197 (28 January 2015)

Welcome to week 197!  The articles below caught my attention this week.  Please note that what are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********).  The links to articles preceded by [SR] require a subscription to be read in their entirety, although complete articles may frequently be found by a title search.

You can find a pdf of this issue, a cumulative pdf for issues 1-156, and a cumulative pdf for issues 157-present at: https://sites.google.com/site/brucedeanlarson/the-invisible-forces.

(22 January 2015): “U.S. Farmers’ Latest Hot Crop: Sorghum” [SR](http://www.wsj.com/articles/u-s-farmers-scramble-to-supply-latest-hot-crop-sorghum-1421858950)

——–Sorghum has long been overshadowed by crops such as corn.  But it is not in “high demand thanks to China’s soaring appetite for animal feed and a shift in its buying preferences away from foreign corn.  A 15-fold increase in imports of U.S. sorghum by China over the past year has pushed its price above corn’s in parts of the U.S., a rarity that highlights how policy shifts by Beijing can have a far-reaching impact on the global grain trade.”  The changing purchases of corn and sorghum by China have been influenced by its stance regarding genetically-modified corn; no GMO sorghum is sold in the U.S.  However, China recently approved biotech corn, so this will likely influence future sorghum demand.

********Sorghum, also known as milo, is drought-tolerant; the largest sorghum-producing states are: Kansas, Texas, Oklahoma, Arkansas, and Nebraska.  You can learn more about sorghum, including its use in making gluten-free beer, at: http://en.wikipedia.org/wiki/Commercial_sorghum.  I think my first encounter with reading about sorghum was in the Ph.D. dissertation of Steven J. Haggblade, The shebeen queen or sorghum beer in Botswana: The impact of factory brews on a cottage industry (Michigan State University 1984).

(22 January 2015): “In Journal, Man Wrote of Creating Silk Road, an Online Black Market, Prosecutors Say” (http://www.nytimes.com/2015/01/22/nyregion/man-wrote-of-creating-illicit-site-jury-is-told.html)

——–According to prosecutors at the trial of Ross W. Ulbricht, “Long before the website Silk Road became an online black market for drugs and other illicit goods, it began its life of underground commerce with the sale of homegrown hallucinogenic mushrooms.”  In a copy of a journal said to be that of Ulbricht, the site was announced “in Bitcoin discussion forums, taking his first order for mushrooms and selling about 10 pounds in a couple of months.”  As his traffic grew, he hired new employees, one of whom helped him to “see a larger vision . . . A brand that people can come to trust and rally behind . . . Silk Road chat, Silk Road exchange, Silk Road credit union, Silk Road market, Silk Road everything.”

********Ulbricht, it appears, was an entrepreneur in the clearest sense.  Wired has more on this story in its article “Here’s the Secret Silk Road Journal From the Laptop of Ross Ulbricht (http://www.wired.com/2015/01/heres-secret-silk-road-journal-laptop-ross-ulbricht/).

(23 January 2015): “How Economists Came to Dominate the Conversation” (http://www.nytimes.com/2015/01/24/upshot/how-economists-came-to-dominate-the-conversation.html)

********Justin Wolfers, a professor of economics and public policy at the University of Michigan, produces and explores references to a variety of social sciences and history in the archives of The New York Times and The Congressional Record.  It turns out that within those archives the word economist has been the most frequently mentioned social scientist and has been, since the 1930s onward, usually been mentioned more frequently than historians.  Just for fun, I used Google’s Ngram Viewer to perform a similar type of search for books from 1860 through 2008.  Searching for the same terms as Wolfers—economist, psychologist, sociologist, anthropologist, demographer, and historian—but over books, historian leads the way, followed by psychologist, and economist.  You can perform the same exercise at: https://books.google.com/ngrams/.  I found it interesting that most of these academics peaked about 1970.

