Category: Business

Freedom costs twelve bucks ninety-five

My complaining about the FCC and free speech infringement does not mean I don’t realize how much free speech we really have. Here’s why our First Amendment is spectacular.

… Sirius Canada, which plans to start beaming to your car and home before the end of this year, has no plans to include Stern and his no-holds-barred morning show that includes the likes of Stuttering John [ed. note: my strike-through], Baba Booey and butt-bongo stunts.
…

So, Sirius Canada, isn’t this like acquiring the Pittsburgh Penguins and deciding you don’t need Sidney Crosby?

“Well, what if Sidney Crosby was going to be arrested and put in jail within two weeks?” said Gary Slaight, the CEO of Standard Broadcasting, which co-owns Sirius Canada along with the CBC.

“The CRTC, who we are licensed to, would eventually force us to take Stern down, because we have standards we have to abide by in this country when you own a broadcasting licence.”
…

“When we applied for a licence, the CRTC pushed us about this,” he said. “(Stern) was definitely a topic of conversation. We (Standard) are a big broadcaster and have to deal with the CRTC on other issues. And the CBC obviously has a cultural mandate to be concerned with.”

Read that again. Arrested and put in jail. For words. Our system of fines is arbitrary and political, but there are no jail threats, aside from those from random idiot Congressmen who want to change our rules. This doesn’t mean we should be complacent in fighting First Amendment infringements, but we have it pretty good, eh?

Post Script: For what it’s worth, I’ve used my Sirius car kit when driving into Canada. I could see Toronto in the distance and my receiver still had a clear signal from the satellites serving the United States. Hint, hint.

(Source: Get Sirius Info)

How to Hurt Everyone with Good Intentions

Via A Stitch in Haste, this story is enough to frustrate anyone remotely interested in economic freedom.

[Massachusetts] has warned the upscale Whole Foods supermarket chain that it will risk criminal charges under the state’s centuries-old “blue laws” if it goes ahead with plans to open on the holiday.

Is it so complicated to think that maybe Whole Foods, along with every other business, has a reasonable expectation that it can open its doors to customers whenever it wants? Yet, the reasoning behind this is what’s most ridiculous.

Shaw’s [Supermarkets], which has 200 stores in New England, complained to Reilly after some of its employees spotted a banner advertising a Thanksgiving Day opening at a Whole Foods in Bellingham.

“Besides disadvantaging competitors, a Whole Foods opening would harm consumers, due to lack of choice in the marketplace for consumers to shop and compare prices for the best deal,” Shaw’s legal department wrote to [Attorney General Thomas] Reilly on Nov. 4.

Ummm, if Whole Foods opens on Thanksgiving, consumers will be forced to buy at Whole Foods prices since they can’t compare prices for the best deal. I know that whenever I go grocery shopping, I visit three, sometimes four, different supermarkets before I contemplate making any purchases. Granted, consumers still retain the option to not buy anything, but why bother with that. Here’s the question, though. Won’t enforcing blue laws to Whole Foods’s detriment reduce the choice for consumers from groceries at one price to no groceries? That’s better? Granted, customers could go to 7-Eleven, since they’re allowed to open. Since we know they offer a wide selection at competitive prices, consumers are protected.

At least the Attorney General is looking out for the little guy.

Nick Messuri, chief of Reilly’s business and labor protection bureau, said that while the blue laws sound archaic, they protect workers from pressure to give up their holidays.

We don’t want the evil corporation taking advantage of the poor workers, which is what Whole Foods would no doubt do with such slave labor tactics.

[President of Whole Foods Market’s North Atlantic Region David] Lannon said working on Thanksgiving was voluntary and workers would have received double pay.

How dare they be such heartless capitalists. As a new college graduate, I worked a temp job that paid me $7.50 per hour. Even a decade ago, that didn’t go very far. And I didn’t get paid holidays. January 1, 1996, I worked four hours while everyone else sat at home, enjoying hangovers, leftovers, and college football. My paycheck reflected a full day’s pay because of the double time. My electricity stayed on thanks to those uncompromising bastards who pressured allowed me to work that day. Virginia’s Attorney General didn’t step in to save me.

