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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…

1 hour ago

… is from page 60 of my late Nobel-laureate colleague James Buchanan’s May 1988 American Economic Review paper, “Contractarian Political Economy and Constitutional Interpretation,” as this paper is reprinted in Choice, Contract, and Constitutions (2001), which is volume 16 of The Collected Works of James M. Buchanan:
The contractarian or catallactic approach to economic interaction suggests that systems or subsystems be evaluated in terms of the comparative ease or facility with which voluntary exchanges, contracts, or trades may be arranged between and among members of the community. Normative judgments take the form of statements that array “better” and “worse” processes (rules, laws, institutions) within which exchanges are allowed to take place. These judgments are categorically

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Ross Is Wrong Yet Again on Trade

13 hours ago

Here’s a letter to the Wall Street Journal:
You rightly denounce what you call “Trump’s Trade Confusion” (May 25). Confirmation of that confusion is Commerce Secretary Wilbur Ross’s recent declaration that “there is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry.”
Ignore the question of whether or not Mr. Ross’s statement about the auto industry is correct empirically. Focus instead on the fact that he apparently doesn’t realize that ‘eroding’ domestic industries that compete against imports is precisely what free trade is supposed to do. When we import goods at prices lower than the costs we’d incur to produce those same goods, we spend fewer resources at home producing those particular goods and, thus, devote more resources at home

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Quotation of the Day…

13 hours ago

… is from page 322 of Daniel Boorstin’s magnificent 1973 volume, The Americans: The Democratic Experience:
In western Europe until about the middle of the nineteenth century the mainstays, and in some places nearly the exclusive items in the diet, were various forms of cereal, mainly bread, supplemented now and then by salted meat. Milk, fruit, and vegetables were frills, eaten for novelty by those who could afford them and when and where they could be found fresh.
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Some Links

15 hours ago

“A car tariff would hurt consumers, the auto industry, and the nation” – so argues my Mercatus Center colleague Dan Griswold. A slice:
And who benefits most from the competition from motor vehicle imports? Millions of American households. Because of imports, motor vehicles today are safer, more reliable, and more comfortable than past models, and come loaded with the latest high tech features. And the average quality-adjusted price for new vehicles sold in the United States hasn’t budged in the past 20 years.
Also on Trump’s asinine proposal to impose punitive taxes on Americans who buy automobiles assembled outside of the United States is Pierre Lemieux.
My intrepid Mercatus Center colleague Veronique de Rugy correctly and rightly describes the Trump administration’s machinations on

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“Deregulation,” As It Is Popularly Called, Is Really Increased Regulation

1 day ago

Among the points that I make in my latest column in the Pittsburgh Tribune-Review is that because regulation by government often shields politically influential producers from competition, it is really deregulation – and that “deregulation” (so-called), insofar as it rolls back “regulation” (so-called) by government, is really greater regulation.  A slice:

Economic competition is the most reliable and incorruptible form of regulation. If in free markets that are unsullied by government favoritism an airline mistreats its passengers or a bank is careless with its customers’ deposits, the market punishes these firms with losses and, if they don’t mend their ways, with bankruptcy. In other words, when markets are free, the ability of consumers to withhold their spending is a source of

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Quotation of the Day…

2 days ago

… is from pages 140-141 of my Mercatus Center colleague Dan Griswold’s excellent 2009 book, Mad About Trade:
Our more globalized world has also yielded a “peace dividend.” It may not be obvious when our daily news cycles are dominated by horrific images from the Gaza Strip, Afghanistan, and Darfur, but our more globalized world has somehow become a more peaceful world. The number of civil and international wars has dropped sharply in the past 15 years along with battle deaths. The reasons behind the retreat of war are complex, but again the spread of trade and globalization has played a key role.
DBx: Pictured above is a statue, in Manchester, England, of Richard Cobden – one of history’s greatest champions of peace and free trade.
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My 2006 Review of James Buchanan’s Final Book

2 days ago

In July 2006 I reviewed my late Nobel-laureate colleague Jim Buchanan’s 2005 collection, Why I, Too, Am Not a Conservative. My review is below the fold.

