11 Temmuz 2012 Çarşamba
America's New No. 2 Oil State - North Dakota - Sets More Eye-Popping Oil Production Records in May
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10 Temmuz 2012 Salı
8 Temmuz 2012 Pazar
Economics 101 Tells Us That the War on Drugs is a Complete Failure: Prices Are Going Down, Not Up
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From the New York Times article, "Numbers Tell of Failure in Drug War the War on Peaceful Americans Who Voluntary Choose to Use Intoxicants Not Currently Approved of By U.S. Politicians and Government Officials":
"When policy makers in Washington worry about Mexico these days, they think in terms of a handful of numbers: Mexico’s 19,500 hectares devoted to poppy cultivation for heroin; its 17,500 hectares growing cannabis; the 95 percent of American cocaine imports brought by Mexican cartels through Mexico and Central America.
They are thinking about the wrong numbers. If there is one number that embodies the seemingly intractable challenge imposed by the illegal drug trade on the relationship between the United States and Mexico, it is $177.26. That is the retail price, according to Drug Enforcement Administration data, of one gram of pure cocaine from your typical local pusher. That is 74 percent cheaper than it was 30 years ago.
Prices match supply with demand. If the supply of an illicit drug were to fall, say because the Drug Enforcement Administration stopped it from reaching the nation’s shores, we should expect its price to go up.
That is not what happened with cocaine. Despite billions spent on measures from spraying coca fields high in the Andes to jailing local dealers in Miami or Washington, a gram of cocaine cost about 16 percent less last year than it did in 2001. The drop is similar for heroin and methamphetamine.
These numbers contain pretty much all you need to evaluate the Mexican and American governments’ “war” to eradicate illegal drugs from the streets of the United States. They would do well to heed its message. What it says is that the struggle on which they have spent billions of dollars and lost tens of thousands of lives over the last four decades has failed.
Most important, conceived to eradicate the illegal drug market, the war on drugs cannot be won. Once they understand this, the Mexican and American governments may consider refocusing their strategies to take aim at what really matters: the health and security of their citizens, communities and nations."
"When policy makers in Washington worry about Mexico these days, they think in terms of a handful of numbers: Mexico’s 19,500 hectares devoted to poppy cultivation for heroin; its 17,500 hectares growing cannabis; the 95 percent of American cocaine imports brought by Mexican cartels through Mexico and Central America.
They are thinking about the wrong numbers. If there is one number that embodies the seemingly intractable challenge imposed by the illegal drug trade on the relationship between the United States and Mexico, it is $177.26. That is the retail price, according to Drug Enforcement Administration data, of one gram of pure cocaine from your typical local pusher. That is 74 percent cheaper than it was 30 years ago.
Prices match supply with demand. If the supply of an illicit drug were to fall, say because the Drug Enforcement Administration stopped it from reaching the nation’s shores, we should expect its price to go up.
That is not what happened with cocaine. Despite billions spent on measures from spraying coca fields high in the Andes to jailing local dealers in Miami or Washington, a gram of cocaine cost about 16 percent less last year than it did in 2001. The drop is similar for heroin and methamphetamine.
These numbers contain pretty much all you need to evaluate the Mexican and American governments’ “war” to eradicate illegal drugs from the streets of the United States. They would do well to heed its message. What it says is that the struggle on which they have spent billions of dollars and lost tens of thousands of lives over the last four decades has failed.
Most important, conceived to eradicate the illegal drug market, the war on drugs cannot be won. Once they understand this, the Mexican and American governments may consider refocusing their strategies to take aim at what really matters: the health and security of their citizens, communities and nations."
Markets in Everything: Hacker Hostels
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SAN FRANCISCO — "From the outside it’s just a beige three-story building in a quiet residential neighborhood. But inside, in a third-floor apartment, there are enough Ikea bunk beds to sleep 10 people, crammed into two bedrooms. The living room is bare except for a futon, a tiny desk and laptop power cables strewed across the hardwood floor like a nest of snakes.
This is not some kind of dorm, but a “hacker hostel.” It’s one of several in the Bay Area that offer short- or long-term stays for aspiring tech entrepreneurs on the bottom rung of the Silicon Valley ladder, those who haven’t yet achieved Facebook-level riches. These establishments put a twist on the long tradition of communal housing for tech types by turning it into a commercial enterprise.
The San Francisco hostel is part of a minichain of three bunk-bed-stuffed residences under the same management, all places where young programmers, designers and scientists can work, eat and sleep."
HT: Dan Greller
This is not some kind of dorm, but a “hacker hostel.” It’s one of several in the Bay Area that offer short- or long-term stays for aspiring tech entrepreneurs on the bottom rung of the Silicon Valley ladder, those who haven’t yet achieved Facebook-level riches. These establishments put a twist on the long tradition of communal housing for tech types by turning it into a commercial enterprise.
The San Francisco hostel is part of a minichain of three bunk-bed-stuffed residences under the same management, all places where young programmers, designers and scientists can work, eat and sleep."
HT: Dan Greller
Louis C.K. Battles Ticket Scalpers Using Basic Economics: He's Increasing Supply by Adding Shows
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Comedian Louis C.K. is battling ticket scalpers (see recent related CD post here) for his upcoming national tour using some basic principles of economics: he's increasing the supply of tickets by adding shows to meet fan demand. The market conditions that allow ticket scalpers brokers like Seat Geek and StubHub to sell tickets above face value are: a) ticket prices that are too low relative to the true market price, and/or b) a supply of tickets that is too low, relative to demand.
