Quotes of the day

I have no doubt some people can predict infrequent events, ... Yet it's pretty hard to validate objectively, and in my experienced is best done via observing all the little good investments someone has made for 10 years, something that is impossible to do in scale. The idea that if you can predict infrequent events you can do very well for yourself is true enough, but that's a lot less useful to know than if rare events are unappreciated in general, which turns out not be be true.--Eric Falkenstein

It would have been hard to know the wisdom of Friedrich Hayek or Milton Friedman or Matt Ridley or Deirdre McCloskey in August of 1914, before the experiments in large government were well begun.  But anyone who after the 20^th century still thinks that thoroughgoing socialism, nationalism, imperialism, mobilization, central planning, regulation, zoning, price controls, tax policy, labor unions, business cartels, government spending, intrusive policing, adventurism in foreign policy, faith in entangling religion and politics, or most of the other thoroughgoing 19^th-century proposals for governmental action are still neat, harmless ideas for improving our lives is not paying attention.--Deidre McCloskey

If the essence of tragedy is essentially good people being caught up in a vicious dilemma that make it impossible for them clearly to distinguish the virtuous from the disastrous choice, Greek voters are, today, experiencing a very real, very personal tragedy.--Yanis Varoufakis

On September 27, 1986, the US Senate voted by a lopsided margin to overhaul the tax code to the benefit of the extremely rich. The act, the second of the two major Reagan tax cuts, was written by Democratic Senator Bill Bradley of New Jersey and Democratic Representative Richard Gephardt of Missouri, and was signed into law by President Ronald Reagan on October 22, 1986. It was the first major alteration in US tax law in 40 years.
...
The law cut the income tax rate on the wealthiest Americans from 50 to 28 percent, while simultaneously increasing the tax rate on the poorest citizens from 11 percent to 15 percent. Tax brackets were reduced from 15 to four, and the top corporate tax rate was slashed from 46 percent to 34 percent. The law included a bevy of other measures punishing the poor and low-income workers, including abolishing interest deductions for debt on consumer loans such as credit cards and tightly restricting deductions for Individual Retirement Accounts (IRA).
...
The 74-23 Senate vote saw 33 Democrats vote in favor of the bill, many of them leading liberals, including senators Kerry and Kennedy of Massachusetts, Gore of Tennessee, Leahy of Vermont, Biden of Delaware, Proxmire of Wisconsin, Glenn of Ohio, Moynihan of New York, Lautenberg of New Jersey, and Harkin of Iowa. Only 12 Democrats, together with 11 Republicans voted against the bill, which was championed by the Reagan administration.--unattributed

Younger blog readers who rely heavily on the NYT for  information might be under the impression that the 1980s tax cuts for the rich were enacted due to the evil Republicans.  Actually, almost every single developed country cut its top MTR during the 1980s and 1990s.  And liberal Democrats in America also supported the cuts.  The past is another country—you had to be there to understand.--Scott Sumner

Photo link here.

Iceland did almost everything right

They stiffed the bank creditors to avoid aggravating the moral hazard problem, just like the textbooks recommend.  In the eurozone the bank creditors are being bailed out.  They relied of fiscal policy to address S/I and debt issues, and let monetary policy address AD, just as the New Keynesians were recommending in the 1990s.  In the eurozone they combined tight money with reckless deficits.  And now Iceland is growing fast and the eurozone is stagnating.

I do realize there are tricky issues involved when analyzing the GDP of a country with 310,000 people.  One big aluminum smelter could probably have an impact on GDP.  I’d focus on the fact that their GDP is up about 12% from 7 years earlier.  That’s not great, but they clearly aren’t in a depression.  I seem to recall that Britain’s GDP is flat over the past 7 years, and some of the weaker eurozone members have done even worse.

I realize that people will say that Iceland is special, it doesn’t count,  Just as Australia doesn’t count and Sweden doesn’t count and Poland doesn’t count and Israel doesn’t count and Argentina doesn’t count, and all those countries in the 1930s that just happened to start recovering after they left the gold standard don’t count.  But still, it’s one more data point.

That's Scott Sumner.

Imagine that the only sport America cares about

... is basketball. Football and baseball don't matter; the whole country is completely invested in the NBA. Now imagine that there's a World Cup for basketball that is 10 million times more important than the Olympics or the world championships. Now imagine that Durant, LeBron, Melo, Dwight, and Kobe went to this World Cup, turned out not to be as good as we all thought, played mediocre college-level ball, and finished eighth while releasing a flurry of sex tapes with reality-TV stars. Now imagine that this happened for 16 straight years. You're getting warm; you're still not hot. 

That's Brian Phillips, helping Americans understand how the English feel about their soccer team.

Quotes of the day

... there has to be a predetermined balance between artists and engineers.--Chris Ryan

Music does sometimes kick a door open inside the mind, but it also sometimes insulates the house, secures it from all wayward feelings and thoughts. And when a song does seem to kick a door open, we frequently listen to it over and over again until it loses its power and all of its passion is spent.--Mark Edmundson

JPMorgan lost $2 billion, one hundredth of the losses so far on Fannie Mae and Freddie Mac

JPMorgan rolled the dice, betting that the U.S. economy would improve — essentially a bet on Obama's economic agenda. That bet went south.  ...

But the losses at JPMorgan were borne not by the American taxpayer, but by JPMorgan. The losses also appear to have been offset by gains so that in the last quarter JPMorgan still turned a profit.

This is the way the system should work. Those who take the risk, take the loss (or gain). It is a far better alignment of incentives than allowing Washington to gamble trillions, leaving someone else holding the bag.--Mark A. Calabra

Quote of the day

People really don’t like to hear success explained away as luck—especially successful people. As they age, and succeed, people feel their success was somehow inevitable. They don’t want to acknowledge the role played by accident in their lives. There is a reason for this: the world does not want to acknowledge it either.--Michael Lewis

Video of the day: Larry Bird gets held by Moses Malone and Charles Barkley while Julius Erving punches him

around the 1:15 mark, via Bill Simmons.

