Chart of the Day: Record Productivity Growth

The chart above shows the "Productivity change in the nonfarm business sector, 1947-2010" (Source: BLS), which supports the post below.  Instead of the "Great Stagnation," maybe we're in the "Great Accelerating Productivity Surge"?

HT: PeakTrader

The Good News: Worker Productivity and Profits Per Workers Are At Record Highs. The Bad News: That Probably Means A Record Jobless Recovery

The top chart above shows that real GDP in the fourth quarter of 2010 was slightly higher (by 0.14%) than real output in the fourth quarter of 2007 when the recession started.  But even though the economy has made a complete recovery from the Great Recession in terms of real economic output, the U.S. economy is producing more real GDP today than in 2007 with 7.3 million fewer private sector jobs.  This current economic recovery is an amazing story of huge increases in worker productivity (producing more output today with 6.3% fewer private sector workers than in 2007) that might be unprecedented in U.S. history over any three year period of time, or in any post-recession period.

What does that surge in worker productivity mean for the bottom lines of American companies?  The bottom chart above shows that real corporate profits per private sector job reached an all-time record historical high of $11,552 in the fourth quarter of 2010 (measured in 2010 dollars).  That's 65% higher than the recession-low of about $7,000 per worker in fourth quarter of 2008 and 7.5% above the pre-recession high of $10,740 in 2006.   

That's the good news about record-high worker productivity and the resulting record-high real corporate profits per private sector worker.  The bad news is that these trends might translate into a record-length "jobless recovery," as U.S. companies have been able to expand output and profits to record levels, but with millions and millions of fewer workers.  Taken together, these two trends might explain why many companies have been reluctant to hire back more workers - why increase the labor force when output and profits are at record-levels?

A recent AP news report discusses these trends:

"U.S. workers have become so productive that it's harder for anyone without a job to get one. Companies are producing and profiting more than when the recession began, despite fewer workers. They're hiring again, but not fast enough to replace most of the 7.5 million jobs lost since the recession began. 

Measured in growth, the American economy has outperformed those of Britain, France, Germany, Italy and Japan — every Group of 7 developed nation except Canada, according to The Associated Press' new Global Economy Tracker, a quarterly analysis of 22 countries representing more than 80 percent of global output.

Yet the U.S. job market remains the group's weakest. U.S. employment bottomed and started growing again a year ago, but there are still 5.4 percent fewer American jobs than in December 2007. That's a much sharper drop than in any other G-7 country. The U.S. had the G-7's highest unemployment rate as of December. Canada and Germany have actually added jobs since the recession ended in June 2009. 

Panicked by the 2008 financial crisis and deepening recession, U.S. employers cut jobs pitilessly. They slashed an average of 780,000 jobs a month in the January-March quarter of 2009. "My sense is there was much more weeding out of the weakest workers — the ones they didn't want," says Harvard economist Kenneth Rogoff.

Yet after shrinking payrolls, many companies found they could produce just as much with fewer workers. And with that higher productivity came higher profits. By July-September quarter of 2010, U.S. corporate earnings were 12 percent more than when the recession began. By contrast, corporate profits fell 6 percent in Japan and 16 percent in Canada from the October-December quarter of 2007."

Rising Supply, Advances in Drilling Technology and Conservation Will Counteract Rising Oil Prices

1. Basic economic theory tells us that one of the predictable consequences of resources becoming more expensive is that higher prices will stimulate discovery, exploration and greater production on the supply side. (Update: See "Peak Idiocy" here for a review of ECN 101 regarding energy prices.) And that's exactly what we're seeing now in Texas for oil and gas, according to today's WSJ article "Chevron Rekindles Old Texas Flame: High Oil Prices, New Technologies Once Again Make the Permian Basin a Popular Spot for Drilling," here's an excerpt:

"Climbing oil prices are making the aging oil fields of Texas's Permian Basin look attractive again to some big petroleum companies. Chevron Corp. has pumped oil from this well-plowed area of west Texas and New Mexico since 1925. But in recent decades, as production in the area declined, Chevron and other companies used it primarily as a lab for oil-extraction techniques that could be employed in larger projects elsewhere.

