Tag Archives: Consumers

Apology For Toyota?

Posted on by
Reply

In what is little surprise to anyone who is not a tort lawyer or megalomaniac Senator, government researchers determined that runaway Toyotas were caused by driver errors. While Toyota was quick to say that the matter is not yet settled, Shout Bits is now prepared to state that when an accelerator is pushed to the floor and the brakes are not applied at all, an accident may ensue. That’s right, when the US Government did an independent study of crashed Toyotas, they found that in every instance the gas pedal was to the floor and brake was unapplied. Naturally, all the Senators and trial lawyers who lined up to bash Toyota have apologized and admitted that Toyota actually sells high quality US made cars. Not yet, anyway.

From hearings on satanic rock music to steroids in baseball, Senators have never shied away from sensationalizing irrelevancies to distract from their many failings. The Senate does not have hearings on their own graft, pork, or special interest handouts. No, the Senate has hearings on whether teenagers should attempt to break aviation records, or whether cigarettes are unhealthy, or why Toyota is to blame for auto accidents.

Nobody can blame Congress for wanting to deflect attention from its massive, nation destroying failures, and its red herrings are usually harmless. After all, harping on lead paint on toys only ruined a handful of small business owners’ lives. In the case of Toyota, however, tens of thousands of jobs are at stake. Toyota has invested billions of dollars in US manufacturing along with decades of innovation that have driven up the quality of all cars worldwide. Congress’s whipping boy was a model of capitalism, prosperity, and the power of a free market to make everyone’s life better. Better still, Toyota never took bailouts from Washington (only union shops qualified for such aid).

Toyota played the game well, unlike BP, by prostrating itself before the uninformed bombastic jackasses who have never done anything to make cars safer. Mr. Inaba, Toyota CEO, nearly wept tears of blood as he admitted failings that his engineers most certainly told him were false. Inaba surely recalled the bogus acceleration charges levied against Audi ten years ago. Rather than defend his product, Inaba knew he had to submit to Orwellian prosecution in order to put the sensation behind him. Never mind that sudden acceleration complaints are only filed when the news is hyping them, not regularly as a real problem would suggest. Never mind that a cash strapped California driver clearly faked his high speed Toyota incident a few months earlier. Never mind that the accelerator systems allegedly at fault were used by many auto manufacturers. Never mind that Congress runs GM, Toyota’s main competitor. In fact Inaba deserves a prize for his containment and focus on preserving Toyota, rather than the objective truth that nearly all accidents are caused by driver error.

Now that the government study has fully exonerated Toyota, where are the apologies? Perhaps Rep. Barton can give it another go. Toyota has wisely remained cautious, likely fearful that claiming victory would incite a backlash. Of course it is no surprise that the old time media’s interest in restoring Toyota’s reputation is tepid. Car crashes caused by driver error are dog-bites-man boredom right down the middle. Likewise for the Senators that preened as Inaba kowtowed. Building up industry, supporting capitalism, or acknowledging that most companies want to do right by their customers is not the Washington way. So, as usual, the prattling classes take more interest in salacious falsehoods than they do in humdrum truth. Toyota: there is nowhere to go to get your reputation back, but thanks for playing the Washington game so well.

Taxation 101

Posted on by
Reply

Shall there be an amendment to the Colorado Revised Statutes concerning limits on government charges, and, in connection therewith, reducing vehicle ownership taxes over four years to nominal amounts; ending taxes on vehicle rentals and leases; phasing in over four years a $10,000 vehicle sale price tax exemption; setting total yearly registration, license, and title charges at $10 per vehicle; repealing other specific vehicle charges; lowering the state income tax rate to 4.5% and phasing in a further reduction in the rate to 3.5%; ending state and local taxes and charges, except 911 charges, on telecommunication service customer accounts; and stating that, with certain specified exceptions, any added charges on vehicles and telecommunication service customer accounts shall be tax increases? – Colorado Proposition 101

This November, voters in Colorado will decide whether to reign in Gov. Ritter’s illegal tax increases, thanks to Proposition 101. Prop. 101 is a broad measure that will reverse the recent increases in vehicle fees, lower overall taxation for all Coloradans, restore Colorado’s TABOR provision that requires voter approval for all tax increases, and eliminate a number of nagging fees found on phone bills.

Naturally, statist groups and the local media recoiled at the proposal. It would bankrupt the State (Government that is). It would require the elimination of vast arrays of services, the standard doom and gloom from those who always want more government. No state has failed because of too little government or taxation. The collapse of California, New York, and New Jersey prove that too much government and taxation is the path to ruin. Since voters can always re-raise taxes later, Shout Bits heartily endorses Prop 101.

Still, voters might wonder why Qwest, the local old fashioned phone company, is opposed to the elimination of state telecom taxes and fees. Would Qwest not welcome reducing its customers’ monthly bills? Wouldn’t that free customers to buy more of Qwest’s services? Perhaps this is part of the reason Qwest soon will cease to exist, but Prop. 101 exposes the sleazy co-dependency between big business and big government.

