Carpe Diem

Quotation of the day on fossil fuel disinvestment….

…. is from Harvard President Drew Faust, in her statement explaining the university’s position on fossil fuel disinvestment:

Universities own a very small fraction of the market capitalization of fossil fuel companies. If we and others were to sell our shares, those shares would no doubt find other willing buyers. Divestment is likely to have negligible financial impact on the affected companies.

I also find a troubling inconsistency in the notion that, as an investor, we should boycott a whole class of companies at the same time that, as individuals and as a community, we are extensively relying on those companies’ products and services for so much of what we do every day. Given our pervasive dependence on these companies for the energy to heat and light our buildings, to fuel our transportation, and to run our computers and appliances, it is hard for me to reconcile that reliance with a refusal to countenance any relationship with these companies through our investments.

Carpe Diem

Working around the delayed Keystone XL pipeline: In the US with oil trains and in Canada with ‘Keystone on steroids’

In the US: The White House decides oil trains are the new Keystone pipeline.

The White House blockade of the Keystone XL and other modern pipelines hasn’t stopped domestic fracking or development of the Alberta oil sands. Instead, the industry transports oil and natural gas to refiners and midstream companies using the technology of the 19th century: Seven of every 10 barrels from North Dakota’s Bakken shale move by rail, and total U.S. carloads of crude oil have increased 4000% since 2008.

Meanwhile in Canada: Canada finds a surprise route around Obama with an alternative pipeline that would be “Keystone on steroids”:

So you’re the Canadian oil industry and you do what you think is a great thing by developing a mother lode of heavy crude beneath the forests and muskeg of northern Alberta. The plan is to send it clear to refineries on the U.S. Gulf Coast via a pipeline called Keystone XL. Just a few years back, America desperately wanted that oil.

Then one day the politics get sticky. In Nebraska, farmers don’t want the pipeline running through their fields or over their water source. U.S. environmentalists invoke global warming in protesting the project. President Barack Obama keeps siding with them, delaying and delaying approval. From the Canadian perspective, Keystone has become a tractor mired in an interminably muddy field.

In this period of national gloom comes an idea — a crazy- sounding notion, or maybe, actually, an epiphany. How about an all-Canadian route to liberate that oil sands crude from Alberta’s isolation and America’s fickleness? Canada’s own environmental and aboriginal politics are holding up a shorter and cheaper pipeline to the Pacific that would supply a shipping portal to oil-thirsty Asia.

Instead, go east, all the way to the Atlantic. Thus was born Energy East, an improbable pipeline that its backers say has a high probability of being built. It will cost C$12 billion ($10.7 billion) and could be up and running by 2018. Its 4,600-kilometer (2,858-mile) path, taking advantage of a vast length of existing and underused natural gas pipeline, would wend through six provinces and four time zones. It would be Keystone on steroids, more than twice as long and carrying a third more crude.

Carpe Diem

More on Garth Brooks and ticket scalping

Following up on the same topic that I featured on a recent CD post about ticket scalping and Garth Brooks, Billboard has an interesting article (“Inside Garth Brooks’ Master Plan to Launch the Biggest Tour of All Time“) that provides some details on how Garth Brooks is pursuing some unusual strategies for his national tour that include: single-price affordable tickets (about $65-70 total cost), multiple shows in the same city (11 now in Minneapolis), multiple shows on the same day (6:30 p.m. and 10:30 p.m. shows in Minneapolis), and adding additional shows based on ticket demand (the number of Minneapolis concerts just increased from 10 to 11), and waiting until the last minute to announce shows in a new city. Many of these strategies, including using paperless tickets for the best seats in some shows, will achieve another apparent goal that Brooks has: minimizing ticket sales on the secondary market at prices above face value (“ticket scalping”). Here are some details from the article:

Paradoxically, the singer’s unusual approach to ticket pricing places him at a fraction of his market value: There is no VIP, premium, gold circle or scaling. In Chicago, tickets were $56.94, typical for the tour, plus $2.56 in tax and a $6 service charge, totaling $65.50. The low price and high demand would seem to set up a field day for ticket brokers, but so far it actually has achieved the opposite effect. While tickets are limited to six per person [eight in Minneapolis] and Ticketmaster uses its array of anti-scalping measures to combat bots and brokers, Brooks is playing enough dates to satisfy demand at the primary level to eliminate the need for a secondary market.

