Coyote Blog

For years Progressives, led by President Obama during the legislative process for the PPACA, have attacked health insurance companies for their profits and overhead.  I never understood the former -- at generally 5% of revenues or less, even wiping health insurance profits out altogether would offset less than a year's worth of health care inflation.  The Progressive hatred for health insurance overhead was actually built into the PPACA, with limits on non-care expenses as a percent of premiums.

Progressive's justification for this was to compare health insurer's overhead against Medicare, which appears to have lower overhead as a percentage of revenues.  This is problematic, because lots of things that private insurers have to pay for actually still are paid for by the Federal government, but just don't hit Medicare's books due to funky government accounting.  Other private costs, particularly claims management, are areas that likely have a real return in fraud reduction.  In this case, Medicare's decision not to invest in claims management overhead shows up as costs elsewhere, specifically in fraudulent billings.

None of these areas of costs make for particularly fertile ground for demagoguing, so the Progressive argument against health insurance overhead usually boils down to marketing.  This argument makes a nice fit with progressive orthodoxy, which has always hated advertising as manipulative.  But health insurance marketing expenses mainly consist of

1. Funding commissions to brokers, who actually sell the product, and
2. Funding people to go to company open enrollments and explain health care options to participants

Suddenly, now that Progressives have taken over health care via the PPACA and federal exchanges, their tune has changed.  They seem to have a near infinite appetite for marketing money to support construction of the exchanges (which serve the role of the broker, though less well because there is no support)  and information about options to potential participants.  That these are exactly the kinds of expenses they have railed against for years in the private world seems to elicit no irony.  Via Cato

Now we learn, from the Washington Post’s Sara Kliff, “Sebelius has, over the past three months, made multiple phone calls to health industry executives, community organizations and church groups and directly asked that they contribute to non-profits that are working to enroll uninsured Americans and increase awareness of the law.”

This follows on from revelations in California (revelations that occurred before a new California law that makes PPACA costs double-secret).

[California] will also spend $250 million on a two-year marketing campaign [for its health insurance exchange]. By comparison California Senator Barbara Boxer spent $28 million on her 2010 statewide reelection campaign while her challenger spent another $22 million.

The most recent installment of the $910 million in federal money was a $674 million grant. The exchange's executive director noted that was less than the $706 million he had asked for. "The feds reduced the 2014 potential payment for outreach and enrollment by about $30 million," he said. "But we think we have enough resources on hand to do the biggest outreach that I have ever seen." ...

The California Exchange officials also say they need 20,000 part time enrollers to get everybody signed up––paying them $58 for each application. Having that many people out in the market creates quality control issues particularly when these people will be handling personal information like address, birth date, and social security number. California Blue Shield, by comparison has 5,000 employees serving 3.5 million members.

New York is off to a similar start. New York has received two grants totaling $340 million again just to set up an enrollment and eligibility process.

These are EXACTLY the same sorts of marketing costs progressives have railed on for years in the private world.

Proponents of Obamacare and other aggressive government health care interventions often argue that government health insurance will be less expensive than private health insurance.  Ignoring the whole history of government provided services (which you have to do to accept this argument), it is entertaining to press them on what costs will go away.

First, they will argue "profits."  Health insurers "obviously" make a lot of profit, so doing away with that will amount to a lot of savings.  Several years ago, when Obama was actively demagoguing** the health insurance business, the profit margins of health insurers were all around 3-4% or less.  Which means in exchange for eliminating all private profit incentives towards efficiency and productivity, we get a 3% one time cost reduction.  Not very promising.

After profits, Obamacare supporters will point to administrative costs.  Their philosophy that private insurance administrative costs drive health inflation is built into Obamacare, which places a cap on non-care related costs as a percentage of premiums.  I would argue a lot of this cost is claims management and fraud detection that government programs like Medicare don't have, to their detriment, but let's leave that aside.  I think most Obamacare opponents are convinced that there are billions in marketing costs that could be eliminated.  This has always been their bete noir in pharmaceuticals, that drug companies spend too much marketing.

I have said for years that to a large extent, what outsiders call "marketing" in health insurance is actually customer service and information, in particular agents who go out to companies and help people understand and make their insurance choices.

