The Invisible Forces comprise a system that influences and is influenced by human behavior.  This system is made up of the invisible hand (economic forces), the invisible foot (legal and political forces), and the invisible handshake (social and historical forces).  The invisible forces stem from David Colander, Microeconomics, 2nd ed. (1995), pp. 17-19. The Invisible Forces Weekly is the work of Bruce Larson.  Its purpose is to provide a broader view of economics by considering human behavior, as reported online, in light of the invisible forces.

347 (12 December 2018)


Welcome to week 347! The articles below caught my attention this week.  What areintended to be relatively objective “briefs” are preceded by dashes (——–),whereas additional material or relatively subjective comments are precededby asterisks (********).  Article titles preceded by [SR] require a subscription.

(3 December 2018):Sign Here to Lose Everything: Part 4Bloomberg.com

********This article, “Business-Loan Kingpin,” is the fourth of four articles on the cash-advance business that preys on small businesses nationwide but processes the bulk of its cases in the state of New York.  This installment focuses on Jonathan Braun, who is awaiting sentencing on a marijuana trafficking charge and works in the cash advance business.  Business rivals of his say “he brags that he makes millions of dollars a month.”  All this testifies, once more, to the profitability of a business model based upon confessions of judgment.  As the article notes: “Collecting a debt from a deadbeat borrower used to be time-consuming.”  But confessions of judgment “speed up the process.”  By signing, those received the cash advance “agree to lose if there’s a dispute with the lender. Armed with this paper, lenders can go to court, secure judgments against borrowers without telling them and then seize their assets.”  Since 2012, “Cash-advance firms have obtained more than 25,000 judgments in New York courts.”  Richmond Capital Group LLC, for whom Braun works, “has been awarded 252 judgments by confession against small-business borrowers” since 2015.  From a map accompanying the article, it looks like about eight of those judgments were awarded for North Carolina businesses.

(6 December 2018):What Monks Can Teach us about Managing our Work LivesJSTOR Daily

——–Theology scholar Jonathan Malesic notes, “finding meaning through work is a concept that has been closely associated with Christianity.  But Christian theology may also offer reasons, and methods, to make work less central to our lives.”  Typically, attitudes toward work have centered on vocation and co-creation, but for many 21st-centry work is “precarious, lacking the identity-defining stability associated with a calling.  Modern work is also abstract . . . To make sense of today’s working life, Malesic suggests drawing from . . . the asceticism of Benedictine monks.”  For them “work is primarily penitential.  Labor is necessary to keep the basic functions of a monastery running, but its more central spiritual function is to mortify bad impulses and promote patience and devotion.  In contrast to the industrial capitalist model of work, this perspective makes the subject experience of work, rather than its products, central.”

********This post connects nicely with the recent book The Job, by Ellen Ruppel Shell, which was noted in TIF Weekly 340 (24 October 2018).  Shell referred to work in relation to job, career, and calling, but Malesic seems to be adding something a little different by noting the Benedictine notion that “work is primarily penitential.”  This is a hard idea for me to nail down, but it seems to be aimed at preventing monastics from placing “labor ahead of prayer.”  To learn more, read Malesic’s article, which can be downloaded near the end of the post.

(6 December 2018):The U.S. Just Became a Net Oil Exporter for the First Time in 75 YearsBloomberg.com

——–“America turned into a net oil exporter last week, breaking almost 75 years of continued dependence on foreign oil . . . The shift to net exports is the dramatic result of an unprecedented boom in American oil production, with thousands of wells pumping from the Permian region of Texas and New Mexico to the Bakken in North Dakota to the Marcellus in Pennsylvania.”  The shale revolution has turned the “U.S. into the world’s largest petroleum producer, surpassing Russian and Saudi Arabia.  The power of OPEC has been diminished, undercutting one of the major geopolitical forces of the last half century.”

********Although this might be hailed as “energy independence” by some, “American refiners continue to buy millions of barrels each day of overseas crude and fuel.  The U.S. imports more than 7 million barrels a day of crude from all over the globe to help feed its refineries, which consume more than 17 million barrels each day.”  The growth in U.S. exports of crude oil has required extensive re-tooling of “export infrastructure along the Gulf Coast.”

(8 December 2018): [SR]Bernie Madoff’s Legacy: Whistleblower Inc.” The Wall Street Journal

——–“Ten years ago, Bernard Madoff’s multibillion-dollar Ponzi scheme, the biggest fraud in U.S. history, shocked the financial world.  It soon emerged that a forensic accountant, Harry Markopolos, had been alerting regulators for years o Mr. Madoff’s fraud, but no one had listened.  At Mr. Markopolos’s urging, the Securities and Exchange Commission created a cash-for-tips program, designed to encourage reports of financial wrongdoing and prevent the lapses in oversight that gave Mr. Madoff free rein.  Today, an entire industry is devoted to surfacing tips from company insiders and expert analysts who scrutinize corporate filings.”  At the center of the industry “stands the Securities and Exchange Commission’s Office of the Whistleblower, which has paid more than $326 million to 59 whistleblowers in seven years.  The potential for sharing in such a huge payday has attracted plaintiffs’ lawyers, forensic accountants and former FBI agents to this government-sanctioned fraud hunt.  Critics say the deluge of those seeking rewards is now overwhelming the system.  More than 5,200 tips have been filed this year, compared to 3,000 in 2012.”  The deluge of filings has “slowed the pace of payments, potentially discouraging future tipsters.”

