We will win the majority of Americans by being a centrist, non self-righteous party; the anti-communist Baptists have nowhere else to turn."

By January of 2005, the Party of Lincoln will be back in power prepared for a long post-communist reign.

06/26/03- 14:30 The Coinidental Invention issue came up recently

Most people have a sense that invention is rarely unique. Most people believe that inventions commonly occur to different people at the same time; coincidentally. I think invention is more often contingent.

The framework for this thought about coincidental invention is that many objects appear in the market at the same time suggesting that invention is a response to a larger processes. Individual inventors are presumably responding to common invention pressures.

This may be true in the realm of the thousands of patents filed every day, and it may be true in the realm of research reported in scientific journals. In each case the inventors are responding to commercial pressures and the scientists are responding to grant-making pressures as well as to the prevailing interests and work of their scientific peers.

There is also a tendency for non-fiction books on common subjects to appear at the same time in waves. I think this is due to the writers actually responding to earlier provocative issues and writings of the time.

I have two problems with the invention is rarely unique thesis. First, the classic science examples to support this view are not good examples at all. Secondly, the classic examples confirm a different contingent thesis of mine.

The two classic examples of concurrent invention are Newton/Leibnitz and Darwin/Wallace. Newton and Leibnitz published key books and papers on light and calculus at roughly the same time. Darwin and Wallace published on evolution from random generation/ survival selection at roughly the same time. The conclusion is that scientists were responding to similar forces of invention.

There are several problems with these examples. Yes, Newton and Leibnitz were working on similar problems, but (1) no one else in the 1600's came up with the answers, only these two unique geniuses had the minds, social locale and background to cope with the technology at hand.

(2) In both instances they came up with different answers. Newton came up with a point/line theory of light and Leibnitz came up with a wave theory. These two light theories survive to this day, separately. The same is true for calculus. Both came up with methods of calculus that yield the same result ,but the theories and structures are different. Both forms of calculus were taught as separate approaches for two hundred years.

Darwin and Wallace came up with he same theory of evolution by selection. The two came up with the same theory for the same reasons as Newton and Leibnitz: 'two unique geniuses' had the minds, social locale and background to cope with the emerging data from biological exploration.

However, Darwin and Wallace differed significantly. Darwin developed his material in a long extensive book with key proof coming from the Galapagos where his theory was strongly supported by evidence. Wallace wrote his theory in an article and a letter, and didn't believe in it strongly enough to defend it against theologians. Wallace saw the hand of god in evolution. Big difference from Darwin and a big difference in the way scientists see evolution today.

Other great minds had no coincident discoverers: Einstein, Euler, Kant and Adam Smith.

I think that in general great ideas and discoveries are contingent. They depend on the right mind, with the right experience, being in the right place at the right time. Otherwise, the world goes on in its wild and wonderful ways without brilliant contributions.

Since I have developed more than my share of contributions, many of which have not been noticed, one would expect me to have this contingency thesis about invention and discovery.

06/26/03- 1530 Blocking Spam

Get used to it.

We won't be able to block spam. The technical problems are insurmountable. Spam has been with us in the billions per day for five years with no abatement. The simple technological problem is that you can generate spam by the billions for hundreds of dollars and earn your money back with one response per million. You can send it from anywhere in the world. Get used to it.

What I find interesting is the porn spam. You know the subject lines:

"I Want To Satisfy My Lover. How LONG Should I Be?"

*CHICKS with DICKS!***

Horny Housewives go wild

Best Summer in years for catching quality peeks up the skirts and dresses of all the super-hot cuties

Wild Blowjobs and EXPLICIT Hardcore

I actually climax when getting it in the ass


and, of course: Women do it with Horses and Donkeys.

Not only do you, the blog reader, know the subject lines, but so do 9-year old girls in Boise and 74-year old nuns in Belfast. Nearly everyone who reads email sees these subject lines. Nearly everyone, regardless of age, religion or nation of residence.

I think spam porn, which often has moving images, has taught nearly everyone about porn. I think the American Puritan hatred of porn is abating because of the vast, impossible to stop, exposure.

