Market Correction

7 September 2006

The Editor, USA Today

To the Editor:

You correctly argue that if the Chinese spend more money vacationing in the United States, "that could help clip the $202 billion trade deficit with China" ("China's latest exports: tourists - and lots of them," Sept. 6). But why assume that this result is desirable?

We praise Americans who don't blow all their incomes on current consumption - that is, Americans who save - and who invest these saved funds. So shouldn't we also praise those Chinese who, rather than rushing to buy as many consumption goods and services as possible, save and invest a portion of their dollars? That such investment by foreigners creates the statistical artifact we call a "trade deficit" does nothing to make such investment less important than domestic saving and investment to the vibrancy of our economy.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

6 September 2006

The Editor, New York Times
229 West 43rd St.
New York, NY 10036

To the Editor:

Scorning laissez faire, Harvard economist Dani Rodrik lists government interventions that he says are "often needed" for economic development ("In Africa, a More Business-Friendly Approach," Sept. 6). His list includes "special economic zones."

Such zones, though, are simply areas spared the tax and regulatory burdens inflicted by government on other parts of a country. That is, special economic zones enjoy policies closer to laissez faire. If these zones do indeed foster economic growth, why praise government for setting them up? Government should instead be criticized for continuing to impose growth-destroying taxes and regulations outside of these special zones.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

4 September 2006

The Editor, The New York Review of Books

To the Editor:

In your September 21 issue, Tony Judt appropriately quotes Leszek Kolakowski's observation that Marxism is "a modern variant of apocalyptic expectations which have been continuous in European history" ("Goodbye to All That?").

Later in the same issue you revisit the current concern over global warming ("'The Threat to the Planet': An Exchange"). Might today's widespread fear that humankind is doomed by capitalism and SUVs - unless we follow Al Gore's advice to "drastically change our civilization and our way of thinking" - be just the most recent manifestation of these apocalyptic expectations?

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

3 September 2006

The Editor, New York Post

To the Editor:

Recalling the Great Depression, Susan Tannenbaum asks "Didn't President Roosevelt respond to that calamity with an alphabet soup of government-funded organizations and lots of action designed to get the country back on its feet? Why can't we do that for the Gulf Coast?" (Letters, September 3).

Let's hope we don't do the same for the Gulf Coast. Contrary to popular myth, FDR's New Deal did not end the Depression.

In fact, by discouraging investment, subsidizing non-production, promoting cartels, and preventing wages and prices from adjusting to market realities, the New Deal was itself the great calamity of the 1930s.* Having endured one of America's worst natural disasters, residents of the Gulf Coast should be spared a replay of one of our worst man-made disasters.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

* See Robert Higgs, Depression, War, and Cold War (Oxford University Press, 2006):
http://www.lfb.com/index.php?deptid=&parentid=&stocknumber=EH9102&page=1&itemsperpage=24

2 September 2006

The Editor, New York Times
229 West 43rd St.
New York, NY 10036

To the Editor:

John Tierney is correct that the GOP fusion of libertarians and conservatives is breaking down ("Can This Party Be Saved?" Sept. 2). The lesson here is important.

Although it hides its nature behind a glorifying facade of marble columns, grandiose titles, and stately ceremonies, government is brute power. And so in politics those who long for power, either because of their ideology or because of their vanity, will over time out-compete those who detest power. Because true conservatives itch to control the lives of others no less than do modern "liberals," it was inevitable that conservatives would overwhelm the libertarian voices within an organization - the GOP - whose sole purpose is to grab as much power as possible.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

1 September 2006

The Editor, New York Times
229 West 43rd St.
New York, NY 10036

To the Editor:

Thomas Frank argues that the modern American economy harms ordinary workers ("Rendezvous With Oblivion," Sept. 1). He grounds this argument in part upon the widespread belief that Americans today have less job security than they enjoyed during "liberalism's" golden era.

This belief isn't supported by the evidence. Economist Ann Huff Stevens finds in a recent paper* that job security for men today is little changed from what it was in 1969. Specifically, "In 1969, average tenure in the longest job for males aged 58-62 was 21.9 years. In 2002, the comparable figure was 21.4 years. Just over half of men ending their careers in 1969 had been with a single employer for at least 20 years; the same is true in 2002."

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

* "The More Things Change, The More They Stay the Same: Trends in Long-term Employment in the United States, 1969-2002," National Bureau of Economic Research, Working Paper No. 11878: http://papers.nber.org/papers/w11878

31 August 2006

The Editor, Washington Times

To the Editor:

Pam Algea agrees with Pat Buchanan that Mexicans are 'invading' America and 'reconquering' the U.S. southwest (Letters, August 31). This view is as narrow as it is baseless. First, real invaders violently plunder; they do not work and produce on terms agreeable to both employer and employee.

Second, as Princeton sociologist Douglas Massey points out,* the data on Mexican immigration powerfully contradict the claim that America is being "overrun" with Mexican immigrants: "Mexican immigration is not a tidal wave. The rate of undocumented migration has not increased in over two decades.... Rates of migration between Mexico and the United States are entirely normal for two countries so closely integrated economically."

