Via Andrew Sullivan, I see that Daniel Indiviglio argues that “We like bad customer service.”

Actually, though, while he states it, he doesn’t really argue that at all.  Rather, he argues that we’re not willing to pay more for good customer service and thus provide no incentive to companies to provide it.

Let’s say you have two options for a flight from New York to Miami. Everything about the two flights is identical except for two things: One airline has poor customer service, but offers you a ticket for $50 cheaper. Do you take the more expensive flight in order to secure the better customer service at a higher price?

Most people, in fact, buy by price.  Which partly explains why airlines have had a race to the bottom in customer service and flying is now only slightly more pleasant than taking a Greyhound bus full of winos.

Then again, there’s not much way of knowing when you buy a ticket which of the two carriers will provide a better experience.   Few of us fly enough to have an informed basis for forming a judgment and I’m not aware of any really good independent comparison mechanism.  For that matter, carriers known for providing a pleasant experience, like JetBlue, do in fact inspire a certain degree of loyalty; but since they also tend to be cheap, it’s hard to disaggregate the effects.

This illustrates an important point: through consumer demand, we ultimately control customer service. If poor customer service was really bothered us, then we could boycott the worst of the perpetrators. I happen to be one of the few people who sticks to a boycott when I’ve been terribly wronged, but I think I’m in the minority. (For example, I haven’t eaten Taco Bell in more than 10 years after swearing it off due to an exceptionally bad experience.) Most people have a very short memory when it comes to bad customer service, especially when low prices entice them return to the company where they experienced annoyance last time.

Most of us, I think, will quickly stop going to restaurants that serve lousy food or treat us rudely.  There are plenty of ready substitutes, after all.  It’s harder, though, for other things.  For example, I refuse to shop at the local Wal-Mart, despite it being conveniently located and typically lower prices, because the shopping experience is so bloody awful.  But it took repeated frustration with the store to instill that because the alternatives are a Target store that’s much nicer but farther away or numerous stops at specialty stores.

This is especially problematic with chain stores.  If I’m treated poorly by at a sole proprietorship, I can assume that this will be the norm and discontinue shopping there.  But one’s experience at a 7-11 really tells you very little about your next trip to that 7-11, let alone how other 7-11s operate.

Regardless, Indiviglio’s larger point is true.  For example, hatred of automated customer service systems (For assistance with installing applications on your iPhone, please press 17) is universal.  Yet they’re now the norm.  They’re obviously cheaper than giving customers what they want — a real, live operator instantly –and customers put up with it.

Michael Tomasky is stoked that Wal-Mart has come out in support of government’s mandating business provide health insurance for all employees. His explanation, however, is curious:

There’s got to be a fascinating story behind the “why.” Wal-Mart would never acknowledge this, but there seems to me little doubt that all the pressure campaigns over the years, the documentary films exposing the company’s dubious practices, and all that kind of thing, led the company to a posture in which it decided it has to change its image.

A simpler alternative explanation:  Wal-Mart is already providing health insurance for its employees at enormous expense and would love to have its competitors forced to do likewise.

Big firms routinely lobby for government regulations that increase barriers to entry into their business and make it harder for others to compete with them.  That Wal-Mart can do that in this instance while coming off as altruistic is an added bonus.

Update (Steve Verdon): In the comments some are wondering if perhaps this is overly cynical. Frequent commenter Odograph notes that the popular perception is that Wal-Mart has a reputation for not insuring its employees. The problem is that this ignores the current political climate. We have a Democrat president, and the Democrats control both the House and the Senate, and the latter with a filibuster proof majority.

Now, you are a Wal-Mart executive do you suggest the company sit on the side lines in the upcoming health care reform debate or do you try to shape the debate to get the best deal you can? I think the latter is the most likely. So, if you think health care reform is coming why not go ahead and try to get the best deal possible? How about a mandatory requirement that Wal-Mart’s competitors also have to provide health care coverage to employees. Wal-Mart is a big company with a huge work force. Such a work force is likely diverse enough so that on average Wal-Mart’s health care costs will be lower than a smaller competitor. If this is the case, then the mandatory health care requirement could drive Wal-Mart competitors out of business. Less competition means that Wal-Mart has more market power. Not just as a seller, but also possibly as a buyer as well.

