Was That A Goat?

What do brush clearance in Southern California and electrical energy generation in Coastal New Jersey have in common? Well, other than appearing in this blog post together, they're also examples of controversial attempts by local government to "go green" -- that is, to promote ecologically responsible operating strategies. The amazing part, at least from where I'm sitting, is that either of these things is actually controversial. I suppose we should keep in mind that nothing is simple when it really is happening in your metaphorical back yard...

First, let's consider the New Jersey wind farm proposal. We've been hearing a lot about wind farms, or large wind-turbine arrays, since the T. Boone Pickens ads started running earlier this year. It's an appealing idea; harnessing the power of the wind to generate absolutely clean energy in a completely renewable manner. As wind turbines become more common the price for building one (and for the equipment that makes it work) is coming down, and the break even point is getting closer and closer. With the relatively high cost of fossil fuels, the idea of a power plant that you don't have to buy fuel for -- ever! -- is only going to become more and more popular as we go on. In fact, the same market forces will probably bring solar power plants online before much longer, as well...

So why is this controversial? In a word, NIMBY. Alright; technically that's an acronym that stands for Not In My Back Yard, and not really a word. But it's an accurate description of the reaction from the resort communities along the New Jersey coastline, all of which are convinced that they will lose tens of millions of dollars each year if there are a bunch of giant windmills anchored into the sea bed three miles offshore. The commercial fishing industry isn't happy about it, either, but it's mainly the resort operators who think the windmills will be an eyesore who are screaming...

I'm not sure that a bunch of tall, white wind turbine towers three miles away constitutes an eyesore, but then I rather enjoy watching windmills spin. In any case, there are conflicting reports of how much actual business would be lost because of the windmills, but most of the experts agree that it would be in the tens or hundreds of thousands, not the tens or hundreds of millions, and only for a few years until everybody concerned calmed down and forget that those white things on the horizon are windmills. The experts also agree that this would remove over 400,000 TONS of particulate from the air over New Jersey each year...

I know that Los Angeles would give it's (metaphorical) eye teeth for that kind of per capital smog reduction, so let's shift over to our other story of the week: the City of Los Angeles is employing a flock of about 100 goats to clear the brush off of Angel's Knob, a hill adjacent to the famous "Angel's Flight" tramway. This is saving the city about $4,000 over employing human workers with gasoline-powered weed whackers and chainsaws and such. It's also saving gasoline, noise, and air pollution, all of which my birth city already has quite enough of. So why is it controversial? Well, apparently the goats smell bad -- and this project is only creating work for a single goatherd for a few weeks, not for a dozen or so laborers for the rest of the year...

Some days, you just can't win, can you?

Buy and Bail?

I suppose we could call this an update on the mortgage crisis stories I've been profiling, but in fact I think this one is more of a spin-off (a new story line derived from older episodes). Which is not to say that it isn't the result of a financial services industry apparently run by people who should never be trusted with any business unit more complicated than a lemonade stand, but the outrage here is coming from the general public, or at least that part of it that are so crooked they have to screw on their hat. The amazing part is that no one saw this one coming...

A story being reported this week on the ABC News Online site introduces the concept of "Buy and Bail" -- people who are escaping from their absurd housing market boom mortgages (both ARMs and also sky-high payments from fixed-rate loans they should never have taken out) by purchasing a second house at rock-bottom prices, and then simply defaulting on their original home loan. Their first bank can foreclose on the loan and seize their first house (and a lot of them do), but not the second one, since it's part of a different loan transaction, often with a different lender. Of course, the foreclosure won't do the first bank much good unless they can sell the property to someone else, and even then it won't repay the defaulted loan if the house is currently worth less than the mortgage taken out on it a few years ago...

Of course, the first bank can sue the absconding homeowner, claiming the original mortgage was taken in bad faith, but that can take years, will frequently cost them more than the amount they are trying to recover on the defaulted loan, and may not be successful. It's hard to prove intent in these cases, and if your contractual agreement was "pay this amount or we take away your house" it's difficult to get the court to change it to "pay this amount or we take away your house, and you also have to give us the difference between what we can get for it and the original loan amount." Most people will just figure that if that was the contract you wanted, you should have asked for it in the first place...