Behold the Luddites

Everyone already knows about Sony’s recent self-inflicted troubles regarding its atrocious Digital Rights Management scheme for music CDs. Installing spyware on customer computers is stupid under every circumstance, but it’s particularly infuriating when used to prevent customers from a fair use of the product. As I understand “fair use”, I can make a copy of the music to play in a manner convenient to me. In the case of music, that means my iPod. I’ve seen varying reports, but at best, Sony’s spyware protection scheme makes the rip/import process through iTunes to the iPod burdensome. At worst, the process isn’t possible. It doesn’t take an MBA to figure out that Sony implemented an anti-customer method.

I didn’t insert an infected Sony CD into my PC, so I sympathize with Sony in its intent to protect its interests. Yet, I’m living in 2005. I like technology and how it makes my life more enjoyable. Who could’ve guessed fifteen years ago that I could carry my entire collection of music and audiobooks with me everywhere and it would require as much space as a deck of playing cards. That’s a great advance in lifestyle. Yet, Sony is for some reason stuck in 1993, with only a grudging, occasional nod to 1999. That’s dinosaur thinking. Dinosaurs are extinct. Figure out a way for me to use your product, with the assumption that I will use it reasonably and pay you for the privilege. Do not assume that I’m a thief. Treat me like that once and I won’t come back as a customer.

Economics education should be mandatory

The Senate gets it wrong investigating recent oil profits, and the press exacerbates the problem. Consider:

The chiefs of five major oil companies defended the industry’s huge profits Wednesday at a Senate hearing where lawmakers said they should explain prices and assure people they’re not being gouged.

There is a “growing suspicion that oil companies are taking unfair advantage,” Sen. Pete Domenici, R-N.M., said as the hearing opened in a packed Senate committee room.

“The oil companies owe the country an explanation,” he said.

Lee Raymond, retiring CEO of ExxonMobil (XOM), said he recognizes that high gasoline prices “have put a strain on Americans’ household budgets” but he defended his companies huge profits, saying petroleum earnings “go up and down” from year to year.

“Huge profits” is also in the article’s title. “Huge” is a relative term; saying profits are huge doesn’t make it so. There are other places to get detailed numerical analysis of the fallacy of “huge” profits, but near the end, the article cites James Mulla, chairman of ConocoPhillips, in pointing out that the company’s $3.8 billion profit is a 7.7% profit margin. How is that “huge”? Just like price, volume factors into the final equation. The article should not say “huge”.

I’m not surprised, though, because even our senators seem oblivious to basic business knowledge. If Sen. Domenici really wants an explanation, he can read the financial statements for every public oil company, just like investors do. Here’s a quick test for the Senators: Is ExxonMobil priced correctly at $57.84 per share? How about ConocoPhillips at $66.90 per share? Like profits, one piece of information is all you need to know the answer, right?

They don’t know Jack about business

I have several thoughts on the “breaking news” that Infinity Broadcasting (or just K-Rock?) suspended Howard Stern for one day. His offense: he talked about Sirius too much.

How is this shocking? As a Sirius shareholder, I love that Howard Stern talks about his looming move to Sirius in January. Free commercials are wonderful, but that’s what makes this suspension laughable. He’s been ranting about this or that offense by the FCC and/or K-Rock since almost the moment Sirius announced his new deal. Why would Infinity wait until now to suspend him? If they didn’t like it, they should’ve stopped it immediately, whether through an order or suspension. Waiting until now, more than a year later, Infinity looks stupid. Oh, shocker, he’s talking about Sirius more now that he’s 58 days away from starting his new gig.

Not surprisingly, Stern is playing this up to get maximum exposure. On Howard 100, they’re doing every hour on the hour coverage of the outrage. Yes, the outrage, because people are stupid. Those brilliant minds calling in are bitching about Infinity trampling on Stern’s First Amendment rights. Sorry, folks, but only the government can do that. Infinity Broadcasting is not the government. It’s a private business protecting (however foolishly belated) its business. With any other business, we’d call the employee stupid for publicly ranting against his employer. We’d register no shock if the employer took such an action. We’d only be amazed if the employer didn’t fire the employee. This case is no different in that fundamental logic just because Howard Stern has a microphone and use of Infinity’s airwaves. This example is more exaggerated than “reality”, but it’s not different. Duh.

That’s at least using some of the fancy words they’ve heard Stern use, regardless of how wrong the analysis may be. The conspiracy theorists calling in are rambling on about how this is a move by Infinity executives who hold Sirius shares. They’ve suspended Stern to drive the share price higher. Ummmm, if you thought market reaction would be anything other than indifference, stop and think. Even if Infinity fired Stern, he wouldn’t start on Sirius tomorrow. Too much marketing blitz for the holiday shopping season revolves around Howard Stern arriving on January 9th. If Sirius miraculously abandoned their plans, letting Stern start tomorrow, the shares would (maybe) go up.

