Saturday, February 12, 2011

Markets in Everything: U.S. Medicine for Canadians

Canada's Times Colonist -- "A Buffalo-based company is the latest to get in on the medical brokering scheme that’s gaining ground in Canada as lengthy wait times force more and more people south of the border for treatment.

Cross Border Access has been helping Canadians book appointments and negotiate fees for a variety of procedures in upstate New York since May, putting a new twist on an industry that’s raising ethical questions and helping fuel the private-public health-care debate.

Unlike Canadian companies that have popped up offering similar services, this American operation charges a $200-a-year membership fee and connects patients directly with service providers." 

MP: How successful is the company at attracting Canadians to come to the U.S. and pay for medical care when it's "free" in Canada? According to the company's founder, business in 2010 more than doubled over 2009. 

Economic Impact of the Printing Press: Info Age 1.0

Some key paragraphs from the paper "Information Technology and Economic Change: The Impact of the Printing Press" by American University professor Jeremiah Dittmar:

"The first printing press was established around 1450 in Mainz, Germany (see chart above on left). Contemporaries saw the technology ushering in dramatic changes in the way knowledge was stored and exchanged. Printing was from the outset a for-profit enterprise. But what was the economic impact of this revolution in information technology? By lowering the cost of disseminating ideas, did the explosion of print media erode the importance of location?

I find that cities in which printing presses were established 1450-1500 had no prior growth advantage, but subsequently grew far faster than similar cities without printing presses. My work uses a difference-in-differences estimation strategy to document the association between printing and city growth. The estimates suggest early adoption of the printing press was associated with a population growth advantage of 21 percentage points 1500-1600, when mean city growth was 30 percentage points. The difference-in-differences model shows that cities that adopted the printing press in the late 1400s had no prior growth advantage, but grew at least 35 percentage points more than similar non-adopting cities from 1500 to 1600.

Cities that adopted print media benefitted from positive spillovers in human capital accumulation and technological change broadly defined. These spillovers exerted an upward pressure on the returns to labour, made cities culturally dynamic, and attracted migrants.

The printing press was one of the greatest revolutions in information technology. The impact of the printing press is hard to identify in aggregate data. However, the diffusion of the technology was associated with extraordinary subsequent economic dynamism at the city level. European cities were seedbeds of ideas and business practices that drove the transition to modern growth. These facts suggest that the printing press had very far-reaching consequences through its impact on the development of cities."

MP: It's estimated that the invention of the printing press started Information Age 1.0 by lowering the cost of processing, copying and disseminating information by about 1,000 times.  The commercial introduction of the microchip in 1971 was the invention that launched Information Age 2.0, and it's estimated that the microchip lowered the cost of information by about 10 million times.  And today's microchips are about 30,000 times faster than the 1971 version.   

HT: Paul Kedrosky

Wal-Mart Bias, NYC Edition

From today's WSJ, an editorial by Charles Fishman, on Wal-Mart's attempt to open stores in NYC, and the typical, expected opposition it faces (but which apparently Home Depot, Target and Family Dollar didn't face):

"The question, though, is why in capitalist democracy those fears of competition should determine public policy. New York is famous as the center of the nation's media business. But the city didn't step in and ban the Internet 15 years ago out of fear that the city's magazines, ad agencies, TV networks and music recording would be devastated by the new media. And many were.

The city's small groceries, diners, coffee shops, food trucks and boutiques also aren't quite as fragile as the Wal-Mart critics would have us believe. They've already survived the big-box, national-chain onslaught.

Home Depot first came to New York City in 1994. It now has 21 locations, including two in Manhattan. Target first opened in New York in 1998, and now has 10 stores, including one in Harlem. New York has Kohl's and Best Buy, Costco and Ikea, Olive Garden and McDonalds. For those worried about low-priced competition, the city already has 50 Family Dollar outlets. And Manhattan has 150 Duane Reade drug stores, often sharing the same block with thriving family-owned bodegas.

The varied, dense, energetic economy of New York City is very different than the commercial squares of the small towns where Wal-Mart earned its reputation for wiping out local merchants. In Gotham, anyone who doesn't like Wal-Mart's employment and business practices can work and shop elsewhere. Yes, Wal-Mart is nonunion, but Target and Home Depot and Starbucks are all nonunion as well, as are most mom-and-pop stores. 

Perhaps most importantly, it's puzzling why elected officials would oppose a store that, everyone agrees, brings low prices to working-class consumers who need those low prices more than ever."

WSJ Quotes of the Day on Egypt and Iran

From today's WSJ:

1. Peggy Noonan -- "Social media is a revolutionary force. We know that, but we're still catching up with its implications. A leader of the Egyptian revolt was a Google executive. Could the future be any clearer? 

No takeable dictatorship will survive this era. The ones that do last will be so effectively totalitarian that their very brutishness will be their bulwark.

A Hollywood director once said that a great Western is defined by this dynamic: "The villain has arrived while the hero is evolving." Egypt itself is evolving. May its people be heroes and do great things." 

