E.U. Consumers Benefit from Telecommunications Deregulation

(p. A23) When Thomas Philippon moved to Boston from his native France 20 years ago, he was a graduate student on a budget, and he was happy to discover how cheap American telephone use was. In those days of dial-up internet connections, going online involved long local phone calls that could cost more than $10 apiece in France. In the United States, they were virtually free.

. . .

Today, his parents pay about 90 euros (or $100) a month in the Paris suburbs for a combination of broadband access, cable television and two mobile phones. A similar package in the United States usually costs more than twice as much.

. . .

The irony is that Europe is implementing market-based ideas — like telecommunications deregulation and low-cost airlines — that Americans helped pioneer. “E.U. consumers are better off than American consumers today,” Philippon writes, “because the E.U. has adopted the U.S. playbook, which the U.S. itself has abandoned.”

For the full commentary, see:

Leonhardt, David. “Big Business Is Overcharging You.” The New York Times (Monday, November 11, 2019): A23.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Nov. 10, 2019, and has the title “Big Business Is Overcharging You $5,000 a Year.”)

Philippon’s views on competition are elaborated in his book:

Philippon, Thomas. The Great Reversal: How America Gave up on Free Markets. Cambridge, MA: Belknap Press, 2019.

At-Home Workers Are Leaving Costly Largest Cities

(p. A1) Kelly Swift grew tired of the Los Angeles area a few years ago so she decided to leave—and take her job with her.

Ms. Swift kept her role in health-care information-technology consulting, and her California salary, when she and her family settled in a suburb of Boise, Idaho. Her employer didn’t mind that she started working from home.

Ms. Swift joined a group of workers fueling a renaissance in U.S. cities that lie outside the major job hubs. People who do their jobs from home, freelance or constantly travel for work are migrating away from expensive urban centers such as Los Angeles and San Francisco toward cheaper cities including Boise; Denver; Austin, Texas; and Portland, Ore., according to economists and local residents.

For the full story, see:

Ben Eisen. “Workers Leave Largest Cities, Taking Their Jobs With Them.” The Wall Street Journal (Monday, Sept. 9, 2019): A1 & A4.

(Note: the online version of the story has the date September 7, 2019, and has the title “Workers Are Fleeing Big Cities for Smaller Ones—and Taking Their Jobs With Them.”)

Google Pivots Back to Search and Away from Audacious Projects

(p. B1) Sundar Pichai’s appointment this week as chief executive of Google parent Alphabet Inc. effectively shifts the focus back on the company’s advertising profit machine and away from its “moonshots” and other potential new businesses.

Mr. Pichai’s promotion late Tuesday amounted to the biggest managerial overhaul of the internet giant since 2015, when co-founders Larry Page and Sergey Brin created Alphabet as a parent company above Google. Their goal then was to make Google and its highly profitable advertising businesses just one of many subsidiaries. The stated purpose, as they said in a public letter: “We are still trying to do things other people think are crazy.”

Those goals were on-brand for the two former Stanford University graduate students. They famously celebrated a “don’t be evil” ethos and were working on driverless cars, wearable computers, beating death and a host of other money-losing projects. The idea was to free the duo from the day-to-day at Google, which remains a profit machine, to build out new, world-changing ideas.

Those now include Alphabet’s Waymo unit, which is piloting self-driving car rides, and Calico Labs, which says it’s “tackling aging.”

At least financially, those efforts have yet to amount to much. Google, which includes search, YouTube, the Chrome web browser, hardware and much else, reported $40 billion of revenue in the past quarter alone, with a 23% margin. These areas draw in more than 99% of the parent company’s staggering $155 billion in annual revenue.

The rest of Alphabet eked out $155 million in revenue, and lost $941 million while doing it.

For the full story, see:

Rob Copeland. “Alphabet Backs Off the ‘Crazy,’ Turns to Reliable Model.” The Wall Street Journal (Friday, December 6, 2019): B1 & B4.

(Note: the online version of the story has the date Dec. 5, 2019, and has the title “Google Management Shuffle Points to Retreat From Alphabet Experiment.” The online version says that the title of the print edition was “Alphabet Backs Off On Experimentation.” My copy of the print edition had the title “Alphabet Backs Off the ‘Crazy,’ Turns to Reliable Model.”)

Wisconsin May Have a Robustly Redundant Labor Market

From Nathan Wiese’s description, below, Wisconsin is described in as what I call a “robustly redundant labor market” in my book Openness to Creative Destruction: Sustaining Innovative Dynamism.

