Quotulatiousness

January 18, 2016

The craft beer movement infiltrates the land of vodka

Filed under: Business, Europe, Russia — Tags: , — Nicholas @ 03:00

In The Guardian, Alec Luhn reports on the rise of craft brewing in the heart of vodka-swilling Russia:

It is a drizzly Monday night, but Craft rePUBlic is boisterous with the chatter of brewers and beer aficionados. Those just walking in are greeted with a half pint of Red Nelson, a saison beer made with hibiscus tea and orange peel by local brewer Alexei Sazonov, who is celebrating his birthday at the craft beer bar.

Sazonov works at Bottle Share, one of a growing number of microbreweries driving what has been dubbed the “craft revolution” here, but he created Red Nelson at home under his nickname, Big Hedgehog. Sazonov says of the major Russian beer brands, whose bland lagers dominate store shelves and taps: “They boil it quickly, ferment it quickly and sell it quickly. A microbrewer brews beer he wants to drink himself.”

Russia, of course, is known for vodka rather than beer, and a popular saying holds that “beer without vodka is throwing money to the wind”. According to the latest World Health Organisation data from 2010, 51% of alcohol consumed in Russia was spirits and only 38% was beer. This vodka culture has had deadly consequences for Russian men, whose average life expectancy of just 64 years lags behind that in European countries due mainly to heavy drinking and tobacco use.

Now a new generation of “beer geeks”, as they dub themselves, is working to change Russians’ approach to beer – and to drinking in general. With a focus on savouring the taste rather than drinking to get drunk, at least two dozen craft bars have opened in Moscow since the summer of 2014, serving Russian and foreign microbrews. They’re getting so numerous that the cultural magazine Afisha declared in August that it was “refusing to write reviews of the craft beer bars that are opening every week”.

Few expect beer to displace vodka as the national drink, especially after the government reduced the minimum price of the spirit in 2015 amid economic troubles. But there’s a long tradition of homebrewing in Russia, and the growth potential of craft beer is huge thanks to its relative affordablity; local craft brews typically sell for between 200 and 300 roubles (£2-3) a pint. Moreover, it’s easy to start a craft bar: no liquor licence is required if an establishment serves only beer, and startup costs are minimal, since a large staff, kitchen and lavish interiors aren’t typically necessary. As a result, craft bars are spreading from Moscow and St Petersburg to the regions.

QotD: The role of faith in trust situations

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

A team of German economists asked subjects to play a game in which one person is the “truster”, who is given some money on each round of the game. The truster is then asked to decide how much money, if any, to pass on to an anonymous “trustee”. Any money passed gets tripled by the experimenter, at which point the “trustee” can choose how much, if any, to return to the truster. Behavioral economists use this game often, but the novel twist in this study was to reveal one piece of real, true personal information about the trustees to the trusters. In some cases, the truster learned the trustee’s level of religiosity, on a scale of 1 to 5. When trusters learned that their trustee was religious, they transferred more money. More important, the religious trustees really did transfer back more money than did the nonreligious trustees, even though they never knew anything about their trusters. The highest levels of wealth, therefore, would be created when religious people get to play a trust game with other religious people.

[…]

Even today, markets that require a very high trust to function efficiently are often dominated by religiously bound ethnic groups (such as ultra-Orthodox Jews in the diamond market) who have lower transaction and monitoring costs than their secular competitors.

Jonathan Haidt, quoted by Scott Alexander in “List Of The Passages I Highlighted In My Copy Of Jonathan Haidt’s The Righteous Mind“, Slate Star Codex, 2014-06-12.

January 12, 2016

Hollywood’s definition of the word “entrepreneur” is “super-villain” or “mobster”

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

Virginia Postrel an a movie that manages to portray an entrepreneur in a positive light:

In the movies, an entrepreneur is more likely to be a super-villain, or at the very least a mobster, than someone who builds a significant enterprise without getting anyone killed. Even the non-murderers are miserable jerks. Take Aaron Sorkin’s angry, status-obsessed Mark Zuckerberg in The Social Network or his Steve Jobs in the abysmal recent movie by that name.