To achieve a real recovery

..., government policy should focus on individual incentives to work, produce and invest. Central here are tax rates and regulations, including especially clarity about future policies. In a successful policy package, the government would get its fiscal house in order and make meaningful long-term reforms to entitlement programs and the tax structure.

The Obama administration seems to think that individual incentives and serious fiscal reforms are of no great importance and policy should emphasize Keynesian-style demand stimulus (public works, prolonged benefits) along with bits of industrial policy (loans and grants to "green" energy companies). This approach has failed for three years.

That's Robert Barro.

Quotes of the day

The world is not organised along rational lines.--Matthew Engel

Regardless of your thesis about what a victory or defeat for Greek leftists would do in the financial markets, having better information about the electoral outcome is sure to be valuable. Someone might just make “the best trade ever” in the next two weeks—all thanks to Greece’s restriction on freedom of the press.--John Carney

It is easy to sympathize with the hostility to the many banks that behaved (in retrospect) so foolishly in ways that damaged everyone else as they took on excessive risk in their quests for greater profits. One can understand also the general reaction against capitalism and “market failures” since commercial and investment banks were in the past a leading example of capitalism at work. Yet anyone concerned about the welfare of the poor and middle classes should resist the temptation to attack competitive private enterprise and capitalism- monopoly or crony capitalism should be deplored. This is only partly because “government failure” also contributed in an important way to the financial crisis as regulators did not rein in the asset explosion of banks and households. Indeed, regulators often encouraged lending to lower income families to buy houses with low down payments, large mortgages and ballooning interest payments.  The main reason to be concerned about the attacks on competitive capitalism is that it has delivered during the past 150 years so much to all strata’s of society, including the poor.--Gary Becker

Every technology has its own logic. Facebook “wants” us to log in a lot and to interact with each other – hence the ability to “like” posts, to comment, to “like” comments, and the constant stream of notifications about all of this. This is sinister, but less insidious because it is so brazen. Facebook the technology has metaphorical wants that reflect the entirely non-metaphorical strategy of Facebook the company.--Tim Harford

Reading is fun, not mental

... the lowest reading-level result on any writing sample that I tested came from people I am certain are the dumbest writers on the internet: the folks who left comments on Yahoo! Sports articles. They wrote at a 3.3 grade level.--Ben Blatt

The cliche is that the ninth inning has the three toughest outs in baseball

And when you look at the numbers you see it: The cliche is absolutely, undeniably, absurdly wrong. They are the easiest three outs.

I saw how Bush and Obama were alike

here.  I did not see Nixon/Obama, until now.

Martin Feldstein

a man who changed the world (via Tim Kane).

What should the CEO-to-worker pay ratio be?

I'm glad it's down from 400-to-1 to 200-to-1, but it still seems high.  Maybe it can get down to 100.  I'm fine with Steve Jobs trading at 400, but it seems much for a middling CEO to be taking down $20 million or more.

Source here, via Greg Mankiw.

Joe not only gets sports or life

He gets Diaper Genies:

I’ve long been unreasonably annoyed by movies and sitcoms that show clueless fathers who have no idea how to change diapers … maybe this is true somewhere, like for fathers in the 1940s or whatever, but I don’t know anyone who ever had any problem with it. Take off diaper … wipe butt … put on diaper. Really not complicated. The tough part, as any parent knows, is emptying the “Diaper Genie” which is supposed to suppress the smell of these diapers but actually has a patented smell-amplifying system that makes the short string-of-diapers smell like a skunk eating limburger cheese in a landfill.

Quotes of the day

Two years ago we invested $250,000 in Instagram. Thanks to the spectacular vision and effort of Kevin Systrom and the Instagram team, the investment will be worth $78,000,000 when the Faceboook acquisition closes.--Ben Horowitz

... sometimes patience is the way to go.--Mike Reiss

We are what we repeatedly do. Excellence, then, is not an act, but a habit.--Aristotle

Not ready for higher ed

I just spent a beautiful spring weekend walk with my 11-year old arguing over whether Wall-E is a better film than High School Musical, or Up than The Avengers.

Oh, and apparently, all opinions are equal.  (I agreed and affirmed that all people are equal).

Someone please remind me why is 'education' so important?  I'd rather spend all this accumulated college savings on something more worthwhile, maybe helping the world instead of letting it sink under its own elitist, status-seeking weight.

Image link here.

Quote of the day

Be polite, be professional and have a plan to kill everyone you meet.--unnamed Marines

Getting things straight

Native American:

African Americans:

Any questions?

Quotes of the day

I rather think that the division of labor created philosophy. That is, when you choose a profession or some important avocation it supposedly is a better means to an end, but what end? Is it merely to be rich? I doubt that is really so prevalent because to have such a nakedly self-interested goal is not necessarily in the best interest of neighbors, and they would not trust or like such people.
...
we have a lot of existential angst as we try to figure out 'why' we want to build a bridge or have five kids, and it's usually some greater good, not merely one's power and pleasure.  Real satisfaction in life often comes from advancing such higher purposes, imagined though they may be.
...
So, Adam Smith was correct to note the division of labor as a crucial step in human development, but he actually underclubbed it: it didn't just give rise to the industrial revolution, but also to the strange fact that humans think about thinking, meaning, and a sense of self.  The division of labor didn't create consciousness, but it did make us ask why we do what we do, and so lead to a higher level of consciousness.--Eric Falkenstein

