Quotes of the day

When you think of the economy, think of a rain forest that you live in and study, not a machine that you fix.--Arnold Kling

In Boston, cops make about $110,000. I’m sure some of them are married to nurses making around $80,000, putting them well up into the top 5 percent. I don’t regard this sort of family as rich, but many people I talk to insist the top 5% are rich. If so, there are far more rich families that are a cop/nurse, or accountant/teacher, or engineer/secretary, then there are Donald Trumps. Why do people find it surprising that so few families make more than $150,000? I think I know, because I used to be surprised myself. Then I realized my mistake. I was assuming “families” were people like me, a middle age guy with a working wife and kids. But then I realized a “family” is any adult household. ... People are surprised that only 5% of families make more than $150,000, because they forget that even most upper-middle class people spend the vast majority of their time (between 18 and 80) making much less than $150,000.--Scott Sumner

The nation is facing some really difficult problems, particularly on the fiscal front. There's no longer any way to put it off; pretty soon, the government is going to have to start making some very hard choices about taxes and spending. No matter what it chooses, that probably means lower economic growth, angry voters, and some real loss on the part of whoever's ox is gored. Listening to earnings calls means listening to quite a few CEOs in analogous situations. Often, the situations they are in are largely not of their making, or indeed anyone's fault at all. But they are expected to fix it. And too often, they can't, at least not yet. Think of Rick Wagoner, and the other managers at GM who knew they were on the road to disaster, but couldn't exit without the consent of stakeholders who weren't quite ready to believe it was necessary. Faced with that situation, what does the CEO say? He puts the best face on things.--Megan McArdle

The president’s friend and adviser Valerie Jarrett sometimes pointed out that not only had he never managed an operation, he’d never really had a nine-to-five job in his life. Obama didn’t know what he didn’t know, yet his self-confidence was so stratospheric that once, in the context of thinking about Emanuel’s replacement, he remarked in all seriousness, “You know, I’d make a good chief of staff.”--John Heilemann

Many people watching tonight can probably remember a time when finding a good job meant showing up at a nearby factory or a business downtown. You didn’t always need a degree, and your competition was pretty much limited to your neighbors. If you worked hard, chances are you’d have a job for life, with a decent paycheck and good benefits and the occasional promotion. Maybe you’d even have the pride of seeing your kids work at the same company. That world has changed. And for many, the change has been painful. I’ve seen it in the shuttered windows of once booming factories, and the vacant storefronts on once busy Main Streets. I’ve heard it in the frustrations of Americans who’ve seen their paychecks dwindle or their jobs disappear -– proud men and women who feel like the rules have been changed in the middle of the game. They’re right. The rules have changed. In a single generation, revolutions in technology have transformed the way we live, work and do business. Steel mills that once needed 1,000 workers can now do the same work with 100. Today, just about any company can set up shop, hire workers, and sell their products wherever there’s an Internet connection. Meanwhile, nations like China and India realized that with some changes of their own, they could compete in this new world. And so they started educating their children earlier and longer, with greater emphasis on math and science. They’re investing in research and new technologies. Just recently, China became the home to the world’s largest private solar research facility, and the world’s fastest computer. So, yes, the world has changed. The competition for jobs is real. But this shouldn’t discourage us. It should challenge us.--President Obama

Our nation is approaching a tipping point. We are at a moment, where if government's growth is left unchecked and unchallenged, America's best century will be considered our past century. This is a future in which we will transform our social safety net into a hammock, which lulls able-bodied people into lives of complacency and dependency. Depending on bureaucracy to foster innovation, competitiveness, and wise consumer choices has never worked - and it won't work now. We need to chart a new course. Speaking candidly, as one citizen to another: We still have time... but not much time. If we continue down our current path, we know what our future will be. Just take a look at what's happening to Greece, Ireland, the United Kingdom and other nations in Europe. They didn't act soon enough; and now their governments have been forced to impose painful austerity measures: large benefit cuts to seniors and huge tax increases on everybody. Their day of reckoning has arrived. Ours is around the corner. That is why we must act now. Some people will back away from this challenge. But I see this challenge as an opportunity to rebuild what Lincoln called the "central ideas" of the Republic. We believe a renewed commitment to limited government will unshackle our economy and create millions of new jobs and opportunities for all people, of every background, to succeed and prosper. Under this approach, the spirit of initiative - not political clout - determines who succeeds. Millions of families have fallen on hard times not because of our ideals of free enterprise - but because our leaders failed to live up to those ideals; because of poor decisions made in Washington and Wall Street that caused a financial crisis, squandered our savings, broke our trust, and crippled our economy. Today, a similar kind of irresponsibility threatens not only our livelihoods but our way of life. We need to reclaim our American system of limited government, low taxes, reasonable regulations, and sound money, which has blessed us with unprecedented prosperity. And it has done more to help the poor than any other economic system ever designed. That's the real secret to job creation - not borrowing and spending more money in Washington.--Representative Paul Ryan

