This is an old rule of thumb, no more, from an experienced waitron unit.
The table that orders a starter, main and a bottle of wine – that just about breaks even for the restaurant. You can mix and match this a bit. Dessert instead of the starter, that sorta thing. But the costs of the building, the staff, the electricity, the stock that goes off, the cost of capital itself, all those things, mean that the basic restaurant experience just about covers its costs.
It’s the having the one thing extra that makes the money, the profit. A drink before the meal, having both a starter and a dessert to add to the main. The second bottle of wine, or the digestif with the coffee. This is why the waiter is so eager for you to have any one or more of these “extras”. The margin over food costs – food costs usually being around 30% of menu price – on those additions is exactly what provides a profit to the business that is the restaurant.
As to why, well, it’s the same reason that the menu prices of some well known item are going to be roughly the same across restaurants. Competition is fierce in the business. That means headline prices are pushed down to where they only just, if even that, cover costs. On exactly the same basis as Ryanair charging you spit for the seat and then a fortune for the air you breathe onboard. You get the punter in with the £20 for two steak dinners then hope like Hell they order the vanilla soup and also the vegetable ice cream in order to make your nut.
Tim Worstall, “Bar Owner Complains Of People Drinking Tap Water – Oi! Where’s My Profits?”, Continental Telegraph, 2019-05-27.
March 4, 2023
QotD: Profit margins in the restaurant trade
February 6, 2023
QotD: US railroad land grants
The speech was widely reprinted by those skeptical of government pork barrel (a term that first became popular about the time Knott gave his speech). Sixteen years later, Northern Pacific, which received what was probably the largest land grant to a private company in American history, reprinted the speech in this brochure.
This might seem strange except that NP annotated the speech with recent facts in bright red letters, such as that Duluth had grown to house 26,000 people by 1886, that more wheat was delivered to Duluth each year than to any other American city, and that it also saw deliveries of millions of board feet of lumber and hundreds of thousands of tons of iron ore each year.
NP didn’t say so in so many words, but its point was clearly that the land grants, contrary to Knott’s predictions, were a good thing for most if not all Americans. However, the brochure also didn’t mention that James J. Hill was proving that a railroad that didn’t receive any land grants or subsidies could provide just as many benefits without going bankrupt, which would leave both investors and taxpayers in the lurch. (The St. Paul & Pacific did receive a small land grant, but Hill paid fair market value for that railroad and land after it went bankrupt, thus Hill didn’t particularly benefit from the subsidy.)
Train Lover (Randal O’Toole), “Debate Over Railroad Land Grants”, Streamliner Memories, 2022-11-01.
February 4, 2023
A lobster tale (that does not involve Jordan Peterson)
In the latest Age of Invention newsletter, Anton Howes relates some of his recent research on the Parliament of 1621 (promising much more in future newsletters) and highlights one of the Royal monopolies that came under challenge in the life of that Parliament:
European lobster (Hommarus gammarus)
Photo by Bart Braun via Wikimedia Commons.
One of the great things about the 1621 Parliament, as a historian of invention, is that MPs summoned dozens of patentees before them, to examine whether their patents were “grievances” — illegal and oppressive monopolies that ought to be declared void. Because of these proceedings, along with the back-and-forth of debate between patentees and their enemies, we can learn some fascinating details about particular industries.
Like how 1610s London had a supply of fresh lobsters. The patent in question was acquired in 1616 by one Paul Bassano, who had learned of a Dutch method of keeping lobsters fresh — essentially, to use a custom-made broad-bottomed ship containing a well of seawater, in which the lobsters could be kept alive. Bassano, in his petitions to the House of Commons, made it very clear that he was not the original inventor and had imported the technique. This was exactly the sort of thing that early monopoly patents were supposed to encourage: technological transfer, and not just original invention.
The problem was that the patent didn’t just cover the use of the new technique. It gave Bassano and his partners a monopoly over all imported lobsters too. This was grounded in a kind of industrial policy, whereby blocking the Dutch-caught lobsters would allow Bassano to compete. He noted that Dutch sailors were much hardier and needed fewer provisions than the English, and that capital was available there at interest rates of just 4-5%, so that a return on sales of just 10% allowed for a healthy profit. In England, by comparison, interest rates of about 10% meant that he needed a return on sales of at least 15%, especially given the occasional loss of ships and goods to the capriciousness of the sea — he noted that he had already lost two ships to the rocks.
At the same time, patent monopolies were designed to nurture expertise. Bassano noted that he still needed to rely on the Dutch, who were forced to sell to the English market either through him or by working on his ships. But he had been paying his English sailors higher wages, so that over time the trade would come to be dominated by the English. (This training element was a key reason that most patents tended to be given for 14 or 21 years — the duration of two or three apprenticeships — though Bassano’s was somewhat unusual in that it was to last for a whopping 31.)
