Small batch food - niche economy or what?

Most recently, it was this juice that got our attention. $10 a bottle at Whole Foods. A single serving bottle. No, I'm not exaggerating. (And as a not-so-side side-note, very impressive marketing from these folks: I began my search for their website - and name for that matter - by typing "Whole Foods Juice." Guess what was the sponsored ad that popped up with just those three words? And if they've got AdSense worked out, a link might just appear next to this blog post as well.)


But I digress... this was only the most recent expensive-healthy-natural-food product; I began noticing this trend a while back in a locally-produced show about local small business foodie entrepreneurs selling their wares at the Brooklyn Flea, a market for many things, including local food (that, for the record, I have never set foot in). The products of a chocolatier featured in that program soon thereafter appeared at Whole Foods (again); two truffles for $9 if I'm not mistaken. There was also a girl selling bags of homemade granola for, oh, $9 a bag. (She seemed nice and seemed to make a good product; let me support her biz with this link.)


The granola really piqued our interest because for about six years now, I have made granola every other week and eat the homemade granola for breakfast every day. For the past four years, my husband has also eaten the granola every day, and before we lived together, he too made his own granola. (Now he eats mine, and charmingly says it is the single food he would want if stranded on a deserted .


And the juice! We also invested in a juicer (ok, my husband bought that one - it was essentially the entirety of his dowry that he brought to our joint kitchen). With that juicer, we can buy dirt-cheap apples, carrots, cucumber, ginger, kale, and more, to make our own juices.  And then there's my newest hobby, making chocolates. Melt down chocolate bar, stir in spices, add in toasted almonds, chill and eat. Each of these is much more fun, more delicious, and much cheaper to make ourselves.


So we look at these businesses and think, "Why pay ten bucks a pop when we can make it ourselves for a fraction of the cost?" But it got me thinking about this trend, this artisan/fresh/healthy/local food trend. Are the businesses overpricing? Well, you can argue that, in order to stay in business, they only price at the level the market will support, so you can't blame the producer alone. Is their market only wealthy people who can afford to splurge on these things? Do people of modest income actually pay such large portions of their income on these foods? Should they be judged harshly for doing so? That is, is buying $10 servings of juice or chocolates or granola a frivolity that contributes to, say, our national failure at saving money?


Or, is there a positive value judgment people of modest incomes make that they choose to support - even when it means stretching their means - these types of entrepreneurs? It seems that there are so many stories in this post-recession age of downsized corporate types finding their true passion and calling as they embark on endeavours such as these. Do those stories resonate for folks, who spend a little extra to support these small business owners based on their story of pursuing a dream, of seeking satisfaction through artisan cooking and eschewing a cog-in-a-wheel career?


So the real question is, will businesses like these ultimately prove sustainable? Has a new market - a niche economy - developed to support these businesses, at these prices? Or will these small produces ultimately falter, discovering that a recession economy just will not support $5 truffles, no matter how delicious, and local? (Whether they will survive, scale up, and sell out is another story.)

Stella D'Oro Blog Preview

I'm very excited about this article in this week's New Yorker, "Out of the Bronx - Private equity and the cookie factory" by Ian Frazier (subscription required). As the article (ever so briefly) recounts, the Stella D'Oro labor dispute was the subject of a NLRB case out of my office. Plus, the entire story concerns what happens when a once-upon-a-time-family-owned-business is bought and sold by a private equity firm. Private equity, also an important meme of January 2012. (See, e.g., this insightful article at TPM about the significance of the media confusing Romney's former firm as "venture capital" rather than "private equity".) I think the Stella case is an interesting look at the import/impact/significance of labor laws. This is a case that the employer lost, but I'm not sure that in the grand scheme of things the employees won much (I hope to be proved wrong that). So here's a preview: I'm going to finish reading the New Yorker article, then read the NLRB decision, and go from there with anything else that catches my attention, and then I'll share my reactions.

