Friday, May 28, 2010

Quotes of the day

It's hard enough for me to explain my libertarianism (government is good--including the Fed vs. the old gold standard--but we need a lot less of it) to others in New York City. My infant is a little too codependent on mommy to show any libertarian leanings; but I have a lot of hope for my elementary school student and preschooler: both of them favor my Red Sox over the Yankees!--Cav

A couple years ago, I participated in a panel discussion on libertarianism in Mike Sandel's Justice class, along with my friend and colleague Jeff Miron. Jeff is a true libertarian, and he defended that position with gusto. By comparison to Jeff, I seemed lacking in conviction. I described myself as a "libertarian at the margin." By that, I meant that given our starting point today, I believe more reliance on individual liberty and less on governmental solutions is usually a step in the right direction, but I often recoil at more radical libertarian positions. David Brooks's column yesterday offers a good explanation of skepticism about big radical ideas, such as pure libertarianism. It made me feel better about my watered-down variety.--Greg Mankiw

You have to listen. A lot of guys can talk.--Art Linkletter

Was Jesus a wandering sage? Maybe so. A failed revolutionary? Sure, why not. A lunatic who fancied himself divine? Perhaps. An apocalyptic prophet? There’s an app for that … But this isn’t history: It’s “choose your own Jesus,” and it’s become an enormous waste of time. Again, there’s nothing wrong with saying that the supernaturalism of the Christian canon makes it an unreliable guide to who Jesus really was. But if we’re honest with ourselves, then we need to acknowledge what this means: Not the beginning of a fruitful quest for the Jesus of history, but the end of it.--Ross Douthat

Greed-based utility is an assumption lying at the heart of the Capital Asset Pricing Model (CAPM) that has been taught to every finance MBA since the 1960s (including this one), and is the basis for how trillions of dollars of investments are managed in the real world. If utility isn’t greed-based, then CAPM simply can’t explain reality. ... if our actions are based not on absolute wealth but relative wealth—an envy-based economy—the market would need no risk premium. ... Risky investments seem less dangerous when everybody buys them. And in a benchmarking environment, underperforming your peers is itself the riskiest bet. ... Maybe greed isn’t good in an unmitigated sense. But compared to envy, on occasion, greed might actually be a little better. --Timothy Taylor

The sad truth is that under the Ethicist's code of conduct, we have more deaths and more foreclosures than necessary, all in the name of fairness.--Greg Mankiw

The story of Sweden over the last 50 years has been one of a steady loss of exceptionalism. In some ways the outside world has grown more "Swedish" -- we all wear seatbelts, drink less, and believe in gender equality. At the same time, Sweden has grown much more worldly -- it drinks more, works and earns less, and struggles with the assimilation of immigrants. The Swedes themselves no longer believe in a Swedish model, or, when they do, it's very different from the heavily regulated "people's home" of myth.--Andrew Brown

The renminbi, China’s currency, is in global opinion — save in China — held unduly low to keep China’s export machine revved up. When Treasury Secretary Timothy F. Geithner arrived here on Sunday, an opening argument to his counterparts was that Chinese rules were forcing American companies to surrender their technological jewels just for a ticket to compete in the Chinese market. Some of these tactics come straight from the playbook of Japan and other developing nations that have sought to raise their export-driven economies to a higher level. China is different in two respects that may seem contradictory. On one hand, major industries like oil, telecommunications, banking and aviation are deemed strategic and are under tight state control. Of the 22 Chinese corporations listed on the Fortune Global 500, 21 are controlled by China’s central government or state-run banks. Just one, Shanghai Automobile, is run by a local government. None are privately owned.--Michael Wines

