The United States of the World

A cool map from Strange Maps:


Click on map for bigger picture

"Although the economies of countries like China and India are growing at an incredible rate, the US remains the nation with the highest GDP in the world – and by far: US GDP is projected to be $13,22 trillion (or $13.220 billion) in 2007, according to this source. That’s almost as much as the economies of the next four (Japan, Germany, China, UK) combined.

The creator of this map has had the interesting idea to break down that gigantic US GDP into the GDPs of individual states, and compare those to other countries’ GDP. What follows, is this slightly misleading map – misleading, because the economies both of the US states and of the countries they are compared with are not weighted for their respective populations.

Pakistan, for example, has a GDP that’s slightly higher than Israel’s – but Pakistan has a population of about 170 million, while Israel is only 7 million people strong. The US states those economies are compared with (Arkansas and Oregon, respectively) are much closer to each other in population: 2,7 million and 3,4 million.

And yet, wile a per capita GDP might give a good indication of the average wealth of citizens, a ranking of the economies on this map does serve two interesting purposes: it shows the size of US states’ economies relative to each other (California is the biggest, Wyoming the smallest), and it links those sizes with foreign economies (which are therefore also ranked: Mexico’s and Russia’s economies are about equal size, Ireland’s is twice as big as New Zealand’s)."

No One Makes You Shop at Wal-Mart

This MR post about this “No One Makes You Shop at Wal-Mart” book is really great.

It’s interesting that every time you look deep enough on these theories around “market imperfections” you end up falling into some great, brilliant bureaucrat sitting in a desk making decisions for everybody else.

Something else that fascinates me is this idea that all these forms of herding are illogical. The fact that you buy at Wal-Mart because your neighbor does makes total sense to me. The part that is always missing in the analysis is that this is just one among many factors, and it has a subjective importance to different people. The questions should be: Would you continue to shop at Wal-Mart if you didn’t like it just because your neighbor continues to do so?

Something else that always makes me laugh is how these “managed” economic theories end up going back to morals. Something that lefties hate in the social arena. They actually have the same ideals about “going back to the good old times” that extreme conservatives have on the social issues.

People say the extremes tend to be similar but I’d argue that the idea that you can control your economy in some moral way is inevitably extremist.

The irony of the book title is almost overwhelming. Nobody really makes you shop at Wal-Mart. And the author would really like to change that.

Your favorite middle man

I am very, very tired. So all I can give you are some pictures and links. You can imagine what I would write about them. Maybe you can even comment about it and people won’t even notice I haven’t actually written a post.

Think of me as your favorite middle man.

Introduction to Oil and Natural Gas





Free Cloclô


U.S. divorce rate falls to lowest level since 1970

It's the means, stupid!

One of my favorite inside jokes with my wife is to say that we are actually liberals. We are vegetarians (which by the way, makes us much more ecofriendly than anyone who drives a Prius and believes in Al Gore – and still we drive high mileage cars); we are in favor of civil unions for gays; we are rabidly against racism; my wife is totally against death penalty; we are very much pro (legal) immigration; we don’t follow any religion.

There are of course some political beliefs that we follow that match with the right: we believe that you need a strong military and that you need to use it from time to time; we are pro-life; we think people should be able to own a gun within some guidelines; we are against high taxes and huge social programs.

But the question remains: Why are we conservatives that are somewhat liberal and not liberals that have some conservative traits?

I believe the answer has to do with our attitude towards other people. Again let’s talk about vegetarianism. We love it. I had a bunch of health issues before and now they are gone. My wife can tell you all the horrible atrocities animals suffer. All and all, it’s really a clear belief for us that at this point in our life we don’t need to eat animals and a lot more people could do the same.

However, you won’t see us protesting with PETA. We don’t want the government to outlaw eating meat. You won’t even see us swearing at people who have barbecues in their houses.

We won’t be at these barbecues either, but there is a huge difference between not doing something and wanting to force other people not to do it.

