Thursday, January 11, 2018

AT&T and Kafkaesque Bureaucracy

Almost ten years ago, I wrote a blog post about my difficulties in getting AT&T to stop sending me a bill for $0 (yes, zero dollars). Incredibly, AT&T is still sending the bills to my old office. I have occasionally tried to stop them, but each time I hit a dead end and gave up. Yesterday, one of the recent letters was forwarded to me, so I decided to make another effort to stop the bills. I ended up spending an hour and a half in chats with 4 different people, AND THE PROBLEM IS STILL NOT SOLVED!!!

I don't know what is crazier: that AT&T cannot stop wasting $1.15 per month to mail me a bill for $0, or that I wasted an hour and a half of my life trying to get them to stop.

A brief summary of the old story: in the old days (1980s and '90s), before Skype and before cell phones, we used to use a "calling card" to make phone calls from public phones. Instead of having to deposit a lot of change, we called a toll-free 800 number, then put in our card number and a PIN, and then dialed the number we wished to call. Every month, we got a bill in the mail, and paid by check. (I know, it sounds very archaic.) We had a Sprint card, and then for some reason we switched to AT&T. We did not use this card to call from Hong Kong, because long-distance charges from Hong Kong were always much cheaper than from the US. But when we were in the US, this was the only way for us to use public phones to call other US numbers.

Once cell phones were available, in about 2004, we got a "pay as you go" SIM card for our phone that allowed us to call and receive US calls. We had no monthly bill; we paid $1.00 per day that we used it, and $0.10 per minute. We paid in advance, and our calls charge were deducted from our account. It was great, and we kept that phone number until we moved back to the US. That plan was originally from a company called Cingular, which was later bought out by AT&T. But this SIM card never was linked to the calling card (this is an important detail for below).

Back to the present: I have called the 1-888 toll free number in the past and know that the first step is that one has to input one's phone number or 16-digit number that I don't have, so I tried by going to the website, as directed by the bill. Very soon, a chat window appeared, so I decided to reply to Laura, and tell her I'm trying to stop the $0 bills. She transfers me to the billing department, where I speak to Charles. (I'm using their "real" names because it seems they are all in the Philippines and are not using their real names anyway. AT&T has a nifty feature where I was able to get a transcript of my chats.)

Charles asks me all sorts of questions, I repeat what I'm trying to do, I wait for a while, then he asks me for my phone number in case we get disconnected. I think, how nice, so I give it to him.

Charles : Thank you.
Charles : Do you have wireless services?
Me : Yes
Charles : Thanks for confirming.
Charles : Let me connect you to our wireless department to check this for you.
Annabelle : Hello! My name is Annabelle. I hope you are having a great day! How may I help you today?                                                 
So, when he asks if I have wireless services, I do not understand that he means "Are you getting wireless services from AT&T?" In fact, I am not. But basically, he did not know what to do, so he dumped me onto Annabelle! And I told her so.

Me : Can you read the chat history or should I start over?
Annabelle : Please allow me to review the items you raised to save time.
Me : Frankly, I think Charles just dumped my case on to you, as it has nothing to do with wireless...
Annabelle : Yes.
Annabelle : You are not in the US right now, correct?
As you can see, I had to start over, explaining that I am indeed in the USA....
She then tells me to call a phone number for the GoPhone department, even though I assure her it has nothing to do with phones.

Annabelle : As I check one of our specialist this is being handled by our GoPhone department, so you may directly contact them so that you can be further assisted with this, okay?
Annabelle : I can provide you their direct contact information.
Me : But this has nothing to do with our GoPhone account. It was for a calling card.
Annabelle : Yes, they are the one who handles calling cards as well.
Me : OK, how do I contact them?
Annabelle : Let me provide you their direct contact information.
Annabelle : It is 1-800-901-9878.
Annabelle : Just contact them directly so that the bill will be stopped from sending you.
Me : OK, I'll try

As I feared, the number was of no use; I do not have the numbers they want for me to move forward with the call. The voicemail just hung up on me.

I was livid. Fortunately, an AT&T survey popped up, so I gave them all zeros.

To my surprise, another window popped up, saying they were going to upgrade the case, asking if I was willing. So, of course I agreed. Now I was talking to Medwin B. Interestingly also was very confused about calling cards; I had to describe the whole process to him, and explain that it was not a prepaid calling card.

