Family Sacrifice

The post-40 mother seems to be the topic of the day, particularly with Mother's Day so near. I watched a late-night women's issues show earlier this week and one topic they covered is the dangers of having babies post-40. They discussed how women don't seem to give enough weight to this difficulty and that they delay having children too long due to career and other achievements. Some of the women (the panel had a good mix of conservative and liberal women, actually--it was a good discussion) bemoaned the fact that men didn't have the same restrictions and could have children even as their careers flourished. Mention was made, of course, of Karen Hughes who recently resigned a high-powered post in the White House in order to be a parent for her teenage son. Supposedly, men don't ever do this--resign a position in order to spend more time with their families. Or at least, if they do, it isn't as extreme as pulling entirely out of the work force. I found a great treatment of the topic by Marianne Jennings. It's worth a look.

But I want to go into the whole man thing. You see, I'm personally in a position to attest that some men make career sacrifices for their families. I met this specifically when I worked at Jenkon. Unlike other programmers there, I went home at 5 or, at the latest, 6 every night. I did so to be with my family. This "lack of dedication" was noted. It came up in conversations with my boss. I'm convinced it played a role in my compensation. And really, it should play a role in my compensation because, frankly, it means that I'm arguably not as productive as I would otherwise be (I believe that I am more productive than other co-workers, and I believe that part of that is the rejuvenation I get with my family, but that's a belief and hardly proven). The call of family is an important one and having a family means making sacrifices. That's just the way it is.

Some claim to perceive the workings of Satan in this pressure on the family. While that may certainly be true (I'm one of those quaint religious people who actually believes in an active force in opposition to good), it is not the whole story. You see, this sacrifice hasn't always been an issue. In past centuries, a married man could out produce a single man on the job. That's due mainly to the amount of home manufacture that was required to maintain a household. Think of it in terms of making dinner and doing laundry. These activities had to be tackled in the home and took a significant amount of work. Eating a balanced, healthy meal required literally hours of preparation. Likewise clean food and healthy living conditions. In the absence of chemical soaps and automated washing processes, it took hours of care and a lot of hard work to ensure a clean home environment. It was weighted enough to the advantage of the married man that single men often congregated in boarding houses--thus pooling their resources and essentially "renting" domestic service.

And it wasn't just having the wife that helped out. Children were also a net asset to the household income with the average child bringing in close to 1,000 pounds net before leaving home--in the study I read about a year ago (I'd reference it if I could--I hate vague statistics thrown out like that, so I'm open to refutation or confirmation). Children worked farms and stores, they did chores, there were no child labor laws. Having children was more than just a personal joy in your offspring, it was a direct benefit to the home in specific material ways--and a form of retirement insurance as well. This dynamic exists still in poor countries. Population controls in countries with heavily agrarian economies is going to continue to run into road-blocks as long as children contribute to total household income. This is why you see the average number of children per household decline in developed countries and birth control initiatives run into brick walls in undeveloped countries.

Contrast all that to today. Home production is a thing of the past. A balanced meal can be had in five minutes and a microwave. Laundry is similarly streamlined and home maintenance is easier and cheaper than it has been in the past. Further, children are now a huge sacrifice on the part of parents costing literally hundreds of thousands of dollars before leaving home and requiring a huge amount of concentrated effort to rear--often incurring the double whammy of requiring the wife to stay at home in addition to their consumption of family resources. Which means that the strains on the family are as much economic as they are demonic. This economic pressure is real, it is harsh, and it requires sacrifice on the part of men and women if it is to be done right.

For me, the trick has been to accept that and move on. I decided to have children, not for their economic benefits, but because I believe that it is right for me to have children. It is a religious conviction for me. It is an explicit doctrine of my church. So I make the sacrifice. I don't achieve the peak of my profession and never will. I'm resigned to that. And I'm happy to support and applaud those others who resign from the full extent of their potential achievements in order to raise a family. So, I guess this is a Mother's Day post when it comes right down to it. Thanks Mom! You pioneered a difficult process and I hope I can live up to the standard you set.

