The GM Recall Record

It’s staggering:

For those who are just tuning into the GM recall saga, some quick facts. GM has issued 44 recalls in North America this year alone. More than 20 million vehicles have been affected worldwide—a tremendous figure that surpasses total annual vehicle sales in the U.S. The recall pace has snowballed since the start of the year, with only two issued in January, but 14 so far this June for some 4.2 million vehicles. With half of the year left to go, GM is already looking at $2 billion in total recall-related charges.

While some recalls have been over more severe issues than others, the breadth and scope of GM’s fiasco this year reveals a shocking safety crisis. At its current rate, GM is on track to shatter the entire auto industry’s record for most vehicles affected in recalls in a single year, explains Michael Schultz, an industry analyst at the Center for Automotive Research. “It’s unprecedented,” says Schultz, who also expects that the company isn’t done yet. “I anticipate there’s going to be more until they have literally nothing else possible to issue a recall on,” he says.

Global Warming Slows As Carbon Dioxide Rose

The Economist writes:

BETWEEN 1998 and 2013, the Earth’s surface temperature rose at a rate of 0.04°C a decade, far slower than the 0.18°C increase in the 1990s. Meanwhile, emissions of carbon dioxide (which would be expected to push temperatures up) rose uninterruptedly.

Then proceeds to offer a bunch of after the fact explanations but I wonder what environmental model predicted this, a priori? Probably not many.

Economist Bryan Caplan has more here.

The Changing Rich

Larry Summers writes:

When Forbes compared its list of the wealthiest Americans in 1982 and 2012, it found that less than one tenth of the 1982 list was still on the list in 2012, despite the fact that a significant majority of members of the 1982 list would have qualified for the 2012 list if they had accumulated wealth at a real rate of even 4 percent a year. They did not, given pressures to spend, donate, or misinvest their wealth. In a similar vein, the data also indicate, contra Piketty, that the share of the Forbes 400 who inherited their wealth is in sharp decline.

Assortive Mating And Inequality

Via Matthew Yglesias:

Among college-educated people, in particular, the tendency is not so much to marry within your community as to marry within your educational cohort. Every once in a while you do see a college graduate married to a high school dropout (my parents, for example), but it’s quite rare. Since incomes are normally measured on the household level for statistical purposes, it matters quite a bit to big-picture national trends. In particular, “assortative mating” of this kind is a major driver of household-level income inequality.

How big? Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, and Cezar Santos report in a new paper that if in 2005 the matching of husbands and wives had been random, the Gini coefficient—the most common summary measure of income inequality—would have been 0.34 rather than its real-world 0.43, a difference of almost 25 percent.

Quote Of The Day

“Three studies examined Americans’ perceptions of incomes and income inequality using a variety of criterion measures. Contrary to recent findings indicating that Americans underestimate wealth inequality, we found that Americans not only overestimated the rise of income inequality over time, but also underestimated average incomes. Thus, economic conditions in America are more favorable than people seem to realize. Furthermore, ideological differences emerged in two of these studies, such that political liberals overestimated the rise of inequality more than political conservatives. Implications of these findings for public policy debates and ideological disagreements are discussed. – Marginal Revolution

The Crime Problem In Venezuela

None of this, of course, comes as a surprise to right-wingers:

The bigger problem for Maduro and his allies is how to explain the government’s failed public-safety record after 14 years in power. The government stopped publishing crime data 10 years ago, and it’s easy to see why. Venezuela’s homicide rate has grown fourfold during the past 15 years, with 79 homicides per 100,000 people last year, according to estimates by Venezuelan Observatory of Violence, a non-governmental institution that tries to piece together crime figures.

Such numbers make the socialist-led country the third most dangerous nation, after El Salvador and Honduras. By comparison, the 2012 homicide rate in the U.S., the world’s bastion of capitalism, stood at 4.7 homicides per 100,000. And that was considered high among rich countries.

