Archive for June, 2010

Blow-You-Away Service? Believe It.

I’m a nut about good customer service.  I strongly recommend 1st Choice AMS, the great people at Jimmy Johns on Alpine Hwy in Lehi, and now I have a new fave as well.

My good friend Jonathan and I went to lunch today and chose the American Fork Olive Garden as our spot.  There’s a story behind that.  But one thing at a time.

We got there, got right in, had to wait maybe ten seconds, and our cheerful waitress Laura showed up and gave us a thorough rundown of the menu.  Mentioned some new stuff there.  Pointed out a couple things.  She was professional.  We ordered the soup, salad and breadsticks, which is what I go there for, and Jonathan got the spinach-artichoke dip as well.  She told us it would be about 7 minutes, and asked if we wanted our other stuff first.  We did.

She was back in about 2 minutes with the other stuff.  Cheese on top?  Don’t mind if I do.  I love the Toscana, and Jonathan is into the Gnocchi, so we munched on that and the breadsticks and generally, Laura was right on top of us the whole time.  She was within one minute of her prediction on the dip, too.  Which was also excellent.

We were never without breadsticks – one of my pet peeves about Olive Garden is that I run through the breadsticks too fast.  Not too fast for Laura, apparently.  Clearly, it was not her first day on the job, but she also went out of her way to make sure we were having a good time.  And we told her we noticed that.  We like to do that; I believe that if you praise something, you get more of it, and if you criticize something, you get less of it, generally speaking.  So we told her she was doing a great job, because she was.

Then we get the bill.  And inside it is this:

Okay, NOW I’m going to have to see the manager, who was Darren today, and tell him how impressed I am with Laura (and, frankly, I shouldn’t forget Colleen, either), and that she’s underpaid.  So he comes out, and we chat, and he tells us she’s getting free dessert for making us so pleased.  We part amiably, then Jonathan pulls out two gift cards to pay.

“Know where I got these?” he asked me.

“No,” I said.

“From right here,” he said.

This Olive Garden was hit by a car just last Friday.  It went through the wall into the bathrooms and could have seriously injured a huge number of people (fortunately, it didn’t).  Of course, the restaurant was then closed for repairs.  But during the closed period, while they were furiously rebuilding, anyone that came to Olive Garden to eat, and had to be turned away, was met in the parking lot by the waitstaff, who thanked everyone graciously for coming, then gave them gift cards to let them know how much the restaurant appreciated them coming there, even if they couldn’t now get a meal.  I bet the restaurant even paid the staff to be there, which is a huge deal for many of them.

Unbelievable.  Service like this, appreciation like this, even the very tiny act of giving the waitstaff little cards on which they could write thank-you notes to the patrons are signs of a truly exceptional business.  Everyone there deserves applause, and a great share of our patronage now and into the future.

Go see for yourself.

Mea Culpa. But I Can Explain.

Okay, so I was wrong. At least I wasn’t the only one.

Last month I wrote about how the expiration of the $8000 and $6500 tax credits for new home buying wouldn’t have much impact on the housing market. Those expired, for the uninitiated, on April 30, and since then sales on new homes have dropped to their lowest levels in history. So that wasn’t one of those really good predictions, and I’m sorry, and I admit I was wrong.

Pundits are saying that the drop is caused by buyers moving their purchases forward to take advantage of the tax credit, so that sales just moved from May to April. That surely took place. But at least here in my shop, there were a good number of people that couldn’t get the deal done in time, and who still are in the process of buying. That should have put some shims under the falling market.

So I have a different explanation for why what happened…happened. See, it wasn’t so much about the money. Markets are really smart. They compensate pretty fast for price-altering events like tax credits and artificial purchase incentives (see “Clunkers, Cash for”). When someone offers $8000 as an incentive for you to purchase a home, then the seller of that home adjusts his price upward to meet the new reality that you have more cash to spend, so most of the $8000 does you no good at all. As an aside, this is what the eggheads call “inflation”.

That did happen in this case, though not by anything like $8000 worth. No, the spike in home buying was not caused by the cash incentive as a dollar amount; rather, it was caused by the application of that dollar amount. As in, the $8000 was not a reduction in the price of the home; it was a boost in cash for down payment and closing costs. Yes, I know the government specifically said that the credit could not be used as a down payment. But, humans being what they are, and being waaaaaaay smarter than the government, they got “gifts” to cover the down payment and closing costs, then repaid those “gifts” with the tax credits. Voila! A temporary reinstatement of the zero-down loan programs the government killed last year.

The reason we’re in the economic mess we’re in is really quite simple: we borrowed too much money, and nobody saved a nickel. Now we can’t make the payments on the things we bought, so they’re being repossessed and foreclosed on. For a business, that means money is drying up and that means firings and layoffs. That exacerbates the personal financial problems, which means people stop spending, which further reduces the money for business, and around and around the mulberry bush.

If you have no cash, you can’t buy a home, because there are no zero-down programs outside of USDA Rural – which, not coincidentally, ran out of money 6 months before the end of the fiscal year – and Veterans’ Administration. But this program made it possible to fudge that, and brought a lot more buyers into the game. Until it ran out.

If you parsed the data, and nobody will actually give it to you so you can do this, but what you would find almost immediately is that the large majority of those tax credits were claimed by people whose down payments were smaller than the $8000 credit. Personally, I would bet that almost half of the loans that closed on which the credit applied were closed with gifts as the means of down payment. That was certainly true in our shop. I have no idea how many of those gifts were legitimate. Perhaps all of them. I hope so. But I doubt it.

Then, of course, the gravy train reached the terminus and everyone had to get off. Immediately, home sales dropped off a cliff. This doesn’t happen in market conditions where nothing hinky is going on. The market simply adjusts – prices fall, in this case – and people move on. Really, folks, the $8000 is not a big deal. It represents a payment increase of only about $40/mo for a borrower at today’s rates. That might have a small depressive effect on the market, but nothing like what we’re seeing.

Conclusion: the $8000 credit had the impact it did because it filled a market niche where there is huge demand, and that is the niche for 100% loans. The loss of the credit has taken out a very large part of the borrowing pool, those people that cannot come up with $7000-10,000 to put down on a house. Until something fills that gap again, don’t expect a huge market rebound.

A Word on Time Management

I wrote a couple weeks ago about managing time and getting things done.  I have several techniques that I use, with varying levels of success, but of course time still gets away from me and I end up accomplishing less than I otherwise would.  Here’s something from a lawyer friend of mine:


Like you, I did not realize how hard it is to "work" for 8 hours a day.  I have to keep track of my time in six minute increments--and they add up fast when I am reading your (entertaining and thought provoking) blog posts or the morning newspaper.  However, it helps me be accountable for how I spend my time each day.  Though obnoxious at times, it is good for me.  I still have a long way to go--it still takes me 10 hours to "work" 8--but I am getting better.

Thanks for keeping me on your email list.  Your writing is always entertaining.  You have a way of explaining life's lessons in a way that connects with a lot of people.

Hope things are well with you and your family.  Please let me know if I can ever do anything to help any of you.



Jones Waldo
Brock Worthen

On Unintended Consequences

Last post I discussed the excellent book Everything I Want to Do Is Illegal, by Joel Salatin, and this time I want to extend the analysis a bit.  In the book, he describes a situation where he is instructed by some federal food police to alter his pricing for his beef such that his business becomes not a beef producer, subject to sales tax, but a service provider, subject only to income tax (which every farmer has more than enough deductions to offset).  This is a compromise to avoid shutting down his operation for a phantom infringement of some obscure and destructive regulation.

