289 (2 November 2016)

Welcome to week 289!  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.

(28 October 2016): “More Wretched News for Newspapers as Advertising Woes Drive Anxiety” (http://www.nytimes.com/2016/10/28/business/media/buyouts-wall-street-journal-bad-news-for-newspapers.html)

——–“Across the country, those working in the newspaper industry are fretting as the end of the year approaches.  Driving much of the anxiety is a steep drop in print ad revenue, once the lifeblood for newspapers.  Spending on newspaper advertising in the United States is projected to fall 11 percent this year, to about $12.5 billion, according to the Interpublic Group’s Magna.  At the same time, digital advertising and other forms of revenue have been slow to pick up the slack, leading news companies, including The New York Times, The Guardian and Gannett, the owner of USA Today, to cut costs by downsizing. . . . Across the industry, similar declines in print advertising coupled with the shift to digital and, increasingly, mobile, are driving newspaper companies to reconfigure their newsrooms.”

********It would be interesting and useful to know what has happened to the sum of print and digital advertising for respective newspapers.  Have ad revenues fallen even as a new source of revenue come into being?  My sense is that the answer is “No.”  That being the case, reducing cost through newsroom configuration is easy to understand.  But there are so many more outlets at which to place ads than was once the case.  One wonders: “How the proposed AT&T and Time Warner merger relates to all of this?”  Still, I am intrigued by a statement that appears in an article by the Public Editor of The New York Times (http://publiceditor.blogs.nytimes.com/2015/04/10/a-darker-narrative-of-prints-future-from-clay-shirky/), “Society doesn’t need newspapers.  What we need is journalism.”  If we are faced with a continuing decline in the newspapers, where will be get that journalism?

(28 October 2016): “The two reasons it really is harder to get a job than it used to be” (https://www.washingtonpost.com/news/wonk/wp/2016/10/28/why-it-really-is-harder-to-get-a-job-than-it-used-to-be/)

——–Since the 1990s it “the labor market seems to have lost much of its natural buoyancy.  The past three downturns caused extended periods of underemployment.  Years after economic output had fully rebounded, there were still fewer people at work.”  Two views are being used to explain these “jobless” recoveries.  One is that “recessions are times when companies clean house and find ways to become more efficient.  In recent decades, that has often meant replacing employees with computers.”  In effect, these “positions became obsolete.”  But there seems to be something else at work, which is the “upskilling” of work.  “After a recession, the remaining job openings may become harder to fill because employers start to demand people with better skills, who can adapt to new technologies in order to be more productive.”  In summary, “it’s not just that many jobs go extinct during a recession.  Even the surviving jobs sometimes shift beyond recognition—and beyond the reach of many.”

********At the end of the article economist Brad Hershbein is quoted as follows: “People need to constantly be learning and keeping their skills up to date as technology changes and evolves . . . If you learned how to do one thing and do it well for 15 or 20 years, and that’s all you really learned how to do—you’re going to be hard-pressed when you lose your job.”  Note the use of the word ‘when’ but not ‘if’.  In short, “checking out” is an option fraught with danger.

(30 October 2016): “Small Factories Emerge as a Weapon in the Fight Against Poverty” (http://www.nytimes.com/2016/10/30/business/small-factories-emerge-as-a-weapon-in-the-fight-against-poverty.html)

——–Located in Baltimore, Maryland, Marlin Steel is “a small maker of specialized metal baskets used by much bigger manufacturers like Ford Motor, Boeing and Merck.”  The company is one of “a rare breed: the urban industrial manufacturer.  Marlin is a thriving factory in a place that, over the last half-century, factories have fled—first to the South, and later to Asia.  That flight haunts the United States perhaps most in its urban areas—especially neighborhoods that once housed the nation’s working class—and helps explain why many African-Americans in particular today live in poverty in metropolises like Baltimore, Detroit, Newark and St. Louis.”

