Welcome to week 341! 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.
(27 October 2018): “Do We Have to Tell Them the House Is Haunted?” JSTOR Daily
********Since TIF Weekly is being distributed and posted on Halloween, Jit seems appropriate to lead with this piece.
——–Houses believed to be haunted “generally fall under stigmatized property laws. These laws cover homes where notorious crimes, violent murders, or suicides have occurred.” According to real estate law scholar George Lefcoe, there has been a shift since the 1960s in the U.S. from “caveat emptor, or ‘buyer beware,’ to the principle that problems with a house should be disclosed to interested buyers. . . . Disclosure laws vary from state to state. ‘Hauntedness’ isn’t considered a material fact in all of them.” California’s Civil Code, though, “mandates that realtors tell buyers if a violent death occurred three years before a purchase offer.” Randall Bell, a California realtor, notes that “stigmatized property can sell for 10% to 25% less than a non-stigmatized one.” He goes on to say that “perception is everything with stigmatized properties.” That is why, “when he consults on places where there are rumors of cultic murders or satanic rites, he effectively treats them as if they’re real.”
********Here, again, is an instance of the Thomas theorem: “If men define situations as real, they are real in their consequences.” The article goes on to discuss a 1989 case in Nyack, N.Y. in which a buyer wanted to be released from a contract as “the realtor hadn’t disclosed the house’s reputation for being haunted”—he was—and a bit of disclosure law history: “Disclosure laws for haunted houses date back thousands of years.” You may be interested to know that the “oldest surviving haunted house story in Greek and Roman literature is the Mostellaria, or ‘The Haunted House,’ by the Roman comic playwright Plautus” and was likely “first performed between 200 and 194 BCE.” You can learn more about Mostellaria in its Wikipedia article and you can read the play in The Rope and Other Plays.
(25 October 2018): “For many grocery stores and pharmacies offering the flu shot is just a way to get you in the door” Marketplace
——–[Reported by Alexandra Olgin from Charlotte, North Carolina.] “Before getting the flu vaccine this year, I did some research. At a nearby CVS and Walgreens I could get a discount of $5 or $10 if I spent a certain amount. . . . I ended up going to a Publix store . . . where the company advertised a $10 . . . gift card for the shot. . . . Publix wouldn’t tell me how much of an increase it has seen in customers coming in for shots since it started offering the promotion.” But the pharmacist who gave the shot said “We’ve been super busy this year, especially with the flu shot promotion we’re doing. . . . It’s kind of a nice way to get foot in the door with people so we can kind of get other immunizations, identify gaps in care for people.” Burt Flickinger of Strategic Resource Group says that “Prescription loyalty is the greatest loyalty in all of retail.” He notes that grocery stores offering flu shots could “cut into the big retail pharmacy market . . . ‘This is the perfect opportunity for the food and drug combo retailers to competitively capitalize.” Pharmacy chains, on the other hand, “look at the flu shot as a gateway to becoming primary care centers, the places where people come for minor illnesses like . . . ear infections or colds.”
********Remember Theranos and Bad Blood? One of its biggest clients was California-based Safeway Inc., whose CEO wanted to incorporate primary care centers into its grocery stores with the blood testing services of Theranos as a centerpiece. The point is that grocery stores that run on thin profit margins are on the lookout for products and services that will expand their customer offerings and make profit margins fatter. Presumably pharmacies are also looking to primary care services, like shots, for the same reason.
(25 October 2018): [SR] “A Big Reason U.S. Economy Is Accelerating: Government Spending” The Wall Street Journal
——–”A stark pickup in government spending, particularly in defense, has helped fuel a broad acceleration in U.S. economic growth in the past year and a half, according to a Wall Street Journal analysis of Commerce Department data. The U.S. economy has expanded at a 2.9% annual rate since April of 2017, according to the Commerce Department’s tabulations of the nation’s gross domestic product, or output. That growth rate is faster than the 2.2% annual growth rate between mid-2009—when the expansion started—and April 2017. Faster government spending accounted for nearly half of the acceleration.” According to the Commerce Department, defense spending “shifted from contracting at a 2.1% annual rate between 2009 and March 2017, to growing at a 2.9% rate since April 2017. The turnaround added 0.21 percentage points on average to the nation’s overall economic growth rate . . . When including faster spending on nondefense items and spending at the state and local levels, increased government spending accounted for 0.34 percentage point of the 0.7 percent point increase in the growth rate since April 2017, or nearly half.”
