402 (1 January 2020)

Happy New Year!  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.  TIF Weekly is available on the web.

On New Year’s Eve, I completed Eccentric Orbits: The Iridium Story, by John Bloom.  I decided to read the book because it relates to “satellite constellations” that are so much “in the news” at this time.  So what is a satellite constellation?  It is a set of satellites, coordinated in activity, that provides location, phone or internet service to large portions of the globe, often the entire globe.  You can find a more technical definition here

Iridium seems to have been the first company to provide phone service to the entire globe, and it is still in business, you can learn more about Iridium here.  The interest in Iridium’s story stems from the incipient efforts of a number of well-financed companies to create satellite constellations that will provide internet services globally.  The company furthest along this path is Starlink, “a satellite constellation being constructed by American company SpaceX.”  SpaceX is the brainchild of Elon Musk.  “As on November 2019, SpaceX has deployed 122 satellites. . . . In total, nearly 12,000 satellites will be deployed by the mid-2020s.”  The satellites are being launched using SpaceX’s Falcon 9 rocket. 

A bit behind Starlink is Amazon, which is working to launch a 3,236-satellite constellation to provide internet service.  This is Project Kuiper, which will be a Low Earth Orbit constellation, one which will “provide low-latency, high-speed broadband connectivity to unserved and underserved communities around the world.” 

Still further behind is Apple, which has a team working on satellites to beam data to devices.  However, it’s “not clear if Apple intends to pursue the costly development of a satellite constellation itself or simply harness on-the-ground equipment that would take data from existing satellites and send it to mobile devices.”  Apple “rarely enters new categories without a clear way to make money.”  Apple is not alone on the margins of the internet-by-constellation industry.  Facebook and OneWeb are also “in the hunt.” 

So I hope the foregoing indicates the relevance of a book about the efforts of Dan Colussy to rescue Iridium from bankruptcy; Motorola was the owner of Iridium.  The first 14 chapters of the book—426 pages—examine in great detail the agonizing struggles that Colussy went through save Iridium.  Struggles with Motorola.  Struggles with governmental regulators throughout the world.  Struggles with the Pentagon.  And the enormous challenge of raising what now seems like a tiny amount of money to maintain a phone service that saved the lives of many and provided a clear vision of what was possible from satellites communicating with one another in low earth orbits.  To me, the clear message of the book is the importance of absolute dogged determination to get things done.  Colussy seems to have lived by the words “failure is not an option.”

(24 December 2019)Farm to Table?  More Like Ghost Kitchen to SofaThe New York Times

——–“New York City is the country’s largest market for food delivery, and demand is only growing. . . . A means through which investors stand to make more money from food delivery has manifested in the city and will multiply in 2020.  The means is a type of business called a ghost kitchen.  These are food establishments, usually fast-casual, that make meals that can be purchased exclusively with a delivery app like Seamless, Grubhub, DoorDash or Uber Eats.  Ghost kitchens can house extensions of existing restaurants or new brands.”  The “money-making part is in the bundling: Several ghost kitchens can exist within the same physical kitchen, sharing ingredients and equipment and cooking staff used to supply multiple restaurant brands.”

********An interesting phenomenon, which brings to mind the role of input sharing in a variety of enterprises.  Not so unusual, I suppose.  Just think of a college cafeteria where many different types and styles of food are being created for students, faculty, and staff.  In this case, however, foods are being delivered via apps and may be associated with different restaurant brands.  You can learn more about ghost kitchens here.

