The Big Mac Index and the PPP

My kids are taking Macroeconomics this fall, and being an involved Dad I decided to see if I remembered any of it. I’m no great fan of theory, but there is a great debate going on about Purchasing Power Parity (PPP) and laissez-faire markets.

I’m a big fan of Adam Smith (I even visited his grave in Edinborough) and I believe in the basic concept behind laissez-faire is “let it be”, and allow market pressure to bring international trade into equilibrium. Under the “law of one price”, international commodities (tomatoes, computer consultants, &c) will equalize as a function of the exchange rate, and that at the end-of-the-day, prices for identical goods will equalize and the only differentiator will be quality.

This “quality” factor has important connotations for my international consulting business, where computer professionals are treated as commodities. In a huge turnaround, I’m seeing foreign countries who are suppliers of “cheaper” computer programmers coming to me even though I charge 10x more than many foreign “Outsourcing” firms.

In a free international market (I require payment in U.S. dollars), overseas consumers purchase dollars at the exchange rate and apply PPP to determine the “absolute purchasing power parity”, essentially the “apples-to-apples” comparative costs, plus perceived quality.

Now, do overseas consumers really ”run” these complex numbers? You bet. In several of my overseas clients I replaced “offshoring” competitors. The differentiator was productivity and price and while the competition was 10x cheaper per hour, my experienced developers were 15x more productive.

But what does this have to do with Big Macs? When we evaluate disparity in PPP it’s always a function of market manipulation (tariffs, trade barriers) we always look for some “equal good” to compare the “real” purchasing power of different currencies. The Big Mac, by virtue of having exactly the same ingredients (remember the jingle “Two all beef patties, lettuce, pickles, onions, cheese, special sauce on a sesame seed bun?) and the ubiquitous nature of McDonalds across the globe, make the “Big Mac index” of a highly reliable index of PPP and artificial trade barriers.

History of the Big Mac

By the way, the Big Mac sandwich was named after Gen. Douglas Macarthur, an amazing medal grabber and legend in his own mind (Ike said that “I studied drama under Macarthur“). I was watching Jeopardy the other day and the final question was “the last name of the only father and son to receive the Congressional Medal of Honor”. All of the contestants got it wrong, but I knew the story of Big Mac. It’s an interesting tale.

Douglas’ Dad, Arthur Macarthur was a brave teenaged officer in the Civil War, back when the U.S.A gave out the “medal of Honor” like candy. Arthur got his at 18, and was a Lt. Col by 19 years old.

Now “Big Mac” was fearless in WWI and he easily made general by 1918, and developed a marketing “persona”, just like Patton did with his combat helmet and pearl-handled pistol:

Macarthur’s ”thing” was a custom hat completely covered in scrambled eggs and a trademark corncob pipe. Back in the 1930’s he thought it was dashing to carry a cane, but after a child wrote and asked “Are you feeble?”, Mac tossed the cane forever!

My Dad served under Mac in Luzon, right before he abandoned 70,000 soldiers to the Bataan death march, and I’m told that Mac was arrogant, aloof and prone to screaming temper tantrums. When Mac made is famous saying “I shall return”, his men mocked him with quips like “I’m going to the latrine. I shall return”.

We all know how Truman fired him for insubordination in the 1950’s, but I’ve always been deeply offended by his politicaly-finagled medals for valor (sound familiar?)

– Congressional Medal of Honor
– Distinguished Flying Cross
– Silver Star with 1 silver oak leaf cluster (six times awarded)
– Bronze Star with “V” device
– Air Medal

In all fairness, he was fearless in battle (no doubt because of his desire to live-up to his Dad, Arthur), and he got a few of these medals for real heroism, but I ask you, how the hell do you get awarded The Silver Star six times? The Distinguished Flying Cross for “extraordinary achievement in aeral combat“? C’mon. . . .

Even Audie Murphy (the most decorated U.S. soldier in history) only got the Silver Star twice. Murphy was the real-deal hero, and he played himself in the 1955 smash hit move “To Hell and Back”, a really, really great movie, especially when you know that Murph is playing himself!

