Quotulatiousness

July 31, 2013

“What LEED designers deliver is what most LEED building owners want – namely, green publicity, not energy savings”

Filed under: Business, Environment, Media, USA — Tags: , , , — Nicholas @ 10:24

A bit of LEED debunking at The New Republic:

When the Bank of America Tower opened in 2010, the press praised it as one of the world’s “most environmentally responsible high-rise office building[s].” It wasn’t just the waterless urinals, daylight dimming controls, and rainwater harvesting. And it wasn’t only the Leadership in Energy and Environmental Design (LEED) Platinum certification — the first ever for a skyscraper — and the $947,583 in incentives from the New York State Energy Research and Development Authority. It also had as a tenant the environmental movement’s biggest celebrity. The Bank of America Tower had Al Gore.

The former vice president wanted an office for his company, Generation Investment Management, that “represents the kind of innovation the firm is trying to advance,” his real-estate agent said at the time. The Bank of America Tower, a billion-dollar, 55-story crystal skyscraper on the northwest corner of Manhattan’s Bryant Park, seemed to fit the bill. It would be “the most sustainable in the country,” according to its developer Douglas Durst. At the Tower’s ribbon-cutting ceremony, Gore powwowed with Mayor Michael Bloomberg and praised the building as a model for fighting climate change. “I applaud the leadership of the mayor and all of those who helped make this possible,” he said.

Gore’s applause, however, was premature. According to data released by New York City last fall, the Bank of America Tower produces more greenhouse gases and uses more energy per square foot than any comparably sized office building in Manhattan. It uses more than twice as much energy per square foot as the 80-year-old Empire State Building. It also performs worse than the Goldman Sachs headquarters, maybe the most similar building in New York — and one with a lower LEED rating. It’s not just an embarrassment; it symbolizes a flaw at the heart of the effort to combat climate change.

[…]

“What LEED designers deliver is what most LEED building owners want — namely, green publicity, not energy savings,” John Scofield, a professor of physics at Oberlin, testified before the House last year.

Governments, nevertheless, have been happy to rely on LEED rather than design better metrics. Which is why New York’s release of energy data last fall was significant. It provided more public-energy data for a U.S. city than has ever existed. It found the worst-performing buildings use three to five times more energy per square foot than the best ones. It also found that, if the most energy-intensive large buildings were brought up to the current seventy-fifth percentile, the city’s total greenhouse gases could be reduced by 9 percent.

July 30, 2013

The economic inefficiency of “fair trade” goods

Filed under: Business, Economics, Food — Tags: , , , , — Nicholas @ 10:26

Tim Worstall applauds you for wanting to use some of your economic surplus to help out the poor and less fortunate producers of various goods in the developing world, but points out that the “fair trade” method is incredibly inefficient at funnelling any of that extra money to the original producers of your coffee or other “fair trade” goods:

However, you might want to have a little think about this in the lights of these quite astonishing numbers:

    An interesting statistic is that in 2010, retail sales of fair-trade-labelled products totalled about $5.5 billion, with about $66 million premium — or about 1.2 percent of total retail sales — reaching the participating producers. There has to be a better way of helping poor farmers. Having only 1.2 cents out of every dollar spent on fair-trade products reach the target farmers is a hugely inefficient way of helping these people. If people wish to help these farmers there has to be charities out there that can transfer more than 1.2 cents per dollar to them.

It may well be that you are exercising your consumer choice as a way to make the world a better place. It’s just an incredibly inefficient method of doing so and thus you might want to reconsider that plan.

My own supposition is that the reason Fair Trade is so appallingly inefficient is the number of Interchangeable Emmas who have to be paid from that money supposedly going to producers. It takes very many poor coffee farmers’ incomes to pay for the PR bod advertising Fair Trade coffee from an office in central London. It might well be better to simply do as Madsen urges, and buy things made by poor people in poor countries. Then send the money saved by not paying the Emmas off to a charity of some minimal efficiency. Or even, if coffee farmers are really your thing, simply drink an extra cup or two a day and send the money by increasing demand for their production.

Update: In a marginally related item, Jonathan Katz explains why the policy of sending food to distant lands is less an attempt to ameliorate hunger than it is a corporate welfare policy to prop up US agribusiness:

The problem, says Christopher Barrett, an economist at Cornell University and one of the world’s leading experts on food aid, is that the U.S. has an entirely different goal when it comes to sponsoring humanitarian assistance. Feeding the hungry has never been its sole purpose.