When enough tickets are supplied to satisfy fan demand, the secondary market for tickets above face value is limited. Louis C.K. apparently understands that he can combat the ticket scalpers by increasing the supply of tickets in markets where his originally scheduled shows sold out, and that's what he's doing. So far Louis C.K. has added shows in New York City (two shows added), Tampa (one show added), Fort Lauderdale (one show added), Seattle (one show added), St. Louis (one show added), Dallas (one show added) and Austin (one show added). In most cities, if his first show at 7:30 or 8 p.m. sold out, he's added a second show at 10 p.m.
Musicians, artists and other performers should take an economics lesson from Louis C.K. and realize they have been largely responsible for creating a secondary market for tickets to their performances and they have been supporting ticket scalpers by under-supplying tickets relative to fan demand. Increase the number of tickets to satisfy fan demand, and the secondary market for tickets above face value evaporates.
When enough tickets are supplied to satisfy fan demand, the secondary market for tickets above face value is limited. Louis C.K. apparently understands that he can combat the ticket scalpers by increasing the supply of tickets in markets where his originally scheduled shows sold out, and that's what he's doing. So far Louis C.K. has added shows in New York City (two shows added), Tampa (one show added), Fort Lauderdale (one show added), Seattle (one show added), St. Louis (one show added), Dallas (one show added) and Austin (one show added). In most cities, if his first show at 7:30 or 8 p.m. sold out, he's added a second show at 10 p.m.
Musicians, artists and other performers should take an economics lesson from Louis C.K. and realize they have been largely responsible for creating a secondary market for tickets to their performances and they have been supporting ticket scalpers by under-supplying tickets relative to fan demand. Increase the number of tickets to satisfy fan demand, and the secondary market for tickets above face value evaporates.
Chart of the Day: Federal Drug Prisoners
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The chart above shows the breakdown of the current federal inmate population by type of offense, according to the Federal Bureau of Prisons. There are currently 93,876 Americans serving time in federal prisons for drug crimes, which is by far the No. 1 offense that results in a federal jail sentence (see chart). Drug offenders make up almost half of our federal inmate population, and that help explains why the U.S. retains the status as the World's No.1 Jailer with a prison population of 730 per 100,000 population, more than even any of the world's most notorious and oppressive regimes like Burma (120 per 100,000 population), Cuba (510 per 100,000 population), and Iran (333 per 100,000).
Besides the fact that federal drug prisoners far outnumber any other category of criminal offenders, there is another important characteristic that distinguishes drug offenses from other federal crimes like arson, extortion, robbery, burglary, homicide, and embezzlement - almost all of those other crimes have identifiable victims who have been clearly victimized, e.g. robbed, assaulted, murdered, etc. In contrast, drug offenders were mostly involved in "crimes" that frequently had no identifiable victim, i.e. crimes without a victim, or "victimless crimes." Hopefully, future generations of more enlightened Americans and political leaders will look back on the War on Drugs as a shameful chapter of U.S. history and a blemish on America's long tradition of individual liberty and limited government.
The chart above shows the breakdown of the current federal inmate population by type of offense, according to the Federal Bureau of Prisons. There are currently 93,876 Americans serving time in federal prisons for drug crimes, which is by far the No. 1 offense that results in a federal jail sentence (see chart). Drug offenders make up almost half of our federal inmate population, and that help explains why the U.S. retains the status as the World's No.1 Jailer with a prison population of 730 per 100,000 population, more than even any of the world's most notorious and oppressive regimes like Burma (120 per 100,000 population), Cuba (510 per 100,000 population), and Iran (333 per 100,000). Besides the fact that federal drug prisoners far outnumber any other category of criminal offenders, there is another important characteristic that distinguishes drug offenses from other federal crimes like arson, extortion, robbery, burglary, homicide, and embezzlement - almost all of those other crimes have identifiable victims who have been clearly victimized, e.g. robbed, assaulted, murdered, etc. In contrast, drug offenders were mostly involved in "crimes" that frequently had no identifiable victim, i.e. crimes without a victim, or "victimless crimes." Hopefully, future generations of more enlightened Americans and political leaders will look back on the War on Drugs as a shameful chapter of U.S. history and a blemish on America's long tradition of individual liberty and limited government.
HOT: Seattle, Pittsburgh Real Estate Markets Sizzle
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Several more metro areas are now reporting strong double-digit gains in both June home sales and home prices:
1. "Seattle-area house prices saw a double-digit increase in June — the first time that's happened in nearly five years. The median price of single-family homes sold last month was $380,000, up 10.1 percent from June 2011. It was the third straight month of year-over-year price increases, and by far the largest change. The last time the median rose by more than 10 percent was in July 2007, when it hit an all-time high of $481,000. Sales volumes were strong in June. Buyers closed on 2,117 houses in King County, the listing service said — 3 percent more than in May, which had been the best month since August 2007. When compared with June 2011, house sales were up 12 percent, condo sales up 16 percent." 2. In the 13-county Pittsburgh-region, the number of residential homes placed under agreement increased 18.6% in June 2012 versus June 2011, while average home sale price increased 13% ($194,500 versus $172,177).