2.  Fouad Ajami --  "The Egyptians will be tested again as to their fidelity to democratic ways. But if this standoff that ended in the demise of the dictator is any guide, the Egyptians may give us a consoling tale of an Islamic people who rose to proclaim their fidelity to liberty, and who provided us with a reminder that tyranny is not fated for the Arabs." 

3. Melik Kaylan about the Iran's ban on Valentine's Day --"Theocratic regimes invariably suffer from the same besetting sin: As the world evolves, they must either revise their antiquated doctrines or try to hold the world rigidly in stasis. Iran's ruling mullahs keep choosing the latter option.

In the end, Iran's rulers face an impossible task. Their genesis myth of a society based on a codified schema of sacred laws looks neither codified nor sacred. It convinces no one. Instead, the regime seems dedicated above all to stamping out joy wherever it may accidentally arise—a sour, paranoid struggle against irrepressible forces of nature, change, the seasons, music, romance and laughter. The Iranian people can take comfort: No earthly authority has won that particular contest for long."

The Waning Power of Unions in the U.S.

In 2010, there were only 11 major strikes and lockouts involving 1,000 or more workers, the second-lowest number  since the major work stoppages series began in 1947 (in 2009 there were 5), the U.S. Bureau of Labor Statistics reported this week (see chart above). 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 11.9% in 2010 (fewer than 1 in 8, and for private workers only 6.9% are in a union, or fewer than 1 in 14).

For example, in the 1947-1980 period when union membership averaged 30% of the workforce, there was an average of 300 major strikes and lockouts per year, and during the last twenty years since 1990, union membership has dropped to an annual average of 14% and the average annual number of strikes fell to 26. 

Update: In what may be a sign of the waning power of public unions and the start of a national trend to help repair state budgets, here's what's happening in Wisconsin:

"Gov. Scott Walker unveiled sweeping legislation that would severely curtail public employee rights and dramatically change the way Wisconsin negotiates with unions going forward.  
To union leaders, and many Democratic lawmakers, the governor's moves represent an all-out effort to end the influence of organized labor in Wisconsin."

Here's more:

"Perhaps the most controversial aspect of Walker's repair bill deals with collective bargaining. The governor wants to remove those rights for most of the 175,000 state and local employees in Wisconsin, allowing workers to negotiate only over salary. By ending state employees' ability to negotiate for their pensions and insurance rates, the governor will be able to increase employee pension contributions to 5.8 percent of salary and more than double their health insurance contributions (to 12.6 percent)."  

HT: Phil Beaver

Friday, February 11, 2011

Exports to China Surge to Record Level in Dec. ($10B); Exports to China Have Grown Faster (19%/yr.) Than Imports (13.8%/yr.) Since 2000

Obama says he wants to double exports in the next five years to create U.S. jobs.  According to data released today by the BEA (available here), U.S. exports to China surged to $10.12 billion in December, a new monthly record, and more than double the $4.6 billion in February 2009, less than two years ago.  In fact, exports to China have more than tripled since January 2006, slightly less than five years ago.  And this apparently happened without any special help from Obama or Bush, it most likely happened because China's economy is booming.

Updated with Annual Data: And as much as we continually hear about China's currency manipulation to artificially increase its exports to the U.S., the chart below shows something very interesting.  When annual exports of China and imports from China are both normalized to equal 100 in January 2000 (when imports were $100 billion and exports were only $16 billion), we can see that exports to China have actually grown much faster (+19% per year) than imports from China (13.8% per year).  We could also say that in 2000, there were $6.25 of imports from China for every $1 of exports to China, and by 2010 the ratio of China imports-to-China exports had fallen to 4. 

HT: Robert Kuehl

Huge Gender Degree Gap at Ages 22-23: National Crisis, Title IX, Government Funding? Probably Not

According to a report released this week by the BLS:

"At age 23, there is a clear gender gap in educational attainment. While nearly 1 in 4 women had earned a bachelor’s degree by the October when they were age 23, only 1 in 7 men had done so, the U.S. Bureau of Labor Statistics reported (see chart above). Additionally, the same percentage of men and women, 16 percent, were enrolled in college at age 23, so it is unlikely the gap in educational attainment will close in the next few years." 

MP: The BLS also reported that at age 22, 12.7% of women had earned a bachelor's degree compared to only 6.8% of men at that age. In other words, at age 22, there are 187 women holding a Bachelor's degree (or more) for every 100 men who have graduated from college.  By age 23, there are 164 women with a bachelor's degree for every 100 men, and that degree gap won't likely change much at later ages because the same percentage of women and men (16%) are enrolled in college at age 23.   

Now that's a huge gender disparity in college completion at ages 22 and 23, but I predict:

1. This gender degree gap will receive almost no media attention, and certainly no attention from the gender activists, who demonstrate a selective concern for only those gender imbalances that favor men.

2. There will be no calls for government studies, or increased government funding to address the problem, and nobody will refer to this persistent gender degree gap as a "crisis."

3. President Obama will not address the issue by signing an Executive Order creating a "White House Council on Men and Boys," like he did for
women and girls.

4. Neither Obama nor Congress will address the gender degree gap by invoking the Title IX gender-equity law, like they have threatened for the gender gap in some college math and science programs.

