The Art of Innovative Consumption - Part 2

Continued from here...

The extreme price differences found in the market for computer hardware in Australia are not necessarily shared by other types of products. What, then, can an innovative consumer do when the product they want is universally costly? What about where there is a monopoly or near monopoly? Well, there are still some options. There are always options.

The second hand market is always worth considering. I grew up with most things bought second hand. New items in our home were a rarity. Most were bought from opportunity shops, but sometimes, just for a treat, we would save up and buy something through the trading post. Now, since the advent of computers - available for less than you think, as those who read part 1 will be aware - we can search through extensive classifieds, bid on eBay auctions, contact locals with things for sale through Gumtree and look up vast amounts of information on the item we intend to buy so as not to get ripped off.

Books are a good example of a product that costs significantly less when purchased online than it does over the counter. Though I do love to look through a book shop and sit in its cafe reading books I am considering purchasing and I will miss the many book shops that have closed recently in Melbourne, the fact is, none of us are made of money and not everyone can afford to pay double or triple the price simply to keep over the counter retailers afloat: they're not a charity. By the way, one way you can buy books is by clicking the adds below this article and ordering them online - new or second hand, digital or hard copy.

The reality is, though, not all the items we want are for sale at reasonable prices and not all the ones at reasonable prices are within our budget. Even if they are, further savings can allow us to invest for the future or make our budgeting more rewarding. The next step in creative consumption is to stop viewing an item in its entirety and begin to consider its component parts.

There are a number of reasons why the cost of a complete item may be more than the sum of it's component parts. Key among these are cost of assembly and the desirability of a complete and usable product.

The mere act of assembling the parts must have required resources. More often than not those resources are human resources and human resources cost money, no matter how much that cost can be minimized by outsourcing to countries without minimum wage laws. By completing as much of the assembly process one's self, one can trade one's time for money. Often the relatively small amount of time that this takes can seem grossly disproportionate to the amount of money it would have cost for the already assembled item. Ikea are hinting at this when they sell you flat packed furniture. As their communication team are keen to emphasize, this also makes it easier to carry home on your car roof rack.

Referring back to the example of computers mentioned in part 1, many computer parts suppliers will charge you for an hour or more of labor at a rate far in excess of what they actually pay their employees, for the assembly of the parts you have purchased. However, this is not always the case: some stores such as Yamada Denki in Japan will assemble your computer parts for you for little or no cost. Of course it still pays to do your homework and research the parts you will choose, since this will enable your to purchase a computer that suits your needs based on parts that represent a good balance between reliability, cost effectiveness and performance.

Assembly costs aside, there is another key factor that inflates the price of complete items when compared to the sum or their components. That is, desirability. It is far easier to market an item that looks complete and is ready to perform its function than one that will require work to assemble. Where components or items not yet assembled are marketed, communication usually centers around images representing their potential. Ikea achieve this by placing on display fully assembled items in a setting that demonstrates their usefulness, mutual compatibility and function. Cake mixes are usually sold with a photo on the box not depicting the little white sachets contained within, but rather the cake you could potentially create by adding the right amount of water and baking in the right dish at the right temperature for the right amount of time. The packaging of computer graphics cards often depicts examples of the computer graphics that may potentially be displayed on your monitor after you have installed the card in your computer, as long as you have the right combination of other components, complimented with the right software.

The point of all those examples is this: products' prices have far more to do with the laws of supply and demand than they do with the cost of manufacture. Demand, in the case of non essential items, relates to desirability and desirability increases dramatically once a product is completed. A completed product performs a function and it looks and feels complete.

However, to the innovative consumer, these virtues offer a completed product only a very short term advantage over the components though, since once we purchase and assemble them, they will gain exactly the same properties as the completed item.

We may even make improvements along the way. We can choose the precise components that suit us, rather than settling for the combination a manufacturer chose. This is very important, because many manufacturers choose the components that will slightly out compete a rival product or slightly outlast a warranty. We, on the other hand, can choose the best combination, giving the product exactly the performance and features we need and finding our own balance between cost and longevity.

One final benefit of self assembly is that by gaining knowledge of the components, we are able to replace them individually when they fail, calling on manufactures' warranties while they apply, or choosing second hand parts once they expire. This saves a great deal of inconvenience and potential cost.

