The IMD World Competitiveness Yearbook (WCY) analyzes and ranks nations’ ability to create and maintain environments to sustain the competitiveness of enterprises. Considered the global authority on world competitiveness, it has been published annually since 1989 and ranks 55 economies on 323 criteria.
Results for 2007 were released in May, here is the press release, see the top 25 countries in the chart above (click to enlarge). As usual, the U.S. ranks #1 as the most competitive economy in the world, followed by Singapore and Hong Kong.
Why is the U.S. economy the most competitive in the world? And a related question: why has America produced so many successful young entrepreneurs? George Mason economist Tyler Cowen offers some excellent insights in this recent NY Times article:
1. American youths are so successful at entrepreneurship in part because so many older and wealthier people are willing to help them. The broader American success at philanthropy, then, lays the groundwork for American entrepreneurship. By global standards, Americans may have looser networks of friends and family, but Americans are more willing to help relative strangers, and this often helps business.
2. The fact that American schooling is less disciplined than that in other countries gives young creators the time and the energy to accomplish something outside their formal education.
3. Relatively loose family structures have similar effects; American children are especially likely to be working on their own projects, rather than being directed by parents and elders.
4. Compared with those in other countries, American children play a much more influential role in society and enjoy a remarkable degree of autonomy. Teenagers receive higher allowances, have greater access to credit cards, and have more money to spend on starting a business. American labor markets are flexible enough to create a large number of jobs at the lower end of the wage scale. Teenagers are more likely to acquire work experience, and they are more likely to earn a small amount of capital for financing a start-up enterprise.
5. It is a common American dream to want to start one’s own business, and this cultural influence spreads to the young.
Tyler concludes, “On a national level, these successes are rooted in the commercial, competitive, philanthropic, nonegalitarian and open nature of American society. America’s economic head start probably won’t go away anytime soon.”
MP: In other words, America’s competitiveness results from an entrepreneurial-friendly society and culture, along with efficient and well-developed financial and credit markets, and generous philanthropic traditions, that together create an incredible infrastructure that nurtures and supports young entrepreneurs more successfully than any place on the planet – like an “economic incubator” for entrepreneurs. Imagine if a Bill Gates or a Michael Dell had been born in any other country – they might not have had the same supportive environment to nurture their entrepreneurial talents as they did here to start Microsoft and Dell, without any inherited wealth and without any political connections?
From Larry Reed’s (president of Michigan’s Mackinac Center for Public Policy) editorial in today’s WSJ “It Takes a Recession” (subscription required):
Why is the basic truth, that unions are part of the state’s economic problem, now coming to replace the notion that they are the state’s salvation? A 2002 study from the Mackinac Center for Public Policy gives us a little hint. The study found that from 1970 to 2000, right-to-work states created 1.43 million manufacturing jobs. At the same time non-right-to-work states lost 2.18 million jobs. Not surprisingly, heavily unionized Michigan was near the bottom of the pile.
Michigan lost a quarter million jobs since the start of this decade. Unemployment is the highest for any state in the country. And while inflation-adjusted per capita personal incomes grew nationally by 4.2% since 2001, in Michigan they have fallen. Over the same period, real per capita GDP grew by nearly 9% nationally and declined in only one state — Michigan. High-profile companies like the Big Three auto makers, Pfizer and Comerica are slashing workforces or moving operations out of state. Tax revenue is down and the state budget is hemorrhaging red ink.
Michigan’s “economic development” efforts have obviously flopped, and for largely the same reason that a bad restaurant can’t turn itself around by offering discounts or subsidies to a handful of customers. It must change the menu for everybody.
The state has tried to stop the bleeding with expensive TV ads featuring Michigan-born actor Jeff Daniels spotlighting the state’s corporate welfare. But what’s really dumb and getting dumber is the persistent reluctance of the administration of Democratic Gov. Jennifer Granholm to tackle the union issue, even as signs swell that the public is ready for a sea change. Her strategy is to sweep aside any suggestion for labor reform and lobby instead for an unpopular, job-killing tax increase and a billion-dollar hike in state spending.
