339 (17 October 2018)

Welcome to week 339!  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.

(4 October 2018):Free Exchange: Bought and paid forThe Economist

——–“Firms that use political influence to obtain relief from stifling rules may thereby contribute to growth. . . . But firms’ political ties can also be used to weaken rules that protect consumers and to squash competition.  In a new paper Ufuk Akcigit, Salomé Baslandze and Francesca Lotti try to distinguish between such malign purposes and benign ones in the case of Italy.”  They found that “The larger and more dominant companies are, the more they invest in political connections.  As their market position strengthens, they engage in more political hiring but register fewer patents.  Political connections appear deadly to economic dynamism.  Firms with lots of them are much less likely to go out of business; and industries with lots of politically well-connect firms see fewer new firms enter.”  It appears from their work that there is no “strong link between connections to politically successful parties and productivity growth . . . Almost all  value of cultivating politicians seem to come from a more secure market position, rather than a lighter regulatory load.”

********The article concludes, “It seems ever clearer that, when corporations open their wallets to politicians, the public loses.”  These losses seem to be a result of “barriers to competition.”  I would be curious to see how this connects with Adam Winkler’s book: We the Corporations: How American Business Won Their Civil Rights.

(12 October 2018): A Map of Every Building in AmericaThe New York Times

********The NYT has created a tool that allow one to “find maps showing almost every building in the United States.”  Why?  To create an opportunity for one “to connect with the country’s cities and explore them in detail.  To find the familiar, and to discover the unfamiliar.”  For really looking at each structure, Google Maps is the way to go, but to get a high-level look at buildings and settlement patterns, the NYT’s tool is the way to go.  There is a search bar to input a zip code and there is a limited ability to zoom in and out.  What an exciting them, I would think, to be a student of economic geography given the data sets now available.  Here is a brief article that surveys some of the early contributors to location theory, which “has become an integral part of economic geography, regional science, and spatial economics.”

(12 October 2018):Theranos Criminal Case Is Broader Than Publicly Disclosed, Prosecutors SayBloomberg.com

********I just completed Bad Blood: Secrets and Lies in a Silicon Valley Startup, which was published earlier this year.  It is, to say the least, a disturbing tale of how many, many people were taken in by Theranos by way of the persuasiveness and sense of purpose of Elizabeth Holmes and the pugnaciousness of Ramesh “Sunny” Balwani.  There is nothing pretty in what I have read, even though the vision itself may have been noble.  But, as it is said, “There’s many a slip twixt the cup and the lip.”  This article is an update on the federal government’s ongoing criminal fraud case “against former Theranos Inc. Chief Executive Officer Elizabeth Holmes and former President Ramesh ‘Sunny’ Balwani” is of great interest.  In 2014, Theranos and Elizabeth Holmes were riding high, as exemplified by the Fortune article “This CEO is out for blood.”  (This article was noted in TIF 166 (25 June 2014.)  In 2015 the reporter, Roger Parloff, wrote the follow-up story “How Theranos Misled Me.”  Since the trial is underway, you can learn more every day.  Here is something from October 16th.

********If you are interested in the sort of documents generated by the Theranos trial, here is the link to learn more.  You can downlead the June 14, 2018 indictment and follow what appears to be all of the motions, notices, orders, and proceeding transcripts for the trial.  Many of these are free of charge, others require payment.  These documents are the meat and potatoes of the invisible foot.  These documents carry one up to the present and will, as I understand, continue.  All this is the work of Court Listener, of the Free Law Project.  You can learn more here.

(12 October 2018):When Your Boss Is an AlgorithmThe New York Times

********This is an author-bylined article by Alex Rosenblat, whose Uberland: How Algorithms Are Rewriting the Rules of Work will release on October 23rd.  Over four years of research “interviewing 125 drivers for Uber and other ride-hailing apps, as well as taxi drivers” Rosenblat “learned that drivers at ride-hailing companies may have the freedom and flexibility of gig economy work, but they are still at the mercy of a boss—an algorithmic boss.”  That boss “seems to watch everything you do.  Ride-hailing platforms track a variety of personalize statistics, including ride acceptance rates, cancellation rates, hours spent logged in to the app and trips completed.  And they display selected statistics to individual drivers as motivating tools, like ‘You’re in the top 10 percent of partner!’”  This is, of course, merely a specific example of the increasingly common practice of continual monitoring of human behavior by software.  It is used in auto insurance, in educational settings, health, and in a variety of workplace settings.  By reading and reflecting upon the content of this article and Uberland, we will be in a better position to understand the downsides and upsides of the continual monitoring of human behavior by software.  We are, I suspect, only at the thin edge of a very long wedge.

(12 October 2018):Forget Stoners.  The Real Money Is in Medical MarijuanaBloomberg Businessweek

——–Canada will legalize the use of recreational marijuana on Wednesday, October 17th.  But “the real money could be made in medicine.  More than 20 countries, including Germany, Mexico, and Australia, have approved the use of medical marijuana.  Denmark and Luxembourg have taken steps to legalize the drug for medical use.  The U.K. plans to allow prescriptions for cannabis-derived medicine by fall, and investors expect many more to follow. . . . The global medical pot market could be worth more than $50 billion by 2025, from $8 billion in 2017, 10 times the projected size of Canada’s total marijuana sector, according to PI Financial Corp.”  It is thought that the “biggest opportunity for medical marijuana could be in pain treatment . . . The opioid crisis across North America has physicians and patients seeking safer alternatives in the pain sphere.

********Bloomberg Businessweek has a nice article on the terminology of legal marijuana: ”A Crash Course for Investors on the Lingo of (Legal) Weed.”  It is impressive to see the growth of sales when the wall between a legal and illegal market is torn down.  While you are “learning the lingo” for investing, you might also want to know what you could invest in.  Here is “A Guide to Cannabis investing” provided by Bloomberg.com.

(14 October 2018): After Nobel In Economics, William Nordhaus Talks About Who’s Getting His Pollution-Tax Ideas RightThe New York Times

——–William Nordhaus believes that the efforts of the European Union to use cap-and-trade to fight climate change have been “a catastrophic failure.”  But there are places in the world—notably, parts of Canada and South Korea—[where] politicians have . . . [used carbon taxation] in ways that also reframe it not as a tax, but as a financial windfall for taxpayers.  Other governments, including China and some individual states in the United States, are also testing different ways to force companies to pay to pollute.  In short, the world is becoming a laboratory for theories that Professor Nordhaus developed decades ago, when global warming was an abstract future threat.”

********This article is essentially a Q&A with Professor Nordhaus on the political challenges on dealing with policies to deal with climate change.  In his view, what is lacking in the U.S. are grown-ups.  “In other countries, people are grown-ups, and they can live with taxes.”

********In a related article, “Clean up climate change?  It’s just good for businessThe Washington Post, the point is made that an increasing number of corporations are recognizing that they must do something to combat climate change regardless of what the federal government does.  One thing that especially stood out for me is this statement: “One analysis shows that half of the globe’s emissions since 1988 are traceable to just 25 private and state-owned fossil fuel corporations.”  It is based upon “The Carbon Majors Database: CDP Carbon Majors Report 2017.”

