Market Correction

26 October 2007

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

To the Editor:

There's widespread agreement that the alternative minimum tax - because it is not indexed to inflation - is mistakenly raising the taxes of millions of Americans ("House Democrats Propose Tax Overhaul," October 25). Happily, there's also widespread agreement that this mistake should be corrected.

So, given that the current operation of the AMT is a mistake, why do Rep. Charles Rangel and so many others talk of the need to "pay for" fixing the AMT? A merchant who mistakenly overcharges customers is obliged to refund the money and stop overcharging, period. This obligation kicks in whether or not the merchant devises some way of replacing the revenue that he loses by correcting his mistake.

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

25 October 2007

Editor, The Washington Times

To the Editor:

In "Oinking senators" (October 25) you report on the venal and hypocritical Senators who relentlessly buy votes with pork paid for with funds pillaged from taxpayers. I'm reminded of my all-time favorite title for an article about the nature of government: "Malice in Plunderland."

It's shameful that so much of Americans' wealth is commandeered to pass to and through the crooking class.

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

24 October 2007

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

Dear Editor:

Robert Samuelson unnecessarily weakens his case for globalization by accepting the myth that the trade deficit depresses U.S. employment ("A Villain To Our Rescue," October 24).

It's not that "domestic job creation and destruction ultimately overwhelm trade's effects." Rather, the trade deficit itself has no negative impact on employment. When foreigners invest their dollars in America (rather than cash them out buying American exports), the trade deficit rises. But these investments create jobs no less surely than do foreign purchases of American-made goods and services. Moreover, these investments - by increasing the size of America's capital stock beyond what it would otherwise be - directly promote greater worker productivity and, hence, higher wages.

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

23 October 2007

News Editor, All Things Considered
National Public Radio

Dear Editor:

In your series on candidates' stump speeches, you featured today Rep. Duncan Hunter's tirade against China. Mr. Hunter simultaneously accuses China of "cheating" on trade by keeping the value of the yuan too low against the dollar AND alleges that China spends the dollars it earns to buy military weaponry that threatens U.S. national security.

Like all protectionists, Mr. Hunter is deeply confused.

By spending its dollars, Beijing fails to remove dollars from the foreign-exchange market and thereby fails to raise the dollar's value against the yuan. So the only way Beijing can then reduce the yuan's value is to inflate the supply of yuan. The unavoidable result is higher prices of Chinese-made goods and services - higher prices that offset the lower value of the yuan against the dollar.

In short, the only way the Chinese government can reduce the yuan's value against the dollar is to reduce the yuan's value against everything else.

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

23 October 2007

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

To the Editor:

Forget that Uncle Sam today rakes in tax revenues that are, in inflation-adjusted dollars, 25 percent larger than those that he took in 2001 - thus making a mockery of your claim that Washington's tax take today is "meager" ("The Dearth of Taxes," October 23). And forget that the Wall Street Journal today reports that Congress has increased corporate welfare for the current fiscal year by nearly ten percent, to $100 billion.

When pleading for higher taxes, at least keep your story straight. In your editorial you simultaneously blame government's alleged lack of funds for bringing many U.S. corporations "to the brink" AND you dismiss the recent growth in tax revenues as being due to "spectacular increase in corporate profits." Such inconsistency taxes your readers' credulity.

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

20 October 2007

Editor, The Washington Times

To the Editor:

Incessantly repeating that "U.S. growth, meanwhile, has been weighed down by soaring deficits with China" does nothing to render true this false bit of conventional wisdom ("China won't adjust currency," October 20). Indeed, it is false on too many levels to list here.

Most fundamentally, the flipside of a rising U.S. trade deficit is a rising U.S. capital-account surplus - meaning, a hefty inflow of capital into America. More capital means lower real rates of interest. Lower real rates of interest mean more investment. More investment raises worker productivity. Rising worker productivity raises real wages. And rising real wages enable Americans to enjoy higher and higher standards of living.

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

These data are from my friend (and EconLog's) Arnold Kling.

(My apologies for my inability to get the formatting on the data portion of this letter correct.)

.....
19 October 2007

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

To the Editor:

Judith Warner writes that "More and more people are being priced out of a middle class existence" ("The Clinton Surprise," October 19). This statement is true, but only because more and more Americans are getting richer. Consider the percentage of American households in each of these different annual-income categories in 1967 and in 2003 (all reckoned in 2003 dollars):

1967 2003
$75K and up 8.2 26.1
$50K - $75K 16.7 18.0
$35K - $50K 22.3 15.0
$15K - $35K 31.1 25.0
under $15K 21.7 15.9

If the middle class is disappearing, it's doing so by swelling the ranks of the upper classes.

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

19 October 2007

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

To the Editor:

Steve Moore reports on corporate America's new-found passion - expressed with generous sums of $$$ - for the Democratic Party ("Comfy with K Street," October 19). Mr. Moore sensibly explains this infatuation by quoting former Rep. Dick Armey's observation that "business groups are simply not ideological givers. They give to buy access and to minimize risk."

Put somewhat differently: like men intent on getting some, most corporate executives care nothing about the party affiliations or ideologies of the currently available assortment of whores.

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

18 October 2007

Editor, The New York Post

To the Editor:

Robert Novak exposes the venality and hypocrisy of those many members of Congress who earmark - that is, who buy votes with taxpayers' money ("Pork Payback," October 18).

Will Rogers was too polite when he observed that "A politician is just like a pickpocket; it's almost impossible to get him to reform."

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

16 October 2007

Editor, The Atlantic

To the Editor:

John Updike makes the startlingly mistaken claim that "the American idea" involves trusting "leaders of government" because leaders who fail "can be voted out" ("The Individual," November).

The Constitution is a monument to the American founders' rejection of the fantasy that democracy alone ensures that government officials will behave themselves. That document intentionally dilutes government power by dividing it among different levels and branches. Most importantly - and despite the fact that the Constitution is ignored on this point - its language is clear that the only powers the national government may exercise are the small handful of those powers explicitly delegated to it.

No less a founder than James Madison famously wrote that "If angels were to govern men, neither external nor internal controls on government would be necessary.... A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions."*

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

* James Madison, Federalist #51.

15 October 2007

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

To the Editor:

Paul Krugman wrongly claims that Al Gore "keeps being right" ("The Gore Derangement Syndrome," October 15). Mr. Gore famously predicts that, over the next century, global warming will cause sea levels to rise by 20 feet. Scientists at the agency that shares Mr. Gore's Nobel prize, the United Nations Intergovernmental Panel on Climate Change, expect a rise of one foot.

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