Monday, August 30, 2010
You've met the type before. You are at a party, and some bore bends your ear about how everyone should "Buy American!" and how those "Idiots in Washington" are driving our precious manufacturing base overseas.
You just want to club these idiots to death, because they just don't get it. The main reasons most of our products are now coming from overseas has more to do with these idiots who say "Buy American!" than with the "Idiots in Washington".
Things are increasingly being outsourced overseas for one very simple reason: Cost. It is not some evil plot on the part of managers to close factories just for the hell of it and move everything thousands of miles across the planet to a place with an unstable government and a huge language barrier.
No, it is cost, and cost alone. And when you think about all the huge barriers to moving production to China, India, or elsewhere, you can understand by what a huge margin overseas manufacturers are undercutting our costs
Why does it cost so much to make things in America? Well, basically it is because of the whiny "Buy American" types who want to blame all our problems on someone else, but never look inward and see that perhaps the problem might be....them.
1. Higher wages are a start - most Americans are incredibly lazy and work very little - if at all. And if they do, they demand a huge salary to do even the most menial tasks that could be performed by a Monkey.
When I was at GM in 1979, we had forklift drivers making $42,000 a year, with overtime. That is a lot of money today, to drive a forklift (which can be learned in about an hour). Back then, well, it was like $100,000 today - if not more.
When I was at Carrier, we did a cost analysis on a new air conditioner product. Labor cost in the USA, with overhead, health insurance, etc. was at least $70 per unit (for a unit with a sales price of $450). Labor in Mexico? $3. If we made the unit in Syracuse, New York, the company would have lost $50 on each sale. Not hard to see why the factory there has been shut way back.
And yet the "Buy American!" crowd would never dream of taking a pay cut. No, they want a raise, if anything, and will see a factory close rather than try to help the bottom line.
2. Health Insurance is another - In most foreign countries (even Mexico!) they have national health insurance. So employers don't have to pay anything for health care coverage for their employees or, more importantly, retirees. This is a huge savings for them, and cuts their labor cost nearly in half.
A recent article about Toyota illustrates the point. Their health care coverage costs are a fraction of GM's. In Japan, they pay nothing at all. In the US, their younger workforce has lower costs and few, if any retirees. Health care and retirement costs are what put GM and Chrysler in to bankruptcy court.
And yet, the jingoistic "Buy American" crowd are also the first people to shout down even the modest health care reform that was passed last year. Forget national health insurance - it just ain't gonna happen! So we pad our labor costs with health insurance and wonder why we can't compete.
And health insurance (along with generous retirement benefits) is one reason many shops would rather pay someone overtime (mandatory overtime, they call it) than to hire a new worker. You only have to pay retirement and health insurance once per worker. So it is easier to work someone 60 hours a week than to hire two people for 30 hours a week.
You want gold-plated benefits? Great. Just bear in mind that they encourage less hiring as a result.
3. Corporate Income Taxes are a big factor too - Most countries overseas have no corporate income tax. You tax shareholders on their dividends, and that's it. And if you think about it, dividends ARE the profit a corporation makes.
Only in the USA do we tax corporations on "profits" and then tax them AGAIN as dividends are paid out to shareholders. This puts US corporations at a huge disadvantage when competing overseas. And the double-taxation of corporations never made any sense at all.
And guess what? The bombastic "Buy American!" crowd are the first ones to say "Tax those evil corporations! They make too much money!" But of course, a Corporation doesn't "make" any money for itself - it has expenses, overhead, and pays dividends. Although it is a legal fiction that a corporation is a "person", there is no "Mr. IBM" out driving a Ferrari and laughing all the way to the bank. But try telling that to the guy with the "Buy American" t-shirt (made in Taiwan).
Shareholders and employees are the only ones who "make" any money from a company, and they already pay taxes on that money.
4. Restrictive Work Rules Hurt - When I was at GM, I needed to have a pallet of parts moved to a machine to keep the line running. The forklift driver (making $42,000 a year, remember?) told me that because of Union rules, he could only move the pallet 10 feet, and that another driver would have to move it the remaining 10 feet. Ridiculous! He finally moved it for me, and guess what? We both had a time-consuming "grievance" filed against us by the Union rep.
In Japan, China, India, or anywhere else not in bizarro-world America, the workers would have hand-carried the parts the 20 feet, if necessary, to keep the line running. Workers overseas appreciate their jobs and understand that if the company doesn't make money, it goes out of business.
And yea, the "Buy American" idiots are the first to subscribe to the concept of unions and union rules. The unions have been cut way back since those old days - silly work rules and nonsense like that are becoming a thing of the past. Becoming - but not fast enough.
5. Take This Job And Shove It - as the song goes. Americans have a schizophrenic relationship with their employment, it seems. They whine and complain when the company closes its doors. But when the company is hiring, it's "I hate this job" and "I hate this damn company!"
I saw this firsthand at GM and, to some extent, Carrier. Highly paid workers, bored to death (restrictive work rules and lax management meant hours of time to kill) literally sabotaging the assembly line or damaging products. You remember the bad old days at GM - when workers would intentionally screw up a car just for laughs. Poor SOB who bought those Monday cars! Ha-ha on him! Of course, that consumer is now a loyal Toyota buyer - and whose fault is that?
Or take the tortured case of Caterpillar. The workers there called a strike - for six years. When they finally backed down and made concessions, it was too late. The plant was closed. And more and more heavy construction equipment now bears foreign-sounding names.
