Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Saturday, January 08, 2005

Ann Margaret and the Gubmnt Debt

Way back in time, when I was a grad student, we all got a big kick out of an advertisement featuring Ann Margaret (I think) in which she said, in a very sultry voice, something like, "Buy Savings Bonds. Help get your government out of debt."

It has come back to haunt us with this from this NYTimes account of Bush's latest on social security reform:
[H]e is dispatching his Treasury secretary, John W. Snow, to New York to reassure Wall Street that his approach, which could involve trillions of dollars in new government borrowing, is consistent with efforts to reduce the budget deficit and improve the nation's financial condition.
If I borrow more money, I can reduce my deficit? Well.... maybe if I can borrow at a lower rate of interest than I'm presently paying.
[link from Brad DeLong via Tyler Cowen]

Home-made Zamboni for the
Backyard Skating Rink

Zamboni machines are those vehicles that cruise around the ice between periods at hockey games, scraping the ice and laying down a thin layer of hot water to smooth out and resurface the rink. CBC reports that Leonard Fraser in PEI used a garden hose with holes in it, a level, and a towel for a flap to retrofit his John Deere riding mower to resurface the backyard skating rink:

A little duct tape compensates for the odd engineering defect, and a cinder block out front balances the load on the back.

"Duct tape is good," Fraser proclaimed

[Thanks to cmt for the link]

Paying to Drive in the HOV Lanes

How much would you be willing to pay for the right to drive your car in the High-Occupancy-Vehicle [HOV] lanes on an expressway, even if you are the only person in the car? How much would you be willing to pay if, in the process, you could receive an identification tag that says, "I care about the environment"?

For many people in the Washington, DC, area, the answer to these questions is, "quite a bit." They do not pay directly for these things, but they have displayed a willingness to pay for them indirectly. How? By buying hybrid cars which are recognized by the authorities as "a good thing" and hence receiving the right to use HOV lanes even if they are driving alone. The demand for hybrid cars has increased dramatically in areas where this privilege is granted [registration required; thanks to JA for the pointer]:

According to the Electric Drive Transportation Association, the Washington area ranks with California as the country's leading markets for hybrids.


The growth in hybrids has helped increase the number of cars on the [HOV] lanes to 1,900 an hour, beyond their operating capacity of 1,500 to 1,800 per lane an hour.

Further evidence that "people respond to incentives".

As the quotation above indicates, one problem with the increased number of hybrid cars in the HOV lanes is that those lanes are becoming so congested that many people who used to carpool or ride public transportation so they could have speedier commutes are now finding it is just about as fast to drive alone, even in the non-HOV lanes.

My gut reaction is that HOV lanes are an inefficient way to reduce pollution, and so I welcome these developments. If automobile pollution is a problem, why not add another fifty-cents or dollar per gallon tax on gasoline? People sure as shooting would respond to that incentive!

Toll Roads and GPS

Alex writes in glowing terms about a German plan to use GPS to track trucks:
Some 800,000 trucks use Germany's 12,000 km of highways every day - all of these trucks will soon be tracked by GPS (i.e. from outer space!) and the big ones will be billed. The toll system will also be tied into traffic reports and routing systems.
As much as I would like to see the implementation of more toll roads to reduce congestion, I am not nearly so thrilled with the prospect of GPS tracking devices on vehicles. The reason? Shades of 1984.
I am willing to sacrifice some efficient congestion relief in exchange for more privacy.

Friday, January 07, 2005

Hockey Cards - an addiction?

When can collecting hockey cards become such an addictive hobby that you turn to crime to support your habit? Ask Donald Billing, who was recently charged by the RCMP with fraud:
Police allege that Donald Billing, former Ontario director of Measurement Canada, used his government credit cards to buy at least $185,000 worth of hockey cards at six southern Ontario businesses.

One good thing about the blogging addiction/compulsion is that it doesn't take much money [thanks to cmt for the link].

