Saturday, November 21, 2009

With HSAs, Mammogram Frequency Is A Non-Issue?

The NY Times blog has an article "The Uproar Over Mammography," which links to a WSJ op-ed "A Breast Cancer Preview: The mammogram decision is a sign of cost control to come."

In a world of consumer-driven health care that includes Health Savings Accounts (HSAs), wouldn't this "uproar" be a complete non-issue? In that world, patients spending their own money could make decisions on their own, in consultation with their physician, about the timing and frequency of their mammograms.

Think about oil changes for your car. If the manufacturer recommends oil changes every 5,000 miles, but you decide on a different frequency - say every 3,000 miles or every 10,000 - that's not a problem. Now if your car insurance covered routine oil changes, and then the government introduced "government car insurance reform" with a "public option," then the frequency of oil changes would become an issue and could lead to an "uproar."

But in a world of consumer-driven health or auto care where consumers pay for routine maintenance or health exams, there's no "uproar," since consumers make decisions on the frequency of their oil changes or mammograms, and are directly responsible for the cost.

However, there's just one small problem - Senator Harry Reid wants to "kill consumer-driven health care" with the Senate's health-care "reform" bill (which would assault HSAs), read the WSJ editorial "The End of HSAs."

Approval-Disapproval Gap Drops from 56 Points to 5

According to Gallup, the percent of Americans who approve of President Obama has dropped by 19 points from 68% in late January to 49% currently (new low). During the same period, disapproval increased from 12% to 44% (new high). Therefore, the approval-disapproval gap has shrunk from 56 points in January (68%-12%) to only 5 points now (49%-44%), a new low. Read more here.

Friday, November 20, 2009

The Power of the Blog: Obama Responds to Yoani

Committee to Protect Journalists -- Cuban blogger Yoani Sánchez was astounded this week by President Barack Obama’s decision to respond a written questionnaire Sánchez submitted to the White House. Still recovering from bruises left by a recent vicious attack by state security agents, she told CPJ from her home in Havana: “This is the best way to get better.”

The blogger said that she had tried for months to reach the U.S. president through different channels. Sánchez said she had sent written questions to Obama through a wide range of different people before the White House responded. On her blog Generación Y, where she has posted Obama’s answers to her seven questions, Sánchez explained that the questions were based on issues “that keep me from sleeping,” and were born from her personal experience.

“It was a very pleasant surprise,” Sánchez said, acknowledging that the chances that Obama would reply were minimal. Before responding to the questions, Obama thanked Sánchez for the opportunity to exchange views with her and her readers in Cuba, and congratulated her for receiving Columbia’s University Maria Moors Cabot Award for excellence in Latin American reporting.

“Your blog provides the world a unique window into the realities of daily life in Cuba,” Obama wrote. “It is telling that the Internet has provided you and other courageous Cuban bloggers with an outlet to express yourself so freely, and I applaud your collective efforts to empower fellow Cubans to express themselves through the use of technology. The government and people of the United States join all of you in looking forward to the day all Cubans can freely express themselves in public without fear and without reprisals.”

See my post today on the Enterprise Blog about Yoani Sanchez, where I conclude that:

When the history of Cuba’s freedom movement is written, it’s likely that Yoani Sanchez will be recognized as a national hero and freedom fighter, the equivalent of Lech Walesa in Poland and Vaclav Klaus in the Czech Republic. Yoani Sanchez demonstrates that we should never underestimate the power of one courageous individual with a computer, a blog, and intermittent access to the Internet, or the individual’s power to change the world in the Information Age, especially with a message of freedom and individual liberty. The fact that the president of the United States, who is often recognized as the most powerful person in the world, has praised Yoani Sanchez’s blog and responded to her questions is a remarkable and historical event. Intellectual figures like Milton Friedman, Friedrich von Hayek, and Thomas Jefferson would be proud of Yoani Sanchez and her powerful message of individual freedom in one of the few remaining regimes of totalitarianism left in the world.

