Stop Freaking Out About Phone Calls on Stop Freaking Out About Phone Calls on Planes Stop Freaking Out About Phone Calls On Planes
The FCC is reconsidering the ban on cell phone use on airplanes, which was immediately met with action by the Department of Transportation to potentially re-ban them on consumer protection grounds.
Before the DOT acts, I think a deep breath is in order. The following things are currently legal in the United States of America:
- Talking on your cell phone in the movie theater.
- Carrying on a loud conversation with the person next to you on a plane.
- Showing up at a fine dining restaurant with shorts, flip-flops, and no shirt.
- Yelling "hey, man, f*** you!" at your bartender.
It would be very annoying if these things happened frequently. And yet even in the absence of government regulation, they generally don't happen. Precisely because they are annoying, there are norms against doing these things. But more to the point, the state is not the sole purveyor of behavioral rules. You'll get kicked out of the movie theater if you talk on your phone. Airlines don't ban conversations with fellow passengers but if you carry on at unreasonable volume you'll be shushed by your seatmates and eventually by the flight attendants. Life goes on.
We are strong enough to survive this freedom. Either people will use their cell phones sparingly and in a considerate manner, or else airlines will move to ban their use as a matter of corporate policy. The DOT can focus on its real job.
The Dakotas Are Drilling Their Way to Prosperity
Here's a map of the change in median income by county. You'll see that it's down almost everywhere. But it's up in the oil boom country in the Dakotas.
A little natural-resource boom can do wonders for your economy, at least in the short term.
Jim Graham's Insane War on Pop-ups
Here in Washington, D.C., there are some blocks where most of the houses are not built up to the full height permitted by the zoning. Since people are moving into the city and demand for housing is increasing, sometimes the owner of a house like this will add an extra floor.
This is for some reason regarded as scandalous behavior, and it leads to all kinds of freaking out about so-called pop-ups. How, everyone wants to know, can these dastardly pop-ups be halted?! At the same time, everyone is very worried about the lack of affordable housing. Here Aaron Weiner lays out Ward 1 council member Jim Graham's multipronged battle strategy* to prevent the supply of urban housing from growing even a little no matter how much demand increases.
But don't worry—he's for affordable housing too!
* Correction, Dec. 12, 2013: An earlier version of this post said that Graham was my councilman; he used to be, but I now live in Ward 2, which is Jack Evans' district.
The Car Purchasing Morass
Reading my colleague Amanda Hess on Mary Barra and her problematic relationship to the "car guy" concept in the auto industry and also Businessweek's excellent story on Barra's career, I'm left not for the first time scratching my head over basic practices in the automobile industry.
I'm not a car guy and in fact have never owned a car. But I do have a driver's license and a parking space (thanks, mandatory parking minimums!) and maybe I'll own one some day. Let's say it's a couple of years from now, I've got a kid, and my wife and I decide we need to add a car to our arsenal. We navigate over to the General Motors website and look at its search tool and find:
We find ... a lot of car jargon. I feel like sensible consumer-facing brands do this the other way around. The Banana Republic men's website has a link labeled "sharp at work" that I think a man is supposed to click on in order to look sharp at work. You go to "dress shirts" to dress up and to "casual shirts" to dress down. This works because these are all words in the English language that people who aren't interested in fashion understand. Do I really want to spend almost $2,000 for a laptop? No, I don't, and since the laptop in question has "Pro" in its name I know that I—not being a pro—should be well-served by the cheaper one. Right?
So why doesn't GM tell me whether my hypothetical young urban family needs a hatchback/wagon or crossover? I don't know what the difference is.
Which is not to single them out for abuse. Toyota has invested in a very well-designed interactive car-matching tool that opens with this absurd and reductive question:
I dunno, some of each? Right? Like everyone else? And while GM insists on confusing me by asking which brand I want, Toyota errs in the other direction—no matter what you say, they won't try to sell you a Lexus. After all, I didn't navigate to www.Lexus.com so obviously I'm not in the market for Toyota's highest end cars. All in all, the marketing seems to assume that the target is big-time car enthusiast. Someone who's really interested in the internal brand separation strategies of major automakers and wants to master the different genres of automobile.
