EXCERPTS:
"BEIJING—Chinese shoppers are clearing supermarket shelves of soap, laundry detergent and shampoo after media reports warned of sharp price increases, the latest signal of public alarm over rising inflation despite government attempts to bring it under control.
State media began reporting late last week that the four consumer-goods companies that dominate the market for detergents—Unilever PLC, Procter & Gamble Co., Guangzhou Liby Enterprise Group and Nice Group—are expected to increase prices soon by 5% to 15%.
That news spurred consumers across the country to flock to supermarkets to fill their shopping carts. At a Tesco PLC grocery store in Shanghai, a service manager said customer numbers doubled over the weekend, and the shoppers stripped shelves bare of laundry detergent.
***
China's consumer-price index rose 4.9% in February from a year earlier, unchanged from January's rate and higher than Beijing's target of 4% for the year. Chinese consumers here have been hit hard by rising food prices, which increased 11% in February from a year earlier. Prices of everything from eggs to garlic have surged.
***
Many consumers feel their only course of action is to stock up on goods that won't spoil quickly.
"Shampoo is already way too expensive, and I can't bear any further price increases," Ms. Wang said.
With five bags of Tide laundry detergent in her grocery cart, Ramona Yan, a 24-year-old website editor, said buying in bulk now would save her money in the coming months."
Thursday, March 31, 2011
China Fuels Waste-Paper Boom - WSJ.com
EXCERPTS:
"CARSON, Calif.—Unemployed and short on cash, Jerry Leonhardt ... regularly sells worn cardboard to the recycling center, which bales it, packs it into containers, and trucks it 10 minutes to the Port of Long Beach, where it is loaded on ships bound for China. "I make out pretty decent," said Mr. Leonhardt, who fetches about $85 per truckload.
Exports of waste paper, the term given to the market for second-hand boxes and other scrap paper, are taking off. The U.S. has long shipped its discarded paper—cardboard, newspapers, catalogues, phone books and other scraps—to emerging markets like China, which doesn't yet have enough imports, hearty trees, or a strong enough recycling habit to generate ample raw materials to make boxes for its own booming export market.
... China needs the U.S.'s old boxes in order to make new boxes to ship stuff back to the U.S. China is also scrambling for American waste paper to box consumer goods sold to its own growing middle class, according to analysts, who say it is far cheaper for China to make boxes locally from waste paper rather than import new boxes directly.
"They simply don't have enough boxes," said Bill Moore, a paper industry consultant in Atlanta.
The U.S., meanwhile, has plenty. With more people shopping online, U.S. houses are inundated with boxes, which now represent 15% of the residential waste stream, up from 5% in 1995, according to Mr. Moore.
After falling sharply in 2009, U.S. export prices for old cardboard boxes—the bellwether for the scrap paper market—have been steadily climbing and are passing pre-recession prices. Chinese paper mills are paying $228 for a baled ton of old corrugated containers—industry jargon for used cardboard boxes—leaving ports around Los Angeles, up 5% from March 2010, and well past the going rate of $160 per ton in March 2007, according to Official Board Markets, a weekly report for the packaging and paper recycling industry.
***
In Carson, Calif., individual and commercial scrap collectors looking to sell their hauls start arriving at the three-acre Corridor Recycling yard at 6 a.m. and pull in all day, backing up trucks to huge mounds of loose cardboard and unloading them.
One regular, José Jimenez Leyva, 58, who had just dropped off a load, said local stores know him and save their boxes for him. He saves the stores the trouble of having to go to the landfill, and he earns about $90 dollars a day. "This is where I get my money for rent and bills," he said.
Mr. Leonhardt, who arrived in his white pickup loaded with boxes, said he was laid off from a shoe manufacturing company in 2009, and that his unemployment checks ran out in December. He heard about box collecting from a neighbor, who mentioned that prices were going up. "I'd like to earn halfway decent wages again, but for now, this is a help," he said.
"CARSON, Calif.—Unemployed and short on cash, Jerry Leonhardt ... regularly sells worn cardboard to the recycling center, which bales it, packs it into containers, and trucks it 10 minutes to the Port of Long Beach, where it is loaded on ships bound for China. "I make out pretty decent," said Mr. Leonhardt, who fetches about $85 per truckload.
