Quotes of the day

Socialism only works in two places: Heaven where they don't need it and hell where they already have it.--Ronald Reagan

Innovation is terribly important; it is why we are rich. We know innovation is caused by economic activity, but if we knew which activities more promoted innovation, we’d want to subsidize them. Three recent papers suggests we should prefer many small industries each dominated by a few firms, and prefer private research in processes of capital intensive industries, especially chem/drug and comp/electronics. ... R&D spending is more effective for process over product, private over public, and basic over applied.--Robin Hanson

I'm not arguing for any change in the laws. I'm just arguing that [people who walk away from their mortgage obligations are] jerks. And I'm arguing that they're jerks precisely because I don't want any change in the laws that makes it harder to default on your mortgage.--Megan McArdle

Right-wing economists aren’t arguing that those specific policies [such as universal healthcare] explain the difference, but rather that America is richer because it has been more capitalist for a long time. Has it been more capitalist since 1820? It is a long time since I read Tocqueville, but my impression is that the answer is yes. The statism of Europe took many forms. There were trade barriers between German states. The French government has always been more interventionist. UK was pretty capitalist in 1820, but then it was also pretty rich. For a while Europe could use the destruction of WWII as an excuse, and indeed when I was young they were growing faster than us in a “catch-up.” But it is obvious they have plateaued about 25% below us. ... Here’s why growth rates are misleading. Once you move to the technological frontier, it is hard to grow faster than about 2% per capita. But poorer countries can grow much faster as they borrow advanced technology. --Scott Sumner

My attitude is this: if you are getting attacked by Krugman, you must be doing something right--Eugene Fama

The pattern during the last 100 years has been for countries with functioning economies to grow faster the lower they start. If [Matthew] Yglesias was an trained economist he would know all this. Conditional Convergence is one of the most robust relations in growth theory. [Paul] Krugman knows this, but Krugman is a liar, he just wants to maximize his ideological argument at any given point, deceiving his readers if he has to. That's why Krugman has not explicitly made the claim that growth rate and levels are unrelated, he just ignored the levels altogether. He knows that writing what you wrote would make him look foolish to other economists. While Krugman knows what he is doing (he just doesn't care), my guess is that Yglesias is honest in his argument, following Krugman where Krugman himself carefully does not step. Matthew Yglesias is left standing with his naive post on growth theory, his just reward for trusting Paul Krugman.--Tino

Nobody in the Bush administration ever displayed more economic ignorance [than President Obama's press secretary Robert Gibbs], but [Paul] Krugman was all over those guys every time they came close. Now he lets it slide. So let me do his job for him: When the domestic demand for a product increases, the law of comparative advantage tells you to import more of it, not less. If it is in fact true that “the type of demand for these components is only going to increase” then American manufacturers might want to start producing them, but American consumers will certainly want to import more of them, and any attempt to circumvent that is a good way to make Americans poorer. ... For goodness’s sake—if Barack Obama or Robert Gibbs discovers that he really likes bananas on his Cheerios, is his first thought that he’d better start growing bananas, or is his first thought that he’d better figure out where to buy them? That’s the kind of question Paul Krugman used to ask. I miss him.--Steven Landsburg

President Barack Obama is trumpeting a new White House estimate that his top economist calls ’stunning’: His stimulus plan has already created or saved up to 2 million jobs,” the Associated Press reported. The net job loss last year was 4 million, the worst since 1940. Barack Obama is now the first president since Herbert Hoover to show a net loss of jobs as president. Obama is saying it would have been a job loss of 6 million, which would mean 11% unemployment without the stimulus. A year ago, he said without the stimulus, unemployment would peak at 9%. Other “stunning” results thanks to the awesome administration include:

• The New England Patriots lost by only 19 points to the Baltimore Ravens on Sunday. Without the stimulus, it would have been a 33-0 shutout.
• The low temperature in Poca this morning was 20. Without the stimulus, it would have been 10.
• The national debt today is $12.3 trillion. Without the stimulus, it would have been $11.9 trillion.

Oops.--Don Surber

Now, let me get this straight.....We are going to pass a health care plan written by a committee whose chairman says he doesn't understand it, passed by a Congress that hasn't read it but exempts themselves from it, to be signed by a president that also hasn't read it and who smokes, with funding administered by a treasury chief who didn't pay his taxes…all to be overseen by a surgeon general who is obese, and financed by a country that's nearly broke. What could possibly go wrong?--anonymous

Ordinarily, if one out of every 22 California drivers had a license to drive any way he chose, there would be demands for more police power to protect Californians from the potential carnage. But until the newspaper series, law enforcement officials and legislators had remained mum. The reason, of course, is that the scofflaws are law enforcement officials and legislators. ... Bigger government means more government employees. Those employees then become a permanent lobby for continual government growth. The nation may have reached critical mass; the number of government employees at every level may have gotten so high that it is politically impossible to roll back the bureaucracy, rein in the costs, and restore lost freedoms. People who are supposed to serve the public have become a privileged elite that exploits political power for financial gain and special perks. Because of its political power, this interest group has rigged the game so there are few meaningful checks on its demands. Government employees now receive far higher pay, benefits, and pensions than the vast majority of Americans working in the private sector. Even when they are incompetent or abusive, they can be fired only after a long process and only for the most grievous offenses. It’s a two-tier system in which the rulers are making steady gains at the expense of the ruled. The predictable results: Higher taxes, eroded public services, unsustainable levels of debt, and massive roadblocks to reforming even the poorest performing agencies and school systems. If this system is left to grow unchecked, we will end up with a pale imitation of the free society envisioned by the Founders. --Steven Greenhut

