WGHubris on June 30th, 2014

The last two years have seen a big change in minimum wage laws in America. However, like everything in the U.S. these days, none of the changes came at the federal level from a gridlocked Washington. Instead, various states and cities have tinkered with minimum wage laws. This results in a nation where the rules for low wage workers are very different, depending upon where you live. While that may not be ideal for some, it makes for a great opportunity for economists and data analysts to finally see what actually happens when you raise minimum wage laws.

Higher Minimum Wages in Some States

minimum wage rising graphicWhile opinions and projections abound, real scientific, and economic, conclusions require data. More specifically, such conclusions require definable data sets that include a control set. A control set is the data set that represents the status quo, or unchanged data. In this case, these are cities and states where the minimum wage laws are not increasing. The new data set will come from the states where the minimum wage is increasing. Additionally, the increases are not uniform, so we may get data suggesting what the optimum increase or minimum wage level is.

In reality, these data sets won’t be so clean. The trouble with economics is that it is impossible to isolate all other factors from influencing your economic data. For example, there have been plenty of news stories about how North Dakota has the fastest growing economy in the United States. Despite the efforts of political leaders there to take credit for the increase, the fact is that policy had nothing to do with it. Rather, North Dakota sits on large oil fields that were previously inaccessible until cheaper fracking methods were developed by the oil industry. If the politicians in North Dakota had sponsored such research, then they could maybe claim some of the credit.

As one of the state not increasing the minimum wage, one could use the growth there as “proof” that such increases are not optimal. Fortunately, it is possible to compare across several states and then extrapolate for various differences.

The questions that economists and researchers will be looking at include, do higher minimum wage laws actually drive away businesses? This question will be more likely to have an effect where a city has raised wages. Relocating a business to another state is more difficult than to move to the next suburb over. In these cases we can see if otherwise similar municipalities experience different economies with different wage laws. Will Seattle experience a boom or bust based on its high minimum wage versus its surrounding cities? A lesser economy would be a warning against higher minimum wage laws. A better would would be an endorsement of them. The same economy could provide ammo to either side.

The long-term affects will actually be more noticeable not in the areas that just bumped up the minimum wage number, but rather from those that set their minimum wage to grow automatically based on inflation. In Colorado, for example, the minimum wage grew in 2014 to $8 per hour. While far below other areas, that number will continue to increase based on inflation. Assuming things remained the same into the future, there would come a day where the minimum wage in some states would be $20 per hour, while it remained $7-ish per hour in other states, would the fortunes of the citizens of each state diverge noticeably? Or, are minimum wage workers simply too unimportant, statistically speaking, to actually affect the economies around them?

What is certain is that in the next five to ten years, we’ll have a whole different set of data to argue over :)

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WGHubris on May 12th, 2014

During the 2012 election, someone decided that Colorado was a so-called battleground state. That meant that for months we endured endless political ads and commercials. We also got several visits from both President Obama and Mitt Romney.

There were some in other states who complained that they felt ignored. Trust me, if you had been living in a battleground state, you would have rather been ignored. For starters, it’s not as if any distinctly Colorado issues were given any extra attention by either candidate. Neither candidate offered any more specific plans for anything Colorado related. Instead, we got month after month of commercials, mostly from out of state groups, parroting what you heard a hundred times on whatever talk show you happen to listen to. In the end, none of that extra “attention” resulted in any better treatment or understanding of either candidate.

Colorado Senate Race 2014

If we hadn’t endured enough in 2012, it seems that, yet again, Colorado has been targeted as a battleground state, this time for the 2014 Colorado Senate race.

Last time around, Senator Michael Bennet, who had been appointed by Governor Bill Ritter to finish the term of Senator Ken Salazar, who left to become Secretary of the Interior, ran against Tea-Party candidate Ken Buck. The race seemed relatively close, but in the end, Buck did the Tea-Party implosion thing when he forgot the proper political phrasing of reasons to be against gay marriage, and ended up comparing it to a disease or mental condition of some sort. This time, Senator Mark Udall is up against Congressman Cory Gardner.

And, here we go again.

Outside special interest groups have been financing campaign ads on behalf of both candidates, or against both candidates, as the case may be. These ads started earlier this year, but picked up the pace in April.

