But, it’s not even price gouging…

I saw an article posted on social media that was churning the outrage machine. Perhaps you saw it too? The one about Best Buy charging $40 for a case of water. While there are some who would defend price gouging from an economics perspective, I’m not even going to do that. What happened at Best Buy is not an example of price gouging and should not inflame anyone who reads the entire article and knows basic definitions.

First, what happened? Best Buy doesn’t sell cases of water. But an employee realized there might be demand for entire cases, so he took the single bottle price and multiplied it by the number of bottles in the case to arrive at a case price. That would work out to $2.50 for a single bottle of Smart Water, or $1.79 for a single bottle of Aquafina. These are standard Best Buy prices. In Texas, price gouging is defined as “Selling or leasing fuel, food, medicine or another necessity at an exorbitant or excessive price” (taken from the Texas AG’s site). That is vague. Certainly, some may find $1.79-2.50 for a bottle of water “excessive” — it isn’t the cheapest bottled water I’ve seen. But the way of determining price gouging appears to involve examining whether prices in the “declared disaster area spike beyond what the normal market forces set.” Indicating that price gouging does require a raising of prices. Which Best Buy simply didn’t do.

The upsetting thing about people not reading is that this article has been a vehicle for virtue signaling. Anyone who argues with the premise that this is an outrageous example of corporate greed is derided as immoral, callous, or a capitalist.

If we buy the narrative that this was price gouging and someone was taking advantage of vulnerable people during a natural disaster (despite the previous discussion of the meaning of the term “price gouging”) then we have to ask ourselves “which greedy entity profited here?” The employee? Best Buy, unfortunately, doesn’t have a commission scale, so the employee who did the pricing didn’t see any profit. The pricing wasn’t done by or condoned by Best Buy corporate, so that’s out too. Looks like we don’t have a villain here.

Another relevant question: who was the victim? Did someone die because Best Buy wasn’t giving out water for free? Who goes to Best Buy to buy water, anyway?

So where is the outrage coming from? Is it really our mentality that enduring a natural disaster makes us entitled to bulk discounts on water from the electronics store? Unfortunately, it seems that what sells these days is outrage. If an article helps the reader feel moral outrage (and thus, morally superior), then they’ll click, share, vent, and really… what more could an advertiser ask for. Don’t be pawns. Save your outrage for something that matters.

Tidal: why Jay-Z and Taylor Swift are wrong

Jay-Z, along with Madonna, Kanye West and other thoroughly cringeworthy big names in music have launched Tidal, ostensibly to protect music, musicians, art. But this Instagram post from Madonna is telling. She says, in part

And remember nothing is for free! This is a universal LAW. Somewhere-Somehow-Someone has to pay.

Let’s not forget that this is also the woman who compares an album leak to rape and terrorism. How could such a person possibly be wrong about the future of music? I guess she’s in pretty good company though, as Taylor Swift (who is also on Tidal) pulled all her music from Spotify, saying

Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.

But she and other artists who believe they’re being paid too little under the streaming model are wrong. Here’s why.

1. No one else gets paid forever for work they did once

Art is indeed valuable. No one is contesting that. But isn’t everything valuable? Nursing care, doctors, teachers, the guy who painted your house. The software engineers that make Google work, or the ones who maintain Wikipedia. All of their work is valuable. But does the engineer who wrote part of Google’s search code get paid $0.0006 every time someone does a Google search? Does the guy who installed your toilet get paid every time you flush it? Even if their work continues to be of value, even if there’s a measurable way in which it’s being used, most people do not get paid forever for work that they did once. What millionaire musicians don’t seem to realize is that they already enjoy a position of great privilege in the royalty system and they should be more grateful. It’s easy to understand why they aren’t: they see that Spotify pays 70% to the recording companies, which leaves a smaller share to them. But the answer is not charging the end user more money.

2. Making streaming more expensive will not increase revenues

The same applies to making streaming more difficult. If someone wants a playlist with all their favorite artists, but the artists each have exclusive contracts with five different streaming services, it makes life difficult. If streaming costs $20 per month, it makes the service less attractive. In fact, according to data analysis done by David Touve of the University of Virginia, the price of streaming that will maximize revenues is around $6/month.

3. Lost album sales is the wrong way of looking at things

Musicians just need to forget about the glory days when buying a CD or waiting around for the song to play on the radio were the only ways for a fan to consume their music. The metric of “lost album sales” is misleading. There’s no evidence that if pirating and streaming weren’t options, those fans would all be paying for albums.