The picture on the dust jacket of this latest book by my Nobel prize-winning colleague James Buchanan has nothing to do with the book’s title or its contents. The dust-jacket shows a photographer’s cloth backdrop, with absolutely nothing in the foreground or background. It’s as if the cover announces “There’s nothing here.”
But oh how misleading that message is! As with all that Buchanan writes, this short book is a deep well of insights, creative reflections, and wisdom. In particular, this book is a collection of 12 essays, each written within the past decade – too recently to be included in the 20 volume Collected Works of James

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Bonus Quotation of the Day…

2 days ago

… is from page 182 of the original 1960 University of Chicago Press edition of F.A. Hayek’s The Constitution of Liberty:
And the Constitution which the new American nation was to give itself [in 1787] was definitely meant not merely as a regulation of the derivation of power but as a constitution of liberty, a constitution that would protect the individual against all arbitrary coercion.
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Some Links

2 days ago

George Will reviews the high price of GOP protectionism. A slice:
Not content with bossing around Americans, even unto telling them which washing machines to buy, the administration’s protectionists have demanded that Mexico, as part of a renegotiated NAFTA, institute a $16 minimum wage for Mexican factory workers. So, a Republican administration purports to know more than Mexico’s labor market knows about the proper price of Mexican labor. But, then, the last know-it-all administration so aggressive about controlling wages and prices was Republican (Richard Nixon’s).
Richard Ebeling is correct: protectionism is a form of economic central planning by government.
David Henderson understandably enjoyed a recent talk on trade by the great Doug Irwin.
Also on trade: John Tamny offers yet

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Mercantilism Weakens the Economies of Countries Whose Governments Practice It

2 days ago

Here’s a letter to the New York Post:
In his column on the dangers that China poses for America, Rich Lowry accepts a premise that is economically unacceptable (“America still needs a serious China policy,” May 22) – namely, that Beijing’s mercantilist policies strengthen the Chinese economy. Like countless other pundits, Mr. Lowry assumes that mercantilism is to a nation’s economic strength what militarism is to a nation’s military strength. This assumption is mistaken.
When a government diverts more resources to its armies, navies, and air forces, that government does indeed strengthen its military, both absolutely and relative to the strength of other governments’ militaries. In contrast, when a government diverts more resources to export industries and other select firms, that

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Quotation of the Day…

3 days ago

… is from page 80 of Steven Pinker’s wonderful 2018 book, Enlightenment Now (footnotes deleted; original emphasis):
The need to explain the creation of wealth is obscured yet again by political debates within modern societies about how wealth ought to be distributed, which presupposes that wealth worth distributing exists in the first place. Economists speak of a “lump fallacy” or “physical fallacy” in which a finite amount of wealth has existed since the beginning of time, like a lode of gold, and people have been fighting over how to divide it up ever since. Among the brainchildren of the Enlightenment is the realization that wealth is created.
DBx: So true.
Thomas Piketty, with his 2014 Capital in the Twenty-First Century, is believed by many to have offered a powerful case for

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A Protectionist is Someone Who…

3 days ago

… if the nominal prices of all the goods and services that he buys fall while his nominal income remains unchanged believes that his real income has thereby fallen.
Unlike intelligent people who understand that the protectionist’s real income in this case has risen, the protectionist sees only that he now has to work fewer hours and less hard to acquire the same amount of goods and services that he acquired before the prices of the goods and services that he buys fell. Thinking that his well-being is a positive function of the amount of work that he must do to acquire some given amount of goods and services for his consumption, because the fall in prices means that the protectionist no longer must work as long and as hard as before, the protectionist mistakenly believes that he is

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A Protectionist is Someone Who…

3 days ago

… if the nominal prices of all the goods and services that he buys fall while his nominal income remains unchanged believes that his real income has thereby fallen.
Unlike intelligent people who understand that the protectionist’s real income in this case has risen, the protectionist sees only that he now has to work fewer hours and less hard to acquire the same amount of goods and services that he acquired before the prices of the goods and services that he buys fell. Thinking that his well-being is a positive function of the amount of work that he must do to acquire some given amount of goods and services for his consumption, because the fall in prices means that the protectionist no longer must work as long and as hard as before, the protectionist mistakenly believes that he is

