Kevin Drum

Counterfeit Bags

| Sun Dec. 6, 2009 8:36 PM EST

Via Felix Salmon, MIT management professor Renee Richardson Gosline says that the market in counterfeit luxury items might actually increase sales of the real thing:

In a working paper she just finished this fall, “The Real Value of Fakes,” Gosline interviewed hundreds of consumers who knowingly bought fake luxury apparel, many at “purse parties” where such goods are sold. Gosline found that within two years, 46 percent of these buyers subsequently purchased the authentic version of the same product — even though other people could not necessarily tell the difference.

Felix calls this finding "astonishing," but it actually seems like it makes a kind of sense to me.  Think about the kind of person who buys a fake Gucci bag.  It's probably somebody who really likes the idea of owning a Gucci bag and would buy one if she had the money.  But she doesn't, so she buys a fake at a purse party.  And she likes it!  She especially likes the fact that other people think she owns an expensive bag.  Still, it gnaws at her.  When people ask if it's Gucci, she has to lie, and she doesn't really like that.  What's more, the longer she owns the fake, the more she understands the subtle differences that identify the real thing.  Eventually she realizes it's possible that really sophisticated people — i.e., the very people she most wants to impress — can tell it's a fake immediately and are laughing at her behind her back.  That makes her nervous.  But she's really gotten attached to Gucci during the time she's carried around the fake.  So she starts saving her money.  Or maybe she gets a raise.  Or something.  And then she goes off and buys a real Gucci, one that not only looks good, but that she can take out in public without feeling nervous that someone will find her out.

That's not everyone, of course.1  There are also people who just flatly can't afford a real Gucci and never will.  But in those cases Gucci isn't losing anything when they buy a fake.  And the genuinely well off who can afford a Gucci bag probably wouldn't be caught dead with a fake no matter how many secretaries and junior account managers seem to be walking down the streets with one.

Obviously this all depends on just how big the counterfeit market is and whether fakes really are largely "starter" pieces that help to keep people brand loyal until they can afford the real thing.  If the market is huge, then it might be taking business away regardless.  If it's small, it probably isn't.  And the answer to that is that the market for counterfeit goods is almost certainly way smaller than the numbers that are routinely tossed around with almost no basis in fact ($200 billion and 750,000 jobs are the usual suspects).  Felix has more here, and Julian Sanchez wrote the definitive debunking here.

1And it's worth noting that this dynamic only applies to luxury goods, not to things like car parts or razor blades.

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The Carbon Tax Charade

| Sun Dec. 6, 2009 6:59 PM EST

Speaking of climate change, here's Matt Yglesias on the sudden boom in the number of advocates of ditching cap-and-trade in favor of a "simple" carbon tax:

Their basic point, that the kind of carbon tax proposal that policy wonks would dream up would be superior policy to the kind of cap-and-trade plan that would result from the compromises necessary to get 60 votes in the Senate, is very true. But by the same token, the kind of cap-and-trade proposal that policy wonks would dream up would be superior policy to the kind of carbon tax plan that would result from the compromises necessary to get 60 votes in the Senate.

Actually, I'd go even further.  Like it or not, politics is a grungy business.  If you want to pass something big, you have to make lots of compromises and give away lots of goodies.  Cap-and-trade allows this to happen far more easily than a carbon tax while still setting a firm limit on carbon emissions.  It's not pretty.  And it's not the way I'd do things if I were a benevolant dictator. But the plain fact is that in the real world, all the moving parts that make cap-and-trade messy are also the things that allow it to have a chance of passing in the first place.

(There are also other benefits to cap-and-trade, as well as some drawbacks.  My piece earlier this year on cap-and-trade runs down most of the big issues.)

And at the risk of pissing off some decent people, I'll add one other thing.  In the near term, no serious carbon tax will ever pass the U.S. Senate.  Period.  If you believe otherwise, you're just not paying attention to things.  A big part of the surge in interest in a carbon tax is purely cynical, coming from special interests who are afraid a carbon cap might actually pass and want to muddy the waters with pseudo-liberal arguments in order to build an anti-C&T alliance and keep anything at all from passing.  There are plenty of carbon tax advocates who are perfectly sincere, but I gotta tell them: you're being played by people who are the farthest thing imaginable from sincere.  If you win, we're not going to get a carbon tax.  We're going to get nothing.

Going Green

| Sun Dec. 6, 2009 6:31 PM EST

When I saw this headline above Mike Tidwell's op-ed in today's Washington Post:

To really save the planet, stop going green

My heart initially sank.  Another piece of dumb contrarianism?  As if we don't already have enough of that?

