The Vimes Boots Theory: Further Reflections
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"When you're broke, the bank starts charging you money... for not having enough money. If you have a lot of money, they give you money. Because you have a lot of money! You have so much money that we should give you some! Because you have a lot, you should have more! Here, take more money! Take this guy’s $15, fuck him, you should have it!"
Like the article says, class boundaries are also knowledge boundaries. Because you don't know of any alternatives, you bank at the local BoA and get taken advantage of to the tune of $15/month in perpetuity with a low balance, or even pay a percentage at the corner check cashing place. Or you can get free banking and around 3% APY today if you have savings, know how and where to bank and how to structure a 12-month CD ladder. It's expensive to be poor!
As far as I know this is normal in the UK and Scandinavia, not sure about the rest of Europe though.
So how do US banks justify USD 15 a month?
for a bank it is as simple as how can they make money from a person. If the person doesn't have much, add a simple fee. If the person has a lot, stroke their ego and convince them to park their cash in the bank so they can use that to make money.
it's the same as $.99 app software going for bulk consumers versus bespoke enterprise software trying to get $$$ from a few customers
Maybe this comes from what the post says about "knowing what to buy", but I bought boots made by a 2nd generation shoemaker constructed out of leather carefully prepared here in Chicago. They're recraftable so I figured after the bottoms wore out I could fix them. But here I am a year later and the inside sole is coming up and squeaks with every step. I'm going to have to take it in to get it repaired, for probably $15-$20. From a consumer waste and natural resources perspective, I'm still happy with my purchase, but I'm pretty convinced that shopping every year or two at Walmart would leave the average person ahead, cost-wise.
More generally, I wonder to what extent the Vimes theory is true. Richer people buy higher quality items and generally have a more luxurious life, but I'm not sure that it's cheaper overall. Or at least, there's a point where it's obviously the case (c.f. the T ticket vs Charlie card point in the post), but I think it happens pretty early on in wealth.
Case in point, I bought a nice 2 year old Chevy from a dealer with low miles for $12,000 a few years ago and haven't had a problem with it. I can imagine that paying itself off quite easily vs. making do with a $3,000 beater that keeps falling apart and needing service. But from a purely cost perspective (not luxury), I don't think beyond maybe $15k or so, more money in a car will save you in the long run.
So, I still kind of get Vimes' theory, but I only think it applies from, say, poverty to lower middle class level. Beyond that, I think upper class people spend more money on stuff, and get a sweet life because of it, but not as a cost saving measure.
Once Honda and Toyota go electric, those things will last a century.
With things like these though, it's important to know if you are paying for quality, luxury/prestige, or some combination thereof, as these are different things that may be considered worthy of paying extra for. With things that are not (strictly) utilitarian, it could be far more of the latter than former. Shoes made of leather from the butt of a baby purple dragon would be quite expensive, but that leather isn't necessarily as strong as your run of the mill cowhide.
Gets even worse/more complicated if the maker used to be known for quality but starts taking shortcuts and quality goes down, but price doesn't.
As some anecdata, I have a couple of leather belts that are if not older than I am but certainly pushing 40, worn very often. Still look as good as new, but I am sure they were very expensive when originally purchased. Another belt is a few years old, from a brand that's known for making quality luggage (or used to be), not worn too often, and wasn't cheap. Leather's already cracking. On the other hand, really cheap ones look terrible even sooner, so the law still holds as a general rule.
Consider a merchant has 2 classes of boots: TypeA that cost $100 and last 5 years, and TypeB that costs $60 and lasts 2 years. Both boots are made by the same merchant, and TypeA has better materials than TypeB, which is primarily why it lasts longer, not necessarily due to the merchant’s craftsmanship ability. In such case, if someone could afford the TypeA boots, we can make sense of Vimes theory because it comes out to be cheaper over the life of the item due to better quality of materials, since quality of craftsmanship is basically the same.
Of course, this is pretty idealized. There’s many other factors that influence quality and how it’s perceived.
OP could have paid a premium to a longstanding brand traditionally known for quality that has cut corners over time and now uses cheaper practices.
I think there’s a lot of cases similar to OP now, where people pay a premium for a TypeA item expecting better quality construction and durability for the price, yet end up getting something not that different than a TypeB item.
Marketing also has a lot to do with this. It’s particularly frustrating when buying from a brand that used to make good stuff, and now sells stuff way worse under the same name (I’m looking at you Pyrex). I also hear a bunch of watch fans calling out the formerly high-end watch brands for cheapening their construction quality while still keeping the price high because buyers pay for the label not the actual quantitatively measured useful quality of the item. Once brands get to that level, they know they can basically put out mass manufactured expensive garbage and people will still buy it because they associate the brand with former traditional quality construction (much like many fashion brands of today that are made in similar overseas factories with similar textile suppliers).
