Thursday, December 06, 2012

The "Stupid Fee" Fee

Today I contacted the bank and asked them to send me a check when my certificate of deposit matures in a few weeks.

I don't have any other accounts with them, so in order to get my own money from them, I have to pay.  If I wanted the money wired somewhere, there would be a wire transfer fee.  If I want a check sent to me, there's a check preparation fee.

This is absurd.  It ranks right up there with--might even surpass!--luggage fees at airlines, or the "resort fee" at hotels.


Rhymes With Right said...

Walk in and demand cash.

maxutils said...

i agree it's ridiculous . . .but, when i started banking with wells fargo, they charged me, i think, five bucks a month for checking . . . by the time i got to college, checking was 'free' everywhere. they need to have a revenue stream . . .other than obama. ;) the other bad fees . . .are ticketmaster. you pay 25%, they call it a 'convenience fee', then ask . . .oh, would you like those tickets to arrive at your home? we can do that, for five times the cost of a stamp and envelope.

Marlex said...

Worst fee I've seen is on StubHut, and I'm not even talking about their $35 service fee. The tickets I bought could be e-mailed to me in PDF form so I could print them out, an option I chose. They sent them to me right away, after I paid a $4.95 "shipping" fee.

maxutils said...

but, the good thing is, ticketmaster isn't a monopoly. congress said so.

Scott McCall said...

i love the "you're broke" fee. when i dont have a minimum amount of cash in my account, they charge me a fee. when i have no money in my account, they charge me another fee. how the hell am i going to pay these fees when i have no money, and i have no money because they're charging me the "no money" fee?

maxutils said...

i once paid 7 bucks in fees for a 5 dollar bleacher seat for the sf giants ... if someone can beat that percentage, i'm sorry. but remember, ticket master is NOT a monopoly.

Anonymous said...

Why are you not with a credit union? They are not always better than banks, but that is the way to bet.

-Mark Roulo

allen (in Michigan) said...

Won't anyone take max's "monopoly" bait? He's trying ever so hard to get a rise out of someone yet no one's paying max's clumsy mockery any mind.

So max, are you opposed to monopolies on principle, as much as that word can apply to a lefty, or is any voluntary exchange into which you enter, that occurs on terms of which you do not approve, evidence of monopoly?

Darren said...

Try buying a ticket to just about any event. Max is *much* more right than he is wrong (but only on this particular point!).

allen (in Michigan) said...

Max is entirely wrong since what he's implying is that Ticketmaster is proof - yes proof! - that the free market isn't all that despite what stupid conservatives think.

But the free market is all that and nothing about the free market precludes monopolies of various kinds over the short to medium term. Ticketmaster is one of those sorts of monopolies and its advantage is in its business process. Its stock in trade is convenience for the consumer and profits for the venue owners.

As a concert goer Ticketmaster allows you the convenience of buying your tickets via telephone and later, Internet. Convenience usually carries a price which you, as a concert goer, are clearly willing, if not happy, to pay.

For the venue owner Ticketmaster brings lower costs by allowing venue owners to reduce their cost of doing business by taking over part/most of the ticket-selling function.

Ticketmaster also allows venue owners to raise prices without catching a lot of flack from fans. Part of Ticketmaster's fee is kicked back to venue owners but Ticketmaster catches the heat for those fees. Higher prices, lower costs, higher profits. What's not to like?

But the workings of the free market ensure that all monopolies fall and Ticketmaster was targeted by the man who created Tickemaster -

That Outbox, Rosen's competitor to Tickemaster, looks like it's going to fail doesn't change the fact that the monopolist's profits are an on-going incentive to prospective competitors. Sooner or later one of those prospective competitors will put together the right combination of convenience for the ticket-buyer and kick backs to the venue-owner and Ticketmaster will fall. But as long as you're willing to pay the asked price to an event it would be morally wrong to let you hang onto your money.

That's why Max is wrong.

maxutils said...

thanks for taking the bait, allen . . .and, I am not a lefty. as a frequent concertgoer, I buy tickets from ticketmaster, regularly, because I have no other option. Travel three hours to buy a ticket in San Jose with no service charge? Well,no, that doesn't work. I object to monopolies, in principle, because they involve market failure ... and above equilibrium pricing. You should, too. When I was in high school, you could get your tickets at BASS or ticketron, for the same show. Ticket service charges were 10% roughly. When Pearl Jam ran their anti-ticket master tour, they charged the same. Now, Ticketmaster feels okay to charge up to 12 times that rate ... but I guess you could use the other ticket provider.

maxutils said...

and, just as another principle, monopoly is not free market. Adam Smith, that free market guy, said so.

maxutils said...

one of the reasons that competitors to ticketmaster can't compete is that tm has tying contacts with all the venues . . .in direct violation of law.

allen (in Michigan) said...