9. May 2002 10:27 by Jacob | Comments (0) | Permalink

Faith in the Real World

I read an interview a couple years ago that has stuck with me in odd ways. Some magazine interviewed the inventor of the Ethernet (not a tool for catching the Ether bunny). Ethernet is the most popular way to network computers in a close geographical area. I have a small Ethernet network here at home, and any of you who have a network connection at work probably use Ethernet, too. Before the Ethernet concept, network traffic was highly regulated in order to insure that no data was lost in transition. There were strict rules--each computer had to know exactly where the data was headed and then wait for the right time to send it that way. In order for a computer to send data to another computer it had to map out the route and then wait for the block of time that the network allocated for data to head to that route.

The Ethernet changed all that. The key change for the Ethernet was nothing less than a leap of faith. In fact, that is the source for the name "Ether"net. In this new network, each computer just sends its data out (into the Ether) whenever if feels like it. Each computer simply exercises the "faith" that the data will be taken up and delivered to the correct destination. It works best when each "node" (computer) just assumes that the other nodes will understand the routing information attached to the data and push it on to the next station. This assumed competence is the heart of the Ethernet. Each computer knows the rules and assumes that the others will as well. Since each computer doesn't have to do all the mapping and routing, a lot of time is saved and the whole network goes a great deal faster. That faith creates efficiency. At the time, many people assumed that this faith would crash the network. Because scientists couldn't see and predict what would happen, they assumed that the result would be chaos. When the pioneer in faith (I wish I could remember his name, he died recently and I should try to at least remember who he was) ignored his critics and simply built his network, he showed that their fears were unjustified and the speed increases were, well, compelling.

The reason this concept has stuck with me so long is that the lesson learned by the Ethernet is not just a technological one. This principle of faith has been used profitably in many networks relying on complex routing. FedEx built a business around it despite the proposal earning a C from the professor it was originally submitted to. Wherever you have systems that interconnect, you will see benefits provided by faith between the components.

Our founding fathers knew this over two hundred years ago. They created a system of faith between interconnected individuals and adopted a system that left each component free to make its own decisions--determine its own route in the network. At the heart of freedom is faith. This fundamental principle is the foundation of our representative democracy. Freeing each individual to their own pursuits in a land rich in resources has created, in time, the most powerful nation currently on Earth. This is essentially the message of the Libertarians.

There are two problems with this over-rosy picture. First, there is a vital companion to freedom that is often over looked--much to our peril. In order for freedom to prosper, an underlying rule of law must exist. This is easy to establish in artificial environments like computer or package networks. Fundamental rules and infrastructure are provided in these systems that allow the faith of the system to have power. In human systems, this rule of law is needed in order to prevent people from having power over others unfairly. Basic guards to our freedom have to exist if our faith is to have any power to enhance our lives. Rules must exist to enforce contracts, prevent coercion, and protect property. The efficient growth of our economy is insured when people are free to contract with each other for their needs and they need to have recourse when those contracts are breached (to prevent swindlers). Leaving each unit (family) to fend for itself can seem cruel or neglectful, but is the key to our prosperity for as long as we remember to provide a system to enforce contracts, prevent coercion, and protect property.

The second problem with this system is our waning faith. We live in an age when people express increasing doubt in the capability and integrity of their fellow citizens. An increasing call in our society is to "protect" various groups from, well, often from themselves. They want to help them, to determine their course for them. Help is nice, but helping people by determining their course breaks the whole system down. If a node (computer) on a network insisted that certain packets couldn't be trusted to arrive safely on their own and decided to regulate the route in order to ensure arrival, not only is the intended packet delayed from its goals, but the whole network suffers a slow down as the route is hardened temporarily and that packet delivered. This is what is happening in our school systems right now as people determine that families aren't capable of determining the best avenue of learning for their children. The result is a hardened system that is frozen in order to hand-deliver certain packets that are feared to otherwise be lost--at a per-pupil cost that is twice the private school average.

And before you think I'm talking about liberals alone, consider that the same fear exists in other industries as they seek the hardening of their own routing systems. The United States sugar industry, for example, benefits from import tariffs that effectively double the retail price of sugar. This tariff limits your freedom to buy sugar at a lower price--oh, and anything that contains sugar is affected as well.

