Market Correction

27 May 2009

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

To the Editor:

As Matt Fass correctly notes, requirements that products be inspected by government are often trade barriers in disguise (Letters, May 27). But I would go him one better. Rather than insist that catfish be inspected by the FDA instead of by the more-intrusive USDA, let's abolish government inspection completely.

Of course, consumers would still demand safety assurances. So you can bet that retailers such as Whole Foods, Safeway, and Wal-Mart would inspect their fish (and beef, and vegetables, and you-name-it) thoroughly before offering it to the public. And consumers, aware that they're relying exclusively on these private, branded businesses for quality assurance, would know just who to punish - and how to do so - in the event of any serious inspection failure.

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

26 May 2009

Editor, The New York Times
620 Eighth Avenue
New York, NY 10018

To the Editor:

I share David Brooks's fear and loathing of President Obama's thuggish methods of persuading business executives to 'cooperate' with his obnoxious intrusions into the economy ("And the Angels Rejoice," May 26). As I read Mr. Brooks's spirited lament, I recalled this wise warning from Walter Lippmann:

"Though it is disguised by the illusion that a bureaucracy accountable to a majority of voters, and susceptible to the pressure of organized minorities, is not exercising compulsion, it is evident that the more varied and comprehensive the regulation becomes, the more the state becomes a despotic power as against the individual. For the fragment of control over the government which he exercises through his vote is in no effective sense proportionate to the authority exercised over him by the government."*

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030

* Walter Lippmann, THE GOOD SOCIETY (Boston: Little, Brown Co., 1937), pp. 105-106.

26 May 2009

Editor, New York Post

Dear Editor:

Ralph Peters argues that terror suspects should be executed summarily, as "man-killing animals" possessing no rights ("Instant Justice," May 26).

His argument begs the question of whether or not those suspected of being terrorists really ARE terrorists. Like too many on the political right (and some on the left), Mr. Peters assumes that procedural protections for persons accused of wrongdoing exist primarily to make life easier for the accused. Not so. The chief functions of these protections are two. One is to shield innocent persons from being wrongly convicted and punished. The other is to keep the state's powers in check.

A state that can summarily execute anyone whom it assures its citizens is a dangerous terrorist will itself, in time, become the most dangerous terrorist of all.

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

Thanks to my friend Lyle for reminding me of this wise passage from Madison's quill.
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26 May 2009

Editor, Washington Post

Dear Editor:

You convincingly expose the destructive political maneuverings that mark the Obama administration's take-over of General Motors ("Government Motors," May 26). Alas, this bullying of bond-holders and coddling of a favored interest group (the UAW) would not have surprised James Madison, who offered in Federalist 62 a lesson that applies not only to today's bailout/stimulus fiasco, but also to much of what governments in the United States have been up to for decades:

"Every new regulation concerning commerce or revenue, or in any way affecting the value of the different species of property, presents a new harvest to those who watch the change, and can trace its consequences; a harvest, reared not by themselves, but by the toils and cares of the great body of their fellow-citizens. This is a state of things in which it may be said with some truth that laws are made for the few, not for the many."

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

25 May 2009

Editor, Washington Post

Dear Editor:

Reviewing Alice Schroeder's biography of Cornelius Vanderbilt, T.J. Stiles uncritically accepts the potted history that condemns Vanderbilt's railroads as having been "strategic monopolies" ("The Man Who Owned America," May 24).

Ironically, Stiles himself reveals the questionableness of that history when he notes that "ironically, his [Vanderbilt's] rate wars lowered transportation costs for everyone."

It's time that historians and journalists come to understand that true monopolists RAISE prices - and, therefore, that falling prices are evidence of vigorous competition, regardless of firms' sizes or market shares.

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

24 May 2009

Editor, The New York Times
620 Eighth Avenue
New York, NY 10018

To the Editor:

You write as though the only reason to cut taxes is to promote more consumer demand ("The Sorry State of the States," May 24). You're mistaken.

By far, the chief economic reason for cutting taxes is to increase the return to productive activity - to increase the return to investment, to risk-taking, to creativity, to work. The economic justification for lower taxes rests squarely on the understanding that cutting marginal tax rates makes profitable many productive efforts, including hiring more workers, that are unprofitable at higher tax rates.

Why does this straightforward point seem so taxing to your editorial-writers' comprehension?

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

22 May 2009

Editor, Politico.com

Dear Editor:

Rep. Alan Grayson (D-FL) has introduced legislation to force employers to provide up to two weeks of paid vacation for all employees ("Alan Grayson to introduce Paid Vacation Act," May 21). His rationale?: "There's a reason why Disney World is the happiest place on Earth: The people who go there are on vacation."

A lengthy article is required to enumerate each flaw in this goofy reasoning. But I can't help but wonder if Mr. Grayson's Mickey Mouse idea has anything to do with the fact that the district he represents includes Disney World. If he represented instead, say, Hollywood, he might conclude that, because people are in a good mode when attending movies, that Uncle Sam should force employers to give each employee a daily 'movie break.' And Jiminy! Who knows what Mr. Grayson would propose if he represented Las Vegas?!

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

21 May 2009

Editor, The New York Times
620 Eighth Avenue
New York, NY 10018

To the Editor:

In your report on the Chinese lending vast sums of money to Uncle Sam, President Obama is quoted as saying that "The long-term deficit and debt that we have accumulated is unsustainable - we can't keep on just borrowing from China" ("China Grows More Picky About Debt," May 21). It's unclear if Mr. Obama is referring to the trade deficit or to the budget deficit.

If the trade deficit, it's not at all unsustainable. As long as the U.S. remains attractive to investors, the trade deficit will persist as foreigners add to America's capital stock. (Alas, as Mr. Obama's policies make the U.S. less attractive to investors, the trade deficit will likely shrink.)

If, instead, the President has in mind the budget deficit, he's correct that it's unsustainable but incorrect as to why. Like any other debt, the larger Uncle Sam's debt grows the more burdensome it is to pay off. But also like any other debt, the burden is the need to pay the creditors and not the nationalities of the creditors.

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

20 May 2009

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

To the Editor:

John Steele Gordon explains "Why Government Can't Run a Business" (May 20). I learned from the historian Burt Folsom one of the best examples of this truth - namely, Congress's mid-19th-century subsidization of Edward K. Collins' steamship company.*

In 1847 Collins persuaded Congress to spend several million dollars to support his effort to build a fleet of luxurious steamships for carrying passengers to and from Europe. Constantly over budget - and frequently seeking and receiving more subsidies - Collins' ships were shoddy. Two of them sank, killing nearly 500 persons. When Congress finally wised up and stopped these subsidies, Collins' steamship business went bankrupt.

At the same time, Cornelius Vanderbilt constructed and operated his own steamships without subsidies. Compared to ships in the Collins fleet, Vanderbilt's vessels were much more sea-worthy, fuel-efficient, and profitable. The unsubsidized Commodore Vanderbilt out-competed the subsidized Edward Collins.

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

* http://www.thefreemanonline.org/columns/entrepreneurs-and-the-state/