Cartoon of the Week
Professor Mark J. Perry's Blog for Economics and Finance
It's Friday evening and you suspect that your child might have strep throat or a worsening ear infection. Do you bundle him up and wait half the night in an emergency room? Or do you suffer through the weekend and hope that you can get an appointment with your pediatrician on Monday -- taking time off your job to drive across town for another wait in the doctor's office?
Chrysler lost $600 million last year, and now private equity firm Cerberus will buy a majority of the struggling Chrysler Group for $7.4 billion, breaking up a transatlantic car union that never lived up to its billing as a marriage made in heaven.
The crippling UAW legacy cost problems are not unique to Chrysler, and they are going to get a lot worse in the future for all of the Big Three automakers.
In 2005, GM provided health and income benefits to more than 450,000 retirees and their surviving spouses, and retirees and their dependents outnumbered the company's active workforce by three-to-one. This imbalance will continue to grow as more and more retirees are supported by fewer and fewer workers, especially since a) nearly a third of GM's hourly workforce signed up for payout packages in 2006, resulting in even more retirees and fewer active workers, b) GM continues to lose market share (see graph above), and rising legacy costs get spread over fewer and fewer vehicles.
In a research article "The Payoff to America from Globalization," three economists associated with the Institute for International Economics (and Northwestern University and Brigham Young) quantify and estimate: a) the payoff from opening the U.S. economy to international trade since WWII, and b) potential future gains from opening the economy to more trade going forward.
I wrote recently here about the problems with the AAUW's report on the "pay gap." Using the information in that blog posting, I wrote a 750-word commentary that appears in my local paper, the Flint Journal ("Graduates, Be Assured That Gender-pay-bias Claim Not Well-founded").
From today's WSJ, an excellent article by George Mason economist Bryan Caplan, who explains why special interest legislation is so popular even though it makes us worse off:
Billings, Montana and Logan, Utah, tied for first place as cities with the lowest unemployment rates in the nation, at just 2%, according to the BLS's report on metro area jobless rates for March. Billings is facing a labor shortage as demand for workers increases for summer employment, and employers are hiring workers from as far away as the Czech Repbulic!
Years ago, there was concern that the poor didn't have enough access to credit, and were denied access to the American dream of homeownerhsip. Now there is concern that there is too much credit available.
George Will writes in his column this week that the World Bank faces much bigger problems than the situtation with Paul Wolfowitz and his girlfriend. In fact, Will says that the rationale for the World Bank was never strong, and has now evaporated, especially because of the waste and corruption of the political yet unaccountable distribution of many billions of World Bank dollars.
From today's LA Times, an article about outsourcing local news reporting to India, where you can apparently hire UC-Berkeley grads for $7,000 per year on Craigslist.
Here is the link to the NY Times article about this story.
Robert Samuelson in yesterday's Washington Post:
Given all of the recent media coverage, I thought most people were worried about HIGH gas prices. Well, apparently not the state of Wisconsin, which is worried about LOW gas prices.
I wrote a few days ago about the surge in tax revenues. In today's WSJ, there is a related article titled April Revenue Shower, here are some excerpts:
A group of Swedish and Malagasy researchers led by Thomas Elmqvist of Stockholm University decided to try to correlate changes in Madagascar’s forest cover with local population densities and customary laws.
From a scene on the TV show West Wing about protecting pharmaceutical patents. One guy says: "Those pills cost them only 4 cents to produce." The other guy says: "That's not true. The second pill costs them 4 cents, the first pill costs them $800 million dollars."'
I wrote before about how the AAUW got it wrong, that there really is no pay gap once you control for all factors that affect earnings. Here is some more on the same topic:
Isn’t it puzzling that so many middle-aged Americans are spending so much of their time and money performing menial labors when they don’t have to?
From the Cato Institute's report on "Botched Paramilitary Police Raids:"
The Congressional Budget Office reported yesterday that through the first seven months of the fiscal year (Oct 2006 - April 2007), total tax revenues collected increased by $153 billion compared to the same period last year, an 11.3% increase. As the table above shows, individual income tax receipts increased by $105B (+17.5B) and corporate taxes increased by $27B (+15.2%), compared to the same period a year ago.
"The closest thing to a state religion in America today isn’t Christianity – it’s corn."
Gas prices (red line in the chart above) are now above $3/gallon in the U.S., and average $3.18 in Michigan, up by almost $1 since just January. Why so high, and how high will they go?
There are now 9.3 millionaire million households (2006), which is 5% more than the previous year (8.9 million). Where do all of the millionaires live? New Yorkers see so much wealth around them, they figure that it has to have the most rich people in the country, if not the world. Well, not really, see chart above, click to enlarge.
Some of the best investment you'll get: "It's time in the market, not timing the market that counts in the long run." In other words, forgot about market timing, watch Jim Cramer for entertainment purposes only, and follow a "buy and hold" approach to investing.
According to Reuters: A gauge of U.S. labor demand edged up one point in April, as growth in U.S. online recruitment activity and demand for workers eased following two previous months of sharper gains, Monster, a global online careers and recruiting firm (Monster), said on Thursday (see chart above).
The Monster Employment Index for Europe likewise shows job growth there as well (see chart below).
According to Reuters, European Union statistics office Eurostat reported that the seasonally adjusted jobless rate in the 13 countries using the euro dipped to 7.2% - the lowest reading since its records began in 1993 - from 7.3% in February.
From the current U.S. Tariff Schedule for imports:
Bathing suits: 28% tariff on men's imports; 12% on women's.
Overalls: 14% tariff on women's; 9% on men's.
Woven wool shirts: 18% for men's, 37% for women's.
Imported wool suits: 8.5% for women's and zero for a men's.
Hiking boots: 10% for women's, 8.5% for men's.
From the IHT: "There is no apparent pattern to the tariffs, which penalize men in some instances and women in others. But the fees tacked onto clothing, shoes and swimwear as they enter the country's ports may be the last legal form of sex discrimination in the United States, approved year after year by lawmakers and passed on to consumers.
Several major apparel makers are challenging the tariffs in lawsuits against the federal government and they could reclaim close to $1 billion worth of tariffs based on gender differences. For example, the lawsuit claims that the government earned $2.5 million last year from discriminatory tariffs on underpants (penalizing women), $93 million for cotton shirts (penalizing men), $16 million for silk shirts (penalizing women) and $71 million for shoes with leather tops (women again)."
Read more here about the sexist "tariff gap."
From the Mises Institute:
From The New Yorker:
There is a post below about the explosion of exports to China.
From today's 's NY Times Business Section:
The American Association of University Women Educational Foundation released a study last week claiming that just one year after college graduation, women earn only 80% of what their male counterparts earn. Ten years after graduation, women fall further behind, earning only 69% of what men earn. The organization further claims that the pay gap is "disturbing," since it can only exist because of sex discrimination. It is hard to take claims like this seriously, and here are the reasons why:
From today's WSJ: "Populists in America like to badmouth China for flooding the U.S. with what they claim are cheap, job-destroying imports, but the export data offer a very different picture. China is now America's fourth largest export market (MP: Third if China and Hong Kong are combined), buying U.S. goods valued at $55.2 billion last year, according to the U.S. International Trade Commission.
Why did the markets shrug off worse-than-expected real GDP growth of 1.3%?