But the blocking of competing imports — especially foodstuffs, which were necessaries of life — could be very controversial, especially when done by patent rather than parliamentary statute. Monopolies could lawfully only be given for entirely new industries, as they otherwise infringed on people’s pre-existing practices and trades. Bassano had worked out a way to avoid complaints, however, which was essentially to make a deal with the fishmongers who had previously imported lobsters, taking them into his partnership. He offered them a win-win, which they readily accepted. In fact, the 1616 patent came with the explicit support of the Fishmongers’ Company.
It sounds like it became a large enterprise, and I suspect that it probably did lower the price of lobsters in London, bringing them in regularly and fresh. With a fleet of twenty ships, and otherwise supplementing their catch with those caught by the Dutch, Bassano boasted of how he was able to send a fully laden ship to the city every day (wind-permitting). This stood in stark contrast to the state of things before, when a Dutch ship might have arrived with a fresh catch only every few weeks or months, and when they felt that scarcity would have driven the prices high.
January 14, 2023
More on the Barnes & Noble turnaround
In the latest SHuSH newsletter, Ken Whyte looks at the Barnes & Noble recovery story (discussed a couple of weeks back):
“Barnes & Noble Book Store” by JeepersMedia is licensed under CC BY 2.0 
.
Back in 2018, the bookselling chain was losing $18 million a year. It had just fired 1,800 full-time employees. About 150 stores had been closed, leaving the company with 600. It had lost its fourth CEO in five years, this one to a sexual-harassment charge. The firm’s big digital initiative, the Nook e-reader, was a flop. The share price was down 80 percent.
Not only was the business failing: it was demoralized. As the writer Ted Gioia noted in a recent newsletter, B&N had lost faith in the public’s willingness to buy books from anyone but Amazon. Its leadership “shifted a huge portion of its floorspace to peddling toys, greeting cards, calendars, and various tchotchkes”. It doubled down on in-store cafes and even tried launching freestanding Barnes & Noble restaurants.
Just when it seemed B&N was certain to follow the path of its former competitor, the Borders chain, which closed in 2011, it was purchased for $638 million (US) by Elliott Advisors, a hedge fund.
SHuSH has been skeptical about the record of hedge funds in the cultural space. We are also skeptical of hedge funds in the retail space where they have a well-established record of buying chains, slashing costs, and driving them into the ground: Sears, Toys R Us, Payless Shoes, Radio Shack, Aeropostale, Sports Authority, etc.
Elliott Advisors is an exception.
The UK based-firm has a demonstrated commitment to bookselling (at least in the medium term — more on this later). It bought the Waterstones chain in 2018. Waterstones and its 283 stores had been rescued from near-bankruptcy in 2011 by lifelong bookseller James Daunt and a Russian backer. Elliott kept Daunt at the helm and a year later bought Barnes & Noble and added this second chain to his responsibilities.
Daunt acknowledged that Barnes & Noble was in rough shape when acquired by Elliott. Its stores were “crucifyingly boring”. But he was confident the chain could be turned around. There was no template or magic ingredient, he said. It was a simple matter of “running really nice bookshops”. To that end, he gives his stores unusual autonomy to develop their own personalities and tailor their stock to the interests of their communities.
Barnes & Noble stores have since dropped most of their crap: they no longer look like big-box flea markets. They’ve quit accepting payments from the major publishers to put their books on display, a practice that brought B&N revenue but left publishers in charge of what customers saw when they walked into stores. Local managers now decide how their books are presented based on what they think will appeal to their customers.
The company used the COVID lockdown to freshen up its dowdy stores. Managers were instructed to take every single book off the shelves and “weed out the rubbish”. Walls were painted, aged carpet replaced, furnishings upgraded. The result is a much improved browsing experience. Readers like to browse.
There were hard decisions, too. Daunt cut the B&N head office staff in half and shed about 5,000 of 30,000 employees.
All in all, it worked. Last spring, The New York Times reported that sales were up and costs were down at Barnes & Noble and that “the same people who for decades saw the superchain as a supervillain are celebrating its success. In the past, the book-selling empire, with 600 outposts across all 50 states, was seen by many readers, writers and book lovers as strong-arming publishers and gobbling up independent stores in its quest for market share … Today, virtually the entire publishing industry is rooting for Barnes & Noble — including most independent booksellers. Its unique role in the book ecosystem, where it helps readers discover new titles and publishers stay invested in physical stores, makes it an essential anchor in a world upended by online sales and a much larger player: Amazon.”
There are not a lot of reliable financial numbers available on Barnes & Noble because it is no longer a public company, but it reports that its 2021 sales in were up 3 percent over pre-pandemic times. Most importantly, sales of books were up 14 percent.
December 30, 2022
Barnes & Noble used to be like an even more boring Indigo … but they’ve been turned around
Back when my job required more travel, one of the things I used to look forward to was visiting US bookstores, as they always had a wider and more interesting stock than our staid Canadian equivalents. Over time, the interesting local bookstores got harder and harder to find as the big box stores like Borders and Barnes & Noble took over much of their customer base. Of the two, I much preferred going into a Borders store, as they had better stock than B&N and the staff seemed friendlier and (generally) more helpful to clueless foreigners like me. Borders went under around the same time my business travels to the US tapered off and it looked like it was only a matter of time for B&N to follow it into bankruptcy. Even if it struggled on, surely the pandemic killed off what Amazon left behind? Ted Gioia says not so fast:
“Barnes & Noble Book Store” by JeepersMedia is licensed under CC BY 2.0 .
