The Skeptical Optimist

FQ.08.12: Favorite Quote for This Week

I think those people who say they believe in a gold standard are fundamentally being very anti-libertarian because what they mean by a gold standard is a governmentally fixed price for gold.
—Milton Friedman

FQ.08.11: Favorite Quote for This Week

On January 24, 1961 ... a B-52, mainstay of the strategic nuclear bomber force, crashed near Goldsboro, North Carolina.  The plane carried two 24-megaton nuclear weapons... [One bomb] fell into a field where it was found intact.  According to Ralph Lapp, former head of the nuclear physics branch of the Office of Naval Research, five of the six interlocking safety mechanisms on the recovered bomb had been triggered by the fall.  A single switch prevented the accidental explosion over North Carolina of a nuclear weapon more than a thousand times as powerful as the bomb that leveled Hiroshima.
—Lloyd J. Dumas, Lethal Arrogance

FQ.08.10: Favorite Quote for This Week

I would much rather have my children, grandchildren, and great-grandchildren have to deal with the problem of global warming than with the problem of a huge economic difference between rich and poor countries.
—William W. Lewis, The Power of Productivity

FQ.08.09: Favorite Quote for This Week

Theory:
[Individual investors] will behave as rational, clear-thinking, self-interested individuals, each one a latter-day Adam Smith.  They will make the market work efficiently, with their well-reasoned actions driving prices quickly to the "correct" level. . . .

Reality:
People simply do not think in terms of some theoretical utility measurable in dollars and cents, and are not always rational and self-interested.  The refutation of this one assumption of modern financial theory has in the past twenty-five years created a fertile new field of inquiry, called behavioral economics. 

—Benoit Mandelbrot, The (mis)Behavior of Markets

FQ.08.08: Favorite Quote for This Week

At any point in time, I always think I understand everything.  Then, ten years later, I have to admit that, ten years ago, I didn’t know a damn thing, and that I’ve learned it all since.
—Robert Lucas  [link]

FQ.08.07: Favorite Quote for This Week

The market economy is a man-made mode of acting under the division of labor.  But this does not imply that it is something accidental or artificial and could be replaced by another mode.  The market economy is the product of a long evolutionary process.
—Ludwig von Mises

FQ.08.06: Favorite Quote for This Week

Two concise definitions:

• "solar system" -  The sun, plus Jupiter, plus miscellaneous debris.

• "lawyer" -  The larval form of a politician.

[Sorry, the sources have faded from memory.]

FQ.08.05: Favorite Quote for This Week

There is no denying capitalism’s record. Market economies have succeeded over the centuries by thoroughly weeding out the inefficient and poorly equipped, and by granting rewards, to those who anticipate consumer demand and meet it with the most efficient use of labor and capital resources. Newer technologies increasingly drive this unforgiving capitalist process on a global scale. To the extent that governments "protect" portions of their populations from what they perceive as harsh competitive pressures, they achieve a lower overall material standard of living for their people.
—Alan Greenspan, The Age of Turbulence, pp. 268-9.

FQ.08.04: Favorite Quote for This Week

Some people believe labor-saving technological change is bad for the workers because it throws them out of work.  This is the Luddite fallacy, one of the silliest ideas ever to come along in the long tradition of silly ideas in economics...

The original Luddites were hosiery and lace workers in Nottingham, England, in 1811.  They smashed knitting machines that embodied new labor-saving technology as a protest against unemployment (theirs)... English government officials, after careful study, addressed the Luddites' concerns by hanging fourteen of them in January 1813.
—William Easterly, The Elusive Quest for Growth

FQ.08.03: Favorite Quote for This Week

I reviewed what articles and working papers in economics I could find.  They collectively show no convincing evidence that economists as a community have an ability to predict, and, if they have some ability, their predictions are at best just slightly better than random ones—not good enough to help with serious decisions. 
—N. N. Taleb, The Black Swan