Tuesday, June 19, 2007

Quote of the Day: Forcing Poor to Buy Rich Toys

Closing sweatshops and forcing Western labor and environmental standards down poor people's throats in the third world does nothing to elevate them out of poverty. Instead, it forces poor people to buy a lot of rich man's toys, like clean air, clean water, and leisure time. If clean air and leisure time don't strike you as extravagant luxuries, that's because Americans - even the poorest of us - are so rich these days that we've forgotten what true poverty is like. But chances are your great-great-grandparents could have told you what it's like: when you're truly poor, you can't afford things like clean air. Nobody in 1870 America worried about the environment.

~Economist Steven Landsburg, from the chapter "Children At Work" in his book "More Sex is Safer Sex"

Three States Set Record Low Jobless Rates in May

State unemployment rates for May were released today by the BLS, showing that 18 states have set historical record-low jobless rates in the last year, and 12 of those record lows were set this year. The states of Arizona (3.6%), Idaho (2.3%), and Texas (4.1%) all recorded historical record low unemployment rates in May 2007.

Here are the 18 states that have set historical record-low jobless rates in the last year:

Alabama: 3.3% in April 2007
Alaska: 5.8% in April 2007
Arizona: 3.6% in May 2007
California: 4.7% in November 2006
Florida: 3.2% in October 2006
Hawaii: 2.0% in December 2006
Idaho: 2.3% in May 2007
Illinois: 4.0% in November 2006
Louisiana: 3.3% in July 2006
Montana: 2.0% in March 2007
Nevada: 4.1% in May 2006
New Mexico: 3.5% in February 2007
New York: 4.0% in March 2007
Pennsylvania: 3.8% in March 2007
Texas: 4.1% in May 2007
Utah: 2.3% in February 2007
Washington: 4.4% in April 2007
W. Virginia: 4.0% in January 2007

India Outsourcing Thousands of Jobs, TO the U.S.

The U.S. dollar has depreciated by more than 17% against the Indian rupee over the last 5 years, and by more than 10% over the last year (see chart above, click to enlarge). Result: Outsourcing of jobs and production has increased, but now FROM India TO the US by Indian IT companies like Tata, Wipro (NYSE:WIT) and Infosys (NASD:INFY)! For example, Tata plans to hire 2,000 Americans within three years for jobs IN the U.S.

From India's
The Economic Times: "Indian companies, which are becoming major players in the international arena, are hiring aggressively in the United States, reversing the earlier trend when they always transferred Indians to work in America on temporary visas.

Also, as the Indian rupee has risen more than 10% against the dollar this year, hiring Americans has gotten cheaper. At the same time, fierce competition for tech talent in India is pushing salaries there up by 12% to 15% per year, although they remain less than a third of those in the US."

In this related
Economic Times article, India is now the #1 job creator on the planet: "India generated 11.3 million net new jobs per year on an average during this period, higher than 7 million in China, 2.7 million in Brazil and 0.7 million in Russia. In contrast, the average was 3.7 million in the OECD area as a whole."

Bottom Line: As India and China's economies grow and prosper, and in the process create jobs, income, and wealth internally, they also become wealthier consumers of goods and services produced in the U.S. (American cars, software, education, travel, etc.) and they help to create jobs in the U.S.

Do we really need the World Bank and IMF when we have the forces of globalization, free markets and international trade (and Wal-Mart) lifting millions of people out of poverty in India and China, creating millions of jobs not just there, but in the US as well!?

(HT: Sanil Kori)

Monday, June 18, 2007

Housing Market Past and Future, In Pictures

Looking forward:
Looking back: Historical year-over-year monthly percent change in the actual home-price figures for selected cities:

Read more here at Yahoo! Finance.

Bottom Line: It's a good time to buy, and it'll get even better over the next year, but it's a bad time to sell.

What Do USA, Liberia and Burma Have in Common?

USA, Liberia and Burma (Myanmar) are the only three countries in the world that do not use the metric system.

Despite Complaints, People Love NY For Crowds

People who live in Manhattan or Detroit might complain about the crowds, but as long as they remain in Manhattan or Detroit it's hard to take them seriously. There are plenty of sparsely populated areas in the United States, and anybody who wants to move there is free to do so. Manhattanites will tell you that they stay in New York because of the theater or the symphony or the job opportunities - but that's just another way of saying they stay in New York because it's crowded.

~Steven Landsburg in More Sex is Safer Sex

Female Millionaires to Outnumber Males by 2020

According to this forecast by the Center for Economics and Business Research in the UK, 53% of millionaires in the U.K. are likely to be female by the year 2020.

Why? According to June 14 issue of The Economist, "Females do better at school and in higher education, and they live longer. Girl power, it seems, never had it so good."

The historical sources of women's wealth—marriage, inheritance and divorce—have been replaced by independent income, business ownership and investments. More than 80% of women now derive their riches from personal earnings, particularly from their own businesses. Divorce, long the engine that propelled women into prosperity, is cited by only 2.9% of those questioned as the main source of their wealth."

The WSJ also reports on this here.

