286 (12 October 2016)

Welcome to week 286!  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.

Occasional remark.  Yesterday—October 11th—while searching for a book at Amazon using the terms ‘economics’ and ‘journalism’, I learned that Democracy’s Detectives: The Economics of Investigative Journalism (https://www.amazon.com/Democracy%E2%80%99s-Detectives-Economics-Investigative-Journalism/dp/0674545508/), by James T. Hamilton, was released on the previous day.  Such good luck.  As the Amazon blurb states, “In democratic societies, investigative journalism holds government and private institutions accountable to the public.  From firings and resignations to changes in budgets and laws, the impact of this reporting can be significant—but so too are the costs.  As newspapers confront shrinking subscriptions and advertising revenue, who is footing the bill for journalists to carry out their essential work? . . . Drawing of a painstakingly assembled data set of thousands of investigations by U.S. journalists, James T. Hamilton deploys economic theories of markets and incentives to reach conclusions about the types of investigative stories that get prioritized and funded.”

Hamilton is the Director of the Stanford Journalism Program and hopes to “help surface the problems faced by journalists to those looking to use computational methods to solve puzzles that benefit society” (https://www.amazon.com/James-T.-Hamilton/e/B000APG2F2/ref=dp_byline_cont_book_1).  The Stanford Computational Journalism Lab (http://cjlab.stanford.edu/) is involved in this work.  This seems like an interesting new direction for “Big Data.”  Somewhat related is the upcoming Pew Charitable Trust webcast—Friday, October 14th—on “Data-Driven Decision-Making at the State and Local Level.”  Colorado Governor John Hickenlooper will kick off “a series of discussions on evidence-based governing, with a special focus on election administration and tax incentives.”  You can learn more about the event (and watch it) at: http://www.pewtrusts.org/en/about/events/2016/governing-by-the-numbers.   The event runs from 9:00 am to noon Mountain Time.

Democracy’s Detectives has already received the attention of some notable entities and I suspect that it will be reviewed frequently in the weeks to come.  One source to learn more about the book is Nonprofit Quarterly (https://nonprofitquarterly.org/2016/10/11/new-book-attempts-define-value-investigative-journalism/), which discusses the “business model crisis” of investigative journalism and notes a few organizations doing investigative journalism as traditional newspapers have done less.  The NQ also, happily, drew my attention to The Poynter Institute, “one of the world’s leading resources for journalism and consequently civil society.”  As mentioned, when Poynter recommends a new book, readers should take note.  You can learn more about the Institute and read what it had to say about Hamilton’s book at: http://www.poynter.org/2016/an-economist-makes-the-case-for-saving-investigative-journalism/433481/.

Regarding the Institute’s article, those in North Carolina will want to pay particular attention to the coverage of former reporter Pat Stith.  Specifically, “there is a 70-page chapter on the career of a single investigative reporter—Pat Stith of the News and Observer of Raleigh, a sort of micro-economic window into the craft.”  Stith, and two other colleagues, won a Pulitzer Prize in 1996 for work “on the environmental and health risks of waste disposal systems used in North Carolina’s growing hog industry” (http://www.pulitzer.org/winners/news-observer-raleigh-nc-work-melanie-sill-pat-stith-and-joby-warrick).

(1 October 2016): “The Federal Reserve: Man in the dock” “(http://www.economist.com/news/books-and-arts/21707908-was-alan-greenspan-blame-financial-crisis-man-dock)

——–[A review of The Man Who Knew: The Life and Times of Alan Greenspan (https://www.amazon.com/Man-Who-Knew-Times-Greenspan/dp/1594204845/), by Sebastien Mallaby.]  “Mr. Mallaby, formerly a journalist at The Economist and now a senior fellow at the Council on Foreign Relations in New York, takes readers on a long journey from Mr Greenspan’s childhood as the adored and awkward son of a single Jewish mother in New York, through his period as a ‘sideman’ in a jazz band, his professional life as a data-obsessed forecaster, his engagement in Republican politics, his 18 years as chairman of the Federal Reserve and, finally, the post-crisis collapse of his reputation.  Through the lens of this stellar career, the book also throws a sharp light on American policy and policymaking over four decades.”

