Phthursday Musings: Hanging Out in the Margins

A couple of days ago I noticed a crack in the base of our coffee pot. Excuse me, carafe. Isn’t that a lovely word? Say it out loud: kuh-RRRAAAAAFF.

Anyway, the carafe wasn’t leaking, but still, with a crack there, it seemed like a good idea to get a replacement. This - needing a replacement carafe - had happened before, and last time, the solution was to go to Target and buy one.

This time I looked online. Target no longer stocks just the carafe. Amazon does, but they wanted $17.99 for it! And although Target doesn’t stock the carafe, they do have a bare bones coffee maker from the same brand, which includes the appropriate carafe… for $18.99!

So I went to Target and bought a coffee machine we probably don’t need. For the extra $1.00 - and for the option of going with a slightly less despicable corporation - I figured the 5% chance that our current machine goes out before the next carafe goes out was worth the extra buck.

This is all of course silly. A coffee pot is a piece of glass. It doesn’t cost anywhere near $17.99 to manufacture. CAPITALISM HMPH

Since the box for the new, of-dubious-likelihood-to-be-used cheap coffee maker is sitting on the floor here, it got me thinking about pricing and this got me thinking about other things and somehow this got me to thinking about Alfred Kahn and well at that point you’ve got musings and…

… this all leads me back to when I worked at Best Buy.

Yes, I was a blue shirt! (along with Gary, who is for sure reading this, because now that I’ve written a parenthetical with his name in it, he will be told to read this, and so what if my verb tenses in this parenthetical are all shot?)

Anyway, I worked at Best Buy. And the #1 perk of being an employee at Best Buy back in the day was that you could buy things at the employee rate, which was 5% above cost. So when you did buy something, not only were you getting a discount, you were also learning what the cost to Best Buy was for the product.

I used my employee discount at one point to buy a printer and a printer cable. The retail prices were $149.99 for the printer and $9.99 for the cable. I don’t remember the discount prices exactly, but… I saved more money on the cable than I did on the printer. Roughly, the wholesale costs were $146.00 and $4.00, something like that. In other words, Best Buy was making more money on cables than on printers.

I noted a couple of weeks ago that I’ve never taken an economics class. This printer purchase was sort of a de facto introduction for me to the idea of marginal costs, although of course the words MARGINAL COSTS appeared nowhere on any receipt.

All of this greatly clarified this weirdness involving how we were pushed to sell more and more accessories. Now, we weren’t pushed too terribly hard - Best Buy didn’t operate by commissions, unlike lesser outfits like ELECTRIC AVENUE BY MONTGOMERY WARD - but still we were always told to upsell crap, and I suspect we did a poor job of it overall.

Ahhh, but there was an exception: the disk case. I worked two summers at Best Buy and at the end of the second summer we were sitting on a weird surplus of cloth cases for 3.5” disks. I think they nominally sold for $9.99. Well, for whatever reason, they were discontinued, but not marked down. And so what we would do is tell the customer we’ll give it to them for free when they bought a computer, it’s just that we would take the $9.99 off the price of the computer. The result of this was that for a hot month, our department’s sale of computer accessories skyrocketed and made us look like hot blue champs, whilst our customer base went forth armed with groovy cloth disk holders and classed up the Greater Rockford Area.

This is a long-winded way of saying that it was via working retail that I learned exactly how and why numbers are made up and how easy it is to manipulate things to make it look like something tremendous is happening when in reality all that’s happening is that you’re saddling customers with bullshit they’ll never use.

I could have taken these deep insights and, say, founded WeWork. But I did not.

My understand of such things was bolstered a couple of years later when, for my last real undergraduate course, I took Regulatory Policy.

[ note to wife: this part is the boring shit ]

Look. I’m going to level with you all. Regulatory Policy was my favorite class in college. This was the class where we actually dove into How Shit Works. Love it, hate it, whatever you think about it, bureaucracy is where the action truly is, and this is arguably more the case today than ever, when you consider how inept Congress is even during the best of times. (Oh, I see you, over in the corner, holding up your tiny signs that say UH, COURTS? You can put your tiny signs down for now.)

There’s a famous Pulitzer Prize winning book, Prophets of Regulation, by Thomas K. McCraw, and you know McCraw was a serious man, because serious men always use their middle initials like this. (Alas, I have no middle name. I was thrust forth into this world destined to be unserious. Thanks, Mansplaining Great Uncle!)

Anyway, McCraw wrote what was essentially a collection of biographies about four men: Charles Francis Adams, Louis Brandeis, James Landis, Alfred Kahn. Kahn came last. He’s associated with the deregulation of the airline and energy industries - I wonder how well that’s holding up this week!

I remember an anecdote from the book where Kahn, in some regulatory role or another, instituted a policy where it would cost a dime to call the operator or something like that. Apparently it used to be that this was just a service available to anyone. But Kahn determined that all people were subsidizing a tiny number of people who were calling the operator all the time, something like that. So by charging a dime, it cut down greatly on the need for operators - people just used the phone book, I suppose - and cut costs for all users except those who insisted on continuing to call the operator for everything. I’ll admit here that I may be getting the details wrong. But what I want to emphasize is the concept, and how exposure to such concepts can alter one’s perception about other things.

I went off to graduate school and spent nine quarters as a TA at Ohio State. The professors for whom I was a TA included Al Churella, who has gone on to write a 968 page first volume of the history of the Pennsylvania Railroad, and my eventual advisor Bill Childs, whose signature work is The Texas Railroad Commission: Understanding Regulation in America to the Mid-twentieth Century. When these are the luminaries you’re surrounded by, you soak up their way of thinking.

