Strong, But Slower, Growth in Online Sales

 

OnlineSalesGrowthGraph.gif   Source of graph:  online version of the NYT article cited below.

 

(p. 1)  SAN FRANCISCO, June 16 — Has online retailing entered the Dot Calm era?

Since the inception of the Web, online commerce has enjoyed hypergrowth, with annual sales increasing more than 25 percent over all, and far more rapidly in many categories. But in the last year, growth has slowed sharply in major sectors like books, tickets and office supplies.

Growth in online sales has also dropped dramatically in diverse categories like health and beauty products, computer peripherals and pet supplies. Analysts say it is a turning point and growth will continue to slow through the decade.

. . .

Forrester Research, a market research company, projects that online book sales will rise 11 percent this (p. 16) year, compared with nearly 40 percent last year. Apparel sales, which increased 61 percent last year, are expected to slow to 21 percent. And sales of pet supplies are on pace to rise 30 percent this year after climbing 81 percent last year.

Growth rates for online sales are slowing down in numerous other segments as well, including appliances, sporting goods, auto parts, computer peripherals, and even music and videos. Forrester says that sales growth is pulling back in 18 of the 24 categories it measures.

. . .

The turning point comes as most adult Americans, and many of their children, are already shopping online.  That means Internet stores are not getting a flurry of new shoppers to spur the kind of growth tht the industry is accustomed to.  There is a boom in the number of foreigners coming online, but shipping items overseas can limit that market as a source of growth. 

. . .

John Morgan, an economics professor from the Haas School of Business at the University of California, Berkeley, said he expected online commerce to continue to increase, partly because it remains less than 1 percent of the overall economy.  “There’s still a lot of head room for people to grow,” he said.

 

For the full story, see: 

MATT RICHTEL and BOB TEDESCHI. "As Some Grow Weary of Web, Online Sales Lose Momentum."  The New York Times, Section 1  (Sun., June 17, 2007):  1 & 16. 

(Note:  ellipses were added.  The online version of the article had the slightlly different title:  "Online Sales Lose Steam as Buyers Grow Web-Weary."  The bold has been added to indicate a couple of sentences in the above excerpts, that were in the print version, but had been dropped from the online version.)

 

    Source of graph:  online version of the NYT article cited above.

 

Latin America Discourages Entrepreneurs

 

LatinAmericanCompetitivenessGraph.gif   Source of table:  online version of the WSJ article cited below.

 

(p. A18) Economist Joseph Schumpeter (1883-1950) may be best known for his innovative work showing the link between entrepreneurial discovery and economic progress.

But as Carl Schramm, president of the Kauffman Foundation of Entrepreneurship has pointed out, Schumpeter’s insights about risk-takers didn’t make him an optimist.

In a speech last year to European finance ministers in Vienna, Mr. Schramm explained Schumpeter’s fears: He "worried that entrepreneurial capitalism would not flourish because the bureaucracies of modern government and big corporations would dampen innovation — the process of ‘creative destruction’ would be too ungovernable for a modern, Keynesian-regulated economy to tolerate." As a result, Mr. Schramm said, Schumpeter thought that "the importance of entrepreneurs would fade over time as capitalism sought predictability from governments who would plan economic activity as well as order social benefits."

Mr. Schramm’s comments caught my attention because they so accurately describe Latin America. There the entrepreneur has been all but run out of town by the bureaucracies that Schumpeter feared. Growth has suffered accordingly.

The World Bank’s annual "Doing Business" survey, released last week, demonstrates the point. The 2008 survey, which evaluates the regulatory climate for entrepreneurs in 178 countries, finds that Latin America and the Caribbean was the slowest reforming region this year and that it "is falling further behind other regions in the pace" of reform.

. . .

The most important lesson for Latin America from the World Bank’s report is that its competitors around the world are working to unleash entrepreneurial spirits, and doing nothing is not an option. As Mr. Schramm told his Vienna audience, "Schumpeter saw what a century of evidence would prove: Socialism has not sustained economic growth." Now, if only more Latin American policy makers would catch on.

 

For the full commentary, see: 

MARY ANASTASIA O’GRADY.  "THE AMERICAS; No Room for Entrepreneurs."  The Wall Street Journal   (Mon., October 8, 2007):  A18.

(Note:  ellipsis added.)

 

Suing the Pants Off Private Enterprise: Illustrating the Case for Tort Reform

 

  The Dry Cleaners that was sued for $67.3 million dollars, to compensate a Washington, D.C. judge for a lost pair of pants.  Source of the photo:  online version of the NYT article cited below. 

 

WASHINGTON, June 12 — Roy L. Pearson Jr. wanted to dress sharply for his new job as an administrative law judge here. So when his neighborhood dry cleaner misplaced a pair of expensive pants he had planned to wear his first week on the bench, Judge Pearson was annoyed.

So annoyed that he sued — for $67.3 million.

The case of the judge’s pants, which opened for trial in a packed courtroom here on Tuesday, has been lampooned on talk radio and in the blogosphere as an example of American legal excess. And it has spurred complaints to the District of Columbia Bar and city officials from national tort reform and trial lawyer groups worried about its effect on public trust in the legal system.

“I don’t know of any other cases that have been quite this ridiculous,” said Paul Rothstein, a professor of law at Georgetown University.

. . .

“You are not a we, you are an I,” Judge Bartnoff said in one of several testy exchanges with Judge Pearson, 57, who is representing himself. “You are seeking damages on your own behalf, and that is all.”

Later, while recounting the day he says the cleaners tried to pass off a cheaper pair of pants as his, Judge Pearson began to cry, asking for a break and dabbing tears as he left the courtroom.

 

For the full story, see: 

ARIEL SABAR and SUEVON LEE.  "Judge Tries Suing Pants Off Dry Cleaners."  The New York Times (Weds., June 13, 2007):  A13.  

