Tuesday, February 16, 2010

Update: Texas vs. the Unionocracy of California

Update on this CD post:

The chart above displays employment levels in California compared to Texas, monthly from January 2000 to December 2009. The employment level in California fell below 16 million jobs in December for the first time since May 2000, 9 and-a-half years ago. From the peak employment level of more than 17 million in July 2007, California has lost more than one million jobs in the last two and-a-half years. In contrast, Texas has lost only about 100,000 jobs from the peak level in December 2008.

The chart below displays monthly government and private sector employment in California from January 2000, showing that most of the job losses have taken place in the private sector. From the 2007 peak, private sector employment has fallen by 1,133,000 jobs through December 2009 to the lowest level since November 1999, more than ten years ago, compared to a loss of only 57,000 government jobs from the peak in 2008.

As George Will wrote in January:

"California, a laboratory of liberalism, is spiraling downward, driven by a huge budget deficit. It took years for compassionate liberalism to make California's welfare menu contribute to the state becoming an importer of Mexico's poverty. It took years for servile liberalism to turn the state into a "unionocracy," run by and for unionized public employees, such as public safety employees who can retire at 50 and receive 90 percent of the final year's pay for life. California's economy is being suffocated by the weight of government."

Exhibit A: More than a million jobs lost in California's private sector, shrinking private sector employment to the lowest level since 1999. And those jobs disappeared fast - it took about nine years to add one million private-sector jobs in California, and only about two years for those million jobs to vanish.

The Unintended Consequences of New Flight Rules

The government announced in December it would fine airlines $27,500 per passenger for long tarmac delays (three hours or more) - or $2.75 million for a 100-passenger flight.

Easy question: Will that policy have any significant effect on flight cancellations? More? Fewer?

Find out here.

U.S. Homeownership Falls to 10-Yr. Low of 67.2%; Bad Homeowners Return to Being Good Renters

According to data released several weeks ago by the Census Bureau, the U.S. homeownership rate fell to 67.2% in the fourth quarter of 2009, the lowest rate since 67.1% in the first quarter of 2000, almost ten years ago. Compared to the peak of 69.2% in 2004, homeownership has fallen by two full percentage points.

Many would agree that the global financial crisis, mortgage tsunami, and housing bubble can all be traced to the political obsession to increase homeownership with easy credit and government housing policies, so in that case the significant decrease in the homeownership rate to a ten-year low is probably a good thing. The political infatuation with homeownership turned thousands of good renters into bad homeowners and consequently turned the American dream into the American nightmare. The fact that bad homeowners are now returning to once again being good renters is a sign of progress.

As Robert Samuelson wrote in Newsweek (August 2008):

"We think everyone should become a homeowner, when many families can't or shouldn't. The result is to encourage lending to weak borrowers who are likely to default. The avid pursuit of a few more percentage points on the homeownership rate has condoned enormously damaging policies."

Empire Index Signals Improvement for 7th Month

"The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved for a seventh consecutive month in February and at a relatively rapid pace. The general business conditions index for current conditions climbed 9 points, to 24.9 from 15.9 in January (see chart). The new orders index fell, though it remained positive, and the shipments index inched downward as well. The inventories index rose sharply, to 0.0, its highest reading in considerably more than a year.

Future indexes suggested that manufacturers in New York State were expecting conditions to improve further in the months ahead. The future general business conditions index was slightly lower than last month, but remained at a relatively high level of 52.8, with 60% of respondents expecting conditions to improve over the next six months (see chart)."

Monday, February 15, 2010

Five Ways to Reform Health Care

(1) Incentivize patients to be smart consumers

(2) Pay for performance

(3) Liability reform

(4) Interstate health-care insurance

(5) Modernize health insurance

~Minnesota Governor Tim Pawlenty writing in
yesterday's Washington Post.

HT: Ryan Stinson

Consumer Sentiment Stays Above 70 for 3 Months for the First Time Since the Start of the Recession

According to the University of Michigan, Consumer Sentiment fell slightly in February to 73.7 from 74.4 in January but has now remained above the 70 level for the last three months in a row (72.5, 74.4 and 73.7 in December, January and February), for the first time since the recession started during the three-month period from December 2007 to February 2008 (see chart above), signalling a gradual restoration of consumer confidence about the economy.

Compared to February a year ago, Consumer Sentiment is up by almost 31%, the greatest annual increase since the early 1990s (see chart below).

Health Care Updates

1. "Yes, the Uninsured Can Get Care" (WSJ)

"Lack of insurance doesn't have to mean going without needed health care. If you're uninsured and seeking stop-gap care until you find coverage, you can triage your way to better health by understanding the tradeoffs of several care options. A retail clinic or urgent-care center may be a suitable fit, depending on the severity of your medical need and personal preferences."

2. "Let Health Insurance Cross State Lines" (NYTimes)

"Arizona Representative John Shadegg, who sponsored legislation to allow insurance sales across state lines in 2005 and has championed the idea ever since, likes to illustrate the lack of competition by pointing to how different the market is for automobile insurance.

“If you turn on the television station at night,” he said, “you see Allstate and Geico and Progressive and State Farm pounding each other’s heads in. ‘Drop your policy and come get a policy from us, and we’ll do two things — we’ll save you money and give you better service.’ You never see that kind of advertisement for you and I to go out and buy health insurance.”

Other experts, like Stephen T. Parente, academic director of the Medical Industry Leadership Institute at the University of Minnesota’s Carlson School of Management, note that many insurers already operate across state lines in administering policies for large employers, and could easily do the same in the individual market.