But ask yourself how much bounce the shares would get for an unexpected 58 days on Sirius. Not much, of course, because Stern’s arrival AND potential firing by Infinity have been priced into the shares already. The only bounce coming is from the crazies who don’t understand that. As I said here, Sirius is a long(ish)-term investment for me, not based on whether or not Infinity grows a set early or late. The day-to-day “news” blips make little difference.

The potholes will lead to the sinkhole

Major League Baseball’s return to D.C. in 2005 made me happy. I saw the Phillies live seven times at RFK Stadium this year and couldn’t have been happier. (I could’ve been if we’d won one of the two we lost when I saw them, because then we could’ve played the Astros for the Wild Card, but such is life for a Phillies phan.) Area residents rallied behind the Nationals, showing an exuberance for the team many suspected would develop more slowly over the next few seasons. Major League Baseball made the correct decision, but it was the inevitable decision. D.C. could not be logically excluded over Las Vegas or Portland, and everyone but the D.C. City Council knew it. They were the group that Major League Baseball held hostage negotiated with, though, which is why the District now faces this mess:

The District government filed court papers yesterday to seize $84 million worth of property from 16 owners in Southeast, giving them 90 days to leave and make way for a baseball stadium.

By invoking eminent domain, city officials said last week, they hope to keep construction of the Washington Nationals’ ballpark on schedule to open in March 2008. The city exercised its “quick take” authority, in which it takes immediate control of the titles to the properties.

Under law, the property owners and their tenants must vacate the land within three months unless a judge declares the seizure unconstitutional.

In papers filed in D.C. Superior Court, city attorneys said: “The Properties subject of this action . . . are taken for an authorized municipal use, namely the construction and operation of a publicly owned baseball stadium complex.”

This is crap, of course, because authorized doesn’t mean legitimate, but when was the last time that stopped a government from invoking eminent domain? I hope the property owners have good negotiators to achieve a reasonable price. And attorneys when this ends up in court because the city won’t pay a reasonable price. That’s just me thinking government should serve the public. I could be wrong.

I’m not, naturally, so I’ll move on to this:

Some activists have argued that the stadium is a private project for Major League Baseball, but District leaders say the $535 million project will create significant tax revenue [sic]. Developers have snatched up land just outside the stadium plot in anticipation of a waterfront revival, and the city is planning to create a “ballpark district” featuring restaurants and retail.

Their goal as a Major League Baseball franchise is to win baseball games, but that’s only one goal. The Nationals are a business. Their most important goal is to make a profit. (The owners of the Phillies ran the team for years to not lose money. Big difference. But I digress.)

One way they do earn a profit is by enticing fans to pay money to come to the ballpark. As a business the team controls its expenses for wages, overhead, maintenance, and whatever other expenses a baseball team encounters. How is acquiring use of a ballpark not inherent in their business? What makes the local government better at managing the ballpark than the team that plays there (or a separate private entity)?

It’s inappropriate for the city government to build a stadium solely to generate tax receipts. That isn’t the government’s purpose. It’s not why citizens entrust the government to issue debt, which is what D.C. will do to finance the stadium. Government’s purpose in this case is to provide functioning infrastructure, law enforcement, and tax policies. The team should take care of the rest. Until the city gets the revenue from the stadium, it shouldn’t pay the costs.

This should be obvious to the city, but its eyes are too glued to the golden calf of tax receipts. But how golden is it? Tax receipts generated by the Nationals arrival in D.C. fell short of expectations this year.

The District government appears likely to fall short of its goal of earning $10.5 million in tax revenue [sic] from sales at Robert F. Kennedy Memorial Stadium for Washington Nationals games, even as the team is on pace to earn larger profits than estimated just four months ago.

The city’s potential tax shortfall from revenue generated by sales of tickets, parking, concessions and merchandise could be more than $500,000, according to financial officials, who expect to have final numbers at the end of the month.

Meanwhile, the Nationals, still owned by Major League Baseball, exceeded expectations by selling 2.7 million tickets in their inaugural season and will earn a $25 million profit, about $5 million more than the team projected at midseason, team officials said.

Why should anyone who pays taxes to the D.C. government believe the District’s projected tax receipts for the new ballpark district?

