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)

Carpe Diem

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.
Carpe Diem

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.

Carpe Diem

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)
Carpe Diem

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.

Carpe Diem

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.

Carpe Diem

Digital Iron Curtain Still Exists in Cuba and China

The Internet is a tightly controlled privilege in Cuba, reserved for the trusted elite. Private citizens are prohibited from buying computers or accessing the Internet without special authorization. Access in Cuba is limited to citizens who can prove they are engaged in research or connected to an accredited and approved institution.

Updated: According to UNESCO, there are only 6.71 phone subscribers per 100 residents in Cuba, 1 computer for every 42 persons, and only 1/10 of 1% of the population has direct access to the Internet (12,193 Internet subscribers out of a population of 11,313,000).

I guess they won’t be visiting Carpe Diem, or any other blog or website, any time soon (see the map above of visits to Carpe Diem, click to enlarge)!

Aprovecha el dia!

Although I can’t confirm this, I received an email from a loyal CD reader in Canada, who says that he has visited China twice in the last month for business, and CD is apparently banned in China, along with some other “unacceptable” blogs.

Carpe Diem

Carpe Diem on Kudlow and Company

Carpe Diem got mentioned on CNBC’sKudlow and Company” for the third night in a row, here is the link to a 9:37 segment from tonight’s show; Carpe Diem is mentioned at about 4:30!

FYI, Larry Kudlow’s show has recently gone to a prime time slot at 7 p.m. on CNBC, where he “puts the capital back into capitalism” five nights a week, delivering the message that “free market capitalism is the best path to prosperity.”

When it comes to a daily discussion, summary and analysis of the most important business, economic and financial news, it doesn’t get any better than “Kudlow and Company.”

BTW, the entire CNBC schedule, including “Kudlow and Company,” is available on Sirius Satellite radio, I listen to Larry’s show in my car, since I am never home by 7 p.m.
Carpe Diem

Indian Stock Market Sets 38 Record Closes in 2007

It was first reported in the Indian press that “A record-breaking performance by India’s stock markets has put the industrialist Mukesh Ambani at the top of a list of the world’s richest people.

Buoyed by unprecedented inflows from U.S. and European investors, the benchmark Mumbai Sensex stock index topped 20,000 for the first time yesterday – having almost doubled in value in the last two years.

One of the results of the surge in share prices has been a boost for Mr. Ambani’s Reliance Industries, a powerhouse of the country’s industrial strength and its most valuable firm. Its excellent performance, along with that of two other of the group’s companies, saw the net worth of its chairman and managing director rise to $63.2bn yesterday.”

Well, they made a
small mistake, “The correct figure was more like $50 billion, Reliance said, because it had erroneously included the group’s petrol subsidiary in which Mr Ambani does not have a direct holding.”

What is not in dispute is that the Indian stock market has set 38 record closes this year, the BSE Index has surpassed 20,000 in recent trading, and is up by 62% YTD (in USD) and 44% YTD (in rupees). It is also true that Mr. Ambani’s personal wealth has increased from $20 billion in February of this year to $50 billion today. Not a bad year at all for Mukesh.