Tuesday, August 04, 2009

Real Estate Rebound: REITs Roar Back to 9 Mo. High

After falling more than 700 points from a level of 1058.79 last September to 345.82 points in early March (see graph above), the MSCI U.S. REIT Index (real estate investment trusts) has rebounded by almost 82% and closed today at 628.38, the highest close in more than 9 months (since early November).

HT: The Kudlow Report

See Forbes article on REITs here.

Cash For Clunkers Might Actually Increase Fuel Consumption and Damage the Environment

Official statement from the Alliance of Automobile Manufacturers"

And while the Cash for Clunkers program has provided much needed economic stimulus to the auto industry, it has also yielded significant energy security and environmental benefits.

Amongst Alliance members Ford reports a 9 MPG increase from trade-in vehicle to new vehicle purchase; GM reports a 54% increase in small car sales since the CARS program was launched; 57%of Mazdas sold so far under the program were highly fuel-efficient Mazda 3’s; Toyota’s top two CARS models – Corolla and Prius – average 39.5 MPG, and accounted for nearly 40% of Toyota’s CARS sales mix. About 70% of their trade-ins have been vans, trucks and SUVs; and Volkswagen reports over 60% of its CARS sales are clean diesel Jetta TDI's which get an EPA combined 34 MPGs.

NHTSA estimates that the average fuel economy improvement for transactions under the CARS program is 9.6 MPG. This amounts to an annual fuel savings of 58 million gallons of gasoline or an average gasoline savings of $580 a year for each new vehicle owner. That equates to an approximate 575,000 ton reduction in carbon dioxide emissions greatly enhancing energy security and reducing greenhouse gases.

MP: There's a major problem with some of the figures quoted above: The fuel savings and environmental benefits are based on a false, STATIC analysis, and NOT a more realistic DYNAMIC analysis. In other words, the fuel savings and emissions reductions are based on the false assumption that there will be NO change in driving behavior when a driver's fuel efficiency improves significantly.

Based on more realistic assumptions (e.g. the Law of Demand), we can expect that increased fuel efficiency will result in an INCREASE in driving. Therefore, the overall net effect on fuel consumption and environmental improvements would be uncertain. That is, if fuel efficiency improves by 20% due to a Cash for Clunkers trade-in, but the driver increases miles driven by 25% because of increased miles-per-gallon (and because he/she is driving a brand new car), he or she would INCREASE spending on fuel, not decrease it. Likewise, there would be an increase in emissions from the increased driving, not a decrease in emissions.

For example, the chart above shows the relationship between fuel efficiency (miles-per-gallon) and vehicle-miles traveled per household from 1983 to 2001, using data (here and here) from the Energy Information Administration. As fuel efficiency increased by 20.4% from 14.2 m.p.g. in 1983 to 17.1 m.p.g. in 2001, the vehicle-miles traveled per household increased by 37.5% over the same period, from 16,800 miles to 23,100. Result? Overall spending on fuel INCREASED. There would certainly be other important factors (fuel costs, disposable income, etc.), but we can be fairly certain that increases in fuel efficiency would contribute to MORE driving, not LESS (or the same).

See Jeff Jacoby's related April 2009 article The Fuel-Efficiency Paradox, where he writes:

Improvements in fuel economy effectively make fuel less expensive, and when costs fall, demand tends to rise. As driving has grown cheaper in recent decades, people have done more of it - choosing to drive to work instead of taking the bus, for example, or buying a second car, or moving to a house with a longer commute, or sending the kids to college with cars of their own. Between 1983 and 2001, data from the Energy Information Administration show, the number of annual vehicle-miles driven by the average American household rose from 16,800 vehicle-miles to more than 23,000 (see chart above).

(Thanks to Dallas Walton for the idea to write this post.)

Update: Worse, cash for clunkers might cause more driving, since new cars are more fun to drive, and more fuel-efficient cars are less costly to operate. Plus, it takes energy to scrap old vehicles and produce new ones, so the net effect of the program might even increase the use of fossil fuel.

~Harvard professor Jeffrey Miron, writing for CNN.

U.K. Patients Forced to Live in Agony

UK TELEGRAPH -- The Government's drug rationing watchdog says "therapeutic" injections of steroids, such as cortisone, which are used to reduce inflammation, should no longer be offered to patients suffering from persistent lower back pain when the cause is not known. Instead the National Institute of Health and Clinical Excellence (NICE) is ordering doctors to offer patients remedies like acupuncture and osteopathy.

Specialists fear tens of thousands of people, mainly the elderly and frail, will be left to suffer excruciating levels of pain or pay as much as £500 ($835) each for private treatment. The NHS currently issues more than 60,000 treatments of steroid injections every year. NICE said in its guidance it wants to cut this to just 3,000 treatments a year, a move which would save the NHS £33 ($55) million.


MP: Another example of the significant rationing that always results from government health care.

Pending Home Sales Increase 5 Months in a Row

WASHINGTON (AP) -- Pending U.S. home sales rose in June for the fifth straight month, another encouraging sign of life for the embattled U.S. housing market, the National Association of Realtors reported Tuesday. For June, the Realtors group said its pending home sales index rose 3.6% to 94.6, from an upwardly revised reading of 91.3 in May, and the index is 6.7% percent above June 2008 when it was 88.7. The last time there were five consecutive monthly gains was July 2003. The results were far better than analysts expected. Economists surveyed by Thomson Reuters expected the index to come in at 91.2.
“It appears home sales are on a sounder footing and inventory is gradually being absorbed,” said Lawrence Yun, the Realtors group's chief economist.

Covering Risks vs. Distributing Largesse

Politicians are already one of the main reasons why medical insurance is so expensive. Insurance is designed to cover risks but politicians are in the business of distributing largesse, especially with somebody else's money. Nothing is easier for politicians than to mandate things that insurance companies must cover, without the slightest regard for how such additional coverage will raise the cost of insurance.

If insurance covered only those things that most people are most concerned about-- the high cost of a major medical expense-- the price would be much lower than it is today, with politicians piling on mandate after mandate.

