Food and Drink

That is the title of my latest Bloomberg column; I love Chinese megacities, don’t you?  Here is the first and most general point:

Chinese megacities are associated with the greatest migration in human history, namely the movement of several hundred million people from the countryside into urban areas. This has created over 100 cities with a population of more than one million. And while Westerners tend to see only the harmful effects of that transformation, it’s gone fairly smoothly. Wages and living standards have risen to create the biggest rapid boost in prosperity the world has seen, ever. Surely it’s worth taking a closer look at that.

Here is the most important point:

If you spend a few days in these places, they will stand out as quite distinct. To suggest otherwise is actually to repeat a common Western imperialist meme about the Chinese, namely that they “are all the same” in some underlying manner. Observing and understanding diversity is a skill, and the Chinese megacities are one of the best places for cultivating this capacity.

By the way, the cameo appearance in the opening bit is Dan Wang.

Mostly not, here is a good article by Maura Judkis.  Here is part of the chat with me:

What’s happening is something that some restaurateurs may not want to hear: Competition in an already-tough business is getting even tougher. Cowen has an analogy: “Say you went to Hollywood and you asked, ‘Is there an actors-and-actresses bubble?’ ” he said. True, there is an overabundance of aspiring stars who move to Los Angeles with dreams of making it big. They spend money, time and effort investing in their future. But for most of them, it will never pay off. Drama-school graduates know the risks, and still, they keep heading west, because they believe that they are different. With some hard work, they’ll be the ones to make it big. The overabundance of young ingenues will continue in perpetuity.

“You have too many people trying, but that’s going to persist more or less forever precisely because the reward is high,” said Cowen. “The world of fancier restaurants” — and casual restaurants, too — “has become more of a winner-take-all world.”

And how is this for a blasé response?:

There may be plenty of openings, but “the lower echelons of the business, they’re tapped out. You can’t find people [staff],” said Paul Guzzardo, a restaurant consultant and partner in several restaurants, including Leopold’s Kafe . He thinks that indicates a bubble, but Cowen disagrees.

“It has not been a speculative fervor,” Cowen said. “The laws changed, prices went up, some places had to adjust.”

The article is substantive throughout.

You don’t see many luxury goods shops, as the region has been deindustrializing since the 1990s.  There are modernist 1920s cement buildings scattered in some of the old central parts of the city, but nowhere is it attractive.  There is a nine-hour Chinese movie about the city falling on hard economic times, with its three segments called “Rust,” “Remnants,” and “Rails.”

If you travel a lot, you should not restrict yourself to “nice” places, which are more likely to disappoint.

Many of the city’s faces seem to have Korean, Japanese, or Turkic elements, befitting the location and the history.

The main sight is the Manchu imperial palace, a smaller, more accessible, and more atmospheric version of Beijing’s Forbidden City, but with hints of 17th century Manchurian and Tibetan styles.  This city ruled China in the early years of the Qing Dynasty, before the torch was passed to Beijing.

Embedded in Marshal Zhang’s Mansion is the best museum of money and currency I have seen; the Marshal was a heroic leader in the war against Japan, but later made “a wrong choice” and spent much of his 100-year life under house arrest.

The two major tombs in the city have little to offer except long walks on flat plains leading essentially nowhere.

For food the city shines, even by Chinese standards.  Laobian Dumpling serves what are perhaps the best dumplings I have had, and Xin Fen Tian is the place for fine regional specialties.  The city’s cuisine blends meat-heavy, dumpling-related Manchu dishes, rich and earthy casseroles, stews, and mushrooms, and finally Shandong-inspired seafood styles, stemming from the proximity to the coast.  The quality of the local fruit is high, blueberries and cherries included, and the nuts are famous throughout China.

Here is Wikipedia on the Soviet-Sino conflict of 1929, in which Shenyang (then Mukden) played a significant role.  The Mukden incident of 1931 was used to provoke/excuse the Japanese invasion of Manchuria.  Nowadays, Shenyang is a major stop on the North Korean refugee route to Laos (China returns them to NK, but some other countries will send them to SK).

Hardly any non-Chinese tourists come here, and that seems unlikely to change.  Yet this is a rich corner of history and cuisine, a former leader of Asian industrialization, a major seat of historic conflict, a crossroads of cultures, and now a mostly forgotten piece of turf.  What more could a boy want?

If Shenyang stays sleepy, the world will remain safe!

The Seattle Minimum Wage Study, a study supported and funded in part by the Seattle city government, is out with a new NBER paper evaluating Seattle’s minimum wage increase to $13 an hour and it finds significant dis-employment effects that on net reduce the incomes of minimum wage workers. I farm this one out to Jonathan Meer on FB.