1. "Seattle-area house prices saw a double-digit increase in June — the first time that's happened in nearly five years. The median price of single-family homes sold last month was $380,000, up 10.1 percent from June 2011. It was the third straight month of year-over-year price increases, and by far the largest change. The last time the median rose by more than 10 percent was in July 2007, when it hit an all-time high of $481,000. Sales volumes were strong in June. Buyers closed on 2,117 houses in King County, the listing service said — 3 percent more than in May, which had been the best month since August 2007. When compared with June 2011, house sales were up 12 percent, condo sales up 16 percent." 2. In the 13-county Pittsburgh-region, the number of residential homes placed under agreement increased 18.6% in June 2012 versus June 2011, while average home sale price increased 13% ($194,500 versus $172,177).
7 Temmuz 2012 Cumartesi
Coal, Gas Shares of Electricity Equal for 1st Time
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From the EIA website today -- "Recently published electric power data show that, for the first time since EIA began collecting the data, generation from natural gas-fired plants is virtually equal to generation from coal-fired plants, with each fuel providing 32% of total generation (see chart above). In April 2012, preliminary data show net electric generation from natural gas was 95.9 million megawatthours, only slightly below generation from coal, at 96.0 million megawatthours."
See related CD post here.
From the EIA website today -- "Recently published electric power data show that, for the first time since EIA began collecting the data, generation from natural gas-fired plants is virtually equal to generation from coal-fired plants, with each fuel providing 32% of total generation (see chart above). In April 2012, preliminary data show net electric generation from natural gas was 95.9 million megawatthours, only slightly below generation from coal, at 96.0 million megawatthours."
See related CD post here.
Louis C.K. Battles Ticket Scalpers Using Basic Economics: He's Increasing Supply by Adding Shows
To contact us Click HERE
Comedian Louis C.K. is battling ticket scalpers (see recent related CD post here) for his upcoming national tour using some basic principles of economics: he's increasing the supply of tickets by adding shows to meet fan demand. The market conditions that allow ticket scalpers brokers like Seat Geek and StubHub to sell tickets above face value are: a) ticket prices that are too low relative to the true market price, and/or b) a supply of tickets that is too low, relative to demand.
When enough tickets are supplied to satisfy fan demand, the secondary market for tickets above face value is limited. Louis C.K. apparently understands that he can combat the ticket scalpers by increasing the supply of tickets in markets where his originally scheduled shows sold out, and that's what he's doing. So far Louis C.K. has added shows in New York City (two shows added), Tampa (one show added), Fort Lauderdale (one show added), Seattle (one show added), St. Louis (one show added), Dallas (one show added) and Austin (one show added). In most cities, if his first show at 7:30 or 8 p.m. sold out, he's added a second show at 10 p.m.
Musicians, artists and other performers should take an economics lesson from Louis C.K. and realize they have been largely responsible for creating a secondary market for tickets to their performances and they have been supporting ticket scalpers by under-supplying tickets relative to fan demand. Increase the number of tickets to satisfy fan demand, and the secondary market for tickets above face value evaporates.
When enough tickets are supplied to satisfy fan demand, the secondary market for tickets above face value is limited. Louis C.K. apparently understands that he can combat the ticket scalpers by increasing the supply of tickets in markets where his originally scheduled shows sold out, and that's what he's doing. So far Louis C.K. has added shows in New York City (two shows added), Tampa (one show added), Fort Lauderdale (one show added), Seattle (one show added), St. Louis (one show added), Dallas (one show added) and Austin (one show added). In most cities, if his first show at 7:30 or 8 p.m. sold out, he's added a second show at 10 p.m.
Musicians, artists and other performers should take an economics lesson from Louis C.K. and realize they have been largely responsible for creating a secondary market for tickets to their performances and they have been supporting ticket scalpers by under-supplying tickets relative to fan demand. Increase the number of tickets to satisfy fan demand, and the secondary market for tickets above face value evaporates.
June U.S. Rail Traffic: Ongoing Economic Growth
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Some highlights from yesterday's monthly report from the American Association of Railroads (AAR):
Intermodal: U.S. railroads originated 996,022 intermodal containers and trailers in June 2012, up 5.2% (49,168 units) over June 2011 and an average of 249,006 units per week. That’s the highest average for any June in history and the third highest average for any month in history (behind August 2006 and October 2006, see top chart above).
In the second quarter of 2012, intermodal loadings were up 4.0% (121,369 units) over the second quarter of 2011. For the first six months of 2012, intermodal originations were up 3.3% (193,541 containers and trailers) over the first six months of 2011.
Through June, year-to-date 2012 U.S. intermodal originations were slightly ahead of 2006, setting up the very real possibility that 2012 will be the highest-volume intermodal year ever for U.S. railroads. The recovery since 2009 has been remarkable. In the first six months of 2009, average weekly intermodal loadings were 185,075 containers and trailers. In the first six months of 2012, the average was up to 232,682 containers and trailers, a 25.7% increase. Assuming 240 intermodal units per train, the improvement in 2012 over 2009 is equal to nearly 200 additional full-size intermodal trains per week.
Carloads: U.S. rail carload traffic in June 2012 wasn’t as encouraging as intermodal traffic, but it was better than it’s been lately. U.S. freight railroads originated 1,140,271 carloads in June, an average of 285,068 carloads per month and down 1.3% from June 2011.
That’s the lowest percentage decline in five months, mainly because coal carloads weren’t as lousy as they have been. Coal carloads in June 2012 averaged 114,485 per week, the highest weekly average in four months and down just 6.2% from June 2011.