Medwin B : Joseph, is the calling card re-loadable once you already consumed the minutes do you get a chance to reload it?
Medwin B : Or is it disposable calling card?
Me : No; we got a bill. It is not disposable either.
Me : We are talking about a product that is dead for more than 10 years. I've been trying to stop these bills for $0 for over 10 years
Medwin B : Do you still have the phone number associated with that account?
Me : It was not associated with an account because we lived in Hong Kong at the time.
Me : Sorry, I mean it was not associated with a phone number because....
Me : We got bills in the mail, based on usage, and paid by check. The bills just keep coming, charging $0, even though we have not been using it for over 10 years.
Medwin B : I appreciate all the information and I am digging deeper here to help you. May I know how do you place a call using that calling card?
Me : :) I feel really old, talking about ancient technology. I called an AT&T 800 number, keyed in the code on the card plus a PIN, then the desired phone number.

Then he asked if I could send him a scan of the bill, and I said I could. Here is his text:
Medwin B : You can scan it and send an email to including your request to
Medwin B : Or you can also call 800-591-9663 .
Medwin B : That is the best option I am seeing here after digging deeper to my resources here.                                                 
I did both. To my great frustration, it turns out both the email address and the phone number are for AT&T's charitable foundation. I got an auto reply email that began:
Thank you for contacting the AT&T Foundation.  Our funding priority is our Aspire Program.  We are committed to supporting organizations implementing verifiable, evidenced-based interventions focused on improving high school retention rates and preparing students – especially those most at-risk – for college or career. 
He, like Annabelle, and Charles, just dumped me. My case was probably lowering their performance on their metrics. I'm insulted that they pushed me off so easily; I feel like a fool for falling for what is obviously not relevant. What is annoying is that AT&T has all sorts of features, like the survey and the chat function, and the record of the chat, that are designed to provide good service, but they don't have PEOPLE who can navigate their system properly to solve a problem.

I am not entirely altruistic in trying to get AT&T to stop, so they save the wasted postage; in the back of my mind, I'm worried AT&T will start charging me for my non-existent card, and then I'll have bill collectors chasing me. I'm totally at a loss as to how to stop this. It is a both funny and frightening example of Kafkaesque bureaucracy.

I wonder if I switched my cell phone plan to AT&T whether they would be able to resolve this. I don't dare try.

Monday, October 30, 2017

Arbitrage or scam?

NPR's Planet Money recently replayed and updated a 2014 show called "Free Money" about two guys in Utah who buy used textbooks online at the end of semesters, when students are selling their books and prices are low, and then re-sell them at the start of the semester when prices are high. From a certain point of view, they are providing a service: they help make the market in textbooks work by buying and selling them. They also take a risk, because they store them for months and the books may not have a market the next semester (if, for example, a new edition or a better textbook comes out). But some people do not like what they do; one woman saw it as just jacking up the prices on her daughter's textbooks. The Utah guys are doing classic arbitrage, the taking of advantage in price differences between two markets, and it has always been controversial. If after a hurricane, I drive to the stricken area with a truck full of electric generators and sell them for five times what I paid for them, some will say that I'm offering a service (after all, without me, the generators are not available at all, and in any case, no one is forcing the buyers to buy from me) and others will say I'm profiteering and behaving immorally by taking advantage of other people's distress. Both arguments have validity and it is sometimes difficult to balance the two ideals of a free market and our sense of a "fair price".

The two friends selling books are able to make money and run their business because they post their books on, which creates a marketplace; without Amazon, it would be much more difficult to find these two guys who are selling a fairly small number of books. Theirs is not a big business. They are not like, or my favorite, (which is run as a social enterprise, meaning they do not try to maximize their profits; it also happens to be run by a graduate of my alma mater, and near my home town in Indiana). These bookstores, as far as I can see, do not raise their prices at the start of the semester, but run a store with stable prices. They do not do arbitrage; they are the market.

Last week, I ordered two air mattresses on Amazon, because we will be having a lot of guests over Christmas. They arrived over the weekend, but I was shocked to find that they arrived in a box. I was sure I had not bought them from Walmart. I remembered that I had to search long and hard to find what I wanted, and that I had bought them not from Amazon directly but from a different Amazon-affiliated vendor, "Posh Products USA" (Amazon page here). So why did the mattresses come from Walmart? At first I was confused.

The answer was in the bottom of the box, on the receipt, which had several surprises. First, it showed that my mattresses had been ordered by "Monica McCoy" to be shipped to me. I have never heard of or met Monica McCoy. Second, Monica only paid $7.97 each for the mattresses, and the total order came to $21.93 for two mattresses including shipping and handling. I paid $17.03 for each mattress, for a total of $34.06 (I'm not sure why I was not charged sales tax on that). So Monica made $12.13 in arbitrage profits, and she never touched my mattresses. She simply took my money, and turned around and ordered the mattresses from for me.

This seems very odd; it is odd that such a gap (i.e. arbitrage opportunity) even exists in this age of digital data. And I can't help but feel a bit cheated: why did Amazon not give me a lower price? The two men in the NPR story actually bought the books, stored them, and shipped them themselves. But Monica is just trolling for buyers. In fact, she may not have placed the order for the mattresses at all; if she's clever, her computer is set up to automatically place the order on Walmart when a sucker like me places an order with Monica. Well, now I know: before shopping at Amazon, I need to do comparison price shopping at Walmart and Target and other stores.

