Why Immigrants Rock (And Native-Born Americans Suck)

People say we should curtail immigration.  If we do this, be prepared for a lifetime of shitty service.

Pictured above:  Redneck turn signal.

My Father's grandparents came over from Switzerland to work as servants on the Steinway estate.   They met there and got married and moved to New Jersey.  The Steinway's gave them a piano as a wedding present.  Nice folks.

Back then, working "in service" was not considered degrading but a career that was respectable.  Even today, in Europe, being a waiter isn't something you do in college, but a respected position.

In America, it is different - at least for native-born Americans.  They view any job as a hardship and beneath them.  They put as little effort into their jobs as possible, and not surprisingly, they tend to lose jobs on a regular basis.  They have a sense of entitlement as if the world owed them a living.

And I have seen this as long as I have been alive.   On the assembly line at GM, workers sabotaged the cars as they went down the line - not bothering to think about the poor sap who ends up with the resultant "lemon" that cannot be fixed properly.   On the way out to the parking lot at the end of the shift, they would take turns beating some poor old Datsun (bought in by union lackys) to death with a sledgehammer - as if this somehow proved our superiority over those "Japs".

The plants closed, the jobs went away, and it was someone else's fault.

Today, not much has changed.   The big-3 recovered from yet another near-death experience and yet they still cannot compete with the foreign (non-union) factories here in the States or with imported cars.  They offer up one lame excuse after another - that people just don't understand how superior US cars are, and are being bamboozled into buying inferior stuff.   The idea that a foreign car could be better made is, of course, not even on the table.

In terms of service, you see this all the time.  On our island, we have a lot of imported labor, mostly from Eastern Europe, who work at the hotel.   If you are lucky, you get one as as server.  They know how to hustle, how to treat customers, how to get good tips (which they get).

If you get a "local" (native-born American) as a server, you may wait a half-hour for a beer, if you don't leave before then.   One of the restaurants on this island has gone bust three times in the last five years, all because the waitstaff didn't think that serving people was an important part of their job.   They didn't "get" that tips could double or triple their income, if they were attentive and flipped tables quickly.   Instead, they would sit in the kitchen and tap on their smart phones.   Others merely stole from the business.

We're talking local rednecks.   And you know the type - people who use their cigarettes as turn signals.  Local Baptists who are bigots and homophobes.  People who watch a lot of television, drink a lot of Mountain Dew and likely have a meth or Oxycontin habit.

We are supposed to "feel sorry" for these sort of folks because they are disadvantaged.  But should we?   The immigrant, placed in the same job, outshines them by a factor of 10.   Why is this?   Well, the immigrant doesn't have the option of failing.  Moreover, they don't believe the country owes them a living. 

The far-right likes to posit that Mexicans are "lazy" and all involved in gangs, drugs, and crime.   And yes, in any population, there are criminal elements.   But ask yourself this, the Mexican who came here with nothing and worked all day in the hot sun and now has his own landscaping business - is he really "lazy" or a criminal?  No, he isn't.   Most are not.  Most work their ass off. 

The "American" on the other hand, refuses to even take on such work, or if he stoops to it, will demand an outrageous wage, do a shitty job, and complain about what a rotten deal he got out of life.  These are the Trump supporters - convinced they would all be Billionaires if not for some crummy immigrant "taking away their jobs"

No, we don't need more of that.   We need less of it.   We don't need to deport immigrants but deport native-born Americans instead - particularly the kind who complain about what a shitty deal they got out of life here.   Let them live in Mexico or Africa for a few years and see how the rest of the world has to live.   Maybe then, we could allow them to apply for a green card - conditional, of course.

In the meantime, bring on the immigrants - they are the lifeblood of this country and they know a good thing when they see it.

We don't need more shitty cars, shitty service, and bankrupt American companies.  And that is all you will get if you follow this self-pitying line put forth by lazy people who think their "birthright" entitles them to money without labor.

Sorry, but I have no sympathy whatsoever for rebel-flag waving bigoted Klansman who think the country owes them a living.

Deport them all.

Is Income Inequality a Bad Thing?

