Saturday, July 02, 2011

Amazing Discovery by the Government in American Samoa: Demand Curves Really Do Slope Downward

From the Government Accountability Office's (GAO) June 2011 report on the devastating effects of Congressionally-mandated increases in the minimum wage in American Samoa by 56% and in the Northern Marian Islands by 66% since 2007 (see chart above):

"In 2007, the United States Congress enacted a law incrementally raising the minimum wages in American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI) until they equal the U.S. minimum wage.  American Samoa’s minimum wage increased by $.50 three times, and the CNMI’s four times before legislation delayed the increases, providing for no increase in American Samoa in 2010 or 2011 and none in the CNMI in 2011 (see chart). As scheduled, American Samoa’s minimum wage will equal the current U.S. minimum wage of $7.25 in 2018, and the CNMI’s will reach it in 2016. 

Here are some of the key findings from the GAO report:

1. In American Samoa, employment fell 19 percent from 2008 to 2009 and 14 percent from 2006 to 2009.  Data for 2010 total employment are not available. 

2. GAO questionnaire responses show that tuna canning employment fell 55 percent from 2009 to 2010, reflecting the closure of one cannery and layoffs in the remaining cannery. Private sector officials said the minimum wage was one of a number of factors making business difficult. 

3. The employers reported taking cost-cutting actions from June 2009 to June 2010, including laying off workers, reducing overtime hours, decreasing benefits, temporarily closing and freezing hiring. The employers attributed most of these actions largely to the minimum wage increases. Cannery officials expressed concern in interviews about American Samoa’s dwindling global competitive advantage.

4. In the CNMI, employment fell 13 percent from 2008 to 2009 and 35 percent from 2006 to 2009.  In discussion groups, private sector employers said minimum wage increases imposed additional costs during a time in which multiple factors made it difficult to operate.

And here are some of the blunt comments about the report from the Governor of Samoa (Appendix VII) and the devastating effects of the mandated wage increases on the Samoan economy:

1. The draft report itself does not capture or convey the magnitude of the economic disaster that has befallen American Samoa.  

2. It is absolutely clear that American Samoa's cannery employment losses, plant closures and and other adverse actions were attributed significantly and most often to the minimum wage increases.

3. There is more than enough evidence in the report to support our recommendation to terminate the increases in the minimum wage immediately in American Samoa. 

4. Application of the U.S. minimum wage to American Samoa, pursuant to the scheduled increases mandated by Congress, continues to have devastating effects on American Samoa's economy.  It is causing severe distortions in American Samoa's labor market. It has driven up labor costs such that businesses are being forced to cut employment, close or relocate.

MP: What's amazing is that it apparently takes 142 pages of government-based analysis in this GAO report to come to the following conclusion: "Demand curves slope downward."

In an amazing flash of economic lucidity back in 1987 during its pre-Krugman era, the New York Times actually got it exactly correct in an editorial titled "The Right Minimum Wage: $0.00":

"The idea of using a minimum wage to overcome poverty is old, honorable - and fundamentally flawed. It's time to put this hoary debate behind us, and find a better way to improve the lives of people who work very hard for very little."

Given the economic devastation the minimum wage has caused for American Samoa, I'm pretty sure its Governor, employers and most employees would agree that the right minimum wage for American Samoa is $0.00 per hour, just like it's the right minimum wage for the entire planet.  

HT: jlkinsella

U.S. is Well-Positioned to Navigate the Exhilarating Changes Coming Because Change is Our Home Field

Walter Russell Mead writing in today's WSJ, "The Future Still Belongs to America":
 
"It is, the pundits keep telling us, a time of American decline, of a post-American world. The 21st century will belong to someone else. This fashionable chatter could not be more wrong. Sure, America has big problems. But what is unique about the United States is not our problems. Every major country in the world today faces extraordinary challenges—and the 21st century will throw more at us. Yet looking toward the tumultuous century ahead, no country is better positioned to take advantage of the opportunities or manage the dangers than the United States.

The great trend of this century is the accelerating and deepening wave of change sweeping through every element of human life. Each year sees more scientists with better funding, better instruments and faster, smarter computers probing deeper and seeing further into the mysteries of the physical world. Each year more entrepreneurs are seeking to convert those discoveries and insights into ways to produce new things, or to make old things better and more cheaply. Each year the world's financial markets are more eager and better prepared to fund new startups, underwrite new investments, and otherwise help entrepreneurs and firms deploy new knowledge and insight more rapidly.

