Saturday, November 11, 2006

More on Lou Dobbs Democrats

From today's WSJ, an article titled "Democratic Gains Raise Roadblocks To Free-Trade Push," about the anti-free trade movement ahead in Congress:

The Democrats' sweep of Congress is set to deliver a blow to President Bush's free-trade ambitions and could hamper impending trade deals both big and small.

Democrats' stances against free trade helped build the party's success at the polls and could tip the balance on trade matters. The new dynamic could put a definitive end to the already troubled effort to reach a global agreement to reduce tariffs and open markets, known as the Doha round. It also could put in jeopardy smaller deals such as those the U.S. has crafted with Peru and Colombia, intended to boost two-way trade by lowering tariffs and increasing intellectual-property protections.

All told, 16 incoming "trade skeptics" are set to replace "trade friendly" Republicans in the House, according to a study by the Swiss Institute for International Economics.

Democrats also could push tough measures of their own. They have floated various bills to squeeze imports from China or to try to manage the country's trade imbalance. Others seek to impose various restrictions or punishments for intellectual-property violations or its failure to allow its currency, the yuan, to strengthen further. Those have been shelved until now, partly because of a lack of support from the Republican leadership and the White House.

Congressional Democrats have long been moving away from free-trade support. In the 1990s, dozens of House Democrats regularly supported free-trade initiatives like the North American Free Trade Agreement backed by then-President Clinton, which won 102 Democratic votes. But only 15 Democrats backed the Central American Free Trade Agreement negotiated by the Bush administration in 2005.

Remember: Trade is Win-Win, and it doesn't matter at all if the buyer and seller are the same side of an imaginary line we call a national border, or on different sides of an imaginary line we call a national border. Just like it doesn't matter if both the buyer and seller are on the same side or different sides, of imaginary lines we call state borders. Or imaginary lines called county borders, or imaginary lines we call city limits, etc.

Greg Mankiw's post titled "David Ricardo Rolls Over in His Grave."

Remember a few years ago when Mankiw, when he served as chairman of Bush's Council of Economic Advisors, was
harshly criticized by political leaders in both parties for his statement that "Outsourcing is just a new way of doing international trade. More things are tradeable than were tradeable in the past. And that's a good thing." House Speaker Dennis Hastert, R-Ill., called for his head, and Mankiw was forced to "apologize."

Apologize for what? Understanding the significant benefits of free trade?


Corporate Social Responsibility?

From today's NY Times, an article about CSR (corporate social responsibility) and the annual Business for Social Responsibility conference in NYC this week.

OVER 35 years ago, the economist Milton Friedman wrote a famous article for The New York Times Magazine entitled, “The Social Responsibility of Business Is to Increase its Profits.” It’s not hard to find critics of corporate social responsibility who still take that hard-line view.

“C.S.R. is a misguided attempt by a subcategory of business managers to deal with the crisis of corporate legitimacy,” said Isaac Post of the Competitive Enterprise Institute. Russell Roberts, an economist at George Mason University, said: “Doesn’t it make more sense to have companies do what they do best, make good products at fair prices, and then let consumers use the savings for the charity of their choice?”

Their essential point is that companies are simply not equipped to “save the world” — nor is it their mission. That’s what governments are supposed to do.

And that is why corporations pay taxes, almost $1 trillion in corporate income taxes over the last three years, so the government can "save the world."

Whenever a corporation has money available (say $50m) at the end of the year to give/donate to charitable causes and be socially responsible, doesn't that really mean its prices were too high all year, or its wages too low all year?

That is, couldn't Target "give money back to the community" by lowering its prices or having huge sales to increase the standard of living of all of its shoppers by giving them $50 million in cost savings? Or couldn't Target give wage increases or annual bonuses totalling $50 million and "give money back to the communities" where it operates?

And what if I am a Target shareholder, maybe I would prefer $50 million of dividend payments, instead of a $50 million donation to the Boy Scouts? Or maybe I would prefer a $50 million donation to the Girl Scouts or Salvation Army instead of the Boy Scouts?

Friedman: "But the doctrine of 'social responsibility' taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collective doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means. That is why, in my book Capitalism and Freedom, I have called it a "fundamentally subversive doctrine" in a free society, and have said that in such a society, "there is one and only one social responsibility of business--to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

Minimum Wage, Maximum Folly

From today's WSJ, an editorial "The Wages of Politics" on the minimum wage:

Raising the minimum wage has been a hardy perennial of the left for decades now. What is striking is the degree to which is has come to be seen as an economic free lunch. Even some reputedly unbiased economists have started to tout the view that raising the minimum wage has no discernible effect on job creation.

