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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

Oren Cass Differs Little from Bernie Sanders

16 hours ago

Alberto Mingardi is correct: Oren Cass, in his call for government to exercise discretionary power to proscribe and to prescribe Americans’ commerce, is quite akin to Bernie Sanders.
It is, of course, certain that each of these scholars would reject the comparison. Cass surely doesn’t feel himself to be motivated by the same sentiments that he believes fuel Sen. Sanders’s fires. And Sen. Sanders surely doesn’t feel himself to be motivated by the same sentiments that he believes fuel Cass’s fires. Yet both of these social engineers believe that government officials should be entrusted with the discretionary power to coerce ordinary Americans to support particular American producers that don’t profit in markets.
Both Cass and Sanders fancy themselves to be much smarter than markets.

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Bonus Quotation of the Day…

21 hours ago

… is from page 79 of my former professor Randy Holcombe’s 2018 book, Political Capitalism: How Economic and Political Power is Made and Maintained:
In the abstract, people can hope that the government always acts in the public interest, but even casual observation indicates that the elite who make public policy do so with their own interests in mind. Externalities exist when the activities of some impose costs on third parties. Because government can force some to bear the costs of policies that benefit others, government policies create externalities. Those who design policies can benefit by producing policies that impose costs on others.
DBx: Indisputably true. So why are people who endorse the likes of tariffs and industrial policy blind to this reality? Such people – represented

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Quotation of the Day…

1 day ago

… is from page 524 of George Will’s marvelous 2019 book, The Conservative Sensibility:
The political class has prospered by hiding from the public the cost of the public’s appetites. By making vast deficit spending not an occasional counter-cyclical recourse but a constant governing strategy, it has made big government deceptively cheap, giving today’s public a dollar’s worth of goods and services and charging them only about 80 cents. By doing so, government deepens America’s infantilization. It is characteristic of children to will an end without willing the means to this end. This is now a national characteristic.
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The U.S. Government’s Fiscal Incontinence

2 days ago

Here’s a letter that I sent on February 9th to the Washington Post:
Editor:
You report that “The White House is preparing to propose a budget that would fail to eliminate the federal deficit over the next 10 years” (“Trump budget plan would fail to eliminate deficit over 10 years, briefing document shows,” Feb. 9).
This fiscal incontinence is appalling. We’re in the midst of the longest economic expansion in American history, real U.S. GDP per capita is at an all-time high, and the unemployment rate is at a 50-year low. There is simply no good reason for the government now to borrow money, and yet Trump proposes that nearly one-fifth of spending over the next fiscal year be funded with debt.
In 1977 my late Nobel-laureate colleague James Buchanan wrote, with my current colleague

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Some Links

2 days ago

My intrepid Mercatus Center colleague Veronique de Rugy wisely warns us of Bernie Sanders’s economically ignorant radicalism.
George Will warns us of the dangers in Elizabeth Warren’s hypocritical and opportunistic embrace of teachers’ unions. A slice:
Nationwide per-pupil public expenditure (in constant dollars) doubled between 1960 and 1980, and doubled again by 2016. Warren’s and Sen. Bernie Sanders’s jeremiads against “greed” exempt that of teachers unions.
Alberto Mingardi is justifiably liberal in his praise of Russ Roberts’s recent effort to debunk the myth that government policies in recent decades were masterminded by Milton Friedman.
Ryan Bourne is rightly pleased that the Council of Economic Advisors is highly skeptical of antitrust policy.
Only in California.
Michael

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Quotation of the Day…

2 days ago

… is from this Bryan Caplan EconLog post of September 19th, 2019 (first link added; second link original):
Most people embrace a dogmatic pessimistic ideology, and believing is seeing. Hedonic adaptation amplifies the problem. After all, it’s easier to deny that your standard of living is great than to admit that you’re unhappy despite your affluence. The fault is not in our stuff but in ourselves.
DBx: I’m sure that hedonic adaptation is real. If it weren’t, we modern, ordinary Americans would be about 300 times happier than were the vast majority of our pre-industrial ancestors. And whatever you might think about the reliability of claims of relative states of happiness, it seems highly unlikely that we today are 300 times happier than were, say, our great, great, great, great, …,

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Don’t Fall for the Fallacies of Economic Nationalism

