Category Archives: Ideas

Krugman on Amazon: Wrong.

Paul Krugman argues that Amazon has too much power and is abusing it, and that abuse hurts America and Americans. He’s referring to Amazon’s battle with Hachette, which has been written about almost everywhere since it came to light last summer.

Amazon is not working hard to sell most of Hachette’s physical books because it wants Hachette to change the terms by which it sells its ebooks to Amazon. Krugman argues that Amazon is a monopsonist, a player with enough market power to drive prices down, and that this is a bad thing.

Book authors, my wife included, have protested that Amazon is using their well being as a negotiating tool against Hachette, undermining the business model that pays the writers who create the books.

Consumers can’t buy books that aren’t available, and books that aren’t available at Amazon are harder to buy, but it seems to me hard to argue that Amazon is hurting consumers by making it harder to buy books that are available elsewhere. And while their fight may be hurting writers in the short run, Amazon certainly isn’t arguing for a future without authors and books.

Krugman says Amazon has too much power, but he can’t say lower prices hurt consumers, so he makes an odder argument: “Book sales depend crucially on buzz and word of mouth (which is why authors are often sent on grueling book tours); you buy a book because you’ve heard about it, because other people are reading it, because it’s a topic of conversation, because it’s made the best-seller list. And what Amazon possesses is the power to kill the buzz. It’s definitely possible, with some extra effort, to buy a book you’ve heard about even if Amazon doesn’t carry it — but if Amazon doesn’t carry that book, you’re much less likely to hear about it in the first place.”

Is that true? Certainly the Today show or any other media outlet isn’t going to not book an author with an interesting book out because of the Amazon Hachette dispute. And the reason publishers send authors on those grueling tours is to promote sales in actual book stores, where the authors read and sign their books. Amazon doesn’t have that relationship with readers.

What it does have is enormous market power, lower prices, and an ability to do an end run around the interests of publishers. And that’s what this dispute is about. Amazon would like to crush the publishers, who to its mind add little value to a process that could be made much more efficient. And it would like to do that now, while it has a dominant position in book sales, since Amazon knows that competition from Apple, Google and Microsoft (with Barnes and Noble) is going to inevitably lead to a collapse in digital book prices.

By getting there first, Amazon will keep those big wolves away from its chicken coop.

Krugman seems to think that the publishers need protection from Amazon, as if they weren’t themselves each part of giant conglomerates, each with its own massive power center. Oddly, he doesn’t really say what he thinks should happen.

What should happen is nothing. If Amazon wants to mess with its relationships with its customers, by not selling them the books they want, so be it. Customers will go elsewhere. 

In the meantime, Amazon is arguing that ebooks should cost much less than printed books because the incremental costs of each copy is much lower for the ebook. Hachette is arguing that if the cost of an ebook goes much lower sales of printed books will decline. This is important because Hachette knows that once ebooks dominate sales, its role in the book production chain will be undermined.

The move to ebooks would seem to be inevitable, eventually, and so Hachette is trying to slow its own march to oblivion. While Amazon knows that once ebooks dominate sales, the ecosystem of readers and online sales will be the one thing that differentiates it from the competition.

Which is why the knives are out. Let them play.

UPDATE: I found this Matthew Yglesias story from Vox after I wrote the above. He more elegantly makes many of the same points, and others that are also important. His points about the ability of publishers to promote books and the nature of the book advance are dead on.



LINK: Should We Eat Octopus?

Silvia Killingsworth, who is the managing editor of the New Yorker, does a great job describing the problem. Octopuses have some kind of intelligence, they decorate their lairs for instance and make octopus gardens, as Ringo pointed out.

Should that disqualify them from being eaten by humans? It is, as she probes and tells, a typically more difficult problem to solve than saying yes or no, but I’m struck by some obvious points she makes, and some she doesn’t.

The octopuses we eat in New York are not local. They are caught elsewhere and frozen. If we value the reduction of food miles, we shouldn’t be eating octopus in New York City, usually.

The intelligence of the animal probably doesn’t matter that much. Pigs may be smarter than octopuses, or are at least close (though their housekeeping talents are definitely less rigorous), and we eat them. A lot of them. Though maybe that’s because they’re farmed, and we let them lie in mud and shit (enjoying life) for their entire lives, just like they like it.

Octopus isn’t kosher either.