"Aliens Caused the Tsunami"

That's only one of many conspiracy theories about the origin of the Dec. 26th earthquake.

Another Example of NIMBY

NIMBY is an acronym for "Not In My Back Yard." It refers to views held by most of us that, yes, we need/want landfills and halfway houses and super highways, etc., but just don't put one in my neighbourhood.

Here (from The Onion) is a good extension of the principle to public transportation: we all want all the other drivers to leave their cars at home and take public transportation so there will less congestion for us when we drive our cars.

[thanks to Jack for the pointer]

Get a TV for Christmas?
Don't Forget a Licence

If you have a television set in the UK, you are required to have a licence for it. The licensing police are out looking for people who acquired new televisions for Christmas but "neglected" to obtain a licence at the same time. And the licence police are very sophisticated [links via JC]:
“Our database of over 28 million addresses shows us all unlicensed properties. Together with our fleet of hi-tech detector vans, this means we are more efficient than Santa himself when it comes to knowing who deserves a Christmas visit.”
Here, buried among many comments, is how it works:
The detector listens for EM transmissions typical of a TV. Every piece of electrical gear gives off some EM waves. TVs have their own unique EM signature and that's what they look for. They're absolutely not a myth. They have a database of all the people who've got a license. They then cruise the streets slowly, looking for EM signatures. When they find one, they check the database and if the house in question has no license, they knock on the door and you're turned into a criminal.

Whither the Loonie?

The chief economists of Canada's five largest banks have different forecasts [from The National Post; Date: Jan 6, 2005; Section: Financial Post; Page: 42, subscription required (thanks to JA for the info)]:

CIBC (Shenfeld) 77 cents U.S.
Royal (Wright) 80
BMO (Egleton) 80
TD (Drummond) 84
BNS (Jestin) 90

The wide variance is intriguing.

The large increase in the U.S. price of a Loon last year had a bit of a negative impact on the demand for Canadian produced goods, especially manufactured goods which are traded internationally.

If Parliament and the Bank of Canada cave in to the interests of the owners and employees of those firms, we might very well see lower interest rates in Canada brought on by an increase in the supply of lendable funds, and more exports of Canadian goods and services. Given that we have a minority gubmnt, there is good reason to expect them to cave in to short-term lobbying. And given that three of the five experts predict a decline in the Loonie from its current value, maybe this isn't such a bad guess.

But much of what happens to the Loonie will depend on what happens to the U.S. dollar. Some are pretty optimistic about the strength of the U.S. dollar (see Sparky's forecast here, for example, where he essentially but more politely asks, "so what is everyone gonna hold instead of dollars, huh?"). I'm more concerned about U.S. fiscal deficits, though, as I have posted earlier (and here, too). If central bankers and in other countries and major investors lose confidence in the U.S. dollar, look for it to fall against all currencies, including the Loonie, in which case the Loonie could rise. As Warren Jestin says,

The reasons for the ongoing erosion of the U.S. dollar against major world currencies are straightforward. Global investors, including central banks, are bound to become increasingly reluctant to add to already heavily overweight U.S. dollar positions, particularly with no end in sight to the U.S. government’s enormous borrowing requirements. Dollar depreciation adds to this nervousness and encourages diversification into non-U.S.-dollar-denominated assets.

Even though I tend to agree with Jestin, if I were a corporate planner, I'd take an average and contrast that with the forward rates.

Thursday, January 06, 2005

How Can the Yankees Afford Those High Salaries?

Even asking this question in this manner means the student is likely (though not certain -- see below) to fail my course in The Economics of Sports. The reason is that when most of us think of how can we afford to buy a big-screen tv, we think of how much money do we have and how much can we borrow?