I’ll pay for pregnancy insurance when I grow a uterus.

I’ve made a specific argument in my entries and comments about tax reform, but George Will described a perfect example of what I’ve written on the subject. Consider:

General Motors took an interesting turn on Monday. It is going back into the automobile business.

Granted, GM has always been in that industry, but it has also become the nation’s largest private purchaser of health care. This supposedly secondary role has become primary.

GM has been forced to allow product development, pricing and other decisions to be driven by the need to keep sufficient revenue flowing in so it can flow out in fulfillment of GM’s function as a welfare state. GM provides $5.2 billion in health care annually — more than Harley-Davidson’s revenue — to 1.1 million workers, retirees and dependents. Retirees outnumber current U.S. employees 2.5 to 1. The $4 billion that goes annually to retirees does not go into developing products people want to buy.

Concessions by the United Auto Workers will provide GM with annual savings of $1 billion in health care costs. But GM’s hourly workers, who pay no health care deductibles and only nominal co-payments, will still enjoy coverage better than most Americans have. Since 2000, the percentage of American businesses offering any health insurance to workers has declined from 69 to 60.

It makes no sense for GM or any other company to offer healthcare. It’s not the primary business, siphoning funds that should be spent growing the business through innovation and/or offering employees higher salaries. I’d contend that most, if not all should go to the employees. It’s part of their compensation, even if part of the expense is overhead. That’s overhead the company wouldn’t encounter if it didn’t offer health insurance. Human Resources is certainly designed to research and purchase insurance competitively, but where are the decisions on what individuals as individuals need (not part of the collective group of workers) best made, the fifth floor conference room or the family dining room? And what of the worker whose spouse’s company offers better health insurance? The worker loses that compensation from his own company because that portion of his compensation is non-monetary and must come in the form of health insurance or not at all. That’s not smart. Better to offer the compensation directly and let the employee decide what best suits his needs.

Mr. Will concludes:

Herb Stein, the University of Chicago economist who served as chairman of President Richard Nixon’s Council of Economic Advisers, famously said: If something cannot go on forever, it won’t. Delphi’s resort to bankruptcy and GM’s attempt, with the cooperation of the UAW, to avoid, for now, doing that, suggest that America’s welfare state — its private sector as well as its public-sector components — is reaching its Herb Stein Moment.

Let’s hope. Ultimately, a structure of competitive health insurance could replace this nonsense. Self-employed people somehow find health insurance without the benefit of employer funding and management. It’s logical to conclude that it would work when implemented on a larger scale, with insurance becoming just another product people purchase. I secured life and disability insurance policies on my own, as well. It’s funny how capitalism works to satisfy a need where it exists. Employer-provided health insurance subverts this process. Tax reform may not be 100% of the solution, but tax nonsense created the problem. It shouldn’t perpetuate it.

My analysis also applies to the 2005 NFC East

The Bowl Championship Series rankings provided a nice shock to the college football world yesterday. I didn’t notice it until late in the day because I already assumed correctly that Virginia Tech would be third in the rankings, as we were last week. Since there are five weeks left in the season, it’s late but still too early to worry too much about the final rankings. The system may be flawed as many are reasonably arguing. I believe college football should figure out a playoff system and let the championship be decided on the field. I’m not in the minority on that, but I don’t control the millions of dollars involved in the current Bowl system. It’ll be around for awhile.

Because the rankings are what they are, they provide sports journalists the opportunity to write about the minutiae as if it mattered in October. Michael Wilbon, who I really like as a writer, discusses the latest rankings in his column today. I disagree with his analysis, but only because it’s a fundamental flaw everyone is making. In analyzing the USC/Texas conundrum brought about by the BCS, Mr. Wilbon highlights a point, that if put into another context (as I’m going to do), we’d laugh at the absurdity. Somehow we accept it in sports. Consider:

Texas shouldn’t be first in the BCS ratings. No one should be ahead of Southern Cal. The Trojans are two-time national champs. They’ve won 29 straight and counting. While Texas beat one ranked opponent on the road in the Buckeyes, USC defeated then-ranked Arizona State in Tempe and Notre Dame in South Bend. Excuse me, but nothing on Texas’s rsum matches winning at Notre Dame. And while Young can carry a team, he’s not as impressive as reigning Heisman winner Matt Leinart, all-American Reggie Bush and all-American candidate LenDale White.
…

The point is, any system that makes it possible, no matter how remotely, that an undefeated Southern Cal team could be left out of the Rose Bowl is too stupid to live with. People (mostly college presidents) who defend this system and argue against a playoff shouldn’t be able to wake up with a clear conscience.

