Conservance

Social, Economic, Enviromental Responsibility

Category: Economics

Pocket Monopoly


The idea of a pocket monopoly is one that has existed in everything but name for quite a long time. In many cases it is entirely benign and ultimately harmless.

The single grocery store in a small town is a prime example of a pocket monopoly. At the “main street” level of a society there is no other form of competition, and the residents of that city must all shop at said location or find other means. In this situation it is entirely non-harmful to the residents affected by it because it is a simple fact of life. The town is only large enough to support one store.

To give a clear definition of a pocket monopoly it is essentially, the existence of a monopoly that is intentionally locked and defined by some certain parameters, usually geography. Beyond those defining parameters a monopoly does not exist, and the market is competitive.

In a more complex form, a pocket monopoly can and on rare does become financially disastrous.

The most heinous example of this of course is the “company stores” from many Appalachian coal towns. Where the entire town was beholden to a single company that provided everything for them. It was a modern day fiefdom. At the larger national level, there was fierce competition between the coal companies, but again for the individual towns, no such competition existed. When the mines closed, the towns died.

Both of those are very cut, very dry, illustrations that rarely occur anymore. A more convoluted, and I would argue slightly more sinister, form of pocket monopolies do exist.

The best illustration of a modern day pocket monopoly can be found in the text book industry. At the national level, there is fierce competition between textbook publishers, made all the more so, by the dwindling of the market. This dwindling most likely fueled the initial move towards pocket monopolies.

What occurs is simple: A professor or department chooses a specific text to use for their courses. They look at a variety of books from different publishers, and then chose one. That book is the required text for the course and no other text book can be used. A pocket monopoly has been born.

A student can not use a trigonometry book from another publisher for Trig 101, the homework would be wrong, the chapter order different, and ultimately the student would fail. With the questionable practice of shifting towards online homework, even the weak competition of used textbooks is being quickly eliminated.

The price of these textbooks, reflecting the complete lack of competition, have steadily increased in value with little to no increase in quality. It is no surprise now to see prices of $100, $125 and even $200 on certain textbooks. With used books being marginally less expensive.

While there may be several bookstores catering to students, they are all selling the same book, and the difference between the prices is not significant enough to be considered real competition. And this supposed “competition” obscures and confuses the reality that for the student, they are caught in a monopoly.Even with the price reducing nature of the internet, the student must purchase a specific textbook sold by a single publisher.
Used textbooks also confuse the issue. While they provide a minor decrease in price, but those textbooks are only valid so long as that same edition is employed in the class. With publishers releasing new editions every few years, the competitive force that could be applied is checked. In both cases, the competitive force that might be applied has been negated.
There are many reasons for the development of pocket monopolies. In the case of textbooks, it is a combination of factors, including the shift towards viewing academic institutions as businesses, the supposed rise in available money for students, the propaganda surrounding college education, and the fact that many college professors are incapable of actually teaching (For many professors, who are not given any educational training, the textbook becomes a crutch). It is especially evident in the sciences, and it is no surprise then that science and mathematics text books are the most expensive.Compare college text books to those of a grade school. Especially a grade school from a poorer district. The pocket monopoly is broken by the simple fact that those text books are purchased by the school and then used for the next five to ten years. A variety of factors dictate the choice, including cost and quality. The school, because of how much money it is going to spend, is able to leverage a better deal, and benefits from access to the market.The concept of a free market, with sensible oversight, is a solid one and it works incredibly well. From the smallest level to the largest level. Any time competition is forced out or eliminated in an intentional manner, the consumer suffers. Whether that is at the national or state , or even at the campus level.

 

A Short Essay To Save The World


In response to the question “Do you feel that businesses or governments have a moral obligation to their workers/constiuents?” I wrote an essay that would solve quite a few of America’s and the World’s problems. It’s easy to write about, hard to live.

 

Yes, I think so, but I understand that companies need to make money. The government is supposed to represent the people and keep their best interests in mind, a part of that is keeping them gainfully employed. But I also believe that Unions and the people themselves must play a part.

I don’t think it’s coincidence that the period of lowest income inequality in the US, our largest innovations and breakthroughs, and our “golden” era all fell within roughly the same time frame. And CEO pay was “surprisingly” NOT tied to stock performance.

