By Frank J. Rich
Among the greatest pleasures of the curious mind is to discover yet another gem hidden in plain sight. Convenience has its way with people, especially when we turn into consumers. It determines where we find our goods and services, how we relate to local communities, and where we put down roots. It is seldom that we travel 10-miles for great bread, wishing it were closer to take fuller advantage of its unique qualities. The Hungry Ghost in North Hampton, Mass., is such a place.
Its dedication to rustic breads, the kind you leave face down on a wooden board for as long as you wish until ready for another piece, is truly the bread of life. I stopped there whenever visiting my daughter, who attended college in town. I have never found its equal, though I’ve not been there since her graduation. But I never stop wishing it were closer.
Our penchant for convenience drives most decisions, not least where we shop. But the motivation can have hidden consequences. You may recall an American Express TV commercial from the ’70s and ’80s wherein Karl Malden, who starred with Michael Douglas in TV series “The Streets of San Francisco,” was pitchman. It’s fair to say that Malden was the Walter Cronkite of the Screen Actors Guild at the time, an organization he also led as president for five years.
His pitch: “It’s dangerous to carry cash. Carry American Express Travelers Cheques. If they’re lost or stolen you can get them back. Your vacation is protected. American Express Travelers Cheques; don’t leave home without them.”
After the Justice Department took a closer look, it concluded that American Express had created an illegal float of millions. If two million people each was holding a $20 Travelers Cheque, that meant the company had an interest-free fund of $40 million.
It seemed reasonable at the time and a good application of or government’s protective machinery, as most seemed to agree. Oddly, the U.S. Government had been doing the same thing since the 16th Amendment was ratified in 1913, which allowed the taxation of individual income. Since many Americans pay more in taxes (through payroll deductions) than they owe, the difference is an interest-free float of funds to the government.
The idea is so winsome that enterprising sorts have developed a prodigious mechanism for doing the very same thing. It’s called the “stored value card,” and Americans used them to the tune of $483 billion just last year. Starbucks customers alone carried around with them some $3 billion in company cards and apps.
One might think the practice egregious enough, until the currency behind the cash is revealed. These stored cards allow companies (and others) to build an alter-banking system that mines the information necessary to their use. Which is more valuable – the money or the information – is debatable.
So before you conclude that “Big Brother” is taking an increasingly large bite into the private lives of consumers, consider that the information gathered also targets individual preferences better and actually reduces the potential number of messages received. Additionally, stored-value balances often mean that the customer is treated better. Presenting loyalty cards, such as at Starbucks, helps put a bounce in the step of the barista.
Not a bad dividend when the lines get long and patience short. A customer in the store, predisposed to buy, is the magic in product sales.
Clearly, a half-trillion dollars sitting idly in stored-value cards cannot be invested, at least in the usual way. The sinking fund could pay for a lot of public services, infrastructure improvements, and tax reduction. But in some sense it may already be doing that.