Over the last couple weeks, my wife and I have been clearing out the house in preparation to move overseas. As we are going through our waterfall of stuff, we realized something “Wow we have a lot of crap!”. To be honest, I don’t know where all this crap comes from. Since my wife and I have been in the apartment, we go through our annual ritual of clearing out the closet(s) and for some odd reason we end up with 5-10 garbage bags of..well..crap. From old electronics to shoes to comforters to old CIA files of assassination targets. I just wonder if there is a hidden portal in the back of our closets that meticulously adds stuff from other people’s closets.

This recent ritual of getting rid of stuff resulted in about 10 bags of stuff that we’ll send to the salvation army (or some thrift shop) and about 6-7 garbage bags of..well..garbage. If that wasn’t enough we have 6 bags of mail that will be shredded tomorrow. (we have so much we had to hire a professional shredding company to come to our apartment so we dump the stuff into the truck). I was shocked. Keep in mind that we have a 1 bedroom apartment. This mysterious “closet accumulation” phenomenon reminds me of the mysterious “lose 1 sock in the dryer” phenomenon. Is this some conspiracy between the cotton sock suppliers and the dryer manufacturers? Are the dryer manufacturers getting kickbacks from the cotton sock companies (Hanes and Fruit of the Looms) for randomly destroying single socks in the dryer? Do they evaporate after 20 washes?

All this industry conspiracy speculation reminds me of the the assumed conspiracy that Adam Carolla so humorously talked about in his book, In Fifty Years We’ll All be Chicks…And Other Complaints from an Angry Middled-Aged White Guy about the toaster and bread manufacturers. From pg 184 on Toasters:

Where’s the toaster technology? Toasters haven’t progressed since Lucy and Ricky were on TV, but now we’ve got an ankle monitor to make sure Lindsay Lohan hasn’t taken a drink. Imagine traveling back in time to the forties and telling someone sitting around their kitchen, “in 2010 this toaster isn’t gonna toast bread one second faster than it does now. Not one %$%^&*$# second. But there will be a thing the size of a pack of cigarettes you strap to your ankle that will contact a satellite if you’ve had a thimbleful of Kahlua”. They’d slam your head into their Formica tabletop and bury you in a backyard.

And half the time the toast comes out burned. Why was it built with the ability to burn the toast anyway? Do we need the ruin-my-breakfast setting? There are degrees that people enjoy, from lightly toasted to dark brown. But nobody wants briquette. Jacuzzis go from warm to hot, but not enough to kill a human or poach a salmon. The heater in your car can get pretty warm, but it will never go up to blast furnace and melt your face. Why do I need to smelt ore in my toaster? I bet the toaster manufactures have some kind of unholy alliance with the bread companies. I picture a guy who looks like Karl Rove, wearing a gold Toaster Manufactures of America blazer and smoking a cigar, saying “What if I could guarantee that every seventh piece of bread ends up in the garbage? It would increase your sales by fifteen percent. “Then we see the Pillsbury Doughboy laugh, slide a briefcase full of cash across the desk, and say “I think this is the beginning of beautiful relationship.”

With all that said, my wife and I still don’t own a flat-screen television, so maybe our carbon-consuming footprint is not so huge after all.

I’ve spent the last couple weeks cruising through the documentary Collapse on my IPhone. The documentary is on Michael Ruppert, a police officer turned independent reporter who predicted the current financial crisis in his self-published newsletter, From the Wilderness.

There is some pretty scary stuff in Collapse. Mr. Ruppert goes way beyond just fractional reserve banking, fiat currency and Federal Reserve monetary policy, but spends a substantial amount of time on the potential societal impacts for the human population because there are limited resources on planet earth.

This documentary serves more of reality check than another boilerplate conspiracy theory piece. As Mr. Ruppert so eloquently stated:

Of course I’ve been called a conspiracy theorist but I don’t deal in conspiracy theory, I deal with conspiracy fact

The audio above is by far some of the truest and honest reality check I’ve heard since Alan Moore’s Culture of Steam quote regarding the doubling of information.

Another other choice quote from the documentary so you know what we are dealing with:

If your in a camp with a bunch of campers, and a bear attacks, you don’t have to be faster than the bear. You only have to be faster than the slowest camper. – Michael C. Ruppert

Hello, my name is Malik Abdul Rasheed and I’m a recovering Software Pirate and File Sharer.

Maybe we should start a public SPFSAAI (Software Pirate File Sharer Anonymous Amnesty International) program because the only way you are going to get honesty about what people are doing when they download (steal) software or music they haven’t paid for, is for the forum to allow anonymity and a general pardon for past piracy offenses. Otherwise we are stuck with the denial of what has been going on since the inception of Napster. Let’s just call it “shealing” (a hybrid of stealing and sharing), less I be hunted down with pitch forks by millions for calling people thieves. Don’t be offended, it takes one to know one. . A friend of mine just gave me the audio book for Freakanomics yesterday. I don’t feel that guilty because I bought a copy of that book for my brother and have given endless promotion of that book in many social circles, so for now, let’s just say I gave Steven D. Levitt and Stephen J. Dubner (authors of Freakonomics) free advertising.

