202 (4 March 2015)

Welcome to week 202!  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.

(23 February 2015): “The Jewish Encounter With Capitalism” [SR](http://chronicle.com/article/The-Jewish-Encounter-With/190153/)

——–[A review of Roads Taken: The Great Jewish Migration to the New World and the Peddlers Who Forged the Way (2015), by Hasia R. Diner.]  “Recent years have seen an efflorescence of the newly christened ‘history of capitalism.’  In fact, the history of capitalism has long been the mainstay of both economic and business history.  What is new is the rediscovery by social and cultural historians of the centrality of capitalism to the development of the modern world. . . . Still relatively underexplored are the history of marketing and distribution, which lie between production and consumption.  Now we have Roads Taken . . . by one of the foremost historians of American immigration, Hasia R. Diner, a professor at New York University.  The book focuses on distribution, connects the social and cultural history of capitalism with the history of Jewish migration, and paints on a global canvas.”  In the development of her argument, Diner shows that “for a remarkable number of those Jewish migrants, the first step on the ladder of opportunity was peddling.”  Realizing the opportunities provided by peddling “meant becoming a sort of anthropologist, which hastened the process of assimilation.”

********This seems like a fascinating book, which you can learn more about at: http://www.amazon.com/Roads-Taken-Jewish-Migrations-Peddlers/dp/0300178646/.  The comment “meant becoming a sort of anthropologist” made me recall The Chosen Few: How Education Shaped Jewish History, 70-1492, by Maristella Botticini.  You can learn more about it at: http://www.amazon.com/Chosen-Few-Education-Princeton-Economic/dp/0691163510/.

(26 February 2015): “Brazil Truckers Jar Soybean Markets” [SR](http://www.wsj.com/articles/brazil-truckers-jar-soybean-markets-1424912200)

——–“A widespread work stoppage by Brazilian truckers is roiling global soybean markets, boosting prices that had been deflated for months by soaring production of the oilseeds.  U.S. soybean futures surged to a six-week high on Tuesday as truckers across Brazil’s main farming regions blocked roads to protest fuel-tax increases and low wages, impeding shipments to ports and fueling speculation the U.S. would enjoy increased overseas demand for soybeans at Brazil’s expenses.  Prices pulled back Wednesday as police officers cleared some roads.”  Some market analysts think the price rally will be short-lived.  Karl Setzer, an analyst based in West Bend, Iowa, noted: “This will more than likely all be over by the weekend.”

********No doubt Setzer is correct.  These traffic disruptions are very short term and soon the trucks stalled on the roads will make their way to port and on to global markets.  In addition to a nice illustration of the fleeting nature of some market disruptions, this situation provides a good example of the transmission of information in a network of interdependent markets.

(26 February 2015): “Supreme Court Affirms FTC Antitrust Authority Over Licensing Boards” [SR](http://www.wsj.com/articles/supreme-court-affirms-ftc-antitrust-authority-over-licensing-boards-1424881999)

——–On February 25th the Supreme Court, in a 6-3 opinion, “upheld a 2010 case against the North Carolina State Board of Dental Examiners,” thereby preserving “the power of antitrust enforcers to scrutinize professional licensing organizations, even if they are designated as state-government entities.  The Federal Trade Commission alleged the board engaged in unfair competition when it attempted to stop hair salons and day spas from offering teeth whitening treatments at cheaper prices than the dentist’s office.”  In response to the ruling, FTC Chair Edith Ramirez indicated her pleasure, noting that “the antitrust laws limit the ability of market incumbents to suppress competition through state professional boards.”

********You can read the opinion of the Supreme Court at: http://www.supremecourt.gov/opinions/14pdf/13-534_19m2.pdf.  You can read additional analysis of the decision at: http://www.nytimes.com/2015/02/26/business/justices-find-antitrust-law-valid-against-dental-board.html.

(26 February 2015): “It’s a Beautiful Day in the Agrihood” (http://www.bloomberg.com/news/articles/2015-02-26/to-lure-homebuyers-developers-use-farms-vegetable-gardens)

——–“American builders have a long history of bulldozing farms to make way for housing developments.  Now developers are starting farms to sell homes.  Harvest, a $1 billion ‘urban agrarian’ community being built by H. Ross Perot Jr.’s Hillwood Development in Texas, hired a farmer to cultivate vegetables before construction began on a planned 3,200 houses.”  According to Ed McMahon of the Urban Land Institute in Washington, “The mainstream development t community has come to think of these as a pretty good way to build a low-cost amenity that people seem to like and that also adds authenticity.”  Brian Cullen, who heads the development team of Willowsford, a community of 2,300 homes in Virginia, notes that “A farm is about 20% of a golf course.”

