Teach this Environmentalist Some Economics
19 June 2008
Ms. Diane Rehm, Host
The Diane Rehm Show
WAMU Radio
Washington, DC
Dear Ms. Rehm:
The Sierra Club's Athan Manuel asserted, near the end of your show today, that "more drilling will only benefit the oil companies."
To see why this statement is preposterous, ask yourself if less drilling will only harm the oil companies. If you conclude that reducing the supply of oil will have no ill consequences for consumers, then you see (blind) eye to (blind) eye with Mr. Manuel. But if you instead conclude - as I suspect you will - that reduced supplies of oil will harm consumers, then you must also conclude that Mr. Manuel speaks nonsense when he asserts that more drilling is in the interest only of oil companies.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Slick Hypocrisy
19 June 2008
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Thomas Evans urges Uncle Sam to sue OPEC for artificially raising the price of oil ("Sue OPEC," June 19). Seems a tad hypocritical given that Uncle Sam himself artificially raises the price of oil by prohibiting drilling on the outer continental shelf and on ANWR.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Wage Determination
19 June 2008
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
According to American Federation of Teachers President Edward McElroy, "If there weren't laws to make sure that base pay is decent and workers are paid prevailing, livable wages, the alternative would be a 'how-low-can-you-go' race to the bottom" (Letters, June 19).
Wrong. Even a casual glance at reality reveals that worker compensation is determined by the supply of, and demand for, workers, and that pay emphatically does not fall to any legally allowed minimum. If compensation did behave as Mr. McElroy alleges, then physicians, accountants, morticians - even supermodels, rock stars, and labor-union officials - would be paid minimum wages. But 97.7 percent of American workers are paid wages above the federally mandated minimum. Most are paid multiples of this amount. Heck, to get someone to watch our child, my wife and I must pay even babysitters close to twice the minimum wage!
Sincerely,
Donald J. Boudreaux
Chairman, Department f Economics
George Mason University
The Pessimistic Bias
18 June 2008
Editor, Washington Post
1150 15th St., NW
Washington, DC 20071
Dear Editor:
The title of one of your reports today wonders "Why We're Gloomier Than The Economy" (June 18). It's true (as you document) that while today's economy remains reasonably healthy, people generally think that it's in the toilet. Why indeed?
One reason is that many pundits, such as your own Harold Meyerson, incessantly cherry-pick the data to portray the economy as being a wreck for ordinary Americans and, hence, allegedly in need of massive amounts of government intervention. Another reason is what my colleague Bryan Caplan calls "the pessimistic bias," which is hardly new. Alexis de Tocqueville lamented it, and Herbert Spencer noted that "the more things improve the louder become the exclamations about their badness."* Our sensitivity to even the least discomfort and insecurity intensifies as our lives become more comfortable and secure.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
* Bryan Caplan, The Myth of the Rational Voter (Princeton University Press, 2007), esp. pp. 43-48.
Perhaps He Misspoke
17 June 2008
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Barack Obama asserts that "Globalization and technology and automation all weaken the position of workers" ("Obama Plans Spending Boost, Possible Cut in Business Tax," June 17).
Wow! Then that tribe of primitive people newly discovered in Brazil must boast the world's most prosperous workers. After all, they have absolutely NO global trade, modern technology, or automation. If he's a man of his convictions, a President Obama will surely urge us back to the stone age so that ordinary workers might again enjoy the lavish wealth that such an existence obviously ensures.
Sincerely,
Donald J. Boudreaux
Chairman, Department f Economics
George Mason University
Minimum Skepticism
17 June 2008
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Adam Cohen waxes enthusiastically: "The minimum wage can play a vital role in lifting hard-working families above the poverty line. But as Roosevelt understood, it is also about something larger: what kind of country America wants to be" ("After 75 Years, the Working Poor Still Struggle for a Fair Wage," June 17).