~Thomas Sowell

Monday, August 03, 2009

"Progressive" White Elites and Organized Labor Are Keeping Poor, Blacks "Locked Up On the Plantation"

If there’s ever an illustration of how “progressive” elites and organized labor are keeping the very people they supposedly care about locked up on the plantation, it’s their consuming opposition to a new Wal-Mart store on the South Side (of Chicago).

The impoverished, unemployed, blacks, seniors, teens—they’ve all been getting a good frigging by the organized campaign by white liberals and powerful unions to block the construction of only the city’s second Wal-Mart, at 83rd Street and Stewart Avenue.

The rousing success of the city’s first Wal-Mart at 4650 W North Ave. providing jobs and shopping for a West Side neighborhood in great need of them hasn’t dissuaded the elites in the least from blocking something that people want and need. More evidence of progressive, white elitism behind the opposition is provided by a new survey conducted for the retailer that found that 76.7% of the 75,347 city residents surveyed want the new store.

Progressives will portray themselves as guardians of those pleading for the Wal-Mart. Progressives say they are only are trying to “protect” those poor people from low wages, insufficient benefits and part-time work. Progressives have decided that for “those people” no jobs are better than jobs that they want and need. Progressives will cite their opposition to Wal-Mart as evidence of their compassion and, well, progressiveness.

It’s all too condescending and patronizing. It all sounds too much like racists who once said they know what’s “best for our colored.” It’s beyond shameful.

From "
Progressives Declare -No Jobs- are Good Enough For South-Side Residents" in the Chicago Daily Observer

John Stossel's 20/20 Special on Health Care

Most or All of The Pay Gap Disappears After Controlling for Marriage and Having Children

The Department of Labor recently released its annual study Highlights of Women’s Earnings in 2008 (HT: Christina Sommers) and opens the report with the following statement:

In 2008, women who were full-time wage and salary workers had median weekly earnings of $638, or about 80% of the $798 median for their male counterparts. In 1979, the first year for which comparable earnings data are available, women earned about 62% as much as men. After a gradual rise in the 1980s and 1990s, the women’s-to-men’s earnings ratio peaked at 81% in 2005 and 2006.

MP: Doesn't the BLS' use of the term "male counterparts" (Webster definition: "one remarkably similar to another") imply an "apples to apples" comparison between male and females workers, as if all relevant explanatory factors have been controlled for, i.e. the ceteris paribus condition has been imposed?

For example, buried in the BLS report are these two interesting facts:

1. In Table 1, it is reported that for those workers who have never been married, women make 94.2% of their "male counterparts."

2. In Table 8, it is reported that for single workers with no children under 18 years old (marital status includes never married, divorced, separated and widowed), women make 95.6% of their "male counterparts."

In these two examples, I would argue that the term "male counterparts" is much more valid than the BLS' use of the term in the opening statement of its report when it is referring to all workers.

Since marriage and having children affect male and female earnings differently, men and women workers can't really be considered "counterparts" in a statistical sense, and any unadjusted comparisons would be comparing apples to oranges. In fact, some research has concluded that the factors of age, marriage and motherhood explain all of the male-female pay gap.

For example, in a 2005 NBER working paper "What Do Wage Differentials Tell Us about Labor Market Discrimination?" by June O'Neill (Professor of economics at Baruch College CUNY, and former Director of the Congressional Budget Office), she conducts an empirical investigation using Census data and concludes that:

"There is no gender gap in wages among men and women with similar family roles. Comparing the wage gap between women and men ages 35-43 who have never married and never had a child, we find a small observed gap in favor of women, which becomes insignificant after accounting for differences in skills and job and workplace characteristics.

This observation is an important one because it suggests that the factors underlying the gender gap in pay primarily reflect choices made by men and women given their different societal roles, rather than labor market discrimination against women due to their sex."

Sunday, August 02, 2009

Markets In Everything: College Textbook Rental

Students frequently rent DVDs to watch in their dorm rooms, but soon they may start checking out something much heavier and pricier: textbooks.

Saying they offer an alternative to the textbook industry's bloated prices, a growing number of companies are renting new and used titles at reduced prices. Among them are Chegg, BookRenter and the Follett Higher Education Group, which will test drive a rental service at campus bookstores this fall. They join a number of colleges that have already started their own on-campus programs.

From the
Inside Higher Ed article "Rent, Read and Return"

"Markets" In Everything: Free, Virtual Education

WASHINGTON (AFP)They don't offer degrees but then they don't charge tuition either. Colleges and universities across the United States are offering free courses online on virtually every subject imaginable, including videotaped lectures by some of their most distinguished professors.

HT: Philip Miller

U.S. Home Construction Stocks Rebound

The chart above (click to enlarge) shows returns over the last six months for the iShares Dow Jones US Home Construction Index (ITB) vs. the Dow Jones Industrial Average (source). Compared to the overall market return (DJIA) of about 15% over the last six months, the Dow Jones US Home Construction ETF (holdings include Pulte Homes, Toll Brothers, KB Home and other home builder companies) is up by 40%. Home construction stocks are showing positive signs of recovery, with returns over the last six months more than twice the overall market return.

Incentives Matter. Or Not?

Don Boudreaux argues below that if teachers don't respond positively to monetary incentives (merit pay), then they likewise shouldn't respond negatively to pay cuts, and we can therefore save millions and billions of dollars by cutting teachers' salaries?

If teachers do not respond positively to the prospect of higher monetary rewards, they are unlikely to respond negatively to the prospect of lower monetary rewards. Alternatively, if the problem with merit pay is that measuring teacher performance is simply too difficult, then we can conclude that Fairfax teachers now are as likely to be doing a truly lousy job at educating children as they are to be doing an excellent job at this task. (Indeed, if performance can’t be monitored, then chances are the teachers are doing a lousy job. After all, why put forth effort if worthwhile results of your effort – or lack thereof – are undetectable?)

