Saturday, June 20, 2009

Creative Capitalism Filling a Gap with Retail Clinics

In times of economic crisis, the ability of the free market to solve problems may come into question. But in one vital corner of the economy, a little creative capitalism is helping fill a gap.

Enter the retail health clinic. In the past decade, more and more pharmacies like CVS and Walgreens, supermarkets such as Kroger and Publix and big-box stores like Wal-Mart have made space for clinics that treat minor ailments, administer vaccines and examine kids who need medical forms to enroll in camp. In those nine years, storefront clinics have logged at least 3.4 million visits. Today there are about 1,200 such clinics, pulling in some $550 million in annual revenue, by one estimate.

~Time Magazine article "Getting Well While You Shop"

MP: While politicians and bureaucrats in Washington dream up the next grandiose government health care reform to address rising healthcare costs and the 44 million uninsured, the most effective, affordable and convenient healthcare solutions might be right around the corner at your local pharmacy or supermarket.

We have a food stamp program to provide food for America's poor, what about "retail healthcare stamps" to provide basic healthcare services for low-income groups?

Cleveland Fed's Median CPI Inflation vs. BLS

Greg Mankiw has an interesting post on the difference between standard CPI inflation reported by the BLS and an alternative measure of inflation calculated by the Cleveland Federal Reserve based on the median CPI. Professor Mankiw points out that:

The average of any data set can be thrown off by a few extreme outliers; the median is a more robust statistic to estimate the central tendency in the data.

Right now, the two measures of inflation are diverging substantially. The standard CPI shows deflation over the past year, but that average is due to a few anomalous sectors, such as energy. If you look at the median CPI, which shows what a more typical price is doing, the inflation rate does not look very unusual (see chart above).

MP: The
BLS reported on Wednesday that annual standard CPI inflation (deflation) from May 2008 to May 2009 was -1.30% (see chart), mostly because of a -27.3% decrease in the energy prices and a -14.3% decrease in transportation prices from a year ago (when gas was almost $4 per gallon and oil was about $125 per barrel).

In contrast, the
Cleveland Fed reported on the same day that its adjusted, Median CPI increased by +2.4% year-to-year through May 2009 (see chart).

The Cleveland Fed has been studying and reporting median CPI for a long time, here is a paper from 1991 on "
Median Price Changes: An Alternative Approach to Measuring Current Monetary Inflation."

Here's an
interactive graphing feature from the Cleveland Fed for creating charts of inflation.

Larry Summers Vindicated? Global Study Shows Greater Male Variability in Math, Reading Scores

Table 1.
(Note: All results displayed in both tables are statistically significant at the 5% level or higher.)

Table 2.

The tables above show selected statistics from the paper Global Sex Differences in Test Score Variability (see summary here), published by two economists, one from the London School of Economics and the other from the Helsinki School of Economics. Analyzing standardized test scores in reading and mathematics from the OECD’s "Program for International Student Assessment" (PISA), a survey of 15-year olds in 41 industrialized countries, the authors found that:

Our analysis of international test score data shows a higher variance in boys' than girls' results on mathematics and reading tests in most OECD countries. Higher variability among boys is a salient feature of reading and mathematics test performance across the world. In almost all comparisons, the age 15 boy-girl variance difference in test scores is present. This difference in variance is higher in countries that have higher levels of test score performance.

Sex differences in means are easier to characterize: It is evident from the PISA data that boys do better in mathematics, and girls do better in reading. This has a compositional effect on the variance differences as well. The higher boy-girl variance ratio in mathematics comes about because of an increased prevalence of boys in the upper part of the distribution, but the higher variance in reading is due to a greater preponderance of boys in the bottom part of the test score distribution. Because literacy and numeracy skills have been shown to be important determinants of later success in life (for instance, in terms of earning higher wages or getting better jobs), these differing variances have important economic and social implications

We therefore confirm that 15-year-old boys do show more variability than girls in educational performance, with specifics that differ according to whether mathematics or reading are being studied and tested. These results imply that gender differences in the variance of test scores are an international phenomenon and that they emerge in different institutional settings.


