August 20, 2015

One of the slickest marketing campaigns of our time

Filed under: Environment, Europe, Health, USA — Tags: , , , , , — Nicholas @ 04:00

In Forbes, Henry I. Miller and Drew L. Kershen explain why they think organic farming is, as they term it, a “colossal hoax” that promises far more than it can possibly deliver:

Consumers of organic foods are getting both more and less than they bargained for. On both counts, it’s not good.

Many people who pay the huge premium — often more than 100% — for organic foods do so because they’re afraid of pesticides. If that’s their rationale, they misunderstand the nuances of organic agriculture. Although it’s true that synthetic chemical pesticides are generally prohibited, there is a lengthy list of exceptions listed in the Organic Foods Production Act, while most “natural” ones are permitted. However, “organic” pesticides can be toxic. As evolutionary biologist Christie Wilcox explained in a 2012 Scientific American article (“Are lower pesticide residues a good reason to buy organic? Probably not.”): “Organic pesticides pose the same health risks as non-organic ones.”

Another poorly recognized aspect of this issue is that the vast majority of pesticidal substances that we consume are in our diets “naturally” and are present in organic foods as well as non-organic ones. In a classic study, UC Berkeley biochemist Bruce Ames and his colleagues found that “99.99 percent (by weight) of the pesticides in the American diet are chemicals that plants produce to defend themselves.” Moreover, “natural and synthetic chemicals are equally likely to be positive in animal cancer tests.” Thus, consumers who buy organic to avoid pesticide exposure are focusing their attention on just one-hundredth of 1% of the pesticides they consume.

Some consumers think that the USDA National Organic Program (NOP) requires certified organic products to be free of ingredients from “GMOs,” organisms crafted with molecular techniques of genetic engineering. Wrong again. USDA does not require organic products to be GMO-free. (In any case, the methods used to create so-called GMOs are an extension, or refinement, of older techniques for genetic modification that have been used for a century or more.)

July 27, 2015

GMO food is safe, says … Slate

Filed under: Business, Environment, Health, Media, Science — Tags: , , , — Nicholas @ 03:00

In Slate, William Saletan on the FUD campaign that has been waged against genetically modified foods:

Is genetically engineered food dangerous? Many people seem to think it is. In the past five years, companies have submitted more than 27,000 products to the Non-GMO Project, which certifies goods that are free of genetically modified organisms. Last year, sales of such products nearly tripled. Whole Foods will soon require labels on all GMOs in its stores. Abbott, the company that makes Similac baby formula, has created a non-GMO version to give parents “peace of mind.” Trader Joe’s has sworn off GMOs. So has Chipotle.

Some environmentalists and public interest groups want to go further. Hundreds of organizations, including Consumers Union, Friends of the Earth, Physicians for Social Responsibility, the Center for Food Safety, and the Union of Concerned Scientists, are demanding “mandatory labeling of genetically engineered foods.” Since 2013, Vermont, Maine, and Connecticut have passed laws to require GMO labels. Massachusetts could be next.

The central premise of these laws — and the main source of consumer anxiety, which has sparked corporate interest in GMO-free food — is concern about health. Last year, in a survey by the Pew Research Center, 57 percent of Americans said it’s generally “unsafe to eat genetically modified foods.” Vermont says the primary purpose of its labeling law is to help people “avoid potential health risks of food produced from genetic engineering.” Chipotle notes that 300 scientists have “signed a statement rejecting the claim that there is a scientific consensus on the safety of GMOs for human consumption.” Until more studies are conducted, Chipotle says, “We believe it is prudent to take a cautious approach toward GMOs.”

The World Health Organization, the American Medical Association, the National Academy of Sciences, and the American Association for the Advancement of Science have all declared that there’s no good evidence GMOs are unsafe. Hundreds of studies back up that conclusion. But many of us don’t trust these assurances. We’re drawn to skeptics who say that there’s more to the story, that some studies have found risks associated with GMOs, and that Monsanto is covering it up.