She also does a nice job of describing the horrors and contradictions of the live octopus eating scene in the deliriously magnificent Korean film, Old Boy. But she merely says that the Buddhist actor, Choi Min-sik, said that he said a prayer for each of the animals before biting their heads off. She doesn’t describe how much excitement came with his transgression, but this clip does:

I don’t eat much meat anymore, and I struggle with the why. In part it is practical. My daughter doesn’t eat meat, she identifies with the animals, and I eat dinner with her. She doesn’t object directly if meat is a dish, but preparing two different dinners is extra work. Not eating meat isn’t a problem at home.

But going out and not eating meat is to miss the art of many chef’s work. I once went vegetarian at Union Square Cafe and was blown away by how good it was, but I also sorely missed that piece of barely-cooked tuna they served that is one of the great dishes I’ve ever eaten. Brilliant vegetables I can and do make at home. Well prepared flesh is a treat.

But I’m thinking harder about these special occasions. We source locally, we pay a lot, we serve small portions, but in the end are we better off? I feel like I’m still making value decisions about the eatability of different forms of flesh (lamb versus octopus? shrimp versus cow?) and I’m very unsure that that is the right tack.

The reason I decided to write about this NYer piece was because I see in it an echo of ethics and morality ringing through history. There is a straight (and long) line from slave holding to deciding not to eat octopus. The trick is to track that line into the future. Which behaviors of ours are actually natural and which are rationalized abominations? The sands shift with our history, but doesn’t our understanding that fact compel us to look closely and not accept today’s easiest answers?

thumb_octopus-grilledEthics, of course, are a luxury afforded when we can afford civilization. But that’s good enough for me. When the grid goes down and we start running out of food, the situation will be different, and will offer different answers. Today I think it’s better to eat way less animal flesh. Better for our health, better for the planet, and maybe better for the animals. But if I should land in a real Greek restaurant with a real wood grill, the earthy burn curling through the air like a temptress, will I resist the tenderly and lengthily massaged and prepared grilled octopus?

Even in New York it would be hard to say no.

Ezra Klein is Pessimistic about global warming.

There is an article at Vox by Ezra Klein that is well worth reading.

He has seven reasons why America will fail at global warming. If you don’t want to read this, he also has a brief video “conversation” with Te-Nehisi Coates at the top of the page in which he summarizes the points he makes in more detail in the article.

Klein’s argument is pretty straightforward. We’re too late getting started fixing the climate (if it is fixable), and our political processes do a poor job of taking on a problem that requires long-term sacrifices for less-than-immediate gains.

He does a good job, too, of showing how the Republican position on putting a price on carbon has changed radically since John McCain ran for president (and lost). McCain supported it. He also writes about why we can’t expect to engineer our way out of the problem scientifically.

All of this is pretty depressing, but he also does a good job of covering his butt at the end, saying he is pessimistic but not fatalistic. He hopes a solution will emerge.

As I watched him talk with Coates in the video I realized that while Klein was limning the depths of the coming disaster, he was also painting this as an obvious problem for America. But as this map shows, while the US may produce a disproportionate percentage of the world’s carbon emissions, we also have one of the biggest cushions for absorbing climate change. It isn’t really our problem yet, unless we look further into the future.  (click to enlarge)

Screenshot 2014-09-23 09.39.36Klein quotes Matt Yglesias on this: “Very few of us are subsistence farmers. Relatively few of us live in river deltas, flood plains, or small islands. We are rich enough to be able to feasibly undertake massive engineering projects to safeguard our at-risk population centers. And the country is sufficiently large and sparsely populated that people can move around in response to climate shocks.”

So, the question becomes, how do we convince Americans to make significant changes and sacrifices when the short term threat level isn’t nearly as dire as the long term threat?

Marching felt great, we should do more of that, but we need to keep talking broadly about how the system works and why it isn’t really designed to answer this question. Maybe, I worry, we’re not designed to answer questions like this one as a species, but I’m not pessimistic. I’m pretty sure that we will hammer on this problem, as other ones, with increasing urgency. And while we talk about it and argue about it and elect public officials who recognize the problems, we’ll make progress.

Will it be enough, soon enough? I hope so.

LINK: Charles A. Mann writes about Climate Change

Screenshot 2014-08-18 13.15.10The eminently readable author of 1492 and 1493 takes on the problem of developing an implementable climate change policy.

I think his reading of the situation is very reasonable. If the situation is as dire as James Hansen suggests, it’s hard to get motivated to get active and make sacrifices, while there are clearly ancillary benefits from reducing our reliance and use of energy produced by burning coal.

It isn’t clear to me why a tax on carbon has to be jointly implemented across the developed nations to be effective, at least partly, but this somewhat long essay does an excellent job of laying out the issues and looking at them from the perspective of climate scientists, environmental activists and economists. Well worth the time to read it.