********You can learn more about the SEC’s Office of the Whistleblower, and access its 2018 Annual Report to Congress, here.  The lengthening of the payout period for fraud rewards has led Mr. Markopolos to consider changing how he operates.  “Now, he’s looking for accounting frauds involving publicly-traded companies, hoping to profit working with hedge funds betting against share of the companies.  Working with short sellers enables Mr. Markopolos to ‘get paid the same year in which I do the work,’ he said.”  So there are at least two ways to derive financial benefit from detecting financial fraud.   

********A related article is “Madoff’s Victims Are Close to Getting Their $19 Billion BackBloomberg.com.  As the article notes, Madoff ran the world’s biggest Ponzi scheme, and although the total amount on customer accounts was $65 billion, a little more than $45 billion of it included fake profits.  Of that $65 billion, $19 billion have been approved for lost principal and $13.3 billion of those claims have been recovered, a 70% recovery rate, which is “extraordinary and atypical” according to Los Angeles bankruptcy lawyer Kathy Bazoian Phelps.  Recoveries for Ponzi schemes typical range from 5 to 30 percent.  The trustee in the case, New York lawyer Irving Picard, “has focused on a simple formula to recover principal cash for victims: Suing customers who withdrew more money than they put in.  The strategy sparked controversy but was ultimately blessed by the courts.”

(12 December 2018):For Big Tobacco and Brewers, Grass Is GreenerThe New York Times

——–“Proponents of legal marijuana spent decades fighting a slow battle for mainstream acceptance.  Now, with recreational use legal in Canada and many states in the United States, big business is suddenly swooping in.”  Bethany Gomez, the director of research at Brightfield Group, which conducts research on the cannabis market, comments: “There’s always been the expectation that big business was going to come in; we’ve been hearing rumors about ‘Marlboro Greens’ for decades . . . Now we’re past the point of no return.”

********As the article notes, “The arrival of large multinational corporations portends sweeping changes for an industry that until recently operated in the shadows.  As billions of dollars pour into product development, marketing and manufacturing, these companies will be looking to create big brands with the market share to match.”  Still, it is thought that will be a place for smaller producers.  F. Aaron Smith, the executive director of the National Cannabis Industry Association, suggests that “Ultimately cannabis will look a lot like beer . . . You have the large firms that dominate the market, but there’s still a thriving marketplace for craft beer.”  Craft pot, anyone?

********The overwhelming passage by the U.S. Senate of the Farm Bill, which includes provisions for hemp legalization, moves the U.S. closer to broader legalization of marijuana and the day when the investments of “Big Tobacco and Brewers” are realized.  Although there are many stories about Farm Bill in the last day, CNBC tends to focus a bit more on the hemp dimensions of the bill.  More extensive coverage of the hemp provisions of the bill can be found in Hemp Industry Daily.  What the NYT article so clearly indicates is the role of potential competition in markets.  In this case, there are many firms with substantial resources waiting, as it were, on the periphery of the hemp and cannabis markets just waiting for legal cover to participate.  The Farm Bill, which looks to be a shoe in for passage in the House and signing by the President, goes a long way toward providing that cover. 

May you have a good week!

Bruce

346 (5 December 2018)


Welcome to week 346! The articles below caught my attention this week.  What areintended to be relatively objective “briefs” are preceded by dashes (——–),whereas additional material or relatively subjective comments are precededby asterisks (********).  Article titles preceded by [SR] require a subscription. 

(28 November 2018):The Plug-In Hybrid Car Hits Its Stride, Just in Time to DieBloomberg.com

——–“It’s becoming increasingly clear that plug-in hybrid vehicles, those green chimeras that have long promised to carry creaky, old car companies into an energy-efficient future, will never grow past their current position as an automatic also-ran.  The battery-electric car now appears poised to turn these hybrids into a historical blip.”  Gil Tal, director of the Plug-in Hybrid and Electric Vehicle Research Center at UC, Davis, notes: “A full electric is a much more elegant solution . . . It’s very simply to build and very low maintenance.”  In his opinion, plug-in hybrids “are just the training wheels” in preparing the auto industry for electric cars.  In relation to U.S. sales, “fully electric vehicles have surged ahead of plug-in hybrids, outpacing them by almost three-to-one in the third quarter” of 2018.  “In the coming months, purely-battery powered machines will overtake hybrids that don’t plug in at all, a category that includes a wide range of vehicles such as the Prius.”

********The article concludes, “The death of the hybrid, while seemingly inevitable, may be long and slow.”  Gil Tal believes that they will likely have a role until 2040.  “But the problem will always be [that] it’s a more expensive solution, having two drivetrains.”

********As mentioned in the article, one of the plug-in hybrid vehicles that is “dying off” is the Chevrolet Volt.  Its elimination from GM’s car portfolio is connected to Amy Goldstein’s article “When GM closes a plant, workers lose their jobs.  But the city loses its spirit.The New York Times.  Goldstein’s article draws upon her award-winning book Janesville: An American Story, which reports at length on the consequences of the closing of a long-existing General Motors plant in Janesville, Wisconsin.  Goldstein is a sure guide as to what is likely to happen to 14,000 GM employees and to the communities in which they live as GM as the company seeks to get “in front” of a potential economic downturn “while the company is strong and while the economy is strong.”  Much work has been done regarding the anticipated change in economic activity resulting from expansionary events, such as the siting of a new business facility in a region, but there has generally been little attention given to the anticipated changed in economic activity resulting from contractionary events, such as the closing of a major production facility.  This is regrettable—the GM closings seem like a great opportunity to redress this imbalance.

