Quote of the Day: Ethanol Mandates Are Immoral

"There are lots of stupid federal programs. There are lots of wasteful federal programs. The corn ethanol mandates are immoral."

~Robert Bryce writing in the Energy Tribune

HT: Nick Schulz

The Waning Power of Private Unions in the U.S.

In 2009, there were only five major strikes and lockouts involving 1,000 or more workers, the lowest number since the major work stoppages series began in 1947, the U.S. Bureau of Labor Statistics reported today (see chart above). The prior low for major work stoppages beginning in a calendar year was 14 in 2003. The decline in work stoppages over the last sixty years coincides with the ongoing decline in union membership as a share of all workers, from a high of 32.5% of all workers in 1953 (almost 1 in 3) to 12.3% in 2009 (fewer than 1 in 8).

See related links at Economix and The Economist.

On Sunday The Caracas Storeowners Had Small Business; 2 Seconds Later, They Were Gone

In the heart of Caracas's historical center, some shopkeepers are being bought out by the state -- whether they like it or not.

Watch the video.

China Surpasses Japan's Stock Market Value in 2009

The chart above shows 2009 year-end stock market capitalization for the 14 largest stock markets based on data available from the World Federation of Exchanges.

1. I'm pretty sure that this is the first time ever that China's stock market ($3.57 trillion) has surpassed Japan's ($3.31 trillion) by total market capitalization.

2. It's also interesting that China, India and Brazil now account for 16% of the world stock market value. It was not too long ago that those three countries accounted for less than 1% of world stock market value. In 2003, those countries represented only 4.2% of world stock market value.

3. The United States stock market has the same value ($15.08 trillion) of the next five stock markets combined: China, Japan, Euronext, U.K. and India, and accounts for 32% of total world stock market value.

4. China has the same stock market value ($3.57 trillion) as Germany, Australia and Switzerland combined.

Rise in Retail Sales Brightens Recovery Picture

WASHINGTON (Reuters) - Sales at U.S. retailers rose more than expected in January, suggesting consumers were feeling a bit more comfortable to spend and sustain the economic recovery. The Commerce Department said on Friday total retail sales increased 0.5 percent. In addition, December and November were both revised to show stronger spending.

Analysts polled by Reuters had forecast retail sales increasing 0.3% last month. Compared to January last year, sales were up 4.7% (see chart above).

"It's a nice surprise for the economy, it suggests that the consumer is willing to spend a little. It tells us that retail sales are in a clear recovery," said Kathleen Stephansen, chief economist at Aladdin Capital Holdings in Stamford, Connecticut.

MP: This is probably one the strongest signs yet of a V-shaped economic recovery (see chart).

Making The Case for Child Labor and Sweatshops

"As any historian could tell you, no society has every pulled itself out of poverty without putting its children to work. Back in the early 19th century, when Americans were as poor as Bangladeshis are now, we were sending out children to work at about the same rate as the Bangladeshis are today.

Having had the good fortune to get rich first, Americans can afford to give Bangladeshis a helping hand, and there are plenty of good ways for us to do that. Denying Third Worlders the very opportunities our ancestors embraced, whether through full-fledged boycotts or by insisting on health and safety standards they can’t afford to meet, is not one of those ways."

~Economist Steven E. Landsburg

Here's more from Landsburg on closing sweatshops.

What Does German Beer Have to Do with Fairness?

All the leading brands of beer in the United States were created by people of German ancestry and so is the leading beer in China, not to mention breweries created by Germans in Australia, Argentina and elsewhere. Germans were producing beer in the days of the Roman Empire.

This does not mean that beer brewing skill is genetic but it also does not mean that this skill-- or any other skill-- is randomly distributed among peoples, so that a failure to have equal "representation" of groups in a given institution can be presumed to be due to discrimination by that institution.

Fairness as equal treatment does not produce fairness as equal outcomes. The confusion between the two meanings of the same word has created enormous mischief, much of it at the expense of lagging groups, who have been distracted from the things that would enable them to catch up. And whole societies have been kept in a turmoil pursuing a will o' the wisp in the name of "fairness."

~Thomas Sowell

National Weather Service

Two-week Snow Movie, January 28 to February 11, hour-by-hour.

More here.

