Quotes of the day

If you can't sell 'em, rent 'em.--agent Paul Larson of Coldwell Banker Burnet, via Mark Perry

... our own regulatory ingenuity ...somehow or other, always manages to backfire.--Richard Epstein

Bernanke's change of mind reflects his shy personality plus groupthink.--Bryan Caplan

Many mediocre minds are impressed by famous colleagues, graduate degrees, Harvard, or equations. Those people aren't worth impressing. While such signals are correlated with good ideas, they are neither necessary nor sufficient for a good idea. When someone emphasizes these signals, however, that should lower their credibility among thoughtful people because it suggests bad faith, a preference towards pretentious irrelevancies. I've seen this a lot, hiding behind equations. It often works because one does not want to sit down, understand what all the variables mean and how they are measured, etc. I just don't feel impressed at all by such equations because my Bayesian prior is they merely have a bad idea in equation form, so I don't give them the benefit of the doubt even when I'm lazy and have not enough time to evaluate their math.--Eric Falkenstein

We’ve seen from Republicans in–particularly Republicans in the House, but with Republicans generally, that they don’t want to be part of any plan that raises taxes at all. The president’s budget has $1 of revenue for every $2 1/2 of spending cuts.--Jack Lew, White House Chief of Staff and former Budget Director

Contrary to Mr. Lew’s assertion, the President is proposing at least $1.20 of tax increases for every dollar of proposed spending cuts. The President’s budget locks in historically high spending levels and relies more on tax increases than spending cuts for the limited deficit reduction it proposes.--Keith Hennessey

Photo link here.

Just got fooled again: unemployment actually RISING

Tyler Durden figured it out:

as chart 2 below shows, people are not retiring as the popular propaganda goes: in fact labor participation in those aged 55 and over has been soaring as more and more old people have to work overtime, forget retiring), and you get 159.4 million: that is what the real labor force should be. The BLS reported one? 154.4 million: a tiny 5 million difference. Then add these people who the BLS is purposefully ignoring yet who most certainly are in dire need of labor and/or a job to the 12.758 million reported unemployed by the BLS and you get 17.776 million in real unemployed workers. What does this mean? That using just the BLS denominator in calculating the unemployed rate of 154.4 million, the real unemployment rate actually rose in January to 11.5%. Compare that with the BLS reported decline from 8.5% to 8.3%. It also means that the spread between the reported and implied unemployment rate just soared to a fresh 30 year high of 3.2%. And that is how with a calculator and just one minute of math, one strips away countless hours of BLS propaganda.

Statistics are like a bikini. What they present is suggestive, but what they conceal is vital.--Aaron Levenstein

Quotes of the day

Simply saying that you take allegations with misconduct seriously does not mean that you actually take the allegations of misconduct seriously. In other words, their response came only about three weeks after the presentation and there was an enormous amount of material that if somebody was going to take the material comment seriously, they would have to review. It doesn't seem to make a lot of sense to me -- or even be possible -- to think that somebody who took our concerns seriously would even be able to review it in three weeks. As a result, it kind of feels like a whitewash to me. The question at this point, since the company wasn't able to give any substantive answers to the most serious of the questions that were raised -- they instead deferred to a general statement from the audit committee -- the question now becomes whether the audit committee itself is part of the problem as opposed to being a part of the solution.--David Einhorn

Perhaps it is not ideal that so many of us go on to Wall Street, but targeting individuals looking at career options in this way is hardly the appropriate remedy. Many students who enter these fields are not the scions of banking families but rather hard-working students looking for a challenging job that lets them experience a newfound financial prosperity. To exhort students to consider their contribution to society when choosing a career is one thing but to target those who want to work for Goldman Sachs misses the point; whatever negative impact the company has on our economy is due to structural issues rather than questions of individual morality. Deterring a couple dozen Harvard students from working at Goldman will not change income inequality nor will it create a more equitable society. Goldman will just hire the next people in line. Occupy’s actions continue to erode whatever student support it gained on the heels of a successful janitorial contract. Pitching a simplistic conception of the financial crisis and targeting fellow students is not the way to have a successful movement. Occupy ought to refrain from such ill-conceived protests in the future.--Harvard Crimson

This will sound insane but I think this is Bill Belichick's best coaching job ever. Better than the Super Bowl years. Better than when Tom Brady was lost for the season and the Patriots still won 11 games. Best he's ever done.--Mike Freeman

I know there are people who think only first-ballot Hall of Famers should be Hall of Famers -- only the slam dunk choices, only the ones you just KNOW are Hall of Famers the way you know that the sky is blue, that every exotic meat tastes "a little bit like chicken" and that Parks and Recreation is on NBC on Thursday nights. But Yogi Berra wasn't a first-ballot Hall of Famer. Juan Marichal wasn't a first-ballot Hall of Famer. Larry Doby wasn't voted in at all by the writers, nor was Johnny Mize or Arky Vaughan, who was probably the greatest shortstop between Wagner and Ripken. I don't want a Hall of Fame without them. I'd rather have a Hall of Fame WITH Yogi Berra and Juan Marichal and Larry Doby than one WITHOUT Jim Rice and Bruce Sutter. That's not close for me. I am a Big Hall guy.

Photo links here, here and here.

I thought the U.S. banks were bad

And then I read about the banks in Japan.

Image link 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.

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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.

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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?

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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.