Scientific and technological revolutions trigger economic, social and political upheavals. Industry migrates around the world at a breathtaking—and accelerating—rate.  Each year the price of communication goes down and the means of communication increase.

New ideas disturb the peace of once-stable cultures. Young people grasp the possibilities of change and revolt at the conservatism of their elders. Sacred taboos and ancient hierarchies totter; women demand equality; citizens rise against monarchs. All over the world more tea is thrown into more harbors as more and more people decide that the times demand change.

This tsunami of change affects every society—and turbulent politics in so many countries make for a turbulent international environment. Managing, mastering and surviving change: These are the primary tasks of every ruler and polity. Increasingly these are also the primary tasks of every firm and household. 

This challenge will not go away. On the contrary: It has increased, and it will go on increasing through the rest of our time. The 19th century was more tumultuous than its predecessor; the 20th was more tumultuous still, and the 21st will be the fastest, most exhilarating and most dangerous ride the world has ever seen.

Everybody is going to feel the stress, but the United States of America is better placed to surf this transformation than any other country. Change is our home field. It is who we are and what we do. Brazil may be the country of the future, but America is its hometown.

Happy Fourth of July."

Friday, July 01, 2011

How State Income Tax Rates Affect NBA Outcomes

Drew Johnson of the Taxpayers Protection Alliance has a great post about how state and local income tax rates determine winners and losers in the NBA.  Here are some key excerpts:

"The NBA operates under a salary cap that not only limits the total amount a team can spend on the combined salaries of all players, but also places a ceiling on the amount that individual players can earn.  As a result, top players with similar years of service in the league make roughly the same salary regardless where they play. Since the maximum salary available to an elite level player varies little from one team to the next, state and local income tax rates play the greatest role in determining the difference in how much money star players ultimately pocket from team to team.

Exhibit A: When LeBron James famously ditched the Cleveland Cavaliers for the Miami Heat last summer, it was estimated that he would save $25 million in state taxes over the next five years by playing in income tax free Florida rather than Cleveland, where combined city and state income taxes approach 8%.

There is a clear pattern of talented players migrating to, or staying with, teams in states with little or no personal income tax. Since they can more easily attract and keep better players, teams in states with lower taxes have consistently performed better on the court than teams in highly taxed states in recent seasons.

Over the past seven years, teams based in the 10 lowest taxed cities in the NBA reached the NBA Finals seven times, winning four championships (Dallas, Miami and San Antonio, twice). In contrast, only three times did one of the 10 teams that play in the NBA markets with the highest income tax burdens reach the Finals.

The trend continued this season when seven of the teams located in the NBA’s 10 lowest taxed cities made the playoffs. This year’s playoffs featured only three teams in the 10 highest taxed NBA cities. During the 2010-11 NBA season, the 10 teams playing in the cities with the lowest income tax burden averaged a stout 57.8% winning percentage. The 10 teams playing in the cities with the highest income tax burden combined for a paltry 39.3% winning percentage."

MP: The chart above (click to enlarge) displays a regression analysis that supports Drew's findings (each blue dot represents an NBA team).  For the 2010-2011 season there was a statistically significant negative relationship (at the 1% level) between: a) the winning percentage for NBA teams, and b) the combined state and local income tax rates for an NBA team's home state.   That is, the higher (lower) the income tax burden of an NBA team's home state the lower (higher) the winning percentage for that team.

From the regression equation, we can quantify the relationship as follows: For every one percentage point increase (decrease) in the combined state and local income tax rate in the state of an NBA team, the winning percentage of that team decreases (increases) by 2.33 percentage points (and that relationship is statistically significant at the 1% level, with a t-statistic of 3.36).  

DSK Guilty: Intrade Odds Fall From 73% to 20%

Intrade.

Thursday, June 30, 2011

Quote of the Day: Unbelievably Loopy Economics; CAP Finds That Demand Curves Slope Upward

"The Center for American Progress, often called the think tank for the Obama White House, recently recommended another increase in the minimum wage to $8.25 an hour. Though the U.S. unemployment rate is 9.1%, the thinkers assert that a rising wage would "stimulate economic growth to the tune of 50,000 new jobs." So if the government orders employers to pay more to hire workers when they're already not hiring, they'll somehow hire more workers. By this logic, if we raised the minimum wage to $25 an hour we'd have full employment."

