How Will You Spend Your $2,800?
19 May 2009
Editor, The Guardian
Sir:
We Americans are lucky! President Obama, although having zero experience as an entrepreneur or in the automotive industry, has designed fuel-efficiency standards that (he assures us) will save the average car buyer $2,800 over the life of his or her vehicle ("Obama touts plan for cleaner, more efficient cars," May 19). What a deal!
No one in Detroit, in the U.K., in Japan, in Germany, in Sweden, in Korea - no one anywhere, not even persons with decades of experience producing and selling automobiles - has figured out how to devise a vehicle that is so obviously attractive to American consumers and, therefore, so rich in profit-earning potential for manufacturers. But our President (he assures us) has done so.
And we can admire not only Mr. Obama's industrial genius, but also his magnanimity in offering to the public, free of charge, his money-saving idea. He could have earned billions of dollars in profit by putting his idea to the test in the market. But no: by simply forcing us to use his idea without charge, he'll forego this profit. We Americans are lucky indeed.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Unintended Consequences
18 May 2009
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Your report on the Obama administration's decision to accelerate the implementation of higher fuel-economy standards is headlined "U.S. to Require Fuel-Economy Standard by 2016" (May 18).
Because these standards will raise the prices of cars produced during and after 2016 relative to the prices of cars produced before that year, an equally good headline would have been "U.S. to Boost the Attractiveness of Used Cars by 2016" - an effect at odds with the administration's multi-billion dollar effort to reboot the Detroit automakers.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Vigorous Responses
18 May 2009
Editor, Washington Post
Dear Editor:
Explaining why he isn't worried that another Great Depression looms on the horizon, Fareed Zakaria notes that today "governments worldwide have reacted with amazing speed and scale" to the economic downturn ("The Sky Isn't Falling," May 18). But so, too, did governments in the 1930s. They did so then, however, with policies that we now know were counterproductive. Higher taxes, money-supply contractions, protectionism, and government-orchestrated cartelization of industry all blocked recovery.
Can we be confident that the vigorous responses of governments today are any less misguided and ill-fated than were the vigorous responses of governments in the 1930s?
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason Universit
Superficial Reporting
16 May 2009
Editor, Washington Post
Dear Editor:
Seeking more active application of antitrust regulations, Steven Pearlstein wants the Supreme Court to reject "the view of Chicago school economists" - a view in which, according to Mr. Pearlstein, "monopolies are actually good for consumers because they attract the money and talent necessary for innovation" ("Can Obama Bring Back the Trust Busters?" May 17).
Mr. Pearlstein seriously misunderstands Chicago-school economics. Those economists do not believe that "monopolies are actually good for consumers." Quite the contrary. What the researches of these economists DO reveal, instead, is this: First, competition is so robust that it is seldom, if ever, squelched by firms who do not enjoy special government privileges; second, being big and/or extra-efficient does not make a firm a monopolist; and third, antitrust statutes themselves have often been used to restrain competition.
It's disappointing that Mr. Pearlstein's understanding of both Chicago-school economics and of antitrust is so superficial.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Simple Error
15 May 2009
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
University of Massachusetts economics professor Ronald Olive asserts that "When a country runs a current account deficit it must incur liabilities, that is, borrow or run down its foreign assets, or do both" (Letters, 15 May).
This assertion is simply untrue. If Mr. Olive spends $500 on a bottle of Chateau Latour and the owner of that French chateau then holds those dollars as cash, or uses them to buy dollar-denominated equities or real estate, America's current-account deficit rises without any corresponding increase in Americans' indebtedness or any reduction in Americans' holdings of foreign assets.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Palm Reading
14 May 2009
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
You're correct that the Obama administration's overhaul of antitrust policy will stifle competition under the guise of fostering it ("Target: Intel, and Competition," May 14). But this fact is unsurprising because governments respond only to interests that are organized and visible.
Genuine competition relentlessly pressures existing firms to work harder to satisfy consumers, and it inevitably turns many firms that are today's industry leaders into tomorrow's bankrupts. In doing so, competition clears the way for the creation of new firms and industries that today are unimagined - and, hence, that today are invisible, politically unorganized, and silent.
The invisible hand, being unseen, will always be at a political disadvantage compared to the visible palms - palms outstretched to the state by beggars seeking special privileges.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Resistance is Futile
12 May 2009
Editor, The New York Times
620 Eighth Avenue
New York, NY 10018
To the Editor:
Many persons warned that Uncle Sam's bailout of banks would become the pretext for much more intrusive interventions - interventions that appease vocal interest groups while harming the economy.
That this warning was justified is revealed in your report on labor-union efforts to constrain Wells Fargo's attempt to recover the money it loaned to HartMarx ("Workers Pressure Bank to Keep Clothier's U.S. Plants Open," May 12): "Seeing a political and public relations opening, the workers and their union are arguing that Wells Fargo, having received $25 billion in the bank bailout, should keep a 122-year-old American company like Hartmarx in business and preserve some 3,600 jobs."
Bailout dollars are like Borg nano-probes from Star Trek: they assimilate all that they enter into a grotesque and dangerous collective.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Revving Up Rent-Seeking
11 May 2009
Editor, The New York Times
620 Eighth Avenue
New York, NY 10018
To the Editor:
The Obama administration will "restore an aggressive [antitrust] enforcement policy against corporations that use their market dominance to elbow out competitors or to keep them from gaining market share" ("Administration Plans to Strengthen Antitrust Rules," May 11).
Anyone unaware that this new aggressiveness will, in fact, SUPPRESS competition is not familiar with antitrust's history. Firms without special government privileges successfully compete for market share only by pleasing consumers. But ability to sic antitrust enforcers on rivals will encourage many firms now, as it has in the past, to compete for market share not by pleasing consumers but by pleading with bureaucrats and courts to hamstring rivals that are more creative or more efficient.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
From "Don't Tread on Me" to "Please Care for Me"
10 May 2009
Editor, Washington Post
Dear Editor:
George Will quotes Alexis de Tocqueville's prescient warning that Americans might one day become "a herd of timid and industrious animals, of which the government is the shepherd" ("Capitalism Goes Out Of Tune," May 10). How apt.
If New Hampshire's state motto, "Live Free or Die," were to be changed to one that more accurately captures today's American spirit, that new motto would be "Exist as Coddled Children or Cry."
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Undeveloped
5 May 2009
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Madeleine Albright and Colin Powell are pleased that, at the Initiative for Global Development (IGD) summit in Washington, "business and government leaders will gather to advance new strategies for reducing global poverty. Participants will focus on ways to promote better public policies, and to integrate the best practices of business and government in order to lift up the lives of the world's poorest people through economic growth" ("Don't Forget About Foreign Aid," May 5).
Wonderful words. But they offer no hint that these former Secretaries of State are aware of the researches of Peter Bauer and, more recently, of William Easterly. Bauer and Easterly show - with compelling arguments and data - that nations lift themselves out of poverty by relying neither upon foreign "aid" nor upon development blueprints drawn up and superintended by "experts" and "leaders." Rather, nations become wealthier only by creating secure property rights enabling countless individuals to experiment with new enterprises aimed at satisfying consumers.
In short, the key to development is freer markets - not top-down do-goodism of the sort that apparently will be offered at the IGD summit.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