Now, lets jump in the way back machine to the late 1800s. How did John D. Rockefeller make his fortune? One factor was getting very good deals from rail roads for shipping his oil and kerosene. In one scandal that came out not only was Rockefeller getting rebates for his product, but his competitor’s products as well. Rockefeller had agreed to act as an enforcer for the rail roads in forming a cartel to raise freight prices. Try to chisel on the cartel and Rockefeller would not ship oil and kerosene on your rail road. These deals helped allowed Rockefeller to undercut his competitors and eventually buy them up. And at the same time the price of kerosene dropped from 56 cents in 1965 to 26 cents by 1870. Hmmm, gobbling up competitors and lowering prices…hmmm geee that sounds familiar.

This is a pretty clear example of rent seeking to me. If the health care reform/regulatory bus is about to leave the station, as America’s largest employer do you sit in the station or get on and try to direct which way the bus goes? Of course the latter.

UPDATE (James Joyner):  Cato’s Michael Cannon says a lobbyist told him this was happening a year ago.

“Target’s health-benefits costs are lower.”

I have no idea what Target’s or Wal-Mart’s health-benefits costs are.  Let’s say that Target spends $5,000 per worker on health benefits and Wal-Mart spends $10,000.  An employer mandate that requires both retail giants to spend $9,000 per worker would have no effect on Wal-Mart.  But it would cripple one of Wal-Mart’s chief competitors.

And Wal-Mart and Target can each absorb the blow more easily than a mom-and-pop or a regional startup.

UPDATE (James Joyner): Megan McArdle observes,

Regulation has a very high fixed cost for compliance; the larger the firm, the more dollars/employees over which to amortize the fixed cost.  Meanwhile, market leaders have disproportionate bargaining power, and tend to get better rates from suppliers than smaller competitors.  Finally, a high fixed cost means either that it’s harder to initially enter the market, or (if there are exemptions for the smallest firms) harder to grow.

On the other side, there is regulatory capture.  Wal-Mart is always going to have a seat at the table when employer mandates are discussed, because Wal-Mart is the nation’s largest private employer.  Target and Macy’s probably won’t have a seat at the table.  So Wal-Mart can influence the rules in ways that benefit Wal-Mart at the expense of the competition.  This is partly because the regulators often cycle into jobs at the firms they regulate, but also simply because the regulator’s attention is finite, so being consistently at the table allows you to shape their views over time.

Steve Bainbridge examines in some detail the degree to which “Wal-Mart has been suckling at the government teat for decades, transferring costs to the tax payer whenever possible.“

Fresh off the heels of snubbing Gordon Brown by not holding a joint press conference with him and giving him a gift that could have been purchased at Wal-Mart, Barack Obama has annoyed Nicolas Sarkozy by sending a mash note to former French president Jacques Chirac asserting that, “I am certain that we will be able to work together, in the coming four years, in a spirit of peace and friendship to build a safer world.”

A minor furor has broken out over this in the American blogosphere.  As I note in my New Atlanticist piece, “Obama Reaches Out to Chirac – Another Snub?,” the administration hasn’t explained the letter.  I’m sure the intent was benign but it’s not at all clear how Obama plans to work with a 76-year-old out-of-power politician.

Young Adolf Hitler Campbell was denied a birthday cake by his local supermarket and had to go to WalMart instead.

Heath Campbell, left, with his wife Deborah and son Adolf Hitler, 3, pose in Easton, Pa., Tuesday, Dec. 16, 2008. Deborah and her husband Heath attempted to buy a birthday cake for their son at a near by ShopRite supermarket in Greenwich, N.J. and were told that the store would not inscribe Happy Birthday Adolf Hitler on the cake. The Campbell's also have two daughters, JoyceLynn Aryan Nation and Honszlynn Hinler Jeannie. (AP Photo/Rich Schultz)

A supermarket is defending itself for refusing to a write out 3-year-old Adolf Hitler Campbell’s name on his birthday cake. Deborah Campbell, 25, of nearby Hunterdon County, N.J., said she phoned in her order last week to the Greenwich ShopRite. When she told the bakery department she wanted her son’s name spelled out, she was told to talk to a supervisor, who denied the request.Karen Meleta, a ShopRite spokeswoman, said the store denied similar requests from the Campbells the last two years, including a request for a swastika. “We reserve the right not to print anything on the cake that we deem to be inappropriate,” Meleta said. “We considered this inappropriate.”

The Campbells ultimately got their cake decorated at a Wal-Mart in Pennsylvania, Deborah Campbell said Tuesday.