Americans Get Their Driving Mojo Back Over the Summer; Largest 4-Month Increase In 5 Years

The chart above shows the percent change in U.S. traffic volume through September (from the same month in the previous year), in a report released today by the Federal Highway Administration (data and report here). After falling for 17 consecutive months starting in November 2007, traffic volume has increased in each of the last four months. The 2.5% September increase is the largest monthly increase since a 3.8% increase in January 2006, and follows increases of 0.7% in August, 2.2% in July and 1.9% in June, and is the first time since the summer of 2006 that traffic volume has increased four months in a row (see chart). The cumulative 4-month June-Sept. increase of 7.3% is the largest 4-month increase since the 10.8% increase through May 2004, more than five years ago.

The chart below displays traffic volume as a moving 12-month total, showing a similar pattern to the percentage monthly increase above. After falling for 16 straight months going back to December 2007, the moving 12-month total has increased four months in a row, and marks the largest 4-month increase in traffic volume (12-month total) since the spring of 2005, more than four years ago.

LA Shipping Reaches Highest Level Since Nov. 2008

SAN PEDRO, CA (Nov. 13, 2009)Containers shipped through the Port of Los Angeles last month increased 10.9% compared to September, making October the strongest month yet for the Port this calendar year (see top chart above). Both containerized imports and exports reached their highest levels for 2009, with loaded outbound containers seeing an 11.8% rise over October 2008 volumes. Still, loaded inbound containers were 8.3% below October 2008 levels (data here).

Despite a reporting period that included a weeklong observance of a Chinese holiday, the total number of Twenty-Foot Equivalent (20-foot containers or “TEUs”) imported and exported through the Port of Los Angeles in October was 647,423
. Total container volumes were 10.9% above September 2009 levels; loaded imports were up 9.6% and loaded exports were up 7.4% over the previous month. Year to date, TEU volume is at 5,606,798, or 15.4% lower than the same 10-month period in 2008.

MP: Container counts at the LA Port have increased in six out of the last eight months, and reached the highest total level since last November. On a year-to-year percent change basis, the 8.34% decrease in October was the smallest decrease in a year, since the 3.98% decrease from October 2007 to October 2008 (see bottom chart above).

Thursday, November 19, 2009

Lou Dobbs Will Appear on Kudlow Report Tonight


U.S. Share of World GDP Remarkably Constant

Somewhat surprisingly, the Economic Research Service of the U.S. Department of Agriculture has some great international historical macroeconomic datasets. According to its website:

The International Macroeconomic Data Set provides data from 1969 through 2020 for real (adjusted for inflation) gross domestic product (GDP), population, real exchange rates, and other variables for the 190 countries and 34 regions that are most important for U.S. agricultural trade.

The chart above shows the annual shares of real world GDP for four geographical regions (European Union 15, Asia/Oceania, Latin America and the combined share of Africa and the Middle East) compared to the U.S. share of world GDP between 1969 and 2009 (data here). What might be surprising is that the U.S. share of world GDP has been relatively constant for the last 40 years, and is actually slightly higher in 2009 (26.7%) that it was in 1975 (26.3%). It's also interesting that the EU15's share of world GDP has declined from about 36% of world output in 1969 to only 27% in 2009. Further, despite having a large share of the world's oil reserves, the Middle East's share of global output has increased from only 2.23% in 1969 to 3.16% in 2009 (graph shows Middle East combined with Africa).

Bottom Line: World GDP (real) doubled between 1969 and 1990, and has increased by another 60% since then, so that world output in 2009 is more than three times greater than in 1969. We might mistakenly assume that the significant economic growth over the last 40 years in China, India and Brazil has somehow come "at the expense of economic growth in the U.S." (based on the "fixed pie fallacy") but the data suggest otherwise. Because of advances in technology, innovation, and significant improvements in U.S. productivity, America's share of total world output has remained remarkably constant at a little more than 25%, despite the significant increases in output around the world, especially in Asia.

Update: The chart above represents about 91% of the world economy and does not include Canada and the European countries not included in the EU-15.

Leading Indicators Rise for 7th Month to 2-Yr. High

The Leading Economic Index (LEI) increased for the 7th straight month to 103.8, the highest level since the fall of 2007, and the first time in more than five years of 7-consecutive monthly increases (since early 2004).


