Data Visualization

One of the greatest things about the Internet is free access to data visualization tools.   There are some remarkable sites available, that quickly allow anyone to see significant data, and develop their own models and conclusions.   Here are some examples:
http://www.gapminder.org/   Gapminder is the site I discovered first, and like the best.
http://www.google.com/publicdata/home    Google's site is clearly modeled after Gapminder.   Imitation is the sincerest form of flattery.
http://www.tableausoftware.com/public/   Tableau Software hosts this site.  The gallery of visualizations generated by other users is very interesting, covering every topic from tooth decay, to the growth rates of technology businesses, to the milk productivity of Wisconsin dairy cows.   Moo!

http://www-958.ibm.com/software/data/cognos/manyeyes/   Many Eyes is collaborative site hosted by IBM.   I need to update my Java plug-in to view these visualizations again.

When I collected these sites last year, there was another site "Swivel.com", which hoped to become the YouTube of data visualization.  Unfortunately, although the content and tools were good, the business failed within a few months, after the company had spent 3 or 4 million dollars.  A technology journalist commented, "These free tools on the web are easy to use, and easy to lose."
http://eagereyes.org/criticism/the-rise-and-fall-of-swivel

But back to Gapminder.   I encourage you to explore this site, especially the featured visualizations "Health and Wealth of Nations", "200 Years that Changed the World", and "Stop Calling Them Developing Nations".  http://www.gapminder.org/
Above all, these visualizations show that globally, despite everything you may read, the quality of life for people on the planet Earth is improving.

The world really is getting better.

Geography of a Recession

The time-series map seen on the following link is an outstanding example of data visualization.  The map was produced by Latoya Egwuekwe, a journalist and labor writer.

The map illustrates the progress of the recession (and geographic concentration) better than numbers.  The recession is seen plainly in color, spreading across the country like a cancer, spreading from county to adjacent county.   I am watching to see how the map will illustrate the economic recovery.
http://www.latoyaegwuekwe.com/geographyofarecession.html

The map suggests that additional analysis might reveal new insights.  It occurs to me that adjacent counties strongly affect their neighbors.  The data underlying "Geography" might be used for a mathematical analysis to show the economic dependence of counties upon adjacent counties.  That in turn helps characterize the local component of the economy, as compared to the national component.

The "cancerous" appearance marking the spread of the recession may be an accurate representation.  It may be possible to analyze the recession as an epidemic, in terms of the parameters set out in "The Tipping Point", by Malcolm Gladwell.   This might provide policy-makers with additional tools for fighting future recessions.

Military Spending

Considering the depth of our Federal Deficit, we should ask why our military spending is so much out of proportion with the rest of the globe.   Admittedly, these figures are not adjusted for purchasing power: I am sure that a Chinese soldier earns less than a US soldier.  Nevertheless, it seems unreasonable that our military spending is more than the next 18 largest counties combined.  

During Ronald Reagan's presidency, the US engaged in a military arms race with the intent to bankrupt the Soviet Union.  This strategy, combined with an engineered drop in the price of oil, succeeded in bringing down the Soviet Union.   The Soviet situation in the 1980's is similar to the United States today -- but we are doing it to ourselves.

Federal Budget

The Federal Debt in 2010 is about 14.2 trillion dollars, or about 97% of annual GDP.
The annual increase, including supplemental appropriations (not included in the "budget deficit", was $1.7 trillion in 2010, following increases of $1 trillion and $1.9 trillion in 2008 and 2009, respectively.
http://en.wikipedia.org/wiki/Federal_budget_deficit

The NY Times has two interesting graphics about the budget.

http://www.nytimes.com/interactive/2010/02/01/us/budget.html

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html

Note the size of the blocks represented on the NYtimes budget graphic.  Military spending, Social Security and Medicare are by far the largest components of Federal spending.  Any discussion of spending cuts which does not include major cuts in these three areas is not worthy of serious consideration.

Corporate Governance Reform

One of the most needed reforms of the financial system is in the process for nominating directors of publicly traded companies.

