Welcome to week 326! 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 might be found by an Internet title search.
Please let me know if you have questions or comments.
(11 July 2018): “Britain’s Online Shopping Boom Is a Bust for the High Street” Bloomberg Businessweek
——–The high streets—central shopping districts—of Britain are being devastated by online retailers. “E-commerce accounts for 18 percent of retail sales in the country—almost double the U.S. level and higher than anywhere else in the western world.” Although “Online retailers typically benefit from lower overhead than their store-based counterparts, . . . in the U.K. that advantage is bigger than just about anywhere. The country has the developed world’s highest commercial property taxes.” For example, last year “Tesco paid £700 million in property taxes, and J. Sainsbury Plc, the No. 2 chain, paid £550 million. Amazon’s bill: £14 million.” As CFO Kevin O’Byrne of Sainsbury’s says: “We start the year £500 or £600 million behind Amazon before we’ve even opened our doors.”
********Philip Hammond, the Chancellor of the Exchequer, notes: Britain “needs to find a better way of taxing the digital economy” to level the playing field between traditional retailers and etailers. That is one way to go to.
(12 July 2018): “The Crucial Southern Blackberry” JSTOR Daily
——–“It’s berry season in much of the United States Depending upon where you live, that might mean you can wander into a field where berries grow wild and pick your own fruit. Historian Bruce E. Baker writes that in the American South, during the years after the Civil War, picking wild berries [especially blackberries] was one of the ‘smaller bits and pieces by which people made a living.’”
********It is definitely blackberry season here. Livia Gershon has written an inviting summary of Baker’s article, which I then went on to read. A link to it is provided at the bottom of her post. The role of the commons as a resource for all to use figures prominently in the article. Referring to the use of the commons in England, Baker notes:
English people had rights to gather nuts, fruits, and other plants for food. These rights carried over into the antebellum South, supported by a series of legal opinions and laws requiring crops, not livestock, to be fenced in. Johnson Hagood, governor of South Carolina when that state passed a law requiring all livestock to be fenced in, explained the rationale: the original title to land had been granted to an individual because he would improve the land, contributing in that way to the common good by paying taxes on the value of the improvement. Since unimproved land did not contribute to the common good through taxes, the people as a whole were entitled to make use of it. Gathering blackberries from the commons did not have the same economic impact as pasturing cattle and hogs, but when put together with all the other foodstuffs and medicinal plants available from the commons, it was not insignificant.
After the Civil War, “there was a concerted attack on common rights in the South. . . . Controversies over fence laws intensified into the late 1870 and early 1880s. Around the same time rights to hunt and fish were restricted by state legislatures in a variety of ways. Within this context, rights to pick blackberries came under attack as well.” It is interesting to see that there is a North Carolina Right to Hunt and Fish Amendment on the November 6, 2018 ballot. No provision is made for harvesting other “fruits” of the land.
(14 July 2018): “Along Maine’s northeastern coast, seaweed stirs an international controversy” The Washington Post
——–The harvesting of seaweed off the Maine coast has brought seaside homeowners and seaweed harvesters into conflict. The “squabble is aggravated by colonial land laws and 20-foot Bay of Fundy tides that award a property owner a new expanse and then take it away twice a day. The fight has tumbled into the courts, and there taken another peculiar turn. The Maine Supreme Court is now pondering whether seaweed is a plant—which would make it the property owners’—or an animal, which would mean it could be harvested by anyone, like fish from the sea.” David Garbary, a biology professor at Nova Scotia’s St. Francis Xavier University is unequivocal: “This is one of those absurd questions where you get tied up in definitions that are not relevant . . . This is a perfectly good photosynthetic organism, and it’s a plant.”
********Next case, please. The seaweed in question, rockweed, is held to be sustainably harvested and provides a source of income to those in Maine’s poorest county. As such, there is a conventional argument about tradeoffs between environmental and economic concerns in the article. What struck me though, was the following quotation: “the kind of seaweed common on intertidal waters of the north Atlantic Ocean is used mostly to feed plants and animals. . . . The long weed [rockweed] collapses brown and matlike over rocks when exposed at low tide. As the tide rises, the plant lifts into sinuous forests, buoyed by bladders of air on its stems.” What beauty is missed if one looks simply at the weed on the rocks and not the buoyed seaweed of the tide. This is a lack of imagination that is all too easy to understand.
(16 July 2018): “What Game Theory Says About Trump’s Trade Strategy” Bloomberg.com
——–“Financial markets were of two minds last week about the impact of mounting trade tensions between China and the U.S. On the one hand, the escalating tit-for-tat tariffs still affect only a relatively small part of the two countries’ economies.” In that case the consensus is that the effects on stocks and the economy should be small and temporary. “On the other each, each escalation . . . increases the market’s downside risk scenario of slipping . . . into a full-blown trade war that would significantly damage corporate earnings and the overall growth outcome.” Market narratives, however, have missed a third scenario, a “Reagan Moment” that “goes beyond tweaks to the existing system by delivering changes in the overall global economic landscape that favor the U.S. in both relative and absolute terms.”
********The frame provided above serves as a basis for seven “insights from game theory on what to watch and expect.” Reading the insights provides an opportunity to imagine that the trade policy of the president involves more than a misplaced application of bilateral deal-making to multilateral trade.
(16 July 2018): “A Surprising Bid for Remington, and an Unsurprising Rejection” The New York Times
——–The Navajo Nation, one of the largest Native American tribes in the U.S., made a bid to buy arms manufacturer Remington out of bankruptcy, offering $475-525 million in cash. The bid was rejected. “The Navajo Nation’s plan for Remington was novel: It intended to shift the company away from its consumer business, including curtailing the sale of the AR-15-style weapons frequently used in mass shootings, to focus on police and defense contracts. The tribe planned to use profits from those businesses to invest in research and development of advanced ‘smart guns’—those with fingerprint or other technology intended to prevent anyone but the gun’s owner from using the weapon.” Over time, the Navajo Nation intended to shift production and distribution of guns onto the reservation, thereby developing skills and reducing unemployment there.
********I found the plan of the Navajo Nation to be interesting. Perhaps it will still come to pass. The Navajo Nation “would have had an advantage in sales for police and military contracts. Not only must a certain percentage of government business go to minority-owned companies, but the Native American Incentive Act also confers certain other advantages.” Here is a link to learn just a little more about the Act.
(17 July 2018): [SR] “’Subscribed’ Review: For a Flat Monthly Fee” The Wall Street Journal
——–[Review of Subscribed: Why the Subscription Model Will Be Your Company’s Future—and What to Do About It, by Tien Tzuo with Gabe Weisert.] “Owning things is so over. Who wants the hassle of having your own car, lawn mower or tuxedo when, for a small monthly fee, you can just use one whenever you need it? Services such as iTunes and Spotify taught us that all those CDs can finally be consigned to the dump; [and] Netflix cleared out the DVDs . . . But this is just the beginning, according to Tien Tzuo . . . ‘Simply put,’ he writes, ‘the world is moving from products to services. Subscriptions are exploding because billions of digital customers are increasingly favoring access over ownership, but most companies are still built to sell products.’” Contributing to the success of subscription businesses is their ability to “derive important information from their customers’ behavior in real time, . . . [making them] better at fast adaptation than companies dependent on their in-store employees for feedback.”
********This review reminded me of the recent article in which the “taste clusters” used by Netflix figured prominently. Presumably those using the subscription model are more likely to generate consumer use information, including time and place, that the traditional “buy the product” model does not. Is a service model more likely to lend itself to further application of artificial intelligence than a goods model? There can be little doubt that the answer is “Yes.”
May you have a good week! Bruce