Wednesday Night Links

1. The NFL season hasn't even officially started, but the ads for the 2012 Superbowl are almost sold out already.  (HT: Mike LaFaive) 

2. Twenty high-profile economists have urged the British government to drop the top 50 percent income tax rate, which they say is doing "lasting damage" to the UK economy.

3. With the economy in the dumps for the last few years, it means less trash in the landfills in Florida. (HT: Steve Bartin)

4. NY Fed Report: Consumer Goods from China Are Getting More Expensive (and we can expect that trend to continue).

5. "Managers for the U.K.'g government-run National Health Service are making patients wait longer than necessary for operations, with one claiming that treating them quickly “raises expectations.”  In some areas, patients endured delays of 12 or 15 weeks after GPs decided they needed surgery, even though hospitals could have seen them sooner."

6. In contrast to the last item, read about Thomas Sowell's "same-day" medical service in the U.S.

Big Gov't Doesn't Create Jobs, Gibson Guitar Does

Tennessee Congresswoman Marsha Blackburn issued the following statement today announcing that Gibson Guitar CEO, Henry Juszkiewicz, will be her special guest for President Barack Obama’s address to the Joint Session of Congress on Thursday night:

“Gibson Guitar is at the heart of this jobs debate, and is an example of exactly why President Obama has it wrong when it comes to getting our economy back on track. Maybe if the President spent more time finding real solutions to empowering small business owners and less time hindering businesses like Gibson, we'd see more new jobs being created.

Small businesses under the leadership of executives like Henry are the key to getting our nation’s economic engine running again. While the President is busy delivering speeches, small business leaders like Henry are busy trying to deliver results. The best thing President Obama could do is seek their advice, then get out of the way. Big government doesn’t create jobs, small businesses like Gibson Guitar do.”

See previous CD posts about the government raids on Gibson guitar here and here. 

Drill, Drill, Drill Jobs Plan: +1.4 Million Jobs, $800 Billion in Revenue, and Increased Energy Security

U.S. oil, gas jobs: Status Quo vs. Increased Development

With more than 22 million Americans unemployed (14 million) or working-part time and unable to find full-time employment (8.5 million), there is obviously nothing more important economically today than job creation.  The issue of jobs will likely be one of the main topics at the Republican debate tonight, and it will President Obama's only topic tomorrow night when he addresses a joint session of Congress and outlines his new jobs programs that will cost $300 billion for increased government spending and tax cuts.  How many jobs will be created from Obama's plan remains to be seen, but even if it optimistically (and unrealistically) created 1 million new jobs, that would come at a very expensive cost of $300,000 per job - not such a good deal.

Well, what if we could create 1 million new jobs in the U.S. over the next seven years by 2018, and 1.4 million total new jobs by 2030 without spending a dollar of taxpayer money?  In fact, what if the creation of those new jobs actually generated hundreds of billions of dollars of additional government revenue ($800 billion by 2030).  Sound too good to be true?

Those are the estimates of job creation and increased government revenues that would result from: a) opening access in key regions of the U.S. to oil and natural gas development that are currently closed, b) returning to historical levels of oil and gas development for existing U.S. regions (onshore U.S., the Gulf of Mexico and Alaska) and c) opening the Keystone XL pipeline and other potential Canada-to-U.S. oil pipelines, according to a new report released today titled "U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012-2030)."

The study was conducted by Scotland-based Wood Mackenzie Energy Consulting for the American Petroleum Institute (API), see the API press release here and the full report here.

MP: The chart above graphically shows the net job gains from increased domestic energy development compared to maintaining the current projected levels of domestic energy development through 2030.  Here's one way to understand the impact of those new jobs on the U.S. economy: If we had 1 million of those jobs today, it would lower the U.S. jobless rates from 9.1% down to 8.4% and if we 1.4 million jobs, it would lower the rate down to 8.2%.

When you can add a million or more jobs to the U.S. economy, while at the same time generate hundreds of billions of revenue and also increase America's energy security as an additional bonus, I think you've got a jobs package that will dominate anything that we'll hear about tomorrow night.

Food Truck Links

1. DETROIT -- "It’s only fitting that a region called “The Motor City” is getting into the mobile food game big time.  The new Taco Mama Detroit is now in operation (see photo above)."

2. CANADA -- "Exotic food trucks, which have long been popular staples in such U.S. cities as Los Angeles, New York City and Portland, are slowly making their way to Canada. However, some operators in two of the country's biggest markets say municipal regulations often leave them spinning their wheels.

