EclectEcon

U.S. Homeland Security Is So Stupid, Sometimes

As Kip Esquire documents, airlines will soon (January 23rd) require that anyone flying to and from Canada have a passport. I guess this is supposed to guard against flyers who don't have legitimate (or good forged) passports. But here, based on some indirect knowledge, is what happens:



People who do not have passports, wanting to fly to Canada from the U.S., are not allowed to board the plane. What do they do? They fly to a nearby U.S. city, rent a car, and drive across the border. It turns out that you don't need a passport to drive a rental vehicle across the border!



Or so I am told. Does this make sense?

OPEC and the Prisoners' Dilemma

The typical analysis applying the prisoners' dilemma to cartel theory concludes that as the number of players increases, so does the incentive to cheat, especially when there are weak or ineffective additional enforcement mechanisms. Paul Kedroski of Infectious Greed (and PhD from UWO's bizskool) provides a telling example:

OPEC had announced a cut of 1.2 million b/d in October, and another 500,000 b/d production cut is scheduled to take place in February. Our analysis suggests that only about 65% of the agreed October cuts have been implemented.

By not cutting back on production by the agreed amount, each of the players (producers) is cheating on the agreement. If all the other producers cut back on production, and one doesn't, then that one producer can sell more at a higher price. But of course all the producers either think that way or expect the others to think that way with the result that all or nearly all of them cheat on the agreement and produce more than the agreed upon amount.



But this is a repeated game, and surely each of the players has learned to anticipate this response from the other players. If so, then it makes sense to state a nominal amount that production will be reduced with the full expectation that no one will abide by the agreement. The only scope left for cheating on the cartel, then is by how much one does not stick to the nominal agreement, and that uncertainty gives rise to more incentives to cheat.



This is surely not a stable cartel in the long run without additional enforcement mechanisms.

Market-Driven Bilingualism

English is the official language in the United States. And yet, when the market calls for it, bilingualism rules. Hawaii provides a good example.



I lived and taught in Hawaii 20 years ago and visited there again 6 years ago. I noticed during my first stay that many of the tourists in Oahu were from Japan, and a few of the signs were in Japanese. During my second visit, there were more signs in Japanese, including some of hotel and car rental information sheets.



Jack has worked and visited in Hawaii off and on over the past 40 years. After his most recent visit he wrote (this is an excerpt):

...[M]any of the delightful 1-3 story restaurants and hotels in the Waikiki area have disappeared, as the necessity of vertical expansion to meet – and feed – demand proceeds apace. Even the huge properties such as the Hilton complex, are adding towers.



A substantial part of the increased demand in the area is from Japan. Some hotels and restaurants are so catered to the Japanese that the subtitles are now English, if they occur at all. It’s possible now to fire a real AK-47 in Waikiki, along with dozens of similarly lethal weapons. The industry caters to the Japanese, where gunnery is illegal.



As in federal jobs in Canada with French, I suspect it is difficult to work in the Hawaiian tourist industry without some Japanese facility.

The difference, of course, is that in Hawaii it is the market that forces the bilingualism. A major block of tourists come from Japan, and to cater to them, shopkeepers, hoteliers, and restauranteurs will have a competitive edge if they employ people who can speak some Japanese. Many of the locals speak some Japanese (the Japanese are a dominant ethnic group in Hawaii because they were brought there as slaves/indentured servants a century ago), and Japanese is taught in all the schools.



Also, in Hawaii, there are no laws forbidding shopkeepers from having their primary signs in some language other than English.

Who Has It In For John Lott?

John Lott has done some pretty foolish things in the past. See the entry under his name at Wikipedia for reports from some of his critics; and to see how virulent his critics can be, check out the history of the revisions there.



However, regardless of what people think of what he has done, and regardless of what people think of his work, there is no excuse for what I observed yesterday at the Economics Job Market BluWiki site.

Someone listed Mary Rosh as having a fly-out to Baylor University. There is no Mary Rosh; this is just someone's way of slapping John Lott a bit more.

Careful readers of this blog will know that I carry no brief for John Lott, but I deleted the Mary Rosh entry twice myself. No matter what you think of Lott, this type of behaviour is just plain disruptive and childish.