Well, it turns out that when the shoe is on the other foot, Obamacare supporters suddenly are A-OK with massive health insurance marketing costs, even when what is being marketed is essentially a monopoly:

[California] will also spend $250 million on a two-year marketing campaign [for its health insurance exchange]. By comparison California Senator Barbara Boxer spent $28 million on her 2010 statewide reelection campaign while her challenger spent another $22 million.

The most recent installment of the $910 million in federal money was a $674 million grant. The exchange's executive director noted that was less than the $706 million he had asked for. "The feds reduced the 2014 potential payment for outreach and enrollment by about $30 million," he said. "But we think we have enough resources on hand to do the biggest outreach that I have ever seen." ...

The California Exchange officials also say they need 20,000 part time enrollers to get everybody signed up––paying them $58 for each application. Having that many people out in the market creates quality control issues particularly when these people will be handling personal information like address, birth date, and social security number. California Blue Shield, by comparison has 5,000 employees serving 3.5 million members.

New York is off to a similar start. New York has received two grants totaling $340 million again just to set up an enrollment and eligibility process.

** Don't be fooled by the demagoguery.  This is standard Obama practice.  In exchange for eating sh*t from Obama in public, private companies get all kinds of crony favors in private.  Remember, health insurers got the US government to mandate that everyone in the country buy their products, and got the Feds to establish trillions in subsidies to help people do so.  This may be the greatest crony giveaway of all time, and to cover for it, like a magician distracting your eye from the sleight of hand, Obama made it appear in public as if he were health insurers' greatest enemy, rather than their sugar daddy.

I am simply amazed at this level of cronyism enjoyed by the sugar industry -- import restrictions on cheaper world sugar, price supports, and government loans that can be paid back with excess product rather than cash.

The U.S. Department of Agriculture is likely to buy sugar in the domestic market this year in order to drive prices up and prevent defaults on loans made to sugar processors, according to a USDA economist.

The USDA estimates it would need to buy 400,000 tons of sugar to boost prices to an “acceptable level,” said Barbara Fecso, an economist at the department. A purchase of 400,000 tons would amount to about 4.4% of projected U.S. sugar production in the marketing year that ends Sept. 30.

Domestic sugar prices have been trading at about 20 cents a pound, their lowest level in nearly four years, putting companies that make sugar from cane or beets at risk of defaulting on loans they received from the USDA when prices were higher.

People talk about these supposed government subsidies for oil companies, but every time I see a list of them they are dominated by things like depletion allowances, FIFO accounting, and investment tax credits, which are either standard accounting rules that apply to all industries or tax credits that apply to all manufacturers.  But Big Sugar gets real heavy-duty subsidies no one, except maybe ethanol companies and other farmers, get.

The well of government absurdity is simply bottomless

In this case, the USDA imposed on the [raisin farming] Hornes a “marketing order” demanding that they turn over 47% of their crop without compensation.  The order—a much-criticized New Deal relic—forces raisin “handlers” to reserve a certain percentage of their crop “for the account” of the government-backed Raisin Administrative Committee, enabling the government to control the supply and price of raisins on the market.  The RAC then either sells the raisins or simply gives them away to noncompetitive markets—such as federal agencies, charities, and foreign governments—with the proceeds going toward the RAC’s administration costs.

I have seen estimates that a Medieval serf had to pay between 30 and 70 percent of his crop to his master.  The RAC seems to be right in line with these numbers.

In Obamacare, it was mandated that health insurance companies spend 85% of premiums on care (vs. marketing, profits, and overhead) or else they owe their customers a refund.  So if the same standard was applied to unions, how much of their dues would they have to refund?

For example, according to the most recent federal filings, the Michigan Education Association — the state’s largest labor union — received $122 million and spent $134 million in 2012. They averaged about $800 from each of their 152,000 members.

According to union documents, "representational activities" (money spent on bargaining contracts for members) made up only 11 percent of total spending for the union. Meanwhile, spending on “general overhead” (union administration and employee benefits) comprised of 61 percent of the total spending.

