Kevin Drum

The Hotel Industry Is Apparently Hellbent on Screwing Its Guests

| Wed Dec. 24, 2014 2:50 PM EST

The sheer venality and barefaced contempt for its customers that's so often displayed by corporate America never ceases to amaze me. I had no idea this was going on:

Microsoft and Google don’t agree on much, but they’ve presented a united front against the hotel industry, which is trying to convince government regulators to give them the option of blocking guests from using personal Wi-Fi hotspots....In October, Marriott settled an FCC complaint about the practice for $600,000 but argued that it hadn’t broken the law and was using technology to protect guests from “rogue wireless hotspots that can cause degraded service, insidious cyber attacks and identity theft.”

....Opponents of the proposal basically argued in filings late Monday that the hotel industry is just trying to keep guests and exhibitors dependent on pricy hotel wireless networks. They suggested hotels have other options for protecting Wi-Fi networks than jamming personal hotspots.

Years ago hotels lost the ability to charge outrageous prices for phone calls, so now they're engaged in a desperate rear-guard attempt to keep charging outrageous prices for Wi-Fi. Here's a suggestion instead: provide decent rooms at reasonable prices, and offer your guests additional services at reasonable prices too. Ho ho ho.

POSTSCRIPT: I wonder what the range of these jamming devices is? If Marriott or Hilton ends up jamming a Wi-Fi hotspot that someone is using on a public sidewalk outside one of their hotels, are they liable for damages?

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How Much Would You Pay For $4,905 In Pension Benefits?

| Wed Dec. 24, 2014 1:03 PM EST

Adam Ozimek points us to some recent research suggesting that people don't actually value pensions very highly:

The study utilizes a change in policy in Illinois that allowed teachers to purchase more pension benefits in exchange for a one-time fee. This allowed the determination of how much teachers are willing to pay for marginal pension benefits. The authors found that on average, teachers valued each $1 in marginal pension benefits at $0.20.

This is useful information for two reasons. First, it suggests states may be able to save money and make teachers better off by buying back pension obligations in exchange for current lump sum payments. Second, it suggests that for districts looking to cut costs, decreases in benefits do not need to be offset with equal dollar value increases in current pay in order to maintain labor supply.

(Yes, that's 20 cents for one dollar of present value. Specifically, the study finds that on average, teachers are willing to pay only $1,000 for benefits that the pension fund has to pay $4,905 to purchase.)

But does this mean that Illinois teachers would snap up a $1,000 lump sum today in return for a decrease of $4,905 in future pension benefits? Not so fast, pardner. A combination of status quo bias, loss aversion, and the endowment effect suggests that things wouldn't be so easy.

Status quo bias is just what it sounds like: we all tend to succumb to a sort of emotional inertia that favors whatever benefits we happen to be getting at the moment. Loss aversion is the well known effect that people work harder to avoid the loss of $X than to secure the gain of $X. And the endowment effect causes people to ascribe greater value than normal to things they own, solely because they happen to own them. Put all these things together, and it's highly unlikely that Illinois teachers would be willing to sell off a dollar of benefits they currently get in return for 20 cents today. In fact, it's quite possible they'd only sell it off for more than a dollar.

Of course, this applies only to workers who are already vested in a pension system. For brand new workers, given a choice of salary today vs. pension tomorrow, it's quite possible they'd undervalue the pension. In fact, I'd say it's almost inevitable, since most of us do exactly that. Nonetheless, I'm skeptical that this research tells us much about either the size of this effect or whether it would be good public policy to even offer the option. The circumstances are just too different.

The Wonkosphere's Top Evergreen Stories, Explained

| Wed Dec. 24, 2014 11:01 AM EST

The news business has always had evergreen stories. When Time magazine asks "Why Did Jesus Have To Die?" on its cover, it's following in its own footsteps along with hundreds of others. If it's Easter, we have stories about Jesus.

