Welcome! 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.
(25 January 2017): “Planet Money: The Chicken Tax” npr.org
********This episode of Planet Money relates the story of the automobile industry and how a tariff set by Germany on U.S. chickens resulted in the dominance of American-made pickup trucks in the U.S. market. The chicken tax seems to be well-known by U.S. auto executives and they are in no hurry to make it go away. It is said that “as the twig is bent, so grows the tree” and that applies to the lasting effects of tariffs, too. Among the matters included in this 17-minute broadcast, with transcript, is a description of the efforts that non-U.S. companies make to evade the chicken tax. My thanks to a reader of TIF Weekly for drawing my attention to this article.
********While we are on the subject of tariffs, ”How 4 Companies Struggle to Navigate Trump’s Trade Uncertainty” The New York Times, is a good companion. The chicken tax seems to have remained in place since its imposition in XXXX, but current tariffs seem as evanescent as a thought while meditating. This article explores how four companies are trying to deal with the tariff of the day. The president seems to be aware of the problems he is creating for business owners, apologetically noting: “Sorry. It’s the way I negotiate . . . It’s done very well for me over the years, and it’s doing even better for the country.”
(11 June 2019): “No, Renting Isn’t Throwing Your Money Away” Bloomberg.com
********This is a light-hearted look at the perennial question of whether to rent or buy a home. Young potential home buyers are more likely to be saddled with large student loans, making their ability to buy a home more problematic. Then there is the issue of frequent job changes—given the large closing costs associated with buying and selling a home, those who change job and location are less likely to recoup their investments. Finally, but not exhaustively, rental and house markets in some areas favor rental decisions. Obviously, one cannot examine all of the factors relevant to the rent vs. buy decision in a five-minute video, much less do the necessary analysis, but it does provide a solid starting point.
(14 August 2019): “Mass Pig Deaths in China Cause Short Supply of U.S. Blood Thinner” Bloomberg.com
——–“A Chinese outbreak of African swine fever that has killed millions of pigs in the country has also led to falling U.S. supplies of a widely used drug derived from the animals, the anti-clotting drug heparin. Heparin’s active ingredient is derived from pig intestines. It’s a critical drug for hear attack patients and is used in surgery to stop clots. Much of the world’s supply of active pharmaceutical ingredient, or API, for the blood thinner comes from China, a byproduct of the nation’s massive pork consumption.” Thus far, China “has lost as many as 150 million to 200 million animals” to African swine fever, “a dire example of how problems can ripple around the world.” This is not the first time that the supply of heparin has been at risk: “Heparin manufacturers used bovine materials up until the 1990s but stopped given concerns over mad cow disease.” The FDA “has been in contact with several companies, both domestic and foreign, regarding reintroduction of bovine heparin to the U.S. market.”
********For reasons that are more likely personal rather than the text of the article itself, the interdependence of markets, as related by economics, and the interdependence of life, as related by ecology, asserted itself. These twin interdependencies are a never-ending source of fascination. The connections between ecology and economy are explored to some extent in Nature’s Economy: A History of Ecological Ideas. It is probably time for a second reading. It is certainly a theme of Rachel Carson’s Silent Spring, first published in 1962, which I am currently reading. Its content is chilling today—how much more so it must have been in 1962.
(27 August 2019): “Corporate Culture Matters Most” Bloomberg.com
********This 50-minute podcast features Ron Williams, a former CEO of Aetna during a time when it was “named Fortune’s most admired health-care company three years in a row. Williams made it profitable, and eventually the firm was sold to CVS for $69 billion.” Starting from a very modest background in Chicago, he is the author of Learning to Lead: The Journey to Leading Yourself, Leading Others, and Leading an Organization (2019). This wide-ranging interview covers Williams’s education, formative work experiences (working at a car wash), business experience, book, and personal interests. It was his MBA education at MIT, after undergraduate studies at Roosevelt University, that familiarized him with “the operational management of services” that helped enable him to have a stellar career in health. When he was asked “What do you know now that you wished you had known twenty years ago?” he simply replied “Listen.”
