Quotes of the day

... as the Economist reports in a feature titled "The 70-30 Nation," the Pew Research Center asked respondents whether they were better off in a free market rather than a socialist economy "even though there may be severe ups and downs from time to time." Seventy percent said yes. So why are the 30% in charge of the 70%? According to American Enterprise Institute President Arthur Brooks, the "game changer" was the economic crisis. As he writes in his book "The Battle," "the opportunity to expand the 30 percent coalition was not the Democratic sweep in 2008. It was the financial crisis of 2008-2009, which was used as a tool to attack the free enterprise system ..."--Gregg Sherill

... if you live long enough you'll see everything, including Alan Greenspan getting religion on the federal deficit.--Pete Davis

If gallons-per-mile laws don’t induce people to choose different vehicles, then we need higher gas taxes. If telling people how much electricity their neighbors use doesn’t cause them to turn out the lights, then we need a carbon tax. To be fair, these cases may involve genuine externalities -- which are recognized as a problem in traditional economics -- rather than the “internalities” of behavioral economics. But Loewenstein and Ubel don’t mention that distinction. The behavioral goals of policy are taken as given; only the means get scrutiny. In our first paper on paternalist slopes, Mario Rizzo and I warned about precisely this kind of process. When a policy is enacted to achieve a specific goal and then fails to achieve it, further policies are justified on grounds of achieving the goal that “we” have already agreed upon. In Loewenstein and Ubel’s op-ed, I believe our prediction is vindicated.--Glen Whitman

I have a warning for Republicans: Don't underestimate Barack Obama. Consider what he has already achieved. Obamacare alone makes his presidency historic. It has irrevocably changed one-sixth of the economy, put the country inexorably on the road to national health care and, as acknowledged by Senate Finance Committee Chairman Max Baucus but few others, begun one of the most massive wealth redistributions in U.S. history. Second, there is major financial reform, which passed Congress on Thursday. Economists argue whether it will prevent meltdowns and bailouts as promised. But there is no argument that it will give the government unprecedented power in the financial marketplace. Its 2,300 pages will create at least 243 new regulations that will affect not only, as many assume, the big banks but just about everyone, including, as noted in one summary (the Wall Street Journal), "storefront check cashiers, city governments, small manufacturers, home buyers and credit bureaus." Third is the near $1 trillion stimulus, the largest spending bill in U.S. history. And that's not even counting nationalizing the student loan program, regulating carbon emissions by Environmental Protection Agency fiat, and still-fitful attempts to pass cap-and-trade through Congress. But Obama's most far-reaching accomplishment is his structural alteration of the U.S. budget. The stimulus, the vast expansion of domestic spending, the creation of ruinous deficits as far as the eye can see are not easily reversed. These are not mere temporary countercyclical measures. They are structural deficits because, as everyone from Obama on down admits, the real money is in entitlements, most specifically Medicare and Medicaid. But Obamacare freezes these out as a source of debt reduction. Obamacare's $500 billion in Medicare cuts and $600 billion in tax increases are siphoned away for a new entitlement -- and no longer available for deficit reduction. The result? There just isn't enough to cut elsewhere to prevent national insolvency. That will require massive tax increases -- most likely a European-style value-added tax. Just as President Ronald Reagan cut taxes to starve the federal government and prevent massive growth in spending, Obama's wild spending -- and quarantining health-care costs from providing possible relief -- will necessitate huge tax increases.--Charles Krauthammer

The risk to Goldman was that more of its dirty laundry would be exposed. As we learned David Viniar’s testimony before the Financial Crisis Inquiry Commission, the company remains in lockdown mode. And once again, the S.E.C. shows little appetite for digging deeper, especially since its new COO of the Enforcement Division is a 30-year-old kid from Goldman.--David Fiderer

And what [Apple] did was provide information. They told us about their own investigations, data from AT&T and so on. Pretty much all of the information is verifiable and the verification process will be public. But not to admit fault was no longer an option for Apple. And not to be ahead of the game — to some extent — on data provision was not an option for them. The new media has brought with it, the end of stealth and patience as a business strategy in the face of a quality issue. But what is interesting is that their competitors are now on the back foot. They were silent and now Apple has challenged them with their own antenna issues that others will verify. In the past month, they could have come out with this first and preempted Apple but they did not. And what is more, I reckon iPhone cases sell more than other smart phones. I’ve never see a Blackberry with a case. What bodes for them now? I think a bit of ‘raising rivals costs’ has occurred.--Joshua Gans

... there is a complex issue of the allocation of space as well as the queuing problem in bathrooms. From experience, we know that women have to queue more than men and so incur waiting costs. These waiting costs are different from those incurred by the men outside waiting for the women as we already have done our business; for instance, men could avail themselves of this iPhone app while they wait. A straight economics perspective would suggest that there is an imbalance in the allocation of facilities between men and women and Banzhaf’s mission is to restore some fairness. Now it turns out that the issue of fairness is complex here. First of all, Banzhaf cites research (and by the way, this is not Banzhaf’s research or mine for that matter — and for those who are surprised that I am stressing this see here and here) that women, when they actually get to a stall, take about twice as long as men. Now it is pretty clear that this argument is unfair because it lumps individual behaviour with a group stereotype. You would not want to look at averages but at individual distributions otherwise what you are doing is profiling. The point is that, from a fairness perspective, a woman should not have wait longer than a man just because she is stuck in a line behind slow people. That said, it does raise the issue of what type of tax we should put on the externality caused by slow people.--Joshua Gans

I was an angry young man. We were all angry. But we had a job to do, and we did it. My personal thoughts were that I knew things would get better, and I’m glad to say that I’m here to see it.--Vernon Baker, only living black Congressional Medal of Honor winner