What inspired me to write this post was a wonderful book called the The Price of Everything: Solving the Mystery of Why We Pay What We Do by Eduardo Porter. Yes, I paid for it from Audible. He has a chapter called the Price of FREE where he goes into the history of intellectual property and public copying dating back to the lithograph in the 1800s. If you have 44 minutes I would suggest you listen to the audio above, which really gets into some of the social psychology and economics behind software and music piracy. If you want to go the media page directly, you can go here. You’ll get a taste of what happens when piracy meets the likes of Radio Head, Saul Williams, and the Dark Knight, not to mention many other interesting ideas behind file sharing and software piracy. No, I’m not going to give you the .mp3. (dang you piracy addicts, always looking for a sharing “hit”). Back up off me, I got no product for you today. You’ll have to find another dealer.

Let me get couple a things off my chest, I’m a recovering pirate. Although you’d have to torture me to tell you how I got around Audible’s DRM and was able to upload and share with you 44 minutes of Eduardo Porter’s audio book, I believe that my “sharing snippets of product with the world” via social media, pales in comparison to the relentless downloading of terabytes of music and movies that sit on servers, ipods, smart phones, and the like. I’m not saying I’m right, nor am I saying this is okay. As of 2011 I have not downloaded any software that I did not pay for. Trust me, I’ve been tempted. I’ve taken a stand, and I’ve decided that I’m not going to pirate any files, whether they be related to audio books or software (Okay Freakonomics was my last “sheal”)

Below, Eduardo Porter sums up the transformation of power very succinctly:

The information revolution didn’t make information FREE , what it did, was transfer the money from the producers of information to the owners of the technologies that deliver it to their audience.

At the root of my change of heart comes down to intellectual property and economics. There is a “robin hood psychosis” that people seem to hold on to when it comes to justifying piracy. Regardless if the theft is from a independent artist, mega-mogul artists, small software company, big software company, book publishers etc. At the root of it, it seems that there is $100 dollars sitting on the side walk and people have decided to take it without asking “Hey did anyone lose $100 dollars?”.

However my purpose of this post is not to admonish those individuals who part-take in this behavior. My intent is to get people to sit in the “product creation” driver’s seat, and think about how you’d feel if the time, effort, money, and personal utility you invested in producing something was sold for nothing while crowds sourced your product for FREE with the fervor of a meth addict looking for their next hit. Whether you are considering the economics or ethics of piracy there is something to be said when we’ve become accustomed to discounting the value of someone’s time and creative efforts because we believe our actions fall in the long-term “borrowing” category.

In this new world of free data entitlement, the few have to shoulder the cost of many. Once again, not an easy task to consider when access to terabytes of data is at your fingertips while the distance between you and the same data is fractions of an inch away via a mouse click.

I’ll close with this excerpt from Eduardo Porter’s The Price of Everything from the section Stealing Sneakers:

It’s little bit like stealing sneakers, he observed. It is not possible that a street gang that steals a shipment of sneakers might ultimately boost sales of the footwear if it happens to be a trendsetting paragon of coolness in the neighborhood. A kid how shoplifts steak might mean more business for the butcher over the long term if the theft induces in the thief a lifelong taste for prime beef. Stiill, Leibowitz, pointed out, “I have never seen these types of argument put forward in a serious way to suggest that society might be better off if the prohibition on theft were overturned.”

On the Internet, the thief is trying to convince the butchers it is in his best interest to hand the steak over to influence his dietary habits.

• Podcast: This American Life – See No Evil
• The Effect of File Sharing on Record Sales An Empirical Analysis

Let me be frank, understanding economics (at least U.B.E.P Understanding the Big Economic Picture) takes a lot of reading, patience and a hellava lot of googling archaic economic vocabulary that on the surface seems to make absolutely no sense. However, once you are able to get past the mysterious language of economics and understand the context of this vocabulary U.B.E.P becomes more concrete and eventually you’ll get the “Ahah” moment.

So why am I so relentless when it comes to economic stuff? Well for starters, the economic policies of government have very deep impacts on the amount of money we take home. From taxes, to interest rates, money in circulation, to how much our government spends on certain mandates and a slew of other things that would probably give me carpal tunnel syndrome in my fingers if I attempted to write out all the thousands of circumstances.

Below are 3 books which I believe are good starters or as I like to say “launch pads” into more sophisticated economic fields of thought. I believe there are several critical areas that each of these books cover. One is macro-economics (understanding how the sum decisions from individuals, firms, and governments impact trends, incentives and movements in the broader economic market), then personal economics (how your behavior fits into the larger scheme of the broader economic market), and how maximizing your personal utility is by far one of the most productive acts you can do to make your skills scarce, hence increasing your value in the broader economic market. These 3 books are as simple as it gets. No fancy language, no crazy complex charts, and lots of objectivity to give us an untarnished and balanced perspective needed to tackle many economic issues that challenge us on a day-to-day basis.