5. Nobody will blame the gender degree gap on structural barriers from grades K-12 that discourage men from attending or graduating from college, like they do for explaining the gender gap for women in math and science

In other words, the standard "disparity-proves-discrimination" dogma will not be applied in this case of a huge gender imbalance in college completion by ages 22-23, because the disparity favors women, not men. But consider what happens when the disparity favors men, and this is just one example of many:

NY Times: "Women make up 46% of the American workforce but hold just 25% of the jobs in engineering, technology and science, according to the National Science Foundation. To Sally K. Ride, a former astronaut, that persistent gender gap is a national crisis that will prove to be deeply detrimental to America’s global competitiveness."

The Movie "Cedar Rapids" Was Actually Filmed in Ann Arbor, Michigan? Reason? "Film Credit Crack"

According to the Michigan Film Office website, 129 movies have been filmed in Michigan since 2008, including 48 in 2010 ("Gulliver's Travels), 43 in 2009 ("Capitalism: A Love Story"), and 38 in 2008 ("Gran Torino").  

It might seem curious that so many movies are now being filmed in Michigan, a state known more for its automotive industry, failing cities, flat landscape and cold weather than as a top movie destination.  And it might also seem curious that a movie being released this weekend titled "Cedar Rapids" that supposedly takes place in Cedar Rapids, Iowa, was actually instead filmed in Ann Arbor, Michigan.   

Well, it's not so curious once you know that Michigan offers filmmakers a 42% refund or tax credit on their direct production costs in Michigan.  Spend $10 million making a movie in Michigan and you could get $4,200,000 back!  With that kind of taxpayer money available, who wouldn't make a movie in Michigan? Even Michael Moore decided to cash in on Michigan tax credits when he filmed parts of his movie "Capitalism: A Love Story"  in Michigan.

The state of Iowa used to have some tax incentives available for filming there, but they were being phased out around the time that the movie "Cedar Rapids" was originally going to be filmed on location in 2009 in the movie's namesake Cedar Rapids.  So Ann Arbor was selected for filming, because it's comparable in size to Cedar Rapids, and more importantly because Michigan taxpayers would foot the bill for 42% of the film's production costs.  

Fortunately, the Mackinac Center for Public Policy has been exposing the Michigan Film program as a complete boondoggle for Michigan taxpayers.  Even the State Senate Fiscal Agency questioned the program when it estimated that the state gave out credits of almost $150 million during a period when it only took in $26.6m in taxes from filmmakers, for an estimated net loss to the state of $122 million.  

Here's one of the Mackinac Center's first studies exposing the Michigan film program for generating net losses to the state.  Also fortunate is that Michigan's new governor Rick Snyder wants to end the state's "film credit candy," which is maybe more like "film credit crack" for filmmakers, like the producers of "Cedar Rapids." 

Jan. Federal Tax Revenues Rise by $20B (10%)

Following an $18 billion, 8% year-over-year increase in December federal tax revenues, January's federal tax revenues showed an even bigger $20 billion, 10% increase (see top chart above), according to data released earlier this week by the CBO.

Tax receipts for the first four months of fiscal year 2011 (October-January) were higher than receipts during the comparable period last year by $64 billion, representing a 9% increase (see bottom chart above). 
From the CBO report, "Nearly all of that increase was from individual income and social insurance taxes, which together rose by $61 billion (or 10%).  Withholding from employees’ paychecks for income and payroll taxes increased by $45 billion (or 8.2 percent), at least partly reflecting higher wages and salaries."

Now, if they could just get federal spending under control.

See related post here showing 12 states reporting improvements in state tax revenues for January.  

Animation Nation

From today's WSJ article "Animation Nation":

"On the heels of Twitter, blogs and YouTube videos, do-it-yourself animation has emerged as the latest form of self-expression online. These days, anyone looking to make fun of their boss, unleash a rant or comment on the latest news can quickly create a cartoon, thanks to a crop of animation websites. And corporations, advertisers—and Hollywood executives—are beginning to take notice.

Xtranormal, which is backed by Boston-based venture capital firm Fairhaven Capital, says its registered users have jumped from 800,000 to nearly 2.4 million in the last six months. In December, the site began charging for cartoon characters that once were free; the average movie costs about $1 to make. The site says it has seen a steady increase in revenue but has not yet turned a profit. Chief Executive Officer Graham Sharp says the company expects to do so by midyear."

Here's something new from Cato's Dan Mitchell, "Obama and Clinton Talk Taxes."

And here's my attempt at animation:

More Signs of Labor Market Improvements

1. Salaries, Job Offers Up for Class of 2011 (Bloomberg) -- "Undergraduates in general, and undergraduate business students in particular, have reason to rejoice.  New surveys by the National Association of Colleges and Employers show that employers are planning to increase their college hiring by double digits this year, and that salaries are up for the first time since 2008.

Employers reported plans to increase hiring from the Class of 2011 by 13.5% over the prior year. The latest poll, in January, showed that 51.5% of respondents planned to increase hiring, the first time in 18 months that a majority reported such plans.  In the latest salary survey, the average salary offer to a Class of 2011 graduate was $50,034, up 3.5% year over year, with increases reported for two thirds of academic disciplines." 

