Carpe Diem

Markets in everything

1. At the website oDesk.com, you can hire a freelancer for help with a variety of services including web development, writing and translation, software development, sales and marketing, administrative support, etc.

2. At the website Care.com, you can hire a babysitter, pet sitter, house sitter, or caregiver for your elderly or infirmed family members.

CD regular Nathaniel King sent the links above with these comments: “My wife and I use oDesk.com for everything from resumes and cover letters to copy for sales and marketing campaigns. Using oDesk is much better than searching Google for help on specific professional writing needs. There are reviews and samples from many professionals on this site. We also use Care.com to find childcare as well so we can have date nights.”

Carpe Diem

Who’d a-thunk it? Taxi cartels don’t like competition from Uber, Lyft, Sidecar, and they’ve launched a smear campaign?

The Taxicab, Limousine & Paratransit Association along with concerned members of the transportation industry, is so concerned about your safety their cartel profits that they’ve launched a new campaign called “Who’s Driving You?” It’s basically a public relations effort  smear campaign to discredit their ride-sharing competitors. Check this out (with some minor editing):

The rise of unregulated taxi services—such as uberX, Lyft and Sidecar—is placing passengers, drivers and pedestrians at risk. These companies are a serious threat to public safety our protected and heavily regulated industry profits.

Why? For starters, “ridesharing” companies who use amateur drivers and other unregulated transportation apps are not adequately insured. Their insurance coverage contains various loopholes which could result in uncompensated pain and suffering. These amateur drivers are not subject to screening via public agency background checks that demand fingerprints and that are run through police and FBI databases. Passengers have been assaulted yet some of these companies continue to insist their background checks are the most stringent in the industry. They aren’t. Equally concerning, these amateur drivers are not required to pass any drug tests before they start picking up passengers.

And don’t forget their so-called “surge pricing.” We call it price gouging. These companies charge multiple times the standard amount during emergencies or “peak” demand. Price gouging has been illegal most everywhere and practically forever. These price-gouging companies want to make obscene profits by charging people more when passengers are in dire need or distress—even during natural disasters.

These companies rail against oversight and regulation. We believe the public’s basic right to safety and corporate accountability will be upheld.

The website provides a link that allows you to fill out an incident report if you’ve “had a bad experience with Uber, Lyft or Sidecar.” If so, they’ll “pass your story on to local media outlets for you.” Of course, nothing is mentioned about filling out an incident report on a traditional taxi driver.

MP: As I’ve noted before, it’s important to remember that Uber, Sidecar and Lyft are already very heavily regulated ride-sharing services, and in some ways they are regulated even more intensely than traditional taxis by a very ruthless group of regulators – the consumers who use their services and can rate each driver after every ride. Consumers also have the driver’s cell phone number, name and picture before every ride. The issue really isn’t regulated versus unregulated ride services; the issue really is who is the primary regulator: a) government bureaucrats and legislators who are often captured by the regulated taxi cartels or b) consumers. And there’s no question that captured regulators almost always put the special interests of the well-organized, concentrated groups of regulated producers like the taxi cartel over the public interest of the dis-organized, dispersed thousands/millions of consumers.

Carpe Diem

Who’d a-thunk it? Market-based medicine saves money?

I’ve featured the Surgery Center of Oklahoma many times on CD, see posts here, here and here, and watch video above of a special report on the surgery center. Unlike most other medical providers, the Surgery Center of Oklahoma actually posts transparent pricing and offers deeply-discounted, payable-in-advance, cash-only medical procedures. The center does accept private insurance, but it does not accept Medicaid or Medicare — government regulations won’t allow them to post transparent prices online. If any competitor offers a lower price, the Surgery Center will match or beat it, so patients can be guaranteed of getting the lowest price possible.

Here’s a recent news report that illustrates just how much money can be saved when a clinic or hospital operates according to free-market principles and is not burderned by the highly bureaucratic, costly system of government-regulated Medicare and Medicaid.

Oklahoma City-based Surgery Center of Oklahoma has saved the Oklahoma County government approximately $573,000 in medical bills in the five months of its agreement with the county to provide surgery for public employees, according to a report from The City Sentinel.

As of July 17, the “ambulatory surgery center” (ASC) has performed 89 surgeries on public employees at a cost of nearly $336,000, just over one-third of the potential total cost of the surgeries through other providers, according to the Oklahoma County Budget Board. “At a conservative level…it looks like we will save about $1.3 million over 12 months,” said Jon Wilkerson, director of human resources, benefits and payroll for the county, in the report.

In addition to providing direct and huge savings for its patients, the Surgery Center of Oklahoma is also imposing market discipline on its competitors (not unlike the discipline Walmart imposes on Target, etc.), as clinic co-founder Dr. Keith Smith explains here:

“Hospitals are having to match our prices because patients are printing their prices and holding that in one hand and holding a ticket to Oklahoma City in the other hand and asking that hospital to step up,” Dr. Smith said. “So we’re actually causing a deflationary effect on pricing all over the United States.”

MP: We would have a lot more market-based, low overhead, consumer driven health care, and a lot more “price wars” for surgery and other medical procedures if the medical industry moved in the direction of the business model of the Surgery Center of Oklahoma. Unfortunately, the Unaffordable Care Act is taking us in exactly the opposite direction: high overhead health care based on traditional third-party payments that are not transparent to patients, with costs that will tend to escalate over time due to the lack of market incentives and competition, along with the high cost of government red-tape, bureaucracy and paperwork.

Carpe Diem

A government that rapes and tortures citizens to find a fistful of drugs is not worthy of our allegiance, obedience or respect

A new video above from Reason.tv (“The Drug War, the Fourth Amendment, and Anal Cavity Searches in New Mexico“) about two cases in New Mexico of the forced medical anal rape of two innocent victims (Timothy Young and David Eckert), both involving unsuccessful forced anal cavity searches for drugs arbitrarily forbidden plants, weeds, and intoxicants.

Here are some insightful comments about David Eckert’s case from Ken White which were featured last November on CD:

What’s terrifying is that a judge who has bought the government’s narrative may decide that the amount of drugs that can be hidden in a man’s rectum justifies detaining him, X-raying him, repeatedly digitally probing him, and despite a total lack of indication he is carrying drugs, sedating him and subjecting him to a colonoscopy.

What’s terrifying is that the Fourth Amendment to the United States Constitution is only as strong as judges allow it to be — and, by extension, only as strong as We the People insist that it must be. We the People are easily frightened into agreeing that the promise of safety outweighs the Fourth Amendment.

I’m not afraid because police officers violated David Eckert’s constitutional rights by raping and torturing him because they thought he might have a trivial amount of drugs. I’m afraid that they might not have violated his rights as defined by the courts, because we have allowed those rights to wither away out of fear and indifference.

The government will continue to act like that until we decide, collectively, that a government that would rape and torture a man to find a fistful of drugs is not worthy of our allegiance, obedience, or respect. The government will continue to act like that until we say “enough.”

Carpe Diem

Who’d a-thunk it? Part of the reason that men earn more on average than women is that they work longer hours?

Here’s the abstract from the paper “Overwork and the Slow Convergence in the Gender Gap in Wages” that appears in the June 2014 issue of the American Sociological Review (by authors Youngjoo Cha, Indiana University; and Kim A. Weeden, Columbia University):

Despite rapid changes in women’s educational attainment and continuous labor force experience, convergence in the gender gap in wages slowed in the 1990s and stalled in the 2000s. Using CPS data from 1979 to 2009, we show that convergence in the gender gap in hourly pay over these three decades was attenuated by the increasing prevalence of “overwork” (defined as working 50 or more hours per week) and the rising hourly wage returns to overwork. Because a greater proportion of men engage in overwork, these changes raised men’s wages relative to women’s and exacerbated the gender wage gap by an estimated 10 percent of the total wage gap. This overwork effect was sufficiently large to offset the wage-equalizing effects of the narrowing gender gap in educational attainment and other forms of human capital. The overwork effect on trends in the gender gap in wages was most pronounced in professional and managerial occupations, where long work hours are especially common and the norm of overwork is deeply embedded in organizational practices and occupational cultures. These results illustrate how new ways of organizing work can perpetuate old forms of gender inequality.

Related: See Bloomberg article “Do ‘Overworked’ High-Earning Men Widen the Gender-Pay Gap?” and Reason article “Study: Rise in ‘Overworked’ Men Helps Explain Gender Wage Gap” by Elizabeth Nolan Brown, who makes the following excellent point:

With this in mind, it makes no sense for the government to try and rectify the wage gap administratively because there is literally no way to account for all the contributing variables—such as this overwork one. How could anyone have predicted that hourly wages for “overworkers” would rise while general wages stagnated? How can bureaucrats possibly correct for cultural expectations? Focusing on the wage gap per se will go nowhere near as far toward closing it as focusing on the culture that creates it can.

Carpe Diem

Tuesday morning linkage

imports1. Chart of the Day – Another Energy Milestone. Through June of this year, net petroleum imports fell below 30% for the first time since 1985, reaching a 29-year low (data here). Note the amazing drop in net oil imports from 60.3% in 2005 to 29.8% this year – completely reversing the 20-year upward trend in just nine years – thanks to the amazing US shale oil revolution.

2. Who-d a-Thunk It? Another day, another cop shoots another dog? And in a related story in Pennsylvania, a cop shot and paralyzed a man over unpaid parking tickets.

3. Great Moments in Government Overreach. Last week, the Michigan Department of Agriculture staged a raid on a small organic farm and food co-op for the “crime” of providing raw milk, butter, cream, and eggs to people who bought shares in the organic dairy. The specific charge? “Selling food without a license,” even though it’s a co-op arrangement where members buy shares. Solution? Force the small farm to dump out 248 gallons of milk, break 100 dozen eggs and destroy an undisclosed amount of fresh cream, butter and cheese, with an estimated value of $5,000.

4. Great Moments in Government Overreach/America Here’s Your Drug War:

From Reason.tv: In October of 2012, Timothy Young was pulled over for failing to use his turn signal in Lordsburg, New Mexico. Following a futile, two-hour search for drugs in his truck, a police officer handcuffed Young and drove him to the Gila Regional Medical Center in Silver City, New Mexico. There, Young was X-rayed and digitally probed without his consent. No contraband was ever found. A few weeks later, Young received a bill from the hospital for “services rendered.” Fortunately, Young sued all parties involved and he recently received a judgment of $925,000 from Hidalgo County.

Update: As Morganovich points out in the first comment, this case is similar to the experience of David Eckert, who was subjected a medical anal rape in a futile search for drugs at the same Gila Regional Medical Center in New Mexico (see CD posts here and here). Like Mr. Young, Mr. Eckert was also billed $6,000 by Gila for “services rendered,” and he was also successful at suing and winning a $1.6 million settlement.

5. Some Drug War Sanity. From the NY Times editorial board – “Repeal Prohibition Again“:

It took 13 years for the United States to come to its senses and end Prohibition, 13 years in which people kept drinking, otherwise law-abiding citizens became criminals and crime syndicates arose and flourished. It has been more than 40 years since Congress passed the current ban on marijuana weeds, inflicting great harm on society just to prohibit a substance far less dangerous than alcohol. The federal government should repeal the ban on marijuana weeds.

6. More Drug War Sanity. Op-ed from yesterday’s NY Times “The Injustice of Marijuana Arrests” by Jesse Wegman:

America’s four-decade war on drugs is responsible for many casualties, but the criminalization of marijuana has been perhaps the most destructive part of that war. The toll can be measured in dollars — billions of which are thrown away each year in the aggressive enforcement of pointless laws. It can be measured in years — whether wasted behind bars or stolen from a child who grows up fatherless. And it can be measured in lives — those damaged if not destroyed by the shockingly harsh consequences that can follow even the most minor offenses.

7. Uber’s Great Expansion. Uber now operates in 90 cities in North America, including four new cities in Michigan: Flint, Grand Rapids, Lansing and Kalamazoo.  (HT: Bob Wright)

8. The Economics of Rotisserie Chicken.  Why are fully cooked rotisserie chickens at grocery stores cheaper (e.g. $7) than buying a raw chicken and roasting it yourself (e.g. $10)? Megan McArdle and Cat Vasko explain.

Technology is Awesome

9. German car parking robot allows for greater use of parking space by up to 60%.

10. 24 Machines That Prove Automation is Beautiful

Carpe Diem

More evidence on the superiority of index investing — most active fund managers can’t even beat a blindfolded monkey

In two recent articles in the New York Times Your Money section, business editor Jeff Sommer wrote about the superiority of passively managed index funds over actively managed funds. Sommer cites a June 2014 study by S&P Dow Jones Indices titled “Does Past Performance Matter? The Persistence Scorecard,” which provides some new, recent evidence that bolsters the case for investing in passively managed index funds.

Here’s an excerpt from Sommer’s first article on July 19 “Who Routinely Trounces the Stock Market? Try 2 Out of 2,862 Funds” (emphasis added):

The study examined mutual fund performance in recent years. It found that very few funds have been consistently outstanding performers, and it corroborated the adage that past performance doesn’t guarantee future returns.

The S&P Dow Jones team looked at 2,862 mutual funds that had been operating for at least 12 months as of March 2010. Those funds were all broad, actively managed domestic stock funds. (The study excluded narrowly focused sector funds and leveraged funds that, essentially, used borrowed money to magnify their returns.)

The team selected the 25% of funds with the best performance over the 12 months through March 2010. Then the analysts asked how many of those funds — those in the top quarter for the original 12-month period — actually remained in the top quarter for the four succeeding 12-month periods through March 2014.

The answer was a vanishingly small number: Just 0.07% of the initial 2,862 funds managed to achieve top-quartile performance for those five successive years. If you do the math, that works out to just two funds. Put another way, 99.93 percent, or 2,860 of the 2,862 funds, failed the test.

The study sliced and diced the mutual fund universe in a number of other ways, too, each time finding the same core truth: Very few funds achieved consistent and persistent outperformance. Furthermore, sustained outperformance declined rapidly over time. And the report said, “The data shows a likelihood for the best-performing funds to become the worst-performing funds and vice versa.”

What should investors make of these findings? There is one clear implication, said Keith Loggie, senior director of global research and design at S&P Dow Jones Indices.

“It is very difficult for active fund managers to consistently outperform their peers and remain in the top quartile of performance over long periods of time,” he said. “There is no evidence that a fund that outperforms in one period, or even over several consecutive periods, has any greater likelihood than other funds of outperforming in the future.”

This seems to bolster the case for index-fund investing. After all, if a fund manager with a great year can’t be counted on to outperform other fund managers later, it’s reasonable to ask: Why bother trying to beat the market at all?

And here’s an excerpt from Sommer’s second article on July 26 “Heads or Tails? Either Way, You Might Beat a Stock Picker” (emphasis added):

Over the last five years, actively managed stock mutual funds have performed even worse than would have been predicted if the fund managers were flipping coins instead of picking stocks. The real-world statistics to which I’m referring were contained in a recent S&P Dow Jones Indices study that I summarized in last week’s column.

Briefly put, the results of the S&P study, “Does Past Performance Matter? The Persistence Scorecard,” were bleak enough on their own. They showed that very few mutual funds were able to consistently outperform their peers, and that those that did so in one given year were likely to be poor performers five years later.

In fact, only 2 out of 2,862 broad domestic stock funds were able to outperform their peers consistently over five years, according to one measure: performance in the top quartile of funds over five consecutive 12-month periods ended in March 2014. That’s an unimpressive performance, to be sure. And if you compare it with a series of coin flips — a series of random choices — it looks even worse.

The dismal results of the real-world fund managers were very close to what Burton G. Malkiel, the Princeton finance professor, once described as “a random walk.” “Taken to its logical extreme, it means that a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the experts,” he wrote in his guide to investing, “A Random Walk Down Wall Street.”

As a group, managers who ran the 2,862 funds examined by S.&P. Dow Jones Indices didn’t do as well as a blindfolded monkey. The hypothetical monkey, or a serial coin flipper, beat them in several other tests, too.

These findings may suggest that rather than spending a lot of time and money picking stocks or stock fund managers based simply on past performance, you might be better off just flipping a coin. And that implies investing in low-cost, diversified index funds.

MP: As I’ve mentioned before, the fact that 70% of US investors don’t own a single passively-managed index fund (and many of the 30% of investors who do own at least one index fund may not be using them as the core of their investment portfolios), despite the proven superiority of index funds over actively-managed funds represents perhaps one of the greatest “market failures” and “market inefficiencies” of our time. The stock market might be highly efficient, but the investing habits of a significant majority of investors remains highly inefficient in my opinion. Thousands and thousands of investors spend millions of dollars on fees and expenses every year for actively managed funds to collectively lose them billions of dollars compared to having the core of their portfolios in passively managed mutual funds…..

HT: Warren Smith

Carpe Diem

Depending on funding perhaps, scientists blame the polar vortex alternatively on global warming and global cooling

This is an excerpt from the article “Another Ice Age?” which appeared in the June 24, 1974 issue of Time Magazine (emphasis added):

In Africa, drought continues for the sixth consecutive year, adding terribly to the toll of famine victims. During 1972 record rains in parts of the U.S., Pakistan and Japan caused some of the worst flooding in centuries. In Canada’s wheat belt, a particularly chilly and rainy spring has delayed planting and may well bring a disappointingly small harvest. Rainy Britain, on the other hand, has suffered from uncharacteristic dry spells the past few springs. A series of unusually cold winters has gripped the American Far West, while New England and northern Europe have recently experienced the mildest winters within anyone’s recollection.

As they review the bizarre and unpredictable weather pattern of the past several years, a growing number of scientists are beginning to suspect that many seemingly contradictory meteorological fluctuations are actually part of a global climatic upheaval. However widely the weather varies from place to place and time to time, when meteorologists take an average of temperatures around the globe they find that the atmosphere has been growing gradually cooler for the past three decades. The trend shows no indication of reversing. Climatological Cassandras are becoming increasingly apprehensive, for the weather aberrations they are studying may be the harbinger of another ice age.

Scientists have found other indications of global cooling. For one thing there has been a noticeable expansion of the great belt of dry, high-altitude polar winds —the so-called circumpolar vortex—that sweep from west to east around the top and bottom of the world. Indeed it is the widening of this cap of cold air that is the immediate cause of Africa’s drought. By blocking moisture-bearing equatorial winds and preventing them from bringing rainfall to the parched sub-Sahara region, as well as other drought-ridden areas stretching all the way from Central America to the Middle East and India, the polar winds have in effect caused the Sahara and other deserts to reach farther to the south. Paradoxically, the same vortex has created quite different weather quirks in the U.S. and other temperate zones. As the winds swirl around the globe, their southerly portions undulate like the bottom of a skirt. Cold air is pulled down across the Western U.S. and warm air is swept up to the Northeast. The collision of air masses of widely differing temperatures and humidity can create violent storms—the Midwest’s recent rash of disastrous tornadoes, for example.

Whatever the cause of the cooling trend, its effects could be extremely serious, if not catastrophic. Scientists figure that only a 1% decrease in the amount of sunlight hitting the earth’s surface could tip the climatic balance, and cool the planet enough to send it sliding down the road to another ice age within only a few hundred years.

Via Steve Goddard’s blog post today at Real Science titled “Forty Years Ago, Scientists Blamed The Polar Vortex On Global Cooling.” Steve comments “Depending on which scam they are currently being funded by, scientists blame the polar vortex alternatively on global warming and global cooling.”