********Another aspect of the rise of the electric car is the rise of the markets that are resources used in producing electric cars, which might be called derived demand markets.  Lithium is one of those products, it being used to manufacture batteries for electric cars.  Bolivia, as it turns out, is “sitting on the second-largest amount” of lithium in the world.  Read about the challenges facing Bolivia’s attempts to develop its resources in  “Bolivia’s Almost Impossible Lithium DreamBloomberg.com.

(28 November 2018):The Annals of FlannelThe New York Times

********Bayard Winthrop, the CEO of the clothing brand American Giant, set out three years ago to produce a flannel shirt produced entirely in the United States.  This turned out to be much more challenging than expected.  When he explored the possibility with others, he continually heard that U.S. flannel is gone.  And it was, until his dogged determination brought it back.  It’s a story worth reading.  The flannel shirt I am wearing was made in China.  I intend to purchase an American Giant flannel shirt—it will be pricey—once they become available.

(29 November 2018):Sign Here to Lose Everything: Part 3Bloomberg.com

********This article, “Rubber-Stamp Justice,” is the third of four articles on the cash-advance business that preys on small businesses nationwide but processes the bulk of its cases in the state of New York.  It points to some of the factors that lead some New York counties, like Erie, Ontario, and Orange, to process more judgments of confession that enable the pillaging of the financial resources of small businesses receiving cash advances.  Of primary concern is their use for that purpose is rapid turnaround, in many cases one day. 

(2 December 2018):Betting on a new way to make concrete that doesn’t polluteThe New York Times

——–Solidia Technologies, based in Piscataway, New Jersey, is working to “dramatically reshape the manufacturing of concrete.”  It says that “it can make the ubiquitous building material cheaper and at the same time reduce carbon dioxide emissions by essentially turning them into stone.”  By “tweaking the chemistry of cement . . . it can profit from helping to clean up an industry that is not only one of the largest on the planet but also one of the dirtiest.  Cement plants are major league emitters of carbon dioxide, which is blamed for climate change.”  It is estimated that “making conventional or Portland cement . . . produces as much as 7 percent of total global CO2 emissions.”  According to the International Energy Agency, on a ton for ton basis, “cement plants spew more carbon dioxide than any other manufacturing process.”

********Traditional cement has a long history as a building material, so cement producers are hesitant to try new production methods due to the perceived risks in using them.  A story about cement naturally leads to consideration of concrete, which are different, but related, things; cement is an ingredient of concrete.  As such, there is some interest in the larger entity (concrete).  A well-regarded book on the subject is Concrete Planet: The Strange and Fascinating Story of the World’s Most Common Man-Made Material

(3 December 2018): [SR]The Trouble With Tuna: ‘A Lot of Millennials Don’t Even Own Can Openers’The Wall Street Journal

——–”Canned tuna, a lunchbox staple from the 20th century, is fighting to keep its spot in American cupboards.  Century-old tuna companies like StarKist Co, bumble Bee Foods LLC and chicken of the Sea International are trying to reboot demand for tuna fish—selling it in cans, pouches and kits with trendy flavors or as a healthy snack—as they seek to hold on to their dominance in a shrinking market. . . . Canned tuna is struggling to connect with younger generations who favor fresher, less-processed options.  It is also dealing with competition from newer and fancier brands, which see an opportunity to innovate in a category they think big brands have let slide.”  Although the “big three” tuna companies have 80% of sales in the tun a market, the industry has “shrunk significantly.  Per capita consumption of canned tuna has dropped 42% in the three decades through 2016.”  Simply put, “In a country focused on convenience, canned tuna isn’t cutting it with consumers.  Many can’t be bothered to open and drain the cans, or fetch utensils and dishes to eat the tuna.”

********The article does point to the role of the invisible handshake—social and historical forces that affect human behavior—on the demand side of the tuna market.

May you have a good week!

Bruce

345 (28 November 2018)


Welcome to week 345!  The articles below caught my attention this week.  What are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********).  Article titles preceded by [SR] require a subscription.  TIF Weekly is available on the web.

The news this week was inundated with articles relating to monopoly and monopolization, more generally increasing market concentration.  In part that is due to the publication (ornear publication) of books on the subject. One is TheMyth of Capitalism: Monopolies and the Death of Capitalism, by Johnathan Tepper with Denise Hearn.  Itsback cover has blurbs from two Nobel laureates, as well as prominent academicsNiall Ferguson and Kenneth Rogoff.  Youcan get a sense of the book from two excerpts by Tepper: oneand two.  Excerpt one is more general and betterwritten, while excerpt two provides more source information.

The second book is The Curse of Bigness: Antitrust in the New Gilded Age, by Tim Wu.  This concise book is described by Rana Foroohar of The Financial Times as “an excellent primer for anyone who wants to understand why corporate wealth and power have grown so concentrated in the past four decades, and why that might be a problem for democracy.”  Wu’s book is mentioned favorably in “The Monopolization of AmericaThe New York Times.  The article notes that information about market concentration has not been regularly gathered since 1981, when the Reagan era “Federal Trade Commission suspended a program that collected data on industry concentration.”  The Open Markets Institute is working to fill that void.  Take a look.

(22 November 2018):’Invisible Hands’ Review: The Children Fueling Global CapitalismThe New York Times

——–“Rich in information and dense with quiet outrage, Shraysi Tandon’s debut feature, the investigative documentary ‘Invisible Hands,’ jumps into the murky and shameful world of child trafficking and forced labor.”  The movie shows “how the intricate supply chains of global capitalism shield corporations like Nestle and Unilever from responsibility . . . [painting] a depressing portrait of pain and poverty and exploitation.”  The opening of “Invisible Hands” comes on Black Friday, the biggest shopping day of the year, arguing that “while capitalism is the disease, it’s also the cure.”