~WSJ editorial

How The Economic Miracle of Chile Increased Life Expectancy by Almost 22 Yrs. in Just Half a Century

The top chart above helps to document graphically what has accurately been described as the “the economic miracle of Chile.” Up until the early 1980s, when the first round of economic reforms (1974–1983) were starting to have a positive effect, Chile’s economic performance was among the weakest of the Latin American countries, with annual increases of real GDP per capita averaging only 0.70% from 1913 to 1983. Additional economic reforms in 1985 and 1990 that included trade liberalization supercharged Chile’s economy, and annual growth in per capita output since 1983 has averaged an impressive 4.0% per year. Before the economic reforms, with only 0.70% annual growth, it took almost an entire century for living standards to double in Chile; living standards now double every 19 years with 4.0% real growth, and that’s a real economic miracle!

A major factor in Chile’s amazing economic success has been its active pursuit since the 1990s of becoming one of the world’s most open and free markets. To help overcome its natural handicap of being a small and remote country, Chile has become a world leader in free trade, demonstrated by its free trade agreements with more than 50 countries around the world, giving its consumers and companies access to more than half of the world’s markets.

The bottom chart above illustrates a major benefit of Chile's miraculous economic turnaround: a significant increase in life expectancy relative to its South American neighbors.  In 1960, life expectancy in Chile was only 57 years, much lower than Venezuela (59.5 years), Paraguay (63.8 years) and more than five years below Argentina (65.2 years).  By 2009, life expectancy in Chile increased to 78.7 years, the highest in all of the Americas except for Canada (80.89 years) and the United States (79.43 years).  That's an amazing increase of almost 22 years in life expectancy for Chileans, from 57 to 78.7 years, in just half a century. 

Bottom Line: The "Chilean economic miracle" demonstrates that free market capitalism and free trade are the best paths to prosperity and a long life. 

Thanks to Charles Musick for providing the life expectancy data. 

New Milestone for "New Age of Energy Abundance"

Natural gas production in the U.S. set another new monthly record in April according to data released yesterday by the Energy Information Administration.  Gross withdrawals of natural gas increased to an all-time high of 78.58 billion cubic feet (Bcf) per day in April, up by 0.54% from the 78.16 Bcf a day in March, and up by almost 7% from production in April last year (see chart above).  

This new natural gas production record is another new milestone for the ongoing success of the hydraulic fracturing method of extracting natural gas from deep shale rock that is bringing about a new age of energy abundance in the United States.  

North Dakota's Booming Oil Economy

If there's any doubt that domestic drilling of oil and gas generate huge and significant positive economic benefits (more jobs, income, output, tax revenues, etc.), the booming economy in North Dakota provides a convincing case study.  The Peace Garden State's economy is doing so well on so many different measures, here are some highlights of its ongoing economic success:  

1. Monthly oil production dipped slightly in April, but is above its year-ago level by 23% and above the April level two years ago  by 78.5% (see chart above).  Oil production this year has averaged more than 10.5 million barrels per month, which is double the monthly production levels in 2008, and triple the levels from five years ago. 

2. Oil-related employment in North Dakota has more than doubled in just two years, from 6,800 jobs in May 2009 to 15,200 jobs in May of 2011.  While the national economy struggles with another "jobless recovery," North Dakota has continued to add jobs, and not just oil-related jobs.  The overall state employment level reached an all-time high in May and is 2.5% above the June 2009 level when the recession ended.     

3. In the first quarter of 2011, North Dakota led the country with a 6.9% increase in personal income.  Second place Wyoming at 2.6% wasn't even close, and North Dakota's increase was almost four times the national average of 1.8%. 

4. In 2010, North Dakota led the country with a 7.1% increase in real state GDP, almost three times the national average of 2.6%, and two full percentage points above the 5.1% growth for second-place New York.

5. North Dakota continues to lead the country with the nation's lowest jobless rate.  In May, North Dakota's unemployment rate of 3.2% was lower than second-place Nebraska's rate of 4.1% by almost a full percentage point, and was almost six percentage points below the national rate of 9.1%.   

6. As a result of North Dakota's booming oil-based economy, tax collections from 2009-2011 have exceeded projections by $237.5 million.  Through May, sales tax collections exceeded projections by 13% and income tax revenues by 10.6%. 

