Just What Price?*

Thomas Sowell writes:

Politicians who claim to be able to “bring down the cost of health care” are talking about bringing down the prices charged. But prices are not costs. Prices are what pay for costs.

(via Samizdata)

*The economist Frank Knight is reputed to have quipped: “A just price — just what price?”

Wrong About Bonds?

A few weeks ago I fretted about the apparent contradictions of Bush’s economic policy. I thought that

Either there’s going to be continued economic recovery and bonds are going to get killed, or there’s going to be a weaker recovery combined with inflation and a weak dollar and bonds are going to get killed.

Now I’m not sure. Stocks haven’t been able to rally in the short run, the dollar is weaker, and the bond market is bubbling and simmering.

Note also (e.g., here and here) that growth rates in monetary aggregates slowed significantly during recent months. It’s conceivable that the markets have already discounted expected inflation. Rates may yet go up as the economy continues to recover, but in the short run, at least, inflation fears may not be as potent as they were a few months ago.

There’s a bunch of economic statistics due to be released Friday. Recent number releases have tended to be upside surprises that were positive for stocks and negative for bonds. The same thing could happen tomorrow. However, the markets seem to have begun to discount optimism. If tomorrow’s data come out below expectations we could get a big break in stocks and a pop in the bond market. That would be the path of least resistance.

Maybe in the long run bonds really will get killed, but that forecast seems premature for now. Too many people expect it, just as too many of us are waiting for a stock rally. Market reaction to the coming data releases should help to clarify whether the bond market’s recent strength will continue or has run its course.

Faulty Business Model Update

A few months ago I wrote a couple of posts (here and here) in which I argued that the Ritz/Dakota single-use digital camera was probably doomed to commercial failure:

Certainly there is a benefit from eliminating film development and from reusing cheap digital cameras. The problem for Ritz is that it can’t prevent consumers from capturing this entire benefit for themselves by buying their own digicams and printers. All that is necessary is for someone to introduce a cheap reusable digicam, which is surely not more difficult to develop than a cheap digicam that is fitted with devices to prevent consumers from downloading their photos on their own. (There are already $20 reusable digicams. Image quality is low, but there is no reason to think price and quality won’t improve.)

I was right, though not quite in the way that I expected. It turns out that the Dakota digicam is already reusable — if you know how to hack it. A guy who does know was kind enough to leave a comment on my old post, with a link to his web site. With just a few simple adjustments the Dakota is capable of making excellent images and can be used again and again. Not a bad deal for 11 bucks. I don’t think it will be long before inexpensive, reusable digicams are widely available commercially. The Dakota is a transition product that will soon be eclipsed.

(BTW, the commenter describes himself as “a recently-graduated electrical engineer looking for work. If you know of any openings for an entry-level EE/CE, drop me a line or feel free to peruse/send my resume.” I don’t know anything about electrical engineering but he seems to be on the ball.)

Armistice/Veterans’/Remembrance Day

In the U.S., the name of this holiday has changed and its scope has expanded. In other countries it is called something else. But these are mere details in the scheme of things. It is important to remember those who fought, and especially those who died, defending our country.

The late philosopher Emil Fackenheim famously said that Jews should not give Hitler posthumous victories. Perhaps we should extend this prescription to say that citizens of democracies should not give Hitler posthumous victories by yielding to his philosophical heirs who now attack us.

Dell’s Abusive Service

I just ordered a Dell computer for a member of my family. I had tech questions. Dell’s phone system prevents prospective buyers from contacting tech support. I tried customer service but gave up because my call was shunted to, I think, India, with a bad phone connection and a rep who put me on hold for several minutes — until I was disconnected. Finally I got help from someone on Dell’s sales line. However, I wasn’t ready to purchase immediately, the salesman wasn’t going to be available the following day, and I prefer online ordering because it minimizes miscommunication.

Unfortunately, Dell’s online ordering system is confusing, I think intentionally so. It is set up to make apples-to-apples price comparisons impossible. I think that this is inexcusable for a company selling commodity products distinguished mainly on price.

