Tuesday, November 07, 2006

Rodney Dangerfield Economy

From Investor's Business Daily yesterday:

Here we had 92,000 jobs added to payrolls in October. That may have been below estimates for the month, but the total first reported for August was revised upward 42,000 to 230,000, and September turned out to be nearly three times as strong as first reported — 148,000 vs. 51,000. Bottom line: Corporate hiring is running near a healthy 150,000 positions a month.

And that doesn't include jobs in the household survey. That measures both corporate payrolls and the hard-to-gather data on entrepreneurial jobs and self-employment. By the household measure, the number of jobs surged 426,000 in October to a total of 145.3 million, even stronger than the strong gains of the previous two months and pulling the monthly average in 2006 to 251,000.

All this has contributed to a 0.2-percentage-point drop in the jobless rate — to a 5 1/2-year low of 4.4%. That's lower than the Clinton-era unemployment average of 5.2%, by the way, and is hair-close to the level where employers start having a hard time finding workers.

Meanwhile, wages are growing at 4%, a rate — as economist and commentator Larry Kudlow notes — almost twice that of inflation, which itself has been cut in half with the plunge in gasoline prices.

So how does all this good news play out in, say, the New York Times?

For the positive wage news, you'd have to drill down 11 paragraphs (and flip to the jump page) in a Friday story headlined "October Sales Were Weak At Wal-Mart" to learn that "wages are increasing and Americans are finding themselves with more disposable income."

Read more here.

The Paradox of Progress

The gains from America's recent economic growth have been widely shared throughout society, as low- and middle-income families -- not just the wealthy -- have seen their standards of living improve dramatically, says James Sherk, a policy analyst with the Heritage Foundation.

But despite the facts, some still claim that few Americans have benefited from the growing economy. Their analysis is based on four specific claims, says Sherk:

1. The share of income earned by the wealthiest Americans has risen, and these are the only Americans whose standards of living have improved.

2. Inflation-adjusted wages have not risen for most Americans.

3. Wages have not kept pace with rising productivity.

4. Wages and salaries, as a share of the economy, have fallen in recent years, while corporate profits have risen.

But a closer look at the data reveals that most Americans have shared in the rising prosperity.


1. Between 1979 and 2004, the proportion of Americans with inflation-adjusted incomes below $75,000 fell by 10.1 percentage points.

2. The largest portion of the decrease came from households earning less than $35,000.

3.Workers total compensation -- wages plus benefits -- have risen by 3 percent since 2003 and 9 percent since 2000, after adjusting for inflation. (MP: I have an earlier post on this.)

4. Net worth of the median American family rose from $70,800 in 1995 to $93,100 in 2004.

And beyond rising incomes, Americans have also seen dramatic improvements in their standard of living. For example:

1. Newly built homes -- in terms of square feet -- almost doubled from 1979 to 2004.

2. Medical advances have improved the health and quality of life of all Americans, raising the life expectancy from 73.7 years in 1980 to 77.9 years today.

3. Between 1997 and 2003, the proportion of Americans with computers at home went from 37 percent to 62 percent; and Internet access leapt from 18 percent to 55 percent.

Read more here.

The Sugar Racket

The graph below is for the March 2007 sugar futures contracts, traded on the NY Board of Trade, quoted in cents per pound for DOMESTIC SUGAR. The contracts were trading at 22-23 cents per pound last summer and are now trading at 19.74 cents.

This next graph is for March 2007 sugar futures contracts at the NYBOT that are traded for the WORLD price of sugar. The prices were 15-16 cents/lb. last summer, and are now trading at 11.75 cents, more than 40% below the price for domestic sugar.

Q1. Why is the world price of sugar 40% below the domestic price? World prices for sugar reflect the cost of producing sugar from the most cost-effective, efficient source: sugar cane. Domestic prices reflect the more inefficient production of sugar from an inferior source: sugar beets.

Q2. How can high-cost, inefficient sugar beet-sugar producers in the U.S. stay in business when their sugar prices are 40% above the world price of sugar? SUGAR PROTECTIONISM in the form of tariffs and restrictions on cheap, imported sugar at the world price.

This sugar protection costs consumers about $3 billion per year in higher prices. There are only about 11,000 sugar farms in the U.S., so that is an annual subsidy of almost $260,000 per farm!

Read more about sugar protection here.

Monday, November 06, 2006

Medical Tourism

Businesses and insurance companies are starting to eye the potential savings of outsourcing health care from the USA to the developing world.

Last year, about 500,000 U.S. residents traveled to countries like India, Singapore and Thailand for medical treatment.

The overseas hospitals, typically known for offering low-cost plastic surgery, are now gaining reputations for heart, knee and back operations.

Medical tourism facilitators like California-based PlanetHospital are already working to make the journey less stressful for patients traveling abroad by arranging everything from visas and airport pickup to sightseeing.

Many doctors working in facilities catering to medical tourists are trained abroad, often in the United States or Europe.

About 100 foreign hospitals have been approved by the international arm of the Chicago-based Joint Commission on Accreditation of Healthcare Organizations, which also accredits American hospitals.

Read more here.

The Amazing Teaspoon Johnson

Check out the amazing Teaspoon on guitar and spoon. I have no information about this guy, but he is pretty amazing.

RSS Feed Now Available

Carpe Diem now has an RSS feed, and you can subscribe to this blog, or any blog, using a reader like Google Reader, if you find it more convenient to read blogs that way. If you go to Google Reader you can add a blog by using the "Add Subscription" option, and entering the blog website address, mjperry.blogspot.com as an example for Carpe Diem.

Especially if you read several blogs daily, using a reader makes it very convenient since all of your subscribed blogs are listed on one page, and new postings on the blog are automatically "fed" to your reader, and you can see if there any new postings. It saves time because you don't have to go to multiple websites to read blogs, they are all organized for you on your reader.

Quotes from P.J. O'Rourke on Politics

1. Giving money and power to government is like giving whiskey and car keys to teenage boys.

2. If you think health care is expensive now, just wait till you see what it costs when it’s free.

3. The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. The Republicans are the party that says government doesn't work and then they get elected and prove it.

4. The mystery of government is not how Washington works but how to make it stop.

5. The Clinton administration launched an attack on people in Texas because those people were religious nuts with guns. Hell, this country was founded by religious nuts with guns. Who does Bill Clinton think stepped ashore on Plymouth Rock?

6. Social Security is a government program with a constituency made up of the old, the near old and those who hope or fear to grow old. After 215 years of trying, we have finally discovered a special interest that includes 100 percent of the population. Now we can vote ourselves rich.

7. When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.

8. No drug, not even alcohol, causes the fundamental ills of society. If we're looking for the source of our troubles, we shouldn't test people for drugs, we should test them for stupidity, ignorance, greed and love of power.

9. If government were a product, selling it would be illegal.

10. Feeling good about government is like looking on the bright side of any catastrophe. When you quit looking on the bright side, the catastrophe is still there.

