Links: Tip screens subsidize sociopaths
+ missing gorillas, sports TV revenue, and more
1 | Here's a fun argument that tip screens are a form of price discrimination (via Byrne Hobart). The logic:
When customers start tipping, the business can reduce pre-tip wages in the future: if they could hire workers at a $20 wage before, they can now hire workers at roughly $18 + $2 in average tips.
Because wage costs are lower, the business can reduce prices, bringing in new customers who weren't willing to pay the original price.
So if you choose not to tip, you're paying a lower price than before; this works because people who do tip are paying more in total (price + tip).
Assuming people who tip tend to have lots of disposable income and/or really like that store, the business is effectively charging more for the same product to people who are willing to pay more.
This is "price discrimination" in economics jargon, and it's more profitable for the business.
But that last assumption doesn't really hold: in the real world, tipping isn't just a way to spend spare cash or show a worker your gratitude; it's a way to signal to that worker and anyone else watching that you're a good person upholding the social contract where tipping is expected -- or, if it's not clear whether it's expected, that you error in a more generous direction. (Just ask George Constanza.) So who tips and who doesn't isn't only determined by a customer's "willingness-to-pay", but also by how much they care what others think about them. Adding tip screens improves a company's bottom line, but it also subsidizes sociopaths at the expense of other customers.
2 | Several years ago, in what I believe was the first major "AI bias" scandal, Google Photos' image-tagging algorithm was found to sometimes label Black people as "gorillas." I didn't know until this NYT article that Google (and Apple) never really fixed the underlying classification error -- they simply stopped tagging anything as "gorillas", even actual gorillas.
3 | Perhaps the biggest story in sports right now is the Diamond Sports bankruptcy -- not so much how this case gets resolved, but what it means for the future of local broadcast revenue and new distribution models that might replace it. Even if you don't care about the business side of sports on its own, there's a long history of television revenue affecting what happens on the field: in the 1960s, the growing pie of TV money was what first got baseball players to organize, paving the way for free agency a decade later; in the 2010s, a big NBA rights contract caused the salary cap to jump by a lot in one year, allowing the Warriors to sign Kevin Durant and cement their dynasty. (A smaller but fun example I just read in Lords of the Realm: Ted Turner was worried that the Braves would move out of Atlanta in the 1970s and ruin TNT's broadcast deal, so he just bought the team!)
4 | When I did the analysis for the first global "Fortune Future 50" a few years back (a ranking of large public companies with the best growth potential), we were surprised to see three Chinese automakers in the list, because cars haven't recently been a growth industry. The story was plausible -- they'd had accelerating (albeit heavily subsidized) growth to that point, they were near the forefront of electric vehicles, and China's enormous middle class was starting to be able to afford cars -- but for a few years it didn't really come together and their stocks stagnated. Now that's changed: Ford's CEO recently highlighted that China surpassed Germany and Japan as the leading vehicle exporter and is likely to play an even larger role in the future of electric vehicles.
5 | Nostalgic for all those charts where COVID-19 completely broke the scale? ChatGPT is doing that too:
6 | America's most dominant top-level team is Oklahoma softball, which won a record-setting 53 straight games and a third championship. From 2000-19, national champions averaged eight losses per season; Oklahoma lost eight games in three seasons combined, including an unprecedented 61-1 record this year.
7 | Wild anecdote from Lords of Finance: The US' decision to drop the gold standard in the 1930s -- which economists now consider one of the most important steps in ending the Great Depression (more so than the New Deal programs you learned about in history class) -- was just a YOLO act from FDR over the objections of all his economic advisers at the time. (The president then spent a couple months moonlighting as a commodities trader, directing the Fed to move the market price of gold to price targets that he pulled out of thin air every morning.)
8 | Favorite recent recipe: this tofu curry (be warned that it might also set the record for longest pre-recipe-SEO-filler).
9 | "The dress" explained in one picture:
