Carpe Diem

More on Taxi Cartels: Breaking The Mpls. Cartel

Magistrate Judge Franklin L. Noel, in his ruling against the Minneapolis taxi cartel that led to an increase in the number of new taxi licenses by 45, “The established taxi vehicle license holders do not have a constitutionally protected freedom from competition.”

Nice choice of words. We have a lot of freedoms, but freedom from competitors isn’t one of them. Freedom to trade with potential customers is.

Read more here.

Read a previous post about the attempts to break the Minneapolis taxi cartel, with excerpts from an excellent George Will article about the situation.

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More on The U.S. Poor Getting Richer, And Being Envy of the World’s Poor

More data above in the chart (click to enlarge) from Swedish think tank Timbro to support economist Walter Williams’ claim that:

“Poverty in the United States, in an absolute sense, has virtually disappeared. Today, there’s nothing remotely resembling poverty of yesteryear. However, if poverty is defined in the relative sense, the lowest fifth of income-earners, “poverty” will always be with us. No matter how poverty is defined, if I were an unborn spirit, condemned to a life of poverty, but God allowed me to choose which nation I wanted to be poor in, I’d choose the United States. Our poor must be the envy of the world’s poor.”

Note also that the same study shows that:

Percent of U.S. Poor Households Owning Washer: 65%

Percent of ALL Swedish Households Owning Washer: 72%

Percent of U.S. Poor Households Owning VCR/DVD: 78%

Percent of ALL Swedish Households With VCR/DVD: 46%

Percent of U.S. Poor Households Owning PC: 25%

Percent of ALL Swedish Households Owning PC: 29%

Percent of U.S. Poor Households With Dishwasher: 34%

Percent ALL Swedish Households With Dishwasher: 31%

Percent of U.S. Poor Households With Clothes Dryer: 56%

Percent of ALL Swedish Households With Dryer: 18%

Percent of U.S. Poor Households Owning Color TV: 97.3%

Percent of ALL Swedish Households Owning TV: 97%

Bottom Line: On many different measures, a poor household in America lives at a standard of living equal to or greater than the average household in Sweden.

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If Sweden Left The EU and Joined the US, It Would Be the Poorest U.S. State, Below Even Mississippi

There is some lively discussion in the comments section of this recent post about poverty, Sweden, income inequality, etc. One issue is about the unemployment rates in Sweden vs. the USA, which are displayed in the graph above. Over the last 15 years, the average jobless rate in Sweden was 7.3%, more than two percentage points higher than the U.S. average of 5.2%. I think it would safe to assume that if Sweden was a U.S. state, it would have had the highest unemployment rate in the country since 1993, higher even than Mississippi, Michigan or Alaska.

And for an analysis of Sweden’s economic condition, I suggest reading this post: “
Swede and Sour,” by Swedish author and blogger Johan Norberg, here are some excerpts:

If Sweden left the EU and joined the U.S. we would be the poorest state of America. Using fixed prices and purchasing power parity adjusted data, the median household income in Sweden in the late 1990s was the equivalent of $26,800 compared with a median of $39,400 for U.S. households – before taxes. And then we should remember that Sweden has the world´s highest taxes.

The Swedish Research Institute of Trade, which conducted the study, underlined that African Americans, who have the lowest income in the United States, now have a higher standard of living than an ordinary Swedish household.

Between 1870-1970, Swedish growth was the highest in the world, next to Japan’s. In 1970 Sweden was the fourth richest among the OECD-members, after USA, Luxembourg and Switzerland.

After more than 30 years of high taxation and an expanding welfare state, Sweden is not the 4th richest OECD-country any longer, but the 15th. This hurts the least well off most. Between 1980 and 1999, the gross income of Sweden’s poorest households increased by just over 6% while the poorest in the U.S. enjoyed a three time larger increase.

Bottom Line: Unless you think that Mississippi and Michigan represent ideal economic models of growth and prosperity, you probably shouldn’t think about Sweden as economic nirvana.

Update: According to this study from Swedish think tank Timbro (“EU vs. USA”), “This report is about the fact that per capita GDP is lower in most of the countries of Europe than in most of the states of the USA.” Further, “Sweden would be the seventh poorest as a state of the USA.”

Carpe Diem

Taxi Cartel Membership Has Its Priveleges: Returns That Have Outperformed Every Major Index

NEW YORK — The priciest piece of aluminum in NYC, a taxi medallion to operate a single cab (pictured above – you’ll see them on the hood of every NYC taxi), just sold for as high as $385,000 when the Taxi and Limousine Commission staff unsealed 155 bids yesterday. The lowest winning bid was $277,777, and the average bid was $309,000.

