Quotes of the day

Whenever you have an efficient government you have a dictatorship.--Harry Truman

When I worked at the World Bank, management was always checking up on us to make sure our research was relevant for real-world economic development. The standard test question was, "What would your research suggest the finance minister of country X should do?" This question reflected the standard view that has endured since the beginning of development economics six decades ago -- that all countries begin with a blank slate and that development happens when today's government leaders execute wise policies. My job was simply to tell the leaders what those wise policies were. Imagine the dismay of my managers if my advice to the finance minister had been, "Make sure your country was well caught up on technology -- 500 years ago." But seemingly irrelevant as that advice might be, it's actually true. If a country had the printing press and the magnetic compass in 1500, it's a pretty safe bet it has a strong national economy today. Ancient history still matters for today's development, providing unique insight into why the lights are still off in the dark corners of the world and what we might do to change that. Strangely, history has never figured into the equation when it comes to exploring why some countries prosper and others don't. ... our research shows that development is not about what you dictate, but what you discover. Little penicillin did far more to improve the world's lot than big plans conceived around a conference table. --William Easterly

One commonly hears complaints that living standards in America haven't "really" increased since the seventies--that it's all useless consumer gimcrackery. If you've ever spent a hot July without air conditioning, you know this is nonsense.--Megan McArdle

Economists understand that, absent externalities, the undistorted situation reflects an optimal allocation of resources. It is crucial to know how far we are from that optimum. To be somewhat nerdy about it, the deadweight loss of a tax rises with the square of the tax rate. Thus, increasing or decreasing a tax rate by 1 percentage point has a small effect on economic well-being if the initial tax rate is low, but it has large effect if the initial tax rate is high. For the margin of adjustment I was discussing (work more now, let your kids consume the proceeds in 30 years) the distortion is very high once all taxes are taken into account. As a result, every change in this tax wedge has a large impact on the size of the economic pie. ... Work has a pecuniary benefit, whereas leisure has a non-pecuniary benefit. Reality is more complicated. I face a choice among a wide range of activities, each of which offers some combination of pecuniary and non-pecuniary benefits. Absent taxes, I would choose an optimal mix of these activities. When the government taxes pecuniary benefits, I spend more time on those activities that yield non-pecuniary benefits. Some of those activities may look like leisure, but others may be better described as "fun work" rather than "income-producing work." Blogging, for instance, or writing op-eds that particularly inflame the left-wing blogosphere.--Greg Mankiw

Interestingly, no one thought it was odd that they should have opinions on Greg Mankiw's taxes; apparently, it is only opinions on your own taxes that are in bad taste.--Megan McArdle

I opposed TARP from day one. I wanted to see the insolvent banks put into bankruptcy. Now, some of the same folks who say that bailing out the banks was necessary to save us from another Great Depression are telling us that we need to stick it to the banks. If you say that "the law is the law" and "rules must be enforced as written," that can be a consistent position and I can respect you for it. But then don't turn around and say that we should empower mortgage counselors to rewrite people's loans. I wish that some of the pontificators had some business experience. ... It is safe to say that what is going on now is not helping "little people" against "the banks." It is an assault on a process that has done little or no actual harm to borrowers, and which supports the complex allocation of mortgage cash flows under today's securities. In the end, the biggest losers will be the unemployed, because the assault on the foreclosure process is going to keep the housing market in limbo for years. That in turn is going to make economic recovery something that does not begin until well after President Palin takes office. Have a nice day.--Arnold Kling

Throughout the financial crisis, the federal government didn't have to put up one single dollar to help out a hedge fund. They suffered, but never went to Washington with their hands out. Does that answer your question?--Byron Wien

A hedge fund is a computer that can go anywhere.--Daniel Donovan, Jr.

I can read my Kindle books on my iPad. I like the Kindle screen better (though it isn’t self-lit like the iPad.) But when it comes to eye strain the Kindle’s more like reading a book. The iPad is more like reading a computer screen. But the book looks better, generally on the iPad. The charts are crisp–on the Kindle you can’t always read them and photos are the same. On the regular-sized Kindle they’re a joke. On the iPad they’re glorious. Email on the iPad is fantastic. The on-screen keyboard is pretty good. Not great for long (more than a paragraph or so) writing but fine for short emails. The pdf reader I’m using (GoodReader) is spectacular. ... But while I’ve read pdfs on the regular-size Kindle it’s pretty horrible. The iPad makes me want to read them. Reading blogs on the iPad is better than on the web. I’m using Pulse as a blog reader. The posts are cleaner and crisper with less distractions. ... I do think it’s a spectacular way to carry a bunch of intellectual stimulation and aesthetic diversion when I travel. I’m planning on leaving my laptop at home on my next short trip. I’d like it to replace my laptop. It can’t yet. But the fact that I want it to, tells me something.--Russ Roberts

What Steve [Jobs]’s brilliance is, is his ability to see something and then understand it and then figure out how to put into the context of his design methodology — everything is design. An anecdotal story, a friend of mine was at meetings at Apple and Microsoft on the same day and this was in the last year, so this was recently. He went into the Apple meeting (he’s a vendor for Apple) and when he went into the meeting at Apple as soon as the designers walked in the room, everyone stopped talking because the designers are the most respected people in the organization. Everyone knows the designers speak for Steve because they have direct reporting to him. It is only at Apple where design reports directly to the CEO. Later in the day he was at Microsoft. When he went into the Microsoft meeting, everybody was talking and then the meeting starts and no designers ever walk into the room. All the technical people are sitting there trying to add their ideas of what ought to be in the design. That’s a recipe for disaster. Microsoft hires some of the smartest people in the world. ... It’s not an issue of people being smart and talented. It’s that design at Apple is at the highest level of the organization, led by Steve personally. Design at other companies is not there. It is buried down in the bureaucracy somewhere… In bureaucracies many people have the authority to say no, not the authority to say yes. So you end up with products with compromises. This goes back to Steve’s philosophy that the most important decisions are the things you decide NOT to do, not what you decide to do. It’s the minimalist thinking again. ... Steve was solving problems back in the 80s that turned out 15, 20 years later to be exactly the right problems to be working on. The challenge was we were decades away from when the technology would be homogenized enough and powerful enough to be able to make all those things mass market. He was just, in many cases, he was way ahead of his time. Looking back, it was a big mistake that I was ever hired as CEO. I was not the first choice that Steve wanted to be the CEO. He was the first choice, but the board wasn’t prepared to make him CEO when he was 25, 26 years old.--John Sculley