But for a business, in addition to those questions, it is important to ask, how much more will it cost me to sign Player X and how much more will signing that player yield in additional revenues. (and then do a comparison with Players Y and Z). The decision on whether to sign a big-name big-salary player is usually an incremental, forward-looking decision about expected additional costs and additional revenues and has little or nothing to do with the net worth of the team or its owner; and from a profit- or wealth-maximizing perspective, it has nothing to do with how much the team is already worth or is already earning without that player. I.e., it has nothing to do with what the team can "afford".

The team could be earning ten quadzillion dollars a year, but if signing that player will add to the team's profits, then (from a profit and wealth-maximizing perspective) the team should sign that player. And if the team is losing ten quadzillion dollars a year [please let me know who lent them so much money so I can borrow some, too!], they can reduce their losses if signing Player X will add more to their net profits (or subtract the most from their net losses) than signing Player Y.

According to this article in the NYTimes, the Yankees are losing money by signing big name players. Overall, even if you believe their numbers, that might not be a bad strategy if it means their ancillary operations (e.g. YES cable network) make even bigger gains. Another possibility might be that it is a good consumption purchase by a team owner who is willing to sacrifice profits in order to purchase the utility of winning games -- an owner who might rather sniff the jocks of winners than losers.

"It's an effort to keep the Yankees, always, as by far the premier brand," Ozanian said. "But a lot of what Steinbrenner does is not to maximize profit, it's to win."
In other words, it might be a mistake to push our profit-maximization models too hard when analyzing the economics of professional sports when owners are spending money on consumption as well as on investment.

And if the student says "afford" refers to the consumption aspect of team ownership, s/he probably would not fail, especially if the answer included references to the capital market.

Global Trade Liberalization and the Erosion of Tariff Preferences

Ben Muse has a good summary of one transition problem as we move toward Global Trade Liberalization:
  • Some developed countries have tariff walls, keeping out the cheap competition from developing economies.
  • The developed countries, perhaps in an effort to aid some developing economies, set up preferential treatment for some of those countries, allowing them to sell in the developed country but under the tariff protection against competition from other developing economies.
  • Global Trade Liberalization means the countries that had been helped by preferential tariffs will be made worse off.

Too bad. Do we believe in comparative advantage and gains from trade, or don't we? But Ben Muse says it so much more nicely. His reference is to this piece from the World Bank.

U.S. Goods and Services Trade Deficits

Many of us take great delight in teaching students that so long as we can exchange coloured pieces of paper, which are really cheap to produce (even with the holograms), for other countries' goods and services, that's a pretty neat deal.

Unfortunately it is also a short-run confidence game, in more ways than one. If people in other countries, and especially their central banks, decide they no longer want to hold our pieces of paper or our IOUs, then the exchange value of these pieces of paper will drop, and we won't be able to get as much for them in the future.

I don't know if the U.S. has reached that stage, yet, but I'd be pretty nervous if I were a central banker in some other country, sitting on tonnes of U.S. t-bills. I'd want to start liquidating or at least diversifying that position. This seems to be the view, too, of John Quiggen in "The Unsustainability of U.S. Trade Deficits", which is in the latest roundup of articles in The Economists' Voice from Berkeley Electronic Press.
However it takes place, the consequences of a rapid loss of confidence will follow a pattern familiar from a broad range of recent financial crises in countries including Mexico, Thailand and Argentina. Interest rates will increase, and access to credit will be reduced. Heavily indebted households and businesses will face severe distress and will be forced to reduce consumption and employment, or perhaps face bankruptcy or liquidation.

These processes will reduce aggregate consumption, and therefore the demand for imports. In this way, the trade account will be returned to balance, but with a sharp reduction in aggregate activity and a corresponding increase in unemployment and business failure.

Concluding Comments
It is inevitable that the U.S. trade account will return to balance, and likely that most of this adjustment will take place within the next ten years. The only question for policy is whether the adjustment will be relatively smooth, like the process which resolved the first U.S. trade deficit blowout in the 1980s, or sharp and costly, as in the case of the many countries that experienced financial crises in the 1990s.

