N˚ 37 47.618′ W˚ 111 24.896′
Monthly Archives: June 2006
McCurrencies
Happy 20th birthday to our Big Mac index.
WHEN our economics editor invented the Big Mac index in 1986 as a light-hearted introduction to exchange-rate theory, little did she think that 20 years later she would still be munching her way, a little less sylph-like, around the world. As burgernomics enters its third decade, the Big Mac index is widely used and abused around the globe. It is time to take stock of what burgers do and do not tell you about exchange rates.
The Economist’s Big Mac index is based on one of the oldest concepts in international economics: the theory of purchasing-power parity (PPP), which argues that in the long run, exchange rates should move towards levels that would equalise the prices of an identical basket of goods and services in any two countries. Our “basket” is a McDonald’s Big Mac, produced in around 120 countries. The Big Mac PPP is the exchange rate that would leave burgers costing the same in America as elsewhere. Thus a Big Mac in China costs 10.5 yuan, against an average price in four American cities of $3.10 (see the first column of the table). To make the two prices equal would require an exchange rate of 3.39 yuan to the dollar, compared with a market rate of 8.03. In other words, the yuan is 58% “undervalued” against the dollar. To put it another way, converted into dollars at market rates the Chinese burger is the cheapest in the table.
Lefsetz FM Playlist
Yesterday was Mike Marrone’s fiftieth birthday. And he had the idea that I should substitute for him on the Loft. So, when I was at XM two weeks ago, we created six hours of programming. I couldn’t turn on the radio yesterday until about four, an hour after I started, but when I pushed the button on my boombox, I was shocked. Because it was my choices. And then me, coming over the airwaves.
Now Mike has got 13,000 plus songs in his library. And I was rushing to catch a plane. So, I quickly picked tracks. After hearing myself I was so elated that I fired up my Inno and recorded what was left of my show. People always ask me what I listen to, well, here you go.
Buy American & Build in Mexico – Ford’s Mark Fields
So a Mexican-built car is Ford’s hedge in the American market against Japanese-branded cars built on US soil. This is getting more and more confusing. But wait – there’s more.
Fields bragged that Ford’s new hybrids are “posting record sales of late” and their “innovations led to more than 130 patents,” with more pending. The Ford exec conveniently omitted the fact that Ford’s hybrid technology depends on technology licensed from Toyota. Nor did he mention the Japanese-made transaxles and battery packs and German-built regenerative braking systems which make Ford’s hybrids possible.
Net Neutrality
Apparent there are now allegations that SBC and Verizon forced the deals through DoJ when the designee for head of antitrust was on Senatorial hold for too activist an enforcement bent. DoJ cleared the deals and the hold was lifted. DoJ then ignored the amended Tunney Act and let the companies close the deals even before the judge did the Tunney Act review.
This is sleazy stuff, and it forms the real basis for being concerned about the games the network owners would play if free to play games. The really striking part of this (to me, a constitutionalist) is how the legislative branch keeps passing laws that the executive branch just ignores. And why ignore the laws? Corporate influence. That’s what this case reeks of.
DRM Stifling Innovation?
Fritz Attaway & Wendy Seltzer:
>Consumers now have the ability to buy digital versions of music and movies from a vast (and growing) online catalog. But that convenience has come at a price: Most of the digital content is packaged with technology called digital rights management, or DRM, a sort of copy protection that limits what users can do with the material.
The music and movie industries defend DRM as a means of protecting artists and publishers — without it, they say, it would be too easy for users to abuse copyrights by illegally swapping files over the Internet. They also argue that without DRM technologies, publishers wouldn’t have been willing to distribute their content in online music and video stores, such as Apple’s iTunes.
But some consumer advocates argue that DRM often goes too far, treating customers as would-be criminals and putting burdensome restrictions on what they can do with music and movies that were legally purchased. (ITunes, for instance, allows users to burn music to an unlimited number of CDs, but limits the number of computers on which users can play purchased music.)
Why Offer Employee Benefits?
The vast majority of US executives see employee benefits as important to their company’s competitiveness, according to the latest McKinsey Quarterly survey.
Cities Shop for Free WiFi Services
Under the agreement, Sacramento residents would pay monthly subscription fees of about $20 to use MobilePro’s wireless service, local businesses would pay $90 to $250, and Sacramento’s city agencies would be able to use the service free. The agreement resembled that of many other municipal wireless deals across the country. For MobilePro, based in Bethesda, Md., a full year of service would bring in $2 million to $4 million in revenue, analysts estimate.
But earlier this month, the deal fell apart. The reason: Sacramento city officials had noticed new municipal wireless deals inked in San Francisco and Portland, Ore. The Portland rollout, sponsored by Silicon Valley startup MetroFi Inc., and the San Francisco deployment from Google Inc. and Earthlink Inc., both offered wireless service to those cities with expanded free access for some businesses and residents. Instead of relying on user subscription fees, MetroFi, Google and Earthlink planned to make money off local advertising that would be embedded in their wireless service.
If It’s Good for Philip Morris, Can It Also Be Good for Public Health?
“We don’t make widgets,” Steve Parrish likes to say, and that acknowledgment strikes me as a good place to start this story. Parrish, whose title is senior vice president for corporate affairs, is a highly paid executive at Altria Group, a New York-based holding company that is the 10th-most-profitable corporation in America. If the name of the company doesn’t strike you as terribly familiar, that’s because a few years ago the company changed its name. It used to be called Philip Morris, a name that still attaches to two of its holdings, Philip Morris USA and Philip Morris International. (Altria also owns Kraft Foods.) So, yes, let’s stipulate right up front: Steve Parrish represents the country’s leading tobacco company, whose best-known brand, Marlboro, is so dominant it accounts for 4 out of every 10 cigarettes smoked in the United States. Last year, Philip Morris USA alone made $4.6 billion in profits. What was it that Warren Buffett once said? “You make a product for a penny, you sell it for a dollar and you sell it to addicts.” They most certainly don’t make widgets.
Kraft is parent of Madison based Oscar Meyer Foods.
Boulder, Utah Photos
More photos from our recent journey. This time, the Boulder, Utah area:
