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Google makes 95% of its revenue from advertising, the the largest share of that comes from financial and insurance companies. What are the most profitable search terms?

In 2011 the industry which used Google's advertising the most was the finance and insurance industry with $4 billion handed over to Google. State Farm topped the charts at a whopping $43.7 million spent. The most common search term in this industry with the highest cost per click was "self-employed health insurance," which charged advertisers around $43 for every time someone clicked their advertisement.

The retail and general merchandise industry holds second place for most spent on Google ads, with Amazon leading at $55.2 million spent. You would think that number would be so high to accommodate Amazon's recent debut of the Kindle Fire, but the most commonly search for keyword in the retail industry was actually "Zumba dance DVD." If we learn anything from common keywords it's that the economy is down, so people are self-employed and want to dance at home for exercise.

Travel and tourism came in third with $2.4 billion spent on Google advertising. Jobs and education came in fourth, and home and garden in fifth.

$43 for a single click sounds crazy to me... I wonder if the insurance companies think that's a bargain?

Some other cost-per-click highlights:

$36 - "online video conferencing software"
$35 - "accredited online college degrees"
$27 - "high speed internet deals"
$21 - "funeral flowers
$18 - "online nursing degree"
$16 - "cheap hybrid cars"
$14 - "custom business cards"
$9 - "home air conditioners"
$8 - "new york hotels"
$5 - "zumba dance dvd"

(HT: MG.)

Even if you're not a salesman this video will make you more ambitious.

Megaupload.com is out of business, but not because their business model failed. The founder, Kim Dotcom, seems to have made hundreds of millions of dollars. His only downfall was basing his business in a country with friendly legal relationships with the US government. So, why doesn't North Korea (or another pariah nation) enter the illegal file sharing market? They'd get a huge inflow of foreign capital for minimal cost and no risk of arrest.

Daniel Kahneman argues that people have different earning preferences, and that the amount a person earns is affected by those preferences.

A large-scale study of the impact of higher education... revealed striking evidence of the lifelong effects of the goals that young people set for themselves. The relevant data were drawn from questionnaires collected in 1995-1997 from approximately 12,000 people who had started their higher education in elite schools in 1976. When they were 17 or 18, the participants had filled out a questionnaire in which they rated the goal of "being very well-off financially" on a 4-point scale ranging from "not important" to "essential."...

Goals make a large difference. Nineteen years after they stated their financial aspirations, many of the people who wanted a high income had achieved it. Among the 597 physicians and other medical professionals in the sample, for example, each additional point on the money-importance scale was associated with an increment of over $14,000 of job income in 1995 dollars! Nonworking married women were also likely to have satisfied their financial ambitions. Each point on the scale translated into more than $12,000 of added household income for these women, evidently through the earnings of their spouse.

Bryan Caplan points out that the effects of these preferences seriously undermine the case for income redistribution:

By the way, I take Kahneman's evidence here as yet another counter-example to George Loewenstein's view that happiness research and leftist politics are natural bedfellows. Kahneman highlights an important, neglected reason why some people are rich and others are poor: some people care about money more than the rest of us. People who want to be rich make the choices and sacrifices conducive to that end - and on average they succeed. "People who care more about X try harder to get X and as a result get more X": This hardly seems like a "problem" in need of a political "solution."*

What about the "losers"? Bite your tongue. When you call lower-income people "losers," you're falsely assuming that we're all racing for the same finish line: material success. But to a large extent, lower-income people are just racing for other finish lines. Leftist outrage over income inequality is therefore deeply misguided. To a large extent, incomes differ because priorities differ. And if the poor don't consider their lack of riches a big deal, why should anyone else?

This begs the question: if income should be redistributed by force, should leisure time also be redistributed?

(HT: Greg Mankiw.)

Ok, so I like Ron Paul and I'm glad he's in Congress, but you've got to admit he's a little crazy. However he's not so crazy that he actually thinks he can win the Presidency, as his investment portfolio reveals.

Here at Total Return, we've looked at hundreds of the annual financial-disclosure forms in which the members of Congress reveal their assets and trades - and we've never seen a more unorthodox portfolio than Ron Paul's. ...

At our request, William Bernstein, an investment manager at Efficient Portfolio Advisors in Eastford, Conn., reviewed Rep. Paul's portfolio as set out in the annual disclosure statement. Mr. Bernstein says he has never seen such an extreme bet on economic catastrophe. "This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds," he says.

How would Ron Paul invest if he thought he would win? I don't know, but he would save the economy from the doomsday scenario he has prepared for, right? Or maybe he knows that his investments will be bad if he wins, and they're just a hedge against the off-chance that he won't be our next President.

