Wednesday, August 04, 2010

Nickel and Dime-ing US (and Tuppence, too!)

Stamp Act Reaction

In the 1770's the reaction to the Stamp Act was the original Boston Tea Party. This year, Congress is expected to authorize a 2-cent increase in the first class postage, from 44 to 46 cents. Under the current regime, Congress can not/will not subsidize the Post Office, requiring it to support itself like a business, but on the other hand it must approve any increases in postage. The financial situation at USPS is such that Congress really has no choice.

My reaction and advice to the postal unit: why stop at 46 cents? Go on up to 50 cents, a respectable round number, accompanied by a promise not to raise rates for, say, six years (two-cents every other year is about the recent pattern). Take the windfall revenues and do some real upgrading of capabilities, and maybe you won't even need to increase in six years.

Always Forever Now

When the Post Office inevitably gets its OK to raise the prices, there will be one of those great investment opportunities: buy the "Forever" stamps at 44 cents just before the rates go up, and you can save on the cost increase--as many stamps as you want!

This seems to be one of those calculated business decisions: balancing the time value of money against the expected "leakage" rate (people will lose some of the stamps they buy and never use them), but for the sophisticated stamp investor, it would make sense to buy about six months' worth of stamps, which, assuming a uniform rate of usage, would give a return of just under 5% for an investment with an average duration of three months. That's a return worth cashing your Treasury bills to obtain.

I, though, won't be taking much advantage of this opportunity. Most of my stamps come to me free from certain charitable organizations who think that their commitment to me--expressed by placing stamps on their return envelopes--will be fully reciprocated by contributions. I haven't done the math to see if that's true or not (I do give to them, but only a fraction of the time), but I do appreciate the willingness to save me trouble. (I've never forgotten Brooklyn Union Gas, which had metered prepaid postage on their return envelopes 15-20 years ago; do they still?) Instead, I take the trouble to save those envelopes, cut off the uncancelled stamps, and I eventually glue them onto other return envelopes of billers which are not so accommodating.

I see that, rather than helping me pay them by putting the postage out there (for which they would get paid sooner--American Express charge cards, take notice!), the debtor community prefers to "hock" me to pay through the Internet (allowing us to do the heavy lifting for them). They should back that up by giving us a postage-stamp's worth of rebate for our trouble.

Optimal Purchase of Socks

On another topic, totally unrelated except by the identical theme of "common-sense consumerism", I am shocked--shocked!--to find that I have not yet posted the results of my lifetime's worth of close observation on the best strategy for purchasing socks.

I presume that all you readers share certain tendencies: accidentally to occasionally pull too hard and tear irrevocably single socks, the nature of laundry machines to somehow randomly "disappear" a sock, a preference for wearing socks that actually match each other. If one grants all these, then there is a single, best strategy for buying socks.

You should buy exactly three pairs of socks--the same color, brand, and size--at a time. If you do this, then, over time, individual sock attrition will not leave you with a drawer-full of single socks. Instead, your pool of that particular style of sock will eventually pare down to two pair, and, over a long period of time, one pair--at which time you can examine the survivors to see if those two are worth keeping in the rotation.

Buying less than three pairs will mean the remaining socks will not get their full use before reducing to the useless status of <2 (and buying a single pair of socks is the moral equivalent of unjustly condemning one valid sock to permanent isolation in the dead drawer); buying more than three pairs will mean you are over-committing to a single style and color (i.e., boring). Of course, this strategy doesn't work so well if one goes for the ultra-modern "toe socks" which fit each toe snugly and therefore have a sense of right sock and left sock--I discourage their purchase for that reason, except for use in rare occasions of luxury or foot ostentation.

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