I’ve spent much of the past year digging into the evidence. Here’s what I’ve learned. First, it’s true that the issue is complicated. But the deeper you dig, the more fraud you find in the case against GMOs. It’s full of errors, fallacies, misconceptions, misrepresentations, and lies. The people who tell you that Monsanto is hiding the truth are themselves hiding evidence that their own allegations about GMOs are false. They’re counting on you to feel overwhelmed by the science and to accept, as a gut presumption, their message of distrust.

H/T to Coyote Blog for the link.

July 16, 2015

“Biodynamic” wine-making – New Age woo-woo marketing bullshit … that sells

Filed under: Business, Science, USA, Wine — Tags: , , — Nicholas @ 04:00

On a recent wine tour in the Beamsville Bench region, I watched a fascinating interaction between a winery representative and a potential purchaser. Out of respect, I won’t identify the winery (although there are a few in both Beamsville and Niagara who profess to be “biodynamic” wineries), but the question was asked and the poor winery employee had to fight against her own clear instincts and try to describe in positive terms the utter bullshit that is “biodynamic” theory. Kindly, the questioner allowed her off the hook quickly and our group moved off to taste some other wines.

At Boing-Boing, Maggie Koerth-Baker links to an older article at the SF Weekly saying:

[…] biodynamic farming is, essentially, organic farming … plus a heaping helping of astrology, mysticism and some delightfully medieval-gothic growth preparations. (One involved taking fresh cow skulls, stuffing them with oak bark, burying them at the fall Equinox, unearthing in spring and adding minute amounts of the resulting goop to compost piles. Ostensibly to promote healing in plants.) Perhaps unsurprisingly, large, independent, peer-reviewed studies haven’t found much of a difference between biodynamic and organic grapes. Now, some folks like biodynamic wine, and that’s cool. I just think people ought to know what it is they’re paying a premium for.

The link is broken, but from the old URL, it’s probably this one:

When asked just what was going on, Eierman shot a glance at Jessica LaBounty, Benziger’s marketing manager, who closed her eyes and gave a quick nod. The gardener proceeded to explain that the severed heads were a vital ingredient in Biodynamic Preparation No. 505: Finely ground oak bark will be placed into the cows’ fresh skulls and stored in a shallow, moist hole or rain bucket throughout autumn and winter. The resultant concoction is then applied, in nearly undetectable quantities, to the gargantuan compost piles; Benziger’s promotional literature claims it “stimulates the plant’s immune system and promotes healing.”

Light-years from the surreal scenes at the Sonoma winery, glasses tinkled and forks hit plates of house-marinated olives in a dimly lit San Francisco storefront. Sharply dressed men and their attractive dates laughed over full pours of red and white at Yield Wine Bar in San Francisco’s up-and-coming Dogpatch neighborhood. Nearly half of the 50 wines served that night were grown Biodynamically — a fact prominently displayed on the bar’s menu. When asked what, exactly, this means, bar co-owner Chris Tavelli described Biodynamics as “the highest level of organics, you know, organic above organic.”

Among those who earn a living selling wine to the general public, this was a typical answer. Those with a vested interest in moving Biodynamic wines almost invariably use the words “natural” and “holistic” — terms that are malleable and vague, but near and dear to every San Franciscan’s heart. Its producers and sellers describe the process as “organic to the nth degree,” “the Rolls-Royce of organic farming,” or, simply, “the new organic.”

It’s an explanation Tavelli and fellow wine merchants have to make — or, more accurately, not make — now more than ever. Winemakers recently began aggressively marketing their Biodynamic status as a selling point, claiming their product to be both the “greenest” and most distinctive-tasting available. In San Francisco, Jeff Daniels of the Wine Club has added 10 new Biodynamic labels in the last year alone; Kirk Walker of K & L Wine Merchants says customer queries about Biodynamic wines have jumped in the past few years from roughly one a week to more than 30. Dozens of other San Francisco winesellers concur that they’ve augmented the number of Biodynamic wines they carry by four, five, or even 10 times of late. National chains report the same, and rank San Francisco as perhaps the nation’s top consumer of Biodynamic wine.

