Quotulatiousness

November 28, 2012

Is Ontario finally “grown up enough” for private wine stores?

Filed under: Business, Cancon, Law, Wine — Tags: , , , , — Nicholas @ 11:38

In the National Post, David Lawrason talks about the push for changes to Ontario’s Prohibition-era laws regarding the sale of wine in private stores:

The Wine Council of Ontario has flipped the switch on a website called www.mywineshop.ca that allows citizens to create their own virtual wine shop. It is a very bold and clever marketing/lobbying idea. And it is the first time an industry association has initiated a public campaign aimed at creating private wine stores in the province. Gutsy stuff.

In less than a week it has painted an appetite-whetting tapestry of what privatization might look like in Ontario, complete with store themes, stock selections and locations across the province as designed by its citizens. And it is giving the public a very direct way to lobby their local MPPs for change.

One of the big reasons the Ontario wineries and wine writers fear pushing too hard for this modernization and liberalization of our drinking law is that the KGBO LCBO has a long history of retribution against dissenters:

The other theme is fear of LCBO retribution. (Talk about “the elephant in the room”). Even our braveheart John Szabo remarked at the end of his piece that “I hope I don’t get put on an (LCBO) interdiction list for writing this”. An importing agent replying to John’s article said he really wanted to talk about the issue ‘off the record’ as he was concerned that being put on an interdiction list would put him out of business.

This fear of the LCBO, whether justified or not, is another compelling reason to re-think the government monopoly. The fear shouldn’t exist within an otherwise free and democratic society; but it does. I have been writing on wine for over 25 years and during that time I have been involved in thousands of conversations with wineries, importers and consumers on shortcomings of the current system. Only once did an individual agree to be quoted.

When your livelihood depends on access to a product controlled by a monopoly, you dare not get on the wrong side of the powers-that-be controlling that monopoly. They may not break legs or leave horse’s heads in the beds of critics, but they can directly freeze the critics out of their profession. An excellent way to limit dissent. Just the hinted threat can be enough to make a would-be critic decide to toe the line and shut the hell up.

November 27, 2012

Comparing Walmart to Costco

Filed under: Business, USA — Tags: , , — Nicholas @ 10:16

Megan McArdle explains why the facile comparison of the two big US retail firms does not make as much sense as people think:

One simply cannot have a discussion about Walmart’s wages without someone bringing up Costco. It seems to be de rigeur, like tipping your waiter, calling your mother on her birthday, and never starting your thank you notes with the words “Thank you”. So lets get it out of the way before the supper gong goes.

[. . .]

Costco has a more highly paid labor force — but that labor force also brings in a lot more money. Costco’s labor force, paid $19 an hour, brings in three times as much revenue as a Walmart workforce paid somewhere between 50-60% of that. (There’s a bit of messiness to all these calculations, because of course both firms have employees who don’t work in stores — but that’s the majority of their workforce, so I’m going to assume that the differences come out in the wash.)

This is not because Costco treats its workers better, and therefore gets fantastic productivity out of them, though this is what you would think if you listened to very sincere union activists on NPR. Rather, it’s because their business model is inherently higher-productivity. A typical Costco store has around 4,000 SKUs, most of which are stacked on pallets so that you can be your own stockboy. A Walmart has 140,000 SKUs, which have to be tediously sorted, replaced on shelves, reordered, delivered, and so forth. People tend to radically underestimate the costs imposed by complexity, because the management problems do not simply add up; they multiply.

One way to think about this is Thanksgiving dinner: how come you, who are capable of getting a meal on the table 364 nights of the year, suddenly find yourself burning things, forgetting the creamed onions in the microwave, and bringing the mashed potatoes to the table a half an hour late? Because when you’re cooking sixteen things instead of four, it is not the same as cooking four four-item meals. There are all sorts of complex interactions involving things like heating times and oven space, and adding more people to the problem, while probably necessary, itself multiplies the complexities.

The missing generation

Filed under: Business, Media — Tags: , , , — Nicholas @ 09:42

Chris Myrick posted a link to a Wall Street Journal article on differences among the age cohorts regarding shopping habits, pointing out that his (and my) generation didn’t even show up in the graphic:

Hmmm. We can tell the shopping habits of folks from age 18 up to 34, then from 55 upwards. I wonder why the invisible folks aged 35-54 didn’t qualify? Perhaps because their behaviour would ruin the message the article is trying to push?