So it might be a surprise to discover a big-budget, award-friendly new film telling a tale of entrepreneurial ingenuity where the protagonist is heroic and the ending is happy. Except that in this case the entrepreneur is a woman. Her gender makes self-assertion, ambition, and even a touch of ruthlessness unconventional and therefore culturally acceptable.

The movie is Joy, starring Jennifer Lawrence as the eponymous inventor of a self-wringing “mop of the future.” Written and directed by David O. Russell (American Hustle, Silver Linings Playbook), the film declares itself: “Inspired by the true stories of daring women. One in particular.” The one is Joy Mangano, whose Miracle Mop and other household inventions made her a multimillionaire thanks to the advent of home-shopping television.

Judging from the previews that accompanied the showing I went to in Los Angeles, distributors see Joy as a chick flick with family values. The marketing is understandable. The story is female-friendly, and both Lawrence and Mangano lend themselves to women-oriented media interviews. You start with the obvious audience and build from there.

But Joy is more than a wholesome paean to girl power. It’s a portrait of entrepreneurial gumption, with a protagonist whose journey is as relevant to men as to women. On her way to fame and fortune, Joy must reawaken the creative spark dampened by her dysfunctional family, solve practical business problems of financing and distribution, confront her self-doubts, find her persuasive sales voice, and subdue adversaries who take advantage of her inexperience and trust. These aren’t uniquely female challenges.

“I think there was this studio mentality for a long time that women and girls can relate to a male hero, but boys and men can’t relate to a female hero. But that’s simply not true,” Lawrence said in a recent Glamour interview. She was talking about The Hunger Games. She could have been talking about Joy.

With a blue-collar protagonist who takes a second mortgage on her house, Joy is a quirky but unabashed affirmation of the entrepreneurial American dream, not just for Harvard dropouts with coding skills but for everyday people with bright ideas. Giving Joy a tour of his studio, QVC executive Neil Walker (Bradley Cooper) explains his philosophy with Old Hollywood examples: “David Selznick, the son of immigrants, married Jennifer Jones from Oklahoma, America’s sweetheart,” he says. “It just goes to show you that, in America, the ordinary meets the extraordinary every single day.”

January 1, 2016

QotD: When capsaicin invaded America

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

Consider spicy-hot food — and consider how recent it is as a mainstream phenomenon in the U.S. In 2002 many of us cheerfully chow down on Szechuan and Thai, habaneros and rellenos, nam pla and sambal ulek. Salsa outsells ketchup. But it wasn’t always that way.

In fact it wasn’t that way until quite recently, historically speaking. I’ve enjoyed capsaicin-loaded food since I was a pre-teen boy in the late 1960s; I acquired the taste from my father, who picked it up in South America. In those days our predilection was the peculiar trait of a minority of travelers and a few immigrant populations. The progression by which spicy-hot food went from there to the U.S. mainstream makes a perfect type case of cultural assimilation, and the role and meaning that the stuff has acquired on the way is interesting too.

(Oh. And for those of you who don’t understand the appeal? It’s all about endorphin rush, like a runner’s high. Pepper-heads like me have developed a conditioned reflex whereby the burning sensation stimulates the release of opiate-like chemicals from the brainstem, inducing a euphoria not unlike a heroin buzz. Yes, this theory has been clinically verified.)

Baseline: Thirty years ago. The early 1970s. I’m a teenager, just back in the U.S. from years spent overseas. Spicy-hot food is pretty rare in American cuisine. Maybe you’d have heard of five-alarm chili if you’d lived in Texas, but chances are you’d never have actually eaten the stuff. If you’re from Louisiana, you might have put Tabasco sauce on your morning eggs. Aside from that, you wouldn’t have tasted hot peppers outside of a big-city Chinatown.

