Carpe Diem

Quotation of the day on ‘price gouging’ and ‘profiteering’…

…. is from Ben Zycher’s excellent article “In Defense of Price Gouging and Profiteering” featured in The American today:

Price gouging” — allocation by market price — provides powerful incentives to conserve, and powerful incentives for people to find ways to supply more bottled water. Are those not desirable outcomes? Price rationing may or may not be good for the poor, but, then, any rationing scheme is bad for someone. Unless we want to argue that the poor have a greater moral claim than others — a position that I would criticize sharply — the widely assumed but poorly reasoned premise that “price gouging,” that is, rationing by price, is morally deficient is a popular fallacy. There also is the equally dubious concept of “profiteering,” a useful definition of which is nowhere to be found.

If we are to defend individual freedom — the freedom of people to better their lives as they deem appropriate, as they choose among alternative paths in the pursuit of happiness — then we must defend the market prices yielded by individual choice behavior, and the profits attendant upon them, whether low or high and regardless of the circumstances yielding shifts in demand and/or supply conditions. The endless attacks on “price-gouging” and “profiteering” in any number of markets are a central manifestation of the long-term ideological battle against individual liberty, because it is that freedom that stands in the way of expanding government power.

Businessmen and women ought not either apologize for responding to market forces or seek approval from the morally superior, as they never will receive it in any event. Nor should they wring their hands about high prices and profits, because their ideological opponents will not do so when they decline, as they inevitably will at various times. Market competition is the true route toward consumer protection, as anyone can see upon viewing the conditions of consumers under government “protection,” crony capitalism, and worse.

Carpe Diem

Big gender split: WSJ poll shows women and men disagree on the economy, minimum wage and mid-term elections

The latest Wall Street Journal/NBC News poll shows a huge gender gap over the state of the economy. The charts below highlight the significant gender differences on four issues, read more here and watch the video above for more details.

wsj1wsj2wsj3wsj4MP: And yet feminist ideologues like Janet Hyde advance the “gender similarity hypothesis” that “males and females are similar on most, but not all, psychological variables. Overinflated claims of gender differences carry substantial costs in areas such as the workplace and relationships.” The empirical evidence, like the results above, beg to differ.

Carpe Diem

Who’d a-thunk it? Liberal hypocrisy about public education?

From Steve Bartin writing in New Geography:

Gentry liberals leaders have told us with enormous conviction that public education is an “investment.” Yet, President Barack Obama and Chicago Mayor Rahm Emanuel send their children to elite private schools. What’s interesting in Rahm Emanuel’s case is he couldn’t find one public school in all of Chicago good enough to send his children. Mayor Rahm Emanuel is so committed to public education that he sends his children to a private school 15 miles away from where his children live.

Carpe Diem

Thursday afternoon links

claims1. Chart of the Day. Jobless claims as a share of the US labor force fell below 0.20% in July for the first time since February 2006. Other indicators this week of an improving US labor market include: a) the Conference Board’s 8-variable composite Employment Trends Index increased in July to the highest level since January 2008 and b) the American Staffing Association’s Staffing Index that tracks weekly changes in temporary and contract employment increased during the week of July 21-27 to the highest level for week 30 since 2007.

2. Markets in Everything: a) On-demand medical weed delivery in SF and b) On-demand ride-sharing services Uber and Lyft both launch carpool services to let you share rides with strangers. Another example of innovation from the new ride-sharing services. Traditional taxis have been around for about 100 years and they never thought of this?

3. IQ Test. Take this “Quick IQ Test” to get a good approximation of your true IQ. (I have no idea if this is really accurate, but take it and see what you think!).

4. Mike Munger: “Our higher education system fails leftist students because they’re rarely challenged to think. Students on the left should sue for breach of contract. We promise to educate them, and then merely pat them on the head for having memorized the “correct” answer!” Read more here.

5. US Drug War Casualties #28 and #29 for 2014: Two Killed in NC As Driver Flees Drug Traffic Stop.

gas6. Bonus Chart of the Day. Gas prices have fallen by 22 cents per gallon over the last six weeks to the lowest level in six months, according to GasBuddy.com.

7. Oh, Really? Lego’s female scientist set could inspire a generation of girls to become scientists. That’s all it takes to reverse what might be genetically determined gender differences?