American universities have been criticized because many of them engage in high-level competitive sports that involve heavy recruitment of student athletes. Since students and alumni like rooting for their school’s teams, these are perfectly appropriate activities for universities, aside from a couple of major problems. One is the exemption that the Supreme Court has granted to the obvious cartel-like behavior of the NCAA that uses its power to severely restrict compensation to student athletes, especially those in football and basketball. Universities should be forced to pay competitive prices for these athletes, not the much lower cartelized prices that the NCAA enforces.
...
Having taught for almost all my adult life at American universities I am well aware of their many limitations. These include faculty who cater to students by easy grading and telling jokes, faculty who engage in vicious battles over trivial issues, faculty and administrators who are afraid to take stands against political correctness and the latest education fads, alumni and other donors who are cultivated for large gifts that really do not help a university’s mission, and so forth. Nevertheless, on the whole, American universities do an excellent job of providing up to date and diversified education for students of varying abilities and interests. Many of their “failures” are the result of bad incentives provided by federal and state support and regulation of university programs.--Gary Becker

There is no doubt that Ben Bernanke’s views on zero-bound policy have changed over time.
...
Once, he called targets for long-term interest rates a “policy I personally prefer”; later, he “agreed 100%” with opposition to that policy. Bernanke once advocated a 3-4% inflation target for Japan; as Fed chair, he says “that’s not a direction that we’re interested in pursuing.” Bernanke has also abandoned his early proposals for currency depreciation and for money-financed tax cuts. More generally, he no longer argues that a central bank can easily overcome the zero-bound problem “if the will to do so exists.”
...
At one level, the primary reason for these changes is also clear: Bernanke was influenced by the work of the Fed staff, as summarized in Vincent Reinhart’s June 2003 briefing to the FOMC. By 2004, Bernanke was coauthoring papers with Reinhart that advocated the same zero-bound policies as the briefing. These policies were communication about the federal funds rate, quantitative easing, and shifts in the Fed’s holdings of short-and long-term securities--exactly the policies that the Bernanke Fed has followed since 2009. In sum, Bernanke’s views about the zero bound changed greatly between 2000 and 2004, but they have been consistent since then.
...
The puzzle about this history is why Bernanke so quickly and completely dropped his previous views and adopted those of the Fed staff. We cannot be sure, but social psychology suggests two possible factors: groupthink and Bernanke’s shy personality. These two factors are complementary. An atmosphere of groupthink pervaded the FOMC in 2003, discouraging anyone from questioning the views of the Fed staff. As a shy person, Bernanke may have been especially reluctant to suggest unpopular policies.
...
If this interpretation of history is correct, it has implications for the design of monetary-policy committees. A committee is likely to explore a greater range of options if the causes of groupthink are avoided, as Sibert suggests. Ironically, as Fed Chair, Ben Bernanke has moved the FOMC in that direction. Bernanke does not dominate policy discussions as Alan Greenspan did. He has reduced the emphasis on consensus, tolerating three dissents from FOMC votes. He has also reduced the Committee’s insularity, for example, with news conferences in which he explains policy decisions.
...
The history described here also has implications for the choice of people to serve on policy committees. It suggests that decisions are influenced not only by policymakers’ expertise and opinions, but also by their personalities. Outspoken “bulldogs” may be more likely than shy people to contribute new ideas to policy debates.--Laurence Ball

Speaking of ludicrous

... here are the players the Patriots picked before Brady in 2000, when they had to forfeit their first-round pick to the Jets for having signed Bill Belichick:

OL Adrian Klemm (round two), RB J.R. Redmond (round three), OT Greg Robinson-Randall (round four), TE Dave Stachelski and DL Jeff Marriott (round five), and CB Antwan Harris (round six.)

It wasn't until after 198 players had been drafted that the Patriots finally decided to take Brady.

Feel free to return now to reading all those articles about which players are the top prospects and which teams should take them.

That's Jim Donaldson.

Quote of the day

He not busy being born is busy dying.--Bob Dylan

James Hamilton canes Joseph Kennedy

If Representative Kennedy knows a way to go out and produce another barrel of oil somewhere in the world for $11 a barrel, he would do a world of good if he would actually go out and do it himself, as opposed to simply asserting confidently in the pages of the New York Times that it can be done. People with far more modest fortunes than Kennedy inherited are out there using their resources to try to bring more of the physical product out of the ground.

And many, many more would be attempting the feat if it were remotely possible to produce a new barrel of oil for anywhere close to $11.

If you want to prove me wrong, Mr. Kennedy, then don't talk about how easy it is to produce more oil-- just go do it.

Read the whole thing here.  Here's a nice photo of Rep. Kennedy with the CEO of Citgo:

Karl Smith takes a switch to Mohamed El-Erian

and a two-by-four to the Fed:

Central Banks don't have direct control of wars but they do control recessions. Thus its natural to think that the goal of central banking is to produce growth, prosperity and financial health.

However, on a basic level its not. If the economy is running at maximum employment and the prices are moving in a steady and predictable fashion then the central bank has done its job. What happens to growth is ultimately not the Fed's concern.

Consequently, when folks like myself point out the ongoing abject policy failure of the Federal Reserve and the absolute nightmare that is the ECB, our complaint is not about growth, it is about employment.

Read the whole thing here.

I'm wondering if Smith feels that a flattening of the curve towards short term rates is what the Fed should be shooting for. It's not all in their control.

Quote of the day

... if faith teaches us anything, it should be that our nostalgia is for an ideal we can only find after accepting, and passing through, the brokenness of a fallen world. Any other approach, in art or in life, is a form of denial.--Gregory Wolfe

Quote and video of the day

You're a grimy little pimp. As soon as I raise my hands, I warn you, it shall be too late to run.--Lane Pryce, to Pete Campbell

Eric Falkenstein is so right and so funny

[Jonathan] Haidt ends this book where he notes he read a book by Jerry Muller titled Conservatism, and the author noted that conservatism was not based on mere orthodoxy, but rather, the idea that encouraging respect, self-reliance, and loyalty were actually a reasoned method to help communities prosper, and their individuals to obtain more satisfactory lives. This reasoned defense of conservative values floored him, because he saw it was, at the least, intellectually defensible and could be argued in good faith. That he came to this conclusion in 2008 highlights the bubble the poor guy was in.--Eric Falkenstein

Talk show transcript excerpt of the day

Larry King: What, Professor, puzzles you the most? What do you think about the most?
Stephen Hawking: Women
Larry King: Welcome aboard.