Exports of waste paper, the term given to the market for second-hand boxes and other scrap paper, are taking off. The U.S. has long shipped its discarded paper—cardboard, newspapers, catalogues, phone books and other scraps—to emerging markets like China, which doesn't yet have enough imports, hearty trees, or a strong enough recycling habit to generate ample raw materials to make boxes for its own booming export market.
... China needs the U.S.'s old boxes in order to make new boxes to ship stuff back to the U.S. China is also scrambling for American waste paper to box consumer goods sold to its own growing middle class, according to analysts, who say it is far cheaper for China to make boxes locally from waste paper rather than import new boxes directly.
"They simply don't have enough boxes," said Bill Moore, a paper industry consultant in Atlanta.
The U.S., meanwhile, has plenty. With more people shopping online, U.S. houses are inundated with boxes, which now represent 15% of the residential waste stream, up from 5% in 1995, according to Mr. Moore.
After falling sharply in 2009, U.S. export prices for old cardboard boxes—the bellwether for the scrap paper market—have been steadily climbing and are passing pre-recession prices. Chinese paper mills are paying $228 for a baled ton of old corrugated containers—industry jargon for used cardboard boxes—leaving ports around Los Angeles, up 5% from March 2010, and well past the going rate of $160 per ton in March 2007, according to Official Board Markets, a weekly report for the packaging and paper recycling industry.
***
In Carson, Calif., individual and commercial scrap collectors looking to sell their hauls start arriving at the three-acre Corridor Recycling yard at 6 a.m. and pull in all day, backing up trucks to huge mounds of loose cardboard and unloading them.
One regular, José Jimenez Leyva, 58, who had just dropped off a load, said local stores know him and save their boxes for him. He saves the stores the trouble of having to go to the landfill, and he earns about $90 dollars a day. "This is where I get my money for rent and bills," he said.
Mr. Leonhardt, who arrived in his white pickup loaded with boxes, said he was laid off from a shoe manufacturing company in 2009, and that his unemployment checks ran out in December. He heard about box collecting from a neighbor, who mentioned that prices were going up. "I'd like to earn halfway decent wages again, but for now, this is a help," he said.
Tuesday, March 29, 2011
One state's hospital cost solution: regulated prices
EXCERPTS:
"The new federal health law has created a flurry of hospital mergers as the industry prepares for major changes in financing and delivery of care. Some worry that the resulting behemoths will have too much price-setting power.
Maryland has the lowest price in the country for average hospital cases — a little more than $13,000, compared to a national average of $32,500. The cost of health insurance in Maryland is second lowest in the nation as a percentage of median income.
Robert Murray, who as head of Maryland’s health services cost review commission is the state's chief regulator, admits that Maryland's “macro” regulation is not perfect. But he says it has put the state in an ideal position to provide incentives for the kind of highly coordinated and efficient care the federal health law is now calling for.
Already, ten of the state’s 46 hospitals have volunteered for a program in which the state sets a flat, three-year budget based on current spending levels, and hospitals have the opportunity to use cost-cutting procedures to improve their bottom lines and reap higher profits. One such procedure involves providing caseworkers for patients who are discharged from the hospital to help them plan their care after leaving so they are less likely to be readmitted for preventable reasons.
Hospitals are supportive
A regulatory approach works in Maryland partly because all stakeholders — hospitals, doctors and patients — have bought into it. Carmela Coyle, president of the Maryland Hospital Association, says the state’s hospitals strongly support the system and work closely with Murray’s 29-person regulatory staff on a daily basis. It’s “equitable and predictable,” she says, and it ensures that everyone has access to high quality hospitals. Facilities in poor areas of Baltimore, for example, do not suffer disproportionate financial burdens.
“But the system is in need of modernization,” Coyle says. The biggest problem is that Maryland’s federal charter allows it to regulate only those services provided within a hospital building or campus. As more and more doctors set up outside operations such as ambulatory surgery centers, medical imaging and diagnostic testing in smaller facilities, regulated hospitals stand to lose business to these less-expensive providers.
