Dynamist Blog

Go With What You Know

The Chrysler PT Cruiser is the classic example of what Mickey Kaus called a cartoon car: "It's a costume, not a car--a prop for people whose lives are so futureless and featureless they'd dress up in '50s clothing and go to 'sock hops.' Costumes are fun for a few hours, but most days aren't Halloween." I'm not nuts about the look either, but it's unique and gives a certain segment of car buyers a reason to pick this car, making the PT Cruiser is a success in the marketplace. Now Chrysler is thinking about dumping the retro look. That, warns Forbes car guy Jerry Flint, would be a very bad idea:

So how can Chrysler screw it up? At last report, the company is trying to decide whether to add a V-6 in the next re-do. The current PT is a four-cylinder. Adding a V-6 would make it bigger and heavier, more expensive and thirstier for gasoline. That does not seem like the right thing to do today.

Such a move would be bad enough, but here's worse news (and I am quoting Automotive News, which usually gets its facts straight): "Another issue is styling. Retro and cutesy are out of fashion. Expect the next-generation PT Cruiser to be more of a straight-up Toyota RAV4 fighter with the retro elements played down."

The word is that Chrysler may even be thinking about changing the name on the new model, which is due in three or four years.

If all this is true, we are talking about wrecking the most original and successful vehicle seen in Detroit in years. It is no secret that designers hate retro. They think that borrowing from the past is an insult to their sensitive talents. Cute is also a problem, because when companies get successful, they believe they are too serious and too important to have cars that look "cute."...

What distinguishes the PT from all the other small wagons--Mazda Motor's Mazda5, Honda's CRV, GM's Pontiac Vibe, Toyota Motor's Matrix or the Ford Focus--is that look. Take it away, and the PT Cruiser is just another small wagon. The truth is, Toyota and Honda still build them better than Chrysler. Eliminate the great look, and the PT--or whatever Chrysler will call it--becomes a second-rater.

He ends with a good tale of how the funny-looking car got designed in the first place.

What Are State Universities For?

This USA Today feature by Mary Beth Marklein highlights the complaints of OK-but-not-great in-state students who find themselves turned down at state universities to make way for better out-of-state students who also pay much higher tuition. Taxpayers are peeved that their kids aren't entitled to the education they paid for, and they're winning some political allies.

"It was anathema to me that this university is funded by taxpayers who are being denied acceptance while out-of-state [students] are allowed to come in," says state representative Jim McGee of Florence. He said he introduced the bill after getting calls from South Carolina alumni whose kids had been rejected. "They're not allowed to go, even if they had a very solid academic portfolio."

This debate isn't that different from the one about racial quotas at state universities: Shouldn't student bodies represent (proportionately, in the case of racial categories) the people who pay the bills? Is a state-funded education a transfer entitlement--between taxpayers and state residents of college age--or is it a public good--a way of raising the human capital of the state and spurring economic growth to benefit everyone? Over the long run, is it politically feasible to fund necessarily elitist institutions of academic and research excellence through taxes?

If a state university system is supposed to be a public good, it should, at least at its flagship, try harder to attract and retain high achievers than to placate every mediocre high school grad. The most promising students don't want, or need, a repeat of high school, and neither do their professors. While I'm skeptical of claims to giant spillovers from state-funded institutions, my natural sympathies lie with the folks trying against all odds to raise the quality of "the other" USC (a task that was much more easily accomplished at the real, private USC, partly because it has fierce academic competition from state-funded rivals).

"We're trying to import intellectual capital," says Dennis Pruitt, vice president for student affairs at the University of South Carolina in Columbia. The state faces flat growth in high school graduates over the next decade.

With appropriations steadily decreasing in recent years and making up about 23% of the university's operating budget, he also takes a swipe at lawmakers: "If our state legislators and others would like us to serve the citizens of South Carolina, then fund us adequately."

In fact, the citizens of South Carolina, in my admittedly jaded experience, get exactly the intellectual capital they want--which is to say, a continuing outflow. Maybe South Carolina policy makers should try to get North Carolina and Georgia to stop taking out-of-state students at state universities.

On the public good/industrial question, Austan Goolsbee's most recent NYT Economic Scene column (free PDF) suggests reasons for pessimism.

The Terrorists Have Won

For a two-day reporting trip to Phoenix, I couldn't bear the thought of checking luggage. So I relied on solids for makeup and deodorant and bought travel-size toothpaste, shampoo (better than the hotel's), and lotion at Target when I got in. I went without sunscreen--a hazard in a climate that certainly wasn't intended for blue-eyed blondes with extremely pale skin. I now realize I could have brought stick sunscreen, though only at the risk of making my face break out. What a pain. The NYT's Anna Bahney has advice for traveling women. She doesn't, however, deal with the shaving cream question for men.