The wonky blog world has its own odd set of evergreens. These are stories that might have been interesting the first time I read them, but which I'm now heartily sick of. So even though I'm a day late for this to be part of the Festivus airing of grievances, here are a few examples:

  • Does Daylight Savings Time really reduce energy consumption?
  • An economist explains why Christmas gift giving is inefficient.
  • The Declaration of Independence wasn't really signed on July 4th.
  • Christmas and those crazy Asians: KFC in Japan and Spam in South Korea explained.
  • Scientists are adding a second to the year today. Here's why.
  • The Dow is a lousy proxy for the actual state of the stock market.
  • Etc.

Of course, if this year happens to be the first time you see any of these evergreens, they're fresh and new to you. It's only the fact that I've seen them so many times that makes them so tired to me. So feel free to ignore my griping on this subject. In fact, feel free to mock me for it if you like.

Anyway, I was reminded of this by the inevitable spate of bloggish stories last week about why Christmas is inefficient, and then reminded again by not one, not two, but three bloggy pieces about KFC in Japan that I happened to see within five minutes of each other this morning. (Bad luck, that!) And it got me thinking: ordinary old-school evergreens all seem pretty understandable. But these wonkish blog evergreens seem....a bit odd. So I'm curious: what is it that makes a subject a bloggy evergreen? What do these kinds of stories have in common?

Once I figure it out, I plan to write a blog post about it every year. Sort of like the one I write every year about the origins of Black Friday. Are you sick of that one yet?

Hollywood Backstabbing Over "The Interview" Now in Full Swing

| Wed Dec. 24, 2014 10:14 AM EST

We all heard yesterday that Sony Pictures made a last-minute decision to release The Interview on Christmas after all, thanks to pleas from a couple hundred independent theaters that agreed to defy Kim Jong-un and show it. So the honor of Western civilization is saved and everyone is happy. Right?

The film's limited release drives a further wedge between Sony and the nation's largest theater owners, who blame the studio for yanking away a potential hit. It was supposed to open on 3,000 screens before Sony and theater chains shelved the movie.

Theater owners are also upset that Sony is negotiating to release the movie simultaneously on a video-on-demand platform...."They could have a full theatrical release. Instead they have a token," said one theater executive who asked not to be identified because it could harm his relationship with the studio.

Wait. What? I thought this whole fiasco had been driven in the first place by the refusal of big theater chains to show the movie amid fears of terrorist retaliation. So what are they all griping about?

The disagreement over a digital release played into larger tensions between Sony and theater owners after hackers last week threatened physical harm on moviegoers who saw "The Interview."....Worried about a potential threat, Sony said it canceled the movie after large chains backed away from the film.

But theater owners have been pointing the finger at the studio for originally giving them the OK to not run the film amid the threats. Then Sony blamed the nation's four big theater chains for forcing the studio to cancel the original release....Representatives of Regal, AMC, Cinemark and Carmike declined to comment on the matter.

OK, I guess I'm officially confused. Did Sony cancel the Christmas release date of The Interview because malls and theater chains were desperate to back out of showing it? Or did malls and theater chains back out because Sony had implicitly urged them to do so when it gave the chains permission to break their contractual commitments to show the movie? Or are both sides now just furiously trying to shift blame after being called out for cowardice by everyone from George Clooney to President Obama?

The latter, I suppose. In any case, now I know what I want for Christmas: A country that doesn't spin into a damn tizzy over every little thing. From Ebola to ISIS to the Sony hack, you'd think we were all at risk of losing our lives to outside forces every time we step off our front porches. In the immortal words of Aaron Rodgers, can we all please R-E-L-A-X?

Quote of the Day: "That Could Have Been Any One of Us"

| Tue Dec. 23, 2014 8:42 PM EST

From Michelle Conlin of Reuters, who interviewed 25 active-duty and retired black NYPD police officers, nearly all of whom said they themselves had been treated harshly by fellow cops when they were out of uniform:

At an ale house in Williamsburg, Brooklyn last week, a group of black police officers from across the city gathered for the beer and chicken wing special. They discussed how the officers involved in the Garner incident could have tried harder to talk down an upset Garner, or sprayed mace in his face, or forced him to the ground without using a chokehold. They all agreed his death was avoidable.

Said one officer from the 106th Precinct in Queens, “That could have been any one of us.”