********The review is accompanied by a two-minute trailer.  The reviewer notes: “Maybe it’s right to believe that corporate action, spurred by consumer demand for ethically made products, can blow past the slow-grinding wheels of government regulation.  I wish I were so sure.”

********On the topic of “the slow-grinding wheels of government regulation” there is a great example in [SR]Drone Rules Likely Still Years Away, Dragging on Industry’s GrowthThe Wall Street Journal.  Its lead sentence notes: “The Federal Aviation Administration is significantly behind earlier schedules for crafting airborne-identification rules for drones, causing industry officials to worry the delay could stymie their most ambitious plans for years.”  The principal trade group for drones in the Association for Unmanned Vehicle Systems International.  Trade association leaders “now see the final FAA regulatory action stretching past the end of the decade.  Some experts say 2022 is more likely.”  Regarding the regulatory delay, an FAA spokesman said “We have to get this right the first time . . .  We are moving as quickly as possible to address the complex issues.”  A particular source of delay came about in spring 2018 when FBI officials “balked at proposed safeguards and demander tougher requirements to identify potential terrorists or hostile operators.”

(23November 2018):A Future With Fewer TrufflesBloomberg.com

——–“Increasingly dry, hot weather in the world’s prime truffle-producing regions of Italy, France and Spain may become so severe that the delicacy is wiped out there by the end of the century, according to a study published in the journal Science of Total Environment.  Prices for the treat, already one of the world’s costliest foodstuffs, will be driven even higher, they predict. . . . But fungus fans shouldn’t be down in the mouth.  Truffles may have a future in cooler northern climates such as the U.K. and Ireland, where mild winters mean heavy frost won’t damage the tubers.  While truffle cultivation is notoriously tricky,” successful trials have been carried out in the U.K.  Black truffles “regularly fetch more than 1,000 euros ($1,135) a kilogram, but they have been known to sell for twice as much after a bad season.”

********A concise supply-driven analysis of the truffle market.  Climate change will affect the ability of traditional suppliers to provide truffles, but perhaps new suppliers will enter the market as prices increase.  The big question, though, is will truffles “take” to their new surroundings and will the traditional cultivators and hunters of truffles be willing (and able) to make the move to new locations.

********The graph of the article mentioned is available here.  Quite interesting at the link is its Graphical abstract, which provides a framework, to my mind, for examining the general  relationships between climate trends and harvests for any agricultural product.  Another article that touches upon climate change and a specific crop—corn—is part of the Price of Climate series in The Wall Street Journal.  The article “A Warming Climate Brings New Crops to Frigid Zones,” in this case Alberta, Canada in particular, appears to have no pay wall.

********While we are on the subject of economics and climate change, this is a good week to take a look at Economic Principals: A Weekly Column about Economics and Politics.  In the article “Time Is God’s Way,” David Warsh.  In the wake of the Nobel Prize awarded to William Nordhaus for his work on the economics of climate change, Warsh takes a brief look at the we-ranging work of economist Martin Weitzman, who has employed “fat-tailed uncertainty” as a means to explore the “unknown unknowns of what might go very wrong . . . coupled with essentially unlimited downside liability on possible planetary damages.”  Such “unknown unknows call for a more expensive insurance policy against their possibility than would otherwise be the case.”  Along with Gernot Wagner, Weitzman authored the “uncommonly well-written book Climate Shock: The Economic Consequences of a Hotter Planet(Princeton, 2015).”  Incidentally, if you haven’t taken a look at the Economic Principals site, you may want to check out its list of Blogs and Journalists, as well as its Bookshelf.  It is an effective way of keeping up with what is being written on economic topics and their authors.

********To conclude the climate and economics references, this was the week when the 13 agencies of the U.S. government released a “major scientific report . . . [presenting] the starkest warnings to date of the consequences of climate change for the United States,” as noted in “U.S. Climate Report Warns of Damaged Environment and Shrinking EconomyThe New York Times.  The article focuses on trade disruptions and agricultural risks.  In a related piece, “What’s New in the Latest U.S. Climate Assessment,” it is noted that the “report suggests a difference approach to assessing the effects of climate changed, by considering how various impacts—on food supplies, water and electricity generation, for example—interact with each other.”  The actual report, as opposed to commentary about the report, can be found here.

(24 November 2018):MarijuanaLegalization Threatens These Dogs’ CollarsThe New York Times

——–“Officer Tulo will turn in his badge in January, forced into early retirement by the country’s waning war on weed.  In his eight years with the Police Department of Rifle, Colo., Tulo, a yellow Labrador retriever, has helped with more than 170 arrests in the town of 9,000.  But one of his old-fashioned skills hasn’t just fallen out of demand since the state legalized marijuana, it has become a liability: State court rulings mean that Tulo’s keen nose for pot imperils his work on other drug cases.”

********Legal changes typically bring about changes in the demand for and supply of goods and services.  This applies, too, to dogs that are trained to smell and alert on specific drugs, as this article so clearly shows.

(26 November 2018):HowDNA Technology Became Cheap, Fast and Easily AccessibleBloomberg.com

********This is Episode 4 of the Prognosis podcasts “about people living on the edge of medical innovation.”  In this offering “some of the most famous names in genetics explain why it took so long to go from mapping life’s code to actually helping people, laying the foundations for technologies on the scientific and ethical cutting edge, like modifying people’s genes.”  The announcement of the decoding of the human genome was made on June 26, 2000 by President Bill Clinton, with remarks also made by Prime Minister Tony Blair of England.  You can read the text here.  The podcast—24-minutes long—seemed timely given the uproar resulting from the recent announcement that a Chinese scientist had played a role in creating the “world’s first gene-edited babies.”