Naked Economics: Undressing the Dismal Science by Charles Wheelan

What is there not to like about this book? So simple and concise minus the ideological hyperbole of free markets vs government. Naked Economics strips away all the fancy rhetoric and explains economics in a language that just about anyone can understand. Don’t be discouraged if you bump into something that sounds unfamiliar. A simple “googling” of the particular word or phrase will get you back on track and it’s extremely rare that you’ll run into this issue. The author wrote this book because he was tired of all the “ivory tower” economist explaining economics in such a drab and complex way. If these mainstream economist are the only ones who understand each other and not the general public, what is the point? This book will clear the fog of economic misunderstandings, not to mention it’s pretty darn funny.

The Millionaire Next Door by Thomas J Stanley and William D. Danko

One of the first books that really helped me understand the difference between saving money instead of looking like you have money was The Millionaire Next Door. This book is the ultimate “Anti-Joneses” personal finance doctrine. What’s extremely helpful is this book attempts at destroying a lot of the myths and urban legends that surround wealthy people. Want to know why most millionaires are NOT entertainers and athletes? How is this possible..uh read the book. You’ll be shocked to know how much the average millionaire spends on his/her watch. Want to know? Read the book. Or how about how much the average millionaire spends on a car? Want to know? Read the book. I promise you, you’ll walk away with a new understanding of why saving is so important, especially when it comes to your own personal utility. Too many people carry a fictitious narrative about what wealth is and who are the fortunate few who’ve been able to reach the status of wealthy. I must read for those who are interested in finding out where the seedlings of wealth begin and how those seedlings grow into wealthy roots.

Outliers: The Story of Success by Malcolm Gladwell

One of the most difficult concepts to understand is the dynamic “magic” that keeps the economy chugging along. In short, incentives and human capital. Incentive is the factor that motivates an individual to do a particular act. In the context of economics, it’s usually more money and quality of life. In some instances aspiring for more money might not be tied to just material objects, but could be tied to savings which breeds financial security or other philanthropic aspirations. Malcolm Gladwell’s Outliers is all about the circumstances, timing, and incentives that allowed select individuals to do extraordinary things in the economy, while explaining what happens when people master the art of aligning their personal incentives with their stock of human capital. This is the driving force behind our global economy.

Honorable Mention

Economics in One Lesson by Henry Hazlitt

Once you finished with the first 3 books above, you can’t move forward with understanding economics before you read Economics in One Lesson. Although written within a Libertarian vein (I say this as a compliment), it’s does a pretty good job of removing a lot of the “economic myths” that seem to never go away. The language is a bit heavier than the books above, but it’s still a good read. Although written almost 60 years ago, the content is as relevant today as it was then. A must read for those who want to rise above the cloud of economic confusion and fallacious punditry.

Now that the 2010 midterm elections are over, all you have to do is view the NYTimes word train from both parties to see the growing dividing line between Democrats and Republicans. 2010 midterm word train vs 2008 election word train. The fault line between red and blue states is deepening. More polarization of ideas equals more congressional gridlock while getting less and less done for the country.

My mood is disappointed. Not because the Republicans gained more seats in the House and flipped several seats in the Senate. Not because the Dems got a licking because there are no jobs. Not because because some of the most extreme ideologues are now representatives in the U.S. government. Not because the youth and other Black/Latino voters decided to stay home during this midterm election. Not because the Independents were “fair weather friends” of the 2008 election that ushered in Democrat control of the House/Senate including the Obama Administration and have now “turncoat” in less than half a presidential term. This is not a “sour grapes” reaction, this is a “reality grapes” reaction.

I’m disappointed because the American people, yet again, have an extremely short memory and seemed to have absolved the Republican party of decades of policy incompetence. They have never been the party of small government, free enterprise, fiscal discipline and just because they say it a thousand times, doesn’t mean that this is the answer or that they should institute these policies that they espouse. We don’t need small government, we need a smart and accountable government. We not only need a policy that encourages free enterprise, but a ethical free enterprise system. I’m not convinced that any party, Democrat or Republican or the fringe Republican movement known as the Tea Party, have the vision or ideas that will lead to the needed policy changes that will pull America out of this economic funk.

It’s not JUST spending cuts, it’s what you cut, it’s not JUST tax cuts, it’s balanced tax cuts that benefit the whole and not JUST the rich, it’s not JUST small business that matters, but the working poor that need help too. The single most crushing reality of this situation is ideological rhetoric has trumped informed reality. Fiscal fantasy over fiscal discipline. The American people nor our congressional representatives are prepared to make the radical changes to fix our problems. The rapid “zig zag” movements between parties is a testament to this fact. The achilles heel of this political process is we do not have an objective citizenry (regardless of the left or right), that has the information needed to understand the difference between sound policy decisions that benefit the whole vs corporatist ideologues posing as honest politicians who pretend that they are offering sound policy decisions.

Understanding the hows, whys, and whats of domestic and foreign policy is difficult. To be honest, I spend a considerable amount of time probing for facts and I STILL don’t have a crystal clear understanding of this stuff . It’s probably why most people prefer 30 second sound bites that move them into certain ideological political circles than doing the grudging hard work of researching and objectively interrogating certain policy ideas. It’s easy to follow your emotions, while not challenging the status quo. People are constantly asking “Where are the JOBS?”. For you to understand this, you have to go back several presidential administrations to understand how we got here. It didn’t start with the Bush Sr. Administration or Clinton Administration although they exacerbated the problem and it most certainly didn’t start with the GW Bush Administration although they exacerbated the problem. And to think the Obama Administration was a prerequisite to this current fiscal crisis is absolutely ludicrous. You have to research all the fiscal policy decisions starting around the Marquette Decision (1978) which completely deregulated the credit card industry. If the so-called “big bang” was the beginning of the universe, then the Marquette Decision was the big bang for our future fiscal problems. Our current “jobless recovery” is a host of bad policy decisions (including Fed policy) that was institutionalized for last 30 years.