The union appears to have spent nearly the entirety, or $119 million of their $122 million in dues, just supporting their leadership  (and various politicians) in grand style.  They actually had to borrow $12 million to do their job of representing their members.

By Obama's standard of good management (core activity costs = 85% of total customer dues paid) then the union should have taken only $17.4 million from their members, and owe them a $104.6 million refund.

The trade group that represents companies like mine that privately operate public parks is looking for a college student to work part-time for us, either this summer or into the fall.  The ideal committment is 20 hours a week for 6-10 weeks but we could accommodate fewer hours for a longer span of time.  We are willing to pay in the ballpark of $13 an hour plus expenses (phone and Internet bills, etc).  We anticipate the candidate would work from his or her own home (or dorm) and already has access to a computer and Internet connection as well as a word processing software of some sort.

Job responsibilities would include:

• Working with our members to accumulate and organize our intellectual property vis a vis this business.  This includes marketing material, regulatory and statutory information, how-to guides, etc.
• Working with our partner agencies, like the US Forest Service, to get statistics on our members' scope  (e.g. we don't even know how many US Forest Service parks are run privately) and to synthesize these into marketing materials

The candidate need not have any specific knowledge of our business, and we have experts in the organization that can supply contacts and information.  Being an all-volunteer organization, we need someone with the time and the focus to gather and organize the information we have.  The candidate will have direct contact with the CEO's of most of the key players in this industry as well as with senior staff officers of a number of public recreation and lands agencies.    We want someone who is bright and unafraid to approach, even pester, strangers for information.  Quantitative skills and/or economics or business-related studies are a plus but are not required.  Experience with web tools such as content management systems like WordPress also a plus.

If someone is interested, have them email me at warren -at- camprrm *dot* com or hit the email link above.

Yes, its stupid, but perhaps for a different reason than has been mentioned.  The tax is on producers, and is meant to fund a promotion and marketing campaign.  Really.  Because Christian families in the US might forget to buy a tree this year if the government did not remind them.  Seriously, do any of these folks have kids.  "Dad, can we get the tree today, can we, can we, please?"

By the way, this kind of taxation authority that bypasses Congress is actually fairly often used by the Department of Agriculture.   If you see random TV ads for avocados or almonds, you probably are seeing one of these government marketing forced-cooperatives.

I had some fun yesterday, dashing off a quick note about the Fisker Karma electric car and just how bad the electric mileage is if you use the DOE methodology rather than the flawed EPA methodology to calculate an mpg-equivalent.

It was the quickest and shortest column I have ever written on Forbes, so of course it has turned out to be the most read.  It has been sitting on top of the Forbes popularity list since about an hour after I wrote it, and currently has 82,000 reads (I am not a Twitter guy but 26,000 tweets seems good).

I wanted to add this clarification to the article:

Most other publications have focused on the 20 mpg the EPA gives the Karma on its backup gasoline engine (example), but my focus is on just how bad the car is even in all electric mode.    The calculation in the above article only applies to the car running on electric, and the reduction in MPGe I discuss is from applying the more comprehensive DOE methodology for getting an MPG equivilent, not from some sort of averaging with gasoline mode.  Again, see this article if you don’t understand the issue with the EPA methodology.

Press responses from Fisker Automotive highlight the problem here:  electric vehicle makers want to pretend that the electricity to charge the car comes from magic sparkle ponies sprinkling pixie dust rather than burning fossil fuels.  Take this quote, for example:

a Karma driver with a 40-mile commute who starts each day with a full battery charge will only need to visit the gas station about every 1,000 miles and would use just 9 gallons of gasoline per month.

This is true as far as it goes, but glosses over the fact that someone is still pouring fossil fuels into a tank somewhere to make that electricity.  This seems more a car to hide the fact that fossil fuels are being burned than one designed to actually reduce fossil fuel use.  Given the marketing pitch here that relies on the unseen vs. the seen, maybe we should rename it the Fisker Bastiat.

Ages ago, I was an executive at Mercata, an Internet store whose strategy was to sell items whose price would go down as more people agreed to buy the item.  In theory, this creates an incentive for viral marketing, as anyone who buys has a financial incentive to get their friends to join in.