Bottom Line: North Dakota's impressive economic success clearly illustrates some of the benefits of domestic energy production: more jobs, record economic growth, huge gains in personal income, and even more tax revenues.  There's no reason that the economic success of North Dakota can't be duplicated elsewhere, if we would only open up more U.S. land and off-shore areas to domestic energy exploration and drilling.   

Wednesday, June 29, 2011

But At Least the Politicians Care... In Theory.

Current teenage unemployment rates for May 2011:

All teenagers: 24.2% 


Black teenagers: 40.7%

Male black teenagers: 45.1%

Female black teenagers: 35.9%


To paraphrase Larry Elder, let's sum up. Politicians and the mainscream media ignore market forces, don't care about the reality that demand curves slope downward, and overlook the significant adverse impacts of raising the minimum wage on teenage unemployment.  But hey, at least they care. In theory. Especially for minorities.

Wal-Mart Gets the Gold Medal For Employee Safety


Company
OSHA Enforcement Inspections, 2006-2011
Employees
Inspections per 100,000 Employees
Ford
389
164,000
237.2
Home Depot
406
189,390
214.4
Lowes
247
161,000
153.4
Costco
99
82,000
120.7
Whole Foods
26
45,300
57.4
Target
203
355,000
57.2
McDonald's
69
400,000
17.3
Walmart
215
2,100,000 (1,400,000 U.S. only)
10.2 (or 15.4 U.S. only)

The table above shows: a) the number of OSHA enforcement inspections over the last five years for a sample of large U.S. companies, along with b) the number of employees at those companies (from Yahoo! Finance), and finally c) the number of OSHA inspections per 100,000 employees at those companies.  

Note that when adjusted for the number of employees, Walmart has the best safety record by far among the group of retailers and manufacturers (Ford). Walmart's main competitor Target has almost six times more OSHA enforcement inspections, and Costco has twelve times as many.     

Conclusion: Wal-Mart has a much better safety record than Target, Home Depot, Lowes, McDonald's, Whole Foods, Costco and Ford, when measured by inspections per employee, and therefore gets the Gold Medal for employee safety.

Update: Even after adjusting for Walmart's U.S. employees only (1.4 million), and not adjusting any of the other companies for U.S. employees only, Walmart still comes out ahead with the best safety record per 100,000 employees.

On Behalf of Eyebrow Threaders, The Institute for Justice Goes Up Against The AZ Cosmetology Cartel



The video above is about the Institute for Justice's latest heroic effort to defend small businesses and entrepreneurs against economic protectionism, empower individuals to earn an honest living, and promote economic liberty.  Here's a summary:
 
"Eyebrow threading is a natural and safe method of hair removal that uses a single strand of cotton thread to remove unwanted hair, most commonly from the eyebrows, with no chemicals, dyes, hot wax or sharp objects. But state bureaucrats have decided that threaders cannot practice their trade without first obtaining an unnecessary and expensive government license. The Arizona Board of Cosmetology is now requiring skilled threaders to obtain an aesthetician license, which requires at least 600 hours of classroom instruction—not one hour of which teaches or tests threading—and that can cost over $10,000. But threaders do not need full-blown cosmetology training.

That is why a group of five threaders have filed Gutierrez v. Aune, a lawsuit to vindicate their economic liberty, which is the right to earn an honest living free from unreasonable government regulation. This lawsuit continues the Institute for Justice Arizona Chapter’s ten-year fight to vindicate economic liberty as a fundamental and constitutionally protected right under the Arizona Constitution."

Related: The Arizona Republic newspaper defends the eyebrow threaders' right to earn an honest living in an editorial today titled "Leave Eyebrow-threaders Alone."

Tuesday, June 28, 2011

2,000 Yrs. in One Chart: 23% of all Goods, Services Made Since 1 A.D. Were Produced This Decade!

The chart above is from The Economist and shows a "population-weighted history of the past two millennia" based on "economic output" and "years lived."  According to The Economist:

"By this reckoning, over 28% of all the history made since the birth of Christ was made in the 20th century. Measured in years lived, the present century, which is only ten years old, is already "longer" than the whole of the 17th century. This century has made an even bigger contribution to economic history. Over 23% of all the goods and services made since 1AD were produced from 2001 to 2010." 

MP: It also looks like more economic output was produced in the 20th century than in the previous 19 centuries combined.

HTs: Robert Kuehl and Steve Bartin

Inconsistencies in Reporting U.S. Trade Data? Is the BEA Following the Cash, or the Goods and Assets?