Still, says Murray, “Maryland has bent the cost curve over the last 30 years” without micromanaging. By setting separate spending maximums for each hospital, his small staff has been able to spread the cost of uncompensated care across the state’s $14 billion hospital industry. This has ensured that every hospital maintained profitability, although at relatively low margins. In addition, the state’s Medicaid program has not suffered the same kind of spiraling cost increases other states have experienced.
Deregulatory trend
Maryland hasn’t always been a lone regulator. In the mid 1970s, Massachusetts, New York and New Jersey also set hospital prices and fees. In the decade that followed, hospital expenditures in those places declined. Earlier in the 20th century, a majority of states imposed some form of price regulation on hospitals. Since then, however, state and federal health officials have opted for letting the market regulate prices, banking on increased competition among managed care and health maintenance organizations to keep costs down.
The American Hospital Association has argued that consolidation in the industry since the 1990s created economies of scale that have generated greater investment in technology and improved safety and quality. But critics say it has also resulted in runaway price escalation.
Whether other states will emulate Maryland’s system is an open question. Any attempt to invoke cost regulation relies heavily on the people involved and the voluntary cooperation of the state’s hospitals. That is not always easy to achieve. In the end, however, Murray insists that the regulatory approach relies on a simple concept: “It’s no surprise that when people try to stick to a budget, they tend to limit their needs. Hospitals are no different."
"The new federal health law has created a flurry of hospital mergers as the industry prepares for major changes in financing and delivery of care. Some worry that the resulting behemoths will have too much price-setting power.
In one state, however, monopoly pricing won’t be a problem. The state sets the prices.
For more than 30 years, Maryland has regulated the rates hospitals can charge, while all 49 other states have relied on market mechanisms to keep prices in check. For the most part, it has worked. The urban hospitals that serve large numbers of uninsured Maryland patients are financially strong, instead of nearly bankrupt like most inner-city hospitals. And everyone — private insurers, the uninsured, and those on Medicaid and Medicare—is charged the same amount.Maryland has the lowest price in the country for average hospital cases — a little more than $13,000, compared to a national average of $32,500. The cost of health insurance in Maryland is second lowest in the nation as a percentage of median income.
Robert Murray, who as head of Maryland’s health services cost review commission is the state's chief regulator, admits that Maryland's “macro” regulation is not perfect. But he says it has put the state in an ideal position to provide incentives for the kind of highly coordinated and efficient care the federal health law is now calling for.
Hospitals are supportive
A regulatory approach works in Maryland partly because all stakeholders — hospitals, doctors and patients — have bought into it. Carmela Coyle, president of the Maryland Hospital Association, says the state’s hospitals strongly support the system and work closely with Murray’s 29-person regulatory staff on a daily basis. It’s “equitable and predictable,” she says, and it ensures that everyone has access to high quality hospitals. Facilities in poor areas of Baltimore, for example, do not suffer disproportionate financial burdens.
“But the system is in need of modernization,” Coyle says. The biggest problem is that Maryland’s federal charter allows it to regulate only those services provided within a hospital building or campus. As more and more doctors set up outside operations such as ambulatory surgery centers, medical imaging and diagnostic testing in smaller facilities, regulated hospitals stand to lose business to these less-expensive providers.
Len Nichols, a health policy expert at George Mason University in Virginia, agrees. Effective cost regulation eventually would have to expand to cover these services, he says. Otherwise, it stands to become gradually less relevant to the real world. Even today, hospital services account for only one-third of all health care costs.
Still, says Murray, “Maryland has bent the cost curve over the last 30 years” without micromanaging. By setting separate spending maximums for each hospital, his small staff has been able to spread the cost of uncompensated care across the state’s $14 billion hospital industry. This has ensured that every hospital maintained profitability, although at relatively low margins. In addition, the state’s Medicaid program has not suffered the same kind of spiraling cost increases other states have experienced.
Deregulatory trend
Maryland hasn’t always been a lone regulator. In the mid 1970s, Massachusetts, New York and New Jersey also set hospital prices and fees. In the decade that followed, hospital expenditures in those places declined. Earlier in the 20th century, a majority of states imposed some form of price regulation on hospitals. Since then, however, state and federal health officials have opted for letting the market regulate prices, banking on increased competition among managed care and health maintenance organizations to keep costs down.
