Saturday, November 26, 2011

Thanks to Perverse Drug War Incentives, Cops Target Pot Smokers Instead of Violent Criminals

"Arresting people for assaults, beatings and robberies doesn't bring money back to police departments, but drug cases do in a couple of ways. First, police departments across the country compete for a pool of federal anti-drug grants. The more arrests and drug seizures a department can claim, the stronger its application for those grants.

"The availability of huge federal anti-drug grants incentivizes departments to pay for SWAT team armor and weapons, and leads our police officers to abandon real crime victims in our communities in favor of ratcheting up their drug arrest stats," said former Los Angeles Deputy Chief of Police Stephen Downing. Downing is now a member of Law Enforcement Against Prohibition, an advocacy group of cops and prosecutors who are calling for an end to the drug war.
Secondly, asset forfeiture creates perverse police agencies to use resources and manpower on drug crimes at the expense of violent crimes.  Under civil asset forfeiture, police can seize property from people merely suspected of drug crimes. So long as police can show even the slightest link of drug activity to a car, some cash, or even a home, they can seize it. In the majority of cases, most or all of the seized cash goes back to the police department. In some cases, the department has taken possession of cars as well, but generally non-cash property is auctioned off, with the proceeds then going back to the department. An innocent person who has property seized must go to court and prove his property was earned legitimately, even if he was never charged with a crime. The process of going to court can often be more expensive than the value of the property itself."

MP: After reading this article about the perverse financial incentives that cause cops to target the victimless crime of smoking pot at the expense of targeting violent crimes with real victims, is it really possible that any rational, sensible, intelligent, logical person could defend America's "War on Drugs"?

Venezuela Repeals the Laws of Supply and Demand

The twisted logic of Venezuela's price controls:

1. Under President Hugo Chavez, Venezuela's central bank has doubled the money supply over the last four years.

2.  Because of the doubling of the money supply, Venezuela is experiencing the highest annual rate of inflation in the Western hemisphere at 27%.

3. In response to the high inflation, the Venezuelan government just announced it is expanding price controls to cover many basic consumer items like toothpaste, coffee, toilet paper and deodorant to prevent "monopolies from ransacking the people." 

4. The move to expand price controls sparked panic buying by consumers, which is causing shortages of many products. 

5. The Venezuelan government is accusing people of panic buying with the intent to hoard consumer items and capitalize on the shortages by selling products in the future at higher prices on the black market.  

Conclusion: According to the Chavez government, the shortages of key consumer goods in Venezuela are being caused by consumers, who are guilty of engaging in panic buying, hoarding and "capitalist" behavior.  The inflationary monetary expansion, rising consumer prices and government price controls have nothing to do with the shortages.  After all, “The law of supply and demand is a lie,” said Karlin Granadillo, the head of Venezuela's price control agency.

Consumer Greed Takes Over on Black Friday

We hear all the time about "corporate greed," but not so much about "consumer greed," which is never illustrated more profoundly than on Black Friday, when greedy consumers engage in some pretty extreme shopping behavior to save few dollars.

Some examples from the Drudge Report:  

Exhibit AWoman pepper sprays other Black Friday shoppers 'to gain an upper hand'... 

Exhibit B'Competitive shopping' turns into chaos... 

Exhibit C: 'Girls Punching Each Other' Over Yoga Pants Sale at Victoria's Secret... 

Exhibit DVIDEO: Mayhem over $2 waffle maker... 

Exhibit ETwo women injured in brawl..

The Non-Green Energy and Jobs Boom

Drill, drill, drill = jobs, jobs, jobs in North Dakota
From today's WSJ staff editorial:

"The ironies here are richer than the shale deposits in North Dakota's Bakken formation. While Washington has tried to force-feed renewable energy with tens of billions in special subsidies, oil and natural gas production has boomed thanks to private investment. And while renewable technology breakthroughs never seem to arrive, horizontal drilling and hydraulic fracturing have revolutionized oil and gas extraction—with no Energy Department loan guarantees needed.

The oil and gas rush has led to a jobs boom. North Dakota has the nation's lowest jobless rate, at 3.5%, and the state now has some 200 rigs pumping 440,000 barrels of oil a day, four times the amount in 2006 (see chart above). The state reports more than 16,000 current job openings, and places like Williston have become meccas for workers seeking jobs that often pay more than $100,000 a year.

Or take production in Pennsylvania's Marcellus shale formation, which the state Department of Labor and Industry says created 18,000 new jobs in the first half of 2011. Some 214,000 jobs are now tied to a natural gas industry that barely existed in the Keystone State a decade ago. Energy firms are also rushing to develop the Utica shale in eastern Ohio, and they are expanding operations in Texas, Louisiana and Oklahoma, among other places. 

Yet earlier this month the Interior Department released a new five-year plan that puts most of the Outer Continental Shelf off-limits for oil drilling. And the Administration has delayed for at least another year the Keystone XL pipeline that is shovel-ready to create 20,000 new direct, pipeline-related jobs.

