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“Before the monopoly should be permitted, there must be reason to believe it will do some good – for society, and not just for monopoly holders”*…

From the ever-illuminating Matt Stoller (@matthewstoller), eagle-eyed sentinel against exploitative monopolies…

I write a lot about big tech, but today’s issue is about something so basic and fundamental we literally don’t think about it. Salt. Salt mining is one of humanities’ oldest industries, with wars fought over this commodity. Cities like Venice monopolized the salt trade in the middle ages for geopolitical reasons, and the British tried to block colonists from access to salt during the American Revolution to prevent their ability to preserve food. 

Today salt is still used in everything from chemicals to food preservation. Its main use is deicing our roads, because salt from mines across North America, and shipped in from overseas, makes it possible to drive in all sorts of weather. Salt saves lives, stops car accidents, and makes our economy run. 

And in the U.S. and Canada, salt mining is being monopolized, as we speak…

In the winter, when it’s really cold and snowy, what Americans need is not a competitive semiconductor industry or better app stores. They need salt. And not the kind of salt that flavors our food, but the kind that melts snow and ice. If we don’t have salt, no one can drive, because salt is what keeps our roads manageable. Without salt, trucks can’t deliver supplies, people can’t get to stores or work, and the economy comes to a standstill. 

And people die. A lot of them.

Every year, over 1300 people die in car accidents due to snowy, slushy, or icy pavement, with another 117,000 injured. Snowy weather is also a huge waste of time and money, costing roughly $500M a day, and 544 million vehicle-hours a year of delay. Road salt doesn’t eliminate this problem entirely, but it comes close, reducing collisions by up to 88% and injuries by 85%. Studies show that deicing salt pays for itself within the first 25 minutes after it is spread. Roughly 40% of domestic salt, produced largely from mining, is used not for food or chemicals, but for deicing. It’s a major expense for cities and states, and commercial customers like shopping malls. And because weather leads to demand spikes, and America tends to operate in just-in-time style inventory models instead of managing risk by storing surpluses of critical commodities, there are often shortages of road salt precisely when everyone needs it most.

And that’s why I paid attention when ex-convict and junk bond king Michael Milken’s alleged private equity firm, Stone Canyon, bought two major salt producers over the last year. Early in 2020, Stone Canyon acquired Kissner, a producer of deicing salt, private label consumer salt, and salt-related chemicals. Then, nine months later, Stone Canyon bought Morton’s Salt, the largest producer in the world, for $3.2 billion, and it is now awaiting antitrust approval. Kissner is itself a roll-up of the salt industry, having bought Central Salt and Lion Salt and turned itself from a small Ontario-based regional distributor of ice melt into one of the giants of the industry. So Stone Canyon is overseeing a roll-up of roll-ups.

This series of mergers should terrify cities across the upper Midwest, who have to buy salt in unpredictable spot markets and often deal with shortages when the weather gets bad. Minnesota, for instance, bought roughly 1.5 million tons of salt for the 2020 season. Salt is a regional business, it’s just not economical to move extremely bulky road salt over land more than 150 miles, so while port cities can get salt from abroad in ocean vessels, and salt can be barged up the Mississippi river, much of the upper Midwest and Canada has to buy local. (It doesn’t help that America’s rail system is monopolized.)…

The salt industry is an oligopoly, and the number of suppliers to Governments in regions of the Great Lakes markets will shrink from 4 to 3 and in some geographies from 3 suppliers to 2. There are two consequences of this consolidation of salt production. The first is that prices will go up, and municipal budgets will be stretched. 

Salt is sold in blind bidding processes. Governments put out tender offers, and then suppliers bid. When bidding, suppliers will set prices by considering the supply levels among competitors. If there are only two competitors in a market and one of them has committed their salt production for the year, then the remaining one is a monopolist who can just set the price. This is particularly true for a bunch of Midwestern states, like Michigan, Ohio, Indiana, Illinois, Wisconsin, and Minnesota.

