369 (15 May 2019)

Welcome to week 369!  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. 

(22 April 2019):In ‘Choked,’ Beth Gardiner Looks At The Origins Of The Clean Air ActNPR.com

­********This five-minute broadcast is based upon the recently published Choked: Life and Breath in the Age of Air Pollution, by journalist Beth Gardiner.  The book itself is much broader than an exploration of The Clear Air Act, as is made evident by the “Book of the week” review in The Guardian and the review of the book in [SR] Science.  As the article in Science notes: “Ultimately, Choked is ‘a book about choices’: What kind of air do we want to breathe, and what kind of world do we want to live in?  The decision to prioritize clean air is among our most important economic, scientific, and public choices.”  Contributing to the difficulty of these choices is “invisibility,” which is noted in the Guardian review.  “You see one person run over in the street and you’ll never forget it, but thousands dying from the effects of dirty air will never even faze you.”  It was only through “the careful application of statistical techniques that the impact [of dirty air] has become apparent.”

(7 May 2019):The price of plenty: how beef changed AmericaThe Guardian

********This is a Longread about the history of the beef industry, especially in its formative days when railroads and refrigeration revolutionized where and how cattle were “dissembled” into cut meat products.  It is based upon the just-released book Red Meat Republic: A Hoof-to-Table of How Beef Changed America, by Joshua Specht.  Specht notes: “the history of the beef industry reminds us that this method of producing food is a question of politics and political economy, rather than technology and demographics. Alternate possibilities remain hazy, but if we understand this story as one of political economy, we might be able to fulfil Armour & Company’s old credo – “We feed the world”– using a more equitable system.”  It looks like a good example of the invisible forces at work. 

(8 May 2019): [SR] ’Jump-Starting “America’ Review: Investing in the BrainThe Wall Street Journal

——–“Jonathan Gruber and Simon Johnson’s important ‘Jump-Starting America’ argues that public investment in knowledge and research can help put American economic growth back on track.  U.S. public spending on research and development, they point out, has fallen to 0.71% of Gross Domestic Product from more than 2% of GDP in  1964.  The authors estimate that increasing research funding by 0.5% of GDP—‘roughly $100 billion per year’—would add jobs and push the annual growth rate from 2% to 2.14%.”

********You can learn more about the book here.  The reviewer is Edward Glaeser, a professor of economics at Harvard University.

(10 May 2019):Revisiting the Ponzi Scheme in Mitchell Zuckoff’s ‘Ponzi’s Scheme’The New York Times

********This piece calls attention to the 10 April 2005 review of Mitchell Zuckoff’s Ponzi’s Scheme: The True Story of a Financial Legend.  The book is about the man as much as the scheme but provides background on an expression that appears all-to-often in the news, financial and otherwise.  As the 2005 review points out, there is a particular subtlety “in the classic Ponzi scheme: not just anyone can pull one off; doing so requires cleverness, charm and charisma.”  Mitchell Zuckoff’s book makes it clear that Charles Ponzi had these characteristics in abundance.  Ponzi “persuaded 30,000 people, Bostonians and others, many of them Italian immigrants like Ponzi himself, to entrust him with their hard-earned, pre-inflationary dollars.”

(14 May 2019):Consumers are already seeing price hikes from the last round of Trump’s tariffsThe Los Angeles Times

——–“President Trump has repeatedly proclaimed that when it comes to tariffs on Chinese goods, China pays the price.  But it’s U.S. consumers who actually pay, if export and import firms and manufacturers choose to pass along the cost.  And trade groups and economic studies show that U.S. consumers already are seeing higher prices on a range of items—luggage and major appliances such as washing machines, for instance—that were subject to previous tit-for-tat tariffs in the U.S.’ escalating trade battle with China or retaliatory tariffs from other foreign countries.”  So far, the tariffs “appear to have had a modest impact on overall inflation. . . . However, Goldman Sachs analysts said in a report that when they grouped together nine of the CPI product categories affected by the tariffs so far . . . it showed those consumer prices increased ‘much more’ than other core goods prices in the CPI.”

********The article goes on to discuss prices in the following areas: housing, luggage, major appliances, and other industries, including toys.  “The Toy Assn. trade group said it was ‘very concerned’ about discussion Friday that the U.S. could levy tariffs on the remainder of the Chinese goods that enter the U.S. market.  Rebecca Mond, a vice president of federal government affairs for the Association, notes that the impact on toy prices “could happen as soon as this holiday season.”  That struck me as a useful comment, providing a reminder to the seasonal elements of demand for a product and why price increases might not show up meaningfully until a high-demand season. 

(14 May 2019):The Mighty Pea Is Everybody’s New Favorite Plant-Based ProteinBloomberg.com

——–With more consumers expressing concern about soy-based protein, peas have become “the food industry’s new favorite protein source.”  Peas are the “star ingredient” in the offerings of Beyond Meat, whose IPO made history “when its shares nearly tripled in value on their first day of trading.  The company’s vegan burgers and sausages are leading the fake meat revolution.”  Peas tend to thrive in northern climates and “Canada is expected to become the global production leader and account for 30% of output in 2020.”  For the present, “Companies are racing to secure supplies” but “Supply worries are likely to be short-term if demand continues to grow as projected.”  Peter Golbitz of agriculture consulting firm Agromeris notes: “I’m never too concerned about the supply of agricultural products . . . They [producers] can expand production lines, or more competition enters the space.”

********What seems to be driving the move into peas is simply stated by Peter Golbitz: “The only reason pea protein became popular is because people didn’t want soy protein.”  Peas have their problems, however.  Henry Rowlands, who directs The Detox Project, says “We can hardly find a clean pea protein source anywhere.”  Perhaps there is a market for farmers who grow clean, i.e., herbicide free, peas. 

********I found the article to be clear and interesting, marred only by describing glyphosate as a pesticide!  In fact, glyphosate, made familiar because of the product Roundup, is an herbicide. 

May you have a good week!

Bruce

368 (8 May 2019)

Welcome to week 368!  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.

