239 (18 November 2015)

Welcome to week 239!  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 an Internet title search.

The Invisible Forces Weekly also appears on the web at: https://theinvisibleforcesweekly.com/.  Please see Resources to find a pdf of this issue, a cumulative pdf for issues 1-208, and a cumulative pdf for issues 209-present.

(12 November 2015): “Why Cocaine Farmers Are Getting Into Chocolate Instead” (http://www.bloomberg.com/news/articles/2015-11-12/in-cocaine-to-chocolate-shift-market-forces-lend-a-helping-hand)

——–“It was the murder—execution-style, in broad daylight—of a friend and fellow farmer in the Colombian countryside that prompted German Sanchez to finally heed government calls to get out of the cocaine trade and plant cocoa instead.  Six years later, market forces, more than concerns about personal safety, are persuading him not to switch back.”  Notes Sanchez, a father of two, Coca “caused a lot of bloodshed . . . Family members were killed and others ended up in jail.  The economic revenues didn’t justify the risk.”  Still, not everyone shares the view of Sanchez.  “Some farmers are sticking with the illegal crop, partly because the reduction in plantings caused the price of coca leaves to rise in certain regions.  Cultivation in Colombia rose 44 percent in 2015, to 69,000 hectares, from 2013,” according to a United Nations report (https://www.unodc.org/documents/crop-monitoring/Colombia/censo_INGLES_2014_WEB.pdf).

********The article concisely states a number of factors that affect the decision of farmers to produce cocoa for chocolate versus coca for cocaine.  At the level of the individual, the decision seems likely to be all cocoa or all coca, i.e., a binary decision.  At the level of the country, though, the individual decisions manifest as a little more of one and a little less of the other.  It seems highly unlikely that any policy could result in the complete elimination of, say, coca from production.  That being said, it appears that the U.S. Agency for International Development has assisted in “replacing more than 80,000 hectares (198,000 acres) of illegal coca with legal alternative crops” since 2002.  For those, like me, who haven’t mastered the conversion of hectares into acres, one hectare equals 2.47105 acres.  I’ll remember this as one hectare equals 2.5 acres.

(13 November 2015): “How Mining Impacted the Midwestern Grasslands” (http://daily.jstor.org/mining-impacted-midwestern-grasslands/)

——–“The New York Times Magazine recently ran an eye-popping photo feature on copper mines.  The photos reveal the astonishing scale of change that mining can bring to a landscape.  Even long after mines have completed their useful lives, they can have a dramatic effect on the places where they were.  In a 1990 paper for Geographical Review, Timothy S. Brothers looks at the way that the history of coal mining in the Midwest has changed the landscape—even in places where you might not know there had ever been a mine.”  Brothers notes that the new grasslands planted to rehabilitate the Midwest lands “might look, at a glance, like the prairies that came before them” but there were actually much different.  “Instead of native grasses, they’re made up of European and Asian species.  That’s partly because the plants were chosen for their ability to survive the acidic, nutrient poor, dry conditions that the mines left behind.”  Native grass seeds “were unavailable or very expensive.”

********A clear example of how economic forces—the invisible hand—have affected our physical environment.  It shows how even when things look “proper” there is more than meets the eye.  The NYT Magazine photo feature—there is a link in the article, as there is for the GR paper—is based on the work of photographer Edward Burtynsky, which I know from the book Manufactured Landscapes (http://www.amazon.com/Manufactured-Landscapes-Photographs-Edward-Burtynsky/dp/0300099436/) and the video by the same name (http://www.amazon.com/Manufactured-Landscapes-Edward-Burtynsky/dp/B000MMLOAG/).  You can learn about Burtynsky and his work at: http://www.edwardburtynsky.com/.  Take a look at the Projects tab to get a sense of the scope of his work.  He notes that “Nature transformed through industry is a predominant theme in my work” (http://www.edwardburtynsky.com/site_contents/About/introAbout.html).  Burtynsky has a 34-minute TED Talk at: https://www.ted.com/talks/edward_burtynsky_on_manufactured_landscapes?language=en.