(15 October 2018):What’s Monopsony?  It May Be the Reason You Haven’t Had a RaiseBloomberg Businessweek

——–“Now that unemployment has touched its lowest level since 1969, economists are puzzling even more over why wages haven’t been rising faster.  After all, with fewer prospective workers seeking jobs, employers should be having to pay up to attract new employees and keep the ones they have.  One theory about what’s going [on] carries the name monopsony.”

********This is the lead paragraph of a QuickTake on monopsony, which is usually defined as a market with one buyer.  Careful definitions also include the notion that there are many sellers.  (Compare this to monopoly, where there is one seller and many buyers.)  It is conventional to discuss monopsony in relation to labor markets, for example, the labor markets of company towns, like those producing textiles or coal.  The article does a nice job of discussing the growing relevance of monopsony and provides interesting links to different types of literature.  The 12-page article “Modern Models of Monopsony in Labor Markets: A Brief Survey” provides a more technical, math-based discussion.

May you have a good week!

Bruce

338 (10 October 2018)

Welcome to week 338!  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.

(1 October 2018): Review of American Prison: A Reporter’s Undercover Journey into the Business of Punishment, by Shane BauerThe New York Times

——–In 2016 Shane Bauer wrote “a 35,000-word exposé that ran in Mother Jones . . . an article that immediately became one of the most celebrated achievements in that venerable publication’s recent renaissance.”  American Prison “reprises that page-turning narrative, and adds not only the fascinating back story of CCA [Corrections Corporation of America, now CoreCivic], the nation’s first private prison company, but also an eye-opening examination of the history of corrections as a profit-making enterprise, of which the advent of the private prisons that now house 8 percent of American inmates is only the latest chapter.”

********This book has “sparked comparisons” to Newjack, by Ted Conover, “who spent a year in the late 1990s working at New York’s infamous Sing Sing prison to better understand what it’s like to pursue a career as a professional jailer.  But this is not what Bauer is writing about, because a career is not what a company like CCA offers its employees.”  The employees at Sing Sing could really have a career, with extensive initial and regular training, good pay, and benefits, whereas the workers at CCA get little training, low pay, and don’t stay long.  It is hard to avoid the conclusion that in the drive to lower costs people have simple forgotten (or do not care) about the resulting reduction in quality.

********Here is the link to American Prison.  You can learn more about CCA, now known as CoreCivic, here.  I found the Facility Locater to be interesting.  North Carolina has no CoreCivic facilities, like bordering states South Carolina and Virginia.  However, Georgia has 6 facilities and Tennessee 9.

(8 October 2018):Nobel in economics goes to two Americans for studying climate change and sustainable growthThe Los Angeles Times

********The Nobel Memorial Prize in Economic Sciences for 2018 was awarded to William Nordhaus of Yale University and Paul Romer of New York University.  This event has received wide coverage—there are many good articles on it.  I have chosen this one because it quotes David Warsh, the former reporter for The Boston Globe who has long reported on the leading lights of economics, including a book on the work of Paul Romer, and continues to write his weekly blog Economic Principals.  When asked if the Nobel Committee was sending a message by awarding the prize to Nordhaus and Rome “at a time of escalating alarm over climate change” he replied clearly: “Darn right they were sending a message.”  I’m looking forward to learning in more detail Warsh’s thoughts on the award, which will have uncommon depth and relevance.

********Probably the best source of materials on this year’s awards is provided at the Nobel Prize website.  There you will see the citations for both laureates:

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2018 was divided equally between William D. Nordhaus “for integrating climate change into long-run macroeconomic analysis” and Paul M. Romer “for integrating technological innovations into long-run macroeconomic analysis.

In brief, their work looks at different aspects of “long-run macroeconomic analysis.”  Nordhaus examines the role of climate and Romer the role of ideas.  The Nobel Committee seems to be pointing to the potential synergy between their works.  To learn more about their contributions, use the drop-down menu of the Nobel Prize website to navigate to: a Summary; the Prize announcement; the Press release; Advanced information; and Popular information.  The last item on the list includes “Popular science background: Integrating nature and knowledge into economics” that looks accessible; it is eight pages long.

********During the week I finished reading The World in a Grain: The Story of Sand and How It Transformed Civilization, by Vince Beiser.  I wanted to review the book for TIF Weekly, but thought maybe it had already been done well enough—it had.  NPR has a nice, brief review by Genevieve Valentine.  While looking for a review it occurred to me that Grain fits nicely in the narrative being created around this year’s awarding of the Nobel Prize in Economics.

********Grain examines the central role of sand in the development of the modern “built world” and how sand mining has resulted in environmental degradation.  Basically, sand is used in the roads we drive on, the windows we look through, and the buildings we live and work in.  And all that sand, which is definitely not homogeneous, comes from some place—river beds, farm lands, and ocean floors—which are the worse for their extraction.  The stories that Beiser tells take us to Spruce Pine, North Carolina (the source of perhaps the world’s purest crystalline sand—essential for our digital age), Chippewa County, Wisconsin (the source of an especially important sand used in fracking), Dubai (where islands made of sand are sold to the ultra-wealthy), and the South China Sea (where islands made of sand extend Chinese military power).  As the book winds down, I was left with the clear sense of the fragility of the world we have built: roads that deteriorate, windows that break, and concrete the crumbles away as reinforcing rods rust.

(8 October 2018): [SR]The U.S.-China Trade Battles Spawns a New Era of Tariff DodgesThe Wall Street Journal

——–“Every product imported into the U.S. carries a 10-digit designation called an HTS code, of which there are 18,926 in all.  Like a taxonomic version of Noah’s Ark, the code provides a common language to bridge disparate markets and identify products in all their variety.  In a world of increasing tariffs, the code has another function: evading those levies.  The business of code-fudging is expanding in step with tariff increases, undermining U.S. efforts to shield American business from foreign competition, according to importers, customs officials, trade attorneys and shipping brokers.  As trade conflict grows between the two largest economies, these professionals say, code misclassification is starting to compete with transshipments—the rerouting of goods through third countries—as a way to duck tariffs.”

********The article provides examples primarily drawn from the world of plywood.  “The U.S. coding system called HTS—for Harmonized Tariff Schedule—contains 88 separate plywood codes, differentiating by types of wood and thickness variations down to the millimeter.”  You can peruse the current HTS here.  This apparatus, of course, wasn’t just created—it dates back to 1989—it is just that some of the duties have recently changed, so there is now an incentive to reclassify products so that they are subject to lower rates.  In effect, pick-and-choose tariffs encourage pick-and-choose product reclassification.

(9 October 2018):Ominous UN Climate Report May Be Good News for One IndustryBloomberg.com

********The release of the U.N. Special Climate Report Global Warming of 1.5℃ has given rise to reaction by many, including the business press; the Report has a 34-page Summary for Policymakers.  This article points to one industry that will have to play a large part in any meaningful attempt to address climate change: carbon capture and storage (CCS). Regarding that, the Report noted that “CCS . . . will be needed for ‘all pathways’ to limit global warming to 1.5 degrees Celsius (2.7 Fahrenheit) . . . Their conclusion is welcome news for big energy companies led by Royal Dutch Shell Plc, Statoil ASA and Total SA, which are studying how to deploy CCS to safeguard the emissions they produce from oil and gas reservoirs.”

