rss

Tag: "consumer"

0
Elizabeth Warren faces fierce resistance to regulation of non-bank lenders
By Erich Vieth on September 06th, 2009

Elizabeth Warren faces fierce resistance to regulation of non-bank lenders

Elizabeth Warren is one of my heroes. Barack Obama appointed her to be Chair of the Congressional Oversight Panel created, which was established to oversee the banking bailouts. For many years, Warren has fought tough battles on behalf of consumers. [See the related posts to this post; and here's a video of Warren being interviewed by Jon Stewart that will give you an idea of what she is about (and especially consider Part II)].

Warren is now facing an incredibly tough uphill battle. Her main weapon is common sense. She wants to regulate banks and non-bank lenders, to stop them from defrauding consumers with their fine print, their outlandish fees and their arithmetical hocus-pocus. In a fair fight, her position should easily win the day. But it’s not a fair fight, because the financial services industry owns much of Congress. Therefore, Warren has spent much time advocating for the need for a strong Consumer Financial Protection Agency (CFPA). Here’s what Warren has to say about the need to regulate non-bank lenders:

There is more that we can do to deal with non-bank lenders, but only if Congress creates a strong CFPA. If we stick with the status quo — which treats loans differently depending on who issues them and places consumer protection in agencies that consider it an afterthought - we know what will happen because we have seen it happen before. Lenders will continue their tricks and traps business model, the mega-banks will exploit regulatory loopholes, and the non-banks will continue to sell deceptive products. In that world, small banks will need to choose between lowering standards or losing market share, and they will still get too much attention from regulators while the non-banks and big banks get too little. Dangerous loans will destabilize both families and the economy, and we’ll all remain at risk for the next trillion-dollar bailout.

Regulating the non-banks hasn’t been tried in any serious way. The CFPA offers a real chance to level the playing field, to add balance to the system, and to change the consumer lending landscape forever.

Corruption • Economy • Featured • Politics • Psychology Cognition
Full Story
4
Ubiquitous conspicuousity
By Erich Vieth on August 05th, 2009

Ubiquitous conspicuousity

At a park to weeks ago, a musician started singing “Somewhere Over the Rainbow.” I was talking with an acquaintance, who immediately pulled out his smart phone, clicked on a few buttons and brought up the movie “The Wizard of Oz” to play on his 1 ½” screen. He explained that he loved the movie and that he could watch it wherever he wanted. Impressive technology? Of course, but watching “The Wizard of Oz” (or any movie) is never such an important thing that I’d need to carry it in my pocket. Was my acquaintance really trying to tell me about his love of “The Wizard of Oz,” or was he subconsciously trying to communicate something else to me?

For many years we’ve been trying to convince ourselves that electronics manufacturers were right that we HAD to have their gadgets, including 50″ screen HD TVs. For decades, we’ve been convincing ourselves that electronic audio manufacturers were correct that we “needed” to plunk down $2,000 for high-end audio components with thick copper cables lest the sound degradation would piss us off too much to enjoy our music.

But here we are in an age where small is cool, and we’re somehow able to enjoy full length movies on tiny lo-res phone and iPod screens. And people are somehow surviving with small low-res youtube videos. And consider that the music almost everyone is enjoying on their mp3 players is sampled at a noticeably lower rate than CD-quality. And consider that CD quality sample rates are severely degraded compared to live music. But somehow we’re now OK with far less than perfect because small and convenient and high tech are cool.

I’m in the process of reading Geoffrey Miller’s riveting new book, Spent: Sex, Evolution and Consumer Behavior. We’ve all heard of conspicuous consumption (originally coined by Veblen). Miller refines and extends Veblen’s concept, setting out the differences between conspicuous waste, conspicuous precision and conspicuous reputation as signaling principles. Cars exemplifying these three principles would be the Hummer (waste), Lexus (precision) and BMW (reputation). Conspicuous precision “can be achieved only through time, attention, and diligence, while conspicuous reputation (brand names) reflects a “vulnerability to social sanctions.” Most products exhibit each of these three forms of “signal reliability.” Other signaling principles including conspicuous rarity (exotic pets or pink diamonds) and conspicuous antiquity (ancient coins).

I find it interesting how much we fool ourselves about how much we “need” products based on these qualities. We “needed” large high-quality electronic audio and visual players until it became a much more impressive display to have extremely small portable electronics. It turns out that our “need” for things isn’t ultimately about need for the product’s qualities. It’s about trying to impress others with our ability to differentiate and afford various types of products.

