Monday , November 19 2018
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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

Quotation of the Day…

5 hours ago

… is from page 87 of my colleague Richard Wagner’s superb 2017 intellectual biography of Jim Buchanan, James M. Buchanan and Liberal Political Economy:
There can be many reasons why someone might think some modicum of force might be necessary to maintain good civil order. It is impossible, however, to guarantee that force will be limited to maintaining good civil order. Force will be deployed as its holders choose to deploy it. This is a basic, irremediable quality of human nature.
DBx: Without question, the most common serious error committed by those who look to the state to ‘solve’ problems (whether real or imaginary) is their assumption that the power they call upon will be used as they wish it to be used and never, or seldom, as they wish it not to be used.
Those who call on the

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Quotation of the Day…

1 day ago

… is from Gerard Gayou’s November 16, 2018, essay in the Wall Street Journal titled “A Trade Deficit Isn’t a Mortgage“:
First, the trade deficit reflects only one side of a national accounting ledger. Whereas a homeowner might never see his money or house again after repaying the bank for a reverse mortgage, that’s not true for nation-states. When Americans send dollars abroad to buy Chinese shoes, those dollars will likely come back in the form of capital inflows.
That’s why the U.S. capital account, which measures net investment in the country, has a capital surplus equal to the U.S. trade deficit. Chinese shoe salesmen who receive American dollars choose to reinvest greenbacks in dollar-denominated assets. This investment then produces more factories and jobs in the U.S. –

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Some Links

2 days ago

My Mercatus Center colleague Emily Hamilton – who was once a student of mine – calls in the Washington Post for an easing of zoning restrictions.
Mark Perry highlights a reason for us Americans to be thankful this Thanksgiving.
Speaking of Thanksgiving, I recently read Melanie Kirkpatrick’s 2016 book, Thanksgiving. It’s wonderful.
My colleague Pete Boettke makes the case for permissionless innovation.
My intrepid Mercatus Center colleague Veronique de Rugy weighs in against the cronyism that infected Amazon’s HQ2 ‘competition.’
In my latest column for the Pittsburgh Tribune-Review, I too express my anger at Amazon and at cronyist government policies.
In this video, John Stossel busts some myths about single-payer healthcare.
I just love Jeffrey Tucker’s essay on the movie Bohemian

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Quotation of the Day…

2 days ago

… is from page 72 of my colleague Richard Wagner’s excellent 2017 intellectual biography of Jim Buchanan, James M. Buchanan and Liberal Political Economy (2017):
Without a constitutional requirement of uniformity in taxation, post-constitutional politics will generate increasingly complex revenue systems as tax favors are granted and removed within the political marketplace. The resulting narrowing of the tax base warps processes of collective choice. For instance, those who are favored by the resulting fiscal discrimination will support more collective activity than they would otherwise support. With the continual churning of the tax code that results, however, most participants may end up worse off than they would have been under a simple system of tax uniformity.
DBx: This reality

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And Then There are These Facts…

3 days ago

Here’s a letter to the Wall Street Journal:
Gerard Gayou eloquently explains some of the several errors that infect President Trump’s, and trade advisor Peter Navarro’s, understanding of trade deficits (“A Trade Deficit Isn’t A Mortgage,” Nov. 16).
Here are three additional pieces of data that belie the Trump administration’s insistence that trade deficits are economically harmful to Americans. Compared in inflation-adjusted dollars to 1975,* the last year in which America ran an annual trade surplus,
– the size of the capital stock in America is today nearly three times larger;
– the total value of financial assets owned by American households and nonprofit organizations is today four-and-a-half times larger;
– the total net worth of American households and non-profit organizations

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Quotation of the Day…

3 days ago

… is from chapter 3 of William Graham Sumner’s 1885 book, Protectionism: the -ism Which Teaches that Waste Makes Wealth:
If trade was an object of suspicion and dread, then indeed we ought to have rules for distinguishing safe and beneficial trade from mischievous trade, but these attempts to define and discriminate only expose the folly of the suspicion. We find that the primitive men, who dwelt in caves in the glacial epoch, carried on trade. The earliest savages made footpaths through the forests by which to traffic and trade, winning thereby mutual advantages. They found that they could supply more wants with less effort by trade, which gave them a share in the natural advantages and acquired skill of others. They trained beasts of burden, improved roads, invented wagons and

