Profit is So Last Century

WeWork, which owns and operates co-working spaces (in other words, they are a commercial property management company), just filed for an IPO, and it doesn’t look great:

Among the disclosures in the filing, WeWork reported a net loss attributable to the company of $689.7m in the six months ending 30 June 30, compared with a loss of $628.1m a year earlier.

In the same period, revenue more than doubled to $1.54bn.

The company also did not give a time frame for becoming profitable as it continues to invest in expanding its operations.

WeWork’s $700m loss is nothing next to Uber’s $5.2 billion loss for the last quarter, of course, but WeWork’s pitch to investors doesn’t include the extra frosting on the shit cake (self-driving cars, food delivery, scooters, etc.) that Uber uses to divert attention from their utter failure as a business.  WeWork just owns buildings and rents space in them, something that’s been done forever at a modest profit.  The only thing new about WeWork is that they rent office space by the day, week or month, and they serve coffee and fancy snacks in the break room.  Glory fucking hallelujah.

I wonder how bad the next recession is going to be after this ridiculous bubble pops.

It’s Stupid’s Economy

Trump’s reverse Midas touch is taking hold:

Trump’s escalating trade war has spooked business executives. There’s already been a noticeable decline in business investment as corporate leaders say Trump’s tariffs and unpredictability are creating too much uncertainty, dissuading them from spending large sums on new buildings or equipment. Now there are early signs that business leaders are beginning to pull back on hiring, too.


The United States had 7.3 million job openings in June, down from a peak of 7.6 million in November, according to the latest Labor Department data. While the decline is modest, economists are concerned hiring could dry up quickly as companies see no end in sight to Trump’s trade war and they look to cut costs. The reduction in job openings is also widespread across many different industries, signaling how cautious companies are becoming.

And his Ag Secretary Sonny Perdue is handling it well:

“I had a farmer tell me this in Pennsylvania,” Perdue said at a farm show in Minnesota last Wednesday, according to Agri-Pulse. “He said, ‘What do you call two farmers in a basement?’ I said ‘I don’t know, what do you call them?'”

Perdue said the farmer said: “A whine cellar.”

There was laughter but boo’s came as some members of the crowd did not find Perdue’s joke funny, just two days after China declared it would no longer buy any American agricultural products to hit back at Trump for imposing an additional 10 percent tariff on Chinese goods.


Trump’s tariffs on China have led to farmers filing bankruptcy at never-before-seen rates.

Minnesota Corn Growers Association President Brian Thalmann said farm producers are not “starting to do great again” and that “things are going downhill very quickly.”

The rural parts of Minnesota are pretty red – hopefully Trump fucking up their livelihoods in an ill-considered pissing match with China will make a few former Trumpers out of farmers.

The Way We Live Now Open Thread: People for Whom It Is Difficult to Feel Sympathy Edition

Calling out the people who fund campaigns is not a new tactic in politics, but the question of how much should be publicly disclosed about those donors has been an issue that Republicans, led by the Senate majority leader, Mitch McConnell, have repeatedly raised in recent years. While the Supreme Court ruled in the 2010 Citizens United case to uphold public disclosure — with Justice Antonin Scalia, the court’s conservative stalwart, arguing later that without such revelations “democracy is doomed” — Republicans and wealthy allies like the Koch brothers have argued that it results in donor harassment and has a chilling effect on free speech…

But the Supreme Court’s support for campaign finance disclosure laws has a built-in exemption for people who can show a realistic threat of harassment, and the renewed scrutiny on Trump donors has also raised questions about what qualifies as donor harassment and who is entitled to privacy…

“Transparency is essential, Mrs. Clinton, unless it means that our favorite plutocrats might get snubbed in the Hamptons. That’s just inhumane!… ”

Industrial clusters and thick labor markets

I’m waiting for a huge piece of code to rerun and I should not be working on a cognitively intensive revise and resubmit on a Friday afternoon, so I want to go back to what I originally went to grad school for — urban economics and economic development — for a minute to respond to a seemingly populist and really dumb proposal to strip the federal government of expertise proposed by Andrew Yang.

Let’s think about Washington DC’s primary export industry as government and more specifically federal government leadership and top level analysis and management. The federal government is an industrial cluster in DC much like venture capital fueled technology firms are an industrial cluster in San Francisco-San Jose region, bio-tech is a cluster in Greater Boston and steel was a cluster in Pittsburgh. Clusters are interesting in that they are often positive feedback loops until they run into hard constraints or a massive external shock.

There is a huge literature on the positive feedback loops on economically successful clusters. One of the major drivers is that a cluster creates a rich and thick labor market. This means that at any given point, there are lots of good jobs available to anyone who is qualified to work in the cluster. People aren’t locked into a “good enough” job because that is the only job available that utilizes any specific human capital/education/tacit knowledge available to them, but that people can readily shift between positions to maximize their personal gain. In Washington DC, if someone is a research economist, there are a hundred opportunities within seven Metro stops of their current place of employment. If someone is a research economist in Sault Ste. Marie, there may be one or two within an hour of their current place of employment. The same applies for geneticists who work in Boston vs. geneticists who work in Boise.

Employment concentration creates specialization and optimization. It allows for work to be more productive as the cluster grows and the labor market becomes even thicker and deeper. This is all pretty standard.

There is another labor market point to make; large urban areas have lots of jobs that are not in the primary export industry. This could matter for me at some point in the future as I could easily see myself spending a couple of years working for either the federal government in the DC-Baltimore region or working for an entity that directly services the federal management and analysis industrial cluster. My wife has a skill set that could translate into this industrial sector but her current experience is in a general professional environment. If my options for moving to DC for federal work or Boone, North Carolina, my wife will far more readily find a good enough job in DC.

Dispersing the vast majority of the DC/Baltimore/NOVA government management and analysis cluster that has been built up over four generations is a great way to make the federal government less efficient and less attractive to top tier talent especially if the dispersion would be going to smaller urban clusters with far shallower and thinner labor markets.

Gagging on the Gig Economy

I ordered two things from Amazon Prime the last couple of days. Yesterday’s package was delivered by a guy driving a four door Chevy Malibu with the back seat crammed full of a jumbled bunch of Amazon packages. After extracting my box from the mess in his back seat, he logged the delivery on an app on his personal cell phone (I could tell because he was talking on it the whole time). This was about 3:30 PM yesterday – I’m sure he was driving until the sun set, given that he had at least 100 packages left (there were a bunch of envelopes on the front seat).

Today’s package will be delivered by an insured, unionized UPS driver in a real delivery van.

I’m just going to shoot in the dark and guess that the first driver doesn’t have good health insurance, that he won’t have a retirement that looks anything like the UPS driver’s, and that his hourly pay, after deducting wear and tear on his vehicle, is probably below minimum wage. But, god damn, did my cheap Chinese shit get delivered to my door quickly.