Good thing for Wal-Mart! But, uh, isn’t Adolf Hitler an odd name, what with the baggage?

Heath Campbell said he named his son after Adolf Hitler because he liked the name and because “no one else in the world would have that name.”

True. And, really, a much better explanation than Levon gave for naming his boy Jesus. (”’cause he likes the name.”)

The Campbells’ two other children are named JoyceLynn Aryan Nation Campbell, who turns 2 in a few months, and Honszlynn Hinler Jeannie Campbell, who will be 1 in April.

Wait a minute . . . I’m sensing a pattern to these names. But before you go jumping to conclusions:

Campbell said he was raised not to avoid people of other races but not to mix with them socially or romantically. But he said he would try to raise his children differently. “Say he grows up and hangs out with black people. That’s fine, I don’t really care,” he said. “That’s his choice.” He said about 12 people attended the birthday party on Sunday, including several children of mixed race.

Well, there you go.

Two people were killed by gunplay at a California Toys R Us yesterday, joining the trampled Wal-Mart worker in New York.   Naturally, this is bringing out condemnations of America’s crazy appetite for stuff.

Mark Silva:

Lay a little blame at the feet of the government, for exhorting Americans to spend more money and shake off that recession gripping the nation. Lay some blame on the media, for stoking the hype surrounding one day of retailing which is, in fact, nothing more than the first of 28 shopping days left until Christmas, with cable news hawking footage of ravenous shoppers storming the doors of stores opening at 4 am.

And in Palm Desert, California, where police say an argument preceded the shooting at a Toys “R” Us, lay some blame on a gun-happy culture which encourages the resolution of simple domestic disputes with the pulling of a trigger.

Kathy Kattenburg:

But I’ve been thinking (being the analytical, rather than the pragmatic, sort) that there is deeper meaning behind this kind of unhinged response to coveted big-ticket “stuff” that normally costs thousands of dollars and for one day only can be had for only a few hundred. People have such a desperate need to have what everyone else has (or what they imagine everyone else has); that seems to be how we measure psychic belonging and emotional safety in our society.

Nor is it just the bleeding heart lefties.  The Anchoress:

Materialism CAN corrupt the soul, of course – as can capitalism untempered by compassion – but as I’ve matured, I’ve come to reject the easy and cynical course that finds “America” and its values to be at the core of every negative situation I encounter. Instead, I have decided to think of the aggression of the battling shoppers to be rooted in vulnerability. They’ve decided they want to purchase a particular item for someone they love. Perhaps this is how they express love. Perhaps they believe, subconsciously, that this is the only way they can be loved back. Perhaps this is a budgeted item and the only way they can afford to purchase it is at a heavily reduced price and – because they love – they’re willing to fight for it.

Looked at in this way, the “crassness” of all of this consumer excess seems less clear, and one finds oneself – as one does all too often, if one is paying attention – in the middle of yet another Holy Mystery. Love is the highest human aspiration, but when it lacks anchoring in something bigger than itself, it tends to drift a bit and take on some detritus (doubt, hurt, anger, self-hate) that gets into the workings and distorts the navigation, a little; in that case, suddenly love can lead us away from, and not toward, our best selves.

Ed Morrissey:

Hundreds of people trampled others to death so that they could get to cheap retail goods the fastest — presumably to celebrate the birth of Jesus Christ.

At some point, that horrible irony should cause people to pause and think about what motivates them in this holiday season.  Everyone likes a good deal, but few of us would choose to die for one — and therefore we shouldn’t want to kill for one, either.  Retailers won’t like to hear this, but maybe we need to spend a little less and recover our humanity just a little more.

Or, maybe this was just a crowd that got out of hand?

The Toys “R” Us incident, apparently, was not a dispute over the last Tickle Me Elmo.  LAT:

The shooting occurred in a crowded toy store on the traditional start of the holiday shopping season, but authorities say it wasn’t related to the bargain-hunting frenzy. [...] Riverside County sheriff’s Sgt. Dennis Gutierrez said the fight was not over a toy and that handguns were found by the men’s bodies. He refused to say whether the shooting was gang-related.

That’s police-speak for “It was gang related.”

(Ironic aside:  Yesterday’s NYT featured a Stephen Roach op-ed hailing the end of the consumer-driven economy.)