Six of the ten indicators that make up The Conference Board LEI for the U.S. increased in October. The positive contributors – beginning with the largest positive contributor – were the interest rate spread, average weekly initial claims for unemployment insurance (inverted), stock prices, average weekly manufacturing hours, real money supply and manufacturers’ new orders for consumer goods and materials. The negative contributors – beginning with the largest negative contributor – were index of consumer expectations, building permits, index of supplier deliveries (vendor performance), and manufacturers’ new orders for nondefense capital goods.

Odds for Health Care Reform Fall From 50% to 2%

Last summer the odds for a federal government-run health insurance plan to be approved before the end of the year were around 50%, according to futures contracts traded on Those odds have now fallen to a contract-low of only 2.2%. Odds for health care reform passing by March 2010 or June 2010 are higher, see details here.

Jobless Claims (Four-Wk. Avg.) Drop for 11th Straight Week to 514,000, Lowest Level in A Year

Weekly jobless claims fell for the 11th straight week to 514,000 (four-week moving average), reaching the lowest level in a year (since November 15, 2008), according to today's report from the Department of Labor (see chart above).

Wednesday, November 18, 2009

Real Estate Recovery in So. California: Home Sales Increase 16th Straight Month, Prices 6th Month

Southern California home sales rose in October as prices showed more signs of firming. The median sale price fell by the smallest amount in two years, the result of a shrinking inventory of homes for sale and government and industry efforts to stoke demand and curtail foreclosures. Last month 22,132 new and resale houses and condos closed escrow in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was up 2.8% from 21,539 in September and also up 2.8% from 21,532 a year earlier, according to MDA DataQuick of San Diego.

October marked the 16th month in a row with a year-over-year sales gain, although last month’s was the smallest of those increases. In October, the median price paid for a Southland home was $280,000, up 1.8% from $275,000 in September but down 6.7% from $300,000 in October 2008. It was the median’s smallest annual decline for any month since September 2007, when the median fell 4% from a year earlier. September 2007 – one month after the current credit crunch hit – marked the beginning of a 26-month streak of year-over-year declines in the median price.

The region’s overall median sale price has risen or held steady on a month-to-month basis ever since it dropped to a more-than 7-year low of $247,000 in April. Last month the median was 44.6% lower than the peak $505,000 median reached during several months in early and mid 2007.

MP: More evidence from October sales data that the real estate market in California has stabilized and is now starting to show continued signs of gradual monthly improvements. With 16 consecutive months of year-to-year sales increases, and now six straight months of price increases, it's looking more and more like a gradual, but solid recovery.

Expanding Coverage = Increased Costs for Current Dysfunctional Health Care System, Less Innovation

Our health-care system suffers from problems of cost, access and quality, and needs major reform. Tax policy drives employment-based insurance; this begets overinsurance and drives costs upward while creating inequities for the unemployed and self-employed. A regulatory morass limits innovation. Deep flaws in Medicare and Medicaid drive spending without optimizing care.

Speeches and news reports can lead you to believe that proposed congressional legislation would tackle the problems of cost, access and quality. But that's not true. The various bills do deal with access by expanding Medicaid and mandating subsidized insurance at substantial cost—and thus addresses an important social goal. However, there are no provisions to substantively control the growth of costs or raise the quality of care. So the overall effort will fail to qualify as reform.

In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it. Likewise, nearly all agree that the legislation would do little or nothing to improve quality or change health-care's dysfunctional delivery system. The system we have now promotes fragmented care and makes it more difficult than it should be to assess outcomes and patient satisfaction. The true costs of health care are disguised, competition based on price and quality are almost impossible, and patients lose their ability to be the ultimate judges of value.

Worse, currently proposed federal legislation would undermine any potential for real innovation in insurance and the provision of care. It would do so by overregulating the health-care system in the service of special interests such as insurance companies, hospitals, professional organizations and pharmaceutical companies, rather than the patients who should be our primary concern.

In effect, while the legislation would enhance access to insurance, the trade-off would be an accelerated crisis of health-care costs and perpetuation of the current dysfunctional system—now with many more participants. This will make an eventual solution even more difficult. Ultimately, our capacity to innovate and develop new therapies would suffer most of all.

There are important lessons to be learned from recent experience with reform in Massachusetts. Here, insurance mandates similar to those proposed in the federal legislation succeeded in expanding coverage but—despite initial predictions—increased total spending.