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Bonus Quotation of the Day…

4 days ago

… is this recent Facebook post by Bob Higgs:
Racism and nationalism are among the most menacing forms of collectivism in the world today. Racists and nationalists are among the greatest enemies of people who favor a society of free and responsible individuals, a society in which all persons are seen as equal claimants of natural rights and equally entitled to respect for their human dignity.
Donald Trump, by his words and his policies, draws on both these cesspools of collectivism and seeks to enlist those who have sold their souls to them to form the core of his political base and populate his cult of personality. Anyone who cherishes a society of free and responsible individuals should steer clear of these terrible forms of collectivism and their associated hatreds and

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Trump is a Cartoonish Protectionist

4 days ago

Here’s a letter to the Wall Street Journal:
All that is mistaken about Donald Trump’s understanding of international trade is summed up by this short passage in your report on his long-standing hostility to trade (“Trump Forged His Ideas on Trade in the 1980s – And Never Deviated,” November 15): “Asked in a recent Wall Street Journal interview about the origin of his views on trade, Mr. Trump said, ‘I just hate to see our country taken advantage of. I would see cars, you know, pour in from Japan by the millions.’”
Anyone who sees waves of valuable goods coming to America and then concludes that Americans are thereby being “taken advantage of” has matters completely backwards. Such a person overlooks what should be obvious: namely, that non-Americans sell their exports here only

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The Weaponization of Milton Friedman

4 days ago

I’m pretty sure that I linked to this excellent essay by Shikha Dalmia when it first appeared back in July. But whether I did so or not, I link to it again here, for it’s filled with important context on Milton Friedman’s (in)famous expression of skepticism about open immigration into a country with a welfare state. And it is in this essay by Shikha that we find this especially relevant passage:
Now, if he [Friedman] had stopped at that, it would have been one thing. But he did not. He went on to declare that despite the welfare state, Mexican immigration was a “good thing” for America, particularly when it was of the illegal variety. Why? “Because as long as it’s illegal the people who come in do not qualify for welfare, they don’t qualify for Social Security, they don’t qualify for

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Low-skilled Immigrants are Productive, Too

4 days ago

Here’s a letter to Mr. Alex Leventis, who majored in economics back in the 1990s at the University of Texas:
Mr. Leventis:
Thanks for your kind e-mail in which you express your support for more open immigration of high-skilled immigrants but not of low-skilled immigrants. I support more open immigration of both, for both sorts of immigrants make net contributions to the economy.
It’s true that each high-skilled immigrant typically makes a larger net contribution to the economy than does each low-skilled immigrant. This fact is true if only because the excess of the amount that each high-skilled immigrant produces over the amount that he or she consumes is greater than is the excess of each low-skilled immigrant’s production over his or her consumption. But as long as there is such an

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Your Paypez Plees

4 days ago

Lots of people are angry with me for not distinguishing “illegal” from “legal” immigrants. Although angering people is not my purpose – and I truly do not like doing it – I will continue to anger these people because for most of the purposes for which I write about immigration, this distinction is irrelevant both economically and ethically.
I myself couldn’t care less if someone has his or her official government papers. The unethical actions in our current regime are not those of peaceful people who come to the United States without the official permission of the U.S. government; the unethical actions are those of the U.S. government in restricting the migration of peaceful people simply because some arbitrary quota of immigrants ‘must’ not be exceeded.
We Americans rightly are

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“They Work Too Much!” “They Work Too Little!”