Rather, the historical goal of food aid has been to stimulate U.S. businesses — the agriculture and shipping industries above all. Modern food aid was devised in the early days of the Cold War as a way to dispose of government-held surpluses, in order to regulate crop prices at home and create markets abroad. The main programs in the early days of food aid didn’t even give food away for free, rather selling it to foreign governments at a discount. “It just happened that this could get advertised as and provide humanitarian relief on occasion,” Barrett said.

Over time, things began to change. Surplus disposal became less important than other forms of domestic price control, and the cheaply sold food did not prove very effective in opening markets. When in the 1970s and 1980s, food donated during famine emergencies in Asia and Africa proved effective, free-food distributions took over as the dominant programs.

Today, the major players in food aid are nongovernmental organizations (NGOs) such as World Vision. But, because of how American laws are structured, domestic corporations still reap the much of the profit. Major U.S. agribusinesses can count on hundreds of millions of dollars in annual sales to the government.

Shipping companies do even better. Federal law mandates that at least half of all U.S. food aid must be shipped aboard U.S.-flagged vessels. With shipping costs taking up nearly 40 percent of any food assistance funding, the law guarantees hundreds of millions of dollars in contracts for shipping companies. The winner of the Mozambique shipment was no exception: Sealift Inc. has grossed $203 million in government contracts since 2011, mostly from the Pentagon, according to data at USASpending.gov. This benefit is not lost on the shipping industry: The sector’s leading coalition, USA Maritime, spent $250,000 lobbying Congress on food aid and cargo-preference laws in 2011 and 2012.

The real, long-term source of damage to American interests from the NSA revelations

Filed under: Business, Government, Technology, USA — Tags: , , , , , — Nicholas @ 10:10

In The Atlantic, James Fallows explains why the NSA’s digital overreach has likely harmed US long-term interests in many different ways:

In short: because of what the U.S. government assumed it could do with information it had the technological ability to intercept, American companies and American interests are sure to suffer in their efforts to shape and benefit from the Internet’s continued growth.

    American companies, because no foreigners will believe these firms can guarantee security from U.S. government surveillance;

    American interests, because the United States has gravely compromised its plausibility as world-wide administrator of the Internet’s standards and advocate for its open, above-politics goals.

Why were U.S. authorities in a position to get at so much of the world’s digital data in the first place? Because so many of the world’s customers have trusted* U.S.-based firms like Google, Yahoo, Apple, Amazon, Facebook, etc with their data; and because so many of the world’s nations have tolerated an info-infrastructure in which an outsized share of data flows at some point through U.S. systems. Those are the conditions of trust and toleration that likely will change.

The problem for the companies, it’s worth emphasizing, is not that they were so unduly eager to cooperate with U.S. government surveillance. Many seem to have done what they could to resist. The problem is what the U.S. government — first under Bush and Cheney, now under Obama and Biden — asked them to do. As long as they operate in U.S. territory and under U.S. laws, companies like Google or Facebook had no choice but to comply. But people around the world who have a choice about where to store their data, may understandably choose to avoid leaving it with companies subject to the way America now defines its security interests.

Update: Also in the aftermath of Edward Snowden’s revelations, you’d think that Senator Ron Wyden would get the credit he clearly has been deserving all this time:

For many, many years we’ve covered Senator Ron Wyden’s seemingly quixotic attempts to signal to the American public (and press) that the NSA was doing a hell of a lot more surveillance than most people believed, even those who were carefully reading the laws. Because secrecy rules meant that he couldn’t directly reveal what he’d learned while on the Senate Intelligence Committee, he had to issue vague statements, documents and speeches hinting at things that were going on that he couldn’t actually talk about. Of course, now that Ed Snowden leaked a bunch of documents, it’s shown that Wyden was absolutely correct in what was going on (and that the American public wouldn’t like it).

You’d think that would lead people to have a lot more respect for the incredible efforts he went through to alert people to these issues without breaking the secrecy laws. And, in fact, many more people are aware of those efforts. The Washington Post has a nice article about Wyden’s attempts to bring these issues out and to get a real debate going on them.

However, towards the end, the reporter talks to two different former top lawyers at the NSA, who both appear to be really, really angry about Wyden daring to suggest to the public that the NSA wasn’t playing straight with the American public. First up, we’ve got Stewart Baker, the former NSA General Counsel and top Homeland Security official, who is so anti-civil liberties and pro-surveillance that he’s almost a caricature of himself — including claiming that the Boston bombings prove that Americans need less privacy and that civil libertarians complaining about too much surveillance are the real cause for the September 11 attacks.