(9 October 2018): [SR] Thousands of Southerners Planted Trees for Retirement.  It Didn’t WorkThe Wall Street Journal

——–In the “depths of the 1980s farm crisis, when prices for agricultural commodities plunged, the Reagan administration launched the Conservation Reserve Program.  Starting in 1986, it promised farmers annual payments of about $30 to $50 for each acre they planted with trees or grasses.  Many seized the offer.  By 1994, more than 2.2 million acres of farmland in the South had been converted to pine plantation, much of it in Mississippi, Alabama and Georgia.”  Thirty years later a “glut of timber has piled up in the Southeast.  There are far more ready-to-cut trees than the region’s mills can saw or pulp.  The surfeit has crushed timber prices in Mississippi, Alabama and several other states.”  This development has “been tough for the individuals and families who own much of the South’s forestland, and who had banked on its operating as a  college fund or retirement account. . . . Many of the owners were counting on forests as a long-term investment that could be replenished and passed on to heirs.”

********A nice piece, too few of which I have seen in the WSJ in recent years.  It provides a good example of the role of the legal and political factors in economic affairs.  I do wonder if the government or individuals took into consideration prospective price declines when they made their decisions to plant.  Although one farmer planting trees will have, for all practical purposes, no effect on market prices, millions of farmers—it is estimated that there are “more than six million owners of at least 10 wooded acres” in the South—will definitely have an effect on market prices.

May you have a good week!

Bruce

337 (3 October 2018)

Welcome to week 337!  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.

This week has been disrupted a bit.  Rather than delaying “publication,” I have decided to send out TIF Weekly with minimal description and commentary.

(10 September 2018):Review of Heartland: A Memoir of Working Hard and Being Broke in the Richest Country on Earth, by Sarah Smarsh.”

——–Raised by those who voted against their interests, “Smarsh is an invaluable guide to flyover country, worth 20 abstract-noun-espousing op-ed columnists.”  Her book “is one of a growing number of important works—including” Evicted by Matthew Desmond and Janesville, by Amy Goldstein.  Perhaps these books “merit their own section in nonfiction aisles across the country: America’s postindustrial decline.”

********Matthew Desmond’s recent article (September 11th) in The New York Times, “Americans Want to Believe Jobs are the Solution to Poverty.  They’re Not” relates well to Smarsh’s book.  He makes a good point when he writes: “If you believe that people are poor because they are not working, then the solution is not to make work pay, but to make the poor work—to force them to clock in somewhere, anywhere, and log as many hours as they can.”  To counter this all-too-familiar attitude, he argues that “When it comes to poverty, a willingness to work is not the problem, and work itself is no longer the solution.”

(26 September 2018): How Dixon Ticonderoga has blurred lines of where its pencils are madeThe Washington Post

********That “Made in America” pencil probably isn’t given a common-sense view.  I found it interesting that there was a Dixon Ticonderoga pencil on the dining room table when I read this article.

(27 September 2018):The Metal That Started Trump’s Trade WarBloomberg Businessweek

********This is an opportunity to learn a bit about the U.S. aluminum market and the role of Section 232 of the Trade Expansion Act of 1962, which is being used to rationalize the imposition of tariffs in the name of national security.  Few companies are happy with the tariffs—the auto industry and brewers are especially unhappy—but Century Aluminum, whose larger shareholder is Switzerland-based Glencore Plc, is very happy as it means its massive stockpile of foreign-made aluminum in the U.S. as worth much more and its manufacturing prospects are looking up.

********Of related interest is “The Real Pain From Trump’s Tariffs Trickles Down to ConsumersBloomberg Businessweek.

(1 October 2018):Detailed New National Maps Show How Neighborhoods Shape Children for LifeThe New York Times

********Small changes in neighborhood, for roughly the same geographical area, can make large changes in life (earnings) outcomes.  The Seattle Housing Authority is offering vouchers to enable families to move to better neighborhoods.

(1 October 2018):The World’s Most Beautiful BatteryBloomberg.com

********High in the Alps, the Kaprun hydroelectric station stores water that can be released to generate power.  Time-of-day energy prices makes this a profitable practice, especially at a time when the use of renewable energy sources like solar and wind are expanding their contribution to the energy supply.

(2 October 2018):Monopsony: When there’s only one employer in townMarketplace

********When there is only one employer, or there is one very powerful employer, wages will be less—this typically is an issue in rural areas and tends to affect women disproportionately.  Monopsony is especially common in (1) retail and tech, (2) K-12 school districts, and (3) franchising with “no-poach” rules.

May you have a good week!

Bruce

336 (26 September 2018)

Welcome to week 336!  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 September 2018): Overlooked No More: Melitta Bentz, Who Invented the Coffee FilterThe New York Times

********The series Overlooked No More lifts up the lives and stories of people who did not make it into the NYT during an era when obituaries were “dominated by white men.”  This article relates how Melitta Bentz of Germany developed the coffee filter—Melitta—and laid the foundation of a business that had 2017 sales of $1.7 billion.

(14 September 2018): FT/McKinsey Business Book of the Year—the shortlistThe Financial Times

——–The shortlist for the annual Financial Times and McKinsey Business Book of the Year has been announced.  The list includes: Capitalism in America, by Alan Greenspan and Adrian Wooldridge; Give People Money, by Annie Lowrey; The Billionaire Raj, by James Crabtree; Bad Blood, by John Carreyrou; The Value of Everything, by Mariana Mazzucato; and New Power, by Jeremy Heimans and Henry Timms.  The Book of the Year Award “goes to the book that provides ‘the most compelling and enjoyable’ insight into modern business issues.”  This year’s Award will be presented in London on November 12th.

********Very brief descriptions of each book are given in the article.  In relation to Give People Money, which examines “How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World,” it is interesting to read and think about “Why Politicians Want the U.S. to Guarantee You a JobBloomberg Businessweek.

(19 September 2018):Windows on How Cities Change Can Be All Too CaptivatingThe New York Times

********Emily Badger, who writes for The Upshot on cities and urban policy, answers questions on what technology she uses in her work.  She recently moved from San Francisco to Washington, D.C., which led her to relay the following observation: “D.C. is a city full of people who would regulate this new technology—or hold think-tank symposiums on how to regulate it—but few here have seen it in action, let alone gone for a ride in a driverless car.”

(20 September 2018):The Auto Industry’s VHS-or-Betamax MomentThe New York Times

——–“The auto industry has a choice to make: Which language will cars speak when they talk to one another?  Until a couple of years ago, automakers agreed on one vehicle-to-vehicle communications platform, called dedicated short-range communications, or DSCR, based on the technology used for Wi-Fi.  But some car companies have begun to favor a competing protocol, known as Cellular V2X, which is based on a next-generation version of the technology used by your mobile phone.  So far, the federal government has held back on enforcing a standard.”  The choice is important.  “Cars are increasingly connected, and the autonomous vehicles that will arrive in the future must have a way to communicate with each other and surrounding infrastructure.  But even before self-driving cars hit the street en masse, there are enormous benefits to be had.  Federal transportation officials estimate that, once widely deployed, such communication systems will prevent or mitigate up to 80 percent of all non-impaired collisions and address thousands of fatal crashes per year in the United States.”