The Amazon page for Posh Products USA (which is a ridiculous name that should have given me pause!) shows that Monica sells a wide variety of products--obviously whatever she can identify an arbitrage opportunity in. There is a leaf blower, candy, a shaver, cat food, and on and on, 2168 products in all. Here is a "business" that may make money but is hardly providing any social value (it is helping people discover cheaper items, but charging more for them than someone else does, who is also able to ship it to you!)

I can't help but feel a bit taken advantage of, because Monica's only service was listing the mattress on I suppose she researched this, and I should be thankful that she is sharing the savings with me. But it seems to me that the fact that the product never passed through her hands is what makes this arbitrage a bit more distasteful than most.

One additional curious aspect of this story is that on the Walmart website, there are two prices for the same mattress that I bought. One is the $7.97 price, and the other is $22.89. The first is a "Special buy" and the second is "Reduced Price" (providing more evidence that marketing terms are meaningless). The list prices of the two mattresses are very different, too, but the mattresses are the same (they look like they are different colors in the online photo, but the $7.97 mattresses I received are the blue color like the $22.89 mattress, so I'm sure they are the same). So we can see how Monica set her price; it is half-way between her price of $7.97 and the "full" price of $22.89.

I'm just glad I did not go on to the site and buy them at the higher price.

Tuesday, August 01, 2017

Scams and Freedom

One of the problems with a "free economy" is that it offers many opportunities for scammers. This was first brought home to me when in 1983, my Bulgarian roommate (not of Bulgarian descent, but literally from Bulgaria) in New York came back to our Columbia apartment with what he thought was a great deal on a camera lens. He was from a communist country, and naively believed he was getting a good deal, when in fact he had bought a damaged lens. He was understandably angry that such illegal (or at least immoral) activity could occur in a major city. For him, this was an indictment of the "free" market. I just thought it was the result of his naivete and greed (for a good deal, "too good to be true"), and unscrupulous merchants, but agreed that it should be illegal, though it turned out there was nothing my roommate could do.

It turns out that there a number of types of scams that occur when you buy a house. Your purchase of the house, and the mortgage you take out, are all public information, so people take that information and try to cheat new home buyers. We got the following letter in the mail:

The letter looks like it comes from our bank, the Busey Bank. The phrase "Notice: Financial Information Enclosed" is actually misleading. Inside, it has a return envelope, with the official "No Postage Necessary" seal. It looks important and official.

Then the card inside seems official because it has our name and address, the name of the bank, and even the exact figure of our mortgage amount (I've redacted the personal information, even though you can probably find it somewhere on the internet). It implies that I have to provide this information to comply with a mortgage protection plan that I already have.

What is astonishing, also, is that this arrived just about 10 days after we closed on our house, and just days after we moved in.

Only if you read the fine print do you realize it is not from the bank. The fine print says: "Information provided by Mortgage Protection Division. Not affiliated with any lending institution. All mortgage obtained only through public records. Benefits and carriers will vary coverage and are subject to underwriting approval."  This "Division" is the name of a company, not a division of my bank. Sneaky.

This is really a sales pitch attempting to get me to buy mortgage insurance. They want me to give them more information, including our phone numbers, so they can try to sell insurance. Fortunately, at our closing, when I signed for the mortgage, our banker told us to ignore all these junk mail solicitations, but my wife and I still found ourselves looking at these twice to make sure they were not important (once my wife simply handed it to me to take care of, thinking it was important--and she's a lawyer!)  It is well known that mortgage insurance is a bad deal for consumers; but it is very profitable, as much as 40 percent return to the insurance company, which leads company to try to drum up this business, hence the junk mail.

It is sometimes difficult to draw the line between deception and advertising. Plus, attempts to protect consumers can end up hurting them. Lisa Servon has studied payday loans and argues that they actually provide a service to poor people, and should therefore not be banned, though well-meaning liberals increasingly push for such legislation. There are certain emergency situations where paying a high interest rate on a loan makes rational economic sense. J.D. Vance in Hillbilly Elegy gives an example where he took out a payday loan to avoid his rent check bouncing, which would have cost more than the interest he paid on his payday loan, not to mention the cost to his credit score.

