326 (18 July 2018)

Welcome to week 326!  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 to be read in their entirety, although complete articles might be found by an Internet title search.

Please let me know if you have questions or comments.

(11 July 2018): Britain’s Online Shopping Boom Is a Bust for the High StreetBloomberg Businessweek

——–The high streets—central shopping districts—of Britain are being devastated by online retailers.  “E-commerce accounts for 18 percent of retail sales in the country—almost double the U.S. level and higher than anywhere else in the western world.”  Although “Online retailers typically benefit from lower overhead than their store-based counterparts, . . . in the U.K. that advantage is bigger than just about anywhere.  The country has the developed world’s highest commercial property taxes.”  For example, last year “Tesco paid £700 million in property taxes, and J. Sainsbury Plc, the No. 2 chain, paid £550 million.  Amazon’s bill: £14 million.”  As CFO Kevin O’Byrne of Sainsbury’s says: “We start the year £500 or £600 million behind Amazon before we’ve even opened our doors.”

********Philip Hammond, the Chancellor of the Exchequer, notes: Britain “needs to find a better way of taxing the digital economy” to level the  playing field between traditional retailers and etailers.  That is one way to go to.

(12 July 2018): The Crucial Southern BlackberryJSTOR Daily

——–“It’s berry season in much of the United States  Depending upon where you live, that might mean you can wander into a field where berries grow wild and pick your own fruit.  Historian Bruce E. Baker writes that in the American South, during the years after the Civil War, picking wild berries [especially blackberries] was one of the ‘smaller bits and pieces by which people made a living.’”

********It is definitely blackberry season here.  Livia Gershon has written an inviting summary of Baker’s article, which I then went on to read.  A link to it is provided at the bottom of her post.  The role of the commons as a resource for all to use figures prominently in the article.  Referring to the use of the commons in England, Baker notes:

English people had rights to gather nuts, fruits, and other plants for food.  These rights carried over into the antebellum South, supported by a series of legal opinions and laws requiring crops, not livestock, to be fenced in.  Johnson Hagood, governor of South Carolina when that state passed a law requiring all livestock to be fenced in, explained the rationale: the original title to land had been granted to an individual because he would improve the land, contributing in that way to the common good by paying taxes on the value of the improvement.  Since unimproved land did not contribute to the common good through taxes, the people as a whole were entitled to make use of it.  Gathering blackberries from the commons did not have the same economic impact as pasturing cattle and hogs, but when put together with all the other foodstuffs and medicinal plants available from the commons, it was not insignificant.

After the Civil War, “there was a concerted attack on common rights in the South. . . . Controversies over fence laws intensified into the late 1870 and early 1880s.  Around the same time rights to hunt and fish were restricted by state legislatures in a variety of ways.  Within this context, rights to pick blackberries came under attack as well.”  It is interesting to see that there is a North Carolina Right to Hunt and Fish Amendment on the November 6, 2018 ballot.  No provision is made for harvesting other “fruits” of the land.

(14 July 2018):Along Maine’s northeastern coast, seaweed stirs an international controversyThe Washington Post

——–The harvesting of seaweed off the Maine coast has brought seaside homeowners and seaweed harvesters into conflict.  The “squabble is aggravated by colonial land laws and 20-foot Bay of Fundy tides that award a property owner a new expanse and then take it away twice a day.  The fight has tumbled into the courts, and there taken another peculiar turn.  The Maine Supreme Court is now pondering whether seaweed is a plant—which would make it the property owners’—or an animal, which would mean it could be harvested by anyone, like fish from the sea.”  David Garbary, a biology professor at Nova Scotia’s St. Francis Xavier University is unequivocal:  “This is one of those absurd questions where you get tied up in definitions that are not relevant . . . This is a perfectly good photosynthetic organism, and it’s a plant.”

********Next case, please.  The seaweed in question, rockweed, is held to be sustainably harvested and provides a source of income to those in Maine’s poorest county.  As such, there is a conventional argument about tradeoffs between environmental and economic concerns in the article.  What struck me though, was the following quotation: “the kind of seaweed common on intertidal waters of the north Atlantic Ocean is used mostly to feed plants and animals. . . . The long weed [rockweed] collapses brown and matlike over rocks when exposed at low tide.  As the tide rises, the plant lifts into sinuous forests, buoyed by bladders of air on its stems.”  What beauty is missed if one looks simply at the weed on the rocks and not the buoyed seaweed of the tide.  This is a lack of imagination that is all too easy to understand.

(16 July 2018):What Game Theory Says About Trump’s Trade StrategyBloomberg.com

——–“Financial markets were of two minds last week about the impact of mounting trade tensions between China and the U.S.  On the one hand, the escalating tit-for-tat tariffs still affect only a relatively small part of the two countries’ economies.”  In that case the consensus is that the effects on stocks and the economy should be small and temporary.  “On the other each, each escalation . . . increases the market’s downside risk scenario of slipping . . . into a full-blown trade war that would significantly damage corporate earnings and the overall growth outcome.”  Market narratives, however, have missed a third scenario, a “Reagan Moment” that “goes beyond tweaks to the existing system by delivering changes in the overall global economic landscape that favor the U.S. in both relative and absolute terms.”

********The frame provided above serves as a basis for seven “insights from game theory on what to watch and expect.”  Reading the insights provides an opportunity to imagine that the trade policy of the president involves more than a misplaced application of bilateral deal-making to multilateral trade.

(16 July 2018):A Surprising Bid for Remington, and an Unsurprising RejectionThe New York Times

——–The Navajo Nation, one of the largest Native American tribes in the U.S., made a bid to buy arms manufacturer Remington out of bankruptcy, offering $475-525 million in cash.  The bid was rejected.  “The Navajo Nation’s plan for Remington was novel: It intended to shift the company away from its consumer business, including curtailing the sale of the AR-15-style weapons frequently used in mass shootings, to focus on police and defense contracts.  The tribe planned to use profits from those businesses to invest in research and development of advanced ‘smart guns’—those with fingerprint or other technology intended to prevent anyone but the gun’s owner from using the weapon.”  Over time, the Navajo Nation intended to shift production and distribution of guns onto the reservation, thereby developing skills and reducing unemployment there.

********I found the plan of the Navajo Nation to be interesting.  Perhaps it will still come to pass.  The Navajo Nation “would have had an advantage in sales for police and military contracts.  Not only must a certain percentage of government business go to minority-owned companies, but the Native American Incentive Act also confers certain other advantages.”  Here is a link to learn just a little more about the Act.

(17 July 2018): [SR]’Subscribed’ Review: For a Flat Monthly FeeThe Wall Street Journal

——–[Review of Subscribed: Why the Subscription Model Will Be Your Company’s Future—and What to Do About It, by Tien Tzuo with Gabe Weisert.]  “Owning things is so over.  Who wants the hassle of having your own car, lawn mower or tuxedo when, for a small monthly fee, you can just use one whenever you need it?  Services such as iTunes and Spotify taught us that all those CDs can finally be consigned to the dump; [and] Netflix cleared out the DVDs . . . But this is just the beginning, according to Tien Tzuo . . . ‘Simply put,’ he writes, ‘the world is moving from products to services.  Subscriptions are exploding because billions of digital customers are increasingly favoring access over ownership, but most companies are still built to sell products.’”  Contributing to the success of subscription businesses is their ability to “derive important information from their customers’ behavior in real time, . . . [making them] better at fast adaptation than companies dependent on their in-store employees for feedback.”

