Birdjaguar

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Often there is economic and business news worthy of posting that is interesting and perhaps useful. While economic news can be political and generate discussion along the capitalism vs Socialism spectrum, that is not my main intent with this thread.

This story caught my eye this morning.

WSJ said:
America Is Willing to Pay for Change

By Stephen Moore

Making change used to be a bit of a joke. A memorable “Saturday Night Live” parody ad in 1988 imagined the “First CityWide Change Bank,” which gave its customers the denominations they want: “If you come to us with a $100 bill, we’re not going to give you 2,000 nickels— unless that meets your particular change needs.”

Nowadays getting the change you want is no laughing matter. In many cities making change has become a cash cow for some because of the great U.S. coin shortage. Covid has limited banks hours and shut down the retail businesses that often return coins to circulation. It doesn’t help that Americans have a tendency to dump coins in shoeboxes and never use them again, keeping many in-circulation quarters and pennies sequestered.

Nickel-and-diming isn’t going away, even in the digital age—though it’s quarters in particular that are in high demand. Americans still need coins at laundromats, to pump air in their tires at gas stations and for old fashioned parking meters. It’s costly to retrofit coin-operated machines. Don’t panic. Washington is coming to the rescue with its usual turtlelike agility. Officials at

the U.S. Mint concede that “sometimes coins are not readily available.” The Mint’s director, David J. Ryder, has asked consumers to “help get coins moving by using exact change when making purchases, taking your coins to financial institutions, or turning them in for cash at coin recycling kiosks.” He says that production of coins is rising now given the demands.

As usual, the free market is way ahead of the government. Customers at the Pennsylvania- based Wawa convenience-store chain can change their coins for bills and come away with a free coffee. For one week in July, the Community State Bank in Wisconsin gave a $5 bonus for every $100 worth of coins turned in. My son tells me that San Francisco even has an active secondary market of enterprising entrepreneurs hanging out and serving as, well, “change agents.” A couple of quarters go for as much as a dollar, a roll of 40 for $11 or $12.

What we have here is a basic Economics 100 lesson on supply and demand. People will pay more than 25 cents for a quarter for the same reasons they pay $4 to get $60 from an out-of-network ATM or $7 for a Budweiser at a football stadium— scarcity and convenience. Those who offer these services make a good buck so to speak for being in the right place at the right time. Isn’t capitalism wonderful?

Covid-19 worsened a shortage of coins. Capitalism is solving the problem.

But don’t tell Rep. Alexandria Ocasio-Cortez or Sen. Elizabeth Warren. Neither has yet commented on the black market coin collecting, but social- welfare critics I know are already howling about “price gouging” that hurts lower-income consumers. Will the dogooders in Congress try to make it a crime to charge five dimes or a dollar bill for a quarter?

Don’t laugh. The feds have already set price caps on ATMs and short-term payday loans. These restrictions will only hurt consumers in a pinch and make it harder to wash your clothes.

Mr. Moore is an economist at FreedomWorks and a cofounder of the Committee to Unleash Prosperity.
 
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Hygro

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@Lexicus let us try our bests not to turn this into a deficits don't matter thread. xD

@Cutlass you follow good econ news sources get your ass in here.
 

Lexicus

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@Lexicus let us try our bests not to turn this into a deficits don't matter thread. xD

There are enough idiot claims in that article in the OP to keep me occupied for at least a couple hours...
 

Lexicus

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The feds have already set price caps on ATMs and short-term payday loans.

This line in particular is egregiously evil/stupid. Short-term payday loans are a completely, 100% bad thing, caused by the social problem of inequality. ATM services can and should be freely available to anyone through a publicly-operated postal banking system.

This article really just is an example of how classical economics amounts to an ideology that normalized and justifies the existence of social inequality and the exploitation of the poor. Coin-operated laundromats and payday loans are, quite obviously, simply about charging people money for the crime of being poor. The idea that more access to more payday loans supplied at the higher price would actually help the poor is just laughable on its face.

What we have here is a basic Economics 100 lesson on supply and demand. People will pay more than 25 cents for a quarter for the same reasons they pay $4 to get $60 from an out-of-network ATM or $7 for a Budweiser at a football stadium— scarcity and convenience. Those who offer these services make a good buck so to speak for being in the right place at the right time. Isn’t capitalism wonderful?

This is also laughable as the real reason people pay high ATM fees and captive-audience prices at places like stadiums and airports is because of manufactured scarcity. This is "convenient" for the consumer in the same way that it's "convenient" to the victim of a racketeering scam that she can avoid being beaten up just by making some small monthly payments.

The real reason ATMs are more expensive in some places than others is not because of "convenience" or any garbage like that, but because the premises where the ATM (or beer stand) is will have a contract with the owner/operator of the ATM where the ATM owner has a monopoly on ATM machines in the premises. Under free market conditions anyone could set up their own ATM or sell beer, and price competition would drive fees or prices down.
 

