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.

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

My more liberal friends argue, based on Keynesian principles, that we need dovish fiscal policy as well. They often argue for short-run fiscal expansion coupled with long-run fiscal contraction. The problem is that fiscal policymakers cannot bind their future selves. It is hard to make commitments to future fiscal contraction credible, especially as short-run actions expand the budget deficit.

...

My more conservative friends argue, based on monetarist principles, that a dovish monetary policy risks future inflation. In my view, however, there are bigger risks than inflation just now. They include prolonged high unemployment and meager growth.--Greg Mankiw

People talk about Main Street vs Wall Street. It should be Main Street vs the Beltway.--David Friedman

Professors are terrible at evaluation. Their method of judging student work is very simple: How close is it to what I would have done? The better you can imitate the professor, no matter what the class, the higher your grade.--Seth Roberts

In short, education becomes little but a vast public subsidy for private ambition. ... The result is a spiral of credential inflation; for as each level of education in turn gradually floods with a crowd of ambitious consumers, individuals have to keep seeking ever higher levels of credentials in order to move a step ahead of the pack. In such a system nobody wins. Consumers have to spend increasing amounts of time and money to gain additional credentials, since the swelling number of credential holders keeps lowering the value of credentials at any given level. Taxpayers find an increasing share of scarce fiscal resources going to support an educational chase with little public benefit. Employers keep raising the entry-level education requirements for particular jobs, but they still find that they have to provide extensive training before employees can carry out their work productively. At all levels, this is an enormously wasteful system.--David Labaree

Today Lipitor, the world's best selling drug and Pfizer's single most profitable product, loses patent protection and goes generic. If Lipitor (generic name atorvastatin) holds true to form for other generic transitions, Pfizer can expect to lose much of its market share and the price of atorvastatin will eventually plummet by as much as 80%. But while everyone is celebrating the "birth" of yet another cheap generic from an expensive blockbuster, it would be good for policymakers and the press to pause and reflect on where generic drugs come from.

...

The stork doesn't bring them to your local pharmacy. They are often the products of years or even decades of enormously expensive and painstaking research by innovative (and yes, profit-driven) companies.

...

What is the proper response to Lipitor going generic? Thank God for blockbuster drugs.

...

Because without those drugs we wouldn't have the tremendous health gains from statins and other widely used drugs to treat stroke and hypertension - or the cheap generics that the health care system gains once those drugs lose patent protection.--Paul Howard

A corporate CEO's pay is determined by how well he or she manages two entities: the company; and the board. If you manage your board well, you can manage your company poorly and still make a lot of money. Conversely, I thought that Leland Brendsel managed Freddie Mac pretty well, but several years after I left he got ousted by the board in an accounting "scandal" that consisted of holding down accounting earnings to more closely reflect economic earnings. His successor, Richard Syron, managed the board well, but he was a disaster for the company--and for the whole financial system.--Arnold Kling

... I see [Adam Smith's] two preeminent works amounting to a unified theory, a blueprint for a more stable and sustainable version of capitalism; a conscious capitalism. The Wealth of Nations presupposed actors in the capitalist system operating on the moral framework he laid out in the Theory of Moral Sentiments. The free market has no conscience of its own: it is made up of billions of people transacting. Though Smith asserts that each of these people are guided by their self interest, he presupposes that each of the actors in the marketplace are guided by some internal morality and an awareness of one's place within the broader context of his community — locally and globally.

...

The current version of capitalism is not the one envisioned by Smith at all. He was seeking to create a system defined by efficient allocation of resources driven by self-interest, but guided by self-restraint. This is conscious capitalism.

...

The current version of capitalism's guidance from self-interest in the corporate world is evidenced in the legal duty to maximize shareholder value, which opens directors up to a lawsuit from their shareholders if they make a decision that fails to make the highest possible profit for their shareholders. Thus, the duty to maximize shareholder value handcuffs directors that want to make decisions that seek to create benefit for people and planet as well as financial returns.
There is debate whether this duty exists, but it is such a dominant perception among directors that it is the practical reality. In order for corporations to be free from the shackles of maximizing shareholder value, the fiduciary duties must be broadened.--Kyle Westaway

Westaway's thoughts on Adam Smith really inspired me, but I was sorely disappointed when he put his hope on legislating forward. Let's look at the track record, Kyle!--Cav

Earlier this year, some very smart people in Washington even suggested that states, which cannot place themselves in bankruptcy, be allowed to do so to solve their pension and employee compensation problems. One argument repeated over and over by advocates of this option was that a bankruptcy judge would void onerous union contracts and pension obligations. In Greek theater, critics once called this the "deus ex machina" ending, where a god in a chariot descended on the stage and untangled all of the complications of a plot that the playwright couldn't resolve in any other way.

...

But there is no deus in municipal bankruptcy law; instead, parties involved must do exactly what they have failed to otherwise do, which is to sit down and negotiate their way to a settlement with the judge serving as a referee. And elected officials who somehow think that bankruptcy will give them political cover when they have to cut services and raise taxes are just kidding themselves. Taxpayers rarely blame the consequences of a municipal bankruptcy on the judge.--Steven Malanga

If you wouldn't object to China sending products to the United States for free, then on what basis would you object to currency “manipulation” that allows you to purchase undervalued Chinese imports at a huge discount and great bargain?--Mark Perry

If you're married, and you have a wife, and you really love your wife, is it good enough to only say to your wife 'I love her' the day you get married? Or should you tell her every single day when you wake up and every opportunity?--Tim Tebow

Image links here, here, here, here and here.

Quotes of the day

Paul Krugman's wife, Robin Wells, came out with a piece arguing Occupy Wall Street's issues are something economists should address. I wonder whether she thinks biologists should all teach about creationism because so many students believe in some sort of transcendental spark to life. Probably not.   ... You see the same thing with Noam Chomsky, were socialism always is to be encouraged, but any time it happens, as in the Soviet Union, the Eastern Bloc, or Cambodia, these aren't considered 'true' socialist countries (if only Trotsky won!). Their naive beliefs do not work because they aren't feasible, and so too the idea that large banks can be some big cookie jar for agreed-upon investments as opposed to being administered by professionals.--Eric Falkenstein

Moral of the story: it’s harder to tax the top earners than you think.
The second moral is that tax incidence remains a neglected topic, even among top economists.
The third moral is that too many people, including both Krugman and his critics on this point, have been neglecting the literature.--Tyler Cowen

NASA records released to resolve litigation filed by the American Tradition Institute reveal that Dr. James E. Hansen, an astronomer, received approximately $1.6 million in outside, direct cash income in the past five years for work related to — and, according to his benefactors, often expressly for — his public service as a global warming activist within NASA.--Christopher Horner

Religions are sustained in the long run by the consolations of their teachings and the charisma of their leaders. With global warming, we have a religion whose leaders are prone to spasms of anger and whose followers are beginning to twitch with boredom. Perhaps that's another way religions die.--Bret Stephens

We have waited for the wave of investigative journalism seeking the reasons for Black absenteeism — but so far we have been disappointed. Black failure to attend right wing demonstrations appears to be a mysterious matter demanding detailed investigation, but there is nothing to discuss when they shun left wing ones. Moreover, a relative absence of Black faces in right wing crowds clearly demonstrates the racism of both the protesters and their ideas, while an absence of Black faces in left wing crowds means — absolutely nothing.--Walter Russell Mead

Occupy Wall Street might seem like a movement that would resonate with black Americans. After all, unemployment among African Americans is at 15 percent, vs. almost 8 percent for whites. And between 2005 and 2009, black households lost just over half of their median net worth compared with white families, who lost 16 percent, according to the Pew Research Center.

...

A Fast Company survey last month found that African Americans, who are 12.6 percent of the U.S. population, make up only 1.6 percent of Occupy Wall Street.

...