[…]

This probably evolved out of the tradition, going back at least to the late 1940s, of defining barbecue and chili as what an anthropologist would call a “men’s mystery”. Despite the existence of male professional chefs and men who can cook, most kinds of domestic cooking are indisputably a female thing — women are expected to be interested in it and expected to be good at it, and a man who acquires skill is crossing into women’s country. But for a handful of dishes culturally coded as “men’s food”, the reverse is true. Barbecue and chili top that list, and have since long before spicy-hot food went mainstream.

For people who drive pickup trucks, spicy-hot food went from being a marked minority taste to being something like a central men’s mystery in the decade after 1985. I first realized this in the early 1990s when I saw a rack of 101 hot-pepper sauces on display at a gun-and-knife show, in between the premium tobacco and the jerked meat. There’s a sight you won’t see at a flower show, or anywhere else in women’s country.

The packaging and marketing of hot sauces tells the same story. From the top-shelf varieties like Melinda’s XXX (my favorite!) to novelty items like “Scorned Woman” and “Hot Buns”, much of the imagery is cheeky sexiness clearly designed to appeal to men.

Nor is it hard to understand why the association got made in the first place. It’s considered masculine to enjoy physical risk, even mostly trivial physical risks like burning yourself on a sauce hotter than you can handle. Men who like hot peppers swap capsaicin-zap stories; I myself am perhaps unreasonably proud of having outlasted a tableful of Mexican college students one night in Monterrey, watching them fall out one by one as a plate of sauteed habaneros was passed repeatedly around the table.

There’s a sneaky element of female complicity in all this. Women chuckle at our capsaicin-zap stories the same way they laugh at other forms of laddish posturing, but then (as my wife eloquently puts it) “What good is a man if you rip off his balls?” They leave us capsaicin and barbecue and other men’s mysteries because they instinctively grok that a certain amount of testosterone-driven male-primate behavior is essential for the health of Y-chromosome types — and best it should be over something harmless.

Eric S. Raymond, “The capsaicinization of American food”, Armed and Dangerous, 2002-11-02.

December 28, 2015

Alberta’s carbon tax scheme

Filed under: Business, Cancon, Economics, Government — Tags: , , — Nicholas @ 02:00

Some thoughts from Dave’s Insight on Alberta’s attempt to signal their new-found carbon virtues:

First, let me set the premise. When giving seminars on Tax and/or Profits, I like to ask the question. What is a word for a Company that does not pass all its expenses, including its taxes on to its customers? The answer of course is bankrupt. Maybe not immediately, but eventually. Something I always ask when dealing with businesses, non-profits and governments when they are talking about spending is: Where is the money going to come from? Well, where is the money going to come from?

The NDP government may claim that it will only be three or four hundred dollars per person, sorry, per family. But let’s cut to the chase. In almost the same breath they claim it will raise 3-4 billion dollars per year revenue for the provincial government. Possibly double that in a few years. So where is this coming from? At the end of the day, one way or another it has to come from our pockets. While at first you might think that we export so we can export the tax. However, our exports have to compete with all the other available sources of supply, so we cannot export the tax. If we could, we would still be charging over $100 per barrel for oil, but we cannot. That leads me back to: Where is this 3 to 4 Billion dollars per year (more later) to come from?

Well, there is really only one answer; it might be somewhat invisible, but we Albertan’s will have to pay it, and that my friend works out to about $1,000 per person per year, or $4,000 per family of four. And if it brings in $8 billion in a few years, that is over $8,000 per family of four per year. We will pay it in the form of higher transportation costs (both public and private); higher heating costs and to a lesser extend in the cost of everything we buy from groceries to toys. Of course some will pay more and some less, but to be clear, this will hurt the poorest the most.

H/T to Small Dead Animals for the link.

