@TheEconomist on a hybrid #VirtualParliament.

"Back to Abnormal"

Bagehot, The Economist, April 25, 2020

available at https://tinyurl.com/y8xn8dyb

This past week the Economist's Bagehot columnist wrote about the implementation of what are Zoom meetings for the United Kingdom's House of Commons, and some of the practical consequences. Adrian Wooldridge writes the column at this time. It is named after Walter Bagehot, a former editor of the Economist and author of "The English Constitution" (one of the books I kept from undergrad). He's also known for his rule for central bankers in a panic from "Lombard Street ("lend freely and at a penalty rate"). Both have been very practical of late, given COVID-19.

I wonder how we will regard the hybrid approach described herein in a few years.  While change has come for everyone, not least the "Mother of Parliaments" (churches were closed in the UK this year for Easter for the first time since apparently 1218), the piece makes clear the essential work that elected officials must do to support newspapers in their efforts to scrutinize the government. In the UK it is essentially only MPs that possess the combination of three critical tools -- they may ask written questions that the relevant ministers are obliged to answer, they have detailed knowledge of their own local constituencies, and they have the ability to speak on behalf of the voters.

Perhaps the "hybrid" we should be watching is not online versus in person meetings of Parliament. Instead it may be that recognizing that government accountability in the United Kingdom increasingly depends upon cooperative joint scrutiny by MPs and the press. Perhaps it would be best to call this the era of the dual hybrid Parliament ...

@TheEconomist on Alcohol and Health.

"A Sober Brawl," available at https://shrtm.nu/8Jwl
Sources: “Drug harms in the UK: a multicriteria
 decision analysis”, by D. Nutt et al., The Lancet;
 “How dependent is the alcohol industry on heavy
drinking in England?” by A. Bhattacharya et al.,
Addiction; Centre for Responsive Politics; NHS

A brief piece this week, on the Economist's "graphic detail" item.  "Vaping" has been in the news, with ancillary reporting relating to tobacco and smoking. The newspaper points out, however, that it is alcohol that causes far more harm, and further illustrates (troublingly) that industry profits are based on the dependency of problem drinkers.  Should all who drink at hazardous or harmful levels moderate, the price rises necessary to maintain profits would be significant.

True, firms engage in public messaging to the contrary. But it appears public health officials question their commitment.  The article points out that the National Institutes of Health recently stopped working with the industry as a consequence, as did the World Health Organization. Perhaps sensing the danger, lobbying spending by alcohol firms has been on the rise. It now exceeds that of the tobacco industry by 31%.

image available at http://tinyurl.com/qh8ww2f

It's not the way we think about these things in the northern part of the San Francisco Bay Area, where so many wineries (and increasingly distilleries and breweries) find their homes. We think of the beauty of the orderly rows of vines. "Living on a vineyard" evokes a mental flash of magic and starlight, hopefully in some way both natural and sustainable. Further, such vistas are reminiscent of James Scott's legible forests -- suggesting, to borrow from David Brooks, that our desire for ordered rationality has found symmetry in our cultivation of the natural environment where we reside.

Yet the industry those rows of vines serve has its problems. To paraphrase Brooks, the highest form of wisdom is balancing the networks that shape our reality by perceiving, evaluating, and acting upon evidence.  Doing so means recognizing that the beauty of Napa and Sonoma, as ever, can come with an uncomfortable cost. Per the bard, roses have thorns, and silver fountains, mud, while clouds and eclipses stain both moon and sun. Sobering thoughts indeed.

@econbartleby and @billswindell at @TheEconomist and @NorthBayNews, respectively.

As I lamented the result from St James' Park this morning, I looked for an insightful article from The Economist. A nice part of focusing on one piece is the chance to learn about the writer. Knowing these journalists grow up and live in a certain context humanizes them. For example, I ran across a piece by Motoko Rich of the New York Times a few years ago, and was surprised to find she grew up in the small town literally next door in Sonoma County.