(30 April 2019):They Want It to Be Secret: How a Common Blood Test Can Cost $11 or Almost $1,000The New York Times

——– It’s one of the most common tests in medicine, and it is performed millions of times a year around the country.  Should a metabolic blood panel test cost $11 or $952?  Both of these are real, negotiated prices, paid by health insurance companies to laboratories in Jackson, Miss., and El Paso in 2016.”  But, if “you’re a patient seeking a metabolic blood panel, good luck finding out what it will cost.”  In Tampa, Florida, alone, “the most expensive blood test costs 40 times as much as the least expensive one. . . . Outside of health care, a swing of prices as huge as the one for blood tests in Tampa is unheard of.”  Jeanne Pinder, who runs “the consumer-oriented website Clear Health Costs, notes: “When you get into M.R.I.s, ultrasounds an blood tests, they [the prices differences] are crazy . . . The secrecy in pricing all over this marketplace encourages this behavior”

********The article makes abundantly clear the importance of knowledge (and ignorance) in the health-care pricing.  A big part of this is that involves the negotiations that take place between health insurance companies and hospitals.  For example, “In markets where there is a dominant hospital chain, or a powerful hospital that many patients insist on using, insurers tend to face high prices, with less leverage to bargain the hospitals down.”

********Secrecy and intellectual property are also important in professional sports, for example, Major League Baseball.  The article [SR] “A Brain Drain for the Astros” The Wall Street Journal draws attention to the increasingly data-oriented nature of baseball.  Contributing to the success of the Houston Astros were “some radical hires . . . people like Sig Mejdal, who worked previously at Lockheed Martin and NASA, and Mike Fast, a longtime semiconductor engineer.  They helped transform the Astros into a powerhouse, with three playoff appearances in the last four years and a World Series championship in 2017.”  But the success of the Astros has led to hires of crucial personal by other teams: “The rest of the league this winter treated the Astros like their own personal Walmart on Black Friday, storming the aisles in search of anything they could pull off the shelves.”  To help protect the intellectual property that the Astros have built up, the team now “tries to limit how many people in the organization know the full scope of the club’s inner workings.  The Astros put less in writing than they once did and will, when appropriate, divide information among different people.”  A very interesting strategy.  In 1945 Fredrich Hayek wrote in “The Use of Knowledge in Society” about the importance of markets for unifying dispersed information.  Now an organization is taking steps to distribute unified information.  No doubt this is a common practice among organizations that have substantial intellectual property.

(1 May 2019):A Rare Prize for an Economist Looking at the Big PictureBloomberg.com

——–The 2019 John Bates Clark medal, “arguably the most exclusive award in the field of economics,” was given to Emi Nakamura of the University of California-Berkeley.  She is “an undisputed star in the field of macroeconomics.”  Nakamura “is one of the leaders in the field of New Keynesian economics.  This school of thought, which has become the dominant paradigm at central banks around the world, holds that recessions happen because companies are unable to adjust their prices in response to events like a financial crisis or a big rise in interest rates.  Without the ability to adjust prices, the theory goes, companies cut their output and lay off workers instead.” 

********The article goes on to note that, although Nakamura is a “leading light” of New Keynesian economics, she “has spent much of her career challenging the idea”  What a refreshing thing to read.  The Clark Medal is awarded by the American Economic Association.  You can read its Prize announcement, which is substantially longer, here.

(2 May 2019):California janitors may get labor law protections in wake of federal court decisionThe Los Angeles Times

——–“In a decision opening yet another front in the battle over how to classify workers, a federal appeals court Thursday ruled that an international franchiser could be forced to treat its California janitors as employees rather than independent contractors.  The U.S 9th Circuit Court of Appeals ruled that the California Supreme Court’s landmark 2018 Dynamex decision, which makes it harder for businesses to classify their workers as independent contractors, applies retroactively to a class-action case again cleaning giant Jan-Pro.”  According to U.S District Jude Frederic Block, Georgia-based Jan-Pro uses “a sophisticated ‘three-tier’ franchising model” in which “ordinary janitors . . . are classified as ‘unit franchisees,’ independent contractors who are not subject to labor laws requiring minimum wages, overtime, disability insurance or other labor law protections.”

********The decision is viewed as have implications for businesses operating in the gig economy.  In the present case, although probably oversimplified, “franchisees” paid Jan-Pro a “franchise fee” to “clean for the company.”

********An article of related interest, largely because it relates to workers on the low end of the wage spectrum, is [SR]For Lower-Paid Workers, the Robot Overlords Have ArrivedThe Wall Street Journal.  The article, written by columnist Greg Ip, notes: “It’s time to stop worrying that robots will take our jobs—and start worrying that they will decide who gets jobs.  Millions of low-paid workers’ lives are increasingly governed by software and algorithms.  This was starkly illustrated by a report last week that Amazon.com tracks the productivity of its employees and regularly fires those who underperform, with little human intervention.”  The report mentioned appears in The Verge.  Such practices, according to Ip, bring to mind those engaged in by Jack Welch at General Electric, better knowns as “rank and yank.”  Nick Bloom, an economist at Stanford University, says that “In banking and management consulting it is standard to exit about 20% of employees a year, even in good times.”

(2 May 2019):Electric Cars and Solar Compete for the Same PartsBloomberg.com

********And what parts are they competing for?  Electric transistors—as “EV production has boomed, solar-component companies are being forced to wait nearly a year for the parts.”  Contributing to the problem has been the reluctance of “makers of components . . . to add capacity . . . But with companies placing orders 18 to 24 months in advance, transistor makers are now ramping up output.”

(3 May 2019):Antibiotics Aren’t Profitable Enough for Big Pharma to Make MoreBloomberg Businessweek

——–“Achaogen Inc. spent 15 years racing to develop antibiotics against resistant superbugs.  It targeted one of the most-feared superbugs lurking in intensive care units: carbapenem-resistant Enterobacteriaceae, or CRE, a strain that can kill up to half the people it attaches.  Last June its first drug, Zemdri, which kills CRE bacteria in the test tube, was approved by U.S. regulators.  From a public health perspective, Achaogen is a success.  But as a business, it’s a failure.  Zemdri’s sales in its first six months on the market were less than $1 million.  Achaogen filed for bankruptcy in April.”  As it turns out, “Big drug companies have been exiting antibiotic research for years, prompting the U.S. government and medical charities to step in with research funding.  Now health experts are realizing that research funding doesn’t matter if there’s no market for the drugs when they get approved.”  A part of this overall picture is that “infectious disease doctors, wary of promoting resistance, are reluctant to use new antibiotics until they’re absolutely needed.”  The tendency is to hold the antibiotic “in reserve,” which “doesn’t make for a good business plan” for drug developers.