********This would have been a great opportunity to derive lessons from the VHS/Betamax competition, but that opportunity was missed.  It seems like “everyone” knows something about the competition, e.g., that Betamax was superior to VHS, which seems to be an urban legend.  There are some good academic sources on the competition, which might provide what the NYT did not.  A good overview is provided by Wikipedia’s article “Videotape format war.”  In its list of references, the articles “Choosing How to Compete: Strategies and Tactics in Standardization” and “Path Dependence, Lock-In, and History” stand out.  Both articles are available in their entirety online.  The most detailed examination of the competition is [SR]Strategic Maneuvering and Mass-Market Dynamics: The Triumph of VHS over Beta,” Business History Review 66,1 (Spring 1992): 51-94.

(23 September 2018):Why Ireland’s Border Is Brexit’s Intractable PuzzleBloomberg.com

——–“The boundary between the Republic of Ireland and Northern Ireland was long the scene of tense checkpoints and violent protest.  Nearly two decades after the end of a conflict that claimed 3,500 lives, the undulating border is once again caught u in a bitter division.  When British and European Union leaders carry out the split—Brexit—that British voters ordered up, the border between Ireland’s north and south will be the only land crossing between the two jurisdictions.  For now the border is effectively open, meaning people and goods are free to cross back and forth.  Whether it remains that way is the most vexing issue in the divorce talks.

********As is the practice for QuickTake articles, this piece has a Reference Shelf for additional information.  How to proceed with regard to the border post Brexit is far from clear.

(23 September 2018):What Have We Learned Since Bagehot?Economic Principals

——-Earlier this month at the Brookings Institution Ben Bernanke said that after he became the chairman of the Federal Reserve Board, in 2006, “Literally one of the first things I did was to ask the staff to give me the handbook or what you do in the case of a financial crisis, and they provided me a little notebook, typed on a manual typewriter and mimeographed, about four pages in it, and it said, ‘Open the discount window.’  And that was about it. . . . Tim Geithner had a similar experience at the New York Fed, and so we went into one of the complicated and consequential crises in human history with very little in the way of playbook for thinking about how to address the crisis.”  What is clear, though, “is that the next global financial crisis won’t be like the last.  the reason is the financial innovation proceeds within the regulatory framework no matter what, until at some point the authorities face a landscape so different from the expected one as to be essentially unfamiliar.”  Walter Bagehot essentially laid down the notion of “open the discount window” in 1873 when his book Lombard Street: A Description of the Money Market was published; Bagehot simply said “lend freely to troubled institutions, at a slight penalty rate, against good collateral.”  Bagehot’s book now has a modern counterpart: Fighting Financial Crises: Learning from the Past (University of Chicago, 2018), by Gary Gorton and Ellis Tallman.  The book “is a vital addition to crisis literature because it compares what happened in 2008 to the ways in which US bankers dealt with panics on their own in the years before there was a Fed.”

********Gorton and Tallman conclude Crises with five guiding principles for future financial crises: “Find the short-term debt.  Manage the information environment . . . Open emergency lending facilities . . . Prevent systemically important institutions from failing during the crisis.  And consider that certain laws and regulations need not be applied during a financial crisis.”  The proprietor of Economic Principals was previously a reporter for The Boston Globe, and ends his post with the following: “With illustration, analysis and nuance on every page, Fighting Financial Crises is one hundred and fifty years better than Lombard Street.

(23 September 2018):The latest sign of Iran’s economic distress: a shortage of diapersThe Los Angeles Times

——–“In recent days, Iranian authorities have conducted raids in several cities, seizing illicit stockpiles of rare goods and vowing to prosecute the culprits to calm a seething public.  The precious contraband: diapers.  Hyperinflation and a shortage of raw materials have made infant and adult diapers costly and exceedingly scarce, prompting some parents to revert to old-fashioned cloth diapers.  Imported alternatives have tripled in price from a few months ago.”  The fall in the value of the Iranian currency against the dollar by more than one half since January has increased the cost of “producing disposable diapers and sanitary products” that use ultra-absorbent cellulose imported from China, Indonesia, and other countries.  This has resulted in smaller and costlier inventories in stores.

********The article contains a graph showing how the dramatic increase in the price of a dollar in rials, the Iranian currency, since November 2017.

(24 September 2018):Walmart’s Veggie-Tracking B.L.T.: Blockchain Lettuce TechnologyThe New York Times

——–“After a two-year pilot project” Walmart “announced on Monday that it would be using a blockchain, they type of database technology behind Bitcoin, to keep track of every bag of spinach and head of lettuce.  By this time next year, more than 100 farms that supply Walmart with leafy green vegetables will be required to input detailed information about their food into a blockchain database developed by I.B.M. for Walmart and several other retailers exploring similar moves.”  This move follows an experiment conducted by Walmart a year ago—trying to trace the source of sliced mangos.  “It took seven days for Walmart employees to locate the farm in Mexico that grew the fruit.  With the blockchain software developed by IBM, the mangos could be tracked in a matter of seconds, according to Walmart.”

********The system used by Walmart is IBM Food Trust.  You can learn more about it here.

(24 September 2018):It’s a good time to buy art made by womenMarketplace

********This is a four-minute podcast, with transcript, of an interview by Kai Ryssdal with Mary Gabriel, the author of Ninth Street Women: Lee Krassner, Elaine de Kooning, Grace Hartigan, Joan Mitchell, and Helen Frankenthaler: Five Painters and the Movement That Changed Modern Art.  Gabriel makes the point that for a number of reasons, art dealers “are awakening to the idea that women artists are of value and of interest to collectors.”  That awakening of interest has led, and should continue to lead, to an increase in the dollar amounts paid for the work of women artists, something that should show up clearly in the fall auction season.  From what I can gather from the interview, Gabriel relates some clear ideas about the development of the U.S. art market, especially as it relates to the abstract expressionist in the 1950s.

********If you are looking for a middle ground between the Marketplace interview and Gabriel’s 944-page book, you can take a look at “Want to Get Rich Buying Art?  Invest in WomenThe New York Times.

(25 September 2018):The Militant Miners Who Exposed the Horrors of Black LungJSTOR Daily

——–Conflict between coal miners and mine owners in Appalachia is of long standing.  So “when men who had worked their whole lives underground began dying in increasing numbers from a chronic respiratory illness, their lungs literally blackened from years of inhaling coal dust, Appalachians did as they have often done.  As labor studies scholar Alan Derickson writes, they organized a grassroots movement to challenge the deadly working conditions in the coal mines.”  The U.S. Department of Labor reports that “more than 76,000 miners have died” from black lung disease.  The efforts of miners, and the legislation they helped pass, resulted in “the 1970 law that created the Occupational Safety and Health Administration.”

********An interesting and informative précis on the efforts of miners to have legislatures recognize the existence of black lung disease and do something about it.  I found the following to be especially thought provoking:

Coal mining has always been a dangerous job, but by the 1950s, technological advances that automated some of the miner’s tasks, like the continuous miner, had succeeded in reducing the number of deaths and injuries from mechanical accidents.  But the new equipment also significantly increased miner’s exposure to coal dust, leading to a spike in the number of workers afflicted by black lung disease.

