US Wealth Distribution, Stock Ownership Edition

[Note:  This item comes from friend David Rosenthal.  DLH]

US Wealth Distribution, Stock Ownership Edition
By Barry Ritholtz
Jun 30 2017
http://ritholtz.com/2017/06/us-wealth-distribution/

Interesting chart via Deutsche Bank ‘s Torsten Sløk:

Last week when I sent around the chart with the US income distribution I got a lot of client questions about the US wealth distribution. The chart below shows that the top 10% of families in the US own about 75% of total household wealth.

[snip]

Re: Is the staggeringly profitable business of scientific publishing bad for science?

[Note:  This comment comes from friend Steve Schear.  DLH]

From: Steven Schear <steven.schear@googlemail.com>
Subject: Re: [Dewayne-Net] Is the staggeringly profitable business of scientific publishing bad for science?
Date: June 30, 2017 at 1:03:09 AM EDT
To: dewayne@warpspeed.com

Copyrights were originally granted to guilds so The Crown could more easily control society. Now, they are to advance the useful arts and encourage the creation of new works. These scientific publishers are guilds collecting rents. If you care about free/affordable access to scientific literature its time to donate to sci-hub.io and libgen.io and help crush the guilds.

 

Is the staggeringly profitable business of scientific publishing bad for science?
It is an industry like no other, with profit margins to rival Google – and it was created by one of Britain’s most notorious tycoons: Robert Maxwell.
By Stephen Buranyi
Jun 27 2017
https://www.theguardian.com/science/2017/jun/27/profitable-business-scientific-publishing-bad-for-science

Re: Is the staggeringly profitable business of scientific publishing bad for science?

[Note:  This comment comes from friend Andrew Odlyzko.  DLH]

From: odlyzko@umn.edu (Andrew Odlyzko)
Subject: Re: [Dewayne-Net] Is the staggeringly profitable business of scientific publishing bad for science?
Date: June 28, 2017 at 11:03:31 AM EDT
To: dewayne@warpspeed.com

Dewayne,

It is a very nice article.  But it conflates several issues, and has
some serious distortions.  

High profits at Elsevier (as well as at other publishers, including
quite a few non-profit professional societies) are one issue.  They
provide an interesting perspective on the general evolution of the
economy, in which high profits are often attained with small investments
by seizing strategic choke points.  I wrote about this in “”Open Access, 
library and publisher competition, and the evolution of general commerce,” 
Evaluation Review, vol. 39, no. 1, Feb. 2015, pp. 130-163, preprint at

http://www.dtc.umn.edu/~odlyzko/doc/libpubcomp.pdf

Another issue is simply the unnecessarily high costs of scholarly
publishing.  Elsevier (as well as many non-profit society publishers)
collect about $5,000 in total on average for each article.  There is
plenty of evidence (see the article cited above) that 10% of that
would suffice to provide a peer reviewed journal system of quality
comparable to the present one.  (Just the distribution of articles
by themselves is almost trivial, the arXiv prepring archive operates
at a cost of about $10 per preprint.)  The main obstacle is the
intertia of academia.  Scholars could easily change the system,
but coordinating them (or even getting them to pay any attention
to the issues) is hard.

Yet another issue is the influence of the journal system on the
whole research enterprise.  But there it seems that journals (and
in this respect it is not clear Elsevier and other commercial
publishers are much different from professional society ones)
simply reflect the general sociology of science.  Even if Elsevier
gave away its journals, those problems would not change.  There is
a slew of publications on the problems with with current system, and 
just one example is the paper of Vinkers et al. in Br. Med. J. in 2015, 
“Use of positive and negative words in scientific PubMed abstracts between
1974 and 2014: retrospective analysis,”

www.bmj.com/content/351/bmj.h6467

with a popular writeup by Philip Ball in Nature,

http://www.nature.com/news/novel-amazing-innovative-positive-words-on-the-rise-in-science-papers-1.19024

A fourth issue in the Buranyi article is the role of Robert Maxwell.
There was much negative about his contributions.  But if one reads
the Buranyi piece carefully, one gets some glimpses of the positive 
effects that Maxwell had on scholarly publishing.  He did recognize 
the rapid expansion of the research establishment, and in particular 
the rise of new fields, fields that traditional professional societies 
were neglecting.  I have not heard of any cases where he tried to 
influence the scientific content of his journals (say, by suppressing 
articles about dangers of tobacco, or of pollution).  So yes, the high 
prices and high profits that he extracted were regrettable.  But he just 
exploited the opportunities that traditional scholarly publishers had 
left open.

Andrew

Is the staggeringly profitable business of scientific publishing bad for science?
It is an industry like no other, with profit margins to rival Google – and it was created by one of Britain’s most notorious tycoons: Robert Maxwell.
By Stephen Buranyi
Jun 27 2017
https://www.theguardian.com/science/2017/jun/27/profitable-business-scientific-publishing-bad-for-science

Re: The Magical Apple Spin-Off That Almost Invented the iPhone … in 1993

[Note:  This comment comes from friend Andrew Odlyzko.  DLH]

From: odlyzko@umn.edu (Andrew Odlyzko)
Subject: Re: [Dewayne-Net] The Magical Apple Spin-Off That Almost Invented the iPh
Date: June 28, 2017 at 10:33:44 AM EDT
To: dewayne@warpspeed.com

Dewayne,

A fascinating story.