Birdjaguar

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@Lexicus Interestingly, you ignore the actual subject of the column, buying change for a premium, and dwell on other things. Of course payday loans are terrible and his mention of them is in regards to government regulation, which the author is against in general. ATMs are a different matter. Not only does an ATM cost money to own, they also take up space. Anyone can buy ATM machines and if they have a contract with agencies in the financial arena, they can place them anywhere a property owner will let them. The fees charged go to the financial institution for doing the transactions, the property owner for giving up physical space and the ATM owner for buying the machine. Bank owned machines are just a variation of that. What ATM owners learn is that not every place is a good location and crowded places where people spend money are better than most others. In many of those crowded place more than one "brand" of ATM will be found. ATMs are found in both rich and poor neighborhoods. Crowded shopping areas often have many machines, both bank owned and privately owned, within a 1 minute walk of each other. Avoiding ATM fees is actually pretty easy: use one's own bank's machines or arrange to have cash in one's wallet when one goes out. It turns out though that many many people prefer paying a fee rather than planing ahead, or they plan ahead to use an ATM.

Scarcity at stadiums is not manufactured in the bad sense you imply. It is a reality of a "closed" location that only has room for a limited number of vendor locations. Restaurants only have a limited number of tables and chairs. A laundromat only has 6 washers and 4 dryer. A small town may only have one bank or one convenience store for fueling. Those also create scarcity. As I think about the Albuquerque Sunport (airport) it has an "A gates" wing, A "B gates" wing and a ticketing concourse. IIRC it has three ATM locations, one in each area and all three are branded differently. My bank has an ATM on the ticketing concourse but none on the gate wings. Is there a reason that the Sunport should allocate additional space for more ATMs of different brands? Is there an advantage to the airport to have 6 ATM locations?

Maintaining an ATM costs money. A busy one will need to be refilled once or twice a week. Someone has to go there (and may need security) and spend 30 minutes or more on site. Then they have to drive back to their office. And the machines do stop working and need a technician to come fix them. Do they make a profit? mostly they do, A property owner makes a steady monthly/quarterly fee. The ATM owner gets a fee, usually per transaction to cover his space rental and his costs. The financial institutions make a percent of the transaction; and while the % is usually small for each participant, the overall volume easily covers their actual very low costs.

"Scarcity" and the desire for convenience is mostly a product of the brick and mortar world and there is no way around it. The internet is doing away much of it though. There are hundreds of online locations to buy things and many have similar policies for shipping or returns etc. Apple Pay and its competitors eliminate the need for ATMs.

What you have ignored is that with the pandemic there is a scarcity of coin money. In addition, people seem to want coin money and to get more of it, they are willing to pay a premium in paper money to get more coins. It is a good illustration of how a new market works. How long will it last? No one knows. IIRC someone posting here said earlier that they were looking for a new game controller, but could not find them because so many other people were also wanting it. Guess what? People are willing to pay a premium for one because there are not enough to go around.
 

Lexicus

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Of course payday loans are terrible and his mention of them is in regards to government regulation, which the author is against in general. ATMs are a different matter.

The author believes payday loans are good, since his argument is that government placing a maximum price on them reduces the supply and that this is bad.

Scarcity at stadiums is not manufactured in the bad sense you imply.

No, it really is.

Is there a reason that the Sunport should allocate additional space for more ATMs of different brands?

The reason that anyone should be allowed to set up an ATM there was already given in my post: price competition, which would reduce fees. The issue that you talked around and never addressed in your entire post, instead choosing to address me as though I am unaware that maintaining an ATM has costs.

It's very funny to me that according to economic theory, competition is the magic that lowers prices and brings benefits to consumers, but the reality of business practice is nothing but methods of avoiding actual price competition.

@Lexicus Interestingly, you ignore the actual subject of the column, buying change for a premium, and dwell on other things.

On the actual subject of the column, the only place where the author has an actual point is wrt to parking meters. There's no reason for any parking meter to exist anywhere that only takes coins. Similarly, there is no reason laundromats should only work if you put coins in them. So the "coin shortage" is just another example of manufactured scarcity. Parking meters serve a legitimate purpose in society but coin-operated laundry machines are just a way of charging poor people for existing.
 

Birdjaguar

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The author believes payday loans are good, since his argument is that government placing a maximum price on them reduces the supply and that this is bad.
Yes, that is his opinion. :dunno:

No, it really is.
You say that, but please tell me why. I explained why the scarcity is connected to physical space, but you haven't said why it is something else.

The reason that anyone should be allowed to set up an ATM there was already given in my post: price competition, which would reduce fees. The issue that you talked around and never addressed in your entire post, instead choosing to address me as though I am unaware that maintaining an ATM has costs.
Not actually so. In an airport most folks don't spend time walking around various concourses looking for deals to save a dollar. They spend time at ticketing, food courts, walking to and from gates, and in the baggage claim. The only ATMs that actually compete with one another are ones that are next to one another or in close proximity. An ATM on Concourse A does not compete with one on Concourse C. So to increase competition an airport would need to group machines close to one another. The airport does not actually care about ATM competition. ATM owners do and they all want exclusivity, but they don't control the space. The likely scenario if two or more ATMs are next to each other is that they will all charge the same rate to each customer class using the machine. If one machine is busy, a customer will just go to the other because it is available, and if one is in a hurry, saving $1.00 will not be important enough to wait. If you are a customer of a bank that has an ATM next to one that is not owned by your bank, you are likely to wait to use your bank's machine.

The theory of competition and actual marketplace competition are world's apart. In the market, competition brings differentiation and branding that stratifies markets and pricing. Competition emerges within that stratification bur not often across those lines. A Chevy does not compete with a Lincoln. Customers do benefit and low price versions of high end products and services emerge. Often though, there is a difference (or a perceived difference) between those products. That is how Southwest Airlines got started.

