Saturday, January 22, 2011

The US loses more ground in a measure of Economic Freedom--From Free to Mostly Free...I don't like the sound of that..

The Heritage Foundation
 A highly regarded survey of economic freedom shows the US losing ground in economic freedom, by their metrics.  We have moved from "Free" to "Mostly Free". Not a good turn of events...Look at the whole survey to get a better perspective.

The 2011 Index of Economic Freedom

"The U.S., which fell from the ranks of “free” economies to the “mostly free” category in 2010, continued to lose ground. Its score slipped by 0.2 points to 77.8, dropping its world ranking to 9th place, one slot behind an improving Denmark.

The U.S. lost ground in four of the 10 economic freedoms measured by the Index, with the greatest decline resulting from the explosive growth of government spending. Monetary freedom also declined. “Government interventions in housing, automotive, health and financial markets have substantially increased price distortions,” the authors note. “Drastic legislative changes in health care and financial regulations have retarded job creation and injected substantial uncertainty into business investment planning.”""

Two excellent essays on the relationship between economic growth, the environment and the world's poor. Well worth the time.

In today's Wall Street Journal there are two excellent essays, one by Pete Singer and one by Bjorn Lomborg, on the relationship between economic growth, the environment and the poorest among us in the world.  Both essays are well worth a read if you need two different perspectives on this issue...

Pete Singer: Does Helping the Planet Hurt the Poor? No, if the West Makes Sacrifices.

""All of us who are middle class or above in the U.S. and other industrialized nations spend money on many things we do not need. We could instead donate that money to organizations that will use it to make a huge difference in the lives of the world's poorest people—people who struggle to survive each day on less than we spend on a bottle of water. For decades, that is what I've been advocating we should do.

But this concern for the poor appears to be in tension with the need to protect our environment. Is there any point in saving the lives of people who will continue to have more children than they can feed? Don't rising populations in developing countries increase the pressure on forests and other ecosystems? Then there is climate change. How would the world cope if everyone were to become affluent and match our per capita rate of greenhouse gas emissions?"" Read the Rest HERE

Bjorn Lomborg: Does Helping the Planet Hurt the Poor? Yes, if We Listen to Green Extremists.
""In a curious way, Mr. Singer's essay is an example of one of the stumbling blocks to making smarter policy decisions. He starts out saying we want to do a variety of good things, but almost reflexively he ends up focusing on green issues—and doing so in a very predictable way: The developed world has sinned and needs to atone.
Mr. Singer correctly points out that concerns over the environment and poverty are often linked. But he thinks about this only in terms of how poverty is bad for the environment, since poorer, less educated people tend to have more children, which puts more pressure on such things as forests and biodiversity.

But his argument can—and should—be taken further. As we get richer and such immediate concerns as water, food and health become less of an issue, we become more open to environmental concerns. Among other things, we become more willing to pay extra for technology that pollutes less and to accept more costly regulations to limit pollution."" Read the rest HERE

What do Tunisia, The Declaration of Independence and Malcolm Gladwell have in common?

The change in government in Tunisia resulting from a "popular up-rising" made me think of the importance of this passage from the Declaration of Independence:
""Prudence, indeed, will dictate that governments long established should not be changed for light and transient causes; and accordingly all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.""
This is the "Big Picture" view of events in Tunisia, but there was also a Small Picture element that may have been "The Tipping Point" that resulted in the overthrow of a long established government.