While the black press and civil rights groups such as the NAACP and the National Urban League were critical to past protest movements, black churches were the organizational force behind the rhetoric. Church leaders mobilized famous names and unsung heroes to end segregation through meetings, marches, demonstrations, boycotts and sit-ins. But where is the church now?

...

Some argue that the black church is losing its relevance, especially among young people who have been turned off by the religious theater of celebrity preachers. Even after lenders were accused of targeting black churches and communities as fertile markets for subprime mortgages, these churches are not joining Occupy protests en masse.

...

And despite their inclusive mission statements, major civil rights organizations and leaders appear to be selling out black America for corporate money. Beginning in the 1980s, for example, the tobacco and alcohol industries meticulously cultivated relationships with leaders of black communities. Institutions such as the NAACP, the United Negro College Fund and the Congressional Black Caucus have counted those industries as major donors — at the expense of the health of the black community.--Stacey Patton

What if fat is good and carbs are bad? What if the government has been nudging people toward obesity, diabetes, and heart disease. Oops! Maybe it would be better to allow more competition in ideas and less nudging. I’ll nudge myself, thank you very much.--Russ Roberts

What you're looking for is some characteristic that is common to the people own pets, exercise regularly, have an occasional drink or two, and practice religion. What could be inferred about all of those people? I'm interested in your answers because the readers of this blog are good at pattern recognition. You'll probably come up with several plausible answers. The pattern I noticed is that each of the lifestyle choices directly lowers stress by improving a person's attitude. My hypothesis is that stress is the root cause of most health problems.--Scott Adams

In the context of daily life as we experience it, of course our joys and sorrows feel intensely meaningful. But just as it surely makes a (if you will) meaningful difference why the war itself is being waged, it surely makes a rather large difference whether our joys and sorrows take place in, say, C.S. Lewis’s Christian universe or Richard Dawkins’s godless cosmos. Saying that “we know life is meaningful because it feels meaningful” is true for the first level of context, but non-responsive for the second.--Ross Douthat

Quotes of the day

Ben, those silver bullets that you and Mike are looking for are fine and good, but our web server is five times slower. There is no silver bullet that’s going to fix that. No, we are going to have to use a lot of lead bullets.--Bill Turpin

JoePa said that with the benefit of hindsight, he wished he had done more, which begged the question: What words, what regrets, what sorrows and devastations are left to Victims 1-8, who must wonder how life might have been different if JoePa had acted in accordance with his lovingly bestowed nickname?--Jane Leavy

... I will say that I am sickened, absolutely sickened, that some of those people whose lives were fundamentally inspired and galvanized by Joe Paterno have not stepped forward to stand up for him this week, have stood back and allowed him to be painted as an inhuman monster who was only interested in his legacy, even at the cost of the most heinous crimes against children imaginable.
...
Shame on them. And why? I’ll tell you my opinion: Because they were afraid. And I understand that. A kind word for Joe Paterno in this storm is taken by many as a pro vote for a child molester. A quick, “Wait a minute, Joe Paterno is a good man. Let’s see what happened here” is translated as an attempt to minimize the horror of what Jerry Sandusky is charged with doing. It takes courage to stand behind someone you believe in when it’s this bad outside. It takes courage to stand up for a man in peril, even if he stood up for you. And that’s shameful. I have not wanted to speak because it’s not my place to speak. I’m Joe Paterno’s biographer. I’m here to write about the man. I’m not here to write a fairy tale, and I’m not here to write a hit job, and I hope to be nowhere near either extreme. I’m here to write a whole story. I’ve had people ask me: “Will you include all this in the book?” Well, OF COURSE I will — this is the tragic ending of a legendary career. I’m going to wait for evidence, and if it turns out that Joe Paterno knowingly covered this up, then I will write that with all the power and fury I have in me.--Joe Posnanski

As defenses get more complex, the answer isn't always to get more complex on offense; sometimes, it's the opposite. By making the game easier, Harbaugh has turned Smith into one of the league leaders in interceptions per pass attempt. Football is a game of intelligent compromises under constraints such as time, ability, and the raw physics of the game. And right now, at 7-1, Harbaugh's 49ers seem to have found the right mix.--Chris Brown

Can't we just call Andy Dalton "Shawshank"? It's right in front of us: Red and Andy.--Joe

Furious that I didn't think of that first.--Bill Simmons

America's monetary problem however is that they are in a liquidity trap. Six or seven years of 6 percent inflation, 2 percent interest rates and to stick the losses to the Chinese who (in their mercantilist fashion) own the debt would be a wonderful way out of America's malaise. And you would think you could induce 5 percent inflation by printing money. You would think the option is open. Indeed you would swear given how much money the Fed has printed that it would have happened. But it has not happened. Sure the Fed has printed money. And when it finished that it printed some more. Soon we will get to QE4 and yet another round of "quantitative easing" and we will still not manage to induce 5-7 percent inflation, 2 percent interest rates and to stick the losses to the Chinese.
...
If you had - without any understanding of monetary theory - been told that the Fed could increase money stock from say $800 billion to $3 trillion and not result in an inflationary torrent you would not have believed it. It would have sounded like nonsense. But you better believe it because it happened. And that requires an explanation.
...
The explanation is simple enough. The Federal Reserve has too much credibility. Each time it increases the money supply it buys some asset (say a government bond or even a foreign security) and issues cash. And people hold the cash because it is a reasonable store of value. And it is a reasonable store of value because they trust - at the end of this cycle - that the Federal Reserve will eventually take its vault full of assets, sell the assets for hard cash (which it will destroy) and will thus suck the excess liquidity out of the system.
...
If people really believed the cash was trash they would all try to get rid of it (ie buy something) but collectively they could not get rid of it (every time they buy something it would have a new owner) and the result would be inflation. Inflation would then reduce the real value of the money stock to a level where people were comfortable holding it.--John Hempton

The Greek debt crisis that has roiled world markets for weeks was resolved today when Greece agreed to marry TV reality star Kim Kardashian for 72 days. The marriage, believed to be the first ever between a sovereign nation and a television personality, is expected to net billions of dollars for Greece’s debt-strapped economy. The wedding between Ms. Kardashian and Greece will generate cash via a People magazine pictorial, an E! Entertainment reality series, and a bond offering backed by the International Monetary Fund.--Borowitz Report

Showing the resiliency that has frustrated foes throughout his storied career, Silvio Berlusconi today stepped down as Italian Prime Minister and assumed the helm of the National Restaurant Association. “This is a dream job for me,” Mr. Berlusconi told reporters as he settled into his new offices in Washington. “I love working with people and I intend to be very hands-on.”
...
Mr. Berlusconi won the coveted position after beating out several rivals, including former International Monetary Fund chief Dominique Strauss-Kahn. “I must admit I am envious of Silvio,” Mr. Strauss-Kahn said. “There isn’t a red-blooded man alive who wouldn’t want to run the National Restaurant Association.”--Borowitz Report

The companies want to retain their favorite loopholes. For the heck of it I include the wish list below this piece. It’s endless. It’s a joke. It proves that American industry’s interests are not at all aligned with the American citizens. This list will insure that the likes of GE never pay their share of US taxes.  I don’t have a problem when US industry lobbies congress for what they want. That’s the system we signed up for. But I do have a problem when the company that has the most to gain from the tax code is also advising the Administration on economic policy.   Obama has made a bunch of dumb mistakes. His getting into bed with Jeff Immelt is high on the list.--Bruce Krasting

In a competitive, low-margin, high-hustle retail business, Ed wanted to project Bloomingdales with a Wal-Mart budget. The showroom had to be beautiful, spotless—just perfect to look the part. Customer service was paramount. In order to be successful, every employee had to have this mentality. Although we didn’t call it that then, I’ve come to believe that Ed was creating a company culture. We often get wrapped up in Silicon Valley with the “new-new” way that we can forget many times we’re simply rediscovering well worn lessons that date back to the beginnings of commerce.--Scott Weiss