********Evidently agrihoods “began cropping up in the 1980s.  What’s changed is the size and number of projects and the entry of large corporate developers.”  Agrihoods haven’t received a book-length treatment, yet, and they don’t appear in Google Scholar.  But they were covered in The New York Times last year (http://www.nytimes.com/2014/03/12/dining/farm-to-table-living-takes-root.html).  There is also a survey of twelve agrihoods at: http://www.nytimes.com/2014/03/12/dining/farm-to-table-living-takes-root.html.

********You can learn more about Hillwood Development’s Harvest community at: http://www.harvestlivesmart.com/.

(27 February 2015): “Resale Prices Tumble on Electric Cars” (http://www.wsj.com/articles/resale-prices-tumble-on-electric-cars-1424977378)

——–“With gas prices down 33% from a year ago, and buyers cooling toward electric vehicles, some auto makers are offering deep discounts or attractive leases on battery-powered vehicles and plug-in hybrids.”  This has impacted prices on resale markets.  Notes auto dealer Pat Hoban of Atlanta, “Used [Nissan] Leafs haven’t really taken off . . . There is really no incentive to buy a used one when you can lease a new one for less.”  This has contributed to a rapid depreciation in price.  In 2012 a new Nissan Leaf sold for $36,643; its price now is $10,220, a decline of 72%.  During the same period the Chevrolet Volt declined by 69%.  As a result, used electric vehicles appear to be a bargain.

********Evidently the electric-only Prius is experiencing similar price declines; the percentage price decline of the all-electric Tesla is much less, which seems to reflect its different customer base.  A four-minute video accompanies the story.

(28 February 2015): “Three Questions That Can Change Your Finances . . . and Your Life” [SR](http://www.wsj.com/articles/three-questions-that-can-change-your-financesand-your-life-1425074968)

********Life coaching has been growing in prominence for more than a decade.  Now, as a complement there is life planning, which helps people think through what they really want.  One proponent of this approach is George Kinder, the founder of the Kinder Institute of Life Planning; Kinder is the author of The Seven Stages of Money Maturity (http://www.amazon.com/Seven-Stages-Money-Maturity-Understanding/dp/0440508339/).  In order to “try to elicit what people want from their lives” he has developed three questions.  You can read the three questions at: http://www.getrichslowly.org/blog/2009/02/15/george-kinder-three-questions-about-life-planning/.  At that same site you can listen to Kinder discuss the questions and their importance.  This seems to pair nicely with the story on agrihoods.

(28 February 2015): “The truly personal computer” (http://www.economist.com/news/briefing/21645131-smartphone-defining-technology-age-truly-personal-computer)

——–“There are 2 billion people around the world using smartphones that have an internet connection and a touchscreen or something similar as an interface.  By the end of the decade that number looks set to double to just over 4 billion, according to Benedict Evans of Andreessen Horowitz, a venture-capital firm.  Already hugely attractive . . . smartphones are getting both more useful at the top end and much cheaper at the bottom.”  It is estimated that by 2020, “something like 80% of adults will own a smartphone connected” to the Internet.  Along with that, “The idea that the natural place to find a computer is on a desk . . . will be long forgotten.”  As a result of this development, “Distinctions that were previously clear—the differences between a product and a service, between a car owner and a taxi driver, between a city square and a political movement—blur into each other.  The world is becoming more fluid.”

********The idea of product and service blurring is intriguing.  Surely one of the things that the Internet-smart phone revolution has done has allowed people to obtain timely services via rentals that were previously available only by product purchases.  E.g., if I own a product, its services are available in an instant, but if I don’t own the product and want such services, I can obtain them on the rental market.  Before “the revolution” the transaction costs associated time, travel, and trouble, were quite high, but now they have diminished significantly.  Thus products that were previously purchased to gain ready availability, are now being rented.

********There were two additional items in the article that caught my attention.  First, the amazing illustration at the beginning of the article that shows Narcissus gazing into a smartphone “pool” taking a selfie.  Seriously creative, that!  Second, was the illustration shown the use of smartphones by three-different age groups throughout the day, which struck me as particularly meaningful.  You can see an additional use of such a figure, for different types of devices, at: http://www.economist.com/blogs/graphicdetail/2015/02/daily-chart-19.

 (1 March 2015): “G.O.P. Race Start in Lavish Haunts of Rich Donors” (http://www.nytimes.com/2015/03/01/us/politics/gop-race-starts-in-lavish-haunts-of-rich-donors.html)

********Although the G.O.P. figures in the headline of the article, it really shows the impact that the Supreme Court’s ruling on Citizens United has had on the election process.  Across the U.S. candidates attend gatherings of the monied “knowing that just a handful of donors can lift them from the second or third tier into the first.”  Some of the gatherings “are expressly intended to bring candidates in line with the policy positions of donors on issues like government spending and foreign policy.”  One unnamed attendee at a Republican event commented that “This is going to be the super PAC election.”

