Saturday, April 30, 2016

Smart Phone Observations

After having a smart phone a few months, I notice a few things...

After resisting the smart phone cattle stampede, we decided to get one for the two of us (a good way to save money right there) because it would be useful when traveling, and we travel a lot.  After a couple of months, I have a few observations which may seem pretty obvious if you've had one for years.

1.  It is hard not to "be that guy" and respond to the beeps and boops of your smart phone like a Pavlovian Dog.   The phone is easy to set up to read both of our e-mails.  So it will beep if a new e-mail appears in either inbox, or beep and vibrate if someone texts.   It is hard not to be curious as to what someone sent, even if you are doing other things.   And if you receive a text from someone and respond, you may find yourself in texting hell, where each person feels they have to respond to the last text, lest they be rude.  It is a nightmare.   The simple solution to this of course, is to turn your phone off unless you are using it.

2.  No one calls, and if they did, you could not answer anyway.  Phone calls are dead, let's face it.   I have my landline set to go to seven rings before it goes to voice-mail.   No one every leaves a voice-mail as no one will wait for seven rings.   Smart phones bounce to voice-mail after two or three rings (tops) as it is assumed you are constantly holding the thing in your hand or have a bluetooth headset on at all times.   If you have the thing in a bag or purse, by the time you dig it out and enter your passcode, you've missed the call.  So, after two months with the smart phone, we've had maybe two calls, which is fine because if you push this thing against your greasy face, it gets gross in a real hurry.

3.  There are some handy features:   You can check your bank balance (and deposit checks!), check e-mails, and use the hotspot to link your laptop and do real work.  And yes, you can even load YouTube videos or listen to music with Pandora or other apps.   These are the things that make a smart phone compelling.  You also have access to the largest database in the world, which eliminates any excuse for being ignorant about anything.  With voice recognition, you can simply ask the smart phone, "Who was Virginia Woolfe?" or whatever, and she will tell you  the answer and provide a list of links.   The GPS feature is useful as well, if you are traveling in a car without GPS (or as was recently the case, a car that only had GPS tracking with the OnStar feature - requiring you to call someone to request guidance.  Not one of GM's better ideas!).

4.  You develop battery anxiety.   My old Kindle will hold a charge for a month.   My slightly retarded phone ($15 from AT&T) will easily hold a charge for a week.   Most smart phones seem to run out of gas after about a day, particularly if you are using WiFi, Bluetooth, or running as a hotspot.  Since the Samsung uses a standard mini-USB plug (I am looking at you, Apple!) it is not hard to have a number of chargers around the house and in the cars to casually plug into.   But this short battery life is somewhat annoying and sadly will never go away.   As battery technology improves, energy usage will increase with new features, functionality, and smaller form-factors will reduce battery capacity accordingly.  The simple solution to this of course, is to turn your phone off unless you are using it.  The battery lasts a long time - if you turn off the phone.

5.  The Obsolescence Cycle is Short:   Computers used to be obsolete within a year or two.  Your XT was replaced by an AT.  Your 386 with a 486.  Dual floppies gave way to 5, 10, and even 20 MB of hard drive, then a GB and today, a TB or more.   MGA to CGA, to VGA to flat panel display.   There was always something newer and better - until about 10 years ago when PC architecture plateaued.  So long as you have a fast Internet connection, a decent amount of memory and hard drive space, and a good display, even an older computer can continue to soldier one for years and years (unless you are gaming or something).

Smart phones are developing so fast that they are quickly obsolete.  A relative sent me an old Apple iPhone 4S.   It is basically a iPod with a phone attached - illustrating the roots of the iPhone business.   It won't even run Pandora without an upgrade to iOS 8.0, which in turn may "brick" the phone if it has been Jailbreaked.   Bear in mind that this phone is only five years old and is basically useless for anything other than basic texting, talking and storing music (as a glorified iPod).   On the other hand, the computer I am typing this on is a decade old and still is going strong.

The Samsung Galaxy S4 is two years newer, but much more functional, for now.  Since it doesn't have near-field communications features, it can't run any kind of smart-pay.  So even its days will be numbered.


Smart phones are the new cable TV - something that you don't really need in life, but that you've convinced yourself is as indispensable as oxygen.  As a result, the companies have you over a barrel, once you decide you "have to have" it.

But the fast development in the field illustrates why the industry loves smart phones and people are saying PCs are dead.   PCs are still alive, but at this point, the market is mostly for replacement and less for upgrade.   There are fewer compelling features in new PCs to justify junking your old one.   And besides, smart phone people don't use PCs as much - they text everything.

Smart phones, on the other hand, have a short, short design life and are obsolete within a year - at least for now.  There are signs the designs are maturing and the field is shaking out.  The replacement cycle may be slowing down at this point, which is not good news for Apple or even Samsung.   And lowering sales at Apple are reflecting the maturity of the marketplace.

6.  The Galaxy has a better Interface.  Now I am comparing a 2011 Apple with a 2013 Samsung, so the Samsung has a leg up, obviously.  But of the two, I find the Galaxy to be easier to use in a number of ways.  The menu and return keys are a nice augmentation to the home key.  The Apple just has a home key, which may act as a return key depending on application. 

Also the Apple's structure seems clunkier.  Even their trash can icon is hard to understand as being a trash can.  Looks more like a parallelogram.   All of their icons are delicate line drawings which may be artistic, but are harder to understand.  Actually all Apple software is this way - iTunes being the worse example.    But both interfaces are very similar, to be sure.   Apple forces you to interface with iTunes to do a lot of upgrades, and for some reason, it wanted me to sign into my iTunes account to download free apps from the "app store" while Google Apps just download without having to ask me to log in.
(The Apple was set up to log into my Brother-in-law's account and figuring out how to erase his name as the default user took some dicking around.  Apple tech is not intuitive, no matter what they try to tell you.  It seems a little more.... fascist.  We know what is best for you!  Shut up and eat your iKibble!).

(And yes, there is a way with newer iPhones to disable the feature requiring you to log into iTunes to download free apps.  However, this is something that requires effort and work on your part, not an "intuitive" mode of operation.  Apple gets away with fascism because they are single-source).

And it is funny, recently Apple sued Samsung over four of their Patents, claiming that things like synchronizing contact lists or using auto-complete for texting were proprietary technologies.  On appeal, however, the court found that all of the Apple Patents were either invalid or not infringed.  If Apple is going to compete with the android platform, it is going to have to do so by offering a more compelling product, and not by trying to eliminate the competition.

And it goes without saying that as an Engineer, I prefer the open architecture and removable battery (and SDRAM and SIM card) to the "sealed box" of Apple (again, fascism - the corporation knows what is best for you!).   But so long as people crave status, they will keep buying Apples and cases with the hold in the back so everyone can see your Apple logo (just as BMW nose bras have a hole so everyone can see your BMW roundel!).
7.  People whine about fees, but fail to explore alternatives.   Folks complain that their cell provider charged them $35 to transfer service to a new phone.   But with GoPhone, they burned a new SIM card and installed it on my phone, for free.   Of course, I don't have unlimited data, but since I am not addicted to the phone (as many people are - gaming, texting, playing videos, etc.) I don't need that much data.   Smart phones are the new cable TV - something that you don't really need in life, but that you've convinced yourself is as indispensable as oxygen.  As a result, the companies have you over a barrel, once you decide you "have to have" it.

And you know how I feel about cable TV.

Friday, April 29, 2016

Why Consumer Reports is Flawed and Can't Be Fixed

The idea behind Consumer Reports is a good one, but their methodology is inherently flawed and can't be fixed.

Not too long ago in this country, if you wanted to buy a product, you pretty much had to go by word-of-mouth or brand-name reputation.   If a product turned out to be a piece of junk, you were pretty much stuck with it.  There were no consumer protection agencies, no online review sites, and the cost of litigating a bad bargain was more than the item cost itself.  Warranties were non-existent or lasted only 12 months or so - 12 months on a car!  Imagine that.  Today, warranties last a decade.