Quotes of the day

What I want to do now is to prevent another me. Last thing I want to happen is for someone to replace me as a cautionary tale.--Ryan Leaf, former NFL QB

Success is the result of randomness, effort, and ability.--Eric Falkenstein

Poverty isn't about money; it's a state of mind. That state of mind is low conscientiousness.--Bryan Caplan

Two powerful forces are threatening to drive America from a meritocratic equilibrium to a nonmeritocratic one. Recall that to survive in a democratic country, a meritocracy must enjoy a welcoming culture and offer large, widespread benefits to citizens. In the United States, both of these factors are being challenged: the first by a spreading belief that markets are a bad method of rewarding the meritorious; the second by a reduction of the benefits that most people derive from those markets.--Luigi Zingales

Bud Selig: Tear down this intentional walk.--Joe Posnanski

When he took office, Barack Obama promised "an unprecedented level of openness in Government." As a major part of that commitment, he pledged fidelity to the Freedom of Information Act (FOIA), which he called "the most prominent expression of a profound national commitment to ensuring an open Government." It is hard to reconcile these lofty memos with the Justice Department's proposed rule instructing federal agencies to falsely deny the existence of records sought under FOIA. But at least the Obama administration is open about its desire to mislead us.--Jacob Sullum

The President’s argument is, in effect, “We can’t wait for democracy.” The Constitution gives the power of the purse to the Congress, not the President. If the Congress doesn’t want to enact his proposals, then it shouldn’t, and that’s how the system is supposed to work. I am not surprised that the President is using the legislative flexibility he has to maximum effect. I am a bit surprised that he sees a political benefit in framing himself as an Imperial leader who can and should ignore democratic processes. This seems inconsistent with Democratic party rhetoric in recent years. Democracy is so inconvenient when your party controls the Presidency and the opposition can block your legislative agenda.--Keith Hennessey

It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp. Now, I'm not saying I'm sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn't have gotten them without that. But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it's one target, it's easy to blame them and congress certainly isn't going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for.--Mayor Bloomberg

The Olympus scandal exposes the all-too-cozy nature of Japanese business that was subject to so much praise in the 1980s. Japanese corporations are dominated by insiders, and companies are often run for the benefit of these insiders rather than shareholder interests. Because of the keiretsu and cross-holdings, shareholder pressure and oversight have traditionally been minimal. Hostile takeovers are almost nonexistent, as is shareholder activism. Though there has been increased government scrutiny of business practices, Japanese regulators have been slow to force changes. ... the fact that United States authorities rather than Japanese regulators appear to be taking the lead in investigating the Olympus transactions speaks volumes. ... Right now, the discourse is about Chinese domination. The Chinese economy is what economists term command and control. The state directs industry and has profited greatly by doing so. In the United States, meanwhile, there is an outcry over a relatively small loan guarantee to Solyndra, the solar company. China has clearly benefited from its cheap labor and huge investment. But it also has cronyism, state protectionism and hidden debts at the local level. This sounds like Japan in the 1980s.--STEVEN M. DAVIDOFF

Occupy Wall Street has raised more than $500,000 in New York alone to support anti-greed demonstrations and, seven weeks into the movement, protesters are finding that having money creates headaches. The challenges have included how to become a non-profit entity, how to deal with credit card companies withholding donations, choosing a bank that shares the movement's philosophy and budgeting what to spend cash on. The totals raised -- more than $500,000 in New York and around $20,000 in Chicago, Richmond and other cities -- have surprised everyone from the protesters to those overseeing their finances.--Ben Berkowitz and Chris Francescani

... the NBA is a monopoly and operates in a manner (it monopolizes!) that would be illegal outside the sports world. Unlike in Silicon Valley, there are no NBA “start-ups.” You cannot create a new NBA team without permission of the incumbent owners. The league also has to approve changes in teams’ location and ownership. What does this mean? The owners can get together and agree to jointly cut expenses, that is, the player salaries. Players have limited opportunities to play professional basketball in other countries, but realistically, if you are a world-class professional basketball player, you probably want to be in the NBA. ... As human beings, we are programmed to reject one-sided deals, even when surrender might be the rational choice.--Tyler Cowen and Kevin Grier

The person who wants to get you fired is not your friend.--David Henderson

If multiple people can't reproduce what's supposed to be a scientific result, then there may well be something wrong with it. And if someone that you're working for or with won't show you raw data, then head for the door, because nothing but trouble can ensue. The alarm bells have at that point gone off, whether you can hear them or not.--Derek Lowe

Even when science shows time and again that it’s not so, we continue to persist in believing that sugar causes our kids to be hyperactive. That’s likely because there’s an association. Times when kids get a lot of sugar are often times when they are predisposed to be a little excited. Halloween. Birthday parties. Holidays. We may even be causing the problem ourselves. Some parents are so restrictive about sugar and candy that when their kids finally get it they’re quite excited. Even hyper. This does not mean that there aren’t a ton of great reasons why our kid should not ingest large quantities of sugar. As almost any parent knows, sugar has been linked to cavities and the obesity epidemic. Just don’t blame it for your child’s bad behavior.--Aaron Carroll

It’s not just that Jobs’ refusal of treatment is “crazy,” as former Intel chief Andy Grove put it to Isaacson. This tragedy sprung from the very thing that made him so great: his unwillingness to believe that technology needed to be clumsy, ugly, or difficult. In consumer products, this led to the MacIntosh and the iPhone. In animation, it created the Pixar canon. But biology and medicine are messy, and demanding a magic solution doesn’t always produce one. ... I’m haunted by a story I heard once about a biotech industry lobbyist who went to see a congressman and was told, “You guys don’t do innovation. The iPad. That’s innovative.” As a society, it seems to me, we say that a lot. We value the magic box built out of many more basic innovations much more than what came before – and as a result, we overlook the work that is actually foundational. And I worry that were this less true, medicine could have done even more for Steve Jobs.--Matthew Herper

But if the apparently timeless appeal of Disney World is symptomatic of the spiritual malaise of contemporary culture, it is also an important indicator of its spiritual hunger. Disillusioned by the lies of our culture, millions choose to escape to a kinder and more magical facsimile of hope at Disney. As C.S. Lewis once observed, the potency of fantasylands are their ability to break the "evil enchantment of worldliness" and arouse a dim longing in us for something unreachable within the drab flatness of wonton perception. Millions visit Disney World for a chance to walk through the looking glass, to be transported to another, more whimsical world where our imaginations take flight. While the happiness it offers is ephemeral, the profound feeling of disenchantment that draws visitors to momentarily withdraw is not.--Chris Cuthill

Surprisingly to me, but maybe I shouldn't have been surprised, [film documentarian Ken] Burns is quite confident that he would not have been successful without government funds. I think this could be an example of a phenomenon that Milton Friedman often noted: that people who are used to something have trouble imagining the world without that thing, in this case, government funding of Burns's documentaries.--David Henderson

I never saw this side of Ken when we were in our kids' classroom.--Cav

Quotes of the day

If Men’s Health magazine was true, you would never need to buy more than one issue. If the articles that promised flat abs and less stress and better sex really worked as promised, you’d never need to have a subscription because every issue is the exact same thing.--Jon Acuff

You can't stop Tebowmania. You can only hope to contain it.--Peter King

In four starts, Tebow now has two fourth-quarter comebacks from at least 13 points down. In John Elway's career, guess how many he had. Two.--Kerry Byrne

I.B.M. named Virginia Rometty as its new chief executive, certifying her status as one of the most powerful women in technology. She joins a list that includes Meg Whitman, the newly installed chief executive of Hewlett-Packard; Sheryl Sandberg, the chief operating officer of Facebook; and Safra Catz, the chief financial officer of Oracle.--Michael De La Merced