Look, I like material possessions and bargains as much as the next guy.  We’ve got a big wall-hanging plasma HDTV, a Blu-Ray, a Wii, and various other goodies.  We shop online when we can to avoid the aggravation but we’re “members” at Costco and shop there with some frequency, putting up with the hordes in order to get good deals; indeed, we bought the TV there.  I tend to wait for sales to buy clothes and have been known to go to T.J. Maxx and outlet malls to look for good deals.

We avoid Black Friday shopping like the plague, though, unwilling to fight like animals to save a few bucks. I don’t understand the mentality of people who are willing to line up outside a Big Box Store at 4 a.m. in order to scramble over cut-price merchandise.  Even when I was young and thin of wallet, that just didn’t appeal to me.  Lots of people, though, find the experience thrilling.  Reasonably affluent people who could afford to pay the extra $19.99 for the item make a sport of shopping.

Retailers have clearly determined over the years that hype is a way of attracting customers.  Otherwise, why force people to get up at the crack of dawn to get good deals?  Why not just open the damn store at 9 a.m., like usual?

The problem with hype and frenzy, though, is that it sometimes gets out of control.  More people than expected show up, the crowds are too big, and the stocks are too low to accomodate them.  Madness ensues.  People hopped up on adrenaline do dumb things, especially in the anonymity of crowds.  Store management has a duty to be aware of this — that’s doubly so for giant enterprises like Wal-Mart, which have huge amounts of institutional experience to draw from — and take appropriate precautions.

I don’t let society totally off the hook, though.  The problem, however, isn’t so much eagerness to acquire crap at a good price as a solipsistic disregard for one’s fellow man.  Anyone who’s been in an airport, a movie theater, or a restaurant — much less driven their car — with any frequency knows that people can be incredibly rude without the lure of cheap crap.  Far too many people seemingly have no clue that there are other people in the world; certainly, they don’t care.   Unfortunately, a small number of such people can ruin the experience for everyone else.

As seems to happen every year, a trampling incident has occurred as a result of a “Black Friday” sales promotion gimmick. This time, a man has died.

Police tape surrounds a Wal-Mart that was the scene of a deadly stampede. (NY Daily News)

A Wal-Mart worker died after being trampled when hundreds of shoppers smashed through the doors of a Long Island store Friday morning, police and witnesses said. The 34-year-old worker, employed as an overnight stock clerk, tried to hold back the unruly crowds just after the Valley Stream store opened at 5 a.m.

Witnesses said the surging throngs of shoppers knocked the man down. He fell and was stepped on. As he gasped for air, shoppers ran over and around him. “He was bum-rushed by 200 people,” said Jimmy Overby, 43, a co-worker. “They took the doors off the hinges. He was trampled and killed in front of me. They took me down too…I literally had to fight people off my back.”

[...]

A 28-year-old pregnant woman was knocked to the floor during the mad rush. She was hospitalized for observation, police said. Early witness accounts that the woman suffered a miscarriage were unfounded, police said. Three other shoppers suffered minor injuries, cops said.

Before police shut down the store, eager shoppers streamed past emergency crews as they worked furiously to save the store clerk’s life.  “They were working on him, but you could see he was dead, said Halcyon Alexander, 29. “People were still coming through.” Only a few stopped. “They’re savages,” said shopper Kimberly Cribbs, 27. “It’s sad. It’s terrible.”

This isn’t even the first such incident at a Wal-Mart.  While people ultimately take the risk of such obvious possibilities into their own hands, store management has some obligation for such predictable results.

Alas, I’ll repeat my prediction of a few years back at a similar but less tragic incident in Richmond involving laptop computers:  “I’m guessing no future Nobel Prize recipients were involved in this incident.”

Wal-Mart is now Walmart and they’ve got a happy, shiny, new logo:

The “Save Money. Live Better.” branding is probably a step forward. I’m rather dubious about the non-hyphenated name change, although that was actually the store’s original name.

The logo is an improvement over its very dated predecessor but I share Armin’s reaction of, “Really? This is the best Walmart can do”? Tyler Cowen thinks it “at least ten years overdue.” Andrew Sullivan is non-committal but passes on a critical review.

A history of Wal-Mart/Walmart’s logos below the fold.  Interestingly, aside from the informal lower case font and curious asterisk, this is very much Back to the Future, resembling the very first logo much more than any of its successors.