“When you look at StubHub on these shows, you would expect to see tickets posted there for hundreds if not thousands of dollars,” says a source close to the tour. “But you don’t, because he has offered so much supply that everybody who wants to go is getting to go, at a reasonable price.”

How those multiple shows are scheduled is another unusual aspect of the tour. In an era when tickets are sold as much as a year in advance — and often an entire tour goes up at once — Brooks announces his about a week before the on-sale date. It’s a practice that has been used regularly at the arena level by only one other artist: Prince. In his case, the aim is to generate excitement and urgency, but for Brooks, the strategy also may be another attempt to stymie ticket resellers. Two or three shows are typically announced in one market at a time, and then more are added as the on-sales progress, based on real-time statistics, website traffic and other factors in Ticketmaster’s secret sauce. The call must be made — several times — to add new concerts while still selling for the previous one. “It’s an imperfect science,” explains one insider. “You have to sell to demand, and pull the trigger at the right time.”

MP: A few comments –

1. Another unusual marketing strategy for Garth Brooks is that he is using Ticketmaster for some markets like Jacksonville and Lexington, but not for Minneapolis, where he is using ticket broker AXS.

2. Even with almost a quarter-million seats available for Garth’s concerts in Minneapolis, there does seem to be a pretty active secondary market on Stub Hub for all 11 Minneapolis shows, all above face value. I think for the Minneapolis shows, there is a combination of “ticketless (credit card entry)” for the best seats in the house and e-tickets (transferable I assume) for the rest of the seats. The seating chart below of the Target Center showing tickets available on StubHub for the November 7 Garth Brooks show seems to confirm that – there are no tickets for sale in the seating sections closest to the stage (white sections).

3. As I’ve mentioned many times before, an active ticket scalping market at prices above face value can generally only happen when the artist, manager, promoter or venue: a) under-price the tickets relative to the market price, and/or b) under-supply the number of tickets relative to fan demand. Raise initial ticket prices and/or increase the supply and the secondary market will evaporate. In this case, Brooks has kept ticket prices low and only increased the supply significantly – 11 shows in Minneapolis at the 20,000-seat capacity Target Center (and he may add more?) will provide a total of about 220,000 tickets for sale. If his intention was to completely eliminate the secondary market, Garth Brooks didn’t accomplish that goal. But if intended to minimize or reduce ticket scalping, especially for the best seats in the house, he certainly did that! And if he really wanted to further reduce the secondary market, he could have priced tickets closer to their true market value, instead of under-pricing them so significantly at $70.

target

Carpe Diem

The truth about the CEO-to-worker pay gap — looking at all US executive officers, it’s about 5-to-1 not 331-to-1

Michael Saltsman and I have an op-ed in today’s WSJ titled “About That CEO/Employee Pay Gap“:

Income inequality is a key theme of Democrats’ 2014 re-election strategy, and the nation’s chief executive officers are an easy target. Before retiring to their districts for the fall, the House Democratic Caucus rallied behind the CEO/Employee Pay Fairness Act, which would prevent a public company from deducting executive compensation over $1 million unless it also gives rank-and-file employees raises that keep pace with the cost of living and labor productivity.

Meanwhile, the AFL-CIO and its aligned think tanks have made hay of the huge difference between the pay of CEOs and employees. One of the most widely cited measures of the “gap” comes from the AFL-CIO’s Executive Paywatch website. The nation’s largest federation of unions laments that “corporate CEOs have been taking a greater share of the economic pie” while wages have stagnated for the rest of us. As proof, it points to a 331-to-1 gap in compensation between America’s chief executives and the pay of the average worker.

That’s a sizable number. But don’t grab the pitchforks just yet. The AFL-CIO calculated a pay gap based on a very small sample—350 CEOs from the S&P 500. According to the Bureau of Labor Statistics, there were 248,760 chief executives in the U.S. in 2013. The BLS reports that the average annual salary for these chief executives is $178,400, which we can compare to the $35,239-per-year salary the AFL-CIO uses for the average American worker. That shrinks the executive pay gap from 331-to-1 down to a far less newsworthy number of roughly five-to-one.

Of course, it’s true that some chief executives heading large multinational companies do command impressive seven- or eight-figure compensation packages. But the data don’t support the rhetorical claim that this slice of the “economic pie” is what’s driving stagnant pay for others on staff. Consider Yum Brands, the parent company of well-known fast-food brands like Pizza Hut, Taco Bell, and KFC. The compensation of the company’s five-member executive team has been a point of contention for the Service Employees International Union-backed fast food protests that have occurred periodically over the past two years. Filings with the Securities and Exchange Commission put the total pay package for the company’s executive team at $30.7 million.