The Office of Natural Resources Revenue recently noted that federal revenue from offshore bonus bids (from lease sales) in fiscal 2011 was merely $36 million—down from $9.5 billion in fiscal 2008. The Obama Administration has managed the nearly impossible feat of turning energy policy into a money loser, pouring taxpayer dollars into green-energy busts like Solyndra. The Washington Post reported in September that Mr. Obama's $38.6 billion green loan program had created a mere 3,500 jobs over two years. He had predicted it would "save or create" 65,000. 

Mr. Obama nonetheless keeps talking about "green jobs" as if repetition will conjure them. He'd do more for the economy if he dropped the ideological illusions and embraced the job-creating, wealth-producing reality of domestic fossil fuels."

Friday, November 25, 2011

Net Oil Imports Only 45.6% of U.S. Consumption, Dependence on Foreign Oil Lowest Since 1995

From Mort Zuckerman's editorial in today's WSJ:

"The good news is that the United States is at the center of a global energy revolution. Our development of innovative shale-gas technology offers the prospect of a huge bonanza of natural gas (and some oil as well). It's the most positive event in the country's energy outlook in 50 years. Let's celebrate the achievement before looking at what needs to be done to bring it to fruition.

This kind of seismic shift in the energy landscape is rare. It could bring us back to the time when the U.S. and its neighbors in the hemisphere were self-sufficient and even a major world source of energy. Energy companies have become exporters, as the U.S. has surpassed Russia as the world's leading gas producer.

America's soaring natural-gas production has already helped cut our share of oil consumption met by imports to 47% last year from 60% in 2005, according to the Energy Information Administration. The shale-gas revolution, with proper safety practices, can be expected to continue this trend while addressing three longstanding concerns of the energy business: energy scarcity, energy security, and environmental risks. In a word, we have a chance to remake our energy future."

MP: Actually, based on the most recent EIA data through October 2011, net oil imports now account for only 45.6% of U.S. oil consumption, the lowest annual average in 16 years, since the 44.5% share in 1995 (see chart above). 

TEDx Talk: The Next Big Shift in the Internet

"The next big shift in the Internet is now, and it’s not what you think: Facebook is the new Windows; Google and Windows must be sacrificed. Ten years from now we will interact with the Internet in completely different ways. In this TED talk, Roger McNamee identifies six changes that are already transforming the ways we consume and create content."

HT: Buddy Pacifico

Thursday, November 24, 2011

N.D. Oil Boom Creates a Boom in N.D. Millionaires

BISMARCK, N.D. (AP) — "The number of North Dakotans reporting seven-figure incomes is swelling and incomes across the state are rising, spurred largely by wealth gained from the state's oil patch, the state Tax Department said. Figures released to The Associated Press show 532 people reported adjusted gross income of more than $1 million on their 2010 individual tax returns, compared to 384 reporting that income on their 2009 returns, a 38.5 percent increase.

Tax Department analyst Kathy Strombeck said the increase in the number of North Dakotans with million-dollar income comes in part from royalties paid to mineral owners by oil companies. Tax Department records show the average adjusted gross income in the state increased from $46,860 in 2009 to $53,036 last year. State officials say the oil industry has helped bump wages throughout the state and created hundreds of high-paying jobs."

MP: More evidence that the domestic oil production in the Bakken shale oil fields is creating millionaires, wealth, prosperity, jobs, higher wages, and even increased tax revenues in the economic miracle of North Dakota, America's most successful state.     

Frac Boom Has Triggered A Huge Sand Boom: Demand for Frac Sand is Jumping Through the Roof

FT.COM -- "Gas and oil production from shale rocks has triggered a corollary boom underground as drillers demand billions of pounds of sand. The hydraulic fracturing process that has brought new hydrocarbon supplies to the US relies on massive injections of water and chemicals to break open rocks. Sand is also pumped into wells as a form of scaffolding.

Sand miners are now racing to expand operations, attracting the attention of private equity investors. One, US Silica Holdings, has disclosed plans to raise $200m through a public offering.

“It’s a gold rush,” said Thomas Dolley, mineral commodity specialist at the US Geological Survey. “Demand for ‘frac sand’ is jumping through the roof.”

In 2010, US frac sand production doubled to 13m tons as drilling activity increased and new mines opened, Mr. Dolley said. Hydraulic fracturing consumed about 40% of U.S. industrial sand output last year, up from 27% in 2009. Annual demand for frac sand has since soared further to about 22 million tons. Each drilling job can swallow up to 10 million pounds of sand."

HT: Robert Kuehl

Current Intrade Odds: Cain and Perry Are Fading, Gingrich and Huntsman on the Rise, Romney Falls

Current odds on for the Republican presidential nominee (click to enlarge).

Ten Great Things About The American Economy That Everyone Should All Be Thankful For

BUSINESS INSIDER -- "As tough macroeconomic headlines lead the S&P lower and political polemic turns the capital into K-Street, we thought it time to take a moment to appreciate all the good accomplished in the U.S. Pundits are quick to point to how the U.S. has fallen behind in innovation, but that's not what we see.

We see a resilient people, continuing to create new markets and products. We see regulations that allow businesses to operate more efficiently than in nearly any other country in the world.
But that's not all we see. Here are the ten great things about the American economy that we should all be thankful for." 

