Carpe Diem

Ticket scalping as a beneficial form of risk management?

In an interesting article that is forthcoming in the next issue of Economic Affairs, Vincent Geloso (Ph.D. candidate at the London School of Economics) presents an interesting defense of “ticket scalping,” arguing that it can provide an effective form of risk management and greater certainty of profits for artists, concert promoters and venue owners. By managing risk with ticket scalping on secondary ticket markets, there could be an increase in the overall supply of events, concerts and ticket sales, especially for lesser-known artists.

Here’s the abstract and part of the conclusion from the paper “Ticket Scalping As a Means of Managing Risk“:


Ticket scalping is often criticized for raising prices to consumers and producing unjustified profits. Conventional economic theory, however, shows that ticket scalping allows tickets to be reallocated in a more optimal manner with regard to the utility of consumers. This article points to an additional benefit from ticket scalping: by providing a secondary market it acts as a potentially powerful tool of risk management for event organizers. It is argued that curtailing ticket scalping may in the long run lead to a decline in the supply of privately provided events and concerts, especially for lesser-known artists. This in turn may stimulate a demand for public subsidy.

From the conclusion:

Since resellers are better at managing risks than site owners, they allow tickets to be reallocated to those who attach the greatest value to them. This leads to attendance at events being maximized, which also means greater certainty of profit for site owners, which in turn increases the supply of such events. Hence, curtailing secondary markets may imply a reduction in supply of these events, which will deprive consumers of opportunities for entertainment. In terms of political economy, it may also mean that organizations involved in sport, the arts and other cultural events seek subsidies to keep the supply at higher levels, which would have been unnecessary in the presence of secondary markets for tickets.

Carpe Diem

US violent crime is lowest in 44 years and half the rate in 1991, so why have we become the United States of SWAT?

crimeJohn Stossel’s column this week is called “Policing America,” and he points to the fact that violent crime in America peaked in 1991 at 758.2 crimes per 100,000 population, and has consistently fallen in almost every year since then. Last year the violent crime rate was the lowest since 1970, and less than half the rate in 1991 (see chart above).

So why have we become the “United States of SWAT,” with 50,000 no-knock SWAT raids every year, almost six every hour, one every ten minutes, and more than 100 every day? In these no-knock, SWAT raids, people’s homes are often destroyed, infant children have been burned with stun grenades, hundreds of family pet dogs have been shot and killed, and dozens of suspects and some police officers have died in these violent paramilitary operations. Not all, but most of these SWAT raids are part of America’s cruel, expensive, senseless and immoral War on Drugs Otherwise Peaceful Americans Voluntarily Using Plants, Weeds, and Intoxicants Arbitrarily Proscribed by the Government. In some cases, these increasingly frequent SWAT raids are mobilized over the possession or sale of very small amounts of weeds or other controlled substances.

Here’s part of Stossel’s column:

SWAT teams were once used only in emergencies such as riots or robberies where hostages were taken. But today there are more than 50,000 “no-knock raids” a year. It’s not because crime got worse. There is less crime today. Crime peaked around 1990 and is now at a 40-year low (see chart). But as politicians keep passing new criminal laws, police find new reasons to deploy their heavy equipment.

Washington Post reporter Radley Balko points out that they’ve used SWAT teams to raid such threatening haunts as truck stops with video poker machines, unlicensed barber shops and a frat house where underage drinking was reported.

SWAT raids are dangerous, and things often go wrong. People may shoot at the police if they mistake the cops for ordinary criminals and pick up guns to defend their homes against invasion. Sometimes cops kill the frightened homeowner who raises a gun.

Because America has so many confusing laws, and also because cops sometimes make mistakes, it’s harder to assume — as conservatives often do — that as long as you behave yourself, you have nothing to fear. The raids should also trouble libertarians who sometimes believe that government can mostly be trusted when it sticks to “legitimate” functions like running police, courts and the military. Government always grows, and government is force. Force is always dangerous.

It’s healthy for conservatives, libertarians and liberals alike to worry about the militarization of police. Conservatives worry about a repeat of incidents like the raids on religious radicals at Ruby Ridge and Waco, Texas. Liberals condemn police brutality like the recent asphyxiation death of a suspect at the hands of police in New York.