November 26, 2012

End software patents

Filed under: Business, Law, Technology — Tags: , , , — Nicholas @ 11:15

Marginal Revolution writer and George Mason economics professor Alex Tabarrok argues for an end to software patents.

November 25, 2012

It pays to advertise … or at least set up a website for your new business

Filed under: Business, Food — Tags: , , , — Nicholas @ 11:24

Coming back from running a few errands yesterday, Elizabeth noticed what looked like a new restaurant setting up shop in downtown Brooklin: The Pour House. We’ve been waiting for Brooklin to get a proper pub or wine bar for a long time, so this seemed like good news. As soon as we got home, she ran a few Google searches to see what was on offer. The googles, they do nothing.

I tried again this morning, searching for “Brooklin Pour House”, and got one link: a parked domain at GoDaddy.com. Perhaps they’re listed under a different name, but it boggles the imagination to see a new business today that doesn’t already have a web presence…

Update, 13 January, 2013: Good news! The owners have created a Facebook page:

Hi Everyone…
Thanks for visiting our Facebook Page! We’re excited to have our Grand Opening in the New Year and hope you will join us for some Wine and incredible Cuisine.
Check back for updates and thank you again for stopping by!
Sincerely,
Brooklin Pour House

Update, 4 June, 2013: There’s now a bare-bones website at http://brooklinpourhouse.com. In the Brooklin tradition, where no business seems to open without at least one direct competitor opening at the same time, here’s another bare-bones website for the 1847 Wine & Beer Bistro, which is also supposed to open soon.

November 24, 2012

The disappointment of the WalMart protest

Filed under: Business, Politics, USA — Tags: , , , — Nicholas @ 11:11

Megan McArdle says that the turnout for yesterday’s nation-wide protest outside WalMart stores fell well short of expectations, but that this shouldn’t be surprising:

There’s an irony to labor organizing: the best time to get workers fired up is during economic downturns, but this is probably the worst time to actually organize them. People are most interested in union actions when jobs are scarce and they feel economically insecure, but of course, that’s when they can ill-afford to take economic changes. Unions made big gains during the Great Depression, to be sure, but they had a host of new laws and a labor-activist FDR administration throwing heavy weight behind those efforts. Without that political help, it’s hard to see how unions could have made such big gains — and of course, arguably, the higher wages that FDR’s policies pushed for helped prolong the Great Depression.

Recessions are also a time when employers don’t necessarily have a lot of profits to give up. Walmart’s $446 billion of revenue last year was eye-popping, but its profit margins are far from fat — between 3% to 3.5%. If they cut that down by a percentage point — about what retailers like Costco and Macy’s have been bringing in — that would give each Walmart employee about $2850 a year, which is substantial but far from life-changing. Further wage improvements would have to come out of the pockets of Walmart’s extremely price conscious shoppers. Which might be difficult, given how many product categories Amazon is pushing into.

The other potential strategy is to mobilize those customers — to cost Walmart business unless they up their wage-and-benefit game. But the Black Friday bargain hunters apparently simply pushed past the scattered protests in search of cheap flat-screen televisions — and the progressives who seem most on fire about this campaign are not really very likely to be Walmart shoppers. Which could be a metaphor for the whole US labor movement.

November 23, 2012

Google the latest whipping boy in Australia over taxation

Filed under: Australia, Business, Europe, Government, Law — Tags: , , , , — Nicholas @ 09:53

Even if you scrupulously obey the multiple jurisdictional laws to legally minimize the amount of tax you pay, politicians can’t resist the opportunity to pillory you for not paying your “fair share”:

The Minister’s explanation of Google’s tax affairs is as follows:

    “While the day-to-day dealings of Australian firms advertising on Google might be with Google Australia, under the fine print of contracts Australian firms sign with Google, they are actually buying their advertising from an Irish subsidiary of Google.

    It is then argued that the source of this income — and therefore the taxing rights under our tax treaty — would be with Ireland rather than Australia. Despite Ireland’s relatively low company tax rate of 12.5 per cent, we have just started to build the sandwich.

    The next step is to route a royalty payment from the Irish operating subsidiary of Google to a Dutch subsidiary of Google, which is then paid back to a second Irish holding company subsidiary of Google that is controlled in Bermuda, which has no corporate tax.

    The first Irish subsidiary receives a tax deduction for the royalty payment to the Dutch subsidiary, substantially reducing the income subject to the 12.5 per cent Irish company tax rate.

    Under Dutch law, and because EU member countries do not charge withholding taxes on transfers within the EU, the transfers to and from the Netherlands are essentially tax free.