It is no coincidence that lately any new technology that streamlines our economy is introduced to us in terms of how many jobs it will cost. We seem to lack the faith that the people displaced by the new systems will be able to work at other positions in our economy. This lack of faith leads us to make poor decisions that end up hurting many more than it helps by denying new efficiencies that free people to work in capacities that are now more important to all of us. It is good news when the position of a worker in a factory becomes automated, because the labor of that worker can now be utilized in a manner that produces more benefit to all. I know that seems a callous analysis of the despair of a family that must search for new employ. And certainly, there is no small discomfort for those affected as they try to find new positions that will suit them. It would be easier on them if we hand-delivered them to a new destination. But that very hand-delivering (or worse, preventing the implementation of efficient processes) taxes the entire system, slowing everything down and eventually, costs everybody (including those protected) more than a temporary reshuffling will.

Please don't misunderstand. I do not mean that all assistance is useless in our economy and that displaced families should have no assistance. All I am saying is that they should not have protection. By following our instincts to protect (and encouraging the instincts to be protected), we take an inappropriate role in the workings of individuals capable of fulfilling their own routing needs. Displaced families, or even industries, should be left to determine their own course of action given their resources, abilities, situations and inclinations. Any assistance given them should be careful to support that autonomy and very wary of usurping it. Our ancestors understood this principle well when they taught the autonomy of the family and the responsibility of each to look after their own. Looking after your own used to be the way that society showed faith in their neighbors, the faith that they would each route their lives in a way pleasing to them, with an underlying assumption that we could expect them to live up to their promises and contracts. Communities were built and segregated by specialty, not by force and assigned allotment, but by one family choosing to supply food (a farm), one family choosing to buy goods from outside and sell them to their neighbors (a local merchant), one family choosing to pool excess resources to provide them to other families in need of temporary support (a bank). Others chose to ferry goods from one community to another, or connect communities by train, caravan or ship.

Those who consider the "look after your own" principle discredited seek to run the lives of others by restricting what they can or cannot do with their resources. You cannot use your land according to your best judgment because we fear you won't value it highly enough (environmental protection). You cannot use your labor according to your best judgment because we fear you don't value your labor enough (minimum wage). You cannot use imported cars because you do not value domestic cars highly enough (import tariffs). You cannot hire who you want for a job because you might not value the right people enough (affirmative action). You cannot interfere with the established education system because we fear you do not know what is best for your children (don't get me started). All of these represent a loss of faith in the judgment of our neighbors. These are examples where people allow their fears to corrupt the necessary rule of law to purposes that end up weakening instead of supporting our freedoms.

Watch people who want to protect you very carefully. If they aren't providing basic rule of law, then they are sending clear signals that they don't trust you. Beware of any law that seeks to piggyback on the needed functions of government to force people to have the same values they do. It's one thing to protect you from a thug who wants your wallet. It is quite another to want to protect you from the natural vicissitudes of life.

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17. August 2001 10:23 by Jacob | Comments (0) | Permalink

On Pot

A lot has been written about drugs and whether we should decriminalize certain "recreational" drugs. I have already written one essay on how this issue eventually divorced me from the Libertarian party. Well, the issue of "medical marijuana" has become something of a hot topic and I'd like to express my thoughts on what is going on.

The thing is, I think it is a real shame that we are unable to approach marijuana research rationally in the United States. Sure, marijuana is a drug. So is morphine. So is aspirin for that matter. And so is Ritalin which, by the way, I am currently on. The thing about drugs is that they affect our minds and bodies in weird and interesting ways. Indiscriminate use of these drugs is clearly wrong and should be prohibited.

That said, intelligent and medical use of these drugs should be possible. Should be encouraged in my opinion. There is reason to suspect that marijuana could lead us to significant breakthroughs in fighting certain aspects of disease. At a minimum, marijuana encourages appetite and suppresses nausea--two benefits that could help some people with extreme treatment regimens (like AIDS sufferers) that produce nausea and hurt appetite.

