Obama reelection chances looking pretty good right now

I can't get excited about this election. The only thing I am pumped for is the VP debate. I hope Ryan's maturity and intellect are properly benchmarked by the nation against the incumbent. The last VP debate was a bit of a draw.

Chart here.

Paul Ryan might not be a good pick

But maybe he is the best.

At least I think so, when reminded of this Megan McArdle piece.

A bit more honest, intelligent, and realistic than all the rest?

Jake Tapper gets it

I hope you do, too.

He compares the President Obama of January 2010 to the version of April 2011.

Reelection's in the air!

UPDATE: Greg Mankiw, too:

I must applaud the President for today's speech in which he finally and at long last takes the long-term budget imbalance seriously. There was a surprising amount of finger pointing for a person who claims to be transcending partisanship. That is especially true in light of the fact that President Obama's proposed policies, as put forth in his own annual budgets, have never shown how he would put the economy on a path with a declining debt-GDP ratio, even after the economy fully recovers from the recession.

But let's put that inconvenient truth aside for the moment. I am delighted that these fiscal issues are now squarely on the national agenda. If only someone could lock President Obama and Congressman Ryan in a seedy hotel room, turn off their access to cable, give them an endless supply of coffee and cold sandwiches, and not let them leave until they come to agreement, the nation could take a large step forward.

Quotes of the day

I never make predictions and I never will.--Paul Gascoigne

I thought the people who wrote off Tiger — depending on what we mean by “write off” — were more likely right than wrong, and anyway I never thought Tiger Woods has done well in an “us against the world” scenario. I don’t think he’s a guy who feeds of disrespect. I think he likes it best when everyone knows that he’s the best player going. At that time, my opinion was a pretty distinct minority. I certainly wasn’t alone on the “Tiger will probably never be the same” airplane, but I do know there were plenty of empty seats and plenty of overhead storage available. In the last year, though — a year in which Tiger spit on the green, threw clubs, blew a four-shot lead in his own tournament … when his average finish was 25th (not even counting the time he missed the cut or the time he withdrew) — the conventional wisdom has certainly shifted. ... The years tend to go in only one direction.--Joe Posnanski

... children are forced to go to school. In other words, school goes beyond child labor. It is forced child labor. ... my conclusion is that the law against child labor is really a law against children making money. Thanks, government.--David Henderson

There is nothing wrong with being tough. There is something wrong with only looking out for No. 1 when you pretend to be a team player.--Michael Lissack

Democracy can be a contact sport, but policy should be decided by legislative officials - not the judiciary. This is the fundamental difference between liberal and conservative judicial philosophies. A constitutional conservative jurist does not decide a case based on policy preferences—an honest liberal jurist admits to it. --Carrie Severino

A large, growing and diverse group of allies interested in consumer, small bank and credit union protections are pressing Congress to delay and study the Durbin amendment. We are encouraged that Congress is taking a closer look at the regulation and examining the unintended consequences. ... Remember, the Durbin Amendment was never debated publicly or the subject of a hearing before being adopted as part of the Dodd-Frank bill. As a result, the potential harm to consumers, small banks and credit unions is not known. If the regulation is implemented as written, consumers will likely see higher costs, fewer choices and reduced benefits—as consumers in Australia have experienced after similar regulations were imposed there.--Credit card insider

Detroit’s population plunged by 25 percent over the last decade, according to data recently released by the Census Bureau. This means fewer people are shouldering the nearly $3 billion of debt that Detroit, its public schools, the surrounding Wayne County and Wayne County Community College have accumulated. It works out to around $4,137 per person, according to the bond research firm MMA-Research. The per capita income of Detroit is just a little over $15,000.--John Carney

A lot of people think of janitors as a group that’s not particularly well paid. Those people might be surprised to learn that in the last five years alone, American janitors earned over $250 billion! That’s billion! With a B! Despite that enormous income, janitors pay no taxes whatsoever — or at least no taxes whatsoever over and above the taxes that are paid by you, me and other ordinary Americans. And shockingly, it appears that the U.S. Congress would rather cut spending than institute a new tax on janitorial income. ... The problem with democracy is that these people get to vote.--Steve Landsburg