Now, Big Mac wanted to stay in Luzon and get captured with his men, but he was ordered to leave his men, for the Bataan Death March.

It’s never been clear how he finagled the Medal of Honor, but to be awarded the MOH for his failed “defense of the Philippines” is a disgrace to the G.I.’s who died there and those who really earned their medals.

The Big Mac Index

The “Big Mac index” is a measure of the price of a Big Mac adjusted by the exchange rate to locate the real cost of living, a market anomaly that would not exist without trade barriers, and the Big Max Index has been spectacular in tracking the Euro.

Can you see the problem with the Euro? It’s a clearly indicated that the Euro has discounted the U.S. dollar value by 17% in the past 18 months (ostensibly because the dollar was “overvalued” in a free market)!

Of course, this makes U.S. good relatively cheaper (my clients must buy cheaper U.S. dollars to pay us), and greatly helps my international business, and hurts foreign outsourcing firms.

Anyway, it’s all good new, and I’ll cry about the weak dollar all the way to the bank. . . .

Gambling in the 21st Century

When predicting book sales, there only real-time gauge of book popularity is the elusive “Amazon Sales Rank”, a metric that ostensibly measures out-the-door virtual book sales.

I have done a bit of research into the Amazon Sales Rank and the results are surprising.

ASR Books Sold per week
—— —————–

75-100 ———– 250-275/wk
100-200 ———- 225-249/wk
200-300 ———- 150-200/wk
450-750 ———- 75-100/wk
750-3,000 ——– 40-75/wk
3,000-9,000 —— 15-20/wk
10,000+ ———- 1-5/wk

The author remains the main component in the mix — Great works sell themselves while poorly-conceived and badly written books fester on the shelves, damaging the reputation of the author and the publisher who was gullible enough to publish rubbish.

Every publisher wants to get a bestseller but the reality is that a runaway-bestseller is a very rare event for any publisher.

What makes a bestseller?

The bestseller “On Bullshit” has an Amazon Sales Rank of 14, translating into sales of more than 2,000 copies per month! Why?

Well, the book is a hardcover edition (which is perceived as gift-quality by the consumer), and it is very cheap ($5.97 on Amazon).

The book “On Bullshit” became a bestseller gift-book for its naughty-word title and the price/value ratio, nothing more. Nonetheless, it’s a superb piece of marketing where a publisher took a piece of academic ruminations and turned it into a hot book.

The First American Bestseller

Word-of-mouth is also a great factor in book sales. Consider Thomas Paine’s bestseller “Common Sense“, first published in 1775. The only publisher who agreed to print it wanted half the book revenue, and Paine agreed to donate his profits to supply mittens for the Revolutionary Soldiers who were attacking Quebec.

The “Common Sense” book sold over 20,000 copies in the first 90-days, and eventually over 500,000 copies. Even today, 225 years later, “Common Sense” has a respectable Amazon Sales Rank of 20,000, about one copy per day.

Click here to read my research on the Amazon Sales Rank.

Horses Sense for the 21st Century

You can always tell a lot about a person by watching how they work with animals, especially horses. Even a young green-broke horse has learned how to judge their riders and they have a remarkable ability to size-up people.

In more than one case I’ve witnessed our horses kick at unsavory people, and the way a person interacts with a horse reveals volumes about their personality.

Now I don’t have any of the “old plug” horses that you find in the public riding stables, and all of our horses are hot-under-saddle English show horses. If you don’t treat them with respect they will sense it immediately and toss you over the back fence. Just like me, they are high-strung and they don’t suffer fools gladly.

Any trainer will tell you that riding a show horse is more than just skill. You must be able to communicate with the horse, and our horses are an excellent judge of character. If you have evil motives or a cruel disposition it’s gonna be a very short ride!

We recently had a gathering at the ranch and I had a chance to see how some of my friends related to horses.

I was pleasantly surprised to see that Mike Ault (a noted author and novelist) is an accomplished horseman and Vaal Dance accepted him immediately.