Update: at least one of the attacks/pranks was posted from IP address: 85.195.123.22; another from 85.195.119.22

What to Do with Gubmnt Savings

I recently gave 3rd-year students an exam question that had, as a side effect, a potential reduction in gubmnt spending in one particular area. Fortunately, all the students who pursued this angle to the question, recognized that the concept of opportunity costs would be important, as in "what might be the best alternative use of these funds." Unfortunately, not one of these students considered tax reductions, leaving taxpayers to choose for themselves how to spend (or save) the money. I feel like such a failure sometimes.

Ontario Secondary School Teachers Federation

This National Post editorial cartoon by Clement (courtesy of Jack) captures my concerns:

Minimum Wages and Capital-Labour Substitution

With all the on-going discussion in the blogosphere concerning the effects of minimum wage legislation (e.g. see this at Cafe Hayek, this at Market Power, and this by Greg Mankiw; and see this earlier piece by Craig Newmark), I'd like to add these observations.



Some years ago, a professor in socionomology argued that raising minimum wages wouldn't cause job losses in the fast food industry because you'd still need workers (graduates from his department, probably) to flip burgers.



There are two problems with this so-called analysis.

1. It assumes a fixed-coefficents production function [you need a fixed proportion of labour and capital, no matter how much you produce] in the fast-food industry. But as one who has happily worked and consumed in the fast-food industry for nearly half a century, I can assure you that production techniques are changing all the time. And much of the technological change that is implemented seems to allow the substitution of capital for labour.
2. The second problem is both larger and more subtle. As minimum wages increase in the fast-food industry, prices rise too. And as the prices of fast food increase, people start buying more microwavable food in grocery stores, storing it at home in freezers, and preparing it themselves. The substitution of capital for labour takes place in the factories that produce the food, in the grocery stores, and people's homes, not in the fast-food restaurants themselves, but it is every bit as important a phenomenon.

For a good but lengthy summary of the economics of minimum wages, see this.

Efficient Markets in Sports Betting

When new information becomes available in markets, supply and/or demand curves shift and prices adjust to equate the quantity supplied with the quantity demanded. The same thing happens in sports betting, but with the addition of Walrasian auctioneers (bookmakers) who adjust prices until the amounts bet on both sides of a bet are approximately equal.



The following information is from the Wall Street Journal [subscription required; h/t to Brian Ferguson].

If modern sports gambling has a spiritual father, it's a Chicago bookmaker named Charles McNeil.



When Mr. McNeil quit his job as a securities analyst to devote himself to gambling in the 1930s, its conventions were very different. Bets on a sport like football were based on "straight" odds: If Army was favored to beat Navy, for instance, the game might be offered at 7 to 1. The problem: If the game wasn't expected to be close, it was difficult to find anyone willing to bet on the favorite.



... Mr. McNeil's solution was to switch the focus from which team would win to something less predictable: the final scoring margin, or point spread.

Rather than favoring Army at 7 to 1, bookmakers would set the spread at a logical number -- say 10 points. If Army "covered" the spread, or beat Navy by more than 10, Army bettors would win. If Army failed to win by 10, or lost, Navy bettors would collect.



The system worked impeccably. Not only did it increase betting, it made it much easier for bookmakers to stay balanced. If the public bet heavily on one side of a game, bookmakers would shift the point spread until smart bettors began making wagers on the other side. Most of the time, the bookmakers and wiseguys would win while the public got clobbered.

Recently (over the past few years) there have been some changes in information dissemination in the football gambling market. Dr. Bob (Robert Stoll) has developed a complex system for beating the spread about 60% of the time, and he sells his picks.

For years, Mr. Stoll's routine started on Sundays when he would download the college box scores and organize the data. He'd spend two days working with his models and angles and another one writing a blurb on every upcoming game. When his clients received his recommended bets on Thursdays, they would have 48 hours to bet at their leisure.



But in 2005, Mr. Stoll noticed that a few minutes after he sent his advice, the lines on those games would shift slightly. The moves were not big enough to cause a stir, but they did get the phone ringing.

And since then, Stoll has been striving to keep his information proprietary for his subscribers but not available to the handicappers (who, understandably, subscribed to his service when they discovered what was going on). If he cannot get his information to the bettors in time for them to use it before the casinos adjust the point spreads, his information will not be worth as much.

