There’s Still Gold in Us Silver Spenders

In The Economist this week is one of those periodic reminders that the Boomer age cohort is actually where the money is.  Such nods to silver spending, even if in this case concerned with greater online purchases of adult “nappies” and mobility milks, are a useful corrective to the routine ad-market focus on the young and brand-fluid.

In fact, if it weren’t for the flood of pharmaceutical pitches insinuated into much news programming, you might think that no consumption remains from those alive when men first walked on the moon. Investment brokerages are another exception to the marketing rule—money managers do know where the money is—but this activity falls in the bucket of keeping not parting with funds.

The short Economist article observes that Boomer seniors—if at ages below 76, on the young end of the sunset population—were more likely to confine themselves during the pandemic, and thus more in need of (finally) embracing e-commerce. This may be so, although our other life patterns were also arguably disrupted less by Covid—we weren’t generally kept from bars, concerts and offices, or forced to look after young children. In some respects, then, we don’t need to be rediscovered, as we never disappeared.

Oh, I suppose the travel industry will want us back—we (ages 55 to 64) rule most leisure hospitality despite what you see in the ads.  We certainly will be reoccupying most of the fine-dining seats (at least those not filled by expense-account whippersnappers). Whether in restaurants or for home, we buy most of the good wine. Speaking of homes—at least the second ones, which were a pandemic special—those are also primarily a market for empty-nest households, perhaps hopeful for the grandkids to visit. We often chuck out a lot for upkeep of them, too.

The most fundamental realization about us Boomers, however, is how active we remain (despite or because of all those pills that are sold to us). Even among those who’ve left the regular workforce, surprisingly few below age 75 have retired to the lounger.  To the extent that golf is exercise when riding around in a cart, that is another favorite spend for the spritely. Museums, reopened, are a popular mature pastime even if the wall captions are usually hard for our eyes to read. To keep us going, we are the most regular coffee drinkers. We do use our smartphones, if not as avidly, something that the Consumer Cellular carrier identifies in its marketing.

In numerous other categories beyond our infirmities, there is gold still to be mined in us silvers. Hey, AARP makes it a good business. So, have at us, retail warriors, even if you must resort to social-media targeting in the process. The fabled Millennial inheritance is a good ways off. Ours is a constituency with money in hand, and bonds are a lousy place to put it right now, anyway.

Even the Manhattan Institute Says Curb Your Car

If an early April panel discussion (virtual) of the Manhattan Institute on “Planning the Post-Covid City” was surprisingly progressive, maybe it was because this talk of revolution in the streets was about reallocating little more than parking spaces. Yet that much upheaval is basic, these panelists agreed, to renewal of New York’s pre-pandemic glory.

The reforming urbanists assembled by the conservative policy outfit contrasted their ambitions with attempts to alter New York’s schools, housing or labor force: These changes, they said, merely involve municipal pavement.  Yet the aim is to reassign much of it to just about anything besides cars. And, to be sure, it’s no small skirmish to challenge the prerogatives of private-auto and SUV owners anywhere.

Covid gave this camp a big head start:   New York City set aside 83 miles of “open streets,” which generally meant pedestrian walkways amid outdoor dining, entertainment and commerce. (With normality returning, this total has been shaved by 11.5 miles.) Bicycle and scooter paths now occupy many other miles–1,375 by 2020, even if barely 500 are protected from traffic.  Clearly “alternative” means of street mobility have been in favor since March 2020, although this stems from viral fear of underground transit as much as desire for exercise.

Still, as Cornell Tech fellow Rohit Aggarwala said in the forum, it was with such adjustments that “we went on living without Midtown.” Indeed, many of New York’s residential neighborhoods have long since regained much of their vibrancy, in dramatic distinction from the office-commercial core of Manhattan. And Aggarwala wants to build on that, rather than succumb to a “knee-jerk return to normal” such as mostly followed the post-9/11 closures in lower Manhattan.

Aggarwala singled out community boards, formal advisory bodies to New York city government, as resistant to better urban streetscapes. These “older, whiter” boards, he said, are skewed toward  opposing changes in traditional residential zones,  such as bike lanes that displace street parking.

