248 (20 January 2016)

Welcome to week 248!  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.

(13 January 2016): “The Woman Shaping Iran’s Oil Future” (http://www.bloomberg.com/news/articles/2016-01-13/the-woman-shaping-iran-s-oil-future)

——–Elham Hassanzadeh was raised “in a pistachio-farming family in tradition-minded southern Iran.”  At 31 years of age, she has a law degree and Ph.D. from the U.K. and “literally wrote the book on Iran’s natural gas industry since the 1979 Islamic revolution . . . She has returned to Iran to head a consulting firm, Energy Pioneers, based in Tehran and London, that’s at the vanguard of Iran’s all-out push to lure back foreign investors after the expected lifting of sanctions in coming months. . . . Hassanzadeh is building a business by parlaying a deep knowledge of Iran’s energy resources, close ties to government technocrats and industry leaders in Tehran, and high-level contacts at major oil companies, law firms, and investment houses in the West.”

********Hassanzadeh’s book is Iran’s Natural Gas Industry in the Post-Revolutionary Period: Optimism, Scepticism, and Potential (http://www.amazon.com/Irans-Natural-Industry-Post-Revolutionary-Period/dp/0198728212/).  I found this to be of interest as it provides an opportunity to test assumptions about Iran and the role of women in the country, for example, “women make up more than 60 percent of the nation’s college students.”  Hassanzadeh seems to have a clear sense of the importance of going slow, so that necessary financial and other institutions can be built.  Regarding this, she counsels patience to Western and Iranian investors, alike.

(14 January 2016): “GE Among Dozens of Corporate Giants Fleeing Suburbs for Urban Centers” [SR](http://www.wsj.com/articles/ge-among-dozens-of-corporate-giants-fleeing-suburbs-for-urban-centers-1452733627)

——–“In selecting Boston as its new home base, General Electric Co. will join dozens of corporate giants forsaking the suburbs for urban centers.  The trend is accelerating, experts say, due to employers’ thirst for the kind of educated, technologically-savvy workers who are clustering in cities such as Chicago, San Francisco, and Seattle.”  According to Patrick Phillips, the global chief executive of land-use think tank Urban Land Institute, “Suburban office parks are falling out of favor as companies recognize their locations affect their ability to compete for skilled workers.”

********As the article points out, corporate tax rate differences, as well as other incentives, also played a role in GE’s move from Connecticut to Massachusetts.  This movement, of course, is common.  It is akin to the international tax inversions that have been much in the news over the last year (http://www.bloombergview.com/quicktake/tax-inversion).  Corporate movements from state to state don’t seem to be accompanied, though, with the same degree of concern as movements from country to country.  The New Geography of Jobs (http://amazon.com/New-Geography-Jobs-Enrico-Moretti/dp/0544028058/) provides additional information about the factors affecting corporate location, especially in the knowledge industries.

********You can learn more about GE’s move to Boston at: http://www.nytimes.com/2016/01/14/technology/ge-boston-headquarters.html.  The products of GE, the article indicates, are “increasingly loaded with digital, sensors, all part of an effort to be a leader in the ‘industrial Internet.’”  Further information relating to GE’s move, and a broader perspective of the benefits of industrial “clusters” can be found in “The biotechnology industry: Clusterluck” (http://www.economist.com/news/business/21688385-bostons-biotech-hub-surviving-challenge-silicon-valley-clusterluck).  That being the case, it would seem that students like those in the UNC Asheville/NC State University Mechatronics program (https://engineering.unca.edu/joint-bs-engineering-mechatronics-concentration) would be ideal candidates for GE.

(14 January 2016): “F.D.A. Approves a Genetically Engineered Potato” (http://www.nytimes.com/aponline/2016/01/13/us/ap-us-genetically-engineered-potato.html)

——–“A potato genetically engineered to resist the pathogen that caused the Irish potato famine is as safe as any other potato on the market, the Food and Drug Administration says.  In a letter Tuesday to Idaho-based J.R. Simplot Co., the FDA said the potato isn’t substantially different in composition or safety from other products already on the market, and it doesn’t raise any issues that would require the agency to do more stringent premarket vetting. . . . Before the potato is marketed to consumers, it must be cleared by the U.S. Environmental Protection Agency . . . The U.S. Department of Agriculture approved the potato in August.”