In the 1950's and 1960's our consumer movement emerged, where people stood up and said they were tired of planned obsolescence and crappy products.  And Consumer Reports magazine became popular starting about that time.  They refused to take ads and refused free samples of products.   Instead, they went out and bought things anonymously and tested them and published their results.   The idea was a good, the execution flawed, though.

(It should be noted that since 2012, the magazine has been spun off from Consumers Union and the website does now take ads, and in some instances, Consumer Reports has done evaluations of its advertisers and business partners - calling into question its impartiality).

The idea was that by not taking ads, they were not influenced by ad dollars.  Car magazines, for example, give out awards and favorable reviews to companies that pay for ad space.   Do an unfavorable review and you might lose millions in ad revenue.   You can be bought and sold.   And if they are giving you free cars and cars that are meticulously gone over before testing, well, you are also being influenced. Consumer Reports set out to avoid that conflict-of-interest.

So the Consumer Reports model sounded promising.   But in execution, it didn't pan out very well.   If you buy ten toasters and then "test" them, you really can't say much about them other than how well they toasted, whether the buttons and knobs were easy to use, and whether any of them caught fire or electrocuted the tester (the latter being "not acceptable").

Most consumers, however, don't buy things based on how nice the knobs are, and most toasters will make toast after a fashion.   If they didn't, you'd take it back and get a refund.   Most people buy based on price first, and maybe features secondary.   And in that, we come to the first problem with Consumer Reports - they fail to acknowledge how price affects purchasing.   People will tolerate slightly less usable features or functionality if the price is substantially lower.  In the marketplace, price is king.

Even within the same product line, people make this trade-off.   You might buy a car that comes in three trim levels - base, SE, and LE.  And each has different options.  The base has cloth seats and crank windows.  The SE has power windows and a stereo.  The LE has a leather interior and a navigation system.   You might decide that even though the LE has more functionality, the $5000 price delta isn't worth it, and get the SE.  We all make this trade-off assessment every day in commerce.

In the Consumer Reports world, price has little influence.  Everything is either acceptable, recommended, or unacceptable, and they often will push a higher-priced product as being the optimal choice.  And in the marketing world, prices are anything but fixed.   So many folks seek out the lower-price or less-popular product, as the dealers are offering rebates.

The second problem with Consumer Reports is that they don't have the staff or resources to do long-term testing on products, and thus their evaluations are somewhat worthless.  We care less about superficial judgments made at the time of purchase and more about longevity and reliability - two things Consumer Reports cannot really determine.

They try to offer some half-assed long-term reporting based on comments made by subscribers but as we shall see, these comments are often from a small sample base and are often based on bizarre criteria.  Once in a while they might offer long-term data on the few cars they actually keep and use.  But they cannot afford to buy one of each car ever made and then systematically test them to destruction (and to really perform a proper test, you'd have to buy ten of each car ever made).   It just isn't practical or possible for them to do.

Even if they could offer long-term reliability data in this manner, it would be of little use, unless you could go back in time and purchase the product.   By the time long-term data is available, the product is no longer on the market.  It is of no use to tell me that such-and-such a car has a long-term reliability issue ten years after the fact.

I'll give you an example of what I mean.

When I bought the Nissan Pickup, I wanted something cheap, reliable, large enough to haul our stuff, and powerful enough to haul a trailer.   I looked online and researched the options for over three years.   Consumer reports did a piece on small pickups and recommended the Nissan and Honda Ridgeline over the venerable Toyota Tacoma.

Now, as an Engineer, I can tell you the Toyota is the best of the three.  But Consumer Reports mumbled something about "rear seat legroom" and "uncomfortable ride" and gave the nod to the Nissan.   The Honda came out on top in their report, but they failed to consider that as a unibody vehicle (based on the Honda Pilot SUV) with a very short bed it really wasn't even a truck at all.  And its low tow rating meant it wasn't in the running.

I bought the Nissan because of the price.   The market speaks with regard to Toyotas.  The dealers don't have to offer sales or rebates to move iron.  To buy an equivalent Toyota, I would have had to shell out another $5000.   That the Nissan had more horsepower was an added bonus.  In terms of quality, longevity, and resale value, though, the Toyota would beat the Nissan hands down, regardless of Consumer Reports' feelings about rear-seat legroom.

Now, fast-forward three years, and Consumer Reports does an article - based on subscriber input - about vehicles "they regret buying!"   At the top of the list for small pickups is the Nissan.   Why?   Poor gas mileage and "too large of a turning radius" are cited as concrete reasons why they thought buying a four-door pickup truck was a bad idea.

Um, the EPA rating on the 265 HP 4.0 V-6 is only about 22 mpg highway.   And on a good day, that is all about it gets.  You were expecting 30 mpg?   Dream on.   As for the turning radius, any vehicle that is over 20 feet long isn't going to turn on a dime, period.

I suspect their "consumer data" is one pissed-off lady who never thought about the EPA ratings when she bought the thing and somehow thought a long, long vehicle would be nimble.   Based on this, Consumer Reports passes judgment - just as they bashed the Toyota based on "legroom" and "ride."

Even when Consumer Reports tries to go technical, they tend to screw things up.  Back in the 1980's, they bashed the Suzuki Samurai as being prone to tipping over.   They could have bashed it as an underpowered, tinny and poorly-made deathtrap piece of overpriced shit.   But instead, they bolted huge metal poles to the sides of the thing and drove it around for the cameras intentionally sawing at the wheel until it tipped over.  It was the worst sort of "investigative journalism" out there.

Why?  Because any car can be made to go up on two wheels if you saw at the wheel hard enough.  Look how bored Saudi rich kids do it - changing a tire at the same time!    That you can get a car to tip over by making a tight turn - after bolting steel poles to the side, well, that's not "science" but just sensationalist bullshit.  Accuracy In Media claims that CR set out to "bash" the Samurai in order to jigger up magazine sales.

And it is not the first time Consumer Reports went overboard with their ratings.  In 1968 they rated the AMC Ambassador as "unacceptable" because the unit they bought had a small defect that cause gasoline to exit the fuel vent under heavy braking and that they felt the headrests were too soft.   Not exactly a scientific study.

Which gets us to the ultimate problem with Consumer Reports - the people who work there and write the reviews, as well as the subscribers are often clueless.   They concentrate on superficial things and ignore more substantial ones.   Part of this is the nature of the organization.   You review a truck you have maybe a few hours to examine it.  What are you going to say other than how convenient the ashtray was to the driver?   Since you can't afford destructive testing or crash testing (as the Insurance Institute for Highway Safety can afford to do) you can't really provide any meaningful analysis if you wanted to.   But a big part of it is that the people who write for them are journalists first, and technicians (if at all) second, and their subscriber base isn't very sophisticated, either.

You don't see "car guys" reading consumer reports for car information (nor toaster people for toasters).  The sort of subscribers they get are risk-averse frightened consumers - the kind that like to complain loud and long about everything and make a nuisance of themselves at retail establishments.  You know - the sorts who always repeat the mantra, "The customer is always right."

The idea behind a "Consumer Reports" type magazine is a swell one.  However, there really is no way to properly execute such a concept in any kind of meaningful way.   And sadly, the folks at Consumer Reports - like so many other "save the world" people, like to laud how they are helping us little folks out as if we should kiss their ass for the privilege.

Sorry, but I find that "unacceptable".  Consumer Reports is just another organization that is dedicated to self-preservation above all else. There really isn't much of the way of useful data in their magazine or website.

Thursday, April 28, 2016

Barriers To Entry

In the business world, a "barrier to entry" is a hurdle you must leap in order to enter into a market.  Are these ultimately detrimental or helpful to the consumer?

