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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

Do Allegations of IP Theft by the Chinese Justify Uncle Sam’s Violations of American Consumers’ Rights?

16 hours ago

In my latest column for the Pittsburgh Tribune-Review, I challenge the case that allegations of intellectual-property theft by the Chinese justify Trump’s tariffs. A slice:
The World Trade Organization (WTO) has in place a mechanism to settle IP disputes among its member nations, which include the U.S. and China. And China’s record at complying with WTO rulings is not bad. If the Trump administration were truly concerned about reducing Chinese violations of Americans’ IP rights, its first step — before inflicting painful tariffs on Americans — would be to bring complaints of such violations to the WTO. Yet so far it has brought only one such complaint.
This fact suggests that the administration cares less about whatever actual IP theft might be occurring and more about being able to

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Managed Trade Is Not Free Trade

1 day ago

Here’s a letter to Law & Liberty:
Editor:
David Conway writes about those of us who are appalled by Pres. Trump’s protectionist agenda that we “would do well to remember that even that supreme apostle of free trade, Adam Smith, advocated tariffs in protection of the domestic manufacture of strategic goods, as were in his day gunpowder and sail-cloth” (“Trump’s Classicist,” July 15).
First, Smith was an “apostle” of nothing; he was a scholar.
And about advocates of free trade, none of us has forgotten that Smith carved out of his case for unilateral free trade a handful of exceptions, one of which is protectionism for purposes of national defense. But Smith was explicit that such protectionism is a cost, if one worth incurring when done prudently. He said about a famous trade restraint

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Quotation of the Day…

1 day ago

… is from page 46 of the 2000 Liberty Fund edition of Geoffrey Brennan’s and James M. Buchanan’s 1985 volume, The Reason of Rules:
The “politics as science” or “politics as truth judgment” conceptualization of the social interaction process is both authoritarian and antiindividualistic. These terms are intended to be descriptive rather than pejorative. The authoritarian imperative emerges directly from the extraindividual source of valuation of “public good.” If “public good” exists independently of individuals’ evaluations, any argument against the furtherance of such good because of some concern for individual liberty becomes contradictory. If “public good” exists separately from individuals’ preferences, and if it is properly known, it must assume precedence over (although, of

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Quotation of the Day…

2 days ago

… is from page 71 of Book I, chapter vi of the 1981 Liberty Fund edition of Adam Smith’s 1776 An Inquiry Into the Nature and Causes of the Wealth of Nations:
But there is no country in which the whole annual produce is employed in maintaining the industrious. The idle every where consume a great part of it; and according to the different proportions in which it is annually divided between those two different orders of people, its ordinary or average value must either annually increase, or diminish, or continue the same from one year to another.
DBx: In 1790, Adam Smith died, in Edinburgh, on this date.
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Their Actions Belie Their Words

3 days ago

Here’s another letter to Ricky Miller:
Mr. Miller:
You ask about the theft of Americans’ intellectual property by the Chinese. While this question is legitimate, beware of assertions that Trump’s tariffs are justified by claims of such theft.
First, as my Mercatus Center colleague Dan Griswold and I explain in this recent paper, the extent of such theft is exaggerated. Also, imposing punitive tariffs on American purchases of imports from China to combat what offenses there really are is a poor remedy. Better remedies are available, yet the Trump administration largely ignores these.
Second, it’s difficult to take seriously Trump’s and other U.S. government officials’ declarations of concern that such theft threatens U.S. economic growth. After all, these people are among those in

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Quotation of the Day…

3 days ago

… is from pages 159-160 of George Will’s 2019 book, The Conservative Sensibility:
Modernity’s gift has been the ability and determination to sharply delineate private and public spheres, with the private being the zone of individual sovereignty. It is the realm of the household, the family, and the work that sustains both. This is the basis of the proposition that the Constitution of the first consciously modern nation, the United States, protects the sovereignty of private individuals, not the sovereignty of a public collective, “the majority.”
DBx: This distinction between society and state is essential to freedom, to prosperity, and to what we today consider to be civilization.
The former – society – is the complex order that emerges unplanned (“spontaneously”) from the

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Be Skeptical

4 days ago

Here’s another letter to Ricky Miller:
Mr. Miller:
Noting correctly the “unusual difficulty” of ordinary people to judge national-defense “threats, opportunities and how industry trends are affecting our military readiness,” you conclude incorrectly that “We’ve got no choice except to trust government leaders whenever they present tariffs as required for our national defense.”
Precisely because ordinary people cannot straightforwardly monitor the truthfulness of politicians’ claims that this or that industry is “essential” to national defense, it’s easy for politicians to lie about such matters with impunity. This ease of lying, in combination with politicians’ always-great temptation to protect powerful producers from competition, should make us all especially wary of assertions that

