Kelsey, Tyler and Ellie at Birthday Dinner

My Birthday In Pictures

The birthday festivities began around midnight.  Most of my family was over visiting going over some details of something we needed to discuss.  Then, later that night (er … morning) I got an email from Molly, who sent me a charitable gift card to Kiva, a wonderful organization.

I woke up to one of my most favorite breakfasts in the world – a plain, untoasted bagel with cream cheese and strong black coffee – and then my mom stopped by with cupcakes.  Aaron, my youngest sister and I headed to the Country Club Plaza to go shopping before my birthday dinner.  Then, at night, after everything was said and done, I got to watch a recorded version of Project Runway and It’s Always Sunny in Philadelphia with Aaron.

All in all, it was a magnificent day.  I really do thank God for the blessings in my life.  I realize just how far I’ve come toward the goals I set out as a child … I’m still not completely there but we’re already light years ahead of 99% of all of humanity throughout all of human history.  God bless the United States of America.

Life really is about incremental improvements; going to bed a little wiser, a little richer, and a little better than you were when you woke up in the morning.  Little by little, step by step, I didn’t quite realize how much progress we’ve made over the past few years.  Warren Buffett and Charlie Munger were right.  If you are intelligent, focus on compounding, try to contribute to civilization and act honestly and ethically in every area of your life, things normally work out in your favor.  That doesn’t mean life won’t be without its tragedies, but it’s just a better way to live.

Here is my birthday in pictures …

Life Is Like 3D Chess

Think Like a Spider Web, Not an Organizational Chart

Here is the best thing I heard all day

Life is not an organization chart. Life is more like a spider’s web. Things happen in strange ways. – Ross Perot

There is a lot of truth in this. You cannot think lineally about your life or business. You need to think in three-dimensions. This is one of the reasons people are successful.

Take my parents and their company, Chenille Appeal. How is it they were able to grow, fund significant expansion and make major technology upgrades during the worst recession since the Great Depression?  I mean, after all, they operate in an industry that is notorious for driving people into bankruptcy.  Domestic manufacturing, especially in the apparel awards business, is hard.  I’ve said it before: You couldn’t pay me to compete with my parents, which is why the businesses I own in the sporting goods industry focus on direct-to-school and direct-to-customer models.

The Secret World of Brooks Brothers

Growing up in relatively modest circumstances, I had no idea how different clothes shopping was for men once they became successful.  Honestly, I never thought much about it but the assumption was that in terms of logistics, it would be just like shopping at Wal-Mart only with better surroundings, better service, higher quality and higher price tags.  You know, you walk into a Neiman Marcus or a Saks, look around at the merchandise, and then pay for it at a register if you were satisfied.

I was totally, completely wrong.

I’m not even talking about the best-of-the-best such as Kiton or Brioni, which are the fare of James Bond. I’m not talking about the brands favored by the trendy set, such as Burberry.  Nor am I talking about the stuff made on Savile Row.

I’m talking about retailers for business owners, attorneys, accountants, bankers and professors, who make the world go round.  The places that become affordable once your household income crosses into the six-figures per year, (which is a dentist in a small town married to a real estate agent or, likewise, a school teacher married to a police officer) and that are just taken for granted in most families.  The type of place where a guy who owns $15 million worth of hotels with no debt, wants to look nice but not stand out might shop, but an investment banker making $400k a year looks down upon.

I See Why Charlie Munger Is Crazy About Brooks Brothers

Take famed men’s clothier Brooks Brothers as an example.  The company has been dressing American Presidents since the mid-1800’s.  Berkshire Hathaway billionaire Charlie Munger is “crazy about Brooks Brothers” according to his daughter, Molly.  He would reportedly give his eight children gift certificates to the legendary clothing store long before he ranked among history’s greatest investors.

If you walk into a Brooks Brothers store, you would be making a mistake to just browse through the dress shirts, sport coats, and suits.  Why?  The company is a true haberdasher, just like in the older days (unless you are in your 80’s, you probably don’t realize that almost all clothes used to be custom made for you, not picked up based upon pre-manufactured sizes!)  To show you just how detailed the process is, I wrote an explanation of ordering custom men’s dress shirts.