July 29, 2013

Ten questions with Evernote CEO Phil Libin

Filed under: Business, Technology — Tags: , , , , — Nicholas @ 09:36

Wired‘s Ryan Tate sat down to talk to Phil Libin of Evernote:

Evernote is known for its eponymous note-taking app, a seemingly modest piece of software that has brought in a heap of money. Evernote has topped 10 million downloads in the iOS and Android app stores and accumulated more than 65 million users across its mobile, web, and desktop versions.

CEO and serial tech entrepreneur Phil Libin used to bristle when people would refer to Evernote as a digital notebook. He sees the product as an extension of the mind, albeit one that’s only about 5 percent complete. These days, though, he’s learned to embrace the pigeonholing. After all, it was humble note-takers who brought Redwood City, California-based Evernote to profitability in 2011 by upgrading en masse to a premium version that includes optical character recognition (handy for pictures of business cards and receipts) and collaborative note editing (great for workgroups).

This year, Evernote is in the red again as the company scales up to reach Libin’s bigger ambition — becoming something like Microsoft Office for mobile devices. Or, as Libin put it in an hourlong interview with WIRED, “like Nike for your mind.”

Evernote’s staff of 330 is divided into teams of no more than eight members — small enough, as Libin sees it, to sit around a dinner table and have a single conversation. No team project can last more than nine months, and none of the teams share any code, which is something close to sacrilege among the software priests of Silicon Valley. One recent sunny Friday, while programmers behind him raced to rewrite the iPhone and iPad versions of Evernote from scratch, we pelted Libin with questions about the past, present, and future of his company.

July 27, 2013

Plan your travels so you’re always close to good beer

Filed under: Business, USA — Tags: , , — Nicholas @ 11:33

While I haven’t been travelling much in the last few years, I always appreciate the chance to sample the local wines and beers in the regions I visit. Wired Mapland looks at some mapping projects to make that even easier (for craft beer, anyway):

Researching a recent business trip to San Diego (okay, not entirely business), I checked out two of them: The Beer Mapping Project, and Brewery Map. Both utilize Google’s map API (short for application programming interface, the set of programming instructions that enables developers to build new websites and apps that tap into an existing website’s data and functions), and they’re both easy to use: type in a location, and a map and list appear telling you what’s nearby. Brewery Map has Android and iPhone apps; several independent apps use the Beer Mapping Project’s API.

“The big reason we do what we do is we think it’s important, especially with the craft beer culture that’s growing, that people get out there and connect with the beer they like to drink, and help promote small businesses making craft beer, and meet the people who are making the kind of beer they like,” said Jason Austin, one of the trio of beer-loving developers behind Pint Labs, which created Brewery Map and the database behind it, BreweryDB.com.

Both sites rely on users to enter data, from plugging in the addresses and hours of existing brewpubs to adding new ones as they crop up. That means the sites are more useful in areas with more craft beer drinkers and can be a bit spotty elsewhere. It also means the more people who use them, the better they’ll get.

Here’s a brief review of their relative strengths and weaknesses:

The Beer Mapping Project. WIRED: Lets you filter search results by type, making it easy to distinguish breweries from brewpubs, bars, and stores that sell microbrew. Click on a pin, and a window pops up with the official website, as well as links to reviews on BeerAdvocate and RateBeer. You can also look up homebrew stores. There are international maps too. TIRED: Beer trip planner isn’t very intuitive. Or maybe it doesn’t work. I got tired of trying to figure it out.

Brewery Map: WIRED: Great beer trip planner. Plug in two destinations and use a pulldown menu to indicate how far out of your way you’re willing to go for microbrew (see map above). TIRED: Designated driver not included. All the pins look the same, so if you want to find, say, a brewpub that serves food, you’ll have to do some extra Googling.

Should I decide to drive all the way to Minneapolis to catch a Vikings home game, here’s the high-level view of my trip according to BreweryMap:

BreweryMap - Brooklin to Minneapolis

If I’d already arrived at my destination, the Beer Mapping Project comes to my thirsty aid:

BeerMapping - Minneapolis area

July 21, 2013

Real competition? In our mobile phone market? It’s less likely than you think

Filed under: Business, Cancon, Government, Technology — Tags: , , , — Nicholas @ 09:31

Canada’s mobile telephone market is a rigged oligopoly of three major companies and a few minor players. One of the big three, Telus, has opened a new campaign against the federal government’s tentative gestures towards allowing a more competitive mobile phone market for Canadians. Michael Geist has the details:

Yesterday, Telus CEO Darren Entwistle was campaigning at the Globe and Mail and National Post, warning of a “bloodbath” if the government sticks with its commitment to allow for a set-aside of spectrum for new entrants such as Verizon. Telus is concerned that a set-aside would allow Verizon to purchase two of the four available blocks, leaving the big three to fight it out over the remaining two blocks. Telus emphasized its prior investments in arguing for a “level playing field” in the auction.