I think that this “militant” approach is what irritates us most about liberals and people on the left in general. It’s not just the silly idea that you need to save the world in all fronts. It’s more this notion that people are not able to make decisions; that information is never enough, and that you need to find little ways to trick people into doing what you want them to do.

There is also the feelings vs. logic issue. I go nuts every time I hear someone say this kind of stuff, or when I hear people trying to justify government economic actions on the “this will help the helpless” banner. Sometimes I even agree with the outcome, but I can’t stand the demagogy.

So the means do make a difference after all. At least for us.

Hey hey hey

Leo Monasterio showing up (or off :-)) in my favorite blog.

Congrats!

What People Earn - 2006

After you filter out the BS, this article has some interesting information:

Economy:

“By most economic measures, 2006 was a great year. Despite rising interest rates, high oil prices and the sharpest housing downturn in 15 years, inflation was low, productivity rose steadily, corporate profits reached a 40-year high, the stock market soared and the unemployment rate dropped to 4.6 percent -- the lowest level in more than five years.”

It’s good to remember that people were predicting that 2006 was going to be horrible…

Paycheck:

“Last year's 1.1 percent average raise was their first real pay increase in a long time. Workers' productivity grew an impressive 18 percent between 2000 and 2006 -- but most people's inflation-adjusted weekly wages rose only 1 percent during that time. This was the first economic expansion since World War II without a sustained pay increase for rank-and-file workers.”

That of course doesn’t take into account benefits. Tax breaks for employer-provided health insurance will definitely cause distortions. But I also think that global competition is a factor in the huge jump in productivity, as well as the improvement of internet related technologies.

The Hottest Jobs (No College Degree Required)

“Translators
The need is expected to grow 26 percent by 2014: $43,000-$100,000

Insurance adjusters
These jobs aren't easily outsourced or replaced by technology: $34,000-$75,000”

The Hottest Jobs (For College Grads)

“Logistics manager
Plan, implement and control flow of goods or services: $35,000-$118,000

Physical therapist
Aging baby boomers will drive the increasing need: $34,600-$74,000”

Interesting how the salary difference is not that large in some cases. The key word seems to be specialization, no matter if it requires a degree or not.

Quickies

Things are way too busy at work. But there’s always time for some good reading.

Here are some you should all check out:
Medved: The Essence of Liberalism: Embracing Life's Losers
MR: The Credit Snobs

Also check this Gallup poll about the "most important problem" facing the US. Of course the focus is on the huge preoccupation with Iraq… But what I think it’s really amazing is that table that shows “Issues Previously Mentioned by 10% of Americans or More (Jan. 2001 to present) “

1% of people worry about crime (from 10% in Oct. 2002)
Another 1% of people worry about energy (from 12% in May. 2001)

Most surprising of all, only 5% worry about terrorism (from 46% in Oct. 2001)

I don’t want to sound callous, but it seems to me that Iraq’s importance is completely inflated and out of proportion…

How many zeros are in a loser?

Venezuela is knocking three zeros off the bolivar, its currency, and renaming it the "bolivar fuerte" (strong bolivar).

Agora vai.

More about the "War on the Middle Class"

"The rich are indeed getting richer (the bastards). As Steven Lagerfeld points out in the Winter 2007 issue of The Wilson Quarterly (not yet online), those 130,000 households at the very top of the earnings pyramid have increased their share of pretax wage and salary income from 2 percent in 1973 to just under 7 percent in 2004. Folks in the top 5 percent of households--those making more than $166,000--have seen their inflation-adjusted annual income jack up by a hefty two-thirds since 1970.

But everyone is getting richer. In real dollars, every quintile has posted significant annual increases over the past 35 years, ranging from $3,000 for the lowest quintile to $13,000 for the middle quintile to over $25,000 for next-to-highest one. And the individuals in those quintiles change all the time, something even The New York Times, which wrings its hands on class matters like an obsessive-compulsive, admits. Urban Institute economists Daniel P. McMurrer and Isabel V. Sawhill estimate that between 25 percent to 40 percent of individuals switch quintiles in a given year and that "rates of mobility have not changed over time." Research tracking individuals in the lowest income quintile in 1968 found that 23 years later, 53 percent were in a higher quintile and that half had spent at least a year in the top income quintile.