11. America wasn't founded so that we could all be better. America was founded so we could all be anything we damned well pleased.

12. Bureaucrats want bigger bueraus. Special interests are interested in whatever's special to them. These two groups bring great pressure to bear upon politicians who have another agenda yet: to cater to the temporary whims and fads of the public and the press.

13. People who are wise, good, smart, skillful, or hardworking don't need politics, they have jobs.

14. If we're going to improve the environment, the first thing we should do is duck the government. The second thing we should do is quit being moral. Screw the rights of nature. Nature will have rights as soon as it get duties. The minute we see birds, trees, bugs, and squirrels picking up litter, giving money to charity, and keeping an eye on our kids at the park, we'll let them vote.

15. The U.S. Constitution is less than a quarter the length of the owner's manual for a 1998 Toyota Camry, and yet it has managed to keep 300 million of the world's most unruly, passionate and energetic people safe, prosperous and free.

TV Economics

There was a scene on the West Wing recently about protecting pharmaceutical patents. One guy says: "Those pills cost them 4 cents a unit to make." The other guy says: "That's not true. The second pill costs them four cents, the first pill costs them $400 million dollars."

When a firm faces a large fixed cost of production for research and development, and a low marginal cost of production that might be close to zero, e.g. computer software, CDs, DVDs, books, textbooks, pharmaceutical products, medicine, computer games, etc., the firm faces a "pure selling problem." Under those production conditions of high fixed cost and low marginal cost, the firm usually wants to maximize global sales to maximize profits.

Suppose a new economics textbook costs $50 million to develop to the point where it can start being printed, and it then costs about $10 for each additional, marginal copy of the book. The textbook publisher now wants to maximize global sales, and will now price the textbook according to the demand conditions in each country. In wealthy countries like the U.S., Japan and Western Europe, it will price the texbook at $150 because that is "what the market will bear" in those countries. In Central and South America, it might price the textbook at $75, and in China and India it might price the textbook at $50, based on "what the market will bear" in those economies. These editions are often called "International Editions" and might be in soft cover instead of hard cover, and are usually marked "Not for Sale in the U.S.," but are otherwise identical to the U.S. edition.

Pharmaceutical products, CDs, DVDs, etc. are priced globally the same way, and many CDs, DVDs and books in countries like India and China are labelled as only for sale in specific countires and maybe "Not for sale in the U.S."

There is nothing necessarily sinister, evil, unethical or illegal about this practice of what economists call "price discrimination," the pricing practice of adjusting the price based on "what the market will bear." Think about how common coupons are - that is simply a pricing practice of charging "what the market will bear" to two different consumer groups: a low price to price-sensitive consumers who use the coupon, and charging a high price to price-insenstive consumer who don't use the coupon.

If you think there is anything wrong with charging "what the market will bear," think about the last time you sold a house, or think about when you sell your current house. Did you, or are you going to, charge "what the real estate market will bear" at the time of sale, or would you be willing to accept some price less than that?

Sunday, November 05, 2006


Prince, the artist formerly known as Roger Nelson, is now setting up home in Las Vegas to headline at the Club Rio every Friday and Saturday for the foreseeable future. The club will be renamed 3121 after Prince's most recent album for the late-night concerts, which will begin later this month. Prince will use his new Las Vegas club to highlight new talent every Wednesday and he'll stage a Latin club night every Thursday. There is a website here for the new club, including ticket information - $125 for general admission.

Check out Prince's
8-page backstage rider from his 2004 Musicology tour. Strangest items include:

1. All items must be covered by clear plastic wrap until uncovered by main artist. This is ABSOLUTELY NECESSARY.

2. Please make a physician available on call until 5:30 p.m. This physician will be used to administer a B-12 injection.

3. Tour does carry a washer and dryer. We request hookups to be available.

4. TOWELS: Tour requires 16 dozen bath towels (192).

World's Smallest Political Quiz

Take the World's Smallest Political Quiz to find your true political idenity.

Real Hourly Compensation Has Increased

We hear a lot about stagnant or declining real incomes, but the graph above shows the relentless and continual increase in real hourly compensation since 1947, data are from the BLS, see the most recent release here. One issue is that compensation includes both wages AND benefits, and we should really look at TOTAL COMPENSATION over time, and not just monetary wages.

1. The data in the graph above are quarterly, and measure real (inflation-adjusted) hourly compensation (wages AND benefits). Click on graph to enlarge.

2. Using the percent change from the same quarter a year ago, real wages increased by 3.3% in the third quarter this year, 3.7% in the second quarter this year, and 2.6% in the first quarter of this year. In fact, we have had 45 consecutive quarterly increases in real compensation, and you have to go all the way back to the second quarter in 1995 for the last quarterly decrease in real hourly compensation.

3. The last time in U.S. history when there was a consectutive increase that long in real hourly compensation was from 1961-1973, when there were 51 staight quarters of increases in realy hourly compensation.

4. Over the last 10 years, there was a 25% increase in real hourly compensation for the first time for a 25% increase in real compensation during a 10-year period since the 1963-1973 period.

Don't buy into all of the "gloom and doom" scenarios about declining incomes - real hourly compensation is at an all-time high, and has increased faster over the last ten years than in a generation.

Is the Economy in Good Shape?

As voters go the polls on Tuesday, is the U.S. economy in good shape?

In a Pro-Con commentary distributed nationally this weekend by McLatchy-Tribune News Service, I say Yes, here is my commentary in today's
Tucson Arizona Daily Star. Note: Since I wrote the article several weeks ago, the unemployment rate fell to 4.4% in October.

Democratic Congresswoman Carolyn B. Maloney from NY (representing the 14th district in NYC)
says NO. She is also the the ranking House Democrat on the Joint Economic Committee.

H.L. Mencken on Government, Elections and Politics

H.L. Mencken is often regarded as one of the most influential American writers of the early 20th century. Here are some of his quotes on politics, democracy, government and elections.

1. Every election is a sort of advance auction sale of stolen goods.
2. A good politician is quite as unthinkable as an honest burglar.
3. A politician is an animal which can sit on a fence and yet keep both ears to the ground.
4. Democracy is a pathetic belief in the collective wisdom of individual ignorance.
5. Democracy is also a form of worship. It is the worship of jackals by jackasses.
6. Democracy is the art and science of running the circus from the monkey cage.
7. Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
8. Every decent man is ashamed of the government he lives under.
9. If a politician found he had cannibals among his constituents, he would promise them missionaries for dinner.

Read more here.


1. Think of all the service people who habitually get tips: hotel bellmen, taxi drivers, waiters and waitresses, the guys who handle curbside baggage at airports, sometimes even the baristas at Starbucks. But not flight attendants. Why not? Read the Freakonomics posting here.

2.The latest Freakonomics column appears in
today's N.Y. Times Magazine. It’s about how some economists are studying the weather itself (particularly the potential impact of global warming) and how others use weather as an instrumental variable to measure various human behaviors, including crime, war, rioting, etc.