But the much more serious problem is that of shortages. The industry manages demand spikes from weather not by having spare production capacity or lots of storage, but by overpromising salt deliveries. The rule of thumb is that one out of every five years will see a mild winter with few sales, three out of five will be snowy but normal, and one out of five will involve extreme weather and much higher demand. Of course, rules of thumb have gone out of the window now that there’s more extreme weather, which means demand drops and spikes will be more common. 

One of the best ways of winning market share is to bid low, and then if demand is high, to simply not deliver to Commercial customers (Landscapers that service residential and commercial customers are almost always shafted first, meaning driveways and sidewalks go unsalted.) There are penalties in contracts for doing this to government customers, but when the snow hits, it doesn’t matter and the producers often pay the penalties if they are even enforced by the government entities. All customers need the salt when it snows, and a contract dispute doesn’t get in the way. 

It’s quite possible, and indeed likely, that shortages will worsen. Without competition, it will be much harder to go to a different supplier, because there won’t be any other suppliers. And private equity takeovers in general are operational nightmares, which means that it’s likely Kissner and Morton will have problems with production and distribution purely because mergers tend not to work out. 

There’s one final piece of the problem. Because private equity firms have too much money and not enough acquisition targets, prices for mid-market industrial companies are really high. So Stone Canyon almost certainly overpaid for both Kissner and Morton’s. To justify its investment, Stone Canyon is going to have to cut costs and reduce capital spending, which will harm production, because salt mining needs a lot of investment. Then it will likely have to raise prices. In other words, if the merger goes through, the financial pressure of paying such rich prices for salt firms will force significant price hikes, and potentially shortages in the market… 

A private-equity salt roll-up suggests that we’re in for shortages and price spikes: “How a Salt Monopoly Could Spike Car Accidents in the Midwest,” eminently worth reading in full.

For other reasons to be paying attention to salt: “How America got addicted to road salt — and why it’s become a problem.”

* Lawrence Lessig

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As we study saline substitutions, we might recall that it was on this date in 37 CE, following the death of Tiberius, that the Roman Senate annulled Tiberius’ will and confirmed Caligula, his grandnephew, the third Roman emperor.  (Tiberius had willed that the reign should be shared by his nephew [and adopted son] Germanicus and Germanicus’ son, Caligula.)

While he has been remembered as the poster boy for profligacy, Caligula (“Little Boots”) is generally agreed to have been a temperate ruler through the first six months of his reign.  His excesses after that– cruelty, extravagance, sexual perversity– are “known” to us via sources increasingly called into question.

Still, historians agree that Caligula did work hard to increase the unconstrained personal power of the emperor at the expense of the countervailing Principate; and he oversaw the construction of notoriously luxurious dwellings for himself.  In 41 CE, members of the Roman Senate and of Caligula’s household attempted a coup to restore the Republic.  They enlisted the Praetorian Guard, who killed Caligula– the first Roman Emperor to be assassinated (Julius Caesar was assassinated, but was Dictator, not Emperor).  In the event, the Praetorians thwarted the Republican dream by appointing (and supporting) Caligula’s uncle Claudius the next Emperor.

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“Remedies are more tardy in their operations than diseases… it is easier to crush men’s spirits and their enthusiasm than to revive them”*…

 

 

It is time to bring Tacitus and the vibrant intellectual tradition that he inspired out of the shadows. Indeed, in an era in which the recrudescence of great-power rivalry has increasingly taken on ideological undertones, the Roman statesman’s rich commentary on the grim and stultifying nature of autocratic rule is more timely now than ever. Indeed, amid an intensifying battle over competing systems of government, the raw accusatory power that quietly ripples through Tacitus’ oeuvre constitutes a formidable force in liberal democracy’s intellectual arsenal.

Having served under several emperors, eventually reaching the rank of consul under Nerva, the Roman scholar-practitioner’s reflections serve not only as a lugubrious reminder of the gloom of a life shorn of genuine freedom but also as a warning against succumbing to complacency in the face of democratic corrosion within our own societies.