Montreal has banned street food for more than the last half-century. Toronto has had a moratorium on new food truck vending permits for almost a decade, although it is now reviewing its street vending bylaws. Vancouver, on the other hand, revamped its rules and now is in the midst of a street eats boom."

3. The Washington Post yesterday featured Bert Gall, the head of the Institute for Justice's food truck program, and described his job as "suing the living daylights out of cities that dare to limit the free enterprise of street vendors."

MP: Canada obviously needs a brach office of the Institute for Justice, or an equivalent organization to fight for economic justice! 

 

HT: Mike W.

Markets in Everything: Amazon Lockers at 7-11

"Word on the street is that Amazon is testing out something new in Seattle - lockers at 7-Eleven mini marts that will let online shoppers pick up their packages while they grab a hot dog instead of waiting for the UPS man at home.

How do these work? Presumably, Amazon customers will be able to have their goodies shipped to the 7-Eleven lockers and access the boxes via a pin number supplied with their order notification email (see photo above)."

Link.

U.S. Innovation, Manufacturing Are Alive and Well. Exhibit A: IBM and 3M Collaborate on 3D Chips

IBM and 3M's Breakthrough Stacked Chip Technology Will Be 1,000 Times Faster Than Today's Chips

Two of America's oldest and most successful manufacturers, 3M (founded in 1902) and IBM (founded in 1911), have teamed up to collaborate on a new 3D computer chip stacking process that could revolutionize computer technology.  According to a report posted just several hours ago on a Wall Street Journal blog,  

"Such three-dimensional structures could be 1,000 times faster than today’s individual chips, IBM estimates, ushering in much more powerful portable devices, PCs and server systems. Electronics companies now routinely stack a few chips together–particularly memory chips, for use in small devices like cellphones–but IBM is talking about bonding 100 or more chips together, including high-performance microprocessors.

What role will 3M play?

"Microprocessors generate heat, and gluing chips together would cause them to melt. That’s where 3M comes in. The Minnesota-based materials company will work with IBM to develop special heat-dissipating adhesives that can safely conduct heat away from chips, and processes that can coat hundreds or thousands of chips with glues at one time."

"You want to ultimately make a brick of silicon,” says Bernard Meyerson, IBM’s vice president of research. “That does not exist today.”

MP: Watch the video above to see how the chip-stacking process works.  The commercial availability of brick-style computers might be several years away, but this new developing breakthrough innovation from two old-line, 100-year old iconic American manufacturers tells us that "Made in the USA" is alive and well, and America is still the World's No. 1 Innovator.  

Guitar Links

1. The 40 Most Influential Rock Guitar Solos, from Guitar Player magazine in June 2011. 

2. The 50 Greatest Guitarists Ever, from the LA Times in 2010, with videos of each one (including the one of Les Paul featured above).

3. Evertune bridge keeps your guitar in tune forever.  

HT: Pete Friedlander

Tuesday Morning Links

1. "Manity sizing" comes to the U.K. Stores are labeling trousers up to two inches narrower at the waist than they actually are. 

2. The Post Office is dying.  Reason? We don't need it anymore. (HT: Tim D.)

3. Flashback to July 22, 2007 - "Fannie Mae and Freddie Mac are riding to the rescue of the subprime lending market. Consumer advocacy groups and politicians have been calling on the agencies to get more involved in guaranteeing subprime loans and creating consumer-friendly mortgages that can be made available to borrowers with blemished credit histories." (HT: Jimmy P.)

4. Freelance Nation: "The Freelance Surge Is the Industrial Revolution of Our Time," a new series in The Atlantic. 

5. China to Overtake Japan in Luxury Demand This Year.  After centuries of communism where private property was not allowed, today's Chinese love to show off a little bling.

Cartoon of the Day: Western Fetish

Featured in James Joyner's article about "the Western fetish for turning cheap, efficient food into expensive, inefficient fuel."

Let Business Pioneers Do What They Do Best: Create New Wealth, Not Redistribute Wealth

From Thomas Sowell's latest column:  

"A recent New York Times article criticized Apple CEO Steve Jobs for not contributing to charity as much as the New York Times writer thought he should. The media in general are full of praise for business people and their companies for giving away substantial amounts of their wealth. Indeed, that is one of the few things for which many in the media praise businesses and the wealthy.  

Judging businesses or their owners by how much wealth they give away -- rather than by how much wealth they create -- is putting the cart before the horse. Wealth is ultimately the only thing that can reduce poverty. The most dramatic reductions in poverty, in countries around the world, have come from increasing the amount of wealth, rather than from a redistribution of existing wealth. 

