Market Correction

25 March 2007

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

To the Editor:

Tina Rosenberg recounts many reasons why people in poor countries invest heavily in the United States ("Reverse Foreign Aid," March 25). She misses, however, the most fundamental one: compared to poor countries, property rights in the U.S. are secure, regulation is less burdensome, and the currency is stable.

Poor countries are poor for a reason - namely, their institutions discourage substantial capital investments. So Ms. Rosenberg is mistaken to suggest that there's something perverse and unfair about persons in poor countries investing in America. A more-appropriate description is that America's relatively free-market economy provides welcome opportunities for foreign investors. The investments that flow to America are not "subsidies"; they are returns on relatively sound economic policies.

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

24 March 2007

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

To the Editor:

Like many others, Peter Morici asserts that "China's purchase of American dollars and securities to keep the yuan cheap creates more than a 20 percent subsidy on China’s exports" (Letters, March 24). This "subsidy" is an illusion.

Beijing can artificially lower the value of the yuan against the dollar only by increasing the supply of yuan relative to dollars - that is, by inflating the yuan. Such inflation, however, eventually raises the nominal prices of Chinese goods and thereby offsets the lower price of the yuan.

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

23 March 2007

The Editor, The Boston Globe

To the Editor:

Objecting to an earlier op-ed that endorsed legalizing marijuana for medical use, Maro Sciacchitano says that "it is irresponsible to promote policies that ignore the illegal drug trade and the complex problems US recreational consumption causes other countries" (Letters, March 23).

I say to Mr. Sciacchitano: it is irresponsible to promote policies that create a multi-billion-dollar underground economy, promote gang violence and police corruption and deterioration of our liberties, and that ignore the complex problems US drug-interdiction efforts cause other countries."

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

21 March 2007

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

To the Editor:

Sen. Charles Schumer and Rep. Jim McDermott want trade agreements that are "fair" (Letters, March 21) - by which they mean trade agreements that protect American workers from having to compete very hard against foreign workers.

I wonder if Messrs. Schumer and McDermott regard IBM, Apple, and Hewlett-Packard to have been "unfair" traders. By making personal computers and desktop printers so incredibly inexpensive, these firms destroyed countless jobs for office-pool typists. An American worker simply cannot compete with these machines. Would we have been well served had government restricted our ability to purchase these machines? If not, why suppose that we will be well served if government restricts our ability to purchase goods and services produced by workers whose wages are now lower than ours?

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

18 March 2007

Editor, US News & World Report

To the Editor:

James Pethokoukis is correct that "liberalizing trade for professional services - such as medicine and law - might not only suppress the dramatic income increases in those professions, as [Alan] Greenspan suggests, but also make them more affordable" ("Greenspan's Inequality Fix: Free Trade for Lawyers and Doctors," March 16).

Opposition to state licensing has a long and proud pedigree. Writing to William Cullen, MD, in 1774, Adam Smith argued that licensing is a monopoly privilege that lowers the quality of medical care by artificially keeping many good physicians out and by certifying some quacks. According to Smith, "That in every profession the fortune of every individual should depend as much as possible upon his merit, and as little as possible upon his privilege, is certainly for the interest of the public."*

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

* Letter from Adam Smith to William Cullen, 20 Sept. 1774, in Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1987), pp. 173-179.

14 March 2007

The Editor, The Boston Globe

To the Editor:

Bill McLaughlin rightly points out that declaring in a statute that an act is illegal is insufficient to make that act wrong or even illegal (Letters, March 14).

Here's language currently on the books in Massachusetts: "A married person who has sexual intercourse with a person not his spouse or an unmarried person who has sexual intercourse with a married person shall be guilty of adultery and shall be punished by imprisonment in the state prison for not more than three years or in jail for not more than two years or by a fine of not more than five hundred dollars." In short, the Massachusetts government declares adultery to be illegal. But would any jury in your state send such adults to prison, or even fine them, for consensual love-making?

No - which suggests that legality is determined much more by practice and expectations than by mere statutory language.

