How Diversity Punishes Asians and Poor Whites

From Princeton Professor Russell K. Nieli's article "How Diversity Punishes Asians, Poor Whites and Lots of Others":

"A new study by Princeton sociologists Thomas Espenshade and Alexandria Radford is a real eye-opener in revealing just what sorts of students highly competitive colleges want -- or don't want -- on their campuses and how they structure their admissions policies to get the kind of "diversity" they seek. The study draws from a new data set, the National Study of College Experience (NSCE), which was gathered from eight highly competitive public and private colleges and universities (entering freshmen SAT scores: 1360). Data were collected on over 245,000 applicants from three separate application years, and over 9,000 enrolled students filled out extensive questionnaires.

Consistent with other studies, though in much greater detail, Espenshade and Radford show the substantial admissions boost, particularly at the private colleges in their study, which Hispanic students get over whites, and the enormous advantage over whites given to blacks. They also show how Asians must do substantially better than whites in order to reap the same probabilities of acceptance to these same highly competitive private colleges. On an "other things equal basis," where adjustments are made for a variety of background factors, being Hispanic conferred an admissions boost over being white equivalent to 130 SAT points (out of 1600), while being black rather than white conferred a 310 SAT point advantage. Asians, however, suffered an admissions penalty compared to whites equivalent to 140 SAT points.

The box students checked off on the racial question on their application was thus shown to have an extraordinary effect on a student's chances of gaining admission to the highly competitive private schools in the NSCE database. To have the same chances of gaining admission as a black student with an SAT score of 1100, an Hispanic student otherwise equally matched in background characteristics would have to have a 1230, a white student a 1410, and an Asian student a 1550.

At private institutions whites from lower-class backgrounds incurred a huge admissions disadvantage not only in comparison to lower-class minority students, but compared to whites from middle-class and upper-middle-class backgrounds as well. The lower-class whites proved to be all-around losers. When equally matched for background factors (including SAT scores and high school GPAs), the better-off whites were more than three times as likely to be accepted as the poorest whites (.28 vs. .08 admissions probability). Having money in the family greatly improved a white applicant's admissions chances, lack of money greatly reduced it. The opposite class trend was seen among non-whites, where the poorer the applicant the greater the probability of acceptance when all other factors are taken into account. Class-based affirmative action does exist within the three non-white ethno-racial groupings, but among the whites the groups advanced are those with money.

When lower-class whites are matched with lower-class blacks and other non-whites the degree of the non-white advantage becomes astronomical: lower-class Asian applicants are seven times as likely to be accepted to the competitive private institutions as similarly qualified whites, lower-class Hispanic applicants eight times as likely, and lower-class blacks ten times as likely. These are enormous differences and reflect the fact that lower-class whites were rarely accepted to the private institutions surveyed. Their diversity-enhancement value was obviously rated very low.

Poor Non-White Students: "Counting Twice"

The enormous disadvantage incurred by lower-class whites in comparison to non-whites and wealthier whites is partially explained by Espenshade and Radford as a result of the fact that, except for the very wealthiest institutions like Harvard and Princeton, private colleges and universities are reluctant to admit students who cannot afford their high tuitions. And since they have a limited amount of money to give out for scholarship aid, they reserve this money to lure those who can be counted in their enrollment statistics as diversity-enhancing "racial minorities." Poor whites are apparently given little weight as enhancers of campus diversity, while poor non-whites count twice in the diversity tally, once as racial minorities and a second time as socio-economically deprived. Private institutions, Espenshade and Radford suggest, "intentionally save their scarce financial aid dollars for students who will help them look good on their numbers of minority students."

HT: Andrew Biggs

Richest Man in the World Says That Trillions of Dollars to Charity Haven't Solved Anything

BLOOMBERG -- "Billionaire Carlos Slim, the richest man in the world according to Forbes magazine, said he’d rather spend money on projects that create jobs than give away his cash as part of a fight against poverty.

“The only way to fight poverty is with employment,” Slim said at a conference in Sydney last month. “Trillions of dollars have been given to charity in the last 50 years, and they don’t solve anything.”

Slim’s comments come as Bill Gates and Warren Buffett are in China to persuade fellow billionaires to give at least half their wealth to charity. Buffett, chairman of Berkshire Hathaway Inc., and Microsoft Corp. cofounder Gates have signed up more than 30 philanthropists, including Larry Ellison and Paul Allen, to their Giving Pledge initiative." 

“To give 50 percent, 40 percent, that does nothing,” Slim said. “There is a saying that we should leave a better country to our children. But it’s more important to leave better children to our country.”

Exhibit A: Spending $9 trillion on America's "War on Poverty" hasn't ended poverty in the U.S. (see Cato article, h/t to Juandos). 

Mortgage Rates Fall to 60-Year Low of 4.19%

According to Freddie Mac, that's the lowest 30-year fixed rate since April 1951!

Freelance Nation: The Temp Job Market is Booming

The overall job market might be struggling to recover from the recession, but there’s one sector of the labor market that’s doing quite well: temporary, freelance and contract employment.  Since September of last year, total private-sector employment has increased by 593,000 jobs (data here), and temporary jobs have accounted for 404,200 (or 68.2%) of that increase (data here), according to the Bureau of Labor Statistics (see chart above).  In other words, more than two out of every three jobs added by private employers in the last year have been temporary, freelance or contract workers. 