(27November 2018):SignHere to Lose Everything: Part 2Bloomberg.com

********Part 1 of this four-part series appeared on November 20th.  This article looks at “The $1.7 Million Man,” Vadim Barbarovich, who is “New York City’s highest-earning official.”  The next-highest-paid official, the CIO for the NYC Retirement Systems, comes in at $362,416; Mayor Bill de Blasio comes in at $232,982.  How does Barbarovich make all that money?  He gets a 5% cut of the judgments processed in his role as NYC Marshal most of which are due to Merchant Cash Advances that are being recovered with his help.  Barbarovich’s income “skyrocketed when cash-advance companies discovered his power” to claw back cash advances.  All this seems to be within the letter of the law, but the situation is seemingly under investigation.

(27 November 2018):In a Texas Art Mecca, Humble Adobe Now Carries a High CostThe New York Times

——–Marfa, Texas is an “artsy outpost in the West Texas desert” where adobe has become “fashionable, a building material befitting the town’s cool mix of culture and desert aesthetic.  But for many of Marfa’s longtime residents, the gentrification of the adobe home has made living in one rather expensive.  Required by Texas law to find more revenue, the Presidio county tax assessors realized that adobe homes in Marfa were selling at a premium, and so they raised their appraisal values in 2017, just three years after a townwide revaluation.  That has meant two big tax increases, not only for owners of , . . high-end and expansive adobe homes . . . but also for hundreds of more modest, weather-beaten residences clustered around the south side of Marfa, where historically most of the town’s Hispanic population has lived.”

********Some homes have seen their property taxes more than triple in recent years as a result of the adobe-based revaluation.  Early in my years of teaching at UNC Asheville, a student remarked to me that many people in the mountains of western North Carolina were driven from their homes via property taxation.  (I’d love to see evidence for this.)  Here, in Marfa, we seem to see the same process at work.  I wonder if the affect of adobe building materials on house prices would have been so dramatic if the age (vintage) of houses was considered.  Reading this reminds me of The Color of Law: A Forgotten History of How Our Government Segregated America, by Richard Rothstein.  It was “One of Publishers Weekly 10 Best Books of 2017.”

(27 November 2018):How Pollution Can Hurt the Health of the EconomyThe New York Times

——–“One argument for rolling back environmental regulations—as is occurring under the Trump administration—is that a lighter touch on industry will lift investment and economic growth.  But increased pollution can also have long-term negative economic consequences.  The effects on health are bad enough on their own, and are well understood.”  Three sources of pollution with well-documented adverse consequences are: particulate matter, carbon monoxide, and lead.  “Children are especially vulnerable to the effect of pollution.”  There is evidence that in utero exposure to pollutants “can cause long-term harm.”

********This is an Upshot article and there is a lot to consider.  Especially usefully are the many references to the literature on pollution and health.  The article concludes with this statement: “pollution from large-scale environmental events like the California fires may also challenge productivity at school and work, even for children in utero.”

May you have a good week!

Bruce

344 (21 November 2018)


Welcome to week 344!  The articles below caught my attention this week.  What are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********).  Article titles preceded by [SR] require a subscription.  TIF Weekly is available on the web.

It being Thanksgiving Eve, here are “Seven Things You Might Not Know About CranberriesJSTOR Daily.  The foundation article for the post, “Heritage OF THE Harvest: Taming the Wild Cranberry,” contains elements that are appropriate for TIF Weekly.  You can access a pdf of it at the end of the post.

(12 November 2018):Could Oysters Ease Trade Tensions With U.S.?  European Leaders Hope SoThe New York Times

——–“The United States and Europe may one day put aside their differences on trade, eliminate tariffs on industrial goods and work together to rein in their common economic adversary, China.  But for Cecilia Malmstrom, the European trade commissioner, the most urgent task is to produce quick results . . . So when Ms. Malmstrom meets in Washington on Wednesday [the 14th] with her American counterpart, Robert E. Lighthizer, she will count it as a substantial victory if she can lower the barriers hindering one bit of trans-Atlantic commerce: oysters.  The United States and Europe have long banned the importing of each other’s shellfish.  But a deal to ease trade on that front has been in the works for several years and could be dressed up by both sides as a success that helps smooth relations with the White House”

********Interestingly, in the process of developing the story about oysters, there is a reference to Section 232 of The Trade Expansion Act, which allows the imposition of sweeping tariffs in the event that an import “threatens national survey.”  The idiom “grasping at straws” comes to mind.

(15 November 2018): What a pair of jeans can teach us about the global economyMarketplace

********This is a three-minute chat with Thomas Ramge, one of the authors of The Global Economy as You’ve Never Seen It: 99 Ingenious Infographics That Put It All Together.  The book appears to be an attempt—I have ordered but not read the book—to visually portray the interdependencies of the world economy.  It strikes me as somewhat similar in concept, but no doubt different in realization, to The Illustrated Guide to the American Economy, last published in 2000, which I own and read long ago.  As the article notes, the book “uses infographics to make the complex global economy accessible to the everywoman and man,” i.e., “an atlas for economics.”  If this can be done for the world, why not the U.S., North Carolina, and Buncombe County, too?  For those reading elsewhere, please make the necessary adjustments for your setting.