... I think it's no longer credible to complain that the GOP has not put forward any sort of meaningful solution for the budget. At this point, they're the only ones who have put forward a detailed outline; the Democrats still seem to be hoping that if they kind of mill around long enough, eventually an angel will float over the horizon and deposit a plan that doesn't annoy anyone (and/or allows them to pay for the entire thing by raising the marginal tax rate on the Koch brothers and Richard Mellon Scaife to 110%). ... What the Ryan plan really shows is not where we're going, but how long it's going to take us to get there. The vengeful, partisan spirit of the times is not conducive to coming to any sort of bipartisan agreement, however grudging. And it is going to have to be a bipartisan agreement. --Megan McArdle

Everyone knows that what the president and his allies really want to do is raise taxes. They might agree to some tinkering around the margins on entitlements for show. But in their heart of hearts they believe the solution is higher rates of taxation. The problem is they don’t have the guts to say so in public. They know that’s the surest way to permanent minority status. And so they are hoping for a more indirect route to their goal, using guile to lure gullible Republicans (see here) into agreeing to their approach without ever having to sell it to a tax-averse electorate. The Ryan plan blows this kind of plotting by Democrats to smithereens. There’s no tax increase in the Ryan plan, and there’s no debt crisis. What’s required is far-reaching entitlement reform and serious spending discipline. By staking out that position, Ryan and his comrades have improved their leverage immensely. There’s no need to agree to tax hikes to solve the budget problem. What’s needed is for Democrats to get serious about spending reform, as Ryan has.--James Capretta

You do not have to like the long-term budget that Paul Ryan and the House Republicans have released this morning. There’s plenty in the plan for liberals to hate, moderates to doubt, and conservatives to question. But you do have to respect it. As my colleague David Brooks writes today, it is “the most comprehensive and most courageous budget reform proposal any of us have seen in our lifetimes.” It puts flesh on the bones of the standard-issue conservative pledge to limit government’s growth, and it does so not with evasive pledges on process (like the risible idea of a balanced budget amendment) or dishonest suggestions that the deficit can be erased by defunding N.P.R. and slashing foreign aid, but by attacking entitlement spending deeply and directly. ... This is how we should want all our legislators to approach the people’s business, whether they’re liberal or conservative or somewhere in between — putting what they consider good policy above what everyone else in their party considers good politics. Too few of them do. But for the ones who try to make real substance their touchstone, rather than just partisan advantage, today should be a hopeful day.--Ross Douthat

Although [John] Milnor is famous for many results, the one for which he is best known is his construction of a seven-dimensional “exotic sphere”. This means a differentiable 7-manifold that is homeomorphic to a 7-sphere but not diffeomorphic to a 7-sphere.--Tim Gowers

Sequencing the human genome isn't really like being able to read the assembly instructions for the human body. The instructions are in a nucleic acid code that gets acted on by lots of different agents to turn them into a final product like a protein, and we don't really know the code yet. Sequencing the human genome was more like getting an instruction manual for something important--in a dead language for which we have no Rosetta Stone. But I didn't have that skepticism at the time, and neither did a lot of people in the biosciences. The human body keeps turning out to be way more complicated than we hope or expect.--Megan McArdle

In a symbiotic union more complete than any previously found in vertebrates, the common spotted salamander lives with algae inside its cells.--Brandon Keim

Why is Sean Penn doing so much better than his ex-wife? Can comparing their stories provide any lessons for aspiring celebrity humanitarians? ... While Madonna visited Malawi for some photo ops, she wasn’t involved in the day-to-day operation of the project. From the Times: “She and her aides offered no explanation of why, given her high interest in the project, she had not noticed the problems as they began unfolding.” In contrast, Sean Penn appears totally hands-on, living in Haiti and learning by doing--Laura Freschi

Photo link here.

I still think President Obama wins reelection

The Republicans don't have anyone close to a Reagan to run in 2012 (or 2016, as far as I can see).

Maybe Paul Ryan, someday.

Via Mark Perry.

UPDATE: Interesting comparison between Reagan and Obama by Fouad Ajami:

It was canonical to [the Obama] administration and its functionaries that they were handed a broken nation, that it was theirs to repair, that it was theirs to tax and reshape to their preferences. Yet there was, in 1980, after another landmark election, a leader who had stepped forth in a time of "malaise" at home and weakness abroad: Ronald Reagan. His program was different from Mr. Obama's. His faith in the country was boundless. What he sought was to restore the nation's faith in itself, in its political and economic vitality.

Big as Reagan's mandate was, in two elections, the man was never bigger than his country. There was never narcissism or a bloated sense of personal destiny in him. He gloried in the country, and drew sustenance from its heroic deeds and its capacity for recovery. No political class rode with him to power anxious to lay its hands on the nation's treasure, eager to supplant the forces of the market with its own economic preferences.

