Author Danny Vinik

Barnes & Noble’s Catch-22

Danny Vinik 1 Comment

A friend texted me yesterday after the resignation of Barnes & Noble CEO William Lynch and asked my thoughts on the company as a whole. I basically repeated what Matt Yglesias wrote yesterday:

Barnes & Noble is a very successful chain of bookstores, except the number of people who want to buy physical books is plummeting. A digital bookstore can stock a much larger inventory with almost no warehousing costs, and can deliver the book of your choice to you within seconds. What’s more, a Kindle Paperwhite or a iPad Mini is lighter than a book and yet can contain many books, greatly facilitating travel. Even better, you can highlight passages of your digital books and annotate them and then have all your annotations available to you on all your digital devices. The only real value of physical books at this point is a kind of nostalgia-soaked experience, and people want to experience that at a friendly independently owned bookstore not an impersonal chain.

She was disheartened by my response, particularly because she had spent hours and hours as a kid reading various books in the now-defunct Borders bookstore. Barnes & Noble is just the next (and largest) chain bookstore to succumb to market pressures. This made me realize exactly who Barnes & Nobles loyal customers are: they aren’t customers at all. They are the kids and adults who sit in the store for hours at a time, reading different selections, moving from chair to chair and not spending any money. These are the people who attach sentimental value to the store, just like my friend. Unfortunately, they also just suck money from the large retailer, taking advantage of the vast book selection without contributing anything to the store’s bottom line.

However, if instead of sitting in the store and reading, my friend had purchased books and taken them home to enjoy, she wouldn’t ascribe the same sentimental value to the store and wouldn’t care about its closure. It’s a catch-22 for B&N and one it can’t find its way out of.

Raul Labrador Has a Point

Danny Vinik 3 Comments

Over the weekend, Raul Labrador appeared on Meet the Press to talk about immigration reform:

In fact, if you look at this Obamacare debacle that they have right now, this administration is actually deciding when and where to actually enforce the law. And that’s what some of us in the House are concerned about. If you give to this administration the authority to decide when they’re going to enforce the law, how they’re going to enforce the law … what’s going to happen is that we’re going to give legalization to 11 million people and Janet Napolitano is going to come to Congress and tell us that the border is already secure and nothing else needs to happen.

Sounds a bit crazy, right? Not really. Republicans have been clamoring for years now about the authoritarian Obama administration. Much of it has been utter bogus, but Labrador has a point here and we can look right back to last week’s delay of the employer mandate to see it.

The employer mandate requires all employers with more than 50 workers to offer affordable health insurance or pay a $2,000 fine. Implementing this policy has proven difficult so the White House announced last week that it was delaying the employer mandate until 2015. Except the Obama Administration doesn’t have the ability to do that. Congress does. Instead, the Administration told the IRS to not enforce the $2,000 fine for a year. That’s not how the government is supposed to work. Here’s Ezra Klein last week:

This is a regulatory end-run of the legislative process. The law says the mandate goes into effect in 2014, but the administration has decided to give it until 2015 by simply refusing to enforce the penalties.

The administration says this kind of thing happens all the time. “I think you’d be harder pressed to find some example where there wasn’t some discretion on how to implement major policies than one where everything went exactly by the books,” says one senior administration official involved in implementation.

Be that as it may, the regulatory solution reflects the fact that the legislative process around the health-care law is completely broken. Republicans won’t pass any legislation that makes the law work better. Improving the law, they fear, will weaken the arguments for repeal. But Democrats, of course, won’t permit repeal. So Congress is at a standstill, with no viable process for reforming or repairing the Affordable Care Act as problems arise. And so the White House is acting on its own.

If the President had come out and asked Congress to pass a bill delaying the employer mandate for a year, do you think legislators would have obliged? I’m not sure. Republicans would be up in arms screaming for repeal again. Would they agree to the delay?  I don’t know. But even if they hadn’t, the White House would have at least tried to adjust the law legally and not used its own authority. Instead, it circumvented Congress without even trying to adjust it legally.

That’s exactly what Labrador feels could happen with immigration reform. The immigration bill that passed the Senate does not have any hard triggers so Secretary of Homeland Security Janet Napolitano wouldn’t actually have to tell Congress the border is secure before illegal immigrants could apply for citizenship. But in any bill that passes the House, hard triggers will almost certainly be part of it and would require such testimony from Napolitano.

Why are Democrats so against hard triggers? They fear that a future Republican Secretary of Homeland Security will never declare the border secure to prevent illegal immigrants from receiving citizenship. Labrador has the exact same fear: that a future Democratic Secretary of Homeland Security will definitely declare the border secure, even if it isn’t, to allow illegal immigrants to apply for citizenship. Republicans favor hard triggers because it’s much harder to declare the border secure when it isn’t than to declare it insecure when it is. Nevertheless, Labrador has the same fear that Democrats have. Both are rooted in a deep distrust of the opposite party with the belief that a future administration will simply bend the rules to get what it wants.

With the employer mandate, the Obama Administration did just that. Raul Labrador isn’t crazy. Conn Carroll isn’t foolish to suggest that “immigration reform is dead and Obamacare implementation killed it.” That may be a bit extreme, but it’s not unfounded. It’s just an ugly component of the dysfunctional, distrustful atmosphere that plagues our political system right now.

Insurance Companies Hesitant to Cover Schools with Armed Guards

Danny Vinik 1 Comment

After the school shooting Newton last December, the NRA’s proposed policy solution to help make schools more secure was to add armed guards to each location. At first blush, the argument made sense: at sporting events, concerts and nearly every other public gathering, armed security is present. Why not at schools?

The answer soon became clear. Students feel less safe when armed guards are around and it inhibits their learning. In addition, it’s unclear whether those guards even help reduce crime. The NRA was proposing a massive investment in beefed up security that hurt students’ learning and had an uncertain effect on crime. Upon further review, it didn’t seem like a very good policy.

Well, a New York Times article today splashes even more cold water on the proposal:

As more schools consider arming their employees, some districts are encountering a daunting economic hurdle: insurance carriers threatening to raise their premiums or revoke coverage entirely.

The insurer of 90% of Kansas school districts has said it will deny coverage to any school that allows any personnel to carry a concealed gun. Many other insurers are close to following suit and schools that can’t find coverage will open themselves up to huge amounts of liability. It will force them to forego armed guards in order to retain insurance coverage.

Effectively, what insurers are saying is that adding armed guards to schools increases the risk of costly injury and thus requires higher premiums. In Kansas, the main insurer, EMC Insurance Companies, is saying that the potential costs are so high that it can’t provide any coverage at all. Through these policies, insurers are communicating that this policy makes schools less safe, not more.

So now that insurers have spoken out and the NRA’s proposed policy is technically unfeasible, what else do they propose to make our schools more secure?