If that perspective, and those of fellow panelists Henry Grabar of Slate.com and Laura Fox of Citi Bike (Lyft), would surprise some Manhattan Institute backers, they haven’t been following the drift of its urban-transport advocacy.   Nicole Gelinas, a mainstay of the institute’s policy staff, is also a city cycling enthusiast. Yet, older habitues might need trusted reassurance that the April event’s advocacy wasn’t right out of left field.

Grabar recently enthused about a report advocating, among other things, that one quarter of NYC’s streets be reassigned from motor-vehicle use.  Cycling enthusiasts are hopeful that the Biden presidency will help fund up to 400 miles of protected paths around the city, which could also be used for other exertions.

But these urbanists ought to be cautious in their partial triumphs over auto culture in the city. For one thing, it’s hardly clear that motor-vehicle ownership among city residents (which we know from DMV registrations had increased in pre-Covid years) went down in 2020. Many weeks now after I requested them, Albany has not provided 2020 breakdowns. More cars may have spent time at alternative residences–second or family homes–and will be coming back to Gotham for greater stretches of 2021. With fewer places to park, where will they go? Or will there be pushback for space?  And resistance to the full metering of spaces that reformers want at a minimum? NYC motorists have long groused over alternate-side street parking  requirements to move their vehicles for street cleaning.

(Some advocates of change want greater basement parking requirements on new construction in the city; however, this will add to building costs and militate against “affordable” housing. On that score, it is notable that parking lots at New York’s public-housing complexes offer an unusual amount of discount surface parking, but do not attract much progressive notice. Aggarwala didn’t respond to an email on these and other points.)

Also of note—and particularly in regard to cyclist and pedestrian safety—the increased usage of trucks for delivery (and garbage pickup) of packaged deliveries is a life-style aspect just as surely detracting from the “reborn city” as personal auto traffic. Congestion fees on the latter as it enters the central core are a good and overdue idea, but shouldn’t we also be imposing surcharges on the e-commerce influx?  In fact, one legislator from Brooklyn is on that case!  For their part, urbanists at other forums have suggested reserving limited and appropriate curb spots for in-and-out trucks, but this is going to be hard-fought ground.

Creative ideas for streetscapes, including parking or not, surely have a part in reaching better order—ideally what a libertarian would call spontaneous order—in our metropolises.  Many urbanists envision new modes of transport (e.g., shared vehicles and soon autonomous ones) being part of that order, which can be fine, especially if we can relax restrictions on old means like motorized shuttle buggies. This can amount to an  attribute of city life, outweighing added costs in time and money.

But human nature being what it is, we oughtn’t be utopian. As the skeptic of sorts at the Manhattan Institute webcast, Alain Bertaud of NYU’s Marron Institute, offered, the great dream of the “15-minute city” with all of life’s desires an easy jog away is far from most people’s reality. Hey, in the actual New York, when finally a designated lane is created to make speedy bus trips not a contradiction in terms, that specially paved corridor is filled every few blocks with obstructions including NYPD vehicles.

All a progressive planner can do is hope to create room for magic in the glorious chaos. Room at the curb is for starters, it appears.

The Complexity of Ever More Simple-Cheese Output

I got to thinking about cheese and whether that infamous American surplus you heard a lot about two years ago had gotten bigger in the pandemic.  The long and short of it—if that’s the right way to refer to something that comes in rounds—is that yes, it’s bigger, but the reasons are not simple.

It isn’t just bigger because the U.S. government encourages dairy farmers to keep supplying milk products that are in steadily less demand. Though fewer drink cow milk, cheese derived from it actually plays an ever-bigger role in the American diet– but hefty appetites can’t keep pace with the cheesemakers. The 2020 oversupply numbers are partly a function of the particularly bad way that Donald Trump’s trade and aid policies affected American agriculture. Yet nothing’s fundamentally changed from the course we’ve been on for decades, nor is it likely to.