(3 March 2015): “NXP Semiconductor Bets $12 Billion on Smarter Cars” [SR](http://www.wsj.com/articles/nxp-semiconductor-bets-12-billion-on-smarter-cars-1425352206)

——–“The race to build smarter cars is prompting another race—to supply the chips that make those vehicles clever.  NXP Semiconductor Inc. stepped on the gas on Monday, agreeing to buy Texas-based Freescale Semiconductor Inc. in a cash-and-stock deal valued at about $11.8 billion. . . . The purchase would vault Netherlands-based NXP to No. 1 supplier of chips for cars. . . . Newer cars incorporate as many as 100 chips controlling braking, dashboard displays, fuel injection and backup cameras.”  It is estimate that “each new car sold last year contained about $334 of semiconductors, up from $223 in 2001.  It projects that the total will reach $368 a car in 2018.”  The growth of “so-called connected cars” is driving this increase.  Such cars “use Wi-Fi internally and cellular connections to the outside world for features that include navigation, traffic information and assisted driving.”

********The article raised the issue of onboard chips getting hacked, which is clearly very important.  Richard Clemmer, the CEO of NXP Semiconductor, notes that the deal for Freescale will help bring security to the car.  You can learn more about the proposed merger at: http://www.nxp.com/news/press-releases/2015/03/nxp-and-freescale-announce-40-billion-merger.html.

(4 March 2015): “Xi Revives the Silk Road” (http://www.wsj.com/video/xi-revives-the-silk-road/4AFEF7E6-7CA9-4B44-9B3A-42F6C003962F.html)

********This is a three-minute video coordinated with a Journal article that requires a subscription.  Its content is very close to that of the print version.  No need to experience both.  The gist of video is that as the U.S. “pivots toward Asia” and advances the Trans-Pacific Partnership, a trade agreement that excludes China, China has been turned toward the Eurasian landmass.  As such, it is revitalizing the Silk Road of years gone by, although this time with an emphasis on railroads, one instance of which is the 8,000-mile journey from Yiwu in China to Madrid in Spain.  As the article points out, however, “locomotives will never replace ships: At most, they can pull a few hundred containers while the biggest container vessels can carry up to 18,000.”  You can read the article at: [SR](http://www.wsj.com/articles/chinas-world-on-track-or-at-sea-beijing-reopens-old-land-routes-1425371903).  It should be remembered, however, that China is pursuing multiple approaches, including the development of a new canal in Nicaragua, which will enable even bigger container vessels to ply global waters.

(4 March 2015): “In First, Indian State Bans Possession and Sale of Beef” (http://www.nytimes.com/2015/03/04/world/asia/indian-state-passes-ban-on-beef-championed-by-right-wing-hindus.html)

——–“The state that includes Mumbai, India’s financial capital, this week became the first in the country to ban the possession and sale of beef, imposing fines and up to five years in prison for violations.”  The ban amends a 1972 law “prohibiting the slaughter of cows.”  The Maharashtra Animal Preservations bill “was first passed in 1995 but languished for two decades” was “championed by right-wing Hindu organizations.”  Water buffalo, “which are more common and less revered in India than cows,” can still be slaughtered under the new law.

********A clear example of the role of the invisible handshake—social and historical forces that influence human behavior.  As the article notes, it is likely that the ban will “send the price of other meats spiraling upward,” at least in the short run.  This week JSTOR Daily has a related article, “Legalizing Marijuana: Lessons From The Post-Prohibition Era, which you can read at: http://daily.jstor.org/legalizing-marijuana-lessons-from-the-post-prohibition-era/.  The occasion for this story is the recent action in Washington, D.C., which allows “residents and visitors to possess and use the drug.”

(4 March 2015): “Yellen Says Effective Supervision of Big Banks One of Fed’s Top Priorities” [SR](http://www.wsj.com/articles/yellen-says-effective-supervision-of-big-banks-one-of-feds-top-priorities-1425431701)

********An interesting article the content of which is only hinted at in its headline.  In it Federal Reserve chair Janet Yellen is quoted as raising concerns about “the state of Wall Street’s culture and ethics” in an address “prepared for delivery to the Citizen’s Budget Commission in New York on Tuesday night.”  She said, “It is unfortunate that I need to underscore this, but we expect the firms we oversee to follow the law and to operate in an ethical manner . . . Too often in recent years, bankers at large institutions have not done so, sometimes brazenly.”  Especially noteworthy in the article are the explicit references to concerns about “regulatory capture,” in which Yellen defined “as occurring when a regulator advances the interests of the firm it oversees rather than the public interest it should be defending.”  You can read a précis on regulatory capture at: http://www.wsj.com/articles/regulatory-capture-101-1412544509.

May you have a good week!

Bruce

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