This is a rare issue where I agree with left-wing TV host Bill Maher. On his TV show last week, Maher ranted about no-knock raids “breaking up poker games, arresting low-level pot dealers.” Maher’s right to point out that most SWAT raids are now done to arrest nonviolent drug offenders. “It’s a guy who sells weed,” says Maher. “You don’t need to shoot his dog and crash through his window.”

But they do. If cops continue to take a warlike us-versus-them approach to policing the population, they just might bring the left and right together. Government is reckless, whether it is intruding into our lives with byzantine regulations that destroy a fledgling business or with a flash-bang grenade like the one that critically wounded a child in a recent SWAT raid in Janesville, Georgia.

Regardless of our political leanings, we should be wary of big government in all its forms.

Carpe Diem

Chart of the day: Hourly wages vs. CPI-Food vs. CPI-All

foodUpdated: The chart above shows the percent changes between January 2000 and June 2014 for: a) Average Hourly Earnings (blue line), b) the CPI for Food and Beverages (red line) and c) the CPI for All Items. As the chart shows, average hourly earnings have increased over the last 14 years by more (49.6%) than food and beverage prices (45.7%) and all prices on average (40.3%).

Updated: This then provides more evidence that: a) average hourly earnings have increased more than the CPI for Food and Beverages since 2000, and b) real, inflation-adjusted average hourly earnings have risen since 2000.

Note: This chart is partly in response to a recent article in The Federalist by Sean Davis who claims that “food inflation blows away wage growth,” “food prices have soared since 2009,” and “food prices are growing 64 percent faster than wages.”

New Update: A more detailed response to Sean Davis, with a more exact match of his time period (June 2009 to June 2014), now appears here.

Carpe Diem

Chart of the day: Spending on food as a share of consumer expenditures, it’s been remarkably flat for a decade at 7.7%

foodconsRelated to my earlier post today on food inflation, the chart above shows that the share of consumption expenditures on food at home for Americans hasn’t changed in the last decade, and has remained remarkably constant at about 7.7%. In fact, it was slightly lower last year at 7.68% than in any year since 2007, when it was 7.56%. If we really were experiencing the high levels of food inflation that many claim we are, shouldn’t we be seeing an upward trend in this data series, and not a slight decline? And for those who wax nostalgic about the “golden age of the middle class” in the 1950s, consider that spending on food as a share of consumer expenditures was nearly three times higher then — more than 22% in the early 1950s — than it is today at 7.68%.

Carpe Diem

Who’d a-thunk it? Liberal, anti-capitalist Michael Moore’s divorce reveals an ostentatious, lavish capitalist lifestyle?

MooreHouseFlint, Michigan native and ardent critic of capitalism Michael Moore is engaged in a bitter divorce battle with his wife of 21 years and details are now emerging about the couple’s ostentatious display of wealth. According to a report in today’s Detroit News:

Moore and [his wife] Kathy Glynn own nine properties in Michigan and New York, including a Manhattan condo that once was three apartments.

The breakup is scheduled to be finalized in a settlement Tuesday (today) at Antrim County Circuit Court in Bellaire, Michigan (near Traverse City). By reaching a settlement, Moore avoids a trial that could have aired dirty laundry common in high-proile breakups and impugned his long-hewn image as a common man by disclosing details of his comfortable life. In legal pleadings, Moore blames his wife for the expansion of their 10,000-square-foot home on Torch Lake, which has a market value of $2 million (pictured above).

He criticizes capitalism, but capitalism made him rich,” said Gary Tracy, owner of Bellaire Bait and Tackle.

Abby Phillip of the Washington Post asks exactly the right question:

What could be more ironic than the liberal, anti-capitalism firebrand Moore battling with his wife about an ostentatious display of his wealth?

And as Peter Schweizer said in 2006 when interviewed by NRO about his book “Do As I Say (Not As I Do): Profiles in Liberal Hypocrisy“:

Michael Moore professes to hate capitalism (“the last evil empire” he’s called it) but practices it in spades.