The American Hospital Association has argued that consolidation in the industry since the 1990s created economies of scale that have generated greater investment in technology and improved safety and quality. But critics say it has also resulted in runaway price escalation.
Whether other states will emulate Maryland’s system is an open question. Any attempt to invoke cost regulation relies heavily on the people involved and the voluntary cooperation of the state’s hospitals. That is not always easy to achieve. In the end, however, Murray insists that the regulatory approach relies on a simple concept: “It’s no surprise that when people try to stick to a budget, they tend to limit their needs. Hospitals are no different."
Saturday, March 12, 2011
Quake in Japan Rattles U.S. Agricultural Markets - WSJ.com
EXCERPTS:
"Japan's earthquake and tsunami roiled commodities from oil to hogs to lumber.
Crude futures tumbled as the market assessed the damage. Fires broke out at two Japanese refineries while others closed down automatically when the earthquake hit. The shutdown refineries had a combined oil-processing capacity of 1.2 million barrels a day, roughly a quarter of Japan's total refining capacity.
Light, sweet crude for April delivery fell as low as $99.01 a barrel early in the session before recovering to settle down $1.54, or 1.5%, at $101.16 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures fell $1.59, or 1.4%, to settle at $113.84 a barrel.
Corn and lean hog futures saw some of the sharpest declines on fears the disaster would slow demand from a key buyer. Further selling came from traders looking to just exit commodities markets because of the overall uncertainty that follows a natural disaster.
"Japan's earthquake and tsunami roiled commodities from oil to hogs to lumber.
Crude futures tumbled as the market assessed the damage. Fires broke out at two Japanese refineries while others closed down automatically when the earthquake hit. The shutdown refineries had a combined oil-processing capacity of 1.2 million barrels a day, roughly a quarter of Japan's total refining capacity.
Light, sweet crude for April delivery fell as low as $99.01 a barrel early in the session before recovering to settle down $1.54, or 1.5%, at $101.16 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures fell $1.59, or 1.4%, to settle at $113.84 a barrel.
Corn and lean hog futures saw some of the sharpest declines on fears the disaster would slow demand from a key buyer. Further selling came from traders looking to just exit commodities markets because of the overall uncertainty that follows a natural disaster.
Wednesday, March 9, 2011
Cuban state layoffs move slowly, workers uneasy | Reuters
EXCERPTS:
"Cuba's program to slash 500,000 state jobs nationwide has barely gotten off the ground in the provinces, as officials scramble to provide alternatives and deal with unease and anger over the layoffs.
Confusion about how to implement the cuts, a lack of alternative jobs and worker resistance have led President Raul Castro to drop a deadline to carry out the plan by March.
The layoffs, aimed at cutting expenditures by the debt-ridden government and increasing productivity on the Caribbean's biggest island, are a key part of economic reforms Castro says are critical to the survival of Cuban communism.
Some 3,000 jobs have been cut in eastern Granma province since the program started in October, a similar number in adjacent Santiago de Cuba and 1,000 in central Camaguey, local officials told Reuters last week.
But that is just 10 percent of the 70,000 jobs they said were slated to go by March in the three provinces and already the experience has proved wrenching for a society where a secure job had been guaranteed for decades under a centrally run socialist economy.
"We never know now if tomorrow we will wake up with a job or not and it was never like that before," said a middle-aged woman in Santiago de Cuba, asking that her name not be used.
***
Castro's reforms envision a growing "non-state" retail and farming sector and more efficient state-run companies. They are expected to be approved at a Communist Party congress in April.
***
Granma's provincial vice president for economic affairs, Raul Lopez Rodriguez, insisted the reorganization would continue, but admitted only 10 percent of those laid off could be absorbed by a shrinking state sector.
The remainder will have little choice but to return to the land or strike out on their own.
"You are going to see a reorganization of the labor force to improve efficiency and those who remain must be paid much more," he said. He estimated that average monthly wages, now about 440 pesos ($20), would need to double to motivate workers.
"Cuba's program to slash 500,000 state jobs nationwide has barely gotten off the ground in the provinces, as officials scramble to provide alternatives and deal with unease and anger over the layoffs.
