Saturday, July 16, 2011

Interactive Map of U.S. Newspapers, 1690-2011


Click on the  map above to access an interactive map from Stanford University of the annual number of newspapers in the United States from 1690 to 2011.  Here is a timeline of some selected years:

1690: 1 paper
1750: 24 papers
1800: 329
1850: 3,029
1890: 13,489
1900: 15,872
1920: 15,570
1950:13,632
2000: 13,690
2010: 13,670

Note that the "golden age" of newspapers was the period from about 1850 to 1890 when the number of papers increased more than four-fold from about 3,000 in 1850 to 13,489 by 1890, which is about the same number of papers as there are today (13,670).

HT: Stephen Dubner at the Freakonomics blog.

Markets in Everything: Chopsticks Made in the USA



It seems everything we buy these days says “Made in China.” But 2 million disposable wooden chopsticks with a "Made in the USA" label are made every day now at a Americus, Georgia factory (Georgia Chopsticks) for export to China, Japan, Korea and other Asian countries.  Business is booming, and the company plans to increase production to 10 million chopsticks per day. Watch the video above and see news reports here and here.

HT: Matt Bixler

High School Grade Inflation: 1991 to 2003

Following up on a recent post on college grade inflation, there's also evidence that grade inflation is taking place at America's high schools.  In a study by the college entrance exam company ACT, it found evidence of significant grade inflation between 1991 and 2003 for high school students taking the ACT exam.  While ACT scores remained stable between 1991 and 2003, the chart above shows that the average high school GPA increased for every ACT composite score over that period.  From the study:

"Each point on each curve represents the average GPA for all students in 1991 and 2003 who earned that specific ACT Composite score.  The curve for 2003 is higher at every Composite score point than the 1991 curve, which is evidence of the existence of grade inflation.

However, the amount of grade inflation varies for different Composite score values: it is highest between the scores of 13 and 27 and steadily lower with Composite scores above 27. This is because students with high ACT Composite scores tend to have higher GPAs, and there is less room for these GPAs to increase over time because GPA cannot exceed 4.00. The average amount of grade inflation is about 0.25, or about one-quarter of one grade point on a grading scale with a range of 4 points (0.00 to 4.00). This means that, during the 13-year period under study, high school GPA for ACT-tested public high school graduates increased by about 6.25%—without an accompanying increase in ACT Composite score.

But this may understate the average amount of grade inflation when we consider that far fewer Ds and Fs are given in high school than As, Bs, or Cs. Data for the 13 years of this study show that the percentage of students with GPAs below 2.00 is less than 5 percent. This suggests that the practical range of high school grades is 2.00 (C) to 4.00 (A). So, with half of the possible grade range effectively eliminated from consideration, one-quarter of a grade point now represents not 6.25 but 12.5% of the range. Therefore, it may be more accurate to conclude that high school grades have inflated 12.5% between 1991 and 2003.

Conclusion: Due to grade inflation and other subjective factors, postsecondary institutions cannot be certain that high school grades always accurately depict the abilities of their applicants and entering first-year students. Because of this, they may find it difficult to make admissions decisions or course placement decisions with a sufficient level of confidence based  on high school GPA alone."

HT: Mike Donahue

Why Do Medicare Patients See the Doctor Too Much? They Usually Pay Nothing Out-of-Pocket; So Demand Curves Really Do Slope Downward

From an editorial earlier this week in the WSJ:

"Almost all discussions about Medicare reform ignore one key factor: Medicare utilization is roughly 50% higher than private health-insurance utilization, even after adjusting for age and medical conditions. In other words, given two patients with similar health-care needs—one a Medicare beneficiary over age 65, the other an individual under 65 who has private health insurance—the senior will use nearly 50% more care.

Several factors help cause this substantial disparity. First and foremost is the lack of effective cost sharing. When people are insulated from the cost of a desirable product or service, they use more. Thus people who have comprehensive health coverage tend to use more care, and more expensive care—with no noticeable improvement in health outcomes—than those who have basic coverage or high deductibles.

