LaMarotte

St. Valentine's Gift Giving Advice

2012-02-14T09:56:00.002-05:00

Candy is dandy

But liquor’s more trendy.

… or so at least I am lead to believe by the DistilledSpirits Council of the United States—a name, alas, a bit too cumbersome to fitinto an Ogden Nash verse.

The Catholic Vote

2012-02-10T09:22:00.001-05:00

In the context of the controversy that erupted a few daysago—the Obama Administration’s regulatory mandate requiring Catholic hospitalsand other institutions to offer health insurance to their employees thatfeature provisions in support of birth control, including sterilizationprocedures—I thought I’d look up data on the Catholic vote. It is amazinglydifficult to get these data, but Wikipedia’s article on “Catholic Church andpolitics in the United States” (link) provides a tabulation at least on thepresidential votes from 1948 through 2008. I present this as a graphic:

The summary: In 12 of the last 16 presidential elections(75%), Catholic majorities voted for the winning candidates, now by large andnow by narrow margins. In four elections the Catholics backed the losingcandidate, in all but one case (1968 - Humphrey against Nixon) by very smallmargins. In each of these cases, the loser was a Democrat.

According to the Center for Applied Research in theApostolate (CARA), Catholics represented 77.7 million people in 2011 (link), asubstantial population. The Catholic, not surprisingly therefore, is viewed asa major swing vote, meaning that it does not consistently stick to one party—asthese data indicate. Now, of course—as might be expected—one can find numeroussites on the web showing that Catholic women are not uniformly committed to theteachings of the Church regarding birth control, “choice,” etc. And in a storyin the NYT this morning the author wondersif the flock will follow the bishops. Well, we shall see. Individual opinionsare one thing, identification with the Catholic culture is something else—meaningthat even secularized Catholics will feel this sort of thing as a sting.

Initiallythe media ignored this controversy—so much so that some pundits (the Catholicspundits, of course) noted this here and there. But now it’s out in the open andheating up. The Obama Administration is showing signs of caving. But cavingafter the damage is already done is miles from wisdom. The very first words ofthe first amendment to the Constitution refer to freedom of religion—butsomehow that did not seem to haveoccurred to the secular evangelists who seem to lead our Department of Healthand Human Services. Mr. President, you already have the pro-choice vote—and you alone have it. But it won’t keepyou in office. I for one am sitting here spelling out C-L-I-N-T E-A-S-T-W-O-O-Don a pad to see what it might feel like.

Re-Exports? Now There’s an Oddity!

2012-02-08T12:07:00.001-05:00

Here is a strange fact I’d never noticed before. It isquietly reported but not publicized. Indeed, having spent much of my adult lifewith economic data, I didn’t consciously note it until this morning. DaughterMonique stumbled across it today in one of our current projects. She discoveredan industry which has exports waygreater than its actual domestic manufacturing. What?!?!! Yes, indeed. Thissort of thing stops you dead in your tracks. How can an industry export something that it doesn’t make? Here is what we discovered.

Within aggregate reports on U.S. exports, the U.S. Bureau ofthe Census has a category called Re-export. So what does that word mean. Hereis the official definition:

ForeignExports (Re-exports)
Exports offoreign merchandise (re-exports), consist of commodities of foreign originwhich have entered the United States for consumption or into Customs bondedwarehouses or U.S. Foreign Trade Zones, and which, at the time of exportation,are in substantially the same condition as when imported.

Sure enough, the word is a designation for goodsmanufactured elsewhere but exported from here. While there is nothing wrongwith that, per se, when such re-exports are counted as part of U.S. exports,they somehow fail to meet the conventional definition of “export.”

So how big a proportion of Total Exports is this oddcategory. I’ve assembled the data from 1998 through 2010, and here it is ingraphic format:

In 1998 re-exports were 6.7 percent of total exports, in2010 12.2 percent. Thus they have become a rather sizeable portion of our totalexports. The main problem with this category is that it causes confusion. Ineffect “re-exports” are really “imports” that don’t stay in the country. Thusthey should be deducted from bothcategories. Suppose a ship approaches one of our ports fully loaded withgoodies. But at the last moment in turns back to sea and goes somewhere else.We wouldn’t count that ship’s contents. Would we? But if it lands here,disgorges its wares, reloads them again, or someone else does, and the goodiesdepart again, why then we do.

The confusion arises because the Bureau does notdifferentiate real exports from re-exports in its detailed reporting onindustries—only in the aggregate. Therefore it appears as if an industry isexporting what it hasn’t produced. Inthe case of one industry, for instance, Audio and Video EquipmentManufacturing, the data tell us that the industry’s domestic shipmentswere $2.9 million in 2010 but that it’sexports were $9.7 billion. Who can make sense of that? And there is more. Thispattern has been in place in that industry since 2007. Confusion!

In its 2010 report, the Bureau also provides a furtherinteresting insight. That year manufacturingexports were $795.4 billion, re-exports $136.7 billion. Thus the ratio for manufacturing was 17.2 percent, much higher than for all exports (which also includeagricultural and mineral products) of 12.2 percent.

Ifwe discover more details about this strange pattern, I’ll be sure to note themhere.

Texas as a Country

2012-02-05T12:09:00.000-05:00

If Texas were a country rather than merely a state(it was a country once, 1836-1845),it would fit between Nepal and Afghanistan. In the tabulation that follows, Ishow other comparative figures.

	Population	GDP (in $ billions)	Per capita income ($)	Land Area (square miles)	Water as % of land area	Density (people per sq.m)
Nepal	26,840,935	35.813	1,270	56,827	2.80	199.3
Texas	25,674,681	597.041	37,706	268,581	2.50	98.1
Afghanistan	24,485,500	30.012	966	251,772	negl.	43.5

When we left Europe aboard the U.S.S. Muir as post-war migrants toAmerica, the ship headed for New Orleans rather than, as usually, for New York.The reason was that our destination was to be Texas—not Missouri, where weactually ended up. The reason for the change? The man who was our “sponsor”died while we were on the Atlantic, and his son declined to honor that pledge;in effect it amounted to giving my father a job. We were able to find a new/oldfriend in Kansas City; she was also an emigrant; we’d known her in Europe. Sowe made the long trip by train to KC rather than some town in Texas the name ofwhich is now lost.

I’ve often wondered what would have happened—howour lives might have been shaped—had we ended up Texans. Compared to its two “neighbors”in population size, Texas is the richest and in land area the largest. It ismore densely settled than Afghanistan—indeed than the United States as a whole(87.4 persons/square mile)—and it does have a little water. The state’s mottois simply Friendship. In Missouri wehad to remember our Latin to figure out the motto there: Salus populi suprema lex esto. Nicelyambiguous word that, salus. Thefounders certainly meant the welfare—of the people. But it could also betranslated as salvation. Friendship, however, is what we feel for Texas.

The Deceptive Unemployment Rate

2012-02-04T13:50:00.002-05:00

I have long viewed the Unemployment Rate as an awfully fuzzyconcept, and that because “unemployment” as such is measured by the CurrentPopulation Survey rather than some more appropriate physical count. Yesterday’sBLS announcements were greeted with pleasure because the unemployment ratedropped from 8.5 percent in December to 8.3 percent in January. Here is atabulation worth pondering:

(Data in 1,000s or %)
	Dec 2011	Jan 2012	% Change
Civilian Work Force	153,887	154,395	0.3
Unemployed	13,097	12,758	-2.6
% Unemployed	8.5	8.3	-2.9

Not in Labor Force	87,212	88,784	1.8
Not in Force but want to work	6,135	6,495	5.9

If Want to Work is added:
Civilian Work Force	160,022	160,890	0.5
Actual Unemployed	19,232	19,253	0.1
% Actual Unemployed	12.02	11.97	-0.2

The civilian work force is defined as those actuallyemployed and the “unemployed.” The unemployed are those actively seeking jobs—asreported to the CPS, and the survey results are then extrapolated to thenation. Active job-seeking means that you have applied for a job in the lastfour weeks. The same survey, however, also tracks other categories. One ofthese is called Not in the Work Force. A subset of that is a rather largenumber of people who “Want to Work” but do not fit the “unemployed” categorybecause they have not been out beating on doors, keyboards, or telephones toget a job last month. That number, 6.5 million in January, is suspiciouslyclose to the 5.6 million jobs lost in the Great Recession but not yet regained.

Now consider the December to January changes. The Work Forcegrew by 0.3 percent, the number of “unemployed” decreased by 2.6 percent, andthe unemployment rate dropped 2.9 percent. But those defined as outside the workforce but still “wantingto work” grew 5.9 percent in that month.

Next let’s restate those data and include those who want to work both under the Civilian Work Forceand the Unemployed. That produces a truer picture. It would show that thenumber of unemployed actually grew (0.1%) but the unemployment rate went downmarginally, by 0.2 percent.

I am still be displeased by this number because it is basedon a survey. Instead I prefer simply to look at total jobs over time—and thetotal population aged 16 and over. That would at least be counted properly every 10 years.

Employment Change by Sector, December 2011 to January 2012

2012-02-04T12:09:00.000-05:00

Herewith the details of the 243,000 jobs gain inJanuary 2012, shown by sectors:

Last month I noted with some pleasure that all private sectors showed gains. This monthwe’ve stepped backward some. The Information and Finance sectors both showednegative job change. All the industries within Information produced negativenumbers, but the big one was Motion Picture and Sound Recording Industriesaccounting for 7,900 of the 13,000 losses. Within the Finance sector, Insuranceand Real Estate had positive results, not so banks and investment houses.

Amidst the still loudly echoing Hallelujahs ofyesterday, let me stick to negatives. Government fared worst, again—and againworse than last month, losing 14,000 jobs. The big loser? Local government;that sector shed 11,000 jobs. And worst hit within that level? It was the localschools. They lost 9,600 jobs, thus most of the local jobs. That’s the spirit,folks. Let’s short the children, by all means. More stupid today, they’ll votethe right way tomorrow.

Employment Update: January 2012

2012-02-03T09:23:00.001-05:00

Bureau of Labor Statistics data released today (link) showthat the economy gained 243,000 jobs in January. In further good news, the Decembernumbers were also updated, adding another 3,000 jobs. The year is off to a goodstart:

Job gains a year ago were 196,000, so we’re a little betterthis year. And December 2011 values (203,000) compare favorably with December2010 (152,000 gain). We have now regained 35.6 percent of the jobs lost in the 2008-2009 period—breaking the 30 percentbarrier for the first time. One third of jobs recovered as we begin the thirdyear of recovery. Slow as molasses, but the trend is good. Tomorrow I’ll bringresults by sector.

Unions: A Slow Fade

2012-01-30T14:34:00.000-05:00

I bring you today a graphic I think of as old and familiar.We published it at ECDI back a ways when the most current data were for theyear 2000. This chart is brought up to speed now showing union membership from1964 to 2011. Data for the period 2000-2011 are available from the Bureau ofLabor Statistics (link); the earlier data are preserved in Social Trends & Indicators USA, Volume 1—or if you need them,send me an e-mail. Those data are also originally from the BLS.

In this period unionized labor has shifted from theprivate to the public sector. In 1983, for instance 67.6 percent of unionmembers worked in the private and 32.4 percent in the public sector. The situation in 2011 was 48.8 percent ofunion members were in the private and 51.2 percent in the public.

Perhaps because employment dropped steeply in 2008—butpublic employment was, then anyway, less affected, the percent of union membersand of those covered by union increases slightly in 2008 and then continues itsdownward drift the following year. The decline of unionization in the UnitedStates represents the weakening of the working population—of which unionmembers are an elite. Do I hear a great sucking sound up there in thestratosphere where the 1 percent live?