Say you want to start a business.  In order to do so, you have to jump through a number of hurdles.   If it is a traditional business, you may need to raise capital, take out loans, find office space, hire employees, collect taxes, and do all the number of difficult, expensive, and risky things you need to do to start a business.   And likely, you will lose all of your money doing this - the success rate of new businesses is pretty pathetic.

In addition to all of those other factors, however, there may be other barriers to entry.   These could be anything from restrictive Patents or other Intellectual Property, to an existing monopoly or duopoly in the business, to unions, and even to organized crime.    In order to survive, you may need to rapidly grow to a certain size in order to take advantage of economies of scale.  And these barriers can develop over time.  In new emerging industries, few barriers may exist.  However, such industries quickly settle out to a few main players and at that point, it becomes very hard to jump in late in the game.

Take the car business, for example.   At the dawn of the automotive age, around 1900, the automobile, as primitive as it was, was arguably the most complex piece of technology ever owned by individuals up until that point.   Manufacturing an automobile required a number of different technologies and trades - everything from a forge plant, to a casting plant, a machining shop, to a carpentry shop, to a coachworks, to an upholstery shop.  And all of this had to be done at a price that was affordable to at least some customers.

In the early days, automobiles were largely hand-built for only the richest customers.   And while a number of companies sprung up to build them, they quickly formed a manufacturer's guild to keep out new competition.   A Patent Attorney name Selden from Rochester, New York, obtained a Patent on an automobile and if you wanted to build cars, you had to pay him and his manufacturing association - if they would give you a license.   This was a barrier to entry.

This sort of practice kept the number of competitors low and prices high and arguably allowed for the infant industry to develop in an incubator fashion.   Cut-throat business practices and low-cost competition didn't exist until a fellow named Henry Ford came along.   Ford, refused a license by the cartel, went his own way and came up with new cost-cutting measures and ways to make a car for an alarmingly low price.   Within a few years, the old-line car companies were largely out of business and a host of new, larger companies with assembly-line manufacturing techniques, came into being.   The "brass lamp" era of automobiles was gone for good.

While one barrier to entry was dropped (the automotive cartel and the Selden Patents, which by now had expired) a new barrier was erected.   In order to make cars, you had to be big, or get big fast.   With prices dropping from year to year, car companies had to consolidate and also acquire lower cost parts by buying up parts companies.  General Motors was created and went on an acquisition spree which nearly drove it to bankruptcy.   Eventually, they were able to turn things around and become the largest car company in the world.

Ford meanwhile build the largest factory in the world - the Rouge plant, where raw iron ore went in one end and finished cars came out the other.   Smaller car companies and specialty car companies would buy manufactured parts (e.g., Many small car companies used Continental engines) but by doing so were always at a price disadvantage.   Within a few years, those "car assemblers" went out of business, and the American automobile industry was reduced to the "Big 3" plus the makings of AMC.

As Preston Tucker discovered after World War II (and as Paul Elio is discovering today) trying to start a car company is next to impossible, at least in terms of mass production.   Going from 0 to GM in 10.5 seconds is impossible to do.   The amount of capital needed is intense.   Setting up a dealer and distribution network is a staggering job.   Meeting all of the regulations to build a new car today is frighteningly expensive.   Few, if any people, can succeed at this.

Tesla has certainly made strides in starting a new car company.  However, if you look at their incremental approach to the business, you can see where they cut corners or jumped over hurdles.   Their first car was a chassis and body bought from Lotus, with a Tesla drivetrain installed.  It was staggeringly expensive and sold as a toy to millionaires - much as the first automobiles in 1900 were sold.   His next car was far more refined, but still staggeringly expensive.   Rather than invest in a dealer network, they opened storefronts in malls - bypassing that barrier to entry.

His products have had their teething problems.   After calling the Tesla the "perfect car", Consumer Reports retracted their evaluation and now rate it unacceptable (so much for the credibility of Consumer Reports!).    Problems continue with their newer cars as well - mostly electrical glitches, of course, which are the bugaboo of any modern car - as cars become more electronic.   And the Tesla is about as electronic as you can get.

The real problem for Elon Musk is that some other car company, who already has the infrastructure to build cars, the dealer network to repair them, and the branding and advertising will steal his thunder and build an equivalent car for far less money.   And in fact, many already are.   If you want an electric car, your local Chevy, Nissan, and KIA dealer are selling them right off the lot.  However, no one will notice you if you drive one.

It will be interesting to see if Tesla can continue to go it alone, or whether, like so many other "start-up" companies, it becomes acquired by another.   With companies like Fiat-Chrysler hoping to be bought out, you have to wonder how tiny Tesla could continue solo.  (Speaking of which, VW looks to be a good mate for F-C, as they are already selling Chrysler's minivan, and have very little presence in the SUV market and none in the truck market.   But the diesel scandal might make it a bad time for mergers).

But getting back to the point, barriers to entry keep the "me too!" competitors out of the market.  Once a market is mature, you either have to find something else to do, or find a new way to compete - as Musk has done - by hopscotching these barriers.

And this pattern repeats in any emerging market.  Not a few years ago, the Internet was a Wild West of opportunity and lawlessness.   If you wanted to start an online business, all it took was a website and a few computers.   Today, the Internet is still a land of opportunity, but it is quickly sorting itself out into a number of major players and a host of has-beens and wanna-bes.

If you want to start a social network today, it is probably too late.   You need that critical mass of users, and Facebook and Twitter have sucked all the oxygen out of the room.  Similarly, if you want to start an online retailer, you will have to go up against Amazon (which is actually losing money) and eBay.  You will need that critical mass or some compelling feature to make it.

This is not to say that you can't succeed.   Niche markets have always thrived even when barriers to entry in major market block competition.   Maybe you can't be the next Amazon, but you can sell specialty goods online, and maybe even use the platforms of Amazon or eBay to do so.

Barriers to entry are, in a perverse way, beneficial to consumers.   While competition is a good thing, too much competition can be ruinous.  The consumer is often better off having a choice of two or three major product lines than having hundreds or thousands of products to choose from.   With too many products comes confusion.   Not only that, it is inefficient use of manufacturing and market space.   Three huge car companies can make cars far more cheaply than 100 boutique brands.   In fact, that is Fiat-Chrysler's argument - that the market would benefit from further consolidation as it has matured further and staggering product development costs need to be shared.

Barriers also provide uniformity in the marketplace.  In the early days of the PC, there was a plethora of formats, operating systems, and computer languages - and I know because I used them all.   In one company, we might have computers from Mostek (the old Zilog Z-80), Apple, Tektronics, HP, IBM, PRIME, Control Data, and even Olivetti (don't ask, it was Italian), each running stand-alone.  Today, computer systems are standardized and cheaper than in the past (and far better).   But along the way, a lot of small competitors went belly-up when they couldn't adapt to new conditions.  The consumer is better served today by fewer competitors, ironically.

Barriers to entry also benefit the consumer in that "fly by night" operators are discouraged.  In the early days of the automobile, the computer, and the Internet, many small companies would start up, offer products, and then disappear from the marketplace - leaving consumers with orphaned products with no support or parts, or products that never worked well in the first place.

In this regard, Americans are schizophrenic when it comes to the marketplace.   We all like to decry "the big corporations" and the Bernie Sanders of the world want to "break them up" into smaller companies.   But such smaller companies would not necessarily be more efficient, provide better service, or lower prices.   And the history of anti-trust law in this country backs this up.

For example, Standard Oil was a ruthless monopoly that swallowed up smaller companies.  One of the "barriers to entry" in the oil business (or any business) was that huge companies can afford to sell below cost in order to put you out of business.   Again, you have to get large quickly or go home, particularly in commodity businesses.   After many years, Standard oil was broken up into a number of companies - Esso, Standard Oil, Mobil, and so forth.   And after many more years, these same companies were consolidated yet again into Exxon-Mobil.   So in effect, we are back where we started.

