Coyote Blog

The current refugee surge into Europe has caused a lot of my friends who are immigration restrictionists to say this proves that I am naive.

During the Cold War, we (including most Conservatives) considered it immoral that Communist countries would not let their people leave (Berlin Wall, etc.).  Now, however, it is argued by many of these same folks that it is imperative that the Western democracies build walls to keep people out.

So here is a question -- not of practical consequences, but of pure morality.  Consider this picture of people being prevented from crossing the border.

Explain to me why this scene is immoral if the wall and police forces were put there by the country at the right (the leaving country) but suddenly moral if the same wall with the same police force were put there by the country on the left (the receiving country).  Don't they have exactly the same effect?  Same wall -- How are they different?

Local AZ water district offers manure share program.

** This post is the result of an email exchange with a reader where we joked about a blog Turing test.  So this is my attempt to imitate Glenn Reynold's style.  How did I do?

I just got the first year bill from my payroll company for the extra reporting we have to do each year vis a vis Obamacare:  $7195.50 for 2015.  Note that this adds absolutely no value -- this is not the cost of insurance or cost of any extra taxes sent to Uncle Sam.  This is merely the cost to handle all the new paperwork required in the law.

I will repeat what I have said before -- the Republicans tend to focus narrowly on taxes and often tend to miss or downplay the regulatory issues, which I think actually loom larger in destroying economic growth.

99% of the examples you will ever hear of resources being "raped" result from lack of property rights on those resources or insufficient legal protections for those rights.  This video says it all (starting at 1:00 but the whole thing is funny).  Money line: "There might be a few more polar bears left if people wanted one for breakfast"

Despite my advancing years, I still like to stay on the bleeding edge of tech, at least tech gadgets (in fact I would argue that I am of an age I have a hard time taking anyone seriously who calls themselves a hard-core programmer that hasn't had to write in assembly language, as I did back in college).

So I enjoy having 20-something's regale me on new tech goodies at sites like Gizmodo and Engadget.  But a running theme through all these sites is their shocking economic ignorance.  A good example was yesterday at Engadget with Sean Buckley writing on a decision in California to declare Uber drivers as employees of Uber rather than independent contractors.  Months ago I described a similar decision as signalling the death of Uber.  Buckley writes: (my emphasis added)

If you ask Uber, none of their drivers are employees -- just independent contractors who happen to use their network to get fares. If you've been watching the news though, you know some drivers disagree: filing lawsuits both in California and the UK for the right to be recognized as employees. Those drivers just got some vindication, by way of the California unemployment office. According to the Employment Development Department, at least one former Uber driver qualifies for unemployment benefits.

According to Reuters, the EDD decided that a former Uber driver in southern California was an employee; the decision was held up twice by a administrative law judge when Uber appealed. Apparently, Uber's control over the driver was a deciding factor -- the company gets to define fares, bar drivers from picking non-Uber passengers and can even charge drivers a cancellation fee for choosing not to pick up a fare. That's "in fact an employer / employee relationship," according to the decision.

Uber says this ruling doesn't have any impact on pending litigation, but it's certainly a feather in the hat of drivers who want a more traditional relationship with the company. We'll have to wait and see how that turns out as the class-action lawsuit moves forward.

I won't repeat what I wrote here, but suffice it to say that I think Uber is a dead duck in the long run if forced to treat drivers as employees.

The amazing line to me is the highlighted one.  What gives the author confidence that most Uber drivers "want a more traditional relationship with the company."  Is that what you want, more timeclock-punching and 100-page employee manuals?  My experience is that most Uber drivers value the fact that it is not a traditional job environment, and gives them a ton of flexibility on work hours, productivity rates, etc.    And why, by the way, is it assumed that every job must offer the same kind of employment relationship?  If someone doesn't like Uber, there are plenty of companies that will happily treat them like a mindless drone if that is what they like rather than being treated as an independent actor.

By the way, beyond the economic and liberty issues involved, I also think the California decision is just plain wrong in terms of the control Uber exercises.  Sure Uber sets standards for its drivers, but everyone does that for their contractors.  They key thing it does not do is set work hours and productivity rates.  They don't care when you work and they don't care how many passengers you carry in an hour, because you just get paid when you drive a customer.  Can you imagine a company that doesn't care when its employees show up for work or how hard they work when they do show up?  Neither can I, which tells me that this is NOT an employer-employee relationship.