But Barnes & Noble is flourishing. After a long decline, the company is profitable and growing again — and last week announced plans to open 30 new stores. In some instances, they are taking over locations where Amazon tried (and failed) to operate bookstores.
Amazon seems invincible. So the idea that Barnes & Noble can succeed where its much larger competitor failed is hard to believe. But the turnaround at B&N is real. In many instances they have already re-opened in locations where they previously shut down.
Barnes & Noble tried exactly the same sort of “re-imagining” of their stores that Canada’s Indigo chain is currently floundering with: cutting back on the floorspace devoted to books in favour of throw cushions, candles, decorations, bath salts, scarfs and towels. It worked just as badly for B&N as it is working for Indigo: it chases out the primary customer base (book-buyers) in favour of bored people looking to waste away an hour or two just browsing tchotchkes. (And if you can find an Indigo staff member to ask about a particular book, they almost always assure you that you can find it on their website, which I’m sure helps bring more people into the store …) In desperation, B&N looked to expand into a very different market:
… in a bizarre strategic move, the company decided to launch freestanding restaurants under the name Barnes & Noble Kitchen — no books, just meals. But this was another disaster.
The company chairman Leonard Riggio eventually admitted, in September 2018, that running a restaurant is “a lot harder than you think it is … The bottom line is awful.”
Given the incredibly short and profitless life of most start-up restaurants, that really does qualify as a “No shit, Sherlock” moment. So how did Barnes & Noble turn things around?
It’s amazing how much difference a new boss can make.
I’ve seen that firsthand so many times. I now have a rule of thumb: “There is no substitute for good decisions at the top — and no remedy for stupid ones.”
It’s really that simple. When the CEO makes foolish blunders, all the wisdom and hard work of everyone else in the company is insufficient to compensate. You only fix these problems by starting at the top.
In the case of Barnes & Noble, the new boss was named James Daunt. And he had already turned around Waterstones, a struggling book retailing chain in Britain.
Bringing in fresh blood can be a life-saver for a business, but we also have that expression about deck chairs on the Titanic in common business parlance, so just being “new” isn’t enough … new leaders must also bring new approaches and fresh ideas:
But the most amazing thing Daunt did at Waterstones was this: He refused to take any promotional money from publishers.
This seemed stark raving mad. But Daunt had a reason. Publishers give you promotional money in exchange for purchase commitments and prominent placement — but once you take the cash, you’ve made your deal with the devil. You now must put stacks of the promoted books in the most visible parts of the store, and sell them like they’re the holy script of some new cure-all creed.
Those promoted books are the first things you see when you walk by the window. They welcome you when you step inside the front door. They wink at you again next to the checkout counter.
Leaked emails show ridiculous deals. Publishers give discounts and thousands of dollars in marketing support, but the store must buy a boatload of copies — even if the book sucks and demand is weak — and push them as aggressively as possible.
Publishers do this in order to force-feed a book on to the bestseller list, using the brute force of marketing money to drive sales. If you flog that bad boy ruthlessly enough, it might compensate for the inferiority of the book itself. Booksellers, for their part, sweep up the promo cash, and maybe even get a discount that allows them to under-price Amazon.
Everybody wins. Except maybe the reader.
Daunt refused to play this game. He wanted to put the best books in the window. He wanted to display the most exciting books by the front door. Even more amazing, he let the people working in the stores make these decisions.
This is James Daunt’s super power: He loves books.
“Staff are now in control of their own shops”, he explained. “Hopefully they’re enjoying their work more. They’re creating something very different in each store.”
This crazy strategy proved so successful at Waterstones, that returns fell almost to zero — 97% of the books placed on the shelves were purchased by customers. That’s an amazing figure in the book business.
On the basis of this success, Daunt was put in charge of Barnes & Noble in August 2019. But could he really bring that dinosaur, on the brink of extinction, back to life?
December 23, 2022
Remember when ending “Net Neutrality” was going to be the death of the internet?
Peter Jacobsen answers a reader question about the now almost forgotten doomsday scenario for the internet that was the ending of “Net Neutrality” in 2017:
To answer this question, we have to wind back the clock to 2017. Then-chair of the Federal Communications Commission (FCC) Ajit Pai successfully led an effort to repeal a set of 2015 regulations on Internet Service Provider (ISP) companies originally put into place by the Obama Administration.
The simplest summary of net neutrality regulations is that they required ISPs to enable access to content on the internet at equal speeds and for equal costs. For example, your ISP charging you to get faster speeds on YouTube or blocking High Definition access on Netflix would be examples of violations of net neutrality.
