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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

Another Open Letter to Peter Navarro

14 hours ago

July 3, 2020
Peter NavarroWhite HouseWashington, DC
Mr. Navarro:
Today on MSNBC you asserted (without evidence) that Beijing “spawned” the novel coronavirus in a laboratory in order to intentionally infect Americans. Hmmm….
You famously believe that China grew rich at the expense of other countries, especially the United States, by deviously expanding its exports and simultaneously restricting its imports. Putting aside here the head-scratcher of how a country grows rich by continuing to ship lots of goods and services to foreigners while refusing to receive goods and services in exchange from foreigners, I’ve this question: Given your economic theory, why would the Chinese government intentionally seek to kill its country’s customers?
If the secret sauce of China’s economic success

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Bonus Quotation of the Day…

18 hours ago

… is from page 66 of the 1969 Arlington House edition of Ludwig von Mises’s 1944 Yale University Press book, Omnipotent Government: The Rise of the Total State and Total War (available free-of-charge on-line here):
In the past various doctrines and considerations induced governments to embark upon a policy of protectionism. Economics has exposed all these arguments as fallacious. Nobody tolerably familiar with economic theory dares today to defend these long since unmasked errors. They still play an important role in popular discussion; they are the preferred theme of demagogic fulminations….
DBx: It’s true. Anyone who understands economics would be as embarrassed to publicly endorse protectionism as he or she would be to publicly endorse flat-earthism or the healing properties of

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Some Links

18 hours ago

Eric Boehm highlights three things to know about the new NAFTA (the “USMCA”), which took effect on Wednesday. A slice:
Although Trump’s supporters sometimes claim that the president is actually pursuing a radical free-trade agenda and only using protectionist tactics to achieve it, the USMCA is strong evidence that Trump would prefer to see more barriers to trade.
For example, the administration pushed for the inclusion of stricter rules that make it more difficult for cars and car parts to cross national borders duty-free. Under the USMCA, 75 percent of the component parts of vehicles would have to be produced in North America to avoid tariffs, and 40 percent would have to be built by workers earning at least $16 an hour—effectively putting a minimum wage on Mexican manufacturing

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Quotation of the Day…

1 day ago

… is from page 73 of the May 9th, 2020, draft of the important forthcoming monograph from Deirdre McCloskey and Alberto Mingardi, The Illiberal and Anti-Entrepreneurial State of Mariana Mazzucato:
“There is nothing in the DNA of the public sector,” Mazzucato declares, “that makes it less innovative than the private sector.” Oh, yes there is. One thing is clear: only people innovate. It is they who think, research, tinker, ponder, imagine, create, produce. Not the bureau, the office, the factory, the corporation, the market, the private sector, the public sector. The State and the market are simply settings, contexts, structures, in which actual people operate – for innovation or against it, wise improvements or waste, bettering or pillage.
So the question is which setting is best for

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With Bill Walton and John Tamny

2 days ago

I’m honored to have been a guest recently, along with John Tamny, on Bill Walton’s show. In this program we discussed a variety of issues, including American Compass’s misguided “Coin-Flip Capitalism” project.
[embedded content]
Comments

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Bonus Quotation of the Day…

2 days ago

… is from page 227 of the late Nathan Glazer’s 2000 paper “Disaggregating Culture,” which is chapter 16 in Culture Matters, Lawrence E. Harrison and Samuel P. Huntington, eds. (2000):
It is of benefit, every group thinks, to be seen as victim, not as superior.
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Some Links

2 days ago

My intrepid Mercatus Center colleague Veronique de Rugy wishes that more people would heed the advice of Frederic Bastiat to look for that which is unseen. A slice:
Take, for example, the massive amount of additional debt the federal government has imposed on future generations of Americans during the COVID-19 crisis. That which is seen is the money flowing from the federal government to the unemployed, to those taking leave due to rescue money given to businesses during the pandemic. While we might be aware in the abstract that there is an accompanying rise in U.S. government indebtedness, that which is not seen is the increase in taxes that must be paid by future generations. Nor do we see the slower economic growth that will be caused by the need to pay off this debt.
Writing in