To be sure, Reagan faltered midway through his second term—the arms-for-hostages trade, the Iran-Contra affair, nearly wrecked his presidency. But he recovered, the nation rallied around him and carried him across the finish line, his bond with the electorate deep and true. He had two years left of his stewardship, and his political recovery was so miraculous that he, and his first mate, Secretary of State George P. Shultz, would seal the nation's victory in the Cold War.

There is little evidence that the Obama presidency could yet find new vindication, another lease on life. Mr. Obama will mark time, but henceforth he will not define the national agenda. He will not be the repository of its hopes and sentiments. The ambition that his would be a "transformational" presidency—he rightly described Reagan's stewardship in these terms—is for naught.

Quotes of the day

Such is the irresistible nature of truth, that all it asks, and all it wants, is the liberty of appearing. The sun needs no inscription to distinguish him from darkness.--Thomas Paine

Good looks can kill a woman's chances of snaring jobs considered "masculine," according to a study by the University of Colorado Denver Business School. Attractive women faced discrimination when they applied for jobs where appearance was not seen as important. These positions included job titles like manager of research and development, director of finance, mechanical engineer and construction supervisor. They were also overlooked for categories like director of security, hardware salesperson, prison guard and tow-truck driver.--Belinda Goldsmith

Put more sex in your life: It slows aging. A Scottish study found that thrice-weekly action stripped at least four years off participants' faces, and getting busy even boosts immunity and reduces heart disease. There are beauty bonuses, too — sex perks up your appearance instantaneously.--Marie Claire

We obtained consistent and converging evidence that personality differences between liberals and conservatives are robust, replicable, and behaviorally significant, especially with respect to social (vs. economic) dimensions of ideology. In general, liberals are more open-minded, creative, curious, and novelty seeking, whereas conservatives are more orderly, conventional, and better organized.--Political Psychology, Vol. 29, No. 6, 2008

I am skeptical of Paul Ryan's roadmap. Not because it's dishonest, but because it's hard. Really hard. As in, I-don't-see-how-it-could-possibly-survive-the-legislative-process hard. ... Nonetheless, I think it's a really, really important document. Why? Because it is the most honest attempt I've seen by a politician to grapple with the challenges ahead of us. Strike that; it is the only attempt that I'm aware of to grapple with what lies ahead of us. Others have been willing to discuss things piecemeal, or delegate the nasty job of balancing a budget to a commission, but as far as I know only Paul Ryan has come forward and said, "Here's how all the moving parts are going to fit together." ... The people complaining that he hasn't spent all his time highlighting the least popular aspects of his roadmap are making ridiculous demands that they would never deliver to their own side. They might as well claim that true honesty demands that he campaign in his birthday suit and open every speech with his unvarnished feelings about his mother in law. Don't get me wrong, there are fair criticisms, and I'm trying to make some of them. But I'd love to see the people kvetching about his plan offer an alternative plan of their own. How much tax revenue would it take to pay for the welfare state that Democrats want us to have? How deeply are they willing to cut military spending? What politically difficult choices are those sniping at Paul Ryan willing to make? His plan may have flaws, but I'll take it over people who have vague plans to deal with the problem by raising taxes on the rich, "closing the loopholes", or, um, ending our wildfire epidemic of unnecessary amputations.--Megan McArdle

Health care now approaches 20 percent of the economy. With health insurance included in compensation, that means that 20 percent of compensation is determined not by your skill level, but by the median cost of health insurance. If the value of your skills has been rising faster than the median, then maybe that is not a problem. However, if the value of your skills has been rising more slowly than the median, then your skill level is no longer enough to overcome the health insurance hurdle.--Arnold Kling

Imposing a 20% income tax is not the same as cutting your wage by 20%. That’s because the income tax grabs not just a chunk of your current wages, but also a chunk of the future interest and dividends those wages enable you to earn. So a 20% income tax will, in general, discourage work more effectively than a 20% wage cut. This is important if you’re using data on wage cuts to predict the effects of income taxes. ... Nobody, not even the most way-out leftist, thinks that the goal of tax policy should be to maximize government revenue. We also care about things like, you know, the quality of life. Asking “what tax rate maximizes government revenue?” is like asking “what conscription rate maximizes the size of the army?”. Who cares? The right question is: What tax rate, and what conscription rate, will make us happiest in the long run? There is more to life than feeding the government.--Steve Landsburg