Either way, cutting teachers’ pay is unlikely to reduce the quality of education supplied in the County schools. If teachers aren’t motivated by money, then they’ll work just as diligently at lower pay as they will at higher pay; if cutting pay will, in fact, cause some teachers to quit, their replacements are likely to perform no worse than them.

Saturday, August 01, 2009

It's a New Bull Market, Here And Around the World; Free Market Capitalism Still Best Path to Prosperity

Let’s call this what it is: A new bull market in stocks has emerged from the ashes of the financial meltdown and the deep recession that followed. And it’s signaling the onset of economic recovery. Free-market capitalism is more durable, resilient, and self-correcting than its detractors would have us believe.

But this is much more than a summer rally. It’s a new bull market heralding a new economic recovery. Free-market capitalism is trying hard to push back against Obama’s central-planning. The bears will lose this round.

~From Larry Kudlow's latest column "It’s a New Bull Market"

MP: And the "new bull market heralding a new economic recovery" isn't only happening in the U.S., we've got a major worldwide bull market and economic recovery taking place. For example, see the chart above of the MSCI World Stock Market Index, which closed yesterday at 1,044.75 points, and is now approaching a 10-month high, and is up more than 50% from the March lows.

And look at the chart below of the MSCI Emerging Markets Index which illustrates the roaring bull market in economies around the world like India (+66.2% YTD), China (+47.6%), Russia (+55%), Brazil (+68%), Turkey (+59%), Taiwan (+47%), etc. As a group, the emerging markets are 78% above the March lows, and the MSCI Emerging Markets Index is at the highest level in more than 10 months, and up by more than 47% year-to-date.

Welcome to the World Bull Market and Global Economic Recovery of 2009!

Friday, July 31, 2009

Best July Gain (8.6%) for DJIA Since 1989

NEW YORK (AP) -- New hope for the economy just gave the stock market its best July in 20 years. The Dow surged 725 points or 8.6% for the month, with most of the gains arriving in bursts in the final 15 days. The extraordinary run shaped July into the best month for the blue chips since October 2002 and the best July since 1989 (see chart above). The Dow has risen four of the past five months.

Markets in Everything: Robot Delivery of Packages, Groceries, Documents Through The Sewer System

It’s 2020, and cities are so overcrowded that it’s impossible to deliver packages. UPS trucks have nowhere to double-park, and obnoxious bike messengers can’t even ride on pedestrian-jammed sidewalks. How, then, can important parcels reach their destinations in a squalid megalopolis of the future? Through the sewers, of course.


Quotes of the Day for Milton Friedman's Birthday

There's no such thing as a free lunch.
~Milton Friedman

Free cheese is only found in mousetraps.
~Russian proverb (HT: Boris)

Housing Affordability Falls Two Months, Suggesting That Real Estate Market is in Recovery

The National Association of Realtors reported that the Housing Affordability Index (HAI) fell to 159.2 in June from 169.8 in May, due to a 4% increase in the median price for existing single-family homes ($174,600 to $181,600) and an increase in mortgage rates from 4.95% in May to 5.16% in June. Compared to the peak housing affordability of 178.8 in April, the June HAI is almost 20 points lower, but is still 35 points above the average of 124.3 (since 1989).

As the housing market recovers, we can expect gradually rising home prices, which will gradually lower housing affordability. In fact, the falling HAI over the last two months is a sign of a real estate market recovery.

Bottom Line: It's still the case that there has probably never been a better time to buy a house than right now, due to the combination of low home prices and low mortgage rates. And throw in a $8,000 tax credit for first-time home buyers, and it makes today's real estate market look even better.

Happy Birthday Milton Friedman, Watch Him Destroy Phil Donahue on Greed and Capitalism

Thirty years ago, in 1979, Milton Friedman—the Nobel Prize-winning economist and Britannica contributor who was born this day in 1912—famously “schooled” talk-show host Phil Donahue on the nature of greed and the virtues of capitalism.

HT: Britannica Blog

Consumer Sovereignty: Russia Edition

MOSCOW Aeroflot’s symbol is still the winged hammer and sickle, but otherwise, the former communist carrier has mostly shrugged off its Soviet past. The strongest evidence yet: by the end of the year, it will fly a fleet nearly entirely made in the U.S.A. and Western Europe.

That Aeroflot will fly almost exclusively Boeing and Airbus jets is a remarkable turn for a company that once owned virtually every civilian airplane in the Soviet Union. But the airline has tried to reinvent itself as a business carrier, and its passengers tend to prefer Western airplanes.

HT: Greg Allar

Thursday, July 30, 2009

The Myth of America's "Free Market" Health Care: It's Free Market The Same Way Madonna is A Virgin

Both ObamaCare's supporters and opponents believe that--unlike Europe--America has something called a free market health care system. So long as this myth holds sway, it will be exceedingly difficult to prescribe free market fixes to America's health care woes--or, conversely, end the lure of big government remedies.

The fact of the matter is that America's health care system is like a free market in the same way that Madonna is like a virgin--i.e. in fiction only. If anything, the U.S. system has many more similarities than differences with France and Germany. The only big outlier among European nations is England, which, even in a post-communist world, has managed the impressive feat of hanging on to a socialized, single-payer model. This means that the U.K. government doesn't just pays for medical services but actually owns and operates the hospitals that provide them. English doctors are government employees!

But apart from England, most European countries have a public-private blend, not unlike what we have in the U.S.

The major difference between America and Europe of course is that America does not guarantee universal health insurance whereas Europe does. But this is not as big a deal as it might seem. Uncle Sam, along with state governments, still picks up nearly half of the country's $2.5 trillion annual health care tab.

More importantly, contrary to popular mythology, America does offer public care of sorts. It directly covers about a third of all Americans through Medicare (the public program for the elderly) and Medicaid (the public program for the poor). But it also indirectly covers the uninsured by--at least in part--paying for their emergency care. In effect, anyone in America who does not have private insurance is on the government dole in one way or another.

~"The Myth of Free Market Healthcare in America," Shikha Dalmia

Cowardly Chicago City Council Punts on Wal-Mart

Chicago Sun-Times editorial.

