Welcome to week 375! 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.
Given that I live in the Asheville, North Carolina area, any article that mentions craft breweries catches my attention. This week the article (21 June 2019) “Where Microbrewery Jobs Are Overflowing” Bloomberg.com did just that. Upon inspection there was no mention of the Asheville area, but I did learn about something called the “employment location quotient” (ELQ) that “measures an industry’s share of total jobs in an area divided by its share nationwide.” I.e., it provides an indication of the degree to which a region’s industry stands out (or not) in relation to the nation as a whole. For example, the Bend-Redmond Metropolitan Statistical Area of Oregon has a brewery-employment location quotient of 18.43, which means that in that place “one is effectively 18 times more likely to run into a brewery worker than in the country as a whole.” Please note that the article was based on Metropolitan Statistical Areas. When one looks at the county level, as I did, things look a bit different. Buncombe County, where Asheville is located, had a fourth quarter 2018 ELQ of 10.30. Nelson County, Virginia had an ELQ of 109.98!
The employment location quotients are found in “the Quarterly Census of Employment and Wages, the hyper-detailed jobs report that the Bureau of Labor Statistics compiles from state unemployment insurance data.” Here is the starting page from which you can construct tables, with ELQs for a variety of purposes. For example, looking at Buncombe County, again, I was interested in the industries with the highest ELQ. Here are the results: Education and Health Services came in first (1.95), Leisure and Hospitality second (1.70), Other Services third (1.17), and Manufacturing fourth (1.13). Take a look at the starting page and investigate your interests.
The author of the microbrewery article is Justin Fox, who has had a distinguished career in business journalism, including serving as the executive editor of the Harvard Business Review. You can learn considerably more about him at his site. Among his books is The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street. He used his new-found knowledge about the Quarterly Census of Employment and Wages, as well as the ELQ, to write a series of articles this week. Here they are:
(22 June 2019): “Financial Jobs Aren’t Just in New York”
(23 June 2019): “A Booming Local Health-Care Industry Isn’t Always a Good Thing”
(24 June 2019): “The Internet Is Everywhere, But Internet Jobs Aren’t”
(25 June 2019): “The New Yorkiest Jobs in New York, Revealed”
(22 June 2019): “Facebook’s Libra Crypto Coin: 5 Things We Know, and 5 We Don’t” Bloomberg.com
********In this article five different reportorial teams write about Facebook’s projected cryptocurrency, Libra. One thing that it makes clear is that the Federal Government is unprepared for the rise of cryptocurrencies, especially one as all-encompassing as the Libra. For example: “More than half a dozen regulators have some jurisdiction over cryptocurrency” with the “Securities and Exchange Commission and the Commodity Futures Trading Commission” being leading candidates for influence “because of their expertise monitoring markets.” Congressional action to help set new rules is “an unlikely prospect before the 2020 U.S. elections.” Of course, Libra will be global in scale. Are international organizations any better prepared to deal with the rise of cryptocurrencies? Highly unlikely.
********There is a twelve-page white paper on Libra. Some useful background on Libra is provided by Wired in “The Ambitious Plan Behind Facebook’s Cryptocurrency, Libra.” David Marcus, a former President of PayPal who is heading up the Libra effort, figures prominently in the article. You can watch a 12-minute interview with Marcus here.
(22 June 2019): “The Trade War’s Latest Casualty: Trees” Bloomberg.com
——–“The global economy is the most obvious casualty of the U.S.-China trade war. The most profound and damaging impact, however, might be on the world’s forests. That’s because two trends are converging. Despite a slowing economy and a swine-fever outbreak . . . , China’s appetite for meat continues to grow inexorably. . . . That means the country can’t afford to cut down on its imports of soybeans, used as feed for livestock, despite tariffs that have raised the cost of U.S. soy. . . . Shifting soybean purchases from the U.S. to other countries such as Brazil . . . raises another threat: rampant deforestation. . . . Between 2001 and 2006, soybean fields expanded by 1 million hectares in the Amazon Basin. Nearly 30% of the area was formerly virgin forest.” The pressures on virgin forests continue today, although the threatened regions of Brazil are now different.
********Land use adapts to prevailing and anticipated market conditions, which depend, in turn, upon legal and political factors, as well as social and historical factors. This article shows clearly how tariff-driven changes in the soybean imports of China have encouraged deforestation in Brazil.
(23 June 2019): “It’s time we tear up our economics textbooks and start over” The Washington Post
********This is a column by Robert J. Samuelson, who answered a question I’ve long had in my mind: “Is he related to the late Nobel Laureate Paul Samuelson?” No. The gist of the article is that contemporary events (and contemporary thinking) is leading to a reconsideration of what should be taught (and what should happen) in the introductory economics course. Standing in as the status quo is N. Gregory Mankiw, whose Principles of Economics is now in its eighth edition. An estimated 4 million copies of the book have been sold. One counter to the status quo is an introductory e-book by Samuel Bowles and Wendy Carlin. In a forthcoming issue of The Journal of Economic Literature, Bowles and Carlin, as well as Mankiw, will be sharing their thoughts about introductory economics. By accessing the appropriate links in Samuelson’s column, you can read them now.