Keep in mind that every party to market situation (Airport, leasing agent, ATM owner, customer) has their own agenda, goals and cost equation (including use of time) that go into what they do. The "solutions" we see in an airport (marketplace) are not simple.

It's very funny to me that according to economic theory, competition is the magic that lowers prices and brings benefits to consumers, but the reality of business practice is nothing but methods of avoiding actual price competition.
The problem is the economic theory rarely holds true at the transaction level of actual people buying and selling. One can find commodity situations where supply and demand function like theory says they should, but as soon as you move to company and community level, most theory falls apart. The reason is that theory doesn't account for how people actually behave. Business happens at the individual transaction level and the goal of a business is to maximize the number of profitable transactions it can, however that business defines profitable. Competition changes behavior, but it does not change the fundamental goal of business owners: earn a living and grow the business. Competition changes how they go about achieving that.

And yes, at the end of summer if a store has too many swimsuits on the shelves, they will lower prices to move them. But the reasons for doing so are particular to the business.

On the actual subject of the column, the only place where the author has an actual point is wrt to parking meters. There's no reason for any parking meter to exist anywhere that only takes coins. Similarly, there is no reason laundromats should only work if you put coins in them. So the "coin shortage" is just another example of manufactured scarcity. Parking meters serve a legitimate purpose in society but coin-operated laundry machines are just a way of charging poor people for existing.
Oh, so if coin is in short supply, people who don't have CC should not be allowed to park in metered spaces? ;) A better solution would be to bag the meters and allow free parking until things get more normal. The coin shortage is not manufactured. It is real because people are staying home and not using coins to buy things. They are using CC.

You said "there is no reason laundromats should only work if you put coins in them. So the "coin shortage" is just another example of manufactured scarcity." The fact that one could offer free access to washers and dryers does not have any connection to the current coin shortage. The actual reality is there is a coin shortage and in response people are paying more than $0.25 for a quarter. Now in your town, you could spend your Saturdays at a local laundromat and put quarters and dimes in machines for those using them.

Laundromats:
  • About 35,000 in the US
  • No major chains or franchises (locally owned mostly)
  • They employ about 50,000 people full and part time
  • Start up costs range from $100,000 to $300,000 depending upon size and have 40-100 washers and dryers
  • Median, annual household income for laundromat users is $28,000
  • 87% of users live within a mile of the laundromat they use, most are repeat customers
  • They have a 95% success rate
  • They generate 20-35% ROI
So who puts up the ~$200,000 to start one? Who pays the wages of the 50,000 workers? What should they be paid? How do machines get fixed when they break? Do they offer free detergent? Now to be fair, laundromats could be almost fully automated and managed with minimal actual paid staff, putting all those people out of work, but that would call for a big investment in tech from somewhere.
 

Birdjaguar

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In other news:
Uber, Gig Companies Seek Labor Deals to Avoid Workers Becoming Employees
Food-delivery platforms in Europe are offering couriers extra benefits in the hope of averting costly legislation on employment rights
BARCELONA—Gig-economy companies in Europe, under pressure over employment rights, are looking to strike labor agreements that give workers some benefits but stop short of making them employees.

Uber Technologies Inc. and Amazon.com Inc.-backed Deliveroo are among a number of food-delivery businesses seeking to secure deals with workers and unions in the hope of averting legislation that could force them to treat delivery drivers as employees, potentially upending their business models.

The effort follows several legal judgments across Europe challenging the companies’ view that drivers and couriers are independent contractors.

In the U.K., Uber is appealing to the Supreme Court to overturn an earlier decision that drivers using its app effectively work for the company, while Swiss courts have forced Uber Eats to stop using independent contractors in the Geneva area. Instead it has started using third-party employees, a first for the company.

Gig-economy companies say reclassifying workers as employees would add to costs, reduce workers’ flexibility and result in lost jobs. Following the Geneva move, Uber said only 300 couriers were given contracts, costing 1,000 others their jobs. Instead the companies are championing a recent labor agreement with a small right-wing union in Italy as an alternative. Under a deal agreed in September, a group of companies including Uber and Deliveroo promised couriers in Italy €10 per hour spent making deliveries, equivalent to about $12, as well as equipment and insurance. That’s above the typical €7 an hour minimum wage but comes without holiday pay or sick leave.

The companies struck the deal, which covers all of their food-delivery workers in the country, after the Italian government threatened to regulate the sector. The companies say the deal doesn’t add to costs for their customers. Larger unions have said the deal leaves workers worse off than if they were treated as employees, but it remains in force. The companies say they are interested in pursuing similar arrangements elsewhere, including in France and Spain.

While Uber and Lyft Inc. offered drivers in California modest benefits after winning a state vote to keep workers as independent contractors, the Italian deal goes further by introducing collective bargaining for independent contractors.

President-elect Joe Biden has said he wants to introduce collective bargaining for contractors, and the Independent Drivers Guild—a New York-based drivers’ group—called for states to offer such arrangements to gig workers following the California vote.

In Europe, the next battleground is Spain, where the government hopes to finalize a new gig-economy law in the coming weeks. The companies are pushing an Italy-style deal that would avoid workers being reclassified as employees. The industry also backed government proposals in France to introduce charters of agreed working conditions, while ruling out full employment rights.

