South Jersey Lessons in Economics

On A Foggy Morning in Cape May

For those not familiar with the odd experiment known as New Jersey, here are a few interesting notes to give you context for the article that will follow:

New Jersey is a state that is hell-bent on control. Now if you have ever hit eight red lights in a two-mile stretch of highway in Maryland (as I have), you may wish you were in New Jersey. The traffic lights here have been controlled, coordinated, and adaptive for decades.

This includes giant boxes full of wires and circuits and gigantic acronyms like — Meadowlands Adaptive Signal System for Traffic Reduction (MASSTR) to run them. It also seems to stimulate a lot of interest in the population, as bills attempting to lengthen and shorten light timing are a regular affair in the legislature. This may or may not explain some recent budget issues, but we will move on for now.

New Jersey is also one of just two states where pumping your own gas is illegal (Oregon being the other). It seems gas is quite dangerous as the rampaging number of fires and deaths in other states clearly attests… errr, wait. Well, it is how they do it here! In Jersey, if they say you can’t pump your own gas — just go with it. Although, if gas is so dangerous — how do they justify giving the role to minimum wage earning… oh, never mind. New Jersey is a place where control is taken.

So back to foggy Cape May, where the sun is trying hard…

I lived on the outskirts of South Jersey for decades, just over the Delaware. They have always had their own ways here. Although, we had our own circle and jug handles, too. I had always viewed the Jersey economy as a leader in the adoption of new practices and technology. Things like the Credit Card and ATM machine, although first used in NYC, were quick to catch on here in the southern shadow.

So I was a bit surprised to return after a decade of absence to find a burgeoning All-Cash economy. In fairness, I also forgot they pump the gas for you. This is not a minor thing down here. It is pervasive, almost cult-like.

While I have not done a quantitative study, I would estimate that half of the business and restaurants here do not accept credit card. But this just gets stranger…

ok — this may not be an 80’s model but it is archaic

More than half of the businesses that do not accept credit cards and a few that do, have these odd monuments to 80’s banking. Now mind you, shore shops are tiny places and these things have prominent placement.

Now most of us grew up with conspicuous ATMs, MAC machines for some. But when my 12 year old asked, “Daddy, what is that thing” I realized that these things are approaching pay phone status in the greater ecosystem, banks and convenience stores aside.

These aren’t your local Wawa (that is an East Coast thing) or bank’s ATMs. They are antiquated throw backs to the 80’s whose optimized function is a balance check — not a withdrawal. Their average withdrawal fee is roughly $2.50 — again not a quantitative study. They also have about a 50% unassisted success rate, that rises to 95% when one of the employees arrives to helpfully provide the right series of 10–12 buttons to press (this is post swipe and pin).

None Of This Speaks To Economic Efficiency

This article will NOT explain why this odd enclave of Cash Only businesses exist. I do not know. If you do, please comment below. I do know a few things.

1. The Cash Only signs are neither large nor prominent (they are colorful). This tells me that when they are — business goes elsewhere.
2. The owners will note how busy they are, but this is a self-fulfilling prophesy. The average wait time is at least 50% longer and that doesn’t even take into account the trip back to the ATM.
3. The ATM fee is much higher than adding the 3% fee to the bill. I assume their is a kick-back to the store owners from the ATM provider… but I can’t be sure.
4. People often have to change their order or put items back once they search the contents of their wallet.
5. Half of one employees job is either providing guidance on using, or finding the ATM. Someone else is engaged in finding change on regular basis.
6. It is not an integration issue, clerks routinely put your purchase on hold while you go to the ATM. If your system can do that, it can just as easily accept credit cards.
7. If you are cash only — I don’t tip. From what I saw, other people don’t tip period or as well. So I don’t think this is a useful play on increased tipping.
8. A hotdog here is $8.50. It routinely cost $20 per family member to eat. Don’t tell me that cash is keeping the cost down.
9. Finally, most of the tourists I asked assume one of two things — this is for tax evasion or money laundering… in other words, part of the branding is “Active Felon”.

I won’t speculate… no, I can’t help it. In the 80’s, plenty of banking activities were on the shady side. I can’t help but fixate on the fact that EVERY ATM is that same damn model. Could this be a mechanism for high-tech money laundering? Just asking?

Back to the lesson … as the sun finally wins.

This is just poor economics. I don’t care what the justification is — it can’t overcome such an array of opportunity costs. But then, fuhgeddaboudit! Wait is that a South Jersey thing… it doesn’t matter. Neither does all this broken economics.

Economics is a study of how most things work best. It offers only an idea of why things may or may not work period.

The Cash Only economy is thriving here. Could a more efficient economy thrive more? I believe so. Will it affect my likelihood of returning? Absolutely, but only among several other factors. And that is economics in a nutshell, single factors color decision-making and limit or drive success, but they are rarely capable of much more. It is one type of feedback in a sea of inputs and flows.

Honestly, that is everything in a nutshell. It is why control economies and governments struggle and also why market economies occasionally flummox us. Great systems allow flaws to exist without critically compromising the system as a whole. Sub-optimal for sure, but often effective regardless. Just remember effective is not efficient. For those who want a vice versa, that is another article entirely. Thanks for reading!

For the record — while Cash Only — Hot Dog Tommy’s is relatively cheap and tasty — the $8.50 is another place nearby

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