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Don Boudreaux

Don Boudreaux

He is a professor of economics at George Mason University in Fairfax, Virginia. Previously, he was president of the Foundation for Economic Education.

Articles by Don Boudreaux

Bonus Quotation of the Day…

13 hours ago

… is from page 352 of Karl Popper’s 1963 collection, Conjectures and Refutations: The Growth of Scientific Knowledge; specifically, it’s from Popper’s 1956 essay (originally a 1954 address to the Mont Pelerin Society) entitled “Public Opinion and Liberal Principles”:
Truth is not manifest; and it is not easy to come by.  The search for truth demands at least(a) imagination(b) trial and error(c) the gradual discovery of our prejudices by way of (a) and (b), and of critical discussion.
Comments

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A Letter to an Imagined Concerned Worker

22 hours ago

Dear Concerned Worker:
Those of us who support free trade are often accused of being callous and out-of-touch – even eggheaded – when we explain the benefits of free trade.  These benefits include avoiding the damage unleashed by protectionism – damage that is real but unseen and overlooked by nearly everyone.  In making our case for free trade, we economists are scolded for writing and speaking in ways that no worker who has just lost a job to imports would find reassuring or comforting.
I do not speak for my fellow economists or for my fellow free-traders, but I here confess to too often defending free trade poorly and with a tin ear to daily realities of workers concerned with their and their families’ livelihoods.
So, dear Concerned Worker, I write to you now when you are employed

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Quotation of the Day…

22 hours ago

… is from pages 326-327 of the late University of Washington economist Paul Heyne‘s undated and previously unpublished manuscript titled “Teaching Economics By Telling Stories,” as it appears in the 2008 collection of Heyne’s writings, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.):
But a mastery of the formalities is not the same as really understanding how markets work.  I have known dozens of economics students, many of them graduate students, whose command of technical theory would earn them an A grade in an economics course, who were incapable of seeing how this theory illuminated the working of actual economic systems.
DBx: Economics, properly and productively done, is driven less by a concern

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Economists Are Not Therapists

2 days ago

Re-reading Paul Moroni’s original comment (addressed here), this line struck me:
The arrogance of economists like DBx who say ‘you should be fine looking your wife and kids in the face after being layed [sic] off because now iPhones are cheaper’ is the reason no one likes listening to free trade diatribes. They miss the point and talk past peoples actual concerns.
For the first time I see something that I don’t recall seeing in the past – namely, economists who endorse free trade are often criticized, as they are here, for not being emotional or psychological or spiritual therapists.
I have nothing against such therapists.  I have nothing against people who use such therapists.  Such therapists, I’m sure, often do genuine good for those suffering loss, grief, anguish, anger, anxiety,

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Who’s Arrogant?

2 days ago

If you’re going to criticize the case for free trade, please try to understand the case that you’re criticizing.  Blasting criticism at a half-baked or caricaturish version of the case for free trade invariably misses the mark, widely.  Paul Moroni, a commenter on this Cafe Hayek post, criticizes only what he wrongly believes to be the case for free trade; because he doesn’t understand what he is criticizing, his criticism misses the mark, widely.  Here’s Mr. Moroni’s comment in full:
This is why free traders like DBx and Worstoll never get anywhere with their arguments. Increasing access to goods and services may be the purpose of economic activity. But for Worstoll to talk of the ‘point of it all’ is to miss the point for very many people. People want jobs. They want thw dignity

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Quotation of the Day…

2 days ago

… is from pages 146-147 of Robert Higgs’s Winter 2001 Independent Review article, “Unmitigated Mercantilism,” as it is reprinted in the excellent 2004 collection of some of Bob’s essays, Against Leviathan:
Gather round, children, and I will tell you in words you all can understand how the Eximbank works.  (1) The government takes money from American taxpayers and gives it to the Eximbank.  (2) The Eximbank gives the money to institutions that lend to the Chinese and Saudi Arabian companies that buy airplanes from the Boeing Company.  (3) Boeing (maybe) sells a few more airplanes than it would have sold in the absence of the export-credit subsidies.  (4) A few people work at the Boeing Company who otherwise would have worked elsewhere.  (5) Boeing shareholders earn a little more

