Editor, Roll Call: Tom Udall and 42 other incumbent U.S. senators propose a Constitutional amendment with the following key provision: “To advance the fundamental principle of political equality for all, and to protect the integrity of the legislative and electoral processes, Congress shall have power to regulate the raising and spending of money and in-kind equivalents with respect to Federal elections, including through setting limits on (1) the amount of contributions to candidates for nomination for election to, or for election to, Federal office; (2) the amount of funds that may be spent by, in support of, or in opposition to such candidates” (“Senate Democrats Begin Efforts to Amend Constitution,” June 6). Never mind that this amendment strikes at the heart of the First amendment values of freedom of speech and freedom of petition. Focus instead on the fact that, if ratified, this amendment would create far greater political inequality and eat like a cancer at electoral processes. It would do so by shielding incumbent politicians from competition. Suppose that Ford, Toyota, Volkswagen, and other of today’s successful automakers seek, and get, the power to regulate the raising and spending of money and in-kind equivalents with respect to auto advertising. Do you think that these incumbent automakers — whose brands are currently established and well-known — would never be tempted to use this power to protect themselves from the competition of upstart automakers? Would you take at face value all the fine rhetoric from these incumbent automakers about the need to protect members of the car-buying public from being overwhelmed and misled by expensive and glitzy ads? And would you be confident that allowing incumbent automakers to regulate spending on auto ads and on sales campaigns would improve the quality of competition among automakers and heighten these firms’ responsiveness to the ‘true’ demands of the car-buying public? I suspect that most people would correctly see such an effort by incumbent automakers as being a scheme to restrict competition — a scheme that would benefit incumbent automakers and make them less responsive to the general public. It’s astonishing, therefore, that so many people continue to believe that the very same such scheme by incumbent politicians is a noble endeavor to improve political competition — an endeavor that, we are assured, will make politicians more responsive to the general public. Sincerely, Donald J. Boudreaux Professor of Economics 10 June 2014 * * * Dear Professor Krugman: On your blog today you document that the percentage of Americans without health insurance has fallen since Obamacare kicked in. You conclude that “This is what success looks like.” You miss the point of Obamacare’s most careful critics. None of these critics denies that government can successfully use a mix of regulations, taxes, and subsidies to effectively mandate an increase in the number of Americans who have health-insurance policies. Instead, the real concern is that Obamacare will either diminish the quality or the accessibility of actual health-care provision (rather than of health insurance) or that the costs of the extra health-care provision made possible by Obamacare — costs reckoned as the value of other goods and services sacrificed as a consequence — will be excessive. Government’s success at mandating that more people have health insurance (or ‘better’ health insurance) no more implies that people thereby have better health care than would, say, government’s success at mandating that more people have jobs imply that people thereby have a higher standard of living. Sincerely, Donald J. Boudreaux Professor of Economics George Mason University 9 June 2014 * * * Program Director, 1010 WINS Radio New York City. Dear Sir or Madam: You reported during today’s 11:00am hour that citizens of Utah are upset that the number of wild horses now being rounded up by the U.S. Bureau of Land Management is too few to protect the environment. In response, the BLM explains that its budget is too tight to justify spending additional sums to round up more horses. An easy solution is available: politicians can simply declare that additional expenditures on horse round-ups are worthwhile. After all, President Obama teaches us that government can make additional expenditures by businesses on employing low-skilled workers worthwhile simply by raising the minimum wage (that is, by government declaring that all low-skilled workers are now worth whatever wage government declares these workers to be worth). In light of this “Progressive” economics lesson, therefore, there’s every reason to believe that government can make additional expenditures by the BLM on rounding-up more horses worthwhile simply by declaring that these additional expenditures are worthwhile. It’s really quite simple! So let’s have no more ‘neigh’-saying by those who deny that government can use incantations to miraculously raise the market values of whatever economic activities government wishes to raise. Sincerely, Donald J. Boudreaux 22 May 2014 * * * Editor, USA Today Dear Editor: Air Line Pilots Association president Lee Moak opposes Norwegian Air International’s effort to operate in the U.S. (“Why the U.S. must deny NAI,” May 19). Overlook Mr. Moak’s mistaken