Feed on
Posts
Comments

I suppose I can be accused of cherry-picking here, but I got to thinking today about how most problems in the past half-century have been dealt with to the extent that they have been dealt with successfully. Have they been the result of great policies and social solutions? Or have they been a result of technical change? Now of course there is a thick gray line between these,  but I am pretty sure that the weight of evidence is heavily in favor of the latter.

Think about the big environmental changes in your lifetime – it was not great social policy that got us there, despite what the history textbooks and environmental advocacy groups may lead you to believe. The filth of car pollution was dealt with by catalytic converters (don’t tell me regulations required them …) it was not solved through public transit or carpooling or taxes. What about the giant hole in the ozone layer (hilariously NASA scientists threw out the satellite data showing the hole because their theory did not predict it)? Did we end up digging root cellars in all of our homes? Nope. We simply changed the refrigerants that we used. Or how about the thinning eggs of the peregrine falcons? Did we do as Naomi Klein suggested? End industrial capitalism as we know it? Go back to more local. community drive lives? Nope. Not at all. We just developed better insecticides that did not accumulate up the food chain.

I was once told by a friend that there is “no constituency for efficiency” in Washington. I doubted him. But thinking about how things have progressed in my lifetime seems to support his point. I do not expect our political process to get any better in my lifetime – it will suffer through spasms and fits and starts – I think the progress we will see, to the extent that we see any, will come despite the political process, and at best the politicians will ex post lay claim to having a hand in any success we have.

Don’t be deceived by the explosion of craft brewing in America, overall beer volume in the United States fell last year by 400,000 barrels to 197 million barrels. This decrease in output is the equivalent of two breweries the size of Dogfish Head shutting its doors.

In the face of overall beer sales stagnation, the import and especially craft beer sectors have been growing rapidly. Last year imports grew by 6% to a total of 31 million barrels. Imports (think Skunk-e-ken) are a much larger market than the craft market – about a third larger. The craft sector clocked in at a total of 24 million barrels produced across the 4,000+ small places scattered about the country.

Aside from the size differences, recognize that what tends to distinguish “craft beer” (it is hard to define) from “mass produced” beer is that craft beer tends to focus on using the freshest, all-natural ingredients and especially does NOT employ any lightening or alcohol enhancing “adjuncts” in their beer. In other words, we do not see Sierra Nevada using corn or rice in their beer. Almost all craft-beer can be characterized by using 100% barley malt, or pure grain specialty grains to go into the brews they make (e.g. Spelt, Wheat, Oats, and more exotic stuff too). The emphasis on all-barley / all-grain beers and not extract or adjunct beers, and an emphasis on freshness, piles and piles of innovative hops, hundreds of proprietary and innovative yeast strains, makes that beer more expensive to produce. Furthermore, sellers of high quality craft beer tend to be selling into a market with more discerning taste and to folks with a smaller degree of price sensitivity than the average mass market drinker. While folks like myself do tend to buckle at a 4-pack on an IPA that may cost $22, we are not exactly lining up craft beers on the shelves and buying the one with the lowest price to alcohol ratio we can find. So there is considerable room for price stratification in the craft beer market,

This is borne out in the sales data. While the overall brewing industry revenues stood at $106 billion last year, and while the craft segment accounted for only 12% of the sales volume, the craft segment revenues were over $22 billion, so over 20% of the value of the beer being sold in the country is coming from craft. Whether or not the boom in craft will continue is an open question, but I do not expect the last trend to change any time soon. In a highly competitive marketplace, brewers are going nuts first to find a niche they can fit nicely into and to craft a message to attract a following, and they are all on the constant experimentation expedition to highlight the incredible array of flavors and aromas and other characteristics, and will continue to reach into the “Long Tail” of the beer consuming population to find a sustainable business model.

We’ll have a lot more to say on brewing and the brewing industry soon. In the meantime, go pick up something funky, perhaps a Long Trail Cranberry Gose, to keep you cool on a hot summer day.

Prost!

A very good and underappreciated site is Put a Number on It. Here, from a recent post on inequality, is not something many are familiar with:

Transfers comprise social security and the rest of welfare. I gave $5,700 to every person over 65 and spread the rest based on number of children and distance from the poverty line. This simplification gets the model close to the actual numbers (average transfers are only $6,700 per person, so being off isn’t a big deal) but the distribution method doesn’t accurately mirror how the government actually spreads money around to the needy.

