Saturday, September 05, 2009

The Top 4 Lessons Learned in Business School

#1 is "Always Consider Opportunity Costs." Read more here.

Retail Health Care Clinics: "A Model for the Future"

Never underestimate the power of the profit motive and competitive market forces to bring about real health care reform. The 1,200 retail health clinics across the country are providing high quality care at lower costs than emergency rooms or physician offices, and they offer better, faster service, with longer and more convenient hours than a traditional medical office (watch MSNBC video above).

While politicians sit around and have endless debates about how to bring down health care costs and expand access to medical care through various grandiose government interventions and programs, the private marketplace is already doing it - lowering costs and expanding access at more than 1,000 retail clinics. And unlike government-based health care reform, the explosion of affordable, convenient retail health clinics across the country didn't require any tax increases, government spending or funding, or special legislation.

Retail clinics truly could be the "model for the future" for health care reform. When it comes to lowering costs and improving quality and service, government enterprises have a miserable track record, and competitive markets have a proven, excellent record. Retail clinics are just one example of thousands of cases of how market competition results in bringing down costs and improving customer service.

Adjusted Jobless Claims Suggest Recession Ended

August employment data was released yesterday, and the graph above of Initial Jobless Claims as a Percent of the Labor Force (1974-2009) has been updated to reflect the August labor force of 154,577,000 and the August average for initial unemployment claims (568,900 for the 4-week moving weekly average). This measure of initial jobless claims, adjusted for the size of the U.S. labor force, shows that jobless claims peaked during this recession above the levels of the last two recessions (1990-1991 and 2001), but were never anywhere close the levels of the previous three recessions in the mid-1970s and early 1980s (see chart above).

In other words, this recession was worse than the last two, but not nearly as severe as the previous three, using this adjusted measure of jobless claims. Additionally, the sharp .056% reduction in adjusted jobless claims from the March 2009 high of 0.4226% to 0.3662% in August follows the same pattern of .05% reductions in adjusted claims at the end of the 2001 recession (a .052% reduction from .3318% in October 2001 to February 2002) and at the end of the 1990-1991 recession (a .058% reduction from .3915% in March 1991 to .3327% in July 1991).

Finally, the current level of 0.3662% for jobless claims as a share of the August labor force is above the level at the end of the 2001 recession, but is very close to the levels that marked the ends of the four previous recessions (see dashed blue line in graph above).

As Scott Grannis reported last month, this type of reduction in job losses as a percent of the workforce suggest that the recession probably ended in June.

Markets In Everything: Portable Toilet for Women

A German company is marketing a mobile toilet for women that fits into their handbags and can be used whenever they are caught short. The disposable portable lavatory consists of a plastic bag fitted with absorbent polymers that turn urine into a gel. The size of a chocolate bar when folded, it has a wide opening and can be used squatting, sitting or standing. The Ladybag is recommended for one-time use and comes in a bag of three for $16.00 including packaging.

Adam Smith blog

Real Estate Recovery

Exhibit A: Portland home sales jumped in July, marking the first year-over-year increase in sales for any month since early 2006. A total of 3,375 new and resale houses and condos closed escrow last month in the Portland metro area. That was up 9.3% from June and up 5.8% from a year earlier. The number of homes sold in July was the highest for any month since August 2007, when 4,242 sold.

Exhibit B: Seattle home sales rose above last year's level for the first time in more than three years last month amid relatively robust sales below $300,000. The median sale price fell, ending its three-month streak of month-to-month gains. A total of 4,221 new and resale houses and condos closed escrow last month in the Seattle area. Last month's sales rose 2.5% from the prior month and were 8.8% higher than a year earlier. July's sales total was the highest for any month since October 2007, when 4,434 homes sold. Last month's annual gain for total sales ended 37 consecutive months of year-over-year declines.

Exhibit C: Phoenix-area home sales climbed above a year ago for the seventh consecutive month in July but dipped below June as purchases of foreclosed properties continued to wane. The region’s decreasing reliance on sales of heavily discounted, lender-owned homes helped the median sale price inch higher for the third consecutive month. A total of 10,288 new and resale houses and condos closed escrow in the Phoenix metropolitan area in July, down 4.1% from June but up 27.7% from a year ago. Total home sales were the highest for the month of July since 2006.

Exhibit D: Las Vegas home sales rose above a year ago for the 11th consecutive month in July as investors and first-time buyers continued to target lower-cost, post-foreclosure properties. A total of 5,311 new and resale houses and condos closed escrow in the Las Vegas metro area last month, down 3.8% from June but up 28.5% from a year ago. It was the highest sales total for any July since 6,530 homes sold in July 2006. July marked the 16th consecutive month in which sales of existing single-family detached houses rose on a year-over-year basis. The 3,925 single-family house resales last month were the highest for any July since 4,555 sold in July 2005. Resale condos have seen an annual sales gain for 13 straight months and in July sales were the highest for that month since 2005.

