240 (25 November 2015)

Welcome to week 240!  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.

(18 November 2015): “Why ‘Rise of the Robots’ was named the most important business book of the year” (http://www.businessinsider.com/rise-of-the-robots-named-business-book-of-the-year-2015-11)

********The Financial Times and McKinsey annually choose the Business Book of the Year, which usually is a book of general interest accessible to “the intelligent reader.”  This year’s winner is Rise of the Robots: Technology and the Threat of a Jobless Future, by Martin Ford; Ford is a “Bay Areas software developer.”  You can see previous winners—the award began in 2005—at: https://ig.ft.com/sites/business-book-award.  You can also see the “short list” of books considered for the award at the same location.  A synopsis of the book is available (https://ig.ft.com/sites/business-book-award/books/2015/winner/the-rise-of-the-robots-by-martin-ford) and more can be learned at: http://www.amazon.com/Rise-Robots-Technology-Threat-Jobless/dp/0465059996/.

(19 November 2015): “How Amazon’s Long Game Yielded a Retail Juggernaut” (http://www.nytimes.com/2015/11/19/technology/how-amazons-long-game-yielded-a-retail-juggernaut.html)

********This relatively brief article explores some of the reasons for Amazon’s entry into the “world’s 10 largest companies by stock market value, where it jockeys for position with General Electric and is far ahead of Walmart.”  Ben Schacter, an analyst who studies Amazon for Macquarie Security, says that Amazon is building “a really insurmountable infrastructure that I don’t see how others can really deal with.”  In addition to its investment in order fulfillment, i.e., the filling and shipping of orders, the Amazon Prime service that it offers is enticing people to shop more.  Prime membership–$99 a year—provides free two-day shipping and a wide array of media offerings.  It is thought that “Growth in Prime subscriptions matters because Prime alters the psychology of shopping.  Once you’ve prepaid for shipping, you tend to start more of your shopping excursions at Amazon.  According to some estimates, people spend three or four times as much with Amazon after they sign up for Prime.”  Ben Schacter predicts that “by 2020, 50 percent of American households will have joined Prime.”  With the combination of enormous selection, fast delivery, and no (additional) cost shipping, as well as low prices, it is easy to see why Amazon is such a formidable competitor and its stock market valuation is so high.

(19 November 2015): “Minnesota’s Iron Ore Producers Retrench, Troubling a Region” (http://www.nytimes.com/2015/11/19/business/minnesotas-iron-ore-producers-retrench-troubling-a-region.html)

********Beautifully concise, like a well-constructed haiku, this one-paragraph story lays out the main causes and regional consequences of a decrease in iron ore demand.

(19 November 2015): “The Return of Debtors’ Prisons” (http://daily.jstor.org/the-return-of-debtors-prisons/)

——–“In the past few weeks, the New York Times, Washington Post, and Seattle Times have published articles documenting the cruelty of debt-related incarceration. . . . But this is hardly new.  Debt-related imprisonment, and its cousin, convict leasing, helped buoy the Southern economy after the Civil War.  The practice continued into the 20th century.  African-American activist Mary Church Terell put it plainly in 1907: ‘the relationship between debt peonage and disfranchisement is intimate and close.’  In her 2015 study on convict labor by black women, historian Talitha LeFlouria echoes Terrell.  She argues that, after the discontinuance of formal slavery, debt peonage shifted power back to white planters, ‘giving them the legal power to purchase black farm labor from county courthouses.’”  Nationwide, according to research conducted by Alexes Harris, et al., “two-thirds of felons are subject to monetary sanctions.”  These sanctions can and do jeopardize “access to public benefits, housing, and employment.”  Probation and parole status can also be affected, as can voting rights.  A recent study found that “eleven states condition restoration of some ex-felons’ voting right on payments of criminal just debt.”

********The citation for the important article by Harris, et al., article is provided at the bottom of the story.  LeFlouria’s book, public by UNC Press, is Chained in Silence: Black Women and Convict Labor in the New South (http://www.amazon.com/Chained-Silence-Convict-Justice-Politics/dp/1469622475/).

(19 November 2015): “Why fewer Mexicans are leaving their homeland for the U.S.” (http://www.latimes.com/nation/la-na-ff-mexican-immigration-20151118-story.html)

——–“To its southern neighbor, the United States once represented hope, safety and prosperity.  But with the effects of the Great Recession still lingering and tougher enforcement along the U.S. border, fewer Mexicans see a reason to leave their homeland.   Workplace raids by immigration agents, nose-diving birthrates at home and the economic slowdown north of the border have convinced 47% of Mexicans surveyed that life in their native country is as good or better than what would await them if they crossed into the U.S., according to . . . the Washington-based Pew Research Center.”  According to research associate Ana Gonzalez-Barrera, “I would not say that Mexico has more of a pull . . . But the United States isn’t as attractive.”