If you haven't already read
Freakonomics, I highly recommend it - wait until you get to the surprise, shocking ending!

Saturday, November 04, 2006

Grade Inflation at the High School Level

Click on graph above for better view, it should enlarge. Note that the percentage of letter grades A+, A and A- has increased from 36% to 43% from 1996 to 2006. During the same period, there was an 11 point drop in SAT scores for reading and a 3 point drop in mathematics for the A students.

The Case for Low Voter Turnout

People often complain about low voter turnout in the U.S. - 50-55% in presidential election years, and 35-40% in non-presidential election years like 2006. See voter turnout since 1960 at this link. Notice that voter turnout has decreased in the last 45 years by more than 10 percentage points, from 63.1% in the presidential election of 1960 to less than 50% in 1996, and from 48.4% in 1966 to 36.4% in 1998.

Many people are probably upset by this trend, but not I, and here is why: In almost all cases, higher voter turnout would NOT have changed the outcome of the election, and so we get the same election outcome/results at a lower cost to society (measured in the opportunity cost of our time).

I have never heard those who complain about low voter turnout make the argument that higher voter turnout would CHANGE the outcome of the election, they usually just say that more people should vote for other reasons: exercise our right to vote, fulfill our civic duty, participate in democracy, etc.

But I have never heard anyone say "More people should vote because low voter turnout leads to unreliable results," or "more people should vote because that would change the outcome/results of the election. " Mostly, I think people would simply "feel better" if we had the same results with 80% turnout, compared to having those same election results with 40% turnout.

But think about it - would you feel any better about a blood test if they took two pints of your blood compared to 20 ccs? Probably not.

There are about 160 million registered voters in the U.S. From sampling theory, a sample size of 16,639 would accurately and reliably represent the entire population of 160m at a 99% confidence level, with an error of only 1%.

What this means is that if the first 16,000 people who vote when the polls first open in the morning are random voters who represent the population of voters, almost all elections are already decided by 9 a.m. or so in the morning. The rest of the voters are really just wasting their time, in the sense that their votes will not affect the outcome of the election. It is like increasing the blood sample - the blood test will still be positive or negative regardless of the sample size.

The possible exception to this would be an extremely close presidential election like 2000, where "every vote mattered" in a sense, but this was an extreme case. Of course, you don't know ahead of time which elections will be that close, so you could justify always voting, just in case.

But in almost all elections, I would argue that voter turnout has NO effect on the outcome of the election, and the same results would prevail with 20% turnout as 100% turnout. Although most people would "feel better" about the election with 100% turnout, that is irrational in my opinion. If the results are same, I would prefer the 20% turnout, because of the significant saving of time for the 80% who did not vote.

Voting is expensive when measured in its full cost: our time. An hour spent voting is an hour lost forever doing something else. As Gatemouth Brown said (see an earlier post): "My time is expensive, I gotta make it last."

I like low voter turnout, because the election results are almost always exactly same as for high voter turnout, and low voter turnout saves and conserves our most precious non-renewable resource: our time, and therefore it is socially more efficient than high voter turnout.

Weekend Voting or Voting Holiday?

Turnout among eligible voters in the U.S. for presidential elections is only 50-55%. Turnout in non-presidential years like this year will be far lower. By comparison, turnout is 70-75% in Canada and over 80% in most other democracies. Even many fragile new democracies have turnout levels far higher than ours.

One reason for low voter turnout in the U.S. is the opportunity cost of time for voting here is very high, because we vote on a weekday that is also a workday and not a holiday. This probably made sense in the 1700s and 1800s when the U.S. was an agriculture-based economy, - farmers had flexible schedules and probably weren't too busy on a Tuesday in November after the fall harvest.

The United States is one of the few Western democracies that do not schedule elections on weekends or a designated holiday. Some countries also have voting on more than one day (Saturday and Sunday) or even for a full week. Advocates for a voting holiday in the U.S. point to higher turnout in countries that give a day off to vote or hold elections on the weekend. They also look to Puerto Rico, where a full day off (voting holiday) is dedicated to the election, and turnout in 2004 was the highest in the U.S. at over 82 percent.

The demand curve for voting slopes downward like other demand curves and follows the Law of Demand, i.e. there is an inverse relationship between the cost of voting and the number of votes.

1. There is a significant opportunity cost of time to vote in an election, and that opportunity cost is probably higher on weekdays that are not holidays.

2. If you lower the opportunity cost of voting with weekend voting, voting holidays, electronic voting, Internet voting, etc. the number of votes will increase, ceteris paribus.

That is, if you want higher voter turnout, simply lower the cost of voting.


Friday, November 03, 2006

Are You Economically Literate?

Take the Minneapolis Federal Reserve Bank's Economic Literacy test here - there are 13 multiple choice questions.

Unemployment Rate Falls to 4.4%

The jobless rate in October fell to 4.4%, the lowest unemployment since May 2001, see WSJ article here. The unemployment rate for college graduates fell to the lowest rate in more than five and 1/2 years (since Feb 2001) to 1.8% in October. Read the BLS report here.

Grade Inflation at UM-Flint

You Say Bangalore, They Say Bengalooru

From today's NY Times Business section, an article about Bangalore, India changing its name this week to the original, traditional name Bengalooru, and the controversy the name-change is causing.

Infosys and its domestic rival Wipro, each with thousands of employees, are among the companies credited with building the city’s brand name around the world. Bangalore is now home to more than 1,000 technology firms, ranging from tiny two-person start-ups to large multinational companies like Intel, Texas Instruments and Cisco Systems. In a teeming city of seven million, the industry employs about 300,000 workers, who are turning into a rising middle-class that is giving rise to some resentment.

Bangalore represents a cosmopolitan, multicultural brand,” said Nandan M. Nilekani, chief of
Infosys Technologies, the outsourcing company, adding: “It is not prudent to abandon the name of India’s most global city.”
I guess you can't be "Bangalored" any more if you lose your job to outsourcing, you'll be "Bengaloorued" from now on?

Thursday, November 02, 2006

Let's Vote in April, or Pay Taxes in November

If you vote next Tuesday, November 7, 2006, it will have been 206 days since you paid taxes on April 15, 2006. From November 17, 2006 until you pay taxes next year on April 15, it will be 159 days. If two dates occur once a year, the farthest away those two dates can be is 182.5 days (365 / 2) or about 6 months. Therefore, the day we vote in November is about as far away from the day we pay taxes in April as possible. It's been more than 6 months since the last tax day (4/15/06), and almost six months before the next tax day (4/15/07), and November is probably the time of the year that we are least likely to be thinking about April 15 and taxes.


1. Abolish withholding taxes, and require all taxpayers to write a check once a year for their entire tax liability - for someone making $100,000 that would mean a check to the IRS of about $25,000.