Source here.

Take out your sociological goggles and look around

In our society, smart, hard-working, conformist kids go to old-fashioned brick-and-mortar colleges. Their elders expect them to do so. Their peers expect them to do so. They feel like losers in their own eyes if they don't go.

The normativity of conventional education isn't a passing phase. College attendance is a central tenet of our society's secular religion. A student who scoffs at all these expectations probably has a serious problem with authority. Would-be employers treat him accordingly.

That's Bryan Caplan. And this is a doozy:

Middle class jobs will no longer require college only after middle class kids can no longer afford college.

What fails more than markets? How about regulations ...

John Carney reports:

Friedman and Kraus argue that regulation—especially regulation of bank capital under Basel II and similar rules in the U.S.—led to a homogenization of balance sheet assets across the banking system. Risk weighting loaded the dice in favor of buying the assets regulators viewed as safe—especially mortgage backed securities—and as a result the banking system as a whole was over-exposed to mortgages and lacked diversity.
...
This last point is especially crucial and not well understood. One of the advantages of a free market system is that different businesses can adopt different business strategies. In fact, competition encourages diversity as executives attempt to gain advantage over rivals in the face of an uncertain future. Disagreement among capitalists strengthens the system because it reduces the cost of errors. Some firms win, others lose, and the damage of bad bets is contained and balanced by the benefits of good bets. Regulations that impose one view on business create systemic risk, Friedman and Kraus argue.

Gary Becker, on controlling campaign finance ... as well as other manifestations of special interests, such as lobbying and volunteering

Sharp restrictions on campaign contributions would make more sense if monetary contributions were the only major force that shapes who wins elections and the policies goverment officials support.Yet that is very far from the situation that prevails in American politics, and in the politics of most other democratic nations. One reason for this is that interest groups can often avoid the intent of restrictions on campaign contributions through other ways to influence political outcomes. For example, many industries hire lobbyists and spend other monies to try to persuade legislators, regulators, and others in important political positions to subsidize their industries, or to reduce the taxes on their industries, or to gain other advantages.

It is not only business that is active in these ways since, for example, unions of government employees use political clout to obtain generous pensions and health plans for their members. The tight budgets that are currently being imposed on many national and regional governments-such as the Greek government and state and local governments of the United States- have induced government unions to fight hard to keep their pension and health benefits, and to limit any reductions in these benefits. Similarly, unions of public school teachers have spent considerable money and time to defeat efforts to introduce school vouchers and many other changes in public school systems.

Candidates who galvanize enthusiasm with their oratory and political positions induce many supporters to spend considerable time working to elect these candidates and to promote policies the candidates favor. Time spent by supporters is often as effective and “corrupting” as money spent influencing political outcomes and policies. This is probably especially true in the age of the Internet and other methods of mass communication. Supporters of a particular candidate may spend a lot of time on political issues through blogs, Facebook and other social networks, and through other forms of mass communication. Radio, television, and Internet stars, such as Rush Limbaugh, Bill Moyers, and Matt Drudge, not only affect the views of followers, but also how active they are in supporting conservative or liberal policies.

These reflections lead me to question whether it is wise to control one form of interest group politics; namely, direct and indirect monetary contributions to political campaigns, in an environment where other types of interest group politics are important and are only weakly controlled.

Read the whole thing here.

Quotes of the day

... with this trade the Jets are getting a relatively fair-priced backup quarterback, with playoff experience, who they can work with and hopefully develop at his own pace. While Tebow will not be confused with Tom Brady anytime soon, I don't think he's as far off as many of his doubters say, though he will only get there — if he ever does — through his effort and the passage of time. For now, the Jets simply hope and expect him to be a serviceable and not overly expensive backup for a few seasons and that is it; Tebow is a clear upgrade over the aged Mark Brunell, who was jettisoned after last season, and Greg McElroy, a seventh-round draft choice out of Alabama, as well as free agent signee Drew Stanton. If Peyton Manning teaches us anything, it is that every team must have a plan if their starting quarterback goes down. But Tebow also gives the Jets an option: There remains a chance that Tebow, over time, fills in some of the holes in his game and develops into what some still think he can be: great, as a quarterback.
...
The most important thing to remember about football strategy is that there is no such thing as Platonic ideal football; there is no right or wrong way to do things, and the game is governed by a few simple things: the size and speed of the players, the geometry of their arrangement on a football field, and, above all else, pragmatism — what is good is simply what works. And what works is what is simple. --Chris Brown

[Jonathan Haidt's] moral foundations fall under six broad headings: care, fairness, liberty, loyalty, authority and sanctity.  What Mr. Haidt has found is that all Americans—left, right and center—are strongly (if not equally) moved by the first three moral foundations. Both liberals and conservatives "care" when they see harm, but liberals care more: They are more disturbed by suffering and violence. Conservatives are more concerned with fairness, defined as getting what you deserve. And both sides champion liberty, though they have very different notions of the likeliest oppressors.  ...  Even as our rival moralities "bind" us together, he concludes, we should be aware that they "blind" us too.--Gary Rosen

Photo link here.

Economics of the Hunger Games

here, via Greg Mankiw.

A non-fictional excerpt:

If you plot per capita income in the Americas today, you see a clear pattern with the United States and Canada ahead, the southern cone around Chile and Argentina in second place, and the middle portion much poorer. It turns out that if you turn the clock back about 500 years, the pattern was reversed. The places that are rich today were poor then, while those that are poor today were generally rich in the past.

I predict I will be in the theaters with my 11-year-old in the next couple of weeks.

Photo link here.