HT: Robert Kuehl

TED: Artfully Visualizing Our Humanity

TED TALKS: "Artist Aaron Koblin takes vast amounts of data -- and at times vast numbers of people -- and weaves them into stunning visualizations. From elegant lines tracing airline flights to landscapes of cell phone data, from a Johnny Cash video assembled from crowd-sourced drawings to the "Wilderness Downtown" video that customizes for the user, his works brilliantly explore how modern technology can make us more human."

HT: J. Howe

Wednesday, November 23, 2011

Milton Friedman Responds To OWS Protestors

During his lifetime, Milton Friedman was a tireless advocate of individual liberty and the free market. Dr. Friedman's passionate defense of freedom and markets was a powerful and timeless message that would be just as relevant today if Milton Friedman were alive to address the concerns of the OWS protestors about wealth, inequality, and the poor, as when Friedman delivered these lectures more than 30 years ago:

Convenient, Consumer-Driven Health Care on the Rise: Retail Clinic Use Jumps 10X in Two Years

Fierce Healthcare -- "With retail clinics increasing ten-fold, more health systems and hospitals are capitalizing on the trend and getting in on the retail movement. Between 2007 and 2009, retail medical clinics at pharmacies and other retail settings have risen from a monthly tally of 0.6 visits per 1,000 enrollees in January 2007, to 6.5 visits per 1,000 enrollees in December 2009, according to a new study by RAND Corporation, published in the American Journal of Managed Care (study abstract here).

Surprisingly, the availability of primary care physicians didn't affect use of retail clinics. The strongest predictor was proximity.

"It appears that those with a higher income place more value on their time, and will use clinics for convenience if they have a simple health issue such as a sore throat or earache," senior study author Dr. Ateev Mehrotra, investigator at RAND and the University of Pittsburgh, said in a RAND press release.

This week's announcement that Emory Healthcare, Georgia's largest hospital system is partnering with CVS MinuteClinic may demonstrate a broader trend of traditional hospital systems aligning with convenient clinics. Earlier this year, Mayo Clinic announced it moved into the Mall of America in what it calls the "Create Your Mayo Clinic Health Experience" center, a 2,500-square-foot space of high-tech interaction. And Walmart recently declared it wanted to be the nation's biggest primary care provider with its entrance into the retail care market."

MP: At the same time that the pending implementation of Obamacare threatens a government takeover of health care and medicine in America that will stifle competition and raise prices, the market continues to offer many new, innovative, alternative solutions to health care that are competitive, affordable and convenient.  The ten-fold increase in the use of retail health clinics in just two years demonstrates that consumers appreciate the market-based, consumer-driven convenience of affordable, no-wait service at retail health clinics, and they'll be pretty disappointed if that changes to long-wait, inconvenient health care under Obamacare.     

Manufacturing Boosts October Trucking Tonnage

ARLINGTON, VA "The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 0.5% in October after rising a revised 1.5% in September 2011. The latest gain put the SA index at 116.3 (2000=100) in October, up from the September level of 115.8.

Compared with October 2010, truck tonnage was up 5.7% following an increase in September of 5.8% above a year earlier. Further, October’s tonnage reading was just 4.4% below the index’s all-time high in January 2005.

“Tonnage readings continue to show that economy is growing and not sliding back into recession,” ATA Chief Economist Bob Costello said. “Over the last two months, tonnage is up nearly 2% and is just shy of the recent high in January of this year.” 

“Manufacturing output has been the primary reason why truck freight volumes are increasing more than GDP. The industrial sector should slow next year, but still grow more than GDP, which means truck tonnage can increase faster than GDP too,” he said."

Fortune 500 Firms in 1955 vs. 2011; 87% Are Gone

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

Group A. American Motors, Studebaker, Detroit Steel, Maytag and National Sugar Refining.

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

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

All the companies in Group A were in the Fortune 500 in 1955, but not in 2011.

All the companies in Group B were in the Fortune 500 in both 1955 and 2011.

All the companies in Group C were in the Fortune 500 in 2011, but not 1955.

Comparing the Fortune 500 companies in 1955 and 2011, there are only 67 companies that appear in both lists. In other words, only 13.4% of the Fortune 500 companies in 1955 were still on the list 56 years later in 2011, and almost 87% of the companies have either gone bankrupt, merged, gone private, or still exist but have fallen from the top Fortune 500 companies (ranked by gross revenue). Most of the companies on the list in 1955 are unrecognizable, forgotten companies today.  That's a lot of churning and creative destruction, and it's probably safe to say that many of today's Fortune 500 companies will be replaced by new companies in new industries over the next 56 years. 

Update: Here's a related article from Steve Denning in Forbes, featuring some insights from Steve Jobs about what causes great companies to decline (power gradually shifts from engineers and designers to the sales staff) and how the life expectancy of firms in the Fortune 500 and S&P500 has been declining over time. 

