Try It Again, Folks

If you’re the type who follows aerospace news, you’ve probably already seen the footage of the Space-X “Starship” prototype exploding a few minutes after what had, to that point, been its first successful high-altitude flight and soft landing. If not, you may not have known or cared that the two previous landings ended the same way. After all, other than hardcore space wonks like your humble blogger, who really cares if an eccentric billionaire’s pet project works out or not? Elon Musk clearly has the money to spend on this weird science-geek hobby, and if he wants to spend it on an epic-scale model rocketry kit, what difference does that make?

Well, in addition to being a hardcore space wonk (since 1968!) I’m also a business blogger and former business teacher, and I have to say that dismissing the latest Space-X explosion as merely a novelty (or even worse, a vanity project) would be a mistake for financial, economic, and historical reasons. The financial opportunities presented by the commercial exploitation of space have been enumerated by many authors, and need not delay us here; nor does it require any great understanding of business or finance to grasp the benefit of the jobs provided by Space-X itself, and by the many companies from which it buys materials. But failing to grasp the historical and economic significance of the rise of private spacecraft and launchers is difficult to excuse as anything other than being two generations behind the times…

Fifty years ago, private space exploration lay entirely in the realm of science fiction. Putting a person – or even a good-sized satellite – into orbit was possible only for a national government, and indeed only two of those had managed it. Even more daunting, perhaps, was that both the American and Soviet space programs had suffered humiliating failures by 1970, with a plethora of rockets exploding on the launch pad, or shortly thereafter, and at least one fatal accident each. The idea of a private citizen building a space-worthy rocket was the stuff of children’s books, fantasy stories, and (in 1979) comedic adventure television programs staring Andy Griffith. And yet, even then, there were historical perspectives that should have told us otherwise…

In 1903 the airplane had no practical applications, and the automobile wasn’t much better; neither one was anything a modern audience would call safe, either. And yet, thirty years later the first of the Douglas Commercial airplanes was built, followed two years after that by the DC-3. Air travel became a common feature of life, and dozens of commercially viable firms began offering it. The same period saw the rise of literally dozens of automakers, proliferation of highways, and expansion of companies selling everything from internal combustion engines to tree-shaped air fresheners. Today it would be virtually impossible to imagine the world without those two industries…

Now, I’m not suggesting that anyone standing on the dunes at Kitty Hawk in 1903 could have predicted the use of airpower in either world war, let alone the 747, the A380, or the SR-71. And we can only wonder what Henry Ford would have thought about self-driving cars, hybrid vehicles, or jet-powered ground vehicles (it’s a stretch to call them “cars”) that can break the speed of sound. But anyone who dismissed those technologies, or discounted their commercial possibilities, based on the failure of early applications would feel like an idiot in today’s world – and I’d be willing to be that anyone who dismisses Space-X or any of the other private spacecraft companies that are getting started today is going to feel even dumber in just another generation or two…

One Small Step

I was reading yesterday’s BBC story about the upcoming Israeli space mission with great interest, and not just because I’ve been a huge space geek for as long as I can remember. If their mission is successful, Israel will become only the fourth country to soft-land a probe on the Moon, following the United States, the Soviet Union, and China. Even more remarkably, the Israeli probe will then use the fuel remaining onboard to take off again, soft-land again, and make observations from a second point on the lunar surface – something that none of the other countries have managed to date. Even the Apollo missions were limited to just landing and then using a separate drive system to leave…

The second flight, or “hop,” across the Lunar surface is a requirement of the X-Prize competition that this mission hopes to win, but if the probe functions correctly it will open the way for more advanced deep space surveys using remote technology at a relatively low price. So far the Israelis have spent around $88.5 million, according to the BBC, and the addition of a Falcon 9 launch vehicle will add another $60 million or so, depending on the exact launch specifications. For reference, a single Space Shuttle launch would cost between $500 million and $1.5 billion, depending on the payload and duration, and most of the equivalent unmanned missions launched by NASA ran in the $700 million to $900 million range. But then, that’s kind of the point…

