People and "causes"

If you post something on Facebook and say oh this is so awful I can't believe this happening, you haven't done anything. Ok, you've created a tiny sliver of awareness. But that's almost nothing. If you want to change something, do something. Don't bemoan the fact that some people are hungry, go give someone food. And please stop thinking that by demanding the government do something that somehow you've done something - you haven't.

facebook is getting stupid

facebook is getting stupid now. just one politically correct article after another. not sure if anyone else notices that. like the huge number of articles about "fat is beautiful". there are several variants on this. it's always about women too. here are some examples
1) this advertiser was brave and commendable for using plus-sized models in their advertising
2) the industry thinks this woman who is average size is fat, but we disagree
3) barbie dolls are bad stereotypes, but this caring man created an accurate representation
etc.

okay, I get it. fat is beautiful, fat is normal, fine. but do I have to see it in every second post?

another thing is dogs and cats or animal abuse in general. help the animals, save the animals, protect the animals. oh and of course, lost animals. so many lost animals. it's like there's a huge epidemic of missing or abused animals and I have to find out about every single one.

then there's all the progressive memes. "denmark pays its teachers a million dollars a year and they only work 2 hours a day. unlike in america." or "portugal legalized all drugs unlike in the US where they are all banned. portugal is way better than america" etc.

oh and my favorite is the "society thinks this, but I think the opposite", when in actual fact 90% "society" already agrees with the "opposite". they just try to come off as morally superior.

I don't know about anyone else, but this is basically all I seem to see on facebook. so what I'm thinking of doing is writing something each day which is politically incorrect but probably a lot more accurate than all this stuff, so stay tuned!

Ryan Cleary is Either Economically Naive or a Demagogue

Letter I'm sending back to Ryan Cleary

I came home last night after being away for some time and received not one but two Ryan Clear pamphlets with his new ideas to make the world a better place. NDPers have such an easy job. They go around and look for problems in society and then just propose a law to make that not happen anymore. It's like they have a magic wand they can just wave and it makes everything better.

So continuing on this trend, Cleary outlines some of the steps his visionary government will take to make our lives better. Specifically he is addressing credit card and other debt. He blames our household debt levels on the government. They may be responsible by imposing taxes which makes life worse, but I'm pretty sure the NDP wants even higher taxes.

Anyway, his 4 suggestions are:

• cap atm fees at $0.50
• lower credit-card interest rates.
• outlaw companies from charging clients for paper bills.
• crack down on payday loans

Although these suggestions make people feel all warm and fuzzy inside, they have negative consequences. If Cleary cannot see that, I do not think he should be a leader of any kind. Let's go through them one by one and look at why his ideas would not work.

ATM Fees
Contrary to popular belief, companies cannot charge anything they like for ATM fees, it is actually market driven. Most banks offer free bank machines to its clients, despite the fact that a bank spends thousands on a machine. To give you an idea how much they cost, a simple machine which cannot accept deposits costs around $3000. Let's say the deposit-ready machines cost $5000. That's a lot of money.

But what would happen if all ATMs could charge a maximum of $0.50 per transaction. Just like with everything in our economy, ATMs follow the rules of supply and demand. At a low price, demand is high, but supply is low. Companies that decide to install an ATM are making an economic decision. Here's an example: It is estimated that between 3-5% of foot traffic will use an ATM. If a private business gets 100 people on an average day, that's 3-5 transactions. If they charge $2 to withdraw money, they will earn $6-$10 per day from the machine. If the machine costs $3000 to buy, it will take about 300 days to recover the initial investment before they begin to make money. That doesn't include the cost for repairs, upgrades, and maintenance.

If Ryan Cleary's law goes through, instead of taking about a year to recover the investment, it may take 4 or more times that long. It could take four or more years to recover that investment, which makes it far less desirable. In fact, $0.50 may be the perpetual break-even point since there are fees and maintenance that must be paid making ATMs completely unprofitable. The result: far fewer ATMs being available.

But what about the banks you ask? Well, the same may hold true, but they may approach it different. Banks must pay a substantial amount to maintain bank machines. At the moment, they accept clients from other banks and earn usually around $1-$2 per transaction. However, if they can only charge $0.50, it may not be worth the extra maintenance that will be required and they may choose to not allow non-bank customers.

Lower credit-card interest rates:
It just seems kind-hearted to want to give people lower credit-card interest rates, but once again there are many negative consequences to legislated that. Right now, believe it or not, credit cards are a very competitive industry. It is simple to transfer your money from one credit card company to another. Companies are not charging sometimes 20% because they just arbitrarily decided to make that much money. Rather, they must balance their desire for profit and the laws of supply and demand. The fact is, right now the legal highest interest rate is 60%. When was the last time you saw a credit card charging that much? Why wouldn't they charge the maximum allowable amount? The reason is consumers would simply go elsewhere.

Credit card companies are subject to the laws of supply and demand just like ATMs are. 20% is how much the company believes it must charge some groups of people in order to make a profit but stay in business. Many people with bad interest end up not paying at all or declaring bankruptcy. That's a loss for the credit card company. For high risk individual, 20% is the amount they must charge to account for defaults, non-payment, and high risk. That's also why there is such a huge variety of card out there. Many offer 0% initially. Obviously the card companies make nothing on this. In fact, they lose money. I know people who perpetually switch from one 0% card to another, and essentially never pay interest.