Windy Today

2012-01-29T09:07:00.000-05:00

As this image shows, I have the solar wind in mind. According to NASA, a big solar wind is emanating from roughly the S-shaped area around 3:30 on the sun-clock. All this turbulence dates back to last Friday when an X2 magnitude solar flare made a spectacle of itself. Herewith a graphic showing it:

The chart is quite informative. If you examine the scale on the right, you will see NASA’s categorization of solar flares: A, B, C, M, and X. An X2 flare, such as that shown for last Friday, is considered a major event. It is accompanied on earth by the fading of short wave signals and strong radio bursts that interfere with satellite-to-earth communications. Note particularly that the distances between the subdivisions of each class are logarithmic rather than linear; on that scale the distance between 1 and 2 is huge!

The image of the sun is from NASA’s Solar Observatory/Atmospheric Imaging Assembly, the graph is from the National Oceanic and Atmospheric Administration’s Space Weather Prediction Center. That NOAA name always amuses me: it suggests that we are able to “administer” the oceans and the atmosphere…

Autos: The Domestic Industry

2012-01-28T07:31:00.000-05:00

Here some interesting “Quick Facts” from a feature of thatname provided by the International Trade Administration of the U.S. Departmentof Commerce (link). These data give us a somewhat novel view of the U.S. AutoIndustry. That phrase all too frequently evokes thoughts of GM, Ford, andChrysler…

… but in actuality nearly half (45.6%) of the domestic autoindustry is run by foreign companies operating on U.S. soil. They employAmerican labor and purchase American supplies. The percentages are based on cars,SUVs, and light trucks produced in 2010. No. This second half of the domestic industry is not centered onDetroit. This listing (hope I have them all) shows that most plants are in theSouth.

BMW, Spartanburg, SC

Honda, Anna, OH

Honda, East Liberty, OH

Honda, Greensburg, IN

Honda, Lincoln, AL

Honda, Marysville, OH

Hyundai, Montgomery, AK

Kia, West Point, GA

Mercedes-Benz, Vance, AL

Nissan, Canton, MS

Nissan, Decherd, TN

Nissan, Smyrna, TN

Subaru, Lafayette, IN

Toyota, Blue Springs, MS

Toyota, Buffalo, WV

Toyota, Georgetown, KY

Toyota, Huntsville, AL

Toyota, Princeton, IN

Toyota, San Antonio, TX

Volkswagen, New Stanton, PA

Volkswagen, Chattanooga, TN

Something to keep in mind when the press talks about theU.S. auto industry.

Work v. Blog

2012-01-27T11:17:00.001-05:00

A brief post to take note of a simple fact. When I’minvolved with actual work on matterseconomic or statistical, as just happens to be the case, blogging on the subject tends to suffer. For the first time ever inthe history of LaMarotte, a week haspassed without a post. Blame theeconomy. It has reached down into retirement and has pulled me in, briefly, toproduce things that actually fetch m-o-n-e-y! My, my. Is a recovery really in the offing?

Greek Debt

2012-01-16T09:32:00.002-05:00

The Greek sovereign debt is in the news today. I got to wondering just how big it is. Meaningful numbers are difficult to find, but I succeeded after a while by consulting the German Spiegel (link). It carries a listing of the debt subdivided into categories—thus the institutions that actually hold it. I show this in a tabulation. Only money actually dispersed, thus actually paid out, to Greece is included. Much more has been promised. My conversion of Euros to dollars uses a rate of $1.2671 per €1, a quite low rate reached this morning.

Greek Debt
	€ bill.	$ bill.	%
European States	41	52	18.0
European Central Bank	50	63	21.9
IMF	18	23	7.9
Greek banks	50	63	21.9
Foreign banks	39	49	17.1
Foreign funds	30	38	13.2

Total	228	289	100.0

Much of the fretting in the media circles around the smallest number here, the holdings by foreign funds (13.2% of the total); some of these are hedge funds. The reason for the barely suppressed hysteria is that hedge funds insure their holdings using credit default swaps; such instruments still exist and may still be sold as derivatives, hence the liabilities are spread God-only-knows where. The invisible consequences may materialize, who knows, even in this humble basement where I write, and I may succumb to dark evil things that will suddenly attack from thin air.

To get some feel for these numbers, I looked up the GDP of the European Union; granted, that is greater than the Euro Zone. That number was $16,282 billion in 2010. The Greek debt, therefore, represents 1.8 percent of the gross domestic product of all Europe. In 2010 Greek GDP stood at $305 billion. Germany’s was $3,315 billion—and the Greek debt, expressed as a percent of German GDP, was 8.7 percent.

The debts are high but are they monstrously high? Not at all. The dangers lie in our virtually non-existent powers of collective self-control—and our much vaunted markets that can spread panic in the flash of an eye.

Negative Numbers

2012-01-14T12:45:00.012-05:00

Reading a superb book on the history of mathematics (Mathematics: The Loss of Certainty by Morris Kline) reminded me of the extent to which we take things for granted, especially when we learned them very early in life. One subject that used to plague the ancients was negative numbers. So I got to thinking. If we view mathematics as a language, then the meaning of that language rests on an agreement by all the parties using it what different notations mean. So let us look at one possible explanation for negative numbers:

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9

One way to see this series is that negatives belong to one domain, positives to another, and the big divide between them is the zero. When it comes to addition or subtraction, we simply begin at the point indicated by the sign of the first number and then march left or right as indicated by the sign between them and the sign of the second number. Here is 3 + 5:

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9

|______________|

Here is 3 + -5. The negativity of the 5 indicates that we need to march to the left.

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9

|______________|

Now let us take -3 + -5:

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9

|______________|

And its inverse, -3 + 5:

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9

|______________|

Now I discover what is really a seeming inconsistency in our language—provided, of course, that it is based on equivalent domains separated by a zero. Consider the following. 2 * 2 = 4; this means that we move two positions to the right from 2. And -2 * 2 = -4. That’s also consistent—because, finding ourselves in the negative domain, we move two positions to the left of -2 as shown for both cases here:

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9

|_____| |_____|

Here the general rule would be that when we multiply, we move in the increasing direction of the domain if the multiplier is positive and in the decreasing direction, still of that domain, if the multiplier is negative. But consider next what happens when we take -2 * -2 = 4 or 2 * -2 = -4. In the negative domain, we should move right if the multiplier is negative; in the positive domain, with a negative multiplier, we should move to the left. As above. If we applied that rule, both cases would yield zero as shown below.

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9

|_____|_____|

But they do not. What we do is multiply the two number first and then we assign the sign based on a rule of signs. This is an arbitrary element in our math or, minimally, is no long capable of being tracked in a visual model. The inconsistency continues when we use exponents, which indicate multiplication. For example, both 2² and -2² yield four (one must believe Excel). And -2^-2 yields 0.25. Here we still cling to the explanation that multiplication of values of the same sign yields a positive number.

What these results tell me is that our mathematics uses a different conceptualization for the negative numbers than that of a domain. It uses the notion of gain and loss. Thus -2² is positive because it reduces the losses by 4, as does the equivalent -2 * -2. The last answer, 0.25 as the result of -2^-2, results because the negative exponent signals successive divisions rather than multiplications. Thus that number means:

-2^-2 = (1 / -2) / (-2) = 0.25

But if we chart that result, thus moving to the right, because division means decrease, we should end up with -0.25, not with a positive value. But the number becomes positive because of our rules. The first result is -0.5 which, divided by -2, turns positive—albeit it is still on the negative side of the zero. We get exactly the same result if we solve for 2^-2. Thus the notion of a domain, as depicted above, corresponding to some physically imaginable plain, has been “suspended” here. 2^-2 should result in 0.25, -2^-2 should yield -0.25.

This field might have been so very different if, instead of the concept of negation, we would have viewed negative numbers as differently colored. Call them red.

Retail Wrap-Up: 2011

2012-01-13T10:52:00.000-05:00

The U.S. Bureau of the Census released data December 2011 retail sales yesterday. Thus we have a complete picture. In a nutshell, 2011 was a pretty good year. To get a good overview of the recent downturn of the economy and our slow recovery from it, I present first a graphic showing retail sales by month, but excluding automobiles, for the years 2007 through 2011.

This is an interesting picture. What it shows is that 2009 and 2010 were “lost years,” as it were. 2009 produced results lower than 2007; 2010 underperformed 2008 until September—when, in 2008, people finally began to reflect in their purchases the facts on the ground, namely that the economy was tanking.

In 2007 December sales were lower than November sales, that decline matched, and in spades, the year after. In the entire period 1992-2010, December sales exceeded November sales by about a hair in every year except three: 2005, 2007, and 2009. The fact that 2011 also lagged its own November sales tells me that public confidence has still not fully recovered. The media reported a 0.1 percent gain, but here I am excluding autos. And 2011 December sales ($328.7 billion) were lower than November’s ($329.4 billion), a 0.21 percent drop.

Next a look at a subcategory, General Merchandise Stores. Here is a graphic on just November and December sales for the same years:

The general pattern is very similar, but the drop-off from November to December was larger. It fell by 0.82 percent. Could that difference be accounted for, in part, by shifts from brick-and-mortar to Internet purchasing? Based on our own family’s experience, the answer seems to be yes.

I obtained the data shown using a Bureau of the Census Internet data server (link).

Steel: Numbers are Sometimes Deceptive

2012-01-12T10:13:00.002-05:00

In the context of another project, I charted economic census data for the Iron and Steel industry (NAICS 331111). Hello! I said, looking at the numbers. I had charted a series on Value of Shipments for the 1997-2010 period. What these numbers showed was a gradual decline of the industry early in the period followed by a dramatic upturn beginning in 2003. But everything else I read about the industry seemed to indicate quite the opposite. No one in the industry was trumpeting the glories of a renascent steel industry. I don’t like growth trends unless I can explain them, so I went to work. What I understood before I started were a few big facts about this industry:

It is maturing, shrinking, and consolidating in the West, thus in the developed world.
It is booming in Asia, especially in China and India. China can’t get enough steel.
Prices have been trending up, in part because of fierce Chinese demand, in part because of the rising costs of coke, the stuff you need to render iron ore into pig iron.

My efforts to explain that rise in U.S. steel performance eventually yielded this interesting graphic:

What I am showing here, using U.S. Geological Survey data (link), is that steel production in the United States, measured in metric tons, has been trending down, that the price of steel has been trending sharply up, and that domestic shipments have been echoing the price increase much more than reflecting the gradual erosion of physical output.

I’m showing production and price data as an index to keep the graphic readable. Domestic shipments are rendered in billions of dollars. The first two items come from the USGS and the series ends in 2009; the shipment data come from the U.S. Bureau of the Census.

While I was engaged in this, I also discovered that U.S. exports of steel, while smaller than imports, have been rising much more rapidly than production for domestic use (both measured in dollars). Rising world prices affect domestic prices even when 83 percent of an industry’s shipments (as was the case here in 2010) are consumed locally—and the price increases are driven by Chinese demand. It’s a global market, isn’t it?

In most industries value of shipments data can be taken at face value. When a basic industry moves overseas for all practical purposes, and when other markets have the hammer hand, one has to be careful in assessing rising curves.

Counting Public Libraries

2012-01-11T15:18:00.001-05:00

My own beleaguered public library is clamoring for a 0.7 mill temporary millage rate increase—lest it be forced to close one of three branches and cut hours and staff by 30 percent. This made me curious about public libraries generally. I got data going back to 1989 from IMLS. Never heard of IMLS? Not surprised. Neither had I. The letters stand for the Institute of Museum of Library Services. That sounds like an association but is actually a federal agency created by the Museum and Library Services Act of 1996 (renewed in 2003 and again, with not even a hint of publicity, in 2010). The agency gives grants and publishes data. The U.S. Bureau of the Census collects data for the agency, and I got my numbers laborious, looking at 21 files in sequence, from them (link). Herewith the data.