“We do believe gig workers should have access to more social rights but not necessarily under a strict labor regime,” said Sacha Michaud, cofounder of Barcelona-based delivery app Glovoapp23 SL, which operates as Glovo across Europe and in parts of Africa. In Spain, Glovo, Deliveroo and Uber say they are willing to offer workers a deal that would pay minimum rates—plus bonuses for working in bad weather—but doesn’t include benefits such as paid vacation.

Deliveroo said it wanted to improve social protections for workers in Spain and elsewhere, without risking their flexibility. Some delivery drivers are supporting the companies’ efforts in Spain. “We want to work as independent contractors and have the flexibility to work as many hours as we want,” said Badr Eddine Hilali, head of the Asociación Autónoma de Riders (Autonomous Riders’ Association), a couriers’ group that works with the platform companies. “A contract of 40 or 30 or 20 hours doesn’t interest me.”

Others say the companies pose a false choice between flexibility and employment. “The Italian model is what the companies want because it offers them more benefits and less for the workers,” said Dani Gutierrez, a spokesman for Riders X Derechos (Riders for Rights), an independent couriers’ group that supports employment status for couriers.

“‘Flexibility’ is what they say you have. We don’t work when we want, we work when they let us, which is very different,” Mr. Gutierrez said, referring to the lack of guaranteed minimum work and the pressure to work evenings and weekends.

Gig-economy companies in Europe may struggle to avoid their workers being classified as employees unless they change their business models or can show couriers enjoy genuine freedoms of self-employment, said Valerio De Stefano, a labor-law professor at the Belgian university KU Leuven. This could include providing more transparency around their algorithms and financial data on labor costs, he added.

European countries often have labor protections incorporated at a constitutional level, which could hamper efforts to carve out a new category of independent contractors in the law, he said. Mr. De Stefano also suggested that legislation in Europe could have an impact in the U.S.

“If you have all of Europe treating gig workers as employees, it will be difficult for U.S. lawmakers not to at least wonder whether to intervene,” he said.
 

Colon

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Re OP: ATMs can be hard to find here in Belgium, especially in less densely populated areas and it's regularly occured to me this wouldn't be the case if banks were willing the charge for withdrawals (it's not actually banned to my knowledge, but there's very little social tolerance for it).

That said, charging $7 for a beer at a game just sounds like shoddy business practices to me. Most people don't give a fig about the law of demand, they just see something that costs a multiple of an identical product elsewhere. You're giving your customers the feeling they're being gouged and you're tarnishing the name of your company for like what, a few ten-thousands more? A pittance basically.

Pricing is a bit like freedom of speech and being vulgar, it's not because you can do something that you should. (something that many artists understand very well when they ask ticket prices that are far below resale value). Celebrating a commercial strategy that potentially makes your customers feel resentful as "capitalism" working well is just silly.
 
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Birdjaguar

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Re OP: ATMs can be hard to find here in Belgium, especially in less densely populated areas and it's regularly occured to me this wouldn't be the case if banks were willing the charge for withdrawals (it's not actually banned to my knowledge, but there's very little social tolerance for it).

That said, charging $7 for a beer at a game just sounds like shoddy business practices to me. Most people don't give a fig about the law of demand, they just see something that costs a multiple of an identical product elsewhere. You're giving your customers the feeling they're being gouged and you're tarnishing the name of your company for like what, a few ten-thousands more? A pittance basically.

Pricing is a bit like freedom of speech and being vulgar, it's not because you can do something that you should. (something that many artists understand very well when they ask ticket prices that are far below resale value). Celebrating a commercial strategy that potentially makes your customers feel resentful as "capitalism" working well is just silly.
Do you have private, non bank affiliated companies operating ATMs there?
 

Birdjaguar

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Streaming Wars of 2020 Turned Into Feast

BY LILLIAN RIZZO AND DREW FITZGERALD

The past 12 months were billed as the year when a flood of new entrants would force streaming services to wage an all-out war for subscribers. Instead, incumbents and rookies alike feasted on a base of shut-in customers eager for more things to watch. The largest streaming services are expected to finish 2020 with combined U.S. subscriber numbers more than 50% higher than a year ago, according to a Wall Street Journal analysis of data from market-research firms Moffett-Nathanson LLC and HarrisX.

They enjoyed a captive audience. The coronavirus pandemic triggered lockdowns that sent millions of Americans home, leaving many people with more time to watch movies and shows from the couch. The virus also prompted movie theaters to shut down and sports leagues to go on hiatus for months, further boosting streaming services’ appeal.

“Instead of a streaming war, there’s been streaming coexistence and parallel growth,” said Dritan Nesho, HarrisX’s chief executive. New services such as Walt Disney Co.’s Disney+ grew rapidly without necessarily harming established players such as Netf lix Inc. and Hulu, he said.

“Disney+ did not displace existing services,” Mr. Nesho said. “It complemented them.” Disney+ is one of many streaming platforms that didn’t exist a little over a year ago. It launched in November 2019, a few days after Apple Inc.’s Apple TV+. Two other major players, AT& T Inc.’s HBO Max and Comcast Corp.’s Peacock, went live in recent months.