Looking for a Cheap Dentist? Go to Mexico

From today's Washington Post, "Discount Dentistry, South of The Border":

Americans travel to Mexico for stomach surgery, eye exams and routine checkups. But it is the dentistas -- thousands of them strung along the border -- who are in the vanguard in attracting U.S. health consumers.

Mexican dentists often charge one-fifth to one-fourth of U.S. prices (see price list above from this website).

I had a previous related post about this Slate article.

Children Staying Closer to Home

From the UK's Daily Mail an interersting article "How children lost the right to roam in four generations," with the map above of the city of Sheffield, showing the shrinking acceptable roaming areas for children over four generations of the Thomas family.

Via Reason, via Boing Boing.

World's Most Expensive Cities

According to this new Cost of Living Survey from Mercer Human Resources Consulting, Moscow is the world’s most expensive city for expatriates for the second consecutive year, followed by London, Seoul, Tokyo and Hong Kong (see chart above). Here is a list of the top 50 cities.

Mercer’s survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowances for their expatriate employees.

According to
this CNN story, a luxury two-bedroom in Moscow now rents for $4,000 a month; a CD costs $24.83, and an international newspaper, $6.30. By comparison, a fast food meal with a burger is a steal at $4.80.

Among North American cities, New York and Los Angeles are the most expensive and are the only two to rank in the top 50 of the world's most expensive cities. But both have fallen in their rankings since last year's survey -- New York came in 15th, down from 10th place, while Los Angeles fell to 42nd from 29th place a year ago. San Francisco came in a distant third at No. 54, down 20 places from a year earlier.

Sunday, June 17, 2007

"Gender Gift Gap": Dads Get 71% of What Moms Get

Total Spending
Mother's Day: $16 billion
Father's Day: $9.9 billion

Per Gift (see chart above):
Mother's Day: $139.14
Father's Day: $98.34

Gift Certificates:
Moms: 39.3%
Dads: 29.9%

Dinner or Brunch:
Moms: 61%
Dads: 42.7%

Read more here about the "gender gift gap" here in the Newsweek Business article Playing Favorites.

(HT: Sanil Kori)

What About This Pay Gap? CEOs vs. Celebrities

According to this AP story, CEOs of 386 companies in the S&P500 that filed proxy information in the first half of this year received a combined $4.16 billion in 2006, which is an average compensation of $10.77 million per CEO (see graph above).

Yahoo Inc.'s Terry Semel led the pack with total compensation last year of $71.7 million, according to the AP formula used to analyze those filings, which adds up salaries, bonuses, perks, above-market interest on pay that is set aside for later and what companies estimated the present value to be of restricted stock and options awards on the day they were granted last year.

According to the
Forbes Celebrity list, the top 100 celebrities earned a combined total of $3.286 billion, or an average of $32.86 million per celebrity from June 2006 to June 2007, which according to Forbes "includes dollars earned solely from entertainment income."

Oprah topped the celebrity list with a whopping $260 million in earnings, or more than 3.5 times the highest CEO, followed by Tiger Woods with $100 million in pay.

Do a Google search for "excessive CEO pay" and you'll get about 10,000 hits. Now try a search for "excessive celebrity pay," and you'll get exactly 0 hits.

Another factor to consider when comparing CEOs and celebrities is the amount of time worked per year. Most people would agree that CEOs work full-time, year-round, probably 60-hour weeks, whereas a lot of athletes, musicians and actors (Madonna, Kobe Bryant, Shaq, Bon Jovi) realistically only really work during part of the year. On a per-hour basis, the "pay gap" between CEOs and celebrities would be even greater!

Driving in India is 10X As Dangerous as the USA!

Buyer Behavior blog (Professor Ray Titus in Bangalore India), has a post "Driving in Bangalore/India," about how "accidents on Indian roads have now reached gargantuan proportions," with the following picture:

Ray also provides some tips for driving in India, and I have actually driven in Bangalore with Ray as recently as last March, and I can say from firsthand experience that the man knows how to drive in India!

According to World Bank data, India had 20.3 traffic fatalities per 10,000 vehicles in 2003, which compares to only 1.86 traffic deaths in the U.S. per 10,000 vehicles according to these NCSA data (note the U.S. reports deaths per 100,000 vehicles as 18.59). Therefore, it is more than 10X more dangerous to drive in India than the U.S., measured by traffic deaths per 10,000 vehicles (see graph above).

Watch this amazing video of traffic somewhere in India at an unmarked intersection, and you'll get an idea of how insanely chaotic the traffic situation really is in India, with the crazy mix of cars, trucks, buses, motorcycles, bicycles, auto rickshaws, cows, pedestrians, dogs and even occasionally camels!

(Thanks to an anonymous comment that questioned my previous post, which was based on data from this website that incorrectly shows 185.8 deaths per 10,000 vehicles in the USA instead of 1.86, they must have studied "rainforest math.")

Quote of the Day: Markets Solving Organ Shortage

"Thousands of people die each year for lack of a healthy kidney, while hundreds of millions walk around with spare kidneys they’re unlikely to need. That’s nuts and most people can probably see that it’s nuts. For some reason, most of those people seem reluctant to embrace the one mechanism — the market — that can actually solve this kind of problem."