It isn't a pretty picture, and the role of U.S. gubmnt fiscal deficits in this is touched on only briefly. To read more about the current account and why the U.S. deficit is not indefinitely sustainable, check out the links provided here by The Marginal Revolution.

What if "Privilege" is also a Detriment?

[note: given the weather, the nature of my commute, and my teaching commitment on Thursday, I'm posting this now rather than wait. There is more to come, however, whenever I get net access again.]

Suppose you are an Arab or a UAE national looking to rent an apartment, say, in Dubai. Because of your nationality, you have many privileges when it comes to landlord-tenant relations. The result is that

Some UAE nationals told Gulf News that they were told by real estate agents they will not rent out property to them because of the influence they are believed to wield....

"Give me any foreign passport, but not an Arab passport."

In one instance, a UAE national sent her (foreign) secretary to look for an apartment, but when the deception became known, the landlord refused to rent to her. According to this piece in the Gulf News,
The real estate agent explained that the owner of the complex did not rent out units to UAE nationals, fearing it would be difficult to evict them if there were problems.

People respond to incentives: if members of one group have privileges that might impose additional costs on landlords, it should not be surprising if some landlords try to avoid renting to members of that group.
[thanks to JC for the pointer.]

Wednesday, January 05, 2005

Tsunami, Catastrophes, and Economics

Posner and Becker deviated from their initial policy of posting only on Mondays. They have absolutely superb pieces on the tsunami, catastrophes in general, and economics that they just posted today. These pieces are well worth reading -- and taking at least a half hour to think about.

Narrowing the Gap Between Rich and Poor Nations

During 2004, "the U.S. economy grew by a solid 4.3 percent, but ... developing countries experienced an explosive 6.1 percent economic growth." As this column points out, one reason for the more rapid growth in developing countries comes from the benefits of freer trade. [Thanks to JC for the tip].

Another explanation for the rapid growth in some economies has to do with government institutions that promote economic entrepreneurship. Here's something Tyler wrote about the changes in India. And here are Becker's thoughts about India:

India provides a good illustration. India remained very poor from its independence in 1947 until the late 1980’s. Some claimed that its slow rate of growth in per capita income was largely explained by a rapid growth in population that absorbed much of the increase in aggregate income. In response to this belief, some Indian women were forcibly sterilized to cut down their birth rates.

Fortunately, a small number of economists and politicians recognized that India’s real problem was not population, but terrible economic policies that overregulated labor and product markets, blocked domestic investments by native entrepreneurs, and discouraged imports of goods and foreign investments. Reductions in tariffs and import quotas, and greater encouragement to private investments introduced in 1991 by the then Finance Minister, Dr. Manmohan Singh (who is now Prime Minister), quickly produced a take off in India’s economy. Income has since been growing by over 6% per year, “despite” an increase in its population by more than 200 million persons that raised India’s total population to over one billion people.

UPDATE: Here is what Tyler just posted about India.

Canada's Response to the Tsunami

I gather the overall response from Canada to the disaster in the Indian Ocean has been comparatively meagre. One reason has been that our gubmnt no longer has large transport planes at its disposal. Another explanation, according to Flit, is that whereas Canada used to take a FIFO (first-in, first-out) approach to world crises of any sort, we now take a LIFO (last-in, first-out) approach [to borrow jargon from the accounting profession]. We have cut our exposure to casualties and have reduced our expenditures with this policy shift. But as the Flit posting argues:

Unfortunately, as was commented on at the time, that mentality makes it now effectively impossible to deploy in natural disaster scenarios, as well. DART [DisAster Relief Team], an Eggleton "first-in" project, has atrophied to the point where it proved undeployable even to Haiti during the hurricanes last year. If all this makes you wonder how effective the CF [Canadian Forces] might be if that earthquake had been off of Vancouver Island, instead of Aceh, well, you probably should wonder. It's certainly not encouraging. Hopefully the Americans will have an aircraft carrier free then, too.
[thanks to JC for the link]
As an aside, I wonder what the personal giving in Canada has been like, compared with that in the U.S.