Pragmatic Idealism, without the Cynicism

I recently saw this awesome TEDx talk by Carnegie Mellon computer science professor, Dr. Luis von Ahn. This guy is amazing. So he invented (helped invent?) Captcha, that computer program that checks whether you are a real person when you try to send a message or buy tickets or post a comment (according to wikipedia, Captchas are "computer-generated tests that humans are routinely able to pass but that computers have not yet mastered"). So as he tells it, von Ahn learned how much time people around the world now spend typing in those captchas, and rather than be excited by the ubiquity of his invention, he thought to himself that it was a waste of time better spent on something more productive. So he invented "reCAPTCHA." Again from wiki: "In reCAPTCHA, the images of words displayed to the user come directly from old books that are being digitized; they are words that optical character recognition could not identify and are sent to people throughout the Web to be identified." Most recently, von Ahn tells us in this talk, he and one of his grad students invented a program called "Duolingo" that works to translate the web in the process of teaching people new languages. In short, I was blown away by this talk, and inspired.

Yesterday my husband and I were talking about how my idealism has evolved over the years, and I've become a little more pragmatic. He commented to me that the world needs all kinds of idealists, and I began to imagine this spectrum of idealism, ranging from lofty dreamers to pure pragmatists. (On my spectrum, I should add, there is no room for cynics.) I seem to be increasingly drawn to the pragmatists on this spectrum, and I think von Ahn is the perfect example of this incredible sweet spot between pragmatism and idealism (no cynicism). Rather that sit around trying to think up the biggest, most confounding problems on the planet - like so many of his fellow academics - he seems to identify a single problem, and think up a genius - and idealistic - solution to that problem. Serially, as entrepreneurs say. On repeat.

I think I am all too often surrounded by pure idealists, on the one hand, and cynics, on the other. Watching this talk gave me such an inspiring dose of pragmatic idealism. I also find this attractive in the emerging field of social entrepreneurs, who seem so different in spirit to the public interest lawyers I know much more personally. Why do lawyers so often seem beaten down and cynical, and these folks seem so much more grounded on the idealism-pragmatism spectrum? How can I incorporate more of these ideals into my life and work?

Undervalued Currency and Manufacturing Jobs: A Long and Not Boring History

Lately I've been seeing currency issues everywhere. For starters, an interesting point from Adam Davidson's astute little essay in this week's New York Times Magazine:

"[Based on the trade deficit,] [e]very month, the United States is demanding a lot of renminbi and China is demanding few U.S. dollars. The natural result should be for the dollar to get weaker as the renminbi gets stronger. But China’s government prevents that adjustment by artificially increasing the demand for dollars, spending much of that $24 billion surplus on U.S. Treasury bonds. This sounds boring, but it effectively makes all Chinese exports somewhere around 25 percent cheaper and all U.S. imports to China, effectively, about 25 percent more expensive."

I find this quite interesting in light of a book I've been reading, Judith Stein's Pivotal Decade: How the United States Traded Factories in the Seventies. I am trying to do a close reading of this book, so my hours of laborious reading have only brought me up to page 42 so far. Nonetheless, I've taken away enough already to see these tremendous parallels between the current U.S.-China relationship and the U.S.'s post-war relations with Germany and Japan.

As Stein herself points out, "Because both countries' currencies were undervalued, like China's today, their exports were advantaged." (p.11). She explains that Japan held reserves in dollars, which actually strengthened the dollar, weakened other currencies, and thus advantaged Japanese and German exports. (p. 10-11). Stein makes the point (as I understand it) that during the 1950's and '60's, U.S. governments allowed this currency undervaluation and related trade surplus to continue (to the U.S.'s disadvantage) because successive administrations prioritized foreign policy concerns over U.S. domestic economic policy. The foreign policy concern was essentially to strengthen these countries weakened by the war so that they would not become so weak as to be a vulnerable target for Soviet takeover, and to generally maintain their alliances with the U.S. during the Cold War. This concern was easily allowed to trump domestic economic priorities because the U.S. economy was so strong during these decades. The imbalance began to appear to policy-makers (i.e., the Nixon administration) in the early 1970's. In 1971, certain Nixon advisers argued that "anemic growth, unemployment, and declining international power" in the United States were directly linked to the "expensive dollar and trade deficit" (p. 39), but the Nixon administration did not act to directly confront this problem. (At least not before page 41 of the book. I'll keep you posted.)