About a year ago, Americans told a WSJ-Harris Poll survey that they were willing to subscribe to an average of 3.6 streaming services—and some 30% of the Netflix subscribers among them had said they would likely cancel their subscriptions to make way for new services. In fact, the new streaming platforms didn’t prevent Netflix and others from continuing to sign up new customers at a healthy clip. Their growth came as traditional pay-TV providers continued to lose subscribers. Satellite and cable companies have shed more than 1 million pay-TV customers each quarter since mid-2018, a trend that analysts expect to continue.

U.S. households now subscribe to 3.1 streaming services on average—up from 2.7 last year, according to Kagan, a media research group within S& P Global Market Intelligence. About three out of four U.S. households subscribe to at least one streaming service, MoffettNathanson data show. “Right now, the rising tide’s helping everyone,” said Michael Nathanson, an analyst for the research firm.

The only new streaming entrant to crash right out of the gate was Quibi, which shut down in October six months after launching. The service was designed for people to consume entertainment in short increments on their smartphones, but the pandemic limited the types of on-thego situations Quibi envisioned for its prospective users. Mr. Nathanson said many lesser-known services could struggle to keep adding customers at the same pace after the pandemic, once U.S. consumers start spending more cash on restaurants, travel and other expenses outside the home. He said a return to normal was unlikely to affect Netflix, which he said was in its “own stratosphere.”

An analysis of U.S. web traffic shows Netflix usage surged in the early days of the pandemic to a much greater extent than its rivals, and remains significantly above its pre-pandemic levels. The gap between Netflix usage on weekends and weekdays also shrank as homebound customers had more opportunities to consume programming on weekdays, said Craig Labovitz, chief technology officer of Nokia Deepfield, the telecom-equipment maker’s network analysis unit.

Netflix’s sheer dominance during the pandemic can be explained by its large library and continued supply of original content, while many of its rivals struggled with pandemic- related production delays that forced them to postpone releasing high-profile shows that they had hoped would lure new subscribers.

Netflix has made no secret of its strategy for keeping the streaming-video crown: more original shows, and lots of them. Its spending on new series and films like “Tiger King” and “The Irishman” helped keep subscribers glued to their TVs while rival media compa- nies started bringing content they had licensed—think “Friends” and “The Office”— back home to their own streaming services.

The smaller number of original series made specifically for streamers like Disney+ and HBO Max are fractions of the massive library of popular titles that their parent companies have produced in recent years. Those companies are starting to put their online-only services first: Disney told investors it would show about 80% of the 100 titles it releases each year on Disney+, and HBO Max parent Warner-Media shocked Hollywood in early December with plans to show its entire 2021 film slate online the same day the movies make their debut in theaters.

Since July, Netflix dominated Nielsen’s weekly top-10 streaming list with a mix of licensed content like “The Office” and original series such as “The Queen’s Gambit.” Disney+’ s “The Mandalorian” and Amazon.com Inc.’s “The Boys” were among the rare other shows to break into the top 10.

“I don’t think Netflix was alone in having a decent pipeline,” said Neil Begley, an analyst for Moody’s Investors Service. “But come 2021, that pipeline is going to look narrower.” Netflix will say goodbye to “The Office” in January when it joins Peacock, the platform developed by Comcast-owned NBCUniversal, whose executives have touted the comedy’s streaming return since the service launched in July.




About 60% of U.S. households currently use Netflix, according to research firm Parks Associates, and it still holds a sizable lead over most of its rivals— though some new entrants are gaining ground fast. Some of these gains are bound to be temporary: Many streaming services have seen subscriptions jump partly because of promotions offering free access for up to a year. Customers of Verizon Communications Inc., for instance, got first-year Disney+ subscriptions free. AT& T offered free HBO Max trials to many customers and bundled the service with its top-tier wireless and broadband plans.

Similarly, pay-TV and broadband customers of NBC-Universal parent Comcast receive the ad-supported premium tier of Peacock free of charge. The company doesn’t break down how many of its sign-ups originate from the Comcast customer base. Apple TV+, meanwhile, is available free for a year to anyone who recently purchased an Apple device.

A recent MoffettNathanson survey showed subscribers of established services such as Netflix, Prime Video and Hulu were far likelier to foot the bills for their subscriptions than those of new entrants. (Amazon’s Prime subscribers get Prime Video as part of their package).

Mr. Nesho, HarrisX’s CEO, said his firm expects the number of Apple TV+ subscribers to dip in the fourth quarter of this year as the first wave of free trials ends—though he said plenty would likely buy iPhones and other Apple products in the coming year, partly offsetting such defections.
 

Birdjaguar

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How Big Cardboard is handling the 2020 box boom
The supply chain industry is working hard to combat potential cardboard shortages with the pivot to more online shopping amid the pandemic

Boxes sit on trash cans in front of a home in the District's Georgetown neighborhood on Nov. 27. (Amanda Andrade-Rhoades for The Washington Post)
By
Hannah Denham
Dec. 30, 2020 at 4:00 a.m. MST

WaPo said:
For families stuck indoors and desperate for entertainment, a cardboard box can transform into a makeshift playground for the kids or a refuge for the cats. Day to day, though, they have been a crucial if often overlooked link in the nation’s supply chain. But now boxes are piling up in homes across the country because of the explosive growth in e-commerce this year. That’s left the corrugated packaging industry dependent on consumers to recycle the products to support its financial and environmental needs.