********This review reminded me of the recent article in which the “taste clusters” used by Netflix figured prominently.  Presumably those using the subscription model are more likely to generate consumer use information, including time and place, that the traditional “buy the product” model does not.  Is a service model more likely to lend itself to further application of artificial intelligence than a goods model?  There can be little doubt that the answer is “Yes.”

May you have a good week!  Bruce

325 (11 July 2018)

Welcome to week 325!  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 to be read in their entirety, although complete articles might be found by an Internet title search.

Please let me know if you have questions or comments.

(5 July 2018): [SR] ’Barrel-Aged Stout and Selling Out’ Review: Windy City WindfallThe Wall Street Journal

——–“The popular image of the brewing industry is of a war between Craft and Big Beer.  It’s small, independently owned breweries facing off against multi-billion-dollar corporations hawing bland-tasting beer with outsize control over the global market.  These terms are useful for drawing battle lines in the beer world, but as Josh Noel explains in ‘Barrel-Aged Stout and Selling Out,’ the reality is slightly more complicated.  Mr. Noel’s book recounts the rise of Chicago-based Goose Island Brewery, a vanguard name in craft brewing that was purchased in 2011 by Anheuser-Busch InBev, the biggest and baddest beer maker on the planet.  Mr. Noel, a beer and travel writer for the Chicago Tribune, uses the tale of Goose Island and Anheuser-Busch to elucidate ‘how craft beer became big business.’  His briskly written narrative will be of interest whether one prefers Bud Light or Goose IPA.”

********The WSJ review was interesting, and I wish it were possible for those who do not subscribe to it to read it in its entirety.  Failing that, the review by John Holl provides an excellent substitute.  Looking at this from the perspective of western North Carolina, one sees that phenomenon of a craft brewer being incorporated into a larger brewer is local, too.  Wicked Weed and Oskar Blues are mentioned in the review and, as it turns out, Wicked Weed helped Noll finish his book.  Holl, as a reporter on the beer scene, has a different perspective than most.  He notes: “When it comes to writing about beer, what we’ve mostly had for the last several years are broad strokes history books, tasting books, niche category books, cookbooks, travel guides, or nerdy, scientific looks at ingredients or processes.  With the release of Barrel-Aged Stout and Selling Out . . . the writing game will change.  I firmly believe that folks will look differently at how beer should be covered.”  You can learn more about John Noll and his book at his website.

(5 July 2018):Why Soybeans Are at the Heart of the U.S.-China Trade WarBloomberg.com

——–“China’s newly imposed tariffs against U.S. soybeans heralds a major trade shift for a crop that’s soared to prominence in recent decades.  While the Asian nation is targeting a slew of American farm goods in  this round of taxes [tariffs?], soybeans are the top agricultural commodity the county imports from the U.S. by far.  The oilseed, used to make cooking oil and animal feed, accounts for about 60 percent of the U.S.’s $20 billion of agricultural exports to China.  If China retaliates with 25 percent tariffs, American shipments may drop by at least $4.5 billion, according to a study by the University of Tennessee.  Brazil, already the world’s biggest soybean shipper, is set to be the biggest winner, filling the gap left by the U.S.”  As a harbinger of things to come, the most-active “soybean futures on the Chicago Board of Trade sank 14 percent in June as tensions swelled between the U.S. and China, the largest loss in four years.”

********This article clearly show the indirect effects of a tariff.  In this case, the Chinese tariff on U.S. soybeans leads to a substitution of Brazilian soybeans for those grown in the U.S.  So, while China and the U.S. engage in “Tariff Wars,” some other countries will benefit.

(6 July 2018):’No comment’: The death of business reportingThe Washington Post

********This article relates the experience of Post business and economics reporter Steven Pearlstein as he “went looking for a well-run company to write about.”  The company he identified—Clorox—regularly shows up “on the list of best companies to work for.”  What he found was a company unwilling to talk with him because “Clorox’s executives were too busy.”  About this, Pearlstein remarked: “Such is the sorry state of corporate media relations these days.  Even the prospect of a positive story can’t crack open the door to the executive suite.”  Regarding such declining access to executives, Alan Murray, a former reporter and editor of The Wall Street Journal who now heads up Fortune, noted: “One, they [the executives] don’t trust us.  And, two, they don’t need us.”  The article continues with an informal look at the declining coverage of business news by the media and the declining trust in the media by business, a sort of “vicious circle” with no clear end in sight.

********There is much of interest in the article, but one thing stood out for me.  I.e., the distinction between ‘earned media’ and ‘owned media’.  The former refers to stories in traditional media that result from business activities—mergers, profits, malfeasance and the like.  The latter refers to media created and distributed by the business itself.  Clearly, the business—organization more generally—cannot directly control earned media but it can completely control owned media.  Of course, even earned media can (and is) influenced by owned media, through press releases, and quarterly and annual reports, but the control is not complete.  As one executive told Pearlstein, top executives “live in an environment where they can’t tolerate a  whole lot of risk. . . . A negative story, if it is picked up by social media, can be more damaging than ever.  That’s why they have become so nervous about engaging the press.”

********It turns out that there is a third type of media: paid media.  For more detail, see the blog post by Sean Corcoran, “Defining Earned, Owned, and Paid Media.”

(7 July 2018): [SR]A Milk Startup Takes On 300 Million CowsThe Wall Street Journal

——–“India boasts the world’s largest dairy herd—some 300 million buffalo and cows that produce 165 million metric tons of milk annually.  Yet the average farmer owns  just two cattle, and most live on one-family farms on tiny plots that lack roads and electricity.  In the U.S., the second-largest producer globally, the average dairy farm has nearly 150 cows. . . . Between cow and consumer, milk quality has suffered.  Middlemen in India often sneak water, sugar or powdered milk into raw milk, adding volume and lowering the quality.  The milk that independent middlemen gather from farmers and deliver to towns and villages is often unpasteurized and not properly refrigerated.  That’s why almost all Indians boil their milk.”  In these circumstances, Srikuman Misra moved back home to eastern India “to launch a milk company . . . Armed with social media, smartphone apps and big-data analytics, Mr. Misra’s dairy business is among hundreds of start-up companies leveraging the arrival of the internet in rural areas in India.”

********The article has a captioned six-minute video that appears to be available to those who do not subscribe to the WSJ.  The written article clearly indicates how legal and political factors, as well as historical and social factors, have slowed the move to profitability of Misra’s business—Milk Mantra—which sells, among other things, Milky Moo.  Its motto: “No need to boil.”  Misra and his wife, Rashima, a partner and marketing executive, believe that “India’s emerging middle class would spend more on a high-quality, healthy product.”