But if this were true, they'd be calling for a $10, $20 or even $50-an-hour minimum wage. They're not, and neither is Nancy Pelosi. That's because the Law of Demand is one of the most dependable precepts of economics. It says that when the price of something goes up, demand for it goes down. An employee's wages are the price the employer pays for his services, so raising their wages means forcing employers to pay more for workers. The price goes up and there is downward pressure on demand for workers. Other things being equal, jobs are lost.

It is implicit in the logic behind raising the minimum wage that if we squeeze employers just a little, they won't even notice. Another argument, this one made explicitly, is that jobs are destroyed, but the wage gains more than make up for the reduced number of jobs. But this is only true if it's not your job that is destroyed. If you are a young black male, you are slightly more likely than the general population to be paid minimum wage, but you are almost 10 times as likely not to have a job at all. And if you're unemployed, raising the minimum wage not only doesn't help you find a job; it probably hurts. Welcome to Speaker Pelosi's idea of progress.
The main question is: How can the thousands of unskilled workers who will be unemployed as a direct result of the minimum wage be better off without a $7.25-an-hour job than they would be with a job that pays $5.15 an hour?

The real problem facing the workers affected by the minimum wage is not that they are underpaid, but that they are under-skilled. Unskilled workers don't need our intuition and humanitarian intentions. They need employment so they can gain valuable work skills.

As the NY Times so correctly said in an editorial on January 14, 1987, "The Right Minimum Wage: $0.00."

Friday, November 10, 2006

The Sad State of German Education

From today's WSJ, an editorial "Educating Germans" about Germany's poor and declining higher education system, partly because of the country's egalitarian federalism which promotes equal funding for all universities regardless of quality, to provide "equal" education across the country. Consider that:

1. Germans practically invented the modern research university in the 19th century, but today not a single German university ranks in world's top 50 universities (the University of Heidelberg ranks #58).

2. The concept of elitism is rejected in Germany universities, and academic mediocrity has been the predictable result. Just 20.6% of adult Germans have completed college, compared with an OECD average of 35%.

3. Most university education is free, and so students consider higher education a "free" service and not an investment in human capital, an attitude that has led to high drop-out rates and long years of study.

4. The civil-servant status of professors makes it impossible to fire even sub-par academics.

In other words, insulation from competition has led to inferior and declining quality of German higher education. Sound a little like American public schools?

Conclusion: Competition breeds competence (those words have the same Latin root: competere), insulation from competition breeds incompetence.

Music I've Been Listening To

1. Shirley Brown, who has a voice that sounds like Aretha Franklin on steroids, how could I have missed her all these years? I have the "Timeless" and "Diva of Soul" CDs, and just ordered about 5 more Shirley Brown CDs. Check out her version of Al Green's "Still in Love," it's awesome. It doesn't get any more soulful than this.

Earl King's CD "King of New Orleans," how did I miss Earl King all of these years? Check out his song "Three Can Play the Game," what a sound!

Oscar Peterson's 4 CD set "Exclusively for My Friends," recorded before live audiences in an elegant, old Black Forest villa in Germany between 1963-1968, these recording have a loose, intimate feel and showcase Oscar Peterson's piano sound at his best on an Imperial Bosendorfer concert grand. When it comes to the classic sound of a jazz trio with piano, bass and drums, it really doesn't get any better than these CDs! Check out the song "Sax No End" on Disc 3, it is the #1 most rockin' jazz piano recording I have ever heard.

4. My brother Jeff Perry in Minneapolis-St. Paul has a new CD out,
give it a listen here.


Proposal 2 Passes in Michigan

With a 58% to 42% margin, Michigan voters approved Proposal 2, which ends race-preferences for admission to the University of Michigan. The table above shows data from the Center for Equal Opportunity on undergraduate students at UM (except for graduation rates in the last column, which are national data).

For example, an Asian minority student with a 3.2 high school GPA and 1240 SAT would have only a 1 in 10 chance of admissions, and an African-American student with the same academic credenitals would have more than a 9 in 10 chance of admission to UM. Unless successfully challenged in the courts, that type of discrimination by a public university will be illegal in Michigan, and the table above might help explains why this proposal passed overwhelmingly in Michigan, and why even many Democrats voted for Prop 2.

Read the
WSJ article here about Proposal 2 passing in Michigan - "Voters Turn Back College Affirmative Action." Read President Mary Sue Coleman's defiant speech here. "I will not stand by while the very heart and soul of this great university is threatened." In other words, diversity, and not quality scholarship, is the heart and soul of this university?

It Was Iraq, NOT The Economy

George Will writes about Tuesday's election, and says that "Republicans sank beneath the weight of Iraq, the lesson of which is patent: Wars of choice should be won swiftly rather than lost protractedly."

