His hands are tied?

Reader question:

“Some say his hands are tied (politically)”. What does that mean?

My comments:

Politically explains that “his hands are tied” is a metaphor. They mean to say he couldn’t do what he promised to do due to political restrictions, not that his hands are actually tied behind his back, like a prisoner is sometimes thus tied up.

YourDictionary.com says this idiom – someone’s hands are tied – was first recorded in 1642, and so you see it’s been in use quite a while. Physically, if you are tied to a chair like a torture victim and have both hands tied up too, there’s practically nothing you can do. Therefore, as a metaphor, to say your hands are tied is a good excuse to say that you’re restrained by some kind of restrictions or other. In other words, you cannot behave the way you normally would.

Still in other words, you’re helpless.

In the above example, when they say that his hands are tied politically, they mean to say he couldn’t do what he wanted to do because there are always other priorities on the political agenda.

Or if he were a president, this might refer to the situation where he’s caught for going back on a campaign promise. For example, the president said on the campaign trail that, once elected, he would raise taxes for the rich. Once elected, however, he’s done nothing of the kind.

Why not? Because his hands are tied. Once elected, he realizes that there are too many political foes wrestle with and that it would be political suicide to pursue drastic tax rises because all the rich people are opposed to it.

And so why did he make that promise (to raise taxes for the rich in order to create a more equitable society) in the first place?

Do you have to ask?

Do I have to answer?

To get elected, in short. People who run for public office are often driven more by personal ambition, i.e. vanity than by their insatiable desire to do public good. Or should I perhaps put it the other way? People who run for public office are often driven more by their insatiable personal ambition, i.e. vanity than by their desire to do public good. At any rate, seasoned politicians know how difficult it is to get things done politically. After all, only a few people bother to enter the race for the highest public office nowadays – presumably all others know better. And after all, if it were easy for any newly elected president to carry out his campaign promise to, say, raise taxes for the rich, then, for starters, there would be no “Occupy Wall Street” movement today.

Anyways, all of this is easier said than done, isn’t it?

So therefore, let’s all shut up and resort to examining more examples of people whose hands are tied.

OK?

All right. Here they are:

1. “The price of cable TV has risen to the point where it’s simply not affordable to lots of lower-income homes. And right now there are an awful lot of lower-income homes,” Moffett said. “The evidence suggests that what we’re seeing is a poverty problem rather than a technology phenomenon.”

In addition, high unemployment in the United States means fewer new households, as children delay moving out of their parents’ houses, or people move in with roommates. That can reduce the number of households that pay for TV.

Cable companies would like to get low-income customers back with cheaper cable packages, but their hands are tied. Content providers such as the Walt Disney Co. and News Corp. won’t license their channels one by one, so subscribers have to take big, expensive channel packages, or very basic ones, which offer little beyond what’s available with an antenna.

Content providers now get billions of dollars in fees from cable service providers, and they want to make sure that whatever new industry model comes along, they’ll get paid. It’s not obvious yet that internet video will let them sustain their profit levels.

Six companies create the content that consumes 85 per cent of U.S. viewing hours, Moffett said. “Until they get on board, the train’s not leaving the station.”

- Internet TV challenges cable for viewers, Associated Press, November 5, 2010.

2. Should you be able to back out of a deal if the going gets tough?

The Toronto Star printed an interesting story recently about an angry condo buyer who wants out of her deal. Easily swayed by advertisements and affordable prices, Alice Batista, single mother of three, put an initial $50,000 down on a planned condo in downtown Toronto. The development, the chic, 5-star Trump International Hotel & Tower, was slated to be open on January 30, 2017. Currently, due to previously unforeseen delays, it’s two years behind schedule.

Within weeks, Batista had put $165,000 in deposits on two units that were valued at $2.4 million. On the day that she went to sign the legal documents she noticed something strange – the owner of one of the suites she was buying, a one-bedroom condo on the 45th floor, was not the developer, but the project’s own director of sales.

The Star obtained the legal documents, which showed that Adina Zak, the project’s sales director, had bought the condo preconstruction for $948,100 in 2006. She then flipped the condo and sold it to Batista 6 months later for $350,000 more. What makes this transaction so problematic is that the flip violates a key condition of the sales agreement imposed by developer Talon International Inc. – a condition that says that new buyers cannot flip unbuilt units. According to the Star, “the condition stipulates that units can’t be sold until completion.”

Val Levitan, chief executive of Talon, and Zak’s boss, has defended the sale. He claims that he had a “moral obligation” to allow it, further explaining, “sometimes you make an exception.”

Batista isn’t the only one who’s trying to get out of the deal. There are several others as well. Buyers have cited 2-year delays and financial difficulties as their main reasons for wanting to get out. For others, it was the realization that they’d made a bad investment decision.

One lucky buyer “won the right from Ontario’s appeal court to renege on his $709,000 condo/hotel suite and get back his $212,700 deposit,” says the Star reporter.

Batista hasn’t been so lucky. She had planned to sell her unit for profit before the deal closed, but has since found out that she is not allowed to do so. Before signing, Batista had a lawyer review both offers – something that most condo buyers don’t bother to do. Apparently, even the lawyer didn’t notice that there was no square footage listed on the agreement. Turns out that the 1,000 square foot unit she thought she’d bought was a mere 856 square feet.