A front page USA Today story explains how this recent trend towards increased reliance on temporary and freelance workers is helping companies cope with a fragile recovery and oscillating demand, while at the same time offering workers the advantages of more flexibility and independence:   

Across the nation, many companies are shifting to a more flexible workforce populated by temporary workers, contractors and freelancers, loosening the bond between businesses and employees. The firms, aiming to become more nimble and cut costs, want to boost or cut staffing to meet fluctuating demand or deploy workers with specialized skills for short-term projects.

The expanding use of contract workers, in fact, is partly fueled by some Americans who see more flexibility, and even security, in such setups. Many young workers who saw their parents lose jobs the past couple of years "are taking on a free-agent mentality," says Steve Armstrong, general manager of U.S. operations for staffing firm Kelly Services. "They're saying, 'It's not the model I want to find myself in.' " Contract or freelance work, he says, can bolster job security by severing workers' ties to the fortunes of one company.

Read more here at The Enterprise Blog.

API: Rising Demand for Petroleum Indicates a Shift from Economic Stagnation to Economic Recovery

WASHINGTON, October 15, 2010 – "U.S. petroleum demand strengthened for all key refined products in September, indicating a shift from economic stagnation to economic recovery, according to the American Petroleum Institute’s (API) Monthly Statistical Report for September.

September distillate deliveries surged 6.9 percent compared with September 2009, driven by a robust demand recovery in ultra-low-sulfur distillates (ULSD), the type used for on-highway truck diesel fuel, indicating a bounce in industrial activity toward the end of the third quarter. September ULSD deliveries averaged 3.1 million barrels per day, up 9.4 percent from the same month a year ago. For the first nine months of 2010, ULSD deliveries averaged 2.95 million barrels per day, a 2.4 percent increase over the first nine months of 2009.

“The September data suggests a move toward economic recovery,” observed API Chief Economist John Felmy. “Stronger distillate demand indicates an uptick in industrial activity, while stronger jet fuel and gasoline demand point to increased business and consumer confidence.”  Jet fuel demand in September jumped 11.6 percent from 2009 to average 1.6 million barrels per day, while September total gasoline demand ticked up 0.1 percent over the same month a year ago to average 8.9 million barrels per day."

Empire Manufacturing Indexes Improve in October

The NY Fed's Empire State Manufacturing Survey showed an improvement in October for manufacturers in New York State, as the General Business Conditions index rose to 15.73 this month, an 11.6-point gain from the 4.14 level in September (see blue line above).  October marked the 15th consecutive month of a positive reading for the General Business Conditions index, following a 16-month period with 15 negative readings from February 2008 to July 2009 that coincided very closely with the recession period.  

The Future Conditions Index also improved in October to a three-month high of 40.0, which was a healthy gain of almost 9 points from 31.34 in September (see brown line above). Although both Empire indexes have been rather choppy lately, that's typical for these indexes as the graph above indicates.  After some weakness in both Empire indexes over the summer, New York's manufacturing industry seems to be bouncing back in the fall, based on the improvements in the indexes for both current conditions and future conditions.      

Retail Sales Reach 25-Month High in September

Consistent with the recent trend of many states reporting increasing sales tax revenue for the month of September, the Commerce Department reported today that retail sales increased to $367.7 billion in September, the third straight monthly increases, and the highest level of consumer spending in more than two years - since August of 2008 (see top chart above).  Except for declines in May and June, retail sales have increased in every month over the last year.  

On an annual basis, September retail sales were 7.2% above the same month last year, and that marked the 11th consecutive year-to-year percentage increase in retail sales starting last November, following 14 straight monthly decreases in year-t0-year sales (see bottom chart).   This stronger-than-expected retail sales report provides more evidence of an economy that is gradually recovering, and should ease fears of a double-dip recession. 

See news reports here and here. 

The Double Standard for St. Target vs. Pariah Wal-Mart, the Retailer That People Love to Hate

1. Wal-Mart and Target both employ non-union workers. 

2. Until recently, Wal-Mart's health benefits for part-time workers were much more generous than Target;  Wal-Mart workers became eligible for health coverage after six months, while Target made workers wait a full two years (with the high turnover in the retail business for part-time workers, that probably allowed Target to avoid covering thousands of its employees).  Target just recently reduced the waiting period for part-timers to three months.

3. Compared to other retailers as a whole, Wal-Mart's health benefits are more generous - 80% of its workers are eligible for some kind of health coverage, compared to the industry average of only 58%.    

4. In 2009, Wal-Mart was the world's most generous company, giving more than $288 million in cash to hundreds of charities, more than twice as much as Target, which gave $133 million last year.  

Yet, according to this WSJ article (which provided some of the facts above) "the Bentonville, Ark., retailer continues to serve as the archenemy of labor unions and urban foes."  While Wal-Mart frequently gets vilified and demonized, its main rival Target usually seems to "get a free ride."  For example, the WSJ article points out that:

"In Chicago, Target amassed 10 stores, seven of which sell groceries in direct competition with unionized supermarkets, and it is planning several more. Wal-Mart only obtained permission to build its second and third stores there this summer, following a six-year fight.