Presidential economic advisor Christina Romer was the lede-off guest on ABC’s This Week with George Stephanopoulos Starring George Stephanopoulos. And, charmingly, Romer is a lousy liar — maybe the only one inside the Beltway. ... Here’s about 11 minutes of her being “grilled” by Stephanopoulos on Sunday’s show. (Sorry for not embedding the video, but ABC doesn’t allow that for reasons unknown.) Anyway — watch her body language. When someone is speaking, their head usually either nods up and down or moves back and forth, depending on what they’re saying, and where they’re trying to place emphasis. Romer’s head is all over the place. I swear, most of the time it’s moving in figure eights. To me, that means she has no clue what she expects you to get out of what she’s saying, because she knows it’s total crap. Having to go out there and spread huge fields of manure for your boss — doing terrible damage to the country in the process — is a nasty job.--Stephen Green

[Jonathan Gruber] is being treated as a supreme authority. In theory, that is because his skills are exceptional. Instead, I suspect that, on the contrary, his success has less to do with how he uses his critical thinking functions than how well he has repressed them. In short, he is paid to tell progressives and politicians what they want to hear. ... I think that there is still a high probability that we are on a path to a system in which a political elite ruthlessly rewards its friends and punishes its enemies, leading to a society with much less innovation and much more corruption. I do not foresee gulags and mass murders, but there is plenty of potential for moral rot in cronyism, and that I do fear lies ahead.--Arnold Kling

Here’s a forecast: Mr. Blankfein will not end his career with a high government position [unlike his predecessors who led Goldman Sachs].--Floyd Norris

My daughter called me from school one day and said, ‘Dad, what’s a financial crisis?’ And, without trying to be funny, I said, ‘This type of thing happens every five to seven years.’ And she said, ‘Why is everyone so surprised?’--Jamie Dimon

Results released today from the Impact Study show that children’s gains from participating in Head Start, documented in a 2005 installment of the study, do not last through the end of 1^st grade.--Lisa Guernsey

Barack Obama has exploited his youthful stint as a Chicago community organizer at every stage of his political career. As someone who had worked for grassroots “change,” he said, he was a different kind of politician, one who could translate people’s hopes into reality. The media lapped up this conceit, presenting Obama’s organizing experience as a meaningful qualification for the Oval Office. This past September, a cell-phone video of Chicago students beating a fellow teen to death coursed over the airwaves and across the Internet. None of the news outlets that had admiringly reported on Obama’s community-organizing efforts mentioned that the beating involved students from the very South Side neighborhoods where the president had once worked. Obama’s connection to the area was suddenly lost in the mists of time. Yet a critical blindness links Obama’s activities on the South Side during the 1980s and the murder of Derrion Albert in 2009. Throughout his four years working for “change” in Chicago’s Roseland and Altgeld Gardens neighborhoods, Obama ignored the primary cause of their escalating dysfunction: the disappearance of the black two-parent family. Obama wasn’t the only activist to turn away from the problem of absent fathers, of course; decades of failed social policy, both before and after his time in Chicago, were just as blind.--Heather MacDonald

At the dark heart of [Robin West's] thinking is the notion that home-schooled children are imprisoned. No sports teams, no church activities, no Boy and Girl Scouts, no summer jobs, no sleepovers with friends. Thus will abuse go undetected, self-esteem unnurtured. Worse, these children become part of an unthinking Republican army. Which pre-empts, of course, the ability of professors like West to turn them into soldiers for the unthinking Democratic army. Which is why we need regulation. Forced testing and immunizations. Home inspections by state regulators. I propose a deal, Professor West. I’m happy to have my sons enrolled in school, should they fail a standardized test, so long as the public schools commit to testing teachers, and firing the ones who fail. I’m happy to let inspectors assess our home curriculum, if we can do the same to the hodgepodge of theories and dry-as-dust, dumbed-down, modernized materials that get bandied about under the guise of pedagogy in public schools. If you’re nice, we might even let you borrow some of our classroom materials. Finally, when my kids are older, I’ll match them up against any precious little free-thinking high-school radicals you perceive as unshackled from the lockstep conservative brainwashing you imagine goes on under my roof, and we’ll have ourselves a debate on philosophy, theology, and politics. If your kids win, I’ll pay your Georgetown salary for a year. If my kids win, you resign.--Tony Woodlief

In short, whenever [Pat] Robertson breathes out a sentence with the word “God” in it, I’m pretty certain he doesn’t know what the hell he’s talking about.--Tony Woodlief

Is mathematics invented or discovered?--Steven Landsburg

...I cannot imagine any way to explain the existence of the Universe without the prior existence of the natural numbers. (This is more or less the same reason some people give for believing in God.) It seems to me that the most compelling question in philosophy is why anything exists at all. Any satisfactory answer has to start with something that must exist.--Steven Landsburg