At first glance you might think; “Aha Sumner, there’s your smoking gun. [Paul Krugman] does oppose the neoliberal agenda of privatization, deregulation and free trade, or at the very least thinks it failed. Just as you said. You’ve finally nailed him.” Not so fast. He didn’t say these policies were tried and failed, he said they were recommended by American officials, and he also said Latin America had not done well. But he never actually said the policies were tried and failed. Again, you might think I am being absurdly pedantic here. But I am quite serious. Indeed I think it is quite possible that Krugman actually favors neoliberalism–as many of his fans insist who write in the comment section of my blog. As with the President Fox example, my interpretation also has the virtue of being true. In most of Latin American neoliberal policies are been tried only fitfully. Only one country in Latin America has enthusiastically embraced neoliberalism; Chile. And Chile also happens to be the only economic success story in South America. So the facts of the matter actually fit my interpretation, strange as it may seem. ... So is [Krugman] brilliant? Yes. But social intelligence? Let’s just say it’s “on the charts.”--Scott Sumner

Progressives and conservatives alike call the United States a "free-market economy": both sides have an interest in perpetuating this delusion. The idea is ridiculous - as ridiculous as calling Europe's economies "socialist". True, the blend of government and private enterprise is a bit different between the US and the European average, but the models (insofar as it makes sense to talk of a European model) are neighbors not polar opposites. All this was true, obviously, long before 2009. Obama, I agree, does want to narrow the gap a bit more - but it just was not that wide to begin with.--Clive Crook

The average state experiences a 40 to 50 percent increase in earmark spending if its senator becomes chair of one of the top-three committees. In the House, the average is around 20 percent. For broader measures of spending, such as discretionary state-level federal transfers, the increase from being represented by a powerful senator is around 10 percent.--Joshua Coval

I can tell a story about crowding out, where the federal money either does something that the private sector might have done anyway, or hires away resources (particularly skilled labor) from private firms. If the government is monopolizing the local supply of cranes and crane operators in order to build a new sewage treatment plant, your construction project may not get built. And because government funds are for discrete projects, and future funds are uncertain--your chairman may get unelected, or their party may lose power--it's probably hard to get firms or workers to relocate to your area in order to pick up the slack. I can even tell a slightly more exotic story where there's what economists call a "resource curse" to federal funds. Countries that have large deposits of natural resources are not, as you would expect, richer and happier as a result; rather the reverse. It turns out that when you have a fat supply of practically free money, the elites spend all their time thinking about how to divert that money into their pockets, and none of their time thinking about how to build good political and economic institutions. And because the government can support itself without tax revenues, it is not made accountable to the citizenry it is betraying. Norway is the great exception to this rule--but Norway had very strong institutions before it had fossil fuels.--Megan McArdle

After controlling for challenger strength, the presence of major scandals or controversies, and the national political climate, the conservatism of the incumbent's voting record continues to have a strong negative influence on incumbent electoral performance. For every additional one point increase in conservatism, Republican incumbents lost an additional three percentage points in support relative to their party's presidential candidate.--Alan Abramowitz

... as the length of education and training for a scientists gets longer, the value of a scientific career drops sharply. [Also], teamwork has been getting more important. For example, on the issue of teamwork, Jones looks at all science, engineering, and social science journal articles published from 1995 to 2005, and shows that team-written papers have far more impact than solo papers.--Mike Mandel

San Francisco and New York are far and away the leaders in human capital density with 7,031 and 6,357 college degree holders per square mile, respectively.--Richard Florida

Similarly seeking to illustrate how important an issue is to the next generation, yesterday President Obama introduced one of his daughters into the oil mess debate. He told a news conference that when he was shaving yesterday morning, his 11 year old daughter, Malia, knocked on the bathroom door and peeked her head in and asked: "did you plug the hole yet, daddy?' It didn't work for Jimmy Carter.--Tom Shine

A Wall Street Journal investigation provides the most complete account so far of the fateful decisions that preceded the blast. BP made choices over the course of the project that rendered this well more vulnerable to the blowout, which unleashed a spew of crude oil that engineers are struggling to stanch. BP, for instance, cut short a procedure involving drilling fluid that is designed to detect gas in the well and remove it before it becomes a problem, according to documents belonging to BP and to the drilling rig's owner and operator, Transocean Ltd. BP also skipped a quality test of the cement around the pipe—another buffer against gas—despite what BP now says were signs of problems with the cement job and despite a warning from cement contractor Halliburton Co. Once gas was rising, the design and procedures BP had chosen for the well likely gave this perilous gas an easier path up and out, say well-control experts. There was little keeping the gas from rushing up to the surface after workers, pushing to finish the job, removed a critical safeguard, the heavy drilling fluid known as "mud." BP has admitted a possible "fundamental mistake" in concluding that it was safe to proceed with mud removal, according to a memo from two Congressmen released Tuesday night. Finally, a BP manager overseeing final well tests apparently had scant experience in deep-water drilling. He told investigators he was on the rig to "learn about deep water," according to notes of an interview with him seen by the Journal.--Ben Casselman and Russell Gold