Economist Steven Landsburg talking to Freakonomics blogger Steven Dubner

Saturday, June 16, 2007

America: An Economic Incubator for Entrepreneurs

The IMD World Competitiveness Yearbook (WCY) analyzes and ranks nations' ability to create and maintain environments to sustain the competitiveness of enterprises. Considered the global authority on world competitiveness, it has been published annually since 1989 and ranks 55 economies on 323 criteria.

Results for 2007 were released in May, here is the press release, see the top 25 countries in the chart above (click to enlarge). As usual, the U.S. ranks #1 as the most competitive economy in the world, followed by Singapore and Hong Kong.

Why is the U.S. economy the most competitive in the world? And a related question: why has America produced so many successful young entrepreneurs? George Mason economist Tyler Cowen offers some excellent insights in this recent
NY Times article:

1. American youths are so successful at entrepreneurship in part because so many older and wealthier people are willing to help them. The broader American success at philanthropy, then, lays the groundwork for American entrepreneurship. By global standards, Americans may have looser networks of friends and family, but Americans are more willing to help relative strangers, and this often helps business.

2. The fact that American schooling is less disciplined than that in other countries gives young creators the time and the energy to accomplish something outside their formal education.

3. Relatively loose family structures have similar effects; American children are especially likely to be working on their own projects, rather than being directed by parents and elders.

4. Compared with those in other countries, American children play a much more influential role in society and enjoy a remarkable degree of autonomy. Teenagers receive higher allowances, have greater access to credit cards, and have more money to spend on starting a business. American labor markets are flexible enough to create a large number of jobs at the lower end of the wage scale. Teenagers are more likely to acquire work experience, and they are more likely to earn a small amount of capital for financing a start-up enterprise.

5. It is a common American dream to want to start one’s own business, and this cultural influence spreads to the young.

Tyler concludes, "On a national level, these successes are rooted in the commercial, competitive, philanthropic, nonegalitarian and open nature of American society. America’s economic head start probably won’t go away anytime soon."

MP: In other words, America's competitiveness results from an entrepreneurial-friendly society and culture, along with efficient and well-developed financial and credit markets, and generous philanthropic traditions, that together create an incredible infrastructure that nurtures and supports young entrepreneurs more successfully than any place on the planet - like an "economic incubator" for entrepreneurs. Imagine if a Bill Gates or a Michael Dell had been born in any other country - they might not have had the same supportive environment to nurture their entrepreneurial talents as they did here to start Microsoft and Dell, without any inherited wealth and without any political connections?

Making Michigan a Right-to-Work State

From Larry Reed's (president of Michigan's Mackinac Center for Public Policy) editorial in today's WSJ "It Takes a Recession" (subscription required):

Why is the basic truth, that unions are part of the state's economic problem, now coming to replace the notion that they are the state's salvation? A 2002 study from the Mackinac Center for Public Policy gives us a little hint. The study found that from 1970 to 2000, right-to-work states created 1.43 million manufacturing jobs. At the same time non-right-to-work states lost 2.18 million jobs. Not surprisingly, heavily unionized Michigan was near the bottom of the pile.

Michigan lost a quarter million jobs since the start of this decade. Unemployment is the highest for any state in the country. And while inflation-adjusted per capita personal incomes grew nationally by 4.2% since 2001, in Michigan they have fallen. Over the same period, real per capita GDP grew by nearly 9% nationally and declined in only one state -- Michigan. High-profile companies like the Big Three auto makers, Pfizer and Comerica are slashing workforces or moving operations out of state. Tax revenue is down and the state budget is hemorrhaging red ink.

Michigan's "economic development" efforts have obviously flopped, and for largely the same reason that a bad restaurant can't turn itself around by offering discounts or subsidies to a handful of customers. It must change the menu for everybody.

The state has tried to stop the bleeding with expensive TV ads featuring Michigan-born actor Jeff Daniels spotlighting the state's corporate welfare. But what's really dumb and getting dumber is the persistent reluctance of the administration of Democratic Gov. Jennifer Granholm to tackle the union issue, even as signs swell that the public is ready for a sea change. Her strategy is to sweep aside any suggestion for labor reform and lobby instead for an unpopular, job-killing tax increase and a billion-dollar hike in state spending.

Making Michigan a right-to-work state would quash with one powerful blow the nagging perception that our labor climate is too hostile and costly for business. It would provide more freedom for individual workers and a temporizing influence on union leadership.

Friday, June 15, 2007

Google's Success = Income Inequality, So What?

Increased income inequality, in and of itself, is neither positive nor negative. What matters is why inequality has increased.

A quarter of the increased income inequality since 1976--and almost all of the increase in inequality among the top earners--is a direct result of the increased use of performance pay by American companies. Inequality is rising because hard workers are being increasingly rewarded for their higher productivity.