I feel like we could get rid of nickels as well, and maybe even dimes. Who even uses coins anymore? Only the old people in front of me at the grocery store, and we'd all like to see that end. Maybe one of the presidential candidates would like to mention the issue?

(HT: Kim Krawiec and Alex Tabarrok.)

Gonzoecon.com has some pictures of the first Geithner-signed bills in circulation! Time to put those tax cheat stamps to work!

The actual burden of a tax doesn't always fall on the person who pays the tax -- this concept is called tax incidence.

In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that, at the end of the day, bears the burden of the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.

More simply: the person who is required to pay the tax will try to shift the cost of the tax onto someone else. Easy example: your employer nominally pays 6.2% Social Security and 1.45% Medicare taxes on your behalf, but the tax incidence falls entirely on the employee -- your salary would be 7.65% higher without these taxes.

Tyler Cowen points out that the difficulty of tax incidence makes it hard to successfully tax high-earners no matter how you craft the tax structure.

Let's turn to taxation of the top 0.1 percent, and focus on these CEOs. If the tax rate on their income/K gains goes up, the firm will compensate by giving them more equity/options, to keep them working hard. In other words, the tax rate on the top earners can be hiked without much effect on CEO effort because there is an offset internal to the firm. At some margin the firm's shareholders will be reluctant to chop off more equity/options to the CEO, but the marginal value created by maintaining the incentive seems to be very high, for reasons presented above, and so the net CEO incentives will be maintained, even in light of new and higher taxes on CEO earnings.

But here's the problem, if that's the right word. The incidence of that tax is going to fall on shareholders in general and thus on capital in general. These top CEOs could even get off scot-free, if the shareholders up the equity/options participation of the CEO to offset completely the effects of the new and higher tax rate.

More simply: when you raise taxes on the wealthy, they just increase their income and pass the cost of the tax onto their shareholders, employees, etc. Taxes "trickle down" just like wealth does. Perhaps this is a partial explanation of why so many wealthy people seem to support the Left's high-tax agenda... they expect to avoid the effects of the taxes by passing the costs down the line.

California's collapse began before the Great Recession:

Another dark sign, largely unnoticed at the time: California's major cities became invalids in the 2000s. Los Angeles and the San Francisco Bay Area had been the engines of California's economic growth for at least a century. Since World War II, the L.A. metropolitan area, which includes Orange County, has added more people than all but two states (apart from California): Florida and Texas. The Bay Area, which includes the San Francisco and the San Jose metro areas, has been the core of American job growth in information technology and financial services, with San Jose's Silicon Valley serving as the world's incubator of information-age technology. During the 1992-2000 period, the L.A. and San Francisco Bay areas added more than 1.1 million new jobs--about half the entire state total. But between 2000 and 2008, as Chart 3 indicates, California's two big metro areas produced fewer than 70,000 new jobs--a nearly 95 percent drop and a mere 6 percent of job creation in the state. This was a collapse of historic proportions.

I grew up in Los Angeles and loved it, but I could see the writing on the wall even five years ago. The recent re-election of Jerry Brown demonstrated that the citizens of the Golden State do not have any desire to change course.

I previously calculated that every day I work from home instead of going into the office (and buying lunch) saves me about $20.

(HT: Lifehacker.)

As technology continues to improve, more and more people will be permanently displaced from the workforce and will be unable to contribute meaningfully to the economy. In January I first wrote about the relationship between unemployment and technology.

As technology continues to improve, more and more workers will be displaced by automated systems. Manufacturing won't be the only sector affected: how many tax preparation jobs have been eliminated by TurboTax? Sales jobs by Amazon?

Using intelligence as a proxy for a person's general capability to contribute to the economy, we would expect that as technology improves the people who will be affected first will be those who are working jobs that require the least capability. Let's call the red line the displacement line: it represents the minimum amount of capability a person must have in order to be able to do a job that cannot be done by an automated system.

Economic indicators validate my prediction.

Since the end of the recession in June 2009, they note, corporate spending on equipment and software has increased by 26 percent, while payrolls have been flat.

Corporations are doing fine. The companies in the Standard & Poor's 500-stock index are expected to report record profits this year, a total $927 billion, estimates FactSet Research. And the authors point out that corporate profit as a share of the economy is at a 50-year high.

Productivity growth in the last decade, at more than 2.5 percent, they observe, is higher than the 1970s, 1980s and even edges out the 1990s. Still the economy, they write, did not add to its total job count, the first time that has happened over a decade since the Depression.