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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

After the financial crisis erupted in 2008, continental Europe on the whole appeared to be in better shape than the US. The main reason was that the big EU banks held smaller amounts of questionable mortgage-backed securities than did American (and British) banks. The housing markets in Germany, France, Italy, and most other member countries-Spain and Ireland are two exceptions- had not boomed as much as the American and British markets.
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Unfortunately, the apparent more solid position of EU banks has turned out to be an illusion because these banks held large amounts of euro-denominated sovereign debt of Greece, Portugal, Italy, and other economically weak members of the EU. The presumption of EU banks in holdong so much sovereign debt of weak members was that the strong members would not allow defaults on any sovereign debts issued in Euros. This same presumption led the now bankrupt American fund, MF Global Holdings, to bet billions of dollars on the expectation that sovereign debt of all members of the euro-zone would be paid off in full.
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Weaker member nations will continue to be stressed by shocks to their economy and to their fiscal balance sheets, with many of these shocks not easy to anticipate in advance. The crisis helps demonstrate that a common currency makes adjustment to individual country shocks far more difficult than when countries can devalue their own currencies. This will continue to be a devastating weakness of the euro unless labor and product markets became much more flexible in the euro-zone, and unless labor mobility across member nations increases greatly.--Gary Becker

So which is it? Is the Keynesian theory wrong? Or did Keynes not believe his own theory? I say the Keynesian theory is wrong. There was no reason for Keynes not to own stocks in 1937. The events that caused the severe recession also caused the stock market crash–and those occurred in the last half of 1937. EMH + market monetarism >>>>>> Keynesian theory.--Scott Sumner

... there are three i-words that need to be banned; inflation, income and interest rates. And they need to be replaced with NGDP growth, consumption, and asset prices.--Scott Sumner

When you've spent your professional life trying to correct the error of priceless economics (the fallacy of assuming that shortages and surpluses are permanent, with no price to clear markets), you apply your thinking to the labor market.--Arnold Kling

Guessing that theists and atheists are equally trustworthy is just as speculative as guessing that they're not. Given this inevitability, it seems better for people to expose their speculation to public criticism instead of pretending that their beliefs are based on "evidence alone." If you want to "overcome bias," you will reward candor, not feigned agnosticism.
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That's my speculation, anyway.
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Challenge: As long as speculation is clearly labeled, shouldn't truth-seekers want people to freely speculate? If not, why not?--Bryan Caplan

How did the Brooklyn of ... crack houses turn into what it is today—home to celebrities like Maggie Gyllenhaal and Adrian Grenier, to Michelin-starred chefs, and to more writers per square foot than any place outside Yaddo? How did the borough become a destination for tour buses showing off some of the most desirable real estate in the city, even the country? How did the mean streets once paced by Irish and Italian dockworkers, and later scarred by muggings and shootings, become just about the coolest place on earth? The answer involves economic, class, and cultural changes that have transformed urban life all over America during the last few decades. It’s a story that contains plenty of gumption, innovation, and aspiration, but also a disturbing coda. Brooklyn now boasts a splendid population of postindustrial and creative-class winners—but in the far reaches of the borough, where nary a hipster can be found, it is also home to the economy’s many losers.
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the borough is a microcosm of the nation’s “hourglass economy.” At the top, the college-educated are doing interesting, motivating work during the day and bicycling home to enjoy gourmet beer and grass-fed beef after hours. At the bottom, matters are very different. Almost a quarter of Brooklyn’s 2.5 million residents live below the poverty line—in the housing projects of East New York, in the tenements of Brownsville, or in “transitional” parts of Bushwick and Bed-Stuy, all places where single-mother poverty has become an intergenerational way of life. Between 2000 and 2010, the percentage of the area’s population on welfare did decline markedly, but the number of Medicaid recipients almost tripled, to nearly 750,000. About 40 percent of Brooklyn’s total population receives some kind of public assistance today, up from 23 percent a decade ago.
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To make matters worse, according to Crain’s New York Business, Brooklyn’s unemployment rate doubled between 2008 and 2009, a considerably higher rise than in Manhattan, Queens, or Staten Island. When manufacturing jobs do become available, they tend to require skills that high school graduates—and dropouts—lack. East New York and Brownsville also remain the highest-crime areas in New York.
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And no one believes that’s transitional.--Kay Hymowitz

Many educators sooth their consciences by insisting that "I teach my students how to think, not what to think." But this platitude goes against a hundred years of educational psychology. Education is very narrow; students learn the material you specifically teach them... if you're lucky.
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Other educators claim they're teaching good work habits. But especially at the college level, this doesn't pass the laugh test. How many jobs tolerate a 50% attendance rate - or let you skate by with twelve hours of work a week? School probably builds character relative to playing videogames. But it's hard to see how school could build character relative to a full-time job in the Real World.
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At this point, you may be thinking: If professors don't teach a lot of job skills, don't teach their students how to think, and don't instill constructive work habits, why do employers so heavily reward educational success? --Bryan Caplan

... many of the criticisms of capitalism are really criticisms of "crony capitalism."--Mark Perry

Like any virtues optimism and confidence are useful only in thoughtful moderation, in the right context.--Eric Falkenstein

I would say that 1931 is the greatest birth year in baseball history, the best vintage.--Joe Posnanski