Market Basket Fantastic.

I was near Boston yesterday, in the western suburbs, and everyone (I talked to, at least) is talking about the family feud that has disrupted business for DeMoula’s Market Basket supermarkets.

This is a family feud, but it also turns out to be a textbook illustration of the perversity of inadequately progressive tax rates and the rapacious nature of those who don’t work who own rights to the returns from those who do.

I’ve shopped in the original Westford Market Basket many times, and as someone who likes food was mostly impressed by lack of the foodie stuff in the store. But what regular shoppers tell me is that the store was customer friendly. Not only did they have lower prices than all the other groceries, but they also rebated four percent of what you bought. And they stocked local produce (that actually was a reason I shopped there sometimes).

On top of this, it turns out, they also had a generous profit sharing program, excellent wages, a program for paying for college tuition and a pension program it was easy to join and easy to collect on.

Not only did the company produce value for its workers, but it also threw off a ton of money for its shareholders.

I didn’t know about the good benefits or the happy workers, until recently, and often shopped at Hannefords and Stop and Shop when I was visiting the inlaws, because those stores had cooler food (more organic, though not more local). But things have changed.

After years of feuding, the DeMoula cousin who is a financial operative has taken control of the company from the cousin who has been a successful retailer. And business has ground to a halt. This fine story from Slate has more details, but doesn’t really hint at the main issue here.

DeMoula’s family business, started in the shadow of the War to End All Wars (the centenary of which we’re now recognizing), has grown into a business worth more than $3 Billion dollars. Some significant part of that expansion was due to the nice cousin’s investment in worker and customer satisfaction.

These investments cut into the bottom line and shareholder reaping in the short term, and the current dispute seems to stem from the dissatisfaction of those who own shares but do no work and who hate seeing money paid to people who actually labor.

The people I spoke with in the Boston area (including some self-described conservatives) seemed to understand that this was a feud between a grocer who recognized the value (and profitablity) of good wages and reinvestment, and a guy schooled in investment who was looking to squeeze as much cash out of cow as quickly as he could. Ouch!

Obviously there is a value to people investing in the products of other people’s labors, but too often this ends up with rich people using money to extract more money from those who actually make the value. Which not only hurts workers, but also strips away the dynamics of our society. We need workers who buy to expand.

The rapacious policies of Artie S. have radicalized, though I’m not sure they would call it this, a broad swath of suburban Boston. But the bottom line belongs to Artie T. It’s better business in the long term to have a well paid workforce than to force them into penury for immediate riches that are there to be gained.

As a society, unfortunately, we’ve allowed the plutocrats (a minute minority) to define the discussion, rather than look out for our own (and, curiously, society’s) interests.

That’s where we can make change.

Link: Introducing the Idaho Stop

Screenshot 2014-05-30 16.30.02For me, anyway. You may know about it already.

The Idaho Stop legalizes, sensibly, bicyclists treating red lights as stop signs, and stop signs as yield signs. This article at Vox makes a ton of sense.

As a bicyclist, I try to follow the law. I abhor riders who bust through intersections against the light, or shout at pedestrians to get out of the way. But there are many times, even in the city, when there are no cars at the intersection and stopping at the stop sign is just stupid. And times when you stop at a red light, cars pass and you can safely head through the red light. And when there aren’t cops around, you may feel a twinge, but you go. Just like they do in Idaho. Where it’s legal.

The Idaho Stop is so named, like the New York Minute, because that’s where it originated. Nice one.

The Million Dollar Page

Some years ago, around 2006, a smart kid got the idea to sell the pixels on an internet page for $100 per pixel, to help fund his way to college.

The page is still up, but Quartz has tested the links and determined that 22 percent of the links no longer work.

But I think it is incredible the page still exists at all. And I want more information that maybe I can track down tomorrow.

You too. Plus I hope my daughter comes up with such a good idea.

The Million Dollar Home Page

A Democratic Evening: Last Night’s Food Coop General Meeting

parkslopefoodcoopfrontI’ve been a member of the Park Slope Food Coop since 1999, that’s 15 years this November. Some people hate the coop, some people mock it, but I will tell you that it is an incredible institution, a piece of bedrock that joins disparate communities across NYC because, well, the produce and the prices are incredible.

This comes at a cost. Every member is required to work a shift every four weeks. A shift’s length varies a little depending on the duty, but the standard is two hours and forty five minutes. This can be a problem for those with regular work hours and kids, so I certainly don’t blame anyone for not being a member. But because every member is responsible for a work shift, being a member really brings with it a sense of community. We’re all equally invested in the institution.