Corrugated box shipments grew 9 percent in March from the year-ago period, industry data shows, despite a brief dip in revenue when the pandemic’s initial shock froze up the supply chain. But shipments were again soon boosted by retailers’ overstocking of food, cleaning supplies and toilet paper amid the panic buying so prevalent in the early days of the coronavirus pandemic. Shipments continued to climb through the fall, peaking in October, and box makers are on pace to end the year with record production to meet this year’s skyrocketing demand.

In fact, retail analysts say, e-commerce sales squeezed in more than two years’ worth of growth since the pandemic began nine months ago. And the corrugated industry is scrambling to keep up: paper mills are running at full speed and some producers are capping orders and contracting out to smaller companies. At some point, yes, there was some pantry loading as people were preparing for what the effect might be of the pandemic, but I think we’re past that point and what we’re seeing here is new consumer behavior,” said George Staphos, a senior analyst covering paper forest and packaging for Bank of America Securities. “Once you establish a new pattern, it’s really hard for it to change.”

The cardboard box and container manufacturing industry, which employs 139,000 in the United States, took in $67.3 billion in revenue from January through October, according to an IBIS World report. Even as the broader economy slid into recession and industries took a hit, e-commerce sales stayed afloat.

Industry operators have largely been buoyed by the movement of consumers to shop online,” according to the report. And demand will continue to rise as consumers increasingly choose e-commerce over bricks-and-mortar stores.

Georgia-Pacific LLC, one of the world’s largest manufacturers of pulp and paper products, is already running its mills at full capacity, executive Brian Smith said in a Marketplace interview. He said the Atlanta-based company has had to buy from smaller producers to keep pace. “It’s certainly been a challenge, because we’re taking extraordinary steps to keep all of our employees safe, which can slow production down considerably,” Smith said. “So sometimes it involves running extra hours and into weekends to keep up with demand.”

Memphis-based International Paper, the nation’s largest forest products company, produced more than 2.7 million short tons of corrugated packaging, up 2 percent year over year, according to its third-quarter earnings report. Chairman and CEO Mark Sutton said during an Oct. 29 conference call that it continues to see “very strong double-digit growth in e-commerce, with increased consumer reliance on e-commerce as a spending channel.”

WestRock Company produces 1 out of every 5 cardboard boxes in the United States. The Atlanta-based manufacturer of corrugated packaging, paperboard and containerboard employs 50,000 workers. Box demand typically peaks in September, then tapers off through the end of the year as merchandise arrives in stores. But this year, between June and October, box shipments met 34 billion square feet — an industry record — each month. Demand swelled as retailers and shoppers alike adapted to the pandemic, according to Rachel Kenyon, vice president of Fibre Box Association, an industry tracker. Well-documented backlogs at the U.S. Postal Service also motivated consumers to start online shopping earlier.

“Based on data that we have dating back to 1999 (from the Fibre Box Association), this is a record," Staphos, the Bank of America analyst, said. “Two months in a row would be a lot, five months is unheard of.” Staphos said the containerboard industry is now raising prices — a $50-per-ton hike on shipments in November — and putting caps on client orders amid the tightest market since 1994. According to his research team’s most recent survey of box producers released Dec. 13, growth in production was still up — 5.1 percent in November and 4.5 percent so far in December, which doesn’t account for much of the holiday season and last-minute shoppers ordering shipments.

Most of the companies surveyed expect another price hike in the first half of 2021, anticipating even more demand, including from vaccine shipments. On the flip side of the industry’s growth is the environmental impact. Cardboard is more biodegradable than plastic packaging, but its production is linked to deforestation and heavy chemical use by paperboard mills. Industry experts say ensuring most of those boxes don’t end up in landfills needs to start at the beginning of their life cycles.

Global consumption of paper and paper products goes through 15 billion trees each year, according to the Environmental Paper Network. The industry relies on recycling virgin fiber — the basis of cardboard boxes — five to seven times, saving trees and improving the bottom line. Kevin Hudson, WestRock’s senior vice president of forestry and recycled fiber, described how this “circular economy” works: Fibers produced in its paper mills are sent to production facilities, which make and ship boxes to clients such as Amazon and Domino’s. The boxes that make their way to WestRock’s 18 recycling plants are then turned into fibers again to start the process all over again.

WestRock invested $2 million in an upgrade to its Marietta, Ga. recycling facility in October — which Hudson said was crucial to handling this year’s high demand.

“It’s absolutely critical that the investments in single-stream sorting technology continues to occur so that the industry as a whole can match with the change in how recyclable material comes available,” he said. Hudson said WestRock works with private landowners to ensure the fibers it uses come from sustainably managed forests. He said his team also works with nonprofits to expand community recycling and make curbside programs more efficient and municipalities to educate residents on what can be recycled.

“As the e-commerce has grown, so has that ability for the resident to recycle cardboard, and how that has evolved where it is easy and more knowledgeable for us to catch more and more of that product,” Hudson said.

And as packaging changes, the more that retailers and corrugated producers learn about consumer needs. Several years ago, it was common for an Amazon order to arrive in a huge cardboard box, with several smaller cardboard boxes inside wrapped in plastic air bubbles. But WestRock now uses its box-sizer machine for customers to right-size the package and reduce waste.

“We’ve optimized the box size to the product, so we’re reducing the amount of fiber that box requires. We're also reducing the amount of fill product that box requires,” Hudson said, as bubble wrap and similar fillings are hard to recycle.