From DQNews.

Miami Home Sales Highest Since August 2007

DQNews -- Miami region July home sales rose to the highest level for any month in nearly two years as investors and first-time buyers continued to dominate the market. The median price paid for all new and resale homes combined held steady, marking the third consecutive month in which the median has not fallen from the previous month. In July, 7,942 new and resale houses and condos closed escrow in the region encompassing Miami-Dade, Palm Beach and Broward counties. That was up 2.8% from June (6,572 homes) and up 24.4% from 6,383 in July 2008, according to MDA DataQuick of San Diego (see chart above).

July marked the fifth consecutive month in which the region's sales have risen on a year-over-year basis. The July sales total was the highest for any month since 9,214 homes sold in August 2007. The number of (existing) single-family houses and condos that resold has risen on a year-over-year basis for eight straight months.

Friday, September 04, 2009

Unprecedented Gender Disparity in Labor Market

The two charts featured here further put the "mancession" into perspective, and demonstrate how men have been significantly and disproportionately adversely affected by the recession. The chart above shows that the August jobless rate for men of 10.9% is almost 5.5% above the post-WWII average of 5.43% for males, and is just 0.20% below the historical record high of 11.2% for men in 1982.

In contrast, women are doing much better compared to the historical average jobless rate for females and the post WW-II peak. The chart below shows that the 8.2% August unemployment rate for women is 2.2% above the 6% average since 1948, and a full 4.2 percentage points below the maximum jobless rate of 10.4% in 1982.

This analysis further demonstrates that the severity of the most recent recession fell disproportionately on men, who have experienced much greater job losses and significantly higher jobless rates than women. Futher, this gender disparity in favor of women is historically unprecedented.

Forget Everything You've Heard in the Media About Income Inequality and Income Mobility

From the study "Income Mobility in the United States: New Evidence from Income Tax Data," by Gerald Auten & Geoffrey Gee (both of the Office of Tax Analysis, U.S. Treasury Department), which was released previously here.

This study examines the income mobility of individuals over the last two decades using large panels of income tax returns that overcome many of the limitations of prior studies. The use of panel data means that the analysis tracks changes in the incomes of the same individual taxpayers over these time periods rather than comparing cross-sections at different points in time. Key findings include:

* There was considerable income mobility of individuals in the U.S. economy over the 1996-2005 period. More than half of taxpayers (57.5% by one measure and 55% by another measure) moved to a different income quintile over this period. About half (56% by one measure and 42% by another) of those in the bottom income quintile in 1996 moved to a higher income group by 2005.

* Median incomes of taxpayers in the sample increased by 24% after adjusting for inflation. The real incomes of two-thirds of all taxpayers increased over this period. Furthermore, the median incomes of those initially in the lowest income groups increased more in percentage terms than the median incomes of those in the higher income groups. In contrast, the real median incomes of taxpayers who were in the highest income groups in 1996 declined by 2005.

* The composition of the very top income groups changed dramatically over time. Less than half (39% or 42% depending on the measure) of those in the top 1% in 1996 were still in the top 1% in 2005. Less than one-fourth of the individuals in the top 1/100th percent in 1996 remained in that group in 2005.

* The degree of relative income mobility among income groups over the 1996-2005 period was very similar to that over the prior decade (1987-1996). To the extent that increasing income inequality widened income gaps, this was offset by increased absolute income mobility so that relative income mobility neither increased nor decreased over the past 20 years.

* Upward and downward mobility is affected by many factors. Based on a regression analysis, we find that initial position in the income distribution and changes in marital status are among the more important factors associated with changing positions in the income distribution.

MP: In other words, almost everything we hear in the media about increasing income inequality, the disappearing middle class, the rich getting richer and the poor getting poorer, and the lack of income mobility is either flawed, deficient, incorrect, incomplete or wrong.

The data show that there is significant income mobility up and down the income quintiles over longer periods of time, e.g. 1996-2005. Many of today's poor are tomorrow's rich, and many of today's rich are tomorrow's middle class or poor. The top income quintiles are not private clubs closed to new members, but are shifting, dynamic quintiles composed of an ever-changing group of different individuals from year to year. Consider that 75% of the individuals in the richest group of Americans in 1996, the top 1/100th percent, moved down into a lower income group by 2005, making room for a completely different group of individuals in that super-rich category.