I find the historical parallels striking. It seems that people today speak constantly about the "threat" from China, as if this were an anomalous, unique occurrence. To review our own history and see that this is not new, but merely the most recent incarnation of an older set of circumstances provides a new way of looking at the current situation.

Just tonight I saw the play Chinglish, which explores the cultural confusions and linguistic misunderstandings that ensue when an American businessman travels to China in an attempt to do business. One exchange I found particularly interesting, and relevant here, was when a Chinese woman remarks to the American that, one day, China will become stronger than America. The American says, in disbelief (and thinking it may be a simple linguistic confusion) that China is already stronger than the U.S. This elicits a comment from the Chinese woman that a problem with the United States is that it acts weak even when it is strong. Could this be true?

I wonder if some of our fear is misplaced? The Chinese have not overtaken us (yet) in every manner. As is suggested by this fascinating series of New York Times articles (here and here), Chinese factories may have surpassed American manufacturing in technical, logistical, and labor force needs, but that is not the end of the story. In the U.S. and Europe, the industrial revolution was followed by a labor movement and other societal changes seeking a certain quality of life (or "work-life balance" in current speak) that China appears to be far from realizing. For example, the former NYT article recounts how, when Apple decided on a last-minute design change, it called its Chinese supplier, and "[a] foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day." This sort of labor force flexibility may prove attractive to U.S. businesses, but it does not make China "superior" to the U.S. U.S. society long ago made a sort of choice that we do not want to live in company dorms (or company towns, for that matter) where employees are always at the beck and call of the employer, and Americans did not want to be "roused" from sleep by their supervisors to begin the first in a succession of 12-hour shifts. With our current unemployment crisis, would some Americans make a different choice? I don't presume to know, I'll just observe that the reality, to me, does not appear that China has already overtaken us in every respect, but that China is now in an economic state resembling where the U.S. was a century ago.

Back to Adam Davidson's article. After remarking on the currency issues, he writes, "lower wages, lost jobs and crippled manufacturing employment fall on the less wealthy. The economists that I spoke to estimated that China’s currency policy has cost the U.S. between 200,000 and 3 million jobs. . . . U.S. manufacturing employment has fallen by around 6 million over the last decade. If China had allowed its currency to adjust naturally, life might be much better for many former American factory workers."

I am very intrigued by the connection between currency (under- and over-)valuations and the loss of manufacturing jobs. We often hear that manufacturing jobs have been lost because of lower wages in other countries, with a particular emphasis (as in the case of the auto industry) on the costs of the union wages, pensions, and other benefits. The New York Times articles make the interesting point that the factories themselves are superior in China. But this connection to currency valuation is so interesting to me, perhaps because it is the story that - no matter how true - many people seem to find too "boring" to bother discussing.

I am also intrigued by the sense of history repeating itself. I'll have to read on to see what happens beyond 1971, but I am fascinated by the sense of this being a continuation of an older historical trend, or a lesson we should have learned 40 years ago but did not. More on all of these themes yet to come.

Why am I here?

Well, it's the new year. I'm going to be 35 this year (I have to check the math each time I say that). I quit a major hobby a few years ago and haven't yet found a new one. I read a lot, and want to think more about what I read and how it all fits together. I want to learn, but I don't want to spend money on classes (lord knows I've done enough of that). I want to write, because I've always thought of myself as a writer, and if everyone else with a nickel and a notion of something-or-other gets to publish a book, why shouldn't I? So all this together made me think a blog was the way to get going on all these goals. I'll start small, maybe just links and summaries of things I've read, along with my reactions, and hope that my creative juices get flowing from there. Here goes.