Yet to borrow Telus’ phrase — “scratch the surface of their arguments and get to the facts” — and it becomes clear the fight is not about level playing fields since new entrants have been at a huge disadvantage for years in Canada. Indeed, even with a spectrum set-aside, there would not be a level playing field as companies such as Telus would have big advantages that include restrictions on foreign ownership for broadcast distribution (thereby blocking Verizon from offering similar bundled services), millions of subscribers locked into long term contracts, far more spectrum than Verizon would own, and its shared network with Bell that has saved both companies millions of dollars.

While the companies frame their arguments around level playing fields, the real goal is simply to keep competition out of the country. For Verizon (or any major new entrants), a spectrum set-aside will be crucial since it is the only way to obtain sufficient spectrum (when combined with the existing spectrum from Wind Mobile and Mobilicity) to establish a viable fourth wireless network that could compete directly with the big three incumbents. If Telus gets their way, the removal of the set-aside would kill the government’s stated goal of a viable fourth carrier since there would be little reason for Verizon to enter the country only to face many of the same disadvantages that has hamstrung the smaller new entrants.

[…]

Make no mistake: the Telus lobbying campaign will be joined by Bell and Rogers as the three companies spend millions of dollars in advertising and lobbying to keep the Canadian market free from much needed competition (the Wire Report reports that ten board members each from Telus and BCE have registered to lobby the government on spectrum). The government has insisted that it will do whatever is necessary to ensure greater competition and consumer choice in the wireless sector. The potential Verizon entry into Canada — undoubtedly conditioned on a spectrum set-aside — is precisely what is needed. In this case, sticking with its policy by siding with consumers and greater competition has the dual advantage of being both good policy and good politics.

July 18, 2013

Foodstamps as a form of corporate welfare

Filed under: Business, Government, USA — Tags: , , , , , — Nicholas @ 09:43

Mike Krieger explains how the US foodstamp program can be seen as a form of corporate welfare:

This ridiculously condescending budget put out by McDonald’s in partnership with Visa has been making the rounds today. I’ll allow excerpts from the Gothamist article on it and their corresponding video do most of the explaining, but the key point I want to hammer into people is that food stamps are corporate welfare. They actually are not welfare for the workers themselves, who undoubtably don’t have wonderful lives. What ends up happening is that because the government comes in and supplements egregiously low wages with benefits like food stamps, the companies don’t have to pay living wages. So in effect, your tax money is being used to support corporate margins. Even better, many of these folks who get the food stamp benefits then turn around and spend them at the very companies which refuse to pay them decent wages. Who benefits? CEOs and shareholders. Who loses? Society.

From the Gothamist post by Nell Casey:

Let’s take a look at what else McDonald’s imagines its employees’ expenditures should look like. First off, the site sets employees’ mortgage/rent at $600, which even if we didn’t live in an outrageously expensive city is still a laughably small figure. Next, the site tallies health insurance at a mere $20 per month. Where is this magical land of nearly free independent healthcare? We want Obama’s unicorn to fly us there! Also as a McDonald’s employee, your cable and phone bills should only come to $100 a month (HA!), your electric bill should hover around $90 (for serious?) and apparently if you work at a fast food chain there’s absolutely no need to ever buy any food ever. Maybe they offer employees a lifetime supply of fries?

So tallying up all of these totally realistic expenses, a McDonald’s employee would need to net $2,060 per month to make this budget work. Broken down, that would mean working at least 40 hours per week and making at least $15 an hour pre-taxes to earn the necessary $12.86 an hour. Currently, McDonald’s workers earn an average of $8.25 per hour, barring any funny business.

Update: A couple of comments have been logged on this post, and Megan McArdle’s first Bloomberg column also addresses the McDonalds/Visa budget thingy:

Speaking of food, a sample budget put together by Visa Inc. and McDonald’s Corp. is rocketing around the Internet. Most of the commentary suggests that McDonald’s is heartless, and gauche, to suggest how its employees might live on the embarrassingly paltry wages that they are paid. (According to the Census Bureau’s American Community Survey of 2009-11, median earnings for a fast-food worker were $18,564 a year.) The budget is based on two jobs, which has aroused special ire: Is McDonald’s telling its employees to get a second job so they don’t have to pay them anything?