It's pretty clear what the next hotel perks will be. Bahney's sidebar reports some early indicators.

It Won't Play in Grand Prairie

D Magazine writer and Freakonomics ticket holder Teresa Gubbins informs me that the local Levitt-and-Dubner show's been cancelled: "sniff sniff, the Grand Prairie stop of the Freakonomics tour just got cancelled. due to poor ticket sales. I did my part to 'support the economist scene' and bought one! but to no avail." Tickets ran $29.50 to $65. Someone needs to tell these guys about price elasticity.

Safer Than It Looks

door.jpgMy neighbors and I were understandably worried when we saw this door at the condo complex across the street. It certainly looks like evidence of a violent break-in. But, no. It turns out to be quite the opposite: proof you can no lock at all--or even a door that fully closes--for a week without inviting burglars. The story, as relayed by our community police officer, is this:

"The officers found the door as described. To our amazement the owner was home passed out on his couch. We woke him and he maintained no crime had been committed, he alluded that he had to cause the damage to gain entry into his unit. He obviously has not concerned himself with repairs."

The orange sticker on the window is a false alarm sticker.

What Wal-Mart Did to Mexican Detergent

This NBER abstract caught my eye:

Openness and Industrial Response in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers by Beata Smarzynska Javorcik, Wolfgang Keller, James R. Tybout - #12457 (ITI PR IO)

Abstract:

This paper uses a case study approach to explore the effects of NAFTA and GATT membership on innovation and trade in the Mexican soaps, detergents and surfactants (SDS) industry. Several basic findings emerge. First, the most fundamental effect of NAFTA and the GATT on the SDS industry was to help induce Wal-Mart to enter Mexico. Once there, Walmex fundamentally changed the retail sector, forcing SDS firms to cut their profit margins and/or innovate. Those unable to respond to this new environment tended to lose market share and, in some cases, disappear altogether. Second, partly in response to Walmex, many Mexican producers logged impressive efficiency gains during the previous decade. These gains came both from labor-shedding and from innovation, which in turn was fueled by innovative input suppliers and by multinationals bringing new products and processes from their headquarters to Mexico. Finally, although Mexican detergent exports captured an increasing share of the U.S. detergent market over the past decade, Mexican sales in the U.S. were inhibited by a combination of excessive shipping delays at the border and artificially high input prices (due to Mexican protection of domestic caustic soda suppliers). They were also held back by the major re-tooling costs that Mexican producers would have had to incur in order to establish brand recognition among non-Latin consumers, and in order to comply with zero phosphate laws in many regions of the United States.

If, like me, you hate the clunky interface and the $5 fee for NBER papers, you can find a downloadable copy of the paper here. I haven't had a chance to read it yet, but the story accords with others I've heard. It's yet another example of why Wal-Mart (and NAFTA) is the essence of evil in certain quarters: The company may raise living standards for the many, but it does so by shaking up long-established institutions and industries. Too much dynamism!

A Foodie Who Likes Wal-Mart

In response to a comment by Jerry Hausman in my Forbes column, Pam Regis writes:

tofu.jpgI'm a foodie, but I live more than an hour's drive from high-end gourmet markets. My life improved enormously when a Wal-Mart superstore opened just 15 minutes from my house. It sells food. And although Hausman is probably right when he says that "diversity isn't as good" in the food selection at Wal-Mart compared to a fine gourmet market, this much-maligned store has added enormously to the culinary diversity available to me in my life pre-Wal-Mart. The jasmine rice (brown and white), the couscous, the chiplotle peppers in adobo sauce now in my cupboard are from Wal-Mart, and every week I find an ingredient, usually ethnic, that, before Wal-Mart, I had not been able to buy locally. Of course, I also find low prices on Diet Coke, paper products, and cleaning supplies.

I don't buy Wal-Mart's produce, bread, or fish. My "old" supermarket supplies these needs. Two stores are always better than one.

As I've often noted, in many places even boring old chains can increase the quality and variety available to consumers. There's also something to be said for Wal-Mart's basic business competence in keeping the right products on the shelves. The only Wal-Mart near me is a small "neighborhood market" with relatively little variety. But at least, unlike Albertson's (the slightly closer grocery store), they manage to keep Diet Coke in stock. And their employees are supernice.

The photo above is the tofu selection at the upscale Wal-Mart Supercenter in Plano, a "laboratory store" where I did some field research yesterday.

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