(27 December 2019)A Decade of Urban Transformation, Seen From AboveThe New York Times

——–“Change can seem slow” on the ground.  “But zoom out—way out—and it’s clear that the last decade has brought remarkable transformation to many communities.  It’s visible from 400 miles above: Vast new exurbs have been carved from farmland, and once-neglected downtowns have come to life again.  The tech industry has helped remake entire city neighborhoods, and it has dotted the landscaped with strange new beasts, in data centers and fulfillment hubs.”  Working with members of Descartes Lab, a geospatial analytics company, The Upshot used satellite imagery to reveal “intimate details—a single home, bulldozed; a tennis court, reinvented—and big patterns that recur across the country

********This is a fascinating, quite literal, look at change in the “built environment” over the last decade.  It is well worth the time to show the dramatic change that some areas have experienced in a decade’s worth of development and destruction.  Particularly striking to me is the first image in the article, which shows the development of “ring structure” around many city centers, a phenomenon to reminds me of the work of von Thünen.  Atlanta is especially striking, but take a look at the state of Texas, too. 

(27 December 2019)Proposed tariffs could send some European wine prices out of reachThe Washington Post

********This article, by Post’s wine columnist Dave McIntyre, discusses the impact of current and prospective tariffs on European wines.  The current 25% tariff, imposed of French, German, Spanish, and British wines (with alcohol content less than 14%) in retaliation for EU subsidies on large aircraft.  More recently, the Office of the U.S. Trade Representative said, “it was considering 100 percent tariffs on French goods, including champagne and other sparkling wines, in retaliation for France’s new digital services tax.”  Obviously, this is likely to affect the price of wine purchased from a retailer or in a restaurant.  To me the interesting thing about this article is McIntyre’s analysis of how the price of a bottle of wine or a glass of wine will respond to each tariff percentage, which proceeds by examining the distribution chain and standard markups.  This is a different approach than would customarily be used in, say, ECON 101, but no less valuable to consider.  Jenny Lefcourt, who is a co-owner of a New York-based importer, catches the nature of the power behind theses tariff impositions when she notes: “I spent 20 years of my life building a successful business, and in one signature the Trump administration could make it all crumble.”

(31 December 2019)Doctors, Nurses and the Paperwork Crisis That Could Unite ThemThe New York Times

********This article, written by a nurse and a physician, examines the electronic record-keeping burdens borne by their respective professions, a burden that a recent study by the National Academy of Medicine requires that “on average nurses and doctors spend 50 percent of their work day treating the screen, not the patient.”  In fact, “Electronic health records are almost universally disliked, with one telling exception, those used by clinicians at the Department of Veterans Affairs.  The reason: Billing concerns don’t shape the records at government-run V.A. hospitals.  They document only what’s necessary to deliver better care.”  Elsewhere in the health system, such records “increasingly serve the needs of America’s corporate, profit-motivate health care.”  Specifically, “Insurance companies and hospitals demand ever more data to make decisions about payments and billing, so clinicians have to provide much more information about each patient at each interaction.  Mounting regulatory requirements that get built into these records are described as insuring patient safety, but are ultimately tied to compensation, which means money.  And in a system rife with legal risks, there is a strong incentive to overdocument everything.”

            Regrettably, monitoring costs of an activity or a product tend to be given little consideration in economic life, especially when monitoring is imposed by law, regulation, or accrediting body.  In the case of electronic health records, monitoring costs are clearly substantial.  To the mind of the microeconomist, the optimal amount of monitoring would equate the marginal benefit of a given amount of monitoring with the marginal cost of a given amount of monitoring (provided that the total benefit of monitoring was at least as great at the total cost of monitoring).  Such considerations, though, fall too often by the wayside.

            The article “How Cutting Food Stamps Can Add Costs Elsewhere The New York Times, connects nicely with the cost-benefit orientation of the paragraph above.  The reduction in cost of the SNAP program by reducing food security, is likely to increase the demand for health services and increase health care costs.  Were those additional health care costs considered?  Most likely they, too, fell by the wayside.  Consideration of costs and benefits of Regulatory Planning and Review were put in place by Executive Order 12866, signed by President Clinton in 1993.  A more expansive and current discussion can be found in a 2017 publication of the Congressional Research Service, “Cost-Benefit Analysis and Financial Regulator Rulemaking.”  A more expansive and very current (2018) book on CBA is The Cost-Benefit Revolution, by Cass Sunstein.

May you have a good week!

Bruce

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