The company died for a variety of reasons, in part just because like many startups in that weird era of the late 90's, we just built up too many fixed costs too fast to reach breakeven in any reasonable amount of time.  We were also ahead of our time in some ways -- the model makes a ton more sense in the Facebook / social media age.

But we also failed, as did many Internet stores, because order fulfillment, product inventory, shipping, etc was and still is expensive.

Glenn Reynolds notices that a lot of folks (including Amazon in his link) are selling coupons.  This may be a blinding glimpse of the obvious to all of you, but the appeal of a retailer of selling coupons online is that they are virtually free to inventory, to fulfill, and to ship.   Think of it this way -- you want to compete online on price.  You can actually sell the physical stuff at a discount.  Or you can sell the coupon, which gives access to the customer access to the same discount but is much easier to fulfill.  It also lets you "sell" things you normally can't provide over the Internet, like a restaurant meal.

The model is not that compelling to me, because I shop online for the convenience rather than the price.  I buy some Groupon type coupons, but generally for things like restaurants rather than products.

This is probably the first ever inside reference to my novel. The funny part is that when I read TJIC's post, I thought "hmm, Preston Marsh, where have I heard that name?"  LOL.  By the way, the business idea Travis has is actually intriguing

Restaurants get napkins and linens as a service "“ every day, they trade huge bags of dirty whites for clean whites. They are in the business of cooking food and hiring wait staff, not in the business of knowing how to bleach things (or in the business of picking out linens that can stand up to bleach).

So what does clothing as a service entail? It could include cleaning, sizing, rotating wardrobes as fashions change, etc.

It removes some hassles, and bundles responsibilities in the place where there are economies of scale "“ people in the fashion industry can and will know more about sizing, cleaning, coordinating, etc. than consumers.

I and others have thoughts on the model in the comments.

By the way, for those who have not read my book, Preston Marsh is an entrepreneur who has made money in a series of sortof odd business models.  Years ago I used to get bored at parties (actually, I still get bored at parties but I no longer use this entertainment technique) and make up occupations for myself.  I remember convincing one woman who had recent evidence that I could not ski well that I was on the Olympic Ski Jumping Team  ("You don't have to turn in ski jumping!")

Anyway, all the business models in the books are ones I made up for myself on the fly at parties.  One involves building fountains in malls and then recouping the investment by harvesting coins from them.  Another, which is central to the book, is a sort of guerrilla marketing startup which does some lifestyle consulting with teens but makes its money placing products in the hands of the coolest, trendsetting teens at high schools (a model that has since been emulated by a couple of real-life companies).

By the way, the book is still on sale at Amazon and available on the Kindle for download.  Just search "BMOC."

A decade ago, I was an executive at an Internet startup named Mercata.  Mercata was one of a couple of entrants in a field we had named "group buying."   In practice, this meant there were limited time sales where the price of a product would fall based on the number of people who agreed to buy.   Obviously the volumes were not large enough to get economies of scale of any sort, so they main advantage of the approach was viral marketing -- once you had agreed to buy, you had an incentive to get others to join in as more buyers would reduce your price.

The company eventually folded.  The company was very professionally run for an Internet startup of the day, but it had a lot of overhead for its volume, and, as eBay would learn, a lot of people wanted to buy immediately rather than wait for some sort of auction to play out.

But it turns out that one of our biggest failures was timing.  Recently, a company called Groupon has taken advantage of social networking that did not exist 10 years ago and has been quite succesful building a business using a very similar model to Mercata's.  It appears that Google has just bought Groupon for $2.5 billion.  Sigh.

This is not, however, even my largest financial missed opportunity.  I still have in my desk a 1984 job offer from Microsoft, which I eschewed at the time because it paid less than my other offers and tried to compensate me in these crazy pieces of paper called "options."  I once calculated the current value of the options just in the offer letter (ie not including any future grants over time) and their value was well north of any conceivable net worth I might reach currently.

My first novel, "BMOC," is now on Kindle for $4.99, a substantial discount off the  $17.95 price Amazon has for the dead tree version.  Incredibly, my author royalty is WAY more for the Kindle version even at that price than for the paper version.

