H/T The Big Picture via Sound Mind Investing Weblog

So in the interest of improving economic understanding I recommend two resources. The first is the website Energy Tomorrow. On this site the oil industry presents its case and I guarantee it will be very different from what is heard on any mainstream headline news.

Second, check out a new book by Richard McKenzie, Why Popcorn Costs so Much at the Movies. I can still hear my Economics prof saying that "prices contain lots of information." It’s true and we can learn a lot about why things cost what they do in Dr. McKenzie’s book.

However, the Anchorage Daily News focuses on one aspect from the report, Anchorage has the most expensive average airfare in the US and Hawaii has the cheapest. Are the airlines who serve Anchorage’s airport gouging Alaskans? Is the comparison of Anchorage to other airports across the nation based on ticket prices only a fair comparison? Let’s look.

I’m an urban Alaskan. In the 27 years I’ve lived here almost all of the flights I’ve taken out of Anchorage have been to destinations Outside. Very few flights have been in-state. A ticket purchased for a short flight to Kenai or Fairbanks is much cheaper than a ticket to Seattle or Chicago. It costs more to fly the 1300 miles to Seattle than it does 40 miles to Kenai (that’s a guess on air miles to Kenai). A study of average ticket prices without accounting for flight distance does not produce a valid comparison of what airports are more expensive. It does accurately show relative changes in prices.

Hawaii has the cheapest airports. That’s not hard to figure out why. The short island hops that leave every few minutes dominate the sampling of airfares in Hawaii. Alaska doesn’t have many short hops nor the population base to demand them and drive pricing down. When Alaskans fly they usually leave the state which requires a minimum 1300 mile flight to Seattle or beyond. That’s why Anchorage has the highest ticket prices: Alaskans have to fly the farthest to get where they are going.

Is it really more expensive to fly out of Anchorage? I can’t tell. There isn’t enough information given in the study. But be careful how newspapers use statistics to draw conclusions.

The Most Profitable Businesses to Start:

1. Accounting Services-return a whopping 25% pretax margin
2. Legal Services,+21.6%
3. Dental Services,
4. Specialized Design Services–interior, graphic, industrial
5. "Other" Health Practitioners–chiropractors, optometrist, physical therapy, speech therapy
6. Outpatient Care Center
7. Insurance Broker
8. Physicians’ Offices
9. Medical and Diagnostic Labs
10. Depository Credit Intermediation–small banks, credit unions with cooperative ownership structure

Characteristics of these most profitable businesses are

constant demand (no matter what the economy is doing, people will still get sick and still sue each other) and relatively low overhead.

The Least Profitable Businesses to Start:

1. Community Care Facilities, -7.2%. Overbearing overhead plus worldwide nursing shortage. Pricing limited by Medicare and Medicaid
2. "Other Support" Services, -2.6%. Event organizing, labeling, gift wrapping and other services with low barriers to entry and plenty of competition.
3. Beverage manufacturing. Wineries, brewing, soft drinks, water. Lots of competition and small outfits do not have scale to compete.
4. Real Estate Related Services. Appraisers, property managers. Low entry barrier and need volume to be profitable.
5. Bakeries/Tortilla Manufacturing
6. Amusement and Recreational Services–golf clubs, ski resorts, marinas, fitness centers
7. Motor Vehicle Parts Manufacturing
8. Specialty Retail–sporting goods, music, hobbies
9. Beer, Wine, Liquor Retail
10. Travelers’ Accommodations

To be fair, these numbers are something of a snapshot, as the profitability of any industry ebbs and flows, at least somewhat, with the overall economy.

OK, I know there is no such thing as a free lunch but The Wall Street Journal has offered up something close to it. America’s best newspaper is now available online free.

Since 2000, we’ve operated in a dual world on the Web. The majority of our daily editorial offerings have remained behind a paid subscription wall at wsj.com/opinion, while our free site, OpinionJournal.com, offered select stories plus a few Web-only features. As of today, those two sites will merge and become a single free site for all Journal opinion, both in the U.S. and overseas editions, book reviews and leisure and arts.

Readers will be able to access the site either through wsj.com/opinion or OpinionJournal.com, and they will see the same page.

Every qualified Alaskan will receive a Permanent Fund Dividend in October. Estimates are this year’s checks will be around $2000. If I enter the PFD amount in the Global Rich List my kids are automatically 1,057,270,585 on the world’s richest list. That puts my 13-year old son in the top 17.62% of richest people in the world. Along with every other Alaskan he is incredibly wealthy in a global perspective. Wow! And he doesn’t even have a Wii or iPod Touch.

Some facts from the Global Rich List to put things in perspective:

• Three billion people live on less than $2 per day while 1.3 billion get by on less than $1 per day.
• The world’s 225 richest people now have a combined wealth of $1 trillion. That’s equal to the combined annual income of the world’s 2.5 billion poorest people

The website was developed in the UK by Poke, a creative multimedia company. Their intent is to challenge people’s perspective on personal wealth and encourage charitable giving.

H/T: Cliotech

Izzit.org provides current event articles along with discussion questions. Yesterday and today’s topic is “How Private Property Saved the Pilgrims.” I can highly recommend this resource for teaching free-market economics. The current article is adapted from The Noblest Triumph: Property and Prosperity Through the Ages by Tom Bethell. I admit I didn’t hear this part of the story as a kid in school; I wish I had. I think it would have given American kids a more educated perspective on communism and the Soviet way of life. Today, this old story should inform us on China and Cuba.

So, as we go into this great holiday with family, friends and feasting my gratitude is again increased for God’s gracious provision and for our heritage of liberty.

John Stossel is the co-anchor of ABC’s Friday night magazine show 20/20. He’s a huge favorite at our house and now some of his work is available in a format for teaching upper elementary through high school.

Stossel in the Classroom provides materials for teaching economics including free DVD’s and teacher guides. I have the free 2007 Edition DVD that includes four segments from 20/20 and it’s very cool. The new 2008 Edition, Hype and Consequences, is now available. Segments on the new DVD are:

1. High-Priced Fashion
2. Vaccine Fears
3. Ethanol Fuel
4. Unintended Consequences
5. Food Donation
6. Media Scares

The 2007 DVD is still available to order on the same page.

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