The Daily Parker

Politics, Weather, Photography, and the Dog

Bankruptcy laws in the US

Whether the US bankruptcy code intended to create a new indentured class of university graduates, its prohibition on discharging student-loan debt has done so.

But the code really helps badly-run businesses, and not just at the criminal scale of Sears. The private-equity fund that owned a grocery store chain in Indiana has done very well under the code, while destroying the future of the chain's retirees:

The anger arises because although the sell-off allowed Sun Capital and its investors to recover their money and then some, the company entered bankruptcy leaving unpaid more than $80 million in debts to workers’ severance and pensions.

For Sun Capital, this process of buying companies, seeking profits and leaving pensions unpaid is a familiar one. Over the past 10 years, it has taken five companies into bankruptcy while leaving behind debts of about $280 million owed to employee pensions.

The unpaid pension debts mean that some retirees will get smaller checks. Much of the tab will be picked up by the government’s pension insurer, a federal agency facing its own budget shortfalls.

“They did everyone dirty,” said Kilby Baker, 70, a retired warehouse worker whose pension check was cut by about 25 percent after Marsh Supermarkets withdrew from the pension. “We all gave up wage increases so we could have a better pension. Then they just took it away from us.”

Truly, the law is a ass. It's also working as its Republican authors intended.

How sellers use Amazon's monopsony power against each other

Via Bruce Schneier, a report on how third-party Amazon sellers use Amazon's own policies to attack their rivals:

When you buy something on Amazon, the odds are, you aren’t buying it from Amazon at all. Plansky is one of 6 million sellers on Amazon Marketplace, the company’s third-party platform. They are largely hidden from customers, but behind any item for sale, there could be dozens of sellers, all competing for your click. This year, Marketplace sales were almost double those of Amazon retail itself, according to Marketplace Pulse, making the seller platform alone the largest e-commerce business in the world.

For sellers, Amazon is a quasi-state. They rely on its infrastructure — its warehouses, shipping network, financial systems, and portal to millions of customers — and pay taxes in the form of fees. They also live in terror of its rules, which often change and are harshly enforced. A cryptic email like the one Plansky received can send a seller’s business into bankruptcy, with few avenues for appeal.

Sellers are more worried about a case being opened on Amazon than in actual court, says Dave Bryant, an Amazon seller and blogger. Amazon’s judgment is swifter and less predictable, and now that the company controls nearly halfof the online retail market in the US, its rulings can instantly determine the success or failure of your business, he says. “Amazon is the judge, the jury, and the executioner.”

An algorithm flags sellers based on a range of metrics — customer complaints, number of returns, certain keywords used in reviews, and other, more mysterious variables — and passes them to Performance workers based in India, Costa Rica, and other locations. These workers choose between several prewritten blurbs to send to sellers. They may see what the actual problem is or the key item missing from an appeal, but they can’t be more specific than the forms allow, according to Rachel Greer, who worked as a fraud investigator at Amazon before becoming a seller consultant. “It feels like it’s a bot, but it’s actually a human who is very frustrated about the fact that they have to work like that,” she says.

The Performance workers’ incentives favor rejection. They must process approximately one claim every four minutes, and reinstating someone who later gets suspended again counts against them.... When they fall behind...they’ll often “punt” by sending requests for more information....

Scary. And an example of why monopolies are bad. As Schenier says, "Amazon is basically its own government—with its own rules that its suppliers have no choice but to follow. And, of course, increasingly there is no option but to sell your stuff on Amazon."

Note that I say this while watching an old TV show on Amazon Prime, waiting for Amazon to deliver a replacement Fitbit band, and on and on.

Wow, who could have seen this coming?

New Republic's Alex Shepherd lays out how the Amazon HQ2 "sweepstakes" is a scam that will not do what Amazon claimed:

The company not only garnered free, widespread publicity, but also drove up its asking price, as some competitors raised their bids by billions. It’s possible that the plan all along was not to open a second headquarters, but to open two, smaller satellites. What’s unlikely, however, is that the deals being offered to Amazon will change significantly, even though the company is effectively halving their investment.

Amazon has already faced backlash for its handling of HQ2. The $1 trillion company is hardly in need of public handouts, and yet it has benefited greatly from taxpayer dollars in recent years. It may have sensed there would be further backlash over its decision, which would explain why the news broke on the eve of the midterm elections, effectively burying it. Unlike other localities, which made their offers public, not much is known about the bids from New York City and Virginia. But the public scrutiny of HQ2 will only intensify as the details—and the social consequences of HQ2—become clear.

Amazon likely chose Washington and New York for obvious reasons, making the pageantry surrounding the yearlong search for an HQ2 site all the more absurd. These are attractive places to work, and, as national hubs of politics and media respectively, they influence the national discussion. But they’re also among just a handful of major cities that could meet Amazon’s needs, in terms of infrastructure and talent. That was always true, and the company cleverly exploited it, using cities that never stood a chance to extract concessions from the few that did.

But all this was obvious from the start. And it does not make anyone look good.

Monopsony effects on workers

This morning we in the US got the news that the employment rebound that started under President Obama has continued, giving us the best employment picture in 50 years. Yet at the same time, despite robust wage growth in some places, families still feel squeezed.