This corrected protest sign illustrates how the average person doesn't really understand statistics - but understands sloganeering.

The far Left has used "income inequality" as an issue in recent years, with the supposition that income inequality is a bad thing.  Is it?

In any debate, challenge the premise of the argument being raised.   Oftentimes, people will slip one past you by making an argument that is little more than a conclusory statement and if you accept this, you have lost the debate.

In recent years, people have been posting alarming graphs and statistics that show that "income inequality" is on the rise.   We are told this is a horrific thing and needs to be changed.   But what is assumed in the argument is that income inequality is bad and moreover needs to be changed.

Now to some, this seems rather foolish.  "Well, of course it's bad!  There should not be such a great disparity in wealth in the world!  1% of the people shouldn't control all the wealth!  This is a bad thing!  Everyone knows that!"

The problem is, these arguments are made on a lot of assumptions, poor definition of terms, and often loose statistics.   For example, as we have harped upon a lot here in this blog, there is a huge difference between income and wealth.   By world standards, I am a "wealthy" person as I have saved up enough money to retire on (as the law now requires me to do, basically).  But in terms of annual income, I likely make less than you.  I make less than the mean household income in the USA, which is about $50,000.  Does that mean I am "rich" or "poor"?  In terms of wealth, I am rich.   In terms of income, I am not far above the "poverty line".

It is a valid question, because on the other side of the spectrum, there are a lot of people making $100,000 a year, or even $250,000 a year who are flat fucking broke and I almost became one of them before I sobered up.   There are a lot of people in the USA who make a lot of money - and spend even more, and thus have a net worth of zero or even negative.   During the recession, a lot of these high-rollers ended up destitute overnight once they lost their high-paying jobs and could no longer afford to make payments on all their debts.

So we should, when discussing this issue, make it clear what we are talking about - wealth or income.  Because people confuse the two, often in the same sentence, such as "the top 1% of income control half the world's wealth!"   The actual statistic, of course, is that the top 1% of wealth in the world control half the world's wealth.

"Worldwide, there are 34 million people who have a U.S. dollar net worth of at least $1 million, or 0.7% of the global adult population, and they account for 45% of global wealth."

OMG!  That's horrible!  We need to change that!   Or, maybe not.  You see, by the definition of "wealth" I am one of those top 1% - anyone who has saved up a million bucks.   That sounds like a lot of money until you realize it barely covers your retirement these days.  A million dollars generates only about $50,000 a year in income in retirement for 30 years or so, before it peters out - as we have gone over in the past in this blog, in excruciating detail.

Many of these Wall-street protesters and young people graduating from college today with their staggering car-loan sized debts (another issue in which the premise goes unchallenged) will, in a few decades, have well more than a million dollars in their 401(k) plan.  It isn't hard to do, over a 45-year working life - provided you are willing to sacrifice things like cable TV, your daily Starbucks, and that smart phone you are reading this on.

In other words, these "1%'ers" are likely your Mom and Dad.  Do you hate them as well?  Moreover, if you are a middle-class person in the United States, odds are, you will become a 1%'er in short order.  Do you hate yourself, too?   It sounds fun to protest when you are 25 and broke (as I was when I was 25), but 20 years later, when you are on the other side of the fence (after two decades of hard work) do you want someone else taking away what took you so long to scrape together?  Think about it.

The fundamental problem with this "income inequality" or "wealth inequality" argument is that it assumes that everything is worse when incomes are more unequal.   This may seem like a given, but like anything else, it bears investigating.

As I noted before in this blog, comparing yourself to others is a dead-end game.  You will never win that game, as there is always someone else making more money that you, having more sex, or happier or whatever.   You have to look internally and see whether you are content with your own life.

And in that regard, the real test of whether our economy is in trouble or the 1%'ers are bad is whether the standard of living of people today is better or worse than in the past.

I mean that really is the big deal, ain't it?   It is not whether Joe Gotrocks has a 100-foot yacht, but whether Jerry Plebe has a nicer hovel than he had ten years ago.   And if the Plebes of the world are doing better because the Gotrocks got more maybe this is not such a bad thing.   I am not saying this is necessarily the case, only that it is a possible outcome that is overlooked by the bold assumption that income inequality is "bad".