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Quotation of the Day…

4 days ago

… is from page 2 of Carlo Lottieri’s “Introduction” to the 2009 collection of some essays by the late, brilliant Bruno Leoni, entitled Law, Liberty and the Competitive Market (Carlo Lottieri, ed.) (footnote deleted; original emphasis):
Economics offered to [Bruno] Leoni a key to understand how a large society works, and how by its autonomous dynamism it can produce relations, rules, languages, and so on. Studying the market economy, he perceives the opposition between spontaneous order and planning, and in this way he understands how such a contrast is significant even for the origins of the legal norms. Leoni’s idea of a law able to protect individual liberty has its roots in the market – i.e., in the firm conviction that only by overcoming the political monopoly that has dominated

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Quotation of the Day…

4 days ago

… is from page 2 of Carlo Lottieri’s “Introduction” to the 2009 collection of some essays by the late, brilliant Bruno Leoni, entitled Law, Liberty and the Competitive Market (Carlo Lottieri, ed.) (footnote deleted; original emphasis):
Economics offered to [Bruno] Leoni a key to understand how a large society works, and how by its autonomous dynamism it can produce relations, rules, languages, and so on. Studying the market economy, he perceives the opposition between spontaneous order and planning, and in this way he understands how such a contrast is significant even for the origins of the legal norms. Leoni’s idea of a law able to protect individual liberty has its roots in the market – i.e., in the firm conviction that only by overcoming the political monopoly that has dominated

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R.I.

4 days ago

Here’s an e-mail that I just sent to a Cafe Hayek reader, Rhonda Foley, who has long worried about the effects on human employment and wages of artificial intelligence:
Ms. Foley:
Thanks for sharing the late Stephen Hawking’s 2016 Guardian essay in which he argued that “the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.”
Mr. Hawking was a great physicist. He was not, alas, a great economist. And so to answer your question: No; Mr. Hawking’s essay does not cause me to worry that artificial intelligence will lead to ever-increasing joblessness.
Consider this: However impressive artificial intelligence might be, and however close science gets to creating machines

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R.I.

4 days ago

Here’s an e-mail that I just sent to a Cafe Hayek reader, Rhonda Foley, who has long worried about the effects on human employment and wages of artificial intelligence:
Ms. Foley:
Thanks for sharing the late Stephen Hawking’s 2016 Guardian essay in which he argued that “the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.”
Mr. Hawking was a great physicist. He was not, alas, a great economist. And so to answer your question: No; Mr. Hawking’s essay does not cause me to worry that artificial intelligence will lead to ever-increasing joblessness.
Consider this: However impressive artificial intelligence might be, and however close science gets to creating machines

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On Private Funding for GMU Econ and Mercatus

4 days ago

Yesterday’s Wall Street Journal had four excellent letters on the trumped-up ‘scandal’ over the funding that GMU Econ and GMU’s Mercatus Center receive from private donors.  Here are two of these letters:
Of the thousands of policy briefings I’ve attended, the Mercatus Center’s were among the most practical and informative for a young staffer. Through Mercatus I became a disciple of Russ Roberts, Bruce Yandle and many other economists with a knack for translating arcane research into useful information for policy makers. It would be a shame if George Mason University backed down in the face of intolerant and disingenuous activists who dislike free-market-oriented philanthropists teaming with a free-market-oriented school to teach students the benefits of free markets.
Gordon

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On Private Funding for GMU Econ and Mercatus

4 days ago

Yesterday’s Wall Street Journal had four excellent letters on the trumped-up ‘scandal’ over the funding that GMU Econ and GMU’s Mercatus Center receive from private donors.  Here are two of these letters:
Of the thousands of policy briefings I’ve attended, the Mercatus Center’s were among the most practical and informative for a young staffer. Through Mercatus I became a disciple of Russ Roberts, Bruce Yandle and many other economists with a knack for translating arcane research into useful information for policy makers. It would be a shame if George Mason University backed down in the face of intolerant and disingenuous activists who dislike free-market-oriented philanthropists teaming with a free-market-oriented school to teach students the benefits of free markets.
Gordon

