Middle-Class Suffering?
10 June 2008
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Bob Herbert asserts that the United States economy "has trouble producing enough jobs to keep the middle class intact" ("Out of Sight," June 10). While there are always cyclical ups and downs, Mr. Herbert's statement - if meant as an indictment of the economy's long-term performance - is contradicted by the facts. Not only is the unemployment rate still at a reasonable level, the Census Bureau reports that real median household income (reckoned in 2006 dollars) was $48,201 in 2006, up from $36,847 in 1967 - an increase of 31 percent. And this growth has been pretty steady over those 40 years.*
Moreover, this figure underestimates the middle-class's increasing prosperity, for it ignores the shrinking size of households. In 1967, the average household contained 3.14 persons; in 2006 it contained 2.57 persons. This fact means that the real income for each member of the average household grew from $11,735 in 1967 to $18,755 in 2006 - an increase of 60 percent.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030
* See "Income, Poverty, and Health Insurance Coverage in the United States: 2006," U.S. Census Bureau (August 2007), especially Figure 1. This document is available at:
www.census.gov/prod/2007pubs/p60-233.pdf
For figures on U.S. household size, see Brad Schiller, "The Inequality Myth," Wall Street Journal, March 10, 2008, p. A15, available at:
http://online.wsj.com/article/SB120511125873823431.html?mod=opinion_main_commentaries
Plus ca change, plus c'est la meme chose
9 June 2008
Editor, Newsweek
Dear Editor:
Fareed Zakaria laments that much of what government should do to improve Americans' future economic prospects "involves some short-term pain in exchange for long-term gain. But Washington has become incapable of that" ("How to Get Back to Growth," June 16). He's right. But he's wrong to suggest that this phenomenon is new, as this 1944 entry from the diary of the great Harvard economist Joseph Schumpeter attests: "Politicians are like bad horsemen who are so preoccupied with keeping in the saddle that they can't bother about where they go."*
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030
* Quoted in Thomas K. McCraw, Prophet of Innovation: Joseph Schumpeter and Creative Destruction (Harvard University Press, 2007), p. 405.
Madame C. J. Walker
8 June 2008
Editor, Washington Post
1150 15th St., NW
Washington, DC 20071
Dear Editor:
There's much talk these days of "glass ceilings" - witness Dana Milbank's "A Thank-You for 18 Million Cracks in the Glass Ceiling" (June 8).
Regardless of why Sen. Clinton's bid for the U.S. presidency failed, it's interesting to note that irrational discrimination and bigotry perhaps are overcome more readily in free markets than in politics. Consider Madame C. J. Walker. Born to former slaves in 1867, Madame Walker eventually became America's first black millionairess. In 1917 she built a mansion on the Hudson River, near estates owned by creme de la creme WASP families such as the Goulds and Rockefellers. Madame Walker earned her fortune at the height of the Jim Crow era, and mostly before women could vote in national elections, by (in her words) "manufacturing hair goods and preparations."
Madame Walker's success is evidence that no ceilings, glass or otherwise, absolutely obstruct entrepreneurial talent in free markets.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Constant Wisdom
8 June 2008
Editor, Washington Post Book World
1150 15th St., NW
Washington, DC 20071
Dear Editor:
Michael Dirda's review of Renee Winegarten's "Germaine de Stael & Benjamin Constant" is a gem (June 8). Both Winegarten and Dirda rightly emphasize that Constant was an important liberal thinker. Constant's liberalism, however, was of the classic variety. Like today's "liberals" he championed civil liberties. But unlike today's "liberals" he was constant in his liberalism, believing that individuals should be as free as possible from government in all matters, including economic ones.
And Constant still speaks to us, warning against the increasingly fashionable "liberal" insistence that government be responsible for our happiness. Let us all take to heart what he wrote in 1816: "The holders of authority are... ready to spare us all sort of troubles, except those of obeying and paying! They will say to us: 'what, in the end, is the aim of your efforts, the motive of your labours, the object of all your hopes? Is it not happiness? Well, leave this happiness to us and we shall give it to you.' No, Sirs, we must not leave it to them. No matter how touching such a tender commitment may be, let us ask the authorities to keep within their limits. Let them confine themselves to being just. We shall assume the responsibility of being happy for ourselves."*
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030
* Benjamin Constant, "The Liberty of the Ancients Compared to that of the Moderns," available at:
http://www.uark.edu/depts/comminfo/cambridge/ancients.html
Silver-Tongued Devils
8 June 2008
Editor, Boston Globe
Dear Editor:
Jeff Jacoby rightly invokes the wisdom of George Washington to counsel a healthy suspicion of politicians ("Poor, poor, pitiful pols," June 8). A more contemporary figure, the late Harvard economist Joseph Schumpeter, described even more succinctly the nature of politicians: "A statesman is the criminal who works with phrases instead of with the burglar’s jimmy."*
It would be wise to keep Schumpeter's warning in mind during this election year - one that will be especially full of soaring phrases designed to mesmerize us into submission to those who want more of our money and freedoms.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
* Quoted in Thomas K. McCraw, Prophet of Innovation: Joseph Schumpeter and Creative Destruction (Harvard University Press, 2007), p. 405.