The dynamic is similar in other big cities where Wal-Mart struggles to expand, such as Los Angeles, where it has just two stores, or New York, where it has none. Target by contrast opened in Harlem in July with a red carpet gala attended by Jerry Seinfeld and New York politicians—and little hand-wringing about the consequences for shopkeepers or union cashiers. 

Wal-Mart Stores Inc. remains a pariah to U.S. labor unions and urban activists who continue to hold the world's largest retailer to a different standard than rival Target Corp. as they block its plans to expand into the nation's biggest cities."

Q: Why the double standard? Unlike Wal-Mart, Target never gets criticized for being nonunion, paying low wages, or driving local merchants out of business, and there are no organized anti-Target efforts like Wakeup Wal-Mart. 

How Free-Market Capitalism Saved the Miners

There's a great article in today's Wall Street Journal by Daniel Henninger about how the frequently maligned principles of free-market capitalism, free trade, globalization, the miracle of the market, the profit motive, and the invisible hand saved the miners in Chile.  Some excerpts appear below, and you can watch Daniel's video above.

"It needs to be said. The rescue of the Chilean miners is a smashing victory for free-market capitalism.

If those miners had been trapped a half-mile down like this 25 years ago anywhere on earth, they would be dead. What happened over the past 25 years that meant the difference between life and death for those men? Short answer: the Center Rock drill bit, from a private company in Berlin, Pa. that has 74 employees."

But the longer answer is that it was really a coordinated global effort that supplied the materials "from the distant corners of capitalism" to help aid and rescue the miners in Chile's Atacama Desert, including:

The drill's rig came from Schramm Inc. in West Chester, Pa.

The high-strength cable winding around the big wheel atop that simple rig is from Germany.

Japan supplied the super-flexible, fiber-optic communications cable that linked the miners to the world above.

Samsung of South Korea supplied a cellphone that has its own projector.allowing the miners to see films or videos of loved ones

Cupron Inc. in Richmond, Va., supplied self-sterilizing socks made with copper fiber that consumed foot bacteria, and minimized odor and infection.

In an open economy, you will never know what is out there on the leading developmental edge of this or that industry. But the reality behind the miracles is the same: Someone innovates something useful, makes money from it, and re-innovates, or someone else trumps their innovation. Most of the time, no one notices. All it does is create jobs, wealth and well-being. But without this system running in the background, without the year-over-year progress embedded in these capitalist innovations, those trapped miners would be dead."

Virginia is State #14 to Report Sept. Tax Gains

"Virginia tax revenues continued to slowly grow in September, state officials said Wednesday, a sign that the state's economy is perking up after the deep economic downturn.

Collections grew by 4.1 percent in September 2010, compared to September a year ago, making September the sixth out of the last seven months in which revenue grew this year over last. State officials said withholding taxes grew 6.8 percent over last year's numbers, while corporate income tax grew 13.8 percent. Sales taxes grew at a more modest 2.1 percent."

See the other 13 states starting here. 

Weekly Rail Traffic, Port of Savannah Show Gains

Weekly rail traffic for the week ending last Saturday (October 9) continued to improve compared with the same week last year, with carloads increasing by 8.8% and intermodal traffic by 13.1%, according to today's report from the American Association of Railroads. Cumulative rail traffic for the first 40 weeks of 2010 has improved by 7.2% for carloads and 14.7% for intermodal units.   

This marks the 39th straight week starting in mid-January of improvements in intermodal rail traffic compared to the same week in 2009, and except for a holiday-related decline in July, rail carloads have increased for the last 32 weeks starting in late February.

In other positive shipping news released today:

"Container throughput in the Port of Savannah jumped 20.1 percent in the first quarter of fiscal 2011 ended Sept. 30, to 742,637 20-foot equivalent units (TEUs), compared to 618,256 TEUs in the same quarter last year, when volume was still depressed by the recession."

World Stock Market Cap Hits A 26-Mo. High in Sept.

According to the World Federation of Exchanges, a Paris-based association of 52 stock exchanges around the world, the world stock market capitalization reached more than $50 trillion in September, the highest monthly value in 26 months, since July 2008.  That was an increase of almost $4 trillion (and 8.2%) compared to the $46.4 trillion value of global equities in August, and a $10 trillion increase since September of last year.  Compared to the cyclical low of $26.6 trillion in February 2009 from the effects of the financial crisis and global economic slowdown, the world stock market capitalization has now almost doubled to $50.2 trillion last month, a gain of 89% in the last 19 months. 

A lot of the growth in world equity values over the last year has been driven by strong returns in the emerging markets (17.5% overall for the MSCI Emerging Markets Index), with especially strong returns over the last 12 months in countries like Chile (53%), Colombia (48%), Turkey (44%), Thailand (43.5%), Indonesia (39%), Philippines (29%) and India (27.5%).  In contrast, developed markets have underperformed the emerging markets over the last year, with returns of 3.3% for Europe, 10% for North America and 4.4% for the Pacific region (data here). 

This strong rebound in global equity valuation to a 26-month high in September of $50 trillion is evidence that the world economies are making a gradual comeback from the 2008-2009 recession and financial crisis, and also means the chances of a global-based double-dip recession are fading away.  

See Scott Grannis' related post "Global Equities Mark a Post-Recession High."

