Category Archives: Consumer protection

FAA Proposes to Murder 100 People Per Year

If you are anything like millions of other Americans you have bought something over the Internet. A world of wares is there for us to browse at just the click of a mouse and tap of a keyboard. And although it is in some respects virtually the same process we (or our parents for the younger among us) engaged in when we browsed print catalogs not that many years ago, it is also a vast improvement over that older, static, process. Information is updated in real time. We can make buying decisions based on the reviews and feedback of other consumers. We can instantly compare prices and options among several vendors. In short, the Internet has not simply repackaged an old process in some techy guise; it has made a material improvement that has added value (that is, time) to all of our lives.

However, one aspect of the ordering process has not changed in over 170 years (Tiffany’s Blue Book, published in 1845 was the first mail-order catalogue in the US) and that is the delivery process. Yes, it has gotten faster (with the advent of air delivery) but the core process is the same: the order changes hands multiple times from human to human as it moves through the delivery pipeline. To be fair, this process is far more enviable than the alternative of picking up the order yourself. In fact one of the rarely noted benefits of bulk delivery is the prevention of accidental death. If every person who has ever ordered something had to go and pick the order up themselves the cost in time and hence productivity is incalculable. But the cost in lives would be calculable to a degree, given the fact that for a certain number of miles driven there will be a certain number of motor vehicle fatalities. All things being equal, without delivery, more people would certainly have died.

Today, after 170 years following one delivery model we are on the cusp of switching to a new delivery model: the drone. Amazon.com has been experimenting with what they call “Prime Air”, that is, direct delivery of your Amazon order, by drone, to your doorstep within hours of placing the order. Amazing! Forget Marty McFly’s 2015 hover board – this is even cooler! But, you knew there was a “but” coming, the FAA will have none of that.  Last week they proposed a new set of regulations for Unmanned Aircraft Systems (UAS) (that only apply to private business naturally; we can’t have these rules standing in the way of government users). Among some of the more onerous rules that would all but quash Amazon’s plans include: “The operator must remain within visual line of sight of the drone” and “They can only operate in the daylight and under 500 feet”. These proposed regulations are driven more by fear of the unknown than by any rational concern over safety. It’s like they never got the point of the old college essay primer: “A ship in harbor is safe, but that is not what ships are made for.” Hint: the point is to let the ship sail so that its potential may be realized.

If these proposed rules are implemented there will be an unseen cost, one that I’m surprised a supposedly “must save lives” utilitarian-mindset entity like the FAA is apparently oblivious to. Were drone delivery of packages permitted it would save roughly 100 lives per year in the United States alone due to the decreased mileage of delivery vehicles (based on my own estimates, see gregmorin.com). And that is only for Amazon deliveries. When other companies begin to deploy the same technology the potential for saving lives only rises further.

Internet commerce, that is, the free market, through its endeavoring to improve our lives has also managed to save many of them. Let’s not forget that lesson as we look toward the future.

Not Neutrality, Part 2

The moniker “net neutrality” is perhaps one of the most masterful strokes of political propaganda, right up there with “ethnic cleansing” and “quantitative easing” when measured for overall obfuscation. When asked their opinion, many are hesitant to take a stand, as they retreat behind a wall of an honest lack of knowledge on the subject. For the most part this is due to a perceived requirement that one must possess a deep technical understanding of how the internet works in order to have an informed opinion. Unfortunately this plays right into the hands of its proponents; “it’s complicated, trust us, we know what is best”. In fact this complexity tactic comes directly from the pundit’s playbook; witness the recent condescending Jonathan Gruber revelations (“Lack of transparency is a huge political advantage.”) In fact, the essence of net neutrality is not at all complicated; it is just good ol’ fashioned crony capitalism in 21st century garb.

Putatively complicated subjects are often best understood through metaphor. In this case we cast the large content carriers (Netflix, Amazon, Apple, Google) as manufacturers. The manufacturers need to ship their product to distributors. The ISP’s (Comcast, AT&T, Verizon) are the shipping carriers. Currently it is entirely uncontroversial that shipping carriers charge more to ship large things quickly than they do to ship small things slowly. So if we rename “net neutrality” as “shipping neutrality” things come into focus. Under “shipping neutrality” the large manufacturers want the government to force the shipping carriers to charge everyone the exact same amount regardless of size, weight, or speed. In fact, they want the shippers to ship everything at “next day air” speeds but charge first class letter rates. Net neutrality is nothing more than two parties disagreeing over pricing for a service. The cronyism comes in to play when one side demands the government take their side and implement a price ceiling. Of course such naked rent seeking would never fly politically, so it is camouflaged under the guise of protecting freedom, equality and baby kittens. Who could be against baby kittens?

But, as with all types of economic protectionism (tariffs, subsidies and other price controls) it is the consumer that is ultimately harmed. To discern this harm we must extend the metaphor a bit further. If the shipping carriers could not recoup their costs from the shipper then they would have no choice but to collect it from the recipient (postage due surcharge). Nothing is free and someone must pay.

We should be striving to make the internet more, not less, like a package shipping network. For example, if our neighbor receives a large delivery and we receive a small one, we do not subsidize his shipment through a “monthly shipment access fee”. If we receive no shipments in a particular month, we pay nothing. With free competition we would likely see a similar situation with internet access develop: no monthly charges, pay for only the amount and speed you demand as you actually consume it.