I’ve written before in this space about the need to privatize spaceflight, beyond basic programs like the X-prizes and the Virgin Galactic sight-seeing flights. Well, according to a recent article in the Smithsonian’s Air and Space magazine, that is exactly what has happened now that Space-X and United Launch Alliance (ULA) are competing to offer the best value for the price. Of the two, Space-X is considerably cheaper, offering launch vehicles for one-half to one-third as much as their rival, while ULA (a joint venture of Boeing and Lockheed-Martin) has a longer track record and over 130 consecutive successful launches. Both are a far cry from the days when only a national government – and only two of them, really – could send anything other than weapons into space…

Now, I would be the first to admit that this appears to be pushing the concept of a business blog just a bit, but it really isn’t. The commercial possibilities for space flight and space-based manufacturing have been discussed for decades now, and new ones appear every time the cost-per-pound of lifting things to orbit goes down. We’re still probably a few decades away from having large-scale habitats in space, let alone passenger service to get to them, but when even conservative companies like ULA start talking about building cities in Trans-Lunar space, it’s time to start taking them seriously…

So far, things seem to be limited to Space-X’s low-cost strategy versus ULA’s differentiated strategy – cost versus quality, or a brash start-up company that has suffered a number of setbacks in recent years versus the more established firm that hasn’t had a rocket blow up on them in over a decade, depending on your point of view. But there is reason to believe that the Russian space agency, which has been the prime contractor for human-rated space launches since the end of the Shuttle program, and the European Space Agency, which never liked having to beg NASA for seats on the Shuttle in the first place, may start offering their own commercial services. And while they haven’t done it yet, I can’t see anything that would prevent the Chinese, the Japanese, or the Koreans from developing their own commercial-grade launch systems…

Let me again call the reader’s attention (assuming I have readers) to the early days of aviation, only 115 years ago. As long as airplanes were limited to Wilbur and Orville in the bike shop, or even a bunch of wood-and-canvas military biplanes, there wasn’t really a lot of commercial potential in the technology. It was only after the First World War, when companies like Boeing and Douglas started building the first airliners, when things really started to take off. I’m not sure we can compare the Falcon-9, or the new ULA launch vehicles due out in 2022, to the DC-1 or the Ford Trimotor. But unless my understanding of business, history, and aerospace are all completely out to lunch, we all just got one small step closer…

Don’t Even Try

Quick, think of the most preposterous choice for a new movie project that could ever come out of Hollywood or anywhere else. This may be harder than you think, considering some of the recent choices. It’s not just that we’ve had movies based on board games (Battleship) and Disneyland rides (Haunted Mansion), it’s that some of those have actually been good (Clue) or at least commercially successful (Pirates of the Caribbean I, II and III). We can assume that anything that ever made money will be remade, but that’s hardly surprising after remakes like the Total Recall remake and the upcoming remake of Top Gun, not to mention the inevitable Godzilla and Dawn of the Dead remakes. Given the appearance of the “Brony” community (look it up) I can’t even say that a rumored My Little Pony live-action blockbuster is all that amazing. But until it is given to me to see an actual press release for a Candyland live-action adventure, I have to go with the upcoming It’s a Small World movie as taking the prize…

You can check out the original story on the Los Angeles Times site if you’d like, but unless someone is pranking the Times (and us, one assumes) there is a project in development to make a live-action movie about a Disney ride in which you travel through an air-conditioned building while dolls in “traditional” costume from around the world sing an endlessly recursive tune. It isn’t clear if there’s a script yet, but a director has been hired to helm the project – it’s Jon Turteltaub, the man responsible for the National Treasure movies. How exactly you go from action/adventure movies featuring Nicholas Cage and lots of explosions to hanging a story around something Walt Disney specifically designed for little girls is not explained – and may be inexplicable – but that’s what appears to be happening…