Markets in Everything: Rainfall Futures Contracts

"CME Group, the world's leading and most diverse derivatives marketplace, announced today that it will begin listing and trading rainfall futures, options on futures and binary options beginning October 31 for trade date November 1. The monthly and seasonal contracts will be based on the CME Rainfall Index and will be available March through October.

The rainfall contract locations include Chicago O'Hare International Airport, Dallas-Fort Worth International Airport, Des Moines International Airport, Detroit Metro Airport, Jacksonville International Airport, Los Angeles Downtown USC Campus, New York LaGuardia Airport, Portland International Airport and Raleigh/Durham International Airport." 

Creative Destruction and Consumer Sovereignty

1. List of defunct retailers of the United States.

2. List of defunct department stores of the United States (by state).

3. List of defunct United States automobile manufacturers.

4. List of defunct airlines of the United States.

These lists provide lots of evidence of: a) the discipline of the market, b) consumer sovereignty, c) consumer greed, d) creative destruction, e) the dynamism of the U.S. economy, f) the effectiveness of the profit and loss system, g) entrepreneurship and innovation, and h) intense global competition, among others.  

U.S. International Trade (Exports + Imports) Reaches 22-Month High of $354 Billion in Aug.

Today the BEA released its closely-watched report on “U.S. International Trade in Goods and Services."  In August there was $153.9 billion of international selling activity (U.S. firms selling their output to other countries, or exports) and $200.2 billion of international buying activity (U.S. firms and consumers purchasing products from other countries, or imports). Then what the BEA does (and this is what gets reported widely by the media) is to subtract imports from exports, to arrive at the monthly “trade deficit,” which was -$46.3 billion in August, up from $42.6 billion July.  As usually happens, any increase in the U.S. trade deficit will get reported as a negative event, here's an example today from CNNMoney:

"The U.S. trade deficit ballooned to $46.3 billion in August, according to a government report released Thursday.The trade balance -- which measures the difference between the nation's imports over exports -- came in higher than estimates. The trade gap widened from $42.6 billion in July. An imbalance between exports and imports can drag down economic growth in the U.S and also lead to more job losses in the manufacturing sector."

It's probably a good thing that the government doesn't also report detailed trade statistics among U.S. states, because there would likely be dozens of state "trade gaps" each month between individual states, and I guess that would "drag economic growth in the U.S." just like our "trade gaps" with China or Canada supposedly "drag economic growth in the U.S.?"

As I reported back in August: Given the importance of all international transactions to the U.S. economy, why not consider a measure of international trade that would compute the total amount of international trading activity in a given month by ADDING exports to imports (see the chart above for total monthly trade), instead of netting out these two amounts to calculate the “trade deficit”?

Here’s how the August trade statistics might get reported:

Total U.S. trade with the rest of the world (sales of U.S. products to consumers and firms in other countries PLUS purchases of foreign production by American consumers and businesses) reached a 22-month high of $354.1 billion in August, the highest level since October 2008, and 44% above the April 2009 cyclical low of $246 billion (see chart above).

Further, the combined amount of trade activity for Americans buying and selling goods and services in the global marketplace has increased in 12 out of the last 15 months (following ten consecutive declines), providing further evidence that the economy started on a recovery path last summer and continues to make solid gains almost every month.  Both the sales of U.S. goods and services produced by American firms and sold to the rest of the world, and the purchases of foreign-produced goods and services by American consumers and firms, have been on an upward trend since the summer of 2009 as the U.S. and global economies recover.

Girl Power in the People's Republic of China: They Dominate the World's Richest Self-made Women

And you thought Oprah was rich..... she barely makes it in the top ten richest self-made women in the world. The elite group is now dominated by Chinese women, who hold the top three positions, four out of the top five and more than half of the top twenty (see chart above).  

What would Mao say today? "Let a hundred billionaires blossom in China...."  There are actually now 400-500 billionaires in China according to this source, the largest number of any country in the world.  And what a difference 10 years makes - ten years ago there were only 24 Chinese worth a billion yuan or more ($150 million), there are now almost 1,400.

Bank Failures: The Worst May Be Over

From an article by Daniel Gross "Bank Failures: The Worst May Be Over":

"A close look at the FDIC's data on recent bank failures suggests that the worst may be over. Yes, banks are still failing at a record pace. But the raw number of failed banks doesn't tell the whole story. The banks that are failing these days tend to be smaller, and have fewer deposits. And because other components of the banking industry have returned to health, the cost of these failures to the FDIC's depleted deposit insurance fund is declining.

In 2008, not many banks went belly-up — only 25. But there were some doozies, including mega-banks such as Washington Mutual and IndyMac. Combined, the 25 banks that failed had $234 billion in deposits (see chart above) and $372 billion in assets. These failures cost the FDIC deposit insurance fund, which pays out to make depositors whole, $19.9 billion. Banks that failed in 2008 had median deposits of $456 million and average deposits of $9.4 billion.

In 2009, the number of failures escalated rapidly — to 140, or nearly three banks per week. But the crisis was, in some sense, less severe than it was in 2008. The failures represented a much smaller chunk of the banking system than the Class of 2008 did. Between them, these banks had $137 billion in deposits (see chart) and $167 billion in assets. The banks that failed in 2009 had median deposits of $234 million and an average of $965 million. The 140 failures caused the FDIC's deposit insurance fund to absorb $37.4 billion in losses.