[…]

Keep in mind that most McDonald’s workers don’t live close to New York City or Washington, the sources of much of the commentary I’ve seen. These are, respectively, the first- and fourth-most-expensive cities in the country. In many areas, the median after-tax household income is not that far from that on the McDonald’s worksheet, and it’s pretty easy to rent a room in a friend’s house for less than $600 a month. Memphis, Tenn., for example, has a median household income of $35,000, which, according to Paycheckcity.com’s take-home calculator, would give a single person about $2,300 a month after taxes. And that’s the median — 50 percent of the city is below that. You should not develop a theory of household finance that declares that the city of Memphis does not exist.

Survival on such a lean budget is possible because people who do it are not trying to live the atomized life of an upper-middle-class college graduate. They band together, sharing rent, cars and cash when needed, handing down clothes and generally spreading fixed costs over as many people as possible.

Should McDonald’s pay enough to support a thrifty-but-not-too-difficult independent lifestyle? Is that now the minimum decent standard for society? Obviously, a lot of people think that they should. Washington’s City Council just passed a “living wage” law directly targeted at Wal-Mart Stores Inc. that aims to force the retailer to pay its workers $12.50 an hour.

What would that look like nationwide? Let’s set the floor a little above the amount in the budget — about $27,500 after taxes, which will allow them to enjoy the full McDonald’s budget, plus health insurance on an exchange. That’s a minimum wage of $13.75 an hour for a full-time worker, almost double the current minimum; obviously, everyone else would also have to be paid more. The minimum that a two-earner household could bring in would be $55,000 a year — not that far from the current median income for a two-earner household.

Even if it were possible to mandate that everyone in the country make almost the median income, this would come with a cost; I’d guess that most economists would agree that such a hike in the minimum wage would cause fairly significant job losses.

July 17, 2013

Matchbox cars at 60

Filed under: Britain, Business — Tags: , , , — Nicholas @ 10:08

While my childhood toys revolved more around Airfix 1/72nd scale soldiers and Lego blocks (to provide the necessary terrain for the soldiers to fight over), I had a modest collection of Matchbox cars. After reading this article, I realize that if I’d only had the foresight to keep them in their original packaging and never actually playing with them I’d have the core of an expensive collection on my hands (I’d also have completely missed the whole notion of “fun”, but that’s a separate issue):

The concept of these tiny die-cast models was the response of a father, Jack Odell, to a rule at his daughter’s school stating that pupils were only allowed to bring in toys that would fit inside a matchbox. Odell, a school dropout who later joined the Royal Army Service Corps, was by this time working for a die-casting company, Lesney Products (itself set up by two British ex-servicemen, Leslie Smith and Rodney Smith in 1947). Working out of a bombed-out Tottenham pub called The Rifleman, Lesney spent the early Fifties moving away from producing small products for industrial use towards making die-cast toys. Believing this direction to be a lost cause, Rodney Smith quit the company in 1951, leaving it in the hands of Leslie Smith and Odell, who was by then a partner.

A year later Odell had his brainwave, creating a scaled-down version of an existing Lesney toy, the model road roller, packaging it in a matchbox and sending it with his daughter to school. It was an instant hit: with his little toys, Odell was on to something big.

[…]

Matchbox, along with Corgi and Dinky, turned Britain into the dominant force in die-cast models. In the Sixties, Lesney would become the fourth largest toy company in Europe, with 14 factories in and around London producing more than 250,000 models a week. By the end of the decade Matchbox was the biggest-selling brand of small die-cast models in the world.

To date, there have been more than 12,000 individual model lines, and total production exceeds three billion. If placed bumper-to-bumper they would circle the Earth more than six times — assuming they could be prized from the possessive fingers of their owners.

H/T to Blazing Cat Fur for the link.

July 11, 2013

Rupert “Emmanuel Goldstein” Murdoch

Filed under: Britain, Business, Liberty, Media — Tags: , , , , — Nicholas @ 07:57

James Delingpole on the quick march to government control over the British media:

I was listening to Radio 4 news yesterday as with salivating glee it reported the recall of Rupert Murdoch to the Culture Media and Sport Select Committee and I thought to myself, not for the first time: “Britain is losing the battle for press freedom.”

What worries me most is that so few of us seem capable of comprehending a) how we’re losing it and b) why it might be a problem. The default assumption behind the BBC’s reportage — and unfortunately, probably, an accurate one — is that most normal people think that Murdoch is the very type of low-down reptilian evil, that he is primarily responsible for dumbing down our culture and abasing standards within our media, and that every time he gets his comeuppance it’s a jolly good thing.