2. Move Voting Day to April 16 right after we pay taxes, or move Tax Day to early November right before we vote.

Here is an exercise: What is your monthly car payment, and what is your monthly mortgage or rent payment? Most people know immediately what those payment amounts are, because most of us write out a check for those expenses. Now, what is your monthly tax liability for federal income taxes, and what is the amount of state income taxes you owe monthly? Most of us have no idea what our tax liabilities are, because we don't write monthly checks for federal and state taxes, employers withhold those taxes and make payments on our behalf. In fact, most employees have TOO much taken out of their checks, resulting in a refund in April!

Wednesday, November 01, 2006

Standard of Livings Keep Rising, Even for Min Wage Teens

According to W. Michael Cox, senior vice president and chief economist at the Federal Reserve Bank of Dallas, a typical college student arrives on campus today with household possessions that his parents often didn’t acquire until they were 40 or even 50 years old, reflecting the relentless rise in living standards over time.

One way to measure the significant advances in US standards of living over time is to consider what a 19-year old could buy with summer earnings at the minimum wage at different points in time.

The summer job, a rite of passage involving ten or so weeks of work between the end of high school and college, provides a useful starting point for looking at the prospects of young people entering college. Taking a job at the minimum wage of $5.15/hour in 2001, a worker could have easily pocketed $2,000 over the summer.

The earnings of one summer’s employment pack quite a lot of buying power in today's economy. The money would be enough to fill a dormitory room or small apartment with all kinds of electronics, gadgets and gizmos:

Go back to 1970, when the minimum wage was $1.60, and summer earnings at the minimum wage would have been $618, enough to only buy the following items:

What about 1950? At the minimum wage of $.75, a teenage worker would have only earned about $282 over the summer months, and his or her entire earning would have been exhausted after purchasing only 4 items, and most of the earnings would have been spent on just buying a TV:

Add it all up. When it comes to their economic prospects, today’s young Americans are the Luckiest Generation in history—at least until their children grow up and forge an even luckier one. And even if real wages are flat, the explosion of new products over time at lower and lower prices translates into a rising standard of living for all income groups, even minimum wage workers. Teenagers today can afford things like cell phones with cameras, and iPods that even a billionaire couldn't have purchased 20 years ago.

No Grade Inflation Here

The Cato Institute released its Fiscal Policy Report Card on America's Governors: 2006, the eighth biennial fiscal policy report card on the nation's governors. The report card's grading is based on 23 objective measures of fiscal performance. Governors who have cut taxes and spending the most receive the highest grades. Those who have increased spending and taxes the most receive the lowest grades.

Only one governor receives an A this year — Republican Matt Blunt of Missouri. Nine governors received a grade of F: Montana, Alabama, Washington, Arkansas, Nevada, Delaware, North Carolina, Arizona, Louisiana. Overall the grades are: 1 A, 6Bs, 17Cs, 13Ds, and 9Fs. Cato is a tough grader.

See the
list of grades here.

Tuesday, October 31, 2006


Go to Google and search for the word "failure." How does that work?

More Internet Porn, Less Rape?

From University of Rochester economist Steven E. Landsburg, author of "Armchair Economist: Economics and Everyday Experience," a new article in today's Slate.com titled "How the Web Prevents Rape." Here are some excerpts:

"Does pornography breed rape? Quite the opposite, it seems.

What happens when more people view more of porn? The rise of the Internet offers a gigantic natural experiment. Better yet, because Internet usage caught on at different times in different states, it offers 50 natural experiments.

The bottom line on these experiments is, "More Net access, less rape." A 10 percent increase in Net access yields about a 7.3 percent decrease in reported rapes. States that adopted the Internet quickly saw the biggest declines. And, according to Clemson professor Todd Kendall, the effects remain even after you control for all of the obvious confounding variables, such as alcohol consumption, police presence, poverty and unemployment rates, population density, and so forth."

Monday, October 30, 2006

NYC Taxi Cartel, I Mean Commission

Over the last 5 years, NYC taxi medallion prices have more than doubled from $200,000 in October 2001 to an all-time high of $450,000 in 2006! Click here for a better view of the graph above. Note that a $450,000 medallion is the license required to operate only ONE taxicab in NYC!

Why so expensive? A medallion is the membership fee to join a taxi cartel, with a strict limit on the number of members competing for business in NYC. With such high barriers to entry, and strict limits on competition, the taxi cab cartel can charge monopoly prices, which then justifies paying $450,000 to join the cartel.

According to the NYC Taxi and Limousine Commission, the official name of the NYC Taxi Cartel: "In 1937, the number of taxicab medallions was limited to those that existed at that time. By the late 1940s, this number settled at 11,787 and was capped by law. Today there are currently only 12,779 yellow medallion taxicabs operating in New York City. A new medallion is a rare opportunity."

Yes, a rare opportunity to join a cartel. Membership has its privileges.

London Stock Exchange Trivia

Stock prices are quoted on the London Stock Exchange in British "pence" and not British "pounds." For example, British Airways is trading at about 457.75, which is 457.75 pence and not 457.75 pounds.

Strange, but true. See the list of stocks in the
FTSE-100 here, note that there is a "p" after each stock price.

Michigan vs. France

Michigan's September unemployment rate of 7.1% is considered high for the U.S., second highest in the country next to Mississippi (7.2%). But if Michigan was a country in Europe, it would be considered much better than average compared to the 7.9% average unemployment rate for OECD Europe countries.

Germany's unemployment rate is 8.5% for August, France is 8.8%, Finland 7.8%, and Belgium 8.6%.

From today's
Investor's Business Daily, an editorial about the persistent unemployment problems in France, despite the mandatory maximum 35-hour work week that was supposed to create jobs:

No longer able to withstand the rigors of a normal schedule, the French had to cut back to a 35-hour workweek. Six years later, and the rotten fruit of socialism is being harvested.

With fewer hours worked, the state predictably has been collecting fewer taxes. The shorter workweek, Finance Minister Thierry Breton reported this week, has added roughly $126 billion to the national debt. For a country obsessed with the safety net, this was deflating news.

But the lost productivity and the drag on economic growth are even worse. All told, the 35-hour week has cost France hundreds of billions of dollars in lost output.

The 35-hour workweek, introduced by I-saw-Karl-Marx-in-my-dreams Socialist Prime Minister Lionel Jospin, was peddled as a solution for France's high unemployment rate. With employees working fewer hours — down from 39 a week before overtime kicked in — businesses would be forced to hire more people.

Has it worked? No. France's jobless rate continues to stagnate in the 9% area — just modestly better than the 5 1/2-year high of 10.2% between March and May of last year, but not much. Nine percent is about where it was when President Jacques Chirac took office more than 10 years ago.

It can take up to 100 days of bureaucratic dithering to get rid of an employee in a big company. As a result, businesses are shy about hiring because they fear they can't fire a worker for not doing his or her job.

French business leaders want the 35-hour workweek abolished. That's a good idea. Unfortunately, fierce resistance from the socialists might be too much to overcome.

