Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

30.6.09

The Iron Economic Rule of Life, or, a page from the Very Occasional Travelogue




Kęty is a very nice place.


A stop in Sevilla serves well to refresh one’s memory regarding the iron economic rule in life.

The lesson applies to all things, of course: in literary consumption it says “thou shalt not read Kurt Vonnegut when Thomas Mann can be re-read instead”; in music, it says something similar about Brahms and Bach; and in tourism – about Seville and most other places in the world.

Do not misunderstand me: Seville is pretty, even cute. It has nice architecture; monuments; good vino; and, at night, girls decked out like they know what they want from decking out. Seville’s climate is not its strongest suit, but beats Kęty’s hands down. It has a white hot night-life, I am told, and it may even have culture, too (if you manage to look beyond the omnipresent tourist flamenco show). It certainly isn’t waste of time to be here; but it surely is a waste of time to come here – unless, like me, you are merely passing through and can take it in at no additional cost.

The place simply isn’t Rome. It does not have the Vatican Stanze or the Doria Pamphilj, the Barberini, or the Gesu; and yet – it costs the same. It costs as much to get here; and it costs as much to stay here. Why do it then? Why is there a line to get into the Cathedral (7.50 euros per person, thirty minutes’ wait in the white hot summer sun?) Why do tourists come here when they could go to Rome on the exact same budget?

I did come here, back in 1986, and thought the trip worthwhile then; but it was a peseta country then – the price-wise equivalent of Thailand or Malaysia today – and for that sort of money it certainly offered one a good vacation deal. But today it does not: twenty years of high inflation, structural transfers from the EU, a ten year bubble in real estate prices, and a staunch refusal to carry out any serious structural reforms have made Seville expensive without making it convenient (e.g. supermarkets are still closed on Sundays; the tourist information booth has no information about buses in and out, the bus company's website does not tell you from which of the three bus stations of Seville their buses depart and when you call their call center they tell you flat out that the journeys listed on their internet page do not exist at all, ect.). (Note: poor information exchange is the leading cause of economic backwardness).

Euro for euro, most Italian cities – even an also ran like Padova – and many French ones – Arles, for example – beat Seville black and blue.

I had the same feeling last summer in Warsaw. Warsaw actually does have tourist assets: it has fantastic theater scene, excellent art film studios, more than passable classical music scene (certainly better than Seville), and it has both art and monuments enough to fill in the lacunae. But last summer it cost more than Venice -- 3.6 Euros for a beer in Foksal, which, believe me, ain't no Saint Mark's.

Well, I said to myself, enough is enough and swore not to go back. But the currency has since taken a 40% dive against the Euro and Warsaw is sensibly priced again. And thus the door is open for me to go back again. (I won’t be having 2.20 Euro beers in Foksal; but the Chamber Opera seats are again attractively priced).

This is a trick Seville cannot pull: it has no currency of its own which it could devalue. Cost competitiveness can only come through grueling, vicious, bone-crushing deflation; it will come in time – the process has already begun (on this morning’s walk every other apartment seemed for sale; they were still expensive, but given the glut of properties, discounting only seemed a matter of time). But it will all take a very long time indeed. Until then, Seville will remain as she is now: simply not good value for money at all.

Nor will she see me again unless business takes me through again; which isn’t very likely.

As an illustration of my gripe, consider my hotel: 77 Euros on a Sunday night, but 95 on Fridays and Saturdays, it has friendly staff and fantastic cuerda seca in the lobby; but the room is ordinary, the bed flabby, the buffet breakfast (included in some prices, but not all, and when not included a mind boggling 10 euros) is indifferent, and the coffee absolutely awful. (The staff shrug apologetically: yes, I know, it’s terrible, but what I can do? It’s the company! And roll their eyes). In Thailand this quality would cost thirty dollars -- dollars, not euros -- at most (and the coffee would be exactly the same); but in Rome the standard -- and the price -- would be, well, par.

So, why not go to Rome, then and at least see the Doria Pamphilj for your trouble?

Yet, people come; and will continue to come. Why? The answer is – they have not been here yet.

This is how people travel, surprising as this may seem to me: no, they do not want to go back to Rome again, they have already been once, three days, and have seen the Vatican; they have even taken their photo with Venus de Milo. (Or was that Paris?) But Seville they have not yet been to. So to Seville they must go.

Why not Kęty then? I mean, really, why not?

The reason is the list: there is somewhere a list of visitable places; Seville is on it and Kęty is not. When a person travels, as they must several times a year, they just work their way down that list.