For the more macho among us I have my personal show horse, Legion of Merit Champion ”Razz”, who has tossed just about every person who dares to ride him aggressively. Now, I didn’t mention this to Col. John Garmany, but it didn’t matter anyway because Razz liked him instantly and gave him a very stable ride:

Here is Michael Armstrong-Smith (author of the Oracle Press Discoverer books) riding with Mike Ault, and going quite well. It was funny that Michael’s British accent initially disturbed Vaalarie and she was quite suspicious of this strange-sounding gentleman. Fortunately, Vaalarie quickly figured out that Michael was a kind and gentle fellow and she reciprocated by being remarkably calm and content:

Mike’s wife, Susan Ault loves horses and they like her back. Here she is with Scout, a working Guide Horse. Susan has helped us greatly with the Guide Horse charity and she has helped with Cuddles in Atlanta and Scout when he visited New York City:

Now, Harry Conway, being a New York Yankee, did not have much experience with riding so we decided to let him get started on Scout and work his way up to the bigger horses later:

All-in-all we had a great time and at the end of the day everyone agreed with the old saying by humorist Will Rogers, “There is nothing better for the inside of a man than the outside of a horse.”

All about Dwarves

In addition to training Guide Horses for the blind, Janet and I also provide ongoing health care for crippled dwarf horses at our Miniature Horse Rescue.

Most people don’t know that there is a difference between “regular” mini horses and dwarf mini horses. Just like with people, dwarfism in horses is very rare, but the deliberate introduction of dwarf genes by some North American breeders has made equine dwarfism a major issue in miniaturized horses.

Dwarf horses come in two general types, Achondroplastic and Brachiocephalic dwarf horses.

Achondroplastic Dwarfism in Horses

The term “Achondroplastic” (also known as “achondrodystrophic dwarfism”) refers to a horse that possesses a normal-sized torso neck and head with abbreviated leg and ear length. Some horses are like “Weiner” animals, just like the Dachshund is a dwarf dog:

Here we see Twinkie, our 18 year-old dwarf mare. She has a regular-sized torso and head, but her legs and ears are very tiny. Twinkie is one of the smartest and friendliest horses that I’ve ever met. She was the prototype for our Guide Horse program, and she has a remarkable memory.

Brachiocephalic Dwarfism in Horses

The term “Brachiocephalic” refers to anomalies of the head and limbs, and this term is properly applied to this type of equine dwarf. The Brachiocephalic dwarf horse has far more observable anomalies than the Achondroplastic dwarf, and this type of dwarfism is far more disabling, primarily because of the severe leg deformities and nasal constriction.

This is “Dirty Harry”, one of our Brachiocephalic dwarf horses with severe mandible and leg deformities:


Can you see why we call him Dirty Harry?

Some dwarf miniature horses have severe problems with leg and internal organ deformities. This link shows some excellent pictures of severe dwarfs who were not able to survive to adulthood.

However, not all dwarf horses have problems, and this is my daughter with Noel the dog and BB the dwarf:

To learn more about equine dwarfism and the dastardly people who deliberately produce crippled dwarf horses, see Janet’s new book “Helping Hooves”.

The Persistence of Memory

I’ve always been fascinated by human learning and memory, and I’m constantly reminded that the science of the 21st century is sadly lacking in the fundamental nature of gray matter. It was only a century ago when Phrenology was popular and “scientists” would measure bumps on your skull to determine your personality.

Dr. Oliver Sacks, famous for his amazing books “Awakenings” (Where Robin Williams played Sacks) and “The Man who Mistook his Wife for a Hat” (HIGHLY recommended), expanded on the idea of brain function localization. Freud postulated that the human brain is like a small tape recorder and that all memories are stored, and what is lost is not the memory itself, but the ability to recall the memory.

In one section, Dr. Sacks probes the brain of a conscious woman and find that she not only recalls childhood memory with electronic stimulus, and almost relives the memory, recalling verbatim the jingle on the radio and the smell of bread baking in the kitchen over 40 years ago.