Palestinian Rockets Are Not Terrorism(according to Jimmy Carter)

See his interview on January 14, 2007, with Al Jazeera at Little Green Footballs or here at Memri. But be patient -- many people are downloading it.

Economics Internships for Undergraduates

Bizskool students usually have a bit easier time finding summer internships than do economics students, but recently Greg Mankiw posted this about internships for economics undergraduates:

Being a summer intern is a great way for students to observe different career paths and figure out which are right for them. For students interested in economic policy, there are internship programs at the policy organizations such as the CEA, CBO, Fed, and NY Fed, and policy think tanks such as AEI, Brookings, Cato, and Heritage. This is the time of year when students should start applying.

There are a number of interesting additional suggestions in the comments, too.



Recently, a student asked me about internship possibilities in economics in Canada, and while I know of some at The Fraser Institute, I don't know of any others. If you do, could you please let me know?

Tentative Evidence That the Canuck Buck Is Over-valued

As I watch the NFL playoffs on US television stations, I see that McDonald's is advertising my very favourite restaurant food, double cheeseburgers, for only one dollar.



In Canada, this same delicious entree is priced at $1.39 (Cdn). Ignoring transportation costs, I could take $1.15 Cdn to the bank, get $1U.S. and buy a double cheeseburger in the U.S. for a lot less than I would have to pay in Canada. That's a huge difference, crying for an explanation.



I really doubt there is less competition in Canada, and I really doubt that McDonalds is trying to stick it to Canadians, and so the differences in the price (compared with the exchange rate) must have some other explanation.



My explanation is that the Canuck buck is a petro currency, and even though oil prices have been declining, they are still quite high historically. The result is that people want to buy Loonies in order to buy our oil (and other resource-based products), driving up the price of Loonies even though it also drives up the effective prices Canadians pay for manufactured goods.



[Of course this sounds a lot like the Big Mac Index because it's the same idea.]

Economics Job Market Wiki

I'm sure I have seen this site [BluWiki] mentioned elsewhere, but I just came across it myself this morning. It doesn't matter whether you are buying or selling on the economics new PhD market, it has useful information that is constantly being updated in "wiki" format.



Query: if you had a couple of fly-outs would you post that information on this Wiki? On the one hand, it would let other potential employers know that if they think they might be interested, they should get moving; on the other hand, it might signal that they would have little chance of hiring you, causing them to skip you in their own fly-outs.



Overall, I love the additional, albeit incomplete, information available there, and I am intrigued by the possible gaming that might take place.

Inflation in Dubai:The Economist Gets It Wrong

According to The Economist, housing shortages are causing inflation in Dubai.

Economists agree that a shortage of new homes is the root cause of inflation in Dubai today.

But the Emirates Economist disagrees:

[M]uch of the inflation has come about because Dubai, and the UAE in general, is growing and attracting investment.

In other words, the inflation has been demand-driven, in part because their currency is pegged to US dollars. He also points out that there is a great deal of residential construction going on in Dubai:

I think the number of units coming on line is beyond the needs of the market already.

Overall, the piece in The Economist does a good job of explaining why rent controls are almost always a bad idea. But John Chilton's analysis of the current situtation in Dubai is both better and better-informed.

Anti-Semitism and the Ontario Teachers' Union

The executive committee in District 12 of the Ontario Secondary School Teachers' Union will be voting this Thursday on a motion that criticizes Israel for the problems in the middle east [link via Judith]. The text of the motion is

BIRT District 12 STBU Council endorse the following motion for AMPA 2007:



“BIRT AMPA 2007 urge the Provincial Executive to express OSSTF’s criticism of Israel’s continued violation of the human rights of Palestinians as well as its belief that the achievement of justice for the Palestinians will help bring peace to the Middle East and to the people of Israel by taking the following actions:



a) Request the provincial Human Rights Committee to develop an educational campaign for its members as well as curricular materials for the classroom, to be ready for September’s Provincial Council, on Israel’s treatment of the Palestinians, Palestine’s role in this conflict, the role of Canada in the Israel-Palestine conflict, and the international community’s response.