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

* Douglas K. Massey, "Seeing Mexican Immigration Clearly," Cato Unbound, August 20, 2006:
http://www.cato-unbound.org/2006/08/20/douglas-s-massey/seeing-mexican-immigration-clearly/

30 August 2006

Editor, The Washington Post
1150 15th St., NW
Washington, DC 20071

Dear Editor:

Harold Meyerson writes that the past thirty years has witnessed a "war of American employers on unions" resulting in a "decoupling of increased corporate revenue from employees' paychecks" ("Devaluing Labor," August 30). He chooses as his argument's crescendo the low salaries paid to pilots by Mesaba Airlines.

Bad example. Mesaba Airlines filed for Chapter 11 bankruptcy in October. The low salaries it pays clearly haven't resulted from - and certainly haven't resulted in - any "increased corporate revenue" pouring into Mesaba's coffers.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

29 August 2006

The Editor, Washington Times

To the Editor:

Ben Bernanke rightly looks at globalization's big picture ("Bernanke on globalization," August 29). Globalization does more than improve people's material standard of living. It also breaks down irrational prejudices - prejudices that stunt and deform the growth of civilization. Historian Will Durant said it well when he explained how foreign commerce sparked ancient Athens' rise to greatness:

"The crossroads of trade are the meeting place of ideas, the attrition ground of rival customs and beliefs; diversities beget conflict, comparison, thought; superstitions cancel one another and reason begins."*

Quite literally, trade restrictions are unreasonable.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

* Will Durant, The Life of Greece (1939), p. 135.

28 August 2006

The Editor, New York Times
229 West 43rd St.
New York, NY 10036

To the Editor:

You allege that ordinary workers today are suffering an unprecedented post-WWII failure of their compensation to keep pace with productivity gains and with profits ("Real Wages Fail to Match a Rise in Productivity," August 28). But the significance you accord the story by running it on the Front Page above the fold is at odds with the fact that you quote only one economist, Jared Bernstein. Were none others available?

Perhaps if your reporters had spoken to more scholars they would not have written that "Since last summer, however, the value of workers' benefits [along with wages] has also failed to keep pace with inflation." Bureau of Labor Statistics data series number PRS85006152, which reports the annual-percentage-rate change in real hourly compensation of non-farm workers, shows this compensation rising by nearly 5.1 percent since September 30, 2005.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

28 August 2006

Editor, The Washington Post
1150 15th St., NW
Washington, DC 20071

Dear Editor:

Sebastian Mallaby rightly takes to task the likes of Evan Bayh, Joe, Biden, and Joe Lieberman who are now denouncing Wal-Mart ("Shopping for Support Down the Wrong Aisle," August 28). Alas, America is marred by a long and disgraceful history of these staged fulminations against successful retailers. That consummate demagogue Huey Long affirmed that he would "rather have thieves and gangsters than chain stores in Louisiana." (Long was, at least, loyal to his genre.) And Rep. Wright Patman, displaying more frankness than do his modern-day successors, declared that "there is no place for chain stores in the American system."

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

27 August 2006

The Editor, The Economist
25 St James's Street
London SW1A 1HG
United Kingdom

SIR:

I'm surprised that you, among all publications, declare that a "silver lining" around hurricane Katrina is that it has created jobs ("New Orleans: One year on," August 26). Were all, or even most, of the workers now rebuilding New Orleans idle before the storm hit? Unlikely.

Describing the jobs made necessary by its massive destruction as a "silver lining" around a hurricane is like describing the jobs created by high tariffs as a "silver lining" around protectionism.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

27 August 2006

The Editor, New York Times
229 West 43rd St.
New York, NY 10036

You assert that "the quality of the teacher corps is more crucial to school reform than anything else" ("Exploding the Charter School Myth," August 27). This claim makes no more sense than would a claim that, say, the quality of the engineering corps is more crucial than anything else to improving the economic performance of North Korea.

Just as economies perform better as they become less politicized and more competitive - as each consumer enjoys more direct and meaningful choices over which suppliers to patronize and which to abandon - schools will perform better only if teachers and administrators confront real incentives to perform well as judged by parents. Such incentives are impossible when schools are run by bureaucrats, overseen by politicians, are fully financed by taxpayers, face little competition, and have captive customers who pay nothing directly for the "services" they are forced to consume.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

26 August 2006

Editor, The Washington Post
1150 15th St., NW
Washington, DC 20071

Dear Editor:

My confidence in your business reporting is not enhanced when I read in today's edition that protectionists blame "an overvalued Chinese currency for the loss of American jobs" ("Fed Chief Backs Global-Wealth Sharing," August 26). In fact, protectionists assert that the Chinese currency is undervalued - a situation that subsidizes Americans' purchase of Chinese goods while it taxes Chinese purchases of American output.

Of course, whether or not the yuan really is undervalued is a separate issue.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

25 August 2006

Editor, The New Yorker

To the Editor:

In "The Risk Pool" (August 28), Malcolm Gladwell repeats the new mantra of those who advocate nationalized health insurance: having to pay for workers' health insurance puts American firms at an international competitive disadvantage.

A fundamental flaw with the conclusion that government-supplied universal health insurance will make American firms more competitive is the fact that all that government supplies is paid for with resources taken from taxpayers. Therefore, much of the cost of such health insurance will still burden American business - directly in the form of higher tax bills and indirectly as higher taxes reduce the profitability of private investment and dampen economic growth. And because of the huge free-rider problems that fully nationalized health-care coverage will create, along with the red tape that will grow like kudzu from the Sisyphean attempts to solve these problems, the full burden on the economy of government-supplied universal health insurance will be colossal.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University