Because these data are not—so far as I could discover—tabulated in one place, I have reproduced the actual counts at the base of the bars; to see these, click on the image; to return, press Esc. Not shown, but each the entity have additional stationary facilities (thus not counting bookmobiles) averaging to 1.8 per library counted. In FY 2009, for example, the 9,225 libraries had 16,698 stationary facilities. I could not discover any explanation for the unusual drop in libraries between FY1991 and FY1992—beyond hazarding the guess that the 1990-1991 recession had an unusually severe impact. But other recessionary periods have left no similar trace. IMLS reports do not discuss year-to-year trends.

The IMLS data deserve to be published in more accessible formats; they are very detailed and rich in information, but using them is a little like eating a slice of bread richly smeared with jelly after it has managed to fall face-down on the beach-sand.

German Unemployment Rate

2012-01-11T14:30:00.001-05:00

Worth noting here that the unemployment rate in Germany dropped to 6.6 percent in December 2011. That made news in at least some German-language publications even in the United States. Looking backward in time, this rate turns out to be better than the rate had been in 1992 when, in January of that year, unemployment had stood at 7.3 percent. Available data don’t go back earlier than that. The Great Recession and its radiations? The Euro crisis? Well, Germany is coping, as one might say. And the name of the lady responsible for this starts with an M.

Employment Change by Sector, November-December 2011

2012-01-07T13:00:00.002-05:00

The 200,000 jobs gained in December were distributed by sector as shown in the following graphic:

Notable this month is the gain in every private sector of the economy—a first since I began publishing such details on LaMarotte. Government still showed a loss of 12,000 jobs. The massive gainer in employment was the Transportation and Warehousing sector. Here is the detail of the industries that it contains:

Transportation and warehousing	50.2
Air transportation	0.8
Rail transportation	0.5
Water transportation	0.7
Truck transportation	5.1
Transit	-0.4
Pipeline transportation	0.8
Scenic and sightseeing	-0.4
Support activities	-0.7
Couriers and messengers	42.2
Warehousing and storage	1.6

The real growth here came from courier and messenger services—the categories where UPS and FedEx belong. That number probably highlights a major change in Christmas season purchasing behaviors—and indirectly points to the increasing importance of Internet retail.

Employment Update: December 2011

2012-01-06T09:37:00.000-05:00

The Bureau of Labor Statistics reported today an increase in total employment of 200,000 in December over November 2011 (link). The actual increase is slightly overstated, however. BLS revised October numbers by increasing them by 12,000 and reduced November numbers by 20,000, with a net effect of lowering results up to November by 8,000 jobs. Thus, overall, we gained 192,000, better than the average monthly increase for the year, which was 137,000. The graphic is here:

As a year ago, so today I am presenting an annual chart, showing gains and losses by year for the period 2007-2011.

The recovery is underway. The rate of recovery is slow. In 2008-2009 we lost 8.66 million jobs, in 2010-2011 we regained 2.58 million, thus 29.8 percent of all losses. That result is shown in the pie chart that follows:

The deeper the recession, the steeper the hill we must climb to get out of it again. Pacman here is still predominantly blue. I’ll feel better when it looks like the red will gobble up the blue. Notable in this month’s report is the 20,000 down-ward revision of employment in November; it suggests that the peak month of the retail season once more failed to live up to its promise; but to confirm that we still lack data. They will appear fairly soon. The next question for me is: Will December results also be adjusted downward when I look at January results on February 4? We shall see. The very slow discovery—unless it accelerates—today suggests that we will need five more years before we reach employment levels last enjoyed in 2007. Detail’s of this month’s change will be up here tomorrow.

How Do You Define “Parallel”

2012-01-04T10:59:00.004-05:00

It amused me yesterday to discover that to ambitious mathematicians the word parallel need not mean what the dictionary says. Webster’s says, “extending in the same direction, everywhere equidistant, and not meeting.”

The crux of the definitional problem arises from Euclid’s Fifth Postulate. It says:

If a line segment intersects two straight lines forming two interior angles on the same side that sum to less than two right angles, then the two lines, if extended indefinitely, meet on that side on which the angles sum to less than two right angles.

Not what you might call an elegant postulate. To make it plain we encounter it usually with an illustration, such as you see to the left. The sum of the two angles is greater than 180°, therefore the lines converge. Now what underlies this postulate are some assumptions. One is the nature of the plane on which the lines live: flat and two dimensional. Another is that straight on such a plane is not curved in any way. A third is embedded in Euclid’s Second Postulate, namely that any line segment can be extended continuously—no limits.

The Scottish mathematician John Playfair (1748-1819) formulated a simpler version. Here it is:

Given a line and a point not on it, at most one parallel to the given line can be drawn through the point.

That postulate is also usually illustrated, as shown. The point Playfair mentions is the P, the dotted line the only parallel line. Playfair obviously understood that a parallel line means a line always at the same distance from another line to which it is parallel.

Non-Euclidean geometries all rely on two assumptions. One is that line segments may be limited in length or that the plane on which they persist may be curved. Here for instance is an illustration of how the word “parallel” is abused (in my opinion). I show a diagram and quote the explanation for it—it concerns the Beltrami-Klein model of non-Euclidean geometry. The link to the site is here:

The Beltrami-Klein model considers the region strictly inside a circle as a model of a plane. Note that the region does not include points on the circle itself. Lines are chords connecting points on the circle with the endpoints excluded. (For lines should belong to the plane.) Line AC and BD pass through point P and both are parallel to AB. Furthermore, all the lines between AC and BD (inside the angles APD and BPC) are also parallel to AB. It's very easy to verify that the first four Euclid’s postulates hold but there is [sic] infinitely many lines through a given point and parallel to a given line.

Note that here “parallel” obviously means “lines that do not intersect.” And that possibility exists only because the nature of the plane has come to be defined in a limited way. Using that definition, of course, the very illustration used above to make Euclid’s Fifth Postulate plain shows “parallel” lines if we restrict the plane to the illustration’s white area.

Too much of modern science relies on such trickeries to be inventive of brand new concepts, among them my favorite bête noire, spacetime.

In the Economy It’s Still 2011

2012-01-01T12:54:00.000-05:00

We never see how the sun looks right now. Even when staring through a telescope with the appropriate filters, what we see right now is how the sun looked 8 minutes and 20 seconds ago—because it takes that long for light to travel 93 million miles. New Years day would be the ideal time to put up some numbers to show how our economy performed in 2011, but economies are extremely vast structures, thus by analogy similar to the sun and—given the time it takes to take measurements and to translate them into useful statistics—at least as far away. Right now we have some preliminary numbers for the way the economy performed in November of 2011. So far as our eyesight of that year’s concerned, December hasn’t happened yet. The first early indicators for employment in that month will issue on January 7, a week away. And those will be preliminary too, with November data probably changed. In effect it turns out that the sun is closer to us than the economy. Eight minutes is pretty good compared to a week for the first ever glimpse of 2011.

A Hundred Years of Multitude

2011-12-30T10:31:00.004-05:00

As the year runs its course, I thought it might be time for a bit of reflection on the longer term. A maxim around here is that demography is fate, therefore this Malthusian reflection. This was the year of various “springs,” beginning with the Arab one. To this have been added others, more or less energetic, including our own Occupy movements, the early signs of exuberance in Russia, and even a village-sized eruption in China. Barely noticed—because, around here, Africa is barely noticed—have been the altogether obscenely violent upheavals on that continent. They don’t look like springs, but, in this humble opinion, they are of the same root and branch.

I bring here world population figures from 1950 through 2050: a hundred years of population growth. These data are the series published by our own Census Bureau (link), which is the most complete and, in its projections, closely matches other people’s. My graph is by decades so that I can display interesting decade-to-decade changes. For the record, the 2011 data say that world population is 6.946 billion, representing an increase of 77.5 million since this time last year, prominently shown on the graphic.

I note here that world population increased nearly three-fold (precisely 2.7 fold) 1950-2010. In the next fifty years we’ll add more than 2.5 billion more people. In recent decades we have been adding three-quarters of a billion per decade. The add-odds, based on these projections, will diminish.

Malthus was ahead of his time. It has pleased technology hawks to belittle his projections as they glowed in the heat of oil, approval, and prosperity. But the future, it seems, will manifest another reality: unbelievable masses of humanity engaged in celebrating the joys of a Global Spring beneath a few pathetic windmills with blades frozen for lack of maintenance.

But there is a silver lining here, however hard to see. If the purpose of being human is something other than grabbing all the gusto that we can, what this great demographic thunderstorm predicts is a return, in time, to the fundamentals.

Retail Mysteries

2011-12-28T11:14:00.002-05:00

The holiday sales season is of great importance to retail. We hear that every year. The National Retail Federation provides some rationales. The Federation reports that in 2010 19.4 percent of all retail sales took place in the holiday season, which season they define as the 61 days of November and December. For many retailers, that season accounts for somewhere between 25 to 40 percent of revenues.

Now arithmetic tells us that 61 days are 16.7 percent of the year. Therefore if 19.4 percent of sales fall into this period, the holidays represent a 2.7 percent jump over average. That seems a rather small amount until we consider some of the mysteries of retail. That mystery hides in the fact that the number of products sold is very large—but number regularly purchased is a small fraction of these.

I came across these interesting facts published by Focused Management, Inc. (link). Looking only at the grocery segment, a typical supermarket carries 22,000 items. Of a quarter of these, thus 5,500, the stores sell fewer than one unit per month. And 8 percent (7,260) represent 85 percent of all sales.

Let me stay with groceries a moment longer to develop the nature of this mystery—or paradox. In retail turnover is the key to profitability; it reduces the carrying costs per unit of time. Therefore the slow moving items, that 72 percent of all items carried, costs much more to carry—but having them is what increases patronage. Reaching always for low-hanging fruit, retail consultants perpetually urge their customers to rid themselves of slow-moving items. To be sure, small grocers, exploiting convenience, do that routinely. But they are small precisely because they do not carry all of the items a supermarket does. And with a smaller customer base and lower volume, they have to charge higher prices.

It strikes me now that the ratios we encounter in grocery stories must be even more pronounced for those who sell general merchandise we don’t consume on a daily basis. This would suggest that their profit margins are even lower—and the surge in holiday demand is therefore even more welcome. Profits are reached after a sufficiently large volume pays for all costs first.

Herewith a comparison of a big general merchandiser (Kmart/Sears) and a big grocer (Kroger). The data come from the two companies’ 10-K reports:

Retail Examples. In million dollars or percent.
	Sears Holdings (Sears/Kmart)
	Revenues	Net Profits	Net as %
2007	50,703	826	1.63
2008	46,770	53	0.11
2009	44,043	253	0.57
2010	43,326	133	0.31
	Kroger
	Revenues	Net Profits	Net as %
2008	76,148	1,250	1.64
2009	76,733	70	0.09
2010	82,189	1,116	1.36

What this tells me is that retail profit margins are quite low for those who carry a range of merchandise—as do these two retailers—but those based on staples recover more rapidly from a total meltdown than those who carry the less absolutely necessary merchandise. Kroger’s very low profit percentage in 2009 was due to a goodwill write-down linked to one of its elements, Ralphs. Had that unusual charge not been levied, Kroger’s margin would have been 1.54 percent in 2009. The savvy reader may also fault me for using Sears/Kmart as an example; that merged entity has been suffering for a while. But it is difficult, these days, to find a big general merchandiser who is not also selling groceries…

Independence? Fund Yourself!

2011-12-27T12:31:00.001-05:00

A telling story in the New York Times. On the front page yet. The headline pulls its punches, but still, the story is there. The headline is:

Israel TV Station’s Troubles Reflect a Larger Political Battleground

Israel’s Chanel 10 television evidently published stories about Netanyahu’s travels to Europe as an elected official with his wife. Rich friends paid all of his bills, and Chanel 10 put these bills on the screen in news reports. Netanyahu was an elected official then and not yet prime minister. He travelled first class. The NYT describes his hotel suites as “baronial.” The friends-paid expenses included dry-cleaning bills for Madam Netanyahu’s clothes. So?