(14 November 2015): “Anti-Licensing Movement Scores a Victory” [SR](http://www.wsj.com/articles/anti-licencing-movement-scores-a-victory-1447433906)

——–“Fitness trainers in the nation’s capital city look set to pull off a feat that has eluded the White House and a number of libertarian groups: stopping the spread of occupational licenses. . . Regulators in D.C. appeared close to imposing new rules on trainers—the first such step in the country—as early as this fall.  But CrossFit Inc., the operator of a high-intensity gym chain with thousands of outlets nationally, led a lobbying push to quash the process, and district council members now vow to scrap the idea entirely. . . . The spread of professional licensing—now five times what it was in the 1950s—has stirred a backlash among critics who say it blocks low-income people from entering certain fields and limits worker mobility, among other issues.”  This last summer, the Obama administration “launched an effort to educate policy makers at the state level about the economic risks tied to overly expansive licensing,” urging them to adopt best practices.

********You can read the Obama administration’s statement on “Occupational Licensing: A Framework for Policymakers,” at: https://www.whitehouse.gov/sites/default/files/docs/licensing_report_final_nonembargo.pdf.  Those wishing to simplify occupational licensing might make note of the work of Lehigh University economist Robert Thornton, who found “just eight successful attempts to roll back such laws” in the past 40 years.  The relevant article is “The de-licensing of occupations in the United States” (http://www.bls.gov/opub/mlr/2015/article/the-de-licensing-of-occupations-in-the-united-states.htm).

(16 November 2015): “Blacks Are Challenged to Buy From Black-Owned Businesses to Close Gap” (http://www.nytimes.com/2015/11/16/business/blacks-are-challenged-to-buy-from-black-owned-businesses-to-close-gap.html)

——–“Should black people go out of their way to patronized black-owned business?”  Maggie Anderson, a lawyer with an MBA, wrote a 2012 book on the subject, Our Black Year, exploring the question.  “In 2008, with the economy in the middle of the worst downturn since the 1930s, Ms. Anderson enlisted her husband and two daughters in a yearlong plan to consume goods and services exclusively from black-owned businesses.”  She has further examined the subject in “several TED talks about how to increase wealth in the African-American community” and in a cross-country tour.

********You can read a review of Our Black Year at: http://link.springer.com/article/10.1007/s12114-013-9156-8#page-1, which links the book to self-help economics.  You can learn still more about the book at: http://www.amazon.com/Our-Black-Year-Americas-Racially/dp/1610392280/.  You can view an 18-minute TED talk by Ms. Anderson at: https://www.youtube.com/watch?v=nFBEoIQutSc.  I’m intrigued.

(17 November 2015): “China Bends Vow, Using Prisoners’ Organs for Transplants” (http://www.nytimes.com/2015/11/17/world/asia/china-bends-vow-using-prisoners-organs-for-transplants.html)

——–Last year a senior Chinese health officials said “China would stop using prisoners’ organs for transplants as of Jan. 1, 2015 . . . But organs from prisoners, including those on death row, can still be used for transplants in China, with the full backing of policy makers, according to Chinese news reports, as well as doctors and medical researchers in China and abroad.  ‘They just reclassified prisoners as citizens,’ said Huige Li, a Chinese-born doctor at the University of Mainz in Germany. . . . The relabeling of prisoners has enabled Chinese officials to include them in a new, nationwide ‘citizen donation’ system that China is rebuilding to reduce its longstanding reliance on organs from prisoners. . . . Many Chinese are reluctant to donate organs because of Confucian traditions that consider the body a gift from parents to be buried or cremated intact.”

********The supply of organs is an issue throughout the world as some lives could be extended through timely transplant procedures.  Chinese health officials have sought to maintain supply and meet international expectations by a verbal distinction.  This approach is all-too-understandable given the relative intractability of cultural beliefs and practices, i.e., the invisible handshake.