That means the packaging is more protective, ensuring suppliers’ quality for its customers, and more efficiency: Smaller packaging means postal and delivery workers can fit more packages on trucks, which reduces carbon emissions from gas and saves time.

Clients play a role in efficiency, too. Amazon now relies on proprietary artificial intelligence to calculate the best fit for orders, which sometimes means using an envelope instead of a box. As a result, Amazon says, it has reduced outbound packaging by 33 percent in the past five years, eliminating more than 915,000 tons of packaging material — the equivalent of 1.6 billion shipping boxes. The company has also invested $10 million in the Closed Loop Infrastructure Fund to improve recycling for 3 million homes in the United States. (Amazon founder Jeff Bezos owns The Washington Post.)

Target spokesman Brian Harper-Tibaldo said the company has been recycling cardboard from stores since the 1960s. In 2019, the Minneapolis-based retailer recycled more than 514,564 tons of cardboard, up 4.5 percent from 2018 and nearly 6 percent from 2017, some of it through its partnership with a paper mill. According to the company’s 2020 corporate responsibility report, 51 percent of Target’s owned-brand paper-based retail packaging are sourced from sustainably managed forests.

“Target is committed to using resources responsibly, eliminating waste and minimizing our footprint,” Harper-Tibaldo said in an email. “All the cardboard Target uses within its operations is bundled and brought to local recycling vendors.”
Both Amazon and Target declined to share cardboard usage data. T.J. Maxx declined to comment on this story. Walmart and Gap representatives did not respond to requests for comment.

Now, with the transition to more cardboard boxes showing up on doorsteps rather than in stores, the industry is relying on more consumers to keep up with recycling. “More paper by weight is recovered for recycling from municipal solid waste streams than glass, plastic, steel and aluminum combined,” Heidi Brock, president and chief executive of the American Forest and Paper Association, said in an emailed statement. “As more people stay at home, it’s a good reminder that the box at your doorstep is designed to be recycled.”

The United States historically has exported much of its waste materials, including old corrugated containers (industry speak for used cardboard boxes), mostly to countries in Southeast Asia and Mexico. But trade data shows money made from exporting recyclables has tumbled since China enacted restrictions on U.S. imports in 2018, and some countries followed suit. Those declines intensified last year during the U.S.-China trade war: Fiber exports, mostly from old cardboard boxes, dipped 3.1 million tons to its lowest volume since 2006, according to Resource Recycling.

That meant the industry had to step up efforts to process more of those recycled fibers domestically. Brock said that the containerboard industry — of which corrugated boxes make up the most — increased production 3.8 percent between January and October in 2020, year over year, and saw a 4.1 percent in recycling. Meanwhile, three new recycled containerboard mills are expected to be built over the next two years, with a $4.1 billion investment in manufacturing to continue recovering fiber for reuse, Brock said.

Cardboard reuse has come a long way since 1993, the year the three-sided recycling symbol first appeared on boxes, when just over half of all boxes were recycled, Kenyon said. In 2019, the recovery rate stood at 92 percent. Today, the cardboard box landing on your doorstep typically includes about 50 percent recycled fibers.
 

Naskra

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Boxes may be piling up in the streets, but that doesn't show in the revenues of IP and WRK.
 

Colon

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Do you have private, non bank affiliated companies operating ATMs there?

Not that I know of. It might even be it's not legal for non-banks to operate them. In the beginning all ATMs belong to 2 jointly operated systems that subsequently merged. Then banks also operated their own ATMs at affiliates, next to the jointly operated system, and now they've been talking about having a single jointly owned firm operate all of them again. It's certainly not as freewheeling as in the US, where you can find practically portable ATMs at neigbourhood groceries (at least that was what it seemed like to me when I was there).
 

sendos

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In other news:
Uber, Gig Companies Seek Labor Deals to Avoid Workers Becoming Employees
Food-delivery platforms in Europe are offering couriers extra benefits in the hope of averting costly legislation on employment rights

The Gig economy certainly wants to revise the common law position on the multifactorial test on employee vs contractor.

All Gig economies need to do is give their "workers" more autonomy in using their gig software and that's it. Too much control, and workers are more likely considered employees.

Of course, these principles vary from country to country. Australia is one country with mixed decisions though. Companies like Foodora has left Australia because their workers were considered employees, while Uber has won decisions stating that their workers are independent contractors.

How Big Cardboard is handling the 2020 box boom
The supply chain industry is working hard to combat potential cardboard shortages with the pivot to more online shopping amid the pandemic

Boxes sit on trash cans in front of a home in the District's Georgetown neighborhood on Nov. 27. (Amanda Andrade-Rhoades for The Washington Post)
By
Hannah Denham
Dec. 30, 2020 at 4:00 a.m. MST

Have you heard of the Australian businessman Richard Pratt and his company Visy? He's basically Australian's cardboard king and his mother's mansion is a few blocks from where I live.
 

Birdjaguar

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World’s richest men added billions to their fortunes last year

BY CHRISTOPHER INGRAHAM

THE WASHINGTON POST

The pandemic has forced untold hardships onto many Americans, with tens of millions of families reporting they don’t have enough to eat and millions more out of work due to layoffs and lockdowns.

America’s wealthiest, on the other hand, had a very different year: Billionaires as a class have added about $1 trillion to their total net worth since the pandemic began. And roughly one-fifth of that went to just two men: Jeff Bezos, chief executive of Amazon (and owner of The Washington Post), and Elon Musk of Tesla and SpaceX fame.