assumption that foreign competition is harmful if it destroys domestic jobs. Focus instead on his report that the ocean-freight industry “employed in 1960 more than 100,000 people here but less than 2,500 today.” True. But contrary to Mr. Moak’s claim, this fact does not support his call to block foreign rivals today from competing for U.S. air passengers. The reason is that the vast majority of those maritime jobs were destroyed not by foreign competition but by technological improvements – most notably, the advent of container shipping. The results are impressive. Not only has the tonnage of freight shipped into and out of U.S. ports more than quadrupled since 1960, but the average amount of freight handled annually by each U.S. maritime worker has skyrocketed from 3,393 tons in 1960 to 591,840 tons today.* If Mr. Moak really wants to protect employment in the U.S. aviation industry, he should ignore the relatively small effects of foreign competition and instead spend his time trying to prohibit the use of jumbo jets. Indeed, if he is correct in his assumption that economic forces are to be judged by how many jobs they create, Mr. Moak should demand legislation that prohibits commercial airlines from having any planes in their fleets larger than, say, the 50-seat Embraer 145. Think of all the piloting jobs we’d have then. Sincerely, Donald J. Boudreaux Professor of Economics May 19 2014 * * * Ms. Gloria Farrar Dear Ms. Farrar: Thanks for e-mailing to me your thoughts on Thomas Piketty’s “Capital in the Twenty-First Century.” I have indeed read the book carefully. I do not, however, share your impression that Piketty has “proved that increasingly the riches [of the super-wealthy] are unmerited and dangerous” to society at large. I’m now writing a review of Piketty’s volume. In that review I’ll cover many of my objections more fully. I’ll send to you a link to the review when it’s published (probably in late May or early June). But to make here one substantive point, let me ask you to look at the most recent (September 2013) Forbes list of the 400 wealthiest Americans.* From Bill Gates at the top to Nicholas Woodman at the bottom, all are billionaires. Yet 261 of these people are self-made. That is, nearly two-thirds earned their fortunes through creative entrepreneurial effort and risk-taking — people such as Amazon.com’s Jeff Bezos, Google’s Sergey Brin and Larry Page, Facebook’s Mark Zuckerberg, eBay’s Pierre Omidyar, and entertainer Oprah Winfrey. These people’s efforts enrich not only themselves but also you, me, and hundreds of millions of other people. I’m aware that Piketty dismisses such claims as being crude apologetics, but I challenge you — and him — to explain how, say, Chick-fil-A founder S. Truett Cathy amassed a large fortune if the countless people who voluntarily dine at his restaurants do not benefit from doing so. Also note that many of the superrich who aren’t self-made — many who began with lots of wealth — nevertheless continue, like Charles Koch, to work hard to further enhance their wealth through entrepreneurial creativity, effort, and risk-taking. This Forbes list supplies powerful evidence against Piketty’s notions that large fortunes in market economies overwhelmingly generate themselves automatically and that today’s superrich are parasitic and idle rentiers. Sincerely, Donald J. Boudreaux Professor of Economics May 8, 2014 * * * Dear Mr. the Aaron: Thanks for sending me Robert Reich’s blog post detailing his case for raising the minimum wage. You read Reich’s argument as “settling the issue” in favor of raising the minimum wage; I read only a torrent of internal contradictions and economically uninformed nonsense. I’ve no inclination to address each of his seven points. I’ll content myself here to expose just one example of Reich’s penchant for poor reasoning – an example so stunning that it should discredit everything the man says about any matter touching on economics. Reich writes that “A $15/hour minimum is unlikely to result in higher prices because most businesses directly affected by it are in intense competition for consumers, and will take the raise out of profits rather than raise their prices.” Reich is correct that businesses are in intense competition for consumers. What he misses, however, is the fact that, precisely because of this intense competition, businesses have none of the excess profits that Reich presumes will be tapped into to pay the higher mandated wages. This error exposes Reich’s inability to grasp even the most elementary economic concepts. Intense competition eliminates excess profits; with no excess profits firms cannot, contra Reich, simply pay workers higher wages. Firms instead must respond to a higher minimum wage by some combination of hiring fewer low-skilled workers, working their remaining low-skilled workers harder and reducing these workers’ non-wage pay, and charging higher prices for their outputs. The fact that Reich misses this reality — the fact that he does not understand that intense competition ensures that firms cannot possibly react to a higher minimum wage by tapping into their profits — tells any thinking person all that he or she needs to know about Reich’s analytical skills. Sincerely, Donald J. Boudreaux Professor of Economics April 11, 2014