The idea of paying your ISP extra to have access to certain websites is a scary one, but it appears the worst fears associated with the end of net neutrality were overstated. To some extent proponents of net neutrality are the victim of their own apocalyptic marketing.
The Rumors of the Internet’s Death Were Greatly Exaggerated
If you spent any time on the internet during the death of net neutrality, it was hard to miss it. On July 12, 2017 websites across the internet coordinated their messages for the “battle for the net.”
Websites including Amazon, Netflix, YouTube, and Reddit called their users to fight for “a free and open internet”.
On Twitter, #SaveTheInternet thrived, seemingly implying the internet itself was facing an existential threat.
The repeal of #NetNeutrality officially goes into effect today, but the fight is far from over.
The people saying we can’t pass the resolution to #SaveTheInternet in the House are the same people who were saying we couldn’t do it in the Senate.
Ignore them. Just keep fighting.
— Ed Markey (@SenMarkey) June 11, 2018
After the decision by the FCC, CNN briefly declared it was “the end of the internet as we know it”.
Unfortunately for all kinds of doomsday prophets, extreme rhetoric always looks silly in hindsight when it fails to pan out.
Obviously we aren’t seeing ISPs charge users different amounts to use different websites in any systematic way. There’s no “pay your ISP to access Hulu” package yet. So already it’s clear some of the doom and gloom was over-hyped.
Fears of ISPs offering “fast lanes” to make users pay more for better service don’t seem to have materialized either. The only example of this sort of thing I could find was a Cox Communications trial of an “Elite Gamer” service. But this service was unlike the “fast lanes” hyped up by net neutrality proponents in that it never offered a less throttled experience and would have been permissible under the old net neutrality rules.
One of the biggest concerns about the repeal of these regulations was that it would lead ISPs to favor their own services. For example, AT&T owns Time Warner and HBO Max. In theory, AT&T could silently throttle speed to competing streaming platforms like YouTube and Netflix, thereby destroying competition.
December 7, 2022
Facebook’s strategy for collapse
Ted Gioia clearly isn’t a Facebook fan — and I sympathize, having lost access to my Facebook account a few years ago — but it’s not just people like us that have contributed to Facebook’s epic decline:
Most companies fail because of competition. They simply aren’t fast enough or smart enough to keep up with the marketplace.
But the big web platforms aren’t like that.
In many instances, they are quasi-monopolies. They are so big and powerful that they hardly need to worry about competition.
After all, who can match Google for search? Who can beat Amazon for online shopping? Who does more to keep you connected with family and friends than Facebook? Who helps you clean out the junk in your garage better than eBay?
But even the most dominant players can falter. There was a point in living memory when Sears controlled 30% of all retail spending in the US. I’m not exaggerating: three out of every ten dollars were spent at Sears.
Sears once operated 3,500 stores. Today only 22 are left. Many of my readers have never seen the inside of a Sears store.
This happened because Sears was so big that it didn’t need to worry about competitors.
That sounds impossible. How can you fail by being too powerful? But this has happened in many instances, even on the web. There was a day when Yahoo was the leader in search. There was a day when MySpace was the dominant social network. There was a day when Tumblr was the place to share photos.
There was even a day when the two companies in total control of your access to the Internet were called Netscape and America Online.
Not anymore.
This has happened before and will happen again. The bigger they are, the harder they fall.
[…]
The situation at Facebook is now uglier than MC Hammer’s wardrobe closet. Meta is the worst performing stock in the S&P 500 this year. In other words, there were 499 other companies in the composite that did better — and this was a tough year all around in financial markets.
Mark Zuckerberg has personally lost more than $100 billion. In fact, he lost $11 billion in a single day. Has that ever happened before in human history? Almost exactly 12 months earlier, I’d written an article entitled “Meta Is for Losers” — but even I never envisioned losses on this scale,
Of course, there are many losers in this story — including the 11,000 workers who got fired a few days ago.
What’s going on?
You probably think that this is the result of Zuckerberg’s fool’s bet on the Metaverse. That’s what everybody is saying. But as we shall see, the Metaverse is just a symptom not a cause.
I can actually explain the problem in one sentence:
Instead of serving users, the dominant company decides it’s better to control them.
This would never occur to a small business. The owner of your neighborhood deli or gas station has no grand plans to control people — for the simple reason that this is an impossible dream.
That’s the reason why they say: “The customer is always right.” It’s not because the customer isn’t often wrong. Customers are frequently wrong — go listen to them sometimes and cringe at the stuff they demand. But if you’re in business, you must act as if they’re right even when they aren’t. And you do learn things by listening, even (or especially) when their demands are excessive.
By the way, you succeed by listening in every sphere of your life — starting at home.
There’s a good reason why students at hospitality school are told never to use the word never — or “no” or “can’t” or “impossible” — when talking to clientele. Instead of saying: “No way, dude, we’re not putting mayonnaise on your pizza, that’s disgusting”, you offer something positive:
I wish we could do that, dude, because it does sound super tasty — but I will put extra mozzarella on your slice, and our high temperature oven will give it a kind of mayo texture.