The BEA released data today on the "U.S. Net International Investment Position at Yearend 2010" with these highlights:
  • The U.S. net international investment position at yearend 2010 was -$2,471.0 billion, as the value of foreign investments in the United States ($22,786 billion) continued to exceed the value of U.S. investments abroad ($20,315 billion).   
  • There was a -$74.6 billion change in the U.S. net investment position from yearend 2009 to yearend 2010 that primarily reflected net foreign acquisitions of financial assets in the United States that exceeded net U.S. acquisitions of financial assets abroad.
  • Foreign acquisitions of financial assets in the United States were $1,245.7 billion in 2010, up substantially from $335.8 billion in 2009.
  • U.S. acquisitions of financial assets abroad were $1,005.2 billion in 2010, up substantially from $139.3 billion in 2009. 
MP: This analysis seems to depart from the way the BEA calculates trade data in the following way:

1. When U.S. imports (cash out) exceed exports (cash in), it gets reported by the BEA as a "trade deficit" because the accounting logic is based on following the cash, and not the goods.  Because the "cash out" for imports is greater than the "cash in" for exports, there is a "net cash outflow" from the U.S. to our trading partners, and we call this a "trade deficit."  

2. When the BEA calculates the international investment position, it seems to depart from following the cash, and switches to following the assets.  The fact that the value of foreign investments in the United States ($22,786 billion) exceeds the value of U.S. investments abroad ($20,315 billion) means that there has been a net inflow, or capital surplus, into the  U.S. of $2,471 billion.   And yet the BEA reports this as a negative -$2,471 billion because of the switch from following the cash (+$2,471 billion inflow) to following who ends up with the assets. 

Likewise, the BEA reports a -$74.6 billion annual change in the U.S. net investment position for 2010 because of a $74.6 billion capital inflow, or as the BEA stated because "net foreign acquisitions of financial assets in the United States exceeded net U.S. acquisitions of financial assets abroad" last year. 

Why the switch from following where the cash ends up (and not goods) when reporting trade data for the U.S., to following where the asset ownership ends up (and not the cash) when reporting the net international investment position for the U.S.?

If the government reported trade statistics the way it reports our net investment position, the BEA would follow where the goods end up and not where the cash ends up. In that case, it seems like the BEA would report our "trade deficit" instead as a "trade surplus."  Reason? We acquire more output produced in foreign countries in a given quarter or year than the output our trading partners acquire that was produced in the U.S. during that time period.  In terms of which country ends up with the most "stuff" on net, the U.S. would be running a "trade/stuff/output surplus," and not a deficit.  It's only because the BEA tracks which country ends up with the most "money" on net, and not the most "goods" on net, that the BEA reports a "trade deficit" for the U.S.

Alternatively, if the BEA reported the U.S. net international investment position the way it reports trade data, shouldn't it be reporting a positive $2,471 billion net investment position overall and a positive $74.6 surplus for 2010?  

The BEA is apparently reporting the the U.S. currently has both a "trade deficit" and an "international investment" deficit?  How can that be?

Chart of the Day: Motorcycle Deaths by Age

The chart above shows the percentage of annual motorcycle deaths represented by the youngest age group (< 29 years) and the oldest group (> 50 years), according to annual data from the National Highway Traffic Safety Administration for the years 1975 to 2009.  In 1975, 80% of motorcycle fatalities were in the youngest age group and that percentage fell over time; only 3% of the deaths were in the older age group in 1975 and that share increased over time (see chart).  It's interesting to note that by 2009, the share of motorcycle deaths for the older group (31%) exceeded the share of deaths for the younger group (26%) for the first time ever.   

I assume these trends in motorcycle deaths reflect the popularity of motorcycles among the baby boom generation, who started driving motorcycles when they were younger and have continued to drive bikes as they age.  Meanwhile, if motorcycles have become less popular among young people in their 20s, the two demographic trends would explain why the share of motorcycle deaths represented by the 50+ age group is increasing, and was greater in 2009 than the younger age group's share of deaths.   

The Iron Law of Intervention

Economist Art Carden identifies what he calls an Iron Law of Intervention in his recent Forbes column: "If you want to make a problem worse, pass a law to fix it."

Art illustrates the law by explaining how price gouging laws actually make conditions much worse, not better, for the victims of natural disasters like the recent tornadoes in Alabama and Missouri.