"The Tipping Point" is a great book by Malcolm Gladwell.  The general thesis of the book is why does it sometimes take a seemingly innocuous event to push enough people to act more boldly than they otherwise would in a given situation.  In Tunisia, many/most people were well aware and tired of the corruption but not to the point where they were incensed enough to do anything about it--remember the above line in the Declaration:
""Prudence, indeed, will dictate that governments long established should not be changed for light and transient causes; and accordingly all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed""

In this article in the NYTIMES: Slap to a Man’s Pride Set Off Tumult in Tunisia, Gladwell may have material for one more chapter:

""SIDI BOUZID, Tunisia — Mohamed Bouazizi spent his whole life on a dusty, narrow street here, in a tiny, three-room house with a concrete patio where his mother hung the laundry and the red chilis to dry. By the time Mr. Bouazizi was 26, his work as a fruit vendor had earned him just enough money to feed his mother, uncle and five brothers and sisters at home. He dreamed about owning a van.

Faida Hamdy, a 45-year-old municipal inspector in Sidi Bouzid, a police officer’s daughter, was single, had a “strong personality” and an unblemished record, her supervisor said. She inspected buildings, investigated noise complaints and fined vendors like Mr. Bouazizi, whose itinerant trade may or may not have been legal; no one seems to know.

On the morning of Dec. 17, when other vendors say Ms. Hamdy tried to confiscate Mr. Bouazizi’s fruit, and then slapped him in the face for trying to yank back his apples, he became the hero — now the martyred hero — and she became the villain in a remarkable swirl of events in which Tunisians have risen up to topple a 23-year dictatorship and march on, demanding radical change in their government.""

Sometimes we have to look beyond the grand rhetoric and look to a simple explanation.  I am sure the  history books will note the revolution in Tunisia, but will not remember Mr Bouazizi' role...Something to think about...

Graph of Corn used for Ethanol as a percentage of US corn production---posted with no comment...none needed...

WSJ using US Dept of Agriculture Data

Solar power---It has to be the primary energy source of the future, doesn't it?

Perhaps I am stubborn and/or naive, but I believe solar power is the ONLY way to go when seeking an alternative energy source to power our economy in the future. It will never diminish or go away. Well, it WILL go away eventually, but then so will we along with it, so I will make the claim anyway.  It will not happen now, or even in 50 years, but it has to happen eventually.  My hope is that its development follows the trajectory of computer technology.. We have all seen (and some of us lived through) the time when computers did very simple calculations but took up a roomful of very inefficient and expensive computers. The advent of the micro-computer chip change everything. We see the same thing with solar--those large, odd-shaped solar panels that power a small one-man vehicle at very low speeds (see article below), analogous to the early computers.  What is going to be the micro-chip equivalent that will do the same thing for solar?  Is it even possible? Hey, if you are not going to major in Economics, I think this would be an worthy endeavor---are you up to it?

Solar car speed record smashed

“We're really on the edge of energy efficiency,” said project manager Daniel Friedman, whose team managed to convert 98% of power from solar panels into kinetic energy. The record run used only 1050 watts of power, similar to that used by a toaster...."

Thursday, January 20, 2011

Step right up and get your Lion tacos! What? Hmm...Maybe this is the BEST thing that has happened to them as a species.

Is this the BEST thing that could happen to Lions as a species?  Apply what you know about "The Tragedy of the Commons" and private property rights to analyze this issue.  An uncomfortable topic, but is it a solution to preserving not only lions but elephants, gorillas, tigers, whales, and many other endangered species?
Boca, gaining a rep for exotic tacos, plans lion-meat offering

""In the six months since it launched Exotic Taco Wednesdays, Boca Tacos y Tequila has served up python, alligator, elk, kangaroo and rattlesnake.
Frog legs, turtle, duck and Rocky Mountain oysters have also made appearances.
"We've done just about anything we can get our hands on," said owner Bryan Mazon. "Every Wednesday we do something a little bit different."

Last week he announced on Boca's Facebook page that the UA-area taco shop was accepting prepaid orders for African lion, to be served on Feb. 16. Orders must be placed by 3 p.m. Feb. 7.

"I've gotten a lot of questions, like if it's legal," said Mazon, adding that a few lion tacos have been reserved so far. "We're still a month out, too."

According to the Food and Drug Administration, lion and other game meat can be sold as long as the species isn't endangered.""