There’s a sweet spot where companies get their profit and stay competitive, the government has enough regulations to keep everyone safe and make their share of taxes but doesn’t damage the industry, and the citizens themselves are protected and employed.

The government needs to enforce tariffs on imported finished goods, or goods to be assembled in the US, and it has to encourage innovation and technological innovation that results in lower costs, higher quality and a better work environment without firing workers. There also needs to be a serious overhaul of the investment laws and regulations to discourage the short-term maximum profit trading that destabilizes US industries and encourages automation/outsourcing.

Unions and workers need to negotiate for raises, benefits and the workers with an eye towards maximum employment possible. Currently, they seek maximum wages and benefits with thought to what the company is facing economically, or how many union members are employed. Which is better, 1000 workers getting paid $10 an hour or 100 workers getting $75? Beyond that, “Union Pride, Union Made” has become a joke. “Union made” used to mean high quality, long lasting goods, now it doesn’t mean anything except overpaid, poorly made junk. Compare a 1958 Chevy Impala versus the 71 model, versus the monstrosity that was the 1994 “impala” or the even worse abomination of the 2002 model.

We the people need to stop buying based solely on price, and we have to start demanding different priorities from our companies and action from our government. We should be voting with our pocketbook, by buying the highest quality goods manufactured and we should be willing to pay top dollar for them. If companies are laying off employees, automating, outsourcing or other negative actions, why are we buying from them? If our representatives are more worried about special interests or lobbyist dollars, then why are we still allowing them to make decisions?

In short, we need to change how our society acts.

Students, Universities And The Student Debt Crisis


The American Ideal involves a house, a dog, a wife and 2.5 children. Those children then spend 18 wonderful years growing up, and after high school attend a fine college or prestigious university to begin the first steps in their chosen career. After four years, the graduate with honors holding a piece of paper that unlocks opportunities that would not be available otherwise. Young men and women enter into the workforce, highly skilled, highly intelligent and go about making the world a better place.

Having now started my second journey through college to develop and refine the left side of the brain; I have been forced to see the truth of higher education in America. On the record of course collegiate institutions are upholding the ideals listed above. Off the record, behind closed doors, where no one but the initiated are allowed the driving principle seems to be this:

The Student Is a Revenue Stream.

This realization came, not through stumbling across an unshredded memo or a chance remark in passing; rather by piecing various experiences I have had thus far with certain university policies and several other conversations. Like Archimedes in the bathtub, my Eureka moment came hard and fast.

The ballooning cost of tuition combined with the increased length of time until graduation is the first marker. It’s one thing if a for-profit institution seeks to place students into the longest possible course schedules, they have to make a buck! But when state schools and private, non-profit universities behave in such a manner; something is wrong. If rising tuition costs are unavoidable, then a prudent university would work to ensure that students are able to graduate in as short an amount of time as is reasonable. The opposite is occurring and I know this from first hand experience. I am currently looking at five plus years of work at a minimum to graduate, and have met strong resistance when attempting to pursue paths that would shorten said time frame. Beyond that, the additional fees assessed by universities onto students in addition to tuition and room and board and the rising cost of text books (especially those special versions printed by a University that cannot be sold on the market, and are still priced at a premium) reveals the idea that students are to be squeezed for as much money as possible.

If one steps back and looks at the Board of Directors, their policies, budgets, and the day to day procedures; it most closely resembles that of banks and financial institutions. To begin with, Students have quietly lost their rights on campus. Of course legal counsel is still available, but there are no Ombudsmen or Arbitrators to decide issues between students and professors or students and the university. Student Advocacy Groups have become information/help desks, their teeth removed and only allowed to answer questions. Student government organizations have been distracted with frivolous things like homecoming court and determining the nutritional value of the food served on “Mexican Mondays.” Meanwhile, the students are so overloaded with coursework and debt that they have no time to think about how wrong this is, and if they could, they wouldn’t have the energy to do anything about it! So the students themselves are left with no course of action to take if they disagree strongly with an issue that directly affects them whatever it may be, from tuition and parking costs to course scheduling and requirements. It is an oppression and slavery of the worst kind.