4. The only way to increase revenue is to increase value

It should be fairly obvious that free or nearly free streaming and pirating are here to stay. It should also be obvious by now that fighting these (with encryption, lawsuits, shutting down sites like The Pirate Bay) are a temporary stopgap at best. If it’s easy to get free music, the only way to convince people to keep paying a premium price for it, whether via album sales or costlier streaming services, is to offer them something extra. Tidal claims it offers some exclusive content, but I think they’ll have to do better. Promotions like “buy this album and be entered for a chance to win a dinner with this artist” or “subscribe for N months and you can qualify to get these limited edition items” — things that freemium streaming and pirating don’t and can’t offer.

I’ll end with simple armchair psychology. If musicians alienate their fans by complaining that an estimated $6 million per year earned from Spotify is too little, fans will be less likely to care about “hurting the artist” by pirating.

In defense of harsher sentencing for crack

(versus powder cocaine)

It isn’t the least bit about race. Crack cocaine dealers have the same access to information about mandatory minimum sentences as anyone else, and if they choose to pursue a life of drug dealing, they can just as well switch to dealing powder cocaine. If a disproportionate number of blacks happen to continue choosing to deal one over the other, we’ll have to conclude either ignorance or stupidity.

Here’s why longer sentences for crack dealers is good: they deal in public. On street corners. Probably on the corner of a street where I used to live. One day I actually exited my building to see a body — someone who had been shot in the head on the (suspected) drug corner. That could’ve been anyone. In fact, it’s much more likely to be someone completely uninvolved because it’s in public.

I don’t really care if a drug dealer is going to someone’s upper east side apartment to deliver powder cocaine. Or their high rise office building. That’s a private transaction that has no bearing on me, and even if that drug user loses his job, his children probably won’t be the state’s problem. He’s probably not going to rob anyone. All that will happen is that he’ll get to go to an expensive rehab a few times. Not the same as when a highly addictive drug is popular among the poor: that increases everyone’s problems — the taxpayer (in the form of welfare, emergency room fees for the uninsured, food stamps, extra policing), the neighbor (armed robbery, burglaries), and even the random person walking in the street (muggings, gun violence/turf wars).

Mostly, I’m just tired of hearing this differential in sentencing trotted out as an example of racism in the legal system. Even if we ignore every point I just made, it still remains true that there was significant support from black leadership to enact these stricter sentencing laws.

Ferguson: more irresponsible reporting

I just read the NYT editorial on the Ferguson riots. Without doing their own fact checking, they quoted a “grim report by ProPublica” which claims that young black men are 21 times more likely to be killed by police than young white men.

That report is grim mostly for its failure to link original sources and its tenuous grasp on basic statistics. Let me attempt to improve on it. Their statement that young black males were 21 times more likely to be killed by police than young white men relies on numbers which they do not cite a specific source for. “Federally collected date on fatal police shootings” is as close as we get. In my own research, I have used the CDC Fatal Injury Reports. From the ProPublica report:

The 1,217 deadly police shootings from 2010 to 2012 captured in the federal data show that blacks, age 15 to 19, were killed at a rate of 31.17 per million, while just 1.47 per million white males in that age range died at the hands of police.

I’ve found a few issues with this statement.

1. According to the CDC data, there have been 1,454 deaths caused by police between 2010 and 2012, not 1,217 (excluding females, the number is 1,402). Additionally, that is the number for all ages, so it seems irrelevant if we’re discussing deaths of those aged 15-19: that number is 81 (79 if we restrict to males).

Screen Shot 2014-11-26 at 12.42.22 AM2. It is unclear from the above statement whether they are comparing all blacks age 15 to 19 to white males of the same age range, or if they’re comparing only males to males. I assume the latter because it makes more sense. In that case, the CDC website shows that blacks were killed at a rate of 6.6 per million, and whites at 1.5 per million.

3. That would make the relative risk 4.4 times as high, not 21.

I’m not sure how they reached the 21x figure, but I attempted to re-create this figure by selecting “homicide and legal intervention” for males age 15-19, but that gave a relative rate of 8.4. Then I tried that again, with males of all ages, and that gave a relative rate of 7. I welcome the authors of the ProPublica report to point me to the original sources from which they derived their relative rate of 21.

