Following up a bit on the last post, it occurs to me that the idea of “perfect information,” which looms so large in the free market model, is something that we’re actually very close to in the age of information digitization. Specifically, bar codes and hand-held scanners should conceivably allow distributors and merchants to monitor not only minute-to-minute inventory, but also purchasing patterns over time. If a situation like the one that raised my ire yesterday were to occur, this technology could easily be used to alert the store to ask the distributor for more of Product X, or to alert the distributor to just show up with more next time. This would be a valuable system, at least at some scale, because every time this particular inefficiency happens, somebody is losing $4-5. In a competitive market, it’s to Coca-Cola’s benefit to keep me from going my next preferred parity product, sold by PepsiCo, and it’s also to Grocer X’s benefit to keep me from checking the shelves at Grocer Y.
But clearly if such a system exists in the world of retail sales, it’s not being employed by either of these two grocery chains. And it strikes me that part of my annoyance here is that I know the technology exists (both because I’m a technologist by trade and because versions of it are featured in ads from IBM, UPS and others) and I reflexively expect it to be in use. I wonder how much this view exists out there in general, and specifically among strong free market theorist-proponents — I’m thinking specifically about the Reason-types who are happy to argue for free markets based on abstraction and theory. The market and the information here and qualitatively different than those that are found in high finance, insurance and exchanges, to be sure, but the principle of efficiently organizing and providing relevant information is the same.
Filed: aka Syscrusher || 22:24, April 23 || No Comments »
The thing that takes a while to realize about Carbondale is that the city’s small size isn’t its most impactful feature — it’s the disconnectedness. We’re 15 miles from the interstate to our east and 40 miles from the one to our north, and the state highway corridor we’re located on features only other towns that are smaller than Carbondale. It’s not cheap to ship stuff in here, and as a result our selection of consumer products, and groceries in particular, is terrible.
That makes some sense, but what astonishes me is the terrible way firms in this market respond to consumer behavior — given the cost of getting products into this market, I would expect firms to do everything they can operate at high efficiency (note: I’m not an economist, so maybe there’s a really good reason for them to operate inefficiently that I don’t know about). But every time I set foot in the pop* aisle at either of our local grocery stores, I’m more and more convinced that nobody cares what consumers here do. You can see this in the discrepancy in stocking and restocking of sugared and diet drinks.
I’m a huge fan of Vault Zero, the low-calorie version of Coca-Cola’s high-caffeine citrus soda. Now, regular Vault is not a particularly high-selling brand, and if the market is more interested in sugared than diet, you’d assume that Vault Zero would be even more of a niche product. What this doesn’t explain, I don’t think, is the tendency for both our stores (stocked by the same distributor, I’d assume, so we’re really talking about one point of entry for these products) to frequently sell out of Zero and sometimes go weeks at a time without restocking. But lest this come off as the screed of a lonely, atypical consumer, I note that many other diet brands go through the same cycle here — low stock, frequent short-term and occasional long-term sell-outs.
What prompted me to really think about this, though, was the sight pictured above, seen this morning in one of our stores. Regular Mountain Dew is given three times the shelf space of Diet Mountain Dew; the diet sells out, while the regular has sold one unit since restocking. And in general, it’s clear that strong consumer demand exists for diet drinks. If we’re concerned about the effects of high-fructose corn syrup intake through beverages, and if we’re going to just chalk American obesity up to freedom of choice, shouldn’t we be looking at how free those choices are, particularly in the commercially disconnected rural areas that are home to so much of that obesity?
* To my fellow Michiganders: I’m trying to fight the good fight, but ten years in Wisconsin has really given “soda” a lot of weight in my brain.
Filed: Neat Little Domestic Life || 11:25, April 22 || 1 Comment »
I try to be optimistic about the potential for political and social change, especially in the light of the tremendous democratizing possibilities afforded by the Internet. My optimism is tempered by cynicism, to be sure — I never bought into the Obama hope hype, in part because I did buy into it in 1992 (in my defense, I was only 13 then). But still, this just crushes the soul:
Most Americans know about that budget. What they don’t know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the “official” budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.
Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the “other” budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. “Our jaws are literally dropping as we’re reading this,” says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. “Every one of these transactions is outrageous.”
But if you want to get a true sense of what the “shadow budget” is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall’s haul doesn’t seem all that huge — just nine loans totaling some $220 million, made through a Fed bailout program. That doesn’t seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.
Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley’s investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income.
The rich aren’t like you and me, and we live in a system designed to keep it that way.
Filed: We R in Control || 13:59, April 17 || No Comments »
Josh Marshall notes that Mitt Romney has given a thumbs-up to Paul Ryan’s plan to end Medicare:
Two contenders, Pawlenty and Daniels, haven’t done more than say kind things in general. But most have said they’re down with it. And Mitt Romney in particular has signed on for the whole thing — which means he’ll go into the 2012 primary and possibly the general election as supporting the abolition of Medicare. And that’s a tough thing to carry, as it should be.
I’m going to be really curious to see what sort of follow-up questions he gets on that position and if anybody is able to get a clearer statement out of Pawlenty on this critical issue.
My guess? No follow-up questions of any sort, unless the impossible happens and Ryan’s flight of fancy becomes a real bill. We’re presently about eight and a half months from the first ballots being cast in the 2012 primaries, and probably six months from the general public paying much attention. Anything that a candidates says now, but doesn’t want to revisit later, about an early-2011 proposal that goes nowhere will simply disappear.
But still, Romney makes an interesting case to watch in this context. He has famously held every position on many issues, and gained favor among elites for his technocratic seriousness. My own view of the 2012 race is that a Romney nomination requires him to consolidate the remaining “serious” Republican technocrats, while the other candidates fight over the far right. There are a lot of voters on the far right, but if even two strong candidates persevere over there, Romney can likely win what he needs for the nomination. And my supposition is that, for the technocrats that make up Romney’s base, what he says doesn’t really matter. They know his political operation based on its personnel, not his public statements, and they know how he’ll govern because he’s just like them — the new H.W. Bush that we the party and the country so desperately need. If he has to say he likes the idea of killing Medicare, or that Ryan’s near-future projection of 3% unemployment is reasonable, well, what candidate hasn’t had to say some silly things to get elected? This could actually be a benefit for Romney, because due to his past flip-floppery, nobody is likely to believe he actually supports the Ryan plan anyway. Once he secures the nomination, he can get the party in line and we’ll just quit talking about such ridiculous things.
Filed: We R in Control || 11:52, April 14 || No Comments »
Whatever the final outcome of the Wisconsin state Supreme Court election, the basic tenor of it is clear — an even split. There have been a number of articles suggesting that this is a surprise, and that conservative incumbent David Prosser should have been expected to cruise to victory. But should we really expect the kind of incumbency effects we see in other races to manifest in judicial elections?
It’s important to understand, first, that while every election has its quirks, this one was really atypical. Generally speaking, state supreme court elections don’t take place six weeks into massive protests against the state’s sitting governor and amid legal wrangling over a controversial new law likely to be reviewed by said court. Turnout in this election was much higher than a typical spring election in Wisconsin, and considering that inability to adequately model it, I don’t know that any outcome should’ve come as a surprise. Prosser took 55% of the vote in the open primary (before the protests started), and opposition to Gov. Scott Walker’s anti-union bill has been in the mid-50s, suggesting anything from 55-45 for Prosser to 55-45 for challenger JoAnne Kloppenburg would’ve been plausible. But polls aren’t elections, and in the primary a total of about 419,000 votes were cast (compared with almost 1,500,000 in the general), so even these boundaries are weak.
If there are incumbency effects at work here, what might they be? Political science typically focuses on legislators in the study of incumbency effects, and there isn’t much there that maps well to the judiciary. Justices don’t have the name-recognition of legislators for a number of reasons, including their much less frequent elections. Justices are also not protected by partisan systems that sometimes allow legislators to easily win general elections in “safe” districts, assuming they survive primary challenges, nor do they have the opportunity to win voters over through constituent service.
And yet, the history of Wisconsin’s supreme court elections includes just five losses by incumbents. The most recent occurred in 2008, when conservative Michael Gableman won a contentious election with strong backing from Wisconsin Manufacturers & Commerce, a year after WMC successfully supported Annette Ziegler’s re-election bid. The previous loss by an incumbent was in 1967, which suggests there is some effect of judicial incumbency. Prosser’s first election, in 2001, suggests it may be the absence of a party system to recruit and support challengers. After being appointed in 1998, Prosser ran unopposed for a full term. In a halfway-politicized judicial system — elections, but no parties — we probably shouldn’t expect to see the kind of challengers and challenging campaigns that we see in other races.