This year, Chevron, the second-largest U.S. oil company by market value after Exxon Mobil Corp., plans to boost investment to $600 million in the Permian Basin, 32% more than a year earlier, and drill twice as many wells as it did in 2010 in the area. Its goal is to squeeze more oil out of these aging fields at a time when commodity-oil prices have risen to over $100 a barrel—levels not seen since summer of 2008—and access to oil in the Gulf of Mexico and lucrative foreign fields has become more of a challenge. The company is also seeking to employ new technologies only recently available to unlock significant amounts of Permian crude that were hard to reach before.

The revival of the Permian Basin is also driven by the widespread use of relatively new technologies such as hydraulic fracturing (see diagram above), which involves injecting a mixture of water, sand and chemicals underground at high pressures to release oil from hydrocarbon deposits. In recent years, this and other technologies have unlocked shale oil and gas that wasn't previously accessible, leading to a boom of new wells across the country. Now they are being adapted and used to boost production from mature oil fields like the ones in the Permian Basin. Chevron and others are also planning to apply the techniques in previously unexplored shale areas of the basin."

2. And as the new hydraulic fracturing and horizontal drilling revolutionize the oil and gas industries, that new technology keeps getting better and better.  One example is the new QuikFRAC system, which is a "set of tools capable of simultaneously stimulating multiple stages with a single fracture treatment (batch fracturing)."  If you watch this video, you'll see that the main implication of this new QuickFRAC technology is that it can pump three times as much oil in a given time period compared to conventional fracking methods, and therefore reduces the time spent drilling by two-thirds. 

Bottom Line: Due to: a) increased oil production in the U.S. and around the world and b) advanced drilling technologies on the supply side, along with c) increased conservation on the demand side, will all counteract and put some limits to how high oil and gas prices will rise.

Update: Another factor that will moderate rising oil/gas prices is the substitution effect of switching to other currently available alternative energy sources like natural gas, along with the increased incentive to develop new, alternative energy sources.     

WSJ Interactive Map/Graphic of Global Int. Rates

Here's a really interesting interactive WSJ map/graphic of global central bank interest rates, on a monthly basis  back to May 2004.  If you watch the monthly time series, you'll see that the U.S. Fed started lowering interest rates in September 2007, about a year ahead of the interest rate cuts in Europe that started in October 2008.  Now the ECB has moved ahead of the Fed by raising rates this month by a quarter point to 1.25%, thus the title of the front page story that the graphic accompanies: "Europe's Rate Rise Signals End of Cheap-Money Era." 

Leading Economic Indexes Increase in Feb.

Leading economic indexes from the Conference Board for February: Japan (pre-earthquake) up by 1%, Korea up by 0.1% in February, and the U.K. up by 0.6% in February (following increases of 0.4% and 0.6% in January and December).  

What's Your News IQ? Take the Test and Find Out

Take the new Pew Research Center News IQ test here.  

The Pandas Are "Made in China." So What Are They Doing at the Smithsonian's NATIONAL Zoo in DC?

Is there really any difference between imported Chinese pandas in a Smithsonian museum and imported Chinese souvenirs in a museum gift shop?

Last month Senator Bernie Sanders (I-Vt.) summoned the Smithsonian Museum's top officials into his office and demanded they start selling more "Made in the USA" products in Smithsonian museum gift shops.  According to ABC News:

"After the meeting with Sanders, Smithsonian officials said they would sell more American-made souvenirs and promised to devote one gift shop to American-made products. Sanders said, "It's a start." 

However, for some in Congress, it's not good enough.  Nick Rahall, D-W.Va., the top Democrat on the committee that oversees the Smithsonian, said he plans to introduce a bill that would require the Smithsonian to sell only American-made goods."