The 20-page article that grounds this post looks to be very readable.

May you have a good week!

Bruce

335 (19 September 2018)

Welcome to week 335!  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 September 2018): A major bank is offering payday-style loans.  Will others follow suit?The Los Angeles Times

——–Minneapolis-base “U.S. Bank says it will offer nearly instant small loans to its customers, becoming the first bank to provide such a product since federal regulators cleared the way earlier this year amid continuing concerns over the costs of payday loans.”  The bank noted that “its checking account holders will be able to quickly borrow $100 to $1,000 . . . through its Simple Loan offering.  Borrowers have three months to repay, at a cost of $12 for every $100 borrowed—equivalent to an annual interest rate of about 71%.”  The bank that these loans are expensive, but “they’re dramatically cheaper than payday loans, which give borrowers less time to repay and come with interest rates that often top 400%.”

********This is welcome news for those in facing a cash crunch and who have previously only been able to resort to payday lenders and other “fringe-banking” providers to meet their emergencies.  Will this result in a reduction in the percentage of people who are unbanked?  Presumably one will not be able to get a Simple Loan unless you have already established a banking relationship with U.S. Bank.  U.S. Bank does not have branches in North Carolina, although there are branches in Tennessee and elsewhere.  You can learn more about Simple Loan by reading the press release and following the links contained therein.

(13 September 2018):The Economist at 175: A manifesto for renewing liberalismThe Economist

********During the last six weeks The Economist provided Philosophy Briefs that summarized some of the greatest works in the history of liberalism.  This week’s edition is given over to a celebration of the role that The Economist has played since its formation 175 years ago in the campaign to end the notorious Corn Laws of England.  The campaign, though championed as an effort for free trade, was also a class struggle—British landlords wanting to preserve the high price of foodstuffs (and the value of their land holdings) by keeping foreign produce out of the country and laborers wanting to lower the price of food by allowing foreign produce in.  This week The Economist provides a Leader of liberalism, which provides a very broad, and chastened, look at the current state of liberalism, as well as some suggested policies that might be embraced.  This link is to the Leader which, by stressing the elites that have emerged in the context of the embrace of liberal policies in the modern world has some important things to say.

********The discussion of liberal elites shows up in Foreign Affairs this week in “The Financial Crisis Is Still Empowering Far-Right Populists.”  As the article notes, financial crises are disruptive because “they are manmade disasters.  People blame elites for failing to prevent them.  It’s often not hard to find policy failures and cronyism among the rich and powerful, so trust in the political system erodes.  This opens the door to political entrepreneurs who try to set ‘the people’ against the ‘ruling class.’  The tendency to blame elites after financial crises might suggest that far-left parties would benefit as much as far-right ones.  But that doesn’t happen.”  Research reported in 2015 by Funke, Schularick, and Trebesch in “Going to Extremes: Politics after Financial Crises, 1870-2014” indicates that “the far left’s vote share stays about the same in the aftermath of a crisis.  It seems that when social groups fear decline and a loss of wealth, they turn to right-wind parties that promise stability and law and order.”

********In considering this, I begin to have a bit more understanding of the provocative title of an article this week by Neil Irwin of The New York Times: “The Policymakers Saved the Financial System.  And America Never Forgave Them.”  Perhaps what was unforgiveable was the preservation of the system and the protection of the elites that benefitted from it.  No doubt both of these considerations have figured into the responses of Americans and others to the handling of the crisis.

(14 September 2018):How forensic accountants help bring down white-collar criminals and drug kingpinsMarketplace

********Here is four-minute audio with transcript on the work of forensic accountants, taking as its jumping off point the recent testimony of Paul Manafort.  As the audio notes, forensic accountants provide expertise in the investigation of “crimes like money laundering, fraud and tax evasion.”  The demand for their services must be expanding in these times of flexible morality . . . what about their supply?

********Forensic accounting would appear to be relevant to the material discussed in Moneyland: Why Thieves and Crooks Now Rule the World and How to Take It Back, by Oliver Bullough, which is reviewed this week in The Economist.  Moneyland is Bullough’s “term for a virtual country populated by the mega-rich and their hangers-on.”  The real scandal of Moneyland is “the way ritzy bankers, lawyers, accountants and PR people enable money stolen in poor, ill-run countries to be invested in rich, safe ones.  There are limits to how much cash the pillagers can spend in their own misruled domains, but the ability to teleport money invisibly around the world means, as Mr Bullough puts it, that the rich can continue eating without ever feeling full.”

(14 September 2018):Even in Better Times, Some Americans Seem Farther Behind.  Here’s Why.The New York Times

********The centerpiece of this article is made up of graphs showing Median Income (and Net Worth) relative to population median for Whites, Hispanics, and Blacks in the U.S. over the time period 1989 to 2016.  The data is broken down by Non-College Graduates and College Graduates.  This is one of those cases where a good stare at the data gives rise to many questions and some explanations, a few of which are mentioned in the article.  I was especially struck by the behavior of median income for White, Hispanic, and Black College Graduates, especially that relating to Hispanics.

(16 September 2018):How an Unsolved Mystery Changed the Way We Take PillsThe New York Times

——–“In 1982, someone tampered with capsules of Extra-Strength Tylenol, turning them lethal with potassium cyanide.  Seven people in the Chicago area died.  Copycat attacks around the country caused several more deaths.  As grim as the Tylenol deaths were, they endure as an example of how a corporation, Johnson & Johnson in this instance, took control of the calamity, came up with a strategy and, with surprising swiftness, regained trust it had lost.”  Instead of renaming the product, “the company offered a different solution, a new bottle with the sorts of safety elements now familiar . . . to every shopper: cotton wad, foil seal, childproof cap, plastic strip.  Capsules began to be replaced with caplets the following year.”

********As the article notes, not all corporations have been so forthcoming as the 1982 version of Johnson & Johnson.  In reading this I am reminded of the decisive action of the late and beloved Laurey Masterton, who owned Laurey’s Catering on Biltmore Avenue in Asheville, North Carolina around a hepatitis incident in 1998.  She got the news out quickly and (it seems) her business never suffered.  Evidently, people will forgive you if you quickly do the right thing.  What does all this have to do with the invisible forces?  Trust influences the demand for goods and services, so it is relevant to the invisible hand (economic forces that affect human behavior).  No doubt there are cultural (invisible handshake) factors at work, too.  It seems like new book Rule Makers, Rule Breakers: How Tight and Loose Cultures Wire Our World, by Michele Gelfand, has something to offer regarding how culture affects human behavior.  You can read a review of the book by Colby College sociology professor Neil Gross.

********The Tylenol article is a Retro Report, which is “a growing series of over 150 short documentaries that tell the history behind the news.”  There is a nine-minute video that accompanies the article that is well worth watching.   You can learn more about more about Retro Reports at www.retroreport.org.  I surveyed the Retro Report site and found the 12-minute video “Gerrymandering’s Surprising History and Uncertain Future,” which focuses on North Carolina.  There is a companion article in The New York Times: “The Odd Political Alliance Behind Today’s Gerrymandering.”