In order to reduce China’s excessive dependence on export surpluses and investment, it is vitally important that household consumption, which in China represents probably the lowest share of GDP ever recorded, rise significantly. To that end Beijing has implemented a number of policies aimed at boosting Chinese consumption. Are these policies working? On the positive side, automobile sales surged last year. For most analysts, this was immensely good news and they argued that this increased demand signaled a major shift in the consuming and saving behavior of Chinese households. But skeptics like me disagreed. We claimed that the surge in demand for automobiles was caused mainly by government subsidies, and that these were not sustainable. The same thing happened, by the way, to durable goods, which were also subsidized and which also saw a surge in retail sales. More importantly, we argued, any current increase in automobiles sales and durable goods would be reversed in the future as households absorbed the cost of the subsidies. Remember that subsidies are not manna from heaven. They must be paid for, and ultimately it is the household sector that pays for them, usually in the form of higher taxes but sometimes, and certainly in the case of China, in the form of financial repression.--Michael Pettis

Most terrorists come from fairly prosperous backgrounds, and though the Internet does help disseminate hate, a close look at terrorism shows that, almost invariably, a necessary step in the process to radicalization occurs in a place of worship. This doesn't mean that all mosques are bad, of course, but it does mean that some have played an important role in the West's decades-long struggle with radical Islam. The mosque that was closed on Aug. 9 is a good example. It's better known around the world by its old name, al-Quds, where Mohamed Atta and two other of the 9/11 pilots worshipped. (It was renamed in 2008.) When the attacks took place in 2001, I went to Hamburg along with many other journalists and tried to talk to the people who ran it and worshipped there. Everyone we met said that they didn't know the plotters and that their radicalization must have taken place elsewhere. That turned out to be exactly wrong, as police investigations later showed. In 1998, in fact, the al-Quds mosque showed up in a German police investigation. A Sudanese man, Mamdouh Mahmud Salim, had been arrested in a Munich suburb, charged with conspiring to build an al Qaeda network in Germany. ... When deciding whether a mosque should exist on public property, simply look at the people involved, figure out what they've done, and look into where the money comes from. Radicals leave a trail, and it really isn't that hard to find it. The hard part is acting when you find the evidence.--Ian Johnson

Google and Verizon announced Monday, as part of their bilateral net neutrality trade agreement they want Congress to ratify, that open wireless rules were unnecessary. “We both recognize that wireless broadband is different from the traditional wire-line world, in part because the mobile marketplace is more competitive and changing rapidly,” the joint statement said. “In recognition of the still-nascent nature of the wireless-broadband marketplace, under this proposal we would not now apply most of the [Net Neutrality] wire-line principles to wireless, except for the transparency requirement.” That’s fancy language for: Verizon and the nation’s telecoms have yet again won, Google officially became a net neutrality surrender monkey, and you — as an American — have lost. Google defends its reversal, saying through a spokeswoman: “We have taken a backseat to no one in our support for an open internet. We offered this proposal in the spirit of compromise. Others might have done it differently, but we think locking in key enforceable protections for consumers is progress and preferable to no protection.” Compare Monday’s statement to this one, from a post on Google’s official blog in 2007: “The nation’s spectrum airwaves are not the birthright of any one company. They are a unique and valuable public resource that belong to all Americans. The FCC’s auction rules are designed to allow U.S. consumers — for the first time — to use their handsets with any network they desire, and and use the lawful software applications of their choice.” Back then, Google figured it would need those rules to catch up to Apple’s iPhone dominance in the mobile world, and its interests and the American people’s were aligned. It created the “Open Handset Alliance” with handset makers — not carriers.--Ryan Singel

It's typical of the morons at UC irvine that they would think Bill Lerach is the right guy to teach an ethics course of any sort. The guy did jail time and was disbarred for gross ethical improprieties.--Steve Bainbridge

John Taylor endorses the Paul Ryan Roadmap

here.

UPDATE: Ted Gayer of Brookings defends the roadmap. Practically bipartisan support then!

I am glad that Paul Krugman is afraid of Paul Ryan

You don't attack what you don't fear.

Here's a 2 minute drill of why Krugman is understandably wetting his pant leg.