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Some Links

2 days ago

Tim Worstall – correcting a popular yet poisonous economic myth recently regurgitated by Mark Zuckerberg – explains about economic growth that “it simply isn’t true that we want to create jobs, that’s not the point of it all. Quite the opposite in fact, we want to destroy jobs, destroy as many as we can.”  Increasing our access to goods and services that satisfy as many human wants as possible is economic-activity’s purpose; laboring to achieve this purpose is among the means.  (HT Anthony Onofreo)
Here’s George Selgin on saving the dollar.
George Will read Sen. Ben Sasse’s new book.  A slice:
In the long-running rivalry between the realist and romantic views of human nature, Sasse is firmly with the former. This aligns him against those who believe that schooling should be “a

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Bonus Quotation of the Day…

3 days ago

… is from pages 97-98 of the 2015 Matthew Dale translation of Weiying Zhang’s superb 2010 book, The Logic of the Market:
Bad policies that arise from vested interests – or policies set for one’s own interests – are also ubiquitous.  Trade protectionist policies are a classic example.  Because some enterprises and workers are threatened by competition, they use various means to persuade the government to limit trade freedom to protect their own interests.  Of course, pursuing one’s own interests is not a problem as long as personal happiness is attained by first creating value for others according to market rules.  The bad policies that arise from the vested interests to which I refer are the policies whose results do not lead to attaining profit by creating value for others; instead,

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Protectionists are Masters of Legerdemain

3 days ago

Here’s a letter to the Wall Street Journal:
Commerce secretary Wilbur Ross writes that “because American auto tariffs are so much lower than those of other countries, the only way U.S. trade negotiators can get trading partners to reduce their tariffs is by giving concessions against other U.S. industries.  This, then, requires the government to pick winners and losers in our own economy” (Letters, May 26).  This passage is a parade of verbal chicanery.
First, U.S. tariff reductions are not “concessions against other U.S. industries.”  U.S. tariff reductions are a restoration of freedom, and of opportunities to prosper, to American consumers – and, by the way, also to the many U.S. industries that are necessarily harmed by tariffs.
Second, Uncle Sam’s picking of winners and losers

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Quotation of the Day…

3 days ago

… is from page 312 of the late University of Washington economist Paul Heyne‘s deeply wise 1995 article in Agenda titled “Teaching Introductory Economics,” as it’s reprinted in the 2008 collection of Heyne’s writings, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.) (footnotes deleted):
We are doing blackboard economics whenever we demonstrate, usually with the aid of a blackboard graph, the non-optimal character of a situation and the Pareto superiority of some alternative arrangement, all without paying any attention to what arrangements real people can actually make and the costs of doing so.  Standing at the blackboard seems to confer upon many economists, at least in their own imaginations, such

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Bonus Quotation of the Day…

3 days ago

… is from pages 22-23 of Nicholas Eberstadt’s informative essay – “Longevity, Education, and the Huge New Worldwide Increases in Equality” – which is Chapter 2 of the new (2017) English-language translation of the volume of collected essays edited by Jean-Philippe Delsol, Nicolas Lecaussin, and Emmanuel Martin, Anti-Piketty (footnote deleted; link and graph added; the lower a Gini-index measure of inequality, the more equally ‘distributed’ across a population is whatever feature, such as longevity of life, that the index measures):
According to the Human Mortality Database, U.S. life expectancy has risen progressively since the Great Depression, increasing from about 61 years [at birth] in 1933 to about 79 as of 2013.  Over those same decades, America’s Gini index for lifespan

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Quotation of the Day…

4 days ago

… is from page 6 of my colleague Dan Klein’s superb 1998 monograph 3 Libertarian Essays (in this passage Dan uses the word “parentalist” to mean what is normally meant by “paternalist”); the specific essay from which this quotation is drawn is Dan’s 1992 essay in Inquiry, “Go Ahead and Let Him Try: A Plea for Egonomic Laissez-Faire”:
If regrettable behavior arises in isolated and identifiable ways, more or less uniformly across individuals, then a helping hand from the government may be just the thing.  If regrettable impulses are pervasive and personal, and the ability to deal with them is an art that applies beyond specifics, an art that is learned and strengthened through exercise and a sense of autonomy, then the parentalist hand needs to show its restraint.
DBx: The essay by Dan

