Quotulatiousness

April 20, 2017

Without our sacred supply management, it’d be “Human sacrifice! Dogs and cats living together! Mass hysteria!”

Filed under: Business, Cancon, Economics, Politics — Tags: , , , , — Nicholas @ 05:00

Colby Cosh saddles up old Rocinante and has a tilt at the ludicrous supply management regime in milk:

You remember how Chobani, a hipster yogurt business based in New York state, got a temporary permit to sell the product in Ontario and won over customers. You know how it tried to meet our supply-managed dairy system halfway by making plans for a factory in Kingston. You know how milk processors waged berserker war in court to prevent the permit from being renewed, and closed ranks to deny the company a supply of Canadian milk.

And, most of all, you know how the product disappeared from our shelves, how Canadians still seek it out on cross-border trips, and how slow and confused the dairy cartel was about meeting the new demand for extra-heavy yogurt. None of this is going to be too easy to explain to a four-year-old.

I hasten to add that I am not seriously playing the “Won’t someone think of the children” card so beloved of politicians, newspaper columnists, and other shameless scum. The four-year-old will get over it. She’ll grow up in a free-trade Canada in which she does not have to accept a world of consumer second-bests, simulacra, and make-dos, except possibly in the dairy section. She can have no personal memory of Seventies Canada — never know what it is like to switch from Eaton’s to The Bay just to buy slightly different versions of the same low-quality, unfashionable crap. The question I grew up with was “Why does Canada have seemingly permanent poorer living standards than the U.S.?”; now it is just “Why are the cheese sections in our grocery stores so pathetic?”

So, Mad Max to the rescue? Not if champion protectionist Steven Blaney can stop him:

… supply management froze the world of Canadian dairying at a perfect moment for Quebec, and so the system has become a sacred cow made of other, literal cows. Because economists and intellectuals know that supply management is a transfer of wealth from consumers of all classes to a few thousand affluent farmers, the beneficiaries reinvest a great deal of the profit in hapless, defensive public-relations efforts that only tend to make us loathe them more.

They have even found a political champion in Steven Blaney, the cadaverous oddball from the Eastern Townships who is in the Conservative leadership race to play milk spoiler to fellow Quebecer Maxime Bernier. Bernier wants to retire supply management by buying farmers out of their quotas with a national tax on dairy, lasting for a fixed period.

This is a generous approach to free trade in dairy: it is a buyout of unearned entitlements. Producers who want to leave the industry would do so with an enormous grubstake — the kind of which workers laid off from regular jobs can only dream. Those who hang in there would get to keep something like the present value of their annulled production quotas as they face new careers in an honest-to-God marketplace (which is what some of them very much wish to do).

April 18, 2017

QotD: Rent control

Filed under: Business, Economics, Government, Quotations — Tags: , , , , — Nicholas @ 01:00

To someone ignorant of economic reasoning, rent control seems like a great policy. It appears instantly to provide “affordable housing” to poor tenants, while the only apparent downside is a reduction in the income flowing to the fat-cat landlords, people who literally own buildings in major cities and who thus aren’t going to miss that money much. Who could object to such a policy?

First, we should define our terms. When a city government imposes rent control, it means the city makes it illegal for landlords to charge tenants rent above a ceiling price. Sometimes that price can vary, but only on specified factors. For the law to have any teeth — and for the politicians who passed it to curry favor with the public — the maximum rent-controlled price will be significantly lower than the free-market price.

The most obvious problem is that rent control immediately leads to a shortage of apartments, meaning that there are potential tenants who would love to move into a new place at the going (rent-controlled) rate, but they can’t find any vacancies. At a lower rental price, more tenants will try to rent apartment units, and at a higher rental price, landlords will try to rent out more apartment units. These two claims are specific instances of the law of demand and law of supply, respectively.

[…]

In the long run, a permanent policy of rent control restricts the construction of new apartment buildings, because potential investors realize that their revenues on such projects will be artificially capped. Building a movie theater or shopping center is more attractive on the margin.