(9 July 2018): Why America’s cheese capital is at the center of Trump’s trade warThe Guardian

——–“Plymouth, Wisconsin, styles itself as the cheese capital of the world.’  The town of 8,445 people . . . was once the site of the National Cheese Exchange where cheese commodity prices were set and today about 15% of all US cheese passes through the town.  Now Plymouth residents are worried they will become one of the first big victims of Donald Trump’s escalating trade war.  In retaliation for his administration’s tariffs on steel and aluminium, the US’s largest trading partners, Canada, China, the EU and Mexico, have all targeted the cheese industry with regulations and extra duties . . . Cheese may seem an unlikely target for an international trade dispute.  But the retaliation is a well-aimed political kick directed at a state that produces 27% of the country’s cheese (3.37bn pounds in 2017) and which Trump barely won in the last election.”

********(Spelling note: aluminium is a variant spelling of aluminum and is used more generally outside North America.  It is more consistent with other element spellings such as helium, lithium, and magnesium.)  I was interested in the relationships among Canada, Mexico, and the U.S.  The article notes that Mexico is the top dairy market of the U.S. and “implemented tariffs of up to 15% on cheese in early June in retaliation for Trump’s tariffs on steel and aluminium.  On Thursday that tariff rose to 25%.  Canada, which has astronomically high tariffs on dairy products of 270%, has also imposed more restrictions.  Canada’s power dairy lobby managed to exclude much of dairy from the North American Free Trade Agreement . . . But what was once a bargaining chip in an ongoing discussion over the renegotiation [of] that agreement is now off the table.”

(9 July 2018):Starbucks will stop handing out plastic straws by 2020The Washington Post

——–“Starbucks, which doles out more than 1 billion straws a year, says it will phase out single-use plastic straws from its stores by 2020.  The coffee giant—the largest retailer to commit to eliminating single-use plastic straws—said that it will replace the ubiquitous plastic straw with recyclable ‘strawless’ lid,’ as well as straws made from biodegradable materials, as part of a no-plastic-straws movement that has gained momentum in recent years.”  According to sales representative Kara Woodring for Aardvark, a paper straw manufacturer,  paper straws can “easily run four times” the price of plastic straws, which “typically cost less than a half-cent each.”  Woodring went on to note, “Straws are kind of an unnecessary item we’ve gotten accustomed to . . . If you can go without, that’s great.”

********For me, the article shows the invisible handshake at work, i.e. social and historical forces that affect human behavior.  A video of a sea turtle with a plastic straw in its nose that went viral has led to a raised awareness of the contribution of plastic straws in global environmental degradation, especially in the sea.  Although this movement will surely decrease the demand for plastic straws, it might well lead to a decrease in demand for straws as a whole, i.e., plastic and paper, as more come to the realization that straws are “an unnecessary item we’ve gotten accustomed to.”

(9 July 2018):Amazon Antitrust Critic Joins FTC as Agency Sets Sights on TechBloomberg.com

********In the 20 June 2018 TIF Weekly (322) there is a mention of Lina Khan’s 2017 article 2017 “Amazon’s Antitrust Paradox”  in The Yale Law Journal, which is available as a pdf.  She is joining the Federal Trade Commission “as a legal fellow for the next few months” as the agency “prepares to increase antitrust scrutiny of technology firms.”  Her article argues that “the current antitrust enforcement framework is ill-equipped to tackle Amazon’s dominance and the potential harm it poses to competition.”

May you have a good week!  Bruce

324 (4 July 2018)

Happy Independence Day and welcome to week 324!  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 to be read in their entirety, although complete articles may be found by an Internet title search.

Please let me know if you have questions or comments.

(26 June 2018): A.I. Has a Race ProblemBloomberg Businessweek

——–A few years back when Brian Brackeen “was preparing to pitch his facial recognition software . . . the software stopped working.  Panicked, he tried adjusting the room’s lighting, then the Wi-Fi connection, before he realized the problem was his face.  Brackeen is black, but like most facial recognition developers, he’d trained his algorithms with a set of mostly white faces. . . . For years the same problem has bedeviled companies including Microsoft, IBM, and Amazon and their growing range of customers for similar services. . . . Microsoft, IBM, and China’s Face++ misidentified darker-skinned women as often as 35 percent of the time and darker-skinned men 12 percent of the time, according to a report published by MIT researchers earlier this year.  Such software can see only what it’s taught to see, which has been mostly white men.”

********The article goes on to say that in recent months, major vendors have “diversified their training data sets to included darker-colored faces and have made strides in reducing bias.”  A fascinating and thought-provoking article.  Perhaps training facial-recognition software provides a model for bias formation in human beings?

(26 June 2018): How to Steal 50 Million BeesBloomberg Businessweek

********Narrowly speaking, this is an article about bee theft in California during the February almond-pollinating season.  More broadly, it is about some of factors affecting commercial bee-keeping in the U.S. and the world.  Along the way one learns that “every February, 2.5 million colonies—two-thirds of the commercial honeybee colonies in the U.S.—are clustered in a few California counties” and that apiarist Valeri Strachan is “one of a handful of Americans who can extract semen from drone bees and use it to inseminate virgin queens.”  Her work enables the Strachans to “produce close to 50,000 queen bees a year.”

(27 June 2018): Where 3 Million Electric Vehicle Batteries Will Go When They RetireBloomberg Businessweek

——–“The first batches of batteries from electric and hybrid vehicles are hitting retirement age, yet they aren’t bound for landfills.  Instead, they’ll spend their  golden years chilling beer at 7-Elevens in Japan, powering car-charging stations in California and storing energy for homes and grids in Europe.  Lithium-ion car and bus batteries can collect and discharge electricity for another seven to 10 years after being taken off the roads and stripped from chassis—a shelf life with significant ramifications for global carmakers, electricity providers and raw-materials suppliers.”  Finding after-vehicle uses for EV batteries is becoming much more important as the global stockpile of such batteries “is forecast to exceed the equivalent of about 3.4 million packs by 2025, compared with about 55,000 this year.”

********Among the firms looking to create an aftermarket for EV batteries are General Motors, BMW, Toyota, BYD Co., and “a clutch of renewable-energy storage suppliers.”  All this indicates that EV batteries have a potential “second life” that can yield a revenue stream after vehicle use.  This might reduce consumer concern about large battery “deaths” by increasing the value of a dead battery, thereby decreasing the cost of replacing such a battery.

********An article that also relates to EVs is “Big Oil, Utilities are Lining Up for an Electric Vehicle WarBloomberg.com.  It notes: “A red-hot electric vehicle market has triggered a face-off between Big Oil and utilities.  Oil majors, who’ve sold fossil fuels to cars for a century, are now moving into an electricity sector that’s preparing for exponential growth.  The problem is that utilities, the primary power suppliers for a century, have the same idea.”  According to Erik Fairbairn, one of the U.K.’s largest EV charging companies, power providers are “for the first time, meaningfully interacting with car companies and the oil industry.”  According to Fairbairn, it is estimated that “only 3 percent of car charging will occur while drivers are in transit, with the overwhelming majority plugging them in overnight at home or wherever they leave their vehicles sitting idle.  This directly plays into the hands of existing utilities.”


