210 (29 April 2015)

Welcome to week 210!  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 1-208, and a cumulative pdf for issues 209-present at: https://sites.google.com/site/brucedeanlarson/the-invisible-forces.

(18 April 2015): “Free exchange: String-pushers” (http://www.economist.com/news/finance-and-economics/21648620-politicians-often-try-manipulate-economy-win-votes-seldom)

——–“Incumbent politicians know that if the economy is doing well, they are much more likely to be re-elected.  When wages are rising and jobs are plentiful, workers feel happy.  Small wonder, then, that many governments attempt to manipulate the economy to boost their political fortunes.  New research, though, shows that however hard politicians try, shaping the economy to suit their electoral needs is a tall order.”

********As the article notes, discussions of “the political business cycle” have been a mainstay of the economic literature at least since 1975, when W.D. Nordhaus published an article by that title.  The literature continues to develop and has taken on increasing refinement, as the Sources listed at the end of the article indicate.  Given the complexities of Western democratic countries at the level of the nation, I do wonder if evidence for the somewhat more refined political budget cycles might be more likely to be found at lower scales of government, e.g., at the state, county, or municipal levels.

(22 April 2015): “China Won’t Let Toyota Ditch Its Electric Cars” (http://www.bloomberg.com/news/articles/2015-04-23/china-won-t-let-toyota-ditch-its-electric-cars)

——–“Toyota Motor has made its view loud and clear: Hydrogen-powered cars are the future.  That’s why the world’s largest automaker pulled the plug last year of the all-electric RAV4 EV cross-over it developed with Tesla Motors.  China, the world’s largest auto market, isn’t listening.”  It has “a strategic initiative to build electric cars on the mainland and is encouraging foreign manufacturers and their local partners to get with the program.  So as many as 40 electric models will go on sale in China this year.”  According to James Chao, the managing director of IHS Automotive in Shanghai, an electric car “is the cost of entry of being here.”  According to one Toyota official, speaking off message, the demand for EVs will be limited because they are “dependent on quick-charging stations that are too taxing on local electric grids.”

********Toyota’s entry into the hydrogen car market is the Mirai, which is available only in California where the hydrogen infrastructure exists.  You can learn more about it at: http://www.caranddriver.com/toyota/mirai.  Here is what Toyota has to say about the Mirai: http://www.toyota.com/mirai/.

(23 April 2015): “High Costs Put Cracks in Glass-Recycling Programs” [SR](http://www.wsj.com/articles/high-costs-put-cracks-in-glass-recycling-programs-1429695003)

——–“In many parts of the country, glass—the original recyclable—is becoming too expensive to handle, placing a growing burden on towns and businesses.  Some cities . . . consider it more cost-effective to have residents throw glass bottles in the trash than to recycle them.”  Contributing to the problem has been the quality of the recycling stream.  Carl Bucey, an executive vice president of Strategic Materials Inc., which is the largest glass-cycling company in the U.S., says that “when used glass arrived at its plants 20 years ago, it was 98% glass and 2% castoffs, such as paper labels and bottle caps.  These days, some truckloads can include up to 50% garbage.”  Consequently, whereas Strategic Materials “used to pay for all the glass it received . . . these days it is charging between $10 to $40 a ton to accept some truckloads of used glass that are heavily contaminated with trash.  Other recyclers are starting to follow suit, sending ripples through the businesses and towns along the recycling supply chain.”  In states that require deposits on beverage containers, contamination is “less of a problem because glass is often collected separately.”

********Whether sorting costs are monetized or not largely depends upon who does the sorting.  When I sort my trash, the costs aren’t monetized; if a recycler sorts my trash, the costs are monetized.  Strategic Materials has a glass recycling plant in Raleigh, North Carolina.  You can view a nine-picture slide show of its operations at: http://www.wsj.com/articles/photos-inside-a-recycling-plant-1429694881?tesla=y.

(24 April 2015): “Cities in China’s North Resist Tapping Water Piped From South” [SR](http://www.wsj.com/articles/cities-in-chinas-north-resist-tapping-water-piped-from-south-1429781402)

——–“After spending billions of dollars on a mammoth project to transfer water from China’s wet south to the parched north, the central government is facing a problem: Many cities aren’t using the water.  A number are balking at the high cost of the transferred water, and they are struggling with figuring out how much to charge users.  Other cities are deterred by the expense of building the pumping stations, processing plants and other infrastructure needed to tap the South-North Water Transfer Project.”

(24 April 2015): “Robots Step Into New Planting, Harvesting Roles” [SR](http://www.wsj.com/articles/robots-step-into-new-planting-harvesting-roles-1429781404)

——–Most of the workers for harvesting corn and other commodity crops were replaced by machines decades ago.  But now, due to “a shrinking supply of available fruit pickers,” automated harvesting, in the form of the 14-arm Agrobot, is coming to strawberries; the Agrobot costs about $100,000.  “Other devices similarly are starting to assume delicate tasks in different parts of the fresh-produce industry, from planting vegetable seedlings to harvesting lettuce to transplanting roses.”

********The article also discusses the Spanish startup called Plant Tape, “whose system transplants vegetable seedlings from greenhouse to field using strips of biodegradable material fed through a tractor-pulled planting device.”  According to one user, “Plant Tape has eliminated at least 10% to 15% of the overall work hours for growing romaine and celery.”  You can learn more about Plant Tape at: http://www.planttape.com/.  You can view a seven-minute video, which is highly reminiscent of a “How It’s Made” video, at: https://www.youtube.com/watch?v=Pkq0joMRAro.