Here is the press release from the NYC Taxi Cartel, aka as the Taxi and Limousine Commission:

According to the NYC Taxi and Limousine Commission, the official name of the NYC Taxi Cartel: “In 1937, the number of taxicab medallions was limited to 11,787. Today there are currently 13,087 yellow medallion taxicabs operating in New York City. A new medallion is a rare opportunity.”

Yes, a rare opportunity to join a cartel with significant barriers to entry. And cartel membership does have its privileges, including above-market rates of return.

According to the president of Medallion Financial Corporation, the leading lender to the industry, “Taxi medallions have been one of, if not the single best investment to own over the years. While the Dow has gone up 8% per year over the last 50 years, taxi medallions have gone up almost double that, 14% per year. They have outperformed every major index including real estate, gold and other stock indexes.”

(HT: Ben Cunningham)

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There Are Two Michigans and a Big Pay Gap: Private vs. Public Employees

According to this report from the Mackinac Center for Public Policy, “The average private sector employee in Michigan earned $41,128 in fiscal 2005, compared to $48,421 for the average state civil service worker. State government employees, in other words, earned about 18 percent more than private sector workers.”

The report also compared private vs. public compensation (wages and benefits) for specific job classifications, including those shown above in the graph (click to enlarge).

Private sector receptionists make only 63% as much as their counterparts in the public sector, and private sector food service supervisors make only 83% of their public sector counterparts.

So there are “Two Michigans” and there is a “disturbing pay gap” when comparing compensation in the private sector to the public sector.
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Two Americas: Private vs. Public Sector Employees

Yes, John Edwards, there really are “Two Americas”: One America for those who work for the government and make almost $62,000 on average (wages and benefits), and another America for those saps who work in the private sector who earn $6,000 less on average ($55,470), see chart above (click to enlarge).

And Yes, Hillary Clinton, there really is a disturing pay gap that calls for legislation: Private sector employees earn only 90 cents on average (wages and benefits) for every one dollar that a public sector employee earns, and this pay gap has persisted for decades. And the pay gap between private sector employees and public school teachers is even greater (see graph).

See this press release from the Heartland Institute for more information, which uses data from this BEA website.

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Latest Victim of Ethanol: Kraft Foods

NEW YORK (Associated Press)Standard & Poor’s Ratings Services yesterday warned it may lower its credit ratings on food maker Kraft Foods Inc. after the company’s third-quarter profit sank 20 percent, partly due to high dairy costs.

S&P noted that the company’s margins will likely remained pressured through the fourth quarter and into 2008 by higher commodity costs, particularly for dairy. Dairy costs have skyrocketed due to international demand for milk and higher animal feed costs. Animal feed is made from corn, which has risen to record levels due to demand for the alternative fuel ethanol. Corn is also used to make the fuel.

(HT: Ray Wallace)
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Comment of the Day; No, Comment of the Month!

From the Hispanic Pundit, in response to this CD post “Our Poor Are the Envy of the World’s Poor:”

At the risk of over-generalizing, there are two views to poverty alleviation: there is the approach of the “left,” which tends to champion direct government involvement (welfare, etc.), and there is the approach of the “right,” which tends to champion economic growth.

The problem is, the two approaches tend to be mutually exclusive. To get more government involvement, you need higher taxes and an increase in the size of government….two things that greatly harm economic growth. So in effect you have a trade off and a disagreement over which poverty solution is better – direct immediate alleviation, though one that may dramatically change incentives and behavioral patterns along with decreased economic growth, or you have the long term solution that increases economic growth and significantly increases the standard of living over time.

Comparing the standard of living from an earlier era shows in stark contrast the very real gains that economic growth produces, and how overwhelmingly larger they are than any immediate government program can possibly achieve. The same is true when you compare the standard of living in the United States (arguably the most capitalist country in the world) with the standard of living of other less capitalist countries.

Comparisons that show the significant gains from economic growth explain why the left avoids making such comparisons.

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Goldilocks Rocks: Consecutive Monthly Real Disposable Income Growth Strongest Since 1999

The Department of Commerce reported today that disposable income, adjusted for inflation, grew by 3.9% in September compared to the same month a year ago (Table 10 in the report), which marks the 14th consecutive month that real disposable income has increased by 2.9% or higher (the approximate average growth rate since 1970, see horizontal line in graph above).

CD Exclusive: This record of consecutive monthly growth in real disposable income hasn’t been matched in the U.S. since July 1997 – April 1999, when real income grew at or above 2.9% for 22 months during the height of the last economic expansion (see shaded areas on the graph above, click to enlarge).

The Goldilocks economy keeps rockin‘.

Update: Real disposable income is one of the 4 key economic variables that the National Bureau of Economic Research watches to determine when the U.S. economy goes into recession, see my previous post. Given the 14-month record of above-average real personal income growth, it wouldn’t appear that a recession is imminent.