Google Rocks

Google stock price is approaching $500 per share. It originally sold for about $100 in August 2004 when it went public, and has doubled in less than 18 months, since May 2005 when it was $222.

Google's market capitalization of $145 billion is more than IBM, Hewlett-Packard, Intel, McDonald's, Merck and Coca-Cola. It is worth 4X the market value of Yahoo! and 3X the market value of Ebay.

It is worth about the same as the combined market value of GM, Ford, ChryslerDaimler and Boeing.

Grade Inflation

Graphs above are from the website GradeInflation.Com, run by a retired Duke University professor.

Also, there is an article titled "When Bs Are Better" in the
current issue (subscription required) of The Chronicle for Higher Education (subscription required) by a Rutgers management professor:
In the fall of 2001, The Boston Globe reported that 91 percent of the seniors who had graduated from Harvard University the previous June had received honors, prompting an investigation that concluded grade inflation was indeed a serious problem at Harvard.

Faculty members have not fulfilled the responsibilities associated with their proclaimed right to be the final judges of student performance. In shirking that duty, they have also neglected their broader obligations to society: Teachers weaken rather than bolster the commonweal when they fail to award meaningful grades. Grading laxness at all levels of American education has contributed directly or indirectly to a variety of problems, including declining scores on the SAT, decreases in the ability of American undergraduate and graduate students to understand prose, and poor training in mathematics and science, which puts American students behind their peers in many European and Asian countries.
Could more-realistic grading stem the tide? Ample evidence shows that students learn more when the bar for success is raised rather than lowered. For example, Valen Johnson's Grade Inflation contains analyses demonstrating that students who took prerequisite courses from teachers who were tough graders performed better in upper-division classes than did students whose prerequisite courses were taught by easier graders.

What are universities doing?

A few universities have established grading standards, and their administrators monitor professors' compliance. Perhaps the most heralded example is Princeton University's adoption of limits on the percentage of A's given in undergraduate courses. And in the M.B.A. programs at the University of Chicago and New York University's Leonard N. Stern School of Business, online grade-reporting systems will not accept an instructor's grades in certain courses if the grades exceed school or departmental standards.

Carpe diem.

Sunday, October 29, 2006

Big and Slow Doesn't Work, Big and Fast Might

From today's (Sunday) NY Times article "Now Playing in Europe: The Future of Detroit:"

“There’s no case anywhere in the world of any previously dominant manufacturer retaining much more than 20 percent once the market is opened to full global competition,” said G.M.’s vice chairman, Robert A. Lutz.

While some national loyalty lingers in Europe, as it does in the United States, no company can rely on such loyalty to sell cars. Carmakers are forced to continually update their brand images in order to stand out in a crowded market. At the same time, like their European counterparts, America’s unionized autoworkers must also adjust. They cannot count much longer on the cushy contracts that typified their jobs in the past, because new deals at new factories have chipped away at pay and benefits while emphasizing more-productive work methods.

European companies have long competed this way, but it is a new reality for American carmakers who were so dominant for much of the last century. As recently as 1990, G.M., Ford and Chrysler together sold more than 70 percent of the cars bought in the United States; G.M. alone accounted for more than one-third of auto sales.

Now those companies’ American market share has dropped to around 50 percent, while the influence of Toyota and other foreign manufacturers is growing. Though G.M. remains on top, its share has slipped below one-quarter, and the battleground has become the section between 10 percent and 20 percent of the market. That is the area where Ford and Chrysler have slipped and where Toyota and Honda have grown.

David E. Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said that American carmakers must change, and fast, or risk disaster. “For an automobile manufacturer, big and slow doesn’t work anymore,” he said. “Big and fast gives you a chance.”

Friday, October 27, 2006

NCAA's Tax-free Lifestyle Operating Football and Basketball Factories at Colleges

From George Will's new column in today's Washington Post:

What is the place of high-stakes football in higher education? Only 55 percent of football players and 38 percent of basketball players at Division I-A schools graduate.

Republican Rep. Bill Thomas wrote, as chairman of the tax-writing Ways and Means Committee, an eight-page letter to the president of the National Collegiate Athletic Association, asking awkward questions. Thomas wonders how, or whether, big-time college sports programs, which generate billions of tax-exempt dollars -- CBS pays the NCAA an annual average of $545 million, mainly for the rights to televise the March Madness basketball tournament -- further the purposes for which educational institutions are granted tax-exempt status.

Some say the tax-exempt status of college sports is justified by the fact -- and it is a fact -- that successful sports teams often trigger increased applications for admission, and largess from alumni and legislatures. But, Thomas notes, "federal taxpayers have no interest in increasing applicant pools at one school opposed to another." Furthermore, athletic success that causes a surge of giving to universities might decrease giving to worthy charities.

Also, tax exemption is financing an escalation of coaches' salaries. More than 35 college football coaches are paid more than $1 million annually.

The University of Michigan, which has had 198 consecutive sellouts at its stadium -- it now seats 107,501 -- is spending $226 million to add 3,200 luxury seats and 83 suites. The University of Texas at Austin is spending $150 million to add 10,000 seats to its current 85,123 capacity. These may be sound commercial decisions, but why should this commerce be tax-exempt?

Arbitrage on Eagle Coin Sets?

American Eagle 20th Anniversary Silver 3-coin sets are available from the US Mint for $100 + $4.95 shipping.

These exact same coin sets are selling on
Ebay for $160 - $175, + $5-$10 for shipping.

The only difference is that coins on Ebay are available immediately, and the coins from the Mint will be shipped in early December. But being willing to $60-$75 extra for delivery in November vs. delivery one month later in December for $100, is about a 720%-900% annual interest rate. Annualized interest rates at Paycheck Advance operations are often less than that, see
some rates here, showing that 14-day rates are "only" 460% on an annual basis.

Arbitrage profits anyone? You can purchase up to ten sets from the US Mint!

New Homes: Good Time to Buy, Save $40k vs Feb

The median price for new homes sold in September ($217,100) was 9.7% below last September's median price of $240,400, which is the largest percentage year-over-year drop in median home prices since December 1970! The median price home in September 2006 fell to about the same as the median price two years ago in August 2004 ($218,100). The median price for new homes peaked in February 2006 at $250,800, and new home prices have fallen by almost $40,000 in the last seven months!

Unit sales have fallen by more than 14% over the last year, and the "months supply"of new homes has increased (months supply is the ratio of new houses for sale to new houses sold).

The information above is from the monthly report on new home sales
from the Census Bureau. Monthly reports on existing-home sales come from the National Association of Realtors. According to the Realtors report earlier this week, the median price for an existing home was $220,000 in September, 2.2 percent below last September's median price of $225,000.

Therefore, you can now buy the median priced new home for $217,100, which is almost $5,000 cheaper than buying the median priced existing home!

Thursday, October 26, 2006

Big Worries for Big Oil?