That might seem like a lot of wealth the company could “share.” But like many service-industry employers, Yum Brands has a lot of people to share it with. The company’s 2013 annual report indicates that it employs 539,000 people, 86% of whom work part-time. If the executive team were able to redistribute 25% of their salaries, incentive pay and stock options to these part-timers, the net impact on hourly pay would be just over a penny-per-hour raise before taxes. Even if the executive team took a 100% pay cut and distributed the money equally to the company’s 463,000 part-timers, hourly wages would only rise by five cents [before taxes].

The point is not that CEOs deserve more money, or less. If an executive is underperforming, the corporation’s board can and should adjust his pay appropriately or terminate his employment. And if the CEO is making the shareholders rich, the board might increase his compensation. But neither voters nor policy makers should make poorly informed decisions about redistributive public policies based on a faulty understanding of how much executives are paid and why entry-level employees aren’t paid more.

MP: As I calculated in this recent CD post, you could confiscate 100% of the compensation of all US CEOs in the S&P 500 last year and then redistribute that $6 billion of executive compensation to America’s 94.5 million middle-class workers, and the average worker’s income would only increase by about $1 per week – and that’s before taxes. Also, as my AEI colleague Alex Brill pointed out on Twitter, the CEO-to-worker pay ratios for the highest paid officers of the AFL-CIO are much higher than average: 8.5-to-1 for president Richard Trumka (based on his 2013 salary of $298,542) and 10.5-to-1 for executive vice-president Arlene Holt-Baker (based on her 2013 salary of $368,652).

Carpe Diem

Economic freedom generates huge benefits, but the US has experienced a substantial decline during the past decade

econfreedom1econfreedom2The annual report on the “Economic Freedom of the World” by economists James Gwartney, Robert Lawson, and Joshua Hall has just been released by the Cato Institute for the year 2014 (based on 2012 data). The report has been published annually since 1996 and assesses the degree to which countries around the world support the cornerstones of economic freedom like personal choice, voluntary exchange, freedom to enter markets and compete, rule of law, and privately property rights. Here’s how the authors explain their mission:

The foundations of economic freedom are personal choice, voluntary exchange, and open markets. As Adam Smith, Milton Friedman, and Friedrich Hayek have stressed, freedom of exchange and market coordination provide the fuel for economic progress. Without exchange and entrepreneurial activity coordinated through markets, modern living standards would be impossible.

Potentially advantageous exchanges do not always occur. Their realization is dependent on the presence of sound money, rule of law, and security of property rights, among other factors. Economic Freedom of the World seeks to measure the consistency of the institutions and policies of various countries with voluntary exchange and other dimensions of economic freedom.

The empirical results from this year’s report demonstrate why economic freedom is so important:

Nations in the top quartile of economic freedom had an average per capita GDP of $39,899 in 2012, compared to $6,253 for bottom quartile nations (see top chart above). Moreover, life expectancy is 79.9 years in the top quartile compared to 63.2 years in the bottom quartile (see bottom chart above), and political and civil liberties are considerably higher in economically free nations than in unfree nations.

Citizens of economically free countries have a standard of living that is more than six times higher than citizens of unfree countries (based on per-capita GDP), and they live almost 17 years longer on average. Also, the average income of the poorest 10% in the most economically free countries ($11,610) is 8.5 times higher than the average income of the poorest 10% in the most unfree countries ($1,358). Those are huge differences and demonstrate the power of economic freedom for elevating the quality of life for both the average and poorest citizens.

From the report’s Executive Summary, a summary of the world’s most and least economically free countries:

Hong Kong and Singapore, once again, occupy the top two most free positions. The other nations in the top 10 for economic freedom are New Zealand, Switzerland, Mauritius, United Arab Emirates, Canada, Australia, Jordan, and, tied for 10th, Chile and Finland. The 10 lowest-rated countries for economic freedom are: Myanmar, Democratic Republic of Congo, Burundi, Chad, Iran, Algeria, Argentina, Zimbabwe, Republic of Congo, and, lastly, Venezuela.