* * *

Editor, The New York Times: You report that “[t]he president … reiterated that it was ‘an embarrassment’ that women on average earn 77 cents for every dollar men make” (“Obama Signs Measures to Help Close Gender Gap in Pay,” April 8).

Because our President is such a smart man, we cannot doubt that he is correct to explain pay differences across broad groups of workers (such as “men” and “women”) as resulting from unjust discrimination against members of the lower-paid groups. But our smart President (no doubt because of his super-busy schedule) missed an instance of even greater pay inequity: that between young workers and older workers. Bureau of Labor Statistics data show that workers aged 16-24 make only 54 cents for every dollar earned by workers 25 and older. It’s embarrassing that our nation tolerates such discrimination.

Free-market ideologues will excuse this grotesque difference in pay with assertions such as “young workers aren’t as productive as older workers.” But our smart President isn’t fooled by these corporate apologetics. He understands that worker pay is set arbitrarily by firms run by executives with biases against people who are not like them — biases so deep and powerful that each of these executives willingly sacrifices the extra profits that could be made by offering to hire, at slightly higher pay, underpaid women away from rival firms.

Because Mr. Obama knows that worker pay is determined by employers’ whims and prejudices, he will understand that the only sensible explanation for the disgracefully low pay of young workers is discrimination against those workers. And so I look forward to our President signing executive orders aimed at closing this shameful pay gap.

Sincerely,

Donald J. Boudreaux

Professor of Economics

April 8, 2014

* * *

Editor, Washington Post

1150 15th St., NW

Washington, DC 20071

Dear Editor:

George Will writes that “tax simplification would reform politics by shrinking opportunities for transactions between private factions and the political class. This class confers favors as much with the tax code as with appropriations. ‘You can drain the swamp,’ says [Sen. Ron] Wyden. ‘They did it in ‘86’” (“A tax reformer’s uphill push,” April 6).

Alas, matters are more complicated.

In 1986 Milton Friedman, my late Nobel-laureate colleague Jim Buchanan, and many other economists, while applauding the tax simplification enacted that year, pointed out that it was politically feasible only because by the mid-1980s the tax code had become so flooded with fiscal favors dispensed to special-interest groups that there was little room left for politicians to dispense any further such favors. So politicians drained the swamp. They did so, however, not to shrink opportunities for them to exchange political favors with private factions, but to make such exchanges once again easy and profitable. The swamp was drained, in short, only so that it could be refilled with the foul water and stench of interest-group politics.

This reality is no argument against tax simplification, but it does counsel realism about the motives of politicians who seek it and about the permanence of that simplification.

Sincerely,

Donald J. Boudreaux

5 April 2014

* * *

Editor, The New Yorker:

John Cassidy’s review of Thomas Piketty’s “Capital in the Twenty-first Century” is insufficiently critical (“Forces of Divergence,” March 31). Here are two examples.

First, by repeatedly describing the incomes of the rich as being “taken” and “took,” Mr. Cassidy misleadingly suggests that income is a fixed-size pie. Why not, instead, describe incomes more accurately, as being “produced” and “earned”? (It’s true that some high incomes are gotten illegitimately, but surely no society can be as prosperous as ours if most high-income earners are economic predators rather than producers.)

Second and relatedly, Mr. Cassidy accepts Mr. Piketty’s explanation that a major cause of today’s rising incomes of the rich is corporate-oligarchs’ habit of simply giving each other high salaries and lucrative stock options. But if such payments serve no purpose other than to perpetuate the oligarchy, it’s very difficult to explain the rising market value of the capital that Mr. Piketty believes to play such a central role in driving increasing inequality. A more likely explanation for patterns of executive compensation is that these salaries, bonuses, and stock options are designed, generally successfully, to incent corporate managers to improve their firms’ efficiencies and to keep their firms innovative. One result, in turn, is a growing economic pie and greater prosperity for nearly everyone.