Now, I will be the first to admit that I’ve never written or directed a successful screenplay of any kind. The people I know who have done so will tell you that it’s even harder than it looks, and the quality of the production, the acting and the story actually have nothing to do with either the critical or the commercial success of the film. Sadly, it’s not only possible for an artist to spend the best years of his or her life crafting a cinematic masterpiece only to see it ignored by the public and criticized by various hack reviewers, this happens more than it doesn’t. After a while, the urge to go directly after projects that already have a popular following – either because they are sequels to an already successful movie or because their about something else that already has fans has to become overpowering. And given that the original version of Small World in Anaheim has had roughly 290,000,000 visitors (that’s 111,000 a week for over 50 years) it seems probable that there are people who already love the concept…

If you’ve been to the movies in recent years, or watched anything reported about motion pictures, or even spent time around people who care about the state of modern cinema, you’ve probably heard the rant about how Hollywood needs to start making better movies if they want people to start going to movie theaters again. And to some extent this is absolutely true – but it is also true that the studios keep making the same repackaged crap over and over again because that is what people will pay to see. If you personally want to do something about the state of motion picture entertainment, then go see an art film, a smart biopic, a period piece or a clever original thriller, while you still can! You can always catch the Candyland movie later, if you need something to complain about…

Flying: Then and Now

Ask anyone who has had to travel by air in the last dozen years what they thought of the experience, and you’re probably going to hear language that you can’t use on television. Between the annoying and insulting security measures (that are mostly futile), passenger discomfort (which gets worse every year) and flight delays most people already hate the entire process before you even get to issues like endless new fees or the time you waste getting to the airport two hours early. But if you ask anybody who has been traveling by air for a while, they’ll probably tell you that things didn’t used to be like this; that air travel used to be a more formal, dignified and enjoyable experience. They usually won’t mention that it was also far more expensive, or that you were more than five times more likely to die in a plane crash…

An article that ran this week on the Huffington Post UK site compares a number of factors between the 1950s – when the advent of jet airliners and international carriers began making the airlines over – to the current state of the industry. And while I wouldn’t say there were a lot of surprises in the article, it was a bit odd to realize just how much cheaper and safer air travel has become just in my lifetime. For example, in 1952 the industry average was listed as 5.2 deaths per 100,000 hours of flying – about five times the current average. This isn’t really that surprising, when you consider advancements in navigation, automation, radar, electronics, and power systems (especially engine reliability), but even for an admitted airplane wonk like me a 500% difference is kind of amazing. Then there’s price – everyone knows that airfare had dropped since the U.S. deregulated our airline industry in 1978, but according to the Huffington people we’re talking about an 83% drop in fares on the New York to London run. And while it is true that the food, drink and service were all better, there really wasn’t much to do – in-flight movies did not appear until the late 1960s, and even into the 1970s the picture and sound were nothing to write home about…

This week also brought with it news about a potentially brighter future for all of us who get stuck in the Economy section of the aircraft; at least in terms of on-board comfort. An article off the Daily Mail website details several new changes in cabin and seating design that have the potential to create a more comfortable passenger environment without adding weight or taking up extra space (both of which would lower the profitability of the flight). None of this is exactly surprising either; the inclusion of cup holders that are separate from the meal tray, footrests usable in the Economy cabin, or seats that can recline without getting any closer to the passenger sitting behind you are all common-sense upgrades that people have been asking for almost from the beginning of modern air travel. The amazing part, at least to me, is that no one has made any particular effort to upgrade this aspect of the experience before now…

Airline seats are theoretically safer now – thanks to advanced construction materials and the like – but they haven’t really changed in design over the past two generations. And while air travel is essentially a commodity product these day (in that competition is mainly based on price) on a route with heavy traffic and significant competition any material advantage that makes one company’s service more attractive than the alternatives could major implications for the success of that firm. It’s early days as yet, but it might just be possible that we could start seeing change for the better in the airline industry…

Unless the new developments in rail transportation render the whole question moot, of course…

