There is an electronic billboard on I-3 between Union City and Soundview that says something to the effect of “Fred Meyer, firing workers for one honest mistake is JUST WRONG”. I read that and I think “Right on!” I say this as someone that was fired from his first job for a some mistakes that were easily verified to have cost the customer nothing but whose accounting practices made it so their accountants got headaches. Long story. Anyway, I’m sympathetic to the grunts because it’s often the case, as it was at that theater, that the “right way” to do things slows everything down to a crawl and results in much worse customer service.

But here’s the thing that gives me hesitation: Fred Meyer has the absolute best cashiers of anywhere I have ever shopped on a regular basis. To take last night, for instance, I was on my way home from a late-night trip to Walmart. It took an insanely long time to check out because of a $1 sale on kid’s clothes that apparently hadn’t been put in the computers. The result is that one manager had to go between five different check-out lines and okay every single sale purchase. Given that they were selling kid’s clothes for a dollar, that was a whole lot of moving around. That type of thing doesn’t happen often at Walmart, but it does happen. It’s not yet happened at Safeway, but the Safeway employees are almost aggressively apathetic. Individually I think that they are actually worse than Walmart’s, but their systems are considerably less likely to be screwed up (at least in part because Safeway limits their sales to a narrower selection of goods than Walmart or, for that matter, Fred Meyer).

Fred Meyer, though, is a dream. Whereas at Safeway I have to make absolute sure that I have all of my items grouped according to how I want them bagged and even then they often seem to cherry-pick from my piles almost randomly. Never, ever happens at Fred. In fact, if I just dump everything into a pile because I don’t have time to sort them, half of the time they will sort them for me. They’ll pick the freezer stuff and put it together and even subdivide the fridge stuff into cheese, meat, and other. They don’t always do this, but they seem to over half the time.

I don’t know if Fred pays their workers any more than Walmart does theirs. If they do, of course, they have more righteous grounds to say that they’re paying a premium for absolutely no mistakes. But it could also be the case that Fred Meyer has a more freewheeling atmosphere that would trust their employees to charge $1 for kid clothes without requiring a manager for every single item. If that’s the case, then it is even more important that they enforce fewer mistakes to get a better caliber of worker than places that where the cashiers have less margin of error. In other words, if I want employers not to have the sorts of policies that the theater had that gave the employees no ability to compensate for a customer changing their mind on something or simply to correct their mistakes, it also stands to reason that they could demand that fewer mistakes be made.

So… I guess I’m not sure I want Fred to change their employment practices until or unless it results in a shortage of employees. Cause I sure seem to benefit from the results.

If you’re looking for a defender of Cash for Clunkers, you’re not going to find it with me. I’m not against it in theory if I thought that it could do what its supporters said it would do. I don’t like the idea of taking functional cars off the road and I think that the money would have been better spent elsewhere. However, there is one argument against C4C encapsulated in this article that I consider to be pretty problematic: The notion that it has made el cheap-o entry-level cars too expensive for people without much money:

The Manheim Used Vehicle Value Index reported that prices reached record highs in September. The consulting firm that publishes the index blamed low inventories.

That’s bad news in Berks, where many shoppers seek inexpensive, used vehicles, especially during difficult economic times, said George Tabakelis, general manager of Perry Auto Service & Sales on Route 61 in Perry Township.

“Customers used to be able to find a good car for their son or daughter to take to college for $2,000 or $3,000, but now that same car may cost $5,000,” Tabakelis said. “It’s sad.”

He, too, blames cash for clunkers, which has led to fewer vehicles being available at used-car auctions, and the recession.

The cars that C4C is taking off the road are those that are old and get less than 18mpg. So for people looking for cheap, entry-level, high-mileage old cars with poor mileage, their hunt got a little bit tougher and more expensive. So for bigger cars, trucks, SUVs, and low-mileage muscle cars, C4C has become tougher. However, those aren’t college student outfitters (except perhaps bigger cars). This article (as well as numerous conservative, libertarian, and anti-Obama commentators) implies that this applies to the most basic of entry-level cars. Like the old Dodge Colt or Chrysler LeBaron that I used to drive. Those aren’t being scrapped.