According to the British lexicographer John Ayto, 'cool' has become an “all-purpose term of approval.” Indeed, the term is so widely used that this might, at first glance, appear to be a valid definition. But I beg to differ: cool is more precise and complex, and an elusively moving target. It’s cool to be clever, but it’s uncool to be a know-it-all. Sometimes cool stuff is expensive – but sometimes it comes cheap, and the expensive stuff is uncool. Sometimes it’s cool to break the law; at other times it isn’t. Communism used to be cool, but not so much any more. Brooklyn didn’t use to be cool, but now it is. And of course people can be (or not be) cool. Steve McQueen was very cool. Clint Eastwood? – not really: he’s too edgy and tightly wound. Collectively, the Beatles could be cool, but viewed individually, John Lennon was cooler than the other three put together. The Dalai Lama is cool (or, at least, admiring him is), but it’s hard to imagine anyone seeing a pope as cool. Barack Obama is sort of cool, for a politician – although the word on the street says he’s failed to live up to his full cool potential. Tony Blair tried very hard to be cool, and for a while he seemed to enjoy some success. But you can’t fool all the people all the time.--Colin Eatock

No, life cannot be understood flat on a page. It has to be lived; a person has to get out of his head, has to fall in love, has to memorize poems, has to jump off bridges into rivers, has to stand in an empty desert and whisper sonnets under his breath. ... It’s a living book, this life; it folds out in a million settings, cast with a billion beautiful characters, and it is almost over for you. It doesn’t matter how old you are; it is coming to a close quickly, and soon the credits will roll and all your friends will fold out of your funeral and drive back to their homes in cold and still and silence. And they will make a fire and pour some wine and think about how you once were . . . and feel a kind of sickness at the idea you never again will be. So soon you will be in that part of the book where you are holding the bulk of the pages in your left hand, and only a thin wisp of the story in your right.--Don Miller

I write about this mostly anonymous man because players like [Kent] Hull are the bedrock of so many good teams, past and present. Hull did his job and never sought glory. If glory came, as it did in the form of three Pro Bowl nods and two All-Pro selections, he would deflect it. He was the perfect Bill Polian/Marv Levy player. Do your job, be responsible, lead when needed, care only about winning -- and be smart. I am confident in saying he was one of the five or six most valuable players on those four Buffalo Super Bowl teams, because of what he meant to the team in making the line calls on the fastest-moving offense in football, and for what he meant as the last guy out of the locker room ... after every game, after every practice. If a problem needed to be solved, he'd help. If someone just wanted to talk, he'd talk. Part of his football life included being there if anyone needed him; someone usually did. I remember lots of big-talking (rightfully so), boisterous players on those Bills teams, on and off the field, and I remember Hull, with a dip between his lip and gum, accommodating teammates, reporters, fans, and never being too big for any of it. He'd do it quietly. He loved Levy's trademark, "Where would you rather be than right here, right now?'' He lived that. Being a cog in the wheel was his thing.--Peter King

I owe a lot of that stitching in my Hall of Fame jacket to Kent Hull.--Thurman Thomas

Image link here.

Quotes of the day

Corporate executives and managers, as well as some economists, like to think that the increasing pay of senior employees has to do with increasing returns for their specialized skills. Over email, [Emmanuel] Saez offered me a much less flattering explanation: it’s not that managers have become more valuable. It’s that, as he puts it, there’s no good way to measure objectively the productivity of an executive. That lends itself to what Saez calls “bubble phenomena” in their perceived value—to put things bluntly, they benefit from being seen as more important than they are.  If that’s the case and managers do not have some special growing value, then the same forces that have put pressure on wages lower down the ladder—labor mobility, ease of hiring and firing—will eventually apply to them, too. We may already be seeing the beginnings of that with CEO salaries. Whether in a slow seep or a big bang, every bubble will deflate.--Mark Gimein

Corporate governance experts should consider whether there should be real mechanisms to throw out and replace bad boards. Perhaps we need term limits for board members? At a minimum, there should be accountability and some metric to determine what constitutes a good board. We are seeing a search for accountability in the criticisms of the Hewlett-Packard and News Corporation boards for poor oversight. Again, though, we have no real systematic way to measure or monitor this conduct. Boards are also not a panacea and have serious institutional failings. Boards appear to be poor at taking decisive action. In the face of crisis, boards tend to resign or be taken captive by their advisers. Think of Dynegy, where the board resigned en masse after two failed sale attempts. And does anyone really think a board can substantively monitor systemic risk at a $2 trillion institution like Bank of America? Not only do boards need to be held accountable, there is the scary question of whether all of this power being provided to them is a good thing. If not, should this power flow back to the chief executive? This is not to say that corporate governance does not have value. It does, and I believe it has increased shareholder wealth. But this is a learning process. There is still a lot of work to do.--Steven Davidoff

I majored in communism and graduated magna cum laude. SO WHAT?--Jim Cramer, on CNBC today, who did this at Harvard

I’m not planning on going home.--Stacy Hessler, Wall Street Occupier, who has 4 children at home

[Herman Cain] is rising as more and more Republicans come to the conclusion that the Republican Party has found its Michael Dukakis, a technocratic Massachusetts governor running on competence, not ideology.--George Will

... when you’re a speaker, in the sense of public speaking, you can pick your topics. When you’re a would-be president, every topic picks you. Whatever happens this morning is the new topic. So, you have to have the ability to get briefed, very fast. Ideally, you should know a fair amount going in. And I think one of the Republican weaknesses has been that we rely too much on consultants and too much on talking points. And we don’t rely enough on actually knowing things. If you’re going to lead the country and change history, you had better know a heck of a lot before you start, because there’s not much time for learning on the job. And as Obama’s proven, youth and inexperience are interesting, but they can also be a disaster.--Newt Gingrich

[New York City Comptroller John] Liu also claims that public-pension funds are a better deal because they can take much more risk in pursuit of higher profits. But he all but ignores the fact that when pension returns fall short, it’s the taxpayer who must make up the difference. Skyrocketing pension costs have wreaked havoc with the city’s budget; they’re the driving force behind budget cuts, including fewer police officers to deal with more protests and gunplay alike. Yet Liu’s report merely says that concerns about higher taxpayer costs are “legitimate” -- and that’s it. Indeed, the report raises a question that the comptroller surely didn’t intend: If big pension plans offer better returns at lower costs, why not let city workers participate in such plans if they like -- but with only a small portion (maybe 20 percent of salary, instead of 50 percent) guaranteed by the taxpayers? Workers who want more money could contribute more and still benefit from scale. But the extra contributions wouldn’t carry a taxpayer guarantee. Anyway, New York City doesn’t have to guarantee such generous pensions to “work” its size. It could still use the leverage to fight for lower fees on 401(k)-style plans for its workforce. Liu’s report doesn’t advance the cause of fixing pensions. But it does remind New Yorkers of the stakes of the next mayoral race. It should remind them, too, that the current mayor is running out of time. If Mayor Bloomberg doesn’t get something done on pensions -- and soon -- he’ll leave behind a legacy of having left untouched a status quo whose costs are eating the city from the inside out. Sadly, plenty of his would-be successors think that’s just fine.--Nicole Gelinas

All models are analogies, and being analogies, they are limited in their scope. In physics you can describe ice, water and steam, and the phase transitions between them, with one unified theory, amazingly, and hence you can handle the extremes of freezing and boiling. In finance or economics we have nothing like that. Even beautiful Black-Scholes-Merton ignores volatility variations, illiquidity, panic, government regulations on shorting, to name just a few things that lie outside it. Therefore, when the world changes dramatically, every single model you can think of is likely to fail. I would like the following principle to be engraved on the foreheads of all financial and economic model users: All models are short volatility. When volatility changes a lot, the model is going to fail.--Emanuel Derman