Other examples of the Iron Law would be: a) rent control laws, which worsen shortages of affordable housing, and b) minimum wage laws that make unskilled workers worse off, not better off. 

Semi-Annual Grammar/Punctuation/Spelling Rant: Why Is This Simple Grammar Rule SO Difficult?

Please indulge me in my semi-annual supercilious grammar - punctuation - spelling rant. Here's some background, here's the rule, and here are some recent examples below from CD comments of the misuse of "it's" for "its."  Excuse my snobbish confusion, but I still can't figure how or why such a simple rule (from about the third grade maybe?) gives so many intelligent people so much trouble?  "It's" is a contraction for "it is" and if you can't substitute "it is" for "it's" you should be using "its" (possessive) and not "it's."

1. You simply list every evil regime you can think of and then credit it's existence and it's crimes to the U.S.

2. The fact that the US imports most of it's oil from Canada and not the Saudis is irrelevant.

3. The age of the US truck fleet is at it's highest level since the interstate highway system.

4. That was were I was headed with my question about government and it's role.

5. That is natural law in it's pure form.

6. If you took the whole earth and broke it up into piles of it's constituent components....

7. Any state that wants to operate it's own system with it's own rules can do so including their own version of block grants.

Suggestion: Spend just five minutes thinking about this rule, and you'll know it and "own it" for life, and the misuse of it's will "stand out like a sore thumb" when you see it in print.

Comments welcome.

Dan Mitchell: Replace Medicaid with Block Grants


Monday, June 27, 2011

Food Deserts in DC? No Problem, Let Walmart Handle It. Bonus: Thousands of New Jobs As Well

The United States Department of Agriculture has recently released a "Food Desert Locator," which is an interactive Internet mapping tool that pinpoints low-income neighborhoods across the United States with high concentrations of residents who have limited access to a local supermarket or large grocery store.  From the USDA's May 2, 2011 press release:

"About 10 percent of the 65,000 census tracts in the United States meet the definition of a food desert. These food desert tracts contain 13.5 million people with low access to sources of healthful food. The majority of this population—82 percent—live in urban areas. 

This new Food Desert Locator will help policy makers, community planners, researchers, and other professionals identify communities where public-private intervention can help make fresh, healthy, and affordable food more readily available to residents."   

MP: Who needs "public-private intervention" to make "fresh, healthy and affordable food more readily available" in poor neighborhoods when you have Walmart willing to do a "private intervention" by opening stores in food deserts and solving the problem?  

A case in point: The pink shaded areas on the map above show the food deserts in the Washington, D.C. metro area.  Walmart is planning to open four new stores next year in the Washington area, and two of them are in the city's food deserts (see map above).  And Walmart will not only solve the poor neighborhood's food desert problem, it will also address some other problems like bringing 1,200 new permanent jobs to the District with benefits available to full and part-time associates,  400 constructions jobs to build the  stores, and affordable $4 prescription drugs.  

Bottom Line: If you care about poor people, are concerned about food deserts, and want more Americans to have jobs, you just gotta love Walmart. For all of its ongoing efforts to eliminate food deserts and bring affordable, fresh and healthy food to poor neighborhoods across the country in cities like Chicago and Washington, D.C., I hereby nominate Walmart for the 2011 Nobel Peace Prize. 

How Big U.S. Companies Would Rank as Countries

Based on 2010 sales revenue, Business Insider has a list of how 25 of America's largest companies compare to the GDP of entire countries in 2010, here are the top three:

1. With 2010 revenues of $414 billion, Walmart would rank as the world's 26th largest economy, right behind #25 Norway, which produced $422 billion of GDP last year.

2. Exxon would rank as the world's 30th largest economy with $355 billion of revenue, ahead of Thailand's $319 billion of GDP. 

3. Chevron would rank #46 in the world with $196 billion in sales last year, ahead of the Czech Republic's GDP of $192 billion.  

HT: Robert Kuehl

Update: Please note that sales revenue and GDP are measures of different types of economic activity and are not directly comparable in a pure economic or scientific sense.  Consider this to be more of an amusing comparison that allows us to put the billions of dollars of revenue that Walmart or ExxonMobil generate every year into some context by comparing those dollar amounts to the annual output of entire country, giving us an appreciation of the size of America's largest companies.    

