The article starts by summarizing economic findings on people’s wine selections. It then examines the US wine market. It finishes with suggestions on selecting wines.

How People Select Wines

Considerable economic analysis has been done on how people choose wine[1]. Summarized in an earlier article, the primary finding is that wine choices are rarely connected to taste. And further, price does not accurately predict taste. What do I mean by that? In carefully conducted large blind tastings, more expensive wines were not preferred. It appears that people buy wine based on its color, brand name, label, and ratings (experts frequently disagree on their ratings).

One other point: some people buy wine because it is expensive. There are two reasons for this: 

• If you are buying wine as a gift and you don’t know anything about wine, it is reassuring to buy an expensive wine;
• Some people want to be known as wine connoisseurs, and they believe that buying expensive wines will make others think they are wine connoisseurs.

The US Wine Market

The overriding point about the US market, made in an earlier article, is that wines from Argentina, Australia, Chile, New Zealand, South Africa, are gradually replacing European wines in the US market. Why? Because they are good and cost less to produce than their European competitors. And as the US buyer becomes more knowledgeable, the price edge European (especially French) producers enjoy by using the region, e.g,. Burgundy rather than the dominant varietal e.g., Pinot Noir, to market their wines will decline.

In another article, I reported on a survey of a large liquor store. The conclusion? Liquor stores do not have counter space for more wine. That means a new wine must replace an existing one. A tall order. Going forward, the US market will be hard to break into. It will take an extremely low price or a varietal that catches on, like Pinot Noir (US), Malbec (Argentina), Sauvignon Blanc (New Zealand) and Shiraz (Australia).

 Quality

There are a large number of relatively inexpensive wines available from Argentina, Australia, Chile, New Zealand, and South Africa in stores. But my survey article did not include anything on quality. This time I focused on ratings, so we could see the relationship between price and quality. Wine Spectator (WS) is one of several rating sources. WS describes an 85-89 rating as “Very Good”. I personally found most WS wines rated 88-89 to be even better than “Very Good”. WS rates anything over 90 as “Outstanding”. I normally don’t buy a wine WS rates less than 88 and I agree that wines rated 90 or above are normally outstanding. WS rates anything over 90 as “Outstanding” and I agree.

So I searched the WS database by varietal (see below) for wines (2004-2009) costing $10-$15 with ratings of 88 or higher. The findings suggest that high quality, inexpensive wines are available.

Heavy Reds

Under “Heavy Reds”, I looked at Cabernet Sauvignons, Shirazes, and Malbecs.

1. Cabernet Sauvignon

I included French Bordeaux in this category because its primary grape is Cabernet Sauvignon. The second column in the table lists Cabs priced at $10 or less with ratings of 88 or more. 15 fall under this category, led by Australia and Argentina. If we increase the search price to $15, 97 wines appear. For exceptional wines (rated 90 or more), 8 wines appear, 2 from Argentina and Australia, and 4 from the US. In my previous large liquor store survey, I found a total of 86 Cabs in the $8-$16 range, with no reference to quality; more than half were from the US.

The conclusion is there are plenty of high quality, low-priced Cabs available. They are not hard to find inasmuch as well-known brand names are included, e.g., Columbia Crest, Hogue, and Peter Lehmann.

Table 1. – Cabernet Sauvignon

Source: Wine Spectator Ratings

Of course, if you are a wine buyer that likes to purchase expensive wines, Cabs are the wines for you. Zachys, a wine auctioneer, is estimating that 6 bottles of Romanee Conti (1990) will be sold in Hong Kong in the HK$460,000-700,000 (US$59,100-90,070) price range, or $9,850-$15,012 a bottle.

 2. Shiraz

Australia made Shiraz a popular varietal, and their wines dominate the inexpensive, high quality Shiraz listings. I came upon 56 in my store survey.

Table 2. – Shiraz

Source: Wine Spectator Ratings

There are plenty of good, inexpensive Shirazes available, with 15 rated 90 or more costing $15 or less. Again, well-known brands show up, e.g., Lindemans, Jacob’s Creek, Penfolds, and Greg Norman.

 3. Malbec

Argentina has popularized Malbecs, and their wines dominate the wine rating table. Again, good, inexpensive Malbecs are available with 11 rated 88 or more costing $10 or less.

Table 3. – Malbecs

Source: Wine Spectator Ratings

The $10 or less group includes brand names readily available: Alamos, Doña Paula, and Terrazas de Los Andes.

Light Whites – Sauvignon Blanc

Sauvignon Blanc is the dominant light white varietal. It is also the dominant grape in the French Sancerres and Pouilly Fumés. They are plentiful  in the US – I found 69 of them in my store survey. Table 4 indicates high quality, inexpensive Sauvignon Blancs are widely available, with New Zealand the leading provider.

