Created by Consumers

Today's Financial Times included a chart detailing the "World's Largest Companies" (by market capitalization) in the world today. This top ten listed included:

1. ExxonMobil - US$431 billion
2. PetroChina - $384
3. Gazprom - $298
4. General Electric - $279
5. China Mobile - $268
6. Microsoft - $241
7. Industrial and Commercial Bank of China - $240
8. Petrobras - $235
9. Royal Dutch Shell -- $232
10. Wal Mart Stores - $228

Now if we break these ten companies down by category we end up with --

-5 companies are energy/oil producers
-3 of these companies are Chinese entities
-4 of these companies are American/USA companies

Given the high price of oil/gasoline today coupled with the growing energy demands of China it is no surprise that 5 of these corporations are energy companies. However their size and market value should not be surprising since consumers spent their own money via market decisions to create these giants -- although PetroChina, GazProm, and Petrobras are essentially products of national governments.

While reading this list in the Financial Times was educational all readers would have benefited if the article would have included a chart showing the "World's Largest Companies" from 50 or even 100 years ago to offer some historical perspective to show how the world economy has changed over time.

Economic history is essential summertime reading,

Todd

Europe

Today's local newspaper published an op-ed from a scholar at the New America Foundation arguing that the European Union (EU) is the the "old and sick man" that most Americans believe it is in economic terms.

I read this op-ed with interest since my wife and I are flying to Brussels, Belgium for the week to attend the annual "Capitalist Ball" hosted by the Centre for the New Europe. This annual gathering of the free market community is mainly a social gathering but there is substance in terms of the policy conversations.

I plan to share copies of today's pro-EU op-ed with my friends at the Ball to get their reaction so I can produce a posting later this week.

I look forward to hearing from readers regarding which economic markets are the most dynamic in the world AND enjoy the highest relative standard of living/quality of life.

Merci/danke/grazie/ta/mange tak/gracias,

Todd

Big Milk

My local newspaper recently published an article entitled, "Rising Dairy Prices Begin to Hit Home," which focused on the fact that the price of a gallon of milk nearly reached $4.00 in July 2007. The article went on to note that dairy prices were up for the following reasons:

• overseas demand for whey and other components of milk
• feed costs because of ethanol (driving the price of corn up)
• laws of supply and demand

While a gallon of milk is nearly $4.00 the price of a gallon of gasoline hovers around $3.00 so I have to pose the following questions --

1. When will the government investigate, 'Big Milk', in the same way they have attacked 'Big Oil' ?
2. Perhaps the CEOs of the big milk producers need to testify before Congress?
3. Will Congress call for a windfall profits tax on milk producers?
4. Will Al Gore lead us to the Promised Land by exploring "alternative milk" options?
5. Does the Head Start program need even more funding due to rising milk prices?
6. Should there be a special tax levied on milk guzzling families?
7. Will the US military invade India or Russia to ensure the free flow of cow milk for our economy? :-) (Top cow milk producing country rankings noted here -- http://www.fao.org/es/ess/top/commodity.html?lang=en&item=882&year=2005)

Bottoms up,

Todd

Family Doctors

Perhaps the TV program from my youth - Marcus Welby, M.D. - instilled in me an admiration for the profession of "family doctor" since Dr. Welby was probably the nicest gentleman on TV at the time. Whatever the cause a recent decision by one of my alma mater's , the University of St. Thomas (Minnesota not the Virgin Islands!!), to partner with Allina Hospitals and Clinics.

Allina and St. Thomas are considering converting the soon to be closed Ford Assembly Plant in St. Paul, Minnesota into a medical school to be focused on training "primary care physicians" (family doctors). Now this is a very interesting economic development idea whereby industrial society assets are converted into service economy resources.

When I first read about this "factory to medical school" proposal I immediately thought:

• This makes a lot of sense because our population is aging dramatically and we are placing a higher value of good health/long life with each generation (okay, beyond our battle with obesity of course).
• Why did the federal government provide government-backed loans to Chrysler Corporation in the 1980's (one of the few Ronald Reagan policies I disagreed with)?
• Today General Motors spends more on health care costs than it spends on steel to produce its automobiles which supports the old joke that, "GM is an insurance company that makes cars as a hobby..........."

If my big government friends don't believe it yet PLEASE think this over -- our quality of life is improved with each generation by the "destructive creativity" that drives our free (partially free to be exact) market economic system. Thus tangible assets like a factory that builds automobiles is converted (potentially) into a medical school because society needs more doctors not automobiles that no one wants to buy anymore (like the Ford Ranger -- which is the only model built at the St. Paul plant).