Similarly, the telephone company, "Ma Bell" was broken up into the "Baby Bells" in order to foster competition.   Today, they are again consolidated into AT&T - right back where we started.   Of course, there is still competition, but this time around in the form of different types of communication - satellite, cable, fiber, wireless.

The Justice Department ran a long-standing campaign against IBM for anti-trust.  We know how that worked out.  Technology changed and IBM is no longer seen as a threat to society.  A similar suit was filed against Microsoft, which itself struggles to remain relevant in a smart phone world.
So "breaking up the big banks" may sound like a swell idea.   But frankly, I like the fact I can go from State to State and use the same bank.   Maybe this isn't "fair" to Ma and Pa Kettle's local bank, but it is the way things are going.  Smaller banks are giving way to regional or national banks.  And increasingly, banking is something done over the Internet and not at a "branch" or office.  Our local Bank - Ameris - is growing rapidly by buying up old Bank of America offices.   But this growth model might be short-sighted.  They are snapping up the costly and difficult "teller" customers at the expense of the low-cost and profitable online ones.

Of course, there reaches a point where barriers to entry might be too high.   When competition grinds to a halt and an effective monopoly is created, consumers can be hurt by arbitrary high prices.   Railroads were accused of this back in the late 1800's.   Farmers would move out West and start raising grain and cattle - often on land bought from the railroads (who were given extensive rights-of-way across the country).   Their crops would be shipped to feed the folks in the big city by railroad.   But the railroads quickly realized they had the farmers over a barrel.  Without a means to ship their products, they would starve to death.   Eventually regulation of freight rates had to be implemented.

Of course, the railroads got their comeuppance later on.   And when competing with peers of an equal size, they had to compete on price.  Rockefeller famously played one railroad off against another with his "rebate" schemes, and used alternative technologies (the pipeline) as a means of keeping competition in check.  But the small local farmer didn't have such options, at least not until our highway system was developed and the tractor-trailer invented.   Folks who pine for the old days of railroads fail to remember why people disliked them so.   A few trips on Amtrak usually reminds them.

I am not sure what the point of all of this is, other than barriers to entry can in fact be a good thing for the consumer.  Just because you get it into your head - as Paul Elio has - that you should start a car company, doesn't mean it is a good idea for you or the consumer.   The consumer benefits from mass production, consolidation, and the resulting low prices as much as he benefits from the competition that creates these low prices.

And in many fields, such as law or medicine, we use regulation to control the number of competitors in the field and insure they are qualified to practice.   Would you really want to live in a Libertarian world where anyone who claims to be a doctor could be one?   We are already sort of doing this today with these quasi-legal "holistic medicine" and "nutritional supplement" quacks plying their wares.  Having a guild does provide some benefit to the consumer.

Finally, as illustrated by the Musk example, a barrier to entry can act to stimulate innovation.   If Musk had tried to build Tesla along the lines of a traditional car company, he would have failed long ago from lack of capital.   By coming up with new and innovative ways of building and selling his product, he has managed to survive (at least for the time being) where others have failed.   By doing an end-run on the barriers, an innovator can still succeed.   Trying to compete doing the same old thing not only isn't going to work, but it really doesn't enhance the marketplace for the consumer by merely adding another look-alike competitor.

Barriers to entry can and are beneficial to the consumer, and indeed most of our manufactured goods today would not be available to us in such quantities and quality if such barriers did not exist.

Wednesday, April 27, 2016

Was Bankruptcy Reform a Bad Idea? Maybe Not.

Was Bankruptcy reform a good idea?  Generally, yes.

In a recent posting, I noted offhand:

Since we live in a Capitalist society, there are lenders who will lend money to people with less-than-perfect credit scores.   As in any mathematical model, you can adjust the cost of the loan based on the factors above - the credit score, the collateral, and so forth.    Since a group of such "sub-prime" loans will have a higher default rate, the interest rate (and fees) will be correspondingly higher.   The borrowers are, in effect, paying for the malfeasance of their fellow sub-prime borrowers who do default.
Re-read that paragraph again and maybe you'll understand how lending works.  Most folks don't.   When you borrow money or use a credit card or whatever, part of the money the bank makes in the deal goes to paying the cost of bad debt and fraud.    Credit card companies write off a lot to fraud (stolen cards, etc.) which is why they charge retailers 2-4% on each transaction.  If fraud could be reduced, the cost to retailers could be reduced, which means prices could be lower.  When someone commits credit card fraud, we all pay for it.

Similarly, the interest rates you pay on a loan (including credit cards) are not all pure profit for the banks.  A lot of that money goes to pay for the bad debts that are generated by your fellow borrowers.   The guy down the street who stops making his car payments effectively increased yours as a result.   Defaulting borrowers are not funny, nor should they be sympathized with.  They cost us all money, and no the banks are not "making money" by foreclosing on properties - they lose their shirts (and as shareholders, we take a hit here as well!).

The next time you hear some deadbeat blather on about how "unfair the banks are" and how he's defaulting on his loan, reconsider your sympathy.   You are paying, almost directly, for his irresponsible behavior.   The bank doesn't pay, you do.  And no, the bank isn't being "unfair" to him, either.

Since we no longer have debtor's prisons (and no, going to jail for not paying a court fine or failing to appear for as summons is not the same thing as a debtor's prison - not even close!) people can - or could - largely escape from debts in the past by declaring bankruptcy and just walking away from debt.

And in the past, it was a pretty lucrative racket.  Since many States had laws sympathetic to consumers, some people willfully incurred debts they had no intention of paying back and then intentionally went bankrupt to avoid paying off these loans.   In some States, you might have been allowed to keep your home (working out a deal with the bank), your car (as you need it to get around) and the "principal tools of trade" which could be just about anything.   Before reform, bankruptcy could be a license to steal.

When you create economic rules, be they taxes or bankruptcy laws, you often create unintended consequences and as a result, some folks will try to game the system rather than live by the intentions of the rules.  In the years before I went to law school, some wily law students figured this out and ran up a lot of law school debt while living high on the hog.  New clothes, new cars, new computers - whatever - all paid for by law school loans.  A day after graduation, they declared bankruptcy and started over, right before they accepted their six-figure salary job with the big law firm.

Nice work if you can get it.

Similarly, the "humanitarian" impulses of legislators and courts tended to backfire when people started to realize that bankruptcy could be a way of life rather than a last resort.   Run up debt, never pay it back, go to court and get out scott-free.  Repeat every seven years.

Some lenders even realized the unintended consequences of these laws.  Since you can only declare bankruptcy every seven years (in most jurisdictions) the best borrower, ironically, is the guy who just emerged from bankruptcy.  Since he can't go chapter 7 on you, you can safely tow away his car or reclaim your collateral.  As a result of this, I've seen friends of mine go from bankruptcy to back in debt, nearly overnight.  The "relief" of bankruptcy was very brief.

Now, in the old days, the system was kind of based on trust and the honor system.   People didn't walk away from debt obligations because it simply wasn't done and moreover was a sign of shame.   However as our society has gotten larger, people are less and less concerned about social standing with regard to such issues.   Or more precisely, a lot of people today would rather be known as a deadbeat crook driving a Mercedes than an honest thrifty person in a Toyota.   We are more concerned about projecting an image than our actual reputations.

So the idea of screening debtors using credit reports - and later credit scores - has limited utility.   The system will only alert you to the chronic defaulter.   And for the person who makes even one mistake in their lives with debt, it punishes them forever, or nearly so.  Judging people's creditworthiness is no easy task - the idea of a firm handshake and good moral character are no longer useful in today's world.   And of course, it goes without saying you can't select your debtors based on their race or religion.

So what did banks do?  Well, they adjust interest rates to compensate for default rates.   If you are a "high risk" borrower, as determined by your credit history, your interest rate is higher.   So you pay a little more (or a lot more) every month to help cover the cost of the defaults by your fellow high-risk borrowers.   It is like health insurance before Obamacare.  Once you got sick, you were screwed, and your rates skyrocketed and stayed there.