(28 June 2018):North Carolina’s newest cash crop is illegal for most farmers to growThe News and Observer

——–“North Carolina farmers take chances whenever they try to grow something new, but no crop poses the kind of uncertainties that surround industrial hemp.  Hemp is used in thousands of products, from parachutes to energy drinks and a growing number of supplements and remedies containing CBD oil.  But the plant is also a cousin of marijuana, which makes almost everything about it harder for growers, from getting loans to buy seed to selling the crop at the end of the season.  Among the added worries: The level of the compound that gives you a high when you smoke marijuana, THC, might inch up a fraction of a percent in your hemp plants, making them a drug under federal law no more legal to possess or sell than cocaine or heroin.”

********This was a front-page article of the N&O on July 2nd.  It provides an unusually good overview of the legal, horticultural, and market challenges facing hemp growers.  The U.S. Senate version of the farm bill, but not that of the House of Representatives, “would make it legal nationwide to grow and sell industrial hemp and hemp-derived products with THC levels of less than 0.3 percent.”  You can learn more about industrial hemp from the NC State Extension.

(29 June 2018):Are Antibacterials Scarier Than Bacteria?  Great QuestionBloomberg.com

——–[An opinion pieced by Faye Flam.]  Bacteria, fat, and GMOs are three of the things that have born the brunt of well-meaning journalists over the years.  But evidence is growing that some bacteria are good, Triclosan used in cookware is unsafe, and GMO food is not adverse to human health.  In order to think more rationally about such matters, it is necessary “to think about safety not as a black or white issue, but to consider risk-benefit ratios.”  This becomes more involved when one considers that, as risk communication expert Peter Sandman holds, “risk perception is a combination of the actual hazard and a more subject factor he calls outrage.”  As he notes, “People may choose whether to buy antibacterial soaps, stain-repellant pants or Teflon pans, but once drinking water becomes contaminated with anything, people are likely to become outraged because control has been taken away from them.”

********The idea that risk perception is a combination of (objective) actual hazard and (subjective) outrage struck me as interesting and useful.  A brief statement by him is “Risk = Hazard + Outrage: Coping with Controversy about Utility Risks”; a sidebar provides five suggestions for managing outrage.  Sandman, educated at Princeton and Stanford, has an extensive and current site.  Especially interesting to me was the Topical Indexes page.  There one can see the 2×2 classification he uses to distinguish among Precaution Advocacy (High Hazard, Low Outrage), Outrage Management (Low Hazard, High Outrage), and Crisis Communication (High Hazard, High Outrage); there is no label for (Low Hazard, Low Outrage).  There is a lot of useful information on Sandman’s site, including a pdf of his “classic” book and videos.  Outrage management and its relationship to risk-benefit ratios seems to have very broad application.

(1 July 2018):A way of monetizing poor people’” How private equity firms make money offering loans to cash-strapped AmericansThe Washington Post

——–Payday lending has been curtailed by federal regulations, giving rise so an expanded market for “consumer installment loans” such as those offered by Mariner Finance, which is “owned and managed by a $11.2 billion private equity fund controlled by Warburg Pincus, a storied New York firm.  The president of Warburg Pincus is Timothy F. Geithner, who, as treasury secretary in the Obama administration, condemned predatory lenders.”  Among the methods used to extend loans, Mariner Finance mails checks to potential borrowers.  Once the checks are signed, the borrower is committed to repaying the loan at an annual interest rate of up to 36 percent.

********This lengthy article is focused more on Mariner Finance and its various products and practices, rather than the mass check mailings that drew my attention.  There is a six-minute video, however, that captures the essence of the article and the reality of those who cash the checks to meet a financial emergency, which is “must see” for its look at how delinquent borrowers are processed by the legal system.

(2 July 2018):The Internet Is Secretly Powered By Billions Of Tiny AuctionsBloomberg.com

********This is a 31-minute podcast from the Odd Lots duo Joe Weisenthal and Tracy Alloway.  This session has a 28-minute Q&A with software engineer Afsheen Bigdeli, who works on online ad platforms.  This articulate and not-too-technical podcast provides a look under the hood of all the data gathering and software-based decision making that take place when you click a link or simply sign in to a site.  All this is intriguing and more-than-a-little concerning.

********The podcast connects well with “Netflix is moving television beyond time-slots and national marketsThe Economist.  Broadly speaking it indicates some of the advantages—large scale and being first—that have aided Netflix in its development, which reminds me of Amazon, especially in its early years.  Of specific relevance to software-driven auctions, though, is what Netflix has done (can do) with its massive database.  “The company has identified some 2,000 ‘taste clusters’ by watching its watchers.  Analysis of how well a programme will reach, draw and retain customers in specific cluster lets Netflix calculate what sort of acquisition costs can be justified for it.  It can thus target quite precise niches, rather than the broad demographic groups broadcast television depends on.”  In the limit, every person is a niche and Markets on One are arrived at, although they are not likely relevant for the entertainment industry and its programming.  But something like that must take place when one clicks on a link and gets an ad, or a suite of ads, tailored just for that person.

(3 July 2018):Something in the Water: Life after Mercury PoisoningJSTOR Daily

********This lengthy article relates the mercury poisoning visited upon the people and wildlife of Minamata, Japan and its environs from 1932 to 1968; Minamata is on the island of Kyushu and abuts the Shiranui (Yatsushiro) Sea.  Although the poisoning “is famous in Japan and around the globe” it was unknown to me.  Ultimately it led to a “UN treaty that governs the use of mercury, called the Minamata Convention on Mercury.”  Evidently director and documentarian Noriaki Tsuchimoto’s masterpiece is the 150-minute film “The Shiranui Sea.”  All this seems to illustrate clearly the interaction of the invisible forces.  For the invisible handshake, see below.

********One story that stood out for me was that of Rimiko, whose mother Mitsuko Oya cared for her fisherman husband who suffered from the so-called Minamata Disease resulting from mercury ingestion.  When Mitsuko brought him home from the hospital, she “tried to help him recover the best way she or anyone knew how; by feeding him more nutritious fish from the bay.”  The irony of it all.

May you have a good week!  Bruce


323 (27 June 2018)

Welcome to week 323!  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 to be read in their entirety, although complete articles may be found by an Internet title search.

Please let me know if you have questions or comments.

(18 June 2018): A History of the Energy We Have ConsumedThe New York Times

——–Review of Energy: A Human History, by Richard Rhodes.  “Whether he is explaining what is meant by the octane rating of fuel or the way Volta’s pile—the first battery—worked, Rhodes makes dry and often technical subjects not just digestible, but a pleasure to consume.  . . He explains that his motivation for writing this book was to provide a larger context for our contemporary debates about energy and ‘to cast light on the choices we’re confronting today because of the challenge of global climate change.’  In many ways, Rhodes achieves his purpose. . . . the dedicated reader can discern important themes emerging over time that have obvious applicability to our current moment.”

********Energy appears to tell a story that is highly consistent with the invisible forces, as well as providing insight into the sources of invention and the obstacles that must be circumvented.  In reading the review, I was reminded of Daniel Yergin’s book The Quest: Energy, Security and the Remaking of the Modern World and wondered how the two books relate.  My search of Rhodes’s book failed to find a reference to The Quest, although there were references to Yergin’s Pulitzer Prize-winning book The Prize.  My sense is, having scanned the Tables of Contents of both books, that Energy is written closer to scale and decisions of individual human actors than The Quest.  As such, the two books are more likely to be complements than substitutes.