What Milton Friedman might say to Occupy Wall Street.--Greg Mankiw

Reducing the burden which government places on the economy, through tax cuts, is the surest way to promote growth. I have never heard of a country that taxed itself into prosperity. Yet Britain last year raised the top rate of income tax from 40 per cent to 50 per cent. For more economic growth, and more tax revenue, this rate should be lowered immediately.
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This paradox — lower rates, but higher yield — has been demonstrated time and time again, the world over. Between 1980 and 2007, the US cut tax rates on every form of income, the highest, the lowest and all those in the middle. The result was that the rich paid more, even if their tax levels were reduced. Let’s take the top 1 per cent of earners. Over this 27-year period, their contribution to the income tax collected in America doubled from 19.5 per cent to 40 per cent. The same dynamics applied in Britain: when the top rate of income tax was lowered to 40 per cent in 1988, the share of income tax collected from the richest 1 per cent rose from 14 per cent then to 27 per cent last year. Raising tax rates on the rich is about as bad an idea for the UK as I could imagine.
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The government doesn’t need to do something. It needs to undo much of what it already has done. If you want poor people to do better, create jobs, not welfare — and to do this make taxes lower, not higher. ‘The best form of welfare,’ in the words of John F. Kennedy, ‘is still a good high-paying job.’--Arthur Laffer

Barney Frank announced today that he was stepping down. He gets a lot of criticism from the right, and to be sure, some of his more spectacular personal pecadillos, and some of his policy decisions on the banking industry, are ripe for criticism.
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Nonetheless, I confess, I like Barney Frank. I also think that, whatever his mistakes, he's pretty knowledgeable about finance. And you need only look at the committee list to see that it could have been so, so much worse.
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Guess which Democrat now becomes the ranking member on the financial services committee? That's right, none other than our favorite batty aunt, Maxine Waters.--Megan McArdle

Quotes of the day

Genuine courage presupposes fear that is overcome. If there is no fear at all, there can be no courage. Similarly, if there is no wrath, forbearance is no longer a virtue; it dissolves into some strange alchemy of niceness and moral indifference.--Don Carson

Being frank burns too many bridges.--Eric Falkenstein

If what such girls experience isn’t slavery, that word has no meaning. It’s time for a 21st-century abolitionist movement in the U.S. and around the world.--Nicholas Kristof

Every province in China is Greece.--Larry Lang, chair professor of Finance at the Chinese University of Hong Kong

We need reform that provides real transparency. Congress should be subject to the Freedom of Information Act like everyone else. We need more detailed financial disclosure reports, and members should submit reports much more often than once a year. All stock transactions above $5,000 should be disclosed within five days.
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We need equality under the law. From now on, laws that apply to the private sector must apply to Congress, including whistleblower, conflict-of-interest and insider-trading laws. Trading on nonpublic government information should be illegal both for those who pass on the information and those who trade on it. (This should close the loophole of the blind trusts that aren't really blind because they're managed by family members or friends.)
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No more sweetheart land deals with campaign contributors. No gifts of IPO shares. No trading of stocks related to committee assignments. No earmarks where the congressman receives a direct benefit. No accepting campaign contributions while Congress is in session. No lobbyists as family members, and no transitioning into a lobbying career after leaving office. No more revolving door, ever.
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This call for real reform must transcend political parties. The grass-roots movements of the right and the left should embrace this. The tea party's mission has always been opposition to waste and crony capitalism, and the Occupy protesters must realize that Washington politicians have been "Occupying Wall Street" long before anyone pitched a tent in Zuccotti Park.--Sarah Palin

It’s hard to believe how much damage Bush did to the US economy in 8 short years.--Scott Sumner

But the way it’s structured here is, I’ll take responsibility for all the plays that are called. I have the final say on it. If I don’t want to run the play, then I can call it off – that’s my right as a head coach. Any of the bad ones, you can blame me for because ultimately I could change them if I wanted to.--Bill Belichick

On the budget, I propose a plan to cut every Federal government expense by 10% and increase every Federal tax by 10%. I'd call that the default plan, meaning I prefer a better plan, but I wouldn't expect anyone to come up with one. The advantage of this plan is that it's bad for every American. That's a little something I call "fair."--Scott Adams

As the deadline looms for the congressional super committee, there's seems to be a growing sense that tax revenue for the government is like income for the household. That's wrong. Raising taxes is nothing at all like earning income. Instead, it's a lot more like visiting the ATM. The government's debt is the American people's debt. If we pay down that debt through higher taxes, we will, for the most part, pay those taxes by drawing down our savings. That's no more "responsible'' than drawing down those savings to finance overconsumption within the household. If you buy a kayak you don't need and can't afford, you're unlikely to placate your spouse by saying "Don't worry, dear, I withdrew the money from our retirement account.'' If your government insists on maintaining social programs we don't need and can't afford, nobody should be placated by a congressional agreement to finance that program with money withdrawn from those same accounts.--Steve Landsburg

I remember learning, in one of the few West Wing episodes I watched, that Aaron Sorkin had awarded President Bartlett the Nobel Prize in economics. No doubt this sounded super-awesome to Sorkin, but if you've ever met a Nobel prizewinner, it's ludicrous. The talents required to win the Nobel prize in economics include things like incredibly single-minded focus on one idea at a time, a willingness to ignore the opinions of others, and a positive enjoyment of the vast amounts of time you will spend alone in your office, thinking. I understand why Sorkin thinks that these would be very admirable qualities for a president to have . . . but I doubt he'd actually hire this person as, say, a producer on one of his shows. The type of person who is good at the one is not good at the other--and being president probably looks slightly more like producing a television show than winning the Nobel Prize.--Megan McArdle