Remember the conversation a few weeks ago over the NY Times article that tried to make Amazon out to be some kind of employer ogre because it sets tough productivity standards for employees?  That is what companies do when they have to pay by the hour (which is essentially how all employees, especially after Obama's most recent changes, must be paid).  So if you don't like companies that set tough productivity standards for workers, then why are you trying to kill labor models that don't require those kinds of standards?

From Mark Perry

If you have ever been at, say, a kids sporting event and had an ambulance or paramedics called for one of the kids, you likely also had a fire truck accompany the ambulance or paramedics.  Did you wonder why they needed a firetruck with a 6 man crew to handle a broken leg in an open field?   Its because most public firefighters unions have gotten local laws passed that require a fire engine to always accompany the paramedics.  Why?  No reason other than they are trying to make firefighters look busy so no one starts to question why we have so many sitting around doing nothing.

Union leaders and fire department chiefs have found new ways to justify their growing budgets and payrolls. In a February 2001 report, the Wall Street Journal noted that 90 percent of firehouse calls in Los Angeles, Chicago and certain other cities were to accompany ambulances to medical emergencies. “Elsewhere, to keep their employees busy, fire departments have expanded into neighborhood beautification, gang intervention, substitute-teaching and other downtime pursuits,” the newspaper added.

YP is the modern name for what used to be the Yellow Pages.  Obviously, yellow pages are a dying business.  Ten years ago the Phoenix Yellow Pages had to be broken up into two books, each a couple inches think.  I happened to see one the other day, and it was the size of a short novel.  They tried to move to the web, but who goes to Yp.com (vs. google or Yelp) to find a business?

Even in the glory days of yellow pages, it was always hard to cancel their service.  If you did not tell them by like August, they would start billing you for the next year and sic a collection agency on you if you disputed it.

However, it appears that now that YP is a dying business, and knows that each lost customer will likely never be replaced, it has turned into the Hotel California.

In 2013, I left a location in Ventura County.   We had advertised in the Yellow Pages for years (back when it made sense) and had never been able to cancel it in time -- by the time we remembered it each year it had already auto renewed.   Soon after we left, I notified them that we needed to cancel.  At the time, I tried to negotiate a reduction in the 2014 charges but figured I probably would have to pay them, which I did.

Then, in 2015 I started getting bills.  I called each month patiently explaining and sending letters that we had already cancelled.  They would say that they had no record of my ever calling, but they swore they would mark the account as closed and that it would be fixed.  Then the next month it would all repeat -- a bad customer service Groundhog Day.

Finally this week I started getting legal threats and collection agency notices that I owe $499 for 2015 and that my life would be left in ruins with the ground salted if I did not pay immediately.  So I called today and AGAIN they had no record of my cancelling -- in fact, it was on a path to renew again for 2016.

Look, I am the first to tell folks to never chalk up to conspiracy what can as easily be explained by mass incompetence.  But at some point one has to suspect there is fraud going on here to retain customers as long as possible for a dying service.

So here is what I am left with -- I found someone in their organization who may be willing to settle my non-debt for non-services for a couple of hundred.  I told them this was absurd, since I did not owe it, but that I would pay a couple hundred dollars if they would give me a letter that said the account is closed and fully settled.  From the outside, this may seem a bad trade.  But I have enough lawyers in my life and hiring lawyers would be the only way to solve this any other way.  And besides, $200 is cheap compared to the thousands of dollars of my personal time I have spent farting with this.

Update 9/27/15:  God, this is Groundhog Day!  YP said that I should send a certified letter to such and such address to make absolutely sure that my account was cancelled.  I sent it to that exact address, braving a 30-minute line at the post office to do so.   So of course, the letter just came back undeliverable.  I have held off saying this, but these guys are total scam artists.  They seem to have no intention of ever letting me leave.

We had a private tour in Vienna from a very good tour guide.  Apparently, to become a tour guide in Austria requires that one study for years and take a special government test to get a government license.  It does not matter if one wants to just focus on, say, giving special Klimt-only tours at the Belvedere or if one wants to give comprehensive cross-city tours, one still must pass the same test to practice tour-guiding.  This, by the way, is entirely parallel to how most US states require one to get a full dental license after a bajillion years of school whether one wants to repair cavities or just whiten teeth.

As a result, tour guides seem to get 80 Euros an hour and up.

Anyway, as we walked we were chatting with her as she called a cab.  We asked if they had Uber in Vienna, suspecting that they had the same conflicts with it as in, say, Paris.  But she had never heard of it, so we explained the concept to her.

To her credit, she immediately got it, so much so that she immediately thought about it in the context of her job.  She said, "Can you imagine, if any housewife could give tours and charge 30% (of her rate)?  I would be looking for work the next day."

I am not totally sure that is true -- there is more differentiation in quality of tour guides vs. cab drivers.  But she recognized that a portion of what she earned came because the license she had gotten from the government excluded a lot of potential competition.

In reading reviews of European restaurants to try to find places to dine, I saw a lot of criticisms of their service.  There seems to be a meme among travelers that Austrian restaurants in particular often have bad service.

I am not sure I can agree with this -- we had a lot of good wait-staff in Austria  But I can say that they had to service a LOT more tables than a typical American waiter.  I don't know what the standard is today, but it used to be that 4-6 tables was the max American restaurants considered that a waitperson could cover and still provide acceptable service.  In Austria, the number was often double that.  I watched one gentleman memorably service almost 20 tables during the busy lunch hour at a museum cafe in Vienna.  I can tell you he was working his butt off but we still had to wait for basic service like ordering or paying our bill or getting our food delivered.

I pair this information with a second factoid from a travel book we read when trying to figure out what tipping policy was over there.  The book, as well as most other sources we consulted, said that tips for waiters in Austria and Germany could be less generous because waiters were paid much more than in the US -- a fact that the source considered a point of superiority over the US for the Europeans.

That may or may not be -- personally, I have never like the US tradition of restaurants outsourcing the paying of their staff to the customers.  But it may well be that these higher wages have their cost in the form of reduced customer service, as restaurants are forced to minimize their higher cost staff to keep prices reasonable.

In Europe, we stayed several times in rental apartments we found through the invaluable VRBO website.  One advantage of these apartments is that we can cook breakfast, avoiding the high-priced breakfasts at many hotels.

So I found myself shopping for orange juice in Austria, with a number of choices at hand, but none recognizable to me.  Skeptics of capitalism often point to branding and brand-based advertising as particular wastes of resources.  But I would have loved to see an orange juice brand I recognized.  Brands are essentially a guarantee of  predictability -- whether I like the taste or not, I know what a Big Mac will taste like in Omaha or Beijing.  Brands are an enormous aid to shopping and making choices, and in this manner create real value for us as consumers.  I missed recognizable brands when I was in Europe.

PS-  Coca-Cola and Pepsi are obviously the exceptions to this predictability game.  Diet Coke, called Coke Light in Europe, tastes entirely different in Europe than it does in the US -- in fact it tastes more like what Diet Pepsi tastes like in the US.  Which is ironic, and fitting I guess, because Diet Pepsi in Europe tastes a lot like American Diet Coke.

When first presented with the idea of the Hyperloop (a train running in vaccuum in an underground tube), I was extremely skeptical it made any sense.   Sure it might work (after all the London tube started out as a pneumatic system much like those that older ones of us remember sending receipts around department stores).   But did it make any economic sense.  Was it really likely that, if we can't afford rail lines above ground easily, we could afford to build thousands of miles of air-tight large-diameter tubes?  Honestly, it looked to me like any other silly idea on the cover of Popular Mechanics, right next to the titanium zeppelin the size of Connecticut that would someday be doing construction work.

So enter Elon Musk, who is very passionate about the idea, claims to be convinced it will work, and appears to be putting some money behind it.   With his support, the idea must immediately be treated as more credible, and it does indeed get a lot of press.  But here is the problem for me with Musk:  With him, the idea must also be treated as very probably another attempt by him to drain money out of the taxpayers' pockets into his.  Because that is what he does in so many of his enterprises.

