Market Correction

Hat tip to Tibor Machan for drawing my attention to this article:

http://www.sciencenews.org/articles/20080315/note12.asp

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28 March 2008

Editor, Science News Online

Dear Editor:

Those of us who study the logic and history of market economies are not surprised by laboratory evidence showing that denizens of market societies - far from being driven by myopic greed - cooperate readily with strangers. But you assume too much when you say that market societies "foster cooperation among strangers" ("Altruistic twist in market economies," March 15). Perhaps they do; I’d like to think that they do.

But an alternative hypothesis is that persons who, for whatever cultural reasons, are more trusting of strangers, and more worthy of the trust of strangers, are persons whose actions give rise to market economies. That is, a willingness to cooperate with strangers might foster market economies, rather than the other way 'round.

Most likely, of course, is that the causality runs in both directions, with willingness to cooperate fostering markets and markets further reinforcing persons' willingness to cooperate.

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

29 March 2008

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

To the Editor:

Why should a candidate's skin pigmentation or genitalia make politics "inspiring" ("At the Barricades In the Gender Wars," March 29)? Black, white, male, female, yankee, cracker, or granola-cruncher, the vast majority of politicians selfishly seek power and adulation for themselves by promising to deliver simple-minded "solutions" to complex problems (and non-problems). Some voters feel deprived? A pol promises to give these voters more by stealing wealth from others. Some voters dislike a feature of realty? A pol promises to change it with brute force.

Being "inspired" by politics is as childish as being inspired by schoolyard bullying, and as dishonorable as being inspired by gang violence.

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

28 March 2008

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

To the Editor:

Defending the right of superdelegates to ignore the popular vote, Hillary Clinton today explained that "That's the way our process is set up" ("Clinton Says She's in It for the Long Haul," March 28). The Senator here appeals to the respect that all decent people have for agreed-upon rules.

But Mrs. Clinton also said today that "This is a very close race and clearly I believe strongly that everyone should have their voices heard and their votes counted and that includes Michigan and Florida." Considering that her campaign explicitly agreed with the DNC's decision, when it was announced, not to count the results of the Florida and Michigan primaries, only one conclusion is tenable: Hillary Clinton's respect for rules is as real as were the sniper bullets that she dodged twelve years ago in Tuzla.

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

28 March 2008

Mr. Carter S. Roberts, President
World Wildlife Fund

Dear Mr. Roberts:

You and members of your organization worry about what industrialization and economic growth do to the earth's environment. I worry about what the intensifying hysteria about the state of the environment - and about what the resulting hostility to economic growth - might do to humankind's prospects for comfortable, healthy, enjoyable, and long lives.

So I commend you on your "Earth Hour" effort. Persuading people across the globe to turn off lights for one hour will supply the perfect symbol for modern environmentalism: a collective effort to return humankind to the dark ages.

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

"Nothing, however, can be more absurd than this whole doctrine of the balance of trade."
— Adam Smith (1776)
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27 March 2008

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

To the Editor:

Bravo for Matthew Slaughter's outstanding explanation of the pattern and enormous benefits of foreign direct investment (FDI) in the United States ("What Tata Tells Us," March 27).

I've one tiny nit to pick: Mr. Slaughter incautiously aids and comforts protectionists when he writes that FDI today is driven by "the evolving pattern of global imbalances." While incoming FDI does indeed increase America's current-account deficit and many other countries' current-account surpluses, there's nothing unbalanced - either in the sense of being unsustainable or being harmful - about America's attractiveness to investors, or about foreigners being especially keen to invest their dollars in the U.S. rather than spend these dollars on American-produced goods and services. Indeed, as Mr. Slaughter ably explains, such actions by foreigners are a great boon to foreigners and Americans alike.

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

27 March 2008

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

To the Editor:

You report that "Hillary Clinton said she fears the U.S. is slipping into a Japanese-style economic malaise that will overwhelm the Federal Reserve's considerable powers" ("Clinton Fears Japan-Style Malaise," March 27). Sounds scary.

But how scared would you be if such fears were expressed instead by, say, your veterinarian or your proctologist? Because these specialists in their respective fields have no expertise at diagnosing the economy, you'd have good reason to take their economic concerns with a grain of salt. And so it should be, but doubly so, with Sen. Clinton's economic pronouncements. Not only has she no expertise in economics, but as her recent sniper-fire whopper reveals, Sen. Clinton's own specialty - the dark art of politics - requires of its practitioners an unusual propensity to lie and dissemble. Almost all that she and her ilk say should be treated with even less respect than would be accorded a professional circus-clown's speculations about string theory.

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

26 March 2008

Editor, Forbes.com

Dear Editor:

Peter Morici unloads a riotous barrage of accusations against free trade: Free trade caused, among other misfortunes, the collapse of the market for adjustable-rate mortgages, excessively high CEO compensation, inflationary monetary policy, and Uncle Sam's inexcusable bailout of Bear Stearns ("It's Time To Cut The Trade Deficit," March 26). Mr. Morici, however, doesn't explain how allowing consumers to take advantage of bargains from abroad caused these calamities. He simply assumes it to be self-evident that America's growing trade deficit proves that free trade triggers countless system-wide maladies.

Alas, Mr. Morici doesn't know what he's talking about. America's trade deficit represents capital flowing into the U.S. True, some of this inflow finances Uncle Sam's Eliot-Spitzer-party-like spending. But that spending is caused by reckless politicians, not consumers. Nearly all the rest of the trade deficit represents positive investments in America - investments that not only signal continued investor confidence in the U.S. economy but, more importantly, investments that finance R&D, product development, worker training, new firms, factory modernization, and other activities that promote economic growth. Does Mr. Morici really think that such investments harm Americans?