As Scott Grannis reports, there are a few sobering conclusions from this year’s report:

The United States, once considered a bastion of economic freedom, now ranks 12th in the world, tied with the United Kingdom at 7.81. Due to a weakening rule of law, increasing regulation, and the ramifications of wars on terrorism and drugs, the United States has seen its economic freedom score plummet in recent years, compared to 2000 when it ranked second globally.

Here’s another:

Global economic freedom fell slightly in this year’s report, and it remains well below its peak level of 6.92 in 2007. The average score fell to 6.84 in 2012, the most recent year for which data are available.

Looking at the details of the drop in America’s ranking for economic freedom over the last 30 years (see p. 172 in the Country Data Tables), it appears that one of the main reasons for the ongoing decline is in the area of “Legal System and Property Rights” – one of the five major areas of economic freedom (the others are Size of Government, Sound Money, International Trade, and Regulation). In 1980, the US ranked No. 1 in the world for the category “Legal System and Property Rights,” and by 2011 the US ranking fell to No. 38 before improving slightly to No. 36 in 2012. Since 2000 (the first year for some of the sub-categories), the US has declined for every single measure in this category: judicial independence, impartial courts, protection of property rights, military interference in rule of law and politics, and integrity of the legal system. And as the authors point out above, this deterioration in America’s ranking for “Legal System and Property Rights” is at least partly the result of America’s twin wars on Drugs and Terrorism. Because of the War on Drugs, the USA is the world’s largest jailer by far (50% of federal prisoners are serving time for drug offenses), and the Drug War has fueled the increasing militarization of America’s law enforcement agencies and 45,000 SWAT raids every year, and an increasing and disturbing frequency of civil asset forfeitures.

I realize that the Cato report measures economic freedom, and therefore doesn’t necessarily even capture the extent to which our civil freedoms have been eroded by America’s War on Drugs. So while we should certainly celebrate the demonstrated benefits of economic freedom highlighted in this year’s Economic Freedom of the World report, we should also be concerned about the fact that America, “long considered the standard bearer for economic freedom among large industrial nations, has experienced a substantial decline in economic freedom during the past decade.” And I would argue that at least part of America’s decline can be traced to America’s longest and most deadly, costly, and senseless and immoral War on Drugs Otherwise Peaceful Americans Who Voluntarily Choose to Ingest Plants, Weeds and Intoxicants Arbitrarily Proscribed by the Government.

Carpe Diem

What if we could confiscate 100% of CEO compensation for all S&P 500 companies and redistribute to average workers?

CEOpaya

As I’ve reported before on CD, the AFL-CIO Executive Paywatch website decries the fact that in 2013 the CEO-to-worker pay ratio was 331:1, based on a comparison of the average compensation of 350 CEOs in the S&P ($11.7 million) to the $35,239 average annual pay for the 94.5 million workers in the BLS employee category “production and nonsupervisory workers.” According to the AFL-CIO, the CEO-to-worker pay ratio has increased from 46:1 in 1983, to 195:1 in 1993, to 301:1 in 2003 and to a record 331:1 last year. Further, we learn from the AFL-CIO that:

America is supposed to be the land of opportunity, a country where hard work and playing by the rules would provide working families a middle-class standard of living. But in recent decades, corporate CEOs have been taking a greater share of the economic pie while wages have stagnated and unemployment remains high. Today’s ratio of CEO-to-worker pay is simply unconscionable. While CEO pay remains in the stratosphere, production and nonsupervisory workers took home only $35,239 on average in 2013.

OK, let’s assume that the AFL-CIO is correct that corporate CEOs have been gobbling up a greater and greater share of the payroll pie over the last 30 years. Well then what would happen if we could either: a) confiscate 100% of the compensation paid last year to all of the S&P 500 CEOs and redistribute that money to the 94.5 million production and nonsupervisory workers, or b) cap the 2013 CEO-to-worker pay ratio at either the 1983 level (46:1) or the 1993 ratio (195:1) and confiscate and redistribute the excess CEO pay above those caps to the 94.5 million workers? The table above summarizes how that confiscation of CEO pay and redistribution would affect the average worker’s annual income and hourly pay rates. Here’s a summary:

1. The AFL-CIO reports that CEOs of companies in the S&P 500 received $11.7 million in total compensation last year on average, based on an analysis of available data from 350 companies in the S&P 500. Assuming that $11.7 million was the average pay for all S&P 500 companies, the CEOs as a group would have generated $5.85 billion in income last year. If we could confiscate that total amount of almost $6 billion and redistribute it equally to all 94.5 million workers that the AFL-CIO uses for its “average worker pay” calculation, each worker would have received $61.90 in extra annual pre-tax income last year, or about 3 cents per hour for a 40-hour workweek and about 3.5 cents per hour for a 35-hour workweek (see first row in the table above).