Consider how universities have handled cutting costs. If they were truly public servants, who desired to serve the best interest of the public and their nation at large, the board would have begun with their own salaries. In fact, the board of directors would be an entirely volunteer position with the appropriate honor and respect given to it because these fine men and women have sacrificed financial gain in order to dedicate their lives to bettering the pursuit of knowledge.

Instead of that, they began with privatizing essential services. Outsourcing! Contracting out essential services to the private sector. It would be one thing if the least profitable portions of the college were outsourced, under-performing departments and bloated research projects for example. But it tends to be those services that break even or make money (provided of course that they are not wildly successful athletic programs). At Ohio State for example, the entirety of the parking services is being sub-contracted out for fifty years with the students having no say in the matter whatsoever. A short-term boon, and the ability to fire State Employees without fully paying retirements, has cost Ohio State long term financial stability and the respect of the students. It won’t come at first, but after a few years of being mistreated at the hands of over-worked, under-paid employees, students will realize how little they mean to the University. While the financial gluttons on the board of directors enjoy a cut of the take.

The most brazen example of this is the recent spate of collegiate advertising. When a state school believes it needs to advertise in order to attract students, something is very wrong. Advertising is, rightly or wrongly, believed to be lies; They might tell the truth in some way, but they are still lies. If a University uses advertisements to trumpet its accomplishments, then those accomplishments are false. They are presented as lies, in a medium specialized for lying. Companies advertise out of desperation, either a competitor is gaining market share, a product has performed poorly, or they are losing money and are trying to reverse the trend. The best companies don’t need to advertise. Starbucks, prior to its fall from grace, had almost no advertising budget. They didn’t need one, they were too busy delivering great coffee to people, and those people were telling everyone about it.

State Universities at one point, were too busy turning out some of the best students ever seen in the world. Students who went on to found ground breaking companies, spearhead research, develop new technology, write the next American Classic, push the boundaries of art, foster thought and philosophy, and generally better the world around us. That was their advertising. Or when a university won a prestigious award, or had an alumni win a prestigious award. That was their advertising. Sometime in the not so distant past, that stopped happening. The students weren’t graduating as bright eyed and (most importantly) well equipped to tackle the new round of challenges. Universities had begun to get caught up in themselves, had become a ground for personal gain, advancement and vendettas. The focus, was no longer on the student. Look at how many “professors” never teach a class at Ohio State, and President Gee has DEFENDED them for it.

This. Is. Wrong.

Any and all colleges and universities should be focused on graduating the best students possible in the shortest amount of time. The “profit” comes in the form of a highly skilled, highly intelligent, highly motivated workforce that goes out and creates the “next big thing.” Pushes society forward, strengthens the economy, and solves the problems facing us today. That means much more money over a much longer period of time, and an alumni association that encourages students to attend their alma maters.

Of course, this means that students must once again be the focus and end product of higher education. They must be taught the skills necessary, and equipped to handle the challenges of the contemporary world. They cannot be burdened with too much debt, and they must be taught how to use their degrees. Gone should be the art major who doesn’t know what to do with their degree, in its place should be the Art Major. An individual who has developed their creative drive in such a way that they can produce amazing works of art and solve solutions in elegant ways. As comfortable with a paintbrush as they are with a hammer or laptop, or Excel spreadsheet.

This requires that Students become investors in the university. They are shareholders with a vested interest in the university. Students attend a university, and enter into a contract that states:

I believe this university is the best choice I can make to succeed. I will work hard, I will learn, I will grow, I will mature. I believe that this is the best course of action. In exchange for investing myself, my money and my time, the University will agree to prepare me to be an economic force. To solve ideas, to serve others, to achieve. They will not overload me with debt, and will not keep me a day longer than is needed to achieve the goals set out.

Instead of being released from the need to learn, the student must work harder at it. Instead of languishing in immaturity, the student will be forced to grow and become better in all aspects of their lives. If they don’t succeed in the larger world, then they have failed themselves, and the university has failed them and itself.

Ghandian Engineering


 

“When you wish to achieve results that have not been achieved before, it is an unwise fancy to think that they can be achieved by using methods that have been used before”

Sir Francis Bacon.

