Saturday, April 05, 2008

Nectar Heaven: Russia Has 300 Vodka Distilleries

LA TIMES--Not long ago, Stolichnaya was the only Russian vodka Americans seemed to know about. But if you look around today, you can find up to 35 brands -- and the pace of new arrivals is picking up. This could keep going for a while, because there are about 300 vodka distilleries in Russia.

The collapse of the Soviet government and its monopoly on distilling is perhaps the ultimate reason for this surge. Add to that the recent American craze for premium vodkas from all sorts of places -- France (Grey Goose), Scandinavia (Finlandia), even Alameda, Calif. (Hangar One). Why not go to the source?

Comment: I'll be in Russia from April 18 to 27 and plan to do some research and taste tasting there on Russia's premium "nectar of the Gods." By the way, I'll be joined by best-selling author and Hoover research fellow Peter Schweizer as a guest blogger on CD during the time I'm traveling to Russia, since I might not have regular Internet access during my travels. Stay tuned for more information on CD's first-ever guest blogger!

(Vodka HT: Craig Newmark)

More On Wikipedia

Professors Should Embrace Wikipedia--If the Web is the greatest information delivery device ever, and Wikipedia is the largest coherent store of information and ideas, then we as teachers and scholars should have been on this train years ago for the benefit of our students, our professions, and that mystical pool of human knowledge.

Wikipedia as we know it will undoubtedly change in the coming years as all technologies do. By involving ourselves directly and in large numbers now, we can help direct that change into ever more useful ways for our students and the public. This is, after all, our sacred charge as teacher-scholars: to educate when and where we can to the greatest effect.

~Mark A. Wilson, professor of geology at the College of Wooster.


BBC NEWS--Wikipedia survives research test: The free online resource Wikipedia is about as accurate on science as the Encyclopedia Britannica, a study shows. The British journal Nature examined a range of scientific entries on both works of reference and found few differences in accuracy.

See related, previous CD post here.

Unintended Consequence: Shortages, Long Waits

NY TIMES: AMHERST, MASS.Once they discover that she is Dr. Kate, the supplicants line up to approach at dinner parties and ballet recitals. Surely, they suggest to Dr. Katherine J. Atkinson, a family physician here, she might find a way to move them up her lengthy waiting list for new patients.

Those fortunate enough to make it soon learn they face another long wait: Dr. Atkinson’s next opening for a physical is not until early May — of 2009.

In pockets of the United States, rural and urban, a confluence of market and medical forces has been widening the gap between the supply of primary care physicians and the demand for their services. Now in Massachusetts, in an unintended consequence of universal coverage, the imbalance is being exacerbated by the state’s new law requiring residents to have health insurance.

Comment: Wow, a one-year wait for a physical in Massachusetts, that sounds like Canada! This story reminded me of an old joke about the Soviet Union. A guy goes into a Soviet car dealer and orders a Lada (pictured above). The salesman says "Your car will be ready two years from today, you can pick it up then." The customer says "Will it be ready in the morning or the afternoon on that day?" The salesman asks "What difference does that make, it is two years from now." The customer replies "Well, the plumber is scheduled to come in the morning on that day."

Losing The Race for Skilled Workers: Scrap the Cap

America's political leaders are so fixated on illegal immigration they've barely noticed that the U.S. is losing the race for the best high-tech minds. This country won't keep its edge in the global economy until legislators stop behaving like border sentries and start acting like international recruiters – a switch virtually every industrialized country is making.

A good way to begin is for Congress to pass pending legislation to scrap the cap on skilled worker (H1-B) visas. This cap is currently so low (65,000) that in April last year it got used up within a day of these visas becoming available, leaving thousands of left over engineers to be scooped up by America's competitors. Immigration authorities started accepting 2009 applications last Tuesday – and expect a similar flood.

~Shikha Dalmia in today's Wall Street Journal

Jobless Rates by Education: Stay In School!

The chart above shows monthly unemployment rates, by educational attainment, from 2000 to March 2008, using data from the BLS, obtained via Economagic. The data show that almost all of the .50% increase in the overall unemployment rate over the last 9 months from 4.6% in June 2007 to 5.1% in March 2008 was mostly from increases in unemployment for workers with less than a high school degree and to a lesser degree from workers with a high school degree. Note that the unemployment rate for college-educated workers has been almost flat for the last three years, and the trend for workers with some college is almost flat as well.

