• everyday economics and robots picking grapes

    Why Robots Will Pick Our Produce

    Apr 30 • Businesses, Demand, Supply, and Markets, Economic Growth, Economic History, Labor, Macroeconomic Measurement, Tech • 144 Views

    Wall-Ye is a French robot. Stories about Wall-Ye indicate that he prunes, de-suckers and can pick grapes. He even is supposed to have a GPS that automatically turns off when he strays so he won’t pick your neighbor’s crop. And to prevent robot-napping, his gyroscope signals, “Help!” when some would-be snatcher lifts him off the ground.

    Wall-Ye’s basic purpose is to increase yield by pruning and de-suckering better than humans. Weighing 44 pounds, it has four wheels, two arms and six cameras.

    This is Wall-Ye:

    Whether the Wall-Ye stories are slightly exaggerated or not, we do know for sure that robots are on the farm and becoming more adept at doing what people have been accomplishing for millennia.

    Strawberry Picking Robots

    For the strawberry grower, a 16-arm picker has been developed. Amazingly, after the agrobot’s sensors are shown specific berry colors, it then selects the ripe ones and deposits them in its small metal baskets. 

    In this video, at 0:58, you can see it clipping the berries. Otherwise, the focus is on the worker depositing the berries in their packages.

    Rather than using color sensors, this strawberry picker will use electromagnetic radiation that measures water content to identify the sweetest berries.

    Productivity from robotic strawberry pickers

    From: Wired

    Our Bottom Line: Productivity

    As you can see below, robotic innovation will continue the trends that have propelled U.S. agriculture during the past century.

    Farm output is up:

    Farm Productivity

    From: “A Brief History of U.S. Agriculture”

    Farm population is down:

    Productivity up from fewer people.

    From: “A Brief History of U.S. Agriculture”

    Farm size is up:

    Productivity from larger farms

    From: “A Brief History of U.S. Agriculture”

     

     

     

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  • Everyday economics and A 13 month calendar would create positive externalities.

    Why a Year Should Have 13 Months

    Apr 29 • Behavioral Economics, Businesses, Economic Debates, Economic History, Economic Thinkers, Government, Innovation, Labor, Lifestyle, Regulation, Thinking Economically • 195 Views

    Sometimes sunk costs entice us to stick with what we have because of the time and energy we’ve already invested. You know, like after you are on hold for 10 minutes, you don’t hang up because you focus on your sunk cost–that 10 minutes–rather than the cost of additional wait time.

    Maybe sunk cost is the reason we don’t have a 13-month year.

    Where are we going? To the value of a standardized yearly calendar.

    The 13-Month Calendar

    Think of how nice it would be if every month were 28 days long. With precisely four weeks, months would not only be the same length but days would fall on the same number. So the first Monday of the month would always be the 2nd, the first Tuesday the 3rd, and the fourth Saturday the 28th. And yes, every month there would be a Friday the 13th.

    In 1902, a gentleman who worked on statistics for the British Railway developed the concept of a standardized month. Enticed by the consistency the 13-month calendar created, Moses B. Cotsworth explained that all months retained their names while the extra month Sol (summer solstice) would be inserted between June and July. Unattached, the additional day he needed to get to 365 was placed at the end of December. The last detail, a leap year, meant that every four years, a 29th day preceded Sol 1.

    The 13-Month Calendar:

    Positive externalities from the 13 month calendar

    From: citylab.com

     

    When Cotsworth toured the U.S., the one famous person he convinced was George Eastman (Kodak camera inventor). Adopting the schedule for Eastman Kodak in 1924, Eastman had the year divided into 13 periods that served as a consistent organizational and financial planning structure. You can see the plusses. With equal months, resources could be allocated according to one monthly template. Comparing monthly sales, 28 days was the constant.

    Although Eastman could not convince the U.S. Congress to switch to his calendar, Kodak used the 13-period calendar from 1924 to 1989:

    Kodak enjoyed positive externalities from a 13 month calendar.

    From: citylab.com

    Our Bottom Line: Externalities

    Whether looking at time zones, weights and measures or the atomic clock, we can say that standardization creates efficiency. As a positive externality, that efficiency creates a slew of business benefits. Comparing monthly revenue for example, you always mean 28 days.

    At home and for government, a standardized month would also come in handy. Told you had March 11 as a vacation day, you would know it was a Wednesday.

    But yes, the sunk cost of the past precludes any possibility that we will ever switch.

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  • everyday economics free trade TPP

    Three Charts That Explain the TPP Free Trade Deal

    Apr 28 • Businesses, Demand, Supply, and Markets, Developing Economies, Economic Debates, Economic Growth, Economic History, Economic Thinkers, Environment, Financial Markets, Government, International Trade and Finance, Labor, Macroeconomic Measurement, Regulation, Thinking Economically • 250 Views

    Sometimes it can be tough to sell free trade.

    Where are we going? To the complexities of the TPP (Trans-Pacific Partnership) trade negotiations.

    Trans-Pacific Partnership History

    Our story starts in 2003 with Chile, New Zealand, and Singapore. Joined by Brunei in 2005, the “P-4″ had a trade agreement the next year. Only the beginning, negotiations were continuing on finance in 2008 when the U.S. entered and soon was joined by Australia, Peru and Vietnam. With Malaysia, Canada and Mexico and later Japan, the talks (now at 20 rounds) wound up with 12 nations.

    The TPP 12:

    Free trade and the TPP.

    From: Congressional Research Service

     

    The 12 TPP countries already interconnect through existing trade agreements.

    Existing free trade agreements

    From: Congressional Research Service

     

    Negotiating Topics

    If we had to name one theme tying their huge list of topics together, it would be market access. Goods and services will be able to move with ease among the 12 nations as supply chains interlock, tariff and non-tariff barriers are eliminated and common protections are established for areas that include intellectual property, labor and the environment. If a mathematician were handy, she could compute the monumental number of permutations that 12 countries with 30 topics and countless subtopics have to agree on.