b) Request the Human Rights Committee to devise a campaign to materially and morally support the students of the occupied territories unable to receive an education due to the occupation and make links with teacher unions and student organizations both in the occupied territories as well as Israel who are seeking a just and peaceful solution to this region’s conflicts.



c) Write a letter to the prime minister as well as to the leaders of the oppositions parties, urging them to:



i) Pressure Israel to comply with international humanitarian law including the decisions of the International Court of Justice and the Fourth Geneva Convention;



ii) Call for Israel’s withdrawal from all occupied territories;



iii) Demand the removal of Israel’s “separation wall” which has resulted in the annexation of Palestinian land and extreme hardship in the daily lives of Palestinians;



iv) Pressure Israel to restore the revenues collected by them to their rightful owners, the Palestinian Authority;



v) Publicly criticize Israel’s aggression against Gaza and Lebanon and



vi) End Canada’s sanctions against the democratically elected government of

Palestine which has resulted in the paralysis of the civil service and the extreme impoverishment of the Palestinian people.



d) Develop ways OSSTF can demonstrate its support of the growing international call for Boycott, Divestment and Sanctions against Israel.”



Estimated cost: to be determined

J. Kunin, Vaughan Road Academy/H. Hulays, Harbord CI

This is sheer nonsense, and it is frightening that educators in Ontario might believe it. It smacks of standard appeasement, and it is wrong.

• The security fence (it really is more of a fence than a "wall") has saved countless lives in Israel by deterring suicide bombers.
• Poor education in Palestine can hardly be seen as the fault of Israel when Palestinian leaders have absconded with billions of international aid and when their schools spend so much time teaching hatred of Jews and not enough teaching basic skills.
• The Canadian gubmnt was absolutely right to withhold aid to the Palestinians after the election of Hamas, an organization with the stated goal of destroying Israel. That the Ontario teachers want this aid re-instated suggests to me that they, too, favour the obliteration of Israel.
• Why no mention of the kidnapping of Israelis by Hamas and by Hezbollah?
• And why no mention of the incessant hail of rockets from Gaza into southern Israel?
• And how about condemning human rights abuses in China, Iran, North Korea, Cuba, and Venezuela? Or don't those count?

What appalls, puzzles, and angers me is that educators here and in the UK, so eager to support a David vs. Goliath cause, can be so blind to the facts and the history of the Middle East. I can only conclude that there is a strong anti-semitism underlying this motion, and I shudder to think of the biases its sponsors might be imparting to their students.



As Charles says at LGF,

At every juncture, over the course of many years, the Palestinians have shown the world that they simply don’t care about having a state. They care about destroying Israel. After Arafat died, the Palestinians had a historic opportunity to change course and move toward statehood—and instead they elected an openly genocidal terrorist gang.

I really doubt if the OSSTF supporters of this resolution understand any of this.

NFL Playoffs; Observation #4

I really didn't expect the Patriots to do well against the Chargers. I wanted them to do well because their head coach, Bill Belichick, is an economist, but I sure didn't expect them to stay close, much less win. The Chargers are a very good team, and I expected them to more than cover the spread.



My picks for next week:

• New Orleans over Chicago by 7; the Saints were impressive in their win, and the Bears weren't.
• a long shot: New England over Indianapolis by 3 in Indianapolis; Peyton Manning has looked only good, not great, in the last six games, and I have to question whether the Colt defence can hold up for one more week.
  
  
  
  [side note: We finally broke down and bought a smallish Samsung LCD hdtv to watch bowl games and play-offs. It is absolutely fantastic.]

NFL Playoffs; Observation #3

Man, does Rex Grossman [quarterback of the Chicago Bears] ever appear to have a poor intuition for Newtonian physics and differential equations. How many, what proportion, of his passes in the game against Seattle were thrown slightly behind his receivers? Add to that the blocked passes, and I can understand why so many Bears fans are hoping for a replacement next season.

NFL Playoffs; Observation #2

Two of my least favourite people, Rush Limbaugh and Terrell Owens, have said that Donovan McNabb is not a very good quarterback. The very fact that these two guys said it makes me want to disagree. However, Allen Barra, a well-respected sports economist/journalist agrees with them. And now that I have seen the Eagles play with him and without him, I have to wonder if maybe they are right. If so, with Garcia approaching being over the hill and McNabb not so good, the Eagles have to be in the market for a quarterback in the next few months.