You can see what I mean if you visit the Dell website and price various computer systems. Try it first via the “home and home office” link, then try to price an identical system under the “small business” category. You can’t do it, because each category has a different mix of options and different “sale” items. The sales rotate every week or two, and if you follow the pattern for a few cycles you see that every discount or freebie is offset by an overcharge (relative to market prices) for something else. This week you get more RAM and hard-drive capacity and “free” shipping, but you pay $100 over market for an LCD monitor, and get charged an additional $79 for a nonstandard warranty (unless you deselect it: this option is presented in an exceptionally misleading way). Or you get the RAM and HD and a “free” printer, but ground shipping costs $110 and you can’t buy the system without a monitor. The pattern is always one of rotating sales, different sale items in “home” and “business” categories, and different configuration options in each category. And a special deal on one option is always offset by an unavoidable upcharge elsewhere.

What makes Dell deceptive is its burying of the selective price increases. The customer has either to accept the deal without scrutinizing it much, and thereby pay through the nose for some component or service; or he can spend a lot of time comparing system configurations and waiting for the sale that most closely approximates his needs. In any case it’s clear that Dell’s real prices are higher than it wants customers to believe, and that Dell’s service is not what it once was.

I once favored Dell because they had what seemed to be the best mix of price, quality and service. I ordered from Dell this time because, at first, doing so seemed to be the easiest way to go, and later it didn’t seem worthwhile to restart the shopping process. Dell isn’t terrible, and I’m sure that the computer I ordered will be acceptable for the price.

But Dell no longer has a clear advantage over other PC marketers. And I am annoyed that Dell uses its online ordering system — which should make ordering a computer faster, easier and more transparent — to obscure its pricing. If buying a Dell means spending hours comparing apples to oranges and looking for hidden charges, I may as well shop elsewhere next time.

UPDATE: I should have credited my brother for making the initial suggestion that Dell’s behavior in making price comparisons difficult may be intentional.

UPDATE 2: The computer, which I ordered Sunday, was shipped Tuesday and arrived Thursday. It appears that in at least this respect Dell’s service has improved.

War: How to Frame the Tradeoffs

David Aaronovitch writes:

Or, to put it another way, where was the Muslim Association of Great Britain’s picture of the victims of Saddam, circulated some time during the long years of his oppression? What might we have demanded to be done in Congo if only it were safe enough for film crews to get pictures back of the horrors there? Mr Damazer, I worry about what happens when we believe that what we see is all there actually is, about what you might call TV-solipsism. The undiscovered boys in the Bosnian graves are every bit as dead as the photographed Iraqi boy.

This argument is not an attempt to drum up support for the invasion of Iraq, or the future invasion of anywhere else. In almost all cases, talking, negotiating and compromising are better than the unpredictable and extreme violence of war. In almost all. But just as there are armchair warriors, who run none of the risks that they recommend for others, so there are armchair pacifists whose commitment isn’t tested by the threat to family or friends. Just other peoples’ families and friends.

We still depend, even in the days of Trisha and trauma counselling, on men and women who will, if necessary, die on our behalf. And I must express my astonishment and gratitude that they will.

(via InstaPundit)

A meaningless poll

When I first read of this poll (via a number of blogs) I was pretty incensed :

Israel has been described as the top threat to world peace, ahead of North Korea, Afghanistan and Iran, by an unpublished European Commission poll of 7,500 Europeans, sparking an international row.
The survey, conducted in October, of 500 people from each of the EU’s member nations included a list of 15 countries with the question, ‘tell me if in your opinion it presents or not a threat to peace in the world’. Israel was reportedly picked by 59 per cent of those interviewed.

The full text of the survey-results can be downloaded from here as a PDF file (3677kb).

Once I realized how flawed the poll is I calmed down again; cold-calling people on the phone, reading them out a list of countries and asking which of those is a threat to “world peace” (without even defining the term) isn’t good polling technique. Now, if the pollsters had visited the respondents at home and asked them which countries are a threat to world peace without naming any first the responses would have been more significant. But giving them a list to start with gives the questions a leading quality. Also, if you call people and ask them for their opinion on the fly you won’t get their well-considered opinion, since on this short notice they’ll mostly think of what they heard or read about the other day and respond according to that. So any country that is frequently mentioned in context of some conflict or war, as America or Israel is, is more likely to be named as a threat to peace as countries which aren’t as often in the news. And as it happens neither North Korea nor Iran are all that often mentioned in the context of war (more like oppression and misery), so why should anyone who isn’t attentively following the news call them threats rather than basket-cases?

The poll also suffers from an imbalance: The sample was 500 people in each country, so that Luxembourg with its 440.000 inhabitants had as much weight as Germany with 80 million inhabitants, which further distorts the results and devalues the respondents’ answers to the point of meaninglessness.