What kind of world do we want -- one in which everyone works to increase wealth to whatever extent they can, or a world in which everyone will be supported by either government handouts or private philanthropy, whether they work or don't work? 

It is not an abstract question. We can already see the consequences on both sides of the Atlantic. Those who have grown used to having others provide their food, shelter and other basics as "rights" are by no means grateful. 

Let business pioneers do what they do best. And let the rest of us exercise more judgment as to how much charity is beneficial and how much more simply perpetuates dependency, grievances and the polarization of society."

Chart of the Day: World GDP and Suez Canal Traffic

The chart above from The Economist displays annual world GDP growth and the annual growth in the amount of cargo passing through the Suez Canal in Egypt, representing about 8% of the total world trade. Making a simple forecast based on recent trends in cargo traffic, The Economist predicts that world GDP will fall from 3.8% in the first quarter to 3.3% in the second quarter.

America Is Still A Great Engine of Innovation and Growth: The U.S. Is Still The Biggest Buy of All

Cato's Dan Griswold points to this great quote in Barron's from Alger CEO Dan Chung (alternate link here):

"America is not a stagnant country. We have a relatively youthful population. Our technology and media industries are the envy of the world, and the Internet is most dynamic in those areas. Europe, China and Japan, for all their attempts, have not been able to replicate our success in innovation of technology and media. We are still a great engine of innovation and growth. While it doesn't make the whole sector or all the stocks a Buy, it does make our country a Buy."

Does the Media Have a Liberal Bias? Is There Any Evidence? Yes, According to a New Book and Study

Political Quotients of Some Politicians (click to enlarge)

Does the mainstream media have a liberal bias?  Yes, according to the empirical evidence that Tim Groseclose, UCLA political scientist and economist, presents in his new book "Left Turn: How Liberal Media Distorts the American Mind."  From Tim's website:

"Dr. Tim Groseclose, a professor of political science and economics at UCLA, has spent years constructing precise, quantitative measures of the slants of media outlets. He does this by measuring the political content of news and converting that content into an SQ, or “slant quotient,” of the outlet.  To determine bias, he compares SQs of news outlets to the PQs, or “political quotients,” of voters and politicians.
 

Among his conclusions are: 1) all mainstream media outlets have a liberal bias, and 2) while some supposedly conservative outlets—such as the Washington Times or Fox News Special Report—do lean right, their conservative bias is less than the liberal bias of most mainstream outlets.

Groseclose contends that the general leftward bias of the media has shifted the PQ of the average American by about 20 points on a scale of 100, the difference between: 1) the current political views of the average American and 2) the political views of the average resident of Orange County, California or Salt Lake County, Utah. With Left Turn, readers can easily calculate their own PQ—to decide for themselves if the bias exists. This timely, much-needed study brings fact to this often over-heated debate."

MP: To determine your PQ, take this 40-question quiz.  At the end of the quiz, you'll see a list of politicians who have PQs similar to yours.  The chart above (click to enlarge) shows a sample of PQs for politicians ranging from Michele Bachmann and Jim DeMint on the far conservative end to Barney Frank and Nancy Pelosi on the far liberal end of the scale.  

Here's a five-part video series of Tim being interviewed about his book by Peter Robinson on Uncommon Knowledge: Part 1, Part 2, Part 3, Part 4 and Part 5. 

Social Security IS a Pyramid Scheme

Is the Social Security system a Ponzi scheme? Texas Governor Rick Perry says Yes, and calls it a "monstrous lie for younger people."  Cato Institute's Michael Tanner says Perry was being too kind, and writes:  "As with Ponzi’s scheme, when the number of new contributors dries up, it will become impossible to continue to pay the promised benefits." Boston Globe columnist Jeff Jacoby says that's not the point, and points out that "Ponzi schemes are intended to defraud; Social Security was designed to be a social safety net for the old."

The debate will continue, but the facts in the graph above are crystal clear: the number of active workers per Social Security recipient is declining, and will continue to decline, and the Social Security system is clearly unsustainable.  Whether Social Security technically meets the technical definition of being a Ponzi scheme is less important than the fact that the current system has become a Pyramid scheme as the population ages.  We will eventually run out of money from active workers, and money from the "trust fund,"  to pay for the unfunded liabilities due to Social Security recipients.  

Temperature Trivia

82 Fahrenheit = 28 Celsius

61 Fahrenheit = 16 Celsius

For those two temperatures, you can simply switch the numbers.