********Interesting that the USDA, the FDA, and the EPA are all weighing in on this product—three different organizations, each of which has its own special concerns and processes.  No doubt this is an indication of the concern about the “unknown unknowns” surrounding GMOs.

(14 January 2016): “NC progress slow on industrial hemp legislation” (http://www.newsobserver.com/news/politics-government/state-politics/article54765300.html)

——–“Industrial hemp production became legal in North Carolina on Oct. 31, but don’t expect to see the crop planted here anytime soon.  The permitting process is moving slowly.  State legislators passed the legalization legislation in September, and Gov. Pat McCrory let it become law without his signature.  But before farmers can grow help, private donors must provide $200,000 to cover the cost of regulating the industry. . . . Once hemp supporters raise $200,000, the state will create an Industrial Hemp Commission with farmers and law enforcement representatives appointed to oversee a permitting process.”  The hemp legislation passed “a few days before the legislative session ended in September” and bypassed consideration of the Agriculture Committee.  Committee chair Rep. Jimmy Dixon is “upset and perturbed in the manner” the bill was passed and plans to put it on the “Committee’s agenda when the legislature returns in late April.”

********A lengthier article about the bill appeared shortly after its passage: http://www.newsobserver.com/news/politics-government/state-politics/article41855457.html.  The text of the bill can be viewed at: http://www.ncleg.net/Sessions/2015/Bills/Senate/PDF/S313v4.pdf.  At the bottom of its page 3, you will see that “The Commission shall not meet or undertake any of its powers and duties under this Article until it has obtained funding from sources other than State funds of at least two hundred thousand dollars ($200,000) to support operations of the Commission.”  This seems so very strange to me.  Are there other examples?

(15 January 2016): “With Gridlock in Washington, Lobbyists Turn to Statehouses” [SR](http://www.wsj.com/articles/with-gridlock-in-washington-lobbyists-turn-to-statehouses-1452825384)

——–These are busy times “for a new army of lobbyists and interest groups swarming state capitals around the U.S.  Businesses and industries seeking relief from the gridlock of Washington are taking to the states such issues as gun regulation, minimum wages and energy.”  According to Michigan-based lobbyist Jason Geer, who represents the Michigan Chamber of Commerce, businesses and organizations “have started investing in states with ballot initiative processes and lobbying legislators more directly, rather than going to Washington.”  According to the nonpartisan research group National Institute on Money in State Politics, “between 2006 and 2012 the number of interest groups and organizations, including unions, represented by lobbyists in the states grew by more than 6,200, about 12%.”

********You can learn more about the National Institute on Money in State Politics, “The nation’s only free, nonpartisan, verifiable archive of contributions to political campaigns in all 50 states.” at: http://www.followthemoney.org/.  The site has a variety of ways of using the data they have brought together.  I suggest clicking on the 1-minute introduction button and take look at what’s offered.  Then, examine one or more of the Popular Tools immediately below.  I found Industry Influence to be interesting—unsurprisingly industry contributions follow a regular patter of increased contributions in election years—but when I tried to explore My District it was never able to locate my residence.

(15 January 2016): “$15 Oil?  It’s Already Here, in Canada” [SR](http://www.wsj.com/articles/15-oil-its-already-here-in-canada-1452818511)

——–“Crude prices dipped below $30 a barrel this week for the first time in years.  But for many producers, $30 oil already is a thing of the past.  Most barrels of oil sold globally garner less than benchmark prices because they are deemed lower quality, or because buyers incur higher shipping costs. . . . A basket of crude oils sold by the 13 members of the Organization of the Petroleum Exporting Countries fell Wednesday to $25.69 a barrel. . . . And some of the cheapest crude oil in the world, in Canada, costs less than $15. . . .  Canadian crude oil suffers from quality and transportation discounts.”  For U.S. crude producers, a “silver lining . . . is that the U.S. benchmark’s discount to Brent [European] prices has disappeared in recent weeks. . . . Once Congress voted to lift the ban on most U.S. crude exports in December, the price gap between U.S. oil and Brent narrowed to zero.”

