Blog

Short blog posts, journal entries, and random thoughts. Topics include a mix of personal and the world at large.

Get your hot dogs here

With all this complaining from me about food price inflation, the one constant I forgot about is the price of a hot dog at Costco. It seems come hell or high water, $1.50 will forever still buy you a hot dog and a soda there. A slice of pizza remains $1.99 as well. There is no freaking way McDonald’s and its $12 for a meal can compete with that.

It’s reputed that the Costco food court is a loss-leader. A marketing spend, an enticement for people to join its membership. That’s why the prices there have not kept up with inflation. That being said, Costco must be hemorrhaging cash at that side of operations now more than ever. Corporate greed aside, it’s indeed true that material costs have increase dramatically in recent years. Even Costco and its buying power can’t be immune to that.

The fact that even under these circumstances, the price of a Costco hot dog remaining the same is a testament to its corporate culture. It’s one of the few brands you can be morally satisified to do business with. (Another is Patagonia.)

But even Costco can only take on so much red ink. Word on the street is that soon, Costco will bar non-members from patronizing its food courts. Previously, anybody off the streets was allowed to buy a whole pizza for the low sum of $9.99. Not anymore! Inflation is so bad that Costco is restricting its de-facto food court subsidy to members only. There’s got to be a return on that subsidy.

The legion of blue-collar workers going to Costco for a cheap lunch will be so disappointed.

Free Tax USA

And my 2023 taxes are done! Because I’m a simpleton with only a W2 and a 1099-INT (from a savings account), filing taxes is always an under 30 minutes procedure. I’m obviously not a target customer for H&R Block. I can appreciate paying for convenience - in having a guy or gal do your taxes - but 30 minutes out of a weekend is not so detrimental.

What is detrimental is last year’s interest income. Because of historically high interest rates, the return from my savings account in 2023 was very healthy. That means I have to pay capital gains tax on that return, of which I am happy to do so, of course. It’s truly a first world problem if you’re complaining about having to pay a lot in capital gains tax. Though I do feel kind of icky about having to pay taxes on income derived from money I already paid taxes on.

The problem with having high interest income is that I no longer qualify for free filing with TurboTax. Apparently: interest income over $1,500 requires a schedule B form (which if you’re using a tax-filing software you shouldn’t have to care what that entails). Because of this one single extra form, TurboTax automatically asked me to upgrade to the paid Deluxe version. I went from free-filing for both Federal and State, to needing to pay over $110. Absolute vultures.

I’m not paying that in this economy. My friends turned me on to FreeTaxUSA, an online tax-filing service of the same ilk as TurboTax. The main difference here is that FreeTaxUSA doesn’t give its customers the bone. Federal tax filing is always free under (I am assuming) most circumstances, and it’s only $14 to file State taxes (compared to $59 for TurboTax). This is what friends are for: saving you $100.

Somewhat tangentially: I am honestly sick of seeing corporations raising prices because of “inflation” and “war in Ukraine”, then three months down the line say they’ve got a record profitable quarter. I endeavor to do as little business with such businesses as possible.

Ads all the way down

Ever notice there’s advertisement in absolutely everything? Even things that formerly did not have any ads. Amazon Prime video is now showing ads in its video content. To get the ad-free experience as before, you have to pay extra per month. It’s just like watching cable TV: many ad breaks within a program. I thought the whole point of “cutting the cord” was the ability to watch an entire episode uninterrupted? How the tables have turned. The arc of progress is a circle.

All because of ads. The entire house of cards is built on ads. Google can’t afford to give away stuff like Gmail if adverts weren’t the majority of the billions in revenues. Your favorite sports league’s viability is entirely based on the ability to sell ads - either at the arena, or on TV broadcasts. The reason WNBA players don’t make as much as NBA players is because they can’t attract enough advertising dollars. (It’s definitely not sexism.) Our favorite online platforms - that we use for free - wouldn’t exist without ads. We’re not the customer, we’re the product.

Downstream from all these advertisements is consumer spending. That’s the other major leg on this house of cards. Ads induce people to buy things they didn’t even realize they needed. Imagine if people didn’t buy, that every adult in this country is fiscally responsible, and consumer credit card debt is not a giant sword of Damocles. This economy would crumble. Companies would spend less on ads. Netflix wouldn’t have big budgets for its TV series. Your favorite online publication might have to charge subscription fees.

Not that I am wishing for the economy to go to shits. I’ve just become more aware of how pervasive advertising is, how much it props up a lot of things we use and enjoy. It’s kind of icky feeling, honestly. In response to Amazon Prime now showing ads in its video platform, I will be way less inclined than I already am to watch anything on that platform.

The price is wrong

Honda has (finally?) launched a fully electric vehicle for the North American market: the Honda Prologue. As expected, the Prologue is a mid-size SUV thing - the most popular type of vehicle in the States - designed to haul people and stuff. The layman would not know that this all-electric Honda is co-developed with General Motors. Not quite a re-badge, but it’s definitely a GM car with Honda window dressing on top.