So maybe I'm being like the well-meaning liberals who want to ban payday loans because they don't understand the needs of the poor, but I find it astonishing that deceptive practices like the marketing for mortgage loans are allowed. I suppose they are a price we pay for having a free and dynamic economy. Still, I also wonder how people in that industry sleep at night, knowing they are getting business by misleading customers, both in their solicitation methods (with the misleading letters) and in the products they sell (which are not as good as simple term life insurance). One thing is sure; I'm being very American in expecting the market, and indeed the world, to be fair. Most peasants have long known the world is unfair and that the elites are out to exploit and take advantage of them. I think my friends in Taiwan believe scams and deception are inevitable (even though most people are very honest in Taiwan). It is a sign of the society and times I grew up in that I can believe deception should be banned. For most people, it is all too common, a given of market life. And perhaps it is.

Monday, June 19, 2017

On Loving and Racism

June 12, 2017, was the 50th anniversary of the US Supreme Court decision Loving v Virginia, which overturned a Virginia state law making interracial marriage illegal. It finally eliminated all such racial bans across the US. There was considerable interest in the case in the US (see for example here and here). 

Mildred and Richard Loving
The case involved a white man, Richard Loving, who married a woman, Mildred Jeter Loving, who was of mixed African and Native American descent. They grew up in a mixed race community, and knew each other because Richard was friends with Mildred’s brother, with whom he shared an interest in car racing. Interracial marriage was illegal in Virginia at the time, so they had gone to Washington DC to get a marriage license. Shortly after they were married, they were arrested in July 1958, in the middle of the night, by an eager sheriff. They avoided jail by agreeing to leave Virginia, but were homesick in DC and so, with the help of civil rights lawyers, and even though they did not seek to be activists, they appealed their case all the way to the Supreme Court. Fifty years ago, in a unanimous decision that reversed decades of legal precedent for anti-miscegenation laws, the Lovings won their appeal and were free to live in marriage in Virginia.

One aspect of the story that few people realize, and that I was not aware of growing up in the US, is that these racial laws are not that old. The law used against the Lovings was the “Racial Integrity Act” of 1924. I understood that the laws were “an instrument of ‘White Supremacy’”, as Chief Justice Earl Warren had written in his unanimous opinion, but I did not understand, growing up, that these laws had to be strengthened and reinforced to continue to mark the lines between the races, and indeed to create the lines. Many earlier laws had been repealed from the 1860s to the 1880s (e.g. in Illinois, Michigan, and Washington). Similar laws were repealed in 15 states between 1948 and 1965, in many cases probably because they also discriminated against Asians (California in 1948, Indiana 1965; see full list here). The Loving v Virginia case overturned anti-miscegenation laws in the remaining 16 states, mostly in the Deep South.

Many articles celebrating Loving Day, as it has become known, comment on the increase in frequency of interracial marriage. According to Pew, the rate has increased from 3 percent in 1967 to 17 percent today. Public opinion has changed too: according to a University of Chicago GeneralSocial Survey poll, only 14 percent of nonblack adults say they are “very or somewhat opposed” to a close relative marrying a black person, compared to 63 percent in 1990. (Of course, this is what they say to pollsters; the real number is likely to be higher, since there is strong social pressure to be non-racist--which is actually good.)

But it is worth looking more closely at these figures. First of all, it is striking that whites are the group with the lowest rate of intermarriage, just 11 percent, compared to 18 percent for blacks. For Asians, it is 29 percent, and for Hispanics it is 27 percent. Even more striking is that 39 percent of US-born Hispanics and almost half (46 percent) of US-born Asians marry outside their group.
As an aside, black men are twice as likely as black women to marry outside their group (24 vs 12 percent), while Asian women (36 percent) are much more likely that Asian men (21 percent) to marry out. (See details from Pew here).

Since whites are the larger group, it is perhaps not surprising that mixing is less common than in the minority groups. But I wonder if a good deal of the intermarriage is within “people of color” and thus not having as much effect on whites as might be assumed.

Furthermore, much of the supposed intermarriage may be between people who are already “mixed” themselves. A Eurasian man, born to an Asian mother and white father, will legally be considered Asian (the US government defines race matrilineally), but may not be treated as “Asian” in white American society. His marriage to a “white” woman will not raise as many eyebrows as his mother’s marriage may have.

Similarly, a white man married to a Cuban-American woman may be considered a “mixed marriage” because she checks the box as “Hispanic,” but in terms of phenotypic appearance, it is possible she could pass for white… or at least as Italian. It may not really be considered by their families as a "mixed marriage."

The issue is really a matter of our definition of “race” and culture. In a NY Times article printing reminiscences of mixed marriages, many wrote about “cultural differences.” If the couples grew up in different countries, or in different subcultures within the US, this may be an issue. But the story of Loving v Virginia is about “race,” not about culture; it is about not being able to marry because of what one looks like. The whole issue of race in America is confused, and intermarriage is making it more so. “Hispanics” are recognized as an “ethnic group” but are put on the same order of difference as “race.” Yet clearly a Hispanic’s experience in the US will be different depending on whether they are an Argentine who looks white like Lionel Messi (or the Pope) or a Dominican who looks black and indigenous like the baseball player RobinsonCanĂ³

Gradually, American definitions of “race” have to change. Chief Justice Earl Warren had questioned the notion of a “pure race” in his questions to the lawyer for the state of Virginia, but the final decision did not address that issue, focusing just on the idea that anyone should be able to marry whoever they want. As one commentator points out, it is unfortunate that the Supreme Court did not challenge the very concept of race.