Today with internet access we pay the same amount month after month regardless of the extent to which we utilize that service. Although some may pay a bit more for faster service, the fact remains that light users subsidize heavy users. Under net neutrality this subsidization ‘inequality’ would only become more extreme. Heavy Netflix users will cause ISP’s to increase access rates for all consumers because they are legally prohibited from collecting anything extra from Netflix or basing consumer’s charges on their usage patterns; all in the name of ‘fairness’ of course. Would it not be a better outcome if through competition ISP’s charged Netflix more to ensure priority for their content and Netflix in turned passed that cost onto their customers alone? Internet access for everyone else would get cheaper and faster as ISP’s plow that ‘Netflix’ profit into bigger and faster pipes.

An even worse outcome of net neutrality would be if ISP’s were prohibited from raising anyone’s rates. This would result in a fixed price but ever slowing speeds as the network became more congested. At which point the voters would cry out “to do something” and we would then see a new “internet delivery tax” collected by the government and doled out to ISP’s that promised to wag their tails and do their master’s bidding (such as identifying all users on their network, tracking “suspicious” behavior and shutting down websites deemed by the government to be “politically incorrect”.)

So net neutrality supporters, be careful what you wish for, you just might get the world Edward Snowden feared.

Come Fly with Me

Media bias is often subtle. Those that know the whole story are aware when a slanted viewpoint arises from omitted information. Then again, there are times the “reporter” simply is unable to contain his zeal and so takes aim at his subject with all the adjectival and adverbial firepower he can muster. I don’t normally do this but I came across just such a hyperbolically biased story this week and can only perform a proper critique in blow-by-blow style. The editorial, err, I mean news story concerns a Democrat congressman Alan Grayson (Florida, 9th district) who is hell bent on tilting his lance at the proverbial windmill that is airline frequent-flier programs. Good to know our elected representatives devote their energies to solving the most pressing of ills in the world. The article, penned by a Christopher Elliott, appears in the Washington Post and by the fourth word the author is well on his way to making his opinion known. According to him such programs are “rigged to favor airlines, deceive passengers and cost consumers billions of dollars.” Rigged? Deceived? Yeah, no judgment calls there. And “cost consumers” – I’m still scratching my head on that one. How does giving consumers free stuff “cost” them billions? Next we have a quote from the good Congressman:

“Frequent flyer programs are prone to manipulation by the airlines that control them,” he wrote, likening the estimated $700 billion worth of miles to an unregulated currency. “Airlines establish the rules, the terms, the value, expiration dates, and the sales pitches.” To earn more money, airlines are constantly devaluing this de facto currency, which is “profitable for the airlines, and costly for the consumer,” wrote Grayson.”

An unregulated currency! Say it isn’t so! Every decent God-fearing person knows that unregulated = pure evil. How dare those airlines establish rules, terms and values for a VOLUNTARY PROGRAM THAT GIVES THEIR CUSTOMERS FREE GOODS? What’s next, regulating the toys in a happy meal (oh, right, that already happened). But the final bit is the height of hypocrisy. The congressman bemoans airlines devaluing the FREE STUFF they give their customers while oblivious that his employer (the Federal Government) purposefully devalues (through inflation) the US dollar every year. Such inflation (devaluing) is profitable for the government and costly for the consumer because each dollar buys less each year. Wait a minute, no, could it be? Could it be that this inflation is the proximate cause of the decreasing value of miles and other consumer complaints (fees for baggage, narrowing seats, etc.)? When inflation affects the value of money there are two ways for businesses to respond: raise the money price of the goods, or lower the goods price of the money, that is, less stuff for the same nominal money price. No one wants to be the one to raise money prices as that “seen” figure is obvious, but, decreasing the goods received is relatively “unseen” because people normally pay attention to the price of the can, not how much is in it.

The article then moves onto what irritates all progressives: inequality, even voluntary inequality. The fact that we are not all clones of each other with the exact same skills, drive, desires and tastes induces apoplexy in the progressive. For it is only in just such a world could their utopian ideal of equality not of negative rights, but of outcomes, be realized. The author states:

“Thanks to loyalty programs, airlines have completely separated their most valued customers from the rest. They lavish top spenders with perks while forcing the less valuable passengers to sit in shrinking seats and pay fees for services that should come with every ticket, such as a seat reservation and the ability to check one bag without paying extra for the privilege. Frequent-flier programs have widened the airborne caste system to the point where it’s hard to believe everyone’s on the same plane. They’re making air travel worse for all but a few privileged elites, according to critics.”

Allow me to parse this. Is he honestly saying that businesses should not be able to “discriminate” amongst their clientele by rewarding their biggest customers in a way that incentives those customers to remain their customers? Words like “lavish” and “forcing” leave the reader with the impression airlines are an aristocratic institution that “lavishes” perks on totally random people they just happen to like for no reason at all and then “force” the rest of us to ride their planes at gunpoint… after forcibly removing money from our wallet for the ticket. Oh, wait, only the state can force people to buy a product at gunpoint.

You know what Mr. Elliott, you can be part of that caste too if you like, no revolution necessary. It’s totally voluntary; just pay for the level of service you desire. No “force” involved – and in case you forgot “force” means weapons, which is what the state has and the airlines don’t.