HT: TaxProf Blog

The Great Mancession Just Got Even Worse

Despite some recent signs that the recession probably ended this summer, the employment news for men sure hasn't gotten any better, and actually continued to worsen in August. The BLS employment report today shows that the Great Mancession deepened to an unprecedented level in August, as male unemployment jumped by almost a half percent to 10.9% (from 10.5% in July) compared to the .10% increase for women, from 8.1% in July to 8.2% in August.

The new male-female jobless rate gap of 2.7% in August (10.9% male vs. 8.2% female) sets a new record for the highest gender jobless rate gap in either direction, as well a record for the highest male-female gap in BLS history back to 1948 (see chart below). There were some months in the 1960s and 1970s when the female jobless rate exceeded the male jobless rate by 2.5%, and there was a 2.5% male-female jobless rate gap in May, but the 2.7% male-female gap in August sets a new historical record.

The chart above shows how the male-female jobless rate gap during the most recent recession compares to the 1990-91 and 2001 recessions, and it's not even close. Following the 2001 recession the male-female jobless rate gap reached a peak of 0.9% in July 2003, and following the 1990-91 recession the maximum gap was 1.1% in January 1992. Therefore, the 2.7% gap in August is exactly 3 times the .90% gap in 2002, almost 3 times the 1992 gap.

Another way to see how bad the current employment situation is for men is that the August jobless rate of 10.9% is just slightly below the highest-ever male rate of 11.2% in December 1982 by only 0.30%. For women, the current rate of 8.2% isn't even close yet to the highest-ever female jobless rate of 10.4% in December 1982.

Thursday, September 03, 2009

Pelosi's Double Standard on the Minimum Wage

ECON 101: The Speaker of the House wants everyone to pay the minimum wage except herself and other politicians. Watch Pelosi demonstrate her resistance to economic logic, and how she finally becomes so frustrated that she has to call the guard to prevent any more questions.

Forget Top-Down Overhaul of Health Care, How About the Government Just Gets Out of the Way?

In the midst of all the talk about a top-down overhaul and reworking of the health-care industry, supposedly to fix the failures of the private sector, two new studies show that the private sector could do a better job of reform if government would just get out of the way. Time Magazine features two Rand Corporation reports on the rise of a new phenomenon, retail health clinics, and the impact that price awareness and competition have on the market. The studies focused on my state, Minnesota, which prides itself on health-care public policy – but private-sector care wins out.

Instead of hiding behind insurance co-pays, the clinics offer pricing up front to consumers, so that they can decide for themselves what to “buy” and how much they want to pay for service. This is the same mechanism that works to keep prices down and supply consistent in other areas of health care that insurance plans do not traditionally cover. For instance, cosmetic surgery and Lasik rely entirely on consumer compensation. There are no third-party payers to get in the way of rationally allocating resources to demand. In those markets, producers and consumers find each other in the normal manner, advertising, discounts, and price competition, and the market attracts new providers when scarcity appears and prices rise.

If we want to reform care, bend the cost curve downward, and promote supply in the health-care industry, we need to learn the lesson from retail health clinics. The top-down reform proposed by Congress threatens to stop real reform and amplify everything that's currently wrong with the system.

Edward Morrisey

Thanks to Wright Truesdell

Markets In Everything: Early Boarding for $10

CS Monitor -- Fans of Southwest Airlines’s folksy and egalitarian ways are in for a culture shock: From now on, customers who pay an extra $10 will get a head start on boarding.

B-School Entrance Test Smackdown: GRE vs. GMAT

Inside Higher Ed -- One of the hot battles in standardized testing these days is over the M.B.A. market. The Graduate Management Admission Test (GMAT) has long been dominant. In 2003, the Educational Testing Service lost its contract for the GMAT exam to ACT and a Pearson division, and a few years later, ETS was talking about encouraging business schools to consider the Graduate Record Examinations (GRE) as an alternative to the GMAT and a growing number of top business schools have agreed to accept either test (Wharton, Harvard, Stanford, MIT, NYU, and University of Virginia).

Here's a comparison of the GRE and GMAT, showing that the GRE has many advantages over the GMAT: faster score reporting time (10-15 days for GRE vs. 20 days for GMAT), available in more countries (165 vs. 110), GRE is both computer-based and paper-based and GMAT is computer-based only, GRE is slightly shorter (3 hours and 15 minutes vs. 4 hours), and probably the most important difference: $150 for the GRE ($180 in most foreign countries) vs. $250 for the GMAT.

Here's another link with comparison data of the test questions.

Monster Employment Index Rises Sharply in August

The Monster Employment Index rose in August, seeing its highest monthly rate of improvement in four years, as a majority of industries, occupations, and regions registered increased online job availability following the slow summer hiring activity. The Index’s annual rate of decline continued to moderate, indicating some signs of improvement in underlying demand for labor nationwide.

