Category: Economics and Business

Time to go shopping

Mike Veseth, the Wine Economist, reports on the state of wine retailed in box containers—good value, low environmental impact:

The top box wine, going by the rating numbers, is a white: Wine Cube California Chardonnay, which sells in Target Stores for $17 per 3 liter box, which is $4.25 per standard bottle equivalent. It earned a very respectable 88 points [from Wine Spectator].

* * *
How can decent wine be this cheap? One answer, of course, is that you can choose to make the wine itself less expensive by economizing in the cellar in many ways (less oak or none at all for red wines, for example). But to a considerable degree the box itself is responsible for the savings.

The bag in box container costs less than $1, according to the Wine Spectator article, which automatically saves $4 to $8 compared with a similar quantity of wine in standard glass bottles and the box they come in.

(Via The Morning News.)

A turn of phrase

A name from the past: C. Northcote Parkinson has a page at Economist.com, excerpted from Tim Hindle’s guide to management gurus. Looking back, it’s not clear to me that Parkinson was ever serious in his assertion that “work expands to fill the time available for its completion”—the sequels that he generated suggest that he had found a moneyspinning idea that he could not drop—but back in high school in the 1970s, at least some of us took him seriously. John Lund was on my debate team, a year or two ahead of me, and John’s politics were substantially righty. He made a specialty of arguing either side of whatever resolution we were working that year—funding secondary education, judicial reform—from the standpoint of Parkinson. Assigned the affirmative position that the federal government should clean up the air and water, John could argue (not necessarily persuasively) that the most effective way to stop pollution is to do nothing about it. As was often the case with counterplan and other gimmick tactics, they often succeeded because the other side had no specific preparation against John and his partner’s preposterous lines of reasoning.

Some links: 36

I’ve been seeing too much of the TV ads during commercial breaks for hockey games featuring that doofus with the electric guitar, the ads flogging Experian’s so-called free credit report service. The report is free, if your idea of “free” is $180 a year, billed monthly. It’s a well-constructed weir designed to snare unsuspecting consumers into something called Triple Advantage Credit Monitoring.

You are entitled to a genuinely free credit report, one per year from each of the three reporting bureaus, through https://www.annualcreditreport.com. You’ll have to click past a couple of promotions for paid add-ons, but everything is opt-in. Or you can request your report by phone or hard mail.

Each report shows credit-related activity (the formats vary across bureaus), but not your FICO score. You still have to pay for that; see Jennifer Bartlett’s recent roundup of information. Fair Isaac Corporation is revising its scoring system as FICO 08, and it’s not clear when those scores will be available for fee to consumers.

Get more information about free annual credit reports from the Federal Trade Commission. And ditch the jerk with the Fender.

Some links: 30

Jonathon D. Colman in his column Everyday Environmentalist posts a richly-linked article on shopping for sustainable coffee (unfortunately, a couple of the links are broken already). He makes the connection—noteworthy if perhaps obvious on a moment’s reflection—between climate change and the deforestation associated with sun coffee.

Blog Action Day 2008

As a small contribution to Blog Action Day, this year concerned with the problem of poverty, some notes on books from my library, all three worth the read. Each one, in its own way, puts a personal, human face on the abstraction of poverty.

The Corner: A Year in the Life of an Inner-City Neighborhood (1997), by David Simon and Edward Burns
I reviewed this book in 1999. It is a fascinating, horrifying report on the drug culture of today’s inner city, specifically the streets of West Baltimore in 1993. Co-author Simon, creator of TV’s The Wire, got his start as a reporter and his journalism informed the TV series Homicide: Life on the Street). Reading this book was like watching a train wreck. It is a shock to find tender photographic portraits of the key figures at the center of the volume. You know in the bones of your head that it its inevitable that some of these people will die by the end of the book.
The Working Poor: Invisible in America (2004), by David K. Shipler
Shipler casts a wider net, interviewing working class citizens from cities and small towns, from D.C. to Los Angeles, from New Hampshire to North Carolina, who are just scraping by. He focuses on what has succeeded in our efforts to job-train the poor into the mainstream of productive work, and what has failed.
Let Us Now Praise Famous Men, (1941/1988) by James Agee (text) and Walker Evans (photographs)
The controversial, seminal book, now back in print. A forerunner of the narrator-involved New Journalism. Agee’s expressive, polemical, romantic, rambling prose pictures of the lives of sharecroppers in the rural South during the Depression, as powerful as they are, nevertheless are outdone by Evans’s quietly eloquent photographs. Evans and Agee recognize in these lives of grinding dirt and drudgery a serious dignity.