That community is large and democratic. There is paid staff, but the coop’s policies are the result of a governance system that allows any member to make proposals and shepherd them to a vote of the members at the monthly general meeting. Despite my enthusiasm for the coop and my admiration for its system of governance, I’d never been to a general meeting before last night.

Some of that had to do with circumstances. There were other community things I tended to that seemed to require me more than the coop did. It was doing just fine without me sitting through a three-hour meeting. And  while one of the inducements to attend the meeting is work-slot credit, you get to skip a shift twice a year if you attend two meetings, I really like working  my shift.

Plus, the big issues that have come up all seemed to have popular support for my side of things. Yes to grass-raised beef from local farmers. Yes to good beer. No to bottled water. Good riddance to plastic shopping bags. Condemning Israel by banning the seven products imported from there was an overreach. But then, a couple of years ago, the environmental committee proposed banning the plastic bags in the produce and bulk aisles that people put food in, and I wasn’t sure what to think.

It would not be reader friendly to go through the backs and forths, the political wrangling, the discussions and arguments that ensued. Better to watch the excellent local sausage makers put together that fine smoked kielbasa in the meat case, if you want to have fun, but please trust me that a lot of smart people spent a lot of time trying to figure out what to do about the coop’s plastic bag use, which is now limited to what are called roll bags, those thin things you put a lot of loose or wet items into.

It’s an issue. The coop uses 2.5 million roll bags a  year. But the majority of these bags are used to buy local fruits and vegetables and bulk products that regular grocery stores don’t sell. Is it better to sell more local and bulk products? We all agree yes. Will we sell less if folks have to bring their own bags? It seems like yes is the answer.

The fantastic thing about the general meeting I attended tonight is that ideas were discussed. The environmental committee made their case with a very slick video, and then people talked about the proposal (and the video—not everyone appreciated its slickness).

There were some points that were hard to understand, and some people repeated something that had been said previously, but by letting 40 or so people speak directly to the meeting about the proposal many aspects of it were described, defined and evaluated. People had ideas that either supported the proposal  or not. (UPDATE: A writer at Slate and coop member, who hyphenates co-op (no doubt correctly), live blogged the event. Snarkier and sometimes funnier details are there.) Hmm, I realize I didn’t say what it was that the environmental committee was actually proposing.

After all the discussion and negotiation, and while they had started with the idea of a phase out of bag use, what they actually proposed was that the roll bags could remain, but that if you used them it would cost you 20 cents per bag.

That’s what we were voting on.

There was some discussion about whether the plastic roll bags made a greater or lesser environmental impact than the alternatives (primarily washing and reusing heavier plastic bags), but mostly everyone agreed that reducing the use of plastics was a good thing.

What ended up being the biggest point of contention was the 20 cents per bag tax. Some of this was a little silly. How would a checkout person know whether your plastic bag was new or used? Some members worried that such a tax would unfairly impact the poorest members of the coop, while others pointed out that the poor are fully capable of living without plastic bags.

The tax clearly violated the coop’s historical markup of all items sold, which is 21 percent of the wholesale price. Each roll bag costs a fraction of a cent, and one speaker said the markup of 2500 percent would be a cruel tax for some.

Everyone who spoke was in favor of reduced use of plastics, but how do we get there? To cut to the end, we voted against the tax on plastic roll bags. For the time being, until a different proposal passes, we will have plastic roll bags at the coop.

I voted against the proposal because the idea of the tax seemed at odds with the way we do things. And better to decide the real issue here than end up with a half-measure that violates the general operational principles of the coop.

So we’re left with this:

If the plastic roll bags are a problem, as the plastic shopping bags were, we should not provide them. Not providing them would still create problems for the unwrapped fruits, vegetables and bulk items, but that’s a problem that each member would have to solve. Maybe some would move to more packaged foods, which would be too bad, but probably most would reuse their plastic bags as best they could depending on their situation. At least the coop would be acting based on its principles.

Or perhaps those plastic roll bags aren’t a problem. Maybe their benefits outweigh the environmental costs. At least if they’re used prudently, and reused as much as possible (which many people already do).

Neither of those options was up for a vote, and so the proposal failed. The irony is that the tax would have reduced bag usage, everybody’s goal.

We know this because the Metropolitan Transit Authority, which runs New York’s subways and buses and commuter trains began last year to charge riders $1 every time they took a new Metro Card rather than reusing their old one. The goal was to reduce printing costs and litter in stations. What has happened, however, is that millions of cards were reused, over and over, and so fewer odd balances (because  you received a percentage bonus on your refills, you might end up with a difficult to use or refund amount less than the cost of a fare) were abandoned on old cards.