The Problems With Free Healthcare Provided by Government-Run Healthcare Monopolies

The more money that has been spent on government-run healthcare, the less healthcare we have gotten. This kind of result is generally true of all government bureaucracies because of the absence of any market feedback mechanism. Since there are no profits in an accounting sense, by definition, in government, there is no mechanism for rewarding good performance and penalizing bad performance. In fact, in all government enterprises, exactly the opposite is true: bad performance (failure to achieve ostensible goals, or satisfy "customers") is typically rewarded with larger budgets. Failure to educate children leads to more money for government schools. Failure to reduce poverty leads to larger budgets for welfare state bureaucracies. This is guaranteed to happen with healthcare socialism as well.

All government-run healthcare monopolies, whether they are in Canada, the UK, or Cuba, experience an explosion of both cost and demand — since healthcare is "free." Socialized healthcare is not really free, of course; the true cost is merely hidden, since it is paid for by taxes. Costs always explode whenever the government gets involved, and governments always lie about it.

~Economist Tom DiLorenzo

Tyler Cowen: Web and Info Economy Protect Us Against Tyranny, Are Bulwarks of Our Freedom

Tyler Cowen, one of the country's foremost defenders of free markets and international exchange, sees his new book "Create Your Own Economy: The Path to Prosperity in a Disordered World" as an ode to the power of the individual, "and how we can all create our own liberties essentially by using the web and the information economy to create streams of meaning." In the interview, he talks about how society is becoming more autistic ("this is a good thing!"), how everyday people can be happier than Bill Gates, and why he's fearful of Barack Obama's economics. "On fiscal policy," he warns, "we are absolutely heading off a cliff."

Also, Tyler discusses how the largely-unregulated Web and the New Information economy are protections against tyranny and are bulwarks of our freedom, and should be appreciated as such.

Cuban Blogger Yoani Sanchez Gets Citation for Journalistic Excellence from Columbia University

Columbia University Graduate School of Journalism Announces Winners of 2009
Maria Moors Cabot Prize for Outstanding Reporting
on Latin America and the Caribbean

Yoani Sánchez is an ordinary Cuban citizen using the Internet with extraordinary power. In barely two years, her weekly blog, Generación Y, has put the rest of the world in touch with Cuba — at least digitally. Generación Y does not repeat the battle of words which Cuba and the U.S. have hurled back and forth for five decades. Instead, it is a pitch-perfect mix of personal observation and tough analysis, which conveys better than anybody else what daily life — with all its frustrations and hopes — is like for Cubans living their lives on the island today.

Sánchez, a 34-year-old philologist, pursues her craft with ingenuity, scarce resources and an enormous amount of guts — buying a few minutes here and there on one of the few internet-connected computers available to Cubans in Havana, quickly downloading and emailing her written and video comments to devoted supporters who post the blog in 15 languages. She has a loyal following of thousands around the world. For her courage, talent and great achievement in such a brief period of time, the Maria Moors Cabot board is proud to award Yoani Sánchez a special citation for journalistic excellence.

See previous CD posts about Yoani Sanchez and her blog here, here, here and here.

Jobless Claims (4-Wk. Avg.) Fall to 6-Month Low

WASHINGTON -- The number of U.S. workers filing new claims for state jobless benefits rose last week, but they remain below peak levels reached in the spring.

Initial claims for jobless benefits rose by 25,000 to 584,000 on a seasonally adjusted basis in the week ended July 25, the
Labor Department said in its weekly report Thursday. The four-week average of new claims, which aims to smooth volatility in the data, fell by 8,250 to 559,000, the lowest level since January 24 (see chart above).

The tally of continuing claims -- those drawn by workers for more than one week -- fell by 54,000 during the week ended July 18 to 6,197,000 the lowest level since April 11.

Wednesday, July 29, 2009

Just One Corporation, Exxon Mobil, Paid Almost As Much in Income Taxes in 2007 As The Bottom 50%

According to IRS tax data just released, the bottom 50% of taxpayers paid $32.26 billion in income taxes in 2007, and the size of that group is 70.53 million U.S. taxpayers. In the same year, just one American corporation, Exxon Mobil, paid $29.86 billion in income taxes to various governments (updated), or almost as much as more than 70 million Americans paid in U.S. income taxes (see chart above).

Top 1% Now Pays More in Tax Than Bottom 95%

TAX POLICY BLOG -- Newly released data from the IRS clearly debunks the conventional Beltway rhetoric that the "rich" are not paying their fair share of taxes and disproportionately benefited from the Bush tax cuts.

Indeed, the IRS data shows that in 2007—the most recent data available—the top 1% of taxpayers paid 40.4% of the total income taxes collected by the federal government. This is the highest percentage in modern history. By contrast, the top 1% paid 24.8% of the income tax burden in 1987, the year following the 1986 tax reform act (see chart above).

Remarkably, the share of the tax burden borne by the top 1% now exceeds the share paid by the bottom 95% of taxpayers combined. In 2007, the bottom 95% paid 39.4% of the income tax burden. This is down from the 58% of the total income tax burden they paid twenty years ago.

To put this in perspective, the top 1% is comprised of just 1.4 million taxpayers and they pay a larger share of the income tax burden now than the bottom 134 million taxpayers combined.
Some in Washington say the tax system is still not progressive enough. However, the recent IRS data bolsters the findings of an OECD study released last year showing that the U.S.—not France or Sweden—has the most progressive income tax system among OECD nations. We rely more heavily on the top 10% of taxpayers than does any nation and our poor people have the lowest tax burden of those in any nation.

We are definitely overdue for some honesty in the debate over the progressivity of the nation's tax burden before lawmakers enact any new taxes to pay for expanded health care.

Key to Healthcare Reform: Lively Competition, Not The Dead Hand of Government Compulsion

Jeff Jacoby writes in today's Boston Globe:

Imagine the sort of car you’d drive if government regulations made it illegal to sell any automobile that didn’t feature 380-horsepower direct-injection V6 engines, computer-controlled electric power steering, eight-speed automatic transmission, four-wheel-drive, automatic climate control, “smart key’’ technology, touch-screen navigation, backup cameras, LED headlights, acoustic glass, surround-sound stereo, and leather seat stitching.