One thought to alleviate this problem was the idea of reforming bankruptcy.   Since many "bankrupt" people still had assets and even jobs, they could in fact pay back a portion of their debts over time.  Just because you are technically insolvent (your debts exceed your assets) is no reason to wipe the slate clean.  And in 2005, bankruptcy laws were reformed in the USA so that a debtor entering bankruptcy has to try to "work out" their debt rather than just write it off.  This means the debtor has to pay back at least a portion of the debts, over a stated period of time.  (Note: there have been a lot of other incremental reforms as well, before and since).

What this means, of course, is that the party is over when it comes to bankruptcy.  If you declare bankruptcy, you will still be faced with debts and even onerous payments for a number of years.  The amount of "breathing room" you will get will be far less.   Granted, the lenders might get more of their money back, over time.  But on the other hand, the cost of appearing in court and arranging these payment plans might exceed the actual value of the payback received.  It is hard to say.  The net effect may be more to punish debtors by making bankruptcy less attractive than to reward lenders by allowing them to recover more of the debts.

And sub-prime lending rates would seem to reflect this, as it doesn't appear that rates have in fact declined over time, even if risk to the lender has been reduced.

But the punishment aspect of it should - at least in theory - discourage people from taking on frivolous or high-interest debts, or taking on debts they have no intention of repaying.   That was the theory anyway - carrot and stick, with a lot of stick to shake around.   Whether this theory has worked out is debatable.

Similarly, to close the loophole on Student Loan bankruptcy, these Federal loans were made to survive bankruptcy - as a figurative lien on the life of the student.   For Federal loans, which are offered at attractive interest rates, this sort of made sense.   If everyone defaulted on Student loans, then the rates would have to go up - or the government would be on the hook for a lot of debt.

But the GOP got into the act and decided that Private Student Loans should have similar protection from bankruptcy.  And it wasn't long before odious lenders and "for profit" colleges started offering such loans to people they knew could never pay it back.   Eighteen-year-olds would sign these loan documents, fully believing they were going to be rich once they graduated from college, and that is how we ended up with Bernie Sanders running for President.

Of course, you as the consumer still have a lot of choices in this area - and you do have these choices.   Looking back on my own life, I can tell you that most, if not all, of the debt I incurred in life (other than commercial debt) was not for things I needed but rather for things I wanted.    Moreover, my spending money on wants often meant that I ended up borrowing money for needs.

I could have been more frugal and thus avoided an awful lot of borrowing.   But I decided at the time that I needed to spend money to be happy or some such rot - that I deserved to "treat myself" now based on money I would earn later.   The later me decided this was a shitty idea, of course, and those two people never seem to agree on just about anything.  (Indeed, later me thinks that early retirement is probably a bad idea, while earlier me thinks it is just swell).

And the problem with borrowing money is that the worse you are at it, the most it will cost you, over time.  There quickly reaches a "tipping point" where the cost of borrowing is so high, you end up a perpetual debtor.   And this tipping point can be reached in a number of ways:
1.  Credit card debt sneaking up over time.

2.  Student loan debt with no way to pay it off.

3.  Previous bankruptcy or bad credit rating.
In each case, you are forced into the high-risk or "sub-prime" lending pool, and interest rates of 15-30% or more become your new norm.  Each additional dollar you borrow at this point becomes almost toxic.  But since folks in this situation are always broke, they keep seeking out new sources of borrowing, as they feel there is no other way to obtain money to purchase things.

Bankruptcy can at least give a person a chance to start over, that is, if they are willing to really change their way of life.   The relief can be very brief, however, if the debtor decides to take on a slew of new debt, at even more onerous rates.   Even with bankruptcy reform, it is still possible to obtain relief through bankruptcy, and the terms are still relatively generous, if you are smart about it.   Things like retirement plans are protected in bankruptcy, so that you can emerge without losing one of your major assets - that is, if you have a retirement plan.

The problem for some folks, particularly students who over-borrowed, is that they took on a debt that they might not realistically ever pay back.   Now, I am talking over $100,000 in debt, at high interest rates and with default penalties added in.    These are far above the national average debt about about $35,000 which can be paid back, over time, if a person chose to make sacrifices in their lives which of course, few are willing to do.

Sadly, after having made these poor choices, many are compounding this by making more poor choices.   One fellow opines that he can walk away from a $15,000 student loan debt (now $25,000 with interest) if he just waits until 25 years have elapsed, at which point the unpaid part is forgiven.   However at that point, he will owe income tax on a $100,000 windfall.    Perhaps it is a perverse strategy that might work.  The problem is, he is spending the best earning years of his life with a shitty credit score - which makes it hard to get a job, rent an apartment, or buy a house.   He will spend the part of his life that most do buying their first home, getting married, getting a job, and raising kids - living with friends or roommates and owning little or nothing.   All to escape a debt that could be paid off even on a minimum-wage job delivering pizzas.  I suspect drugs are involved.

Was bankruptcy reform a good thing?   In the end analysis it really doesn't matter.   As we talk about a lot here, your personal choices outweigh the effects of national trends.   You can protest student loans all you want, that still won't get them paid off.   Whatever student loan relief Hillary pushes through likely won't forgive all your debts - or maybe any of it.

A better plan is to pick a degree that is worthwhile at a school that is affordable.   Majoring in "whatever" and paying "whatever they charge" and then arguing it is "unfair" no one hires you is not really a good battle plan.

Euro Follies

The cause of the refugee crises can be laid right at the feet of Europe.

Our European friends are freaking out right now, and for good cause.   Just as the Moors (or the Moops, according to Seinfeld) over-ran parts of Europe in the past, today, a new Islamic invasion is taking place.

Millions of refugees from Islamic countries are now flooding into Europe, which is alarming a number of folks for very good reason.   The economic cost of supporting and resettling these refugees is staggering.   In addition, there is the "cultural shock" which occurs when a group of people with alien values and habits suddenly appears in your community - often ending up, as in France, living in perpetual slum areas or ethnic enclaves, either unwilling or unable to assimilate into the local culture.

And the local cultures are already under attack.  The idea of what it means to be French, Spanish, German, Italian, or British is eroding over the years due to multicultural influences and of course, our voracious American culture which devours everything in its path.   Mosques and McDonald's - the twin threats to what it means to be European (Although the latter serves hamburgers, a foodstuff named after a city in Germany).

Why are these refugees flocking to Europe?   There are a number of reasons, and the major fault for this crises lies with the Europeans themselves.   Yes, there would be no ISIS if George Bush hadn't invaded Iraq.   But the refugees from Syria represent only a portion of the overall total.   Many are coming from Africa.  And most refugees are not seeking asylum from war and violence but a better economic way of life.   And this migration has been going on for decades as well - the Algerian ghettos ringing Paris have been around a long, long time, and Germany's "foreign workers" from Turkey were actually invited in and now are being not-so-politely invited back out.

The problem for Europe is twofold.   First, with their cradle-to-grave Socialism, they have created a honey-pot attractant.   If you are starving in some third-world country and are told tales of how in Europe, you will receive a "guaranteed basic income", a free place to live, and free food on your table, you might be inclined to think that Europe is a swell place to go to.  And in the past, many have moved to Europe and were able to live well - often writing back to friends at home saying how nice it was.

European countries are actually taking out ads in Arab newspapers trying to quell this myth - pointing out that benefits in the Socialist State are not as great as some make them out to be.   Some countries will even buy you a plane ticket back home, hoping you will go away.   But so long as this "honey pot" exists, people will die trying to cross the border to get there.   And I can say this as we have the same situation in the US - people dying every day to get from Latin America through Mexico and into the US, where life is far better than in their home country.

With the downturn in the economy and stricter immigration policies (as well as improving economic conditions in Mexico) we actually saw a negative migration of Mexicans for a while (and an increase in those from more poverty-stricken Latin American countries).   So if the honey-pot is shut down or at least curtailed, fewer people will make the journey.