As innovative consumers who assemble our possessions from their component parts, we achieve the next level of mastery over our material lives. The process bears rewards that extend well beyond the financial. We learn and develop as people through interaction with the man made artifacts that constitute a large part of our culture. We become increasingly self reliant, able to recombine parts in new and creative ways. We can perform repairs and modifications. These things are highly satisfying and enrich our lives.

To be continued...


In the mean time, please consider the following books/eBooks. Prices start from $0.99. Part of the proceeds will support this blog. 
 

CEOs and Incentives

CEOs often have little or no incentive to improve. Even in cases of very poor performance by the companies they lead, they continue to receive extremely high pay, often award themselves bonuses and, once they leave, are able to easily find similar work in other companies, no matter how bad they are at it. This is a sad state of affairs.

Qantas CEO Alan Joyce is a prime example of this. Increases in his pay are completely disproportionate both to the company's performance under his leadership and to the working conditions of the majority of Qantas employees. 

When share holders vote on pay increases it is rare for the recommendations of the board to be opposed. Those who cast proxy votes but don't specify any instruction by default allow decisions to be passed. Even if there were a high level of voter engagement it would be hard for small share holders to have much influence, since major share holders in companies tend to belong to the same social elites as the company leaders and share similar ideas. 

This is a serious issue of corporate governance. Companies themselves are unlikely to decide to make changes, as they lack any financial incentive. The interests of companies as a whole, as organisations of people working together to earn a living and achieve something, would be better served by restrictions on pay, share schemes, bonuses and benefits given to company leaders. Bonuses must be conditional if they are to be an effective incentive for improvement and for them to be meaningful, salaries and other benefits must be kept at levels where their recipients, though well off, will still feel a need for more income. 

The only way that restrictions can ever be put in place is through legislation. The chances of it happening are very slim. The most likely outcome is that we will be interminably stuck with poorly performing companies that serve largely as a means of funnelling funds into their CEOs' bank accounts.

Are Australian Living Standards Declining? A Cursory Look.

The OWS protests have brought a lot of new knowledge to light about inequality, greed and corruption in the USA. Not least of these little insights has been the fact that average incomes (those of 'the 99%') peaked relative to the cost of living in the 1970s and Americans have in effect been worse off ever since.

What about my little country then: Australia? Well, a cursory glance at the graph (below) of real household disposable income, would suggest we're doing pretty well. Have a look, then I'll continue. 

Well that one doesn't go back to the 70s, so here's one that does, but doesn't quite cover the little dip in the last few years: 

There. Now there seems to be a reasonably steady trend upwards. That one is in '99/2000 prices. 

However, commentators have argued that women's workplace participation has been a contributing factor to increasing income. Here is a graph showing the increase in workplace participation by gender. The bottom line is dotted (hard to see) and, as may be expected, represents women. 

That's from here. The explanation notes that male participation has declined, but female participation has increased enough to make the overall participation rate increase, which has been extremely beneficial to the economy. 

So, disposable income has about doubled in about the same time that womens' participation in the workforce has not quite doubled. Very well. Each of us must be better off. Right? 

Well, here's another graph from the same document: 

Married women's participation in the workforce is growing much faster than that of non married women. This means there has been a significantly greater increase in the proportion of people living together, married on dual incomes than data manipulators like The Australia Institute would claim. There isn't equivalent data available to show de facto arrangemnts, I'm afraid, or at least I can't find it right now. Young single people often live in share houses to lower costs. There isn't data on this, since the arrangements are often illegal (the landlords don't know) and share houses aren't regarded like families by gatherers of data like the ABS. 

Either way, based on this cursory glance, it looks like we're not much better off than the 1970s. Right wing extremists like the 'Australia Institute' bewilderingly state, in rather sexist and patronising terms, that without women's participation in the workforce, average household disposable income would be higher. This is obviously misleading. There is a need here for more detailed analysis and also for concern. It quite clear that far more of us are working in order to achieve similar living standards to what we had in the 1970s. Whether those standards are in fact slightly higher or slightly lower though, that's something that needs to be investigated further. I'll look into it soon. 

Bigots' FB Page.