Pointing a finger at any one political party is a waste of time. For what it’s worth, the one single book that has given me more food for thought on the nature of regulatory reform, fiscal policy decisions by the U.S. government, global monetization policy, Fed monetary policy and the roots of economic booms and busts including our current fiscal crisis is the book Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram Rajan. You can also read Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism by Kevin Phillips which helps to understand these fiscal issues too. Start there and use this as a guide so you can understand why jobs have been obliterated from the U.S economy. In short, our extreme financialization of phantom assets/equity, erroneous reactions from the Fed have severely hampered the U.S. economy, not to mention financial illiteracy by the general public. It’s not going to take half of a presidential term to get out of this. We are 3-4 presidential terms away from getting even close to fixing the fundamentals of the U.S. economy. If that. Jobs can only come from the efficient use of resources in the economy. I repeat, there is no political party that can get us out of this. Once we realize that we are all in this together, irrespective of party affiliation, things will start falling into place.

Books

• Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram Rajan
• Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism by Kevin Phillips

Recently, I’ve been reading The Narcissism Epidemic: Living in the Age of Entitlement by Jean M. Twenge Ph.D. and W. Keith CampBell Ph.D. It’s one of the 12+ plus books that will contribute to my 4 part series on the Science of Relationship which I’ll be finishing later on this year (inshallah). The book is not perfect, but it makes some good points. A bit too much “soap boxing”, but the good intentions and clear warnings are there. However, I want to take a short pit stop and quote a couple of very insightful paragraphs from this book that highlight—what I think is very eye-opening information on what many of relationships are suffering from. When I read these paragraphs it reminded me of some of the issues I encountered in my bad relationships in the past. Some of you might read this and say. “Oh snap, that’s me”. Nevertheless, check it out:

Narcissists and materialism….

Materialism is also a real stumbling block in narcissists’ relationships. Narcissists’ partners, for example, often say that the narcissists’ interest in material goods interferes with the relationship. She’s more interested in stainless-steel appliances, fancy handbags, and Manolo Blahnik shoes than our relationship, guy will say. (Simply insert “a huge flat-screen TV, Rolex watches, expensive suits” to switch the sexes.) The partners have a point: If you can get social status from either an expensive watch or trophy partner, what does that say? Narcissists also sort their friends according to material standards.

Narcissist approach to relationships….

In place of love for another person, put love for the self, in place of caring, put exploitation; and to commitment, add “as long as it benefits me.” Narcissists’ approach to relationship is simple: it’s all about them. They want to look and feel good and if the relationship is a way to do this, great, if not, it’s time to find another one. People often use the term “feeding the ego” to describe narcissists’ approach to relationships. If the relationship proves to be sufficient food, it works, and if not, it doesn’t.

Narcissist triggers of aggression…

These three triggers of aggression—ego threat, rejection, and saying no—make a relationship with a narcissist feel like tiptoeing though a minefield. The excitement at the beginning is not worth the stress, anxiety and sometimes fear that comes later.

Narcissism relationship virus spreads…

Unfortunately, with relationships—especially romantic relationships, but also in friendships and even in picking CEOs—people have a major problem with selection. We really want two things from relationships: the sizzle the fun, exciting, confident, charismatic outgoing and “magic” part, and the substance, the commitment, caring, and teamwork part. Narcissists’ secret to success in relationships is that they deliver the sizzle up front, but then fail to deliver the substance. Instead, you end up with a bevy of relationship problems like those described above.

Why Narcissist threaten relationships….

Narcissists may seem like a tasty treat when you first meet them, but they are not. Narcissism is absolutely corrosive to social relationships. People who have been deeply involved with narcissists can tell you this. These relationships destroy trust in others. You learn not to trust anyone after being mistreated by someone so charming and likable. You also lose trust in yourself. If you couldn’t see this coming, what does that tell you about your judgement? And then to dip the wound in salt, relationships with narcissists are remembered and ruminated about for a long time. People ponder what went wrong; the ruminate about the warning signs they should have seen; and they waste a lot of time trying to figure out what made the narcissist into a narcissist.

The great thing about this book is it gives you the tools to spot a narcissists a mile away. Yet another tool to add to your social toolkit.

• No Returns on Downgrades by George Reid from The Nobel Realm
• Get the Book! The Narcissism Epidemic: Living in the Age of Entitlement by
  Jean M. Twenge Ph.D.
• Why are our Relationships So Disastrous? by Malik Abdul Rasheed

Recently I’ve been reading a lot of articles on the housing market and how it’s been impacted by macro economic policy of the U.S. One article that stands out to clear the air on the roots of inflation and it’s so-called “archenemisis” deflation is Frank Shostak’s Is Deflation Really Bad for the Economy.