Exhibit A: pegs Michael Moore’s wealth at $50 million.

Bottom Line: Despite his professed hatred of capitalism, the free-market capitalist system has been very, very good to Michael Moore, and has allowed him to live an ostentatious, lavish lifestyle that most of us can’t even imagine. It’s almost like a love affair, or a love story about capitalism, or something like that… Maybe there’s a movie there….

Carpe Diem

Why it’s still the case that Americans should stop whining and complaining about rising food prices

Last September, I wrote a post titled “Americans love to complain about rising food prices; here are three reasons they should stop whining.” In an article today in The Federalist, Sean Davis responds to my post in an article titled “American Families Are Right To Be Worried About Inflation.” Davis levels a number of criticisms at my post, and also criticizes more recent posts about inflation by Ramesh Ponnuru and Jimmy Pethokoukis. Here are some of Davis’s criticisms:

A lot has happened since Perry told us ten months ago to stop whining. Did events prove him right or wrong? Was his inexplicably bizarre method of averaging four years’ worth of inflation data actually an effective way of predicting future price growth? Let’s take a look.

My “inexplicably bizarre method of averaging four years’ worth of inflation data” was actually explained in my post: Given the somewhat volatile history of food prices on a monthly basis, we can look at the average food inflation rate over a longer period of time to smooth out some of the volatility. I showed a chart of the 48-month moving average of monthly food inflation rates to provide a smoothed measure of food inflation back to the 1960s.

Here’s a different way to look at historical food inflation using an alternative method of smoothing out the extreme volatility in monthly food prices. The chart below shows food inflation on an annual basis, using the average values of monthly “CPI: Food” in each year from 1990 to 2013, and the June value of “CPI: Food” for 2014.

foodannualOver the last 25 years, annual food inflation has averaged 2.68%, and has been as high as 5.8% in 1990 and 5.5% in 2008. Over the last year, food inflation has been only 2.23%, or almost 0.50% below the 25-year average. So again, I say to Americans — “stop your whining” about food prices and food inflation, it’s really not that bad. It could be worse, and it was worse – in 7 out of the previous 10 years, inflation was higher than it is right now this year!

I’d also point out that I certainly wasn’t using past food inflation to predict future food inflation, I was merely pointing out that actual, historical food inflation as of last summer certainly wasn’t very high at all, by historical standards:

Food prices over the most recent 12 month period through July [2013] have risen by only 1.44%, following 12-month increases of 1.38% in June, and 1.37% in May. Over the last 12 months starting last August, the annual food inflation rate has ranged between 1.37% and 2%, and averaged 1.6%.

With those relatively moderate rates of food inflation a year ago, I think I was quite justified telling consumers to stop their whining. What food inflation? There was none!

Well, what’s happened since last September? According to Davis:

It turns out food prices have soared since Perry so confidently told us to shut up about them. The chart below shows the rapid disparity between food price growth and wage growth since Perry issued his “stop whining” directive. No joke: compared to less than a year ago, egg prices are up 13%. Beef is up 10%. Pork is up more than 9%. Fresh fruits are up over 7%. Overall, the prices of food at home are up 2.3%, while average hourly wages are up only 1.4%. In other words, food prices are growing 64% faster than wages.

Food Prices Since Sept. 2013

Now it’s Davis who is using an “inexplicably bizarre method” of picking six food categories to supposedly demonstrate that “food prices have soared” from September 2013 to May 2014 (June data only became available today). Here’s the problem with that “inexplicably bizarre method” — the overall CPI for All Food Items increased by only 2% from September 2013 to May 2014 (with beverages it was only 1.9%, and for food at home by 2.3% as Davis reported)! Therefore, Davis’s chart makes food inflation look artificially high by picking six food categories that all increased multiple times the 2% increase in the CPI: Food (and 2.3% for food at home).