Anyway, if you like this site, you might check it out.  The novel is part murder mystery, party comedy, and part business book.   I used to have fun with my friends at business school and later in nconsulting thinking up odd new business models (e.g. coin harvesting from fountains) and this book embodies some of the odder ones we came up with.  Though as wacky as the business model of the main company in the book (called "BMOC" appropriately enough) was supposed to be, since writing it I have had a number of people send me stories of startups pursuing eerily similar approaches to marketing.  Anyway, the book is a light read though with adult language and a tiny bit of sex.

I was reading through some leftish/alarmist environmental blogs, and I was struck by how many desperately want to buy into the story line that poorer nations are the true heroes of Copenhagen, holding the rich nations feet to the fire so they will commit to deeper CO2 cuts.

Really?  A bunch of dictators who demonstrably have little concern for their citizens and spend most of their time trying to figure out how to divert state funds into their Swiss bank accounts suddenly care about the effects of anthropogenic climate change on their nations?  Hugo Chavez, whose nation currently is avoiding following Zimbabwe down the toilet only by its oil revenues really wants the world to wean itself off oil?

Here is the perfect analogy for the Third World's sudden interest in climate:  The "I will work for food" sign.  Beggers learned that (at least for a while) this sign was a good marketing tool.  They had no intention of doing any work  (I had a friend who used to drive up to all of them and offer them landscaping work in exchange for lunch, always to be turned down flat) but they knew it made potential donors more sympathetic -  see, they really want to work but are just down on their luck.   If you haven't seen the movie Interstate 60, you really need to.  Relevant clip below:

This is exactly the equivalent of the Third World's sudden interest in climate change.  Up to this point, their leaders have shown no interest in stopping the raping of their own local ecosystems.  These guys are certainly not conservationists, but they know a good marketing tool.  Copenhagen is about these guys putting their hands out, and using climate as the marketing tool to soften up their marks in the West.  These nations certainly have no intention of having any targets or restrictions placed on their countries.   And it looks like they may succeed, at least in the treaty phase.

Obama has positioned himself in such a way that he feels that he has to have something he can call a win at Copenhagen.  So he goes to the politician's traditional playbook, which is to use taxpayer money to buy a deal to try to make himself look better.  He is working to do this with the passage of the health care bill and he probably will do this in Copenhagen, agreeing to $100 billion a year in payoffs to third world kleptocracies so he can look like a winner to western socialists.

My brother-in-law Eric Grove's book on email marketing was voted on the list of top ten small business books for 2009.

My brother-in-law's book, "The Constant Contact Guide to Email Marketing," is doing quite well on Amazon.   After the early spam-crazy days, email marketing has really had to rebuild itself from the ground up.  I am a big believer in it, and can highly recommend his company Constant Contact as a email service.  I have several accounts and have set most of the non-profits I work with on it.  In his book, Eric discusses email marketing in the context of both customer acquisition and loyalty.  With Google clicks going for $2 or more, email remains a great value if done right.

I have crafted any number of Google adwords ads, and every time it is a challenge to get my marketing message across in the limited number of characters available.  So it is probably a bad sign that five top advertisers in one search feel the need to use some of this limited real estate to write "not hiring."

I was a consultant for McKinsey & Co. for about 5 years in Dallas.  This was NOT me:

Through conversations with several staffers who have endured the McKinsey interviews, we've assembled a portrait of the typical consultant. First, they're quite young! Despite the early perception that they'd look like pasty lawyers wielding big-wheeled suitcases, they're apparently a plucky, charming bunch.

"They're kind of hot," said one source.

Crisp shirts, no jackets, freshly pressed pants"”not unlike the fresh-faced boys who posed for the Harvard fashion shoot in the Styles pages of The Times this past weekend. They jot notes down on legal pads and in marble notebooks.

Though I will say, much to my kids' ever-lasting amusement, McKinsey did send me to a sort of executive charm school when I started managing teams, because I was such a hopeless geek.  Actually, my main problem was that I was adult-ADD, and couldn't sit still in a meeting.  It's fine roaming around the room in hyperactive fashion when its your own company (ala Steve Jobs) but it is not OK when you are a 25-year-old consultant to the CEO of a Fortune 50 company.