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Yet Another Open Letter to the Scarcityist-in-Chief

4 days ago

22 May 2018
Mr. Donald Trump1600 Pennsylvania Ave., NWWashington, DC 20500
Mr. Trump:
You and your trade triumvirate regularly insist that China’s trade surplus with the U.S. reveals that China is taking unfair advantage of America and thereby damaging our economy. So tell me, is America taking unfair advantage of Hong Kong, the Netherlands, Australia, the United Kingdom, Guatemala, and the several other countries with which the U.S. is now running trade surpluses? Are we Americans abusing the citizens of these countries and damaging their economies by selling more goods to each of them than each of them sells to us? (And do note that some of these trade surpluses that the U.S. has with other countries are larger, as a percentage of those countries’ GDPs, than is the Chinese trade

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Yet Another Open Letter to the Scarcityist-in-Chief

4 days ago

22 May 2018
Mr. Donald Trump1600 Pennsylvania Ave., NWWashington, DC 20500
Mr. Trump:
You and your trade triumvirate regularly insist that China’s trade surplus with the U.S. reveals that China is taking unfair advantage of America and thereby damaging our economy. So tell me, is America taking unfair advantage of Hong Kong, the Netherlands, Australia, the United Kingdom, Guatemala, and the several other countries with which the U.S. is now running trade surpluses? Are we Americans abusing the citizens of these countries and damaging their economies by selling more goods to each of them than each of them sells to us? (And do note that some of these trade surpluses that the U.S. has with other countries are larger, as a percentage of those countries’ GDPs, than is the Chinese trade

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Quotation of the Day…

5 days ago

… is from page 39 of Steven Pinker’s excellent 2018 book, Enlightenment Now (original emphasis):
Intellectuals hate progress. Intellectuals who call themselves “progressive” really hate progress. It’s not that they hate the fruits of progress, mind you: most pundits, critics, and their bein-pensant readers use computers rather than quills and inkwells, and they prefer to have their surgery with anesthesia rather than without it. It’s the idea of progress that rankles the chattering class – the Enlightenment belief that by understanding the world we can improve the human condition.
DBx: These “Progressives” also hate an institution that is essential to progress – namely, private property markets in which entrepreneurs and businesses are free to innovate and to reap the profits from

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Quotation of the Day…

5 days ago

… is from page 39 of Steven Pinker’s excellent 2018 book, Enlightenment Now (original emphasis):
Intellectuals hate progress. Intellectuals who call themselves “progressive” really hate progress. It’s not that they hate the fruits of progress, mind you: most pundits, critics, and their bein-pensant readers use computers rather than quills and inkwells, and they prefer to have their surgery with anesthesia rather than without it. It’s the idea of progress that rankles the chattering class – the Enlightenment belief that by understanding the world we can improve the human condition.
DBx: These “Progressives” also hate an institution that is essential to progress – namely, private property markets in which entrepreneurs and businesses are free to innovate and to reap the profits from

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Bob Higgs on the Senselessness of the “Balance of Payments”

5 days ago

This new post by Bob Higgs on the irrelevance of the “balance of payments” – and of the folly of worrying about a so-called “deficit” in it – should be read in full by Trumpkins and other protectionists. And then read again. And again. Carefully. And then read yet again.
Here’s a large slice:
Let us define the set of all human beings whose height is greater than 170 cm and less than 180 cm. Call this set A. Now let us collect data on all the dealings between members of set A and members of set B, which consists of all human beings whose height is less than or greater than those in set A. What economic significance can we ascribe to the aggregate of monetary flows between members of set A and members of set B? Correct answer: none. This aggregation of persons who trade with persons in

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Bob Higgs on the Senselessness of the “Balance of Payments”