There are many similarities to the ads from the Presidential campaign. None of these ads have anything really to do with Colorado. Ads against Gardner portray him as “extreme” and ads against Udall portray him as an ally of President Obama. Ads for both say that they are the candidate who will stand up to “Washington” and create jobs. It’s hard to say if Coloradans are dense enough to by that line. Both men are pretty party-line, so there isn’t going to be any standing up to anyone by either man.

There are two reasons that all of these commercials will likely end up being a waste of time and money. First, Colorado almost always re-elects statewide political officials. The last sitting governor to lose reelection in Colorado was in 1975. The last Colorado U.S. Senator to lose reelection was 1975 as well. In other words, it’s been about 40 years since Colorado booted a sitting Senator. There is a reason this state loves term limits. (All statewide officials are limited to a set number of terms by constitutional amendment.)

Second, Colorado might seem like a battleground state, or purple state, from outside, but it really isn’t like that. Colorado has a mix of city dwellers and rural areas. The cities, for the most part, run in a line along I-25 down the middle of Colorado. Denver, Colorado’s most populated city, is so liberal that Republicans don’t even run candidates for office. The Mayor is essentially elected by winning the Democratic Primary in May. Two of the next biggest cities are Boulder and Colorado Springs, the former is highly liberal, the latter is highly conservative.

Everything east of I-25 is just as conservative as Kansas. The mountains, to the west, are mixture with some areas being more conservative and some areas being more liberal, usually for environmental reasons.

In other words, Colorado isn’t a purple state because its voters are moderates who are easily swayed to another party candidate, it’s because there are about half who are Democrat voters and about half who are Republican voters.

In the end, elections in Colorado are decided by how many voters in Denver bother to turn out, and how many low-awareness voters turn out and vote for the name they recognize (the incumbent).

So, Super-PACs, and 527 organizations, and whoever else, you’re wasting your money and bugging us citizens. Mark Udall is already reelected, some people just don’t know it yet.

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WGHubris on March 25th, 2014

I have a bank account online. Actually, I have several bank accounts, and pretty much all of them are accessible online. It’s taken a decade or more, but, I’m pretty sure that these days, it’s a given that you can access your bank account online. And, like most other online accounts, bank accounts are secured by a lock and key system that is becoming increasingly unreliable every day.

The username and password combination has been the cornerstone of computer security almost from the beginning. The idea, quite simply, is that by having to enter a password, you ensure that only the authorized person gets the access.

Quality of Password Security

Believe it or not, this can actually provide very good security in most non-online applications. Your ATM card is a great example. Nothing secures your ATM card from being used to empty your bank account except for a four-digit PIN number. Assuming your PIN number isn’t something stupid like your birthday (or your wife’s birthday, or kid’s birthday… really, anyone’s birthday at all), it is highly unlikely that your ATM card will ever be compromised, even though there are only 9999 combinations. This is because you only get something like three or four wrong entries before the ATM just takes your card, and alerts your bank. It takes someone really lucky to beat 3 in 9999 odds.

For most websites, password security is also actually sufficient to guard most data. My online bank account follows the same protocol as the ATM machine. If you enter the wrong code more than three times, it locks my account. Since my bank password requires letters, numbers, upper case, and so on, the combinations are too many to be guessed.

The movies always show some teenager figuring out your password, or using a computer to make millions of really fast guesses, but that only works on the weakest passwords and the weakest of computer systems.

Password Hacking

The security of online passwords is why all but the least secure systems are virtually impenetrable to random guess of passwords.

What happens instead, is that hackers get into systems that have usernames and passwords. Then, they download the file containing those credentials. Those files are supposed to be encrypted, but even software industry giants like Adobe can be criminally negligent in how they handle those files.

Once hackers have those files, they can spend an eternity decrypting, them, sifting through them for information, and creating password hacking dictionaries. These dictionaries are not used to hack directly into online systems, but rather to decrypt properly encrypted databases stolen in the future.

If a hacker finds your username and password on one site, that information is useless as soon as you change your password. Unfortunately, with so many online services, and so many of them requiring complex password rules, people start to come up with one or two good passwords, and then use them everywhere. Once you’ve reused bonniesmith as your username with your password Aktiv4HClubMember! on more than one website, all the hackers need to do is find it, and then try that username and password combination on more important websites, like your bank.