Venezuela’s death count has even come close to that of Iraq (with a comparable population), where there happened to be a war. From 2003 through 2011, Venezuelan homicides were 124,000, or 76 percent of the body count in Iraq during that same period. That’s a shocking toll for a nation in peace time.

Full post here.

On Mexico Opening Up Oil Sector To International Investors

“Mexico has mismanaged its oil to the detriment of us all, said José Luis Luege. Ever since the government proposed opening the oil sector to foreign partners, leftists have been marshaling “pseudo-nationalist arguments” that equate letting foreign oil companies develop Mexican oil fields with stiffing our own citizens. They have it exactly backward. Besides North Korea, Mexico is the only country in the world that doesn’t allow foreign commercial partners in the oil industry—even communist Cuba does. That’s because the industry poses investment risks that only private companies can take. Pure nationalization of our oil hasn’t worked: At the turn of the 20th century, Mexico was a top oil producer, behind only the U.S. and Russia. But since the state nationalized production under Pemex in the 1930s, our oil industry has been “bankrupt and inefficient,” as “terrible corruption” has siphoned off funds that should go to exploration and infrastructure. Pemex has been systematically “looted by a bloated union structure” and corrupt officials, who together have “defrauded the nation.” Only by amending the constitution to allow companies besides Pemex to invest in our oil fields will we be able to reap real profits “for all Mexicans.”” — Via The Week

Indian International Student On The Most Surprising Things About America

A worthwhile post overall, but this one stood out:

An almost-classless society: I’ve noticed that most Americans roughly have the same standard of living. Everybody has access to ample food, everybody shops at the same supermarkets, malls, stores, etc. I’ve seen plumbers, construction workers and janitors driving their own sedans, which was quite difficult for me to digest at first since I came from a country where construction workers and plumbers lived hand to mouth.

Also, (almost) all sections of society are roughly equal. You’ll see service professionals owning iPhones, etc. as well. This may be wrong but part of it has to do with the fact that obtaining credit in this country is extremely easy. Anybody can buy anything, for the most part, except for something like a Maserati, obviously. As a result, most monetary possessions aren’t really status symbols. I believe that the only status symbol in America is your job, and possibly your educational qualifications.

Full post can be found here. This point reminded me of this post from economist Don Boudreaux. Both articles are wothwhile reads.

Question For Supporters Of The Minimum Wage

Given by economist Don Boudreaux:

In the U.S. in 1948, quoting my colleague Walter Williams, “the unemployment rate for white 16-17 year olds was 10.2 percent while that for blacks was 9.4 percent. Among white 18-19 year-olds, unemployment was 9.4 percent and for blacks it was 10.5 percent.” Today (October 2013) the unemployment rate for white 16-19 year olds is 19.4%; the unemployment rate for black 16-19 year olds is 36.0% – nearly double the rate of white teenage unemployment. (In 2006 – the year before the current recession began – the unemployment rate for white 16-19 year olds was 13.2%; the unemployment rate for black 16-19 years olds was 29.0% – slightly more than double the rate of white teenage unemployment.)

That is, the unemployment rate of black teenagers in 1948 was comparable to that of white teenagers, and about 2.5 times higher than the overall unemployment rate of 3.8%. Today, the unemployment rate for black teenagers is much higher than that for white teenagers, and nearly 5 times higher than the overall unemployment rate of 7.3%. (In 2006, the year before the current recession began, the unemployment rate for black teenagers was 6.3 times higher than the overall unemployment rate of 4.6%.)

How do you explain these data? Are American employers more prejudiced in 2013 than in 1948 against teenagers? More importantly, are Americans more racist in 2013 than they were in 1948?

These facts about teenage unemployment are straightforwardly explained by the standard economic theory that predicts that a legislated minimum wage causes the lowest-skilled, most poorly educated, or otherwise least-desirable workers to be the first to be fired and the last to be hired. What is your alternative explanation?