Needless to say, I disagree totally with this analysis — and not purely because I’d love it if he plucked me from obscurity and gave me an incredibly well paid job, writing, say, the James Delingpole Tells It Like It Is column in the Sun. No, I say it because I sincerely believe it. Tabloid media moguls like Murdoch do not create public taste: they reflect it. And if, like me, you believe in free markets and freedom of choice then we should applaud the farsightedness and tenacity with which he broke the print unions at Wapping, and the way he pioneered satellite viewing in Britain with Sky and the way in the US his Fox channel and his Wall Street Journal fight such a heroic and inspiring battle against the liberal consensus. Sure, I’ve no doubt he’s very good at drowning kittens — he’s a ruthless billionaire businessman, for heaven’s sake — but the benefits this buccaneer has brought to our world economically and socially far, far outweigh any he damage he might have done.

Yet you’d never guess this from his treatment in the media nor from the way he’s represented in public debate. Really, he’s like our very own Emmanuel Goldstein — the all-purpose hate-figure created by Big Brother in Nineteen Eighty-Four in order to channel the people’s discontent in the “correct” direction.

July 9, 2013

NYT writer files classic “First World Problem” article

Filed under: Business, USA — Tags: , , , , — Nicholas @ 08:35

In yesterday’s “Morning Jolt” email, Jim Geraghty made some sport of a New York Times article by James Atlas:

The comments section underneath the article raises the fairly glaring point that Atlas’s rose-colored memories of flying before these harsh Darwinist times (probably to be blamed on Republicans) ignore the fact that once you adjust for inflation, air travel is a lot more accessible to a lot more people today. In the “golden age” of attractive stewardesses that he romanticizes, flying was too expensive for most of middle-class America.

    Come on. Look at the prices (adjusted for inflation) of air travel back in the 60s that you so glorify. In 1972 it cost me about $350 round-trip to fly from Atlanta to Chicago to go to college (so usually I took Greyhound). According to online inflation calculators, that’s the equivalent of $1950 today. If we want the same level of service we got in the 60s and 70s, we’d need to pay equivalent prices. Airline travel in “economy” today is pretty much analogous to what bus travel was in the 70s; cheap enough that many people can afford it but dirty, uncomfortable, crowded, and miserable. Comfortable travel is available now, as it was then, to the more well-to-do — if you can afford to pay for first class, then your flight is far more tolerable than if you’re in economy. In 1972, the one time I flew, it was a lot more enjoyable than taking the bus. But then, as now, one got what one paid for. We expect airfares to be rock-bottom low and accessible to all — but we can’t then expect service levels to match what they would be if the airlines still charged the prices they used to charge.

I would note that higher-end air travel is one of those rare products where a large portion of the consumer base isn’t spending their own money. (How many business class or first-class passengers bought those tickets with personal funds, as opposed to having their employer pay for it?) When it’s somebody else’s money, hey, anything goes, or at least as much as you can get away with. (Of course, that’s at other employers. For the transatlantic flights for the Norway cruise, Jack Fowler has booked me a space in an overhead luggage rack.)

If everyone paid out of his own pocket, those passengers willing to pay $659 to $2,337 for a one-way first-class ticket from D.C. to Los Angeles nonstop would largely disappear. But those folks willing to pay those exorbitant costs — really, those companies willing to pay those costs for their employees — are what make the (relatively) cheap price of $234 for the same flight in coach possible. (I got those figures from plugging in a flight from D.C. to LA with one week’s notice into Expedia.)

Also … did no editor at the Times think it was bad timing to run a column complaining about insufficient legroom and stale ham sandwiches right after the crash at San Francisco airport?

July 7, 2013

Trying to prevent another “flash crash”

Filed under: Business, Economics, Technology — Tags: , , , — Nicholas @ 10:57

Tim Harford discusses high speed trading and its potential problems:

“High-frequency trading” is a rich environment of algorithms, of predators and prey, all trying to make money by trading financial products at tremendous speed. But the basic proposition is simple to state. When the price of a share rises in New York, the price of related contracts will rise in Chicago just as soon as the news arrives. But if everyone else gets the news on the regular cable, and you’re renting space on the faster cable, you can see into everyone else’s future by (say) 0.7 milliseconds, plenty of time to buy soon-to-rise assets and then, less than a thousandth of a second later, to sell them again.

You don’t have to be a socialist to find this kind of thing discomfiting. There are three concerns. The first is that scarce resources are being spent on high-speed connections that have no social value in what is at best a zero-sum game. The second is that high-frequency traders may be making money at the expense of fundamental investors. The third problem is that such trading appears to introduce systemic risks. The “flash crash” of May 2010 is still poorly understood, which should ring alarm bells — especially since the need for speed means most high-frequency algorithms are simple and therefore stupid.

