As we celebrate mediocrity all the boys upstairs want to see
How much you'll pay for what you used to get for free
--Tom Petty, The Last DJ

In Working and Thinking on the Waterfront, Eric Hoffer reflected that twenty years earlier shopkeepers who advertised products by ending the price in "9" rather than rounding off would have been uniformly regarded as shysters. By 1959, he lamented the universality of the practice. Hoffer saw this as a reflection of the declining ethical standards. Were Hoffer alive today, he would certainly see evidence of further decline in $29.99 gizmos hawked through 1-800 numbers on late-night television and especially upon gas stations billboard who go decimal on consumers. More troubling would be the curiosity with which anyone born after 1959 would greet his peeve. Practice so effectively normalizes the abnormal that much that we do not even think of objecting to our grandfathers would not have tolerated. And much that we currently object to our grandchildren will obliviously endure.

American Airlines will begin charging travelers $15 for checking in a bag. Unbeknownst to me, American and other airlines have already been charging customers $25 for the second checked bag. The good news is that most people aren't dumb enough to entrust the airlines with one of their bags, let alone two. Airlines generally issue a service fee for selling you a ticket. On a recent six-hour flight, I almost fell out of my chair when the stewardess announced that a half a turkey sandwich with a bag of chips would be made available for only $10. I didn't ask if mayo came complimentary.

Bars without live entertainment, or a DJ, have the nerve to charge covers. At my public high school, instead of cutting administrative costs or curbing the annual increases in teacher pay, the school district started charging money to participate in sports. Play two sports, get the third one free (I'm serious). Ticketmaster charges mightily for the privilege of buying a concert ticket. When will movie theaters and museums get in on the scam of making you pay twice for entry? We now pay the bank to hold our money when they used to pay us through interest for the privilege. My bank charges me for deposit slips.

I don't think this greed is exclusive to our outpost of capitalism. In Europe, for instance, several train stations charged to use their dirty bathrooms and restaurants charged for ketchup that has a particularly strange aftertaste. I've been informed that elsewhere on the continent they make shoppers pay for the carts and the bags.

I blame the greed of the seller. I also marvel at the stupidity of the buyer. Water is free, but some people would rather pay for it. Maybe they like the plastic bottle, which you don't get when you turn on the tap. Buying water, paying the airlines to transport your bag after you have already paid them to transport you, and paying to use a public bathroom instead of creatively protesting inside the establishment only encourages these legalized rackets. People market what was once free because there is, sadly, a market for it.

"I blame the greed of the seller. I also marvel at the stupidity of the buyer."

Yes - but there is no surprise at the former. It's the latter that truly amazes me.

Here's a new one: The school where my younger son attends preschool recently instituted something called "smart tuition." Smart for the school, that is. Smart Tuition enabled me to have my payment conveniently withdrawn from my bank account and deposited straight into theirs - for a nominal, reasonable, one-time-only fee of $40. Unbelieveable! Obviously we didn't sign up for this program even though they said it was mandatory...shockingly, they haven't been rejecting my on-line billpay paymants, done the "old-fashioned way" through our bank.

I still can't get over it - they wanted us to pay them to pay them! Unreal.

Here's one: hospitals charging you to turn on the TV they have put in your room.

But I only partially agree with the post.

On the one hand, I think charging a service fee to pay a merchant money is both crazy, and dishonest. After all, the whole price is a service fee, and one shouldn't pay two prices when only one is listed. I also think that merchants charging for little things is just petty (bags at the grocery story, extra tortillas at a Mexican restaurant, little cardboard cups for the water fountain at the movies).

On the other hand, charging extra for _expensive_ services that not all customers want or need is okay. And that is what American Airlines is doing. Food on a flight that is less than 8 hours is unnecessary and expensive for them, and gross anyway -- so bring your own sandwich. Extra for checked baggage? Fine with me. I wouldn't mind if they simply put the person and all his bags on a scale and determined the price that way. Weight matters on a plane.

The Airline charging for 1 Bag as a separate fee is ridiculous though.

My problem is that these aren't so much evidences of greed but an annoying and pathetic attempt to avoid directly charging customers an appropiate amount so that you can operate your business. Do this directly. If AA finds it needs to charge 15$ more per bag to cover their operating costs, then just charge a proper amount for the tickets to begin with. These tricks mask how weak our currency is and how high inflation is. These tactics also illustrate how horrible contemporary corporate capitalism is in keeping operational costs controlled. If the airlines (for example) hadn't completely destroyed themselves by getting deeply indebted by managing the healthcare of their employees, and negotiating contracts that have crippled them w/ pension debt then they wouldn't be looking for ways to nickel and dime people.