Union Membership: Good News, Bad News

Good News: Union membership as a percent of all U.S. workers is close to an all-time low of 12.3% in 2009, down slightly from 12.4% in 2008, but higher than the 12% share in 2006 and 12.1% share in 2007 (see chart above). In the early 1950s, almost one of three American workers belonged to a union, compared to only about one of eight workers today who are union members.

Bad News: There are now more public sector union members than private sector union members, for the first time ever (see chart below). Public sector union membership has increased in six out of the last nine years, and is higher today by 781,000 government employees compared to 2000. Over the same period, private sector union membership has declined by 1,788,000 workers, bringing down the overall share of union members since 2000. But the 11% increase in public sector union members since 2000 and the upward trend over the last decade is a cause for serious concern.

Quiz On Current Events from Pew Research

Test your News IQ at Pew Research.

Full Disclosure: I got 10/12 correct, and missed items #7 and #8.

HT: Ryan Stinson

The Two Americas: Public vs. Private Sector, Part II Highest Paid Madison City Worker: $159k Busdriver

WISCONSIN STATE JOURNAL -- "Madison's highest paid city government employee last year wasn't the mayor. It wasn't the police chief. It wasn't even the head of Metro Transit. It was bus driver John E. Nelson. Nelson earned $159,258 in 2009, including $109,892 in overtime and other pay. He was among the seven bus drivers who made more than $100,000 last year thanks to a union contract that lets the most senior drivers who have the highest base salaries get first crack at overtime."

HT: NCPA

See related CD posts, "Two Americas" and "Piano Movers at Carnegie Hall Make More Money Than the Piano Players."

Real World GDP Through 2030

The chart above of historical real world GDP shares was featured on CD in November and generated lots of discussion (44 comments) and was also featured on Greg Mankiw's blog and about 25 other blogs. Using the same international macroeconomic database from the USDA, the chart below plots the projected shares of real world GDP shares through 2030, and shows the expected change in the composition of world output over the next 20 years as world output is anticipated to increase by 150% from $39 trillion in 2000 to $98.1 trillion by 2030.

As expected, the continued economic growth in China and India will boost that region's share of world GDP from the current 25% to 36% by 2030. And most likely within the next few years, the Asia region's share of world GDP will surpass both the USA and EU-15. Also within the next few years, the USA's share of world GDP will exceed the EU-15's share for the first time ever, and the USA-EU-15 gap is expected to widen over the next several decades.

The third chart below shows the projected real world GDP per capita through 2030, which is expected to increase from $6,439 in 2000 (in 2005 dollars) by 84% to $11,875 by 2030. If world GDP increases over the next twenty years as projected, the world economic slowdown in 2009 would be a minor blip on an extended period of economic growth.

U.S. Patent Activity for the Last 125 Years

The chart above plots the annual number of approved patents in the U.S. from 1883 to 2008, according to data from the World Intellectual Property Organization. It's interesting that it took more than 70 years for patents to double from 40,000 to 80,000 (1914 to 1987), and then only 14 years for patents to double again to 160,000 by 2001. In total, there have been 7,176,477 U.S. patents granted in the 126 years between 1883 and 2008.

The chart below plots both the number of patent applications and patents granted, annually from 1883 to 2008, and shows the same pattern for patent application as for patents granted: almost a 70-year period for applications to double from 100,000 to 200,000, and then another doubling in only 12 years.

Finally, the chart below plots U.S. patents as a share of total world patents since 1883. In total, there have been 31,764,313 patents awarded worldwide from 1883 to 2008, and 22.6% of those (7,176,477) have been in the U.S. It looks like there was a spike during WWI and WWII for U.S. patents, and then a long period of below-average patent activity (relative to the rest of the world) in the 1950s, 1960s and 1970s, followed by an above-average period in the 1980s, 1990s and 2000s. Despite a declining share of world patents since 2000, the U.S. share in 2008 at 21.7% is close to the average share over the last 125 years.


The fact that Americans, with 5% of the world's population, have received more than 22% of the world's patents over the last century, is a testament to American ingenuity and innovation, our entrepreneurial spirit, and the dynamism of our (mostly) market economy.

U.S. Exports Would Rank #8 for Largest Economy

In 2008, the U.S. exported $1.276 trillion (or $1,276 billion, BEA data here) of manufactured goods to the rest of the world including food products ($89 billion), industrial supplies and materials ($780 billion), capital goods ($454 billion), automotive vehicles and parts ($234 billion), and consumer goods ($482 billion). If the value of U.S. exports ($1.276 trillion) in 2008 were considered as a separate country, it would have been the 12th largest country in the world, larger than the entire GDP of either India ($1.2 trillion, IMF data here) or Mexico ($1.1 trillion), and just slightly smaller than the entire GDP of Brazil ($1.57 trillion) and Canada ($1.5 trillion).