It's also interesting to see that during the 2001 recession, the jobless rate increased by about a full percentage point for ALL education levels. Unfortunately, the data for jobless rates by educational attainment only go back to 1992, so it's not possible to extend this analysis back to recessions before 2001. But looking at unemployment rates by education in the the 2001 recession, we won't be in recession again until the unemployment rates for all education categories start to rise, and we haven't seen that yet.

Friday, April 04, 2008

Some Bright News in Today's Labor Report

One bright spot in today's BLS employment report is found in Table A-9 - the median duration of unemployment fell to a 15-month low of 8.1 weeks in March 2008, the lowest level since December 2006, and matches the third lowest level in more than six years (see graph above). That means that 50% of those unemployed are finding employment within about two months, one of the lowest levels since 2001!

If You Tax Something, You Get Less of It

CHICAGO SUN-TIMES--Are Chicagoans trekking to the suburbs to buy cases of bottled water -- and avoid a new nickel-a-container tax that adds $1.20 to the price of a 24-pack? Or are they making the switch to tap water to save money? One or the other is happening. Maybe both.

Revenues from Chicago's new bottled water tax are trickling in -- at a rate nearly 40% below projections -- exacerbating a budget crunch that has already prompted Mayor Daley to order $20 million in spending cuts. January collections were $554,000. That's far short of the $875,000-a-month needed to meet the city's $10.5 million-a-year projection.

Comment: Some remedial economics for Chicago's City Council?

1. People respond to incentives.
2. Demand is elastic, and there are substitutes for everything.
3. If you tax something, you get less of it.

Or to paraphrase Thomas Sowell, this story suggests that "The first lesson of economics is that people respond to incentives. The first lesson of politics is to ignore the first lesson of economics."

(HT: Market Power)


Thursday, April 03, 2008

An Occasional Crisis is the Cost of Innovation: The Case Against New Regulation of Financial Markets

THE ECONOMIST--Bold re-regulation could damage the very economies it is designed to protect. At times like this, the temptation is for tighter controls to rein in risk-takers, so that those regular, painful crashes could be avoided. It is an honourable aim, but a mistaken one.

A sophisticated and innovative financial system is susceptible to destructive booms; but a simple, tightly regulated one will condemn an economy to grow slowly.

The tempting answer is to try to wriggle free from the dilemma with a compromise that would permit innovation but exert just enough control to squeeze out financial failure. It is a nice idea; but it is a fantasy. The experience of the past year is an object lesson in the limited power of regulators.

The notion that the world can just regulate its way out of crises is thus an illusion. Rather, crisis is the price of innovation, so governments face a choice. They can embrace new financial ideas by keeping markets open. Regulation will be light, but there will be busts. The state will sometimes have to clear up and regulation must be about cure as well as prevention. Or governments can aim for safety and opt for dumbed-down financial systems that hobble their economies and deprive their people of the benefits of faster growth. And even then a crisis may strike.

Comment: As tempting as more regulation of the financial markets seems right now, we should not underestimate the market's resiliency and ability to self-correct. As economist Arnold Kling reminds us, "Markets fail, let's use markets."

Honey Badger: Most Fearless Animal on Earth


Amazing Video: Elephant Paints Self-Portrait


What Does $350k Buy in Today's Housing Market?

Check it out here, 10 homes/condos around the country for sale at $350,000.

Another Possible Healthcare Solution:The Dr. Nurse

WALL STREET JOURNAL--As the shortage of primary-care physicians mounts, the nursing profession is offering a possible solution: the "doctor nurse."

More than 200 nursing schools have established or plan to launch doctorate of nursing practice programs to equip graduates with skills the schools say are equivalent to primary-care physicians. The two-year programs, including a one-year residency, create a "hybrid practitioner" with more skills, knowledge and training than a nurse practitioner with a master's degree, says Mary Mundinger, dean of New York's Columbia University School of Nursing. She says DNPs are being trained to have more focus than doctors on coordinating care among many specialists and health-care settings.

(HT: Clover Aguayo)

BIG PORK: 11,610 Projects Worth $17.2 Billion

The Democrat-led Congress last year broke a promise to slash pork spending and doled out $17.2 billion for pet projects, a 30% increase over the previous year's $13.2 billion expenditure, according to the Citizens Against Government Waste's (CAGW) 2008 "Pig Book." Congress stuffed 11,610 projects into fiscal 2008 spending bills, the second-highest total ever and more than triple the number of projects in fiscal 2007.