Progress with some pain,

Todd

Minimum Wages and Career Changes

Via this posting I will introduce readers to -- Dennis Luehr of Campbell Hill, Illinois -- who should be an inspiration to at least two labor unions I know of but first a restaurant review. Tonight I dined at Domenico's Restaurant in Jefferson City, Missouri. While my meal of a house salad followed by blackened yellow fin tuna coupled with steamed broccoli was tasty the customer service was very poor. My waitress, "Sarah", was clearly new to the business based on her performance. Sarah left me stranded for 40 minutes between when I finished my salad and when she brought my tuna, plus she never asked me how the meal was, and I did not give her a chance to ask if I wanted dessert (and they had spumoni which I am addicted to!!!!!) because I asked one of her colleagues if I could pay my bill since I was tired of waiting for Sarah to return. On my 5 point scale I will have to give them a "2" for poor customer service but an excellent tuna steak.

So how would the US Congress respond? They would vote to increase Sarah's hourly wage by MANDATING an increase in the minimum wage rate -- not based on economics and excellent customer service but instead because of the media opportunities Congress will have available to show how they care about "helping" people. So what would be a better alternative than raising the minimum wage to improve performance? Instead of increasing Sarah's hourly pay from say $4.00 per hour to $7.00 per hour which equates to $480.00 per month why not let the restaurant owner decide how to spend this $480 on employee training? If I owned Domenico's I would give Sarah $200.00 per month for 3 months as a "training fund" to be used solely for eating at restaurants in the local area. I would further require Sarah to write a restaurant review (and turn in her receipts of course!!) for each venue she visits so we could discuss them in a one to one meeting. To improve customer service Sarah has to be an active restaurant consumer.

The good thing is that Sarah is young (maybe 20 years old but I hate to guess women's ages or their weights) so she has time to make mistakes, receive bad tips from unhappy customers, get fired, and improve along the way. But what if Sarah was 48 years old and lost her job when the company she worked at closed, what would she do? I would hope she would be inspired by Dennis Luehr's career transformation which I read about in today's St. Louis Post-Dispatch. Mr. Luehr became unemployed when the coal mining company he worked for, Horizon Natural Resources, closed its operations. Instead of crying out like the aircraft mechanics at Northwest Airlines or the automobile workers in Detroit did when layoffs were announced that, " I have done this job for 35, 40, 45 years.............(fill in the blank).......so what am I to do now?" Mr. Luehr transformed himself from coal miner to accountant by getting a college degree at Southern Illinois University-Carbondale via a job re-training program. Now Mr. Luehr is on track to complete his master's degree in May 2008 along with his Certified Public Accountant designation.

To say I am impressed is an understatement.

Over the years I have seen numerous stories about coal miners in Pennsylvania and West Virginia who have been trapped or even died in mine accidents but I do not remember any news reports focused on accountants dying at their desks!!

Career changes are often necessary in our dynamic economy but as Mr. Luehr's example shows such changes can produce very positive results.

Personal motivation beats minimum wage "gifts" every time.

Todd

State of Economic Freedom

Tonight watching football and eating snacks on the couch was replaced with watching President Bush's annual "State of the Union" address and reading through my mail.

As I listened to the speech I read an op-ed by Mary Anastasia O'Grady which summarized the annual "2007 Index of Economic Freedom" which is co-published by the Heritage Foundation and the Wall Street Journal. The full index can be reviewed at -- www.heritage.org/index

The two partner organizations use a set of economic criteria (regulations, taxes, labor unions, etc.) to rank a total of 157 countries in terms of their overall economic freedom. Readers can review the full index for themselves so let me focus on the "top 5" and the "bottom 5" countries in this year's index:

1. Hong Kong (note - China itself was ranked #119)
2. Singapore
3. Australia
4. United States
5. New Zealand

and

153. Burma
154. Zimbabwe
155. Libya
156. Cuba
157. North Korea

Now granted, perhaps I missed it since I was reading my mail so maybe President Bush mentioned this index in his speech but I doubt it. I feel strongly that utilizing such an index would have helped him illustrate to the US Congress and world leaders who will focus on the speech's content the need for greater free trade in the world and an overall reduction in the role governments play in macroeconomics.

Ask yourself -- where would you rather open a business and/or raise a family? Australia (economically free) which has a high per capita income/quality of life or in Zimbabwe (economically oppressive) which must now rely on food aid to feed its citizens but was once a net exporter of food?

President Bush needs a TANGIBLE tool like this index to show when progress has been made in the march to freedom versus his current, intangible rhetoric about bringing democracy to Iraq.

Maybe next year,

Todd