********As noted in The Wall Street Journal [SR](http://www.wsj.com/articles/u-s-exports-first-freely-traded-oil-in-40-years-1452643962), the first freely traded oil exports in 40 years began in early January, destined for Germany via Italy.  The article does a nice job of illustrating the role of transportation costs and quality in giving rise to price differentials of crude oil, as well as the role played by the law (regarding exports) in allowing markets to take those factors into consideration.

********As an especially dramatic example of falling prices, consider that “Flint Hill Resources LLC, the refining arm of billionaire brothers Charles and David Koch’s industrial empire, said it would pay -$0.50 a barrel Friday for North Dakota Sour, a high-sulfur grade of crude, according to a list price posted on its website.  That’s down from $13.50 a barrel a year ago and $47.60 in January 2014.”  The negative price is “due to the lack of pipeline capacity for a particular variety of ultra low quality crude.”  You can learn more about this situation at: http://www.bloomberg.com/news/articles/2016-01-18/the-north-dakota-crude-oil-that-s-worth-less-than-nothing.  The article goes on to note, “Negative energy prices are rare but not unprecedented.  Propane traded at a negative value in Edmonton, a key pipeline hub in oil-rich Alberta, for about three months last year.”  These situations tend not to last.  As John Auers of Dallas-based Turner Mason & Co. notes, “You don’t produce stuff that’s a negative number . . . You shut in the well.”

********Given that Iran is about to expand its oil sales due to the elimination of some sanctions against it, clearly indicates that low prices are likely to continue barring unexpected increases in oil demand.  You can learn more about oil production in Iran, as well as view some excellent multimedia and graphics about oil prices, at: http://www.nytimes.com/2016/01/19/business/international/oil-iran-sanctions.html.

(15 January 2016): “Do Incentives Modify Behavior?” (http://daily.jstor.org/do-incentives-modify-behavior/)

——–With the start of a new year, many people are working away on their resolutions.  But a 1989 study shows “that only 19 percent of people reported that they had successfully stuck to their resolutions.”  Incentives seem to play an important role in sticking to resolutions, but their effectiveness “depends heavily on their design, and the behavior being incentivized.”

********The article draws upon two articles from the economic literature, both of which are accessible by a link at the bottom of the article.  The first, “Incentives to Exercise,” was published in 2009 and is loaded with statistics.  The second, “When and Why Incentives (Don’t) Work to Modify Behavior,” was published in 2011 and is written for a more general audience as it appeared in The Journal of Economic Perspectives.  It is the article I would read if I was looking for a readable account of the possibilities and limitations of behavioral incentives.  In particular, it addresses pro-social behaviors like recycling and giving blood, and distinguishes between “doing good” and “doing well.”

(16 January 2016): “Weighing the cost and benefit of divestment” (http://www.latimes.com/business/hiltzik/la-fi-hiltzik-20160117-column.html)

********”Silicon Valley and the entertainment and biotech sectors have secured California’s reputation as an investment nirvana.  Here’s the other side of a coin: the state is a national leader in divestment actions too.”  Such initiatives include “Senate Bill 185, signed by Gov. Jerry Brown last October, effectively mandating that the state’s two giant public pension funds CalPERS and CalSTRS, divest from the coal industry.”  Stanford University and the University of California system have made their own recent divestment decisions.  “These moves build on a longer tradition.  Tobacco companies, firearms makers and companies doing business in Iran and Sudan have all been targeted for divestment over the years by CalPERS and CalSTRS.”  But the recent movement to divest from fossil fuels has raised broad questions.  “Does divestment work?  And if it does, can the lessons learned from the fossil fuel campaign be applied to other industries targeted by California activists, such as firearms and private corrections companies?”