Despite the mythology of soldiers “carrying 40 pounds of body armor in 130-degree temperatures” during their tours in Iraq, David Sessions explains, “the highest temperature ever recorded in Asia is 124 degrees—in Dhahran, Saudi Arabia.” Further, since there’s little humidity in the desert, “the heat index won’t be much higher than the actual temperature.”

Veterans of the Vietnam war also bandy about the 130-degree figure but, since Vietnam is in Asia, and it’s never been above 124 degrees there, it can’t be right. (Although, to be fair, it’s humid in the tropics, so the heat index might actually reach that mark.)

Maybe soldiers just like to bitch about how hot it is? Almost certainly. But there’s also a scientific explanation:

Soldiers and travelers often measure the temperature with personal thermometers, which tend to give inaccurate readings. Command posts sometimes place thermometers on their outside walls or other locations within their encampments, but these thermometers are also cheap and unscientific; one solider described them as the kind of thing you’d pick up from Wal-Mart or see in someone’s garden.

But even a perfectly functioning thermometer, if placed on a solid surface, is likely to deliver higher readings than one set up in an open, breezy area. In general, a solid object absorbs more heat than an equivalent volume of air and can rise to a higher temperature given the same amount of sunlight. An instrument placed on sand or concrete will absorb heat from that surface—obscuring (and inflating) the actual air temperature. So, depending on where it’s sitting, a surface thermometer can be off by more than 10 degrees. That’s why professional meteorologists prefer to measure the temperature in a ventilated location, and never set up their instruments on heat-conducting surfaces like sand, concrete, or asphalt.

Indeed, my car has a thermometer which displays external temperatures and I’ve frequently recorded 100-degree plus temperatures this summer, even though we’ve only barely crossed that mark here in the official statistics. The asphalt, though, apparently gets there more often.

UPDATE: Several commenters point out, quite correctly, that our soldiers in Iraq are quite frequently working on sand and asphalt and that, therefore, the fact that the official air temperature in some breezy location is of small comfort.

John Burgess adds another wrinkle:

Governments have laws or regulations that prohibit laborers from working when the outside temperature exceeds a certain point. (See Standing Up for Laborers in the Saudi Summer)

If the Weather Bureau says it’s above the set point, then millions of dollars of work isn’t getting done. The higher the temperature rises above the limit, the harder it is for the Weather Bureau to dissimulate. But it’s amazing how temperatures only rarely rise above the legal limit.

Interesting. While I”m well aware that government statistics are often skewed for a variety of reasons, especially in the developing world, it had never occurred to me that they’d lie about something as innocuous as temperature data.

Hillary Clinton will give back $850,000 in bundled funds raised, apparently illegally, by Norman Hsu.

Sen. Hillary Rodham Clinton’s presidential campaign said Monday it will return $850,000 in donations raised by Democratic fundraiser Norman Hsu, who is under federal investigation for allegedly violating election laws. Clinton, D-N.Y., previously had planned only to give to charity $23,000 she received from Hsu for her presidential and senatorial campaigns and to her political action committee, HillPac.

The FBI is investigating whether Hsu paid so-called straw donors to send campaign contributions to Clinton and other candidates, a law enforcement official said Monday.

“In light of recent events and allegations that Mr. Norman Hsu engaged in an illegal investment scheme, we have decided out of an abundance of caution to return the money he raised for our campaign,” Clinton spokesman Howard Wolfson said in a statement Monday night. “An estimated 260 donors this week will receive refunds totaling approximately $850,000 from the campaign.”

Wolfson said the Clinton campaign also will vigorously review its fundraisers, including thorough criminal background checks, in the future. “In any instances where a source of a bundler’s income is in question, the campaign will take affirmative steps to verify its origin,” he said.

The amount that the campaign identified as raised by Hsu would make him one of her top fundraisers. During the first six months of this year, her presidential campaign raised $52 million from individual contributors, second to Sen. Barack Obama, D-Ill., who raised $58.5 million.

Since 2004, Hsu has donated $260,000 to Democratic Party groups and federal candidates, and raised hundreds of thousands of additional dollars. He was regarded as a top party fundraiser until recent reports surfaced that he was wanted on a warrant in California in connection with a 1991 grand theft charge.

Federal authorities are looking into whether Hsu leaned on investors to contribute to political candidates after paying them big earnings from a shady business venture he was running, the law enforcement official said. Such a scam — using conduit contributors known as straw donors — is a violation of the Federal Election Campaign Act, which limits how much money individuals can give to candidates and political committees. The FBI may be looking at other potential charges as well, according to the law enforcement official who spoke on condition of anonymity because of the ongoing investigation.