Excluding coal, U.S. rail carloads were up 2.2% (14,979 carloads) in June 2012 over June 2011. That’s their lowest year-over-year monthly increase in six months, though the weekly average in June 2012 (170,583) was the second highest (just behind April 2012) since October 2008 (see bottom chart above).
Excluding coal and grain, U.S. carloads in June 2012 averaged 151,363 per week in June 2012, up 4.2% (24,138 carloads) over June 2011 and their highest weekly average since August 2008.
U.S. carloads of petroleum and petroleum products continued their startling growth in June 2012, rising 51.0 percent (14,177 carloads) over June 2011.
Carloads of motor vehicles and parts continued to grow rapidly in June 2012 as well, with U.S. carloads up 24.5% (12,957 carloads) and U.S. plus Canadian carloads up 22.5% (16,545 carloads) compared with June 2011.
Seasonally adjusted total U.S. rail carloads were up 2.9% in June 2012 over May 2012. Seasonally adjusted U.S. rail intermodal traffic was up 3.8% in June 2012 over May
2012."
Bottom Line: The AAR points out that rail freight is a "derived demand" industry, meaning that the demand for rail delivery occurs as a result of demand elsewhere in the economy for the products that railroads haul (inputs, raw materials, parts, lumber, chemicals, autos, etc.). Therefore, weekly and monthly rail traffic activity is a useful gauge of broader economic activity, especially of the "tangible" economy.
Except for a decline in coal and grain deliveries this year, most other products delivered by rail have been increasing, and overall intermodal rail traffic was the highest ever for the month of June, and on track to set a new annual record in 2012. Rail car traffic excluding coal was the highest for the month of June since 2008, and rail car loadings have been at 4-years highs in each month this year. Overall, the June report from the AAR on U.S. rail activity suggests that the economy is continuing to make gradual improvements, and there is nothing in the report that would suggest that the economy is heading towards a recessionary cliff.
Some highlights from yesterday's monthly report from the American Association of Railroads (AAR):
Intermodal: U.S. railroads originated 996,022 intermodal containers and trailers in June 2012, up 5.2% (49,168 units) over June 2011 and an average of 249,006 units per week. That’s the highest average for any June in history and the third highest average for any month in history (behind August 2006 and October 2006, see top chart above).
In the second quarter of 2012, intermodal loadings were up 4.0% (121,369 units) over the second quarter of 2011. For the first six months of 2012, intermodal originations were up 3.3% (193,541 containers and trailers) over the first six months of 2011.
Through June, year-to-date 2012 U.S. intermodal originations were slightly ahead of 2006, setting up the very real possibility that 2012 will be the highest-volume intermodal year ever for U.S. railroads. The recovery since 2009 has been remarkable. In the first six months of 2009, average weekly intermodal loadings were 185,075 containers and trailers. In the first six months of 2012, the average was up to 232,682 containers and trailers, a 25.7% increase. Assuming 240 intermodal units per train, the improvement in 2012 over 2009 is equal to nearly 200 additional full-size intermodal trains per week.
Carloads: U.S. rail carload traffic in June 2012 wasn’t as encouraging as intermodal traffic, but it was better than it’s been lately. U.S. freight railroads originated 1,140,271 carloads in June, an average of 285,068 carloads per month and down 1.3% from June 2011.
That’s the lowest percentage decline in five months, mainly because coal carloads weren’t as lousy as they have been. Coal carloads in June 2012 averaged 114,485 per week, the highest weekly average in four months and down just 6.2% from June 2011.
Excluding coal, U.S. rail carloads were up 2.2% (14,979 carloads) in June 2012 over June 2011. That’s their lowest year-over-year monthly increase in six months, though the weekly average in June 2012 (170,583) was the second highest (just behind April 2012) since October 2008 (see bottom chart above).
Excluding coal and grain, U.S. carloads in June 2012 averaged 151,363 per week in June 2012, up 4.2% (24,138 carloads) over June 2011 and their highest weekly average since August 2008.
U.S. carloads of petroleum and petroleum products continued their startling growth in June 2012, rising 51.0 percent (14,177 carloads) over June 2011.
Carloads of motor vehicles and parts continued to grow rapidly in June 2012 as well, with U.S. carloads up 24.5% (12,957 carloads) and U.S. plus Canadian carloads up 22.5% (16,545 carloads) compared with June 2011.
Seasonally adjusted total U.S. rail carloads were up 2.9% in June 2012 over May 2012. Seasonally adjusted U.S. rail intermodal traffic was up 3.8% in June 2012 over May
2012."
Bottom Line: The AAR points out that rail freight is a "derived demand" industry, meaning that the demand for rail delivery occurs as a result of demand elsewhere in the economy for the products that railroads haul (inputs, raw materials, parts, lumber, chemicals, autos, etc.). Therefore, weekly and monthly rail traffic activity is a useful gauge of broader economic activity, especially of the "tangible" economy.
Except for a decline in coal and grain deliveries this year, most other products delivered by rail have been increasing, and overall intermodal rail traffic was the highest ever for the month of June, and on track to set a new annual record in 2012. Rail car traffic excluding coal was the highest for the month of June since 2008, and rail car loadings have been at 4-years highs in each month this year. Overall, the June report from the AAR on U.S. rail activity suggests that the economy is continuing to make gradual improvements, and there is nothing in the report that would suggest that the economy is heading towards a recessionary cliff.