December 24, 2015

QotD: Ayn Rand’s view of the commercialization of Christmas

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

Ayn Rand, the poet-theorist of capitalism, had a clever Lucy-like line about the “commercialization of Christmas”: she said it was the best thing about Christmas. “The gift-buying … stimulates an enormous outpouring of ingenuity in the creation of products devoted to a single purpose: to give men pleasure,” she said in 1976. “And the street decorations put up by department stores … provide the city with a spectacular display which only ‘commercial greed’ could afford to give us.”

Rand saw exchange as the ideal model for all human relationships. Sometimes the free-marketeers who have borrowed her style and her ideas are accused of heartlessness for this attitude. Things like holidays and families, they say, should be shielded from the supposedly brutalizing effects of mere trade. What one notices about these arguments is that they smuggle in the notions of exchange and mutual advantage by the back door: everyone benefits selfishly from having havens from selfishness.

What one notices about the people who make these arguments, on the other hand, is that they have an excuse for not being attuned to giving as much as they get in personal relationships or social environments. If you’re exchange- or trade-minded, you will usually be asking yourself whether you’re paying your parents back well for raising you, doing right by your friends, being a good guest when hospitality is extended, observing implied social contracts correctly.

As Rand said, there is a Christmas ideal of “goodwill toward men” that is connected with all these things, and not exclusive to Christianity. The gift-giving part of Christmas, the part where silly mammals rummage in the marketplace trying to please and surprise one another by selecting shiny material objects, has swallowed the part in which we celebrate rescue from hell. It’s a good thing, Charlie Brown. Or a very entertaining sort of racket, at any rate.

Colby Cosh, “Good grief! The commercialism of Christmas isn’t so bad”, Maclean’s, 2014-12-25.

December 23, 2015

SpaceX Falcon 9 performs successful launch and controlled landing

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

William Harwood reports for CBS News:

Making its first flight since a catastrophic launch failure last June, an upgraded, more powerful SpaceX Falcon 9 rocket roared to life and shot into space Monday, boosting 11 small Orbcomm data relay satellites into orbit in a major milestone for the California rocket builder.

In a significant space “first,” the Falcon 9’s first stage fell back into the atmosphere and pulled off a powered landing at the Cape Canaveral Air Force Station, settling to a smooth tail-first touchdown in a convincing demonstration of reusability, a key requirement for lowering commercial launch costs.

In a scene resembling a launch video running in reverse, the booster quickly dropped out of a cloudy sky atop a jet of flame from one of its Merlin 1D engines, heralded by twin sonic booms that rumbled across Florida’s Space Coast. Cheers erupted in company headquarters in Hawthorne, California, as the stage settled to a smooth touchdown.

In another first, the Falcon 9 used colder, denser-than-usual liquid oxygen and kerosene propellants, a significant upgrade allowing the booster’s nine first-stage engines to generate more power, increasing their combined liftoff thrust from 1.3 million pounds to 1.5 million, or 170,000 pounds of thrust per engine.

The launch, first-stage landing and satellite deployments all appeared to proceed without a hitch, a welcome success for a company returning to flight after a disheartening failure.

“Everything we’ve seen thus far in the mission appears to be perfect,” SpaceX founder Elon Musk said in a conference call with journalists. “The satellites were deployed right on target and the Falcon 9 booster came back and landed. Looks like almost dead center on the landing pad. … As far as we can see right now, it was absolutely perfect. We could not have asked for a better mission.”

December 20, 2015

Are you the customer or are you the product?

Filed under: Business, Media — Tags: , , , — Nicholas @ 02:00

Howard Tayler explains why he’d be willing to pay real money to Twitter for the use he gets out of the service and in the process, change from being a product to be resold into an actual customer:

Facebook’s actual plans were far more problematic. At a high level, the plan was to monetize their user base as a product, rather than as customers. This meant selling the product to OTHER customers — advertisers and market research firms, for starters. I don’t mind being advertised to, but in order for the monetization to work, Facebook had to step into our feeds and adjust the content we were seeing.

Facebook became less useful to us, and this loss of utility was hidden much of the time. When we actually noticed it, it was status quo.

