335 (19 September 2018)

Welcome to week 335!  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 September 2018): A major bank is offering payday-style loans.  Will others follow suit?The Los Angeles Times

——–Minneapolis-base “U.S. Bank says it will offer nearly instant small loans to its customers, becoming the first bank to provide such a product since federal regulators cleared the way earlier this year amid continuing concerns over the costs of payday loans.”  The bank noted that “its checking account holders will be able to quickly borrow $100 to $1,000 . . . through its Simple Loan offering.  Borrowers have three months to repay, at a cost of $12 for every $100 borrowed—equivalent to an annual interest rate of about 71%.”  The bank that these loans are expensive, but “they’re dramatically cheaper than payday loans, which give borrowers less time to repay and come with interest rates that often top 400%.”

********This is welcome news for those in facing a cash crunch and who have previously only been able to resort to payday lenders and other “fringe-banking” providers to meet their emergencies.  Will this result in a reduction in the percentage of people who are unbanked?  Presumably one will not be able to get a Simple Loan unless you have already established a banking relationship with U.S. Bank.  U.S. Bank does not have branches in North Carolina, although there are branches in Tennessee and elsewhere.  You can learn more about Simple Loan by reading the press release and following the links contained therein.

(13 September 2018):The Economist at 175: A manifesto for renewing liberalismThe Economist

********During the last six weeks The Economist provided Philosophy Briefs that summarized some of the greatest works in the history of liberalism.  This week’s edition is given over to a celebration of the role that The Economist has played since its formation 175 years ago in the campaign to end the notorious Corn Laws of England.  The campaign, though championed as an effort for free trade, was also a class struggle—British landlords wanting to preserve the high price of foodstuffs (and the value of their land holdings) by keeping foreign produce out of the country and laborers wanting to lower the price of food by allowing foreign produce in.  This week The Economist provides a Leader of liberalism, which provides a very broad, and chastened, look at the current state of liberalism, as well as some suggested policies that might be embraced.  This link is to the Leader which, by stressing the elites that have emerged in the context of the embrace of liberal policies in the modern world has some important things to say.

********The discussion of liberal elites shows up in Foreign Affairs this week in “The Financial Crisis Is Still Empowering Far-Right Populists.”  As the article notes, financial crises are disruptive because “they are manmade disasters.  People blame elites for failing to prevent them.  It’s often not hard to find policy failures and cronyism among the rich and powerful, so trust in the political system erodes.  This opens the door to political entrepreneurs who try to set ‘the people’ against the ‘ruling class.’  The tendency to blame elites after financial crises might suggest that far-left parties would benefit as much as far-right ones.  But that doesn’t happen.”  Research reported in 2015 by Funke, Schularick, and Trebesch in “Going to Extremes: Politics after Financial Crises, 1870-2014” indicates that “the far left’s vote share stays about the same in the aftermath of a crisis.  It seems that when social groups fear decline and a loss of wealth, they turn to right-wind parties that promise stability and law and order.”

********In considering this, I begin to have a bit more understanding of the provocative title of an article this week by Neil Irwin of The New York Times: “The Policymakers Saved the Financial System.  And America Never Forgave Them.”  Perhaps what was unforgiveable was the preservation of the system and the protection of the elites that benefitted from it.  No doubt both of these considerations have figured into the responses of Americans and others to the handling of the crisis.

(14 September 2018):How forensic accountants help bring down white-collar criminals and drug kingpinsMarketplace

********Here is four-minute audio with transcript on the work of forensic accountants, taking as its jumping off point the recent testimony of Paul Manafort.  As the audio notes, forensic accountants provide expertise in the investigation of “crimes like money laundering, fraud and tax evasion.”  The demand for their services must be expanding in these times of flexible morality . . . what about their supply?

********Forensic accounting would appear to be relevant to the material discussed in Moneyland: Why Thieves and Crooks Now Rule the World and How to Take It Back, by Oliver Bullough, which is reviewed this week in The Economist.  Moneyland is Bullough’s “term for a virtual country populated by the mega-rich and their hangers-on.”  The real scandal of Moneyland is “the way ritzy bankers, lawyers, accountants and PR people enable money stolen in poor, ill-run countries to be invested in rich, safe ones.  There are limits to how much cash the pillagers can spend in their own misruled domains, but the ability to teleport money invisibly around the world means, as Mr Bullough puts it, that the rich can continue eating without ever feeling full.”