From today's WSJ, a staff editorial on oil companies, profits and oil prices:

Our favorite headline this week has to be "Big Worries for Big Oil," reporting that oil company profits are under pressure as oil prices decline. Exxon Mobil, Royal Dutch Shell, BP and other members of the vast energy conspiracy may have a hard time keeping their run of profit growth going now that oil prices have fallen to $60 or so a barrel from upwards of $80.

Imagine that: Oil companies are subject to market forces. They may make big profits when the price of oil rises, but those profits invariably fall back down to Earth when oil prices decline. This is also what happened in the 1990s, as oil crashed below $20 a barrel after the heights reached in the 1970s. The companies and their shareholders swallowed those declines, as they should have.

This cycle is typical of commodity markets, and is part of the risk of doing business. The run-up in oil prices over the past couple of years was rooted in worries about supply related to hurricanes, Middle East tensions and low stockpiles, as well as growing demand in a strong global economy and the Federal Reserve's easy money policy. As supply fears and demand have ebbed and the Fed has tightened, prices have fallen back down, albeit still to higher levels than a decade ago.

The recent price decline is also proof of the folly of a "windfall profits" tax or similar punitive measures against Big Oil favored by so many politicians. Only this week, however, Democratic Leader Nancy Pelosi repeated her pledge to soak the oil companies if her party takes over the House next month.

Her policy seems to be that when oil prices decline, oil company shareholders must absorb all the market risk and the lower profits. But when oil prices rise, the companies must hand over a cut of their profits to Members of Congress to spend as they like. The only "windfall" is for the political class.

Michigan: Single State Recession?

From today's WSJ, an editorial about Michigan's economy and upcoming election for governor, written by Michigan resident Shikha Dalmia of the Reason Foundation.

That Michigan has become the Mississippi of the Midwest is no secret (actually, Mississippi is doing better than Michigan right now). While the rest of the country is experiencing real overall growth of 3.2%, Michigan is in a single-state recession. Its unemployment rate, at 7.1%, is twice the national average; it was the only state last year not hit by a hurricane to lose jobs. Personal per capita income is 7% below the national average. Home foreclosure rates have doubled this year. And over the last four years, 200,000 economic refugees have left the state, a trend that will only accelerate as the ongoing downsizing of the Big Three forces other auto-related industries to lay off workers.

The fundamental reason why not a single non-U.S. auto maker like Honda and Toyota has ever opened a major plant in Michigan -- notes David L. Littmann, a senior economist at the Mackinac Center for Public Policy -- is not a lack of these offices (MP: Devos' plan to make Michigan globally competitive involves opening offices in 10 countries to promote trade and tourism), but that it costs too much to generate wealth in this state.

Thanks to the strong union presence, Michigan's labor costs relative to productivity are the second-highest in the nation. Normally, an economy might adapt to such realities by "diversifying" -- to use a buzz word that both candidates bandy -- into non-unionized service industries. But Michigan's onerous combination of redistributive regulations and high taxes has prevented even this from happening, making it more vulnerable to the imploding auto industry.

Lesson on Opportunity Cost: Professor Gatemouth

I think blues guitarist Clarence Gatemouth Brown understood opportunity cost, based on his song "My Time is Expensive." Here are the lyrics:

My time is expensive, baby.
I'm tryin' to make it last.
My time is expensive, baby.
I'm tryin' to make it last.
If we're going to get together,
We better do it fast.

Listen yoself here:
My Time is Expensive by Clarence Gatemouth Brown, R.I.P.

Happy 25th Anniversary, HP-12C Calculator

In 1981, Hewlett-Packard introduced the HP-12C financial calculator, and it became the standard financial calculator used by financial anlaysts, mortgage bankers, stock analysts, bond traders, accountants, real estate brokers, MBA students, finance and accounting majors, etc.

The HP-12C orignally sold for $150, it now
sells for $70.

The goal of developing the 12C was to have a sophisticated programmable financial calculator, that would be small enough to fit in a shirt pocket, would have long battery life and would meet the HP "drop test" - the ability to withstand a fall from a desktop onto a concrete floor. HP worked with several researchers with Ph.D.s in numerical analaysis, mathematics, electrical engineering and computer science to develop the 12C.

The decision was made, for the ultimate mathematical and computational efficiency, to use RPN (Reverse Polish Notation) for data entry, instead of the traditional algebraic entry. For example, instead of 2 + 2 = 4 (algebraic entry), RPN entry would be 2 ENTER 2 + (mathematical operation comes last). Although mathematicians and engineers were comfortable with RPN, HP was concerned that finance professionals would have trouble accepting RPN, but the calculator became a huge success, and is still used widely today.

In 2003, HP introduced the
Platinum 12-C that uses either RPN or algebraic. Although once you learn RPN, I can guarantee that you will NEVER go back to algebraic, it is TOO slow.

For the 25th anniversary of the 12C, HP recently introduced a
limited edition 12C model for $80, with both RPN and algebraic, with a beautiful leather case.

Here is
HP's backgrounder on the 12-C.

Here is an
explanation of RPN.

BTW, I own 2 original 12Cs, one platinum 12C, 2 two of the new 25th anniversary 12C, one HP 10B and one HP 10BII.

Wednesday, October 25, 2006

Happy 5th Anniversary, Economic Expansion

As we celebrate the 5th anniversary of the iPod in October, let's also get ready to celebrate another important upcoming 5th anniversary: In November, it will be the fifth anniversary of the current economic expansion, which started in November 2001. The National Bureua of Economic Research is the offical national authority on business cycle dates, see its official business cycle reference dates here, back to before the Civil War.

The last record-setting 120-month economic expansion lasted from March 1991 to March 2001, and the last recession lasted 8 months from March 2001 to October 2001. Then the current economic expansion started in November 2001, and therefore November 2006 will mark the 5th anniversary of this expansionary phase of the business cycle.

The average economic expansion is 52 months, so the current 60-month expansion is already longer than average. And we are half way to the 120-month record of the last expansion.

Happy 5th Birthday, U.S. Economic Expansion!

Latest Asian Economic Tiger: Vietnam

From today's NY Times, an article about Vietnam's roaring economy:

In the three decades since Vietnam has gone from communism to a form of capitalism, it has begun surpassing many neighbors. It has Asia’s second-fastest-growing economy, with 8.4 percent growth last year, trailing only China’s, and the pace of exports to the United States is rising faster than even China’s. Through the end of last year; Vietnam’s growth rate exceeded that of Thailand, Malaysia, Taiwan, South Korea and even India, its closest rival.

American companies like Intel and Nike, and investors across the region, are pouring billions of dollars into the country; overseas Vietnamese are returning to run the ventures.

The Vietnamese government, like China’s, has embraced capitalism after becoming disillusioned with the widespread poverty and sometimes hunger that accompanied tight state control of the economy. Economic liberalization policies have been pursued in earnest since the early 90’s, after poor harvests and economic mismanagement left millions facing malnutrition in 1990.

Bottom Line: The biggest difference between capitalism and socialism is this: Capitalism works.

Congressional Price Gouging?

