by Dana Blankenhorn
  Volume IX, No. XII

This Week's Clue: The Oil Curse

Home | Dana's Bio | Clued-In Archive | Newsletter '04 Archive | | Subscribe!
This Week's Clue: The Oil Curse
SSP (Shameless Self Promotion)
Best of the Week
The American Diaspora
ZDNet Open Source
Clued-in, Clueless

Dana Recommends The Blankenhorn Effect offers a powerful, positive message for our time. Once you understand how Moore's Law impacts every part of your life, how powerful it is, and how irresistible a force it truly is, you will have the power to predict the future and know how to change it. Buy it today, and make 2004 a better year for yourself, your business, and your family.


For the Week of March 21, 2005

The great financial Curse is to have money coming out of the ground.

I didn't believe this when I started in journalism. I started in Houston, whose economy was based entirely on the concept of money coming out of the ground - Black Gold, Texas Tea.

For most of history, money has mainly come out of the ground. Assets were what you could drill for, what you could mine, or what you could grow. The exceptions to this rule were those of trade. If you sat astride a trade route, if you had a deep water port, if the railroads decided that your location would work for a station, then your land had value.

Moore's Law has changed all that. The Internet has changed that for all time.

There are now many forms of virtual real estate, and it's this real estate that now controls the world economy. (That's why the copyright wars are so important - the powerful are trying to maintain control of the past so they can rule the future with it.) The value of this real estate can go up or down depending on a government's ability to attract intellectual capital. Universities are key bits of virtual real estate. Every free, active mind is a key asset. (But the mind must be both free and

active to be worth anything.)

A legal environment that attracts great minds can create virtual real estate out of whole cloth. Hong Kong is just one example. Singapore is another. Neither is, nor ever has been, perfection. But in an authoritarian desert any water is an oasis.

America was the ultimate oasis, one that stretched from sea to shining sea. We had the laws, we had the liberty, we had the attitude, and so we got the capital and the universities. The length of our lead over the world at the end of the 20th century was truly staggering. The lead looked insurmountable.

But then came The Curse.

I grew to manhood with The Curse, and covered its effects at the Houston Business Journal. The American system did its best against The Curse, but Texas is a shining example of just how powerful that Curse is. Intellectuals in Texas have almost no power. I always thought it was funny that my alma mater, Rice University, represented Texas' great center of secular intellectual power and, thus, was always the smallest school in the old Southwest Conference.

The great engine of the Texas intellectual economy was called the Permanent University Fund, or PUF the magic dragon. PUF came out of the ground. PUF represented the revenues the state gained by leasing its land for oil and gas production. That money was placed into two institutions - the University of Texas (representing the bureaucracy) and Texas A&M (representing the military). The state's intellectual capital is based on PUF, which hires no professors and is only used for construction.

The state's power is based entirely on The Curse. It's based on controlling the land. Power in Texas has always been about the land. This was true for Democrats under Lyndon Johnson, who stole his first election to the Senate. It is true for Republicans under the Bushes. Democracy, the rule of law, liberty - these were mere words to Texas power. Politics in Texas has nothing to do with issues, with right or wrong. These are, and were, mainly labels, meant to hide the deeper truth. He who had the land made the rules.

To the world of The Curse order is all. Democracy may make changes against those who control the land. Liberty allows people to speak against the landowners. Capitalism, while good for the landed, is allowed to reach a stasis that is feudal in fact, the landed ruling over the landless.

The rise of Texas to the pinnacle of American power has also meant the rise to power of this attitude, that money comes out of the ground, that power comes from holding land, and that principles are mere window-dressing. Freedom is just another word for nothing left to lose, a cudgel used to hold people down to the power of the land. They are not allowed to rise above it.

Wherever power comes from the land and not the mind, there you will find The Curse.

Back in what Europeans call the Dark Ages, the Arab world represented intellectual capital. Nothing grew in the desert. Arabic was the language of learning, not just for the Qu'ran, but literature, science, and (best of all) mathematics. Algebra is an Arabic word. We use Arabic numbers. It's man's universal language.

Twists of fate, involving the pulling of power and wealth from the ground, allowed Europe to surpass Arabia. But early in the 20th century The Curse came. The West had found minor curses throughout its rise - gold, silver, spices, coal - but there was one great curse to come, one curse that bound them all, one more curse to drive Arabia down, and sink the world with it.

The name of The Curse was oil. Texans helped discover it in the sands of Arabia.