My personal style didn't work any better in any of the other companies I worked for.  Aerospace was probably the biggest mis-match.  There is just no place for a hyperactive marketing guy in a business that takes 10 years to close a sale.  So I now run my own company, and there is no one above me to complain.

It is going to be a really, really, really long four or eight years if the Obama Administration and much of the left insists on declaring that anyone who dares to criticize a black President in racist.  The most recent example, of course, are frequent charges that critics of the health care reform are motivated by racism.

It is already clear that this Administration intends to raise the unverifiable claim to a new state of the art (3 million jobs saved or created!)  But the interesting thing about the health care - racism link is that in this particular case, we actually have a really good control group -- the first term of the Clinton administration.

In 1993, the Clinton administration embarked on a double secret effort to redesign the health care industry under government authority.  As details of the plan leaked out, many folks went nuts.  Commercials aired in key districts attacking various portions of the proposals and raising fears all around.  People were so ticked off that in the 1994 mid-term electi0ns, Democrats lost control of Congress for the first time in many decades, an election trouncing generally credited first and foremost to health care proposals.

Its not like the Obama administration is unaware of this example.  Many if Obama's approaches to the health care legislation this year are intentional changes from Clinton's approach.  Obama's rush to pass legislation that does not really start getting implemented until 2013 by the August 2009 recess was clearly an attempt to prevent opponents from gearing up campaigns against the bill as they did with Clinton's.

But here is the really interesting part.  I could have this wrong, but I could swear Clinton is a member of the White Anglo-Saxon Protestant oppressor race.  If so, the implication is that people went bonkers in 1993-1994 over health care plans for some political reason, but people who go bonkers  in 2009 over many of the same plan points are racist?  Does this pass any kind of smell test?

What is really going on is that a bunch of people who have never held a productive job, being politicians for life, and who have bought into their own "dedicated public servant" marketing are suddenly shocked to find that they and their efforts are not universally appreciated.  When someone has the bubble burst on their manufactured self-image, their reaction is seldom pretty.

From Mickey Kaus:

Democratic blogger Ezra Klein appears to be positioning Dem health care reforms as a way to cut costs, on the grounds that a reformed system will be able to make "hard choices" and "rational" coverage decisions, by which Klein seems to mean "not providing" treatments that are unproven or too expensive--when "a person's life, or health, is not worth the price." Matthew Yglesias' recent post seems to be saying the same thing, though clarity isn't its strong suit. (He must have left it on Journolist.)

...

The "rational," cost-cutting, "hard-choices" pitch isn't just awful marketing--I don't even think it's accurate. Put it this way: I'm for universal health care in large part precisely because I think the government will be less tough-minded and cost-conscious when it comes to the inevitable rationing of care than for-profit insurance companies will be. Take Arnold Kling's example of a young patient with cancer, where "the best hope is a treatment that costs $100,000 and offers a chance of success of 1 in 200." No "rational bureaucracy" would spend $20 million to save a life, Kling argues. I doubt any private insurance company is going to write a policy that spends $20 million to save a life.  But I think the government--faced with demands from patient groups and disease lobbies and treatment providers and Oprah and run, ultimately, by politicians as terrified of being held responsible for denying treatment as they are quick to pander to the public's sentimental bias toward life--is less likely to be "rational" than the private sector.

That is to say, the government's more likely to pay for the treatment (assuming a doctor recommends it). So it's government for me.

He comes oh-so-close to getting it right, but then falls short.

Klein is right that the pressure will be to ration care -- we already see such rationing being seriously considered in Massachusetts (the model of choice for Democrats) under the weight of massive expenditures.

But Kaus is correct that if some high-powered and well-funded interest group gets behind a certain procedure, cost-effective or not, the government overlords of the program will likely approve it.   As a result, for example, no potential treatment for breast cancer will ever be denied given the proven strength of women's groups lobbying for breast cancer treatment (already, breast cancer research is hugely over-funded vs. other diseases given its mortality, due in large part to this powerful lobbying).