This chart looks alarming until you realize that the Y-axis has been stretched quite a bit and the X-axis ends in 2011.

By some measures, median household income has dropped in recent years.   Granted, this trend started in 2008 during the recession.   But the Y-axis of this graph is really stretched, and the real variation is only +/- 5% overall since 1989.   Of course, statistics can be misleading in a number of ways.   First, numbers like this, which measure only dollar amounts, fail to take into account standard of living compared to earlier generations.  And our standard of living is one of the highest in the world:

"The homeownership rate is relatively high compared to other post-industrial nations. In 2005, 69% of Americans resided in their own homes, roughly the same percentage as in the United Kingdom, Belgium, Israel and Canada.  Residents of the United States also enjoy a high access to consumer goods. Americans enjoy more cars and radios per capita than any other nation. and more televisions and personal computers per capita than any other nation with more than 200 million people."

And I have noted this before.  Comparing a dollar today with a dollar of 1970, even accounting for inflation, fails to take into account other factors.   A television in 1970 was a piece of shit that cost over $500 and got three channels.  Today, $500 buys you a flat-screen that is 50" wide and gets 500 channels.  The quality of life we have today is far greater than in the past.  Statistics based on money alone fail to account for this.

Sure, cars today are more expensive than in the past - but accounting for inflation, not that much more.   But comparing the empty steel box that is a 1970 Chevy with the electronics laden safety-mobiles of today is apples to oranges.  Moreover, cars today get better mileage and last longer.  Has life really gotten worse?

Moreover, is dollars in income really a way of measuring wealth?   If you are "poor" in America, you can qualify for food stamps, subsidized housing, subsidized transit fare, free cell phones, free medical care - and a host of other "freebies" that really raise your standard of living up to a middle-class or near-middle-class standard.   If you are working a low-wage job, odds are, you also qualify for a host of Federal and State subsidies.  Are we counting these when we talk about income disparity?

The other side of the coin is this - is income equality some sort of desirable goal?   Is a perfect world one in which everyone makes the same amount of money?   Should a day-laborer make as much as a bum who sleeps under a bridge all day?   Should a car salesman make as much as a Doctor?   Should a CEO make as much as the man on the assembly line?   Believe it or not, some people on the Left really think so.

This also begs the question:  Who gets to decide who makes how much?  Do we set up government agencies that dictate salaries or wealth?  You laugh, but it has been tried - and failed - in every Communist country out there.   While Capitalism is far from perfect, it does assign wealth largely based on the worth of the person to the economy.   You and I might not think a baseball player deserves millions of dollars a year, but the team that hires him (and the fans that pay for ticket) seem to think so.   Should we disrupt this market assertion of value?  Perhaps.  To even ask the question is deemed to be a heartless bastard, however.

Moreover, is such a scheme even possible?   Imagine a world where everyone paid the same.  How long would that last?   The smarter and cleverer of folks would find ways to make money out of the less clever, and before long, income disparity would occur.  Philip José Farmer sort of addressed this concept in his Riverworld novels - which describe a planet where the entire population of Earth (from all time) is plunked down and each given identical "incomes" in the form of food and supplies.   Within a few years, of course, some end up Kings, and others end up slaves.   Farmer had a keen eye for the human condition.

There is another aspect, and that is means and averages can be misleading, as they can represent a few people who make a lot of money and a lot of people who make no money.   And a dichotomy in incomes is occurring in the United States to be sure.  People with no skill sets are finding work hard to come by and pay very meager.   Unskilled labor in this country has found its paychecks getting smaller and smaller in recent years - or at least not getting larger.

But by no skill sets, I don't mean "lack of a college degree" but rather no usable job skills.  People who know how to wire or plumb a house or weld a beam or repair an airplane are finding plenty of good-paying jobs (and indeed, starting their own businesses) without much trouble.   The people protesting "income inequality" are largely college graduates who wasted a lot of money on useless degrees.   Do they deserve automatic pay raises for making bad life choices?