I guess I never really thought of it quite like this, since it was during grad school that I joined the Green Party, but the way I quickly took to regulatory policy, and especially things like anti-trust, all turned me into… a New Dealer.

In retrospect I suppose that Churella, the consummate business historian, emphasizing things like Rockefeller and Carnegie and vertical integration may not have been the sexiest way to present American history to 180 undergrads taking a survey class. But if your goal is to confront capitalism, you need to understand what exactly it is you’re up against, right? John Rockefeller is actually a great entry point to that.

I’m not sure if it was day one exactly, but, Rockefeller, Carnegie, Gould, robber barons, populists, crosses of gold, that stuff was deeply interesting to me. I immediately gravitate to anti-trust talk. It’s why I read Matt Stoller so closely today.

But here’s the thing. Almost nobody wants to sit around and have a friendly, casual conversation about anti-trust. The four of you who do, well, you and I, we’re all freaks, I suppose. So I might read Stoller, or I might read Churella, but I’m at an incredible loss as to what to do with any of this. (Stoller himself mentioned a few months ago that he was reading Churella!)

I’ll throw this out there though. How many of you have read Stoller’s Goliath: The 100-Year War Between Monopoly Power and Democracy? I’ve had it sitting here waiting to be read for a while. If this is something people are interested in comparing notes on, though, I’d be happy to facilitate something. A veritable freak fest.

[ wife is now safe to resume reading ]

I mentioned my time as a TA. I’m going to admit something ridiculous here.

Students would write short papers for my recitation sections. In the requirements for the papers, I would include formatting instructions. It was explained to me that these survey classes that all of these thousands of students had to take were important for a number of things, including getting them to write and… follow instructions.

So my instructions would include that the papers be double-spaced, and that all margins be one inch. And I would even use a ruler to check if I thought they looked significantly off.

Yes, this was luricrous. But I thought this was the sort of thing I was supposed to be doing. I thought college was supposed to be preparing them for the future.

Fast forward a few years. Our little workplace was hiring for someone to be a front desk person, answering some calls, sending some faxes, blah blah blah. My boss put a little ad in the paper - because that’s what you did back then - and we got like 100 resumes!

Well, let me tell you, plowing through 100 resumes for a basic front desk job is… arduous. You only have a couple things to go off of. There’s the resume itself, which doesn’t necessarily say much. There’s whatever they write in the cover letter. And… there’s whether the whole thing demonstrates an aptitude in Microsoft Word or not. Things like, you know, can you adjust margins?

For a few years in there I was an occasional trainer of Word, Excel, and Access. I’d have people come through who hardly needed to be there. I’d have other people come through who fundamentally did not understand how to use the mouse. Really.

In the grand scheme of things I do not think these are critical life skills. But I honestly do not know how important these sorts of things are when it comes to getting a job. Perhaps today it’s harder to separate yourself from the pack than it used to be. I can say this: Since the people I’m liable to hire today are software engineers, if they don’t seem to be able to use Word, that’s not a good sign. (Of course, most resumes now seem to come through as plain text anyway. I will never understand these job seeking tools and why it’s deemed acceptable for them to be such pieces of crap.)

I was not an activist in any form until grad school. While there though I got involved in the Council of Graduate Students, and somehow I wound up as chair of a non-committee having to do with compensation and benefits.

Teaching assistants at Ohio State were not unionized. This was in contrast to a wave occurring at some other institutions, most notably… dare I say it… That School Up North. MICHIGAN.

We led a successful effort that culminated in the university picking up the cost of 50% of our health insurance. We accomplished this by comparing OSU unfavorably to Michigan. This is not a joke. The rivalry between the institutions is so fierce that anything where OSU looks bad compared to Michigan is leverageable. (There was even a fierce rivalry between the two schools’ Women’s History disciplines!)

Along the way, there was some point in time when the health insurance contract for graduate assistants was being ironed out, and we were presented with this: Our insurance had a relatively low cap on pharmaceuticals, and a handful of grad students were blowing past that cap, notably people with asthma. This could be substantially addressed by raising the cap greatly, but at the result that everyone’s costs would go up a little. I want to say this was less than $10 per quarter, but it might have been less than $10 for the whole year. We said, sure, go ahead and do that.

This is sort of the inverse of the dime-for-calling-the-operator thing. There are “marginal cases” - people who call the operator all the time, people who have asthma. Decisions that affect everyone have to be made with these “marginal cases” in mind.

Overall I think this idea of “margins”, of “operating at the margins”, of “marginal cases”, of “marginal costs”… I don’t feel like this stuff was ever really taught to me. Even when I learned about it via history classes, it was information that I feel like may have been informed only because I’d, you know, actually had a couple of life experiences along the way.

Margins feel like an incredibly powerful way to explain the world to people. Concepts like this, which pop up in all sorts of realms, are ways to expand people’s understanding. It’s not coincidence that so much of what I write about there is condensed in the period when I was in college or grad school. But there’s nothing about this which couldn’t have been readily understood in high school, or even before then. It’s just not the sort of thing that neatly fits into subject areas or curriculum per se.

Wouldn’t it be interesting if in high school there could be a class like Concepts 101 which focused on things like “margins”? Which could use math to teach about social sciences and social sciences to teach about math?

Kids are smarter than they’re given credit for. And increasingly it seems that people are coming around to this. They want kids to learn, to be challenged, not just to be shuffled through the system. Not just to be marginalized. Nobody likes being marginalized.

Oh, but, marginalizing people… those are musings for another week.