May 5, 2015

Interesting jobs for foreigners in China

Filed under: Business, China — Tags: , , , — Nicholas @ 02:00

I’ve had a few friends over the years who seemed to somehow be able to spend extended time in China. This article may explain how at least a few of them funded their stays:

In 2010, Mitch Moxley wrote a story for The Atlantic entitled “Rent a White Guy,” relating the story of his trip to Dongying where he pretended to be the representative of a non-existent California-based company that was allegedly building a factory in the city. His Canadian friend Ernie, hired to play the role of director, delivered a speech before a large crowd in which he “boasted about the company’s long list of international clients.” After the speech, “confetti blasted over the stage, fireworks popped […] and Ernie posed for a photo with the mayor.” The article has nothing to say about the extent of the scam. Were Mitch Moxley and his friend Ernie giving a boost to a local company or were the attendees being asked to invest in a company that didn’t exist?

A 2010 CNN report cited one ad posted on The Beijinger by a company called “Rent A Foreigner.” The story describes one foreigner who had police knock on his door one day, “after a financial company he worked at for a couple of months in Xi’an […] allegedly swindled millions of yuan out of clients.”

It’s commonplace in China to see expats paid exorbitant fees as dancers, singers, musicians, or models, often regardless of talent. I have seen unattractive models, dancers who couldn’t dance, and singers who couldn’t sing. One of my friends was once paid handsomely to play bass at a live concert. The thing was, he didn’t know how to play bass — so they left his instrument unplugged and he plucked at the strings as if he had some clue as to what he was doing. Several of the musicians were also pantomiming to a prerecorded track, but the track had no bass, so my friend was pretending to play a part that didn’t exist. No one in the crowd seemed to notice though, and he was paid more than twice what the Chinese band members, who were actually rather talented musicians, earned.

April 30, 2015

Organic wines as mere marketing buzz and gimickry

Filed under: Business, Health, Science, Wine — Tags: , , , — Nicholas @ 02:00

At VinePair, Kathleen Willcox explains why the “organic” label on your wine may be little more than a marketing ploy:

A lot of the buzz and imagery about organics appears to be just that – empty sound bites and gimmicks created by folks eager to cash in on the increasingly lucrative organic market. Where does that leave us? Not in an easy place.

Falling for marketers’ ploys is practically a full-time occupation in America (I’m not the only one who’s bought multiple cartons of fat-free ice cream hoping, this time, to finally find “creamy fat-free vanilla bliss” right?). Consumers’ perception of what organic agriculture is vs. the reality, and the halo of virtue with which it is bequeathed (and conventional agriculture’s implicit pair of devil’s horns) is, arguably, one of the biggest boondoggles in our culture today. More than half of Americans (55%) go organic because they believe it’s healthier. Meanwhile, there is really no evidence to back that assumption up. And even organic farmers use pesticides (sorry random lady at the bar). They just happen to be “natural.”

It’s never been a better time for organic marketers and companies. The market for organic food and beverages worldwide was estimated to be $80.4 billion in 2013 and is set to reach $161.5 billion in 2018, a compound annual growth rate of 15% per year. North America has the biggest market share, and will be responsible for roughly $66.2 billion by 2018.

But in the rush to get organic products out the door (and fulfill the public’s desire for healthier, more environmentally responsible products), some producers are often doing little more than following the letter of the USDA law to earn the “organic” label, consequences to the environment and our overall health be damned. In fact, from what producers and studies revealed, it may actually be worse for the environment and your body to buy organic wine from a large manufacturer instead of buying wine produced from grapes on a smaller vineyard sprayed judiciously with synthetic pesticides by a hands-on farmer.