Mr. Cohen's enthusiasm for the minimum-wage might be tempered if he knew its full history, such as that the minimum-wage established by the Fair Labor Standards Act of 1938 was meant to protect northern producers and workers from competition posed by their southern rivals. The (left-wing) Nobel laureate economist Gunnar Myrdal lamented in 1944 that, because of this Act, "Southern industry will lose one of its main competitive advantages. This effect will increase the competition for jobs in the South and make the Negroes' chances for employment in Southern industry slimmer." Or the fact that the industry-by-industry minimum-wages created by the National Industrial Recovery Act of 1933 were argued by Myrdal to throw perhaps as many as half a million southern blacks onto welfare.*
Is the "kind of country America wants to be" one that uses nobly named statutes to protect influential producers from having to compete with less influential rivals?
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University™©
* Gunnar Myrdal, An American Dilemma (New York: Harper & Bros., 1944), p. 398.
Progressive Paul Krugman
16 June 2008
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Paul Krugman repeatedly insists that Uncle Sam's fiscal problems are caused by tax cuts, especially for the rich ("Fiscal Poison Pill," June 16). But budgets have two sides: revenue and spending. Identifying only one of these sides as responsible for fiscal problems is akin to identifying only one blade of a pair of scissors as responsible for cutting through paper.
And on the spending side Uncle Sam is criminally irresponsible. Citing a Government Accountability Office study, Sandra Day O’Connor and James R. Jones report in today's Washington Post that "Even if every dollar of wealth of every millionaire in the United States were magically diverted to pay these costs, 80 percent of the unfunded liabilities forecast for these three programs [Social Security, Medicare, and Medicaid] would remain on the books."
No amount of "progressive" taxation can solve the fiscal problems caused by the "Progressive" spending that Mr. Krugman champions.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Webb of Foolishness
15 June 2008
Editor, Richmond Times-Dispatch
Dear Editor:
Sen. Jim Webb alleges that today's high oil prices are caused by speculators - that is, the senator thinks that these prices don't reflect fundamentals of supply and demand ("Webb says farm bill will help food banks," June 15). It follows that Mr. Webb believes that oil prices will eventually fall.
I'm tempted to advise Mr. Webb to put his money where his mouth is and go short in oil; if his allegation is accurate he'd make a fortune. Perhaps, though, he hasn't much freedom to invest now that he's in Congress. But no private citizen seduced by the ancient cry that prices are unjustifiably manipulated by speculators need despair! Each can act profitably on his or her belief by going short in oil today. Not only would this investment put immediate downward pressure on oil prices, it would make each of these short investors a tidy fortune - assuming, of course, that the chief cause of today's high oil prices is indeed speculative buying.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Macaulay on Appreciating Nature
14 June 2008
Editor, Washington Post
1150 15th St., NW
Washington, DC 20071
Dear Editor:
Suggesting that capitalism has planted in modern humans an "indifference to nature," Michael Gerson says that we are only now seeking to "rediscover" it ("A Prince's Green Sensibility," June 14). Untrue. Nothing has done more than capitalism to instill in humans an appreciation for nature. Hear the words of the mid-19th-century English historian Thomas Babington Macaulay from his "History of England":
"Indeed, law and police, trade and industry, have done far more than people of romantic dispositions will readily admit, to develop in our minds a sense of the wilder beauties of nature. A traveller must be freed from all apprehension of being murdered or starved before he can be charmed by the bold outlines and rich tints of the hills. He is not likely to be thrown into ecstasies by the abruptness of a precipice from which he is in imminent danger of falling two thousand feet perpendicular; by the boiling waves of a torrent which suddenly whirls away his baggage and forces him to run for his life; by the gloomy grandeur of a pass where he finds a corpse which marauders have just stripped and mangled; or by the screams of those eagles whose next meal may probably be on his own eyes....
"It was not till roads had been cut out of the rocks, till bridges had been flung over the courses of the rivulets, till inns had succeeded to dens of robbers . . . that strangers could be enchanted by the blue dimples of lakes and by the rainbows which overhung the waterfalls, and could derive a solemn pleasure even from the clouds and tempests which lowered on the mountain tops."
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Lieberman's Follies
13 June 2008
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Re Sen. Joe Lieberman's efforts to "reduce speculation" ("Lieberman Seeks Limits to Reduce Speculation," June 12): Whenever commodity prices behave in ways that government officials dislike - and especially when these prices reflect the costs of ill-advised government policies - officials invariably blame "speculators." This is a conveniently nebulous group of investors whose financial expertise, being greater than that of the average literature professor, enables demagogues to portray them as practitioners of a dark art.