It shouldn't be too hard to hold two thoughts in our minds at once. Thought #1: Police officers have an intrinsically tough and violent job. Split-second decisions about the use of force come with the territory. Ditto for decisions about who to stop and who to keep an eye on. This makes individual mistakes inevitable, but as a group, police officers deserve our support and respect regardless.

Thought #2: That support shouldn't be blind. Conlin reports that in her group of 25 black police officers, 24 said they had received rough treatment from other cops. "The officers said this included being pulled over for no reason, having their heads slammed against their cars, getting guns brandished in their faces, being thrown into prison vans and experiencing stop and frisks while shopping. The majority of the officers said they had been pulled over multiple times while driving. Five had had guns pulled on them."

Respect for the police is one of the foundation stones of a decent and orderly society. But police work is one of several professions that are inherently coercive and invest their members with tremendous amounts of sometimes unaccountable power over the rest of us. It's equally a foundation stone of a decent and free society to maintain vigilant oversight of professions like this, and to deal vigorously with the kinds of systemic problems that the routine exercise of power and authority makes unavoidable. Belief in the latter does not exclude belief in the former.

Smile! You're on Cop Cam!

| Tue Dec. 23, 2014 2:51 PM EST

Seattle police have made the decision to adopt body cameras, but this means they need to find an automated way to blur out things like faces and license plate numbers before the footage becomes public. Dara Lind comments:

But as police departments move cop cams into the field, the an important question becomes whether there are things that shouldn't be recorded to protect civilians' privacy. And if so, who controls the footage?....As reported in Slate, the programmers that participated in the hackathon focused on ways to automatically redact police footage so that, for example, civilians' faces and license plate numbers were blurred.

The fundamental appeal of automatic redaction for a city government is pretty clear. If you can write an automated program that takes care of any privacy concerns, you can release body-camera footage to the public en masse. Without an automated solution, the city would have to rely on the police department to edit the footage — which opens the door to manipulation.

En masse? I wonder where this leads? If I get pulled over for speeding in Seattle, the encounter will be saved on video. Does that get released to anyone who wants to see it? Does every encounter with a police officer become public? How long will police departments be required to save video records? What kind of indexing requirements will be imposed? Will they all be accessible as public records via Freedom of Information requests?

These are good questions to ponder. Body cameras for police forces are a good idea, but there are downsides as well as upsides.

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Everyone Wants the Cuba Embargo to End

| Tue Dec. 23, 2014 1:44 PM EST

According to the latest Washington Post/ABC poll, 64 percent of the American public supports establishing diplomatic relations with Cuba. And even greater numbers want to get rid of the trade embargo:

Those are remarkable numbers. Everyone supports an end to the embargo by wide margins, even Republicans. I checked all the other crosstabs, and it turns out that ending the embargo is supported by all parties, all ideologies, all sexes, all ages, all races, all education levels, all incomes, and all regions.

The only subgroup that opposes it—barely—is conservative Republicans, who make up about 17 percent of the population. So naturally that means the embargo will stay in place. It no longer really matters what the other 83 percent of us think.

Let Us Now Praise Obama's Economic Policies

| Tue Dec. 23, 2014 12:38 PM EST
President Barack Obama stands with outgoing Fed Chair Ben Bernanke and current Chair Janet Yellen.

Steve Benen evaluates recent economic news by the standards of Republican promises from two years ago:

  • The Romney Standard: Mitt Romney said during the 2012 campaign that if Americans elect him, he’d get the unemployment rate down to 6% by 2016. Obama won anyway and the unemployment rate dropped below 6% two years faster.
  • The Gingrich Standard: Newt Gingrich said during the 2012 campaign that if Americans re-elected the president, gas prices would reach $10 per gallon, while Gingrich would push gas down to $2.50 a gallon. As of this morning, the national average at the pump is a little under $2.38.
  • The Pawlenty Standard: Tim Pawlenty said trillions of dollars in tax breaks would boost economic growth to 5% GDP. Obama actually raised taxes on the wealthy and GDP growth reached 5% anyway.