I really like this "koala bear on the third rail"

Quotes of the day

U.S. prosecutors are investigating whether Morgan Stanley misled investors about mortgage-derivatives deals it helped design and sometimes bet against, people familiar with the matter said, in a step that intensifies Washington's scrutiny of Wall Street in the wake of the financial crisis. Morgan Stanley arranged and marketed to investors pools of bond-related investments called collateralized-debt obligations, or CDOs, and its trading desk at times placed bets that their value would fall, traders said. Investigators are examining, among other things, whether Morgan Stanley made proper representations about its roles.--AMIR EFRATI, SUSAN PULLIAM, SERENA NG And AARON LUCCHETTI

Is this how Americans believe their government should act? Do they believe that all of the rules related to equity and fairness in the judicial system should be thrown aside, as the government pursues its vendetta against Wall Street through leaks to the press? Are we now in an era when government can slander and destroy reputations by attacking people with press leaks?--Dick Bove

Morgan Stanley’s overall mortgage bets resulted in multi-billion dollar mortgage-related losses in 2007 and 2008, which brought the firm to the brink of collapse. Goldman and Paulson profited handsomely from their mortgage bets. That in large part explains why Goldman, Tourre and Paulson are such targets of public and lawmaker anger, and why Morgan’s traders will likely remain footnotes in the history of the mortgage collapse.--Michael Corkery

Suppose that we misspecified the underlying probability of mortgage default and we later discover the true probability is not .05 but .06. In terms of our original mortgages the true default rate is 20 percent higher than we thought--not good but not deadly either. However, with this small error, the probability of default in the 10 tranche [of the pooled CDO] jumps from p=.0282 to p=.0775, a 175% increase. Moreover, the probability of default of the CDO jumps from p=.0005 to p=.247, a 45,000% increase!--Alex Tabarrok

The main issue is the long-term deficit. As societies become richer, citizens tend to want better schools, better medical care and other government services. This country is following that pattern, but without paying the necessary taxes. That combination has us on a course to Greece-like debt. As a rough estimate, the government will need to find spending cuts and tax increases equal to 7 to 10 percent of G.D.P. The longer we wait, the bigger the cuts will need to be (because of the accumulating interest costs). Seven percent of G.D.P. is about $1 trillion today. In concrete terms, Medicare’s entire budget is about $450 billion. The combined budgets of the Education, Energy, Homeland Security, Justice, Labor, State, Transportation and Veterans Affairs Departments are less than $600 billion. This is why fixing the budget through spending cuts alone, as Congressional Republicans say they favor, would be so hard. Representative Paul Ryan of Wisconsin has a plan for doing so, and it includes big cuts to Social Security and the end of Medicare for anyone now under 55 years old. Other Republicans have generally refused to endorse the Ryan plan. Until that changes or until the party becomes open to new taxes, its deficit strategy will remain unclear.--David Leonhardt

Before his arrest on corruption charges, Wang Yi was not only a powerful financial official in the Communist party but also one of China’s most celebrated modern classical music composers. ... Mr Wang is described now as someone who has trouble reading music, had no formal training and was reliant on ghost writers to produce what was once hailed by state media as “China’s answer to Mozart” and “music for rejuvenation of the nation”. Official reports suggest that most of the millions of renminbi spent on tickets to see Mr Wang’s works came from businesspeople and officials hoping to curry favor with him. The case is one example of the extraordinary influence senior party officials with few or no artistic credentials wield over the Chinese arts. Critics say these factors are the main reason China, the world’s biggest exporter of manufactured goods, has produced relatively few cultural or artistic exports in recent years – despite a multibillion-dollar global campaign and regular exhortations from leaders to develop the “cultural industries” and “soft power” of the nation. ... In the wake of the hugely successful animated film Kung Fu Panda, prominent Chinese media commentators published a string of soul-searching articles asking why such a film was made in Hollywood instead of China, even though all the themes were Chinese. Critics such as Mr Peng and Mr Ai say government control and the conditions illustrated by the Wang case are two key reasons.--Jamil Anderlini

We all looked up to John [Lennon]. He was older and he was very much the leader; he was the quickest wit and the smartest and all that kind of thing. So whenever he did praise any of us, it was great praise, indded, because he didn't dish it out much. If ever you got a speck of it, a crumb of it, you were quite grateful. ... When the four of us got together, we were definitely better than the four of us individually. One of the things we had going for us was that we'd been together a long time. It made us very tight, like family, almost, so we were able to read one another. That made us good. It was only really toward the very end, when business started to interfere. ... We were the biggest nickers in town. Plagiarists extraordinaires. ... George [Harrison] wrote [Taxman] and I played guitar on it. He wrote it in anger at finding out what the taxman did. He had never known before then what could happen to your money. ... People always thought Lucy in the Sky with Diamonds was [an LSD song], but it actually wasn't meant to say LSD. It was a drawing that John's son brought home from school. Lucy was a kid in his school. ... I wrote [Back in the USSR] as a kind of Beach Boys parody. And Back in the U.S.A. was a Chuck Berry song, so it kinda took off from there. I just liked the idea of Georgia girls and talking about places like the Ukraine as if they were California, you know? It was also hands across the water, which I'm still conscious of. 'Cause they like us out there, even though the bosses in the Krelmin may not. The kids do. And that to me is very important for the future of the race.--Paul McCartney