I am uncomfortable with the hope for more interracial marriage as a solution to America’s racial problems. It sounds like the inverse of eugenics, and it does not really address the racism at the root of discrimination. Racism is a cultural idea; it does not spring naturally from physical differences. There are  Yet, confusing categories does serve a purpose. We can call this the Sneetches Theory of antiracism, after the Dr. Seuss story of Sneetches with stars on their belly who discriminated against those who did not have a star. Technology to add and remove the star created confusion of categories, after which all lived happily together (see video of the story here). My father served in Puerto Rico during WWII, and he told me segregation in the military seemed ridiculous because brothers, with the same mother and father, would be assigned to “white” or “Negro” units, based on their physical appearance and the mood of the officer in charge on that particular day. Clearly “race” was a problematic category, and it undermined attempts to “keep them in their place.”

But ultimately, racism will be defeated through cultural change, not biological change. As in the story of the Sneetches, only when people agree to drop the categories will racism be overcome.

I heard a disturbing interview with Pat Buchanan on This American Life. Buchanan was asked how he felt that he had run for president three times in the 1990s and lost, but Trump took most of his ideas and won. (He said he was fine with it, happy the country is being saved.) In the interview, he defended his anti-immigrant position, a basically racist view, saying the country is already too divided, so the US should not let in non-white immigrants. He claims they do not assimilate. He thinks the US was better before 1960 when it was “majority European white” and when asked why he is against immigration, he says “I feel more comfortable with the folks [I] grew up with.” Until Trump’s election, these views were dying out with Buchanan’s generation. It remains to be seen whether the racism of the Alt Right is the last gasp of the reactionaries, or will be strengthened and emboldened by the Trump administration. In any case, I find it surprising and disappointing that intelligent people like Buchanan can say such racist things, fifty years after Loving v Virginia.

Friday, June 09, 2017

Incentives, Work and "Culture"

We are having some renovations done on our home, and the contractor’s site supervisor, who I’ll call John, had warned me well in advance that the drywall workers were very messy. He said he could not figure out why, but they were very dirty and did not bother to clean up the site. He warned me, and he was right.

There are two kinds of “drywall” workers: the ones that cut and screw/nail in the drywall onto the wooden frame, and the ones who use plaster to finish the wall. The second type of worker puts coats of plaster, which is called “mud,” to make the wall flat. They have to put on more than one coat, and then sand it to take out bubbles and make it smooth.

You can get a sense of what drywall workers do by looking at the pictures at this "how to" site here.   

The drywall workers were all Mexican, and they worked very fast. They work on stilts so that they don’t have to move ladders and go up and down. But when they were done, they left a mess in their wake. There were scraps of drywall, screws, tools all over the floor. Once the mud work started, the powdered plaster was everywhere and splots of plaster covered the floor all the way down the stairs and outside the door. These blobs landed on the floor when they took breaks and went outside. There was even white plaster on the walk outside our house. Fortunately the floors were covered with “ram board,” which protects them. This was amazing; the workers who had done demolition had not created the same kind of dust and mess.

Part of the reason for the mess is that the plaster powder is dusty and hard to keep under control. Plus, when the workers mix it, bits of it easily go spinning out of the bucket as they use the electric mixer to prepare the “mud” to a proper consistency. And then the sanding will inevitably cause a lot of dust. Still, that is only part of the reason. Tile workers also have to mix grout and cut tiles, and they don’t make that kind of mess. And they don’t leave a trail of plaster when they take breaks.

John had told me that he could not figure out why the drywall workers were so messy. He said they were the only trade that was so messy. Carpenters, plumbers, everyone else cleaned up after themselves.

It might be tempting to give a “cultural” explanation, and say it is because the workers are Mexican. This would be false, because the tile workers have been working recently and they are meticulous and very clean, and they are also Mexican. I also hasten to add that these kinds of “cultural” explanations are at best misleading, more likely totally wrong. When I was a kid, it was an ethnic slur but taken as common knowledge that Mexicans were “lazy.” Now, it is universally accepted that Mexicans are very hard workers. I don’t think Mexican culture has changed in one generation. Similar changes have occurred to Western perceptions of Chinese culture; Chinese have gone from working hard but not efficiently or intelligently in the 1950s, to being frighteningly efficient and intelligent workers today. If culture changes that quickly, what kind of explanatory power does it have? No, it is the American perception that has changed.