Quotes of the day

Dirty tricks were not invented by Nixon; they stretch back to the Fall. Blessed is the Christian whose life is so transparent, who is “trustworthy and neither corrupt nor negligent” (Dan. 6:4), so that the only way he or she can be destroyed is by making Christian conduct and conviction a crime. ... no legal system can ensure consistent justice. Corrupt people will always find ways of exploiting the system to oppress others and advance themselves. Hidden behind the slogan is a deeper issue. Historically there has long been a tension between positive law theory, in which the only law to be obeyed is that enacted by government, and natural law theory, in which some fundamentals are thought to be discoverable by human beings. In the name of equity and justice, British courts, until fairly recently, would sometimes set aside positive law in favor of natural law where it was pretty obvious an injustice was otherwise being committed. Both in Britain and in the United States, such considerations are now rare. In Britain, what must be obeyed is what Parliament says; in the United States, what must be obeyed is what the Supreme Court says. In both instances, positive law largely prevails, as in ancient Persia. The matter has become increasingly difficult here since Western states have come to think they have a therapeutic role in society, defining the “illnesses” that must be confronted and the “therapies” that must be imposed as they go along. The potential for injustice and inequity multiplies.--Don Carson

Our tax dollars at work… a half-billion dollar loan (actually $529 million) from the U.S. Department of Energy to develop a hybrid toy for the wealthy and/or celebri-licious (like Leonardo DiCaprio, one of the first customers) that, in real world driving, won’t get much better mileage than your average crossover utility vehicle. Not only that, but the cars are manufactured in Finland — that’s right, Finland – and shipped here for sale, where their purchasers will then receive a $7,500 tax credit for buying one (the “cheap” base model starts at $96,895, with the full-zoot Eco Chic model going for a bargain $108,900). ... Those Occupy Wall Street-types in their tents at MacPherson Square? If they really, truly are bugged by corporate welfare, they need to schlep their signs and their chants and their anger over to the Mandarin Oriental Hotel. Right now. Because the Fisker Karma is where the rubber meets the road when it comes to corporate welfare. I have no problem with a group of entrepreneurs raising money from private investors to build a hundred thousand dollar toy for rich folks who want to flaunt their eco-consciousness. When and if that’s the case, may they have all the mazel in the world. But damn, it steams me up when my family and every family in America are forced to pay for it.--Andrew Fox

The more people helping each other out, the better.--Pietro Poggi-Corradini

Earlier this year, a report from Standard and Poor’s indicated that of the 1,485 stocks making up the S&P 1500 index, not a single one had a consensus sell recommendation from Wall Street analysts. That doesn’t mean there wasn’t the odd sell recommendation, it just means that there were no stocks that most analysts agreed had less than rosy prospects. Meanwhile, the S&P 1500 is down 2.77 per cent including dividends to Oct. 19, with the financials sector down 19.97 per cent. --Preet Banerjee

One of the running jokes of Mr. Chandor’s [Margin Call] script  is that the higher a person’s [corporate] rank, the less he is likely to understand what the firm is actually doing. This ignorance is almost a point of pride. “I don’t get any of this stuff” — this line is repeated about Peter’s discovery by Will, then Sam, then Sam’s boss, Jared Cohen (Simon Baker) and then Tuld. In a further absurdity, one person who does get it, Peter’s mentor, Eric Dale (Stanley Tucci) has just been downsized out of the company. As a security measure his cellphone has been disconnected, which means that his increasingly desperate former colleagues are unable to find him when he might be of most use.--A. O. SCOTT

I thought, This is a very dangerous person.--Sidney Lumet, on meeting Pauline Kael

Parents, you may be onto something: A small new study suggests that teens' intelligence, as measured by the IQ test, may fluctuate throughout adolescence. The changes -- in both verbal and nonverbal IQ -- ranged to as much as 20 points and were correlated with specific brain areas. IQ has long been thought to remain stable over a person's lifetime.--Amanda Gardner

[Steve Jobs] tries to treat [his pancreatic cancer] with diet. He goes to spiritualists. He goes to various ways of doing it macrobiotically and he doesn't get an operation. ... I think that he kind of felt that if you ignore something, if you don't want something to exist, you can have magical thinking .... We talked about this a lot.--Walter Isaacson, Jobs' authorized biographer

Ohhhh. That cake looks so good.--Kim Kardashian

Italy is house rich, somewhat cash poor, and has a miserable recent history of growth. If you look at the wealth side of the balance sheet, you can easily work up a heady optimism for Italy. If you study public choice theory, it is harder to do so. How many people in that country are either paid to do the wrong thing, or paid to do not so much at all? [The Great Stagnation] reigns. Italy’s privileges and distortions are so often so local, and so concentrated in inefficient professional services, that it is hard to imagine clearing them up quickly in the form of a big bang, in the way that say New Zealand or Chile or Thatcher’s England did. And even those successes took some time to pay off and underperformed for years. Note that if Italy could credibly be expected to grow a mere 2 pct. a year — maybe less — the entire eurozone crisis probably would be messy but manageable. It’s not.--Tyler Cowen

Brian Moynihan is here tonight. He’s the C.E.O. of Bank of America. As many of you know, Brian’s brother Patrick runs a Catholic boarding school in Haiti. Their parents must be so proud to see two of their boys running an underfunded, nonprofit organization.--Steve Schwartzman

Quotes of the day

Over the next two years, Amazon, Apple, Facebook, and Google will increasingly collide in the markets for mobile phones and tablets, mobile apps, social networking, and more. This competition will be intense. Each of the four has shown competitive excellence, strategic genius, and superb execution that have left the rest of the world in the dust. HP, for example, tried to take a run at Apple head-on, with its TouchPad, the product of its $1.2 billion acquisition of Palm. HP bailed out after an embarrassingly short 49-day run, and it cost CEO Léo Apotheker his job. Microsoft's every move must be viewed as a reaction to the initiatives of these smarter, nimbler, and now, in the case of Apple, richer companies. When a company like Hulu goes on the block, these four companies are immediately seen as possible acquirers, and why not? They have the best weapons--weapons that will now be turned on one another as they seek more room to grow.  There was a time, not long ago, when you could sum up each company quite neatly: Apple made consumer electronics, Google ran a search engine, Amazon was a web store, and Facebook was a social network. How quaint that assessment seems today.--Farhad Manjoo

High tech runs three-times faster than normal businesses. And the government runs three-times slower than normal businesses. So we have a nine-times gap.--Andy Grove, Intel CEO

... the average salary in the securities industry in New York City was twice the average in other private sector jobs. At last count, in 2010, it was 5.5 times as much. (In case you want to gnash your teeth, the average is now $361,330.)--Nicholas Kristof

In 1988 (earliest year available from the USA Today Salaries Databases), the average salary of a baseball player on the New York Yankees ($700,339) was 28 times the average salary in other private sector jobs in New York City (about $25,000). By 2010, the average salary for the Yankees (if you want to gnash your teeth, the average was $8,253,000) was 124 times the average private sector salary in NYC ($66,120). Where's the outrage about "excessive" salaries for Yankees players, which have increased relative to average New York City salaries much more than salaries for NYC bankers? What about an "Occupy Yankee Stadium" protest?--Mark Perry

... couples who say money is not important to them score about 10 to 15 percent better on marriage stability and other measures of relationship quality than couples where one or both are materialistic.--Science Daily

If there is any unifying them surrounding the Occupy Wall Street movement – and I use that noun in the Brownian sense – it’s that some people have too much, and others (the protesters) have too little. Exactly how much of the former’s property they should be allowed to keep, and how much must be yielded over to the latter has yet to be made clear.  But one thing has become clear – property redistribution is all well and good, so long as it’s somebody else’s property that’s being redistributed.--Neptunus Lex