There are further, more insidious problems with rent control. With a long line of potential tenants eager to move in at the official ceiling price, landlords do not have much incentive to maintain the building. They don’t need to put on new coats of paint, change the light bulbs in the hallways, keep the elevator in working order, or get out of bed at 5:00 a.m. when a tenant complains that the water heater is busted. If there is a rash of robberies in and around the building, the owner won’t feel a financial motivation to install lights, cameras, buzz-in gates, a guard, or other (costly) measures to protect his customers. Furthermore, if a tenant falls behind on the rent, there is less incentive for the landlord to cut her some slack, because he knows he can replace her right away after eviction. In other words, all of the behavior we associate with the term “slumlord” is due to the government’s policy of rent control; it is not the “free market in action.”

Robert P. Murphy, “The Case Against Rent Control: Bad housing policy harms lower-income people most”, The Freeman, 2014-11-12

April 17, 2017

Why big organizations act like idiots (United Airlines is only the most recent example)

Filed under: Bureaucracy, Business — Tags: , , , — Nicholas @ 03:00

Charlie Martin knows about big corporations making themselves look foolish … and far too often doubling down on the stupid:

This whole recent thing with United Airlines has me thinking, once again, about how big organizations act like idiots. […]

Like all good consultants, I have a Model, mostly cribbed from others, based on two observations:

  • The SNAFU principle: the farther up a hierarchy information has to travel, the more information is lost. This is because no one likes giving people bad news, so the news tends to get better the farther up it goes.
  • The Peter Principle (modified): people rise in a hierarchy to the limits of their competence in rising in a hierarchy; further, the skill of rising in a hierarchy is largely independent of the skills needed to deal with actual issues.

Of course, the implication of this is something I’ve called Carl’s Corollary (for a friend and co-worker Carl Madison, who first pointed it out). Carl’s Corollary implies that most decisions are being made by people less and less competent to deal with the situation, using increasingly bad information.

Naturally, this results in bad decisions being made. The usual result is that once the bad decision has been made, someone is identified to be responsible, that person is punished, and a new policy is issued to make sure no one makes that mistake again.

[…]

United, though, has a different scheme, clearly. They have a Book, and it Must Be Followed. No one on the ground in Chicago — at least no one in reach of the gate — had the authority to do anything but offer an $800 voucher, which just wasn’t enough. (I can relate. I used to be a “45 weeks a year” road warrior, and there were some nights where if they’d have tried to bump me off a flight home, I would have either killed someone or just thrown myself on the floor of the terminal screaming.) So they followed the Book, and when they couldn’t get Dao to leave, they followed the book again saying he was disruptive, and then the mall airport cops went all Cartman on him…

https://media.giphy.com/media/B1TMcmoBAaSZi/giphy.gif

… and the rest was history.

Now, imagine if, instead, the gate people had the authority to offer more. And the gate agents knew their primary responsibility was to make customers happy and not get bad publicity.

QotD: The dubious “value add” of the LCBO

Filed under: Business, Cancon, Government, Quotations — Tags: , , , , — Nicholas @ 01:00

The liquor board’s cocktail recipe of the month, offered on its website, is for “gin and lemonade,” which you make with a shot of gin and some lemonade. The gin is cherry, so there’s that. Its three recommended beers of the month are themed for the hockey playoffs. They are — I am not kidding — Molson Canadian in a bottle, Molson Canadian in a can, and Molson Canadian in a larger can. The value the LCBO’s adding that a private retailer couldn’t is not obvious.

David Reevely, “LCBO union uses government’s rhetoric against it in brewing labour battle”, National Post, 2017-04-06.

April 16, 2017

The tale of unsalted butter in French cuisine

Filed under: Bureaucracy, Business, France, History — Tags: , , — Nicholas @ 05:00

At his new blog, Splendid Isolation, Kim du Toit explains the historical roots of a French culinary oddity:

One of the quirks of French cuisine is that most often the butter is unsalted, and at a French dinner table you will usually find a tiny cruet of salt with a microscopic spoon inside, so that you can salt your butter (or not) according to taste. To someone like myself, accustomed only to salted butter, this seemed like an affectation, but it wasn’t that at all: it was the result of taxation, and this is one of the things changed forever by Napoleon’s administrative reforms.

