Market Correction

8 April 2008

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

To the Editor:

Robert Kennedy, Jr., might be right that electricity is best provided in Chile by means other than hydroelectric dams (Letters, April 8). His presumption, however, about the source of prosperity casts doubt on the quality of his argument.

Mr. Kennedy opposes dams because he wants to protect "nature's bounty." But nature is not bountiful. If it were, human history would be one of prosperity and long, healthy lives rather than one of oppressive poverty and short, miserable lives. Nature is miserly. The bounty that Mr. Kennedy presumes comes from nature is, in fact, the relatively recent product of human creativity and industry unleashed by free markets - and now threatened by the mindless worship of nature.

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

7 April 2008

Editor, Washington Times

Dear Editor:

Not only does William Hawkins misunderstand the principle of comparative advantage, he incorrectly suggests that it is the lone pillar supporting the case for free trade (Letters, April 7).

Adam Smith didn't know about comparative advantage when he wrote THE WEALTH OF NATIONS, but his case for free trade remains powerful. Smith explained that free trade expands the size of markets, making possible capital investments and greater specialization of workers. These investments, along with the improved skills that highly specialized workers learn, increase output and wages. Confining economic activity to the nation keeps the market artificially small and, thereby, reduces opportunities for output-expanding investment and specialization.

Smith also explained a danger that Mr. Hawkins - who wants government to pick economic "champions" - overlooks: "The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a many who had folly and presumption enough to fancy himself fit to exercise it."*

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

* Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations (1776); Book IV, Chapter II.

6 April 2008

Editor, Baltimore Sun

Dear Editor:

In yet another call for expanded government powers, Benjamin Todd Jealous asserts that millions of Americans are trapped in poverty by racism and a dysfunctional economy ("Progress against poverty stalled," April 6). Not so.

As politically incorrect as it is to proclaim, success is likely for anyone who works hard, acts responsibly, and rejects the mantle of victimhood. Consider, for example, Korean Americans. Koreans who emigrate here find themselves in a country with a very different culture, a strange language and alphabet, and no history of privilege to give them a leg up. Yet they are generally quite successful.

Consider Joyce, who emigrated with her husband to America in the early 1980s. Joyce cuts my hair; her husband sells groceries. Their oldest child earned a PhD in engineering and is now in law school at Harvard. Their youngest son just graduated with an engineering degree from Georgia Tech, and is now debating which of several competing job offers to accept.

One anecdote proves little. But it does show that success does not depend upon being a member of a "privileged" ethnic majority. It also contradicts the Rev. Martin Luther King's assertion that economically disadvantaged people must stage "a revolution" against society's "structures" if they are to have any hope of succeeding.

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

5 April 2008

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

Dear Editor:

Re "Galvanizing Young Voters" (Letters, April 5): why the unquestioned applause of young people becoming involved in politics? This applause stems from at least two false presumptions. The first is that time devoted to politics could not be used more productively in the private sector. The person who, say, volunteers to work for a political campaign necessarily takes time away from studying, working for a private employer, wooing a mate - activities that arguably are more worthwhile than helping megalomaniacs gain political power.

The second false presumption is that we are "involved" with our fellow human beings only - or, at least, most nobly - through politics. In fact, we are involved even when we pay no attention to politics. We care for our families, support our friends, work at jobs that produce goods and services for millions of people, and are active members of churches and clubs. Each of us is intensely involved, daily. And this private involvement is much nobler than political involvement, for when we're involved privately we are not butting our noses uninvited into other people's affairs.

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

4 April 2008

Editor, Hillbuzz

Dear Editor:

You relate with pride the tale that Hillary Clinton told last night on Jay Leno's Tonight Show. As she tells it, an eleven-year-old boy recently complained to Sen. Clinton that his mother's working hours were shortened as a result of the rise in the minimum wage. (Rather than recognize this result as a predictable consequence of a higher minimum wage, Sen. Clinton explained that she will "fight" to fix such alleged injustices.)

But I don't believe the story. First, a mere 1.5 percent of workers in America earn the minimum wage (or lower). And 53 percent of workers who do earn these low wages are 24 years old or younger. Therefore, far less than one percent of American workers are both old enough to have an eleven-year-old child AND earn the minimum wage. More importantly, because the typical minimum-wage job is entry-level, well over half of all workers who earn the minimum wage enjoy wage increases (of about 20 percent) within one year.

So the likelihood that a Clinton rally was attended by an eleven-year-old child with a mother who was earning the minimum-wage in July 2007 (when it was last raised) and who is today still earning the minimum wage is very small indeed - so small that the best bet is that Senator Sniper Fire is again fabricating tales in her gluttonous quest for more power.

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

3 April 2008

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

To the Editor:

Louis Uchitelle reports that falling home prices keep workers stuck in their homes, unwilling to sell and, hence, unwilling to move in order to take jobs in different locations ("Unsold Homes Tie Down Would-Be Transplants," April 3).

But far from being evidence in support of your incessantly expressed belief that American workers today are in desperate shape economically, this phenomenon instead suggests that American workers are doing very well indeed. Persons in miserable economic straits would not allow loss-aversion on their real-estate holdings to prevent them from taking better jobs.