Table 4. – Sauvignon Blanc

Source: Wine Spectator Ratings

Many widely-known and readily available brand names are represented in the table, including: Babich, Santa Rita, Neil Ellis, and Chateau Ste. Michelle.

Heavy Whites – Chardonnay

Chardonnay is the dominant heavy white grape. There are plenty in stores – I found 78 in my survey. And again, as Table 5 indicates, there is no problem in finding inexpensive, high-quality Chards.

Table 5. – Chardonnays

Source: Wine Spectator Ratings

The US has 8 Chards rated 90 or higher, along with 2 each for Australia, Chile, and New Zealand. These 90+ rated wines are widely available. Well-known brand names include: Columbia Crest, Thorne-Clark, and Babich.

Country Competition

Argentina, Australia, and New Zealand became large wine exporters because of one grape: Argentina (Malbec), Australia (Shiraz) and New Zealand (Sauvignon Blanc). There is a marketing problem here: becoming associated with only one varietal. Chile and South Africa do not have such a reputation. This should help them in future years.

Concluding Thoughts

There are people in the world who can actually tell the difference between a Romanee Conti vintage 1990 and vintage 1991. Amazing! For the wine expert, a good part of the enjoyment in drinking wine is the ability to make such fine distinctions.

But the vast majority of people who drink wine (myself included) have difficulty distinguishing between a wine rated 88 and 95 by WS. My suggestion: choose a varietal you like, pay for a month’s subscription for wine ratings -  Parker, Wine Spectator, or some other, to see if you can tell the difference between wines rated very good and outstanding.

One frequently hears “if Williams did not have to take time off for military duty, he would have been the greatest hitter of all time”.  Here, I address this point by projecting what Williams would have batted if not for the wars. Specifically, I project: home runs (HR), batting average (BA), runs batted in (RBI), on base percentage (OBP), and slugging average (SLG). Williams is also compared to other “best hitter ever” contenders.

Simulating the Lost Years

Ted Williams lost 6 years to military service in the prime of his career. For WWII, 4 years – 1942-1945; for the Korean War, he effectively lost 1952 and 1953. Williams had just hit .406 and .356 in 1941 and 1942, respectively, before his WWII military service. He also hit .388 at age 39 in 1957 after returning from the Korean War. Clearly, his military service took him away in the prime of his baseball career.

To make the projections for the lost years, I took the average of the two years before he went off to war. The results for the statistics are given in the following table. The years used for the projections are underlined with the projections in bold.[1]

Table 1. – Williams Career and Projections

Source: http://www.baseball-almanac.com/players/player.php?p=willite01

Home Runs

Before getting to the home runs stats, it is worth noting that the home run numbers changed dramatically by era. This is captured in Table 2 where American League home runs are shown for the “Ruth”, “Williams”, and “Steroid” eras.

Table 2. – American League Homers in Different Eras

Note how dramatically the numbers of home runs hit has increased through the eras.

Home run leaders are presented in Table 3. Williams tied for 19^th. My projections suggest that had he played the years spent in military service, he would have hit 711 home runs and ranked 4^th.

Table 3. – Home Runs

Keep in mind that Fenway Park is not friendly to left hand hitters. While it is only 302 feet down the right field line, it drops back sharply to 380 feet in right center. Table 4 provides data on more friendly American League parks in use when Williams played.

Table 4. – Park Dimensions

Source: Clem’s Baseball Blog

Batting Average

Before getting to the stats, it is useful to ask whether different eras were better or worse for batters. Table 5 provides data on average batting averages for the best AL hitter and the average for Major League Baseball. The average for the AL champ was very high for the earliest two periods. The Ruth era had a high overall average, suggesting that Ruth’s averages might have been high because of bad pitching. But the Williams era was not abnormally high or low, suggesting Williams did not get a batting performance break because of when he played.

Table 5. Batting Averages in Different Eras

Data on batting averages are presented in Table 6. Williams’ actual average of .344 tied for 7^th. My projection suggests he would have ranked 4^th had he played in his service years. Table 4 indicates that the 6 players with higher averages played during a high-average era.

Table 6. – Batting Averages

Runs Batted In

Like home runs, RBIs are cumulative, so my projections for Williams will be much higher than his actuals. Table 7 provides data on RBIs. Williams ranked 13^th but I project he would have been 1^st had he not gone to war.

Table 7. – Runs Batted In

On Base Percentage

OBP is increasing accepted as the best single statistic on batters. Getting on base half the times you come to the plate is amazing. At .489 (proj.), Williams is pretty close. Like other dangerous hitters, Williams was given many intentional passes. But he was also a very disciplined hitter with a great eye. He prided himself on never swinging at a pitch not in the strike zone. Williams has the highest on base percentage of any hitter, ever.

Table 8. – On Base Percentage

Slugging Percentage

Slugging average is a common batting statistic. It is defined as the total number of bases resulting from your hits divided by your at bats. The maximum is 4.000, e.g., if you hit a home run in your only at bat, you will have a 4.000 slugging percentage. Williams’ slugging average was second only to Babe Ruth’s.

Table 9. – Slugging Percentage

Overall

Who are the contenders for greatest hitter of all time? Among retired players, there are only two worthy of consideration – Ruth and Williams (Aaron’s lifetime batting average was only .305 and Bonds only .298).

How about people still playing? Albert Pujols and Alex Rodriguez come to mind. Rodriguez is 35, maybe 2 good years left. But his overall batting average is only .303. End of discussion. Pujols is 30, maybe 7 good years left. In Table 10, I project Pujols ahead for 7 years using annual career averages for the projection. The winner in each category is in bold.

Table 10. – Ruth, Williams, and Pujols Comparisons

Williams was the winner in four categories, Ruth in 2. Ruth might have been helped on batting average because of the weak pitching in his era. My sense? Ruth or Williams is the greatest hitter ever.

Reflections

My father took me to Fenway in the late ‘forties/early ‘fifties when Williams was in his prime. He was the most exciting player I ever saw in person. I will always remember the announcement – Now Batting, Number 9, Ted Williams. Whatever the game, a significant number would stand and cheer. Williams would come to the plate, often say something to the ump and catcher, and then the performance would start. Anyone fortunate enough to see him hit a home run or even swing at a pitch never forgot the beauty of the swing[2]. He rarely swung at a bad pitch. Many umps believed if Williams did not swing at the pitch, it was a ball. Just before the pitch came, he would lift up/cock his wrists, and swing at the very last moment.

Williams had excellent eyesight, quick reactions, and very strong wrists. His swing was traditional and classic. He held onto the bat with both hands until the end of the swing. His signature home run was a towering drive into the right field bleachers.

Whomever you think was the greatest hitter, Ruth has to be considered the greatest ball player ever.  In Boston, he won 23 and 24 games in 1916 and 1917, respectively, as a pitcher.

[2] You can catch a glimmer of the beauty of his swing at – http://www.youtube.com/watch?v=lRie0HNJmZY and http://www.youtube.com/watch_popup?v=lRie0HNJmZY&vq=small#t=42.

 by Elliott R. Morss, Ph.D.

 Introduction

 The United States has just passed a major health care bill. The bill is extremely complex (the Congressional Budget Office has a team of more than 40 professionals working on its budgetary implications).

It was not presented to the American public in a way it could understand. Instead, supporters and detractors selected pieces of it to generate strong opinions, both pro and con. Below, the key features of it will be analyzed. But first, some background on US health and its current care system is presented. A caveat – my expertise is global finance, not health.

 Background

 In the following paragraphs, several features of US health and care are discussed.

 High Per Capita Outlays

 Table 1 provides comparable data on per capita health expenditures and the 2 indicators most commonly used to measure a country’s health – life expectancy at birth and the mortality rate of children under 5 years old. All the countries listed with the exception of the US, provide universal health care.

 Table 1. – Health Care Expenditures and Overall Health Indicators 

Source: The World Health Organization

 Several aspects of Table 1 are notable:

• The United States spends more on health care per capita than any other country in the world.
• In Cuba, where there is a government run medical system for all, per capita health expenditures are only 5% of US outlays. The US and Cuba have the same life expectancy, but the child mortality rate is higher in the US than it is in Cuba.
• Among developed nations, Japan and Spain have better health indicators than the US while spending only one-third as much on health. Does this mean Cuba has a better health delivery system than the US? This is a debate for another time. The key point is that pretty good health care is being delivered in Cuba at 5% of the US per capita cost.

 Rapidly Growing Health Expenditures

 The Congressional Budget Office (CBO) has projected that future growth in spending per beneficiary for Medicare (a government run insurance program for people 65 and older) and Medicaid (a government run insurance program for low income people) will rise from 4 percent of GDP in 2007 to 12 percent in 2050. The bulk of that projected increase in health care spending reflects higher costs per beneficiary rather than an increase in the number of beneficiaries associated with an aging population.

 Chronic Diseases and Obesity

Half of the population spends little or nothing on health care, while 5 percent of the population spends almost half of the total amount. Some of this spent on non preventable health problems. The most tragic are birth defects that cannot be corrected.