One of the best parts of our U.S. Constitution is the “interstate commerce” clause, which forbids states from levying taxes on goods and services passing from one state to another, and through another in transit. This was not the case in pre-Napoleonic France. Goods manufactured in, say, Gascony or Provence would pass through a series of customs posts en route to Paris, and at each point the various localities would levy excise taxes on the goods, driving up the final price at its eventual destination.

Which brings us to salt. French salt, you see, was produced mainly on the Atlantic coastline, and was a major “export” of Brittany to the rest of France. Butter, of course, was produced universally — in and outside Paris and ditto for every major city — but the salt for the butter came almost exclusively from Brittany, and having been taxed multiple times by the time it reached points east like Paris or Lyons, it was expensive. So the cuisine and eating habits in those parts developed without the use of salt — or, if salt was requested, at an added cost. It’s why, to this day, many French recipes use unsalted butter as an ingredient. (In contrast, butter for local consumption in western France was [and still is] almost always salted, because salt was dirt cheap there.)

Napoleon’s reforms did away with all that; he saw to it that the douane locale checkpoints and toll booths along the main roads were abolished (causing salt prices in eastern France to plummet and become a mainstay of French cuisine at last). And when the towns and villages protested about the loss of tax revenue, Napoleon made up the shortfall with “federal” funds out of the national treasury.

Of course, the French treasury had in the meantime been emptied out by, amongst other things, the statist welfare policies of the Revolutionary government (stop me if this is starting to sound familiar). Which is why, to raise money, Napoleon invaded wealthy northern Italy and western Germany (as it is now), pillaged their rich cities’ treasuries and garnered revenue from the wealthy aristocracy, who paid bribes to avoid having their palaces sacked and their wealth confiscated.

April 15, 2017

QotD: “Healthy” food choices

Filed under: Britain, Business, Health, Quotations — Tags: , , — Nicholas @ 01:00

Whenever I find myself choosing my next meal I always like to look out for the sign that says “healthy option.” In this age of variety and abundance it can often be hugely difficult making up your mind as to what to eat next. “Healthy option” makes things so much easier. It tells me: “Avoid like the plague.”

Good news, then, for takeaway customers in Rochdale, Greater Manchester. No fewer than six local fish and chip shops have taken on board the advice of their local council’s Healthier Choices Manager and introduced special, non-greasy, low-fat menu options. So now when customers find themselves torn between the battered sausage, the chicken nuggets and the “rock salmon” at least they can be sure of what they don’t want: that insipid-looking fillet of steamed cod on a bed of salad, with so few chips they barely even qualify as a garnish.

“It’s too early to say if steamed fish will be a hit,” says an article on the council’s website. And I’ll bet when they know the answer they won’t tell us. That’s because this well-meaning scheme is doomed to flop like a wet kipper. Of course it is. No one in their right mind goes to a takeaway as part of a calorie controlled diet. You do it when you fancy a treat.

And the reason it’s a treat is precisely because that food is so deliciously greasy. As the late Clarissa Dickson-Wright, the generously girthed cook from TV’s Two Fat Ladies, once explained to me, fry-ups, sizzling bacon, battered fish, and so on will always taste nicer than the “healthy option” because fat is a great carrier of flavour.

Clarissa (who was as big an expert on the science of food as she was on cooking and eating it) remained, to the end, a great defender of butter, cream and full-fat milk. She claimed they were much better for you than most of the supposedly healthy, low-fat alternatives. And it turns out she was right. Recent studies have shown that it’s the “trans-fats” in artificial health products like margarine that are the killer, not natural animal fats you find in butter.

What’s more, the evidence increasingly suggests, that it’s sugar not fat which is most responsible for our supposed obesity epidemic. So by trying to stop customers eating fried fish in Rochdale, the council is barking up the wrong tree. It’s the cafes pushing sweet cakes and doughnuts they should be investigating.

James Delingpole, “I prefer my cod in batter, thanks very much”, James Delingpole, 2015-08-15.