There Is No Money Pile To Be Shared Equally

From Walter Williams:

"Class warfare thrives on ignorance about the sources of income. Listening to some of the talk about income differences, one would think that there's a pile of money meant to be shared equally among Americans. Rich people got to the pile first and greedily took an unfair share. Justice requires that they "give back." Or, some people talk about unequal income distribution as if there were a dealer of dollars. The reason some people have millions or billions of dollars while others have very few is the dollar dealer is a racist, sexist, a multinationalist or just plain mean. Economic justice requires a re-dealing of the dollars, income redistribution or spreading the wealth, where the ill-gotten gains of the few are returned to their rightful owners. 

In a free society, for the most part, people with high incomes have demonstrated extraordinary ability to produce valuable services for -- and therefore please -- their fellow man. People voluntarily took money out of their pockets to purchase the products of Gates, Pfizer or IBM. High incomes reflect the democracy of the marketplace. The reason Gates is very wealthy is millions upon millions of people voluntarily reached into their pockets and handed over $300 or $400 for a Microsoft product. Those who think he has too much money are really registering disagreement with decisions made by millions of their fellow men."

Giving Thanks for Capitalism, The Invisible Hand, The Miracle of the Market, and No Turkey Czars

Like in previous years, you probably didn't call your local supermarket ahead of time and order your Thanksgiving turkey this year. Why not? Because you automatically assumed that a turkey would be there when you showed up, and it probably was there when you showed up "unannounced" at your local grocery store to select your bird.

The reason your Thanksgiving turkey was waiting for you without an advance order? Because of "spontaneous order," "self-interest," and the "invisible hand" of the free market - "the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many." And even if your turkey appeared in your local grocery stores only because of the "selfishness" or "corporate greed" of thousands of commercial turkey farmers, truckers, and supermarket owners who are complete strangers to you and your family, it's still part of the miracle of the marketplace where "individually selfish decisions lead to collectively efficient outcomes." 

In a 2003 Boston Globe column titled "Giving Thanks for the Invisible Hand" (featured in Greg Mankiw's ecomomics textbook) Jeff Jacoby explains below why he is thankful for the miracle of the invisible hand that makes affordable turkeys automatically available so efficiently at Thanksgiving:

"The activities of countless far-flung men and women over the course of many months had to be intricately choreographed and precisely timed, so that when you showed up to buy a fresh Thanksgiving turkey, there would be one -- or more likely, a few dozen -- waiting. The level of coordination that was required to pull it off is mind-boggling. But what is even more mind-boggling is this: No one coordinated it.

No turkey czar sat in a command post somewhere, consulting a master plan and issuing orders. No one forced people to cooperate for your benefit. And yet they did cooperate. When you arrived at the supermarket, your turkey was there. You didn't have to do anything but show up to buy it. If that isn't a miracle, what should we call it?

Adam Smith called it "the invisible hand" -- the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many. Out of the seeming chaos of millions of uncoordinated private transactions emerges the spontaneous order of the market. Free human beings freely interact, and the result is an array of goods and services more immense than the human mind can comprehend. No dictator, no bureaucracy, no supercomputer plans it in advance. Indeed, the more an economy is planned, the more it is plagued by shortages, dislocation, and failure.

It is commonplace to speak of seeing God's signature in the intricacy of a spider's web or the animation of a beehive. But they pale in comparison to the kaleidoscopic energy and productivity of the free market. If it is a blessing from Heaven when seeds are transformed into grain, how much more of a blessing is it when our private, voluntary exchanges are transformed - without our ever intending it - into prosperity, innovation, and growth?"


Tuesday, November 22, 2011

Charts of the Day: Kidney Shortage Worsens Yearly

As a follow-up to this recent CD post on the market for kidneys, the charts above show up-to-date data on the kidney situation from the United Network for Organ Sharing (UNOS).  Here's the current situation:

1. There are currently 90,363 registered candidates on the ever-increasing waiting list to receive a kidney transplant, which is an all-time record high (see top chart). 

2. Based on actual transplant operations through August of this year, an estimated 16,855 patients will have a kidney transplant operation this year (see top chart).

3. Of the 90,363 patients currently on the waiting list, only about 18.6%, or fewer than one-in-five, will actually receive a kidney transplant this year (see bottom chart).  That's the lowest chance of receiving a kidney for those on the waiting list since UNOS records start in 1989, and way below the 50% chance in 1989, 1990 and 1991.  

4. Based on data from the last few years, there will be about 5,000 registered candidates on the list who will die this year while waiting for a kidney, and another 2,000 who will be removed from the list because they are considered to be too sick to survive a kidney transplant operation.  

Bottom Line: The situation for those with renal failure waiting desperately to receive a kidney continues to worsen every year under the current policy that prohibits donor compensation.  The only realistic, long-term and truly compassionate solution to address America's worsening kidney shortage is to legalize some form of donor compensation.  

ASA Staffing Index Reaches New High for 2011

Today the American Staffing Association (ASA) reported its weekly Staffing Index, which reached a new year-to-date high of 92 for the week of November 7-13 (see chart above), the highest level since mid-December last year.  The index level of 92 last week was just slightly lower than the 93 reading for the comparable week last year, but was above the level for the same week two years ago (80) and  the same week three years ago (85).  The ASA Staffing Index is considered to be a leading labor market indicator of broader-based hiring expected to take place in future months.     