1. The results above show that for both the U.S. (Table 1) and the global group of 41 countries (Table 2), the mean math test scores for 15-year boys are significantly higher than the average score for girls, but the reverse is true for reading test scores: girls score significantly higher than boys on average in reading.

2. For both the U.S. and the 41 countries in the global group, the variability of boys' test scores for both reading and mathematics is significantly greater than the variability of girls' test scores (at the 1% level in all cases), suggesting that there are more boys in the upper and lower tails of the test score distributions.

3. Looking at the top 5% and the bottom 5% of test scores, we can see that boys are overrepresented in almost every case:

a. In the bottom 5% of reading scores, there are 245 boys for every 100 girls in the U.S. (220 boys for every 100 girls for the world group), and in the top 5% of reading scores there are 167 girls for every 100 boys (172 girls for the global group).

b. In the bottom 5% of math scores, there are 121 boys for every 100 girls in the U.S. (94 for the global group), and in the top 5% there are 172 boys for every 100 girls (170 girls for the world group).

In other words, the results indicate that boys' test scores are significantly more variable than girls' test scores, resulting in boys being significantly overrepresented in both the bottom 5% and the top 5% of students in the U.S., and these outcomes are a global phenomenon.

Bottom Line: Can Larry Summers get his job back as president of Harvard, for saying basically the same thing?

"It does appear that on many, many different human attributes- height, weight, propensity for criminality, overall IQ, mathematical ability, scientific ability - there is relatively clear evidence that whatever the difference in means - which can be debated - there is a difference in the standard deviation, and variability of a male and a female population."?

See related CD posts here, here and here?

All The President's Women and Women's Groups

Men are bearing the brunt of the current economic crisis (the "man-cession") because they predominate in manufacturing and construction, the hardest-hit sectors, which have lost more than 3 million jobs since December 2007. Women, by contrast, are a majority in recession-resistant fields such as education and health care, which gained 588,000 jobs during the same period.

Last November, President-elect Obama addressed the devastation in the construction and manufacturing industries by proposing an ambitious New Deal-like program to rebuild the nation's infrastructure. He called for a two-year "shovel ready" stimulus program to modernize roads, bridges, schools, electrical grids, public transportation, and dams and made reinvigorating the hardest-hit sectors of the economy the goal of the legislation that would become the recovery act.

Women's groups were appalled. Grids? Dams? Opinion pieces immediately appeared in major newspapers with titles like "Where are the New Jobs for Women?" and "The Macho Stimulus Plan." A group of "notable feminist economists" circulated a petition that quickly garnered more than 600 signatures, calling on the president-elect to add projects in health, child care, education. At the same time, more than 1,000 feminist historians signed an open letter urging Obama not to favor a "heavily male-dominated field" like construction: "We need to rebuild not only concrete and steel bridges but also human bridges." As soon as these groups became aware of each other, they formed an anti-stimulus plan action group called WEAVE-- Women's Equality Adds Value to the Economy.

What did President-elect Obama do when the National Organization for Women (NOW), the Feminist Majority, the Institute for Women's Policy Research, and the National Women's Law Center soon joined the battle against the supposedly sexist bailout of men's jobs? Our incoming president did what many sensible men do when confronted by a chorus of female complaint: He changed his plan. He added health, education, and other human infrastructure components to the proposal.

~ From Christina Hoff Sommers' (resident scholar at the American Enterprise Institute) article "No Country for Burly Men: How Feminist Groups Skewed the Obama Stimulus Plan Towards Women's Jobs," just published in the Weekly Standard

Thursday, June 18, 2009

First Monthly Travel Increase Since October 2007

The Federal Highway Administration reported today that travel on all roads and streets increased by by +0.6% (1.4 billion vehicle miles) in April 2009 compared to April 2008. This was the first monthly percentage increase compared to the same month in the previous year since October 2007, and follows 17 consecutive monthly percentage decreases (see graph above).

Does this increased driving suggest consumers are feeling more confident? Another green shoot/mustard seed? Possibly.

Comments welcome.