2. Higher Pay Gains Seen for 2011 (WSJ) -- "U.S. workers have reason to hope for slightly better pay raises this year, a shift that could add momentum to the economic recovery. With corporate America sitting on large piles of cash and manufacturers seeing a surge in exports to fast-growing emerging markets, signs are mounting that some of the benefits will start trickling down to employees.

This could mean average wage gains of as much as 3% in 2011, compared with 1.7% in 2010—enough to boost consumer spending, which accounts for more than two-thirds of the economy, but not so much that it would stoke concerns of an inflationary spiral."

Thursday, February 10, 2011

UCLA Commerce Index Increases for 14th Month

"The Ceridian-UCLA Pulse of Commerce Index (PCI), issued yesterday by the UCLA Anderson School of Management and Ceridian Corporation fell 0.3% on a seasonally and monthly workday adjusted basis in January, giving up some of December’s exceptional 1.8% sequential gain. Because of the very strong December showing, the three-month annualized moving average is up 5.1% and gaining strength (see chart above). This follows a string of weak or negative readings experienced in the second half of last year, further supporting our view that there is no evidence for a “double dip” in 2011. Importantly, however, we are not yet seeing signs of the growth required to drive meaningful employment gains.

The PCI grew 3.4% on a year-over-year basis in January. This marked the 14th consecutive month of year-over-year growth in the index. Growth of 3.4% is respectable, but not exceptional – particularly when compared to the gains recorded in April through July of 2010. However, like last month, the year-over-year growth is encouraging because January of last year was strong, and the index was able to grow over that strong comparison."

NY Politicians Seek to Tame Lawless Bus Industry

A thriving business has developed over the last few years that delivers super low-cost express bus transportation between cities like Washington D.C. and New York City, for as low as $1 (see picture above), but with fares typically running more like $26 round-trip on Megabus, $55 round-trip on DC 2 NY, and $35 round-trip on Chinatown Bus for travel in February.

So what's the problem? The buses are clean, convenient, affordable, on time, and offer free wireless service, and the intense competition between many rival companies keeps it that way.   Well, there really is no problem; that is, unless you're a politician and can't fathom the idea that a market can exist without some kind of government regulation and oversight, i.e. no appreciation at all of "spontaneous order."

Worried that there is a "chaotic lack of rules" that could put travelers "at risk," New York lawmakers have introduced legislation to tame a "lawless bus industry that has left Chinatown like the 'Wild West'." Read more here

HT: Michael Kelly

Offbeat Economic Indicators: Economy is Booming

1. The "RV Indicator":  Sales of Recreational Vehicles are rebounding, and are expected to increase by 8.2% in 2011 compared to last year. 

2. The "Vanity/Implant Index": Plastic surgery procedures were up by 5% in 2010 (296,000 breast implants last year).   

3.  The "Divorce Index":  "In a grim sign of the economic recovery, the divorce rate, which dipped during the recession, appears to be on the rebound."

Markets in Everything: Datasets (Many Are Free)

The website "Infochimps" makes it easy to buy, sell and share data online.  Many datasets are free, and some are available for sale, here are some examples:

1. Play-by-play data for every Major League Baseball game from 1950 through 2009 (free), and MLB boxscores for all games between 1871 and 2008 (free).

2. Twitter Census: 500 million "tweets" from 35 million users between March 2006 to November 2009 ($1,000). 

3. NYSE daily data (open, high, low, close, volume) from 1970 to February 2010 (free), free datasets also available for NASDAQ and AMEX

4. Word list: +100,000 Official Crossword words (Excel file, free).

5. MySpace user count by zipcode ($120).

HT: Peter Parlapiano

Jobless Claims Fall to 2.5 Year Low

Weekly initial jobless claims fell last week to 383,000 on a seasonally adjusted basis, according to today's Department of Labor report, which was the lowest level since July 5, 2008, more than 2-1/2 years ago.  The four-week moving average fell by 16,000 to 415,500 (see chart).

Here's a report from Reuters:

"New U.S. claims for unemployment benefits dropped more than expected last week to touch their lowest point in 2-1/2 years, a government report showed on Thursday, offering assurance that the labor market was strengthening despite January's poor jobs numbers."

Wednesday, February 09, 2011

100 Years of The American Economic Review: The Top 20 Articles

From the February issue of the American Economic Review

100 Years of the American Economic Review: The Top 20 Articles 

Note that the most recent article of the top 20 is Robert Shiller's article from 1981, everything else is before, starting with the Cobb-Douglas article in 1928. 

Michigan, Manufacturing Are Making a Comeback

The chart above displays the monthly jobless rates for Michigan, California and Nevada, and here are a few key observations:

1. For 101 consecutive months between December 2001 and April 2010, the Nevada jobless rate was at or below Michigan's jobless rate, until May 2010 when Michigan's rate dropped below Nevada's for the first time in more than nine years.  The Nevada-Michigan jobless rate gap has increased in every month since May and stands now at 2.8% in December: Nevada (14.5%) vs. Michigan (11.7%, a 23-month low). 