(23 June 2019): “As seniors go into twilight years, some of them privately mull ‘rational suicide’” The Washington Post
——–“Ten residents slipped away from their retirement community one Sunday afternoon for a covert meeting in a grocery store café. They aimed to answer a taboo question: When they feel they have lived long enough, how can they carry out their own swift and peaceful death? The seniors, who live in independent apartments at a high-end senior community near Philadelphia, showed no obvious signs of depression. They’re in their 70s and 80s and say they don’t intend to end their lives soon. But they say they want the option to take ‘preemptive action’ before their health declines in their later years, particularly because of dementia. More seniors are weighing the possibility of suicide, experts say, as the baby boomer generation—known for valuing autonomy and self-determination—reaches older age at a time when modern medicine can keep human bodies alive far longer than ever.”
********As the article notes, the “concept of rational suicide is highly controversial; it runs counter to many societal norms, religious and moral convictions, and the efforts of suicide prevention workers who contend that every life is worth saving.” The economic study of suicide was given its first influential statement by Daniel S. Hamermesh in “An Economic Theory of Suicide” (1974). The literature has since grown. It was reviewed and given a restatement by Dave E. Marcotte in “The Economics of Suicide, Revisited” (2003).
(24 June 2019): “You can enter a drawing to buy rare liquor in Utah. Just don’t call it a lottery” The Los Angeles Times
——–“Utah isn’t exactly a heavy-drinking state. Almost two-thirds of the population is Mormon, a faith that bars the consumption of alcohol. But for thirsty apostates, a limited release of $270-a-bottle Pappy Van Winkle 23-year reserve bourbon is game-on.” According to Terry Wood of the Utah Department of Alcohol and Beverage Control, what happened last year when the state’s 46 liquor stores received a total of 110 bottles “was just nuts . . . People would race from store to store . . . Some people were trying to game the system or bet on what stores would have it and show up there.” All agreed that something had to be done, perhaps a lottery like those used in other states? It turns out that “If alcohol is frowned upon in Utah, gambling is even more so. With a criminal code that spends 12 sections detailing all manner of wagering that is illegal, Utah is just one of two states in the country with no lottery.” After years of effort, the state alcohol agency got the go ahead from the state’s attorney general. The term being used is ‘a distribution system for a limited-quantity product.’
********The opening for a “lottery” in Utah seems to have been the hunting permit system used by the state. Although the two cases are not identical, they were close enough to get people to think more creatively about a method of allocating Pappy that does not result in long lines and, as Terry Wood describes it, chaos.
********Long ago one of the bread-and-butter topics of introductory economics was “capitalism vs socialism” and the lines that resulted from socialism (and ostensibly didn’t result from capitalism). During this political season capitalism vs socialism seems to be in the news—a lot. Perhaps that is why “Democrats point to Nordic nations as models of socialism. Here’s how they actually work” caught my attention. The article draws upon a report published by JPMorgan Chase, which notes: “copy the Nordic model if you like, but understand that it entails a lot of capitalism and pro-business policies, a lot of taxation on middle class spending and wages, minimal reliance on corporate taxation and plenty of co-pays and deductibles in its healthcare system.” As the report goes on to note, “On many measures, the Nordic approach to the private sector is even more business-friendly than the US.”
(26 June 2019): “Frackers Go Electric as Low Natural Gas Prices Spur Fuel Switch” Bloomberg.com
——–“Thrifty drillers have found a new use for the glut of natural gas that’s sent prices for the fuel below zero in America’s biggest shale patch: Use it to power fracking operations. For decades, explorers have used massive diesel engines mounted on tractor-trailers to shoot a mixture of water, sand and chemicals down wells and blast open layers of oil-soaked shale rock. That’s changing now that soaring output has crushed gas prices, especially in West Texas’ Permian Basin, where the fuel is a byproduct of crude oil extraction. Explorers are switching to so-called e-fracking, using gas from their own wells to run turbines for electric motors that power drilling pumps. The move helps in two ways: It cuts . . . fuel costs . . . and it lessens the excess gas burned off at the well site.” It is predicted that “electric pumps will represent about a third of the market in roughly the next five years, from about 3% now”
********It is expected that switching to “gas-powered electric motors could reduce flaring, which releases carbon dioxide into the atmosphere. The practice has reached record levels in the Permian as the oil boom leads to escalating output of gas.” Astonishingly, the “total amount of gas burned off a waste worldwide in 2018 would have been enough to supply all of Central and South America, according to the World Bank.” Still, conversion to e-fracking faces some hesitation. Initial capital costs are higher than diesel, and the technology is in its early stages, but “the horse has left the barn.” E-fracking “will likely allow the best pumpers to differentiate themselves from the rest of the pack the same way land drillers did with their higher-technology rigs at the turn of the century.”
May you have a good week!