August 2009 Index Highlights:

• Index rises 7 points, or 6%, the highest monthly rate of increase since August 2005
• Year-over-year decline eases to 24%, the most moderate pace of slowdown so far this year
• Retail, administrative and financial industries demonstrate solid growth
• Arts, design, entertainment, sports and media rise among occupations, whereas healthcare, community and personal care and services show softening demand
• New England leads all regions while Portland, OR sees the highest rise on the month amongst the metro markets

“The significant jump in the Monster Employment Index in August offers encouraging signs of improvement in the US economy with the demand for managers and professionals as well as sales and office workers picking up in time for the fall hiring season,” said Jesse Harriott, senior vice president and chief knowledge officer at Monster Worldwide. “The Index is now at its highest since February while showing the most moderate yearly rate of contraction since December 2008.”

Globalization is Good

Click arrow to start video.

The world is an unequal and unjust place, in which some are born into wealth and some into hunger and misery. To explore why, in this controversial Channel Four documentary the young Swedish writer Johan Norberg takes the viewers on a journey to Taiwan, Vietnam, Kenya and Brussels to see the impact of globalisation, and the consequences of its absence. It makes the case that the problem in the world is not too much capitalism, globalisation and multinationals, but too little.

"Globalisation is Good" tells a tale of two countries that were equally poor 50 years ago - Taiwan and Kenya. Today Taiwan is 20 times richer than Kenya. We meet the farmers and entrepreneurs that could develop Taiwan because it introduced a market economy and integrated into global trade. And we meet the Kenyan farmers and slum dwellers that are still desperately poor, because Kenya shut its door to globalisation. The Kenyans are suffering from regulations, corruption and the lack of property rights. The unequal distribution in the world is a result of the unequal distribution of capitalism - those who have capitalism grow rich, those who don't stay poor.

MP: This is from 2003, but the message is as relevant today as it was six years ago. Via the
Adam Smith Institute.

Wednesday, September 02, 2009

BP Discovers ‘Giant’ Oil Field in Gulf of Mexico

HOUSTON -- The British oil giant, BP, announced today the discovery of what it characterized as a “giant” oil field more than six miles under the Gulf of Mexico, but it may take years to assess how much crude can actually be recovered.

“This is big,” said Chris Ruppel, a senior energy analyst at Execution, a London-based investment bank. “It says we’re seeing that improved technology is unlocking resources that were before either undiscovered or too costly to exploit because of economics.”

Measuring Economic Growth From Outer Space

Click to enlarge.
GDP growth is poorly measured for many countries and rarely measured for cities at all. Given the low quality of GDP measures for countries and the almost total absence of GDP measures for sub-national units such as cities, we propose a readily available proxy: satellite data on lights at night. The best use of lights data is to examine growth in GDP rather than GDP levels, so that cross-country differences in how lights spatially and culturally reflect consumption are differenced out.

The figure above contrasts the big increase in lights from 1992 to 2002 in the Eastern European countries of Poland, Hungary, and Romania with the distinct dimming of lights to the east in the former Soviet Republics of Moldova and the Ukraine, which endured a harsh transition process.


Cancer Drugs and The Smell of Profits

NY TIMES -- About 860 cancer drugs are being tested in clinical trials, according to the pharmaceutical industry’s main trade group. That is more than twice the number of experimental drugs for heart disease and stroke combined, nearly twice as many as for AIDS and all other infectious diseases combined, and nearly twice as many as for Alzheimer’s and all other neurological diseases combined.

Pfizer has amassed about 1,000 researchers for an all-out effort to develop drugs for cancer, a disease the company once largely ignored. Virtually every large pharmaceutical company seems to have discovered cancer, and a substantial portion of the smaller biotechnology companies are focused on it as well. Together, the companies are pouring billions of dollars into developing cancer drugs.

But for all the industry’s spending and effort, only a trickle of new cancer drugs make it to market. Last year there were two, and this year there has been only one.

MP: Why all of the sudden interest and investments of billions of dollars in cancer drugs by private companies? Federal funding? Funding from charitable nonprofit foundations? Subsidies, grants or tax breaks from the government like for the ethanol industry? Corporate social responsibility? Love of mankind? Nope. It's the good old "smell of profits":

Two industry trends are driving the push. Recent scientific discoveries have suggested new targets for cancer drug researchers to attack. And as drug companies see profits beginning to wane from mainstays like Lipitor, the high prices that cancer drugs can command have become an irresistible lure. Cancer drugs have been the biggest category of drugs in terms of sales worldwide since 2006 and in the United States since 2008.

