EclectEcon

Yes, I take about ten different placebos each morning... a multiple vitamin, vitamin C, Vitamin D, ... etc.

Over-the-Counter Placebo
03 JUN 2008 – A new drug is arriving in the US that promises safe relief from everything from a wide range of childhood (and adult) conditions. It is called Obecalp – placebo backwards. Obecalp fills a previously empty market niche: you cannot normally buy placebo medication at the pharmacy, but many parents wish to help their children for imagined ailments without giving them real drugs as placebo. The pills look and taste like actual medicine but just contain dextrose. Since there is no active ingredient and they do not treat any particular condition it can be marketed as a dietary supplement.

Experts are somewhat divided over marketing placebo to minors. One issue is the deception involved, which has led the the AMA to come down negatively on placebo. But given that parents often believe (based on quite a lot of evidence) that placebo does work, that parents regularly lie to their children and that the alternative may be them instead giving ibuprofen or antibiotics rather than something guaranteed innocuous, the deception issue may be outweighed by concerns of overprescription. The real problem may be that parents are bad at acting as if it was a real medication. Yet studies have found that even when patients know they are getting placebo they get better. [emphasis added]

Another reason to avoid placebo pills is that they condition children to see pills as a relief, perhaps making them more vulnerable to future overmedication or quackery. Yet giving other kinds of placebos like herbal teas may have the same effect. What most crying kids really need is a "kiss it and make it better" concern from their parents. Yet today's kids may actually consider being given a pill a similar symbol of affection. Ms. Buettner, the creator of Obecalp, claims that "as a parent you'll know when Obecalp is necessary." Leaving the non-medical interventions in the hands of parents seems to be a better choice than asking the medical professions to deal with them.

The Sunday Telegraph has learnt that the Wintertons have decided to move out after being barred from claiming any more in Additional Cost Allowance (ACA) for living there. Instead, they will move into a rented flat in Westminster which will cost the taxpayer thousands of pounds a year in ACA.

Lady Winterton, the MP for Congleton, Cheshire, has written to John
Lyon, the Parliamentary Standards Commissioner, informing him that the
family trust, which owns their previous home on behalf of their
children, would now rent it out to a new tenant "at the current market
rate, as now".

Addendum: The criteria for who should qualify for the ACA do, indeed, seem to open the door for some questionable activities (see this); but given the criteria, the buy-rent decision and the wealth of the MPs should not cloud the issue. Opportunity costs are still important.

Regular EclectEcon reader, Kevin, sent me this link about the changing wage structure in Cuba.

Cuba is to abolish its system of equal pay for all and allow workers and managers to earn performance bonuses, a senior official has announced. [emphasis in the original as a sub-headline]

Vice-Minister for Labour Carlos Mateu said the current system - in
place since the communist revolution in 1959 - was no longer
"convenient".

He said wage differentiation should improve production and services. ...

The minister pointed out that the current wage system sapped
employees' incentives to excel since everyone earned the same
regardless of performance.

"It's harmful to give a worker less than he deserves, it's also
harmful to give him what he doesn't deserve," the newspaper article
said.

The history of mankind is the history of the struggle between the Active Man and the Passive, between the individual and the collective. The countries which have produced the happiest men, the highest standards of living and the greatest cultural advances have been the countries where the power of the collective — of the government, of the state — was limited and the individual was given freedom of independent action. As examples: The rise of Rome, with its conception of law based on a citizen's rights, over the collectivist barbarism of its time. The rise of England, with a system of government based on the Magna Carta, over collectivist, totalitarian Spain. The rise of the United States to a degree of achievement unequaled in history — by grace of the individual freedom and independence which our Constitution gave each citizen against the collective.

While men are still pondering upon the causes of the rise and fall of civilizations, every page of history cries to us that there is but one source of progress: Individual Man in independent action. Collectivism is the ancient principle of savagery. A savage's whole existence is ruled by the leaders of his tribe. Civilization is the process of setting man free from men.

Ironman, at Political Calculations, presents a graph showing,

In simpler words, we confirm that individual Americans are not
consuming an ever-increasing amount of oil. We can therefore eliminate
increased U.S. consumption of petroleum-based products as a significant
contributor to the recent spike in the world price of oil.... As we see in the chart ..., the amount of
finished petroleum products consumed by U.S. residents started at 2.572
gallons per day in February 2007 and peaked at 2.661 gallons per day in
August 2007 before plunging to 2.443 gallons per day in March 2008.

In March of this year, Ed Leamer predicted that the US would narrowly avoid a recession [link via Newmark's Door, still my first read each day]. This forecast clearly reflects updated information, given his discussion over two years earlier, in which he expressed dismay about the US housing bubble and forecast a recession.

But here are two very different forecasts (among the many) about whether the U.S. will have a recession during the next year or so.

• Ironman at Political Calculations posted a graph showing (according to his model) that the threat of a recession has passed.
  


• At the same time, Steven Pearlstein writes,

So much for that second-half rebound.

Truth be told, that was always more of a wish than a serious forecast, happy talk from the Fed and Wall Street desperate to get things back to normal.

It ain't gonna happen.

Not this summer. Not this fall. Not even next winter.