********The article goes on to discuss some of the research about divestment.  To me the article makes clear that the question “Does it work?” depends fundamentally upon the meaning of the word ‘work’, i.e., what is to be accomplished by divesting?  Sometimes ‘work’ is viewed as strictly a financial matter—the monetary return—but those advocating divestment, I sense, are concerned about extra-financial matters, too.  In language related to the previous article, they are more concerned about “being good” than “doing well.”  In the language of economics, they are willing to trade off some financial return for being more ethical.  Of course, whether it makes sense to use the words ‘more ethical’ will be argued by some: either you are ethical or you aren’t.  A recent book that explores this and a host of related issues is Ethics in Economics: An Introduction to Moral Frameworks (http://www.amazon.com/Ethics-Economics-Introduction-Moral-Frameworks/dp/0804794537/), by Jonathan Wight.

********Closely connected to the idea of trading off financial return for being more ethical is paying more for products that support some value, whatever it might be.  This is explored in “Whole Foods And The Problem With Enlightened Consumption” (http://daily.jstor.org/whole-foods-and-the-problem-with-enlightened-consumption/).  The article is based upon a “2008 paper for Theory and Society,” in which sociologist Josée Johnston examine the “citizen-consumer” model that “encourages us to vote with our dollars for a better world.”  According to Johnston, “ethical consumption became a matter of concern for many people starting in the 1980s, tying together worries about the environment, animal welfare, local farms, and workers’ rights.”  I found a pdf of Johnston’s article at: http://www.rhetcom.net/wp-content/uploads/2013/10/Johnston.pdf.

(18 January 2016): “A Businessman Who Trades in Hand-Me-Downs” (http://www.nytimes.com/2016/01/18/world/asia/a-businessman-who-trafficks-in-hand-me-downs.html)

********A glimpse at the used-clothes business in Kabul, Afghanistan and how it has responded to changing political and military regimes.  Interesting to me was that upon the reestablishment of the used-clothes trade in Kabul, a merchant was able to get “40 bales of [used clothes] on credit” from merchants in Karachi, Pakistan.  I went searching for a book on the used-clothing market and turned up Clothing Poverty: The Hidden World of Fast Fashion and Second-hand Clothes (http://www.amazon.com/Clothing-Poverty-Fashion-Second-hand-Clothes/dp/1783600675/), by Andrew Brooks.  The book reminded me of Pietra Rivoli’s The Travels of a T-Shirt (http://www.amazon.com/Travels-T-Shirt-Global-Economy-Characters/dp/1118950143/), which is now out in a second edition.  The endnotes of Clothing Poverty indicate many additional resources to explore.

(19 January 2016): “Fixing Drafty Old Buildings Becomes $20 Billion U.S. Industry” (http://www.bloomberg.com/news/articles/2016-01-19/fixing-drafty-old-buildings-becomes-20-billion-u-s-industry)

——–According to the U.S. Green Building Council, “Buildings account for 39 percent of carbon dioxide emissions, exceeding transportation and industrial uses.”  Cliff Majersik, the executive director of Washington nonprofit Institute for Market Transformation, “Most of the focus has been on new construction, but now people are really taking a look at existing buildings . . . If you really want to move the needle on climate change, you can’t ignore the 99 percent of buildings that are already there.”  As a result of a “decade of progressively stricter laws aimed at reducing energy use and consumer desire to lower costs” a $20 billion-a-year U.S. industry has been emerged.

********The article’s distinction between the existing stock of buildings and new constructions (a flow) was useful.  Clearly, focusing solely on the flow will miss many opportunities to reduce greenhouse gases.  I was surprised to see the size of the energy reduction industry.