Update: In the light of the link provided by Adam in his comment, I probably need to think more about how good McNabb is (or will be next fall).

NFL Playoffs; Observation #1

What happened to the Indianapolis Colts defence? They looked weak in nearly every game all season, and people expected them to give up tonnes of points against Kansas City last week (they didn't) and then again this week against Baltimore (again, they didn't). How did they get so good all the sudden? Can it last?

Another Gem from Stephen Pollard

Stephen Pollard, writing on ignorance:

Talking of ignorance, where would we be without Guardian columnists? My old boss, Peter Shore, the late Labour Cabinet minister, used to read the Daily Express every morning just to get angry. I prefer The Guardian.

My friend, BenS, lumps the Guardian together with the NYTimes, referring to both or either as the "Times-Guardian".

Lott v. Levitt Defamation Suit to Proceed

John Lott sued Steven Levitt for defamation on two grounds. The first involved a statement in Freakonomics that Lott's research results could not be replicated. The second involved an e-mail sent by Levitt asserting that Lott had bought a special issue of a journal to publish only views consistent with his findings in More Guns, Less Crime.



Levitt presented a motion to the court to dismiss the case.



But the judge has allowed the case to proceed on the second issue. From John Lott's blog,

p. 12: "While the Court concludes that Lott does not have an actionable defamation case against Defendants for the exertp [sic] from Freakonomics, the same cannot be said about Levitt's unfortunate and ill-considered email response to McCall."



... 2) p. 15: ". . . Levitt's email sounds as if he was "in possession of objectively verifiable facts." In his email Levitt states: 'It was not a peer refereed edition of the Journal. For $15,000 [Lott] was able to buy an issue and put in only work that supported him. My best friend was the editor and was outraged the press let Lott do this.' First, it would be unreasonable to interpret Levitt's unqualified statement that the journal edition was not 'peer refereed' as Levitt merely giving his opinion on the 'peers' chosen to review,or referee, the Special issue. Indeed, the editor of the Journal might be able to verify the truth or falsity of whether teh [sic] Special Issue was reviewd by peers. Furthermore, while Levitt argues that one person's "'peer' in the academic realm may be another person's 'hack'," this distinction is not reasonable when discussing the review process at a top university's academic journal. Second, a reasonable reader would not interpret Levitt's assertion that "For $15,000 [Lott] was able to buy an issue and put in only work that supported him" as simply a statement of Levitt's opinion. Levitt's email appears to state objectively verifiable facts: that Lott paid $15,000 to control the content of the Special Issue. . . . Levitt's motion to dismiss Count II of Lott's Complaint is denied."

Quite frankly, I thought Lott's case against Levitt's assertion in Freakonomics that Lott's results could not be replicated was at least as strong.



Update: Tyler Cowen's posting at Marginal Revolution is somewhat misleading when he says "The suit is thrown out." Also see Ted Frank's latest on the case at OverLawyered.



.

David Beckham and the MLS:a prime example of the winner's curse

There is a general proposition in the theory of auctions that whoever wins the auction probably over-estimated the value of the object being auctioned off and ended up paying too much, hence the concept "the winner's curse".



I cannot help but think the recent signing of David Beckham to play soccer for the LA Galaxy of the MLS is an example of the winner's curse. Yes, Beckham is a well-known soccer player who starred for Manchester United and then Real Madrid, but he is well over the hill in terms of ability and even was benched on England's team during last summer's World Cup.



The marquee value of David Beckham is surely positive, but I truly doubt if his marginal revenue product is anywhere near $50m/yr for five years. Rather, it seems to me this is more a case of a team and league bidding too much for a fading superstar.



David Carter was quoted by WaPo as saying roughly the same thing,

"He may very well serve as the Pied Piper for MLS," said David Carter, a Los Angeles-based sports marketing executive and professor at the University of Southern California's Marshall School of Business. "They're going to get people to the stadiums, but it's going to be up to the league to make sure they come back and to convert them into regular fans. They're going to have to deliver beyond Beckham."

