Market Correction

Attempting to learn about international commerce by reading anything written by Byron Dorgan and Sherrod Brown is worse than trying to learn the laws of physics by watching cartoons of the Road-Runner and Wile E. Coyote.
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23 December 2006

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

Dear Editor:

Senators Byron Dorgan and Sherrod Brown are uninformed about trade ("How Free Trade Hurts," Dec. 23). For example, they assert that trade today causes "a global race to the bottom as corporations troll the world for the cheapest labor, the fewest health, safety and environmental regulations, and the governments most unfriendly to labor rights." But as Washington University political scientist Nathan Jensen reports in his new, data-rich book on the investment decisions of multinational corporations, "No systematic evidence lends credence to the race to the bottom thesis."*

If these Senators understood trade, they would realize that the very U.S. trade deficits that cause them so much anguish are evidence that large amounts of investment capital continue to flow into the U.S. - a pattern of investment that simply wouldn't happen if a global race to the bottom were underway.

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

* Nathan M. Jensen, Nation-States and the Multinational Corporation (Princeton University Press, 2006), page 66.

22 December 2006

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

To the Editor:

Lamenting the demise of the budget surpluses achieved on the watch of President Clinton's Secretary of Commerce Robert Rubin, Paul Krugman says that "the whole conservative movement shared Mr. Bush's squanderlust, his urge to run off with the money so carefully saved under Mr. Rubin's leadership" ("Democrats and the Deficit," Dec. 22). I'll ignore Krugman's own inconsistent call for Democrats now to spend regardless of the budgetary consequences. What galls me is his apparent ignorance of the work of my Nobel-laureate colleague James Buchanan.

Buchanan - whom Krugman would no doubt classify as a leading member of the "conservative movement" - has for a half-century consistently and forcefully argued for fiscal responsibility. Indeed, it was Buchanan's brilliant 1958 book, Public Principles of Public Debt, that first exposed the foolishness of the then-dominant view that public debt is innocuous because, as the myth went, "we owe it to ourselves."

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

22 December 2006

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

Dear Editor:

In "Bloomberg's Brave Bet on Innovation" (Dec. 22), E.J. Dionne alleges that "government succeeds more than we want to acknowledge. Ask any elderly person if he or she would prefer to live without Social Security and Medicare."

Mr. Dionne's standard for success is too lax. The appropriate question is "compared to what?" Are elderly persons better off than they would be if their pensions and medical care were not provided by government? Maybe; maybe not. But it's difficult to tell because Americans are forced to participate in Social Security and Medicare. Private alternatives are crowded out.

Just because someone is reluctant to release the scrawny crow he holds in his hand does not mean that he would not prefer the flock of plump pheasants that might fly his way if government did not force us all to settle for crow.

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