Mr. Parente said his research had found that millions of uninsured people who now find coverage unaffordable in their home state might buy cheaper policies if they were available from other states. The competition would force insurers to provide better, cheaper service and might force low-performing companies out of business, while states with the most efficient regulatory framework could become regional “powerhouses” where insurers prefer to operate."

Size Matters: $30,000 Per Inch

CHARLOTTE OBSERVER -- "A forthcoming study by a Duke University researcher and several colleagues confirms what not-so-thin women and short, broke men have long suspected: They don't get nearly as much romantic attention as skinny women and tall, financially secure guys.

With the $1.1 billion online dating and matchmaking industry growing in popularity, researchers say dating sites' gigantic databases make fertile ground for study. The study, still under peer review before publication, analyzed 22,000 online daters and found that women put a premium on income and height when deciding which men to contact, said Dan Ariely, a Duke behavioral economist who worked with University of Chicago researchers on the project.

For example, the study showed a 5-foot-9-inch man needs to make $30,000 more than a 5-foot-10-inch one to be as successful in the dating pool."

MP: Life can be so unfair.

Sunday, February 14, 2010

No Significant Global Warming Since 1995

Climategate U-turn: Scientist at Center of Controversy Admits There Has Been No Statistically Significant Global Warming Since 1995.

HT: Drudge Report

DC: Some Cars Are Still Buried

Calvert Street NW in Washington DC near the Duke Ellington Bridge (yes, there is a car in there).

Same car from the back.

This wiper thing seems so wrong!

Top 20% of Countries Earn 82.7% (80.73%) of Global Income (Nobel Prizes)

Wikipedia: "The Pareto principle (also known as the 80-20 rule) states that, for many events, roughly 80% of the effects come from 20% of the causes."

The example provided in the Wikipedia entry is the distribution of global income in 1989 (see chart above). Interestingly, the distribution of the 1,820
Nobel prizes awarded from 1901-2009 to recipients in 57 different countries mirrors the global income distribution almost perfectly (see chart above).

No Contest: Russia Wins This Cold War

MOSCOW — "Even in Russia, the recent blizzards that have hit Washington have been noticed. Though not always sympathetically. Were Congress and other powerful institutions really closed, not to mention the schools? Did panicked residents actually strip stores of food, making the bare shelves resemble something from the Soviet era? All because of the snow?

Russia, mindful that it trails the United States in many measures, tends to leap at any chance to promote its supremacy, and when it comes to wintry hardiness, there is, of course, no contest. This is one cold war that Russia wins."

Avg. Michigan Home < $100k, 1st Time Since 1994

According to housing sale data from the Michigan Association of Realtors, the average price of a home sold in Michigan in 2009 was $99,121, a 16.3% decrease from the $118,388 average price in 2008, and 35% below the peak average price of $152,845 in 2006. The $99,121 average home price in 2009 marks the first year since 1994 (15 years ago) that the average Michigan home sold for below $100,000 (see chart).

Update: December 2009 stats are available here. If you take out Detroit, the statewide average (unweighted) home price rises to $101,286 for 2009, and if you take out both the Detroit and the Flint areas, the statewide average rises to $102,061.

Internet Usage Statistics

Detroit To End Child Abuse aka "Social Promotion"

DETROIT FREE PRESS (Feb. 5) -- "Amiya Olden remembers well the day she graduated from Denby High School in Detroit. She handed her diploma to her mother, Karen Olden, who read it to her. "Then when someone asked me to read it, I could remember the things that she read, and I knew what I had to say," recalled Amiya Olden, now 22. Amiya could not read her own diploma.

Amiya Olden, like many students in schools across Michigan, suffered a kind of child abuse that the state Legislature not only allows but supports: social promotion."

DETROIT FREE PRESS (Feb. 12) -- "Detroit Public Schools emergency financial manager Robert Bobb plans to sign an executive order today ending social promotions, the practice of advancing students to the next grade when they’re not really ready.

The district began, for the first time, quarterly assessments of student proficiency this week. The results will be used, along with MEAP scores, to chart student progress and determine who needs more help to go onto the next grade. Such assessments are standard in nearly every other school district in the country."

Day Care in Wonderland

Day Care in Wonderland from Mackinac Center on Vimeo.

Saturday, February 13, 2010

Quote of the Day: Ethanol Mandates Are Immoral

"There are lots of stupid federal programs. There are lots of wasteful federal programs. The corn ethanol mandates are immoral."

~Robert Bryce writing in the
Energy Tribune

HT: Nick Schulz

The Waning Power of Private Unions in the U.S.

In 2009, there were only five major strikes and lockouts involving 1,000 or more workers, the lowest number since the major work stoppages series began in 1947, the U.S. Bureau of Labor Statistics reported today (see chart above). The prior low for major work stoppages beginning in a calendar year was 14 in 2003. The decline in work stoppages over the last sixty years coincides with the ongoing decline in union membership as a share of all workers, from a high of 32.5% of all workers in 1953 (almost 1 in 3) to 12.3% in 2009 (fewer than 1 in 8).

See related links at Economix and The Economist.

On Sunday The Caracas Storeowners Had Small Business; 2 Seconds Later, They Were Gone

In the heart of Caracas's historical center, some shopkeepers are being bought out by the state -- whether they like it or not.

Watch the video.

Friday, February 12, 2010

China Surpasses Japan's Stock Market Value in 2009

The chart above shows 2009 year-end stock market capitalization for the 14 largest stock markets based on data available from the World Federation of Exchanges.

1. I'm pretty sure that this is the first time ever that China's stock market ($3.57 trillion) has surpassed Japan's ($3.31 trillion) by total market capitalization.