So what if Netanyahu had generous rich friends? Well, we have a case here of Caesar’s wife or, at minimum, Caesar’s wife’s dry-cleaning bills. Interested in clear language, such a situation makes for problem in drawing up clear definitions of what words like “corruption” mean, but that’s my problem. Chanel 10’s problem is that it is now on the brink of financial collapse. It owes money to a public regulatory body that, in turn, is controlled by the Parliament. The agency intended to extend the loan’s repayment schedule, but a Parliamentary committee nixed that generous offer. The moral of that story?

Well, Arsen, time to eat crow. Always have favored state-subsidized television. But, alas that has its problems too. Want independence? Fund yourself. But self-funding often means selling your soul to advertisers—because TV simply costs too much to spread that cost to individual contributions by subscribers. The snake in the paradise of Journalism and the People’s Right to Know and all that—as the snake in every other paradise—is money. You have to have lots of your own. And even then, if Caesar is powerful enough, somebody will testify under oath, persuaded by some politbureau or other, to send you one way to Gulag.

It ain’t easy. No way, José. Heaven will help us, but it’ll take a while.

The New America Indeed

2011-12-23T10:22:00.001-05:00

We spent about an hour in a Dollar Store yesterday, a rare event, and came out with a bill for $17.41—meaning that we must have bought 15 items; the rest is tax. Later that day Brigitte heard a news story. It said that two kinds of outlets had done splendidly of late: dollar stores and luxury outlets. I went on a search this morning to find the story. I found it on Investors.com (link). It was in a section titled The New America. Indeed, I thought. Indeed.

The article cites data from the International Council of Shopping Centers. Average store-sales Q4 to Q4, 2010 to 2011, stood at 4.9 percent. Luxury folks averaged 8.1, dollar stores above 5 percent. The International Council talks about a barbell-shaped spending pattern. Nice image that. The middle of that barbell is the thin part where, presumably, most people still live. But I must tell you: What we saw in this Dollar Store was quite amazing. To be sure, we saw lots and lots of junk not worth even 50 cents. But we saw lots of stuff at a dollar that elsewhere sells for $3 or $4. The place was thick with people. I fell to examining their faces—and concluded that all those present in that store were most intelligent-looking. I avoided mirrors lest I lower that high average.

Taxes: a GDP Perspective

2011-12-21T10:42:00.001-05:00

Reader russel, commenting on the last post, inspired another look at taxes and social security contributions. russel pointed to a graphic (link) showing that income taxes paid are 8 percent of GDP and essentially flat. What follows is a slightly different take on this same subject sticking to the 1960-2010 time frame. My data show all taxes paid (somewhat higher than federal income taxes alone) and also charts contributions made to “government social insurance,” to use the Bureau of Economic Analysis’ phrasing. I presume that it includes both Social Security and Medicare Contributions. Here is the graphic:

The total personal taxes paid averages, in this 51 year period, 11.9 percent of GDP. The trend line of the data is ever-so-slight up. The trend of social insurance contributions, which averaged 7.2 percent for the period, is strongly ascendant, but that may be due to the fact that the Medicare program passed in 1965.

I am again showing the top marginal tax rate for the period. It appears to have no influence on the trend of total personal taxes paid. Recessions, booms, and busts, however, do show an influence. Booms and busts? Well, the biggest rise in tax collections as percent of GDP came during the dot-com boom, the biggest drop in the dot-com bust. And the next up-then-down is the housing bubble.

My conclusion is that tax rate shifts reflect the relative power of the various classes in the United States and act to distribute the wealth now in one direction, sometimes in another. When we do not feel a genuine threat—I’m thinking of communism now—the distribution is from bottom to the top. Oh, Stalin! Where are you when we really need you!

---------------
The data I am using comes from the BEA using the facility located here. Following links from there, I used Table 2.1 for Personal Income and Its Disposition and Table 1.1.5 for Gross Domestic Product.

Taxes in Some Perspective

2011-12-20T09:46:00.003-05:00

With the payroll tax cut shenanigans now provided to give us holiday entertainment, I thought I would add some perspective on taxes over a 50-year period. We’ll start with total revenues collected by the Internal Revenue Service in graphic form, showing various tax categories as percent of total IRS revenues in 1970, 1980, 1990, 2000, and 2010:

What I’m showing here is business and individual income taxes, the employment tax deducted from wages, estate taxes, and excise taxes. Excise taxes are levied on alcohol, tobacco, telephone services, and transportation fuels. Not shown are gift taxes; they’ve amounted to maximally 0.2 percent of total in each of these years, most recently, in 2010, 0.1 percent of total IRS revenues. These data are from Table 6 of the 2010 IRS Data Book.

Note here the importance of individual income taxes. They amount to more than half of all revenues right up to 2010, and in that year they represented 49.6 percent of total. Note that all categories show a drop in share of total except employment or payroll taxes. These have been climbing. The interesting aspect of that is that employment taxes are categorical. They constitute Social Security and Medicare Contributions.

Income tax totals, while they are interesting in showing their importance, do not show changes in tax rate. Therefore I next show the top marginal tax rate next, going back to 1960:

What this graphic shows is that the top tax rate has dropped from a 1960 peak of 91 percent to 35 percent. That last rate, in 2011, was levied on all income exceeding $379,150 for a married couple filing jointly. You might say that that number is where wealth really begins. Now some will say that a rate of 35 percent on income above $379,150 is not comparable to a rate of 91 percent in 1960—because of inflation. Indeed, that is true. That sum, in 1960, would have been $52,095. And the 1960 tax rate on that amount was 62 percent. I obtained the data shown from the Tax Foundation (link).

I am providing, below, a tabulation of the data used in this last graphic. Years not shown had the same rate as the last year actually shown. Thus in the period 1961-1963, the rate was also 91 percent on all income exceeding $400,000.

Year	%	On income of more than ($):	Year	%	On income of more than ($):
1960	91	400,000	1995	39.6	256,500
1964	77	400,000	1996	39.6	263,750
1965	70	200,000	1997	39.6	271,050
1970	70	200,000	1998	39.6	278,450
1977	70	203,200	1999	39.6	283,150
1979	70	215,400	2000	39.6	288,350
1980	70	215,400	2001	39.1	297,350
1982	50	85,600	2002	38.6	307,050
1983	50	109,400	2003	35	311,950
1984	50	162,400	2004	35	319,100
1985	50	169,020	2005	35	326,450
1986	50	175,250	2006	35	336,550
1987	38.5	90,000	2007	35	349,700
1988	28	29,750	2008	35	357,700
1990	28	32,450	2009	35	372,950
1991	31	82,150	2010	35	373,650
1992	31	86,500	2011	35	379,150
1993	39.6	250,000

My purpose in showing such data? I’m interested in looking at the proposition that cutting taxes on the wealthy increases jobs—because it is the rich who create jobs. Well, here are some early indicators. The following table shows increase in employment, December to December in four decades:

Decade	Tax rate change in %	Employment change %
1960-1970	-23.1	31.7
1970-1980	0.0	28.5
1980-1990	-60.0	20.0
1990-2000	41.4	21.4
2000-2010	-11.6	-1.7

Here the tax rate change is from the first to the last year. The employment change is from December to December, thus in the first line, 12/1960 to 12/1970. What this tabulation tells me is that top tax rates may have nothing whatsoever to do with employment increase or decline. We’ve had the largest increase in employment in a period where the marginal rate went from 91 to 70 percent. In the 1970-1980 decade, when the top rate was at 70 percent, we still had high growth in jobs. When rates dropped from 70 to 28 percent, the biggest drop ever, we added the fewest jobs—but did much better in the next decade when taxes increased from 28 to 39.6 percent. And in the last decade, when our taxes dropped again, from 39.6 to 35 percent, we actually lost job in absolute count.

It feels better to know something than not to. In any case, the notion that giving the wealthy more dollars to spend will result in job creation is certainly a big canard.

I am Still Sane

2011-12-18T10:00:00.003-05:00

The Senate extends the payroll tax cut for two months. President Obama says: “I am very pleased.” He urges the House to pass this measure and says that he will sign it.

Now the Senate’s action amounts to an insult to the President—as indeed most of this year’s legislative activity has been. I am not even a mediocre student of American democracy, to be sure, but it seems to me that no president has been treated in this fashion by any Congress before—or got away with it. “I am very pleased” ??? What kind of nonsense is that? Up to this point I have staunchly believed that President Obama was born in Hawaii. That statement makes me wonder what planet he was born on. Either that or I have to start doubting my sanity.

Indeed this event is, as it were, a compressed little kernel of insanity. The payroll tax cut is actually a cut in Social Security program contributions (see this earlier post). That so-called tax should never have been cut in the first place. To treat Social Security contributions as a tax is to endanger the whole notion of social security as a right. The administration should never have advocated such a cut in the first place. Its belief in “stimulus”—as if you could buy public confidence with pennies on the dollar—was mistaken. At the same time Republican malevolence towards this administration is patent and amounts to contempt. Therefore President Obama’s “I am very pleased” sounds like abject servility.

The temptation is to believe that I’ve gone insane, that I’m neither seeing nor hearing right. But no. I still have my sanity.

Saved by Insurance

2011-12-17T11:14:00.002-05:00

While on the subject of health care, here is a bit of fascinating history. I bring three pie charts showing how health care expenditures were funded in 1960, 1980, and 2009—all courtesy of the Centers for Medicare & Medicaid Services, the National Health Expenditure Accounts (link). Clicking on the images enlarges them; Esc returns to the text.

Notice here what happens to the out-of-pocket category—that’s the ordinary person’s cash participation—over time. It goes from nearly half in 1960 to 23 percent in 1980 to 10 percent of total cost in 2009. Notice what happens to private health insurance. Its share increases by just 7 percent in nearly 50 years. So who is it that saves our rears? Why it is the federal sector.

Worth noting here is that in 1960 the federal portion is entirely defense related, Department of Defense and Veterans Affairs. By 1980 (but beginning in 1966), we add Medicare (the elderly) and Medicaid (selected categories of the poor). By 2009 (but beginning in 1998) we add the CHIP programs, thus the Children’s Health Insurance Program. CHIP covers one more layer of poor children, thus those that Medicaid does not reach. This means, in effect, that the poor-with-children, the near-poor children, and the elderly (those who’ve stopped working) are already essentially insured by the Federal Government. Yet that still leaves 49.9 million without any health insurance. These are the poor who don’t qualify for Medicaid.

To sharpen the extent to which the evolution of our mixed insurance system has helped the majority of us, we need to note how total spending on health care has escalated since 1960. That is shown in the following table:

	Total ($ billion)	% of GDP	Per Capita $
1960	27.3	5.2	147
1980	255.7	9.2	1,110
2009	2486.3	17.6	8,086

Thus out-of-pocket spending, while decreasing from 48 percent in 1960 to 10 percent in 2009 still managed to increase 23-fold in this period. Saved by insurance—even if, to be sure, we still pay the costs of it in various forms—as taxes, premiums, or as lower wages.

Footnote to Health Care Costs

2011-12-15T07:56:00.000-05:00

These costs amounted to $2.49 trillion in 2009 and equaled 17.6 percent of GDP. Yesterday at a holiday-kind of dinner held by Brigitte’s swimming group, we learned of this interesting fact. Today a couple will travel some 104 miles, round trip, in order to undergo one neuro-muscular test and to see one specialist, this because neither (test nor specialist) is available anywhere else in the Detroit Metro area. We learned that it took three months of waiting to get this appointment.

Households, Recessions, Marriage

2011-12-13T09:51:00.004-05:00

Households form when young adults leave the nest and set up on their own. These moves are typically voluntary and happen because the person leaving has the means to support him or herself. On average (say in the 1971-2010 period), 62 percent of households are formed by young people marrying each other, 38 by going off alone. In either case, economic conditions have a strong influence on whether to leave the parental home. I find the following graphic, which charts increases in total households year by year since 1970—and also shows increases or decreases in total single-person households—fascinating:

I’ve included recessionary periods on the chart. The message they convey is somewhat ambiguous, but what is clear is that in the more severe recession—thus those of the longest duration or those that are close together, the economy seems definitely to influence household formations. This is clearly shown in the recessions of 1973, the two recessions close to each other in the early 1980s, and most pronounced in the Great Recession, the effects of which still linger on.