Of course, that's what's starting to happen. One of the consequences of the mortgage crisis is that home loans are no longer as easy to get as they used to be, and one of the reasons why not is that lenders are trying to block the "Buy and Bail" tactic. Another is that they're trying to screen out anybody who they think might try such a thing in the first place. And still another is that they're trying to screen out anybody who they think IS trying to do such a thing right now (e.g. if they think you're trying to make THEM the second bank in a "Buy and Bail" scheme)! Which may be a little like closing the barn door after the horses escape, but is still better than nothing...

Now I know some of you are thinking, "these greedy bastards brought the whole mortgage crisis down on themselves in the first place; it's great that someone is finally using their own greed to pay them back!" And in some ways that might be true, but don't forget who is paying the money to bail out all of these stricken mortgage lenders. That's right: you are. Your tax dollars will be used to keep billion-dollar companies from suffering the consequences of being too stupid, greedy and incompetent to avoid losing all of their money in the first place, and protect all of their investors from suffering the consequences of being too heavily invested in an industry with questionable business ethics. None of which is going to be any less expensive just because a few people managed to work themselves out of trouble by screwing the bank back in return...

The Ethics of Pole Dancing

For those who have never encountered the term, Pole Dancing has nothing to do with folk dances of Polish origin, Maypoles, or drunks who believe that the telephone poles are following them as they drive home -- although alcohol is sometimes involved. Pole Dancing is the performance style common to "exotic" dances in strip clubs, and involves a series of gymnastic or even acrobatic maneuvers executed while clinging to and spinning around a pole extending from the floor of the stage to the ceiling. Clearly, this is not something you'd want located in (or moving into) a retail space in the center of town, or anywhere families with small children are likely to encounter it, unless you take an unusually tolerant view of sex education. But the case that came up a week or so ago demonstrates once again that things are never that simple, especially where First Amendment Rights are involved...

As reported in the York PA Daily Record, a woman named Stephanie Babines is attempting to open a dance studio in rural Adams Township, where she will teach (among other things) pole dancing to local women who want to learn how to do it. Note that this is not a strip club or a "gentleman's club;" there will be no men allowed in these classes, and spectators will not be permitted either. In fact, there will be no nudity involved, and nothing will go on in any of the studio's classes that could not be shown on network television in prime time. But this hasn't stopped the local authorities from going berserk over the studio's business permit application...

The township government seems to be taking the position that anything that might be remotely defined as a sex-based business, or even anything that might be remotely defined as promoting a sex-based business (or even anything implying that there are such things as sex-based businesses, one supposes) are in violation of a town ordinance that governs business permits. This is often considered a slippery-slope situation, in the sense that once a given municipality has one sex-based business, it is no longer possible to prevent other such businesses from opening. And we all know how dangerous THAT could be!

In fairness, there are cetain public safety risks associated with bars of any kind, and strip clubs in particular. But this situation isn't about increased rates of public intoxication (the dance studio doesn't serve alcohol), noise polution (the studio will be sound-proofed and will not operate at night), drunken driving (no alcohol, no drunk driving), or associated crime (no drunks with cash to rob, no cash register full of cash to rob, no dancers with handfulls of dollar bills to rob, no scantily-clad women to assault, no crowds of drunks to get into brawls, and so on); it's only about whether this type of business is going to be difficult for families with small children to deal with. Which is hard to imagine in this case...

The bottom line in this case seems to be at what point does the township's collective right to live in peace (without troublesome reminders that people do, on occasion, behave in risque fashions) outweigh the rights of a law-abiding citizen to operate a business that teaches people how to dance in a risque fashion? If the good people of Adams Township don't want a studio like this one, can't they just not do business there? Or does the Township government have a responsibility to protect their citizens from the (possible) effects of such an operation?

It's worth thinking about...