(17 September 2018):Marijuana industry fights ‘stoner,’ ‘pot’ and other words that stigmatizes peopleThe Los Angeles Times

——–MedMen Enterprises of Culver City, California, has undertaken an ad campaign to remind people that “marijuana users come from all walks of life.  They can be cops, nurses, teachers, scientists, construction foremen and grandmothers.  All these people appear in MedMen ads that also feature the word ‘stoner’ with a line drawn through it.  As in, let’s get rid of this.”  Daniel Yi, senior vice president of communications at MedMen, notes: “We want to take the stigma away.  We want to make marijuana mainstream.”  The $2-million “Forget Stoner” campaign debuted earlier this year and “is part of a larger push by the cannabis industry to normalize the use of marijuana.”

********The normalization of marijuana and its components is a strategy being considered and employed by a wide range of producers, as is clear from “Coca-Cola Is Eyeing the Cannabis MarketBloomberg.com.  Drinks infused with Cannabidiol (CBD), which is “the non-psychoactive ingredient in marijuana that treats pain but doesn’t get you high,” are of increasing interest to those in the drinks market, which “Coca-Cola says it’s monitoring.”  By considering such a move, Coke is following a strategy already embraced by larger brewers, such as Corona, Molson Coors, and Heineken, which are seeing slowing sales in their traditional markets.  Both large-scale brewers and soft drink producers have seen sales slow in recent years.  Some useful and concise information about the components of marijuana is related in the Quicktake “Why Coca-Cola May Add a Cannabis Component to DrinksBloomberg.com.  The main distinction is between THC, which is psychoactive, and CBD, which is not.  Evidently the U.S. Drug Enforcement Administration regards CBD and THC in the same way, even though they are demonstrably different in their effects.

May you have a good week!

Bruce

334 (12 September 2018)

Welcome to week 334!  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.

(28 August 2018): How a Ruling on Insider Trading Could Affect the Chris Collins CaseThe New York Times

——–“Insider trading cases are sometimes as simple as a well-timed phone call warning an investor to bail on a stock ahead of impending bad news.  The indictment this month of Representative Chris Collins, a Republican representing a district near Buffalo, N.Y., his son Cameron Collins, and the father of Cameron Collins’s fiancée is a good reminder of that. . . . An insider trading violation does not require the source of the information trade on it.  The law requires only that the government show the information was given to others with the intention that they trade on it and that the tipper received a benefit, which can be something as simple as cash or a gift to family or friends.”

********The article goes on to summarize some recent rulings on insider trading that make it easier to demonstrate benefit, and then easier to secure insider trading convictions.  It will be interesting to see how things work out for Representative Collins et al.

(4 September 2018):James Mirrlees, Whose Tax Model Earned a Nobel, Dies at 82The New York Times

——–James Mirrlees, who shared the 1996 Nobel Prize in Economics with William Vickrey, died on August 29th at his home in Cambridge, England.  In his work “Mirrlees suggested that too many progressive taxes imposed at the highest income levels could discourage the wealthy from earning even more, reducing the revenue available to pay for government services and assist lower-income households.”  Although he had expected that “the rigorous analysis of income-taxation in the utilitarian manner to provide an argument for high tax rates” he found that an “approximately linear” (flat) tax schedule was more desirable.

********You can learn much more about James A. Mirrlees by consulting his Nobel Prize materials.

(6 September 2018):Rousseau, Marx and Nietzsche: The prophets of illiberal progressThe Economist

——–This brief is the sixth and last of the Philosophy Briefs on Liberal thinkers.  Encountered here are the ideas of “three anti-liberals: Jean-Jacques Rousseau, a superstar of the French Enlightenment; Karl Marx, a 19th-century German revolutionary communist; and Friedrich Nietzsche, 30 years Marx’s junior and one of philosophy’s great dissidents.  Each has a vast and distinct universe of ideas.  But all of them dismiss the liberal view of progress.  Liberals believe that things tend to get better. . . . And so liberals set out to define the conditions for progress to come about.  They believe that argument and free speech establish good ideas and propagate them.  They reject concentrations of power because dominant groups tend to abuse their privileges, oppressing others and subverting the common good.  And they affirm individual dignity, which means that nobody, however certain they are, can force others to give up their beliefs.  In their different ways Rousseau, Marx and Nietzsche rejected all these ideas.”

********In concluding the article, and the series, it is noted that, in contrast to the ideas of Rousseau, Marx, and Nietzsche, “Liberalism . . . does not believe it has all the answers.  That is possibly its greatest strength.”

(6 September 2018):The pros and cons of collaborationThe Economist

********This article take a brief look at collaboration (working in teams) that is mindful of its pro (the wisdom of crowds) and its con (groupthink).  In so doing it discusses some of the recent literature on the subject—one article and some books.  It turns out that intermittent collaboration tends to perform better on average than going it alone or continual collaboration.  And it is noted that “Close teamwork may be vital in the lower reaches of a hierarchy, but at the  top someone has to make a decision.”  Finally, co-leadership structures tend not to work well, as it “creates uncertainty over who is really in charge.”

********This seems like a good place to mention Farsighted: How We Make the Decisions That Matter the Most, by Steven Johnson, which is [SR] reviewed in The Wall Street Journal.  As the reviewer notes, “Mr. Johnson is explicitly focused on real-life decisions that (ideally) involve serious deliberation . . . He is less interested in the abstract experiments . . . that he says constitute the foundation of behavioral economics.”  Interesting to me was the distinction made between shared and unshared information.  In designing a process to elicit information, town halls tend to elicit shared information.  As a result, “it is important to design a process that exposes ‘unshared information’—by meeting individually with stakeholders,” too.

(6 September 2018):The fight against illicit fishing of the oceans is moving into spaceThe Economist

********This is a brief survey of Illicit, Unreported, and Unregulated (IUU) fishing and some of the technological means being adopted to combat it.  Fitting large ships and small boats with radio beacons and expanding the satellite network would help develop the information necessary to detect IUU fishing and apprehend them in port.  These innovations could make IUU fishing a thing of the past, at least where “the will to enforce the rules exist.”  The National Oceanic and Atmospheric Administration is a source of additional information about IUU fishing.

(7 September 2018):Amazon’s Antitrust Antagonist Has a Breakthrough IdeaThe New York Times

********This is another article, mostly biographical, on Lina Khan, the author of “Amazon’s Antitrust Paradox,” and the influence of her ideas.  As the article notes, her paper “has rocked the antitrust establishment, and is making an unlikely celebrity of Ms. Khan in the corridors of Washington.”  What’s new about this article is the attention it draws to hearings by the Federal Trade Commission, starting on September 13th at the Georgetown University Law Center.  These hearings, “the first of their type since 1995,” will consider “whether a changing economy requires changing enforcement attitudes.”  The Hearings are entitled “Competition and Consumer Protection in the 21st Century.”  At its link you can find the Agenda and information about Event Speakers, and much more.  At another link, there is a statement that “The event will be webcast live” but I see no indication of how to access the webcast.  This could be an important event.