********An enlightening article—the summary above only provides a hint of its many aspects.  It is inspirational, telling the story of one Marlin employee (James Branch) who went from selling drugs and doing time to a life remade through hard work, education, and a good job.  It is concerning, indicating that smaller businesses sometimes do not have access to opportunities that larger businesses take for granted.  And it is thought provoking, making one reflect on the identity dimensions of making something with one’s own hands.  Regarding the last point, I had never thought about the difference one might experience making something that lasts, i.e., is durable (a good) as opposed to something that doesn’t last, i.e., is not durable (a service).  I can certainly see that it might matter to many people.  No doubt it is a factor in the demand and supply of labor that could use some more attention.

(31 October 2016): “No One Saw Tesla’s Solar Roof Coming” (https://www.bloomberg.com/news/articles/2016-10-31/no-one-saw-tesla-s-solar-roof-coming)

——–On Friday evening at Universal Studios in Los Angeles, Elon Musk presented the “grand unification” of his “clean-energy ambitions.”  The audience “was able to step into a future powered entirely by Tesla: a house topped with sculpted Tuscan solar tiles, where night-time electricity is stored in two sleek wall-hung Powerwall batteries, and where a Model 3 prototype electric car sits parked out front within reach of the home’s car charger.”  With the introduction of solar roofs and a higher-capacity (and cheaper) Powerwall battery, Musk’s pursuit of SolarCity is now easier to understand.  As Musk said, “The future is going to overwhelmingly be solar plus battery . . . They go together like peanut butter and jelly.”

********The article includes a three-minute video, which captures the essence of the story and shows the complete line of products: roofs, Powerwall, and a car or two.  I would imagine that this new development, although not entirely unforeseen, will make established (incumbent) electric companies a bit more concerned.  It has now become easier for some potential customers to become electricity producers, too.  In relation to this, I wonder: “To what extent will small-scale electricity producers increase their use of electricity?”

********It is one thing, as in the U.S., to supplement an existing grid with solar-generated electricity, but the situation in much of Africa is quite different: there is no existing grid.  In the absence of such a grid, solar power is leap-frogging (in some areas) the grid altogether.  A brief examination of that topic is provided by “Off-grid solar power: Africa unplugged” (http://www.economist.com/news/middle-east-and-africa/21709297-small-scale-solar-power-surging-ahead-africa-unplugged).  The situation is like that of mobile phones.  Many Africans have completely skipped the use of land lines and moved directly to mobile phones.  In this development path, it seems that the role of regulation, i.e., the invisible foot, would be reduced.

(1 November 2016): “Selling Air (a.k.a. the Idea They Thought of Next)” (http://www.nytimes.com/2016/11/01/world/what-in-the-world/china-bottled-air-pollution.html)

——–“Would you pay $100 for a whiff of Welsh air?  In some of the world’s most polluted cities, people apparently will: Sales of bottled air from fresh-smelling places are taking off. . . . Bottled air is one of the least practical but most talked-about ideas.  It can hardly replace the local atmosphere . . . But residents in smoggy places are snapping up the stuff anyway.  The Australian bottler, Green and Clean, plans to ship about 40,000 containers a month to China starting in December, and then expand to India, Malaysia, Chile and the Middle East.”

********One of those “I can’t believe it has come to this” things.  It did make me remember, though, a relatively distant story on the sale of “hits” of oxygen in Tokyo.  I don’t think I read this specific article (http://abcnews.go.com/International/story?id=1999240&page=1) from 2006, but it is enough to indicate that the idea of selling bottled air to public has been around for a while.  Evidently this isn’t an issue just for urban professionals with a lot of money to spend conspicuously, as reported by The Washington Post in “1 in 7 children lives with ‘toxic’ air, study finds” (https://www.washingtonpost.com/news/energy-environment/wp/2016/10/31/one-in-seven-children-globally-lives-with-toxic-air-study-finds/?utm_term=.4162072a937b).  Breathing clean air is an issue, it seems, is a global issue.