The Coming Golden Era and Next U.S. Boom, If We Can Unleash the Animal Spirits of the Market
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From yesterday's WSJ editorial by tech journalist Michael Malone:
"Three years after the recession was declared officially over, unemployment remains high and there's worry that a new recession is down the road. And yet waiting in the wings for when we get our economic policies in order are a mounting number of stunning discoveries, inventions and technological breakthroughs that could set off a burst of growth and wealth creation as big as any in living memory."
MP: Those discoveries and technological breakthroughs outlined in the article by Malone include hydraulic fracking, nanoculture, cloud crowd, 3-D printing, Internet-based education and training, and self-health technologies. Here's his conclusion:
"It's all on the way. Together, these trends offer the potential for a golden era. Getting there won't be easy, as we are currently governed by leaders who want to manage our complex and dynamic economy from the top down, to tame entrepreneurs with regulation, to tax the productive and, ultimately, to pick the next generation of winners. That's never worked well and isn't working today. But a better world awaits us if we elect leaders who can imagine a better future and fight to unleash the animal spirits of the market that will get us there."
"Three years after the recession was declared officially over, unemployment remains high and there's worry that a new recession is down the road. And yet waiting in the wings for when we get our economic policies in order are a mounting number of stunning discoveries, inventions and technological breakthroughs that could set off a burst of growth and wealth creation as big as any in living memory."
MP: Those discoveries and technological breakthroughs outlined in the article by Malone include hydraulic fracking, nanoculture, cloud crowd, 3-D printing, Internet-based education and training, and self-health technologies. Here's his conclusion:
"It's all on the way. Together, these trends offer the potential for a golden era. Getting there won't be easy, as we are currently governed by leaders who want to manage our complex and dynamic economy from the top down, to tame entrepreneurs with regulation, to tax the productive and, ultimately, to pick the next generation of winners. That's never worked well and isn't working today. But a better world awaits us if we elect leaders who can imagine a better future and fight to unleash the animal spirits of the market that will get us there."
U.S. and Bakken Oil Updates
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1. A million people in North Dakota by 2030 and a million barrels of oil per day by 2015 are possible, according to one major oil executive. (ht/BakkenBlog News)
2. You've never seen anything like this North Dakota Oil Boomtown (in photos), from Business Insider.
3. More from Business Insider: The 15 Hottest American Cities of the Future, including North Dakota oil boomtown Williston, where unprecedented wealth will be created in the years ahead. (ht/BakkenBlog News)
4. Net oil imports for the U.S. are down to 42.1% this year through May, bringing oil imports as a share of total products supplied down to the lowest level since 1992.
2. You've never seen anything like this North Dakota Oil Boomtown (in photos), from Business Insider.
3. More from Business Insider: The 15 Hottest American Cities of the Future, including North Dakota oil boomtown Williston, where unprecedented wealth will be created in the years ahead. (ht/BakkenBlog News)
4. Net oil imports for the U.S. are down to 42.1% this year through May, bringing oil imports as a share of total products supplied down to the lowest level since 1992.
5 Temmuz 2012 Perşembe
AMA: The Strongest Trade Union in the U.S.A.
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As a follow-up to the post below on Milton Friedman's Mayo Clinic talk on the "economics of medical care," I present the two charts above.
The top chart shows the number of annual graduates from U.S. medical schools (AMA data here) per 100,000 U.S. population, from 1962 to 2011. Between about 1970 and 1984, there was a significant increase in medical school graduates that pushed the number of new physicians from 4 per 100,000 Americans in 1970 to almost 7 per 100,000 by 1984. Since 1984, the number of medical school graduates has been relatively flat (see red line in bottom chart), while the population has continued to grow, causing the number of new physicians per 100,000 population to decline to only 5.3 per 100,000 by 2008, the same ratio as back in 1974. Over the last few years the number of medical school graduates has increased slightly, and the ratio of graduates per 100,000 increased to 5.56 last year, the highest in a decade.
The bottom chart compares the actual number of medical school graduates (red line) to the projected number of graduates if the number of new physicians had keep pace with U.S. population increases, i.e. the ratio of graduates per 100,000 Americans had stayed at the 1984 level of 6.91. In that case, we would now be graduating close to 22,000 new doctors annually, and the cumulative increase in medical school graduates from a rate of 6.91 per 100,000 population over the last 27 years would mean that we would have 84,000 additional physicians today.
In most professions, as the population grows and the demand for those occupations increase, we would expect to see an increase in the number of people employed in those professions. Over the last 25 years, the U.S. population has both increased in size, and gotten significantly older on average due to increasing life expectancy, and both of those factors would put upward pressure on the demand for physicians. But in the case of medicine, the supply of students entering medical schools has been restricted relative to the growing population, leading to an insufficient supply of doctors, and higher-than-market wages. This restriction on the supply of doctors relative to a growing population is one example of the "power of organized medicine" that Milton Friedman talks about in his lecture at the Mayo Clinic.
Also, in his classic 1962 book Capitalism and Freedom, Dr. Friedman describes the American Medical Association (AMA) as the "strongest trade union in the United States" and documents the ways in which the AMA vigorously restricts competition. For example, the "Council on Medical Education and Hospitals" of the AMA approves both medical schools and hospitals. By restricting the number of approved medical schools and the number of applicants to those schools, the AMA effectively limits the supply of physicians, which increases their wages, and raises the overall cost of medical care.
As a follow-up to the post below on Milton Friedman's Mayo Clinic talk on the "economics of medical care," I present the two charts above.