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

13 March 2007

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

To the Editor:

Antonia Juhasz rightly deplores the American military's role in allocating oil reserves in Iraq ("Whose Oil Is It, Anyway?" March 13). But her opposition to private ownership of these reserves is ill-informed. Assets owned in principle by "the people" are owned in practice by the political elite. As recent developments in Venezuela reveal, nationalized assets are used not to promote economic development but to tighten the elites’ grip on power - including the destruction of the very democratic institutions that Ms. Juhasz fantasizes will be used by the people to control "their" assets.

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

12 March 2007

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

To the Editor:

Kudos to my colleague Russ Roberts for reminding us that fears today of China's investments in dollar-denominated assets are as foolish as were fears 20 years ago of Japan's investments in these assets ("Protectionists Never Learn," March 12). I hope Paul Krugman reads Russ's essay.

In his June 27, 2005, New York Times column, Krugman argued that China does pose a problem today for the U.S. because the Chinese differ from the Japanese: "One difference is that, judging from early indications, the Chinese won't squander their money as badly as the Japanese did."

What a peculiar theory Krugman peddles: we Americans should welcome foreign investors only if they are wastrels. Responsible investors, Krugman believes, are a threat.

Krugman's theory sounds to me a lot like pop internationalism.

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

10 March 2007

The Editor, The Times-Picayune

To the Editor:

You correctly point out that "stronger buildings are safer buildings" ("Help for building codes," March 10). But it does not follow that Louisianans will, in general, live and work in safer buildings if building codes are toughened.

Tougher building codes raise the cost of replacing old structures with new ones. So with tougher codes, some old homes and buildings that would have been razed and built anew will, instead, remain standing and occupied. Such structures will likely be weaker than even those that would have replaced them in the absence of toughened building codes.

It's important always to keep in mind such unintended consequences.

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

9 March 2007

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

Dear Editor:

Harold Meyerson asserts that American workers today have less job security than they enjoyed in the past ("'Family Values' Chutzpah," March 9). This assertion is incorrect.

MIT economist Daron Acemoglu examined the data and found that "despite the popular perception to the contrary, there has not been a large increase in employment instability. The tenure distribution of workers today looks quite similar to what it was 20 years ago."

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

9 March 2007

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

To the Editor:

You are too quick to call January's fall in the U.S. trade deficit "positive" ("Stocks Rise on Jobs Report," March 9).

What if the trade deficit fell because foreigners now find America to be a less-attractive place to invest? What if foreigners' confidence in the dollar is fading? Would these developments - which shrink the trade deficit - be "positive"?

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

8 March 2007

Editor, USA Today

To the Editor:

You argue that documented abuses by credit-card issuers show that Congress must regulate the consumer-credit industry more heavily ("When interest rates hit 32%, there ought to be a law," March 9).

I disagree. The case for keeping politicians from meddling in markets does not rest on the claim that businesses never misbehave. Instead, it rests on the understanding that politicians attempting to correct that misbehavior will likely make matters worse.

Consider that it would be easy to fill time at a Congressional hearing with documented errors and abuses committed by America's free press. One that comes to mind is the 12-year run of false and plagiarized reports in your own pages by reporter Jack Kelley. Should Congress conclude from this abuse of the public trust that the First Amendment has failed? Should we Americans repeal that Amendment so that Congress can "set some markers" designed to keep you and other news media from misleading us in the future?

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

8 March 2007

Editor, Boston Globe

To the Editor:

Re your editorial on immigration-officials' raid on the Michael Bianco, Inc. plant in New Bedford ("The Mess After the Raid," March 8): As a result of this raid, Uncle Sam is now detaining 350 allegedly illegal immigrants against their will.

While you identify some genuine inconsistencies in immigration policy, you slip into an inconsistency of your own when you agree with the government that "Company officials should be prosecuted for exploiting workers." Who, in this case, is the party inflicting most harm on these 350 foreigners - the company that employed and paid them, or the government that is now imprisoning them until they are forcibly deported?

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