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04/14/2009

The 20 Hour Watch ... Why The Smart Russians & Even Smarter Americans Aren�t The Smartest

By Chester Billingsley

After the fall of the Berlin Wall, the Russians sent me a Russian. I was to teach him about capitalism. He was amazed at the concepts of discounts, the emotion of advertising and the possibility of stiff commercial competition. After his internship, we exchanged $40 watches. As I was an avid jogger then, he got a waterproof sports watch, digital and accurate to 3 seconds a year, with dual time zones, alarms and lap times.

I quite happily and smugly traded for his new Red Star analog military watch. I was a little chagrined when he told me it had a winding stem like by Dad�s old watch. I quickly found that it lost 4 minutes per day, fogged in the shower, and the band came un-sewn. This all didn�t matter much, because the watch stopped within a month.

The stem fill out. But what left me with the biggest lesson, was that one winding of the watch lasted 20 hours. Who the heck designs a winding watch that you can�t just wind once a day? Well, the answer is any worker in a centrally planned economy, not subject to the competition of the market.

This is all in great contrast to Costco blueberry muffins. My hard working friend, Jesus, ran a trucking company that delivered muffins to Costco. A vendor of his was trying to introduce a new blueberry muffin into Costco stores. At the taste-off there were thirteen competing brands of blueberry muffins.

With just the right mix of sweetness, the best oil, a few pecan chips (never walnut), full blueberries and snappy packaging, Jesus and his vender won. In a similar way, mini-muffins, muffin tops and giant muffins were all introduced to Costco. The same type of vetting and re-vetting is going on today at WalMart and any number of stores across America.

The reason capitalism works and socialism does not is the genius of Jesus and a million other experts in their daily jobs that keep striving to make their particular product and work a little bit better than the competition. Even though the many advisors around you are all smart, none of any of us is as smart as the collective Jesus� of the world.

A president, especially a competent and intelligent president, must keep the effective and distributed dynamic of capitalism in mind and not substitute the centralized judgments of a well meaning elite.

Chet Billingsley did his undergraduate work at West Point. He attended Harvard where he received a Master�s Degree in Applied Physics with concurrent study at Harvard Business School and MIT�s Nuclear Engineering Department. He spent the major portion of his early career at General Electric in the energy and high tech sector in project turn-around and international management positions.

Currently, Billingsley is the CEO of Mentor Capital (Symbol:MNTR). For more information on Mentor Capital see: http://www.MentorCapital.com.

�The Prince� by Chet Billingsley can be purchased at http://www.amazon.com.

(Disclosure: Bob Meyer owns Mentor Capital stock.)



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