 

There’s a move to restore Detroit. I have friends from Detroit, and I love the tenacity of much of the city’s denizens. However, we can not restore Detroit to it’s hey day. The golden years of the automobile have passed on. What we can and should do: is to rebuild Detroit. Remove what is no longer used, what no longer works, what is no longer relevant; and rebuild.

Compare Akron to Toledo. Toledo is stuck, trying to restore itself. Akron is seeking to rebuild itself.

What does this mean for the environment, for sustainability? Our current society and culture is no longer feasible. We have two paths to choose from. One will lead to the downfall of America, the other towards a new America.

We are the land of change. Every new generation has left its mark, for good or bad. But we’re at the crux of our society. And the decision before us is not “save the planet or not” it is “do we continue to exist or not.” Will we continue to be relevant, or will we slide like every other great nation, empire, city-state that has come before us?

What the sustainability movement is about, is a better way of doing things. Getting more, from less, for more people. Why aren’t we doing this?

Cost? Costs have risen every year. We might as well derive some benefit from higher costs.

Jobs? Jobs are cut and lost every year. Look at Detroit to see that.

Will it work? When US scientists set off the first atomic bomb, there was a real belief that it would trigger a chain reaction that would ignite the whole planet. Decisions are made, and put into effect without knowing the full consequences every day.

Is it entirely true? Nothing is entirely true, nor can anything be verified beyond all doubt. Define and measure gravity. We know it exists, we know it has to do with mass, but we can’t quite put all the pieces together. Try and prove evolution. Try and prove almost any scientific theory widely believed to be “true.” It’s almost impossible. We operate on partial information every day, and we’ve done incredibly well for ourselves over the thousands of years that humanity has been in existence.

It is time for us to clean house. To sweep out the old, and attempt the new. The old ways of doing things were wonderful, and marvelous, and should be retired with reverence and respect (mostly). However, it is time to implement the next phase in humanity.

Isolated Incidents?


I posted a quick link yesterday on tumblr, and I’d like to expand on it. Love Canal, Picher, Centralia (the real life inspiration for “Silent Hill”), River Valley, The Yangtze, and other similar situations.

Everyone acknowledges how dreadful these events were, how sad, how terrible, how wrong. And yet, that’s it. The causes of these events are all similar: the desire to cut costs, make money, avoid responsibility. All to fuel our desire for cheap goods and services.

We don’t want to admit that this is a systemic problem because the guilty party is us.

Look at the outcry against BP, but note that our driving habits didn’t change.

Look at the backlash against violent video games. Before that it was television, then movies, then music. As opposed to actually saying “Our current society is detrimental to families.”

These aren’t isolated incidents. These are symptoms that something is violently wrong with our current society. It’s time to change.

A Few Thoughts That Should Come Together


I’ve got “Factory Floor” on television right now. One of the clips is about plywood.

The quote was “because it’s man made it’s stronger than any tree.”

I had to think for a second about that statement, and the answer is yes; We can often engineer some specific characteristic to be better than what is found naturally.

Obviously then, we can improve on what is found in the world around us. Meaning we can improve the world around us.

Secondly, this post. Note further down, the ideas on taste and bad culture. Currently, our society as a whole is operating with this slow moving, bad taste culture.

The good ideas are either not being implemented, being poorly implemented, or only implemented in certain areas/sectors. What good changes that are implemented in one area (say MPG standards) are ignored or counteracted within other circles (Oil Production).

Societal costs raise every year. Yes some of the environmental changes will also raise prices. However the trade off (better city planning, more jobs, cleaner energy, more fuel efficient cars and vehicles, proper mass transit, a more integrated culture, etc) is worth it.

 

But again, prices will go up regardless of what we do. We might as well do the right thing.

Guest Post: Renewable Energy


My good friend Joe sent me an email this morning. I thought it appropriate for today.

Hey,

I was having a conversation with my mum about the oil spill, because it is in this month’s National Geographic, and we got to talking about alternative energy.

Through the conversation, I kind of came upon an analogy I hadn’t thought of before:

Thinking about the change from non-renewables to renewable energy could be similar to the ways in which people generate their incomes now, against how they did in the past.