4 days ago

My latest AIER piece was mentioned on air yesterday by Rush Limbaugh – a happy fact that nevertheless filled my e-mailbox this morning with several hostile missives from anti-immigrationists. This gentleman was one of several who discovered Cafe Hayek and blew a fuse when reading some of my posts on immigration. Here’s my letter to him:
Mr. Nick Poage
Mr. Poage:
You write to object to this blog post of mine. After expressing your support for government-imposed work restrictions that, in your words “stop immigrants from stealing American jobs,” you call “insane” my argument that much hostility to immigration is fueled by the (false) belief that immigrants produce too much and consume too little. You further write that “plenty of us Americans who want big reductions in immigration are

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Quotation of the Day…

4 days ago

… is from pages 120-121 of Frank Easterbrook’s classic 1988 paper “Ignorance and Antitrust,”” which first appeared in Thomas M. Jorde and David J. Teece, eds., Antitrust, Innovation, and Competitiveness (1992):
If judges had the data, we would not trust them to make good decisions. The business world relies on financial incentives to encourage managers to make the best use of knowledge and to weed out those who, despite their best efforts, cannot do as well as others. Judges do not profit from making astute business decisions and are not let go for making bad ones…. To the extent judges make economic decisions in antitrust cases, they are making predictions about tomorrow’s effects of today’s practices. This is problematic under the best of circumstances. Economists start from

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Damn Them! They Produce Too Much and Consume Too Little!

5 days ago

The topic for discussion in my International Economic Policy class (ECON 385) for this evening was immigration.
While preparing my lecture it dawned on me with unusual clarity that for many (most?) American anti-immigrationists the ideal immigrant is someone who comes to the United States with a bank account filled with billions of dollars that he or she immediately commences to spend on goods and services produced and sold here in America by Americans, but who never lifts a finger to produce as much as one cent worth of output. But because almost no one immigrates to America exclusively to spend money without earning money – that is, to consume without producing – immigrants in general are regarded by these Americans as scourges who must be kept out.
How bizarre. How utterly,

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Some Links

5 days ago

My intrepid Mercatus Center colleague Veronique de Rugy and my friend Deroy Murdock appeared today with Douglas Holtz-Eakin on Charles Payne’s show to discuss the cronyist policies that led to Amazon selecting Arlington, VA, and Queens, NY, for its new headquarters.
George Selgin’s new book – Floored! – on how the Fed worsened the 2008 financial crisis is out. Buy it and read it!
Tom Firey worries – understandably – that Trump will endorse an increase in the national minimum wage. A slice:
Even better from his perspective: raising the wage would redistribute employment to more skilled, more experienced, predominantly white workers—that is, to the people at the center of the Trump coalition. A century ago, the Progressive originators of the minimum wage understood this well.

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Quotation of the Day…

5 days ago

… is from page 99 of Thomas Sowell’s 2018 volume Discrimination and Disparities (original emphasis; footnote deleted; link added):
Similarly, people who discuss raising the government-mandated minimum wage talk as if this would automatically mean having the lowest-paid workers’ income rise, from $10 an hour to $15 per hour, for example. In reality, for millions of inexperienced and unskilled young workers, it can mean that the wages they receive in fact fall from $10 an hour to zero, when they are unable to find jobs. Even those who have and keep their jobs can nevertheless end up with lower incomes, as a result of having fewer hours of work available in the wake of a minimum wage increase, as a National Bureau of Economic Research study showed happened in Seattle in 2016, for

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John Stossel on Amazon and Minimum Wages

6 days ago

In this excellent video, John Stossel reveals the smug self-righteousness and sheer economic ignorance – and, in some cases, the appalling hypocrisy –  of those who support legislated minimum wages.

Comments

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There are No Natural Resources…

6 days ago

… because all resources are created by human creativity and effort. Without such creativity and effort, there are no resources. This lesson is the key one from the late, great Julian Simon – and I write about it in my latest essay for AIER. Here are two slices:

At first this notion sounds wacky. After all, the human mind didn’t create the likes of wood or iron ore or petroleum. These materials were created by nature; that’s why they’re called “natural resources.”
It’s true that nature created these materials, but nature did not transform them into resources. This all-important transformation was the product exclusively of human creativity, intellect, and effort.
For example, what we humans now recognize as iron ore is just rocks that are especially rich in iron oxides. By themselves

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Not that Pierre Lemieux Needs Me to Defend Him….

