Month: September 2010

Warning Lights

Have you had a traffic ticket lately? You may have been a victim of public manipulation, dear reader. And it may be very hard to figure out if you were just unlucky (or foolish) or actually manipulated…. We’ve talked briefly about speed limits before, but I don’t think we’ve mentioned traffic lights and other traffic signs. So let’s take a look at the basic traffic light: They’re generally a good idea. In fact, people thought they were such good things that in the mid 1980s, they supplemented the humble traffic light with a camera to catch folks who ran the light. Traffic cameras were a simple concept – municipalities installed them because they believed that they could reduce accidents. There was also a cost-saving rationale: a camera costs less than a police patrol, theoretically freeing up the police to use their time more intelligently elsewhere. There were worthy aims, but they quickly got corrupted by a number of other dynamics. For one thing, municipalities quickly realized that while a police car could occasionally catch a light runner, cameras caught them all, and that meant a lot of money came in through fines. One traffic camera, one single camera, for example, was found to bring in more than $2M a year – 3,000 tickets a month.  Worse still, municipalities quickly found that buying these cameras, putting them up, maintaining them,...

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Professional Credits

Anyone who likes manipulation must love credit cards. For the past few years, credit cards were one of the biggest profit center of the banks that gave them out. I could write a whole book on how banks could manipulate customers via credit cards, but let me just list my favorite banking manipulations: Low minimum payments: The monthly minimum amount that your card company asks for is usually only slightly more than that month’s worth of interest. As a result, if you’re foolish enough to just pay the monthly minimum, you are essentially just paying interest – you’re not actually reducing the balance. To put it in some numbers, if you had $1,000 on a credit card and paid off the minimum amount every month, it would take you… 152 months (or more than 12 years!) to pay off that balance. In that time, you would have given the credit card company more than you borrowed (around $1,100) in interest alone. And don’t kid yourself – up to 1/3 of cardholders pay the minimum amount on their cards at least some months of the year. Games with APR: so you think you know your card’s interest rate, do you? Most cards’ interest rate hover around 18% (the good ones, anyway). But most cards also have a hidden rate, the Penalty rate, that is buried in the card’s agreement. The...

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