********Summing all this up, the CEO of Achaogen, Blake Wise, notes: “It’s really frustrating . . . We developed a really important medicine and went through all the things we needed to do to develop a drug, but the market dynamics are such we can’t successfully run the commercial part of the equation.” 

(4 May 2019): [SR]In News Industry, a Stark Divide Between Haves and Have-NotsThe Wall Street Journal

——–“After suffering a historic meltdown a decade ago in the financial crisis, American newspapers began racing to transform into digital businesses, hoping that strategy would save them from the accelerating decline of print.  The results are in: A stark divide has emerged between a handful of national players that have managed to stabilize their businesses and local outlets for which time is running out, according to a Wall Street Journal analysis of circulation, advertising, financial and employment data.  Local papers have suffered sharper declines in circulation than national outlets and greater incursions into their online advertising businesses from tech giants such as Alphabet Inc.’s Google and Facebook Inc.  The data also shows that they are having a much more difficult time converting readers into paying digital customers.”  All this has contributed to “a parade of newspaper closures and large-scale layoffs.  Nearly 1,800 newspapers closed between 2004 and 2018, leaving 200 counties with no newspaper and roughly half the counties in the country with only one, according to a University of North Carolina study.”

********The North Carolina study alluded to, but not named, appears to be “The Expanding News Desert,” by Penelope Muse Abernathy.  You can download the report and explore interactive maps here.  There is a map for the U.S. as a whole, as well as for every state.  The WSJ article makes note of the problems that the decline of local newspapers presents, in particular for democracy.  As the slogan of The Washington Post says: “Democracy Dies in Darkness.”

(6 May 2019):American Students Have Changed Their MajorsBloomberg.com

********This article compares the top college majors in 1970-71 and 2016-17.  In brief, likely too brief, “Health professions are in, education and the humanities are out.”  What I found especially insightful about the article was its discussion of the changes brought about by “women entering college in large numbers” and then “busting out of the narrow range of majors such as education and English to which they had initially been confined.”  This is a good example of the invisible handshake—social and historical forces—at work.

********This is a good place to mention a locally-generated article by John Boyle of The Asheville Citizen Times: “Good-paying blue collar jobs go unfilled in tight labor market.”  Do the same factors that affect college major choice also affect the decision to go to college or enter a trade?  Something worthy of study.

May you have a good week!

Bruce

367 (1 May 2019)


Welcome to week 367!  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.

(10 April 2019):From Gentrification to Decline: How Neighborhoods Really ChangeCityLab

——–“When people talk about how big cities have changed over the last two decades, the word the inevitably comes up is gentrification—the influx of affluent newcomers. . . . But across U.S. metros, gentrification may not be the dominant type of urban change.  Instead, it’s the concentration of poverty—particularly in the suburbs—that’s the type of transformation most Americans have been experiencing.  That’s according to [a] new report and mapping project by William Stancil, a research fellow at the University of Minnesota Law School’s Institute of Metropolitan Opportunity.”  Previous studies “have explored the complicated relationship between gentrification and displacement, and researchers have come up skeptical about whether the firs directly causes the second. . . . Demographic shifts observed over time appear to happen in part because low-income residents are more precarious generally, and more likely to move.  As rents rise, they’re often replaced by higher-income residents.  the low-income residents who do end up being pushed out, however, tend to move to worse-off areas.  Over time, these complex, simultaneous changes lead to a shifting of economic, and often racial, boundaries.”

********Most interesting to me is the development of a 2×2 table based upon whether a geographic tract is economically expanding or declining, and whether the tract low-income population is growing of declining.  Thus a displacement tract is economically expanding and experiencing low-income population decline, which sounds a lot like gentrification.  A concentration tract is economically declining and experiencing low-income population growth.  Filling out the table are growth tracts and abandonment tracts.  The interesting thing related in the Report, p.20, is that “By far the most common form of neighborhood change is low-income concentration.  In the 50 largest metros, tracts that have experienced strong low-income concentration include about 365 million people, and are predominantly suburban.”  On the other hand, “Tracts that have experienced low-income displacement contain about 9.5 million people, and are predominantly located in central cities.”  In short, suburban low-income concentration dwarfs urban low-income displacement in numbers.

********The Institute of Metropolitan Opportunity has an interactive map that allows one to zoom into an part of the U.S. and see the extent to which low-income people are being displaced or concentrated.  I was struck by the areas of concentration in my childhood town of Watertown, Wisconsin.  Likewise, although less surprising, Asheville, North Carolina shows large areas of displacement and concentration.  Check out areas of interest to you.

********The work of the Institute of Metropolitan Opportunity provides a valuable lens through which to view articles such as “The Neighborhood Is Mostly Black.  The Home Buyers Are Mostly WhiteThe New York Times.  This article focuses largely on Raleigh, North Carolina and brings race into the picture.  The following gives a sense of what is going on.  In Raleigh, “and in the center of cities across the United States, a kind of demographic change most often associated with gentrifying parts of New York and Washington has been accelerating.  White residents are increasingly moving into nonwhite neighborhoods, largely African-American ones.”  The fuller picture is this: “In city after city, a map of racial change shows predominantly minority neighborhoods near downtown growing whiter, while suburban neighborhoods that were once largely white are experiencing an increased share of black, Hispanic and Asian-American residents.”