2. It's also interesting that China, India and Brazil now account for 16% of the world stock market value. It was not too long ago that those three countries accounted for less than 1% of world stock market value. In 2003, those countries represented only 4.2% of world stock market value.

3. The United States stock market has the same value ($15.08 trillion) of the next five stock markets combined: China, Japan, Euronext, U.K. and India, and accounts for 32% of total world stock market value.

4. China has the same stock market value ($3.57 trillion) as Germany, Australia and Switzerland combined.

Rise in Retail Sales Brightens Recovery Picture

WASHINGTON (Reuters) - Sales at U.S. retailers rose more than expected in January, suggesting consumers were feeling a bit more comfortable to spend and sustain the economic recovery. The Commerce Department said on Friday total retail sales increased 0.5 percent. In addition, December and November were both revised to show stronger spending.

Analysts polled by Reuters had forecast retail sales increasing 0.3% last month. Compared to January last year, sales were up 4.7% (see chart above).

"It's a nice surprise for the economy, it suggests that the consumer is willing to spend a little. It tells us that retail sales are in a clear recovery," said Kathleen Stephansen, chief economist at Aladdin Capital Holdings in Stamford, Connecticut.

MP: This is probably one the strongest signs yet of a V-shaped economic recovery (see chart).

Making The Case for Child Labor and Sweatshops

"As any historian could tell you, no society has every pulled itself out of poverty without putting its children to work. Back in the early 19th century, when Americans were as poor as Bangladeshis are now, we were sending out children to work at about the same rate as the Bangladeshis are today.

Having had the good fortune to get rich first, Americans can afford to give Bangladeshis a helping hand, and there are plenty of good ways for us to do that. Denying Third Worlders the very opportunities our ancestors embraced, whether through full-fledged boycotts or by insisting on health and safety standards they can’t afford to meet, is not one of those ways."

~Economist Steven E. Landsburg

Here's more from Landsburg on closing sweatshops.

What Does German Beer Have to Do with Fairness?

All the leading brands of beer in the United States were created by people of German ancestry and so is the leading beer in China, not to mention breweries created by Germans in Australia, Argentina and elsewhere. Germans were producing beer in the days of the Roman Empire.

This does not mean that beer brewing skill is genetic but it also does not mean that this skill-- or any other skill-- is randomly distributed among peoples, so that a failure to have equal "representation" of groups in a given institution can be presumed to be due to discrimination by that institution.

Fairness as equal treatment does not produce fairness as equal outcomes. The confusion between the two meanings of the same word has created enormous mischief, much of it at the expense of lagging groups, who have been distracted from the things that would enable them to catch up. And whole societies have been kept in a turmoil pursuing a will o' the wisp in the name of "fairness."

~Thomas Sowell

Thursday, February 11, 2010

National Weather Service

Two-week Snow Movie, January 28 to February 11, hour-by-hour.


Union Membership: Good News, Bad News

Good News: Union membership as a percent of all U.S. workers is close to an all-time low of 12.3% in 2009, down slightly from 12.4% in 2008, but higher than the 12% share in 2006 and 12.1% share in 2007 (see chart above). In the early 1950s, almost one of three American workers belonged to a union, compared to only about one of eight workers today who are union members.

Bad News: There are now more public sector union members than private sector union members, for the first time ever (see chart below). Public sector union membership has increased in six out of the last nine years, and is higher today by 781,000 government employees compared to 2000. Over the same period, private sector union membership has declined by 1,788,000 workers, bringing down the overall share of union members since 2000. But the 11% increase in public sector union members since 2000 and the upward trend over the last decade is a cause for serious concern.

Quiz On Current Events from Pew Research

Test your News IQ at Pew Research.

Full Disclosure: I got 10/12 correct, and missed items #7 and #8.

HT: Ryan Stinson

The Two Americas: Public vs. Private Sector, Part II Highest Paid Madison City Worker: $159k Busdriver

WISCONSIN STATE JOURNAL -- "Madison's highest paid city government employee last year wasn't the mayor. It wasn't the police chief. It wasn't even the head of Metro Transit. It was bus driver John E. Nelson. Nelson earned $159,258 in 2009, including $109,892 in overtime and other pay. He was among the seven bus drivers who made more than $100,000 last year thanks to a union contract that lets the most senior drivers who have the highest base salaries get first crack at overtime."


See related CD posts, "Two Americas" and "Piano Movers at Carnegie Hall Make More Money Than the Piano Players."

Real World GDP Through 2030

The chart above of historical real world GDP shares was featured on CD in November and generated lots of discussion (44 comments) and was also featured on Greg Mankiw's blog and about 25 other blogs. Using the same international macroeconomic database from the USDA, the chart below plots the projected shares of real world GDP shares through 2030, and shows the expected change in the composition of world output over the next 20 years as world output is anticipated to increase by 150% from $39 trillion in 2000 to $98.1 trillion by 2030.

As expected, the continued economic growth in China and India will boost that region's share of world GDP from the current 25% to 36% by 2030. And most likely within the next few years, the Asia region's share of world GDP will surpass both the USA and EU-15. Also within the next few years, the USA's share of world GDP will exceed the EU-15's share for the first time ever, and the USA-EU-15 gap is expected to widen over the next several decades.

The third chart below shows the projected real world GDP per capita through 2030, which is expected to increase from $6,439 in 2000 (in 2005 dollars) by 84% to $11,875 by 2030. If world GDP increases over the next twenty years as projected, the world economic slowdown in 2009 would be a minor blip on an extended period of economic growth.