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Some Links

4 days ago

The title (and content) of the latest blog post by my Mercatus Center colleague Dan Griswold is spot-on: “Trump’s 2018 Budget Plan Sows Confusion Over Impact of Trade.”
Speaking of Trump and trade, David Henderson points out the disappointing fact that Larry Summers has recently slipped into sounding even worse on trade than Trump (if that’s possible).
Jeff Jacoby laments Americans’ continuing insistence on enforcing racial discrimination.  Here’s the concluding paragraph:
Today, more than 11 million Americans are married outside the racial box. Millions more have dated someone of another race or ethnicity. When it comes to family, the American people have internalized the conviction that racial categories are only skin deep. In our own homes, where it matters most,

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Resources Are Scarce In All Cases

4 days ago

Here I elaborate on this post in which I argue that, if you understand that cutting the funding for a government program results in a scaling-back of that government program, then you should also understand that raising the minimum wage has the same effect on the operations of employers of low-skilled workers.
The obstacle to seeing clearly that the two cases are parallel is that, if employers respond to a hike in the minimum wage in the way that most of minimum-wage’s champions believe employers respond, then the total amount of money spent by employers, per period of time, on the operations of their firms isn’t reduced.  Indeed, this sum seems to increase!  Most minimum-wage champions imagine that employers simply raise their employees’ wages in response to the minimum-wage hike.

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Bonus Quotation of the Day…

5 days ago

… is from page 258 of Liberty Fund’s newly published, expanded English-language edition, expertly edited by David Hart, of Frédéric Bastiat’s ingenious Economic Sophisms and “What Is Seen and What Is Not Seen”; specifically, this passage is from the new translation of Bastiat’s December 1846 essay “Recipes for Protectionism” (“Recettes protectionnistes”); Bastiat is here engaged in his familiar parodying of protectionists, who insist that people are somehow made poorer as their access to goods and services increases:
What holds up production?  Obviously existing products.  Destroy them and production will take on a new lease of life.  What constitutes our wealth?  Our needs, since without needs there is no wealth, without disease, no doctors, without wars, no soldiers, without court

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Questions for Those Who Obsess Over Income Differences

5 days ago

In my latest column in the Pittsburgh Tribune-Review I pose some questions to those people who obsess over differences across individuals or households in incomes. A slice:

• What, exactly, counts as income? Only what workers receive as take-home pay? Or does it include also the value of fringe benefits? What about the value to workers of above-average workplace conditions? Is a worker treated unfairly by society if she chooses a lower-paying job under a pleasant boss rather than a higher-paying job under an unpleasant boss?
• If — as is true — there is some positive relationship between how much a worker produces and that worker’s pay, at what level does workaholic Smith’s higher income become unacceptably high compared to leisure-loving Jones’ lower income?
• Consider two

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Calling Mark Perry

5 days ago

News reports abound today with allegations that Trump’s proposed budget cuts are cruel and dangerous.  Each and every proposed cut is presumed, should it become reality, to cause the operation and output of the affected government programs to shrink.  Of course, “Progressives” are among those who have no doubt that a government program that receives less funding is a government program that will thereby scale back its operation and, hence, produce less of whatever goods or services that program is meant to produce.
So I’m confused.  If cutting the budget of a government program causes the operation of that program to shrink, why does not raising the minimum wage inevitably cause the operations of employers of low-skilled workers to shrink?  How can “Progressives” be so very confident

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Quotation of the Day…

5 days ago

… is from page 445 of the 5th edition (2015) of Thomas Sowell’s Basic Economics:
Moreover, the public usually buys finished products in the marketplace, but can choose only among competing promises in the political arena.  In the marketplace, the strawberries or the car that you are considering buying are right before your eyes when you make your decision, while the policies that a candidate promises to follow must be accepted more or less on faith – and the eventual consequences of those policies still more so.  Speculation is just one aspect of a market economy but it is the essence of elections.
Comments

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Do You See What I See?