If those were the minimum requirements every car had to meet before it could be sold, would you commute to and from work every day in a Lexus LS 460 or some other luxury vehicle? Well, you might, if the steep price wasn’t an obstacle. But it’s more likely you wouldn’t be driving at all. If the government barred you from buying anything but a high-end car, you’d probably have no choice but to rely on the bus or subway, or to find a job closer to home.

What is true of transportation is true of everything else: Increase the number of amenities that a product or service must include, and more consumers will be unable to pay for that product or service. That is why one of the simplest strategies for making health insurance more affordable is to reduce the minimum number of benefits that insurers are required to cover.

In every state in the union, legislators and regulators drive up the cost of healthcare by making insurance policies more comprehensive. Rather than allow the free market to determine which medical services health plans will cover, states force consumers to pay for an array of covered benefits they may not need or want.

The key to healthcare reform is lively competition, not the dead hand of government compulsion. Legislators, take note: Enacting new mandates won’t make medical insurance more affordable. Repealing old ones just might.

MP: It's a basic law of economics (Perry's Law) that market competition breeds competence (and lower prices) and government restrictions on competition and market forces breed incompetence (and higher prices). If we want affordable health care, we should encourage more competition, not less; and less government intervention, not more.

Boston:166 Women Per 100 Men in 4-Year Colleges

NORTHEASTERN UNIVERSITY -- New findings by Northeastern’s Center for Labor Market Studies show that while more city high school graduates are enrolling in two- and four-year colleges, females are outpacing males in the successful completion of high school and enrollment in college.

The research paper, prepared by the Center’s director Andrew Sum found that while college attendance overall was increasing—78% of the city’s 3,300 high school 2007 grads enrolled in college, up 9% over the class of 2000—the gender gap is also widening.

While both male and females enrolled in college at high rates, there were many more women attending college than men—153 women per 100 men—and among four-year college students, the gender gap was even larger, with 166 women per 100 men, according to the study (see chart above).

MP: Note that the gender gap is especially large for blacks (191 females per 100 men in four-year college) and Hispanics (175 women per 100 men).

The Little Clinic Also Offers $29 Physicals

It's not just Target that is offering $29 sports, school and camp physicals, competition is a wonderful thing and "The Little Clinic" is also offering $29 physicals at its retail clinics in nine states, mostly in Kroger and Publix grocery stores.

HT: Brad S.

More on Cash for Clunkers and Clunky Paperwork

Car dealers reported problems with the government's online system to get the transactions approved by the National Highway Traffic Safety Administration, which is running the program.

Scott Lambert, vice president of the Minnesota Auto Dealers Association, said he was "astounded" to learn at a meeting Tuesday representing about 150 Minnesota dealers that not one has had a deal approved. "We had dealers representing 1,500 to 2,000 transactions," he said. "We asked how many had a deal approved yet, and not one hand went up."

Lambert said the government has created a program that's "so big and cumbersome that it can't find a way to accept anything. We're sending in good, reliable deals." It's nerve-racking for the dealers, he said, because they have given the customer $4,500 and now the dealers need to be reimbursed.

The program took effect July 1, but traffic at dealerships is up now because dealers had been reluctant to participate until the rules were published, which happened Friday. The program expires once the $1 billion is gone or Nov. 1, whichever comes first, prompting many to take advantage early.

~From today's Twin Cities Star Tribune

See related CD post here.

UK's Gov't. Health Care Has Pauperized Its Citizens

Not coincidentally, the U.K. is by far the most unpleasant country in which to be ill in the Western world. Even Greeks living in Britain return home for medical treatment if they are physically able to do so.

The government-run health-care system—which in the U.K. is believed to be the necessary institutional corollary to an inalienable right to health care—has pauperized the entire population. This is not to say that in every last case the treatment is bad: A pauper may be well or badly treated, according to the inclination, temperament and abilities of those providing the treatment. But a pauper must accept what he is given.

There is no right to health care—any more than there is a right to chicken Kiev every second Thursday of the month.

~A British physician writing in today's Wall Street Journal

If You Can Afford The Monthly Payments for A Cell Phone, You Can Probably Afford Health Insurance

Need insurance now? Insta-Care from BlueCross BlueShield Minnesota meets your needs.

Short-term coverage from Blue Cross can be a great choice for people like this:

  • Between jobs
  • Just out of school
  • Waiting for an employer’s coverage to start
  • Want coverage that can start right away

Benefit highlights:

  • Hospital services, prescription drugs, medical supplies, emergency care and more covered at 80 percent (in network)
  • See the doctors you choose – without a referral
  • Well-child doctor visits to age 6 covered at 100% (whether or not you’ve met your deductible)
  • 3 deductible and 3 out-of-pocket maximum options to meet your budget
  • $1 million lifetime maximum
  • Extras including Stop-Smoking Support and online wellness center, plus Health Guides and
  • Nurse Guides just a phone call away
  • No coverage for mental health or any preexisting conditions

Coverage starts at $44.67 per month.

Tuesday, July 28, 2009

Cash for Clunkers: 136 Pages of Rules and Regs; How Many Pages for Government Health Care?

Webwire -- The United States Government has recently released the “Cash For Clunkers” program, 2009. There has been some confusion as to how to go about claiming the $4,500 check. First of all, there is no “$4,500 check,” at least not one the public will ever see. The entire transaction must be done at the dealership, and if the transaction qualifies, the dealership will receive the sum direct from the government.

How does the dealer know if the transaction qualifies? The government rules, requirements and procedures are outlined in this 136-page government document, whose title is enough to make your head spin:

National Highway Traffic Safety Administration
49 CFR Parts 512 and 599
[ Docket No. NHTSA-2009-0120 ]
RIN 2127-AK53
Requirements and Procedures for Consumer Assistance to Recycle and Save Program

Here's an excerpt of just one part of one of the 136 pages:

As set forth in section 599.200(c), dealers that have been contacted by mail by the agency and that wish to participate must register to do so electronically, using the authorization code and following the instructions provided in the mailing, and fill out an electronic screen providing, among other things, name and contact information and bank account and routing data for receiving payment under the program. The agency will review this information to ensure completeness, and verify that the dealer has a still active franchise agreement (based on the continuously updated list provided by OEMs).