Wednesday, January 19, 2011

Salaries of Top College Majors by starting and career mid-point pay...Economics is near the top...just sayin'...

Annual pay for Bachelors graduates without higher degrees. Typical starting graduates have 2 years of experience; mid-career have 15 years. See full methodology for more.
HERE is the source and a more comprehensive list...

Tuesday, January 18, 2011

Nice video showing the manufacture of a Model T...Compare it to the production of a Mercedes today...What a difference a 100 years makes!

A nice video showing the manufacture of the Ford Model T.  It is a good example of how technology has changed in a little over a century and how labor has become a smaller part of the whole process of making a car.  The second video is a modern Mercedes-Benz factory...WOW! Nary a person in sight! (HT: CafeHayek)

"WWBS"--What Would Bastiat Say" about the tax code and the cost to comply with it...I think I know...

I am not sure if this excerpt below violates Frederic Bastiat's conclusion in "The Broken Window Fallacy", Destruction is not profitable", but it sure is a good example of the "seen and the unseen".  The tax code is so complex that it requires a whole tax preparation industry to help people do their civic duty to pay taxes.  Yes, this creates lots of jobs, but ONLY because the IRS, with Congressional oversight, has aided and abetted it.  The tax preparation industry "rent-seeks" at the expense of the taxpayer.  This industry only exists with the help of government. That is the seen. The unseen is what the incredible amount of money that goes to this industry COULD be doing instead.  The unseen is what we are giving up in order to comply with the tax code.  We have destroyed (ok, maybe that is extreme--how about limited) future opportunities that will never be realized because of present policy.  Something to think about...

""Each year America’s labyrinthine tax code costs taxpayers billions, in dollars, hours and headaches. But it also has one giant beneficiary: America’s tax preparation industry.

The National Taxpayer Advocate’s latest annual report to Congress argues that “the most serious problem facing taxpayers” is not that taxes are too high, or that tax revenues fall so short of government spending, but that the Internal Revenue Code is just too dang “complex.” A convoluted tax code sucks up a huge amount of time and resources from the nation’s taxpayers, the report says.

Among the report’s key findings:

U.S. taxpayers and businesses spend about 6.1 billion hours a year complying with the filing requirements of the Internal Revenue Code…

Compliance costs are huge both in absolute terms and relative to the amount of tax revenue collected. Based on Bureau of Labor Statistics data on the hourly cost of an employee, [the Taxpayer Advocate Service] estimates that the costs of complying with the individual and corporate income tax requirements for 2008 amounted to $163 billion – or a staggering 11 percent of aggregate income tax receipts…

Individual taxpayers find return preparation so overwhelming that about 60 percent now pay preparers to do it for them. Among unincorporated business taxpayers, the figure rises to about 71 percent. An additional 29 percent of individual taxpayers use tax software to help them prepare their returns, with leading software packages costing $50 or more. IRS researchers estimate the monetary compliance burden of the median individual taxpayer (as measured by income) rose from $220 in 2000 to $258 in 2007, an increase of 17 percent....""From Economix Blog

Who was the richest man in the history of the US? A nice interactive graphic here....

GO HERE to see who the richest people in American history were. You will find a very nice interactive graph there....(HT: The New Arturian Economics)


Monday, January 17, 2011

VERY COOL population pyramid graphic from 1950 to today---Watch it change before your eyes!

Source HERE
(Thanks to Michael Johnston for the tip!)

In a nutshell--an economists view of why employment is not increasing as it perhaps should be...

The economy is officially in recovery as measured by GDP growth and the increase in employing available productive capacity to produce goods and services---also known as Capacity Utilization. However, contrary to past economic recoveries, employment opportunities that come with utlizing productive capacity have not emerged. This summation of the over-arching reasons for employment stagnation is provided by economist Mark Thoma...Make sense to me...
Read the whole thing and look at the graphs provided HERE
""Why will the recovery of employment take even longer than the recovery of output? A combination of factors is at work. First, firms do not want to make a commitment to hiring new workers until they are sure the recovery is solid, and uncertainty about the strength of the recovery near turning points leads firms to delay in hiring new workers.