Blog Action Day

Cash for Clunkers

Alan Blinder proposes an economic stimulus measure that’s good for the environment as well: subsidized repurchases of aging, inefficient cars and trucks, targeted to the low-income households that need the money the most.

…a fourth possible goal. By pulling millions of old cars off the road, Cash for Clunkers would stimulate the demand for new cars as people trade up. It need hardly be pointed out that our ailing auto industry, like our ailing economy, could use a shot in the arm right now. Scrapping two million or more clunkers a year should help.

In proportion

Gasoline prices in the United States continue to be a bargain compared to the rest of the industrialized world, as a short article by Bill Marsh (accompanied by a chart) points out, part of the Times‘s collection of stories this Sunday about consumer energy costs. Back when we were kids, and gas was less than half a buck per gallon, it was explained to us that prices in Europe were much higher (and efficient cars more popular) because of higher taxes. Prices have risen a lot since then, but I was mildly shocked to learn that U.S. taxes haven’t kept pace. Of the current national average pump price of $4.00 a gallon, only 49 cents (12.3%) is taxes. By comparison, Canadians pay $5.09 per gallon and $1.26 (24.8%) in taxes; in France, the comparable price is $8.78, of which more than half, $5.06, is taxes.

Missing middle

James Surowiecki sounds a contrary note in the chorus of appreciation for microfinance:

What poor countries need most, then, is not more microbusinesses. They need more small-to-medium-sized enterprises, the kind that are bigger than a fruit stand but smaller than a Fortune 1000 corporation. In high-income countries, these companies create more than sixty per cent of all jobs, but in the developing world they’re relatively rare, thanks to a lack of institutions able to provide them with the capital they need. It’s easy for really big companies in poor countries to tap the markets for funding, and now, because of microfinance, it’s possible for really small enterprises to get money, too. But the companies in between find it hard.

He cites a paper by Karol Boudreaux and Tyler Cowen, “The Micromagic of Microcredit.” Boudreaux and Cowen speak more highly of microcredit, but still their praise is muted. They point out that microcredit benefits more women than men (3:1, according to one U.N. statistic) and that often the loans go for a blend of consumption and investment, like school fees for a child. Perhaps paradoxically, livestock can be a better store of wealth for poor people than cash. Whatever its weaknesses, institutional microcredit is a better deal for the world’s poor than the alternative, freelancing moneylenders (what we call “loan sharks” in this country).

Microcredit is making people’s lives better around the world. But for the most part, it is not pulling them out of poverty. It is hard to find entrepreneurs who start with these tiny loans and graduate to run commercial empires…. The more modest truth is that microcredit may help some people, perhaps earning $2 a day, to earn something like $2.50 a day. That may not sound dramatic, but when you are earning $2 a day it is a big step forward.

So my hundred bucks a year to FINCA isn’t going to solve all the problems of the world, hunh? Not surprising.

Adding it up

I hope to be able shortly to post in a little more depth about New Jersey’s Natural Capital valuation project, which was reported on by Janet Babin today for Marketplace. Since the days of Soviet command economies and the joke of Leontief’s input-output tableaux, through the imputation of the value of services (which dominate goods in the post-industrial economy), down through today’s valuation of privately-held companies, the assignment of a dollar figure to a transaction or an asset when no money is changing hands at a market-clearing price is a dodgy proposition. So a healthy skepticism is in order when it comes to assigning dollar values for the services provided by an ecosystem. Nevertheless, I am encouraged by New Jersey’s efforts to do just that.

Protecting the environment is a public service provided by government (along with other entities), and it requires the expenditure of money and effort to do it. So environment protection competes, if you will, for the scarce resources available to government, which is beset by demands for all sorts of other services (some of them worthwhile, some of them hopelessly foolish, some of them mere plundering). Putting a dollar figure on the value of undeveloped land, even one that is wrong by an order of magnitude, helps legislators and policymakers compare apples to apples and make better-informed decisions.

There is a tendency among certain members of the environmental community to treat the environment as a treasure without price, and in the extreme, that’s true. (It should be noted that defenders of human life and liberty, be they terrorism hawks or right-to-lifers, tend to argue similarly.) But I’m beginning to think that this is a fruitless way to reason about natural resource conservation.

Philanthropic graffiti

Charles Isherwood visits the Shakespeare Theatre Company’s newly-opened Harman Hall and is bemused by the tagging of every possible amenity in the place with the name of a corporate benefactor. For pity’s sake, the elevators and the coat check room have an underwriter.