Sincerely,

Donald J. Boudreaux

Professor of Economics

27 March 2014

* * *

Editor, New York Post: Kudos to Linda Chavez for criticizing the anti-immigrant stance of many conservatives (“Minimum wage: Righties gone mad,” March 22). It’s worth pointing out, though, that unlike the egregious Ann Coulter – whose economics are as faulty as her ethics – Ron Unz gets his economics right.

Mr. Unz calls for raising the minimum wage because he correctly understands that a higher minimum wage will price a disproportionately large number of immigrants out of jobs. While his goal is indefensible, his economics is sound. Mr. Unz reminds me of an Auburn University undergraduate student back in 1982 who, when asked on an exam about the minimum wage, expressed strong support for that legislation precisely becauseit makes it harder for blacks to compete with whites for jobs.

Sincerely,

Donald J. Boudreaux

Professor of Economics

22 March 2014

* * *

Editor, Wall Street Journal: Air Line Pilots Association International president Lee Moak, attempting to excuse his organization’s efforts to stymie competition, resorts to the tried-and-untrue legerdemain rehearsed by all rent-seekers (Letters, March 20). First he proclaims his enthusiasm for competition. Then he immediately reveals his proclamation to be false by asserting that government must thwart his rivals because they have “an unfair competitive advantage.”

Capt. Moak forgets that competition is not about fairness or unfairness for suppliers. Markets and competition are about serving consumers. Period. Suppliers are valuable only because, if, and as long as they serve consumers in ways that consumers themselves – rather than politicians or the suppliers – judge best. The “unfair competitive advantage” here is not, therefore, one enjoyed by the foreign supplier that Capt. Moak seeks to prevent from serving American consumers; it is, instead, the privilege of being protected from competition that he himself seeks for his union members at the expense of those consumers.

Sincerely,

Donald J. Boudreaux

Professor of Economics

20 March 2014

* * *

Editor, Washington Post

1150 15th St., NW

Washington, DC 20071

Dear Editor:

Richard Cohen rightly defends charter schools against greedy teachers’ unions (“Illogical hostility toward charter schools,” March 18). In the process, though, he gratuitously condemns a useful financial practice, asking snarkily “tell me again what’s moral about short-selling stock.”

Short selling (like long buying) causes asset prices to reflect underlying economic realities better and more quickly than they otherwise would. Still, many people object to short selling because short sellers borrow the assets that they then sell today – that is, that they then exchange today for some other assets. But if this practice is immoral, then the practice of many American homeowners in the 1970s and 1980s of taking out larger mortgages in anticipation of higher inflation was also immoral.

If you borrow more money today only because you anticipate a rate of inflation that makes the interest payments a bargain, you are shorting an asset (namely, money). And your hope – like that of all short sellers – is to profit from the decline you expect in the market value of the borrowed assets (here, dollars); your hope is to repay your creditor with assets that will be worth much less at the time of repayment than they were worth when you borrowed them and then exchanged them for another asset (here, a house). So unless Mr. Cohen also condemns people who borrow money in anticipation of higher inflation, he has no business condemning short sellers of any other assets.​

Sincerely,

Donald J. Boudreaux

Professor of Economics

18 March 2014

* * *

Programming Director, WTOP Radio, Washington, DC. Dear Sir or Madam: Dear Sir or Madam: Kate Ryan reports that preservationist Mary Rowse, in an effort to prevent a homeowner from tearing down a 100-year-old house in Chevy Chase, is “collecting signatures from passersby” (“Neighborhood organizes against home ‘tear-down,’ March 10).

Ms. Rowse is collecting cheap currency. She should instead be collecting cash. Only if she buys the house from its current owner – someone who pursues his preferences by spending his own money – will we have solid evidence that Ms. Rowse and the passersby truly value the preservation of this house more than its current owner values the prospect of replacing it with a newer home.

Sloganeering and signatures are easy and lay no skin in the game. Ms. Rowse and those who claim to share her preferences should put their money where their pens are.

Sincerely,

Donald J. Boudreaux

Professor of Economics

March 10, 2014

* * *

Editor, Washington Post

1150 15th St., NW

Washington, DC 20071

Dear Editor:

George Will writes that “The idea that politicians should write laws restricting people critical of them is as perverse as the idea that the sprawling, opaque IRS bureaucracy should be assigned to construe and apply such laws” (“The IRS’s behavior taxes credulity,” March 9). Perverse indeed, yet entirely predictable. The notion that politicians will give birth to apolitical government agencies is as fanciful as is the notion that tigers will give birth to bunny rabbits.