Moreover, does it make sense to pay unskilled laborers as much as skilled labor?  As I noted in earlier postings, the workers at GM back in 1978 when I worked there were making about $15 an hour.  Today, the Nissan plant in Mississippi pays about as much to part-time workers who have no benefits.   Wages have not only stagnated, they have fallen behind.

On the flip side, though, in 1978, $15 an hour was $2.65 an hour, so the wages the union workers were getting were almost five times that.  Today, it is only double.   This doesn't mean workers today are underpaid, only that unskilled union workers in 1978 were vastly overpaid.  Back then, about 1/3 of the blue collar workforce was unionized, and unions used the blackmail of strikes to demand (and get) higher wages.   Were shitty UAW workers who destroyed the US auto industry worth even 50 cents?  If you owned a car from that era, you might not think so.

Higher wages meant, of course, higher prices for consumer goods, which is why we had much less back then (one television, maybe two dial phones, two cars).  It also lead to an era of "stag-flation" where prices kept going up, productivity kept going down, and the economy stalled.   This started in the Nixon era.  Nixon enacted wage and price freezes which is a radical concept for Republicans today and illustrates how bad things were.  When a Republican turns to the command economy, things are bad.   Of course, Nixon had his hands full the next few years, and when Jerry Ford became President, he was ridiculed for his "Whip Inflation Now" (WIN) buttons - as if inflation could be willed away.    Jimmy Carter didn't have much better luck with the economy, as oil prices spiked again, and wages kept spiraling up to keep up with consumer prices, which went up with the price of labor.

Some have argued that we should just have the government raise everyone's wages and that would fix the problem.  The problem is, as the experience of the 1970's shows, when you raise wages, you raise costs of retail products, so the increased wages have less purchasing power, which leads to demands for higher wages.   If you make the minimum wage $15 an hour, then $15 is worth eight bucks.

The flip side is in taxation.   The GOP has done a good job over the last two decades of bringing down tax rates for the wealthy and upper classes.  The Bush-era tax cuts have finally expired, but we still have far less progressive tax rates than in the past.   The Gifts and Estate tax ("death tax") is still in place but has an exemption of about $5M which is helpful to the upper middle class.   The very rich, of course, pay themselves in Capital Gains (the "Romney Rate" of 15% or so) and avoid paying any Social Security or Medicare taxes.

Bernie Sanders says he wants to tax "Millionaires" but he isn't quite clear on what this means.   Does that mean he wants to tax me or just tax people making a million dollars a year?   It appears to be the latter, and Bernie is proposing we go back to the 1950's and 90% plus marginal rates.  The problem with his proposal, of course is twofold.  First of all, no one will pay the taxes.    When you make that much money, you can afford tax shelters and tax dodges.   You pay yourself in dividends.  You move to a friendlier country.   Even left-wing artists and rock stars will dodge taxes this way.  They will do a "We are the World" promotional song for income inequality and then move to France to not pay taxes.  Irony alert.

That right there is the problem - we all want to tax "the other guy" to pay for our swag, but when it comes down to us paying taxes we shy away from the deal. And that's the second part of the problem.   It all sounds like fun to beat up on the "very wealthy" until you realize that the people Bernie is talking about might include you.

The sign above claims we are 93rd in "income inequality" (or equality, she doesn't seem too sure) and that this, on its face, is a bad thing.   But comparing yourself to others, whether it is on an individual basis or a country basis, can be misleading and miss the point.   Yes, people in Zimbabwe all make the same amount of income - one pile of cow dung per month.   There is arguably less "inequality" there than in other countries.   In the former Soviet Union, everyone was "equal" in pay (except a few wealthy party members) but everyone was paid shit.   Do we really want to go there?

Perhaps our tax system could be tweaked a bit to be a little more progressive.   But if people are resorting to tax dodges at the 39.5% marginal rate, raising that rate probably won't collect much more in taxes (particularly if the capital gains rates are not raised).   And maybe the minimum wage could be raised a little bit to account for inflation and rising rent costs.