For those who don't know the recent history of porn here it is. When I was in the Army in 1960 there were a few low quality, printed in Mexico, porn comics and very low quality 16mm five minute movies. The total market, in current dollars, was under $10 million. By 1975, real porn magazines were in the market along with strip clubs and 30 minute, good quality porn films from all over the world. The market probably reached $100 million. By the time private video tapes came to the market in 1985 the market was nearly $1 billion. With home VCRs and a large VCR rental market, the market reached $8 billion by 1995, according to Newsweek ($8 billion is the same size market as Hollywood feature films). Now, thanks to the internet no one can reliably estimate the size of the porn market -- in the tens of billions of dollars, certainly.

I said this about homeless on the streets in 1988. I now say it about Spam and porn on the internet. Spam and porn are here to stay.

What does it mean to you?

06/22/03- 8:30 Local scene

Two interesting signs in the Castro District of San Francisco.

One sign is pasted on the sidewalk in half a dozen places. It was put there by a lawyer seeking a man: "David LeBoux call Paul Kangas 609-6543." What is interesting to me is that this will work if David is in the Bay Area and has any social life at all. The gay community is fairly close and many members spend daily time in the Castro District. How many other places in the U.S. or the world would this sidewalk sign work?

The second sign is a conditional sign. The sign is a telephone poll poster which announces there will be a demonstration at a central Castro location following the Supreme Court decision on sodomy. The demonstration will be either a celebration of a protest, depending on the court decision.

06/22/03- 8:10 Movie: Capturing the Friedman's

This movie will leave a big emotional impression on anyone who sees it. I have a particular history with the subject of the film. I was the first person on the planet to publish an article that exposed the American hysteria about child sex abuse. The article was in the Whole Earth Review in 1986, published only because there was an agreement to print whatever the writers submitted. My piece was the only piece of any historic value in that issue. Only a few people, at that time, knew how terrible the hysteria was. Those knowledgeable people were among the 50 in prison, their families and their lawyers. The hysteria got worse for a decade and a 150 more innocent people went to prison a la the Salem witch trials. I was shunned by several family members for my honest position.

The first major article in the U.S. on the hysteria was by Debbie Nathan who does a superb review of the Capturing the Friedman's movie. She also did a book with my friend Michael Snedecker. Slate does a good movie review, too. Once you've seen the movie you will never be able to view this family photo with equanimity.

Lest anyone think the hysteria of false sexual abuse charges and long prison sentences for innocent people is over, my ex-wife, Catherine Campbell, has just such a case, currently, in Fresno.

06/22/03- 8:00 Historic

I want to point out to my readers that we have passed an historic point.

For nearly two years I have been telling anyone who would listen that the nature of anti-semitism has changed.

My position has become official at the first world conference on anti-semitism held last week in Vienna by the OSCE, the international forum to promote democracy.

The quote that summarizes the conference and my public position is: "We are witnessing an old-new, escalating, global and even lethal anti-Semitism," Irwin Cotler, a Canadian member of Parliament, said in a speech to the conference today. Its chief characteristic, Mr. Cotler and other delegates argued, is that it singles out Israel for criticism and condemnation beyond any other nation, and asserts that a Jewish homeland, by its nature and the nature of its citizens, violates the rights of others.

I've sadly been forced to give up five friends because they are anti-semites. My definition of anti-semite is now accepted by an official international body.

06/18/03- 18:30 Sylvia made it official

Sylvia came into Caffe Malvina this morning for the second time in three months. Shylvia is a Long Island Jew who came to the U.S. from Baghdad more than fifty years ago when she was five years old. Her family had lived there since the thirteen tribes of Judea were driven out of their country in 586 BCE.

It's now official. Sylvia said to me: " President George W. Bush is the best friend the Jews have had in 2,500 years."

06/18/03- 18:00 Brilliant work

Mark Lilla wrote a brilliant piece in the latest New Republic.

In order to understand what he wrote, most people, especially non-Jews, need two pieces of information. Lilla is answering a question most people aren't even asking.

What Lilla wrote is that Europeans have a pattern. Whenever the European world is shaken by a new concept or intellectual challenge, Europeans automatically use the opportunity to kill Jews.