The only surprise from 2020 is that the price of this surplus item—basically American cheddar, Colby and Jack—spiked up.  Apparently that was a function of pandemic-related costs on the supply side, not demand finally overtaking the inventory and providing the woe-is-me dairy farmers with a break. Overall sales, or as the USDA curiously categorizes them, “commercial disappearance,” were roughly even, though American-cheese exports got hit. But cows kept giving us milk and more milk. The fancy cheeses that are associated with dining out—feta, blue, Gouda—did drop in volume. (Takeout meals survived Covid well, sure, but never mind those increasing efforts to insinuate cheese into fast food—that’s mostly a processed form that doesn’t move the big supply needles. Mozzarella, you ask? A story for another time.)

So is this not a compounding problem? Cornell Prof. Andrew Novakovic is encyclopedic on matters dairy, and counsels against alarm about a cheese buildup. “I would push back on the proposition that there is an extensive system of federal ‘dairy supports’ that widely or even periodically distorts dairy markets, with ‘great’ cheese surpluses as a common outcome,” he emails, arguing, “Clearly, stocks have tilted higher relative to usage since the Trump Administration messed up export markets, but even then it’s not all that different from the earlier baseline.”

Yet the USDA data on stocks and production which he helpfully flags show an upward blip just before Trump got his grubby little fingers on the market, and those levels have stayed higher since. Further, regional trends in the U.S. affirm the picture of bloat: the great mid-section of the country (most notably Texas–where per capita production increased 35% from 2015 to 2020–and to which you can add Idaho and New Mexico) has taken up the habit.  Novakovic observes that unlike traditional cheese locus Wisconsin, growth in these states is dominated by large-plant investments in the commodity varieties—exactly what the “surplus” worries, legitimate or not, are about. [Apologies: the links in this paragraph are not working.]

Some commentators of even a progressive flavor have asked why the dairy industry is not “restructured” in return for the help Washington tries to give it, so that oversupply doesn’t persist. But whatever the changes in partisan balance, the farm lobby maintains its grip. For what it’s worth, Joe Biden as a senator from Delaware—not a big milk source—usually sided with the Northeastern Democrats who form part of the support wall. (Hello, Bernie!)  We can’t forget that, on the consumption end, milk and cheese are staples of the food assistance programs, so there is a natural affinity on the Left.

A more normal U.S. economy in later 2021, plus some repair of the international trade channels, may help gets us back toward where we were in 2015 or so. Big Dairy will still find opportunities, while smaller farmers can’t make it. For better or worse diet-wise, American might begin to eat themselves out of the surplus.  Meantime, they can rest easy on this score: their strategic cheese reserve isn’t going away.

A Path to Pandemic Relief in the ‘Burbs

A shift in residential demand to suburban and exurban locations is nearly a year old in the pandemic.

It’s said to stem from households’ desire for more private space (as well as school and crime concerns), combined with greater flexibility to work from home. But public spaces are also an attribute of distance from the city center. Unlike most urban respites, parklands in the ‘burbs tend to have enough elbow room during most times of the year.

This is particularly true for nature trails that entail a substantial hike, say a mile or more. These invite determined active recreation, and that self-selection in turn rewards users with a further break from unwelcome reminders of the mass public. For example, on the East End of Long Island, where I have most recent experience, it is rare to find litter on most trails, whereas the roadsides that surround them are replete with such debris.

Because most trails on the East End are in wooded areas, away from sandy beaches and open farmland, they aren’t widely known to the seasonal visitors who typically crowd this “Hamptons” area. Covid-19 has changed matters to a degree—with more people in residence year-round, some hiking stretches have become too popular lately to suit some of their off-season enthusiasts. (Cold weather is also the best time to avoid infectious ticks in the bush.)

What’s true locally is true nationally, according to various accounts (and in Sonora, Mexico, too!).  AllTrails, a free and subscription service for finding and navigating hikes, reports that usage of its app-based services has grown three-fold over previous years, with the totals for daily users, in all seasons and not just weekends, up 130%. 

It needn’t take a national park or wilderness to provide an hour or two of virtual solitude. However, even where volunteers look after most trails, as on the East End, land-use policy is critical in assuring public access. This can be accomplished through deeded open space or easements across private property. Having more room to begin with—even where parcels are expensive—makes such objectives more attainable. For instance, clustering new development can leave surrounding territory in nature. (In a three-acre minimum zone, putting two homes beside each other on an acre apiece yields four acres of woods.)

