Wednesday, March 30, 2011

Quotes of the day

From an economist’s perspective, it’s right to focus on the core [inflation number over the headline]. Appropriately, the Fed’s goal is headline inflation, but it’s headline inflation in the future, and therefore core is the good predictor.--Vincent Reinhart

Suppose you're driving across a long stretch of desert and notice that your gas tank is nearly empty. A sign says, "Last gas for 100 miles." Unfortunately, the brand of gas is associated with an oil company that you consider to be unethical weasels. You have vowed to boycott their products. On principle, you drive past the gas station, run out of gas, and eventually die in the desert. Question: Were you principled or stupid?--Scott Adams

Of what use is money in the hand of a fool, since he has no desire to get wisdom?--Solomon

I also don’t see any reason to believe that if we raised taxes from 28% to 40% of GDP, that revenue would rise anywhere near proportionately, with no change in GDP per capita. The progressive response is that the Laffer Curve idea is far-fetched, and that higher tax rates don’t reduce GDP per capita. Instead they argue that the lower European GDP/person represents mysterious cultural differences, a preference for leisure. Even worse, this cultural trait developed only recently, as during the 1960s (when French tax rates were similar to those in America), they worked just as hard as we did. All this may be true, but progressives can’t point to any European models (except perhaps special cases like Norway and Luxembourg) that raise the sort of revenue they claim the US would raise if we boosted taxes as a share of GDP to European levels. ... Peter Lindert showed that Europeans were able to raise more tax revenue only by having more regressive tax systems than the US, i.e. tax systems that relied more heavily on consumption taxes. This is now pretty much common knowledge in the public finance area. But many American progressives keep insisting that we can get closer to the (egalitarian) European model by making the US tax system more progressive, by having the rich pay more. ... I have a different solution. Recognize that $13,000/person is enough revenue (if used wisely) to provide for a decent society. (Canada spends less.) Stop spending $15,000/person on Medicare in counties like McAllen Texas, where per capita income is only about $15,000. Decentralize everything and level the playing field by giving lump sum grants to counties based on per capita income levels in those counties. Don’t try to raise lots more revenue, try to get much better results with the revenue we already raise. Spend less on the military. Use ideas from Singapore (which provides universal health care at a very low cost to the taxpayer.) ... Progressives believe that the US can raise lots more revenue, that the US tax system is not progressive enough, and that fiscal stimulus can work. Those are all examples of the triumph of faith over reason. Blind faith in government that can only lead to bad outcomes.--Scott Sumner

In the final analysis, it has been Treasury’s broken promises that have turned TARP — which was instrumental in saving the financial system at a relatively modest cost to taxpayers — into a program commonly viewed as little more than a giveaway to Wall Street executives. It wasn’t meant to be that. Indeed, Treasury’s mismanagement of the Troubled Asset Relief Program and its disregard for TARP’s Main Street goals — whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in — may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises. This avoidable political reality might just be TARP’s most lasting, and unfortunate, legacy.--Neil Barofsky, outgoing special inspector general for TARP

I really like that part [Alan Greenspan says] about “notably rare exceptions.” It reminds me of a defense lawyer arguing that while his client may have committed a few murders on one particular day, his conduct on all the other days of his life had been exemplary.--Floyd Norris

Research is sort of doing your homework ahead of time. Getting the [revenue] number [before official release] is more like cheating on a test ... I knew the answer ahead of time.--Adam Smith, testifying in the Raj Rajaratnam trial

Singapore is important to any study of government just now, both in the West and in Asia. That is partly because it does some things very well, in much the same way that some Scandinavian countries excel in certain fields. But it is also because there is an emerging theory about a superior Asian model of government, put forward by both despairing Western businesspeople and hubristic Asian chroniclers. Simplified somewhat, it comes in four parts. First, Singapore is good at government (which is largely true). Second, the secret of its success lies in an Asian mixture of authoritarian values and state-directed capitalism (largely myth). Third, China is trying to copy Singapore (certainly true). Last, China’s government is already more efficient than the decadent West (mostly rubbish, see next section). ... It is sometimes argued that an American administration operates strategically for only around six months, at the beginning of its second year—after it has got its staff confirmed by the Senate and before the mid-terms campaign begins. ... For all the talk about Asian values, Singapore is a pretty Western place. Its model, such as it is, combines elements of Victorian self-reliance and American management theory. The West could take in a lot of both without sacrificing any liberty. Why not sack poor teachers or pay good civil servants more? And do Western welfare states have to be quite so buffet-like? By the same token, Singapore’s government could surely relax its grip somewhat without sacrificing efficiency. That might help it find a little more of the entrepreneurial vim it craves.--The Economist

... we have some small degree of success and we add that to our identity. That success becomes our identity. So now, when we try something new, we’re not just afraid to fail, we’re afraid to lose our identity. That’s what’s terrifying. That’s why people are afraid to take risks or try new things. It’s not just failure at stake, we think we’re going to lose our identity and that’s overwhelming.--Daniel

I was considered a right-wing capitalist at Harvard Law School for favoring the hard left side of the Democratic Party.--Jim Cramer, on CNBC

Only a hacker who had trouble with women could have created Facebook.--Cav

If A is a success in life, then A equals x plus y plus z. Work is x; y is play; and z is keeping your mouth shut.--Albert Einstein

Basically, there are just paths. Or maybe there’s just woods, and you have to cut your way through the woods. One of my favorite lines from one of my favorite movies is from Wonderboys, when Katie Holmes character reminds Professor Tripp that “writers have to make decisions.” What she meant was a book only starts taking shape when a writer decides to go somewhere and then takes action in that direction. Kinda like life, I think. Just decide and move. Just write the thing. Just move.--Don Miller
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