This thing's going down, fast and hard. Corporate bankruptcies, bond defaults, bank failures, hedge fund meltdowns and 6 percent unemployment. We're caught in one of those vicious, downward spirals that, once it gets going, is very hard to pull out of.

Others, especially those at RGE Monitor, tend to share Pearlstein's view. I might, too, but they have been predicting this recession for quite some time. If they are right, how long will we have to wait for it???

Meanwhile, Ironman's model seems to have predicted reasonably well....

1. Global Warming is occurring,
2. Global warming is the direct of human behaviour, and
3. it is most efficient for us to do something about it, likely via carbon taxes.

Environmental extremists routinely assert a “scientific consensus” that global warming is occurring, and that human activity somehow causes it. This week, however, over 31,000 scientists spoke up and reduced that myth to a smoldering rubble.

The environmentalists’ alleged “scientific consensus” is much like the curtain in The Wizard of Oz, behind which the supposedly infallible wizard dictated to his minions. Beyond that curtain, however, the wizard was nothing more than an ordinary little man perpetrating a fraud upon those who worshipped his doctrine. And once Toto removed that curtain, the fraud was exposed for all to see.

Similarly, environmentalists’ mythical “scientific consensus” has served as a shroud behind which they have sought to maintain an air of infallibility. By falsely claiming a closed consensus and excoriating anyone who speaks out against their flawed orthodoxy, environmental extremists seek to prevent any objective, scientific debate that might inhibit their political agenda.

That shroud, however, was further torn this week by a 31,000-strong petition organized by the Oregon Institute of Science and Medicine (OISM). According to the OISM’s board of scientists, “a review of the research literature concerning the environmental consequences of increased levels of carbon dioxide leads to the conclusion that increases during the 20th Century have produced no deleterious effects upon global weather, climate, or temperature.”

To the contrary, the OISM notes that increases in atmospheric carbon dioxide have actually increased plant growth rates, among other positive effects. On this basis, the OISM concludes that “predictions of harmful climatic effects due to future increases in minor greenhouse gases like carbon dioxide are in error and do not conform to current experimental knowledge.”

• Even if the EU, Canada, and the US impose carbon taxes, these taxes would have a minimal impact on carbon emissions, given the rates of economic growth in the rest of the world, and
• it might be more efficient to build levees and dikes, if necessary, than to try to curtail carbon consumption.
  
  Just call me a major skeptic.
  
  Addendum: For more, see this at SCSU Scholars.
  
  And check out the Global Warming DoomsDay Called Off video from, surprisingly, the CBC.

  Addendum #2: For more, see this about the decline in sunspot activity and possible global cooling. [h/t Newmark's Door].

The most ironic thing about the bill is its provisions for both massive subsidies to American farmers and, a few pages later, its provisions for food aid to third world countries. There’s a brilliant, productive solution to global poverty if I’ve ever heard one: make it impossible for farmers in the third world to compete on a global market, then inefficiently deliver more expensive American food to save the day. With this sort of policy, all America (and the EU, which has strikingly similar policies) does is continue a cycle of dependency while subsidizing unprofitable enterprises within her own borders.

The sponsors of the bill, among other things, express concern about the cost of rising food prices for the poor. If the goal is lower food expenses for poor workers, then let’s stop taxing workers in cities to pay for subsidies to farmers and start importing food from the places where it can best and most economically be grown.

...the SA rate fell, from a peak of 3.1 million individuals
in the early 1990s to 1.7 million in 2005.

More likely than not, the U.S. will experience a recession. The housing recession and credit crisis are ongoing and their consequences are likely to be felt for quite some time – both in the U.S. and world wide. The U.S. housing sector does not look to be approaching a bottom quite yet. On the supply side, housing starts are down 57% from their peak, but on the demand side sales of new homes are down a whopping 62%. This certainly does not bode well for inventory absorption and keeps putting downward pressure on home prices – the S&P Case-Shiller indices that came out yesterday speak for themselves. And together with home prices, the wealth of the U.S. consumer – the engine of a U.S. economy that relies on consumption (72% pf GDP) like no other economy in the world – is estimated to have fallen by almost $2 trillion in Q1 2008 and is bound to fall further. If tax refunds and rebates are trying to hold up the mood of the U.S. consumer – whose confidence is dropping – energy and food prices are pushing the other way. And employment figures are contributing further to the dismal of the U.S. consumer. The big shock in the latest employment report was a spike in the unemployment rate to 5.5% from 5.0%, one of the biggest monthly rises on record, and the next employment report could mark the seventh consecutive monthly decline for payrolls and the sixth for overall jobs.

Canada’s GDP actually contracted by 0.3% y/y in Q1 on plunging inventory and residential investment, disappointing those that hoped it would decouple from its Southern neighbor which absorbs 75% of its exports. U.S. weakness, elevated credit costs, and a strong Canadian dollar are offsetting strong commodity exports and buoyant domestic demand. Yet, some economists suggest that real GDP strips out the very income gains that have increased Canadians wealth from its sustained terms of trade rise. With the Canadian dollar’s disinflationary power fading, the Bank of Canada may have ended its aggressive easing and there is little room for more fiscal stimulus. Lackluster growth looks likely for the rest of the year. See “Canada Recoupling With a Vengeance?” and Rachel Ziemba’s “Why Is Canada Growing Slower Than the U.S.?”

"What can we do," the Syrian Finance minister asked, "to increase Chinese investment?" "Well," the Chinese minister replied, "before we invest in Syria you most open your markets, cut your subsidies, and reduce regulation..."

As the [US] presidential campaign drones on, Barack Obama and the Democrats are fleshing out the promise of "change" with some specific, big-government policy proposals. Many are familiar, perhaps because they already have been tried – in Argentina.

That country has gone from South American breadbasket to world-class basket case. ...

The [Argentine] constitution once held limited government and private property to be among the highest ideals of the land. But in the 1920s these protections, which had made the country a magnet for immigrants and the seventh-largest economy in the world, began to erode.

An early example of this assault on liberty was when Congress imposed a rent freeze to deal with a housing shortage after World War I. This only exacerbated the problem, and in 1922 a politicized Supreme Court widened state powers to allow the regulation of rents. That decision put property-rights protection on a slippery slope. A decade later the Court gave the legislature the power to regulate interest rates.

The interventions didn't end there, and as state control of the economy expanded and the nation grew poorer, the country could not recover its footing. Economic populism and labor militancy took hold; protectionism blossomed and Argentina became a welfare state. Meanwhile, the informal economy swelled under the high cost of legality.

Fiscal crises have been recurring. According to a paper recently released by researchers at the Buenos Aires business school Eseade, external debt as a percentage of GDP has now climbed to 56% compared to 54% in 2001. If you include the unpaid debt to bondholders, the number is 67%. More than a few analysts are worried that should the economy slow, the government may tap Central Bank reserves, sparking a run against the peso or, fearing that, choose default, for the second time in a decade, as its escape hatch.

Will that mean an end to ballooning entitlements, class warfare, hostility toward producers, capital and private property, protectionism and subsidized central-planning? Unlikely.

Americans reading that laundry list may note that it sounds a lot like the mindset of the left wing that will dominate the Democratic Party's convention and choose Barack Obama as its candidate in August. From nationalized health care and government-owned refineries to punishing taxes on the rich, Argentina has been there, done that. There are good reasons to find the resemblance disturbing.

A Los Angeles woman claims she was injured by her Victoria's Secret thong, prompting her to sue the underwear manufacturer.

The plaintiff in the case, Macrida Patterson, 52, attributed the May 2007 injury to a Victoria's Secret "low-rise v-string," according to a court document posted on The Smoking Gun.

Patterson's lawyer told The Smoking Gun that a "design problem" caused a decorative metallic piece on the underwear to fly up and hit Patterson in the eye while she was putting the underwear on.

1. Perhaps this was an efficient accident, i.e., it was an accident that it would cost more to prevent than the expected costs resulting from the accident. Of course to truly assess the efficiency of the accident, one must consider the dot product of (a) the vector of all possible probabilties of accidents and (b) the vector of costs of those accidents, should they materialize.
2. If it was not an efficient accident, Victoria's Secret was negligent. To promote economic efficiency, they should be held liable. And if they are held strictly liable (they must pay compensation, even if they were not negligent), they will tend to prevent only those accidents which are inefficient, but choose to pay compensation for those that are efficient.
3. If it was an efficient accident, who is the least-cost bearer of the risk: customers or the firm? We seem, increasingly, to assign this risk to large firms, not because they are any better insurers than consumers, but because they have more money. The result is that such cases are decided more on distributional than efficiency criteria.

It looked like a routine decision that Steven Levitt had to make. The co-editor of the "Journal of Political Economy" (JPE), who is most renowned for his bestseller "Freakonomics", had to accept or reject a comment written by the Dallas-economist Stan Liebowitz on an article which had been published in the JPE.

Perhaps Levitt should have simply used his far-reaching powers as editor and reject the comment without much ado. He did not do this, He did something instead, which could potentially taint his own good reputation and the reputation of the JPE, and which exemplifies the relatively lax procedural standards at top-flight economics journals.

On closer look, everything about the case was unusual. The comment was phrased very strongly. It was a thinly veiled assertion of data-manipulation. This is quite remarkable, given that the JPE, edited at the University of Chicago where Professor Levitt teaches, is one of the top five economics journals globally.

The subject of the criticised article was a hot topic. The authors, Felix Oberholzer-Gee (Harvard) and Koleman Strumpf (University of Kansas), claimed to prove that file-sharing websites on the internet have not been responsible for the sharp decline in music sales since the turn of the millennium. Music labels might disagree. They have been busy suing file-sharing sites and their users for copyright infringement.

Professor Liebowitz disagreed strongly He had told Stephen much in a letter even before the article was published in the JPE. Liebowitz had pointed to what he considered numerous mistakes and inconsistencies in the paper and complained that the authors would not share their data for replication purposes. Levitt had forwarded the letter to the authors of the study, but had published the study more or less as submitted.

Ignoring Liebowitz was not possible any more, however, after he submitted his counter-study officially as a comment to the JPE in September 2007. Levitt started by asking one of the authors, Koleman Strumpf, for his opinion. Strumpf handed in his reply in November. He defends the study and retaliates by pointing to alleged mistakes in Liebowitz' comment.

In addition, Levitt asked for a report from an impartial referee. The referee recommends publishing the comment in order to "save subsequent researchers from building on a flawed research foundation." While he advises Liebowitz to rephrase his comment such that it would not contain any overt assertions of data manipulation he sides with him on almost all the critical points and comes to a damming conclusion regarding the file-sharing article: "I would suggest that the authors? conclusions are not warranted given the analysis and evidence that they provide."

However, Levitt is not inclined to publish the comment. He anonymizes the reply by Strumpf and uses it as a second referee-report on which he bases his rejection of Liebowitz' comment. "There is no doubt you raise some reasonable points. Nonetheless, I think the negative referee (negative toward the comment, N.H.) is correct in most of what he says", Levitt writes to Liebowitz. The only point he takes up from the impartial referee is the advice to moderate the tone, should Liebowitz wish to submit the comment to some other, lesser journal.

[H]ere’s a question rarely asked, at least in Washington: Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway?...

In fact, given the way U.S. policy favors owning over renting, you can make a good case that America already has too many homeowners....

All I’m suggesting is that we drop the obsession with ownership, and try to level the playing field that, at the moment, is hugely tilted against renting.

And while we’re at it, let’s try to open our minds to the possibility that those who choose to rent rather than buy can still share in the American dream — and still have a stake in the nation’s future.

Dani Yatom, a member of the Israeli parliament, the Knesset, was invited to attend a NATO conference in Brussels last year. While reviewing the agenda, Yatom, a retired major general, was surprised to see that the meeting was titled “The Iranian Challenge” and not “The Iranian Threat.”

When a speaker with a French accent mentioned that a US military strike against Iranian nuclear facilities would be the most dangerous scenario of all, Yatom said, politely but firmly: “Sir, you are wrong. The worst scenario would be if Iran acquired an atom bomb.”

First, even before Iran may try to retaliate to this action by trying to block the flow of oil from the Gulf, oil prices would spike above $200 dollar a barrel.

Second, Iran could react militarily to such Israeli action (that would be taken with the tacit support and the military logistic support of the US) by unleashing its supporters in Iraq against the US military forces there. That would trigger a military reaction by the US that would start a sustained air-led bombing campaign against Iran’s military capabilities (air force, anti-aircraft defenses, radar and other military installations, etc.)

Third, Iran would unleash its supporters in Lebanon and Gaza (Hezbollah and Hamas) in a military confrontation with Israel. A broader war will follow in the Middle East.

Fourth, Iran would use both the threat of blocking the flow of oil out of the Gulf and an actual sharp reduction of its exports of oil (an embargo) to spike the price of oil. Oil prices would rapidly rise above $200 per barrel and the US and global economy would spin into a severe stagflationary recession (like those triggered by the sharp spikes in the prices of oil following the staflationary shocks of the Yom Kippur war in 1973, the Iranian revolution in 1979 and the Iraqi invasion of Kuwait in 1990).

Fifth, while Sunni regimes may – in private – sigh relief following the destruction of the nuclear capabilities of the Shiite Iranian regime – the Sunni Arab street (the masses of poor Sunnis) from Algeria to Egypt and all the way to Pakistan, India and Indonesia may become even more anti-Western and anti-American leading to the risk over time of rise of anti-Western fundamentalist regimes in many Arab countries.

Sixth, the Bush administration whose hands have been tied by the new National Intelligence Estimate (that argued that Iran had suspended its program of development of nuclear weapons) would thus be able to strike Iran – via Israel - before the end of its term. Such October surprise by Israel would also certainly lead to the election of McCain and defeat of Obama as a national security crisis of such an extent would doom the chances of Democrats to win the White House. So both Israel – that prefers McCain to Obama and is hurried to act as it is wary of the constraints that an Obama presidency may put on its ability to act against Iran – and the Bush administration would guarantee the election of McCain.

Sorry, folks, but the SUV is dead ...

We can let oil companies drill here, where they'll be expected to keep it clean and be proactive to prevent problems, or we can import more oil from Nigeria, which «has one of the worst environmental records in the world. In recent years, the country has seen the execution of a Nobel Peace Prize nominee, widespread social and environmental problems stemming from oil operations in the Niger River delta, and the world's highest deforestation rate.

We can have a few more oil rigs breaking the clean blue line of the Hollywood horizon or we can help finance the Russian exploration of the Arctic, leaving the Arctic Ocean to the devices of the country that «succeeded in wiping from the map almost an entire sea - the Aral, now largely a toxic desert - and turning the world's deepest freshwater lake, Baikal, into a borscht of cadmium and mercury deposits.» How do you think those Alaskan lichens will fare if the Russians repeat their recent history?

And, by the way, aren't our neighbors to the North a socialist paradise that can do no wrong? Yet, they also seem to be expanding oil production as fast as humanly possible - and selling it to us. If oil production is so bad for the environment, why are the sainted Canadians doing it and why isn't Barack Obama demanding they stop?

• When prices rise, the quantity demanded falls. Demand curves are downward-sloping. This is the "law of demand".


• People respond to incentives.

• They buy smaller cars.
• If they have two cars, they begin to use the smaller car more often.
• They bicycle more.
• They walk more.
• They make greater use of public transportation.
• They take fewer trips.
• They make shorter trips.
• They move closer to work or closer to public transportation connections.