(24 January 2015): “Dueling Oil Benchmarks Converge in Their Price, But Diverge in Their Stories” [SR](http://www.wsj.com/articles/dueling-oil-benchmarks-converge-in-price-but-their-stories-diverge-1422039795)

——–The prices “traditionally used to convey global oil prices—the West Texas Intermediate and Brent crude benchmarks—measure different things and don’t always line up.  On Friday, for example, a barrel of oil cost $5 and change by WTI and a few dollars more by Brent.  At times, the difference between the two has topped $20.”  The basic reason why the prices differ is that they reflect market conditions in two different: “WTI reflects the U.S. and Brent the North Sea in Europe.  At one time, they were equally good benchmarks of global crude.  But as domestic production surged, WTI began to reflect the surprising domestic oil, which turned out to be more than the existing pipelines could handle.”  Thus the WTI price fell below the Brent.  Subsequently, additional pipeline services from Cushing, Oklahoma to the Gulf Coast refineries, including the reversal of the 500-mile Seaway pipeline, have reduced “the spread between the benchmarks . . . displaced imports contributed to the lessening gap.”

********This article is part of Jo Craven McGinty’s column, The Numbers.  She is a graduate of Elon College, now Elon University, in North Carolina and won a Pulitzer Prize while working at The Washington Post in 1999.  She came to the WSJ from The New York Times.  You can learn more about her at: http://topics.wsj.com/person/M/jo_craven-mcginty/8046.  Some additional information about this specific column can be found at: http://blogs.wsj.com/numbers/behind-the-benchmarks-a-look-at-some-crude-history-1924/. The Numbers blog (http://blogs.wsj.com/numbers/) provides information on seven categories: Politics, Science, Media, Health, Sports, Social States, and Money.  In some ways its organization reminds me JSTOR Daily (http://daily.jstor.org/).  By the way, Carl Bialik, who previously wrote the column The Numbers Guy for the WSJ now writes for FiveThirtyEight (http://fivethirtyeight.com/), the brainchild of Nate Silver of election prediction fame.  It is worth a look.

********The relationship between these two markets can be usefully explored using a simple two market general equilibrium model that most any high school student can manage with some effort.  Its exploration becomes all-the-more relevant given that both the WTI and the Brent markets traffic in “light, sweet crude oils.”

(25 January 2015): “When Calculus of Loss Doesn’t Add Up” (http://www.nytimes.com/2015/01/25/public-editor/when-calculus-of-loss-doesnt-add-up.html)

——–[A column by Margaret Sullivan, The Public Editor of The New York Times.]  “If you start from the premise that every human life is of equal importance, then the judgments of news organizations will often be confounding.  Because when it comes to coverage, some violent deaths—to misquote Orwell—are more equal than others.  Such was the case earlier this month, when the Western news media . . . was fixated on the attacks that left 17 victims on three dead in Paris.  Coverage was wall to wall . . . Meanwhile, in a much more remote part of the world, the radical group Boko Haram had devastated the town of Baga in rural Nigeria.  Early reports said that as many as 2,000 had been slain.  In the first days, The Times barely took note.”  Readers of The Times did take note, however, asking with greater urgency, “Where is the Boko Haram story?”

********Ms. Sullivan took up the coverage with Joseph Kahn, “The Times’s top-ranking editor for international news,” who noted that the two stories weren’t comparable.  I found the discussion of what makes something newsworthy interesting.  There is someone or some group who has made a decision to deliver the news we read, hear, and see every day.

(27 January 2015): “The Business Side of Animal Rights” [SR](http://www.wsj.com/articles/animal-rights-advocates-get-proxy-advisory-firms-onboard-1422303269)

——–“Animal-welfare advocates are courting a new Wall Street ally as they take on big U.S. meatpackers: proxy advisory firms.  Groups such as the Humane Society of the U.S. for years have sought to build support among large companies’ shareholders to push for changes in animal treatment, often finding little traction.  Now, some pitches are being tailored to win backing from increasingly influential firms that advise investors on how to vote their shares, including Institutional Shareholder Services Inc. and Glass, Lewis & Co.”  The difference?  Animal-rights advocates are now focusing on “the financial-risk angle instead of merely animal treatment.”  Advocacy groups are harnessing “a growing tendency among institutional investors such as mutual funds to press for change at companies, rather than divest their shares in protest.”  Support from Institutional Shareholder Services led Tyson Foods Inc. to agree to “urge more space for pregnant mother pigs in a January 2014 letter to its hog suppliers.”  As a result the Humane Society withdrew a proposal that would have been taken to a Tyson shareholder meeting.

********In example that shows the importance about being clear about one’s objective and exploring alternatives.  By focusing upon corporate reporting of risk to investors, some animal-rights advocates have found an argument that is more convincing to those who advise investors, and thus for those who make corporate decisions.