April 14, 2015

(Some) Corporations love (some) social causes

Filed under: Business, Environment — Tags: , , — Nicholas @ 04:00

You’ll notice some corporations are quick to climb onboard certain social causes. Because reasons:

My absolute favorite example of corporations using social causes as cover for cost-cutting is in hotels. You have probably seen it — the little cards in the bathroom that say that you can help save the world by reusing your towels. This is freaking brilliant marketing. It looks all environmental and stuff, but in fact they are just asking your permission to save money by not doing laundry.

However, we may have a new contender for my favorite example of this. Via Instapundit, Reddit CEO Ellen Pao is banning salary negotiations to help women, or something:

    Men negotiate harder than women do and sometimes women get penalized when they do negotiate,’ she said. ‘So as part of our recruiting process we don’t negotiate with candidates. We come up with an offer that we think is fair. If you want more equity, we’ll let you swap a little bit of your cash salary for equity, but we aren’t going to reward people who are better negotiators with more compensation.’

Like the towels in hotels are not washed to save the world, this is marketed as fairness to women, but note in fact that women don’t actually get anything. What the company gets is an excuse to make their salaries take-it-or-leave-it offers and helps the company draw the line against expensive negotiation that might increase their payroll costs.

March 30, 2015

Apple’s cultural significance, as illustrated by reactions to the Apple Watch

Filed under: Business, Media, Technology — Tags: , , , — Nicholas @ 04:00

James Lileks points out that Apple does not get the media attention for being innovative (at least, not just for innovations):

What’s that, you say? You don’t want an Apple Watch?

Let’s talk about that.

People seem obliged to offer substantial, reasoned arguments why they don’t want one — and that seems proof that Apple’s cultural position is enormous. I mean, imagine it’s 1956, and Kelvinator just brought out the new Fido-Matic Fridge that automatically extrudes moist dog food into a bowl at preset intervals. The press wouldn’t say boo. The Today show wouldn’t do a live report from people queued up at the Kelvinator store. There wouldn’t be bitter battles in the letters-to-the-editor section about Kelvinator fanboys falling for the latest gimmick, and besides Frigidaire did that last year.

But Apple invents something, and the world is riven into two camps. Those who desire, and those who decline. The former group is regarded with less interest than the latter, since those who want the Watch are assumed to be devotees of Apple who would pay $199 for a white plastic brick used to prop open doors.

The people who don’t want them — ah, they’re the ones who make for good copy. They’re the rebels now. If I were a New York Times editor, the day the Watch was released I’d run a lifestyle-section story about men in Brooklyn with carefully curated beards who repair 1950s watches, and how this attention to the craft — nay, the art — of timepieces stands as a Contrast, and perhaps a Rebuke, to the overcomplicated Watch the sheep are lining up to get.

“It’s just an honest thing,” the watch-repair guy (Josh, I’m guessing) would say. “You hold it to your ear, you hear it tick. It manifests time in a real way. The delicacy of the movement — it’s almost intimate, to have a machine on your wrist with such precise detail, devoted to just one thing. The time.”

Yeah yeah. Go have a sarsaparilla, hipster. Look: You don’t want an Apple Watch, you don’t. But reject it for the right reasons — and that’s not because it’s another screen that takes you away from dealing with humanity, because that’s not what it is.

March 4, 2015

The odd secular religion of Corporation Theology

Filed under: Business, Religion — Tags: , , — Nicholas @ 02:00

Megan McArdle on the weird things some people can believe:

I got a lot of responses to my post last week on Wal-Mart’s decision to raise the minimum wage many of its employees earn to $10 an hour next year. One variety of response stood out: the folks who said “Wal-Mart is doing this because it’s good for its business.”

It stood out because it is almost right, but not quite. The correct statement is that “Wal-Mart is doing this because it thinks it’s good for its business.” Never ignore the possibility that Wal-Mart could be completely wrong.

I remark on this because some of the arguments I saw verged upon what I’ve come to think of as “corporation theology”: the belief that if a corporation is doing something, that thing must be incredibly profitable. This is no less of a faith-based statement than the Immaculate Conception of Mary. Yet it is surprisingly popular among commentators, not just on the right, but also on the left.