Philip Coggan

available at https://shrtm.nu/EYpO

So, today, it's the Bartleby columnist, Philip Coggan. He's a graduate of Sidney Sussex College, one of the constituent colleges at Cambridge University. His work at the Financial Times, authorship of several books, and awards won belies his skill, but details on his person are scarce. He has a feed at Medium, though, where his words on the loss of a pet say much. It recounts how he, his daughter, and his wife said goodbye, recalling Philip's loss of his own father as a child:

"We take small pleasures from our pets. The purr of a cat as it is stroked; the excitement of a dog as it chases a ball; the occasional bursts of madness as a cat attacks a piece of string or a dog chases its own tail. They create a rhythm to the day; the morning feed, the afternoon walk, the night-time arrival of cat on bed, eager for shared bodily warmth. And there is satisfaction from a relationship that is so uncomplicated; in return for food and affection, the dog or cat will stay around. There are no arguments; no sudden estrangements. These small joys help us through the long days and nights. My cat will no longer be the first to greet me when I open the front door. How can I not be sad that he’s gone?"

Julian Richer

available at https://shrtm.nu/o5fQ

Perhaps fitting for a financial journalist with such a sense of the personal, the piece this week is his writing on the appropriately-surnamed Julian Richer.  Richer made his fortune in peddling high-end audio equipment in the UK, from stores cheekily named "Richer Sounds." Richer's parents had both worked for Marks & Spencer (for an American, think maybe Macy's), and he entered the business at fourteen.  Coggan draws attention to Richer for the unusual fact that Richer has planned to give away much of his wealth to his employees.

When asked why, Coggan writes that Richer claims inspiration from the nearly 40-year-old book "In Search of Excellence." Richer maintains (and Coggan appears to agree) that the case studies therein illustrate that top performing companies treat both customers and employees well. "Organizations that create a culture based on fairness, honesty, and respect reap the rewards ... [t]hey attract motivated staff who are there for the long haul."

Coggan does not concede that Richer's arguments are ones for general application. He notes that Richer Sounds' turnover is a mere $157 million. That about matches the four supermarkets in the little City of Sonoma. However, he points out that the UK's high street retailers and supermarkets (M&S, Asda) have sought Richer out for his insight, suggesting lessons for the business community as a whole.

The point Coggan doesn't quite tease out (and I give him the benefit of the doubt here, for the column is a brief one), is that Richer, while not running a family business, is definitely in the family business.  His folks were retailers.  His approach to employees mirrors many family businesses in my part of semi-rural California. Bill Swindell of the Santa Rosa Press Democrat made this point five years ago, with his article "All in the Family." Swindell's quote from Marcus Benedetti (Clover-Sonoma) sums it up, as the CEO of the longtime dairy said "I look at myself as a temporary steward of something I can pass on to my children."

Over the past months and years, increasingly, navel-gazing about the raison d'être of companies has been a recurrent theme in the business press. The Economist has been no different. Contemporary capitalism often feels simultaneously disconnected from place while focused on individual cults of personality, provoking something of a crisis. It has not always been thus. When so many large business organizations in the United States came into existence in the Gilded Age, the personalities involved were known to one another, and the ownership thereof was often family-based, if dysfunctional.  Discomfort with family-type structures may therefore be present for good reasons -- embarrassing, emotional strife was and is common, messy details are inevitable, and nothing saps a meritocracy like nepotism.

Business is replete with family fortunes won-and-lost, the proverbial "shirtsleeves to shirtsleeves in three generations." It is understandable then, that with family life often resembling nothing so much as a blooper reel, that businesses would have a long-deep discomfort with management principles that may very well be family-derived. What irony there is, then, in the unstated suggestion of Mr. Coggan's piece — that at the core of successful businesses, those impersonal machines of prosperity, is the resiliency, reciprocity, and, yes, care for one another upon which family depends?

@TheEconomist (Ann Wroe?) on Dr. Robert McClelland and #JFK.

Wikipedia, "John F. Kennedy"

image available at https://shrtm.nu/8I21

Like many, I take Sunday afternoon and evening as an opportunity to review The Economist in print. While I scan its articles Thursday morning Pacific Time as they go live in London, I'm looking at the leaders in the throes of a workday. My review of the more detailed discussions and analysis of the newspaper takes place later, as the sun sets, children go to bed, and quiet descends on Sunday. I try to pick out at least one article to save: I don't have a formula for it, but I usually know the piece when I see it.