This is the first time I’ve mentioned this scandal which has simply failed to pique my interest until now. I’m rather sure Hsu is a crook but have no reason to think Clinton or other Democratic candidates who took his money were involved in any wrongdoing or knew about the schemes. My hunch is that candidates don’t look gift horses in the mouth very often.

That the campaign will now start conducting criminal background checks on big donors is amusing. It’s a good PR move, I suppose, but rather silly. How many cases like this have their been?

Jeralyn Merritt hopes the checks will indeed be limited to big time bundlers. “For the individual donor, I think it’s important they be allowed to donate to political campaigns, up to the allowed $2,300.00, without fear of a background check.” Out of sheer practicality, I’m sure that will the case. I don’t know the logistics of running criminal checks from outside the auspices of a law enforcement agency but I’d imagine it’s rather expensive and time consuming. (I am, however, amused at the notion that donating money to political campaigns will reduce recidivism.)

Flip Pidot has a clever comparison of the fundraising activities of Hsu and Jack Abramoff. Let’s be clear, though: The scandal in Abramoff’s case was that several political figures, including a White House staffer and two Congressmen, were involved in his crimes and that bribery took place. So far, the politicians to whom Hsu donated appear to be clean.

Does all this, as Gaius suggests, point to a wider “culture of corruption”? We’ll see, I suppose. The incentives to raise large piles of cash are strong and the penalties for wrongdoing are usually small and after-the-fact.

Roger L. Simon wonders if this might not signal the end of the era of big money politics.

McCain-Feingold solved nothing. One of things about the Thompson campaign is that he has been doing well without a lot of money (ahead in today’s Rasmussen). If that keeps up, maybe he will prove that you can run without such a ton of cash…. of course, he’s an actor and all but… with the current insatiable media, almost anyone credible gets a huge amount of attention. Maybe the ability to buy endless ads doesn’t amount to so much anymore. People tune them out. I know I do.

An intriguing concept but I’m a little dubious. Like Roger, I tune ads out. Still, ads must work in the aggregate or else Coca-Cola, Wal-Mart, and Nike — who are run by some pretty savvy people — would quit running them. And Fred Thompson has been the beneficiary of a lot of free media, partly owing to his non-political celebrity and partly because of the shrewdness of his long tease of a pre-campaign. I’m not sure how easily that could be replicated by other candidates.

Meanwhile, Ben Smith questions the timing.

Can you think of a better evening to get bad news out? It’s the eve of 9/11 and the midst of the Petraeus circus, not to mention the week of Rosh Hashannah. Anybody else got some bad news they want to dump?

This ain’t her first rodeo. Still, this news was prominently mentioned on NPR and the big papers, so it’s not as if this is going to be buried. No candidate wants to be associated with criminals. Again, though, there’s no reason to think she’s done anything wrong here.

One of the things about people who seem biased against markets is that they seem to ignore the effect reputations can have on helping to ensure that markets work. If a firm builds up a reputation that is costly then that can act as a signal to consumers that the firm is producing goods of a given level of quality. If the reputation is costly to build and it results in enhancing profits then the firm will also take steps to help protect its reputation. Phil Miller points to such an example,

“Our children are guinea pigs in these products,” said Nancy Cowles of Kids in Danger, a Chicago-based advocacy group. “We need to demand that these Chinese products be improved and made safe.”

So if the government doesn’t protect consumers, who will? The companies who sell the goods will, of course.

While the nation’s three biggest toy retailers — Wal-Mart, Toys ‘R’ Us and Minneapolis-based Target — hire third-party inspectors in China to test for lead paint and choking hazards, there’s no federal law requiring them to do so.

Why do this? A firm like Toys ‘R’ Us has a reputation that it wants to protect as such it will take steps to protect this reputation. Of course, having a reputation isn’t some sort of magic bullet. If the cost-benefit analysis suggests that a firm would be better off taking a hit to its reputation then the firm might opt for that outcome. Still, when a firm is actively seeking to protect its reputation and in a way that will enhance its reputation then calling for additional government intervention might not only be unwarranted, but wasteful as well.

Salon’s Farhad Manjoo notes the fight of one brave lawmaker to end the impossible tyranny of Apple and AT&T over the Must Have Gadget of the Century, the indispensable iPhone.