But it is not one dynamic or the other.  Both will exist.  There will be huge pressures to cut back somewhere, as costs skyrocket.  And there will be huge pressure from certain interest groups to fund treatment for certain diseases in unlimited amounts.  The result will not be, as Kaus posits,  that everything will be funded more than it is today -- the result will be that certain procedures and conditions with strong lobbying and political muscle will get funded more, with the difference being made up from cutting funding for conditions and procedures without a well-organized lobby.

Access to care will no longer be determined by money, but by political pull.  (Yeah, I know, it's Ayn Rand's world and we all just live in it).

On September 12 last year, I linked an article in the Arizona Republic that I declared to be ridiculous wishful thinking on the part of the author, completely disconnected from how people have responded to price changes in the past:

The worst oil shock since the 1970s has put a permanent mark on the American way of life that even a drop in oil's price below $100 a barrel won't erase.

Public transportation is in. Hummers are out. Frugality is in. Wastefulness is out....

As prices come falling back to earth, Americans aren't expected to drop their newfound frugality. The jarring reality of $4-a-gallon gasoline stirred up an unprecedented level of consumer angst that experts say will keep people from reverting to extravagant energy use for years to come - if ever again....

"I see a permanent shift," said Kit Yarrow, a consumer psychologist at San Francisco's Golden Gate University who has studied how high oil prices have affected Americans' buying behavior. "Historically, when gas prices come down, people use more. But we've learned a lot of new things during this period and it will be hard to go back to our gas-guzzling ways."

Thank God for consumer psychologists.  From the LA Times last week:

Americans have cut back on buying vehicles of all types as the economy continues its slide. But the slowdown has been particularly brutal for hybrids, which use electricity and gasoline as power sources. They were the industry's darling just last summer,  but sales have collapsed as consumers refuse to pay a premium for a fuel-efficient vehicle now that the average price of a gallon of gasoline nationally has slipped below $2.

"When gas prices came down, the priority of buying a hybrid fell off quite quickly," said Wes Brown, a partner at Los Angeles-based market research firm Iceology.

Prices matter.  Nearly every other form of communication, from advertising to public education to presidential fireside chats to go-green guilt promotion campaigns pale in comparison to the power of prices to affect behavior.

Postscript: I studied a lot of marketing in business school and was a marketing guy for years in corporate America.  I wonder how a marketing guy and a "consumer psychologist" differ?  The only differences I can think of are 1) a marketing guy's pay will suffer over time when he is this wrong and 2) I found in marketing that bringing facts to the table often yielded better forecasts than simply applying my personal biases and wishful thinking.  About 10 seconds of looking at how consumer focus reverted away from conservation after the oil price collapse in the 1980's might have given these guys a hint.   Particularly since the price shock of 2008 was far shorter and less severe than the shocks of the 1970's.  Here is my measure of gas price pain (I have not updated it for the recent price collapse):

Apparently for some reason having to do with screw-ups and protests in contracting, the State of Arizona is not going to publish a Visitor's Guide.

I run a decent-sized business in Arizona, and have never paid much attention to these guides.  Every state and city and town and county and school district seems to put out some kind of visitors guide, and I could go bankrupt paying for ads in all the ones who hit me with marketing calls.  Customers have a jillion ways to find out about our business, either from Internet searches or private guidebooks and directories.  Heck, when I travel, I usually hit places like TripAdvisor and then run down to Borders to pick up whatever Fodor's guide covers my destination.  I have never even thought about calling the government and asking them to send me a visitors guide, but perhaps some of y'all have.

Anyway, what do I know?  I am just a little small business trying to run a few campgrounds.  Just because I can handle my own marketing needs doesn't mean that billion dollar multinational hotel chains are capable of doing so without the government:

Greg Hanss, director of sales and marketing for the new InterContinental Montelucia Resort and Spa in Paradise Valley, couldn't believe it. "For me, the fact that we don't have a state visitors guide in what is the most challenging economic time of our tourism lives is really disappointing."

Pathetic.  It is interesting to see that, for every 20-something anxiously awaiting the government's takeover of healthcare because they are really bummed about all the work it takes to find the right health care plan, there is a corporation waiting for the US govenrment to do its work for them.