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

3 April 2008

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

To the Editor:

Louis Uchitelle reports that falling home prices keep workers stuck in their homes, unwilling to sell and, hence, unwilling to move in order to take better jobs in different locations ("Unsold Homes Tie Down Would-Be Transplants," April 3). Perhaps; but I have my doubts.

While it's true that people prefer to sell their homes at high prices, it's also true that people prefer to buy their homes at low prices. So why should people's disappointment at being unable to sell their homes at prices as high as they once thought possible not be offset by their happiness at being able to buy new homes at prices lower than they once thought possible?

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

2 April 2008

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

To the Editor:

Re "Oil Chiefs Say High Prices Not Our Fault" (April 2): If I were an oil-company executive called before Congress to explain my company's investing and pricing practices, I'd respond simply: "Piss off."

Of course, the pols would reply by bellowing that my firm receives subsidies - an alleged fact allegedly justifying Congress telling CEOs how to run their companies. I'd reply that, in addition to my company paying billions of dollars ON NET in taxes, the "tax breaks" that constitute the major source of my company's so-called subsidies are not subsidies at all. As my colleague Bryan Caplan writes in his acclaimed book The Myth of the Rational Voter, "corporate income is...double taxed. Tax breaks or 'loopholes' partially mitigate the inefficiencies of double taxation."*

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

* Bryan Caplan, The Myth of the Rational Voter (Princeton University Press, 2007), page 60.

2 April 2008

Editor, Newsweek.com

Dear Editor:

Courting blue-collar votes, Hillary Clinton promises to use "tax incentives to persuade companies to 'insource' jobs in the United States" ("Clinton proposes plan to keep jobs in US," April 2). Because firms 'outsource' jobs only when doing so lowers firms' costs of production, Mrs. Clinton's proposal amounts to bribing American firms not to lower production costs whenever possible. She wants to encourage American firms to produce inefficiently, which is to say wastefully. In short, she wants us to be poorer than we would otherwise be.

Mrs. Clinton's proposal is further evidence that good politics typically is bad economics.

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

1 April 2008

Editor, USA Today

Dear Editor:

In today's segment of that low-brow made-for-tv comedy series "Congressional Hearings," several members of Congress feign self-righteous indignation over the burden of high gasoline prices that oil producers allegedly now impose on ordinary Americans ("At hearing, Big Oil says its profits aren't extreme," April 1). Going for the guffaws, Rep. Edward Markey blurts out to the oil-company executives arrayed before him that "On April Fool's Day, the biggest joke of all is being played on American families by Big Oil" ("Big Oil" apparently is the evil entity's official name.)

What a hoot! The posers, liars, and hypocrites in Congress keep straight faces as they lecture private-industry specialists on how THEY - the posing, lying, and hypocritical specialists in nothing but finagling votes - would run oil companies. And then Rep. Markey, that long-time joker of the House, caps the show off by accusing the private-industry executives of being the rogues in the room. Hilarious!

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

1 April 2008

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

To the Editor:

True to political operatives' devious penchant for redefining words to suit their purposes, Lissa Muscatine and Melanne Verveer excuse Hillary Clinton's now-infamous recollection of her 1996 landing in Tuzla as being a "mistake" ("Straight Shooting from Tuzla," April 1). Nonsense. Regardless of how dangerous the hills surrounding Tuzla were at the time, Ms. Clinton’s description of her landing on the airfield there was a "mistake" only if we redefine this word so that it also excuses, say, Enron's executives as having made a "mistake" when reporting that company's financial condition.

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

I've said it before: tying to learn economics from the popular media (John Stossel excepted) is like trying to learn physics by watching Road Runner cartoons.

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31 March 2008

Director, Fox News

Dear Sir or Madam:

Fox Morning News co-host Megyn Kelly naively worries that Pernod's acquisition of Vin & Spirit AB (maker of Absolut vodka) will lead to higher prices paid by those of us who belly up to the bar (March 31). Ms. Kelly reasons that, because many analysts regard the $8 billion paid by Pernod for Vin & Spirit to be "too high," Pernod will raise the prices it charges for its products in order to recover the losses it would otherwise suffer as a result of paying such a large sum for Vin & Spirit.

If Ms. Kelly's economics were correct, bankruptcies would be unknown. Any business finding its revenues to be inadequate would simply raise the prices it charges for its products and enjoy the resulting higher revenues. Any individual finding his income too low would simply demand a higher wage and enjoy his resulting higher income. If covering expenses were as easy as simply demanding higher prices for whatever it is you sell, then we'd all live in a bizarre economic paradise - one in which it would be meaningless to describe anyone as paying "too much" for an asset or as living beyond his means.

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

31 March 2008

Editor, Washington Times

Dear Editor:

You're correct that it's a poor idea to use the police to track down truants ("The D.C. truancy problem," March 31). You're correct also to suggest that the most vital players in any young student's life are that student's parents.

So note the problem: truancy statutes and other features of K-12 schooling policy are built upon the pernicious premise that the state - and, hence, not parents - bears ultimate responsibility for children. This institutionalized distrust of parents goes hand-in-glove with the delusion that government can, should, and will somehow substitute for parents. And it is a short and natural step from this delusion to using police officers to enforce truancy statutes.

In a free society, parents are not forced to send their children to school.

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