For those wondering, other countries are doing some interesting research on the affect of marijuana on the mind and body:

It would be interesting to pursue these breakthroughs and see what it is that we've been given for amazing chemicals on this planet.

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15. May 2001 10:21 by Jacob | Comments (0) | Permalink

Capitalist Greed

"Capitalism: The system of modern countries in which the ownership of land and natural wealth, the production, distribution, and exchange of goods, and the operation of the system itself, are effected by private enterprise and control under competitive conditions." --Webster's Collegiate Dictionary, 1945

There has been a lot of criticism of capitalism lately. The most common charge is that capitalism promotes greed. In fact, in many circles including popular media and entertainment, capitalism tends to be synonymous with greed. A popular movie in the last decade starred Michael Douglas (I think) in a role where he played a CEO who lived by the motto "Greed is Good".

I'll go on record as someone who believes that greed is *not* good and can in fact lead to great evil. But the problem is, greed is impossible to quantify. Greed is the motive of actions, not the action themselves. How can you tell if someone is successful because they are greedy or because they sought to serve their customers well with products they want? In fact, how can you tell that someone who is successful is greedy at all? Or that a poor person isn't greedy (I mean, they might be very greedy, just bad at satisfying their greed)? In fact, the sanctimonious finger pointing about the greed of successful people can just as easily be a function of the envy of other (less talented) greedy people as anything else.

Well, since you can't quantify greed, I think that it might be more useful to look at command economies vs. free market economies and look at how they handle any greed that might crop up. I mean, what are the effects of greed under different economic systems? Or, put another way, what might greed motivate someone to do under different systems?

The central feature of a command economy is that somebody, well, commands the economy. Socialism is a mild command economy where the government controls certain universal services like health, broadcast TV, transportation and, well, anything they can control without actual armed revolution. Communism goes further and attempts to control the production of everything (er, so does fascism, come to think of it...) and just makes sure that any armed revolution is beat down. So if you are a greedy person and you are born in a country with a lot of command over the economy, what activities would you undertake if you wanted more stuff? To me, the answer would be that I would do what I could to make sure I was the commander rather than the commanded. Greed reinforces oppression.

In a free market however, since few outside influences can touch the economy, anyone who is greedy is forced to figure out a way to get the stuff that others have. As long as the free market is accompanied by the rule of law, Greedy people have to convince someone to give them stuff--they have to be persuasive (this is where Russia is failing, by the way--they have a free market without the rule of law). I have to give others something that I value less than whatever it is that they will give me for it. In other words, I have to figure out what others want and try to provide it. Did you catch that interesting transformation? Free markets turn the impulse to greed into a search to satisfy the needs of others. Pretty darn cool, I think.

What that means is that a free market is the only way to take the inherent greed of people and turn it to the service of others. Now, this isn't as clean as it should be. For one thing, there is no such thing as a free market. None exist in the world today at any rate. I'm afraid that in our world once a certain level of wealth is achieved, that wealth tends to be directed towards controlling the hand of commanders to protect or grow the wealth. So greed reinforces oppression in any system. In the United States, that means that once companies become a certain size, they feel the need to manipulate government force to their advantage by erecting barriers to competitors (taxi companies in Las Vegas for example or Doctors and Lawyers with their respective legally enforced practice requirements) or by directly petitioning for government subsidies and "protection". If you want pristine forests, but can't afford to buy one, your greed will seek to oppress those who don't value pristine forests as highly.

But here's my conclusion. The freer the markets that can still maintain the rule of law, the less problem they will have with greed. Not because greed won't exist but because the effects of greed are ameliorated by the freedom of those around the greedy. Our society *does* have a problem with greed, no doubt about it. Too many people are willing to sacrifice morals and relationships for material possessions. I'm just glad that our freedom provides us some protection by forcing the greedy to get our permission before taking our stuff. There's a warning in that. The more power to oppress that we give others, *any* others, the more greed can hurt us.