Notice here especially that single-person household numbers can show an actual absolute decline, which happened in 1983, 1987, 1993, 1994, 2009, and 2010. The young adults went home again. Total household numbers do not shrink because the population is not declining but is growing, in recent years (2001-2009) at an average rate of 2.8 million a year.

Over the long term, increase in households is declining as shown in the following table:

	Increase in Households - %
1940-1950	24.6
1950-1950	21.2
1960-1970	20.1
1970-1980	27.4
1980-1990	15.6
1990-2000	12.2
2000-2010	12.3

The peak in growth, from 1970 to 1980, is certainly due to the baby boom generation’s maturing, those born 1946 through 1964. Thereafter, more and more, marriage lost its hold on the American public. In the 1970-2010 period, total households grew at the rate of 1.6 percent a year, single-households at the rate of 2.7, family households at the rate of 1.1 percent annually.

We’re not there yet—and it’s my conviction that curves never drop nor ever rise forever—but for many people “bowling alone” is a daily reality—until the money runs out and it’s back to the parents again.

Nostalgia. Not.

2011-12-12T11:00:00.001-05:00

Having an expansive sense of time—thus remembering the past and looking far ahead—produces sobriety, understanding...and also disgust. Here I bring a graphic that shows at a glance just how effectively we’ve always managed to manage our financial sector. The graphic looks back over two hundred years, dividing the time into decades. Bars show decades in which a major financial melt-down took place, and its date replaces the decade’s number. Thus in the 1810s there was the major crisis of 1819. For the more recent events I’m also showing the name we’ve come to attach to the troubles, beginning with the Panic of 1907. In every one of these cases, massive bank failures have taken place. Here is the image:

It was my good fortune to have arrived in the United States in the wide grey period of the twentieth century (getting here in 1951). By the time the S&L meltdown came we were safely in a home of our own. The first financial crisis that actually cost us like real money was the Great Recession. But as this history shows, it's difficult to escape one of these blue bars hurting you, sooner or later, unless your life is rather short.

What’s striking here is that, without serious interventions, such as those that began after the Great Depression, these crises occurred with a kind of regularity at roughly twenty-year intervals, about the time it takes for a generation to forget how bad things had once been. Hence deregulation, to permit easier gaming of the blessed Market, takes hold and produces the next Surprise!!!

Tug of War

2011-12-10T09:08:00.002-05:00

It is a curious fact that Germany is leading structural reform in Europe and that China, a Communist country, consistently scores the highest GDP-growth in the world. In the third quarter of 2011, that growth rate has been 2.5 percent in Germany, 9.1 percent in China, and 1.5 percent in the United States. The U.S. prescription for the Euro Crisis is short term fixes. The Obama administration (having most recently achieved that 1.5 percent) is urging Germany to foster growth. Our economists want to print money and fix the problem by “temporary” inflation. Everybody wants to “calm,” to “reassure” the markets. The gods to appease appear to be “investors.” Meanwhile the Germans are trying to make long-term order and never mind those market fluctuations now.

All this is fascinating. The countries with the highest growth rates include China and Singapore (6.1% growth), both authoritarian regimes. They also include India (6.9%)—but I for one would not bet on Indian policies in the longer stretch. In the recent summit, Poland (4.2% — and the one country that has not had a recession) strongly backed Germany. Denmark (-0.2%) and Hungary (1.5%) initially sided with the United Kingdom (0.5%) in favoring “market” fixes before, wisely, joining the majority. Interesting. The worse they do the less inclined they are to make the big, painful changes. (In all of the above I am citing 3Q 2011 GDP growth rates taken from here.)

What I hope is that in the endless cycling between freedom and order (or to put it negatively, chaos and tyranny), we may be in a period where order is in the ascendant and freedom, read Market Capitalism, is in decline. That seems to be the case. But the genuinely adult position is to be, always, against excess. What the last few decades have shown is that we have been abusing freedom (by deregulation) and letting disorder gain footing. Therefore I am now on the side of more order. And if I were not, as it were, close to departure, I know that eventually the time would come when I would, again, side with freedom against too much restraint.

California as a Country

2011-12-09T06:46:00.000-05:00

California is the largest state in the Union, measured by population. Let’s treat is as a country. In that case it would fit between Poland and Algeria. In the tabulation that follows, I show other comparative figures.

	Population	GDP (in $ billions)	Per capita income ($)	Land Area (square miles)	Water as % of land area	Density (people per sq.m)
Poland	38,092,000	468.539	12,300	120,696	3.07	320
California	37,253,956	1,500.279	42,578	163,696	4.70	234
Algeria	36,300,000	192.384	7,179	919,595	negl.	38

Brigitte was born in Poland—so we have a way of relating in this comparison too. Last month I showed Michigan. It was sandwiched between Hungary (my place of birth) and Somalia. This time, again, Europe and Africa. I must say, though. When the Bureau of Economic Analysis absolutely insisted that California’s state product was greater than a trillion dollars in 2010, I was somewhat taken aback. That’s a rich country, even if it isn’t, strictly speaking. Someday, someday, you’ll break away. And then I will be justified in my recurring typo. I always type Lost Angeles and must then backspace to correct it.

Next I will show Texas, honoring the large states first.

Trends: Jobs and Diplomas

2011-12-05T10:38:00.002-05:00

As the new century got going, we were engaged in preparing a statistical series at my company titled Social Trends & Indicators USA. We assembled once a week to discuss new chapters we were adding, each author reporting on his or her work. One of us startled the company by announcing (this was 2002) that, in the future, the economy would be seeking people who did not require college degrees. As you might imagine, we had a lively session. Today I want to show you some trends in labor force participation by those with no high school degrees, those with high school diplomas but without any college, and those with bachelor degrees and higher—all aged at least 25 or older. Here the three graphics:

What these graphics show is the percent of the category actually participating in the labor force, by month, from January 1992 through November 2011. In this period, the group with the least education increased its participation by 5.7 percent, those with the most lost 5.4 percent of participation, and those in the middle lost 5.9 percent. The process is slow, to be sure, but the trends...

Well, the trends are telling. Aren’t they! Ah, yes, attention to detail. By the Media, by the political establishment. This sort of thing—a slide toward the Third World—will take place unless we concentrate on the facts of economic life rather than on vague ideologies about the market. When the child decides to get a job rather than struggling with high-school algebra, he or she actually might get a job whereas, after endless years of labor, he or she, fixed up with an advanced degree, may have to settle for work as a retail clerk after all.

The data shown come from the Bureau of Labor Statistics, but I obtained them from the St. Louis Federal Reserve Bank’s FRED facility here.

Employment Change by Sector, October-November 2011

2011-12-03T14:41:00.000-05:00

Now for the details. The net 120,000 jobs gained in November are shown in detail, including losses that produced the net value:

The private sector produced 156,100 jobs and lost 17,700 jobs for a net gain of 138,400. The 140,000 on the graphic is due to rounding of subcomponents. Government, again, lost 20,000 jobs, somewhat lower than the 24,000 it shed last month. The consequence of arbitrary tax cutting is the shrinkage of government, of course, and here we see the results, month after month.

Private sectors that remain troubled are Construction, Manufacturing, and Information. Construction continues to be troubled by the freeze-up of the housing sector. Manufacturing is growing jobs ever so reluctantly, 2,000 this month, down from 5,000 last month. The Information sector lost 8,800 jobs in five of its subdivisions, has gained 4,900 jobs in only one, resulting in a 3,900-job net loss, rounded to 4,000:

Information	-4.0
Publishing industries, except Internet	-4.0
Motion picture and sound recording industries	4.9
Broadcasting, except Internet	-1.1
Telecommunications	-2.6
Data processing, hosting and related services	-0.9
Other information services	-0.2

It looks like, from the above tabulation, that entertain and music, alas, if you can call it that, are holding their own. But everything else in Information is dead in the water.

Employment: Update November 2011

2011-12-02T12:11:00.002-05:00

The Bureau of Labor Statistics (link) reported a net increase in employment of 120,000. The actual gains since the last report here, however, were 192,000 jobs. In addition to the 120,000 the BLS also reported revisions for September and October amounting to 72,000 jobs. As I’ve noted before, at least the revisions are now running upward!

The pattern for the last two years continues to be anemic. The patient’s recovery—if, indeed, the economy is going to recover on the jobs front—is certainly slow. What we do not see here is the kind of growth that signals what once we used to think of as normalcy. I thought I’d look backward a bit and compare this one with an earlier recovery. The next chart shows data for the years 1991-1993 overlaid with data for 2009-2011, month by month; we still need December data for 2011. The earlier recession began in 1990 3Q and ended in 1991 1Q. Now the recovery from that recession already carried the label of “jobless recovery,” and for the first time in the post-World War II period. But look at the differences!

We have, as of October, recovered 27.6 percent, thus 2.4 million, of the 8.7 million jobs lost in 2008 and 2009. This suggests that we shall recover the 2007 level of employment no earlier than 2016. I suppose that would qualify as a jobless recovery.

Odd Use of “Bold”

2011-12-02T09:44:00.000-05:00

European sovereign debt is held by countries. The lenders are banks and other investment combines. The sovereigns borrowed money in perfectly legal transactions. Failure to pay those debts has consequences. So why is it suddenly bold to transfer those obligations to third parties, thus to the populations of yet other countries, by inflating the Euro? All Europeans lose purchasing power so that some sovereigns are rescued and lenders are held harmless. Rob the weak to pay the powerful—and do so in such a way that it takes a long time to notice? That’s sophistication, not boldness. The sophisticates, like Paul Krugman, are on it. The Germans are resisting. They are now the bad guys.

The author of the piece in the NYT, Nicholas Kulish, through no fault of his own, was born in 1975. He is therefore quite able to write a paragraph like this:

The prospect of a dim historical memory — the antique photograph of the wheelbarrow full of nearly worthless bills — helping to drive the world off the economic precipice and into another deep recession may seem like the height of irrationality and even irresponsibility.

The memory is not dim for somebody like me, born in 1936. I actually saw a big box full of Reichsmarks at a street corner as a boy. The wind was blowing the bills down the street, and nobody bothered picking them up. 1947. I just happened to be on my way to the bakery. My mother gave me half of a cigarette—knowing in advance that it would get us two baked rolls. And it did. Indeed the baker immediately put it in his mouth and smoked it right then and there.

Kulish then goes on to contrast the American love affair with consumerism and the Germans’ dislike of consumer debt, high savings rates, and relatively low rates of home-ownership. In other words the Germans don’t get it. The sophisticated view is that you can stimulate growth, kick-start economies, and get rid of debt by inflating the currency.

The drums are beating because, directly or indirectly, American banks are exposed to the European liabilities as well. We’ve had to bail them out once already—meaning that the innocent had to pay for the guilty. We have not bailed out the miserable little borrowers who signed mortgages they shouldn’t have. We weren’t bold enough. But if our banks start failing again, believe you me we will be bold enough to bail again—if we can’t persuade those timid Germans to embrace the good old times to save our 1 percent.

Telling It Like It Is

2011-12-01T09:07:00.000-05:00

I salute Catherine Mann. I heard her yesterday on the PBS Newshour. The subject was a good day on the market because central banks eased bank-to-bank borrowing to help the Europeans. Cathrine Mann is a professor at Brandeis International Business School—and had also served earlier on the Federal Reserve Board of Governors. Here is the comment that caught my attention:

Well, the markets have been—the markets are basically run by algorithmic trading these days or traders. Nobody’s making investments in the stock market thinking they’re getting a long-term investment in the company that they’re buying a stock for.