But doubling the minimum wage?  90% marginal rates?   This is akin to locking on the brakes or putting the pedal to the floorboard.   It is overkill for a "problem" that really is more of a meaningless statistic than any indicia of how wealthy or well-off we are as a country.

We should think about this more carefully than Bernie Sanders has.

Bureau of Specious Statistics - Automotive Division

There is a difference between reliability and popularity.

Two articles recently, one in Popular Mechanics and one in Road and Track (sister publications) list the "top ten vehicles" and "top ten cars" which go over 200,000 miles.  Both stories are utter bullshit.

Why?  Our friends at the bureau of specious statistics are up to no good again!

To determine the "top ten" rankings, they counted which vehicles were most commonly cited as going over 200,000 miles.   This was not done on a per capita basis - based on the number of vehicles sold - so all you Subaru fans are left out in the dust, as Subies are not as high-volume as other cars.

Not surprisingly, the "top ten" over 200,000 miles are also the "top ten vehicles sold in America" with America's most popular vehicle, the Ford F-150, leading the list.

The list reads like a list of the most popular selling vehicles in America because it largely is.  Most cars today can go over 200,000 miles, provided they don't get into a wreck.  So it is not surprising that the most popular vehicles sold in America (Pickup trucks and SUVs) round out the list.

The only anomoly is the Toyota Avalon.  The Avalon is a larger version of the Camry, which is on their secondary list (and is the most popular or second most popular car sold in America).   The Avalon isn't sold in large numbers (not as large as the Camry) so its presence is a bit puzzling.  But Avalons tend to be purchased by older people (a demographic Toyota is desperately trying to change with the new model) and you'll see them tooling around The Villages a lot.  It is the new Mercury Marquis, basically.   So they get driven carefully and held onto for a long period of time, and show up on the list despite their relative rarity.

In the car list, the same pattern repeats - the list mirrors the list of most popular cars sold in America - including the inevitable Honda Accord and Toyota Camry.   Don't get me wrong, both cars are well-made, but the reason they appear on this list has more to do with the fact they are the first and second most popular cars sold in America, and the methodology of the survey is flawed.

In other words, it is basically a "top ten vehicles sold in America" list and not any indicia of quality or longevity.  There maybe many other cars which are far more reliable, but don't appear on the list simply because they don't sell in large numbers.

A better methodology would be to look at percentage of cars made that are still on the road after 10, 15, 20 years and also percentage of cars made that reach 100k, 200k, and even 300k miles.   I suspect the list might be a bit different, although the Hondas and Toyotas will still appear on the list as before.

But a method that merely measures percentage of cars that are over 200,000 miles?   That merely reflects which cars are sold in the largest volumes.   It is bogus statistics and shit science - and crappy journalism.

And yet, people would read this article and go out and buy a car based on it.

People are idiots.

Dealing With Protesters

The best way to deal with protesters is to appear to cave into them, while getting what you really want.

In the 1960's people started protesting more and the "establishment" got kind of worried about this.   And it doesn't matter what it was they were protesting about - people protested about everything.   The powers-that-be freaked out and tried using riot police, the National Guard, and tear gas.   This only made things worse, of course, as it made the power elite look like even more ruthless bastards and gave the protesters yet more to protest about (and in some instances, something real to protest about for the first time!).

A lot has changed since then, and today, governments, businessmen, and colleges are better prepared for Protesters and better able to handle them.  As a result, while protests still occur, it is a lot easier to defuse them, often by pretending to cave in to demands.

A developer keyed me into this many years ago, in law school, where he taught a course on how to build office complexes and strip malls.   To some Lefties the word "developer" is itself a dirty word - the sort of people who do nothing but build strip-malls and parking lots and uglify the nation.  Of course, even the Lefties patronize the resulting businesses so I am not sure what the point is.

But back in the 1960's and 1970's, some developers got into hot water by proposing developments, only to be shot down when protesters showed up at zoning meetings or garnered free publicity on the evening news by having a "protest" outside the construction site - often only a dozen people or so, with picket signs.  The protesters became adept (and still are) in creating eye-candy for the newspapers and evening news, who are usually desperate on a slow news day to have something to report other than a car accident.