CA Vineyard Tried to Hire Americans, But It Was a Total Failure, A "Social Experiment Gone Awry"

"With a nearly 12 percent unemployment rate in California, you'd imagine most job openings would have applicants lined up around the block, but one local man says he had a difficult time keeping almost any workers on the job.

John Salisbury owns Salisbury Vineyards in Avila Valley and Paso Robles. He needed 32 grape pickers fast for the harvest season in late September and put the call out for anyone to apply, even if they didn't have any experience, advertising on his website and on the radio.

"The idea is to be able to pick them in that one day and get them while they're perfect, but if you have to wait two or three more days, you've maybe missed a peak time," he said.

Workers had to be able to lift 35 pounds, keep up with crews and provide all necessary documentation.

Salisbury now calls his experience a social experiment gone awry. It was ill-fated from the beginning; Salisbury started with 40 applicants, but only seven actually finished the job."

Read more here

HT: Joe Lais

Markets in Everything: Computerized Contact Lens

DAILY MAIL -- "Imagine catching up with your texts, social networking and perhaps the news without having to log on to a computer or even glance at a smartphone. Messages and images would simply appear in front of your eyes, generated by a computerized contact lens.

Scientists have developed a prototype lens that could one day provide the wearer with all kinds of hands-free information. It could also be used to display directions and TV programs." 

HT: Warren Smith

What Percent Are You?

Enter your household income here and find out.

HT: Steve Bartin 

Update: At the Political Calculations blog, you can enter your individual income here and find your percentile, or enter your household income here

Monday, November 21, 2011

UCLA Finance Professor Goes Up Against College Textbook Cartel and Offers His Textbook for Free

The first edition (2008) of UCLA (Anderson School) Finance Professor Ivo Welch's Introductory Corporate Finance textbook was available through Prentice-Hall for $220, which is about the average outrageous price these days for most over-priced college textbooks.

The book is now coming out in the second edition at a new price: FREE for the online readable-only version (no printing), and $60 for the 736-page softcover print version through Amazon (available in mid-December).  According to the author "It will not be updated every two years for the sake of suppressing the resale market," which has become the new anti-consumer (student), anti-competitive industry standard.   
I've posted before about the unsustainable "college textbook bubble" (see here and here and see chart above), and Professor Welch's approach is one example of how that bubble is now starting to burst.  As Kevin "Angus" Grier commented on KPC in February: 

"These days, given that you could make yourself a pretty good free principles text just by downloading relevant Wikipedia entries, I don't see how these [textbook] rents can be sustained over the long run (I am aware that not all or perhaps not even a majority of the rents are going to the authors)."

Thanks to Professor Welch, I'm starting to hear a "giant hissing sound" of the unsustainable, inflationary college textbook bubble starting to deflate, and I encourage other professors to join in his efforts to challenge the college textbook cartel. 

Big Gains Over Time in the Energy-Efficiency of Household Appliances Make Us Better Off

The chart above shows the dramatic gains in energy efficiency over the last 20 years for clothes washers and dishwashers, based on historical data from the Association of Home Appliance Manufacturers.  In the 11-year period between 1993 and 2004, the energy efficiency of clothes washers doubled from 2.71 kWh/cycle to 1.22 kWh/cycle, and then doubled again in the six year period from 2004 to 2010 to 0.66 kWh/cycle.  The increase in energy efficiency for dishwashers has been less dramatic, but energy efficiency for dishwashers has roughly doubled since 1990, from 2.67 kWh/cycle to 1.37 kWh.  

Although not reported here, there have been similar efficiency gains in the amount of energy required to operate today's freezers, air conditioners, and refrigerators (energy efficiency has doubled since 1990).

We've heard a lot lately about how median household income has stagnated in recent years.  But I wonder if there are underlying trends like the significant increases in household appliance efficiency that lower the cost of operating our households, and thereby increase our standard of living, especially for lower and middle-income households, and offset some of the income stagnation.  That is, flat household income is not necessarily the same thing as a declining standard of living, if the energy costs of household operation (and the costs of food, clothing, appliances, furniture, electronics, etc.) are falling significantly. 

The Case for Presidential Nominee Clinton

"We write as patriots and Democrats—concerned about the fate of our party and, most of all, our country. We do not write as people who have been in contact with Mrs. Clinton or her political operation. Nor would we expect to be directly involved in any Clinton campaign.

When Harry Truman and Lyndon Johnson accepted the reality that they could not effectively govern the nation if they sought re-election to the White House, both men took the moral high ground and decided against running for a new term as president. President Obama is facing a similar reality—and he must reach the same conclusion.  

He should abandon his candidacy for re-election in favor of a clear alternative, one capable not only of saving the Democratic Party, but more important, of governing effectively and in a way that preserves the most important of the president's accomplishments. He should step aside for the one candidate who would become, by acclamation, the nominee of the Democratic Party: Secretary of State Hillary Clinton. 

One year ago in these pages, we warned that if President Obama continued down his overly partisan road, the nation would be "guaranteed two years of political gridlock at a time when we can ill afford it." The result has been exactly as we predicted: stalemate in Washington, fights over the debt ceiling, an inability to tackle the debt and deficit, and paralysis exacerbating market turmoil and economic decline.