Most people don't know the history of European Jew killing. European Jew killing began when Catholic Europe encountered Islam. Islam conquered two thirds of the known world by 1,000 CE stretching from Spain to Bali. Catholic Europe responded with three waves of military attack called the Crusades. The funds for the Crusades were raised by extorting every Jewish community on the path of the Crusaders. In most cases the Crusaders destroyed Jewish villages to let the next village know they were serious about raising money.

A few hundred years later when European Catholics again confronted a new idea -- the Protestant Reformation -- they responded traditionally by killing Jews. This large scale Jew killing was called the Inquisition and many people think the Inquisition was directed at witches. Witches were definitely killed along with Jews. Just as Gypsies and Gays were later killed along with Jews.

The next big Jew killing by Europeans began as a response to the creation of the idea of the nation-state and was done from Poland to Russia in an area known as the Pale of Settlement. The killing began in the 1850's and ended a century later.

Most readers know the next European Jew killing splurge from 1942 to 1945. Many thinkers recognize it as a reaction to the new ideas of Communism and Modernity.

Now you can read Mark Lilla who explains that the current wave of European Jew killing is in response to the idea of the EU. Lilla points out that the EU is an idea of a nation state without a military defense and without a clear idea of governance.

The question most people don't know that Lilla is answering is "Why are the Europeans killing Jews again?"

What most people, especially non-Jews, don't know is that the PLO has derived nearly all of its funding from the EU. (Saudi Arabia is a minor funder.) Hamas and the other Palestinian terrorist groups receive nearly all of their funds from the EU. Even today, after two years of relentless killing of civilian Jews, the EU is still sending the PLO and Hamas money to kill Jews. The French foreign minister paid an official visit to Arafat two weeks ago. Today's Jerusalem Post tells about the unwillingness of France to let the EU stop sending money to Hamas to kill Jews.

06/18/03- 17:30 My view on the Lilla explanation

Lilla believes the end of the Cold War, the end of American military protection for Europe and the rise of the incomprehensible EU are the intellectual challenges that Europe faces. I disagree.

I believe the intellectual challenge that Europe faces is the end of a century of teaching nearly all Europeans students a false, dead end useless ideology. The Europeans called their subject an analytic tool. Europeans, most of them, now stand before the world with no intellectual skills to deal with the world.

The ideological tool that Europeans swallowed whole was Marxism. Marxism has been the only analytic tool in European thought for a century. The French stars have been Camus, Derida and Foucalt, the German stars have been Habermas and Adorno. All Marxists.

Marxism offered an analysis based on the historic inevitability of class self-interest and economic gain.

That leaves the standard, educated, European-thinking-Marxist analyst unable to deal with language, science, technology, commerce, cosmopolitanism, real history, art, esthetics, governance, personal relations, psychology, family and everyday personal needs. None of these matters are addressed by class self-interest and economic gain.

The great French thinker, Raymond Aron, who offered an alternative to Marx was driven out of France to the U.S. forty years ago. The Europeans never heard of the British equivalent to Aron, Issiah Berlin, until he was nearly dead ten years ago.

The only new thinkers on the horizon in France are Pascal Bruckner, André Glucksmann and Bernard-Henri Levy.

06/18/03- 17:15 No trade boycotts

I want to be on record as opposing trade boycotts of any sort.

France needs to be told that continued French support for Jew killing is not in my interests. But I will not use a boycott of French goods to send that message to France.

The problem with boycotts is they don't work. They can't work. A total, complete and powerful boycott is called "a prohibition." That word prohibition should let the reader of this blog know that boycotts don't work.

Prohibitions only raise the cost of the goods people want to buy or raise the profits of the seller. Most buyers still get the products and services they want. The boycott or prohibition sends the message: "I have the power to raise your costs or your profits; the most you can do is defy me at a small risk to yourself."

That is not the message I want to send to the French.

We need new and more effective ways for individuals in one country to send messages to another country.

I can suggest two here, very specific.

One: Gather a large crowd, call the press, put pictures on the internet of the following: photos of EU and French leaders being held up on standard picket signs. A line of people passes by an open debris box with the word Auschwich on it. The photo signs are thrown one by one into the debris box and lit on fire.