Of all the Roman historians, Tacitus offers the clearest understanding of how moral resignation forms the dank loam within which tyranny takes root…

Despite Tacitus’ towering moral and intellectual influence over the centuries, his works are only rarely consulted by contemporary students of authoritarianism; we should look again: “Thrones Wreathed in Shadow: Tacitus and the Psychology of Authoritarianism.”

* “Remedies are more tardy in their operations than diseases, and as bodies slowly increase, but quickly perish, so it is easier to crush men’s spirits and their enthusiasm than to revive them; indeed there comes over us an attachment to the very enforced inactivity, and the idleness hated at first is finally loved.”   — Publius Cornelius Tacitus, The Life of Cnaeus Julius Agricola

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As we learn from history, we might that it was on this date in 587 BCE that king Nebuchadnezzar II‘s  siege of Jerusalem ended in his victory, with the destruction of the Temple of Solomon (and much of the rest of the city).

Following an earlier siege (1597 BCE), the Neo-Babylonian Nebuchadnezzar had installed Zedekiah as vassal king of Judah.  But Zedekiah revolted against Babylon, and entered into an alliance with Pharaoh Hophra, the king of Egypt… to which Nebuchadnezzar responded by invading Judah again.

220px-Nebuchadnezzar_camp_outside_Jerusalem._Famine_in_the_city

Nebuchadnezzar camps outside Jerusalem. The citizens starve and are reduced to cannibalism. (Petrus Comestor‘s “Bible Historiale”), 1372

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“Not everything that is faced can be changed, but nothing can be changed until it is faced”*…

 

police

Police advance through a cloud of tear gas on Aug. 17, 2014 in Ferguson, Mo.

Fifty years ago, President Lyndon B. Johnson called for a “War on Crime,” a declaration that ushered in a new era of American law enforcement. Johnson’s turn toward crime control as a federal priority remains his most enduring legacy—even more than the Great Society programs that scholars often herald as his greatest achievement—and continues to shape what is arguably the most important social crisis the United States now faces.

Until recently, the devastating outcomes of the War on Crime that Johnson began had gone relatively unnoticed. Then, last August, during the series of demonstrations in Ferguson, Mo., images of law-enforcement authorities drawing M-4 carbine rifles and dropping tear gas bombs on protestors and civilians alike shocked much of the American public. Ferguson looked like a war zone. Many commentators attributed this sight to the ongoing technology transfers from the defense sector to local law-enforcement authorities, which began during the War on Drugs and escalated in the climate of the War on Terror.

But the source of those armored cars is much older than that. It was the Law Enforcement Assistance Act that Johnson presented to Congress on March 8, 1965, that first established a direct role for the federal government in local police operations, court systems, and state prisons. Even though the Voting Rights Act is considered the major policy victory of that year, Johnson himself hoped that 1965 would be remembered not as the apex of American liberal reform, but rather as “the year when this country began a thorough, intelligent, and effective war against crime”…

As we witness (again) the deploying of martial materiel against citizens the vast majority of whom are peacefully exercising their constitutional rights to express all-too-understandable frustration and anger, we’d be wise to try to learn from our history and correct our mistakes: “Why We Should Reconsider the War on Crime.”

(TotH to EWW)

* James Baldwin

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As we pray for ploughshares, we might recall that it was on this date in 455 that the Vandals entered Rome, which they plundered for the next two weeks.  It was, as sackings went (this was Rome’s third, of four altogether), relatively “light”:  while the Vandals (who had destroyed all of Rome’s aqueducts on their approach) looted Roman treasure and sold many Romans into slavery, their leader Genseric acceded to the pleas of Pope Leo that the Vandals refrain from the wholesale slaughter of Rome’s population and the destruction of the Eternal City’s historic buildings.