A Hayekian Lesson
7 June 2008
Editor, Washington Times
Dear Editor:
Ernest Christian and Gary Robbins nicely detail some of the irrational policies driven by political passions and preposterous presumptions ("Stupidity and the State," June 7).
One reason for this situation is that "We the People," who are supposed to monitor our government, are 300 million individuals, each evolved to be able to digest only a tiny fraction of the knowledge necessary to keep such a huge society working. In the free market, when each of us sticks to our own knitting, prices and competition weave our efforts together into a remarkably productive whole that is no part of anyone's intention.
But when We the People try to plan large swathes of society consciously, we succumb to what Hayek called "the fatal conceit." We simply are not mentally equipped to govern society with the same effectiveness and subtlety that each of us is equipped to govern our own personal affairs. So it's no surprise that governments with vast powers routinely behave stupidly: they are attempting to do the impossible while being overseen by the ill-informed.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Trying to Castrate the Mad Stallion
6 June 2008
Editor, Washington Times
Dear Editor:
Howard Richman argues that a key to America's prosperity is "balanced trade" (Letters, June 6). He's confused, as evidenced by his allegation that America's recent economic slowdown is linked to America's trade deficit. The U.S has run a trade deficit for each of the past 31 years, some of which (like the present) were periods of slow growth, but many of which were periods of high growth. Indeed, the evidence suggests that higher trade deficits are associated with higher, rather than lower, rates of economic growth.*
This last point highlights another of Mr. Richman's confusions. He thinks that trade deficits mean less domestic investment. Not so. Every trade deficit (more accurately, current-account deficit) is exactly offset by a capital-account surplus - meaning net inflows of capital into the domestic economy. And more capital generally means more growth.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030
* Daniel T. Griswold, "America's Record Trade Deficit: A Symbol of Economic Strength," Cato Institute (February 2001), available at http://www.freetrade.org/node/51
Some Reading Suggestions
5 June 2008
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Thomas Frank is correct that Barack Obama would benefit from a new reading list ("Obama Needs a Better Reading List," June 4). But Mr. Frank's suggestions are unlikely to be an improvement. Consider, for example, Mr. Frank's tiresome insistence that America is plagued by "market idolatry." I recommend that Mr. Obama (and Mr. Frank) read the entire 2007 Code of Federal Regulations - all 26-plus feet of library shelf space of it. The Democratic presidential candidate will discover that Uncle Sam's greedy hand and vile nose intrude into countless aspects of Americans' lives that "market idolaters" (that is, people with a principled commitment to freedom) believe are best kept free of politics.
I recommend also that Mr. Obama sharpen his understanding of international economics by reading Martin Wolf's Why Globalization Works.* To improve his ethics, Mr. Obama would do well to digest Douglas Rasmussen's and Douglas Den Uyl's Norms of Liberty** and David Kelley's A Life of One's Own.*** And to rid him of his juvenile notion that he is going to "change" society for the better from his hoped-for perch in the White House, Mr. Obama should study volume one of F.A. Hayek's Law, Legislation, and Liberty - a magisterial work that makes clear that society is far more vast, complex, and multidimensional than glib politicians realize.
Sincerely,
Donald J. Boudreaux
Chairman, Department f Economics
George Mason University
* Martin Wolf, Why Globalization Works (Yale University Press, 2004).
** Douglas B. Rasmussen and Douglas J. Den Uyl, Norms of Liberty (Penn State University Press, 2005).
*** David Kelley, A Life of One's Own (Cato Institute, 1998).
**** F.A. Hayek, Law, Legislation, and Liberty, Vol. 1 (“Rules and Order”) (University of Chicago Press, 1973).
Frank Nonsense
5 June 2008
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Thomas Frank asserts that "the rise of China and India ... was possible only because those countries shunned global commercial credit markets in the 1970s, allowing them to avoid the interest-rate shock of the early '80s" ("Obama Needs a Better Reading List," June 4). Nonsense - both theoretically and empirically. Theoretically, because a country avoids global interest-rate shocks only by avoiding global capital. No economy grows rich by keeping investors away in droves.
Empirically, because the data suggest that the recent impressive economic growth of these two countries is the result of their liberalization - China's starting in 1978 and India's in 1991. Dartmouth economist Douglas Irwin calculates that had China continued to grow at its pre-liberalization rate, real per-capita GDP in that country would today be no higher than one-fifth of its actual level. For India, real per-capita GDP today would be only 60 percent of its actual level had that country not liberalized in 1991.*
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030
* Douglas A. Irwin, Free Trade Under Fire, 2nd ed. (Princeton University Press, 2005), pp. 166-170.
A Congress of Creeps
5 June 2008
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Robert Rorden writes: "I believe that the activities of lobbyists have resulted in a corrupt government" (Letters, June 5). The reverse is closer to the truth: a corrupt government has resulted in the activities of lobbyists.
Like Mr. Rorden, I'm appalled by most lobbyists' unethical readiness to plead, on behalf of their clients, for ill-gotten gains. But unlike Mr. Rorden I don't blame lobbyists for turning Capitol Hill into what P.J. O'Rourke calls "a parliament of whores." I blame the whores.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