And for more, see this by Stef Szymanski at the Sports Economist.



Update: The Economist also appears to question the wisdom of the signing.

America is not enthralled by soccer. Paying David Beckham, a British football star, $250m to play there will make little difference

If it isn't the winner's curse, what else would explain it?

Money and Utility

Does money provide utility? Nope.



Too many people jump to the short-cut conclusion that money provides utility. It doesn't. It is the services of money that provide utility. These services underlie our understanding of the various reasons that people want to acquire and/or hold money (e.g. the transactions demand, the precautionary demand, or the speculative demand).



I guess the same can be said for most goods.

The Wonders of Physics

One of our small pleasures is to watch DVDs about physics and cosmology (see this, for example). Recently Ms. Eclectic came across this link to the one-hour lectures by Clint Sprott on "The Wonders of Physics." A bit too much showmanship for even my tastes, but good stuff for non-physicists.

Investors' Fundsa bad deal?

I can remember over 40 years ago being pushed by some sales hack to "invest" with this outfit. I wasn't impressed then, and it looks as if things have not changed. From Canadian Fund Watch (courtesy of BenS):

The Investors Dividend Fund C units can’t seem to wring out costs despite doubling in size. In Gordon Pape’s 2000 Buyer’s Guide to Mutual Funds, this fund is shown as a $5 billion fund with an MER [Management Expense Ratio] of 2.38%. Since that edition was published in the fall of 1999, the size of the fund would have been as of June that year, while the MER would have been 1998 fiscal. Today, it’s a huge $11.8 + billion fund with a whopping 2.92 % MER for the C units (it’s a little less for the A and B units). The company’s clients are paying a lot more in fees for a fund that is a below-average performer over 3, 5, and 10 years. For 10 years it lags its peer group by a significant amount [10.36 % vs. 12.04% compound annual return]. Per fundlibrary.com its 10-year ranking is 21 / 28; it’s a 3rd quartile performer over 10 years. Great deal, eh? [emphasis added]

How do companies like this survive over the years? Aggressive marketing?



Quoted elsewhere in that same link:

''Hey, it's your money. There are a lot worse things you can do with all your bucks than giving them to even a mediocre mutual fund - such as, for example, giving them to a mediocre hedge fund. If supporting the lifestyle of a mediocre fund manager is your favorite charity, who am I to stop you?"

-Gary Weiss in Wall Street Versus America: The Rampant Greed and Dishonesty That Imperil Your Portfolio, 2006

Overall, the newsletter is a fun, spot-on read about markets, generally promoting passively-managed index funds.

BBC = Biased, Bigoted Corporation

I used this title before, and here is further evidence, provided by Stephen Pollard:

A BBC mole has sent me this briefing for BBC staff from the BBC's Middle East Editor, Jeremy Bowen, on what lies ahead this year.



It’s all too predictable. The "fragmentation" of Palestinian society has, in Mr Bowen’s view, nothing to do with the Palestinians and everything to do with Israel (“the death of hope, caused by a cocktail of Israel's military activities, land expropriation and settlement building – and the financial sanctions imposed on the Hamas led government”). Indeed, Israel is to blame for almost everything. The Palestinians are not responsible for anything; Israel is the culpable party.



He has contempt for every Israeli politician he mentions; Ehud Barak, for instance, is described as having killed "various Palestinians", written as if he did so for the sake of it.



If this is what passes for high-level analysis at the BBC, is it any wonder its reporting is so poisonous?

Pollard posted the entire memo at his site. It is absolutely appalling. And be sure to read the comments there as well.

Canadian Mutual Funds:The Okay and the Ugly

Ms. Eclectic has been extremely disappointed over the past number of years that her RRSP funds in the CIBC Balanced Fund have not been doing at all well. As she puts it, "If they can't at least meet the market average, they don't deserve any fees." But of course their MER [Management Expense Ratios] are inexplicably and unjustifiedly among the highest in the industry.