(14 September 2018):Even in Better Times, Some Americans Seem Farther Behind.  Here’s Why.The New York Times

********The centerpiece of this article is made up of graphs showing Median Income (and Net Worth) relative to population median for Whites, Hispanics, and Blacks in the U.S. over the time period 1989 to 2016.  The data is broken down by Non-College Graduates and College Graduates.  This is one of those cases where a good stare at the data gives rise to many questions and some explanations, a few of which are mentioned in the article.  I was especially struck by the behavior of median income for White, Hispanic, and Black College Graduates, especially that relating to Hispanics.

(16 September 2018):How an Unsolved Mystery Changed the Way We Take PillsThe New York Times

——–“In 1982, someone tampered with capsules of Extra-Strength Tylenol, turning them lethal with potassium cyanide.  Seven people in the Chicago area died.  Copycat attacks around the country caused several more deaths.  As grim as the Tylenol deaths were, they endure as an example of how a corporation, Johnson & Johnson in this instance, took control of the calamity, came up with a strategy and, with surprising swiftness, regained trust it had lost.”  Instead of renaming the product, “the company offered a different solution, a new bottle with the sorts of safety elements now familiar . . . to every shopper: cotton wad, foil seal, childproof cap, plastic strip.  Capsules began to be replaced with caplets the following year.”

********As the article notes, not all corporations have been so forthcoming as the 1982 version of Johnson & Johnson.  In reading this I am reminded of the decisive action of the late and beloved Laurey Masterton, who owned Laurey’s Catering on Biltmore Avenue in Asheville, North Carolina around a hepatitis incident in 1998.  She got the news out quickly and (it seems) her business never suffered.  Evidently, people will forgive you if you quickly do the right thing.  What does all this have to do with the invisible forces?  Trust influences the demand for goods and services, so it is relevant to the invisible hand (economic forces that affect human behavior).  No doubt there are cultural (invisible handshake) factors at work, too.  It seems like new book Rule Makers, Rule Breakers: How Tight and Loose Cultures Wire Our World, by Michele Gelfand, has something to offer regarding how culture affects human behavior.  You can read a review of the book by Colby College sociology professor Neil Gross.

********The Tylenol article is a Retro Report, which is “a growing series of over 150 short documentaries that tell the history behind the news.”  There is a nine-minute video that accompanies the article that is well worth watching.   You can learn more about more about Retro Reports at www.retroreport.org.  I surveyed the Retro Report site and found the 12-minute video “Gerrymandering’s Surprising History and Uncertain Future,” which focuses on North Carolina.  There is a companion article in The New York Times: “The Odd Political Alliance Behind Today’s Gerrymandering.”

(17 September 2018):Marijuana industry fights ‘stoner,’ ‘pot’ and other words that stigmatizes peopleThe Los Angeles Times

——–MedMen Enterprises of Culver City, California, has undertaken an ad campaign to remind people that “marijuana users come from all walks of life.  They can be cops, nurses, teachers, scientists, construction foremen and grandmothers.  All these people appear in MedMen ads that also feature the word ‘stoner’ with a line drawn through it.  As in, let’s get rid of this.”  Daniel Yi, senior vice president of communications at MedMen, notes: “We want to take the stigma away.  We want to make marijuana mainstream.”  The $2-million “Forget Stoner” campaign debuted earlier this year and “is part of a larger push by the cannabis industry to normalize the use of marijuana.”

********The normalization of marijuana and its components is a strategy being considered and employed by a wide range of producers, as is clear from “Coca-Cola Is Eyeing the Cannabis MarketBloomberg.com.  Drinks infused with Cannabidiol (CBD), which is “the non-psychoactive ingredient in marijuana that treats pain but doesn’t get you high,” are of increasing interest to those in the drinks market, which “Coca-Cola says it’s monitoring.”  By considering such a move, Coke is following a strategy already embraced by larger brewers, such as Corona, Molson Coors, and Heineken, which are seeing slowing sales in their traditional markets.  Both large-scale brewers and soft drink producers have seen sales slow in recent years.  Some useful and concise information about the components of marijuana is related in the Quicktake “Why Coca-Cola May Add a Cannabis Component to DrinksBloomberg.com.  The main distinction is between THC, which is psychoactive, and CBD, which is not.  Evidently the U.S. Drug Enforcement Administration regards CBD and THC in the same way, even though they are demonstrably different in their effects.

May you have a good week!

Bruce

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