When Capitalism Doesn't Work
Here's an economics problem that I'd like to see some hotshot young economist work on: Why capitalism sometimes doesn't work. Specifically, why technical innovations that should lead to price cuts for consumers actually wind up costing consumers more money.
Three examples.
Remember when gas stations first started making some gas pumps "self-serve"? They justified the cutback on customer service by pricing self-serve gas lower than full-service pumps. The idea was, okay, you might have to get out of your car on a freezing cold day, or in a rainstorm, but doing so will cost you seven cents less per gallon.
Over time, of course, that price savings vanished, even with the advent of credit card machines that fully automate pumps. Now everything is self-serve except in New Jersey and (I think) Oregon, two states which mandate that gas station attendants pump gas. (It's a silly full-employment law.) But does gas cost less as a result?
Example two: Ordering movie tickets via the web. It's a feature that benefits both movie theaters (they can sell more tickets and cut down on labor costs) while obviating the need for people to wait in line. But for some reason, theaters charge you about $2.00 for the privilege of...buying a ticket! When in fact they should give you a discount, as airlines do when you buy a ticket online. This may be one reason why people don't go to movies as much as they used to...because the basic amenities of movie-going can, totaled up, make the whole experience considerably more costly than renting a dvd from Netflix (whose customer service is fantastic).
Here's the latest outrage: When you buy tickets online from Ticketmaster, the site now gives you an option of having your tickets e-mailed to you, for you to print out. "TicketsNow!", it's called, or some bogus name like that.
Obviously, this saves Ticketmaster money; they don't have to print and mail the tickets, and once the computer program is written, there's no human cost whatsoever. Yet for some reason (i.e., greed), Ticketmaster charges $2.50 to send you the e-mail containing your tickets. (This on top of the $9.50 service charge for $49.50 tickets to see The Killers at Madison Square Garden.) That's better than the ten bucks Ticketmaster charges to actually put your tickets in the mail, but still.....
Of course, there's probably nothing illegal about any of this, at least when the federal government doesn't look into anti-trust actions with any vigor. No one has to buy movie tickets online; no one has to go to concerts. (Though if you do, you pretty much have to use Ticketmaster. Thanks, Justice Department!)
But I wonder if it's occurred to people in either the film or concert industry that such price-gouging probably has a lot to do with why both their businesses are in such dire straits....