 

 ChungsDryCleaners.jpg  The Korean immigrant owners of the dry cleaners who were being sued for $67.3 million dollars.  Source of the photo:  online version of the NYT article cited below. 

 

Thales of Miletus Lives

 

   Source of book image:  http://store.43folders.com/books-3-1400063515-The_Black_Swan_The_Impact_of_the_Highly_Improbable

 

This is part entertaining rant and part serious epistemology.  I’ve finished 9 of 19 chapters so far–almost all of my reading time spent smiling. 

Historians of Greek philosophy used to tell the story of one of the first philosophers, Thales of Miletus, that he once was watching the stars, and fell into a well.  The citizens of Miletus made fun of him being an impractical philosopher.  To prove them wrong, he used his knowledge to corner the market in something, and made a fortune. 

Not a very plausible story, but appealing to us philosophers.  (Like Thales, we like to think we could all be rich, if we didn’t have higher goals.)

Well apparently Taleb is the real Thales.  He wanted to be a philosopher, got rich on Wall Street using his epistemological insights, and is now using his wealth to finance his musings on whatever he cares to muse on.

Beautiful!

 

Here’s an amusing sentence that broadened my grin.  (It was even more amusing, and profound, in context, but I don’t have time to type in the context for you.)

(p. 87)  If you are a researcher, you will have to publish inconsequential articles in "prestigious" publications so that others say hello to you once in a while when you run into them at conferences.

 

Reference for the book:

Taleb, Nassim Nicholas. The Black Swan: The Impact of the Highly Improbable. New York: Random House, 2007.

 

Buchanan on Hayek, Rawls and Nozick

 

  Sandy Peart talking to James Buchanan.  Source of photo:  me. 

 

In an earlier blog entry, I mentioned a comment on disagreeing with journal referees, made by  James Buchanan in conversation at the closing dinner of the 2007 Summer Institute for the Preservation of the History of Economics.

Hayek also came up at the dinner with Buchanan. Buchanan mentioned that he was not as enthused about Hayek’s later work, including The Fatal Conceit, and Law, Legislation and Liberty—he thought the best might have been The Constitution of Liberty.

He mentioned that some foundation had funded a couple of conferences in Europe of top free market scholars to offer advice to Hayek.  They told Hayek that his manuscript was a mess, and that it would be an embarrassment to him to publish it. But he said he was already under contract. (I think this comment referred to The Fatal Conceit.) So someone (Bruce Bartlett?) helped Hayek clean it up.

Buchanan also spoke highly about Rawls.  I think I mentioned that Hayek had said that his approach was similar to Rawls.  I think Buchanan said he did not think that comment was surprising.

I also believe I remember Buchanan saying that he thought more highly of Rawls than of Nozick.

 

Sherwin Rosen Approves a Positive Review of Rosenberg’s Book

 

Another of Sherwin Rosen’s minor acts of methodological delinquency, this time in his role as co-editor of the Journal of Political Economy, was his asking me to review Alexander Rosenberg’s criticism of the economics profession for drifting further and further into irrelevant mathematical puzzle-solving.  My review was basically favorable to Rosenberg, and my memory is that Rosen was quite content with my review.

 

The reference to my review is:

"Review of:  Alexander Rosenberg’s Economics–Mathematical Politics or Science of Diminishing Returns?."  Journal of Political Economy 104, no. 3 (June 1996):  655-659.

 

Global Warming is No Threat to North Atlantic Current

 

   A view of part of the Greenland ice sheet.  Source of the photo:  online version of the NYT article quoted and cited below.

 

(p. D3) OSLO — Mainstream climatologists who have feared that global warming could have the paradoxical effect of cooling northwestern Europe or even plunging it into a small ice age have stopped worrying about that particular disaster, although it retains a vivid hold on the public imagination.

The idea, which held climate theorists in its icy grip for years, was that the North Atlantic Current, an extension of the Gulf Stream that cuts northeast across the Atlantic Ocean to bathe the high latitudes of Europe with warmish equatorial water, could shut down in a greenhouse world.

Without that warm-water current, Americans on the Eastern Seaboard would most likely feel a chill, but the suffering would be greater in Europe, where major cities lie far to the north. Britain, northern France, the Low Countries, Denmark and Norway could in theory take on Arctic aspects that only a Greenlander could love, even as the rest of the world sweltered.

All that has now been removed from the forecast. Not only is northern Europe warming, but every major climate model produced by scientists worldwide in recent years has also shown that the warming will almost certainly continue.

“The concern had previously been that we were close to a threshold where the Atlantic circulation system would stop,” said Susan Solomon, a senior scientist at the National Oceanic and Atmospheric Administration. “We now believe we are much farther from that threshold, thanks to improved modeling and ocean measurements. The Gulf Stream and the North Atlantic Current are more stable than previously thought.”

. . .

“The ocean circulation is a robust feature, and you really need to hit it hard to make it stop,” said Eystein Jansen, a paleoclimatologist who directs the Bjerknes Center for Climate Research, also in Bergen. “The Greenland ice sheet would not only have to melt, but to dynamically disintegrate on a huge scale across the entire sheet.”

The worst imaginable collapse would likely take centuries to play out, he said. Any disruption to the North Atlantic Current — whose volume is 30 times greater than all the rivers in the world combined — would thus occur beyond the time horizon of the United Nations climate panel.

 

For the full story, see: 

WALTER GIBBS.  "Scientists Back Off Theory of a Colder Europe in a Warming World."  The New York Times  (Tues., May 15, 2007):  D3. 

(Note:  ellipsis added.)

 

 AtlanticWarmWaterCirculationMap.jpg  Source of the map:  online version of the NYT article quoted and cited above.