Quotes of the day

Dear Sen. [Sherrod] Brown: Your office is advertising for an unpaid intern – one whose responsibilities will be quite extensive. But on your webpage you boast of your efforts to fight poverty by raising the national minimum-wage. Are you not concerned that you are promoting poverty by paying this intern an hourly wage of $0.00?--Don Boudreaux

The boundaries of each firm are not arbitrary; there are economic reasons that Google owns a huge capacity of computing power, whereas Bayer has facilities suitable for drug research. In extreme cases, when an industry rapidly changes or management is particularly inept, the proper course is for the firm itself to be dissolved, taking its resources out of a relatively inefficient organization and putting them in different lines where they will be more useful. Although this process is particularly painful for the workers involved, in a free society, layoffs are the only way to signal when labor is being used in a very unproductive enterprise. Once we understand the vital role played by the stock market and (successful) speculation, the case for government intervention in financial markets is considerably weakened.--Robert Murphy

If regulators believed in efficient markets, then they would have looked to market instruments, like subordinated debt, to promote bank soundness. Instead, they used--and continue to use--the notion of risk-based capital, which is a quota system that ultimately resembles the central-planning model that failed in the Soviet Union. The Shadow Financial Regulatory Committee, which is much more market-oriented than the bank regulators, was clear on the problems with risk-based capital twenty years before the crisis hit. On the other hand, the Public Choice story is quite compelling. I can explain the growth of mortgage securitization in terms of the capture of bank regulators by Wall Street. In fact, it is hard to explain mortgage securitization any other way.--Arnold Kling

Moscow failed; Moscow lost. For all the idealism, brilliance and ingenuity of the minds that tried to fashion a Marxist utopia on the ruins of post-second world war Russia and Ukraine, the greater part of Red Plenty is given over to why and how the Soviet communist project failed.  There were plenty of Soviet economists in the 60s who wanted to bring computers into the system, who wanted to put prices on things that bore some relationship to the labour required to make them, who knew that rules like the tonne-kilometre target – whereby a factory that did its job by moving 100 tonnes of materials over 1,000 kilometres was thought more successful than a factory that achieved the same result by moving half the goods over half the distance – made no sense.  But with the death of Stalin, the director class had lost the main incentive it had to be more efficient – fear. The replacement of Khrushchev by the Brezhnev clique in 1964, and the discovery over the next few years of vast reserves of oil in Siberia, made it easy for the people running the country's economy to brush the reformers aside.--James Meek

I think a lot of today’s political disputes come down to a conflict between farmer and forager ways, with forager ways slowly and steadily winning out since the industrial revolution. It seems we acted like farmers when farming required that, but when richer we feel we can afford to revert to more natural-feeling forager ways. The main exceptions, like school and workplace domination and ranking, are required to generate industry-level wealth. We live a farmer lifestyle when poor, but prefer to buy a forager lifestyle when rich.--Robin Hanson

The dark genius of the meritocracy is that it can take a kid like Mark Zuckerberg, someone who grew up in Westchester and went to an exclusive prep school and generally had things pretty easy by any reasonable standard, and — by surrounding him with other hyper-competitive alpha students — make him feel like he’s an underdog, an outsider, someone who needs to fight and claw his way against all odds to make it to the top and stay there. Whether the flesh-and-blood Zuckerberg felt this way or not, I don’t pretend to know. But the phenomenon is real, and crucial to understanding the psychology of the American elite.--Ross Douthat

The traditional public school system had a very weak incentive structure. Since students automatically went to neighborhood schools, schools did not have to compete for students. The teachers unions long ago eliminated merit pay, and made teachers’ pay determined almost entirely by degrees and years spent teaching. Finally, in this traditional system, students had little incentive to work hard, especially when they did not expect to get much education, and could count on always getting promoted. All this is beginning to change for the better, despite fierce opposition from teachers unions to virtually every important reform. School vouchers, and especially the charter school movement, is bringing competition to the traditional neighborhood school. No longer can public schools automatically have a captive audience of all the school age children in their neighborhood. Charter schools are expanding as rapidly as allowed by local and state restrictions that have been due mainly to lobbying of teachers unions.  ... The disgraceful reaction of the LA teachers union to publication by the LA Times of the database that gives performance scores of the students of 6000 elementary school teachers is indicative of how teachers unions feel toward rewarding better teachers. The support by Arne Duncan, the US Secretary of Education, of the newspaper’s publication of this information is highly commendable. Not only should such information be published and publicized, but they should also be used to design a system where merit plays a sizable part in the monetary compensation of teachers.--Gary Becker

Two economists at the Wharton School of the University of Pennsylvania, while investigating how round numbers influence goals, examined the behavior of major league hitters from 1975 to 2008 who entered what became their final plate appearance of the season with a batting average of .299 or .300 (in at least 200 at-bats). They found that the 127 hitters at .299 or .300 batted a whopping .463 in that final at-bat, demonstrating a motivation to succeed well beyond normal (and in what was usually an otherwise meaningless game). Most deliciously, not one of the 61 hitters who entered at .299 drew a walk — which would have fired those ugly 9s into permanence because batting average considers bases on balls neither hit nor at-bat.--Alan Schwarz

We work for you. Our players play for you. It gives us immense pride to do so. You are the rock on which this franchise is built. We know the best way to honor you is not merely to thank you, but to go out and honor our fundamental commitment to field an excellent team in 2011, another one worthy of your avid support. We can do better. We will do better. We are committed to winning. For you, for us, for the whole of Red Sox Nation. Once more, we say "Thank You."--John Henry, Tom Werner and Larry Lucchino

... hearing the news that Cannell died today at 69 from a battle with melanoma, all those childhood memories came flooding back. Of great theme songs ("The Rockford Files" theme is even more celebrated than "Greatest American Hero"). Of buddy shows with an "and" in the title ("Tenspeed and Brown Shoe," "Hardcastle and McCormick"). Of catchphrases I knew by heart ("I love it when a plan comes together" from "The A-Team," or "Works for me" from "Hunter"). Of gunfights where dozens of bullets could be fired without a single person dying ("A-Team," "Riptide"). Mostly, though, I just thought of good, solid craftsmanship. Cannell and his proteges (notably Donald Bellisario, who would go on to create the very Cannell-esque "Magnum, PI" and "NCIS") could do highbrow ("Wiseguy" was a great cable drama more than 10 years before such a thing existed). They could do lowbrow ("The A-Team" was never high art). And they could do middlebrow ("Rockford Files" is still considered the gold standard for TV private eye shows). And they could do them all with a focus on putting a story together so all the pieces neatly fit together, and so that all the main characters got to do the things that viewers loved about them. (Again, see catchphrases.) Even TV snobs seemed to have a soft spot for at least one Cannell show.--Alan Sepinwall