Monday, December 14, 2009

Quotes of the day

While faith contains an element of reason, it is essentially moral rather than intellectual. ... "Everywhere, everywhere, Christmas tonight." But Christmas either means more than is popularly supposed or it means nothing. We had better decide.--A.W. Tozer

Why was alchemy a terrible idea? It was only chemistry without a sound theory. Chemistry would not have been developed unless alchemy had come before. In the same way, social science today lacks a sound theoretical basis. Economics and sociology are the alchemies of today; not quite scientific, but essential precursors to the sound social science of the future.--pj

Don't forget that even today's 2% to 4% bond yields aren't as paltry as they look, because inflation remains close to zero. The 6% interest income you remember earning a decade ago came at a time when inflation ran about 3%. You might protest that inflation, as officially measured, is understated today—but it is probably no more inaccurate now than it used to be. In real terms, you are only slightly worse off now than you were then.--Jason Zweig

The essence of capital provision is bearing economic risk. The flow of funds is like the flow of urine: important, even essential, as one learns when the prostate malfunctions. But “liquidity”, as they say, takes care of itself when the body is healthy.--Steve Randy Waldman

It is indeed true that the stock market can forecast the business cycle. The stock market has called nine of the last five recessions.--Paul Samuelson

The very young Paul Samuelson bore an odd resemblance to, of all people, Buddy Holly.--Tyler Cowen

When economists “sit down with a piece of paper to calculate or analyze something, you would have to say that no one was more important in providing the tools they use and the ideas that they employ than Paul Samuelson.--Robert Solow

I’ve just campaigned on a platform of fiscal responsibility and balanced budgets and here you are telling me that the first thing I should do in office is to cut taxes?--John F. Kennedy, to his professor Paul Samuelson

Successful stimulus relies almost entirely on cuts in business and income taxes. Failed stimulus relies mostly on increases in government spending. All these findings suggest that conventional models leave something out. A clue as to what that might be can be found in a 2002 study by Olivier Blanchard and Roberto Perotti. (Mr. Perotti is a professor at Boccini University in Milano, Italy; Mr. Blanchard is now chief economist at the International Monetary Fund.) They report that “both increases in taxes and increases in government spending have a strong negative effect on private investment spending. This effect is difficult to reconcile with Keynesian theory.” These studies point toward tax policy as the best fiscal tool to combat recession, particularly tax changes that influence incentives to invest, like an investment tax credit. Sending out lump-sum rebates, as was done in spring 2008, makes less sense, as it provides little impetus for spending or production. LIKE our doctor facing a mysterious illness, economists should remain humble and open-minded when considering how best to fix an ailing economy. A growing body of evidence suggests that traditional Keynesian nostrums might not be the best medicine.--Greg Mankiw

Governments, if they endure, always tend increasingly toward aristocratic forms. No government in history has been known to evade this pattern. And as the aristocracy develops, government tends more and more to act exclusively in the interests of the ruling class — whether that class be hereditary royalty, oligarchs of financial empires, or entrenched bureaucracy. ... Good government never depends upon laws, but upon the personal qualities of those who govern. The machinery of government is always subordinate to the will of those who administer that machinery. The most important element of government, therefore, is the method of choosing leaders.--Frank Herbert

I still have to keep going to Washington and sucking up. Because the problem is when you have a baby with an Uzi, right, they might accidentally mow you down. But here's the thing . . . they're brilliant people. It's just that the idea of a market in health care never occurred to them. ... You can't buy what [healthcare] you want. America will have one car. Everyone will have access to transportation, which means that everyone will have a black Escalade, with spinners. That's it. There's no Hyundais, no bicycles, no nothing. These poor people who clip the things off the backs of cans to make the tomatoes cheaper are subsidizing the hypochondriac who gets his shoulder done with an arthroscope because it clicks when he serves at tennis. ... It is kind of too bad that all these software companies that we're really close to putting out of business, these terrible legacy companies, with code that was written in the '70s, are going to get life support. That's why I call it the Sunny von B├╝low bill. What it is, basically, is a federally sponsored sale on old-fashioned software. ... This is a market: its a set of agreements, it's a language. What's needed is a way of exchanging value and making choices, that's ethical—and, you know, nobody, nobody, not nobody, has said a word about that.--Jonathan Bush

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