In addition, Medicare's convoluted benefit structure encourages the purchase—either individually or through an employer—of various forms of supplemental insurance. Medicare covers roughly three-fourths of total costs, but about 85% of the Medicare population has expanded coverage with small to limited cost sharing. This additional cost insulation pushes seniors' out-of-pocket costs toward zero, thereby increasing overall utilization."

MP: This crystallizes one of our main health care problems: spending other people's money (see chart above, data here).  When out-of-pocket costs for medical care approach zero, it shouldn't be any surprise that utilization goes up, that's just the Law of Demand. 

Southern California, Bay Area Home Sales Highest in a Year, Median Prices Highest Since 2010

1. Southern California home sales in June shot up more than usual from May (11.6% vs. 6.2% historical average) to the highest level for any month since June 2010, when the market got its last big boost from homebuyer tax credits. The median price paid for all new and resale Southland houses and condos purchased last month was $285,000. That was up 1.8 percent from $280,000 in May and the highest since $290,000 last December, but still down 5.0 percent from $300,000 in June 2010.

2. Bay Area home sales rose sharply last month from May to the highest level for any month since June 2010, when outgoing homebuyer tax credits gave housing demand a final boost, and median prices edged up to a 2011 high. The median price paid for all new and resale houses and condos sold in the Bay Area last month was $377,750, up 1.5 percent from May but down 7.9 percent from $410,000 in June 2010. Last month’s median was the highest since it was $380,000 last November.

MP: These reports are somewhat mixed and not completely positive, and the reporting company DQNews.com says that "Indicators of market distress continue to move in different directions."  But the fact that home sales in Southern California and the S.F. Bay Area are at 12-month highs and June median prices are the highest for 2011 in both markets suggests that there are some modest improvements taking place in California, and there even might be a glimmer of hope for the nation's real estate market to recover. 

Friday, July 15, 2011

High GPAs Have Little Use As Student Motivator or Evaluation Tool for Grad Schools and Employers

Stuart Rojstaczer is a retired Duke University professor who has tirelessly crusaded for several decades against "grade inflation" at U.S. universities and maintains a website with lots of historical GPA data and charts (GradeInflation.com).  The chart above illustrates grade inflation at the University of Michigan-Ann Arbor over roughly the last half century (data here), with the average GPA rising from 2.57 in 1951 (C+/B-) to 3.27 by 2008 (B+).  The grade inflation at Michigan is similar to the national trend at most American universities over time.  

Catherine Rampell at the NY Times Economix Blog writes about a new paper by Professor Rojstaczer and co-author Christopher Healy titled "Where A Is Ordinary: The Evolution of American College and University Grading, 1940–2009," published in the Teachers College Record.  The main findings of the paper appear below, illustrated by this chart: 


"Across a wide range of schools, As represent 43% of all letter grades, an increase of 28 percentage points since 1960 and 12 percentage points since 1988. Ds and Fs total typically less than 10% of all letter grades. Private colleges and universities give, on average, significantly more As and Bs combined than public institutions with equal student selectivity. Southern schools grade more harshly than those in other regions, and science and engineering-focused schools grade more stringently than those emphasizing the liberal arts. It is likely that at many selective and highly selective schools, undergraduate GPAs are now so saturated at the high end that they have little use as a motivator of students and as an evaluation tool for graduate and professional schools and employers."

MP: It's the college version of the "Lake Wobegon effect" and "illusory superiority." 

Thursday, July 14, 2011

Markets in Everything and Antidote to Obamacare: 24/7 Access to MD Consultations via Phone/Video

From the Teladoc website:

1. You wake up one morning with sudden cold-like symptoms: stuffy nose, cough, congestion. You don’t want to miss time at work by sitting in an urgent care or ER waiting room. What to do?