2. If we could impose the 1983 CEO-to-worker pay ratio of 46:1, the average S&P 500 CEO compensation last year would have been only about $1.6 million, and the 500 CEOs would have earned only $810 million in 2013, instead of $5.85 billion. Distributing the approximately $5 billion in excess earnings last year to the 94.5 million workers would have increased their annual pay by $53 and their hourly pay by about 3 cents, before tax (see middle row in the table above).

3. Imposing the 1993 CEO-to-worker pay ratio of 195:1 would mean that the average CEO compensation last year would have been only about $3.4 million, generating nearly $2.5 billion in excess CEO pay to redistribute to average workers. Each of the 94.5 million workers would have seen an increase in their annual pay of less than $26, and their hourly pay would have gone up by less than 2 cents, before tax (see last row in the table above).

MP: Even if the AFL-CIO could have engaged the services of a magic genie (or the federal government) to confiscate 100% of the compensation of all US CEOs in the S&P 500 last year, and then redistributed that $6 billion of executive compensation to America’s 94.5 million middle-class workers, the average worker’s income would have only increased by about $1 per week – and that’s before taxes. And if the AFL-CIO could have capped CEO compensation last year at the 195:1 ratio of CEO to average worker pay that prevailed 20 years ago, and redistributed the excess above last year’s actual CEO pay, the average worker would have seen his or her pay increase about 50 cents a week. Big deal.

There might be a lot of reasons that average worker pay has stagnated over the last decade – intense international competition, an increase in fringe benefits as a share of total worker compensation that has slowed monetary wage increases, the Great Recession, the jobless recovery, the new two-tiered wage systems of autoworkers and other industries — but the increased compensation for America’s top executives certainly isn’t one of them.

Carpe Diem

The fight for economic liberty and the battle against cronyism and over-regulation of business: Middle East vs. USA edition

In today’s WSJ, Hernando de Soto argues that the cure for terrorism in the Middle East is capitalism, economic empowerment, and private property rights to help rescue “extralegal entrepreneurs” who have become trapped in their own countries as “economic refugees” by cronyism and burdensome over-regulation of market activity. Here’s an excerpt of “The Capitalist Cure for Terrorism” (emphasis mine):

It is widely known that the Arab Spring was sparked by the self-immolation in 2011 of Mohamed Bouazizi, a 26-year-old Tunisian street merchant. But few have asked why Bouazizi felt driven to kill himself—or why, within 60 days, at least 63 more men and women in Tunisia, Algeria, Morocco, Yemen, Saudi Arabia and Egypt also set themselves on fire, sending millions into the streets, toppling four regimes and leading us to today’s turmoil in the Arab world.

These suicides, we found, weren’t pleas for political or religious rights or for higher wage subsidies. Bouazizi and the others who burned themselves were extralegal entrepreneurs: builders, contractors, caterers, small vendors and the like. In their dying statements, none referred to religion or politics. Most of those who survived their burns spoke to us of “economic exclusion.”

Bouazizi’s plight as a small entrepreneur could stand in for the frustrations that millions of Arabs still face. The Tunisian wasn’t a simple laborer. He was a trader from age 12. By the time he was 19, he was keeping the books at the local market. At 26, he was selling fruits and vegetables from different carts and sites.

He was on his way to forming a company of his own and dreamed of buying a pickup truck to take produce to other retail outlets to expand his business. But to get a loan to buy the truck, he needed collateral—and since the assets he held weren’t legally recorded or had murky titles, he didn’t qualify.

Meanwhile, government inspectors made Bouazizi’s life miserable, shaking him down for bribes when he couldn’t produce licenses that were (by design) virtually unobtainable. He tired of the abuse. The day he killed himself, inspectors had come to seize his merchandise and his electronic scale for weighing goods. A tussle began. One municipal inspector, a woman, slapped Bouazizi across the face. That humiliation, along with the confiscation of just $225 worth of his wares, is said to have led the young man to take his own life.