So, if you can have three minutes of footage of people with signs and some long-hair decrying the fate of the baby penguins (whose breeding ground is on the site of your proposed shopping mall) it is "in the can" for the local Eyewitness News Team.   Local politicians know the drill on this.  Whenever you see a movement like this, you jump out in front of it and then claim to be leading the parade.   So the local city council gets up in arms and you don't get your building permits, easements, and eminent domain takeover of the local youth camp.

Developers got wise to this, though, pretty quickly.   The key, as it turns out, happened by accident - sort of like that New Coke deal.   A developer wanted to build 500 new homes.  The protesters showed up and claimed it would ruin wetlands and so forth.   So a city councilman got into the act and "made peace" by downsizing the development to 250 units and gave the developer a tax break to make up the difference. The protesters are satisfied.  The politician is made to look good.  And the developer realizes that he still comes out ahead in the deal.

So, next time around, when he wants to build a 500 home development, he applies for a permit for 1000 homes.  Hey, if he gets it, so much the better.  But his real intention is 500 homes.  The protesters show up, the news covers it, angry words are said in zoning board meetings, politicians make sage pronouncements - and the developer gets what he wanted all along - a permit to build 500 homes.  The protesters can claim they "won" and the politicians can claim they are "doing their job" and the developer totes his money to the bank in a wheelbarrow.  Everyone is happy.

The next time you see one of these deals go down, where the developer agrees to "only" build a 20-story building instead of a 40-story one, think about what is really happening and whether your "community activists" are in fact being bamboozled.  Or maybe they know they are, but won't admit it.

With colleges, the same is true.  As one Dean of Students explained to me, the most obvious thing that they figured out is that students graduate every four years and it is a lot easier to wait them out than to worry much about their list of demands.   Some schools - even very liberal ones - simply threaten to withhold diplomas or transcripts if students don't fall into line.

Cornell University, in ultra-left-wing Ithaca, New York, wanted to cut down a "woods" that was popular with the students as a place to "hang out" (read: smoke dope).   They literally wanted to "pave paradise and put up a parking lot" on campus.  To any veteran of the 1960's this is a no-brainer.  Tress versus cars.  Grass versus asphalt.   I mean, shutting this puppy down shouldn't be too hard, right?

So the protests started and some students chained themselves to trees and one even climbed a tree and lived in it for a week.  It all went well until the University said to the students that diplomas would not be forthcoming unless they vacated the area and moreover that transcripts would be withheld for any student who did not leave peaceably.  The bolt-cutters came out and the chainsaws were started.  Every student left in short order.   With so much in student loans to repay, they did the math on this and simply gave up.

Now bear in mind this is an ultra-left-wing campus, and you can see it ain't hard to placate demonstrators.

But there are other, less draconian ways of dealing with demonstrators, and one is to simply appear to give in.  You promise to set up a committee to study their grievances, and appoint a few of the more loudmouthed of the protesters as well as some of your more inept faculty members to the committee.   Nothing can stifle progress more than a committee meeting.  After a few of these snooze-fests, even the most boisterous protester is struggling to stay awake.   But everyone can say they "won" and then go home.  And eventually, the protester graduates, and your problems are solved.

Strategic retreat is nothing new.  Russia has used its vast territories to thwart the greatest armies ever assembled.  Napoleon and Hitler both broke their back on the steppes of Russia - as they ventured far beyond the distance their supply lines would take them.   Appear to cave in, and when they are over-extended and fatigued, then you strike back.

So what's the point in all of this?   Well, before you get caught up in someone else's protest, think about what is really going on.  Odds are, it is far more Machiavellian than you think, on both sides of the equation.  Often the professional protesters are out for their own fame and fortune (usually trying to get street cred to become politicos later on).  The politicians are out to save their hides.  The developers are out to make money.  If you get involved, you may be little more than a pawn in someone else's game.  Being "outraged" is what they want you to do.  But in the end analysis, it is often just a waste of your precious emotional energy.

They Throw Pennies At Us, Hoping We Spend Dollars

Is getting involved in "rewards" programs a worthwhile endeavor, or it is just smarter to shop around on price?