(27 April 2019):’Getting Worse, Not Better’: Illegal Pot Market Booming in California Despite LegalizationThe New York Times

——–“It’s been a little more than a year since California legalized marijuana—the largest such experiment in the United States—but law enforcement officials say the unlicensed, illegal market is still thriving and in some areas has even expanded.”  As a result, there have been calls for stepped-up enforcement.  Illicit sales “are cannibalizing the revenue of licensed businesses and in some cases, experts say, forcing them out of business.  Entrepreneurs in the industry, which spent decades evading the law, are now turning to the law to demand the prosecution of unlicensed pot businesses.”  As Robert Taft, Jr., a licensed cannabis business owner in Orange County notes, “We are the taxpayers—no one else should be operating.”

********An interesting but not so surprising development.  I found it interesting that an enforcement regime that was once predicated on protecting public health or safety, is now being pursued to protect economic interests, at least as Robert Taft, Jr. sees things.  One thing to consider in this story, as the article notes, are exports to other states which are, of course, illegal.  Thus “the more fundamental reason for the strength of the black market in California . . . is the huge surplus of pot. . . . Of the roughly 14 million pounds of marijuana grown in California annually, only a fraction—less than 20 percent . . . –is consumed in California.  The rest seeps out across the country illicitly.”

********Legal pot in California has led to a great expansion of pot-related jobs, which “range from hourly work at farms and stores to executive positions.  They also span the country.  Columbia Care, a medical cannabis company that is based in New York and has 500 employees, has indoor farms and manufacturing plants in Massachusetts, Delaware, Florida, Illinois, Arizona and the District of Columbia.”  You can learn more by reading “Cannabis, Marijuana, Weed, Pot?  Just Call It a Job Machine” in The New York Times.

(29 April 2019):Greek Gods and Game TheoryJSTOR Daily

——–“Undergraduate students are often exposed to game theory.  But . . . upon graduation most students ‘will never again encounter a formal game theoretic model.’”  So perhaps “professors who rely on mathematical models and theorems should instead turn to something more familiar and compelling to students, something that will stay with them long after graduation.”  Perhaps the route to learning game theory is through Greek mythology.

********The foundation article for this post is “Using Greek Mythology to Teach Game Theory” in the Fall 2002 copy of The American Economist.  A link to the article is provided at the end of the post.  The post raised the question for me, once more, of what is deeply learned in a college (or other) course, so that it might be accessed repeatedly over a lifetime.

(30 April 2019):Why Financial Literacy Is So ElusiveBloomberg.com

********Here Barry Ritholtz dilates upon college graduation speeches and the often heard “lament about a lack of financial literacy.”  Drawing upon his reading and academic research, he notes that “One research paper looked at more than 200 studies, and reached the conclusion that the lessons of financial education are fleeting, and degrade quickly without frequent use.”  Nonetheless, many states have jumped on the financial education bandwagon: “financial-literacy classes are mandated by 19 states in order to graduate from high school, up from 13 states eight years ago.”  And, as it turns out, North Carolina is one of the states looking to be included in that list.  Ritholtz provides three potential solutions to make financial education “stick”: (1) use hand-on education; (2) employ repetition; and (3) teach how to think, i.e., how to find information and problem solve.  These are suggestions that clearly relate to the question of how to teach so that what is learned might be accessed repeatedly over a lifetime.

May you have a good week!

Bruce

366 (24 April 2019)

Welcome to week 366!  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.

Capitalism and Socialism, the fodder of many an introductory course in the social sciences, are very much in the news as we continue the very long run-up to the next presidential election.  As a result, journalists and opinion writers are finding the occasion to share their thoughts.  Here are a few that occurred this last week:

  • Socialist!  Capitalist!  Economic Systems as Weapons in a War of WordsThe New York Times.  Columnist Andrew Ross Sorkin shares the results of an interview he had with Nobel Laureate Joseph Stiglitz.  “Mr. Stiglitz proposes using a combination of market forces and government nudges—a higher minimum wage and an expanded earned-income tax credit, for example—to help the poorest among us.  He also supports a ‘public option’ to improve competition in the private sector in areas like health care and even retirement savings.”  On April 22 Stiglitz’s latest book, People, Power, and Profits: Progressive Capitalism for an Age of Capitalism, was released.
  • Progressive Capitalism Is Not an OxymoronThe New York Times.  Joseph Stiglitz wrote this Opinion piece.  As he notes: “we can indeed channel the power of the market to serve society.”  How does one do that?  By recognizing that “Markets don’t exist in a vacuum; they have to be structured by rules and regulations, and those rules and regulations must be enforced.”  At the present time, he argues, we are “in a vicious cycle: Greater economic inequality is leading, in our money-driven political system, to more political inequality, with weaker rules and deregulation causing still more economic inequality.  If we don’t change course matters will likely grow worse.”
  • Capitalism in crisis: U.S. billionaires worry about the survival of the system that made them richThe Washington Post.  This article, by reporter Greg Jaffe, takes a look at one of the strongest political supporters of Bernie Sanders: Rep. Ro Khanna, whose constituents include many billionaire residents of Silicon Valley.  Khanna is concerned about “the problems that runaway capitalism were causing in his district, where the median home value in formerly blue-collar cities surged past $2 million.”  An indicator of that broader concern is the class “Reimagining Capitalism,” taught by Rebecca Henderson, at Harvard University.  When the elective began it had 28 students—now nearly 300 are taking it.  Here is a description of here course.  You can watch a 30-minute video by her here.  In May 2020, her book Reimagining Capitalism In a World On Fire will be published by Public Affairs.

May the many future discussions of capitalism and socialism during this campaign be based upon fact and experience, rather than ideology and wishful thinking.

(19 April 2019):A climate change solution slowly gains groundThe Washington Post

********This article explores three firms—Global Thermostat, Carbon Engineering, and Climeworks—that are looking to profit by developing technology to remove carbon dioxide from the atmosphere.  They are participating in a complex and somewhat contradictory political-economic environment.

(20 April 2019):Sweet corn out, sweet potatoes in: Data shows fundamental shifts in American farmingThe Washington Post

——–“The American vegetable landscape has shifted.  Farmers are abandoning onetime basics such as sweet corn, green beans, peas and potatoes.  In their place, they’re planting sweet potatoes and leafy greens such as spinach, kale and romaine lettuce.  Once every five years, the USDA Census of Agriculture provides a definitive guide to the trends behind the nation’s farms and diets.  The latest figures, released last week, show broad dietary upheaval.  In many cases, they show vegetables that may once have been dismissed as fads or trends are reshaping America’s agricultural landscape.”

********The article is graphically rich, although I found some of the graphs hard to interpret.  In each case an effort is made to provide insight into why a vegetable is gaining or losing popularity.  Sweet potatoes have a strong North Carolina connection.  The state “leads the nation is sweet potato acreage . . . In some places, sweet potatoes may be a viable replacement for cash crops: Two of the five counties in North Carolina where tobacco acreage fell the most, the eastern counties of Wayne and Duplin, also saw large gains in sweet potatoes.”

(22 April 2019): [SR] “Coffee Prices Plunge Even Though We Can’t Stop Drinking the Stuff” The Wall Street Journal

——–“Call it the coffee paradox.  The brewed beverage has never been more popular, but the price of beans is at its lowest point in over a decade and down by a quarter since October. . . . What has enabled the world to be awash with coffee?  Factors include major advances in coffee production and a collapse in the value in the currency of the world’s largest producer, Brazil.”

********Central American coffee growers have not been able to compete with the low cost of Brazilian coffee.  One consequence, according to Robert Vélez of the National Federation of Coffee Growers of Colombia, is “You have Central Americans immigrating to the U.S. and Africans moving up to Europe because coffee prices are too low.”

(22 April 2019):After China turned it into a cheap snack, caviar is at risk of losing its status as a luxury goodThe Washington Post

********I’m sure that few people are concerned about caviar losing its status as a luxury good, but the reasons for it are interesting.  Foremost among them is that cheap “Chinese caviar is flooding the U.S. market, causing prices to plummet, and with it, the product’s cachet. . . . You can [now] get caviar on tater tots in New York, on a burrito in the District.  [And] The NBA now has its own caviar line . . . and hopes to have it available to fans in arenas soon, right alongside hot dogs and nachos.”  Although Chinese caviar seems to be consistent and used by upscale restaurants for years, many “companies in China still use borax as a food preservative—even though it is banned in the United States, China and other countries.”

(24 April 2019):How the Color Blue Changed LightingBloomberg.com

********This five-minute video give the story behind the development of the blue LED, which was necessary to create white light.  The story of how a Japanese scientist, Shuji Nakamura, eventually developed the blue LED while pursuing his Ph.D. is inspiring.  The role of LEDs in lesser-developed countries is earnestly discussed.

(25 April 2019):The Guilt-Free, Data-Driven Guide to ParentingBloomber.com

——–Emily Oster “has a doctorate from Harvard and teaches economics at Brown” and is the author of Cribsheet: A Data-Driven Guide to Better, More Relaxed Parenting, From Birth to Preschool.”  A mother of two, Cribsheet is a follow-on of Expecting Better, “which got raves from everyone from the New York Times to Amy Schumer and took a similar, even-handed look into the scientific research around pregnancy.”  As Oster notes, “This book will not tell you what decisions to make for your kids . . . Instead, I’ll try to give you the necessary inputs and a bit of a decision framework.  The data is the same for us all, but the decisions are yours alone.”

********Oster is an economist, is a married to an economist, and is the daughter of two economists, so taking a data-driven, rather than anecdotal, approach to pregnancy, birth, and child raising seemed to her like a natural way to proceed.  Oster’s work seems to be what is taking hold for people who want to know the facts, including the odds, about these live passages.  Although, as the reviewer notes, Oster is not judgmental, some of the facts she has developed are astonishing.  Check out the statistics on co-sleeping for parents who bottle-feed, smoke, and drink in contrast to those who breastfeed, don’t smoke, and don’t drink.

May you have a good week!

Bruce

365 (17 April 2019)


Welcome to week 365!  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.

(4 April 2019):How We Uncovered 10,000 Times Lawmakers Introduced Copycat Model Bills—And Why It MattersThe Center for Public Integrity

——–Two years ago “journalists and developers with USA Today and The Arizona Republic set out to . . . Identify among the roughly 100,000 bills introduced in the 50 states each year what’s been copied from drafts pushed by special interests.”  This article outlines the methodology used to identify copycat legislation.

********This article is one of a series of articles with the collective title “Copy, paste, legislate” being run.  A useful broad overview with relatively few words can be found here.  Although business (4,301 bills) and conservative groups (4,012 bills) were the sources of most copycat legislation, liberal groups (1,602 bills) have also participated.  This is a lengthy and important series.  A list of all of the articles can be found in “You elected them to write new laws.  They’re letting corporations do it instead.”  The article is lengthy, but you can identify the list by searching on: “More in this series.”

(9 April 2019):China’s Voracious Appetite for Timber Stokes Fury in Russia and BeyondThe New York Times

——–“From the Altai Mountains to the Pacific Coast, logging is ravaging Russia’s vast forests, leaving behind swathes of scarred earth studded with dying stumps.  The culprit, to many Russians, is clear: China.  Since China began restricting commercial logging in its own natural forests two decades ago, it has increasingly turned to Russia, importing huge amounts of wood in 2017 to satisfy the voracious appetite of its construction companies and furniture manufacturers. . . . Russia has been a witting collaborator, too, selling Chinese companies logging rights at low cost and, critics say, turning a blind eye to logging beyond what is legally allowed.”

********The Altai Mountains roughly form the western boarder of Mongolia.  The article goes on to note that, although the Chinese government “began restricting commercial logging in the nation’s forests” two decades ago, “The country’s demand for wood did not diminish.  Nor did the world’s demand for plywood and furniture, the main wood products that China makes and exports.”  The low price at which Russia sells its logging concessions, averaging “roughly $2 a hectare, or 80 cents an acre, per year” has contributed to the loss of Russian forests.

(11 April 2019): [SR]Congestion Pricing Is Bad News for Parking Garages in New YorkThe Wall Street Journal

——–“With congestion pricing coming to New York City, Manhattan’s public parking garages risk becoming an endangered species in parts of the borough.  Starting in 2021, commuters entering Manhattan below 60th Street could be charged a fee somewhere around $11.52, according to estimates.  That measure is likely to accelerate the disappearance of parking garages from Midtown and downtown, real estate owners and brokers say.  The entry fee marks the latest threat to an industry that is already struggling with declining revenues with the rise of ride-sharing companies like Uber and Lyft.”

********The article goes on to point out that parking garage owners have been struggling in recent years, with many of their properties being converted to alternative uses.  Although parking garage owners in areas subject to congestion pricing are likely to be harmed by the move, “parking garage landlords just outside the congestion pricing zone stand to gain . . . as commuters look to avoid the fee by parking further away from work and either  walking to their Midtown offices or taking the subway.”  (Interestingly, NYC has a very high rate of bus fare avoidance—one of five riders avoid paying the fare.)  All this points out the consequences of line drawing—depending upon which side of the line you happen to be on, the incentives and opportunities can be much different.  And who draws these lines?  Usually regulatory or political entities.  One should remember that all lines, like literal “lines in the sand,” are social constructs, somewhat arbitrary and subject to revision.  A valuable book about distinctions is Eviatar Zerubavel, The Fine Line: Making Distinctions in Everyday Life.

(14 April 2019):Overfishing Doesn’t Just Hurt the FishBloomberg.com

——–[This is an Opinion from the Editorial Board.]  “Overfishing threatens disaster not only for fish, oceans and the food supply, but for fishing itself.  The industry’s prosperity declines right along with populations of tuna, shark, swordfish and other species.  Yet all over the world it persists in taking more fish than nature can replace.  If this practice seems foolish, still more so are government efforts to encourage it.  The largest fishing nations spend tens of billions of dollars annually to help fishing companies pay for fuel and new vessels.  The U.S. government has been a leader of international efforts to end subsidies, but is now proposing a new one of its own: low-interest loans for fishing-boat construction.  The National Marine Fisheries Service should abandon this disturbing reversal of policy.”

********This Opinion largely endorses the argument made by Martin D. Smith in “Subsidies, efficiency, and fairness in fisheries policyScience.  Encouraging the expansion of fishing capacity is certainly not the way to address overfishing concerns.  The Proposed Rule is not yet in place.  You can learn more about it in The Federal Register.

(14 April 2019):Paying taxes in the hustle economyThe Los Angeles Times

********This is not so much about paying taxes as it is about the so-called “hustle economy” or the more familiar “gig economy.”  The essential point of the article is that federal statistical agencies, notably the Bureau of Labor Statistics, have failed to keep pace in data-gathering about contingent workers despite its growth.  In fact, last year the BLS released “its first Contingent Worker Survey in 13 years.”  The article goes on to note: “It’s alarming what crucial information about hustle industries is lacking” and goes on to list that missing information. 

********A recent book on the subject is Hustle and Gig: Struggling and Surviving in the Sharing Economy, by Alexandrea J. Ravenelle.  In the book, Ravenelle “shares the personal stories of nearly eighty predominantly millennial workers from Airbnb, Uber, TaskRabbit, and Kitchensurfing.”  Higher education, of course, is a significant and growing part of the “hustle economy.”  In terms of teaching, adjunct professors are large-scale contributors to the education of many students, especially at lower levels.  (Disclosure: I taught two courses as an adjunct this year and was grateful for the opportunity.)  There is a new book out by Herb Childress, The Adjunct Underclass: How America’s Colleges Betrayed Their Faculty, Their Students, and Their Mission, that explores the roughly 70 percent of professors who are part time.  You can read a bit about the book, as well as an interview with the author, at Inside Higher Ed.  Although the book is “Part memoir, part manifesto, it’s also a rigorous, data-driven analysis of how we got here, why adjunctification hurts the academic enterprise and possible solutions.  There’s a full appendix of charts, facts and figures.  The mix makes for a book that anyone, novice to expert, can read.”

May you have a good week!

Bruce

364 (10 April 2019)


Welcome to week 364!  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.

This week completes the seventh year of TIF Weekly, which first appeared on 27 April 2011 and took a one-year sabbatical after year six.  I’d like to express my thanks to you for making the time to consider what I find and my thoughts about them.

(7 March 2019):Brand Reputations That Took a Hit in 2019Statista

********Statista “offers daily infographic about trending topics covering Media and Society.”  This brief piece focuses on the Humpty Dumpties of the world of brands, with Facebook and Tesla Motors taking the biggest tumbles, followed by McDonald’s.  Based upon the Axios and Harris Poll The 100 Most Visible Companies, a look at the Poll will also show that the companies that improved their reputations the most during the year were Samsung, Sony, and 21st Century Fox.  The Poll makes for an interesting browse.

********Brand reputation is very much “in the news” in Asheville, North Carolina.  The naming rights for what was once known as The Asheville Civic Center and is now known as The U.S. Cellular Center are up for consideration.  The highest bidder for those rights was Harrah’s Cherokee Casino, which is owned by the Eastern Band of the Cherokee Indians; it bid $3.25 million for five years in contrast to a $543,000 bid for three years by U.S. Cellular.  But, as the article notes, many in the local community would be offended by the association of gambling with the city.  Then there is the issue of branding.  Stephanie Brown, the CEO of Asheville tourism development group Explore Asheville, recently remarked that “the casino’s gaming brand is ‘inconsistent with our community identity.’”  She goes on to note: “(Harrah’s is) buying affiliation with our community identity and our destination brand . . . But that connection is a two way street that ties Asheville to their national corporate gaming identity—and those characteristics are not positive for any of Asheville’s goals—not as a place to live, go to college, to visit or to locate a business.” 

********Strictly from a dollar-and-cents standpoint, there is an interesting question here: “Will the short-term benefit of additional funds from Harrah’s compensate for the long-term cost of (alleged) injury to the Asheville brand?”  Related to that is the issue of whether there might be some long-term benefits, too, speaking strictly in money terms.  This is an involved issue.  Unsurprisingly, brand valuation is a business, as Wikipedia makes clear.  Three leading firms are: Interbrand, Kantar Millward Brown, and Brand Finance.  Although brand valuation is typically (and more easily) associated with businesses, it can and has been done for cities.  Here is one example from the Guardian, which briefly discusses some aspects of the methodology used by the consulting firm Saffron which generated the valuations.  The point of all this is simply to indicate that professional guidance is available for cities that want help in thinking systematically about their brands.