Business From On High

In the classic historical account The Right Stuff author Tom Wolfe details the phenomenal rate at which the luster came off the U.S. space program after the Apollo 11Mission landed on the Moon. Although manned space flight remained (and remains) a hot topic in other parts of the world, by the time the ill-fated Apollo 13 Mission launched the only thing that retained the interest of the American public was the malfunction that almost killed the entire flight crew – and the brilliant improvisations that brought them home safely. This continues to lead to some unflattering (and probably deserved) comments on the attention span of the American people, but the unfortunate truth is that by 1971 most people in this country were only paying attention to our space program when something extraordinary happened (e.g. Skylab, the first Space Shuttle launch, and two Shuttle disasters). This seems particularly unfortunate at the moment, considering that one of the most significant developments in the history of manned spaceflight and business is taking place somewhere over our heads this week…

If you missed it on your local news, you can pick up the most recent Forbes article about the Space-X Dragon spacecraft docking at the International Space Station with 5,000 pounds of supplies last week direct from the link. It may not seem that important at first – it is the fourth time the Dragon capsule has docked with the station, after all – but once you consider that price and convenience are the two major factors that have limited the commercial exploitation of space, this even becomes very significant. As exciting as the sound and fury of a rocket launch is, the critical aspect to any transportation system is reliability. A vehicle that can go someone once (or even six times) is at best a curiosity, at least from a business standpoint. A vehicle that can go somewhere whenever you want it to is a business asset. The Dragon has made the flight to the ISS four times already, as opposed to the single-use launch vehicles of the last century, and there is reason to believe it could do so indefinitely – or, at least, dozens of additional times. Assuming that you could find a cost-effective way of launching it…

This is what makes the other part of the linked article so interesting. The successful use of a privately-funded, privately designed launcher means that it is now possible for private companies to launch profit-seeking enterprises into Earth orbit without needing support from NASA or our national government. But even more potentially important is the successful test of the reusable Falcon 9 rocket. In theory, a reusable orbital launch vehicle would enable Space-X to lift payloads into space at a lower cost than any other entity in history – effectively opening up the commercial use of space to a huge range of companies that could never have afforded to place payload on a Space Shuttle or a Russian conventional rocket. A mass-produced reusable launcher would lower the costs still further. And if the company can produce a version of the Dragon – or one of their other designs – that is safe enough to be certified for human use, they could lift people to orbit for a fraction of what the so-called “Space Tourists” have been paying…

Now, even I have to admit that there are still a lot of “ifs” in that description, and a corresponding number of developments that we still have to await. It is possible that another company, or even another launch technology (such as the winged rockets being developed for Virgin Galactic) will become this century’s answer to Pan Am, leading the way into space and on across the cosmos. It is also possible that none of these things will pan out, commercial space travel will remain on hold for another century or two, or that humans will succeed in destroying our planet’s biosphere before we can get off of it and effectively exterminate ourselves. If I had all of the answers I’d be a multi-billionaire financial advisor and philanthropist, not a scruffy blogger nobody ever reads. But all of that said, I can’t help but think that what may be the most important technological development since the wheel may be taking place in the sky over our heads this week…

And, apart from a few space-mad history wonks like yours truly, no one is paying any attention…

Making a Comeback?

It may seem fantastical to us now, after 70 or so years of the skies being dominated by airplanes, and ruled by especially pointy ones, but back in the yearly days of the last century some of the most important flying machines were actually lighter-than-air vehicles: rigid airships and blimps. Many of these were cargo and passenger carriers, but several nations (notably including the U.S., U.K. and Germany) also produced military versions, including bomb-carrying attack craft and the infamous flying aircraft carriers U.S.S. Macon and U.S.S. Akron. Unlike a conventional airplane, lighter-than-air vehicles can stay in the air for as long as desired, provided their crew is kept supplied with food and drink, and while not particularly fast (military versions had a top speed of around 85 MPH) there was no reasons they couldn’t just keep flying until they reach their destination. Or, to look at it another way, it’s four times as fast as an ocean-going ship, is not limited by shallow water or a need for natural harbors, and can travel over land as easily as water, and for their time they carried a relatively good payload…