Gary Larsen took off on the brain probe idea in one of his most famous cartoons. I firmly believe that what is lost when we “forget” is not the memory itself, but the neural connection to the memory (except in cases of anesthesia and psychoactive drugs that limit the brains ability to store the original memory). Making this “memory blocking” assumption codifies many theories of personality and insanity, especially repression and subconscious motivators in human behavior.

But still, nobody has ever mapped the human brain; and scientisis are woefully lacking in understanding the machinations of the human psyche.

Today we have not really come that far from Phrenology, and neuroscientists barely understand synapse functions, and we cannot even duplicate the processing of a fly’s brain. We have artificial eyes that can read a newspaper heading from outer space, but we have yet to develop a computer that can “perceive” the world around them, taking-in billions of bytes of data every second from their superior artificial eyes, ears and smell sensors.

See, I believe that today’s lack of “real-time” Artificial Intelligence is a function of our ancient computers. In College I was fortunate enough to take several classes taught by Professor Richard Harris where he developed reliable equations to describe human processing (such as altruism and equity), and I was a lab assistant for Professor Emeritus Frank Logan author of “Reward and Punishment” and “Logan’s Laws of Learning”.

The equations are there; the only thing missing is the computing hardware and the daily terabytes of storage required to create a machine that perceives the world around them. A linear regression of the falling costs and improved capacity of computers indicates that a true learning machine will become feasible by about 2040. I won’t be around to see it, but I believe that computers will someday be able to replicate human cognition.

Have you ever wondered why a certain smell evokes vivid memories of the past? Researchers have yet to fully-understand the relationship between long-term memory and olfactory senses and why a smell from the distant past often evokes a “re-living” of an event, much like Dr. Sacks artificial recall experiments.

Personally, I suspect that the increased recall from olfactory stimuli is because we use our visual and auditory sensors more than tactile and olfactory memory (this includes “taste” memory, as taste is really a function of small). If I’m right, this might also explain the “Idiot Savant” phenomenon (e.g. Dustin Hoffman in the movie Rain Man) where un-used cerebral components pave-the-way for superhuman mathematical and counting skills. Also, here is a fascinating study of the McGurk Effect on memory and aging.

On aging and memory

As people age we see an almost predictable decline in mental processing. The first thing most people say able an elderly friend is “And they still have their wits about them” as-if senile dementia is expected.

Is mental decline inevitable? I’ve met people in their 90’s that are sharp-as-a-tack, and I’ve met others with severe dementia in their 40’s. People were not meant to live as long as they do today.

I hope that I live long enough to witness 50 million baby-boomers start to loose their faculties, and the inevitable barrage of TV commercials! I’m already amazed at the aging-boomer ads on television for Viagra, Cialis, and those diapers for boomers without bladder control.

Oracle mocked on Saturday Night Live!

In case you missed it, SNL veteran and comedian Will Farrell (famous for his movies “Elf” and “Anchorman”) amazed computer dweebs worldwide last night with his comedy skit titled “Oracle Conclave 2005”.

I sprayed my Geritol when Farrell started playing the rock tune “Eye of the Tiger” (the real-world theme song used at Oracle World conferences) and Farrell performed a hilarious “Oracle Rap”.

Will Farrell mocks Oracle on Saturday Night Live!

Smokey get his girls

Yesterday we heard the dogs barking like crazy and discovered that the mini mares had broken the gate chain and got into the front yard with Smokey the stallion. . .

You see,more than 25 mares had come-in to season at the same time, and they were all “hot to trot” with Smokey. They were all backed-up to the fence, waving their fannies in his face, and driving poor ole Smokey crazy.

Well, Smokey must have thought that he had gone to heaven and gotten his 72 virgins. The chain broke and the mares were all over him. That’s Janet in the picture below, chasing Smokey aware from his horny harem:

By the way, mares in-season are shameless sluts, spreading their legs for any stallion that comes along. Smokey did this two years ago and produced a filly, which we appropriately named “Smokey’s Escapade“, who we call Essey. Of course, Janet brings Mom
inside the house to foal. . . .

