Rishi Taparia - Issue #110
This week we look at how home delivery has reshaped the world, Walmart’s China strategy, common themes in economic history, social media with kids and more. Enjoy!
How our home delivery habit reshaped the world
This week’s long read, and it’s a goodie. I can’t remember the last time shipping and logistics was described so lusciously.
The great trick of online retail has been to get us to do more shopping while thinking less about it – thinking less, in particular, about how our purchases reach our homes. This divorce of a product from its voyage to us is perhaps the thing that Amazon has sold us most successfully…Amazon’s emphasis on speed compelled other retailers to hurry, too, and encouraged us to believe that if something cannot be had quickly, it is barely worth having at all. It is as if we have forgotten that a product is an object moving through space, fighting gravity, air resistance and other forces of nature. Companies, though, are only too aware of it. While we choose and buy our purchases with mere inch-wide movements of our thumbs, they are busy rearranging the physical world so that our deliveries pelt towards us in ever-quicker time.
The piece goes through everything from warehousing and packaging to the environmental impact of cardboard 1mm thicker than normal and how cities are going to change in decades to come thanks to humans experiencing evolution in reverse.
For thousands of years, human progress was indexed to the ease and speed of our mobility: our capacity to walk on two legs, and then to ride on animals, sail on boats, chug across the land and fly through the air, all to procure for ourselves the food and materials we wanted. In barely two decades, that model has been turned inside out. Progress today consists of having our food and materials wing their way to each of us individually; it is indexed to our immobility.
While all the pre-Black Friday sales “[invite] you to gaze out upon the entire bazaar all at once and to indulge the merest whim”, I highly encourage you to take a pause and read about how all the items are going to get to you.
Walmart is doubling down on China with 500 new stores
Walmart is in a battle for its future. Its biggest rival: Amazon. Walmart is fighting the ecommerce giant on multiple fronts, both online and offline. The Bentonville based behemoth has partnered with Microsoft, is making inroads within communities and finally starting to leverage its people with the next gen shopper in mind. Determined not to lose out on a global scale, Walmart beat out Amazon in a $16bn bid for Flipkart in India which has yielded some positive early results. Now, determined not to lose another major market Walmart is doubling down in China. Don’t be surprised if we see a Walmart-Alibaba partnership materialize in the future. The enemy of my enemy is my friend right?
Common Plots of Economic History
According to author Christopher Booker, there are 7 basic plots that encompass the history of storytelling:
Overcoming Monsters
Rags to Riches
The Quest
Voyage and Return
Rebirth
Comedy, and
Tragedy.
The point is not that all stories are the repetitive in nature. The point is that “plots that catch readers’ attention are psychological common denominators among all of us, so the seven plots show up in stories told by cultures that have little in common.” According to Morgan Housel, this notion of common plots can be applied to many more fields, including economic history.
People tend to want the same economic things – security, power, admiration, fulfillment. They tend to use the same tactics to get those things – work, risk, incentives, persuasion, theft, control. And they tend to fall for the same flaws in pursuit of those things – overconfidence, pessimism, no room for error, underestimating how fast things can change, etc.Economic history may be complicated. But the common denominators of human behavior means there are, if you look, only a handful of broad story plots that pop up again and again, throughout history and around the globe, connecting the economic experiences of people who otherwise seem to have little in common.
Housel’s plots for economic theory:
A good idea taken to the furthest extreme becomes indistinguishable from a terrible idea.
A competitive advantage that once looked invincible is squandered.
Future progress is underrated because past progress is misunderstood.
Surprises are constant, and not necessarily because we’re bad at predicting, but because everything important in the economy is driven by power laws where a tiny portion of things are responsible for the majority of outcomes, and it’s impossible for any one forecaster to track every moving part.
The ability to believe things that aren’t true or haven’t happened yet is the foundation of all economic growth and decline.
Through stories about railroads, Sears, America in the 90s, individuals that have shaped the world as we know it and hope Housel paints a convincing narrative. A worthwhile read.
Pollution
Air pollution has devastated New Delhi over the last week, with conditions so bad that schools have closed and many businesses have chosen to shut until conditions improve.
The physical side effects are well documented. However, the cognitive side effects are not as frequently mentioned. This week Stripe CEO Patrick Collison this week put out a post articulating the negative effects of air pollution on cognition. On polluted days chess players have been found to make more mistakes. Politicians use less complex speech. Baseball umpires make worse decisions on polluted days. Stock market returns are lower on polluted days.
The Real Cost of Tweeting About My Kids
I’ve become a fan of Agnes Callard recently. Her thoughts on parenting and the changes associated with parenting in the 21st century are simultaneously funny and thought provoking. This piece in the New York Sunday Times doesn’t disappoint. In it, the UChicago professor goes into a few topics:
The tradeoffs we make when posting on social media
Losing ‘control’ of our data once we post
What we are willing to pay for 'distance’
As my children appreciate, the control issue goes well beyond whether Facebook monetizes our data. It is also a matter of making oneself into a thing that others can own. When I’ve told you what my son said, it’s not “his data” anymore. He can’t control whether you laugh at it, or what tone you use when you do.
We don’t like to acknowledge just how much we are willing to pay for distance from other people. For example, people warn prospective parents that having a baby is expensive, but that isn’t exactly true. What’s expensive is getting away from your baby. If you don’t want to feed them with your body, you buy formula and bottles. If you don’t want them looking at you all the time, you buy contraptions to entertain them. A stroller so you don’t have to carry them, a crib so you don’t have to sleep with them, a house with extra rooms so you don’t even have to sleep near them, child care so that you can get farther away yet: These are the costs that add up. You don’t pay much for babies, but you pay a lot to escape them.
Quote I’m thinking about: “A son may conform or rebel; a daughter may adopt her parents’ dreams or veer off in a quite different direction toward her own. Either way, their choices will be made with reference to their family’s expectations.” - Peter Buffet