HT: John Thacker

Ronald Reagan on Socialized Medicine: 1961

Southern California Real Estate Market Rebounds: Unit Sales and Median Prices Both Increase in May -- Southern California home sales rose for the 11th consecutive month in May as sales of $500,000-plus homes started to come back. The median price paid increased slightly from the prior month for the first time since July 2007, the result of a shift in market activity where sales of deeply discounted foreclosures waned and mid- to high-end purchases rose, a real estate information service reported.

A total of 20,775 new and resale houses and condos closed escrow in San Diego, Orange, Los Angeles, Ventura, Riverside and San Bernardino counties last month. That was up 1.3% from 20,514 in April and up 22.8% from 16,917 a year ago. Sales have now increased year-over-year for 11 consecutive months. May’s sales were the highest for that month since May 2006, when 30,303 homes sold, but were 21.2% below the average May sales total since 1988, when DataQuick’s statistics begin.

The median price paid for all new and resale houses and condos sold in the six-county Southland last month was $249,000, up 0.8% from $247,000 in April but down 32.7% from $370,000 a year ago. The median price hadn’t risen from one month to the next since July 2007, when it increased 0.6% from $502,000 to $505,000.

"We appear to be in the early stages of the market gradually tilting back toward a more normal balance of sales across the home price spectrum. As more sellers get realistic, more buyers get off the fence and more lenders offer reasonable terms for high-end purchase financing, we’ll see a more normal share of sales in the more established, higher-cost areas that have been nearly comatose,” said John Walsh, MDA DataQuick president.

MP: Although the increases were small, the fact that both unit home sales and median home prices increased in May suggests that the Southern California real estate market has reached a bottom and is on the road to recovery.

Southern California Home Prices Rise Slightly in May, First Monthly Increase Since July 2007

LA TIMES (front page of today's Business Section) -- Southern California's median home price rose slightly in May for the first time in nearly two years. But the increase was more reflective of a change in the types of homes sold than an end to falling values, a real estate research firm reported Wednesday. The $249,000 median price in May was up less than 1% from April's $247,000 figure, and marked the fifth-straight month the median has held at roughly $250,000, according to San Diego-based MDA DataQuick.

The modest rise reflects increasing purchases at the high end of the housing market, where sales have been virtually frozen. For much of the last year, most home sales have occurred in the low end of the housing market, with banks unloading foreclosed properties at deep discounts, dragging the median price down. Now, more expensive properties are selling, which raises the median, through a market paradox: many of those homes sold after owners cut prices to lure buyers. Still, stirring sales activity at the high end is a sign that the market is crawling toward equilibrium.

The April-to-May Southern California median price increase was the first month-to-month gain since July 2007, when it moved from $502,000 to $505,000, which was the market's peak.

HT: Benjamin

71-Point Increase in Philly Fed Forecast Index Suggests Economic Recovery Is Now Underway

The Philadelphia Fed reports today that the Six-Month Forecast Indicators Show Continued Improvement:

Broad indicators of future activity showed significant improvement this month. The future general activity index remained positive for the sixth consecutive month and increased markedly from 47.5 in May to 60.1, its highest reading since September 2003 (see chart above). The index has now increased 71 points since its trough in December.

The indexes for future new orders and shipments each improved 12 points this month.
For the second consecutive month the percentage of firms expecting employment to increase over the next six months exceeded the percentage expecting declines (21 percent versus 8 percent). The future employment index improved three points. The future workweek index increased 24 points.

MP: Notice in the chart above that in 2001 the 60-point increase in the forecast index signalled the end of the 2001 recession. Hopefully the recent 71-point increase in the future activity index since December 2008 is signalling the end of the current recession.

According to the Philadelphia Fed, "Most of the survey’s broad indicators of future activity showed continued improvement, suggesting that the region’s manufacturing executives are becoming more optimistic that a recovery in business will occur over the next six months."

Wolfram Alpha

Watch a 13-minute introduction video to Wolfram Alpha featuring Stephen Wolfram.

