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California: Recap

Updated: Jul 22, 2018

Observations Specific to California:

1. Many Californians refer to Pacific Time as “California Time.” Borrowing a little state hubris from Texas, California?

2. Ever want to simulate an appearance on a Hollywood movie set? Drive through any of the US Border Patrol stops in California. There are two cameras for every angle possible. Don’t forget to smile because the cameras are rolling—all 25 of them.

3. During my ride through the California desert on a windy afternoon, I wondered how CA DOT kept the roads free of sand. After all, it seemed obvious that wind gusts blew sand all over the road. About that time, a snowplow passed me. “What is a snow plow doing here?” I thought. Then the snowplow’s driver lowered the blade and began to plow sand from the road’s shoulder back into the desert. And that’s how I observed my first sandplow.

4. California state highways (not interstates) are surprisingly bad. Like really bad. Potholes and cracks dominate these roads so much that California highways rival Louisiana in being the worst state highway system out of the eight states through which I rode. Texas chipseal was bad, but at least chipseal concedes mediocre road conditions. Conversely, California appeared to strive for quality road surfaces, as the roads appeared to enjoy a smooth surface back in the day. Gauging from the extent of the road fissures, “back in the day” was no less than 30 years ago. Time to upgrade your roads, California. My joints are still feeling the effects from riding on what seemed to be a jackhammer.

5. Expect to pay more for gasoline in California. Good thing my two horsepower engine didn’t require gasoline.

6. Californians refer to Interstate 8 and Interstate 10 as “the Eight” and “the Ten.”

7. Southern California maintains a disproportionately high rate of homeless folks, mainly due to its warm climate. One local told me that the City of San Diego once paid for the train tickets of all homeless people who were willing to travel to Florida for the summer. I suppose the City’s motto was “if you can’t force ‘em to leave, pay ‘em to leave.”

8. In a conversation with a San Diego cycling enthusiast, he lamented that many of the recreational cycling races experience prolific drug use, including blood doping. According to this guy, drug use in the Southern California cycling community is so rampant that the top place finishers in the local races are routinely examined for drug use.

9. According to the same cycling enthusiast, many of the wealthy drug users in the cycling community make the short trek into Mexico in order to acquire EPO, a chemical which increases the blood’s ability to transfer oxygen by artificially boosting the body’s red blood cell count. Talk about people desperate for a conversation piece at a cocktail party.

10. Similar to Austin, San Diego is experiencing the aches of rapid growth, including increased traffic congestion, soaring prices for goods and services, and a shortage of housing options. But there’s little doubt why San Diego is so desirable: it’s not everyday you find a place with 80 degree weather in the middle of December.

11. Speaking of San Diego, the warm and temperate climate draws outdoor enthusiasts from all over the country. In light of its location, one San Diego local told me that by living in San Diego, it’s possible to swim in the Pacific in the morning, cruise down the ski slopes of the local mountains in the afternoon, and ride a dune buggy through the desert in the evening. In other words, three radically different climates are accessible from San Diego all within a day’s drive.

12. Because of the variety of outdoor options, the same San Diego local indicated that there is a niche activity for everyone. On one hand, that is great for folks with eclectic interests. But, as with everything, there is a tradeoff. In this case, the tradeoff appears to be something a friend who had recently moved from San Diego lamented: San Diego lacks a universal common bond or interest. My friend explained that the abundance of local interests prevent the City from unifying around any particular thing—something which other cities enjoy—like the Redskins in DC, for example.

13. In the southern California desert, I experienced something that was financially and economically brilliant—something unlike anything I’ve experienced before: stores levying a credit card fee at checkout. Currently, most businesses against the acceptance of credit cards will provide an ATM to customers, effectively levying an indirect credit card fee on customers. But the business practices of these California desert stores cut the ATM out of the purchase process while importantly preventing credit card fees from compressing profit margins. In other words, the California desert stores (a) do not have the headaches associated with maintaining an ATM on the property, and, (b) can still accommodate cash-less customers all without losing money to a credit card transaction. Brilliant.

14. Here’s an example of this credit card business practice in action: I once tried to buy $8.00 worth of Clif bars (you can never eat enough) from a convenience store in Palo Verde. In response, the female cashier pointed to a sign taped to the countertop: WE CHARGE A $3.00 CONVENIENCE FEE FOR ALL CREDIT CARD PURCHASES—MINIMUM $10.00 PURCHASE.