The LeBaron got around 25 miles to the gallon and the Colt got 30 until the day it died. The only vehicles in our family history that would be eligible would be the vans and the convertible, neither of which are “college cars” (and I have my doubts that the convertible would have been eligible because even though it got very poor mileage, I think the model itself got good mileage and I think that eligibility is determined by model and year).

The only really good argument that C4C made college cars more expensive is that by taking old SUVs and station wagons off the road, it forced people that would buy those to instead buy smaller cars, increasing demand on those cars and driving the price up. I’m not really sure how much of a factor that is, though. People that get low-mileage vehicles typically do so for a reason. When it’s necessitated by extra cargo space or passenger capacity, smaller vehicles don’t do them any good and so they’ll likely bite the bullet and get something a little more expensive. It’s a bit murkier with people that wanted a 1990 Ford Mustang or Taurus but instead must make due with an Escort. Those people may drive the price of Escorts up a little bit, but you can still get a 90’s Ford Escort for $2,500. Clint got an early-90’s Toyota Corolla for less than $1,000 and it runs great. Even if Crayola, my late-90’s Ford Escort, were running well, I wouldn’t expect more than a couple thousand for it.

For those noticing an uptick in the cost of entry-level used vehicles, it’s possible that C4C is playing a marginal role in it through a cascading effect, but to that extent so is the economy as a whole on models completely unaffected by the program. The article above actually points out that fewer new car sales are making barely-used car sales more expensive. As I’ve been car shopping for the last several months, I’ve noticed the price differential between low-usage used cars and new cars has shrunk to become pretty marginal (and I say this as someone that never intended to buy new).

Back to the original point, as much as I’d like to blame a government program that I never really liked for an undesirable turn of events, I’m afraid I just don’t buy into the notion that Cash for Clunkers, despite its various flaws, has priced people out of the entry-level cars that they need. It may have priced them out of the entry-level cars that they want, if they wanted a Ford Taurus or a truck of some sort, but for the poor cash-strapped college student depicted in the article, they have other options.

If I were in the market for buying a mobile home in Alabama, I’d totally buy from this guy.

As the government cuts off (or limits) some revenue streams for credit card companies, they’re going to try to pick up the slack somewhere else:

Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected. Citigroup, meanwhile, has started charging annual fees to card holders who don’t put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don’t use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.

These fees are the credit card industry’s response to credit card legislation that will, among other things, restrict credit card issuers’ ability to raise interest rates on existing balances. Credit card issuers are looking for ways to raise income before the new rules take effect in February. During the first quarter, 27% of credit card offers included annual fees, up from 18% a year earlier, according to Synovate Mail Monitor, a credit card direct-mail tracking service.

I’ve seen this argument made by some as a reason that it’s pointless to try to prevent corporations from making money because either (a) they’ll make it up elsewhere or (b) they’ll go out of business, denying everyone of their services.

Personally, I couldn’t be bothered less by it. Oh, make no mistake, I won’t take annual fees lying down. In fact, right now I think I would take the hit on my credit score before I would submit to paying $50 for a privilege of a credit card. And I’m relatively confident that I will be able to find some card issuer somewhere that won’t charge me an annual fee. Perhaps my longevity of service with Discover or my all-in relationship with Wells Fargo will get me a pass. Or maybe not. In any case, I suspect that to the extent that these fees become mandatory you’re going to see a lot of people shifting over exclusively to debit cards. And on credit scores, I think it’s easier for banks to claim in the current environment that people who don’t own credit cards are risky, but in an environment where everyone has to pay for the privilege if they have the audacity to pay their bills on time, it’ll look a lot more like what it is: a punishment for people that decline to be taken advantage of.

But the main reason I couldn’t care less is that if absent the backdoor profits they receive from fees they need $50 a month for maintenance on a credit card account, then that’s what they should charge. Then people can make the decision for themselves to sign up or not sign up. Instead, in the current model, people sign up thinking that it’s not going to cost them anything (or much) and then end up getting charged at the back end when all does not go according to plan.

I thought about all this when I got a letter from Discover that they’re raising my interest rates on an account that I have not been delinquent on. Along similar lines, I’ve been dealing with my health insurance company. I had a recent appointment and some blood work done and I got a bill back for $200 when my insurance company apparently decided that all but $15 was not covered.