Thanks to Ben Cunningham and Ariel Goldring (
Free Market Mojo blog) who both pointed me to the article.

IMF: World Economic Growth To Resume in 2010

WSJ -- The IMF expects the global economy to expand at slightly less than 3% in 2010, said Jörg Decressin, a senior IMF economist, higher than the IMF's July estimate of 2.5%.

The chart above plots IMF data for real World GDP growth rates from 1980 to 2008 (actual) and 2009 to 2014 (projected). The IMF currently estimating that real world GDP will contract by 1.4% in 2009, with positive economic growth resuming in 2010 with a 2.5% expansion in world real GDP (data here).

Despite a global economic slowdown in 2009, the future looks pretty bright for world economic growth according to IMF forecasts of a resumption of 4-5% positive growth in the world economy starting in 2011 and continuing through 2014.

The chart above also shows the steep, upward trend line for world real GDP since 1980. Due to increased productivity, technological improvements, greater world trade, and the spread of free market capitalism around the world among other positive long-term trends, the trend in world economic output has increased by a full percentage point since 1980 (see trend line above), from less than 3% in 1980 to almost 4% today.

Bottom Line: One year of a global slowdown doesn't seem so bad during a 35-year period of unprecedented global expansion, characterized by a positive upward trend in the world economy that has boosted the annual growth in world output by a full 1% since 1980.

Grand Rapids, MI: The Days of Low-Ball Offers for Real Estate Are Over; Bidding Wars Are Back

Grand Rapids, MI -- The 22% increase in home sales last month was not the only good news being reported by the Grand Rapids Association of Realtors. The average home sale price, which has been tumbling down for 16 months, finally went up. The increase of 0.1% from August 2008 was slight, but it is a far cry from the double-digit drops recorded during the past 12 months

Real estate agents who have been engaging in bidding wars are not surprised. "All my offers have been multiple offers," said Bill Pearl, an agent with Bellabay Realty. "I've gotten outbid with three other buyers."

The struggle now is getting his buyers to understand the market is changing and low-ball offers won't be accepted, he said. "I'm having a hard time convincing them that those days are over," he said.

Intrade Odds for Q3 Positive GDP Growth: 92.5%

Update: In early March the odds for positive U.S. real GDP growth in the third quarter were only 25%, based on contracts trading at, the "Prediction Market." As the economy has improved and as economic indicators have grown increasingly positive over the last six months, the odds for positive third quarter growth have increased to 92.5% (see graph above, click to enlarge).

Tuesday, September 01, 2009

10 Worst Teaching Mistakes

Like most faculty members, we began our academic careers with zero prior instruction on college teaching and quickly made almost every possible blunder. We’ve also been peer reviewers and mentors to colleagues, and that experience on top of our own early stumbling has given us a good sense of the most common mistakes college teachers make. In this column and one to follow we present our top ten list, in roughly increasing order of badness. Doing some of the things on the list may occasionally be justified, so we’re not telling you to avoid all of them at all costs. We are suggesting that you avoid making a habit of any of them.

Top Ten Worst Teaching Mistakes.

The Government Can

Thanks to Pete Friedlander.

51.5% vs. 42.8%: The Gap is Narrowing

Source: Real Clear Politics (9/1/2009)

It's Still Not Great, But Even Michigan's Economy Is Starting To Show Some Signs of Improvement

Comerica Bank's Michigan EconomicActivity Index improved two points in July, to a level of 75. Compared to its cyclical low, the Index is now up five points, or 7%. Year-to-date, the Index averages 73, down 14 points from the 2008 average.

"Our Index got a big boost from auto production in July," said Dana Johnson, Chief Economist at Comerica Bank. "In all likelihood, gains in auto productionand auto sales will continue to push our Index higher in the next couple of months reflecting, in part, the highly successful cash-for-clunkers program. More generally, Michigan businesses should see stronger demands for their products as the national recovery takes hold."

The Michigan Economic Activity Index equally weights nine, seasonally-adjusted coincident indicators of real economic activity. These indicators reflectactivity in the construction, manufacturing and service sectors as well as job growth and consumer outlays.

Originally posted at Carpe Diem.

It's Over (The Recession)

(Tempe, Arizona) -- Economic activity in the manufacturing sector expanded in August, following 18 consecutive months of contraction, and the overall economy grew for the fourth consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business. The report was issued today by Norbert J. Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee.