Wednesday, February 10, 2010

U.S. Patent Activity for the Last 125 Years

The chart above plots the annual number of approved patents in the U.S. from 1883 to 2008, according to data from the World Intellectual Property Organization. It's interesting that it took more than 70 years for patents to double from 40,000 to 80,000 (1914 to 1987), and then only 14 years for patents to double again to 160,000 by 2001. In total, there have been 7,176,477 U.S. patents granted in the 126 years between 1883 and 2008.

The chart below plots both the number of patent applications and patents granted, annually from 1883 to 2008, and shows the same pattern for patent application as for patents granted: almost a 70-year period for applications to double from 100,000 to 200,000, and then another doubling in only 12 years.

Finally, the chart below plots U.S. patents as a share of total world patents since 1883. In total, there have been 31,764,313 patents awarded worldwide from 1883 to 2008, and 22.6% of those (7,176,477) have been in the U.S. It looks like there was a spike during WWI and WWII for U.S. patents, and then a long period of below-average patent activity (relative to the rest of the world) in the 1950s, 1960s and 1970s, followed by an above-average period in the 1980s, 1990s and 2000s. Despite a declining share of world patents since 2000, the U.S. share in 2008 at 21.7% is close to the average share over the last 125 years.

The fact that Americans, with 5% of the world's population, have received more than 22% of the world's patents over the last century, is a testament to American ingenuity and innovation, our entrepreneurial spirit, and the dynamism of our (mostly) market economy.

U.S. Exports Would Rank #8 for Largest Economy

In 2008, the U.S. exported $1.276 trillion (or $1,276 billion, BEA data here) of manufactured goods to the rest of the world including food products ($89 billion), industrial supplies and materials ($780 billion), capital goods ($454 billion), automotive vehicles and parts ($234 billion), and consumer goods ($482 billion). If the value of U.S. exports ($1.276 trillion) in 2008 were considered as a separate country, it would have been the 12th largest country in the world, larger than the entire GDP of either India ($1.2 trillion, IMF data here) or Mexico ($1.1 trillion), and just slightly smaller than the entire GDP of Brazil ($1.57 trillion) and Canada ($1.5 trillion).

If we add services and consider the total value of U.S. exports ($1.826 trillion), it would have been the 8th largest economy in the world for 2008, larger than the GDP of either Russia ($1.7 trillion) or Spain ($1.6 trillion), and ranking right behind the GDP of the U.K. ($2.7 trillion) and Italy ($2.3 trillion).

MP: We hear a lot about how the U.S. "doesn't make anything anymore" and how we have outsourced our manufacturing to China, etc. The U.S. export data for U.S. manufactured goods suggest otherwise - the U.S. manufacturing sector is alive and well, and according to many recent economic reports (ISM, vehicle production, industrial production, Empire State survey, manufacturing jobs in January, manufacturing overtime hours, etc.) the manufacturing sector is coming back.

See related Enterprise post "
Manufacturing’s Death Greatly Exaggerated." Also note that U.S. exports dropped by about 15% in 2009, and imports by 23%, both due to the global slowdown.

Newspaper Articles Are Too Long

"One reason seekers of news are abandoning print newspapers for the Internet has nothing directly to do with technology. It’s that newspaper articles are too long. On the Internet, news articles get to the point. Newspaper writing, by contrast, is encrusted with conventions that don’t add to your understanding of the news. Newspaper writers are not to blame. These conventions are traditional, even mandatory.

The software industry has a concept known as “legacy code,” meaning old stuff that is left in software programs, even after they are revised and updated, so that they will still work with older operating systems. The equivalent exists in newspaper stories, which are written to accommodate readers who have just emerged from a coma or a coal mine. Who needs to be told that reforming health care (three words) involves “a sweeping overhaul of the nation’s health care system” (nine words)? Who needs to be reminded that Hillary Clinton tried this in her husband’s administration without success? Anybody who doesn’t know these things already is unlikely to care. (Is, in fact, unlikely to be reading the article.)"

~Michael Kinsley writing in The Atlantic, "
Cut This Story."

One of the Most Dangerous Words Ever: Fairness

1. "In recent times, virtually any disparity in outcomes is almost automatically blamed on discrimination, despite the incredible range of other reasons for disparities between individuals and groups.

Nature's discrimination completely dwarfs man's discrimination. Geography alone makes equal chances virtually impossible. The geographic advantages of Western Europe over Eastern Europe-- in climate and navigable waterways, among other things-- have led to centuries of differences in income levels that were greater than income differences between blacks and whites in America today."

2. "In the language of the politically correct, achievement is equated with privilege. Such verbal sleight of hand evades the question whether individuals' own priorities and efforts affect outcomes, whether in education or in other endeavors. No need to look at empirical evidence when a clever phrase can take that whole question off the table."

~Thomas Sowell's series "The Fallacy of Fairness," Part I & Part II.

Tuesday, February 09, 2010

Markets in Everything: Screw-in-the-Ground Casket


The Two Americas: Public Sector vs. Private Sector

Note: This post was inspired by Michael Jahr's post on the Mackinac Center's website, "Economy Contracts, Government Expands."

According to a December report from the BLS, state and local government employers spent an average of $39.83 per hour worked ($26.24 for wages and $13.60 for benefits) for total employee compensation in September 2009. Total employer compensation costs for private industry workers averaged $27.49 per hour ($19.45 for wages and $8.05 for benefits), see chart above. In other words, government employees make 45% more on average than private sector employees.

According to another BLS report, compensation for private industry workers has increased by 6.9% between December 2006 and December 2009, compared to a 9.8% increase for government workers (state and local) over the same period.