~Jeffrey S. Flier, Dean of Harvard Medical School, in today's WSJ - "Health 'Debate' Deserves a Failing Grade"

Tuesday, November 17, 2009

More Selective Concern on Sex Imbalances

From a new report "Staying Competitive: Patching America’s Leaky Pipeline in the Sciences" from the Center for American Progress:

The “leaky pipeline” for women in the sciences, sometimes referred to as the “pool problem” because of the low number of women in job applicant pools relative to their rates of doctoral degrees granted, has become a point of considerable debate in recent years. Discussions about the reasons for the leaks range from “chilly” institutional and departmental climates to gender bias and discrimination to innate differences in cognition to lack of mentoring to the role of marriage and children.

This debate was perhaps best brought to national attention in the aftermath of comments by former President of Harvard University Lawrence Summers in 2005, when he referenced theories that women might have less intrinsic aptitude to excel at academic science careers. In fact, research universities across the country and federal granting agencies are routinely confronted with evidence of a leaky or constricting pipeline for women in the sciences.

Data from both NIH and NSF, the two agencies providing the greatest amount of funds to researchers in U.S. universities and colleges, also suggest that the leaky pipeline is not an aspect of the past. As seen in the figure above women comprise a much larger proportion of the predoctoral fellowships given by these agencies than they do postdoctoral fellowships and competitive faculty grants. The drop-off in relative proportion is dramatic, with women comprising 63% and 54% of NIH and NSF’s predoctoral awards in 2007, respectively, but just 25% and 23% of the competitive faculty grants awarded in the same year.

MP: 1. Once again, another mis-characterization of what
Larry Summers actually said:

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.

In other words, what Summers actually said is that "male intelligence is inherently more variable than female intelligence," which is significantly and distinctly different than saying that "women might have less intrinsic aptitude to excel at academic science careers." Anybody who understands basic statistics and the difference between the mean and standard deviation of a distribution will understand immediately the difference between what Summers said (the standard deviation of male intelligence is greater than the standard deviation of female intelligence) and what others claim he said (women have less intrinsic aptitude to excel in math and science).

2. Isn't it interesting that there is no concern whatsoever that women receive 170 NIH predoctoral awards for every 100 grants awarded to men, and 117 NSF awards for every 100 men, but there is suddenly a selective concern of a "dramatic drop-off" of NIH and NSF awards to faculty. If I understand the rules of gender activism correctly, they go something like this:

Rule A. If women are over-represented (college degrees, SAT scores for reading or writing between 750-800, doctoral degrees in the life sciences, English and foreign languages, etc., scholarly research awards, or tenured professors in education), that is because women are smarter, more motivated or more talented than men. No action, policies or funding required to correct the gender imbalance.

Rule B. If women are under-represented (engineering or math Ph.D.s, SAT math scores between 750-800, tenured math, computer science and physics professors at MIT, etc.) that is because of pervasive, unexamined sexism, which requires action, policies and funding to correct the sex imbalances.

3. The report concludes that "If we delay we simply continue to lose talented scholars [women] from fast-track academic careers in the sciences—to the detriment of our nation’s future."

Here's another solution: Make it easier for all of the foreign doctoral students studying math, science and engineering in the U.S. to stay here after they complete their degrees.

Baltic Dry Index Roars Back: 102.5% Gain in 39 Days

The Baltic Dry Index closed today at 4381, advancing for the 14th straight day, and registering positive gains in 31 out of the last 35 days. From the late-September low of 2163, the benchmark index for freight costs to ship dry bulk commodities such as iron ore, coal and grains has more than doubled in just 39 days, and has reached the highest level since September 24, 2008, almost 14 months ago. The global economic recovery is underway and gaining momentum.

See related post here from Scott Grannis, who says that:

Clearly, the wheels of global commerce are spinning back up. Everything I see is consistent with a global recovery in confidence, in demand, and in production.

Belichick Gets No Respect, Except from Economists

1. "Bill Belichick Is Great" by Steven Levitt

I respect Bill Belichick more today than I ever have. This decision may have hurt his chances for the Football Hall of Fame, but it guarantees his induction into the Freakonomics Hall of Fame.