The problem, too, is that apart from goods that are tested for durability, there aren't many signals a layperson can use to judge if say boots are well-built and made of quality materials.
Then, of course, "quality" is multi-faceted, too. Type A boot could cost more because it is better-looking, light, flexible, comfortable, and made of thin, soft, supple leather as smooth as baby's bottom. But because of that, it will fall apart as quiclly as WalMart boot for $20; you'd just enjoy wearing it more.
With mass production in factories, so much of the effort is front-loaded in R&D and production equipment which gets shared among all the output. Those cheap Walmart boots have far more effort put into them than your custom ones. The only reason they’re worse is because a lot of that effort was put into making them cheap rather than making them good. But it’s a conscious tradeoff and nothing forces it to be anything like proportional. Quality largely depends on those front-loaded costs which require a lot of customers to justify. The best products will necessarily be ones that are fairly popular, although not necessarily the most populr.
This is most visible in electronics. You can pay for quality up to a point, but there’s a low ceiling. Pick the best cell phone you can buy for under, say, $2,000. How much would it cost to buy something even better? You might be able to do it for less than a billion dollars, but I kind of doubt it.
The idea still applies, but a lot of it comes down to buying in bulk. A person who can afford to buy a year’s supply of toilet paper will save money. And yes, the ceiling on that is still not particularly high.
So what's the cost of a loan or other financial products? Of course there's utility in providing upfront capital in exchange for time-spread payments and interest (buy the $200 boots today), but what of the macro-cost of decreased market participation for the duration of the payments? The loan payments with interest is money that could've been used by an individual participating in the market that is instead piped to the financing provider who, by definition, is already richer.
Given the rich, or a rich organization, has different buying habits and participation in the markets (different perspective = different information), how much economic flow, throughput, and growth are we losing from financial mechanisms which go from poor -> rich? In this sense wealth concentration is a problem of bottle-necking economic potential by depriving our markets of participants and diverse perspectives.
Then one day my wife and me ended up in a small, local shoe shop. No customers there, just the owner. We weren't even looking for shoes. The owner was getting pension-aged and would close his shop in a few months.
He told about how some company would make great but expensive shoes, and build a name for quality. After a few years, a big company would buy the brand, raise the price, lower the quality, and coast on the perception for a few years. He told this cycle goes on and on. He stopped selling the shoes as soon as he know the quality went down. Shoe salesman kept trying talking him into selling these shoes as it was easy money, and he kept throwing them out of the shop. He was getting very pissed off at this point.
He talked me into buying a pair for about €160, which isn't the most I've paid for shoes, but more than I would give for that specific pair - they looked like my normal €40 models. Now these shoes lasted for about 7 years, which basically obliterated any personal record.
Unfortunately, the shop is gone now, and the only shoe shops left are the big chains. I am still willing to spend the money, but I have no idea what I should buy.
Software is the obvious example of the former (with open source software often being as good or better than paid alternatives), but information/journalism/research/whatever could count to some degree too. If you know where to look, there's free content on par with some of the best newspapers and journals, especially now with the internet and passion projects/people using Patreon or donations to fund their work. They're the channels I feature in some of my underrated channels lists.
For fields where you can't really pay more for a better service, well entertainment usually comes under that. That CD or DVD or video game or book will cost roughly the same regardless of who buys it and what shop they get it from.
The idea works pretty well for clothing and appliances, struggles when it comes to software and is virtually irrelevant for movies or games. Then again, I guess you could say software is a field where at a certain level, the only thing that even remain are opportunity costs. Get skilled enough, and every buying decision becomes a question of whether you want to buy/download to save time or rebuild it yourself over the next few weekends or so.
Originally for hiking, but they have also seen daily service as winter boots. Been very pleased with them for both purposes, and they're still as good as new. (As a student, this was a pretty big investment for me, but I'd definitely do it again!)
On the other hand, originally expensive and equally Italian Malo shoes (granted, I got them at Filene's Basement for pennies on the dollar) seem to be designed purely to look at, but not to actually wear outside.
If you were looking for sneakers, perhaps you’d be interested in MMM or Rick Owens.
That being said, I buy 200 dollar boots.
I'm sure that was an allusion by Prachett: you're not supposed to think like Vimes. His books always have layers of meaning.