8. What’s so wrong with Nanny Statism? Well, it inevitably leads to police brutality, “warrior coppery” (thanks to Morgan Frank for that term), and the United States of SWAT.

9. Peak What? Mexico just opened its energy market to international oil companies for the first time since the industry was nationalized 76 years ago. Mexico is expected to be the most attractive oil and gas market in the world — it has an estimated 10.26 billion barrels of proven oil reserves and the world’s sixth-largest shale gas reserves. Companies are expected to start drilling activities in the second half of 2015. Source.

10. Map of the Day. The richest person in each state (interactive version of the map available at the link).

usamap

Carpe Diem

Who-d a-thunk it? Restaurants raise prices or add fees to compensate for government-mandated wage increases?

minwageKMSP-TV FOX News in Minneapolis-St. Paul reported this story today:

STILLWATER, Minn. (KMSP) – An incremental minimum wage increase [to $8 per hour] took effect in Minnesota last Friday (August 1), and Oasis Café in Stillwater (20 miles east of St. Paul) tacked on a separate “minimum wage fee” [of 35 cents] on each bill to show guests what they’re paying for (see photo above).

In response to complaints from some customers, the restaurant post this response on its Facebook page:

With regards to why we’re charging a $0.35 fee to cover the recent $0.75 per hour increase in minimum wage…we estimate the increase in labor cost will will cost our company more than $10,000 per year…which has to be offset by an increase in revenue in order to operate profitably. Rather than increase the prices of our menu items, we chose to charge a flat fee. If the state of Minnesota would pass tip credit, like 43 other states have done, none of this would be necessary. For what it’s worth, we pay our people very well. Our dishwashers start at $10 per hour, our cooks start at $12 per hour and our servers average more than $20 per hour when you consider what they earn in tips.

MP: As economic theory would predict, employers will take steps to counteract government-mandated increases in labor costs. Those steps might include: reducing hours, reducing staffing levels, reducing future hiring, reducing non-monetary forms of compensation like free or reduced costs for uniforms, meals, or merchandise, and/or increasing prices or adding “minimum wage fees.” Anecdotal evidence from Minnesota restaurant owners and managers suggests that many restaurants raised menu prices on August 1 to counteract the higher state minimum wage of $8 per hour (the first incremental increase on the way to $9.50 per hour in 2016).

Prediction: In response to “minimum wage fees” and higher menu prices, won’t many customers simply reduce their tips to waitresses and waiters to protest the higher prices, which could completely counteract the $0.75 per hour minimum wage increase? Or many customers may just not eat at restaurants as often, which will reduce the demand for restaurant workers, leading to reductions in either hours or jobs, or both. In any case, it’s not clear that most minimum wage workers will actually gain net benefits from a government-mandated wage increase.

Bottom Line: TNSTAAFL.

Carpe Diem, Economics, Energy and the Environment

Chart of the day: Daily US oil production topped 8.5M barrels in July on the way to surpassing 9M milestone later this year

oilAnother energy milestone was reached last month: US daily crude oil production topped 8.5 million barrels per day during the month of July for the first time in 28 years. The last time US oil companies pumped that amount of crude oil every day was back in July 1986 (see chart). During each of the last three years, oil production in the US has increased by one million barrels per day (bpd), from 5.42 million barrels in July 2011 to 6.4 million barrels in July 2012 to 7.454 million barrels in July 2013 to 8.513 million barrels this year.

Thanks to the shale oil revolution, the US has added more than 3 million barrels of oil per day to the domestic oil supply, which is equivalent to the entire daily oil production in all of Europe (3M bpd), and more than the daily oil output in UAE (2.8M bdp), Kuwait (2.6M), Mexico (2.5M) and Venezuela (2.35M). At the current rate of 14-15% annual increases in US oil output, domestic production in “Saudi America” should top 9 million bpd by November or December of this year. Reaching the 8.5 million bpd of daily domestic oil production in July is another in a long series of important energy milestones that continue to demonstrate that America’s Shale Revolution is the strongest reason to be optimistic about the US economy

Carpe Oleum.

Carpe Diem

Who-d a-thunk it?

