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

Catherine Campbell

Gaiko Forum

Stephan Sharkansky


February 2003

January 2003

December 2002

03/30/03 Association of Democratic Nations

Awhile back I wrote about the moral problem of judging democracies. There is no moral place to stand. Where do you stand to say the French are wrong? You can't judge a government elected by millions of free people. That is their government and they can change it. Details about representation are a moral subterfuge; irrelevant.

Important notice. I do not associate democratic government with commercial success. Commerce does best in a democracy but many democracies are poor exemplars of commerce. Mexico comes to mind.

The question about judging democracies lead me to two conclusions and one policy recommendation.

One conclusion is that the only way to deal with differences of policies between democracies is to argue openly and use persuasion. No matter how long it takes.

The second conclusion follows from the first. Democracies should get used to open public debate and persuasion across borders. I have pointed out in one of my Japanese foreign affairs articles that this is beginning to happen in the U.S. Foreign government officials are talking directly to the American public via the New York Times and the Wall Street Journal

It is time for the U.S. government and NGO's to actively write articles and produce media for use in debates with other democracies.

This would be fun. I'd love to see more foreign generated material available in the U.S. I now watch German Television News, Deutsche Welle on channel 32 in San Francisco and I love it.

The policy recommendation that follows from these two conclusions is to create a viable association of Democratic Nations. The title Association of Democratic Nations is old and many proposals exist for creating such an institution. My proposal is to start such an institution next door to the UN (see photo). Begin with the G8 members and add 20 nations the first year. Give the organization three years to create a definition for membership then invite all eligible members. Then close the door.

I like the notion of "close the door". Nations that are democratic and members of the Association will rapidly start to favor each other in trade; and non-democratic nations will begin to find the "democratic definition" a valuable economic incentive to become democratic. I think of China changing its laws and judiciary in order to join the WTO.

The definition of democratic is not as hard as many people think. I can see two rough criteria: (1) elections that actually change members of government and government policy (Mexico, Philippines and Japan would only have been able to join the Association a few years ago), (2) citizens are free to travel outside the country.

Israel and India would, of course, be immediate members but not China or any Arab nation. The image above shows a potential building to buy for the new organization.

03/29/03 The failure of the peace movement

The latest SF Weekly has a long puff piece on David Hartsough and his revitalization of the peace movement.

A blogger who translates French indicates that the French are reading articles clearly calling the peace movement an intellectual disaster.

This provokes me to tell about two recent peace movement failures that are unknown to most readers and are ignored by participants in the peace movement. One failure occurred in Winter 2000 the other in Fall 2000.

The SF Weekly puff piece misses the real story. David Hartsough began working in Pristina in the late 1990's to develop a broad based peace movement in response a long expected Serbian military campaign against Kosovo. (Kosova as the Albanians call it.) David worked with several volunteers over a four year period and by the end, more than 80% of the adult Albanians in Pristina were actively involved with the peace movement and had been trained in non-violent resistance. This marks the greatest success in the history of the peace movement, a far greater proportion of a national population committed to non-violence than anything in the past, including Gandhi's India.

So what happened to David's successful non-violent peace movement when Serbia finally turned its attention to Kosovo in late 1999? First the Serbs kicked David and his four helpers out of the country and declared them persona non grata. Then the Serbs invaded the country with modest military force and drove all 400,000 Albanians out of Kosovo into Macedonia.

The Albanians waited in Macedonia for five months, in Winter 2000, until the United States bombed Serbia into withdrawing its military force from Kosovo.

The greatest peace movement in history was a colossal failure. At an international peace conference held immediately after those events, the subject of the Pristina failure was never discussed.

The second great peace movement failure occurred in September 2000.

In early August 2000 the largest and most successful peace movement in a major war zone had reached its full extent. More than 70,000 Israeli Jews belonged to Peace Now, as did a larger number of Jews outside of Israel. Jews have constituted one of the largest denominations found in the peace movement, per capita, after the Quakers.

What happened? After 9 years of Oslo Peace Accord negotiations and overwhelming support for a peace treaty among Israeli citizens, the most generous peace offering was made to the Palestinians, under duress from the U.S.

The offer was made by Prime Minister Ehud Barak and rejected by Yasir Arafat. This peace offer rejection was followed one month later by a daily series of public murders of Israeli civilians which went on for five months. Barak was voted out of office by his own party, a national unity government was formed and the Israeli Defense Force moved into the West Bank. It took the Israeli Defense force less than six months to reduce the public murders of civilian Israelis to once a week. After a year of efforts by the Israeli military the murders were reduced to less than one a month.