(p. A1) ROSENDALE, Wis.—Nathan Wiese, a third-generation dairy farmer who is struggling to get by, says even if he has to close his family’s farm, he feels confident he could hire on as a truck driver and take home more money.

“If you want a job, you can get a job,” said Mr. Wiese, who voted for Donald Trump in 2016 and plans to do so again. “I could probably get one in one day.”

. . .

. . . in an era of severe worker shortages, people losing jobs when a plant or a farm closes are quickly getting scooped up by others. This provides a safety net in the broader economy by keeping incomes and consumer spending strong.

For the full story, see:

Shayndi Raice and Jon Hilsenrath. “In Wisconsin, Demand for Workers Buffers a Slowdown.” The Wall Street Journal (Friday, November 29, 2019): A1 & A9.

(Note: ellipses added.]

(Note: the online version of the story has the date Nov. 28, 2019, and has the title “How a Strong Job Market Has Proved the Experts Wrong.”)

My book, mentioned at the top, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Economists Surprised by Strength of Economy

(p. B3) There are a lot of good things to say, and few bad things to say, about the November [2019] employment numbers that were published Friday morning.

Employers added 266,000 jobs, a blockbuster number even after accounting for the one-time boost of about 41,000 striking General Motors workers who returned to the job.

. . .

Still, there is a bigger lesson contained in the data, one that is important beyond any one month’s tally of the job numbers: that the American economy is capable of cranking at a higher level than conventional wisdom held as recently as a few years ago. As the economy continues to grow well above what once seemed like its potential, without inflation or other clear signs of overheating, it’s clearer that the old view of its potential was an extremely costly mistake.

The mainstream view of the economics profession — held by leaders of the Federal Reserve, the Congressional Budget Office, private forecasters and many in academia — was that the United States economy was at, or close to, full employment.

. . .

People often say that this expansion, now in its 11th year, is growing long in the tooth, or that we are late in the economic cycle. And maybe that’s right. But the biggest lesson when you contrast where the labor market stands at the end of 2019, versus where smart people thought it would stand just a few years ago, is that there’s a lot we don’t know about just what is possible and how strong the United States economy can get.

For the full story, see:

Neil Irwin. “In Hindsight, Economy Is Stronger Than It Looks.” The New York Times (Saturday, December 7, 2019): B3.

(Note: ellipses, and bracketed year, added.]

(Note: the online version of the story has the date Dec. 6, 2019, and has the title “How a Strong Job Market Has Proved the Experts Wrong.”)

Local Chinese Governments, Buried in Debt, Ask Citizens for Loans

(p. B1) RUZHOU, China — When the call came for local doctors and nurses to step up for their troubled community, the emergency wasn’t medical. It was financial.

Ruzhou, a city of one million people in central China, urgently needed a new hospital, their bosses said. To pay for it, the administrators were asking health care workers for loans. If employees didn’t have the money, they were pointed to banks where they could borrow it and then turn it over to the hospital.

China’s doctors and nurses are paid a small fraction of what medical professionals make in the United States. On message boards online and in the local media, many complained that they felt pressured to pony up thousands of dollars they could not afford to give.

“It’s like adding insult to injury,” a message posted to an online government forum said. Others, speaking to state and local media, asked why money from lowly employees was needed to build big-ticket government projects.

Ruzhou is a city with a borrowing problem — and an emblem of the trillions of dollars in debt threatening the Chinese economy.

Local governments borrowed for years to create jobs and keep factories humming. Now China’s economy is slowing to its weakest pace in nearly three decades, but Beijing has kept the lending spigots tight to quell its debt problems.

For the full story, see:

Alexandra Stevenson and Cao Li. “China’s Complex Debt Problem.” The New York Times (Monday, November 11, 2019): B1-B2.

(Note: the online version of the story has the date Nov. 10, 2019, and has the title “How Bad Is China’s Debt? A City Hospital Is Asking Nurses for Loans.”)

Bicycles Gave Women “Freedom and Self-Reliance”

(p. B8) The decade before the 20th century began saw an explosion in bicycle sales and cycling in general. The so-called “safety bicycle,” with wheels of equal size and a chain mechanism that allowed pedaling to drive the back wheel, along with the arrival of the pneumatic tire, had transformed cycling from an acrobatic and somewhat perilous enterprise into a pleasurable, less hazardous and even utilitarian recreation. Bicycles were mass produced as men increasingly used them to commute to work.