In the greater scheme of things, I don’t care if it was not covered. It was worth $200 to me and it needed to be done. What I hate is that when I go to the doctor, I never have any idea how much it’s going to cost me in the end. I don’t know of any other industry with greater opacity. My history with health insurance has actually been less contentious than dental insurance, but in neither case can I simply ask how much something costs. This isn’t because of the different rates they charge for the insured and uninsured so much as it is because the subject of cost is a conversation (in the form of billing codes and contract bylaws) between your provider and insurance that you are not a part of.

Defenders of insurance companies say that it has to be this complicated to keep costs down. Leaving aside the immense costs of billing and compliance, the fact that it is so complicated is a cost in and of itself. First, it’s a literal cost insofar as if people knew that they were going to end up paying for certain things they wouldn’t go through with them (I am not sorry I got the blood work done, but if I’d known the bill ahead of time I might have quietly declined). But there’s also the cost of the uncertainty of the protracted negotiations between your provider and insurance company and not knowing what the verdict is going to be. But even discounting all of these things, there comes a point where if transparency comes with its own costs, it’s a price worth paying.

I was in line at a convenience store the other day waiting f-o-r-e-v-e-r behind this woman that was having some sort of problem. Apparently, the little kiosk they have for state lottery ticket generation wasn’t working correctly. After several minutes, the guy behind the counter told her that he guessed it was broken, but if she was interested, someone had earlier had some lottery tickets printed out that he realized only afterward that he didn’t have the money to buy. That was initially fine with the woman, but after looking at the tickets she said “I don’t want these.”

“Can I ask why not?” The clerk asked.

“I don’t like the numbers.”

At this point, a guy behind her chimed in. I couldn’t tell if he was presumptuous or if they were in there together, but he said, “You don’t like the numbers? What does it matter?”

“Well,” she explained, “on this ticket they’re in order. 31, 32, 33, 34, 35, 36. Who picks those numbers? What are the odds that the numbers will be sequential?”

“Good point,” the guy said.

Of course, she’s completely right. What are the odds that they would be sequential? The answer is that the odds are the same as any other six numbers that she might pick, unless they do something special with the number generation for the lottery that I don’t know about. If I had a kid with me, I would use that to illustrate that if the notion of six consecutive numbers seems six steps beyond unlikely, that’s why you shouldn’t play the lottery because there is no way to pick any series of numbers that is any more likely to occur. Then, of course, I would probably launch into a tirade about the evils of a state-run lottery system. At which point they would roll their eyes and probably ignore the more useful information that came before my jump on my high horse.

In the videogame/media world recently, there’s been a major push for “download-based” or “managed server based” delivery systems. In particular in the videogame world, there are now two parallel, competing channels for content. Major games are released on disc and go to stores (Walmart, Target, Gamestop, etc). Minor games and past classics are distributed/resurrected via the download services provided by Microsoft, Nintendo, Sony, and even for the computer over venues such as Valve’s “Steam” service.

Sony has recently taken this to a new level with their “PSP Go”, an ill-conceived console that can only purchase games from Sony’s download store, and takes ~3 hours to download a single purchase. Meanwhile, over at Slashdot there’s a raging debate over EA’s latest few debacles, most notable their constant stripping of game content off into “nickel and diming” paid DLC. Some estimates of the actual price of certain EA titles go to over $90 after the “release day” DLC, which most people agree is necessary to make the game playable.

Of a larger part in the picture, however, is the game companies’ repeated attacks on the used-games market. EA has teased the idea of games whereby certain downloadable content is only available to the “original” purchaser, making the title crippled (possibly even unplayable) if purchased second-hand. Sony, a while back, patented a system whereby games would “burn in” their processor ID number the first time a game was used, on a special section of a disc, and subsequently the disc would refuse to play in any other console (particularly vexing given that the failure rate of many consoles is 20% or higher, and an entire library of games could be made worthless by something as simple as a power surge). The PSP Go has no possible game cartridge slot unless Sony releases “pre-programmed” memory cards, meaning that the only time any store is likely to see any money from it is when they sell the console itself.

From the companies’ perspective, the more common internet access becomes, the easier it is to bypass the brick-and-mortar retailers. This isn’t unique to the video game industry, since the movie and music industries have been pioneering it (poorly) to some extent, but the hatred towards the secondary market (and to some extent, the multiple personality disorder, since Gamestop regularly cuts “exclusive release deals” with many game companies) in the videogame market is particularly strong.