That’s how you roll in retail.
But at Facebook, the customer is always wrong.
November 26, 2022
Indigo vastly prefers selling pillows, candles, and tchotchkes of all kinds rather than – ugh! – books
In the latest SHuSH newsletter, Ken Whyte explains why it’s becoming harder and harder to find actual books in Canada’s biggest bookstore chain … because they no longer want to be a bookstore chain:
“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0
We need to talk about Indigo. As you know, it’s Canada’s biggest bookstore chain, with 88 superstores and 85 small-format stores. It sells well over half the books that are bought in stores in Canada, with Walmart, Costco, and independent bookstores accounting for most of the rest.
One problem with Indigo is that it’s failing. The other problem is that it’s abandoning bookselling. Yes, that sounds like a Woody Allen joke, but it’s not funny from a publishing perspective. We depend on Indigo.
The company’s finances have been ugly for some time. It lost $37 million in 2019, $185 million in 2020, and $57 million in 2021. Things looked somewhat better in 2022 with a $3 million profit, but the first two quarters of 2023 are now in the books (it has a March 28 year end) and Indigo has already dropped $41.3 million.
[…]
Indigo hasn’t come right out and said we’re through with books. It can’t, given that Heather [Reisman] has spent the last twenty-five years building herself up as the queen of reading in Canada. Also, the Indigo brand is still associated with books in most people’s minds and that won’t change overnight no matter how many cheeseboards it stocks. So Heather talks about a gradual, natural transition: “We built a wonderful connection with our customers in the book business. Then, organically, certain products became less relevant and others were opportunities.”
To be clear, books are irrelevant; general merchandise is the opportunity. Heather recently appointed as CEO a guy named Peter Ruis who has no experience in books. He comes from fashion retail, most recently the Anthropologie chain, which sells clothing, shoes, accessories, home furnishings, furniture, and beauty products. Anthropologie was hot in 2008, and it seems to be where Indigo wants to go today.
Fair enough. You own a company, you can take it in any direction you want, so long as your shareholders will follow. I don’t blame Heather for having second thoughts about the book business. (I have them every week. It’s a tough business.) But where does that leave readers, writers, agents, publishers, and everyone else who remains committed to books?
You’ll recall that Indigo and Chapters, between them, decimated the independent bookselling sector in Canada in the nineties. They are the principal reason Canada has so few independent bookstores today. You could probably fit the combined stock of all our independents into a handful of Heather’s stores.
The federal government let Heather’s Indigo buy Larry Stevenson’s Chapters in 2001, which gave her a ridiculously large share of the market. That shouldn’t have happened.
At the same time, with the help of some lobbying by Heather, the federal government made it clear that the US chains, Borders and Barnes & Noble, weren’t welcome up here. The argument was that bookselling was a crucial part of our cultural sector and needed to be protected from foreign domination by the Canadian government.
In that spirit, Indigo also asked the federal government to prevent Amazon from opening warehouses in Canada. That request was denied in 2010, which is about when Indigo began its transition out of books.
One can see how Heather might feel betrayed by the federal government. Instead of protecting bookselling, it swung the door wide open for Amazon. You said I wouldn’t have to compete!
November 7, 2022
“We are the descendants of good team players”
Rob Henderson considers the Male-Warrior hypothesis:
The male-warrior hypothesis has two components:
- Within a same-sex human peer group, conflict between individuals is equally prevalent for both sexes, with overt physical conflict more common among males
- Males are more likely to reduce conflict within their group if they find themselves competing against an outgroup
The idea is that, compared with all-female groups, all-male groups will (on average) display an equal or greater amount of aggression and hostility toward one another. But when they are up against another group in a competitive situation, cooperation increases within male groups and remains the same among female groups.
Rivalries with other human groups in the ancestral environment in competition for resources and reproductive partners shaped human psychology to make distinctions between us and them. Mathematical modeling of human evolution suggests that human cooperation is a consequence of competition.
Humans who did not make this distinction — those who were unwilling to support their group to prevail against other groups — did not survive. We are the descendants of good team players.
It used to be accepted as a given that males were more aggressive toward one another than females. This is because researchers often used measures of overt aggression. For instance, researchers would observe kids at a playground and record the number of physical altercations that occurred and compare how they differed by sex. Unsurprisingly, boys push each other around and get into fights more than girls.
But when researchers expanded their definition of aggression to include verbal aggression and indirect aggression (rumor spreading, gossiping, ostracism, and friendship termination) they found that girls score higher on indirect aggression and no sex differences in verbal aggression.
The most common reasons people give for their most recent act of aggression are threats to social status and reputational concerns.
Intergroup conflict has been a fixture throughout human history. Anthropological and archaeological accounts indicate conflict, competition, antagonism, and aggression both within and between groups. But violence is at its most intense between groups.
A cross-cultural study of 31 hunter-gatherer societies found that 64 percent engaged in warfare once every 2 years.