So she is thinking of changing funds, and in the process of looking for something different came across this article [March 25, 2006, Globe & Mail] which lists the best and worst bank mutual funds (I apologize in advance for not figuring out how to set this up neatly in html):

Bank funds to avoid



% Change

MER 1 YR 3 YR 5 YR 10 YR

1 BMO International Equity 2.5 10.37 13.03 – 2.91 0.71

2 CIBC Balanced 2.34 8.15 11.63 3.45 6.44

3 CIBC Core Canadian Equity 2.25 18.13 17.45 5.26 8.08

4 National Bank Dividend 1.76 11.44 11.83 9.05 9.28

5 RBC European Equity 2.51 1.3 14.5 – 2.14 5.96

6 RBC Select Conservative 1.7 7.47 10.23 5.37 6.77

7 Scotia Canadian Balanced 1.74 9.34 11.18 4.05 7.32

8 Scotia Canadian Growth 2.3 19.45 18.19 5.56 7.69

9 TD International Equity 2.74 2.17 13.14 – 4.96 2.26

10 TD U.S. Blue Chip Equity 2.52 1.44 4.32 – 5.85



Top funds to buy

% Change

MER 1 YR 3 YR 5 YR 10 YR

BMO Dividend 1.75 22 21.42 12.68 16.51

BMO Special Equity 2.53 24.14 25.1 14.71 11.38

CIBC Energy 2.48 25.87 38.89 26.43

CIBC International Small Co. 2.67 17.3 29.42 5.62

CIBC Monthly Income 1.44 19.19 16.26 12.15

RBC Dividend 1.74 22.25 20.04 12.75 15.67

RBC Energy 2.09 28.36 36.13 24.06 17.29

RBC Monthly Income 1.17 14.87 15.46 11.26

RBC O'Shaughnessy Can. Equity 1.52 13.42 24.61 14.27

RBC O'Shaughnessy U.S. Growth 1.61 20.01 29.98 12.55

RBC O'Shaughnessy U.S. Value 1.58 3.85 17.53 7.55

Scotia Latin American Growth 2.7 45.48 45.31 16.8 11.68

TD Canadian Bond 1.07 5.21 6.75 6.93 7.94

TD Canadian Equity 2.14 23.15 26.05 10.25 12.58

TD Dividend Growth 2.01 25.88 23.6 14.26 15.18

TD Energy 2.29 39.08 36.64 23.96 13.4

TD Monthly Income 1.46 14.28 16.51 14.08

TD Real Return Bond 1.48 9.98 9.88 8.89 9.39

Rob Carrick, who wrote that piece, also wrote on Sept 5th in the Globe and Mail,

I should add at this point that there are lots of very good mutual funds available to Canadian investors with low MERs. You just have to look beyond the marketing hype produced by the mainstream fund industry.



... [I]nvesting is one field where people are content to be slackers. People will read up on medical issues and second-guess their doctors to death, but they won't learn enough about investing to be able to tell if they're wasting their time and money in a particular mutual fund. The fund companies and advisers who sell funds promote this attitude by positioning themselves as experts who will take much better care of your money than you could. I would never criticize all funds for being too expensive, though. As I said before, there are lots of funds for investors to choose from with very low fees. It's just that these funds don't get anywhere near the publicity that funds from the major companies do. For investors seeking low-fee funds, here are a few names to chew over: Beutel Goodman, McLean Budden, Saxon, PH&N, Leith Wheeler, GBC, Mawer.

Maps and Mythologyand how Jimmy Carter has helped to set back the goal of peace in the Middle East

Dennis Ross commissioned the maps used by the Clinton administration in its attempt to broker a peace settlement between Israel and Arafat. Here is an excerpt from his Op-Ed in the NYTimes today:

Put simply, the Clinton parameters would have produced an independent Palestinian state with 100 percent of Gaza, roughly 97 percent of the West Bank and an elevated train or highway to connect them. Jerusalem’s status would have been guided by the principle that what is currently Jewish will be Israeli and what is currently Arab will be Palestinian, meaning that Jewish Jerusalem — East and West — would be united, while Arab East Jerusalem would become the capital of the Palestinian state.



... It is certainly legitimate to debate whether President Clinton’s proposal could have settled the conflict. It is not legitimate, however, to rewrite history and misrepresent what the Clinton ideas were [EE: he argues elsewhere in the op-ed that this is precisely what Carter did in his latest book].



