The Future of Textbooks is Colored Orange

This has been sitting in draft since May 25^th 2009.  In the interim the textbook rental market has taken off.  The references to the movie theaters, airlines, and credit card companies are still relevant as business are still nickel and dime-ing, "breaking out services", or scrambling to make up forlost revenue.

On the very first day of Stats the instructor asked who had purchased the book, where they got it, and how much they paid. One student said she rented her book on line from Chegg.com for ~$40. Others had paid over $150.

I took a look, rented the text on Wednesday, paid for expedited shipping, and, lo and behold, an orange box arrived via UPS on Friday. The book looks pristine. Amazing!

Chegg.com and the recent Credit Card Bill Of Rights legislation got me thinking about capitalism, movie theaters, and credit cards. It seems that credit card companies cannot make money on people like myself who pay their bills on time in the same way that supermarkets can't make a profit from me because I've never left the impoverished graduate student mentality behind.

Credit card services provide an exceptionally useful service by minimizing the need to use cash for transactions and speeding commerce. If I had to pay for the textbook by check I would not have gotten the textbook anywhere as quickly as the check winged it's way to the vendor and being routed through the banking system. Add on the delay of a weekend and I would be half way through a summer course without the book unless I forked over considerably more money.

If the credit card companies are making money, they're not making money on me.  Someone else is taking up my slack. Thank you, but is it fair? It is analogous to the movie theater owners who can't make money on what is ostensibly their business: showing movies. I'm told that their profits come from the (overpriced) concessions.

(It was not always thus. Back when I was an undergraduate, someone obtained a large brown paper sack of popcorn. I was told that the sack was what theater owners poured into their popcorn machines. The popcorn machines in theaters only warmed the popcorn.   The machines didn't actually pop the popcorn. (It was one of many myths shattered in college.) I remember bringing the sack into the theater with about half a dozen others. The kid with the sack sat in the middle seat in the second of 3 rows with the sack extended lengthwise so it overlapped the seat of the guys next to him. We punched a hole in the top side of the bag at either end and in the middle so all of us could reach in for popcorn. Nowadays, something like that could only happen at free films.)

In this regard what is fair? Am I taking unfair advantage of the poor credit card companies, enjoying the good life financed by the wretched of the earth who can't manage their credit or driven in desperation to borrow at exorbitant rates? (Will Jesus not drive these money lenders from the temple?)  Could be.  On the other hand, by taking advantage of the situation I'm revealing flaws in the business plans of the credit card companies thus strengthening the capitalism's Darwinian imperative. (The Cato Institute is invited to donate to my PayPal account.) Or helping to destabilize evil Capitalism. (Surviving members of the International Communist Conspiracy are invited to donate to my PayPal account.) Or playing into the hands of the Capitalist masters so they can appeal to their government lackeys to use legislation to save them from the proletarian onslaught when their profits tank. (Whoo. the 60's are coming back with a rush!)

Is there a sensible way of viewing the situation?  I always considered credit card purchases as a short term, no interest loan. In my days of impoverishment (make a note: not a bad title) I would keep a mental tally of what I owed. I was fortunate enough that I didn't need to cover a large unexpected medical bill. Are the frequent flier miles programs essential for their business or a marketing idea come back to bite airlines? Does the need to offer inducements or grow their market by extending credit to those who can't repay the total represent a flawed business model or have credit card companies found themselves caught short like Long Term Capital Management: strategies which worked well during "normal" economic times fail disastrously in times of upheaval.