In an economy where most wealth is not inherited but earned, increased inequality can be beneficial. Consider the impact of Google, Inc. The company's founders, Larry Page and Sergey Brin, are now worth more than $16 billion each. Their financial success has made America a demonstrably less equal country, and most Americans are better off for it. Google's various services allow tens of millions of Americans to quickly find what they want on the Internet, conveniently get directions to where they need to go, and use a quality e-mail server--all for free. Page and Brin became wealthy--and increased inequality--by improving the lives of others.

Performance pay increases wage inequality for two reasons. First, such jobs usually pay more than jobs without performance pay. Performance pay makes workers more productive, allowing employers to increase pay. However, higher wages for these workers, but not others, increases inequality.

Second, performance pay increases inequality directly because it means the workers who produce more, earn more. Imagine two car repair shops: The first pays employees a flat $15 per hour wage for installing replacement windshields; the second pays employees $20 for each windshield they install. There will be very little inequality in the first company since every worker earns the same wage. The second company pays more to diligent or talented employees because they install more windshields. Performance pay rewards productive workers more than less productive workers, meaning higher inequality.

Read more here.

What About Consumer and Employee Greed?

Do a Google search for "corporate greed" and you'll find about 752,000 hits. Try "greedy CEOs" and you'll get about 24,000 hits.

Now try "consumer greed" and you'll only see about 500 listings, and you'll only find 2 hits for "greedy shoplifters."

Even though "corporate greed" and "greedy CEOs" get all the attention, it appears that a lot of shoppers and employees display quite bit of their own greed, as they helped themselves to about $42 billion of corporate inventory at retailers around the country in 2006, which as a percentage of total sales was about 1.6%~!!!

About $3 billion of Wal-Mart's merchandise was lifted last year by greedy shoppers and employees, according to this AP report.

More on "Unconscionably Ridiculous" Gouging Laws

Greg Mankiw has an excellent post on why Bush will probably veto the "unconscionably ridiculous" Federal Price Gouging Prevention Act," which passed the House and now moves to the Senate.

A Master of the "Economic Way of Thinking"

From Steven Landsburg's new book "More Sex is Safer Sex: The Unconventional Wisdom of Economics:"

"Common sense tells you that promiscuity spreads AIDS, population growth threatens prosperity, and misers make bad neighbors. If your common sense tells you otherwise, remember that common sense also tells you the earth is flat. I wrote this book to assault your common sense.

My weapons are evidence and logic, especially the logic of economics. Logic is most enlightening - and surely most fun - when it challenges us to see the world in a whole new way. This book is about that kind of logic."

Read a Q&A here with Landsburg on the Freakonomics blog.


Interesting Google Trend search result:

#1 Goolge searches (per capita) in the world for "Paris Hilton"

By Country: Ecuador, S. Africa, El Salvador, Venezuela, Australia

By City: Melbourne, Sydney, Irvine CA, Caracas, Bogota

By Language: Indonesian, Macedonian, Tagalog (Phillipines), Turkish, Estonian

What's up with that?

Bad News Sells

In the gas price chart above (click to enlarge), the most recent 6-week period (May 1 - June 15) shows about a 24 cent increase in gas prices from $3.00 per gallon to $3.24 during the first 3-week period (May 1 - 22), and about a 24 cent decrease in prices during the second 3-week period (May 22 - June 15) from $3.24 to $3.00.

A Google News searchs reveals the following results:

May 1 to 22, for the term "rising gas prices": 10,639

May 22 to June 15, for the term "falling gas prices": 3,349

Conclusion: Rising gas prices get more than 3X the news coverage as falling gas prices, even when the price increase is the same as the price decrease (24 cents in this case), over the same period of time (3 weeks in this case).

It's probably also the case that when it comes to the economy, bad economic news always gets more press coverage than positive economic news, which leads to the general public falsely thinking economic conditions are worse than they actually are.

Anybody? Anybody?

From Jessica Hagy's Indexed website, who proves daily that if you can think it, you can graph it.

Taco Trucks vs. The Restaurant Cartel in Salinas, CA

In Salinas, CA, a farm town 120 miles south of San Francisco, there are 33 approved food trucks and 240 mobile vendors, which include ice cream push carts (paleteros), flower vendors and other street sellers.

Taco trucks, like the one pictured above in Salinas, are cultural icons and social magnets in Mexico, and provide good, cheap food (see the $1.25 taco above), as well as good jobs for entrepreneurs.

But the taco trucks have become a flashpoint in at least a dozen cities in California — including Santa Rosa, 55 miles north of San Francisco, and Gardena, 15 miles south of Los Angeles — and in other states, like Arizona, Oregon and Tennessee, according to today's NY Times article, "Proposed Ban on Taco Trucks Stirs Animosity in a California Town."

For example, a proposed ordinance in Salinas would phase out mobile and stationary catering vehicles, most of which are taco trucks, by 2011, and would restrict how, when and where 240 pushcart vendors could sell cold prepared foods.

Who's behind the ordinance? Well, it's not too hard to figure that out, it's the "Salinas United Business Association," complaining that the taco trucks have "an unfair competitive advantage."

Translation: the taco trucks have better food at lower prices.

The NY Times quotes a blogger on Chowhound.com (website "for those who live to eat") who said, "It really comes down to competition. Why should one class of merchant roll over for another class of merchant?”