"The year-and-a-half decline in manufacturing output has come to an end, as 11 of 18 manufacturing industries are reporting growth when comparing August to July. While this is certainly a positive occurrence, we have to keep in mind that it is the beginning of a new cycle and that all industries are not yet participating in the growth. The August index of 52.9 percent is the highest since June 2007. The 4 percentage point increase was driven by significant strength in the New Orders Index, which is up 9.6 points to 64.9 percent, the highest since December 2004. The growth appears sustainable in the short term, as inventories have been reduced for 40 consecutive months and supply chains will have to re-stock to meet this new demand."

MP: The 17.1 point increase in the ISM Manufacturing Index from February t0 August is the strongest six-month gain in more than 25 years, since July 1983. The August gain in the ISM Index to a level above 50 provides another piece of evidence that the recession has ended.

Originally posted at Carpe Diem.

Retail Clinics Save 32% vs. MDs & Urgent Care (81% vs. Emergency Depts.), With Higher Quality Care

US News Health Day -- Walk-in retail clinics staffed by nurse practitioners provide high-quality care for routine illnesses, a new study has found.

Writing in the Sept. 1 issue of the Annals of Internal Medicine, study author Dr. Ateev Mehrotra said that retail clinics -- which are typically staffed by nurse practitioners and found in drug stores and other retail chain stores such as Target and Wal-Mart -- provide a good standard of care for sore throat, ear infections and urinary tract infections. Mehrotra is an assistant professor at the University of Pittsburgh School of Medicine and a policy analyst at Rand Health.

"I'm interested in how we deliver new forms of health care," said Mehrotra, who compared data from retail clinics, doctors' offices, urgent care centers and hospital emergency departments. "There's been a lot of discussion about the quality and effectiveness of these clinics; I wanted to find out more. From the patients' perspective, their appeal is twofold. They're convenient and they provide significant cost savings."

Retail clinics have become increasingly widespread in recent years. One such operation is CVS's MinuteClinic, the focus of Mehrotra's research. MinuteClinic staffers treat minor illnesses and injuries, and provide vaccinations and various health and wellness services. Customers can walk in without an appointment, and the clinics are open seven days a week. Most visits take no more than 15 minutes, and costs vary from $30 to $110, according to the MinuteClinic Web site.

According to Mehrotra, one-third of Americans live within a 10-minute drive of a retail clinic, and more than 6,000 of these clinics are expected to open across the United States within five years. Surveys of patients who received care at retails clinics have been positive, he added.

From the results section of the full article:

Overall costs of care for episodes initiated at retail clinics were substantially lower than those of matched episodes initiated at physician offices, urgent care centers, and emergency departments ($110 vs. $166, $156, and $570, respectively. Aggregate quality scores were similar in retail clinics, physician offices, and urgent care centers (63.6%, 61.0%, and 62.6%).

MP: In other words, for some routine health care, retail clinic costs are 81% below emergency rooms, and about 32% below physician offices and urgent care centers, with slightly higher quality scores than physician offices and urgent care centers.

Could Obama and all members of Congress receive copies of this study?

Update from Time Magazine, "
Drive-Thru Medical: Retail Health Clinics' Good Marks":

There are roughly 1,000 clinics now operating in the U.S., offering acute care for such routine problems as throat infections and earaches as well as providing diabetes and cholesterol screenings, routine checkups and vaccinations. The fees are low — and conspicuously posted; nearly all of the clinics treat both the insured and uninsured, and there is little or no waiting time. With 50 million Americans lacking health insurance and family budgets collapsing under the weight of medical costs, what's not to like about the clinics?

Markets in Everything: Eye Candy Caddies

Eye Candy Caddies website, where they "make golf gorgeous." Packages start at about $275.

Not everybody likes the idea, the BBC reports that "An owner of a string of golf courses in south-east England has banned the all-female caddy service."

Originally posted at Carpe Diem.

Minimum Wage, Maximum Folly, Minimum Jobs

Milton Friedman: "The minimum wage is a law saying that employers must discriminate against workers with low skills."

New John Stossel video on the minimum wage here.

Monday, August 31, 2009

Hoover's Pro-Labor Policy Caused Great Depression

UCLA -- Pro-labor policies pushed by President Herbert Hoover after the stock market crash of 1929 accounted for close to two-thirds of the drop in the nation's gross domestic product over the two years that followed, causing what might otherwise have been a bad recession to slip into the Great Depression, a UCLA economist concludes in a new study.

"These findings suggest that the recession was three times worse — at a minimum — than it would otherwise have been, because of Hoover," said Lee E. Ohanian, a UCLA professor of economics.

The policies, which included both propping up wages and encouraging job-sharing, also accounted for more than two-thirds of the precipitous decline in hours worked in the manufacturing sector, which was much harder hit initially than the agricultural sector, according to Ohanian.