Here's a clue - when you strike for SIX YEARS, you are basically saying "Fuck this job". And you have no cause for complaint when the jobs just go away.
And no, none of the workers there were "underpaid". In UAW and other union plants, most workers make 2-3 times more than similar, non-union workers are paid on the "outside". Greedy little pigs, is all they are, running a shake-down game with the help of the Mafia.
And yea, guess what? The "Buy American!" jerk belongs to a union.
6. I want it cheap - below cost: Most Americans appreciate a bargain. And today, foreign-made consumer goods are far cheaper than American made products of just a few years ago - by a factor of 2 to 5.
When I was a kid, my Dad never bought a Coleman cooler, as they were very expensive back then. Today, the price is about the same, but inflation being what it is, the effective price is 1/10th what is was back then. Chances are, you have one or two of these coolers. In 1965, it was "too expensive" for our family. If we did buy such luxuries, they were carefully tended and expected to last decades.
If you look at the typical household back then, it was pretty bereft of electronics, gadgets and other junk. A vintage radio ad I found from 1960, shows a Zenith portable radio (AM/FM) selling for $79. Ouch! That would be like $500 today. Who could afford such a thing? When "Cheap Japanese Transistor Radios" came out, they took the market by storm.
And yea, you guessed it, the "Buy American!" dude wants all his stuff on the cheap - and if you go through his house, you'll find it chock full of foreign-made goods, just like the rest of us. And chances are, he even drives a Japanese or Korean car.
Talk about hypocrisy.
7. Lawsuits - In China, no one is going to sue you for selling hot coffee (or tea). But in the good old USA, everyone is a "Victim" and has a lawsuit they are filing or have filed.
The cost of litigation is not trivial, and while the idea of lawsuits protecting consumers, the environment or workers is a fine one, in many cases, these suits are little more than shakedown attempts to extort money from companies.
Take "class action" suits, for example. These are filed by opportunistic law firms who take in millions of dollars in fees for cases that are supposed to right "wrongs" that in many instances are trivial. The consumers get little or nothing, in most cases - perhaps a coupon for a free car wash.
And yea, Joe "Buy American!" will no doubt bore you with the status of his lawsuit against his former employer, Doctor, retail store, or whatever. Because you know, he's a victim here.
8. Regulation - This is not as big an issue as you might think, which is why I list it last. But in many places of the USA, building a factory is a major - almost impossible - chore. There are so many regulatory hoops to jump through that it is nearly impossible to even start.
And even if you get all the necessary permits, chances are the "citizens against big factories" committee will spring up and sign a petition to stop your expansion or construction.
And yea, these same "citizens" are the ones who say "Buy American" and then bitch when the factory closes or jobs go overseas.
Yes, some regulations are good, but we have far more than our overseas counterparts. If you want to know why people locate factories overseas, this is one (but not the only) reason.
* * * *
What it all gets down to, with this "Buy American" nonsense, is that Union-types would like to enact restrictive tariffs to keep imports out of our country, so we would all be FORCED to buy American products.
Would that be a bad idea? Yea, hugely bad. History has shown again and again that restrictive tariffs end up causing reciprocal tariffs, and the result is a tariff war, which results in restricted commerce and usually a prolonged RECESSION if not DEPRESSION.
It also means that prices skyrocket and quality goes in the tank. Cars in the 1960's were horribly made, no matter how nice the "hot rod" at the car show may look today. And since consumers had no choices, they were forced to "Buy American". In fact, Americans were so desperate to avoid buying American crap, they bought tinny foreign cars like Volkswagens and Peugots. Companies like that would not have stood a prayer in the US market if not for the horribly bad quality and selection from "the big 3".
In short, we handed the market to companies like Toyota - on a silver platter.
Should we be concerned that crappy manufacturing jobs are going overseas? Perhaps. As our country matures, we have become more of a center for design and development -high paying jobs for educated, skilled people. Crappy, low-skill jobs are going to where the labor is cheap. And if you haven't figured that out in the last 30 years, well, I simply can't help you.
If we want more companies to site themselves here, there are things we CAN do other than raise tariffs or bash Toyotas with a sledgehammer (yes, they did this at GM back in the 1980s. Brilliant).
1. Stop hating your job and buying into this sophomoric "Corporations are Evil" crap. If you want a company to stay in your town, start appreciating it instead of resenting it.
2. Stop blaming the Japanese for being efficient or the Chinese for working too hard. Given the shipping costs from China or Japan to the USA, we should have a huge competitive advantage for any product made here.
3. Show up for work on time, stop sabotaging the assembly line. Yea, you. The whiner. You want to keep your job? Then do it. Yea, working the line sucks. But you chose not to go to college. Not my fault.
4. Just Say NO to Unions. You want a union? The organizer promises that they will double your salary and get you all sorts of benefits? Think long and hard about it. If your job can be outsourced, chances are, it will, if costs escalate.
The Union movement has perhaps realized too late, that they have screwed the pooch, big time. Factory jobs are not hard to pick up and move, lock, stock, and barrel, overseas. No matter how large an investment a company has in the USA, it is often cheaper to build a new factory overseas and have a 50% decrease in overhead. And it is not a matter of being "greedy for profits" either - they have to do it to survive.
Unions today are focusing on the service sector, which is a smart move on their part. While Wal-Mart may buy most of its stock from China, they still have to hire some local low-skill labor to man the registers and stock the shelves. You can't move the store overseas, if you want to sell product.