(16 November 2018):Why ‘Clean Coal’ Is Being Embraced and QuestionedBloomberg Businessweek

********This is a useful précis on “clean coal.”  Like all QuickTakes it makes clear and concise statements, while providing readers with a list of accessible sources.  Although much of this material is familiar, there are some new points.  For example, it provides insight into where new “clean coal” plants are being built globally—many in China—and investor views.  I thought it was especially interesting to learn that “Some of the world’s biggest insurers . . . have pledged to scrap underwriting new coal plants, and insurance market Lloyds of London [has] said it will divest from the fuel.”  It makes me wonder about the role of insurance in relation to other prospective power plants, in particular nuclear.

(16 November 2018):Trouble in the Congo: The Misadventures of GlencoreBloomberg Businessweek

********The expression “It is not what you know, it is who you know” is well exemplified by this story of the mines of the Democratic Republic of Congo.  Unusually rich holdings of copper and cobalt lie at the bottom of personal relationships generating large profits for (and many legal actions against) Glencore, not to mention billions of dollars of wealth for the individuals involved, and some revenue for the Congolese governments.

(17 November 2018):Cage-Free Eggs Are Out, Pastured Ones In as Tastes Change, AgainBloomberg.com

——–“It wasn’t that long ago that consumer demands for better animal treatment sparked the rise of the cage-free egg.  Hens moved from the confines of 67-square inches . . . to the wilds of the barn, with space to walk and stretch their wings—but rarely, if ever, outside.”  But the bar is being raised to “the pasture-raised egg.”  The pasture movement is “sending animals outdoors for ample sunshine and space to spread out.  Compared with cage free, pasture is tantamount to bird paradise.”  This is part of a more general phenomenon: “Some of the biggest shifts in the protein industry in the past decade have come from increased consumer demands over animal welfare and sustainability.”

********In short, consumers are continuing to become more aware and more caring about the lives led by their food, especially animals.  In noting this, one cannot help but think of the work of philosopher Peter Singer,  He gained widespread notice, effectively founding the animal rights movement, through his 1975 book Animal Liberation.  Changing tastes would tend to be captured by social and historical forces, i.e., the invisible handshake.

(20 November 2018):Sign Here to Lose Everything: Part 1Bloomberg Businessweek

——–Doug and Janelle Duncan, the owners of a real estate franchise in Florida, “borrowed $36,762 from a company called ABC Merchant Solutions LLC” to help finance a planned expansion and they thought “they were paying the money back on schedule.”  But in a matter of days $52,886.93 disappeared from one of their account, a loss that “set off a chain of events that culminated a month later in financial ruin. . . . As the Duncans soon learned, tens of thousands of contractors, florists, and other small-business owners nationwide were being chewed up by the same legal process.  Behind it all was a group of financiers who lend money at interest rates higher than those once demanded by Mafia loan sharks.  Rather that breaking legs, these lenders have co-opted New York’s court system and turned it into a high-speed debt-collection machine.  Government officials enable the whole scheme.  A few are even getting rich doing it.” 

********The article goes on to note, “The lender’s weapon of choice is an arcane legal document called a confession of judgment.  Before borrowers get a loan, they have to sign a statement giving up their right to defend themselves if the lender takes them to court. . . . Armed with a confession, a lender can, without proof, accuse borrowers of not paying and legally seize their assets before they know what’s happened.”  This is a chilling tale—small business borrowers beware.

May you have a good week!

Bruce

343 (14 November 2018)

Welcome to week 343!  The articles below caught my attention this week.  What are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********).  Article titles preceded by [SR] require a subscription.  TIF Weekly is available on the web.

(no day November 2018): When No One RetiresHarvard Business Review

********This is the first of a seven-part series on “The Aging Workforce” to appear in HBR.  You can connect to the other articles in the series at the top of the page at the link.  In this, the first article of the series, an inside view of the “graying of the workforce” is provided, i.e., what that means for those doing the work and how it is organized, as opposed to an outside view, which is customer oriented.  As the article points out, population aging in the U.S. is well under way and will have multiple consequences.  “Are companies prepared?  The short answer is ‘no.’  Aging will affect every aspect of business operations—whether it’s talent recruitment, the structure of compensation and benefits, the development of products and services, how innovation in unlocked, how offices and factories are designed, and even how work is structured—but for some reason, the message just hasn’t gotten through.  In general, corporate leaders have yet to invest the time and resources necessary to fully grasp the unprecedented ways that aging will change the rules of the game.”

********Although this article is written with businesses in mind, surely its lessons are relevant to all organizations, whether profit-oriented or not.  This seems like a good opportunity to expand a bit on the speed of adjust of the invisible forces.  Surely social and historical forces, like population and values, are the slowest to adjust.  The changes in a population pyramid work their way through, sort of like a rodent in a snake, over scores of years.  Legal and political forces may manifest over an election cycle, say two or four years.  Economic forces often can and do take place extremely rapidly.  Not always true, to be sure, but generally speaking, the invisible hand responds most rapidly, the invisible foot a bit less rapidly, and the invisible handshake responds the least rapidly. 

(7 November 2018):Even Lobsters Can’t Escape Trump’s Trade WarBloomberg Businessweek

——–Since the 1990s, Mark Barlow has built his company, Island Seafood, “into a $50 million-a-year business by shipping live lobsters around the world.  He exported one out of every five to China until recently. . . . The first months of 2018 were the best start in Island Seafood’s history, says Barlow, who this year expected to ship a million pounds of lobster to Shanghai, Guangzhou, and other Chinese cities, where he’s built relationships for a decade.”  But then Washington put tariffs on China and “the Chinese stopped buying immediately.”  As a result of the tariff, Maine lobstermen, like Barlow, are “scrambling to find other markets. . . . His biggest concern: The trade war’s consequences are unlikely to be short-term.”