    And under Irish tax law, the second Irish resident subsidiary is not taxed on the royalty payment because it is controlled by managers elsewhere.

    The profits from the sale of advertising to an Australian firm then sit in a tax-free jurisdiction — possibly indefinitely.”

Tax lawyers — especially those who work on multinational levels — don’t create these situations out of whole cloth: it’s the politicians and revenue ministries that set up and maintain the tax rules. Corporations are legally required to pay taxes (as are individuals), but corporations are also legally required to conduct themselves in ways that maximize the profits for their shareholders. Finding ways to legally pay tax at a lower rate is a requirement. That companies like Apple and Google are big enough to take advantage of the “loopholes” deliberately created by the tax authorities is not a reason to bash Apple or Google. They can only take advantage of “loopholes” because this or that government tried to rig the system in a particular way. Changing or threatening to change the rules retrospectively is a really good way to indicate to foreign business that you really don’t want them operating in your territory.

Update: Snigger.

November 22, 2012

The Apple ad that tells the whole truth

Filed under: Business, Humour, Media, Technology — Tags: , — Nicholas @ 08:55

The Commercial that Apple never wanted to show us, but today I’m going to show it to you 😀 I highly recommend to watch it 🙂 It’s short and sweet.

November 20, 2012

Microsoft’s essential problem

Filed under: Business — Tags: , , , , , , — Nicholas @ 09:43

ESR explains why Microsoft has been languishing in the doldrums for the past several years:

This is why Microsoft looks so doomed and desperate. Yes, Steve Ballmer is a colossal fool who has never met a strategic decision he couldn’t bungle, but in an important way that is symptom rather than cause. Dysfunctional leaders arise from dysfunctional cultures; the problem behind Ballmer is that Microsoft’s culture is broken, and the problem behind that is that the monopolistic/authoritarian goals around which Microsoft’s culture was constructed are incompatible with any other kind of excellence.

A more poetic way to put this is Tolkien’s “Oft evil will shall evil mar.” Google’s “Don’t be evil” isn’t mere idealism or posturing, it’s an attempt to sustain the kind of culture in which excellence is possible. (Whether and how long this will be a successful attempt is a different question.)

Apple’s turn is next.

November 17, 2012

“3D printing will be bigger than the web”

Filed under: Business, Technology — Tags: , , , , — Nicholas @ 12:46

While I’m not quite willing to go as far as Chris Anderson (quoted above), I do think 3D printing is going to be a fantastic development in our very-near future:

Chris Anderson has exited one of the top jobs in publishing — Editor-in-Chief of Wired magazine — to pursue the life of an entrepreneur, making a big bet that 3D printers represent a massive new phase of the industrial revolution.

He spoke at a Wired “Culturazzi” event, at the Marriott Union Square and to sign copies of his latest book: Makers: The New Industrial Revolution.

Mr Anderson is always an excellent speaker and his talk covered the beginnings of the Industrial Revolution, which he picked out as the invention of the Spinning Jenny in 1764 — a hand powered machine for spinning yarn.

I’d have pinned the start of the Industrial Revolution to the invention of the steam engine and its ability to power large numbers of machines thus enabling the first factories — which represented aggregated labor energy. Scale makes factories viable.

But I can see why Mr Anderson would favor the Spinning Jenny as it was a high-tech machine that was kept in a home — just as 3D printers are home based, completing a neat cycle of history.

November 15, 2012

Fisking the Williams-Sonoma catalog

Filed under: Business, Food, Humour — Tags: , — Nicholas @ 13:22

Drew Magary made a critical mistake once, paying for an overpriced Williams-Sonoma cheese grater with a credit card, thus ending up with yet another glossy catalog landing in the mailbox every year. “Every holiday season, my mail slot gets bukkake’d with monstrous catalogs packed with shit I would never, ever buy, and the W-S catalog stands out among them.”

Inspired by the offerings of the Williams Sonoma catalog, Drew responds to some of the juiciest items:

Item #02-4381232 Acorn Twine Holder

Williams-Sonoma says: “Polished alderwood with 76 yards of linen twine. Made in Italy.”

Price: $26

Notes from Drew: Oh, thank God! Thanksgiving was mere weeks away and I was like OH FUCK, WE’RE OUT OF TWINE. AND WE HAVE NO PLACE TO DISPENSE SAID TWINE. Sure, any asshole can go to the store and buy a roll of cooking string for half a penny and keep that twine in a drawer for the one time per year someone in the house has to tie up a raw turkey only to fail miserably and get salmonella deep inside his palms for years and years. But I want CLASSY twine, you know? I want my twine to say something about ME.