Jobless Claims Fall to Lowest Level in Four Months

The Department of Labor just released its Unemployment Insurance Weekly Claims Report, reporting that the four-week moving average (which smoothes out the volatility) of initial unemployment claims fell this week to 615,750, the lowest level since February 7, more than four months ago (see chart above). From the April 4 peak of 658,750 claims, the four-week moving average has declined in 8 out of the last 10 weeks, and is now 43,000 claims below the peak. With every week of new data, it's looking more and more certain that April 4 was the peak for jobless claims, and the labor market will continue to gradually improve as move forward.

Wednesday, June 17, 2009

Almost 4 Of 10 Uninsured Households Make > $50k Per Year. What's Wrong With Being Self-Insured?

According to this Census Bureau report "Income, Poverty, and Health Insurance Coverage in the United States: 2007" (most recent data available), there were 45.6 million uninsured Americans in 2007. The chart above shows the household income levels of those 45.6 million uninsured Americans.

There are 9.1 million uninsured Americans living in households making $75,000 per year or more, and this represents about 20% of the total number of uninsured. There are 8.5 million Americans without health insurance in households making between $50,000 and $75,000, representing 31.8% of the uninsured. With those two groups combined, 38.6% of Americans without health insurance (17.6 million people) lived in households with $50,000 or more of household income in 2007.

According to The Kaiser Family Foundation, the average annual total premium cost was $4,479 ($373 per month) for single coverage and $12,106 for family coverage ($1,008 per month).

Q: With $50,000 or more in household income, wouldn't many or most of those 17.6 million uninsured households be without insurance voluntarily? That is, couldn't most of those households afford health insurance?

Alternatively, with those income levels (especially the 9 million with income above $75,000), couldn't many of those households choose to forego health insurance in favor of being "self-insured," at least for routine health procedures? Given the widespread availability of more than a thousand convenient and affordable retail health clinics around the country at Wal-Marts, Meijers, CVSs and Walgreens, these households could easily be on the "pay-as-you-go" model of self-insurance for health care.

Foreign Investment in U.S Businesses Increased to $260B in 2008, Mostly in Manufacturing

According to data released earlier this month by the BEA, foreign investors pumped $260.4 billion into the U.S. economy in 2008 to acquire U.S. businesses ($242.8 billion) or to establish new U.S. businesses ($17.6 billion), the highest level of foreign investment in eight years, and a 3% increase from 2007. This investment activity in the U.S. by foreign investors represents almost a 5X increase since 2002, when FDI was only $54.5 billion (see chart above, click to enlarge).

The BEA reported that:

Among major industries, there was a substantial increase in outlays in manufacturing, which accounted for the majority of the spending by investors in 2008. Outlays were also large in information and in finance. Outlays in real estate fell sharply. Outlays increased from investors in Europe, Latin America and Other Western Hemisphere and in the Asia and Pacific region. As in previous years, the largest share of outlays was from European investors. Outlays by investors from Canada and the Middle East fell.

In 2008, U.S. businesses that were newly acquired or established by foreign direct investors had 368,500 employees, compared with 496,600 employees in 2007. Employment at newly acquired or established firms was largest in manufacturing (146,600) followed by finance (except depository institutions) and insurance (95,700).

Bottom Line: Americans might have lost confidence in their economy over the last few years, but foreign investors apparently haven't, and in fact, are increasingly bullish about the U.S. economy and its businesses. Despite subprime mortgage problems, a housing slump, a recession compared frequently to the Great Depression, an auto sector on government life support, and a manufacturing industry in serious decline, foreigners invested more than a quarter trillion dollars in the U.S. in 2008, mostly in the ailing American manufacturing sector.

Map: Drink-Driving Limits Around the World

Click to enlarge.
The Economist.

Want Health Insurance? Go Out and Buy It. If You Can Afford A Cell Phone, You Can Afford Insurance’s Nick Gillespie knows how to get coverage to at least half of the 45 million Americans who need it. Call it the "Gillespie Plan": If you want health insurance, go out and buy it. Click on the video above (from October 2008 before the election, but still relevant today).