(7 September 2018): The Consolidation of the American HarvestBloomberg.com

——–“America’s heartland has a sameness that didn’t exist a generation ago. . . . As global markets have grown, the desire and need for diverse local production has declined. . . . Since the mid-1990s, around the time that genetically modified crops became prevalent in U.S. agriculture, the diversity of American fields has decreased.  It’s not just the GMOs, although they had aided the spread of corn and soybeans.  The rise of ethanol and farm exports to China—as well as cheaper transportation costs, increasing concentration of livestock feedlots, and climate change—have each played a role.”

********This article is accompanied by a series of figures that dramatically indicate how some crops are expanding, and where, and some are not.  Acres planted in corn and soybeans are expanding, in some places dramatically, while wheat is contracting, almost everywhere; there are dramatic declines in cotton acreage in traditional areas, with expansion in north Texas and western Oklahoma.  Driving some of these changes has been the expansion of corn for ethanol production, the consequence of the invisible foot—legal and political factors—and changing international trade patterns, especially with regard to China.  I would love to see representations of this data at the county level.

********This is the place to reference another article from that I have seen for the past six weeks or so: “Here’s How America Uses Its LandBloomberg.com   This graphically-rich article uses information from the USDA and other sources to look at six types of land usage in the 48 contiguous states.  The uses are: Pasture/range, Forest, Cropland, Special Use, Miscellaneous, and Urban.  Each use is color coded which is important to remember as you make your way through the article.  I needed to work my way through the content slowly as it is put together in an unusual way.  The very first graph, which shows all of the uses imposed upon the map of the U.S., may be the most informative.  Now if there was just some way of integrating the changing land use, as shown in “Consolidation” with the predominant use shown in “Here’s How.”

********The USDA information on Major Land Uses is available online.  There is a 69-page report “Major Uses of Land in the United States, 2012” available as a  pdf.

(10 September 2018):A Forensic Accounting Expert Explains How Companies Trick InvestorsBloomberg.com

********This is an episode of Odd Lots, with Tracy Alloway and Joe Weisenthal.  In this week’s 36-minute podcast they speak with Howard Schilit, a forensic accounting expert who is the author of Financial Shenanigans: How To Detect Accounting Gimmicks and Fraud in Financial Reports, now in its 4th edition.  In this engaging and enlightening interview, Schilit indicates that “Companies have all kinds of discretion in how they recognize revenue and costs.  Some of this is legit.  Some of this is fraud.”  Among the topics discussed are “the various techniques companies use to disguise their earnings, how accounting rules have failed to keep up with changing times, and what investors can do to spot red flags.”  Of contemporary interest is Schilit’s discussion, starting at 27 minutes, of President Trump’s words about possibly doing away with quarterly corporate financial reports.  Schilit is not a fan and  provides some suggestions about how to make those reports more meaningful.

********This is one of those podcasts that does not lend itself to multitasking.  There are many thoughtful questions and equally thoughtful answers.  What stood out for me was the power of a story.  A good story, evidently, has the ability the shut off the ability to think critically.

(11 September 2018):American Eating Habits Are Changing Faster than Fast Food Can Keep UpBloomberg.com

——–According to researcher NPD Group Inc., per-person restaurant visits fell to a “28-year low in 2018 . . . Restaurants are getting dinged by the convenience of Netflix, the advent of pre-made meals, the spread of online grocery delivery, plus crushing student debt and a focus on healthy eating.”  Now “Eighty-two percent of American meals are prepared at home—more than were cooked 10 years ago . . . The latest peak in restaurant-going was in 2000, when the average American dined out 216 times a year.  that figure fell to 185 for the year ended in February.”  Although chains like McDonalds Corp. are reporting rising U.S. sales, the increases “have been driven by price hikes, not more customers.  Traffic for the industry was down 1.1 percent in July, the 29th straight month of declines.

********The article contains some telling graphs.  One showing the behavior of Restaurant meals per capita, which has declined continuously since 2008, and another showing “Restaurant inflation” vs. “Food at home inflation.”  As the article notes, the “gap” between the two is growing, i.e., the relative price of eating out in comparison to eating in is increasing.

(11 September 2018):The Secret Drug Pricing System Middlemen Use to Rake in MillionsBloomberg.com

********Much of the discussion of pharmaceutical prices seem to revolve around the notion that manufacturer profits must be “high” to ensure the research costs surrounding new product development.  This article provides another perspective, by looking at “spread” between Medicaid program costs (on the high side) and pharmacy costs (on the low side), which tends to be dramatic.  This piece of investigative journalism—check out the notes on Methodology at the end of the article—helped me formalize what it is that is attracting me to Bloomberg’s approach to the news.  It made me reach for Democracy’s Detectives: The Economics of Investigative Journalism, which is now next to the top of my reading list.  What’s at the top?  The World in a Grain: The Story of Sand and How It Transformed Civilization.

May you have a good week!

Bruce

333 (5 September 2018)

Welcome to week 333!  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.

(29 August 2018): Miami Will Be Underwater Soon.  Its Drinking Water Could Go FirstBloomberg Businessweek

——–“Barring a stupendous reversal in greenhouse gas emissions, the rising Atlantic will cover much of Miami by the end of this century.  The economic effects will be devastating: Zillow Inc. estimates that six feet of sea-level rise would put a quarter of Miami’s homes underwater, rendering $200 billion of real estate worthless.  But global warming poses a more immediate danger: The permeability that makes the aquifer so easily accessible also makes it vulnerable.  ‘It’s very easy to contaminate our aquifer,’ says Rachel Silverstein, executive director of Miami Waterkeeper, a local environmental protection group.  And the consequences could be sweeping. ‘Drinking water supply is always an existential question.’  County officials agree with her.”

********In my reading, I have tended to focus on (be impressed by) sea-level rise and its effect on land and dwellings.  What this article points out is that what happens below, e.g., to the aquifer, is important, more immediate, and perhaps more insidious because it is not easy to see.

********The article “Life Without Water: Sweaty, Smelly, and Furious in CaracasBloomberg.com provides a glimpse of what a life without water, most of the time, is like and makes a connects to the article immediately below.

(30 August 2018): Venezuela’s Neighbors Join Forces to Contain Crushing Flow of RefugeesBloomberg.com

——–“Venezuela’s accelerating slide toward mass starvation has become a continental disaster and South American governments this week began trying to manage it together.  With thousands of migrants pouring over the border—an outflow equal to the Mediterranean refugee crisis—government officials are meeting in Colombia, Peru and Ecuador to coordinate a response that so far has been haphazard.  On the agenda are measures to prevent epidemics, harmonize identification requirements and share the burden of relief. . . . In all, 2.3 million Venezuelans live outside the country, with more than 1.6 million fleeing the ravaged petrostate since 2015, according to the United Nations High Commissioner for Refugees.  That’s roughly equal to the flow of migrants to Europe in the same period.  The crisis looks likely to worsen as oil output plunges thanks to mismanagement, and hyperinflation defies attempts to rein it in.”  Bearing the brunt of the exodus is Colombia, “which has a 1,400-mile border with Venezuela.”

********I admit to being oblivious to the humanitarian crisis taking place in Venezuela and the region.  Here is a map of the region if you, like me, could use a refresher.  In searching for a little background, I found “How Venezuela’s crisis developed and drove out millions of peopleBBC.com, which is current (22 August 2018) and comprehensive.  Two statistics jump out: 95% of government revenue comes from oil exports and the 2018 inflation rate is predicted to be 1,000,000%.  In 2017, approximately 600,000 Venezuelans migrated to Colombia, 290,000 to the U.S., 208,000 to Spain, and 119,000 to Chile.  The projected inflation rate will likely continue to lead Venezuelans to conclude that they would be better off living someplace else.