Before that, Smokey fathered a full-sister to Essey which we named Rainey because she was born in our living room on a rainy night:

So, we are pretty sure that Smokey made love to at least one of the mares, so now I’m faced with two options:

  • The fun of paying for 25 abortion shots, one for each mare (cost, $750).

  • The fun of having another mare foal on our living room carpet (cost, priceless).

It’s funny that groups of mares tend to sync-up their estrous cycles, just like groups of human women. There must be some evolutionary reason for this, but it did not do much for Smokey, since it would have taken him a week to breed all of those mares.

Mini Horses, Major Fun!

We have had above-normal rainfall this year and the ponies have been unable to keep up. The grass is now three-feet high and you can only see the tops of their backs when they are grazing. We are thinking of marking them with flags so we can find them:

You know, a lot of people believe that the idea of using horses as guides is a new idea, but the concept has been addressed in movies for many years, some dating-back over half a century:

Guide horses in movies

Janet has experienced great success at training ponies to live indoors for brief periods, even teaching them to sleep in beds:

If any of your read the award-winning cartoon strip Non Sequitur, you might notice that Danae has a miniature horse (a “pygmy Clydesdale”) companion named Lucy. We were thrilled when Wiley featured a Lucy as a guide horse in his cartoon strip.

Guide Horses in Non Sequitur

While we are in no-hurry to expand the Guide Horse Foundation beyond experimental status, we were thrilled to note that a guide horse user has declared that her horse is better than her dog, and she returned her dog to the Seeing Eye, preferring to use her horse:

Guide Horses leading the Blind

We are also happy to see increased interest in our training method and we have been invited to meet Dr. Jane Goodall later this year to demonstrate the Guide Horse concept.

Guide Horses are allowed to fly onside the passenger cabin of commercial airliners, and several of our ponies are now frequent flyers.

The Federal Aviation Administration (FAA) allows people to fly with emotional support animals, prompting some people to consider emotional support horses:

Using emotional support horses

There is also an explosion of interest in having mini horses as surburban pets, and Janet has an exciting new book on the subject:

Miniature horses in the Neighborhood

Vermin, Varmints and Nasty Words

I went out to feed ponies last night and their backs looked like their fur was moving! Lice, millions of lice have taken-up residence on them (lice are attracted to the light and come to the surface of the fur). Fortunately a 5-day course of Ivermectin will kill them all.

Folks report a huge Raccoon in the pony stallion pasture, a big he-Coon, at least a 15 pounder. To me, Coons have absolutely no redeeming value. They stink to high-heaven, they taste foul, they eat your eggs and chickens, and they are mean, especially to dogs.

Around here my neighbors have Coon-dogs, Beagle-like critters that tree the Raccoons, so you can shoot ‘em out of the tree at your leisure. These dogs hate raccoons mostly because the Coons don’t have any respect for them. Of course, I won’t like the vermin but I can’t bear to kill them, so we have have-a-hart traps of every conceivable size to capture critters and relocate them to better neighborhoods.

Speaking o’ Dogs

Janet’s friend Robin does dog shows with Rottweiler’s and she related a funny story to me. They wuz at Denny’s after a big dog show discussin a huge jet-black Rottie with a bad conformation fault in her croup. Just like Horse-show people, dog show people sit around and pick-apart their competitors faults, and at one point Robin exclaimed:

“Did you see the butt on that big black bitch?”

Well, Janet sez you coulda heard a pin-drop, and people all around Dennys stopped eatin’ to give her the evil eye! Robin had to explain to the whole room that they were dog show people, and they were talking about dogs, not people! It’s funny how real-world words can change meaning over time.

Speakin’ o’ obsolete words

Ah remember my ole Aunt Sara and how she would use out-dated words. For example, when our son was a baby he screamed and ole Aunt Sara commented “My, my, what an ejaculation”. Heck, even as a kid I remember the theme song from the Flintstones “We’ll have a Gay Old Time”, and how that wording would not be PC today.