What, then, should be done? Rather than trying to slow down the algorithms, why not slow down the market? Most financial exchange markets run continuously, effectively assuming that traders can react instantaneously, withdrawing out-of-date offers and replacing them with up-to-the-picosecond prices. It’s this flawed premise — that all trades could be instantaneous — that means that no matter how fast the computers get, there will always be an incentive to go faster still.

A simple way for an exchange to improve matters would be to run an auction once a second, batching together all the offers to buy and sell that have been submitted during that second. Unsuccessful bids and asks would be published and would remain on the books for the next auction, unless withdrawn. One auction a second ought to be enough for anyone; it would deliver a stream of well-behaved data to regulators — currently unable to figure out what is going on — and it is plenty of time for a computer to weigh its options.

July 6, 2013

Matt Ridley on the “shale cornucopia”

Filed under: Business, USA — Tags: , , , , , — Nicholas @ 10:15

It’s a big deal. A really big deal:

A new report (The Shale Oil Boom: a US Phenomenon) by Leonardo Maugeri, of Harvard University, sets out just how astonishing this second shale revolution already is. After falling for 30 years, US oil production rocketed upwards in the past three years. In 1995 the Bakken field was reckoned by the US Geological Survey to hold a trivial 151 million barrels of recoverable oil. In 2008 this was revised upwards to nearly 4 billion barrels; two months ago that number was doubled. It is a safe bet that it will be revised upwards again.

The big reason for the upwards revisions is technology rather than discovery. Thanks to faster and cheaper drilling (which means less-rich rocks can be profitable) and things such as “zipper fracturing”, where two parallel wells are drilled and alternately fractured to help to release oil for each other, the oil recovery rate is rising from 2 per cent towards 10 per cent in places. Gas is now nearer 30 per cent. Well productivity has doubled in five years.

Now the Bakken is being eclipsed by an even more productive shale formation in southern Texas called the Eagle Ford. Texas, which already produces conventional oil, has doubled its oil production in just over two years and by the end of this year will exceed Venezuela, Kuwait, Mexico and Iraq as an oil “nation”.

[. . .]

Mr Maugeri calculates that at $85 a barrel most shale oil wells repay their capital costs in a year. He estimates that even if oil prices fall steadily to $65 in five years, shale oil production will treble in the US because of increasing productivity per well and the easing of transport bottlenecks. By 2017, he thinks, America will be producing nearly 11 billion barrels a day [correction 11 million], equal to its previous peak in 1970. It would need much less in the way of imports. US oil imports peaked at 60 per cent in 2005 and will be below 40 per cent this year.

Internationally the effect is very different for oil compared with gas. Gas is costly to export by sea, requiring liquefaction. This roughly doubles the cost of it, meaning that America’s cheap shale gas boosts its economy at home, and gives it a competitive advantage in attracting energy-intensive industries. (US gas prices are a third or a quarter of what they are here.) Mexico, too, is benefiting because of having a land border with America and pipelines.

[. . .]

There would be losers. America’s falling appetite for imports may hit Nigeria and Angola harder than the Middle East because of the types of oil they produce, while Canada and Venezuela, whose tarry oil sands are high-cost, would also suffer if oil prices fell. But every oil producer would eventually feel the effect of this falling US demand, so there is no doubting the downward pressure on world oil prices that this revolution is likely to cause.

June 30, 2013

“It’s very difficult to regulate greed”

Filed under: Business, Cancon, China, Law, Wine — Tags: , , , — Nicholas @ 11:30

Icewine is what originally put Canadian wine on the international map. Icewine is an expensive thing to produce, and therefore has drawn a lot of cheaters into the market:

Canada is tightening the rules for producing its popular icewine, a sweet dessert wine that is only made in cold climates, to crack down on fraudsters who sell mislabeled bottles that don’t make the grade.

In regulations published this week, the Canadian government said any bottle labeled and sold as icewine must be made only from grapes that have frozen on the vine.

[. . .]

Because the frozen grapes only yield a tiny amounts of sweet liquid, the dessert wine has a high cost and a high price. Grapes are left on the vine until the temperature falls to -8C (18F) over a prolonged period, and usually harvested overnight.

“It’s liquid gold,” said Paszkowski.

In China, where icewine has become hugely popular, a thriving counterfeit industry is flooding the market with wines that don’t live up to the label, he said.

“It’s very difficult to regulate greed,” said Paszkowski. “We’ve identified counterfeit icewines even in five-star restaurants and hotels.”