April 14, 2017

QotD: How to negotiate

Filed under: Business, Politics, Quotations, USA — Tags: , , — Nicholas @ 01:00

All negotiations are defined by something called the ZOPA: the Zone of Possible Agreement. The boundaries of that zone are defined by another buzzword, the BATNA: the best alternative to negotiated agreement.

The ultimate deal has to be better for both sides than their BATNA. Anything that either side considers worse than no deal at all is outside of the ZOPA, and no amount of strategery is going to get you there. Getting rid of Social Security and Medicare: outside of the ZOPA. Raising tax rates to Danish levels: outside of the ZOPA. Single-payer health care: outside of the ZOPA. Defunding Planned Parenthood: outside of the current ZOPA.

Is the ZOPA fixed? Nope. If a Republican president were in the White House, and a few more Republicans were in the Senate, defunding Planned Parenthood might well be feasible. The massacre at Newtown moved the ZOPA on gun control leftward. The financial crisis made all sorts of previously unthinkable things — like TARP and a nearly $900 billion stimulus bill — eminently feasible. The ZOPA moves all the time, which is why we’re no longer debating the free and unlimited coinage of silver at a ratio of 16 to 1.

But note that these movements didn’t come from some sort of deft negotiation strategy. They came from external events that changed the BATNA of one side or the other. Note too that even though the ZOPA had shifted in his favor, President Obama lost on gun control because he included an assault weapons ban in his list of demands as a bargaining chip, and the other side decided to walk away instead of negotiating a deal.

How did this happen? Because the bargaining chips you include send signals about your intent, and how serious you are about negotiating — and they can therefore change the facts on the ground in ways that hurt you rather than help you.

Imagine that you tried negotiating for a car by announcing that you intended to pay no more than $2,400 for a fully-loaded new truck. Would this improve your bargaining position? Of course not; the salesman would decide that you were wasting his time, and go find another customer. Similarly, if the car salesman announced that he wanted $100,000 for a well-used Camry, that wouldn’t make you more willing to pay $30,000 for it; it would make you go seek a dealer who wasn’t obviously crazy.

Megan McArdle, “Let’s See What Republicans Learn From Losing Boehner”, Bloomberg View, 2015-09-25.

April 13, 2017

United Airlines Honest Commercial [Jimmy Kimmel]

Filed under: Business, Humour — Tags: , , — Nicholas @ 06:00

Published on Apr 11, 2017

“No one wanted to volunteer to get off the plane because the next flight wasn’t until 2 p.m. the next day, which is almost a full 24 hours later,” said Bridges, who added that the airline selected which flyers to eject “based on an internal algorithm that weighs in … who was the last to purchase.” Bridges said the unidentified passenger was told he had to leave, but the man refused to do so.

“He said he was a doctor, he had patients he had to see in the morning, he wasn’t going to get off the plane,” Bridges recounted, “and the gate agent was like, ‘You have to get off the plane. If you don’t get off, we’ll call in security.’ And he was like, ‘Fine, call security, I’m not getting off the plane.’”

Bridges said the man wasn’t being violent with security and police officers who responded, but did say he was “kind of [flailing] his arms and trying to keep them away from him and ultimately they had to use the force, as you can see in the video.”

The shocked passengers berated United employees who boarded the plane in the ejected flyers’ place.

Late Monday, United CEO Oscar Munoz issued a statement apologizing for having to “re-accommodate these customers.”

“Does that look like re-accommodation to you?” Carlson asked. “There’s no mention of the fact that this guy is bloody and unconscious. That’s re-accommodation, according to United Airlines.”
[http://www.foxnews.com/travel/2017/04/10/united-airlines-passenger-describes-moment-unconscious-man-was-dragged-off-plane.html]

April 12, 2017

United Airlines implies that the beatings will continue until customer morale improves

Filed under: Business, Humour, USA — Tags: , , , , — Nicholas @ 03:00

One of several videos from other passengers on the flight:

Some reactions from around the net to a United Airlines initiative to treat their customers like unruly prison inmates:

Reason‘s Brian Doherty:

The world is rightly abuzz over an awful incident yesterday in which a man was beaten and dragged off a plane by police at Chicago’s O’Hare airport for the crime of wanting to use the seat he’s paid for on a United Airline flight getting ready to leave for Louisville.