Of course, it remains to be seen how successful the unions will be at this. Or, if they are, if a Coleman cooler will cost $500.
Sunday, August 29, 2010
It has been nearly 9 years since 9/11. This one event probably defines the lives of an entire generation.
Last night I was parking the car in the barn, and I realized I left the radio on in the barn. I went to shut it off, in the dark, the way being lit only by the parking lights of my car. As I approached the radio this song started to play. It haunted me, for a number of reasons.
Like post-traumatic stress disorder, suddenly years of events started to telescope into one moment. Had we really lived through those days? It seemed so far away and yet, unreal.
I remember the day, September 11th, and my partner calling me from work. "Turn on the TV, someone flew a plane into the World Trade Center." I turned on the television and after a few moments of inane commentary (was it a private plane, or a jet?) we all saw an airline fly into the second tower.
Silence. And the realization that the world had just changed, in a way that was complete, utter, and irreversible.
I sat there by myself, making and receiving phone calls. Rumors on the TV about two other planes and then the ground shakes and I walk outside to see a plume of black smoke rising from the direction of the Pentagon.
It was a weird, odd time, in retrospect, and hard to recall. The details were buried by memory. We took the Metro liner to New York the next week, at the insistence of the Mayor of New York - the city was "open for business" he said. Front row seats on closing Broadway shows. A tour of Manhattan on an open tour bus. Walking, drawn toward "ground zero" - the smell of burning, the white powder of sheet rock. The signs on lamp posts, "Have you seen my spouse?". Empty fire houses, with their doors open, no equipment, no people, just photos and wreaths.
We returned to Washington. Anthrax. Our mail washed and dried, arriving a month late. The sniper, killing people in places we'd been to. We laughed it off, running in zig-zags from the Metro. Make it hard for him to aim. Who knows? Maybe we frustrated him.
And deep down, a decision - a need - arose. We had to leave this place. We had to move on. This was crazy.
It has been nearly a decade now. Next year, there will be bombastic 10-year anniversary displays and songs like "Proud to be an American" played. And no one will really remember what it was like. The fear, and the uncertainty of what was to come ahead.
And yet, I do remember, at the time, feeling, "we will get through this". Two buildings were not enough to sink our country. I knew that then. I know it now.
I was out on my boat a couple of years back and got a call from the credit card company. Seems someone had tried to charge a ticket to Dubai, one way, first class, on my card. That set off all sorts of alarms.
How they got my number, I do not know. They had first charged $1.11 to iTunes to see if the card worked, and then went for the big patootie.
I called the card company back (just to be sure it was not a phishing call) and confirmed I did not make the charge. They canceled the card and sent me a new one the next day. It was pretty painless, and of course, I was not liable for any of the bogus charges.
All this happened while I was out on my boat, drunk, and it was settled within 20 minutes, without any fuss or mess or any "credit protector" necessary.
So what's the big deal? Even if the credit card company had not noted the unusual charges, I would have had 30 days to dispute them, and since I didn't make the charges, not be liable for them. That's the law, plain and simple.
(And that's a law the Credit Card companies can live with, as if it were not so, no one in their right mind would pay by anything other than cash!)
Since I check my credit card charges almost daily, the idea that a charge could slip by my for 30 days is remote. I enter all my charges on Quickbooks and then balance them with the charges on my credit card company website. You should, too, at least weekly, if not more often.
And yet, so many people are paranoid about identity theft. I just had a client send me his credit card information through seven different e-mails. Others are squirrely about sending the info over the phone even. Here's the deal: You don't make the charge, you aren't liable for it. You have a lot of protection under current credit card laws. You are not liable for purchases you don't make.
I have friends who refuse to bank on line, because they think that someone will "steal their identity" and "break into their bank account". But unless you willingly hand over your PIN number, chances are, this is a long-shot. Getting your banking statements and sending checks in the mail, on the other hand, is far less secure. Thieves can "wash" checks you mail out and then try to cash them. And as I have noted before, with the advent of Check-21, a paper check is little more than a request for an electronic transfer. Doing banking online is just cutting out one step - the one step that has the highest risk of interception - the paper check.
And I've read of stories of some folks who actually DO pay off debts that are not theirs - simply to get collection agencies off their backs. Now, if you are going to pay off a debt that you don't owe, just because someone sent you a nasty phone call, I can't help you. And scammers do this sort of thing all the time. There is one robo-caller out there who leaves ominous messages on your answering machine, asking you to call a law firm to pay a debt you supposedly owe. And apparently, people call the number, convincing themselves that somehow they forgot about a debt, and they pay these people off.
Hey, if you are that dumb, I can't help you. But it illustrates how some folks do not keep track of their money - and how scared they are of banks, creditors, and collection agencies - as well as the legal process.
I think the whole idea of "identity theft" is over-hyped, so that the credit card companies and credit report companies can sell "credit protector" services. The credit card companies report any credit card fraud as "identity theft" these days, so it makes the numbers seem higher.
People seem to be under the impression - an impression that "News at 5:00" stories like to make and an impression the credit card companies let hang out there - that someone can "steal their identity" and go out and buy a Porsche, hire a bunch of hookers, and snort a pound of crack, and make the poor sap whose identity they stole spend the rest of their lives paying it all off.
That is, of course, not true. If a bank gives out a loan to an impostor, you are not liable for it. Now granted, this could cause some difficulty for you in terms of straightening things out and it might ding your credit score - temporarily. But is this very common at all?