There’s another issue with the Davis analysis – average hourly wages according to this measure increased from $20.21 in September 2013 to $20.58 in May 2014, which is a 1.6% increase. And that leads to another problem — the overall CPI increased by 1.4% between September last year and May this year, which was less than this 1.6% increase in average hourly earnings (and the same as the 1.4% wage increase used by Davis). In other words, average nominal wages by one measure increased slightly greater during that period than did overall consumer prices, meaning that real wages increased. For the measure Davis uses, real wages were flat, but not declining.

foodThe chart above displays a more realistic representation of changes from September 2013 to June 2014, and shows that both measures of hourly wages (available here and here showing increases of 1.83% and1.62%) have: a) increased by less than three measures of food inflation (1.95%, 2.1% and 2.2%), but b) by more than the increase in the CPI-All Items (1.4%), meaning that real wages have increased over that nine-month period.

Federalist Food Price Time Series 07072014

Davis then compares increases in his selective sample of six food groups to the increase in average hourly earnings over a longer period going back to June 2009 (see chart above), and concludes that “food inflation (of my six bizarrely selected food groups) blows away wage growth.” But we’ve got the same problem here as before. Average food prices increased only 11.26% between June 2009 and May 2014, nowhere near the increases of 20% to 35% in the six-item food sample. Also, average hourly earnings increased by 10.61% over that period, slightly higher than the overall increase in consumer prices of 10.38%, which means real earnings increased slightly since June 2009.

Here’s another problem for Davis’s food price analysis. The measures he uses are food price indexes constructed by the BLS, and not actual retail food prices. For whatever reason (maybe because of attempts to adjust for quality?), the BLS price indexes Davis uses for food items like eggs don’t match actual retail price that consumers actually pay at grocery stores, as also reported by the BLS here.

For example, Davis reports correctly that the BLS index measure for eggs increased by 13% between September 2013 and May 2014. But according to actual retail price data from the BLS, a dozen eggs increased in price by only 5.2% during that period, from $1.897 per dozen to $1.996, which is less than half of the increase reported by Davis using the egg index series. Now that June retail price data are available, egg prices fell last month, and the increase in eggs since last September through June is only 2.7%, from $1.897 to $1.948 per dozen. That increase in the retail price of eggs from September 2013 to June 2014 is displayed in the table below. Also displayed in the table below are percentage increases in the retail prices of 30 different food items over the last nine months since my September post. Those 30 items represent most of the BLS items (and categories) available from its “Average Price Data” database here.

Notice that over the last nine months, the retail prices of 19 food items have decreased, while 11 have increased. The biggest food price increases since last September have been for the various cuts of beef (see a detailed list here), which have all registered double-digit percentage price increases. Pork products like ham (3.4%) and bacon (7.5%) have also increased, as have milk (5.8%), eggs (2.7%) and cheese (2.3%).

On the other hand, other meats have declined in price since last September — turkey by almost 12% from $1.819 to $1.606 per pound, and chicken breasts by 2.9%, from $3.608 to $3.504 per pound. From the table, we can see that the retail prices of many other food items have fallen, many pretty considerably, since last September such as strawberries (-13.8%), coffee (-8.3%), potatoes (-8.2%), cookies (-8.2%), bologna (-7.5%), peanut butter (-7.3%), etc. Importantly, many of the food items that showed significant price declines (chicken, turkey, coffee, potatoes, sugar, etc.) weren’t included in the food items used by Davis.

Bottom Line: Also over the September 2013 to June 2014 period, average hourly wages increased by 1.83% (from $20.21 to $20.58), which was slightly higher than the 1.69% overall increases in all consumer prices during that period (including food). The CPI for Food increased 2.06%, although only by 1.95% when beverages are included. But it’s not food prices alone that determine our cost of living, it’s the cost of all consumer goods and services, as measured by the CPI-All Items. And by that measure of all consumers prices, average hourly earnings have been increasing greater than overall consumer prices, meaning that real wages have increased slightly.

To conclude by paraphrasing Davis, the prices of things people buy have really not been growing faster than most average workers’ ability to buy them. For example, over the most recent 12-month period, the increase in average hourly earnings (2.3%) has outpaced the increase in the CPI (1.9%), meaning that real wages have gone up. It’s time for pundits to stop pretending that rapidly rising prices are such a big deal, because they’re really not. And it’s still the case that Americans should stop whining about rising food prices, because they’re not. Especially if you’re eating strawberries, turkey, chicken, coffee, grapefruit, ice cream and peanut butter these days.