I was curious as to what could be the cause of drywall workers being so messy, so I asked John how the drywall workers are paid. Just as I suspected, they are paid by the square foot. Piece-rate! In fact, I found out from our contractor that drywall workers charge extra if you want them to clean up. Cleaning up is not part of their job. It ends up being cheaper for the contractor to use her own workers to clean up rather than pay the drywall workers to do it. So, they of course do not worry about cleaning up. Tile workers are paid by the job; there are tolerances for how even the tiles need to be, so they cannot rush a job. And they keep the job site clean.

Economists and economic anthropologists know the importance of incentives. We take it for granted that incentives strongly influence human behavior. Many people know that, but many also do not, or do not think of it. People are often tempted to make generalizations about the “culture” of an occupational group, or an ethnic group. In fact, in this case at least, the “messiness” of the workers is easily explained by the incentives they are working under.

There is also an additional layer, however, that does relate to “occupational culture.” Our contractor mentioned that until the recession of 2008, drywall workers only worked on new construction projects. Small renovation work was not of interest to them. Renovators used to have to do drywall “in-house” (with their own staff). John told me that because it is dusty, and it is easy to get cut while cutting the drywall, most carpenters do not like to do that work. And those who specialize in it are very fast and efficient at it. Because new construction decreased dramatically after 2008, the drywall workers were willing to take smaller renovation projects. And since there is a lot of renovation work available, and they’ve gotten used to working at small jobs, they continue to do renovation work even though the economy has picked up again.

But their way of working seems to still be that of work on new construction. As John put it, they seem to forget that there are people living in the house they are working on. In a new construction site, it does not matter if plaster gets on the floor, because the floor probably has not been finished, or even laid. It is different in a renovation, and it seems these workers have not modified their work practices. Maybe we could call this an occupational culture of "messiness" that carries over from working on new construction.

Many people are telling me that the labor market is getting tight. Indeed, my contractor told me that there is now a shortage of labor. She has trouble finding good carpenters. She said that the carpenters they get are often older; young people want a desk job, or something with computers. Yet, carpenters can make a good salary, easily $70,000 per year, she says. Her husband (who does office work for her renovation business) has pointed out that the tradesmen are in much better shape than he is, because they are always moving. Desk work is not very healthy, actually. But Americans tend to look down on physical labor, even on highly skilled work, much like Chinese do. Young people are less willing to go into the trades. There probably is some "cultural" bias at work, but I suspect that salary is still higher for most office work, and contributes to this bias. 

If we look at government wage statistics, we can see that while an experienced tradesman can make a good living, managers in office jobs can make more. Here are the annual mean wages for a few trades:

“Installation, Maintenance, and Repair Occupations:” $46,690
      Carpenters: $48,340
      Helpers—carpenters: $30,020
      Cabinetmakers and Bench Carpenters: $34,800

This is higher than wages in Sales (average $40,560, but only $25,940 for Retail Sales Workers), and higher than wages in “Office and Administrative Support Occupations” (average $37,260, and $33,010 for “Office Clerks, General”). On the other hand, “First-Line Supervisors of Sales Workers” average $51,230, and “First-Line Supervisors of Office and Administrative Support Workers” make $57,890, so it may well be that young people are anticipating higher wages down the road when they can become supervisors, rather than focusing on the average wages of workers.

The case of messy drywall workers shows the importance of incentives (they are paid by piece-rate), but also the effect of occupational culture (they are used to work on new construction projects). Added to all this is the perception of work (of drywall work being dusty and “dirty,” and of construction and physical labor being less desirable than office work). “Culture” ends up being used in many different ways to summarize the current situation, and often does not really explain anything, but provides a hook for our description. As this example shows, there are many factors that influence "culture," so just calling it "culture" can be a circular explanation. We’re still struggling to describe all these factors clearly, especially how the different factors interact with each other. 

Friday, May 12, 2017

Airline seats and the market

A story about airline seats caught my eye, because it tells us something about markets. CNN Money reports:

American Airlines is planning to decrease the front-to-back space between some of its economy class seats by another two inches.
The airline says it plans to add more seats on its coming Boeing 737 Max jetliners. To do that, it will shrink the distance between seats, also known as pitch, from 31 inches to 29 inches on three rows of the airplane, and down to 30-inches in the rest of its main economy cabin.
With the change, American will become the first large U.S. carrier to offer legroom with a pitch that's nearly on par with ultra-low cost carriers Spirit Airlines and Frontier Airlines. Those seats are an industry minimum 28-inches apart.
By comparison, economy class pitch on Delta Air Lines and United ranges between 30 and 31 inches, while JetBlue Airways, Southwest Airlines and Alaska Airlines have between 31 and 33 inches.
As the big airlines match each other move for move, the risk is that 29 inches becomes the standard for flying economy in the United States. American has been a bellwether before for the airlines. For instance, it was the first big U.S. airline to introduce bag fees in 2008.
Airlines have enjoyed strong profits and low fuel fuel prices after a decade of consolidation. They're adding seats now to help offset rising employee wages.
"This is one of the best economic environments the U.S. airline industry has seen in decades," said Harteveldt. "There is no need to race to the bottom."
But a race to the bottom is indeed what we have. Interestingly, because humans are really just animals, one way you can see we are getting to "the bottom" is the increasing number of cases of violence that have been breaking out, in airplanes and at airports, as humans are increasingly stressed out by the travel conditions (see recent cases of Dr. Tao, a fight on a Southwest Airlines flight caught on video, fights due to frustration with Spirit Airlines' cancellations, and of course the infamous case of Dr. Dao, about which United Airlines has apologized (and paid compensation).

Airline violence has been a problem in China in recent years, too. According to the SCMP in 2013, Hong Kong Airlines reported that they had incidents of violence on flights between Hong Kong and China an average of three times per week, and so started teaching their flight crew martial arts. 
In China, passenger violence is usually blamed on the "low quality" of Chinese tourists.  Certainly, manners and "education" are important in preventing people from fighting all the time, but the stress of being in crowded spaces, of not having control, and being among strangers, all lower any person's trigger point for overreacting and even violence. (BTW, on the strong reaction to the Dr. Dao United incident in China, see this very insightful commentary).

In the US, there is a religious faith in the power of the market to solve everything. And indeed, market forces have reduced airfares and really created a much larger and more efficient industry. Where flights need to be negotiated by international agreements (e.g. between the US and China), prices are often inflated by the lack of competition. But what we see with airline seats is a market failure. American Airlines discovered many years ago that while consumers overwhelmingly say they want wider seats and more leg room, they are not willing to pay for it. They tried to meet customers' demand, but found that when they went to buy tickets, consumers preferred to save the money. This is especially true now with the internet, where it is very easy to compare prices. Expedia and Kayak and other travel sites all list fights by price; they do not list leg room (known as seat pitch). 

So airlines start charging separately for baggage, and for choosing your seat, so the ticket can actually look cheaper when the customer goes to buy it. To some extent this is the way the market should work: people pay for what they want, and poor people (and students) take the middle seats. 

But the pressure to reduce costs also gradually makes the airlines stuff as many passengers as they can in an airplane. Customers gradually get used to the newly crowded conditions--except those that lash out. Only some sort of industry standard will prevent airlines from continuing to reduce seat space. (I can foresee extra charges if you are fat, wide, or "excessively" tall; that is the natural next step). Congress told the airlines that either they come up with rules or congress will do it for them. 

The problem is that since so many people "believe" in the free market and do not understand that in some cases markets can fail, I don't see this being solved any time soon. A Red State columnist even criticized congress holding hearings on the United incident, predictably claiming any government interference would just raise prices for consumers and not improve service. Congress did hold hearings, and both Republicans and Democrats criticized the airlines, but it seems even this issue will be political, with Democrats calling for regulations and Republicans against regulations. The possibility of a free market with some regulations to set minimum standards is impossible to achieve. American Airlines reducing their seat size right after the hearings in Congress seems to prove that this market failure will not be solved or even addressed any time soon.

Friday, May 05, 2017

Racism and individualism

I heard a very interesting NPR Fresh Air interview withRichard Rothstein yesterday on the podcast while doing errands (transcript here). He has just published a book that shows how US federal government policies during the New Deal (1933-1941) had systematically discriminated against Blacks. He noted, for example, that the term “redlining” referred to government maps that had neighborhoods marked with a red line where government loans were not allowed because residents of those neighborhoods were Black. I thought I had heard him on Fresh Air before, so I googled his name. Sure enough, I found that he was a guest on Fresh Air almost two years ago.

In my google search, I stumbled across a right wing blog by Jack Coleman of the Media Research Center’s “News Busters” (which claims to expose "liberal bias") that has a severely distorted take on Rothstein’s argument, and it—and especially the comments section—show serious lack of understanding of social forces.

First the distortions. Coleman begins by implying that though FDR is an iconic leader for liberals, his record with the New Deal is problematic. He then includes a transcript of sections of the Fresh Air interview, with key parts in bold, to highlight the facts raised by Rothstein. These facts (accurately reported) include:
  • The Public Works Administration of the New Deal had explicit segregation policy, “So public housing policy created racial segregation where none existed before.”
  • The Federal Housing Administration would not give loans to Blacks, so the suburbs that sprang up after WWII were all white.
  • “Public housing became all-black in the inner city. And these two policies -- of public housing and Federal Housing Administration subsidization of suburbs -- are the two major factors that have created the segregation that we know today.”