However, a major factor in the growth of outlays stems from the growing share of privately insured adults classified as obese. I have written on this issue earlier. Obesity is a global phenomenon, even in developing countries. But no developed country compares with the US. In the US, two thirds of the population is overweight, and one third is obese. Consider the following:

• Heart disease is the leading cause of death in the US and strokes are the third leading cause. Being overweight increases the risk of both;
• Cancer is the second leading cause of death in the US. 20% of cancer in women and 15% of cancer in men is attributable to obesity;
• Diabetes kills almost 4 million people annually and accounts for 11% of US health care costs. There is a direct link between diabetes and being overweight: 80% of people with the primary type of diabetes are overweight;
• Obese people are 83% more likely to develop kidney disease than those not overweight.
• The US spends over $2 trillion on health care annually; one study estimates obesity costs at $214 billion annually, or approximately 10%.
• The number of obese children is a good predictor of future obesity problems, and that number is growing rapidly. It is projected the health costs for being overweight and obesity will double every decade. This means it will become an ever-increasing share of total health care costs.

 Old People

The elderly (age 65 and over) made up around 13 % of the U.S. population in 2002, but 36% of health outlays were spent on them. The average health care expense in 2002 was $11,089 per year for elderly people but only $3,352 per year for working-age people (ages 19-64). This same phenomenon can also be seen by looking at the top 5 percent of health care spenders. People 65-79 (9 percent of the total population) represented 29 percent of the top 5 percent of spenders. Similarly, people 80 years and older (about 3 percent of the population) accounted for 14 percent of the top 5 percent of spenders –  http://www.ahrq.gov/research/ria19/expendria.htm.

 Health Care Payment Systems

In the US, health care providers do not get paid for improving health. Instead, they get paid for charging for everything that is allowed. That includes client visits, client tests, etc. So it is not surprising that many studies have shown “too many patients are getting angiograms — invasive imaging tests for heart disease — who don’t really need them; and specialists convened by the National Institutes of Health said doctors are too often demanding repeat cesarean deliveries for pregnant women after a first C-section.”(http://content.nejm.org/content/vol362/issue10/index.dtl). Much of the health care expenditure increase comes from treating patients without symptoms or with mild symptoms only. Also, someone has to pay for the new machines purchased to diagnose and treat patients.

The New US Health Care Act

With these issues as a backdrop, I turn to the new health care bill. It has many defects, and, as will be seen, does little to address the basic US health problems presented above. As I just reported, in 2009, insurance companies, pharmaceutical companies, hospitals, doctors, nurses, in short, the health industry spent $539 million to convince legislators to add something special for each of them. If you add to that two contentious political parties unwilling to work together and focusing entirely on trying to make the other look bad, it is not surprising that the bill is not perfect.

The bill has three key features:

• Moving the US closer to universal health care via carrot and stick incentives for firms and individuals;
• New health insurance regulations;
• Efforts to increase health care productivity

Moving Towards Universal Coverage

According to the Congressional Budget Office (CBO) –  http://www.cbo.gov/ftpdocs/113xx/doc11379/Manager’sAmendmenttoReconciliationProposal.pdf, the bill will reduce the uninsured from 51 million (today) to 23 million in 2019. Of the remaining uninsured, about a third will be unauthorized immigrants. The CBO estimates that of the new enrollees, 5 million will be unsubsidized. The remaining 23 million new enrollees will be subsidized, with the average subsidy in 2019 estimated at $6,000.

This increased insurance coverage will be expensive. The CBO estimates that after allowing for small employer tax credits, penalty payments by companies and individuals, an excise tax on high premium insurance plans, and “other effects”, this will cost $172 billion in 2019 and $788 billion for the 2010-2019 period.  

Insurance Company Regulation

 The massive lobbying of the insurance companies was successful in removing the public choice option from the new legislation. In addition, they removed a proposal allowing people to sign up for Medicare before they reached 65. But moving ahead, things will be quite different for health insurance providers: 

• No more refusals for preexisting medical conditions;
• All individual and group policies must offer dependent coverage for children up to age 26;
• Individual and group health plans can no longer place lifetime limits on the dollar value of coverage;
• Insurers cannot rescind coverage except in cases of fraud;
• Requires qualified health plans to provide, at a minimum, coverage without cost sharing for preventive services;
• Requires that health insurance companies start paying fees to the government based on market share.

 In addition, the new insurance exchanges should increase competition and the rates insurance companies charge will be closely monitored.

Efforts to Increase Health Care Productivity

There are a large number of items in the bill intended to increase health care productivity. The CBO has estimated the effects of these steps on the Federal Budget with numerous and understandable qualifications. Inasmuch as I am not a health expert, I will make no judgments on them. But in Table 2, I list a number of them with the CBO’s estimated Cost savings.