But no.  In fact, he's making a very, very good point:

Instead of continuing our faddish and counterproductive emphasis on small, voluntary actions, we should follow the example of Americans during past moral crises and work toward large-scale change. The country's last real moral and social revolution was set in motion by the civil rights movement. And in the 1960s, civil rights activists didn't ask bigoted Southern governors and sheriffs to consider "10 Ways to Go Integrated" at their convenience.

....For eight years, George W. Bush promoted voluntary action as the nation's primary response to global warming — and for eight years, aggregate greenhouse gas emissions remained unchanged. Even today, only 10 percent of our household light bulbs are compact fluorescents. Hybrids account for only 2.5 percent of U.S. auto sales. One can almost imagine the big energy companies secretly applauding each time we distract ourselves from the big picture with a hectoring list of "5 Easy Ways to Green Your Office."

As Tidwell says, personal change is still a good thing.  But it's nowhere near enough.  Not enough people are willing to do it on their own, and even the people who do don't do enough.  Partly this is because calculating carbon footprints is really, really hard, and partly it's because most of us just don't have a good gut feeling for the tradeoffs.  It's like dieting: unless you really pay attention and do the work up front to figure out what you can and can't do, you're going to screw it up.  A week's worth of good eating can be blown in an hour.  And dieting is way easier than cutting your carbon use.  As David Roberts says about building efficiency, which is one of the best and easiest ways of reducing carbon emissions:

The most puzzling behavioral phenomenon to understand when it comes to building efficiency is that Most People Won’t Do Sh*t (MPWDS). “Most people” includes people who could make money by doing sh*t, people who say they will do sh*t, even people who have promised to do sh*t. I’ve heard from people who write about energy efficiency for a living, know exactly what to do to make their homes more efficient, and still don’t do sh*t. It’s hard to disentangle the reasons why — some mix of status quo bias, hyperbolic discounting, and loss aversion to begin with — but it’s clear that public surveys and polls about this tend to be misleading. What people say they’re willing to do and what they demonstrate they’re willing to do are very different things. Attitudes don’t translate into actions.

The only real way to address climate change is to make broad changes to laws and incentives.  It puts everyone on a level playing field, it gives everyone a framework for making their own choices, and it gives us a fighting chance of making the deep cuts we need to.  So listen to Tidwell: "Don't spend an hour changing your light bulbs. Don't take a day to caulk your windows. Instead, pick up a phone, open a laptop, or travel to a U.S. Senate office near you and turn the tables: 'What are the 10 green statutes you're working on to save the planet, Senator?'"

But go ahead and caulk your windows too.  It won't save the planet by itself, but it still helps.

DC Football Update

| Sun Dec. 6, 2009 6:03 PM EST

So I just caught the last few minutes of the Saints-Redskins game.  With two minutes to go and the game seemingly in the bag, the Redskins blow a chip shot field goal, give up a touchdown in 40 seconds, turn over the ball on an interception to send the game into overtime, fumble in their own territory, and then finally lose on a Saints field goal.  Unbelievable.

I think I finally understand what it's like to be a Redskins fan.

Quote of the Day: Obama vs. Charlie Brown

| Sat Dec. 5, 2009 6:26 PM EST

From Russell Wiseman, mayor of Arlington, Tennessee, on his annoyance at the timing of Barack Obama's West Point speech:

Ok, so, this is total crap, we sit the kids down to watch "The Charlie Brown Christmas Special" and our muslim president is there, what a load.....try to convince me that wasn't done on purpose. Ask the man if he believes that Jesus Christ is the Son of God and he will give you a 10 minute disertation (sic) about it....w...hen the answer should simply be "yes"....

As Will says, this is the best conspiracy theory ever.

Death Threat Update

| Sat Dec. 5, 2009 4:14 PM EST

This isn't the kind of topic I normally spend much time on, but since I mentioned it yesterday:

[There was] a spike of threats against Mr. Obama before his inauguration and in the early months of his presidency, raising deep concerns inside the Secret Service and at the White House.

The threats have leveled off in recent months, officials said, and Mr. Obama now receives about the same as his two most recent predecessors. But several officials said they took no solace that the volume of reports had receded because it was the nature of the threats that concern them and because the factors behind the increase remain — Mr. Obama’s race prime among them.

....While the big increase in threats against Mr. Obama took place in the first four months of his presidency, officials say the depressed economy has contributed to an increase in antigovernment sentiment, which particularly alarmed federal officials over the summer.

“They are absolutely totally aware that the spike did occur, and they are watching for any trends that would indicate it’s going to spike again,” said W. Ralph Basham, a former director of the service who keeps in contact with Mark Sullivan, the current director.

So there you have it.  There were more threats than usual early on, but now things have mostly settled down.  Good to know.