2. Simply log in to your account or call 1-800-Teladoc to request a phone or online video consultation with a Teladoc doctor. You can use Teladoc from home, work, on vacation, or while traveling internationally. The average doctor call back time is 22 minutes. 

3. A U.S. board-certified doctor or pediatrician licensed in your state reviews your Electronic Health Record (EHR), then contacts you, listens to your concerns and asks questions. It's just like an in-person consultation. There is no time limit to the consult. 

4.  The doctor recommends the right treatment for your medical issue. If a prescription is necessary, it's sent to the pharmacy of your choice.

5. Teladoc costs far less than in-person visits: $38 or lower, depending on your plan design. Teladoc charges the credit card you provided when requesting your consultation or your billing information on file.  You can request a receipt for deductibles or reimbursement, if needed. The doctor updates your HIPAA-compliant EHR based upon the consultation. Teladoc is a qualified expense for HSA, FSA and HRA accounts.

MP: Another example of market-based, consumer-driven, convenient and affordable health care delivery as an alternative to government-managed Obamacare.

HT: Greg Ungemach. 

"Administrative Blight" Plagues Nation's Colleges

Inside Higher Ed reports today on a new book "The Fall of the Faculty: The Rise of the All-Administrative University and Why It Matters" (Oxford University Press), by Benjamin Ginsberg, Professor of Political Science at Johns Hopkins University. 

Professor Ginsberg "takes stock of what ails higher education and finds a single, unifying cause: the growth of administration."  Here are some excerpts of the review:

"Ginsberg bemoans the expansion over the past 30 years of what he calls "administrative blight" as personified by what he characterizes as an army of "deanlets" and "deanlings." By virtue of their sheer number and their managerial rather than academic orientation, Ginsberg argues, these administrators have served to marginalize the faculty in carrying out tasks related to personnel and curriculum that once sat squarely in their domain.

He provides data showing that the growth in the ranks of administrators (85 percent) and associated professional staff (240 percent) has far outstripped the increase in faculty (51 percent) between 1975 and 2005. "Generally speaking," he writes, "a million-dollar president could be kidnapped by space aliens and it would be weeks or even months before his or her absence from campus was noticed.”

The larger result, he argues, is that universities have shifted their resources and attention away from teaching and research in order to feed a cadre of administrators who, he says, do little to advance the central mission of universities and serve chiefly to inflate their own sense of importance by increasing the number of people who report to them."

"Armies of staffers pose a threat by their very existence," he wrote. "They may seem harmless enough at their tiresome meetings but if they fall into the wrong hands, deanlets can become instruments of administrative imperialism and academic destruction." 

Quote of the Day: Robert Lucas


"Is it possible that by imitating European policies on labor markets, welfare and taxes, the U.S. has chosen a new, lower GDP trend? If so, it may be that the weak recovery we have had so far is all the recovery we will get. 

If we're going to move to a European welfare state, we're going to have to pay a European price."

Markets in Everything: Cigarette Butts

A San Diego stock trader pays $3 a pound for cigarette butts.

HT: PERCtweets

Wednesday, July 13, 2011

Cartoon of the Day


Alabama Dental Cartel Tried To Squash Competition

The Nonprofit Quarterly (NPQ) has been following a controversy in Alabama involving a battle between the non-profit Sarrell Dental Center and the state's for-profit, private "dental cartel" and its trade organization - the Alabama Dental Association (ALDA), see news reports here (4/13/2010), here (4/28/11) and here (7/9/2011).  Here's some background:

From the clinic's website: "Sarrell Dental is a non-profit that treats the dental and optical needs of Alabama children ages 1-20 with Medicaid or ALLKids insurance. Sarrell Dental was founded in 2004 in Anniston, and since then Sarrell has grown to include 11 other offices and it operates a mobile dental bus which travels to schools and daycare centers throughout the state. Since 2006, Sarrell has grown to include optical services in 5 of its locations."

