399 (11 December 2019)

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. 

(13 September 2019)Evaluating the Genuine FakeInside Higher Ed

********This is a review of Genuine Fakes: How Phony Things Teach Us About Real Stuff, by Lydia Pyne.  In a time of purported “fake news” it is of some interest to take a broader view of the material world and discuss what is real and what is not.  In her book she “focuses on the paradoxical status of a number of ‘tangible, physical things that have been made, unmade and remade any number of ways throughout history.’  The genuine fake poses questions about the relationship between authenticity and value in ways that compel thought rather than numb it.”  I think this book touches upon the distinction between mass-produced goods and craft goods that is noted in the immediately following article. 

(4 December 2019) [SR]The U.S. Furniture Industry Is Back but There Aren’t Enough WorkersThe Wall Street Journal

——–[Dateline Hickory, North Carolina] “Here’s the good news: There are now more reasons to make furniture in the U.S. than at any point since the financial crisis.  Crate & Barrel and Williams-Sonoma Inc. are expanding manufacturing in the U.S., and the factories of longtime furniture makers are humming.  Here’s the bad news: There aren’t enough skilled workers available to support the renaissance.”  Furniture companies “face special challenges after years of shrinking.  A generation of prospective sewers and upholsterers have steered clear of the industry, leaving it heavily reliant on an aging workforce.”  One of the workforce solutions has been to expand training opportunities for the young and old alike, in places like Catawba Valley Community College.  But with fewer graduates than needed to meet production requirements, companies like Hickory’s Century Furniture have stretched out their delivery times, currently at nine weeks.

********One thing in the article that struck me as interesting, if not surprising, was the types of furniture products that tended to locate internationally and those that tended to remain in the U.S.  Mass-produced, high volume furniture production tended to relocate to China, for example, and low volume, specialty furniture tend to stay in the U.S.  Factories in the U.S. “still churn out about half of upholstered furniture sold in this country, much of it in places like Catawba County, in the foothills of the Blue Ridge Mountains.”  It is the demand for upholstered furniture that has picked up in recent years.  And so, “When business picked up, there just weren’t enough skilled people.”

            A related article, that also speaks to the importance of education in a work force that increasingly demands higher skills, is [SR]American Factories Demand White-Collar Education for Blue-Collar WorkThe Wall Street Journal.  The message is clear.  “College-educated workers are taking over the American factory floor.  New manufacturing jobs that require more advanced skills are driving up the education level of factory workers who in past generations could get by without higher education, an analysis of federal data by The Wall Street Journal found.  Within the next three years, American manufacturers are, for the first time, on track to employ more college graduates than workers with a high-school education or less, part of a shift toward automation that has increased factory output, opened the door to more women and reduced prospects for lower-skilled workers.”  The Journal analysis found that “Employment in manufacturing jobs that require the most complex problem-solving skills, such as industrial engineers, grew 10% between 2012 and 2018; jobs requiring the least declined 3%.” 

(6 December 2019) [SR]GDP Doesn’t Include Proceeds of Crime.  Should It?The Wall Street Journal

——–“When the U.S. calculates its gross domestic product, it only includes things that are legal.  But if the wares of drug dealers, pimps, bookies and other black-market denizens were included, the GDP would expand by more than 1%, according to one estimate.  It would also align our national accounts more closely with those of the European Union, whose members already incorporate some illegal activities in their tallies. . . . The EU began accounting for illegal activities in its national accounts about five years ago.”

********As the article goes on to point out, a consideration of the importance of adding illegal activities to GDP depends upon the growth rate of illegal activities compared to legal activities.  According to James Tebrake, assistant director of the statistics department of the International Monetary Fund, “if the illegal economy were growing at, say, 1% faster than everything else, that’s a dynamic we might want to pick up.”  There is evidence that “real illegal output did grow faster than overall GDP during the 1970s and after 2008.”  Rachel Soloveichik, a research economist at the Bureau of Economic Analysis, has been studying the likely impact of the inclusion of illegal activities on GDP.

(8 December 2019)Satellites Are Changing the Night Sky as We Know ItBloomberg.com

——–“Expect the night sky to start changing fast.  One day soon, the stars we can see from Earth could be outnumbered by a vast swarm of satellites. . . . SpaceX has plans to launch 30,000 more satellites, in addition to the 12,000 already approved by the FCC and FAA. . . . The result could be cheap or free high-speed Internet access for everyone on the planet, at the price of our view of timeless constellations.”  It is estimated that the naked eye “can pick up just 10,000 or so [stars] from a relatively dark place.”  In addition to fundamentally changing the view of the night sky, additional satellites increase the probability of collisions.  An international agreement to limit space debris is one way that collision risk can be limited.