If God does not exist then — in light of the hidden hand that events have placed on the shoulders of these two new leaders, paving their way and staying their enemies — Nick Clegg and David Cameron may this weekend think it necessary to invent Him.--Matthew Parris

Like Robert Peel’s decision to repeal the Corn Laws, and split the Conservative Party for a generation, or Stanley Baldwin’s gentle manoeuvring to install the first Labour Government in 1924 and thus dish the Liberals, David Cameron’s generous offer to the Liberal Democrats has changed British politics for ever. Whether it succeeds or not. On Friday morning, as he surveyed the election result, Cameron was able to see that the new arithmetic of the House of Commons represented both a huge challenge and a big opportunity. And the decision he made — to treat it as an opportunity — will be the making of him or the breaking of him.--Daniel Finkelstein

I was surprised and impressed that [Gordon] Brown did not have to be stretchered out of Number 10 under heavy sedation--that he was willing to sacrifice what was left of his career, his reputation beyond redemption, to keep Labour in power. I had thought him less principled than that.--Clive Crook

The central issue is what you do when you notice many other people doing something that bothers you. If you believe that government should address the issue, then you belong to the Church of Unlimited Government. ... I think that most Americans are in that Church, and that it is the established Church in our schools and universities.--Arnold Kling

It is not the role of the ECB, IMF, or Federal Reserve to bail out banks. These measures are profoundly unpopular with voters in countries such as Germany and the United States. I think it is incumbent on the architects of these measures to communicate what is the structural defect in banking regulation that made such intervention necessary, and what reforms have been implemented to ensure that such measures won't be needed again.--James Hamilton

High social rank, as noted, has substantial instrumental value, and low social rank entails substantial concrete costs, irrespective of whether people care about rank per se. Forcing a productive person to buy more social rank than he wants is objectionable, but the alternative is to give all of society’s most productive members a valuable asset free of charge. That asset would command a high price in the libertarian’s ideal world in which purely voluntary societies could form and dissolve at will. And since its value is a direct consequence of the substantial costs associated with low social rank, a society without redistributive taxation should strike libertarians as even more objectionable.--Robert Frank

I am shocked to see an economist talking about “enough for everyone.” What do those words mean? Additional medical services would produce some benefit well past the point at which the entire GNP is spent on them. As you have just conceded, what matters is not whether I get the best care but how good the care is that I get. When my absolute real income increases but my relative income decreases, I can afford better care than before, even if other people can afford care better still. So, in the case of medical care, it is absolute not relative that matters. ... If everybody gets richer, the quality of schools can increase everywhere. You are again confusing absolute and relative. The richer people will still, on average, have better schools--but the “worse” schools can be producing education as good as, or better than, the best schools used to produce. ... Your claim is correct only with regard to the status output, not the schooling output. If you go to Harvard and I to Cornell, that may result in your winning out over me in our courtship of the woman both of us wish to marry. It may result in people who happen to know our backgrounds treating you with more deference than they treat me. I do not know if it has occurred to you, but one implication of your argument is that spending on schooling, insofar as it produces status, imposes a negative externality on others, so private individuals will tend to buy a more than optimal quantity of schooling for their children. It follows, on straightforward economic lines, that instead of subsidizing schooling, as we do on an enormous scale, we ought to tax it. If schooling is “inescapably relative,” we could cut every school’s expenditure in half and still produce the same amount of education, relatively speaking, while saving many billions of dollars. Perhaps that should be the subject of your next op-ed.--David Friedman