2. For 93 consecutive months between March 2003 and November 2011, the California jobless rate was at or below Michigan's, until last month when Michigan's December jobless rate (11.7%) fell below California's rate of 12.5% for the first time in almost eight years.  

It was easy to spot these trends using Google's interactive graph of state unemployment rates.

Homeownership Rate Falls to 13-Year Low; Gov't. Created An Unsustainable "Homeownership Bubble"

The homeownership rate in the U.S. fell in the fourth quarter of 2010 to 66.5%, according to data recently released by the Census Bureau.  That was the lowest homeownership rate in 13 years, since the 66.4% rate in the fourth quarter of 1998, and it looks like it will probably fall further in the coming years.  

Conclusion: The political obsession with homeownership raised homeownership in the short run to an artificial and unsustainable level of 69% by 2006, but failed in the long run to stimulate homeownership at a sustainable level, and in the process government policy turned good renters into bad homeowners, created a housing bubble, waves of foreclosures, and a subsequent housing meltdown and financial crisis. In other words, the chart illustrates how government policies (monetary, mortgage market, GSEs, CRA, affordable housing, etc.) created an unsustainable "homeownership bubble."

The "Time Cost" of Food Has Fallen Since 2008

Time Cost (in Minutes), Selected Food Items

Although this is not a complete analysis, the chart above (click to enlarge) provides some additional evidence that there is not a lot of food inflation right now in the U.S.  In the post below, there are a lot of comments that are critical of the way the BLS calculates inflation, with some general consensus that the BLS and CPI massively "under-report inflation." 

So here's an alternative approach to measuring food inflation by calculating the "time cost" of food, using:  a) actual retail food prices ("Average Price Data" U.S. city average) in December 2008, December 2009, and December 2010, and b) the average hourly earnings in those same months for "Total Private Industries."  

For example, in December 2008, the food item "Ground chuck, 100% beef" had an average retail price of $3.00 per pound, and the average hourly wage in that month was $18.39 (or 30.65 cents per minute), which would mean that the average worker in December 2008 would have spent 9.78 minutes working at the average wage to earn enough income (disregarding taxes) to purchase one pound of ground beef.  In December 2009, the "time cost" of ground beef would have been 9 minutes, and in December 2010 the "time cost" of hamburger was 9.14 minutes (see chart above).  Therefore, in the two-year period between December 2008 and December 2010, the "time cost" of hamburger fell by 6.54%, and in the one-year period between December 2009 and December 2010, the "time cost" of hamburger rose by 1.56%.  

The chart above shows comparable "time cost" calculations for the food items in the BLS list of average price data for its "Top Picks," and this measure of food inflation should avoid some of the dueling criticisms of the CPI measure of food inflation (upward bias vs. downward bias) by using two nominal measures (retail prices and wages) to calculate the cost of food in what's ultimately most important: the amount of time spent working to earn the income needed to buy food at retail prices. 

Although the list is not exhaustive (and I'll provide a more comprehensive list later), the initial results of these items confirm my previous report that there does not appear to be a lot of food inflation in the U.S. right now.  Especially compared to food prices two years ago, there's no question that the "time cost" of all of these food items fell between December 2008 and December 2010, on average by 5.54%.  Over the last year (December 2009 to December 2010), the changes in the "time cost" of these food items has been mixed: the "time cost" of bread, chicken, eggs, orange juice concentrate, and tomatoes has fallen, while the "time cost" of hamburger, milk, apples, oranges and bananas has risen

I'm working on a more comprehensive list of the "time cost" of food items and will post when it's complete. 

Tuesday, February 08, 2011

There's No Food Inflation in the U.S.

We hear a lot lately about how the prices for commodities, metals (gold and copper), agricultural products and food are rising, but it sure hasn't started showing up yet in the CPI for Food and Beverages, see chart above of annual price inflation for that series.  Annual food inflation through December 2010 was only 1.5%, more than a full percent below the ten-year average of 2.72%. 

Treasury Spread Shows No Sign of Inflation

The current spread between nominal 10-year Treasuries at 3.68% (data) and 10-year TIPS (data) at 1.30% has increased slightly over the last few months, to the current level of 238 basis points as of February 4.  But the current spread is still below the 250 basis point average during 2004, 2005, 2006, 2007 and the first half of 2008 (see chart above).  At least by this Treasury bond-market derived estimate of future inflation, there don't appear to be any inflationary pressures building yet.

Monster Employment Index Gains 25% in January

The Monster Employment Index Europe increased in January by 25% from its year-ago level, the largest year-over-year increase of the current economic expansion (see chart above), and above the 22% gain in December.  There were especially strong annual gains for online job demand in Germany (+37%), Sweden (+32%), France (+23%) and the U.K.'s IT sector (+34%).  

Markets in Everything: Polish Board Game Recreates Communist Shopping Hell

BBC -- "Poles have been queuing to buy a new board game called "Kolejka" (The Queue), which recreates the tedious shopping experience of communist-era Poland. Crowds of people, including those who remember standing for days in queues and teenagers who were not even born in the 1980s, lined up at the state-run Institute of National Remembrance (IPN) to buy the game.