Americans drove 30 billion fewer miles from November through April than during the same period in 2006-07, the biggest such drop since the Iranian revolution led to gasoline supply shortages in 1979-80.

The numbers released Wednesday may reflect more than a temporary attitude change in consumers toward high gas prices, Transportation Secretary Mary Peters said. Previously, she said, "people might change their pattern for a short period of time, but it almost always bounced back very quickly. We're not seeing that now."

... "It's not a blip," said Marilyn Brown, professor of energy policy at Georgia Tech, citing data showing surging transit ridership, dropping sales of sport-utility vehicles and sharply increased demand for gas-efficient vehicles. "I think the difference between now and 1979, when prices were comparable when you adjust for inflation, is there's a sense of sustained pain. There's a sense that the era of cheap energy is a thing of the past."

It seems the down economy is hurting every business, even the oldest profession. The Moonlight BunnyRanch in Carson City, a legal brothel featured on HBO's "Cathouse," is offering the first 100 customers who show up with their stimulus rebate checks twice the "services" for the same price.

They're calling it ... "more bang for your buck." ...

The ranch is also offering to reimburse customers who paid American Airlines $15 to check a bag, patrons "who otherwise might feel screwed at 30,000 feet."

As for the stimulus offer, a guy who brings in an entire $1,200 check gets a special deal: three women and a bottle of bubbly. Anyone notice that a guy with a $1,200 check is married to qualify for that amount?

But wait, there's more! The legal bordello plans to have all 100 customers, plus some of the Bunnies, sign a thank you card and send it to President ...Bush. Oy.

Fallen media baron Conrad Black had harsh words for the American judges hearing the appeal of his fraud conviction, saying they don't understand the case and sometimes acted like part of the prosecution.

Black made the comments in an e-mail sent to the Globe and Mail from the Coleman minimum-security prison where he has been serving his 6½-year sentence since March.

"As you will have noticed, [Judge Richard] Posner and [Judge Diane] Skyes had little understanding of the case and were, in a way that I am unfortunately familiar with, essentially part of the prosecution until the realization began to dawn that they didn't really understand the case," the Globe and Mail quotes Black as writing.

In the most sweeping global study yet of cooperation, a team of experimental economists tested university students in 15 countries to see how people contribute to joint ventures and what happens to them when they don't. The European research team discovered startling differences in how groups around the world react when punishment is handed out for antisocial behavior.

In some countries, researchers found, almost no good turn went unpunished. "What kept popping up is this element of retaliation," said economist Benedikt Herrmann at the U.K.'s University of Nottingham, who reported the experiment this past March in Science. "It took us by surprise."

Among students in the U.S., Switzerland, China and the U.K., those identified as freeloaders most often took their punishment as a spur to contribute more generously. But in Oman, Saudi Arabia, Turkey, Greece and Russia, the freeloaders more often struck back, retaliating against those who punished them, even against those who had given most to everyone's benefit. It was akin to rapping the knuckles of the helping hand.

Among those punished, differences emerged immediately. Students in Seoul, Istanbul, Minsk in Belarus, Samara in Russia, Riyadh in Saudi Arabia, Athens, and Muscat in Oman were most likely to take revenge by deducting points from other players — and to give up a token themselves to do it.

"They didn't believe they did anything wrong [by freeloading]," said economist Herbert Gintis at New Mexico's Santa Fe Institute. And because the spiteful freeloaders had no way of knowing who had punished them, they often took out their ire on those who helped others most, suspecting they must be to blame.

Such a readiness to retaliate, researchers said, reflected relatively lower levels of trust, civic cooperation and the rule of law as measured by social scientists in the World Values Survey, which periodically assesses basic values and beliefs in more than 80 societies. In countries with democratic market economies, peer pressure goaded people to cooperate. Among authoritarian societies or those dominated more by ties of kinship, freeloaders instead lashed out at those who censured them, the researchers found. [emphasis added]

By the time those new fields would be producing, global oil production will probably be about 100 million barrels per day. Optimistically, the fields would yield about 3 million more barrels a day - for a long-run cut in the price of crude of about 3 percent.

A secret NHL report detailing the ticket revenues of its 30 teams reveals [that]... The six Canadian teams account for 31 per cent of the $1.1 billion (U.S.) in league ticket revenue, and have gone through league-leading double-digit increases over last season, according to the internal NHL report.

Overall, the league has seen its ticket revenue rise almost 10 per cent, but 11 of the 24 U.S.-based clubs were either revenue-flat or lost ticket income.

"This really makes the case for another team in Canada, whether it's Hamilton, Winnipeg or Quebec City," says former Vancouver Canucks owner Arthur Griffiths.

"I think Hamilton has the best facility, but obviously faces challenges in what it would have to pay Toronto and Buffalo. Winnipeg is a good possibility, but the market there has shown a resistance to paying top dollar for tickets, and you wouldn't want to add a team that was going to be in the middle-of-the-pack for revenue, while Quebec City needs a huge infusion of investment for a new facility."...

NHLPA executive director Paul Kelly has reviewed the document and said it highlights the importance of placing more franchises in Canada, instead of potential expansion cities such as Las Vegas, Houston or Kansas City.

"I think it would be a huge error not to relocate one of the existing franchises to Hamilton or Winnipeg," Kelly said.