Amen. I'd love to live in a city with 33 food trucks competing for my business, and be able to buy tacos for $1.25 like in the picture.

(551 Students: We'll cover this topic of "barriers to entry" at the next residency.)

See a related CD post on the "taxi cartel in Minneapolis."

Starbucks and Dunkin' Donuts Set to Open in India

From LiveMint.com (WSJ partner in India) Mumbai: The world’s biggest coffee chain Starbucks said it will open its first store in India by the end of 2007 in either New Delhi or Mumbai.

The Hindu: "People want to matter. They want to be more than a wallet with legs attached. Starbucks has shown that you can turn a commodity like coffee into an uplifting and memorable experience. Once that is done, customers make an emotional bond with the Starbucks product, which in turn produces brand loyalty and international success."

LiveMint.com: "With Starbucks on its way in to India, can Dunkin’ Donuts be far behind? Dunkin Brands Inc., the world’s largest coffee and baked goods chain, is in discussions with potential Indian partners to roll out the brand, which sells nearly one billion cups of java each year.

“India is a huge opportunity. We want the wallets of the country’s 250 million middle-class households,” said a spokesman.

MP: Thousands of young Indians working in call centers provide customer service for millions of Americans, and they'll now buy coffee and donuts on their breaks from American companies like Starbucks and Dunkin' Donuts operating in Bangalore, Chennai, New Delhi and Mumbai. Seems like a win-win deal to me, and that's what international trade is all about. Without the call center jobs, they might not be able to afford Starbucks.

(HT: Sanil Kori)

Thursday, June 14, 2007

Save the Elephants in Africa, Buy Lots of Ivory

From a previous CD post: "Over the last thirty years, there have been two approaches to saving elephants in Africa: a) a ban on commercial use of elephants and elephant products like ivory, and a ban on private ownership of elephants; or b) allow commercial use of elephants like trophy hunting licenses and the sale of ivory, and promote private property rights for elephants.

After a quarter century of both approaches operating in different African countries, the evidence is clear: elephant herds are decreasing significantly in countries like Kenya that ban private ownership and commercial use, and elephant herds are increasing significantly in countries like Zimbabwe and Botswana where elephants can be owned and where commercial uses like hunting and ivory sales are allowed (see graph above)."

From this IHT article "
African states reach compromise on ivory sales," it appears that Kenya still hasn't learned much from its failed conservation policies that have caused its elephant herds to dwindle, and is still resisting the market-based approaches that have helped elephants in Zimbabwe and Botswana.

An agreement was reached in the Netherlands yesterday by the 171-member Convention on International Trade in Endangered Species that will allow South Africa, Namibia, Botswana and Zimbabwe to empty government inventories of ivory in a single sale to Japan, which guaranteed not to reexport the raw ivory. Revenues from the sale are earmarked for conservation programs.

Botswana, Zimbabwe, Namibia and South Africa, came to this year's conference with a proposal to end the 1989 international ban on ivory sales and establish annual quotas, furthering the market-based approaches that have allowed them to succeed at increasing elephant herds (see graph above).

Kenya worried that the one-time sale will stimulate a demand that cannot be legally met.

"It will encourage the illegal market, and that's what kills elephants," said Michael Wamithi, the Kenya-based elephant expert for the International Fund for Animal Welfare. It also sends a signal to consumers "that ivory is back in style," he said.

It's obvious by looking at the graph above that what kills elephants is Kenya's approach to elephants, which is to ban private ownership and ban commercial use of elephants, a tragic outcome for Kenyan elephants, and another predictable "tragedy of the commons" result. The reality is that if nobody owns elephants in Kenya, and commercial use of elephants is not allowed, then nobody cares about Keynan elephants, and they will eventually disappear.

Exhibits A and B: There are no longer any shortages of America buffaloes or American alligators now that they can be privately owned, and commercial use is allowed.

Quote of the Day: Swedish Tax Lesson for Congress?

Tax rates are falling all over the globe -- even in Sweden. The exception is the U.S. Congress, which is scrambling to find some way, any way, to raise them.

The proposed 44% top marginal rate would reduce U.S. competitiveness by reducing the after-tax return on investment. Less investment means fewer jobs and lower wages. A Tax Foundation analysis of tax returns finds that roughly three in every five Americans in the highest income tax bracket are small business owners, who create most new jobs.

What's missing from this Congressional tax debate is any recognition that today's tax rates are producing record tax receipts. If the current pace of tax collections continues amid a modicum of spending restraint, the federal budget could be balanced within 18 months. The tax share of GDP is approaching 19%, which is above its modern historical average.

It's a sorry day when American politicians have to be instructed in the virtues of low tax rates by the Swedes.

~From today's WSJ editorial "
100% Marginal Tax Rate"

Wednesday, June 13, 2007

What American Accent Do You Have?

Take a 16-question quiz and find out here.

My results are "You have a Northern accent. That could either be the Chicago, Detroit, Cleveland, Buffalo accent (easily recognizable), or the Western New England accent that news networks go for."