Twitter is doing similar things to monetize their user base. The insertion of Promoted Tweets is the most immediately intrusive, but recently they’ve begun mucking with our timelines in order to adjust the content we see.

Look, I get it. These companies are providing an exceptionally valuable communication service to hundreds of millions of users. They deserve to be paid for that. The question is, what’s the best way to pay them? What will make them the most money, while keeping their users not just happy, but loyal?

Twitter’s 2014 revenue was $1.4B. They have over 900 million users, but most of those users do not tweet things. If we assume, conservatively, that there are only 100 million human beings actively using Twitter’s service, they were worth $14 each during 2014. Much of that money was paid in by advertisers.

$14 isn’t much. It’s less than $1.20 per month. I would cheerfully round up, and pay $20 for an annual Twitter membership without batting an eyelash.

For that money I would obviously expect to NOT be monetized further. Don’t market to me, don’t promote Tweets, don’t mess with my feeds. Maybe give me instead some cool tools that let me better manage this awesome communications tool.

If those 100 million users were willing to pay $20/year for “Twitter Prime,” Twitter’s revenues would be $2B. It’s not beyond the pale to further assume that their profit margins would be better, since all the overhead that goes into making a useful advertising engine could be dust-binned. Additionally, Twitter would become far more valuable to its users (who are now CUSTOMERS,) and they’d attract more paying users pretty quickly.

My ISP is Rogers, and I’ve been a customer for more than a decade. I use their web client for my personal email most of the time and it’s part of the services I pay for. At some point, Rogers decided that they needed to take over part of the screen to advertise at me. That was what finally induced me to install AdBlock Plus in all of my web browsers. Had the email been a free service, I wouldn’t have objected, but I was paying real money for it and chose not to be subject to having to put up with animated ads every time I needed to read or write an email message.

December 16, 2015

To lower healthcare costs, increase the competition

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

At Mother Jones, Kevin Drum links to an article that explicitly shows the cost of having monopoly providers in healthcare:

Regular readers of this blog should know that when it comes to the price of hospital care, it’s competition that matters, not insurance companies. In areas with only a single hospital, insurance companies have no leverage and have to accept whatever price the hospital charges. If there are lots of hospitals, they have to compete with each other to earn the insurance company’s business.

But in case you’re still skeptical, a team of researchers has analyzed a huge database of health care claims in the US to check this out. They found enormous regional variation in hospital costs for the same procedure, and one of the biggest drivers of this variation was competition:

Market power and hospital price

    Hospital market structure stands out as one of the most important factors associated with higher prices, even after controlling for costs and clinical quality. We find that hospitals located in monopoly markets have prices that are about 15.3 percent higher than hospitals located in markets with four or more providers. This result is robust across multiple measures of market structure and is consistent in states where the HCCI data contributors (and/or Blue Cross Blue Shield insurers) have high and low coverage rates.

Chipotle gains “green cred PR opportunities” and worse health outcomes for customers

Filed under: Business, Food, Health, Science, USA — Tags: , , , , — Nicholas @ 03:00

Henry Miller on the Faustian bargain Chipotle willingly made and is now paying for:

Chipotle, the once-popular Mexican restaurant chain, is experiencing a well-deserved downward spiral.

The company found it could pass off a fast-food menu stacked with high-calorie, sodium-rich options as higher quality and more nutritious because the meals were made with locally grown, genetic engineering-free ingredients. And to set the tone for the kind of New Age-y image the company wanted, Chipotle adopted slogans like, “We source from farms rather than factories” and, “With every burrito we roll or bowl we fill, we’re working to cultivate a better world.”

The rest of the company wasn’t as swift as the marketing department, however. Last week, about 140 people, all but a handful Boston College students, were recovering from a nasty bout of norovirus-caused gastroenteritis, a foodborne illness apparently contracted while eating Chipotle’s “responsibly raised” meats and largely organic produce.

