Monday, July 23, 2007
Shorter Stanley Fish
by Tom Bozzo
At the very bottom of the column, the Nutty Perfesser — in contrast to his previous vagueness with respect to atheists and evolution — assures everyone that his affection for Thomas's opinion is not Swiftian satire or a pomo mind game. Thanks for clearing that up, Stanley, but did we really need to see directly into that corner of your mind?
But as a lack-of-self-awareness bonus, Fish offers this among potshots taken at various commenters (*) to the original column:
(*) Some of whom make elementary mistakes like assuming there may be no limits to free speech rights.
My columns would go over better with the Washington Times readership.(Times Select link, a column responding to readers who gave Fish what-for after a column praising Clarence Thomas's opinion that students have no free speech rights.)
At the very bottom of the column, the Nutty Perfesser — in contrast to his previous vagueness with respect to atheists and evolution — assures everyone that his affection for Thomas's opinion is not Swiftian satire or a pomo mind game. Thanks for clearing that up, Stanley, but did we really need to see directly into that corner of your mind?
But as a lack-of-self-awareness bonus, Fish offers this among potshots taken at various commenters (*) to the original column:
Krista Kerber believes that my columns are themselves “a perfect illustration of 1st amendment rights.” No, they are an example of rights granted, not possessed. The New York Times can always decline to print what I write, although if you are reading this, it hasn’t done so yet.Hope springs eternal (though we appreciate the source of blogging material, Times Select editors). But is our Perfesser reading? She said,
[F]or Fish to hold this opinion and express it is a perfect illustration of 1st amendment rights.Ms. Kerber doesn't claim that Fish or anyone has a right to expression at nytimes.com. The only fair reading of the comment's plain language is that what Fish has is a right to express himself whether in major media, at stanleyfish.blogspot.com, or handing out flyers on the Florida International University campus. Kerber 1, Fish 0.
(*) Some of whom make elementary mistakes like assuming there may be no limits to free speech rights.
Labels: Current Events, SCOTUS, Tortured Logic
Sunday, July 08, 2007
Astroturf: More Effective Than Spam!
by Tom Bozzo
Around here, our local TV broadcasters lately have been funded in large part (or so it seems) by ads sponsored by a group called "TV4US," which claims to want to give Wisconsin a "real choice to [sic*] cable TV." In this case, "US" is the sorta-new AT&T, which is keen to see pending legislation that would allow it to enter the cable TV business enacted. For a full rundown on the controversies surrounding the legislation, go see our blog pal Barry Orton at WaxingAmerica.
TV4US recently circulated a list of names of supporters of the legislation, which notoriously included the names of vocal opponents, including Paul Soglin (**) and Ed Garvey. A second round of bad press Friday concerned people who had signed up with TV4US in favor of cable TV competition who were advertised as supportive of the legislation. These included:
(*) This sounds weird to me, as if it's using "cable TV" as a verb. I guess this must have been judged less wonky-sounding than "choice of cable TV provider."
(**) We figure Barry would have kicked Paul's butt across town if he got anywhere near a TV4US petition. Maybe he can work on him with respect to this totally misguided post on the prospective Regional Transit Authority referendum.
Now there's a title that would make no sense to Mr. or Ms. 1977. What does artificial grass have to do with a processed meat product? I don't suppose any blog reader would need a gloss on the new (indeed, now primary) meaning of "spam," but if you aren't aware, "astroturf" in this context means a corporate PR or political interest group action masquerading as a grass-roots effort.
Around here, our local TV broadcasters lately have been funded in large part (or so it seems) by ads sponsored by a group called "TV4US," which claims to want to give Wisconsin a "real choice to [sic*] cable TV." In this case, "US" is the sorta-new AT&T, which is keen to see pending legislation that would allow it to enter the cable TV business enacted. For a full rundown on the controversies surrounding the legislation, go see our blog pal Barry Orton at WaxingAmerica.
TV4US recently circulated a list of names of supporters of the legislation, which notoriously included the names of vocal opponents, including Paul Soglin (**) and Ed Garvey. A second round of bad press Friday concerned people who had signed up with TV4US in favor of cable TV competition who were advertised as supportive of the legislation. These included:
[Former Madison city council member Alicia] Ashman... Beverly Crosson, a state administrative law judge, and Jay Heck, executive director of Common Cause in Wisconsin.Yes, you saw that correctly, the local director of Common Frackin' "Holding Power Accountable" Cause signed a petition from a group that's "the very definition of Astroturf" (yes, that quote is from a Common Cause webpage). Just goes to show that an advocacy ad which is "plainly... not the functional equivalent of express advocacy" can be a feature, not a bug.