6 days ago

Champions of keeping markets free and government limited typically have a solid grasp of economics.  The same cannot remotely be said of the people who run the oddly named “Americans for Limited Government.”  Here’s yet another letter to the president (Rick Manning) of that organization:
You say today in your now-daily e-mail plea for Trump to punitively tax Americans who buy low-priced Mexican sugar that “This is the perfect opportunity for President Trump to prove that what it will take to protect American jobs is through tough trade enforcement.” [sic]
Before pronouncing publicly on trade you really should learn some economics.  Contrary to your insinuation, to protect American jobs in the U.S. sugar industry is not remotely “to protect American jobs.”  Restricting Americans’

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Some Links

6 days ago

Brittany Hunter defends competition, market-driven innovation, and creative destruction against cronyism.
Adam Smith: feminist.
Mark Perry quotes Adam Smith on the virtues of free trade.
Also from Mark Perry: praise for Amazon.com.
Marian Tupy explains that the foreign-aid industry is a racket.
“Greek Anarchists Provide Services the State Doesn’t”
Here’s a fun lesson about the role of prices from newly minted GMU Econ PhD Joy Buchanan.
Kevin Williamson reviews the current state of Trump, Trumpism, and anti-Trumpism.
John Tamny – in contrast to the New York Times – celebrates the future being built by private enterprise.
Arnold Kling has just started to read a new book by Hugo Mercier and Dan Sperber (The Enigma of Reason: A New Theory of Human Understanding).  A slice from Arnold’s

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Quotation of the Day…

6 days ago

… is from page 300 of the late Paul Heyne‘s 1995 article “Economics Is a Way of Thinking,” as it is reprinted in the superb 2008 collection of Heyne’s writings, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.):
One acquires proficiency in the art of economic thinking largely by learning to recognize the ingenious ways in which market participants overcome obstacles to mutually advantageous exchanges, obstacles created not only by government but also by ignorance and uncertainty.
Comments

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Watching With Arnold Kling Economics’ Left-Wing March

7 days ago

Arnold Kling has good reason to predict that, in his words,
academic economics is on the road to becoming like academic sociology. That is, it will become increasingly driven by a left-wing agenda.
Arnold himself, in the post linked here, offers no explanation(s) for this left-wing movement of economists and, hence, of economics.  I don’t doubt, however, that Arnold has a few excellent possible explanations in mind.
Let here me offer an explanation of my own: economists’ increasing embrace of empiricism that isn’t solidly rooted in basic microeconomic theory of the sort that can be, and should be, taught to undergraduates.  That which can be measured and quantified is that which can be seen.  Indeed, to quantify something is, in a real sense, to see something – or at least to see some

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Protectionism Expands the Power and Reach of Government

7 days ago

Here’s another letter to Rick Manning, president of an organization mysteriously named “Americans for Limited Government”:
Your organization sent out again today yet another blast e-mail imploring addressees to “help” Trump “implement his trade agenda.”  Your e-mail is addressed to “Dear Liberty Activist.”
To quote John Stossel: give me a break.
Why would a liberty activist encourage government to obstruct people’s ability to buy imports?  Why would a liberty activist entreat the state to punitively tax buyers who spend their money in ways that you and Trump find objectionable?  Why would a liberty activist cheer on a policy that artificially inflates the profits of some producers by artificially stripping other producers of resources and by stripping all consumers of options?  Why

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Quotation of the Day…

7 days ago

… is from pages 258-259 of the late Wesleyan University economic historian Stanley Lebergott’s great 1984 book, The Americans: An Economic Record (footnotes deleted; asterisk note added; link added; first two brackets added by Boudreaux; third bracket original to Lebergott):
The deeper answer is implicit in the Reconstruction legislation that defined the criminal.  He was “not the black man who left his plantations, but the planter who sought a free market in labor.”  The “criminals” were in fact those white planters who offered higher wages to attract labor.  They included white landowners who offered [share]croppers a better share, to get croppers, and thereby profit from their land ownership.  They also included white lenders who loaned freedman money to buy land.  They even