(21 June 2018): These places will pay U.S. workers thousands of dollars to move thereThe Washington Post

——–States and municipalities facing worker shortages are turning to signing bonuses to address the problem.  Megan McGown, of Nebraska’s North Platte Area Chamber of Commerce and Development Corporation, says the town of 24,000 has about 500 open jobs and matching bonuses are a way of filling those positions, noting that “People don’t want to see companies move away because they can’t find workers.”  To date, “two people have received the bonuses—both for a total of $10,000: a lawyer and a physical therapist.”

********McGown’s statement is a clear reminder that businesses, as well as workers, can move to address labor shortages.  Business moves will affect the demand for labor, while worker moves will affect the supply of labor.  It is so easy to lose sight of demand and supply adjustments to market conditions.

(21 June 2018):The New Startup SouthBloomberg Businessweek

——–Greenville, South Carolina has provided a particular answer to the question, “How do you revive postindustrial towns and make them part of the knowledge economy?”  There, “decades of political commitment to creating a community that’s appealing to college graduates and high-skilled workers” have played a role in its transition, as has “access to technology and research talent from nearby Clemson University and state-of-the-art manufacturing plants turning out Michelin tires and BMWs.”  Also playing a role is a culture of risk-taking and a network of investors to fund the early stages of businesses.

********Raleigh, North Carolina compared favorably to Greenville in relation to the number of new businesses per 1,000 people.  On the other hand, Danville, Virginia did not.  Danville is following “the Greenville playbook closely” hoping to move its median income of $33,721 toward Greenville’s $51,595.  Looking at the article immediately above, how likely is it that a business will move from Greenville to Danville to pursue lower wages?  How likely is it that some workers will move from Danville to Greenville to pursue higher wages?

(21 June 2018):Michel Foucault’s lessons for businessThe Economist

——–“Not many businesspeople study post-war French philosophy, but they could certainly learn from it.  Michel Foucault, who died in 1984, argued that how you structure information is a source of power.  A few of America’s most celebrated bosses, including Jeff Bezos and Warren Buffett, understand this implicitly, adroitly manipulating how outsiders see their firms.  It is one of the most important but least understood skills in business. . . . Most industries have established taxonomies that hide their flaws. . . . A few astute bosses know how to remould taxonomies, bending the perceptions of investors, counterparties and staff.”

********This one-page article provides examples of changes in the categories by which businesses represent themselves have made them more attractive in the eyes of investors.  Of course, investors are simply one group of people whose perceptions one might wish to influence, and businesses are simply one organization that might wish to influence perceptions.  Each set of categories, I am sure, brings some things into focus, while letting others recede into the background.  In an economic approach to category change, then, categories will be chosen to best advance the interests of the relevant party.

(21 June 2018):For a day, I was one of the millions of Americans without a bank account.  It was humblingThe Los Angeles Times

——–LA Times finance reporter James Rufus Koren recently teamed up with “Ray Chay, director of operations at a high-interest consumer lending company, and Sybil Mulokwa, a manager at a company that develops software for small banks and credit unions” to get a sense of what it is like to use the financial services of the poor.  The occasion was “an annual conference organized by the Center for Financial Services Innovation and attended by executives from banks, credit unions and financial technology firms, as well as consumer advocates and even federal regulators.”  Their team, like others participating in the Financial Experience (FinX), was assigned an “L.A. neighborhood and asked to complete several transactions including cashing a few checks, getting a debit card, asking about a loan and buying a small gift.  There was an extra catch: It all had to be done in about two hours, a time limit many of us thought was generous given our own experiences with financial products. . . . In the end we got through only about half our tasks and still blew past our deadline.  Even if we’d had more time, we wouldn’t have had enough cash to finish.”  Both Chay and Mulokwa commented about the roles of money and time.  Chay noted: “the biggest lesson was that his customers—who are typically in some kind of financial bind—may be just as pressed for time as they are for cash.”  Mulokwa noted that “she has a new appreciation for the ‘time tax’ of all these services, but her biggest takeaway from FinX is that she doesn’t know enough about how underbanked consumers live their lives.”

******** The time required to access financial services, if one can access them at all, is something I haven’t thought about at all.  But time constraints are just as relevant as money constraints, and just as a poor person typically pays more money for a given financial service than someone who is not, so a poor person typically expends more time for that same service than someone who is not.  You can learn more about CFSI at its website.

********Barbara Ehrenreich’s book Nickel and Dimed: On (Not) Getting By in America has been sitting on my book shelves for years.  It is time to read it.

(22 June 2018):Companies Get First Tariff waivers, but Many More Are Left in LimboThe New York Times

——–“The Trump administration granted seven companies the first set of exclusions from its metal tariffs this week and rejected requests from 11 other companies, as the Commerce Department began slowly responding to the 20,000 applications that companies have filed for individual products. . . . While the administration has said the exclusions are an effective way to ensure the fairness of the tariffs, companies that have applied for the exclusions criticized the exercise as both long and disorganized.”

********This article provides a glimpse of how the newly-imposed tariffs on metals actually work, which includes an appeal process for particular buyers to obtain relief from the tariff.  In effect, the process replaces the relatively impersonal workings of the market with the relatively personal workings of a bureaucracy.  While reading the article, the expression “a nation of laws, not of men” came to mind, which is one statement of the so-called “rule of law.”  In 1780, “John Adams enshrined this principle in the Massachusetts Constitution by seeking to establish ‘a government of laws and not of men.’”

********There are two recent (and lengthy) books by highly-respected publishers that take broad overviews of trade policy in the United States.  First, the 2017 Clashing Over Commerce: A History of US Trade Policy, by Douglas A. Irwin.  Irwin is an economist at Dartmouth College.  One of the Amazon reviewers noted that “Irwin divides his history into three eras: tariffs for revenue (1789-1860), tariffs for restriction (1861- 1933) and tariffs for reciprocity (1934-Present?).”  Second, the 2018 The Wealth of a Nation: A History of Trade Politics in America, by C. Donald Johnston.  Johnson has had a varied career in politics, administration, and academia.  He is “Director Emeritus of the Dean Rusk International Law Center at the University of Georgia School of Law, where he was on the faculty for eleven years and taught international trade law in China and Geneva.”

********Every tariff has its consequences, some intended and some unintended.  Some unintended consequences are adverse and some beneficial (although one doesn’t hear much about the latter).  The article “Lobsters, Small-Batch Whiskey and Trump’s Trade WarThe New York Times provides vignettes of some of the consequences of recent tariffs, both by the U.S. and elsewhere, on the following products: nails, whiskey, lobsters, cranberries, and peanut butter.  Regarding cranberries, which are subject to a newly-imposed European Union tariff, it is noted: “From a political perspective, it makes sense to pick on those crops that would have the most significance politically . . . The speaker of the house happens to live in Wisconsin” where cranberries are an important crop.  Yet another business based in Wisconsin is Harley-Davidson.  The article “Harley-Davidson Moves Some Production Out of U.S. After Tariffs” is highly ironic.  A firm can’t move cranberry bogs out of its home country, but motorcycle production can be so moved.