More important, basic indicators of wealth and opportunity drive home the reality that the middle class' place at the table is pretty secure--maybe not the best seat in the house, but arguably better than ever. A historically high 70 percent of Americans own their homes (see table 956). And two-thirds of high school graduates go on to college (up from half in 1970) [see table 265]. That wouldn't be happening if the U.S. was fast turning into the Brazil of the North.

But don't expect the "vanishing middle class" storyline to itself vanish. Pols and pundits will use scare stories to drum up business and push minimum wage hikes, tax breaks to pay for the wage hikes, prescription drug coverage, and on and on. We in the middle class like the attention (and the more-than-occasional entitlement). More to the point, there are more of us and we've all got more to lose than we used to. Which also means we've got even more to worry about."

More here.

Best post of the day

From the Free Exchange:

"BEHAVIOURAL ECONOMICS has been embraced enthusiastically by the left, because it challenges the model of the rational decision-maker. If people systematically make errors in their decisionmaking, then doesn't that open up a need for the government to step in and fix things?

I've never quite understood this argument, of course; where are we getting the human beings who make the decisions for the government? Do they come out of a different pool from the ones who flunk the basic rationality tests posed by the behavioural economics? In fact, as public choice theory shows, government has a whole set of special decision-making problems that can make the normal human mistakes of those decision-makers even worse."

10 Most Economically Literate Members of Congress

Here is the complete article.

6 Republicans and 4 Democrats. Mostly unknowns. No surprises there.

The one thing I could not believe is that old Barney Frank shows up on the list. And they say he is “scary smart”! I mean, the guy is completely crazy, has an incredibly annoying lisp and is one of the most pompous politicians I’ve ever heard.

The funny part is that he claims to believe in “free-market principles, checked with protections”. “Capitalism plus”, as he calls it. Yeah right.

Now, if you want to have a good laugh watch this:


For those who don’t understand why the Republicans are asking about an exemption for American Samoa, here is a quick summary:

The new Democrat controlled congress allowed an exemption to the new minimum wage bill for the pacific Island of American Samoa. So while every other company in any part of the US will be required to pay at least $7.25 an hour, American Samoan companies will be free to pay whatever they want. The average wage for workers in American Samoa is $3.60 an hour.

Why is that?

Well, maybe the answer is StarKist Tuna, which owns one of the two packing plants that together employ more than 5,000 Samoans, or nearly 75 percent of the island's work force. StarKist's parent company, Del Monte Corp., has headquarters in San Francisco, which is represented by Mrs. Pelosi. More interesting than that, there is some controversy around whether Pelosi’s husband owns $17 million in Del Monte stock.

Call me biased, but there's something fishy going on here.

The middle-class

Here is another article that shows the odd disparity between what people think about the overall economy and their own financial situation:

"...
- Although only 32 percent rate the overall economy as "excellent" or "good," 52 percent judge their personal situation as excellent or good (35 percent said "fair" and 13 percent "poor").

- Most Americans (60 to 37 percent) think their own living standards are rising; parents of children under 18 overwhelmingly (54 to 24 percent) think the same will be true for their children.

- Almost 70 percent of Americans say they've attained or will attain the "American Dream," as they define it. More than half say success comes from a good education and hard work, not from connections (18 percent) or being born wealthy (13 percent)."

---x---

One of my "hobbies" is to listen to liberal talk shows. Most of them are garbage but some are quite entertaining. My favorite one is Thom Hartman's.

One of Thom's favorite subjects is the "war on the middle-class" being waged supposedly by Republicans. It took me a while to understand exactly what he was talking about, but I finally got it: For him, the middle-class is not an idea of bringing people out of poverty and into a decent standard of living. No sir. Middle class for Thom is another way to say income equality. If the rich are getting richer, nothing else matters. Not even if the poor are less poor.

That's a smart (and dangerous) liberal right there.