6 days ago

My old sparring partner Ian Fletcher yesterday sent a long e-mail to Pierre Lemieux. In this e-mail, Ian registered 30 objections that he has to Pierre’s new monograph, What’s Wrong With Protectionism? Because I am among a large number of people who were cc’d by Ian, I took the liberty of responding by e-mail to some, but not yet all, of Ian’s objections to Pierre’s points.
Below I summarize in bold (although I don’t quote) some of Ian’s objections. My responses to Ian are italicized (and only very slightly edited from the version that I sent out in my e-mail).
1.      You [Lemieux] attack a protectionist straw man. For example, contrary to what you [Lemieux] say on page 48, reasonable opponents of unilateral free trade do not advocate protecting “obsolete manufacturing.”
Of course

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Some Links

6 days ago

John Tamny takes on Tim Wu’s economically simplistic and historically uninformed call for governments to break up firms that Wu has somehow divined are too big. A slice:
Wu writes that “we are conducting a dangerous economic and political experiment,” and that “we have recklessly chosen to tolerate global monopolies and oligopolies in finance, media, airlines, telecommunications and elsewhere, to say nothing of the growing size and power of the major technology platforms.” Actually Professor Wu, “we” has nothing to do with where we are today. Better yet, the elite class you’re part of had nothing to do with what’s happened in the 21st century. Thankfully.
To see why, we readers need only consider the five most valuable companies in the world today. One of them is Microsoft, and the

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Quotation of the Day…

6 days ago

…is from page 123 of Eamonn Butler’s superb 2018 monograph, An Introduction to Capitalism (link added):
Peter Berger’s The Capitalist Revolution (1986) shows how capitalism’s features – property, capital goods, free markets, automatic asset allocation and a predictable legal system – make it well suited to promote efficiency and progress. It offers a refuge from political power, unlike socialism, which has to be imposed by force – and the grander the vision, the more despotic the rule must be. But capitalism is plagued by viruses, such as the intellectuals whom it creates but who also oppose it, and the interest groups who lobby for legal privileges.
Comments

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In Fact I Don’t Complain of Being Wronged When Students Enroll at Universities Other than GMU

7 days ago

Here’s an open letter to Cafe Hayek commenter Steve Walser:
Mr. Walser:
This letter is a response to your comment on a blog post in which I argue that producers, including workers, have no property rights in the sales that they make to consumers. You wrote that you “imagine that if such a foreign power [that is, a government] targeted George Mason and came to our shores and built a beautiful new campus, hired prominent and learned professors and then started offering tuition far below GMU’s ability to match you might see things differently.”
You’re mistaken.
Begin by recognizing that ‘foreign powers’ on our shores frequently build beautiful new campuses, hire prominent professors, and charge tuition lower than is charged by GMU. We call these powers “state governments” – all but one

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Some Links

7 days ago

My intrepid Mercatus Center colleague Veronique de Rugy is rightly pleased that one consequence of last-week’s midterm elections in the United States likely will be further legalization of marijuana.
Jeffrey Tucker reports on the long and nuanced history of the word “liberalism.”
A.J. Jacobs marvels – rightly so – over his cup of coffee (just as 60 years ago Leonard Read marveled over his pencil). Here are the opening lines from Jacobs’ celebration of the wonders of the globalized economy:
I recently had the opportunity to gaze at one of the most mind-boggling accomplishments in history. This marvel is the result of thousands of human beings collaborating across dozens of countries. It required the combined labor of artists, biologists, politicians, mechanics, miners and goatherds. It

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Quotation of the Day…

7 days ago

… is from pages 194-195 of Louis De Alessi’s superb 1995 paper “The Public-Choice Model of Antitrust Enforcement,” which serves as the Introduction to Part Three of the 1995 collection edited by Fred S. McChesney and William F. Shughart II, The Causes and Consequences of Antitrust (original emphasis; references deleted; typo corrected):
Even if, in principle, antitrust could do some good, it does not follow that antitrust is desirable. That judgment depends on the alternatives available and the value criteria used. The alternatives are the economy as it would function in practice without antitrust and the same economy as it would function in practice with antitrust. Those responsible for antitrust are constrained by political and bureaucratic considerations as well as by a frequently