In February, ABC News featured another news story titled "At Smithsonian, Americana 'Made in China'", and reported that museums and monuments all over the nation's capital are selling gift and souvenirs, including statues of U.S. Presidents, magnets of the Washington Monument, plates, and even a Barack Obama coffee mug, that are made in China.

Don Boudreaux featured this Reason.tv video today about "Bernie Sanders' War on Chinese Bobbleheads." 

MP: Suppose in a momentary lapse into protectionist nitwitery we were to take Rep. Rahall's American-made only legislation for the Smithsonian gift shops seriously. If so, why stop there?  Why not then legislate that all of the displays, contents, artwork, artifacts, and animals at every of the 20 Smithsonian properties be "made in the USA" as well.  And require that all food served at Smithsonian Museum restaurants and cafeterias be "American made" only. In other words, why restrict the "made in the USA" policy to just the gift shop and not the entire museum?

For example, the Smithsonian's African Art Museum features only "traditional and contemporary art from the entire continent of Africa" and would have to be closed for being un-American.  It violates the "made in the USA" policy.  Likewise for the Freer Gallery of Art, which houses one of the "premier collections of Asian art."  Un-American.  The contents of the National Museum of Natural History would have to go through some serious culling of un-American exhibits that include a stuffed African elephant and exhibits of other African wildlife, exhibits on Egypt, an exhibit on Chinese orchids, etc.  Serious violations of the "made in the USA" policy.

And the Smithsonian's National Zoo probably has a higher concentration of foreign animals than any of the Smithsonian museum gift shops have foreign-made Americana.  So we'd have to start by getting rid of the Chinese pandas (pictured above), which should be considered as great a threat to Americans as Chinese-made snow domes, baseball caps and statues of Obama in the Zoo gift shop.  After all, we have brown bears and black bears that are real "American" bears and why shouldn't those be displayed instead of the Chinese pandas?  And then we would replace all of the other foreign animals with patriotic American animals and make it a real NATIONAL Zoo. Right now it's not a "national" zoo at all, it would be more accurate to call it the Smithsonian INTERNATIONAL Zoo, and that's un-American.  

Finally, the restaurants at Smithsonian museums should be forced to serve only food "made in America" - none of that un-American coffee grown in Colombia or foreign bananas from Costa Rica.

Obviously, if that all seems like nonsensical nitwitery, it is. But then so is Bernie Sanders' "War on Chinese Bobbleheads."

Recovery Watch: Rail,Temp Help, Air Traffic All Up

1. The American Association of Railroads reported today that U.S. railroads originated 305,905 carloads for the week ending April 2, which was an increase of 5.7% from the comparable week last year, and is the highest level for carload rail traffic since late 2008 (see chart above).  Intermodal rail containers increased to 234,208 trailers and containers last week, which was 19.4% above the same week last year.   

2. The American Staffing Association Staffing Index reached the highest level so far this year of 92 for the week ending March 27, which is a 9.5% annual gain vs. the same week in 2010, and a 26.4% gain compared to 2009. 

3. The International Air Transport Association reported annual increases for international traffic during the month of February: 6.0% for passenger traffic compared to last year, and 2.3% for cargo volume.

4. Traffic at Dulles Airport increased in February for both passenger traffic (+13.6%) and freight traffic (+4.4%), and traffic at Reagan Airport increased by 22.2% for passengers and 11.1% for cargo. 

The Wholesale Liquor Cartel Harms Consumers

NY Times -- "Imagine if Texas lawmakers, in a bid to protect mom-and-pop bookstores, barred Amazon.com from shipping into the state. Or if Massachusetts legislators, worried about Boston’s shoe boutiques, prohibited residents from ordering from Zappos.com. Such moves would infuriate consumers. They might also breach the Constitution’s commerce clause, which limits states from erecting trade barriers against one another. But wine consumers, producers and retailers face such restrictions daily. 

The wholesaling industry’s survival depends on maintaining today’s highly regulated system. It is estimated that because of wholesalers, consumers pay 18 percent to 25 percent more at retail than they otherwise would. 