3 days ago

In my most-recent column for the Pittsburgh Tribune-Review I lament the fact that Oren Cass – like so many other “national conservatives” and “Progressives” – does not appreciate the full reality of creative destruction. A slice:
Joseph Schumpeter, Julian Simon and Deirdre McCloskey are only three of the economists who’ve demonstrated that high and rising prosperity for ordinary people is the result of innovation that destroys old patterns of production and replaces these with new and better ones. Such “creative destruction” is inescapable for those who wish to be members of a society that grows and prospers economically.
Yet Cass and other proponents of “national conservativism” are uncomfortable with creative destruction. Obsessing over the destruction, they’re blind to the

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Bonus Quotation of the Day…

3 days ago

… is from page 19 of my GMU Econ colleague Richard Wagner’s excellent 2014 monograph, American Federalism: How Well Does It Support Liberty?:
So, how is it possible for democracy to conflict with liberty? Democracy is a scheme for governing human interaction. But so is liberty, which is a system of regulation grounded on private property. Private property is a regulatory system that accommodates the voluntary organization of social interaction. Economic theory explains how it happens that a society where individual action is largely organized through private property is able to generate coherent patterns of societal activity without there being any entity or organization to plan that pattern.
DBx: Indeed. And because markets put to use far more knowledge than can possibly be put to

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No, Hayek’s ‘Promise’ Wasn’t ‘Broken’

3 days ago

Here’s a letter to The American Mind:
Editor:
Quoting F.A. Hayek’s 1960 claim that free markets will bring about a “balance … between exports and imports,” Oren Cass argues that the string of annual U.S. trade deficits over the past 44 years proves that Hayek was wrong – that history has “broken” Hayek’s “promise” (“Hayek’s Broken Promise,” Feb. 19).
Being a non-economist, Mr. Cass can be forgiven for missing Hayek’s meaning. The balance to which Hayek refers is not a strict equality between the value of a country’s exports and the value of its imports. Hayek means, instead, that there is a market process that connects exports to imports in a predictable manner: specifically, and contrary to popular mythology, if imports fall so, too, over time will exports fall. Hayek was bemoaning

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Quotation of the Day…

3 days ago

… is from page 182 of the original edition of Lee Francis Lybarger’s 1914 book, The Tariff (original emphasis):
There is no denying the fact that a Protective Tariff is a system of taxation for the sole purpose of enriching private individuals. It is not a public tax but a private tax publicly enforced.
DBx: Costumed in the (often garish) finery of ‘official public policy,’ tariffs (and subsidies) appear to naive eyes to be something grander than theft carried out by government officials for the benefit of politically influential groups. But theft is what these policies are, for there is no plausibly legitimate justification for such policies as ones that are likely to promote acceptable collective purposes.
You show me a tariff (or subsidy) and I’ll show you a thief, albeit one who –

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Bonus Quotation of the Day…

4 days ago

… is from page 243 of my Mercatus Center colleague Dan Griswold’s excellent Cato Journal review of Oren Cass’s 2018 book, The Once and Future Worker:
Ultimately, the book’s emphasis on production over consumption reflects a common mistake that can easily warp public policy. Of course, production is a prerequisite of consumption, but consumption is the ultimate aim of production. Production detached from consumption is a form of servitude. If goods and services become more expensive because of restrictions on trade and competition, real wages will be reduced for tens of millions of American households. To favor the producer over the consumer is a recipe for cartels, cronyism, inefficiencies, and exploitation.
DBx: Yes. Dan’s point is vital.
And even more fundamentally: consumption,

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Pittsburgh Tribune-Review: “Made blue by green initiatives”

4 days ago

In my column for the May 23rd, 2008, edition of the Pittsburgh Tribune-Review I explained why I am not taken in by ‘green’ initiatives such as buying local and driving an electric automobile. It’s better, of course, that such initiatives be voluntary rather than – as is too often the case – imposed by government. But the intellectual and economically uninformed hubris that nevertheless motivates proponents of even voluntary ‘green’ initiatives is disturbing. You can read my explanation beneath the fold.