1. The largest revenue generator in the league is the Toronto Maple Leafs [despite their relatively poor performances of late] with Montreal a close second. Still from the same source,
   

   Atop the list of income winners is the Maple Leafs, who nudged out the Montreal Canadiens to lead the league this past season with $1.9 million worth of ticket revenue per game. Based on 41 home games, that's $77.9 million a year – not counting revenue from pre-season games. A year ago, the Leafs generated $1.5 million a game, according the report obtained by the Star from several league sources.



2. And keep in mind that these figures are all in terms of US dollars. The appreciation of the Canuck Buck during the past few years has played a major role in the rise in Canadian ticket-sale revenues. Even with no increase in Canadian dollar revenues, the Canadian teams would, cet. par., be reporting 20 - 30% more revenues in US dollars.
   

   The increase in the value of the Canadian dollar may be responsible for as much as half of the league's revenue gains since the NHL went through the lockout of 2004-05, say several sources familiar with NHL finances.
   
   "If you take out the Canadian teams, which have done so well since the lockout largely because of the Canadian dollar, the league's revenues are actually only growing at a 2 per cent clip per year," says an executive with a U.S.-based NHL team, who requested anonymity.

   Given these points, and given the potentially weak markets in possible 7th hockey cities in Canada, it is difficult to see how the fact that Canadian teams earn 31% of the NHL ticket revenue would support having another NHL franchise in Canada.
   
   I, personally, would be thrilled to see a franchise in Hamilton or in Kitchener-Waterloo. And it might well be the case that even considering the losses that would inevitably be suffered by the Toronto Maple Leafs (and quite likely the Buffalo Sabres) if a team were to locate in one of these cities, a franchise in Hamilton or in K-W would do better than the franchises currently located in, say, Phoenix or Atlanta or Columbus or....
   But if so, that has nothing to do with comparisons of average revenue per game in Canada vs. the US.

1. What are you complaining about? You could have bought into those profits if you had bought stock in those companies last year or three years ago or...; why didn't you?
2. The greed of the complainants is appalling in these situations. What they are really saying is,
   • You have the oil and the profits, and I want some of what you have. I might make an appeal that says, "The oil belongs to all of us" when in fact I chose not to become an owner of some of the oil or a claimant to some of the profits.
   • Or I might make a more general statement that it is not right for the rich to get richer at our expense.
   This strikes me as being at least as greedy as charging what the market will bear.

What principle of economics suggests that markets are working well when the price of one asset (say, housing) rises, but not when the price of another asset (say, petroleum) rises? What principle of ethics dictates that owners of one asset (say, housing) are entitled to capital gains and to enjoy these gains however large they might be, but that owners of another asset (say, petroleum) are not so entitled to their gains?

Finally, what moral precept advises us, in the case of petroleum products, to sympathize with buyers and demonize sellers, and in the case of housing, to ignore buyers and sympathize with sellers?

My father had a lust for life and a thirst for conversation and debate about economics, politics, and finances. A couple of years ago when I asked him if he was afraid of dying, he told me, "I'm not afraid of dying, I just want to live." It really was his love of his work that kept him going, even in the days just before cancer took his life.

# Plojhar (via Bloomberg): More rate increases will be needed, up to 11% this year, in face of overheating, high inflation, and a potential renewed currency weakness
# March inflation came in higher-than-expected at 8.63% yoy
# Danske: Inflation likely to remain well above NBR official inflation forecast in both 2008 and 2009. Expects key policy rate to be hiked to 11.0% over next 12 months
# NBR Governor Isarescu: Inflation rate will remain 'relatively high' in coming months, creating a risk of a price/wage spiral

For what it’s forth, inflation in Romania went from dizzying 14% in January 2004 to 4% throughout the first half of 2007 and then, after July 2007, it spiked into 8-9% territory.

The dots are the end of year inflation targets, the dashed lines are the +/- 1% target band and the red line is actual inflation.

Persistent inflation is always and everywhere a monetary phenomenon.

``The small cars are very hard to get right now. The cars that were $5,000 are now $7,000,'' [said used-car dealer, Mike Haile].

In the past year, the average used small car price has gone up 2 percent, from $9,278 to $9,470, according to wholesale auto auction data collected by the National Automobile Dealers Association [NADA]. There's evidence that the prices are accelerating, according to recent data from J.D. Power and Associates.

The increases are in contrast to used full-size sport utility vehicles, whose prices have dropped $1,600 to $2,000 in the past year, said Paul Taylor, the NADA's chief economist. The average sale price of all used vehicles in the U.S. dropped 2.5 percent in the past year, the NADA reported.

Up until the 1930's, the two countries followed very similar paths: foreign investment financing the development of resource-based economies. But then the 1930's happened, and Canada and Argentina parted ways.

This is the best graphical demonstration that starting points are not destiny...

Here's how it works. All new hires spend their first four weeks in a training program that “immerses them in the company's strategy, culture, and obsession with customers.” New hires receive their full salary during this training period. Then, after the four weeks are up, Zappos offers each of them $1,000 on top of the money they've already earned to quit. Now.