The game's functional box (pictured above) also mimics no-frills communist shopping."   

MP: Interesting that the Poles are lining up in queues today to buy a board game called "The Queue" about the queues of the past.  

HT: Colin Grabow

Will Cuba Be the Next Egypt or Have Market-Based Reforms There Delayed an Egyptian-Like Rebellion?

Mary Anastasia O'Grady asks in yesterday's WSJ: "Will Cuba Be the Next Egypt?", here are the opening and ending paragraphs:

"Developments in Egypt over the last two weeks brought Cuba to my mind. Why does a similar rebellion against five decades of repression there still appear to be a far-off dream? Part of the answer is in the relationship between the Castro brothers—Fidel and Raúl—and the generals. The rest is explained by the regime's significantly more repressive model. In the art of dictatorship, Hosni Mubarak is a piker.

With very limited access, Cubans are already using the Internet to share what has until now been kept in their heads: counterrevolutionary thoughts. If those go viral, even a well-fed military will not be able to save the regime. But for now, Cubans can only dream about the freedoms Egyptians enjoy as they voice their grievances."

From Hernando De Soto's editorial about Egypt in the WSJ last week:

"As in most developing countries, Egypt's legal institutions fail the majority of the people. Due to burdensome, discriminatory and just plain bad laws, it is impossible for most people to legalize their property and businesses, no matter how well intentioned they might be.

The examples are legion. To open a small bakery, our investigators found, would take more than 500 days. To get legal title to a vacant piece of land would take more than 10 years of dealing with red tape. To do business in Egypt, an aspiring poor entrepreneur would have to deal with 56 government agencies and repetitive government inspections.

All this helps explain who so many ordinary Egyptians have been "smoldering" for decades. Despite hard work and savings, they can do little to improve their lives."

From Cuban blogger Yoani Sanchez:

"In just the few months since the announcement of the expansion in the number of licenses for independent work, the results are encouraging. We have begun to recover lost flavors, longed-for recipes, hidden comforts. More than 70,000 Cubans have taken out new licenses to work for themselves and at their own risk, and thousands more are seriously considering the advantages of opening a small family business.

Despite the caution of many, the still excessive taxes, and the absence of wholesale markets, the brand new businesses have started to be noticed in a society marked by stagnation. You see them building their little stands, hanging colorful signs announcing their merchandise, rearranging their homes to accommodate a snack bar or to offer haircuts or manicures. Most are convinced that this time they are here to stay, because the system that so suffocated and demonized them in the past, has lost the ability to compete with them."

MP: Whether it was intentional or not, perhaps the Castro brothers have prevented Cuba from being the next Egypt by introducing market-based reforms that have apparently been well-received by entrepreneurial Cubans.  Even without the access to the Internet that Egyptians enjoy, the new freedom for Cubans to start small businesses may prevent the "smoldering" frustration that led to the Egyptian rebellion.   

Another Gender Gap: Book Reviews in 2010

The organization VIDA: Women in Literary Arts was founded in August 2009 "to address the need for female writers of literature to engage in conversations regarding the critical reception of women’s creative writing in our current culture."

The organization has completed a gender analysis of book reviewers and books reviewed for 2010, and has uncovered gender gaps for both - a disproportionate number of book reviewers are male, and a disproportionate number of books reviewed are written by men (see NY Times breakdown above, 60% of book reviewers were male, and 65% of book reviews were of books authored by men).  Here's what VIDA says:

"We know women write. We know women read. It’s time to begin asking why the 2010 numbers don’t reflect those facts with any equity. Many have already begun speculating; more articles and groups are pointing out what our findings suggest: the numbers of articles and reviews simply don’t reflect how many women are actually writing. VIDA is here to help shape that discussion. Please tell us about the trends you’ve witnessed in your part of the writing world. Let us know what you think is going on. We’re ready and anxious to hear from you. We’re ready to invest our efforts and energy into the radical notion that women are writers too."

MP: Another example of perfect statistical gender parity being the goal? Except in those cases where women are over-represented (e.g. college degrees), and the concern about gender imbalances disappears? 

Monday, February 07, 2011

Employment Trends Index Gains in January

The Conference Board reported today that its composite Employment Trends Index, based on eight individual labor-market indicators (including both hard economic data and confidence measures), increased in January for the fourth consecutive month. The index increased to 100.5 in January from 100.3 in December, and is now above its year-ago level by 7%, and above its cyclical mid-2009 low by 20 points (see chart above).

Says Gad Levanon, Associate Director, Macroeconomic Research at The Conference Board: “Despite anemic job gains in January, the Employment Trends Index suggests that employment growth is poised to accelerate. Both hard economic data as well as confidence measures have improved, and since employment growth typically lags, we expect larger numbers of jobs to be added back into the economy in the coming months.”

MP: The Employment Trends Index has been an accurate leading indicator of trends in payroll employment back to 1973. In that case, the ongoing gains in the index and the 20-point gain since mid-2009 predict that we can look for gradual improvements in labor market conditions in the months ahead. 