Outstanding Lecturer? Not Me!

I have given some real kick-ass lectures at times. One, in particular, is my intro lecture on the economics of search, shopping, courtship, one-nighters, love, and marriage. Another is my intro to the prisoners' dilemma, which formed the basis of this chapter in my intro text. But for the most part, I give okay or good lectures, not great ones.

So I was really pleased to receive e-mail on Monday from TVOntario, informing me that someone had nominated me to be included in their programme on the top lecturers in Ontario. [btw, thanks to the anonymous person who nominated me!]

I most likely won't follow up on the nomination for two reasons: First, I know that overall I'm a good lecturer, probably even a very good lecturer; but I'm not consistently great. Second, doing anything more requires the hassles and embarrassment of having a lecture taped and submitted to a council of judges. I don't want to go through all that -- for what?

An additional reason is that when I notified some administrators at my university of the nomination, their response was something to the effect of, "That's nice. Are you going to do it?" Nope, not with that kind of response.

Now, if their reaction had been, "That's terrific! What can we do to help?" I might have decided to follow through.

But the sad fact is that our university, like many others, pays lip service to the importance of teaching. They don't really give a $hit. And this stage of my career, this sort of thing has only costs, and no benefits for me.

Tuesday, January 04, 2005

Will They Serve More Time Than Martha Stewart Did?

Krispy Kreme Donuts is under investigation for both fraud and insider trading:

The suit alleges that between January 2003 and last May, when Krispy Kreme issued a profit warning, ``the company issued false and misleading statements, including false financial results'' and ``repeatedly ratcheted upward its public quarterly and fiscal year revenue and earning projections ... all in the face of slowing sales and market saturation.''

At the same time, three top officers named in the lawsuit - chief executive officer Scott Livengood, former chief operating officer John W. Tate and former chief financial officer Randy S. Casstevens - ``unloaded more than 475,000 shares of Krispy Kreme stock for proceeds of $19.8 million,'' the suit charges.

I'm betting that the officers charged in this case, if found guilty, will serve less time than Martha Stewart does. Why might that happen?
[thanks to Ben for the pointer;
his comment: "KK Cooks the Books (and uses lots of grease)"]

Fair-Trade Coffee Smackdown

We won't buy coffee where doing so would help really poor farmers; instead we buy it from others who are better off. Oliver has quite a put-down of Oxfam's position:
The conclusion couldn't be clearer: meddlesome NGOs are institutionally compelled to seek increasing ... subsidy from all sources, resulting in a compulsion to emotionally blackmail Western liberal audiences into misguided attempts at socially just buying. That this should have to be brought to the attention of - much less explained to - a large international organisation with considerable clout is indicative of how sentimental appeals can overcome even the most rigorous logic.

The entire post is fun, but [warning] it is X-rated.

Compare Canadian Travel Credit Cards

Ben recently sent me this link. Not all travel credit cards are created equal.

The Elegant Universe

My wife and I spent New Year's Eve watching the 3-hour DVD series, The Elegant Universe. We had seen snippets of the programme on Nova over the previous weeks, and we were so intrigued, we ordered the DVDs. They arrived a day or two before the 31st.

I know there a many people more sophisticated and more knowledgeable than I who may disagree, but I loved the series. [My son, Adam Smith Palmer, aka "physics boy", thought it would have been better if it hadn't moved quite so slowly, but we needed that pacing and level].

I always felt uncomfortable with the notion of "the big bang" theory of the creation of the universe because it didn't explain what was here before the big bang or what caused the big bang. This series, in a manner comprehensible to us, tells us what string theory and 'brane theory say and how they explain the potential existence of our 3-dimensional universe (4 dimensions if you include time) as a part of an 11-dimensional "bulk" or super universe. Even if it doesn't yield testable hypotheses, I find it satisfying in a philosophical sense.
[click here to order it from; and click here to order it from].