    Free trade and the negotiating topics for TPP talks.

    From: Congressional Research Service

     

    The U.S. Congress

    And finally, we can add to all of this what has to happen domestically. In the U.S. President Obama hopes for trade promotion authority (TPA). Also called fast track, it just means Congress cedes its right to debate the content of a trade deal. Instead lawmakers can only vote yes or no–approve or reject– within 90 days.

    You can see the benefits of fast track for this kind of a deal. Imagine if Congress added an amendment and the 12 nations had to return to the negotiating table and begin all over again!

    Our Bottom Line: Free Trade

    Talking about free trade, economists rarely say, “On the one hand but then on the other.” Almost all agree that free trade is beneficial. The reason takes us back to the early 19th century and David Ricardo. The economist who first explained comparative advantage, David Ricardo (1772-1823) said each nation should make whatever involves the lower opportunity cost in that country. Because we are all doing what we do best, productivity is optimized through specialization and trade. Meanwhile, consumers benefit because worldwide competition lowers prices.

    And yet still, free trade is a tough sell because people tend to focus on protecting domestic industry rather than the growth that globalization creates.

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  • everyday economics and progressive punishment for speeding ticks

    When Your Ability to Pay Determines Your Punishment

    Apr 27 • Behavioral Economics, Economic Debates, Economic History, fiscal policy, Government, Regulation, Thinking Economically • 155 Views

    Posting a Facebook image of his €54,024 speeding ticket (close to $58,000) and a Mercedes his fine could buy, a Finnish millionaire expressed his fury. In a 50 M.P.H. zone, he had been driving 64 M.P.H.

     

    Progressive punishment is like progressive taxation.

     

    Similarly, a Nokia executive was fined €116,000 ($103,000) for driving 75 km/h (47 M.P.H.) in a 50 km/h (31 M.P.H.) zone on his Harley-Davidson motorcycle and another gentleman was asked to pay $44,100 for zigzagging through Helsinki. After his ticket he commented, “if you earn enough you shouldn’t even touch a car.”

    Progressive Punishment

    In Finland, exceeding the speed limit beyond a certain amount and shoplifting are violations of the law for which your penalty is a fine based on your income. Called progressive punishment, the system penalizes the affluent more than those who have less. Day fine advocates say the system is more equitable because they make the rich experience as much pain as those with less.

    Simply explained (there is lots more detail), infractions are ranked by severity. A severity “unit” then gets a multiple of a person’s daily income. That would mean (hypothetically), traveling 15 M.P.H. above the speed limit creates a fine that is 15 times your daily income; 25 M.P.H. above would be a multiplier of 20 times what you earn each day.

    Called a day fine system because it seizes your day’s income, the approach was first implemented by Finland in 1921. Germany used it to diminish its prison population for any crime with a six-month or less lock-up span. While we did experiment with day fines in the U.S. during the 1980s in Staten Island, NY for crimes that ranged from loitering to theft and in Milwaukee, it never stuck. In Europe though, Sweden, Switzerland, Germany, Austria, and France have day fines.

    Our Bottom Line: Progressive Taxation

    Some say it is never fair for those with less to pay more and yet it happens everyday at the cash register. For every sales tax, whenever everyone pays the same amount, the poor are paying a higher percent of their income. For that reason the tax is called regressive. By contrast, as with the Finn speeder, when the more affluent pay a higher proportion of their income than those with less, the tax is called progressive.

    And, whether contemplating progressive punishment or progressive taxation, we just have to decide whether we believe ability to pay should be our rationale.

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  • everyday economics at Starbucks

    A New Message From Starbucks

    Apr 26 • Businesses, Demand, Supply, and Markets, Economic Humor, Innovation, Labor, Lifestyle • 230 Views

    Think Maxwell House and you have the coffee culture that preceded Starbucks. Made with low quality beans, sold in cans, pre-ground, sitting for months and maybe years, the coffee was terrible. So, when Starbucks came to town, it was transformational. Paying more than at the local luncheonette, the first Starbucks customers in the 1990s felt special. Perhaps because the idea was somewhat European, the concept of the coffeehouse had status. In a world of coffee that had been dominated by cans of Maxwell House, Starbucks was elite.

    No more.

    Now with a Starbucks (or two) on every block, Starbucks has become rather ordinary. Those of us looking for an aspirational coffee experience with a better bean from a small far-off farm have been flocking to places like Blue Bottle and Philz.

    In last week’s investor call, Starbucks’s CEO and founder Howard Schultz seemed quite aware that he had to recapture the gourmet coffee consumer. Describing Starbucks’s new Roastery coffeehouses, he used the words “ultra-premium, small batch, limited availability.” No longer called a barista, Coffee Masters assist us at Roasteries. And, at $20 a pound and more, prices also convey an elite message.

    Our Bottom Line: Competitive Strategies

    An economist might say that Schultz understands how to compete in a monopolistically competitive market structure. Because you just need an espresso maker and some beans, market entry is easy. But to be successful, you need something unique–the monopolistic part. Starbucks, through its beans, its barista training and its store design initially competed successfully.

    To regain that special image, the action is taking place at the margin. While Starbucks’s everyday coffee experience remains the same, its Roasteries are supposed to elevate its image. By retaining the masses and entering the ultra-premium coffee market, will Starbucks have its cake and eat it too?

    Moving closer to monopoly along a market structure continuum, firms become larger and more powerful.

    Starbucks competitive strategies

     

    And finally, for a laugh and a reminder of the Starbucks culture, below, Ellen sends Dennis Quaid to Starbucks.

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