Tag: fairness

Apple Users Are Stupid

Wow! That is fun to say! After suffering years under the smug superiority of my Apple-using friends…

The evidence that they’re stupid is not evidence of stupidity at all. It’s evidence that they are willing to pay a premium for luxury/status goods like their Apples. The evidence was gathered by the Orbitz travel web site, which has experimented with pricing hotel rooms consistent with what Apple users are likely to pay: more.

Perhaps we’ll hear wails of outrage from self-styled consumer advocates, the drama heightened by the glow of the apple icons on their Macbooks. Perhaps Congress will look into “unfair” pricing schemes. I’m hard-pressed to see how offering a price based on an indicator of one’s willingness to pay is unfair.

What’s happening here is the articulation of pricing and marketing practices that have been at play probably since commerce began. (Perhaps you’ve heard of haggling.) I’m not saying commerce began around his time, but my dad used to tell me about when he sold suits. If a guy wearing a fancy blue suit came into the store, he would try to sell him a fancy blue suit. If a guy came in wearing something a little downscale, pops steered him over to the sale rack. Now that’s happening with digital data rather than analog data.

Perhaps public reaction will be strongly opposed. A rough sense of pricing “fairness” will threaten differential pricing’s practitioners with too much opprobrium to make it worth the risk. Or perhaps Apple users are relatively indifferent to price and they won’t be able to sustain their outrage. I’m in favor of whichever development the free interaction of sellers and buyers produces.

I hope you gather the negative inference in that last sentence: this is not an issue for politicians to meddle with. If they did, that would be truly stupid.

Update: Kashmir Hill, not befogged with glee at Apple users’ travails, writes with more care, noting, “Mac users can still choose to sort their hotel and flight options by price, and then see the cheap stuff. And PC users can still filter their results so they get four- and five-star hotel options instead of a three-night deal at the Super 8 Hotel.” So it’s not actually differential pricing, though I wish it were…

Forget Freedom. The UK Poll Is All About ‘Fairness’

Britain may have given the world freedom as we understand it (see The Liberty of Ancients Compared with that of Moderns by Benjamin Constant), but you would not know it from the last prime ministerial debate that took place last Thursday. The candidates (Conservative David Cameron, Labour’s Gordon Brown and Liberal Democrat Nick Clegg) used the word “freedom” only 2 times. They said the word “free” 5 times, but all in the context of the supposedly “free” goodies, which they promised to lavish on the electorate. Words “responsible” and “responsibility” fared somewhat better (4 times). But the winning words were “fair” and “fairness” that were mentioned 22 times – almost always in connection with taxing the rich. Here is a typical example:

Brown: “But I come back to the central question about fairness that has been raised by our questioner. How can David [Cameron] possibly justify an inheritance tax cut for millionaires at a time when he wants to cut Child Tax Credits? Let’s be honest. The inheritance tax threshold for couples is £650,000, if your house is worth less than that you pay no inheritance tax. What David [Cameron] is doing is giving 3,000 people, the richest people in the country, he’s going to give them £200,000 each a year. That is simply unfair.”

It was Gordon Brown, the current Prime Minister, who increased the top rate of income tax to 50%. Neither Clegg nor the supposedly business-friendly Cameron have proposed to cut that rate. Indeed, “fairness” in British politics seems to amount to little more than taxing the most productive members of society “until the pipes squeak.” Those words were uttered by Denis Healy who was the Chancellor of the Exchequer in the 1970s. It was under his leadership that the UK ran out of money and had to borrow billions from the IMF. It turns out that when you tax the rich too much, they will work less or leave for a more hospitable jurisdiction. Margaret Thatcher and Ronald Reagan understood it. Messrs Cameron, Clegg and Brown do not.



The Flat Tax: Good for America, Bad for Washington

America’s biggest fiscal challenge is excessive government spending. The public sector is far too large today and it is projected to get much bigger in coming decades. But the corrupt and punitive internal revenue code is second on the list of fiscal problems. This new video, narrated by yours truly, explains how a flat tax would work and why it would promote growth and fairness. Something to keep in mind with tax day in just a couple of weeks.

There are two big hurdles that must be overcome to achieve tax reform. The first obstacle is that the class-warfare crowd wants the tax code to penalize success with high tax rates. That issue is addressed in the video in a couple of ways. I explain that fairness should be defined as treating all people equally, and I also point out that upper-income taxpayers are far more likely to benefit from all the deductions, credits, exemptions, preferences, and other loopholes in the tax code. The second obstacle, which is more of an inside-the-beltway issue, is that the current tax system is very rewarding for the iron triangle of lobbyists, politicians, and bureaucrats (or maybe iron rectangle if we include the tax preparation industry). There are tens of thousands of people who make very generous salaries precisely because the tax code is a playground for corrupt deal making. A flat tax for these folks would be like kryptonite for Superman. But more than two dozen nations around the world have implemented a flat tax, so hope springs eternal.

California, Here We Come

Next week the Cato Institute will hold seminars in Los Angeles and Santa Barbara. The program is the same both places.

Leda Cosmides, one of the world’s leading evolutionary psychologists, will kick things off at 11 a.m. with a talk on our intuitive ideas about fairness and justice. Then Cato’s Michael Tanner will warn about the horrors of Obamacare and Dan Mitchell will tell us that it doesn’t matter because the country’s going to be bankrupt anyway.  Former California congressman and Senate candidate, and potential governor, Tom Campbell will wrap things up after lunch with a  discussion of the state’s fiscal predicament.

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