Two: Get a few hundred people to hand write and sign personal letters to the 20 top EU and French officials and list the names a few of the Israelis who have been murdered in the past two years on each letter. Post the letters on the internet too.

There are many similar actions individuals can take. These are just two ideas to suggest more effective ways to convey political messages. More effective than boycotts.

06/14/03 This might disturb you

I've been disturbed by an essay. My son called it to my attention. The essay is by Andrew Levy and first appeared in Spring 2001 edition of The American Scholar.

Levy lets us know a disturbing piece of history. Robert Carter III, one of the wealthiest men and largest landowners in Virginia, with 77,000 acres, freed his slaves. He freed hundreds of slaves and provided support for many of them.

Did you know about Robert Carter III? I didn't either.

What is stunning about this piece of historic information is that Carter was a friend of two men who struggled with the morals of freeing their slaves and made a public occasion of the emancipation issue. In the case of George Washington, it didn't happen until he died and his wife freed their personal and farm slaves. In the other case, Thomas Jefferson only wrote about the moral problem of not freeing his slaves, but didn't free them because he couldn't figure out how they would survive in Virginia society.

You get the picture now. An important man of wealth, in Virginia society, freed all of his slaves, hundreds of them, in the 1790's just after the nation was founded and I didn't know anything about it. Historians and history books have never told us about Robert Carter III freeing a monumental number of slaves at a time when few others even considered it. An historian who hates the non-Marxist way American history it is taught, Howard Zinn, never mentioned it.

Andrew Levy, the author of the essay about Robert Carter III, does his best to explain why Carter emancipated his slaves and probably gets that part of the story right. Levy tries to explain the silence of history, black history, white, Marxist, pro-slavery history and abolitionist history and he doesn't succeed in explaining the silence.

Two hundred years of ignoring an important and challenging moral act. How did that happen?

I want to throw out an explanation for this silence derived from my personal experience.

In 1970 Stewart Brand published the Last Whole Earth Catalog. The Whole Earth Catalog was a publishing goliath. It had reached annual sales of more than one million copies. It was the first hippie success story. There was a successful bookstore in Menlo Park, California attached to the Catalog. One day Stewart decided to stop publication, close the bookstore and let all forty employees go their way. The money from the last Catalog was put into a foundation called Point. I was on the board and served as president of Point Foundation one year.

There was a flurry of discussion about Stewart ending this successful venture in the publishing world, but little discussion anywhere outside of publishing.

I think Robert Carter III and Stewart Brand have something in common. They each ended a successful business, by fiat -- that is not a story line that fits into American thought.

I think we don't know about Robert Carter III for any malicious or challenging historic reason. I just think we don't know about him because we don't have a place in our pantheon of stories about people who succeed and then deliberately terminate their success. Our brains only have room for human behavior that fits into story lines we already have in our minds.

We, me included, don't have a mental frame of reference for stopping a successful business and walking away from it. Consequently, that kind of story doesn't get told and doesn't make it into our history.

06/11/03- 20:40 Alternative Consumer's Report

I don't intend this blog to be an alternative Consumer's Report. But I have to report my consumer research honestly, when I do it.

I read Jacob Sullum's article in the July Reason magazine (not online yet) called The Anti-Pleasure Principle. Sullum tells how Michael Jacobson (an acquaintance of mine) and his Center for Science in the Public Interest (CSPI) condemned Olestra, a frying fat that is indigestible. Olestra is made by Procter & Gamble from sugar and vegetable oil into a molecule that is too big to be digested. CSPI destroyed Olestra in the market by claiming it caused "anal leakage." Sullum points out that no evidence supports CSPI.

I would love to eat potato chips that are fat free. Fries too. Fries don't seem to be on the market, but Lays sells a giant bag of chips that are fat free, fried in Olestra.

My partner and I bought a giant bag and ate the whole bag at a movie (The Italian Job). It tasted good and there was no bathroom problem for us old people.

Enjoy fat free potato chips courtesy of Sullum's good journalism. If you find French fries fried in Olestra, let me know where they are.

06/11/03- 18:20 Neocon one pager

My friend Alex and I have been talking about the next stage of neocon thinking. We have been talking about this for nearly a year.