Whatever happened to Anonymous?

…what became of those wealthy philanthropists who used to support arts organizations and other not-for-profit and charitable institutions without requiring that their names be slapped somewhere — anywhere, it sometimes seems — on a building?

He then turns to a favorable development at the University of Wisconsin-Madison. A group of anonymous donors contributed $85 million so that the business school would not bear a brand name. At least for the next 20 years.

Meanwhile, since I was graduated in 1977, my alma mater has sold the naming rights to its liberal arts, engineering, medical, and business schools like a cash-strapped city scrounging for ways to pay for its new baseball stadium.

Squeezing the melons

Adelaide and Sarah summon the names of a few defunct retailers in “Marry the Man Today.” Adelaide’s intro begins:

At Wanamaker’s and Saks and Klein’s,
A lesson I’ve been taught:
You can’t get alterations
On a dress you haven’t bought.

Saks Fifth Avenue (founded by Andrew Saks, and hence no apostrophe) is still with us, after the usual bewildering chain of ownership exchanges. I didn’t know that Saks had merged with Gimbel’s by 1923, but maintaining its distinct branding. Middlebrow Gimbel’s, of course, has passed on. When I was in graduate school, I bought a great sweater from the downtown Philadelphia store.

The Philadelphia institution founded by John Wanamaker, now merged into Hecht’s and then Macy’s, once had a million-square-foot flagship store in New York at 770 Broadway. Klein’s would be S. Klein, On the Square, also long gone from Union Square.

But the real poser comes in the first bridge:

ADELAIDE: Slowly introduce him to the better things, respectable, conservative, and clean.
SARAH: Reader’s Digest!
ADELAIDE: Guy Lombardo!
SARAH: Rogers Peet!
ADELAIDE: Golf!
SARAH: Galoshes!
ADELAIDE: Ovaltine!

As punctuated in the libretto, Rogers Peet sounds like the name of a self-help guru from the first half of the century, someone like Norman Vincent Peale, Émile Coué, or Dale Carnegie. But it turns out to designate the merger of the businesses of men’s clothiers Marvin N. Rogers and Charles Bostwick Peet. Rogers, Peet & Co. was a nineteenth-century retailing innovator, introducing tags that identified fabric content and price (no haggling!) and a money-back guarantee. The final Rogers, Peet store closed in the mid-1980s.

Thinking globally, eating locally

Via kottke.org: the question of whether eating locally is better for the environment isn’t quite settled, argues Sarah Murray, writing for the Financial Times (a publication, admittedly, with its own slant on things), in support of her recent book. She points to recent studies that indicate that shipped food performs as well as local food in terms of environmental impact.

Keep in mind that Murray is writing for a British publication, and food shipped into the U.K. needs must travel over water (often by efficient container ship) while food that travels within the U.S. and North America more likely came by truck. And her quoting a study by New Zealand’s Lincoln University that New Zealand lamb is more efficiently produced than its British equivalent, even after accounting for shipping, is disingenuous.

Nevertheless, Murray makes the good point that transportation may not be the most important environmental factor in the production of a lamb and boiled potato dinner. And

the environmental trade-offs can be perplexing. While water conservationists point out that pressurised sprayers and drip irrigation systems distribute water to crops more efficiently than traditional gravity-based methods, they require mechanical pumping and therefore consume more energy.

Along with the carbon dioxide emissions generated by agriculture come other, more potent, greenhouse gases. Animal manure, soil management and heavy use of synthetic nitrogen fertilisers in crop production all contribute to an increase in nitrous oxide emissions, which are up to 300 times more effective at heating the atmosphere than carbon dioxide.

On the other hand, whether a locally-produced piece of fruit, picked and carried a short distance to a farmers market, just plain tastes better than one engineered for long-distance travel, harvested green, wrapped in plastic, and shipped thousands of miles is a question that Murray doesn’t pick up in this article.

Dispersing the blue smoke

Timothy L. Keiningham et al. publish peer-reviewed research that questions whether the Net Promoter Score metric (promulgated by Fred Reichheld, Bain & Company, and Satmetrix Systems, Inc.) does a better job than other metrics of explaining business performance. Keiningham’s paper, “A Longitudinal Examination of Net Promoter and Firm Revenue Growth” says, from the abstract:

Using industries Reichheld cites as exemplars of Net Promoter, the research fails to replicate his assertions regarding the “clear superiority” of Net Promoter compared with other measures in those industries.

Stefan Kolle’s post includes an extended e-mail exchange with Keiningham, in which he is even more pointed in its criticism of Reichheld.