Is this fair? Meh. Maybe, maybe not. But there's not likely to be a whole lot of news to blog about today, so why not poke holes in some Republican balloons instead? As Benen says, "By the party’s own standards, Obama is succeeding beautifully. They established the GOP benchmarks and now the Democratic president is the one meeting, and in some cases exceeding, the Republicans’ goals."

The downside of all this is that in the past Democrats haven't promoted their own economic policies plainly enough to get credit now that the economy has finally turned around. Republicans, by contrast, simply cut taxes and then loudly and relentlessly repeat their promise that the economy will improve. Eventually it does, of course. Maybe not a lot, and maybe not for long, but economies always improve eventually. If Kansas ever manages a quarter or two of decent growth, for example, you can be sure that Gov. Sam Brownback will be crowing about it for the rest of his political career.

To some extent, of course, Democrats were stymied in their economic policy, which gave them less to brag about back in 2009. And five years is a long time to wait for a recovery. Still, Dems did pass a stimulus; enact a payroll tax holiday; extend unemployment benefits; pass Obamacare; reform Wall Street; raise taxes on the rich; and pass several jobs bills. It's true that this laundry list doesn't quite have the simple oomph of "Tax cuts will bring the economy roaring back to life!" But it is an economic program, and eventually it got us to where we are today: a pretty good recovery, and one that looks like it might be sustainable since it's not built on the sandy foundations of tax cuts and deficits. Democrats should be louder about demanding more credit for all of this.

Happy Holidays! Economic Growth Finally Starting to Look Robust.

| Tue Dec. 23, 2014 10:32 AM EST

Hey, take a look at this. Yet another revision is in, and the Commerce Department now estimates that third-quarter GDP grew at a sizzling 5.0 percent rate, following a nearly-as-good 4.6 percent rate in the second quarter. Part of this is still a make-up for poor growth in the first quarter, but it's good news nonetheless. The economy really does seem to have found a new gear this year:

Tuesday’s report showed stronger-than-expected spending by U.S. consumers, particularly on services like health care. Fixed nonresidential investment also was revised up, signaling more spending by businesses on new buildings and research and development.

“There is a positive feedback loop going on at the moment,” Mike Jakeman, global analyst for the Economist Intelligence Unit, said in a note. “Job creation is running at the strongest rate for 15 years. More people in work means more income, which means more private spending, which means more business investment, which means more hiring.”

Corporate profits are also up, and the stock market is at new highs every day. Wage growth still needs to get stronger, but it showed signs of life last quarter. All things considered, five years after the Great Recession technically ended, we're finally doing pretty well.

Putin Ally Says Putin Needs to Make Peace With West

| Tue Dec. 23, 2014 1:01 AM EST

Things that make you go hmmm:

Russia faces a “full-blown economic crisis” next year that will trigger a series of defaults and the loss of its investment-grade credit rating, a respected former finance minister has warned. Real incomes will fall by 2-5 per cent next year, the first decrease in real terms since 2000, said Alexei Kudrin, a longtime ally of President Vladimir Putin and widely tipped to succeed Dmitry Medvedev as prime minister.

....In unusually blunt comments for an establishment figure, he also called on Mr Putin to do what was necessary to improve relations with the west: “As for what the president and government must do now: the most important factor is the normalisation of Russia’s relations with its business partners, above all in Europe, the US and other countries.”

This gets to be a little like old-school Kremlinology, but I wonder what it means when a longtime Putin ally publicly suggests that Russia needs to mend relations with the West, and do it pronto? Is this really an independent act of truth-telling? Or some kind of semi-sanctioned trial balloon designed to start shifting domestic public opinion? I suppose it's most likely the former, especially considering this little tidbit:

Last March, the Russian leadership considered the possible consequences of sanctions against Russia in connection with the crisis in Ukraine, Civil Initiatives Committee Chairman Alexei Kudrin said...."I provided my assessment of the consequences. The president and prime minister listened to them. I simply paraphrased them and then submitted them in written form to the president's aide," he said.

His report included three possible scenarios for developments in connection with the enactment of sanctions against Russia, Kudrin said.

Hmmm again. This is basically noted without comment, since I don't really quite know what to make of it.