(25 April 2015): “The process of invention: Now and then” (http://www.economist.com/news/science-and-technology/21649448-patent-records-reveal-way-inventions-are-made-has-changed-over)

——–“Invention can come about in two ways.  Thomas Edison’s light bulb, for example, was not so much the product of a metaphorical light-bulb moment of discovery as of the bringing together of pre-existing components—an electricity supply, a heated filament, a vacuum and a glass envelope.  None of the things was novel in the 1877s, but in Edison’s hands the combination became a patentable invention.  In contrast, William Shockley’s transistor, invented 70 years later, involved a lot of new physics that Shockley and his colleagues had to work out for themselves.  Bothe devices changed the world . . . And together they exemplify the two sorts of novelty that exist, in differing proportions, in any successful invention: discovery and recombination.”  A recent study of the patent records of the US Patent and Trademark Office show that patents by recombination are now growing much more quickly than those by discovery.

********As the article notes, “This combinatorial explosion no doubt partly reflects the fact that the number of possible combinations grows faster than the number of codes they are based on.”  This is, no doubt, another reason for the expansion of interdisciplinary programs in the universities.  The “recent study” is Hyejin Youn, et al., “Invention as a combinatorial process: evidence from US patents.”  You can read the article at: http://rsif.royalsocietypublishing.org/content/12/106/20150272.

(25 April 2015): “Schumpeter: Twilight of the gurus” (http://www.economist.com/news/business/21649478-management-pundit-industry-shadow-its-former-self-twilight-gurus)

——–“It is customary nowadays for management gurus to preach that competition is fiercer than ever. . . . Yet the management-guru industry seems remarkably stable. . . . What explains such lethargy in a supposedly lethargy-busting industry?  The main problem is that the guru business is reaching the end of a long cycle of creativity.  For the past two decades or so it has been driven by two seismic economic changes—the rise of the emerging world and the digital revolution.”  There are glimmers of hope, though, in Silicon Valley and MIT, where entrepreneurs and academics are grappling with a challenges ranging from “ageing to talent-management.”

********The article draws one’s attention to the “though leadership” industry, in relation to which it notes the biennial ranking of Thinkers50, which was last released in 2013, topped by Clayton M. Christensen of disruption fame.  You can see the list at: http://www.thinkers50.com/t50-ranking/2013-2/.  The ceremony for the 2015 Awards Gala will take place in London on 9 November 2015.  Tickets are now available for ₤720 (VAT included).

(27 April 2015): “Not just photo-ops: Businesses gain from political visits” (http://www.citizen-times.com/story/news/local/2015/04/26/just-visiting-untold-side-business-politics/26425791/)

********This article appeared in the Asheville Citizen-Times and provides clear examples of how businesses and politicians reach out to one another to further their own ends.  As such it is an excellent example of the invisible forces in action.  One thing that comes across strongly is the importance of on-site face-to-face interactions of politicians with business people.  The impact is pointed to in the comment of Tim Fenton, who is the senior director of global government relations for Thermo Fisher Scientific.  He notes: “I always say to our site leaders that one 90-minute site visit with a tour, town hall and a discussion is worth 100 Washington, C.C. meetings as far as value goes . . . A meeting with a lobbyist wearing a suit in Washington is not really memorable.  They spend all day in Washington meeting with people in suits.”

(27 April 2015): “Pharmaceutical Companies Buy Rivals’ Drugs, Then Jack Up the Prices” (http://www.wsj.com/articles/pharmaceutical-companies-buy-rivals-drugs-then-jack-up-the-prices-1430096431)

——–“On Feb. 10, Valeant Pharmaceuticals International Inc. bought the rights to a pair of life-saving heart drugs.  The same day, their list prices rose by 525% and 212%.  Neither of the drugs, Nitropress or Isuprel, was improved as a result of costly investment in lab work and human testing, Valeant said.  Nor was manufacture of the medicines shifted to an expensive new plant.  The big change: the drugs’ ownership.”  Company spokesperson Laurie Little commented: “Our duty is to our shareholders and to maximize the value [of its products] . . . Sometimes pricing comes into it, sometimes volume comes into it.”  Pharmaceutical companies are increasing using the tactic of “buying drugs that they see as undervalued, then raising prices.”  For the companies, “price hikes offer an easy way to boost sales without years of costly, risky research to find new medicines.”

(29 April 2015): “For Sale: Used Oilfield Machinery” [SR](http://www.wsj.com/articles/for-sale-used-oilfield-machinery-1430213401)

——–Steve Taylor is the Texas sales manager at Kruse Energy and Equipment Auctioneers LLC.  He says that plunging oil prices have “meant two things for his auction business: more stuff for sale at much lower prices.”  According to his estimate, “there’s 10% more equipment for sale compared with a year ago, and a 20% drop in prices.”  This equipment is hitting the market as “The number of oil and gas rigs operating in the U.S. has fallen 50% in the past 12 months to 932, according to Baker Hughes Inc., an oil-field services company.”

********The substance of the article can be viewed in a two-minute video at: http://www.wsj.com/video/american-idle-oilfield-equipment-heads-to-auctions/261979C8-F790-43BB-8DE4-2F3D91B7AA88.html.

May you have a good week!

Bruce

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