My only regret is not suggesting that it would be a “worthwhile Canadian initiative” for our northern neighbors to “test drive” the [NGDP targeting] policy before we tried it here in the much more important American economy.--Scott Sumner

You know how things end for Sonny Corleone — he ignores his consigliere, makes it personal and ends up gorging on a bowl of bullets parmigiana. His brother, Michael, assumes command and remains all-business for his first few years, slowly losing perspective and becoming more and more paranoid. He stops trusting his inner circle, grows apart from his family and murders his bumbling brother. Killing Fredo is strictly business for Michael, a warning that nobody should ever cross him. He can't see anything beyond making money and keeping power. He's dead inside. No different than Sonny, really. What does this have to do with the NBA lockout? The owners wanted to blow up their current model; the players gave them gas and matches. But why? I think the answer lies in that Godfather scene. The owners treated these negotiations as a natural extension of their business, only caring about their bottom line and nothing else. The players took the proceedings much more personally.--Bill Simmons

In short, grade inflation in the humanities has been contributing to college students moving away from science, technology, engineering, and math fields, as well as economics, for the last half century. It's time for the pendulum to start swinging back. A gentle starting point would be to making the distribution of grades by institution and by academic department (or for small departments, perhaps grouping a few departments together) publicly available, and perhaps even to add this information to student transcripts. If that answer isn't institutionally acceptable, I'm open to alternatives.--Timothy Taylor

I expect the medical profession to undertake an all-out effort to raise fear, uncertainty, and doubt about technology to replace the doctor, until eventually people realize that they have more fear, uncertainty, and doubt about doctors themselves.--Arnold Kling

A new experiment appears to provide further evidence that Einstein may have been wrong when he said nothing could go faster than the speed of light, a theory that underpins modern thinking on how the universe works. The new evidence, challenging a dogma of science that has held since Albert Einstein laid out his theory of relativity in 1905, appeared to confirm a startling finding that sub-atomic particles called neutrinos could travel fractions of a second faster. The new experiment at the Gran Sasso laboratory, using a neutrino beam from CERN in Switzerland, 720 km (450 miles) away, was held to check findings in September by a team of scientists which were greeted with some skepticism.--Kate Kelland

The American Farm Bureau Federation (AFBF) recently reported that Americans will pay more to feed 10 people for Thanksgiving dinner this year than since the mid-1980’s. The average turkey feast for 10 this year will cost $49.20 – that’s $5.73 more than it cost just last year. Shoppers at Walmart will pay 1/3 (31%) less for the same Thanksgiving groceries and will have an extra $15 in their wallet with this savings.--Walmart

Photo links here and here.

Good Lord, people, get up off your knees and get over yourselves

Charles Pierce writes very, very well. A notable excerpt:

It happens because institutions lie. And today, our major institutions lie because of a culture in which loyalty to "the company," and protection of "the brand" — that noxious business-school shibboleth that turns employees into brainlocked elements of sales and marketing campaigns — trumps conventional morality, traditional ethics, civil liberties, and even adherence to the rule of law. It is better to protect "the brand" than it is to protect free speech, the right to privacy, or even to protect children.

Mayor Bloomberg

Zombie Robo Signer.

Greenwashing

A nice summary about not being as green as we think.

Quotes of the day

The great value investor Benjamin Graham suggested that investors should never have less than 25% or more than 75% of their money in stocks.--Jason Zweig

I realized technical analysis didn’t work when I turned the charts upside down and didn’t get a different answer.--Warren Buffett

I’m already highly irritated. What makes this canuck think that “the simplest model you can imagine” has any bearing on whether NGDP targeting is a wise policy for our highly complex economy? Theoretical macroeconomists love to play with their little toy models, but unfortunately these models don’t actually describe the world we live in. In their models the IS curve slopes downward. Output depends on real interest rates. Inflation depends on output gaps. I don’t know about you, but that’s not the world I inhabit.--Scott Sumner

Well, you're gonna be dead a long time. Might as well have fun when you're alive.--Rex Ryan

In terms of guardrails in the financial system, I think automatic saving for me is the best example for this. You know the rational thing to do is to look at the end of each month and see how much money we had, how much expenses we had and then at the end of each month decide how much to send for our long-term savings. But I think we all intuitively realize that if this was the case we would not save as much. American savings rates are nothing to be proud of, but they will probably be even lower. And it clearly doesn’t make rational sense because we have different levels of expenses in the winter and in the summer. There are fluctuations. There are things that come as emergencies. Saving should not be the same every possible month. But we know that if we relied on our mediocre cognitive ability and thinking and demanded that every month we make this decision, the odds are we will never make this decision. Or at least we’ll make it very infrequently. So by creating a system that takes this decision out of our hands we actually do much better.--Dan Ariely

[At Goldman, Jon Corzine] was called ‘Fuzzy’ because he’s a sloppy thinker.  You can never really figure out what he’s doing because he doesn’t know. He just kind of wings it.--Goldman Sachs executive

I suggest that a rich person can consistently favor taxes on the rich without volunteering to pay such taxes him or herself. The argument is simply that the world in which every rich person pays is preferable to me to the world in which no rich person pays which is preferable to me to the world in which only I pay.--Karl Smith

