Breakage

July 11, 2017

I first heard the term “breakage” when learning about betting on horses.  Breakage is the rounding down (never up) of payoffs to the nearest nickel, dime, quarter or dollar, ostensibly to eliminate the need for mutuel clerks to handle pennies or other small change.  Breakage also helps fund “minus pools” in which the net amount bet on losers does not cover the legally mandated minimum payout of $2.10 on a winning $2.00 bet.  However, breakage really is a surcharge on almost every winning bet a horse player makes, especially when the rounding down is to an amount greater than a nickel, or when it is imposed on non-cash betting accounts.

In the casino gambling industry, the term is used to describe when an establishment does not have to give something a patron has been offered or is entitled to, as explained in this post.  Casinos want to appear generous in extending offers to potential patrons, but don’t necessarily want to incur the costs of fulfillment to everyone who shows up to take advantage.

Breakage also occurs in the commercial world.  I have written about several varieties, such as the gas discount that may be used only once for up to 20 gallons, when most people’s cars have tanks that don’t hold that much, and coupons that, in large type, purport to apply to any item in the store; the small-type exclusions (which always seem to apply to the item you intend to purchase) are not apparent until after you’ve traveled to the store and been told the bad news at the check out counter.

I don’t understand how merchants believe that losing a customer who feels misled by an offer (even if, when carefully read, the offer fairly represents its terms) is worth the savings it can realize in terms of breakage.  I prefer giving my business to businesses that are forthright in their communications with customers and don’t play “gotcha.”

 


Design

July 11, 2017

Good design is something we all crave in consumer products.  In my experience, manufacturers seldom deliver.  In many cases, the lack of good design is shocking — if anyone actually used the product for any time before putting it in production,  its design would have been changed.  Two examples of this appeared shortly after I bought a new car.  While I generally am pleased with the vehicle, two features, each very obvious to me after a few short drives, make me want to scream.  The first is the ornamental chrome-like trim on the dashboard air vent to the left of the steering wheel.  This metal reflects in a glaring way in the outside rear view mirror and is a constant annoyance.  Interestingly, my father’s car, from a different manufacturer, exhibits the same problem.  A more serious design flaw is presented by the control for the instrument panel lights — a thin, plastic stalk that sticks out of the instrument panel that is twisted to control the brightness of the instrument back lights.  Aside from the fact that the stalk is flimsy and likely to break, it presents a safety hazard when accessed while driving, because accessing it requires the driver to reach through the steering wheel with one hand.

Other design elements that are bad for the consumer are deliberate.  In my limited experience, Apple, whatever the other merits of its products, is a master at this — so much so, that when other companies see what it gets away with, they emulate it. The lack of a memory card slot on its phones and tablets (before any claim at water resistance, which might have justified its omission), as well as the lack of a user-replaceable battery put me off Apple products when I was looking to buy my first smart phone and tablet.  I simply did not want to pay five times the cost of a standard memory card for the same storage that had to be built into the phone, or pay the Apple store a hundred dollars to replace a fifteen dollar battery.  The recent elimination of the headphone jack on some products, to force the user to purchase a dongle or bluetooth ear pieces, is the same type of deliberate anti-consumer planned obsolescence design. Another is the changing of the jack for the charging cable that forces a consumer to buy all new cables each time he or she buys a new model Apple phone. In the biopic about Steve Jobs, a scene that resonated with me was the launch of a new Apple computer.  When the machine wouldn’t work seconds before the public unveiling, the poor guy who tried to fix it found that Jobs had used screws that prevented the opening of the computer with a standard screw driver.


A tale of two states

June 15, 2017

Republicans claim excess government spending hobbles the economy and fosters dependence.  Lower taxes will stimulate the economy and benefit everyone.  Democrats claim that investment in the public sector will raise all boats, and those in the educational establishment are always claiming under funding.  Both, it appears, are wrong.

This story shows that, as of a few years ago, New York maintained its standing as first in the nation — by a large margin — in per capita school spending.  While some argue that the spending is not evenly distributed, per capita spending in the New York City is even higher.  Results are nowhere near the top.  By most measures, New York ranks mid-pack among the states, or even below.  How, then, can education in New York be under funded?  I would like to see a direct response from one or more of the teachers’ unions or their lobbying arm, the Campaign for Fiscal Equity.

This story, among many others, details how the tax cutting experiment in Kansas failed so badly to stimulate the economy, and in doing so, hurt the most vulnerable, that the legislature there repealed it and overrode the Governor’s veto.  No comment from the Koch brothers or any other conservative think tank.

What do these stories have in common?  They both prove that conventional wisdom of whatever ideological bent is likely wrong.  Simple solutions simply don’t work to solve complicated problems.  They prove that we need to hear less from special interests on each side of the aisle and more from moderate, thoughtful people who will seek to apply tailored, empirically based solutions to societal problems, and not continue policies that have proven to be ineffective.


Other hotel pet peeves

June 5, 2017

A couple of years ago, I wrote about some annoyances I encountered while staying at hotels.  Last night, at a fairly upscale hotel associated with a casino in the northeast, I encountered a few more.