Unfortunately, as every school child knows, the era of the airship came crashing down on May 6, 1937, when the German airship Hindenburg exploded at the Naval Air Station at Lakehurst, New Jersey, killing 35 of the 97 people aboard and one of the handlers on the ground. It didn’t really matter that the Hindenburg had been filled with hydrogen because the U.S. had embargoed helium as a strategic material, or that a conventional airplane exploding in mid-air would probably have killed a lot more than 35% of the people on board; the disaster got too much ink and captured too many imaginations. Even the often-repeated claims that the explosion was caused by sabotage did nothing to change public opinion. From about 1940 onward, lighter-than-air vehicles were limited to recreational and promotional use, hardly more than curiosities in sky filled with noisy, fuel-guzzling, smoke-spewing craft with airfoils…

Until now…

Even if the public relations issues surrounding airships could have been overcome – and that would have been a tall order even for helium-filled craft following the Hindenburg disaster – the greater speed of conventional aircraft and the relatively low cost of fuel to power them made the slower but more fuel-efficient airships unappealing. But with the cost of aviation gas and jet fuel rising, along with concerns regarding global warming and air pollution, the idea of something that floats along at the speed of a fast truck or train and carries 70 metric tons (around twice what a semi carries) to any point on Earth is starting to gain traction. An article on the Bloomberg website from earlier this month tells the story of a company named Hybrid Air Vehicles (HAV) and its plans to start building blimps designed to carry ores to market from remote parts of Canada starting in 2016…

How well these craft will work is anyone’s guess, but the company’s technical manager claims that the blimps will use about a quarter of the fuel a cargo airplane with similar payload would require, will be able to land anywhere on water or land without port facilities or a runway, and can use any engine type that could be used to power an airplane. The company also claims that the craft will cost something around $100 million, or about one-third of what a large cargo jet with none of those capabilities would cost (a new Boeing 777 freighter is about $300 million according to the Boeing website). Or, to look at it another way, less than the access road to a single distant mining operation would cost to build even before you purchase the trucks to drive on it…

Now, it remains to be seen if the company can overcome 77 years of “conventional wisdom” telling everyone that lighter-than-air vehicles are impractical and/or dangerous. If they can get even a few of these things flying and prove the concept works (e.g. lower cost and higher efficiency) I’d expect to see some commercial interest in the design. It probably helps that it’s a British company (rather than an American one) building them; it would also help if the potential buyers from Siberia (where roads are even less practical than they are in Northern Canada) come through with additional purchases. But believe it or not, this isn’t the first time somebody has tried to sell this concept – and the last time did not end well…

I’d Buy That for a Penny, Too!

It was one of those headlines that catches your eye from the corner of the page: “Carrier Sells for a Penny!” Obviously, this is one of those outrageous cases of governmental waste in action! We must leap to arms, write to our Congresspersons, demand action, and speak loudly in public – or at least put our caps lock key on and leave it there! Unfortunately, once you actually call up the story and read it most of the fanfare drains away relatively quickly; the carrier in question is the former U.S.S. Forrestal (CV-59), commissioned in 1955 and decommissioned thirty-eight years later in 1993. For the past twenty years she’s been more of a political and ecological football than anything you could call a ship, and it’s actually past time somebody did something with her hulk.

From a historical standpoint, Forrestal was a significant development; the largest carrier constructed by that point in history and the first ship to include innovations such as an angled flight deck, a steam-powered launch catapult, or an optical landing control system during her construction. Like the later and somewhat larger nuclear-powered super carriers, Forrestal served both as a symbol of American military power and as an instrument of force projection all over the world. With the end of the Cold War and the gradual drawdown in Navy requirements, however, the need for the older carriers began to decline following the first Gulf War, and several of these ships were decommissioned and offered for use as monuments or museums, much like the U.S.S. Midway (museum ship in San Diego, California) or the U.S.S. Intrepid (museum ship in New York City). In the event, however, Forrestal became a more difficult issue…