In the (even recent) past, people would have one source of income. They had one job, which paid them a lot of money–likely all the money they would earn. Increasingly now, people are using the power of the internet to generate multiple income streams. Each of them provides just a small amount of income, but they add up to a sufficiency.

I think that you can contextualize renewable energy in a similar way. Formerly, we put all our efforts into fossil fuels and got all of our power from one place: one giant power plant. Now, with wind, wave, tidal, solar, hydro, (even nuclear), biofuel, we’re going to have to rely on different “income streams” to satisfy our energy demands.

So it’s not necessarily necessary to fill Nevada with solar panels, or risk disrupting the airflow on the East coast of the US with wind turbines, to get all of your energy from one source. Instead, it might be possible to get just a little of an individual’s, or even a nation’s, energy from multiple sources.

Just a thought, but there might be something in it.

Best,

Joe.

Enough said.

Recycling Is Easy


Or at the very least it should be.

There are two ways to encourage recycling.

1) Make throwing away trash prohibitively expensive

2) Make recycling easier than throwing something away.

Regarding option 1,  somehow the US economy has hidden the actual cost of certain products and disposal. Trash disposal should be much more expensive then it is currently.

Regarding option 2, imagine if you could throw every recyclable object into one bag. No sorting, no checking of numbers, no worries. Meanwhile, if you wanted to throw something away it had to be sorted. And depending on what it was, there would be costs associated with it.

For example plastic and styrofoam would cost the most money to throw out, because they never really decompose.

Stupidity Reproduces Itself


I had a professor in college, after I landed myself in some serious trouble with the administration, say something to me that stuck with me. He said;

“bureaucracies exist to perpetuate themselves.”

It was said to me to remind me that there is no mercy or grace in a system, despite it’s outward trappings. Earlier this morning, I caught Robert Rubin and Paul O’Neil on Fareed Zakaria.

Paul O’Neil has come under fire for criticizing the Bush Tax Cuts repeatedly. But his reasoning behind it is simple: The IRS is inefficient, complex, and bloated. A tax cut merely lessens it’s horrible inefficiencies; it doesn’t fix them. He believes basically that the IRS is merely an experiment in stupidity that everyone tries to fix instead of blowing it up and starting over.

O’Neil would like to see a simpler, more effective and easier to enforce tax system.

Take the two ideas: bureaucracies exist to perpetuate themselves, and a stupid system needs to be scrapped and rebuilt; and you have a pretty good idea of what’s occurring in the the environmental world.

We’re holding onto ideas that are a hundred years old, no longer work, and are merely self-perpetuating stupidity.

  • Take our power generation. We burn something to heat something to make electricity. Cavemen burned things, Peasants in the Dark Ages burned things, and what do we do after 10,000 years of human development? We burn things.
  • Our highways and byways could stand to be reevaluated as well. It was built as a defense tool for the Cold War in the 1950s. It’s 2010 and the Cold War is over. Yet we still plan and build roads like Eisenhower is president and the Soviets are a button push away from starting WWIII.

We have better ways to generate power, better ways to build roads, houses, businesses, better ways to plan communities, better ways to manufacture, transport, and more. Basically we have better, and cleaner ways to do everything in our lives. And yet?

We still are allowing a stupid, bureaucracy to reproduce itself.

Quick Fix


President Obama was touted as the Capitalist-in-chief for the United States in an article on BusinessWeek (here). Specifically he’s been pushing money into the clean tech sector.

This is a quick fix to a serious problem.

Our current system, was built on ideas and assumptions from the 1940s and 50s. Back when smoking was healthy and gasoline wasn’t polluting. But since that time, we’ve learned that pollution is a serious issue and smoking causes cancer.

Electric and hydrogen powered vehicles are nothing more than ways to prop up old world ideas.

Look at our stimulus package: $300 Billion to the establishment. It didn’t actually stimulate the economy, nor did it trickle down to Main Street.

Look at health care reform: No one answered the question “Why have health care costs sky rocketed?”

The question with clean tech must be “Why are we trying to preserve a dying, antiquated way of doing things?”

We like to fix things, we aren’t good at solving problems.

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