Explaining Southern California's economy

Wine Report: When the front of the label matters less than the back

The wine store. The wine section at the grocery store. The wine retail website. Terrifying experiences for many. Sweat. Shakes. Nervousness. So many labels. So many labels. So many labels...

There's an easy way to avoid this anxiety, so common among even more experienced wine drinkers. Forget the front of the bottle. Concentrate on the back. 

The back label is where, often, the wine importer's logo can be found. Now, I'm talking about wines from Europe, primarily, here. If all you ever drink is California wine, you don't need this advice.

At right is the famous logo of Kermit Lynch, an importer who owns a wine store in Berkeley, CA and who is highly regarded for seeking out rewarding, delicious French wines that don't cost an arm and leg. I've been a fan since I lived in Brooklyn and had access to the Lynch portfolio through my local wine shop. (Lynch also wrote one of the great wine books, "Adventures on the Wine Route," in which he recounts his experiences finding unusual wines and passionate winemakers in France.) 

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California high-speed rail is dead. No it isn't. Yes it is. No it isn't...

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California High Speed Rail Authority

An artist's rendering of California's high speed rail.

At Slate, Will Oremus says high-speed rail is a goner. And not just in California, but everywhere. Of course, everywhere but California, the "speed" part of high-speed was questionable:

The Europeans define high-speed trains as those that travel at speeds of 155 miles per hour or more (or 125 mph for tracks that are upgraded, rather than newly built). Wisconsin’s proposed $823 million Milwaukee-to-Madison line was to reach 110 mph, at most, in between stops in cities such as Brookfield and Oconomowoc. Ohio’s version was even slower, with trains on an upgraded freight-rail track topping out at 79 mph. With stops, the trip from Cincinnati to Cleveland would have been significantly slower by rail than by car. Who would ride such a thing?...
For all that, a line in California, connecting Los Angeles to San Francisco, still seemed to stand a chance. Unlike its counterparts elsewhere in the country, the California line would be true, dedicated high-speed rail, with trains running up to 220 mph. It would connect two metropolises of seven-million-plus people that are just far enough apart to make a drive unappetizing (six hours sans traffic) and a plane hop unwieldy. And the plans were already in place; the state had been working on a high-speed rail line for decades and lacked only the money to execute it. It was, it seemed, the perfect showcase for the Obama stimulus. This was more than just digging holes in the ground—it was putting people to work building something that the country needed anyway. Not only is California’s Interstate 5 congested and getting worse, but air traffic between San Francisco and Los Angeles is beginning to be a problem as well. Without high-speed trains, the state will need to build more highways, more airports, or both.

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China: Where's the innovation?

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Mark Ralston/AFP/Getty Images

A Chinese flag hangs next to a new development under construction on the busy Nanjing Road shopping street in Shanghai, China.

It's not a trivial question. This is Douglas Hervey, from the Harvard Business Review blog:

In the United States, disruptive innovation has harmed a few but benefited many. In China, top-down capitalism has benefited a few but harmed many. An absence of disruptive innovation and entrepreneurship is suffocating China's future growth potential. The future of that growth potential will depend in large part on whether China suppresses or unleashes its would-be disruptive entrepreneurs.

Hervey says that the Chinese are facing a "middle income trap — losing their competitive edge in labor-intensive industries and not yet gaining new sources of growth from innovation." So does this mean that China won't become the economic powerhouse we might once have expected?

It depends on how much faith you place in innovation. And here's why you should place a lot in it: because innovation really has no upper limit. More traditional contributors to GDP do. When an economy extracts as much growth as it can from some established process, it starts to outsource that process to a region where labor costs are cheaper. Or it fires up the innovation engine to make the process better — or replace the product in question with something better.

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Facebook: The worst thing that's ever happened to humanity

Getty Images

Facebook founder and CEO Mark Zuckerberg speaks during a news conference at Facebook headquarters on October 6, 2010 in Palo Alto, California.

OK, maybe not the worst thing. But according to Harvard Business Review blogger Daniel Gulati, not exactly a force for happiness:

When Facebook was founded in 2004, it began with a seemingly innocuous mission: to connect friends. Some seven years and 800 million users later, the social network has taken over most aspects of our personal and professional lives, and is fast becoming the dominant communication platform of the future.

But this new world of ubiquitous connections has a dark side. In my last post, I noted that Facebook and social media are major contributors to career anxiety. After seeing some of the comments and reactions to the post, it's clear that Facebook in particular takes it a step further: It's actually making us miserable.

He goes on. This is my favorite part:

[Facebook is] creating a den of comparison. Since our Facebook profiles are self-curated, users have a strong bias toward sharing positive milestones and avoid mentioning the more humdrum, negative parts of their lives. Accomplishments like, "Hey, I just got promoted!" or "Take a look at my new sports car," trump sharing the intricacies of our daily commute or a life-shattering divorce. This creates an online culture of competition and comparison. One interviewee even remarked, "I'm pretty competitive by nature, so when my close friends post good news, I always try and one-up them."

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California's underground economy: The cost of doing business in the state

Cleaning services are vulnerable to the underground economy and price competition.

How much does the "underground economy" cost California every year in lost tax revenue? A whopping $7 billion, according to LA Times

A recent review of records from nearly 1,500 employers revealed that nearly a third lacked legally required workers' compensation insurance coverage to pay the medical bills of employees hurt on the job, Baker said.

Many of those workers seek treatment at hospital emergency rooms, a burden that ultimately falls on insured patients and taxpayers. They also seek benefits from state workers' compensation courts and money that comes from a special state fund that passes the costs along to law-abiding employers. Off-the-books laborers likewise don't pay income taxes, while their employers avoid payroll taxes to fund unemployment insurance benefits.

Bottom line: Tax-paying companies, consumers and taxpayers are stuck paying the bill for cheats.

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