(1 November 2016): “A Waterfight Like No Other May Be Brewing Over Asia’s Rivers” (http://www.bloomberg.com/news/features/2016-11-01/a-waterfight-like-no-other-may-be-brewing-over-asia-s-rivers)

——–“On Oct. 1, China said a hydropower project in Tibet was diverting water from a tributary of the Brahmaputra River, which flows into India and Bangladesh, reigniting concern over China’s control of some of the region’s biggest waterways that have provided irrigation, transport and life for millennia to much of South and Southeast Asia.  India, which fought a war with China in 1962 over a disputed border, is concerned that Beijing could use water as a strategic weapon.  Six of Asia’s 10 biggest rivers originate in China, including the Brahmaputra.”

********It is interesting, but not surprising, to see that access to both water and air are increasingly problematic.  Presumably population and economic growth are behind both developments.

(2 November 2016): “The Social Responsibility of American Industrialists” (http://daily.jstor.org/the-social-responsibility-of-american-industrialists/)

——–“In an effort to improve its reputation, Walmart recently ran an ad campaign in which CEO Doug McMillon spoke about the company’s commitment to its workers.  Companies have always been concerned with appearing to do the right thing—and, perhaps, with really doing it.  In a 1998 paper, John H. Hamer examined what social responsibility looked like to the American industrialists in the nineteenth century. . . . Hamer suggests that these men were motivated not just by public relations concerns but also by their own moral codes. . . . Today, the growth of global, publicly financed companies has further rationalized the business world.  It’s up to consumers to decide whether or not efforts like Walmart’s are cynical public relations ploys or genuine attempts to do what is right.”

********The post is based upon “Money and the Moral Order in Late Nineteenth and Early Twentieth-Century American Capitalism,” by John H. Hamer.  Hamer examines thirteen capitalists and a link to the article can be found at the bottom of the post.  The appearance of this post was serendipitous for me.  Presently I am reading Last Call: The Rise and Fall of Prohibition (https://www.amazon.com/Last-Call-Rise-Fall-Prohibition/dp/074327704X/), by Daniel Okrent, which I am finding to be readable and informative.  My interest in the book stems from the unusual, perhaps unique, situation of alcohol producers in the U.S. having once produced a legal good which was outlawed and then made legal again.  Fifty pages into the book I am seeing, once more, the determined action of market incumbents confronting those who would do away with their businesses.  Having recently read The Cigarette Century, though, it seems that the Anti-Saloon League (ASL) and a variety of other “dry” advocates were more effective than those who sought to bring down the tobacco industry.  Especially noteworthy, I think, and relevant to this article and the invisible forces generally, is the linkage of the ASL, the brewing industry, large corporations, and the onset of Worker’s Compensation laws.  On pages 51-52 of Okrent’s book, it is noted that the passage of Worker’s Compensation laws, resulting from a partnership of Progressives and the ASL.  Their passage in many states “placed the burden of proof on the employer instead of the employee,” which turned out to be “a catastrophe for the beer industry.  U.S. Steel, Pittsburgh Steel, and other industrials giants” declared “against the saloon.”  Some, “like the Diamond Watch Company, announced they would fire any worker knowns to drink ‘intoxicating liquors.’”  The result was a knot of “unlikely alliances, conflicting motives, and disingenuous arguments that a three-cushion shot (progressives to ASL to industrialists) around an issue like worker’s compensation didn’t seem odd at all.”

********In all of the above there is a certain flexibility of perspective that recalls the expression “When in Rome, do as the Romans do,” which is nicely elucidated at: http://www.italiannotebook.com/local-interest/origin-do-as-romans-do/.  A modern variant is due to Jay Gould of the Erie Railroad, who is reputed to have said that “he was a Republican when he was in Republican districts, a Democrat when he was in Democratic districts, but that he was always for the Erie Railroad.”  Something to ponder.

May you have a good week!

Bruce

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