Tunisia’s system of cronyism, which demanded payoffs for official protection at every turn, had withdrawn its support from Bouazizi and ruined him. He could no longer generate profits or repay the loans he had taken to buy the confiscated merchandise. He was bankrupt, and the truck that he dreamed of purchasing was now also out of reach. He couldn’t sell and relocate because he had no legal title to his business to pass on. So he died in flames—wearing Western-style sneakers, jeans, a T-shirt and a zippered jacket, demanding the right to work in a legal market economy.

I asked Bouazizi’s brother Salem if he thought that his late sibling had left a legacy. “Of course,” he said. “He believed the poor had the right to buy and sell.” The people of the “Arab street” want to find a place in the modern capitalist economy. But hundreds of millions of them have been unable to do so because of legal constraints to which both local leaders and Western elites are often blind. They have ended up as economic refugees in their own countries.

In an interesting complement to de Soto, George Will makes a similar argument in today’s Washington Post that America’s “teeth-whitening entrepreneurs” are being denied the right to earn a living, and have become “economic refugees” in North Carolina because of cronyism capitalism, protectionist rent-seeking, and the burdensome over-regulation of market activity. Here’s an excerpt of “Supreme Court Has a Chance to Bring Liberty to Teeth Whitening” (emphasis mine):

On Tuesday, the national pastime will be the subject of oral arguments in a portentous Supreme Court case. This pastime is not baseball but rent-seeking — the unseemly yet uninhibited scramble of private interests to bend government power for their benefit. If the court directs a judicial scowl at North Carolina’s State Board of Dental Examiners, the court will thereby advance a basic liberty — the right of Americans to earn a living without unreasonable government interference.

The board, whose members are elected by licensed dentists and dental hygienists, regulates the practice of dentistry in North Carolina. To the surprise of no one acquainted with human nature, the board wields its power for the benefit of fellow members of the cartel of licensed dental practitioners.
Timothy Sandefur of the Pacific Legal Foundation says the board protects the economic interests of those who elect it, by pretending to protect North Carolinians from the supposed danger of unlicensed people participating in the business of “teeth whitening.” In this simple procedure, a peroxide-treated plastic strip is placed on teeth for a few minutes, brightening them.

Responding to complaints from licensed dentists seeking to monopolize teeth whitening, the board has issued at least 47 cease-and-desist orders to small-business owners who do whitening in stores and shopping malls. The board also asked the state’s Board of Cosmetic Art Examiners to forbid licensed cosmetologists from offering teeth-whitening services.

James Madison’s Constitution contains the Supremacy Clause because he knew that state legislatures, even more than the national legislature of an “extensive” republic, were susceptible to capture by self-seeking factions. Today, factions enrich themselves through occupational licensure laws unrelated to public safety.

Such laws are growth-inhibiting and job-limiting, injuring the economy while corrupting politics. They are residues of the mercantilist mentality, which was a residue of the feudal guild system, which was crony capitalism before there was capitalism. Then as now, commercial interests collaborated with governments that protected them against competition.

The North Carolina case is an opportunity for the court to affirm an economic right — the right to earn a living. Courts have abandoned the defense of these rights, and conservatives have encouraged this abandonment by careless, undiscriminating rhetoric denouncing “judicial activism.” Tuesday’s oral arguments might indicate whether the court will at last resume a properly active engagement in the defense of individual liberty against abridgements by governments that connive with rent-seeking factions.

Carpe Diem

More Schumpeterian innovation from ride-sharing service Uber, and another reason Big Taxi is doomed

uberHere’s another innovation from the ride-sharing service Uber. Introduced yesterday in Seattle, you can now request UberPEDAL, an on-demand bike rack option. From the Uber webiste:

Seattleites love their bicycles, and so do we. Whether you’re stranded due to a flat tire, a torrential downpour (it is Seattle, after all) or consuming one too many beers, we’ve got you covered. We’ve teamed up with Saris, creators of the best American made bike racks, to get you and your bike to your destination safely. With the touch of a button and a $5 surcharge, you can request an uberX equipped with a Saris bike rack (fits up to two bicycles), and in minutes your car will arrive, ready to take you and your bike where you need to go!

This latest innovation from Uber is one more reason why the outdated, traditional taxi cartels are doomed – they’re operating the same way today as they did 60 years without a “drop of evolution” as Morgan Frank points out in an email. No family-friendly services, no bike-friendly services, no business-friendly services, no credit cards in some markets, etc. In contrast, Uber is constantly innovating and offering new services, based on what today’s consumers want – like UberPEDAL, UberFamily (for “parents on the go”), Uber for Business (“uncomplicating business travel for your entire company” now available in 45 countries), and now the first #UberDESTINATION for the exotic beaches of Phuket, Thailand.

