Welcome to week 339! 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.
(4 October 2018): “Free Exchange: Bought and paid for” The Economist
——–“Firms that use political influence to obtain relief from stifling rules may thereby contribute to growth. . . . But firms’ political ties can also be used to weaken rules that protect consumers and to squash competition. In a new paper Ufuk Akcigit, Salomé Baslandze and Francesca Lotti try to distinguish between such malign purposes and benign ones in the case of Italy.” They found that “The larger and more dominant companies are, the more they invest in political connections. As their market position strengthens, they engage in more political hiring but register fewer patents. Political connections appear deadly to economic dynamism. Firms with lots of them are much less likely to go out of business; and industries with lots of politically well-connect firms see fewer new firms enter.” It appears from their work that there is no “strong link between connections to politically successful parties and productivity growth . . . Almost all value of cultivating politicians seem to come from a more secure market position, rather than a lighter regulatory load.”
********The article concludes, “It seems ever clearer that, when corporations open their wallets to politicians, the public loses.” These losses seem to be a result of “barriers to competition.” I would be curious to see how this connects with Adam Winkler’s book: We the Corporations: How American Business Won Their Civil Rights.
(12 October 2018): “A Map of Every Building in America” The New York Times
********The NYT has created a tool that allow one to “find maps showing almost every building in the United States.” Why? To create an opportunity for one “to connect with the country’s cities and explore them in detail. To find the familiar, and to discover the unfamiliar.” For really looking at each structure, Google Maps is the way to go, but to get a high-level look at buildings and settlement patterns, the NYT’s tool is the way to go. There is a search bar to input a zip code and there is a limited ability to zoom in and out. What an exciting them, I would think, to be a student of economic geography given the data sets now available. Here is a brief article that surveys some of the early contributors to location theory, which “has become an integral part of economic geography, regional science, and spatial economics.”
(12 October 2018): “Theranos Criminal Case Is Broader Than Publicly Disclosed, Prosecutors Say” Bloomberg.com
********I just completed Bad Blood: Secrets and Lies in a Silicon Valley Startup, which was published earlier this year. It is, to say the least, a disturbing tale of how many, many people were taken in by Theranos by way of the persuasiveness and sense of purpose of Elizabeth Holmes and the pugnaciousness of Ramesh “Sunny” Balwani. There is nothing pretty in what I have read, even though the vision itself may have been noble. But, as it is said, “There’s many a slip twixt the cup and the lip.” This article is an update on the federal government’s ongoing criminal fraud case “against former Theranos Inc. Chief Executive Officer Elizabeth Holmes and former President Ramesh ‘Sunny’ Balwani” is of great interest. In 2014, Theranos and Elizabeth Holmes were riding high, as exemplified by the Fortune article “This CEO is out for blood.” (This article was noted in TIF 166 (25 June 2014.) In 2015 the reporter, Roger Parloff, wrote the follow-up story “How Theranos Misled Me.” Since the trial is underway, you can learn more every day. Here is something from October 16th.
********If you are interested in the sort of documents generated by the Theranos trial, here is the link to learn more. You can downlead the June 14, 2018 indictment and follow what appears to be all of the motions, notices, orders, and proceeding transcripts for the trial. Many of these are free of charge, others require payment. These documents are the meat and potatoes of the invisible foot. These documents carry one up to the present and will, as I understand, continue. All this is the work of Court Listener, of the Free Law Project. You can learn more here.
(12 October 2018): “When Your Boss Is an Algorithm” The New York Times
********This is an author-bylined article by Alex Rosenblat, whose Uberland: How Algorithms Are Rewriting the Rules of Work will release on October 23rd. Over four years of research “interviewing 125 drivers for Uber and other ride-hailing apps, as well as taxi drivers” Rosenblat “learned that drivers at ride-hailing companies may have the freedom and flexibility of gig economy work, but they are still at the mercy of a boss—an algorithmic boss.” That boss “seems to watch everything you do. Ride-hailing platforms track a variety of personalize statistics, including ride acceptance rates, cancellation rates, hours spent logged in to the app and trips completed. And they display selected statistics to individual drivers as motivating tools, like ‘You’re in the top 10 percent of partner!’” This is, of course, merely a specific example of the increasingly common practice of continual monitoring of human behavior by software. It is used in auto insurance, in educational settings, health, and in a variety of workplace settings. By reading and reflecting upon the content of this article and Uberland, we will be in a better position to understand the downsides and upsides of the continual monitoring of human behavior by software. We are, I suspect, only at the thin edge of a very long wedge.