It can be read in several ways.  

One is as an example of great technical insight and inspiration.

Another one is as an example of the disconnect from reality by
really smart and knowledgeable folks who should have known
that their vision could not be realized with the technologies
available at that time.  The issue was not that “the world 
wasn’t quite ready for handhelds in the mid-1990s.”  It was
that the heldhelds that could be built at that time could
not do much.

Andrew

 

The Magical Apple Spin-Off That Almost Invented the iPhone … in 1993
By Sean Braswell
Jun 27 2017
http://www.ozy.com/flashback/the-magical-apple-spin-off-that-almost-invented-the-iphone-in-1993/40708

NRA Issues Call for White Supremacy and Armed Insurrection

NRA Issues Call for White Supremacy and Armed Insurrection
The gun lobby’s new “recruitment ad” is really a call for white supremacy and armed insurrection, deliberately crafted to stir anger and fear.
By BILL MOYERS AND MICHAEL WINSHIP
Jun 29 2017
http://billmoyers.com/story/new-low-nra/

Take a look at the ad below and ask whether the National Rifle Association can go any lower. Ponder this flagrant call for violence, this insidious advocacy of hate delivered with a sneer, this threat of civil war, this despicable use of propaganda to arouse rebellion against the rule of law and the ideals of democracy.

On the surface this is a recruitment video for the National Rifle Association. But what you are really about to see is a call for white supremacy and armed insurrection, each word and image deliberately chosen to stir the feral instincts of troubled souls who lash out in anger and fear:

Disgusting. Dishonorable. Dangerous. But also deliberate. Everything deplored by the NRA in the ad is committed by “they” — a classic manipulation turning anyone who disagrees with your point of view into “The Other” — something alien, evil, foreign.  

“They use their media to assassinate real news,” “They use their schools to teach children that their president is another Hitler,” “They use their movie stars and singers and comedy shows and award shows to repeat their narrative over and over again.”

“And then they use their ex-president to endorse the resistance.”

Well, we all know who “they” are, don’t we? This is the vitriol that has been spewed like garbage since the days of The Protocols of the Elders of Zion, blasted from lynch mobs and demagogues and fascistic factions of political parties that turn racial and religious minorities into grotesque caricatures, the better to demean and diminish and dominate.

It is the nature of such malevolent human beings to hate those whom they have injured, and the NRA has enabled more injury to more marginalized and vulnerable people than can be imagined. Note how the words “guns” or “firearms” are never mentioned once in the ad and yet we know that the NRA is death on steroids. And behind it are the arms merchants — the gun makers and gun sellers — who profit from selling automatic rifles to deranged people who shoot down politicians playing intramural baseball, or slaughter children in their classrooms in schools named Sandy Hook, or who massacre black folks at Bible study in a Charleston church, or murderously infiltrate a gay nightclub in Orlando.

Watching this expertly produced ad, we thought of how the Nazis produced slick propaganda like this to demonize the Jews, round up gypsies and homosexuals, foment mobs, burn books, crush critics, justify torture and incite support for state violence.

It’s the crack in the Liberty Bell, this ad: the dropped stitch in the American flag, the dregs at the bottom of the cup of freedom. It’s a Trump-sized lie invoked to bolster his base, discredit critics, end dissent. Joseph McCarthy must be smiling in hell at such a powerful incarnation on earth of his wretched, twisted soul.

With this savage ad, every Democrat, every liberal, every person of color, every immigrant or anyone who carries a protest sign or raises a voice in disagreement becomes a target in the diseased mind of some tormented viewer. Heavily armed Americans are encouraged to lock and load and be ready for the ballistic solution to any who oppose the systematic looting of Washington by an authoritarian regime led by a deeply disturbed barracuda of a man who tweets personal insults, throws tantrums and degrades everything he touches.

[snip]

The U.S. fertility rate just hit a historic low. Why some demographers are freaking out.

The U.S. fertility rate just hit a historic low. Why some demographers are freaking out.
By Ariana Eunjung Cha
Jun 30 2017
https://www.washingtonpost.com/news/to-your-health/wp/2017/06/30/the-u-s-fertility-rate-just-hit-a-historic-low-why-some-demographers-are-freaking-out/

The United States is in the midst of what some worry is a baby crisis. The number of women giving birth has been declining for years and just hit a historic low. If the trend continues — and experts disagree on whether it will — the country could face economic and cultural turmoil.

According to provisional 2016 population data released by the Centers for Disease Control and Prevention on Friday, the number of births fell 1 percent from a year earlier, bringing the general fertility rate to 62.0 births per 1,000 women ages 15 to 44. The trend is being driven by a decline in birthrates for teens and 20-somethings. The birthrate for women in their 30s and 40s increased — but not enough to make up for the lower numbers in their younger peers.