Since September of 2000 the Peace Now movement, in Israel and outside, lost nearly all of its membership.

In addition, the global peace movement made the few remaining Peace Now members pariahs in their own state. The global peace movement never did anything to protect Israeli civilians from public murder. It never interceded in the daily, unprovoked Palestinian attacks on Israeli soldiers on patrol. Instead, the global peace movement sided 100% with the Palestinians in calumnious lies about Israeli defense efforts and always intervened in battles on the Palestinian side. Paradoxically, the peace activists defied logic by publicly announcing that Israeli forces were humane and would not harm peace activists. Of course they never mentioned that the opposite was true of the Palestinians who thought nothing of risking the activists lives. Palestinian fighters used UN personnel and peace activists as shields on numerous occasions.

This is the current state of the peace movement. After two complete failures, nothing new is being considered. No new ideas are being discussed. The failures of the movement are not the subject of any discussions that I know of, anywhere.

Self examination, open analysis and honest reflection seem to be values that rank low among peace activists.

03/27/03 Celebrate the big six

There are six recent San Francisco accomplishments that I am pointing out to visitors. San Francisco has a long history of citizen inspired innovation that resulted in wise government behavior, starting with an uprising against a major crosstown freeway in 1960 and ultimately with the tear down of the Embarcadero Freeway in 1991.

My nominations for the top six San Francisco accomplishments:

Airtrain at San Francisco Airport. Works well, runs efficiently and has a spectacular view of the Bay on a clear day.

PacBell Park. The citizens voted against this park three times which resulted in it being built with private money on public land. Beautiful site, great feel and a perfect ball park.

French public toilets. Work well (except for the homeless residents from 10 PM to 7 AM), look good and are a godsend for tourist and elderly. Creator: Wendy Nelder, when she was a supervisor. I gave her an award for this in the late 1990s.

F-Line street cars on Market from Castro to Fisherman's Wharf. Restored old streetcars, very popular worldwide. Creator: Wendy Nelder.

Michael Tilson Thomas, conductor of the San Francisco Symphony with a ten year contract until 2005. Greatest conductor in the past 100 years. Plays music by living composers, something unheard of before MTT. I don't know how he got to SF. Our upper crust elite are incompetent tasteless boors who have assured us third class art for 150 years.


Doggie Diner head. Preserved by the city and restored beautifully. Celebrate the big six

03/25/03 An email with a novel conspiracy theory

The conspiracy theory that arrived in my email suggests that the most powerful counter-revolutionary movement in recent history is the Wahabi Oil Merchants.

03/24/03 This past week saw the triumph of two ideas

Most people have no understanding of the power of ideas to change our lives. The old adage that last century's ideas become this century's way of life is right about the sequence, wrong about the timeline. Or in this unique case, the last century was only four years ago.

In my scheme of the world, our society is held together by common language which imbeds within it our common metaphors and commonly accepted concepts. We have a descending hierarchy from language to metaphors to concepts to ideas to individual members of the society. We find ideas, on the hierarchical ladder, just one step below concepts.

Ideas battle with each other, gladiator style, to show that they are more aligned with our society's established concepts. The triumphant ideas are the ones we agree are most aligned with our concepts.

People familiar with the law will recognize this process. In appeals to higher courts, the litigants on each side argue that their own case is closer to all previous relevant cases. Each side argues that they have the best alignment with prior precedent. The best case fits precedence the best.

What is fascinating is the speed with which battles between ideas are resolved these days.

We are at war today because one idea, the idea of a democratic society being a safe and stable ally for America, has been triumphant. Most Americans now believe that creating a democratic state in Iraq will give us a stable ally in the Middle East and put pressure for positive change on dangerous enemies in neighboring states: Saudi Arabia, Syria, Iran and Palestine. We also hope the power and determination of our invasion will be an object lesson for several other rogue countries such as North Korea and Turkmenistan.

This idea, democracy is safe and stable, triumphed in 2002-3 for several reasons. Three traditional concepts have emerged, newly energized in our hierarchy. The idea of creating democracy is aligned with all three.

One concept is that the existence of nation states which are hostile to the U.S. -- with oil money, nuclear arms or no government-at-all -- can be a direct threat to the American population (Afghanistan, a nation with virtually no government, was the source of a bombing of NY and DC, two years ago). We all pretty much acknowledge the truth of that concept.

