» The practice of taking advantage of a price difference between two or more markets…it is the possibility of a risk-free profit at zero cost.
+ Occupy McDonald’s
Willy Staley in The Awl has a theory about when and why McDonald’s chooses to bring back the ever elusive McRib. The money shot? A graph that shows McRib campaigns to be timed exactly with drops in the price of pork.
At this volume, and with the impermanence of the sandwich, it only makes sense for McDonald’s to treat the sandwich as a sort of arbitrage strategy: at both ends of the product pipeline, you have a good being traded at such large volume that we might as well forget that one end of the pipeline is hogs and corn and the other end is a sandwich. McDonald’s likely doesn’t think in these terms, and neither should you.
But correlation does not prove causation, and who knows what actually brews in McDonald’s corporate office. In any case, Staley has a damning critique of what McDonald’s stands for:
Barbecue, while not an American invention, holds a special place in American culinary tradition. Each barbecue region has its own style, its own cuts of meat, sauces, techniques, all of which achieve the same goal: turning tough, chewy cuts of meat into falling-off-the-bone tender, spicy and delicious meat, completely transformed by indirect heat and smoke. It’s hard work, too. Smoking a pork shoulder, for instance, requires two hours of smoking per pound—you can spend damn near 24 hours making the Carolina style pulled pork that the McRib almost sort of imitates.
And for its part, the McRib makes a mockery of this whole terribly labor-intensive system of barbecue, turning it into a capital-intensive one. The patty is assembled by machinery probably babysat by some lone sadsack, and it is shipped to distribution centers by black-beauty-addicted truckers, to be shipped again to franchises by different truckers, to be assembled at the point of sale by someone who McDonald’s corporate hopes can soon be replaced by a robot, and paid for using some form of electronic payment that will eventually render the cashier obsolete.
+ Occupy Airplanes
“I’m basically an oil company with an airplane business on the side now” - says a former airline employee. NPR’s Planet Money explains how money got weird: how airline companies became speculators on the price of oil and how the accounting division became the only profitable part of the company. (Potentially problematic, no?) Airline companies would buy oil futures to lock in prices in advance. With rising oil costs, it actually becomes more profitable to use those oil futures, buying cheap and selling high. Listen to the podcast for the rest of the story. Listen to every Planet Money podcast ever.
+ Occupy Gringotts
As much as JK Rowling’s books are beloved to me, I’d had my reasons for avoiding the world of Harry Potter fandom, so it surprised even me that I became sucked into reading AI researcher Eliezer Yudkowsky’s Harry Potter and the Methods of Rationality. Maybe not so surprising, I’m a nerd. In this alternative universe, Harry Potter is raised by a Cambridge science professor, and he goes to Hogwarts to interrogate the world of magic with the tools of science. When the author notes that the “novels seem inconsistent in the apparent purchasing power of a Galleon,” of course Harry Potter is going to have these thoughts upon his first visit to Gringotts.
So not only is the wizarding economy almost completely decoupled from the Muggle economy, no one here has ever heard of arbitrage. The larger Muggle economy had a fluctuating trading range of gold to silver, so every time the Muggle gold-to-silver ratio got more than 5% away from the weight of seventeen Sickles to one Galleon, either gold or silver should have drained from the wizarding economy until it became impossible to maintain the exchange rate. Bring in a ton of silver, change to Sickles (and pay 5%), change the Sickles for Galleons, take the gold to the Muggle world, exchange it for more silver than you started with, and repeat.
The writing is not very smooth — paragraph long Wikipedia-esque explanations are plonked into dialogue — but the scenarios are interesting and the humor nerdtastic. There’s a podcast, ebook, and even more fanfic based on this fanfic…so we descend into the rabbit hole.