(28 January 2015): “Indiana Will Allow Entry to Medicaid for a Price” (http://www.nytimes.com/2015/01/28/us/politics/indiana-will-allow-entry-to-medicaid-for-a-price.html)

——–“After a lengthy back-and-forth, the Obama administration has agreed to let Gov. Mike Pence of Indiana, a Republican, expand Medicaid on his own terms, including some that have not been allowed before under federal rules.  The plan will extend coverage to an additional 350,000 Indiana residents with incomes of up to 138 percent of the federal poverty level . . . starting next month.  But Mr. Pence, like several Republican governors before him, insisted on adding a conservative twist to the expansion, mostly be requiring beneficiaries to pay something toward their coverage.”  According to Pence, “There are a lot of first-in-the-nation aspects to this . . . It give Hoosiers the dignity to pay for their own health insurance, and that transaction is important to starting people on a path toward really embracing greater ownership of their health care.” Republican governors in other states, e.g., Tennessee, Utah, and Wyoming, are also “pushing for alternative Medicaid expansions that would charge premiums to some enrollees.”

********According to The Wall Street Journal, Gov. Pence’s move “could prompt up to a half-dozen other GOP-led states to follow suit, including Florida, Tennessee and Alabama, by giving them a model to follow.”  [SR](http://www.wsj.com/articles/indiana-governor-to-expand-medicaid-coverage-1422371729).  You can learn more at: http://blogs.wsj.com/washwire/2015/01/27/the-fight-over-charging-fees-to-medicaid-beneficiaries/.  This link provides access to many additional studies, including those done by Mathematica policy analysts for the state of Indiana.  As a final note, the Washington Wire blog looks quite useful for those who want to know what is going on “now” in DC.

(28 January 2015): “On-Demand Workers: ‘We Are Not Robots’” [SR](http://www.wsj.com/articles/on-demand-workers-we-are-not-robots-1422406524)

——–“Companies like Uber Technologies Inc., cleaning service Handybook Inc., and odd-job facilitator TaskRabbit have captured the imagination of consumers and investors because their apps turn a smartphone into a remote control capable of summoning a drive, housekeeper or errand-doer. . . . Yet a host of lawsuits, protests and forums organized by and for workers suggest that many flexible laborers feel less enthusiastic about the new model of work.”  The rumblings of discontent among such workers “highlight the ambivalence that many workers feel toward the platforms that supply or supplement their income.”  According to Shelby Clark, the CEO of Peers, which is a membership organization of about 250,000 independent contractors for on-demand firms, “Many people are really liberated by the income they are able to earn and the flexibility over their schedules . . . At the same time, working in the sharing economy can feel isolating and confusing.”

********The article points to an important issue regarding “app-enabled workers.“  They do not “fit neatly into a regulatory landscape that recognizes only two types of worker: employees in traditional work relationship and independent contractors.”  Some have suggested the term ‘dependent contractors’ to capture some of app-enabled workers.  Since “New laws changing the system appear unlikely any time soon, . . . courts and companies may sort out the complexities first, employment experts say.”  A search on the term “dependent contractor” will turn up an article in The Wall Street Journal and others, including http://www.sportlaw.ca/2013/07/dependent-contractors-a-third-employment-relationship-with-legal-concerns-for-sport-organizations/.

********A somewhat related article is “Job Licenses in Spotlight as Uber Rises” (http://www.nytimes.com/2015/01/28/business/economy/ubers-success-casts-doubt-on-many-job-licenses.html).  Evidently, President Obama’s budget, to be released on Monday, includes “$15 million for states to analyze the costs and benefits of their licensing rules, identify best practices and explore making licenses portable across state lines.”  The budget contains another $500 million to develop “industry-recognized credentials teach to and employers could use for hiring, potentially reducing the need for state-sanctioned licenses in the future.”  It will be interesting to see if this survives the budget process.  You can learn more about occupational licensure at: http://en.wikipedia.org/wiki/Occupational_licensing.  You can find a readable article on “The Economics of Occupational Licensing” at: http://www.nber.org/chapters/c0601.pdf.  Milton Friedman’s thoughts about occupational licensure can be read at: http://books.cat-v.org/economics/capitalism-and-freedom/chapter_09.

May you have a good week!

Bruce

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