Dynamist Blog

It Won't Play in Grand Prairie

D Magazine writer and Freakonomics ticket holder Teresa Gubbins informs me that the local Levitt-and-Dubner show's been cancelled: "sniff sniff, the Grand Prairie stop of the Freakonomics tour just got cancelled. due to poor ticket sales. I did my part to 'support the economist scene' and bought one! but to no avail." Tickets ran $29.50 to $65. Someone needs to tell these guys about price elasticity.

Safer Than It Looks

door.jpgMy neighbors and I were understandably worried when we saw this door at the condo complex across the street. It certainly looks like evidence of a violent break-in. But, no. It turns out to be quite the opposite: proof you can no lock at all--or even a door that fully closes--for a week without inviting burglars. The story, as relayed by our community police officer, is this:

"The officers found the door as described. To our amazement the owner was home passed out on his couch. We woke him and he maintained no crime had been committed, he alluded that he had to cause the damage to gain entry into his unit. He obviously has not concerned himself with repairs."

The orange sticker on the window is a false alarm sticker.

What Wal-Mart Did to Mexican Detergent

This NBER abstract caught my eye:

Openness and Industrial Response in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers by Beata Smarzynska Javorcik, Wolfgang Keller, James R. Tybout - #12457 (ITI PR IO)


This paper uses a case study approach to explore the effects of NAFTA and GATT membership on innovation and trade in the Mexican soaps, detergents and surfactants (SDS) industry. Several basic findings emerge. First, the most fundamental effect of NAFTA and the GATT on the SDS industry was to help induce Wal-Mart to enter Mexico. Once there, Walmex fundamentally changed the retail sector, forcing SDS firms to cut their profit margins and/or innovate. Those unable to respond to this new environment tended to lose market share and, in some cases, disappear altogether. Second, partly in response to Walmex, many Mexican producers logged impressive efficiency gains during the previous decade. These gains came both from labor-shedding and from innovation, which in turn was fueled by innovative input suppliers and by multinationals bringing new products and processes from their headquarters to Mexico. Finally, although Mexican detergent exports captured an increasing share of the U.S. detergent market over the past decade, Mexican sales in the U.S. were inhibited by a combination of excessive shipping delays at the border and artificially high input prices (due to Mexican protection of domestic caustic soda suppliers). They were also held back by the major re-tooling costs that Mexican producers would have had to incur in order to establish brand recognition among non-Latin consumers, and in order to comply with zero phosphate laws in many regions of the United States.

If, like me, you hate the clunky interface and the $5 fee for NBER papers, you can find a downloadable copy of the paper here. I haven't had a chance to read it yet, but the story accords with others I've heard. It's yet another example of why Wal-Mart (and NAFTA) is the essence of evil in certain quarters: The company may raise living standards for the many, but it does so by shaking up long-established institutions and industries. Too much dynamism!

A Foodie Who Likes Wal-Mart

In response to a comment by Jerry Hausman in my Forbes column, Pam Regis writes:

tofu.jpgI'm a foodie, but I live more than an hour's drive from high-end gourmet markets. My life improved enormously when a Wal-Mart superstore opened just 15 minutes from my house. It sells food. And although Hausman is probably right when he says that "diversity isn't as good" in the food selection at Wal-Mart compared to a fine gourmet market, this much-maligned store has added enormously to the culinary diversity available to me in my life pre-Wal-Mart. The jasmine rice (brown and white), the couscous, the chiplotle peppers in adobo sauce now in my cupboard are from Wal-Mart, and every week I find an ingredient, usually ethnic, that, before Wal-Mart, I had not been able to buy locally. Of course, I also find low prices on Diet Coke, paper products, and cleaning supplies.

I don't buy Wal-Mart's produce, bread, or fish. My "old" supermarket supplies these needs. Two stores are always better than one.

As I've often noted, in many places even boring old chains can increase the quality and variety available to consumers. There's also something to be said for Wal-Mart's basic business competence in keeping the right products on the shelves. The only Wal-Mart near me is a small "neighborhood market" with relatively little variety. But at least, unlike Albertson's (the slightly closer grocery store), they manage to keep Diet Coke in stock. And their employees are supernice.

The photo above is the tofu selection at the upscale Wal-Mart Supercenter in Plano, a "laboratory store" where I did some field research yesterday.

Value-Added Metal Making

The Philadelphia Inquirer's Eils Lotozo reports on how the aesthetic imperative saved an old-line sheet-metal manufacturer. Here's an excerpt:

What do you do with an aging manufacturing concern when it's left in the dust by changing technology and the global economy?

That's the question Adam Kamens faced when he took over the Frankford factory his parents launched in 1965 to make magnetic shielding for the aerospace industry, science labs and medical devices.

Kamens' solution for the floundering business? Parlay its sheet-metal expertise into custom fabrication for high-end, high-design environments.

These days, Amuneal Manufacturing Corp.'s clients include Barneys New York, Anthropologie, and the women's wear chain Lilly Pulitzer, whose 15 shops feature store fittings and floor-to-ceiling cast-fiberglass palm trees made by the Philadelphia company.

Amuneal engineered and installed the interactive displays and architectural features for the Nintendo World Store in New York. For Abercrombie & Fitch's flagship store there, it created a four-story staircase made of metal strips woven on a specially built loom....

"We've been lucky," says Kamens, who now employs a workforce of 80--about a quarter are people with art and design backgrounds. "Our customers have been amazing. They've taught us about this business, and they've been our best salespeople."

Claudia Dominguez, who moved on from Barneys to become head of visual merchandising and store design for The Limited Brands, says there isn't another company like Amuneal.

"They just bring so much to the table," Dominguez says. "You can hire all the architects in the world, and they just pump out drawings. But the people at Amuneal will say, 'I know that's what the shop drawings look like, but I don't think it will work. Let me give you some options.' "

Check out the rest here.

Kidney Blogging Cont'd

Several readers have called my attention to this Freakoonomics blog posting on an Israeli court's ruling that kidney donors should be paid by the country's HMOs. (The original Ha'aretz article is here.) I was particularly struck by this comment from "kazulanth":

I work in transplant, and off the top of my head there are three major reasons why it's a great cost-saving move for insurance companies to pay donors. First, the cost for just finding and getting a cadaveric kidney is billed to the insurance as $25,000 flat fee. So right there, having a living kidney donor is much cheaper for the HMO, which is a good reason to pay living donors. Also, often people wait so long on the list that they become sicker and are more expensive, so if they've got a living donor and can be transplanted earlier, so much the better. Third, dialysis is EXTREMELY expensive, and transplant is a really cheap option comparatively, even when you factor in the lifetime of drugs. $800 a month of drugs versus $3000 per week of dialysis.

People who worry about organ markets because they're concerned about the poor are on the wrong side of the issue. Poor patients, and there are many of them, would greatly benefit from payment, which would also save taxpayers money compared to keeping people on an infinite entitlement to dialysis.

In other news, this Dallas Morning News story on a local teacher's kidney donation to her father-in-law does an admirable job of explaining how straightforward the procedure is. And the donor makes a nice point in favor of live donation:

"I couldn't ask for a better father-in-law," she said. "Often, when someone gets an organ transplant, the donor's dead.

"This way, I get to see the effects of the transplant, and I'm very much alive, and we have this cool connection."

On a down note, Lisa Cunningham, the Boston-area kidney patient who had to switch hospitals when hers refused to do a transplant from a stranger, has lost her donor for medical reasons.

Higher Living Standards

My latest Forbes column looks at why official statistics seem to understate the increase in living standards--and why people are so eager to believe in economic stagnation. (The headline is unfortunate.)

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