Buffett is buying strong communities when he buys newspapers • Romney in Iowa • Top Senate races are rural • Fertilizer cartels jack up prices for U.S. farmers
Investor Warren Buffett is finding value in newspapers — but not the big metropolitan papers. The Omaha, Nebraska, billionaire recently bought 63 smaller papers from Media General, and it appears that what he was really purchasing was good communities.
In larger communities, there are fewer connections from one part of the city to another. “If you live in South Central Los Angeles, you’re not interested in who dies in Beverly Hills,” Buffett said.
In smaller towns, those connections are alive. “In Grand Island, Nebraska, everyone is interested in how the football team does,” Buffett observes. “They’re interested in who got married.”
“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” Buffett said.
According to MarketWatch reporter John Gerard Lewis, Buffett’s investment in newspapers is a bet on small communities. Lewis writes:
Buffett has clearly in his life ventured a few miles outside of Omaha to burgs like Ashland, Blair and Wahoo, Nebraska. He knows the important and differentiated role that the local newspaper plays in those communities. He understands that with a “sense of community” comes a sense of “community ownership of the local newspaper.”
It’s the community’s diary, its photo album, its chronicle of present-day history. And because he rigorously eschews generalizations in his analysis, he perceptively distinguished between those papers and big-city papers.
Top Ten Senate Races — Of the top ten U.S. Senate races to watch listed by the Washington Post, three will be decided by rural voters. They are contests in Maine, Montana and North Dakota.
Ryan on Keystone — Republican Vice Presidential candidate Paul Ryan said Monday that his administration would immediately approve the full Keystone XL pipeline, which would bring tar sands oil from Canada to the Gulf Coast.
Keystone awaits a federal permit after Nebraska ranchers and the state legislature objected the route the pipeline would take through the state. (It would go over fragile land and the huge Ogallala aquifer.)
Drugging The Poor — The New York Times reported yesterday that doctors were prescribing powerful drugs to poor children as a way to help them through school classes they aren’t prepared to take.
The article said that doctors were prescribing drugs like Adderall, used to treat attention deficit hyperactivity disorder, to help them concentrate in class. “I don’t have a whole lot of choice,” said a pediatrician for many poor families in Cherokee County, north of Atlanta. “We’ve decided as a society that it’s too expensive to modify the kid’s environment. So we have to modify the kid.”
Turns out this is indeed happening. The Lexington Herald-Leader reports today that the “amount of powerful antipsychotic drugs distributed to poor and disabled children on Medicaid in Kentucky jumped 270 percent from 2000 to 2010, according to a new report by researchers at the University of Kentucky.” There are huge regional differences in the rates at chichi ADHD drugs are prescribed to children.
The Herald-Leader also found that residents in rural Eastern Kentucky are being prescribed narcotics at rates up to ten times that found in other counties.
Romney on Rural — Mitt Romney visited Iowa yesterday to announce his rural platform. We reported on this document yesterday here.
Politico’s story on the day in Van Meter, Iowa, was headlined, “Mitt Romney Goes Rural.” “The big difference between the president and me, he has no plan for rural America, no plan for agriculture, no plan for getting America back to work,” Romney said. “I’m going to make sure I help the American people, and the American farmer, and get America working again.”
He met with the editorial board of the Des Moines Register. There’s a story about that discussion here, as well as a video of the session.
Fertilizer Cartels — There has been excess production of fertilizer over the last five years, but profit margins by the companies that dominate this sector have risen as high as 60 percent. The Organization for Competitive Markets says this is a sign that the market for fertilizer is subject to price-fixing and collusion.
“Sustained high profit margins coupled with excess capacity and barriers to entry for new firms are usually indications of price-fixing and collusive behavior,” says C. Robert Taylor, Alfa Eminent Scholar of Agricultural Policy at Auburn University in Alabama. Yet OCM says that the Federal Trade Commission refuses to act on this evidence.