Market Correction

30 October 2008

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

To the Editor:

Re "The Costs of Misperception"(Letters, October 30): behavioral economics clearly shows that human beings' cognitive powers are quite limited. This fact suggests that one benefit of a competitive price system is that it enables market participants to plan their actions by observing relatively simple prices rather than by directly scrutinizing the incomprehensibly complex underlying reality reflected by prices.

But when the money supply is arbitrarily determined (as it is with central banking), prices often reflect not economic reality but, rather, changes in the supply of money. Prices' reflection of the underlying reality is distorted. Systemic errors, including bubbles, are among the consequences.

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

29 October 2008

Editor, New York Post

Dear Editor:

Although Kirsten Powers recognizes that Democrats howled in protest against George Bush's presidency, she's shocked - shocked! - that Republicans now howl in protest against the prospect of an Obama presidency ("Deranged by O," October 29).

In politics, such histrionics are inevitable. As H.L. Mencken observed, "Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule - and both commonly succeed, and are right."*

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

* H.L. Mencken, Minority Report (The Johns Hopkins University Press, 1997 [1956]), p. 222.

28 October 2008

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

Dear Editor:

We're supposed to be inspired by your report of high-school kids becoming politically active - working, in one case, for the Obama campaign, and in another for the McCain campaign ("Too Young to Vote, But Electing to Care," October 28).

I'm not inspired; I'm saddened. Why applaud young people who are attracted to the opportunistic compromises, platitudes, distortions, and exaggerations of party politics? These kids either lack the maturity to understand that party politics is chiefly about winning office (rather than about pursuing truth and justice), or they DO understand this fact. In neither case is this juvenile political involvement admirable.

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

27 October 2008

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

To the Editor:

Arthur Laffer despondently predicts that today's tsunami of government interventions will ensure "the end of prosperity" ("The Age of Prosperity is Over," October 27). He's correct that these new interventions will only make matters worse - just as the interventions of Herbert Hoover and FDR turned what would have otherwise been a relatively quick market correction into the Great Depression.

But I resist Mr. Laffer's extreme pessimism. If Ireland can escape from decades of oppressive statism to become entrepreneurial and prosperous - and, even more impressively, if countries such as the Czech Republic, Poland, and Estonia can make the progress they've made since they were freed from the awful yoke of communism - surely not all hope is lost for us Americans. The big challenge is to get through this current infatuation with statism as quickly as possible.

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

25 October 2008

Editor, Baltimore Sun

Dear Editor:

In "The problem with average Joes," Mitch Albom correctly notes that serious thinking about public policy is in short supply (October 25). But he mistakenly supposes that the ideas of ordinary persons such as Joe the Plumber are generally worse than those of elected officials in high office.

Just yesterday I attended a seminar at the University of South Carolina School of Law. At that seminar, U.S. Rep. Brad Miller (D-NC) bragged that, unlike the other seminar speakers, he's no academic. He boasted that he doesn't use theories to see the world. He uses only his eyes - and he trusts his eyes. No drinking of the inebriating elixir of abstract thought for THIS practical man! (He, no doubt, believes that we inhabit a stationary flat earth around with the sun revolves, for that is surely what his eyes reveal to him.)

There is indeed much ignorance, even willful ignorance, about policy matters - on Pennsylvania Avenue no less than on Main St.

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

24 October 2008

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

To the Editor:

Rober Inlow, relying on a dictionary definition, praises modern "liberals" for being "tolerant of the ideas and behavior of others" (Letters, October 24).

Huh?

Has Mr. Inlow forgotten about the "liberals" who want to restrict people's ability to smoke and to eat trans-fats? How does he account for the "liberals" who do not tolerate any worker voluntarily agreeing to work for less than the minimum-wage? And what's his explanation for "liberals'" officious insistence that individuals cannot be trusted to provide for their own retirements?

Modern "liberals" - although tolerant on a few important fronts - generally are eager to regulate, mandate, and otherwise intolerantly order ordinary people about.

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

24 October 2008

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

To the Editor:

Robert Inlow writes that "Liberals have been responsible for gaining women equal rights" (Letters, October 24). To make such a claim is akin to crediting the diplomats who negotiate an enemy-country's military surrender for doing all the hard work that won the war. Capitalism's ethos of freedom of contract - and its creation of inexpensive washing machines, vacuum cleaners, disinfectants, and other household appliances and products - have done far more to promote women's rights than has any "liberal" crusader or politician.

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

23 October 2008

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

To the Editor:

Alan Greenspan now blames deregulation for today's financial turmoil ("Greenspan Concedes Error on Regulation," October 23). Whatever deregulation there was, and whatever its merits or demerits, there is one crucial financial instrument - dollars - that throughout was supplied by an utterly unjustifiable nationalized monopolist - the Fed. Unfortunately, this decidedly unfree-market arrangement draws little attention.

Skepticism is advisable when the former head of a government-created, owned, and protected monopoly blames the market for using that monopoly's output unwisely. Would the demand for mortgage-back securities have been as frothy as it was if Mr. Greenspan's Fed had not created so much new money? Would the demand for owner-occupied housing itself have been so intense? Because money plays a common and vital role in all of these transactions - and because Mr. Greenspan's Fed kept pumping dollars into the economy with no way to know either what the existing supply of dollars really was or what the 'correct' supply is - you'll pardon my inability to give credence to Mr. Greenspan's latest pronouncements.

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