We have two other concepts that have now emerged in our national pantheon: (1) The Cold War is over and (2) Weakness fails. These two concepts emerged over the past decade. They have deeply roots in our traditions.

When we attacked Iraq in 1991 we were still worried about the Cold War. We wanted a stable world and stable alliances to continue our containment policy, just in case Russia was still the USSR. So we left Saddam in charge. We chose the status quo ante. Now we know that Russia will not be the USSR and we can act in the world as the mega-power that we are. We were the unopposed mega-power in 1918 and in 1946. We keep learning what this means. We are now orders of magnitude more powerful.

We have let Arabs kill 800 Americans over the past decades, without responding. This sign of weakness, which started with 234 dead in Beirut and our withdrawal from Beirut, provoked more Arab attacks. Americans saw that our response to 9/11 with a swift attack in Afghanistan garnered worldwide support. The traditional American concept of gaining respect through power was reinstated in our national pantheon. We believe it is particularly meaningful in the Arab world, based on what we see in the recent success in Israel.

That is how two concepts emerged and the subsidiary idea of implementing democracy triumphed as a policy.

In addition, triumph of the second idea is also the defeat of two previous ideas: Keynes and Supply-side economics.

Last week Congress passed the ten year tax cut, fully cognizant that it could mean many years of deficits.

The idea that triumphed is: federal deficit resulting from tax reduction. This idea brought total defeat of two older ideas, Keynes' (deficit from increased government spending) and Supply-side economics (that a tax reduction will generate enough revenue to avoid deficits). We are now prepared to accept a deficit caused by a tax cut. This is a new idea that has triumphed.

This idea arises from the recent emergence of two concepts.

One concept is that the American body politic demands lower taxes and little or no growth in government. (This is a single concept.) Countless state elections, starting with California in 1976, made this a national political imperative.

The second concept is that Americans don't want deficit spending. A broad spectrum of political groups from Wall Street to Main Street have developed strong political aversion to deficit budgets. This such a strong aversion that it is becoming an American political icon: "Balanced Budget!"

So what happened? How did the idea of a tax cut-based deficit triumph?

Congressional experience in the late 1990's showed strong public support for a balanced budget and antagonism for deficits. The Congress and President acted to give us a balanced budget over ten years and changed a large 1990 deficit into a modest 2000 surplus.

Then, behind closed doors, the December 2000 Congress spent $30 billion of the budget surplus on pork in one month! $30 billion was spent by a lame duck Congress and a lame duck President. This grease ball outrage scared every elected official. Congress privately vowed a surplus would never be allowed to happen again. It was obvious that having a surplus to muck around in and squander was a disaster.

The solution: cut taxes and keep the budget deficit just under the balanced budget point. If the budget gets to surplus again, cut taxes. That's the idea. We have it now.

 03/18/03 Clothing: a matter of life or death

I hope that headline catches your attention. On face value it seems preposterous. However it is true in current urban life.

Current circumstances involve two factors:

* First, we are surrounded by a large street population of drunks. In San Francisco the number of "public inebriates" on the streets at any one time is around 3,000. (Public Inebriate is the term people on my Emergency Services Committee use. God save us from the use of such sterile euphemisms.) Three thousand drunks is a lot. About two hundred drunks per day are taken by ambulance to our hospitals, where they spend 6 to 24 hours on gurneys, clogging the hallways, sobering up.

* Second, the decline of deaths from heart attacks in the past thirty years is close to 50%. Meaning that 50% fewer people (mostly men) died of heart attacks last year than in 1973. The reason is straightforward. Today's paramedics learned their lessons from military paramedics in the Viet Nam War. Paramedics can now save lives by prompt diagnosis and action to avoid death from heart attacks while in the ambulance on the way to the hospital.

What has this got to do with clothing?

The first and second points above are connected.

I have seen three cases where a man was lying on the sidewalk and people were standing around, with several cell phones, trying to decide whether the man was a medical emergency or a drunk. For a medical emergency the people would immediately call 911, otherwise they would leave the person on the street and walk on. The main basis for judging the person lying on the street was the person's clothing. Did it look like a drunk persons clothing? The second judgement was based on the person's smell. People are very reluctant to smell strangers.

Put it all together.

Clothing is the first method good Samaritans use to determine a medical emergency from a drunk. A quick determination of a medical emergency, if it is a heart attack, can mean life or death in prompt paramedic response time.

Being well dressed and lying on the sidewalk will mean an immediate phone call for an ambulance. Being poorly dressed and lying on the sidewalk means good Samaritans will stand around and try to decide whether you are a drunk or not.