... let’s take a look at the $1 bill I am holding in my hand. It says right at the very top, “Federal Reserve Note.” It also says right down here, “This note is legal tender for all debts, public and private.” This is what the public ex-ante wants: the knowledge that they can turn their deposits into these Federal Reserve Notes. And if the public knows they can turn them into these notes, they don’t. With me here? If I know I can, I don’t. ... So, bottom line, [after the August 2009 run] you had the Fed step up and provide its public good to the Shadow Banking System. You had the FDIC step up and do the same thing with its public good. And as Paul Volcker was noting this afternoon, you had the Treasury step up and provide a similar public good for the money market mutual funds, using the Foreign Exchange Stabilization Fund. It was a triple-thick milk shake of socialism. And it was good. Again, I’m not being pejorative. I’m being descriptive. ... When my son turned 18, he said, “Dad, I’m now the age of majority and I can do whatever I want.” I said, “Son, that’s absolutely true. However, I still control the Bank of Dad. And if you want to have access to the Bank of Dad, there are going to be rules. If you don’t want access to the Bank of Dad, that’s fine. But if you want access to the Bank of Dad, there are going to be rules.” ... Yes, think in terms of the Federal Reserve and the FDIC and the Treasury as all providing public goods to banking. But the Federal Reserve has got to be at the top of the totem pole, because the Fed truly is the Bank of Dad. The entity that can print money has got to be the lead supervisor. To me, it’s unambiguously clear. And the fact that it’s being debated actually befuddles me. I operate on the notion that self-evident truths should be self-evident. But apparently Washington doesn’t operate on that thesis.--Paul McCulley

Think of eminent domain as the bastard child of Joseph Stalin and Richard Posner. In 2005, the Supreme Court ruled in Kelo versus New London that the government could take your property and give it to a private corporation if that corporation could prove it would bring in more revenue.--Shooting War

There he was, a short, beefy guy with a goatee and a Red Sox cap and a thick Boston accent, and I suddenly learned that I didn’t have the slightest idea what to say to someone like him. So alien was his experience to me, so unguessable his values, so mysterious his very language, that I couldn’t succeed in engaging him in a few minutes of small talk before he got down to work. Fourteen years of higher education and a handful of Ivy League degrees, and there I was, stiff and stupid, struck dumb by my own dumbness. “Ivy retardation,” a friend of mine calls this. I could carry on conversations with people from other countries, in other languages, but I couldn’t talk to the man who was standing in my own house. It’s not surprising that it took me so long to discover the extent of my miseducation, because the last thing an elite education will teach you is its own inadequacy. ... because these schools tend to cultivate liberal attitudes, they leave their students in the paradoxical position of wanting to advocate on behalf of the working class while being unable to hold a simple conversation with anyone in it. Witness the last two Democratic presidential nominees, Al Gore and John Kerry: one each from Harvard and Yale, both earnest, decent, intelligent men, both utterly incapable of communicating with the larger electorate. ... Graduates of elite schools are not more valuable than stupid people, or talentless people, or even lazy people. Their pain does not hurt more. Their souls do not weigh more. If I were religious, I would say, God does not love them more. The political implications should be clear. ... The elite like to think of themselves as belonging to a meritocracy, but that’s true only up to a point. Getting through the gate is very difficult, but once you’re in, there’s almost nothing you can do to get kicked out. Not the most abject academic failure, not the most heinous act of plagiarism, not even threatening a fellow student with bodily harm—I’ve heard of all three—will get you expelled. ... For the elite, there’s always another extension—a bailout, a pardon, a stint in rehab—always plenty of contacts and special stipends—the country club, the conference, the year-end bonus, the dividend. If Al Gore and John Kerry represent one of the characteristic products of an elite education, George W. Bush represents another. It’s no coincidence that our [former] president, the apotheosis of entitled mediocrity, went to Yale. ... if you’re afraid to fail, you’re afraid to take risks, which begins to explain the final and most damning disadvantage of an elite education: that it is profoundly anti-intellectual.--William Deresiewicz

Even though I hope I have persuaded you that purely economic measures of personal well-being are not as narrow as sometimes thought, I have so far dodged the key questions: Ultimately, what makes us happy? What makes our lives satisfying in the long run? And, more subtly, how is the state of mind we call happiness, at least as social scientists define the term, related to our long-run life satisfaction? We can look inward for answers, but, at least for someone trained as a social scientist, the most direct way to tackle the question is just to go out and ask people--lots of people. ... The results of these studies are quite interesting. One finding is that most people consider themselves to be reasonably happy, despite the undeniable hardships that many people face. ... Perhaps people don't want to admit to survey-takers that they are unhappy, but the explanation preferred by most researchers is that human beings are intrinsically very adaptable and are able to find satisfaction in their lives even in very difficult circumstances. ... Ultimately, life satisfaction requires more than just happiness. Sometimes, difficult choices can open the doors to future opportunities, and the short-run pain can be worth the long-run gain. Just as importantly, life satisfaction requires an ethical framework. Everyone needs such a framework. In the short run, it is possible that doing the ethical thing will make you feel, well, unhappy. In the long run, though, it is essential for a well-balanced and satisfying life.--Ben Bernanke