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Quotation of the Day…

2 days ago

… is from Thomas J. DiLorenzo’s June 1998 essay “The Ghost of John D. Rockefeller” (footnote deleted); I offer this quotation on this day, July 2nd, 2020, the 130th anniversary of President Benjamin Harrison signing into law the unfortunately revered Sherman Antitrust Act – a piece of legislation sold as attacking a non-existent problem but one later used to create problems:
The Sherman Act was a protectionist scheme in more ways than one. The real source of monopoly power in the late nineteenth century was government intervention. In October 1890, just three months after the Sherman Act was passed, Congress passed the McKinley tariff the largest tariff increase in history up to that point. The bill was sponsored by none other than Senator John Sherman himself. Sherman, as a leader of

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Bonus Quotation of the Day…

3 days ago

… is from page 57 of the May 9th, 2020, draft of the important forthcoming monograph from Deirdre McCloskey and Alberto Mingardi, The Illiberal and Anti-Entrepreneurial State of Mariana Mazzucato:
For example, the Chinese system of high-speed trains is a glorious State project, which now stretches through the entire immense country—all of the trains raised twenty meters above grade on viaducts. Stunning. But was it a good idea? China, still with an income per head, despite its successes from economic liberalism, only one-fifth or one-fourth that of the United States, has more of such three-hundred-kilometer-per-hour trains than the rest of the world combined. Like the TGV in France, the trains are nice for affluent people with a high opportunity cost of personal time, and are

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Taking the Knowledge Problem Seriously

3 days ago

Here’s a letter to Ian Fletcher, who e-mailed me yesterday in response to this earlier post of mine.
Ian:
Thanks for your e-mail in response to my request that you, as a proponent of industrial policy, explain how government officials would get the information they need in order to outperform markets. You respond that “There are a number of answers to this question,” and you then offer five specific ones. Unfortunately, only two answers are real; the other three are red herrings. For example, the fact that “the present international environment” features “aggressive mercantilism” is no answer to the question of how government officials will acquire the knowledge necessary to carry out industrial policy successfully.
One of your two real answers is that governments have access to

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Quotation of the Day…

3 days ago

… is from pages 324-325 of the final chapter of Columbia University economics professor Arvind Panagariya’s superb and must-read 2019 book, Free Trade and Prosperity:
I have reviewed several major cases of sustained rapid growth and found that in every case, low or declining barriers to trade were an integral part of the growth strategy…. I do not find a single case in which high or rising protection has accompanied rapid growth.
DBx: Protectionists and advocates of industrial policy deny the reality described here by Professor Panagariya. In defense of their schemes, they offer recitations of obscure theoretical possibilities (that no sound economist denies) and long lists of ways – also well-known to economists – in which real-world markets differ from the perfectly competitive

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Bonus Quotation of the Day…

4 days ago

… is from page 59 of the 1969 Arlington House edition of Ludwig von Mises’s 1944 Yale University Press book, Omnipotent Government: The Rise of the Total State and Total War (available free-of-charge on-line here):
The classical economists demonstrated that each constellation of the market has a corresponding price structure. Prices, wages, and interest rates are the result of the interplay of demand and supply. There are forces operating in the market which tend to restore this – natural – state if it is disturbed. Government decrees, instead of achieving the particular ends they seek, tend only to derange the working of the market and imperil the satisfaction of the needs of the consumers.
DBx: Do not lose sight of a key goal of Adam Smith and other classical economists. They saw

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The New History of Capitalism Is Bunk

4 days ago

I recently read the late Stanford University economist Nathan Rosenberg’s excellent 1981 paper “Why in America?” (which is reprinted as Chapter 6 in the 1994 collection of some of Rosenberg’s papers, Exploring the Black Box). In this paper, Rosenberg mentions a fact about 19th-century America that casts further doubt on the so-called “new history of capitalism” – the “history” that purports to show that American capitalism and economic growth are chiefly, or at least largely, the product of chattel slavery.
Here’s Rosenberg (from pages 116-117 of the 1994 reprint of the paper):
An abundance of natural resources means, in economic terms, that it is rational to employ methods of production which are resource intensive. Much of American inventive activity in the first half of the

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Some Links

4 days ago

My colleague Walter Williams celebrates Thomas Sowell on the latter’s 90th birthday. A slice:
Sowell cares about people. He believes that compassionate policy requires dispassionate analysis. He takes seriously the admonition given to physicians, “primum non nocere” (first, do no harm).
In many respects, Sowell is an Austrian economist like the great Nobel laureate Friedrich Hayek, who often talked about elites and their “pretense of knowledge.” These are people who believe that they have the ability and knowledge to organize society in a way better than people left to their own devices — what Hayek called the fatal conceit. Their vision requires the use of the coercive powers of government.
My friend Vince Graham, a housing developer in South Carolina, named a street in his