Oh max, you don't have to be wearing a "Che" t-shirt to be a lefty. If you're a lefty on a single issue then you're a lefty. Sorry.

And of course you have another option...don't buy the tickets. It's not like you're forgoing kidney transplant surgery. You're going to a concert for entertainment purposes. Pardon me if I neglect to choke back sobs of sympathetic pain at the trauma you've suffered from ticket prices you don't like but pay.

Also, you don't object to monopolies. You object to monopolies that inconvenience you.

Other monopolies, Pearl Jam's monopoly on their music for instance, cause you to cough up their asking price. As long as you're willing to pay the continually rising price of tickets Ticketmaster, the artists and the venue owners are ethically bound to take your money. I commend to your attention W.C. Fields' observation on the immorality of letting a sucker keep his money.

There's nothing about a free market that precludes the establishment of a monopoly. There is, however, that about the free market that inevitably makes a monopoly the target of an ever-increasing mob of competitors who won't rest until the monopoly's destroyed.

Not out of a sense of nobility and fairness of course but because the monopoly's profits are an irresistible attraction. I suggest you review the history of Standard Oil.

I do think it's marvelously naive that you turn to government to save you from evil monopolists in that government's the source of almost all monopolies and all monopolies that haven't been brought down by market forces after a decent interval.

Darren said...

*Choosing* to attend a concert and pay a monopolistic fee doesn't make the fee-taker any less of a monopoly.

Max is right about Adam Smith, the free market, and monopolies. That there's nowhere else to buy a ticket is, kinda by definition, a monopoly.

maxutils said...

Thank you, Darren. And, Pearl Jam did a tour they lost money on, trying to fight the monopoly . . . they had to cut it short because they couldn't find venues that would let them sell their tickets themselves at lower cost.

allen (in Michigan) said...

"There's nothing about a free market that precludes the establishment of a monopoly. There is, however, that about the free market that inevitably makes a monopoly the target of an ever-increasing mob of competitors who won't rest until the monopoly's destroyed."

Standard Oil wasn't brought to heel by the sterling defenders of the public that reside in Washington D.C. as so many people think but by the mob of competitors who, observing Rockefeller's innovations, copied them. Rockefeller sought, and got, protection from his competitors via government action but it wasn't enough to protect Standard Oil from those voracious competitors.

Max is wrong about Adam Smith, the free market and monopolies. What Max is sore about is not being able to dictate the terms of the voluntary exchange and having to confront the fact that he's willing to pay a sucker's price for an evening's entertainment.

Sorry, there's nothing about free markets that precludes voluntarily entering into an exchange in which the terms aren't all that favorable. What is clear though is that when one party is coerced the damage is socialized - we all suffer a little bit so that a politically-powerful few can benefit a great deal.

One obvious example is labor unions, Detroit and the American automotive market.

Detroit has an atmosphere of "Dresden after the raid" precisely because the defacto monopoly enjoyed by the formerly Big Three automotive manufacturers allowed them to relentlessly raise prices to satisfy the insatiable demands of the UAW. The wreckage that's now Detroit resulted from the collapse of that monopoly due to competition.

The public education system's the mess it is, to a great degree, because it's effectively, a monopoly.

The solution to the problem of a monopoly isn't to apply noble and morally-defensible coercion to offset the ignoble and morally-indefensible coercion of the monopoly but to allow the free market's inevitable, if not necessarily timely, "death of a thousand cuts".

maxutils said...

allen is entirely correct that nothing in a free market prevents the establishment of a monopoly . . . but, I'm not getting why that is a good idea, or to anyone's benefit except the monopolist? or in violation of the Clayton act?

allen (in Michigan) said...

It's not a question of whether monopolies are a good idea or not. Monopolies are a natural consequence of human characteristics and thus inevitable.

Since monopolies are a natural consequence of human characteristics it wouldn't be at all inaccurate to view monopolies as a force of nature. Forces of nature are neither good nor bad. They simply are and if they're destructive you do what you can to avoid their destructive effects and do nothing to prolong or exacerbate their destructive effects.

Dangerous weather's a worthwhile analogy although it's only an analogy so vulnerable to hole-poking.

You wouldn't pass a law against the formation of hurricanes because that would be self-evidently stupid. You might, however, pass law that discourages people from building homes in areas especially prone to hurricane damage.

Of course an excellent mechanism already exists to discourage such behavior and that's the free market. Insurance companies have a strong incentive to accurately gauge the likelihood of a payout - guess wrong in one direction and your premiums are too high for your prospective customers to afford. Guess wrong in the other direction and you go out of business with the first few claims.