Table 2. – Estimated Budget Savings Resulting From Increased Productivity

Source: Congressional Budget Office

There are several items in this list worthy of comment. The intent of the bill is clearly to cut back on the Medicare Advantage Program. CBO appears quite hopeful on Medicare Productivity Improvements. It is notable that at least through 2019, the CBO estimates that preventative care programs will be costly. In large part, this is because they will mandate more testing. In fact, some estimate that insurance premiums for high deductable individuals will go up because more tests will be mandated.

The Overall Budgetary Numbers

The CBO breaks down the budgetary impacts under three separate headings as presented in Table 3.

Table 3. – Budgetary Impacts of New Health Care Legislation*

* A positive number signifies a deficit increase.

The CBO estimates that the costs of increasing coverage will be offset by other expenditure reductions and higher revenues.

Assessment

Achieving universal health care and reducing insurance company abuses are desirable goals. And having more people with insurance should reduce emergency ward demand and increase health in the long run.  But, if we return to the points made about US health at the outset, the jury is most definitely out on whether there is much in this bill to turn matters around. Will some of the research being funded change the incentive structures of health care providers so they focus more on improving health and less on their billed time and equipment use? And how about obesity? I am increasingly of the mind that obesity reduction will require a major education campaign coupled with a reduction in subsidies for grain/corn products.   

by Elliott R. Morss, Ph.D.

Introduction

Having worked in 45 countries, I have seen many of the forms that corruption and governance take. It is a fascinating and complex topic. I believe my review of four countries I know well (Argentina, China, Myanmar and the United States) will add understanding.

How do I define corruption? Doing something for pay that goes against the interests of your organization. For example, if you are the procurement officer in a major newspaper, buying second-quality paper for a kickback would qualify as corruption. If you are a politician, getting paid or “receiving favors” for some act that does not reflect the interests of the citizens you represent would qualify. Corruption is a worldwide vice. Like drinking, drugs, and sex, it happens everywhere.  

What’s the difference between good and bad governance? Tricky. I am tempted to say that good governance means political decisions reflect the will of the people. But what if the people are poorly informed? Perhaps it means political decisions reflect the interests of the people. One thing I am sure of: the quality of governance does not depend on whether the country is a dictatorship or democracy. In fact, the conditions for democracy to work exist in very few countries. So I do not agree with Churchill’s famous quotation:  It has been said that democracy is the worst form of government except all the others that have been tried. It all depends.

Myanmar

What has happened in Myanmar is tragic. It is a country blessed with abundant natural resources, and at one time was a center of cultural and academic excellence. Rangoon University was the most prestigious university in Southest Asia in the 1940s and 1950s. But the country has lost a generation that will never be made up. What happened?

Since Myanmar won independence from the British in 1948, it has been governed by the military with a few brief episodes of democracy. In 1990, Aung San Sui Kyi was elected Prime Minister but the military government would not allow her to take her position. For most of the time since then, she has been other house arrest. There was no justification for what the government did aside from wanting to stay in power (the government would argue that a firm hand is needed because of the large number of conflicting minorities in northern part of the country).

It is troubling that in the ensuing 20 years, Aung San Sui Kyi (the daughter of Aung San who founded the Burmese Army and negotiated the country’s independence from England) and the military leaders could not find some way out of this mess. I had businesses in Myanmar in the 1995 – 2004 period and always believed the standoff would be resolved. After all, this was little more than a squabble between the elite military families of the country.

But instead, the government has done as much to hurt its citizens short of genocide (Cambodia, China, and Russia) as any government ever. Of course, the government aggressively suppresses its critics. But many countries do this. What makes Myanmar’s government unique are the steps it has taken to keep its citizens uneducated. This includes removing books from libraries and controlling the books and magazines allowed in the country. But more importantly, the government has stricter controls on Internet access than any country in the world. The result is the citizens of Myanmar are uninformed – at least a generation has been lost. Young people have become superficial, disoriented and lazy.

What has happened is somewhat reminiscent of Mao’s Cultural Revolution in China. But the Cultural Revolution only lasted 3 years!

The destructive standoff in Myanmar is now in its 21^st year. It is hard to see how governance in Myanmar could be any worse. And China, wanting to draw on Myanmar’s natural resources, is enabling the standoff to continue.

Of course there is corruption in Myanmar. But it does not take the extreme form it has taken elsewhere, e.g., the Duvaliers’ use of the Régie du Tabac to rape Haiti. By now, the leaders have undoubtedly collected significant sums illegally, but they continue to live quite modest lives.

China

One historic point about China has to be understood: it has held together as a civilization for 2,000 years: that includes Tibet, Macau, Hong Kong, and Taiwan. Any attempt to remove any part of China from the country will be strongly resisted by the government and people.