... I learned far more from 3 months with the Assimil self-study course than from 5 years of school French. The absurdity of that comparison only grows upon comparing the hours spent. The Assimil method took 0.5 hours per day for about 90 days: That’s 45 hours. The 5 years of school French happened every school day for roughly 50 minutes. A school year has roughly 180 days, for a total of 750 hours over the 5 years. Including homework, the total is probably 900 hours. That’s a time-invested ratio of 20 to 1. Thus, despite spending 5 percent of the hours that I spent in school, with the self-study method I became far more competent in the language.--Sanjoy Mahajan

The history of English’s global diffusion is littered with important dates: the planting of the Jamestown colony in 1607; Robert Clive’s victory at the Battle of Plassey in 1757, which ushered in the dominion of the British East India Company; the creation of the first penal colony in Australia in 1788; the British settlement at Singapore in 1819 and establishment of a Crown Colony in Hong Kong in 1842; the formal beginning of British administration in Nigeria in 1861; the foundation of the BBC in 1922 and the United Nations in 1945; the launch by AT&T of the first commercial communications satellite in 1962. This list is condensed. It takes no account, for instance, of the various waves of Anglomania that swept much of Europe in the eighteenth century. But it will be apparent that the diffusion of English has had a lot to do with material reward, the media, and its use as a language of instruction. A fuller list might intensify the impression of a whiff of bloodshed. Wherever English has been used, it has lasted. Cultural might outlives military rule.--Henry Hitchings

Retractions of research papers have soared in recent years, which demonstrates how unethical scientists, like financial criminals, cut corners to tell people what they want to hear.--Edward Tenner

Together with a string of other recent cases, the Bronx case suggests that a culture of corruption and entitlement has spread through the ranks of the thin blue line. Worse, it is clear that police union officials are the mainstay of the illegal ticket fixing enterprise, so much so that prosecutors considered indicting the union as a corrupt organization under racketeering laws. The police demonstration in the Bronx was apparently orchestrated by the union, which sent text messages to officers urging that they show up to support colleagues involved in ticket fixing. “It’s a courtesy, not a crime,” was the slogan.
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This of course is what everybody thinks of special privileges. That’s what doctors and lawyers think when they cover up professional wrongdoings by their guild brethren. It’s what investment bankers think when they pass on inside information to favored clients — a courtesy not a crime. It’s what politicians think when they do favors in exchange for money and it’s what Don Corleone and Tony Soprano think when they do favors for their friends. The essence of privilege (private law, etymologically speaking) is exactly that: exemption from the laws that govern other people. The police union in New York believes that based on longtime practice it possesses certain unique rights to circumvent the written law.
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What that Bronx courtyard shows us is a political culture in decline and a development model on the brink. New York’s dependence on Wall Street and the federal government is becoming more acute by the year. Post bubble and post stimulus, neither source of revenue can be expected to grow at an adequate rate, and it is not unlikely that both will be shrinking for years. The pieces of the coalition are venting their rage and hostility, and new supplies of money are nowhere in view.--Walter Russell Mead

But if we are headed toward collapse, what would an American “Oh sh*t!” moment look like? An upsurge in civil unrest and crime, as happened in the 1970s? A loss of faith on the part of investors and a sudden Greek-style leap in government borrowing costs? How about a spike of violence in the Middle East, from Iraq to Afghanistan, as insurgents capitalize on our troop withdrawals? Or a paralyzing cyberattack from the rising Asian superpower we complacently underrate? Is there anything we can do to prevent such disasters? Social scientist Charles Murray calls for a “civic great awakening”—a return to the original values of the American republic. He’s got a point. Far more than in Europe, most Americans remain instinctively loyal to the killer applications of Western ascendancy, from competition all the way through to the work ethic. They know the country has the right software. They just can’t understand why it’s running so damn slowly.
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What we need to do is to delete the viruses that have crept into our system: the anticompetitive quasi monopolies that blight everything from banking to public education; the politically correct pseudosciences and soft subjects that deflect good students away from hard science; the lobbyists who subvert the rule of law for the sake of the special interests they represent—to say nothing of our crazily dysfunctional system of health care, our overleveraged personal finances, and our newfound unemployment ethic. Then we need to download the updates that are running more successfully in other countries, from Finland to New Zealand, from Denmark to Hong Kong, from Singapore to Sweden.
...
And finally we need to reboot our whole system. I refuse to accept that Western civilization is like some hopeless old version of Microsoft DOS, doomed to freeze, then crash. I still cling to the hope that the United States is the Mac to Europe’s PC, and that if one part of the West can successfully update and reboot itself, it’s America.
...
But the lesson of history is clear. Voters and politicians alike dare not postpone the big reboot. Decline is not so gradual that our biggest problems can simply be left to the next administration, or the one after that. If what we are risking is not decline but downright collapse, then the time frame may be even tighter than one election cycle.--Niall Ferguson

The one thing that we absolutely know for sure is that if we don’t work even harder than we did in 2008, then we’re going to have a government that tells the American people, ‘you are on your own. If you get sick, you’re on your own. If you can’t afford college, you’re on your own.--President Obama

Roosevelt transformed millions of Americans from citizens into clients. The direct effect of this was evil, and the indirect effect was even worse, for all these people were robbed of their self-respect.--H.L. Mencken