Sincerely,

Donald J. Boudreaux

Professor of Economics

George Mason University

March 8, 2014

* * *

Editor, Baltimore Sun

Dear Editor:

Flaws aplenty infect Peter Morici’s dismissal of the value and prospects of Bitcoin (“The Bitcoin myth,” March 4). None, however, is as uninformed as is his claim that “[d]etractors of paper money have always been fixated by the absence of gold to back it up, but they fail to recognize what really makes a currency accepted and secure — the government guarantee and the good sense of the sovereign not to abuse its franchise.”

Forget the many historical instances of the sovereign debasing the coinage and unleashing ​hyperinflation — from Nero in ancient Rome to Mugabe in modern Zimbabwe. Look instead only at the relatively stable U.S. dollar. During the 34 years of the classic — gold — standard era in the U.S. (1880-1914), the dollar lost only 3 percent of its value. In contrast, during the past 34 years (since 1980) the dollar has lost 65 percent of its value. Even more revealingly, since the 1913 creation of the Federal Reserve — an institution designed and operated by Uncle Sam allegedly to maintain the purchasing power of the dollar — the dollar has lost 96 percent of its value.

Contrary to Prof. Morici’s claim, “sovereign” control of money, unrestrained by gold convertibility or other such safeguards, has been anything but a guarantee of stable money.

Sincerely,

Donald J. Boudreaux

Professor of Economics

* * *

Mr. Jack Burkman

Burkman LLC

Washington, DC

Dear Mr. Burkman:

Your P.R. firms just e-mailed to me the announcement of your endorsement of the so-called “The American Decency Act of 2014” — a piece of legislation that, if passed, would ban the National Football League from employing openly gay players.

I’ve got an idea for a better Act: “The Mind Your Own Business Act of 2014.” If passed, private citizens — including, of course, N.F.L. owners, coaches, and players — would be authorized to ignore you and other busybodies. Under my Act, private adults would be free to hire, fire, marry, live with, play with, play against, and generally to associate with whomever they choose on whatever terms they find mutually agreeable without having to worry that their voluntary interactions will be disrupted by the indecent pestering and obstructiveness of presumptuous intermeddlers such as yourself.

My Act, in short, would promote genuine decency in America.

Sincerely,

Donald J. Boudreaux

Professor of Economics

George Mason University

* * *

Editor, Seattle Times:

Mike O’Brien and Rick Stolz — upset that new suppliers of taxi services are operating in Seattle without government’s blessing — assert that “multimillion-dollar corporations unleashed their services without seeking permission” (“Looking out for immigrant drivers in new taxi, Uber, Lyft laws,” Feb. 13).

Messrs. O’Brien and Stolz are mistaken. While these new taxi suppliers might not have sought permission from government, they most certainly did seek permission from the people who matter: consumers.

And not only did suppliers of these new taxi services seek such permission from the people, their success proves that they also got that permission – permission that, because it is given by people who actually use the services and pay for them with their own money, is far more real and relevant than is any ‘permission’ bestowed by politicians and bureaucrats.

Sincerely,

Donald J. Boudreaux

Professor of Economics

* * *

Editor, Washington Post
1150 15th St., NW
Washington, DC 20071

Dear Editor:

You report that Jason Furman, Chairman of the Council of Economic Advisors, recently “displayed a chart showing how food stamps and other social programs had lowered poverty dramatically over the past half century…. But the graph also showed that the economy itself had done nothing for the poor: Only government dollars had” (“Economist Jason Furman is the wonkiest wonk in the White House,” Feb. 13).

Whatever the consequences of government welfare programs, Mr. Furman is mistaken to assert that, over the past half century, “the economy itself had done nothing for the poor.”

Here’s a link to a 2008 article with its own charts.* Figure 2 shows that the percentage of poor American households in 2005 to have refrigerators, stoves, color televisions, air conditioning, and automatic dishwashers is higher than was the percentage of all American households in 1971 to have these amenities. And my own research suggests an important reason for this happy fact: the amount of time that ordinary (“non-supervisory”) workers must work in order to earn enough income to buy these (and many other) products is today
much lower than it was decades ago.

