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Tuesday, December 1, 2009

Complexity, Dissent, Economic Slavery, and Coffee

When California Bob has something to say, he really says it:

The slobbering lapdogs of the oligarchy over at Citigroup had some interesting comments on "complexity," that is, waves of change, accompanied by increasing complexity, driving wealth accumulation.

This resonates with me when I see simple, practical, functional, straightforward, cheap, simple methods displaced by expensive, complex systems, usually with unfortunate shortcomings. I see this in commercial and political worlds, and it probably applies to technology, medicine, or any human endeavor you can think of.

An obvious example is the automobile. Yes, automobiles have gotten "better," meaning more reliable. But there is a trend toward complexity: computerizing the car's systems, covering up the components with shrouds, etc. DIY repairs become daunting or impossible. Moreover I notice a disinformation campaign designed to discourage DIY or aftermarket work: carmakers have the gall to suggest that the only safe place to have your oil changed is at the dealer. And I know people who only take their cars to the dealer to have the oil changed because "it's the best place" or "they're the only ones who can do it."

An established system works effectively to contain dissent. The automakers' system works to overwhelm the home mechanic, and at the same time to cajole owners into buying proprietary services:

"To maintain the Lexus mystique, you must only have your wiper blades swapped out by the Certified Factory Trained Service Technicians at Lexus (ie: the guy who was working at Jiffy Lube last week). No one else has the expertise. You could seriously damage your automobile. And you don't want people thinking you're not part of the Lexus family, do you? You've spent $30,000 on this car -- do you want to risk having it ruined by the stink of "uncertified" hands? Good. Now, this'll only hurt for a second..."

Coffee is another one. My coffee maker is a simple plastic "coffee cone," a one-piece plastic drip maker which sits on top of a cup. You put in a filter, put in some coffee, and pour hot water. Quick, easy, quick clean-up, and it makes great coffee. I bought it years ago at Peet's. I notice they no longer carry them. Why? Because why offer your customers a superior item that nets you $2 margin, when by withholding it you can sell them a complex machine which will net you $100?

Thus the system contains dissent. In this case, the commercial system of Peet's, once established as a coffee authority, and functioning widely in key retail anchor points, guides your coffee making choices toward expensive complex solutions -- which of course benefits the plutocracy, or at least Peet's senior management.

To cut to the chase: lately I notice a big marketing push around single cup, fake espresso machines using pre-packaged coffee pods. Eg: "Keurig" and "Nespresso" machines:

http://www.keurig.com

I also notice a lot of news about Peet's buying Diedrich coffee, a maker of pre-packaged coffee pods:

http://finance.yahoo.com/news/Peets-Coffee-amp-Tea-ups-apf-95716223.html?x=0&.v=1

My initial reaction is to dismiss this: the machines are "stupid," produce inferior coffee, the pods are expensive, the machines are for people who can't learn how to operate a "real" machine, they'll break after a few months, etc. However I have learned not to bet against stupid impractical things. In fact, if they can provide some kind of consumer titillation, cheap crappy sub-optimal solutions are big money makers.

So my prediction is that the single cup coffee makers will be a big hit. They're easy to use. By buying one people can "feel like a barista" and "feel like they're at Starbucks" and "feel like my apartment is a coffee house where all kinds of cool people go." And they'll sucker tons of buyers by marketing the pods as "half the price of a coffeehouse drink."

Net results: margins for coffee pod sellers go up 20%;
Costs for coffee consumers go up slightly, but they don't notice and they're compensated anyway by the thrill of gadgetry;
Coffee quality suffers 30% but no one notices or cares.

On a positive note: you can still find coffee cones on the web, and to date, you can still buy good espresso machines, and good coffee, and even green beans to roast yourself.

A note on espresso machines: mine have held their value better than any device or tool I can think of. Except maybe houses. Cars depreciate. Computers are guaranteed to be worthless in a few years. My espresso machines are worth more than I paid for them, AND I get huge value out of them everyday. Interesting.

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