Made blue by green initiatives
My wife, Karol, shares my deep appreciation for the creative powers of people operating in free markets as well as my skepticism of politics. She and I see very much eye to eye.
On some matters, though, we disagree — not fundamentally, but more as a

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Quotation of the Day…

4 days ago

… is from page 346 of Matt Ridley’s important 2010 book, The Rational Optimist:
The future will feature ideas that are barely glints in engineers’ eyes right now – devices in space to harness the solar wind, say, or the rotational energy of the earth; or devices to shade the planet with mirrors placed at the Lagrange Point between the sun and the earth. How do I know? Because ingenuity is rampant as never before in this massively networked world and the rate of innovation is accelerating, through serendipitous searching, not deliberate planning. When asked at the Chicago World Fair in 1893 which invention would most likely have a big impact in the twentieth century, nobody mentioned the automobile, let alone the mobile phone. So even more today you cannot begin to imagine the

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Another Open Letter to Oren Cass

5 days ago

Mr. Oren CassAmerican Compass
Oren:
Reporting on the launch of your new organization, American Compass, the Washington Post quotes you as accusing libertarian free-market advocates of believing “that whatever policies are best for shareholders in the short run are the best policies and will eventually be good for everyone else also.”
Nice sound bite. After all, every sensible person understands that an economics that attends only to the interests of one relatively small group of people (shareholders) – and then only to that group’s immediate interests – is nonsense that is unlikely to yield policy recommendations that promote the well-being of everyone over the long-run.
The trouble, however, is that the economics that you trot out as the demon that you and your organization will slay

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Some Links

5 days ago

In a new paper, my Mercatus Center colleague Dan Griswold busts several myths about American workers, globalization, and automation. Here’s the abstract:
It is often asserted that, for most American workers, real wages and incomes have been “stagnant” for decades, but evidence shows that the large majority of US workers are better off today than in past decades. Increased trade, globalization, and technological innovation have helped to raise wages and incomes. US economic policy should not aim to regulate or slow a dynamic labor market, but instead to help the minority of American workers who have been displaced or more permanently disconnected from the labor force. Policy initiatives should focus on upgrading the skills of US workers, promoting mobility, eliminating

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Quotation of the Day…

5 days ago

… is from pages xv-xvi of Geoffrey Brennan’s, Hartmut Kliemt’s, and Robert Tollison’s “Foreword” to The Logical Foundations of Constitutional Liberty (1999), which is volume 1 of The Collected Works of James M. Buchanan (original emphasis):
More specifically, public choice stands in vivid contrast both to the naively optimistic “benevolent despot” model of politics that implicitly inhabits most conventional economic analysis of public policy and to the tradition in political theory that views politics as the search for the “true,” the “good,” the “beautiful” in total isolation from the feasible. Public choice is an attempt, quite literally, to conduct political analysis in a way that is shorn of romantic illusion.
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Americans’ Shocking Prosperity

6 days ago

In my latest column for AIER I return again to the theme of the extraordinary material wealth of ordinary Americans, with a specific application near the end to the so-called “China shock.” A slice:
Consider, for example, the much-noted reduction over recent decades in Americans’ geographic mobility. This reduced mobility is said to be a major reason why increased trade with China inflicted on Americans what is now known as the “China shock” – namely, a slower than expected adjustment of American workers to increased imports of goods from China. (There is, by the way, some confusion about exactly what the “China shock” finding is. Some people interpret this finding in the manner in which I describe it in the previous sentence. Yet other people interpret it to be a finding that

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Pittsburgh Tribune-Review: “Heat and light”

6 days ago

In my January 28th, 2008, column for the Pittsburgh Tribune-Review I responded to a criticism by Joe Kennedy of this earlier column of mine. You can read my response to Mr. Kennedy beneath the fold. (This column, and the Kennedy piece to which I respond, are not available on-line.)

Heat and light
Former U.S. Rep. Joe Kennedy took issue on these pages with my objections to his “Joe for Oil” campaign (“The poor among us,” Jan. 18). Mr. Kennedy complains that I’m insensitive to the plight of poor Americans who cannot afford to heat their homes. And he defends his association with Venezuela’s socialist strongman, Hugo Chavez, as a morally appropriate means of helping him help poor Americans.
I do not doubt that many Americans are poor — some very poor — by American standards. And I

