The Beginning of the End for PayPal

MSNBC reports that less than a week after its IPO, PayPal has been hit with a class action lawsuit filed on behalf of people who claim that the company wrongfully denied them access to their money. PayPal is an interesting experiment, but in the long term I think it is doomed.

Quite a few people seem to have had bad experiences with PayPal, but most people seem to ignore the fact that PayPal’s behavior is also one of the reasons it can offer such relatively good terms — i.e., it keeps its costs per transaction and the amount of fraud in its system extremely low. The problem is that in order to accomplish this, PayPal resorts to a whole host of customer unfriendly policies.

In that respect, PayPal is a lot like a small commuter air company. It’s not that PayPal couldn’t be nicer or have more reasonable policies, but rather that the second it does it will no longer have much of a competitive advantage in its market. The lawsuit against PayPal concedes this point, arguing that,

As a result of its inability to set up an adequate and effective anti-fraud mechanism and its attempt to compensate for such inability, PayPal adopts an aggressive and grossly over-broad anti-fraud policy that persistently causes erroneous and wrongful restrictions of access to be imposed on user accounts — causing economic damage and financial loss to a significant number of innocent PayPal account holders.

Between lawsuits and attempts by state and perhaps even federal officials to regulate PayPal as a bank, PayPal will have to raise its fees and institute more selective criteria for the accounts it takes on — i.e., it will have to become more like a traditional bank. And at that point, traditional banks who have been busy working on their own competitors to PayPal will likely eat it for lunch.

Source:

PayPal sued over frozen funds. Lisa Napoli, MSNBC, February 21, 2002.

Lawrence Lessig’s Brilliant Idea

He’s still wrong about Microsoft, but Lawrence Lessig has a brilliant idea with his Creative Commons initiative (there’s not much at the web site now, but supposedly it will launch in a few months).

The idea is simple — offer intellectual property licenses that are a) relatively airtight and b) allow people to customize the level of control they want to maintain over their creations. Think of it as a DIY copyright. As a profile of Lessig summarized Creative Commons,

In a boon to the arts and the software industry, Creative Commons will make available flexible, customizable intellectual-property licenses that artists, writers, programmers and others can obtain free of charge to legally define what constitutes acceptable uses of their work. The new forms of licenses will provide an alternative to traditional copyrights by establishing a useful middle ground between full copyright control and the unprotected public domain.

That’s something I’d use immediately. I have a pretty liberal reproduction policy for people who want to reprint things I’ve written, but I’d still like to have a more formal license to protect my rights.

The Role of the Barcode in Human Progress

The BBC has fascinating account of the role of the humble barcode in human progress. The barcode made its debut 25 years ago in Great Britain — just a year after the first bar code appeared in the United States.

The barcode is ubiquitous today and, as the BBC documents, has revolutionized retail stores. For example, the BBC interviews a consultant to supermarket chains who notes that in the early 1970s the average store only stocked a couple thousand different product lines. Today the average supermarket in Great Britain stocks 25,000 different product lines. The efficiencies gained by using bar codes for pricing changes and inventory made it possible to dramatically expand the goods that stores could profitably sell.

It is clear from the article that, at least in Great Britain, they also led to the much-demonized consolidation of supermarkets and the emergence of enormous chain stores. The improvements in supply chain management that barcodes allowed also increased the economies of scale and allowed giant supermarkets to pass on the savings to their customers.

Barcodes are also used in other businesses, including to track raw materials and products in factory settings. The BBC notes that experiments are under way to use radio tags that have pricing and other information embedded so that a box of corn flakes can ring itself up at the register automatically. There are also experiments under way to use small barcodes to tag produce and similar goods.

Ah, the sweet smell of progress.

Source:

In praise of the bar code. Mark Ward, BBC News, February 16, 2002.

The European Union Enacts Toothless Sanctions Against Zimbabwe

The European Union finally took official action against Zimbabwe‘s Robert Mugabe after Mugabe ejected a Swedish diplomat who was heading a mission to observe Zimbabwe’s upcoming election. The EU’s sanctions, however, will have no real effect on Mugabe.

Mugabe is now banned from traveling to European Union nations, any assets he has in the EU will be frozen, and Zimbabwe is barred from buying arms from the EU. As The BBC’s Paul Reynolds summed up the likely reaction by Mugabe,

The European Union has therefore played its card. But it is not a particularly strong card, since Mr. Mugabe is unlikely to be much moved by not being able to travel to Europe.

These sort of sanctions might have been a little more helpful 18-24 months ago, but the situation in Zimbabwe is way beyond being influenced but such tepid sanctions. Or as Reynolds eloquently put it,

The European Union has huffed and now it has puffed.

But it is unlikely to bring Robert Mugabe’s house down.

Source:

Analysis: EU sanctions lack teeth. Paul Reynolds, The BBC, February 18, 2002.

MMR Vaccination Has Been a Worldwide Success

As I mentioned earlier this week, Great Britain is experiencing an outbreak of measles because of declining vaccination rates. Some parents fear having their children vaccinated using the measles, mumps, and rubella (MMR) vaccine because of unsubstantiated claims that it is linked to autism. Worldwide, however, the MMR vaccine has been extremely successful.