Minimum Wage Study

“new evidence based on methods that let the data identify the appropriate control groups leads to stronger evidence of disemployment effects, with teen employment elasticities near −0.3. We conclude that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others, and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage.” — David Neumark, J.M. Ian Salas, William Wascher, via Greg Mankiw

On Working Holidays

“Which is just to say that in a diverse nation with more than 300 million citizens, opinions are going to vary on the pros and cons of extended business hours. How strapped for cash are you? Where does your family live? What’s your relationship with them like? How sentimental are you about specific holiday rituals? People will differ. This Thanksgiving there are going to be people with jobs at the Gap who wish they weren’t working Thanksgiving but feel that they’d lose their jobs if they weren’t willing to take an extra shift. There are also going to be people with jobs at Radio Shack who wish they could earn some extra cash and get out from under that credit card debt. I’m not persuaded that there’s a first-order question of social justice here one way or the other.” — Matthew Yglesias

Quote Of The Day

“A few years back, Robert Ohsfeldt of Texas A&M and John Schneider of the University of Iowa asked the obvious question: what happens if you remove deaths from fatal injuries from the life expectancy tables? Among the 29 members of the OECD, the U.S. vaults from 19th place to…you guessed it…first. Japan, on the same adjustment, drops from first to ninth.” — Forbes Magazine Commentary

Teachers And Incentives – A Study

“Teachers in the United States are compensated largely on the basis of fixed schedules that reward experience and credentials. However, there is a growing interest in whether performance-based incentives based on rigorous teacher evaluations can improve teacher retention and performance. The evidence available to date has been mixed at best. This study presents novel evidence on this topic based on IMPACT, the controversial teacher-evaluation system introduced in the District of Columbia Public Schools by then-Chancellor Michelle Rhee. IMPACT implemented uniquely high-powered incentives linked to multiple measures of teacher performance (i.e., several structured observational measures as well as test performance). We present regression-discontinuity (RD) estimates that compare the retention and performance outcomes among low-performing teachers whose ratings placed them near the threshold that implied a strong dismissal threat. We also compare outcomes among high-performing teachers whose rating placed them near a threshold that implied an unusually large financial incentive. Our RD results indicate that dismissal threats increased the voluntary attrition of low-performing teachers by 11 percentage points (i.e., more than 50 percent) and improved the performance of teachers who remained by 0.27 of a teacher-level standard deviation. We also find evidence that financial incentives further improved the performance of high-performing teachers (effect size = 0.24). – new NBER Working Paper, Thomas Dee and James Wyckoff

Unemployment Insurance Affect On Unemployment

“We exploit a policy discontinuity at U.S. state borders to identify the effects of unemployment insurance policies on unemployment. Our estimates imply that most of the persistent increase in unemployment during the Great Recession can be accounted for by the unprecedented extensions of unemployment benefit eligibility. In contrast to the existing recent literature that mainly focused on estimating the effects of benefit duration on job search and acceptance strategies of the unemployed — the micro effect — we focus on measuring the general equilibrium macro effect that operates primarily through the response of job creation to unemployment benefit extensions. We find that it is the latter effect that is very important quantitatively”. — new NBER paper

Quote Of The Day

“The influence of the California Teachers Association was rarely more apparent – or more sickening – than in the defeat of SB1530. The union showed its willingness to defend an expensive and cumbersome process for firing bad teachers at almost any cost – even if that means school districts must continue to spend exorbitant sums of time and money to dismiss teachers in cases involving sex, drugs or violence with students.” -SF Gate, on the teachers union recent campaign effort against SB1530

Quote Of The Day

“It’s not just bathroom tissue that’s lacking: In recent months, food items such as cooking oil and powdered milk have nearly disappeared from store shelves. But even after a decade of price controls, foreign-exchange restrictions, runaway inflation, currency devaluations, blackouts and takeovers of more than 1,000 companies or their assets, the government still claims the private sector is at fault for the deficiency in consumer staples. The Manpa asset grab came a week after Maduro introduced the new regulatory committee, which will address product hoarding and other abuses that he blames for missing goods.” — Bloomberg, on toilet paper shortages in Venezuela