Economist 6/14/16

  1. In the first quarter of 2016, services such as Uber and Lyft accounted for 46% of business “ground transportation” trips in America, according to Certify, an expense-management firm. That compares with 40% for car-hire and a piddling 14% for taxis. The share of business trips taken by taxi in America has dropped by 23 percentage points over the past two years.Within the ride-sharing sector, Uber dominates. Stripping out those who hired a car, who are often travelling between cities, Uber has a 69% market share of business trips. Lyft has 4%.One of the things that appeals to business travellers about Lyft is the ability to book cars in advance, a service the firm unveiled earlier this year.That explains why Uber announced last week that it will follow Lyft’s example and allow riders to book cars between 30 minutes and 30 days in advance.
  2. Vanguard, a fund-management group fits the disruptive mould. It offers diversified portfolios for retail investors at a fraction of the cost of the industry average, thanks in part to a mutually owned structure that means it cuts fees rather than pays dividends. It now runs more than $3.5 trillion of assets, and takes in another $1 billion or so from investors every working day.This is no overnight success: Vanguard was founded in the 1970s.Money is gushing into passive funds. In America they raked in $400 billion in 2015; actively managed funds endured outflows.Despite the surge of money into passive funds, the share of actively managed stocks has only fallen from 78% to 70% in the past six years.
  3. Critics of big tracker managers like Vanguard and BlackRock argue they make financial markets more volatile.But the evidence that retail investors withdraw en masse from tracker funds when the market falls is thin—they did not during the financial crisis. And new types of tracker funds are emerging that invest in stocks based on different criteria such as dividend yield; that should reduce the tendency to herd.Another worry is that tracker managers will be less vigilant in rooting out bad management practices at the firms they invest in, as they do not have the option of selling if they are unhappy.But problems of inadequate governance afflict active managers as well as passive ones.A third—somewhat contradictory—concern is that a stockmarket dominated by tracker managers would lead to collusion.But trackers do not seek to attract investment by boosting their returns, unlike actively managed funds. As a result, they have less reason to encourage collusion.
  4. Now most people in rich countries never have to worry about where the next meal is coming from.That assumption, though, leads to complacency. Famine has ended in much of the world, but it still stalks parts of Africa—Ethiopia, Mozambique and Zimbabwe, to name three, depend on handouts of food. And millions of people still suffer from famine’s lesser cousin, malnutrition. According to the UN’s Food and Agriculture Organisation (FAO), some 2 billion of the world’s 7.3 billion people do not have enough to eat. Moreover, by 2050, the total population is projected to grow to almost 10 billion. Add this to the rising demand for meat, fish, milk and eggs, which is born of prosperity and which requires extra fodder to satisfy, and 70% more food will be needed in 2050 than was produced in 2009, the year the FAO did the calculation.
  5. Agricultural technology is changing fast.Techniques developed in the West—especially genome-based breeding that can create crops with special properties almost to order—are being adapted to make tropical crops, such as cassava, hitherto untouched by scientific progress, both more productive and more nutritious.. It can also produce crops with properties such as drought- and heat-resistance that will mitigate the effects of global warming. Drought-resistant maize created in this way is already on the market.Yield plateaus are a phenomenon only of the most intensively farmed parts of the world. Extending to the smallholders and subsistence farmers of Africa and Asia the best of today’s agricultural practices, in such simple matters as how much fertiliser to apply and when, would get humanity quite a long way towards a requisite 70% increase in output.The FAO says that about a third of food is lost during or after harvest. In rich countries a lot of that is thrown away by consumers. In poor ones it does not reach consumers in the first place. Bad harvesting practices, poor storage and slow transport mean that food is damaged, spoiled or lost to pests.

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