Legal Weed

Here's another one of those cases of something that sounds like a good idea (or at least an innocuous one) at first glance, but very rapidly turns out to be more complicated than you'd expect. It happens that Federal law (which governs most aspects of the brewing and distilling industries) prohibits drug references on the packaging of alcoholic beverages. You might think this would be a good idea, in that it would prevent the liquor industry from trying to use the appeal of various controlled substances to sell a product that would almost certainly end up being abused in its own right. Unfortunately, once you allow any regulation to restrict free speech, the matter will almost always become more complicated than you wanted it to be...

Take the case of Legal Weed beer, made by the Mt. Shasta Brewing Company in Weed, California. The town of Weed has been enjoying the double entendre of its name for over a century now, with everything from T-shirts that play on the name to a sign at the city limits that reads "Temporarily Out of Weed." A famous tourist spot is the road sign that has "Weed" with an arrow pointing left, and "College" with an arrow pointing right (people like to get their picture taken in front of the sign). It's all made even funnier by the fact that the town is actually named for its founder, Abner Weed, a local lumber baron and state senator. No one is actually advocating the sale, possession or use of marijuana (often known by the slang term of "weed"), and everyone knows it...

Everyone, that is, except for the Federal Alcohol and Tobacco Tax and Trade Bureau, which earlier this year ordered the brewery to stop marketing the "Legal Weed" beer that they had begun selling. Apparently unable to see the humor in the situation, the Feds threatened all sorts of civil and criminal sanctions, and only backed down when the huge storm of negative public opinion reached a crescendo. Video segments about this David-and-Goliath fight appeared on the news across the U.S. and as far away as Saudi Arabia, and over 1,400 supporters sent letters or emails to the brewery owner, urging him to stay in the fight. Eventually the Bureau, sensing the enormous potential for bad publicity and a lengthy trial reversed its position...


But not before sales of all of the brewing company's products (not just the "Legal Weed") had more than doubled. We've often been told that there is no such thing as "bad" publicity; anything that puts your company into the public eye is automatically a good thing, no matter how negative the circumstances behind it might be. Based on the events in this story, it might be true. But a much more immediate question is whether anyone else out there is considering launching an alcoholic beverage product with a drug reference in the name, and whether this story will convince them to go ahead and take the same risks, or rename the product "White Rabbit Lager" or something equally inoffensive...

And whether letting Federal agencies suspend a constitutional right just because they think it MIGHT help to suppress crime and/or drug abuse is a good idea in the first place...

Starbucks Update

It’s funny how often we’re seeing additional information about the current events I wrote about four or five months ago, especially when you consider that these stories really have nothing in common except for the oddball writing about them. In today’s example, I will ask all of you who still can to remember a post I wrote back in California about Starbucks attempting to expand their business through the introduction of new product lines, new promotional angles, and even new business partners. I was dubious about how well any of it was going to work, and apparently I had good reason to be…

A story being reported on The “Cluster Stock” website last week indicates that the Starbucks empire is indeed coming into difficult times, with 600 locations closing in the U.S. alone, and a 60% drop in its stock price from the peak a few years ago. One would expect the company to do something about the weaknesses in its business model, the primary one being the relatively high cost. In a worsening economy, it’s getting harder and harder to persuade your customers that it’s actually worth paying $3 for a cup of coffee (or $4.50 for a specialty coffee drink), and new competitors (like the Biggby Coffee chain profiled in this space a few weeks back) are taking full advantage of that weakness. Starbucks might also be able to do something about their food options or convenience issues, but they’re already faster than most of the companies in the industry, and food isn’t really their core competency. But apparently the company is balking at the idea of lowering prices…

According to the story (originally carried by Reuters), the CEO of Starbucks is maintaining that the firm will not lower prices, but will instead “look for fun ways to offer value.” One wonders what, exactly, this will entail. Their new “everyday blend” of coffee (profiled in my last post about them) does not seem to have been the sales booster the company was hoping for, and their special $2 iced coffee deal (if you’d already bought a regular coffee at Starbucks that day and still had the receipt to prove it and came in during the specified hours the special was valid) was so confusing that most customers didn’t bother to try figuring it out, and so precious that most people wouldn’t have bothered with it even if they did understand it. Similar offers, as well as short-term sales on seasonal products, new products or discontinued merchandise are unlikely to do any better, either…