Quotes of the day

Your hands should not, together with the face,
be drawn with the brush
You reveal them in your work
And hide them in the painting.--François Malherbe

It is difficult to say what will happen for Google, but a good dose of self-doubt that they are somehow above it all is a good place to start. Oh yes, and Facebook, if you are listening, all of the above applies to you too.--Joshua Gans

In China, the year is traditionally divided into periods based on the moon’s orbit around the earth and the sun’s path across the sky. This lunisolar calendar is laden with myths and celebrated by rituals that allowed Chinese to mark time and make sense of their world. So too the modern political calendar in China. It takes shape around the mysterious workings of the Communist Party, which rotates its top leaders every decade at a Party Congress, a comet-like event that awes onlookers as a portent of change and renewal. The next congress is set to take place in the fall of 2012—the 18th occurrence in the party’s 91-year history—and is already being associated with unusual phenomena. The most spectacular was last week’s eclipse of Bo Xilai.--Ian Johnson

Quote of the day

Yeah, [I like Obama:] I’m living in London and I’m socialist. What do you expect?--Elle MacPherson, former supermodel, and current policy expert

Every large public school system has many excellent and good teachers. Unfortunately, every public school system also has really bad teachers who cannot be fired. Some miss many classes, others do not know the materials they teach, while others do not really try to teach, and prefer to joke around or mainly give their opinions. They should be fired, but they cannot in part because of the tenure system. Having the power to get rid of the bad teachers would improve everyone’s teaching, partly by raising the incentives and morale of other teachers.
...
Teachers’ unions are the major force opposed to abandoning the tenure system, as they are the major opposition to pretty much every major school reform that has ever been suggested- including charter schools, school vouchers, and evaluations of teacher performance. They are an important hindrance to improving the quality of teaching and the performance of students.
...
I oppose teachers unions and the tenure system for teachers (including university teachers) partly because they are especially detrimental to the education received by students from low income and more disadvantaged backgrounds.--Gary Becker, some dude that is much less famous than supermodels

Quotes of the day

... over the past two generations China has been emerging not from aMarxist, but from a feudal state. Indeed, if one were to take Marx'sview, China could only arrive at communism through capitalism, andonly arrive at capitalism through feudalism.--Rick Brookstaber

A new report from the International Institute for Strategic Studies (IISS) claims that defense spending in Asia this year is set to overtake that of Europe for the first time in centuries.--Walter Russell Mead

Providing “for the common defense” is one of the primary reasons our Founding Fathers ordained and established the Constitution. Moreover, they clearly wanted the defense imperative to be unmistakable, so they put it in the Constitution’s very first sentence, the Preamble. Later, in Article I, Section 8, they gave Congress the power “to lay and collect taxes” and “to borrow money on the credit of the United States” in order to fulfill the imperatives.
...
In short, the Constitution first tells us what to do (defend the country), and then tells us how to pay for it (tax, and borrow on credit). Could the founders have made it any clearer? Maybe, just maybe, if they’d said it something like this: “The president and the Congress must defend this country; to do that properly, Congress must maintain the country’s good credit, and must tax and borrow as necessary.”
...
Notably, the Constitution does not say, “Defend this country, unless it would require Congress to borrow money.” No, our founders wrote it to say precisely the opposite—a point that should be obvious to everyone, not just Constitutional originalists.--Steve Conover

The CSS Virginia, a.k.a. the Merrimack, makes a splash

A couple of splashes, actually, 150 years ago today.

She meets the USS Monitor, tomorrow.

Quotes of the day

If it had not been for Jefferson Davis recognizing Lee's value and putting him in important positions of leadership, the Confederacy probably would have ended several years sooner. --Joshua Horn

Is it me, or does Robert E. Lee look a lot like another southerner, this one of our time, Ben Bernanke?--Cav

The 'Greatest Generation' built things like Hoover dam and created a country of unprecedented prosperity and universal education; then, as if to prove that failure is endogenous, raised the greatest generation of naive, self-absorbed whiners in the History of Man.--Eric Falkenstein

Since life is a dream, we argue (with plausible but erroneous logic) that politics must be an encounter of dreams, in which we hope to impose our own.--Michael Oakeshott

Chart of the day: Registered Dems fading

Source here.

Maya Rudolph, an awesome Beyonce

Quotes of the day

If you can't sell 'em, rent 'em.--agent Paul Larson of Coldwell Banker Burnet, via Mark Perry

... our own regulatory ingenuity ...somehow or other, always manages to backfire.--Richard Epstein

Bernanke's change of mind reflects his shy personality plus groupthink.--Bryan Caplan

Many mediocre minds are impressed by famous colleagues, graduate degrees, Harvard, or equations. Those people aren't worth impressing. While such signals are correlated with good ideas, they are neither necessary nor sufficient for a good idea. When someone emphasizes these signals, however, that should lower their credibility among thoughtful people because it suggests bad faith, a preference towards pretentious irrelevancies. I've seen this a lot, hiding behind equations. It often works because one does not want to sit down, understand what all the variables mean and how they are measured, etc. I just don't feel impressed at all by such equations because my Bayesian prior is they merely have a bad idea in equation form, so I don't give them the benefit of the doubt even when I'm lazy and have not enough time to evaluate their math.--Eric Falkenstein

We’ve seen from Republicans in–particularly Republicans in the House, but with Republicans generally, that they don’t want to be part of any plan that raises taxes at all. The president’s budget has $1 of revenue for every $2 1/2 of spending cuts.--Jack Lew, White House Chief of Staff and former Budget Director

Contrary to Mr. Lew’s assertion, the President is proposing at least $1.20 of tax increases for every dollar of proposed spending cuts. The President’s budget locks in historically high spending levels and relies more on tax increases than spending cuts for the limited deficit reduction it proposes.--Keith Hennessey

Photo link here.

What economists REALLY do

Source here.

New found freedom for a New Yorker

is flying through Texas, down I-10, at 74 mph, which is under the speed limit.