Why Kęty is not on the list is not clear, but Warsaw’s experience sheds some light on the question. Warsaw, just as its currency, and prices, peaked last summer (and its relative value reached its nadir) managed to make the list through the simple trick of running ads on CNN and BBC. All of a sudden all sorts of travelers met in all sorts of places were saying to me, oh, Warsaw, yes, I so much want to go.

Years of working in advertiging had made me cynical about these things; I have seen so much clients' money put into projects that did nothing or their brand; why, sometimes even -- not infrequently enough -- projects which did not even exist that I have become jaded; and come to the conclusion that it is all a rip off; an utter waste of money; a pure confidence trick, a madoff job, a ploy to part the fool and his money. After all, how could anyone be seriously expected to go out and buy a car only because they saw a pop star in a 15 second clip get into one while the assembled crowd oohed and ahhed? The very notion of this mechanism seems so transparently false to me that I would never buy a brand so advertised, assuming that it must be a real piece of junk if it needs a that sort of promotion.

But guess what? I am wrong. It works. Put it on TV, and they will come.

4.6.09

In which he descends (briefly) into hell

(and makes his own illustration)

Every great classic must obligatorily contain a chapter in which the hero travels out to the limit of the known world and peers beyond. (If it doesn't, it fails; ask Camoes and Mickiewicz why they are not taught in the Dead White Men courses in America).

The epic chapter of my life took place this morning.

I went to a certain suburb to look for shoes in a certain large shopping mall. This expedition necessitated a departure from the quaint city center, with its seven hills, its aqueducts, its triumphant arches, its mosaicked side-walks, its cute wooden trams and the levitating clouds of blooming jacaranda everywhere, its tiny retail shops and minuscule family owned eateries, its mainly pedestrian traffic -- and into the wholesale mass-market world of modernity.

The impression this created was so overwhelming that upon returning I immediately set out on a massive substance abuse program, carefully blending uppers and downers for that so very much needed knock-out blow.

Over there there had been broad freeways down which endless chains of motor vehicles tore with a roar; and square honey-comb towers -- factories for living -- in which people somehow managed to live cheek-by-jowl without going on a wild shooting spree too oft; gigantic shopping malls, convoluted architecturally, full of absolutely worthless, shockingly ugly stuff; and proferring in their feederies (deemed "restaurants") what looked like mold-injected, polymer-based artificially colored sugar pulp. Everything was fast and noisy and there was not a single pretty thing upon which to rest one's soul.

A huge tower full of apartments with head-bashing low ceilings (but central vacuum-cleaning, I am sure) was being marketed at a site overlooking a major snarling freeway traffic exchange. "Lux living" said the copy, but it should have said "Luxury living easy to get away from" (that is -- if you buy this place, you needn't really be here).

A hard thought struck me: goodness gracious, people live like that.

My god, I thought to myself, these suburbs have grown in the last fifty years; but how did they grow? Where must one come from to find this kind of life sufficiently bearable to choose it over wherever it is one comes from?

*

Later, a glance at the real-estate magazine revealed a puzzling fact: the housing there, in the middle of all that, is hardly less expensive than it is here; 20-30% discount on average over this -- which is, I grant you, a theme-park life, but a cute theme park life all the same, agreeable in the extreme, easy on the senses, and pretty well laid back.

Which means that the quality/price curve is here extremely shallow -- as it is in the rest of the world: as one travels down the curve, one gives up a tremendous amount of quality to gain a little in price advantage -- an apartment which costs 10% less to rent is a lot worse than its 10% more expensive brother.

But try to go up from the middle and the opposite seems true: to generate a 10% improvement in quality from here -- the place where I am -- one must be prepared to double the price one pays. The price-to-quality curve seems therefore to look like this:



Where the axis cross is the "middle" of the market (me, and almost certainly -- you). If we go down from here (look for a cheaper apartment, for instance), any saving will come at a huge cost to quality; but going up from here we pay through our nose for even a small improvement.

I am not sure why the curve should look like this, though suspect it has something to do with income distribution.

*

How steeply prices rise as one tries to go up from the middle was confirmed for me in the afternoon when I visited an oriental carpet dealer -- in my own quaint and laid-back neighborhood of course (my much abused soul had needed to look at pretty things to recover from the morning's rude shock). The friendly Iranian man took me through the back, up some regal stairs and into a cavernous apartment hung and laid with delicious carpets (it was like entering the Ali-Baba cave). And there they were, beautiful, restful and silent: mamluks, tekkes, herazes, sardes, qoms reposing in total and absolute silence, not rushing anywhere, not making a sound. There I sat on a snow-white silk qom, all 40,000 euros of it, and slowly my soul calmed down.