According to an analysis by USAToday (thanks to Michael Jahr for the pointer), "The number of federal workers earning six-figure salaries has exploded during the recession, according to an analysis of federal salary data." For example, the number of federal employees making $100,000 or more has increased by 120,595, from 262,163 employees in December 2007 to 382,758 in June 2009, for a 46% increase. The number of federal workers making $150,000 or more has more than doubled since the recession started, from about 30,000 to more than 66,000 (see chart above).

USA Today also reports that "When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000." That's a 168,900% increase!!

The final chart below shows the average unemployment since December 2007 for government workers (3%) and private-sector workers (7.9%), so the private sector has faced a jobless rate more than twice as high as the rate for government workers over the last several years.

MP: By every labor market measure, the public sector has done quite well and even expanded during the recession compared to the private sector. This has prompted Michael Jahr of the Mackinac Center to wonder whether recent government policies could lead to a long-run hollowing out of the private sector, i.e. could we be in the early stages of the "Detroitification" of the country?

Josh Barro writes for the Manhattan Institute about the "
Two Americas" and the "sharp difference between two classes of employees: those who work in the private sector and those who work for the government. Workers in the public sector have experienced a very different recession from those in the private sector."

Monday, February 08, 2010

Historical Statistics for Minerals and Commodities

Here is a great database for statistics on Mineral and Material Commodities in the United States, annually from 1900 and through 2008, for about 90 commodities and minerals including data for supply, demand, exports, imports, nominal prices, real prices, etc.

The chart above shows the real price of aluminum annually back to 1900. Despite the fact that the real price of aluminum had fallen from $14,000 per ton in 1900 by 64% to less than $5,000 per ton in 1937, Alcoa Aluminum was charged with "illegal monopolization" of the aluminum market by the Justice Department in 1938 (see details here "
United States vs. Alcoa").

10th Monthly Increase in Miami Home Sales

"In December, 8,259 new and resale houses and condos closed escrow in the metro area encompassing Miami-Dade, Palm Beach and Broward counties. That was up 19.1% from November and up 41.3% from 5,846 in December 2008, according to MDA DataQuick (see chart above). December marked the tenth consecutive month in which the region's overall sales rose on a year-over-year basis.

The median price paid for all new and resale houses and condos sold in December was $155,000, the same as in November but down 22.5 percent from $200,000 in December 2008. It was the smallest year-over-year decline for the overall median sale price since the median fell 22.2%, to $210,000, in November 2008."

For-Profit Colleges Change Higher Ed's Landscape

Interesting article in today's
Chronicle of Higher Education, here are some excerpts:
At a time when American public higher education is cutting budgets, laying off people, and turning away students, the rise of for-profit universities has been meteoric.

Enrollment in the country's nearly 3,000 career colleges has grown far faster than in the rest of higher education—by an average of 9 percent per year over the past 30 years, compared with only 1.5 percent per year for all institutions, according to an industry analyst. For-profit universities now educate about 7 percent of the nation's roughly 19 million students who enroll at degree-granting institutions each fall. And the proportion rises to 10 percent, or 2.6 million, if you count students who enroll year round. Just this academic year, the University of Phoenix eclipsed California State University as the second largest higher-education system in the country, with 455,600 students as of this month—behind only the State University of New York.

Proprietary schools charge a lot more than public colleges—an average of $14,174 this year, compared with $2,544 at public two-year institutions and $7,020 for in-state tuition at public four-year institutions, according to the College Board. But students frequently choose proprietary schools over public colleges because for-profits do so much to limit the hassle of enrolling and applying for aid, and because students can take the classes they need quickly and get on with their lives.

The biggest player among those is the Apollo Group. Its flagship University of Phoenix has morphed from an institution with 25,100 students in 1995 to one with 455,600 today. That means that 15 years ago Phoenix was about the same size as George Washington University. Now it is larger than the entire undergraduate enrollment of the Big Ten.

The stocks of publicly held for-profit education companies have outperformed the Standard and Poor's 500 by about 40 percentage points in each of the past two years. And companies like Stifel Nicolaus that analyze the market predict that the sector will continue to enjoy a "significant tailwind." Indeed, BMO Capital Markets predicted in the fall that revenue from the for-profit sector would rise by 10 percent per year through 2014.
MP: The chart above (
data here) shows the 600% increase in the Apollo Group's stock (University of Phoenix) since 2000, compared to the flat return for the S&P500.

Sunday, February 07, 2010

Canada's Jobless Rate Falls to 8-Month Low in Jan.

Feb. 5 (Bloomberg) -- "Canada gained almost three times as many jobs as expected in January, led by part-time positions for youth, pushing the unemployment rate down to the lowest since September.

Employment rose by 43,000 last month, Statistics Canada said today in Ottawa, and the unemployment rate fell to 8.3%. The median forecast of 22 economists surveyed by Bloomberg was for a 15,000 gain in employment and a jobless rate of 8.5%."

MP: The unemployment rate in Canada has now declined three months in a row, and has decreased in four out of the last five months, reaching the lowest rate in January (8.3%) since April of 2009 (8%).

Saturday, February 06, 2010

Verizon Wireless Cure for Health Care Reform

"Sadly, neither version of the healthcare plans in front of Congress allow space for healthy competition. The various health insurance “exchanges” and byzantine combinations of subsidies and penalties that the proposed legislation contains will only further restrict competition. Restrictions force insurance companies to offer only those plans that meet government approval.