If President Obama were to withdraw, he would put great pressure on the Republicans to come to the table and negotiate—especially if the president singularly focused in the way we have suggested on the economy, job creation, and debt and deficit reduction. By taking himself out of the campaign, he would change the dynamic from who is more to blame—George W. Bush or Barack Obama?—to a more constructive dialogue about our nation's future."

~Patrick Caddell and Douglas Schoen in today's WSJ, "The Hillary Moment"

60 Minutes Segment on Grover Norquist

(CBS News - 60 Minutes) "As head of Americans for Tax Reform since 1986, Grover Norquist has transformed a single issue - preventing tax hikes - into one of the key platforms of the Republican Party. As Steve Kroft reports in the video above, his biggest coup was getting more than 270 members of Congress, and nearly all of the 2012 Republican presidential primary candidates, to sign a pledge promising never to vote to raise taxes. But some opponents say the pledge may be hindering a solution to America's debt crisis."

MP: If you missed it last night, "60 Minutes" profiled libertarian, anti-tax advocate Grover Norquist, President of Americans for Tax Reform.  Watch the full episode above.

Lessons From Canada: It Fixed Its Fiscal Problems with 7:1 Ratio of Spending Cuts toTax Increases

Some excerpts from a very lengthy, but excellent Reuters article "Insight: Lessons for U.S. from Canada's "Basket Case" Moment":

"Canada's shift from pariah to fiscal darling provides lessons for Washington as lawmakers find few easy answers to the huge U.S. deficit and debt burden. "Everyone wants to know how we did it," said political economist Brian Lee Crowley, head of the Ottawa-based thinktank Macdonald-Laurier Institute, who has examined the lessons of the 1990s.

To win its budget wars, Canada first had to realize how dire its situation was and then dramatically shrink the size of government rather than just limit the pace of spending growth. It would eventually oversee the biggest reduction in Canadian government spending since demobilization after World War Two. The big cuts, and relatively small tax increases, brought a budget surplus within four years.

Canadian debt shrank to 29 percent of gross domestic product in 2008-09, from a peak of 68 percent in 1995-96, and the budget was in the black for 11 consecutive years until the 2008-09 recession. For Canada, the vicious debt circle turned into a virtuous cycle which rescued a currency that had been dubbed the "northern peso." Canada went from having the second worst fiscal position in the Group of Seven industrialized countries, behind only Italy, to easily the best.

It is far from a coincidence that the recent recession was shorter and shallower here than in the United States. Indeed, by January, Canada had recovered all the jobs lost in the downturn, while the U.S. has hardly been able to dent its high unemployment.  Canada's experience turned on its head the prevailing wisdom that spending promises were the easiest way to win elections. Politicians of all kinds and at all levels of government learned that austerity could win.

Canada's scrape with disaster had been building for a long time. Over a decade earlier, top finance department bureaucrats had begun raising the alarm about the problem of rising debt, a hangover from the big government era of the 1970s. The period before Jean Chretien came to power in Canada is often likened to the situation in the U.S. today. The country was not yet peering over a precipice, but was fast approaching it.

The budget deficit more than doubled between 1980 and 1990, rising to 8 percent of GDP in 1983 and 1984, before shrinking to a still unsustainable 5.6 percent just before Chretien took over, and all the time debt was soaring. The debt-to-GDP ratio shot up to 67 percent in 1993-94 from 29 percent in 1980. The numbers aren't that different to the U.S. today with its deficit of around 9 percent for 2011, and debt-to-GDP ratio at 74 percent, up from 40 percent at the end of 2008.

Drawing a parallel to Washington, Scott Clark, associate deputy finance minister in the 1990s, said Canadian leaders before Prime Minister Jean Chretien paid lip service to the debt problem but did nothing.  "There are no lights blinking saying you're at the edge of the cliff," he said. "The one lesson others can give the U.S. is that the higher that debt-to-GDP ratio goes, the more difficult it's going to be."

The ratio of spending cuts to tax hikes was seven-to-one.  Asked why, then-prime minister Jean Chretien, a Liberal who ended up chopping cherished social programs in one of the most dramatic fiscal turnarounds ever, said simply: "There was more need on one side than the other." That contrasts with proposals this year by President Barack Obama and the Democrats to have a much higher proportion of revenue increases in the deficit-tackling mix.

Canadian ministers were told how much they had to cut and then told to come back with a plan on how to do it. Cuts ranged from five percent to 65 percent of departmental budgets and included controversial cuts in transfers that help provinces pay for health and education, decisions that lengthened medical waiting lists for years to come. In the end, program spending fell by about 12 percent between 1994-95 and 1998-99. The percentage fall was substantially more after adjusting for inflation. The deficit disappeared by 1997 and the debt-to-GDP ratio began a rapid decline - it is now at about 34 percent.

"The entire political class decided to stop treating this as a matter of political contention and started treating it as a matter of national interest," said political economist Brian Lee Crowley.  After wrestling the deficit to the ground, Canada enjoyed what Crowley calls the payoff decade, outperforming the rest of the G7 on growth, job creation and inward investment. From 1997 to 2007, it averaged 3.3 percent economic growth while U.S. growth averaged 2.9 percent.