Men are the primary participants in such conflicts. Human males across societies are responsible for 90 percent of the murders and make up about 80 percent of the victims.
The evolution of coalitional aggression has produced different psychological mechanisms in men and women.
Just as with direct versus indirect aggression, though, homicide might be easier to observe and track with men. When a man beats another man to death, it is clear what has happened. Female murder might be less visible and less traceable.
Here’s an example.
There’s a superb book called Yanoama: The Story of Helena Valero. It’s a biography of a Spanish girl abducted by the Kohorochiwetari, an indigenous Amazonian tribe. She recounts the frequent conflicts between different communities in the Amazon. After decades of living in various indigenous Amazonian communities, Valero manages to leave and describes her experiences to an Italian biologist, who published the book in 1965.
In the book, Helena Valero describes arriving in a new tribe. Some other girls were suspicious of her. One girl gives Valero a folded packet of leaves containing a foul-smelling substance. She tells Valero that it’s a snack, but that if she doesn’t like it she can give it to someone else. Valero finds the smell repulsive and sets it aside. Later, a small child picks up the leaf packet, takes a bite, and falls deathly ill. The child tells everyone that he got the leaf packet from Valero. The entire community accuses Valero of trying to poison the child, and banishes her from the tribe, with some firing arrows at her as she runs deep into the forest.
The girl who gave Valero the poisonous leaf packet formed a win-win strategy in her quest to eliminate her rival:
- Valero eats the leaf packet and dies
- Or she gives it to someone else who dies and she is blamed for it, followed by being ostracized or killed by the community
This is some high-level indirect aggression. Few men would ever think that far ahead (supervillains in movies notwithstanding). For most men, upon seeing a newcomer they view as a potential rival, they would just physically challenge him. Or kill him in his sleep or something, and that would be that.
Point is, this girl would have been responsible for Valero’s demise had she died. But no one would have known. If a man in the tribe, enraged at the death of the small child, had killed Valero, then he would be recorded as her killer. Or if Valero had been mauled by a jaguar while fleeing, then her death wouldn’t have been considered a murder.
Interestingly, the book implies that Valero was viewed as relatively attractive by the men, which likely means the girl who attempted to poison her was also relatively attractive (because she viewed her as a rival). Studies demonstrate that among adolescent girls, greater attractiveness is associated with greater use of aggressive tactics (both direct and indirect) against their rivals.
October 16, 2022
QotD: State monopolies
Richard Epstein, “The Intellectual Poverty of the New Socialists” [PDF], 2018.
October 8, 2022
Faint glimmers of hope for Canadians’ “right to repair”?
Michael Geist on the state of play in modifying Canada’s digital lock rules to allow consumers a tiny bit more flexibility in how they can get their electronic devices repaired:
“The Self-Repair Manifesto from ifixit.com ‘If you can’t fix it, you don’t own it’. Hear, hear!” by dullhunk is licensed under CC BY 2.0 .
Canadian anti-circumvention laws (also known as digital lock rules) are among the strictest in the world, creating unnecessary barriers to innovation and consumer rights. The rules are required under the World Intellectual Property Organization’s Internet Treaties, but those treaties leave considerable flexibility in how they should be implemented. This is reflected in the countless examples around the world of countries adopting flexible anti-circumvention rules that seek to maintain the copyright balance. Canada was pressured into following the restrictive U.S. approach in 2012, establishing a framework is not only more restrictive than required under the WIPO treaties, but even more restrictive than the U.S. system.
One of the biggest differences between Canada and the U.S. is that the U.S. conducts a review every three years to determine whether new exceptions to a general prohibition on circumventing a digital locks are needed. This has led to the adoption of several exceptions to TPMs for innovative activities such as automotive security research, repairs and maintenance, archiving and preserving video games, and for remixing from DVDs and Blu-Ray sources. Canada has no such system as the government instead provided assurances that it could address new exceptions through a regulation-making power. In the decade since the law has been in effect, successive Canadian governments have never done so. This is particularly problematic where the rules restrict basic property rights by limiting the ability to repair products or ensure full interoperability between systems.
The best policy would be to clarify that the anti-circumvention rules do not apply to non-infringing uses. This would enable the anti-circumvention rules to work alongside the user rights in the Copyright Act (also known as limitations and exceptions) without restricting their lawful exercise. This approach was endorsed by the 2019 Canadian copyright review, which unanimously concluded:
it agrees that the circumvention of TPMs should be allowed for non-infringing purposes, especially given the fact that the Nintendo case provided such a broad interpretation of TPMs. In other words, while anti-circumvention rules should support the use of TPMs to enable the remuneration of rights-holders and prevent copyright infringement, they should generally not prevent someone from committing an act otherwise authorized under the Act.