Easy Additional Security

Here is where things get interesting. While the username and password is quickly becoming too easy to get past, two passwords can still be quite a roadblock.

Several of my online financial accounts require a username and password, but they also require an additional security question before allowing me to log in from a new machine or mobile device. So, you not only need bonniesmith and Aktiv4HClubMember!, you also need to know that Bonnie’s first pet was named Hawk. That last bit of information is both easy to find, and a very short, insecure password. Anyone that knows Bonnie really well could maybe guess that.

But, here’s the thing. It is incredibly rare that the person trying to hack into your bank account knows you. In fact, it’s pretty rare that they are even in the same country. It’s just as rare that they are trying to actually get into Bonnie’s account specifically and not just quickly get into as many accounts as possible before stealing money. That means that that little bit of information can stop hackers in their tracks.

If you’re thinking that eventually people will use the same information across multiple websites, you’re right, but here’s where it gets interesting. What if the websites dictated the questions?

For example, what if my bank asked me to setup a username and a password, and then asked me what color my first car was, while my other bank asked for a username and password and what my Mom’s favorite animal is? Now, even if I reuse passwords, my banks accounts are twice as hard to hack since the same three failures will lock my accounts if the hackers can’t guess that Bonnie’s first car was red and her mom’s favorite animal is camels.

The beauty of it, is when the inevitable happens and someone gets hacked, even fully compromised usernames, passwords, and security answers are half as useful on sites like that.

The problem is that this level of security is often diminished because you can “save” your answers on your own computer in the form of a check box that says remember this computer, or phone, or whatever. Maybe just adding that extra bit, without allowing a save, is all we really need to get back ahead of the hackers for another decade.

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WGHubris on March 18th, 2014

Tesla is a new car company that currently makes only electric cars. That in itself is revolutionary, but the company is looking at completely remaking the entire car selling and buying model, and that is ruffling some feathers setting up a Tesla versus dealerships battle royale.

New Jersey Bans Tesla Direct Sales

The latest news comes thanks to New Jersey’s decision to ban Tesla‘s standard business practice of selling cars directly to customers rather than going through the more traditional car dealer model. As it turns out, selling cars via car dealerships, the way the major automakers do, isn’t so much a strategic business choice made by car manufacturers, but a requirement of state law in many places. Tesla’s business model, however, doesn’t include car dealers, and it is starting to bump into the common scenario of entrenched businesses fighting to prevent newcomers from changing the way of doing things.

tesla-versus-dealersIf you are wondering why a Republican Governor like Chris Christie is suddenly in FAVOR of government regulation after spending an entire career supposedly against it, you have to look no further than the campaign contributions regularly doled out by the dealership associations.  State politicians are so eager to protect their local dealership cash cows that when General Motors was in danger of failing all together, and operating under a special federal government backed bankruptcy protection, states fought to keep even the most unprofitable of dealerships from closing. It’s no wonder, now that Tesla looks like it’s here to stay as more than just a novelty car dealer, that politicians are moving quickly to protect dealers.

Not Just New Jersey

New Jersey is not the only state, or the first state, to prohibit, or severely limit Tesla’s direct sale to customers strategy. So far, Arizona, Maryland, and Virginia have all banned or limited these kinds of sales. In Texas, Tesla has “galleries” that do not allow test drives or discuss pricing because the sales model is illegal there too. In Colorado, the lobbyists got to work faster. Since March 2010, state lawmakers have allowed Tesla to have just one store in the entire state. The dealer lobby in New York and Ohio are pushing for the same thing.

It’s curious how both liberals and conservatives in state government can get behind the dealer associations since there are no competing lobbyists or campaign contributions to be had. Who favors government regulation again? Which one opposes? Or, does the highest bidder win?

Check out this Credit Sesame review to get your credit score before buying a car.

Car Dealers Service

One of the arguments for the dealership model is that it is a “consumer-protection” issue. After all, if Tesla goes out of business, for example, where would its customers get it’s cars serviced?

This may be one of the dumbest arguments ever made. For starters, if Tesla went out of business, its dealerships would be right behind it. Dozens of car makers went out of business over the last three decades, and not one of them still has dealerships operating. Second, this statement ignores the thousands of independent mechanics and auto repair businesses that exist around the country.