Confusion about how to implement the cuts, a lack of alternative jobs and worker resistance have led President Raul Castro to drop a deadline to carry out the plan by March.
The layoffs, aimed at cutting expenditures by the debt-ridden government and increasing productivity on the Caribbean's biggest island, are a key part of economic reforms Castro says are critical to the survival of Cuban communism.
Some 3,000 jobs have been cut in eastern Granma province since the program started in October, a similar number in adjacent Santiago de Cuba and 1,000 in central Camaguey, local officials told Reuters last week.
But that is just 10 percent of the 70,000 jobs they said were slated to go by March in the three provinces and already the experience has proved wrenching for a society where a secure job had been guaranteed for decades under a centrally run socialist economy.
"We never know now if tomorrow we will wake up with a job or not and it was never like that before," said a middle-aged woman in Santiago de Cuba, asking that her name not be used.
***
Castro's reforms envision a growing "non-state" retail and farming sector and more efficient state-run companies. They are expected to be approved at a Communist Party congress in April.
***
Granma's provincial vice president for economic affairs, Raul Lopez Rodriguez, insisted the reorganization would continue, but admitted only 10 percent of those laid off could be absorbed by a shrinking state sector.
The remainder will have little choice but to return to the land or strike out on their own.
"You are going to see a reorganization of the labor force to improve efficiency and those who remain must be paid much more," he said. He estimated that average monthly wages, now about 440 pesos ($20), would need to double to motivate workers.
Monday, March 7, 2011
The Weekend Interview with Paul Johnson: Why America Will Stay on Top - WSJ.com
EXCERPTS:
"In his best-selling history of the 20th century, "Modern Times," British historian Paul Johnson describes "a significant turning-point in American history: the first time the Great Republic, the richest nation on earth, came up against the limits of its financial resources." Until the 1960s, he writes in a chapter titled "America's Suicide Attempt," "public finance was run in all essentials on conventional lines"—that is to say, with budgets more or less in balance outside of exceptional circumstances.
"The big change in principle came under Kennedy," Mr. Johnson writes. "In the autumn of 1962 the Administration committed itself to a new and radical principle of creating budgetary deficits even when there was no economic emergency." Removing this constraint on government spending allowed Kennedy to introduce "a new concept of 'big government': the 'problem-eliminator.' Every area of human misery could be classified as a 'problem'; then the Federal government could be armed to 'eliminate' it."
Twenty-eight years after "Modern Times" first appeared, Mr. Johnson is perhaps the most eminent living British historian, and big government as problem-eliminator is back with a vengeance—along with trillion-dollar deficits as far as the eye can see."
"In his best-selling history of the 20th century, "Modern Times," British historian Paul Johnson describes "a significant turning-point in American history: the first time the Great Republic, the richest nation on earth, came up against the limits of its financial resources." Until the 1960s, he writes in a chapter titled "America's Suicide Attempt," "public finance was run in all essentials on conventional lines"—that is to say, with budgets more or less in balance outside of exceptional circumstances.
"The big change in principle came under Kennedy," Mr. Johnson writes. "In the autumn of 1962 the Administration committed itself to a new and radical principle of creating budgetary deficits even when there was no economic emergency." Removing this constraint on government spending allowed Kennedy to introduce "a new concept of 'big government': the 'problem-eliminator.' Every area of human misery could be classified as a 'problem'; then the Federal government could be armed to 'eliminate' it."
Twenty-eight years after "Modern Times" first appeared, Mr. Johnson is perhaps the most eminent living British historian, and big government as problem-eliminator is back with a vengeance—along with trillion-dollar deficits as far as the eye can see."
Protecting passengers: Drop in flight delays, rise in canceled flights | NJ.com
EXCERPTS:
"By all accounts, the Federal Aviation Administration’s "tarmac rule" has dramatically reduced the number of passengers who are stuck inside an aircraft on the ground for three hours or more.
Violations of the rule, which went into effect last April, can cost airlines $27,500 per passenger, or $2.75 million for a planeload of 100 people going nowhere fast. In fact, there were just three cases nationwide of three-hour tarmac delays in December — compared with 34 the previous December, according to the federal Department of Transportation, the FAA’s parent agency.
But critics say an unintended consequence of the rule is becoming apparent and spoiling travel plans for a far greater number of would-be fliers.