(2 April 2019):NC was once a top source of lithium.  Growing demand could lead to a mine near Charlotte.The Charlotte Observer

——–“A region west of Charlotte that was once a mother lode of lithium, the increasingly vital metal that powers cellphones, Teslas and cordless tools, may soon be one again.  A recently-formed company, Piedmont Lithium Limited, is applying for permits to launch an open-pit lithium mining operation that it says would be the only one of its type in the United States.  Piedmont plans to extract lithium from mineral deposits in Gaston County, 25 miles west of Charlotte, in what geologists call the Carolina Tin-Spodumene Belt.  Mines in the belt supplied most of the world’s lithium from the 1950s through the 1980s, before producers turned to cheaper deposits in South America and Australia.”  Piedmont Lithium believes that there is enough lithium at the site to be mined for 13 years.  It also says that North Carolina is attractive “because of its low labor costs, corporate tax rate and lack of state mining royalties.”  The mine would be open pit, like a quarry, and “as much as 500 feet deep.

********This article appeared later—April 9th—in The News and Observer.  Both The Charlotte Observer and The News and Observer are owned by The McClatchy Company.

(3 April 2019):Short of Workers, U.S. Builders and Farmers Crave More ImmigrantsThe New York Times

——–Builders are facing “a demographic reality that could hamstring industries besides their own: Their labor force is shrinking.  President Trump’s threat to close the Mexican border, a move that would cause damage to both economies, only adds to the pressure.  Immigration—often illegal—has long acted as a supply line for low-skilled workers.  Even before Mr. Trump ratcheted up border enforcement, economic growth in Mexico and the aging of the country’s population were reducing the flow of Mexican workers into the United States.”  According to the Pew Research Center, “Immigration has been padding the labor force for years.  Over the last two decades, immigrants and their children accounted for more than half the growth of the population of 25- to 64-year-olds . . . Over the next 20 years, they will have to plug the hole left by the retirement of the baby boom generation.”  The Trump administration “has tried to shift immigration policy to limit the entry of less-educated immigrants and draw more workers with advanced degrees, businesses are still hungry for immigrants with lesser skills.”  In the hotel and lodging industry” immigrants make up almost one-third of the workers . . . and over a fifth of workers in the food service industry.”

********As the article notes, “Businesses scrambling for low-skilled workers provide a glimpse into the kind of strains a future of low immigration might bring.”  A case in point is “agriculture, where seven in 10 workers were born in Mexico, and only one in four was born in the United States.”  As a result of the increased difficulty in securing workers, some California growers are relocating their operations to Mexico.

(5 April 2019):This 99-year-old federal law is stifling jobs and shifting higher costs to consumersThe Washington Post

********This piece expresses the opinion of columnist George F. Will.  Its subject is the Merchant Marine Act of 1920, otherwise known as The Jones Act, which provides that “cargo transported by water between U.S. ports must travel in ships that are U.S.-built, U.S.-owned, U.S.-registered and U.S.-crewed.”  Will argues, drawing up a lengthy and well-documented article by the Cato Institute, that “The Jones Act illustrates how protectionism creates dependent industries that then squander resources (ingenuity, money) on manipulating the government.  The act also illustrates the asymmetry that explains much of what government does—the law of dispersed costs and concentrated benefits.  The act’s likely annual costs to the economy (tens of billions) are too widely distributed to be much noticed; its benefits enrich a relative few, who use their ill-gotten profits to finance the defense of the government’s favoritism.”  Utah Senator Mike Lee has introduced a bill called The Open America’s Water Act of 2019 to repeal “the Jones Act’s requirements that cargo transported by water between U.S. ports must travel in ships that are U.S.-built.”  Such laws making shipping goods to and from Alaska, Hawaii, Guam, and Puerto Rico especially expensive.

(6 April 2019): [SR]The Battle for the Last Unconquered Screen—The One in Your CarThe Wall Street Journal

——–“The auto industry and Silicon Valley are locked in a battle for control of one of the last unconquered screens: your car dashboard display.  At stake are billions of dollars in revenue from ads and services as well as the balance of power between two big industries.  And then there is the future of the dash itself, a source of endless complaints from drivers frustrated by its glitchy concoction of buttons and technologies.  Car makers, trying to overcome this poor track record, are counting on these few square inches to help build closer relationships with customers.  Some fear handing control to Silicon Valley.  Alphabet Inc. and Apple Inc., meanwhile, are itching to put their familiar screens and apps inside vehicles.”

********The article goes on to note that data-driven products making use of the screen and knowledge about driver behavior “could create as much as $750 billion in new revenue by 2030.”  Ky Tang, an executive director of Silicon Valley’s Telenav Inc., notes: “We see this as the battle for the fourth screen,” following television, computer and mobile phone.  In 2011, the four screens included tablets, so maybe this is the fifth screen?  Whatever the number, the screen on one’s auto dashboard will be a much-disputed terrain.

(6 April 2019):The black-white wealth gap is unchanged after half a centuryThe Economist

——–”American history is replete with horrific episodes that prevented the accumulation of black wealth for centuries: first slavery, then indentured servitude under Jim, Crow, segregated housing and schooling, seizure of property and racial discrimination.  The result was that in 1962, two years before the passage of landmark civil-rights legislation and the Great Society programme, the average wealth of white households was seven times greater that that of black households.  Yet after decades of declining discrimination and the construction of a modern welfare state, that ratio remains the same.”  The multiple for median wealth is even larger: “The typical black family has just $17,100 compared with the typical white one, which has $171,000.”

********The article goes on to point out that “Determining what lies behind the persistent wealth gap is essential to fixing it.  The thinking ascendant on the left blames both present-day discrimination and the long history of racist public policies, such as redlining, an official practice that made it harder for blacks to get mortgages, and so permanently disrupted the transmission of wealth between generations.”  One cure for all of that is reparations.  But reparations given as a lump-sum, as put forward in “baby bond” proposals, “would not lead to wealth convergence if present-day racial income patterns remained fixed.”  Furthermore, “the politics of reparations remain treacherous.  Even race-neutral anti-poverty programmes, like cash welfare and food stamps, already attract fierce opposition, in no small part because they are often seen by white voters as handouts to minorities and immigrants.”