So many odd balances were abandoned that revenue from abandoned cards dropped from $95M in 2012 to $52M in 2013. (Don’t worry about the MTA. They expected to save $6M a year in printing costs from printing fewer cards, and that $1 surcharge replaces the abandoned odd balances nicely.)

Money talks. But as last night’s vote showed, it shouldn’t always have the final word.


Some Ukraine Illumination

Reading stories about the bloody riots in Ukraine, it was difficult to know what was really going on. Who was protesting and why? The answers and explanations were often contradictory, once you got past the obvious issues with the government.

This VICE documentary does a pretty good job of showing the diversity of ideology among the participants in the Kiev protests, represented by different groups fighting the current government.

Prime movers are the nationalist Right Sector, right wingers, but there is also a serious progressive element to the protests, as well as a more mainstream group. For now, at least, the different sides are joined by their mutual hatred for the present government and fear of Russian annexation.

The bottom line is that the people of Ukraine are standing up to the government and its special police (the regular police are refusing to act against the protestors) in decisive and dramatic terms, even though they themselves don’t agree about what comes next.

Compensating the One Percent

Reading the NY Times today, I came across this piece by N. Gregory Mankiw, in which he argues that we are not outraged by the oversized compensation of superstars like Robert Downey Jr. and E.L. James and LeBron James (not related, presumably) because we can see the impact that their singular talents bring to their enterprises, like Iron Man and 50 Shades of Grey.

He then points to the outsized contributions of others, like Steve Jobs, to make the point that superstars exist in fields other than entertainment. Then he cites a survey showing that privately held companies pay their CEOs just as lavishly as publicly held companies, suggesting that the reason CEOs are paid so much is not because of lax board oversight, inadequate regulartion and cronyism, but because CEOs are just that valuable.

FInally, he says, the top one percent pays an effective Federal tax rate of 34 percent of their $400,000+ incomes, while the middle fifth in the income distribution paid just 12 percent, demonstrating thei elite’s greater contribution to society. He likens them to the Avengers, though not out of altruism to they contribute more than their share to advance the public good.

Mankiw’s argument seems to be that because Robert Downey is able to command a huge salary, which seems fair because of the somewhat transparent economics of his relationship with his producers and studio, that other high earners are equally justified earning enormously high salaries. As if a CFO at Yahoo is as hard to replace as LeBron James. And that these high salaries are good for society, since as individuals they collectively pay a higher rate of tax than the rest of us.

This seems to me like a public relations argument. The problem with income inequality is that life and work dynamics are broken. We have more people than there are jobs for them, which forces wages down for those who are easily replaced in whatever job they have. The scandal is that someone can work full time and not be able to afford a basic life, including health care and a nice home and the basic things, like food, without government support like WIC and the earned income tax credit.

While in many cases their employer is booking huge profits, paying scant corporate taxes, and the CEO is taking outsized compensation for engineering the fruits of employee labor away from the employee and to the benefit of stockholders, fund managers and inside executives and their friends.

Talented people deserve to make all the money they can, but it is surely our job as a society to set rules that recognize that the amount of payment a person is able to command is not an absolute measure of their worth. And that our system of laws and taxes doesn’t assist corporate interests make bigger and more concentrating profits while failing to compensate their workers a living wage. In fact, salary/income isn’t anything close to an absolute measure. Our society has set up all sorts of incentives and rewards that accrue to the some and are for the most part unavailable to the rest.

Discussing how this all works and figuring out how to pay to implement the societal support and service we all value (health care, Social Security, police, fire department, food inspections, flight controllers, parks and wild lands, education standards and support, tax collection) is our great challenge today.

Mankiw’s piece seems to be an attempt to foreclose all such talk, and convince us all to applaud the contributions the wealthy make.  The point isn’t that this is totally untrue, but in a system that is clearly out of balance, we need to figure out what services we need and value, and then figure out how to fairly derive revenues to pay for them.

That’s the conversation that needs to be pushed forward.

FWIW, back of the envelope:

A self-employed person who makes $450,000 would pay $150,000 Federal tax and about $15,000 in FICA. State and local taxes vary, so let’s ignore them. Net: $285,000. (Holds onto 63 percent)

A self-employed person who makes $51,000, the median US income, would (according to Mankiw) pay about $6,000 in tax and $7,000 in FICA. Net: $38,000. (Holds onto 74 percent)

(Click to enlarge chart)