That seems pretty accurate, since I was born in Chicago and live now near Detroit. Comments welcome on the accuracy for others.

The Cheapest Car in History is Coming in 2008

The Model T (pictured above) put the world on wheels during its 18-year production run. More than 15 million were made between October 1908 and May 1927. The original list price was $850, but was progressively cut until a roadster sold for as little as $260 in 1925, which is $3,070 in today's dollars.

In January 2008, Tata Motors (TTM:NYSE), one of India's largest automakers, will reveal the world's cheapest car ever made, and "will earn a parking place in history alongside Ford's Model T, Volkswagen's Beetle and the British Motor Corp.'s Mini, all of which put a set of wheels within reach of millions of customers," according to this report in Forbes.

Tata is currently referring to the new vehicle as the "1-lakh car." A "lakh" is a unit of the Indian numbering system equal to 100,000, and so Rs. 1 lakh (Rs. 100,000) is equal to $2,460 at today's exchange rate (Rs. 40.65 per USD), or 20% below the inflation-adjusted cost of a Model T in 1925!

The affordable price firmly aims to market the car to families otherwise restricted to motorcycles, like the Indian family of six pictured below, perfect customers for the new 1 lakh car, which will be available by the third quarter 2008.

(HT: Sanil Kori)

Mango Mania: First Indian Mangoes Arrive in the US

Varieties of mangoes grown in India: More than 1,000, in varying shapes, colors, and tastes.

Amount of time India has grown mangoes: 6,000 years

Percent world mango production grown in India: 50%

India's exports as a percent of world mango trade: 1%

Price of fresh mango juice in Mumbai: Rs. 20 (50 cents)

The year India first applied to export mangoes to the U.S.: 1989 (18 years ago)

Reason for the ban on Indian mangoes until 2007 and India's overall low export levels: Mangoes can harbor the mango seed weevil, a pest absent from North America.

First delivery of Indian mangoes to US: April 27, 2007

Reason the ban on India mangoes was lifted: The U.S. Agriculture Department decided in 2006 to allow the importation of Indian mangoes if they were treated with low doses of irradiation to kill or sterilize insects.

Number of India mango varieties available in US this season: 3 (Alphonso, Kesar and Banganpalli)

Price of Indian Mangoes compared to mangoes from Central and South America (Ataulfo variety): 3-5 times more expensive

#1 Import Country for Mangoes into the U.S.: Mexico's mangos (Ataulfo variety), currently 60% of U.S. market share

Read more here (NY Times), here (LA Times), and here (Wash Post).

Quote of the Day: Tariffs = Act of War on Ourselves

Any interference with the operation of the marketplace, however done, is analogous to an act of war. A tariff is such an act. When we are "protected" against Argentine beef, the effect (as intended) is to make beef harder to get, and that is exactly what an invading army would do. Since the duty does not diminish our desire for beef, we are compelled by the diminished supply to put out more labor to satisfy that desire; our range of possibilities is foreshortened, for we are faced with the choice of getting along with less beef or abstaining from the enjoyment of some other "good." The absence of a plenitude of meat from the marketplace lowers the purchasing power of our labor. We are poorer, even as is a nation whose ports have been blockaded.

Moreover, since every buyer is a seller, and vice versa, the prohibition against their beef makes it difficult for Argentineans to buy our automobiles, and this expression of our skills is constricted. The effect of a tariff is to drive a potential buyer out of the marketplace. The argument that "protection" provides jobs is patently fallacious. It is the consumer who gives the worker a job, and the consumer who is prevented from consuming might as well be dead, as far as providing productive employment is concerned.

~Frank Chodorov in 1959 from Chapter 6 of his book The Rise and Fall of Society, excerpted here.

Hollywood vs. Bollywood

When it comes to making movies, who's bigger: Hollywood or Bollywood, the popular Mumbai-based Hindi-language film industry in India?

In terms of the number of movies per year and worldwide audience, Bollywood is clearly bigger, producing 1,000 movies in a typical year watched by a worldwide audience of 3 billion, compared to Hollywood's 500 movies annually watched by 2.6 billion viewers worldwide. Bollywood passed Hollywood in 2004 for global viewership, and remains the global leader for movie audience.

Bollywood is also older than Hollywood, it started in 1899 11 years before the birth of Hollywood.

In terms of revenue, Hollywood clearly dominates Bollywood, with annual revenues in 2006 of $9.2 billion, vs. $1.75 billion for Bollywood. Four Hollywood movie studios (Sony, Buena Vista, 20th Century, and Warner Bros.) each generated more $1 billion in revenues in 2006, almost as much individually as the entire Bollywood industry.

Read more here. (HT: Sanil Kori)

Everyday Economics: Immigration Economics

University of Rochester economist Steven Landsburg (author of Armchair Economist and More Sex is Safer Sex) poses the following question in his new Slate.com column Everyday Economics:

"How do you justify a border fence? Why is it OK to consign millions of unskilled Mexicans to lives of desperate poverty? I'm told it's because Americans should care more about their countrymen than about a bunch of foreigners. OK, but how much more?

