Loeb Blow

I am pained by the criticism of me in Slate for writing an essay on personal finance that ran in a special advertising section in the March 22 issue of Time. Much or all of the criticism is based on a false assumption: that I was paid by Time for this assignment.

In fact, I did not receive payment from anybody--not one penny. Time did offer to pay me a fee, size unspecified. I declined. But I suggested that Time might want to make a contribution to one of the charities of which I am an officer and director, Recording for the Blind & Dyslexic. Time, of course, was pleased to do so. I do not know the size of this contribution. My name will in no way be attached to it. I certainly will not receive a tax deduction for it. I will receive no credit for it in any way. To reiterate as emphatically as I can: I was not paid by Time, not paid by Time Inc., not paid by the advertisers, not paid by anybody in any way. This a key point that I should have clarified and corrected earlier.

So why did I accept the writing assignment? I did it because Time offers a magnificent platform, because I frankly don't mind the limelight, and because I believe that the counsel and cautions I have to offer about personal finance may be useful to other people.

This is also a good time for me to reiterate that the Columbia Journalism Review was, is, and always will be independent, tough-minded, fair, and impartial in all its judgments.

--Marshall Loeb

Editor, Columbia Journalism Review
New York City

Judith Shulevitz replies: When I interviewed Marshall Loeb, he said, according to my notes, "I am paid by Time Inc." He did not tell me that the payment had been made to charity and not to him personally. He now says he does not remember whether the decision to give it to charity was made before or after my item appeared. He also says that payment for the first two advertorials went to his book publisher and that he also did not profit directly or indirectly. This is something else he did not mention in our interview. It seems clear that Loeb has not personally profited from writing advertorials. I think my misunderstanding on this point is understandable, but I apologize for suggesting otherwise. I still think it is wrong from someone in Loeb's position to be writing advertorials, even for free.

Game Over (and Over)

Your discussion of the winner's curse as it relates to online auctions (see "The Agony of Victory") overlooked one very important point: the multiplier effect that comes from the power of the Internet to reduce transaction costs.

Let's take video games as an example. Over the last five years I have bought one or two new video games a year, ones that seemed so great that they were worth the $50. The main reason I only bought one or two was I knew that after playing them I would generally be stuck with them. Sure, I might be able to sell them to a used software store, but I wouldn't be able to get more than $5 or so because those stores must mark them up so substantially to cover their own costs. Now, thanks to Internet auctions (eBay being my personal favorite) I can do most of my game shopping online. When I was interested in picking up the new smash hit Unreal, I went to eBay and saw that over the past month some 70 or so copies of that game had been auctioned for about $22 each. Over the following week or so I tracked the 20 to 30 auctions for Unreal that were going on, and I eventually won a copy for $18.50 plus $4 shipping. The game arrived, I played it for a few weeks, and then I put it back up for auction right there on eBay and made back almost all of my money.

Now that consumers know that there is a fluid aftermarket for video games, they are more likely to go into a store and buy one of these games for full price on the day it comes out. They know that they can play it and auction it off right away online when its value is still quite high. The net result is not only far more transactions at much lower costs but also a sharp increase in market participation, thanks to the price discrimination seen over time. (If you're not willing to pay $22 wait a few months until the online market is only going for $16.)

In addition, any effects of the winner's curse are offset by the fact that "losing" bidders become "winning" sellers when they re-auction products. The winner's curse can therefore be said not to exist for products that we buy, enjoy, and resell without using up their inherent value.

The winner's curse may be pervasive in auctions for Beanie Babies and Faye Dunaway's eye mask, but that is in large part because those items have such little inherent value, and they can lose their public appeal overnight. Even there, though, the magic of the Internet auction helps out one last time: He who has overpaid for Faye Dunaway's eye mask can enjoy it for a bit and then put it right back up for auction.

--Bart Scott Epstein

Charlottesville, Va.

A Kosovar by Any Other Name

Just a point of clarification--these refugees from Kosovo are Kosovars, not "ethnic Albanians" as much of the media keep singing. If they are not Kosovars, then Jesse Jackson is an "ethnic African," Dan Rather is an "ethnic German," and Simon Wiesenthal is an "ethnic Jew," and so on. Please label things correctly. Calling the Kosovars "ethnic Albanians" makes it sound as if they are really Albanians, though they have lived in Kosovo for over 500 years.

--Professor Samuel Hamod, Ph.D.

San Diego, Calif.

Clearing Up

"Today's Papers" asked, "Why did the weather prevent NATO from hitting the Serbian forces purging the refugees, when it didn't seem to hamper the bombing of Belgrade? ... The papers have shed little light on how poor weather can impede various missions."

Here's the answer: Bombing buildings in Belgrade, or other fixed sites with known coordinates, can be accomplished by GPS (Global Positioning System, a satellite navigation service)-guided weapons, such as Tomahawk missiles. It is not necessary to be able to see the target. Bombing mobile targets, such as troops performing ethnic cleansing, requires the use of laser-guided weapons. Because we don't know in advance where these targets will be, we can't use GPS-guided weapons, and laser-guided weapons require clear weather to operate.

--Lt. Cmdr. Sean Peters, U.S. Navy

Chesapeake, Va.