Market Correction

18 December 2008

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

To the Editor:

Bravo for Roger Cohen's explanation that market economies work by creating new firms, new products, new processes - and that these creations are both the source of our prosperity and that they require that old firms, old products, and old processes be allowed to die ("Pan Am Dies, America Lives," December 18).

The still-unmatched explanation of this capitalist process was penned in 1942 by Joseph Schumpeter. He is worth quoting: "Capitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary." It propels us forward by unleashing a "perennial gale of creative destruction."

To those who would prevent these adjustments in order to avoid their short-term pains - to those who insist that even temporary unemployment of resources is economically unacceptable - Schumpeter replied wisely: "A system - any system, economic or other - that at every given point of time fully utilizes its possibilities to the best advantage may yet in the long run be inferior to a system that does so at no given point in time, because the latter's failure to do so may be a condition for the level or speed of long run performance."*

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

* Joseph A. Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper, 1942), pp. 82-83.

The man who never cheats on his wife because no other woman will have him is not particularly principled - but he proudly fancies himself that way. So the first bimbo he sniffs who'll do him the honor will prompt him to "abandon his principles" with as much alacrity as a hungry dog will attack a ham. Such are the principles of our "leaders."
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17 December 2008

Editor, The Washington Examiner

Dear Editor:

George Bush is the complete politician: he believes all that his in-house press and party operatives say about him, and he pours whatever meaning is politically expedient into every word that he uses. This fact is made clear by his statement that he "abandoned free market principles to save the free market system" ("Bush: 'I've Abandoned Free Market Principles To Save The Free Market System'," December 17).

First, one cannot abandon something that one never possessed - and this President, from his steel tariffs to his prescription-drug program to his No Child Left Behind foolishness, at no time gave the slightest indication that he supports free markets as a matter of principle.

Second, principles by their nature are things you stick with during trying times. Because no case has been established that today's troubles are caused by free markets, or that Mr. Bush's hyperactivity of late will "save" markets," his "abandonment" of his alleged principles simply reflects the fact that he never possessed them to begin with.

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

17 December 2008

Editor, The Washington Times

Dear Editor:

I agree with every sentence of Steve Chapman's essay on Barack Obama - save this one: "But Mr. Obama came to public attention because of a speech, at the 2004 Democratic convention, that showed he was capable not only of clear thought but of genuine passion" ("A 'My Pet Goat' moment," December 17).

The most we can conclude from that speech is that Mr. Obama is capable of displaying passion that appears genuine to audiences longing to hear it, much like a soap-opera star is capable of displaying passion for an actress whom that star might hold in utter contempt the moment the tape stops rolling.

Let's not confuse theater with reality.

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

14 December 2008

News Editor, WTOP Radio
Washington, DC

Dear Sir or Madam:

Your reporter today asked a University of Maryland economist why so many Americans oppose bailing out the Detroit automakers. The professor answered that economics (and, presumably, the economics allegedly justifying the bailout) is a "tough subject"; that many people find it "boring"; and that it is "very difficult to explain to non-economists." I disagree, both with his presumption that only persons ignorant of economics oppose the bailout, and that basic economics is inherently beyond the grasp of people of ordinary intelligence. Economics is beyond the grasp of most people in large part only because too many of my fellow economists make it so. H.L. Mencken agreed:

"Its [economics's] dismalness is largely a delusion, due to the fact that its chief ornaments, at least in our own day, are university professors. The professor must be an obscurantist or he is nothing; he has a special and unmatchable talent for dullness; his central aim is not to expose the truth clearly, but to exhibit his profundity, his esotericity – in brief, to stagger sophomores and other professors."*

Sad but true.

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

* H.L. Mencken, "The Dismal Science," reprinted in Mencken, ed., Prejudices (Baltimore: The Johns Hopkins University Press, 1996 [1947]), p. 149.

13 December 2008

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

To the Editor:

You rightly dismiss the argument that a government bailout of GM, Ford, and Chrysler is justified by the concern that people won't buy cars from companies in Chapter 11 ("Mitch McConnell's Finest Hour," December 13).

People will indeed not buy cars from companies that might be gone in a few years. But this fact argues against, not for, a bailout. Precisely because - unlike Chapter 11 - a bailout postpones the need for these companies to restructure themselves into more-competitive producers, it makes their long-term survival much less likely than would Chapter 11.

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

13 December 2008

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

To the Editor:

Part of Jon Walker's case for drug prohibition is his claim that today's controlled substances, unlike alcohol, are not "entwined in the fabric of our culture" (Letters, December 13). Perhaps. But a much more important fact looms: individual liberty IS "entwined in the fabric of our culture" - at least as the worthiest of aspirations. Because the "war on drugs” is an odious assault on liberty, that war is ripping the fabric of our culture.

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

12 December 2008

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

To the Editor:

Presidential spokeswoman Dana Perino said today that "Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary - including use of the TARP program - to prevent a collapse of troubled automakers" ("White House Open to Using Bailout Money to Aid Detroit," December 12, 2008).

In other words, the administration believes that the market is the best way to allocate resources - to discover their most productive uses and to give producers and consumers unparalleled incentives to pursue those uses - but in times, such as today, when it is especially important to use resources carefully, the administration concludes that resources will be more wisely allocated by politicians and bureaucrats.

What lunatic logic.

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

An economist is talking to a college student. The student says "I don't know how to play the piano, but I've always really wanted to learn."

The economist replies "Obviously not."
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11 December 2008

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

To the Editor:

While I agree with Nicholas Kristof's criticisms of Uncle Sam's practice of picking Americans' pockets and transferring the booty to big agribusiness, I'm mystified by his "regret" that his "kids don’t have the chance to grow up on a farm" as he did ("Obama's 'Secretary of Food'?," December 11).

America has lots of farms and farmland. Even along the heavily urbanized eastern seaboard, many local farms thrive. So the truth is, Mr. Kristof did indeed "have the chance" to live on a farm and raise his children there. The fact that he didn't do so reflects no obstacle other than the fact that working for the New York Times is more attractive to him than farming. He CHOSE not to live on a farm. He CHOSE the amenities of urban living; these weren't forced upon him by the Department of Agriculture or by anyone or anything other than his own preferences.

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

This letter is written by my (far-)better half:
......
December 11, 2008

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

To the Editor:

Nicholas Kristof rightly bemoans the current, corrupt system of agricultural protection and subsidies ("Obama's 'Secretary of Food'," Dec. 11). He is wrong though when he suggests that we need government to promote local farms and foods.

My family, for example, has ready access to high-quality local foods. We purchased shares in a farm cooperative located in western Virginia and fresh food was delivered to our door. From early May to late October I visit our local farmers' market, along with hundreds of others, for everything from apples to zinnias. Finally, several Whole Foods and other grocery retailers provide locally grown fruits, vegetables, dairy products, and meat. This cornucopia of products is available to consumers in northern Virginia not because of government efforts; it's there because of market incentives - people like me want, and will pay for, locally grown fruits and vegetables.

So forget about a renamed or revamped Department of Food! What we need is freedom for creative food entrepreneurs to do what they are already doing: improving the quality of the US food supply.


Sincerely,

Karol Boudreaux
Senior Research Fellow
Mercatus Center at George Mason University