If a bill passes, the result would be the equivalent of forcing every American to buy a cellphone, even if they didn’t want one. Those who have phones would see their plan costs soar, spending more for features they don’t want and inferior customer service. Washington should seriously consider the success of the cellphone industry’s model. Making health insurers more consumer-friendly requires competition.

By changing tax law to break the link between employment and health insurance and by abolishing laws that prevent purchasing health insurance across state lines, Washington could turn a doomed system around. More competition would give consumers more options and enable them to switch providers more easily, which would create much stronger incentives for good customer service than just complaining to a monopoly.

The sooner Congress realizes that the prescription is not more government regulations but a dose of real competition, the sooner we can restore some health to the health insurance industry."

~Steve Horwitz in the Christian Science Monitor

MP: The chart above shows the percent change in the CPI since 1998 for all items (+34%) compared to the CPI for medical services (+60%, almost twice the overall rate of average price increase) vs. a -36.4% decrease in the CPI for cell phone services since 1998.

Feminist Hypocrisy

From today's NY Times:

"Women have represented about 57% of enrollments at American colleges since at least 2000, according to a recent report by the American Council on Education (see chart above for BA degrees,
data here). Researchers there cite several reasons: women tend to have higher grades; men tend to drop out in disproportionate numbers; and female enrollment skews higher among older students, low-income students, and black and Hispanic students."

From the article "
Feminists Still Defending Radical Gender Inequality in Education":

"There was a time, of course, when feminists railed against gender inequality in a wide variety of areas, and rightly so. What possible reason could there be for inequalities based on sex in education, the workplace, academia, government, etc.? And they had a good point; there was no legitimate reason.

But the instant the shoe gets onto the other foot, the principle of gender equality vanishes from feminist discourse. Funny how that happens. Indeed, when it comes to the radical gender equality in education, feminists tie themselves in rhetorical knots justifying the very thing they were screaming about just 30 years ago.

Once feminists pretended to care about gender equality, but when that principle could conceivably benefit men, all of a sudden they’re not. There’s a word for that – hypocrisy."

Male Workers Still Outnumber Women 52% to 48%

The New York Times reports today that "Women Now a Majority in American Workplaces":
For the first time in recorded history, women outnumber men on the nation’s payrolls. This benchmark is bittersweet, as it comes largely at men’s expense. Because men have been losing their jobs faster than women, the downturn has at times been referred to as a “man-cession.”

Women’s new majority in the nation’s workplaces comes decades after women first began trading in their aprons for pantsuits in droves, and it reinforces expectations that women will continue on the path to pay parity.

“Important milestones remain to be achieved, but women’s surpassing 50 percent of employment is something that historians will note for years to come,” said Casey B. Mulligan, an economics professor at the University of Chicago who has been tracking the recession’s effects on both sexes.
MP: There are a few problems with this report.

1. On a seasonally adjusted basis, the percent of women on nonfarm payrolls in January was 49.9% (see Table B-5 of the
BLS report), so women were not a majority on a seasonally adjusted basis.

2. More importantly, the nonfarm payroll data excludes almost 9 million American workers including the self-employed, unpaid family workers, agricultural workers, and private household workers, who are all included in the more comprehensive household survey. The two charts above shows employment levels and employment shares by gender, using the BLS monthly household survey data back to 1948.

The top chart shows historical employment levels by gender (household survey), and for January 2010, there were almost 7 million more men employed than women: 72,516,000 men vs. 65,817,000 women. The bottom chart displays employment shares by gender and shows that men held 52.42% of all jobs in January.

3. Gender parity by employment level/share really doesn't have anything to do with gender parity for pay, since even with employment gender parity there will still be gender differences in hours worked, career choices, family roles, career interruptions, etc.

4. For women's jobs to come at the expense of men's jobs requires a fictitious labor market with a fixed number of jobs, so the writer has committed the "fixed pie fallacy." As Milton Friedman reminds us, “Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.”

M2 Growth Falls Below 2% for 1st Time Since 1995

Data source.

Quotes of the Day: Politicians in Wonderland

Thomas Sowell
1. The big question that seldom— if ever— gets asked in the mainstream media is whether these are a net increase in jobs. Since the only resources that the government has are the resources it takes from the private sector, using those resources to create jobs means reducing the resources available to create jobs in the private sector.

So long as most people do not look beyond superficial appearances, politicians can get away with playing Santa Claus on all sorts of issues, while leaving havoc in their wake— such as growing unemployment, despite all the jobs being "created."

2. Whatever position people take on health care reform, there seems to be a bipartisan consensus— usually a sign of mushy thinking— that it is a good idea for the government to force insurance companies to insure people whom politicians want them to insure, and to insure them for things that politicians think should be insured. Contrary to what politicians expect us to do, let's stop and think.

Why aren't insurance companies already insuring the people and the conditions that they are now going to be forced to cover? Because that means additional costs— and because the insurance companies don't think their customers are willing to pay those particular costs for those particular coverages.

It costs politicians nothing to mandate more insurance coverage for more people. But that doesn't mean that the costs vanish into thin air. It simply means that both buyers and sellers of insurance are forced to pay costs that neither of them wants to pay. But, because political rhetoric leaves out such grubby things as costs, it sounds like a great deal.

Friday, February 05, 2010

Anti-Greed Michael Moore Wants Taxpayer Money

Filmmaker Michael Moore would like to fill that bag with Michigan taxpayer money.
"A Michigan Republican state senator is calling out filmmaker Michael Moore for requesting $1 million in tax subsidies for his movie “Capitalism: A Love Story,” in which the filmmaker decried the government bailout of Wall Street executives.