Section 599.200(d) sets forth the procedures for approving and disapproving registration applications. Section 599.200(d)(1) provides that, where an application for registration is approved, the agency will notify the dealer of approval by email, providing a user identification and password with which to conduct transactions, and add the dealer to the list of registered dealers on its website at http://www.cars.gov. Consumers may consult this list to identify registered dealers in their locality. Section 599.200(d)(2) provides that, where an application for registration is rejected, the agency will notify the dealer by email, and provide the reasons for rejection. The agency anticipates that, unless rejected, confirmation of registration and addition to the list should occur within 2 to 4 business days after a dealer submits the required information.

Section 599.200(e)(1) provides that the agency may automatically revoke a registration as a matter of course for termination or discontinuance of a franchise but the dealer’s registration may be reinstated upon a dealer’s showing of proper and adequate license to sell new vehicles to ultimate purchasers. Section 599.200(e)(2) states that the agency may suspend or revoke a dealer’s registration under the procedures in Section 599.504. Section 599.200(f) requires a registered dealer to immediately notify the agency of any change in the registration information it submitted or any change in the status of its State license or franchise. Finally, section 599.200(g) accommodates transactions that occurred after July 1, 2009, but prior to the publication of today’s final rule, by permitting registration after a qualifying sale or lease transaction has occurred.

MP: If there are 136 pages of mind-numbing government regulations for a $4,500 car rebate, can you imagine how many pages of regulations will be required for a government-managed health care system?

Just What the Doctor Ordered, Antidote to Gov't. Healthcare: $29 Physicals at Target Superstores

I just visited the health clinic at the Richfield (MN) Super Target (one of 22 Super Targets in the Twin Cities with convenient, walk-in, affordable health clinics) and took the picture above featuring "camp and sports physicals" for only $29, no appointment necessary. While I was there there was nobody waiting, so it would have been possible to just walk in and get immediate service from a highly-trained, licensed nurse practitioner or physician assistant. Target clinics are open 7 days a week, and operate from 9 a.m. to 8 p.m. Monday-Friday and 9 a.m. to 4 p.m. Saturday-Sunday (total of 69 hours per week).

So while President Obama and politicians in Washington dream up the latest grandiose government health care reform to address rising healthcare costs, the most effective, affordable and convenient healthcare solutions might be right around the corner at your local Target store. And through September 30, you can get a sports or camp physical for only $29.

See a list of services and fees below for Target Clinics (click to enlarge):

Q: In places like Canada and UK with government health care, would this type of affordable, convenient, walk-in, free-market alternative even be allowed?

Brain Drain Sabotages Venezuela's Future

When they first elected him in 1998, Venezuelans hoped that Hugo Chávez would be a healer. Instead what they got was a tyrant who seizes private companies and farms, crushes labor unions, and harasses political opponents. And now after a decade of the so-called Bolivarian revolution, tens of thousands of disillusioned Venezuelan professionals have had enough. Artists, lawyers, physicians, managers, and engineers are leaving the country in droves. An estimated 1 million Venezuelans have moved away since Chávez took power, and a study by the Latin American Economic System, an intergovernmental research institute, reports that the outflow of highly skilled labor from Venezuela to Organization for Economic Cooperation and Development countries rose 216 percent between 1990 and 2007.

The exodus is sabotaging the country’s future.....

Read more here of the Newsweek article "Venezuela’s Brain Drain"


Gas Wars Are Back

(Granite Falls, NC) -- Lines of vehicles stretched out onto the shoulder of US 321 in Caldwell County as the most recent chapter of the Catawba Valley gas wars was launched yesterday.

The Wilco Hess station at US 321 and Pinewood Road displayed a low $2.129 price for regular gas early Friday morning, that by 5-cents the lowest seen in the immediate area. Then by late in the afternoon, even though no other area station matched that price, the station lowered the price for unleaded regular to $2.069, and the lines formed. The station taped off access from Pinewood, leaving one way in and out of the station from US 321, but most gas bargain seekers managed to maneuver through the instant vehicle maze.

HT: Environmental Economics

Recession Is Over in Richmond Fed Region

RICHMOND FED -- In July, the seasonally adjusted manufacturing index — our broadest measure of manufacturing activity — jumped to 14 from June's reading of 6 (see chart above, click to enlarge). Among the index's components, shipments leaped 14 points to 16, new orders rose eight points to finish at 24, and the jobs index edged up one point to end at −5.

Other indicators also suggested mostly stronger activity. The orders backlogs index eased four points to 4, while the measure for delivery times edged up two points to 2. The capacity utilization index doubled, adding seven points to 14, while our gauges for inventories grew at a considerably slower pace. The finished goods inventory index retreated 14 points to 26, and the raw materials inventory index moved down 10 points to 8.

MP: The Richmond Fed Manufacturing Index has increased for five straight months (March-July), the first five-consecutive monthly increase in the index's history (back to 1994). Further, the Manufacturing Index has increased by 69 points from the December 2008 low reading of -55 to 14 points in July, suggesting that the recession has ended in the Richmond Fed region (MD, VA, WV, NC, SC and DC).

Intrade Odds for Positive Q3 GDP Growth: 73%

From only 25% in early March, the Intrade odds for positive U.S. real GDP growth in the third quarter 2009 is now at 73% (see chart above, click to enlarge).

Monday, July 27, 2009

CA Real Estate Recovery: 10th Consecutive Month of Sales Gains, Fourth Month of Rising Prices

LOS ANGELES (July 27) -- June home sales increased 20.1% in California compared with the same period a year ago, while the median price of an existing home declined 26.4%, the California Association of Realtors (C.A.R.) reported today.