A reader recently sent me a link about how Starbucks customers are "furious" about changes to the rewards program.   In a way, this is nothing new - the airlines do this all the time.   Rewards points on airlines used to be based on miles traveled - regardless of how much you paid for a ticket.   They changed that, basing them on how much you spent.   And the rewards miles used to last forever, so they changed that, making them expire so fast that only the most frequent of frequent flyers could use the miles.   Rewards points used to allow you to book a flight for the whole family to fly to Hawaii on vacation.  They changed that - at best you might be able to get one seat on one flight - if that.   And along the way, they added "fees" for using miles, offered to sell you miles, or offered to keep miles active if you paid another fee.  Today, airline miles are pretty worthless, unless you fly an awful lot, and even then, the best thing you can do with them is upgrade to business class.

The entire idea behind rewards is to encourage brand loyalty and repeat business.  For airlines in the 1960's, frequent flyer miles were a way of getting business travelers to use ONE airline, as opposed to shopping around on price.  Since your company was paying the ticket price anyway (and basic airline tickets cost more than a good used car back then) no one bothered to shop on price.  So you stuck with Pan Am, for example, racked up a lot of miles, and then used those personally to fly the family on vacation.

Of course, it was a kick-back - a bribe - and some companies caught on that employees were not shopping air fares on price but on kick-backs.  Even the government tried to stop this - requiring frequent flyer miles be handed over.   But it didn't last long.   Flyer miles were deemed the perk you got for having to endure flying.

But over the years, the industry changed.  With deregulation, the cost of airfare became competitive and more and more people flew.  There were no longer empty seats in an airplane to sell.  Overbooking became the norm.   Flyer miles became harder to use.  And in an era of airline bankruptcy and thinner and thinner margins, the idea of letting people fly for free became less attractive to the accountants.  So the rules were changed for a new era, and today, flyer miles are pretty bogus if you fly only once a year or so.  You are better off shopping on price than on brand.

For restaurants, rewards programs can do two things.  First, they encourage brand loyalty.  If you are a Starbucks fiend and have a "rewards" card, you will tend to go to a Starbucks, over some local Mom & Pop coffee shop, as you will want the "rewards" points.   This of course means you are missing out on some really good coffee or something unique, from a place that doesn't roast its beans in a blast furnace.

Second, rewards encourage consumption.   You might not otherwise be going to Starbucks today, but you think, "Hey, I'll get more rewards points, or maybe cash some in on a free cookie!" so you go when maybe you wouldn't have gone, before, and in addition to the cookie, you buy another "coffee drink" because, hey, the points, right?

There is a third aspect, for the consumer, and that is status.  We are all status beasts, and what these "frequent flyers" at Starbucks really love is having that coveted gold card which means you are in their exclusive (not exclusive) club and you and look down your nose at those "amateurs" who don't know to ask for half-caf, half-decaf latte with a half 2% half skim foam.  People really think this way, but of course, none of us will every admit it out loud!  We all want to think we are better than everyone else, it is human nature.

Rewards points are what I call the secondary deal and in marketing, secondary deals abound.  Back in the day, if you opened a new checking account at the bank, they would give you a free toaster.   Why banks are selling toasters (and they are selling them, even if the price appears to be "free") is a good question.  But it became a "thing" in the 1960's and 1970's.   Grocery stores and gas stations gave away plates with each bag of groceries or each fill-up of the tank.  Over time, you could accumulate a whole set of dishes!  Everyone's Mom did, back then - or got S&H Greenstamps, which you could save up to get small appliances.

Secondary deals are distractors.  They distract you from the primary transaction and get you thinking about the "free bargain" instead.  And while your head is turned, they raise prices a penny or two and you don't notice it, because you are fixated on the free toasters.   Magicians know this trick all too well - it is called sleight of hand.  They distract you with the right hand, so you don't see the left hand up to no good.

Secondary deals get you to thinking you are making out like a bandit, when in fact you are falling into a carefully laid trap.  It doesn't matter if the trap is over-consumption, credit card debt, or what, the secondary deal is the "bait" to get you to fall into the trap.