The top three "porkers" identified in the "Pig Book" all were Republican members of the Senate Appropriations Committee: ranking member Thad Cochran of Mississippi with $892 million, Ted Stevens of Alaska with $469 million and Richard C. Shelby of Alabama with $465 million. CAGW ranked Mrs. Clinton of New York the 13th top pork spender in the Senate, far outpacing Democratic rival Sen. Barack Obama who ranked 28th and sent his home state of Illinois about $97 million in pork. The presumptive Republican presidential nominee, Sen. John McCain of Arizona, as usual secured no pork projects.

~Today's Washington Times

Senate List: By Dollar Amount or Alphabetical

House List: By Dollar Amount or Alphabetical

Complete Pork Database:
Search all 11,610 projects by keyword, member, state, party or appropriations bill.

Monster Employment Index Up 2 Points in March

The Monster Employment Index edged up two points in March, as overall U.S. online job availability rose moderately for the second consecutive month, but remained down 10% from a year ago. The Monster Employment Index is based on a real-time review of millions of employer job opportunities culled from a large, representative selection of corporate career sites and job boards, including Monster.

During March, a majority of industry and occupational categories tracked showed greater online job demand compared to the previous month, with 16 of 20 industries and 15 of 23 occupations registering gains.

Wednesday, April 02, 2008

Cost of Living

OSLO is the priciest city in the world to live in according to The Economist. In its latest twice-yearly index of over 130 cities, in which 160 items are assessed, Norway's capital has been the costliest since 2005, when it toppled Tokyo from the top spot. European cities dominate the list, reflecting the weakness of the dollar. New York is still the most expensive city outside of Europe or Asia, but it has slipped from 28th to 39th in a year. Relocating to Latin America or India would get you a lot more for your buck.

In Defense of Wikipedia: I Kinda Like It

Columbia Journalism Review--At the end of the day, Wikipedia looks less like the reputation-munching monster it’s being portrayed as, and more like the future of information in the Internet age.

Professor Mark Goodacre, Duke University--It is becoming fashionable among academics these days to have a go at Wikipedia. This is inevitable for a variety of reasons. Academics are often behind their students in the use of new technology, and this brings about a reaction of fear. We witnessed the same thing with the advent of the World Wide Web in the 1990s and now that fears about the academic value of Internet resources has diminished, a new, narrower target has been found. It is an easy target because its open source basis makes it often apparently "unreliable." Negative reactions to the use of Wikipedia in the classroom, however, are unnecessary and should be discouraged.

Professor Tyler Cowen--Critiques of Wikipedia miss its comparative advantage. Entries tend to be link-rich, and the ongoing debate and revisions refresh and improve the links. Think of Wikipedia as hiring someone to do search engine work for you, not just Google but the other brands as well. They then report back with the best links. Wikipedia brings you this service for free.

Washington Post Blog--Even the most celebrated sources of fact are frequently flawed. A study by the scientific journal Nature investigated the legitimacy of both Wikipedia and the Encyclopedia Britannica, a widely respected information outlet. Through a random sampling of articles, the study discovered 162 errors from Wikipedia and 123 from the Encyclopedia Britannica.

Ultimately, Wikipedia is more than merely a source of information; it is a global system that promotes a constant exchange of information. Its purpose is to encourage a dynamic flow of knowledge, an element that is critical to this era of globalization.


Duke Professor Cathy Davidson
--Wikipedia is not just an encyclopedia. It is a knowledge community, uniting anonymous readers all over the world who edit and correct grammar, style, interpretations, and facts. It is a community devoted to a common good — the life of the intellect. Isn't that what we educators want to model for our students?

As a cultural historian and historian of technology, I find that I often go to Wikipedia for a quick and easy reference before heading into more-scholarly depths. I'm often surprised at how sound and good a first source it is.

Comment: There are a lot of Wikipedia-skeptics out there, especially in academia, where it seems to be almost universally condemned, banned and ridiculed by professors.

Well, at the risk of being an academic heretic, I have a confession to make: I like Wikipedia, and often go there first when trying to find information on the Internet. For example, check out the Wikipedia listing for Gross Domestic Product. In addition to links for original sources of GDP data in many countries, there are many useful ranked lists at the end of the Wikipedia GDP entry, based on GDP using data from the IMF, World Bank and the CIA World Factbook with adjustments for inflation, PPP and per capita, etc. (I refer to these lists often):

List of countries by GDP (nominal), (per capita)
List of countries by GDP (PPP), (per capita), (per hour)
List of countries by GDP (real) growth rate, (per capita)
List of countries by GDP sector composition
List of countries by future GDP estimates (PPP), (per capita), (nominal)
List of countries by past GDP (PPP), (nominal)

Wikipedia is in its infancy, and will likely continue to improve significantly over time. Wikipedia-skeptics, give it some time. It'll likely be the "future of information in the Internet age."


Where's The Credit Crisis?

Annual Growth of Total Bank Credit Through March 19, 2008:
Annual Growth of Total Loans and Leases through March 19, 2008
Annual Growth of Commercial Loans Through March 19, 2008

Source: Federal Reserve via the St. Louis Fed.

Free Trade, Globalization & "The Great Moderation"

In recent decades, as foreign trade and investment have been rising as a share of the U.S. economy, recessions have actually become milder and less frequent (see chart above, click to enlarge). The softening of the business cycle has become so striking that economists now refer to it as "The Great Moderation."

For the U.S. economy as a whole, the era of globalization has brought healthy long-term growth and a moderation of the business cycle. Expansions are longer if less spectacular than in eras past, and downturns are mercifully shorter, shallower, and less frequent. Moderation of the business cycle in recent decades is something to be thankful for, and expanding trade and globalization deserve a share of the credit.

~From Cato's "Worried about a Recession? Don’t Blame Free Trade," by Dan Griswold

The Recession is a Media Myth

According to John Lott.

Tuesday, April 01, 2008

Market Share of Big Three at Record Low of 47%

According to March auto sales data released today by Motor Intelligence, the market share of the Big Three automakers fell to a new record low of 47% in March 2008, down from 53% last year (see chart above).

Carpe Diem Exclusive: Total Bank Is Growing At the Fastest Rate Since the 1970s: What Credit Crunch?


According to Federal Reserve banking data (via the St. Louis Fed) released yesterday, "weekly bank credit of all commercial banks" hit an all-time record high of $9.49 trillion on March 19, 2008. What's even more impressive though is the growth in total bank credit measured as the "percent change from a year ago" (see chart above). Compared to the same week a year ago, bank credit in the third week of March (the most recent week available) increased by 12.62%, the largest annual percent increase in bank credit in more than a quarter century!

You would never know from media reports on the "credit crisis" (1.81 million Google hits) and "credit crunch" (3.61 million Google hits) that total U.S. bank credit is higher in absolute terms than ever in U.S. history, and is growing at the fastest rate in percentage terms since 1979!

Update: Notice also that the growth in bank credit declined sharply during each of the last four recessions (shaded areas in graph). Although bank credit is not one of the official NBER recession-indicating variables, it seems highly unlikely that we could now be in recession when bank credit is growing at almost a record high rate.

Drew Carey Calls for Open Borders on Reason.tv

What do English-speaking soccer superstar David Beckham and working-class Mexican immigrants have in common? Drew Carey says they both make America a better place on Reason.tv.

“Americans, especially LA Galaxy fans were very excited and greeted David Beckham with open arms when he came here to play in Los Angeles, even though he took the roster spot away from some poor, hard-working American kid,” Carey says in the Reason.tv video. “So I guess we’re very welcoming when it comes to rich famous Brits. And we love our Beatles. But are we as welcoming when it comes to people from other countries?”

Food Stamp Hysteria: Whoops, They All Forgot to Control for Record U.S. Population of 306m in 2009


CBS Evening News: More Americans Turning To Food Stamps: Amid Economic Slowdown, Record 28 Million In U.S. Expected To Use Program In Coming Year

NY Times: As Jobs Vanish and Prices Rise, Food Stamp Use Nears Record
The Independent: USA 2008, The Great Depression. Food stamps are the symbol of poverty in the US. Dismal projections by the CBO suggest that by fiscal year 2008, 28 million people in the US will be using government food stamps to buy essential groceries, the highest level since the food assistance program was introduced in the 1960s - and a sure sign the world's richest country faces economic crisis.

Comment: There's one big, fundamental problem for these "food stamp hysteria" stories about record food stamp use of 28 million by 2009 (fiscal year 2008): The U.S. population will be at a record level of 306.272 million in 2009, and food stamp use by 28 million Americans will be about 9.14% of the population, just slightly higher than the 2005-2007 average of 8.78% (see chart above using data from USDA and the Census Bureau). And the 9.14% projected food stamp usage as a percent of population in 2008-2009, will be lower than food stamp usage in 1980, 1981, 1982, 1983; and 1992, 1993, 1994, 1995 and 1996.


Bottom Line: We're nowhere near a record for food stamp use, and we're nowhere close to the Great Depression!

(Inspired by this post on Captain Capitalism)

A Real Time-Saver: Alt-Tab Keyboard Shortcut

Alt-Tab is the name for a keyboard shortcut on Microsoft Windows used for switching between windows without using the mouse.