To move forward in understanding the direction of neocon thinking, we realized we need to summarize the core of neocon thought. I have put it into a one page summary.

Neocons have been attacked lately by Lefty Fundamentalists as disciples of Leo Strauss. This is ridiculous on the face of it. The reason Lefty Fundamentalists are looking for the guru of the neocons is because Lefty Fundamentalism is an ideology derived from Karl Marx. Lefty Fundamentalists assume all other worldviews are ideologies with gurus too. Sorry folks --- neocons are anti-ideologists.

06/10/03- 9:40 Street Art

Octavia near Fell in San Francisco. TV set smashed over a fire hydrant.


06/08/03- 13:40 "The next election hinges on the economy"

I don't know where this nonsense comes from. I know the economic data for every Presidential election in the past century and there is no correlation.

There is only one rule to consider: the incumbent wins unless there is a political reason he shall fail. There have been two failures of elected incumbents in the past century each for political reasons.

President Lyndon Johnson didn't run for a second term because the core activists of his party were anti-War and quite adamantly opposed to him.

President Ford was never an elected president in the first place.

President Bush I was defeated by Ross Perot who ran with a 35% initial public support, pulled out of the race after Bush set his own campaign in motion to win a three way race with Perot and then Perot re-entered the race late, attracting more confused Bush supporters than confused Clinton supporters. The economy in 1992 was nearly identical to the economy in 1988 based on GNP, GNP growth, interest rate, the stock market, employment level and every other economic measurement.

06/08/03-13:00 Book Review

The Company: A Short History of a Revolutionary Idea; by John Micklethwait and Adrian Wooldridge at Amazon $13.97 Hardcover: 256 pages (March 2003) Chronicles Book, ISBN: 0679642498

If you want a complete library on commerce, you need this book and you can order it from this site via Amazon.

Unfortunately this is the first book on this subject and it may be a long time before the next one comes along. Unfortunately because the writing is good, the material is accurate, but the writers are journalists so we get an excellent product with little or no insight.

The history is reliable. The joint-stock-limited liability company that any business person could create without a vote of a legislative body (just pay your fee and sign-up) was created by Parliament in 1856 and took final form in 1862. Those are important dates. Thenceforth there was a little English Parlimentary competition to have a better form of corporation than the French Societes Anonymes form.

The similar American corporate version first appeared in New York State in the late 1870's. The two English authors of this book don't cover the American legal history.

My problem with the book is that I would have written the second half of the book (after the history part up to 1862) quite differently. The important elements of the modern corporation, limited liability, public stock ownership, perpetual life, human attributes in corporate public behavior, labor law restrictions and government regulation should be the focus of the books' structure. Each of these corporate elements has a different history and a different future and should therefore be treated differently.

For example, limited liability is always an element of the corporation that is in flux. Lawsuits against shareholders and by shareholders are never ending. Corporate officers are going to prision every week this year. The different strains of historic interaction with limited liability need to be disentangled to understand the corporation and its role in the world.

For contemporary history, Micklethwait and Woolridge rely heavily on Peter Drucker and Alfred Chandler. Their own most interesting point is the choice of 1970 as the peak of the stable American giant corporation. After 1970 we saw the rise of the smaller, newer and more nimble specialized corporation (think Microsoft). A useful and new observation -- one of the few.

06/08/03 Nuts

Many readers will say I'm nuts. The most positive expression will be: "Do we need a skeptic about New Age woo woo ideas?"

Following woo woo instructions for removing ear wax, I put a candle-like tube, narrow end down, in my ear and lit the wider end. I bought two tubes (one for each ear) in a New Age store. The tubes are paper imbedded with wax. Mine burned for fifteen minutes. The purported purpose is to remove ear wax. The photo shows the tube burning with me under a piece of paper under the tube.

I can't figure out the intended physics. The burning end of the hollow tube can create a slight up-draft in the tube with air being pulled into my ear past the ear wax. But the air flow is slight and will be the ambient room temperature. The air couldn't do anything.

Maybe an effective device would drive warm air, like a hair drier, into the ear and have it sucked out with a modest vacuum pump.

My partner and I looked into the tube and sure enough there was wax at the bottom, ear end, opening. We think it is wax from the burning tube that fell in.

06/7/03-12:30 Homeless ingenuity

There is a homeless man in North Beach (San Francisco) who has donned a street cleaners vest. This seems to allow him access to coffee shops and general respect from non-homeless people on the street. I see this as an ingenious camouflage of indigence (homeless person picking up stray cans for cash) with professionalism (street cleaners and garbage collectors who wear the orange reflective vests).

06/7/03-11:45 Lott, Raines, Ashcroft

The bloggosphere got rid of Lott and Raines, now its time to get rid of John Ashcroft. Ashcroft, in case anyone was in Isfhan for the past three days, banned a Gay staff dance in the Justice Building. Ashcroft, the petty religious bigot, should get out of our face.

I'm signing up with Businessmen to Dump Ashcroft, now.

06/7/03-11:30 Hamas vs Abbas

The leaders of Hamas said, "They listened to the speeches on television and declared their decision to stop the dialogue and stop listening," Shaath said in an interview with Lebanon-based Future TV (source Yahoo). Shaath is the representative of Palestinian Top Minister Abbas.

Some readers may miss the meaning of this issue.

What the leaders of Hamas saw on TV and heard in Arabic was Abbas saying that terrorism must stop and that Palestine will recognize the existing State of Israel at the end of the "Road Map". No Arab leader, none, has ever said this in Arabic. All Arab leaders have said in Arabic that terrorism is justified and that the State of Israel will never be recognized and accepted.

Abbas was the first Arab leader. That is important. Nothing he says in a back room can erase what George Bush got him to say publicly in Arabic.

06//03-11:00 Envy

I have three wonderful grown children. It is my wildest hope that one of them can write the kind of postmortem op/ed that Leo Strauss's daughter wrote for him.

The op/ed explains, with astounding beauty and love, that Leo Strauss was not a neocon guru, but was a powerful and important teacher at my alma mater, U. of Chicago.

06/6/03 More comments

A recurring question from readers concerns my proposed Ratchet Tax (5/8). This seems to be an idea that tickles fancies, but has no use in the world.

I'll try to explain it again. The problem that I was trying to solve is that the U.S. uses a large and growing amount of oil -- that means imported oil which means Saudi and Russian oil. This large volume of imported oil, costing about three percent of our economic output (GDP), can adversely effect our economy when pricing is volatile because oil and oil energy are pervasive components of America's goods and services.

Actually, stated that way, oil imports aren't too much of a problem for us. The Middle East is only one of many sources of oil. Maybe the Lefty Fundamentalists have got me paying more attention to oil than it deserves in 2003.

In any case, even if the Ratchet Tax has no use when applied to gasoline for cars, the idea might be useful somewhere else.

The gasoline tax idea was based on the view that gas-guzzling autos deserve a sin tax in order to reduce the amount of imported oil used for automobile gasoline. Sin taxes only work for consumer goods with inelastic demand and no substitutions. That is pretty much true for gasoline in autos.

Sin taxes usually apply to a small group of sinners, or heavy sinners in the case of alcohol and tobacco. A sin tax applied to gasoline would be political suicide since nearly everyone is a gasoline sinner.

The Ratchet Tax is intended to be a politically acceptable sin tax. It is to apply to gasoline AFTER a price rise. When the price of gasoline rises, the new high point becomes the target price that consumer should get used to. When the actual wholesale price of gasoline drops down, the price at the pump remains the same because the high price becomes the target for the Ratchet Tax. The tax gets ratcheted up to the new high price. The public perceives the villain as the gasoline company that raised the price in the first place, not the government taxing authorities that applied the tax after prices had already risen.

One question from readers was, how do you know how much the price of gasoline drops after a price rise, so you can apply the new tax? Answer, you leave a few markets free of the tax for a few months. The free market markets where the price falls would be randomly chosen.

Example for the whole U.S. The average gasoline price rises from $1.55 to $1.70, (9.7% rise) where it stays for a few months. In a few select random markets, Dallas and Sacramento, for example, the market is free to fall and it falls 9.0%. The rest of country gets an immediate tax of 9.0% on the old base gasoline price of $1.55, making the new base price $1.69. A few months later the tax is applied to Dallas and Sacramento.