Turns out that in many cases, the premium from adjacency to undisturbed terrain can make up for much of the lost backyard value. In any case, property transactions on the East End—clustered or not–have exploded in volume and price such that a 2% fee on sales over $250,000, for what’s called the Community Preservation Fund, raised about $140 million last year. This money goes mostly to buying more land out of developable use.  Again, this kind of virtuous cycle (from a nature-lover’s perspective, if not a budget-conscious homebuyer’s) is easiest to achieve on the outer ring of a metropolis.

What has not yet been mastered is the custodianship of these preserved stretches. The volunteers can blaze the trails and even keep them cleared, but they are not suited to enforcing proper use, whether against illegal motorized-vehicle trespass or more nefarious human presences. By contrast, urban areas have had more call for policing parks, and (at least until lately) more capacity for exercising such authority.

Perhaps, to borrow on a different city experience, the greater usage of the trails will have a “Jane Jacobs” effect, deterring miscreants by force of wider observation. Paradoxically, even in a pandemic, a more populated path might turn out to be a safer one.

New York Again Seeks a Handle Up

One aspect of New York City’s clean-up in the 1990s was the closing of many dingy Off-Track Betting parlors. Some tidier operations lived on for a few years but ultimately Gotham said good riddance to the public gambling-on-horses corporation.

The OTB experiment in the city had begun with apparent popular support in 1970 as a way to cover budget deficits. The idea soon spread to Long Island and upstate, where forms of off-site pony punting continue today even as horse racing itself sputters.

But now, with all of New York in the fiscal soup again, betting on a range of sports seems in the offing, and there’s a push for a casino in or near Manhattan.  New York state voters in 2013 approved allowing an initial four full betting licenses upstate, to be followed seven years later (that would be after 2022) by up to three in the New York City area. As it happens, three horse tracks in the New York City area also are hubs for video-slots “racinos”, and one or more may be upgraded as part of this expansion.

(The sport of kings itself may have lost luster, but part of New York’s apparatus for horse wagering lives on in local quests for a take. Suffolk [County] OTB, one of five regional remnants of the 1970s public betting push, is looking to expand again, bringing slots to a former multiplex theater complex it bought seven years ago, a few miles down the Long Island Expressway from where a partner opened one in 2017.)

Sports betting generally has taken off, with app-based outfits such as Fan Duel and DraftKings widely advertising the possibilities and the professional leagues warming to associations they once eschewed. New Jersey jumped on the ball in 2018 by legalizing through its Atlantic City and racetrack casino licenses and has collected 13% tax rate on $400 million last year (even with sports interrupted by Covid-19) .  This revenue pressure proved too much for New York Gov. Andrew Cuomo, who in January signaled he wants to follow suit.  A Democrat-dominated legislature can be expected to do so soon.

Although sports puts more vigorish into the equation, gambling has been a disappointing payday for the state going back to the OTB days. Skeptics abound across the political spectrum, but any found money is an easier sell these days. It won’t be much, as E.J. McMahon of the fiscal-watchdog Empire Center notes—new gambling and legal marijuana sales (another Cuomo push) aren’t likely to generate as much as New York doles out in film-making credits.

Nonetheless, the opportunities to be parted with pocket money (or more) soon may once again be ubiquitous. It won’t be catastrophic except for the worst of “problem gamblers” that are a contemporary social worry. The OTBs probably didn’t drag down much beyond the properties on the immediate blocks. The casinos that have sprung up since are also mainly of localized concern. (Indian tribes in New York operate casinos separately from these, though with state oversight.)  Of course, the New York State lottery has soaked the wagering class all along–$2.5 billion worth in the latest year.

Amid the high-minded rhetoric of Gov. Cuomo’s calls for rejuvenating his state’s economy, however, this part of the plan seems rather retrograde.  That won’t stop it, I recognize, and the marketing will package the bet as something of civic virtue, so long as we can tax the vice. Excelsior indeed!