Related, from today's Investor's Business Daily:

"Many Americans are uninsured by choice," wrote Dr. David Gratzer in his book "The Cure: How Capitalism Can Save American Health Care." Gratzer cited a study of the "non-poor uninsured" from the California HealthCare Foundation. "Why the lack of insurance (among people who own homes and computers)?" Gratzer asks. "One clue is that 60% reported being in excellent health or very good health."

The uninsured are not always the same people, and many are without coverage only for a relatively short time. Devon Herrick, senior fellow with the National Center for Policy Analysis, notes that "Being uninsured is a transitory state, since most uninsured Americans are only without coverage for a short time."

Bottom Line: If you can afford a cell phone or cable TV, you can afford basic health insurance. In Michigan, you can get basic health insurance through Blue Cross Blue Shield starting at $47.14 per month for those 18-30 years old (about the cost of a basic cell phone plan), and starting at $168.13 per month for another plan for individuals under 65 and families (not too much more than a cable TV plan with premium channels, and about the same as two cells phones at the monthly average of $77).

Countrywide REOs Back to Early 2007 Levels

The Countrywide Foreclosure Blog reports that there are currently 7,017 foreclosed homes being offered for sale on the Bank of America/Countrywide website, down from the peak of 21,500 last November, and back to levels of April 2007 (see chart above, click to enlarge).

Below are charts for the individual states that had some of the worst foreclosure problems (CA, AZ, FL and NV), showing significantly reduced levels of lender-owned (REO) properties in June 2009. In all cases except Nevada, the REO levels are at two-year lows and Nevada foreclosures are close to a two-year low.

Comment: This is just one company - although Countrywide was (or still is) the largest mortgage company in the U.S. and financed 20% of home mortgages in 2006 - but doesn't this suggest that the real estate markets are slowly healing and recovering, and gradually returning to normal as the foreclosed properties are sold?

Tuesday, June 16, 2009

Min. Wage Hike = Summer Camp Job Killer

ALBEMARLE, N.C. -- The minimum wage is set to rise in North Carolina next month but the effects are already being felt at summer camps around the state. The wage hike’s strain on some already tight budgets could mean fewer counselors to look after the children.

Some camps have already cut field trips to save money. And now they must try to get by with fewer counselors.

HT: Frank Stephenson

Largest L.A. 3-Month Shipping Increase Since 2006

The Port of Los Angeles reported today on May shipping volume, measured in TEUs (Twenty-foot Equivalent Units, a standardized industry measurement used when counting cargo containers of varying lengths), noting the following:

May 2009 imports are greater than April 2009 due to lower warehouse inventory levels, showing some signs of improvement.

May 2009 exports are the highest for the year and greater than April 2009 due to stronger exports of raw materials.

Higher volumes May 2009 vs. May 2008 from China Shipping.

MP: Also, the three consecutive month shipping volume increases in March, April and May 2009 marks the first three month-in-a-row increase in almost three years, since the middle of 2006; and the 161,000 TEU increase over those three months is the largest three-month increase since early 2006 (see shaded areas above).

Shipping Index Rises For Third Straight Month

BUSINESS WEEK -- In yet another sign that some key players are acting as if recession is on the run, more offshore manufacturers are shipping goods into the consumer-driven U.S. market, global-trade tracker Panjiva reports. The May trade data mark the third consecutive monthly rise in the number of shippers moving such goods, the first such Trifecta since the firm began following this metric in July 2007.

Panjiva, a three-year-old statistics analysis firm based in New York and Boston, keeps track of manufacturer shipments around the globe for customers such as Home Depot.

“Increasingly, it feels that the worst is behind us,” says Josh Green, chief executive officer of the trade-tracking firm. Waxing cautious, however, he adds “Still, we have a long way to get back to the pre-crisis level of global trade.”

Nonetheless, the data, released today (June 16), suggest that global trade has hit bottom and is taking the first steps toward recovery. Some 131,688 suppliers were active in May, up 2% from the number in April. The rises in shipper tallies give the Panjiva analysts heart, since such totals have been sliding since at least July 2007, when they counted 161,905 shippers moving goods into the U.S.

See related CD post above.


4-Block World.