For example, a few years back, I designed a miniature barn to go with the miniature horses that lived in it. As ole Aunt Sara would say, “What do you think of my magnificent erection?”

Speakin’ o’ nasty words

Last year my kids came back from East Carolina University raving about a perfesser who wuz teaching Greek and Latin. Now, I’d never heard of an interestin’ Latin class and I figured I’d better meet this guy.

Doctor Steve Cerutti was one of the most popular professors on the ECU Campus, mostly because of this exciting class on word origins where he includes the origin of offensive and vulgar words, including some that I use every day.

Wall, I had to meet Dr. Cerutti and we met at a restaurant in Greenville to discuss doing a book on word origins:

The Words of the Day: The Unlikely Evolution of Common English

Anyway, me and Steve hit-it-off and I wuz thrilled to find-out that my filthy-mouth was now a legitimate area of academic research. We cussed and cursed with great pleasure and wild enthusiasm at dinner.

See, Dr. Cerutti is an Ivy League dude (Duke), and even though he is well-published in academic books, he is concerned that his book does not come-off as too erudite. We’ve put one of his chapters online, and we invite anyone who is interested in word origins (who is over 18 and is not offended by profanity), to have a look and give him feedback:

Nine Words (And A Fish) You Thought You Knew

Please send Dr. Steve your comments to

More Adventures in the Big Apple

Janet and I decided to combine a visit to a book conference with a training mission for Scout. The Book Expo 2005 conference in New York City was one of the world’s largest book conferences with more than 2,000 exhibitors. Books are alive-and-well, and book sales in the USA are a multi-billion dollar a year industry.

Because of the computer book slump, there were hardly any booths by technology publishers.

Because we wore a technical publisher badge we were swamped by potential computer book authors, each hawking their book proposals. I must have a shoebox full of book proposals from aspiring computer book authors who want to get published.

Click here to read details about our trip to Book Expo 2005

Scout in the Big Apple

While attending this mega-conference we decided to use the opportunity to take Scout with us to refine his traffic avoidance skills. It’s very easy to take a horse to New York City and there are many hotels that accept all animals, great-and-small. When doing charitable training, we have been amazed at the number of hotels that want to help, and we have had many major hotel chains donate our rooms.

Click here to see a list of horse-friendly hotels in New York City

Native New Yorkers know that combining fantastic hot dogs with papaya juice is a culinary delight, and we had great fun munching dogs and chatting with the whores and crack heads at Gray’s Papaya near Madison Square Garden.

Scout is a bit of a show-off and he displayed himself a few times, but a quick tap and the command “put that back” kept him socially acceptable.

Another treat was seeing Michael Creighton and meeting Laura Barnes, the author of the fantastic Ernest series of children’s books, a super-nice lady with a shared love of horses.

Click here to read about Scout in New York City

So, what’s going to be the hot books next year? We have a fairly good idea, but we always hold our cards close until the catalogs are published. As the boomers age-out and enter an age where they have high disposable income, many publishers are pursuing travel books. We also saw a huge interest in books about personal relationships.

Here are some book title ideas we have for next year:

Finding the perfect man – Janet Burleson (This one was my suggestion)
Scuba diving for the middle-aged professional – Mike Ault
More “Insider Adventures” ™ travel books, focused on “safe” destinations

From the mail bag:

We have been getting e-mails asking about Lil orphan Annie, and I’m sad to report that she died quietly at 7 days-old in Penny’s arms. According to Dr. O’Malley, Annie had signs of the “dummy foal” syndrome, most likely cause by oxygen depravation and head trauma. Penny was emotionally drained, devastated and she was crying uncontrollably at this unexpected loss.

We also lost “Dixie”, a severely deformed dwarf that we rescued four years ago. Rescuing crippled, abused and neglected miniature horses is a sad business, and we do everything to ease their suffering and prosecute the offenders. Janet’s latest book Helping Hooves describes how we saved Traveler and prosecuted his heartless owner for cruelty to animals, including the death of Hidalgo, a foal that he starved to-death.

Dixie’s story