This left-wing writer was evincing considerably more faith than I have in the American corporation. Corporations do dumb stuff all the time — for decades, even. Moreover, advertising has multiple purposes. It can of course induce you to consume more of a product, but frankly, no matter how much Pepperidge Farm advertises, it’s probably not going to dramatically increase America’s consumption of prepackaged cookies. So why does it advertise? Because it wants you to choose a Milano instead of an Oreo or one of them newfangled biscotti.

This is corporation theology. Of course, you also see it on the right — arguments that if some product were good or desirable, a corporation would already have provided it. The entire history of human progress argues against this theory.

As these two examples suggest, corporation theology gets trimmed to personal and ideological convenience, as all theologies often are: A liberal is capable of simultaneously believing that market failures abound in industries he or she would like to regulate, and also that Costco knows how to run Wal-Mart’s labor policy better than Wal-Mart does; a conservative, the inverse. Both are wrong. Corporations, like all human institutions, are great engines for making mistakes. The only reason they seem so competent is that companies who make too many mistakes go out of business, and we don’t have them around for comparison.

February 19, 2015

“Faking it” versus “Keeping it real”

Filed under: Britain, Media, Politics — Tags: , , , , , — Nicholas @ 02:00

Neil Davenport reviews Authenticity is a Con by Peter York:

Everyone and everything today must, it seems, be ‘the real deal’ — they must be walking, talking embodiments of heart-on-your-sleeve authenticity. After all, no one wants to be accused of ‘faking it’, as Kurt Cobain put it in his suicide note. From pop stars to politicians, being real, being oneself, being transparent, is pretty much a pre-requisite for entrance into respectable society.

But social commentator Peter York believes there is something rather phoney in the need to be seen as genuine. In his short polemical book, Authenticity is a Con, York provides several deliciously scathing snapshots of the current tyranny of transparency.

For York, authenticity is the ‘absolute favourite word of shysters and chancers; of motivational speakers and life coaches dealing with “human potential”; of people who think “I’m so worth it”… people with only the vaguest idea of authentication and none at all about the philosophical back story.’ He traces the ‘me generation’ tendencies back to 1960s America. For York, the authenticity peddlers sell the idea that if you’re ‘true to yourself’ then everything else, from a satisfying career to successful relationships, will magically fall into place. York understands that the free-yourself psychobabble has always sounded preposterous. To lampoon it requires very little effort.


York’s sharp eye provides insights aplenty. There’s a hilarious dig at hippy ‘t-shirt and trainers’ companies such as Facebook or Virgin, whose informality disappears when they are challenged on something substantive (‘you get some very formal legal action’, quips York). He points out the irony of early- to mid-twentieth-century black musicians like Lead Belly, who wanted to wear smart suits and play hotel jazz, having to ham up a jailbird persona in order to sate their white audience’s demand for an ‘authentic’ blues performer. York also notes how, in the 1970s, the desire to be inauthentic, to not be ourselves or down to earth, was a mark of boldness and imagination. Think of the sci-fi-based, proto funk of Parliament or Funkadelic, or how working-class bricklayers donned tights and make up during the Glam era. Roxy Music made a career out of not keeping it real. They even prompted the NME’s Charles Shaar Murray to declare them a threat to Britain’s rock culture with, as York says, ‘their posey eclecticism, poncey retrofuturism and their wholly meretricious concern with appearances’. And then there’s David Bowie who elevated artifice, pretension and inauthenticity to the level of an art-form.