The top chart shows the number of annual graduates from U.S. medical schools (AMA data here) per 100,000 U.S. population, from 1962 to 2011. Between about 1970 and 1984, there was a significant increase in medical school graduates that pushed the number of new physicians from 4 per 100,000 Americans in 1970 to almost 7 per 100,000 by 1984. Since 1984, the number of medical school graduates has been relatively flat (see red line in bottom chart), while the population has continued to grow, causing the number of new physicians per 100,000 population to decline to only 5.3 per 100,000 by 2008, the same ratio as back in 1974. Over the last few years the number of medical school graduates has increased slightly, and the ratio of graduates per 100,000 increased to 5.56 last year, the highest in a decade.
The bottom chart compares the actual number of medical school graduates (red line) to the projected number of graduates if the number of new physicians had keep pace with U.S. population increases, i.e. the ratio of graduates per 100,000 Americans had stayed at the 1984 level of 6.91. In that case, we would now be graduating close to 22,000 new doctors annually, and the cumulative increase in medical school graduates from a rate of 6.91 per 100,000 population over the last 27 years would mean that we would have 84,000 additional physicians today.
In most professions, as the population grows and the demand for those occupations increase, we would expect to see an increase in the number of people employed in those professions. Over the last 25 years, the U.S. population has both increased in size, and gotten significantly older on average due to increasing life expectancy, and both of those factors would put upward pressure on the demand for physicians. But in the case of medicine, the supply of students entering medical schools has been restricted relative to the growing population, leading to an insufficient supply of doctors, and higher-than-market wages. This restriction on the supply of doctors relative to a growing population is one example of the "power of organized medicine" that Milton Friedman talks about in his lecture at the Mayo Clinic.
Also, in his classic 1962 book Capitalism and Freedom, Dr. Friedman describes the American Medical Association (AMA) as the "strongest trade union in the United States" and documents the ways in which the AMA vigorously restricts competition. For example, the "Council on Medical Education and Hospitals" of the AMA approves both medical schools and hospitals. By restricting the number of approved medical schools and the number of applicants to those schools, the AMA effectively limits the supply of physicians, which increases their wages, and raises the overall cost of medical care.
Cars.Com: Japan-Based Honda and Toyota Now Make 4 of Top 5 "American-Made Cars" in U.S.
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2012 Cars.com American-Made Index
Sources: Automaker data, Automotive News, dealership data, and National Highway Traffic Safety Administration
Cars.Com -- "In today's global economy, there's no easy way to determine just how American a car is. Many cars built in the U.S., for example, are assembled using parts that come from elsewhere. Some cars assembled in the U.S. from largely American-made parts don't sell well, meaning fewer Americans are employed to build them. Cars.com's American-Made Index recognizes cars that are built here, have a high percentage of domestic parts and are bought in large numbers by American consumers.
The Toyota Camry topped this year's American-Made Index, extending its No. 1 status to four years running. Ford's F-150 landed by a photo-finish at No. 2, falling behind the Camry by fewer than two days of sales. The F-150 was once a common AMI leader, topping the index from 2006 to 2008, but lower domestic parts content had dropped the best-selling pickup off the list. With its domestic parts content back to 75 percent — up from 60 percent last year — the F-150 returns to the AMI for 2012."
Here's something really interesting:
"A globalized industry may mean fewer cars that hail mostly from the U.S., but it works for many companies' bottom lines. Ford's global One Ford strategy coincides with falling domestic parts content in its vehicles. Five years ago, Ford had 20 models with 75 percent or higher domestic parts content. For the 2012 model year, that figure fell to three. Yet the same strategy has helped to bring Ford into the black with 11 straight quarterly profits.
Ford isn't alone. Cars.com surveyed domestic parts content for the top 113 models on the market, which make up 89 percent of all the cars sold through May. More than 80 percent of those cars — the vast majority of what shoppers are buying — have domestic parts content below 75 percent or are assembled in Canada, Mexico or abroad."
MP: Interesting that four of the top five, and five out of the top ten "American-made" cars are Japanese automakers Toyota and Honda, and also interesting that pursuing an "American-made" strategy might actually lower profitability. Perhaps Japan-based Toyota and Honda are intentionally sourcing parts in America at a higher cost than using Japanese parts for the positive publicity value in rankings like this one, even if profits are adversely affected? Whereas Ford, as a domestic Big 3 automaker doesn't have to be concerned about the adverse effect of increasing the use of foreign parts, because U.S. consumers will still perceive Fords as being "Made in the U.S.A."
Although the "American-Made Index" is interesting, it also helps highlight how meaningless the whole concept of "American-made" has become in a highly globalized industry like motor vehicles with global sales, global production, and global supply chains. Does it really matter any more that a Ford Focus has lower domestic content than a Toyota Camry? Most consumers shop on price and value and don't consider domestic content, although 23% of consumers surveyed by Cars.com last month still say that "they would only consider buying a car from the Detroit Three." Well, at least that means that 77% of American consumers are thinking clearly about this issue, and shopping sensibly on price, value, quality and service, regardless of the national origin of the automaker or the domestic content.