It should come as no surprise to anyone that it is an expensive proposition to maintain an 81,000-ton ship in readiness to sail and fight; what continues to surprise many people is that it is also expensive to maintain one as a floating museum. Of course, anything made of metal that is floating in salt water is going to have to deal with corrosion, and a museum (of any kind) also has to deal with maintaining displays and exhibits and with keeping the interiors clean and safe enough so that the tourists won’t accidentally hurt themselves. This isn’t necessarily easy to do inside the hull of a warship, which (in fairness) was never designed for small children, idiots, or members of Congress. And even assuming you can raise the money to acquire and convert the hull, tow it to its final resting place, and maintain both the hull and its contents, there’s still the issue of where to put the museum…

In the end, Forrestal was on the donation list for over a decade while various groups tried to raise the money to buy her, but ultimately those efforts fell short. There are, after all, only so many carrier enthusiasts, and only so many ports that can both house and afford a museum ship of that size. There was a second effort in the early 2000s to use the ship as an artificial reef; a number of former American warships have been utilized in this fashion, but these efforts fell through as well. All that was left at that point was to sell the ship for reclamation, to be broken apart and scrapped. Oddly enough, this also proved difficult…

Despite the desire to view an aircraft carrier – or any other large vessel – as just an ocean-going collection of metal, such a ship is actually better described as a floating waste dump, containing forty years worth of petroleum waste, battery acid, asbestos, heavy metals, lead-based paints and other toxic chemicals. Cleaning one up enough to use it as an artificial reef is a massive undertaking, and highly expensive; breaking one up for parts is even harder, and requires more OSHA and EPA clearances than the average person would believe. It is still possible to make money on such a salvage operation, given enough time and the right facilities, but it isn’t easy and it’s almost always something that our government would be better advised to outsource than try to do in-house. So if you were thinking about trying to by one of the other decommissioned pre-nuclear super carriers for a penny, I’d have to advise against it. It’s more fun to blog about anyway…

Everything Old is New Again

I’m always amused to find stories that indicate that for all of the talk of tradition, learning from the past, and trying not to repeat the mistakes of previous generations, no one can actually remember anything and the same old mistakes keep right on being made. There’s a lot of that going on in the news right now, since it’s a Presidential election year in the US, and a lot of the usual empty promises are being thrown around, but there was a story in the news this week that confirmed my belief that follies of this type are not limited to Americans, let alone American politicians. Apparently, some folks in Canada are trying to revive the Avro Arrow project of 1958…

You can find the original story on the Toronto Star website if you want to, but for anyone who isn’t particularly interested in the history of aircraft, the Arrow was a supersonic interceptor designed by Avro Canada during the Cold War as a counter-measure to Soviet strike aircraft attacking over the North Pole. Similar in concept (if not entirely in design) to the Convair delta-wing interceptors of the same era (the F-102 and F-106), the Arrow was an impressive piece of technology that would have equaled or exceeded the performance of all contemporary aircraft and would not have found a worthy opponent in Soviet service until the arrival of the Tupolev Tu-22 “Backfire” bomber nearly two decades later. However, like any other piece of cutting-edge technology, building a fleet of Arrows and working the bugs out of them would have been an expensive undertaking, and the Canadians elected to purchase a fleet of McDonnell-Douglas F-101s instead…

In most respects, that choice worked out very well for the Canadian Air Force. The F-101 turned out to be ideal for Canadian defensive requirements, and its adaptability for high-speed air-to-ground and very high-speed recon missions could only have been a plus. The downside – purchasing defense equipment from a foreign source, stunting the domestic aerospace industry’s growth in defense (and particularly supersonic) programs, and outsourcing all of the jobs involved to the US – remained a source of bitter contention for some years thereafter, but the loss of the actual aircraft doesn’t seem to have harmed the country or its national defense. It was a bit surprising to find a story about reviving the program as an alternative to the F-35 Lightning II turning up on one of the news aggregation sites…