Politicians leave reality to others. What matters in politics is what you can get the voters to believe, whether it bears any resemblance to reality or not.--Thomas Sowell

The amount of disrespect that the players involved here showed to each other, to the organization, to Tito [Francona], to the game, is staggering to me. Probably as staggering are some of the names that are on that list. I'm blown away. I'm incredibly disappointed. Things have changed here for a long, long time, and I think it's for the worse. I think the way that this was handled by the organization is pathetic and embarrassing. Why would you want to root for this team?--Curt Schilling

The negative growth impact of the sharp drop in China’s trade surplus may have forced GDP growth rates to nearly zero, and the sudden and violent expansion in investment was necessary as the counterbalance to keep growth rates high. Changes in the declining consumption share of GDP have had very little impact on changes in GDP growth. And it continues to decline.--Michael Pettis

Like classic demagogues, Berlusconi has displayed, since the beginning of his political career, a remarkable ability to fascinate the masses with political theater that exalts his image. At the same time, he has an impressive ability to win over the Italian public by telling them exactly what they want to hear. His speeches are skillfully crafted to exploit the electorate's beliefs and offer a comforting and simplified vision of reality. Unlike almost all demagogues, however, Berlusconi is immensely rich, and he uses his fortune to obtain and consolidate political power. With his money he buys people, and more often he uses his money to distribute favors of various sorts and value, from presents to jobs. In turn, he gets, as has always been the case with this kind of politics, the loyalty of a large number of supporters. One could say that Berlusconi has established an oligarchy within a democratic system.  ... Berlusconi is surely unfit to govern a democratic republic, but Italians are unfit for liberty.--Maurizio Viroli

Photo link here.

Quotes of the day

Even leftists believe in property rights ... at least when it comes to their property. --Greg Mankiw

... the Tea Party has a ready and plausible answer as to how to restore self-government and break the grip of the crony capitalism that ties the Obama administration to Wall Street. They want to drastically reduce the size of government. The protesters have no such view. Like their 1960s predecessors, they're chasing their tails trying to imagine procedural reforms that will allow the demonstrators to govern themselves, while also curbing the power of those greedy capitalists.--Fred Siegel

If [Romney's] rivals looked stronger, he might need to play more to “the poor should pay higher taxes and the uninsured should take care of themselves” strand within conservatism. But as it stands, the field’s weakness is letting him get away with rhetoric and positioning that should make the Obama White House very, very nervous.--Ross Douthat

The Obama administration, under fire for not taking a harder line
on China over its currencyon American consumers who stubbornly take advantage of good deals offered by Chinese sellers and, allegedly, made even more attractive by Beijing’s monetary policy appears set to move against
the Asia export powerhouse on other fronts these politically unorganized Americans as next year’s U.S. elections approach.--Don Boudreaux, riffing on Doug Palmer and Glenn Somerville

It’s remarkable to see how similar the arguments being put forward by wind-energy proponents are to those that the Obama administration is using to justify its support of Solyndra, the now-bankrupt solar company that got a $529 million loan guarantee from the federal government. But in some ways, the government support for the Shepherds Flat deal is worse than what happened with Solyndra. The majority of the funding for the $1.9 billion, 845-megawatt Shepherds Flat wind project in Oregon is coming courtesy of federal taxpayers. And that largesse will provide a windfall for General Electric and its partners on the deal who include Google, Sumitomo, and Caithness Energy. Not only is the Energy Department giving GE and its partners a $1.06 billion loan guarantee, but as soon as GE’s 338 turbines start turning at Shepherds Flat, the Treasury Department will send the project developers a cash grant of $490 million.--Robert Bryce

[The Red Sox] needs a statistical agnostic leader. They need a guy who it doesn’t matter if he plays or not. Or it doesn’t matter what he’s hitting or not. He will talk to anybody on the team about them doing something wrong. I’ve said it a couple times. That was Doug Mirabelli. That was Mike Lowell. That was what those guys did. That was Gabe Kapler. None of those guys were leading the team in home runs or RBIs or batting average. The guys in those clubhouses had an immense amount of respect for them. Orlando Cabrera marching back to Manny [Ramirez]‘s locker and demanding that Manny put himself back in the line-up. Guys like that. This team doesn’t have them. This team has a couple of guys like a [Dustin] Pedroia who is going to play his [expletive] off and expect everyone to do the same. I don’t see him as a kid who stands up in front of the locker room and says, ‘This has got to change.’ I’m not seeing that yet.--Curt Schilling

Anyone — Keynesian or otherwise — paying attention to the last thirty years of empirical macro never expected much crowding out of financial capital in the first place.  It simply has not been in the cards.  To put it more bluntly, the “no crowding out” result is not much of a predictive victory for Keynesian economics, IS-LM, the liquidity trap, and so on, even though I have read it claimed as such many times.  It is a strike against some predictors who were wrong in the first place, especially in the right-wing popular press circa 2009-2010, plus some Republicans who jumped ship on the issue, perhaps because they wanted to attack Obama.  What’s a unique prediction we might look at?  It is a common Old Keynesian claim these days, at least from Krugman, that the AD curve is upward-sloping because of a liquidity trap.  That would imply that harsh and binding minimum wage hikes, and other wage-propping mechanisms, should prove expansionary.  That claim, at least for the Great Depression, has been knocked down fairly conclusively by Scott Sumner.  If there is no comparable test on today’s data, it is because we have grown that much wiser.--Tyler Cowen

I’ve argued before that the Mother of All Bubbles may be excess manufacturing capacity in Asia. Decades of above average returns on investment, compounded by a range of state policies aimed at encouraging the development of this kind of enterprise, have led to a massive overcapacity: the world can’t consume as many widgets as manufacturers need to sell.--Walter Russell Mead

... in 1934 the Austrian mathematician Karl Menger wrote a paper that rejected unbounded utility functions. These unbounded functions include, for example, logarithmic utility, a particularly useful one because it corresponds to exponential growth, and thus is a natural for many time series processes (like compounded returns). Because his result is wrong, the motivation for focusing on the ensemble approach is ill founded. And, to make matters worse, in many important cases it is a time series approach that makes the most sense. After all,we only live one life, and we care about what is dealt to us in that life. If we enjoyed (and recognized that we enjoyed) reincarnation so that we could experience many alternative worlds – and better yet,if we experienced them all simultaneously -- perhaps it would be a different matter. What is fascinating is that Menger’s paper has been cited widely by notable economists, including Samuelson, Arrow and Markowitz, Nobel laureates all.--Rick Brookstaber

I have done 1.5 years of research on the type of tumor that affected Steve Jobs and have some strong opinions on his case, not only as an admirer of his work, but also as a cancer researcher who has the impression that his disease course has been far from optimal. Let me cut to the chase: Mr. Jobs allegedly chose to undergo all sorts of alternative treatment options before opting for conventional medicine. This was, of course, a freedom he had all the rights to take, but given the circumstances it seems sound to assume that Mr. Jobs' choice for alternative medicine could have led to an unnecessarily early death. Again, please understand that I have no knowledge of the specific case, I'm just trying to give insights on his a priori odds of cure.--Ramzi Amri

Chart of the day: Large cap, large lobbying

Source here, via Abnormal Returns.

Hypocrisy of the day: Anti-corporate protestors are big corporate consumers

Source here.

Chart of the day: Only $200 million per year to buy America's politicians

Source here.

I think I share at least 2 major disappointments with Occupy Wall Street protestors

First is massive lobbying, and how paid for our government is.

Second is CEO and executive pay, and how ineffectual corporate governance is for certain principal-agent problems.

Unfortunately, our legislative and executive branches are addicted to the first and even more ineffectual on the second.