Surely there's some limit; virtually nobody thinks, for example, that Americans should be allowed to hunt Mexicans for sport. So, exactly how much are you willing to hurt a foreigner to help an American? Is a foreigner's well-being worth three-quarters as much as an American's, or half as much, or one-quarter as much?"

Landsburg provides his usual careful economic cost-benefit analysis answering the question, and in the process makes this following point:

"On balance immigrants don't harm Americans; virtually all economists agree that immigration makes us richer, not poorer. Every immigrant is a potential trading partner, a potential employee, and a potential customer. He bids down wages, but that's a two-edged sword: It's bad for his fellow workers, but it's good for employers and good for consumers."

Fuzzy Rainforest Math is Out: Back to the Basics

1. Teaching Math in 1960: A logger sells a truckload of lumber for $100. His cost of production is 4/5 of the price. What is his profit?

2. Teaching Math in 1970: A logger sells a truckload of lumber for $100. His cost of production is 4/5 of the price, or $80. What is his profit?

3. Teaching Math in 1980: A logger sells a truckload of lumber for $100. His cost of production is $80. Did he make a profit?

4. Teaching Math in 1990: A logger sells a truckload of lumber for $100. His cost of production is $80 and his profit is $20. Your assignment: Underline the number 20.

5. Teaching Math in 2000: There are 5 baby birds in a nest. Three of the birds fly away. Question: how do the other two birds feel? (There are no wrong answers)

6. Teaching Math in 2005: A greedy, profit-seeking logger cuts down a beautiful forest because he is selfish and inconsiderate and cares nothing for the habitat of animals or the preservation of our woodlands. He does this so he can make a profit of $20. Topics for class or small group discussion: What do you think of this way of making a living? How did the birds and squirrels feel as the logger cut down their homes? (There are no wrong answers)

From the
WSJ's article (subscription required) "New Report Urges Return to Basics In Teaching Math: Critics of 'Fuzzy' Methods Cheer Educators' Findings" (9/12/2006):

It took parents 17 years to overturn the tragic 1989 curriculum mistake made by the so-called education experts who demanded that schools abandon traditional mathematics in favor of unproven approaches. The National Council of Teachers of Mathematics finally reversed course and admitted that elementary schools really should teach arithmetic, after all.

Now the nation's math teachers are getting some new marching orders: Make sure students learn the basics.

The council's advice is striking because in 1989 it touched off the so-called math wars by promoting open-ended problem solving over drilling. Back then, it recommended that students as young as those in kindergarten use calculators in class.

Those recommendations horrified many educators, especially college math professors alarmed by a rising tide of freshmen needing remediation. The council's 1989 report influenced textbooks and led to what are commonly called "reform math" programs, which are used in school systems across the country.

HT: J. Howe

Tuesday, June 12, 2007

Harvesting Cash: American Farmers Got $35 Billion

For decades, American taxpayers have provided tens of billions of dollars in federal farm subsidies ($35 billion between 2003-2005) to some of the largest and wealthiest farm businesses in the nation. But thousands of people who benefited from the subsidy flow were shielded from public view behind layers of partnerships, joint ventures, limited liability corporations, cooperatives, and other business structures that obscured their personal subsidy claims. Not anymore.

A new online database, developed by the Environmental Working Group (EWG) from millions of previously unpublished USDA subsidy records, provides nearly full disclosure of federal farm subsidy beneficiaries for the first time. The disclosures include individuals, sometimes numbering in the dozens, whose subsidy benefits pass through one or more plantation-scale farm businesses that produce vast quantities of subsidized cotton, rice and other crops. Many of those businesses receive millions in USDA crop subsidies each year, and according to the new USDA data, pass six-figure benefits through to many people. In many cases, these individuals have not previously had subsidy benefits attributed to them by name.

EWG finds that the top 1% of beneficiaries received 17% of the crop subsidy benefits between 2003 and 2005, and their average benefit was $377,484 per person for the 3 program years or over $125,000 apiece annually.

Read more about EWG here, and check out its updated searchable Farm Subsidy database that just became available today.

Read an
AP story here about EWG and the new searchable farm subsidy database.

And who has harvested the most money from farm programs? Who's The King? As revealed in the new data, the current answer to that question is one Maurice Wilder, resident of Florida. Mr. Wilder received a total of $3,217,158 in farm program payments from 2003-2005. Read about
The King of Farm Cash here.

Reminds of an old joke - Q: How do you starve a farmer? A: Weld his mailbox shut.

Unconscionable Movie Ticket Gouging?

I had a previous post on stamp prices and several posts on food prices here and here. When I came across this time series of movie ticket prices back to 1910, I was able to create the chart above (click to enlarge) that shows inflation-adjusted price indexes for movie tickets and gasoline over the last 50 years.

As the chart shows, the real price of a movie ticket today ($6.58) is 80% higher than in 1957 when the nominal price of a movie was 50 cents, but $3.65 in today's dollars. In contrast, the average price of gasoline so far this year of $2.60 per gallon according to EIA data, is only about 15% above the real price in 1957, when gas sold for 31 cents per gallon ($2.26 in today's dollars).