Greed is bad. But amassing power to take stuff from the greedy as is proscribed by the political left in the United States is entirely the wrong way to solve the problems of greed. That just leads to the smarter greedy people switching sides to where the power has been amassed. The antidote to greed is to reinforce freedom from oppression and to put as many checks on power as we can find. That won't get rid of greed, nobody can do that, but it *will* turn the effects of greed into services and goods we might actually find useful.

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1. May 2001 11:20 by Jacob | Comments (0) | Permalink

Paying for Drug Research

I'd like to point some things out about the ongoing debate about prescription drugs. This is important stuff, so please bear with me.

The latest hue and cry by budding socialists is the cost of prescription drugs. There are a lot of reasons for this and I'd like to explain my position a little bit. The price of prescription drugs makes a great target for several reasons. First off, drugs are life-saving and it becomes tragic when a poor person cannot afford to save (or even just improve) their life because the cost of doing so is too high. Obviously, we want to help as many people as we can and our impulse is to call for clemency or mercy to supply them with the means to save or improve their lives. Second, other "industrialized nations" have cheaper drug prices. Third, drug companies are huge and they have profit margins in the teens and large budgets for things that we don't understand (like marketing).

Okay, that's why drug companies are such lovely targets by the soft-headed socialists in our press and government. Here's some things that you should bear in mind when you try to call for regulated drug prices.

Number one, drugs are in our discourse now because drugs have become such a large part of our lives. In fact, many ailments that used to require hospitalization can now be remedied for about a tenth the cost with a prescription. Drugs now account for about a third of our medical spending where they were barely on the map just ten years ago. Improved medications account for about ten additional years of our ever increasing life-span estimations. Unfortunately, for all their benefit, drugs aren't as visible as a hospital stay and we are used to their costs being a marginal portion of our health care costs. This is too bad because if we understood the actual trade-offs we would be grateful for the advances we have instead of being so resentful. If a patient understood that they were paying $250 for a month of pills that saved them a two-day hospital stay they would understand better that the true cost of drugs adds up to a substantial savings. In fact, our medical costs have been decreasing in recent years in large part due to increasingly effective medications.

Number two, there are a lot of factors that go into the cost of drugs that we aren't used to considering when we evaluate a product. Drugs are the heaviest research industry bar none. It costs approximately $500 million to bring a drug to market. That is before even one pill has been sold. That price includes research and the government approval processes. This expenditure is only possible because of the patent laws that we have in the United States that allow the company to profit from the sale of their drug. Now, a company only has 20 years from the time the patent is applied for before they lose patent protection. That seems like a long time, but remember that a) the patent has to be applied for as soon as possible in order to protect the company, b) it takes between five and ten years after application to bring the drug to market, and c) a competing drug can be introduced at any time that might make your drug obsolete. That means that a company has approximately five to ten years (and a maximum of 15) to make back this huge investment and sometimes they have less than two.

This brings us to number three, the marketing costs. Drug companies spend approximately as much on marketing as they do on research. The reason for this is simple: if nobody knows about the drug, how can they benefit from it? Now, our drug companies actually fit all their philanthropy under their marketing budgets as well, so you have to be careful when people decry the marketing budgets of drug companies. In fact, fully half the marketing cost of the drug companies is in the form of free samples given to doctors for their poor patients.

All of this means that the cost of drugs will be high. So what about all those countries that restrict drug prices to a certain percentage over manufacturing costs like all of Europe and Canada? Well, you can thank them for your high drug costs. In fact, it turns out that the United States citizens are supporting the entire research and development costs for all the drugs in the world. Well, that's a little extreme. Perhaps it would be better to state that the United states supports the research and development costs for all the socialist countries in the world. Oh wait, same thing. In fact, the next time you read some article about the Canadians paying $5 for a pill that costs you $100, you can thank the Canadians for raising the price of your pills by forcing you to support the entire R & D costs of the drug companies.

What's left for the left to gripe about? Oh yeah, obscene profits. It is true that the drug companies are some of the most profitable in the U.S. You can understand why by the simple saying that "with the greatest risk go the greatest rewards". Drug companies take huge risks with their capital. They have the highest research costs, the highest "product-to-market" costs of any industry in the United States. In order to pull together the money to invest in that kind of risk, the rewards at the end will naturally be higher than for a company (like mine) with little start-up cost. And here's some things to bear in mind when people talk about profits. First, high profits generate high taxes. And second, only a small portion of company profits get paid out to the owners of the company (usually, profits are funneled back into the company in the form of increased spending on things like labs, researchers etc.).