Musk has quintupled his net worth since January, according to estimates by Bloomberg, adding $132 billion and vaulting him to the No. 2 spot among the world’s richest, with a fortune of about $159 billion. Bezos’s wealth has grown by roughly $70 billion over the same period, putting his net worth estimate at roughly $186 billion.

The fortunes of both men grew largely due to stock gains posted by the companies they run. Shares of Tesla are up roughly 800% this year after a five-to-one stock split in August. The meteoric rise is driven by a number of factors: its factory in Shanghai started churning out vehicles this year, the company began posting consistent quarterly profits and demand for electric vehicles in general is expected to surge in 2021.

Amazon’s stock, on the other hand, has risen around 70% this year, a figure that is modest only in comparison to Tesla’s gains. Much of Amazon’s performance is due to homebound Americans turning to the e-commerce giant to order products they would have otherwise purchased at retail outlets shut down by the pandemic. Amazon Web Services, a big profit generator for the company, has also experienced increased demand during the pandemic.

All told, the two men increased their net worth by a staggering $200 billion last year, a sum greater than the gross domestic products of 139 countries. A billion dollars — a radically life-changing sum in nearly any other context — becomes just “an entry in a database,” as Musk recently characterized his Tesla assets. Such a rapid accumulation of individual wealth hasn’t happened in the United States since the time of the Rockefellers and Carnegies a century ago, and we as a society are only just beginning to grapple with the ethical implications.

What does it mean, for instance, that two men amassed enough wealth this year alone to end all hunger in America (a price tag of $25 billion, according to one estimate) eight times over? Or that the $200 billion accumulated by Bezos and Musk is greater than the amount of coronavirus relief allocated to state and local governments in the CARES Act?
 

Birdjaguar

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Across U.S., 2021 Ushers In Laws Prompted by Pandemic and Protests

BY SARA RANDAZZO

The start of the new year brings more than just hope for the end of the pandemic. In states across the country, new laws and regulations will be going into effect, including some aimed at addressing worker safety, affordable health care and other issues that emerged last year from the coronavirus. Others target matters like racial inequality and policing that were thrust into the national spotlight in 2020.

Employment
• In California, employers must notify workers of a possible workplace exposure to Covid-19 within one business day and report an outbreak within 48 hours to local public- health officials. In a major expansion of the state’s family leave program, employers with at least five employees must now offer at least 12 weeks of unpaid, job-protected leave to take care of new children or sick family members.
•Connecticut also is expanding its family leave program, which will be funded by a 0.5% tax on worker wages that begins in January.
• New York requires all employers to offer sick leave. Companies with five or more employees or net income of more than $1 million must give paid time off, and smaller companies can offer unpaid leave.
•The minimum wage increases in about half the states, including Maryland, Arkansas and Vermont. Florida joined a few other states and cities in aiming to get baseline pay to $15 an hour; the rate will rise to $10 an hour in September, with annual increases until 2026.
•In California, app-based and delivery drivers won’t be classified as employees and will be exempted from state laws governing minimum wage, paid sick leave and other labor protections after voters approved a ballot measure sponsored by Uber Technologies Inc., Lyft Inc. and other companies. Under the new law, the companies will offer some benefits to employees including mileage reimbursement and contributions toward health care.

Health and Medical Costs
• Virginia and Georgia have new laws aimed at curbing surprise medical bills. Virginia’s law protects insured patients from being billed by out-of-network providers for emergency care, or for surgeries and some other scheduled procedures performed at in-network hospitals.
• Diabetics will have greater drug-pricing protections in seven more states. New Mexico created the lowest 30-day cap for insulin payments at $25. Virginia’s new cap is $50.
• Oklahoma will expand its Medicaid coverage starting in July.

Policing, Crime and Drugs
•The killing of George Floyd in May after a Minnesota police officer pressed his knee to Mr. Floyd’s neck for nearly nine minutes prompted several statehouses to put a ban on the chokehold maneuver used in his killing. California, Delaware, Iowa, New York, Oregon and Utah all passed some form of choke hold ban. Connecticut banned choke holds as part of a broader law reforming policing in the state, which has some elements taking effect in January, including requiring officers to wear a badge in a prominent place. Some antichoke hold measures failed in other states.
• Georgia makes it a hate crime to target someone because they are a police officer. The law, opposed by civil-rights groups, followed the passage of a broader hate-crimes law that increased the prison sentences in crimes motivated by a victim’s race, religion, sexual orientation or other bias. Legislators passed that law after the killing of Ahmaud Arbery, a 25year-old Black man who was fatally shot after being pursued by three white men while he was on a run.
• More states continue to legalize recreational marijuana use through ballot measures or legislative changes, including Arizona, South Dakota, Montana and New Jersey.

Other Notable Laws
• Several states are cracking down on cellphone use on the road. Virginia is making it illegal to hold a cellphone while driving, expanding on a prior law that banned such use in work zones, or reading or typing on devices while driving. California increased penalties for texting and driving. And Arizona is imposing fines for holding a phone while driving.
• Publicly held corporations with headquarters in California will be required to have at least one member of boards of directors be part of a racial or ethnic minority group or LGBT by the end of 2021.

—Christine Mai-Duc, Zusha Elinson and Deanna Paul contributed to this article.
 
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