My Commentary on ‘The Reagans’

More than most U.S. presidents, Ronald Reagan was a myth–and I mean that in the non-disparaging sense. A story was created around the real man, and it came to represent policies or ideology put into practice. On the economic front, this amounted to limiting government’s growth, at least in many areas (middle-class transfer programs such as Social Security were an exception).

Because the myth was so strong–redirecting American politics for decades–it has now become an obsession of the progressive Left to undo Reaganism as a historical force. In a piece at the new webzine Discourse, published by the Mercatus Center at George Mason University, I examine the recent documentary appearing on the Showtime streaming network, “The Reagans.”

I fault the makers of the show for failing to produce much hard evidence for their sweeping economic indictment of Reagan as having ushered in an era of dramatic inequality in the U.S. (I don’t get into the debate over whether inequality is of itself an adverse condition.) Now, even in a four-hour total program, a video presentation is not going to venture deeply into data analysis, I recognize that. But the numbers are important in understanding whether the shifts occurring in our nation (and world) in this era are fundamentally of a domestic political or global economic nature. I believe they are greatly the latter, although I concede (in fact, mostly celebrate) that policies such as Reagan’s played a part. It is now an easy, and sloppy, bit for polemicists of the Left to ascribe outcomes they don’t like to a symbol from those times–when many of the trends they decry preceded his time in office or have accelerated long after his immediate wake.

I also object to seemingly historical documentaries, on ostensibly neutral platforms, being used for score settling. “The Reagans” has a lot of well-crafted (if adversarial) story telling, but I don’t think the economic installment does enough justice to truth.

Here’s the link to my piece: https://www.discoursemagazine.com/economics/2021/01/27/blaming-the-gipper/

Love Letter *From* the Editor

Many words—including some of my own—have been expended lately on the plight of what we used to call daily journalism.  Often they get around to saying the newspapers (and now their websites) have themselves to blame for failing to maintain a connection with their readerships.

These critiques call to mind a missed opportunity of my own from a quarter century ago. I was completing a run as a weekly columnist for the Wall Street Journal, an extraordinary opportunity that, for various reasons, I wasn’t maximizing. (This was the Business World opinion space that subsequently has been occupied, with a distinctive voice, by Holman Jenkins.) It was time to move on but such scribes typically get a valedictory. I couldn’t get that quite right, either.  Soon enough, however, I realized what I should have written instead—and now finally I will.

This is a love note back to the readers who send “letters to the editor.” It applies to all publications, but especially to those who wrote to the Journal. Back then, the mail all came from the post, and it would collect in a desk tray for the wag who ran that department, picking and headlining the few to be published. Over my 12 years at the paper, I’d be in the office at odd hours and would enjoy chances to scour the unused pile. What a wonder!

For my money, the Journal had (and has) the most valuable audience in America. It may not have the most literati, but there’s plenty of erudition and advanced degrees. Beyond that, it comprises the greatest range of business people—corporate, family, professional, enterprises of all nature—of any forum on the planet. These are the “ordinary people doing extraordinary things” that characterize the idealized U.S. economy. (And, yes, letters came in from non-business folks who fit that description as well.)

It was fulfilling to know that a million such souls were spending a part of their days with our words, and in these cases were taking the trouble to respond with some of their own. They cared enough to write, in the good faith that at least one pair of eyes would see. I am sure that now with email (let alone, social media) many, many more are chiming in. But there was something especially powerful and lasting about the paper missives, even when destined ultimately for the wastebasket.

I understood why the limited inches of letters space in the paper were dominated by the high-and-mighty or others who were addressing a mention in our stories, the institutional officers replying on behalf of an aggrieved constituency, or the professorial expert clarifying a point at issue. My private treasure was the shopowner, plumber or dentist–and many a retiree–who had a relevant bit to add. I wish I still had a few in hand to quote.

Getting back to today’s hand-wringing about the future of the press, I’d say that as much as the Google-Facebook advertising disruption has decimated the revenue stream and subscription dollars have become a life-saver for a select group of news entities, a different omen of survival is the feedback. Nowadays, it’s called “engagement.” Silence is a killer. On the other hand, the in-box of personally composed reactions was and is pay dirt, and any publisher should loudly acknowledge that.

