Quotes of the day

The high-frequency traders are like the beautiful women. If their biggest “threat” is to stay home, we are not worse off for their existence. If we fear their flaky departures enough, we may prefer to trade in other markets or at other time horizons, namely very long.--Tyler Cowen

Said a Harvard professor of econ,
"That Google's got something unique on:
They have cash by the score,
Yet still borrow more;
This is something I've puzzled all week on."

Said an expert in cross-border taxes,
"I should hope the professor relaxes;
As Google keeps cash
In an overseas stash,
'Til taxation here wanes and not waxes."--Dr. Goose

The three largest U.S. metropolitan areas, New York, Los Angeles, and Chicago, contain 13 percent of the population and generate 18 percent of GDP. This (crudely) suggests that densification could increase GDP considerably.--Reihan Salam

If normal growth theory is right, it takes a lot of work just to keep a rich economy rich. Just replacing the old, depreciating physical capital is an enormous task that only a highly productive economy can accomplish. The more capital you have, the more capital you have to replace every year. If you fall behind in replacing the fast-decaying capital, you quickly become less productive. The fact that the US has been able to keep its relative ranking is evidence that it has stayed highly productive over the decades. Solow’s growth model captures this fact—and it’s why a one-time massive gift of capital can’t make a poor country rich. It’s a gift that keeps on wearing out.--Garrett Jones

I just pre-ordered Ezra F. Vogel, Deng Xiaoping and the Transformation of  China, which looks to be an important book.--Tyler Cowen

Our exchange rate is just a price — the price of the dollar in terms of other currencies. It is not controlled by anyone. And a high price for the dollar, which is what we mean by a strong dollar, is not always desirable. Some countries, like China, essentially fix the price of their currency. But since the early 1970s, the United States has let the dollar’s value move in response to changes in the supply and demand of dollars in the foreign exchange market. The Treasury no more determines the price of the dollar than the Department of Energy determines the price of gasoline. Both departments have a small reserve that they can use to combat market instability, but neither has the resources or the mandate to hold the relevant price away from its market equilibrium value for very long.  In practice, all that “the exchange rate is the purview of the Treasury” means is that no official other the Treasury secretary is supposed to talk about it (and even he isn’t supposed to say very much). That strikes me as a shame. Perhaps if government officials could talk about the exchange rate forthrightly, there would be more understanding of the issues and more rational policy discussions.--Christina Romer

In addition to his wide-ranging influence within the academic and policy spheres of economics, Harvard Economics Professor Martin S. Feldstein ’61 has perhaps had his greatest impact in the classroom. While sitting in a meeting about Social Security reform in the West Wing of the White House in 1999, Harvard Kennedy School Professor Jeffrey B. Liebman—once a Ph.D. student of Feldstein’s—realized he shared something with the others at the meeting. “[I noticed] that three of the four economists in the room—Larry Summers, Doug Elmendorf, and myself—had been Marty’s students,” he said. “The fourth economist had studied at MIT under someone who himself had been a student of Marty’s.” Feldstein, a professor at Harvard since 1967, has taught every level of economics, from introductory to upper-level graduate courses—training some of the world’s foremost economists in the process and spurring the Wall Street Journal to term him perhaps the “most influential economist of his generation.”--Benjamin M. Scuderi

Washington relies too much on off-the-cuff comments and tweets to drive policy debates. Serious policy addresses like these three provide depth that is essential to the national dialogue. I also wish we had more frequent serious policy speeches on the House and Senate floors. Today I will begin to respond to the Geithner speech, which is the most effective presentation of the Administration’s fiscal policy argument I have seen. It’s a long speech with a lot that deserves analysis and response. Since the partisan policy battle is already fairly heated, and since I haven’t written in a while, I’ll start today with a reach-across-the-aisle post. ... Secretary Geithner is reflecting the conclusions of the Social Security and Medicare Trustees, issued last Friday, and he is saying something different from the Washington Consensus, which focuses only on health care cost growth. In fact demographics is a bigger deficit driver over the next 10-20 years than health care. Kudos to the Secretary for emphasizing both. He also correctly identifies the two subcomponents of an aging population: more Baby Boomers becoming retirees and longer lifespans. The first of these is big but temporary (one generation), the second is gradual and permanent. ... Secretary Geithner is right that the ultimate forcing action will be when investors lose confidence in American fiscal policy and take their funds elsewhere. He is right that, if this happens, it can happen suddenly and without warning. He is right that this would be extremely painful and costly to stop. And he is right that it is unpredictable. We may not know the market-imposed deadline until it has already passed.--Keith Hennessey

So much for rational ideas in public debate.--Peter Suderman

The fact that I would want to be able to involve the police if my daughter became a streetwalker, but not if she became a Hari Krishna, tells me something important about what kind of legal regime I should support.--Ross Douthat

(A map of slave ownership by county)

You have now shown under the most adverse circumstances that the great mass of the people of Western Virginia are true and loyal to that benificent [sic] government under which we and our fathers have lived so long. ... The General Government cannot close its ears to the demand you have made for assistance. I have ordered troops to cross the Ohio river. They come as your friends and brothers, as enemies only to the armed rebels who are preying upon you. Your homes, your families, and your property are safe under our protection. All your rights shall be religiously respected, notwithstanding all that has been said by the traitors to induce you to believe that our advent among you will be signalized by interference with your slaves. ... I call upon you to fly to arms and support the general government, sever the connection that binds you to traitors, proclaim to the world that the faith and loyalty so long boasted by the Old Dominion are still preserved in Western Virginia, and that you remain true to the stars and stripes.--General George McClellan, May 26, 1861

In terms of basketball talent, I’ve been covering pro basketball for more than 40 years, and I’ve never seen a guy Rodman’s size play like he did and shut down opponents who were half a foot taller and 100 pounds heavier. When he played for the Bulls from 1996 to 1998, I remember 7-1, 335-pound Shaquille O’Neal trying to back Rodman into the paint to posterize him with a dunk. But Rodman would body up, using his leverage and pelvis to impede Shaq’s progress.--Lacy Banks

He has six of the 17 best seasons in history for offensive-rebounding percentage, and six of the 12 best for defensive-rebounding percentage. And unlike most top rebounders, one skill didn’t impede the other. Most players who are great on the defensive glass aren’t as good at corralling offensive rebounds, perhaps because they are behind their teammates in getting down the floor.--Carl Bialik

Wait, what? Dennis Rodman is a Christian? Not yet, but wait for it. This one is going to happen and when it does, we’re going to lock in a phenomenally colorful rebounder.--Jon Acuff

Photo link here.