In 2010, the pace of bank failures has picked up. With 11 weeks left in the year, 129 banks have already failed. (This year's list of losers can be seen here.) So it is likely more banks will fail in 2010 than did in 2009. But those banks represent a much smaller chunk of the banking sector than the Class of 2008 or 2009. Combined, this year's dead banks had just $72.4 billion in deposits (see chart) and $84.2 billion in assets. The median deposit level of a failed bank in 2010 is $264 million and the average is $560 million. 

Meanwhile, with surviving banks returning to health, and new capital entering the industry, competition for banks taken over by the FDIC has risen. The end result: bank failures have become cheaper. By my calculations, failures have cost the FDIC deposit insurance fund about $20.15 billion so far this year."

MP: Daniel Gross is careful to point out that 2010 will "still turn out to be a debacle," but it seems clear that by several important measures (total deposits of failed banks, annual FDIC losses, the average size of failed banks in a given year, etc.) the worst of the banking crisis is definitely behind us.  

General Motors and the State of California

A quote from a few years ago: "If you're not familiar with General Motors, it's a health care benefits management firm that sells cars for a loss as a side venture."

Updated version: "If you're not familiar with the state of California, it's a public employee pension management organization that runs a state on the side with a large $19 billion deficit."

California governor Arnold Schwarzenegger explains it this way in today's WSJ:

"The problem is stark: Over the last decade in California, spending on state employees' compensation rose nearly three times faster than state revenues. This has squeezed resources for programs, such as higher education and job training, that benefit private-sector workers. This year, for the first time ever, our state was forced to spend more on retirement costs ($6.5 billion) than on higher education."

N. Carolina is State #13 to Report Sept. Tax Gain

"North Carolina's tax collections are showing small signs of improvement as the state tries to pull out of an economic downturn which caused government shortfalls.  State budget director Charlie Perusse said Tuesday that preliminary September revenues are better compared to the same month a year ago. Taxes withheld from payroll checks are 4.5% higher and sales tax collections are up by 3%. Corporate tax payments have seen an 11% increase.  Perusse said the readings make it the best month for those indicators in a couple of years."

See the other 12 states by starting here. 

Markets in Everything: ZestCash Loans

Yesterday, former Google CIO and VP of engineering Douglas Merrill launched an online loan service called "ZestCash," to "serve the underbanked" and provide an alternative to payday loans.

From the ZestCash website:

"ZestCash offers a fair and transparent alternative for people who need short-term loans but do not have access to traditional credit. We designed ZestCash loans to help people meet their basic life needs without getting themselves into a vicious debt cycle.

With ZestCash loans, borrowers fully understand the entire cost of their loan and set a payment they can afford. Our goal is to offer a hand up to people when they need it most, not to push them down.

ZestCash loans are currently available in Utah. We will be available in additional states soon."

ASA Weekly Staffing Index Holds Steady at 100 for Second Straight Week, First Time Since May 2008

The American Staffing Association Index, a weekly barometer of temporary and contract employment, and a key coincident economic indicator and a leading indicator of total U.S. nonfarm employment, held steady at 100 in the week ending October 3 (see chart above).  According to the ASA:

"During the week of Sept. 27–Oct. 3, 2010, temporary and contract employment remained unchanged (-0.03%), maintaining the ASA Staffing Index at a value of 100. At a current index value of 100, U.S. staffing employment is 45% higher than the level reported for the first week of the current year and is 23% higher than the same weekly period in 2009."

MP: This is the first time since May 2008, almost two-and-a-half years ago, of two consecutive weeks of an ASA Index at 100.  

Barney Frank, Then and Now, CD Edition

Greg Mankiw has a great post about Barney Frank's changing views over time on affordable housing and the role of the GSEs.

Frank's current position was summarized during a radio debate this week when Republican challenger Sean Bielat claimed that "Frank contributed to the downfall and subsequent recession by supporting lenient lending standards for prospective home buyers.  He has long been an advocate for extending homeownership, even to those who couldn’t afford it, regardless of the cost to the American people."

  

The Boston Globe reported on the debate:

"Frank, a leading liberal who has represented the state’s Fourth Congressional District for nearly 30 years and became chairman of the House Financial Services Committee in 2007, said he and other Democrats fought to curb predatory lending practices before the recession but were thwarted by Republicans. He said he had supported efforts to help low-income families rent homes, rather than buy them.

“Low-income home ownership has been a mistake, and I have been a consistent critic of it,’’ said Frank, 70. Republicans, he said, were principally responsible for failing to reform Fannie Mae and Freddie Mac, the mortgage giants the government seized in September 2008."

Greg Mankiw links to a NY Times article that presents a much different Barney Frank in 2003. Here's another example from that era that illustrates just how much Barney Frank's views on affordable housing and GSEs have changed, based on this letter to President Bush in 2004, co-signed by Barney Frank, Nancy Peolosi and 74 other Congressional Democrats: 

"We urge you to reconsider your Administration's criticisms of the housing-related government sponsored enterprises (the GSEs) and instead work with Congress to strengthen the mission and oversight of the GSEs. We write as members of the House of Representatives who continually press the GSEs to do more in affordable housing. 

