Market Correction

2 March 2009

Editor, Washington Post

Dear Editor:

Supporting Pres. Obama's efforts to "redistribute" incomes, E.J. Dionne quotes an administration official: "'Over the past two or three decades, the top 1 percent of Americans have experienced a dramatic increase from 10 percent to more than 20 percent in the share of national income that's accruing to them,' said Peter Orszag, Obama's budget director. Now, he said, was their time 'to pitch in a bit more'" ("The Re-Redistributor," March 2).

This "Progressive" mindset distorts sound thinking.

First, in market economies incomes aren't "distributed"; they're produced and earned. Second, persons whose earnings rise disproportionately more than those of other persons generally achieve this outcome by increasing their production disproportionately more than other persons increase theirs; the fact that someone's income rises means that he or she already is pitching in more. Third, the share of federal individual income-tax revenues paid by America's top one-percent of income earners has recently been on the rise. In 2006 (the latest year for which data are available) this tiny group of Americans paid a whopping - and all-time high - 39.9 percent of such taxes.*

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

* http://cafehayek.typepad.com/hayek/2008/07/tax-facts-to-re.html

1 March 2009

News Editor, Weekend Edition
National Public Radio

Dear Sir or Madam:

Gen. Russel Honore waxes that "to work is a blessing" ("Work is a Blessing," March 1). Indeed, he's so impressed by work's blessedness that he shares this favorable recollection: "During a visit to Bangladesh, I saw a woman with a baby on her back, breaking bricks with a hammer. I asked a Bangladesh military escort why they weren't using a machine, which would have been a lot easier. He told me a machine would put that lady out of work."

Gen. Honore confuses toil with being productive. The latter is a blessing; the former is a curse. And the magnitude of the blessing of being productive rises as workers have more capital to work with and are part of an economy that yields a growing volume of output.

If people's blessing were indeed counted in their opportunities to toil, then war, natural disasters, and poverty would be celebrated as great benefactors - great bringers of blessings - for they inevitably expand opportunities to toil.

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

1 March 2009

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

To the Editor:

Arguing for government-supplied universal health care, Nicholas Kristof claims that "American businesses are at a competitive disadvantage when they have to pay for health care and foreign companies don't" ("Franklin Delano Obama," March 1).

Mr. Kristof naively supposes that government-supplied health care comes from some magical font of resources such as tooth fairies. In fact, nationalized health care will both raise businesses' tax burdens and shrink their revenues.

Those who truly believe that government can lighten economic burdens by relieving private parties of the need to pay for them directly should go much further than Mr. Kristof does. Such persons should want government also to relieve private firms of the need to directly pay workers' wages and of the need to directly pay for factory equipment and office supplies. Only those persons who conclude that the economy would be made even more "competitive" by this more complete nationalization should agree with Mr. Kristof's claim.

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

28 February 2009

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

To the Editor:

Theresa Tedesco argues that the U.S. banking system is infected by a risky lack of regulation ("The Great Solvent North," Feb. 28). She's correct. But she overlooks what is by far the most dangerous failure to constrain decision-makers' ability to wreak havoc.

That failure is the Federal Reserve's monopoly power to determine the supply of dollars. Facing no competition in supplying dollars, the Fed is free to err or to behave irresponsibly without being disciplined by competitive-market feedback, and without being guided by the knowledge that would be discovered and revealed by competition.

Free of these vital restraints, the Federal Reserve, between 2001 and 2006, pumped far too many new dollars into the economy - new dollars that inflated the now-burst housing bubble.

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

Readers,

Many of you have asked me why the date of each of these letters -- the date appearing in the text of the letter -- differs from the date the letter is posted. Here's why:

I write a letter-to-the-editor almost once a day (and sometimes more than once). I began this practice several years ago. Andy Morriss -- who is also an avid letter-writer -- proposed a few years ago that he and I set up a blog called "Market Correction" as a place to publish these letters. So we did so. (Andy, alas, seldom posts his letters here. Note to Andy: DO SO!)

So when Market Correction was started a few years ago I went back in my letter file and began posting them. At first, they were several YEARS old; and then only several months old.

I will try to post my letters here more frequently so that the date of each posting catches up with the date on which each letter was written.

Finally, thanks for reading Market Correction!

Don Boudreaux

27 February 2009

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

To the Editor:

Yesterday you devoted precious front-page space to a report on the environmental costs of soft toilet paper ("Mr. Whipple Left It Out: Soft Is Rough on Forests," Feb. 26). While I have no reason to doubt that, compared with manufacturing less-fluffy toilet paper, manufacturing fluffy toilet paper requires more tree-cutting, I resent your puritanical presumption that we Americans should feel guilty about our taste for maximum comfort in the commode.

And keep in mind that if it's acceptable to criticize consumer demands that result in a volume of tree-cutting deemed by environmentalists to be "unnecessary," criticism of consumers for reading newsPAPERS (rather than getting their news from the likes of blogs and television) will soon follow. Your business might be wiped out.

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