I spend a lot of time on mises.org. Not because all my ideas on economics fall in the so-called “Libertarian” camp, although I find many of my own views inline with many Libertarian views, but I can get straight non-partisan, non-baised information on what makes the global economy tick from the likes of mises.org.

It’s not for lack of trying to understand the “conventional” mainstream economic wisdom, but at some point you have to let go and look for greener pastures of understanding. So as we all know, the source of our economic woes was a huge bubble in real estate, prices soared beyond their intrinsic value, investors hedged their bets on those inflated prices and when the cheap credit and cash ran out, prices corrected themselves and we are now experiencing a dramatic price correction in the economy. Unfortunately we are experiencing a huge price correction on all areas of the economy because the real estate industry doesn’t happen in a vacuum. There are many industries that are tethered to real estate, so if real estate gets the “financial flu”, everyone else is going to get “financial pneumonia”.

As stated in the title of Shostaks’ article, “Is Deflation Really Bad for the Economy?”. Well..in the case of the U.S economy yes and no, but overall…No. It’s going to be bad for those individuals who were apart of those jobs in industries that experienced “bubble” prices. Meaning those prices weren’t real and any macroeconomic attempt by the Fed to prop up those inflated prices is a recipe for disaster. The prudent way to go is getting an asset back to it’s “real” price and not the fake “bubble” price. You can’t build off of something that was never supposed to be there in the first place. The “Great Recession” that you are seeing in the U.S. and other economies is a price correction. If there are pockets in the economy that are experiencing a value/price correction, then this is a good thing.

How is any economy going to experience any efficiency or proper recovery if you prop up areas of the economy that are correcting themselves? There are only x-amount of savings and investment resources in the economy and propping up “dead areas” of the economy will create artificial demand (i.e. housing) which is just another bubble. A bubble is just a misuse of resources, not something that is healthy for any economy.

I’ll close with Thomas Wood’s wonderful analogy from his book Meltdown: A Free Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. No better explanation can sum up the danger that lies ahead if we continue to artificially maintain areas of the economy that deserve a value correction:

Consider a circus that comes to town for a few weeks. A restaurant owner may expand his seating capacity in the false expectation that the circus and the related demand for his food that it brings in its wake will last forever. But when the circus leaves town, he’ll find he has “idle resources” on his hands. We should not want to put these idle resources to work. Doing so would only draw labor and other resources away from other sectors of the economy, where they are employed in the satisfaction of real consumer demand. The expansion of the restaurant should not have occurred in the first place. We should want this bubble activity to shrink back down to size, in order that other, non-bubble activities in the economy can be correspondingly strengthened.

In the wake of a previous, unsustainable boom brought about by the central bank’s credit expansion, the market economy and its price system, left to their own devices, will adopt another arrangement of resources that employs available factors in the service of producing goods and services that correspond to real consumer demand. During the bust, free individuals interacting within the market nexus sort out which projects and business ventures are healthy and sustainable, and which are bubble activities that cannot survive without a constant artificial increase in the money supply, and cannot (and should not) survive now that reality has reasserted itself.

• Tooth Fairy Economics by Thomas Woods
• Our Insane System of mortgage finance? by John Papola
• The Fed Can’t Solve Our Economic Woes by Gerald P O’Driscoll Jr.
• Is Deflation Really Bad for the Economy? by Frank Shostak

Table of Contents

1. My Umbrella Story
2. Windproof Umbrella Conspiracy
3. Now tell me what windproof umbrellas and diamonds have in common
4. Conclusion
5. Related Sources

My Umbrella Story

I know these two products seem like quite the odd couple, but when I finish this post, you’ll see the similarities. About 3 or 4 years ago, I bought this great black windproof umbrella from the Walgreens right around the corner from my house. It was raining like cats, dogs, giraffes, elephants, tigers, and dinosaurs at the time so I was ready and willing to put down some good money for an umbrella, and when I say good money..um that’s about $15.00-$20.00 dollars. Normally I get those cheap-o street vendor $5.00 dollar “I’ll last about 10-minutes in the rain then evaporate” black umbrellas, and when it eventually meets it’s short demise I kindly dunk it in the nearest garbage can with the rest of the $5.00 dollar umbrellas that have been imploded or exploded by the wind or rain.

So I walk into Walgreens and I’m looking at the umbrellas. One side (left) has the the $7.00 – $9.00 dollar umbrellas and the other side (right) has the $13.00 – $15.00 dollar umbrellas. The umbrellas on the left side seem enticing because I know these umbrellas are better then the street vendors and that extra $2-3 dollars will be well spent. I then look over to the right side and see a set of windproof umbrellas and instantly forget I was looking the first set.. I give it a couple looks, test it out for a minute or two and I’m sold. I now own my first windproof umbrella. This umbrella was a champ. No matter how windy or rainy, it held up. No more inverted umbrella embarrassment, no more charging forward and jousting with my umbrella in the wind looking to attack the next pedestrian, and no more buying cheap umbrellas. I have officially upgraded.

