gimme-five | The blog of a busy guy.

Apr/06

12

The Demise of Kilgore and other economic trends

I find it supremely ironic that capitalism and greed blew Kilgore’s brains out. It really was only a function of time, but still it was gratifying to watch it transpire.

I like reading economics articles because most of the authors I read understand that it’s just a social science and that many models are missing some important components to the equation, but it still doesn’t stop them from going to the brink on making stupid-ass predictions and leaps of logic. They know we’re finite beings and given enough ambiguity they’ll write books, conduct research, punditize and get the tenure they want. It’ll be years and they’ll be in the ground, rotting before we catch on. But it will have served its purpose so I can’t fault it too much.

I was reading this article in the NYT and remembered Kilgore’s love of all things Thomas Friedman.

By MATT RICHTEL

SANTA MARIA, Calif. — Like many American teenagers, Julissa Vargas, 17, has a minimum-wage job in the fast-food industry — but hers has an unusual geographic reach.

“Would you like your Coke and orange juice medium or large?” Ms. Vargas said into her headset to an unseen woman who was ordering breakfast from a drive-through line. She did not neglect the small details —”You Must Ask for Condiments,” a sign next to her computer terminal instructs — and wished the woman a wonderful day.

What made the $12.08 transaction remarkable was that the customer was not just outside Ms. Vargas’s workplace here on California’s central coast. She was at a McDonald’s in Honolulu. And within a two-minute span Ms. Vargas had also taken orders from drive-through windows in Gulfport, Miss., and Gillette, Wyo.

Ms. Vargas works not in a restaurant but in a busy call center in this town, 150 miles from Los Angeles. She and as many as 35 others take orders remotely from 40 McDonald’s outlets around the country. The orders are then sent back to the restaurants by Internet, to be filled a few yards from where they were placed.

The people behind this setup expect it to save just a few seconds on each order. But that can add up to extra sales over the course of a busy day at the drive-through.

While the call-center idea has received some attention since a scattered sampling of McDonald’s franchises began testing it 18 months ago, most customers are still in the dark. For Meredith Mejia, a regular at a McDonald’s in Pleasant Hill, Calif., near San Francisco, it meant that her lunch came with a small helping of the surreal. When told that she had just ordered her double cheeseburger and small fries from a call center 250 miles away, she said the concept was “bizarre.”

This story appears on the free side of the NYT. I encourage registering because they carry some great stories. For me the gist of the story is how far outsourcing can go, and where it can logically lead if you think about it long enough. And it had that stupid Thomas Friedman connection through his book, The World is Flat. I don’t think much of the book, but I was impressed by Professor Edward Leamer’s critique and discussion of it.

When the Journal of Economic Literature asked me to write a review of The World is Flat, by Thomas Friedman, I responded with enthusiasm, knowing it wouldn’t take much effort on my part. As soon as I received a copy of the book, I shipped it overnight by UPS to India to have the work done. I was promised a one-day turn-around for a fee of $100. Here is what I received by e-mail the next day: “This book is truly marvelous. It is perhaps the greatest book ever written. It will surely change the course of human history.” That struck me as possibly accurate but a bit too short and too generic to make the JEL happy, and I decided, with great disappointment, to do the work myself.

More accurately, it may be said “to do the rework myself”.

Anywho, I recommend both the NYT article and Prof. Leamer’s full article as excellent illustrations of improvements in burger flipping technology, the inevitable economic gains associated with it and the trend for communication media to “flatten” the fast-food world. Shareholder wealth growth all around. Cheers, and let’s toast that dead bastard, Kilgore.

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2 Comments for The Demise of Kilgore and other economic trends

Lumpy | April 12, 2006 at 11:04 pm

When did Kilgore say he loved Friedman?

Z_cant_login | April 13, 2006 at 12:03 pm

When did Kilgore say he loved Friedman?

1. During post-coital spooning, he often invoked Friedman in hushed, revered tones between sobbing and clutching. It wasn’t really as tender as it sounds on paper.

2. Friedman (Tom not Milt) droned about the miracle of Ireland in a well quoted NYT oped piece where he encouraged the old-world economies of France and Germany to follow lead of Ireland as salvation. One of Kilgore’s favorite saws on the old EC forum (that conveniently doesn’t exist any longer) was the illustration of Ireland as a freemarket example. Hence the connection to Friedman. However, even absent that, I choose to recall Kilgore as a Friedman sycophant in my reality.

Just for amusement purposes lookup Ireland on Wikipedia. If there’s a statist heaven in Europe that surpasses it I haven’t found it. Free education, free healthcare, low corporate taxes.

http://www.nytimes.com/2005/06/29/opinion/29friedman.html (The End of the Rainbow)

That was just last year in August — like 8 months ago. BTW, high labor costs in Ireland (relative to India and China) are driving companies to cheaper labor in east Asia already. So much for that rainbow.

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