For example, to buy a 22 cubic feet refrigerator-freezer, such a worker in 1975 had to toil for 140 hours. To buy the same size refrigerator-freezer today, the typical American worker must work only 52 hours. To buy a 30” electric range and oven cost the typical American worker in 1975 125 hours of work; today such a range and oven costs the typical American worker only 21 hours of work.

Similar reductions in work-time costs have occurred for food, clothing, and countless other goods and services — a trend that is strong evidence that “the economy itself” continues to improve the living standards of middle-income and poor Americans.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

* W. Michael Cox and Richard Alm, “How Are We Doing?” The American, July/August 2008:
http://www.american.com/archive/2008/july-august-magazine-contents/how-are-we-doing/

* * *

Editor, Washington Post

1150 15th St., NW

Washington, DC 20071

Dear Editor:

E.J. Dionne writes that “[F.A.] Hayek and [Ludwig von] Mises perceived little difference between democratic governments that used their power to plan against recessions and dictatorships that did the same thing. In this view, the policies of Franklin Roosevelt led down what Hayek called the ‘Road to Serfdom’ and were thus objectively comparable to those of Hitler or Stalin” (“An economic school has led to gridlock in Washington,” Feb. 10).

Not so. Instead, Hayek argued (in his 1944 book, The Road to Serfdom) that individual freedom will inevitably be snuffed out IF government insists on centrally planning the economy in the way demanded by many socialists of the era, or IF government attempts to protect every producer and worker from the forces of market competition. The argument is neither that the slightest overreach by government dooms society to totalitarianism, nor that all unwise interventions such as those of the New Deal are “objectively comparable” to the tyrannies unleashed by Hitler or Stalin.

Hayek and Mises were certainly not New Dealers. But for Mr. Dionne to caricature their warning that freedom cannot survive IF the economy becomes overwhelmingly politicized as a claim that the slightest bit of politicization is “objectively comparable” to Nazism and Soviet communism is absurd. Mr. Dionne’s caricature of these scholars’ works is evidence that he writes about what he does not know.

Sincerely,

Donald J. Boudreaux

Professor of Economics

George Mason University

* * *

Editor, Wall Street Journal

1211 6th Ave.
New York, NY 10036

Dear Editor:

Consider two items in today’s news. The first is the Journal’s own report that “politics often complicates the task of wringing savings from the U.S. military budget. Lawmakers, facing pressures from defense contractors and local communities, often oppose proposed cuts to military bases, aircraft and shipbuilding programs and weapons systems” (“Pentagon Drops Plan to Mothball USS George Washington Aircraft Carrier”). In short, politics corrupts military operations.

The second item is a Washington Post op-ed whose author, Henri Barkey, rightly criticizes Pres. Obama for nominating as U.S. ambassador to Norway a man who knows nothing of diplomacy or of Norway. The wannabe ambassador’s only ‘qualification’ is that he bundled lots of political contributions to help Mr. Obama win reelection. In short, politics corrupts diplomatic operations.

So I’ve some questions for my conservative friends: Why do instances such as these not cause you to be as leery of government bureaucracies called “the Pentagon” and “State Department” as you are of government bureaucracies called “Federal Trade Commission” and “Environmental Protection Agency”? If ignorance and special interest politics routinely drive Uncle Sam’s domestic economic interventions, why do you think that such ignorance and special-interest politics only rarely drive Uncle Sam’s foreign interventions? Why do you trust venal and arrogant politicians — who so regularly screw up the domestic economy by unleashing, over here, Niagaras of taxpayer funds along with hordes of U.S. bureaucrats and tax collectors — to bring civility and prosperity to foreigners by unleashing, over there, Niagaras of taxpayer funds along with hordes of U.S. diplomats and soldiers?

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University

* *

5 February 2014

Editor, Salon

Dear Editor:

Jesse Myerson’s plea for communism is a torrent of historical errors and twisted reasoning (“Why you’re wrong about communism: 7 huge misconceptions about it (and capitalism),” Feb. 2). Here’s just one instance. Suggesting that art under communism would be better than under capitalism, he asserts that “most of the greatest art under capitalism has always come from people who are oppressed and alienated (see: the blues, jazz, rock & roll, and hip-hop).”

