Market Correction

16 December 2006

Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281

Dear Editor:

Peter Navarro insists that China's trade practices are "unfair" (Letters, Dec. 16). Unfair for whom? Not for American consumers. We get lower-priced goods and - because trade with China releases our own resources to produce things that would otherwise be too costly to supply - more innovative products. Not for American producers, for an essential rule in a market economy is that no producer has any right to consumers' patronage.

Any unfairness in this picture is suffered only by Chinese citizens who are taxed and regulated to make Chinese exports more attractive. Even here, though, the picture is unclear. The lifting of hundreds of millions Chinese out of poverty over the past quarter-century is powerful evidence that that country relies less and less on government intervention and more and more on the rules of the market.

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

15 December 2006

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

To the Editor:

Opposed to a loosening of S.E.C. rules governing foreign firms that raise capital in America, Floyd Norris mocks the idea that shareholders can protect themselves by voting with their feet ("S.E.C. to Firms: Keep Money, Forget Rules," Dec. 15). But he himself presents evidence against his proposition by reporting that researchers find that "investors paid more if a company complied with American rules and promised to keep doing so."

Investors need no help from Washington bureaucrats to distinguish between firms that do and firms that don't follow effective disclosure and corporate-governance procedures.

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

13 December 2006

Editor, The Los Angeles Times

Dear Editor:

Regarding all the complaints about America's trade deficit with China ("Trade deficit drops sharply in October," Dec. 13):

In plain language, America's trade deficit with China means that we voluntarily buy more from the Chinese than the Chinese buy from us. This situation is no more of a problem than is the fact that I buy more from supermarkets than supermarkets buy from me.

Now here's a genuinely serious problem: Uncle Sam forces me to "buy" more from him than he buys from me. Like most taxpayers, I have a gigantic and growing trade deficit with Washington. Does my trade deficit with Washington justify my refusing to ship any more of my money to that town?

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

12 December 2006

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

To the Editor:

The U.S. government argues that Beijing puts too many barriers in the way of its citizens who wish to buy foreign goods ("Before Visit to China, a Rebuke," Dec. 12). Although correct, this argument is sodden with hypocrisy.

Most notably, among Uncle Sam's complaints is that China imposes "limits on some sales of farm goods." On Sunday, the Washington Post reported how Washington protects large dairy farms by shutting down low-priced dairy suppliers - in other words, by imposing "limits on some sales of farm goods."

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

11 December 2006

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

Dear Editor:

To make an even more compelling case for free trade, Sebastian Mallaby should avoid sports metaphors. For example, by writing that the WTO's purpose is "to keep the trade playing field balanced" ("Cracking the Currency Puzzle," Dec. 11), he lends credence to the protectionist illusion that trade is a zero-sum contest among producers to see which ones can score the most exports.

In truth, trade is a positive-sum process by which consumers seek the best available deals. Trade's benefits are measured ultimately in consumer satisfaction, not in producer output or profits. And while foreign-governments' trade interventions should be criticized, the problems with such interventions are not that they harm "our" producers but that they harm foreign consumers and taxpayers.

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

10 December 2006

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

To the Editor:

Writing in support of NYC's ban on trans fats, Dr. Soja John Thaikattil (Letters, Dec. 10) argues that "Experience has shown that consumers do not always use their freedom to make healthy choices. So a regulation that is based on science and in the best interests of the consumer should not be interpreted as an unwarranted intrusion into personal lifestyle choices. Is the freedom to choose unhealthy food that difficult to forfeit?"

Suppose NYC had banned newspapers from reporting on controversial issues. I wonder if Dr. Thaikattil would then write "Experience has shown that newspapers do not always use their freedom to report wisely. So a regulation that is based on science and in the best interest of the public should not be interpreted as an unwarranted intrusion into freedom of the press. Is the freedom to report unwisely that difficult to forfeit?"

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

9 December 2006

Kai Ryssdal, Host
Marketplace
American Public Media

Dear Mr. Ryssdal:

Marketplace routinely frets about the size of the U.S. trade deficit. So I was surprised when on yesterday's show, just after David Johnson reported that Intel earns 85.4 percent of its revenues from abroad, you asked Mr. Johnson if it "troubles" him "that all these big American companies are so dependent now on revenues from overseas."

Firms earn lots of revenues from overseas by selling lots of goods and services overseas. Such sales reduce the size of the U.S. trade deficit.

Now I don't worry one whit about the trade deficit. But your frequent fretting about this deficit, combined with your concern that many American firms earn substantial revenues from their foreign operations, tells me that you don't grasp even the basic principles of international trade.

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

8 December 2006

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

Dear Editor:

Robert Samuelson is misled by the terms "trade deficit" and "trade imbalances" ("Dangers in a Dollar on the Edge," Dec. 8). As he himself notes, one reason for America's trade deficit is the great attractiveness to foreigners of dollars and dollar-denominated assets. Americans give foreigners financial security in return for imports. No real imbalance here.

Also, Mr. Samuelson is mistaken to say that foreigners' demand for U.S. assets - by boosting the dollar's purchasing power - helps American consumers but not American producers. Because at least half of all American imports today are intermediate components, raw materials, and capital goods, a strong dollar unquestionably helps many American producers.

Mr. Samuelson should take to heart Adam Smith's recognition that "Nothing, however, can be more absurd than this whole doctrine of the balance of trade."

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

7 December 2006

The Editor, The New Yorker

To the Editor:

Lou Dobbs believes "unequivocally" that free trade harms ordinary Americans ("Mad as Hell," Dec. 4). So being a courageous man of principle, he’ll no doubt soon inform his bosses at Time-Warner, CNN’s owner, that they contribute to the demise of middle-class America by broadcasting (according to CNN's website) in "Asia Pacific, South Asia, Europe, Middle East, Japan, Africa, Latin America, North America." And when his bosses refuse to stop trading internationally, I await hearing Mr. Dobbs thunder on air that CNN's participation in globalization is yet another instance of shameless corporate greed.

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