A president’s approval rating at the beginning of his third year in office has historically had very little correlation to his eventual fate. In January 1983, Reagan had an approval rating of just 37 percent, but he won in a landslide. George H. W. Bush had a 79 percent approval rating in January 1991 and was soundly defeated. But voters start to think differently about a president over the course of his third year; they view him more on the basis of his performance and less on the hopes they had for him. These perceptions are sharpened by the beginning of the opposition party’s primary campaign, which, of course, accentuates the negatives.  A president’s approval rating toward the end of his third year, therefore, has been a decent (although imperfect) predictor of his chances of victory. Reagan saw his approval rating shoot up to 51 percent in November 1983 amid the V-shaped recovery from the recession of the previous year — the first sign that he was headed for a big win. Obama’s approval rating may have rebounded by a point or two from its lows after the debt-ceiling debacle — but not by much more than that. In late October, it ranged between 40 and 46 percent in different polls and averaged about 43 percent.  There have been two presidents stuck with similarly low approval ratings a year in advance of the next election. Gerald Ford had a 44 percent approval rating a year before his loss to Carter. Johnson had a 41 percent approval rating in November 1967, and although he was eligible for another term, he opted not to run. His vice president, Hubert H. Humphrey, did, and he lost.--Nate Silver

Unoccupied Wall Street?

Source here, via Neptunus Lex.

Quotes of the day

Unemployment represents a crisis of imagination, a failure to figure out how to make potential workers productive in the modern economy. The people who make creative leaps to solve that problem are entrepreneurs. If we want to bring America’s jobs back, our governments—federal, state, and local—need to tear down barriers to entrepreneurship, create a fertile field for start-up businesses, and unleash the risk-taking innovators who have always been at the heart of our economic growth.--Edward Glaeser

Yeats was right from the beginning: Everything does fall apart. Margaret Thatcher once said that the problem with Socialism is that eventually you run out of other people’s money. The Greeks have followed that aphorism to its logical terminus, but we ourselves have not, not yet. The Grecian formula could be instructive to the Occupy Wall Street loons, whose policy preferences, to the degree that they can be discerned at all, are to reject the qualities which once made this nation great in favor of those which are tearing Greece apart. A good lesson indeed, if only they had the wit to attend. They don’t, of course. Which is why the grown-ups will have to do the thinking for them, while there is still time.--Neptunus Lex

... it's time that Americans who lament the loss of that which wasn't so great see what the prevailing wage - once again provided by investors - is for manufacturing. Considering average income in the rising country itself, that works out to $2,000/year (as of 2007), according to The Elephant and the Dragon author Robyn Meredith. Even the poorest of the working poor in the U.S. don't earn so little. And what about factory wages in China? According to Meredith "Chinese factory workers, whether making light bulbs, talking toys, or tennis shoes, earn each day about what Americans pay for a latte at Starbucks." These are the kinds of jobs we want to lure back to the U.S.? The simple and happy truth is that there are no jobs without investment, and factory worker pay in China reveals, investors have no interest in paying anywhere near the wages Americans have grown accustomed to. So assuming we resumed manufacturing light bulbs and tennis shoes stateside thanks to some benevolent investor, the wages that support this activity are so low that no Americans would apply for the work. Extremely low pay in China supports the positive pronouncement that we long ago left low value factory work in the rearview mirror, and with good reason. One can't get by on one Starbucks latte per day. In The Federalist Papers, Alexander Hamilton warned his readers about falling for the "deceitful dream of a golden age." Manufacturing is just that. Once the employer of many at high wages, those days are long past, so to dream of a manufacturing future for the United States is to pine for excruciating poverty.--John Tamny

... the percent of Americans’ personal consumption expenditures used to buy Chinese-made goods and services in 2010 was 2.7 percent. And if we exclude expenditures on food and energy, the percent of our 2010 personal consumption expenditures spent on goods and services from China rises to only 3.1 percent. In contrast, the percent of Americans’ personal consumption expenditures spent on goods and services made in America in 2010 was 88.5 (and 88.0 percent if we look at personal consumption expenditures excluding those on food and energy).--Don Boudreaux

Who was in charge of regulating MF Global? Everybody and nobody, it seems. In the days since that midsize brokerage company filed for bankruptcy, officials at many regulatory agencies have defended their actions, all the while explaining that they had narrow, limited roles. At MF Global, there were at least six different agencies and industry groups minding separate parts of the store.--LOUISE STORY and ERIC DASH

Illinois is like the Bears after Walter Payton, the Bulls after Michael Jordan. Except that it's been even longer since the state could claim it had a championship season. As Josh Barro showed in a City Journal article earlier this year, the state has long tried to deliver services without having the revenues to pay for them. It essentially wanted to be a low-tax (or at least a moderate-tax) state with high services and rich employee pensions. One result has been that the state hasn't really balanced its budget for a long time. Instead, even during the national good times earlier this decade, Illinois used borrowing and gimmicks to create the appearance of fiscal propriety, though few people were fooled. As Indiana's Gov. Mitch Daniels likes to say whenever he talks about his own state, it's easy to look good when you have Illinois for a neighbor. But late last year it seemed as if Illinois had finally reached the limit of its shenanigans. Investors balked at buying the state's bonds except at a significant premium over what other states had to pay investors.--Steven Malanga

... the thing that will always be most unfathomable about [Kareem Abdul Jabbar aka Lew] Alcindor was his very first game, played when he was an ineligible freshman: UCLA was coming off back-to-back national championships. As an exhibition, the Bruin varsity — ranked no. 1 in the nation — opened the season by scrimmaging the freshmen team. Alcindor had 31 points, 21 boards, and eight blocks. The freshmen hammered the varsity by 15 points; the no. 1 team in the country could not beat a player who could not yet play. As an ineligible 18-year-old, Alcindor was (at worst) the fourth or fifth-best basketball player in the world. So I guess talent does matter, sometimes.--Chuck Klosterman

Participants were more likely to make memory errors after they'd passed through a doorway than after they'd travelled the same distance in a single room. Another interpretation of the findings is that they have nothing to do with the boundary effect of a doorway, but more to do with the memory enhancing effect of context (the basic idea being that we find it easier to recall memories in the context that we first stored them). By this account, memory is superior when participants remain in the same room because that room is the same place that their memory for the objects was first encoded.--Radvansky, G., Krawietz, S., and Tamplin, A.