********Serving 18 years and five months, Greenspan was the second longest-serving chair of the Federal Reserve System, following William McChesney Martin (http://www.ibtimes.com/who-longest-serving-federal-reserve-chairman-history-1491906) who served 18 years and nine months.  At 780 pages, this book is quite long but it seems like one worth reading.  According to reviewer Randall S. Kroszner, “despite its nearly 700 pages of text, the book is hard to put down, thanks to Mr. Mallaby’s knack for finding just the right example or sparkling quotation to illustrate his points” [SR]( http://www.wsj.com/articles/sebastian-mallabys-biography-shows-that-alan-greenspan-foresaw-the-housing-crisis-why-didnt-he-act-1475877299).  It’s a pity that Kroszner’s review requires a subscription, as he provides a knowledge and sympathy for both writer and subject that makes his review come alive.  As he notes, “Alan Greenspan’s intellectual journey began with Ayn Rand, who was introduced to him by his first wife in 1953.”  Over time, “Mr. Greenspan evolved a practical view of political economy in part, Mr. Mallaby says, because he was ‘mugged by reality.’”  I am very curious about Greenspan’s intellectual odyssey: How did he get from Ayn Rand to the Federal Reserve?

********In connection with the above, The Man Who Knew is on the shortlist for the Business Book of the Year of The Financial Times.  You can see the complete list at: http://aboutus.ft.com/2016/09/07/financial-times-and-mckinsey-announce-shortlist-for-2016-business-book-of-the-year-award/#axzz4MWAypCcZ.  There are six books on the list, including What Works: Gender Equality by Design (https://www.amazon.com/What-Works-Gender-Equality-Design/dp/0674089030).  There may be some valuable insights in this book for the political leaders of Asheville, as they seek to address local equity issues, as mentioned by Mayor Esther Manheimer in her recent State of the City address.  You can learn more at: http://www.citizen-times.com/story/news/local/2016/10/04/mayor-us-racial-divide-asheville-eyes-equity/91532542/.

(6 October 2016): “Wind Is the New Corn for Struggling Farmers” (http://www.bloomberg.com/news/articles/2016-10-06/wind-is-the-new-corn-for-struggling-farmers)

——–“Wind energy, the fastest-growing source of electricity in the U.S., is transforming low-income rural areas in ways not seen since the federal government gave land to homesteaders 150 years ago.  As commodity prices threaten to reach decade lows and farmers struggle to meet debt payments, wind has become the newest cash crop, saving family farms across a wide swath of the heartland.”

********Power companies have invested more than $100 billion on wind power “in low-income counties—where about 70 percent of wind farms are located—has helped double assessed land values in some of the poorest parts of rural America.  That’s provided a much-needed infusion of local tax revenue that’s being used to rebuild schools and pay down debt.”  All this points to the intricacy of the relationships of policy and outcomes in relation to energy.  This makes me think of the alternative uses of land in the mining areas of the Appalachians and the farming areas of the Midwest, e.g., Iowa.  As a result of policy and wind patterns, it seems, the Midwest is likely to be better able to adapt to changes in the energy landscape than the Appalachians.