Last month,  Representative Jason Chaffetz, Republican of Utah, introduced a bill in the House that would allow states to cement such protectionist laws. It should appall wine snobs, beer swillers and even teetotalers. In this case, the law would protect not small stores and liquor producers, but the wholesale liquor lobby."

MP: Congress should just say "No" to the Wholesale Liquor Cartel. 

Jobless Claims Remain Below 400,000 for 6th Week

The Department of Labor reported today that initial jobless claims fell by 10,000 for the week ending April 2, bringing the four-week moving average down by 5,750 to 389,500 (see chart).  For the first time since July 2008, the four-week average for jobless claims has remained below the benchmark 400,000 level for six consecutive weeks, and provides additional evidence that conditions in the labor market are gradually improving. 

According to Reuters:

"New U.S. claims for unemployment benefits fell slightly more than expected last week, according to a government report on Thursday that pointed to firming labor market conditions. Initial claims for state unemployment benefits slipped 10,000 to a seasonally adjusted 382,000, the Labor Department said. Economists polled by Reuters had forecast claims falling to 385,000. The four-week moving average of unemployment claims -- a better measure of underlying trends - fell 5,750 to 389,500."

CHART: International Public Opinion on Capitalism

The chart above is from today's online version of The Economist, showing an international comparison of public opinion on the free market, with some interesting results:

1. Brazil ranks #1 for responding "strongly agree" that the free-market system is the best, and Germany ranks #1 for "strongly or somewhat agree."

2. Germany, Brazil, China and Italy are rank higher than the U.S. for the top two most favorable responses.  

3. Citizens of Germany and Italy view free-markets more favorably than the Brits, and a lot more favorably than the French.  

4. Japan ranks lowest for the most favorable response (strongly agree).

Chart of the the Day: Real Gold Prices, 1970-2011

Record-high gold prices have been in the news lately, here's an example of a new story today from Bloomberg titled "Gold Advances to Record for Second Day":

"Gold for immediate delivery in London rose to an all-time high of $1,462.30."

The chart above (click to enlarge) displays real, inflation-adjusted gold prices back to 1970 (data are from Global Financial Data, paid subscription required), and shows that the real price of gold peaked on January 21, 1980 at a closing price of $892.10 per ounce in current dollars, but that's more than $2,500 per ounce in today's dollars. Compared to that peak real price, the price of gold today at $1,462.30 per ounce is 42.5% below the 1980 peak.

If You Subsidize Something, You Get More of It

SAN FRANCISCO  — "The San Francisco Board of Supervisors approved a tax break to keep Twitter from fleeing the city. The measure passed 8-3 and exempts the micro-blogging service from paying payroll tax on new hires if it moves to the city’s neglected Mid-Market area.

Twitter is already outgrowing its current San Francisco headquarters in the city’s South of Market neighborhood, and the company is poised to expand from a few hundred to a few-thousand workers. While seeking a building with more office space, the company had said it had considered moving down the Peninsula to a city that has no payroll tax.

San Francisco is the only city in the state that charges companies a payroll tax; 1.5 percent of total employee compensation each year if the firm has more than $250,000 in payroll. The tax also applies to money made on stock options, a prime consideration for Twitter which is rumored to be exploring an initial public offering."

HT: Kyle Stingily

P.J. O’Rourke: "Atlas Shrugged. And So Did I"

P.J. O'Rourke reviews the movie "Atlas Shrugged" in today's WSJ blog, here's an excerpt:

"But I will not pan “Atlas Shrugged.” I don’t have the guts.  If you associate with Randians—and I do—saying anything critical about Ayn Rand is almost as scary as saying anything critical to Ayn Rand.  What’s more, given how protective Randians are of Rand, I’m not sure she’s dead.

The woman is a force.  But, let us not forget, she’s a force for good.  Millions of people have read “Atlas Shruggged” and been brought around to common sense, never mind that the author and her characters don’t exhibit much of it. Ayn Rand, perhaps better than anyone in the 20^th century, understood that the individual self-seeking we call an evil actually stands in noble contrast to the real evil of self-seeking collectives.  (A rather Randian sentence.)