“Many first-time buyers, especially those who were previously priced out of certain areas, are realizing that tax credits from both the state and federal governments, increased affordability, and low interest rates are creating a prime time to purchase a home,” said C.A.R. President James Liptak. “June marked the 10th consecutive month of positive sales gains, and the fourth month of rising median home prices (MP: both compared to the previous month)."

Other highlights of the June report include:

  • Sales have increased year-over-year for 15 consecutive months (my calcuation).
  • C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in June 2009 was 4.1 months, compared with 7.6 months for the same period a year ago (see chart below). The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

  • The median number of days it took to sell a single-family home was 44.3 days in June 2009, compared with 49 days (revised) for the same period a year ago.

MP: Rising median prices for the last four months + increasing sales for the last ten months compared to the previous month + year-over-year sales increases for the last 15 months + falling inventory levels + faster selling time compared to a year ago = California real estate recovery.

Paul Krugman Could Not Have Predicted Ebay

Paul Krugman: The standard competitive market model just doesn’t work for health care: adverse selection and moral hazard are so central to the enterprise that nobody, nobody expects free-market principles to be enough.

Hodak Value: Whenever I see such nonsense, I have to keep reminding myself that the trade theories for which Krugman won his Nobel Prize were explanatory and predictive. Krugman did not win a prize for mechanism design; he could not have predicted E-bay.

The idea of people bidding for stuff they can’t really see from people that they’ve never met is fraught with asymmetrical information. Honest sellers could not hope to compete with liars selling competitive products. Honest bidders could not hope to compete with fraudulent bids that may not be honored. Such a market, failing as it does the test of a “standard competitive market model” could never exist.

Except that it does.

E-bay exists because they managed to attach a credibility mechanism to their bidding process. This mechanism rewards people for neither understating nor overstating the qualities of the items they have put up for bid. It encourages honest bidding.

HT: Marc'n'NY

New Home Sales Increase Three Months in a Row For the FIrst Time in Five Years

Wall Street Journal -- New-home sales soared in June from the previous month, the third increase in a row and supplying fresh evidence the housing market is beginning to recover from its long crisis. Sales of single-family homes increased by 11.0% to a seasonally adjusted annual rate of 384,000 compared to the prior month, the Commerce Department said Monday.

The increase was the fourth in five months, as buyers take advantage of falling prices. It appears new-home sales reached a bottom in January, at a level of 329,000, and that the market is beginning to recover slowly. The level of 384,000 in June was the highest since 390,000 last November.

MP: The three consecutive monthly increases in new home sales for April, May, and June of this year was the first time since the summer of 2004 that new home sales increased three months in a row. The sales increases in four out of the last five months follows a long string of declines in 18 out the previous 21 months going back to May 2005 (see chart above, data here).

Update: The 11% June increase is the largest monthly percentage increase since the July 2000 gain of 11.85%, almost nine years ago, see First Trust Portfolio report here.

3,116 Record Low Temps Set in July

AccuWeather.COM -- 1,044 daily record low temperatures have been broken this month (July) nationwide according to NCDC -- count record "low highs" and the number increases to 2,925, surely to pass 3,000 before the end of the month.

An update through July 26th revealed the following for Records:

Record Lows (Source):New: 1,165 + Tied: 600 = Total: 1,765

Record Low Maximums (
Source):New: 1,951 + Tied: 634 = Total: 2,585


Food and Jobs in Chicago's South Side "Food Desert"? 73% of Chicago Voters Say YES

Five hundred jobs is a helluva lot better than no jobs at all. In this disastrous economy, company layoffs and plant shutdowns are as plentiful as glazed doughnuts. Meanwhile, for years the City Council has been blocking the corporate behemoth Wal-Mart from building a megastore on the old Ryerson Steel yard at 83rd Street and Stewart Avenue.

For months, the Council has held hostage an ordinance sponsored by Ald. Howard Brookins to bring a new Wal-Mart to his 21st Ward on the South Side. It may finally come up for a vote this week. Passage, however, is far from assured.

It seems that many members of that august body are terrified of labor unions like the Service Employees International Union, which charges that Wal-Mart underpays and disrespects workers. Vote for a Wal-Mart, the unions warn, and we'll run you out of office. Our jobs or no jobs, they proclaim.

No matter that the unemployment rate for metropolitan Chicago rose to 11.3% in June, the highest in 26 years, according to the Illinois Department of Employment Security. The Council doesn't care that the proposed Chatham store would employ up to 500 workers. Wal-Mart says its Chicago area stores pay an average hourly wage of $12.05 for associates.

Aldermen could give a whit that the multimillion-dollar West Side Wal-Mart store was built by an African-American female general contractor, with 57% of all the subcontracts going to women and minority-owned firms. They sneeze at the other rich bennies Wal-Mart claims it has brought to Chicago: Its West Side store generated $10 million in new tax revenues in its first two years, and 14 new minority-owned Chicago vendors have gotten their products into Chicago area stores.

Our elected representatives couldn't care less. Here's someone who might finally get their attention: Voters. Serious voters. The Chicagoland Chamber of Commerce is rolling out a new poll that may turn some aldermanic heads.

The poll, which queried registered voters in 12 wards throughout the city, was conducted by the Freeman Institute, a Chicago-based political advisory and public affairs firm that specializes in targeted polling. The survey, taken June 8-12, targeted residents with long histories of voter participation.

Question: "Should your alderman vote to approve the proposed Wal-Mart store on Chicago's South Side?" Seventy-three percent of voters polled said yes, 17 percent said no, and 10 percent had "no opinion."

~Laura Washington in today's Chicago Sun-Times

No Examples of Free Market Health Care?

Paul Krugman: There are, however, no examples of successful health care based on the principles of the free market, for one simple reason: in health care, the free market just doesn’t work.

Don Boudreaux: I can list lots of examples of successful health care based on the principles of the free market: the regular, smooth, widespread, and affordable supply of aspirin, bandages, decongestants, toothpaste, dental floss, toothbrushes, contact lenses, running shoes, and gyms. I could go on.