"Never before has a midterm election so severely repudiated a president for a single policy. The Iraq war, like the Alaska bridge, pungently proclaims how Republicans earned their rebuke. They are guilty of apostasy from conservative principles at home (frugality, limited government) and embrace of anti-conservative principles abroad (nation-building grandiosity pursued incompetently)."

Read more here.

The unemployment rate is at a 5 1/2 year low, 11 states have the lowest unemployment rates in history, the stock market is hitting record highs, and the 4% average output growth over the last 3 years is well above average. The election was NOT about the economy this time, it was about Iraq.

Thursday, November 09, 2006

Pay Gap? Men Earn 85% of Women?

In 2001, comparing men and women who never married, never had a child, worked full time, and were college educated, women earned 117% of what men earned. That is, after controlling for marital status, having children, hours worked and education, men earned 85% of what women earned.

The graph above is from
Warren Farrell's website, he is the author of the book "WHY MEN EARN MORE: The Startling Truth Behind the Pay Gap and What Women Can Do About It."

See his
NY Times commentary here from September 2005 (may require NY Times subscription).

The Rise of Anti-Trade Lou Dobbs Democrats: Free Trade Has Left the Building

From yesterday's, an article titled "The Lou Dobbs Democrats: Say Hello to the New Economic Nationalists," about how many of the Democrats who recaptured seats held by Republicans ran hard against free trade, globalization, and any sort of moderate immigration policy.

Economic nationalism begins from the populist premise that working people aren't doing so well. But instead of blaming the rich at home, it focuses its energy on the poor abroad. The leading economic nationalist today is Lou Dobbs, who on nights other than Election Night natters on against free trade, outsourcing, globalization, and immigration on CNN.

Economic nationalism is not unique to Democrats—nor is it a new theme. The protectionist wing of the party emerged in the 1980s when America's manufacturing decline was first linked to imports and foreign competition. During his 1992 campaign, Bill Clinton made a key decision to support NAFTA. Clinton espoused a strong free-trade position and embraced globalization through his presidency.

See a related post from Greg Mankiw's here: "Which Party Favors Free Trade?"

As a result of this year's election, it now seems unlikely that the new Congress will extend George W. Bush's "fast-track" trade-negotiating authority, which expires this summer. The results are further bad news for the Doha round and bilateral trade agreements with South Korea and other countries. It is possible that congressional Democrats will revive efforts to saddle China with punitive tariffs as punishment for "currency manipulation." It would be going too far to say that the 2006 election ushers in a new protectionist consensus. But free trade has definitely left the building.

See today's NY Times Business section for more on the anti-trade trend:
Democrats and Republicans agree that the new Congress is likely to be less hospitable to trade deals negotiated by the Bush administration, since any such deals are likely to involve cuts in tariffs and subsidies that could cost manufacturing jobs.

The main issue would be a possible global trade agreement negotiated by the World Trade Organization. Major business organizations support such a deal but farm groups are ready to oppose anything that does not require tariff and subsidy reductions by America’s trading partners.

Wednesday, November 08, 2006

Gridlock is Good

More on gridlock from columnist Bruce Bartlett, a Republican who voted for Democrats for the first time in his life as a "vote FOR gridlock":

I think the American people like divided government. They don't trust either party to run the whole show and believe deeply in the separation of powers that the Founding Fathers established in the Constitution. To most people, dividing government by political party is just another way of separating power.

Every war in American history that lasted more than a few weeks was authorized by a unified government. It's also worth noting that every major entitlement program -- the spending programs that are bankrupting the country -- was enacted by unified governments.

I believe that the good economic times of the late 1990s resulted largely from gridlock -- Democrat Bill Clinton couldn't get his plans through a Republican Congress and he blocked its initiatives. So for a blessed six years government was basically on automatic pilot. The result was budget surpluses instead of deficits, low unemployment, high wages and a skyrocketing stock market. Who wouldn't go back to those times if we could? Bringing back gridlock could to the trick.

Divided government often helps the passage of legislation with broad support that is opposed by special interests. Neither party will want responsibility for killing it, and so they both push it forward. If one party were shut out of power, however, it would be easier for it to oppose even an overwhelmingly popular measure out of sheer partisanship.
Read more here.

Gridlock Glee

Bloomberg News: U.S. Stocks Rise on Gridlock Prospects: A divided government may lead to a legislative impasse and forestall new regulations as well as curb government spending, investors said.

International Herald Tribune:
Gridlock hopes lift indexes: Analysts say gridlock would forestall new regulations and curb government spending.

P.J. O'Rourke on gridlock: "I like legislative gridlock. What I hate is bipartisan consensus. Bipartisan consensus is like when my doctor and my lawyer agree with my wife that I need help."

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, 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!