Two short facts that illustrate the success of the United States vs. everyone else. Five of the top ten drugs in the world were developed in the United States. That means that all the other "industrialized nations" combined can't match us. Canada is actually improving some because they toughened up their patent laws recently and saw an immediate increase in research (with the goal of actually recouping their costs in the U.S., by the way because they won't get their money back in Canada). Both of the top two drugs in the world (which account for over 80% of world-wide drug sales) are U.S. drugs. No other country comes anywhere close to the innovation of the United States in improving our lives.

Finally, a short note on medical innovation. Everyone has heard of wonderful herbal remedies for common ailments. In fact, some people claim to be able to cure cancer (which I doubt) and epileptic seizures (which actually bears up under scrutiny) by controlling diet alone. I'd like to point out that the reason we never pursue these cures is because there is no money in it to do so. You cannot patent a diet. You cannot patent a plant extract. In order to make medical claims about, say, St. John's Wart, you would have to make multi-million dollar investments that you could never, ever recoup because once you documented it, anybody who wanted to could sell St. John's Wart at the super market. This is sad, but I don't see any way around it under our current system (beyond philanthropic donations or government subsidy--both expensive options fraught with opportunities for fraud and abuse).

Anyway, long live capitalism. And God Bless the United States for continuing to bear the costs for helping the world solve their medical problems. If you want to see an end to innovative research on drugs that save and improve our lives, please pursue price controls on prescription drugs.

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27. April 2001 12:19 by Jacob | Comments (0) | Permalink

Napster

Napster has been in the news a lot lately with legal injunctions pending in the appeals court ruling against them. Copyright is a tricky issue and one that I think is very important. The problem is, in our modern era, copyright is tied to the distribution channels. You will notice that the law suit against Napster was brought not by artists (though Metallica is certainly a driving force behind the RIAA suit) but by an industry organization put together primarily by distributors.

I think this is the heart of the true problem. The thing the Internet fundamentally alters is not the cost of producing music. The thing the Internet alters is the cost of delivering music. That means that the value added by distributors has been reduced to essentially zero. People don't *want* CDs anymore. The business model of Sony, Virgin, and all the other RIAA subscribers has been essentially trashed. Their practice of putting three decent songs together with eight lesser pieces and selling the whole thing together for $20 is now over. People want control over what they purchase and that control will win over all the legal issues RIAA is trying to throw up to protect their business. People will keep on ripping MP3s of their favorite songs in order to put their own collections together based on what they *really* want regardless of whatever legal issues may stand in their way.

In my opinion, the law is *not* intended to protect businesses beyond their usefulness. Just ask carriage makers in the early 20th century.

Now, people are saying that artists deserve to make money on their hard work. I agree with that. However, the place that most artists make money is *not* currently album sales. Album sales act as a primer for concert and merchandizing sales where the real money is made. Smart artists should recognize that fundamental fact and relearn the lessons they learned with radio--i.e. that if you restrict the access, you end up hurting yourself where you actually make the money. Artists now compete for radio (and MTV, but less so) air time. They should do the same with their Internet distribution systems. Frankly, they'd be smart to give their music out in exchange for basic demographic data. Stuff that will allow them to gear future venues to their greatest fan base.

Ripping CDs to MP3s is tough. I've done it and I can tell you that it is a non-trivial effort for non-geeks. The value that Napster provides is that you can find the songs you want without the hassle of trying to rip the stupid album yourself. This is a valuable service when you consider that even after I've slain the technical issues, I can download a song faster than the computer can rip a new copy off a CD. In this light, Napster provides a perfectly legitimate service to people like me who have purchased valid copies of music they like. I fear that the potential illegal uses of Napster will cause the legal authorities to broaden current copyright law beyond the original protective intent.