Is the free market a perfect solution to the dangers posed by monopolies? Of course not. The free market's just a better solution then anti-trust laws and anti-trust government agencies. The free market never sleeps, can't be bribed, isn't easily fooled and then not for long. Government agencies seem to have a propensity for falling asleep at the switch, probably because the people who make up those agencies are heir to all human frailties and thus bribeable, foolable and foolable as long as there's a good reason to remain fooled.

Another advantage of the free-market solution is that market-based monopolies produce benefits.

The latest example of that effect is Microsoft which earlier in its existence brought order and worthwhile standardization to a chaotic and fractured personal computer market. I'm no Microsoft partisan not having owned a Microsoft-based computer in over ten years but I am old enough to remember the zillions of operating systems that crowded the market before Microsoft brushed them aside to the benefit of every computer-user.

It's the free market that rewarded Microsoft for its successful risk-taking and it's the free market that curbed Microsoft when it attempted to use that success to conquer other markets.

Remember the Microsoft set-top box? Not many people do. How about WebTV? Windows Phone?

There are plenty more examples of Microsoft's vast wealth not being enough to even make Microsoft a big player in an emerging, and potentially very lucrative, market let alone dominating it the way Microsoft's dominated desk-top and lap-top markets.

I could go on, pointing out that it wasn't the government that saved the republic from becoming a subsidiary of Standard Oil and that about the time we were being saved from Standard Oil by government the free market, copying the innovations that propelled Standard Oil to its monopoly, was already well on it's way to making Standard Oil just another competitor, but I won't. Other stuff to do.

maxutils said...

We need anti-hurricane legislation! And fewer bears! It's interesting you brought up insurance companies, because I agree. It's another example of market failure, and this one favors the consumer. I support market equilibrium in every case . . .and monopolies don't do that. Allowing insurance companies to inquire about medical records, for health or driving records, for auto, makes perfect sense. They still have a disadvantage, but it makes it closer. Likewise, monopoly hurts the consumer. Maybe my choice is to not support it . . . but, how is the ticket market 'free' if venues are required to sell from only one seller? There aren't that many venues. And when ticketmaster is really the only viable seller, how does it change? The Pearl Jam tour was at the height of their popularity . . . and they had to play Golden Gate park and the San Diego raceway because ticketmaster didn't let them book normal venues. Monopolists charge more than they need to, because they can . . . I agree that it is inevitable in a free market, but it is also illegal, and one of the very few things a free market can't correct. Which is why we have the Clayton act. Microsoft? Where can I start? Apple puts out a better, easier to use product . . .which costs more, because they found a niche with people who like better, easier to use products. Microsoft got busted for enforcing software tying contracts, then immediately redesigned their software so that they could technically not be doing what they were sued for. I guess I'm not sure why someone who supports free markets doesn't also support regulation in the cases Adam Smith acknowledged the market didn't work for. Like, insurance (imperfect imformation) which I guess you do, or monopoly (which, regardless of what you say ensures a non equilibrium price) . . . how do you feel about funding of fire departments? Because, I know I would let you pay my fire bill since if my house caught on fire next to yours, the firefighters you paid for would put out my fire to save your house from catching. Same with police. Same with roads. Although toll roads have their purpose. The free market usually works. But there are identifiable cases where it doesn't result in a price that is 'fair' to the consumer, and to the producer. And sometimes it results in too much of a good (pollution) or too little (police). Smith recognized this, and identified the cases. The REAL problem is when government intervenes in cases that AREN'T market failure . . . like giving tons of money to the banking, auto, and housing industries.

allen (in Michigan) said...

Yawn. Feel free to define "market failure" as something other then "stuff I - maxutils - don't like". Or provide some definition at all since I had to infer the definition I provided.

What's interesting about your dislike of monopolies is that you support monopolies you like.

Those concert tickets you're so upset carry a Ticketmaster premium? They're for a concert which is protected by the monopolistic power of copyright and part of the reason ticket prices are so high is because Ticketmaster kicks back part of its fee to the venue-owners and artists. No copyright? Ticket prices come down. Apparently though you don't have a beef with Pearl Jam for charging a price you don't like, only Ticketmaster.

And I think we've already covered why Ticketmaster's monopoly is legitimate - they do a better job then their competitors. They provide juicy kick backs to the venue-owners so the venue-owners sign up with Ticketmaster and they fill venues which means the performers play to full houses. If that results in higher ticket prices then withhold your business. Ticketmaster may have the power to twist venue-owner's and performer's arms but they don't have that power over you. If you, and enough other people, are upset enough over Ticketmaster's prices to forgo their offerings then Ticketmaster's grip on the market collapses.

But you don't do that. You buy the tickets, indicating that they're fairly priced, and then complain about their price.

As I've already pointed out, and provided examples, inevitably bring down monopolies.

Standard Oil was already beset by competitors who studied the methods pioneered by J.D. Rockefeller and duplicated them erasing the competitive advantage Rockefeller used to build Standard Oil. By the time Teddy Roosevelt's monopoly-busters came on the scene the free market had tamed Rockefeller's monopoly.