"That's not honest grassroots lobbying," [Heck] said.No kidding. The common thread among the irate TV4US respondees was that well, of course they want competition and lower cable rates. Who wouldn't? Naturally, preferences over policy solutions vary, leading one interviewee offers good (if not obvious) advice:
"Before signing up for something that seems so black and white and clear it's probably good to ask some questions before giving your name and address."Quite. We'll never hear a "Tell Senators Kohl and Feingold that everyone loves apple pie" ad the same way again.
(*) This sounds weird to me, as if it's using "cable TV" as a verb. I guess this must have been judged less wonky-sounding than "choice of cable TV provider."
(**) We figure Barry would have kicked Paul's butt across town if he got anywhere near a TV4US petition. Maybe he can work on him with respect to this totally misguided post on the prospective Regional Transit Authority referendum.
Labels: Modern Retailing, SCOTUS, Utter Stupidity
Friday, June 29, 2007
Leegin vs. PSKS: Vertical Price Fixing is Good for Some
by Tom Bozzo
As an equity holder in an economic consulting firm, my first reaction was, "Woohoo! The economic consultant's full employment act of 2007!" The second reaction, after seeing Justice Kennedy refer to economic literature (Greg Mankiw, via PGL at Angry Bear, has the story as told in his principles textbook) on potential beneficial effects of RPM arrangments was, "Oh, really?"
Before going further, these RPM agreements are not the same sort of restrictions as are provided by minimum markup laws such as Wisconsin's Unfair Sales Act. Such laws directly affect the terms of interbrand competition — the Shell station is limited in its ability to try to underprice the Mobil station down the street — whereas the RPM agreements (directly) limit intrabrand competition. The former are much likelier to have adverse effects on consumers.
The standard story (again via Mankiw) suggests that RPM agreements may be valuable in that they ensure retailers enjoy sufficient markups to pay for what the manufacturer considers to be valuable ancillary services — retail shop ambiance, demonstrations of complex products, etc. In the absence of such arrangements, it's claimed, there's a free-rider problem as cut-price retailers direct their customers to go to full-service stores for the free services and then to come back to buy the product on the cheap. In the end, the full-service retailers can't provide the services (or underprovides them) and everyone's worse-off.
One thing about this type of arrangement is that it appears, on the face, to be allocatively inefficient. That is, in static resource allocation problems, the "market" puts resources to their best possible uses when prices and marginal costs are equal. RPM agreements increase the gap between prices and marginal cost of the affected retail products in order to subsidize the provision of ancillary services at zero price. Whether and how much consumers benefit depends on how they value the ancillary services; it seems uncontroversial that there are, indeed, some people who don't need the hand-holding and/or don't care about having a "free" skinny chai latte while they shop.
The part of the theoretical story that I buy less is that the subsidy is necessary to solve the free-rider problem. An alternative is not that the provision of the ancillary services collapses, but rather than full-service retailers explicitly charge for them (or at least those with nontrivial costs). This happens quite a bit in some markets. For example, interior decorators can (and do) "unbundle" their design services by charging for design consultation; they can (and will) rebate the design fees for customers who subsequently purchase stuff through the designers. Car dealers in Wisconsin can charge a fee to cover "reasonable" costs related to the sales process. The stickers advertising these fees seem to have become much more prevalent since the advent of Intertube-assisted car buying. We haven't yet had the opportunity to determine whether those fees are negotiable. Clothing stores charge for alterations on sale merchandise. The list, I'm sure, could go on.
PGL also points to a very interesting Wall Street Journal Econoblog face-off on the subject. There, Larry White raises some rhetorical questions that don't obviously have the answer he perhaps implies:
To the extent that the potential market failure doesn't turn into an actual one, then it's very hard to see how consumers would enjoy significant net benefit from RPM arrangements. The appearance of amici such as the American Petroleum Institute and National Association of Manufacturers — not exactly defenders of the Little Guy — in favor of the legality of RPM heightens my doubt that consumer benefits are what's really at stake in the case. And I'm skeptical that maintaining brand images by keeping up the appearance of high prices has dynamic efficiency benefits to speak of.