---x---

In the other side of the Atlantic, my french buddies are still not getting it. They keep taxes so high that now one of their rock stars, a guy called Johnny Hallyday, is getting his money out of France.

Now, that is one way (probably the only non-violent one) to get income equality.

Embrace the Trade Deficit (or why globalization works)

Since the 2001 recession, the U.S. economy has created 9.3 million new jobs, compared with 360,000 in Japan and 1.1 million in the euro zone excluding Spain. This despite our trade deficit and their trade surpluses. Like the U.S., Spain (3.6 million new jobs) and the U.K. (1.3 million new jobs) ran trade deficits and created jobs rapidly in this five-year period. Wages are rising solidly in these three. The economics is clear (for once) that a liberal trading environment allows more jobs with higher wages as people specialize.

More here.

Remembering Milton Friedman

This is for the tax cuts for the rich crowd:

“I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible.”

This one is for the minimum wage lovers:

"The high rate of unemployment among teenagers, and especially black teenagers, is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum wage laws. We regard the minimum wage law as one of the most, if not the most, antiblack laws on the statute books."

And these two go to my protectionist friends:

“Most economic fallacies derive - from the tendency to assume that there is a fixed pie, and that one party can gain only at the expense of another.”

“The black market was a way of getting around government controls. It was a way of enabling the free market to work. It was a way of opening up, enabling people.”

And finally, the best one:

"There is all the difference in the world, however, between two kinds of assistance through government that seem superficially similar: first, 90 percent of us agreeing to impose taxes on ourselves in order to help the bottom 10 percent, and second, 80 percent voting to impose taxes on the top 10 percent to help the bottom 10 percent -- William Graham Sumner's famous example of B and C decided what D shall do for A. The first may be wise or unwise, an effective or ineffective way to help the disadvantaged -- but it is consistent with belief in both equality of opportunity and liberty. The second seeks equality of outcome and is entirely antithetical to liberty."

So simple, yet so many still don’t understand.

He will be missed.

Build It and They Will Come

The New York Times reports that last month Nissan bought an Island and built a driving course to promote its new Sentra model. But while Nissan paid real money to the promotional assets, the island and the driving course were imaginary. They were part of the online game Second Life.

Find more about the new markets being created by massive online games here. Another little reminder of why this silly thing called videogame moves 10 Billion dollars a year. It should also be another good way to show that those who try to stay out of the race will fall more and more behind.

That is true for all kinds of protectionist policies. They will ultimately fail, and the damage is not always evident. Capitalism is our nature. Those who understand this will always lead.

Why?

Xbox 360 chega em 1º de dezembro ao Brasil, por R$ 2.999,00

Custo nos EUA:
Console: $399
Kameo: Elements of Power: $49.99
Perfect Dark: $49.99
Project Gotham Racing 3: $49.99
Remote Control: $29.99

Total: US$ 578.96 = RS$ 1273.71

Antes de eu colocar a culpa em lugares indevidos, pergunto aos que sabem mais: De onde vem esses RS$1,726.278? Impostos? Outros custos de importação?(quais?) Margem de lucro? (Porquê a MS cobraria mais num país que tem poder econômico menor?)

The Average American: 1967 and Today

Forbes has a very interesting comparison between the economic situation of the average American in 1967 and today. Clearly things have improved tremendously: (all numbers were adjusted for inflation)

Median Income (Men)
1965 $28,599
2005 $41,386

Median Income (Women)
1965 $9,533 (33% of men)
2005 $31.858 (77% of men)

Changes in Purchasing Power
From 2005 - 10 years: 5.7% 20 years: 8.0% 30 year: 7.5% 40 years: 6.2%

Productivity Increases Since 1965
1965 (baseline)
2005 +220%

Home Ownership Percentage
1965 63%
2005 69%

However, the article mentions that "according to a Parade Magazine survey, 48% of Americans believe they're worse off than their parents were. A study by GFK-Roper group showed that 66% of Americans said that their personal situations in the "Good Old Days"--defined by the bulk of respondents as anywhere between the 1950s and the 1980s--were better than they are today. And in May, a Pew Research Center poll showed that half of U.S. adults believe the current trends point toward their children's future being worse than their own present."