A few years ago, I was looking at stunning images of a coral reef on the big new HD TV sets at Costco. I asked my wife whether we should think about “moving up” to a HD TV set. She asked me: “How often have you been watching a movie on our 25-year old TV set when it occurred to you that you weren’t enjoying the show because the screen was not huge or high definition? I answered truthfully: never. We still have our quarter-century old TV set and I’ve never again been tempted to “move up.” But I also admit that if I were trying to impress people today, I wouldn’t be able to do it by showing off my TV. I wouldn’t be signaling that I can notice and afford fine engineering tolerances. I might show off my TV nonetheless, to signal my frugality, but my old TV wouldn’t be impressive to modern-day Americans, given that it is not (today) an expensive signal in any sense—I could buy a TV like mine very cheaply indeed at a garage sale.

Miller’s book is a powerful reminder that our “need” to buy SO many things is often not about the things themselves, but about the need to tell the world something about ourselves in order to increase our social status or to attract mates.

Miller has a lot to say about the differences among the types of conspicuosity. For instance, Aristocrats eschew conspicuous waste. They tend to hone in on conspicuous precision and reputation.

For more on Miller’s theory, see this book review at the NYT.

American Culture • Communication • Community • Consumerism • Cultural Evolution • Evolution • Featured • Human animals • Media • Networking • Psychology Cognition • Science • Technology
Full Story
19
Fat Tire’s first prize: an obsolete bike. The rationality of costly signaling.
By Erich Vieth on July 20th, 2009

Fat Tire’s first prize: an obsolete bike. The rationality of costly signaling.

Fat Tire Beer is holding a contest, and first prize is an old-fashioned bicycle. It is a cumbersome and heavy one-speed bike that lacks most of the useful features found on modern bicycles. What does it have going for it? Nothing much worth my while. I buy my bicycles for performance, features and functionality, not looks.

Others would say that the Fat Tire bicycle has an unique style worth coveting. I know a woman who recently paid a large amount of money for a “retro” bicycle much like the one in the photo. She bragged about her bicycle only in terms of what it looked like, and seemed to get irritated when I asked her whether she would miss some of the useful features found in most modern bicycles, features such as multiple gears, high-tech gear-shifting, feather-light frame, and front or rear suspension. It appears that Fat Tire Beer is looking for customers like the woman I just described, people who are obsessed with the looks of a bicycle rather than its functionality.

I recently posted on Geoffrey Miller’s terrific new book, Spent. At page 97, Miller discusses the “signaling value” of many modern products. Miller points out that modern corporations work hard to avoid competition based upon objective features that can be compared. Fat Tire Beer, for example, did not choose to offer a modern bicycle that could easily be compared to the many other bicycles currently being sold. Instead, the company chose to offer an old-fashioned bike that would signal a certain trait for the owner and his/her friends/acquaintances. Modern corporations

Use advertising to create signaling systems–psychological links between brands and the aspirational traits that consumers would like to display. Although these signaling links must be commonly understood by the consumer’s socially relevant peer group, they need not involve the actual product at all. The typical Vogue magazine ad shows just two things: a brand name and an attractive person . . . there is a hidden rationality at work–the rationality of costly signaling. What matters in most advertising is the learned association between the consumer’s aspirational traits and the company’s trademarked brand name–the fountainhead of all profitability.

Therefore, don’t waste your time trying to figure out what obsolete styles of bicycles have to do with beer. The bicycle featured on the label of Fat Tire Beer has nothing to do with the taste or quality of the liquid in the bottle. Rather, buying Fat Tire Beer is an opportunity for a consumer to display to others that the consumer can afford a premium beer. The bicycle on the label gives consumers a further opportunity to suggest that tradition is more important than functionality. Those who buy Fat Tire Beer let the beer do their talking for them: “I’m a person who values tradition over functionality.” That’s my guess.

I wouldn’t accept that cumbersome and sparsely-featured contest bicycle even if someone offered it to me for free, because I know less-costly, less wasteful and more effective ways of convincing others that I often value tradition. It involves hard work and no gimmicks. It requires that you willingly put your life under a microscope, that you repeatedly show rather than tell, and that you show your values in ways other than through conspicuous consumption.

American Culture • Communication • Consumerism • Current Events • Media • Psychology Cognition • Science • advertising
Full Story
5
Ripped off? Go get an attorney! But wait . . . you won’t find one.
By Erich Vieth on July 12th, 2009

Ripped off? Go get an attorney! But wait . . . you won’t find one.