But the old traditions of driving only "American cars" and demonizing "foreign cars" die hard in places like Flint, Michigan, where you still find signs like these at UAW offices.
| Rank 2012 | Make/Model | U.S. Assembly Location | Rank 2011 |
|---|---|---|---|
| 1 | Toyota Camry | Georgetown, Ky.; Lafayette, Ind. | 1 |
| 2 | Ford F-150 | Dearborn, Mich.; Claycomo, Mo. | - |
| 3 | Honda Accord | Marysville, Ohio | 2 |
| 4 | Toyota Sienna | Princeton, Ind. | 6 |
| 5 | Honda Pilot | Lincoln, Ala. | - |
| 6 | Chevrolet Traverse | Lansing, Mich. | 8 |
| 7 | Toyota Tundra | San Antonio | 9 |
| 8 | Jeep Liberty | Toledo, Ohio | - |
| 9 | GMC Acadia | Lansing, Mich. | 10 |
| 10 | Buick Enclave | Lansing, Mich. | - |
Cars.Com -- "In today's global economy, there's no easy way to determine just how American a car is. Many cars built in the U.S., for example, are assembled using parts that come from elsewhere. Some cars assembled in the U.S. from largely American-made parts don't sell well, meaning fewer Americans are employed to build them. Cars.com's American-Made Index recognizes cars that are built here, have a high percentage of domestic parts and are bought in large numbers by American consumers.
The Toyota Camry topped this year's American-Made Index, extending its No. 1 status to four years running. Ford's F-150 landed by a photo-finish at No. 2, falling behind the Camry by fewer than two days of sales. The F-150 was once a common AMI leader, topping the index from 2006 to 2008, but lower domestic parts content had dropped the best-selling pickup off the list. With its domestic parts content back to 75 percent — up from 60 percent last year — the F-150 returns to the AMI for 2012."
Here's something really interesting:
"A globalized industry may mean fewer cars that hail mostly from the U.S., but it works for many companies' bottom lines. Ford's global One Ford strategy coincides with falling domestic parts content in its vehicles. Five years ago, Ford had 20 models with 75 percent or higher domestic parts content. For the 2012 model year, that figure fell to three. Yet the same strategy has helped to bring Ford into the black with 11 straight quarterly profits.
Ford isn't alone. Cars.com surveyed domestic parts content for the top 113 models on the market, which make up 89 percent of all the cars sold through May. More than 80 percent of those cars — the vast majority of what shoppers are buying — have domestic parts content below 75 percent or are assembled in Canada, Mexico or abroad."
MP: Interesting that four of the top five, and five out of the top ten "American-made" cars are Japanese automakers Toyota and Honda, and also interesting that pursuing an "American-made" strategy might actually lower profitability. Perhaps Japan-based Toyota and Honda are intentionally sourcing parts in America at a higher cost than using Japanese parts for the positive publicity value in rankings like this one, even if profits are adversely affected? Whereas Ford, as a domestic Big 3 automaker doesn't have to be concerned about the adverse effect of increasing the use of foreign parts, because U.S. consumers will still perceive Fords as being "Made in the U.S.A."
Although the "American-Made Index" is interesting, it also helps highlight how meaningless the whole concept of "American-made" has become in a highly globalized industry like motor vehicles with global sales, global production, and global supply chains. Does it really matter any more that a Ford Focus has lower domestic content than a Toyota Camry? Most consumers shop on price and value and don't consider domestic content, although 23% of consumers surveyed by Cars.com last month still say that "they would only consider buying a car from the Detroit Three." Well, at least that means that 77% of American consumers are thinking clearly about this issue, and shopping sensibly on price, value, quality and service, regardless of the national origin of the automaker or the domestic content.
But the old traditions of driving only "American cars" and demonizing "foreign cars" die hard in places like Flint, Michigan, where you still find signs like these at UAW offices.
Markets in Everything: Android-based Healthcare Smartphone Packed with Medical Sensors
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MedGadget -- "LifeWatch AG (Neuhausen am Rheinfall, Switzerland) has presented the LifeWatch V (see video above), a feature-packed healthcare smartphone for patients and health conscious consumers. At its core, the LifeWatch V is a pretty standard Android-based phone. However, what sets it apart is the presence of a plethora of medical sensors powering seven health tests, combined with wellness-related applications and cloud-based services. The health tests are operated by placing a finger on one of the sensors, allowing users to measure, track and analyze their medical measurements, take corrective action, plan meals, activities and more.
The tests include one-lead ECG, body temperature, blood glucose, heart rate, blood oxygen saturation, body fat percentage and stress levels as expressed by heart rate variability. Each medical test is presented as an application and, in addition, there are diet applications and programmable reminders for medications. All collected data is automatically and securely saved to a remote server and can be retrieved from the cloud for follow-up anytime, anywhere. Results and historical data can be shared with doctors, family or others on the user’s request through e-mail or text message.
There is no information on pricing or availability yet, but LifeWatch intends to launch the healthcare solution smartphone world-wide in collaboration with local partners."
MedGadget -- "LifeWatch AG (Neuhausen am Rheinfall, Switzerland) has presented the LifeWatch V (see video above), a feature-packed healthcare smartphone for patients and health conscious consumers. At its core, the LifeWatch V is a pretty standard Android-based phone. However, what sets it apart is the presence of a plethora of medical sensors powering seven health tests, combined with wellness-related applications and cloud-based services. The health tests are operated by placing a finger on one of the sensors, allowing users to measure, track and analyze their medical measurements, take corrective action, plan meals, activities and more.
The tests include one-lead ECG, body temperature, blood glucose, heart rate, blood oxygen saturation, body fat percentage and stress levels as expressed by heart rate variability. Each medical test is presented as an application and, in addition, there are diet applications and programmable reminders for medications. All collected data is automatically and securely saved to a remote server and can be retrieved from the cloud for follow-up anytime, anywhere. Results and historical data can be shared with doctors, family or others on the user’s request through e-mail or text message.