This is the official study that was commissioned several years ago by the city of Seattle to study the impacts of raising the minimum wage, in a move that I applauded at the time as an honest and transparent attempt towards self-examination of a bold policy. It is the first study of a very high city-level minimum wage, with administrative data that has much more detail than is usually available. The first wave (examining the increase to $11/hr) last year was a mixed bag, with fairly imprecise estimates.

These findings, examining another year of data and including the increase to $13/hr, are unequivocal: the policy is an unmitigated disaster. The main findings:

– The numbers of hours worked by low-wage workers fell by *3.5 million hours per quarter*. This was reflected both in thousands of job losses and reductions in hours worked by those who retained their jobs.

– The losses were so dramatic that this increase “reduced income paid to low-wage employees of single-location Seattle businesses by roughly $120 million on an annual basis.” On average, low-wage workers *lost* $125 per month. The minimum wage has always been a lousy income transfer program, but at this level you’d come out ahead just setting a hundred million dollars a year on fire. And that’s before we get into who kept vs lost their jobs.

– Estimates of the response of labor demand are substantially higher than much of the previous research, which may have been expected given how much higher (and how localized) this minimum wage is relative to previously-studied ones.

– The impacts took some time to be reflected in the level of employment, as predicted by Meer and West (2016).

– The authors are able to replicate the results of other papers that find no impact on the restaurant industry with their own data by imposing the same limitations that other researchers have faced. This shows that those papers’ findings were likely driven by their data limitations. This is an important thing to remember as you see knee-jerk responses coming from the usual corners.

– You may also hear that the construction of the comparison group was flawed somehow, and that’s driving the results. I believe that the research team did as good of a job as possible, trying several approaches and presenting all of their findings extensively. There is no cherry-picking here. But more importantly, without getting too deep into the econometric weeds, my sense is that, given the evolution of the Seattle economy over the past two years, these results – if anything – *understate* the extent of the job losses.

This paper not only makes numerous valuable contributions to the economics literature, but should give serious pause to minimum wage advocates. Of course, that’s not what’s happening, to the extent that the mayor of Seattle commissioned *another* study, by an advocacy group at Berkeley whose previous work on the minimum wage is so consistently one-sided that you can set your watch by it, that unsurprisingly finds no effect. They deliberately timed its release for several days before this paper came out, and I find that whole affair abhorrent. Seattle politicians are so unwilling to accept reality that they’ll undermine their own researchers and waste taxpayer dollars on what is barely a cut above propaganda.

I don’t envy the backlash this team is going to face for daring to present results that will be seen as heresy. I know that so many people just desperately want to believe that the minimum wage is a free lunch. It’s not. These job losses will only get worse as the minimum wage climbs higher, and this team is working on linking to demographic data to examine who the losers from this policy are. I fully expect that these losses are borne most heavily by low-income and minority households.

The orcas will wait all day for a fisher to accumulate a catch of halibut, and then deftly rob them blind. They will relentlessly stalk individual fishing boats, sometimes forcing them back into port.

Most chilling of all, this is new: After decades of relatively peaceful coexistence with cod and halibut fishers off the coast of Alaska, the region’s orcas appear to be turning on them in greater numbers.

“We’ve been chased out of the Bering Sea,” said Paul Clampitt, Washington State-based co-owner of the F/V Augustine.

Like many boats, the Augustine has tried electronic noisemakers to ward off the animals, but the orcas simply got used to them.

“It became a dinner bell,” said Clampitt.

John McHenry, owner of the F/V Seymour, described orca pods near Alaska’s Aleutian Islands as being like a “motorcycle gang.”

“You’d see two of them show up, and that’s the end of the trip. Pretty soon all 40 of them would be around you,” he said.

A report this week in the Alaska Dispatch News outlined instances of aggressive orcas harassing boats relentlessly — even refusing to leave after a desperate skipper cut the engine and drifted silently for 18 hours.

These are not Coasean orcas, or are they?  And sperm whales are now in on the act:

Fishing lines are also being pillaged by sperm whales, the large square-headed whale best known as the white whale in Moby Dick.

“Since 1997, reports of depredation have increased dramatically,” noted a report by the Southeast Alaska Sperm Whale Avoidance Project.

A remarkable 2006 video by the Avoidance Project captured one of the 50,000 kg whales delicately shaking fish loose from a line. After a particularly heavy assault by sperm whales, fishers are known to pull up lines in which up to 90 per cent of the catch has disappeared or been mangled.

Here is the full story, with video, and further points of interest.  For the pointer I thank the excellent Mark Thorson.