A year later I mistakenly left that wonderful black windproof umbrella at a spot I used to get my locks re-twisted (at the time) and the young lady who does my hair (who now cornrows my wife’s hair) found it. I decided to part with my first windproof umbrella and let someone else reap the benefits. I’m pretty sure it was her first windproof umbrella and nothing would make me happier than passing down the legacy. So I go back to the same Walgreens to buy a new windproof umbrella and they only have blue and white (think New York Yankees). I really enjoyed my stealthy black windproof umbrella but I decided to go with the NY Yank themed windproof umbrella and I still have it till this day.

I know at this point you are asking..”Can we get the the diamond part already?”. Yeah, we are almost there, the finale is coming. Like most people you accumulate umbrellas at home because:

1. You forgot that it was going to rain today
2. You didn’t think it was going to rain even though the weather man/woman said it was going to rain (usually he or she gives a T-storm or isolated T-storm type of forecast and you say..”I won’t need it”)
3. You forgot your umbrellas somewhere. Normally when you go out you bring your umbrella because it’s raining. You reach your destination but when you are ready to leave it’s no longer raining. You are either going to remember “Oh its not raining let me bring my umbrella” or “Oh its not raining anymore [internal thought: I did not remember that I had an umbrella because it's no longer raining]

Then you get caught in a rain storm and you need something really quick. So you go with the cheap-o street vendor brand to prevent looking like you just jumped into a pool with your clothes on. Then you bring “I needed an umbrella urgently” no 846 home and soon the section where you keep the umbrellas looks like the area where people put their umbrellas at the door of a hotel. To your benefit, when company comes over and you need to go outside while it’s raining you can just pass them the cheap-o umbrellas while your “top notch top shelf” umbrellas remain in the special section that only you and your family know. It’s like a family secret. “shhh..don’t give them the good umbrellas”.

So a couple weeks ago…yeah you guessed it..I get caught in a rain storm with no umbrella. Damn you weather man. You should by hung, drawn and quartered for your weather prediction blunders. Sorry I digress. I go to my favorite Walgreens spot and I go straight to aisle 7 to pick up a windproof umbrella and to my surprise not one windproof umbrella. I’m shocked. I feel like a 3 year old kid that has been stranded in the airport. Now what? Okay, I’ll just go to your competitor Duane Read which is right around the corner and get it there. So I walk straight to the umbrella section and once again…no windproof umbrellas. I can’t believe this. I’m shocked. So I settle for some umbrella that is worst than the cheap-o street vendor umbrella but I have no choice. At this point, time is short and I don’t have the luxury to shop around.

So where did all the windproof umbrellas go?

Windproof Umbrella Conspiracy

To be honest I’m not sure where they all went. They went from being available like a kit kat in the candy section of any drug store to being scarce like looking for Scarface on VHS in BestBuy. However, I have a couple theories:

1. They fell out of fashion. Like any trend, there was a huge push then for some reason no one wanted them. A simple act of supply and demand. No malicious intent there.
2. Did those stores see a drop-off of their non-windproof umbrellas sales because the windproof umbrellas held up a lot longer? In my case, I usually have to buy several umbrellas a year because they get smashed by strong winds and rain. However, since I bought my windproof umbrella I haven’t had to buy another umbrella. It’s literally been 3-4 years. Let’s do the math:
   1. Hypothetical non-windproof umbrella sales if I didn’t buy my windproof umbrella:
      Roughly 2-3 umbrellas a year at $5-$10 dollars a pop for 3 years = $45-90.00 dollars. Now lets multiply this by several thousand because obviously I’m not the only one buying non-wind proof umbrella. Let’s just say 2,000 people for one store for each year. That’s anywhere between $90K-180K over 3 years.
   2. Hypothetical windproof umbrella sales using my windproof umbrella buying pattern in part a.
      So in 3 years I had to buy 2 wind proof umbrellas because I lost one. For the sake of this exercise, lets say the average person buys 1 wind proof umbrella at the price point I bought my windproof umbrella which was roughly $13 bucks over 3 years:
      1 wind proof umbrella at $13 dollars over 3 years = $13 dollars. Using the same 2,000 people for one store each year that’s 26K over 3 years.

   As you can see the hypothetical gross revenue of the windproof umbrellas is 40% less than the lowest revenue estimates for the non-windproof umbrellas and 85% off the highest revenue estimates for the non-windproof umbrellas.

   I was a lot more careful with my windproof umbrella because of the following reasons:

   1. It was extremely valuable/reliable (product value)
   2. I paid a little bit more so I didn’t want up another $13 bucks where $5 bucks (cheap-o non windproof umbrella) I felt less obligated to be responsible. Not to mention I knew it was going to implode any minute so my care for my non-windproof umbrella was a lot lower and reckless.(behavioral value based on price and quality)
   3. I was also less likely to forget my windproof umbrella at random places because it was a good umbrella.

Now tell me what windproof umbrellas and diamonds have in common

The point of this whole entire hypothetical economic exercise is to demonstrate several key economic and behavioral conditions that impact our buying decisions and patterns. In this scenario (I believe) windproof umbrellas and diamonds are both impacted by artificial or false scarcity.