Not really. When you scratch the surface of most of these "identity theft" stories, they start to fall apart:
1. The Credit Card companies report all credit card fraud as "identity theft" so the numbers seem astronomical. Credit Card fraud has been with us since credit cards were invented. People steal credit card numbers - usually clerks or waiters at shops and restaurants - and then charge things. You are not, and have never been, liable for such charges.
2. Some folks rack up a pile of debt and then try to use "identity theft" as an excuse to get out of it. It doesn't work, of course.
3. Banks do get snookered by folks impersonating a solid citizen. But the impersonator is usually a family member or friend (or acquaintance) of the "victim". You take in your crack-head cousin, and he swipes your wallet while you are at work and takes out a car loan. Since the two of you look similar, he gets away with it - but not for long.
But true, stranger-based "identity theft"? Much rarer than the credit card companies (who have a vested interest in cranking up the paranoia) want you to think.
Still paranoid? You can put a "hold" on your credit report, at little or no cost to yourself. Such a hold prevents anyone from obtaining credit under your name without written authorization from you. Of course, I suppose a thief could just forge the written authorization, right?
"Credit Protector" services will monitor your credit reports and send you e-mails if someone tries to borrow money under your name, or if other suspicious activity occurs. But they really do not provide any additional protections for what is the most common form of "identity theft" - simple credit card fraud.
As noted above, checking your credit card balances regularly will help you detect fraudulent charges. And the major credit card companies have very efficient fraud departments. Citibank, for example, will deny charges when I am traveling sometimes, unless I call them to confirm the charges. It often pays to call them in advance and tell them you are traveling, so charges are not declined. They are very aggressive about fighting fraud, as it comes out of their bottom line. Complex computer algorithms check to see if your spending habits are outside of predetermined norms.
And of course, it pays not to fall for "Social Engineering" schemes. Yes, a huge percentage of so-called "identity theft" is a result of people willingly handing over credit card and other information to strangers on the phone or online. A friend of mine recently fell for one such scheme, handing over his e-mail address and password to a stranger in a "social engineering" scam. I realized it because the scammer then sent out an e-mail under his name, claiming to have been mugged in London, and needing $5000 wired right away.
Just in case you missed the point - no company will ever, ever ask you for your user name and PIN through an e-mail. And if you get a realistic looking e-mail that asks you to click on a link to go to a site to enter such data, don't do it. Open a new browser window or tab and then visit the company site that you normally visit (which you have bookmarked, so as to not visit look-alike sites that are keyed to typo URLs). It is really not that hard to avoid.
And some of these "Social Engineering" scams are pathetically crude, such as the "e-mail" supposedly from Yahoo or Microsoft, asking for your user name and password so they can do "maintenance" or to avoid "having your account canceled".
When in doubt, visit www.snopes.com and look up the scam, or visit that site weekly to keep up on the latest scams.
Is there a real risk of identity theft? Yes, it can occur - but you can take steps, which are free, to reduce your risk. Will it bankrupt you? Unlikely. The horror stories on TeeVee are designed to make the stories seem more compelling - and get you to watch.
Which brings us to the main point about identity theft - getting your social cues, norms, and basic economic data from the television is a really, really bad idea. Stop watching the TeeVee and your life will improve in so many ways. To begin with, you will no longer be bombarded with really, really bad economic advice.
UPDATE 2020: I found out later on that when I bought some BMW car parts from a place in California, they were employing contract labor to pull the orders and pack them. They handed the order forms to these day-laborers, some of whom were felons on parole, complete with name, address, and credit card numbers. One of these laborers photocopied the forms and sold the data to a 3rd party. I found this out only later on when they admitted the "data breach" after my debit card was stolen.
Both were a minor hassle, but in both cases, I was on the hook for nothing. The risks are far over-stated, trying to get you to be afraid of everyone and everything. Fear is not an emotion to be trusted.
Friday, August 27, 2010
Many Americans are feeling financially stressed these days, and yet are quite wealthy. Why is this?
I am starting to downsize my life more dramatically than I have in the last two years since I started this blog. I started this blog in response to the recent economic downturn, but also to try to figure out where all my money was going - and why. I came from a family of spendthrifts - folks who enjoy a good party but are not very savvy when it comes to money or respect for it.
The funny thing is, and the thing that puzzles me, is that I make good money. And yet, each month, it is a struggle to pay the bills while still funding the 401(k) and putting money aside. And it has been that way most of my life. There are two opposite lessons one could draw from this. First, perhaps everyone lives this way - from month to month, struggling to pay bills and stay afloat. Or second, that a lot of people unnecessarily stress themselves financially in order to live a lifestyle that they think they deserve.
And increasingly, I believe it to be the second. Americans love their toys and stuff and STATUS above all. And so they willingly hock themselves to the hilt in order to have "things" instead of real wealth. As I noted in my Owning Money post, most people think of money as something that passes through their hands, not something they possess for very long.
But in our new 401(k) world, you had better think about owning money, or you will end up broke when you retire. And therein lies the fundamental problem with our society. We are trained from birth to look at money as "cash flow" - something to be earned at a "job" and then spent just as fast in monthly installment payments and expenses. Give the average working Joe - even a well-paid executive - a lot of money, say in lottery winnings, and chances are, they will blow it in a matter of months or years.
There are, of course, a few people in this country who don't think that way. Folks who grew up with a respect for money and understand how it works. Accumulating capital and then putting it to work is the real way to wealth, not in some "job".
