BUSINESS BY CARLSON – 6/28/17

Content provided by Paul Vaaler of the Carlson School

Mid-week greetings to Business by Carlson readers and listeners. Yesterday (Tuesday, June 27, 2017) saw a great one-hour discussion off business issues related to current US (and Minnesota) trade policies. Dave Lee and I got to interview two experts on these issues: Executive Director of the Minnesota Agri-Growth Council (MAC) Perry Aasnese; and Chair of the US Meat Export Federation (MEF) Bruce Schmoll. Here’s where you can learn more about that panel discussion broadcast: http://minnesota.cbslocal.com/audio/business-by-carlson/. One of the big things I learned from the discussion was how important associations like MAC and MEF are when trying to exploit business opportunities made possible by trade agreements. Once the politicians have inked a deal to lower tariffs or quotas, then associations like MAC and MEF step in to help their member firms find qualified trade partners in the target country. They match up companies and help smooth the negotiation of cross-border transactions. Trade agreements are only the beginning step in getting Minnesota farmers and agribusiness (and manufacturing and services) firms to the bargaining table. Many thanks to everyone at ‘CCO, Carlson for putting the event together. Let’s do it again next quarter.

Trade issues are part of the local business conversation. Minnesota Lt Governor Tina Smith just returned from a week-long trip to Cuba at the head of a state trade and tourism delegation. Here is where you can learn more about her trip: http://www.startribune.com/tina-smith-s-trip-to-cuba-plants-seeds-for-future-ties/430588033/. No agreements were concluded. The trip was more a listening and educating opportunity for Smith and her delegates. But it should not be surprising that her delegation was comprised largely of state agribusiness association representatives like the Minnesota Corn Growers Association. Cuba’s own farming sector is inadequate to supply households and nascent tourist and leisure business sector with high-quality food and nutrients. Minnesota can help with high-quality commodities like corn and soybeans as well as agribusiness market-making services provided by Minnesota multinationals like Cargill. Smith and her delegates should not expect help from the Trump Administration, which announced tougher enforcement of decades-old trade and tourism restrictions that may appeal to certain Cuban emigre communities, but stifle so many lucrative trade opportunities that could also help achieve greater economic and political openness in Cuba. I hope Lt. Governor Smith (and Governor Dayton) will keep pushing the trade door open in Cuba for all of those reasons.

The local business scene also saw Minnesota-based Target roll out it’s new Target Restock service. Here is where you can learn more about that launch: http://www.startribune.com/target-restock-launches-this-morning-in-minnesota/431089933/. Target is offering an array of its essential grocery and dry goods on an online format paired with next-day delivery. As with many recentTarget technology initiatives, the Restock initiative saw only some of the essentials available to consumers –Honey Nut Cheerios but no Diet Coke, for example. Why the new service? Analysts see it as a competitive response to the growth in online shopping of the same essentials at Amazon paired with speedy deliver via Amazon Prime membership. Apparently there is quite an overlap between Target shopping and Prime membership. Target is almost certainly worried that those shoppers will migrate to Prime without a Restock alternative. So there’s the reason to innovate at Target. Mere roll out does not mean success –even if they get the Diet Coke in the Restock inventory. Compared to Amazon, Target is a small player, an irony given Target’s 1800 stores in the US. Target still needs to get shoppers into those stores to be successful. That means making them more attractive, entertaining destinations.

Online shopping services are getting a closer look by regulators, especially in Europe. Earlier this week, online search giant Google was hit with a $2.7 billion fine by the European Union competition regulator roughly equivalent to our Department of Justice Antitrust Division. Here’s where you can get details on Google’s alleged misdeeds and fine: https://www.nytimes.com/2017/06/27/technology/eu-google-fine.html. What’s the claim against Google? Well, it’s complicated, but maybe we can summarize it simply by saying that Google allegedly directed search users seeking products and services to purchase on line to products and services offered by Google first and foremost. At first glance that might seem just fine. Google isn’t the only search service. If consumers purchase on line via Google then Google ought to be able to benefit by pushing its own products and services to the fore. But that’s not how EU antitrust chief Margrethe Verstager sees it. EU competition law imposes substantial constraints on firms deemed to be “dominant” in their market segment. Dominant firms have to take special precautions to avoid even the appearance of limiting consumer choice, and that includes showing favoritism to proprietary products and services over rival offerings also marketed by the same dominant firm. US antitrust law doesn’t require the same precautions on dominant firms. Google denies the EU antitrust allegations and will appeal the fine. I think Google will lose. The EU is sending a message to Google and other US-based digital economy giants like Apple and Twitter. They need to bend over backwards to let any and all suppliers access to their digital marketing channels, especially if those suppliers are European.

For those of us who grew up reading comics, Mad Magazine was a staple. I couldn’t get enough of the Spy versus Spy and Fold-It pages in each issue. And the parodies. Somewhere in the attic of our house is a dusty issue from the 1960s, there is a great parody of West Side Story called East Side Story. The plot line involved two gangs related to the UN Building: the freedom-loving gang led by Jack Kennedy and Harold MacMillan (UK); and the communist-loving “Reds” gang led by Nikita Kruschev and Fidel Castro. It was so much fun: http://www.broadwayworld.com/article/MAD-Magazines-Vintage-Parodies-Of-WEST-SIDE-STORY-WHOS-AFRAID-OF-VIRGINIA-WOOLF-20140730. Well, Mad Magazine has a new executive editor this week, Bill Morrison. He’s inheriting a lucrative print and online magazine in the DC Comics universe. Morrison’s first target for attack in his magazine will be…Trumpcare. There’s an iconic Mad Magazine cartoon from the 1960s humorously depicting how the presentation of high medical bills can be as hazardous to a patient’s health as any other disease. Here’s where you can view it: http://www.comicsbeat.com/dept-of-funny-business-bill-morrison-is-named-new-executive-editor-of-mad-magazine/. Look for Alfred E. Neuman and company to go after the proposed Senate and House Republican healthcare “reforms” as 2010 examples of that 1960s cartoon.

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