(30 August 2018):Rawls rules: Three post-war liberals strove to establish the meaning of freedomThe Economist

********This brief is the fifth of six Philosophy Briefs on Liberal thinkers.  Here we encounter the ideas of: Isaiah Berlin, who distinguished between negative and positive liberty in “Two Concepts of Liberty” (1958); John Rawls, who wrote A Theory of Justice (1971), and Robert Nozick, the author of Anarchy, State, and Utopia (1974).  The connections among then, especially between Rawls and Nozick, are clearly laid out; the Stanford Encyclopedia of Philosophy has a scholarly entry on “Positive and Negative Liberty.”  I found the discussion relating to identity and freedom of expression to be thought provoking.

********Connected to this brief in an unexpected way is the interview by Kai Ryssdal, host of “Marketplace,” with Arthur C. Brooks, the outgoing president of the American Enterprise Institute who will soon teach at Harvard University.  The interview is titled “Outgoing AEI president wants a healthy ‘competition of ideas’.”  Ryssdal sought to get his perspective on some current matters in light of the AEI’s motto “a competition of ideas is fundamental to a free society.”  There are a number of things of interest in the article, but what really caught my attention—and will endure—is the response by Brooks to the following question by Ryssdal: “Do you think you’ve gotten traction on [some of your ideas] . . . in the past 10 years?  Or have you been shouting into the hurricane?

Brooks: Well, you know when you’re in the world of ideas it’s very easy to feel like you’re shouting into a hurricane. Why? Because you’re kind of a climate scientist in a world that’s more interested in weather reports. Politics is like the weather, and ideas are climate science. But in the end, in the long run, it’s ideas that matter the most.

(30 August 2018):The U.S.-Mexico Border Is Becoming a Banking DesertBloomberg Businessweek

——–“Sabrina Hallman’s seed business has operated out of warehouses [in Nogales] a short drive from the U.S.-Mexico border since 1989.  The Sierra Seed Co., which sells to commercial growers in Mexico, is well-known in her small Arizona town—as is Hallman, a former school principal who took over from her father as chief executive officer in 2007.  Three years later her bank was acquired, and its new owners cut off a line of credit her business had depended on for years.”  Regardless of the arguments Hallman made, they were to avail: “The company did business on both sides of the border and therefore posed a money laundering risk the bank wasn’t willing to take.  Rather than spend resources vetting and monitoring what it perceived to be a high-risk account—or face enormous fines for failing do so—Hallman’s company had to go.”  Enhanced scrutiny of banks “in high financial crime areas, particularly those near the border, has caused banks to retreat, unleashing a host of unintended consequences. . . . Businesses run by Mexican nationals, those that transact on both sides of the border, and those that deal primarily in cash were especially likely to get the boot.”

********An excellent example of the changes in the economic environment that can result from a particular historical event, in this case 9/11/2001.  As the article notes, “the real turning point for the Nogales border . . . Sept. 11.  The 2001 USA Patriot Act ramped up pressure on banks to detect and report suspicious activity and increased penalties on institutions that didn’t comply.  In 2012, HSBC got hit with a $1.9 billion fine for failing to stop the Norte del Valle and Sinaloa cartels from laundering more than $880 million of drug money.”

********The U.S. Government Accountability Office has written a report on the financial situation along the southwest border of the U.S.  You can learn more by the report’s website.

(31 August 2018):’It’s become a gold rush’: Inside the race to create smart shoes, custom razors and high-tech devices for the over-65 crowdThe Washington Post

——–For years Gillette mailed out free razors to “millions of men a year on their 18th birthdays.  Its ads focus on the experience passing from father to son (sometimes with the help of famous faces like quarterbacks Archie and Eli Manning).  But in recent years, executives have begun to see another milestone emerge in their customers’ lives: the moment when sons begin shaving their aging fathers.”  Recognizing this, Procter and Gamble, which owns Gillette, spent three years designing and testing what has become the Gillette Treo, which has features to address the requirements of those shaving others.  This is just once instance of reconceptualizing products in line with an aging population group, the baby boomers, who “still control 70 percent of the country’s disposable income.”  According to Danny Silverman of Clavis Insight, such rethinking of traditional products has “become a gold rush.”

********The article includes some of the research that was done on the Treo.  In a real-world test, traditional shaving materials in a nursing home took 12 minutes in contrast to 3 minutes for the Treo.  In addition, to the Treo resulted in a better experience for the person being shaved.  All this made me think of the principle involved in this redesign.  What changes to a product must be made when it is no longer used by “me” for me but instead used by someone else for me?  (I think I would call this recentering the user.)  As the Treo example shows, there is a lot to be learned from care givers.  Clearly these are opportunities that have been missed for far too long.  It is simply too easy to come up with a reason why that has been the case.  An example of how social and historical forces—the invisible handshake—enables us to not see, as well as see.

(3 September 2018):Will Judges Have the Last Word on Climate Change?Bloomberg Businessweek

********It depends, is the short answer to the question posed.  This is a nice summary of the use of the legal system as a means to slow climate change.  Approaches vary in the U.S. and in other countries, sometimes being aimed at national governments and agencies, sometimes at state and local governments, and sometimes at corporations.  In the U.S. environmentalists are “seeking their tobacco moment.”  Regarding tobacco, decades of litigation were unsuccessful before the tide turned.  When victory came, “settlements totaling $246 billion and permanent changes in the sale and marketing of cigarettes.  It’s a model that climate change activists would love to duplicate.”  The article concludes with The Reference Shelf, which provides access to six types of source materials.

(4 September 2018): [SR]Flood of Sand Points to Shakeout for Shale SuppliersThe Wall Street Journal

——–“Two years ago, many investors had the same idea: tapping the dunes of the West Texas desert to supply shale drillers with the sand they use in fracking.  Now, around 20 sand mines are set to be active in the Permian Basin, America’s most active oil field, by year’s end, and even some of those who put hundreds of millions of dollars between these startups predict they won’t all survive.”  The quality of sand in West Texas is an issue.  Typically frackers have favored “Northern White [Wisconsin sand] because of its superior ‘crush strength,’ or ability to withstand pressure deep underground . . . But when oil prices fell around 75% in 2014, companies were forced to seek savings in their supply chain and rethink using local sand.”  Oil producers using local sand can eliminate “the rail costs of Northern White, sometimes more that $60 per ton . . . But there are still doubts about local sand’s long-term performance.  So far, companies say it has not impacted initial production on wells, when they produce oil at their highest rates.  But it could limit production at later stages, experts say, as higher pressures expose the weaker crush strength of the local sand.”

********I continue to be fascinated by the relevance of sand quality for different uses.  This article has the additional complexity of short- and long-term production effects of different types of sand.  Presumably there are “crossover” levels of output and pricing differences that will make one quality of sand preferable to another.  So, something as seemingly prosaic as “sand” is full of complexity.

May you have a good week!

Bruce