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Tyler whines to an Indian readership
Here is the opening of the piece, in the latest Mint:
Sometimes my life feels like a series of never-ending frustrations. The last three products I bought at Best Buy—a large electronics store—had to be returned because they simply didn’t work. The DVD from Amazon has a fatal skip. My wife’s new Mac computer doesn’t function on our wireless network. I dread any call to customer service. A wait is followed by a transfer, which is followed by two more transfers, which is in turn followed by a promise to call me back. The return call never comes. My billing dispute on my AT&T credit card dragged on since May, mostly because they simply didn’t find it worth their while to respond to my letters.
But there's a happy ending, sort of:
If you need consolation, I have two suggestions.
First, count your blessings and read some Buddhist or Stoic philosophy. Second, take your revenge in the form of lower prices.
In the short run, one supplier can rip you off pretty easily. In the long run, it is harder for the world as a whole to avoid giving you a pretty good deal.
Posted by Tyler Cowen on February 1, 2008 at 08:01 AM in Philosophy | Permalink
Comments
Tyler wrote (link above): "Take the proverbial cheat auto mechanic. Maybe half the time he will charge you even when he hasn’t done any useful fixing. But in the long run that extra revenue will draw about twice as many auto mechanics into the industry to compete for your money. Yes, they will be ripping you off half the time but prices will fall by a roughly proportionate amount. In the long run, you, as a consumer, will do okay. You pay twice as often as you ought to, but as a consolation each time you pay only about half as much."
What mechanisms need to be in place so, in the end, I can get my car actually fixed by somebody at some price, rather than just taking it to twice as many cheat auto mechanics?
Isn't it required that we be able to predict the expected quality of the service BEFORE we buy? (much like Darwinian mechanisms work best if they increase the likelihood of having offspring, not if they just extend fitness after offspring have been taken care of)
With auto mechanics, word of mouth isn't too bad. If you talk to two neighbors and they are satisfied, the mechanic is probably OK.
I'm not sure this works with many other products without some help -- Angie's List, Walter Mossberg in the WSJ, etc.
And then there's oligopolies. If both AT&T and Comcast are inadequate providers to your home, one might need to wait a good portion of a lifetime for improved alternatives. Maybe in the long term things improve, but "in the long run we are all dead".
Posted by: ZBicyclist at Feb 1, 2008 8:47:23 AM
What about pseudo-legal fraud that threatens to rob my time if I try and fight against it?
Take Rhapsody; canceling their service requires me to spot a small-font link on an obscure page on their website, which takes me to another page that says I have to call a toll-free number! Yes,call to cancel an online music service. What next, fax my email address to them so they may respond by pigeon mail? This is a disingenuous practice with a high, aggregate opportunity cost. Technology is advanced enough that we ought to have new laws that automatically penalize companies if the sum total of these specific micro-complaints crosses a certain threshold. Or something of that sort.
Posted by: zai at Feb 1, 2008 10:12:25 AM
"My wife’s new Mac computer doesn’t function on our wireless network."
You have dozens of graduate students who could fix that problem in five minutes.
Posted by: Steve Miller at Feb 1, 2008 10:13:06 AM
If profitable fraud causes there to be 2N auto mechanics when the efficient number is N, then fraud causes a social waste equal to the time of N mechanics. How is that not an unambiguously bad thing?
Posted by: David J. Balan at Feb 1, 2008 1:16:13 PM
My personal peeve is MP3 players. I've gone through 10+ in the last 3 years.
I try not to buy the same brand twice, but they are all basically equally crappy.
The main switching cost is the different software. The best ones just act like a thumbdrive and let you drag and drop.
Posted by: andrew at Feb 1, 2008 1:38:23 PM
Balan nailed it. The FTC is in good hands.
Posted by: Peter McAllister at Feb 2, 2008 8:58:51 PM
I don't think Tyler is correct in this article.
It is a question of Bastiat's broken window fallacy...
" Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a square of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—"It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented."
We do not benefit from fraud. Had it not occurred we would have spent our money wisely elsewhere and encouraged other businesses and industries.
Posted by: Anonymous at Feb 4, 2008 5:33:38 AM
Having services cost half as much is, in my admittedly uneducated opinion, not worth the loss in productivity that I have to take in order to bring my car to twice as many mechanics. My time costs something, too. When my purse was stolen right before bill paying time, I literally spent days on the phone trying to lock down the accounts, cancel the credit cards, and reroute scheduled ACH debits for both my home and business accounts, because each entity I had to call put me on hold for an hour. It took so much time that I wasn't able to stop all the scheduled debits and I got some bounced check fees. Whenever I have a problem with my merchant account, I lose several hours' work time in calling them up, waiting on hold, having to explain to three different people what's going on, etc.
This kind of poor customer service takes its price not only in dollars from my wallet, but in lost productivity as well.
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