In this specific case, I believe that windproof umbrellas are experiencing a certain type of “artificial scarcity” because it is less profitable at the low to mid-tier umbrella market to sell windproof umbrellas next to the non-windproof umbrellas. When I say “artificial scarcity” I’m stating that companies are purposely making the availability of windproof umbrellas more scarce because it is less profitable for them in regards to umbrella sales. My wife was just looking for a windproof umbrella and literally had to hunt every single pharmacy (i.e Walgreens, CVS, Duane Reade, etc) in NYC and could not find 1 windproof umbrella. She just happen to be in Home Depot at the time and on a whim looked for a windproof umbrella and found a few. Same price as the one I bought 3-4 years ago, $13 dollars. Even when you go to direct umbrella manufactures and suppliers windproof or wind resistant umbrellas are seldom mentioned. I’m not exactly sure if the distributers and suppliers are in direct “kahoots” with one another, but clearly the availability of windproof umbrellas has been minimized from the manufacturer to the distributer.

So in the case of the diamond industry De Beers buys up tons of diamonds off the market to lower the total amount of available diamonds globally, hence making them “artificially scarce”. Just imagine the natural amount of water that existed in the world was 5 trillion gallons. Then a water corporation, let’s call them De Water, would selectively buy hundreds of millions gallons of water out of the total 5 trillion gallons then put those hundreds of gallons in a water container. Over time the total available gallons would decrease hence making it scarce which means the price per gallon of water would slowly go up. In the case of De Beers just swap out water for diamonds and you’ll get a sense of what we are up against.

Since the late 1800s, De Beers has regulated both the industrial and gemstone diamond markets and effectively maintained an illusion of diamond scarcity. It has developed and nurtured the belief that diamonds are precious, invaluable symbols of romance. Every attitude consumers hold today about diamonds exists–at least in part–because of the persistent efforts of De Beers. Moveover, by monitoring the supply of diamonds throughout the world, De Beers has introduced and maintained an unprecedented degree of price stability for a surprisingly common mineral: compressed carbon. Such unique price stability lies within the cartel’s tight control over the world’s supply of diamonds. De Beers’s operating strategy has been pure and simple: to restrict the number of diamonds released into the market in any given year and perpetuate the myth that they are scarce and should therefore command high prices.

For more details on scarcity and marginality you can go to these great articles from Mises.org on marginality and artificial scarcity.

So simply, prices are impacted (excluding misnomers like government and cartel price controls) by the natural ease or difficulty on the availability, including cost of production, distribution, and manufacturing; of a particular product or resource. In addition there is also “subjective value”, which falls into the area of behavioral economics. (i.e. I prefer the windproof over non-windproff) In the context of diamonds, De Beers, who own roughly 60% of the diamond market have been accused of creating “artificial scarcity”. I don’t disagree with this accusation. They also put together one of the most successful marketing campaigns in history for their diamond business:

Over the last century, De Beers has been highly successful in increasing consumer demand for diamonds. One of the most effective marketing strategies has been the marketing of diamonds as a symbol of love and commitment.
A young copywriter working for N. W. Ayer & Son, Frances Gerety, coined the famous advertising line “A Diamond is Forever” in 1947.[31] In 2000, Advertising Age magazine named “A Diamond Is Forever” the best advertising slogan of the twentieth century.[32]
Other successful campaigns include the “eternity ring” (as a symbol of continuing affection and appreciation), the “trilogy” ring (representing the past, present and future of a relationship) and the “right hand ring” (bought and worn by women as a symbol of independence).

De Beers is also known for its television advertisements featuring silhouettes of people wearing diamonds, to the music of Palladio by Karl Jenkins. A 2010 commercial for Verizon Wireless parodied the De Beers spots.[33]

Conclusion

There are a multitude of psychological, marginal and environmental factors that go into a point of sale for any product. When products are sold there are a multitude of “micro” decisions and conditions that are related to psycho-science and economics. Or in this case, “neuralnomics”, if you will. Some of these decisions can be driven on a subconscious level. If you read how supermarkets sell their products, it reads like some white paper out of psychological science magazine. In many instances the line between psychology and business has become increasingly blurred.

As you can see I find the topic of behavioral economics and the roots of scarcity quite fascinating. You probably had no idea that something as random as windproof umbrellas have been brewing in my mind like this. Although this is a very simplified example, it’s just one example of how many variables can impact the sale of just one product.

• Thanks to Ads, Kids Won’t Take No, No, No, No, No, No, No, No, No for an Answer
• Tag Team: Tracking the Patterns of Supermarket Shoppers by KnowledgeWharton
• What Does Marginality Mean? by Robert P. Murphy
• IP and Artificial Scarcity by Stephan Kinsella
• From Louis Vuitton to the local street-corner brand, umbrellas tested. by Aja Mangum
• Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely

That’s right, I don’t own a flat screen, I still have my old school 27” RCA Remote Monitor ColorTrak (Picture embedded in the post) that came with the Co-op when I bought it almost 4 years ago. It never went bad, so I never replaced it. Until that day comes, I’m rocking the RCA 27” till the tube explodes like a spark from those old school cameras that used flash powder (aluminum and potassium perchlorate) to light up the pictures. Unfortunately this post is not about my electronic frugality, but close to the topic at hand. Last night my wife and I attended Poetic, People and Power 8th annual show Price Check: How We Became a Culture of Consumption. Here’s a bio from the website:

Poetic People Power was founded by writer/performance poet Tara Bracco in 2003 to create an ongoing project that combines poetry and activism. Each year, a diverse group of poets are commissioned to write new works on a political or social issue. The new poems are then brought to a public audience in April to celebrate National Poetry Month. Poetic People Power entertains and informs. It raises awareness on specific topics and engages audiences through the expressive art of poetry.