I have seen this story all over the place, touting some Indian airport that will, gasp, entirely power itself with solar.  Look at the picture environmentalists are bragging about.  The solar panels to power a few buildings cover perhaps 10x or more of the land taken up by the buildings themselves.  They paved paradise and put up ... a solar farm.

I was thinking about the crazy populist nuttiness of Donald Trump and the misguided focus of Black Lives Matter and the musty socialism of Bernie Sanders.  As I drive around Europe and see ruins of castles and palaces, it occurred to me that we had almost always been saddled with an aristocracy exercising power over us.  Sometimes they won that position through violence and military action, and sometimes by birth.

But it struck me that we have a new sort of aristocracy today:  the Aristocracy of Hucksterism.  These new aristocrats are just as wealthy and powerful as the old sort, but they have found a new way to gain power -- By suckering millions of people to simply hand it to them.   And when they inevitably fail, and make things worse for everyone, they additionally manage to convince people that they root cause of the failure is that they had not been given enough power.

BLM coalesced as a reaction to police brutality and lack of accountability for how they treated black citizens.  The organization claims its problems are rooted in the ghetto-ization of blacks that has robbed them of their agency.

Can I observe that both these problems are ones of an out of control, unaccountable, over-powered government?  Police are government officials allowed to operate with few checks on their behavior.  Black ghettos were explicitly created by the New Deal and maintained by Federal policy for years.  No doubt many private citizens are still racist, but they can't legally shoot you on the street or say where you can and can't buy homes.

So why does the leadership of BLM so consistently support the further expansion of government power?

I still find this whole notion of opposing cultural "appropriation" to be bizarre and awful.   I am not really an expert, but in the few areas that I know, some of the greatest moments of cultural innovation have come from cross-pollination of cultures.  For God sakes, the cultural non-appropriators would never have allowed white British boys in Liverpool and London to play black American blues, but much of modern music owes its roots to this strange synthesis.  Keith Richards and Mick Jagger spent years trying to be Howlin' Wolf before anyone heard of the Rolling Stones.  I know that black musicians were resentful of the appropriation in part because the white bands made so much more money than they did and killed what market demand there was for their music.  But that just forced African Americans, some of the greatest musical innovators the world has known, to innovate again and again to keep ahead (e.g. Motown, funk, rap, etc).

In a previous post, I observed that the opposite of cultural appropriation is cultural apartheid.  I would add that the opposite of cultural appropriation is cultural stasis and stagnation.

Fortunately, Suze Orman and Jim Cramer are on the case.   Because why do we have a government if not to keep asset bubbles inflated as long as possible?

I am in Europe for a little bit.  I have not blogged because I either had a good Internet connection, but no time, or vice versa.  I am now on Lake Maggiore at a little town called Gerra for a few days, and watching the rain on the lake (perhaps this is disappointing for other travelers, but for Phoenicians watching a cold rail fall is a treat).  This area is an odd one, barely inside Switzerland.  Most of the folks are bilingual in German and Italian but most speak Italian day to day and most of the road signs are in Italian.  But they price their services in Swiss Francs, so they are no fools.  It all seems to work fine and be a source of pride for local residents.

Here are a few notes so far from our trip:

• T-Mobile's rock-bottom international roaming rates appear to be the real deal.  I have gotten service everywhere we went and free (if sometimes slow) data.  The only problem so far is I can't send or receive MMS (SMS is fine) so I can't send my kids the usual picture travel-log I like to send.
• Until today, XCom Global's European roaming wifi hotspot was great.  It worked in Switzerland, Austria, and Germany but failed me in Austria when the separate Austrian unit they sent me turned out to have a bad sim card.  They claim the other unit that works everywhere else will work in Austria as well -- we shall see, but if that is true, why did they send me a separate Austrian unit?
• The Mercedes plant tour at Sindelfingen, Germany is great.  I could have stayed all day.  I have been on a lot of plant tours, and some have been very intimate with the machinery.  But those tended to be private tours.  This is the most up-close and personal I have ever gotten on a public tour.  The tour covered a large stamping plant and a final assembly line.  We took the 1:00 English tour, which I think is the most complete one.
• I have never been to Baden Baden, Germany before.  A beautiful town with a 19th century vibe, we stopped there only because we needed to stop somewhere not far from Stuttgart.  We ate an incredible meal at the Michelin one-star Brennar's Park Hotel Restaurant.  Lichtentaler Allee was one of the most beautiful and peaceful public parks I have ever walked.
• Last night we went to the opera at Bregenz (you may have seen it in Quantum of Solace, or you can google the amazing stages).   I thought the performers were from meh to fine, but not outstanding.  The staging though was gorgeous, probably the most beautiful stage production I have ever seen.