From NPQ: "The clinic gave away $400,000 in dental care to patients in 2010, never turns away a patient even if they are late or don’t have appointments, and, according to the CEO, “If they make it here, somehow, somewhere, even if we have to stay late, we’ll see them.” 

The $10 million Sarrell clinic, now the largest dental provider in the state, is turning away job applicants and, according to the CEO, has “never had a complaint from a consumer,” unlike other Medicaid specialty practices. There’s no evidence – and no charges – that Sarrell is offering subpar services."

MP: So what's the problem? There really is none, unless you're a for-profit, private dentist and you don't welcome the competition from a non-profit organization.  In that case, you exercise your political muscle and try to put your nonprofit competitor out of business, which the ALDA attempted to do, even though Sarrell was providing excellent, and sometime free, dental service to Alabama's under-served, poor children.  Sarrell countered with an anti-trust lawsuit against Alabama's dental cartel for trying to engage in monopolistic, anti-competitive behavior. 

Bottom Line: It now looks a compromise has been reached, signed by the governor, that will allow Sarrell to continue to operate under the supervision of the Alabama Board of Dental Examiners. In return, Sarrell will drop its antitrust lawsuit, although the FTC may still pursue action against the "dental cartel" for its attempts to put its non-profit competition out of business.

Ethanol Now Consumes More Corn Than For Animal Feed for First Time, Corn Prices Reach Record High

Financial Times --  "U.S. ethanol refiners are consuming more domestic corn than livestock and poultry farmers for the first time, underscoring how a government-supported biofuels industry has contributed to surging grain demand.

The U.S. Department of Agriculture estimated that in the year to August 31 ethanol producers will have consumed 5.05 billion bushels of corn, or more than 40% of last year’s harvest. Animal feed and residual demand accounted for 5 billion bushels."

MP: As the chart above illustrates, this also "underscores how a government-supported biofuels industry has contributed to surging, record-high corn prices." 

Ten Largest U.S. Manufacturing Industries, 2010

Rank10 Largest U.S. Manufacturing Industries2010 Revenue (Millions)Examples of Companies
1Petroleum and Coal Products$1,027,938 ExxonMobil, Chevron, Conoco
2Computers and Other Electronic Products$581,344 HP, IBM, Microsoft
3Chemicals$387,326 P&G, Dow, DuPont
4Food$284,390 ADM, Kraft, Tyson
5Pharmaceuticals$257,975 J&J, Pfizer, Abbot
6Aerospace & Defense$250,446 Boeing, United Technologies, Lockheed Martin
7Electrical Equipment & Appliances$245,307 GE, Emerson, Whirlpool
8Machinery$194,098 Caterpillar, Deere, Xerox
9Motor Vehicles$150,721 Ford, Navistar, PACCAR
10Beverages$133,619 Pepsi, Coke, Dr. Pepper/Snapple
Source: IndustryWeek

The chart above displays the top ten largest manufacturing industries based on 2010 sales revenue.  I reported on the IndustryWeek rankings previously in this post back in February.

Tuesday, July 12, 2011

Dow Jones Average Dominated by Manufacturers

I've posted many times about the supposed "decline/demise/death of American manufacturing," how we supposedly "don't make anything here any more," etc. etc.  

And yet what is probably the most popular and most widely-quoted measure of the health of America's stock market?  It's the Dow Jones Industrial Average (DJIA), which is dominated by U.S. manufacturers.  Of the 30 component companies in the DJIA, 19 are American manufacturers: 3M, Dupont, Aloca, IBM, Boeing, Intel, Merck, GE, Microsoft, ExxonMobil, Chevron, Pfizer, Procter & Gamble, United Technologies, Caterpillar, Johnson and Johnson, Cisco, Coca-Cola and Kraft. 