********The article goes on to discuss how climate change is affecting various elements of the lobster food chain.  Short term, in some areas, warmer waters have led to ideal growing conditions for lobsters, resulting in booming yields for lobstermen.  But the question is, “How long will that last?”  Temperatures that are too warm will bring in lobster predators such as black sea bass and may disrupt the populations of crustaceans on which larval lobsters feed. 

********The author of this article was interviewed by Kai Ryssdal of Marketplace—you can hear the four-minute interview here.  You may also be interested in reading the article “Consider the Lobster,” by the late David Foster Wallace.  It provides some history around the consumption and class orientation of lobster as a food, as well as considering the deeper issue of traditional ways of preparing lobster, i.e., boiling them alive.  You can find the article here

(8 November 2018):The 16-oz. Beer Can: A Cold One That’s a Hot OneThe New York Times

********Here is a piece on beer cans and aluminum by graphic journalist Wendy MacNaughton.  It visually explores changing tastes and perceptions of beer in cans, as well as the role of aluminum tariffs on the price of beer.  At the end of the piece, you will learn a bit about beer can nomenclature.  If you prefer a pure textual approach to the tariff and beer can story, you can find one in “Trump’s tariffs squeezed Canada.  Now American beer is feeling the pinchThe Washington Post.

(8 November 2018): [SR]To Make a Cup of Coffee, It Takes More Than a VillageThe Wall Street Journal

********A.J. Jacobs, the author of the forthcoming Thanks A Thousand: A Gratitude Journey, set out some time ago to thank “every person who had even the smallest role in making . . . [his] cup of coffee a reality: the barista, the farmer and everyone in between.  It turned out to be not so simple a project.”  He ended up thanking “a thousand people” but there could have been many more.  As Jacobs notes, “Our modern lives depend on radical interconnection.”  There are many books that have sought to explore the supply chain of an everyday product—to my mind The Travels of a T-Shirt, by Pietra Rivoli stands out.  What is surely different about Thanks A Thousand is the gratitude angle.  I’m curious to learn about the stories of the many people thanked for their role in providing a cup of coffee.

(8 November 2018): “The Curse of the Honeycrisp Apple” Bloomberg.com

——–“Unlike the vast majority of modern commercial produce, the Honeycrisp apple wasn’t bred to grow, store or ship well.  It was bred for taste: crisp, with balanced sweetness and acidity.  Though it succeeded beyond anyone’s wildest dreams, along the way it became a nightmare for some producers, forcing small Northeastern growers to compete with their massive, climatically advantaged counterparts on the West Coast. . . . The Honeycrisp variety is now so popular, consumers will spend three times the cost of other apples to experience it.”  Although the Honeycrisp is now the “fifth most-grown variety . . . not everyone is a fan.  Those who produce Honeycrisps often have the most cutting words for it.”  Issues of excessive vigor and fruit vulnerability, as well as harvesting and storage challenges mean that growers must “do a lot more work” to bring fruit to retail markets.

********Evidently, for retailers like Whole Foods and FreshDirect, “sourcing from the West Coast to sell in the East is inevitable if they want to carry the organic version of their most popular apple.”  On the East Coast orchards and smaller and wet weather “makes organic growing impossible.”

(9 November 2018):Why conservatives abandoned conservationScience

********This is a summary of a review of The Republican Reversal: Conservatives and the Environment from Nixon to Trump, by James Morton Turner and Andrew C. Isenberg; the book release date is 12 November 2018.  The authors point to the irony that “the major environmental laws that today’s Republic Party seeks to weaken were widely championed by Republicans of an earlier era.”  Turner and Isenberg point to “three characteristics of the Republican Party that changed over time: (i) a shift from viewing environmental issues as urgent to viewing them as alarmist and exaggerated; (ii) a shift from relying on scientific research and expertise to viewing these entities with suspicion; and (iii) a shift from embracing a central role of government in addressing environmental problems to viewing regulations as a threat to economic growth, individual freedom, and free enterprise.”  In the fuller review upon which this summary is based, the reviewer notes that the “most original portion of the book juxtaposes the conservative and environmental movements in the 1960s . . . The remainder traverses ground that has largely been covered elsewhere, most notably in Judith Layzer’s excellent Open for Business.”  Open for Business was published by MIT Press in 2012.  The Republican Reversal provides a good example, it would seem, of the role of ideas and the invisible handshake in the evolution of the law and the economy.

(12 November 2018):’Bad Blood’ wins the FT and McKinsey Business Book of 2018The Financial Times

——–Bad Blood, “John Carreyrou’s riving account of the rise and scandalous fall of Theranos, the blood-testing company, has named Financial Times and McKinsey Business Book of the Year. . . . The book recounts the inside story of the collapse of Theranos and the disgrace of its once-feted founder Elizabeth Holmes, after the group’s supposedly revolutionary blood-testing system turned out to be dangerously flawed.”  In accepting the award, Carreyrou noted that “readers should learn from the Theranos scandal that the ‘move fast and break things’ approach to technology innovation did not work well in areas such as healthcare or self-driving vehicles.”

********As the award announcement notes, the Business Book of the Year Award began in 2005.  Wikipedia has a complete listing of all of the short-listed books and winners from 2005 through 2018 here.

May you have a good week!