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Some Links

8 days ago

Boston Globe columnist Jeff Jacoby wisely warns the press to avoid getting carried away with their criticisms of Trump.
George Will explores the creeping (and creepy) expansion of Uncle Sam’s power.
Arnold Kling has become more pessimistic about politics – but not about private enterprise and innovators.
James Hagerty remembers Allan Meltzer.  A slice:
He evolved into a libertarian. Capitalism, he wrote in one essay, “works well with people as they are, not as someone would like to make them.”
Does capitalism help or hurt women?
Richard McKenzie offers a new and interesting angle on the BAT proposal.
Richard Ebeling writes sensibly about trade deficits.
Nick Gillespie interviews P.J. O’Rourke.
And, finally, Dilbert.  (HT Roger Meiners)
Comments

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Quotation of the Day…

8 days ago

… is from page 247 of the 5th edition (2015) of Thomas Sowell’s Basic Economics:
Third-party observers face none of the inherent constraints and trade-offs that are inescapable for both employers and employees, and therefore these third parties have nothing to force them to even think in such terms.
DBx: Quite so.  And yet in the popular mind the no-skin-in-the-game crusaders for minimum wages, for mandated family leave, and for other state-dictated terms of employment contracts are held in great esteem while the employers who must arrange for the profitable employment of workers – including arrangements to pay workers – are regarded with suspicion or even outright hostility.  As for workers, the no-skin-in-the-game crusaders inflict damage on them even though most of these

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Bonus Quotation of the Day…

8 days ago

… is from page 316 of Mark Kishlansky’s 1996 volume, A Monarchy Transformed: Britain 1603-1714:
Anne Stuart was only thirty-seven when she ascended to the thrones of England, Scotland and Ireland in 1702, but she was already an old woman, carried to her coronation in a sedan chair.  She had been physically depleted by seventeen pregnancies and psychically debilitated by their futility – not a single child had survived.
DBx: A high-born English royal in the early modern era – a woman who was for twelve years Queen of what was by then one of the wealthiest nations on earth – died as a widow in 1714 at the age of 49 without a single surviving child despite giving birth ten times.  (Each of her other seven pregnancies ended in a miscarriage.)  Anne’s longest-surviving child was Prince

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Some Links

9 days ago

Here’s a line from near the beginning of this excellent essay in the New York Times by Martin Seligman and John Tierney:
What best distinguishes our species is an ability that scientists are just beginning to appreciate: We contemplate the future. Our singular foresight created civilization and sustains society.
Nicolás Maloberti is motivated to write about motivated reasoning.
David Bier writes about Sen. Ron Johnson’s (R-WI) bill to improve immigration policy.
George Will uses an idea from the late William Baumol to diagnose U.S. health-care policy.
FEE offers this excellent excerpt from Ludwig von Mises’s 1944 book, Bureaucracy.
My former GMU student Ninos Malek explains how to make economics interesting by revealing its full relevance.
Comments

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Clarification and Elaboration on Stolper-Samuelson

9 days ago

(Prefatory Note: This post and the earlier one on which it is an elaboration are wonkier than is typical for Cafe Hayek.  For that I apologize.  Each of these posts is also a bit more speculative than is typical for my blog posts.  While I believe that my reasoning here is correct, I’m still pondering the intricacies of the arguments.  I confess to a possibility of error that is even higher than usual.)
……………………….
The point I try to make in this earlier post on the Stolper-Samuelson Theorem warrants further elaboration.  Let’s begin by running through a quick example of Stolper-Samuelson.
Suppose that there are two goods (chemicals and shoes) and two inputs (high-skilled labor and low-skilled labor).  Both kinds of labor are used to produce both chemicals and shoes, but in different

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Here I Take a Minority Position on the Prediction of Stolper-Samuelson

9 days ago

Here’s a letter to the Wall Street Journal:
Reviewing Roger Backhouse’s biography of the economist Paul Samuelson, Eric Maskin writes that “The Stolper-Samuelson Theorem implies that international trade causes inequality between high-skilled and less-skilled workers to grow in rich countries.  The theorem was derived in 1941 but clearly remains relevant in today’s America of rising inequality” (“An Einstein of the Dismal Science,” May 20).
Not so fast.
When applied to labor, the Stolper-Samuelson Theorem predicts that the workers whose wages fall as a result of freer trade are (in econ jargon) the relatively more scarce factor of production – which, in America, is less-skilled workers – and that the workers whose wages rise are the relatively more abundant factor of production.  In

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