And they’re not alone. The Centers for Disease Control and Prevention has been tracking another, unrelated Chipotle food poisoning outbreak in California, Illinois, Maryland, Minnesota, New York, Ohio, Oregon, Pennsylvania and Washington, in which victims have been as young as one year and as old as 94. Using whole genome sequencing, CDC investigators identified the DNA fingerprint of the bacterial culprit in that outbreak as E. coli strain STEC O26, which was found in all of the sickened customers tested.

Outbreaks of food poisoning have become something of a Chipotle trademark; the recent ones are the fourth and fifth this year, one of which was not disclosed to the public. A particularly worrisome aspect of the company’s serial deficiencies is that there have been at least three unrelated pathogens in the outbreaks – Salmonella and E. coli bacteria and norovirus. In other words, there has been more than a single glitch; suppliers and employees have found a variety of ways to contaminate what Chipotle cavalierly sells (at premium prices) to its customers.

December 15, 2015

Hillary Clinton’s well-intentioned plans will make the prescription medicine market even worse

Filed under: Business, Economics, Government, Health, USA — Tags: , , , , — Nicholas @ 04:00

Another older post from Megan McArdle on the nice-soundbites-but-terrible-economic-notions from the Hillary Clinton campaign to fix the prescription medicine marketplace:

Hillary Clinton thinks drug development should be riskier, and less profitable. Also, your health insurance premiums should be higher. And there should be fewer drugs available.

This is not, of course, how the Clinton campaign would put it. The official line is that Americans are just paying too darn much for drugs, and she has a plan to stop that:

  • Regulate direct-to-consumer advertising more heavily, and strip its tax deductibility
  • Require drug companies to spend a certain percentage of revenue on research and development, or face penalty payments and the loss of their R&D tax credit (I am inferring that this is what she is talking about, since the actual language of the proposal is long on paeans to the importance of federal research funding and short on details)
  • Cap out-of-pocket costs for drugs
  • Reduce the exclusivity period for biologic drugs
  • Prohibit companies from making side payments to generic manufacturers to keep generic competition off the market
  • Allow drug reimportation
  • Require that new treatments be proved to be a substantial improvement over existing treatments — i.e., eliminate the dreaded “me too” drugs
  • Allow Medicare to “negotiate” drug prices

Eliminating the side payments seems eminently sensible. (Yes, yes, you can strip my libertarian card, but market-rigging contracts shouldn’t be enforced.) It also seems reasonable to require some sort of comparative effectiveness research. Other provisions will certainly drive down drug prices, at the risk of also driving down innovation.

Still other provisions, however, are simply bad economics. In what other market do we worry about having a second product available that’s merely just as good as the first? Should we really only have one antidepressant, one statin, one blood pressure medication, and so forth? Might there be variation among patients so that drugs that are statistically about equally effective in large groups are nonetheless individually more or less effective for different people? Might one drug’s side effects be better tolerated by some patients than another’s? Might having two drugs in the category help keep prices down?

Then there is notion that we should force pharmaceutical companies to spend a set percentage of their revenues on R&D. This seems to me to be … what’s the word I am looking for? Ah, I’ve got it: “insane.”

[…]

Economically, large parts of this plan make little sense. Politically, many of these items would be very difficult to pass, not least because the Congressional Budget Office would assess the likely effects and would make it sound much less appealing than it does in a gauzy stump speech. But away from those harsh realities, purely as campaign rhetoric, it probably works very well.

Perhaps the key element of the gender pay gap is … motherhood

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

In Forbes, Tim Worstall pinpoints exactly when many women stop earning as much (or more) than their male co-workers:

Currently, among women under 30 or so (it varies, the age, depending upon the average age of first childbirth and this is itself something that varies quite a bit in the US) women tend to outearn men. And as above those without children have, depending upon how you correct for other factors, a positive wage gap in favour of women of about the same size or no pay gap of any relevant size. But there is a pay gap between men and women who have married and who have children (the two effects are not being separated from each other). So, why?