In fact, though, speculation is nothing more than betting on the future course of prices. If done profitably, it makes resource supplies more predictable and smoothes out changes in prices. A speculator who correctly predicts, say, that the price of oil will be higher tomorrow than it is today buys oil today for resale tomorrow. That is, he buys oil when it is relatively abundant and makes it available when it is in shorter supply. His doing so raises today's price of oil and lowers tomorrow's price. Without successful speculators, markets would be more volatile and resource supplies less certain. Speculation done unprofitably, of course, hurts no one as much as it does the speculators themselves.
Sen. Lieberman is demagoging an issue about which he knows nothing.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Free Trade and Medical Care
13 June 2008
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Dr. Arnold Relman asserts that "'Free trade' applies to commerce. Medical care is not commerce and shouldn't be treated as if it were” (Letters, June 13). Why not? Free trade exists whenever buyers and sellers are free to deal with each other without regard to their nationalities, religious beliefs, or any other criteria that officious third-parties would elevate into importance but that the buyers and sellers themselves find irrelevant.
Why should consumers and suppliers of brain surgery suffer greater interference from impudent third-parties than should consumers and suppliers of bubble gum?
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030
Frank Cheap Shot
12 June 2008
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Thomas Frank levels a harsh allegation against law and economics scholars at the University of Chicago: "Their hostility to the working class is not to be doubted" ("The Tilting Yard," June 11).
The American Heritage Dictionary defines "hostility" as "antagonism or enmity." These are passions of hatred and ill-wishes. I'll pay Mr. Frank $100 for every line he finds in any article or book written by Milton Friedman, George Stigler, Gary Becker, Ronald Coase, Aaron Director, D. McCloskey, Sam Peltzman, Richard Epstein, or Richard Posner - the greatest scholars in the Chicago tradition - that reveals a desire to keep working-class people from prospering.
My bank account is safe. Mr. Frank's assumption that those who disagree with his means also disagree with his ends is both childish and cheap.
Sincerely,
Donald J. Boudreaux
Chairman, Department f Economics
George Mason University
Protectionism Is A Parasite that Feeds On Any Available Host
12 June 2008
Editor, USA Today
Dear Editor:
As you see it, South Koreans who protest imports of American beef are motivated only by a concern for safety ("The beef about U.S. beef," June 12). This view is naive. These safety concerns, while real, are stoked by a far less defensible force: Korean beef producers' greedy desire for a protected market.
If, as you say, "what people eat is an intensely personal matter," then surely a government that imposes a wholesale ban on beef from the U.S. intrudes unnecessarily into this intensely personal matter. A less intrusive step is simply to require that American beef be labeled as such. That way, Koreans who discount the risks of mad-cow disease are free to buy American beef without forcing anyone else to do so. Korean ranchers will still protest, but they'll no longer be able to mask their piggish quest for monopoly profits as a selfless concern for the health of fellow Koreans.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
On the U.K.'s Population
11 June 2008
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Ashley Mote is worried because "[d]emographers say the U.K.'s sustainable population is about 30 million - a figure we exceeded over a century ago. Today, we already have over 60 million" (Letters, June 11). Fortunately, the "sustainability" of a population is not chiefly a question of demographics; it's one of economics. It's a question of how effectively the economy encourages people to produce greater quantities of useful outputs from given resources - and how well the economy encourages people to discover hitherto unknown resources.
Consider: A century ago, with a population much closer to the maximum that demographers identify as "sustainable," per capita income in the U.K. was about $4,600 (in 2008 dollars). Today it is nearly eight times higher, at $35,300. So even overlooking the oddity of alleging that population has been "unsustainable" for over a century, the fact that real per-capita income in the U.K. today is vastly higher than it was when population was lower is strong evidence that demographers are bloody way off in their estimate of what population level in the U.K. is "sustainable."
Sincerely,
Donald J. Boudreaux
Chairman, Department f Economics
George Mason University