********This is one of those instances where it would be nice to look at the reports and data used by the WSJ in its analysis, but there were no citations of such materials. No one will be surprised that increased government spending and lower tax rates, especially at the federal level, will increase GDP. But then there is the issue of the federal deficit and the federal debt. This is not a small matter, as indicated in “Mnuchin Set to Top Geithner’s Record as Treasury Auctions Grow” Bloomberg.com.
(26 October 2018): “This AI Startup Generates Legal Paper Without Lawyers, and Suggests a Ruling” Blomberg Businessweek
——–Ignacio Raffa is the creator of Prometea, artificial intelligence software that was trained using “300,000 scanned court documents from 2016 and 2017, including 2,000 rulings.” Based in Buenos Aires, Prometea can, in seconds generate a draft ruling . . . that carries the letterhead of the Buenos Aires district attorney’s office and all the proper fonts and jargon, with no lawyers or paralegals involved.” This is a boon as, “In Argentina, Das write the decisions and the cases’ presiding judges either reject them and write their own, or simply approve them. Prometea is being used for stuff like taxi license disputes, not murder trials, but it’s a significant automation of the city’s justice system.” What used to take 15 lawyers six months to clear can now be done is six weeks. The documents created by Prometea have met with success. “So far, judges have approved 33 or its 33 suggested rulings, and it’s being used in at least 84 other pending cases.”
********As the article notes, the app developed by Prometea can “redirect staffers away from legal scut work and toward more complex cases.” What this article has brought to my mind is how different legal systems are, certainly among nations, but among states (and municipalities), too. The invisible foot manifests in different ways in different places.
(27 October 2018): [SR] “Chinese Firms Snap Up U.S. Sites to Process Scrap” The Wall Street Journal
——–“Chinese companies are setting up shop in the U.S. to obtain the scrap paper and plastic their government has deemed too dirty to import. U.S. shipments to China of old cardboard, newspaper and discarded plastic slowed after China this year implemented more stringent standards on the purity of imported scrap. That change has left Chinese packaging companies and plastics manufacturers short on materials. Some of them are buying or building plants in the U.S. to manufacture the paper for corrugated boxes, pulp and plastic pellets for which they can’t find enough raw material in China. Companies including some of China’s biggest paper makers are discovering a glut of cheap recycled material in the U.S.”
********In brief, China’s imposition of higher quality standards for U.S. scrap paper and plastic has led to additional processing of that scrap in the U.S. before exporting it to China, some of that additional processing being carried out by Chinese firms, whether established or newly formed. This seems like a predictable consequence of the Chinese intervention.
********Further processing of items like scrap plastic before exporting it to China is one way of addressing the surfeit of scrap. Another is to employ that scrap in the U.S., for example, in roads. That is the message of “Where does your recycled plastic go? Perhaps into future highways.” The Washington Post. Much research is underway to identify methods by which recycled plastic can be incorporated into roads. So far, “companies in the United States and abroad have embrace research into three types of roadway plastics: adding refined plastic pellets to hot-mix asphalt, grinding off the top surface of roads and adding urethane, and roads that essentially are nothing but recycled plastic.” Roads infused with plastic last longer and potholes fixed with plastic-based materials seem to be fixed once and for all. Roads made with plastic, however, tend to be slippery and require a special coating to make it less slippery.
(28 October 2018): [SR] “Tariffs May Crown Corn King Again” The Wall Street Journal
——–“American farmers hit by the U.S.-China trade battle are preparing to reshape the U.S. Farm Belt by planting more corn and less soybeans next year over a land mass potentially equal to the size of Connecticut. . . . U.S. farmers in 2018 planted more soybeans than corn for the first time in more than three decades, betting on that demand. But Chinese tariffs on U.S. soybeans have hurt that bet: U.S. exporters have sold less soybeans to China, typically the largest foreign buyer of the crop, in the past seven weeks than in a single week last fall.” Prices and profitability are driving these changes. As Minnesota farmer Joe Schreurs notes, “You’re not going to raise a crop that you lose $2 a bushel on every year.” Schreurs is considering “switching up to 30% of his soybean acres into corn next year if Chinese duties remain in place and federal assistance dries up.” Still, “corn may not be a panacea, especially for farmers who have racked up debts. . . . Some farmers anticipate bankers will have a bigger say in planting decisions this year, scrutinizing a farm’s finances before offering loans.”