Bottom Line:
Compared to buying a movie ticket, gasoline today is a real bargain. And yet you'll find 83,200 Google hits for the term "gasoline price gouging" and only 2 for "movie ticket gouging." And Congress has yet to introduce legislation to protect consumers from "unconscionable movie gouging," like for gas.

Oh, and what about the price of popcorn once you enter the movie theater? If consumers ever needed legislation for protection against "unconscionable pricing," movie theater popcorn would be a good place to start.

Grand Rapids Marriot Drops Gender Segregation

In a previous post, I wrote about the Marriot Hotel in Grand Rapids, MI that announced recently that it intended to reserve the entire 19th floor of the hotel for women only, and charge a $25-30 nightly premium.

According to this AP report, "Soon afterward, the hotel received a "tremendous response" from its customers and others, and the decision was made not to go forward with the gender-segregated floor, a Mariot spokesperson said."

Probably a good idea since the Public Accommodation section of the the Civil Rights Act of 1964 says that "All persons shall be entitled to the full and equal enjoyment of the services, facilities, and privileges, advantages, and accommodations of any place of public accommodation (any inn, hotel, motel that provides lodging to transient guests), without discrimination or segregation."

Moving to India? Don't Buy a Car, Taxis Are Cheaper

According to this Economic Times of India article Want to save on expenses? Sell your car!, it costs 16.73 rupees per kilometer to operate a car in India, which works out to about 67 cents per mile (see graph above).

In contrast, it costs only 48.5 cents per mile to operate a vehicle in the U.S., according to the IRS. In a previous post, I reported that gasoline currently costs $5.16 per gallon in India, so it makes sense that driving in India is a lot more expensive than in the U.S., and also explains partly why the average person in India drives only about 6,000 miles (10,000 km) per year compared to the 12,000 mile average in the U.S.

The article also claims that it would actually be slightly cheaper to use taxis (60 cents per mile) than owning and operating a car.

(HT: Sanil Kori)

Google Street View or Google Spy?

Google's "Street View Van."

Google Street View of 7th Ave. and West 43 St., NYC.

From today's Slate, "Google Spy: Zooming in on neighbors, nose-pickers, and sunbathers with Google Street View,"

As Google grows older, it's becoming that kid who brings an M-80 to the neighborhood barbecue. While everyone else is goofing off with sparklers, Google blows up a trash can and freaks out the entire block.

The latest explosion is Google Street View. The free-sushi-eating Googleheads dreamed up the idea to send a camera-equipped van (see picture above) to take 360-degree shots around the streets of San Francisco, Las Vegas, New York, Denver, and Miami. Cool, right? Then the service launched last Tuesday, and Mary Kalin-Casey discovered that she could see her cat Monty in the window of her apartment. If you zoom in, you can tell that Monty is a tabby.

Check out Manhattan here with Google Street View, starting in Times Square.

Monday, June 11, 2007

Ford's Volvo Enters the India Market in 2007

For the second month this year (May), Toyota outsold Ford Motor Co., which saw sales fall 6.9%, according to this report. But Ford sales worldwide might get a boost from the strong economic growth in India, and the fact that in developing markets, the premium segments of the car business grow the fastest.

From the article Volvo to Hit Indian Roads by Year End, "Ford-owned premium car brand Volvo is planning to drive into India the S80 (top picture above) and the SUV XC 90 by the end of this year (bottom picture above)."

MP: Maybe the booming economies of India and China will help save Ford and GM? As globalization and free markets unleash previously untapped entrepreneurship, talent and wealth in India and China, their middle and upper classes expand and prosper, and they enter the global marketplace and start to buy globally, including many products from the U.S. and from U.S. MNCs like Ford.

HT: Sanil Kori

Wal-Mart Enters India in Early 2008

NEW DELHI - "The Bharti-Wal-Mart retail partnership is looking at opening its first clutch of retail stores - around half a dozen - sometime early next year.

Bharti Enterprises group chairman and CEO Sunil Mittal today said: “We will start rolling out stores from next year and may put up several hundred stores over four to five years”.

Bharti has announced that it will invest $2.5 billion in its retail venture, under which it will lead and manage the front end operations, while Wal-Mart will power the logistics and backend operations. Around $100 million has already been committed by Bharti."

more here.

Read a previous post here about Wal-Mart's impressive overseas sales growth, despite staganating sales in the U.S.

Globalization of U.S. Higher Education

Greg Mankiw has a post today "MBA vs. PhD" responding to a question about career options and earning potential with a Ph.D. in economics compared to an MBA degree.

There is a link to this report "The Market for New Ph.D. Economists in 2002," which contains the data in the chart above (click to enlarge) for the percent of foreign students in economics doctoral programs in the U.S. Isn't it interesting that 30 years ago, U.S. citizens made up 2/3 of the economics students in Ph.D. programs, and in 2000 international students made up almost 2/3 of the students!

Also interesting is the fact that the median time to get a Ph.D. in economics was 7 years in 2000, compared to 5.7 years in 1976.

Here are the stats on Harvard MBAs, including median starting salaries in 2006 ($105,000).