Russell Roberts's Blog, page 1423
August 19, 2011
Selgin on Mellon, Harding, and Hoover
Here's George Selgin on the 1920-21 economic downturn in the U.S. His conclusion:
Proponents of Keynesian pump-priming often berate the Hoover administration for its "liquidationist" strategy for dealing with the outbreak of the Great Depression–forgetting that it was Hoover himself who caricatured Andrew Mellon, his Secretary of the Treasury, as someone who wished to "liquidate" the stock market, farmers, real estate, and so forth, and who took pride in not having followed his advice. But Mellon was also Harding's Secretary of the Treasury; and Harding, unlike Hoover, trusted him. It is one of the greater ironies of economic history that "liquidationist" policies, including government austerity, are blamed for prolonging a depression for which those policies were set aside, while being denied credit for perhaps helping to end one for which they really were put into practice.
It's What They Do
Here's a letter to the Washington Post:
Charles Krauthammer criticizes Pres. Obama for serving Americans nearly three years of lies, half-truths, ruses, and excuses ("Bad luck? Bad faith?" Aug. 19). These criticisms are justified. But Mr. Obama is not unique. Expertise at fraud and passing-the-buck is part of the job description. As Will Durant noted, "it is a lesson of history that men lie most when they govern states."
We are destined to suffer the insults and ill-consequences of such deception and excuse-making as long as holding high political office is attractive – which is to say, as long we continue to give such frauds power over our purses and our lives, and to regard the exercise of such power as an honorable occupation.
Sincerely,
Donald J. Boudreaux
August 18, 2011
Freedom for Surrogates
Here's a letter to the editor of tothesource:
Arguing against allowing women to be paid to be surrogate mothers, Jennifer Lahl asserts that "commercial surrogacy, whether done legally [or illegally] is still selling babies" ("Babies for Sale, Buyer Beware").
Not so.
Surrogate mothers are paid to assist infertile couples to have children. Each surrogate mother is compensated for choosing to give her time; for choosing to bear medical risks; and (if she still chooses after giving birth) for parting with her parental rights in the same way that each and every mother who gives her child up for adoption parts with her parental rights.
On the other side of each of these voluntary exchanges is a couple desiring a child so fervently that they willingly pay a large sum of money to a woman who helps them navigate around the curse of infertility. Most of these couples have already paid huge sums of money to infertility clinics in unsuccessful attempts to get pregnant – yet, rightly, no one calls the voluntary exchanges that couples have with infertility clinics "baby selling."
To label voluntary, mutually advantageous contracts between surrogate mothers and infertile couples "baby selling" is a grotesque mischaracterization, one that masks reality behind a blanket of hysteria.
Children brought into the world through surrogacy contracts are no more "sold" than are children brought into the world through infertility treatments. Why should couples for whom infertility treatments fail be denied the joys of parenthood if they and willing surrogate mothers voluntarily agree to terms that bring new human beings to life?
Sincerely,
Donald J. Boudreaux
Many years ago I held forth, in the Cato Journal, on the larger issue involved here.
Yet One More Reason Why I Refuse to Vote
It is the rare politician who doesn't disgust me. Michele Bachmann is not among those rare few.
The only wall I want to build is one that protects from the swarming hordes of politicians and government functionaries people who simply wish to be left alone to mind their own business.
Quotation of the Day…
… is one of Frederic Bastiat's incisive critiques of the nanny-state. It's found on page 435 of Frederic Bastiat, The Man and the Statesman: The Correspondence and Articles on Politics (Liberty Fund, 2011); it is from an essay that originally appeared in 1848, entitled "Laissez-faire":
This is simply absurd. Do you seriously have such faith in human wisdom that you want universal sufferage and government of all by all and then you proclaim these very men whom you consider fit to govern others unfit to govern themselves?
August 17, 2011
Quotation of the Day…
… is from page 527 of Will Durant's The Reformation:
[I]t is a lesson of history that men lie most when they govern states.
Open Letter to Mitt Romney
Dear Mr. Romney:
A blog-post by the Cato Institute's Sallie James links to a transcript of your appearance recently on the Greta van Susteren show on which you complained that Beijing pursues policies that make Chinese products less expensive than American products.
I overlook the fact that, because only 2.7 percent of Americans' personal consumption expenditures are on goods and services produced in China, 97.3 percent of the goods and services bought by American consumers obviously are less expensive to Americans than are Chinese-made equivalents.
Instead, let me here go to the heart of your argument and accept your presumption that party A harms party B if A offers to sell goods or services to B at prices lower than what it would cost B to produce those goods or services himself.
Accepting this presumption, I'm obliged to advise you that you can make yourself and your family better off by styling your own hair. Your current stylist obviously does a fine job – strong evidence in support of my suspicion that that stylist has pursued policies that make it less costly for you to use his or her styling services than it would be for you to design and maintain your coiffure yourself.
Clearly, you're being harmfully exploited.
By accepting my counsel that you style your own hair you will no doubt improve your well-being and, more importantly, demonstrate to voters that you're a man of your convictions – one who acts in the same ways that he proposes that other people act.
Sincerely,
Donald J. Boudreaux
Keynes, Krugman, and Texas
Here's a letter to the New York Times:
Unimpressed that wage flexibility creates jobs in Texas, Paul Krugman writes that "at a national level lower wages would almost certainly lead to fewer jobs" ("The Texas Unmiracle," August 15).
By asserting – for he has no evidence – that job growth in Texas comes at other states' expense, Mr. Krugman reveals his Keynesian confusion.
But he can be forgiven, for Keynes himself was deeply confused. While it's true that in some parts of the General Theory Keynes alleges that falling nominal wages won't increase overall employment, in other parts of that book – parts in which Keynes more carefully spells out his assumptions – he sings a different song. Consider Keynes's conclusion on this matter from page 253 in Chapter 18: "If competition between unemployed workers always led to a very great reduction of the money-wage level … there might be no position of stable equilibrium except in conditions consistent with full employment…. At no other point could there be a resting-place."*
Translation: "If wages are flexible, competition for jobs will reduce nominal wages until there is full employment."
Keynes himself here contradicts his modern-day St. Paul.
Sincerely,
Donald J. Boudreaux
As the late David McCord Wright pointed out about Keynes's General Theory (in addition to the fact that it is no general theory at all):
about half of the General Theory is inconsistent with the Keynesian model, usually understood. The General Theory is almost, in fact, two separate books only slightly related by a common terminology.
This quotation from Wright is from page 83 of his superb article "Is There a Keynesian System?" found in Money, the Market, and the State: Economic Essays in Honor of James Muir Waller, N. Beadles and L. Drewry, eds. (Athens, GA: University of Georgia Press, 1968), pp. 82-90.
….
More generally, Mr. Krugman's take on Texas is questionable – as Kevin Williamson explains. (HT Peter Minowitz)
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