China is quite different than Myanmar. There are some limits on how critical one can be of the government, but a dissident really has to “work on it” to get sent to jail. Starting in 1990, I had a Chinese partner, Dr. Zhu Jia-Ming. He left China in 1989 because his boss, a senior Chinese government official, was placed under house arrest (he had been too supportive of the Tiananmen students). In the early 90’s, we created Green China, a US NGO with the objecting of increasing the dialogue on the trade-offs between economic growth and environmental preservation in China. That gave me the opportunity to travel throughout China.

For a number of years, my partner was the leader of the international human rights movement for China. In the late 1990’s, he resigned, believing that China’s human rights issues would be resolved internally. He went to business school (Sloan at MIT), and shortly thereafter, we started a company with other Chinese partners.

Since Mao’s Cultural Revolution referenced above, the Chinese government has done everything it can to insure its citizens know what is happening in the world. Of course the government wants to stay in power, and allowing its citizens open access to information could at some point threaten its continued dominance. But the “genie is out of the bottle”, and there is no way the Party can block its citizens from knowing what is going on in the rest of the world.

What is the major difference between the leaders of China and Myanmar? In Myanmar, the government does not care what the people think; it will do everything it can to remain in power. In China, the Communist Party wants to remain in power, but knows this depends on doing things that makes its citizens better off.

Senior Chinese Government officials are for the most part very well-trained – the Central bank, Ministry of Finance, and the Environmental Protection Ministry, are all headed by professionals.

China is most certainly not a democracy – the Party rules. But the Party works to please its citizens. And because it is not a democracy, the Government can get things done in a hurry, like:

• an interstate highway system for the entire country built in less than a decade;
• a subway system for Shanghai in about 12 months, and  
• 42 high-speed rail lines recently opened; with average speeds of up to 215 miles per hour, it takes a little more than 3 hours to get from Guangzhou to Wuhan (664 miles).

India is a democracy, and this puts it at a significant competitive disadvantage to China.

In short, I give the Chinese Communist Party a high mark for governance.

Corruption in China is interesting. The overriding feeling among Chinese businessmen is pragmatism: we want to make money, and everyone who helps us is our partner. As is the case in most developing countries, government officials are poorly paid. So it is common in China for them to be “consulted” on projects, either by state enterprises or private firms. And if they help out and the project makes money, they receive compensation.

Does corruption sometimes screw things up? Of course: the Shanghai Airport is a good example.    

To summarize: The leaders of the Communist Party worry a lot about what the citizens think. The corruption is managed well in the sense that things get done to benefit the country.

Argentina

I have been going to Argentina the last four years. During the last two, I taught in Buenos Aires in the Graduate School of Business at the University of Palermo.

A pretty complete summary of governance in Argentina is presented in a recent Economist article. There are all sorts of inappropriate government business deals to enrich the people in power and their allies. Various forms of intimidation are used to keep individuals and institutions “in line”. And many senior government jobs are given to Kirchner friends. As I indicated in a recent interview, there are many well-trained economists in Argentina. But in contrast to China (and Chile in Latin America), I do not sense that qualified professional are running the important government ministries. Instead, policy seems to proceed as a series of uncoordinated moves in different directions. There are several powerful groups in Argentina: the military, business, and the unions. The Kirchners have chosen to ally themselves with the union block.

Has governance suffered? Everyone living in Buenos Aires thinks so because on or another union strikes all the time. But the large business firms have continued to operate and the country is recovering from the global recession. The worrying thing is that the politicians do not appear to fear or care what the people want. Instead, they believe they can run the country in an alliance with one block or another. The situation is unstable and so long as it exists, policies will favor one group or another without regard for the whole.

International Rankings

Before getting to the United States, consider the following rankings on corruption and democracy. Myanmar is near the bottom on each criterion: 178^th out of 180 on corruption (only Afghanistan and Somalia are lower) and 163^rd out of 167 on democracy.

International Rankings: Corruption and Democracy

Sources: Corruption – http://www.transparency.org/; Democracy – http://www.economist.com/markets/.

The ranking are pretty much as one would expect. However, while Argentina ranks better than China on democracy, I believe China is currently better governed than Argentina. And by that I mean key policy decisions are being made with the interests of all the people in mind, and not just a single power faction. 

United States

I lived in Washington for 20 years. And during that period, I came to understand how it is run. While the US is definitely a democracy in the sense that it holds fair elections, decisions are influenced at all levels of government by special interest groups. That is, while the people elect people to public office, they end up working with groups or individuals that have very specific interests in how particular pieces of legislation are written and how regulations are implemented. Once politicians have been elected “to represent the people”, most become controlled by one or another special interest group. The result is that nobody in Washington represents the people.