The government has not acted on this recommendation, but two private members bills are working their way through the House of Commons that provide some hope of change. First, Bill S-244 on the right of repair. Introduced by Liberal MP Wilson Miao in February, the bill this week passed second reading unanimously and has been referred to the Industry committee for further study. The lack of a right of repair exception in Canadian digital lock rules has hindered both consumers and Canadian innovation significantly, leaving consumers unable to repair their electronic devices and farmers often locked out of their farm equipment. After farmers protested against similar copyright restrictions, the U.S. established specific exceptions permitting digital locks to be circumvented to allow repair of software-enabled devices.
Given the impact on consumers, the agricultural sector, and the environment, a provision that explicitly permits circumvention for purposes of the right of repair in Canada is long overdue. Indeed, such an approach is consistent with the 2019 copyright review recommendation:
Recommendation 19
That the Government of Canada examine measures to modernize copyright policy with digital technologies affecting Canadians and Canadian institutions, including the relevance of technological protection measures within copyright law, notably to facilitate the maintenance, repair or adaptation of a lawfully-acquired device for non-infringing purposes.
July 19, 2022
Drawing the proper lessons from the massive Rogers outage earlier this month
In The Line, Matt Gurney explains the really important lesson that seems to have escaped a lot of the critics who covered the Rogers internet/cell/TV outage that took a third of the country offline for 24 hours or more:
Most of the conclusions reached after the Rogers telecommunication outage two weeks ago are wrong. Millions of people lost home internet, television and cellphone service for the better part of a day (some for much longer). For those who had all their services bundled with Rogers, this meant being entirely cut off, including from access to emergency services. It was a big deal, both in terms of lost economic productivity and for those Canadians who needed help and could not access it.
The problem isn’t with Rogers, though. The problem is with everyone else.
I don’t want to be misunderstood. Rogers is bad. It did have a big problem. I am not a fan. Their customer service is generally awful. Their reliability and performance is decidedly meh and the meh costs a fortune. So don’t take this column as some sort of apologia for Rogers. I am one of their customers, but I’m only one of their customers because none of the other options are much better.
But still. The lesson of two Fridays ago shouldn’t be that Rogers is bad. It also shouldn’t be that the CRTC is bad or that our politicians are spineless and that our regulators are thoroughly captured. All of those things are true, but they’re not the lesson. That wasn’t the failure of two Fridays ago. The failure of two Fridays ago was that when one of our telecom companies went down, a pretty horrifying cross-section of Canadian society had no back-up plan.
Let’s imagine an alternate universe where things in Canada simply functioned better. Close your eyes and just dream it up. You’re in a different Canada now. The CRTC is awesome. Our politicians are terrific. Rogers is an incredibly good company that is masterful at delivering services that are overwhelmingly reliable and affordably priced. Even in this increasingly far-fetched parallel timeline, no telecom company is going to bat a thousand. You will never have 100 per cent service reliability. This alternate Canada still has outages — maybe they’re rare and brief, but they’re not unheard of or impossible.
And that’s why we can’t look at what happened two weeks ago as a failure at Rogers. Obviously Rogers failed. But the real failure was a failure of imagination and planning on the behalf of millions of individuals, and a worryingly diverse set of institutions, that did not have a back-up plan.
July 11, 2022
Canadians deserve better than “core network maintenance problems” for critical cell phone and internet services
Our internet service provider, Rogers, suffered a major network failure early on Friday morning, taking down not just wired internet services, but also cable TV, and cell phone services and causing knock-on issues that utterly disrupted many emergency 911 services, government websites, banks (including ATM and point-of-sale terminals) and many more. I subscribe to both Rogers internet and Rogers cell phone services, but fortunately my wife has a different wireless phone provider so we weren’t completely offline all of Friday and most of Saturday. Michael Geist and his family weren’t as lucky:
Like many Canadians, I spent most of the massive Rogers outage completely offline. With the benefit of hindsight, my family made a big mistake by relying on a single provider for everything: broadband, home phone, cable, and wireless services on a family plan. When everything went down, everything really went down. No dial tone, no channels, no connectivity. Work was challenging and contact with the kids shut off. It was disorienting and a reminder of our reliance on communications networks for virtually every aspect of our daily lives.
So what comes next? We cannot let this become nothing more than a “what did you do” memory alongside some nominal credit from Rogers for the inconvenience. Canada obviously has a competition problem when it comes to communications services resulting in some of the highest wireless and broadband pricing in the developed world. Purchasing more of those services as a backup – whether an extra broadband or cellphone connection – will be unaffordable to most and only exacerbate the problem. Even distributing the services among providers likely means that consumers take a financial hit as they walk away from the benefits from a market that has incentivized bundling discounts. Consumers always pay the price in these circumstances, but there are policy solutions that could reduce the risk of catastrophic outages and our reliance on a single provider for so many essential services.
First, there is a need to better understand what happened and why. Rogers CEO says the problem lies with maintenance to the core network, which caused some routers to malfunction. But that’s just tech talk. Canadians deserve answers that explain not only how this happened, but how we find ourselves in a position where malfunctioning routers at one company cause a nationwide payment system to go down, government services to be taken offline, and emergency services to be rendered inaccessible. It is one thing for my household to make a mistake, but another for Interac to do so. That means conducting an open CRTC process into this outage alongside a Parliamentary hearing on the broader issues since this is a matter that requires both regulatory and political response. There is no need to wait: these hearings must happen this month with the goal of identifying the scope and source of the problem along with potential policies that might mitigate future harms.