“Why? Because if you're willing to take the company up on the offer, you obviously don't have the sense of commitment they are looking for,” Taylor writes. “It's hard to describe the level of energy in the Zappos culture—which means, by definition, it's not for everybody. Zappos wants to learn if there's a bad fit between what makes the organization tick and what makes individual employees tick—and it's willing to pay to learn sooner rather than later.”

That's the problem, John. Only the people we want to keep would be the ones who leave.

• They help cover the costs when people treat a retailer as a lending "library" where they can borrow camcorders for weddings, GPS receivers for trips, etc.
• They tend to be enforced primarily for items that customers are more likely to want for only short-term use.
• If not imposed, the frivolous returns from inconstant customers raise the store's costs, which must be covered somehow if the place is to stay in business.
• If you know what you want and are unlikely to return it, you might want to shop at places which charge a restocking fee, since their costs will tend to be lower.

Why the differences? It’s largely about what’s for sale. Central Canada has the automobile and auto parts industries, machinery and equipment, and a range of primary and consumer products. Demand for these products has faltered across the board, with key industries suffering double-digit declines. Forestry, critical to British Columbia’s exports, is suffering as the US housing market implodes. In contrast, searing global demand for energy, agri-food products and fertilizer are a boon for the oil-and-gas and bread-basket provinces. ...

Will this turning of the provincial growth tables persist? The boom in the Prairies will not fade fast. Energy prices are forecast to fall to more reasonable levels later this year, but strong investment will, on balance, ensure higher export volumes. Prices for wheat and other coarse grains will continue to rise as global food supplies remain stretched, ensuring strong export activity. Fertilizer shipments, another key growth source, will continue to expand as food shortages bring more marginal arable land into production worldwide.

This spring, for the second straight year, home run totals... have shrunk dramatically. Last season's 8 percent drop in home runs was welcomed, but with caution. ... [H]ome runs have fallen this spring by another 10.4 percent.

Suddenly, a sport that produced 5,386 home runs in 2006 is on pace for 4,442 this year — a 17.5 percent drop, or a loss of almost 1,000 home runs in just two seasons. ...

This season, major league teams have scored 8.98 runs per game. Since 1871, there have been 1,750,230 runs in the majors, an average of 9.11 per game. Warm weather, when fly balls carry farther, might bring the game almost exactly back to its long-term scoring trend.

1. In general, ceteris paribus, fans prefer more home runs to fewer. Again, quoting Boswell,

   "From a personal and aesthetic point of view, I like this kind of baseball better," MacPhail said. "I like a well-played game more than a slugfest. But plenty of fans like runs." [Emphasis added]. One test of this assumption will be to see what happens overall to MLB attendance.

2. Conditional on the first assumption, (and again, cet. par.) the marginal revenue of runs is positive, the marginal revenue of home runs is positive, and the marginal revenue product of slugging is positive; i.e. for a given winning percentage, etc., if fans expect more runs and more home runs, they'll shell out more to attend games and buy team merchandise. There is an implication in the Boswell piece that general managers on the whole are relieved to see the home run totals decline since they anticipate not having to pay so much for the big-bopper-type players.
   
3. The health costs of steroid use (assuming there are any) are borne by the player-users themselves; there are no negative externalities from steroid use.

* Core CPI growth rose to 1.5% y/y in April, from 1.3% in March (1.5% in Feb) below the BoC's 2% target but the first rise in 10 months. Total inflation rose to 1.7% y/y from 1.5%. Gasoline prices the main contributor to acceleration of total inflation, followed by mortgage interest cost
* TD: March could have marked the bottom for Canadian inflation in the current cycle as Canadian dollar's downward pressure on retail prices cannot be counted on. Food inflation tripled in April to 1.2% and seems to be catching up to international trends. BoC might ‘ease the easing’ and cut only 25bps points rather than 50bps at its June meeting.
* BMO: domestic bakery and cereal prices up 9.9% y/y, the largest gain since 1981. the dampening impact of the strong C$ is starting to fade but it is still cushioning Canada from global food and fuel inflation.
* CIBC: w/out the GST cut, all-items inflation would be above 2%. In the last three months, core prices have been running at an annualized 2.9% clip, its quickest pace since April 2007. CPI
* Ontario had the slowest price increase.
* Consumer prices were slow to respond to increased purchasing power of loonie, as recently as September BMO noted average 25% higher prices on similar goods between in US and Canada. Consumer pressure (including increase in cross border shopping) convincing retailers to lower prices; moderating prices; trend likely continue in coming months

1. Econtalk with Russ Roberts. When I first started listening to these podcasts, I didn't enjoy them nearly as much as I do now. Roberts inserts quite a bit of himself into them, and there have been times when I wanted to hear more from his guests and less from him. Gabriel Mihilache has mentioned this as well.
   
   But over time, I have come to enjoy these podcasts very much. I no longer think of them as "Roberts interviews X"; rather, I think of them as "Roberts has a discussion with X". Viewed this way, one develops an appreciation for Roberts' insights and his patience, as well as enjoying whatever his guests have to say, too. Most recently, I was thoroughly amused as Roberts implicitly seemed to be trying to get Meltzer to talk about rational expectations in money-macro models, but Meltzer kept going in other directions.
   