So all we’re looking at is trading on news. This was big news. And so when the market opened here in the United States, the market just responded to that news in a very positive way. I think, though, that one of the downsides of this additional liquidity being put into the global marketplace is that it provides more ammunition for the traders in the marketplace who want to bet against the central bank—or against the European Central Bank in particular, or want to bet against some of those sovereign governments in Europe that are running some difficulties.

So this excess liquidity or a lot of liquidity does have a downside. And I think that we aren’t thinking exactly how that ammunition is going to be used. We’re thinking it’s going to be used for good, but there’s no guarantee that it’s going to be used for good.

The emphases are mine. Mann tells it like it is. The stock market is an echo chamber where people bet on laughter and on tears. It’s time-horizon is the algorithmic nano-second. It’s not even a proper mirror. It’s a trick-mirror. If you are fat you will look fatter, if anorexic, even thinner. Distorted mirror twisting light back up from a pit of the world deepest gambling hell. But such is the media’s own reflexive worship of Mammon that the market’s treated like an oracle.

As for the valiant efforts of several central banks, they’re applying what feeble tools they happen to have handy, not necessarily tools that work. When our eyesight grows blurry because the cataract is thickening, stopping the car to give the windshield a good wash might help, ever so little, but what’s really indicated is cataract surgery.

Electronics: So What Exactly Happened Circa 2000?

2011-11-30T12:51:00.000-05:00

Herewith a graphic showing what has happened to the major components of our domestic electronics industry—thus semiconductors, computers, computer peripherals, and telephone apparatus. I’ve derived these data from the Economic Census conducted by the Bureau of the Census in years ending in 2 and 7—and for other years the Annual Surveys of Manufacturing also conducted by the Bureau. Thanks to the shift from the old Standard Industrial Classification (SIC) to the North American Industrial Classification System (NAICS), comparable data for some industries cannot be obtained for the pre-1997 period, but where available, I show them. Here is the graphic:

What happened, exactly, is that circa 2000 we reached what might be called Peak Electronics (on the analogy of Peak Oil). We stopped making most of the products we buy at home and began to consume the same products but made elsewhere in the world.

The only trend line still pointing up, but almost flat, is the trend associated with semiconductors, but that trend appears also destined to decline. The major product categories that depend on electronics are all headed for de facto extinction as domestic products—and the employment associated with them is therefore heading for what? Part time work in retail?

What is still climbing is software—and that with barely so much as a hiccup during the Great Recession. It’s the silver lining, you might say. And arguably technological innovation in electronics is also still firmly in our domestic grasp as well, but no sooner perfected on paper and in the lab, it gets shipped overseas for manufacturing. But here, as in other regions of our economic life, the beneficiaries are relatively small domestic elites while the ordinary people are sliding slowly toward the Third World.

I am a holdout. I am against globalism, for a National Economic Policy. We must protect jobs locally. And it won’t happen if we let whole industries just disappear without a single political murmur.

Cyber Madness

2011-11-27T07:27:00.001-05:00

I am looking at a Staples ad sent me this morning. It says:

Cyber Monday Event

Starts Sunday!

Black Friday was really Black Thursday. Now Cyber Monday is on Sunday. I’m not, by the way, trying to single out Staples for scorn. It’s the same all over. Every seller has drunk the poisoned water. They’ve all gone mad.

Staples’ promotion is centered on laser toner, more specifically on Hewlett-Packard toner. It happens that I use that product. So let me see how good the deal is. Well, I can get $30 off if I buy $200 worth of HP toner—or $20 off if I spend $150. The toner I use costs, at Staples, $109.99. In either case I’d have to buy two cartridges to get a discount. But a cartridge lasts me several months, so why bother? And the discount is relatively small, 13.6 percent ($30 off $219.98). Toner is supposed to have a limited shelf life, but I don’t know how long that is. In effect I’d be taking a chance storing one for a long time for a relatively small discount.

The whole premise of the modern economy is to sell consumers more than they need. To have a rosy future, we must over-consume. Systematically promoting that is madness.

It’s strange to live in a culture the core premise of which is systematic undermining of rational frugality.

December Retail Sales

2011-11-26T09:00:00.003-05:00

Back in 2009 I posted data on percent change in retail sales, December to December. Back then the last hard data point was for 2008, showing a huge dip. You can still see that post on the old LaMarotte (link). I thought I would update the graphic. The source for it is a tabulation by the Bureau of the Census (link).

The updated graphic, together with a projection (in red) showing what might happen next month is below:

The graphed data show changes in total retail sales, December to December, from 1992 through 2010. The value for 2011 is a projection of the trend shown earlier. We begin in 1992; the change in that year, therefore is zero; but for all other years, I show the change from the previous December. To this I have added a trend line, courtesy of Microsoft Excel. The conclusion is that growth in retail December to December is definitely trending down, but this down-trend is entirely due to the severity of recessions. Just to check on this, I tried making the 2007-2008 recession milder; thus I assumed that the change, 2007 to 2008, would be a mild growth, about 3 percent—rather then the nearly 13 percent dip. In that case the trend of this series is flat for all practical purposes. The illustration of that is inserted as a smaller graphic on the left; 2008 is “corrected,” and I’ve only plotted through 2010, thus only using actual data.

Let’s face it. December is the nation’s big shopping month. This pattern only weakens when the economy is really diving into the sand, as it did in 2008. In this period two recessions took place: March to November in 2001 and December 2007 through June 2009. The public felt both of these coming—and curbed its spending. But the last one was severe, and people really sat on their wallets.

More October-November Retail Stats

2011-11-25T13:11:00.001-05:00

Yesterday I showed retail sales for two categories (all retail and general merchandise stores) for three years (1992, 2002, and 2010). Today I am showing data on October and November sales for the same two categories and for every year in the 1992 through 2010 period.

My object, of course, is to throw some light on Black Friday, the day when, based on the retail industry’s experience, retailer begin to turn a profit for the year. My interest is on the general trend, and the graphics today do a better job in illuminating which way things are trending over an eighteen-year period. Here are the two charts:

What these patterns shows is that the October-to-November jump in sales is much more important for general merchandise stores than for retail sales as a whole. The latter have much bigger gains in this month, averaging 16.8 percent over the period versus retail as a whole, averaging 3.4 percent. The trend in month-to-month percentage gains is down in both cases, but the decline is much more pronounced for the general merchandise stores.

By way of contrast, the following graphic shows the same patterns for book stores. The performance of these retailers falls somewhere midway between all retailing and merchandising stores. The average percentage jump in sales, October to November, is better than for retailing as a whole, thus 5.3 versus 3.4 percent—but less than shown for general merchandise stores. And the trend, it turns out, is flat.

So what do we make of these trends—particularly the smaller-and-smaller jump in retail sales, October-to-November, experienced by general merchandise stores. Behind that trend, I propose, lies another and much more pervasive one. It is the gradual blurring of once much more sharply defined retail categories. Consider, for instance, that the largest grocery store in the United States is Wal-Mart. But for purposes of reporting, the Census Bureau categorizes Wal-Mart as a general merchandise store (NAICS 452910) whereas the Bureau places Kroger into the supermarkets and other grocers category (NAICS 445110). Wal-Mart-owned Sam’s Club has been featuring groceries since 1983; regular Wal-Mart stores have sold food at least since 1990, the year Wal-Mart acquired McLane Company (which it later sold), a grocery and food distributor. I am tentative about the date because I cannot discover exactly when Wal-Mart began selling groceries; maybe it always did. At present, according to Wal-Mart, half of its revenues are derived from groceries. Have they always? And under a 2010 program the company is restructuring small stores to be principally grocery stores.

Now, mind you, other major general merchandise stores are also selling groceries. One thinks of Costco and other warehouse clubs. And so are Kmart, Sears (which is owned by Kmart), Meier, and Target. So also are drug stores, for that matter. This is what I mean by a fuzzing of the definitions.

Quite possibly the ever smaller sales jumps of general merchandisers in November have something to do with internal shifts in the share of the product lines that they carry. As these stores come ever more to resemble “all retailing,” so also will Black Friday gradually grey out.

Some “Black” Perspectives

2011-11-24T11:34:00.002-05:00

Black Friday, this year, begins in the evening of Turkey Thursday, and the smell of our retailers’ tangible hysteria almost hides the pleasing odors of that roasting bird. I thought I’d look at retail sales by month and see what the pattern looks like for some years going backwards.

Here is the first such chart. It shows all retail sales by month, excluding only motor vehicles and parts.

There is certainly a “lift” in sales between October and November in the three years selected, 1992, 2002, and 2010. But the real lift actually comes in December. What color do we paint the last month of the year?

The increase in sales, while meaningfully present above, is not exactly dramatic, of course, while the sales-leap in December is. I thought I’d look at a narrower segment, General Merchandise Stores. Here is the graphic for these:

General merchandise stores certainly show much sharper increases than retail as a whole. In 1992 all retail increased (October to November) by a mere 1.6 percent; general merchandise store sales increased by 19.3 percent! So that’s where we really get this new way of celebrating Thanksgiving.

An interesting phenomenon now appears. As we advance in time, the monthly growth rates experienced by general merchandise stores decline. In 2002 they advanced 17 and in 2010 only 13.2 percent. Meanwhile all retail (ex automotive) increased from the 1.6 percent base in 1992 to 3.9 percent in 2002 and 4.4 percent in 2010. All retail, of course, includes the general merchandise category. The panic seems to relate more directly to people who sell special goods that, perhaps, are more discretionary.

What will 2011 bring? It will be interesting to see. And we can be sure the results will be very well reported—because the holidays, these days, mean shopping. And little else.

Cheap Shot

2011-11-21T12:58:00.001-05:00

Looking at a timeline for computing on Wikipedia (here), I came across this quote for the year 1977:

There is no reason anyone would want a computer in their home.

The person quoted is supposedly Ken Olsen, founder, president, and chairman of Digital Equipment Corporation. I stared at that for a moment. The first thing that bothered me was that revealing “their.” This is 1977, I thought. Back then people had not yet succumbed to the disease of gender-neutral PC newspeak. My next thought was that Ken Olsen was no dummy. Apple had been launched the year before—and behind it a rather sizeable cloud of amateurs building little personal computers. And Commodore had already launched its first little computer too, dubbed PET (for personal electronic transactor). So I went on a search. One thing that the Internet age has taught me is that you do not automatically believe what you read on a screen. Sure enough…

What Olsen had said, in an address to the World Future Society in Boston, was “There is no reason for any individual to have a computer in his home.” Notice that “his.” And the context was quite different. I learned from Snopes.com, “Rumor Has It” (link), that Olsen’s context was a computer installed to control every function of the residence, “turning lights on and off, regulating temperature, choosing entertainments, monitoring food supplies and preparing meals, etc.” Snopes quotes Olsen himself saying later was that this interpretation

…is, of course, ridiculous because the business we were in was making PCs, and almost from the start I had them at home and my wife played Scrabble with time-sharing machines, and my sixth grade son was networking the MIT computers and the DEC computers together, hopefully without doing mischief, using the computers I had at home.

Now, amusingly, Snopes itself gives no attribution for this quote beyond saying: “As Olsen later noted…” Sloppy, I would say. The truth of the matter is, the information is out there, but it’s best to trust—but verify.

Michigan as a Country

2011-11-20T09:24:00.000-05:00

Michigan has a population of 9.88 million. Got to wondering where we might fit into the list of the world’s genuinely sovereign countries? Well, Michigan would be sandwiched between Hungary and Somalia. Herewith a little table:

	Population	GDP (in $ billions)	Per capita income ($)	Land Area (square miles)	Water as % of land area	Density (people per sq.m)
Hungary	9,985,722	128.960	12,879	35,919	0.74	279
Michigan	9,883,640	326.123	25,172	96,716	41.5	102
Somalia	9,557,000	5.896	600	245,200		6

I was born in Hungary. Looks like the move to the United States gained me income, land, and water. The dice-roll of fate…

I might do this for other states in the future as well. Candidates are Missouri, California, Texas, Minnesota, and New York...

