Who watches most television?

From the Economist:

Despite an increase in entertainment choices, watching television remains as popular as ever, according to data from the OECD’s Communications Outlook report. American households watch the box for over eight hours a day on average, twice as long as anyone else. Viewing has fallen in some countries. Turks reportedly watched an hour’s less television per day in 2007 than they did only two years earlier, when the country was America’s nearest rival as couch-potato king.

Quote of the Day

“The Constitution only guarantees the American people the right to pursue happiness. You have to catch it yourself.”

~ Benjamin Franklin

ACORN In Context

Glenn Greenwald from Salon writes:

I spoke with Rep. [Alan] Grayson this morning regarding the consequences of all of this.  He is currently compiling a list of all defense contractors encompassed by this language in order to send to administration officials (and has asked for help from the public in compiling that list, here).  The President is required by the Constitution to “faithfully execute” the law, which should mean that no more contracts can be awarded to any companies on that list, which happens to include the ten largest defense contractors in America.  Before being elected to Congress, Grayson worked extensively on uncovering and combating defense contractor fraud in Iraq, and I asked him to put into context ACORN’s impact on the American taxpayer versus these corrupt defense contractors.  His reply:  “The amount of money that ACORN has received in the past 20 years altogether is roughly equal to what the taxpayer paid to Halliburton each day during the war in Iraq.“

If you eat rapidly, will your economy grow the same way?

According to data released by the Organization for Economic Cooperation and Development may indicate that the answer is yes. “The relationship is not perfect, but it is persistent,” The New York Times reports:

To no one’s surprise, France followed the most leisurely schedule of dining; those surveyed reported they spent an average of 135 minutes each day. The fastest eaters were in North America; the United States, Canada and Mexico were the only three nations to report fewer than 75 minutes a day devoted to eating and drinking.

As the accompanying chart shows, the 10 countries where people spend less than 100 minutes eating and drinking each day have, as a group, consistently shown higher economic growth than those that took more than 100 minutes to savor their daily repasts.

(Click to enlarge)

But of course, correlation does not prove causation:

There are cultural factors at work, and the picture could change if there were data from more countries. Certainly eating habits alone do not determine economic growth.

Even if there is a relationship, it is not obvious which is cause and which effect. Do people spend more time eating because they have less to do in economies that are not growing? Or do economies stumble because people are savoring a glass of wine when they should be working?

FDA Bans Flavored Cigarettes

The Associated Press reports:

The new federal ban on flavored cigarettes took effect on Tuesday, marking one of the first visible signs of the Food and Drug Administration’s new authority to regulate tobacco.

The ban on manufacturing, importing, marketing and distribution includes candy-, fruit- and clove-flavored cigarettes, which health and federal authorities say are more appealing to youth. It does not include a ban on menthol or other flavored tobacco products like cigars,  issues that the FDA is studying.

“Candy- and fruit-flavored cigarettes are a gateway for many children and young adults to become regular tobacco users,” said Dr. Lawrence R. Deyton, director of the FDA’s Center for Tobacco Products.

Now its flavors, before it was clever advertising.  George Carlin gives his insight:

Kids don’t smoke because a camel in sunglasses tells them to. They smoke for the same reasons adults do, because it’s an enjoyable activity that relieves anxiety and depression.

Nevertheless, all comedy aside, whose responsibility is it to prevent children from smoking? The government or their parents? Of course some parents are irresponsible so people argue that the government should take responsibility in their place.

But does it make sense to ban an entire product because some people may abuse it? We might as well ban flavored vodka since it is more attractive to minors. But since when has the government been interested in consistency?

Quote of the Day

“Another bunch of ignorant bull**** about your children: school uniforms. Bad theory! The idea that if kids wear uniforms to school, it helps keep order. Hey! Don’t these schools do enough damage makin’ all these children think alike? Now they’re gonna get ‘em to look alike, too?

And it’s not even a new idea; I first saw it in old newsreels from the 1930s, but it was hard to understand, because the narration was in German! But the uniforms looked beautiful. And the children did everything they were told and never questioned authority. Gee, I wonder why someone would want to put our children in uniforms. Can’t imagine.”

~ George Carlin

Alarming Debt Charts

John B. Taylor writes:

Simple charts vividly demonstrate the immensity of the exploding debt problem now faced by the United States. The large expansion of debt in World War II looks like a small blip compared to what’s coming if we do not change policy. Click here to see the charts I used to compare U.S. debt history with CBO projections in my Economics lectures at Stanford today. The source is the spreadsheet for CBO’s alternative fiscal scenario in its June Long-Term Budget Outlook.

Barack Obama vs. Henry Hazlitt

Barack Obama:

I’ve insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects. But by avoiding some of the overhead that gets eaten up at private companies by profits and excessive administrative costs and executive salaries, it could provide a good deal for consumers, and would also keep pressure on private insurers to keep their policies affordable and treat their customers better. . . .