The second factor that caused this crises was the unwillingness of Europe to intervene in the Middle East.    The US gets routinely bashed for acting as "World Police" which in effect we are.  As the world's strongest economy, we spend 1/3 of our budget on the military, which is more than the next ten largest militaries in the world combined.   While some on the Right like to make noises about China and Russia, we have a far larger military machine.   China struggles to build its first aircraft carrier from a half-completed hand-me-down from Russia.  We already have at least 10.

The war in Syria has gone on for so long because few countries want to intervene in any significant way.  No one wants to put "Boots on the ground" and over-run the estimated 25,000 terrorists that comprise ISIS.   Germany could do it in a week, if it chose to.  So instead we take pot-shots from drones and get criticized for killing civilians, while at the same time, ISIS slaughters civilians.

I am not advocating for "boots on the ground" or ratcheting up the war, just pointing out that so long as this low-level conflict festers in the region, the refugee crises will continue unabated.
Europeans love to play the safe game of sitting on the sidelines, watching America make mistakes (and we've made a lot) and then smugly saying, "I told you so!" when it goes wrong.   When it goes right, of course, no one gives us accolades.   And it goes without saying that while Europe will offer criticism, they rarely will offer to participate in any significant amount.

The war in Syria could have been ended in ten days, if all of Europe had participated in strength.   This in turn would have put an end to the refugee crises, at least from Syria.  Instead, we have this smoldering terror war, where a tiny army of fanatics is allowed to run rampant over Iraq and Syria, being blasted by the occasional drone.  They will eventually be annihilated, of course, but it has taken years instead of months or even weeks to do so.

Similarly, the situation in Libya continues to smolder with no one apparently in charge and civil war raging.   President Obama calls our lack of response in Libya the greatest mistake of his Presidency.   But Libya is a neighbor of Europe, not the USA - and Europe gets a lot of its oil from Libya.   Where were they in all this mess?

Across the Middle East, we've propped up dictators, tyrants, and military juntas.  We were criticized by our European friends for this, even though the lines on the map and many of these governments were originally installed by them.  Remember it was the French who got us into Vietnam in the first place.  America, one of Europe's colonies, pays the price for European colonialism.

Over the years, we've stood by as one dictator after another was toppled, only to be replaced by an even worse sort of government - or no government at all.   In retrospect, are the excesses of the Shah any worse than the excesses of the current Iranian regime?   A government that marched children across mine fields to clear them?   A government than hangs people from tow trucks for even petty crimes?   All we've done is trade one horrific form of government which was stable for another horrific form of government that isn't.

So when Mubarak was overthrown, we were horrified when the Muslim Brotherhood took over.   When a new military junta took back power, we sort of whistled to ourselves and walked away.   We decried the excesses of the Assad regime in Syria, but today would probably accept the return of the entire country to his control without too much protest.  Better a friendly strongman than an unfriendly one.  And as both Iraq and Afghanistan have demonstrated, Islamic countries are not ready for, and may never be ready for, Democracy.  If they ever are, it has to come from within and cannot be imposed from without.  Probably the best thing that ever happened to Afghanistan was the Soviet Invasion and we put the kibosh on that.

So what does this all mean?   Well, once again, on a national level we see the same lessons that apply on a personal level.   While it is nice to be humanitarian and want to "help people", if you create a socialist State where no one has to work but gets paid anyway, you've created a honey pot or "bug light" which acts as an attractant for vagrants and refugees.   We see this even here in the States.    Places like New York State offer many benefits to the poor.   If you don't want to work another day in your life, move to Ithaca, New York.   In addition to Federally-mandated benefits, the State and County offer a plethora of additional ones.   And not surprisingly, people move there just to collect benefits.

You don't want to move to States that have work requirements for food stamps - they will make you get a job!  And oddly enough, in States where the work requirement was re-enacted, the number of people working increased and the number collecting food stamps (and amount) went down.

It is the same on a personal level.   A relative or friend hits you up for money.  If you give it to them, they will hit you up again and again (and perhaps other relatives or friends will start tapping you as well).   And so long as you give them money, they won't bother looking for a job.   This is particularly true if the relative in question is your child, and you are coddling them in the basement well into their 30's.

And similarly, interventions - like invasions - are fraught with peril.   Trying to go and clean up a hoarder's home, or straighten out a drug addict's life is a process that is likely to fail, because as soon as you leave, they will go right back to their old way of living.   And if you don't have the manpower or the authority to take control of their lives for them (for example, institutionalization) they will defy all of your attempts to help them.   Which is why interventions are often a really bad idea.

And the same is true of invasions.  Yes, our European friends are right - the Iraq war was a bad idea.   As stupid and belligerent (but relatively harmless, to us) as Saddam Hussein was, he did have Iraq in a relatively stable mode.   And by playing off regional animosities (Iran versus Iraq, Sunni versus Shiite) it was possible to have a modicum of stability in the Middle East.  "Democracy" in Iraq has ended up being anarchy.  People who believe in Sharia law will never accept things like the Bill of Rights.   We might as well realize that and move on.

But it is too late to unwind that mess.   When it came to Syria, we supported "rebels" trying to overthrow the government without really understanding who these rebels were.  They were not a homogeneous group, and they were quickly infiltrated and overrun by religious fanatics and folks with an economic and military agenda.  Years later, hundreds of thousands killed, millions more as refugees, entire cities destroyed, and the best available option seems to be to put the mean old dictator back into power.

Tuesday, April 26, 2016

Why Bernie Sanders Wants to Destroy America

Bernie Sanders is disillusioned and angry because he was never successful in our economic system.  Rather than try to question his own behavior, he would rather destroy the system.

A recent revelation that Bernie Sanders had $25,000 to $65,000 in credit card debt was somewhat appalling.  Some tried to explain this away that he had "expenses" such as travel or whatnot, or that his daughter and niece had a wedding (he pays for a niece's wedding?).    But even if such expenses did occur, why would you finance it on a high-interest credit card?   Wouldn't you use savings instead, or at least get a lower-cost home equity loan?   It calls into question his financial acumen, which is sort of important for someone who is to lead the free world.

It also calls into question his entire fiscal history.  And what you find isn't all that savory.

Sander's history is somewhat comical.  Other than his employment in government (as an elected official) he really never made any money in the private sector.  He lived in some sort of dirt-floored barn for a while, until his wife left him.  He attempted to find work as a carpenter (just like Jesus!) but couldn't drive a nail straight.   It wasn't until he latched onto running for office that he met with any success.  And since winning his first election, he's never looked back.

Bernie is sort of typical of a certain mindset in America - what Donald Trump would rightfully call "losers."    There are some people who never seem to succeed in America, largely due to their own malfeasance.   And quite frankly, I would be shocked if Bernie Sanders could pass a urine test, if you get what I am saying.

Since they are not successful at life, they resent and decry those who are - even those of moderate wealth and success.   Since they were denied the fruits of our economic system, they want to insure no one else gets them either.  So they advance ideas like Communism or Socialism - where the government takes away and then redistributes wealth, so even those who don't even try will win.  Why should someone have to work hard to succeed?  Shouldn't the government provide for the general welfare of everybody and make sure we all have a guaranteed minimum income?

These are attractive arguments to people who haven't succeeded.   Folks who never bothered to take their education seriously or tried to work hard at a job, or felt that hard work was beneath them.   I am not sure, but I am guessing Bernie Sanders never scrubbed toilets for minimum wage.  I did.  Working those shitty jobs did two things for me - they paid the bills and put food on my table, and they also convinced me that I didn't want to do shitty jobs the rest of my life.