Edward Markey, the Massachusetts Democrat who chairs the committee, began the affair by holding up the phone and hailing its “sheer brilliance and wizardry,” noting that “undoubtedly consumers will cherish this device as though it is a part of their family.”

But the iPhone, Markey said, “highlights both the promise and the problems of the wireless industry today.” The phone sells for full price, yet owners get essentially no rights over how to use it; the phone forces you to sign a two-year contract with poorly ranked AT&T service, at pain of a $175 early-termination fee. “Many consumers feel trapped having bought an expensive device or having been locked into a long-term contract with significant penalties for switching,” Markey said. And it’s not just iPhone owners. Nobody likes their cell provider; people are sick of the fees, they’re sick of the stringent contracts, they’re sick of the bad cell signal. But what are you going to do? There are four large cell carriers in the U.S. — AT&T, Verizon, T-Mobile and Sprint — and none has customers who are particularly happy.

Ezra Klein remarks, “It’s really rather remarkable how totally we let cell phone companies screw us over.”

Truly, this is a national tragedy. If only — if only — there were some way to escape this abuse at the hands of our corporate overlords.

Now, some of you are probably thinking, “But, James, you don’t have to sign a long-term contract with AT&T. And you don’t have to get an iPhone. Generations of Americans have gotten along without them. And, if nobody buys one, Apple will change their business model.”

Now you’re just talking nonsense. Didn’t you read what Markey said about “sheer brilliance and wizardry”?! Plus, as Manjoo points out, AT&T has a veritable gun to your head, forcing you to give up your rights to chose other companies:

Many people might consider this a good trade; get a free phone, sign a long-term contract. But as Chris Murray, an attorney at Consumers Union, pointed out at the House hearing last week, wireless companies don’t give customers a choice over whether they want to take this deal. You can’t offer to pay full price for a handset in exchange for a reduced early-termination fee and an unlocked phone — no major firm will let you do that. Indeed, in some instances carriers will charge you a fee even when they don’t offer you any break on the price of the phone. The iPhone is the primary exhibit: AT&T doesn’t subsidize the price of the phone, but you’re still locked to a single provider.

So, you see, if you don’t enter into a contract with them, agreeing to do some stuff you’d rather not do, they won’t enter into a contract with you and give you the stuff you want from them.

That’s pretty harsh. It reminds me of when I was 15 and joined the Columbia House Record Club. They sent me 13 albums for a penny. Then, they had the audacity to expect me to buy six more albums from them — at prices higher than Wal-Mart charges for them — over the next three years plus pay shipping and handling. Sure, I knew that going into the deal but all I could see was “13 albums for a penny.” The rest of the deal was not to my liking. Boy, was I steamed.

Now, sure, I could get the really cool phone and cough up the extra $175 and break the contract with AT&T so that I could get the far, far better cell phone service offered by other companies — where they let you transmit not only voice but also text via “satellite signals.” But, sheesh, who wants to do that? There oughta be a law!

UPDATE: Triumph thinks the last option unavailable because Apple has “locked” the phone to protect the exclusivity given AT&T. While not part of Markey’s discussion, Manjoo notes that issue later in his piece. Apparently, there are numerous ways around it.

Still, I’m not sure how this is different than the “proprietary” game that Sony played unsuccessfully with BetaMax and Apple has played very successfully with the iPod. Ultimately, people buy the product under the terms it’s being offered or they don’t. If the product is good enough, people will put up with it. If a suitable substitute exists, they don’t.

For the record: I don’t own an iPhone and have no plans to buy one anytime soon. I have had cell service with AT&T (mostly, under the Cingular name) for years. My two year contract is actually up and I’m going month-to-month for now.

The last Harry Potter book will be a runaway bestseller but will likely not make booksellers and money, Reuters reports.

Millions of people will descend on stores for a copy of “Harry Potter and the Deathly Hallows” in July, but deep discounts mean many will struggle to turn a profit from the jamboree.

“Everywhere you go there is huge, ridiculous discounting by the chains,” said Graham Marks, children’s editor at the British-based trade magazine Publishing News. “They are literally not going to make one penny out of the book. It is stupid – just throwing money away … The world has gone mad.”