State Sen. Nancy Cassis, R-Novi, is asking Moore to withdraw his application from the Michigan Film Office, which would reimburse up to 42% for costs associated with filming in the state. Cassis, who is chair of the Senate Finance Committee, said Moore shouldn’t be treated differently from any other filmmaker applying for the tax credits, but said his public criticisms of corporate welfare ring hollow if he asks for taxpayer dollars. Cassis said the Michigan Film Office told her Moore qualified for $1 million in tax credits.

“He got caught in his own rhetoric and double standards,” Cassis said. “He decried capitalism and big corporations getting government handouts, and he asked for a handout himself from all the taxpayers of Michigan. He presented himself as a defender of the poor and downtrodden, and government should not be supportive of corporate welfare, but he himself is taking money from taxpayers.

She continued, “Michael Moore, if you stand by your position in 'Capitalism: A Love Story,' then withdraw your application from the film office for refunds at the expense of and subsidized by Michigan taxpayers.”

Moore has not responded to media attempts to get his comments, and appears to be "just as elusive as the subject of his breakthrough movie ‘Roger and Me' " according to Kathy Hoekstra of the Mackinac Center who
broke the story last week that Moore applied for the tax subsidy."

Markets In Everything: Online Exam Proctoring

ProctorU is a revolutionary new service to help students take exams online. Using almost any webcam and computer, students can take exams at home, at work, or anywhere they have internet access. Connect one-on-one with your proctor, follow their instructions, and take exams from the comfort of your own home.

Temp Workers, Overtime Signal Gradual Recovery

Two positive signs from today's BLS employment report are:

1) Manufacturing overtime hours for January increased to 3.5 hours, reaching the highest level since August 2008 (see graph). This marks the tenth month in a row that overtime hours have either increased or stayed the same as the previous month, following 16 months of declines (or no change) in average overtime hours.

2) The number of temporary help workers increased in January by 52,000 to the highest level since December 2008 (see graph above), and temporary workers increased for the sixth consecutive month for the first time since 2005. The 227,000 increase in temporary jobs since August is the largest 6-month increase since that data series started in 1990.

Both of those indicators signal a labor market that is slowly recovering, and strongly suggest that the worst is behind us.

Thursday, February 04, 2010

Phoenix, Las Vegas Home Sales Hit 4 Year Highs

From DQNews:

1. Sales of existing homes in the Phoenix region rose to the highest level for a December in four years as home price measures trended lower and investor activity rose. A total of 8,826 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in December, up 3.3% from November and up 30.5% from a year ago. December’s total sales were the highest for that month since December 2006, when 11,341 homes sold. Total home sales have increased on a year-over-year basis for 12 consecutive months.

2. The number of homes that resold in the
Las Vegas region in December shot up to its highest level for that month in five years amid robust sub-$200,000 sales and strong demand from investors. A total of 5,316 new and resale houses and condos closed escrow in the Las Vegas-Paradise metro area in December, up 11.1% from November and up 33% from a year earlier. December’s sales total was the highest for that month since December 2006, when 5,780 homes sold. December marked the 16th consecutive month in which total sales have risen on a year-over-year basis.

Even in Michigan: Hope of Economic Recovery

Comerica Bank’s Michigan Economic Activity Index rose 4 points in December, fully reversing the decline in November. The fourth quarter average was up 2.3% from the third quarter and up 9% compared to the second quarter, which was the cyclical low. The Index averaged 74 for all of 2009, 13 points below the 2008 average.

“The broad-based improvement evidenced in our Index since May surfaced again in December, with seven out of nine variables contributing positively to the Index,” said Dana Johnson, Chief Economist at Comerica Bank. “Bolstered by a rise in steel production, as well as more favorable auto sales, December’s Index erased November’s dip, the only decline in the Index since its May 2009 low. Looking to 2010, our Index should continue to trend higher as a rebound in the state’s auto sector evolves into a more broadly-based recovery.”

MP: If there's hope for the Michigan economy, there's hope for the rest of the country.

Markets in Everything: Bathroom Sex at Restaurant

TORONTO STAR -- Mildred's Temple Kitchen in Toronto is inviting customers to have sex in its bathrooms. The Valentine's weekend promotion takes uncomfortable but electrifying sex from the close confines of an airplane and transfers it to the unisex stalls of the Hanna Ave. restaurant.

The Liberty Village restaurant proposes its modern bathrooms become one of the "101 places to have sex before you die."

Fortune 500 Firms in 1959 vs. 2009; 86% Are Gone

What do the companies in these three groups have in common?

Group A. American Motors, Studebaker, Eastman Kodak, Maytag and National Sugar Refining.

Group B. Boeing, Campbell Soup, Deere, IBM and Whirlpool.

Group C. Cisco, eBay, McDonald's, Microsoft and Yahoo.

All the companies in Group A were in the Fortune 500 in 1959, but not in 2009.

All the companies in Group B were in the Fortune 500 in both 1959 and 2009.

All the companies in Group C were in the Fortune 500 in 2009, but not 1959.

the complete database of the Fortune 500 every year from 1959-2009.

Comparing the Fortune 500 in 1959 to 2009, I find that there are only 72 companies that appear in both lists. In other words, only 14% of the Fortune 500 companies in 1959 were still on the list fifty years later in 2009, and 86% of the companies have either gone bankrupt, merged, gone private, or still exist but have fallen from the top 500 companies (ranked by gross revenue). That's a lot of churning and creative destruction, and it's probably safe to say that many of today's Fortune 500 like the ones listed above will be replaced by new companies in new industries by the year 2059.

Thanks to Nick Schulz for the idea. The 50 year database is a great resource and I might try some additional analysis, this was just a quick start.