Retraining yourself to think in this second way is very hard. It is like, as I have noted before, dieting. In order to lose weight, you have to monitor calorie count, exercise more, and keep track of your weight. You have to learn to eat what you need, not what you want, and be content with that - and content with the feeling of better health and less fat to carry around.
Similarly, living within your means is hard to do, when there are so many bright, shiny consumer goods out there that demand your attention. Most Americans, it seems, are in debt to various banks, credit card companies, and other lending agencies, to pay for a whole host of things they think they "need" but really don't. Fancy houses, fancy cars, recreational equipment, restaurant meals, expensive vacations - you name it.
And most of us feel that, so long as we have a "job" that pays the minimum payments on the bills, we are doing "OK". But if that job is lost - well, we're screwed, as most Americans have pitiful savings in the bank - and darn little in their 401(k) accounts.
How the heck do you go broke on a six-figure salary? It is not hard to understand how you can be broke making 20 grand a year - but one hundred? Something isn't right.
In examining my own finances over the last two years, I found I was over-paying for a whole host of goods and services. Nearly double for car insurance, perhaps 20% over on homeowners insurance. Over-insured on life insurance. Paying too much for cell plans, utilities, etc.
But the big expenses are in owning big things. We have two very nice houses, and while one is paid for, the expenses of owning both add up - not in big chunks, but in little bits. Maintenance alone can run into the hundreds of dollars every month. Houses require regular maintenance, or they fall apart. And if you want a house to look good, you have to maintain it. Utilities have to be paid, whether you are there or not. And doubling everything from Internet to phone service adds up over time.
I enjoy my car collection, but I've come to realize that it costs a lot more than I'm willing to admit. I just sold one car, and that decreased my car insurance by $140 a year. Not much, right? But throw in registration, parking permits, oil changes, regular maintenance, and pretty soon you are talking $500 a year or more. And then throw in depreciation - perhaps $1000 a year or more. A car that just "sits" most of the time still depreciates.
And that is just the start of it. Wherever I look around me, I see "things" that for some reason, at some time in my life, I thought I had to have. Compounding this are "keepsakes" that clutter and take up space in my life. They are all too precious to get rid of - or are they? The instinct is to hang on to "things". Hey, I paid money for that, why get rid of it?
Downsizing will be hard, but what will be harder is not getting back on the "things" bandwagon yet again, selling it all, only to accumulate yet more junk to clutter up a new life. Just as in dieting, when you lose weight, the temptation is to say "Well, that's done, time to check out the buffet again!"
Like goldfish that grow to the size of their bowl, most Americans spend up to the limit of their incomes - and then some. They mortgage their future so they can have something "today" - and as a result, end up perpetually in debt.
The secret to monetary success and personal happiness is to live within your means - spend a dollar less than you make - preferably more.
It apparently is a hard trick to learn, as so few actually do it.
Thursday, August 26, 2010
NOTE: Since I wrote this posting, Angie's list has merged with another company and apparently changed its business model. I offer no opinion on the "new" Angie's list, and this posting is really only relevant as an historical perspective and a commentary on "negative option" plans.
The idea of an impartial review site on the Internet remains an unrealized dream, I'm afraid. Word-of-mouth remains the most powerful marketing tool out there. If you can co-opt that, you could own the world. And many folks have tried, over the years, but found it hard to do. Like grassroots movements, you can't turn them into "AstroTurf" without people figuring it out.
In other words, you can't make a business out of word-of-mouth, just as you can't schedule spontaneity.
If you listen to NPR often enough, you will hear ads for Angie's List, a site that promises to provide impartial reviews of goods and services and service providers. Sounds like a good idea, right? Maybe.
Unfortunately, such online review forums have met with a number of difficulties and they should be taken with a grain of salt.
Ripoffreports, for example, has been accused of shaking down businesses to get them to pay money to have embarrassing reports deleted. I am not sure if this is true, but when I do read the site, I find it less than useful. It is hard to tell whether the complaints are legitimate (some people are over the top) and the folks "defending" some odious businesspeople are clearly shills. You have to read between the lines to find useful information - if any.
For example, truly crooked operations, like some of these Invention Brokers, might have a number of complaints on the site. But then there are also "testimonials" which are obviously faked-up postings, which try to damage-control the negative comments.
You can sort of parse out what is going on, if you are Internet-savvy and astute. All it takes is simple logic - what is the motivation of the poster in making his comments? Laudatory comments are always suspect, unless the poster states a motivation. You have to read between the lines.
Other "complaints" are more along the lines of people doing stupid things and then blaming it on someone else. For example, one poster complained that FNC Insurance (which manages a bi-weekly payment scheme for Citibank Mortgage) was no good because the consumer let their balance go low in their bank account, causing the bi-weekly draw to bounce. The consumer then paid the mortgage payment directly, causing more checks to bounce when additional draws were deducted. They blame FNC for their troubles, when in fact, they just mis-managed their own finances.
It is like the "complaints" about Bank of America by disgruntled customers who find out that - horror of horrors - the bank will charge you an overdraft fee when you have.....an overdraft. Whose fault is that?
So you have to parse comments you see on complaint websites like ripoffreports, epinions, or the like. Negative comments by consumers who do something stupid should be ignored. Super-positive comments are also somewhat suspect. In other words, you have to THINK about what is being said, and make sure you are not being BAITED.