When we want a quick barometer of how American companies and the U.S. economy are performing, we use the manufacturing-dominated DJIA.  It's maybe a simple point, but I don't think most people realize how important, vibrant and dynamic America's manufacturing remains even today.  The fact that we look to a stock market index dominated by our manufacturing sector illustrates its continued importance to the economy, and underscores the reality that it's a sector that's not in decline the way it gets portrayed by the media. 

Drill, Drill, Drill = Jobs, Jobs, Jobs = Investment, Investment, Investment = Energy Independence

BISMARCK, ND – "According to a new study from the Western Energy Alliance, North Dakota oil production could soon outpace imports from oil-rich nations like Russia, Iraq and Kuwait.

“The Bakken formation spanning North Dakota and Montana will lead oil production in the region, with an expected 685,000 barrels of oil and condensate a day by 2020 (see chart above),” the group states in a press release referring to a study done by EIS Solutions. “Combined with other western production, North Dakota will help lead the way in generating 1.3 million barrels of domestic oil production a day by the year 2020, which is more than the current amount of oil imported from Russia, Iraq and Kuwait combined.”

The study also indicates that investment in North Dakota due to oil production could increase to $58 billion annually by 2020 creating 16,000 more jobs in the state.

“These projections of increased investment in North Dakota energy is good news for our state’s economy and for American energy security,” said Ron Ness, President of the North Dakota Petroleum Council. “North Dakota’s oil producers are already responsible for a significant percentage of our domestic energy production, and continued growth of our industry means more jobs for North Dakotans, increased revenue for local and state governments, and less reliance on foreign energy sources.”

Standing in the way of this production and growth is federal policy which they describe as “significantly undermining these projections of growth, investment and expansion" the group argues."

U.S. Total Trade Surges to New Record High in May


Today's monthly trade report showing an increase in America's current account deficit to $50.2 billion in May was accompanied by the typical alarming media headlines such as: "U.S. Trade Gap Soars to 31-Month High in May," "U.S. Trade Deficit Jumped in May,"and "U.S. May Trade Gap Widens to $50.2 Billion."  

Here's what probably won't get widely reported:

1.  The total volume of U.S. international trade activity (exports + imports) reached an all-time record high in May (not adjusted for inflation) of almost $400 billion, slightly higher than the previous record of $398 billion in July 2008 (see top chart above).  Compared to the recession-related, cyclical low of $277 billion of total trade activity in May 2009, there has been a 44.5% increase in U.S. trade in just two years, as the U.S. world economies have recovered and our trade level has "surged" and "jumped" to a record high.    

2.  Despite a slight dip in exports from April, the May volume of exports ($174.86 billion) was the second-highest monthly export volume in history (not adjusted for inflation), a further sign that a worldwide economic recovery, along with a cheap dollar, have led to a "surge" and "jump" in demand for U.S. products (see bottom chart above).  

Related: Cato's Dan Griswold recently wrote in a Barron's article about the political and media obsession with the U.S. "trade deficit," and the underlying assumption that imports are "bad" and exports are "good":

"Much of what we import doesn't displace domestic production so much as complement it. Imports fuel American industry by providing the raw materials, intermediate inputs and capital machinery our producers need to compete. Competition from imports spurs innovation, cost containment, and productivity gains. Lower prices for imported consumer goods allow households to spend more on home-grown services. 

The dollars we spend on imports quickly return to buy U.S. assets. In 2010, our trade deficit in goods of $647 billion was exactly offset by our trade surplus in services and investment income and our large capital surplus—the amount of U.S. assets, including Treasury bonds, purchased by foreigners, minus the foreign assets purchased by Americans. The grand balance of U.S. international transactions last year, as in every year, was zero.

Politicians obsessed with the trade balance should give up the goal of promoting exports over imports. The aim of U.S. trade policy should be to maximize the freedom of Americans to buy and sell in global markets for mutual gain, whatever the mix of goods, services and assets we freely choose to trade."