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Back When Dan Griswold and I were Young(ish) Men…

8 days ago

… we shared a lectern with each other at an October 2004 Cato University session in Quebec. Dan at that time was working on trade at Cato; he is now, as readers of this blog know, working on trade at the Mercatus Center. He is a marvelous colleague and friend, and one of the most effective champions today for free trade and much more liberalized immigration.
I thank Cafe Hayek patron Kent Early for alerting me today to the on-line availability of the transcript both of Dan’s remarks and of my remarks. (The vanity license tag to which I refer near the beginning of my remarks is:
FRE TRDE
I still proudly have this tag on my foreign-assembled automobile.)
Here’s a slice from Dan’s remarks:
Ninety percent plus [of Americans polled] will say trade is bad for workers. It’s good for the

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A Protectionist is Someone Who…

8 days ago

… when the inescapable logic of his arguments is revealed to him and to others either (a) typically fails to understand that which is revealed, or (b) on the relatively rare occasions when he does understand that which is revealed, descends to new depths of illogic and legerdemain in futile attempts to explain that that which is illogical really is logical, and that that which is logical really is illogical.
At the core of protectionist arguments are propositions that make no more sense than does the statement “I enjoy drawing circular triangles.” And if the political success of protectionism depended on widespread public belief in the reality of circular triangles – if the political success of the cronyist policies that plunder consumers and politically invisible producers in order

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An Open Letter to Warren Platts

8 days ago

Mr. Platts:
Commenting on this blog post, you describe tariffs as “merely a Pigovian tax on the negative externalities caused by free trade.” If you’re correct, there’s nothing “merely” about the matter, for implicit in your description of tariffs is a wholesale rejection of the competitive market order.
Sales losses experienced by domestic producers as a result of imports are a negative externality only if producers have a property right in all sales that they make. Yet if producers have such a property right, then producers no longer must compete for and continue to earn consumers’ business. Such an economy would be run for producers; people as consumers would be little more than slaves who are obliged to spend their incomes in ways that maintain the current, never-to-be altered

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Quotation of the Day…

8 days ago

… is from page 274 of the 2003 Cato Institute edition of Johan Norberg’s great 2001 book, In Defense of Global Capitalism:
The notion that the market forces countries to adopt certain policies has, it seems to me, been created by craven politicians. Lacking the energy or the ability to justify the choice to adopt a policy of fiscal restraint or to liberalize, politicians declare such measures necessary, forced upon them by globalization. This is a handy cop-out, and a denigration of the market economy into the bargain.
Comments

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Playing Whack-a-Mole

9 days ago

Here’s another letter to Mr. Roland de Groote:
Mr. de Groote:
Thanks for your follow-up e-mail. In it, you argue that “free trade can’t work if different parties operate under different tax schedules, laws and regulations…. [T]rade policies should offset any contrived advantages enjoyed by foreign businesses.”
I disagree.
First, if (say) the Taiwanese government taxes Taiwanese businesses at lower rates than Uncle Sam taxes American businesses, you presumably would regard Taiwanese businesses as enjoying a ‘contrived advantage’ over American businesses. But why? It is equally valid to instead regard American businesses as suffering, at the hands of their own government, a contrived disadvantage. And so from this perspective, why trust government with the power to ease a disadvantage

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Quotation of the Day…

9 days ago

… is from page 46 of Matt Ridley’s excellent 1997 book, The Origins of Virtue (footnote excluded):
Indeed, [Adam] Smith pointed out that benevolence is inadequate for the task of building cooperation in a large society, because we are irredeemably biased in our benevolence to relatives and close friends; a society built on benevolence would be riddled with nepotism. Between strangers, the invisible hand of the market, distributing selfish ambitions, is fairer.
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