Food Item Change in Retail Price, Sept. 2013 to June 2014
Strawberries -13.8%
Turkey -11.7%
Coffee -8.3%
Potatoes -8.2%
Cookies, Chocolate Chip -7.6%
Bologna -7.5%
Peanut Butter -7.3%
Grapefruit -4.7%
Potato Chips -3.9%
Sugar -3.6%
Chicken Breast -2.9%
Oranges -2.6%
Spaghetti -2.5%
Ice Cream -2.2%
Broccoli -1.6%
Bread, White -1.3%
Margarine -1.0%
Apples -0.9%
Orange Juice -0.3%
Rice 0.1%
Bananas 1.0%
Flour 1.9%
Cheese 2.3%
Eggs 2.7%
Ham 3.4%
Milk 5.8%
Tomatoes 7.0%
Bacon 7.5%
Ground Beef 10.8%
Lettuce 14.4%
CPI – All Items 1.7%
CPI – Food 2.1%
Average Hourly Wages 1.8%
Carpe Diem

For ‘representational equity,’ Univ. of Wisconsin-Madison calls on professors to use racial profiling for assigning grades

In the summer of 2006, as the citizens of Michigan were getting ready to vote that November on a ballot proposal that would decide whether publicly-funded Michigan universities could continue their admissions practices of racial double standards and affirmative discrimination, I wrote an op-ed about Proposal 2 that appeared in the Detroit Free Press. An excerpt of that article appears below. (Note: The ballot proposal passed by a wide 16-point margin of 58% to 42%.)

To understand why it’s time to end racial preferences in higher education, consider the following scenario. A university professor walks into class at the beginning of the semester. After a review of required texts, assignments and examinations, the professor discusses grading. The professor explains that there is a new university policy that applies a double standard for grading and is an extension of the university’s race-based admissions policies.

A standard grading scale will apply to all white, Asian and Arab students. African-American and Hispanic students will automatically receive extra points for all assignments and will receive a final letter grade based on a preferential grading scale.

Most people would find this a blatant form of discrimination.

First, the students receiving academic favoritism might justifiably object that they are being stereotyped as a homogeneous group. It would be offensive to many of those students to assume automatically that they all need preferential academic treatment.

Second, this form of academic profiling creates a disincentive for black and Hispanic students to study as hard as they would otherwise. Moreover, these students could face a special-preference stigma when they enter the job market or apply to graduate school. Their academic credentials could justifiably be questioned.

Moreover, these students could face a special-preference stigma when they enter the job market or apply to graduate school. If a student graduates from college with a 3.5 grade point average, a prospective employer or graduate program would justifiably question the academic credentials and potential abilities of those students who received race-based adjustments in all of their undergraduate course work.

Finally, most everyone would object to the fundamental unfairness of giving preferential treatment to certain groups of students. The students who didn’t receive special grading preferences would rightfully feel they were being treated unfairly and being discriminated against. Why should an Arab or Asian student with an 85% score in an accounting class get a letter grade of B if a black or Hispanic student with the same percentage gets an A?

These and many other reasons explain why the only acceptable practice in the classroom is the equal treatment of all students as individuals, without regard to race, sex, ethnicity or religion. And yet the hypothetical classroom-based discrimination is exactly the type of admission-based discrimination that prevails at some public universities in Michigan. And it is the obvious objections to academic favoritism in the classroom that explain why racial favoritism in college admissions is being legally challenged.

Students are already treated as individuals without regard to race by university professors once they enter college. Treating all students as individuals when they first apply to college will ultimately move us further along toward the ideal of a colorblind society than maintaining the current admissions practices of double standards, special preferences and racial discrimination.

MP: Never did I think that the hypothetical example of race-based grading used in my op-ed to illustrate why race-based admissions are equally objectionable and offensive would ever be seriously considered. But I guess I underestimated the extent to which racial profiling, affirmative discrimination, and diversity remain so deeply embedded and entrenched in the liberal minds of college administrators and professors.

