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Posts tagged ‘Economics’

7.6 tons of cocaine was seized in Peru recently. That’s somewhat important.

It’s not important in the context of “stopping the drug trade” — that’s not actually going to happen — but it is important in terms of this:

“In Peru we don’t have drug cartels, we have collectors linked to a foreign cartel or organization. We assume, because it is still under investigation, that Mexican cartels have come to establish two legal export companies and once they are seen as serious companies in the market they are used to take the drugs out of the country,” Urresti said.

My wife is Peruvian — hence my in-laws are — so this stuff has periodically interested me. I’ve written about El Chapo twice — here and here — and one time, back in Minneapolis, I was scrolling through a bunch of articles on my phone while my wife did a job interview. I found out this whole thing about how Sinaloa — the main Mexican cartel, and the one associated with El Chapo — deals with Peru.

See, Peru produces the most cocaine in the world, but the Mexicans tend to organize all the logistics and infrastructure around the transport of drugs. (I could be wrong about a lot of this, admittedly, but I don’t think I am.) I’ve seen articles that Peruvians involved in the process will get about $2 for every $20 a Mexican higher up the chain gets. (Again, since illegal drug industry numbers aren’t reported in any type of printout, I’m not sure anyone knows the exactitude of it.)

This seven-ton bust was hidden in blocks of coal — previously drugs have been hidden in banana shipments, among countless other things — and was destined for Belgium and Spain. The street value was $300 million.

Now, Belgium and Spain will have access to cocaine tomorrow — at least, the people who want said access will have it — so that’s not really the issue. The illegal drug trade is essentially unstoppable so long as the demand is there and people are willing to work within it. (Both of those things are likely to remain true.)

The interesting thing about this Peru dynamic is that now, the whole thing seems a bit more de-centralized. Most of the cocaine is grown in Peru, but the logistics are organized by Mexico — and the product needs to get to Europe, Asia, et al.

The more de-centralized the process becomes, you could theoretically see more of these larger-sized busts over time — because when more people have to coordinate to make something happen, there’s a higher probability that someone along the chain will EFF something up. I mean, that’s only logical, right?

This cocaine seized had a lion symbol on it, which is believed tied to Mexicans. For example:

“Gulf Cartel or Cartel del Golfo associates used the MGM lion a couple years ago, as well as the initials ‘CDG,’” the bulletin stated, adding, “it appears that they are now using the ‘John Deere logo.’”

To boot:

The ranch’s owner was Jesus “The King” Zambada, a leader of the powerful Sinaloa drug cartel. He had developed a love for exotic species shared with other kingpins. Just two days before Zambada’s arrest, police confiscated two tigers and two lions from a drug gang hideout on the forested outskirts of Mexico City.

Remember — drugs are all about branding, at some level. Lions are cool, king-of-the-jungle animals that, apparently, Mexican drug lords like to collect. So there’s a tie.

But interestingly on all this, de-centralization in a legitimate business tends to lead to more creativity; in a business that needs to hide itself and coordinate among dozens (if not hundreds) of people, de-centralization among nations could lead to a lot more massive product seizures.

 

 

Where can you get the cheapest flight from?

We have some science behind when you should book travel to get the best discounts, and now we have a little bit of science around where you should fly from. Of course, the latter is a little bit restrictive, as people tend to fly from, uh, where they live or are working out of. But it’s still kind of interesting.

This study is based on cost per 100 km; that’s about 62 miles. The cheapest place in the world to fly from is the Philippines, where it costs $7.86 per 100 km. That means if you wanted to fly the equivalent of NYC to Atlanta in that area of the world (about 761 miles), you’d pay about $96. If you try to get a flight from NYC to Atlanta on 30 days notice right now, the lowest shot you have is about $271. Thus, it’s much cheaper to fly around Asia than within the U.S. In fact, 7 of the 10 cheapest places to fly from in the world are in Asia: Read more

No one really understands the unemployment rate

There are actually six different “unemployment rates,” although predominantly when people use that term in cocktail party banter, they mean “the number of people looking for work who can’t actively find it.” But by no means is that the entire picture (I wrote about this a little bit when I was just starting this blog). First, you need to consider this — U.S. labor force as a percentage of population peaked in 1999 at 67.1 percent. Phrased another way, it’s like this: since these stats started being recorded, the highest percentage of the population actively in the labor force was never above 7 in 10.

