Hello World

Thomas Keller, the chef/owner of Per Se (the latest Big Restaurant in New York City), has abolished tipping, opting instead for a compulsory 20% service charge on every bill. While I think that 20% may be overly generous, I support the move away from the gratuity culture. And I'm not the only one--check out this op-ed from the Times, which explains why the justifications for tipping are illusory.

In most of Europe, there's no such thing as tipping. Instead, a value-added tax is applied to bills automatically. When I've been there as part of my glamorous jet-set lifestyle, it's been quite refreshing knowing that the total cost of my meal is right there in front of me--there's no math, no irritating assessment of service quality, no awkwardness. Just pay the bill. And I certainly wouldn't suggest that the service in Europe has been worse than the service here in the states (quite the opposite).

So why do we still tip? I mean, yes for restaurant service, but also in general. Does this seem like an anachronistic holdover from a barter economy to anyone else?

Links initially collected at Kottke.org.

Edit: Waiter Rant has some thoughts.

Warning: oversimplification to follow.

Alan Greenspan favors a national sales tax over our current income-based tax system. He acknowledges concerns that this could inequitably hurt the poor, but thinks there are ways to get around this. He also admits that a full switch is politically unlikely, saying that it will probably be necessary to have some kind of combination of income and sales tax.

Honestly, and I'm pretty sure what I'm about to say makes me a Bad Liberal, this sounds like a good idea to me. Rather than an arcane and loophole-filled progressive income tax (one that is pretty easy to cheat and extremely expensive and difficult to enforce), a sales tax has the potential to be a simple way of encouraging saving (which money wouldn't be taxed until spent) and penalizing the fat cats whose gluttonous spending would make up a sizable portion of the new tax. Furthermore, instead of concentrating on consumers (individuals), regulators could focus their energy on producers, wholesalers, retailers--businesses that are already regulated would remain so, but with simpler and more comprehensive rules.

Obviously there are other issues that make this less than ideal--how about people who make so little that they already don't pay income taxes? What if they could no longer afford to buy things they needed because of this tax? Well, I'm sure that in terms of economic theory it turns out that they will end up with more money to make up that difference, but even if that's not true why not use this opportunity to get creative? We trade Republicans their sales tax for our better-funded welfare and education systems. What if we didn't tax food, and focused resources (like the ones formerly tied up in IRS tax enforcement) on ensuring affordable housing for those who need it?

Of course, some of the benefits I'm touting (especially those based on efficiency and simplicity) would only come from a full changeover, which is pretty much not a realistic possibility. Nonetheless, I would definitely hope that people in charge are looking seriously (and apolitically) at this idea.

What do you think?

Observe as I carefully take us from an examination of Netflix to my opinion of the future of the world.

Why doesn’t Netflix offer a regular subscription option? In other words, why can’t I just have a Netflix account where I pick one movie, pay them $2.00 (or some other price significantly cheaper than Blockbuster), and get the DVD mailed to me in the same return envelope they use for the unlimited subscription model. I could still have a queue, or I could just have a list of movies from which I pick. Hell, I could even just browse their movies and press “Rent It Now.” Most people wouldn’t use this option, as the one or two day delay would be a bigger deal in that situation than it is for an unlimited subscription. But the amazing thing is that adding the new subscription style would be a drop in the bucket in terms of resources needed to get it started. They wouldn’t need a new distribution system, or new agreements with business partners, or new warehouses. It would just be a matter of a few software changes on Netflix’s end and the result would be the addition of a completely new business model. There’s no downside here--if it fails, a few days’ programming was wasted. If it succeeds, Netflix does yet another thing better than its brick-and-mortar competitors. Do you realize how great that is? A tiny material risk with a potentially huge reward. This is Big.

( whoa, I wrote a lot more )

If you're interested in a pretty thorough (though fairly simple) description of supply-side economics--the basis of Dubya's economic policy--you can find one here*. It's laid out in a fairly non-partisan manner, I think (I'd prefer to see a few more cheap shots, but I suppose a lack of obvious bias has its own virtues).

What I don't understand about supply-side economics is: if your ultimate goal is to get money in the hands of people who need it, why are you giving it to people who don't? The only argument I can think of is that you're not just trying to temporarily aid the indigent (heaven forbid!); you're trying to bolster the economy as a whole. A rising tide lifts all ships, etc. But frankly, I don't buy that. It seems like a pretty safe assertion to say that our national economic health waxes and wanes cyclically, often for no reason that anyone can identify even after the fact, so any attempt to directly change that (i.e. lowering interest rates, lowered tax rates (for the rich!) that lead directly to increased national debt, foisting stupid anti-outsourcing laws upon a nation built on other countries' outsourcing, etc) does nothing but (at best) delay and exacerbate the inevitable economic downturn (see: stagflation).

This strikes me as lazy economic theory conceived by and for the affluent--just another example of the conservative belief that those who will be harmed aren't paying enough attention to fight back.

This paragraph impressed me, and I'm surprised that I've never read anything along these lines before:

In 1991, part of the reason why George H. W. Bush had to break his "read my lips: no new taxes" pledge was because he was forced with the choice of either raising taxes, or putting the country further in debt. He made the politically painful move in order to protect the long-term interests of the country, even though he knew he was just about guaranteeing he would lose the 1992 election.

If this is true (that H. W. Bush knew he was signing away a second term), it's very impressive and admirable and generally astonishing behavior for a politician. There is that whole "Gulf War" thing, though, which may be partly responsible for his unplanned vacation. Then again, you can argue that his real mistake in the Gulf War was turning back without overthrowing Saddam; this was (in retrospect) probably the smartest thing he could have done (after all, who wants a long drawn-out occupation of a country filled with hostile, heavily-armed religious zealots with no one to take their frustration out on save the occupying force?), but was also certainly not what most Americans wanted at the time. Basically, I hate the fact that "politically unpopular" is so often synonymous with "the right thing to do." Digression over.

The moral of this rant is: I wish I hadn't fallen asleep so much in Econ 101.


*Feel free to ignore the incoherent comments of the libertarians and uninformed irrational dorks below the actual essay.