See what happens here.  Someone complains to his representative about beef being prepared in unsanitary conditions.  The representative gets a law passed forming an agency to inspect beef packing to make sure it’s sanitary.  Then the agency promulgates a gigantic mess of regulation, ostensibly to make sure that if the regulations are followed, the beef will be safe.  Businesses then bear the cost of complying with the regulations, even though they are of necessity made to fit operations that are massively different from theirs.  This cost is least easily borne by small businesses, many of which close.

Thus the original complaint, focused on getting safe meat to the table, closes the businesses most likely to provide it.  That’s consequence #1.  It also raises the cost of the meat.  That’s consequence #2.  And then, best of all, it encourages those businesses which are accidentally now the focus of regulatory scrutiny, to cheat and evade not only the regulation but the taxes that they were happily paying before.  That’s consequence #3.

How much of the US economy is in the gray and black markets now?  10%?  20%?  I’m not talking about the hiring of illegal workers, which absolutely fits into consequence #3 above, but other things like the evasion of labor law by paying under the table, or the changing of business classification from for-profit (taxpaying) to not-for-profit (non-taxpaying), without changing the nature of the business at all, simply to avoid regulation that makes it increasingly impossible for the business to make money.

Salatin’s book describes a situation where the cheese police came and shut down a small cheese factory because it was selling uninspected (though perfectly safe) cheese at a farmers market.  So the enterprising woman called the bureaucrats and asked what the restrictions were on fish food.  They said there weren’t any.  So the next week she labeled her product “Fish Bait Cheddar” and “Fish Bait Swiss”, and nobody could touch her.  Until someone decides to regulate fish bait.  Which someone inevitably will.

Leia Organa famously once said, “the more you tighten your grip, the more star systems will slip through your fingers.”  This is a terrific commentary on the current US government.  There is already no theoretical way that all the rules and regulations we have could ever be enforced.  Life would come to a grinding halt altogether.  So we are reduced to cheating, lying, and turning a blind eye, running our economic activity in the gray areas, inside the house, but in the walls and the crawl spaces, in order to get anything done at all.

I hate it.  And I think it’s ridiculous.  And I’m now thinking, after reading this book, that I might finally have to give in and run for office.


Everything I Want to Do Is Illegal

This is actually not quite true, but it’s true enough.  It’s also the title of a delightful and terrifying book by Joel Salatin that I cannot recommend highly enough.  I was told about it yesterday morning, got the book by noon, and finished it this morning at 7.  Compulsively readable.  Frustrating.  Scary, even.  But required reading, I think, for anyone that lives in the US.

As you know if you read this blog, I am an avid microfarmer.  We keep chickens for eggs, grow grapes, apples, peaches, apricots, cherries, walnuts, strawberries and raspberries, and have a very healthy and quite large vegetable garden.  We use no pesticides (normally).  We can and preserve everything we are able to.  We take a large interest in making our land produce the maximum it possibly can.

A good number of the things we do are illegal.  And we do not care.

No, that’s not correct.  We do care.  We care intensely.  We would love to live a fully legal life, but we find that we cannot.  When one cannot collect rainwater without running afoul of city and state ordinances – really, you ought to look this up – then it becomes impossible to live a responsible life without also becoming a criminal.  And this is where we are in almost every city in the US.

Salatin’s book points out his running gun battle with the local, state, and national authorities just to be able to do things on his farm in a way that makes sense.  In every case, what he does is better, cheaper, more responsible, and more contributory to a healthy life than what the government mandates, and still, the pinheads come and start flinging around “compliance”.  It reminds me powerfully of what happens in the mortgage industry when I show people a Good Faith Estimate that is federally mandated to be obscure and absolutely misleading.  It is wrong, just flat wrong.  I spend a great deal of time going through alternate, non-federally-approved documents to help my clients understand what is actually happening with their mortgages, because I care more about the client than about the Department of Housing and Urban Development.  One day it will probably get me in trouble, but I do it anyway, because I can’t live with myself if I don’t.

Get the book.