Up until now, Canada has been one of the members of a constantly-shifting group of nations who intend to purchase the F-35, originally known as the Joint Strike Fighter, along with the United States Air Force. As with the F-16, F-18, F-15, F-5, F-111, F-101, F-104, C-130, A-4 and far too many other designs to bore you with, this arrangement should make it possible for a whole range of countries friendly to the US (or at least hostile to people we don’t like) to purchase cutting-edge war planes that they could never afford to develop on their own, while at the same time helping the American companies that produce the airplane to recover the cost of their R&D efforts and make more money into the bargain. Unfortunately, the F-35 has been delayed by technical problems, plagued by cost over-runs, and has thus far failed to live up to all but the most basic claims made for it – which is making it easy for people in Canada who oppose the project to come up with alternate suggestions. It’s just that this one was loony enough to raise eyebrows in anyone who has ever studied aircraft, history, or business…

For its time, the Arrow was a remarkable piece of engineering, and could have proved useful as a counter-measure to Cold War-era long-range strikes. But reviving the program now would mean producing a machine designed before the parents of most of its pilots were born to perform a mission long since made obsolete against an enemy who no longer exists. As an appeal to nationalists, voters who don’t particularly like Americans, or the Canadian domestic aerospace industry, this stunt might make sense from a political standpoint. And there is some precedent for it – the US has revived the U-2 and SR-71 aircraft for service, if not new construction. But the Arrow was cancelled in 1958 because it didn’t make military or economic sense, and today it represents more of a point of national pride than anything anyone would actually want to take into battle…

That doesn’t mean that someone won’t try it, however…

An Oblique Attack

I noticed two items online this week that don’t at first glance appear to have any connection, but when you stop and think about them are really just two sides of the same coin. If you study history or finance, or worst of all, economic history, you already know that virtually every major financial crisis in Western history has given rise to protests that seek to blame the woes of the poor and downtrodden on the wealthy classes of their society, and demand redress, usually in the form of redistribution of that same wealth. In the Twentieth Century this tendency became permanently associated with civil rights and social justice movements, and with the usually (very) young people who make up the core of such groups, resulting in a perception of not just rich versus poor, but also of young versus old, crude versus cultured, liberal versus conservative, those who feel entitled to wealth and privilege versus those who (for whatever reason) actually have money and the advantages that go with it. And if you have read up on that history, you know that both halves of that perception are dangerous…

First, you have a story off of the Oregon Live site (quoted from the Oregonian), which tells about the mess and damaged caused by Occupy Portland, and how city officials are saying that cleaning up and repairing everything will cost around $85,000 from an already overtaxed city budget. The author does a good job of staying neutral in the report, but there isn’t much room for interpretation here anyway; the work descriptions and costs being reported are official, and they don’t paint a nice picture of the situation in Oregon. Even if you support everything the Occupy movement stands for, the fact that the encampments caused a huge mess, disrupted life in the area, and attracted a crowd of homeless people (and others who exploited the situation) can’t really be disputed. Given that most people around the country still don’t really know what the movement is trying to accomplish, all the average reader is seeing is a bunch of hippies demanding something or other while contributing nothing to society and draining money from taxpayers and social services (not exactly the 1%, whoever they might be). But that’s still the milder of the two stories…

The second was a piece on Fox News – quoted here by a conservative talk-radio broadcaster from Boston – about a college professor asking his students to write essays about what the American Dream means to them and getting a bunch of answers that expect the national government to take care of them and provide for their needs. Both the video and the site make a big point of emphasizing that the students repeatedly stated that rich people should have their money taken away and distributed to poor young people (like themselves). The authors then comment that since this seems to be the prevailing attitude, it’s no wonder that there have been public demonstrations by people “demanding free stuff.” The implication is that the Occupy have no real grievances or true reform agenda; they’re just spoiled kids who want everything but don’t want to actually work for it. The implication is snide, underhanded, and unfair to all of the people in the movement who would gladly take jobs and invest in their own future if they could get jobs, access to capital, networking opportunities, and all of the things the conservatives seem to forget that they already have. Unfortunately, the comments on the levels of entitlement currently prevailing in America aren’t incorrect – or even unfair…