I am of course excited about this, as his 1491 and 1493 are two of my favorite books:

The Wizard and the Prophet: Two Remarkable Scientists and Their Dueling Visions to Shape Tomorrow’s World

Here is the Amazon summary:

In forty years, Earth’s population will reach ten billion. Can our world support that? What kind of world will it be? Those answering these questions generally fall into two deeply divided groups–Wizards and Prophets, as Charles Mann calls them in this balanced, authoritative, nonpolemical new book. The Prophets, he explains, follow William Vogt, a founding environmentalist who believed that in using more than our planet has to give, our prosperity will lead us to ruin. Cut back! was his mantra. Otherwise everyone will lose! The Wizards are the heirs of Norman Borlaug, whose research, in effect, wrangled the world in service to our species to produce modern high-yield crops that then saved millions from starvation. Innovate! was Borlaug’s cry. Only in that way can everyone win! Mann delves into these diverging viewpoints to assess the four great challenges humanity faces–food, water, energy, climate change–grounding each in historical context and weighing the options for the future. With our civilization on the line, the author’s insightful analysis is an essential addition to the urgent conversation about how our children will fare on an increasingly crowded Earth.

I pre-ordered mine but a moment ago.

Ben Thompson writes:

…you can see the outline of similar efforts in logistics: Amazon is building out a delivery network with itself as the first-and-best customer; in the long run it seems obvious said logistics services will be exposed as a platform.

This, though, is what was missing from Amazon’s grocery efforts: there was no first-and-best customer. Absent that, and given all the limitations of groceries, AmazonFresh was doomed to be eternally sub-scale.

WHOLE FOODS: CUSTOMER, NOT RETAILER

This is the key to understanding the purchase of Whole Foods: to the outside it may seem that Amazon is buying a retailer. The truth, though, is that Amazon is buying a customer — the first-and-best customer that will instantly bring its grocery efforts to scale.

Today, all of the logistics that go into a Whole Foods store are for the purpose of stocking physical shelves: the entire operation is integrated. What I expect Amazon to do over the next few years is transform the Whole Foods supply chain into a service architecture based on primitives: meat, fruit, vegetables, baked goods, non-perishables (Whole Foods’ outsized reliance on store brands is something that I’m sure was very attractive to Amazon). What will make this massive investment worth it, though, is that there will be a guaranteed customer: Whole Foods Markets.

…At its core Amazon is a services provider enabled — and protected — by scale.

Here is the full piece, with many more background and points.

Bleg for Dalian, China

by on June 17, 2017 at 8:32 pm in Food and Drink, Travel | Permalink

After my trip to Shenyang, I’ll be in Dalian for the World Economic Forum.  Nonetheless I will get there a day early and have time to look around — what do you all recommend?

He has a new paper on that topic, here is the abstract:

During the Neolithic Revolution, seven populations independently invented agriculture. In this paper, I argue that this innovation was a response to a large increase in climatic seasonality. Hunter-gatherers in the most affected regions became sedentary in order to store food and smooth their consumption. I present a model capturing the key incentives for adopting agriculture, and I test the resulting predictions against a global panel dataset of climate conditions and Neolithic adoption dates. I find that invention and adoption were both systematically more likely in places with higher seasonality. The findings of this paper imply that seasonality patterns 10,000 years ago were amongst the major determinants of the present day global distribution of crop productivities, ethnic groups, cultural traditions, and political institutions.

The pointer is from Jesus Alfaro.  And via Kevin Lewis, here is an interesting paper “Geography, Transparency, and Institutions,” by Mayshar, Moav, and Neeman:

We propose a theory in which geographic attributes explain cross-regional institutional differences in (1) the scale of the state, (2) the distribution of power within state hierarchy, and (3) property rights to land. In this theory, geography and technology affect the transparency of farming, and transparency, in turn, affects the elite’s ability to appropriate revenue from the farming sector, thus affecting institutions. We apply the theory to explain differences between the institutions of ancient Egypt, southern Mesopotamia, and northern Mesopotamia, and also discuss its relevance to modern phenomena.

All of a sudden we are seeing ongoing advances, admittedly connected to speculative hypotheses, in our understanding of this era.

Matt Yglesias: “A big city daily newspaper, physical bookstores, a supermarket chain. Bezos’ futuristic vision is all coming together.”

Alex T. tweeted: “I already do 80% of my shopping at Amazon and Whole Foods. I am beginning to get worried.”

Ross Douthat: “What if Bezos intends to turn Whole Foods into a Mormon-style charitable storehouse …”

Me: “Perhaps preserving my favorite brands of Whole Foods dark chocolate is Jeff Bezos’s plan for short-run public charity.”

@JesalTV: Jeff Bezos: “Alexa, buy me something from Whole Foods.” Alexa: “Sure, Jeff. Buying Whole Foods now.” Jeff Bezos: “WHA- ahh go ahead.”

Here is an earlier Conor Sen piece on Amazon acquisition strategy.

And Stratechery on Amazon.

And above all else: “Dow opens down 10 points. Amazon jumps 3% after deal to buy Whole Foods. Walmart slumps 7%, Kroger plunges 16%”

Here are more retail share price declines.