Currently, the nomination process is controlled by corporate management.  Management presents a slate of directors to the shareholders for approval, but there is no alternative to the management slate, and no easy way to for shareholders to present an alternative.  During the Bush administration, a proposal was presented to the SEC to allow shareholder nominations for directors.  SEC commissioners voted down the proposal in a party-line vote, with the Republican majority prevailing.

It is all too easy for management to nominate candidates who are compliant and inclined to vote large bonuses for management.  No alternative choices are presented to the shareholders.  These directors then become attractive candidates to serve on additional corporate boards.  The conflict of interest is blatant.  No particular knowledge of business or a particular industry is necessary, so you often see retired generals and astronauts, university presidents or other prestigious candidates without business experience.
This system, where management controls the nomination process for company directors, contains intrinsic conflicts of interest.   It is institutionalized, systematic corruption.  And it is the legal and everyday way to conduct business in America today.

It is disappointing to me that the financial reforms recently enacted have not included a reform of the process of nominating directors.   Shareholders should have not only a right, but an obligation to nominate the directors who will supervise the management of publicly traded companies.

Also see:
http://dougrobbins.blogspot.com/2011/04/executive-compensation.html

Oil imports, trade deficits, and the US international investment position

The consequence of importing oil at a rate of a billion dollars a day is that the net foreign investment position of the United States is steadily eroding.
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Note: This post has been updated, as of February 28, 2012.
http://dougrobbins.blogspot.com/2012/02/oil-imports-trade-deficits-and-us.html
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The US annual trade deficit has been growing since 1980, reaching about $750 billion a year in 2006.   The annual trade deficit diminished sharply in the 2009 recession to about $380 billion a year.  It's interesting to note that at a billion dollars a day, oil imports accounted essentially for the entire trade deficit during the recession.

I placed the trade balance chart as a scaled inset into the oil import chart shown in my last post.  As oil imports rise, the trade deficit grows.  I should convert the oil import chart to dollars and show it as a percent of the trade imbalance, but for now, here is the composite chart.

The accumulated trade deficit is reflected in the Net US International Investment Position.  Foreign ownership of US financial assets now greatly exceeds US ownership of overseas assets.  The first chart is taken from the US Bureau of Economic Analysis, and the second, from Wikipedia, shows the same data, but with a scale-bar showing percent of GDP.  

As foreign ownership of US financial assets grows, of course, the earnings from those assets also grow.  

And earnings of American productivity then flow overseas, along with the dollars already flowing overseas for oil and foreign goods.  And there is no end in sight for the current dependence on foreign oil.

US Oil production and oil imports

As seen in the attached graph, US oil production peaked in 1970, at about 10 million barrels per day, and has since declined to about 5 million barrels per day.  But consumption has continued to increase, enabled by imports.   Imports exceeded domestic production in 1993, and in 2009 provided 11.7 million barrels of our 18.8 million barrels per day consumption (EIA, http://tonto.eia.doe.gov/energy_in_brief/foreign_oil_dependence.cfm)
At $90 per barrel, we are paying over a billion dollars a day for imported oil, and as I wrote in 2001, much of it is going to people who don't like us very much.

As a sense of scale, consider that for the US population of 308 million, a billion dollars a day amounts to about $1200 per person annually, or $4800 annually for a family of four.  This is money simply removed from our economy, and not returned as paychecks, dividends or taxes.

The figure is from Wikipedia; author David Moe, using data from the US Energy Information Agency.

If GDP is a function of oil consumption, as we saw in a previous post, what will happen if oil imports decline?

Oil Consumption and Productivity

Plotting GDP per capita versus oil consumption per capita shows how much wealth is being created in different countries, and the efficiency with which they do so.   It is interesting that almost all countries plot below an "efficient frontier" indicating a ratio of productivity to oil use.   Despite major efforts in some countries (think about the number of bicycles in Holland) few countries are more than marginally more efficient at using energy than the United States.

Corruption vs. Per Capita GDP

Transparency International publishes a corruption index, quantifying the badness in every country.  Plotting against Per-Capita GDP shows that corruption in society, or conversely, integrity, is one of the main factors determining the wealth of an economy.   I will be waiting by the telephone for the Nobel Prize in Economics.