The obvious answer being that this is what humans do. No, it’s no longer true that this is what humans must do, women taking the majority of the child care duties, men going out to work to support everyone. But it is still what the majority do do, it’s the general expectation about how life is going to be worked out. And this does have its effect:

    The division of labor in the family is less delineated than it once was and a majority of women with children now work in the market. Nonetheless, women on average still assume greater responsibility for child rearing than men, and that responsibility is associated with a lower extent and continuity of market work. In addition, the expectation and assumption of home responsibilities influence choice of occupation and preferences for working conditions that facilitate a dual career, combining work at home and work in the market. A significant literature has investigated the effect of work in the home on women’s lifetime patterns of labor force participation and the effect of labor force discontinuities on wages.15 Women with children devote relatively more of their energy to home responsibilities than women without children and as a result earn lower wages. On the other hand, married men earn higher wages than other men. Although that effect may be partly endogenous—women may shun low earners as husbands—it is a plausible consequence of the division of labor in the home, which leads men to take greater responsibility for providing the family’s money income and consequently to work longer, more continuously and possibly harder.

In a nutshell, the gender pay gap is really the effect upon the overall averages of two effects. Mothers earn less than non-mothers, fathers earn more than non-fathers. And yes, mothers and fathers are a majority and so the effect is large enough to sway that national average. And while the effect is not entirely symmetric it is reasonably so. We talk of the overall gender pay gap as being around 20% or so, and we see that fathers outearn non-fathers by 8%: that’s a significant portion of that gap right there.

Our conclusion thus has to be that the gender pay gap that we’re seeing isn’t a result of societal discrimination against women (nor of such discrimination in favor of fathers, something that no one at all is complaining it is) but instead a result of the choices that people make about how the kids are going to be cared for and who does it.

December 13, 2015

The TPP is pretty far from being a genuine “free trade” deal

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

Last week, Kevin Williamson attempted to explain why the Trans Pacific Partnership isn’t all that similar to an actual “free trade” agreement (and why that’s so):

Prominent among the reasons to look askance at TPP is that its text calls for the incorporation — sight unseen — of whatever global-warming deal is negotiated at the conference currently under way in Paris. It is one thing for a trade deal to incorporate changes to environmental practices — regulatory differences are an inhibitor of truly liberal trade — but there is a world of difference between incorporating specific environmental policies and incorporating environmental policies to be named later.

It would be preferable if we could simply enact a series of bilateral “Goldberg treaties,” so called in honor of my colleague Jonah Goldberg, who argued that an ideal free-trade pact would consist of one sentence: “There shall be free trade between …” But the unhappy reality is that the snouts of the nations’ sundry regulatory apparatuses are so far up the backsides of various industries and economic sectors that sorting them out requires thousands of pages of text. Consider, for example, the problem of defense-acquisition practices. Some countries have rules mandating that defense procurement be restricted to domestic firms, and some countries don’t. Coming up with a harmonized, one-size-fits-all approach is difficult; we Americans, accustomed as we are to operating in an economy that produces the best of almost everything in the world, sometimes forget that there are countries with no domestic aerospace industry or sophisticated manufacturers of military materiel. Of course Kuwait goes abroad for military gear; if memory serves, at one point their air force uniforms were made by Armani.

[…]

All of which is to say, we should expect trade deals, especially multi-lateral trade deals, to be complex, and we should expect environmental and labor standards, along with government procurement procedures and the like, to be part of the accord. There’s no getting around it. And, again, there is nothing wrong in principle with using trade accords, which have real economic bite, as a critical instrument for enforcing environmental rules and other regulatory reforms that are incorporated into trade relationships. But using TPP to commit the United States to whatever is cooked up in Paris, without an additional vote in Congress, is a poor tradeoff. It’s not often that I will turn up my nose at a trade deal — even far-from-perfect trade pacts are generally desirable — but here we should draw the line. TPP was negotiated, Congress and the public have had a chance to review the text, and Congress should reject it. That’s the system working, not the system failing to work. It’s why we have votes.