Qwest is regulated by an abusive wing of the Colorado Department of Regulatory Agencies, the PUC. As with many of Qwest’s territories, the Colorado PUC has grown fat by shaking down its subjects, forcing them to provide money losing services in the name of social justice. In particular Prop 101 would repeal a tax that funds the PUC’s requirement that Qwest provide old fashioned phone service to the poor and those who live in the country. In a free market, the price of phone service in the country would be much higher than in the city because there are fewer country folk to share the cost of running wires everywhere. Qwest is concerned that its investment in these high cost phone lines would go to waste if it ceased to get so called Universal Service money from taxation. Better still, Qwest’s competitors pay into the Universal Service Fund. Expect a campaign against Prop. 101 showing people burning to death because Prop. 101 took away the phone that could have called 911.

The problem with this argument is that Universal Service, and the tax everyone must pay to fund it, does nearly nothing to benefit today’s consumers. Universal Service funds cheap phone services to the poor, but nowadays poor people overwhelmingly prefer cell phones for their flexibility and convenience. Poor people already get free cell phones and service for up to a year to help them reestablish themselves. On the other end, Universal Service primarily helps rich country customers. The real farmland countryside is not served by Bell companies like Qwest; the real countryside is served by an army of tiny family owned rural carriers that get huge subsidies from the Feds. Qwest’s version of the countryside is more like Vail or Ted Turner’s ranch. These people are middle to upper class and are perfectly capable of paying their own way without a government handout.

So, why not eliminate a program that gives the poor what they don’t want or need and subsidizes wealthy vacationers? The answer lies in the timeless tango of regulation – codependency. The state PUC is filled with bureaucrats who relish their power, while big companies like Qwest have kowtowed to their PUC masters for so long they can no longer make a valid business decision without government support. A simple proposal to defund this corruption by eliminating a wasteful and regressive tax would bring the cubical walls of this stem winding parasite crashing down. Both big government and big corporations defend the status quo because it supports them at the expense of hapless and often unaware consumers. As always, government is taking from the many to give to the few – in this instance the undeserving few.

Voters should be skeptical of the self-serving cries to keep the status quo of big government, illegal taxes, and cronyism. Vote for Prop. 101 if you live in Colorado. After four years of illegal tax increases and wasteful expansion of government into areas like union mandates and green energy, it is time to give the Government a dose of the reality with which everyone else is already well familiar.

No Miles for You

Posted on by
Reply

This week the US Senate voted to outlaw earning frequent flyer miles from credit card transactions.  Of course Sen. Durbin, the amendment’s sponsor, would not put it that way.  Durbin rather said that by capping the fees charged to retailers, small businesses would benefit.  Sadly, Durbin is wrong on both counts; his proposed law would outlaw frequent flyer miles and harm small business.

Credit card companies like Visa and American Express charge both interest on consumer debt and transaction fees to merchants who accept their cards.  The fees vary, but can be as high as 2.5% of the purchase price for the more expensive American Express.  Durbin wants to help consumers by authorizing regulators to cap transaction fees at something like 0.7%.  As with all the consumer regulation coming out of Washington, capping fees sounds nice until the price of regulation comes due.

Credit card companies use the fees to pay for operating expenses like billing and customer service, but in order to compete for customers they also rebate some of those fees back to cardholders.  Sometimes the rebate comes in the form of frequent flyer miles, and sometimes plain cash.  American Express offers a Fidelity Investments affinity card that gives back 2% of most purchases.  Obviously if transaction fees are capped at 0.7%, such cards can no longer exist.  Durbin compared the costs of operating a credit card company to the fees it currently charges, but he ignored the marketing cost of consumer rebates.

Durbin’s amendment would force credit cards to quit innovating perks to attract the best consumers.  In Durbin’s world, all credit cards would be the same, since they would be regulated into offering exactly the same services to all.  Currently, consumers can choose from hundreds of options that best suit their needs, but that kind of choice is always the first victim of government regulation.

Even worse, Durbin’s amendment would reduce the quality of customer service for cardholders.  Since the cost of agressively investigating and reversing disputed charges does not appear to be in Durbin’s cost formula, credit cards will likely provide less consumer services.  Durbin’s amendment would turn credit cards in to regulated commodities with limited value to consumers.  Expect far fewer people to use credit cards when they offer limited service and no perks.

This brings up Durbin’s second misrepresentation – that his amendment would help small business.  Contrary to Durbin’s understanding, credit cards help small business.  Prior to the dominance of Visa and American Express, only large corporations issued credit cards for their customers.  Major department stores and gas stations issued their own cards.  There is nothing in the Durbin amendment to discourage large companies from offering credit card perks on their own cards.  Companies like Visa allow small businesses to better serve their customers and thereby compete with larger companies.  Without the ubiquity of Visa, consumers will be incented to shop at large retailers with their own credit cards and customer perks.  As is most common with Washington, this bill will actually harm small businesses and enrich the big ones.

Which company might benefit the most form the Durbin amendment?  PayPal stands to gain because it charges fees for processing credit card transactions.  PayPal would continue to charge unregulated fees for moving money, but would pay out far less to the credit cards it accepts.  Not to get Glen Becky here, but Ebay, PayPal’s parent company, did give Durbin $1000 the last time he was up for election.

So, a far left Senator from Illinois puts through a surprise amendment that stifles consumer choice, harms small retailers in favor of big businesses, and handsomely rewards one of his corporate donors.  Hardly news, to be sure, but it is one more reason to turn out at the polls this November.