Don Miller laps Tyler Cowen

Almost an impossibility, the gentle genius that Tyler is.

My inboxes and conference calls are noting a rise in Linsanity

Here is one link I received this week.

Too bad I am a Celtics fan.

Just got fooled again: unemployment actually RISING

Tyler Durden figured it out:

as chart 2 below shows, people are not retiring as the popular propaganda goes: in fact labor participation in those aged 55 and over has been soaring as more and more old people have to work overtime, forget retiring), and you get 159.4 million: that is what the real labor force should be. The BLS reported one? 154.4 million: a tiny 5 million difference. Then add these people who the BLS is purposefully ignoring yet who most certainly are in dire need of labor and/or a job to the 12.758 million reported unemployed by the BLS and you get 17.776 million in real unemployed workers. What does this mean? That using just the BLS denominator in calculating the unemployed rate of 154.4 million, the real unemployment rate actually rose in January to 11.5%. Compare that with the BLS reported decline from 8.5% to 8.3%. It also means that the spread between the reported and implied unemployment rate just soared to a fresh 30 year high of 3.2%. And that is how with a calculator and just one minute of math, one strips away countless hours of BLS propaganda.

Statistics are like a bikini. What they present is suggestive, but what they conceal is vital.--Aaron Levenstein

Quote of the day

Kraft and Mara were widely recognized as the two owners most instrumental in carving out a labor peace. Some would say that six months later it is poetic justice their teams are the last two playing.--Greg Garber

Quote of the day

Bill [Parcells] did a real good job of hiring good people and collectively bringing them together. We kind of had our own way of doing things. That was a different time; the game was different than what it is now. I think Bill brought together people, I’d say what we all have in common out of that group, is we all like football. You don’t really feel like you’re working. You’re doing something you want to do. You don’t think about the hours or you don’t think about how much more I have to do, you think about doing something because you enjoy doing it. I would say that about all those people. I think that staff worked pretty well together. There was a good amount of respect.--Bill Belichick, on the Giants Superbowl XXV coaching staff

The officials got it right.--John Brenkus

Quote of the day

Blogging frequency has been reduced here, primarily due to job change. I need to get back into a higher consumption rate of reading, but in the meantime, I've given up my hundreds of RSS feeds for a book. Here is an excerpt:

Theoretically, if everyone is completely on the same page and working in lockstep toward the same goals with no sense of confusion, then I suppose a lack of debate might be a good sign.

Quotes of the day

I believe the Federal government has grown out of control, threatening the Rights, Liberties, and Property of the People.  This is being done at the Executive, Legislative, and Judicial level. This is in direct opposition to the Constitution and the Founding Fathers vision for the Federal government.  Because I believe this, today I exercised my right as a Free Citizen, and did not visit the White House. This was not about politics or party, as in my opinion both parties are responsible for the situation we are in as a country. This was about a choice I had to make as an INDIVIDUAL.--Tim Thomas

I already knew what a great athlete Thomas is. I just found out how deeply thoughtful and patriotic a citizen he is, too.--Cav

Photo link here.

South Carolina GOP primary

Both Intrade and Rasmussen have Newt Gingrich to win the SC primary.

I am still waiting for the prediction market and the pollster to differ.

Quotes of the day

It's always been that hot team that had to play it's way into the playoffs ... For me, I'm going with the hot hand, the hot team:  the New York Giants.  Eli's playing great.  Defensively, they've got that great pass rush going again.--Mark Schlereth

If you can beat a supremely motivated Patriots team in New England -- especially this particular Patriots team, which has been lights-out offensively for two solid months and wants nothing more than to end this whole "Baltimore owns you" thing -- without a decent pass rush, a shrewd offensive coordinator, fast linebackers, or a genuinely reliable quarterback that your team totally believes in, then Tebow bless you.--Bill Simmons

Photo links here and here.

Quotes of the day

I feel like I’m playing whack-a-mole.--Scott Sumner

Scott reminds me of Mace Windu.  And now that I think about it, certain Keynesians remind me of droids (ones who obviously fail the Turing Test).--Cav

The SOPA blackout: Wikipedia, Reddit, Mozilla, Google, and many others protest proposed law.32
i  Two new laws proposed by US legislators, the Stop Online Piracy Act and Protect IP Act, have been attracting a very negative reaction from the web community over the past couple of months, which is today culminating in a day of protests. Aiming to curtail copyright infringement on the web by giving the US government unprecedented new powers, both SOPA and PIPA have been rejected as overreaching and unhelpful laws that cannot coexist with a free and open internet.--Vlad Savov

Image links here and here.

Interview of the day: Robert Kraft on CNBC

Football, politics, business strategy, economy, faith, basically most of what this blog is about:

Same as the old boss; same as it evahhh was

Governor Romney signing his Massachusetts healthcare regime into the world, with Ted Kennedy looking on approvingly.


Photo source, via Peter Suderman.

Quotes of the day

In an establishment like Ditka’s, the namesake is Jehovah: always looked for, seldom found.--Rich Cohen

How did Tom Brady go from Joe Montana to Dave Krieg?--Jeremy Lundblad

You know, each team plays their own defensive scheme against them, whether it’s Buffalo or Kansas City or Pittsburgh or whoever it is. We have our scheme. We’ll take some things from each game that we’ve seen and try to apply it to what we do. We’re not them, they’re not us, we have different players - same thing with Kansas City, Buffalo and all that. There’s certainly a lot to be learned but at the same time, we have our own matchups and we’re different from everybody else.--Bill Belichick

Translation: We're not going to play it the way the Steelers did, but we wouldn't have done that anyway ... Oh, and the Steelers were dumb. ... In basketball parlance, the Steelers packed the paint against someone whose only chance was to hit 3-pointers, which Tebow did.--Tony Massarotti

Mark Twain was as brilliant as Ricky Gervais. People try to give labels and change what it is. But comedy has always been the same.--Eddie Brill

Image link here.