A country’s birthrate is among the most important measures of demographic health. The number needs to be within a certain range, called the “replacement level,” to keep a population stable so that it neither grows nor shrinks. If too low, there’s a danger that we wouldn’t be able to replace the aging workforce and have enough tax revenue to keep the economy stable. Countries such as France and Japan that have low birthrates have put pro-family policies into place to try to encourage couples to have babies. The flip side can also be a problem. Birthrates that are too high can strain resources such as clean water, food, shelter and social services, problems faced by India, where the fertility rate has fallen over the past few decades but still remains high.

The debate now is about whether the United States is headed toward a “national emergency,” as some have feared, or whether this is a blip and the birthrate will level off soon.

“It’s about millennials,” says Donna M. Strobino, a professor of population, family and reproductive health at the Johns Hopkins Bloomberg School of Public Health.

Those supposedly entitled young adults with fragile egos born in the 2000s who live in their parents’ basements and hop from job-to-job — it turns out they’re also much less likely to have babies, at least so far. Some experts think millennials are just postponing parenthood while others fear they’re choosing not to have children at all.

Strobino is among those who is optimistic and sees hope in the data. She points out that the fall in birthrates in teens — an age when many pregnancies tend to be unplanned — is something we want and that the highest birthrates are now among women 25 to 34 years of age.

“What this is is a trend of women becoming more educated and more mature. I’m not sure that’s bad,” she explained.

Indeed, as fertility treatments have extended the age of childbearing, the birthrates among women who are age 40 to 44 are also rising.

[snip]

Thoughts on Insurance

[Note:  This item comes from friend Judi Clark.  DLH]

Thoughts on Insurance
By Aaron Harris
Jun 29 2017
http://blog.ycombinator.com/thoughts-on-insurance/

Two years ago, I printed up Chubb’s 10k and started reading.1 I’d become interested in the insurance industry through a number of conversations with my father-in-law, who is a commercial broker. While I’d thought a bit about health insurance before that, it was mostly in the context of my own access to it, and the never-ending debate around Obamacare.

As I read Chubb’s financials, industry reports, Warren Buffet’s letters, and various blogs I came to realize that the insurance industry was both far more complex and rife with opportunity than I’d assumed. While I’ve always been attracted to fractured and regulated markets, nothing quite mimics insurance in its scope, nuance, and size. I wasn’t the only person thinking about this, as the number of recent insurance tech companies indicates.

Problems

Here are a few core problems built into the structure of insurance today.2

Data
Insurance is fundamentally a data problem. Insurance carriers set their rates based on actuarial models designed to predict the likelihood of future events. Without access to oracular powers, these models rely on the best available data when they are built and as they are updated.

This data is necessarily incomplete. It only becomes more incomplete as time goes on and more events pile up in a very large and unordered world. For instance, a home insurer would be able to better predict the likelihood of fire if it knew the details of every overloaded power strip in every home in its portfolio. It does not.

The issues faced by carriers with data extends to the setup of carrier/broker relationships. These relationships necessarily involve lots of paper because there are few simple systems that easily integrate the two sides. This means that information about customers is often relayed poorly, misunderstood, or simply ignored.

Structures
Trying to figure out all of the different players in the industry is difficult at best.

When it comes to the distribution side, I can’t do it any better than Kyle did here: https://medium.com/@kylenakatsuji/so-your-startup-wants-to-sell-insurance-a0167581f7b1.

However, there are even more players involved behind the scenes which are important to understand if you want to uncover opportunities:

Reinsurer – There are companies that purchase insurance risk from carriers. They are critical to the system because insurers will often find that they are overexposed to a given risk (like that presented by hurricanes in the Gulf Coast) and will need to offload some of that risk. Reinsurers traditionally purchase risk from carriers and from other reinsurers. Reinsurers have also begun expanding the types of risk that they will purchase and the stage at which they’ll do it, sometimes acting nearly identically to carriers.

ILS buyers – ILS are Insurance Linked Securities. The most of famous of these are CAT (catastrophe) bonds. These are created by insurers and reinsurers who wish to syndicate risk beyond the insurance world. This is done by creating a bond which pays an interest rate and defaults in the case of particular event. The market for these is currently fairly small, and the bonds are generally purchased by hedge funds. This market will likely expand over time as capital continues to look for yield.

Fronting carriers – These are carriers that form partnerships with other entities, like MGAs (Managing General Agent, defined in Kyle’s post above), wherein the MGA writes risk using the regulatory framework of the fronting carrier, and then immediately sells the risk to a third party. This structure allows entities that could not otherwise sell insurance – whether through business choice, lack of regulatory capital, or lack of expertise necessary to form a carrier – do so as long as the fronting carrier agrees.

Fronting carriers are not capitalized in the same way that large carriers are, as they don’t hold risk on their own books. They generally collect a fee – for the use of the regulatory framework – from the entity finding and pricing risk.

[snip]