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Government Is Not US

4 days ago

Here’s a letter to Farai Chideya:
Mr. Chideya:
I enjoyed your NPR interview on the challenges of adopting children. And I agree with much of what you said. But I disagree – strongly – with your drawing from the fact that the United States “is the only developed country in the world that does not have federally mandated leave policies” the conclusion that “[i]t’s about this country disrespecting what it takes to raise families.”
Neither “this country” nor we Americans as a people are synonymous with the U.S. government. And so the fact that something of value isn’t mandated by Uncle Sam does not mean that in America that something is nonexistent or even rare. Nor does it mean that we as a people ‘disrespect’ the purposes served by non-mandatory things of value.
Uncle Sam does not

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On the Burden of Government Debt

4 days ago

Who bears the burden of government debt? In my latest column for AIER I do my best to explain the pioneering answer to this question given by my late Nobel-laureate colleague Jim Buchanan. A slice:

The second prong of the Keynesian orthodoxy is that the burden on society of government debt is shouldered at each of the moments when programs that are funded with debt are undertaken. If, say, Uncle Sam borrows $10 billion to build 100 F-35 fighter jets today, all of the labor, metals, plastics, and other real resources that would otherwise have been used differently are consumed today to produce the fleet of fighter planes. The 100 commercial jet liners – or the 500,000 automobiles, or the 10,000,000 sets of patio furniture, or some quantity of whatever – that would otherwise have been

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Some Links

4 days ago

My Mercatus Center colleague Adam Thierer explains how regulation by government wrecks innovation. A slice:
A new NBER working paper, “The Failure of Free Entry,” finds that “regulations and lobbying explain rather well the decline in the allocation of entry.” Economists Germán Gutiérrez and Thomas Philippon show that, “regulations have a negative impact on small firms, especially in industries with high lobbying expenditures.” Their results also document how regulations, “have a first order impact on incumbent profits and suggest that the regulatory capture may have increased in recent years.”
Phil Magness documents some of the many misuses by universities of donors’ dollars.
Issac Orr offers evidence of how capitalism protects the environment.
Also on economic growth and the

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Quotation of the Day…

4 days ago

… is from page 393 of the 1936 English-language edition (translated from German by Alfred Stonier and Frederic Benham) of Gottfried Haberler’s classic 1933 volume, The Theory of International Trade With Its Application to Commercial Policy; here Haberler is speaking of the home government selectively lowering and raising tariffs on imports from individual foreign countries in a scheme to impel foreign governments to lower their tariffs on exports from producers within its, the home-governments’, jurisdiction:
[I]t springs only from a naïve belief that the preferential system provides a means of reaping part of the advantages of Free Trade without hurting anybody, a way of increasing the volume of trade without any reshuffling and without any of the pains of transition, a method of

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Bonus Quotation of the Day…

5 days ago

… is from my George Mason University emeritus Nobel laureate colleague – and now Chapman University professor – Vernon Smith’s December 10, 2002, Nobel Prize Banquet Speech:
I wish to celebrate… F.A. Hayek for teaching us that an economist who is only an economist cannot be a good economist; that fruitful social science must be very largely a study of what is not; that reason properly used recognizes its own limitations; that civilization rests on the fact that we all benefit from knowledge that we do not possess (as individuals).
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Quotation of the Day…

5 days ago

… is from page 134 of George Will’s 2019 book, The Conservative Sensibility:
Funding the welfare state by vast borrowing and regulatory taxation hides the costs from the public. Hence its political potency. Until the implosion.
DBx: Two facts are here dominant. One: compared to when Smith spends his own money, when Jones spends money that Smith has little choice but to turn over to Jones (whose job security turns on his spending Smith’s money), that money is spent more profligately. Two: Smith’s money eventually runs out.
Jones – attentive chiefly to his job-security – is nevertheless undaunted. Smith’s children and grandchildren have money that Jones then takes by borrowing from Williams. Smith’s progeny bear the burden of this debt.
…..
Progressives – especially ones with some

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Quotation of the Day…

6 days ago

… is from Pres. Andrew Johnson’s February 22nd, 1869, message (available here) to the United States House of Representatives explaining his veto of a tariff on copper; this veto message was drafted by the American economist David Wells:
[I]t imposes an additional tax upon an already overburdened people, who should not be further impoverished that monopolies may be fostered and corporations enriched….
Legislation can neither be wise nor just which seeks the welfare of a single interest at the expense and to the injury of many and varied interests at least equally important and equally deserving the consideration of Congress.
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“High-Wages” Means “High-Productivity”