The man claimed to be a doctor who had patients to see the next morning, explaining why he neither took an initial offer made to everyone on the plane to accept $400 and a hotel room for the night in exchange for voluntarily giving up his seat nor wanted to obey a straight-up order to leave, in an attempt on United’s part to clear four seats for its own employees on the full flight.

No one considered even the $800 that was offered after everyone had boarded enough for the inconvenience, so United picked four seats and just ordered those in them to vacate. But the one man in question was not interested in obeying. (Buzzfeed reports, based on tweets from other passengers, that the bloodied man did eventually return to the plane.)

While United’s customer service policies in this case are clearly heinous and absurd, let’s not forget to also cast blame on the police officers who actually committed the brutality on United’s behalf. NPR reports that the cops attacking the man “appear to be wearing the uniforms of Chicago aviation police.”

However violent and unreasonable the incident might appear to us mere ignorant peasants, the CEO assures his minions that beatings of this sort are totally within normal procedural guidelines:

The head of United Airlines said in an email to his employees Monday that the security guards who violently dragged a passenger from his seat were following “established procedures for dealing with situations like this,” according to a tweet by CNBC reporter Steve Kopack.

“As you will read, the situation was unfortunately compounded when one of the passengers we politely asked to deplane refused and it became necessary to contact the Chicago Aviation Security Officers to help. Our employees followed established procedures for dealing with situations like this,” wrote Oscar Munoz, CEO of United Airlines.

Munoz’s message to staff comes amid public scrutiny after a passenger refused to relinquish his seat on an overbooked plane and was violently dragged off the plane by three security officers.

Surfaced videos of the incident have since gone viral.

April 10, 2017

Audit Hollywood!

Filed under: Business, Law, Media, USA — Tags: , — Nicholas @ 03:00

Harry Shearer has launched a suit against the owners of the movie Spinal Tap after he and his co-stars earned a pitiful sum on merchandise and music royalties, despite the film’s continuing popularity. Movie studios and music conglomerates use impenetrable and complex accounting “rules” to hide any profits (as profits need to be shared with actors, directors, musicians, and writers):

Behind the ambitious, creative talent that is Hollywood lies a darker side of the entertainment industry little appreciated by the ordinary moviegoer. It’s an opaque world of film financing, revenue accretion and minimal profit share. If exposed, as our Spinal Tap lawsuit against Vivendi aims to do, fans will no doubt be horrified at the shameful gravy train that rolls for corporate rights holders at the expense of creators. So far, challenges to media conglomerates’ comfortable status quo provoke little more than derision, since the power balance is so skewed in their favor. But, for how much longer?

Spinal Tap began as a mock rock band that we four – Rob Reiner, Christopher Guest, Michael McKean and myself – developed for an appearance on a TV pilot at the end of the 1970s. On our own initiative, we wrote and recorded most of the songs and performed them live in several music clubs around L.A. before any cameras rolled. The ultimate movie was truly, in the words of Michael McKean, “the result of four very stubborn guys working very hard to create something new under the sun.”

[…]

Unfortunately, “Hollywood accounting” isn’t a practice confined to California. Within the success story that is the European film and television industry, which generated €122 billion in 2013, less than one-third of 1 percent was shared with the writers and directors of the works created. A peculiar definition of “fairness,” you might say.

Under French law, filmmakers should be paid a fee for their work plus an ongoing remuneration proportionate to the exploitation of their creation. In reality, less than 3 percent of French writers and directors receive anything more than the initial payment of that minimum guarantee. And 70 percent of all European film directors are asked to defer a proportion of their original fees (as we, the creators of This is Spinal Tap, originally agreed to do).

The Europeans are simply following Hollywood’s lead; however, Spinal Tap‘s rights are determined by US law. In fighting for creators’ rights against a French conglomerate, Spinal Tap is simply pursuing a legal path well-trodden by our American creator peers. The well-known science-fiction “flop” of a film, Return of the Jedi, has apparently never gone into profit despite earning almost $500 million worldwide. Harry Potter and the Order of the Phoenix, apparently “lost” almost $170 million.