15. Look, I know what you’re thinking: Kyle, charging a credit card convenience fee, even if it’s at checkout, is not all that revolutionary. Well, I beg to differ, which leads me to my next point…

16. Unless a store charges me a credit card convenience fee, all cash users and inferior credit card users subsidize my credit card purchases, incentivizing me to always use a credit card for purchases. “Kyle, I don’t subsidize nothing in your budget,” you say. Oh yes you do. Let me explain. First, credit card users, including me, receive benefits from each credit card transaction. Second, credit card companies charge stores a transaction fee on each purchase—usually a flat fee (e.g. $.20) plus a certain percentage (e.g. 3%). Traditionally, this cost is absorbed by either one of two parties: either the store itself or the store passes the fee along to the customer by way of higher product prices. If the store eats the transaction fee and product prices remain stable, the store loses and I win due (i.e. the store’s profit margin shrinks and I receive credit card rewards). Notably, when the store eats the transaction fee, all credit card users win because any credit card reward is received at no cost. But if the store passes the transaction fee along to the customer by way of higher product prices, then the analysis becomes slightly more complex. Specifically, when the store passes the transaction fee to the customer, credit card customers are bifurcated into a class of winners and losers. For example, if a store inflates its product prices by 3% (i.e. passing a 3% credit card transaction fee along to the customer), then all credit card users who receive credit card benefits at less than 3% lose (e.g. 1% credit card user benefits minus 3% increase in product price = -2% loss for the credit card user). However, if a store inflates its product prices by 3% (i.e. passing a 3% credit card transaction fee along to the customer), then all credit card users who receive credit card benefits at greater than 3% win (e.g. 5% credit card user benefits minus 3% increase in product price = 2% benefit for the credit card user). The consequences of this paradigm are twofold. First, because cash users can at best not lose (i.e. break even under the first scenario but always lose under the second scenario), the incentive is to always use a credit. Second, because the net benefits of a credit card’s usage is contingent on the particular credit card reward system, a sort of credit card arms race is created, driving up rewards for credit card users while simultaneously exacting higher transaction fees for all businesses. However, this entire analysis is moot if a business levies a credit card usage fee at checkout, much like California desert convenience stores. The big takeaway: the convenience stores of the California desert have radically shifted the incentives of credit card usage, thereby curbing credit card usage. Look, there’s no reason why I should earn free airfare miles off the backs of cash users and credit card users using an inferior credit card.

General Observations:

1. I know I said this before but it warrants repeating: warm showers are the best. To all the ancient Romans: you knew what you were doing by investing heavily in bathhouses.

2. If you find yourself in a rather impoverished area but observe a nice, new car, that car is probably a Kia.

3. Besides cyclists, who are limited in mobility, what type of folks stay at dumpy motels? I stayed at several dumpy motels which were located sometimes as close as a mere 10 miles outside of a major city. Surprisingly, these motels often enjoyed many guests. My question: why don’t these folks just drive an extra 10 miles into the city (or refrain from driving 10 miles outside of the city) in order to stay at a nicer place. And no, the answer is not price. A trend I noticed is that the more isolated a dumpy motel, the more expensive the motel. I suppose the lack of supply drives up the price. Bottom line: I don’t understand how dumpy motels stay in business. Someone please explain this business model to me.

4. Speaking of business models, riding through the southern USA exposed me to the myriad of tractor-trailer trucks motoring across the country. This may get nerdy, but bear with me here. What is the most expensive asset used in the tractor-trailer industry? No, it’s not the trucks or the drivers—it’s the roadway system, particularly the interstate. Because trucking companies are not required to build their own transportation infrastructure, the economy maintains an artificially high supply of tractor-trailer companies. After all, if trucking companies were responsible for financing certain sections of the interstate system, such an exorbitant investment would prohibit many trucking companies from entering the tractor-trailer industry in the first place. Now compare the free (i.e. no direct investment required) transportation infrastructure of the tractor-trailer industry to the capital-intensive transportation network of the railroad industry (i.e. direct investment required). Dissimilar to the tractor-trailer industry, various private railroad companies built many of America’s railroad lines, including the First Transcontinental Railroad. (Note: I realize that the US government occasionally subsidized the construction of the American railways; however, this subsidization paled in comparison to the US government almost singlehandedly financing the construction of the US interstate system. For the sake of simplicity, I’ll assume the US government has largely left the free market dictate railroad construction). Obviously, without railways there is no railroad. But without mountains of capital, there are no railways. The US government’s policy to construct and expand its interstate highway system while largely leaving private industry to develop its own railways has noticeably impacted the manner in which people and goods are transported throughout the country. As a result, America maintains an artificially high number of tractor-trailer companies and an artificially low number of railways.

5. In riding through the Southern Tier of America I encountered by fair share of US Air force bases. It’s safe to say that military fighter jets are super loud. Even though several of these jets flew over me at approximately 10,000 feet, I still wanted earplugs

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