Quick action by good Samaritans can save your life if you have a heart attack. Speed can mean a big difference in your survival rate.

Therefore: dress well when you are in public, it can save your life.

(The man in the photo was drunk and everyone passed him by after deciding he was drunk.)

03/17/03 Getting old, getting conservative

A friend, who was successful in business, has steadily become conservative. A mutual friend has suggested that the change was do to a desire to protect the successful business person's assets out of self interest.

I strongly disagree. People appear to become conservative for a very different reason.

What I see happening is that successful business people change their political views for a different and much more obvious reason: They want to associate with people who appreciate them. They want to be around people who appreciate their successful life.

Successful business people find their liberal friends thrive on hostility to big corporations, thrive on more inefficient government programs, rejoice in their hostility to Starbucks and loudly object to vigorous international trade. So the liberal friends become former friends. New friends are found among successful people who can appreciate the virtues and rewards of commerce.

Makes sense, doesn't it? No change in values occur with age, just a change from friends who don't appreciate success in commerce to friends who do. Political views just go along with the new friends.

(The photo is a signal light knocked off its post last night )

03/12/03 Delete Nightmare

This blog is nearly two weeks late. My apologies. I was in Kauai with a 28.8k dialup line so I didn't want to upload my writing. Upon my return, on a redeye flight, I deleted my blog work. You only need to be cautioned if you run a Vaio with Windows 2000 NT, in which case please avoid my disaster.

03/12/03 New Columns

I've made two new additions to my lefthand column. Almost Heroes of Commerce and Gratuitous Advice

"Almost Heroes of Commerce" is a list of (1) people who might become heroes if their businesses continue in their current directions and (2) people who would be heroes except for the fact that others helped make their success possible.

(1) Bezos and Omidyar/Whitman are in the first category. Amazon and eBay are potentially the first service monopolies in business, but this status depends on them surviving for several decades.

A service monopoly is a business that provides such extraordinary service to its customers that customers have no need to select any other company. (Economics has the concepts of a natural monopoly and a government-protected monopoly; in both cases the customer is the loser).

Two earlier service monopolies survived as unique businesses only for a while after their creators died, namely, ATT which was created by Theodore Vail, and Bank of America which was created by A.P. Giannini. ATT provided the best technology, best service and the lowest rates of any phone company on the planet. But by the 1960's it was squashing competitors and acting like a traditional monopoly. Bank of America grew to become the largest bank in the world by treating its customers so well that as loyal Californians and its devoted clients in the film and aircraft industries prospered the bank prospered as well. After Giannini died, the bank forgot all about customers.

(2) Pierre Omidyar, an eBay founder, worked with MegWhitman on the company's design and management, and Joseph Williams (founder of Visa) worked with others at the Bank of America to achieve success. Working alone as enduring visionaries, they would have been stand-alone heroes of commerce.

"Gratuitous Advice" is what I offer to corporations free of charge. I have had several thousand paying clients in my life. This new column is for several companies who need my advice and haven't hired me. There is a hitch. People often ask me for business advice free of charge. I give it freely with the caveat that there is no warranty. If it turns out wrong, too bad. Paying clients get the guarantee that if my advice doesn't work, I will help them until the problem is solved.

The Gratuitous Advice column is free advice that comes with no warranty.

03/12/03 Raising San Francisco

For more than a year and a half, I have been involved with my neighbors in a zoning battle. We halted a developer from building a residential home on our block until he agreed to major modifications. We hired a well-known lawyer and our own architect. So I know the San Francisco zoning process. A new residential home can take several years or more before zoning permission is granted.

Developers are getting around this, brilliantly. They simply jack up an existing house and raise it one story.

The economics are as follows: $15,000 to raise the house and $85,000 to put in a new foundation, walls, plumbing and electrical system. If the raised house adds a garage, new rental unit and a thousand square feet in the back of the house, it can sell for $200,000 more. The value is that work can begin within weeks of submitting the plans because the facade stays the same, the new height matches neighbors' existing homes and the footprint stays the same.

03/12/03 Professional Fish

One day last week in Kauai it rained. I went to the beach to snorkel. No one was there. The air, rain and ocean were the same temperature, so why didn't anyone else come out?

Anyway, I noticed that all the colorful tourist fish followed me around. They may have assumed that the only human in the water had food to give them.

I've concluded that the fish were professionals catering to tourists, just like the deer in Nara and koi, ducks and pigeons the world over.

03/12/03 Authenticity

I read Charles Taylor's Ethics of Authenticy while in Kauai.