If we add services and consider the total value of U.S. exports ($1.826 trillion), it would have been the 8th largest economy in the world for 2008, larger than the GDP of either Russia ($1.7 trillion) or Spain ($1.6 trillion), and ranking right behind the GDP of the U.K. ($2.7 trillion) and Italy ($2.3 trillion).

MP: We hear a lot about how the U.S. "doesn't make anything anymore" and how we have outsourced our manufacturing to China, etc. The U.S. export data for U.S. manufactured goods suggest otherwise - the U.S. manufacturing sector is alive and well, and according to many recent economic reports (ISM, vehicle production, industrial production, Empire State survey, manufacturing jobs in January, manufacturing overtime hours, etc.) the manufacturing sector is coming back.

See related Enterprise post "Manufacturing’s Death Greatly Exaggerated." Also note that U.S. exports dropped by about 15% in 2009, and imports by 23%, both due to the global slowdown.

Newspaper Articles Are Too Long

"One reason seekers of news are abandoning print newspapers for the Internet has nothing directly to do with technology. It’s that newspaper articles are too long. On the Internet, news articles get to the point. Newspaper writing, by contrast, is encrusted with conventions that don’t add to your understanding of the news. Newspaper writers are not to blame. These conventions are traditional, even mandatory.

The software industry has a concept known as “legacy code,” meaning old stuff that is left in software programs, even after they are revised and updated, so that they will still work with older operating systems. The equivalent exists in newspaper stories, which are written to accommodate readers who have just emerged from a coma or a coal mine. Who needs to be told that reforming health care (three words) involves “a sweeping overhaul of the nation’s health care system” (nine words)? Who needs to be reminded that Hillary Clinton tried this in her husband’s administration without success? Anybody who doesn’t know these things already is unlikely to care. (Is, in fact, unlikely to be reading the article.)"

~Michael Kinsley writing in The Atlantic, "Cut This Story."

One of the Most Dangerous Words Ever: Fairness

1. "In recent times, virtually any disparity in outcomes is almost automatically blamed on discrimination, despite the incredible range of other reasons for disparities between individuals and groups.

Nature's discrimination completely dwarfs man's discrimination. Geography alone makes equal chances virtually impossible. The geographic advantages of Western Europe over Eastern Europe-- in climate and navigable waterways, among other things-- have led to centuries of differences in income levels that were greater than income differences between blacks and whites in America today."

2. "In the language of the politically correct, achievement is equated with privilege. Such verbal sleight of hand evades the question whether individuals' own priorities and efforts affect outcomes, whether in education or in other endeavors. No need to look at empirical evidence when a clever phrase can take that whole question off the table."

~Thomas Sowell's series "The Fallacy of Fairness," Part I & Part II.

Markets in Everything: Screw-in-the-Ground Casket

Link.

The Two Americas: Public Sector vs. Private Sector

Note: This post was inspired by Michael Jahr's post on the Mackinac Center's website, "Economy Contracts, Government Expands."

According to a December report from the BLS, state and local government employers spent an average of $39.83 per hour worked ($26.24 for wages and $13.60 for benefits) for total employee compensation in September 2009. Total employer compensation costs for private industry workers averaged $27.49 per hour ($19.45 for wages and $8.05 for benefits), see chart above. In other words, government employees make 45% more on average than private sector employees.

According to another BLS report, compensation for private industry workers has increased by 6.9% between December 2006 and December 2009, compared to a 9.8% increase for government workers (state and local) over the same period.

According to an analysis by USAToday (thanks to Michael Jahr for the pointer), "The number of federal workers earning six-figure salaries has exploded during the recession, according to an analysis of federal salary data." For example, the number of federal employees making $100,000 or more has increased by 120,595, from 262,163 employees in December 2007 to 382,758 in June 2009, for a 46% increase. The number of federal workers making $150,000 or more has more than doubled since the recession started, from about 30,000 to more than 66,000 (see chart above).

USA Today also reports that "When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000." That's a 168,900% increase!!

The final chart below shows the average unemployment since December 2007 for government workers (3%) and private-sector workers (7.9%), so the private sector has faced a jobless rate more than twice as high as the rate for government workers over the last several years.

