No clips today, just personal testimony. Citibank has won its war against consumers--at least, this consumer. First they tried to change my bank card to a Mastercard debit card without my permission. I was able to stop this. Then, they changed the password on my account for no reason. I was able to sort this out. They also saw fit to unilaterally cancel my visa card and change it to a mastercard. I was unable to stop this. After much screaming on the phone, they gave me a visa but it would be a new one, with a new number. So long every online merchant I have an account with, so long Paypal, so long automatic bill payment at Sprint. But I had to fight to get them to activate this new card.

I hope mastercard paid them enough. This customers is gone.

Cutting subsidies The European Commission's promise last week to get tough with EU accession countries over state subsidies for industry is welcome. Mario Monti, the competition commissioner, was right to insist that enlargement cannot go ahead without the development of free and fair industrial markets.

Business vs. Workers In an age when capitalism is supposed to have triumphed over everything else, it's surprising to see government figures (especially in the US, the most capitalist of them all) on the Republican side (also, supposedly the most capitalist of them all) get it wrong. Capitalism is neither about business nor workers, it's about consumers. The mandate of the FCC is to make life better for consumers. The new Republican crew wants to make life better for business. Why?

Frightening and sick is the only way I can describe the moves to erode the "right of first sale." This is the right you have to sell your book or bicycle to someone else after you've bought it. The software industry, lead by Microsoft, spawn of Satan, wants to ban customers from being able to resell, or loan, something after they have bought it. Basically, according to them, you can buy something and still not own it. Evil.

Protecting consumers from themselves is a popular ploy of protectionist predators. Here, Levi's argues that it takes specially trained personnel to sell their jeans, because customers need to have different shades of blue explained to them, and the difference between "baggy" and "slim fit." The real reason behind this inanity: Levi's wants to continue to charge folks in the UK extra for their jeans.

AOL/Time Warner Two articles about AOL/Time Warner. I don't know much about the deal, but given how cosy Bush is with the bad old days of business, I think that these deals will not turn out good for the customer/competition.

MSNBC: Rivals of AOL Time Warner face battle with giant, despite curbs. The requirement that AOL Time Warner eventually open up parts of its instant messaging, cable-TV and interactive television systems to competitors represents a big reversal from a year ago, when some consumer groups feared the deal would be approved without conditions.

Industry Standard: The Rules of Politics. Two days after the Supreme Court embarrassed its apologists, the FTC approved the merger of America Online and Time Warner under terms that took cynics by surprise.

Currency Machismo The posturing over currency exchange rates best illustrates the shallowness of understanding about economics. The Financial Times is usually a decent publication, but this article about Japan letting the Yen weaken against the Euro and US Dollar is full of macho posturing.

For some reason, people think their currency's exchange rate is a proxy for their national virility. A strong currency, they emote, means that we are a strong country.

Idiots.

The exchange rate has nothing to do with national economic strength (or any other sort of strength, for that matter). There are many benefits to a weak currency, it boosts internal consumption, helps exports, and is just the ticket if your currency happens to be deflating and you're carrying a large amount of public debt.

And oh look, Japan's a country with weak consumption, falling exports, a deflating currency and spiraling public debt. Maybe, just maybe, Japan can boost its economy by inflating away the value of the Yen. Paul Krugman has been making this point forever.

Stupid ideas don't die, they just become noble Here's a great example of a person who just doesn't get it. For those who follow the US stock market, Federal Reserve Chairman Alan Greenspan recently cut interests rates on fears that the US economy was in danger of entering a recession. Basically, Greenspan made it cheaper to borrow money, and therefore cheaper to invest. Hopefully this will stave off a recession.

This idiot article denies the role of economics in, well, the economy. The author thinks everything is about politics, and probably has never bothered to add in his life. Why else would he think that Greenspan presiding over the US recession in the early 90s is cause to hang him? The fact that the US was not in recession for long is lost.

What is most disturbing is the self-satisfied nobility he infuses his comments with, presumably because he truly believes that his ideas are morally superiority in some way. He is unaware that his brand of ignorance is the cause of poverty and misery around the world. There is nothing noble about intellectual flabbiness.

Winterspeak is back online! I am back from vacation, which I hope to write up and put online somewhere. So, winterspeak should be back online, and again I will aim for about five blogs a week.

Let's start this year with inefficiency at the Nasdaq The SEC recently released a study that said trading on the Nasdaq is more expensive than trading on the New York Stock Exchange. This is not because of price collusion, unlike the SEC's rather scathing report in 1994 where price collusion between Nasdaq traders kept spreads artificially high. It's just interesting to see inefficiency in the infrastructure of a system that helps drive inefficiency out.

Productivity Although productivity sounds boring, it is actually the single most important factor to consider when thinking back on America's recent stock market boom (and subsequent deflation). While things were good, people were claiming that the Internet was making everyone wonderfully more productive, and so we could all expect rapid growth with low inflation. Now that the Nasdaq is trading at well under 4K, the predictable counterclaims are being made, saying that productivity gains are bogus. Some other news magazines have picked this up as well, going so far as to say that productivity has actually declined over the past few years. Time to add some substance to these claims.

1) Productivity is the rate at which time is converted into money. Nothing more, nothing less.
2) Productivity is best increased by INNOVATION, not throughput. This is actually a fairly new way of thinking about productivity, which is not that well understood, so this may change in the future. Basically, this means that when things are completely restructured to make them work better, you get high productivity gains (so individual electric motors in factory machines increases productivity, while replacing a central steam engine with a central electric motor does not). In the same way, Moore's Law, which states that processor speed doubles every 18 months has no bearing on productivity increases. It's not how much more you got, it's what you do with it.
3) Since innovation creates NEW things, it's hard to measure its value. Viagra cures impotence for a few bucks a pop. It used to be IMPOSSIBLE to cure impotence. Is that an infinite improvement in productivity? Is that worth infinite dollars? In the same way, this blog (both me creating and you reading it) would be IMPOSSIBLE without the Internet. What's that worth? It's easy to measure productivity when you go from the expensive to the cheap, but how much does productivity improve when you go from the impossible to the possible?

So, has productivity improved? Probably some. My main point is that most businesses (and people) have no clue about how to use the Internet and computers, and the BIG gains from using IT are still to materialize. Although I hope they will start to over the next 20 odd years.

By the way, I am still technically on vacation, so please do not expect regular postings for a few days yet. Happy 2001.