It’s easy to make fun of Rand for being a simplistic philosopher, bombastic writer and—I’m just saying—crazy old bat.  But the 20^th century was no joke. A hundred years, from Bolsheviks to Al Qaeda, were spent proving Ayn Rand right."

Blog Stats: 159 Million

According to BlogPulse, there are more than 159 million blogs, and 68,825 new blogs have been created in just the last 24 hours. 

Natural Gas Prices Fall to Lowest Levels Since 2002

While rising oil and gas prices have captured all of the media attention lately, there’s another energy story about falling prices that has gone largely unreported. According to data released last week by the Department of Energy, natural gas prices for residential consumers fell to a seven-year low in January of $9.80 per 1,000 cubic feet. When adjusted for inflation, American consumers haven’t had cheaper natural gas since December 2002, more than nine years ago (see top chart above, data here). The bottom chart above shows a similar price decline for commercial customers, who paid less for natural gas in January this year (adjusted for inflation) than in any month since November 2002 (data here).

About 25% of energy in the U.S. comes from natural gas, so the falling prices for this energy source should offset some of the rising costs of oil and gas, and also act to offset some of the overall inflationary pressures.  Read more here at The Enterprise Blog.   

If You Tax Something, You Get Less of It

From the Boston Globe:

"Fidelity Investments will shutter its offices in Marlborough, Massachusetts by the end of next year and move almost all of the 1,100 jobs there out of state, a spokeswoman said yesterday. The financial services giant, based in Boston since it was founded in 1946, has steadily slashed its Massachusetts workforce in the past five years. Fidelity will probably have about 7,300 workers left in Massachusetts, just over half of the 13,000 it had in 2006. Most of the jobs will be relocated to other states, with the lion’s share going to existing offices in Merrimack, N.H., and Smithfield, R.I.

Several observers said it appears Fidelity is relocating to states that will offer more tax breaks, or where it believes it can cut operational costs, especially since many of the jobs are moving only across the Massachusetts border."

From the Boston Herald (thanks to Steve Bartin):

"A clandestine company that manages billions for Fidelity Investments has quietly pulled up stakes from Boston’s Financial District, leaving the Bay State behind for New Hampshire and its beneficial trust and tax laws. Crosby Advisors’ relocation of more than 100 workers to new offices in Salem, N.H., last fall — marking a major migration of Boston wealth over the border — went virtually unnoticed except among informed company insiders.

The move also went completely unmentioned amid all the hand-wringing after Fidelity announced last month that it would close its Marlboro campus and send most of those 1,100 jobs to its offices in Merrimack, N.H., and Smithfield, R.I."

5 Reasons to Be Bullish About America in Long Run

1) The United States is the home of the entrepreneur.

2) The United States is the most open/flexible society the world has ever seen.

3) The brightest minds from around the world dream of coming to the United States.

4) English is the universal language.

5) Americanization remains a powerful and growing – though resented – economic and social trend throughout the world. (To quote the advertising/marketing giant WPP Group’s CEO, Sir Martin Sorrell, “Globalization is a misnomer. The better word is Americanization.”)

~Jeffrey Saut via Real Clear Markets

NY Fed Model: 1-in-232 Chance of 2012 Double-Dip

The New York Federal Reserve updated its "Probability of U.S. Recession Predicted by Treasury Spread" yesterday with treasury yield data through March 2011, and the Fed's recession probability forecast through March 2012. The NY Fed's Treasury model uses the spread between the yields on 10-year Treasury notes (3.41% in March) and 3-month Treasury bills (0.10%) to calculate the probability of a U.S. recession up to twelve months ahead (see details here).

The Fed's model (data here) shows that the recession probability peaked during the October 2007 to April 2008 period at around 37-42% (see chart above), and has been declining since then in almost every month.  For March 2011, the recession probability is only 0.26% and for March of next year the recession probability is slightly higher at 0.43%. According to the NY Fed Treasury Spread model, the chances of a double-dip recession through March of next year is less than one-in-200.