We have been concerned that the Administration's legislative proposal regarding the GSEs would weaken affordable housing performance by the GSEs, by emphasizing only safety and soundness. While the GSEs' affordable housing mission is not in any way incompatible with their safety and soundness, an exclusive focus on safety and soundness is likely to come, in practice, at the expense of affordable housing.

We also ask you to support our efforts to push the GSEs to do more affordable housing. Specifically, join us in advocating for more innovative loan products and programs for people who desire to buy manufactured housing, similar products to preserve as affordable and rehabilitate aging affordable housing, and more meaningful GSE affordable housing goals from HUD."

Holding Crumbling Cuba Together With Crazy Glue

Cuban blogger Yoani Sanchez writes about a precious and highly valued commodity in Cuba, which is frequently hard to find - Crazy Glue:

"Surrounded by my list of broken things, I start to w0nder if there will be statistics on how much crazy glue is used each year on this Island. I sense that there is a relationship between the need to repair our belongings and the seriousness of the country’s economic crisis. If not, why is the whole world running after an adhesive that is advertised as able to reassemble everything?

In many stores, when this contact cement comes in you’d think they were having a big sale. People buy dozens of tubes, as if its great adherent power could glue together a reality cracked by frustration. When we break something, we rarely have a substitute. So I will leave this post here, and go and buy my share of crazy glue, my necessary dose of that instantaneous mender. Perhaps a few drops will help me to gather the pieces of that future we’ve dropped on the floor, smashing it to smithereens all over the place."

Companies Are Leaving CA By the Hundreds

Relocation expert Joseph Vranich has been keeping track of how many companies are leaving California for more business-friendly states, and the latest tally appears in the graph above above.  For all of 2009, 51 business left California, and just so far this year the number of businesses moving out of California has more than tripled to 158, with several months to go. 

Professors Riding Amtrak’s High-speed Acela Train

John Edgar Wideman, professor of Africana studies and literary arts at Brown University, rides Amtrak’s high-speed Acela train from New York City to Providence, R.I. and writes in the NY Times that he generally finds Acela passengers to be subtly racist because they will only sit next to him as a last resort:

"I’m a man of color, one of the few on the train and often the only one in the quiet car, and I’ve concluded that color explains a lot about my experience. Unless the car is nearly full, color will determine, even if it doesn’t exactly clarify, why 9 times out of 10 people will shun a free seat if it means sitting beside me. Color appears to be a sufficient reason for the behavior I have recorded."

John McWhorter, lecturer at Columbia University and also a "man of color" frequently rides the same Acela train, and writes in The Root that he is mystified because nothing of the sort ever happens to him, and he is in fact perfectly happy to have an empty seat: 

"I kind of enjoy having that empty seat to put my bag and food containers on, there have been many times when someone has sat next to me when the train was nowhere near full and I have grumbled to myself, "Why next to me out of all these other empty seats?"

This is the truth. It is based on several dozen Acela trips. It is based on my own experience in my own black skin. And there is nothing I do to invite company on the train; I almost always have my nose buried in a book or newspaper."

McWhorter also reports that he has "never been stopped for Driving While Black," and he's been waiting for eight years in NYC to be bypassed by a taxi, and he's still waiting - "It has never happened, anywhere in town — ever."

Tennessee is State #12 To Report Sept. Tax Gain

"Tennessee sales tax revenue continued to grow in September, with collections coming in $41 million more than the budgeted estimate.  Tennessee Finance Commissioner Dave Goetz said Tuesday that overall September revenues were $977.5 million, or 6.1 percent, above September 2009 collections.

The general fund was over collected by $28.5 million and the four other funds were over collected by $12.5 million. Goetz said the recent growth in the sales tax and corporate tax categories is particularly pleasing, given the dismal conditions the state faced from 2008 until this spring."

HT: Greg Stowell

See the other 11 states here. 

Everything Has Its Price

Here's an old Catholic joke:

A farmer named Muldoon lived alone in the country with a dog that he loved. After many long years of faithful companionship, the dog died, so Muldoon went to the parish priest and asked "Father, my dear old dog is dead. Could you be sayin' a Mass for him?"

Father Patrick replied, "I am so very sorry to hear about your dog's death. But, unfortunately, I can't say Mass for the poor creature..."

Muldoon said, "I understand, Father. I guess I'll go to this new denomination down the road; no tellin' what they believe... Do you think $500 is enough to donate for the service?"

Father Patrick: "Why didn't you tell me your dog was Catholic?!"

Here's a more recent variation of that joke, except this time it's real (thanks to Thomas Edwards for this link)! 

SANTA MONICA, Calif. (KABC) -- "Santa Monica is looking to ease restrictions on match making. The city had banned such businesses for nearly 60 years. The ordinance prohibiting professional matchmakers dates back to 1954. The city council will consider the change on Tuesday night.

Matchmaking companies could bring the city more revenue. Online matchmaker eHarmony is currently trying to move their headquarters to Santa Monica, but if the ban is not lifted, the move won't happen."