December 3, 2015

Even the IPCC agrees that corn ethanol is a waste of effort and resources

Filed under: Business, Economics, Environment, Food, Government — Tags: , , , — Nicholas @ 04:00

In Forbes, James Conca wraps up the latest IPCC Working Group reports’ comments on the viability of biofuel production from corn:

OK, can we please stop pretending biofuel made from corn is helping the planet and the environment? The United Nations Intergovernmental Panel on Climate Change released two of its Working Group reports at the end of last month (WGI and WGIII), and their short discussion of biofuels has ignited a fierce debate as to whether they’re of any environmental benefit at all.

The IPCC was quite diplomatic in its discussion, saying “Biofuels have direct, fuel‐cycle GHG emissions that are typically 30-90% lower than those for gasoline or diesel fuels. However, since for some biofuels indirect emissions — including from land use change — can lead to greater total emissions than when using petroleum products, policy support needs to be considered on a case by case basis” (IPCC 2014 Chapter 8).

The summary in the new report also states, “Increasing bioenergy crop cultivation poses risks to ecosystems and biodiversity” (WGIII).

The report lists many potential negative risks of development, such as direct conflicts between land for fuels and land for food, other land-use changes, water scarcity, loss of biodiversity and nitrogen pollution through the excessive use of fertilizers (Scientific American).

The International Institute for Sustainable Development was not so diplomatic, and estimates that the CO2 and climate benefits from replacing petroleum fuels with biofuels like ethanol are basically zero (IISD). They claim that it would be almost 100 times more effective, and much less costly, to significantly reduce vehicle emissions through more stringent standards, and to increase CAFE standards on all cars and light trucks to over 40 miles per gallon as was done in Japan just a few years ago.

November 28, 2015

More on inequality and stagnant wages

Filed under: Business, Economics — Tags: — Nicholas @ 02:00

A few months back, Tim Worstall explained why we can soon stop worrying about the rise in income inequality, because the disturbance which caused it in the first place is finally settling out:

We’re constantly told that rising inequality is the greatest threat to the peace and prosperity of the nation. And further, that the stagnant wages of the ordinary working guy and gal are an abomination: as is the increasing amount of the nation’s income going to the already well off. Therefore something must be done. And there’s interesting news for us all. Which is that we don’t have to do anything at all to reverse this trend, the world economy is going to do that for us. We don’t need to change domestic tax rates, start to place tariffs on imports, shout at China for being a currency manipulator, none of the things currently being touted. Because the reason for that income stagnation and rising inequality is itself reversing.

OK, this does rather depend upon agreeing what the original cause of them both was but I think it’s reasonably clear that it is the process of globalisation that has done it. As Branko Milanovic tells us, here’s the winners and losers from globalisation:

Changes in global income from 1988 to 2008

That 75% to 95% of the global income distribution, the people who haven’t done well out of it, is essentially some of the people in the communist transition countries and most of those on below median wages in the rich countries. That latter group being exactly who everyone is worrying about in terms of stagnant incomes. The poor of the world have made out like bandits from globalisation which is why I support it. And, yes, the already rich have done well too.

And the point is, this is exactly what we would expect from having added a couple of billion low wage and low skill workers to the global economy. The low skill and low wage workers already in that global economy aren’t going to do very well, as Charles Goodhart explains via Ambrose Evans Pritchard:

    Prof Goodhart and Manoj Pradhan argue in a paper for Morgan Stanley that this was made even sweeter by the collapse of the Soviet Union and China’s spectacular entry into the global trading system. The working age cohort was 685m in the developed world in 1990. China and eastern Europe added a further 820m, more than doubling the work pool of the globalised market in the blink of an eye. “It was the biggest ‘positive labour shock’ the world has ever seen. It is what led to 25 years of wage stagnation,” said Prof Goodhart, speaking at a forum held by Lombard Street Research.

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