Microsoft's a different example of the market working it's ameliorative magic.

Microsoft still dominates the desktop and laptop market but no one cares. The market Microsoft helped create has grown beyond Microsoft's power to dominate as is amply proven by its failure in the set-top, cell phone and server markets. Microsoft, like IBM, are still dominant players but they're dominant players in a market that's no longer pivotal. Mainframes or spreadsheets, there's only one supplier, practically speaking, but the monopolies are tolerable because they're no longer crucial.

Two final thoughts - I have no intention of fisking your last "everything but the kitchen sink" post and the "enter" key, don't be afraid to use it.

maxutils said...

Okay . . .in shorter bursts. Those venue tying kickbacks are in direct violation of the Clayton act, and should be prosecutable. Pearl Jam on that tour charged 20 bucks a ticket, 23.50 out the door while producing an oversize colectible personalized ticket. No problem there.

maxutils said...

As for the other cases . . .I've already cited most of them: and, are largely acepted by most economists (good ones, anyway) the fre market wil always result in the lowest price for consumers, at a normal rate of return for producers, except in the folowing cases.
1)goods withexternal costs (polution) we get to much of it (based on societal desires, overall - not just libs) at to low a price for the gods produced, because the poluter is not forced to pay for that which he doesn't control after it leaves his plant

maxutils said...

2) External benefits - a god where I get some of your benefit, despite the fact that I didn't have to pay . . .which is we force people to pay taxes,for things like police and roads. if we didn't i could just leech of the contributions of others.

maxutils said...

3)imperfect competition the fre market works if there are many buyers and selers. Then, one can't obtain an advantage; the customer merely goes somewhere else. If there are only one, or a few selers, they can always extract a profit above the normal rate of return from customers.

maxutils said...

4)natural monopoly - an industry that by it's nature requires to much capital or would result from to much inconvenience to have competing firms. We wouldn't want 5 diferent sewer lines in town. These are usualy provided by, or regulated by the government . . .like SMUD in Sacramento. These usually result in slightly higher prices, regardles, but the alternatives are worse. Cheers

allen (in Michigan) said...

Yeah, I'm not particularly impressed with your interpretation of the Clayton Anti-trust act. I comfortable with the assumption that you're wrong on the basis of the lack of anti-trust action on the part of the current, as well as previous, administrations.

1) I've heard the "externalities" argument plenty of times and there's never a case made for an objective determination of the costs of those externalities. It's always "a whole bunch" supported by a methodology of dubious, if not laughable, validity advanced by people whose standing to assert the cost of an externality is based on redness of face and loudness of hollering.

2) The flip side of what you refer to as external benefits is the establishment of a "commons" with all that implies. Since "commons" is eventually prepended by "the tragedy of" the fewer commons exist the less opportunity there is for the resulting tragedies.

3) Market liquidity and thus efficiency, depends on among other things a sufficiently large population of buyers and sellers. When the market's illiquid price action results in prices above *and*below* what they would be in an efficient market. Advantage does not inevitably accrue to the seller. Illiquid market conditions apply equally to both buyers and sellers.

4) Your understanding of natural monopolies is flawed. It's entirely possible to have competition in various municipal services including the maintenance and operation of a sewer system. Privately-managed water and sewer systems inevitably out-perform their governmental counterparts for the simple reason that there's always a competitor waiting in the wings to displace them. The same can't be said of government-run water or sewer systems until their rapaciousness exhausts public patience.

Natural monopolies, based on business process or other innovation, are inevitably eroded by competition for the simple reason that their innovation is duplicable. That's what happened to J.D. Rockefeller.

Regardless of the genesis of a monopoly though what they all have in common is that they're offering something of value or their customers would exercise the one option always open to customers, the option you choose to pretend doesn't exist, and that's to forgo the monopolists offerings.

maxutils said...

Finally . .. some economic arguments! Now we can have a real discussion . . .1)&2) You're entirely right. When externalities, like pollution, occur, it is very difficult to determine the dollar value of damage (or benefit) that the externality is responsible for. So . . .we have to guess, and essentially average people's different valuations through elections. The one thing that is true is that the situation would be WORSE without government intervention. Can we agree that some limits on pollution and some level of police protection are good things? After that, we can quibble about amounts. 3) Again . . .you're right. Although this is being mitigated by internet shopping . . .it doesn't change the fact that if there is only one supplier, the market price will ALWAYS be above equilibrium, and as long as that firm can protect it's lone status through illegal actions, it will remain so. 4) I don't misunderstand natural monopolies . . .again, you're right. Technology frequently renders them no longer 'natural' - ATT, which I cited is a perfect example. As soon as they become competition friendly, they SHOULD be turned over to the private market.