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

26 March 2008

Editor, The New Yorker

Dear Editor:

Pastor John Kerr accuses economists of viewing "the ideal worker as an interchangeable part that can be moved and replaced at the whim of so-called market forces" so that the worker is a "perpetual migrant, never to know the pleasures of roots, community, and belonging" (The Mail, March 31).

Perhaps the good parson is too accustomed to gaining knowledge through divination or visitations by the holy ghost, but for him to understand what economists say requires that he actually read some economics - which he obviously has not done. I challenge Pastor Kerr to find a single passage in the writings of the most influential economists - say, Adam Smith, F.A. Hayek, or Milton Friedman - that suggests an indifference to workers losing their jobs, or that describes as ideal (or even acceptable) an economy in which each of us is a "perpetual migrant" denied the obvious benefits of community.

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

25 March 2008

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

Dear Editor:

Justifiably applauding Ross Douthat's and Reihan Salam's call for expanding the child-tax credit from $1,000 to $5,000, E.J. Dionne bizarrely comments that "It's a relief to see conservatives willing to make a link between economic forces and family life, something their more radically free-market comrades are rarely willing to do" ("Righting the Right," March 25).

In fact, this terrain is actively ploughed by free-market proponents. Here are three examples. Among the most famous books written by the free-market, Nobel laureate economist Gary Becker is "A Treatise on the Family." This work explicitly explores connections "between economic forces and family life." From a different perspective, the libertarian economist Jennifer Roback-Morse wrote "Love and Economics: It Takes a Family to Raise a Village" - another book that investigates the links between economic forces and families. Finally, in "Losing Ground" the libertarian Charles Murray investigates the ways that government policies affect the economies - and, hence, the structures - of families

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

25 March 2008

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

To the Editor:

Admiral Paul Rohrer argues that U.S. national defense is compromised by the Air Force's award of a tanker contract to EADS, an aerospace company in France (Letters, March 25). The bulk of Adm. Rohrer's case, however, is mere standard-issue protectionism. And the facts of which he complains strengthen, not weaken, U.S. national defense.

For example, Adm. Rohrer gripes that "EADS has received tens of billions of dollars in illegal subsidies from the French and other European governments." Translation: European taxpayers now foot part of the bill for Uncle Sam's weaponry, giving Americans more resources to spend (if they wish) on national defense and European governments fewer such resources. Likewise for the Admiral's complaint that "European defense acquisition policies are already highly protectionist." Translation: European governments pay unnecessarily high prices for their weapons, giving those governments less bang for the buck (or, explosion for the euro). The end result is that America's defense capacity is strengthened both absolutely and relative to Europe's.

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

23 March 2008

Editor, The New Yorker

Dear Editor:

I'm outraged that Hillary Clinton promises, if elected president, to help people (in her words) "quit smoking, to get more exercise, to eat right, to take their vitamins" ("The Iron Lady," March 17). Perhaps I'm overreacting because I buried my mother on Wednesday, but neither Uncle Sam nor Mrs. Clinton is my parent. That role was performed remarkably well and lovingly by the persons who had responsibility for it: my father and late mother. I, like any self-respecting adult, resent beyond words the impertinence of any stranger presuming to possess the moral authority to intrude into my affairs.

To my own dying day, I will live by the creed instilled in me by my parents: My life is my own, and just as I have no right (or wish) to meddle in the affairs of others, no one - regardless of how exalted her status or how large her electoral majority - has the right to meddle in mine.

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

23 March 2008

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

To the Editor:

Joseph Kennedy argues for more government regulation of the oil industry ("We Need a New Bargain With Big Oil," March 22). His argument, however, is suffused with ineffective anecdotes (such as the untearful tale of the "young mother, who had to move in with her mother to keep her children warm and healthy") - with mistaken history (Teddy Roosevelt's attack on Standard Oil was for "the good of the nation" only if the nation was served by breaking up a firm that steadily pushed the price of kerosene DOWN) - with naivete about government (Mr. Kennedy assumes that all those additional powers that he demands for government will be exercised by apolitical geniuses) - and with bad economics (his assertion that private firms have no right to charge "whatever they want" reveals both his failure to understand that prices convey vital information and incentives to producers as well as to consumers).

So why, exactly, did you publish Mr. Kennedy's uninformed and ill-reasoned essay?

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

20 March 2008

Editor, The New Orleans Times-Picayune

Dear Editor:

David Brooks notes that "behavioral economists demonstrate every day [that] human beings are powerfully and unconsciously influenced by ... ideas and assumptions" that cause them sometimss to make systematic mistakes ("Not a good time to trut the market," March 20). True. But Mr. Brooks himself mistakenly draws the conclusion that this fact justifies government regulation.

The trivial truth that each of us frequently makes foolish decisions does not justify overriding our freedoms, especially if (as is likely) the same "powerful and unconscious ideas and assumptions" that cause us to err when acting privately will cause us to err when acting politically -- and will cause also those persons in political office to err when exercising their power.

For all of their insights, behavioral economists have never demonstrated that political power cures its holders of any of the cognitive flaws that afflict the general lot of humankind.

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

15 March 2008

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

To the Editor:

Like Gail Collins, I was unimpressed with George Bush's speech yesterday to the Economic Club of New York ("George Speaks, Badly," March 15).

But I disagree with Ms. Collins that "in times of crisis you would like to at least believe your leader has the capacity to pretend he's in control." A defining characteristic of this economy that produces such enormous abundance for us all (and yes, despite the current downturn, it continues to produce prodigiously) is that no one is "in control." Indeed, no one could POSSIBLY be "in control." A far greater danger to Americans' prosperity than a President with a poor speaking style and a penchant for standard-fare political shenanigans is the spread of the belief that economic salvation lies in having someone "in control."

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