Tuesday, November 09, 2010

Quotes of the day

The German export successes are not the result of some sort of currency manipulation, but of the increased competitiveness of companies. The American growth model, on the other hand, is in a deep crisis. The United States lived on borrowed money for too long, inflating its financial sector unnecessarily and neglecting its small and mid-sized industrial companies. There are many reasons for America's problems, but they don't include German export surpluses.--German Finance Minister Wolfgang Schäuble

The ephemeral increase in homeownership was to people who never had the wherewithal or commitment to own homes, rather, the boom merely gave all sorts of people money they basically wasted. This highlights the folly of trying to fine-tune aggregate economic statistics, as homeownership is something you can have ‘too much’ of, as inconceivable as that might sound to some back in 2005. [Today we can’t have enough education.] The key to a bubble is the broad asset class trend that facilitates it. This highlights why interviews on CNBC are so clichéd and vapid. I mean, really successful people seem nice enough, usually have virtues like discipline, good humor, and above average intelligence, but once they stop talking about their childhood (who didn't have interesting challenges growing up?), their big idea is often just to go all-in on a big trend that works. A really big bet like that that pays off can't be luck, many people think, because that would be an absurd amount of risk. This just highlights the maxim about confusing a genius with a bull market. It happens all the time.--Eric Falkenstein

We know that taxes do not stay where Congress puts them. In technical terms, the economic incidence of a tax does not match the statutory incidence. Who bears the burden of a tax depends on the underlying economic fundamentals, not on who writes the check to the government. When the government taxes car companies, for instance, the burden falls not only on the company shareholders. It also falls on car buyers and car workers, and most likely on consumers and workers in other industries as well. ... The estate tax is a tax on capital. As such, one would naturally expect it to discourage capital accumulation. Now, put this together with the fact that a smaller capital stock reduces productivity and labor income throughout the economy and the implication is clear: the repeal of the estate tax would stimulate growth and raise incomes for everyone, even those who never receive a bequest. ... Whether a person reaches old age wealthy or penniless mostly depends on the percentage of his earnings he saved - not on the total amount he made in his lifetime. This means that most of the burden of the estate tax falls not on those who have been lucky throughout life but rather on those who have been frugal. In other words, when the government taxes your estate, it is, literally, taxing your patience.--Greg Mankiw

Domino’s Pizza was hurting early last year. Domestic sales had fallen, and a survey of big pizza chain customers left the company tied for the worst tasting pies. Then help arrived from an organization called Dairy Management. It teamed up with Domino’s to develop a new line of pizzas with 40 percent more cheese, and proceeded to devise and pay for a $12 million marketing campaign. Consumers devoured the cheesier pizza, and sales soared by double digits. “This partnership is clearly working,” Brandon Solano, the Domino’s vice president for brand innovation, said in a statement to The New York Times. But as healthy as this pizza has been for Domino’s, one slice contains as much as two-thirds of a day’s maximum recommended amount of saturated fat, which has been linked to heart disease and is high in calories. And Dairy Management, which has made cheese its cause, is not a private business consultant. It is a marketing creation of the United States Department of Agriculture — the same agency at the center of a federal anti-obesity drive that discourages over-consumption of some of the very foods Dairy Management is vigorously promoting. Urged on by government warnings about saturated fat, Americans have been moving toward low-fat milk for decades, leaving a surplus of whole milk and milk fat. Yet the government, through Dairy Management, is engaged in an effort to find ways to get dairy back into Americans’ diets, primarily through cheese.--Michael Moss

The Great Persuader was going to carry the country into a new age of progressive politics, creating a new consensus behind the power of a reinvigorated state. The earth would start to cool, the waters to recede, the rainbows would appear in the sky. All pundits, including yours truly, get it wrong sometimes, and normally there would be little point in dwelling on past blunders. But it this case, it is worth exhuming these vaporous and embarrassing stupidities for a few moments. Many of our nation’s intellectual leaders wonder why the rest of the country isn’t more respectful of their claims to be guided by and speak for the cool voice of celestial reason. That so many of them gushed over Barack Obama with all of the profundity of reflection and intellectual distance of tweeners at a Justin Bieber concert should help them understand why their claims of superior wisdom are sometimes met with caustic cynicism. A significant chunk of the American liberal intelligentsia completely lost its head over Barack Obama. They mistook hopes and fantasies for reality. Worse, the disease spread to at least some members of the White House team. An administration elected with a mandate to stabilize the country misread the political situation and came to the belief that the country wanted the kinds of serious and deep changes that liberals have wanted for decades. It was 1933, and President Obama was the new FDR. They did not perceive just how wrong they were; nor did they understand how the error undermined the logical case they wanted to make in favor of a bigger role for government guided by smart, well-credentialed liberal wonks. ... Another factor in the President’s political trouble comes from a failure of rhetoric and communication. Musing over the electoral setback, President Obama has spoken of a ‘failure of communication.’ It’s a strange failure for a President so enthusiastically hailed by the mainstream media as the greatest orator of the era.--Walter Russell Mead

The pursuit of sport is not something we put as much emphasis on here at Sidwell Friends - it's such a vulgar enterprise. My own father wasn't so enlightened - he loved baseball, hunting and other antiquated male pastimes, whereas I celebrate opera, gardening and appeasing my angry, Prius-driving wife. While my passivity and latent homosexuality may negatively impact my son's performance on the football field, I am confident it will prepare him well for a life of NPR, canvas totes, and garden parties featuring locavore cuisine.--Lexus Liberal

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