Some of the most fascinating topics covered this week are: Economics (Law of demand-supply isn't fair), Lifestyle (End of meat is here), Finance (Suze Orman will ride you out the financial storm), Technology (Hacker who turned into a hero overnight, only to be arrested soon), and Investing (Three sides of risk).
At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, ranging from zeitgeist to futuristic, and encapsulate them in our weekly ‘Ten Interesting Things’ product. Some of the most fascinating topics covered this week are: Economics (Law of demand-supply isn’t fair), Lifestyle (End of meat is here), Finance (Suze Orman will ride you out the financial storm), Technology (Hacker who turned into a hero overnight, only to be arrested soon), and Investing (Three sides of risk).
Here are the ten most interesting pieces that we read this week, ended May 29, 2020:
1) The law of supply and demand isn’t fair [Source: NY Times]
Most of the stores’ shelves were empty when the coronavirus pandemic started. People grabbed and stocked anything and everything they could lay their hands on. So, what happened to the laws of supply and demand? Why didn’t prices rise enough to clear the market, as economic models predict? A paper written by Richard Thaler, a professor of economics and behavioral science at the Booth School of Business at the University of Chicago, Daniel Kahneman, a psychologist, and Jack Knetsch, an economist, explored this problem. They found that the answer may be summed up with a single word, one you won’t find in the standard supply-and-demand models: fairness. Basically, it just isn’t socially acceptable to raise prices in an emergency.
They asked people questions about the actions of hypothetical firms. For example: “A hardware store has been selling snow shovels for $15. The morning after a blizzard the store raises the price of snow shovels to $20.” Fully 82 percent of our respondents judged this to be unfair. The respondents were Canadians, known for their politeness, but the general findings have now been replicated and confirmed in studies around the world. We have seen similar behavior after hurricanes. As soon as a storm ends, there is typically enormous demand for goods like bottled water and plywood. Big retailers like Home Depot and Walmart anticipate this, sending trucks loaded with supplies to regions just outside the danger zone, ready to be deployed. Then, when it is safe, the stores provide water for free and sell the plywood at the list price or lower.
When anyone tries to reap big profits in an emergency like this, it can look ugly. Entrepreneurs see a disaster as an opportunity and so will fill up trucks with plywood near their homes, drive to the storm site and sell their goods for whatever price they can get. As a practical matter for businesses, big and small, that want to keep operating for the long haul, it makes good sense to obey the law of fairness. If the next shortage is meat and a store owner realizes that there is only one package of pork chops left, it would be unwise sell it at auction to the highest bidder.
2) The end of meat is here [Source: The New York Times]
You surely must have come across empty grocery store shelves in one of the recent days. Almost everyone has been doing more cooking these days, more documenting of the cooking, and more thinking about food in general. The combination of meat shortages and President Trump’s decision to order slaughterhouses open despite the protestations of endangered workers has inspired many Americans to consider just how essential meat is. Is it more essential than the lives of the working poor who labor to produce it? It seems so. An astonishing six out of 10 counties that the White House itself identified as coronavirus hot spots are home to the very slaughterhouses the president ordered open.
Animal agriculture is now recognized as a leading cause of global warming. According to The Economist, a quarter of Americans between the ages of 25 and 34 say they are vegetarians or vegans, which is perhaps one reason sales of plant-based “meats” have skyrocketed, with Impossible and Beyond Burgers available everywhere from Whole Foods to White Castle. We cannot protect our environment while continuing to eat meat regularly. This is not a refutable perspective, but a banal truism. Whether they become Whoppers or boutique grass-fed steaks, cows produce an enormous amount of greenhouse gas. If cows were a country, they would be the third-largest greenhouse gas emitter in the world.
According to the research director of Project Drawdown — a nonprofit organization dedicated to modeling solutions to address climate change — eating a plant-based diet is “the most important contribution every individual can make to reversing global warming.” We cannot claim to care about the humane treatment of animals while continuing to eat meat regularly. We cannot protect against pandemics while continuing to eat meat regularly. Much attention has been paid to wet markets, but factory farms, specifically poultry farms, are a more important breeding ground for pandemics.
3) Suze Orman is back to help you ride out the storm [Source: NY Times]
Getting your finances right is what pandemics like the current one teaches us all. It is times as such that you realise that you had to have an “emergency fund”. And Suze Orman, America’s favorite financial adviser has been pressing on this for long time now. Although Suze Orman has written more than a dozen books over the last 25 years, her favorite thing to read is people. She reads millennials taking 30-year mortgages on properties they can’t afford, and she reads people in their 50s and 60s holding on to houses merely because their adult children come home a couple of times a year for holidays. When the economy is good, Ms. Orman’s business does fine. But your bust is her boom.
Occasions like these are when she emerges as a saviour. Recently, she delivered a virtual master class. She said, “You’ve heard me say for years, you need to have an eight-month emergency fund,” she said. “If you had an eight-month emergency fund, you wouldn’t be freaked out about paying your mortgage, or your rent or your bills or anything. But so many of you didn’t. You had $150,000 coming in a year, $200,000, whatever it is, and your bills were exorbitant because you know and I know that you were spending more money than you had coming in, and now, maybe for the first time in your life, you still have all these bills that have to be paid, you don’t have any money to pay them with, and you’re totally freaked out.”
“She’s a naysayer,” said David Zaslav, a friend and the president and chief executive of Discovery Communications. “The majority of the financial market is driven by commission and convincing you how you can do more by spending more, and Suze is a great voice as an equalizer. And when the 2008 financial crisis hit, the people who listened to Suze were OK. They weren’t buying houses they couldn’t afford, they weren’t overleveraged.” One of Ms. Orman’s biggest mantras is that no one should really retire until they’re 70. With the current pandemic, she’s wound up being as in demand as Lysol wipes and rescue dogs. Hoda Kotb wanted her on the “Today” show. She started doing hits with CNN and MSNBC. PBS booked her to shoot yet another special.