(6 April 2019):MIB: Michael LewisThe Big Picture

********This episode of Masters in Business, with Barry Ritholtz, features best-selling author Michael Lewis, whose most recent book is The Fifth Risk.  In an engaging and spirited interview of one hour and thirty-five minutes, Lewis speaks about his time at Salomon Brothers, his developing love for writing, and the path he took through his sequence of highly-successful books.  Definitely worth a listen—it made me want to read through all of his books.  You can find them at his official website, which draws attention to his latest project—the podcast “Against the Rules.”

(9 April 2019):Immigrants In The U.S. Send Billions of Dollars HomeStatista

********This graphic shows how much in aggregate immigrants in the U.S. send to their home countries.  Countries receiving the most funds are Mexico, then China, then India.  The information is based upon work done by Pew Research, which you can view here.  The interactive features of the link allow one to select outgoing or incoming remittances.  For example, the countries that UK immigrants send the most funds to are Nigeria, India, France, and Pakistan.

(10 April 2019):Google Flips the Switch on Its Next Big Money MakerBloomberg.com

——–The next big money maker is Google Maps. “an indispensable part of life for more than a billion people . . . The service has been mostly free, and free from ads, since it launched 14 years ago.  Interviews with Google executives and customers show this is changing as the internet giant increases the ways advertisers can reach Maps users . . . The app now regularly highlights sponsored locations, and shows extra paid listings when people look for nearby gas stations, coffee shops or other businesses.”  Brian Nowak, a Morgan Stanley analyst, notes: “Sometimes I say the most under-monetized asset that I cover is Google Maps . . . It’s almost like a utility where it’s kind of waiting for you to flip the switch on.”  Apparently, the switch is being flipped.

********A glimpse of the way one analyst and Google thinks.  What asset is likely to be monetized next?

May you have a good week!

Bruce

363 (3 April 2019)

Welcome to week 363!  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.

(26 March 2019):Infected U.S. Shale Oil Is Being Turned Away by Asian BuyersBloomberg.com

********U.S. shale oil is not “infected” in the biological sense, but it is frequently degraded by the presence of impurities, such as “oxygenates, metals and cleaning agents”—picked up in production and transportation by pipeline.  “Two refiners in South Korea . . . have rejected cargoes in recent months due to contamination that makes processing difficult.”  In at least one case, oil refused by South Korea was redirected to China.

(27 March 2019):U.S. and China got into a trade war—and Mexico walked away richerThe Los Angeles Times

——–“The Trump administration’s trade war with China has turned out to be a windfall for another country the president frequently berates Mexico. . . . Mexico has seen gains in shipments to the U.S. in categories in which competing Chinese goods were hit with tariffs, including poster board and air conditioner parts.  In all, U.S. imports of goods from Mexico surged 10% to almost $350 billion last year, the fastest growth in seven years.  That helped widen the U.S. trade deficit with Mexico by 15% to more than $80 billion, while the growth in shipments from China slowed by about a third.”  Mexico’s bonanza “underscores the difficulty in trying to win a trade war when companies can shift production or find new sources to avoid tariffs.  Despite Trump’s vow to reduce it, the U.S. trade deficit for goods globally hit a record $891 billion last year as tax cuts boosted demand for imports and retaliatory tariffs weighed on American exports.”

********A nice illustration of what is likely to occur when a bilateral approach is taken to a “problem” that is multilateral. 

(1 April 2019):The Creeping Capitalist Takeover of Higher EducationHuffPost Highline

********Unfortunately, this is not an April Fools joke.  Written by long-time higher ed reporter Kevin Carey, this lengthy article explores the interaction of for-profit education, online education, traditional and mostly elite universities, accrediting agencies, and the federal government.  The result is a concerning mix of degrees that benefit universities a little and online program managers (OPMs) a lot; students may benefit a little.  A key factor creating immense profit opportunities has been a pricing decision, i.e., charging students the same tuition for an online coursework as for campus-based coursework.  The costs are nowhere near the same, so that opens up a large gap between marginal revenue and marginal cost of a course which OPMs have been eager and able to fill.  A sobering article.

********Kevin Carey is the author of the 2015 book The End of College: Creating the Future of Learning and the University of Everywhere, which no doubt touches on some of the themes developed in the article.  You can read a 10-page review of the book here.  Here is its first paragraph:

While other books have outlined the crises that face institutions of higher education in America (Blumenstyk, 2015; Selingo, 2013), Carey (2015) argues that these crises have been, in part, caused by and can, in part, be solved by burgeoning enterprises in instructional technology. In The End of College, Carey fervently argues that soon, the “University of Everywhere” will arise. This university will be digital, it will serve millions, and, most importantly, in relation to teaching and learning, it will be more effective than traditional universities could ever hope to be.

Looking at this paragraph and the article, it strikes me that Carey has become disillusioned by the prospect of reconstructing higher education to the benefit of students.

(3 April 2019):What Happens When an Economist Walks Into a Brothel?Bloomberg Businessweek

——–“To learn how to manage risks in your life, don’t consult office-bound economists or actuaries.  Aske the real experts: prostitutes, gamblers, magicians, paparazzi, big-wave surfers, movie producers, horse breeders, and soldiers.  Their careers require them to take risks.  They succeed by doing so smartly—deriving as much benefit as possible per unit of risk taken.  Allison Schrager, herself an economist, though not of the office-bound variety, interviewed all of these exotic professionals for an intriguing new book.”

********The intriguing new book is An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk.  I took a look at the Table of Contents and it seems to be meaningfully more than yet another book on “let’s look at X as an economist to see what we can say” effort.  It does have some things to say about traditional topics such as insurance and moral hazard.  Along the way Schrager discerns five rules relating to risk management.  This is a very appreciative review and I’m willing to take chance on the book.

May you have a good week!

Bruce