The reason for that is that the more I studied the actual distribution of transfers in the US, the more gin and tonics I had to drink to keep my sanity. Not only is the assignment of transfers so arbitrarily complex as to be unmodelable, but it seems designed mostly to benefit lower-middle class people (21-50 percentile) at the expense of actual poor people (1-15). The third quintile by income (41-60) receive twice as much in government transfers as the bottom quintile (page 6).The bottom 15 are almost all out of the labor force (🎅), mostly unmarried (🚶, 💔), with no capability of going to college or buying a house. Policies like minimum wage, earned income tax credit, marriage tax breaks, mortgage tax breaks and college subsidies don’t help them one cent. Every policy that doesn’t help the poor ends up hurting the poor, by increasing the gap between them and the other 85%, and by blocking their social mobility and reducing their purchasing power. One of my upcoming posts will basically be a long rant about how American policies and politics are stacked against the bottom 15% to a depressing degree.

The cynic may respond that the votes of the bottom 15% don’t mean much. This election year seems to provide some fuel for that fire.

We’ll be taking a hiatus for a while, not that we haven’t intellectually done so for the past 2+ years.  In the meantime, I report now that (1) the union drive at U of R is likely toast, so thank you to all of you for your interest in that story; and (2) I see lots of articles by classical liberals suggesting that a HRC presidency is best now because with a Republican Congress we can see some gridlock so there is less chance for her to do damage than Chump. I would also second that her husband’s time as President was characterized by such a desire to be liked and popular that he didn’t do too many bad things, and was not so bad overall – though times are different today. I would think a Trump Presidency would nonetheless be better. Why? I want people of all stripes to strike down their holy view of the Presidency by several notches, and on top of that, what other person could be put into the Presidency for a good chunk of Americans to agree to perhaps reduce the power of all government branches over our lives?

In the meantime, I’ll be out galavanting, recovering, and more – hope to connect soon.

  1. Healthy life expectancy has increased by 1.8 years since 1992. Disabled expectancy? Down a half-year.
  2. Shocker. Not. Supply shocks are expansionary, even at ZLB. All of this stuff about the “rules being different” at the zero lower bound astound me, as if there is some magic to the number zero as opposed to a number like -0.5 or 3.2 or any other number. It is a totem.
  3. In other zero lower bound news, if you have a view of secular stagnation, it turns out that structural labor market reforms are … begger thy neighbor. Color me skeptical.

Very unmotivating week of research. That is more a reflection of your author than the field.

Graduating college is not a wise choice for all.” That is James Heckman. But what if it were truly free?

In other news, it seems that for-profit colleges really are a rip-off.

Memorial Day Roundup

  1. Food stamps work. Sure to be widely reported on the right.
  2. Definitely spend the time to read this article on the Sugar Conspiracy.

There was once a collection put together of 100 Authors Against Einstein, meant to criticize his theory of relativity. Einstein’s reaction is wonderful:

Why 100 authors? If I were wrong, one of them would be enough!

One conditions to not get angry or depressed by the myriad vapid, unsubstantiated and ad hominem-type remarks in nearly every book you pick up. This is especially the case in my two areas of “expertise” – environmental economics and the economics of higher education. Here is an example from the latest, The Big Ratchet, by Ruth DeFries:

Aberrant weather may have precipitated the hatchets that fell in northern Europe’s fourteenth-century famine and England’s late eighteenth-century food riots, but weather was not the only force at play. Markets and politics combined to escalate the crises. Due to markets and politics there was not enough surplus for these populations to make it through the lean times, and often no way for the hungry to get the food that was stored. (wintercow emphasis added)

And of course, what follows is page after page of thoughtful analysis and illustration of that point. From what I know of markets, admittedly very little, there was no such thing as a market economy in the 14th century. Europe was mired in feudalism, and any excess grains grown on the feud merely enabled the children of the nobles to draw some pictures and mold some clay. As far as the foot riots in Britain, they indeed were spurred on by horrible weather, but also there was this tiny matter of a War with France and an inability to import grain from other parts of the world. Note that this does not in itself exonerate markets, especially in England when rapid industrialization and the enclosure movement made it very difficult for the new urban poor to sustain themselves particularly when hard times struck, but at least it is the beginning of an explanation. But in today’s world we can just say stuff like, “markets and politics” did stuff, and we all shake our heads in affirmation.

If someone had told two years ago that one party was going to run a ticket with two ex-governors who were regarded as competent and scandal-free while another party was going to run Trump, which would you have guessed would be the mainstream party and which would you have guessed would be the wacko third party?

Between now and November, could the mainstream media take notice of this? How would it affect the race if the media started to take the — ticket seriously?

I took out one word from the original quote, to drive the point home a bit more. Of course Arnold is hallucinating. “The media” will not take it seriously, and most people get their jollies off by saying they are a Team Reebok member or Team Nike member. So it will be a long, cold day in hell when something changes.

Older Posts »