The BBC reports that since it was introduced in the United States in 1975, over 500 million doses of the MMR vaccine have been administered around the world — equivalent to about 10 percent of the world’s population receiving the vaccine.

A major success story with the MMR vaccine has been Finland where the three diseases have been almost wiped out by an aggressive vaccination program that began in earnest in the 1990s.

One of the demands of British parents who fear the MMR vaccine is that their children be offered separate vaccinations for measles, mumps and rubella rather than the combined vaccine. That is precisely how things are handled in Japan where an MMR vaccine was withdrawn in 1993 after a high rate of post-vaccination meningitis cases. But according to the BBC, after the switch from a single vaccination to multiple vaccinations, the disease incidence rate rose markedly and there were 79 deaths from measles in Japan from 1992 to 1997.

One of the problems with multiple vaccinations is that it is far more expensive and, of course, inconvenient, reducing the number of children who will receive all three.

Source:

MMR’s global success. The BBC, February 6, 2002.

Upcoming Abortion/Breast Cancer Trial in North Carolina

Women’s eNews recently reported about an upcoming trial in Fargo, North Dakota, in which a judge will be asked to weight the claims and counterclaims about whether or not abortion contributes to increased risk of breast cancer. Not only are anti-abortion advocates relying on junk science, but they’re own claims are deceptive. Rather than urge women not to have abortions, their advice would be more accurate if they said: have a child before you are 22 or face increased risk of breast cancer. Lets look at the epidemiological evidence before moving on to the biology of abortion, pregnancy and breast cancer.

Anti-abortion advocates always cite the same weak epidemiological data. There are quite a few studies showing that women who have induced abortions have increases risk of breast cancer anywhere from 20 to 30 percent higher than women who do not have induced abortions. The proper reaction to such studies is — big deal.

Those are very low increased risk levels for epidemiological studies — they are so low that it is difficult for even well-designed studies to accurately measure such low levels of risk.

This problem is compounded by the fact that most of these studies suffer from a number of flaws. The most obvious of these, which Womens’ eNews does an excellent job of explaining, is recall bias. Women’s who have breast cancer are far more likely to tell researchers that they had an abortion than are women who do not have breast cancer. A Swedish study, for example, found that women with breast cancer were 50 percent more likely to report having had an abortion than were women without breast cancer. Women’s eNews quotes Lancet Oncology editorial as saying that, “healthy control women have been more reluctant to report on a controversial, emotionally charged subject such as induced abortion, than have patients with breast cancer.”

Of course, a major study involving 1.5 million Danish women that relied on medical records rather than women’s recall. The results? No increased risk of breast cancer at all for women who had abortions compared to women who did not.

The claim that abortion increases risk of breast cancer is nonsense. Sort of. An interesting possibility is that some women may in fact increase their risk of breast cancer if they do something that is increasingly common in the Western world — delay the age at which they have their first child.

A recent study of 100,000 French women, for example, found that women who gave birth to their first child in their 30s were 63 percent more likely to develop breast cancer compared to women who gave birth to their first child by the age of 22. The study also found that women who started having periods the earliest also had a higher risk of breast cancer compared to those who began having periods the latest.

Why should the age at which women have their first child or begin menstruating have anything to do with breast cancer? Dr. Steven Austad offers an excellent summary of the link in his book, Why We Age,

Simply put, estrogen and progesterone increase the risk of breast cancer because they cause the cells lining the milk ducts in the breast to divide prolifically during the latter part of the menstrual cycle, when the body is preparing for pregnancy. When no pregnancy occurs, these newly formed cells die, returning the breast to its original condition. During the next cycle, there is another round of cell division and cell death if no pregnancy occurs.

And of course, the more this cycle occurs, the higher the risk of a mutation that might later develop into breast cancer. But once a woman gives birth, this cycle stops — the cells become permanently differentiated and the monthly division/death process comes to a halt.

So women who want to really reduce their risk of breast cancer should have a child as soon as possible after menstruating. Or if you want to do even better than that, go for a hysterectomy — studies have found that young women who have been forced to have hysterectomies for one reason or another have much lower rates of cancer than do healthy women. This applies to men as well — studies of men who have been sterilized find that they have far lower rates of cancer than men who have not.

If there is any increased risk of breast cancer attendant with abortion, it almost certainly is due to the women using abortion to delay the age at which they first give birth. Women who are on birth control or celibate will also experience the same risk, though this writer has to wonder if abortion activists are prepared to warn all childless women that they are endangering their lives. Would they require the Roman Catholic Church to inform childless women who want to become nuns that they are imperiling their health? Somehow I suspect now.

Sources:

Cancer risks for older mothers. The BBC, February 13, 2002.

Judge to Rule on Abortion, Breast Cancer Link. Margaret A. Woodbury, Women’s eNews, February 17, 2002.

Why we age. Steven N. Austad, 1997.