Especially significant was that women, for the first time, took to the activity, relishing the freedom it gave them from the restrictions of a homebound existence. Corsets and billowy skirts even gave way to bloomers so that women could ride comfortably. The bicycle was very much a part of the early women’s movement.

“Let me tell you what I think of bicycling,” the suffragist Susan B. Anthony said in an 1896 interview in The New York World with the pioneering journalist Nellie Bly. “I think it has done more to emancipate women than anything else in the world. I stand and rejoice every time I see a woman ride by on a wheel. It gives woman a feeling of freedom and self-reliance. It makes her feel as if she were independent. The moment she takes her seat she knows she can’t get into harm unless she gets off her bicycle, and away she goes, the picture of free, untrammeled womanhood.”

If ever there was an avatar of these combined social trends, “of free, untrammeled womanhood,” it was Annie Cohen Kopchovsky, a Latvian immigrant who in June 1894, at about age 23, cycled away from her Boston home, leaving a husband and three small children, for a journey around the world.

. . .

Kopchovsky’s celebrity, though it lingered through the completion of her trip, was short-lived, and her adventure would probably have remained obscure were it not for Peter Zheutlin, a journalist and cycling hobbyist who, decades after her death, became intrigued by what little he knew of Kopchovsky, his great-grandfather’s sister. For his book “Around the World on Two Wheels: Annie Londonderry’s Extraordinary Ride” (2007), he scoured newspaper archives from around the world, dug up family relics and plumbed the memory of Kopchovsky’s only survivor, a granddaughter.

For the full obituary, see:

Bruce Weber. “Annie Londonderry.” The New York Times (Monday, November 11, 2019): B8.

(Note: ellipsis added.)

(Note: the online version of the obituary has the date Nov. 6, 2019, and has the title “Overlooked No More: Annie Londonderry, Who Traveled the World by Bicycle.”)

The book mentioned above, is:

Zheutlin, Peter. Around the World on Two Wheels: Annie Londonderry’s Extraordinary Ride. New York: Citadel Press Books, 2007.

“Misguided Regulations” Kill Ride-Hailing App

(p. B3) New York ride-hailing business Juno USA LP filed for bankruptcy protection, blaming its demise on minimum wage regulations and mounting lawsuits from drivers, riders and competitors.

. . .

Ride-hailing companies are grappling with efforts by several states to extend employment protections to gig workers. In the face of additional regulation, the ride-hailing industry has been consolidating and pushing back against government measures that could upend their business models.

Gett, which bought Juno in a $200 million equity-based deal, said the company’s demise stemmed from “misguided regulations” in New York City.

. . .

Juno generated $269 million of revenue last year, a 23% annual increase, according to court papers. But this year its costs escalated after the city put in place a pay floor for ride-hail drivers.

The wage regulation pushed customer prices up by nearly 20%, bringing Juno’s rides per day down to 25,000 immediately before the chapter 11 petition from 47,000 per day in 2017.

. . .

Juno also said it spent substantial money on legal fees to defend itself against lawsuits from drivers, riders and competitors alike that the company described as “opportunistic.”

Drivers have sued over unemployment insurance, saying they were employees rather than independent contractors, and over stock incentives.

For the full story, see:

Alexander Gladstone. “Ride-Hailing App Enters Bankruptcy, Blaming Wage Law.” The Wall Street Journal (Thursday, Nov. 21, 2019): B3.

(Note: ellipses added.)

(Note: the online version of the story has the date Nov. 20, 2019, and has the title “Ride-Hailing App Juno Enters Bankruptcy, Blaming Wage Law.”)

Theil Venture Capital Firm Will Invest More in Later Stage Startups

(p. B1) Peter Thiel’s venture-capital firm is raising nearly $3 billion—and in a switch from the company’s usual script, much of the war chest will be poured into the swelling ranks of technology startups that have stayed private for years.

. . .

The venture firm, co-founded by Mr. Thiel, typically backs early-stage companies. But with its biggest winners, like Airbnb Inc., staying private longer than startups of an earlier generation, Founders needs to be able to make larger investments at later stages of a company’s lifetime to maintain comparable stakes and a say in company operations, some of the people said.

. . .

Founders Fund has told potential investors that older companies that stay private longer can prove to be more stable, if less lucrative, investments than moonshot startup bets, according to the people familiar with the matter.