Exhibit A: In a major departure from race-neutral grading that has been a central part of higher education in America for hundreds of years, it looks like the University of Wisconsin-Madison is now actually calling on its professors to engage in racial profiling and affirmative discrimination when they distribute grades in their classrooms.

W. Lee Hansen, University of Wisconsin-Madison economics professor emeritus, explains in a recent op-ed (“Madness in Madison“) what is happening at his institution:

Many American colleges and universities are in the thrall of “diversity,” but none more so than my institution, the University of Wisconsin. This spring, the university adopted a new plan that, according to Board of Regents policy, “places the mission of diversity at the center of institutional life so that it becomes a core organizing principle.” That is, promoting diversity appears to be more important than teaching students.

This Framework for Diversity and Inclusive Excellence sailed through our Faculty Senate without the least bit of attention, much less the “sifting and winnowing” on which it prides itself.  Although much of the language is a thicket of clichés, no one dared challenge it. Moreover, there was no probing of the ramifications of the plan. Apparently, “diversity” has become such a sacred cow that even tenured professors are afraid to question it in any way.


The new framework includes eight essential “working definitions,” among them the already-discussed diversity, as well as others: “compositional diversity,” “critical mass,” “inclusion,” “equity mindedness,” “deficit-mindedness,” “representational equity,” and “excellence.” Let us take a closer look at one of these working definitions included, namely “representational equity.”

It calls for “proportional participation of historically underrepresented racial-ethnic groups at all levels of an institution, including high status special programs, high-demand majors, and in the distribution of grades.”

Especially shocking is the language about “equity” in the distribution of grades. Professors, instead of just awarding the grade that each student earns, would apparently have to adjust them so that academically weaker, “historically underrepresented racial/ethnic” students perform at the same level and receive the same grades as academically stronger students.

At the very least, this means even greater expenditures on special tutoring for weaker targeted minority students. It is also likely to trigger a new outbreak of grade inflation, as professors find out that they can avoid trouble over “inequitable” grade distributions by giving every student a high grade. Is there any reason to believe that the UW system’s Inclusive Excellence plan implemented at UW-Madison is going to improve the education of its students? I can see no reason to think so. Actually, the contrary seems more likely.

The University of Wisconsin adopted its first diversity plan back in 1966 and every few years it launches a much-touted new one. During my 30-year teaching career at Madison, followed by more than a decade of retirement, I have seen not the slightest bit of evidence that the fixation on “diversity” has made the campus better in any respect.

Update: Patrick Sims, Chief Diversity Officer and interim vice provost for Diversity and Climate at UW-Madison issued a statement a few days ago disputing Professor Hansen’s article. In that statement Sims said that UW-Madison’s diversity plan “absolutely does not extend to how instructors should or could grade students.” Further, Sims called Professor Hansen’s column “a gross misrepresentation of our current efforts.”

HT: Morgan Frank

Carpe Diem

Monday afternoon linkage

1. Video of the Day. Do girls fall behind in science and engineering because society tells them they should be pretty, rather than, “pretty brilliant?” That’s the message of a new Verizon ad campaign. But in the video above, Christina Sommers, the Factual Feminist, shows that many inconvenient facts in the Verizon ad were held back to construct the misleading and false narrative about girls and women in STEM. For example, the ad failed to acknowledge that women earn 59% of bachelor’s degrees in biology, 48% of chemistry degrees and 44% of degrees in mathematics.

satratio2. Chart of the Day above illustrates graphically one of the reasons that women are under-represented in the more mathematically intensive STEM fields like engineering and computer science. In 2013, boys out-performed girls for perfect scores of 800 on the math SAT test by a male-female ratio of 1.88 to 1 (188 boys for every 100 girls), and for a near-perfect score of 790 by a ratio of exactly 2 to 1.

3. “Smart Apps vs. Obamacare” by Greg Beato in Reason:

Health care is on the verge of becoming far more individualized, far more contextualized and collaborative, and most of all, far more ubiquitous. And as this happens, the Affordable Care Act will start to look more and more anachronistic, a 20th century solution imposing itself onto a rapidly shifting set of 21st century conditions.