[. . .]

Item #02-741009 Callie’s Charleston Biscuits

Williams-Sonoma says: “Flaky, buttery, and made by hand by celebrated caterer Callie White.”

Price: $72 (set of 24)

Notes from Drew: That’s $72 dollars for biscuits. At Popeye’s, the biscuit comes free with your order. At Williams-Sonoma, it costs you the rough equivalent of your phone bill. How good could these biscuits possibly be? There’s a threshold past which biscuits cannot improve. Even the best goddamn biscuit in the world isn’t $72 better than a Popeye’s biscuit. Unless that biscuit can make you teleport.

And what kills me is that there are clearly people out there who have shitloads of money and NO cooking skills who order this shit. Who are these people? How are there so many of them that Williams-Sonoma can sustain its business model? Are we all just racking up massive biscuit debts that will soon break the economy? I imagine that 60 percent of Williams-Sonoma’s business come from a group of six Persian oil barons, who buy everything in every catalog five times over every year for no good reason at all. Seventy-two-dollar biscuits. WHAT THE FUCK.

[. . .]

Item #02-410423 Assumption Abbey Fruitcake

Williams-Sonoma says: “Baked by trappist monks at a monastery in the Missouri Ozarks. Order early. Supply is limited.”

Price: $39.95

Notes from Drew: Everything about that sales copy just blew my skull. There are trappist monks in the Ozarks? Do they brew artisanal meth? I don’t trust fruitcake to begin with. I sure as shit am not trusting fruitcake that comes from a redneck friar. They’ll swap out uppers for candied fruit. And yet, supply is limited. Apparently, the market for $40 Ozark fruitcake is ENORMOUS. White women from Bridgehampton ALL THE WAY to Westhampton rely on the monks to deliver their holiday fruitcake every year. Ina Garten’s ADORABLE HUSBAND JEFFREY WHO MAKES A LOT OF MONEY loves the sight of a fine white-trash-monk fruitcake any time he comes home. TIE IT UP WITH THE TWINE!

H/T to John Kovalic for the link.

November 14, 2012

Enter the real Facebook business model

Filed under: Business, Technology — Tags: , , — Nicholas @ 10:13

Facebook is changing, and lots of folks have ideas about what it is changing into. Here’s Dalton Caldwell‘s interpretation of the new business model:

Several prominent people are up in arms about Facebook charging for access to users who have already Liked their page.

I believe this debate is missing the big picture, and what we are in fact witnessing is the unfurling of the full-fledged Facebook business model. Facebook is showing us how they will cross the chasm from low-CTR low-CPM ad-units into what investors have been waiting for since the beginning: a Facebook analogue to Google Adwords.

[. . .]

From a Facebook user perspective, we don’t really know how the algorithm works, and are already trained to understand that some things magically show up our newsfeed and some things don’t. If a normal user sees that one of their friends bought a LivingSocial deal at the top of their feed, they may/may not click on it, but they certainly won’t question how it got there.

Facebook newsfeed is an embodiment of our war on noise. We depend on the newsfeed optimizer to protect our limited attention span, and as a consequence, Facebook gets to choose what stories we do and don’t see, just as Google chooses which search results we do and don’t see. Conceptually, this seems very lucrative: Facebook is auctioning off our limited attention span to the highest bidder, as long as the bidder has a candidate newsstory to promote.

This is what Like-gate is about.

Welcome to the attention economy.

H/T to Tim O’Reilly for the link.

November 10, 2012

Minimum wage and “living wage”

Filed under: Britain, Business, Economics — Tags: , , , — Nicholas @ 10:47

Tim Harford discusses the image and reality of Britain’s campaign for “living wages”:

Living wage?

The minimum wage, £6.19 an hour for those 21 and over, is a legal obligation. The living wage, £8.55 an hour in London and £7.45 an hour elsewhere, is the result of a very successful publicity campaign and can count Ed Miliband and Boris Johnson among its advocates. There are no legal sanctions for paying less than the living wage, although Mr Miliband did announce plans to “name and shame” those companies who didn’t. Apparently that is helpful, because “name” rhymes with “shame”.

Why do campaigners say that you can’t live on the minimum wage?

Try living on £6.19 an hour and see how you get on.

For an economist you’re getting very high-minded all of a sudden.