How can that be? The article says that a lot of this current feeling of discontentment comes from the increase of inequality:

Income Share of Middle 60% of Wage Earners
1965 52.3%
2005 46.2%

Compensation of CEO of largest U.S. Corp. vs. Median Household
1965 Frederick Donner/General Motors 3.9 million (med. household income = 0.2%)
2005 Lee Scott/Wal-Mart $19 million (med. household income = 0.2%)

Compensation of highly paid athlete vs. Median Household
1965 Joe Namath/football $142,333 (med. household income = 5%)
2005 Tiger Woods/golf $87 million (median household income = 0.1%)

The cover story for Time follows the same line:

“The very idea of redistributing wealth can feel un-American in the land of Horatio Alger, until you look closely at how it's spread now. Half of us earn less than $30,000 a year, 90% less than $100,000. To get an idea of how we value our values, Howard Stern earns every 24 seconds what takes a cop or a teacher about a week.”

I just don’t buy this whole thing. What difference does it make whether Howard Stern or some football player makes millions? Do people think they are stealing money from them? If everybody were really so disgusted with this disparity, why would they keep listening to the radio/TV/sport shows and buying products these people sell?

It just doesn’t make sense.

I have a theory (impossible to proof of course) that all this complaining is caused by my favorite demon: press bias.

It should be obvious how this works. If you keep hearing that people are poor and that is unfair that Howard Stern makes gazillions of dollars a minute, you will eventually believe that this is common knowledge. And so, even if you personally don’t care about celebrity’s salaries or don’t really know that many people going through financial hardship, you assume that the problem is with you.

Michael Medved does a little thing on his radio show that illustrates how this works. Whenever someone calls to complain about the current economic situation, he asks whether that individual is personally going through a tough time, and whether he/she was better or worse 10 years ago. The huge majority always says they are doing ok, and justify their opinion saying that things are bad for other people, not themselves. What other people? They are not sure.

The numbers show that Americans have no reason to think that things are worse than before. On top of that, we need to remember all the immeasurable advances we benefit from. How do you calculate the benefit of paying 100 dollars in an air ticket that used to cost 300 before deregulation? How much better is your life because of the internet or better dental anesthesia?

So the big question is: Why is the press doing this?

Again, I think the answer is simple: politics and ideology. It is in the interest of “progressives” to propagate discontentment so people can keep looking for them for the so needed progress. If things are going great, conservatives have a natural advantage.

By the way, that is one of the reasons Fox News is so successful. It is not because it is more or less biased than other networks. It has also nothing to do with the fact that it is pro-Republican while the others are pro-Democrat (if that was the case audience would be horrible currently). The main difference is just the simple fact that it makes more sense to people to hear that things are not falling apart all the time.

Just because they are not.

Economic bias

The most irritating press bias for me (and there are many) is the economic.

Yesterday's job growth report is a classic example. Take this ABC News piece: Notice the difference between the way they report bad news (“That's the lowest level since the October 2005 post-Katrina report and well below the 125,000 consensus estimate of economists.”) and good news (“The nation's unemployment rate — the result of a different, but simultaneously released survey — showed a slight improvement during September, ticking down one-tenth of a percent to 4.6 percent. Realistically, this is nothing more than a statistically insignificant wobble in the number.”).

You have to dig around to get a nicer (and more realistic) view of yesterday’s data. Looking at one such report (WP article) you will find out that:
- The Labor Department said payrolls for the 12 months that ended in March 2006 will be revised upwards by a whopping 810,000 jobs, the biggest revision since 1991.
- The unemployment rate fell to 4.6 percent in September from 4.7 percent in August, which was down from 4.8 percent in July. The jobless rate has varied from 4.6 to 4.8 percent all year. Considering that a few workers have such poor skills as to be nearly unemployable, many economists consider a rate below 5 percent to constitute full employment, meaning just about every worker with the skills and desire to work can find a job.
- 6.6 million new jobs have been created since August 2003
- Demand for labor helped drive workers' average hourly wages, not including those of most managers, up to $16.84 last month. That's a 4 percent increase from September 2005, the fastest wage growth in more than five years.