2. "
Bill Belichick as Frederic Bastiat"

It's pretty evident that the degree of opposition to Belichick's decision amongst the sports public and even so-called football experts is disproportionately high compared to the true probability that Belichick's decision would fail. In fact, a few statistical geeks have even suggested that Belichick made the correct decision under the criterion that head coaches are supposed to use: maximize the probability of your team winning.

The type of response we see to Coach Belichick's decision is too often what we also see in public policy debates: there is a bias for what is seen versus what is not seen.

Update (Wall Street Journal): Somehow in American football, the punt—a clear and unambiguous symbol of surrender and retreat—has become the hallmark of sensible coaching.

Brian Burke, a statistician who has studied the results of fourth-down situations in the NFL, says a team in the Patriots' situation had a 79% chance of winning by going for it (either by converting the fourth-and-two or stopping the opponent thereafter). That compares favorably to a 70% probability of preventing a foe from driving down the field for a touchdown following a punt.

Unemployment, The Movie

Another interactive map showing monthly unemployment rates from December 2007 to September 2009. Watch "Unemployment, The Movie" here.

HT: Taxing Tennessee

Monday, November 16, 2009

Stripped of Its Intellectual Content, "Rainforest Math" Has Serious Implications for U.S. Economy

From the article "Who Needs Mathematicians for Math, Anyway?" by Professor Sandra Stotsky in the City Journal:

As part of his education-reform plan, President Obama wants to “make math and science education a top priority” and ensure that children have access to strong math and science curricula “at all grade levels.” But the president’s worthy aims won’t be reached so long as assessment experts, technology salesmen, and math educators—the professors, usually with education degrees, who teach prospective teachers of math from K–12—dominate the development of the content of school curricula and determine the pedagogy used, into which they’ve brought theories lacking any evidence of success and that emphasize political and social ends, not mastery of mathematics.

A new effort is under way to develop national math standards for K–12. The two organizations running the effort—the National Governors Association and the Council of Chief State School Officers, with support from both the Department of Education and the National Education Association—have not yet invited a single mathematical or science society to ensure that the high school mathematics standards and “college-readiness” standards they propose in fact prepare American high school students for the freshman calculus courses that serve as the basis for undergraduate majors in engineering, science, and mathematics (as well as other mathematics-dependent majors and technical/occupational programs). The effort, which is being pushed very quickly, seems determined to do an end run around the country’s mathematical and scientific organizations and the panel’s recommendations on the major topics for school algebra.

Baseless pedagogical theories mean that the educators’ long-term captive audience—K–12 teachers, most drawn from the middle academic tier of our high school population and the bottom third of our undergraduate population—will know even less about authentic mathematics than they do now. Alas, so will their students. And even if a new Congress or Secretary of Education were to support the panel’s recommendations, it will be essentially business as usual in the public schools so long as math educators, joined by assessment experts and technology salesmen, continue to shape the curriculum. A form of mathematics stripped of much of its intellectual content has obvious repercussions for higher education and the American economy. The math wars, which started in debates about pedagogy, may end in questions about the long-term prospects for American prosperity.

Exhibit A:
During their first math class at one of CUNY's four-year colleges, 90% of 200 students tested couldn't solve a simple algebra problem, the report by the CUNY Council of Math Chairs found. Only a third could convert a fraction into a decimal.

HT: Arthur Little

Welcome to the 2009 Worldwide Bull Market Rally

The MSCI World Stock Market Index has registered gains in 7 out of the last 9 trading days, and closed today at 1175.40, the highest close since October 1, 2008, more than a year ago (see chart above). The World Index has risen 27.7% since the first of the year, and by more 70% from the early March bottom. Welcome to the Worldwide Bull Market Rally of 2009.

Here's one report.

Retail Clinics: "Disruptive Innovation and Improved Value Proposition," The Magic of the Marketplace

From a new study released today by the Deloitte Center for Health Solutions "Retail Medical Clinics: Update and Implications - 2009 Report" (press release here and full study here):

Retail clinic market growth has slowed from an astronomical 350 percent in 2007 to 30 percent in 2008, and it trended negative (-5 percent) in the first five months of 2009. The economic downturn that began in December 2007 had a chilling effect on retailers; conditions also were challenging for private investors backing start-ups in retail medicine.