Indeed, since the talks fell apart, there has emerged a mythology that seeks to defend Mr. Arafat’s rejection of the Clinton ideas by suggesting they weren’t real or they were too vague or that Palestinians would have received far less than what had been advertised. Mr. Arafat himself tried to defend his rejection of the Clinton proposals by later saying he was not offered even 90 percent of the West Bank or any of East Jerusalem. But that was myth, not reality.



... The basic trade-offs require meeting Israeli needs on security and refugees on the one hand and Palestinian needs on territory and a capital in Arab East Jerusalem on the other. But producing such trade-offs won’t simply come from calling for them. Instead, an environment must be created in which each side believes the other can act on peace and is willing to condition its public for the difficult compromises that will be necessary.



So long as mythologies can’t be cast aside, and so long as the trade-offs on the core issues can’t be embraced by Israelis or Palestinians, peace will remain forever on the horizon. If history tells us anything, it is that for peace-making to work, it must proceed on the basis of fact, not fiction.

Maybe so. Is it a fact that no settlement that recognizes Israel's right to exist will be acceptable to the Palestinians? If so, even Ross needs a reality check.

Susette Kelo: Time to Chill Out and Move On

Susette Kelo sent some pretty nasty Christmas cards to the politicians involved in the eminant domain case which forced her to give up her house for a commercial development:

Susette Kelo's holiday cards feature a snowy image of her pink house and a message that reads, in part,

"Your houses, your homes, your family, your friends.

May they live in misery that never ends.

I curse you all. May you rot in hell.

To each of you I send this spell."

She appealed the taking all the way to the U.S. Supreme Court and (incorrectly) lost her case. But surely now it is time for her to get over it, rather than send hate mail to her adversaries.



Two additional points:

1. Maybe she should have been sending hate mail to her attorneys. If she lost her case, maybe they had something to do with that loss.
2. It's easy for me to say that she should "get over it", but I know from my own experiences that there are lots of setbacks that some of us do not "get over" easily. We may well know we should get on with life and put the setbacks behind us, but that is SO much easier said than done.

Deep-Dish Pizza Wrap-Up

As I hinted in yesterday's posting, I wasn't sure I would want to go out for a fourth night of pizza, especially since King and Hari returned home and wouldn't be here to share in the fun. Also, I really needed to sleep and rest to try to shake this blessed cold. So I didn't go to Gino's last night even though I may regret having foregone the opportunity in a day or two. I must say, the leftover pizza from Uno was very good cold later, too.



Here are some further thoughts on Chicago-style, Deep-Dish Pizza [for my earlier postings see here, here, and here; for King's postings and reviews of our Chicago Pizza Crawl, see here and here.].



After all our searches and after all the fun we had, I have come to the realization that I probably prefer pizza with a yeasty, bread-like crust, not the buttery or flakey crusts of most Chicago deep-dish pizza. And Uno pizza comes closer to what I like, whereas Pizano's seemed to really tickle King's fancy.



All that search and finally I figured that out? I guess I'm a slow learner.

Oh well, the search process itself was tonnes of fun.



And that fact should provide some insight into our economic anaylses of search, namely, that many of us enjoy searching and would be terribly disappointed if the options were not available.

The Turn-around of the Israeli Economy

Danny Czamanski argues that increased reliance on market forces and incentives contributed in a major way to the turn-around of the Israeli economy:

While in 2003 unemployment was almost 11 per cent, this year it is at 8.5 per cent. Despite the very strong Israeli currency, for the first time in the country's history we experienced a positive balance of foreign trade, the value of exports was 2.2 billion dollars bigger than the value of imports. The stock market broke records and the interest rate is lower than that in the USA. Foreign investors brought in US $ 20 billions.



Perhaps the dream of those who would like to see Israel with per capita GNP among the top in the world is not impossible.



So, how did it happen? In the mid-1980s Israel suffered from hyper-inflation and government expenditures were close to 3/4 of the GDP. Today government expenditures represent less than 50 per cent. In addition to privatization, a series of reforms introduced price signals and incentives into decision-making processes. The market responded.

I expect that, in addition, the success and health of the US economy played a contributing role in the success and health of other market economies over the past two decades.