Online retailer Amazon.com (up $0.00 to $73.24, Charts, Fortune 500) and Wal-Mart Stores Inc. (up $0.00 to $50.08, Charts, Fortune 500) have slashed nearly 50 percent off the book’s $34.99 list price, forcing many independent booksellers to follow suit to stay competitive. Barnes & Noble Inc. (Charts, Fortune 500) and Borders Group Inc. (up $0.00 to $20.23, Charts), the world’s largest booksellers, are selling it at 40 percent off.

Such price cuts drive sales, but usually result in minimal profit margin, something Jefferies & Co analyst Tim Allen said typically happens on every bestseller. “It’s so discounted, there’s minimal, if any, gain,” Allen said. “Retailers try to make up the shortfall by marketing loyalty cards, which they hope will entice shoppers back into their store.”

Great news for consumers, if a bit odd. Turning the most popular books into loss leaders strikes me as an odd strategy but, presumably, retailers have found this an effective way to get people into the store to buy less publicized titles.

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Related:

Harry Potter and the Deathly Hallows
Rowling to Kill Two Characters in Final Harry Potter Book
J.K. Rowling Begins Last Harry Potter Book
Harry Potter Betting Resumes
Harry Potter and the Half-Blood Prince Out July 16th
Ralph Fiennes to Play Voldemort in Next ‘Potter’
Harry Potter and the Half Blood Prince
Quidditch Deconstructed
No Wizard Left Behind

Alex Tabarrok has en extensive review of Tom Slee’s No One Makes You Shop at Wal-Mart, which he dubs “the best of the anti-market books: it is well written, serious, and knowledgeable about economics.”

The next several paragraphs demonstrate why “best of the anti-market books” is faint praise, indeed, and makes the description “well written, serious, and knowledgeable about economics” seem far too kind.

The inflation-adjusted cost of the wars in Afghanistan and Iraq have now exceeded that of the Vietnam War, Lori Montgomery reports in the business section of WaPo, but the cost has been virtually unnoticed because of our relative affluence.

The global war on terror, as President Bush calls the fighting in Iraq and Afghanistan and related military operations, is about to become the second-most-expensive conflict in U.S. history, after World War II.

Since the Sept. 11, 2001, terrorist attacks, Congress has approved more than $609 billion for the wars, a figure likely to stand as lawmakers rework their latest spending bill in response to a Bush veto. Requests for $145 billion more await congressional action and would raise the cost in inflation-adjusted dollars beyond the cost of the wars in Korea and Vietnam.

But the United States is vastly richer than it was in those days, and the nation’s wealth now dwarfs the price of war, economists said. Last year, spending in Iraq amounted to less than 1 percent of the total economy — about as much as Americans spent shopping online and less than half what they spent at Wal-Mart. Total defense spending is 4 percent of gross domestic product, the figure that measures the nation’s economic output. In contrast, defense spending ate up 14 percent of GDP at the height of the Korean War and 9 percent during the Vietnam War.

And this time, the war bill is going directly on the nation’s credit card. Unlike his predecessors, Bush is financing a major conflict without raising taxes or making significant cuts in domestic programs. Instead, he has cut taxes and run up the national debt. The result, economists said, is a war that has barely dented the average American’s pocketbook and caused few reverberations in the broader economy.

All-and-all, it would seem a good thing that we’re becoming richer and can afford both guns and butter. To the extent that the wars in Iraq and Afghanistan are making us more secure — and I grant that there is significant debate on that issue — then financing it in such a way that is largely painless is a net good. Further, it’s not unreasonable that future generations would pay part of that cost, since defeating the jihadists would redound to their benefit as well.

Will Wilkinson, though, notes that it has the negative consequence of making it easier for the government to fight an unpopular war:

Government is generally inefficient relative to markets because, among other things, periodic voting is a terribly slow feedback mechanism compared to the rapid adjustment of market prices. A policy can be failed for a long time before voters catch on and demand at the polls that it be changed. When voter demand and taxpayer cost are disconnected in the way debt-financing disconnects them, the problem of slow feedback is made even worse, practically ensuring the persistence of expensive, failed policies.

I think that’s right, whether we’re talking about defense policy or any other issue. Then again, making people feel large amounts of economic pain all at once for investments designed to yield benefits in the longer term would stifle good policies as well as bad.

Wal-Mart’s PR firm has sent me a release noting that Wal-Mart has a new television show called “In Front With Wal-Mart.”

Somehow, I don’t believe I’ll be adding this to my TiVo list.