This week it was the obituary, and I suspect it was written by Ann Wroe (The Economist eschews bylines). She took a first in History and a doctorate in medieval history (Oxford, 1975), then worked for the BBC before joining The Economist in 1976 to cover American politics. She eventually became the Books and Arts editor (1988-1992) and US editor (1992-2000). She has edited the Obituaries page, usually writing the obituaries herself, since October 2003. I personally started reading the Economist in 1991 or 1992, so I've been reading her work for nearly 30 years, although usually unaware of the fact when I'm doing so.

Ann Wroe

Obituaries Editor

The Economist

available at https://shrtm.nu/k5r8 

The obituary this week regards Dr. Robert McClelland, a remarkable surgeon from Dallas in his own right. For nearly 30 years starting in the 1970s, he self-published “Selected Readings in General Surgery,” a regular compendium of journal articles — accompanied by his critiques. As the article notes, at one point, nearly 60% of America's general surgery residents subscribed, as the journal was a collection of the most useful new articles regarding first-hand surgical experience. That alone makes Dr. McClelland noteworthy, but it was the events of one week more than a half century ago that brings his passing to the attention of an English magazine in the 21st century. For Dr. McClelland was called to operate in an emergency on both President John F. Kennedy, and Lee Harvey Oswald, in the space of nearly 48 hours in November 1963.

The maelstrom of theories regarding the Kennedy assassination has never held my interest, despite the fact that the man has always been a hero for me. That he died for his country, rather than how, has always loomed far larger in my psyche. As Mark Shields, the longtime PBS Newshour commentator notes, Americans form individual relationships with the presidents.  Kennedy has always been the figure that comes to mind for me when I consider the office; as a near-mythical figure, and as the only Irish-Catholic (like me) to occupy the Oval Office, that is perhaps natural.

"To save a life"
"Robert McClelland died on September 10th, 2019"
The Economist
available at https://shrtm.nu/QNHI

However, the obituary of Dr. McClelland noted that, unlike the other surgeons in the room operating on President Kennedy, he disagreed with the conclusion of the Warren Report. His significant experience in dealing with the consequences of gunshots, and his position at the head of the table, caused him to examine both of the wounds of the stricken President. While the wound to the neck appeared to come from the back, the injury to Kennedy's head, in the opinion of Dr. McClelland, clearly came from the front -- indicating that more than one assassin participated.  After witnessing the Zapruder film years later, Dr. McClelland felt that the theory was validated, as the New York Times wrote in its obituary.

The tone and tenor of the obituary treats Dr. McClelland as a faithful and reliable witness. My sense is that the author thought Dr. McClelland's theory was right. If indeed Wroe is the author, she is unquestionably an individual with a great degree of reporting skill. She has borne witness to the reality of American presidential politics at the highest level for nearly fifty years.  What other discussions Ms. Wroe has had over the decades that informed her opinion, I and perhaps no one else can say.

But that she chose to draw attention to this careful, methodical, dedicated surgeon was no accident.  Both she and he fully appreciated the importance of what happened on November 22, 1963. Dr. McClelland preserved the blood stained shirt in which he operated that day for the rest of his life. He had fought that afternoon to save the life of a 46-year-old father of two, who happened to also be the leader of the free world. He would fight every bit as hard two days later to save the life of the accused assassin. There are fewer higher tributes to the medical profession than the sense of duty that compelled this surgeon to render aid under both circumstances. For that, the McClelland family has much to be proud.

@noahpinion on how Colleges affect Communities.

I tend to spot articles over time that I can tell will have some future relevance, but I can't always put my finger on it.  A good example of why saving copies of such pieces is important is here -- I didn't know what to make of that oil price article in 2012, but I certainly did by the end of 2014.