According to some news reports, it is the over-priced service element that the dealers are most anxious to defend. When dealers provide warranty service, they get paid by the automobile manufacturer. When the provide non-warranty service, they get paid by the customer, both are very profitable. This isn’t the first time dealers have tried to protect their repair and service business. It wasn’t long ago court action and threatened legislation were required to force manufacturers and dealers to allow independent mechanics access to cars’ computer codes.

Buy Direct Benefits

I’ve often wondered why manufacturers didn’t offer a buy direction option. It turns out there are a few reasons for this. First, dealers don’t like the idea of funding all the infrastructure for people to come take a test drive, and then have that some customer go home to buy direct and cut the dealer out of the commission.

Second, dealerships have to be stocked with cars. Those cars have to be pre-made by the manufacturer. Allowing customers to customize and make their own cars, like Tesla does makes those cars sitting on the lot even harder to sell. Who wants to buy a car with pre-selected colors and options when you can create exactly the car you want.

Finally, car buying is very much an impulse buy business. That is, if you don’t walk off that car lot with a new car that day, chances are you won’t end up buying after all. Many car buyers end up with remorse after buying, but cars are one of the few goods you cannot really return once you’ve purchased them. That’s a reason car dealerships are such high-pressure environments. They know that if you go away to think about it, you might decide you don’t need a new car, and then no sale. If you’ve ever seen your how a new car loan affects your budget, you know why sales need to be struck while you still have stars in your eyes.

Tesla avoids all of these issues with its direct sale model. In all fairness, this model works exactly because Tesla is so new and has comparatively few sales. In order to sell hundreds of thousands of cars, like the big boys, Tesla might also need test drives and high-pressure sales. On the other hand, Tesla is smaller, so it doesn’t need to sell anywhere near as many cars to be profitable.

Car Dealerships Suck

People hate car dealerships, and Tesla knows this.

Need proof?

What does every car dealer commercial in America say?

We aren’t like those OTHER dealerships.

When your own industry markets itself by saying that you are one of the only good ones, it is no wonder that no one is rushing to the defense of car dealers.

But, as long as those lobbyists keep doing their job, states will keep trying to put up roadblocks for anyone that wants to cut in on the profits car dealers make.

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WGHubris on March 13th, 2014

Several years ago I bought a netbook. At the time, there was no iPad, there most certainly was no such thing as a Chromebook. There may have been the first iPhone, although I do not recall for certain.

I liked my netbook. It was underpowered compared to other computers around, and certainly compared to other computers and laptops that I owned. However, it was the smallest and lightest computer I owned. Instead of requiring its own laptop bag (and accompanying power supply), I just slipped it into my regular message bag with my usual documents and notebooks. The idea was that I had a computer for “just in case” there was time or need, or that I had one for a short period of time, usually in between other things. It was also so inexpensive that it was practically disposable. In short, a netbook was a perfect on the go, computer. We used it for years until the power supply finally stopped working.

Microsoft Destroys Netbook Market

Just as the netbook market was gaining its footing, Microsoft killed it, in hopes of saving its reviled Windows Vista operating system. At first, netbooks started by using Linux based operating systems. Customers didn’t like this, so Windows was a logical solution. However, Microsoft’s Windows Vista OS was too big, too slow, and too bloated to run on the limited hardware of cheap, small netbooks. Windows XP worked fine, but Microsoft wanted people to stop buying Windows XP and start buying Windows Vista.

Nothing destroys a company faster than when it focuses on making customers do what the company wants instead of focusing on the company doing what customers want. Instead of allowing customers to buy Windows XP like they wanted and working harder on making Vista better, Microsoft simply ended XP sales. Eventually, however, not even Microsoft could pretend that Vista would run acceptably on a netbook, so they allowed XP to be installed on them. However, they knew that people would rush through that loophole to get what they wanted. Microsoft didn’t want companies making netbooks with XP instead of laptops with Vista, so they set licensing restrictions that crippled the netbook market.

Microsoft decreed that Windows XP could not be installed on anything with more than 2GB of RAM and limited the screen size of netbooks as well. In doing so, Microsoft made it impossible for manufacturers to try and improve and build what a fast moving customer market wanted. Instead, all netbooks were the same, and they weren’t getting any better.

