Thursday, September 16, 2010

Quotes of the day

One key characteristic of civilization is property rights, where people have clearly delimited areas of responsibility.--Eric Falkenstein

In the end, the goal of the rent control laws is thwarted (the low rents are enjoyed by well-paid tenured faculty rather than the needy), the income tax laws are thwarted (a sizable part of compensation is untaxed), and all this is done by a nonprofit institution (the university) whose ostensible purpose is to serve the public interest.--Greg Mankiw

America's financial crisis, deep recession and anemic recovery have largely been driven by economic policies that have deviated from proven fact-based principles. To return to prosperity we must get back to these principles. The most fundamental starting point is that people respond to incentives and disincentives. Tax rates are a great example because the data are so clear and the results so powerful. A wealth of evidence shows that high tax rates reduce work effort, retard investment and lower productivity growth. Raise taxes, and living standards stagnate.--GEORGE P. SHULTZ, MICHAEL J. BOSKIN, JOHN F. COGAN, ALLAN MELTZER AND JOHN B. TAYLOR

The president defended his proposal by saying that, for high-income taxpayers, “the tax rates would just go back to where they were under President Clinton.” The president reminded his listeners that the economy grew at a rapid clip during the Clinton years, adding tens of millions of new jobs. The analogy with the Clinton years is a little questionable. During those years, a Democratic president and Republican Congress worked together to restrain federal spending and balance the budget, a far cry from current policy. In any case, as I explain in the September issue of the American Enterprise Institute’s Tax Policy Outlook, the claim that the president’s plan would only take the top tax rates back to Clinton levels isn’t quite right. Or, rather, it’s right for only the first two years of the president’s plan. Thanks to a little-known provision in the new healthcare law, the president’s plan will push the top tax rates for most types of income above Clinton levels in 2013 and thereafter.--Alan Viard

... almost no one questioned the socialists' idealism. By 1961, however, the descendents of the radical wing of the Social Democratic Party had built the Berlin Wall -- and were shooting anyone who tried to flee their "Workers' Paradise."...Who could have foreseen such a mythic transformation?--Bryan Caplan

What a fool does in the end, the wise do in the beginning.--Spanish proverb

Wharton’s Professor Jeremy Siegel, the author of Stocks for the Long Run, used historical data (a) to demonstrate that there had never been a long period when stocks didn’t outperform cash, bonds and inflation, and thus (b) to argue that most people of average risk tolerance should have roughly 100% of their capital in the stock market. But Siegel, like many laymen, failed to pursue the most critical line of inquiry. The right question to ask in the late 1990s wasn’t, “What has been the normal performance of stocks?” but rather “What has been the normal performance of stocks if purchased when the average p/e ratio is 33?”--Howard Marks

[Randy] Moss re-signed with the Patriots on March 3rd. [Brett] Favre retired from the Packers on March 4th. Coincidence?--Andrew Brandt

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