I'm open to the possibility that this is just a weird quirk of my Manhattan upbringing and normal people find car companies' self-presentation to be totally clear and logical. But I have a suspicion that car companies run by "car guys" may be a little bit excessively cocooned about how this looks to just regular people.
Is Taxing Airfare Regressive?
One question a number of people asked me yesterday about the idea of raising taxes (or "fees") on airplane tickets is whether this is a regressive tax increase or a progressive one.
There doesn't seem to be any clear data out there about the income profile of American air travelers. But I think common sense can tell us a few things here. One is that at the top end, it's pretty clearly going to be regressive. Which is to say a person in the 80th percentile of the income distribution almost certainly spends a larger share of her income on airplane tickets than does a person in the 99.9th percent. Among other things, really rich people don't fly commercial at all!
But conversely, unlike a general sales tax you'd think a tax on plane tickets would largely spare the poor as people who are really struggling economically almost by definition don't have the luxury of worrying a lot about vacation expenses.
The bigger issue is that the actual incidence of this tax hike is going to be hard to figure out. You have two pretty distinct markets for air travel, one consisting of leisure travel and the other of business travel. The business travel market is fairly inelastic. Business travelers will look for a good deal on a flight, but if there's a meeting in Chicago and all flights get more expensive because of some new tax, then they're just going to pay the tax. The leisure travel market, by contrast, is very price sensitive. People have an amount of money they can afford to spend on vacation and find a plan that fits the budget. There's a welfare loss if higher taxes make you switch plans to a different destination (someplace you can drive to, say), but the economic loss is going to fall on the airline, which lost a chance at the sale. Those losses will trickle down throughout the airline value chain which is why, for example, you see a major pilots union blasting the deal.
Don't Get Tricked Into Swimming in This Swiss Vault Full of Money
JamesEdition—the billionaires' version of eBay—is auctioning off a chance to connect with your inner Scrooge McDuck by lounging in a bank vault filled with currency. The vault in Basel, Switzerland, is filled with 8 million real Swiss coins, which works out to roughly $450,000.
Here are some intrepid vault laborers shoveling the money:
Gizmodo thrilled at the JamesEdition listing, saying it would "fulfill every person's childhood (and adult) dream of swimming in money." Sorry to be a killjoy, but as much fun as it sounds, attempting to swim in 15 tons of Swiss doubloons would be extremely painful at best, and potentially life-threatening at worst. (Now, using that money to fill a swimming pool with cornstarch or spaghetti would be a much more reasonable, enjoyable alternative).
We are only human beings, and unfortunately cartoon physics don't apply to us. The Billfold's Matt Powers has put McDuck's wealth at $210 billion—making the Disney 'toon $137 billion richer than Carlos Slim Helú. It's time to accept the fact that Scrooge McDuck will always have it better than we do.
Good News for People Who Want Doritos-Flavored Chicken Wings
PepsiCo, makers of not just Pepsi but also various delicious snack products, struck a deal today with Buffalo Wild Wings to become the chain's exclusive soft-drink provider.
“You’ve got to get in the door with great beverages,” said Kirk Tanner, president of PepsiCo’s food service business, which supplies restaurants and other institutions with the company’s products. “But what this partnership does is give Buffalo Wild Wings a full access pass to all that PepsiCo has to offer.”
Of course PepsiCo has a lot to offer besides beverages. Quaker Oats oatmeal, for example. But I doubt we'll see oatmeal revolutionizing the Buffalo Wild Wings menu. The game-changer is to follow Taco Bell's lead and incorporate delicious chips into the food. Doritos-flavored wings. Or something with Fritos. Fritos are great.
Wall Street's Puzzling Sadface
Ben White and Maggie Haberman have a good feature story about incredibly rich financial services people who have far more money than they could possibly know what to do with feeling frustrated by a political process that leaves them stuck with the choice of vast riches under Barack Obama or gigantic tax cuts under Republicans. No, I don't understand it either. Nor do I particularly understand the hankering for a Hillary Clinton administration that will allegedly restore the sheen of some alleged golden days that allegedly existed when her husband was president.