For obvious reasons, Batista wants out, but her hands are tied. She did, after all, sign an agreement. Shnaider, Talon’s chairman, plans to hold her to her agreement, too. As he told the Star, “it’s up to investors to do their due diligence before signing binding legal documents.”

- Trouble brewing at Trump Towers development, RealEstate.YourMoney.ca, January 6, 2017.

3. “Buy now, pay later” has long been the unofficial mantra of American retailing. But this holiday season plenty of American shoppers have gone the other way—paying first and buying later. ’Tis the season of layaway. Not long ago, layaway looked like a relic, thanks to the widespread availability of credit cards. The dismal economy has changed all that. As early as the fall of 2008, with the recession in full swing, Kmart started a campaign pushing layaway, and, as shoppers embraced the idea, retailers across the country have made it a big part of their holiday sales drive. Walmart had killed its layaway program for everything but jewelry in 2006. But this year it acceded to reality and brought layaway back.

The return of layaway makes historical sense, since it first became widespread during the Great Depression, when the country, just as it is now, was dealing with the hangover from a colossal credit binge. During the nineteen-twenties, the vast majority of consumer durables, like refrigerators, washing machines, and furniture, had been purchased on installment. But credit dried up during the Depression. Similarly, one reason for layaway’s resurgent popularity is that credit, for many Americans, is much harder to come by these days. Credit-card companies have tightened their standards, dropped customers, and shrunk credit lines. But consumers aren’t using layaway just because they don’t have other options. They’re using it as a way to manage their money better. It’s a question not necessarily of spending less but of learning how to spend smarter.

The key to understanding the appeal of layaway is that most layaway programs require shoppers to make regular payments. Typically, you pick out the product you want, make a down payment, pay a service fee (typically five dollars), and then make regularly scheduled payments over a period of time until you’ve paid off the full price. There are no interest payments, and if you don’t make all the payments you get your money back, minus a cancellation fee. It’s the exact opposite of installment credit, where you get the product, and then pay for it.

From a strictly financial perspective, layaway looks foolish. As critics point out, if you were to put the purchase on a credit card instead and pay off the amount in full by the time that the layaway period would have elapsed, you could well pay less in interest than the five-dollar service fee that most stores charge. Alternatively, if you don’t have a credit card, you could put the money you’re going to spend on the product into a savings account or under your mattress. That would save you the service fee and eliminate the risk that you’ll have to pay a cancellation fee if you end up not making all the layaway payments. What this analysis leaves out, however, is the way people actually behave. Even people who can pay off their credit cards often don’t, since the whole structure of the credit-card industry is designed to make you irresponsible—as long as you make a small monthly payment, the bank will carry you. In fact, that’s what the bank wants: the profits in the credit-card business come from “revolvers,” people who pay a small amount each month and rack up big interest charges—far more than the five bucks they’d have spent on a layaway service fee. Layaway, by contrast, fosters virtue: it forces you to save, because if you don’t make the payment you don’t get the product. It’s what psychologists call a “commitment device,” a way to get yourself to do something that you want to do but know you’ll have a hard time doing if left purely to your own devices.

Layaway is also appealing because it helps people target their savings. In economics textbooks, money is money, which makes it seem as if you could get the same results by making regular deposits into a savings account or even into a jar labelled “Christmas Money.” But in the real world most of us rely to some extent on what the economist Richard Thaler calls “mental accounting”—we split our money into different mental accounts, and treat it differently depending on what account it’s in. Money that’s in the bank is more likely to be spent on other things, while layaway insures that it’ll be spent on one thing. As Sendhil Mullainathan and Eldar Shafir show in a fascinating essay on the savings habits of low-income consumers, layaway is a popular way of making big purchases (like washing machines), because, if you don’t have a lot of money, the presence of a sizable sum in the house or even in the bank means that you’ll be constantly tempted to dip into it. The economists Barton Lipman and Wolfgang Pesendorfer argue convincingly that people have a profound distaste for temptation, and are willing to go to great lengths to avoid it. That’s precisely what layaway does.

It’s common to think of American consumers as reckless dupes, myopically focussed on the present and easily led astray by their desires, with the buying binge of the years leading up to the crash proffered as Exhibit A. But consumer choices don’t occur in a vacuum; they’re always shaped by social and economic norms. Americans have been big spenders for decades now, but as Sheldon Garon observes in his new history of consumption, “Beyond Our Means,” that’s in large part because our economic system is set up to encourage overspending. And what the revival of layaway makes clear is that, while many shoppers are prone to spend what they don’t have on what they shouldn’t buy, they can also be sophisticated about their weakness, and savvy about finding ways to control it. They know that sometimes you have to have your hands tied in order to grab what you want.

- Christmas Shopping, Credit Cards, and Layaway, NewYorker.com, January 2, 2017.

About the author:

Zhang Xin is Trainer at chinadaily.com.cn. He has been with China Daily since 1988, when he graduated from Beijing Foreign Studies University. Write him at: zhangxin@chinadaily.com.cn, or raise a question for potential use in a future column.