What accidents like the [BP oil spill or the space shuttle] Challenger should teach us is that we have constructed a world in which the potential for high-tech catastrophe is embedded in the fabric of day-to-day life. At some point in the future-for the most mundane of reasons, and with the very best of intentions-a NASA spacecraft will again go down in flames. We should at least admit this to ourselves now. And if we cannot-if the possibility is too much to bear-then our only option is to start thinking about getting rid of things like space shuttles altogether.--Malcolm Gladwell

It was only about 10,000 years ago that humans in many parts of the world began raising livestock and growing food through deliberate planting. These advances provided more reliable sources of food and allowed for larger, more permanent settlements. Native Americans alone domesticated nine of the most important food crops in the world, including corn, more properly called maize (Zea mays), which now provides about 21 percent of human nutrition across the globe. But despite its abundance and importance, the biological origin of maize has been a long-running mystery. The bright yellow, mouth-watering treat we know so well does not grow in the wild anywhere on the planet, so its ancestry was not at all obvious. Recently, however, the combined detective work of botanists, geneticists and archeologists has been able to identify the wild ancestor of maize, to pinpoint where the plant originated, and to determine when early people were cultivating it and using it in their diets. ... Looking at the skinny ears of teosinte, with just a dozen kernels wrapped inside a stone-hard casing, it is hard to see how they could be the forerunners of corn cobs with their many rows of juicy, naked kernels. Indeed, teosinte was at first classified as a closer relative of rice than of maize. But George W. Beadle, while a graduate student at Cornell University in the early 1930s, found that maize and teosinte had very similar chromosomes. Moreover, he made fertile hybrids between maize and teosinte that looked like intermediates between the two plants. He even reported that he could get teosinte kernels to pop. Dr. Beadle concluded that the two plants were members of the same species, with maize being the domesticated form of teosinte. Dr. Beadle went on to make other, more fundamental discoveries in genetics for which he shared the Nobel Prize in 1958. He later became chancellor and president of the University of Chicago.--Sean Carroll

For large stocks in particular, algorithmic trading narrows spreads, reduces adverse selection, and reduces trade-related price discovery. The findings indicate that algorithmic trading improves liquidity and enhances the informativeness of quotes.--Terrence Hendershott

Machine Trading Good? At a minimum, not bad. The problem is that many people think stuff they don't understand must be bad. Of course, they still watch their plasma tv. Somehow, not understanding THAT must be okay.--Mungowitz

Any mother who wears her vintage Valentino while making muffin topping with her kids should be hauled up before the Department of Children and Family Services.--Roger Ebert

The finale of Lost pretended to be about the ultimacy and redemptive power of love, or something like that, but it exemplified instead the incoherent ruinous mess of our needy scattershot attachments, our whorish readiness to be doped by the dull, warm, indeterminate golden light. Speak not to me of love, Lost, if you know not love.--Will Wilkinson

This may not sound especially exciting, but watching Pierce is not exactly exciting. Watching Pierce play basketball is like watching a great plumber or great carpenter or great auto mechanic at work. No wasted motion. No pointless energy. No false moves. I love this sort of basketball. It’s why I love Tim Duncan too. “Adventure?” the Jedi teacher Yoda asks in The Empire Strikes Back. “Excitement? A Jedi craves not these things.” Paul Pierce craves not these things. No, he cannot dominate a game anytime he likes, a la Kobe or LeBron. He will not pull out some sort of ridiculous and superfluous move to make the SportsCenter highlights. He will have games when he scored 8 points and games when he scores 30. He plays to play. He does what needs to be done. He has learned Roy Williams’ lesson well. Just do something? Yes. Paul Pierce does.--Joe Posnanski

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