Quotes of the day

Preventing recessions is not the key to growth, as these are regrettable but unavoidable companions to an economy directed by a capital allocation process that is susceptible to systematic failure. Preventing the last failure is pretty irrelevant, because the next systematic failure will be different. Last I checked, only the US government is offering low-down payment loans, and no one offers no-documentation loans, so our government is not really helping here. As for creating growth via something new, if centralized governments could do that, the Soviet Union would still be around. ... Our priority at the top level should be to get out of the way, and so government should focus on its essential but limited perennial tasks as opposed to creating some new engine of growth. Leave that for the millions of people making sure millions of small changes are constantly made to daily procedures. Such changes do not require vision from politicians, subsidies, or tax breaks, but are rather the natural by product of people trying to make a buck. It's the standard Hayek/Friedman view of macroeconomics, and it's still the best description of how the complex adaptive system of our economy works. --Eric Falkenstein

[U.S. policy makers are] munching on the theoretical heads of future generations, while paying no mind to the wretches that will eventually be called upon to pay the bills.--Bill Gross

I don't have a problem with Republicans using the opportunity of raising the debt ceiling to demagogue the deficit problem--this is one issue that needs all the passion it can get. And Democrats can hardly complain, since one Senator Barack Obama was doing just that four years ago. However. If Republicans want to reduce the deficit--and they say they do!--then they should find some damn spending cuts to match the gargantuan tax cut they just demanded. Threatening a showdown over the debt necessary to pay for the spending that they won't cut, is childish in the extreme. Spending isn't going to fall until congress cuts it; playing with the debt ceiling just adds in an intervening step of default, which makes everything harder, and makes our country into a lunatic laughingstock.--Megan McArdle

In essence, we have seen the rise of a large class of "zero marginal product workers," to coin a term. Their productivity may not be literally zero, but it is lower than the cost of training, employing, and insuring them. That is why labor is hurting but capital is doing fine; dumping these employees is tough for the workers themselves -- and arguably bad for society at large -- but it simply doesn't damage profits much. It's a cold, hard reality, and one that we will have to deal with, one way or another.--Tyler Cowen and Jayme Lemke

The scientists were talking their book, which they do with even less subtlety than Wall Street portfolio managers. Although the panelists touted more funding for science, there were a lot of arguments made that suggested that the right issue is not "more" vs. "less" but smart vs. dumb.--Arnold Kling

... during the previous year it has become disturbingly clear to me that some of my scientific contributions may not be aiding people's well-being at all. In fact, they could be causing real harm.--David Nichols

The point is that there are lots of things that seem logical in poker, but aren’t.--Mike Caro

Why is the military so bad at retaining [great leaders]? It’s convenient to believe that top officers simply have more- lucrative opportunities in the private sector, and that their departures are inevitable. But the reason overwhelmingly cited by veterans and active-duty officers alike is that the military personnel system—every aspect of it—is nearly blind to merit. Performance evaluations emphasize a zero-defect mentality, meaning that risk-avoidance trickles down the chain of command. Promotions can be anticipated almost to the day— regardless of an officer’s competence—so that there is essentially no difference in rank among officers the same age, even after 15 years of service. Job assignments are managed by a faceless, centralized bureaucracy that keeps everyone guessing where they might be shipped next. The Pentagon’s response to such complaints has traditionally been to throw money at the problem, in the form of millions of dollars in talent-blind retention bonuses. More often than not, such bonuses go to any officer in the “critical” career fields of the moment, regardless of performance evaluations. This only ensures that the services retain the most risk-averse, and leads to long-term mediocrity.--Tim Kane

When I think of talented young directors I think of David Lynch, and he’s old. In the teens no director will produce 4 masterpieces like Coppola did in the 1970s, or the amazing Kubrick films made in the 1960s, or the sublime Hitchcock films of the 50s. The well has run dry.--Scott Sumner