Market Correction

25 June 2008

Editor, USA Today

Dear Editor:

Ralph Peters correctly notes that "capitalism needs adult supervision" ("I'm for McCain, but not the GOP," June 25). He incorrectly presumes, however, that this truth justifies regulation by government.

In market economies consumers, workers, investors, and property owners provide ample adult supervision. If a brewer sells me bad beer, I stop buying his product. Of course, some misbehaviors are less easily punished, but to presume that these difficulties validate government regulation is to presume that government acts as a responsible adult. Can anyone who soberly beholds the behavior of politicians honestly conclude that sufficient numbers of them are mature, wise, responsible, and trustworthy supervisors of anything other than their own vulgar careers?

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

24 June 2008

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

To the Editor:

John McCain wants Uncle Sam to offer a prize of $300 million to whoever develops an affordable and practical battery package that will reduce the costs of powering automobiles by at least 70 percent ("McCain Proposes a $300 Million Prize for a Next-Generation Car Battery," June 24). How silly.

Anyone who develops such a device will earn profits dwarfing $300 million simply by selling it on the market. There's absolutely no need for any such taxpayer-funded prize.

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

24 June 2008

Editor, The New York Post

Dear Editor:

Rich Lowry hilariously smacks down Senators Kent Conrad and Chris Dodd for claiming not to know that the cut-rate, VIP loans given to them by Countrywide Financial were attempts to buy their influence ("Suffering Senators," June 24). But while any ordinary person would indeed have seen Countrywide's bribe for what it is, maybe - just maybe - these "public servants" really are oblivious to the obvious. As historian Will Durant said about Robespierre at the height of that madman's dominance, "power dements even more than it corrupts."*

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

* Will and Ariel Durant, The Age of Napoleon (New York: Simon and Schuster, 1975), p. 81.

23 June 2008

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

To the Editor:

Re the parallels that Mary O'Grady draws between polices implemented by Argentinian strongmen and strongwomen and those proposed by Barack Obama ("From Breadbasket to Basket Case," June 23): hopefully Americans aren't so gullible as are our southern neighbors.

Mr. Obama is like a master seducer. The charming, worldly, handsome, silver-tongued gentleman assures the fetching damsel of his sincerity and devotion to her - and, of course, of the fact that he's different from the other boys and men who've come before him. HE won't deceive her, cheat on her, break her heart; HE, and he alone, will sacrifice himself to her happiness, for that really is all that he, inspired by her majesty, truly desires. In return for this break-the-mold-man's selfless devotion, he asks only for access to her most select favors. He will love her in the morning, and always. HE represents change she can believe in.

I can only hope that even if most Americans succumb to this deceiver's charms, enough of these Americans - even many who are today swooning girlishly over his promises - will eventually see the real agenda (lust, for power) behind his fine words. If we're lucky, today's giddy infatuation will be replaced by skepticism, caution, and even anger - and hopefully soon enough so that we Americans don't find ourselves carrying an unwanted burden that will impoverish us. (The analogy ends here: an unwanted burden, should it come to life, will be a burden only. Unlike a child, it will be decidedly unlovely and a source of pride only to the most deluded amongst us.)

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

Or as Arnold Kling points out, middle income earners are indeed being squeezed out of middle-income brackets mostly into higher-income brackets. See this 2004 Washington Post graphic:

http://www.washingtonpost.com/wp-srv/business/daily/graphics/landscape_091704.html

The obvious lesson of this graphic was amazingly overlooked by the reporter whose story was accompanied by it.

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22 June 2008

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

Dear Editor:

Michael Kazin and Julian Zelizer assert that America's middle-class for the past thirty years has been "shrinking" and that "no family is secure" ("A New Social Contract," June 22).

Evidence cautions against this conclusion. According to Bureau of Labor Statistics data, worker productivity and inflation-adjusted worker compensation have both risen consistently and in very tight alignment with each other over the past four decades. Compared to 1968, productivity today is higher by 110 percent, while real worker compensation is higher by 103 percent.*

Or consider that IRS data - which track individual taxpayers through time - reveal (as reported by Thomas Sowell) that "People in the bottom fifth of income-tax filers in 1996 had their incomes increase by 91 percent by 2005." Adjusted for inflation, that's an increase in real incomes of 73 percent for low-income taxpayers. America's average taxpayer enjoyed, over this same time, an increase in real income of nearly 20 percent. This latter result probably was not driven by the super-rich getting richer: over this same period the real incomes of 1996's top one percent of income earners fell by 21 percent.**

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

* http://bp0.blogger.com/_otfwl2zc6Qc/SFp66bl7BjI/AAAAAAAAE58/oTwkcdFFmZo/s1600-h/income2.gif

** http://www.realclearpolitics.com/articles/2007/11/income_confusion.html

My and Karol's dear, late friend Hugh Macaulay asked this question in his economics classes at Clemson University.

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21 June 2008

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

To the Editor:

J.D. Koerner's satirical mention of "inequality" among PGA players (Letters, June 21) reminds me of a question that I now pose to my students whenever they insist that unequal incomes are evidence of injustice and, therefore, should be "reallocated" more equally by government. I ask these students if they want me, as their professor, to "reallocate" A and B grades to students who earn D and F grades. Students who earn high grades will have their grades lowered to C, while students who earn low grades will have their grades raised to C. The result will be equality of grades.

I've yet to encounter a student who defended such a system for "distributing" grades.

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

20 June 2008

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

To the Editor:

Paul Krugman asserts that opening up new areas to oil exploration "would do nothing for current gas prices" ("Driller Instinct," June 20). This claim is questionable.

Oil is traded across space AND time. So even if oil from the outer continental shelf won't see the light of day until the 2020s, the prospect of its future availability would put downward pressure on the price of oil today, even though the effect might be small. (If investors' time horizons did not extend over such a long time period, oil companies would be unwilling to invest today on the OCS given that such investments won't generate actual oil production until the 2020s.) And this price-reducing effect will be even larger insofar as opening new areas to drilling is taken to represent a liberalization of supply-suppressing regulations.

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

20 June 2008

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

To the Editor:

Paul Krugman opposes opening up new areas to oil exploration in part because doing so "would do nothing for current gas prices" ("Driller Instinct," June 20). By this logic, he should also oppose investments in finding alternative energy sources: they, too (if Mr. Krugman's logic is sound), "would do nothing for current gas prices."

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

20 June 2008

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

To the Editor:

You write that "The excitement underpinning Senator Barack Obama's campaign rests considerably on his evocative vows to depart from self-interested politics. Unfortunately, Mr. Obama has come up short of that standard with his decision to reject public spending limitations" ("Public Funding on the Ropes," June 20).

Regardless of the merits of Mr. Obama's decision, I'm bemused by how easily you are bamboozled by politicians. Do you truly believe that any serious candidate is not self-interested? Are you really surprised when a favorite candidate, after predictably promising to selflessly serve the greater good, instead selfishly serves first his or her political ambitions?

Selflessness among politicians is as likely as is selflessness among prostitutes: both gratify their patrons only - and only as far as is necessary - to further their own ambitions.

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