2009 marks a pause between wave one and wave two of retail clinic growth. Cautious growth is likely to resume from 2010-2011 and then accelerate from 2012-2014. Despite forecasts from a variety of organizations estimating 5,000 clinics by 2010 and perhaps 6,000 by 2012, data suggest those numbers are unattainable in that timeframe. Merchant Medicine, a leading tracker of retail clinic operators, has suggested that the market may, in fact, top out at 4,000 clinics in 2015 (see chart above).

Employer sponsorship of onsite retail clinics is a key factor in their potential growth. By hosting and partially underwriting a clinic’s costs, employers have the potential to reduce employee health costs and lost worker time due to long wait times at physicians’ offices. One forecast suggested that 32 percent of large employers (those with greater than 1,000 employees) will have onsite clinics by 2009 – a total of more than 2,400 sites.


Retail clinics represent a new channel to deliver primary care services more conveniently and at lower cost to consumers. Clinic services are safe and effective, due in large measure to medical management programs that are evidence-based and supported by electronic medical records. As a new entrant, retail clinics represent a threat to many traditional health care industry stakeholders; however, to consumers, health plans and employers they offer an important care alternative with a strong value proposition.

2. The growth and evolution of retail clinics reflect opportunities for disruptive innovation and an improved value proposition for the U.S. health care system.

MP: What an amazing success and growth story, from only 200 retail health clinics in 2006 to possibly 4,000 by 2015, a 10-fold increase in less than ten years! At the same time that Congress debates a government takeover of the health care system, we have market-based health care reform taking place right now in the form of convenient, affordable, quality health care at more than 1,000 retail clinics around the country. Read more here.

Ronald Reagan reminds us:

We who live in free market societies believe that growth, prosperity and, ultimately, human fulfillment are created from the bottom up, not the government down. Trust the people. This is the one irrefutable lesson of the entire post-war period, contradicting the notion that rigid government controls are essential to economic development. The societies that have achieved the most spectacular, broad-based progress are neither the most tightly controlled, nor the biggest in size, nor the wealthiest in natural resources. No, what unites them all is their willingness to believe in the magic of the marketplace.

Sunday, November 15, 2009

Markets in Everything: Selling Lesson Plans Online

NY Times -- Between Craigslist and eBay, the Internet is well established as a marketplace where one person’s trash is transformed into another’s treasure. Now, thousands of teachers are cashing in on a commodity they used to give away, selling lesson plans online for exercises as simple as M&M sorting and as sophisticated as Shakespeare.

Without Market Pricing, Kidney Demand Exceeds Supply 6 to 1, And 1000s Needlessly Die Waiting

From the article "White Collar Reset: Kidney for sale?" by Mark Cohen:

In my last installment, I entertained the notion of opening a medical marijuana store in the New York City suburb my wife and I call home. This week, while we wait for the New Jersey legislature to finalize the legality of that option and as I begin year two in what is now semi-officially the direst U.S. job market since the Great Depression, I'd like to move on to the next previously taboo plan for recapitalizing our household.

I'm considering selling one of my kidneys.

Now, before you say, "Oh, come on, that's absurd!" and immediately skip to the next story about housing starts or crude prices, hear me out for a few seconds. I, too, had my doubts and recognized the potential for a jump-the-shark moment. But that was before I spoke to Dr. Sally Satel, M.D., a resident scholar at the American Enterprise Institute in Washington, D.C., and author of the book When Altruism Isn't Enough: The Case for Compensating Kidney Donors.

While the two statistics admittedly most on my mind when I called Satel were 17.5 and 892 (that's the percentage of underemployed workers in last Friday's job report and dollars in my checking account, respectively), the number always front and center for her is 13. That's the average number of people who die every day in this country awaiting a kidney transplant. Despite decades of work encouraging people to sign donor cards and donate to loved ones, the number of kidney donors last year was less than it was in 2005. Clearly, the current system of appealing exclusively to people's better natures isn't working. What's interesting is how the economic downturn has suddenly created a whole new class of constituents for Satel's more free-market approach.