This caught my eye today:

Hostess Twinkies are becoming the latest product remade and repackaged into 100-calorie snack packs

No word on how small they will be.  This had to be one of the great marketing blinding glimpses of the obvious:

Hostess launched its 100 calorie cupcakes in 2007, but held off on making a version of the Twinkie because the product was a favorite overall, not just among those looking for low-cal options

Get out of town.  Who would have thought that Twinkies were not a favorite for those looking for low-cal options.

Would an oil company get roasted for this or what:

Call it a soybean spat. The University of
Minnesota isn't going to receive any research funding from the state's
soybean growers council until the two parties have a heart-to-heart
talk next week.

The Minnesota Soybean Research and Promotion Council voted to
temporarily suspend its financial support after a study co-authored by
U researchers in the journal Science said increased use of biofuel
crops like corn and soybeans could worsen global warming, not lessen
it.

The council typically picks up the tab for $1 million to $2
million a year for research on such things as how to increase soybean
yields and how to improve marketing, said Jim Palmer, president of the
Minnesota Soybean Growers Association.

The funding relationship has gone on for decades and was good until now, both the growers and the university said.

The study, published Feb. 7 by the University of Minnesota and
the Nature Conservancy, an environmental advocacy group, warned that
converting prairie or peatland to cropland for corn and soybeans would
release more carbon stored in plants and the ground as carbon dioxide,
the main greenhouse gas that contributes to global warming.

My dad is a University of Iowa grad and has tried for years to get them to demonstrate a higher quality of scholarship around the ethanol issue.  Good freaking luck.

OK, perhaps it is a guilty pleasure, but I enjoy downing a couple of Mike Hard Lemonade's on a hot afternoon.  Now, it seems, the Food Nazi's at the Center for Science in the Public Interest want to stop me"

Public Citizen's blog announced that CSPI
plans to sue the beverage sellers, asking for disgorgement of profits
from flavored malt beverages, unless they agree to take them off the
market. Their theory? By making flavored alcoholic beverages that taste
good, they are effectively marketing to children. (Because, after all,
adults don't like beverages that taste good.)

TJIC points out a dynamic in coffee houses I have also observed at work among restaurants:

"¦Strange as it sounds, the best way to boost sales at your
independently owned coffeehouse may just be to have Starbucks move in
next-door.

That's certainly how it worked out for Hyman. Soon after
declining Starbucks's buyout offer, Hyman received the expected news
that the company was opening up next to one of his stores. But instead
of panicking, he decided to call his friend Jim Stewart, founder of the
Seattle's Best Coffee chain, to find out what really happens when a
Starbucks opens nearby. "You're going to love it," Stewart reported.
"They'll do all of your marketing for you, and your sales will soar."
The prediction came true: Each new Starbucks store created a local
buzz, drawing new converts to the latte-drinking fold. When the lines
at Starbucks grew beyond the point of reason, these converts started
venturing out - and, Look! There was another coffeehouse right
next-door!

One wonders if smaller niche book stores, who complain about Borders and Barnes & Noble, have had any similar experiences.

As to the part about "When the lines
at Starbucks grew beyond the point of reason," I can say from my limited observations as a non-coffee drinker that there are a lot of things wrong with the Starbuck's model, particularly vis a vis lines.  First and foremost seems to be that their production process doesn't make a lick of sense.  I'd have been laughed out of the room in almost any operations course if I had proposed the production process they use to deliver coffees.  At some point, people are going to realize that waiting in lines does not have to be part of the coffee experience, and then Starbucks is in trouble. 

For years, the Einstein's Bagels near me had the worst production process I had ever seen.  People had to criss-cross one another constantly behind the counter just to complete one order, and the assembly line, from ordering through payment, always had a horrible bottleneck somewhere, thought the bottleneck moved around as they played with staffing.  Every Saturday morning the line and wait would be awful.  I pretty much had given up on them when they suddenly closed for three weeks.  When they reopened, they had a new layout behind the counter, new electronics, and a whole new process.  Since then, I have never seen a line longer than 2 people even in peak periods.  And look at Southwest Airlines.  They have reinvented their boarding process for about the third time  (and I like the changes).  Is it really possible that no one at Starbucks has thought about re-engineering the coffee delivery process?