A matter of simple economics

New York Times, March 26, 2009.
Quotation of the day:
"Our insatiable demand for illegal drugs fuels the drug trade. Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians."
SECRETARY OF STATE HILLARY RODHAM CLINTON, on a visit to Mexico.

Why hadn't the most capitalist of the capitalists realized that as long as there was demand there would be supply, not the opposite? It's Economics 101! What did it take for the USA government to admit that the problem was not just combating the supply? Was it that the violence generated by drug trafficking was too close to home and it started to massively enter their territory?

As a person born in Colombia, the most stigmatized country with drug traffic in recent history, I was surprised to read this quotation and the full article on that subject this morning. I was always puzzled by the way the "war on drugs" was handled. Millions of dollars were sent to producer countries to arm antidrug forces to destroy the marijuana crops, then coca and more recently amapola. And what about the spreading of glyphosate on those crops and its environmental impact. And what about the very high number of deaths in countries producing these kinds of plants or involved in drug smuggling? And what about the financing of terrorist organizations with drug money?

It's only till today that an American Government Official makes this admission publicly. And one can only wonder why not before? The war on drugs always looked like a waste of money because data indicated that the illegally crop-cultivated land was not decreasing; it has continued to grow. As long as there is demand for drugs there will exist supply. If the demand grows, prices increase, making the business more attractive. What interest was there that did not allow USA officials to see this simple economic principle. Was it a matter of image? Or was it some hidden interest?

What does it imply that Mrs. Clinton had made this admission? Would the war on drugs strategy change? It is my stronger desire it changes. If Americans cut their demand for drugs there is hope for a chain reaction: decreasing prices; production reduction; drug smuggling business becoming less lucrative and thus less attractive; decreasing income sources for illegal movements, including terrorist groups; decreasing political and economic influence of illegal organization; decreasing number of drug-related deaths, including American victims of overdose.

Do I have a reason for hope?

Open market economy

For many years I have been incredulous about the so called open market economy. If the economy is really open, why rich countries subsidize crops in their land?

If the economy is really open, why workers cannot travel freely anywhere they could get a job and work honestly? Let me bring the quotation of the day on the NY Times of May 24, 2008:

"I don’t doubt for a moment that you are good, hard-working people who have done what you did to help your families. Unfortunately for you, you committed a violation of federal law."MARK W. BENNETT,a federal judge, to illegal immigrants sentenced to prison terms in Iowa."

If the economy is really open, why my human blood or other type of samples could not be used for a research project on MS in the USA? I quote from the email from the Multiple Sclerosis Genetic Group at University of California, San Francisco, as response when I volunteered for this project:

"We wanted to thank you for emailing the Multiple Sclerosis Genetic Susceptibility Project. Unfortunately, we cannot enroll your family at this time due to restrictions on transporting specimens outside of the 50 states. "

By the way, I live in Puerto Rico, a US territory for other purposes!

Could it be that the open market economy is just a pompous name for a convenient commercial exchange of goods?

An African American wins the presidency of the United States of America

I have to agree with the heading of this post, not because I wrote it or because of the color of the skin of Mr. Barack Obama, not even because it has been used in the media but because Mr. Obama is the son of an African from Kenia and an American from the United States.

Another loss on July 25, 2008

Many people got to admire Randy Pausch for his "Last Lecture". He died on July 25, 2008.
http://www.cmu.edu/homepage/beyond/2008/summer/an-enduring-legacy.shtml
http://www.cmu.edu/news/archive/2008/July/july25_pausch.shtml
I did admire him too. RIP.

Premonitions?

For many years my most recurrent nightmare was about being followed by some bad guys and my legs didn’t move fast enough to get away from them. I screamed desperately because I wanted to get out of the dream. Many times I got to wake up by myself or got my wife to wake me up in a profuse sweat at the very moment the bad guys caught up with me.

Now my legs do not move fast enough to run or walk anymore, but fortunately I haven’t been followed by bad guys.

I haven’t had that nightmare anymore…

Entrepreneurship and Romanticism

Is it just me or the concept of entrepreneurship has changed radically from what I saw of my father? I have been to a couple of entrepreneurship seminars lately and the general impression I’ve gotten from them is that entrepreneurship nowadays is about start-ups. You get an excellent idea of a product or service with a good market and either you hit rich, for example Google, or you sell your nascent business to a giant and move on with your life, or rather, move on to another idea and another start up.

Where is the concept of developing your client base, being loyal to them and gaining their loyalty? At least that’s what I saw in my father’s business: a hardware store. He started almost from scratch with his two business partners and slowly and with hard work built their business. Yes, many people must've just walked in and bought in their store only once but many returned because business was about getting clients, gaining their trust, remaining loyal to them and maintaining their loyalty based on good quality products and customer delight, not just satisfaction. It was a personal relationship between the customer and the salesman. It was a long-term person-to-person relation, the salesman knew the customer name and the customer knew the salesman name. And the employees were not just a sales force or a team; they were friends, almost family.

My father probably didn’t write a business plan and didn’t carry out a market study. He just worked hard with his partners and employees at delighting their customers. It wasn’t the most efficient or profitable business but it generated employment; and most of his employees stayed with him for many years. One of them, Don Ignacio Rodriguez, stayed with him until my father died.

Not long after my father’s death we had to close the stores, two at the time. Business didn’t go well anymore. Maybe customers were so loyal to my father that they went away after his death, or they were already moving on to the new hardware stores run by franchises. My father successors, i.e., my mother, my sister, my brothers and I didn’t contemplate paying royalties to a franchiser.

Now that I see modern hardware stores, I believe my father wouldn’t have liked to be part of one of those franchises. If I got to know him well, he would’ve felt like betraying his customers. We would’ve had to surrender not only our business identity but my father’s very own philosophy of business: close personal relationship with clients; clients you know by name and clients that know you by name too. It was not only about selling the highest quality tools or the cheapest, but chatting with the customers to really find out the right tool and price for each one.

It was not probably the most efficient business model or the most profitable, but that business provided for all of us and for the families of the employees. Probably business was not about becoming rich but about profiting just enough while enjoying good friendships; the sense of belonging; feeling part of a family.

Adios Tía Lucila

July 25, 2008. RIP.

Seven years, a long long time

After seven long years I went back to Bogotá and visited many relatives and some friends. I found the city intense, overwhelming, yet attractive. Large cities have the charm of diversity in every aspect, architecture, art, music, cuisine...

And of course, I loved being with my mother, most of my brothers, my sister, most of my nephews and nieces, and friends. My daughters, my wife and I all brought along beautiful pictures and memories.