The Brooks Brothers staff keeps huge books of fabric at a large, dark desk.  Perhaps you want a sports coat?  You go through the books and choose from more than 250 fabrics, which you can feel and see.  You select your fabric, you take measurements so the garment fits your body comfortably based upon your preferences, you choose how many pockets you want, where they go and the style, the buttons, and even the lining.  Do you want a pink cashmere sport coat with white silk lining and mother of pearl buttons?  They can do that.  How about a dark green water-resistant, lightweight wool sport coat to wear on the golf course in the morning when it is still a bit chilly?  They can do that, too.

I Want My Country Back

How to Solve the Trade Deficit – Part IV

This is part of my special on How to Solve the Trade Deficit. You can read Part I, Part II, or Part III if you missed them.

The Increased Competition for Jobs Is Domestic, As Well

You mention that standards of living have fallen, despite gains in things like iPods with 25,000 songs and the ability to connect instantly through the Internet.  The thing is: In many respects, it isn’t true – standards of living haven’t fallen – unless you fit one specific demographic, which we’ll talk about in a minute.

I pointed out a few months ago:

  • Research that showed Americans alive today have more free time that any group of humans that have ever lived in history (you can read about it here).  What do they do with that free time?  Watch television.  No, literally, the research showed that people used all of those extra hours to sit on the couch in front of the TV.
  • Teen pregnancy and abortion rates are collapsing, which is promising for future poverty rates because having a child before the age of 25 is more likely to result in lifetime poverty.
  • We live longer than any civilization in history.
  • We have better pain management than any humans who have ever lived.
  • We can cure more diseases than any humans who have ever lived.
  • We can travel anywhere on the planet in under 20 hours.
  • We consider full-home air conditioning and heat a basic human right when, only 90 years ago, the richest men on the planet suffered the heat just like the poorest worker.

Plus, you must consider that 50 years ago, blacks, Jews, gays, women, and anyone over 55 weren’t viable competitors in the work force because they were either paid a fraction of their white, male protestant counterparts, fired, or not even considered for positions.  Unless you happened to fit into that one lucky genetic “lottery ticket” you were screwed.

Now, we are increasingly a meritocracy.  In today’s workforce, you are far more likely to have your ideas compete with a much wider range of people.  This is good for the civilization.

To put it bluntly: When you say things are getting worse from a standard of living perspective than they were several decades ago, the unspoken fact is that this is only true if you are a straight, white, male, protestant, high school graduate who wants to make a living without years of specialized training.

Knowledge Worker

How to Solve the Trade Deficit – Part III

This is Part III of my special on How to Solve the Trade Deficit.  If you missed the earlier parts, you can read Part I or Part II first.

How to Solve the Trade Deficit – Knowledge Workers vs. Manual Workers

In many ways, your question about the trade deficit has very little to do with global trade policies and everything to do with the rise of the “knowledge worker” class that Peter Drucker predicted in 1959.

Drucker, the management guru who is to executives what Warren Buffett is to investors, realized decades before most of his contemporaries that rapid gains in technology would eventually result in blue collar jobs disappearing and causing somewhat of a crisis in the population. Drucker hypothesized that the economy would split into several major classes of employees: “knowledge workers”, “production workers” and “manual workers,” just to name a few.

What Is a Knowledge Worker?

A knowledge worker is someone who has a set of skills that cannot be easily replicated or automated. A heart surgeon, a nurse, a nuclear engineer, a chemist, and a lawyer are examples of knowledge workers. No matter who employs them, they are, for all intents and purposes, their own business.

A nurse can move across the country and find work at another hospital far easier than someone who flips burgers for a living because the competition for the fast food job is much more intense (after all, almost anyone can flip burgers but not everyone has the years of medical knowledge necessary to save people’s lives in a hospital setting). Likewise, an attorney can put up a shingle and go into business for himself, getting clients to pay him on a case-by-case basis.