I agree that USC’s consecutive wins streak (29, I think) is impressive. I’m even willing to ignore the last-second, come-from-behind win they had against Notre Dame two weekends ago, winning because the officials blew two calls in USC’s favor in the last three seconds of the game. (I will not, however, ignore the crap officiating that cost the Hokies a chance to beat the Trojans in last season’s kickoff game at FedEx Field Jack Kent Cooke Stadium. No, I will never ignore that.) USC is a great team on a tremendous run.

But there is a flaw in Mr. Wilbon’s logic, as I said. If this weren’t college football, but auto manufacturing instead, we’d never accept the idea that past years are as important in determining the best cars in the current model year. Just because USC has won the last two championships doesn’t mean this year’s team should face an easier judgment. The humans voting in the AP and USA Today polls are certainly capable of arriving at different conclusions but it should be based on this year’s teams. If the voters believe Vince Young and Texas would out duel Matt Leinart and USC, they should vote Texas #1. Even the computers will compare them based on what happened on the field this season. The problem is, the BCS uses the artificial measures of human voting and computer data models to judge what can’t easily be judged without an on-the-field matchup. Subjective analysis is inevitable, but it shouldn’t be applied haphazardly in a way that compounds the artificial mess that is the BCS. Seniority, which is what voting based on the winning streak constitutes, is no match for merit, which is what Saturdays are for in the college football world. Maybe those measures will come up with the right answer, maybe not. Without a playoff system, it’s mostly speculation. But those measures should only consider what’s happening this season.

I’ll defend that into January if the Hokies face either USC or Texas in the Rose Bowl for the National Championship.

Why do you need to wreck this company?

I’ve jumped into the media bias argument before. Usually, I explain it with a rant about media being a business determined to make a profit. If there’s a slant, it’s because the business people within the media organization think they can make a profit from it. (Either that, or they’re bad business people. I leave that option open.) If you, as the consumer of that media bias, don’t like it, stop buying. Flip the channel, put your money in another newspaper box, whatever action makes you no longer a consumer of the bias you don’t like. It’s that simple, really. Especially in the age of the Internets, where there’s a web site for everything. It’s not complicated.

Yet, some still wish to pretend like it’s more. Consider this question from a college football chat hosted by The Washington Post:

Silver Spring, Md.: So since Virginia Tech fans alway [sic] come on here and whines [sic] about coverage in the paper, do you think they are happy with the number of stories in there the last few days while Maryland has received little coverage. And on that note, since Philadelphia and New York City are closer to D.C. then [sic] Blacksburg, I was wondering when the Post was going to start covering Delaware, Penn State, West Virginia, Pitt, Temple, Towson, St. Joe’s, Rutgers and St. Johns as hometown schools, too.

The individual has a point in the “MSM is biased” worldview. Unfortunately, the facts don’t hold up to scrutiny when scrubbed with that nonsense. I could offer my own analysis with wonderful wordplay, but I’ll just leave it to the reporter’s response. Enjoy:

Dan Steinberg: The Rutgers-UConn tilt will likely lead the sports section on Sunday.

No, actually, we’ve answered this before but are happy to answer it again. We cover Tech not because of their proximity to D.C. but because of the large and rabid fan base that lives in our readership area, which we judge in part by our readership surveys. For further evidence, check out the stands in Byrd on Thursday night. It’s unfortunate that people in Maryland might have to read Tech stories that don’t interest them, but it’s the challenge of putting out a paper in this market, and we try to be as diverse as possible based on reader interest. Tomorrow’s game preview story will be about the quarterbacks Ralph Friedgen and Charlie Taaffe have produced over the years.

Also, I think you forgot to demand more Delaware State coverage.

It really is that simple. There are many Hokies in the D.C. metro area. They want to read about the Hokies. They have quarters. The Washington Post knows that Hokies will insert quarters into the coin slots of newspaper boxes throughout the region. The Washington Post has a preference for which newspaper boxes receive those quarters. So they cover Virginia Tech football. (As well as Maryland, Virginia, and Navy.) You say bias, I say economics.

Yes, I know I offered my own analysis with wonderful wordplay after I said I wouldn’t. So what? Go Hokies!