Monday, January 03, 2005

The Problems with the Left

Most of us who are familiar with his writings already know the views of Victor Davis Hanson about the left, the UN, and the Middle East. I actually don't care for much of some of his editorial writing because it is too polemical. But in his December 17th column for the National Review, he sets out four major problem areas for the left, and he does so very well. His arguments are directed at the U.S. left, but they apply to the leftists of Canada, Europe, and elsewhere, too. The entire article elucidates, but here are some quotes that provide a summary:

  1. There really isn't a phenomenon like "Islamophobia"—at least no more than there was a "Germanophobia" in hating Hitler or "Russophobia" in detesting Stalinism. Any unfairness or rudeness that accrues from the "security profiling" of Middle Eastern young males is dwarfed by efforts of Islamic fascists themselves—here in the U.S., in the U.K., the Netherlands, France, Turkey, and Israel—to murder Westerners and blow up civilians.

  2. "Imperialism" and "hegemony" explain nothing about recent American intervention abroad—not when dictators such as Noriega, Milosevic, the Taliban, and Saddam Hussein were taken out by the U.S. military. There are no shahs and Your Excellencies in their places, but rather consensual governments whose only sin was that they came on the heels of American arms rather than U.N. collective snoozing.

  3. It won't do any longer to attribute American outrage over the U.N. to a vast right-wing conspiracy led by red-state senators and Fox News. All the standing ovations for Kofi Annan cannot hide the truth that the Oil-for-Food scandal exceeds Enron… There can be no serious U.N. moral sense as long as illiberal regimes--a Syria, Iran, or Cuba--vote in the General Assembly and the Security Council stymies solutions out of concern for an autocratic China that swallowed Tibet. Millions were slaughtered in Cambodia, Rwanda, and Darfur while New York bureaucrats either condemned Israel or damned anyone who censured their own inaction and corruption. Rather than faulting those who fault the U.N., leftists should lament the betrayal of the spirit of the liberal U.N. Charter by regimes that are neither democratic nor liberal but who seek legitimacy solely on their ability to win concessions and sympathy from guilt-ridden Westerners.

  4. So it is also time to take a hard look at the heroes and villains of Hollywood, liberal Democrats, and the Euro elites. Many are as obsessed with damning the senile dictator of Chile as they are with excusing the unelected President for Life Fidel Castro. But let us be frank. A murderous Pinochet probably killed fewer of his own than did a mass-murdering Castro, and left Chile in better shape than contemporary Cuba is in. And the former is long gone, while the latter is still long in power.

    Similarly, Nobel Prizes increasingly go to either unsavory or unhinged characters. Yasser Arafat was a known killer and terrorist, not a global peacemaker. Wangari Maathai's public statements about AIDS are puerile and ipso facto would have eliminated any Westerner from consideration for anything. Rigoberta Menchu Tum herself was a half-truth, her story mostly a creation of a westernized academic publishing elite. Jimmy Carter's 2002 award was not predicated on his past work on housing for the poor, but his critically timed and calculated opposition to George W. Bush's effort to topple Saddam Hussein--as was confirmed by the receptive Nobel Committee itself.

I wonder how Hanson incorporates the Japanese internment camps in the U.S. and Canada during WWII into his position set out in point #1. As much as I agree with him, he seems to overstate his case somewhat.

[thanks to Ben for the pointer. If you are interested in other works by Hanson (he is a noted scholar of the wars in Ancient Greece), you can find them from the box below.]

Peanut Butter

According to WebMD, "Peanut Butter Packs a Healthy Punch" [thanks to Ben for the pointer (and for the suggestion that perhaps they left an "a" out of the last word)].

Researchers from Pennsylvania State University found that men, women, and children who ate a daily dose of peanuts or peanut butter were better able to meet the Recommended Daily Allowance (RDA) for vitamins and nutrients than those who steered clear.