Making Michigan a right-to-work state would quash with one powerful blow the nagging perception that our labor climate is too hostile and costly for business. It would provide more freedom for individual workers and a temporizing influence on union leadership.
Do a Google search for “corporate greed” and you’ll find about 752,000 hits. Try “greedy CEOs” and you’ll get about 24,000 hits.
Now try “consumer greed” and you’ll only see about 500 listings, and you’ll only find 2 hits for “greedy shoplifters.”
Even though “corporate greed” and “greedy CEOs” get all the attention, it appears that a lot of shoppers and employees display quite bit of their own greed, as they helped themselves to about $42 billion of corporate inventory at retailers around the country in 2006, which as a percentage of total sales was about 1.6%~!!!
About $3 billion of Wal-Mart’s merchandise was lifted last year by greedy shoppers and employees, according to this AP report.
Greg Mankiw has an excellent post on why Bush will probably veto the “unconscionably ridiculous” Federal Price Gouging Prevention Act,” which passed the House and now moves to the Senate.
From Steven Landsburg’s new book “More Sex is Safer Sex: The Unconventional Wisdom of Economics:”
“Common sense tells you that promiscuity spreads AIDS, population growth threatens prosperity, and misers make bad neighbors. If your common sense tells you otherwise, remember that common sense also tells you the earth is flat. I wrote this book to assault your common sense.
My weapons are evidence and logic, especially the logic of economics. Logic is most enlightening – and surely most fun – when it challenges us to see the world in a whole new way. This book is about that kind of logic.”
Read a Q&A here with Landsburg on the Freakonomics blog.
In the gas price chart above (click to enlarge), the most recent 6-week period (May 1 – June 15) shows about a 24 cent increase in gas prices from $3.00 per gallon to $3.24 during the first 3-week period (May 1 – 22), and about a 24 cent decrease in prices during the second 3-week period (May 22 – June 15) from $3.24 to $3.00.
A Google News searchs reveals the following results:
May 1 to 22, for the term “rising gas prices”: 10,639
May 22 to June 15, for the term “falling gas prices”: 3,349
Conclusion: Rising gas prices get more than 3X the news coverage as falling gas prices, even when the price increase is the same as the price decrease (24 cents in this case), over the same period of time (3 weeks in this case).
It’s probably also the case that when it comes to the economy, bad economic news always gets more press coverage than positive economic news, which leads to the general public falsely thinking economic conditions are worse than they actually are.
From Jessica Hagy’s Indexed website, who proves daily that if you can think it, you can graph it.
In Salinas, CA, a farm town 120 miles south of San Francisco, there are 33 approved food trucks and 240 mobile vendors, which include ice cream push carts (paleteros), flower vendors and other street sellers.
Taco trucks, like the one pictured above in Salinas, are cultural icons and social magnets in Mexico, and provide good, cheap food (see the $1.25 taco above), as well as good jobs for entrepreneurs.
But the taco trucks have become a flashpoint in at least a dozen cities in California — including Santa Rosa, 55 miles north of San Francisco, and Gardena, 15 miles south of Los Angeles — and in other states, like Arizona, Oregon and Tennessee, according to today’s NY Times article, “Proposed Ban on Taco Trucks Stirs Animosity in a California Town.”
For example, a proposed ordinance in Salinas would phase out mobile and stationary catering vehicles, most of which are taco trucks, by 2011, and would restrict how, when and where 240 pushcart vendors could sell cold prepared foods.
Who’s behind the ordinance? Well, it’s not too hard to figure that out, it’s the “Salinas United Business Association,” complaining that the taco trucks have “an unfair competitive advantage.”
Translation: the taco trucks have better food at lower prices.
The NY Times quotes a blogger on Chowhound.com (website “for those who live to eat”) who said, “It really comes down to competition. Why should one class of merchant roll over for another class of merchant?”
Amen. I’d love to live in a city with 33 food trucks competing for my business, and be able to buy tacos for $1.25 like in the picture.
(551 Students: We’ll cover this topic of “barriers to entry” at the next residency.)
See a related CD post on the “taxi cartel in Minneapolis.”