(7 October 2016): “Foodies Can Order Meats From a Single Animal” [SR](http://www.wsj.com/articles/foodies-can-order-meats-from-a-single-animal-1475690882)

——–“In grocery store cases stuffed with exotic grass-fed and organic meats, new ‘single-origin’ cuts are taking the local food craze to new heights.  Retailers including Whole Foods Market Inc., FreshDirect, and Amazon.com Inc. are building farm-to-store meat operations that sate some consumers’ desires to trace their burger or bacon all the way back to an individual animal.”  One such purveyor is 26-year-old Hannah Raudsepp, the founder of Honest Beef, who “buys cattle directly from her family’s ranch in the Nebraska Sandhills.  She pays a small plant nearby to butcher and dry-age them, one at a time.  Then Ms. Raudsepp matches online orders with carcasses coming down the line, and ships directly to consumers who order at least $85 worth of steaks and burgers ‘from one single animal.’”  Honest Beef charges $8.50 a pound for its dry-age ground beef, compared to an average August prices elsewhere of $4.25 a pound.  “Analysts say the single-origin meat sellers are tapping into demand for meat that consumers see as more ethically raised or butchered.”

********You can learn more about Honest Beef at: https://www.honestbeefco.com/.  During the two minutes or so that I was online I learned that someone from Hendersonville, North Carolina purchased a sirloin share, so customers are “in the neighborhood.”  This is a market that is so new that many of its supporting structures.  For example, “Because so few of these [single-origin] farms now exist, Whole Foods had to invest in farms and slaughter plants to meet customer demand for ‘whole animal’ products,” according to the company’s global meat buyer.  This new market evokes many thoughts.  Perhaps you have one?

 (9 October 2016): “Sending Potatoes to Idaho?  How the Free Market Can Fight Poverty” (http://www.nytimes.com/2016/10/09/upshot/sending-potatoes-to-idaho-how-the-free-market-helps-food-banks.html)

——–“Skepticism about capitalism and free markets is rising.  A survey by the Harvard Institute of Politics found that a majority of 18-to-29-year-old Americans do not believe in modern capitalism at all. . . . Yet food banks, the organizations at the forefront of the fight against hunger, haven’t given up on free markets at all—to the contrary, they are increasingly relying on them.  How this unlikely marriage happened, and what it teaches us about markets, is an important story.  It is embedded in the research of Canice Prendergast, an economics professor at the University of Chicago Booth School of Business who documented the innovations of Feeding America, a large nonprofit organization that collects and distributes hundreds of millions of tons of food to more than 200 food banks throughout the United States.”

********The research mentioned in the article is “The Allocation of Food to Food Banks,” which can be read at: http://faculty.chicagobooth.edu/canice.prendergast/research/food4.pdf.  What struck me as especially noteworthy in the article is its discussion of the objections to free markets, which tend to be based on two issues: “First, goods go to the highest bidder; second, bidders possess different amounts of wealth.  Disentangling these two factors is important.  When markets produce outcomes that seem unfair, it is usually the second factor—the wealth disparity—that is to blame.  Place bidders on an equal footing and the superior efficiency of the market becomes evident.”  As this idea is explored, the approach (and success) of Feeding America becomes easier to understand.

********As I read the article it seemed to contain a familiar story.  After some searching, I found that a somewhat similar story showed up in TIF Weekly 242.  The story was “The Pickle Problem” and it showed up in an 18-minute NPR podcast.  You can listen to it at: http://www.npr.org/sections/money/2015/11/25/457408717/episode-665-the-pickle-problem.

(11 October 2016): “Oliver Hart and Bengt Holmstrom Win Nobel in Economics for Work on Contracts” (http://www.nytimes.com/2016/10/11/business/nobel-economics-oliver-hart-bengt-holmstrom.html)

——–“Oliver Hart and Bengt Holmstrom were awarded the Nobel Memorial Prize in Economic Science on Monday for their work on improving the design of contracts, the deals that bind together employers and their workers, or companies and their customers.”

********You can learn substantially more about the Noble recipients and their work at: https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2016/press.html.  Be sure to check the various links on the left-hand-side of the screen.  Another useful source for information on the Nobel Prize in economics in recent years can be found in the October 11 post of Economic Principals at: http://www.economicprincipals.com/.  Its proprietor, David Warsh, is a journalist who has focused his attention on the economics profession.

May you have a good week!

Bruce

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