Today’s art-school poseurs, though, are as swept up with authenticity as anyone else. York begins Authenticity is a Con by visiting Shoreditch and noticing a product called ‘honest man’s beard oil’. As readers of Sunday supplements will know, east London has the highest beard count in the capital. York has great fun juxtaposing Shoreditch’s quest for reclaimed-floorboard authenticity with its entirely invented (read inauthentic) claim to be an artistic Boho enclave. ‘It’s a thing of surfaces’, writes York, ‘anti-bling surfaces that actually cost much more than the gold and glass and shiny marble of mainstream bling’. Indeed, Shoreditch and Hackney are the kind of places that have specially designed ‘old man pubs’ that don’t actually feature any old men drinking in them. York calls Shoreditch ‘applied authenticity’, which is about as accurate and as real a description of EC1 as you will find.

And yet the authenticity-marketing scam goes far beyond east London. For over a decade now, we’ve experienced what can be called ‘kooky capitalism’, wherein huge companies re-brand themselves as ethical, people-orientated cottage businesses. York supplements the idea of kooky capitalism with his concept of ‘micro-connoisseurship’, which refers to the ‘market for luxury, for superior, smart, snobby, value-added goods – “positional goods” of all kinds. We’ve got millions of micro-connoisseurs agonising about the thread count in sheets, the back-story of a recipe, the provenance of a shop.’

January 25, 2015


Filed under: Business, Media, Quotations, Technology — Tags: , , — Nicholas @ 01:00

Take the curious phenomenon of the TED talk. TED – Technology, Entertainment, Design – is a global lecture circuit propagating “ideas worth spreading”. It is huge. Half a billion people have watched the 1,600 TED talks that are now online. Yet the talks are almost parochially American. Some are good but too many are blatant hard sells and quite a few are just daft. All of them lay claim to the future; this is another futurology land-grab, this time globalised and internet-enabled.

Benjamin Bratton, a professor of visual arts at the University of California, San Diego, has an astrophysicist friend who made a pitch to a potential donor of research funds. The pitch was excellent but he failed to get the money because, as the donor put it, “You know what, I’m gonna pass because I just don’t feel inspired … you should be more like Malcolm Gladwell.” Gladwellism – the hard sell of a big theme supported by dubious, incoherent but dramatically presented evidence – is the primary TED style. Is this, wondered Bratton, the basis on which the future should be planned? To its credit, TED had the good grace to let him give a virulently anti-TED talk to make his case. “I submit,” he told the assembled geeks, “that astrophysics run on the model of American Idol is a recipe for civilisational disaster.”

Bratton is not anti-futurology like me; rather, he is against simple-minded futurology. He thinks the TED style evades awkward complexities and evokes a future in which, somehow, everything will be changed by technology and yet the same. The geeks will still be living their laid-back California lifestyle because that will not be affected by the radical social and political implications of the very technology they plan to impose on societies and states. This is a naive, very local vision of heaven in which everybody drinks beer and plays baseball and the sun always shines.

The reality, as the revelations of the National Security Agency’s near-universal surveillance show, is that technology is just as likely to unleash hell as any other human enterprise. But the primary TED faith is that the future is good simply because it is the future; not being the present or the past is seen as an intrinsic virtue.

Bryan Appleyard, “Why futurologists are always wrong – and why we should be sceptical of techno-utopians: From predicting AI within 20 years to mass-starvation in the 1970s, those who foretell the future often come close to doomsday preachers”, New Statesman, 2014-04-10.

October 3, 2014

QotD: Marketing

Filed under: Business, Media, Quotations — Tags: , , — Nicholas @ 00:01

Among those currently imagining our possible futures, one of the most persuasive is the novelist William Gibson, who, having evolved quite a bit past the man who wrote Neuromancer in 1984, can hardly be said to be imagining futures at all, with his most recent novels constituting, in his words, “speculative fiction of the very recent past,” more oriented toward social situations than technological situations. With the possible exception of David Foster Wallace, no novelist of whom I am aware has ever written with such freshness and imagination on the subject of advertising and marketing, which is a big part of what Wallace called “the texture of the world I live in.” Nor has any novelist quite so precisely identified what is sinister in our world of ubiquitous sales pitches: that something whose entire purpose is to be at the center of our attention still manages to be somehow covert. The marketing mentality is an invasive species; earnest young people now speak entirely seriously about their “personal brands” at the same time they complain about the commodification of this or that. Gibson understands the strangeness of our times, and my own mental shorthand for the odd little details one sometimes encounters, particularly in urban life, when one identifies something that is entirely ordinary and yet feels as if it were not in its right time and place, is “Feeling like I’m living in a William Gibson novel.”