Apparently Alexa ranks Coyoteblog 181 among "Conservative" and center-right news and opinion sites sites.  I am not sure how a web site that supports gay marriage, legalized narcotics, and legalized prostitution can be "Conservative" but I understand that there are those who group everyone who is not socialist under the "conservative" moniker.  Honestly, in the age of RSS feeds and twitter and many other ways to read a site, I am not sure if this means anything.  Particularly since I see no possible way we have more readers than Volokh.  But there you go.  Thanks for the link from Maggies Farm, who aces us out at 159.

Vox shares what is perhaps the greatest achievement in human history, the continuing disappearance of absolute poverty:

Readers of this blog will likely  have seen this before (though it may well be new to Vox readers).  Here is the amazing thing about the Vox article:  It never once mentions capitalism, trade, economic freedom, or any synonym.  Here is a sampling of the tone of the accompanying article:

There's still much work to be done: 14.4 percent of the world amounts to 1 billion people who still need to be lifted out of extreme poverty. And making sure everyone's making at least $1.25 a day isn't the end of the fight either. The world's median income is still only $3 to $4 a day. By comparison, the poverty line in the US for a family of four is $16.61 per person per day. Once under-$1.25-a-day poverty is eradicated, the world needs to set about eradicating under-$15-a-day poverty, which will be a substantially harder task.

Vox is treating this like it is the result of some top-down effort, using the same language one might use to describe the eradication of Yellow Fever in Panama.  As if this resulted (and as if future progress depended on) some all-hands-on-deck technocratic government program.

No one "set about" eradicating poverty.  It happened because governments, at least to some extent, got out of the way and didn't stop it.  China is a great example.  Mao "set about" trying to eliminate poverty using many of the approaches likely favored by the Vox staff, and killed a few tens of millions of people in the process.

Here is my theory of the world's accelerating wealth formation that I have written on a number of times before.  This chart largely results from:

• There was a philosophical and intellectual change where questioning established beliefs and social patterns wentfrom being heresy and unthinkable to being acceptable, and even in vogue. In other words, men, at first just the elite but soon everyone, were urged to use their mind rather than just relying on established beliefs and appeals to authority.
• There were social and political changes that greatly increased the number of people capable of entrepreneurship. Before this time, the vast vast majority of people were locked into social positions that allowed them no flexibility to act on a good idea, even if they had one. By starting to create a large and free middle class, first in the Netherlands and England and then in the US, more people had the ability to use their mind to create new wealth. Whereas before, perhaps 1% or
  less of any population really had the freedom to truly act on their ideas, after 1700 many more people began to have this freedom.

So today's wealth, and everything that goes with it (from shorter work hours to longer life spans) is the result of more people using their minds more freely.

I need to try to be fair to Yelp.  A reader sends me some second-hand comments from an ex-employee at Yelp:

He absolutely believes that there is no way for Yelp to hide or promote reviews just based on who the company is. This doesn't mean that they're not, of course. What my colleague says, though, is that the overriding criterion that they use to determine if a review should be "recommended" is if they can verify that the writer is a real person.

There are a couple ways you can do this, but two that will actually cause all of your past reviews to suddenly become recommended:

1) Work for Yelp--not really helpful, I know. I am told that Yelp will instantly fire anyone who leaves reviews while working there. But, once you leave, all of your reviews will always be recommended.

2) Connect your Yelp account to your Facebook, then connect with 100 friends.