5 days ago

This new post by Bob Higgs on the irrelevance of the “balance of payments” – and of the folly of worrying about a so-called “deficit” in it – should be read in full by Trumpkins and other protectionists. And then read again. And again. Carefully. And then read yet again.
Here’s a large slice:
Let us define the set of all human beings whose height is greater than 170 cm and less than 180 cm. Call this set A. Now let us collect data on all the dealings between members of set A and members of set B, which consists of all human beings whose height is less than or greater than those in set A. What economic significance can we ascribe to the aggregate of monetary flows between members of set A and members of set B? Correct answer: none. This aggregation of persons who trade with persons in

Read More »

Quotation of the Day…

6 days ago

… is from pages 13-14 of L. Albert Hahn’s July 1943 article, “Should Government Debt, Internally Held, Be Called a Debt at All?”, as this article is reprinted in Hahn’s excellent 1949 collection, The Economics of Illusion:
It is, of course, obvious that it is easier to pay interest and amortization on a government loan if it is possible to tax all those who possess the new assets which correspond with the new indebtedness of the government. But insofar as the necessary taxes are not levied on the “new capitalists” (as they can be only partly), the amounts have to be obtained through increased taxes on other members of the population. To these, it is entirely the same whether the amounts are finally channeled to an internal or an external creditor. If part of the population has to pay

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Quotation of the Day…

6 days ago

… is from pages 13-14 of L. Albert Hahn’s July 1943 article, “Should Government Debt, Internally Held, Be Called a Debt at All?”, as this article is reprinted in Hahn’s excellent 1949 collection, The Economics of Illusion:
It is, of course, obvious that it is easier to pay interest and amortization on a government loan if it is possible to tax all those who possess the new assets which correspond with the new indebtedness of the government. But insofar as the necessary taxes are not levied on the “new capitalists” (as they can be only partly), the amounts have to be obtained through increased taxes on other members of the population. To these, it is entirely the same whether the amounts are finally channeled to an internal or an external creditor. If part of the population has to pay

Read More »

Protect Us from Such ‘Victories’

6 days ago

Here’s the latest in my on-going correspondence with Nolan McKinney, a fervent fan of Trump’s trade policies:
Mr. McKinney:
Yes, I saw that the Trump administration, in an effort to reduce America’s trade deficit with China, seems to have persuaded Beijing to arrange for the Chinese people to buy more American exports. But no, I neither regard this outcome as a “victory for America” nor “thank” Trump for arranging it.
You’ll pardon my repetition, but regardless of what you think of the U.S. trade deficit with the rest of the world, it’s absurd for you or anyone else to find meaning in the U.S. trade deficit with China, which is one among nearly two hundred nations with which Americans trade. Bilateral trade deficits and surpluses in a world of more than two countries are completely

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Protect Us from Such ‘Victories’

6 days ago

Here’s the latest in my on-going correspondence with Nolan McKinney, a fervent fan of Trump’s trade policies:
Mr. McKinney:
Yes, I saw that the Trump administration, in an effort to reduce America’s trade deficit with China, seems to have persuaded Beijing to arrange for the Chinese people to buy more American exports. But no, I neither regard this outcome as a “victory for America” nor “thank” Trump for arranging it.
You’ll pardon my repetition, but regardless of what you think of the U.S. trade deficit with the rest of the world, it’s absurd for you or anyone else to find meaning in the U.S. trade deficit with China, which is one among nearly two hundred nations with which Americans trade. Bilateral trade deficits and surpluses in a world of more than two countries are completely

Read More »

ECON 101 > ECON 999

7 days ago

Here’s a letter to a young man who will embark this coming Fall upon his graduate studies in economics:
Mr. Cody Thompson
Mr. Thompson:
Thanks for your e-mail. You critically observe that on my blog I “seldom rise above Econ 101.” You’re correct, but my focus on economic fundamentals is by design.
I wholeheartedly agree that knowledge of advanced economics is valuable. But the economic knowledge ignored by the public, pundits, and politicians isn’t that which is found in ECON 999 but, instead, that which is found in ECON 101. Long before whatever truths that might be learned in ECON 999 become relevant, the insights and ‘way of thinking’ learned in ECON 101 must first be grasped.
Put differently, the flaws in real-world economic policies reflect not a naïve and uncritical application

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