7 days ago

Here’s a letter to a commenter at AIER, one Mr. Robert Young:
Mr. Young:
Commenting on Jeffrey Tucker’s essay “Tariffs Have Not Been Paid by China; They Have Not Raised Revenue on Net,” you suggest that the level of wages in high-wage countries will fall if residents of those countries can trade freely with producers in low-wage countries.
You’re mistaken.
Wages in the U.S. and other high-wage countries are higher than are wages in low-wage countries not by chance. These wages are higher because workers in high-wage countries are more productive than are workers in low-wage countries. That is, compared to workers in low-wage countries, workers in high-wage countries on average produce more value per hour for their employers.
High-wage workers are more productive, in turn, because they

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Bonus Quotation of the Day…

7 days ago

… is from page 1 of the July 1961 edition of Harvard economist Gottfried Haberler’s A Survey of International Trade Theory (footnote deleted):
Strictly speaking, it is neither possible nor essential to draw a sharp distinction between the problems of foreign and domestic trade. If we examine the alleged peculiarities of foreign trade, we find that we are dealing with differences in degree rather than with such basic differences of a qualitative nature as would warrant sharp theoretical divisions.
DBx: Yep.
Trade is trade is trade. Any economic disadvantages that you can identify as arising from Americans’ trade with non-Americans, I can identify as arising also from some Americans’ trade with other Americans. Likewise, any economic advantages that you can identify as arising from some

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Quotation of the Day…

7 days ago

… is from page 5 of Tyler Cowen’s excellent 2019 book Big Business: A Love Letter to an American Anti-Hero:
Many features of contemporary America are wonderful, including high levels of trust in the corporate sector, but the weirdness in our government has been rising.
In contrast, the world of American business has never been more productive, more tolerant, and more cooperative. It is not just a sources of GDP and prosperity; it is a ray of normalcy and predictability in its steady focus on producing what can be profitably sold to customers. Successful businesses grow dynamically, but they also try to create oases of stability and tolerance in which they can perfect their production methods.
DBx: So true. And yet many on the political left are blind to this reality. These

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Bonus Quotation of the Day…

8 days ago

… is from page 3 of the 1976 second edition of my late, great teacher Leland Yeager’s sweeping International Monetary Relations: Theory, History, and Policy (footnote deleted):
Like technological progress, trade widens the range of available ways of transforming labor and other resources into desired goods and services. Technological progress and geographic specialization both make this transformation more “efficient” (to us a loose but convenient word). The basis for specialization and trade among countries of the world is the same as for specialization and trade among states of the United States.
DBx: Yes.
Stealing the essential idea from David Friedman and Steven Landsburg, I often ask my students to imagine that a Ms. Edie Thomas invents a machine that in a matter of days converts

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None of Trump’s Business

8 days ago

Here’s a letter to the Wall Street Journal:
Editor:
You make several important points in “Why Vietnam Loves Donald Trump” (July 11). Yet you there keep implicit one point that should be made explicit – namely, Pres. Trump’s trade policies are the opposite of those that would be pursued by someone with excellent business acumen.
For example, a good business executive understands that when a company sources inputs from abroad it does so not haphazardly but because those foreign sources are less costly than are domestic sources. This executive therefore also understands that disruptions caused by tariffs to a company’s global supply chain are very costly. And so unlike Mr. Trump, no skilled business person would blithely tell Apple that moving more of its operations to the U.S. to reduce

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Some Links

8 days ago

My intrepid Mercatus Center colleague Veronique de Rugy reports on some of the baneful consequences of Trump’s trade war.
“In a world full of people looking to impose their concepts of justice on others, it’s refreshing to revisit Adam Smith’s thinking.” That’s the opening sentence of my emeritus GMU Econ colleague Vernon Smith’s essay in the Wall Street Journal on Adam Smith and justice. Here’s another slice:
Smith thought society improved itself by controlling certain hurtful actions, rather than by trying to achieve some utopian benefit through collective action. History is littered with examples of unintended consequences and grandiose failures stemming from the latter approach. Smith’s preferred approach relied on people’s natural impulses to better themselves, risking only their

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Quotation of the Day…

8 days ago

… is from pages 376-377 of the 1936 English-language edition (translated from German by Alfred Stonier and Frederic Benham) of Gottfried Haberler’s classic 1933 work, The Theory of International Trade With Its Application to Commercial Policy (original emphasis; footnote deleted):
The peculiarity of such an ‘exchange’ [as occurs when governments negotiate trade agreements with each other] is that the surrender of its own exchange-object – the reduction of its own duties – is in reality no sacrifice…. It is the increase and not the reduction of duties which is the real economic burden!
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No Sign of Intelligent Life