Of course, the problem with these "-isms" is that over time, they have been amply demonstrated not to work under any circumstance.   When you pay people regardless of their merits, there is no incentive to work hard or improve yourself.   The fate of the Soviet Union and pre-industrialized China are apt illustrations.  The Soviet Union fell apart due to the folly of Communism.   China languished and people were actually starving to death, until they embraced the capitalist model - and then succeeded beyond anyone's expectations.

And our own society has morphed over time into a quasi-Capitalist, quasi-Socialist economy.  We don't have guaranteed incomes or plush social benefits in this country, but if you fall off the social economic ladder, there is indeed a safety net of services you can fall back on.   That guy with the cardboard sign at the intersection isn't "homeless" but a drug addict who decided that being stoned all day long was a far better gig than a "job" - the latter of which pays less than panhandling.

Our country is hardly "broken" as both Trump and Sanders like to posit.   We are, in fact, quite well off, and our economy is doing quite well compared to Europe, Latin America, South America, Africa, Russia, and even China.   In fact, our economy is really the only one today that is not in recession.   Manufacturing is growing in the USA, thanks to more reasonable labor rates and lower costs of production.   Of course, that could all come screaming to a halt if Sanders is elected and minimum wage is hiked to the sky.

But where does the anger of Sanders come from?   And what is he attempting to accomplish?   As noted before, his anger is really the result of his own failures in life - his inability to do anything of merit in either the private sector or public.   While kooky Vermonters will re-elect him to office indefinitely, he really hasn't accomplished much in his long tenure in the Senate.  While it is fun to play the outsider and run as a "Socialist" it means that your vote is not courted by either side of the aisle, and you don't get a lot of major committee assignments.   And on the committees you are on, your voice is largely ignored.

So how is Sanders trying to destroy America?   Simply by running for President, which he has no chance of winning, he could alter the outcome of the next election.   First, he runs as a Democrat, even though until now he has refused to join the Democratic party.   He did this to foil Hillary - he could have run as a Socialist or an Independent, but again, Socialists are irrelevant in the greater scheme of things and such a campaign would fail to generate any interest.   He wanted to confront Hillary head-on and damage her in the primary process.

And it is already working.  We are seeing a strategy of carefully placed conspiracy-theory stories (often placed by Sanders himself) that the entire election is "rigged" and that voters are being turned away from the polls, sometimes by Bill Clinton in person!   The fact that he gets fewer votes overall isn't the issue - it is all about "the fix" which sounds a lot like the sour grapes from the Al Gore era.   And as for super-delegates, he is happy to have their votes, of course.  But if they dare to vote for Hillary, he denounces the entire scheme as a "fix" even as he tries to flip their votes.

And a fix it is - as in a "repair".  The Democratic Super-delegate system was put into place after the debacle that was the 1968 Democratic Convention in Chicago.   Then, as now, a lot of young people who were long on agitation but short on actual voting showed up and caused a riot.   The convention was divided and the resulting nominee - Hubert Humphrey - was nobody's first choice.  In fact, he didn't enter or win a single primary.   The convention effectively ruined the Democrats' chances in 1968.  Middle America saw the violence and disarray and flocked to the safety of Nixon and Law-and-Order.

The super-delegate system was enacted to avoid such a debacle.   Party loyalists would have a percentage of delegates that would insure that no ugly fights broke out on the convention floor - or that an outsider such as a Trump or a Sanders would hijack the party.  And since 1968, the system has worked pretty well.   Sanders looks to wreck this - and the Democratic Party - by causing a convention fight and accusing Hillary of corruption and voter fraud.

While this alone might not cause Hillary to lose, if Sanders decides to run as an independent or Socialist (the latter of which he actually proclaims to be) then enough votes could be siphoned off from Hillary to let Donald Trump win the election.

And there is precedent for this.  When Ross Perot ran as a third-party candidate against George Bush, he siphoned off enough votes to allow Bill Clinton to win.   When Ralph Nader ran against Al Gore, he siphoned off enough votes to put the Florida results in doubt.  If Nader has bowed out and his supporters voted for Gore, he would have easily won Florida and the White House and the world today would be a different place.   No war in Iraq.  No war in Syria.  No ISIS.  Maybe not even a 9/11.   It is hard to say.

But Sanders fails to see any of this.  He is delusional and a classic Narcissist.   Nothing he does is ever wrong.  Nothing he says ever needs to be retracted - such as his comments that white people will never know what poverty is like (even though whites outnumber blacks among the ranks of the poor).   He actually believes that America will elect a Socialist, and he actually believes that he can enact his wild agenda of radical change without the cooperation of Congress.

At first I thought Sanders was a sincere person with Left-wing views.  I thought he was sort of the "conscience of the Party" kind of candidate - keeping alive some ideals and views that might get shouted down in a general election.   But increasingly, it appears he is no such person.  He isn't even a Democrat.  He is an outsider who has come to the party not to join it, but to wreck it.

And the stakes are too high for this narcissistic fool to win at his sick game.

Think about it.  You are a 20-something who has graduated from college with student loan debts.  Saunders tells you what you want to hear - like any evil politician will do.  He will erase your student loan debts, guarantee you a job, and reduce your rent - and the best part is, no one will have to pay for it except of course, the "fat cats" he will tax to death.   It is a nice fantasy, but the reality is, these things will never pass Congress.  And Middle America - your parents - will not vote for Sanders.

If he runs as an independent, Trump or Cruz might win.   What will that mean?  Well, for starters, your legalized marijuana will go away and go away quickly.   Yes, marijuana is still illegal at the Federal level, and the only thing keeping the DEA at bay is a Democratic President in the White House.  You fought for your legalized pot long and hard.   Are you now going to give it all away just to make some sort of "statement" or protest vote?

And people are that stupid, throughout history.   Tyrants come into power not through majority vote or by popular acclaim, but because the opposition is divided over petty differences.   Name a ruthless dictator in history and chances are, his opposition handed him power by failing to unite in a common cause with their own allies.

Sadly, I see this going down in the very same way.  Sanders does not seem willing to concede the election, even as Hillary comes with 200 votes of the nomination.  He wants an ugly fight and it sounds to me like he will try to run as an independent.   This is handing the election to Trump on a platter.

Thus, when it comes to Trump versus Sanders, while both candidates scare me, Sanders scares me more.   He is more of a threat to the election as he is utterly delusional about his chances of winning.   Trump, on the other hand, actually seems to be on track to win the nomination, if he doesn't screw things up too badly in the next few races.   And on the GOP side, the alternatives to Trump are even scarier than Trump himself.

UPDATE:  A reader writes that they are unhappy with any of the choices presented in this race.   A lot of people feel that way in every election ever held.

There is no perfect candidate.   There are, however, the wrong candidates.

Political maturity is understanding that there will never be a candidate that reflects all of our own personal opinions, only a compromise as to the best option from what is presented.

I find it odd that people accuse Hillary of being a "liar" when 10 Benghazi committees have exonerated her and the FBI has done likewise with regard to the e-mail thing. But the other candidates get up on stage and say outright falsehoods, and no one calls them out  on it.  But I will let you in on a little secret:  Our votes don't matter anyway.  I live in Georgia.  It will likely go for Trump in a big way.   Unless Atlanta can out-power the State, that is.  UPDATE 2020: Hillary surprisingly won 45% of the vote in Georiga, which makes one wonder how red a State it really is.  But 45% alas, is still losing.

You live in California, which will likely go to Clinton.   So either way, if we vote or we don't vote, Hillary will likely win.  See, for example, this Electoral College map.  Every four years, voters seem to re-discover the electoral college (just as the remember the difference between a primary, a convention, and a caucus) and every four years they will cry the whole thing is rigged, of course.

What does make a difference is political donations - large and small.   Even $100 donated to a campaign can make more of a difference than an actual vote (particularly in our cases) unless you live in a swing state.  I think Hillary is the best choice of what we have.   The left thinks she is too conservative and corporate.  The right thinks she is too liberal and socialist.  That sounds to me like what I am looking for - right in the middle!