As another example of a meaningless poll you could take the one where about 80 percent of American respondents answered that Saddam Hussein was behind 911, even though nobody had ever officially made that claim. As with the European poll, people had simply thought of the speculations they had read or heard about and responded accordingly.

You could also look at this poll:


Washington, DC – Most Americans are unable to identify even a single department in the United States Cabinet, according to a recent national poll of 800 adults. Specifically, the survey found that a majority (58%) could not provide any department names whatsoever; 41% could. Only 4% of those surveyed specified at least five of the 19 executive-level departments, a figure comparable to the poll’s overall margin of error (+/-3.5%).

This poll doesn’t mean that Americans are ignorant, of course. Europeans wouldn’t have done any better if asked about their governments but it shows clearly how little substance there is to answers people have to provide on short notice.

I rest my case. :)

Your Tax Dollars At Work

tax dollars at work

(Source: Brickell Post, November 2003. Emphasis added.)

This kind of shit should be illegal if it isn’t already. It’s certainly unethical, though I’m sure it goes on everywhere. These guys are always whining about under funded this and that, but somehow there’s enough to spare for lobbying on the taxpayers’ dime.

Oh, do you want to know what these terribly important ballot items would do?

– #76 would effectively extend for 15 years the city’s current lease, to a restaurant, of a parcel of waterfront having one of the best views in town. Nothing wrong with that in principle, and the restaurant would be required to make substantial capital improvements, but you have to ask why the city doesn’t just sell the land to the highest bidder, and use the proceeds to cut taxes or retire debt, instead of staying in the property-management business. Because what usually happens in these situations is that the city managers, who don’t have any profit incentive (much less risk of missing meals if they screw up), give away the store to the people they’re doing “business” with. Which brings us to the next provision of this ballot item: the city would provide, as part of the package, two consecutive five-year renewal options for the lease. In other words, the restaurant gets an option to lock in, for the next twenty-five years, a lease deal that it will probably amortize within the period of the initial lease, if not earlier. Then the restaurant gets another ten years at lease rates determined long before anyone could possibly predict the real-estate values that will be current then. Not much risk for the restaurant, but the taxpayers stand to forgo a great deal of revenue if land and lease values go up. (The restaurant is adjacent to large tracts of run-down municipal land that can probably only increase in value.)

– #78 would increase the annual salaries for county commissioners, who currently are paid at a part-time rate of about $6k per year, to $58k per year. So instead of spending most of their time with their law practices, commissioners will now be paid to spend more time spending their constituents’ money.

– #80 is a parking-tax increase. (It’s framed as a “continued parking surcharge.”)

Remind me again who, besides pols and bureaucrats and their business cronies, benefits from passage of these measures.

UPDATE & CORRECTION: The raise specified in ballot item 78 is for city rather than county commissioners. It passed, as did the other two ballot measures.

“Hang on in there, buddies”

The excellent Melanie Phillips bolsters our morale in the wake of the deadly shooting down of one of our helicopters:

To repeat — this is a war that’s still being fought. The Americans’ mistake was to assume they had won it and to turn their attention to creating the civilian administration. They have to put themselves firmly back onto a war footing. They have to find Saddam. And they have to stop being strung along by Iran and start getting heavy with them and the rest of the axis of terror.

I think she’s right.

BTW, was anyone else besides me offended by the extreme (even for Reuters) anti-American bias of this article about the incident, that Drudge linked?

Witnesses said American soldiers had fired on a crowd after a hand grenade was thrown at them. U.S. helicopters circled as armored personnel carriers blocked roads.

One man said he had pulled his five-year-old daughter out of a car just before an American tank crushed it. “She just made it. Why are the Americans doing this?” asked Ali Saleh.

Iraq’s six neighbors plus Egypt held security talks in Damascus, mindful of U.S. assertions that Syria and Iran were not doing enough to prevent militants crossing into Iraq.

In a statement, they condemned “terrorist” attacks on “civilians, humanitarian and religious institutions, embassies and international organizations” and vowed to cooperate with Iraqi authorities to “prevent any violation of borders.”

Yeah, that’s it — American soldiers fired on a crowd, just like that. We know it happened, because the anti-American witnesses said it did. No need to ask the Army. And of course there are the famous Reuters quotation marks around the word “terrorist.” How dare we call them that. It’s merely those poor, misunderstood militants who are attacking civilians. I’m glad someone cleared that up.