If the government arbitrary limits the interest rate, the supply of cards will diminish. People with poor credit ratings will be unable to get a card from anywhere. They won't get lower interest, they'll get none. The fact is there are credit cards at all kinds of different interest rates. 5%, 10%, 15%, 20%. Why don't the people paying 20% get one that charges 10% if they are available? The answer is, they don't qualify, and eliminating 20% cards will just take away that option.

Outlaw companies from charging clients for paper bills
There are obvious flaws with this proposal as well. This law can easily be put into place and probably lots of people will applaud it, but ultimately no one is better off, here's why. Companies have a lot of expenses. Revenue - expenses = profit. Whether an expense is explicitly stated or not, the company must pay for it. Sending out paper bills costs money so they charge clients for that service. Making a law saying they can't charge for it doesn't take away the expense. Companies are not going to go into the red or go bankrupt to please Ryan Cleary, so what will they do instead? Basically companies will just charge everyone for the paper bills and just include that in the price. In fact, the companies really don't care about this much.

Right now, Rogers customers pay $2 extra if they want a paper bill. This includes the cost of printing, the paper, the envelope, the people hired in the department that does this, and the postage. Just say half the clients of Rogers avail of this. If the $2 was outlawed, Rogers would simply charge everyone $2 extra per month. They wouldn't say it was for the paper bill they would just add it to their service fees. Think of it this way. Rogers doesn't send out a detailed list of expenses. They don't say $8 went to tech support, $10 went to technicians, $7 went to advertising, etc. Instead they say it costs $80 per month for your telephone and internet bill. Right now they say if you get your bill online, you only have to pay $78 per month. If it became a law that you couldn't charge $2, they would just say it's $80 for your telephone and internet bill.

If you take it to an extreme, imagine Ryan Cleary said companies must send a representative to your door to announce your bill with a singing telegram and that companies couldn't charge for this. Your bill would just increase to $200 per month and they'd just say it's for service.

Crack down on payday loan gouging
The same principles of why banning high interest rates for credit cards or artificially lowering ATM fees will not work apply here. Payday loan companies operate in a competitive environment. If one company charges 10% per week for a loan, in order to compete another company will have to charge the same or less. Companies cannot simply charge whatever they like. Competition keeps them in check. I will not say more about this, since I've written a lot on the other subjects.

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Overall, these proposals represent a complete lack of economic understanding and are simply designed to garner support. Nobody likes paying high interest rates, but this is not the way to change it. Ryan knows these steps are popular and he is either simply appealing to the masses or he is completely naive about economics. Either way, I do not want him as my "leader".

Tragedy of the Commons

cbc on crusade against shady business

The CBC seems to have stepped up its game of finding shady businesses and exposing them. They not only have marketplace, now it seems have the news articles are about companies ripping people off. Many would say this is a public service, but I say there's more to it.

They have a new show called "Go Public", as in expose this to the public. But could there be an implied idea, a sort of subliminal message, of changing something from private to public, as in "public" broadcasting.

The biggest fear of the CBC is that people will start questioning government spending. Of all the reasons people advocate spending by the government, the last is for really bad tv shows. So CBC recognizes that if people start thinking in these terms, they're the first to go.

So they have made an all-out assault on private business. That's one of the reasons why most people I talk to loathe business. They think government loves you and wants to protect and take care of you, while business just wants to hurt you in some way. The CBC is just continuing to push this agenda.

The irony is that the government violates the very things people fear from companies. Government healthcare is a disaster, the government runs many monopolies, etc. If a company gave terrible service, people would be up in arms, but not with government. A company with a monopoly? That's some people's greatest fear, but somehow it's okay when the government does it.

Hopefully people will realize soon that there are just two ways of doing things: voluntarily or coercively. The government represents the latter.

Chocolate price-fixing accusations very hypocritical

Canadian chocolate companies are being charged with "price fixing", meaning they colluded and artificially increased the price of chocolate in Canada. Now there's a class-action lawsuit. I heard that the people who can enter the lawsuit are Canadians who spend $1000 or more in less than two years. It must be for personal consumption and they must provide receipts. I doubt many Canadians could enter the lawsuit.

But the irony is that the charge against these companies is that they "conspired, agreed or arranged to fix prices of chocolate products." Well, that's such a crime! You can easily find chocolate bars for $0.75. So how much were the prices increase? 10¢, 20¢? Oh, the humanity! But the irony is that the GOVERNMENT price fixes ALL THE TIME! Now, they turn around and get upset because some chocolate company is doing the same! How hypocritical!

The government doesn't add 10 or 20% to the price though, they commonly DOUBLE the price! Look at milk. It's controlled by the milk marketing board, and the price is about double. Look at cigarettes, even worse. A carton of cigs costs $29 before taxes. After taxes, it's $94! That's over triple!! Alcohol also has some crazy taxes on it, as I discussed yesterday.

Now the government has the gall to act all indignant that a company dares rip people off. GIVE ME A BREAK.

But the other side of the story is that this sounds awfully suspicious to being with. Most of the time these anti-trust or similar lawsuits are manufactured by competitors in the industry who are unable to compete. Apparently in this case, the suit was brought on by Hershey.

So I'm suspicious to begin with, but even if it's true, the government has no moral authority to condemn this activity.