The more Satel talked, the less selling my kidney seemed like some bizarre, macabre act of depravity, and the more I wondered why the hell I hadn't thought of it before.

I'll put it this way: A hundred thousand dollars (for a kidney) would do a lot more to stabilize our finances than the other items (a Pottery Barn cabinet, a Thomas O'Brien leather club chair, a cowhide rug) currently under consideration for sale around our house. Although I've been bringing in more freelance and consulting work, the checks have been slow to trickle in, and, at any rate, it will likely take months before I figure out how to organize and focus my business to where it comes close to approaching my old salary. The other option up for discussion -- emptying my 401(k) -- now seems more irresponsible and injurious to my future than my new (k)idney plan.

If all this were happening two years ago, my mortgage company would be encouraging me to take out a second mortgage or tap my home-equity line. That's obviously no longer on the table, but is tapping the one truly valuable asset I have left really so much different?

As my mortgage broker used to say about the home-equity line: It's just sitting there. Why not use it?

MP: The chart above shows the current number of registered patient candidates waiting for a kidney transplant (
data here) and the number of kidney transplants performed this year from January 1 to August 31 (data here). That's a ratio of 7.3 patients on the waiting list for each kidney transplant performed through August. If we increase the number of transplants for September, October and the first half of November by 1,131 per month (the monthly average for Jan.-Aug. 2009), it would still be a ratio of almost 6 candidates on the waiting list for every kidney transplant.

ECON 101: Congestion, shortages, and surpluses are always caused by a failure to apply market pricing. The market for kidneys is no different in principle than the market for gasoline, Miley Cyrus tickets, old coins, pork bellies or unskilled labor. Since the demand for kidneys exceeds the supply by a factor of 6, it seems obvious that the deadly kidney shortage is artificially created because the current "price" for kidneys is way, way below the market-clearing price, and people will continue to die waiting until some type of market pricing is allowed.

Interestingly, there is actually one country that currently allows various forms of cash compensation for kidneys, and that country has completely eliminated its kidney shortage to the point that nobody dies anymore on a waiting list -
find out here.

The "Good Old Days" Are Now and It Gets Better All the Time, Thanks to Free-Market Capitalism

Click to enlarge.

From the BLS report "100 Years of U.S. Consumer Spending":

1. The material well-being of families in the United States improved dramatically, as demonstrated by the change over time in the percentage of expenditures allocated for food, clothing, and housing. In 1901, the average U.S. family devoted 79.8 percent of its spending to these necessities. By 2002–03, allocations on necessities had been reduced substantially, for U.S. families to 50.1% of spending (see top chart above).

2. The continued and significant decline over the century in the share of expenditures allocated for food also reflected improved living standards. In 1901, U.S. households allotted 42.5% of their expenditures for food; by 2002–03, food’s share of spending had dropped to just 13.2%.

3. Over the 100-year period, expenditure shares for clothing steadily declined. In 1901, the average U.S. household allocated 14% of total spending for apparel. By 2002–03, spending shares for clothing had decreased to 4.2%.

4. In 2002–03, the average U.S. family could allocate about 50% ($20,333) of total expenditures for a variety of discretionary consumer goods and services, while the average family in 1901 could allocate only 20.2%, or $155, for discretionary spending (see bottom chart above).

Conclusion: Perhaps as revealing as the shift in consumer expenditure shares over the past 100 years is the wide variety of consumer items that had not been invented during the early decades of the 20th century but are commonplace today. In the 21st century, households throughout the country have purchased computers, televisions, iPods, DVD players, vacation homes, boats, planes, and recreational vehicles. They have sent their children to summer camps; contributed to retirement and pension funds; attended theatrical and musical performances and sporting events; joined health, country, and yacht clubs; and taken domestic and foreign vacation excursions. These items, which were unknown and undreamt of a century ago, are tangible proof that U.S. households today enjoy a higher standard of living.

MP: As I wrote in a previous post: Teenagers today can afford products today like cell phones with cameras, digital cameras, GPS systems, CD players, DVD players, laptop computers, and iPods that even a billionaire couldn't have purchased 20 years ago. As much as we might complain, just by being alive in the 21st century America, even if you're earning the minimum wage, you've already "won first prize in the lottery of life."

HT: Lyle Meier