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What was the (net) profit margin for Walmart in the most recent quarter for which I can fund data? In other words, for every $100 of goods that Walmart sells, how much profit do they “take home?” My bet is that if you asked a typical person they would think the number would be very high – something like $20, perhaps more. So, how much out of a $100 do they actually take home?

Not $20, but rather $2.91. In other words, for every hundred dollars of goods sold by Walmart, they “keep” $2.91.

For some perspective, I just got back from buying a few small things from my local Walmart. While today I spent only a few dollars, consider “who gets what” when I spend $100 there. While I have no idea who gets paid what, when I look at my sales receipt I can surely see how much “society” gets when I buy $100 of goods from Walmart. Before I mention the data, note that the closest Walmart to where I live has located a few hundred yards from my home county of Monroe (in Ontario County) where sales tax rates are a little lower. So, on my bill, the total amount of sales tax collected was 7.5%, broken up as 4% for New York State and 3.5% for Ontario County.

Let’s recap. As a consumer buying $100 worth of goods from Walmart:

  • The government of Ontario County gets $3.50.
  • The government of the State of New York gets $4.oo.
  • Walmart itself gets $2.92.

But hey, neither Walmart nor you “built that.” We’ll have more to say about “You didn’t build that,” sometime next week. Have a great weekend.

Reader warning – this is not well thought out, and I am narrating it to my phone via voice as I am driving to work this morning.

It occurs to me that either retail financial institutions are intensely sclerotic, old-school, dinosaurs, or that regulation is strangling what they are able to offer retail customers, or I suppose that the economics of retail finance do not lend themselves to making that sector very innovative. Think for a moment about the variety of products and services that are available to retail banking customers. The array of options doesn’t look entirely different from what was offered in the 1930s. Sure, in the 30s we had 5-year mortgages with balloon payments at end, and CDs did not exist – but we had savings accounts paying interest and before 1933 we had deposit accounts paying interest on the liability side and on the asset side the banks were making mortgage loans, small business loans, etc. About the only new products on the lending side are revolving credit type arrangements either on consumer durables or housing, and on the liability side you might argue that the array of savings options and deposit options is somewhat expanded – but I disagree with the notion that any of it is very innovating or offers customers really great financial options for issues that are important in the 21st century. Indeed, many of the programs retail banks offer are a result of the disintermediation crisis of the 1970s and regulatory arbitrage in the face of that and increasing competition from global commercial banks and from non-bank lenders and borrowers.

Here’s an example. If you want to make elaborate financial transactions, say like buying and selling futures, you have to do that via non-bank intermediaries and do so in a sort of complicated way. Certainly those intermediaries are not marketing to and reaching out to “regular Joes” who may want to participate. What is an example of how retail customers might want to participate? How about the energy sector? Think about the amount of electricity or gasoline or heating oil you use every year, and expect to use year after year after year after year. Having some confidence that you know what the costs of such inputs would be as you plan your future would obviously be enormously helpful for all kinds of planning purposes, and of course people have different tolerances for risk and different horizons for how long they need/want to be exposed to fluctuations in those markets.

For instance, right now on the East Coast, the average price of gas is $2.43. I’d very much like to be able to lock in that price for gasoline over the next X years. My family drives about 30,000 miles per year and conservatively uses 1,200 gallons, including my lawmowers and snowblowers and the like. So, when gas was $4.00, that was costing us about $4,800 per year at our estimated average gasoline efficiency. At $2.43, that means I’d be spending $2,916, a savings of nearly $2,000 per year. That’s a ton of money – it pays for sports for my daughter for a year, or all of our school supplies and clothes for the year, etc. I’d be thrilled to lock in that price.

So, where are the retail agencies offering me the opportunity to buy futures at that price? Sure, there is a question of storage, but aren’t there obviously sellers of such futures – agents who are happy selling at the price because they are worried the price would go lower?

Why must one be a major institutional player, using sophisticated intermediaries, to participate in such a market? It’s not actually extremely complicated to get involved in. If a commercial bank functioned as the clearing agent on such transactions wouldn’t they stand to make very considerable profits? And once you think about this, you can begin to think about the huge variety of goods that retail financial services would make sense to cover.

A related question is, independent of the banks doing anything, why don’t individuals make greater individual efforts to lock in these low prices? After all, if I am better off by $2,000 per year by the current price of gas, you might think that I should be interested in spending up to $2,000 per year to take advantage of it. Sure, a 1,200 gallon tank to store a year’s supply of gasoline is large, and a 12,000 gallon tank to store 10 years of gasoline is huge, but they’re not huge beyond the scales of typical large home or certainly not huge beyond scale of anything a middling industrial park building could absorb. Why are groups of people not getting together to create the storage, or to finance the purchase of this gas? Yes, there are probably physical issues about long term storage of gasoline, but you can swap the commodity gas (if it is a commodity, it may not be since the formulations across states and over the time of year varies widely) for some other similarly currently cheap good, the problem is the same.

So, why aren’t we seeing a flourishing of these kinds of projects? I am a financial conservative in my behavior, but I’d be extremely attracted to this sort of a thing. I have lots of ideas as to what the problem is, what thoughts do you have?