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Quotation of the Day…

4 days ago

… is from page 61 of Thomas Sowell’s 2009 volume Intellectuals and Society:
Despite whatever vision may be conjured up by euphemisms, government is not some abstract embodiment of public opinion or Rousseau’s “general will.” Government consists of politicians, bureaucrats, and judges – all of whom have their own incentives and constraints, and none of whom can be presumed to be any less interested in the promotion of their own interests or notions than are people who buy and sell in the marketplace. Neither sainthood nor infallibility is common in either venue. The fundamental difference between decision-makers in the market and decision-makers in government is that the former are subject to continuous and consequential feedback which can force them to adjust to what others prefer and

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Bonus Quotation of the Day…

5 days ago

… is from page 49 of the May 9th, 2020, draft of the important forthcoming monograph from Deirdre McCloskey and Alberto Mingardi, The Illiberal and Anti-Entrepreneurial State of Mariana Mazzucato:
You cannot force science or the economy, or much else in human life from sport to art, to innovate by the rules of Francis Bacon’s House of Intellect financed by a masterful State.
Comments

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Free Markets Fail at Self-Promotion

5 days ago

In my latest column for AIER, I review some instances of market failure – specifically, the market’s failure to make people aware of the good that it delivers to them. A slice:
Back at home capitalist successes also often generate ‘true statistics’ that tell misleading tales. Consider, for example, the statistical quirk created when increasing wealth and health reduce the average size of households. As we grow wealthier, young adults are better able to move out of the family home into their own apartments. Women are better able to divorce abusive or unfaithful husbands and set up households on their own. Widows and widowers can more easily afford to live alone rather than move in with their siblings or children. With more wealth and health, grandma and grandpa can live longer by

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I Repeat Myself Only Because Protectionists Repeat Themselves

5 days ago

Here’s a letter to a now-regular correspondent:
Mr. Wilson:
You’re determined to portray Trump’s protectionism as an economically informed scientific effort designed to make global trade freer and, thus, to enable American producers to enlarge the scale of their operations. I could not disagree more with your portrayal.
It’s true that the economic theory of trade shows the possibility of enriching Americans by using tariffs to pry open foreign markets. (By the way, it’s surprisingly easy to show that all manner of fantastical things are possible in theory.) But to make a credible case that Trump and his three protectionist cronies – Peter Navarro, Robert Lighthizer, and Wilbur Ross – deploy their protectionist powers in a scientific way requires a demonstration that these four men

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Quotation of the Day…

5 days ago

… is from page 127 of Liberty Fund’s 2011 collection of Frédéric Bastiat’s writings, The Man and the Statesman: The Correspondence and Articles on Politics – which is the first volume of what will eventually be six volumes, expertly edited by David Hart, of The Collected Works of Frédéric Bastiat; specifically, this quotation is drawn from Bastiat’s April 20th, 1847, letter to Richard Cobden (original emphasis):
I have no need to tell you how much I share your views on the political results of free trade. We are being accused within the democratic and socialist party of being devoted to the cult of material interests and of bringing everything down to questions of wealth. I must admit that when it concerns the masses I do not share this stoic disdain for wealth. This word does not

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Bonus Quotation of the Day…

6 days ago

… is from page 12 of the 1969 Arlington House edition of Ludwig von Mises’s 1944 Yale University Press book, Omnipotent Government: The Rise of the Total State and Total War (available free-of-charge on-line here):
Doctrines which can stand the trial of logic and reason can do without persecuting skeptics.
Comments

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Quotation of the Day…

6 days ago

… is from page 61 of Thomas Sowell’s 2009 book Intellectuals and Society (original emphasis):
[T]here is no concrete institution called “society,” and what is called “social” planning are in fact government orders over-riding the plans and mutual accommodations of millions of other people.
DBx: Indeed so.
“Socialism,” “social planning,” “industrial policy” – these are some of the names given to schemes by which the few substitute their knowledge and preferences for those of the many. And because the few who issue the commands can know neither the preferences of the many nor the on-the-spot, frequently changing, and hyper-detailed economic realities, any such scheme substitutes hubris and ignorance for humility and intelligence.
Choosing the issuers of these commands democratically