2. The Economist. I have long subscribed to The Economist, but have often found that I do not find or make the time to read much of it. Listening to it in the car is a great way to "read" it. Sometimes the readers get annoying with their repetitive vocal inflections, but their diction is amazingly clear (we could all take lessons from them!) and now I cover much more of the magazine than I ever did in the past. Unfortunately, it takes awhile (maybe 15 - 20 minutes each week) to load up my MP3 player with the items from The Economist since I don't like to load the items in separate folders.
   
3. Bloomberg on the Economy These are typically short podcasts -- about 10 or 15 minutes at most. Tom Keane interviews people about markets or about various economic policy issues. They're insightful and interesting. Unfortunately, I have not found an easy way to subscribe to them, so I listen to fewer of them than I might otherwise.

Mass transit systems around the country are seeing standing-room-only crowds on bus lines where seats were once easy to come by. Parking lots at many bus and light rail stations are suddenly overflowing, with commuters in some towns risking a ticket or tow by parking on nearby grassy areas and in vacant lots....

Some cities with long-established public transit systems, like New York and Boston, have seen increases in ridership of 5 percent or more so far this year. But the biggest surges — of 10 to 15 percent or more over last year — are occurring in many metropolitan areas in the South and West where the driving culture is strongest and bus and rail lines are more limited....

The national average for regular unleaded gasoline reached $3.67 a gallon, up from $3.04 a year ago, according to AAA.

It has come to my attention that Canada Customs and Revenue Agency has approached an instructor in a large first year course to provide information about a student's examination schedule so that the student could be served with papers, presumably at the examination. (CCRA was clearly fishing. The student in question is not enrolled in that instructor's class.)

There are NO circumstances under which any information about students should be given out to persons outside the university. If faculty or staff receive inquiries of this type, they should direct the questions to the Office of the Registrar.

Interviewer: Premier, what is the gubmnt doing to help people who have been hurt by the flooding?

Premier then lists all the gubmnt programmes designed to help bail out people who choose to live in areas of flood risk.

Nothing. Nothing at all. People harmed by the flood chose to assume risks by living where they did; they knew when they bought their houses that there was no private insurance available for flood damage, and I see no reason for the taxpayers in general to be forced to provide insurance for people who make such risky decisions.

Having said this, my heart goes out to those who took a gamble, bought property that was affected by the flood, and lost, and I encourage their friends and neighbours to band together to provide community support for helping these people get back on their feet, presumably on higher ground. To that end, I am personally making a donation to local charities, and I hope others will do so, too.

1. My son says his glasses are fine. He is not as happy with the style of the frames as he had hoped he would be, and this is one disadvantage with buying glasses online. The site has considerable detail about sizes, colours, and styles, but it is not the same thing as trying the frames in the showroom of an optician.
2. I ordered one pair of glasses with just my distance vision prescription. I refer to these as my "bedtime glasses" because I wear them in bed so I can see the tv, something wearers of bifocals and trifocals cannot do easily because the bottom portion of their lenses is usually for close-up, not distance vision. These glasses were $8, including some frames with spring-loaded temples, and seem just fine. I had nothing special done to the lenses, so these were the very basic model, and they seem like a fantastic bargain. The new prescription is certainly better than the old one that I had been using for over a decade.
3. My intermediate vision glasses (for when I play French horn in the band) are fine, too. The focal point is about 5” closer to me than I might have liked, but that’s a (very minor) problem with the prescription, not the glasses. For these glasses, I ordered thinner lenses, transition lenses (photo-gray) and anti-reflective coating for when we play outside; I also selected some slightly more expensive ($20, not %8) unusual rimless frames. Because I got more expensive frames and extras with the lenses, the price of this pair was about $55. The price for my first two pairs of glasses at even a discount optician in London, ON, would easily have been around $300 - $400 or more. My son's would have been about $350.
4. I also ordered a pair of full progressive glasses, just like the ones I had ordered from a London optician [see my previous posting about shopping for eyeglasses]. As I said earlier, I am not terribly keen on progressives because they have too narrow a field of vision. I ordinarily would get tri-focals, but Zenni doesn’t do trifocals, so I decided to try their progressives. The actual clear-vision “post” is still too narrow to suit me (I have to move my head to read this small computer screen when wearing those glasses), with some intriguing distortions outside the post. But the field of vision with the Zenni progressives is, if anything, a bit wider than that of the progressives I ordered locally. Progressives, transitions, thin lenses, anti-reflective, neato rimless frames - $97. These will become backup glasses.
   
   My local monopolist optometrist would probably charge about $900 - $1200 or more for the same three pairs of glasses; I paid about $170 for all three. So overall I’m pleased. But please note that I have no idea how good the lense material is, and I realize that not everyone has been happy with their orders from that outfit.

South Carolina-based Companion Global Healthcare added three Singapore hospitals to its network. The deal now allows Americans access to medical and surgical services at ParkwayHealth operated hospitals at pre-negotiated, in-network rates lower than those of U.S. hospitals.

The deal between ParkwayHealth and Companion Global Healthcare is a step in the maturation of the medical travel industry, notes David Williams, consultant and cofounder of MedPharma Partners LLC.

“Conceptually, hospitals halfway around the world will now have the same status to members as those just down the street, so that’s a big step,” he said. “It may be a bit of a wake-up call to the local hospitals in South Carolina, putting them on notice that they are facing a broader set of competitors.”