********Space junk is a big problem.  You can learn more about its various dimensions in “Satellites Are Crowding Space, and It’s Time for a Cleanup PlanBloomberg.com.  It was because of the increasing efforts by SpaceX, Amazon, and others that I decided to read Eccentric Orbits: The Iridium Story, by John Bloom.  Iridium was a company launched by Motorola to establish a satellite-based global phone business.  I’ve been finding the book—I’m 40% through it—engrossing.  It has many of the characteristics of the SpaceX model: low earth orbits (LEOs) and many satellites, but it was oriented to phones, not the Internet.  By the way, Iridium still exists.  You can learn more about it here.

(8 December 2019)Who Put the ‘S’ in ‘ESG’ (and What Does it Mean)?Bloomberg Businessweek

********ESG investing is frequently discussed in the press without elaboration or explanation.  This article is set up like a Bloomberg QuickTake and provides seven paragraphs of discussion what ESG investing is—E stands for Environmental, S for Social, and G for Governance—and some of its historical predecessors, e.g., Socially Responsible Investing.  ESG investing seems to be closely related to the recent—August 2019—Business Roundtable Statement on the Purpose of a Corporation, which places additional emphasis on all corporation stakeholders, rather than just shareholders.

            An article that goes along very well with the one on ESG investing is “Finland Is a Capitalist ParadiseThe New York Times.  Its authors, Anu Partanen and Trevor Corson moved to Helsinki from Brooklyn in search of a better life.  As the article shows, they found it.  In discussing their move and their lives before and after Brooklyn (mostly after), they have come to a variety of conclusions about socialism and capitalism, especially as they relate to Finland and the U.S.  Here is an example:

the Nordic nations as a whole, including a majority of their business elites, have arrived at a simple formula: Capitalism works better if employees get paid decent wages and are supported by high-quality, democratically accountable public services that enable everyone to live healthy, dignified lives and to enjoy real equality of opportunity for themselves and their children. 

And why would the Nordic countries, including Finland, adopt this formula?

Some Nordic capitalists actually believe in equality of opportunity and recognize the value of a society that invests in all of its people. But there is a more prosaic reason, too: Paying taxes is a convenient way for capitalists to outsource to the government the work of keeping workers healthy and educated.

I would be curious to know if the U.S. governance system, where states have substantial power relative to the federal government, plays a role in the inability to advance some of the reforms which, in Finland and the other Nordic countries, capitalists find comfort.  As the authors note, the Finnish approach “liberates businesses to focus on what they do best: business.”

            Anu Partanen is the author of The Nordic Theory of Everything: In Search of a Better Life.  It is interesting to note that 34-year-old Sanna Marin, who just took office on December 10th as Finland’s Prime Minister, is “the youngest head of government in the world.  She leads a coalition headed by women.”       

(9 December 2019)Paul A. Volcker, Fed Chairman Who Waged War on Inflation, Is Dead at 92The New York Times

********An informative piece on Paul Volcker, who served as Chairman of the Federal Reserve under presidents Carter and Reagan.  Particular emphasis is given to his central role in breaking the inflationary momentum of the U.S. but a much broader view of his life and work is provided.  I was surprised to learn that he served as “unpaid chairman of the National Commission of the Public Service, a nonprofit organization founded in 1987 to encourage private-sector leaders to serve in government.”  For a memoir on Volcker’s life, read Keeping At It: The Quest for Sound Money and Good Government.

(10 December 2019)Sicilian Homes Went Up for Auction Starting at €1.  More Than 100,000 People Called.The Wall Street Journal

­——–“Leonardo Ciaccio, mayor of Sambuca in Sicily, put 16 houses up for auction at a starting price of €1 early this year as part of an effort to halt the depopulation of his small town. Within weeks, more than 100,000 people, mostly from the U.S., requested information.”  All 16 houses sold to the highest bidders “able to commit to renovating the dilapidated properties.”  Now, the mayor says, “Sambuca is in a renaissance.”  This approach is being used by 16 towns in Italy, “most of them in the poorer south.”  They are “selling abandoned houses for as low as €1—about $1.11.  The catch: Buyers need to renovate them.  “Small towns and villages in many European countries are under demographic pressure as people leave for big cities and those remaining have fewer children. . . . Small-town shrinkage is particularly acute in Southern Europe, where immigration compensates less for locals moving away: Migrants tend to settle in Northern Europe or large cities.”

********The challenges of the rural areas of Southern Europe are hardly unique.  For only the most recent article, take a look at “2 North Carolinas: Cities grow at record pace while rural counties fall behindAsheville Citizen-Times.

May you have a good week!  

Bruce

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