No matter how stable you think your time machine is, your first jump should always be into the future. It’s a mistake to visit President Lincoln on your maiden voyage. The past is loud, smelly and dangerous. And without at least one pit stop in the future, the road backwards is a million times more difficult.--Jim Behrle

Chart of the day: Inconvenient Truth Squared

Source here.

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

No matter what technology and science bring us, the dystopias of our future will always be of our very own, all-too-human design.--TED

And as long as we continue to pay attention, we lose. Because we all tuned in to her stupid wedding special and allowed her to be a star, Kim Kardashian is the 1 percent and we are all bottom-feeders.--Molly Lambert

Finally, I am part of a 1%!--Cav, who did not nor does not pay attention

The President has imposed on himself a ban on taking contributions from lobbyists.--David Axelrod, President Obama's close advisor

No the President has not done this. He still takes contributions from lobbyists. He still has lobbyists raising money for him. A few examples: Lawrence Rasky and Joseph Baerlein, Chairman and President of the lobbying firm Rasky Baerlein, are Obama donors. Google public affairs manager Ginny Hunt and Blue Shield public policy VP Tom Epstein are Obama donors. Obama donors Mark Boatwright, James O'Neill and Soyla Fernandez list themselves on Obama's FEC filings as "lobbyists." There are plenty more. What Obama has done is tried to exclude registered federal lobbyists from donating. Of course, lobbyist registration is basically unenforced on the federal level, so that's a cosmetic rule.--Tim Carney

He doesn't, uh, hire lobbyists.--David Axelrod

The most accurate description for this Axelrod statement --  a colloquial term for the manure of a male cow -- is not fit for a family-friendly blog.  At least 50 former lobbyists have taken senior positions in the Obama administration. This includes multiple cabinet secretaries. The former lobbyist for the Swiss Bankers Association is Obama's general counsel at the IRS. A former lobbyist for Goldman Sachs is Obama's Treasury Department Chief of Staff.  I think Axelrod knows everything I've blogged above. That's why it's hard to avoid the conclusion that David Axelrod is lying.--Tim Carney

Defense attorneys, embracing the new rights, did not bring forward evidence of their clients' innocence but instead sought to suppress evidence of their guilt. Whatever the other merits of the procedures, they were bound to make the justice system do a worse job of separating defendants who deserve punishment from those who don't.  Mr. Stuntz powerfully argues that such decisions have perversely worsened inequality in the criminal-justice system. The Miranda rule, for example, gives sophisticated suspects—mainly recidivists and white-collar defendants—the ability to "lawyer up" and avoid questioning altogether. Many other suspects—including the innocent but poor—waive their rights and receive less protection than they did before Miranda.--PAUL G. CASSELL

The scandal isn’t what’s illegal -- but what’s legal.--Nicole Gelinas

Being a former Goldmanite [like Jon Corzine] has long been considered the ultimate calling card. But, in some cases, it has proved to be a liability: A series of blunders by former senior Goldman executives raises questions about whether Goldman’s secret sauce can actually be exported. Think John Thain. Or Robert Rubin. Or J. Chris Flowers.--Andrew Ross Sorkin

If the practical effect of any rescue proposed by Greece is to force Greece to "live within its means," the logical response is to repudiate debt. If you are living within your means, you don't need access to global credit markets. Still differently: If you owed $40,000 in credit-card debt you could not afford to pay and decided to swear off ever incurring more debt, why not declare bankruptcy? You don't need good credit if you aren't going to use it.--John Carney

Credit-rating companies routinely award higher rankings to debt issued by banks and corporations that pay them the most, a conflict of interest that may escape Congressional efforts to change the way they do business. Bonds from countries and cities that pay about half as much as issuers of less creditworthy debt are “rated more harshly,” according to a study by scholars at Indiana University in Bloomington, Washington, D.C.-based American University and Rice University in Houston. Sovereigns rated A had no defaults over a 30-year period, compared with 1.8 percent of corporate bonds and 27.2 percent of securities backed by debt such as mortgages and loans assigned that ranking, the study of Moody’s Investors Service data said.--John Detrixhe

Businesses give back to society every day by pleasing their customers and employing their employees. There's nothing business owes other than selling the best product at the best price.--William Frezza

With a long early is just early. With a short early is plain wrong.--John Hempton

Dangers lurk, no question about it. The thing we just stress is keep climbing; we don't want to hang on. Like a rock climber, it takes more energy to hang on than to keep climbing.--Jim Harbaugh

We are atoms connected to create big, awkward, intelligent animals, animals complex in construction, equipped with minds, hearts, and the like. Spinning secretly around us is an intricate system of interconnected physical laws, completely dependent upon one another for effectiveness. And we are in the middle of it; actors on Shakespeare’s stage, madmen in Nietzsche’s streets, accidents in Sagan’s universe, children in God’s creation.--Don Miller