SME: Profile of a Globalizing Industry

2011-11-12T10:13:00.002-05:00

Working on another project, I chanced across some data on the Semiconductor Manufacturing Equipment (SME) industry. In 2009, the last year for which we have hard Census data, it was 5.6 percent of the $98.3 billion domestic electronics industry, at least as measured in shipments. Herewith a profile of it from 1992 through 2011:

This industry makes the tooling for other sectors of the electronics industry. Thus in a sense it stands in relation to electronics as a whole like the machine tool industry stands in relation to all manufacturing. Electronics got its start in 1958 with the invention of the integrated circuit; a decade later Intel was launched. This fundamentally American technology has been globalizing, globalizing, globalizing—and what that means for the domestic industry is plainly visible in the graphic above.

Now, of course, we’re looking at what is undoubtedly a natural phenomenon, if our faith in the Hidden Hand is unflagging. Indeed, with the very best of efforts, technologies can never be held close and protected from spreading around the globe. But the downward trend visible here also represents employment decline from 81,900 people in 1992 to 19,362 people in 2009. This illustrates the inherent conflict that arises when we let nature take its course on the one hand and protect the domestic employment on the other. At best, of course, we can only slow things down.

Japanese Method for Pulling Square Roots by Hand

2011-11-06T09:22:00.007-05:00

Take two, you might say. An earlier post introduced this method (link), but while it is perfectly correct as far as it goes, it actually provides a German version of how to solve the problem of squaring. I learned of the Japanese method from Murai Takayuki. A second set of message from Murai finally enabled me to see how the Japanese actually do it. It is presented here. The example I shall use is to calculate the square root of 99—which presents problems when using the German mehod I described earlier.

The Japanese method involves a two-column approach. Calculations on the left side provide inputs for the division-like calculation on the right side. We also obtain successive digits of the actual answer on the left side. The following illustration sums up the method. Click to enlarge, press Esc to return:

As explained in the earlier post, the number is arrayed in digital pairs. The decimal point, if any, must fall on one of the spatial divisions. Therefore, the number 3.099, for example, must be divided 03 . 09 90 not 3.0 99.

The core of this process is the method by which the digits are determined. In the earlier post, showing the European formula instead of the Japanese (e.g. 18 *  ≤ 1800 explained above), two equations are used to calculate first the next digit of the Answer and the sum to be deducted from the last Remainder. Let us take the case, above where the first 4 is obtained. Using the Japanese method, we set up 198 *  ≤ 9900. We can start with the highest digit, 9. Therefore we get 1989 * 9 = 17901. That’s too big. Next we might try 5, therefore 1985 * 5 = 9925. Still too big. The next attempt, with 4, will succeed: 1984 * 4 = 7936. That’s quite simple. We get, at once, both the next digit of our answer, 4, and the sum to deduct, 7936.

The European method begins with a division. The last Remainder (9900) is divided by a number constructed by multiplying 2 * 10 * the already calculated Answer. In this case that number is 99, and 99 rather than 9.9 because the decimal is ignored. 2 * 10 * 99 = 1980. Then 9900 / 1980 = 5. Next we test that number. We take (1980 + 5) * 5 = 9925. But that number is too high. Therefore we reduce 5 by 1 to get 4. Next we apply the new number, thus (1980+4) * 4 = 7936.

As is evident, this process is much more complicated than the method Murai suggests. We have to engage in double-column bookkeeping, to be sure, but everything is clearer, and the procedure is much simpler.

Nice, handy method, readily used with a sheet of paper divided in two and a hand calculator.

For those able to read Japanese an excellent tutorial with live demos is available here from suguru.jp. Google will translate the Japanese into English. The result is so-so but one can make out the sense and follow the numbers.

Thanks Murai. This has been a lot of fun.

Square Root Extraction the Japanese Way

2011-11-05T15:17:00.007-04:00

A comment came today from Murai Takayuki (村井　剛志) in comment on my piece on calculating logarithms by hand. In that post I suggested that a certain weariness also accompanies pulling square roots by hand. Murai wrote: “In Japanese schools we learn a method resembling long division for finding square roots by hand. If you haven't ever heard about this method I would love to tell you about it!!” Now it turns out that I’ve also published here a relatively easy method (link), but I’m always game for new ways—hence I asked for enlightenment and immediately got it by a returning e-mail. The missive took the form of two images. You can see one of them here on the left. Clicking through it will make it big; Esc will bring you back. Murai’s accompanying instructions, alas, were pretty brief: “I think you can figure out how it works with these two images.” I was flattered but baffled. Now it so happens that at least 65 years have passed since I was in school and learning such things; therefore I utterly failed to grasp the progression of numbers. English language web sites all flunked too—as indeed I had expected them to do. Then a brilliant notion came. I tried a web search in German and rapidly found multiple sites able to give me what I needed. As in Japan, so in Germany. Herewith, therefore, the results. (Mind, I could have asked Murai to help as well, but I thought he’d already done enough.) So let us take the problem presented in that image. The other JPEG Murai sent is much the same. In that one the square root of 5 is pulled using the method I describe below.

We want the square root of 628.5049. The first step is to divide the number into pairs from the back as follows:

06 28 | 50 49

The first step is by eyeballing, the other steps are by using two formulae.

Step 1: Determine the closest square to the first group. In our case that is 4, 2*2. The root we used is also the first digit of our answer.

Step 2: Deduct the actual number from the first pair, thus 06 - 4. Next pull down the next pair of numbers awaiting action and place them alongside. Here is how it looks:

Note that the root of that 4 is now the first digit of our answer, already in place. The \/ symbolism ahead of the first digit is meant to represent the square root symbol (√).

Step 3: This step and all successive iterations have the same requirement. We want to do two things in this and every succeeding step, if necessary. First, we want to calculate the next digit of our answer. That is done by Formula 1:

[1] Next digit = Int(R / (20*A))

R here is our Remainder (2 28 above) and A is our current Answer, thus the 2 following the equals sign above. The Int means that whatever answer we get will be only the integer part. In this particular instance the formula fleshes out as 228 / (20*2) or 228/40 = 5.7. The Int prefix renders the answer as 5. That is the next digit of our answer.

Next we want to calculate the number to deduct from our Remainder. The formula for that is the following:

[2] New Deducter = ((20*A)+L)* L

Here L is the Last digit to be added to Answer, 5 in this case. The formula fills in as follows: ((20*2)+5)*5 = 45*5 = 225. This is our New Deducter. We put it in place and add the Last digit to the answer. Here is what it looks like now:

Step 4: Notice that after deducting the New Deducter from the last Remainder, we also crossed the decimal point. For this reason we now also add a decimal point to our Answer.

The two formulae we used in the last step are employed again. Formula 1 produces zero. Here the actual numbers: 350 / (20*25) = 350 / 500 = 0.7 = 0 when chopped to an integer. That 0 is our new digit, the Last digit to be added. Formula 2 also produces a 0 as our New Deducter: ((20*25)+0)*0 = 500 * 0 = 0. Our calculation now looks as follows:

Step 5: In this case Step 5 happens to be the last. Note, again, that we have deducted the 0 and were left with the same number. But we’ve also pulled down the last pair to be considered in our calculation. And we’ve added the 0 to our Answer. Here the two formulae used for the last time:

Formula 1: 35049 / (20*250) = 35049 / 5000 = 7.0098 = 7.
Formula 2: ((20*250)+7)*7) = 5007* 7 = 35049.

Notice that in using these formulae, we ignored the decimal point in the Answer. Our New Deducter now has the same value as our last Remainder, hence we are done. In other cases we can stop as soon as we are happy with the number of digits we have produced. The final picture:

With this explanation, Murai’s presentation will become quite clear—and the derivation of those initially mysterious numbers like the 45, 500, and the 5007 will be evident. Come to think of it, the real virtue of this method is that it is very easily rendered into a quite brief algorithm in Visual Basic. Those who know that language will need no help from me in writing the subroutine.

Added later: In playing with these algorithms, I discovered an interesting problem when applying it to the square root of 99. The layout then is the following:

\/99 | 00 00 00 00 00 = 9
81
18 00

The nearest square to 99 is 81. That leaves 18, and the first digit of our answer is 9. Adding two zeroes to the Remainder, we get 1800. Then, applying Formula 1, we get 1800 / (20 * 9) = 1800 / 180 = 10. But the square root of 99 is actually 9.94987… per Texas Instruments calculator. Therefore Formula 1 seems to misfire. The rule here appears to be that if the answer to Formula 1 is 10, it must be reduced by one. If we make that adjustment and proceed to the next step using 9 instead of 10, the answer comes out correctly. But my sources do not mention this rule. Perhaps Murai can come to our rescue…

Added Even Later: I received appropriate instructions from Murai Takayuki. The method finally makes sense. To make it plain I provide a new post (link) titled “Japanese Method for Pulling Square Roots by Hand.”

Employment Change by Sector, September-October 2011

2011-11-05T10:25:00.001-04:00

Herewith the details of employment change by sector. The familiar pattern once again repeats with some mildly positive changes:

Last month Construction was negative and Manufacturing positive. Now the results have been reversed. Last month Wholesale, Transportation, Finance, and Leisure were in the red, this month they are positive. But Information, which had been positive has now gone red. And Government, which showed a loss of 33,000 jobs, this months shows a lesser loss of 24,000 jobs.

Herewith some additional notes on the Government sector. The Great Recession officially ended in June 2009. Since then Total Private employment increased by 1.5 percent and All Government lost 2.6 percent of its employment (Federal, -0.1, State, -2.2, and Local -3.2 percent; the Federal loss has been due entirely to losses by the U.S. Postal Service; other employment actually grew). The State and Local sectors together may be broken into educational employment (53.5%) and all other (46.5%). In this recent month, Federal employment dropped by 2,000, State government by 20,000, and Local government by 2,000 employees. The states thus bore the brunt of the October decline. State education declined by 4,300 jobs, all other by 15,600. Local education increased by 1,200. The two numbers for local changes don’t quite add due, no doubt, to rounding errors.

Employment: Update October 2011

2011-11-04T09:25:00.001-04:00

The U.S. economy added 80,000 jobs in October—but that number is deceptive. The Bureau of Labor Statistics also revised its numbers for August and for September. In both cases jobs were added to the earlier reported totals. If we add the results of those changes, the total change between the last report and this one is a net addition of 182,000 jobs, 102,000 due to revisions and 80,000 due to changes in October. October data, to be sure, will also be revised before the next report is published, but the good news is that revisions, these days, are in the positive direction. The changes made are shown in the small insert graphic to the left. The results for October are presented below. Details may be obtained from the BLS press release (link). I will follow this up tomorrow with details by sectoral changes.

It pleases me that the trends are up. We’ve clocked 13 months of solid gains. Of 8.7 million jobs lost in 2008-2009, we have recovered 2.2 million, amounting to a 25.3 percent recovery in 22 months. The economy is not roaring back exactly, but it is better to employ than not to.

When We Eat, We’re Eating Energy

2011-10-30T15:48:00.006-04:00

Herewith some startling numbers. A report by the Congressional Research Service in 2004 (link), provides direct and indirect energy consumed in Agriculture, including crop and livestock production. The numbers are in quadrillion BTUs, and the answer is that we consumed 1.7 quadrillion BTUs of energy, 1.1 quadrillion BTU in direct uses, and 0.6 quads in indirect, thus for fertilizers and pesticides. A USDA Factbook (link) tells us that “The aggregate food supply in 2000 provided 3,800 calories per person per day.” The (late) 2012 Statistical Abstract (link, Table 2) tells me that the 2002 population of the United States was 288.1 million people. So let us combine these numbers. Below the CRS data shown graphically:

Now one food calorie, also known as a kilo calorie, is worth 3.968320721 BTUs. Put another way, it takes 0.251995761 calories to make a BTU. So we can convert calories to BTUs or BTUs to calories. A quadrillion is 10¹⁵. Here is what it looks like: 1,000,000,000,000,000. So let us proceed.