I offer two concrete examples of how this works:

• US tax laws. There is rarely any serious consideration given to overhauling the tax laws. But every year, special amendments are made in the tax laws to favor one group or another. The officials that oversee this in the US Treasury are very aware of what is happening. But they are not in a position to block amendments that have strong Congressional support. In the 1970s, I created a US NGO with a frustrated former Treasury official – Taxation with Representation – to oppose the special tax interests by bringing tax academics to Washington to testify against special interest legislation. We gave up in frustration. The lobbyists were too powerful.
•  US policy in the Middle East – Most people living in the Middle East hate the US. The result is global terror and the inconvenience of long airport lines to insure no weapon is brought on board to “get Americans”. What is the reason for this hatred? The American Jewish lobby that has so influenced US policy in favor of Israel that the rest of the Middle East hates the US. This is well-documented in the article written by two tenured professors, one at the University of Chicago and the other at Harvard – http://www.lrb.co.uk/v28/n06/john-mearsheimer/the-israel-lobby. 

The Washington lobbies are getting bigger and stronger. The Open Secrets NGO estimates that lobbying outlays in Washington have increased from $1.4 billion in 1998 to $3.5 billion in 2009. And note these are lobbying expenses only: they do not include campaign contributions to elected officials. In 2009, Open Secrets’ data show there were 13,739 lobbyists registered in Washington.

 The US just passed a bill to move the country towards universal health care. The bill is complex and full of very imperfect plans. That should be no surprise. Open Secrets reports that in 2009, insurance companies, pharmaceutical companies, hospitals, doctors, nurses, in short, the health industry spent $539 million to convince legislators to add something special for each of them.

 In late 2008, the American banking system collapsed, throwing the world into a global recession. Washington responded by setting up a $787 billion fund (TARP) to bail out the banks. I have long argued such a fund was unnecessary. Through various channels, AIG alone received $180 billion of government support. Part of that money was spent to pay back Goldman Sachs (more than $12 billion) and other clients at 100% on the dollar. This favoritism to Goldman via AIG: might it have had something to do with Paulson’s link to Goldman and perhaps the $6.2 million Goldman has spent lobbying in Washington in the 2008-09 period?

 The next major piece of legislation affecting the banking industry will be regulatory reform. Will my sensible reform proposal even be considered – no FDIC insurance to banks that make money from trading and/or sell off their loans? No, not a chance. Why not? The big banks want to keep trading and selling off their loans. And the financial industry is not skimping on lobby expenses. Open Secrets estimated that in 2009, the finance, insurance, and real estate industries spent $463 million lobbying in Washington.

Conclusion

Democracy is no panacea because special interests will always outbid the general interest. An informed public is a partial antidote. And do keep in mind what has happened in Myanmar….

 by Elliott R. Morss, Ph.D.

 Introduction

I recently interviewed George Ball, the Chairman of Burpee Gardening, about the economics of the mail order/nursery plant/seed business (I will post that interview shortly). He said the vegetable seed business is growing rapidly, partly because in tough times, people want to take advantage of the cost savings resulting from growing vegetables from seed.

 That got me thinking: at 10 cents a tomato seed, there is definitely a cost savings if you can just rough up the soil, drop in a seed, and get a healthy tomato plant to grow. But living in New England, it is not quite that simple. In what follows, I will take you through what I do and what it costs.

Seed Costs

 Certainly seed costs are low enough to warrant growing from scratch, if that were all there was to it. The following seed prices are taken from my recent article comparing gardening catalogues.

 Vegetable Seed Prices

If we could only live on lettuce, basil, and beans! 

Starting Seeds Indoors

 Living in New England requires that I start growing seeds indoors if I want vegetables before fall. What do I grow the seeds in? In essence, there are two possibilities: buy an all-in-one seed-growing package, or buy separate pieces and put them together. A good example of the former is the APS system that has been offered by Gardener’s Supply for many years. In essence, you get a water-holding tray, a capillary mat, soil holders and a plastic cover at a cost of $19.95 for one that holds 24 plants. You can get 2 with soil for $49.94. A. M. Leonard’s Gardeners Edge offers essentially the same product. Burpee offers something similar – its “ultimate growing system” has a reservoir, a mat, soil and 72 soil holders (the holders are smaller than the other two) for $19.95. The attraction of these systems? In addition to being all-in-one packages, they are self-watering: you can go away for a few days without losing your seedlings. The systems can be reused but new soil will be needed (more on soil costs below).

 All-In-One Sytems

 I turn now to the separate pieces. “Pot-Makers” allow you to make your own holders. In essence, you wind newspaper around the pot-maker to make a soil holder. Pinetree charges $14.95 for one, Burpee charges $19.95.