I can't believe people would express senseless views like this publicly. However, I still come across them from time to time. The mainstream media promote racism on a regular basis and contribute a lot to these kinds of views being held by people who don't know any better.

I encourage anyone who uses FB to report this page. It's quite blatant discrimination based on lies.

For what it's worth, the I'd just like to point out that unemployment cannot, by any stretch of the imagination, be linked to immigration, as this page tries to imply. In fact our economy and the jobs we have rely heavily on it.

Political correctness is just derogatory word that racists have begun to use as a defense whenever they are told not to say offensive, idiotic or defamatory things about others in public. This is worrying. Words have consequences. Words can hurt people. If you hurt people physically, of course there are laws to stop you. The same applies if you hurt people with offensive words, for example, by creating stereotypes or misinformation about them.

When these people talk about 'Aussy Pride' what they really mean is that they have the arrogance to say they are better than other people in other parts of the world, no matter how little intelligence they exhibit, simply on the basis that they live in Australia and look something like their ideal image of what it is to be Australian. It's because of this that we need words like racism and bigotry.

Worst of all, the page uses the word 'islamification,' which presumably refers to some kind of conspiracy or agenda on the part of our friends and colleagues who believe in Islam. There is no evidence for any such agenda. All religions aim to encourage people to believe. The white majority from whom the page's creators undoubtedly derive are themselves descended from Christians and their religion has been spread world wide, often (though not always) through coercive means. For them to blame any social problems on those who practice Islam, a religion that values purity and peace, is both hypocritical and disrespectful.

So, dear readers, please take action and report the page to FB admin. The more complaints they receive, the sooner it will be removed. Also, please share this article to send a clear message to bigots everywhere about how wrong these kinds of views are.

PM Will be Swayed by Party on Gay Marriage

I've argued all along that Julia Gillard would back marriage equality in the end. By the looks of it, her party do already. This is a clear indication that it's only a matter of time. Resisting this kind of progress is futile and altogether silly. 

Note: Censorship has been added to protect the identities of the people posting.

Man Swears at Gang of Police

This very evening I was in the Melbourne CBD having dinner at a table out the front of McDolalds when a large group of police in fluoro vests came along. There was a man walking the other way and they stopped him and started asking him questions like what he was doing there and whether he had any identification. The man's only apparent crime was being slightly unshaven.

The man cooperated with them but uttered several profanities in his efforts to question why they had suddenly singled him out. Rather than explain, the police officers berated him for swearing.

Unfortunately, one of the changes made by this new state government, who I consider to be idiotically adverse to the rights and freedoms of the residents they supposedly represent, is to introduce fines for swearing in public. This means that the poor chap could well have been fined.

Of course at this point a middle aged and respectably dressed lady spoke up for him, pointing out that he had clearly been doing no harm and minding his own business. Several other people who had been listening would have done the same, had the police showed the nerve to enforce such an absurd law.

Though I know that it would do me no good at all, I have to admit I would almost certainly have sworn if the police hand randomly accosted me in the street like that. Indeed I have no doubt the only reason they chose him and not me was that I was clean shaven and wearing a clean university employees uniform.

This man was in jeans and a t shirt. His subsequent conversation with the lady who had spoken, once the police had left, revealed that the reason for his unshaven face was that he had only today got off a plane returning from charity work in rural areas of South East Asia.

Why do these young men become police officers in the first place? Shouldn't it have something to do with protecting and upholding the rights and freedoms of everyday people in the street? How does harassing us achieve that?

When a close friend of mine called the police after being threatened with physical violence, they didn't respond at all and when she went directly to the police station they merely explained why there was no point applying for a restraining order because it would take too long. There was no mention of the protection notices they can serve on a perpetrator with some paper work and a phone call. There was no mention of referral to family violence related agencies. It appeared that the police officer's main priorities were to avoid involvement, risk and paper work by any available means.

Why aren't these young employees of Victoria Police taking initiative and being courageous? Why aren't they at least up to date with their own procedures and willing to apply them in places where they will help? Are our laws to be enforced by selfish bureaucrats and gangs of aggressive men in high visibility builders' uniforms? What is needed is courage: the courage to express what is right and stand up for ideals, whether they seem to fit with the exact wording of the procedures of not. Courage has been severely lacking in the police behaviour I've witnessed this week.