1. Streetcars/trolleys/trams are a total boondoggle, scam and waste of taxpayer money?

2. Legalizing weeds in the US is crippling the Mexican drug cartels?

3. Local people preserve the environment better than governments, e.g. private ownership of land by local communities greatly reduces deforestation? (HT: Ronald Bailey science writer at Reason, whose mantra is: “Wherever you see whatever you want to call an environmental problem, catastrophe, screw-up, it’s occurring in an open access commons.“)

4. An NBER working paper estimates that the government’s 2009 Cash for Clunkers program – while designed to provide stimulus to the auto industry – actually reduced industry revenues by around $3 billion over a period of less than a year?

Carpe Diem, Economics, Energy and the Environment

One of the most remarkable energy success stories in US history: The amazing Marcellus shale gas boom

marcellus

Natural gas production in the Marcellus Region reached a new milestone by surpassing 15 billion cubic feet per day in July, according to new production estimates released today by the Energy Information Administration (EIA). Over the last three years, natural gas production in the Marcellus Region has increased by more than three times, from 4.7 billion cubic feet per day in July 2011 to 15.23 billion cubic feet in July of this year (see chart above). Since 2007 when the shale boom first started in the Marcellus gas fields, natural gas production there has increased about 14 times, from just over one billion cubic feet per day in early 2007. The EIA estimates that Marcellus natural gas production will increase further to almost 15.5 billion cubic feet in August, making this one of the most remarkable energy success stories in US history.

What economic impact has the increase in natural gas production had on the Marcellus Region? Here’s how it’s affected employment and wages in Pennsylvania according to a recent BLS report “The Marcellus Shale gas boom in Pennsylvania: employment and wage trends“:

This article uses data for the period 2007–2012 to examine employment and wage trends in Pennsylvania’s oil and natural gas industry and to compare those trends with corresponding developments in the state’s coal mining industry.

Despite recent declines in Pennsylvania’s overall economy, the state’s oil and natural gas industry has seen substantial growth in terms of both employment and wages. From 2007 to 2012, total annual average employment in Pennsylvania declined by 74,133 (–1.3 percent), to 5,578,414; by contrast, employment in the oil and natural gas industry increased by 15,114 (259.3 percent) over the same period. In addition, while the state’s average annual pay increased by $5,158 (11.9 percent), to $48,397 in 2012, wages in Pennsylvania’s oil and natural gas industry rose by $22,104 (36.3 percent), to $82,974 in 2012.

The Marcellus Region is centered on Pennsylvania but extends into eastern Ohio and covers almost all of West Virginia, and here are some first-hand observations of economist W.E. Heasley based on his recent trip to the Marcellus shale gas fields near St. Clairsville, Ohio (14 miles west of Wheeling, West Virginia):

1. You have a hard time finding a parking space in St. Clairsville on weekdays. Why? St. Clairsville is the Belmont County seat and there is a line of people waiting daily to enter the county courthouse to check deeds and property records, etc. Parking spaces near the courthouse are filled every day, all day.

2. All rental properties are occupied, all of the hotels and motels are full, and all of the RV parks are occupied with gas field workers. About a dozen new hotels have been built during the last three years to accommodate the high housing demand for gas field workers. As soon as they cut the grand opening ribbon, each of the new hotels is already booked.

3. When you drive by the hotels there are few private passenger vehicles because the vast majority of vehicles are light trucks of many varieties used by the gas field workers.

4. The restaurants, bowling alleys, bars and golf courses are always packed.

5. Need some gasoline? You’ll frequently need to wait in line. There are simply too many vehicles for the current supply of gas stations in St. Clairsville.

6. There appears to be no wildcatting (speculative or exploration drilling). The gas companies know exactly where to drill…first time, every time.

7. Transmission lines from the new drill sites to main transmission lines are being installed, and the activity looks like busy ants scurrying over many ant hills.

One thing that came to mind on my recent visit was: History books. That is, one reads in history books about America’s “boom towns.” But to see it first hand, live, in action is an amazing sight.

MP: Just like with shale oil in North Dakota and Texas, the shale gas bonanza in Pennsylvania, Ohio and West Virginia is bringing shale-based prosperity to those states in the form of thousands of new, well-paying jobs, millions of dollars in royalty payments to local landowners and farmers, construction booms for housing and hotels, and a huge boost in local retail spending for food, restaurants, cars and trucks, recreational vehicles, home furnishings, appliances, etc.