I may yet delete this gross, but captivating in-a-cheesy-80s-oeuvre music slideshow

If I get 3 comments to remove it, it shall be done.

Still needs work, there's a "St. Elmo" artifact, and an "Eagles" reference that each should be reworked.

One of the reasons why I'm a libertarian

comes from my experience with financial regulators. They are totally out of their depth, not understanding where risk really lies because the essential information simply can't be grasped by flying in and looking and talking to people for 2 weeks. I have never worked in a financial firm where I felt I understood what was really going on for at least a couple years. They fill out reports conceived by someone ten years ago that would have caught last decade's big error, and come back next year.--Eric Falkenstein

Me, too.--Cav

Quotes of the day

Despite its remarkable contribution, The General Theory is an obscure book. I'm not sure that even Keynes himself knew completely what he really meant.--Greg Mankiw

... note that Keynesians think $97B was created via this spending and taxes this year, which is why they love government spending regardless of what it is spent upon. But if they issued $100B in bonds to create this 'new demand', where would that $100B have have gone otherwise? I don't think this makes sense in general equilibrium; money is never 'idle' unless it is under your mattress. I guess if you could caricature the two views: one thinks supply creates its own demand, the other that demand creates its own supply.--Eric Falkenstein

The issue is not that Krugman changed his mind (I’ve done that plenty, Alex too). The issue is that Krugman a) regularly demonizes his opponents, including those who hold Krugman’s old positions, and b) doesn’t work very hard to produce the strongest possible case against his arguments. Krugman’s response shows that he has changed his mind on debt, and explained why, but Heritage has not. It’s an “I am better than they are” response. That is beside the point, which is about elevating the views of others not oneself. The need to show all the time that one is better or more right than the others is itself harmful to depth, and responding with “but I really am better than them” is just falling into the trap again.
...
How about writing a NYRB essay that lays out the short-run negative output gradient to austerity, presents why austerity is considered a serious option nonetheless, discusses catch-up and bounce back effects and their relevant time horizons, analyzes what kinds of policies are actually possible in a 17 (27) nation collective, engages with the best public choice arguments (including Buchanan and Wagner) on a serious level, ponders the merits and demerits of worst case thinking, and ruminates on the nature of leadership in a way which shows some tussling with Thucydides and Churchill? Surely that is within Krugman’s capabilities and if it still comes out Keynesian or left-wing, great, at least someone will have seen those arguments through. Such an essay would stand a far greater chance of influencing me, or other serious readers, or for that matter President Obama. We should hold Krugman to the very high standard of actually expecting that he produce such work. Not many others are capable of it.
...
There is a kind of hallelujah chorus for Krugman on some of the left-wing economics blogs. The funny thing is, it’s hurting Krugman most of all.--Tyler Cowen

Really, what do you do with a guy who insults fellow economists, while admitting in writing that he doesn't even read the opeds and blog posts that are the cause for his insults (let alone their actual academic work, where ideas can be documented and defended)? He often doesn't even link or name the articles he's criticizing so his readers can decide for themselves!--John Cochrane

Sure, the top 10 [macroeconomists] make a good living, but no one else does, as companies and municipalities don't need macroeconomists any more than they need sociologists.--Eric Falkenstein

[Rex Ryan] kind of looks like Mario Batali.--Jason Gay, channeling Eli Manning

The vitriol toward [Josh] McDaniels has always surprised me. ... OK, he lost. Lots of coaches lose and get fired. But the overriding sentiment is that McDaniels destroyed the franchise, setting it back for years. On Sunday, the quarterback, record-setting receiver, third receiver and two starting offensive linemen came from the 2010 draft that McDaniels oversaw. The quarterback he picked and was ridiculed for is 8-4 and saved your season and just knocked the defending conference champ out of the playoffs and has your team in the final eight of the NFL. ... your disdain for McDaniels is irrational. He needed a strong GM, never got one, blew a bunch of draft picks and lost most of his games. That we know. Can you tell me if, say, Raheem Morris or Eric Mangini or Todd Haley, other coaches who got jobs in 2009, got the Denver job you'd be better off now? I can guarantee you none of them would have taken Tim Tebow in the first round.--Peter King

He’s a big dude, a strong guy. I know we talked about it, but I didn’t realize. He’s just a physical guy, his stature, just a big guy. I’ve seen some big guys over the years, but he’s probably one of the biggest and toughest, probably one of the strongest, that I’ve faced.--Vince Wilfork, 4 time All-Pro and Pro Bowl (325 lb) defensive lineman

[Nick] Saban walked off, escorted by three police officers. A couple of miles away, on Bourbon Street, the party raged, an army of drunken fans from Muscle Shoals and Dotham and Birmingham no doubt crooning along to ill-advised Skynyrd covers. Meanwhile, the coach did a neat bunny hop onto the back of a golf cart, hair slicked back in a Gatorade pompadour, and his wife sat next to him, and off he went, no doubt thinking fastidious thoughts. ... Saban adhered to his own process, measured and cautious; he lost when it didn't matter, and won when it did, and he did so with five field goals and one garbage-time touchdown. You may not like him, but you have to respect that, in a sport driven by misplaced emotion, the man always knows when to carry an umbrella. He will be remembered as the greatest coach of this era because he won a number of big games in the sort of methodical fashion that makes them very easy to forget. And maybe, when you think about it, the only way to end this season was with a frustrating anticlimax.--Michael Weinreb

On January 1, 1991, the federal excise tax on beer doubled, and the tax rates on wine and liquor increased as well. These changes are larger than the typical state-level changes that have been used to study the effect of price on alcohol abuse and its consequences. ... A conservative estimate is that the federal tax reduced injury deaths by 4.7%, or almost 7,000, in 1991.--Philip J. Cook, Christine Piette Durrance

Photo links here, here, here and here.