The stupid nanny state mentality of our corporations is a big part of the problem w/ the contemporary economy.

At one of the parties held by my wife's boss (she's the CFO) a young hottie had one too many and ripped her top off and jumped into the pool. She got her walking papers that night. My wife and the other ladies referred to that as a CLM, or Career Limiting Move.

I'm a small businessman and when my competitors act like idiots and infuriate the customers I refer to that as a PLM, or Profit Limiting Move. I take their customers, usually at a better price too!

Dan I wouldn't get too mad at businesses which act like idiots, natural selection in the business world is BRUTAL. Businesses MUST pass on added expenses or eventually they end up dead.

Greed is a good thing, it's part of what motivates me to get up early in the morning and compete like hell to make my customers happy.

Morgan

Dan this line was beautifully writen:

"Practice so effectively normalizes the abnormal that much that we do not even think of objecting to our grandfathers would not have tolerated. And much that we currently object to our grandchildren will obliviously endure."

Bravo!

As is true, nothing is for free. But there seems to be a lot of unnecessary gouging these day and real values are far and few between.

But, when people will pay extra for water in a bottle or go to an oxygen bar and pay for air, is it any wonder that business sees a profit strategy in over charging in general and then hitting people up for every little particular?

People shrug their shoulders, complain about costs but still continue to pay the freight. As long as that's the case, business has little incentive to step backward.

asdf, I agree with you and Dan that it's rather stupid to pay a 1.50 for a bottle of water when it runs FREE from the fountain. My young daughter and I have had this discussion...

What is "unecessary gouging"? Honestly, I hear populist politicians spout this word--gouging--as if it actually meant something. When they use it they also assume that you're stupid. This tells you something important about that politician, something that you should remember.

A competitive market absolutey KILLS the ability of ANYONE to "price gouge." Where you have competition you CANNOT have "gouging." They are like oil and water!
Monopolies can cause "gouging", and it's important to remember who's responsible for enabling 99 out of 100 monopolies:
THE GOVERNMENT!

OVERLY high prices for any commodity are insulated from market factors, by definition. Those same prices draw competition by "greedy" businessmen like s--t draws flies!

Any question? I'd love to help you on this "gouging" issue, really.

Morgan

I agree with you. Business will always seek equilibrium with the market. So, if the market is savvy and tough, business follows what the market will bear. If the market is lazy and stupid, business will (not necessarily in a bad way) take advantage of that.

I could only hope that the same principles applied to how government works.

asdf wrote:
"I could only hope that the same principles applied to how government works."

Government is ALWAYS inefficient and we cede power to the governmet at the expense of our freedom. As badly as the govt. handles the issue of driver's licenses, it's absolutely amazing people want to turn over something as complicated as healthcare.

"People" are stupid. And government knows that. They understand that in most cases only a minority are really paying attention and will recognize bad ideas.

> Food on a flight that is less than 8 hours is unnecessary and expensive for them, and gross anyway -- so bring your own sandwich. Extra for checked baggage? Fine with me. I wouldn't mind if they simply put the person and all his bags on a scale and determined the price that way. Weight matters on a plane.

Yes, but have you tried to bring a bottle of fluid onto a plane, recently?

> If the airlines (for example) hadn't completely destroyed themselves by getting deeply indebted by managing the healthcare of their employees, and negotiating contracts that have crippled them w/ pension debt then they wouldn't be looking for ways to nickel and dime people.

Oh, stop drinking the flinking Koolaid. The airline industry is so heavily regulated -- even still -- that it's pitiful. For a brief time in the 80s, they were relatively unregulated. Fares plummetted. Ever since then, the slow gradual addition of relentless new bureaucratic rules and supervisory activities (like the whole Transit Security fiasco that does no such thing), as well as rules "allowing" pilots to carry suitable weapons following "conventiently unavailable" training... The Fed should have allowed several of the airlines to go under as a result of 9/11. They should have, for failing to grasp the importance of security... but the Fed bailed them out, rewarding their incompetence.

We need less protectionism in this country, less propping up of inefficiently run businesses, and less regulation of how businesses perform their own internal operations.

Great comments OBH. I'm with you! I especially liked this:

"We need less protectionism in this country, less propping up of inefficiently run businesses, and less regulation of how businesses perform their own internal operations."

Morgan