Oct 082014
 

Having lived in the US for over a decade there are quite a few cost of living differences I notice when I return to visit Canada. One of the more obvious differences between the two counties is the treatment of alcohol. The first and most obvious difference is how one purchases liquor or beer. In many US states liquor is commonly available at any corner store. In Canada, up until relatively recently all liquor had to be purchased through Provincially owned and controlled stores. This history also means that even the privately run liquor stores are typically quite clean, modern, and tidy – one never sees run down malt beverage shops which occasionally dot the landscape of poorer zip codes in the US.

The second big difference is in price. The price difference is primarily due to higher “sin” taxes in Canada. However, there is a secondary effect when it comes to imports as higher duty charges also take effect. While visiting this summer I took a look to see what was available in one of the larger stores in Prince George. While domestically produced spirits seemed to be about the same price one would pay for them in the US, some imported liquor appears to be dramatically marked up. The one which surprised me the most was Old Pulteney Scotch 12 Year – this is a nice Scotch which is typically under $40 in the US ($35.99 as of the time of my writing in San Diego). However, at this LCBBC the price was an eye watering $79.99. I guess I’ll be sticking to Canadian rye when I visit.

Old Pulteney Scotch 12 Year Canadian Pricing

Aug 152014
 

CGP Grey has posted a 15 minute video which gives an excellent overview of current and future automation, and the potentially brutal disruption it will have to on our societies. Technological Unemployment is not a new concept, but the prospect of blue and white collar worker replacement is becoming more real:

The Economist also has a good take on the topic as well: The onrushing wave – Previous technological innovation has always delivered more long-run employment, not less. But things can change..

… technical change is increasingly taking the form of “capital that effectively substitutes for labour”. There may be a lot more for such capital to do in the near future. A 2013 paper by Carl Benedikt Frey and Michael Osborne, of the University of Oxford, argued that jobs are at high risk of being automated in 47% of the occupational categories into which work is customarily sorted. That includes accountancy, legal work, technical writing and a lot of other white-collar occupations.

Answering the question of whether such automation could lead to prolonged pain for workers means taking a close look at past experience, theory and technological trends. The picture suggested by this evidence is a complex one. It is also more worrying than many economists and politicians have been prepared to admit.

Jun 082013
 

It has been interesting to watch the ongoing strife and turmoil that has been shaking Turkey. We were there for two weeks in March & April and had a chance to speak with a number of people in different locations. To a certain extent it has been hard to reconcile the strength of reaction given our conversations and the views shared, though some of the seeds of the reaction were easily visible.  Our time in Turkey was marked by three main themes when we spoke with people:

Ongoing tensions between secular & traditional Turks – Due to reforms driven by Mustafa Kemal Atatürk, Turkey has a modern history of being open to different forms of religious worship, or no worship at all compared to the rest of the region.  The majority of the people we spoke with (bias of English speakers) identified as Muslim, but not devout and in many cases, non-practicing.  They had plenty of scorn for the clerics and traditionalists and dismissed their political power as buy-outs & giveaways to segments of the population. They felt that their options & lifestyles were under threat to a certain extent.

The Turkish economy is (or was) great – We saw a lot of new development and construction as we navigated the country.  In general all of the folks that we spoke with said things were good and life was getting better for everyone.  Despite Turkey’s run of growth there is increasing worry that the economic growth and stability in Turkey has been fueled unsustainable by outside lending. Sound familiar?

Turks are happy to be separate from the Euro – Without prompting people would mention how proud they were that they were doing better than the Euro zone, and that they were very happy to have not joined the Euro.  The financial crisis appears to have given confidence to going it alone.  Perhaps the growth experienced in the last five years was amplified by the troubles in Europe and investors looking for (and paying more for) opportunities in Turkey.

Time will tell how far the current unrest will last, both sides don’t appear to be backing down and are further instigating the other.  I wouldn’t give up hope soon – Even now it is very common to see Atatürk bumper stickers and tributes.  Turks are proud of their country and consider it unique and a model for other countries to follow.