(17 November 2015): “Constellation Brands to Buy Craft-Beer Maker for $1 Billion” [SR](http://www.wsj.com/articles/constellation-brands-to-buy-craft-beer-maker-for-1-billion-1447686489)

——–“Constellation Brands Inc. said Monday it will pay $1 billion for California craft brewer Ballast Point Brewing & Spirits—a record sum for a U.S. craft-beer company.”  This is the fourth, and largest, craft deal this fall and “signals that the craft-beer industry, which has a roughly 10% market share in the U.S., has crossed a threshold and become a big business that large brewers expect to continue to grow in the years to come.”  What makes Ballast Point unique is that it is “immensely profitable.”  For the first six months of 2015, Ballast Point reported a profit of $5.9 million on net revenue of $51.7 million.  During that time, it sold “more than 118,831 barrels” with an average revenue of $357.66 a barrel, which is well above the craft-beer average of $270 a barrel,” according to Townsend Ziebold, “a managing partner at First Beverage Group who works in craft-beer mergers and acquisitions.”

********It does seem that craft beer has demonstrated a real market presence and obvious some large brewers are willing to pay a lot of money to be a part of the picture.  I tend to read a few of the reader comments for articles such as this, but I tend to be put off by their tone and lack of content.  In this case, though two comments, one by Wayne Tamarra and one by John Smith, caught my attention.  Together they noted that the sales price was 10X sales, 20X net revenue, and 100X annual profit!  It makes me wonder how Constellation intends to use its acquisition.

********One factor that may lead craft brewers to embrace larger scale of operation, that might be achieved by merger, is access to testing equipment for things like nutritional value of beer.  For a recent development on that front, see “How many calories are in that beer?  Soon, you’ll know” (http://www.citizen-times.com/story/news/local/2015/11/16/how-many-calories-beer-soon-youll-know/75654000/).

********In a somewhat related development, the FDA recently completed new food-safety rules that might have implications for produce growers, growing out of “a law passed by Congress in 2010, which marked the biggest overhaul of federal food-safety oversight in 70 years. . . . The produce rule for the first time sets federal standards for how fruits and vegetables are grown, harvested, packed and stored to reduce contamination risks” [SR](http://www.wsj.com/articles/fda-completes-long-awaited-food-safety-rules-1447451622).  This story was also covered by The New York Times (http://www.nytimes.com/2015/11/14/health/new-rules-make-companies-do-more-to-police-imported-food.html).  You can view the Final Rule on Produce Safety of the Food Safety Modernization Act at: http://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm334114.htm.  I don’t know if the rule applies differently to producers of different sizes.  The Pew Charitable Trusts has an analysis at: http://www.pewtrusts.org/en/research-and-analysis/analysis/2015/11/13/major-steps-forward-for-us-food-safety-system.

(18 November 2015): “Indentured Servants and the Domestic Economy” (http://daily.jstor.org/indentured-servants-when-domestic-economy-was-really-domestic-nathan-tankus-piece/)

——–“As Democratic and Republican candidates keep debating the economy, it’s clear that as different as their ideas might be, all contemporary political candidates have one thing in common, a preoccupation with unemployment and job creation.  American’s weren’t always so concerned about jobs.  Colonial government spending was primarily for war, and most of its economic policy debates took place in that context.  Today’s American government . . . spends substantial sums on the military, but our biggest expenditures are on the social safety net.”  Although colonial government didn’t spend much money to support the poor and unemployed, “They did intervene extensively to manage poverty.  But their primary tool for doing this was via the household, which included all kinds of relationships far beyond the nuclear family.”

********What really caught my attention was the article’s reference to housing the poor and the subsequent “building of poorhouses where paupers could live . . . The more paupers there were, the more cost-effective housing them in the same building became.”  All this comes at a time when Los Angeles (http://www.wsj.com/articles/l-a-struggles-with-homeless-emergency-1447809523), New York (http://www.wsj.com/articles/APe3c82f0983554c9eb1336db9bb4e9821), and Asheville (http://www.citizen-times.com/story/news/local/2015/11/17/could-new-approach-help-solve-ashevilles-housing-crisis/75923000/) are wrestling with how to address homelessness and provide affordable housing.  To me this simply points out the widespread, systemic issue of poverty in the United States, one which can be addressed, but not solved, at the local level.

May you have a good week!

Bruce

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