I don’t have the potential audience I once did, but let me say thanks just the same.

‘The Hamptons’ Is a One-Industry Place

 A “resort” community where there is no central commercial resort can still be a one-industry economy. In the case of the South Fork of Long Island (aka “Hamptons”), the one trick is luxury housing. There’s an extensive commercial/labor ecosystem to support it.

Of course, there are the houses themselves—nearly all of them being conceived big now, a few at 10,000 square feet or more. And during the pandemic, they’re being occupied for longer, which magnifies the demand for all the supporting businesses.

But first, they must be built or upgraded, likely then sold. After a brief interruption, Covid-19 has done wonders for that market. It brings a slew of custom contractors and their many “subs.” The realty agents flog the merchandise, sometimes before it is even finished. The lawyers and  fixers make sure everything passes muster with the seemingly tight zoning and other codes.

Once the new occupants are “living the life” (as one Hamptons developer markets it), the real parade begins. The bigger the house (and wallet), the more likely that designers will be employed, both inside and out. The furnishings and appliances must be procured and delivered. The landscaping appears—sometimes with mature bushes and trees—and after implanted must be tended to weekly for much of the year. (Don’t forget the leaf blowers and chippers in the fall, especially.) There’s all the plumbing (bathrooms galore!) and wiring, and nowadays much of the latter entails entertainment networks and related utilities. Eastern Suffolk has limited sewerage and natural-gas hookups, so there are septic and propane calls on top of the heating oil fill-ups. Plus the garbage pick-ups…and the many, many “priority” package dropoffs. Most homes have a pool of some sort, and require servicing for five or six months of the year, along with any tennis court. And, my goodness, you have to eat! Catering is for normal times, but during a health scare, PeaPod and DoorDash will be up your drive. If you are not in residence, there’s probably a caretaker or security patroller who is coming by to check on things.

Add all that up and you get virtually nonstop truck traffic on the often-winding roads, on top of the residents’ SUVs tending to their kids’ needs and other errands.  (The resident population is about 100,000.) As in other pricey areas, much of the “trades” inflow has to drive in and out each workday from less expensive digs miles away along a narrow strip. The backups only grow worse.

What do the data show about trades activity? Figures from the U.S. Bureau of Labor Statistics are imprecise as to this topic, but consider:  For the Nassau-Suffolk County (Long Island, N.Y.) region, “mining, logging, construction” employment grew 42% between March 2010 and March 2020, whereas all private-sector jobs were up less than 12%. (And construction, unlike other sectors, had almost fully rebounded by October 2020 from the pandemic dropoff.)

And what else? Artists can hope to find space in the great rooms or galleries. The South Fork still has some baymen looking after the maritime catch and modest commercial fishing out of Montauk, but this has dwindled with the fishery. The fabled duck farms are long gone, and other agriculture is mostly boutique, for the seasonal stands. The remaining potato crop goes into high-priced vodka distilling.

For one proxy of the growth of housing-trade services, I sought to find out how many more landscaping licenses were issued in 2019 versus 10 or 20 years before. My inquiry with the town of Southampton was rather aggressively denied—supposedly no such count can be made. The clerk for East Hampton simply didn’t respond. An earlier effort to get a commercial-vehicle count from the Southampton highway department yielded nothing.

Now, it’s true that today’s big, big homes usually mean that the South Fork will have fewer dwellings than it was once zoned for. But my observation is that the McMansions create more of the services demand listed above than their room count might suggest.  So: If an old-style, 4 bedroom-2.5 bath home on a shy-acre lot would generate two calls a week, a double-sized manor and grounds will account not for four calls, but more likely six or eight. It’s in the nature of the property and the folks who live there. Let’s just say you rarely see many of the new gentry doing their own lawn care or puttering around the 3-car garage to fix a chair leg.

This does make me wonder why planning regs can’t take into account the externalities involved in further development approvals. The lots have their various requirements on building setbacks and footprints, to protect neighbors (it is hoped). But what of the onslaught of attendants the new homeowner will require?

To be fair, the luxury-home boom has had its positives.  Some of the places are marvels to look at, and they are mandated to entail a goodly amount of native vegetation. More significantly, all sales in the Peconic Bay towns draw a 2% excise tax, which since 1999 has gone into land-preservation purchases and lately into minimizing incremental harm to the region’s natural and scarce water resources. (Gotta save the supply for all those bathrooms.) A $5 million transaction yields $95,000 for the fund (the first $250,000 of the price is exempt), and this year it has raised over $100 million through October. Plus these properties pay a lot of annual school taxes, which lowers the rate for everybody. The new wealthy inside them frequently support cultural and other nonprofit activity. Also, as an old newspaperman, I am gratified that the many pages of vanity advertising for the turnover of Hamptons estates keeps an ever-challenged local press in business.

If only “living the life” could be an indulgence experienced only by those most successful or fortunate. But the rest of us do cross paths with them, so to speak, and therein lies a rub.

December 18, 2020

China Rediscovers Rural Life (Cue Applause)

Another period of singing the virtues of Chinese Communist Party (CCP) direction seems upon us, at least when it comes to steering an economy.  Just as after the Great Recession of 2008-9, China’s rebound from the Coronavirus Covid-19 has led the world. Of course, the official statistics always bear scrutiny, and public debt levels probably lend a false note to stimulus measures. But a 4.9% growth rate in third-quarter GDP looked great.

              A component of China’s recent economic and social gains has been a bolstering of rural areas, until recent decades the essence of national life but lagging since. A November report in the Wall Street Journal fleshed out the emphasis that Xi Jinping’s regime has placed on this effort. He wants to eradicate extreme poverty in the countryside by the 100th anniversary of the CCP next year. The plan involves creating job opportunities in the hinterlands rather than having peasants flock to major cities.

              Separately, a few Chinese agricultural village projects drew notice from curators of an expansive rural-life exhibit this year at the reopened Guggenheim Museum in New York. The premise of the show, spearheaded by the celebrated Dutch architect Rem Koolhaas, is the reinvention of country life to restore its traditional appeal while addressing civic and environmental imperatives. (It is scheduled to close by Feb. 15, 2021.)

              While noting the checkered history of state- and privately driven back-to-the-farm initiatives over the centuries—including the CCP’s horrid Great Leap Forward under Mao Zedong—the Guggenheim exhibitors draw a mostly hopeful portrait of recent rural experiments on the mainland.

              Working with a study group from the Chinese Academy of Fine Arts, Koolhaus protégé Stephan Petermann takes us through a “Taobao village” that grew out of a bed furniture-making hub, becoming one of the regionally dispersed manufacturing centers of the huge Alibaba online market for buyers and suppliers. The idea is to use modern Chinese commerce to reinvigorate local economies such as this one in Jiangsu Province.  Elsewhere, we see, sleepy backwaters are transformed into enticing cultural tourism draws for China’s urban masses, while at the same time the sprucing up makes the inhabitants’ digs more livable

              In another example, from Shandong Province, an agricultural village is brought to scale with developments such as a greenhouse complexes 30 times the size of Manhattan to produce vegetables for 60 million consumers. The happy farmworkers are bused in from a high-rise district minutes away, where they enjoy the pleasures of urban living without having to leave the countryside. It seems a neat carrot, though if there is much attention paid to the stick, the hokou system by which the CCP has constrained internal migration, I missed it.

The virtues of spontaneous liberty in allocating modern economic resources—including people—are increasingly under attack.  Central planning, including softer variations of what’s called industrial policy, is again thought to have advantages, particularly when addressing society-wide challenges such as inequality and climate. Promising examples can be found—as they have been in the past, at least until human nature began to erode the harmony and enthusiasm of collective efforts.  

              Let’s revisit these Chinese pioneers in 25 years.  And compare the post-pandemic output results of various economies in maybe a year or two.  We won’t know as much about citizens of the democratic West—who aren’t willing to be tracked so closely—but the macro data may still tell a tale.

Why’s Your Desired Wine $8 Less Within 8 Blocks?