Indeed, imagine if, in the late 1990s, the federal government decided to ensure our right to affordable music by making every American purchase a monthly subscription to the Columbia House Music Club or Tower Records. That would have been great for the Columbia House Music Club, Tower Records, and, say, Sisqo, but would it have been great, in the long run, for the American people?

4. Markets in Everything. uberFamily just expanded to D.C. and Philadelphia, and offers customers the option of ordering a vehicle that comes with a car seat for children. (Source: Washington Post)

5. Meanwhile, as Uber does its best to please and serve consumers, the Denver police department is doing its best to please and serve the local taxi cartel by harassing Uber drivers near the airport. See the article “My Uber got pulled over by the Denver police — and then things got really weird.”

billboard6. Billboard of the Day above.

7. Exhibit A: In San Diego, a local Domino’s becomes the first store in the U.S. to go all-digital with online ordering only. The San Diego City Council just voted to raise the city’s minimum wage from $9 currently to $11.50 an hour by 2017 in several steps. (HT: Mike Robertson)

gummit8. Poster of the Day above. (HT: Pete Boetke via Don Boudreaux)

9. Who-d a-Thunk It? Politicians are hypocrites?

Massachusetts Sen. Elizabeth Warren—a leading progressive populist, possible Democratic presidential candidate, self-proclaimed champion of the poor, and enemy of greedy corporations — supports the Export-Import Bank. That’s right: The woman best known for demonizing big businesses nevertheless wants to maintain an outlandishly generous subsidy package for them.

technology10. Bonus Chart of the Day above (click to enlarge) from Derek Thompson’s article in The Atlantic from a few years ago titled “The 100-Year March of Technology in 1 Graph.” It shows the “adoption rate” of new technologies and is pretty fascinating. For example, it took almost 100 years from the introduction of the automobile until 90% of US households owned a car. In contrast, more recently introduced new consumer products like the color TV, microwave, cell phones, computers, and air conditioning were more quickly adopted by a majority of US households, usually within a decade, and by 90% of households within several decades in most cases. (HT: Hitssquad)

Carpe Diem

Bonus chart of the day: Expected inflation from the bond market using the 10-year Treasury-TIPS spread = 2.23%

spreadThe monthly 10-year Breakeven Inflation Rate over the last ten years is displayed above and represents a market-based measure of expected inflation derived from the spread between 10-Year Treasury Constant Maturity Securities and 10-Year Treasury Inflation-Indexed Constant Maturity Securities as calculated and reported by the St. Louis Federal Reserve. The latest value from the Treasury spread in June implies that bond market participants expect inflation to average 2.23% annually over the next 10 years. In other words, the current bond market-determined measure of expected inflation, based on thousands of bond market participants who are putting millions of dollars at stake, suggests that inflation will remain low and stable over the next ten years at less than 2.50%. More market-based evidence that there are currently no inflationary pressures building in the US economy, even over a ten-year horizon.

See Jimmy P’s related post about inflation (“Why Amity Shlaes is Dead Wrong About Inflation”) here and my recent post (“More on Why Amity Shlaes is Dead Wrong About Inflation”) here.

Update: Here’s a related chart below of the “Expected Inflation Yield Curve” from 2015 to 2044, based on the Cleveland Fed’s estimates of inflation expectations for one-year periods out to a time horizon of 30 years. According to the Cleveland Fed:

The Cleveland Fed’s estimate of inflation expectations is based on a model that combines information from a number of sources to address the shortcomings of other, commonly used measures, such as the “break-even” rate derived from Treasury inflation protected securities (TIPS) or survey-based estimates.

The Federal Reserve Bank of Cleveland reports that its latest estimate of 10-year expected inflation is 1.83% (see chart below). In other words, the public currently expects the inflation rate to be less than 2 on average over the next decade.

clevelandMore empirical evidence that future inflation, out to a time horizon of 30 years, is expected to remain low and stable in a range between 1.5% and 2.25%.