(12 October 2018): “Forget Stoners. The Real Money Is in Medical Marijuana” Bloomberg Businessweek
——–Canada will legalize the use of recreational marijuana on Wednesday, October 17th. But “the real money could be made in medicine. More than 20 countries, including Germany, Mexico, and Australia, have approved the use of medical marijuana. Denmark and Luxembourg have taken steps to legalize the drug for medical use. The U.K. plans to allow prescriptions for cannabis-derived medicine by fall, and investors expect many more to follow. . . . The global medical pot market could be worth more than $50 billion by 2025, from $8 billion in 2017, 10 times the projected size of Canada’s total marijuana sector, according to PI Financial Corp.” It is thought that the “biggest opportunity for medical marijuana could be in pain treatment . . . The opioid crisis across North America has physicians and patients seeking safer alternatives in the pain sphere.
********Bloomberg Businessweek has a nice article on the terminology of legal marijuana: ”A Crash Course for Investors on the Lingo of (Legal) Weed.” It is impressive to see the growth of sales when the wall between a legal and illegal market is torn down. While you are “learning the lingo” for investing, you might also want to know what you could invest in. Here is “A Guide to Cannabis investing” provided by Bloomberg.com.
(14 October 2018): “After Nobel In Economics, William Nordhaus Talks About Who’s Getting His Pollution-Tax Ideas Right” The New York Times
——–William Nordhaus believes that the efforts of the European Union to use cap-and-trade to fight climate change have been “a catastrophic failure.” But there are places in the world—notably, parts of Canada and South Korea—[where] politicians have . . . [used carbon taxation] in ways that also reframe it not as a tax, but as a financial windfall for taxpayers. Other governments, including China and some individual states in the United States, are also testing different ways to force companies to pay to pollute. In short, the world is becoming a laboratory for theories that Professor Nordhaus developed decades ago, when global warming was an abstract future threat.”
********This article is essentially a Q&A with Professor Nordhaus on the political challenges on dealing with policies to deal with climate change. In his view, what is lacking in the U.S. are grown-ups. “In other countries, people are grown-ups, and they can live with taxes.”
********In a related article, “Clean up climate change? It’s just good for business” The Washington Post, the point is made that an increasing number of corporations are recognizing that they must do something to combat climate change regardless of what the federal government does. One thing that especially stood out for me is this statement: “One analysis shows that half of the globe’s emissions since 1988 are traceable to just 25 private and state-owned fossil fuel corporations.” It is based upon “The Carbon Majors Database: CDP Carbon Majors Report 2017.”
(15 October 2018): “What’s Monopsony? It May Be the Reason You Haven’t Had a Raise” Bloomberg Businessweek
——–“Now that unemployment has touched its lowest level since 1969, economists are puzzling even more over why wages haven’t been rising faster. After all, with fewer prospective workers seeking jobs, employers should be having to pay up to attract new employees and keep the ones they have. One theory about what’s going [on] carries the name monopsony.”
********This is the lead paragraph of a QuickTake on monopsony, which is usually defined as a market with one buyer. Careful definitions also include the notion that there are many sellers. (Compare this to monopoly, where there is one seller and many buyers.) It is conventional to discuss monopsony in relation to labor markets, for example, the labor markets of company towns, like those producing textiles or coal. The article does a nice job of discussing the growing relevance of monopsony and provides interesting links to different types of literature. The 12-page article “Modern Models of Monopsony in Labor Markets: A Brief Survey” provides a more technical, math-based discussion.
May you have a good week!