As I pointed out in a post last week, consumers have clearly and overwhelmingly expressed their preferences – they are “evangelical” about ride-sharing for a very good reason – it’s much better, cheaper, and faster than Big Taxi with more options for families, bicyclists and businesses. Consumers have seen the transportation future, and it’s not Big Taxi. Here’s my economic forecast for the transportation industry: Expect continued and very strong hurricane-strength Schumpeterian gales, with a high likelihood of market disruption and creative destruction of Big Taxi, accompanied by huge tsunami-level tidal waves of increased consumer surplus. (Thanks to Morgan Frank for inspiring that forecast language.)

HT: Morgan Frank

Carpe Diem

Quotation of the day on the evolution of female empowerment into female infantilization….

….is from Ashe Schowe’s op-ed “Feminist hysteria is causing the infantilization of women” in

When did female empowerment become female infantilization?

Women once were encouraged to be strong and independent, to brush aside insensitive words and actions and to emerge stronger. But now, politicians, pundits, even celebrities are feeding an outrage machine by telling women they should be offended by anything and everything.

Add this all up and you have today’s “thought leaders” telling women they need to be spoken to gently, need the government to guard them from harsh words and uncomfortable topics, that their setbacks are always someone else’s fault and that they aren’t in control of their own lives.

This shift toward telling women they need help at every stage of their lives (remember the Obama campaign’s “Life of Julia”?) might raise funds for feminist causes or gain votes for politicians, but it’s not empowering. It’s infantilizing.

Carpe Diem

The sharing economy, Schumpeterian gales of creative destruction, and my top 10 interesting facts about Airbnb

airbnbAccording to its website, Airbnb is a “global community marketplace that connects travelers seeking authentic, high-quality accommodations with hosts who offer unique places to stay.” Along with ride-sharing services like Uber and Lyft, and home-cooked food sharing marketplaces like EatWith and Feastly, Airbnb is playing a central role in what’s being called “the sharing economy” and “collaborative consumption.” It’s one of the most exciting new economic trends, and it’s opening up promising new possibilities in the areas of domestic and international travel. You can now travel to worldwide destinations like Paris, Bangkok, Bogota or New York City and book your accommodations through Airbnb, arrange for local transportation through Uber or Lyft, and enjoy home-cooked local cuisine prepared by hosts in private homes through EatWith or Feastly.

Thanks to the sharing economy, here’s my economic forecast for the travel industry: Expect continued and very strong Schumpeterian gales, with a high likelihood of market disruption and creative destruction, accompanied by huge tidal waves of increased consumer surplus. (Thanks to Morgan Frank for inspiring some of that forecast language.)

Here are my Top Ten Interesting Facts about Airbnb, collected from its website with some additional assistance from an Airbnb representative.

1. Number of cities served by Airbnb: 34,000 and growing

2. Number of lodging listings worldwide in 190 countries: 800,000 and growing

3. Greatest number of Airbnb reservations ever booked on a single night: 425,000 worldwide on a peak night in August 2014

4. Airbnb’s largest market: Paris, followed by New York City, based on average guest stays per night

5. Percent of Airbnb properties that are located outside of main hotel districts: 76%

6. Average stay for Airbnb guests vs. typical visitors: 5 nights vs. 2.8 nights

7. Average spending per trip for Airbnb guests vs. typical visitors: $978 vs. $669

8. Percent of Airbnb guest spending in neighborhoods where they stay: 50%

9. Number of Airbnb guests during the 2014 World Cup in Brazil: More than 100,000, which generated more than $38 million for local hosts

10. Number of unusual properties available through Airbnb: 4,000 castles (see example above in photo), 2,800 tree houses (see photo), 1,000 islands (see photo) and 9,000 boats

There are also current Airbnb listings for lighthouses, shipping container homes, underground homes, private properties inside national parks, geodesic domes, homes of famous authors, stone houses, handmade homes, gypsy wagons, traditional yurts, homes or apartments with pianos, windmills, retro trailers, fairytale cottages, European villas, and buses, see samples photos above.

You can browse Airbnb listings here and here to start planning your next trip.