There are other ways to have past reviews always come up recommended. If you post a review or several reviews, and, in aggregate, you get four interactions (they are marked as funny, cool, or useful), this will happen.

So I went back and looked.  To see if one's reviews are in the non-recommended purgatory, you have to log out (Yelp will pretend to you that you are recommended until you log out**).  Sure enough, all my 9 reviews seem to be in purgatory.  In other words, any effort I expended on reviews has been wasted, because Yelp does not show them.  I tend to write longer reviews, so apparently writing fewer more detailed reviews is not a practice Yelp wants to promote.  Do they prefer folks who spam lots of short reviews?  I can see how that may be, since more reviews bulk up Yelp's numbers.

I don't know what to make of this feedback.  At one level, it seems right and makes sense.  There are a lot of not recommended reviews where the review has just that one review.  But not always.  For example, for this store, reviewers with no picture, no name (just initials), just 2 total reviews and no friends are recommended, but someone who has a picture, a real name, 1 friend and 31 reviews is not.   I have to say that either their algorithm has some purposely random element (to defeat reverse engineering) or else there are other factors involved than just the ones listed above.  Also, some of the advice above simply has to be wrong.  For example, the last sentence makes no sense since it is impossible to upvote or favorite reviews in not-recommended purgatory (they don't even give you the buttons to do so).

I will post some more reviews over time to see if I get pulled out of spam status by their computer, or if I am permanently exiled based on a corporate complaint.

** By the way, this could be the subject of a gripe in and of itself.  It should not be so opaque that one's posts are all getting sent to the Yelp spam folder.  It is kind of insulting to invest this effort and then find out later Yelp is trashing everything I write.

The people behind all of this were frightened of Muskie and that's what got him destroyed. They wanted to run against McGovern. Look who they're running against.

-- Deep Throat, in the movie "All the President's Men"

This is not the most amazing story I have ever heard told about political machinations, but it is perhaps the most amazing told by a sitting politician about her own actions.  How Democratic Senator Claire McCaskill (proudly) manipulated the GOP primary to get the incredibly weak opponent she wanted.  As told by ... Claire McCaskill.

It was August 7, 2012, and I was standing in my hotel room in Kansas City about to shotgun a beer for the first time in my life. I had just made the biggest gamble of my political career—a $1.7 million gamble—and it had paid off. Running for reelection to the U.S. Senate as a Democrat from Missouri, I had successfully manipulated the Republican primary so that in the general election I would face the candidate I was most likely to beat. And this is how I had promised my daughters we would celebrate.

 

Update:  This post may be unfair, as discussed here.  I am not fully convinced, though.

I won't repeat what I wrote before, but several months ago I wrote a long article about my suspicions that Yelp was using its review recommendation system to disappear reviews its corporate sponsors and their attorneys did not like.   My evidence was based on my actual experience writing a detailed, fact-based negative review of an insurer, only to have it disappear from the site and be left out of the insurer's overall score.

It took me a long time to find the review, along with dozens of others, in a purgatory of "not recommended" reviews reachable from a near invisible link that doesn't even look like a link.  I won't retype the whole post but my evidence was in part:

• Yelp says it is sending reviews to not-recommended purgatory because they are of lower quality or have reviewers with less reviewing history on Yelp.  But a scan of the reviews in my case showed no such pattern.  Not-recommended reviews were at least as (and arguably more) detailed than recommended reviews, and there was no discernible difference in reviewer experience.  The not recommended reviews were also no less moderate, as there was immoderate language (and horrible grammar) in accepted reviews while there were calm and reasoned reviews that were rejected.
• What the not-recommended reviews had in common was that they tended to be more negative on average than the recommended ones (which is hard to do because the recommended reviews average to about 1.5 stars)
• Looking at several local independent restaurants, I saw no or few not-recommended reviews and pages and pages of recommended reviews, a ratio that was reversed for the major insurer which presumably has far more resources to intimidate or buy off Yelp.  For the insurer, there were two not-recommended reviews for every one recommended one.
• I knew this insurer to be willing to litigate against bad reviews, since they have sued me for libel to remove my review.  Presumably, they would not hesitate to threaten Yelp as well.
• Yelp already has a review quality system driven by upvoting by customers based on the usefulness of the review.  So why the need for an entirely parallel review-rating system unless that rating system was for an entirely different purpose than quality control.

