Quotes of the day

Yes, 100% marginal tax rates don’t produce much revenue, but they sure do produce a lot of hunger.--Scott Sumner

I think the stimulus package was very stupid; it was awful. It’s just a tremendous waste of money and it’s going to cause some trouble in terms of a bigger public debt; it’s just wasting resources. But the more important thing is the financial system, and the housing related aspects. So on that, despite a lot of floundering around, mostly I think what they were doing is in the right direction. I think they made a big mistake by not bailing out Lehman Brothers – I think they recognized that two days later. That was Paulson’s individual fault and responsibility from what I can gather. ... For a while there was this ridiculous view that there was this massive consensus in favour of Keynesian stimulus. And Biden even said at some point that, “Every economist agrees that we need this stimulus.” Of course that was always nonsense. So in that sense I agreed with the sentiment of what was in that signed advertisement.--Robert Barro

Andrew Coulson recently estimated that the Washington, D.C. public schools spend an average of $24,606 per pupil annually. In contrast, D.C.'s private schools—which include some of the most elite institutions in the country—spend only $14,534. Despite their lower funding, private-school students consistently outperform their public-school peers. However, much of the disparity disappears once differences in student background are taken into account.4 Assume for the sake of argument that public and private schools do a comparable job educating equivalent students. Superficially, these results suggest that even for a local task, subject to immediate feedback from voters (and parents), the government consumes almost 70 percent more resources to produce the same output as the private sector. ... Despite this article's narrow focus, it has, nonetheless, documented a $2.6 trillion increase in annual economic output if the government were to restrict itself to its classic role of protecting the country's residents from criminals and invaders. Such an increase would have meant an 18 percent increase in GDP in 2009. It also works out to an average of about $8,500 per man, woman, and child in America, per year, starting almost immediately after a hypothetical rollback of Big Government. The only long-term component in our calculations was the disincentive effect from high tax rates. The other categories would yield their savings almost immediately, just as soon as businesses could adjust to the new influx of workers (previous students) and the influx of cash in consumers' pockets.--Robert Murphy