July 2, 2008 5:26

What Starbucks should be doing is charging to use the bathroom

I wrote a piece for Time.com about the decision at Starbucks to shutter 600 stores. You can read it here. It's brilliant and all, but the real reason I'm blogging is so that I can pass along this text my friend Richard sent me over the weekend:

Starbucks is toast—waiting in line for the bathroom at the brighton beach location—two people in front of me drinking dunkin donuts coffee

I just called up Richard to see if he minded me passing along his comment. He said to go for it. And then he added that he had only gone into the Starbucks to use the bathroom.

The people who run Starbucks aren't unaware of this phenomenon. I once asked a regional VP if she didn't sometimes want to put a "customers only" sign on the bathroom. "Sometimes, yeah," she said, "but that's not who are are."

It never ceases to amaze me how big companies maintain a sense of culture, especially when that culture involves something like being nice beyond the normal human limit of niceness. I mean, Starbucks employees still have to clean the bathrooms, right? I guess the argument is that at the end of the day "being the good guy" comes back to you in the form of proud, hard-working employees and happy customers. Or maybe it's happy competitors' customers.

Barbara!

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July 2, 2008 11:32

Danes still the happiest, even if they won't say hello at the grocery store

As America's Leading Source of News About the Danish Economy^TM, the Curious Capitalist is legally required to report this important information released Monday by the University of Michigan's World Values Survey:

The results indicate that Denmark is the happiest nation in the world and Zimbabwe the unhappiest. The United States ranks 16th on the list, immediately after New Zealand.

Despite being just a teensy bit dour, the Danes are perennially high scorers on happiness surveys. My favorite explanation for this came in a study published in 2006 by researchers at the University of Southern Denmark: It's not the great economy or the free health-care or the pickled herring; it's the low expectations. As the NYT reported:

[O]n surveys, Danes continually report lower expectations for the year to come, compared with most other nations. And "year after year, they are pleasantly surprised to find that not everything is getting more rotten in the state of Denmark," the paper concludes.

There's one other possibility that I don't think the University of Southern Denmark researchers explored, though. Puerto Rico is No. 2 on the happiness list, and I know from personal experience that large quantities of Danish packaged meat products are consumed there. I think it's high time the Danish beef and pork industries sponsored an exhaustive study of the link between processed meat and personal satisfaction.

Another interesting result of the World Values Survey is that, on the whole, the people of the world have been getting happier (or at least saying they're happier) since 1981. This has apparently been a surprise to researchers. Said Ron Inglehart, the University of Michigan political science professor who directs the survey:

Most earlier research has suggested that happiness levels are stable. Important events like winning the lottery or learning you have cancer can lead to short-term changes, but in the long run most previous research suggests that people and nations are stuck on a "hedonic treadmill." The belief has been that no matter what happens or what we do, basic happiness levels are stable and don't really change.

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July 2, 2008 6:26

Why free trade and globalization aren't quite the same thing

How can you be for free trade yet against (or at least worried about) globalization? Ralph E. Gomory and William Baumol would like to tell you:

On what grounds can we, as free trade advocates, assert that globalization can harm the country? A straightforward explanation suffices: In standard analyses of trade, economists usually assign fixed values to a country’s productive capabilities and define trade as the exchange of the goods and services, with each country supplying those items in which its productive capabilities are relatively greatest. With this definition, trade can easily be shown to offer benefits to both parties. Economic analysis repeatedly bears this out. Hence, economists emphatically reject tariffs and other forms of protectionism as impediments to those benefits. We accept this conclusion for the assumed scenario. But when productive capabilities are changing, not fixed, the world enters a whole new ball game. As long shown by many economists - the latest being Nobel Prize winner Paul Samuelson - the end result of that productivity change, even after the period of adjustment, may be better for one’s country or it may be worse, depending on circumstances.

More concretely, when the United States trades semiconductors for Asian t-shirts, for example, that is trade in the narrow sense. And we concur with the most basic theoretical conclusion that this exchange clearly benefits both countries. But when Intel properly pursues the interests of its shareholders by building a multi-billion dollar semiconductor plant in China rather than the United States, a shift in comparative productive capability suddenly occurs. Globalization is not simply free trade; it is trade plus shifting productivity. We have not sent China consumer goods, but the capability to produce more effectively.

Gomory is a former IBM executive and Alfred P. Sloan Foundation chief. Baumol is a veteran and much-honored economist (and co-author of my freshman-year econ textbook) who now teaches at NYU. These aren't your usual trade warriors. And it seems to me that they're on to something.

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