Quotes of the day

Dignity and liberty are admittedly hard to disentangle. But dignity is a sociological factor, liberty an economic one.--Deidre McCloskey

Most of the libertarians I know are ambivalent, for heaven's sake--if you can't get the libertarians united on actions that increase transparency, you've sure as hell lost the rest of the country. That's a ripe environment for new laws that reduce transparency. Maybe we'll be less effective--but we'll also be less free.--Megan McArdle

Greg Oden has a high rebound rate but he hardly plays, due to recurring injury. No one calls him the Ronald Coase of rebounding. Similarly, Yao Ming has high success rates, but cannot stay on the court for very long, due to his bad feet. His team has plenty of talent but has not won much and it probably needs to be dismantled at this point. In other words, it is often "brute total" statistics which are underrated (think about evaluating a potential spouse).--Tyler Cowen

The base problem is either inherently difficult or trivial. It's inherently difficult because we are attempting to find the "best" player in a multidimensional circumstance, where the weighting of the dimensions is both arbitrary and ever-changing. It's trivial because sports awards don't matter much except for PR value. Consider how well the Heisman trophy indicates pro potential.--zbicyclist

Uunemployment insurance has pros and cons. The pros are that it reduces households' income uncertainty and that it props up aggregate demand when the economy goes into a downturn. The cons are that it has a budgetary cost (and thus, other things equal, means higher tax rates now or later) and that it reduces the job search efforts of the unemployed. To me, all these pros and cons seem significant. I have yet to see a compelling quantitative analysis of the pros and cons that informs me about how generous the optimal system would be. So when I hear economists advocate the extension of UI to 99 weeks, I am tempted to ask, would you also favor a further extension to 199 weeks, or 299 weeks, or 1099 weeks? If 99 weeks is better than 26 weeks, but 199 is too much, how do you know?--Greg Mankiw

The slow recovery is disturbing because speedy recoveries typically follow severe recessions. ... Many in China and elsewhere believe the US economy is too sick to be cured. I do not agree, but recovery would require some unpalatable medicine with regard to spending and taxes, somewhat along the suggested by the recent majority-backed Report of the National Commission on Fiscal Responsibility and Reform. Unless the US takes serious actions to promote its long-term growth, the next decade may be a very difficult one.--Gary Becker

The conservatives do not have a single good argument against QE2. Every argument is based on bad logic, bad economics, a lack of understanding of history, or a lack of understanding of our political system. There must be some reason why the conservative establishment hardly raised a peep when the Fed would cut rates when inflation was running 3% or 4% when Reagan was president, or when Bush was president, and yet are now up in arms over monetary stimulus when we have 1% inflation and 17 million people out of work. There must be some reason. But for the life of me, I can’t figure out what it is.--Scott Sumner

Suppose I prevent everyone in America from trading with anyone outside their own households. We’d eat only what we could raise in our own gardens, burn only the fuel we could gather from our own backyards, and wear only the clothes we could make for ourselves. In other words, we’d all be living pretty much at the subsistence level. Would you be willing to call that a Depression? I would. Krugman, apparently, would not. ... It’s very bad practice for an economist to make policy recommendations without telling you what he’s trying to maximize. Krugman is frequently guilty of this particular sin. But now he’s given us an insight into what he thinks is important. By relegating “may make the economy more efficient” to an essentially parenthetical remark and putting all the emphasis on how much we get to work, he’s revealed a lot about his priorities. Those priorities are nuts.--Steve Landsburg

That's the problem with retiree benefits--they can accumulate for quite a while before you notice that, oops, they're budget killers. Unfortunately for us, as with Medicare and Social Security, now is when these problems have gotten too big to ignore. We have a triple-whammy of rising health care costs, a demographic bulge, and the historical legacy of a major expansion of government. In the early years, as government expanded, generous pensions and retiree benefits were easily expandable; the previous generations of workers were relatively small, while the large new class was relatively young. Now those generations of workers are piling up in the retirement system, and the current group of workers is not big enough to absorb the cost out of their paychecks. This mirrors a debate happening in Europe, and I think it is the end game of the arguments about the welfare state. The vision has hit its practical (and demographic) limits. The convulsions will continue for some time, as we try to settle what, and how much, the state will pay for. But in the end we'll probably emerge with something roughly stable, and the sweeping, century-long conflicts will no longer be about growing or shrinking the safety net.--Megan McArdle