May 232013
 

iTunes and Amazon MP3 have been dominating music sales for years now, but there is plenty of evidence that providers have wildly different strategies when it comes to pricing. This is made all the more absurd by Amazon’s AutoRip functionality, where the lines between a digital & physical purchase are even more blurry.

Exhibit A is Vampire Weekend’s Modern Vampires of the City album. As one might expect given the lower productions costs the digital version is dramatically cheaper than the physical CD:
Vampire Weekend prices on Amazon

Exhibit B is Daft Punk’s new Random Access Memories album. The incredible thing is this example is that you can get a digital copy of the album cheaper by buying the physical CD – Amazon gives you instant access to the digital versions as well via AutoRip:
Daft Punk RAM on Amazon

Both of these are new albums from popular acts, released a week apart. There are those that argue that the digital instances should be priced at the same or higher than physical, since the user gets the benefit of instant gratification. However, in the case of Amazon purchases this logic no longer applies. One could certainly argue that the Daft Punk offering has much more drive given their advertising blitz, but I find it curious that these two examples are so different.

Apr 202013
 

This American Life in coordination with Planet Money created a show which dives deep into structural issues related to employment which have been dogging the US (and frankly other wealthy western nations) for decades. As usual they do an excellent job crafting a riveting story about what can be a very dry subject.

The number of Americans receiving federal disability payments has nearly doubled over the last 15 years. There are towns and counties around the nation where almost 1/4 of adults are on disability. Planet Money’s Chana Joffe-Walt spent 6 months exploring the disability program, and emerges with a story of the U.S. economy quite different than the one we’ve been hearing.

Nov 042012
 

I think some people have amnesia. I’ve heard several times over the last few months that several politicians (namely Ryan & crew) are espousing a return – or more accurately an acceleration – of supply-side policies while claiming it will increase economic growth. This is the equivalent of arguing who will win the 1991 World Series title, we have plenty of data to show the outcome. I think the nonpartisan Congressional Research Service (CRS) report did a great job showing the numbers and findings when a reasoned eye looks at all the data:

Concluding Remarks
The top income tax rates have changed considerably since the end of World War II. Throughout
the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%.
Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s;
today it is 15%. The average tax rate faced by the top 0.01% of taxpayers was above 40% until
the mid-1980s; today it is below 25%. Tax rates affecting taxpayers at the top of the income
distribution are currently at their lowest levels since the end of the second World War.

The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate
and the top capital gains tax rate do not appear correlated with economic growth. The reduction in
the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The
top tax rates appear to have little or no relation to the size of the economic pie.

However, the top tax rate reductions appear to be associated with the increasing concentration of
income at the top of the income distribution. As measured by IRS data, the share of income
accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before
falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the
top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to
how the economic pie is sliced—lower top tax rates may be associated with greater income
disparities.

TL;DR – Decreasing tax rates on the wealthy will not spur economic growth, it will simply increase income disparity.

Jan 022012
 

This is a bit mind blowing. The US debt is a bad situation. Japan after fighting its slump for decades is even worse. Both of them are not critical yet, but very well could be if China and others decide to stop buying bonds. However recent data analysis on British debt shows it now has a 950% private debt to GDP ratio, and a financial sector debt ratio alone of over 600%. Read more here:

Everyone Is Starting To Realize The Size Of Britain’s Debt Crisis

Dec 222011
 

I’ve seen many others attempt to link our current situation with the 30’s but I think this article does one of the better jobs at making that argument:

The Book of Jobs by Joseph E. Stiglitz in Vanity Fair

Monetary policy is not going to help us out of this mess. Ben Bernanke has, belatedly, admitted as much. The Fed played an important role in creating the current conditions—by encouraging the bubble that led to unsustainable consumption—but there is now little it can do to mitigate the consequences. I can understand that its members may feel some degree of guilt. But anyone who believes that monetary policy is going to resuscitate the economy will be sorely disappointed. That idea is a distraction, and a dangerous one. What we need to do instead is embark on a massive investment program—as we did, virtually by accident, 80 years ago—that will increase our productivity for years to come, and will also increase employment now.