The Natural Forces of Market Concentration

Country	HHI Index, 2009
China	6,772
Portugal	5,843
Switzerland	4,296
South Africa	4,152
Turkey	4,076
Japan	3,591
Spain	3,401
United Kingdom	3,401
Russia	3,383
France	3,346
US - Proposed	3,320
Canada	3,247
Italy	3,243
Israel	3,115
Germany	2,936
Australia	2,853
Taiwan	2,801
US - Now	2,744
Argentina	2,499
Brazil	2,396
India	1,614

NEW YORK TIMES -- "The [AT&T-T-Mobile] merger would increase the concentration of the cellular industry in the United States to 3,320, by the Herfindahl-Hirschman Index (HHI, a measure of market concentration), up from 2,744 before (see chart above). But note that even if AT&T does not acquire T-Mobile, the American wireless market is and will remain highly concentrated. An international comparison of market concentration, published this week by the Columbia Institute for Tele-Information, shows that the wireless markets in most nations are highly concentrated. 

In fact, the merger would move the United States from “toward the bottom to well in the middle of the pack” in terms of consolidated market power in the wireless industry, said Eli Noam, an economist at the Columbia University Business School and director of the telecommunications research institute (see chart above).

In telecommunications, the market concentration itself is not surprising. The telephone business, after all, has long been one of the classic examples of an industry that exhibits the forces that lead toward “natural monopolies,” or at least oligopolies. Those forces include high fixed costs — the investment needed to build out networks — and the efficiencies that come from providing services to millions of customers.

The drive to build out more sophisticated, higher-speed wireless networks will considerably increase the capital costs for network carriers. “That will almost certainly increase the natural forces of market concentration,” Mr. Noam noted.

MP: Maybe it would be best that the Department of Justice do nothing about the ATT-T-Mobile merger. As long as there is open entry to the wireless services industry, and the incumbent firms have no legal protection against current or future competition, what's the problem? The natural forces of market competition are usually the best and most effective forms of regulation.

Update: Don Boudreaux argues in this video that the proposed merger between AT&T and T-Mobile would make the wireless market more competitive, benefiting consumers.

More Government Overreach: The War on Drugs

NEW YORK TIMES -- "Hundreds of New Yorkers who have been caught with small amounts of marijuana, or who have simply admitted to using it, have become ensnared in civil child neglect cases in recent years, though they did not face even the least of criminal charges, according to city records and defense lawyers. A small number of parents in these cases have even lost custody of their children."

Truly scary.  

HT: Walter Olson

Cartoon of the Day: Green Jobs

By Lisa Benson.

More than a decade ago, Paul Gigot of the WSJ pointed out that "ethanol is produced by mixing corn with our tax dollars."  In that case, solar energy is produced by mixing sunlight with our tax dollars. 

Two Brits, Alex and Liam, Visit Walmart

"Walmart is amazing, I don't even know why any other stores exist. They should just have one Walmart for every city."

HT: Che

Some Good Friday Editorials

1. "A Case Against the Case Against Walmart," by Art Carden in the Washington Examiner.  Critics of Walmart have the burden of proof. 

2. "Mr. Obama, Tear Down Those Union Posters," by Diana Furchtgott-Roth in the Washington Examiner, about the NLRB requirement for employers to put up 11-by-17-inch posters informing workers of their right to unionize.

 

3. "The Great Recession and Government Failure," by Gary Becker in the WSJ. When comparing the performance of markets to government, markets look pretty darn good.

4. Review of "The Fall of the Faculty: The Rise of the All-Administrative University and Why It Matters," in the WSJ.   Professors once ran university affairs largely by themselves. Now they are at the mercy of proliferating 'deanlets.' The enormous investment in administrative bloat has not translated into a better college education.

 

5. 'Green Jobs' vs. Real Energy Jobs, by Steve Moore in the WSJ. For every two cents of tax subsidies for 'Big Oil,' wind and solar get nearly $1. The environmentalists are for any energy source.... except those that actually work.

 

6. "It's Time to Repeal the Minimum Wage," by Gary Wolfram in the Detroit News. It's time that we restored one of our fundamental freedoms - to negotiate wages for unskilled labor without government interference.  

Only in California: A Ballot Proposal to Prohibit Foreclosures and Shut Down the Mortgage Industry

Here is some of the language below from a ballot proposal in California called the "Foreclosure Modification Act," scheduled to go on the November 2012 ballot if supporters get the required minimum 800,000 voter signatures.  It was approved in late July by the California attorney general for signature collection.