The economics of wine are complex on many fronts, but today I want to consider just the consumer end of things: Specifically, why aren’t retail wine prices rational? That is to say, at a time when purchaser information can be nearly “perfect” (by smartphone search), why such disparities in what competing shops charge for the same bottle? The price band routinely extends 20%, according to a 2011 study, and that’s more than differences in store overhead such as rent would explain. Beyond that, the cheaper sellers are not always the same merchants or where you’d expect a bargain—the lowest price points can be all over the map.

Let’s take what appears to be a typical situation: a “fine” wine selling for a nominal price of $30 (per the winery) and available for between $20 and $25 retail, before sales tax. That $5 difference persists despite: 1) the unusual wholesale controls, via distributors and importers, that exist in alcoholic beverages; 2) a retail sector that has become more concentrated in most states with the emergence of big-box sellers, but still sports thousands of independent shops; 3) the advancing ease of digital price comparisons before purchase, especially in e-commerce transactions for delivery.

On that last point first, obviously not every wine purchase or wine consumer is conducive to price comparison (although price levels figure hugely in what is bought). The buyer who is looking for one or two bottles for a looming occasion—maybe simply “tonight at home”—will not find shopping around worth it. In fact, such a person may be seeking advice from a favored wine seller, who obviously has no incentive to shave his margin.

So that sets aside maybe 80% of transactions (but a much smaller share of wine sales by total dollars. For the remainder, however, that are being bought in volume (often by the 12-bottle case) or otherwise by someone intrigued by a tasting or description into cellaring a purchase for future enjoyment, it would be frivolous to overpay by much. Eager sellers from around the country (where interstate shipping is legal) or in tight urban areas across town, will frequently get the wine to a buyer’s doorstep with no added fee,

Perhaps the especially low prices—often beyond the 20% band—can be explained by a need to clear out inventory. A store may have especially limited shelf or storage space, and want to encourage turnover. Moreover, even though wine is generally a product that ages well, unlike beer, many varietals do “lose” something after only a few years.  However, the pricing gaps also seem to occur on recent vintages as well.

Wine comes in a vast array of different types and makes—this can be overwhelming to many casual consumers and probably limits the price shopping that goes on. You often have to be precise beyond just the brand and grape (and vintage); it can matter what vineyard or cru.  Maybe the retailer itself gets confused and misprices?  Unlikely in these computerized storekeeping days. (Recently I found an apparent “steal” on a shelf price, only to be foiled at checkout—the bottles had been moved out of place.)

The truth is that wine is not as fragmented a business as those many, many labels let on. Notwithstanding the countless variation in the aisles, ownership is more concentrated. A combine like E&J Gallo or Constellation Brands puts out dozens of brands, some of which they purchased from family founders. They can offer promotions, through their distributors. But these ought to apply to everyone. Wholesale prices on wine are set at the state level, though with some allowances that favor certain vendors. So the initial pricing simply reflects what margin the retailer is aiming for. (Later markdowns can be quirky.)

Karl Storchmann, a New York University professor who edits the Journal of Wine Economics, says stores do track each other, but choose to offer select bargains much as a grocer does. “I don’t have the answer to this,” he says. “Some want to be cut throat at certain wines but not at others.” You’d expect the big-box operators like Total Wine or Costco to undersell the independents, and they usually do, but often there are outliers. And Total, unlike discounters in some product categories, isn’t going to match the best price you find.

I often use the online guide winesearcher.com to compare retail pricing (the pay site gives you a wider sort than the free one). I’ve noticed that some shops appear often among the best. One of them is Saratoga Wine Exchange in New York. I emailed Saratoga about its pricing strategy, explaining my interest, and received no response. (A visit to the physical shop provides no clue as to its secret.)

So for now, the mystery of why quality wine remains such a varied and worthwhile shopping experience is yet unsolved.  An intelligent consumer can only do the research and then do the math before making any particular bottle choice.  Meantime, any reader insights or anecdotes would be welcome in reply.

A postscript: I inquired as well with Empire Wine of Albany, N.Y. (“Ask Adam,” they invite) but this frequent discounter also did not respond.