Welcome to week 349! 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.
(18 December 2018): “Our pick of the decade’s eight best young economists” The Economist
********The Economist has picked a list of best economists four times: 1988, 1998, 2008, and now 2018. (There is no online access to the 1988 article available to me at this time. The 1988 listees, which appeared in the 1998 article, were: Alberto Alesina, Sanford Grossman, Paul Krugman, Gregory Mankiw, Jeffrey Sachs, Andrei Shleifer, Larry Summers, and Jean Tirole. Krugman and Tirole later won the Nobel Prize.) The 2018 list is characterized by a “question-driven, issues-first approach.” Here is the 2018 list of the best young economists: Isaiah Andrews, Melissa Dell, Nathaniel Hendren, Emi Nakamura, Parag Pathak, Stefanie Stantcheva, Amir Sufi, and Heidi Williams. Their varied work is worth learning about. What would be revealed by a systematic look at the economists selected by The Economist over the last thirty years?
********The “questions first” approach reminds me of my favorite quotation regarding academic creativity, which comes from mathematician Felix Klein. When asked by a student about the secret of mathematical discovery, he responded: “Your must have a problem . . . Choose one definite objective and drive ahead toward it. You may never reach your goal, but you will find something of interest on the way” (Men of Mathematics, p. 419).
(20 December 2018): “Juul Closes Deal with Tobacco Giant Altria” The New York Times
——–“The tobacco giant Altria, maker of Marlboro and other top-selling brands of cigarettes, has agreed to pay nearly $13 billion for a 35 percent stake in Juul Labs, the wildly popular vaping company that burst on the scene in 2015 with a mission to render cigarettes obsolete. . . . The all-cash deal . . . pairs two businesses whose products have had a profound effect on public health, and, until now, had seemingly divergent paths. . . . Now Jull is staking its future growth on the very industry it sought to disrupt, while Altria can profit from, and even influence, its would-be slayer.” Through the deal “Juul will get access to Altria’s marketing and distribution muscle, including prized shelf space in convenience stores, but also Altria’ lobbying power and regulatory influence. During the past year, Juul has confronted one public relations disaster after another as its sleek, high-nicotine e-cigarette became the drug of choice for the nation’s youth and the target of federal regulators, parents and school officials.”
********Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, contends that Altria sees Juul’s e-cigarettes as “their fail-safe in case the cigarette market keeps declining so that they remain profitable no matter what happens.” This view is supported by Barnaby Page of ECigIntelligence.com. He notes that “For Altria, I think we have to see it as a part of a larger strategy including the cannabis and beer investments . . . Possibly looking forward to a post-Marlboro future in which it is a more wide-ranging sin industry operator, rather than simply a tobacco company.” What we see, then, is a Big Tobacco move similar to the Big Beer move into pot.
(20 December 2018): “Sign Here to Lose Everything: Part 5” Bloomberg.com
********This installment on the cash-advance industry is entitled “Fall Behind on These Loans? You Might Get a Visit From Gino.” This should be pretty familiar by now. The cash-advance industry charges huge rates of interest along the lines of payday loans and is usually able to recoup its advances by way of confessions of judgment that leave borrowers with almost no recourse. Borrowed funds are usually reclaimed by seizing bank deposits. But this doesn’t always work, in which case personal “visits” by the likes of Renato “Gino” Gioe can be forthcoming, a seeming return to “the loan-sharking rackets of a bygone era.”
********Bloomberg’s series has done what outstanding investigative journalism can do, i.e., catch the attention of lawmakers and bringing about change. To learn about some of the consequences of this series, go to this link and scroll down to Follow-up Coverage. There you will find, as of this date, five responses from NYC, the State of New York, and U.S. Senators.