A Star-Ledger analysis of federal DOT figures reveals airlines are simply canceling more flights, presumably to avoid idling on the tarmac and exposing themselves to the whopping fines. In fact, the cancellation rate at the nation’s major airports surged 24 percent during the eight months after the rule went into effect.
There is no breakdown by airport, and there was a noticeable spike in cancellations during the wicked December weather. But over the course of the eight-month period, 7,095 more flights were ditched.
Put another way: Nearly 900 more flights a month are being scrubbed.
"They’ve exchanged inconvenience for a relatively few number of people for an inconvenience for a tremendous number of people," said David Stempler, president of the Air Travelers Association, a passengers advocacy group.
"By all accounts, the Federal Aviation Administration’s "tarmac rule" has dramatically reduced the number of passengers who are stuck inside an aircraft on the ground for three hours or more.
Violations of the rule, which went into effect last April, can cost airlines $27,500 per passenger, or $2.75 million for a planeload of 100 people going nowhere fast. In fact, there were just three cases nationwide of three-hour tarmac delays in December — compared with 34 the previous December, according to the federal Department of Transportation, the FAA’s parent agency.
But critics say an unintended consequence of the rule is becoming apparent and spoiling travel plans for a far greater number of would-be fliers.
A Star-Ledger analysis of federal DOT figures reveals airlines are simply canceling more flights, presumably to avoid idling on the tarmac and exposing themselves to the whopping fines. In fact, the cancellation rate at the nation’s major airports surged 24 percent during the eight months after the rule went into effect.
There is no breakdown by airport, and there was a noticeable spike in cancellations during the wicked December weather. But over the course of the eight-month period, 7,095 more flights were ditched.
Put another way: Nearly 900 more flights a month are being scrubbed.
"They’ve exchanged inconvenience for a relatively few number of people for an inconvenience for a tremendous number of people," said David Stempler, president of the Air Travelers Association, a passengers advocacy group.
Saturday, March 5, 2011
Wednesday, March 2, 2011
Winners and losers from trade - Russ Roberts
EXCERPTS:
"Don [Boudreaux] argues in the book and in the podcast that to point to an American steel worker put out of work by imports of Brazilian steel and say that he is "harmed by trade" is to misunderstand the nature of trade and its winners and losers. He says it’s like saying that a man whose wife leaves him for another man is harmed by love. After all, the man married because of love. The man is the product of his parents who were touched by love. So it is with the steel worker. His steel job exists because of trade. His whole life is supported by trade of various kinds. So in what sense is he "harmed by trade?"
It’s a profound point. It forces you to see just how trade and specialization and the division of labor create the incredible lives we lead, lives of wealth and health unimagined by previous generations.
*****
"Ironically, the richer we become, the more specialization we have. The more specialized you are, the greater the risks (and rewards) from economic change.
The lesson, I think, is that education should give you a range of places to apply your specialized skills. It’s better to learn how to program than to learn how to program in HTML. It’s better to know how to write than to know how to write an article for a traditional newspaper. It’s better to know how to communicate generally than to know how to write.
It is better to learn how to learn than just to learn something specific."
"Don [Boudreaux] argues in the book and in the podcast that to point to an American steel worker put out of work by imports of Brazilian steel and say that he is "harmed by trade" is to misunderstand the nature of trade and its winners and losers. He says it’s like saying that a man whose wife leaves him for another man is harmed by love. After all, the man married because of love. The man is the product of his parents who were touched by love. So it is with the steel worker. His steel job exists because of trade. His whole life is supported by trade of various kinds. So in what sense is he "harmed by trade?"
It’s a profound point. It forces you to see just how trade and specialization and the division of labor create the incredible lives we lead, lives of wealth and health unimagined by previous generations.
*****
"Ironically, the richer we become, the more specialization we have. The more specialized you are, the greater the risks (and rewards) from economic change.
The lesson, I think, is that education should give you a range of places to apply your specialized skills. It’s better to learn how to program than to learn how to program in HTML. It’s better to know how to write than to know how to write an article for a traditional newspaper. It’s better to know how to communicate generally than to know how to write.
It is better to learn how to learn than just to learn something specific."
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