When I entered the room, the bed had been turned down, chocolates had been placed on it, and the radio had been turned on.  I turned off the radio, and didn’t notice that the alarm had been left on by the previous guest.  My blissful sleep was rudely interrupted by the alarm at 6:00 a.m., long before my intended hour of waking.  I don’t think it’s incumbent upon the hotel guest to figure out whether the alarm clock in a hotel room (of which there are infinite confusing varieties) has been armed; that should be an item on the housekeeping check list, especially when a housekeeper is tasked with turning on the same radio as part of the hotel’s turn down service.

Were it not for the rude awakening I experienced, I would not be writing this.  But as long as I’m ranting, this hotel had a loose faucet in the bathroom sink that no housekeeper could have missed while cleaning the room.  The room, recently (and apparently expensively) renovated, also had a paucity of soft surfaces, such as drapes and rugs.  While I was on the phone, I sounded like I was in an echo chamber, and noises from the hallway and other rooms were quite audible.  The heavy doors also clanged loudly when closed by guests.

I do not envy the jobs of hotel housekeepers, whom I’ve heard work to a very tight schedule and sometimes encounter the messes left very inconsiderate guests that make their jobs more difficult and increase the pressures on them.  However, I think they are the crucial eyes and ears that must be trained to look for certain things, and correct or report them, before the room is released to a guest. Management, please take note.


Health insurance for some

March 13, 2017

This Times Union story is disheartening, but not surprising.  It’s about legislators hiring rich cronies for part time jobs that pay little but provide State-subsidized health insurance, which is top-of-the-line and costs the employee very little (full disclosure — as a full-time, non-political State employee, and now as a State retiree, I too enjoy this benefit).

What the story doesn’t address, and what should be of broader concern, is the pricing policy for employees and retirees, who are required to pay a share of the cost of their policies.  There are two prices — for individuals with no dependents, and a higher family price for those with any number of qualified dependents.  Thus, the employee with a spouse and no children pays the same premium as the employee with a spouse and 15 children.  I do not know whether the cost to the State is the same regardless of the number of the employees’ dependents, but I do know that State employees with small families are paying a lot more per person for their health insurance than State employees with large families.  While this policy is great for State employees who have large families, it’s not so good for those making up the difference.  Even worse, it’s not a transparent policy — those who are making up the difference are not aware of who they are or how much they are paying.

I’m not saying the policy is indefensible; for example, where government jobs sometimes pay less than the private sector, the family insurance plan may make it practicable for someone with a large family who is an attractive candidate to take a lower-paying State job, which could benefit the public. And it is a way to make health care more affordable to those with larger families and, presumably, less disposable income (though that may not be the case of the part timers in the TU story, one of whom claimed a net worth of over $8 million). What I am saying is that it also presents apparent fairness issues and, as the TU story indicates, an incentive for abuse.  Open discussion of the issue — one that most taxpayers probably are not aware of — might benefit everyone.

 

 


Buried lede

March 2, 2017

Here’s a headline and story from USA Today that appears to unquestioningly accept the modern corporate culture that protects overpaid executives from the consequences of their mistakes.

Why isn’t the headline something like “Exec on whose watch company lost billions in value and exposed customers’ data to abuse keeps job and ‘golden parachute;’ takes slap on wrist.”

 


Health care conundrums

February 17, 2017

As I advance in age, I am exposed more and more to the health care industry, despite having enjoyed relatively good health until recently.  As a retired New York State employee, I am blessed with excellent health insurance that covers most doctor visits, medical tests and procedures, as well as prescription drugs, with only a relatively modest co-pay. Here are a few observations:

First, it appears that many of our health problems are what a friend of mine calls “diseases of affluence.”  More appropriately, they should be called “diseases of lifestyle,” since they affect people of all socioeconomic strata.  A lot of these are directly influenced by government policies.  For instance, our auto-centric physical infrastructure minimizes the opportunities for and pleasures of walking and cycling, and cannot help but contribute to obesity and other problems based on lack of physical activity.  Our government subsidies to cane sugar and corn (the main ingredient of high fructose corn syrup) help make junk food and sugared soft drinks attractively priced.  This is especially so for the poor, since the SNAP program (formerly known as Food Stamps) allows their purchase with SNAP benefits.  If we collectively spent more on complete streets that were friendly to pedestrians and cyclists, as well as cars, how much could we save on health care (not to mention on school transportation)?  How about if we stopped subsidizing sugar?  I think it would be worth a try.

For all the criticism leveled against it, the Affordable Care Act (“Obamacare”) has achieved something great — it has shifted the dialog from whether health care insurance should be extended to many of those who don’t have it to how the present system should be replaced or improved.  Neither Trump nor his minions are suggesting that those who obtained health insurance through Obamacare should lose it, meaning that they recognize that there is no going back on government’s commitment to growing numbers of its citizens.  Whether things actually get better or worse remains to be seen, but at least no one is talking a bout a pre-Obamacare “reset.”  To me, that is yuge.