Economist 4/12/16

  1. Tata Steel’s links with Britain did not start nine years ago when it bought Corus (formerly British Steel) for £6.2 billion. In the early 1900s J. N. Tata, the founder of the Tata Group, approached the colonial government for help setting up his business. He was mocked.The Tata family, like many businessmen of the era, were Empire loyalists. Knighted for their contributions to industry, they had, like the Sassoons of Bombay, started out as silk and opium traders to China before diversifying. On the day Queen Victoria was proclaimed Empress of India— New Year’s Day in 1877—Tata named his first textile mill the ‘Empress Mills’. Yet Tata was also an economic nationalist who dreamed of a self-reliant India in the modern age. It was a dream he knew could only be realised if India constructed its own industrial backbone: steel. Tata Steel started in 1908, and four years later the first steel ingot was produced.Then the largest steel plant in the British Empire, it was located in Jamshedpur—a company town in east India that the Western press had dubbed “the Pittsburgh of the east.”With the outbreak of the first world war, the Tata’s steel mill proved invaluable.
  2. BRETT SNYDER recently ran an online search for flights from Washington Reagan to Dallas-Fort Worth to San Francisco and then back to Washington. He found something strange. If he booked the three legs of the flight as separate one-ways with American Airlines, the total cost was $412.80. But if he wanted to book the whole multi-city itinerary together, American was charging $1,837.20.Essentially, America’s three big legacy airlines noticed an inefficiency in their ticket pricing.The airlines didn’t want to undercut themselves. So they stopped allowing customers to buy non-refundable tickets on multi-city itineraries. Refundable tickets are far more expensive, removing the incentive for flyers to book their flights this way.Problem solved? Perhaps, but the move created a much bigger problem. It effectively killed multi-city booking, to the detriment of anyone whose travel involves more than two locations. While there is a workaround—flyers can book each leg of the trip as a separate one-way—that is tedious.
  3. Thanks to New Jersey’s aggressive supervision of municipal finances, there has been no default or bankruptcy in the state for nearly 80 years. But no town has had so much go wrong so quickly as Atlantic City. In 2014 four of its 12 casinos closed and gaming revenue, which the state relies on, plummeted. Nearly 8,000 jobs were lost in a city with already high unemployment.When gambling laws were relaxed in nearby states, Atlantic City lost its monopoly.Atlantic City relies on property taxes for most of its revenue.The value of taxable property has fallen by 64%, from $20.5 billion in 2010 to $7.3 billion in 2015.Atlantic City’s jobless rate of 7.7% is far higher than that of the state or the rest of the country.One in three residents lives below the poverty line.Chris Christie, New Jersey’s governor, has made Atlantic City’s recovery a recurring project.In early 2015 he appointed an emergency management team.Mr Christie has twice vetoed an aid package, including a bill allowing casinos to make fixed payments in lieu of property taxes.
  4. In 1987 Yum, a big American restaurant company, opened a KFC chicken restaurant near Tiananmen Square in Beijing, becoming the first big Western restaurant chain in the country.KFC rose so fast that it claims to be the leading fast-food outlet in China. More than 5,000 outlets are spread across hundreds of cities, with Yum opening two new restaurants on the mainland every day in recent years. In 2011 Yum’s China division, which includes a smaller chain of Pizza Hut eateries, earned $5.6 billion in revenues, more than two-fifths of the firm’s global total. Operating profits from China topped $900m that year. By last year operating profits in China were down to $757m. The company has been hit by recent food-safety scandals, which revealed that its local management lacked a good grip on its supply chain.Keen to separate the firm’s volatile Chinese business from the mother ship, and to give local managers a freer hand, Yum said last October that it would float Yum China this year.
  5. The main task of a national convention is to pick a presidential candidate, a choice made by delegates representing different states and territories. This year there will be 2,472 delegates—local worthies selected at state conventions or by party committees. Most delegates are “bound” in the first ballot, meaning they are allocated to a candidate by the results of a primary, caucus or convention back home. At every national convention since 1980 the winner was known before the first ballot, because a candidate arrived with a majority of delegates bound to him, turning the convention into a coronation. This year, if no candidate has secured 1,237 delegates then the voting could go on and on.The lessons from history are less clear. The Republican party has held ten contested conventions. Only three nominated the candidate who initially boasted the most delegates.

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