Local races, particularly  Congressional ones, are far more important than Presidential ones.  People never bother to vote in those, and they have a far greater impact on how our country is run.

Monday, April 25, 2016

Single-Malt Fixies

We like to think we are unique and different, so it pains us when you realize that what we thought were our own unique ideas were merely trends we were following.

I was on a website the other day and the question was "which bands have famously 'sold out' and when?"  What followed was an entirely pretentious discussion by self-appointed music experts (many such as myself who could barely play an instrument, much less carry a tune) opining about how such-and-such a band was the shits before they went "mainstream" and became "more accessible."   Only the purists could appreciate their early work, when they were playing in Mom's garage!

It was so hilarious and it reminded me of the Portlandia sketch above - people falling all over each other trying to out-hipster each other.   "I was drinking Pabst Blue Ribbon before it was ironic!" they say, or "I was doing the grunge look before it was grunge!"

The reality is, of course, that there are very few style leaders out there, and most new styles are adopted perhaps by accident.   Consider for example, the fixed-gear "fixie" bicycle.   They originally were based on racing bikes that had no brakes and no freewheel.   Dangerous as hell, they were rarely driven on the streets, particularly in hilly areas.

How did they become a thing?  I was in Charleston, South Carolina last week, and there were fixies locked to nearly every streetlamp, parking meter, and fire hydrant.   No shortage of people trying to look cool!

Of course, the trend is quite a few years old - it may be "over" already.   And no doubt it was started by someone out of necessity.  Either they found an old racing bike at a garage sale, or like most fixie owners, made their own out of clapped-out Schwinn 10-speed and some cans of spray paint and pink handlebar wrap from Wal-Mart (intended, no doubt, for some 10-year-old's My Pretty Pony sidewalk bike).   In fact, those home-made stripped-down fixies are the most interesting, as they represent a form of primitive folk art and craftsmanship.   The best elements of style are those created on a budget.  People who buy their way in are far less interesting.

The fixies I saw in Charleston were all store-bought with expensive carbon-fiber rims and fancy paint jobs.  So the trend has gone upscale, and no doubt they are now selling them to old people with the reversible hubs permanently in "freewheel" mode and of course a discrete front brake installed.   That's no fun, is it?

They have even made their way to the trailer park - WalMart now sells fixies - or did for a while anyway.

If they are sold at Wal-Mart, they are officially "over".  Yet they still sell, at the boutique bike shops, but now to 40-something Moms who want to be hip and trendy and can afford to drop $1000 or more on a bike.

So who were really the original fixie aficionados?   Well, we may never know.  But there had to be one guy or maybe one girl who started this craze.  Everyone after him or her was just a copycat.  The idea that you are a "purist" or whatever is sort of flawed.  Because so long as the idea did not originate in your brain it really wasn't yours.

Adult coloring books?  You didn't invent that -even if you are a big fan.   Microbrews?  Cage-Free Eggs?  Buying Local?  Single-source free-trade coffee?  Cigars?  Bowling Shirts? Hookahs?  None of this is yours, even if you think you own it or discovered it.

And this goes double or triple for your favorite band or rap group.   You may think you are all that by being "into" some obscure form of music, but unless you composed it, arranged it, and played it, you are just a johnny-come-lately who is following a fad.

That is why lamenting that a band "sold out" is nonsense.   They just became more popular and play what people want to hear - and now have access to better studio and personnel.   What pisses you off isn't that they changed their music, but that you no longer have bragging rights about knowing an obscure band.   All you can say now, with a pathetic pout, is that you knew them back when...... which really isn't much of an accomplishment, is it?

It gets right back to fandom - which is a form of loserdom.   If you are going to set up your personal identity based on brand choices, I feel very sorry for you.

And as you can see with the fixie example, the powers-that-be are very much onto these emerging trends.   It didn't take but a few years for Wal-Mart to jump on the fixie trend.   They aren't blind.   They have people who go out and trend-spot for things that will be years in the making.

So you think that your choice of Pabst Blue Ribbon is some ironic statement, but chances are, the proliferation of that brand among certain sectors was a planned marketing event.  They just made you feel like you discovered it, is all.

Because if you feel you are being sold something you tend to react negatively and retreat.   But if they can get you to think you discovered something - like an Easter egg - you take possession of it and hold it close to your breast.

And we all do this.  You do it.  I do it.   We "find" a bottle of wine on the store shelf and try it and like it.  And before you know it, "old vine zinfandel" becomes a mainstream thing.   And I was drinking it before it was hip!  Yea, right.   How do you suppose it got on the shelves in the first place?   Not by accident, I can assure you.

I have posted e-mails here from companies who blatantly said they would pay me cash money (is there any other kind?) if I would just write a blog entry praising their product.   Viral videos are created so that we will think we "discovered" a video and then like the product.  "Brand Ambassadors" are used to promote brands on college campuses and in bars - I kid you not!  Your classmate, when he recommends a new obscure liquor for you to try (and maybe even gives you a free sample!) might be getting paid to do so.  Even I was knighted "brand ambassador" for a brand of Whiskey - and buried in free swag.

I recently went to a whiskey-tasting here on the island.  It was interesting to try different whiskeys and scotches from distilleries I hadn't heard of (and a few I had).   What was fascinating is that under Georgia law, they could not sell their products at the tasting.   So these companies paid to set up booths to give away free booze.  Why?

Brand awareness.   If you can get even one or two people to remember the name of your brand, they will see that brand later on in the liquor store, have warm memories of the free samples and then buy your product.   Better yet, they may recommend it to a friend.  Word of mouth is the most powerful form of marketing.  Sometimes you don't need to cram an idea down someone's throat with a catchy jingle and a loud 30-second ad.  All you need to do is plant the idea in their head, very casually.

So, we think we have "discovered" a new wine or beer or product and crow about it to our friends.  Of course, we didn't create these things, we only bought them.   And when these products seem special and unique, well, we tend to think of ourselves as special and unique.   When everyone else follows suit, we get pissed off.

Why do you think iPhone sales are slackening?   Well, in the early days, having an iPhone with that Apple logo was a big deal - particularly if you could flaunt it in front of someone with last year's Motorola razor phone or whatever.  Lamers!  They don't have the cutting edge phone!

But when everyone has one, what can you do?   You can upgrade to a fancier phone, I guess, but since they all look alike from a distance and come in varying sizes, no one will really know.  Phone makers need to put tail fins on these things!  (and later take them off of course, to sell even more!).  The key of course, is to let the consumer "discover" these new designs and feel special and different - that is until the rest of the plebes jump on the bandwagon.

We see this all the time with cars.   There are a lot of people out there - a LOT - who will buy a brand-new car from a dealer and pay top price, just so they can be the first on the block with the new version.   Recently, Chevrolet introduced a radically new Corvette, and a lot of folks shelled out big bucks to have the newest version.   You wonder how the guy who bought the last of the old version felt, right?

But of course, car makers know all about this, which is why after 2-3 years, they come out with special editions and higher performance models, so a new generation of buyers can also feel special and unique.

The joke is, of course, that often the last year of production for any given car model is the most reliable and best example of the breed.   The early adopters face the "bleeding edge" technology phenomenon, having to act as beta testers for manufacturers.  Some folks wear these scars as badges of courage.  "Yea, I bought a Tesla.  First one off the line.   Been in the shop 200 days the last year alone.   But that's the price you pay when you're a high-tech guy like me!"  He is the world's most interesting man.

Anyway, that's what I take away from people claiming a band has "sold out" to the man.  They didn't sell out, they just have a recording contract, access to better studio equipment, and most importantly, a really good producer and recording engineer (who really makes the records).   The raw "yea yea yea" music of the Beatles gave way to more finished compositions thanks to George Martin.  You can try to convince me that you are a connoisseur of their work because you listen to bootleg recordings of their Hamburg gigs, but frankly, no sale.

It is just posturing, plain and simple.  And we all do it, too!