Neither the CRTC nor the current government has shown much inclination to challenge the big telcos. CRTC Chair Ian Scott has reversed years of a consumer-focused Commission into one more comfortable supporting the big providers, while the government has been far more interested in sabre rattling or shaking down Internet companies than taking on big telecom. Yet as we were reminded on Friday, the linkage to the availability of essential services – payments, health care, government services – runs through the telcos, not the Internet companies.
This is the second object lesson in concentrated power in a small number of government-approved hands this year. Our first wake-up call was when the government prompted chartered Canadian banks to cut off some of their customers from all financial services even though no crimes had been committed and no charges were laid. It’s not clear how many people were affected, but arbitrarily denying people access to their bank accounts and credit cards should have rung alarm bells for many people. Now, we’ve been shown how dangerous it can be to allow a very small number of companies to divide the mobile phone and internet service market between them and use the power of government to keep out potential competitors. Will enough Canadians notice?
May 29, 2022
Approaching the “Chekhov’s gun” denouement in the Random Penguin-Simon & Schuster play
In the latest SHuSH newsletter, Kenneth Whyte updates us on the state of play in the long-running drama in the publishing world:
SHuSH readers know that back in November 2020, the fattest of the world’s five big publishing companies, Penguin Random House, outbid the second fattest, Rupert Murdoch’s HarperCollins, to acquire a listless third member of that group, Simon & Schuster.
Regulators in the UK, Canada, and the USA immediately began studying the $2.1-billion cash deal to determine if it would result in too much concentration of ownership and not enough competitiveness in the big leagues of book publishing. Last November, the US department of justice decided it would and sued to block it. A trial is expected this summer. Penguin Random House has until November to close the deal or it expires (with PRH owing S&S a dead-deal fee of $200-million).
For those of you who think in literary terms, the deal is Chekhov’s gun, and we’re coming in hard on the third act. Either S&S gets shot (acquired) or the play ends in an anticlimax (although whoever has been stewarding the deal at PRH may get shot by its parent company, Bertelsmann.)
If the deal fails, we’re in for a sequel because the current owner of S&S, Paramount (formerly ViacomCBS) won’t want it back. It is a motion picture/television company in the process of selling everything it owns not directly related to screen entertainment. It hopes to cement its status as a fourth-rate streaming service. S&S no longer fits, if it ever did.
Our view of the PRH-S&S deal is that the department of justice suit will fail to block the merger and S&S will be swallowed whole. It will be difficult to present the merger as the end of competition in the book industry when there are still four large publishers operating in the US, and a shitload of mid-size and smaller publishers. Combined, PRH&S&S may amount to less than a third of the American trade book market, and as little as 20 per cent, depending on how you do the math. That’s a long way from monopoly.
The DOJ, moreover, has chosen to fight its battle on low ground. It’s saying that the deal is bad for competition in books generally, but it is particularly concerned that the merger will result in less competition for the services of writers of anticipated top-selling books, loosely defined as authors commanding huge advances. You read that right: the DOJ is seeking justice for the .001% of the literary world. We argued all this at length, and destroyed the government’s case back in SHuSH 123.
May 28, 2022
“… the only thing that is history are any immediate hopes for a more competitive communications marketplace in Canada”
Michael Geist pans the latest official misinformation from the federal government on telecommunications legislation:
Innovation, Science and Industry François-Philippe Champagne unveiled the government’s proposed new telecom policy directive yesterday, hailing it as a “historic step”. However, a closer look at the policy suggests that the only thing that is history are any immediate hopes for a more competitive communications marketplace in Canada. Once again, the government has shown itself unwilling to take a strong stand in favour of consumers and competition, instead releasing a directive that largely retains the status quo and sends the message to CRTC Chair Ian Scott to stay the course. Indeed, the primary purpose behind the announcement would appear to be an attempt to shield the government from criticism over its decision to leave the controversial CRTC decision on wholesale Internet access intact, thereby denying consumers the prospect of lower costs for Internet services.
While the new proposed policy directive features much needed details and helpfully replaces the 2006 and 2019 directives that often conflicted and enabled the CRTC to pay little more than lip service to the issue, it sends a strong signal that it is happy with the Commission’s current approach. For example, the directive’s summary on measures to address wholesale Internet access are all about the status quo: “requiring large companies to continue to give access to competitors” or “directing the CRTC not to phase out the existing model for wholesale access.” These are not instructions to change.
The same is true for mobile wireless competition. Rather that using the opportunity to accelerate competition through mobile virtual network operators, the CRTC is instead to directed to improve its hybrid MVNO model “as necessary”. A full MVNO model? The government says it is prepared to support it “if needed”. Based on the current market, it apparently believes it isn’t needed.