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Quotation of the Day…

6 days ago

… is from page 109 of my late Nobel laureate colleague Jim Buchanan’s 1980 paper “Rent Seeking and Profit Seeking” as this paper is reprinted in volume 1 of The Collected Works of James M. Buchanan: The Logical Foundations of Constitutional Liberty:
Rent-seeking activity is directly related to the scope and range of governmental activity in the economy, to the relative size of the public sector.
DBx: And, therefore, the larger the government, the larger are rent-seeking’s distortions and wastes.
…..
When anyone calls for any extension of government’s role in the economy, that person necessarily is calling for more resource-allocation decisions to be made by the state and correspondingly fewer such ‘decisions’ to be made by the spontaneous order of markets. Yet unlike economic actors

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Bonus Quotation of the Day…

7 days ago

… is from Deirdre McCloskey’s “penultimate” contribution to her Pairagraph exchange – titled “Milton Friedman and the Liberal Promise of Broad Prosperity” – with Binyamin Appelbaum:
Mr. Appelbaum says, “the marketplace is not a state of nature.” Yes it is. All humans trade, from about age eight on. The earliest evidence of trade comes from the Blombos Cave in South Africa, 70,000 years ago.
The market, he says, “is an artifact of society.” Sure, but so is art and language and journalism.
“There is no ‘spontaneous order,’” he asserts—with sneering scare-quotes against the absurdity of the very idea that free adults could accomplish anything without coercion—as though art and language and journalism were not also spontaneous orders.
“Markets must be constituted, the rules must be

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Some Links

7 days ago

My intrepid Mercatus Center colleague Veronique de Rugy laments the U.S. government’s on-going fiscal shenanigans. A slice:
Now there is nothing historic about Mr. Trump’s making his budget look good by using fantastical assumptions. All presidents perform this theatrical trick. For instance, no president ever projects that the economy will experience a slowdown in the next ten years of the budget window even though, on average, the economy slows down every 7 years.
“The Battle to Feed All of Humanity Is Over. Humanity Has Won” – So writes Marian Tupy.
Alberto Mingardi is rightly dismayed by Pope Francis’s appalling economic ignorance. (I’m not a Roman Catholic – or, indeed, a believer in any religion – but if I were a member of the Pope’s church I would pray fervently that Francis’s

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Quotation of the Day…

7 days ago

… is from page 51 of my late Nobel-laureate colleague Jim Buchanan’s 1978 paper “From Private Preferences to Public Philosophy,” as this paper is reprinted in James M. Buchanan, Politics as Public Choice (2000), which is volume 13 of the Collected Works of James M. Buchanan; the original published version of this paper is available here):
Little or none of the empirical work on regulation suggests that the pre-public choice hypotheses of regulation in the “public interest” is corroborated.
DBx: More than four decades later this observation remains descriptive.
This reality is – or ought to be – unsurprising. Everyone who graduates from kindergarten understands that incentives matter: if the ease of gaining at the expense of strangers rises relative to the costs of seeking such gains,

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Pittsburgh Tribune-Review: “Joe & Hugo: Oily characters”

8 days ago

My Pittsburgh Tribune-Review column for January 13th, 2008, was inspired by hearing a radio ad featuring Joe Kennedy praising Hugo Chavez. This column appears in full beneath the fold. (Other than below, this column is not available on-line.)

Joe & Hugo:Oily characters
A few days ago while driving my car I heard a radio commercial that caused me to doubt my sanity. Perhaps I was imagining things. So I called my wife to tell her what I might (or might not) have heard.
“Oh, yes,” she replied. “I heard that, too.”
So I wasn’t imagining things.
The commercial featured a man’s voice telling us how, while many Americans enjoy the wintertime because of all the great winter sports, too many Americans suffer cruelly. These poor Americans cannot afford to heat their homes; they must hang

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Quotation of the Day…

8 days ago

… is from page 54 of Razeen Sally’s excellent 2008 book, New Frontiers in Free Trade: Globalization’s Future and Asia’s Rising Role (footnote deleted; link and emphasis added):
The naysayers, from the hard and soft Left, and the conservative Right, hold that liberalization has not delivered the goods. They argue for various forms of government intervention, at national and international levels, to tame “market fundamentalism” and “neoliberal globalization.” Interventionist ideas on trade (and aid) are not new; they hark back to pre-Adam Smith, “preanalytic” mercantilism (as Schumpeter called it). What they have in common is an age-old distrust of markets and faith in government intervention – what David Henderson calls “New Millennium Collectivism.” Such collectivist thinking is on