Fast forward a few years, and Apple released the iPad. The iPad did almost everything a netbook did. It browsed the web, it played movies and music, it even had a camera. On top of that, it was just as small and light as a netbook.

The iPad was missing one critical feature: a keyboard. I myself denounced the iPad as unsuitable for writers, compared to a netbook, because there was no physical keyboard. No matter how accurate your digital keyboard is, you can’t touch-type without, well… touch.

The netbook could have been a strong competitor to iPads. Manufacturers could have taken advantage of Apple’s one-size fits all approach just like they do today with cell phones, offering netbooks that were bigger, faster, more powerful, more memory, more hard drive space, and so on. In fact, today larger screens have drawn away once loyal iPhone fans. Larger netbook screens might have done the same, but Microsoft wouldn’t allow it. As a result, netbooks died, and the next generation of portable computing belonged to Apple.

In order to force Vista down user’s throat, the company had cut off its nose, to spite its face, and Apple picked up all of the pieces.

Microsoft Afraid of Chromebooks?

And here, is where the story takes an ironic, or karmic, twist. Years after netbooks disappeared, and years after Windows Vista disappeared, Google released a new, cheap, lightweight, easy to carry, low-power computing device called a Chromebook. A Chromebook is like a netbook in so many ways, except for one very big difference. A Chromebook runs Google Chrome operating system instead of Microsoft Windows. Instead of releasing Chromebook into a mature, robust, netbook market asking why would we use a Chromebook when a netbook already does all of that, customers looking for something that does what an iPad does, but with a keyboard and a lower price tag don’t even remember the word netbook, but they are starting to know the name Chromebook.

chromebook

A recent CNN article suggests that the small, but growing, market of Chromebooks has Microsoft worried. You can bet Google won’t make the same mistake Microsoft did. Instead, you’ll see all manner of innovation, from larger screens to better graphics, to who knows what else. And, it will have a keyboard, and maybe more memory, and more…

In trying to force its failed Windows Vista OS on consumers a decade ago, Microsoft may have written itself out of the future of ultra-portable computing for good. Instead of a crowded marketplace of low cost, low power netbooks, Google found a vacuum, and it is filling it.

 

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WGHubris on January 21st, 2014

Recent news reports suggest that Sprint is looking into the possibility of buying out rival wireless carrier T-Mobile. On one hand, this is a possibly strategic merger between the number three and number four wireless carriers. Even with the buyout, Sprint would remain the number three carrier beyond the much bigger Verizon and AT&T. On the other hand, this is a desperate move for Sprint whose strategic vision ended up being hopelessly flawed.

Several years ago, Sprint bought out Nextel. The idea then, as it is now, was that two smaller carriers could join forces to compete with the bigger carriers. The only problem is that it didn’t work. Sprint backed the wrong horse in the 4G technology race and wasted valuable time deciding what to do with Nextel’s network and spectrum. By the time it realized that it was leaps and bounds behind the bigger carriers, it was too late.

Now, Sprint has barely begun to roll out 4G coverage in the biggest markets, and there are plenty of markets where it hasn’t deployed any 4G at all. My home town of Denver, Colorado is case in point. Denver is the 23rd biggest city, and the 21st biggest metropolitan area in the US, but Sprint’s 4G coverage is nowhere to be found. The constant drumbeat of “it’s coming, but there are no dates,” has grown old and customers whose contracts come up tend to jump ship.

Why Sprint’s 4G Failure Matters

Just a few years ago, there were plenty of wireless customers who didn’t really care much about 4G coverage. Sure, those who cared about cutting edge technology were already there, but the iPhone didn’t even have 4G until 2012. Today, however, 4G is everywhere, and Sprint’s lack thereof in major metropolitan areas is a growing embarrassment.

The biggest issue is that even non-techies are now very aware that 4G means faster. Sprint’s only real hope for customers buying new phones is inertia. That is, that customers who already have Sprint service will just buy a new Sprint phone without asking about 4G, but even that possibility is fading fast. New services like the NFL’s highly touted “Football on Your Phone” are abysmal, if non-functioning, on Sprint’s slow 3G network. The same is true for any Comcast, HBO, or other video service on Sprint’s network. Once a customer sees those services on other phones, it is only natural for them to assume that there is something “wrong” with their service.