Physician Compensation Data for 68 Specialties

Via John Goodman's Health Policy Blog, here's a sortable database of the 2009 Physician Compensation Survey, from the American Medical Group Association for 68 different medical specialties (I had no idea there were that many). Median salaries range from a low of $176,974 per year for "Pediatric Pulmonary Disease" to a high of $641,728 for "Orthopedic Surgeon - Spine." The median salary for the 68 specialties is $278,000.

The highest and lowest five specialties are presented in the chart above (from John's blog).

Jobless Claims in Perspective: Adjusted for Workforce Today's Claims Are Below 1992 Level

WASHINGTON (MarketWatch) -- "First-time filings for state unemployment benefits climbed to their highest level since mid-December last week, defying the forecasts of economists who had expected a sharp downturn, government data showed Thursday. For the week ended Jan. 30, initial claims rose 8,000 to stand at 480,000, according to the Labor Department. A closely watched barometer for U.S. employment, claims had spiked earlier in January. However, economists have thought that the increase would quickly be reversed.

The claims data may cause economists to become more pessimistic about the U.S. employment report for January -- pivotal for jobseekers, investors and Washington policy makers alike -- that will be released by the government on Friday morning. It is starting to look as though the downward trend in claims, which has been key to the story of payroll gains in the next few months, has stalled but we need more data to be sure," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Other economists said the backlog problem was centered in California and may be cleared up in coming weeks. This week, the government said only that there were no reports of unusual factors that might have influenced the data. The four-week moving average for initial claims, designed to smooth out fluctuations in the weekly data, rose to 468,750, up 11,750 (see chart above), the highest level since the week ended Dec. 5."

MP: Following 19 straight weekly declines, jobless claims (4-week moving average) have increased for the last three weeks and are at the highest level in eight weeks.

See Scott Grannis' post on why this recent "hiccup" doesn't mean anything. In his post Scott writes: "In fact, if you adjust claims for the size of the workforce (which is 21% larger today than it was then), today's level of claims is about 5% lower than than the average level of claims in the first half of 1992."

Human Ingenuity and Advances in Engineering Have Turned the U.S. Into Saudi Arabia of Nat Gas

"How ironic that during the ‘drill, baby, drill’ demonstrations as gasoline prices spiked in 2007 and 2008, a silent revolution with natural gas was already underway that will make those concerns largely irrelevant.

By marrying and perfecting two processes into a technology called horizontal fracking, engineering has virtually created, from nothing, new natural gas resources, previously regarded as inaccessibly locked in useless shale deposits. Suddenly, the mammoth shale formations in Texas, Pennsylvania, Ohio, New York, North Dakota, and elsewhere have the potential to produce abundant amounts of gas for decades to come.

Human ingenuity has turned theoretical gas reserves — too costly ever to be exploited — into practical resources. And just in time. Less than a decade ago, experts were noting that conventional natural gas production had begun to plateau, despite annual increases in the number of wells drilled."

~Max Schulz writing in the

MP: The chart above shows natural gas production (data here) in the United States, which recently overtook Russia as the #1 gas producer in the world.

Capitalism Created the Middle Class and They Still Have it Pretty Good

"In the run-up to the release of his new budget, President Obama painted a dire picture of the middle class. It has, he said, 'been under assault for a long time ... '

It's certainly true that the past two years have been tough for many middle-class Americans. Many of them have lost jobs and homes, seen their investments decline and, more broadly, faced new uncertainties about incomes.

Families are suffering in every community – but the entire middle class under assault? Don't believe it. No hard evidence points to a general decline in living standards for the average American family. Perhaps, having it so good for so long has created expectations, some of them a bit unreasonable. Consider:

•America's middle class lives in bigger and better-equipped homes than ever before, with appliances of all kinds, air conditioning, big-screen televisions, computers, DVD players, digital cameras and so much more (see chart above, "The Spread of Products into U.S. Households").

•Nine in 10 households own a car – better equipped, more durable and more fuel efficient than any in history.

•Cell phones once cost $4,200, but they're now less than $100. Nearly every pocket and purse holds a cell phone, many now with Internet access.

•In real terms, the average family's net worth has tripled since 1970, even after the past two years of declines in housing prices and stocks.

•Tap water's free, but Americans still buy 8.6 billion gallons of bottled water a year.

•Obesity has replaced hunger as the most pressing dietary concern.

Innovation and trade continually drive down the real cost of goods and services and increase the productivity of each hour of work. As this capitalist engine churns onward, the scarcity that plagued mankind for millennia has given way to the abundance that's the foundation of today's vast middle class.

The capitalist system literally created the middle class, and the best way to maintain and improve our living standards lies in keeping it functioning at peak efficiency. Government largesse, no matter how high-minded or well-intended, isn't going to do much for the majority of middle-class families. They have to pay their own way – as always."

~From Dallas Fed Economist W. Michael Cox's article, "
The Middle Class Still Has It Pretty Good."

MP: In the graph above, notice how it took almost an entire century for the telephone to become commonplace and reach 90% of all households, compared to the cell phone, which took about a decade to reach 90% ownership.

Milton Friedman on Steel Tariffs and Trade in 1978

Milton Friedman gives a concise and lucid argument for free trade at Utah State University in 1978.

At this link, you can watch Nucor (America's largest steel producer) CEO Dan Dimico's (salary of $3 million per year) argue on "60 Minutes" for trade protectionism for the U.S. steel industry. It gets interesting starting about 8:30 when Dimico responds to being called a protectionist by Leslie Stahl.

HT: Matt Bixler