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Friday Cat Blogging - 4 December 2009

| Fri Dec. 4, 2009 4:01 PM EST

What do cats do when they're home alone?  The folks at Nestle Purina PetCare's Friskies division installed cat-cams on 50 cats in order to find out, and they've now announced the results:

Based on the photos, about 22 percent of the cats' time was spent looking out of windows, 12 percent was used to interact with other family pets and 8 percent was spent climbing on chairs or kitty condos. Just 6 percent of their hours were spent sleeping.

Uh huh.  Look: I work at home.  So I know exactly what my critters do between the hours of nine and five: they sleep.  I'd peg it at about 80% of the time.  The Purina folks clearly have some serious methodological issues here.  Perhaps it's a Heisenberg kind of thing: the existence of the cat-cams affects the behavior of the cats being observed.  They'd have to be pretty small cats, though.  Alternatively, someone just screwed up.

Anyway, photographic proof is right here.  These pictures were taken just moments ago.  Earlier this morning Domino woke up just long enough to hop up on my desk and stare at me until I vacated my chair (no worries, I've got a spare for just these occasions), and then fell fast asleep.  Inkblot didn't even open his eyes that long.  He's been curled up on the red blanket upstairs ever since he finished his breakfast.  Six percent my ass.

UPDATE: More detail than you ever imagined possible about the cat-cam study here.

Soccer Madness

| Fri Dec. 4, 2009 3:46 PM EST

I know you're all interested in the World Cup draw, right?  Well, the United States (ranked #14 in the world) ended up in Group C, the second easiest group, along with England (#9), Algeria (#28), and Slovenia (#33).  The Daily Fix reports:

[Landon] Donovan nods and smiles as Algeria and Slovenia are placed in the U.S.'s group. He is trying to be diplomatic. But there's no question that he's relieved, and that the U.S. got a good draw.

....Drawing England will make for huge viewership and some in England feared the U.S., but the U.S. will have its hands full with England. The rest of the group, Algeria and Slovenia, looks workable. The USA has a decent chance of advancing — they dodged some huge obstacles (France, Portugal) and drew a weakish seed. I bet the USA camp will be in decent spirits.

Anyway, just thought I'd let everyone know.  Schedule here.

Reining in Entitlements

| Fri Dec. 4, 2009 2:51 PM EST

The healthcare legislation winding its way through Congress is chock full of cost-savings measures.  But will they be allowed to take effect, or will Congress cave in and repeal them once they start to bite and interest groups start to squeal?  A new CBPP report suggests the former:

The history of health legislation in recent decades demonstrates that, despite some critics’ charges, Congress has repeatedly adopted measures to produce considerable savings in Medicare and has let them take effect....In arguing that Medicare cuts never “stick,” critics point in particular to Congress’ repeated refusal to let the reductions in physician reimbursement rates under Medicare’s so-called “sustainable growth rate” (SGR) mechanism, which it enacted in 1997, take full effect. The SGR cuts, however, represented a badly designed measure that was not intended to produce large savings (the projected SGR savings represented less than five percent of total Medicare savings in the 1997 bill), but turned into a blunt instrument that would have produced cuts far in excess of what was anticipated and would have had harsh and indefensible effects. (Moreover, even though Congress did not allow the full cuts required under the SGR formula to take effect, it has still cut the physician reimbursement rate substantially — at its current level, the reimbursement rate in 2010 will be 17 percent below the rate for 2001, adjusted for inflation.)

The SGR mechanism has little in common with most of the other provisions that Congress has enacted over the years to produce savings in Medicare and that have, in fact, taken effect. This distinction is important because most of the Medicare savings provisions in the House and Senate health reform bills are similar in nature to the types of Medicare provisions that Congress has enacted in the past that have taken effect — and they differ markedly from the blunt-instrument design of the SGR cut.

....Every significant deficit-reduction package in the last 20 years has included Medicare savings, most of which have been implemented as planned....And most of the savings enacted in 1997 other than the SGR cuts — nearly four-fifths — were implemented as well.

Obviously it's impossible to predict which cost savings measures will work and which ones won't.  But CBPP's summary of past efforts suggests that most of them will be allowed to take effect and most of them will have a noticeable effect.  They're still only small steps in the right direction, but anyone who's serious about reining in entitlement spending should welcome them.  Much more detail at the link.

Quote of the Day: Sarah and the Birthers

| Fri Dec. 4, 2009 2:18 PM EST

From Sarah Palin, asked if she thinks questions about Barack Obama's birth certificate are legitimate:

I think the public, rightfully, is still making it an issue. I don't have a problem with that.

The mainstreaming of insanity in the Republican Party continues apace.