Now, I don’t mean to side with either group in this scenario. I’ve taught undergraduates for the last three years, and a lot of them do have entitlement issues – but a lot of them are determined, hard-working people who will accomplish amazing things if they are allowed to do so. And I’ve seen the same stories you have about banks refusing to extend credit while they demand that the government bail them out – and then issuing billion-dollar bonuses to the people whose incompetence caused the financial crisis in the first place – but I’ve also met people who started with nothing and had nothing handed to them who have earned the riches they have; where is the justice in demanding that they give all away to people who have never worked a day in their lives? The truth is, both of these positions are nothing more than an oblique attack on the other side of a social-political issue, and the only ones who can possibly benefit from this innuendo are those political and social forces who are busily stirring the pot…

Getting Clipped

Ever clip coupons out of the Sunday paper and take them to the grocery store? Ever decide that there aren't enough coupons for anything you want to buy to make it worth your time and just give up on them? Well, if you fall into that second category, you're not alone. According to an article on MSN Money News today, only about .5% of the 285 billion coupons printed last year were ever actually redeemed, and the number is continuing to drop. I call this to the reader's attention because if nothing else, these events are noteworthy from a historical standpoint. Discount coupons have been in common use (primarily as an advertising method) for nearly a century now, and have formed the heart of too many marketing plans to count -- and in a few years they may be completely gone...

If you wonder, as I did, how effective these things were in the first place, consider that the redemption rate on printed coupons was, up until recently, pegged at about 1%, or something on the order of 2,850,000,000 coupons redeemed each year -- rather a lot, really, especially when you consider the difficulties inherent in getting anyone to use them in the first place. Placing too small a discount onto each coupon will degrade their effectiveness to the point where no one is going to bother cashing them in; placing too large an amount on each coupon will turn the item into an instant loss-leader. It isn't usually possible to overcome brand loyalty with a small discount; in order to convince consumers to try a different brand name it is usually necessary to offer a rather substantial savings, and even that may not be effective. And even if a coupon is being redeemed, you must still subtract the cost of printing and emplacing the coupons from the increased profit margin.

A major factor contributing to the decline of print coupons is believed to be those in-store loyalty club cards that most markets now use to offer lower prices in exchange for demographic purchasing information. True, the decline in newspaper readership is definitely a factor, but the fact that people believe (correctly or not) that they can save more money just by swiping their card than they can by clipping out coupons has had a significant impact in recent years. The impact of warehouse stores like Costco and Food 4 Less on this type of marketing is harder to gauge (these stores often issues their own coupons), but is also believed to have had some influence on the industry.

Interestingly enough, the e-commerce people have come up with a new wrinkle that may bring the discount coupon back -- in a way. Some markets that have their own loyalty club cards had taken to offering "coupons" on their websites, available to anyone with a club card number and a printer. Customers could go online, select only those coupons they actually wanted to use, print them, and take them to the store, without the bother of clipping them out with scissors. This met with some success, but wasn't exactly a runaway success; the demographic of tech geeks who go online looking for bargains does not overlap all that much with the demographic of people who clip coupons. But then some bright person got the idea of eliminating the printing. Some chains are now testing a system where their club cardholders can go online, highlight the "electronic coupons" they want to use, and then have those discounts appear at the register when they make the purchases.

It's an interesting idea which takes care of all three functions of tradition coupon advertising: it gets the customer to read (or at least look at) more product advertising; it brings the customer into the store to make the purchase, and it lowers the total purchase price for those items, thus serving the needs of the advertiser, the retailer, and the customer. Of course, there have been many other online efforts to boost retail store performance, but I believe this is the first one to address the needs of all of the stakeholders involved. It will be interesting to see if these schemes actually work to boost sales -- and if the manufacturers and retailers who participate are successful as a result...