It turns out that Arabia sits in the center of the world's greatest pool of oil. To secure it, Texans helped place the Saud family on a throne, giving them absolute power over their subjects. The Saud family not only has the power of a Louis XIV, but the power of infallible Popes as well. The Saud family became both church and state, but they could also be manipulated by their dependence on Texas oil technology. The Sauds understood Texas, and Texas understood them. This assured stability. No other family gives its name to a state but this - Saudi Arabia.

Thus it was throughout the world, and throughout the 20th century. Any place oil touched turned toward absolutism, because it is easy to manipulate, and seems to guarantee order. Labels mean nothing without power, power means nothing without wealth, and wealth comes from the ground.

It has never mattered to Texas what form absolutism took. Texas was quite happy dealing with Shahs in Iran, with the PRI in Mexico, with Sukarno in Indonesia, with the oligarchs of Russia. What Texas demanded, simply, was order, a guarantee that contracts would be honored, that the money would flow. Corruption was fine, in fact it was good for business. (Pronounced "bidness.")

This is not unique to Texas or oil. I'm not condemning the place or the people. The Curse has existed wherever money flowed from the ground. It was behind the American Confederacy, in the cotton that slaves picked. It was behind apartheid in South Africa, in the gold and diamonds pulled from the mines.

And when the assets are stripped what's left?

What's left are the people.

People can create wealth all on their own. Thanks to Moore's Law, they can create it far more efficiently than wealth can be pulled from the ground. Thanks to the Internet, they can do this anywhere. Wealth can be found in the mind, in software, in hardware, in medicine, in machines, in communications, in words, in numbers, in music, in entertainment, in marketing, in banking and insurance. All these forms of wealth grew best where people were truly free to pursue it.

In the world of Moore's Law, where technology and intellectual capital rule, things like freedom, democracy, and the rule of law are not meaningless phrases. They are living, breathing realities. They are bedrock. They are the real oil fields.

Thus it is vital that truly honest elections be protected and advanced, that choices be free and followed. It is vital that stability be guaranteed, but intellectual freedom encouraged. It is vital that free markets enable men and women to extract the maximum wealth from their creative endeavors, and trade it freely.

But in our time, the power of The Curse has come to rule over America. The Bush Junta speaks of freedom, but only freedom to be ruled by them. They speak of democracy, but only when results conform to their wishes. They speak of capitalism, but only for the capitalists.

Until Americans lift this Curse from their land, until they truly understand its banal evil, until they destroy it and salt the Earth in its wake, guaranteeing that no men shall ever again take power or wealth they do not merit, only inherit, then America will continue to falter. Its young will be bled on the field of battle, its wealth will be wasted, and its intellectual capital will dwindle.

Instead other centers will rise. India will rise. China will rise. Europe will rise. Australia and Korea will rise. None of these centers are perfect. None has, fully, what America promised, and what it delivered until The Curse came to power over it.

  • India suffers from ethnic strife, from a multiplicity of languages, from religious conflict, and from its Cold War with Pakistan.
  • China suffers from a tyrannical government, from censorship, and from growing corruption among its nomenklatura.
  • Europe suffers from age, the same force driving down Japan. It also suffers from bureaucracy, both government and corporate, and from instability at the margins.
  • Korea suffers from its sclerotic system of chaebol, from its small size, from the tyrant to its north, and from an aging population.
  • Australia suffers from its small population, from its own inferiority complex, from its Euro-centric bigotry, and from its alliance with the Bush Junta.
It's very possible that, at some point down the road, Africa or Latin America will take advantage of this weakness to increase their own intellectual capital. Even in the Middle East, in Bahrain, it's happening. (Where do you think the wealth of Israel comes from? Intellectual capital.) It's not hard to do. We're already starting to see it in Brazil, where science and learning are being honored, where the rule of law is taking a stronger hold, and where democracy is offering some real choices. South Africa offers stability, capitalism and a rule of law that has outlasted apartheid, plus English, a powerful force for unity in the world's markets.

Because The Curse now grips Washington, D.C., all these centers have their chance to rise. We're moving toward a multi-polar world, and this trend will continue, even after The Curse is lifted from America, because once people find the way to wealth through intellectual capital they seldom deviate from the path until they've reached their goal.

Their goal is to have what we have, what we're in the process of throwing away. I weep for America, but rejoice that its ideals will not die, and that they are now being spread all around the globe, thanks to the medium you are now using.