If we apply year 2000 calories per capita to the 2002 population, we discover that in that year agriculture provided 1.1 trillion calories per day or 399.6 trillion calories a year to the total population. We can render that number into BTU-equivalents by either multiplying by 3.968… or by dividing it by 0.25199…. In any case we will be 1.584 quadrillion BTUs. That was the energy output of our agriculture in 2002 measured in quads of BTUs. So what did we expend in energy to get that output? What was the energy input? It was 1.7 quadrillions of BTU.

To get a ratio here, we take the input and divide it by the output. The result is 1.072. In other words, we expended more calories in industrial energy to get 1 calorie that we could eat. But the energy ratio calculation is not yet done.

We learn from this story in the Atlanta Journal Constitution, by William G. Mosely, co-author of a 2010 National Academy of Science study, “Understanding the Changing Planet: Strategic Directions for the Geographical Sciences,” that in addition to direct and indirect energy uses, an equivalent amount is used in processing and packaging of food. These two are, according to Mosely, 7 percent each of national energy use. And then another 3 percent of national energy consumption is used in food distribution.

Using these additional inputs, it turns out that in 2002 we used total energy of 4.13 quads as input for that 1.58 quads of caloric output. The cost now turns out to be 2.6 units of energy in for each unit of edible energy out.

Therefore it is absolutely true that we are eating energy in this modern day and age. This should make us very alert when we think about World Population. It has now reaching 7 billion—projected to reach 8 billion in 2050—a time by which we shall have pretty much consumed currently know hard reserves and only shale stuff will be left to take us to the next billion-person addition to the human family.

Added later. Thanks to russel’s comment to an earlier version of this post, I realized that I was using the wrong kinds of calories, not the kilo calories used in food. This post has therefore been updated to correct that very big error. I appreciate the correction.

Shale Oil and Gas: The Years They Add

2011-10-26T15:38:00.001-04:00

The real hot topic in energy these days is not wind or solar. It is shale. By way of an example, today’s New York Times carries a story titled “The Energy Picture, Redrawn.” The focus is on shale oil and on shale gas respectively. As is usual in such coverage, the broader context provided by current reserves and trends in consumption are not highlighted at all. The graphics suggests, instead, plenty of both for a long time to come.

By way of a useful footnote to news coverage, I’ve undertaken to calculate for you just how long current proven reserves will last and how much longer the fossil age will last assuming that projected shale reserves actually pan out.

Here is a graphic that tells the tale. After that I’ll tell you how I did it.

What we see here is that without exploitation of global shale oil reserves, oil will run out by 2037. If we succeed in exploiting all reserves of shale oil, we get another 44 years and the world runs out of oil in 2081. The same for natural gas. Current conventional world gas reserves now are seen to last longer (until 2048), but exploiting all shale gas will only extend gas use by 25 years, to 2073.

What I did was to assemble three categories data: (1) current reserve estimates; I chose the World Oil estimates (link) because they are the highest. On the oil side these already include some portions but not all Canadian tar sands—which are not part of the shale of projection. (2) I obtained shale oil reserves from this Wikipedia compilation and shale gas estimates from the Energy Information Administration (link). (3) I obtained oil and gas consumption estimates from the EIA (link, link). For oil I calculated the consumption growth trend from 1982 through 2008; I extended that trend into the future. The growth is at a rate of 1.4 percent a year in barrels. For gas, the EIA provided forward estimates out to 2035; the growth here is at a rate of 1.6 percent a year, measured in trillions of cubit feet. These I extended at the same rate into future years as well.

Having a projected consumption out through 2100, I calculated, first, how rapidly known reserves would be consumed. Next, I added shale reserves to current reserves and did the calculation once again. The results are charted above.

Part of the down-side of loudly cheering shale reserves is that it lets the public fall back into an easy slumber—of ignorance. Shale is not a long-term solution. First of all, both resources will cost a lot more to exploit than crude oil and natural gas. Exploitation will have huge environmental consequences. And current estimates may well be optimistic.

The next two graphics show the same relationships in quantitative forms, the first for oil, the second for gas.

Desalting the Sea

2011-10-26T11:16:00.000-04:00

Desalination has long been an interest of mine—entirely due to chance and personal history. My first assignment as an analyst at Midwest Research Institute, which actually marked my career as an analyst, was to write a report on that subject for a client. Back in those days half the people in the field still called it desalinization. The change in name had humorous aspects. It was the big joke at the first ever industry conference I attended. Yes, on this subject. Those were the days of Nikita Khrushchev—and a thaw in Russia. The name of the conference was changed at the last minute at the request of a Russian delegation; the Russians had requested it because the old word was too close to destalinization—which was too hot a topic in Russia. Or this is what the talk and snickers at the conference were all about…

Now today comes an interesting story in the New York Times. It’s about a $4 billion desalting plant built in Tianjin in China (quite near Beijing). The thrust of the story is that it costs the Chinese more to desalt the water than they receive for it—thus they are desalting at a loss. “In some places,” says the Times, “this would be economic lunacy. In China it is economic strategy.” This neatly summarizes the differences between worshippers of the Hidden Hand and users of the Human Hand. China subsidizes technologies with an eye on the future—while we bow heads praying to Adam Smith.

Some interesting factoids here. Some of these the Times includes. One is that the technology used by the Chinese is from Israel, entirely imported. It was just assembled in Tianjin. Another is that the project is owned and operated by a state-owned conglomerate called SDIC (State Development & Investment Corporation). What the Times omits is that SDIC is a rather sizeable venture with 2010 revenues of 64.6 billion renminbi ($10.3 billion). SDIC also achieved profits of RMB 6.8 ($1.07 billion). That’s a profit of 10.4 percent. Not bad, actually—and that includes whatever red ink the desalting operation spilled on SDIC’s books.

Someday third-world will come to mean countries that still hew to superstitions worship of old secular gods. If we don’t convert to the new secularism, we might become denizens of that third world ourselves.

The StatAb Is Dead, Long Live the StatAb

2011-10-25T07:54:00.001-04:00

The Statistical Abstract of the United States (1878-2011) is now officially dead. We’ve managed 131 editions of this book. We’ve managed to produce it right through World War I, the Depression, World War II, the Korean War, Vietnam, and on—until now budget cuts have killed it. Here is the official announcement from the Census Bureau (link):

The U.S. Census Bureau is terminating the collection of data for the Statistical Compendia program effective October 1, 2011. The Statistical Compendium program is comprised of the Statistical Abstract of the United States and its supplemental products — the State and Metropolitan Area Data Book and the County and City Data Book. In preparation for the Fiscal Year 2012 (FY 2012) budget, the Census Bureau did a comprehensive review of a number of programs and had to make difficult proposals to terminate and reduce a number of existing programs in order to acquire funds for higher priority programs. The decision to propose the elimination of this program was not made lightly. To access the most current data, please refer to the organizations cited in the source notes for each table of the Statistical Abstract.

Never mind. Long live the StatAb. The spirit it represented is still alive and well. It was an effort to empower a well-informed citizenry with straight facts—straight from their own Census Bureau—with lots of help from other stellar statistical agencies of the United States government. Those people are still there, although diminished in numbers. We salute and join you in bowing our heads. The StatAb Shall Rise Again!

Real and Unreal “Work”

2011-10-24T13:58:00.001-04:00

“Work” has positive connotation when its meaning is to create something or get some necessary task accomplished—be that using hands-and-bodies or using only hands-and-mind. The “creation” here, needless to say, is actually a kind of transformation, be it of physical substances or of ideas. For many people in corporate life today “work” has come to mean something quite different. The actual doing itself happens outside to the corporation. The employees’ job inside is to get other people to do the work—and the pressure is on Big Time to get the work done at ever lower prices. That’s what words like out-sourcing, farming-out, and contracting signify.

This sort of thing began with the industrial revolution—which itself began with textiles. So-called producers obtained cotton, flax, and wool. They farmed it out to individuals who spun the yarns in a highly fragmented cottage industry. Then the yarns were farmed out again, to a similar network of individuals working on their own, to be woven into fabric. The fabric, in turn, was farmed out to individuals who cut and sewed to the producer’s specifications, again paid only for the work accomplished, never for their time. Those who worked had virtually no power—many although in numbers. When we arrived in America as immigrants, the first job my mother held was in a textile operation where she was paid by the piece. Yes, she was an employee, but this practice, piecework, harked all the way back to the dark beginnings of industrialization. In this structure producers did no work and workers had but a minimum economic share in the manufacturing process.

In the evolution of industry there was a period—we’re still largely in that period—when workers were hired, paid for their time, had a stake in the enterprise, and also had a role in product design and creation (as defined above). But now we are gradually going in the other direction again. In many corporations, only tiny minorities of employees actually do work; they are either at the lowest administrative levels or they are engineers-designers who specify the work to be done. Its actual accomplishment is sourced out. Most employees do unreal work: they must find, qualify, negotiate with, and pressure outside agents who will then do the work specified.

Is it real work to lean on suppliers to produce to spec at ever lower prices? Or is that something else? What pride arises from being able to say: “I got the bastards to move up the deadline and to swallow the new price. They hated it, but I got the signature.” Now those who have to do this sort of work are themselves but peons, are themselves under pressure, and the more they succeed, the more the pressure mounts. They, but indeed also the people who live in more square feet above them, are all slaves of the Devil himself who wants infinite expansion of meaningless numbers to enrich the very few who only talk to lawyers and no longer actually really need the wealth.

History has cycles. Times of equilibrium, when justice more or less reigns, are transitory. Then the cycles either turn up—justice increases—or they turn down—the reverse effect. Our times now trend downward. May the process accelerate. May Modernity soon die its soul-less death. Here and there the change upward is sometimes glimpsed, but the instances are still too few. May they multiply.

Naked but Eating Peanut Butter

2011-10-23T10:58:00.002-04:00

In the category of food, next to my daily bread I most value peanut butter. I waxed eloquent on that subject two years ago on the old LaMarotte (link); there I called America the Zone of Heavenly Oils and concluded the post by saying: “One cannot praise peanuts, and peanut butter, frequently and ardently enough.” So I am prejudiced.

The other day I had occasion to note here that Global Warming was threatening coffee and cocoa—two more natural products I’d add to the list of the Indispensables. Elsewhere (link) I have suggested that in a forced-choice between coffee and chocolate on the one hand and gasoline on the other, I would choose coffee and chocolate. Now we learn that (groan! wail! sob!) peanuts are under attack—and possibly from the same cause. Drought has devastated the peanut crop—and plantings were, in any case, already down. Why? Well, farmers prefer to grow corn and cotton because these crops yield higher profits. So is it to be Cotton or Peanut butter? My choice is already made. I’d gladly go naked if I could still have my jar of Smucker’s Natural Peanut butter. And I’ll gladly walk to the store to get it, lacking gasoline, so that I might buy Taster’s Choice and Lind’s dark chocolate while I am out—but with an old newspaper draped around my privates using my last cotton string.

Employment’s Best and Worst: September

2011-10-22T14:24:00.000-04:00

The Bureau of Labor Statistics (link) brought the latest changes in employment and unemployment between August and September. One table in the release shows states with statistically significant employment changes. I’ve mapped these courtesy of Nations Online Project’s free outline map:

Light brown indicates states losing employment (New Mexico, Wisconsin, Michigan, Ohio, Pennsylvania, New Jersey, New Hampshire, and North Carolina). Purple shows those gaining employment at statistically significant rates (Hawaii (not shown), Arizona, Louisiana, Mississippi, Florida, District of Columbia (not shown), and Maine).

The vaguely discernible pattern (if any pattern) is that heavy industrial states are not exactly recovering and that what little significant recovery is taking place is mostly southerly.