300px-Genseric_sacking_rome_456

Genseric sacking Rome, by Karl Briullov

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“A world constructed from the familiar is the world in which there’s nothing to learn”*…

 

bubble

 

In a surprising new national survey, members of each major American political party were asked what they imagined to be the beliefs held by members of the other. The survey asked Democrats: “How many Republicans believe that racism is still a problem in America today?” Democrats guessed 50%. It’s actually 79%. The survey asked Republicans how many Democrats believe “most police are bad people”. Republicans estimated half; it’s really 15%.

The survey, published by the think tank More in Common as part of its Hidden Tribes of America project, was based on a sample of more than 2,000 people. One of the study’s findings: the wilder a person’s guess as to what the other party is thinking, the more likely they are to also personally disparage members of the opposite party as mean, selfish or bad. Not only do the two parties diverge on a great many issues, they also disagree on what they disagree on.

This much we might guess. But what’s startling is the further finding that higher education does not improve a person’s perceptions – and sometimes even hurts it. In their survey answers, highly educated Republicans were no more accurate in their ideas about Democratic opinion than poorly educated Republicans. For Democrats, the education effect was even worse: the more educated a Democrat is, according to the study, the less he or she understands the Republican worldview.

“This effect,” the report says, “is so strong that Democrats without a high school diploma are three times more accurate than those with a postgraduate degree.” And the more politically engaged a person is, the greater the distortion.

What could be going on? Bubble-ism, the report suggests…

Arlie Hochschild explains: “Think Republicans are disconnected from reality? It’s even worse among liberals.”

* Eli Pariser, The Filter Bubble

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As we contemplate commonality, we might recall that it was on this date in 37, following the death of Tiberius, that the Roman Senate annulled Tiberius’ will and confirmed Caligula, his grandnephew, the third Roman emperor.  (Tiberius had willed that the reign should be shared by his nephew [and adopted son] Germanicus and Germanicus’ son, Caligula.)

While he has been remembered as the poster boy for profligacy, Caligula (“Little Boots”) is generally agreed to have been a temperate ruler through the first six months of his reign.  His excesses after that– cruelty, extravagance, sexual perversity– are “known” to us via sources increasingly called into question.

Still, historians agree that Caligula did work hard to increase the unconstrained personal power of the emperor at the expense of the countervailing Principate; and he oversaw the construction of notoriously luxurious dwellings for himself.  In 41 CE, members of the Roman Senate and of Caligula’s household attempted a coup to restore the Republic.  They enlisted the Praetorian Guard, who killed Caligula– the first Roman Emperor to be assassinated (Julius Caesar was assassinated, but was Dictator, not Emperor).  In the event, the Praetorians thwarted the Republican dream by appointing (and supporting) Caligula’s uncle Claudius the next Emperor.

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Written by LW

March 18, 2020 at 1:01 am

“Better the illusions that exalt us than ten thousand truths”*…

 

Pushkin

 

St. Petersburg is set to open a sprawling, immersive theme park that will bring iconic Russian writer Alexander Pushkin’s fairy tales and poems to life in 2023. [sic]

Considered the founder of modern Russian literature, Pushkin wrote some of Russia’s most famous fairy tales and epic poems and remained popular through Soviet times and into the present.

Dutch design company Jora Vision will use Pushkin’s works as inspiration for the 17,000-square-meter Lukomorye park, named after the mythical Slavic land in which Pushkin’s fairy tales take place…

The interactive park, which will be populated by actors playing famous heroes from Pushkin’s stories, will stage carnivals, performances and master classes. While the park is still in its conceptual stage, visitors can expect to be able to learn about Pushkin’s life in an “immersive walkthrough experience,” Jora Vision says…

The future of entertainment is the past: “Immersive Pushkin-Themed Park to Open in St. Petersburg in 2023.”

* Alexander Pushkin

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As we make our travel plans, we might recall that it was on this date in 41 CE that Roman Emperor Caligula (see almanac entry here) was assassinated by the Praetorian Guard, which promptly proclaimed his uncle, Claudius, the new Emperor.

220px-Gaius_Caesar_Caligula

Caligula

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Written by LW

January 24, 2020 at 1:01 am

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