Quotes of the day

Today’s aged hippies no longer understand that there is a difference between the election of a black president and the creation of cheap solar energy; in their minds, the movement towards greater civil rights parallels general progress everywhere. Because of these ideological conflations and commitments, the 1960s Progressive Left cannot ask whether things actually might be getting worse. I wonder whether the endless fake cultural wars around identity politics are the main reason we have been able to ignore the tech slowdown for so long. However that may be, after 40 years of wandering, it is not easy to find a path back to the future. If there is to be a future, we would do well to reflect about it more. The first and the hardest step is to see that we now find ourselves in a desert, and not in an enchanted forest.--Peter Thiel

The first detailed conversation I had was with a middle-aged guy who was there "largely to exercise his first amendment rights" and the "rights embedded in the constitution". He did not really know what he was saying except that he had the right to say it and that it somehow involved good government. He did not like the libertarians (who he thought were rather silly) but he kind of liked the anarchy of the whole scene. And he gave me the quote of the day. The protesters were "anarchists for good government". ... A pretty young black woman I spoke to was about the most lucid person I found. She thought the American dream had been narrowed to a very small elite and that class distinction was rampant. She was at the protest because she thought that Wall Street was the most obvious bastion of elitism in America. I asked her what she wanted to do in life and she said she wanted to work in the fashion industry in New York. I looked at her puzzled and she sheepishly admitted that was another bastion of elitism. Then she told me she wanted to start her own company. I wished her luck. She was charming in her hypocrisy.--John Hempton

Who was Steve Jobs? Well, he was a guy who founded a corporation and spent his life as a corporate executive manufacturing corporate products. So he wouldn't have endeared himself to the "Occupy Wall Street" crowd, even though, underneath the patchouli and lentils, most of them are abundantly accessorized with iPhones and iPads and iPods loaded with iTunes, if only for when the drum circle goes for a bathroom break. The above is a somewhat obvious point, although the fact that it's not obvious even to protesters with an industrial-strength lack of self-awareness is a big part of the problem. But it goes beyond that: If you don't like to think of Jobs as a corporate exec (and a famously demanding one at that), think of him as a guy who went to work, and worked hard. There's no appetite for that among those "occupying" Zuccotti Park. In the old days, the tribunes of the masses demanded an honest wage for honest work. Today, the tribunes of America's leisured varsity class demand a world that puts "people before profits." If the specifics of their "program" are somewhat contradictory, the general vibe is consistent: They wish to enjoy an advanced Western lifestyle without earning an advanced Western living. The pampered, elderly children of a fin de civilisation overdeveloped world, they appear to regard life as an unending vacation whose bill never comes due.--Mark Steyn

Benny [-Jarvus Green-Ellis], he’s a great guy to block for. He’s going to read the play, he’s going to find the right hole. He’s not going to fumble. He’s going to do the right thing. He’s going to give you everything he’s got. He’s a great guy to block for.--Logan Mankins

When a board of directors removes a CEO for poor performance, we don't expect the board to have a specific plan for how the next CEO will run things. The board's job is to remove the underperforming CEO and start a search for a new one. That model reminds me of the Occupy Wall Street protests. Some pundits are criticizing the protesters for not having specific demands, but I don't think that's a fair observation. The protesters are simply trying to fire the old CEO, metaphorically speaking. It's not their job to micromanage the next one. Some politicians have branded Occupy Wall Street as a class war. But I think that misses the point too. If the economy were humming along and creating the right kind of jobs, folks would see wealth as an aspiration and not an enemy. I see Occupy Wall Street as an effort to get rid of the system that brought us to this place. The anger is not so much about replacing politicians as it is a complaint about the nature of government and the corrupting influence of money. Our collective image of the protests is muddied by the media's fascination with the nut jobs in the crowds, allegations that George Soros is the puppet master, and references to evil bankers and capitalists. We humans like to put faces to evil, but sometimes the evil is simply the result of a mismatch between the system and the times.--Scott Adams

Consumers value the simplicity Netflix has always offered and we respect that. There is a difference between moving quickly — which Netflix has done very well for years — and moving too fast, which is what we did in this case.--Reed Hastings, CEO

... no one listens to a word the prime minister [David Cameron] says. But if Jonathan Ross or Simon Cowell had told us to stop shopping, that would have been a disaster.--Tim Harford

Europe is demonstrating that a sovereign nation without a true central bank is just an uninsured bank, liable to be tipped over by the markets.--James Saft, via Tyler Cowen

One of the [Obamacare] budget savings that the critics claimed was a gimmick was that a new long-term care insurance program, The Community Living Assistance Services and Supports program or CLASS for short, was counted as reducing the deficit. How can a spending program reduce the deficit? ... So we have phantom savings from a zombie program and many people knew at the time that the program was a recipe for disaster. Now some people may argue that I am biased, that I am just another free market economist who doesn’t want to see a new government program implemented no matter what, but let me be clear, this isn’t CLASS warfare, this is math.--Alex Tabarrok

4 out of the last 5 econ laureates are anti-Keynesian, actually too anti-Keynesian for my tastes, but a lesson there in any case.--Tyler Cowen

Tyler Cowen tells you about Sargent and Sims. My reaction is, "eh."  Sort of like Bert Blyleven. Star players, but not historically important, unless you're from Minnesota.--Arnold Kling

Paul defends the IS-LM model. I agree completely!--Greg Mankiw

Smart people can be very clueless when they apply too much precision to imprecise problems.--Eric Falkenstein

Rather, as has been the case with most sociologists of religion, Habermas has looked at the world and concluded that secularization theory—that is, the thesis that modernization necessarily leads to a decline of religion—does not fit the facts of the matter. Beyond this acknowledgement of the empirical reality of the contemporary world, Habermas admits the historical roots in Biblical religion of modern individualism, and he thinks that this connection is still operative today.--Peter Berger

Al Davis was a great American sports villain, the best of his time, the best of all time. He was great, I think, because he played it big. ... He was the bad guy. End of story. Al Davis' life was not so black. He quietly did many good things, charitable things, he helped friends and strangers, but he did not want anyone to know. He was entirely color blind. He hired the first Hispanic coach in the NFL (Tom Flores), and the first African American coach in the NFL (Art Shell). But he never grandstanded about it. I don't' think this was because he wanted to avoid credit. I think it's because he did not want anyone to think he had a heart.--Joe Posnanski

Quotes of the day

[HP] looks cheap, but the future of the PC is a very, very difficult business to handicap.--Bill Ackman

One of the interesting things that we’ve noticed is that companies correlate on decision making and speed of decision making. There are basically no companies that have good slow decisions. There are only companies that have good fast decisions. I think that’s also a natural thing as companies get bigger –they tend to slow down decision making. And that’s pretty tragic.--Larry Page

... even though a computer can execute millions of instructions in a microsecond, the furthest light can travel in that time - even in a vacuum - is just 300 meters.--Jeff Hecht

The world has experienced five major technical-economic cycles:
(1) 1771 - , The First Industrial Revolution in Britain, based on mechanization of the cotton industry.
(2) 1829 - , The Age of Steam and Railways
(3) 1875 - , The Age of Steel and Electricity
(4) 1908 - , The Age of Oil, the Automobile, and Mass Production
(5) 1971 - , The Age of Information and Telecommunications
--Leonard Wilson, on Carlota Perez's Technological Revolutions and Financial Capital

Proposed List Of Demands For Occupy Wall St Movement!--LloydJHart

I think we are between the last cycle and the next cycle, the latter of which will hopefully improve the intellectual capacity of people who make lists like the one above.--Cav

The midsection of a 67-year-old is not a pretty sight.--Bill Gross

For centuries, parents have given their kids the awkward “birds and the bees” sex conversation. But we are the first generation of parents in the history of mankind who must have a “digital footprint” conversation with our kids. We are the first generation that has to sit our kids down and say, “Let’s talk about Facebook and Twitter and Youtube.”--Jon Acuff