Paul Ryan's Plan for a Debt-Free Nation

Paul Ryan (R-Wisconsin) presented his "Path to Prosperity" budget plan today at AEI, here's the full text of his talk, here's his WSJ editorial today, here's the link to the video, and here's the full 73-page plan. 

Americans for Tax Reform prepared the chart above to compare Ryan's budget to the Simpson-Bowles (Obama) commission (and the Coburn-Chambliss “Gang of Six” which is introducing legislation modeled after Simpson-Bowles).

In his talk today, Paul Ryan quoted a famous American president:

"The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of sound policy. It is in violation of the traditions of America."

And Rep. Ryan concluded his talk by saying:

"This budget offers America a model of government that is guided by the timeless principles of the American Idea. This budget provides policymakers with a blueprint to put our budget on the path to balance and our economy on the path to prosperity. This budget assures America's seniors-those who are currently retired and future retirees-that their health and retirement security will be preserved and strengthened.

This budget provides parents with hope that their children can inherit a strong, free and prosperous America. It is a plan to give our children a debt-free nation so they too can realize the American Dream."

Two Americas: Public vs. Private Employees

1. "If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government (see chart above).

~Steve Moore in the WSJ

2. NY Times -- "Carlos Bejarano, a Phoenix school superintendent with more than 30 years in education is one of an increasing number of public employees here who are retiring one day and going right back to the same jobs the next, enabling them to supplement their income with retirement benefits without really retiring at all."

It's called public sector "double dipping," "faux retirement" or "non-retirement retirement." 

3. Boston Globe -- "Health insurance plans to cover city and town employees in Massachusetts cost 37 percent more than similar plans for workers at private companies, mostly because municipal employees pay minimal copayments or deductibles when they get care, according to a new statewide survey.

The report, which focused on 14 municipalities, found that city and town workers typically pay only $11 to see their primary care physician, half the amount typically paid by workers in the state, federal, and private sectors."  (HT: Steve Bartin)

$11 for an office visits, that's "almost free," so it's no wonder medical costs are so high for city workers, they probably go to the doctor every time they have a mild cold. 

Employment Trends Index Increases for 6th Month

The Conference Board Employment Trends Index (ETI) increased in March for the sixth month in a row. The March index rose to 100.9, up from 100.3 in February.  Compared to March last year, the ETI has increased by 8%.

Says Gad Levanon, Associate Director, Macroeconomic Research at The Conference Board: “The Employment Trends Index started signaling acceleration in employment growth late last year, which we are now experiencing. In the last six months, employment excluding construction and state and local government has been growing faster than almost any other 6-month period in the past decade. We do not expect a turnaround in those sectors, which are still lagging, nor do we forecast acceleration in overall economic growth in the next several quarters. As a result, employment growth is likely to continue growing at its current rate and not improve further for the rest of 2011.”

Cartel Nation: Barriers to Entry Stunt Job Growth

"Consider this fact: In the 1950s, only 1 in 20 American workers needed the government's permission to work; today, that figure is nearly 1 in 3. So much for the Land of Opportunity."

~Chip Mellor, President of the Institute for Justice in Forbes.com

HT: Instapundit via Newsalert

MIT's BPP Monthly Inflation Rate Has Been Falling

I'm not sure what's going on here, or if this means anything, but the monthly inflation measure from the MIT Billion Prices Project has been falling steadily since mid-February, see chart above.  From the recent peak of 0.82% on February 18, the monthly BPP inflation rate has fallen almost in half, to 0.48% as of April 3, 2011. 

Jobs, Jobs, Jobs, Jobs

1. Walmart plans to create 10,000 jobs in Chicago by 2015.

2. McDonald's plans to hire 50,000 people this year (thanks to Steve Bartin).

Random Monday Links

1. Gloom and doom from Robert Reich: "The Truth About the Economy that Nobody In Washington Or On Wall Street Will Admit: We’re Heading Back Toward a Double Dip."