The curious part, at least from my perspective, is that the margin on a cup of coffee is already the best aspect of running a coffee house. As I noted last fall, in my post about starting such an operation, most of the food choices sold by businesses of this type are break-even propositions at best, with only a handful of companies (generally ones that bake their own food products for sale) actually turning a profit on anything other than coffee. Of all of the things they could possibly do to add value to the consumer, the one that is least likely to impact the bottom line in a Starbucks operation is a price reduction. So why aren’t they even considering it?

It’s possible that the company is adhering to an old salesman’s adage: never lower your asking price for something; it makes it look as if the thing was never worth what you were asking in the first place. You have to wonder if Starbucks is trying to avoid letting their customers find out that they’ve been paying $3 for a beverage product that actually costs between 40 and 60 cents (depending on the formula you use), or if they’re just worried that if they lower the price to $2.70 the public will expect them to keep it that way. But in either case, the company needs to stop fooling around with “fun ways to offer value” and come up with something that their customers will actually be willing to pay for…

The Ethics of Bandwidth

Here’s an interesting question that came up last week about cable modems and Internet access – and exactly what each customer is entitled to under a supposedly “unlimited” service agreement. According to the news reports, Comcast Cable has decided to cap their customers’ Internet downloads at 250 gigabytes per residential account per month, calling this amount excessive for a residential customer. A quick check will tell you that this will come out to over 50 million average emails, or 124 full-length movies downloaded at standard resolution, which does seem a bit excessive for only 30 days, but the real issue here is what “unlimited” actually means in practice – and if the company has an ethical responsibility to the rest of its customers to protect them from having their cable modems jammed by a single user who is downloading 4 or five movies a day (or the equivalent). It seemed like it might be worth a closer look…

The first question that comes to mind is what a customer can reasonably expect from a service that is described (and sold) as being effectively infinite. In practice, most “unlimited” service contracts for whatever form of media delivery (cell phone, text message, Internet, etc.) have only meant that the customer does not pay any additional fees for service, regardless of the actual volume of data they use. These service plans would more correctly be called “flat rate” services, and in fact are usually called just that in the contracts, along with a deeply-buried clause about cancellation for excessive use. Thus, the debate on deceptive marketing and misleading advertising goes back to before the customer ever signs up. It is quite possible that some of the people who saw the term “unlimited” in print ads or on television actually had an expectation of unlimited usage, and failed to read the fine print that said otherwise…

In most states, however, not reading (or claiming that you didn’t read) a contract will not protect you from the consequences of signing it. California, in particular, is sometimes called the “Anybody can contract to do anything” State, because you are assumed to have read, understood and agreed to anything you actually sign. If you signed a contract that specified that you could be billed extra (or disconnected) for “excessive use” you can go to court and argue whether 250 gigabytes is actually excessive, but you can’t expect to get an infinite amount of downloads just because you thought you could. And as long as Comcast isn’t actually charging you more for your monthly service than their usual flat rate, you can’t contend that they are in violation of your contract…

A much more interesting point is how the “rights” of these extreme high-end users impact the rest of the customers on the system. Modern fiber-optic systems can carry a lot of data in a relatively small physical space, but there are still hard limits to how much volume can be transmitted over a specific cable line – and cable modems are already infamous for slowing down if a lot of people are attempting to use the same line. So if there’s a power user on your block, downloading over 250 gigabytes each month, and this usage is making your Internet service run slower, does the company have a responsibility to restrict the power user and free up bandwidth for you? Or should the company just let the download speeds fall where they may? Should Comcast be legally required to expand its capacity to give everyone all of the downloads they want? What if the cost of expanding their capacity bankrupts the company, putting thousands of people out of work and destroying the fortunes of their shareholders?

It’s worth thinking about…