Why Cheap is Good
It’s probably not fair to comment on a book I’ve never read, but here I go. I am basing most of my specific comments off of Richard Bernstein’s piece in the New York Times. In any case, Ellen Ruppel Shell, a correspondent for the Atlantic, has written a book called Cheap: The High Cost of Discount Culture, in which she argues that America’s drive to cheap, discounted good is detrimental to society overall. Her main point is that cheap goods end up lowering wages, preventing innovation, and hurting the environment.
I have not read the book, but her arguments are certainly not her’s alone, and the first two points, at least, seem to stem from a fundamental misunderstanding of economics. Simply put, there is no reason to think that cheap goods lower wages. The implication is that if people purchased an expensive bookshelf that is handmade, workers would earn more money than if someone purchases an Ikea bookshelf. This logic is faulty in at least two point. First, is that wages are not based on the end product’s price. Wages are based on the relative levels of supply and demand for labor for that particular job. In other words, if Ikea were to double its prices, the factory worker who makes the bookshelf would see exactly zero dollars of that increase. Read the rest of this post »
July 30, 2009 |
Posted in: Economics |
By: Charles | 
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Airline Pricing and Baggage Fees
With the news that American Airlines will increase its baggage fees starting August 14, 2009, I thought it might be nice to have a little note on airline pricing. It is well known that passengers on the same flight will often pay wildly different prices for the same trip. These prices differ by when you purchased, where you purchase, when the return flight is, how you paid, and many other dimensions. Airlines do this because they engage in a pricing practice called price discrimination.
Price discrimination stems from the fact that airlines are not perfectly competitive. Instead, unlike the market for cereal, there are only a few carriers — even fewer at any given airport — and they only go at certain times of the day to certain destinations. Couple that with the fact there are severe financial and regulatory barriers to entry for potential competition, and the result is that airlines have a decided advantage when it comes to choosing what price you get to pay for the privilege of flying with them. Read the rest of this post »
July 27, 2009 |
Posted in: Economics |
By: Charles | Print
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Missing the Point on the Gates Arrest
Today, President Obama attended the White House press briefing to state that he “could have calibrated those words differently” when he stated that the Cambridge police officer who arrested Henry Louis Gates Jr. acted stupidly. To sum up what happened, Gates, a Harvard professor and leading authority on race, locked himself out of his house. Neighbors witnessed two black men (Gates and an associate) breaking into a house and called the police. The police arrived, questioned Gates, who took offense, and eventually the police arrested Gates. Both sides claim that the other was at fault, and many of the claims center around the police being racist and Gates refusing to cooperate. This matter, however, is not only about civil rights, it is about civil liberties.
Now it is certainly plausible to think none of this would have happened if Gates were white. It might be less likely that neighbors would have called the police if they saw a white person locked out of their house. It’s also plausible that the interaction between Gates and police would have gone differently if they were of the same race, but all of that misses the point. Because we are so worried about race we are failing to question why the police even have the right to question or arrest a person who refused to show ID. I am not a Constitutional or Massachusetts law expert, but I question to authority of the police to ask you to produce ID simply because a neighbor called. In other words, what would happen if, every time I see someone I don’t know (or don’t like) doing something, I would call the police. Read the rest of this post »
July 24, 2009 |
Posted in: Policy |
By: Charles | Print
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Venn Diagrams and Free Speech
Fred Kaplan has written an interesting history of the legal case that struck down many of America’s obscenity laws, particularly the ability of the US Postal Service to confiscate items from the mail it deemed obscene. The case revolved around a publisher, Grove Press, that sued the Postal Service for confiscating copies of the D. H. Lawrence novel Lady Chatterley’s Lover under the law that prevented the shipment of materials the Post Office deemed to be obscene, lewd, lustful, lascivious, or prurient. Previously, the Supreme Court had ruled that free speech, protected by the First Amendment, did not cover obscenity.
The interesting part of the case, for this website, was that the lawyer for Grove Press, Charles Rembar, used a Venn Diagram to point out the logical flaw in the current interpretation of the law. In the case Roth v. United States, 354 U.S. 476 (1957), Justice William Brennan wrote,
All ideas having even the slightest redeeming social importance – unorthodox ideas, controversial ideas, even ideas hateful to the prevailing climate of opinion – have the full protection of the guaranties, unless excludable because they encroach upon the limited area of more important interests; but implicit in the history of the First Amendment is the rejection of obscenity as utterly without redeeming social importance.
July 21, 2009 |
Posted in: Policy |
By: Charles | Print
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How to Get Your Wallet Back
Richard Wiseman, the psychologist who brought us LaughLab, and their quest to find the world’s funniest joke, has come out with another piece of interesting research. Professor Wiseman tried to determine what factors increased the chances of getting a lost wallet returned. He found that wallets containing baby pictures were returned at a significantly higher rates than other wallets.
To perform the experiment, Wiseman and his team planted over 500 wallets around different parts of Edinburgh with different objects behind the clear plastic window. Overall, 42 percent of the wallets were returned, but those with a baby picture were returned at a much higher rate — 88 percent. Next came a puppy photo (53 percent), followed by a family photo (48 percent), and finally a photo of an elderly couple (28 percent). Trailing all other objects, at 20 per cent, was a card identifying the wallet owner as a recent charitable donor. Curiously, the lowest overall return rate was experienced by the control wallets — indicating that having something in the wallet is better than nothing at all. Perhaps this is because empty wallets may be considered as discarded.
Possibly, the reason for baby pictures doing so well is that humans have an innate desire to protect babies, and returning money to their parents is one way to do so. Dr. Wiseman stated, “If you want to increase the chances of your wallet being returned if lost, obtain a photograph of the cutest baby you can find, and ensure that it is prominently displayed.”
July 20, 2009 |
Posted in: Programming, Data and Metrics |
By: Charles | Print
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