Welcome to week 317! The articles below caught my attention this week. What are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********). Article titles preceded by [SR] require a subscription to be read in their entirety, although complete articles may be found by an Internet title search.
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(5 May 2018): “New Orleans News Site Finds Actors Were Paid To Support A Power Plant” npr.org
——–“Multiple actors were paid to appear at City Hall meetings in New Orleans and express support for a proposed gas-powered power plant, an investigative news site reports, citing interviews with actors and messages with organizers.” The news site is “The Lens.” It has published evidence “suggesting a campaign to recruit, organize and pay people, including people from outside on New Orleans, to express support for the power plant. The Lens notes that “the practice appears to be legal.” According to The Lens, “participants were paid $60 for showing up and wearing a shirt, and $200 for delivering a speech in support of the plant. The news outlet also said that in one message, the organizer referenced ‘Crowds on Demand.’ In 2016, Dave Rothbart wrote about that company, which supplies fake crowds for events, for The California Report.”
********Here is the link to the foundational article in “The Lens” and here is the link to the website of Crowds on Demand. The website of Crowds on Demand draws attention to its services in the areas of Celebrity Events, Protests, Rallies And Advocacy, and Corporate Events And Audiences. The event in New Orleans falls squarely in Protest services and the link for “The Lens” seems to provide a good illustration of that service in action. All of this is another clear example of the many ways that human behavior expresses itself on “the market” broadly considered. In an update on May 10th, “The Lens” reports that the energy company “Entergy has acknowledged that a public-relations firm working on its behalf was responsible for paying people to attend and speak at two public meetings in support of a new power plant in New Orleans. The company said it hired the PR firm to bring supporters to the meetings, but it didn’t know those people had been paid.”
(10 May 2018): “Canadian newsprint tariffs start to take a toll on U.S. newspaper industry” The Los Angeles Times
——–“Little noticed amid the trade war discussion, tariffs levied by the Trump administration on the Canadian paper used to make newsprint are starting to take a toll on U.S. newspapers and printers.” Two sets of interventions “have raised the price of newsprint by about 30%.” As a result, the “Tampa Bay Times said it will eliminate about 50 jobs by June to try to manage the estimated $3.5-million additional cost the paper will pay per year as a result of the tariffs.” According to Paul Boyle of News Media Alliance, there were about 15 newsprint mills in the U.S., but the mills began disappearing as the demand for newsprint declined. Now “there are only a handful left in the nation.” Canadian paper mills provide 60% of the 2.4 million tons of newsprint in the U.S. Boyle notes, “I think it’s foolish to believe someone’s going to start a newsprint mill and spend $200 million to $300 million to build a mill . . . when you see a decline in newsprint.”
********It is always good to have specific examples to look at when examining the impact of a policy which, by its nature, must be general. Here, tariffs (invisible foot) on Canadian newsprint reduce the supply of newsprint in the U.S. and drive up the price of newsprint (invisible hand). In the short run and, if we are to believe Paul Boyle, the long run there will be little supply response by U.S. newsprint producers due to the tariff. The higher price of newsprint decreases the supply (and increases the prices) of products that use newsprint, especially newspapers. This makes newspapers relatively more expensive than alternatives like online media, decreasing the demand for those who produce newspapers in their traditional form. This is only a glimpse of the ramifications.
********I’m currently reading You Had a Job for Life: Story of a Company Town, by Jamie Sayen. It is a history, based upon oral histories, of a paper mill in Groveton, New Hampshire, not too far from the Canadian border. The book has kept my attention and, in its later stages, has shown the challenges that arise for a company town when it loses its connection to local ownership and becomes just another unit to be managed by a larger business. (I would be grateful to anyone who could point me in the direction of a good history of the paper mill in Canton, North Carolina, which has also had multiple owners.) On that reading trajectory, I am looking to read for my next book Annie Proulx’s novel Barkskins, which follows the families of two wood cutters over 300 years. I became aware of this book via a review of The Overstory, by Richard Powers, another novel about trees and the people who relate to them. Maybe I’ll read both.
(10 May 2018): “Bans on paying for human blood distort a vital global market” The Economist
——–“The global demand for plasma is growing, and cannot be met through altruistic donations alone. Global plasma exports were worth $126bn in 2016—more than exports of aeroplanes. But paid plasma raises ethical, social and medical concerns: that it will lead to health catastrophes, as in the 1980s when tainted blood spread HIV and hepatitis; that it exploits the poor; and that it reduces the supply of ‘whole’ blood, which is almost all donated voluntarily. None of these worries is well-founded.”