********No doubt the transformation of health care in North Carolina is something that would require much listening. The article “Inside North Carolina’s Big Effort to Transform Health Care” The New York Times has interesting things to say about what’s up in the Old North State. The gist of the article is that:
North Carolina is in the early stages of turning away from the traditional fee-for-service model, in which doctors and hospitals are paid for each office visit, test or operation. Instead, providers will often be paid based on health outcomes like controlling diabetes patients’ blood sugar or heart patients’ cholesterol. The better the providers do, the more they can earn. If they perform poorly, money could eventually come out of their pocket.
As Dr. Mandy Cohen, the secretary of North Carolina’s health department notes, “I want to buy health with our dollars, not necessarily buy health care.” Cohen served in the Obama administration.
(30 August 2019): “Flaring, or Why So Much Gas Is Going Up in Flames” Bloomberg.com
********This Quicktake takes a look at why gas flares are so prevalent in oil-producing regions. In short, it is a question of money—local gas prices have gone negative multiple times in the Permian Basis of Texas, meaning that drillers were “paying customers to haul their gas”—and regulatory—the Texas Railroad Commission, which regulates gas and oil in Texas—“has never denied a request for a flaring permit.” Not all countries follow the U.S.—Russia “requires oil drillers to make use of 95% of the gas they produce.”
(2 September 2019): “If Business Roundtable CEOs are serious about reform, here’s what they should do” The Washington Post
********Economist Lawrence H. Summers poses five questions for the executives who comprise the Business Roundtable in light of their seeming adoption of stakeholder capitalism. It would make for a very interesting set of answers, were they to be forthcoming. I wonder, too, how the economics profession might respond to these questions? In particular, what does competition look like in the context of stakeholder competition?
********Writing these words reminded me of David Warsh’s post in Economics Principals entitled “The Listener’s Hour.” It provides a review of Binyamin Appelbaum’s book The Economists’ Hour: False Prophets, Free Markets and the Fracture of Society. The book was mentioned last week. There is a good deal more here than what appeared in Appelbaum’s piece in The New York Times. Here, of course, shareholder capitalism is center stage and its star is Milton Friedman.
(3 September 2019): “Review of Fashionopolis: The Price of Fast Fashion and the Future of Clothes, by Dana Thomas” The New York Times
——–In Fashionopolis, “Dana Thomas, a veteran style writer, convincingly connects our fast-fashion wardrobes to global economic and climate patterns and crises, rooting the current state of the fashion biosphere as a whole—production methods, labor practices and environmental impacts—in the history of the garment industry. Her narrative is broken up into three manageable sections. The first focuses on today’s global fast-fashion and regular fashion industries and how they came to be so enormous, voracious, so seemingly uncontainable. . . . The second presents alternative, even opposite, approaches to making clothing that Thomas terms ‘slow fashion’ . . . Lastly, she meets people who are trying to reform the system entirely, from the materials we use to how clothes are produced and the ways we shop. Throughout, Thomas reminds us that the textile industry has always been one of the darkest corners of the world economy.”
********You can learn more about the book at Amazon. This book has drawn some attention, with reviews on it in The Wall Street Journal and npr. No doubt there will be others. One dramatic statistic stood out for me from the WSJ review: “In 1991, the Bureau of Labor Statistics says, 56.2% of all clothing purchased in the U.S. was American-made; by 2012, it was down to 2.5%. Much of that clothes is now produced in Bangladesh, where it generates “20% of GD and over 80% of export earnings, while employing 4.5 million people, mostly women.”
(4 September 2019): “Anti-hunger advocates eye latest food insecurity data” Marketplace
********Today the USDA released its annual report “Household Food Security in the U.S. in 2018.” It shows that an “estimated 11.1 percent of U.S. households were food insecure at least some time during the year in 2018 . . . down from 11.8 percent in 2017 and from a peak of 14.9 percent in 2011.” A webinar discussing the report will be held on Monday, September 9th at 1:00 pm EDT. You can learn more about it (and register for it) here.
May you have a good week!