Specifically, the diets of peanut and peanut butter eaters were higher in vitamins A and E, folic acid, calcium, magnesium, zinc, iron, and fiber. Nuts are also loaded with monounsaturated fats, which have been linked to lower cholesterol....

In recent years peanut butter and nuts have been shown to be part of a healthy diet. A Harvard study in 2002 showed that women who regularly ate peanut butter and nuts had a reduced risk of type 2 diabetes. And the more they ate, the lower their risk was.
Yet despite the lead paragraph in the section quoted above, the more recent study showed an effect on the reduction of heart disease with men and children, but not women:

"Scientific evidence suggests but does not prove that eating 1.5 ounces per day of most nuts, as part of a diet low in saturated fat and cholesterol, may reduce the risk of heart disease." An ounce and a half serving of nuts is about a third of a cup or a small handful.

In this new study, the researchers found that men and children who regularly ate nuts had lower cholesterol. There was no significant effect in women.

But peanuts and peanut butter are high in fat, so there's a concern that eating too much could make a person gain weight. The researchers found that calorie intake was indeed higher in people who regularly ate nuts. However, BMI -- an indicator of body fat -- was actually lower in nut eaters.

As JB pointed out to me, however, the decline in BMI among nut-eaters was most likely due to substituting peanuts for meat, not supplementing a meat diet with peanut butter.

A note to students as we begin this term: peanut butter and rice - high food value, low cost.

Click here to learn more about peanut butter. Or maybe one of these books in the banner below will say something about peanut butter (the links seem pretty random sometimes):

Sunday, January 02, 2005

Rational non-voting

In a recent ballot that the University of Western Ontario Economics Department was forced by university regulations to hold about some procedural issue, the announced results were:

44 ballots distributed
8 votes in favour
36 unreturned ballots.

I'll bet that if the election issue were controversial and wouldn't involve a tonne of work if we voted against it, the response rate would be a LOT higher.

My question is, "Who were the 8 who bothered to vote, and why?"
I would guess they are the new assistant professors.

Myth vs. Reality in the U.S. Economy

Cowboy Capitalism is an examination of many of the myths propounded by know-nothing pseudo- or anti-intellectuals. Here is a sample from the Cato Institute summary:
Myth: American wealth is debt financed.
Reality: Growth of wealth has outpaced debt, as the average American family increased its net worth by 50 percent between 1989 and 2001. (page 92)

Myth: Living standards are higher in Europe than in the United States.
Reality: The United States has the highest living standard of any major industrialized nation. Adjusted for price-level differences, per capita income in the United States exceeded the French level by 36 percent in 2003. At 42 and 44 percent, respectively, Germany and Italy lagged even further behind. (pages 78 and 87)

Myth: Long-term unemployment is a chronic problem in the United States; European job creation schemes work better.
Reality: In the United States 65 percent of unemployed people found new work in less than three months in 2002. In France, Germany, and Italy, that figure is only 26 percent, 17 percent, and 12 percent, respectively. (page 178)
[link provided by The Marginal Revolution, a daily must-read blog] But you know what? I'm not sure I believe everything in that summary. Check it out yourself and see if you do.

East St. Louis - #1 City!

That's what Onion says that the December issue of Poverty magazine says:

East St. Louis Rated 'Number One City In America'

Poverty Magazine

EAST ST. LOUIS, IL—The December issue of Poverty magazine, featuring its annual “Top American Cities” poll, hit newsstands Monday, and for the second year in a row, East St. Louis topped the list. “East St. Louis dominated our poll yet again in 2004, topping such categories as unemployment, hubcap availability, and liquor-stores-per-capita,” Poverty editor Felicia Banks said. “The city’s educational system also rated high, boasting a student-gun ratio of 1:1.” Rounding out the top five, in descending order, were Flint, MI; Newark, NJ; Compton, CA; and Gary, IN.

I wonder why these ratios are included in any measure of poverty. And I wonder what implications Ms. Banks would draw from them....

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