Second, during a downturn it's natural to reorganize production. As firms lay workers off, they reassign tasks to the workers who remain. Then, as things improve they install labor saving equipment in an attempt to cut costs. This reassignment of tasks and the replacement of labor with software, robots, and other machinery lead to a delay in the recovery of employment.

The third reason for a delay is that firms do not want to let their highest productivity workers, or workers that require costly training, go in a recession even if there's not enough work for them to do. Since these firms will not hire new workers until this excess capacity is used up, this also delays the time until new workers are hired.

Fourth, when there is a considerable amount of structural change – leading to large numbers of workers who must be retrained and/or relocated as they move out of industries such as housing and finance – labor markets will have difficulty recovering....""

"Signs, Signs, Everywhere a Sign""---this is SO true on the UT--Austin campus...What is up with the Anarchist-Bicyclist influence on Campus?

I have been at the University of Texas--Austin for the past 3 days with students participating in a Model United Nations competition.  The campus perplexes me in a lot of ways, but the signs posted around campus are of special note, especially about parking.  Most signs have several addendums attached to them so there could be as many as 4 differents levels of explanation about a particular parking lot/space. UT students will know what I am talking about.  Also, bicyclists appear to have representation by anarchists on the committees that determine the rules of the road...Here few I got pictures of...

 Ummm....What else would you do on a Loading Dock??

It is hard to see, but the bottom of the sign carves out an exception for two-wheelers too. These confirm for me the influence of anarchist-bicyclists on campus... :)

Nice graphic comparing many aspects of life before and after the recession

Source HERE (click on image to make LARGER)

Take this 33 question Civic Literacy Test...A little govt, history, economics...How did you do???

Take the test HERE...I missed only one... :(
""Are you more knowledgeable than the average citizen? The average score for all 2,508 Americans taking the following Civics test was 49%; college educators scored 55%. Can you do better? The 33 questions on this Civics Quiz were taken from the 2008 Civic Literacy exam""....Source Carpe Diem

Is Thomas Hobbes going to be the next President of Haiti?

New York Times
Well, not the REAL Thomas Hobbes (1588-1679), but a philosophical surrogate perhaps..."Baby Doc" Duvalier, a former dictator in Haiti, arrived unexpectedly in Port au Prince over the weekend (NY TIMES).  He inherited power from his father, "Papa Doc" Duvalier. This family ruled Haiti from the 1950's to 1980's. 

Haiti could be a modern day example of the Hobbesian view of man in the "state of nature" and why the return of Baby Doc may be no mere coincidence.
Kind of a dim perspective, isn't it? The "common power to keep them all in awe" refers to the choice of government people will choose to avoid the above conditions.  In Hobbes view, the social contract people would/should choose voluntarily is rule by a "single sovereign or assembly of men"  who would use unconditional power to maintain law and order. The people would cede all rights, including the right to rebel, to this sovereign power in return for protection against those who would do them harm. 

If you view this Frontline documentary on post-earthquake Haitii, one could see how the power vacuum in Haiti may set the conditions for the rise of a single-power sovereign like Duvalier.  At this point, are the people of Haiti ready for some law and order provided by another dictator? I certainly hope not, but the inertia seems to be pushing that way...

"During the time men live without a common power to keep them all in awe, they are in that conditions called war; and such a war, as if of every man, against every man.

"To this war of every man against every man, this also in consequent; that nothing can be unjust. The notions of right and wrong, justice and injustice have there no place. Where there is no common power, there is no law, where no law, no injustice. Force, and fraud, are in war the cardinal virtues.

"No arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death: and the life of man, solitary, poor, nasty, brutish and short."
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