The final lesson is that you can impose painful spending cuts and still win elections. Chretien went on to win two more back-to-back to form majority governments, a rare feat. He argued that a responsible Liberal who believes the state has a role in reducing poverty can only do so by ensuring a financially healthy government."

Note: Emphasis added.

Columbia, South Carolina Food Trucks Win Victory over Protectionist Restaurant Association

COLUMBIA, SC - "The new guys in the food game were served a victory at Columbia city council Tuesday night.

A nearly two-hour public hearing on proposals by the Columbia Restaurant Association to keep the increasingly popular food trucks from parking too close to traditional restaurants ended with council voting 5-1 to adopt an ordinance drawn up by the city's planning commission that included none of the restaurant association's extreme measures."

In the video above, Scott Hall, owner of Bone-In Artisan Barbeque on Wheels asks, "Is it City Council's job to protect existing restaurants from legal competition? I certainly don't think it is."

HT: Madison Felder

The Market in Kidneys: A Moral Case

Philosophy professor James Stacey Taylor: "When there's a transplant operation from a living donor into the body of a living recipient, everybody involved in the operation is getting paid: the anesthesiologist, the surgeon, the nurses, the hospital, etc. The only person not getting paid is the person who is actually giving up the most precious commodity of all - the kidney donor.  And I think that's morally wrong."    

Cartoon of the Day: The Wrong Track

By Gary Varvel.

Markets in Everything: Roll-Your-Own Cigarettes

ABC News: "NYC Sues Roll-Your-Own Cigarette Shops Over Taxes":
"[Island Smokes] is one of a growing number around the country that have come under fire over their use of high-speed cigarette rolling machines that function as miniature factories, and can package loose tobacco and rolling papers into neatly formed cigarettes, sometimes in just a few minutes.

The secret to Island's low prices is simple: Even though patrons leave carrying cartons that look very much like the Marlboros or Newports, the store charges taxes at the rate set for loose tobacco, which is just a fraction of what is charged for a commercially made pack.

Customers select a blend of tobacco leaves, intended to mirror the flavor of their regular brand. Then they feed the tobacco and some paper tubes into the machines, and return to the counter with the finished product to ring up the purchase."
But the NYC government is not happy:
New York City's legal department filed a lawsuit against Island Smokes on Nov. 14, arguing that the company's Manhattan store and another on Staten Island are engaging in blatant tax evasion.

Without Any Real Input from Washington, The Energy Outlook in America Has Been Transformed

Edward Luce in the Financial Times, "America is Entering a New Age of Plenty":

"Forget Al Gore’s “planet in peril.” Forget also Mr. Obama’s promise that future generations would look back on his nomination as “the day the oceans stopped rising.”

Embrace instead the language of tar sands, shale gas, fracking and tight oil. Without quite knowing whether they were new boondoggles or potential game-changers, the debate in Washington until recently largely ignored these escalating supply shocks. Yet together, they have transformed America’s energy outlook. Because of better technology, notably breakthroughs in drilling, the U.S. all of a sudden realizes it is sitting on a century’s worth of gas supply (see chart above of domestic production). When Mr. Obama came to office, the country faced projections of rising natural gas imports from places like Qatar.

The same technology has unlocked ever-growing estimates of once inaccessible “tight” oil lurking beneath America’s rocks. In its immediate neighborhood, Alberta’s huge expanse of “tar sands” contains oil reserves that rank Canada second only to Saudi Arabia. In Brazil, recent advances in offshore oil drilling will relegate Venezuela into second place in the region.

Without any real input from Washington, windfalls just keep dropping into America’s lap. Welcome to a new age of plenty." 

Conclusion: "A new era of fossil fuel appears to be upon us and nobody saw it coming."

Sunday, November 20, 2011

Class of 2009: College Degrees by Discipline, Sex

Academic DisciplineMale
Percent Female
Female-Dominated Disciplines
Family and consumer sciences/human sciences 2,75419,15187.4%
Health professions and related clinical sciences17,792102,69685.2%
Public administration and social service professions 4,37419,47781.7%
Education 21,15980,54979.2%
Psychology 21,48872,78377.2%
Legal professions and studies 1,0372,78572.9%
Foreign languages, literatures, and linguistics 6,30214,85670.2%
Area, ethnic, cultural, and gender studies 2,7356,03768.8%
Multi/interdisciplinary studies 11,85725,58768.3%
English language and literature17,97337,48967.6%
Liberal arts and sciences, general studies and humanities 16,61630,48064.7%
Communication and communications technologies 31,21851,89162.4%
Visual and performing arts 35,05154,08960.7%
Biological and biomedical sciences 32,92547,83159.2%
Close to Gender Parity
Security and protective services 21,07320,72749.6%
Social sciences and history 85,19783,30349.4%
Business, management, marketing177,862170,12348.9%
Agriculture and natural resources 13,10111,88747.6%
Parks, recreation, leisure, and fitness studies 16,66615,00147.4%
Male-Dominated Disciplines
Mathematics and statistics 8,7936,70343.3%
Architecture and related services 5,7974,32242.7%
Physical sciences and science technologies 13,2999,16740.8%
Philosophy and religious studies 7,7614,68337.6%
Theology and religious vocations 5,9502,99033.4%
Computer and information sciences and support services 31,2156,77917.8%
Engineering and engineering technologies 70,67513,96116.5%