HT: R. Adams

Monday, June 15, 2009

Springsteen Shows: Who Gets Best Seats? Not You

Now comes word, courtesy of an Open Public Records Act request from the Newark Star-Ledger, that the biggest reason fans couldn’t find good seats to Bruce Springsteen's May concerts in New Jersey had nothing to do with Ticketmaster, TicketsNow, or scalpers. In reality, almost none were ever actually on sale. Instead, 90% of the best seats were reserved for friends and family of the band, venue employees, record-label executives and their guests.

Of the 20,000 seats at the May 21 show, 2,262, or 12%, were withheld from public sale by various interested parties, including public agency that runs the venue (hence the public-records act request). The paper noted that under New Jersey law, only 5% are allowed to be set aside. Of those, 1,450 were held for friends and family of Springsteen and his band, plus radio-station executives and the like; 812 were held by the New Jersey Sports and Exhibition Authority. And they weren’t exactly in the nosebleed section. Of the 1,126 seats closest to the stage, only 108 were officially listed for sale to the public.

~Wall Street Journal

MP: Ticket scalpers and re-sale markets often get the blame for high ticket prices for concerts, but it appears that the artists and promoters are at least partly responsible for creating ticket shortages and high prices by withholding the best seats for themselves.

Quote of the Day

Politics is the art of looking for trouble, finding it, misdiagnosing it, and then misapplying the wrong remedies.

~Groucho Marx

HT: Brian Wesbury and Bob Stein

Top 5% = 36% of Both Income and MLB Home Runs

Using the sortable Major League Baseball historical database, there were 1,226 active professional baseball players in the major leagues in 2008, and there were 4,877 total home runs for the season. The top 5% of the MLB players ranked by the number of home runs hit in 2008 (63 players with between 22 and 48 home runs for the season), hit 1,779 home runs, or 36.5% of the total.

Interestingly, in 2006 (most recent year) the IRS reported that the top 5% of American taxpayers earned 36.6% of the total taxable income that year.

In other words, home runs are distributed just about as unequally as income - the top 5% earn a disproportionate share of income, about 36%; and the top 5% of baseball players hit a disproportionate amount of home runs, about 36%.

Movin' Up and Down The Income Quintiles

How much income mobility exists in America? Research consistently affirms that there is substantial upward income mobility in the United States, with the lowest income earners typically showing the strongest results. A Treasury Department study of the 1996–2005 period used IRS income tax data to discern considerable mobility: more than 55% of taxpayers moved to a different income quintile. More than half the people in the lowest fifth of earners moved to a higher quintile over this period (29% to the second, 14% to the third, 10% to the fourth, and 5% to the highest).

Moreover, there is a great deal of movement in and out of the top income groups. The Treasury data show that 57% "of households in the top 1% in 2005 were not there nine years earlier." The rich sometimes get richer, but they get poorer as well. The study also reveals that income mobility has increased, not decreased, during the past twenty years. For example, 47.3% of those in the lowest income quintile in 1987 saw their incomes increase by at least 100% by 1996. That number jumped to 53.5% from 1996 to 2005.

~From "
The Politics of Envy" in The Hoover Digest, by Jeffrey Jones and Daniel Heil (HT: NCPA)

MP: A common misperception is that the top or bottom income quintiles, or the top or bottom X% by income, are static, closed, private clubs with very little turnover - once you get into a top or bottom quintile, or a certain income percent, you stay there for life, making it difficult for people to move to a different group. But reality is very different - people move up and down the income quintiles and percentage groups throughout their careers and lives. The top or bottom 1/5/10%, just like the top or bottom quintiles, are never the same people from year to year, there is constant turnover as we move up and down the quintiles.

As Thomas Sowell reminds us:

Comparing the top income bracket with the bottom income bracket over a period of years tells you nothing about what is happening to the actual flesh-and-blood human beings who are moving between brackets during those years. Following trends among income brackets over the years creates the illusion of following people over time. But the only way to follow people is to follow people.

Empire State Survey Suggests Recession is Ending

NEW YORK FED -- The Empire State Manufacturing Survey indicates that the general business conditions index fell several points from last month’s level, dropping to -9.4, but remained well above the string of deeply negative readings observed in the October-March period (see chart above). This month, 28% of respondents reported that conditions had improved, compared with 23% last month, while 38% of respondents reported that conditions had worsened, up from 28%.