Not that in it of itself is a bad thing. What Toyota has done with the Supra - essentially a re-styled BMW Z4 roadster - seems to have worked (and continues to work) just fine. I see plenty of Supras on the road, driven by guys who look a bit too young to be able to afford a $60,000 sports car.

The main problem I see with the Honda Prologue is that it is too expensive. The poverty FWD trim level starts at $48,795. For the AWD trim with some bells and whistles that most people would want, you’re looking at well into the $50,000 mark. Worse: as of writing, the Honda Prologue does not quality for the Federal EV tax credit ($7,500). I would bet only the true die-hard Honda fans would buy one of these over a Tesla Model Y (low $40,000s after tax incentives). That, or Honda will have to heavily discount the Prologue.

The Model Y has another advantage: buyers don’t have to beg some asshole at a dealership to take their money.

To be competitive, I think the Honda Prologue needs to start the high $30,000s. Because that’s what a gas engine equivalent - the Honda Pilot - starts at. Honda can’t charge an EV premium for what is a mass-market product, because that would simply drive buyers towards Tesla. Ford found out about this with its electric Mach E SUV. The problem is that Honda - GM, really - cannot build the Prologue cheap enough to sell in the $30,000s. Meanwhile, Tesla can produce Model 3 sedans and sell profitably in the high $30,000s all day long. It’s a competitive advantage that’s evident in the sheer amount of Model 3s and Model Ys we see on the road.

The first legacy automaker to market with an all-electric mid-size SUV selling in the $30,000s will be the one to take a chunk out of Tesla.

Would you like some fries?

Is anyone eating at McDonald’s these days? Prices there have become absurd. A cursory check on the McDonald’s app shows (for San Francisco, California) that you cannot get a meal - a sandwich, a drink, and fries - for less than $13. For the same kind of money, I rather go to In-N-Out for a much fresher burger. The last time I actually ate at McDonald’s was when they were giving out free fries.

Inflation is inflation, right? Cost of goods sold has gone up, and so has cost of labor. Here in California the minimum wage for fast food workers is scheduled to go up to $20-per-hour in a few months. McDonalds (and other restaurants) have already signaled they are going to raise menu prices in response. When a meal is already at least $13, who the heck is willing to pay even more?

It’s basic economics: you can only raise the prices so much before customer demand goes down. I understand McDonald’s want to protect their margins, but it can only go so far. I have to think we’re already at that critical juncture of price vis a vis demand. If my middle-class income is cutting back on McDonalds due to cost, people making less are certainly doing the same.

The high prices won’t change until these fast food places feel the squeeze of less demand. It looks like it still hasn’t happened yet, despite my not so herculean efforts. Revenue and net-income for McDonalds beat expectations due to menu price increases. This is just pure greed, hiding behind the facade of inflation.

Life is so cool

It’s been a week since I’ve returned from China, and I have to say it’s been overwhelmingly positive to be back. You know how people go on vacation and then dread going back home to their normal lives? I was actual the opposite. Towards the end of my two-week stay in Guangzhou, I was beginning to miss my life here in the States. Keep in mind: I was on vacation, at the land of my birth, with family I haven’t seen since the start of the pandemic, and eating Cantonese food incomparable to anything available in America.

And yet I was looking forward to returning home!

The realization here is that my life is actually pretty good. My response to coworkers wishing me a happy return is not mere lip-service - It genuinely is good to be back living my regular, normal life. Not hating your job - and perhaps even enjoying it - is such an advantage, and a privilege.

This past week was filled with calm and contentment. It’s the first time I’ve felt such things at the end of a vacation. I can remember coming home from Japan back in 2019 and getting depressed. So wonderful was that trip that the stark contrast to my life at home was emotionally damaging (cue the meme).

I guess I’ve done well to cultivate a living that is worthwhile and satisfying. Traveling then is no longer an escape. Rather it’s a brief detour, one that will take me back to the main road soon enough. Because the main road is pretty cool to be on.

Don't buy used

Word on the street is that Ford has (again) lowered pricing on its Mustang Mach E electric car. The base real-wheel drive version can now be had for (just) under $40,000. Ford is also throwing in $7,500 on leases. Combining with the federal EV tax credit of another $7,500 makes the base Mach E a highly attractive option if you just need a simple electric runabout. I would consider one if I actually needed a car.

And because I wouldn’t want to buy a used electric vehicle. You simply cannot trust it. The thing no one seems to be talking about is battery degradation. Much like the battery in our smartphones, the cells in electric cars degrade with use and time. But how much it degrades does not scale linearly with mileage. Depending on the usage pattern - how often it’s charged, how fast, to what level, etc - an EV with 50,000 miles can potentially have a healthier battery than a 20,000 miler.

This is a critical piece of information in electric vehicles because the battery is everything. A degraded battery cannot motivate the car to the same number of miles as new on once charge. At least with a combustion car you can expect the same range in a high-mileage gas engine.

The problem is we have no way of knowing about battery degradation. The electric cars (currently) don’t show the health percentage (our smartphones do). Venturing into the vast menu of a Tesla Model 3 doesn’t reveal this information. I think manufacturers should include battery health indicators, plus showing how much maximum range has been lost as well. As I said, range in an electric car is everything.