I cannot put much of the blame for the situation on Gamestop or the other secondary-market stores (heck, it’s so lucrative even Wal-mart wants in on the action). Movies sell for (relatively) cheap, oftentimes less (thanks to ongoing borderline-illegal price fixing by music companies) than a movie’s corresponding soundtrack. Most people buying a movie have already seen it once (either in theater, over broadcast/cable, or via rental) and know what they’re buying. Videogames, by contrast, are purchased more or less blind. There are many cases in which a game has been preceded by a massive hype machine, only to be sold back to the store in droves because it was either way too short, particularly godawful, or some combination thereof. Most games have enough of a market of “hey, I don’t like this at all” types that within 2-3 days of release there will be at least a handful of “used” copies available at the secondary-market stores. Game manufacturers feel “cheated” by the fact that their new-title sales get cannibalized this quickly, and would prefer to stop it from happening entirely; at least one company attempted unsuccessfully to force Gamestop into a contract barring resale of their titles for at least a month after release, in hopes of making a bit more money that way. At the same time, rumblings of attempted copyright actions against Gamestop in the past smacked of antitrust violations and violations of first-sale doctrine, and attempts to claim a percentage of the revenue from Gamestop’s sale of used titles (via threat of withholding new-sales product) were outright extortion. In a market where a term for bad product (“shovelware”) exists and is commonly used, game companies are much more to blame for putting out product that’s so easily sold/forgotten and thus making the current system (whereby a given disc cycles through a Gamestop-style store an average of 5-6 times in its usable lifespan) to their own disadvantage.

Meanwhile, of course, from a pure revenue perspective I can’t blame the game makers from salivating over the prospect of both ongoing revenue streams (original title $59.99, DLC to the tune of $6-10 every couple months, onwards onwards) and for the “noncannibalized” sales model of downloadable content. It can’t escape them that every sale of a game over Xbox Live Arcade, for instance, can’t be resold or transferred to anyone else unless someone sells their entire console and transfers the Xbox gamertag information/login to the new owner (which may, or may not, violate some part of the Xbox Live ongoing subscription contract). From their perspective, when Gamestop sells a used disc they see no money, whereas any time someone buys a game via download they get “their cut.”

Of course, the generalized form of this debate is nothing new. A long time ago, booksellers tried to kill the idea of public lending libraries on the idea that it would put them out of business, and an attempted deal for Google to offer a sort of “online” booksearch/lending library model is going through all sorts of hell currently. What is new is the fact that, armed with the DMCA (some of the worst garbage legislation ever written), certain companies actually have been given the option to try to hide their content behind so many layers of “protection” that they have, in fact, begun attempts to destroy the customer’s right of first sale entirely.

I can’t imagine that this bodes well for consumer rights, or for the market in general. At the very least, should trends continue, Gamestop’s in real trouble 10-15 years down the road and we might see Target/Best Buy/Wal-mart’s electronics sections seriously reduced in size.

The other day I saw a billboard for 2010 models for Saturn, the soon to be defunct GM brand. I thought to myself “Who in the world would buy a Saturn now?” Saturn has always had the reputation of being a risky brand because they make their cars a little bit differently than the competition. My ex-girlfriend Julianne used to drive one. I thought that they were great right up until a driver suddenly decided to stop at a green light in some weird panic and Julie failed to break in time. That wasn’t the Saturn’s fault, but the repair bills were astonishing (and Julie was declared at-fault, and the other driver was unlicensed and uninsured anyway, so she had to foot that bill). It’s hard to imagine that the repair bills are going to get any lighter even if GM is saying that they’ll still service them. That’s the same sort of thing that makes me lukewarm on the prospect of buying an Isuzu (who recently pulled out of the US market).

Anyhow, for those of you that don’t know, Saturn was originally supposed to be bought by Roger Penske but that fell through when they couldn’t line up a manufacturer.

It’s a shame that a solid brand name and an existing distribution network is about to fall by the wayside. Presumably GM will incorporate as many as they can for their other badges, but since Saturn was a distinct enough brand that they’re going to have to worry about market cannibalism and will close more than a few. What’s interesting is that what Penske had in mind was a variation of what I was thinking that a foreign carmaker without an American presence should consider. I was thinking about it back when the dealerships were going to be cut loose and I had a slightly different idea, but it would apply doubly to Saturn and Pontiac and other to-be-discontinued brand names.