Now, if you are really ‘lucky’, you will find other reports like this WSJ editorial. Then you will learn that:
- The federal budget deficit estimate for the fiscal year 2006, which ended Sept. 30, has dropped to $260 billion from $319 billion deficit recorded in fiscal 2005 (approximately 21% decrease).
- The deficit is now about 2% of our $13 trillion economy, well below the 2.7% average of the last 40 years. Most states and localities are also afloat in tax collections, and including their revenue surpluses brings the total U.S. public sector borrowing down to roughly 1.5% of GDP
- The main cause of this decline -- 90% of it -- is a tidal wave of tax revenue. Tax collections have increased by $521 billion in the last two fiscal years, the largest two-year revenue increase -- even after adjusting for inflation -- in American history. (Tax cuts for the rich. Go figure!)
- Tax collections from Corporations have climbed by 76% over the past two years. Personal income tax payments are up by 30.3% since 2004 too, despite the fact that the highest tax rate is down to 35% from 39.6%. The IRS tax-return data just released last month indicates that a near-record 37% of those income tax payments are received from the top 1% of earners.

Want more? Here it goes:
- Inflation is low
- Dow at all time high, up 9.1% this year
- Crude oil prices have dropped about 20 percent since late July, from $75 a barrel to $60 a barrel. Gasoline prices have dropped 60 cents a gallon since last month (around 20%)

It goes on and on. Maybe Rush Limbaugh is right: the only way to get good economic news from the press is to elect a democrat.

The Grocery Game or another reason why I love the internet

I am not sure why but the first time my wife told me about “The Grocery Game” I thought it was phony.

But let me tell you this: it works like a charm. We have saved hundreds, possibly thousands of dollars with this thing.

The concept is really simple. They search for coupons and sales among all grocery stores and let you know which one is cheaper. That’s it! The reason it works so well is because usually these coupons are buried inside a newspaper or a magazine. The information is so dispersed that no one is able to find out what stores have the best deals for what products.

Of course there’s still some work left. You have to organize your trips to each supermarket based on whatever you need and where the best prices for such products are. You usually need to buy brands you are not very familiar with.

This kind of saving is one of the aspects that I doubt is taken into consideration when people analyze the benefits of the internet. Can you imagine the economic implications of saving, let’s say, one thousand dollars a year in groceries per family? This is huge.

Econ 101 (or lack of thereof)

Plinio de Arruda Sampaio, para a Folha de hoje:

"Rememoremos: em 1992, foram criadas as câmaras setoriais para negociar entre os três "parceiros" -trabalhadores, multinacionais e governo- a atenuação dos impactos da globalização na indústria brasileira. Naquela época, a Volkswagen empregava 18 mil trabalhadores e produzia 960 veículos/dia. Atualmente, emprega 11.900 e produz os mesmos 960 veículos/dia. Portanto, nesses 14 anos, a produção passou de 14 para 21 veículos por trabalhador/ano. Ou seja, a produtividade aumentou 50%, e o emprego encolheu 33%.

A indiferença com que a opinião pública acompanhou o drama dos trabalhadores da Volkswagen revela que os brasileiros ainda não perceberam que o mesmo se repetirá em todo o parque industrial do país e que atingirá, com maior ou menor intensidade, todos os trabalhadores brasileiros atuais e futuros.

Não se trata, portanto, de um problema dos trabalhadores daquela empresa, dos operários da indústria automobilística ou mesmo da classe trabalhadora. Trata-se de um problema nacional a requerer não uma solução técnica -que não há-, mas uma solução política, por meio de uma decisão nacional soberana. Se não for capaz de tomá-la, o povo brasileiro terá o mesmo trágico destino das estirpes condenadas que García Márquez retratou em seu livro "Cem Anos de Solidão"."