It is perhaps instructive to note that the court that issued the injunction against Napster is the same court that issued a similar ruling against VHS. The potential to use new technology to make illegal copies should *not* preclude the legal use of that technology. Change brings pain as systems you built up on the current model are found to be obsolete. Companies want their revenues to be protected from these changes and as such, the lawsuits are understandable. RIAA and the artists eventually behind them need to come to grips with the new technology and figure out how they can continue to make money using the resources they have available. Otherwise, their fear that they are obsolete will become self-fulfilling.

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15. February 2001 11:17 by Jacob | Comments (0) | Permalink

Bank Policies

I received a notice from one of my banks, today. They included a notice that beginning March 19th, they will begin processing my checks nightly from highest to lowest. They claim that this policy is enacted to ensure that my most important checks get paid first. This is pure BS. I hate this policy and have to vent some. I apologize for taking up your time with it, but I want everyone to know the real reason for this policy.

The truth is that they process from highest to lowest so that your balance will go down as fast as possible. The reason this is significant is because of bounced checks. Banks know that it is the large checks that will pull you under your limit. So if you make a mistake in your balancing, they want as many checks to bounce as possible. Since they charge $20 per check and not some percentage of the amount, they want you to incur the charge on as many checks as possible. That way, instead of bouncing one check and charging you $20, they bounce five checks and charge you $100.

The fact is, though the large checks do tend to be most important, they are also the ones where you have the most leverage and where you have the greatest relationships. If my check to my landlord bounces, all I have to do is call them up, apologize and write a new check. It's much worse for me if I bounce a check at the local grocery store because they'll just put me on a list and begin refusing my checks.

Another aspect of this scandal is the $20 fee. It costs the bank maybe $0.30 per bounce. It isn't like they have to pay a clerk to go through each individual check and hand-write a notice to you. The biggest cost is the postage for the notice they send to you (after two days delay--got to let those fees build up)--and even then, they don't send you a notice for each check, just one notice to let you know you screwed up.

So they make $100 on something that costs them maybe $1 to process.

The problem is that this policy only hits people who are too stupid or undisciplined to track their bank balance. That's apparently a safe group of people to rip off on an institutional basis. Chances are, they won't notice the real effect of the policy. And if they do, they won't want to broadcast their lack of intelligence or discipline to alert others. The proof of this is that consumers in Nevada (who are apparently not ashamed of being stupid or undisciplined :) got wise and enlisted the state government in the cause. I don't like the method, but it is enlightening to know that they are the only state USBank is in that requires checks to clear lowest to highest.

Anyone know a bank with this policy on a voluntary basis? I'd be happy to throw my business their way...

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6. February 2001 09:16 by Jacob | Comments (0) | Permalink

The Microsoft Monopoly

I've been mostly supportive of Microsoft in their current legal troubles. I mean, it's hard to imagine a monopoly without a barrier to entry (beyond labor). There just isn't any valid barrier to entry in the OS market (as is amply proven by the Linux successes).

And even if MS is a monopoly, they shouldn't have legal trouble unless they are harming consumers. Note, consumers. Not competitors. As a programmer, I can tell you that MS has provided a great deal of benefit to consumers not just by providing a decent product. The greatest benefit is that by providing a pax Microsoft, I can develop a product for the windows platform and be confident that 80% of my customers won't have trouble with it. Ever wonder why so much software is available for windows, but not so much for OS2, Linux, or Macintosh? It's because as a developer, you can reach the largest market by developing for the MS platform. You add significant cost for each OS you add to the mix. If there were an even mix of Operating Systems, my expenses would be huge. And the choices in the market would be correspondingly smaller.

Now, Microsoft isn't an honorable company. They keep pushing initiatives that are, at best, dubious. The latest one is a doozy. Basically, in order to combat piracy, they are refusing to ship discs with any new PCs you might order. So you buy the software without actually receiving the software. Not good.

When Microsoft does something disingenuous like this, they should be called on the carpet and forced to cough up.

But breaking them up just because their competitors complain seems a little precipitous to me.

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8. June 2000 13:02 by Jacob | Comments (0) | Permalink

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