"By keeping industrial wages too high, Hoover sharply depressed employment beyond where it otherwise would have been, and that act drove down the overall gross national product," Ohanian said. "His policy was the single most important event in precipitating the Great Depression."

After the stock market crash, Hoover met with major leaders of industry and cut a deal with them to either maintain or raise wages and institute job-sharing to keep workers employed, at least to some degree, Ohanian found. In response, General Motors, Ford, U.S. Steel, Dupont, International Harvester and many other large firms fell in line, even publicly underscoring their compliance with Hoover's program. Reluctant to lower wages due to Hoover's entreaties, employers in the manufacturing sector responded by reducing the work week and laying off workers. By September 1931, the manufacturing sector was already hurting: Hours clocked by workers had fallen by 20% (see chart above) and employment by 35%.

Overall, the economy suffered, with the GDP falling by 27%. In a situation in which wages would have been expected to fall, they remained at about 92% of what they had been two years earlier. When adjusted for deflation, they had actually climbed by 10%, Ohanian found. Interestingly, during the dreaded period of deflation a decade earlier, some

manufacturing wages fell 30%. GDP, meanwhile, only dropped by 4%.

The findings are slated to appear in the December issue of the peer-reviewed Journal of Economic Theory and were posted today on the website of the National Bureau of Economic Reasearch as a working paper (full paper here).

Hoover's approach is unlikely to be considered today as a means of responding to economic crisis, but it does illustrate the perils of ill-conceived government policies in times of economic upheaval and confusion, says Ohanian, a macroeconomist who specializes in economic crises.

Originally posted at
Carpe Diem.

Significant Gender Gap on the PSAT Math Test

The table above (click to enlarge) is based on PSAT scores in 2008 for college-bound juniors for males and females taking the mathematics exam, showing the results for the five geographical regions of the U.S. For both males and females, the highest scores were in the Midwest states, similar to the findings for the SAT test results, reported yesterday on the NY Times Economix blog, "Why The Midwest Rules on the SAT."

The results also show a significant gender gap in favor of males for the mean math test scores in all five regions, with mean male test scores ranging from 3.2 points higher in the Midwest (52.2 for males vs. 49 for females)to a low of 2.5 points higher in the South (50 points for males vs. 47.5 for females). In all five regions, the standard deviation of male test scores was higher than the standard deviation of female test scores, confirming previous findings of greater variability in male intelligence/scores on standardized tests.

Male high school students also outperform female students at the highest level of math test performance, i.e. in the range from 75-80 points. For example, 1.6% of male juniors in the Midwest score above 75 points, vs. only 0.50% of female students, for a ratio 3.2 males to 1 females for test scores in the highest range (see last column in table above). The M:F ratios for scores above 75 range from a low of 2.11 males per female in the New England states to 3.2 males per female in the Midwest states.

Originally posted at
Carpe Diem.

Government Spending Creates Wealth? The Most Persistent Economic Fallacy of All Time

At a 1978 lecture, Milton Friedman talks about government spending and explains one of the greatest economic fallacies of all time, essentially another version of Bastiat's "broken window fallacy."

HT: Drew Suder

Originally posted at Carpe Diem.

Sunday, August 30, 2009

Investor Optimism Rises to Highest Level of 2009

PRINCETON, NJ -- Consistent with Gallup's Consumer Confidence measure and the continued strong performance of the equity market, the Gallup Index of Investor Optimism -- a broad measure of investor perceptions -- in August hit a new 2009 high of 9. This represents a 12-point increase from July and is the first time the Index has been positive since June 2008. The Index has improved by 73 points from February's -64 reading -- its lowest level since its inception in October 1996.

Originally posted at Carpe Diem.

Capitalism: A Love Story

Peter Schweizer: Michael Moore is constantly trying to prove his and the Left's moral superiority, so he says things about himself that are patently not true. He's pathological about it. How else to explain that he's loudly proclaimed no less than three times that he doesn't invest in the stock market because it's morally wrong while quietly picking up shares in a whole host of companies. A portfolio that includes Halliburton, Boeing, and HMOs doesn't fit the bill so he lies about it. I think he assumed that no one would poke around and investigate. When it comes to the MSM he was correct in making that assumption. He never responded to my questions. I'm dying to know how he explains away this one.

Moore professes to hate capitalism ("the last evil empire" he's called it) but practices it in spades. Moore condemns people for their racism and claims to support and practice affirmative action, but has a lousy record of hiring minorities. He outsources post-production film work to Canada so he can pay non-union wages. I could go on and on. I would ask his fans: is this really a sincere person?