There is no information on pricing or availability yet, but LifeWatch intends to launch the healthcare solution smartphone world-wide in collaboration with local partners."
Thursday Economic Reports: Lookin' Pretty Good
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1. Private-sector employment increased by 176,000 in June according to today's ADP National Employment Report. The June job gain was the 29th straight monthly increase in private employment and the 10th consecutive month of a job increase above 100,000. The 12-month gain through June of nearly two million private-sector jobs is the largest annual increase in almost six years, since the 12-month period ending in August 2006.
2. (Reuters) - The number of U.S. businesses and consumers filing for bankruptcy fell 14 percent in the first half of 2012 and could end the year at the lowest level since before the 2008 financial crisis, according to data released today by Epiq Systems and the American Bankruptcy Institute.
3. The fixed rate for 30-year mortgages fell to another fresh low this week of 3.62%, according to Freddie Mac. The fixed rate for 15-year mortgages also dropped to a new low of 2.89%.
4. From the American Association of Railroads today: "Intermodal volume for the week totaled 253,497 trailers and containers, up 7 percent compared with the same week last year and the fifth highest-volume intermodal week ever for U.S. railroads."
5. "Planned layoffs fell to a 13-month low in June, as U.S.-based employers announced job cuts totaling 37,551 during the month. That is down 39% from the 61,887 announced job cuts in May, according to today's report on downsizing activity from Challenger, Gray & Christmas. The June total is 9.4% lower than the 41,432 planned job cuts announced during the same month a year ago. It is the lowest monthly total since May 2011, when employers announced plans to eliminate 37,135 workers from their payrolls."
6. "U.S. unemployment, as measured by Gallup without seasonal adjustment, was 8.0% in June, unchanged from May, but significantly better than the 8.7% from a year ago. Gallup's seasonally adjusted number, based on applying an estimate of the government's June adjustment, is 7.8%, an improvement from 8.3% in May, and down considerably from 8.5% in June 2011. Both the unadjusted and the adjusted numbers are at least tied for the lowest Gallup has recorded since it began collecting employment data in 2010."
7. Intrade odds of a U.S. recession this year? Less than one-in-six chance at 15.8%.
2. (Reuters) - The number of U.S. businesses and consumers filing for bankruptcy fell 14 percent in the first half of 2012 and could end the year at the lowest level since before the 2008 financial crisis, according to data released today by Epiq Systems and the American Bankruptcy Institute.
3. The fixed rate for 30-year mortgages fell to another fresh low this week of 3.62%, according to Freddie Mac. The fixed rate for 15-year mortgages also dropped to a new low of 2.89%.
4. From the American Association of Railroads today: "Intermodal volume for the week totaled 253,497 trailers and containers, up 7 percent compared with the same week last year and the fifth highest-volume intermodal week ever for U.S. railroads."
5. "Planned layoffs fell to a 13-month low in June, as U.S.-based employers announced job cuts totaling 37,551 during the month. That is down 39% from the 61,887 announced job cuts in May, according to today's report on downsizing activity from Challenger, Gray & Christmas. The June total is 9.4% lower than the 41,432 planned job cuts announced during the same month a year ago. It is the lowest monthly total since May 2011, when employers announced plans to eliminate 37,135 workers from their payrolls."
6. "U.S. unemployment, as measured by Gallup without seasonal adjustment, was 8.0% in June, unchanged from May, but significantly better than the 8.7% from a year ago. Gallup's seasonally adjusted number, based on applying an estimate of the government's June adjustment, is 7.8%, an improvement from 8.3% in May, and down considerably from 8.5% in June 2011. Both the unadjusted and the adjusted numbers are at least tied for the lowest Gallup has recorded since it began collecting employment data in 2010."
7. Intrade odds of a U.S. recession this year? Less than one-in-six chance at 15.8%.
Markets in Everything: Rent Control Millionaires
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Bloomberg: "Thousands of rent-controlled tenants in India’s fast-growing financial hub are becoming millionaires as developers tear down crumbling colonial mansions to build luxury towers for the rich.
Mea Kadwani, 78, has lived in the same apartment in the Mukund Mansion in Mumbai since he was a toddler. Thanks to rent control laws, he paid less than $20 a month for decades, and $23 a month recently, for a 2,600-square-foot space in the upscale Nepean Sea Road neighborhood, where rents typically top $2,000 a month. Now he’s moving on: After three years of negotiations, he and his wife pocketed $2.5 million from a real estate developer planning to turn the building into a garage for residents of its 29-story Villa Orb tower under construction next door."
MP: Amazing what government price controls can do to distort markets and create that kind of phenomenal "phantom wealth."
Mea Kadwani, 78, has lived in the same apartment in the Mukund Mansion in Mumbai since he was a toddler. Thanks to rent control laws, he paid less than $20 a month for decades, and $23 a month recently, for a 2,600-square-foot space in the upscale Nepean Sea Road neighborhood, where rents typically top $2,000 a month. Now he’s moving on: After three years of negotiations, he and his wife pocketed $2.5 million from a real estate developer planning to turn the building into a garage for residents of its 29-story Villa Orb tower under construction next door."
MP: Amazing what government price controls can do to distort markets and create that kind of phenomenal "phantom wealth."
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