MP: And how about Lasik eye surgery (costs a third today of what it did 10 years ago), low-cost convenient retail health clinics (1,200 in the U.S. and growing), cosmetic surgery (stable prices despite a 6X increase in demand since early 1990s), medical tourism around the world, $10 prescription drugs at Wal-Mart for a 90-day supply of 300 different generic prescriptions, the No Insurance Club, medical savings accounts, etc.

Despite All of the Whining About How Expensive Food Is, It's Actually Never Been Cheaper

It's pretty easy to find articles in the media and in various food blogs complaining (or worse, whining) about how expensive food is these days. But the chart above tells quite a different story.

Read more here at Casual Kitchen blog.

Sunday, July 26, 2009

Markets in Everything: Black Market Kidneys

DAILY NEWS -- The international black market for kidneys — preying on the desperate and run by a shadowy network of greedy organ brokers — is flourishing, a Daily News probe found. The arrest of a Brooklyn man Thursday on organ trafficking charges sheds a new spotlight on an underground business where wretchedly poor foreigners — particularly in India — are paid $2,000 to $10,000 for kidneys.

Those kidneys are ultimately sold for as much as $180,000 to transplant recipients who otherwise could die. More than 80,000 Americans were waiting for kidney transplants as of last week, the United Network for Organ Sharing said.

The wait for a suitable legitimate donor is as long as three years, which drives many to the underground market, experts said.

HT: Johnny Hsu

MP: Per-capita GDP in India is $2,762 and $47,000 in the U.S., according to the IMF. In other words, Indians are willing to sell kidneys for up to 3.62 times their per-capita income (GDP), and Americans are willing to pay about 3.82 times their per-capita income to receive a kidney. On an income-adjusted basis, it seems like it could be a fair deal for both the Indian seller and the Amercian buyer, so what's the problem?

Crisis of a House Inflated

American Enterprise Institute's Nick Schulz interviews Thomas Sowell about his latest book, The Housing Boom and Bust:

Q: What is the greatest popular misconception about the housing boom and subsequent bust?

A: The biggest popular misconception about the housing boom and bust is that it was due to a lack of regulation. In reality, it was precisely the intervention of federal regulators that caused traditional mortgage lending standards to be reduced, leading to sales of homes to many people who either could not or would not pay for them.

One regulatory solution? I would get rid of Fannie Mae and Freddie Mac entirely. As long as these hybrid private and government enterprises exist, they will be a standing invitation to politically motivated decisions.

Monterey County Home Sales More Than Double vs. 2008; "Very, Very Busy With Lots of Buyers"

Moneterey County Herald -- Low prices and good interest rates are sparking an increase in home sales in Monterey County. "It's very, very busy. There's a lot of buyers out there," said Becky Jones, an agent at Shankle Real Estate in Monterey. Potential buyers are thinking "that maybe we've seen the bottom, or close to it."

In the first half of this year, the Monterey County Association of Realtors logged 2,279 home sales, up from 994 in the first half of 2008. The average sale price in the county was $313,000 in the first half of this year; a year ago it was $733,000.

Those numbers, agents say, are skewed by the high number of foreclosures in East Salinas. In the first half of this year, sales in East Salinas were about 20 percent of the county total; a year ago they were 5 percent.

There are also fewer homes on the market — 1,743 in June, down from 2,768 a year ago.

MP: Isn't this exactly what a real estate recovery would look like? A sizzling sales pace, lots of buyers, and falling inventory?

The Law of Unintended Consequences

4-Block World.

Economic Principle from Frederic Bastiat:

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

Saturday, July 25, 2009

Increase in Minimum Wage = Decrease in Hours

HUNTSVILLE (WATE) -- The federal minimum wage has gone up to $7.25 an hour and in a county that already has Tennessee's highest unemployment rate, a grocery store has to make some changes.

Scenic Foods sits just off of Highway 63 in Scott County. It's the kind of store where you can get a little bit of everything, including a down home feel. But owner Bruce Posey isn't exactly happy about the 70 cent minimum wage increase. "It is hard on a small business to absorb this."

Starting Monday, the 12 part time employees making minimum wage will have their hours cut. "If we don't cut hours, it could add as much as $400 to $500 per week to the pay roll," Posey explains.

As I pointed out recently, increases in the minimum wage are guaranteed to have adverse effects on employees that will NOT necessarily be reflected in increases in the teenage unemployment rate. In the case above, none of the minimum wage workers at Scenic Foods have lost their jobs because of the minimum wage hike, but they have all had their hours reduced. These workers and thousands of others like them whose hours have been cut, will still be counted as being employed by the BLS, and the teenage unemployment rate won't necessarily change.

Bottom Line: The demand curve for unskilled workers, like all other demand curves, slopes downward. At higher wages, the number of hours demanded for unskilled labor decreases. Period. Unskilled workers are harmed by increases in the minimum wage, even those who manage to keep their jobs like the employees at Scenic Foods.

Markets in Everything: NOT. U.S. Postal Service: Largest Drop in Mail Volume in 234 Years

WASHINGTON POST -- Combine the impact of new technologies with the gut punch of the recession, and in the past year alone, the Postal Service has seen the single largest drop-off in mail volume in its 234-year history, greater even than the decline from 1929 to 1933 during the Great Depression. That downward trend is only accelerating. The Postal Service projects a decline of about 10 billion pieces of mail in each of the next two years, going from a high of 213 billion pieces of mail in 2006 to 170 billion projected for 2010 (see chart above, click to enlarge).

The situation is so dire that the Postal Service, which is projecting a $6 billion shortfall by the end of September despite a recent postage rate increase, will go to Congress this month to seek emergency relief, looking to cut home mail delivery from six days a week to five. Already, the Postal Service has cut hours at hundreds of post offices across the country, including 56 of the Washington area's 386 outlets. It has consolidated routes, dropping 158 delivery routes locally, offered workers early retirement and imposed hiring and salary freezes. Still, said Postmaster General John E. Potter, the service is in "acute financial crisis."