• Makes home ownership a fundamental right for every Californian.
• Prohibits lenders from foreclosing on any California citizen's personal home.
• Requires lenders to assist California borrowers not making payments on home loans due to financial hardship or illness.
• Requires lenders to reduce mortgage principal to reflect any drop in local property value of more than 10 percent, and to reschedule payments, reduce interest rates, and/or refinance without new credit review.
• Requires lenders to refinance home loans at a minimum cost within 45 days of request if loan has been maintained for three years.
• Provides back property tax assistance to homeowners from local governments (counties, cities, townships, etc.)

Here's a news report in Business Law Daily about this citizen's initiative that would basically eliminate all new private mortgages in California.  

HT: Morganovich

Cartoon of the Day

Gender Wage Gap and Occupational Fatality Gap

From LearnLiberty.org at Institute for Humane Studies:

"Are women discriminated against in the workplace? Looking at the data, women on average earn an annual wage that is approximately 75% that of men, which many people believe is the result of discrimination. However, when Prof. Steve Horwitz analyzes the data more closely, he finds that women make certain choices, such as career selection and raising children, which tend to result in lower wages than men. These choices could be the result of personal preferences or sexist cultural expectations for women's work, though the relative influence of these two factors remains unclear."

Another factor that can explain some of the "gender wage gap" is the huge "gender occupational fatality gap." Last year, men were 12 times more likely than women to get killed on the job, see the chart below and read my post today about this topic on the Enterprise Blog.  More men than women are willing to work in high-risk occupations, with both higher wages and a higher chance of workplace-related injury or death, which can help explain some of the disparity in wages by gender.
 

One Solution for High-Priced Textbooks

From Timothy Taylor at the Conversable Economist blog:

"Take a look at prices for the best-selling and best-known introductory economics textbooks. A copy of the full-year, micro and macro version will typically list at more than $200, although students can often get discounted copies at sellers like Amazon.com for about $170-$180.

My solution is my own introductory textbook, "Principles of Economics." The second edition of this text is out this fall through Textbook Media, Inc. The pricing works this way: $17 for access to an online e-textbook which has search, notes, and chat options, but that can't be printed; $22 for the e-textbook along with the ability to print out PDF files of the chapters; and $33 for the e-textbook along with a black-and-white printed softcover version of the book.  Textbook Media is a small company. It has no sales force to knock on the doors of professors and take them to lunch. It sponsors no junkets. The book is printed in black and white. But it does have e-textbook functionality, a workbook of problems and answers, a test bank, and some other add-ons. If you want a micro or a macro split, they are available."

MP: I predict that we'll see more and more of this.  Spending $1,000 per semester on textbooks (5 courses x $200) seems like an unsustainable exercise of monopoly power and pricing. 

Ratio Of Takers To Givers Reaches A Tipping Point

Larry Elder has an editorial in today's Investor's Business Daily that starts out by quoting an Irish taxi driver who identified the No. 1 reason for the grim economic situation in Ireland as "too many takers - not enough givers."  The charts above help to graphically illustrate that situation in the U.S.  Read the full editorial here.  

Watch Out for Political Solutions to Non-Problems

Here's some editing of Jon Huntsman's recent comments:

"When I was born in 1960, manufacturing agriculture comprised 25 four percent of our GDP. Ten years earlier it was about seven percent.  Today, it’s down to around 10 only one percent (see chart above). This does not reflect a decline in American ingenuity or work ethic; it reflects our government’s failure to adapt to the realities of the 21st Century economy.  It’s time for Made "Grown in America" to mean something again."

MP: Even though the shares of GDP for both agriculture and manufacturing have fallen over time, the total production of agricultural and manufactured products have continued to increase to record levels in almost every year.  It's a testament to the increased productivity of American farm and factory workers that we can produce more output over time with fewer workers.  And it's those significant increases in productivity that have dramatically lowered the prices of food and durable goods over time, so that purchases of those goods represent a decreasing share of national and personal income.  That's a good thing (see chart below).

If Huntsman is suggesting that increasing manufacturing's share of GDP back to 25% would make us better off economically, then wouldn't it also be the case that we would be better off if the farming/GDP share increased back to 7%? In both cases it would imply a significant reduction in worker productivity making the manufacturing and agricultural sectors much less efficient, leading to large increases in the prices of food and durable goods, and increasing the share of income spent on food and durable goods (see chart below for food). That would make us much worse off.       

Bottom Line: It's a sign of remarkable progress, not regress, that the farming/GDP and manufacturing/GDP ratios have fallen over time, and means that our standard of living has risen, not fallen.  Be very skeptical of Huntsman's political solution of increased government intervention to solve this "non-problem" because it would certainly make us worse off, not better off.

Price Discrimination in Pictures

At the tavern:

Local residents get a 50% discount to Six Flags: