Carpe Diem

Happy 102nd birthday, Milton Friedman

miltonMilton Friedman was born on this day, July 31, in 1912, and he would have been 102 years old today. Unfortunately, Milton died on November 16, 2006 when he was 94 years old. In an editorial in the Wall Street Journal following Friedman’s death, they reported his loss with the same tribute Milton used when Ronald Reagan died, saying “few people in human history have contributed more to the achievement of human freedom.” In honor of his legacy and birthday, here are some of my favorite Milton Friedman quotes:

1. There is nothing as permanent as a temporary government program.

2. Inflation is always and everywhere a monetary phenomenon.

3. Inflation is caused by too much money chasing after too few goods.

4. Sloppy writing reflects sloppy thinking.

5. All learning is ultimately self-learning.

6. I’m in favor of legalizing drugs. According to my values system, if people want to kill themselves, they have every right to do so. Most of the harm that comes from drugs is because they are illegal.

7. Nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.

8. The government solution to a problem is usually as bad as the problem.

9. The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.

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

11. Industrial progress, mechanical improvement, all of the great wonders of the modern era have meant relatively little to the wealthy. The rich in Ancient Greece would have benefited hardly at all from modern plumbing: running servants replaced running water. Television and radio? The patricians of Rome could enjoy the leading musicians and actors in their home, could have the leading actors as domestic retainers. Ready-to-wear clothing, supermarkets — all these and many other modern developments would have added little to their life. The great achievements of Western capitalism have redounded primarily to the benefit of the ordinary person. These achievements have made available to the masses conveniences and amenities that were previously the exclusive prerogative of the rich and powerful.

12. President Kennedy said, “Ask not what your country can do for you — ask what you can do for your country.”… Neither half of that statement expresses a relation between the citizen and his government that is worthy of the ideals of free men in a free society. “What your country can do for you” implies that the government is the patron, the citizen the ward. “What you can do for your country” assumes that the government is the master, the citizen the servant.

13. On the difference between public vs. private education: “Try talking French with someone who studied it in public school. Then with a Berlitz graduate.”

14. Fair’ is in the eye of the beholder; ‘free’ is the verdict of the market. The word ‘free’ is used three times in the Declaration of Independence and once in the First Amendment to the Constitution, along with ‘freedom.’ The word ‘fair’ is not used in either of our founding documents.

15. What most people really object to when they object to a free market is that it is so hard for them to shape it to their own will. The market gives people what the people want instead of what other people think they ought to want. At the bottom of many criticisms of the market economy is really lack of belief in freedom itself.

16. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from grinding poverty, the only cases in recorded history are where they’ve had capitalism and largely free trade. If you want to know where the masses are worst off, it’s exactly in the kinds of societies that depart from that, so that the record of history is absolutely crystal clear: that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.”

17. The problem of social organization is how to set up an arrangement under which greed will do the least harm; capitalism is that kind of a system.

18. With some notable exceptions, businessmen favor free enterprise in general but are opposed to it when it comes to themselves.

19. The case for prohibiting drugs is exactly as strong and as weak as the case for prohibiting people from overeating.

20. The government has no more right to tell me what goes into my mouth [including illegal drugs] than it has to tell me what comes out of my mouth.

For more Milton Friedman quotes, see this list here at “The Collected Works of Milton Friedman” project at Stanford University’s Hoover Institution.

Carpe Diem

So-called civil rights activist, Jesse Jackson, advocates for discrimination against Asians in tech industry

Well, that’s the title that Jennifer Gratz suggested on her Facebook page for the USAToday article “Jesse Jackson: Tech diversity is next civil rights step.” In that article, U.S. civil rights leader Jesse Jackson called on the Obama administration to scrutinize the tech industry’s lack of diversity among its employees.

“This is the next step in the civil rights movement,” Jackson said, noting minorities represent a sizable share of tech consumers but not its workers. He said it’s bad business to exclude them. Of Twitter’s U.S. employees, only 3% are Hispanic and 5% black, but those groups along with Asian Americans account for 41% of its U.S. users.

The USAToday article points out that Asians account for 39% of employees at Yahoo, 30% at Google, 34% at Facebook, 38% at LinkedIn and 29% at Twitter. As is often the case, Asians apparently don’t count when it comes to racial or ethnic diversity. And wouldn’t forcing or shaming tech companies to hire more blacks and Hispanics really mean forcing or shaming them to hire fewer Asians?

Why do we treat tech companies so differently than professional sports teams? For example, only 1.1% of NFL players are Asian while 66.3% of are black. Similarly, only 0.2% of NFL players are Asians while 76.3% are black. And yet, the University of Central Florida’s The Institute for Diversity and Ethics in Sport (TIDES) gives both the NFL and the NBA letter grades of A+ for the diversity of their players. Using Jackson’s logic, shouldn’t we be saying that whites, Asians and Hispanics represent a sizable share of NFL and NBA fans but not their players?

Isn’t this a double standard?

Carpe Diem, Economics, Energy and the Environment

Chart of the day: The amazing 12-fold increase in natural gas production in the Marcellus Shale in just four years

marcellusThe chart above shows the amazing increase in natural gas production in the Marcellus Shale Formation that covers Pennsylvania, West Virginia, Ohio and New York (see map below, EIA data here). In just the four-year period between June 2010 and June 2014, production of Marcellus natural gas increased roughly 12 times, from 1.159 billion cubic to 13.713 billion cubic feet per day, mostly from the states of Pennsylvania and West Virginia (fracking is banned in New York). During the last two years since June 2012, natural gas production doubled in the Marcellus formation from 6.25 billion to 13.713 billion cubic feet.

The total amount of natural gas recovered over the last 14 years in the Marcellus Shale — at slightly below 10 trillion cubic feet — represents less than 2% of the estimated 500 trillion cubic feet of natural gas reserves available in the shale-rich formation.

Just like the shale oil in North Dakota and Texas, shale gas is bringing energy-based jobs, wealth, and economic prosperity to Pennsylvania and West Virginia as part of the Great American Energy Boom.

marcellusshalemap

Carpe Diem

More evidence that ‘competition’ breeds ‘competence’

The AP reported a few weeks ago that “Seattle taxi drivers hit charm class to improve customer service in response to competition” based on this report from Komo News:

Call it a charm school for cabbies. The region’s long-established taxi companies are sending some of their drivers to a hospitality class to improve their customer service skills.

About 130 drivers, most from Yellow Cab, sat in a classroom to listen to instructors from the Hospitality Management program at South Seattle College. The idea was hatched in response to increasing competition from app-based ride services companies like Uber and Lyft that are taking business away from the traditional companies.

HT: Bill Greenway

Carpe Diem

Quotation of the day on the only economist to ever be awarded a posthumous Nobel prize….

…. is from Steven Landsburg (via Don Boudreaux at Cafe Hayek):

Former economist Paul Krugman has actually managed to get these words past an editor at the New York Times:

There is, however, one big difference between corporate persons and the likes of you and me: On current trends, we’re heading toward a world in which only the human people pay taxes.

Now I think we can be quite sure that even Paul Krugman, with his gargantuan capacity for forgetting everything he once knew, is well aware that we already live in a world where only human people pay taxes. That’s an instance of the general principle that the legal incidence of a tax does not determine its economic incidence. The corporate income tax is levied by law on corporations, but its economic effects are felt entirely by humans.

Krugman’s minor sin is that he lies about the content of economics — for example, misleading readers about the incidence of taxes or the desirability of one tax rate over another. His major sin is that he (in effect) lies about the nature of economics, leading readers to believe that it’s all about politically convenient slogans (like “redress the balance”) as opposed to, you know, logical thought. In other words, he’d rather be a demagogue than an economist. But I say the world has too many demagogues and not enough economists, and I do wish Krugman would do something to redress the balance.

MP: The reference in the headline comes from Don Luskin, who wrote in 2008 that:

Prior to 2008 the Nobel Prize had never been awarded posthumously. So great minds such as John Maynard Keynes and Fischer Black never received the coveted award. But all that has changed. This year, the prize for economics is going to Paul Krugman, an economist who died a decade ago.

To clarify, the person named Paul Krugman, the living and breathing man who will accept the Nobel in Stockholm this December , is merely a public intellectual — a person operating in the same domain as, say, Oprah Winfrey.

Carpe Diem

Markets in everything: ‘Uber for business’ – another example of why traditional taxi cartels are doomed

Now that Uber operates in 42 countries and 158 cities, the new corporate service it just introduced makes perfect sense: Uber for Business. It’s also an example of a service that traditional taxi cartels are incapable of offering because they lack a national and global network of drivers, and many traditional cabbies don’t even accept credit cards yet. Here’s how Uber for Business works:

As business travel with Uber has increased, we’ve heard from loyal users that the ability to use a shareable business account would make their lives a lot more seamless – and a lot more Uber. We aim to please, and so we set out to build the best possible product for companies and their traveling employees, whether the destination is Denver or Dubai.  The result: Uber for Business.

Uber for Business allows employees who Uber to bill their trips directly to their company.  A centralized billing system helps administrators, team leads and small business owners by providing trip information in place of receipts and helps employees by connecting with the same safe, reliable Uber ride they are used to without the hassle of having to file expenses.  (No more paper receipts!)

But it doesn’t stop there.  We’re also launching a new partnership with Concur, the world’s leader in spend management solutions with over 20,000 business clients around the globe.  This partnership will allow all 25 million Concur users to link their Uber and Concur accounts, allowing for effortless expensing.  Once an employee opts in and links their accounts, Uber will automatically pass along expense-ready travel information, including an e-receipt.   Uber, Concur and American Express are also proud to announce that later this year corporations will be able to “turn on” this effortless expensing across their entire organization.

MP: Here’s one more example of why the traditional taxi cartel model is doomed – it’s stuck in the past, and it’s not driven by the consumer-friendly forces of innovation that would allow the “Yellow Cabs” to readily adapt to the 21st century technologies the way on-demand services like Uber, Lyft and Sidecar can. Further, because traditional taxi cartels typically operate only in a single metro area, they can’t offer the seamless national and global corporate services that Uber just introduced with its new Uber for Business. Expect more innovation from the on-demand car services and expect more whining from the taxi cartels and their government/regulatory enforcers about “unfair” competition.

Exhibit A: UberFamily now operates in Washington, New York City and Philadelphia, and offers customers the option of ordering a vehicle with a car seat. Traditional taxi companies have been around for almost 100 years, and they never thought of offering that service?

Carpe Diem, Economics, Energy and the Environment

Texas oil reaches 3 million barrels per day milestone in May; as separate nation it would be world’s 8th largest oil producer

TexasThe Energy Information Administration (EIA) released new state crude oil production data yesterday for the month of May, and one of the highlights of that monthly report is that oil output in America’s No. 1 oil-producing state – Texas – continues its phenomenal, eye-popping rise. Here are some details of oil output in “Saudi Texas” for the month of May:

1. Oil drillers in Texas reached a new milestone in May, by producing more than 3 million barrels of crude oil every day (bpd) during the month of May, which is the highest daily oil output in the Lone Star State in any single month since at least January 1981, when the EIA started reporting each state’s monthly oil production (see chart above). Texas reached the two million barrel per day oil production milestone in August 2012, and has since added a million more barrels of daily oil production in less than two years to reach the three million barrel milestone in May of this year. Compared to a year ago, oil output in Texas increased by 21.2% in May marking the 37th straight month starting in May 2011 that the state’s oil output has increased by more than 20% on a year-over-year basis.

2. Remarkably, oil production in the Lone Star State has more than doubled in less than three years, from 1.496 million bpd in August 2011 to 3.01 million bpd in May of this year (see chart above), and that production surge has to be one of the most significant increases in oil output ever recorded in the US over such a short period of time. A 1.51 million bpd increase in oil output in only 33 months in one US state is remarkable, and would have never been possible without the revolutionary drilling techniques that just recently started accessing vast oceans of Texas shale oil in the Eagle Ford Shale and Permian Basin oil fields. As I reported recently, both the Eagle Ford and Permian Basin oil fields in Texas are now producing crude oil at a rate of more than 1 million bpd, joining an elite international group of only ten super-giant oil fields that have ever produced that much oil at their peak.

3. The exponential increase in Texas oil output over roughly the last three years has completely reversed the previous, gradual 28-year decline in the state’s conventional oil production that took place from 1981 to 2009 (see arrows in chart) – thanks almost exclusively to the dramatic increases in the state’s output of newly accessible, unconventional shale oil.

4. As recently as mid-2009, Texas was producing less than 20% of America’s domestic crude oil. The recent gusher of unconventional oil being produced in the Eagle Ford Shale and Permian Basin oil fields of Texas, thanks to breakthrough drilling and extraction technologies, has recently pushed the Lone Star State’s share of domestic crude oil above 30% in each of the last 20 months, and all the way up to more than 36% of America’s crude output in May.

5. Oil output has increased so significantly in Texas in recent years that if the state was were considered as a separate oil-producing country, Texas would have been the 8th largest oil-producing nation in the world for crude oil output in March (most recent month available for international oil production data) at 2.93 million bpd – behind No. 7 Iran at 3.23 million bpd.

6. The dramatic increase in Texas’s oil production is bringing jobs and economic prosperity to the state. For example, over the last 12 months through May, payrolls in the state of Texas increased by 371,000 jobs, which was a 3.3% annual increase in the state’s employment level, almost double the 1.8% increase in total US payrolls over that period. Every business day over the last year, more than 1,400 new jobs were created in the Lone Star State, and many of those jobs were directly or indirectly related to the state’s booming energy sector, which experienced a 8.1% increase in payrolls for oil and gas extraction jobs (8,450 new jobs) over the most recent 12-month period through May. Oil and gas companies in Texas hired more than 32 new employees every business day over the last year just for extraction activities, or more than 4 new hires every hour!

MP: The significant increase in Texas’s oil production over the last several years is nothing short of phenomenal, and is a direct result of America’s “petropreneurs” who developed game-changing drilling technologies that have now revolutionized the nation’s production of shale oil. Thanks to those revolutionary technologies, Texas is now home to two of only ten super-giant oil fields to ever produce more than 1 million barrels of oil per day – the Eagle Ford and Permian Basin.

For oil output in Texas to increase from 2 million to 3 million bpd in less than two years, and increase so dramatically that the state produced more than one-third of all US crude oil in each of the last 15 months (and more than 36% of US oil in May), is undoubtedly one of the most remarkable energy success stories in US history – and it’s just getting started. At the current pace of annual increases of about 25%, Texas oil production will likely surpass 4 million bpd by late summer of next year. With those projected increases in Texas oil output, the state could soon surpass Iraq, Iran and even Canada to move up in the international oil production rankings to become the world’s No. 5 oil producer in 2015.

“Saudi Texas” continues to be the shining star of The Great American Energy Boom.

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.