Yelp got a lot of grief a while back accusing it of deleting reviews, so its CEO has pledged on multiple occasions that it doesn't do so.  I believe them.  Instead, it looks like Yelp disappears reviews in a way that the CEO can truthfully say they were not deleted, but they are for all intents and purposes invisible to the public.

Anyway, all this was spurred by the following trailer sent to me with this article from a reader.  Apparently a film called Billion Dollar Bully is being made about Yelp, and from the hints in the trailer it appears that they will be taking on many of the issues I listed above and frankly have only been able to guess at rather than prove.  Brava!

Verizon's decision to stop subsidizing smartphone purchases in exchange for 2-year contract lock-ins is going to be a big change in the industry.  It will be interesting to see what happens to handset prices.  A while back someone I know had a Verizon iphone that they lost.  They were talking about going out and buying a new one to replace it.   I said, "uggh, an $800 hit."  They looked at me like I was crazy.  They said they had paid something like $300 for it.  I pointed out that that was likely with a 2-year contract lock-in, and that a replacement would go full price which can run over $800 depending on which version they had.

They did not believe me.  In fact they were almost indignant that I would suggest such a thing.  And went running off the the Verizon store with every confidence an iPhone 6 plus could be purchased for $200-$300.

This situation has obtained for a decade.  It will be interesting to see what happens to iPhone sales when customers are exposed to something closer to the true price.  Since most iPhones without contract go for more (substantially more in fact) than the laptops I am buying my employees, I can't help but think that iPhone revenues will suffer.  (Of course, the result could be everyone who wants a new iPhone switching to AT&T from Verizon  -- it is not at all clear Verizon's new no-subsidy rates are low enough to be a better net deal than the old rates+subsidy).

I use Verizon because my business operates in the boondocks and Verizon is almost always the last carrier standing when I drive out to our locations.  I wonder if Verizon will now be allowing unlocked phones?  I presume this will be the case -- T-Mobile is the other company that ended phone subsidies and I moved my unlocked Nexus to them.

By the way, the current T-Mobile $50 a month plan allows unlimited data and text when roaming in 120 countries, and $0.20 a minute international calls from any of these countries.  This is even better than you can do with the old method of buying an international sim card and switching when you land.   No other US carrier is even in the ballpark.  You have to pay Verizon $20 a month or so to get them to reduce international roaming text costs to 50 cents each with some paltry amount of data.  For international travelers, there is no other choice even close to T-Mobile among US carriers.

A reader sent me this:  A recent McKinsey study looked at large infrastructure projects (over $1 billion).  In the introduction they observe:

Rail projects, for example, go over budget by an average of 44.7 percent, and their demand is overestimated by 51.4 percent.

We actually can combine these two numbers and find that the total cost per user of these systems was over-estimated by 117%, meaning the cost per user was on averagemore than double what was promised when these projects are sold to the taxpayers.

At the end of the day, the first segment of the line cost $75,000 per round trip daily raider.  We could have bought every regular rider a prius and a lifetime of gas and still saved money.

I operate recreation areas in the US Forest Service and from time to time get criticized that my profit adds cost to the management of the facilities, and that the government would clearly be better off with a non-profit running the parks since they don't take a profit.  What they miss is that non-profits historically do a terrible job at what I do.  They begin in a burst of enthusiasm but then taper off into disorder.    Think about any non-profit you have ever been a part of.  Could they consistently run a 24/7/365 service operation to high standards?

Don Boudreaux has a great quote today that touches on this very issue

from page 114 of the 5th edition (2015) of Thomas Sowell’s Basic Economics:

While capitalism has a visible cost – profit – that does not exist under socialism, socialism has an invisible cost – inefficiency – that gets weeded out by losses and bankruptcy under capitalism.  The fact that most goods are more widely affordable in a capitalist economy implies that profit is less costly than inefficiency.  Put differently, profit is a price paid for efficiency.

It is also the "price" paid for innovation.