Conclusions drawn from this report seem to be unvaryingly of one flavor: we suffer from a problem of racist policing. However, here’s another interesting chart from the CDC data

Screen Shot 2014-11-26 at 12.47.52 AM

It’s the same data, but including males of all ages. Here, the black males seem to face twice the risk of white males of death by cop. But if we glance down a bit further, white males are at about twice the risk of Asian males. If we are to conclude, like the NYT article did, that

“These statistics reflect the fact that many police officers see black men as expendable figures on the urban landscape, not quite human beings”

Then I suppose we’ll have to conclude that police officers also see white men as expendable compared to Asian men. Or that the justice system was set up to benefit Asian men. Asian privilege? But if not, if these conclusions sound absurd, then might there also be room at the other end of the spectrum for more reasonable and less racially divisive conclusions? Any speculation you can give about why Asian men are at lower risk than white men should sound also reasonable when you apply it to whites versus blacks. Try that before saying what’s expected of you.

You could also read the grand jury testimony to get the full picture. Or, if you still believe this is an issue of racial privilege, I dare any white male to punch a police officer, attempt to take his gun, then charge him. I want proof that white privilege would have kept Michael Brown alive or seen to the prosecution of his killer. Show me.

Update: Looks like some people agree and ProPublica has had to print a defense of the original report.

Here’s an analysis similar to mine on a cop blog.

Now, if only NYT and other news sites would stop quoting the “21 times more likely” statistic as if it were the gospel truth.

Reader’s Digest

In middle school, there was a magazine drive every year. To motivate us to sell, we were given ‘weevils’ — multicolored fuzzy pom-poms with googly eyes and stick-on feet worth exactly nothing — for each magazine subscription sold. It worked on me.

But, while I was a spoiled child able to convince my mother to subscribe, I was an utter failure outside of my house. That’s why she still has half a bookshelf full of National Geographics that we leafed through at best. They were too pretty to recycle. “We’ll read them someday.” That was more than ten years ago.

Sometimes I find a copy of Reader’s Digest under furniture or at the bottom of a box. Those I devoured cover to cover. I think my mother took the title too literally, imagining that each one contained summaries of great books that she didn’t actually want to read. They didn’t, so that ended her interest in them.

I’m not sure why I found them so fascinating, but now I think it’s because they represented what’s at the heart of White America. What does that even mean. Stories of miraculous recoveries from being coated with hot tar, heartwarming stories about giant but gentle bulls, a page of jokes sent in from military families… 20/20 on paper. Engineered to appeal to the least common denominator. Simple and sensationalist. After your heartstrings without being informative.

I was 12 and I knew that they were full of nonsense, but that didn’t stop me from reading every page. I wish I felt the same way about useful texts.

Tipping: let’s not

This entry was inspired by Wait But Why’s unsurprising blog post on the necessity of tipping (linked below). In the lead in on Wait But Why’s Facebook page, he says

Tipping is about making sure you don’t mess up what you’re supposed to do.

I call his blog post unsurprising because he admits to having once been a server. He claims he was “undertipped” — but I disagree that undertipping is a real thing. I disagree with the tipping system in general, but we’ll get to that. Lots of things make no sense:

Pricey restaurants

When I was in grad school, a fellow grad student told me that he had spent years as a waiter at a high-end restaurants making $100K per year (tax-free). He reported only enough of his tips to make it appear that he was making minimum wage. It was hard for him to leave that lifestyle behind — he only worked dinner hours and was free to party and sleep in the rest of the time.

Sure, he was providing a needed service. But was his work really of more value to society than, well, that of most people? The median income of an American worker is far below $100K, after all. And if your meal at a cheap restaurant costs $10, but a meal that took similar efforts on the part of the waiter cost $100 at a fancier restaurant, does the fancy waiter really deserve 10x the tip?

Claims that waiters rely on tips

According to US Federal law on tipped workers:

If an employee’s tips combined with the employer’s direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.

Though the rest of his article seems … if not well researched then at least researched … his claim that in the case of some tipped workers, “customers are in charge of paying the professional’s salary”. He even goes on to emphasize that for waiters and bartenders:

Your tips are literally their only income.

That is literally not true, unless the businesses they work for are violating federal law.