Shenyang bleg

by on June 11, 2017 at 3:17 pm in Food and Drink, Travel | Permalink

Not too long from now, I’ll be in Shenyang, formerly known as Mukden, and largest city of Liaoning province.  It is also the largest city in China’s Northeast.  What should I do there, and what/where should I eat?  What else do I need to know?  I believe Lang Lang is from this city, and the famous nine-hour documentary Tie Xi Qu: West of the Tracks is set in Shenyang.  Note that “Due to the popularity enjoyed by many Shenyang-based comedians, the city is nationally recognized as a stronghold of Chinese comedy.”

I can hardly believe my good fortune at being able to visit Shenyang.

I thank you in advance for your assistance.

Jason Kottke reports:

On the website for the book, you can browse the solutions in a ranked list. Here are the 10 best solutions (with the total atmospheric reduction in CO2-equivalent emissions in gigatons in parentheses):

1. Refrigerant Management (89.74)
2. Wind Turbines, Onshore (84.60)
3. Reduced Food Waste (70.53)
4. Plant-Rich Diet (66.11)
5. Tropical Forests (61.23)
6. Educating Girls (59.60)
7. Family Planning (59.60)
8. Solar Farms (36.90)
9. Silvopasture (31.19)
10. Rooftop Solar (24.60)

Refrigerant management is about replacing hydro-fluorocarbon coolants with alternatives because HFCs have “1,000 to 9,000 times greater capacity to warm the atmosphere than carbon dioxide”. As a planet, we should be hitting those top 7 solutions hard, particularly when it comes to food. If you look at the top 30 items on the list, 40% of them are related to food.

Here is the background context:

Environmentalist and entrepreneur Paul Hawken has edited a book called Drawdown: The Most Comprehensive Plan Ever Proposed to Reverse Global Warming which lists “the 100 most substantive solutions to reverse global warming, based on meticulous research by leading scientists and policymakers around the world”.

I will however order the book.

Switzerland has taken in a high portion of foreign-borns, yet without losing its identity or sense of order.  Over 24 percent of the population is foreign-born, noting that almost half come from France, Germany, Italy, or Portugal.  The country recently imposed restrictions on migrants from Romania and Bulgaria.

German as a second language in Switzerland is declining, as the migrant workers in the service sector do not command it with much fluency if at all.  In Lugano, for instance, English now seems to be of more value.

In so many parts of the country unemployment is below two percent, with a national average of 3.3 percent.  And the Swiss manage this with an “overvalued” exchange rate, at least by purchasing power parity standards.  It is worth pondering how this is possible.

Probably the Swiss have never seen a better time.  Their countryside is gorgeous and intact, and their major cities are creative and flourishing, yet many Swiss remain deeply unhappy about inward migration.

The Swiss are no “snowflakes;” they impose and enforce stiff penalties on those who don’t meet the insurance mandate, and they are on the verge of deporting an ethnically Spanish man who was born and raised in Switzerland, and who never has lived in Spain, for his repeated criminal offenses.  Furthermore “Voters in Bern on Sunday rejected a proposed 105 million franc funding boost to help asylum seekers in the canton, primarily unaccompanied minors.”

It is striking how much the theory of comparative advantage has operated on Switzerland over the last thirty years, as the country has moved to a true economic integration with the EU.

I see Swiss cuisine as declining in relative value, as quality ingredients have spread to many other countries, including the United States (and Ireland!), but Swiss cooking has grown only marginally more imaginative.  And food prices here can be 2x or more typical developed country levels.

Bern feels much freer and less provincial than it did thirty years ago, the last time I visited.  Living here now seems imaginable.  And in Bern you still can see a working public phone booth.  Nor, from casual observation, do people here seem as cell-phone obsessed as their American demographic contemporaries.

As for Lugano, nothing seems to happen there.

Switzerland, an extreme country, and an extremely successful country, is always worth pondering.  And visiting, even at 2x prices for the food.

For $49.99, patrons can “sip their coffee while seated at bistro-style tables, nicely draped with red and white gingham tablecloths… all while being surrounded by rats.” The price includes all-you-can-drink coffee, tea, water and pastries, along with admission to the dungeon. (Don’t forget the 15 minutes of rat interaction!)

Here is the link, via the excellent Samir Varma.

While food security has increased in importance globally, the availability of cheap and nutritious meals at hawker centres is particularly central to Singaporean life.

The hawker stalls that serve up traditional favourites such as char kway teow* and Hokkien mee (both noodle dishes), are regarded as a safety net for the poorest as well as a place where all levels of society meet. Politicians are conscious of the need to keep a lid on prices at these stalls.

That is from Jeevan Vasagar at the FT, and the article is interesting throughout.  In earlier times, the hawker centres also were conceived as ways of improving public health (easier to monitor than street carts), subsidies to working long hours (quick food on the way home), and a means of making high-density construction, and thus small kitchens, bearable.