2. Senators Bacus and Kerry argue in the WSJ that Congress should pass the U.S.-Colombia Free Trade Agreement (FTA). Colombian products have nearly complete access to U.S. markets, while U.S. farmers face an average tariff of 30% in Colombia, and manufacturers face a 14% rate. The Colombia FTA will eliminate tariffs for U.S. exports.  Seems like a no-brainer.

3. The Mackinac Center reports that Michigan’s recent economic revival of late can be traced in part to two little-known sources – China and Saudi Arabia. Michigan’s international exports increased 36.3% from 2009 to 2010, the third-largest increase in the nation. 

4. Daniel Yergen writes in the WSJ on the promise of shale gas: "Estimates of the entire natural-gas resource base, taking shale gas into account, are now as high as 2,500 trillion cubic feet, with a further 500 trillion cubic feet in Canada. That amounts to a more than 100-year supply of natural gas."  

5. Oregon cops hope classical music deters loiterers, vagrants, vandals and ne'er-do-wells who loiter near a busy transit stop.

6. Cuban blogger Yoani Sanchez meets Jimmy Carter in Havana. 

7. Market-driven concierge medicine is expanding significantly, but its spread could worsen the shortage of primary care doctors when Obamacare brings in more than 30 million newly insured patients.  (Thanks to Steve Bartin.)

Another Name for "Trade Deficit" is "Capital Account Surplus," Balance of Payments Always = 0

Here's another look at the balance of payments data back to 1980 (BEA data here), demonstrating graphically Don Boudreaux's statement that "another name for “U.S. trade deficit” is the “U.S. capital-account surplus” – that is, inflows of investment funds into America that supply (directly or indirectly) financing for more capital creation in America."

As a direct consequence of our current account deficits, the U.S. economy has been the beneficiary of more than $8 trillion worth of capital inflows from foreigners since 1980.  Because the Balance of Payment accounts are based on double-entry bookkeeping, the annual current account and capital account have to net to zero, so that any current account (trade) deficit (surplus) is offset one-to-one by a capital account surplus (deficit) and the balance of payments therefore always nets out to (equals) zero. And that's why it's called the "balance" of payments, because once we account for trade flows and capital flows, everything balances, and there are no deficits or surpluses on a net basis.  

For more details see this CD post from last October.     

A Fraudulent "Ph.D" in California With Politically Correct Results Keeps His Job, While A Real UCLA Ph.D. Scientist Gets Fired For Dissenting

UCLA Professor Enstrom goes up against California's "environmental regulation machine" and gets fired. 

The California Air Resources Board (CARB) claims that diesel particulates, a type of pollution emitted from buses and trucks, contributes to 2,000 premature deaths in California each year.

Hien T. Tran was the lead scientist who wrote the report upon which the heavy duty truck and bus regulations are based. He bought a $1,000 mail order Ph.D. from Thornhill "University" located at 255 Madison, New York.  Using his fake Ph.D., the unqualified liar applied for and got the position as Manager of the Health and Ecosystem Assessment Section claiming he has a Ph.D. in statistics from UC-Davis.  Some of the board members, the chair of the California Air Resources Board, Mary Nichols knew of the fraud before voting on the controversial regulation. The board members who knew, kept the information from other board members for nearly a year after the vote.  The Governor also had the information and failed to take action.

Reason.tv -- UCLA epidemiologist Dr. James Enstrom says the number of premature deaths should be closer to zero. In 2005 Enstrom authored an extensive study that found no relationship between diesel particulates and premature deaths. He says his study, as well as other evidence that agrees with it, have been ignored by an agency bent on passing ever more stringent regulations regardless of their effect on California's economy.

Enstrom blew the whistle on CARB for, among other things, failing to publicize that the lead author of the study that was used to justify the new regulations falsified his education history (he purchased his PhD from an online diploma mill). But UCLA didn't come to Enstrom's defense. In fact, officials informed him that, after 34 years at the university, he was out of a job.