Think of all the times that merchants have ripped people off. Sometimes it’s a line-item that jacked up your bill. You called and complained, but you eventually gave up and ate the $3.50 after making four phone calls without satisfaction.

Sometimes, you bought an appliance and after getting home discovered that it wasn’t as it was promised, but the merchant refused to take it back.

Or it might be a $1,000 piece of electronics. Only after the warranty expired, it became clear that it didn’t function as promised.

Maybe it’s a used car that you bought for $2,500 and right after driving it off the lot you discovered that it literally wouldn’t go, certainly not at highway speeds, and that the dealer knew of the problem but refused to refund your money.

Consider the many complicated financial transactions you’ve signed, credit cards, car loans, or payday loans. What do you do if you notice you’ve been ripped off, but the amount of damages you’ve suffered is relatively small, less than $3,000?

You go get an attorney, right? Wrong. You won’t find an attorney to handle cases in this range unless an attorney decides to help you as a favor or “pro bono.” Why not? Because it is a time-consuming task to open a case, file it, prepare for trial and represent a consumer in a trial. It can take dozens of hours to get a decision in the trial court, and then the defendant, who is often represented by a high-priced attorney, can appeal the case, delaying the result for another year.

The net result is that consumers who have been ripped off for less than $3,000 (and, actually, much greater amounts too) will have only one real option to litigate their claim: at the small claims court where they will represent themselves.

Consumerism • Law • snake oil
Full Story
27
Who I Am Is No One Else’s Business
By Mark Tiedemann on June 02nd, 2009

Who I Am Is No One Else’s Business

As this just happened, I thought I’d come right home and write about it. I just had one of those customer service incidents that sends me over the moon.

I walked into a store to find something. I was in a frame of mind to buy. I found the something and asked the sales person “How much is that?” Back at her desk, she sat down, I sat down, and I expected her to punch up the price on her computer and tell me.

Instead: “What’s you name?”

“Private individual,” I replied, a bit nonplussed.

“I need a name for the quote,” she said.

“You have to have it?”

“Yes.”

“Have a nice day.”

And I walked out.

Now, this was perhaps petty of me. What, after all, is the big deal? She needed to punch a name into her computer to open the dialogue box to ask for the price.

Here’s the big deal: IT’S NONE OF YOUR DAMN BUSINESS WHO I AM UNTIL I DECIDE TO BUY FROM YOU!

This is a persistent and infuriating condition in our present society that causes me no end of irritation because so few people think it is a problem that I end up looking like a weirdo because I choose not to hand out private information for free.

It has crept up on us. Decades ago, when chain stores began compiling mailing lists by which they could send updates and sale notices to their client base. Then they discovered they could sell those lists to other concerns for marketing. Now we have a plague of telemarketers, junk mail, spam, and cold calls and a new social category with which to look askance at people who would prefer not to play. Like me.

In itself, it is an innocent enough thing. But it is offensive, and what offends me the most is my fellow citizens failing to see how it is offensive and how it on a deep level adds to our current crisis.

Look: if telemarketing didn’t work, no one would do it. A certain percentage of those unwanted calls actually hook somebody into buying something. Direct mail campaigns have an expected positive return rate of two percent. That is considered normal response and constitutes grounds to continue the practice. Economies of scale work that way. So if only two to five percent of the public respond favorably to the intrusions of these uninvited pests, they have reason to persist.

I think it might be fair to say that people with money and education don’t respond as readily as poorer, less educated folks who are always on the lookout for bargains—and often find bargains they don’t understand and probably end up costing them too much, like sub prime mortgages.

We are too free with our personal information. Maybe you or you or you find nothing wrong with always giving out your phone number or your zip code or even your name and address when asked, in Pavlovian response to the ringing bell behind the counter, but what has happened is that we have made available a vast pool of data that makes it easy to be imposed upon and that has aided and abetted a consumer culture that has gotten out of hand.

And made those of us who choose not to participate in this look like some form of misanthropic libertarian goofballs.

How hard is this? If I choose to buy from someone, then I have agreed to have a relationship, however tenuous, with them. Unless I pay cash, they are entitled to know with whom they are dealing. But if I’m not buying, they have no right to know who I am. And I can’t know if I’m going to buy if I don’t know how much the object in question is. Trying to establish the buying relationship in advance of MY decision to buy is…rude.

I have walked out of many stores when confronted with a request for personal information. I’ve had a few shouting matches with managers over it. In some instances, the unfortunate salesperson is as much a victim, because some software programs these days have as a necessary prerequisite for accessing the system the entry of all this data. The corporation won’t even let the employee make the call whether it’s worth irritating someone over collecting all this information.