Koch Industries has spent more than $50 million to lobby in Washington since 2006." My reaction to reading this was, "$50 million? That's it?" That might sound like a lot, but let's compare that to, say, General Electric. Over the same period, GE has spent more than $136 million lobbying, according to the Center for Responsive Politics. ... I don't know the Koch brothers; I've never met them. I can't tell you if they're saints or sinners. But at least from this Bloomberg article, their company doesn't appear to be especially destructive or immoral. That much is crystal clear through some perspective. But maybe the reporters can prove me wrong about their bias by their next article detailing the many alleged misdeeds of a company with political ties to the left, like GE.--Daniel Indiviglio

Ms. [Betty] Liu deserves some credit for being a rare interviewer of Mr. Buffett who, rather than simply fawning, challenges him. Other journalists sought out by Mr. Buffett would do their profession and the country a favor by following suit. Some possible follow-ups for next time: “What’s your justification for making your tax apply only to “people who shuffle money around all day” but not to athletes or CEOs? Would it apply to CEOs of banks, insurance companies, or other publicly traded financial firms? Are there any other precedents for taxing income differentially by occupation rather than by source? Is that something we want to encourage in the tax code? Wouldn’t it just make things more complex?--Ira Stoll

Obama has basically confirmed the worst fears about regulators (and himself) which is that business shouldn't be regulated based on any predictable rules, but rather the whims of people who might in their gut just feel that something is wrong. In this instance, people who scream about "uncertainty" may have a point.--Joe Weisenthal

Gibor Basri, Berkeley’s vice chancellor for equity and diversity, could have served a valuable role here by pointing out that the [affirmative action] bake sale was obviously a parody of racial and gender preferences, not a criticism of students themselves. Whatever one thinks about the issue of preferences, he might have said, such political theater belongs to Berkeley’s once-revered tradition of free speech. Instead, Basri chose to stoke the melodramatic self-pity of today’s college students. “A lot of students, especially students of color, read [the bake sale] as placing a higher value on white students,” Basri told the New York Times. Basri, in other words, obeyed the ironclad script for all such minor perturbations in the otherwise unbroken reign of campus political correctness. That script requires that the massive campus-diversity bureaucracy treat the delusional claims of hyperventilating students with utter seriousness. Students in the ever-expanding roster of official campus victim groups flatter themselves that by attending what is in fact the most caring, protective, and opportunity-rich institution in the history of the world, they are braving unspeakable threats to their ego and even to their physical safety. (Indeed, so desirable is this alleged threatened status that a gender and women’s studies major held a sign during Tuesday’s protest of the bake sale decrying the exclusion of “queer people” from the Republicans’ pricing structure.) ... If he really is incapable of understanding such a simple satire, he does not belong in an institution of higher learning—or at least what used to pass for one. --Heather MacDonald

Eight new Dodge Grand Caravans, purchased 10 months ago with $186,192 in federal stimulus funds, are sitting unused in storage at a county park because Waukesha County has found no takers for its proposed workers' van pool program.--Laurel Walker

Photo link here.

Quotes of the day

Apple couldn’t have killed Flash if HTML 5 hadn’t recently been adopted by major browsers. HTML 5 offers alternatives to most of the key features of Flash. And no one controls it the way Adobe controls Flash. Since no software company wants to build its products on a standard it doesn’t control, every company other than Adobe has a natural incentive to adopt HTML 5 over Flash.  This brings to mind Jonathan Zittrain’s book The Future of the Internet and How to Stop It. Zittrain warned that the success of the proprietary iPhone threatened to undermine the decentralized, bottom-up structure of the Internet. The Flash story is a useful counterexample to Zittrain’s thesis. On the one hand, iOS is a proprietary standard controlled by Apple, so its ascendancy looks like a threat to open standards. Yet the rise of the iPad was a major factor in the decline of another proprietary standard, Flash.  ... for at least two decades, it has looked like proprietary technologies were on the verge of taking over the software industry. Yet open standards have grown more and more dominant. This hasn’t been a lucky fluke, it’s a matter of basic economics. Proprietary software is central planning. And in the long run, central planning doesn’t work as well as bottom-up organization.--Timothy B. Lee

Trading is about being self-aware to obtain profits in excess of losses. Gambling is about the emotional payoff. ... When a trader lacks emotional intelligence and has no inner voice to listen to, he is more of a philanthropist than a trader. He’s giving money away, so it doesn’t matter who is on the other side of the trade ... [rogue traders] didn’t deliberately trade a Martingale system, but this is what their emotions led them to do, whether they knew it or not. That’s how vicious a cycle it is if you don’t learn to take small losses and flush your ego. Traders don’t think it can happen to them, and then all of a sudden they’re emotionally invested in the outcome of a trade. A trader must detach emotionally from the outcome of any particular trade.--Joshua Brown

You [men] don’t have to take the pill, wear a patch, insert messy rings or go through the hassle of making an appointment with your doctor to change and refill your prescription for said pills, patches, rings and paraphernalia. As for the potential short and long-term health consequences such as nausea, decreased libido, blood clotting, cancer, and infertility? On us. Cervix with a smile. If I didn’t know better, I would say that it’s like men invented birth control. But, of course, that’s just the woman in me talking crazy.--Clare Halpine

... if your blogger was good at forecasting market movements, he would be running a hedge fund, not enduring the daily sardine-like commute on the Piccadilly line. It is that the nature of financial journalism is in assembling evidence from published sources, analysts, fund managers that other people know as well. By the time the evidence of a trend is convincing enough for an article, the trend may well be over.--Buttonwood

[Jamie] Dimon, a lifelong Democrat who was rumored to be on Obama’s short list for treasury secretary before he settled on Tim Geithner, met privately with Romney on Tuesday morning before a fund-raiser at Brasserie 8¹/2 hosted by Highbridge Capital, a JPMorgan-owned hedge fund. Dimon, who was spotted “in a discreet one-on-one” discussion with Romney, cannot publicly endorse a candidate because he sits on the board of the Federal Reserve Bank of New York. But he donated to Democratic candidates in 2008 and privately supported Obama. ... Political insiders are buzzing that a defection would signal further Wall Street hostility toward Obama, who famously called them “fat cat” bankers in 2009. Dimon responded, “I don’t think the president of the United States should paint everyone with the same brush.” One insider said, “There is not a person on Wall Street, with the exception of the genetic Democrats, who would get anywhere near supporting Obama. The hostility to the administration is huge. Dimon will continue to look bipartisan, then work behind the scenes to get a Republican elected.” There were few big Wall Street names openly linked to Obama’s fund-raisers in New York. And we’re told ticket sales for Obama’s Friday event with Warren Buffett have been slower than expected, with staffers calling and e-mailing supporters to shift tickets at up to $35,800.--Page 6

High-frequency traders—often seen as the destabilizing villains of the currency markets—may in fact be helping it to run smoothly, a study by the Bank for International Settlements suggested Tuesday. Many traditional market players blame secretive high-speed traders for "predatory" or "unfair" practices, bemoaning the superfast computers they use to pick out trade signals and exploit banks' often slower machines. Some banks have even toyed with the idea of setting up closed trading systems, where they can trade with one another and avoid these accounts. But in a report based on research by officials at 14 central banks, the BIS said high-frequency traders help to make trading cheaper for everyone by squashing so-called spreads—the gap between where banks buy and sell currencies. High-frequency traders also support liquidity, and don't tend to flee the market in tough times any more often than banks.--EVA SZALAY And JACOB BUNGE

A good corporate board should be characterized by constant tension, with non-executive directors respectfully questioning the decisions of management. This can make board meetings very uncomfortable, especially for young people. Chelsea’s background makes her very well suited to dealing with this situation. So stop your hating, kids.--John Carney

Sometimes, frankly, it seems the Jets organization is afraid of Namath.--Mike Freeman

Photo links here and here.