Future indexes continued to rise, conveying an expectation that conditions should get better over the next six months. The future general business conditions index advanced 4 points, to 47.8, its highest level in nearly two years (see chart above); 61% of respondents expected conditions to improve over the next six months. The future new orders index, at 45.8, suggested similar optimism, as did the future shipments index at 48.7. The capital expenditures index rose into positive territory for the first time since October, climbing 13 points to 11.5, and the technology spending index also rose above zero, to 1.2.

MP: The Empire Fed future conditions index of 47.8 in June is the highest reading since July 2007, and the 54 point rebound over the last four months (March-June) matches the 54 point increase over the four month period from October 2001 to January 2002 that signalled the end of the 2001 recession.

Global Cooling? Coldest June on Record in Chicago

WGNTV.COM -- The cloudy, chilly and rainy open to June here has been the talk of the town. So far this June is running more than 12 degrees cooler than last year, and the clouds, rain and chilly lake winds have been persistent. The average temperature at O'Hare International Airport through Friday has been only 59.5 degrees: nearly 7 degrees below normal and the coldest since records there began 50 years ago.

Cartoons of the Day

Both from Gary Varvel.

Sunday, June 14, 2009

Eugene Fama, Jr. on Efficient Markets

Here's Part 2, Part 3 and Part 4.

Time Magazine Cover Story: Deja Vu All Over Again

If America's economic landscape seems suddenly alien and hostile to many citizens, there is good reason: they have never seen anything like it. Nothing in memory has prepared consumers for such turbulent, epochal change, the sort of upheaval that happens once in 50 years. Even the economists do not have a name for the present condition, though one has described it as "suspended animation" and "never-never land."

The outward sign of the change is an economy that stubbornly refuses to recover from the recession. The current slump already ranks as the longest period of sustained weakness since the Great Depression. That was the last time the economy staggered under as many "structural" burdens, as opposed to the familiar "cyclical" problems that create temporary recessions once or twice a decade. The structural faults represent once-in-a-lifetime dislocations that will take years to work out.

Among them: the job drought, the debt hangover, the banking crisis, the real estate depression, the health-care cost explosion and the runaway federal deficit. "This is a sick economy that won't respond to traditional remedies," said Norman Robertson, chief economist at Pittsburgh's Mellon Bank. "There's going to be a lot of trauma before it's over."

~Time Magazine cover story "The Long Haul" (click to see the date of the article, excerpts above were modified slightly).

Women Underrepresented in Prison Populations

According to 2008 Department of Justice data, there were almost 13 times more men in U.S. prisons than women (see top chart above), and data from the Death Penalty Information Center show that there were about 65 men on death row for every woman in 2007 (see bottom chart above).

In other words, the data clearly show that men are way overrepresented (and women way underrepresented) in overall prison populations and among death row inmates. Isn't that what Larry Summers said that led to his resignation as president of Harvard University (see quote below)?

It does appear that on many, many different human attributes-height, weight, propensity for criminality, overall IQ, mathematical ability, scientific ability - there is relatively clear evidence that whatever the difference in means - which can be debated - there is a difference in the standard deviation, and variability of a male and a female population.

Don't Blame Only the Ticket Scalpers, Springsteen Withheld 2,262 of the Best Tickets for NJ Concert

NJ REAL TIME NEWS -- Fans were quick to blame Ticketmaster and ticket brokers when they were unable to score seats to last month's Bruce Springsteen and the E Street Band concerts at the Izod Center in East Rutherford. But an examination of ticket sale data from the May 21 concert shows Springsteen himself may be part of the problem. The best seats in the house that night were the 1,126 seats in the four sections closest to the stage, but only 108 of those tickets were ever for sale to the public, according to new ticket data obtained through the Open Public Records Act. None of the more than 9,800 seats in the upper level -- the worst seats -- was kept back for the artists and promoters.