The catch is that you can’t just flip a switch and go 4G. Sprint has to switch out its old equipment to get 4G signals. The worst part is that it is taking down parts of its 3G network to do so. That means that not only to Sprint customers not have 4G, the 3G network they do have is actively getting worse.

All this brings us to Sprint’s desperate bid for T-Mobile. T Mobile has 4G networks in some of the same areas that Sprint is missing them. Ironically, however, they aren’t the same networks or the same equipment meaning that until the merger goes through, and until customers buy new phones, they will just get the same old, same old from Sprint.

How bad is Sprint’s position these days?

Well, I have an employee plan from way back in the day that adds up to approximately one-half the monthly cost of the other carriers for unlimited data and voice. I’ve told my wife that there is no way we are switching. I even bought new Sprint Galaxy 4S phones for both of us last fall, even though I knew Sprint didn’t have 4G in Denver. After all, I figured, the company dies more every day it doesn’t have those speeds, they have to be coming soon, right?

However, if I don’t have 4G in Denver by this Spring, I think I’ll take T-Mobile up on its offer to get me out of my contract and go over to them instead. Of course, I can’t do this if Sprint buys up T-Mobile. Me and the millions thinking the same thing are the reason Sprint needs to buy T-Mobile, and to do it fast. Everyone else has already deserted for ATT or Verizon at this point.

Otherwise, Sprint is headed for life as the low-tier carrier for folks who still just want a flip-phone.

(Or, of course, it could actually start lighting up 4G networks in bigger cities instead of trying to pad its numbers by rolling out dozens of smaller communities every three months in big press releases designed to show that it is moving forward more quickly than it actually is.)

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WGHubris on December 30th, 2013

New light bulbs have arrived and the old versions of 100 watt bulbs and 75 watt bulbs have begun to disappear from store shelves. The new light bulb laws now mean that the old, hot, inefficient 100 watt light bulbs that power old-fashioned Easy Bake Ovens are no longer available. Is the new light bulb law a problem, or will this just be a phase that quickly passes.

Low Flow Toilet Law

Around twenty years ago, in 1992, Congress passed a law mandating that all toilets be low-flow toilets. A low flow toilet can only use 1.6 gallons per flush. The law went into effect a few years later. The implementation and after effects of this law may be instructive in looking toward how the new light bulb law will work out.

old light bulb pictureWhen the ban against higher per flush gallon toilets first went into effect, the reaction was pretty much the same. The opposition to the law insisted that higher gallon per flush toilets were superior for various reasons. In fact, early low flow models did not work as well and were prone to clogging for some people. There were report of some builders hoarding older toilets, and even stories of people bringing in higher flow toilets from Mexico. Critics of the law pointed to these issues as proof that the law was a failure, and insisted that the market should decide. The law was held up as exactly the kind of thing that government should not regulate.

However, over the next few years, things changed. Manufacturers, who could no longer rely on making their toilets work simply by throwing more water down the drain had to actual put some time, money and effort into better designs. This investment would have never been made without the law, in part because the end consumer often does not buy the their toilet directly. Instead, builders, apartment managers, and others buy the toilets without input from the end users. The result is a trend toward the cheapest toilets, offering no incentive for “better” toilets.

The new and improved low-flow toilets saved millions of gallons of water every year. This was particularly helpful in areas like Colorado where droughts followed huge housing booms. Reservoirs that ran near critical low levels would have fared much worse if those decades of construction had included higher water use toilets.

Today, only 1.6 gallon toilets are sold, millions of gallons of water are not wasted, and no one really notices or cares. Certainly, no one brings in old toilets from Mexico.

Old Light Bulb Hoarding and Nostalgia

So, what lessons can we draw from the laws to regulate toilet flushing?

Chances are that the first few years of newer light bulbs will have issues. Manufacturers, now forced to deal with developing better light bulbs that don’t have to compete against the cheapest possible bulbs, will likely improve the technology quickly. Ramping up production to full levels of scale will mean that prices will drop. Soon, the only reason to have older, incandescent bulbs will be nostalgia, or those who claim that the light is “better.”

In other words, don’t panic. By this time next decade, no one will remember or care that Congress banned high watt light bulbs and society will be silently reaping the benefits of a nationwide reduction in the usage of power. But, rest assured that more than a few folks will have horror stories and studies will point to the wasted dollars caused by the new law in the meantime.

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