(22 June 2018):There’s little economic justification for tipping.  But we can’t stop doing it.The Los Angeles Times

********This is a review of some of the well-known arguments for and against tipping.  What caught my attention is academic expert on the subject, Michael Lynn, “a business professor at Cornell University who probably has studied tipping more than any other American academic.”  You can learn about his work at his website.  The biggest obstacle to be overcome in moving away from tipping is the so-called ‘tip credit’ of federal law, that allows “businesses to pay tipped workers as little as $2.13 an hour.”  (A map of the U.S. showing the Minimum Wages for Tipped Employees can be found here.)  Without the tip credit, restaurants would have to pay their currently tipped workers substantially more than is presently the case, which goes a long way toward explaining why the National Restaurant Association “generally opposes any move to raise minimum wages.”  Restaurants in San Francisco are dealing with high wage rates for wait staff by increasing the amount of labor that customers put into their dining experience.  You can learn more about this approach in “San Francisco Restaurants Can’t Afford Waiters.  So They’re Putting Diners to Work.”  The concept, according to the article, is spreading.

May you have a good week!  Bruce


322 (20 June 2018)

Welcome to week 322!  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 to be read in their entirety, although complete articles may be found by an Internet title search.

Please let me know if you have questions or comments.

(15 June 2018): Why Aren’t More Men Working?The New York Times

——–Although the unemployment rate is 3.8 percent, the lowest in many years, “that number hides a perplexing anomaly: The percentage of men who are neither working nor looking for work has risen substantially over the past several decades.”  Such people are out of the labor force, according to the Bureau of Labor Statistics, in contrast to being employed (working) or unemployed (not working and looking for work).  From 1950 to today, the percentage of men out of the labor force has increased from 14 percent to 31 percent.  In contrast and for the same period, the percentage of women out of the labor force has decreased from 66 percent to 43 percent.  The question is, why has the percentage of men out of the labor force “nearly tripled?”  Explanations vary, from “declining opportunities for those with low levels of education” to “skill-biased technological change” to trends in international trade to an expanding social safety net.

********The author of the article is N. Gregory Mankiw, a professor of economics at Harvard University.  I am intrigued by the questions asked of data.  The percentage of men out of the labor force is going up and the percentage of women out of the labor force is going down, but it is the percentage of men that is the object of inquiry.  I suspect that a lot could be learned by looking at the common factors affecting both men and women.

(15 June 2018):’Dying at your desk is not a retirement plan’The Washington Post

********If you haven’t retired and aspire to retire, this article provides some ideas to consider.  It elicited one thousand comments.

(18 June 2018): Climate Change May Already Be Hitting the Housing MarketBloomberg.com

——–A new study by Attom Data Solutions, a curator of national property data, for Bloomberg News found that between “2007 and 2017, average home prices in areas facing the lowest risk of flooding, hurricanes and wildfires have far outpaced those with the greatest risk. . . . Homes in areas most exposed to flood and hurricane risk were worth less last year, on average, than a decade earlier.”  Attom Data “looked at the annual change in home prices and sales across 3,397 cities across the country, then divided those cities into five groups based on their exposure to various types of natural disasters.”

********The risk categories used by Attom Data are: Very Low, Low, Moderate, High, and Very High.  These results are now increasingly familiar but there are two things here that are new.  First, the sheer number of cities—3,396—examined.  Second, the variety of events considered—flooding, hurricanes, and wildfires.  Wildfires, in particular, provide another look at climate-related risk and property value.  As the article notes, the data “suggest the relationship between climate risk and home prices isn’t always a straight line.  That’s because home buyers have to weigh the risk of disasters against the so-called amenity value of living near water or at the edge of the forest.”  This calls out for a multivariable analysis of property value in which climate change risk is one of many explanatory variables

********Real estate markets have clearly been affected by climate change but so have energy markets, as noted in “Coal Plants Keep Shutting Despite Trump’s Order to Rescue ThemBloomberg.com.  On June 1st the president “ordered Energy Secretary Rick Perry . . . to take immediate action to stem further coal and nuclear plant closures in the name of national security.”  However, “utilities are reluctant to reverse course on plans put in motion years ago or to backtrack on pledges to embrace renewable energy.”  The move toward closing coal-fired power plants “has been underway for years.  Since 2010, nearly  40 percent of the capacity of the nation’s fleet . . . has either been shut down or designated for closure.”  And, according to Bloomberg New Energy Finance, “More than a quarter of U.S. nuclear power plants don’t make enough money to cover their operating costs, raising the threat of early retirements.”

********Contributing to the challenges faced by coal-fired and nuclear power plants is the decreasing cost of batteries and battery storage.  This is examined, with a particular emphasis on lithium-ion batteries for cars, in “How Batteries Went From Primitive Power to Global DominationBloomberg.com.

********This is a good place to call attention to work given impetus my Michael Bloomberg regarding the consequences of climate change.  First, there is the Risky Business project, which examines “the bottom line on climate change.”  It generated five reports on risk and return in relation to climate change and its regional and national impacts.  Second, there is the Task Force on Climate-related Financial Disclosures, which seeks to “develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders.”

(20 June 2018):This Form of Legal Immigration Is SoaringBloomberg.com

——–“As the fight over undocumented immigrants reaches a fever pitch along the U.S.-Mexican border, a surging number of farmworkers are arriving to pick tobacco, sweet potatoes and blueberries—and doing so legally.  The number of migrant workers in the U.S. on temporary agricultural visas is up 159 percent since 2011, as U.S. farmers seek replacements for the thousands of undocumented farmworkers scared away by anti-immigrant policies.  Now the farm lobby is pushing for changes that will allow farmers to double the number of legal immigrants, permit them to stay longer and cut the overall costs associated with using them. . . . The current farmworker visa program, called H2-A, has been reviled by growers for years, both because of its bureaucracy and costs.  Many avoided using it when illegal farm labor was more plentiful and less risky years. . . . For their part, undocumented workers prefer construction jobs, which are generally less seasonal and better paying,” according to Lee Wicker, the deputy direct of the North Carolina Growers Association.  He noted that “Farmworkers are not crossing the border illegally anymore to take a farm job.”

********This is another one of those articles that asks us to think about the relationships between legal and illegal activity, and how the invisible forces, especially the invisible foot of legal and political forces, affect them.  Concern about the prevalence of undocumented workers and illegal immigration resulted in the institution of H2-A visas, as well as the concomitant expansion of farm raids by ICE personnel.  The resulting labor shortages led to an increase in the demand for H2-A visas, as growers sought to bring in the crops.  Meanwhile, the undocumented have something new to consider, the possibility of an ICE apprehension.  If we are to believe the words of Lee Wicker, cited above, the result of that consideration has been for undocumented workers to focus more on construction than on farm work.