 Coleman also highlights a part of the interview where Rothstein mentions that George Romney (Mitt’s father and former governor of Michigan) had tried, as Nixon’s Secretary of Housing and Urban Development, to only offer federal funds to communities that desegregated, but was blocked by the Nixon administration. He somehow thinks this exonerates Republicans from being charged with racism; seems to me it only exonerates Romney the Elder. Coleman also notes that unions prevented Blacks from joining, and that this discrimination was endorsed by the National Labor Relations Board, so was not merely a local action. Only after 1964 was this reversed. Again, this is supposed to indict all labor unions (American conservatives hate unions), but my take is that racism was deep-seated and made worse by state action, not that racism was somehow inherent in labor unions.

Rothstein’s point is made clear when he notes that for most Americans, homeownership is the main way that wealth was created and accumulated, and since subsidized home ownership was not possible for Blacks, it resulted in much lower levels of wealth for Blacks. While Blacks earn 60% as much as whites, they own only 5% as much wealth as whites. This provides Blacks with less of a buffer, which is why Blacks suffered more than whites from the Great Recession of 2008.

(As an aside, Rothstein repeats many of these points in his 2017 interview, including these 60% and 5% numbers. I checked the transcripts to see if the 2017 interview was not a repeat of the 2015 interview, but it is a new interview, albeit with some repetition. A good interviewee knows how to tell a story and focus on the core message, even if he/she is repeating himself. If I had been interviewed, I might have assumed listeners had heard me the first time, or would be annoyed by my repetition. As it happens, I only vaguely remembered the first interview, so he was right to repeat himself.)

Coleman’s take on all this is to imply that liberals have suppressed this information because it conveniently “perpetuates the myth that the Republicans are solely responsible for racism in this country.” This “myth” is, in fact, a surprise to me. A myth of a myth. While the Republicans are indeed the party of racism today, they were clearly the opposite from Lincoln through to Eisenhower. Coleman displays fake surprise that a Berkeley professor would do such research, and that such a story would end up on “liberal media.” This is rather disingenuous, since it is liberals in general who are concerned with questions of inequality (conservatives assume a free market would reduce inequality; they do not believe Picketty). Coleman likes the story only because he thinks it undermines the ideals and practices of the New Deal, which conservatives love to hate.

Implicit in Coleman’s critique is also the idea that if it had not been for “government interference,” there would not have been any discrimination. That is not how most liberals will take this story. They will see it as a case of how despite the liberal intentions of the FDR administration, Black interests were sacrificed because of racist notions at the time. Liberals will not see this story as undermining the New Deal. But conservatives are right that “good intentions” and government programs have the potential to cause great harm. Of course, not acting can also cause or perpetuate great harm.

The most up-voted comments to Coleman’s blog shows that right wing Americans are intensely individualistic. One comment is a resentful attack against “victimhood”, particularly of “blaming conservatives and Republicans, and whites in general.” Addressing Blacks, he/she says:
Stop blaming whites, stop blaming slavery, stop blaming Jim Crow and segragation [sic] and start taking an independent initiative to make a better life for yourself and your family. Continue to blame whites and don't be surprised to find your children and grandchildren still living in ghettos for generations to come.
 A comment to this comment says:
Until a spotlight is turned on black inner city culture...nothing will change. It's not about race...but it's always been about culture. Getting an education, being married, and bringing up your children to do the same is a large part of the answer. Why can't anyone say that in public today?
Because it is simplistic and wrong?

That writer falls back on the common “blame the victim” argument: Blacks are poor because of their individual behavior, because of their (implicitly) dysfunctional culture. Americans are intensely individualist and ahistorical. These commentators are not interested in how the past affects the present. Interestingly, they are not even following the logic of the blog (and the book), which is that federal government intervention made poverty worse for Blacks. These readers assume that by getting an education, being married, etc., one can single-handedly pull oneself up by the bootstraps, as the expression goes. The institutional factors like redlining that disadvantaged Blacks are completely ignored. While Rothstein is making institutional racism even more dramatically clear with his research, these commentators insist on individuals being Horatio Alger. They are saying, OK, racism happened, but get over it! Move on! If only it were so easy.

There are important individual choices that each person makes that affect their lifecourse. But any basic social science course (by which I mean sociology, anthropology, political science; not economics) will also teach us that we do not make these choices entirely freely. Interestingly, conservatives in Europe are more aware of the importance of institutions and historical forces in shaping our individual choices. American conservatives have perhaps studied too much economics, and reduce everything to the individual. We need better ways of integrating the structural forces of society with individual choices. This has, in fact, been one of the main issues in anthropology over the past 40 years. But there is little hope for the US politically if many people cannot see structural forces, and even misread research like Rothstein’s and think it only means individuals need to make better choices.