Overlook the questionable claim that most great artists under capitalism were oppressed and alienated. (Were Lennon and McCartney, Berry Gordy, Duke Ellington, Leonard Bernstein, and Andy Warhol truly “oppressed and alienated”? How about Jackson Pollock? Thomas Hardy? Ernest Hemingway? Lawrence Olivier? Raymond Loewy?) Focus instead on the critical reality that, in fact, there are countless great artists, and Niagaras of profound art, produced under capitalism. The same cannot be said for communism.

The reason is simple. Capitalism supplies artists not only with abundant materials and media for producing and sharing their works, but also with the freedom and personal space for them to create. In stark contrast, communism necessarily prohibits would-be artists from pursuing their muses. All means of production under communism are owned by the state, and, hence, remain off-limits to artists whose individual plans do not mesh with the central plan.

The nature of a central plan requires that the state regiment each individual to his or her assigned part in that plan. You can’t have a working central plan if everyone is free to choose his or her own job or free to produce whatever he or she fancies. If a longshoreman under communism wants instead to work full-time as a poet, too bad. He can’t. And if one of the state’s official poets wants to criticize the regime, too bad. She can’t — unless, of course, she’s prepared to be executed.

It’s astonishing that Mr. Myerson is blind to this reality.

Sincerely,

Donald J. Boudreaux

* * *

3 February 2014

Hon. Martin O’Malley, Governor
State of Maryland
Annapolis, MD

Dear Gov. O’Malley:

Reasoning that “[o]ur economy does best when our middle class is actually growing and thriving,” you today told attendees at a rally that you support a 39% hike in Maryland’s minimum wage. Contrary to the arguments of many economists who worry that raising the minimum wage prompts employers to hire fewer workers, you obviously believe that employers simply absorb higher mandated costs without changing their behavior.

So I’ve a question: If, as you believe, employers respond to higher mandated costs only by absorbing these costs rather than by changing their behavior to minimize their exposure to such costs, why are you confident that firms will pay the higher legislated minimum wage rather than pay the penalty specified for failure to do so?

You recognize that imposing costs — in the form of fines — on employers who disobey the legislation causes employers to adjust their behavior in order to minimize their exposure to the costs of fines. As a result, no firms pay workers wages below the legislated minimum. It’s odd, therefore, that you do not recognize that imposing costs — in the form of minimum wages — on employers causes employers to adjust their behavior in order to minimize their exposure to the costs of higher wages. In reality, just as raising firms’ costs of violating government regulations causes firms to commit fewer such violations, raising firms’ costs of employing low—skilled workers causes firms to employ fewer such workers.

If you think it’s silly to suppose that higher costs of employing workers reduces employment, then you must also think it’s silly to suppose that higher penalties for breaking the law reduces the amount of law breaking — and the latter proposition is one that you, as a government official, clearly do not think to be silly.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

* * *

26 January 2014

Editor, New Yorker

Dear Editor:

John Cassidy concludes his musings on the finding that income mobility in America hasn’t changed in recent decades with a warning: “Finally, the new study doesn’t mean that the effects of inequality aren’t more serious than they used to be. With inequality rising, particularly at the top, the rewards for clambering up the income distribution are greater, and so are the costs of getting stuck at the bottom” (“Social Mobility Hasn’t Fallen; What It Means and Doesn’t Mean,” Jan. 23). This warning is confusing.

If rising inequality does indeed mean that “the rewards for clambering up the income distribution are greater,” then we should expect more such clambering. In a market economy that means more work, more saving, more investing, more innovation. The results of this clambering might not yet appear in the data, but it’s strange that Mr. Cassidy thinks that the higher rewards for “clambering up the income distribution” are necessarily a problem.

Also, why does rising income inequality mean that the “costs of getting stuck at the bottom” are greater? Unless Mr. Cassidy assumes that Jones gets richer only by making Smith poorer (and surely no modern economics pundit would commit such a primitive error), why does Mr. Cassidy dismiss even the possibility that individuals’ absolute incomes can rise even if their relative incomes do not?

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030