Occupational Licensing Totally Out of Control

On the front page of today's WSJ, an excellent article about the rising occupational licensure in some states for some professions (see chart above, click to enlarge): "A License to Shampoo: Jobs Needing State Approval Rise," here are some key paragraphs:

"Mr. Kleiner, labor professor at the University of Minnesota, looked at census data covering several occupations that are regulated in some states but not others, including librarians, nutritionists and respiratory therapists. He found that employment growth in those professions was about 20% greater, on average, in the unregulated states between 1990 and 2000.

Licensing can also drive up costs to consumers. Licensed workers earn, on average, 15% more than their unlicensed counterparts in other states—a premium that may be reflected in their prices, according to a study published by the National Bureau of Economic Research and conducted by Mr. Kleiner and Alan Krueger, an economist at Princeton University.

Mr. Kleiner estimates that across the U.S. economy, occupational licensing adds at least $116 billion a year to the cost of services, which amounts to about 0.1% of total consumer spending. In a look at dentistry, Mr. Kleiner found that the average price of dental services rose 11% when a state made it more difficult to get a dental license.

In many service trades, licensure "is totally out of control," says Charles Wheelan, a lecturer in public policy at the University of Chicago. He says the marketplace might be a better judge than the government of whether a barber or a yoga instructor is competent. "It's fairly easy for you to tell whether you've gotten a bad haircut or not, and if quality turns out to be bad, it's not a big social problem," says Mr. Wheelan.

When a trade group does succeed in getting a licensing law passed, it sometimes exempts existing workers from the testing requirements. In Michigan, for instance, it will soon be a felony to practice massage without a license. Newcomers to the field must take 500 hours of classes and pass an exam to get that license. But a grandfather clause exempts most current massage therapists, including those who may never have taken a class at an accredited school."

MP: See Chapter IX ("Occupational Licensure") of Milton Friedman's book "Capitalism and Freedom."

Markets in Everything: "Cash for Keys" in NYC

In New York City, there is a whole industry built around real estate developers paying tenants to move out of the one million NYC apartments that are still rent-stabilized.  One tenant was able to squeeze $400,000 from an anxious developer for turning over the keys and moving out.

HT: Greg Mankiw

Retail Clinics in the U.S. Could Triple in 5 Years

According to Merchant Medicine's "2011-2015 Walk-In Clinic Market Forecast," the number of retail clinics in the U.S. could almost double from the current level of 1,220 clinics to 2,315 by 2015 under a "mid-case scenario," and the number could more than triple to 3,380 under the "best-case scenario (see chart above).  Even under the "worst case scenario," the number of retail clinics would increase by 33% during the next five years.  The report identifies some key factors that will influence the growth in retail clinics through 2015:

1. "Our take on the insurance mandate portion of health reform is it will have a negligible effect, if any [on retail clinic growth]. What we believe to be more important to watch is the development of accountable care organizations (ACOs) and how those ACOs will impact retail and urgent care.

On the positive side, we see ACOs partnering with retail pharmacies in different ways. One example is the partnerships MinuteClinic is forming with large health systems like the Cleveland Clinic, Allina and Catholic Healthcare West (CHW). The CHW/MinuteClinic partnership is more than a simple exchange of collaborative physicians from CHW for the referral of patients from MinuteClinic that are outside of the limited-scope model.

Beyond these partnerships, where the ACOs don’t bring retail pharmacies into the fold, large health insurance companies will, as evidenced by recent deals between CVS and Aetna, and United Healthcare and Walgreens. All of these partnerships, which Walgreens Health and Wellness Division President Hal Rosenbluth refers to as “health care ecosystems,” will benefit large operators like MinuteClinic (CVS), Take Care Health (Walgreens) and The Little Clinic (Kroger).

2. Market forces have been driving walk-in medicine and will continue in the industry’s favor: cost, convenience, quality and flexibility.

3. Because of the primary care physician shortage in the U.S., there is no question that retail and urgent care clinics will step in where patients have trouble finding access to good primary care physicians. In Baltimore/Washington/Northern Virginia, Patient First has evolved from an urgent-care-only clinic network to become an equally powerful brand for primary care. And retail clinic nurse practitioners are beginning to develop a following as primary care providers in markets where there is a primary care physician shortage."

Sunday, February 06, 2011

January State Tax Revenues Coming in Strong

1. The Massachusetts Department of Revenue collected $2.053 billion in January, an 11.3 percent increase over January 2010.

2. The Pennsylvania Department of Revenue’s tax collections last month showed signs of economic improvement for businesses and the state’s fiscal health, countering the situation this time last year. Overall, the state’s general fund received $2.2 billion from taxes and fees in January, more than 3 percent above what the state estimated it would receive.

3. Indiana reports it took in $41 million more than expected in January. State Budget Agency Director Adam Horst says state tax collections have now increased on a year-over-year basis for 11 consecutive months. Horst says January was the first month in state history when sales tax collections exceeded $600 million in a single month.  Individual income tax collections for the month were 15 percent above the same period last year.

4. With the fiscal year now half over, Hawaii state tax revenues are running 6.3 percent above year-before levels, a sign of economic recovery in a state that gets most of its revenue from excise taxes on consumer and business spending.