April 9, 2017

The Internet-of-Things wants to invade your kitchen

Filed under: Business, Technology — Tags: , — Nicholas @ 04:00

Megan McArdle on the good and bad (mostly bad, IMO) of adding extra layers of technological sophistication to your kitchen appliances. If someone hasn’t already offered a hand-blender, can-opener, or soup tureen with Wi-Fi and/or Bluetooth built-in, just wait a bit … it’s bound to happen.

I don’t think of myself as having Luddite tendencies, but I confess that when I see refrigerators with screens set into their doors, my first thought is: “Why?”

No, don’t tell me that you can stream music or look inside the refrigerator. I already have technology for that — respectively, my Amazon Echo and this app called “opening the door.” Neither costs the thousands of extra dollars I would have to pay to get my hands on a Samsung Family Hub Refrigerator. And if my music streamer breaks, I can replace it without calling an appliance repair company and spending a fortune on parts.

I have similar sensations about many of the technologies on offer in today’s appliances. Every major appliance manufacturer seems to be looking for a way to stick wi-fi into their products, for example. And I confess, I have occasionally fantasized about starting a pie cooking in my oven, sauntering to the other side of my 5,400-square-foot home for a dip in the pool, and being able to use my phone to turn down the heat on the pie after 10 minutes. Alas, in the trim 1,700-square-foot rowhouse I actually live in, I am never far enough from my kitchen to actually justify resorting to my smartphone rather than my feet.

We are at a curious moment in cooking technology. The last decade or so has probably introduced more technology potential into the kitchen than any previous decade except the 1930s. Sous vide, electric pressure cookers, fuzzy logic rice machines, induction cooktops, food processors that also cook, wi-fi controls, web connections … these things are now common enough for ordinary cooking enthusiasts to have at least heard of them, if not tried them. It is an era of enormous potential. And yet, that potential is frequently not realized, because we can’t actually figure out what to do with all our new toys.

Don’t get me wrong: I’m not saying that all of this new technology is useless. Far from it! I am an enthusiast for many of them. And yet, almost all these whiz-bang technologies fall prey, to some extent, to one of two problems. Either they are not actually very useful, or they are so spectacularly revolutionary that the average home cook can’t figure out what to do with them.

And this doesn’t even dip in to the awesomely terrible security issues of so many Internet-of-Things devices, creating new, wide vistas for Ransomware scumbags…

April 6, 2017

Words & Numbers: Taxing Robots Does Not Compute

Filed under: Business, Economics, Technology — Tags: , , , — Nicholas @ 04:00

Published on 5 Apr 2017

This week, Antony and James break down Bill Gates’ recent suggestion that companies that use robots instead of human workers should pay employment taxes in order to fund new welfare programs.

On legalization the feds are headed the wrong way

Filed under: Business, Cancon, Law, Liberty — Tags: , , — Nicholas @ 03:00

Libertarian Party of Canada leader Tim Moen looks at the public safety aspects of Justin Trudeau’s marijuana legalization plans:

If we are concerned about public safety we need to make it more attractive for people to grow, distribute and consume cannabis legally than illegally so that there is engagement with public safety mechanisms. Right now it is far more attractive for people to grow and consume illegally. Cannabis is easy to produce, you just need seeds and dirt, and there is a high demand for it. A regime that restricts legal supply through onerous licensing and prohibitions will drive up illegal supply to meet the demand.

We were seeing a trend towards improved public safety. Storefronts offered customers a safe place to buy cannabis from businesses that had a vested interest in developing a reputation for quality and safety. Small- to medium-sized growers have been operating in the sunlight where public safety officials like me could inspect and educate. Cannabis was emerging from the shadows and the problems associated with illicit activity were fading away.

All the Trudeau government had to do was notice what was going on and end the rules that made it difficult for public safety to emerge. Instead, over the past month we have seen a hard crackdown on storefront cannabis dispensaries. Coordinated raids have occurred across the country and some business owners are facing financial ruination and life in prison at the same time the Trudeau government has announced legalization by the summer of 2018. The message to the cannabis industry is loud and clear, “Fall in line with the regime, or else.”