H/T to Elizabeth for the link.

June 26, 2013

Petitioning to “save” Kensington Market

Filed under: Business, Cancon, Politics — Tags: , , , , — Nicholas @ 09:21

John Pepall on the claimed 80,000 folks who’ve signed petitions to stop WalMart and Loblaws from moving near the historic area of Kensington Market:

What these people must be saying is that many people who now shop in the Kensington Market would, if the Walmart or Loblaw’s opened, choose to shop at them instead. And they want the City government to deny them that choice.

Just conceivably the petitions could be a kind of voluntary market survey, kindly warning Walmart and Loblaw’s that people won’t shop at their stores. That they will lose money because people prefer to shop at the Kensington Market. But plainly they are not. The petitioners call themselves the Friends of the Kensington Market and claim they are trying to Save the Kensington Market. The big corporations and their big stores are the baddies. And the retailers of Kensington Market are the good guys.

What are they up to then? If they are a statistically significant sample of people who regularly shop at the Kensington Market, they have nothing to worry about. Unless they own shares in Walmart or Loblaw’s. They will continue to shop in a thriving Kensington Market and Walmart and Loblaw’s will struggle and perhaps go away.

Might they? Just might they be people who already shop at the Loblaw’s on Christie or Whole Foods on Avenue Road and, perhaps, fashionable organic farmers’ markets and occasionally go down to Kensington Market for fine cheese or fish, or vintage clothing and a bite at one of its characterful restaurants?

If so, and at over eighty thousand and rising the petitioners must go way beyond the regular household shoppers in the Market, they are basically local tourists who want to restrict the shopping choices of those who live in the Kensington neighbourhood so that they can have a picturesque market to visit when they tire of the Distillery District or funky Queen Street West.

H/T to Colby Cosh for the link.

June 23, 2013

Wine tasting scores are bullshit

Filed under: Business, Media, Science, Wine — Tags: , , — Nicholas @ 11:49

In the Guardian, David Derbyshire takes the modern “science” of wine tasting to the woodshed:

… drawing on his background in statistics, Hodgson approached the organisers of the California State Fair wine competition, the oldest contest of its kind in North America, and proposed an experiment for their annual June tasting sessions.

Each panel of four judges would be presented with their usual “flight” of samples to sniff, sip and slurp. But some wines would be presented to the panel three times, poured from the same bottle each time. The results would be compiled and analysed to see whether wine testing really is scientific.

The first experiment took place in 2005. The last was in Sacramento earlier this month. Hodgson’s findings have stunned the wine industry. Over the years he has shown again and again that even trained, professional palates are terrible at judging wine.

“The results are disturbing,” says Hodgson from the Fieldbrook Winery in Humboldt County, described by its owner as a rural paradise. “Only about 10% of judges are consistent and those judges who were consistent one year were ordinary the next year.

“Chance has a great deal to do with the awards that wines win.”

These judges are not amateurs either. They read like a who’s who of the American wine industry from winemakers, sommeliers, critics and buyers to wine consultants and academics. In Hodgson’s tests, judges rated wines on a scale running from 50 to 100. In practice, most wines scored in the 70s, 80s and low 90s.

Results from the first four years of the experiment, published in the Journal of Wine Economics, showed a typical judge’s scores varied by plus or minus four points over the three blind tastings. A wine deemed to be a good 90 would be rated as an acceptable 86 by the same judge minutes later and then an excellent 94.

Today’s headline is a slightly stronger version of one I ran in May: Is wine tasting bullshit? with this rather amusing caption:

A real wine review

Although that “real” wine “review” illustrates the verbal bullshit side of wine reviewing, the statistical analysis in Robert Hodgson’s tests rather undermines the claims to any kind of actual analysis in most or all wine reviewing.

I’ve said for years that for most people there is a range of wine prices that will satisfy their tastes without emptying their wallets — in Ontario, the range for most people seems to be in the $14-$40 price spectrum. Pay less than that, and you risk buying wine that really isn’t very good (although there are some underpriced gems even there), and pay over $40 and you’re just paying extra for the “prestige” and most of us wouldn’t really be able to detect any flavour differences.

It’s interesting to see what kind of immediate environmental changes seem to be able to directly influence the scores given by reviewers:

More evidence that wine-tasting is influenced by context was provided by a 2008 study from Heriot-Watt University in Edinburgh. The team found that different music could boost tasters’ wine scores by 60%. Researchers discovered that a blast of Jimi Hendrix enhanced cabernet sauvignon while Kylie Minogue went well with chardonnay.

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