Market Correction

29 January 2007

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

To the Editor:

Jeff Dircksen correctly notes that when government subsidizes biofuels R&D (or, for that matter, anything else) it pursues politically appealing goals by spending other people's money. This arrangement is inherently dangerous. Thomas Babington Macaulay's account of the motives of King James II describes also those of politicians such as Sen. Richard Lugar and each corn farmer seeking biofuels subsidies: "What he had not the generosity to do at his own expense he determined to do at the expense of others."*

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

* Lord Macaulay, The History of England, Hugh Trevor-Roper's one-volume abridgment (Penguin, 1968), p. 187.

28 January 2007

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

To the Editor:

To justify preventive medical care, Joseph Ritter correctly points out that "society suffers a great economic loss when one of its productive members dies prematurely" (Letters, Jan. 28). As the late Julian Simon argued, people are "the ultimate resource." The greater the number of persons participating in a market economy, the wealthier are the people of that economy.

So just as we should regret the premature deaths of fellow citizens, we should regret trade and immigration restrictions which artificially limit the ability of men and women from around the world to contribute to our prosperity.

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

26 January 2007

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

To the Editor:

Paul Krugman mistakenly credits Franklin Roosevelt with having "created" unemployment insurance ("On Being Partisan," Jan. 26).

Private unemployment insurance was offered long before the New Deal. As Professor Michael Rappaport found, starting around 1910 companies began selling such insurance to railroad workers. Alas, seeking to offer such coverage to other workers, private insurers were consistently blocked by state governments. And when New York's legislature in 1931 finally approved the expansion of private unemployment insurance, the bill was vetoed by none other than Gov. Franklin Roosevelt.

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

25 January 2007

Editor, The New York Review of Books

To the Editor:

Paul Krugman alleges that, when "speaking to the mass public," Milton Friedman was intellectually dishonest ("Who Was Milton Friedman?" Feb. 15).

Well now. As EconLog's Arnold Kling points out, Mr. Krugman himself - in his essay on Friedman - commits what some might classify as intellectual dishonesty. Krugman correctly notes that Americans during the years 1947-1976 more eagerly embraced government regulation than they did during the years 1977-2005. Then Krugman (also correctly) notes that real family income grew more rapidly during the earlier period than during the latter - suggesting that ordinary Americans were hurt by the slowdown in the growth of government.

But as Krugman surely knows, family size has shrunk: it is nearly 19 percent lower today than it was in 1970. So the decline in family income might reflect nothing more than the shrinkage in the size of families. The more honest measure of economic well-being is real GDP per capita. And as Kling points out, this figure "grew at about the same rate over [both periods]. Using 1946, 1976, and 2005 as endpoints, the average annual growth rate was 1.021 in the first half and 1.020 in the second half."

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

25 January 2007

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

To the Editor:

Anthony DiStefano says that cutting taxes is a "facile" solution to "complex and difficult" problems (Letters, Jan. 25). Mr. Stefano's is a facile understanding of tax cuts.

By keeping more resources in private hands, tax cuts encourage countless entrepreneurs to experiment with different means of solving problems. And by allowing consumers individually to choose which of these ways they like and which they dislike, tax cuts promote more accurate assessments of each solution's worthiness.

The phrase "cut taxes" is indeed short and straightforward - but it reflects the recognition that reality is far too complex and difficult to be managed centrally by politicians spending other people's money.

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