9 days ago

Here’s another letter to Ricky Miller:
Mr. Miller:
Unlike you, I fervently hope that Pres. Trump proves to be, by his own standards, a complete flop at negotiating trade deals. The reason is that what Pres. Trump regards as American costs are, in fact, American benefits – and what he regards as American benefits are, in fact, American costs.
Negotiating for us to increase our exports as much as possible, and to increase ‘in exchange’ our imports as little as possible, the Trump trade team is unwittingly negotiating to enrich foreigners at our expense. ‘We insist on producing a lot more stuff for your enjoyment, and we demand that you produce as little as possible stuff for our enjoyment!’ is Trump’s message to foreigners.
Fortunately for us, foreign-government leaders are just as

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Conserving the Ideas and Institutions of Freedom

9 days ago

I thank my GMU Econ colleague Dan Klein for alerting me to this conversation between Judy Woodruff and George Will. Notice the prominence – often explicit – in Will’s thought of Hayek’s wisdom.
[embedded content]
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Quotation of the Day…

9 days ago

… is from the new David Hart translation – still only on-line, but forthcoming in print – of Frédéric Bastiat’s 1850 Economic Harmonies; specifically, it is from the chapter X, titled “Competition”:
As far as I am concerned, I wish to choose for myself and do not want anyone else to make choices on my behalf, against my will that is all. And if someone claims the right to substitute his judgment for mine in matters that concern me, I will ask to substitute mine for his in transactions that concern him. Where is the guarantee that things will go (any) better? It is obvious that competition is another word for freedom. If you destroy the freedom to act, you destroy the possibility and consequently the right to choose, judge, and compare; you kill the mind, you kill thought, and you kill

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Another Open Letter to Thomas Hutcheson

10 days ago

Mr. Hutcheson:
Commenting on my recent objection to minimum-wage legislation, you write that “It is quite possible to believe that the negative effects on employment are small enough that low income workers nevertheless benefit from minimum wages.”
While your proposed cost-benefit analysis of minimum wages seems on its face to be objective, in fact it isn’t. A number of flaws infect your method, but the most obvious one is this: you mistake the term “low income workers” for a relevant category with well-defined, objective boundaries. But no such category here exists.
Which persons are we to classify as “low income workers”? Are they all people currently working for $7.25 per hour or less? Or are they all people working or actively looking for work at $7.25 per hour or less? What about

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Quotation of the Day…

10 days ago

… is from pages 85-86 of George Will’s 2019 book, The Conservative Sensibility:
And the more things government touches, the more people will have interests in touching, and wheedling, government. Progressives purport to be scandalized by modern Washington, which is indeed an unlovely maelstrom of interest groups maneuvering to maximize their rent-seeking. This is, however, the Washington that progressives should have known they were making. But they only could have known this if they had a keen Madisonian sense of political sociology. And if progressives had had this, they would have had to reconsider their premises.
DBx: Stealing a dietary term that I first heard from Russ Roberts, those who want big and active government that is apolitical and immune to monetary interests are as

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(Some) Econometric Studies Find that the Law of Demand Mysteriously Doesn ‘t Apply to Low-Skilled Workers

11 days ago

Here’s a letter to the Washington Post:
Editor:
Andrew Van Dam is impressed with some empirical research by authors who claim to find only significant net positive consequences from minimum-wage hikes (“It’s not just paychecks: The surprising society-wide benefits of raising the minimum wage,” July 8). Having kept abreast of minimum-wage research since the early 1980s, I’m much less impressed.
Starting about 25 years ago there poured forth a stream of research claiming that the data debunk the standard economic prediction that minimum wages affect the employment options of low-skilled workers negatively. Proponents of minimum wages refer to these studies in the same way as does Mr. Van Dam: “the most definitive.”
But these papers inspired other economists to produce a parallel stream

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Some Links

11 days ago

George Mason University Econ alum Wayne Brough writes wisely about 5G technology. A slice:
In the United States, both Verizon and AT&T already are selling 5G products, a metric that puts the nation ahead of China. By another metric — nationwide deployment — many analysts believe China will be first across the finish line. But it must be remembered that the promise of 5G requires more than deployment. Ultimately, it is the rollout of the Internet of Things with virtually instantaneous communications between humans as well as machines. It is an exponential leap in connectivity that can transform economic activity. But doing so requires entrepreneurship and innovation, qualities that are better left to the private sector. Open and competitive markets have allowed U.S. firms to excel and

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Quotation of the Day…

11 days ago

… is the closing paragraph, on page 262, of Joseph Epstein’s insightful 1993 essay “Culture and Capitalism,” as this essay is reprinted in Epstein’s 2014 collection, A Literary Education and Other Essays:
I love art; apart from family and friends, nothing in life is so important to me; and I am grateful to have been able to arrange my life so that I can spend a greater part of it than most people indulging myself in the splendors and delights of others’ artistic production. But however necessary to some of us art remains, it is well to remember that, in the larger perspective, art is a luxury – the luxury of luxuries – and one that is only earned by societies that, in the fundamental sense of the phrase, first take care of business.
DBx: The production of art requires scarce

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