Category Archives: Economics

Business, Economics, Political Commentary, Social Commentary

Thoughts On Optional And Extortional Compensation

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Let me preface this post with the point that I despise the general notion of tipping service people. This is partly because I dislike the notion of service people, period. That is, I don’t like people “serving” me (which may partly explain my antipathy to nanny government). Whether it’s the Jew, or Scotch in my ancestry, unless I can’t, I’d rather do it myself, if I have to pay for it. I hate to pay people to do something that I can perfectly well do myself (when loading luggage into a courtesy van, or checking into a hotel, I feel like a driver being extorted by a squeejee guy, being expected to provide a gratuity for a service that I hadn’t requested).

Now, having said that, I understand the economic model behind restaurants. The waitpeople are underpaid as a base salary, and expected to supplement their meager income via tips performed for better service. I get that.

What I also get is that it is a subtle implied form of extortion. If you’re a regular, if you’re a lousy tipper, don’t be shocked if over time your food becomes adulterated with the bodily fluids of the staff, and takes forever to get to you, and is cold when it arrives, and may not even be what you ordered. On the other hand, if you tip great, you’ll be treated like royalty from the planet Krypton.

But let’s talk about a different form of service. I’ve been on the road a lot lately, and not just for a night or two in a given place, but for days and weeks at a time. I’ve never (OK, not never, but rarely) done this, but my understanding from reading travel mags and such, is that it is also de rigeur to tip the people who clean your hotel room. On one of our many trips to Golden, CO over the past three months, we stayed at a Marriot Residence Inn, at which on Valentine’s Day, the maid left a chocolate with a note wishing us a good one. It seemed an obvious plea for a tip.

But here’s the thing. There is a difference, and a crucial one, between serving you food, and changing your sheets.

In one case, there is an ongoing personal interaction, and in the other case, there is…not.

When you go out to eat, the waitperson is your personal interface to the establishment. The establishment recognizes this when it encourages said waitperson to be chipper and cheery and say, “Hi, I’m Lance (or Kristi!), and I’ll be your waiter/(waitress) this evening.” There is a personal relationship, perhaps more so than you want, but it’s there regardless. And you know and they know, that if your order is taken, or dinner delivered, too late, it will be reflected in the additional compensation on the bill.

But cleaning a room is different. It generally happens when you’re not present, and you don’t even know the gender of the person doing it (though there’s generally a good guess), let alone their name or what they look like, or how chipper and perky they are. There is no personal relationship.

But isn’t there the same extortionate potential?

I suppose. They could fill your little shampoo bottles with hydrofluoric acid (though the containers would be unlikely to survive until you get back to the room and can pour it onto your noggin). They can short-sheet the bed (which I find that lot of them do as a matter of policy…).

But basically, there’s not a lot of variation in the possibilities of what they can do for your room, other than giving you little gifts (like chocolates) in the hope that they will be more than sufficiently compensated via your gratuity.

It seems to me that there is a basic service (like cable), that shouldn’t require bribes to get. In my ideal world, you should expect to get such service without having to a) pay more than is on the menu or room rate and b) try to figure out just how much more you should pay. Tipping waitpeople should occur only if the service is really great, not just adequate (and they should hope for some adverse event that they can overcome to really earn their additional pay). And this really makes it hard for hotel servicefolk, because there is so little opportunity for the personal interaction that can really provide opportunities to earn tips. I’d really rather live in a society in which basic service was included in the bill, the prices on the menu (or hotel rack rate) reflected the full cost of hiring people to provide the services being paid for, and any additional compensation was a result only of extraordinary (break that word down, folks) service.

But apparently I’m in a minority. Or else, this is one of those perverse situations in which everyone hates the system, but doesn’t see any good or safe way to transition to one better.

Business, Economics, Media Criticism, Political Commentary

The Problem With First-Dollar Coverage

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Thoughts from Megan McArdle. One of the big problems with health care is that people have come to see every-day costs as an entitlement that someone else should pay, instead of the old days (and not that old — within my lifetime) when you paid for doctor’s visits (and they would even make house calls) out of pocket, with insurance reserved for catastrophe. We’ll take our car to the shop, our pet to the vet, but the current mess has accustomed many of us to thinking that we somehow shouldn’t have to pay for a doctor visit. As Megan notes, when you’re not spending your own money, you’re going to use the service a lot more, and you won’t care about the price. This is the key point of how screwed up the market is as a result of employer-provided insurance:

With all the layers in between consumers and the providers in the ordinary market, the natural battle between consumers seeking better value and producers seeking higher prices is terribly distorted in ways that don’t make us healthier.

That market disconnect is what we need to fix, rather than finding some other peoples’ money to keep doing the same crazy things. And the way to fix it is to end the preferential tax treatment of employer-provided insurance versus personally purchased policies, and to allow purchase across state lines for real competition. If I hear one more moron saying that the way to provide competition for private insurers is with a government option, I’m going to plotz. Just make them compete with each other.

Business, Economics, Political Commentary

It’s The Economic Uncertainty

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…Stupid:

He…proceeded to relay a conversation he had with a local chemical company regarding their 2010 capital expenditure budget. When asked what the company intended to invest in 2010, the response was ‘nothing,’ not due to a paucity of good opportunities, but because it was impossible for the company to calculate a rate of return given all the uncertainty over cost of labor, energy prices, regulatory mandates and the like.

These people are completely clueless about how an economy works.

Business, Economics, Media Criticism, Political Commentary, Science And Society

The Need For Humility

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Acknowledging doubt about climate change:

A former head of the IPCC, the British scientist Robert Watson, notes, “The mistakes all appear to have gone in the direction of making it seem like climate change is more serious by overstating the impact.”

Too many of the creators and guardians of the “consensus” desperately wanted to believe in it. As self-proclaimed defenders of science, they should have brushed up on their Enlightenment. “Doubt is not a pleasant mental state,” said Voltaire, “but certainty is a ridiculous one.” The latest revelations don’t disprove the warming of the 20th century or mean that carbon emissions played no role. But by highlighting the uncertainty of the paleoclimatic data and the models on which alarmism has been built, they constitute a shattering blow to the case for radical, immediate action.

And not a moment too soon, though fortunately, it coincided with an appropriate collapse of confidence in Washington wisdom in general. Unfortunately, it’s clear that many still desperately want to believe. That’s how religions work.