The federal government is poised to adopt the report of The Task Force on Marijuana Legalization and Regulation as the way forward and this is cause for serious concern from a public safety perspective. The Task Force recommends a requirement for a federal license to grow cannabis commercially. If you’re one of the hundreds of small- to medium-sized dispensaries currently operating in the sunlight your days are numbered. If you are a customer of one of these dispensaries you will be faced with a choice of big government-approved corporation or local black market dealer.

It’s not clear why customers would choose the low quality, limited access, unreliable cannabis that a few big government-approved corporations would provide over locally grown craft cannabis. Imagine if growing tomatoes required a federal license and there was a coordinated effort to raid local growers and sellers who did not have a federal license. Would people stop putting tomato seeds in dirt? Would people drive past an unlicensed farmer selling big, fresh, juicy tomatoes from a roadside stand on their way to a licensed grocery store which may have some small, pale, nearly-spoiled tomatoes in stock? It is naive to imagine people are going to follow stupid rules that they can easily avoid following, yet this naivety has permeated cannabis prohibitionism and continues to permeate the thinking of cannabis legislators.

QotD: The “real” “synergies” of corporate mergers

Filed under: Business, Quotations, USA — Tags: , , , — Nicholas @ 01:00

There can be a few factors behind consolidation. For example, massive economies of scale. Or … well, I’m afraid this is a bit delicate, but I can’t let it go unmentioned: Industries consolidate to reduce the number of players in the market, giving the remaining players more pricing power. Antitrust regulators tend to put on their big frowny face if companies cite the latter reason, so the public statements made by companies in consolidating industries tend to focus on more superficially attractive reasons like cost savings and “broader industry reach,” or more ethereally vague words like “synergies.”

True to form, Anthem is claiming that nearly $2 billion in synergy savings will be realized by the merged entities. This is probably true, to some extent. But you should keep in mind that mergers are themselves extremely costly. And I don’t just mean the fabulous fees that investment bankers and consultants collect to facilitate them. Joining two entities into one is really difficult: Corporate cultures clash, turf wars damage morale and profits, IT systems never do work right together, key employees leave, customers are alienated. So in general, these sorts of statements should be taken, not just with a grain of salt, but while sitting next to a salt lick with a big bag of Mr. Salty Pretzels and some cocktail peanuts to wash the whole thing down.

Megan McArdle, “No Wonder Insurers Want to Merge”, Bloomberg View, 2015-07-24.

March 30, 2017

You can now have beer brewed to your taste (as encoded in your genome)

Filed under: Business, Science — Tags: , , — Nicholas @ 12:07

For those with a taste for custom-brewed beer (and a very big budget), you can now have a batch of beer created to match your taste preferences, scientifically:

London-based Meantime Brewing Company, acquired a year ago by Belgian beverage multinational Anheuser-Busch InBev, wants to sell you beer tuned to your taste.

To do so, the company plans to direct willing customers to genetic testing service 23andMe – the Silicon Valley personal genomics biz that’s slowly emerging from its near death experience at the hands of US health regulators – to evaluate their genetic taste proclivities.

For a mere £25,000 (~$31,200), beer lovers who prefer entrusting purchasing decisions to science rather than self-knowledge can buy 12 hectolitres (about 2,100 Imperial pints or 2,500 US pints) of ale tailored to taste preferences encoded in their genome.

Customers supply their saliva, 23andMe sorts the genes, and Meantime crafts a beer to fit inborn affinities.

“Pioneering personal genetics company 23andMe will assess hereditary variations in your oral taste receptors (the TAS2R38 gene) to reveal the genetic variants that could explain personal preferences towards specific flavour profiles within beer, such as sweetness and bitterness,” the company explains on its website.

And if the genetically dictated balance of flavors doesn’t align with actual taste preferences, Meantime has left itself an out – customers get a consultation with Brewmaster Ciaran Giblin to adjust the flavors if necessary.

That’s almost certainly for the best since, as 23andMe points out, the role of genetics in taste preferences is uncertain. “Scientists aren’t yet sure how much of our taste preferences are genetic, but estimates are generally around 50 per cent,” the company says in the Taste report it offers subscribers.

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