This employment shift will not be smooth and continuous -- employment numbers may rebound for a while -- but the shift is inexorable. Those with capital (the shareholders of the corporations who own the technology) will continue earning, but those who depend on the value of their labor to survive will be slowly squeezed.

If the trend continues it will necessarily lead to either a giant social-welfare apparatus supported by the machines and the few who control them, or civilization will collapse. Or maybe both!

America's economy isn't in great shape, but we'll own the 21st century because we're a lot stronger than anyone else. I'll quote the section about oil and gas, but there are several other major points in the article as well.

Telegraph readers already know about the "shale gas revolution" that has turned America into the world's number one producer of natural gas, ahead of Russia.

Less known is that the technology of hydraulic fracturing - breaking rocks with jets of water - will also bring a quantum leap in shale oil supply, mostly from the Bakken fields in North Dakota, Eagle Ford in Texas, and other reserves across the Mid-West.

"The US was the single largest contributor to global oil supply growth last year, with a net 395,000 barrels per day (b/d)," said Francisco Blanch from Bank of America, comparing the Dakota fields to a new North Sea.

Total US shale output is "set to expand dramatically" as fresh sources come on stream, possibly reaching 5.5m b/d by mid-decade. This is a tenfold rise since 2009.

The US already meets 72pc of its own oil needs, up from around 50pc a decade ago.

"The implications of this shift are very large for geopolitics, energy security, historical military alliances and economic activity. As US reliance on the Middle East continues to drop, Europe is turning more dependent and will likely become more exposed to rent-seeking behaviour from oligopolistic players," said Mr Blanch.

Along this same line, I recommend "The Next 100 Years: A Forecast for the 21st Century" by George Friedman.

Forget factory jobs -- they're never coming back. So what does the job of the future look like?

The future feels a lot more like marketing--it's impromptu, it's based on innovation and inspiration, and it involves connections between and among people--and a lot less like factory work, in which you do what you did yesterday, but faster and cheaper.

That sounds a lot like my job now. I guess that means I'm positioned well for the future!

The global economic and political order is shaped more by geography than most people realize. Does it bother you that most of America's enemies are funded by American dollars spent to buy oil? Well an American oil boom is the leading edge of a global realignment.

Two years ago, America was importing about two thirds of its oil. Today, according to the Energy Information Administration, it imports less than half. And by 2017, investment bank Goldman Sachs predicts the US could be poised to pass Saudi Arabia and overtake Russia as the world's largest oil producer. ...

Amy Myers Jaffe of Rice University says in the next decade, new oil in the US, Canada and South America could change the center of gravity of the entire global energy supply.

"Some are now saying, in five or 10 years' time, we're a major oil-producing region, where our production is going up," she says.

The US, Jaffe says, could have 2 trillion barrels of oil waiting to be drilled. South America could hold another 2 trillion. And Canada? 2.4 trillion. That's compared to just 1.2 trillion in the Middle East and north Africa.

Glenn Reynolds says that if he ran Russia or Saudi Arabia he'd be funding American environmentalist groups in an attempt to slow down the boom -- and Glenn certainly knows that Saudi Arabia is already campaigning against "ethical oil".

This energy boom may be the most globally significant event right now, thought it will take many years to be fully realized.

Ok, try to keep up here. James Carville urges President Obama to fire Attorney General Eric Holder if DOJ doesn't indict financial bosses who presided over the economic collapse of 2007.

There are certain people in American finance who haven't been held responsible for utterly ruining the economic fabric of our country. Demand from the attorney general a clear status of the state of investigation concerning these extraordinary injustices imposed upon the American people. I know Attorney General Eric Holder is a close friend of yours, but if his explanations aren't good, fire him too. Demand answers to why no one has been indicted.

Mr. President, people are livid. Tell people that you, too, are angry and sickened by the irresponsible actions on Wall Street that caused so much suffering. Do not accept excuses. Demand action now.

Then James Taranto complains that such indictments would politicize the justice system.

To politicize the criminal justice system in this way would be not just cynical but un-American. Carville ought to be ashamed of having written this.

However, there's another option! Maybe the current lack of indictments is the result of political calculations -- after all, President Obama and the Democrats get huge campaign donations from financial bosses.

More interesting than indicting financial bosses would be indicting the politicians who presided over the housing bubble.

Hey financial markets, chill out! Legendary Obama supporter investor Warren Buffet says America's debt should be "AAAA"!

U.S. billionaire Warren Buffett not only thinks that Standard & Poor's shouldn't have downgraded the country's credit rating from AAA to AA+ -- he thinks it should have been raised to "quadruple A." ...