********The article goes on to elaborate upon why these worries are not well founded. It turns out that plasma can be highly processed and checked for purity in a way that whole blood cannot. Still, many countries tend to treat plasma like whole blood and ban payment for plasma. The U.S. does not, and that is why it is responsible why it collects three-quarters of global blood plasma. Unsurprisingly, countries that pay for plasma tend to be exporters while countries that ban pay for plasma tend to be importers. A surprising fact: “plasma makes up 1.6% of America’s total goods exports.”
********There is a good deal of academic literature on the market for blood. An accessible article is “The Market for Blood” The Journal of Economic Perspectives (2014).
(11 May 2018): [SR] “Maryland’s Crab Country: Not Enough Visas, Not Enough Workers” The Wall Street Journal
——–In Fishing Creek, Maryland, on Hoopers Island, 21 Mexican women at G.W. Hall & Sons are cracking open steamed crabs that will be processed and sold to wholesalers in the mid-Atlantic states and as far away as Canada. Just one-half mile away, “the picking room at a competing company, Russell Hall Seafood, was silent, no workers to be seen. . . . The difference: one firm won the visa lottery, and the other didn’t. This year, for the first time, demand for the low-skilled, seasonal H-2B visas was so high that the U.S. government awarded them by lottery.” The worker shortage on Hoopers Island was unexpected and has disrupted its economy. “Processors that don’t have pickers aren’t buying crabs. Those crabbers aren’t buying bait fish from local fishermen. The combination has slashed sales at the Hoopers Island General Store to its lowest level in six years, said owner Katie Doll.” Fisherman Burl Lewis “recently laid off a crew member from his 52-foot boat,” noting “The Mexican labor creates jobs for Americans. It’s creating my job.”
********Another clear illustration of the invisible foot—legal and political forces that influence human behavior—in action. In addition, it shows how a change at one part of a supply chain are transmitted to its other parts and beyond, i.e., it illustrates multiplier effects. It strikes me that that the lottery approach to allocating H-2B visas would strike many as being fair but inefficient, whereas as market approach to visa allocation would strike many as being unfair but efficient. Fairness and efficiency are important considerations in all policy decisions.
********While we are on the subject of lotteries as an allocation method, it is used to allocate affordable housing, too. Check out “These 95 Apartments Promised Affordable Rent in San Francisco. Then 6,580 People Applied” The New York Times.
(13 May 2018): “Atlantic City’s Grand Casino Bust” JSTOR Daily
——–“On May 26th, 1978, a grand social experiment began in Atlantic City, New Jersey. the first legal American casino not located in Nevada opened, less than two years after New Jersey voters approved a referendum to allow gambling in the battered resort community.” Gambling supporters saw casinos as a way “to boost the economy and create jobs. Moralists argued that casinos would erode the country’s moral fiber. But the jobs argument won out, and by the 1990s, casinos were seemingly everywhere.” It was anticipated that casino gambling would increase tax revenues for states, but the “concept was based on a false hope. The original gambling mecca, Las Vegas, was an isolated locale that became a tourist destination. Its imitators, including Atlantic City, relied on locals and day hoppers, who play at the casinos and then go home, contributing few outside tourist dollars to their localities. In Atlantic City, a third of that town’s local businesses closed within four years of the casino openings.”
********This post shows all of the invisible forces in action. It also connects with the two articles immediately above. First, it provides a look at yet another example of probability-related activity. Second, and more interestingly, it shows that the economic impact difference of casino gambling between Las Vegas and Atlantic City relates to the size of their multipliers—relatively large if most spending comes from outside the community and relatively small if it comes from inside the community. (Where economic development is concerned, bigger is better.) In the latter case, gambling money would likely have been spent locally anyway, so there is simply a redistribution of expenditures, which is why so many local businesses closed in Atlantic City after casinos were introduced. In the former case the additional expenditures are all new.
********It will be interesting to see how state governments respond to the recent decision by the U.S. Supreme Court to allow sports gambling. States must still act, however, and it is possible that the federal government will, too. What arguments will be made and to what extent do those arguments lie upon factual grounds rather than wishful thinking? It shouldn’t be long before we find out.
May you have a good week! Bruce