. . .

Founders has produced investment returns well-above the industry average, The Wall Street Journal reported earlier this year. Its earliest funds, from 2005 and 2007, grew sixfold and more than eightfold, respectively, by the third quarter of last year.

For the full story, see:

Rob Copeland and Katie Roof. “Thiel Fund Builds War Chest in Strategy Shift.” The Wall Street Journal (Tuesday, October 22, 2019): B1.

(Note: ellipses added.)

(Note: the online version of the story has the date Oct. 21, 2019, and has the title “Peter Thiel’s Founders Fund Builds New War Chest in Strategy Shift.” In the third passage quoted above, the quote follows the print version instead of the slightly different online version.)

Improved Stoves, Pushed by Social Entrepreneurs, Do Not Improve Health or Environment

(p. 80) Laboratory studies suggest that improved cooking stoves can reduce indoor air pollution, improve health, and decrease greenhouse gas emissions in developing countries. We provide evidence, from a large-scale randomized trial in India, on the benefits of a common, laboratory-validated stove with a four-year follow-up. While smoke inhalation initially falls, this effect disappears by year two. We find no changes across health outcomes or greenhouse gas emissions. Households used the stoves irregularly and inappropriately, failed to maintain them, and usage declined over time. This study underscores the need to test environmental technologies in real-world settings where behavior may undermine potential impacts.

Source:

Hanna, Rema, Esther Duflo, and Michael Greenstone. “Up in Smoke: The Influence of Household Behavior on the Long-Run Impact of Improved Cooking Stoves.” American Economic Journal: Economic Policy 8, no. 1 (Feb. 2016): 80-114.

“These Guys Are Selling Things to Better Their Lives”

(p. A20) The colorful bottles have popped up every summer in black and Hispanic communities — from the bodegas of Washington Heights to the stoops of Fort Greene — since the early 1990s. On beach boardwalks, at neighborhood basketball courts and block parties, New Yorkers are drinking nutcrackers, boozy homespun cocktails made from a blend of alcohol and fruit juices.

But this year, the New York Police Department is cracking down on the illegal drinks and the vendors who sell them, vendors and customers said.

. . .

But sellers and customers who believe there is a crackdown are alarmed, saying vital financial lifelines are threatened and raising the issue of which infractions police choose to focus on and which communities are scrutinized.

“It’s just another way to target us,” Dee said. “If I don’t sell nutcrackers, I can’t make my rent. I don’t have a choice.”

Most every Thursday in the summer, Dee clocks out from her job as an exterminator with the city and begins work on her illegal private enterprise.

After spending $600 or so at the liquor store nearby, she will lug her ingredients — cases of vodkas, rums, tequilas and cognacs — to her two-bedroom public housing apartment and into a dim, cramped back room where she will get to work making batches of her best sellers like Tropical Punch, Henny Colada and the Fort Greene Lean.

Dee’s concoctions will be poured into dozens, sometimes hundreds, of stubby plastic bottles and peddled all weekend to her longtime customers: old-timers playing dominoes in Bedford-Stuyvesant, basketball tournament crowds at Gersh Park in East New York, neighbors and friends in her old Flatbush neighborhood. They will all be waiting for her, she said.

On a good weekend, Dee will earn around $1,400 from nutcracker sales, enough to cover her rent, which has risen nearly $700 since 2015, she said.

. . .

“They always trying to beat us down,” said Jay, another nutcracker seller who preferred that his last name be withheld. Jay said he decided to venture into the business this summer as a way to get his music management business off the ground.

“This is going to buy studio time for my artist,” he said, nodding to the cooler he wheeled down the Coney Island boardwalk at sunset. “Ice-cold water,” he said loudly to passers-by, followed by a softer, more subtle “(Nutcrackers.)”

“Ice cold water!”

“(Nutcrackers).”

“These guys are selling things to better their lives,” said Sandra Anguiz, 30, after buying a cream-soda-flavored nutcracker from Jay. “Why are police worried about that?”

For the full story, see:

Aaron Randle. “Cracking Down on the Sweet, Boozy Staple of a City Summer.” The New York Times (Saturday, August 17, 2019): A20.

(Note: ellipses added.)

(Note: the online version of the story has the same date as the print version, and has the title “Banned on the Beach? It’s Still Nutcracker Summer.” In the passages quoted above, the sometimes slightly longer online version is followed.)