Imbalanced?
14 August 2007
Editor, WTOP Radio
To the Editor:
Reporting on America's trade deficit with China, you call this situation "imbalanced."
Although common, this language is wholly misleading. Just as no economic theory suggests that the amounts that people in, say, Opelika, Alabama, buy from people in New York City should equal the amounts that people in NYC buy from people in Opelika, no economic theory even remotely suggests that, in a world of many countries, the value or volume of trade between any two pairs of those countries should be equal.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Costs Are Not Benefits
13 August 2007
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Peter Navarro accuses the 1,000-plus economists (including yours truly) who signed the petition opposing trade sanctions against China of overlooking Beijing's beggar-thy-neighbor policies (Letters, August 13).
Not so. Save for the counterfeiting of western goods, every offense that Mr. Navarro accuses China of committing against Americans BENEFITS Americans. If Beijing truly is, for example, subsidizing Chinese producers, the resulting lower prices are a gain to American consumers no less than if the lower prices stemmed from a technological breakthrough in China.
By failing to see that imports, rather than exports, are the ultimate goal of trade, it is Mr. Navarro who spreads beggar-thy-neighbor fallacies.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
On Status
7 August 2007
The Editor, New York Times Book Review
229 West 43rd St.
New York, NY 10036
To the Editor:
Reviewer Daniel Gross should have asked harder questions about Robert Frank's argument that higher taxes on "the rich" will moderate individuals' quest for status ("Thy Neighbor's Stash," August 5). Monetary wealth and the material goodies it buys are hardly the only source of status. Consider, for example, Prof. Frank's faculty position at Cornell University. He earned this position in large part through his hard work. By his own thesis, then, he inadvertently caused other scholars to work unnecessarily hard in their quest to win high status Ivy-League appointments -- a quest that for the vast majority of us futile.
Higher taxes on the rich will do nothing to create more Ivy League faculty positions, more mansions with stunning views of the Pacific ocean, a greater number of the world's most beautiful women or most eligible bachelors, or most of the other things that confer and signal high status for those who possess them. Frankly, it is naive to suppose that muting competition in markets will mute humans' competition for status.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Stocks and Growth
28 July 2007
The Editor, New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Paul Krugman confusedly argues that stock prices are falling, in part, because the global economy is booming ("The Sum of Some Fears," July 27). He asserts that investors now believe that this global boom will keep oil prices high, and he assumes that high oil prices are a significant drag on the value of corporations.
Even if global economic growth will continue to buoy oil prices (which isn't certain), such growth surely puts more upward than downward pressure on stock prices. As people worldwide earn larger incomes to spend and invest, and as global supply networks improve, prospects increase for entrepreneurial American corporations to thrive - as long, that is, as Washington resists the temptation to "protect" us from the growing world economy.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Broken-Window Fallacy
25 July 2007
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
Dear Editor:
Hans Redeker, BNP Paribas's chief currency strategist, argues that the demand to rebuild in the wake of the floods now afflicting the U.K. might give the economy an "unforeseen boost" (July 25). Rubbish.
Resources spent to rebuild are no longer available to produce goods and services that would have been produced had the floods not happened. The economy isn't boosted; it's damaged. If Mr. Redeker's economics were correct, today's boom towns would be Mogadishu and Baghdad. Were I a client of BNP Paribas, I would hope that his bosses give Mr. Redeker an unforeseen boot.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Opportunity and Security
18 July 2007
Editor, The Baltimore Sun
To the Editor:
Thomas Schaller writes that "Working people value 'economic security' over 'economic opportunity'" ("Bush also earns low marks for economic policy," July 18). If so, working people believe in a false choice, foolishly forgetting the source of the very things that they want to be secure in. Almost everything that workers today fear losing - housing, automobiles, abundant food, scientifically sound health care, WiFi; you name it - is the result of economic opportunity. This opportunity created these goods and services and ensures their continued abundance. Kill economic opportunity in the quest to create more economic security and we'll have neither.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Real Regulation
17 July 2007
Editor, The Boston Globe
Dear Editor:
James Collura complains that energy-market speculators are "unregulated" and that this lack of regulation enables speculators to profit at the expense of innocent consumers ("How traders gamble with your energy dollars," July 17). But the lone example he gives of alleged wrongdoing by speculators is of a company, Amaranth Advisors, that suffered severe losses. Amaranth went long in natural-gas futures and then lost big when the price of natural gas plummeted.
Obviously, this large speculator could not control the price of natural gas. And just a bit less obviously, the risk of such large losses is the market's very effective way of regulating speculators.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Everything is Relative
15 July 2007
The Editor, The New York Post
To the Editor:
Terry Keenan says that it's unfair that gains on hedge-funds are taxed at the capital-gains tax rate of 15 percent rather than at the higher income-tax rate of 35 percent ("Richest Men in the World Cry Poverty on Capitol Hill," July 15).
I agree. But why not solve this problem by lowering income-tax rates rather than raising the capital-gains rate? In this debate du jour, most people unthinkingly assume that hedge-fund owners are receiving an unjustified break. Isn't it at least possible that other income earners are being unjustifiably milked by the political class in Washington?
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Reality Is Not Optional
12 July 2007
The Editor, New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Demanding a single-payer health-care system, Celina Su announces that her "health is not a consumer good" (Letters, July 12).
Ms. Su can call her health whatever she pleases, but changing the way health care is funded can never free us from the need to ration health care somehow. The resources necessary to supply medical treatments are scarce. These resources can be rationed through market mechanisms (which I prefer) or through bureaucratic mandates, but always there will be some health-care desires that go unmet. The notion that a single-payer system will create for Americans "an embarrassment of health care riches" is infantile.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