5. Net general revenue collections in Missouri increased 6.3 percent in 2011 fiscal year-to-date, starting July 1 and ending Jan. 30, to $4.13 billion compared to $3.88 billion last year in the same period.

6. The Arkansas Department of Finance and Administration said that the state's net available revenues in January totaled $459.8 million. That's $19.7 million more than 2010 and $4.4 million above the forecast.

7. West Virginia general tax revenues topped their January estimate by a whopping $81 million. Tax collections totaled $425 million for the month. The excess puts state government $241 million above revenue projections for the budget year that began July 1.

8. Virginia Gov. Bob McDonnell said Virginia may collect as much as $152 million more than expected for the current two-year budget because of strong tax collections and lower-than-anticipated refunds to taxpayers. Individual withholding collections through January were up 5.2 percent, ahead of the budget estimate of 3.4 percent, suggesting a rebound in small business hiring and wages. 


9. State tax collections in Georgia increased by 8 percent in January, the eighth straight month of growth. For the fiscal year that began July 1, tax collections are also up 8 percent to $9.4 billion."Our state continues its recovery, as many Georgians who have suffered during this downturn return to employment and being paying taxes again," said Gov. Nathan Deal.

10. Minnesota tax collectors did better than expected last month as individual taxpayers withheld and paid more income taxes. Minnesota Management and Budget said that the state collected $137.4 million more than anticipated in January. That's 9.3 percent higher than forecast.  The extra cash puts the state $165.5 million ahead of projected revenues seven months into the current fiscal year.

11. Nebraska collected more tax revenue than predicted for a third month in a row, according to a report released Thursday. The report eases worries that the the state budget situation will worsen, and it contains hopeful signs of economic recovery.

12. Texas sales tax revenue for last month jumped more than 10 percent compared to a year ago as the Texas economy improves.  Sales tax revenues in Texas have improved for the last ten months, reflecting increased activity in almost all major economic sectors.

Believing in the "Magic of the Marketplace"

President Reagan’s visit to the NYSE in 1985 marked the first time a sitting president had visited the Exchange.
On its website, the NYSE has "A Tribute to President Ronald Reagan," highlighting President Reagan's two visits to the"nerve center of entrepreneurial capitalism," and featuring Reagan's core beliefs  as communicated to members of the IMF and the World Bank in September 1981 during Reagan's first administration:

"We who live in free market societies believe that growth, prosperity and, ultimately, human fulfillment are created from the bottom up, not the government down. Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefiting from their success – only then can societies remain alive, dynamic, prosperous, progressive and free.

Trust the people. This is the one irrefutable lesson of the entire post-war period, contradicting the notion that rigid government controls are essential to economic development. The societies that have achieved the most spectacular, broad-based progress are neither the most tightly controlled, nor the biggest in size, nor the wealthiest in natural resources. No, what unites them all is their willingness to believe in the magic of the marketplace."

Made in the USA

From Jeff Jacoby's column in today's Boston Globe "Made in the USA":

"There’s just one problem with all the gloom and doom about American manufacturing. It’s wrong.

Americans make more “stuff’’ than any other nation on earth, and by a wide margin. According to the United Nations’ comprehensive database of international economic data, America’s manufacturing output in 2009 (expressed in constant 2005 dollars) was $2.15 trillion. That surpassed China’s output of $1.48 trillion by nearly 46 percent (see chart above). China’s industries may be booming, but the United States still accounted for 20 percent of the world’s manufacturing output in 2009 — only a hair below its 1990 share of 21 percent.

Perceptions also feed the gloom and doom. In its story on Americans’ economic anxiety, National Journal quotes a Florida teacher who says, “It seems like everything I pick up says ‘Made in China’ on it.’’ To someone shopping for toys, shoes, or sporting equipment, it often can seem that way. But that’s because Chinese factories tend to specialize in low-tech, labor-intensive goods — items that typically don’t require the more advanced and sophisticated manufacturing capabilities of modern American plants.

A vast amount of “stuff’’ is still made in the USA, albeit not the inexpensive consumer goods that fill the shelves in Target or Walgreens. American factories make fighter jets and air conditioners, automobiles and pharmaceuticals, industrial lathes and semiconductors. Not the sort of things on your weekly shopping list? Maybe not. But that doesn’t change economic reality. They may have “closed down the textile mill across the railroad tracks.’’ But America’s manufacturing glory is far from a thing of the past."

Update: The chart above was prepared using the United Nations data on international GDP, including a breakout for manufacturing output, on an annual basis for most countries in the world from 1970-2009.  For most advanced countries, manufacturing data are provided for both: a) manufacturing, and b) total manufacturing including mining and utilities.  Total manufacturing would be a measure consistent with the Federal Reserve's (and other countries') measure of monthly "industrial production," which is for total manufacturing output including mining and manufacturing.  For China, the only measure available from the UN is for total manufacturing, including mining and utilities.  Therefore, the only way to compare manufacturing output in China to the U.S. and other countries using the UN data is to use the measure of total manufacturing (including mining and utilities).