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Bonus Quotation of the Day…

9 days ago

… is from page 7 of the late Charles Schultze’s sadly still relevant Fall 1983 Brookings Review article, “Industrial Policy: A Dissent”:
The first problem for the government in carrying out an industrial policy is that we actually know precious little about identifying, before the fact, a “winning” industrial structure. There does not exist a set of economic criteria that determine what gives different countries preeminence in particular lines of business. Nor is it at all clear what the substantive criteria would be for deciding which older industries to protect or restructure.
DBx: This point – so simple, so obvious, and so important – is nevertheless completely ignored by Marco Rubio, Oren Cass, Daniel McCarthy, and other advocates of industrial policy. Industrial-policy advocates

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Anti-Antitrust

9 days ago

In response to Farhad Manjoo’s bizarre column in yesterday’s New York Times – a column in which Manjoo complained that Amazon serves consumers so well that the general public isn’t much interested in using antitrust to break it up – my Mercatus Center colleague Bob Graboyes sent me the following note by e-mail (which I share with his kind permission):
I knew an antitrust economist long ago who told me about a landmark case in which he had some involvement. The accusation was that Xerox was monopolizing the copier market. The investigation dragged out for a while, and by the time the government’s antitrust authorities geared up for litigation, one of the first things they did was solicit competitive bids from various copier manufacturers.
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Pittsburgh Tribune-Review: “A better brew for Rwanda”

9 days ago

In my Pittsburgh Tribune-Review column of November 20th, 2007, I wrote about the pacifying consequences of commerce. You can read my column beneath the fold. (Other than below, this column is not available on-line.)

A better brew for Rwanda
Americans are used to hearing bad news from Africa: The fighting in Darfur, corruption in oil-producing countries and the HIV/AIDS epidemic in southern Africa are just a few examples. These problems are real and they deserve our attention.
But something else in Africa deserves our attention and that is Africa’s good news. In some parts of the long-suffering continent, good things are happening and too few people, in Africa and elsewhere, know about them. Consider Rwanda. For many Americans this small, land-locked country is the very image of all

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Some Links

9 days ago

David Henderson joins in in setting the record straight about Milton Friedman’s ideas and influences.
My intrepid Mercatus Center colleague Veronique de Rugy continues rightly to lament Trump’s and Congress’s fiscal incontinence.
Veronique also appropriately pokes fun at Farhad Manjoo’s incredibly bizarre complaint about Amazon.
Some things never change – including the unfounded fear that today’s large and successful firms somehow, unlike any firms in the past, will grab and maintain monopoly power that will last long into the future.
Eric Boehm reports on yet another bad idea from the Trump administration.
John Miltimore reveals the latest instance of economically idiotic ‘thinking’ about the minimum wage.
Steve Landsburg is rightly perturbed by politicians’ arrogance and apparent

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Quotation of the Day…

9 days ago

… is from page 74 of my late Nobel laureate colleague Jim Buchanan’s pioneering February 1962 article in Economica “Politics, Policy, and the Pigovian Margins,” as this article is reprinted in volume 1 of The Collected Works of James M. Buchanan: The Logical Foundations of Constitutional Liberty:
The almost universal neglect of the imperfections that might arise from the political attempts at applying the economists’ efficiency criteria represents a serious deficiency in the work of welfare economists and economists generally. To shy away from considerations of the politically feasible has been deemed an admirable trait, but to refuse to exams the politically possible is incomplete scholarship.
DBx: This problem with economics scholarship hasn’t much improved over the course of the 58

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Bonus Quotation of the Day…

10 days ago

… is one to which Oren Cass, Daniel McCarthy, and other enthusiasts for protectionism and industrial policy should pay attention; it is from pages 68-69 of Chapman University’s Bas Van Der Vossen’s and Georgetown University’s Jason Brennan’s 2018 book, In Defense of Openness (original emphasis; footnote deleted):
However, it’s one thing to say that in principle such protectionist measures could pay off. It’s quite another to say that in the real world, we should pursue them. One problem here is that we face serious epistemic barriers. While on the blackboard we can describe infant-industry protection working to a country’s advantage, in the real world we aren’t well equipped to know which infant industries are worth protecting, how much protection they should have, when those

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