Politics and Class
11 October 2008
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Your headline for some letters today shouts "The G.O.P. Waged Class Warfare, and We All Lost" (October 11). Without defending the indefensible G.O.P., I note that you leave the mistaken impression that Democrats DON'T wage class warfare.
Fundamental to class warfare is the notion that opportunity and prosperity are fixed in size - that a good job secured by Peter is a good job denied to Paul; that higher income paid to Peggy means lower income paid to Paula. If society truly were zero-sum, fear and loathing of the "haves" by the "have-nots" might make some sense. But American society emphatically is positive-sum: a person who works hard and acts responsibly almost always improves his economic lot, even if (indeed, especially if) the great majority of his fellow citizens do the very same.
Alas, though, it's now central to the creed of Democrats that Jones's poverty is caused by Smith's prosperity - that Jones can be made better off only by giving him the good job now held by Smith, or by forcibly transferring some of Smith's above-average wealth into Jones's below-average bank account.
What is such politics if not class warfare?
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Banking on Selgin
10 October 2008
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Portraying central banks as necessary to prevent banking crises, John Steele Gordon misreads banking history ("A Short Banking History of the United States," October 10). It's true that between 1836 and 1912 (when the Fed was created) the U.S. had no central bank. It's true also that during those years Americans suffered several banking crises. But the reason had nothing to do with the absence of a central bank and much to do with ill-considered regulations - such as state prohibitions on branch banking, and Uncle Sam's requirement that national banks hold federal-government securities as reserves.
Canada's history is instructive. That country allowed branching; Canadian banks could issue currency free of regulations common in the U.S.; and, significantly, that country had no central bank until 1935. A happy result of this system of free banking is described by one of the world's preeminent banking historians, George Selgin: "it allowed Canada to avoid the bewildering assortment of bank notes, recurring currency shortages, and waves of bank failures that beset the United States."*
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University<
* George Selgin, “Milton Friedman and the Case against Currency Monopoly,” Cato Journal, Spring/Summer 2008; quotation from page 294. This paper is available on line at:
http://cato.org/pubs/journal/currentissue.html
Labor Economics 101
I here ignore the fact that hourly wages are taxed while employer-paid health-insurance premiums aren't. The conclusion still holds
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10 October 2008
Editor, Washington Post
1150 15th St., NW
Washington, DC 20071
Dear Editor:
According to E.J. Dionne, "Few investments would help businesses more than offloading a share of their health-care costs to the government. It's social justice with an economic kick" ("Hoover vs. Roosevelt?" October 10). Overlooking the questionable "justice" of forcing Peter to pay Paul's insurance premiums, Mr. Dionne's economics is wrong.
Universal government provision of health insurance won't reduce employers' costs of employing workers. Worker pay - wages and benefits - is set by competition among employers for employees. If competition obliges Acme Inc. to pay a worker an hourly wage of $20 plus health benefits worth $5 hourly, this fact means that Acme must pay this worker a total-compensation package of $25 per hour. Because government provision of all health insurance would not reduce the value of this worker to Acme and other potential employers, competition would oblige Acme to raise the worker's hourly wage by $5 - the amount that Acme no longer must pay for health-insurance premiums. Acme would still have to pay this worker a total-compensation package worth $25 per hour.
Contrary to Mr. Dionne's assumption, universal government provision of health insurance would not reduce firms' costs — although it would surely raise their taxes.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
Enterprise Hall
George Mason University
Fairfax, VA 22030©
Sharks and Vultures
9 October 2008
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
You're right that "In seeking to make lobbying an issue, Senator McCain has made one of hypocrisy" ("One Man's Crony ...," October 9). But this fact hardly sets Sen. McCain apart from other politicians.
Among the articles of faith of "progressivism" is the theory - which never yields to experience - that you can fill the sea with enormous quantities of fresh red meat and then, Moses-like, successfully command the sharks not to devour it.
As long as Uncle Sam continues to stock the Potomac by ripping from the body politic such enormous quantities of flesh and muscle - now more than three TRILLION dollars worth annually - sharks and vultures will inevitably swarm throughout Washington in a competitive struggle to gorge themselves on this unfortunate feast.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