The second problem with some of these "consumer evaluation" sites is that a lot of them are faked-up. If a company wants to sound legit, they put up a phony website that sounds like a consumer evaluation website, and put lots of laudatory remarks on it. For example, the White Van Speaker Scam people put up fake websites that claim that their off-brand speakers are high quality. If you can't read between the lines or know it is a fake, you might get taken in.
Angie's list takes a new tack. They charge you money - and not an insubstantial amount - to join the website. You can't see what kind of product you are buying in advance, so you are, in effect, buying a pig in a poke.
I was asked the other day, for a reference for car and also boat repairs. I have had good luck with Twin Oaks Marine, in Union Springs, NY, and referred my friend to them. I Googled their name to find contact information, and an Angie's list entry popped up. I thought I would add a comment commending Twin Oaks, but you have to sign up first. And you can't read the other comments (if they do indeed exist) without signing up.
I signed up with my full-time zip code and the website said "sorry, Angie's list doesn't exist in your area yet." I tried my vacation home and got the same message. I finally tried a neighboring zip code, and that worked.
So there is the first thing that sucks about Angie's list. Why does it matter what zip code I am in? Cars have wheels. People travel. Most people travel through more than one zip code in a day. Am I only allowed to comment on businesses or services within a 1-mile radius of my home? If so, it is not much of a list. Or do they want zip code information so they can market my demographic data? Whatever the reason, it is pretty lame to require a zip code.
The second thing, is they want you to pay for the service. And pay a LOT:
Angie's List Monthly Membership Plan$5.00 account activation applies
Angie's List Annual Membership Plan$5.00 account activation applies
(Note that some folks have reported that membership costs vary depending on your location, which explains the whole "zip code" thing. I guess people in New York City will pay more than folks in Buffalo.)
As I have noted before, many consumers, including myself, are succumbing to "subscription fatigue" and are tired of paying monthly or yearly fees for services. Over time, these fees stack up, to the point where your credit card is carrying hundreds of dollars in fees every month. So I tend to say "no" to new subscription fees, particularly when it is something I don't really need.
This blogsite also notes that some consumers are frustrated by the negative option credit card charge technique. As I have noted in the past, negative option payment plans are difficult to deal with, as companies (AOL being the most notorious) will continue to charge your card and when confronted, say "Whoops! My Bad!" or "Computer Error!" and then charge you again next month. You spend countless hours on the phone canceling such plans, only to be charged again. Many people end up canceling credit cards to get the charges to stop. Just say NO to negative option!
UPDATE: Blogger allows me to see what keywords people are using to find this blog entry. So far, at least a dozen are along the lines of 'How can I cancel Angie's List?' or 'Why does Angie's List keep charging me?' which would lend credence to claims that their negative option billing is problematic. Save 'negative option' billing for important things in your life, like your utility bill. If you insist on using 'negative option' for silly things like joining Angie's list, at least use a disposable credit card that you can 'charge up' with money and then toss, if they keep billing you and won't stop. NEVER use your primary credit card, if you can help it!
Angie's List argues that by charging consumers to read the site and write reviews, they are more "impartial" than a site that takes advertising or allows anonymous posts. I disagree.
The problem with this model is that like any good porn site, you have to pay to get in, and once you get in, you may find you paid for bubkis. At least on a porn site, they have "samples" of the wares for you to try out.
So, do I pay $6.30 to $37.00 just to find out if Angie's list has any good data? I don't think so. It is like one of those "mystery box" auctions - where they auction off a box of goods, but you don't know what is in it. The auctioneer does, of course. And often it is just a box of junk.
You really have no way of determining whether a complaint is from an actual consumer or from a competing businessman, signing in under his brother-in-law's name. Similarly, laudatory comments could be from consumer - or from the contractor himself. It is not hard to set up a dozen e-mail addresses on hotmail or yahoo or gmail (I have three, myself) and then shill for your own business.
And if you Google "Angies List Rip-off" or "Angies List Sucks" you'd be surprised at the number of complaints people have about the site. Many compare it to the Better Business Bureau (BBB) which is an interesting analogy (and if you read my blog, you know how I feel about the BBB - worse than useless). Apparently, according to some posts, the people who are being evaluated by Angies list can join as contractor members and also refute complaints. Some members report their complaints being deleted after a time.
I found this blogsite, which is interesting, in that several "disinterested consumers" defend the site (I smell shilling!). Turns out any contractor can pay $400 for an "enhanced listing" on the site. Very interesting. And as the blogger notes, there is no way they can police the site to prevent someone from writing a laudatory review of their own business.
What is scary about that blog entry and related entries, is how the same people kept jumping down his throat about it. I am skeptical these are "disinterested consumers" disputing his entries, but rather Angie's List employees shilling for the company. Who in their right mind spends endless hours defending someone else's company? Again, positive reviews are ALWAYS suspect.
I walked away from Angie's list for a number of reasons. First, they advertise the snot out of it on NPR. Heavy hype advertising usually means that something is not a good bargain. Those advertisements (whoops, "sponsorships" right?) are not free. Anything heavily advertised is not a bargain, period. eFax might advertise 10 times more than Maxemail, but not suprisingly, they charge 10 times as much for the same service? A rip-off? Perhaps not. A bad bargain? Certainly. Avoid companies that advertise a lot. There usually is a reason they need to.
Second, the entire concept of online evaluations, as I noted above, is flawed, regardless of whether you pay to get into the site or not. Free porn on the Internet is usually better than the paid-for kind, even though you may have to wade through a mountain of spam. (And by porn, I am using an Internet shorthand for any type of information focused in one area).