I think it’s perfectly reasonable to point out that £6.19 an hour isn’t a lot of money. £8.55 an hour isn’t a lot of money, either, but a lot of people have to get by on less. Unfortunately we economists have to ask awkward questions — for instance, whether these campaigns are likely to help people without much income.

[. . .]

Perhaps we should just raise the legal minimum wage to the same level as the living wage.

Perhaps. Perhaps we should raise the legal minimum wage to a £100m an hour. I think if we did we’d find unemployment might rise. A minimum wage does two things. It will shift money from employers in an imperfectly competitive market to low-paid workers and it will induce some employers to sack workers, even if both employer and employee would prefer a deal struck at an illegally-low wage rate. There’s a case that for the good of low-paid workers, there should be no minimum wage at all. There should be one but it needs to be modest if it isn’t to cause too much unemployment.

Is there any evidence on the right level?

There’s lots, and it is mixed, but on balance it’s in favour of the idea that if you raise the cost of employing people, fewer people will be employed. It is worth bearing in mind that, for a lowly paid worker shifting from job to job, having less work available but at a high hourly rate, isn’t a bad deal. The concern has to be that certain types of people — especially young unskilled workers — will be shut out completely and denied the chance to learn on the job.

November 4, 2012

Rethinking software patents

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

Software patents are becoming a clear and present danger to innovation:

The basic problem being that there are so many patents, covering so many things, that the system is in danger of eating itself like Ourobouros.

    When Dan Ravicher of the Public Patent Foundation studied one large program (Linux, which is the kernel of the GNU/Linux operating system) in 2004, he found 283 U.S. patents that appeared to cover computing ideas implemented in the source code of that program. That same year, it was estimated that Linux was .25 percent of the whole GNU/Linux system. Multiplying 300 by 400 we get the order-of-magnitude estimate that the system as a whole was threatened by around 100,000 patents.

    If half of those patents were eliminated as “bad quality” — i.e., mistakes of the patent system — it would not really change things. Whether 100,000 patents or 50,000, it’s the same disaster. This is why it’s a mistake to limit our criticism of software patents to just “patent trolls” or ”bad quality” patents. In this sense Apple, which isn’t a “troll” by the usual definition, is the most dangerous patent aggressor today. I don’t know whether Apple’s patents are “good quality,” but the better the patent’s “quality,” the more dangerous its threat.

It’s near impossible to develop new software when there are so many such patents out there. Further, even if you tried to get clearance (or signed up to licenses and so on) to use them it would be near impossible.And we do need to recall what the purpose of a patent system is. No, it isn’t to provide and income to those who create inventions. That’s only the proximate aim: the ultimate aim is to maximise the amount of invention and innovation.

The economics of patents accepts that there is a tradeoff here. Yes, we’d like people who come up with useful new things to make money. Because that incentivises people to work on coming up with interesting new things to all our benefit. However, we also want people to be able to create derivative innovations and inventions. If our protection of the original inventors is too strong then we limit this. What we want is a system that hits the sweet spot, of encouraging the maximum amount of both, original and derivative. The problem of course being that to encourage one we weaken the incentives to do the other, either way around.

November 3, 2012

Contract law and brown M&Ms

Filed under: Business, Law, Media — Tags: , , — Nicholas @ 09:40

What is it about Van Halen and their notorious demand for non-brown M&Ms in their contracts? It’s actually rather clever:

Take Van Halen, for example. On the surface, the group is famous not only for its music but also for stunts such as trashing green rooms over the presence of brown M&Ms, and it’s easy to write off such behavior as simply being symptomatic of a 1980’s rock diva mentality. In reality, however, the brown M&Ms served an important purpose from a contracting perspective.

Think about it- wouldn’t it be nice to have an easy way to observe whether your counterparty has paid attention to all of the details of a complicated contract? As it turns out, the brown M&Ms served exactly this function. [. . .]

Since Van Halen’s (long) tour rider stipulated M&Ms with the brown ones taken out, the group knew that they needed to double check a lot of safety items for the show if they saw brown M&Ms (or no M&Ms, for that matter) in the backstage area. They also knew that they could feel comfortable that the contract provisions had been fulfilled if they saw a bowl of M&Ms with the brown ones removed. (I’m pretty sure that trashing stuff was for some combined purpose of making the incident memorable and entertaining one’s self.) This is pretty smart, since it’s far more efficient to use this as a signal (the canary in the coal mine, in a way) rather than go around and check everything at each show. It’s even smarter that the signal was crafted in the fashion of typical rock star douchebaggery so as to not arouse suspicion.

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