Information is cheap; meaning is expensive.--George Dyson

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

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

[Rogue traders] need to come to terms, personally, with what happened, with their own dishonesty. If you can't accept that you can't move on. If I had put my hand up at the end of the first year, I'd have received a slap on the wrist. By the end of the second, I'd have lost my job. By the end of the third, it had become criminal. I am a criminal, by the letter of the law, but there was no criminal intent there. You don't go into these things intending to become a criminal. You want to make money for the bank, be a good trader and get a big bonus. The criminality is always with the individual trader, but the bank, with its incompetence and negligence in controlling what is going on, is complicit. In all those cases there are strange similarities: the length of time that passes before they reveal themselves, the amount of money involved, the age of the trader.--Nick Leeson

... the “tournament” problem ... comes up in any market that’s potentially dominated by “superstars”. Athletic competitions, for example, are prone to drain more resources than they’re worth. (See previous blog posts here and here.) Major league baseball is a good thing — it entertains the fans. But if we could randomly eliminate half the players, we’d lower the quality of competition just a little, while freeing up a lot of ex-ballplayers to start businesses, drive cabs, or write sports blogs. The market fails to find that outcome. The fact that it’s so easy for markets to fail is part of why we should be so astonished, and so thankful, that they typically succeed.--Steve Landsburg

This is no market for young men.--Jeremy Grantham

Attention all you hedge fund readers: if [the Swiss] can arbitrage and convexify their guinea pig market, you’d better not bet against their currency peg.--Tyler Cowen

... unless you get rid of the tax-free status of muni bonds, Theresa Heinz-Kerry will continue to have the effective tax rate of a probationary janitor.--Megan McArdle

It appears Team Obama wants you to conclude that there is no difference between the President and Congressional Republicans on the amount of proposed deficit reduction, and that the President wants a prospective deficit reduction approach balanced between spending cuts and tax increases. Both conclusions are false. The policy changes the President is proposing are significantly less deficit reduction than that proposed by (House) Republicans, and almost all of the President’s new proposed deficit reduction comes from tax increases. To put the second point in schoolyard terms, President Obama is in effect saying to Republicans, “We did it all your way (spending cuts) the last two times, so this time we should do it almost all my way (tax increases). That’s balanced.” It’s a legitimate liberal policy position to propose new net deficit reduction of about $1.4 T over the next ten years, almost all of which comes from tax increases on the rich. That is the President’s policy. I think it’s terrible policy, but that’s a judgment for the Congress and ultimately for American voters to make. Team Obama knows they will lose the public debate if they actually say that, so they are helping you to draw mistaken conclusions about what they are actually proposing. They are instead pretending to propose $4T of deficit reduction over the next ten years, balanced between “real, serious spending cuts” and tax increases. That is a fundamentally dishonest presentation of the policies the President is actually proposing.--Keith Hennessey

You can get a sweet deal if you are the customer who gets marginal cost pricing. Medicare does this--reimburses hospitals at above their marginal cost, but below their average cost, so that private insurers have to pick up most of the hospital overhead. European countries do this with prescription drugs: reimburse above the marginal cost of producing the pills, but below the total cost of developing the pills, so that the US has to pick up most of the tab for drug development. The problem is that as voters and as customers, we often get the notion that this can be extrapolated to everyone. So liberal policy wonks want to save money by putting everyone on Medicare, or some equivalent program that uses the government's monopsony pricing power to get lower prices for everyone; thrifty customers think that everyone should drop cable and just pay $14.95 for streaming plus DVDs.--Megan McArdle

... the President’s definition of “shared sacrifice” exempts the largest entitlement spending program (Social Security), his biggest legislative achievement (the new health entitlement created two years ago), and tax increases for more than 99% of the population. That is an odd definition of “shared.”--Keith Hennessey

I never put on a pair of gloves again [after the Leonard fight]. Never had one gym workout. If you get that taste in your mouth, it never goes away.--Marvin Hagler

Marvin [Hagler] was more a traditionalist and a purist. The money was great, but he didn't fight for the money. For Marvin, the belts came first, the history came first, the legacy came first. He was a boxer-businessman. [Sugar] Ray [Leonard] was a businessman-boxer.--Seth Abraham

On This Day. 1862: President Lincoln issued a preliminary Emancipation Proclamation, setting a date for the freedom of 3 million slaves.--WestWingReport

I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.--Warren Buffett

"I thought they did a great job with the movie.  Let's be honest: Did I think they could make a movie out of 'Moneyball?' No. Never. I even told the studio that. And when they did make it, I thought it would suck.--Michael Lewis

The movie did not suck, not at all, that's the wrong word and that's a story for tomorrow. The story for today is how we even got here. It is about a man who is not really in the movie. No actor plays him. He's mentioned in the movie here and there, but only for a a few seconds. Still, without him, there is no Moneyball. There is no Sabermetrics, at least not under that name. Certainly people would still be looking for objective knowledge in baseball -- people were looking long before Bill James and they will look long after.  But without the life's work of Bill James, they sure as heck would not have made a movie out of it.--Joe Posnanski

Before a decade’s worth of steroid revelations made their glowing press coverage seem like an exercise in self-deception, people liked to say that Mark McGwire and Sammy Sosa “saved baseball” in 1998 — that their extraordinary home run surge revived fan enthusiasm and restored America’s interest in the sport after the ugliness of the World Series-canceling 1994 strike. Maybe that was true for others. For me, the player who saved baseball was Tim Wakefield.--Ross Douthat

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