MP: By every labor market measure, the public sector has done quite well and even expanded during the recession compared to the private sector. This has prompted Michael Jahr of the Mackinac Center to wonder whether recent government policies could lead to a long-run hollowing out of the private sector, i.e. could we be in the early stages of the "Detroitification" of the country?

Josh Barro writes for the Manhattan Institute about the "Two Americas" and the "sharp difference between two classes of employees: those who work in the private sector and those who work for the government. Workers in the public sector have experienced a very different recession from those in the private sector."

Historical Statistics for Minerals and Commodities

Here is a great database for statistics on Mineral and Material Commodities in the United States, annually from 1900 and through 2008, for about 90 commodities and minerals including data for supply, demand, exports, imports, nominal prices, real prices, etc.

The chart above shows the real price of aluminum annually back to 1900. Despite the fact that the real price of aluminum had fallen from $14,000 per ton in 1900 by 64% to less than $5,000 per ton in 1937, Alcoa Aluminum was charged with "illegal monopolization" of the aluminum market by the Justice Department in 1938 (see details here "United States vs. Alcoa").

10th Monthly Increase in Miami Home Sales

"In December, 8,259 new and resale houses and condos closed escrow in the metro area encompassing Miami-Dade, Palm Beach and Broward counties. That was up 19.1% from November and up 41.3% from 5,846 in December 2008, according to MDA DataQuick (see chart above). December marked the tenth consecutive month in which the region's overall sales rose on a year-over-year basis.

The median price paid for all new and resale houses and condos sold in December was $155,000, the same as in November but down 22.5 percent from $200,000 in December 2008. It was the smallest year-over-year decline for the overall median sale price since the median fell 22.2%, to $210,000, in November 2008."

For-Profit Colleges Change Higher Ed's Landscape

Interesting article in today's Chronicle of Higher Education, here are some excerpts:

At a time when American public higher education is cutting budgets, laying off people, and turning away students, the rise of for-profit universities has been meteoric.

Enrollment in the country's nearly 3,000 career colleges has grown far faster than in the rest of higher education—by an average of 9 percent per year over the past 30 years, compared with only 1.5 percent per year for all institutions, according to an industry analyst. For-profit universities now educate about 7 percent of the nation's roughly 19 million students who enroll at degree-granting institutions each fall. And the proportion rises to 10 percent, or 2.6 million, if you count students who enroll year round. Just this academic year, the University of Phoenix eclipsed California State University as the second largest higher-education system in the country, with 455,600 students as of this month—behind only the State University of New York.

Proprietary schools charge a lot more than public colleges—an average of $14,174 this year, compared with $2,544 at public two-year institutions and $7,020 for in-state tuition at public four-year institutions, according to the College Board. But students frequently choose proprietary schools over public colleges because for-profits do so much to limit the hassle of enrolling and applying for aid, and because students can take the classes they need quickly and get on with their lives.

The biggest player among those is the Apollo Group. Its flagship University of Phoenix has morphed from an institution with 25,100 students in 1995 to one with 455,600 today. That means that 15 years ago Phoenix was about the same size as George Washington University. Now it is larger than the entire undergraduate enrollment of the Big Ten.

The stocks of publicly held for-profit education companies have outperformed the Standard and Poor's 500 by about 40 percentage points in each of the past two years. And companies like Stifel Nicolaus that analyze the market predict that the sector will continue to enjoy a "significant tailwind." Indeed, BMO Capital Markets predicted in the fall that revenue from the for-profit sector would rise by 10 percent per year through 2014.

MP: The chart above (data here) shows the 600% increase in the Apollo Group's stock (University of Phoenix) since 2000, compared to the flat return for the S&P500.

Canada's Jobless Rate Falls to 8-Month Low in Jan.

Feb. 5 (Bloomberg) -- "Canada gained almost three times as many jobs as expected in January, led by part-time positions for youth, pushing the unemployment rate down to the lowest since September.

Employment rose by 43,000 last month, Statistics Canada said today in Ottawa, and the unemployment rate fell to 8.3%. The median forecast of 22 economists surveyed by Bloomberg was for a 15,000 gain in employment and a jobless rate of 8.5%."

MP: The unemployment rate in Canada has now declined three months in a row, and has decreased in four out of the last five months, reaching the lowest rate in January (8.3%) since April of 2009 (8%).