Kevin D. Williamson, “Futures Trading: We are no longer thinking about the future because we believe we are there”, National Review, 2014-10-01.

September 4, 2014

How post-Prohibition restrictions still plague many states

Filed under: Law, USA — Tags: , , , , — Nicholas @ 17:07

The American craft beer boom continues, but making the beer is only the start of the process of getting the beer into the hands of eager consumers. CEI’s Michelle Minton explains how rules crafted for the end of Prohibition now artificially restrict the craft beer marketplace, reduce consumer choice, and add unearned profits to favoured corporations:

After Prohibition ended, Americans could sell, produce, import, and transport alcoholic beverages, but home-brewing was still illegal until 1978 when then President Jimmy Carter signed legislation to legalize brewing in the home for personal or family use. In that year, the number of breweries was at its lowest point after the repeal of Prohibition. But in the 1980s, after states began to legalize brewpubs, the number of brewers began to rise. This development, along with easy access to capital in the 1990s and 2000s, aided efforts of modern craft breweries to change the laws in their home states so that they could brew more, self-distribute, and start the microbrew revolution.


Another hindrance for craft brewers are franchise laws, enacted among the states in the 1970s and 80s due to fears of brewers’ market power. With less than 50 brewers in the nation at the time — most of them large — there was a fear the big brewers could hold wholesalers hostage by threatening to walk away unless distributors bowed to the brewers’ demands. Since then, however, the landscape has completely shifted.

Although the number of wholesalers nationwide has declined, those remaining are larger and more powerful than almost all of the breweries in the nation. Yet, the laws remain, giving the wholesalers “virtual carte blanche to decide how the beer is sold and placed in stores and bars,” according to Brooklyn Brewery founder Steve Hindy.

In almost every other industry, a manufacturer unhappy with a distributor’s performance or price can terminate a contract in search of a better fit. This is not the case for beer manufacturers. Brewers wishing to switch from one distributor to another must go through long and costly legal battles. Hindy, for example, paid $300,000 to get out of a contract with a New York wholesaler. Yuengling COO Dave Casinelli’s experience was similar. In a phone interview, he noted that in his 24 years with the company, he couldn’t recall any attempt to switch wholesalers that didn’t end up with some legal ramifications.

Most state franchise laws not only make leaving a wholesaler hard, but they also create regional monopolies, known as “exclusive territories,” where a brewer is prohibited from selling through more than one distributor within a given area. This undermines incentives for wholesalers to compete by improving performance, increasing efficiency, or lowering prices. After all, distributors have little or no fear that a brewer will leave — because most of them can’t. As for consumers, they end up paying more because of this lack of competition.

August 15, 2014

QotD: Mobile phone companies

Filed under: Business, Quotations — Tags: , , — Nicholas @ 00:01

I recently cancelled a contract with a different provider after some gizmo broke. The company first told me the whole thing was my problem, then at the last moment offered me hundreds of pounds to stay. When your phone company starts using the playbook of an emotionally abusive spouse, this is not a market in good working order.

Tim Harford, “Casinos’ worrying knack for consumer manipulation: The spread of machine gambling offers a portent of other economic developments”, TimHarford.com, 2014-01-07

March 31, 2014

Market research, disguised as crowdfunding

Filed under: Business, Economics, Media — Tags: , , , — Nicholas @ 11:01

Virginia Postrel has an interesting take on the current brouhaha over Facebook’s acquistion of formerly crowdfunded Oculus:

Crowdfunding sites such as Kickstarter and Indiegogo represent a classic entrepreneurial phenomenon: Once you roll out your great idea, customers use it in ways you didn’t imagine, and you wind up in a different business than you expected.

