Market Correction

11 September 2008

Editor, ABA Journal

Dear Editor:

Kristin Choo's report of how (as your cover proclaims) "Global Warming Leads to Water Wars" has not a single mention of water markets ("Gulp," September). How unfortunate.

A great deal of research shows that water markets replace fighting over access to water with peaceful, mutually advantageous allocation of water. As the great environmental economist Terry Anderson explains, "Where water prices signal the true scarcity value of water, people find innovative ways to conserve and trade; where prices do not reflect scarcity value, water is wasted and political battles rage.... The more that we reform legal institutions to lower the cost of water transfers from one use to another, the more we can adapt to changing demands and supplies regardless of what is causing those changes."*

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

* Terry Anderson, "Fightin' or Drinkin'," (PERC Reports, June 2007):
http://www.perc.org/articles/article885.php

11 September 2008

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

To the Editor:

David Perel offers good reasons why today "Everything About Politicians Is Fair Game" (September 11, 2008).

But Mr. Perel overlooks what is surely the fundamental reason: tit-for-tat. Because everything about private citizens has become fair game for politicians - everything from our retirement planning to what we ingest and even to the sizes of our toilet tanks - it's not surprising that citizens eagerly pry into the intimate lives of politicians.

Those who raise busy-bodyness into a guiding principle of public policy can hardly complain when their officious Frankenstein monster turns its spying eyes on them.

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

9 September 2008

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

To the Editor:

Coming as it does during the crisis involving Fannie Mae and Freddie Mac, Bob Herbert's unconditional praise of Medicare and Medicaid is curious ("Hold Your Heads Up," September 9).

Fannie's and Freddie's troubles are textbook examples of what happens when gains are privatized while risks and losses are socialized: private decision makers are led by an invisible hand to screw things up. The same underlying dysfunctionality that created America's housing-market troubles is needlessly driving up health-care costs: Medicare and Medicaid privatize the benefits of health care (medical attention for patients and handsome fees for physicians) while socializing the costs. Spending other people's money leads patients and doctors to overuse, and to use inefficiently, health-care resources - and, thus, to unnecessarily drive up health-care costs.

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

9 September 2008

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

To the Editor:

Bob Herbert's paean to modern "liberals" - that is, to those who view government as being necessary to protect us from our own stupidity and from others' cupidity - contains several errors ("Hold Your Heads Up," September 9). Here's one. Contrary to Mr. Herbert's assertion, unemployment insurance is not the gift of "liberals." Such insurance was introduced by private insurance firms about 100 years ago, against the resistance of state governments. A fatal blow was dealt to these commercial efforts by none other than FDR who, as governor of New York, vetoed a bill to allow private companies to expand the number and kinds of workers covered by private insurers.

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