In all, 2,262 seats were held back from public sale, for the band, its record company and agent and the New Jersey Sports and Exposition Authority, the public agency that operates the arena and acted as promoter for the concerts, according to the ticket sale records. That number represents about 12 percent of the total. That violates state law, say some legislators, including lawmakers who have sponsored bills to regulate ticket sales.

Not only were a large number of tickets held back from the public, but the majority of them were the best seats in the arena. And, ticket brokers say, that helped drive up prices on the secondary market. Although tickets sold for $95 and $65 in the initial sale, some tickets were selling for hundreds of dollars more on the secondary market.

"Simple economics 101 would tell you that any time you restrict supply the price will be much greater," said Robb Kenison, a ticket broker from the Washington, D.C., area. "I would not be surprised if a seat in 109, 110, 120 or 121 was double if not triple what it would have been had they sold even 50 percent of the seats in the sections. Fans have always blamed ticket brokers and Ticketmaster for not being able to get a good seat when in reality the blame lies with the artist and promoter for holding back the majority of the good seats."

"There are a lot of people with their fingers in the pie. Sometimes it's not just the scalpers," said Numa Saisselin, president of the Count Basie Theatre in Red Bank. "The sale of tickets is all too often manipulated to someone's ends, and that someone is rarely the fan."

We Waged a War Against Drugs, And Drugs Won

Here in the United States, four decades of drug war have had three consequences:

1. We have vastly increased the proportion of our population in prisons. The United States now incarcerates people at a rate nearly five times the world average. In part, that’s because the number of people in prison for drug offenses rose roughly from 41,000 in 1980 to 500,000 today. Until the war on drugs, our incarceration rate was roughly the same
as that of other countries.

2. We have empowered criminals at home and terrorists abroad. One reason many prominent economists have favored easing drug laws is that interdiction raises prices, which increases profit margins for everyone, from the Latin drug cartels to the Taliban. Former presidents of Mexico, Brazil and Colombia this year jointly implored the United States to adopt a new approach to narcotics, based on the public health campaign against tobacco.

3. We have squandered resources. Jeffrey Miron, a Harvard economist, found that federal, state and local governments spend $44.1 billion annually enforcing drug prohibitions. We spend seven times as much on drug interdiction, policing and imprisonment as on treatment.

It’s now broadly acknowledged that the drug war approach has failed.

~Nicholas Kristof
in yesterday's NY Times

MP: Note the "War on Drugs" is actually a war against generally peaceful American citizens who decide to buy, sell or ingest drugs that are somewhat arbitrarily considered to be illegal by government officials, e.g. cannabis sativa, an annual, dioecious flowering herb that grows naturally all over the world.

Markets in Everything: Bypass Burgers

The Heart Attack Grill website.

Lazy Summers, Short Days, Fewer Weeks in School

THE ECONOMIST -- American children also have one of the shortest school days, six-and-a-half hours, adding up to 32 hours a week. By contrast, the school week is 37 hours in Luxembourg, 44 in Belgium, 53 in Denmark and 60 in Sweden (see chart above). On top of that, American children do only about an hour’s-worth of homework a day, a figure that stuns the Japanese and Chinese.

American children have it easier than most other children in the world, including the supposedly lazy Europeans. They have one of the shortest school years anywhere, a mere 180 days compared with an average of 195 for OECD countries and more than 200 for East Asian countries. German children spend 20 more days in school than American ones, and South Koreans over a month more. Over 12 years, a 15-day deficit means American children lose out on 180 days of school, equivalent to an entire year.

Americans also divide up their school time oddly. They cram the school day into the morning and early afternoon, and close their schools for three months in the summer. The country that tut-tuts at Europe’s mega-holidays thinks nothing of giving its children such a lazy summer. But the long summer vacation acts like a mental eraser, with the average child reportedly forgetting about a month’s-worth of instruction in many subjects and almost three times that in mathematics.

The understretch is also leaving American children ill-equipped to compete. They usually perform poorly in international educational tests, coming behind Asian countries that spend less on education but work their children harder. California’s state universities have to send over a third of their entering class to take remedial courses in English and maths. At least a third of successful PhD students come from abroad.