From Walter E. Williams' latest column:

The Washington-based Institute for International Economics has assembled data that show that tariffs and quotas on imported sugar saved 2,261 jobs during the 1990s. As a result of those restrictions, the average household pays $21 more per year for sugar. The total cost, nationally, sums to $826,000 for each job saved. Trade restrictions on luggage saved 226 jobs and cost consumers $1.2 million in higher prices for each job saved. Restrictions on apparel and textiles saved 168,786 jobs at a cost of nearly $200,000 for each job saved.

You might wonder how it is possible for, say, the sugar industry to rip off consumers. After all, consumers are far more numerous than sugar workers and sugar bosses. It's easy. A lot is at stake for those in the sugar industry, workers and bosses. They dedicate huge resources to pressure Congress into enacting trade restrictions.

But how many of us consumers will devote the same resources to unseat a congressman who voted for sugar restrictions that forced us to pay $21 more for the sugar our family uses? It's the problem of visible beneficiaries of trade restrictions, sugar workers and bosses, gaining at the expense of invisible victims -- sugar consumers.

We might think of it as congressional price-gouging.

Tuesday, October 24, 2006

Best Jazz on the Internet

For the best jazz radio on the Internet, actually the best jazz radio on the planet, check out Minneapolis station KBEM-FM Jazz 88 here.

Are Oil Prices and Gas Prices Related?

A few weeks ago, I had a nationally distributed op-ed on the "gas price conspiracy," where I made the claim that the main economic reason that gas prices have come down is because crude oil prices have come down. Seems simple and obvious.

Here is what I wrote: "The simple truth is that changes in the world price of crude oil account for nearly all changes in the retail price of gasoline -- and so recent international events such as an easing of tensions in the Middle East and growing inventories of oil exerted substantial influence in reducing both oil and gasoline prices -- exactly what textbook economics tells us to expect."

Here is a question from a reader in San Diego:
I read your editorial in the San Diego Union Tribune. Interesting stuff. You make the claim that gas prices have come down because the price of crude has come down. My question is this: Since crude prices have come down ~25% and since the price of crude accounts for ~50% of gas prices, why aren't gas prices in the $2.60 range? How do you account for this discrepancy?
I sent the reader the chart above that shows graphically very clearly the direct relationship between crude oil prices and retail gas prices.

iPod 5 Years Later

On October 23, 2001, Apple announced in this press release its introduction of the ipod for $400 retail, holding 1,000 songs on a 5 GB hard drive, that could only be used with a Mac. Steve Jobs said at the time, “With the iPod, listening to music will never be the same again.”

Five years later, for less money (
$332 at BestBuy), and for use on a Mac OR PC, you can get an 80 GB iPod that holds 20,000 songs and plays movies! A 4GB iPod comparable to the original iPod holding 1,000 songs now sells for $189 at BestBuy.

Things get better and better and cheaper all time time, remember when VCRs cost $1200? Probably not, if you were born after 1975 or so.

See CafeHayek for more on this: how does BLS handle this significant price decrease and significant quality improvement?

Monday, October 23, 2006

Tigers Win Game 2, ¡Viva los Tigres!

Pudge Rodriguez (Puerto Rico) and Jim Leyland have been two of the biggest reasons for the Tigers' turnaround in the last three years.

Hispanic connection: 11 players on the Tigers are of Latino descent:

Dominican Republic: Placido Polanco, Fernando Rodney, Neifi Perez, Alexis Gomez, Ramon Santiago.

Venezuela: Carlos Guillen, Magglio Ordonez, Wilfredo Ledezma, Omar Infante.

Puerto Rico: Ivan "Pudge" Rodriguez

Mexico: Joel Zumaya (grew up in California, parents are Mexican.)

From today's WSJ, an editorial titled "Stealing Bases, Not Jobs," which highlights a recent study titled: "Immigrants, Baseball and the Contributions of Foreign-Born Players to America's Pastime." Here is an excert of the WSJ article:

On the eve of the World Series, the sprinkle has become a solid block. A new study shows that, as of Aug. 31, a whopping 23% of players on active rosters in the majors were foreign born. That's more than double the percentage as recently as 1990 and about 10 times what it was in the 1920s and '30s.

But you don't hear Americans complaining about this group of immigrants. And we're not aware of any U.S.-born hitters accusing the Red Sox home-run champion David Ortiz -- or the other Dominican players here on visas -- of stealing their job. Of course not. They get it, we all get it: Foreign players been berry, berry good to baseball.

Sunday, October 22, 2006

Chinese Cars in the US? Not Yet.

From the NY Times, an article about China's effort to export cars to the US:

Despite growing anxiety that the Chinese would quickly seek to conquer yet another important industry, it now looks as if it will be at least another several years before Chinese automakers start exporting large numbers of cars they both design and make. They had intended to start selling their own brands in the United States as soon as 2007 but have pushed off their plans by a couple of years.

And now, some Chinese auto executives admit, it could be as late as 2020 before they will be ready to take on the world auto market.

While Chinese cars are inexpensive and approaching Western levels of reliability, Chinese automakers have not yet brought their styling, safety, emissions and performance standards up to snuff, let alone their skill at marketing home-grown nameplates around the globe.

CD Exclusive: Record Low Jobless Rates in 11 States

Eleven states have set historical record low unemployment rates so far this year (through September 2006):

Alabama: 3.3% in September
Arizona: 3.7% in August
Florida: 3.0% in June
Idaho: 3.2% in March
Louisiana: 2.9% in July
Montana: 3.4% in March
Nevada: 3.6% in January
New Mexico: 4.0% in March
Utah: 2.8% in September
Washington: 4.6% in March
W. Virigina: 3.8% in January

A Google News search indicates that nobody has reported this. You read it here first on Carpe Diem!

Saturday, October 21, 2006

Trade Deficit Angst

Protectionist Pat Buchanan worries about our trade deficit in a recent column, and free trade economist Walter Williams responds in his column:

First, he laments, "Europeans, Japanese, Canadians and Chinese sell us so much more than they buy from us, because they have rigged the rules of world trade." But so what? I buy more from my grocer than he buys from me. It wouldn't make a difference if I lived 2 feet south of the U.S.-Canadian border and my grocer lived 2 feet north of it.

Like many, Buchanan worries about our foreign trade deficit, pointing out that it's reaching an annual rate of $816 billion, and that means "dependency on foreigners." Actually, the foreign dependency is a two-way street. I'll explain it, starting with the alleged trade deficit I run with my grocer.

When I purchase $100 worth of groceries, my goods account (groceries) rises by $100, but my capital account (money) falls by $100. That means there's really a balance in my trade account. By the same token, my grocer's goods account (groceries) falls by $100 but his capital account (money) rises by $100, also a balance in his trade account.

Mr. Buchanan writes, "Imports surged to $188 billion for the month [of July], as our dependency on foreigners for the vital necessities of our national life ever deepens." That means we imported $188 billion worth of goods. Do foreigners keep all those dollars they earned under a mattress? They are not that stupid. They use those dollars to import capital goods such as U.S. stocks, bonds and U.S. Treasury notes.