I think it's better to date [in Washington, DC] if you are male. Government attracts a disproportionate share of intelligent women. I've never lived in New York, but there are so many celebrities, billionaires. If you are a guy in New York, there's always another guy that crushes you on the scale. Here, there are all these politicians but they are really out of commission for the most part -- or if they fool around, it's with interns. You don't have to compete with them. The people who are really high status are off the market. As a male in Washington, you can be high in status fairly easily without the true very high status competing. In New York or L.A., there are movie stars and directors. Even if a woman can't be with a movie star, women can still say, 'Gee, this guy or that guy is not a movie star or a director.' There's lobbyists and lawyers here, a lot of them. You can be more interesting than that. This is a great place to live.--Tyler Cowen

Quotes of the day

Does honest editorial quality matter any more?--Harold Goldberg

See if you can spot the difference between reality and American culture.--Andrew Klavan

Not everything that has come out of the IPCC and the East Anglia Climate Unit is false, but enough of their product is sufficiently tainted that these institutions can best serve the cause of fighting climate change by stepping out of the picture.--Walter Mead

Non-Keynesian economists might be mistaken. But the plausibility of their arguments and the prominence of many in their ranks mean that [Robert] Reich’s summary dismissal of them is, well, facile.--Don Boudreaux

... the Fed has some sort of implicit nominal target, and if the economy seems to fall short they’ll pull out all the stops and flood the economy with liquidity. That’s why the $800 billion dollar fiscal stimulus was a complete waste of money; the Fed wasn’t going to allow NGDP to fall much further than the actual 2.5% it fell. Shame on us for not figuring that out, and shame on the Fed for not explaining that to us. Oh, and shame on the Fed for not having a more aggressive policy even with the stimulus. And shame on me for writing this post just one day after I resolved to be less opinionated.--Scott Sumner

Without exception, every time I've seen someone advocate means testing, he uses income as his measure of means. This completely ignores wealth. Although income and wealth are highly positively correlated, the correlation is not close to 1.0. Therefore means testing would discriminate in favor of wealthy people with low income. Because the most expensive programs for which means testing is advocated tend to be for the elderly, this is an even bigger problem.--David Henderson

Facebook was successful early on because it didn't depart significantly from how its audience interacted, and because it started at the top of the social hierarchy. Zuckerberg distinguished his site through one innovation: Facebook, initially at least, would be limited to Harvard. The site thus extended one of the primary conceits of education at an elite university: that everyone on campus is, if not a friend, then a potential friend, one already vetted by the authorities. Most previous social networks, such as MySpace and Friendster, had been dogged by the sense that, while one might use them with friends, they were to a substantial degree designed for meeting strangers.--Charles Petersen

Rationing happens today! The question is who will do it? The government? Or you, your doctor and your family? ... I have a lot of respect for [the Wyden-Bennett] plan. If I were a Democrat, it’s the bill I’d be on. He’s got more mandates than I’d like. But if Ron Wyden and I were in a room, we could hammer out a deal by tomorrow. ... This is my 12th year. If I lose my job over this, then so be it. In that case, I can be doing more productive things. If you’re given the opportunity to serve, you better serve like it’s your last term every term. It’s just the way I look at it. I sleep well at night. ... I don’t want a closed system that will gravitate towards more government control. I want it to be decentralized that has regulatory competition and market competition. You can be in or out of the exchange, which keeps everybody honest. That to me is very important.--Paul Ryan

I pay off the debt completely [with my legislative roadmap], and over time I wipe all these unfunded liabilities off the books. But if we do half that, that’s fantastic. ... I’m not interesting in winning by default. And I’m worried that if we get the majority back by default, we’ll screw up again.--Rep. Paul Ryan

There are hundreds of Republican politicians in Washington, but Ryan is one of the few worth taking seriously on substance — and one of the few, as a result, who can critique the Obama administration without resorting to gimmickry or sloganeering. And in a party that’s suffering from deficits of both leadership and substance, that’s pretty good position for a young congressman to occupy.--Ross Douthat