Third is the way Angie's list appears to be grooming their reputation online. You may recall my posting about Northwestern Mutual Life a few months back - and the reaction it got, almost immediately from NML. They troll the Internet, looking for comments about their company, and then try to do damage control. It is sort of like Hillary Clinton's campaign site, where Hill-bots patrolled the blogs there and deleted any comments that sounded even remotely like a criticism of Ms. Clinton. Chilling. Scary. Don't-Understand-The-Internet stupid.
(Grooming and Spamming posts are one reason I have deleted the comments section in this blog. If you want to comment, create a blog of your own.)
Fourth, and most importantly, if I want word-of-mouth recommendations, I can get them locally from people I know and trust. While the users on Angie's list may not be anonymous, I still probably don't know them firsthand (or know if they are shills for the owner of the business, or the owner themselves). Word-of-mouth advertising is more than just a recommendation, it is a recommendation based on who is giving the advice.
So, for example, my neighbor asks me for a recommendation for a car repair place and for a boat repair place. He asks me not because I am just his neighbor, but because I studied Automotive Engineering at General Motors Institute, have owned dozens of cars, do all my own car work, am meticulous about cars, own four older BMWs, and also have had a number of boats, including, until recently, two fairly expensive Bayliners. My advice carries weight not only because I used the businesses in question, but also because I know good work from bad, know a good shop from bad, and know good pricing from bad.
Recommendations from clueless idiots, on the other hand, are probably not worth anything. So when I read hysterical remarks on Craigslist Rants and Raves about how some car repair place is a "ripoff", I take it with a grain of salt, largely because the content of the message reveals how the poster had no clue how a car works (much less the CAPS LOCK key), and had unrealistic expectations about the repair shop (do it for free, make it perfect, get it done by yesterday).
Word of mouth is not a common currency. Some comments are worth 10 or 100 times more than others. So just tallying up "positive" or "negative" comments is not a good indication of anything, really. You can't create a "score" for a business just by counting comments - as if each were equal in value.
(In a way, this is like the evening news these days. They provide equal time to "both sides" of an argument, even though one is asinine. So logical thinking and angry rhetoric, or worse yet, lies, are all given an equal weight on the scale of reason. In the same way, Angie's list totes up comments, positive and negative, without taking content into consideration. It is like evaluating a person based on their credit score, and not their credit history, or evaluating someone on eBay based on their feedback score, without reading the feedback itself, the latter of which tells volumes).
So review sites may have some limited use, but inherently, they are flawed from the get-go. One that you pay for? No thanks. The idea that paying for access to the data makes it "better" is, in itself, flawed.
You can't make a business model from word-of-mouth. You can't co-opt it. It comes across as phony and fake. It's like those made-up boy-bands or faked-up rock-and-roll groups that record promoters assemble and hype. The Monkees were not the Beatles, even if they had a couple of hits.
There are some things the Internet just can't replicate or make a business model from. And word-of-mouth is one of them.
UPDATE: March 1, 2011: Many contractors point out since Angie's list charges for memberships, the only people motivated to provide reviews are those who want to write bad reviews. They also point out that Angie's list "suggests" that the contractor obtain "10 new members" to write good reviews to counteract the bad. (Note: I updated this link as the original was taken down. The comments in the link are the opinions of the poster, not myself).
So (according to this link) the contractor pays the Angie's list membership fee for 10 friends and has them write laudable reviews.....
Yea, it's called shilling. You expect that on Craigslist or on a free site. But the point of Angie's list was that since people are paying, it is supposed to be "better".
And once a week, I still continue to get 2-3 inquiries on Google for this blog entry - "How do I cancel Angie's List?"
Answer: Cancel your credit card.
Angie's list - another service for hysterical housewives...
Hey Angie! This is what I think of your list!
UPDATE: After years of losing money (but briefly making money in 2015), Angie's list decided at least in part to dump the "negative option" subscription model and at least let people read reviews for free (I am guessing you have to pay to post, however). There are two problems with this new model:
1. Except for shills, the only people motivated to pay to join and post a review are people who want to complain. So positive reviews may become few and far between.
2. Revenue is down as a result of this change, and the share price is in the tank. Whether they can make money with this new model remains to be seen.
Frankly, given the historic losses over time, it is a wonder how they stay in business. Perhaps they are hoping for a buyout from Facebook or something.
Whether the allegations that they are doing reputation blackmail are also troubling. If they are indeed offering service providers means of sanitizing or diluting low ratings, it is troubling.
The New Yorker ordinarily has interesting articles in long-format which are usually factually correct. However, lately, I have to question the accuracy of some of their information.
One problem with being an Attorney is that you are trained to speak precisely - and the imprecise language of ordinary folks tends to drive you nuts. Dangling modifiers, for example, annoy me. And as Patent Attorney, it is worse, as people tend to spout off all sorts of nonsense about Patents - and not even get the basic facts right.
And some certain phrases are like nails on a chalkboard to an IP Attorney. "I trademarked my invention," or "I copyrighted my company name," for example. They are as annoying as "I Xeroxed a document".
In a recent issue of the New Yorker, this boner jumped out at me:
"When he comes to Las Vegas himself, he is Farmer Lee, and wears a uniform he has trademarked with the U.S. Attorney General's office...." (August 16&23, 2010 issue, page 45, col. 1, lines 11-12, emphasis added)
Nice try, New Yorker. How about the Patent & Trademark Office? The "U.S. Attorney General's Office" does not grant Trademarks. Seems kind of simple. The USPTO even has the word "Trademark" in its name. How hard is that?