********I like Gonzalez-Barrera’s emphasis on the relative attractiveness of the U.S. and Mexico in relation to population movement.  You can learn more about the Pew report at: http://www.pewhispanic.org/2015/11/19/more-mexicans-leaving-than-coming-to-the-u-s/.

(20 November 2015): “Genetically Engineered Salmon Approved for Consumption” (http://www.nytimes.com/2015/11/20/business/genetically-engineered-salmon-approved-for-consumption.html)

——–“Federal regulators on Thursday approved a genetically engineered salmon as fit for consumption, making it the first genetically altered animal to be cleared for American supermarkets and dinner tables.”  The FDA’s approval “caps a long struggle for AquaBounty Technologies, a small company” which first approached the FDA about approval in the 1990s.  “The AquAdvantage salmon, as it is known, is an Atlantic salmon that has been genetically modified so that it grows to market size faster than a non-engineered farmed salmon, in as little as half the time.”  Currently the fish are being raised “in Panama, from eggs produced in Prince Edward Island, Canada.”  But “moving beyond Canada and Panama seems to be the plan, according to a regulatory filing by AquaBounty a year ago.”

——–“The approval could help other efforts to develop genetically modified animals. . . . there has been a surge of interest in developing new genetically altered farm animals and pets” using new techniques “including one known as Crispr-Cas9,” that enable scientists “to edit animal genomes rather than add genes from other species.”

********The article notes that selling the genetically modified salmon may be an issue, as some leading supermarkets have said that “they have no plans to sell it.”  You can learn more about AquaBounty at: https://aquabounty.com/.

(20 November 2015): “Across the Oil Patch, Firms Are Going Bust” (http://www.wsj.com/articles/across-the-oil-patch-firms-are-going-bust-1447985458)

——–“Thirty-seven North American oil and gas producers have filed chapter 11 [bankruptcy] cases in 2015, according to law firm Haynes and Boone LLP.  The cases involve $13.1 billion in debt, and ‘industry and economic indicators suggest more producer filings will occur before the year is out.’”  The bankruptcies have resulted from dramatic price declines from “an average price of $92.91 a barrel in 2015 . . . [to] around $50 a barrel this year. . . . Prices dipped below $40 on Wednesday and again Thursday, which ‘felt a lot like a tentative temperature-testing toe in the water before a full-on cannonball into the pond,’ Wolfe Research analysts said in a note.”

********Commodity and futures prices for oil, and much additional information, can be found at: http://markets.wsj.com/us.  Nothing surprising in this information, as lower market price will tend to induce some firms to leave the industry and some to reduce their output.  As with Minnesota iron ore, changes in global prices give rise to many regional (and local) adjustments.

(20 November 2015): “Australia Blocks Farm Sale on Security Grounds” (http://www.wsj.com/articles/australia-blocks-farm-sale-on-security-grounds-1447911315)

——–“Prime Minister Malcolm Turnbull’s new government blocked the sale of one of the world’s biggest cattle farms to Chinese and other foreign investors on security grounds . . . Foreign takeovers are a sensitive matter in Australia . . . Takeovers from China are especially contested because many companies there are state owned.  So too are deals involving the agricultural sector, where China is now the biggest investor in Australia, and where food security is a worry.”  According to the Australian government, the deal involving the holdings of S. Kidman & Co., including “the Anna Creek Station in South Australia state—which, at 9,142 square miles, is almost the size of the state of Vermont.”  Within recent years, Australia turned down an “attempted takeover of an Australian grain handler by U.S. agribusiness Archer Daniels Midland.”

********An example of how legal and political forces—the invisible foot—determine what items can be bought and sold.

(23 November 2015): “How Demographics Rule the Global Economy” (http://www.wsj.com/articles/how-demographics-rule-the-global-economy-1448203724)

——–“Ever since the global financial crisis, economists have groped for reasons to explain why growth in the U.S. and abroad has repeatedly disappointed, citing everything from fiscal austerity to the euro meltdown.  They are now coming to realize that one of the stiffest headwinds is also one of the hardest to overcome: demographics.  Next year, the world’s advanced economies will reach a critical milestone.  For the first time since 1950, their combined working-age population will decline, according to United Nations projections, and by 2050 it will shrink 5%.  The ranks of workers will also fall in key emerging markets, such as China and Russia.  At the same time the share of these countries’ population over 65 will skyrocket. . . . This reflects two long-established trends: lengthening lifespans and declining fertility.”

********The article contains a wealth of information about the consequences of lengthening lifespans and declining fertility.  This is one of seven articles relating to the theme 2050: Demographic Destiny.  You will a list of each article in the series at the top of the screen for this article.  Harvard economist Alvin Hansen, an early popularizer of the work of John Maynard Keynes, wrote influentially on the relationship between population and economic growth, as mentioned in the article and indicated in: https://en.wikipedia.org/wiki/Alvin_Hansen.  The article that put Hansen on the demographic map is “Economic Progress and Declining Population Growth” (1939).

May you have a good week!

Bruce

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