Similarly, I am linking to an article today from March, that I had thought would be part of a more complicated piece.  It's from Noah Smith, a former finance professor who blogs himself professionally for Bloomberg. The piece is interesting on its own merits because so many of us seem to think of a college as a place that educates the local population, and because, in true academic fashion, Noah points in a different direction:

"... ideas and technology leak out to surrounding businesses in myriad ways ... [a]cademics consult for local businesses. [Staff] start local businesses of their own. Companies ... hire smart people away from... campus jobs. [Colleges] provide forums for local entrepreneurs, inventors and academics to meet each other, exchange ideas and offer employment ... [h]igh-productivity technology businesses therefore tend to cluster ... in order to take advantage of the rich flow of ideas and skilled workers. That, in turn, draws smart educated people from other regions, boosting productivity and raising wages even for less-educated locals."

That the impact of an educational institution is, economically, in many respects due to the private-sector activity it influences in the surrounding economy, rather than the degreed individuals marching out the door in regular intervals, is I think a key to understanding the intuitive interest so many have in the fate and future of their local schools and colleges, beyond whether they or their children did, will, or do attend at any given time ...

@TheEconomist on #Homelessness in @SFGov.

I blog from time to time on the trustworthiness of news sources, and in general in the United States, the Economist is often considered the most reliable when surveys of the public are conducted. Before the June 5, 2018 primary in California, they took a look at San Francisco's Mayor's race. Their article touched the twin problems of the cost of housing and of homelessness, and I recommend the piece (available online here).

It's disturbing reading.  The author (The Economist eschews bylines) confronts the lived reality in terms that the reader can almost smell.  But the striking sentence to me was "[t]o voters, though, the problem seems to be getting worse ... '[but t]here’s not more homelessness than before. It’s just a lot more visible,” says [Jeff] Kositsky [San Francisco's Director of Homelessness Services]."

We all struggle in the San Francisco Bay Area to understand how wealth disparities in the nine county area can rival those on display in what the article characterizes as "poor-world entrepôts." But that the situation has become clear to so many is not in dispute, and perhaps that is the silver lining -- for we must have awareness before we can take action together.

The Return of #Cash.

Image available at http://tinyurl.com/yaxw3y5g

Just a brief note today, regarding reporters who are pointing to an economic and financial shift.  Extraordinarily low interest rates have had a significant impact on asset prices in Sonoma Valley (as I blogged about here, here, and here).  In 2015, Robert Shiller pointed out that in the San Francisco Bay Area, that most people expected annual home price increases over the next decade of 5%. However, more than a quarter of respondents thought prices would increase each year by 10% or more. Many of the second group leveraged (and profited impressively) as real property prices have continued to rise over the intervening 36 months.

S&P 500 dividend yield v. 3-month T-bill yield

courtesy the Board of Governors of the Federal

Reserve System (US), retrieved from the Federal 

Reserve Bank of St. Louis [FRED] May 15. 2018. 

S&P 500 dividend yield courtesy mutlpl.com,

 May 15, 2018. Excel data and graph available here.

Today, though, there is evidence that change is afoot, as the yield on "cash" (short term Treasuries) now exceeds the dividends on a broad range of stocks (the S&P 500).  The Financial Times' graph, courtesy of John Authers, is on the right.  I extended the graph back a bit (to 1933) just to get a longer perspective, via FRED and multpl. For about a thirty year period, dividends were generally always higher, until some point in June of 1963, when the rule flipped. Cash was king, more or less constantly, for the following ~2,335 weeks, until February of 2008. There are periods where these two measures briefly "invert" from the norm in both eras (e.g. 1959 for dividends, 2002 for cash), but it's unusual.

What does it mean? Stanford economist Bob Hall (who continues as chairman of the academic panel that dates American business cycles) notes that, economic syncopation being what it is, “[t]he next recession will come out of the blue ... just like all of its predecessors.” However, the Economist has pointed out previously that this economic cycle is already running exceptionally long at ~105 months, and it is now more than a year past the average of the last three (the longest ever, March of 91-March 01, was 120 months).  Meanwhile, valuations continue to be particularly rich (the Shiller PE is at 32.33, in excess of the '29 crash and only matched by the dot-com bubble). My sense is that the financial columnists pointing to this data are wondering how "out of the blue" a contraction could be at this point. Which is an interesting point to consider, when one reflects on the power of narratives in financial markets.