The sort of baffling nature of the complaints is captured here on the second page:
Despite Emanuel’s own foray in banking (he earned more than $18 million in a two-and-a-half year stint as a managing director in the investment firm Wasserstein Perella) there was a prevailing sense among these Wall Street Democrats that nobody in the White House understood the industry. Bankers could certainly present their arguments to first-term Treasury Secretary Timothy Geithner, whom many knew from Geithner’s tenure as head of the Federal Reserve Bank of New York, but they believed that was as much of a hearing as they would get. “Tim was someone everyone knew and could talk to, but beyond him it’s fair to say the business community was uniquely without influence,” one senior Wall Street executive says of the early days of the Obama administration.
The financial industry was without political influence in the Obama administration, with the small exception of the Treasury Department. There was nobody in the administration they could talk to, except the treasury secretary. What?
When the CEO of Papa John's complains about the Obama administration, he at least has the decency to say that he thinks the Obama administration's tax and regulatory policies are going to cost him money. He doesn't whine that senior White House staff don't understand the fast-food industry (why would they?) or that he can't make direct phone calls to enough Cabinet secretaries.
Given that most business executives from time to time find themselves wanting concrete tax and regulatory favors from the federal government, they manage to at least keep their egos in check the rest of the time. But Wall Street seems to want low taxes and light regulation and bailouts, and they want political leaders to thank them for it. I think, honestly, that it's not going to happen. You're never going to get a more finance-friendly public figure that Mitt Romney, but even he wasn't giving speeches hailing the virtues of derivatives trading as a vocation. He talked a lot about Staples, because creating a better office supply business seems like a worthwhile and useful thing to do with your time.
Central Planning in America
Most people think that they think that Soviet-style economic central planning is a bad idea. They generally think it's not just a bad idea but a discredited idea. One that has almost no support in America today. But there are important exceptions to this rule. There is an overwhelming unquestioned bipartisan consensus in the United States of America that the correct way to decide how many parking spaces new developments ought to have is for the zoning code to specify a quantity and then for developers who want to build a different quantity to go begging to politicians for relief.
Are members of the Rockville, Md., town council experts in real-estate development? In parking management? Are they putting their own money on the line in the success or failure of projects in the center of their town? Of course not! Nonetheless:
Mayor Bridget Donnell Newton said she attended the Christmas tree lighting recently and was unable to find a parking space in Town Center. Councilman Tom Moore said he would like to get a briefing on Town Center parking from city staff before making a decision.
Councilwoman Virginia Onley said the proposed parking reduction was her biggest concern with Duball’s plan. In Petworth, she said, some apartment residents have a Safeway downstairs. In Rockville, Town Center residents have to get in their cars to go to Safeway.
Suppose other kinds of business decisions were made this way. Maybe someone wants to open a burger joint in Rockville, but he doesn't want to serve milkshakes. One councilman says the last time he wanted to get a milkshake there was a very long line, so obviously the new burger place must serve milkshakes. Another councilman protests that he doesn't even like burgers. Aren't more people vegetarians these days?
Market forces aren't good at everything. But striking a balance between the demand for some service (parking) and the cost (including opportunity costs) of providing it is exactly what market forces are good at. And yet somehow when it comes to parking spaces no politician in America is radical enough to suggest that the solution is to build as much parking as people want to pay for.
Carrier Subsidies Are Loans, and You Should Welcome Their Death
A very confused TechCrunch piece by John Biggs bemoans the possible future end of carrier subsidies in the American mobile phone market. The right way to think about this is that the "subsidies" aren't subsidies at all, they're loans. If you compare what AT&T or Verizon charge as a monthly rate with what a service like Ting or the new no-contract T-Mobile plans cost, you'll see that the big boys are charging a massive premium. That premium, paid over the life of a two-year contract, is the interest you are paying on your loan.
The carriers are exploiting our shortsightedness (and the fact that banks don't offer a mobile phone loan product) to get us to pay much more for "phone plus service" than we would otherwise pay.
Where Biggs is right is that a move to a nonsubsidized model would be bad for the phone-makers, since the way the carriers run this bait-and-switch requires them to throw some extra scratch in the direction of Apple, Samsung, Motorola, or whomever. But consumers would be better off. There's a reason we don't buy cars that are tied to a particular oil company and feature a two-year contract to exlusively fuel your vehicle with overpriced gasoline from one particular vendor. The only reason the subsidy model has lasted as long as it has is that spectrum scarcity makes the market for network access rather uncompetitive, and lets exploitative business models live fairly long lives. But it's not a totally uncompetive market, and the walls will and should come down.