That said, the SCOTUS majority's view that, in effect, the costs and benefits should be weighed isn't that controversial. However, the end result may still be consistent with Justice Breyer's expectation, in the dissent, that the main effect will be higher retail prices.
Yesterday, the Supreme Court's conservative majority decided that arrangements to fix minimum retail prices ("resale price maintenance," or RPM) between manufacturers and their retailers are not "per se" anticompetitive and must instead be judged by the "rule of reason" on the merits or demerits of particular RPM deals.
As an equity holder in an economic consulting firm, my first reaction was, "Woohoo! The economic consultant's full employment act of 2007!" The second reaction, after seeing Justice Kennedy refer to economic literature (Greg Mankiw, via PGL at Angry Bear, has the story as told in his principles textbook) on potential beneficial effects of RPM arrangments was, "Oh, really?"
Before going further, these RPM agreements are not the same sort of restrictions as are provided by minimum markup laws such as Wisconsin's Unfair Sales Act. Such laws directly affect the terms of interbrand competition — the Shell station is limited in its ability to try to underprice the Mobil station down the street — whereas the RPM agreements (directly) limit intrabrand competition. The former are much likelier to have adverse effects on consumers.
The standard story (again via Mankiw) suggests that RPM agreements may be valuable in that they ensure retailers enjoy sufficient markups to pay for what the manufacturer considers to be valuable ancillary services — retail shop ambiance, demonstrations of complex products, etc. In the absence of such arrangements, it's claimed, there's a free-rider problem as cut-price retailers direct their customers to go to full-service stores for the free services and then to come back to buy the product on the cheap. In the end, the full-service retailers can't provide the services (or underprovides them) and everyone's worse-off.
One thing about this type of arrangement is that it appears, on the face, to be allocatively inefficient. That is, in static resource allocation problems, the "market" puts resources to their best possible uses when prices and marginal costs are equal. RPM agreements increase the gap between prices and marginal cost of the affected retail products in order to subsidize the provision of ancillary services at zero price. Whether and how much consumers benefit depends on how they value the ancillary services; it seems uncontroversial that there are, indeed, some people who don't need the hand-holding and/or don't care about having a "free" skinny chai latte while they shop.
The part of the theoretical story that I buy less is that the subsidy is necessary to solve the free-rider problem. An alternative is not that the provision of the ancillary services collapses, but rather than full-service retailers explicitly charge for them (or at least those with nontrivial costs). This happens quite a bit in some markets. For example, interior decorators can (and do) "unbundle" their design services by charging for design consultation; they can (and will) rebate the design fees for customers who subsequently purchase stuff through the designers. Car dealers in Wisconsin can charge a fee to cover "reasonable" costs related to the sales process. The stickers advertising these fees seem to have become much more prevalent since the advent of Intertube-assisted car buying. We haven't yet had the opportunity to determine whether those fees are negotiable. Clothing stores charge for alterations on sale merchandise. The list, I'm sure, could go on.
PGL also points to a very interesting Wall Street Journal Econoblog face-off on the subject. There, Larry White raises some rhetorical questions that don't obviously have the answer he perhaps implies:
It's the manufacturer's judgment that [the RPM arrangement] is the best way to sell the product. Shouldn't the manufacturer's judgment be controlling? Isn't that what a market economy generally relies on to benefit consumers?Neither is a clear affirmative. Why shouldn't the retailer's judgment be controlling? They, presumably, have better information about the demand for ancillary point-of-sale services than the manufacturers. And it would seem reasonable to believe that vigorous competition among retailers would help ensure efficient provision of those services.
To the extent that the potential market failure doesn't turn into an actual one, then it's very hard to see how consumers would enjoy significant net benefit from RPM arrangements. The appearance of amici such as the American Petroleum Institute and National Association of Manufacturers — not exactly defenders of the Little Guy — in favor of the legality of RPM heightens my doubt that consumer benefits are what's really at stake in the case. And I'm skeptical that maintaining brand images by keeping up the appearance of high prices has dynamic efficiency benefits to speak of.
That said, the SCOTUS majority's view that, in effect, the costs and benefits should be weighed isn't that controversial. However, the end result may still be consistent with Justice Breyer's expectation, in the dissent, that the main effect will be higher retail prices.