My idea was thus: An Indian or Chinese (or whatever) car company should consider buying a discontinued brand name from a US dealership. The most obvious one that came to mind was Geo, which was an import badge anyway (meaning that GM didn’t make Geos, they bought models from Suzuki and other manufacturers and rebranded them). Geos were known for being inexpensive cars, that Indian company (Tata) was known for producing inexpensive cars, so it would be a natural fit. Most people wouldn’t know that the new Geos were not the GM-branded cars of old, but it would at least be instantly recognizable. Then they could let the dealerships that were being cut loose on cannibal grounds (as opposed to profit/loss ones) in on the ground floor.

Penske had a similar idea, except with the less dusty Saturn brand. Get GM for a couple of years and then bring in foreign cars. An article in the New York Times was ambiguous as to whether or not these cars would be rebranded Saturn, though my impression is that they would have been. Saturn is certainly more expensive than buying the Geo brand would have been (if GM had been willing to sell it), but the distribution network in place was a much better idea than my hodge-podge gang of reject dealerships. Plus, Saturn is well-regarded by some while Geo is probably unknown by what would be Tata-Geo’s target demographic (young people). In any event, it looks like neither model is workable.

Of course, all of this is running around the fact that we are dealing with three automobile manufacturers that are unable to compete in the modern marketplace. It’s easier for foreign car companies to come into the US and make cars here profitably than it is for local manufacturers. The Big Three are bogged down in pension obligations and union contracts that soak up funds that could otherwise be directed towards engineering a better car. Maybe the recent re-orgs will work out, but it’s a shame that we can’t start over from scratch and deal on a level playing field with Hyundai and Honda and Toyota cars that are also built here.

And while I’m throwing my (ahem, relatively ignorant) opinions out there, I also wonder if one of the foreign companies that don’t have any existing contracts in the US couldn’t actually make a go at primarily selling through the Internet. I know that in my car search the dealership model is proving decidedly inconvenient. I’ve been contemplating the ramifications of going to a dealership and giving them a “Build a Car” from the dealer’s website, but the logistics leave a lot of room for maneuvering in the low-trust environment of auto sales (though Linus makes it sound like less of a hassle than maybe I fear). Instead, I wonder if there’s room for a business model out there where they can keep “test drive” vehicles at affiliated locations (I’m thinking used car dealerships, rental car agencies, or repair shops). Or make a deal with a rental agency and if someone wants a test drive they can rent the car at a special rate or an hourly rate or something and get a feel for it. But most selling would take place over the Internet. With their dealership agreements, it would be nearly impossible for a current automaker to sign on to such a model, but I think it’s something that one trying to break into the US market should consider.

By most accounts, she seems to be kind of out there. But I can’t really blame her on this one. I realize that the banks and the credit car companies need to make their money, but not every way of doing so – even if legal – is ethically legitimate. Customers that make their payments on time and don’t overdraft should not be penalized because the banks made some bad loans to other people.

While I’m on the subject of cars, just about every car manufacturer has an option where you can build a car online. You can’t buy it online, but you write up the specs and it gives you the MSRP and basically puts you in touch with the dealer who will then quote you a price. Have any of you actually bought a new car this way? If so, how does it work? Do you have to pay them up front or do they basically order the car and then you buy it when it arrives?

Seems like they’d want some sort of deposit or something. Ideally, I’d almost prefer it if they just had you pay for the car and then you pick it up when it arrives. But every conceivable way of handing the transaction seems fraught with peril. If you put down a deposit or buy the car at the outset, they have all the leverage when it arrives because they have your money. Not that you wouldn’t have any recourse if they suddenly remembered that there were some special fees that they didn’t mention earlier, but it would it would probably be worth your while to pay a non-trivial sum just to get the dang car you’ve been waiting for. On the other hand, even if there is no deposit and they just order the car for you to purchase later, there’s nothing to stop them from suddenly raising the price or wanting to renegotiate once the car is there. You’d been salivating over this car for 6-8 weeks, after all. What are you going to do, start all over?

So… anybody know how that works? What sorts of protections you have that the price you agreed on is the price that you pay and the car you ordered is the car that you get?