The Economist suggests this may come in part from business concentration depressing wages through the same mechanism through which monopsonies increase prices:

In perfectly competitive markets, individual firms wishing to sell their widgets must charge the prevailing market price and no higher. But the situation changes when one or a few firms dominate a market. A monopolist may charge higher prices. The calculation is that consumers, faced with little choice, will buy enough of its offerings at a higher price to yield greater profits. But some sales are lost because of monopoly pricing, which represents a “deadweight loss” to society—a missed opportunity to raise total welfare. Monopolies can also stifle innovation. AT&T, America’s once-mighty telecoms firm, used its dominant position in the operation of local phone networks to overcharge consumers for service and handsets. It took the break-up of the network monopoly to clear the way for falling prices and innovation.

Just as powerful firms may use their clout to overcharge customers, they can also manipulate markets to pay lower wages. In competitive labour markets an individual employer can do little to squeeze pay, because workers can easily find better-paying jobs. But in a “monopsony”, such as a mining town with only one mine, workers have fewer options. Firms can offer wages below the competitive-market rate knowing that many workers will not be able to afford to turn them down. As with monopolies, this exercise of monopsony power boosts profits but saddles society with a deadweight loss—the underemployment of workers—as well as other costs, such as higher spending on state benefits.

To date, governments have been too focused on the harms to customers from increasing industrial concentration. A consideration of the impact on workers is overdue. Without competition, large firms become exploitative bureaucracies that are accountable to no one. Consumers and workers alike deserve better.

Witness Amazon.

Fear of loss

Paul Krugman highlights how the politics of the Republican party are mainly about privileged white men feeling like they're losing their privilege:

There have been many studies of the forces driving Trump support, and in particular the rage that is so pervasive a feature of the MAGA movement. What Thursday’s hearing drove home, however, was that white male rage isn’t restricted to blue-collar guys in diners. It’s also present among people who’ve done very well in life’s lottery, whom you would normally consider very much part of the elite.

In other words, hatred can go along with high income, and all too often does.

At this point there’s overwhelming evidence against the “economic anxiety” hypothesis — the notion that people voted for Donald Trump because they had been hurt by globalization. In fact, people who were doing well financially were just as likely to support Trump as people who were doing badly.

I very much ran with the nerds during my own time at Yale, but I did encounter people like Kavanaugh — hard-partying sons of privilege who counted on their connections to insulate them from any consequences from their actions, up to and including abusive behavior toward women. And that kind of elite privilege still exists.

But it’s privilege under siege. An increasingly diverse society no longer accepts the God-given right of white males from the right families to run things, and a society with many empowered, educated women is finally rejecting the droit de seigneur once granted to powerful men.

And nothing makes a man accustomed to privilege angrier than the prospect of losing some of that privilege, especially if it comes with the suggestion that people like him are subject to the same rules as the rest of us.

This basic dynamic explains almost every revolution in history, including the American one in the 1770s. This time it's white men, but it could be any elite group who start losing power. The Post makes a similar point:

Jennifer Palmieri, a Democratic strategist and author of “Dear Madam President,” a book about reimagining women in leadership roles, said the nation’s fast-changing culture can be unsettling and indeed frightening to men in power.

“A lot of white men don’t know what it’s like to feel threatened, powerless and frustrated,” said Palmieri, former communications director for Clinton’s campaign. “As we go through the reckoning of this lopsided power balance, there’s going to be a lot more of this.”

The Republican Party has long identified with more traditional white males, such as former presidents Ronald Reagan and George W. Bush. But strategists say it is now turning more toward combative male candidates in the mold of Trump, with allegations of misconduct interpreted by many within the party not as liabilities but as unfair political attacks.

“We’re a party of angry, older white men at a time when our country is going through tremendous demographic change,” Republican strategist John Weaver said, predicting that the GOP would suffer the consequences in future elections.

So when white voters tell pollsters and reporters that they fear a tide of "those people" coming over the border, they feel afraid of losing their birthright. Not the traditions and culture, necessarily, but the parts of those things that put them on top because of the accident of birth.

Personal update

For the first time since April 2000, none of my property is real.

(That's a little lawyer humor.)

The last transaction of the month will be Friday, when I close on Inner Drive Technology World Headquarters 5.0. Meanwhile, I own nothing, and I owe nothing. It's an odd feeling.

Morning reading list

Before diving back into one of the most abominable wrecks of a software application I've seen in years, I've lined up some stuff to read when I need to take a break:

OK. Firing up Visual Studio, reaching for the Valium...

Lunchtime reading list

While trying to debug an ancient application that has been the undoing of just about everyone on my team, I've put these articles aside for later:

Back to the mouldering pile of fetid dingo kidneys that is this application...

Tracking gentrification through Yelp

Researchers at the City University of New York have discovered that Yelp data can show rising incomes with remarkable precision:

First, in testing a popular theory about signs of the gentry’s arrival, they pulled out all the Starbucks listings on Yelp across the United States dating back to 2007. Combining that information with Federal Housing Finance Agency data by zip code, they found that the arrival of every new Starbucks into a given area was associated with a 0.5 percent rise in local housing prices. Coffee shops of all kinds—artisanal and chain—had a similar relationship.

More broadly, they found that housing prices grew in tandem with the entry of new restaurants, bars, hair salons, convenience stores, and supermarkets. Counting reviews, the Yelp data also captured commercial activity at those businesses, which turned out to be a predictor of rising home values, too.

Fascinatingly, different listing types were more correlated with different demographics than others as they increased within Big Apple neighborhoods. Grocery stores were more strongly associated with demographics than any other listing type—the greater the change in grocery stores in a neighborhood, the greater the change in college-educated white people ages 25-34, the researchers found.

Citylab caveats the data, saying, "Still poorly understood, however, is which comes first in gentrifying neighborhoods: the wealthier residents or the 'nice' amenities."