From the back cover of Peter Schweizer's book "Do As I Say (Not As I Do): Profiles in Liberal Hypocrisy":

Originally posted at Carpe Diem.

Era of Citing Adults for A Victimless Crime Is Over?

DENVER - A city panel in charge of overseeing marijuana possession crimes in Denver recommended on Wednesday that the fine for possession be set at $1. If Denver's presiding judge accepts the recommendation from the Denver Marijuana Policy Review Panel, the fine would be the lowest in the entire nation for marijuana possession.

"By setting the fine at just $1, we are sending a message to Denver officials that the era of citing adults for using a less harmful drug than alcohol is over. It's simply not worth the city's time or resources," said panel member and SAFER Executive Director Mason Tvert, who coordinated the successful Denver marijuana initiatives.

Originally posted at Carpe Diem.

Youth Jobless Rate Hits Record July High of 18.5%

BLS -- The youth unemployment rate (the unemployment rate for 16 to 24 year olds) was 18.5% in July 2009, the highest July rate on record for the series, which began in 1948 (see chart above).

Additionally, the male (19.7%) - female (17.3%) jobless rate gap of 2.4% in July 2009 for youth was the highest male-female gap since 1954 (2.5%), and 1949 (2.8%), see chart below.

Bottom Line: Between the economic slowdown and the 24% increase in the minimum wage over the last years, the 16-24 year old group is having a rough summer. And it's especially bad for males in that age group, who are feeling the effects of the "mancession" along with males in other age groups.

Originally posted at Carpe Diem.

Maximum SS Taxes Have Increased 4X Since 1970

The chart above is based on Social Security Administration data here for maximum taxable Social Security earnings, and here for the tax rates for Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) and Medicare's Hospital Insurance (HI), and shows the maximum annual taxes payable from 1937 to 2009. The annual tax amounts have been adjusted for inflation using the CPI data available here, and are shown above in 2009 dollars for the total annual contributions that come from both employees (50% of the total) and employers (50% of total).

Note that since 1970, the maximum taxes paid annually for Social Security and Medicare has more than quadrupled from $4,000 to more than $16,000.

Originally posted at Carpe Diem.

"Kennedy" Once Meant Supply-Side Tax Cutter

His name was Kennedy. He was the preeminent figure in the Democratic Party. And he was a resolute supply-side tax-cutter.

“It is a paradoxical truth,’’ he once told the Economic Club of New York, “that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.’’ What he had in mind, he said, was “an across-the-board, top-to-bottom cut in personal and corporate income taxes.’’

Those were not the words of Senator Edward Kennedy. The speaker - in December 1962 - was President John F. Kennedy (see video above), and his ringing call for tax cuts was no anomaly.

Four months earlier, JFK had called high tax rates a danger to “the very essence of the progress of a free society.’’ In his 1963 State of the Union message, his first priority was “the enactment this year of a substantial reduction and revision in federal income taxes.’’ In the speech he was scheduled to deliver on Nov. 22, 1963, Kennedy planned to report proudly: “We have proposed a massive tax reduction, with particular benefits for small business.’’

In recent days, Ted Kennedy has been justly acclaimed as a lion of the Democratic Party. But how different the party mourning Kennedy today is from the one that nominated him in 1962.

~Jeff Jacoby in
today's Boston Globe

Originally posted at Carpe Diem.

Quote of the Day: You Tell Me The Rules.....

Most of economist Armen Alchian's work in property rights can be summed up in one sentence:

"You tell me the rules and I’ll tell you what outcomes to expect."

Originally posted at Carpe Diem.

How Long Does A Top Athlete Work For $100,000?

According to the latest figures from the U.S. Census Bureau, it takes an average U.S. citizen a shade under four years to earn $100,000. Alex Rodriguez does it in six pitches.

Ben Roethlisberger of the Pittsburgh Steelers may have him beat. If you include his signing bonus, Mr. Roethlisberger brought in 100 grand for every 3.6 snaps he took in 2008 (many of which were hand-offs). But at least he helped his team win a Super Bowl. Cleveland Cavaliers forward LeBron James played 3,054 minutes in the 2008-09 regular season and made $100,000 every time he passed the 21.2 mark.

Read more.

Originally posted at Carpe Diem.

Markets in Everything: Coupons on Your Cell Phone

Coupons You Don’t Clip, They're Sent to Your Cellphone

Originally posted at Carpe Diem.

Value of U.S. Currency in Circulation

Note the difference in life expectancy between $1 bills (1.8 years) and $5 bills (1.3 years, less than the $1 bill) and $100 bills (7.4 years).

From Visual Economics.

Listen to bluesman Little Walter sing about them "
Dead Presidents."

Originally posted at Carpe Diem.