********A factor that will surely dramatically affect the demand for farm workers, legal or not, in the future is the continuing technological development of agriculture.  This is alluded to in “Deere Legal Battle Highlights Race for $240 Billion Farm Tech MarketBloomberg.com.  Once again, the invisible foot is at work, but in this case it is a matter of patent, rather than immigration, law.

(July/August 2018):How to Fight Amazon (Before You Turn 29)The Atlantic

——–The work of Lina Khan, a 29-year-old legal scholar, has been “cited approvingly by the lefty, rabble-rousing congressman Keith Ellison and by a Trump-appointed assistant attorney general, Makan Delrahim.  She has been interviewed by NPR and written op-eds for The New York Times.  She has done it neither by focusing on a hot-button issue nor my cultivating a telegenic demeanor.  She is just a young adult . . . interested in an old topic: antitrust law, that musty corner of American jurisprudence aimed at curtailing monopoly power.”  The work of Khan and her colleagues at the Open Markets Institute, in Washington, D.C., has included traditional antitrust topics such as cartel formation and prices kept artificially high, but more than that they are looking at potentially harmful cases where “monopolies appear to benefit consumers by offering free services or lows prices.”  Frequent targets of the group “are some of the most popular companies in America: Google, Facebook, and the one to which Khan has committed much of her published work, Amazon.  She tells a comprehensive story about how these companies make Americans less free.”

********Khan’s signal article is the 2017 “Amazon’s Antitrust ParadoxThe Yale Law Journal, which is available as a pdf.  According to its Abstract, “the current framework in antitrust—specifically its pegging competition to ‘consumer welfare,’ defined as short-term price effects—is unequipped to capture the architecture of market power in the modern economy.  We cannot cognize the potential harms to competition posed by Amazon’s dominance if we measure competition primarily through price and output.  Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may proved anticompetitive.”  Khan’s article is long—96-pages—but looks to provide a valuable framework for thinking about the online giants that increasingly affect our lives.

May you have a good week!  Bruce


321 (13 June 2018)

Welcome to week 321!  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 to be read in their entirety, although complete articles may be found by an Internet title search.

If you have questions or comments, please send them.

(5 June 2018): Could Ocean’s 8 Actually Work?Bloomberg.com

********The subtitle of this article is “Why stealing giant diamonds is a terrible, no good, very bad idea.”  This piece is not so much about the just-released movie but rather what one might be able to retain from stealing a diamond necklace worth $150 million.  Not too much, it seems.  As Martin Rapaport of a diamond-market company notes, “There’s legitimate and illegitimate markets . . . The spread . . . in the thieves’ market is really low . . . The buyer knows they’ve got you by the balls.  Who are you going to sell it to?  And if they rip it off, who are you going to complain to?”  In the end, such expensive pieces are well known, and everyone involved in the process wants to be well-compensated for this knowledge and their participation in the process.  Rothauser recommends that fictional and real  thieves stick with gold.  “You steal gold bars, and no one knows anything . . . It’s a commodity.  It’s like stealing truckloads of water.  But diamonds?  If someone gives me a necklace and claims it’s worth $150 million and I try to sell it—or even just a couple of its stones—everyone would know.  They turn me in just for the PR value alone.”

(7 June 2018): America’s Largest Private Company Reboots a 153-Year-Old StrategyBloomberg Businessweek

——–Minnesota-based Cargill is the largest privately-held company in the U.S., with 2017 revenues of $109.7 billion and 155,000 employees.  Its commodities trading business has long derived profits by acting as a middleman between farmers and food companies, employing an informational advantage driven by size and scope of its global operations.  With the Internet, that advantage is diminishing and it “has lowered the spread that Cargill and other big buyers used to make on such deals.”  In response to these new conditions, Cargill’s CEO David MacLennan is aiming “to remake Cargill into less of a trading operation and more of an integrated food company betting on growing global demand for proteins.  Already the world’s No. 1 supplier of ground beef and the second-largest beef packers in the U.S., trailing only Tyson Foods Inc., Cargill is expanding aggressively into aquaculture.  The company is also spending heavily on technology services.”

********The article provides a relatively-brief case study on how one very large private company is responding to a new business environment.  I found two things especially noteworthy.  First, “Agriculture is moving from a pure commodities business, where each bushel of wheat or corn is considered functionally identical, to an ingredients business, where consumers demand differentiation, such as organic produce and foodstuffs grown without genetically modified organisms.”  The inability of traders to “substitute one origin for another . . . reduces their ability to make money from the supply chain.”  Second, “The Food and Agriculture Organization of the United Nations says farmed fish overtook wild catches as the main source of seafood for human consumption in 2014, replicating the shift that occurred centuries ago in livestock when humans started to raise cows, pigs, and other animals as food.”  Surely this development is due to the contraction of wild populations as well as the expansion of farmed populations.

********There is another article that has a different angle on product differentiation and markets: [SR]’We Got Lazy’: U.S. Recyclers Try Cleaning Up Their ScrapThe Wall Street Journal.  Here is the product is recycled materials.  “American trash haulers and recyclers are becoming more prudent about how they collect and sort scrap after China stopped accepting most U.S. scrap exports earlier this year.  The move has upended the U.S. recycling industry: Prices for recyclables are plunging, a glut of paper and plastic is accumulating in warehouses and some material is being sent to landfills.  As a result, some recyclers have focused on producing cleaners loads of paper, plastic and corrugated cardboard, which can fetch higher prices.”  In recycled materials, as well as grains, buyers care about product quality.

(7 June 2018):America’s gig economy is smaller now than before Uber existed, official data showThe Washington Post

——–“Companies like Uber and Lyft—which offer workers flexible work without being employed by a traditional company—have been held up as transformational forces in the American economy. . . . But the gig-economy, which has drawn billions of dollars in venture capital and praise but deep criticism from policy makers, appears not to have caused the massive disruption to the economy that many originally thought.  A new report from the Bureau of Labor Statistics, the first in 13 years on the topic, says the share of U.S. workers in these types of jobs has shrunk from 7.4 percent in 2005, before Uber and its like existed, to 6.9 percent in 2017. . . . The findings suggest that while the nature of work may be changing in certain fields like transportation, there is no dramatic shift away from traditional employment in the economy.”

********The BLS report was widely reported but I found the graphs of The Washington Post to be the most illuminating.  The results of the survey are certainly at variance with the conventional narrative, one that I’ve bought into, of the expanding gig economy.  Perhaps the results were influence by the fact that the BLS “asked people only about their primary job, meaning if someone is driving for Lyft in the evenings or weekends to earn more money, that does not appear in the report.”  It just might be that the primary job that people have is paying so little that they are working their primary job and a gig job.  More research could shed light on this, but it seems like the funding for such additional surveys, at shorter time intervals, is not likely to be forthcoming.

(7 June 2018):The market for driverless cars will head towards monopolyThe Economist

********A one-page exploration of some of the factors that are likely to lead to a highly concentrated industry for driverless cars.  One part of the argument is safety, it being argued that consumers are likely, all things being equal, to purchase (or use) driverless vehicles with better safety records.  Even now there are large differences in those records.  “Between December2016 and November 2017 Waymo reported three collisions in 350,000 miles . . . of driving in California; GM, the nearest American competitor, had 22 in 132,000.  Neither has been involved in a fatal accident, as Tesla and Uber have.”  Also of interest is the brief discussion of ethical considerations in relation to regulation and the possibility of internalizing congestion effects when a particular type of driverless vehicle software is widely employed.