(21 December 2018): “Where Government Is a Dirty Word, but Its Checks Pay the Bills” The New York Times
********This article explores the relationship between transfer payments and voting, especially as it relates to the last election. It does this by focusing on Harlan County, Kentucky. The teaser, if you will, if provided by this sentence: “The residents of Harlan County, Ky., depend heavily on federal assistance. That hasn’t deterred, and may explain, their swing to Republican voting.” There is a lot of interest in this piece, in particular maps of the U.S. showing the dramatic expansion of Federal assistance in the U.S. for the years 1970, 1985, 2000, and 2016. In relation to voting, research by Dean Lacy of Dartmouth College has found that “states receiving more federal spending for every tax dollar they contributed were more likely to go Republican.” The article also provides a graph that indicates that “The most conservative counties are the ones that get the most government assistance.” There seems, then, that cultural values, transfer payments, and voting are closely related. Sounds like the invisible forces.
********Early in the article the author, Eduardo Porter, writes that “Harlan County is the nation’s fifth most dependent on federal programs, according to the government’s Bureau of Economic Analysis.” As it turns out, Porter did not provide the four counties that are more dependent than Harlan. This is so common—why do writers do this? Or is it the editors? In any event, I followed the link provided but only found access to the BEA’s data. Here it is. A few hours of digging couldn’t replicate Porter’s results exactly, but I got pretty close. My results, which used Personal Current Transfer Receipts (CAINC35) and Economic Profile (CAINC30), showed that Harlan County had the third-highest percentage of Personal Current Transfer Payments to Personal Income in 2016 (54.11), following Owsley County, Kentucky (58.37) and McCreary County, Kentucky (54.58). In fact, the 10 counties with the highest percentages were all in Kentucky. (Spreadsheet available upon request.) All of these counties fall in the Eastern Kentucky Coalfield and have been greatly affected by the decline in the demand for coal.
(22 December 2018): “All the Ways Trump Can (and Can’t) Influence the Fed” Bloomberg.com
********This is a Quicktake on the autonomy of the Federal Reserve and the President’s recent unhappiness about the Fed’s decisions around interest rates. It is a brief post with four pieces on The Reference Shelf at the end. Evidently a reliable source on the independence of the Fed is Peter Conti-Brown’s 2017 book The Power and Independence of the Federal Reserve. Conti-Brown is an assistant professor of Legal Studies & Business Ethics at The Wharton School of the University of Pennsylvania and seems to have a meaningful presence on Twitter. You can learn more about him here.
********Conti-Brown has tweeted a bit about what might happen in President Trump “ousted Federal Reserve Chairman Jerome Powell.” Chaos is one immediate outcome. More instructive, though, he notes that “there are two Fed Chairs, not one. The Board Chair (controlled by President) and FOMC [Federal Open Market Committee] Chair, controlled by the FOMC.” Were the President to remove Powell as Board Chair, Powell might still serve as the Chair of the FOMC. This would be the first time since 1935 that the two Chairs would be separated.
(22 December 2018): [SR] “Climate Change Drives Fish Into New Waters, Remaking an Industry” The Wall Street Journal
——–Climate change, and the warming seas that go with it, are causing fish species to move further north, creating new markets for some fishermen, and longer travel times and higher costs for others. In Rhode Island, black sea bass are new to the area, the bulk of which “once lived roughly 700 miles south off North Carolina.” In the Bering Sea, on the other hand, “halibut, pollock and cod are moving away.” As a result crews sail as far as 800 miles north “from the seaport of Dutch Harbor in the Aleutian Islands [of Alaska], before finding the halibut that a decade ago lived several hundred miles closer to home.” Given these developments, fishermen are adapting their vessels and using larger ships to be more flexible with regard to the fish they catch and process.
********Two graphs in the article struck me in particular. They showed the “Average Change in Latitude and Depth for 105 Marine Fish and Invertebrate Centers of Abundance in the U.S.” Regarding latitude, it shows that since 1982 centers of abundance have been moving north. Regarding depth, it shows that since 1982 centers of abundance have been moving lower. In short, centers of abundance are moving north and deeper. This is a clear echo of the findings of Alexander Von Humboldt, so beautifully expressed by Andrea Wulf. Von Humboldt mapped the movement of life on land away from the equator and up mountains. Now we see the movement of life in the sea away from the equator and down from sea level. In both instances, temperature seems to be the driving force.
May you have a good week!