Outsourcing and Insourcing Both Create U.S. Jobs

From today's WSJ editorial "Obama and the Politics of Outsourcing" by William S. Cohen:

 "Most people treat outsourcing as a zero-sum game—one foreign worker replaces one American worker. But this is not how the dynamic global economy works. In 2007, Matthew Slaughter, an economist at Dartmouth's Tuck School of Business, published a comprehensive study of the hiring practices of 2,500 U.S.-based multinational companies.

He found that when U.S. firms hired lower-cost labor at foreign subsidiaries overseas, their parent companies hired even more people in the U.S. to support expanded operations. Between 1991 and 2001, employment at foreign subsidiaries of U.S. multinationals rose by 2.8 million jobs; during that same period, employment at their parent firms in the U.S. rose by 5.5 million jobs. For every job "outsourced" to India and other foreign countries, nearly two new jobs were generated here in the U.S. Those new U.S. jobs were higher-skilled and better-paying—filled by scientists, engineers, marketing professionals and others hired to meet the new demand created by their foreign subsidiaries.

A 2004 study by Prof. Slaughter titled "Insourcing: The Often Overlooked Aspect of Globalization" found that the number of American jobs created by the subsidiaries of foreign-based multinationals has more than doubled over the past generation. In 2002 those subsidiaries employed over 5.4 million American workers, nearly 5% of total private-sector employment. They also paid American workers 31% more than their American nonsubsidiary competitors—an average of $56,667 per year. If Congress enacts legislation to stop American companies from outsourcing, foreign governments could do the same—and that could put at risk millions of high-paying jobs in the U.S."

Shipping Increases at Frankfurt Airport in September and Baltimore Port in August

1. "Frankfurt airport's cargo traffic jumped 15.4 percent in September from a year ago to an all time high for the month. Europe's largest air cargo hub handled 186,111 metric tons in September to match pre-crisis levels and consolidate its lead over Paris Charles de Gaulle, Amsterdam and London Heathrow.  Cargo shipments totaled 185,372 metric tons in August, an increase of 18.4 percent on the same month in 2009."

2. "Container throughput at the Port of Baltimore surged by 21.7 percent in August to 57, 510 20-foot equivalent units (TEUs), compared to the 47,259 TEUs in the same month last year when trade was severely impacted by the recession. Although the volume of containers handled by the port was down .09 percent sequentially from the record volume of 63,740 TEUs in July of this year, it was still the second strongest month for container volume in the port’s history."

Sept. MN, MI Tax Revenues Higher Than Expected

1. Income tax revenue is coming in higher than expected in Michigan, a sign that more people are working or earning more money. Gov. Jennifer Granholm said Monday that the state general fund is expected to have about $100 million more than state economists estimated in May when the books are closed on the budget year that ended Sept. 30.

2.  Minnesota tax collectors took in $55 million more than expected from July through September.  In the last snapshot of the state budget before the Nov. 2 election, Minnesota Management and Budget released an economic update on Monday. The brightest spots were sales and corporate taxes.

That brings the total to 11 states that are reporting either higher than expected tax revenues in September, or gains compared to September of last year, see CD post. 

Intrade Updates

Current odds from Intrade.com (at around 9 a.m.):

1. Republicans to control the House of Representatives after 2010 Congressional Elections: 80%

2. The Democrats to control the Senate after 2010 Congressional Elections: 46%

3. Democratic Party candidate (Harry Reid) to win in Nevada: 45%

Monster Employment Index Europe Up by 21%

 

The Monster Employment Index Europe for online job opportunities increased in September to a 21-month high of 117, up by 2 percent from 115 in August, and by 21 percent from the 97 reading in September last year (see chart above).   Worker demand in almost all sectors improved, with hospitality and tourism showing the biggest monthly gains.  Sweden and Germany registered the biggest gains in online job demand, with monthly increases in September of 9 percent and 3.2 percent respectively, and annual increases of 31 percent and 24 percent. 

According to Monster:

"Across Europe, there is a cautious hint of improvement, with external indicators such as business and consumer confidence reaching three year highs.  The Index is beginning to mirror this sentiment as the annual growth rate for online hiring continues to accelerate.  Compared to September 2009, job opportunities are now 21 percent higher and the Index is at its highest level since December 2008."

N. Dakota Oil Production Sets New Record in Aug.

In August, North Dakota pumped another record amount of oil, producing more than 10 million barrels in a single month for the first time ever (see chart above, data here).  Compared to August of last year, oil production has increased by 41%, and oil production has doubled in a little more than two years - from slightly fewer than 5 million barrels in June of 2008 to more than 10 million barrels in August this year.  

Partly because of its ongoing oil boom, North Dakota continues to lead the nation with the lowest unemployment rate at 3.7% in August, almost a full percentage point below second-lowest state South Dakota at 4.5%, and almost 6 points below the nation's average 9.6% rate. 

Forced Redistribution of Income vs. Blood

1. Do you support the forced redistribution of income?

2. Do you support the forced redistribution of blood?  After all: a) someone needs blood every two seconds, b) one in seven people entering a hospital need blood, and c) one pint of blood can save up to three lives. 

If your answers to the two questions are not the same, you have a problem on your hands, according to Philip Maymin (fellow finalist for the 2010 Bastiat Prize for Online Journalism). 

Price Discrimination: Russians Get a Discount

It is well-known in Russia that citizens often get discounts to museums, cathedrals and other culturally important national and historic landmarks. But how do Russians get the discount?

