Month: June 2008

On Onions, Oil, and ‘Speculators’:
Politicians who blame “speculators” in futures markets for the run up in oil prices — such as Sen. Byron Dorgan (D-N.D.) writing in this morning’s USAToday — should consider a lesson from the lowly onion.
Onions are one of the few commodities in the United States for which there are no futures markets, according to an item published Friday in Fortune magazine. (Futures markets allow the sale of commodities for set prices at future dates.) It seems that in the late 1950s domestic onion producers blamed those same speculators in futures markets for driving onion prices DOWN. They successfully lobbied Congress to ban all futures trading in onions, a ban that is still in place a half century later.
So has the absence of futures-market speculation kept onion prices low and stable? Quite the contrary. According to Fortune:

And yet even with no traders to blame, the volatility in onion prices makes the swings in oil and corn look tame, reinforcing academics’ belief that futures trading diminishes extreme price swings. Since 2006, oil prices have risen 100%, and corn is up 300%. But onion prices soared 400% between October 2006 and April 2007, when weather reduced crops, according to the U.S. Department of Agriculture, only to crash 96% by March 2008 on overproduction and then rebound 300% by this past April.

Sen. Dorgan and his allies will need to find someone else to blame for volitale and rising oil prices.

Murdering Hookers Is One Thing, but Having Sex With Them…:

When I found myself in the unaccustomed position of seeing merit in a class action lawsuit, I knew it wouldn’t be long before I came across one that was easier to ridicule. Even The New York Times has trouble keeping a straight face about the lawsuit over “hidden sex scenes” in Grand Theft Auto: San Andreas. Here is how what is ostensibly a news story about the case begins:

“Lawyers who sued the makers of the video game Grand Theft Auto: San Andreas profess to be shocked, simply shocked, that few people who bought the game were offended by sex scenes buried in its software. Any buyer upset about hidden sex in the violent game could file a claim under a settlement the lawyers struck with the game’s makers, Rockstar Games, and its corporate parent, Take-Two Interactive. Of the millions of people who bought the San Andreas version after its release in 2004, exactly 2,676 filed claims.”

Each of them will get coupons or discounts worth $5 to $35, at a total cost of less than $30,000. The lawyers, meanwhile, will get $1.3 million, equivalent to a contingency fee of 4,300 percent. They emphasize that Take-Two also has promised to make a “charitable contribution” of $860,000 to everyone’s favorite charity, the Entertainment Software Ratings Board.

The problem is not just the extreme lopsidedness of the payments but the difficulty in figuring out exactly how consumers were injured by Take-Two’s failure to completely eliminate the sex scenes that had been edited out of the official game. The scenes were “accessible only to knowledgeable players using third-party software,” the Times notes, so it’s not as if easily offended people accidentally stumbled upon them. In any case, how many easily offended people play Grand Theft Auto? Players who unlocked the sex scenes presumably viewed them as a bonus, not a bug.

The discovery of the scenes did lead to a change in the rating for the unexpurgated game, from MA (for players 17 or older) to AO (for players 18 or older). That might make a difference to retailers and therefore affect Take-Two’s ability to distribute the game, which is why it ultimately released a cleaned-up MA version. But from the consumer’s point of view, it’s a trivial distinction. Since the only way to see the hidden scenes was to go looking for them, the only consumers who might have been upset about them would have been parents who bought the game for their more tech-savvy kids. They would have to be parents who are OK with a video game featuring the murder of police officers, prostitutes, amd random passers-by but draw the line at cartoony sex. To the credit of the American public, there don’t seem to be very many of them.