The result is the price of gasoline keeps rising because the amount of the Ratchet Tax keeps rising. The Ratchet Tax presumably gets the price of gasoline high enough to discourage gasoline use and the public blames the gasoline companies.

06/5/03 Glad I didn't publish

I have kept thinking to myself how badly State governments have behaved over the past five years. Especially California. While tax revenues, mostly from income tax, have been rising by large amounts, the State has been increasing its expenditures proportionately by hiring additional government employees.

Now taxes have fallen because the driving force, commerce, has stopped growing. The State refuses to cut its employee payroll and proposes new taxes. Stupid and mean on the face of it. Commerce is not known to respond well to punishment. Raised taxes engender perverse commercial behavior. Commerce can move elsewhere or go underground whenever it wants to. In the long term, commerce does leave high tax areas for lower tax areas.

But I didn't publish my rant on this subject. Good thing. I looked at the State budget today and I find that 44% of State expenditures are for education and 35% is spent on health and welfare. Only a few percent is spent on crime, prisons, government administration and Highway Patrol.

While it was a stupid mistake to raise the State expenditures to meet the increased tax revenues, it is mean spirited now to cut education and health and welfare spending.

06/3/03 Comments from readers

1. We all seem to realize that the "Left left" but how long will we still be listening to them rant? The answer seems to be in remembering how long the Civil War lasted: until 1996; more than 130 years after the War.

The "Peculiar Institution" of slavery migrated into the romantic and sentimental notion of "The Old South". A white colonial mansion surrounded by weeping willows, ladies in white crinolines holding mint juleps and colored children playing -- with minstrels singing in the background.

The Left already seems to be moving in that direction. They now have the sentimental "We Were Right, We Were Together" George McGovern picture of the anti-Vietnam demonstrations. Tens of thousands marching in the sun, with nude hippies dancing and everyone singing along with Joan Baez.

2. On the homeless question of two days ago, my son reminds me that some thinkers prefer the term "Capitalistically Challenged" to homeless. The concept of capitalistically challenged is a better predictor of who will become homeless.

3. After some discussion, several friends have come to understand the discussion about our economy being driven by the 1997 Tax Act (that made $250K to $500K capital gain on a home tax-free.) They understand the idea when it is stated in following manner:

When the investment in a home is compared to all other alternatives (under $2 million) it clearly has become the #1 investment choice.

06/1/03 - 16:30 Bye Coastal

My friend Alex, who doesn't have his blog running yet, commented that America is paying less and less attention to the Big lefty cocktail party on the Upper West side of Manhattan. The big cocktail party is an hypothetical creation and is attended by all the sophisticated people from the NY Times and the New Yorker. Once you get to New York you can easily get swallowed up in this alluring lefty party. Paul Krugman did. Now he is an accepted insider. All he had to do was sell his soul to the nattering nabobs of negativity.

I think Alex has got it right. The coasts are losing their power to the mainland. I mentioned earlier, in my blog of 4/20, that a combination of the University of Chicago and Stanley Fish's University of Illinois at Chicago could become the new intellectual locus of America. The mainland may well become the heart and mind of the new 21st Century America.

The 21st Century America is not becoming Imperial (that is such a 17th Century notion). America is becoming the Global Champion of Commerce.

The politics of America is certainly moving in the direction of the mainland and the disconnect between America, reality and Lefty Fundamentalism is moving rapidly apace.

06/1/03 - 16:00 Thinking Problem

I spend six months to a year thinking about a problem. You got the answer to one of my earlier questions about obesity last month in my blog on 5/11. Obesity is the second great struggle to control appetite, the first is the struggle to control credit.

To get started thinking about obesity, I phrased the obesity question as follows: "Why is every American demographic group getting obese with only one exception, the cohort of yuppies?" Many other changes have occurred in America and the world, but nothing else correlated well with the increase in obesity.

My new question is, "Why did the homeless appear, nearly everywhere, when they did?" The large number homeless on the street appeared between 1978 and 1983 nearly everywhere on the planet. The word homeless came from New York. It was an appellation created in 1981. Before "homeless" the term was "street people."