They might use some of it to build factories in the U.S. such as Honda, Novartis and Samsung. The dollar amount of those purchases is going to equalize the value of what we import. We sport a huge surplus in our capital account with foreigners. As such, they are dependent on us for a safe and profitable place to invest their earnings. That dependency contributes to our economic growth.
Remember: The balance of payments always balances, and equals zero. We hear a lot about the "trade deficit" for merchandise (about $800 billion), without hearing about the offsetting and matching surplus on our capital account (about $800 billion). Trade statistics are based on double-entry bookkeeping, so there HAS to be an overall balance. BP = 0.

Do a Google News search for "current account deficit" and you'll get about 2200 hits. Search for "capital account surplus" and you'll get about 542 hits? Hmmmmmmmm. Even though a capital account surplus of $800 billion is just the flipside of a $800 billion current account deficit, and they are really just two sides of the same coin, we hear about 4X as much/often about the trade deficit, as the capital surplus?

What's to complain about anyway when we have a trade deficit? We get access to the world's cheapest goods and increase our consumption, and more of the world's goods end up here than our goods end up there. In other words, a trade deficit of $800b means we end up in the USA with a net increase of $800b in foreign-produced goods. We end up with more stuff, why do we even call that a "trade deficit" in the first place? Actually, it is because we follow the money, and NOT the goods. We end up with a cash outflow and a goods inflow, and we call it a "trade deficit."

If we tracked and recorded where the actual merchandise and goods actually end up and get consumed, instead of where the money ends up, we would then think of our trade balance as a $800 billion trade surplus, no? I am not sure the general public understands that a "trade deficit" really means that we end up with "more stuff" and is really a "stuff surplus?"

Weekly Summary of U.S. Economy

Summary: Sharp declines in energy prices brought good news on the inflation front, with both producer (PPI) and consumer (CPI) prices declining in September. The housing market got a boost with housing starts rising in September, but the overall housing market remains soft. The Index of Leading Economic Indicators was up in September, but just barely (.10%). And on Wall Street, the Dow Jones Average marked the 19th anniversary of the 1987 crash by closing above 12,000 on both Thursday and Friday, setting a new record. For the week, the yield of the 10-year U.S. Treasury note fell 3 basis points to 4.78%, and the average 30-year fixed mortgage rate rose 1 basis point to 5.93%.

Read more here

Outsourcing Works Both Ways, Talent Shortage in India

From the NY Times:

Indian IT firms like Infosys (
NASDAQ:INFY) are now recruiting engineering talent in the US - they get trained in India (at Mysore, near Bangalore), and then return to the US to work for Infosys, according to this article:

Where once the brains of India left for more lucrative pastures in the United States, today a handful of fresh American college graduates are sampling the fruits of the Indian economic boom.

The recruits from America and elsewhere are not expected to fill the looming labor pinch. But they do illustrate the efforts by Indian companies to extend their global reach and recognition.

From a related NY Times article, "Skills Gap Hurts Technology Boom in India":
As its technology companies soar to the outsourcing skies, India is bumping up against an improbable challenge. In a country once regarded as a bottomless well of low-cost, ready-to-work, English-speaking engineers, a shortage looms.

India still produces plenty of engineers, nearly 400,000 a year at last count. But their competence has become the issue.

A study commissioned by a trade group, the National Association of Software and Service Companies, found only one in four engineering graduates to be employable. The rest were deficient in the required technical skills, fluency in English or ability to work in a team or deliver basic oral presentations.

Movie and TV Mistakes: DOH!

Which movie has the most mistakes, like factual errors, visible crew or equipment, continuity mistakes, etc.? According to MovieMistakes.com, the movie with the most mistakes is "Pirates of the Caribbean: The Curse of the Black Pearl," with 220 mistakes, followed closely by "Apocalypse Now," with 219 mistakes, "The Birds" (212), Star Wars (209), and Harry Potter and the Chamber of Secrets (203).

Example of a factual error in the movie "Spinal Tap": In the scene where Derek Smalls is having trouble with the airport security the gate only beeps when he walks 'in'. The gate would beep no matter what way he walked through it.

Continuity problem from "Cuckoo's Nest": In the scene where the boys are playing blackjack, watch McMurphy's (Jack Nicholson) cigarette as he talks to Martini about the rules of the game. It changes length throughout the scene.

Who thinks of these things?

For TV mistakes,
check it out here. Friends is #1, Simpons is #2. DOH!

Friday, October 20, 2006

Stay in School and Don't Do Meth

Faces of Meth. Yikes.

Stay in School

WSJ: The typical American worker with a four-year college degree earns a lot more money than a similar worker who didn't go beyond high school -- 45% more.

Education does pay. But in today's economy, getting a bachelor's degree is no longer a guarantee of raises big enough to beat inflation.

Although the best-paid college grads are doing well, wages of college grads have fallen on average, after adjusting for inflation, in the past five years. The only group that enjoyed rising wages between 2000 (just before the onset of the last recession) and 2005 (the most-recent data available) were the small slice with graduate degrees.

Economic Hypochondria

According to George Will: "Economic hypochondria, a derangement associated with affluence, is a byproduct of the welfare state: An entitlement mentality gives Americans a low pain threshold — witness their recurring hysteria about nominal rather than real gasoline prices — and a sense of being entitled to economic dynamism without the frictions and "creative destruction" that must accompany dynamism. Economic hypochondria is also bred by news media that consider the phrase "good news" an oxymoron, even as the U.S. economy, which has performed better than any other major industrial economy since 2001, drives the Dow to record highs."

"Today's widening income disparities will be partly self-correcting. Granted, income statistics show the increasing disadvantages of persons with education deficits. But that is the market saying — shouting, really — "Stay in school!" Over time the voice of the market is rational, credible and therefore a potent instrument for changing behavior."
BTW, the unemployment rate for college graduates in September was 2% ( and was 1.8% in August - the lowest jobless rate for college grads in more than 5 years). For those with less than a HS degre the September unemployment rate was 6.4%. Stay in school.

Gotta Love Wal-Mart

Wal-Mart Stores Inc. on Thursday said it would begin selling $4 generic prescriptions in 14 additional states, including New York and Texas, speeding up the roll-out of a plan that has put pressure on rival retailers.

Wal-Mart said the $4 program covers a 30-day supply of 143 different drug compounds, representing nearly 25 percent of the prescriptions it currently dispenses in pharmacies nationwide.

The program, initially launched in Florida last month, will be available in an additional 1,264 stores throughout Alaska, Arizona, Arkansas, Delaware, Illinois, Indiana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Texas and Vermont.

Wal-Mart said it filled 88,235 new prescriptions in Florida in the 10 days after it rolled out the $4 program across the state. (MP: That's more than 6 prescriptions every minute in FL, 24/7).
I think even Wal-Mart employees can afford these prices.