If you press ALT+TAB to switch between Windows-based applications, Windows displays a box that identifies the last application that you accessed. If you hold the ALT key down, pressing TAB cycles through all of the applications that are currently running. When you let go of the ALT key, the identified application becomes the active application.

Carpe Diem on Kudlow & Company

Thanks to my pal Larry Kudlow for a nice mention of this Carpe Diem post last night on CNBC's "Kudlow & Company," in the segment "The Case Against Case-Shiller" (starting at about 1:40).

Quote of the Day

There is no question that the people who run the Federal Reserve System today are a lot more knowledgeable about economics than those who ran it back in the days of the Great Depression. Indeed, the average student who has passed Economics 101 today is probably more knowledgeable than those who ran the Federal Reserve System back during the Great Depression.

Being a disinterested government official does not mean that you know what you are doing. That fact gets left out of the equation in a lot of proposals for new government programs.

~ From Thomas Sowell's latest column "Irony in Wall Street"

Monday, March 31, 2008

Cash for Keys in Vegas, Foreign Buyers in Detroit

A few interesting real estate stories:

1. Wall Street Journal--These days, bankers and mortgage companies often find that by the time they get the keys back from foreclosed homes, embittered homeowners have stripped out appliances, punched holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc. Real-estate agents estimate that about half of foreclosed properties to be sold by mortgage companies nationwide have "substantial" damage.

The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners hundreds or even thousands of dollars to put their anger in escrow and leave quietly. In Las Vegas, agents hired by the banks to handle foreclosed properties say the "cash for keys" approach, as it's known in the industry, is a regular part of the job.

2. Detroit Free Press--Investors from as far away as Hong Kong and Hawaii are coming to Detroit to make their fortune buying foreclosed homes in bulk. Some buyers are looking to buy larger numbers of homes, perhaps 100 or more at a time.

In Detroit's distressed housing market, the majority of sales now are to investors, often in bulk deals. Sales were up dramatically in Detroit in February, rising 49% from a year before, and foreclosure properties played a key role in the increase.

Sunday, March 30, 2008

Forget Ethanol, What About Canada's Oil-Sands?

At a time when saying anything good about fossil fuels is like declaring war on the environment, it may seem like wishful thinking to press for an expansion of U.S. oil refining capacity. Yet it is precisely this sort of thinking that is necessary if we are to make use of a vast, secure and reliable supply of fuel from Canada's oil sands.

The tar sands hold an estimated 174 billion barrels of crude oil, making Canada's oil-sands deposits second only to Saudi Arabia in global reserves. The U.S. currently obtains 1 million barrels a day from Canada's tar sands, but with planned investments the daily supply could exceed 3 million barrels by 2015.

Read more here in Investor's Business Daily

Piger's Recession Probability Index for Jan. = 0.04

The chart above shows University of Oregon economics professor Jeremy Piger's "Recession Probability Index" from 2000 to January 2008, based on the 4 monthly variables used by the NBER to determine U.S. recessions: non-farm payroll employment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales.

According to Professor Piger, "Historically, three consecutive months of recession probabilities exceeding 0.8 (see historical graph below) has been a good indicator that an expansion phase has ended and a new recession phase has begun, while three consecutive months of recession probabilities below 0.2 has been a good indicator that a recession phase has ended and a new expansion phase has begun."

Professor Piger's has a research paper on this topic, "A Comparison of the Real-Time Performance of Business Cycle Dating Methods," forthcoming in the Journal of Business and Economics Statistics.

Comment: According to this methodology, the U.S. economy has not entered a recession, at least not through January.

Dark Ages: Earth Hour Here, Earth Decade N. Korea

Dear Mr. Roberts, President of World Wildlife Fund:

You and members of your organization worry that industrialization and economic growth are harming the earth's environment. I worry that the intensifying hysteria about the state of the environment - and that the resulting hostility to economic growth - might harm humankind's prospects for comfortable, healthy, enjoyable, and long lives.

So I commend you on your "Earth Hour" effort. Persuading people across the globe to turn off lights for one hour supplies the perfect symbol for modern environmentalism: a collective effort to return humankind to the Dark Ages.

Sincerely,

Donald J. Boudreaux, Chairman, Department of Economics, George Mason University

P.S. The WWF should award some special prize to the North Korean government, for that government keeps North Koreans not in any meager "Earth Hour," or even "Earth Day," but in what WWFers might call "Earth Decades." See picture above of a society keeping its carbon footprint tiny. Of course, in doing so it keeps itself also desperately poor, often even to the point of starvation.