I know about street people and the homeless because I built a park in San Francisco for street people in 1979. The park lasted until 1982. The park, known as Wino Park, was at Sixth Street and Minna Alley. I watched a vast expansion of the number of people living on the street in those three years.

I watched homeless appear in large numbers on the streets of Tokyo, Kyoto, Seattle, LA, New York, Sacramento and D.C. I was in those cities before and after the explosion of public homeless.

Since 1983 I have seen homeless nearly everywhere from West Africa, Mexico, Hong Kong, Guatemala City, and Havana to India, where the homeless are indistinguishable from the rest of the population. I have seen homeless in Portland, Tel Aviv, in nearly all major American cities, and Toronto where they are easily recognizable.

In Tokyo, where I interviewed many homeless in 1983, they were called the OPEC Children, presumably based on their appearance after the oil price inflation of 1973 and 1978.

The term homeless is completely wrong. Many cities have built extensive housing for homeless people with no decrease in the number of homeless on the streets.

Homeless are not people out of work. San Francisco went through an extreme boom and bust in employment, including a period in 1999 where no employer could find workers. Homelessness didn't diminish one iota during that no-workers-available period.

Help me think about this issue. Please

06/1/03 - 15:30 I want to be appreciated for the following

What is driving our economy?

I have the answer. Yes, yes I do. Only a few major forces drive an economy. In the 1990's it was new media and big cars. Now it is housing and cars.

But housing expansion has been going on for longer than any time in the past and prices keep rising in the eight major American internet-international cities. Why?

The answer is the tax break for home sales. The tax break, passed in August 1997, allows up to $250,000 tax-free capital gain for singles and $500,000 for married home owners who dwell in a home for two years before selling it.

This tax act has put billions in the pockets of homeowners and private builders, and is driving the current residential home market growth.

The precise numbers, that prove my point, are not available. The best evidence I can find is a comparison of the rate of growth of "Private construction" (which includes developers) compared to "Private Residential" (which has few developers). I have also looked at the number of "Residential Units" which is an even better measure of individuals and contractors building homes to resell for the tax-free gain.

Here are the numbers: Private Construction Investment 1995 to March 2003 rose 56% in stable dollars. The Private Residential part of that investment rose 84%. The number of residential units, the best measure, rose 92% in that period. That is damn good evidence.

Home Depot stock rose 150% from January 1995 to Mar 2003.

Is residential construction an important number?

Americans spend 50% more on residential housing than they do on cars. Residential housing expenditures is almost equal to what corporations spend on new equipment. Surely it is an important amount of money.

I'm convinced that the 1997 tax exemption for residential homes is what is driving the current American economy.

06/1/03 - 14:00 There is another great San Francisco creation.

Do you recognize this waterfall in the middle of San Francisco?

It is located in the center of Golden Gate Park. It falls from the top of Strawberry Hill which rises about 80 feet above Stow Lake. It was designed in the 1880's as part of the water recycling system of the park. The water, which flowed through the whole downward sloping park, was captured and pumped, by two windmills, up to the peak of Strawberry Hill for reuse throughout the park.

My brother Tom is visiting San Francisco and asked for examples of artificial hills with water falls. Tom is in charge of a redevelopment project in Seattle that will now be modeled on Strawberry Hill and Stow Lake.

See May Archive

6/26/03 C- Gray Davis is discussing with his staff resigning when the recall initiative presents enough signatures. That would make Lt. Gov. Bustamonte governor and keep Democrats in control of California.

6/22/03 D- My guess is that Michael Lerner, publisher of Tikkun magazine, works for the Israeli Mossad. I've met him with Mossad agents, his magazine has no visible source of funding and the Mossad would like to know who are the dangerous lefty Jews in the U.S.

6/7/03 C+ Japan has decided to build a dozen secret nuclear weapons in defense against North Korea. Should take two months to build a dozen.

6/6/03 C- Rove's office in the White House just asked two staffers to design a campaign that will please abortion supporters. Plans for minor bills, rulings and speeches to start next July and run through the Nov election.


email: mp@well.com