Happy Birthday, Fischer Black

A typical quote of his:

In the end, a theory is accepted not because it is confirmed by conventional empirical tests, but because researchers persuade one another that the theory is correct and relevant.

I find this relevant to faith (which is also required where confirmation by conventional empirical tests are unavailable). One could also say:

In the end, a theology is accepted not because it is confirmed by conventional empirical tests, but because theologians persuade one another that the theory is correct and relevant.

(NOTE: His actual birthday is tomorrow, but I may not get to the blog then).

How can the same paper that complains about

this:

publish this?

Anyone? Anyone? Bueller?

Via Glenn Reynolds.

Well that explains a lot

Megan McArdle does some clear thinking:

So far, none of the people who have urged me to recognize Krugman's superior analytic abilities on the grounds that he called the housing bubble, have changed their minds and agreed with me when I informed them that I "called" it even earlier than their sage.  Nor have they switched their allegiance to The Economist, which has been quite sharp about Krugman in its time.

I get the feeling that Krugman himself rather encourages this touching faith in his unusual forecasting abilities, and more generally, the notion that the only reason he is such a flaming jerk to economists he disagrees with is that they really are, every one of them, too stupid to count to twenty with their shoes on.  His latest response to Marginal Revolution is a case in point:

I plead innocent. I only treat people as mendacious idiots if they are mendacious idiots.

Seriously: I have some big disagreements with Ken Rogoff, but if you use the little search box up there on the upper right and enter "Rogoff" I think you'll find that I have always treated him with respect. On the other hand, enter "Heritage" and you'll find me pretty scornful -- but with very good reason! And I always document what I'm saying.

This is true, as far as it goes: in my recollection, he always has been pretty respectful to Ken Rogoff.

But allow me to suggest--gently, gently!--that this might not be quite the whole story.  For those of Krugman's readers who are not familiar with Ken Rogoff's oeuvre beyond what they have read of it on Paul Krugman's blog, it's worth noting that Ken Rogoff has not, in the past, been shy about shredding Nobel Prizewinners who made the mistake of going all Defcon 1 in Professor Rogoff's vicinity.  And that it's generally agreed that the last time this happened, he got by far the better of the argument.

Paul Krugman is a brilliant man with a very fine memory.  Though this angle probably eludes most of his readers, I doubt it's eluded him.

Quotes of the day

Economics blogs are ... “dim sum for the mind.”--Alex Tabarrok

We are mistaking high resolution and portability as an advancement of culture.--Rick Brookstaber

... we notice the monetary shocks that make us poorer much more than we notice the real shocks that make us richer.--Scott Sumner

Our economic system’s collapse may not seem as exciting as melting ice caps, but people really aren’t going to like it — at least, according to computer models.--Frank J. Fleming

... redistributionist government ... is inherently regressive: It tends to distribute power and money to the strong, including itself.--George Will

The table is set for the Patriots to be in the Super Bowl. A Bronco team comes to town that you already handled Dec. 18, on their home turf. So the chances of getting by Denver are good. I ask you this: Which QB scares you -- Joe Flacco or T.J. Yates? I say neither. Not only is it there for the Patriots to win this week, but if they don't make the Super Bowl, I'd be very disappointed.--Tedy Bruschi

New Hampshire GOP primary

Both Intrade and Rasmussen have predicted a Romney victory.

Hoping for a tighter race soon.

Tim Tebow to Demarius Thomas made for an exciting and shortest ever playoff overtime

in NFL history.  I'm happy for them, Coach Fox, GM John Elway and the rest of the team.

Trent Dilfer made a great point a few minutes ago.  He asked, "Who drafted these guys (meaning Thomas and Tebow)?"

Well, the answer is Josh McDaniels, who will be waiting for them on the opposite sidelines next Saturday night, as he is back with the New England Patriots.

Interesting times, indeed.

Photo links here and here.

UPDATE:  Had to add this cover:

UPDATE: Gets better, Tebow is quoted as saying:

I guess [Tom Brady]’s a prophet, I don’t know.

UPDATE: Jon Acuff weighs in with:

Tebow threw for 316 yards. Hellooooo John 3:16 comparisons.

UPDATE: Tony Massarotti says:

Say this for the irresistible Mr. Tebow: the Steelers dared him to beat them deep - and beat them he did. Prior to yesterday, the mighty Pittsburgh defense had surrendered two pass plays all season of at least 40 yards. Yesterday, the Steelers allowed four, culminating in an 80-yard strike from Tebow to Demaryius Thomas that ended Pittsburgh's season on the first play of overtime.

Swamped

with work for the next week.

I hope to get back into a better rhythm soon.

Quotes of the day: New England Patriots edition

... defensive passing yards allowed don’t tell the whole story, particularly when a team’s offense is as prolific as New England’s. Consider that the four teams that have allowed the most passing yards this season are the Packers, Patriots, New York Giants and New Orleans Saints, four division champions with a combined 50-14 record.--John Parolin

Statistics are like a bikini. What they present is suggestive, but what they conceal is vital.--Aaron Levenstein

After losing to the Giants to fall to 5-3, the Patriots ran off a string of eight straight wins to get to 13-3 and grab the AFC’s first seed heading into this week’s opening round bye. Following that Giants loss, Bill Belichick cut ties with Albert Haynesworth, one of his notable off-season pickups. So yes, the Pats haven’t lost since Big Al got the gate. Might there be a correlation between the winning streak and Albert’s departure? ... For what it’s worth, Tampa, who picked up Haynesworth, went 0-for-Albert. They didn’t win a single game since picking him up off waivers.--Rap Sheet

Some statistics present something vital.--Cav

Image links here and here:

Intrade vs. Rasmussen

Four years ago, I tracked the head-to-head predictiveness of the Intrade futures market as compared to the Zogby pollster.

This election year, I will compare Intrade to Rasmussen.  Both have Romney taking Iowa tomorrow.