Feynman’s Epilogue

Going through all of the famous Feynman lectures may not be for you, though I do recommend many of them, but reading some of Feynman’s popular work is highly recommended as is learning a little bit more about him. I very much appreciated his comments to close his few years of teaching “Intro” physics at Caltech (intro is in quotes for good reason):

Well, I’ve been talking to you for two years and now I’m going to quit. In some ways I would like to apologize, and other ways not. I hope—in fact, I know—that two or three dozen of you have been able to follow everything with great excitement, and have had a good time with it. But I also know that “the powers of instruction are of very little efficacy except in those happy circumstances in which they are practically superfluous.” So, for the two or three dozen who have understood everything, may I say I have done nothing but shown you the things. For the others, if I have made you hate the subject, I’m sorry. I never taught elementary physics before, and I apologize. I just hope that I haven’t caused a serious trouble to you, and that you do not leave this exciting business. I hope that someone else can teach it to you in a way that doesn’t give you indigestion, and that you will find someday that, after all, it isn’t as horrible as it looks.

Finally, may I add that the main purpose of my teaching has not been to prepare you for some examination—it was not even to prepare you to serve industry or the military. I wanted most to give you some appreciation of the wonderful world and the physicist’s way of looking at it, which, I believe, is a major part of the true culture of modern times. (There are probably professors of other subjects who would object, but I believe that they are completely wrong.).

Perhaps you will not only have some appreciation of this culture; it is even possible that you may want to join in the greatest adventure that the human mind has ever begun.

From three All-Stars (Fryer, Levitt and List):

This intervention had large and statistically significant positive impacts on both cognitive and non-cognitive test
scores of Hispanics and Whites, but no impact on Blacks

Children with above median (pre-treatment) non cognitive scores accrue the most benefits from treatment.

In other work, it seems that government R&D subsidies are very effective in New Zealand.

In other work, some evidence for the sketchy behavior of established real estate agencies.



I don’t have a pony in this race aside from the fact that I don’t want to live through a Great Depression:

If we do not act, and act soon, we are headed for another Great Depression.


One of the things that “anti-ACA” analysts worried about with the new law was that it would open the door to regulating all manner of areas of our lives that not even the staunchest supporters of the law ever intended or ever imagined it would lead to.

Here is an episode confirming these concerns.

After decades of unregulated existence in all 50 states, the booming field of personal trainers is braced for a wave of scrutiny that is expected to transform the industry

A variety of workplace wellness programs and preventive health-care initiatives called for in the law

Do you really believe it ends here?

Here is a fun conversation-starter at a dinner-party. Ask the person you are talking to what sexual position their parents used in order to conceive them. I am serious.

What’s the rub? Well, “transgenic foods” (popularly and incorrectly referred to as Genetically Modified Organisms or GMOs) inspire much trepidation and one of the common arguments I see in regard to their use and regulation is that consumers have a “Right to Know” what is in their food. I suppose that is the case. But by that measure consumers have a “Right to Know” what is in their crayons, and laptops and so forth. I don’t see marches against Crayola demanding a full and complete listing of every last molecule used to create their Burnt Sienna crayon. When firms and consumers find it advantageous to know, or when regulators ascertain that information in important enough to know, it is usually produced.

The thing about transgenic foods is that this particular form of genetic modification is simply a breeding method. It tells us nothing at all about what is in our food. So, labeling a food that has been produced with transgenic methods tells us not a single thing about what chemicals are in the food or other properties of that food any more than knowing that your parents commenced with the Missionary position tells you what your hair color was likely to be.

Can the fact that a crop was bred transgenically contain useful information? Sure, but that fact alone tells us nothing. You see the same sort of issue arise when it comes to things like “natural/organic” fertilizer versus the stuff that is produced by evil corporations in the lab. But when fertilizer is applied to a crop, a nitrogen atom is a nitrogen atom is a nitrogen atom. It doesn’t matter whether that atom fell from the booty of a ruminant, was trawled from the ocean, or came out of a factory. Thus, a plant on the ground doesn’t care nor does it know where the particular nitrogen atoms it is using came from, they are just nitrogen atoms. The same is true of your food.

Of course, I am sure that somewhere deep in the dark recesses of the 401(k) that I have not looked at in years and spent 5 minutes establishing that I own some small portion of Monsanto, and I am sure that somewhere in the deep dark recesses of my university something that I do came from the support of some other evil corporation. So I am a hack and have nothing to teach you. Pay no attention to me.

That headline is not intended to be sarcastic. It turns out that Dr. Hansen has recruited children to sue the federal government and its many agencies because it has permitted global warming to continue to threaten the future.

Again, saying nothing about global warming, I think my readers should be me reminded that this sort of strategy is becoming quite popular with the activist community. What happens is that the activists, with the implicit support of an agency, sue said agency, and when the courts rule in favor of the activists the agencies are “forced” into making changes that it would have had difficulty implementing unilaterally. Now it has political cover to do what its leaders want.

Whether you agree or disagree with the particular goals of an agency, this is a particularly ugly and disingenuous way of getting things done. Not exactly Hayek’s Reichstadt.

This is disgusting, but not at all surprising. I suppose by connection that since I listen to talks and read work by Professor Folta that I, too,  am a shill and unprofessional.

We’ve jumped the shark: employees are now Green Reps. Isn’t this sort of forcing folks to either publicly be “for” or “not for” workplace sustainability?

What if one chooses not to become one? Who doesn’t want their workplace to run more efficiently anyhow?

I can’t stop thinking about this.

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