#1, #2 American-Made Cars: Toyota and Honda


Rank 2011Make/ModelU.S. Assembly LocationRank 2010
1Toyota Camry Georgetown, Ky.;1
Lafayette, Ind.
2Honda Accord Marysville, Ohio;2
Lincoln, Ala.
3Chevrolet Malibu Kansas City, Kan. 5
4Ford Explorer Chicago, Illinois 
5
Honda Odyssey
Lincoln, Ala. 6
6Toyota Sienna Princeton, Ind. 10
7
Jeep Wrangler
Toledo, Ohio 9
8
Chevrolet Traverse
Lansing, Mich.
9Toyota Tundra San Antonio, Texas 8
10GMC Acadia Lansing, Mich.
Sources: Automaker data, Automotive News, dealership data, and National Highway Traffic Safety Administration

"CarCars.com's American-Made Index (AMI) recognizes cars and trucks that are built here, have a high amount of domestic parts and are bought in large numbers by American consumers (see top ten above). Despite stagnant sales, the Toyota Camry and Honda Accord remain atop this year's American-Made Index. Falling domestic parts content axed Ford's popular Escape and Focus, but the Dearborn MI automaker's redesigned, Chicago-built Explorer hit the ground running and entered the list at fourth place.

Detroit's full-size pickups, once a dominant force on the AMI, remain off the chart. The F-150 held a commanding No. 1 spot in the first three years that Cars.com compiled the index, with domestic parts content as high as 90 percent. Alas, today's Michigan- and Missouri-built F-150 bears only 60 percent domestic content rating. Similarly, the Chevrolet Silverado, which held second place for much of the F-150's reign, has just 61 percent domestic content. Chrysler's Ram 1500 pickup's 70 percent domestic content fares better, but it still falls short of the AMI's 75-percent cutoff."

MP: Three out of the top five, and four out of the top six American-made cars are built by the Japanese automakers Toyota and Honda.  Out of the top ten American-made cars, half are built in the U.S. by Toyota and Honda, three by Toyota and two by Honda. 

Update: Isn't it a bit ironic that many of the "most American made" cars would get towed from the two UAW parking lots in Flint, MI pictured below? And what about the 17 vehicles on the UAW’s 2011 Vehicles Guide built in Canada by unionized members of the "Canadian Auto Workers" - including the Chevy Camaro, Chrysler Town and Country, Dodge Challenger, Lincoln Town Car - wouldn't they be considered "foreign cars" subject to getting towed by UAW Local 659? And the following vehicles on the list that are built by UAW workers in the U.S. for Japanese automakers Mazda and Mitsubishi would apparently be approved at either lot: Mazda6, Mitsubishi Eclipse, Mitsubishi Eclipse Spyder, Mitsubishi Galant, Mazda B-series, and the Mitsubishi Endeavor?




Update: See Don Boudreaux's Open Letter to the President of UAW Local 599.  

Sunday, June 26, 2011

Sunday Links

1. Intrade contracts for Obama to be re-elected next year are now trading at 56%, the lowest re-election odds since early January 2011 (see chart above).   (HT: Steve Bartin)

2. Made in China: The new San Francisco-Oakland Bay bridge.

3. Children with Medicaid are far more likely than those with private insurance to be turned away by medical specialists or be made to wait more than a month for an appointment, even for serious medical problems. Reason? Lower payments by Medicaid, delays in paying, and red tape. 

4. Increased worldwide demand is fueling a Kentucky bourbon boom, thanks in part to a growing middle class in emerging markets.  (What would Ian Fletcher, author of "Free Trade Doesn't Work" say?)

5. The U.S. military spends $20 billion annually on air conditioning in Iraq and Afghanistan. 

6. The Great Corn Con: "In its myriad corn-related interventions, Washington has managed simultaneously to help drive up food prices and add tens of billions of dollars to the deficit, while arguably increasing energy use and harming the environment." I think author Steven Rattner is agreeing with RollingStone Magazine that "Ethanol is not just hype -- it's dangerous, delusional bullshit."

Quote of the Day: Thomas Sowell on the Cavemen

At Cafe Hayek, Don Boudreaux quotes economist Julian Simon:

“Natural resources are not finite in any meaningful economic sense, mind-boggling though this assertion may be.  The stocks of them are not fixed but rather are expanding through human ingenuity.”

Here's a related quote about natural resources from economist Thomas Sowell in his book "Knowledge and Decisions":

"The cavemen had the same natural resources at their disposal as we have today, and the difference between their standard of living and ours is a difference between the knowledge they could bring to bear on those resources and the knowledge used today."