Henry Hazlitt, Economics in One Lesson:

In a free economy, in which wages, costs and prices are left to the free play of the competitive market, the prospect of profits decides what articles will be made, and in what quantities — and what articles will not be made at all. If there is no profit in making an article, it is a sign that the labor and capital devoted to its production are misdirected: the value of the resources that must be used up in making the article is greater than the value of the article itself.

One function of profits, in brief, is to guide and channel the factors of production so as to apportion the relative output of thousands of different commodities in accordance with demand. No bureaucrat, no matter how brilliant, can solve this problem arbitrarily. Free prices and free profits will maximize production and relieve shortages quicker than any other system. Arbitrarily fixed prices and arbitrarily limited profits can only prolong shortages and reduce production and employment.

The function of profits, finally, is to put constant and unremitting pressure on the head of every competitive business to introduce further economies and efficiencies, no matter to what stage these may already have been brought.

HT: Organizations and Markets

Subsidies Pushing Iran to Import Gasoline

Financial Times reported yesterday that Chinese state oil companies began supplying gasoline to Iran this month and now provide the Islamic Republic between 30,000 to 40,000 barrels a day, or as much as a third of the country’s imports. This is despite US attempts to” shut off the supply of fuel on which its economy depends.”

But why would Iran, with 10.20% of the worlds proven oi reserves (leaving it ranked third), need to import gasoline?

The answer, is failed economic policies in the form of subsides.

In 2006, gasoline subsidies accounted for between twenty-five and twenty-eight percent of the government’s total budget at a cost of over $80 billion in the energy sector alone. This left Iran the highest payer of energy subsidies in the region.

Subsidizing below market prices, whether for gasoline, water, bread or any other product, results in shortages as it removes the consumer’s incentive from limiting his or her consumption. As consumers purchase more than they otherwise would under a free market (since the product is cheaper), waste ensues and shortages result. Waste in Iran, in this case, is typified most by inefficiency.

A Deutsche Bank report, for instance, estimates that Iran’s seven million vehicles consume about the same amount of gasoline as Britain’s thirty-five million vehicles. Given the artificially cheap price of gasoline, Iranians have lost the incentive to purchase more efficient cars or limit their gasoline consumption. Shortages, caused by increased demand and subsequent waste, are especially visible if supply is not increased to meet new demands, as is generally the case when subsidies occur. This is the case in Iran for reasons of its own.

The government mandated price of approximately $0.09 a liter (nearly a fifth of its market value), the lowest in the Middle East after Libya, has made Iranians among the world’s largest consumers of gasoline. Iran’s twelve percent growth in gasoline consumption, as well as limited refining capacity (due to foreign isolation), has forced Iran to import roughly one third of its gasoline at a higher price while continuing to sell it at a low, subsided one.

These imports have cost the state, and by default its citizens, an estimated $5 billion annually. While at the pump it appears that the subsidies have reduced gasoline prices for the consumers, the hidden costs, in terms of both taxes and inflation, far outweigh the benefits leaving gasoline more expensive than initially apparent.

But even with its imports, demand has not been met. In June 2007, the Iranian government decided to limit gasoline consumption. Its citizens were consuming nearly 75 million liters of gasoline daily, while its refineries were only producing 44 million liters of gasoline per day for domestic consumption. Instead of eliminating the subsidies, which would reduce gasoline demand by thirteen percent, according to the International Energy Agency, the government instead attempted to minimize public consumption through a rationing scheme that limited gasoline purchases to one hundred liters per month at an insignificantly higher $0.11 a liter. By March 2008, the government changed its rationing rules and permitted the sale of extra, higher-priced gasoline at $0.44. This has done little to fix the core problem. Iranians are clever and found ways to bypass the law—for instance purchasing two license plates.

One consequence of Iranian gasoline subsidies, in addition to domestic shortages and unsustainable costs, has been an emerging black market. The cheaper gasoline, approximately one-tenth the price of its neighbor’s, encourages its smuggling into neighboring countries, particularly Afghanistan, Pakistan, Turkey and Iraqi Kurdistan. According to some estimates, between 3.5 and 4.5 million liters of gasoline and nearly two million liters of diesel fuel are smuggled daily out of Iran worth approximately $1.5 billion annually.

The Iranian government will likely point to the US as the reason Iran needs to import foreign gasoline. While this is partially true, Iranian domestic economic policy is the true culprit.  American policy will only sustain the problem.

BEA: Tourism Spending In Decline

The U.S. Bureau of Economic Analysis (BEA) has issued the following news release today:

Real spending on travel and tourism* declined at an annual rate of 1.4 percent in 2009:2 (that is, from the first quarter to the second quarter) after declining 8.9 percent (revised) in 2009:1.

* The BEA defines “tourism spending” as the sum of “all goods and services purchased by tourists (defined as people who travel for any reason).”