Sadly, Mark still falls for these secondary deals even as I try to gently persuade him otherwise.   He finally figured out that frequent flyer miles are kind of pointless, particularly if you don't fly a lot (flying is no longer viewed as some special treat, except by the very poor.  For the rest of us, it is something we endure for business or to cross an ocean).  But he still loves his Hilton Honors points, which can provide an upgrade or even a free room once in a while.   But a better deal, I think, is to find the best hotel room price, whether that means using an online price shopping site or staying in some Mom & Pop hotel or bed and breakfast.   $250 a night for a hotel room is no "bargain" even if they give you a "free" breakfast.

I am presently experimenting with a "rewards" credit card.   One reader has exhorted me to "steal the cheese" with these kinds of cards, and I will write a review of it in a month or two.   So far, the cash "rewards" are less than $100 a month on average (even with my platinum bonus!  Take that, gold card Starbucks members, I got platinum, bitch! - you see how status works).   The problem is, if I ever carry a balance, even for a month or so, it will wipe out most of those rewards points in short order.  If I carried a balance for several months, well, an entire year's worth of rewards points could be more than wiped out by interest payments.   It is like carrying around a loaded handgun pointed at your head.   They throw pennies at us, hoping we spend dollars.

The Starbucks customers who are "furious" over the changes to the rewards program may be furious, but I suspect less than 1/10th of 1% will stop going to Starbucks as a result of these changes.   And I oftentimes see this in online discussions.  People are furious that a bank, a car company, an airline, a ticket agency, a cable company, a cell phone company, or a coffee company has treated them poorly, overcharged, or changed their terms of service.  What they want is justice and they want it now!

But what they don't realize is that the only way things will change is if people stop patronizing the business in question and as a result, lose customers.   If you keep patronizing a business and expect it to sua sponte change its business terms in your favor, you are kind of living in a dream world.  The one choice you always have is to not consume or to not consume their product.  Usually the former is the better option.

You really don't need Starbucks to live.  You could always just not go or bring a teabag to work with you and bank that Starbucks money (which could add up to over $100,000 by retirement, easily).   You could try a different coffee shop maybe with different coffee (yea, I know that is scary!!).   But that is the beauty of Starbucks - they aren't selling coffee at all, just the idea of it.  "Going to Starbucks" is more of an experience than mere drinking of coffee.  It is all wound up in status, from the moment you step in.  From the first time they humiliate you for calling a "tall" a "regular" to the snide comments the "barista" makes while taking a half-hour to make a Latte, to the little leaf in the foam - it is all about status and posturing and less about coffee.   It is Portlandia in a cup.

But Starbucks people are Starbucks people, and that is to say, sheep.  The idea of not going will never occur to them unless for some reason it became unfashionable to be seen in such a place.  And that isn't going to happen anytime soon.  I am not sure even a Chipolte-like disease outbreak could shut them down for long.

And so on down the line.  The guy who "has to have" the "full ticket" sports package on cable or satellite isn't going to stop watching television.  He is just going to burn off steam about the latest rate increase or the latest incident of shitty customer service.   He isn't going to stop consuming and indeed, doesn't even see this as an option.   The concert-goer will bitch and whine about Ticketmaster, but doesn't think for a moment that not going to see the heavy metal band is even a viable option.   What would his fellow head-bangers think if he didn't covet the tickets as they did?

So the airlines, the banks, the restaurant chain, the hotel chain, the credit card company and now Starbucks can change the terms of their secondary deals and people will bitch and moan and complain and then go about their business and latch onto the new deal.

Of course, there is yet one more way to manipulate the customers in this kind of situation, and I give it a 50/50 chance this will occur here.   What you do is say you are changing your deal and make the terms far more onerous than you really wanted.   People are "outraged" (if they are not, your shills in marketing generate some outrage via Twitter or Facebook) and a week or two later, you "cave in" by changing the deal yet again to make it what you wanted in the first place.   Your customers are satisfied that "their voices were heard" and you get free publicity, increased consumption, and the deal you wanted in the first place.

Hey, it worked with the New Coke, right?   Or don't you remember that whole scam?