 Johnny’s offers “hand-held soil block makers”. You press down using a block maker and you get a block of soil that stands on its own. One that presses out 2 square inch soil blocks 4 at a time costs $29.95.

 And then there are the pellets – held together by a biodegradable netting ( that I do not find all that biodegradable the next spring):

• The Jiffy-7 peat pellets;
• Coir pellets.

So how do all of these products compare? To answer this question, we need comparable soil prices. Most catalogues offer seed growing soil, quoted either in quarts or cubic feet. So I asked, how many 2-inch square blocks (8 cubic inches) of soil can one get from each seller’s soil? You need to know there are 1728 cubic inches in each cubic foot and 67.2 cubic inches in each quart to make the conversion from bags of soil quoted in cubic feet or quarts in the catalogues to square inches. And that, coupled with the catalogue prices, allows me to the price per square two-inch (8 cubic inch) block shown in the following table.

Price per 2- Inch Block of Seed Starting Soil

 According to this Table, Jiffy’s seed starting mix (not pellets) sold by Harris is the lowest priced soil. And Harris’ shipping fees are based on shipping value, not weight. How do these soil prices compare with the price of the Jiffy pellets (a peat growing medium held together by a biodegradable netting)? I use the “extra-depth” Jiffy-7. I pay Harris $56.95 for 500 pellets, or 11 cents per pellet. Park offers 200 coir pellets for $19.95 or 10 cents a disk). Clearly, the Jiffy soil is cheaper than the Jiffy pellets. But pellets don’t need a holder. If you buy the soil, you will need to use a pot-maker, a soil block press, or just buy trays with built-in cells.

 Lighting

 To grow a significant number of seeds indoors, you need lighting. I use a 3-level fluorescent stand with 12 growing trays of 10’ x 21.5” for a total growing area of 2,580 square inches. I have been using the extra-deep Jiffy-7 pellets. I can fit 40 pellets comfortably in each tray, or 480 seeds in all. I don’t transplant.

 This lighting apparatus in available from A.M. Leonard’s “Gardeners Edge” for $600 or from Harris for $720. I believe this lighting system bought from Leonard will be as good or better in price per square inch of growing area than any other lighting system on the market.

 My tomato plants get special treatment. I use a now discontinued Gardener’s Supply APS system where each cell is 4” inches square. When the plants get too large for the fluorescent stand, I stake them and take them to the basement where I have a halide light hanging from a beam. They don’t go outside until the Memorial Day weekend.

Heating mats are simply too expensive for me, and my vegetables grow without them.

 Outdoors

 There is really no limit on what you can spend once it is time to move your plants outdoors.

 I believe the following table constitutes pretty close to the bare minimum of what is needed. You really need a small seed dispenser, but maybe you could do without the soil-testing machine. The catalogues convince us we need fertilizer and fertilizer sprayer. But how about the need for the bean innoculant and tomato blossom set spray? I don’t know, but I get them.

 Every year, I buy a few bags of manure/compost. I don’t buy red mulch any more for my tomatoes. They do fine without it. I do need tomato, bean, and cucumber supports (I use the metal cages. Soil is tough on skin and nails, so gloves are needed. A weeding instrument for gardeners is like a good knife for a chef – they come in many different forms but are essential. Rabbits ate all my green peppers and beans last year and it will not happen again. I will start with sprays (Liquid Fence). If that does not work, I will have to buy fencing.

 There are many different ways to water your garden. But whatever method you use, you will at least need a hose with a nozzle. I use a combination of sprinklers and soaker hoses on a timer. You really don’t need a mechanical tiller, but you do need clippers and to be politically correct, a composter.  

On all of these products, I recommend that you first check with Pinetree and Gardeners Edge on price. Gardeners Edge seems to be mimicking Gardener’s Supply but with lower prices.

But I should say: I will always have an allegiance to Gardener’s Supply – so many original great ideas! What does that mean? I will always buy their new ideas from them – but I will not buy upside down plants from them or anyone.

 I have left out a lot. For example, water and electricity costs. And I have to get my trees trimmed back every other summer at a cost of $1,500 a trim.

 I now want to return to George Ball’s claim that there are great savings in growing vegetables from seed. In the following table, I have two columns for costs: the middle one is for annual costs and the right one is for investment costs. I arbitrarily assume the investments will last six years.

Growing Vegetables from Seed: Summary Cost Table

 This assumption is reflected in line 27 where I take the total investment cost ($1,431) and divide it by 6. In line 28, I get the costs per seed planted. For the annual costs, I divide the total ($199.80) by 300 seeds. For the investment costs, I divide $238.50 by 300. That results in a total cost per seed of $1.46.

 What does it all mean? George Ball was right: at $1.46 for a vegetable plant, you are doing a lot better growing than buying your vegetables in the market.