"The environmental regulation machine in California is powerful," says Adam Kissel of the Foundation for Individual Rights in Education, which is defending Enstrom in the fight to keep his job. "When Dr. Enstrom went up against that machine he was retaliated against." A hearing that begins on April 4 will determine whether Dr. Enstrom keeps his job, and the final decision rests with UCLA Chancellor Gene Block.

Says Kissel, "If Dr. Enstrom loses his job because he exercised his academic freedom, then it's a message to other researchers that you'd better not rock the boat because you might be next."

And what happened to the fraudulent "Doctor" Tran? He got a 60-day suspension and a demotion, but still works as an air pollution specialist for the state of California despite his record of fraudulent misrepresentation of his academic credentials.

Bottom Line: In California, it's more important that your scientific results are politically correct than scientifically accurate, and as long as your results are politically correct, it doesn't matter if you've fraudulently misrepresented your credentials.  

Quotes from Yesterday's Wall Street Journal

1. "What a remarkable human achievement it is to have nearly seven billion people on the planet and more of them overweight than malnourished."  ~Matt Ridley

2. "But maybe there's a darker side to bike-lane advocacy. Political activists of a certain ideological stripe want citizens to have a child-like dependence on government. And it's impossible to feel like a grown-up when you're on a bicycle if you aren't in the Tour de France."  ~P.J. O'Rourke

3. "The great hypocrisy of politicians who oppose school choice is that most claim allegiance to a party and philosophy that so often claims the moral high ground as defenders of the disadvantaged. Yet they callously oppose an opportunity to provide a better educational choice for children because they have a large constituency in unions. If education policy is about providing our children with the best opportunities possible, we ought to be enacting school choice everywhere we can." ~Dick Armey

Why Wearing a Baseball Cap Backwards is Dumb

Thanks to Ron H. 

Update: One more.......

Markets In Everything: Princess Boot Camp

"With Britain's royal wedding around the corner, wannabe princesses gathered Saturday at a posh London hotel for a crash course on how to curtsy, what to say to the queen and how keep pesky crumbs off their lips when eating finger sandwiches. The April 29 wedding of Prince William and Kate Middleton has fueled a bonanza of opportunities for niche entrepreneurs.

Ms. Jerramy Fine, 33, the American founder of Princess Prep, says that "It gives girls the ability to know that they can be in any situation - whether it's with the queen, their parents, their teacher, a friend – and know that they're behaving the right way. And I think that's important, royalty or no royalty." 

Saturday's one-day course will be followed by a series of weeklong summer camps in London for 8- to 11-year-old girls. Costing more than $4,000, the camps teach girls about modern and historic princesses, royal history, phone etiquette, how to take compliments and how to curtsy. The girls also volunteer at charities - all while being waited on by a butler called 'Jeeves.' Fines says she expects to draw more Americans for the longer summer camps, which are in their first year."

Source.

Don Boudreaux: Don't Fear the Trade Deficit

"To lament an American trade deficit, is to lament the fact that foreigners are investing in America. And that seems very odd."

Snarky Fashion Rant: Guys Wearing Shorts in Winter

Is it just my imagination or has the following "somewhat retarded" fashion trend been gaining popularity in recent years: Guys are now wearing shorts all year-round, even in the middle of winter, and sometimes even when it's snowing and really cold (see example above)?  This last winter especially, I observed many dozens of guys wearing shorts outside in Minnesota, Michigan and Washington, D.C. even when the temperatures have been in the 20s, 30s or 40s.

Maybe this is something like the retarded fashion practice of wearing a baseball cap backwards, where the thinking must be something like this: "It doesn't make any logical or rational sense to wear a baseball cap backwards (or wear shorts in the middle of winter), and in fact it's somewhat retarded.  But maybe it's so goofy and retarded, that if enough people start doing it, it will somehow be perceived as being cool and fashionable, instead of being nonsensical and stupid."   

Help me out here, has anybody else noticed this?