(20 January 2016): “Instead of Computer Code, ‘Plant Hackers’ Tinker With Genetics” (http://www.wsj.com/articles/instead-of-computer-code-plant-hackers-tinker-with-genetics-1453254509)

——–[This is the A-Hed, quirky, article.  Not-so-quirky, today.]  25-year-old Sebastian Cocioba is seeking to create the elusive blue rose.  “Born into an earlier generation, Mr. Cocioba might have spent hours writing computer programs.  Instead he is at the vanguard of a millennial niche: do-it-yourself bioengineering.  In place of a keyboard, he has a homemade ‘gene gun’ that fires genetic material into plants on a blast of tiny tungsten particles.  A growing coterie of plant hackers and synthetic biology startups have their sights set on creating some bizarre and wondrous creations: glowing plants, fragrant moss and flowers that change colors when you pour beer into the soil.”

********There is a two-minute video accompanying the article that shows Cocioba, who is “almost entirely self-taught,” at work.  So much concern has been raised about genetic engineering when done by trained scientists that I thought this article that should be widely read and reflected upon.  I am nearing completion of reading The Invention of Nature: Alexander von Humboldt’s New World (http://www.amazon.com/Invention-Nature-Alexander-Humboldts-World/dp/038535066X/), by Andrea Wulf.  It is scientific biography at its finest, written with style and deep knowledge about someone who was extraordinarily important in helping us to arrive at current understandings of biology and ecology, and set the stage for the path-breaking work of George Perkins Marsh, whose Man and Nature (http://www.amazon.com/Man-Nature-Geography-Weyerhaeuser-Environmental/dp/0295983167/) provided copious illustrations of how people have affected the environment.  Someday, I am sure, someone will be writing a book on how people have affected the genomes of multiple species.  I sense it will be, like Marsh’s, a hard book to read.

(20 January 2016): “How the Epidemic of Drug Overdose Deaths Ripples Across America” (http://www.nytimes.com/interactive/2016/01/07/us/drug-overdose-deaths-in-the-us.html)

——–“Deaths from drug overdoses have jumped in nearly every county across the United States, driven largely by an explosion in addiction to prescription painkillers and heroin.  Some of the largest concentrations of overdose deaths were in Appalachia and the Southwest, according to new county-level estimates released by the Centers for Disease Control and Prevention.”  The trend of deaths from drug overdose is now similar to that of the HIV epidemic “in the late 1980s and early 1990s, said Robert Anderson, the C.D.C.’s chief of mortality statistics.”  In contrast to HIV, drug overdoses “cut across rural-urban boundaries.  In fact, death rates from overdoses in rural areas now outpace the rate in large metropolitan areas, which historically had higher rates.”  Appalachia “has been stricken with overdose deaths for more than a decade, in many ways because of prescription drug addiction among its workers.”  According to Dr. Carl R. Sullivan III, who directs addiction services at the West Virginia School of Medicine, “In the mid-1990s, there was a social movement that said it was unacceptable for patients to have chronic pain.”  In an area with blue-collar workers subject to injury, prescription painkillers came to be abused.  Then, when states began to address such misuse, prescription “addicts began turning to heroin instead.”

********In economic terms, as legal changes caused the relative price of heroin to fall, more people switched to it from prescription painkillers—this response is unfortunately familiar.  The graphics incorporate into the article are stunning in more ways than one.  In particular, there are maps for 2003 and 2014 showing overdose deaths in Appalachia in which it is easy to make out the counties.  The article also provides a link (http://blogs.cdc.gov/nchs-data-visualization/drug-poisoning-mortality/) to information showing trends in the U.S., each state, and each county from 2002-2014.  I looked at state information for North Carolina, Wisconsin, and Florida.  North Carolina and Wisconsin state trends follow U.S. almost exactly.  Since Florida is a known location of high levels of excessive pain-killer prescriptions, I thought its behavior would be different (and it was).  For much of the 13-year period, Florida rates were much higher than U.S. rates, but state rates fell below U.S. rates after Florida tightened its regulations.  I encourage you to make some comparisons of interest to you.

May you have a good week!

Bruce

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