All Disciplines685,382915,98657.2%

The table above is based on the most recent data on bachelor's degrees by discipline and sex for the class of 2009 from the Department of Education. Note that:

1. Overall, there were 134 female college graduates with bachelor's degrees in 2009 for every 100 men.

2. Women significantly outnumbered men in 14 academic disciplines, men significantly outnumber women in 7 academic disciplines, and there was approximate gender parity in 5 disciplines. 

3. Even though we constantly hear about female under-representation in science, in 2009, women outnumbered men for bachelor's degrees in biology by a ratio of 145 women per 100 men.  

4. The concern about gender imbalances for college degrees is frequently selective, with great concern about female under-representation in certain disciplines, but very little concern about female over-representation, both by discipline, and overall for all college degrees. 

New Era of Oil and Gas Exploration Promises To Bring Economic Boom and 200k Jobs to Ohio

Map shows where the "shovel-ready" jobs are in Ohio
Granville, Ohio — "Providing further evidence that Ohio is on the cusp of a possible economic oil and gas boom, the Ohio Oil & Gas Energy Education Program released its second economic impact study, which provides data about how the state’s natural gas and crude oil industry positively impacts Ohio’s economy today, and includes the first comprehensive study about how planned oil and gas development in Ohio’s Utica shale formation might impact the state over the next five years.

“Pursuing oil and gas exploration in the Utica has the potential to turn Ohio’s economy around,” said David Mustine, general manger for energy at JobsOhio. “It’s an amazing economic opportunity.”

Here are some highlights from the report:

1. Ohio’s natural gas and crude oil industry could help create and support more than 200,000 Ohio-based jobs from the leasing, royalties, exploration, drilling, production and pipeline construction activities for the Utica shale reserve.

2. The state could experience an overall wage and personal-income boost of $12 billion by 2015 from industry spending.

3. Royalty payments to landowners, schools, businesses and communities could increase to as much as $1.6 billion by 2015 — a number that exceeds the total amount of royalties distributed by Ohio’s natural gas and crude oil industry in the last decade.

4. Total tax revenue from oil and gas exploration and development in the Utica shale formation from 2011 until 2015, including severance, commercial activity, ad valorem (property), federal, state and local taxes, is projected to be approximately $479 billion.

5. Industry expenditures related to Utica shale development could generate approximately $12.3 billion in gross state product and result in a statewide output or sales of more than $23 billion.

MP: The new domestic energy mantra should be "Drill, create and collect," i.e. drill, drill, drill = jobs, jobs, jobs created, and taxes, taxes, taxes collected. 

HT: Warren Smith

CA October Home Sales: Adjusted for Inflation, Typical Mortgage Payment Now Lowest On Record

From DQ News on California October Home Sales:

"An estimated 34,087 new and resale houses and condos were sold in California last month. That was down 3.7 percent from 35,404 in September, and up 4.3 percent from 32,669 for October 2010. California sales for the month of October have varied from a low of 25,832 in 2007 to a high of 70,152 in 2003, while the average is 43,528. DataQuick's statistics go back to 1988. 

The median price paid for a home last month was $240,000, down 3.6 percent from $249,000 in September, and down 6.3 percent from $256,000 for October a year ago. The median has decreased on a year-over-year basis for the last thirteen months. The bottom of the current cycle was $221,000 in April 2009, while the peak was at $484,000 in early 2007. Distressed property sales – the combination of foreclosure resales and “short sales” – continued to make up more than half of California’s resale market.

The typical mortgage payment that home buyers committed themselves to paying last month was $924, the lowest since early 1999. That was down from $964 in September, and down from $1,005 in October 2010. It was 58.8 percent below the spring 1989 peak of the prior real estate cycle. It was 66.6 percent below the current cycle's peak in June 2006."

MP: Here's the most amazing part of the report: "Adjusted for inflation, last month's mortgage payment was the lowest on record."

Cutthroat Competition: The Consumer's Best Friend

NY Times -- "As retailers battle to draw customers into their stores on Black Friday, online merchants are plotting a cunning ambush — offering an arsenal of mobile-only deals intended to pick off shoppers as they wait in line.

Not only can online merchants now offer a relatively annoyance-free alternative to shoppers stuck in crowded stores, but they can also even exploit the faster download speeds on free wireless networks promoted by retailers like Nordstrom and Macy’s. And most are throwing in free shipping. 

Last year, the online giants stole some of the Black Friday riches by offering early Web specials on Thanksgiving Day. But the move to mobile-only discounts — the specials will not be available on Web sites, in most cases — can lead to “a massive amount of share-stealing,” said Joel Bines, a managing director in the retail practice at the consultancy AlixPartners, “if I get just a small percentage to make a purchase standing in the store.”

And there is not much retailers can do to stop customers from checking out competitors, he said."