What we’re reading (4/21)
“It’s Gotten Riskier To Be A Long-Term Investor” (New York Times). “Many people can ignore these shifts and hang on to their government bonds and bond funds. And those looking to lock in high yields may find occasional bargains, when Treasury yields jump close to 5 percent, as they did earlier this month. But everyone — even if not an investor — is being exposed to innumerable risks that may not be entirely appreciated.”
“Why It’s So Difficult For Robots To Make Your Nike Sneakers” (Wall Street Journal). “Nike’s effort was the boldest. The company aimed for large-scale automated production in under a decade, which it said would save on labor costs and allow it to deliver new models of shoes to Americans faster…The effort quickly ran into trouble. The robots struggled to handle the soft, squishy and stretchy parts that are integral to shoemaking. Shoe fabrics also expand and contract depending on the temperature, while in shoemaking no two soles are exactly alike. Human workers can adapt to such challenges, but it proved difficult for machines.”
“The Pepperoni Price Index” (Business Insider). “‘This happens every sort of downturn in the economy — there’s increased demand for premium frozen pizzas, high-priced frozen pizzas,’ said Craig Zawada, the chief visionary officer at Pros Holdings, a price optimization company. It’s a bit counterintuitive, he added, since you'd think consumers are more cost-conscious, but it's actually a trade that makes sense because ‘they’re replacing eating out to having a good frozen pizza at home.’”
“Long-Run Effects Of Trade Wars” (David Baqee and Hannes Malmberg). “[This paper] shows that accounting for capital adjustment is critical when analyzing the long-run effects of trade wars on real wages and consumption. The reason is that trade wars increase the relative price between investment goods and labor by taxing imported investment goods and their inputs. This price shift depresses capital demand, shrinks the long-run capital stock, and pushes down consumption and real wages compared to scenarios when capital is fixed. We illustrate this mechanism by studying recent US tariffs using a dynamic quantitative trade model. When the capital stock is allowed to adjust, long-run consumption and wage responses are both larger and more negative. With capital adjustment, U.S. consumption can fall by 2.6%, compared to 0.6% when capital is held fixed, as in a static model. That is, capital stock adjustment emerges as a dominant driver of long-run outcomes, more important than the standard mechanisms from static trade models — terms-of-trade effects and misallocation of production across countries.”
“Pope Francis, First Latin American Pontiff Who Ministered With A Charming, Humble Style, Dies At 88” (Associated Press). “Pope Francis, history’s first Latin American pontiff who charmed the world with his humble style and concern for the poor but alienated conservatives with critiques of capitalism and climate change, died Monday. He was 88.”