Right now it’s 6:52am, and I’m postponing my P90x routine this morning to write about this, because I was so moved by the poet(s) poetry. This particular show was about the power of consumerism and how our society has become somewhat enslaved to an ideology of spending and debt. I touched on this topic in a post I wrote in 2006 called Slave to Fashion Dominatrix to Prices. This is not just about people who overspend, it’s also about the cost of living (healthcare, education, etc) skyrocketing and how wages have stagnated (relative to inflation), while pushing many of us further into debt.

In light of the recent financial crisis, this is extremely important. I cannot find the exact words to explain how last night’s topic is connected to the happiness and financial solvency of the average household, but I’ll leave you with this.

In the foreward of Tim Kasser’s book The High Price of Materialism, Richard M. Ryan summarizes Kasser’s research by stating.

Once people are above poverty levels of income, gains in wealth have little to no incremental payoff in terms of happiness and well-being.

Also check out this very eye opening and disturbing documentary on how our kids are becoming indoctrinated by a new culture of consumerism. I have 1 year old so for those parents out there, keep your third eye open.

Get informed, Get Active, and Become a smarter consumer!. There are resources below for those who are interested:

• Affluenza: The All-Consuming Epidemic ~ John de Graaf (Author), David Wann (Author), Thomas H Naylor (Author), David Horsey (Illustrator), Vicki Robin
• The Overspent American: Why We Want What We Don’t Need ~ Juliet B. Schor
• The Hight Price of Materialism by Tim Kasser
• Credit Card Nation by Robert D. Manning
• The Paradox of Choice: Why More is Less by Barry Schwartz
• Your Money or Your Life by Vicki Robin & Joe Dominquez
• No Logo by Naomi Klein

This post is well over due but as you know, I have a Boo Bear to deal with, so time is of the essence.

This past Valentines Day I was left speechless with disgust as I witnessed the most horrific scene at our local Applebee’s.

As most of you know, my husband and I do not celebrate Valentines Day for a number of reasons. However, Malik’s mom was visiting us that day and wanted to go out for lunch. Her choice of venue: Applebees. Now, since arriving in the US in 2007, I have never experienced Valentines Day in a public way. Malik and I always stay home on this day; so, to my surprise, I was shocked, literally, into silence, when I witnessed the following scenario.

As we were half way through our meal, a young couple was seated next to us for lunch. At first, everything seemed to be in place. Here was a young man taking his lady out for a meal. Sweet, right? Guess again.

About 15 minutes after they were seated, their food had arrived. From there everything went down hill for this poor young man. His date instantly threw a tantrum. With raised eyebrows, piercing eyes and deathly tone she stated “what is this? This is not broccoli!” For a moment, I looked up at her like she was crazy. That lasted a moment though because it turned out she was a total nut. Her date was like a scared puppy dog, confused on what to do; yet, he signaled for the waiter to come over.

As the waiter approached, she said “what is this? I asked for broccoli.” So, the waiter stated that they were out of broccoli since it was a busy business day and that they had served the mixed seasonal vegetables instead. With her eyebrows now at a 90 degree angle and her eyes piercing anger and fear into her boyfrind and then the waiter, she demanded “I want to speak to the manager.” I thought to myself, how odd, all this hullabaloo over a side of seasonal vegetables.

The manager approached, apologizing for the lack of broccoli, stating that he would change the entire meal with no charge. At this, the young woman just rolled her eyes, looked at her date and waved her hand NO! The manager continued to explain the situation further but she was not willing to hear another word.

After about a 7 minute argument about broccoli and seasonal vegetables the lady stands up, puts her coat on, glares at her date and walks out of the restaurant; leaving her date fumbling with his meal, glasses, keys and wallet. I was in complete and utter shock, as were so many other customers there that afternoon.

This is just one incident that I witnessed of many similarly maddening situations. The sad part about all of this is that I realize that for too many women, a relationship is rarely about the quality time spent together and more so about where they dine, what gifts they receive, what holidays are celebrated and how they define appreciation.

Ladies, a strong and successful relationship is not built or based on what restaurant you dine at or what vegetables come with your side. Ladies, stop looking and man-made holidays for love and appreciation. Focus on finding a good man who loves you 365 days a year, who appreciates you 365 days a year, who will be a good husband to you 365 days a year, who will be a good father to your children 365 days a year and who will randomly show you his love in his own way through the year.

Men, PLEASE STOP CATERING TO WOMENS INSECURITIES AND MAN-MADE HOLIDAYS. Give only when YOU want to and avoid forced traditions because you think it is expected of you. Show your woman your love in your own unique way. Once you begin to do that you will be happier, sincerer and more respected.