Now consider this: after the 2008 downturn, essentially six million (6,000,000) workers straight up left the job rolls, and the largest sub-section of those six million was men aged 25-54 — i.e. men in their peak-earning years:

Where Did Jobs Go

You can read this a couple of different ways:

1. There weren’t enough people actively hiring after the downturn, so people who were laid off searched for a year or so, got frustrated, and turned to other things (freelance, taking care of kids, going back to school).

2. There simply aren’t enough jobs.

3. Americans have become frustrated with the job market, the hiring process, and the like and are just straight-up exiting the process (similar to No. 1).

The conclusion of the paper that produced the above chart — read the paper here — is more towards No. 2 above: there aren’t enough jobs. In fact, the author of that paper thinks that we would need 7.9 million jobs created (about 4.3 million for men, the rest for women) to reach healthy, pre-downturn levels. That’s a lot of jobs.

Biggest point here: it’s not really about the unemployment rate, per se — especially when you consider there are six different ones — but it’s more about job creation rate. We’re only adding about 209K jobs per month now, which means we have a long way to go for that 7.9 million.

Sometimes I think this is the bottom line on what happened with the recession / downturn of 2008:

  • Stuff blew up / fell apart.
  • People realized their jobs and investments and security weren’t Teflon and the US could falter.
  • People started to think more about themselves and their families.
  • This trickled down to management and hiring.
  • People don’t necessarily care about helping others find work, so long as they’re taken care of.
  • In sum, the downturn had a bigger psychological emotional impact than a purely economic one.

Maybe that’s naive, but that’s kind of how I look at these days.

Also in keeping with the “Eh, we care less and want to protect ourselves in case this all happens again” motif: pay is down 23 percent even as jobs get created.

This 430 million days of unused paid vacation a year is so sad for Americans

You may have seen some of these stats — they’ve been on morning shows and evening news for a couple of days now. Basically, Americans don’t take as much vacation as they should; 430 million days of paid vacation time is left on the table every year. Here’s the report; the first part of the title is “Overwhelmed America.” This has led to a bunch of discussions about being a “work martyr,” and quotes like this:

“We found that people have this whole busyness as a badge of honor thing,” said Roger Dow, president and CEO of the U.S. Travel Association. “We’re becoming a nation of work martyrs. People really wear it on their sleeves how they don’t take time off. Everyone around the world looks at Americans like we’re crazy.”

That quote made me feel smarter than I really am, because I’ve written about the same topic before.

Now, a personal story — and a bit of a sad one at that, but bear with me. Last fall, my aunt passed away fairly young (about 60). It was a tragic situation because it happened pretty quickly; she essentially got sick in July and passed away in October. At the end of her life — I wasn’t there day to day, but I know people who were — she never talked about work and spreadsheets and clients and bookings, but she talked about memories and experiences and trips. For example, her and my uncle had gone on a genealogy trip in the last 18 months of her life, and also gone to the Caribbean with friends. That’s what was on her mind at the end.

I’m not trying to argue that you should make life decisions based on how you might feel when you’re close to the end of your life, but I do think you need some context around how to think about things. Too often, we get caught up in the day-to-day of what we do and what our responsibilities are, and we don’t realize the bigger picture. First off, vacations let you re-charge and reflect and relax; all of those are good things in terms of your professional existence. If all you do is grind, you’re basically grinding yourself to a nub. You need those periods of breaking away; weekends are good, but they’re not everything. Weekends become errands and stuff too.

Quotes like this are ridiculous:

Managers didn’t set a very good example either. The survey found that nearly half answer emails on their vacation, three in 10 return work calls and just 37 percent of senior managers surveyed fully unplug from work while they’re away.

Get awayHave experiences. The work will be there when you come back.

In this same study, I read something like 30 percent of people were “afraid” to take vacation because they thought other people might jump them at work, or something like that. Asinine. If someone is going to jump you because you’re gone for a work week or maybe a little more than a work week, then you live in a politically-fraught environment where someone might jump you when you’re there doing your work. If the people making promotion decisions are going to penalize you for taking some time off, that’s not a place you want to become a manager anyway; I don’t care how high the salary is. Life isn’t about Excel.