* * *
UPDATE: Apparently the New Yorker read the letter I wrote to them and still got it wrong. The phrase in the article online now reads:Here is the correct wording: "He wears a uniform he has
trademarkedregistered as a trademark with the patent’sU.S. Patent & Trademark office"
patent's office? Are you shitting me? Know-nothing people at the New Yorker! And what a horrible shill article for Las Vegas! My question to the author, how do you sleep at night knowing that you whored for gambling interests? This is modern journalism in a nutshell. Even their correction gets it wrong.
* * *
The rest of the article was pretty much bullshit as well. It was a 10-page fluff piece about some dude who buys gourmet food for Vegas restaurants. Unsubstantiated facts, rumors, and that sort of thing, plus a "Gee-Whiz, those people in Vegas sure do eats them fancy foods" kind of deal. It was an unabashed promotion of Las Vegas, frankly, and disappointing for the New Yorker. Perfect for People magazine, if you trimmed it down to a page or so.
A 30-second search of the USPTO database (even a newbie can use it!) reveals the following, when searching under "Farmer Lee":
|Word Mark||FARMER LEE JONES|
|Goods and Services||(ABANDONED) IC 035. US 100 101 102. G & S: On-line ordering services featuring fresh vegetables, fruits, plants, herbs and edible flowers; Retail services by direct solicitation by sales agents in the field of fresh vegetables, fruits, plants, herbs and edible flowers; Retail stores featuring fresh vegetables, fruits, plants, herbs and edible flowers|
|Standard Characters Claimed|
|Mark Drawing Code||(4) STANDARD CHARACTER MARK|
|Filing Date||November 2, 2006|
|Current Filing Basis||1B|
|Original Filing Basis||1B|
|Published for Opposition||July 10, 2007|
|Owner||(APPLICANT) The Chef's Garden, Inc. CORPORATION OHIO 9009 Huron-Avery Road Huron OHIO 44839|
|Attorney of Record||Jeffrey C. Norris|
|Type of Mark||SERVICE MARK|
|Other Data||"The name(s), portrait(s), and/or signature(s) shown in the mark identifies Lee Jones , whose consent(s) to register is submitted."|
|Abandonment Date||April 3, 2008|
From that dead mark, searching by owner name (Chef's Garden) we get a host of Marks:
Searching through this list (looking for IMAGE marks, which don't have a name in the mark column) finds this:
|Goods and Services||IC 035. US 100 101 102. G & S: Retail store services, telephone order retail services, on-line retail store services, and retail services by direct solicitation by sales agents in the field of fresh vegetables, fruits, herbs and edible plants. FIRST USE: 20051107. FIRST USE IN COMMERCE: 20051107|
|Mark Drawing Code||(2) DESIGN ONLY|
|Design Search Code||02.01.18 - Farmers (men); Hobos (men); Men, farmers, hobos and other men wearing overalls; Overalls (men wearing) |
02.01.31 - Men, stylized, including men depicted in caricature form
02.11.06 - Beards; Hair; Hair extensions; Human hair, locks of hair, wigs, beards, mustaches; Mustaches; Toupees; Wigs
09.03.02 - Coveralls; Exercise clothes, shorts; Gym shorts; Jeans; Knickers; Overalls; Overalls; Pants; Shorts; Slacks; Sweatpants; Trousers
09.03.15 - Bow ties; Neckties; Ties, neckties or bow ties
09.05.01 - Caps, including visors, military caps and baseball caps
|Filing Date||November 20, 2003|
|Current Filing Basis||1A|
|Original Filing Basis||1B|
|Published for Opposition||October 26, 2004|
|Registration Date||January 10, 2006|
|Owner||(REGISTRANT) The Chef's Garden, Inc. CORPORATION OHIO 9009 Huron-Avery Road Huron OHIO 44839|
|Attorney of Record||Jeffrey C. Norris|
|Description of Mark||The mark consists of a picture of a farmer wearing overalls, a bow-tie, and a cap.|
|Type of Mark||SERVICE MARK|
|Other Data||The name(s), portrait(s), and/or signature(s) shown in the mark identifies Lee Jones , whose consent(s) to register is submitted.|
So yes, he has a Trademark registration for his image, including the outfit (and his face). But no, the USAG does not issue Trademarks. (And no, the mark is not for the outfit per se, but for the image shown above).
Total Search Time: 1 minute.
Do I have to start reading the Atlantic Monthly now or something?
What makes the crime worse was that the New Yorker ran an article a few years back about how great their fact-checking department is. They detailed how every statement in an article is run down and checked and sources found - even innocuous statements that would seem to be self-evident. Of course, that article was about how the fact-checking department worked, "back in the day".
Perhaps in the interim, Conde Nasty has laid off all the fact-checkers to save money. To miss something as simple as which government agency registers Trademarks, well, that seems like a no-brainer.
Perhaps the New Yorker is going the way of Time Magazine?
Perhaps. It illustrates how much of our media and information these days is sloppy and poorly prepared. Television long ago ditched factual reporting in favor of celebrity news and talking heads. Allegations and "controversies" are now the order of the day. Factual analysis is too expensive and frankly, the ratings are too low.
So fluff pieces and showy articles that generate interest are promoted, as that is what sells. It is just sad that that sort of thing has trickled down to the New Yorker.
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