Monday, July 11, 2011

Currency Manipulation in Favor of U.S. Consumers

From a WSJ article today "China Boosts Lead in Global Exports" about China's exports setting several new records in June: 

"China's critics, including members of the U.S. Congress, say an undervalued currency unfairly helps Chinese exporters." 

Don Boudreaux responds on Cafe Hayek:

"Overwhelmingly, the beneficiaries are non-Chinese consumers (including Americans) of China’s subsidized exports. In contrast, the people unfairly burdened are exclusively Chinese citizens – both as consumers forced to pay higher prices at home, and as taxpayers forced to fund Beijing’s practice of purchasing U.S. dollars in order to depress the price of the yuan against the dollar.

It is, in fact, obscenely unfair for Beijing to oblige the Chinese people to hand over chunks of their wealth to Americans, even the poorest of whom is far richer than is the typical man or woman in China."

MP: The chart above helps to show how American consumers have benefited from China's "unfair" currency policy by comparing the overall increase in prices (CPI: All items) since 1998 to the price increases for clothing and toys, which are both mentioned in the  WSJ article as examples of China's export dominance in labor-intensive products.  While overall prices in the U.S. have increased since 1998 by 39%, clothing prices have fallen by almost 10% and toy prices have fallen by more than 50%.  That means that in real terms, clothing is about 49% cheaper now than in 1998 and toys are cheaper by almost 90%. 

We can of course thank China's low wages in part for the dramatic decreases in real prices for clothing and toys purchased in the U.S., but we can also thank the Chinese government for manipulating its currency in favor of American consumers, and we should be grateful for the billions of dollars saved by Americans over the last decade from that manipulation.   

Markets in Everything: Yuan and Cow Breast Milk

1. Chicago Mercantile Exchange introduces futures contracts for the Chinese yuan.  Guess that means the "unfair pegging" of the yuan is over.

2. Human Breast Milk From Cows. (HT: Fred Dent)

Sunday, July 10, 2011

Markets in Everything and Antidote to Obamacare: On-Site Modern, Full-Service Medical Clinics

LA Times -- "Major employers across the country, eager to curb fast-rising healthcare costs, are opening their own state-of-the-art health centers where doctors and nurses provide medical care to workers often just steps from their desks.

The cost-cutting strategy has been embraced by dozens of companies — typically large employers that are self-insured and pay their own medical claims, including Walt Disney Co., Qualcomm Inc. and American Express Co.

Many of the health centers are full-service medical offices equipped with exam rooms, X-ray machines and pharmacies. Some provide on-site appointments with dentists, dermatologists, psychiatrists and other specialists who treat life-threatening illnesses.

Executives say providing in-house medical care keeps workers healthy and productive. But the clinics also help the bottom line by reducing absenteeism and slashing employers' medical bills for outside doctors and emergency rooms."

World's Top Five Patent Producers

As a follow-up to this recent post on historical U.S. patent activity, the chart above shows the annual number of patents granted for the top five patent-producing countries in 2009 over the period 1995-2009 (data here, note that for Europe, it's the "European Patent Office" that is being used here).   Here are some interesting observations:

1. Following a ten-year period from 1998 to 2007 when the U.S. granted more patents than any country in the world in every year, Japan took the number one place in 2008 and 2009, and produced 15.5% more patents than the U.S. in 2009. 

2. In 1995, China granted only 3,393 patents, about 3% of the number of patents registered in the U.S. (101,419) and Japan (109,100) in that year.  In 2004, China granted more patents than Korea for the first time, and in 2005 more patents than Europe.  By 2009, China granted more patents (128,489) than Korea (56,732) and the European Patent Office (51,969) combined.   

3. Korea registered only half the number of patents in 2009 (56,732) as in 2006 (120,790) and 2007 (123,705).  

Update: The chart below shows the U.S. share of total world patents granted annually from 1883 to 2009.  America's share was above 30% as recently as 2001, 2002 and 2003, has been above 20% in every year since 1987, and was as low as 12.6% in  1979.