********The article goes on to discuss a variety of ways that different sellers of goods are being affected by the tariffs. I was struck by the notion that the tariffs may lead to an increased say of banks in the planting decisions of farmers. This relative loss of decision-making autonomy is one of those things, I am certain, that few people think of when considering tariff impacts.
(28 October 2018): “Capitalism besieged” The Washington Post
********This piece, by columnist Robert Samuelson, is a review, of sorts, of Capitalism in America: A History, by Alan Greenspan, the long-serving (former) chairman of the Federal Reserve, and Adrian Wooldridge, an editor at The Economist. The authors hold that “What explains America’s success at creating prosperity . . . is society’s willingness to accept change.” They note that “The central mechanism of the progress has been creative destruction,” the well-known phrase “coined by economist Joseph Schumpeter.” But the willingness to accept that change has lessened. “As a result, the sanctity of American capitalism is now questioned more than at any time since World War II.” A good example of such questioning is provided by Can American Capitalism Survive?, by Steven Pearlstein, a colleague of Samuelson at The Washington Post. A précis, of the book seems to be provided by Pearlstein’s article “Five myths about capitalism.” In commenting about Pearlstein’s work, Samuelson observes “The truth is that American capitalism is a joint venture between the private sector and public policies . . . Laissez-faire . . . died a long time ago. But the interaction of so many pressures frustrates our ability to control the outcome.” No doubt this is true. Reading Capitalism in America and Can American Capitalism Survive? sequentially or in tandem is bound to lead to new insights about the shifting roles of the public and private sectors in the evolution of capitalism.
(31 October 2018): “A Virginia Farmer Fights to Harvest His Uranium” Bloomberg.com
——–“Walter Coles Sr. stood on a hill overlooking the Virginia pasture land that his family has farmed since it was deeded to them by Thomas Jefferson, motioning with a sweep of his hand to the expanse of radioactive treasure buried below. ‘There’s uranium everywhere,’ Coles said of fields that once filed with tobacco. In fact, his land holds the largest-known deposit of uranium in the U.S., an estimated 119 million pounds that could displace imports that constitute more than 90 percent of the uranium used by the nation’s nuclear power plants. But the cache, once valued at $6 billion, can’t be mined.” The Three Mile Island nuclear meltdown in 1979 led the Virginia legislature to impose a moratorium on uranium mining in the state. Coles is contesting that ban with a group of Canadian investors through their company Virginia Uranium Inc. “The case has made its way to the U.S. Supreme Court, where arguments will be heard on Nov. 5.”
********This is a good opportunity to see the invisible hand and foot in action. Clearly Walter Coles Sr. would like the money that might flow from developing his land, which was once valued at $6 billion. But that can only be done if the resource can be mined and that can only be done if the Supreme Court rules in his favor. But then there is the non-trivial problem of profitability. At present, “Uranium prices have declined to about $28 a pound, far below the $64 per pound the Virginia Uranium says is needed for the project to be economic.” (This makes me wonder about the land valuation—whoever did the valuation must think that uranium prices are going to skyrocket over the life of the project.) Is there something that can be done to “nudge” prices higher? Import quotas fit the bill and there are efforts underway to do just that. Domestic uranium miners Energy Fuels Inc. and Ur-Energy Inc. are seeking “to have the Trump administration slap a 25 percent quota on uranium imports. The U.S. Commerce Department is investigating the companies’ claims that uranium imports threaten national security, and a decision could come next summer.” As is often the case, and no doubt exemplified in the books in the article immediately above, political and legal factors frequently play a decisive role in enabling or preventing the formation of markets.
********The U.S. Energy Information Administration is the federal source of energy information and its Energy Explained page provides ready access to information about nonrenewables (like nuclear), renewables, and secondary sources of energy. You can see a bar graph for uranium imports by country of origin from 1997 to 2017 here, which also shows a bar graph for U.S. uranium concentrate production from 1949 to 2017. In terms of employment, uranium production is very small on a nation basis—just 424 “person years” in 2017. You can see the employment data for 1993-2017 here.
********While searching for information about the case, I ran across SCOTUSblog: Supreme Court of the United States Blog. In addition to a concise statement of the Issue of the case, it provides a precise timeline of the various petitions, briefs, responses, distributions, and so on, of the case Virginia Uranium Inc. v. Warren; John Warren is the Director of the Department of Mines, Minerals and Energy of the Commonwealth of Virginia.
May you have a good week!