Concerns and worries over Big Brother have a certain validity, but it is largely unremarked that the foundation of such a system will not be imposed on us—rather we will hand the powers that be what they ask for because we can’t muster up enough sense of ourselves to say, consistently, “None of your damn business!”

There. I feel better. I needed to get that out. This rant has been brought to you by Consumer Culture LTD.

American Culture • Communication • Community • Consumerism • Education • Whimsy • ignorance
Full Story
2
By Erich Vieth on February 15th, 2009

We’re making our own gifts and cards, and we’re better off for it.

We’re making our own gifts and cards, and we’re better off for it. More was not better. Consider this article by the NYT, titled “Days of Wine and Roses are over this Valentine’s.” Here’s an excerpt:

Long-stemmed roses are being replaced by homemade cards. Theater tickets are being replaced by Netflix. Personal jewelry is being replaced by personal poems.

And even some preparing to propose on Saturday are seeking a bargain approach: on Yahoo, searches for “cheap engagement rings” are “off the charts” compared with a year ago, according to Vera Chan, a trend analyst for the company. Other searches that are up over last year include “cheap lingerie,” “free Valentine’s Day cards” and “homemade Valentine’s Day gifts.”

Consider, also, this wonderful anecdote:

Creative, personal and experiential have become the key words. Chadd Bennett, 30, of Seattle, and his wife are forgoing their traditional getaways and jewelry this year, and will instead camp out in their living room and build a fort, harking back to their childhood.

American Culture • Consumerism • Economy
Full Story
2
By Erich Vieth on December 02nd, 2008

What it’s like to not shop for a year.

Judith Levine and her significant other decided to not shop for a year.   She wrote about her trials and tribulations in her book, Not buying It: My Year Without Shopping. She also wrote about it in Washington Post in an article titled, “Don’t Buy It.” Here’s an excerpt:
People can learn to live with less — [...]

American Culture • Consumerism • Economy • Environment • Food
Full Story
3
By Erich Vieth on September 04th, 2008

Are we competing? A tale of two bicyclists.

As I’ve indicated before, I live about 4 1/2 miles from the office where I work as an attorney.  Because I cycle about 14 mph on average, I am about 20 minutes away from work by bicycle.  That’s only ten minutes more than it takes to drive.  Riding a bike instead of driving offers many [...]

American Culture • Consumerism • transportation
Full Story
5
By Erich Vieth on May 06th, 2008

How to keep customers coming back for things they don’t need.

How do you keep customers coming back? Keep them constantly dissatisfied.
That is the topic of this article in Orion Magazine.  The author is Jeffrey Kaplan.  Here’s are a few excerpts from this well written article.   [Note:  you might be blocked from going straight into the article.  If so, go to the Orion link and [...]

American Culture • Consumerism
Full Story
7
By Erich Vieth on December 21st, 2007

“Push capitalism” turns us into full-time consumers and non-citizens

Bill Moyers recently interviewed Benjamin Barber, a renowned political theorist and a distinguished senior fellow at Demos — a public policy think tank here in New York City. Barber’s most recent book is Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole (2007). What’s the focus of this book?
[T]he global economy produces too many [...]

American Culture • Consumerism • Economy • Psychology Cognition
Full Story
0
By Erich Vieth on November 27th, 2007

Giving it all away

Huffpo published this piece on a businessman who takes anti-consumerism seriously:
Travel company operator Hal Taussig buys his clothes from thrift shops, resoles his shoes and reads magazines for free at the public library. The 83-year-old founder of Untours also gives away all of his company’s profits to help the poor _ more than $5 million [...]

Consumerism
Full Story
4
By Sujay Prabhu on November 11th, 2007

Social movements in the consumerist world

If I were asked to divide the world into two groups of people, I would flatly refuse. It is extremely unfair, I would argue that it would be absurd to divide humans, as ineffably complex and diverse as they are, on the basis of one quality or trait. But then again, that would just be [...]

Consumerism • Culture • Films
Full Story
12
By Erich Vieth on November 17th, 2006

We are drowning in material goods, yet we crave ever more stuff.

See them floundering after their cherished possessions, like fish flopping in a river starved of water. 
Sutta Nipata 777 (From What Would Buddha Do? (1999)).
A friend of mine recently returned from an extended trip to Egypt.  He found it striking that the 18 million residents of Cairo lived in tightly packed conditions and that they owned [...]

American Culture • Consumerism • Economy • Food • Meaning of Life • Politics • Psychology Cognition • Religion • Uncategorized
Full Story