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Bonus Quotation of the Day…

7 days ago

… is a remark made by Albert Einstein during a 1926 lecture in Berlin; I encountered this astute quotation in this excellent June 24th, 2020, essay at AIER by Barry Brownstein:
Whether you can observe a thing or not depends on the theory which you use. It is theory which decides what can be observed.
DBx: And what is true in physics is also true – indeed, more intensely so – in economics and other social sciences which study phenomena of vast complexity. Those who approach observing – those who count, measure, compare this quantity to that, and track quantitative trends – without first getting their theory straight and sound produce nonsense. This nonsense might well have all the trappings of high science; it might look to the unsuspecting eye to be the work of penetrating genius. But

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Industrial-Policy Advocates Routinely Display Their Ignorance of Economics

7 days ago

Here’s a letter to the Washington Post:
Editor:
It’s difficult to decide which of the many fallacies fueling Henry Olsen’s case for U.S. industrial policy to counter China is most egregious (“How can we keep China in check? Curb free-market fundamentalism.” June 27). One candidate is Olsen’s mistaken assumption that intentions are results. Beijing surely does have an “intent to dominate a range of militarily crucial technologies, including artificial intelligence and information technology.” But history and economics reveal that any such intention is regularly thwarted by reality.
With no special talent for predicting the future, freed from market discipline by being able to spend other people’s money, and buffeted by shifting political winds and palace intrigue, government officials

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Quotation of the Day…

7 days ago

… is from George Will’s new column titled “Much of today’s intelligentsia cannot think“:
An admirable intelligentsia, inoculated by education against fashions and fads, would make thoughtful distinctions arising from historically informed empathy. It would be society’s ballast against mob mentalities. Instead, much of America’s intelligentsia has become a mob.
Comments

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Bonus Quotation of the Day…

8 days ago

… is from page 174 of the late economic historian Nathan Rosenberg’s 1993 paper “Does Science Shape Economic Progress – Or Is It the Other Way Around?”, which is chapter 24 in Deirdre N. McCloskey’s brilliant 1993 edited collection, Second Thoughts (original emphasis):
It is widely believed that an industrial civilization, such as late twentieth-century America, depends upon scientific research for its continued economic success. Although there is no reason to doubt the long-term validity of this belief, it is often associated with a striking unawareness of the considerable extent to which new technologies can emerge without the assistance of recently acquired scientific knowledge. Indeed, to think of the lines of causation as running exclusively from new scientific findings to

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Some Links

8 days ago

Robert Sauer, Donald Seigel, and David Waldman reveal some of the awful unseen consequences of the covid lockdown. A slice:
Of course, there was never any need to “lock down” any of our children for any period of time. It is well known that children are at extremely low risk of contracting the disease and even when they do, they have the highest recovery rate of all. CDC data reveal that school-age children are more likely to be struck by lightning than to perish from the virus.
While it is true that children could potentially infect their teachers, teachers are also generally young and at very little risk from the disease. The median age of public-school teachers in the U.S. is 41. Regularly testing teachers and students for the presence of COVID-19, and periodic self-isolation when

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The Emotigentsia

8 days ago

Here’s a letter to someone who “stumbled into” my “disturbing blog”:
Ms. White:
Thanks for your e-mail in response to my favorably quoting George Will’s observation that America’s intelligentsia “is so unintelligent.” You accuse me (and Mr. Will) of mistaking “disagreement for unintelligence.”
You’re wise to be alert to this common problem: While people can disagree with each other without any of them being unintelligent, very often disagreement nevertheless is wrongly taken as evidence of unintelligence. Yet in this case I believe that George Will expresses a sad truth.
There are, of course, exceptions, but members of today’s intelligentsia too often mistake their good intentions for sound argument; too few of them understand that (as David Henderson warns) “intentions are not

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Quotation of the Day…

8 days ago

… is from page 93 of Matt Ridley’s marvelous new (2020) book, How Innovation Works: And Why It Flourishes in Freedom:
Innovation is not an individual phenomenon, but a collective, incremental and messy network phenomenon.
DBx: Ridley, in his book, thoroughly documents this reality. He also makes clear that the “messy network” that fosters innovation is an emergent order. It is not the product of government planning. And this network is “messy” only in that it involves, necessarily, a great deal of trial and error – of false starts – of projects abandoned before completion as knowledge grows from this experimentation. But the trial-and-error experimentation and the consequent learning-by-doing with a promise of reward when successes are achieved is an emergent-order way of both

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