(8 June 2018):Shale country is out of workers.  That means $140,000 for a truck driver and 100$ pay hikesThe Los Angeles Times

——–Labor and housing markets in the Permian Basis of Texas are on fire due to the boom in shale oil production.  “The oil industry has such a ferocious appetite for workers that it’ll hire just about anyone with the most basic skills.”  Sales-tax collections for municipalities are increasing from expanded output but some of those revenues may needed to provide higher wages for city workers to keep them from leaving for the oil fields.

********It sounds like towns in the Permian Basin are experiencing the consequences of increased shale oil production just like North Dakota did a few years back.  One difference, though, is that booms are nothing new to those in the Permian Basis.  As a result, they might be better able to foresee and cope with the seemingly inevitable end of the boom.  One interesting part of the story involves enrollments in programs at Midland College.  Its oil and gas program, “which trains for positions like petroleum-energy technician enrollment is down about 20% from last year.  But schools that teach how to pass the tests for a CDL—commercial driver’s license—are packed.”  With such drivers earning upward of $100,000, it is not hard to see why.

(11 June 2018):Dairy Farms Find a Lifeline: BeerThe New York Times

——–Dairy across the U.S. are having a hard time making ends meet, with milk prices cratering “driven by high supply and falling demand.”  Sean DuBois, who with his wife Molly Stevens runs the 1,000-acre Carter & Stevens Farm in Massachusetts, notes: “To succeed today as a dairy farm, you need to diversify.”  For their farm, that has meant a turn toward craft beer.  They opened Stone Cow Brewery on the farm in 2016, “making beers like the Roll in the Hay I.P.A., which sells for $7 a pint at its taproom.  That makes the beverage much more profitable than the dairy’s raw milk, which currently sells wholesale for about 16 cents per pint, even though it costs more to produce.”  All this is another chapter in “the dairy and brewing industries’ interlinked history.  Brewers often supply farmers with spent grains for feed, and many American craft breweries have started by using secondhand dairy infrastructure.”  In fact, “Ken Grossman founded Sierra Nevada Brewing Co. in Chico, Calif., in 1980 with equipment scavenged from closed Midwestern dairies.”

********Clearly dairy farmers are up against it, helping to explain presidential rants about Canadian milk tariffs, as well as the efforts of North Carolina state representatives to delete the reference to ‘milk’ in almond milk.  We see, then, three different approaches to a serious challenge for dairy farmers: diversification, jawboning, and legislation.

(13 June 2018):Baby Food for Baby BoomersJSTOR Daily

——–Modern baby food began in 1928 when “Daniel Gerber launched his first line of mass-produced canned strained peas for babies . . . The product became popular after World War II, when . . . Americans went on a nationwide spending spree.  This embrace of consumerism included a new love of industrially-produced products like baby food. . . . By 1958 . . . 90 percent of mothers reported feeding their babies commercial baby food.”

********An interesting brief post about some of the factors that led to the widespread acceptance of mass-marketed baby food.

May you have a good week!  Bruce

320 (6 June 2018)

Welcome to week 320!  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 to be read in their entirety, although complete articles may be found by an Internet title search.

If you have questions or comments, please send them.

(30 May 2018): Are avocados toast?  California farmers bet on what we’ll be eating in 2050The Guardian (originally published in Grist)

——–For farmers “planting trees they hope will bear fruit 25 years from now,” climate change projections must be considered now.  California, which produces “two-thirds of the fruits and nuts for the United States” and is the locus for a wine industry with grapevines that “bear abundant fruit for about 25 years . . . but can keep going for hundreds of years,” is a state that is “highly sensitive to climate change.”  Experienced farmers like Chris Sayer, whose Ventura land has been in the family for 130 years, make crop decisions in light of three risks: climate, market, and execution.  Reflection on those risks influence whether an orchard is replaced with another orchard, an annual crop, or turned into houses.

********The article touches upon a wide variety of matters that farmers must take into consideration as a matter of course.  What especially struck me was Chris Sayer’s discussion of execution risk, which involved learning the ins and outs of growing a crop, especially a new one, as well as making market connections.

(30 May 2018): [SR] Rural America Has Jobs.  Now It Just Needs HousingThe Wall Street Journal

——–Austin Steinbach was all set to move to the rural farming town of Columbus, Nebraska “for a job that offered benefits, a $500 signing bonus and a higher wage.  But the 25-year-old father of two had to turn it down after a week-long search with his wife for a home failed to turn up anything livable or in their price range. . . . Instead, Mr. Steinbach will stay in Creston, Iowa, where he supports his family earning $2 less an hour power-washing farm equipment and has no benefits.”  Finding affordable and livable housing is a significant problem.  “Fewer homes are being built per household than at almost any time in U.S. history, and it is even worse in rural communities.”  Developers find it more expensive to build there and “Rural areas are also seeing their populations stagnate or decline as younger people opt for urban living, adding to  the gamble involved in speculative building.”  These factors make it more challenging to attract new businesses to rural areas.

********This is not a new problem.  The Atlantic published a nice piece on the subject in January 2015.  This article clearly relates to Chris Sayer’s options as described in the avocados article above.

(31 May 2018): [SR]Tech’s Titans Tiptoe Toward MonopolyThe Wall Street Journal

********This article is hard to summarize.  It considers Amazon, Apple, Facebook, and Google, and asks us to consider a day when they might be ripe for regulatory action, such as that placed upon the likes of once-dominant firms like AT&T, Standard Oil, and Western Union.  Interestingly, of the four tech giants, “Apple is considered more vulnerable to competitive disruption, despite the fact that it tops the tech world in revenue, profit and market capitalization.”  Regarding these firms, researcher Glen Weyl notes, “Companies go one of two ways—some are in areas where declining returns to scale set in and they get tamed by market processes . . . And other companies get tamed by getting turned into a public utility.  And until they are, they reap extortionate profits.”

(1 June 2018):Why Inconsistent Income Needs Consistent PlanningThe New York Times

——–“Professional athletes, Hollywood players, even tech entrepreneurs whose company rises to a billion-dollar valuation would not seem to need wealth planning.”  But what they share “with many others is an inconsistent income.  It comes in bulk early in their career or later in chunks that are unpredictable.”  Joe McLean, the managing partner of Intersect Capital “and a former professional basketball player in Europe, has drafted a list of 50 reasons that professional athletes and entrepreneurs stay wealthy.”  McLean realizes that it can be heard advising someone who has already “beat the odds” by becoming successful where most others fail.  As a result, he tends to focus on money basics, such as paying off debt, attending to credit scores, and knowing who to trust.

********As work becomes more gig like, inconsistent income will be an increasingly important factor to consider, so these issues are not only ones to be considered by professional athletes in the prime of their careers.  Here is McLean’s list.

********While we are on the subject of financial advice, here is something relating to charitable giving.  The subject is “effective altruism” in the article “Faith, hope and clarityThe Economist.

May you have a good week!  Bruce