Difficulties are Not Benefits
8 January 2007
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Mark Whitehouse reports that a weaker dollar is good for America because it makes "U.S. exports more attractive to foreign buyers while making it costlier for Americans to buy products from abroad" ("Why U.S. Should Root for Dollar to Weaken More," Jan. 8).
Rubbish.
Would Mr. Whitehouse write that lower wages are good for American workers because they make "U.S. workers more attractive to employers while making it costlier for these workers to buy products produced by others"? Since when is less real purchasing power generally desirable?
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Smith on Jobs
7 January 2007
The Editor, New York Times Book Review
229 West 43rd St.
New York, NY 10036
To the Editor:
Reviewing P.J. O'Rourke's "On 'The Wealth of Nations'" (Jan. 7), Allan Stone admits that he has read only a few pages of Adam Smith's Wealth of Nations. I admire Mr. Stone's candor. I also believe that if he had read Smith carefully he would stop fretting about America "exporting manufacturing jobs."
Were Adam Smith alive today he would ask if Mr. Stone worries about technological advances. After all, jobs are forever being destroyed by mechanization that increases each worker's output. This rise in productivity releases many workers to produce other goods and services that previously were too costly to produce. As a result, the economy's output expands - in large part because many manufacturing jobs are "exported" to machines. Assuming that Mr. Stone rejects the Luddite fear of technology, he should reject also the mercantilist fear of imports.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Inflation Is Not Caused by Higher Prices
6 January 2007
The Editor, New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Reporting on economist George Akerlof's efforts to make economics more "realistic" than it was under the influence of the late Milton Friedman, Louis Uchitelle mistakenly attributes to Mr. Friedman the view that workers' "pressure for higher pay" fuels inflation ("Encouraging More Reality in Economics," Jan. 6).
Mr. Friedman vigorously and famously rejected the notion that rising costs - including rising labor costs - cause inflation. Indeed, one of his most memorable phrases is that "inflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output."
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Origins of Minimum-Wage Legislation in the United States
4 January 2007
Editor, The Washington Post
1150 15th St., NW
Washington, DC 20071
Dear Editor:
George Will rightly argues that the legislated minimum-wage should be $0 ("The Right Minimum Wage," Jan. 4). Recognizing that Congress never behaves so wisely, Mr. Will argues that a second-best option is to let states with low costs of living set minimum-wages lower than the one set by Uncle Sam. While sensible, this proposal directly contradicts the original purpose of the federal minimum-wage - namely, to protect northeastern textile producers from lower-wage competition coming from rival producers in southern states.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Minimum-Workforce Legislation Anyone?
2 January 2007
Editor, The Los Angeles Times
To the Editor:
Raising the minimum-wage apparently is good politics ("Democrats to tackle modest proposals," Jan. 2). But it remains bad economics.
Minimum-wage legislation springs from the faith that insists that when government modestly raises firms' costs of hiring workers, firms absorb most of these costs rather shift them onto workers in the form of such unpleasant surprises as layoffs, fewer fringe benefits, and more stressful work conditions. If correct, this faith implies not only that government can raise wages by passing minimum-wage legislation but also, for example, that government can reduce unemployment by requiring all firms to hire a minimum number of full-time workers. We might call this "minimum-workforce legislation."
Of course, if you worry that minimum-workforce legislation will backfire - say, by reducing the number of employers and causing unemployment to rise - then you should also worry that minimum-wage legislation will backfire.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