Shameless Self-Promotion

I'm now helping to produce a special blog on Open Source for ZDNet.

I work as a freelance writer in Atlanta, and am on the development team for EgoScout, a new kind of mediator for mobile phone users.

My last non-fiction book, "The Blankenhorn Effect" won the Computer/Internet category in the 2003 Independent Publisher (IPPY) awards. Write me for a PDF copy of my latest novel, "Baptists are for Dunking."

On my Mooreslore blog I've written a new novel, "The Chinese Century." It's a story told in real-time, with real characters, but entirely fictional, dealing with the consequences of the falling dollar. I'm beginning a sequal, "American Diaspora," exploring the themes of the first book but with more fictional characters. It's a true alternate history, but set in the present day.

You are encouraged to forward this newsletter widely. And if you have trouble subscribing let me know. Remember: it's journalism that keeps the Clues coming...


Best of the Week

Moore Wisdom

While the headlines spoke of Moore's skepticism on materials that might replace silicon, I was more intrigued by his views on Intel, where his foundation still holds a considerable stake.

Gates Feeling Groovy, or a Microsoft OzFest

Bill Gates has finally hired himself a new CTO. It's Lotus Notes inventor Ray Ozzie. While Ray may think he sold a company to Microsoft, Groove Networks, in fact his world is about to get rocked like never before.

Where EDGE Cellular Makes Sense

The cellular technology called EDGE doesn't make sense for the U.S. It's not that fast. It costs real money. By the time a carrier installs EDGE his competitor may have true 3G available, and now you've spent your budget but lost the market.

One More Step for Always On

It's easy for someone to criticize Wind River's strategy as an attempt to maintain proprietary control in a world of open source, but the fact is there are opportunities here for the Always On world that need to be explained, and then seized.

Mutterings on Corporate Personhood

Corporations were made persons by the footnotes to an obscure 19th century Supreme Court decision involving the Southern Pacific Railroad. All those involved are long since dead but the railroal company's interests survive as part of the Union Pacific Corp.

BBC Gets it Wrong on China

The BBC has a feature today claiming China's censorship of the Internet is highly effective. In some ways China has been effective. But there's a lot more to the story than that:

Negroponte's Mobile Clue

I don't always agree with Nicolas Negroponte, but he made a point in Korea recently that really makes sense. Simplicity is the secret of cellular success.

Yahoo-Google War Goes Mobile

Yahoo is what it has been since 1997, a portal. Google is a search service. Now, with the rise of the Mobile Internet (we're still at 1994 with this, in fact) Yahoo is gigging Google and calling it "limited."

Two Ways to WiFi Coverage

Should WiFi cover every inch of ground or should it be concentrated where people congregate. Today we have two designs in the news, one meeting each need.

Democratic Choice on Software Patents

Neither U.S. voters nor their elected representatives have ever endorsed the idea of patenting software, or mathematical algorithms. It was done by a court. If this stupidity is to rule over Europe, it's fitting that the people's representatives should decide the question, and it now appears that they will.

UWB Standard Struggles Hit the FCC

Failure to define a single standard for Ultrawideband is killing the technology. So say the experts. This could be the week that tells the tale on that, as the FCC weighs in.

Google Desktop Search Goes Gold

Google's Desktop Search is out of beta and available for download.

Who Will SA-ave Your Soul (For those Lies that You Told)

When Canadian Michael Geist started his "Law Bytes" column some years ago, I didn't think much of it, or him. It was conventional, and usually took the side of industry. Either he grew, or I did, because lately he has been rocking. He's loosened up,

Moore's Law of Market Acceptance

Intel says its Wireless USB is going to eliminate Bluetooth. It's faster, has less interference, and it's just better. Uh-huh. Maybe that's all true. But even if it is, that will take time.


The American Diaspora


Table of Contents

ZDNet Open Source

Wind River's Open Source Moves

Is OSI License Reform Stalling?

How To Fight The FUD

Stallman's New Campaign to Free the BIOS

Major Applications Tiptoe Toward Open Source


Clued-in, Clueless

Clued-in is Dean Kamen, and his colleagues at US First.

Clueless is John Doerr, along with his colleagues at TechNet


A-Clue.Com is a free email publication, registered with the U.S. Copyright Office as number TXu 888-819. We're on the Web at

Home | Dana's Bio | Clued-In Archive | Newsletter '02 Archive | | Subscribe!