One common method of price discrimination in Russia is illustrated in the picture above, which shows a sign at Saint Issac's Cathedral in Saint Petersburg, Russia. The top sign says "ENTRANCE TO THE MUSEUM" in Russian. If you can read Russian, you enter to the left and go to a ticket counter that has a lower entrance fee than if you follow the English "ENTRANCE" sign to the right, and pay a higher price. 

Prof. Lewis: Climate Change is the Greatest and Most Successful Pseudoscientific Fraud I Have Seen

87-year old Professor Hal Lewis, Emeritus Professor of Physics at the University of California-Santa Barbara, formally resigned from the American Physical Society (APS) last Wednesday after 67 years as a member.

From Professor Lewis' resignation letter to Curtis G. Callan, Princeton University, President of the APS:

"For reasons that will soon become clear my former pride at being an APS Fellow all these years has been turned into shame, and I am forced, with no pleasure at all, to offer you my resignation from the Society.

It is of course, the global warming scam, with the (literally) trillions of dollars driving it, that has corrupted so many scientists, and has carried APS before it like a rogue wave. It is the greatest and most successful pseudoscientific fraud I have seen in my long life as a physicist. Anyone who has the faintest doubt that this is so should force himself to read the ClimateGate documents, which lay it bare. I don't believe that any real physicist, nay scientist, can read that stuff without revulsion. I would almost make that revulsion a definition of the word scientist.

APS management has gamed the problem from the beginning, to suppress serious conversation about the merits of the climate change claims. Do you wonder that I have lost confidence in the organization?

Your own Physics Department (of which you are chairman) would lose millions a year if the global warming bubble burst. When Penn State absolved Mike Mann of wrongdoing, and the University of East Anglia did the same for Phil Jones, they cannot have been unaware of the financial penalty for doing otherwise. As the old saying goes, you don't have to be a weatherman to know which way the wind is blowing. Since I am no philosopher, I'm not going to explore at just which point enlightened self-interest crosses the line into corruption, but a careful reading of the ClimateGate releases makes it clear that this is not an academic question.

I want no part of it, so please accept my resignation. APS no longer represents me, but I hope we are still friends."

HT: Tom Hemphill

IPN Announces 2010 Bastiat Prize Finalists

LONDON, 11 October -- International Policy Network is pleased to announce the finalists in its ninth Bastiat Prize for Journalism. The competition includes one prize awarded for print journalism ($15,000 total prize money), and one prize awarded for online journalism ($3,000 prize money). Winners and runners-up will be announced in early November.

Seven finalists for the print journalism prize are:

•Andrew Ferguson, Weekly Standard

•Peter Foster, National Post, Canada (2009 finalist)

•Tim Harford, Financial Times (2006 co-winner)

•Jeff Jacoby, Boston Globe

•Bret Stephens, Wall Street Journal

•Jamie Whyte, freelance (for articles written in The Times and Wall Street Journal; (2006 co-winner)

•Martin Wolf, Financial Times

Three finalists for the online prize are:

•James Delingpole, blogger for telegraph.co.uk

•Philip Maymin, columnist, fairfieldweekly.com and lewrockwell.com

•Mark Perry, Carpe Diem blog / American Enterprise Institute / University of Michigan

The Bastiat Prize was first awarded in 2002 and judges have included Lady Thatcher and Nobel-Prize-winners James Buchanan and Milton Friedman. The winner of the Bastiat Prize will receive US$10,000, and the winner of the Bastiat Prize for Online Journalism will receive US$3,000. They will also receive an engraved crystal candlestick - a reference to an essay by Frederic Bastiat entitled “A Petition.”

A list of judges is available on IPN’s website. 

2010 Nobel Prize in Economics

As usual, Tyler Cowen at Marginal Revolution has the best summary, commentary and analysis of this year's Nobel Prize winners in economics:

Peter A. Diamond

Dale T. Mortenson

Christopher A. Pissarides

Tyler's personal observations

Competition for Spare Change: Homeless Meters

Orlando Sentinel -- "Panhandlers in downtown Orlando may soon have some mechanical competition for spare change. City Hall is set to roll out a plan to install "homeless meters" near spots where panhandling is grudgingly allowed.

People could deposit their coins in the repurposed parking meters — painted a different color and set back from the street — instead of giving spare change to panhandlers. The city would collect the money and give it to a nonprofit group to help the homeless."

HT: Buddy Pacifico

Tragedy of the Commons Comes to D.C.

Not to be deterred by the reality that most common property bike programs fail, Washington, D.C. just launched the largest and most ambitious bike-sharing program in the country a few weeks ago.  Capital Bikeshare will eventually provide more than 1,000 red bikes (pictured above on the Duke Ellington Bridge in Woodley Park near my apartment) at more than 100 stations in D.C. and Arlington, VA. (see station map here).   Read a news report here about Capital Bikeshare. 

How have these bike-sharing programs worked out elsewhere?  Not so well.  Here are three examples of bike-sharing programs that have "gone flat" and failed in Paris, Lexington, KY, and Berry College in Rome, Georgia. Reason? "Tragedy of the commons."

Update: Here's another example of a failed bike-sharing program at Florida Atlantic University (HT: E. Frank Stephenson).