Economist 7/13/15

  1. The number of farmers’ markets offering local produce, cakes and jams around the country has more than doubled to nearly 8,300 in a decade. But regulating the sale of goods made in ordinary kitchens is a “grey area”.So states are passing “cottage-food laws” allowing people to sell “non-potentially hazardous” foods, such as baked goods and almost anything canned, from their homes. But the rules are often odd or fussy, and no two states are alike.Rhode Island, for example, allows farmers to peddle their wares but bans everyone else. In Oklahoma the law applies only to bakers, who may sell up to $20,000-worth of breads and cakes as long as the sales take place in their homes, not a market.In Texas, where lawmakers eased home-made food rules in 2013, more than 1,400 people are now licensed to sell their treats from home.
  2. For years it has been officially required that admission to a school in China be based solely on how close a child lives to it. Schools have paid little attention.In March, however, the Ministry of Education stamped its feet again: by the beginning of the new school-year in September, all primary-school students and 90% of those in junior secondary-schools must attend the school closest to their registered home address.Schools appear to be taking this latest order more seriously than previous ones.In recent months house prices have been stabilising in most places after a frothy few years, but not near good schools. Now even the most rundown properties in such areas may cost ten times the city average per square metre.A commonly used term for the ordeal of getting children into good schools is pindie, which literally means daddy race.
  3. After over six years of near-zero interest rates and three rounds of quantitative easing, the Federal Reserve is poised to begin tightening.According to its latest forecasts, 15 out of 17 Federal Open Market Committee (FOMC) members expect a rate hike by year-end. This view is based in part on the expectation that inflation will move towards its 2% target.The International Monetary Fund has urged the Fed to keep rates low until at least 2016. The IMF reckons that low inflation and residual slack in the labour market call for at least another few months of easy money. Hiking too early could destabilise financial markets and increase the risk of deflation.
  4. The towels on display have many brand labels but all are made by Welspun. A big-box retailer or department store typically relies on a sole supplier for towels and bedding: that firm is said to “own the wall”. Welspun owns the wall at some of America’s best-known chains, including Walmart, Costco, Target and Macy’s. One in every seven towels sold in America is made either at Anjar or at Welspun’s smaller factory in Vapi, a few hours’ drive from Mumbai, India’s commercial capital. In Europe Welspun also supplies IKEA, as well as John Lewis, a posh British department-store chain.Welspun offers some broader lessons for the wider economy. India has trouble producing firms of an efficient scale. It is hard to put together large tracts of land, to ensure reliable power supply, to get goods to market quickly (on the country’s poor roads and through its inadequate ports) and to comply with the many complex laws that apply to biggish firms.Welspun is still finding new customers among America’s second-tier retailers and its hotel chains. Ninety-five per cent of its revenue comes from exports. But it is now also developing its own brands aimed at middle-class consumers in the domestic market.
  5. Chinese firms, it seems, are buying into the market while stocks are cheap. Hebei Iron and Steel Group is building a massive steelworks in South Africa; last month it received approval to takeover the Swiss firm Duferco’s African steel processing and sales network.There may be reason to be suspicious of Chinese steelmakers’s motives. To some, it looks as if China simply wants to export its domestic pollution abroad. Officials are desperately trying to close dirty domestic steel plants.The problem is that China already produces too much steel. The country already makes almost as much crude steel a year as the rest of the world combined—822m tonnes in 2014—adding to the current global glut. Chinese steel is at its lowest price in over a decade and most firms producing the commodity in the country are loss-making.There is a more favourable interpretation.And an African source of iron ore and basic steel could also give China a more stable supply. Chinese consumers used over half of the world’s iron ore in 2013.
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