The combination of implicit debt forgiveness and the wide spread between the lending and deposit rate has been a very large transfer of wealth from household depositors to banks and borrowers. This transfer is, effectively, a large hidden tax on household income, and it is this transfer that cleaned up the last banking mess. It is not at all surprising, then, that over the past decade growth in China’s gross domestic product, powered by very cheap lending rates, has substantially exceeded the growth in household income, which was held back by this large hidden tax. It is also not at all surprising that household consumption has declined over the decade as a share of gross national product from a very low 45 percent at the beginning of the decade to an astonishingly low 36 percent last year. This is how China’s last banking crisis was resolved. It did not result in a collapse in the banking system, but it nonetheless came with a heavy cost. The banking crisis in China resulted in a collapse (and there is no other word for it) in household consumption as a share of the economy.--Michael Pettis

Brooks' main point is that preventing kids from sleep-overs and other childhood games deprived them of essential, nay, dominant skills in managing status rivalries, negotiating group dynamics, understanding social norms, navigating the distinction between self and group. These are the really important skills learned in childhood. Clearly, these are essential skills, but the problem with prioritizing this kind of competence is you can't really monitor them, and what you can't monitor, you can't instruct, drill, or correct, other than simple things like teaching your kids to say please and thank you, and to see 'getting mad' as basically an internal failure. So, while letting your kid play with other kids is essential, I don't see it as a more important parenting strategy because kids will naturally work these skills without prompting. Math, reading, and writing, are not natural activities, and there's a brief window in childhood where one can put these concepts into their brain efficiently.--Eric Falkenstein

In a season where N.F.L. owners have steadily threatened to lock out the players next year unless they secure more profits in the next collective bargaining agreement, it’s poetic justice to see the Green Bay Packers, the team without an owner, make the Super Bowl. Actually, it’s not quite accurate to say the Packers are without an owner. They have a hundred and twelve thousand of them. The Packers are owned by the fans, making them the only publicly owned, not-for-profit, major professional team in the United States.--Dave Zirin

Some anti-globalization protestors view Klaus Schwab, the seventy-two-year-old German economist who set up Davos forty years ago and still runs it, as the devil incarnate. I prefer to view him as a savvy nightclub promoter or restaurateur, a German version of Ian Schrager and Steve Rubell, or Keith and Brian McNally. Back in the nineteen-eighties, when I first moved to New York, people used to queue around the block to get into the McNallys’ latest hotspot, such as Odeon, Canal Bar, or 150 Wooster. But unless you knew the private reservation line or worked on Page Six you had little chance of securing a table. Davos works on the same principle. The actual sessions are largely devoid of meaning, as evidenced by the recent themes of the conference. 2011: “Shared Norms for the New Reality.” 2010: “Improve the State of the World: Rethink, Redesign, Rebuild.” 2008: “The Power of Collaborative Innovation.” I defy anybody to find any meaning in this corporate-speak gobbledygook. The point of Davos is not to learn or think or do deals, but simply to be there—and to be seen to be there. If the shareholders are picking up the tab, that’s all the better.--John Cassidy

In four studies, we show that participants with creative personalities who scored high on a test measuring divergent thinking tended to cheat more (Study 1); that dispositional creativity is a better predictor of unethical behavior than intelligence (Study 2); and that participants who were primed to think creatively were more likely to behave dishonestly because of their creativity motivation (Study 3) and greater ability to justify their dishonest behavior (Study 4). Finally, a field study constructively replicates these effects and demonstrates that individuals who work in more creative positions are also more morally flexible (Study 5). The results provide evidence for an association between creativity and dishonesty, thus highlighting a dark side of creativity.--Harvard Business School Working Paper 11-064

A former AOL exec explains that this is AOL's "dirty little secret" – "that 75% of the people who subscribe to AOL's dial-up service don't need it."--Nicholas Carlson

The ultimate woman should have Taylor Swift's hair, Anne Hathaway's eyes and January Jones' cheeks, say two hot-shot Beverly Hills plastic surgeons. "Hollywood's Hottest Looks," compiled by Dr. Richard Fleming and Dr. Toby Mayer, also found that their patients desired Natalie Portman's nose, Scarlett Johansson's lips, Halle Berry's jaw line, Amy Adams' skin and Penelope Cruz's body. The Tinseltown nip-and-tuck specialists surveyed more than 1,200 of their current and former patients to craft this snapshot of favorite celebrity body parts. On the male side, the most admired looks included Jude Law's nose, Hugh Jackman's eyes, Jon Hamm's jaw line, Ashton Kutcher's lips, George Clooney's hair, Leonardo DiCaprio's cheeks, Neil Patrick Harris' skin and Mark Wahlberg's body.--David Li

Embodying smiles not only lets people recognize smiles, Dr. [Paula] Niedenthal argues. It also lets them recognize false smiles. When they unconsciously mimic a false smile, they don’t experience the same brain activity as an authentic one. The mismatch lets them know something’s wrong.--Carl Zimmer