In what sense can we agree that service workers “rely” on tips? Only in the sense that they are gambling on their salaries: counting on the tipping system to get them more than minimum wage. Because, I’ll say it again, minimum wage is guaranteed by federal law. Even if a tipped worker doesn’t receive a single cent in tips, he will make the maximum of federal/state/local minimum wage, and furthermore, it will be his employer that pays the difference, not the customer — as it should be!

The entitlement

Now that we know tipped workers are guaranteed minimum wage, let’s examine the entitlement. I’ve gone to dinner with foreigners here and let them refuse to tip. We’ve been chased out into the street by angry servers asking if they did something wrong. I’ve been told “the standard tip is 15%” when I had paid the check separately and was intending to leave the tip on the table. I’ve had discussions with people who have been tipped workers, and the attitude is that customers “owe” them at least a 10% tip — and that’s the low end that’s supposed to be reserved for totally crap service. The blog post below claims that it’s never acceptable to tip below 15%.

Why do tipped workers believe they deserve a certain amount? A simplistic answer is that the broken tipping system in America has given them that expectation. It’s the norm to tip. There’s social censure if you don’t. People call you cheap and waiters follow you down the street. But is it reasonable for a service worker to expect more than minimum wage? Most service positions don’t require much in the way of specialized skills or education. They are not any more demanding or dangerous than other minimum wage jobs (WalMart workers, for example). There isn’t a shortage of willing waiters. Maybe I’m missing something, but it seems silly that they should expect more than minimum wage. And if they could get it with their skill set, I’m sure they would work elsewhere — where the salary was guaranteed. Yet, they willingly work for tips — probably because it’s easy to underreport them when it comes time for income taxes.

An alternative

Just don’t tip. There should be a business card that people leave in place of adding a tip. One that says more or less:

Your service was [Excellent Good Fair Poor], but in any case, I don’t tip because your wage should come from your employer, not the customer. If you believe your wage is unfair, you should take it up with your manager.

Maybe there could also be a link to some kind of Anti-Tipping Society with more info on politicians/labor unions/etc that they can become involved in to demand a fair salary that doesn’t rely on tips.

Remember: if you believe that it’s the restaurant’s responsibility to pay the tipped worker and not yours, then you shouldn’t tip — because the restaurant only has to pay $2.13 an hour if you decide to be Mr. Moneybags and leave a generous tip. That’s right — the restaurant paid your server $2.13 while you paid $20 for that $100 meal. Why on earth should you be paying 10 times as much as the actual employer? Why should someone with no special skills or education be making $100K/year, tax-free? Everyone who tips is contributing to the problem we have today. I think the only way to motivate anyone to change this system is to stop tipping.

Everything You Don’t Know About Tipping

 

Push Back

I was at a Beethoven & Schubert chamber concert on Saturday night, and I arrived a few minutes late. There was already a line of other latecomers and the attendant told us she’d let us in between movements. Then a Jewish man slid up, right against the door, and started wheedling to get in. The attendant told him the same as she told the rest of us “when the movement is over.” He didn’t move to the back of the line. Instead, he stayed pressed up against the door, certainly inside the attendant’s personal space bubble.

When there was a moment of silence, he put his meaty hand on the door of the auditorium and opened it. The attendant stopped him, and he started arguing with her. “You said we could go in between movements. The movement is over now.” I think she meant between pieces, when there would be a bit of shuffling of musicians and stage setup. She held her ground though, and closed the door.

“Can I slap him?” N asked me.

“Please do.”

So N gestured at the line, “Sir, we have all been waiting.” The Jewish man smiled and nodded, “mmhmm.” He didn’t move.

I followed up, “Maybe you should get in line like everybody else?”

Then the attendant actually defended him, “Oh there’s no line here, it’s open seating.” This made no sense. If there were tickets, then lines wouldn’t matter. But without them, the best seats would go to whoever gets inside first.

I didn’t let him ruin my evening, but decided I should blog about it. Society would be a much worse place if we encourage his pushy behavior by letting him slime his way to the front of the line, or force his way into the concert hall in the middle of a piece. Instead I think we should push back. People like this don’t care about glares or disapproval. They need to hear “no” from people who have the authority. They need to be told to wait in line like everybody else.

In my ideal world, we’d all stand up to these people whenever they tried their creepy “social engineering” methods for getting ahead. We would all chime in and say “wait in line the rest of us.” We’d all do our part to prevent them from getting what they’re after. We really should not encourage this kind of behavior. Let’s show them that being pushy gets them nothing but disdain. Let’s push back.