I learned that the typical self-centered, navel-gazing Marinite (Marin County, due north of San Francisco, has a disproportionate number of navel-gazing residents) is pursuing a degraded version of a worthwhile ideal.

The worthwhile ideal is finding personal authenticity. The degraded version allows people to be isolated and believe that counting the number of freckles on their left leg can be fruitful. Wrong. The ideal of authenticity is based on dialog with family, friends, peers and intimates. The dialog keeps the searcher in touch with the social horizon. So the searcher for authenticity can find that authenticity within the realm of our social world. A freckle count is not worthwhile. Probably, a BMW, love of Merlot and vacations in Paris aren't either; nor is authenticity found in love of McDonalds over Burger King.

Taylor argues, and I believe that reason can convince us, that the searcher for authenticity should nestle their efforts in the comfort of a social horizon. Many degraded searchers can be raised to ideal searchers. Maybe enough to make the ideal a socially worthwhile effort.

03/12/03 Social Security, Medicare and Kauai

In the blog for 02/09 I confronted the nightmare of Medicare. In Kauai I confronted the future of both Social Security and Medicare. There were so many obese people.

A surplus in Social Security. I realize that more than half of Americans from 40 to 60, the next wave of retirees, are obese on the BMI scale and will live six years less than expected (see blog 1/11/03). Since Social Security was calibrated in 1985 with life expectancies of 76 years for men and 81 years for women, the reality is that in a few decades these ages will be 73 for men and 78 for women. That will generate a Social Security surplus.

Medicare disaster. The same obesity that creates a Social Security surplus will create very high costs for medicare. Death from obesity has unique additional morbity costs. Just the trivial act of moving an obese person onto a gurney takes extra hospital staff.

We need to cap Medicare right away before the impending obesity problem arrives.

03/12/03 Peter Berger

I enjoyed Peter Berger's book The Capitalist Revolution: Fifty Propositions About Prosperity, Equality, and Liberty . It left me terribly grateful that I am not an academic. Poor Professor Berger had to spend half his book inveighing against the ghost of Marx that haunts university life. The four ton elephant of Marxism in academia stifles orginal thought. When new ideas come out, they smell like three-day-old dead fish.

I left Marxism behind when I was 19, lived on a great old kibbutz for three months, and worked in an Israeli aircraft factory for nine months.

The kibbutz was pure communism. Pure. It was also the perfect George Orwell Animal Farm. I hated it, and saw my dreams of a pure communal life evaporate.

The aircraft factory was a model of Sovietism. The company was run by the Israeli Labor party, 100% unionized, with a party operative stationed fulltime in my office. Total unionization made sure that no efficiency was possible; bureaucracy reigned supreme.

I am grateful that my experience with Marxism was tangible and happened when I was young.

03/12/03 Sontag et al

The work of Sidney Hook has recently been re-discovered. Hook was a neo-con in 1953. I read some of his essays in 1956 at the peak of the anti-McCarthy era. Hook pointed out that there is no reason to let Communist Party members remain secretly hidden in universities or as government employees. The Communist Party members were committed to overthrow our democratic society and would not give US any democratic rights if they triumphed. No communist country ever did give its citizens democratic rights.

Isn't the same true again today?

Susan Sontag et al say publicly that the Arab Airplane Murderers were justified in their act because America has been such a terrorist nation. These are defenders of the Arab Airplane Murderers. Yet the Arab Airplane Murderers have made it clear that they would not give US any democratic rights if their version of Islam is triumphant. We have examples of their triumph in Iran, Taliban Afganistan and for the short period when Islam won an election in Algeria. Plus, we have the examples of triumphant Islam in every other Arab Islamic state.

So how do we make it clear that people who wish to destroy a democratic society and their friends should have some restraint on their behavior? Even if it is just a list of their names on a website, like Daniel Pipes has created. (Campus Watch)

03/12/03 AirTrain Joy Ride

The new AirTrain at San Francisco Airport went into operation last month. I recommend a ride on it.

There are two lines, red and blue. Blue is a four minute circle with a great view of the Bay Area on a clear day and Red is a 17 minute circle with an even better view.


See February Archive

03/18/03 D- Planning is beginning on a future international mechanism for approving pre-emptive military action.

03/12/03 B-The U.S. will be delivering its Launch Stage Missile Defense to Japan by the end of 2003.

03/12/03 C- The two new Japanese satellites will give nearly live coverage of N.Korea with longitudinal orbits passing overhead more than four times a day.

email: mp@well.com