Bruce

342 (7 November 2018)

Welcome to week 342!  The articles below caught my attention this week.  What are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********).  Article titles preceded by [SR] require a subscription.

(29 October 2018):Life, Death And The Lazarus Drug: Confronting America’s Opioid CrisisNPR.com

********This is a 49-minute podcast with “Hidden Brain” reporter Shankar Vedantam.  The broad topic is the opioid crisis, but it is especially focused on Narcan, the so-called “Lazarus Drug” in the podcast title.  An essential point made early in the podcast deals with the problem of moral hazard, i.e., the notion that taking steps to mitigate the consequences of certain behavior is likely to bring about more of that behavior.  For example, the ability to insure one’s home against hurricane damage or floods may lead more people to build more homes where hurricane damage is likely or where flooding is probable.  In this particular case, moral hazard manifests with the existence of Narcan.  Since it is very effective in saving lives from opioid overdoses, will more people engage in opioid use if it is available?  Unsurprisingly, some economists and people working in addictions have differing views, and the discussion is worth a listen.  There are four Additional Readings at the link that provide much more information.

********The modern source from which stems economic writings on moral hazard is Sam Peltzman, “The Effects of Automobile Safety Regulation,” Journal of Political Economy, 83,4 (August 1975): 677-726.  Oddly, Peltzman’s name does not appear in the Wikipedia article on moral hazard.

(31 October 2018):  “Why do we have a 30-year mortgage, anyway?Marketplace

********This five-minute podcast explores the origin of the 30-year mortgage.  As one interviewee notes, the 30-year mortgage “did not come down engraved in a tablet” but was the outcome of historical processes growing out of the Great Depression, with the administration of FDR playing a central role.  In the 1920s, mortgages were typically 3-5-year interest-only loans with a variable interest rate, i.e., in repaying the mortgage, one made interest payments for 3-5 years, after which the entire loan was repaid (the so-called “balloon” payment).  Most people, though, simply went out and got another loan.  (This reminds me of payday loans.)  With the advent of the Great Depression, opportunities for refinancing disappeared, and new loan mechanisms needed development.  And they were.  Cornell historian Louis Hyman was interviewed for this story and he is the author of a 2011 book that looks like essential reading on the subject, as well as consumer debt generally: Debtor Nation: This History of America in Red Ink.

********Debtor Nation appears to be a revision of a highly-decorated doctoral dissertation at Harvard.  According to an Amazon reviewer, “Hyman was awarded the prize for best dissertation in history at Harvard and best dissertation in business history nationally for his effort” (from Amazon review).  A more popular version of the book seems to be the 2012  Borrow: The American Way of Debt.  While we are discussing Hyman’s oeuvre, his most recent (2018) book is Temp: How American Work, American Business, and the American Dream Became Temporary.  Hyman seems to be able to bring history to bear on essential issues of our times.

(2 November 2018):Where ‘Yes! To Affordable Groceries’ Really Means No to a Soda TaxThe New York Times

——–“In the run-up to Election Day, residents of Washington and Oregon have been bombarded” with ads from “groups with names like Yes! To Affordable Groceries.  The organizations have spent more than $25 million on commercials that feature plain-spoken farmers and penny-pinching moms urging support of ballot measures that would prohibit municipalities from taxing food sales.  But what most voters don’t know is that Coca-Cola, PepsiCo and other American beverage companies are largely financing the initiatives—not to block taxes on stables like milk and vegetables but to choke off a growing movement to tax sugary drinks.”

********As the article points out, soft drink companies have devised a strategy that avoids explicit mention of soda taxes, thereby protecting them from arguments of special pleading.  Historically, “The strategy of pushing pre-emptive laws and ballot measures was pioneered four decades ago by the tobacco industry and the National Rifle Association as a way to stop localities from passing antismoking ordinances or limitations on gun ownership.”  In so doing the N.R.A. “has been wildly successful.”  That is, pre-emption can work.

********So here are the results.  In Washington, I-1634 is on track to be approved by the voters, thereby prohibiting the enactment of “new food and beverage taxes” but not reversing Seattle’s existing “1.75-cents-per-ounce sweetened beverage tax.”  In Oregon, a similar ballot item to change the state constitution, Measure 103, was soundly rejected, “failing 57 percent to 43 percent.”  The item would have prohibited “taxes on the ‘sales or distribution’ of food and nonalcoholic beverages.  Early in 2018, California’s state legislature passed legislation, subsequently signed by Governor Jerry Brown, to prohibit “California cities and counties” from taking soda “for the next 12 years.”  .”  I’m sure that soda companies and others will be carefully studying these outcomes as they prepare for future political action.

(5 November 2018):We’re All Climate Catastrophe Preppers NowBloomberg.com

********This is quick jaunt through some of the economic and financial issues connected to climate change.  Most of these will be familiar, some probably not.  One thing that seems sure to happen is slower economic growth: “Humans are far less productive at high temperatures.”  And physical capital may grow more slowly, too, due to storm damage and increased costs of “rebuilding and damage-prevention efforts.”  The author concludes the article noting “If fears of material financial loss for ourselves and our children can’t motivate us to change our ways, then perhaps nothing will.  In the meantime, assume asset returns will be lower than they might otherwise have been and try to put aside more money today.  We are all preppers now.”

********One item that I found interesting to look at is the University of Notre Dame’s rankings in relation of climate vulnerability.  There are three: an overall GAIN index, a Vulnerability index, and a Readiness index.  You can see all three here.  No great surprises—there seems to be an inverse relationship between economic development and vulnerability, and a direct relationship between economic development and readiness.

May you have a good week!

Bruce