Buffett, 80, meantime, said Friday that that the S&P decision "doesn't make sense" and that his Omaha, Nebraska-based company would hold onto its sizeable number of U.S. Treasury bills.

"In Omaha, the U.S. is still triple-A. In fact, if there were a quadruple-A rating, I'd give the U.S. that," he told Fox Business News.

The best part is this image of Obama giving Buffet a Medal of Freedom:

So Buffet owns t-bills and he received the highest civilian medal from President Obama. His debt advice is completely objective, I'm sure.

(HT: National Review.)

I knew the general facts but didn't realize the implication: the United States can't default via inflation because most of our debt has a short maturity and needs to be continually rolled over.

Here in the U.S., total Federal debt to GDP is also approaching 100%, but the debt held by the public (outside of that held by Social Security and the Federal Reserve) amounts to about 60% of GDP and rising, due to recent budget deficits of about 10% of GDP annually. This is presently manageable since so much of that debt is of short-maturity and is being financed at very low interest rates. And though U.S. Federal tax revenues have historically run near 19% of GDP (they're presently only about 16% due to the sluggish economy), those depressed interest rates mean that debt service doesn't consume a huge chunk of revenues just yet.

Still, it's precisely that short average maturity that makes the debt problematic from a long-run perspective, because it can't be inflated away easily. In the event of sustained inflation, the debt would have to be constantly refinanced at higher and higher yields. Contrary to the assertion that the U.S. can easily inflate its debts away, it is clear that sustained inflation would create enormous risks to our long-run fiscal condition by driving interest costs to an intolerable share of revenues. At that point, any shortfall in GDP growth or government revenues would result in a rapid spike in debt-to-GDP (as Greece and other peripheral European nations are experiencing now). Prior to embarking on an inflationary course, the first thing a government would want to do is dramatically lengthen the maturity of its debts.

If our debt was mostly 30-year notes we could inflate it away without worrying about interest rates, because the rates would be locked in for decades. But if we have to keep re-borrowing the money every few years we'll have to do it at ever-increasing rates... in inflation can't "save" us. We are so totally screwed.

(HT: Tyler Cowen.)

Companies are fleeing California in droves, but don't worry, the state is creating yet another government agency to study the matter!

Later this year, California will set up a new agency that will serve as a focal point for economic development and job creation, [Lieutenant Governor Gavin Newsom] said. Among its goals will be to reverse the perception that California is business-unfriendly.

Yeah, the real problem is the perception of unfriendliness, not actual unfriendliness! Those corporations are so dumb and misguided... I'm sure the new agency will set them straight.

The economic crisis is really about to hit home: bacon prices are about to skyrocket.

The global debt crisis has sparked riots in Greece and elsewhere in Europe, but while you were watching the mayhem on TV, you might not have noticed that there's a riot brewing at your kitchen table.

Bacon prices are expected to soar this summer -- just in time for peak BLT (bacon lettuce and tomato sandwich) season. ...

But this year, just as the U.S. is worrying about its own debt crisis and a possible "double-dip" recession, the price of bacon --that sizzling, smoky comfort food we most need during tough times -- is expected to surge. The price of pork bellies, which is where bacon comes from, jumped to more than $130 per hundredweight (100 pounds), and some analysts suggest it's going to top last August's level of $150.

(HT: Instapundit and his strategic bacon reserve.)

More "good" jobs would be nice, but what America really needs is more "bad" jobs.

Think of the path to successful middle class living as a ladder; the lower rungs on that ladder are not nice places to be, but if those rungs don't exist, nobody can climb. When politicians talk about creating jobs, they always talk about creating "good" jobs. That is all very well, but unless there are bad jobs and lots of them, people in the inner cities will have a hard time getting on the ladder at all, much less climbing into the middle class.

Many sensitive and idealistic people in our society work very hard to keep from connecting these dots and admitting to themselves that bad jobs are something we need. Quacks abound promising us alternatives ("green jobs" is the latest fashionable delusion), but ugly problems rarely have pretty solutions. We need entry level jobs that will get people into the workforce, and we need ways that they can learn useful skills at affordable prices that will help them climb the ladder and move on.

To get these jobs, we have to change the way our cities work. Essentially, we have created urban environments in which the kind of enterprises that often hire the poor -- low margin, poorly capitalized, noisy, smelly, dirty, informally managed without a long paper trail -- can't exist. The kind of metal bashing repair shops that fill the cities of the developing world are almost impossible to operate here. Plumbers, carpenters, electricians, pushcart vendors and day care operators need licenses; construction work has to comply with elaborate guidelines and city bureaucracies disgorge the required permits slowly and reluctantly.

We've created cities that can only accommodate the wealthy and have no use for the poor.