Here’s some common excuses and rebuttals. Look it over and make some notes.

Final thing: as people are living longer, there’s this idea that “what” generations leave to the next generation will change. For years, that model was “money” (as in, inheritance/etc.) Now the idea is the grandparent generation does OK for itself, and they take big family trips — in the travel and leisure industry, they call that “multi-generational” — and in the process of spending some of the nest egg, they’re giving their children and grandchildren experiences as opposed to cash on the barrel when they’re gone. I think you’re going to see more and more of that, especially as “real wealth” is probably going to get harder to accumulate.

Look, life is about the value of the experiences and the connections you make; work is a part of that, but it’s not something that should define everything. Travel is a way to experience life and gain context. Do it. You’ll still have a job to get after when you get back.

 

 

Home Depot just taught you something about the housing market

That video above is from a year ago, but the current Home Depot fiscal situation is seemingly a lot better — their second-quarter profit just climbed 14 percent and they’re trading at around $88/share now (that’s up!). Check out this chart of their overall quarterly profit, too:

Home Depot Profits

Here’s the interesting aspect, via Quartz. Home Depot calls larger contractors “pros.” They classify smaller contractors as, well, “smaller contractors.” Apparently sales to the former are doing well:

Home Depot executives noted that sales to larger contractors—known as “pros” in Home Depot lexicon—are outpacing sales overall at the company, which is a good indicator of the health of Home Depot’s housing-related business. However, sales to smaller contractors aren’t growing as fast. “We think a lot of these smaller pros in the depth of the housing recession really exited the business, to start to work for some of the larger pros,” a Home Depot executive told analysts.

Larger contractor sales are outpacing overall sales? The company has $23 billion in sales. You’d have to figure that if you take the high-volume of overall sales in concert with the “outpacing” idea, it means that Americans are (for the most part) investing back in their houses again. That has to be a generally good sign, right?

That said, there are widespread variations at the local level:

 

Is Tampa representative of the American city crossroads?

I have a lot of family in Florida, but admittedly I don’t know a ton about Tampa. I’ve always found that people in Florida tend to disparage areas that aren’t their own — Miami will trash Orlando, and vice versa, for example — and I’ve only been to Tampa a handful of times (no family there), so perhaps my context is devoid. But it seems like an interesting place right now in terms of this whole “millennials will soon be the dominant force in the economy and home ownership, so what should a city do?” discussion. (For three things cities can do, see here, here and here.)

The City Is Growing Fiscally

Consider this: rents at Crescent Bayshore are going for $2.32 a foot, which essentially means that a 3BR, 1,600-foot spot is $3,800/month. That’s not quite NYC-level, but it’s close in some regards. But there’s always a caveat, and in this case it’s two-fold:

Multifamily experts say the building’s unique location, with its waterfront views and proximity to downtown and South Tampa, allow it to command those kinds of rents. SkyHouse, a 23-story, 320-unit apartment high rise under construction in Channelside, will likely command rent above $2 per square foot, in line with the Element, an apartment tower in Tampa’s urban core. Across the Bay, rents at Madera Prime 235 in St. Petersburg are close to or on par with Crescent Bayshore, but downtown St. Petersburg is farther ahead than Tampa in the race to create a live-work-play environment.

Good: near water and downtown/South Tampa. Bad: St. Petersburg is ahead of them on creating an environment.

But Is Tampa Doing Enough To Retain Millennials?

Now consider this, from Medium. A Tampa-based writer opens with this:

For a city that has a stated goal to become the high-tech center of the Southeast by attracting and retaining the best young talent Tampa sure is doing a lot to push us out.

Some of the central arguments: blue laws (which are ridiculous no matter where they are), the demolition of the “Bro Bowl” (a skate park), and restrictions on Uber and Lyft, among other ride-sharing-type services.

This is a really interesting crossroads situation here. You see the same stuff in a place like Boston, which has a higher reputation for innovation than a place like Tampa — but still, Boston is very much controlled by old-school, back-door politics in many ways. I suspect it’s the same in the Tampa area. Taxis are a f’n terrible industry. They needed to be disrupted, and that’s what Uber/Lyft/etc. do. But they’re also very politically powerful, and that makes it hard (it’s hard to fight the man, after all).

If you want young people, you need progressive ideas — a generalization, but true.

I was actually talking to my friend from Seattle recently about an off-shoot of this concept: Seattle is an incredibly progressive place on things like marijuana, gay marriage, and even minimum wage. Yet, they have mostly-awful public transportation that makes it really hard to get from A to B in a quick, easy fashion. So sometimes being progressive isn’t enough; you need to be both progressive and practical. That’s how you get millennials.

In some ways here, it feels like Tampa is being neither — despite a Tampa-area company being the first to have an openly-gay CEO among publicly-traded companies.

This Is The Future Of Cities

We don’t know what’s going to happen with airfare in the next 20-30 years — if it goes through the roof for some reason, I feel like a lot of people might start living closer to their core family, irregardless of what industry they wanted to be part of — but in terms of the future of U.S. cities, everything comes down to appealing to a new crop of dwellers (those being millennials). It’s a different world for them — heck, in terms of hotels too — and Tampa seems like one of those “crossroads cities” that has the potential to ratchet up (near water, decently cheap cost of living, good tax situation, a couple of tech hubs, etc.) but needs to make sure it makes the right decisions in the process.

 

 

The great irony of business teamwork and why ‘together’ is a super-important word

Interesting article on Harvard Business Review right now. Follow the bouncing ball here:

1. As a species, humans weren’t big enough or scary enough to survive pre-historic times without banding together in groups. Hence, from an evolutionary standpoint, we’re hard-wired to basically want to work together with others.

2. The social connectivity thing is so valuable that when those bonds are frayed, it’s like a physical hit. In other words, you can get dumped, take an Aspirin, and feel better. Honestly.

3. When you think about how important socially connecting to others is, you would thus initially assume that workplaces are really effective — after all, most white-collar work in the modern era is done in teams, and a lot of blue-collar work is as well. But yet, teams aren’t that effective — and neither are managers, generally — so that begs the question: Why?

4. Here’s one potential reason: “teams” often equates to more and more meetings of a group of individuals, but the actual work you do (after those meetings) is individual, and not in a team. Think about it: in college, if you had a group assignment due, chances are you all met and discussed it — then you assigned individual portions to individual people, who went and worked on it by themselves and sent it to a person whose individual job it was to put everything together. This is pretty common.

5. So … could one word change everything? Here’s Harvard Business Review:

In Carr and Walton’s studies, participants first met in small groups, and then separated to work on difficult puzzles on their own. People in the psychologically together category were told that they would be working on their task “together” even though they would be in separate rooms, and would either write or receive a tip from a team member to help them solve the puzzle later on. In the psychologically alone category, there was no mention of being “together,” and the tip they would write or receive would come from the researchers. All the participants were in fact working alone on the puzzles. The only real difference was the feeling that being told they were working “together” might create.

Carr and Walton, FYI, are Prinkya Carr and Greg Walton of Stanford.

Sooooo …. what happened?

The effects of this small manipulation were profound: participants in the psychologically together category worked 48% longer, solved more problems correctly, and had better recall for what they had seen. They also said that they felt less tired and depleted by the task. They also reported finding the puzzle more interesting when working together, and persisted longer because of this intrinsic motivation (rather than out of a sense of obligation to the team, which would be an extrinsic motivation).

The word “together” is a powerful social cue to the brain.  In and of itself, it seems to serve as a kind of relatedness reward, signaling that you belong, that you are connected, and that there are people you can trust working with you toward the same goal.

That’s a video of Walton talking about “encouraging a sense of belonging;” a lot of his research goes towards these same ends. If you think about concepts like “employee engagement” or “talent retention strategy,” a lot of them come back pretty simply to these types of things: you’re trying to encourage a sense of belonging in your employees, and in some cases, it could be as simple as one word — “together” — when describing how a project will unfold.

Notice in the above that Group A was told they were “together” but still worked in different rooms. In a work context, then, “together” doesn’t have to mean “on top of each other” — that can annoy people — but it can just mean using a basic cue word and seeing what happens.

This is almost like A/B Testing for employee engagement. Super interesting.

 

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