Kickstarter’s founders wanted to help artists raise money. Indiegogo co-founder Danae Ringelmann pictured aiding capital-strapped small-businesses owners like her parents. Neither intended their site to act as a test market. But, as the rags-to-riches story of virtual-reality firm Oculus shows, that’s what they have become.

“It’s a way to access capital, but what it’s also become is a market-testing and validation platform,” Ringelmann told the Dent the Future conference on Tuesday. “What we’re doing is creating pre-markets for ideas,” she said.


Now that Facebook is buying Oculus for $2 billion, critics are reverting to the original assumption that crowdfunding is primarily about raising money. “Talking people out of $2.4 million in exchange for zero percent equity is a perfectly legal scam,” wrote my colleague Barry Ritholtz.

But it’s not a scam at all. It’s market research. In effect, customers placed pre-orders and received early products; why are they griping that they don’t own a part of the business?

The backlash is largely Kickstarter’s fault. It may not be running a scam, but it definitely sends mixed messages. Unlike Indiegogo, which prides itself on operating a neutral platform giving anybody’s idea a market test, Kickstarter hasn’t embraced its de facto transformation. It strictly curates the campaigns it hosts and, although it makes its biggest profits on technology products, it still exudes an artistic sensibility that isn’t entirely comfortable with disruptive technology or large enterprises. It still talks as though it’s PBS. “Kickstarter is not a store,” it declares.

March 22, 2014

The “narrative”

Filed under: Media, Politics, USA — Tags: , , , , — Nicholas @ 11:10

Wilfred McClay noticed the increasing use of the term “narrative” over the last few years:

We have this term now in circulation: “the narrative.” It is one of those somewhat pretentious academic terms that has wormed its way into common speech, like “gender” or “significant other,” bringing hidden freight along with it. Everywhere you look, you find it being used, and by all kinds of people. Elite journalists, who are likely to be products of university life rather than years of shoe-leather reporting, are perhaps the most likely to employ it, as a way of indicating their intellectual sophistication. But conservative populists like Rush Limbaugh and Sean Hannity are just as likely to use it too. Why is that so? What does this development mean?

I think the answer is clear. The ever more common use of “narrative” signifies the widespread and growing skepticism about any and all of the general accounts of events that have been, and are being, provided to us. We are living in an era of pervasive genteel disbelief — nothing so robust as relativism, but instead something more like a sustained “whatever” — and the word “narrative” provides a way of talking neutrally about such accounts while distancing ourselves from a consideration of their truth. Narratives are understood to be “constructed,” and it is assumed that their construction involves conscious or unconscious elements of selectivity — acts of suppression, inflation, and substitution, all meant to fashion the sequencing and coloration of events into an instrument that conveys what the narrator wants us to see and believe.

These days, even your garage mechanic is likely to speak of the White House narrative, the mainstream-media narrative, and indicate an awareness that political leaders try to influence the interpretation of events at a given time, or seek to “change the narrative” when things are not turning out so well for them and there is a strongly felt need to change the subject. The language of “narrative” has become a common way of talking about such things.

One can regret the corrosive side effects of such skepticism, but there are good reasons for it. Halfway through the first quarter of the 21st century, we find ourselves saddled with accounts of our nation’s past, and of the trajectory of American history, that are demonstrably suspect, and disabling in their effects. There is a view of America as an exceptionally guilty nation, the product of a poisonous mixture of territorial rapacity emboldened by racism, violence, and chauvinistic religious conviction, an exploiter of natural resources and despoiler of natural beauty and order such as the planet has never seen. Coexisting with that dire view is a similarly exaggerated Whiggish progressivism, in which all of history is seen as a struggle toward the greater and greater liberation of the individual, and the greater and greater integration of all governance in larger and larger units, administered by cadres of experts actuated by the public interest and by a highly developed sense of justice. The arc of history bends toward the latter view, although its progress is impeded by the malign effects of the former one.

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