… mistakes creation for destruction.  Because a protectionist sees jobs as ends in themselves – because a protectionist sees jobs as the principal things produced by an economy – the protectionist views the elimination of the need for a job to be performed as destruction, as a loss to the economy of something valuable.  In this view (as in so much else), the protectionist is not only mistaken, but has matters backwards.  Jobs as such are not valuable; what is valuable is the output produced by a worker in a job.  Only because that output is valuable are people willing to pay a worker to perform a job.  If that output is no longer valuable, that job no longer has any useful function.

When through innovation or trade any given amount of valuable output becomes available with less labor, jobs, it is said, are “destroyed.”  But nothing valuable has been destroyed.  Instead, if anything is properly said to be “destroyed,” it is a cost that has been destroyed.  What has been “destroyed” is the heretofore unfortunate need to spend as much labor as was once required to make some given amount of output available.  Now that that output is available with less labor, something has been created.  Participants in the market in which this good or service is now available with less labor than before not only have an undiminished – or an even greater – amount of this good or service, they have also that which they earlier did not have, namely, whatever valuable goods or services will now be produced and made available only because the production of other goods or services now requires less labor than before.

In short, the protectionist reckons costs – the need to labor – to be benefits, and therefore mistakes the lowering of costs to be a loss of benefits.  This protectionist error is as deep as it is common.


A reliable mental experiment when discussing jobs and trade or innovation is to imagine that you’re Robinson Crusoe stranded alone on a desert island.  You have to work very hard to supply yourself with the bare necessities of survival.  Would you regard yourself as being blessed or cursed if, upon awakening one morning, you discover that some friendly natives from a nearby island have deposited on your island – as a gift to you – a year’s worth of food along with a promise to annually provision you with food in this way?  Of course you would regard yourself as blessed.  It’s clear that these generous foreigners have enriched you even though they have “destroyed” the jobs that you would otherwise have performed to supply yourself with food.  You are clearly and unconditionally made richer by this job destruction.

What holds true for Crusoe who occupies an island alone holds true for, say, the 325 million of us Americans who occupy the landmass that cartographers call “the United States.”

Add a Comment    Share Share    Print    Email

A Variation on a Theme of Henry George

by Don Boudreaux on March 21, 2018

in Myths and Fallacies, Trade

Here’s a letter to my frequent e-mail correspondent, and self-described “Trump man,” Nolan McKinney:

Mr. McKinney:

You continue to insist that Beijing’s taxes on the Chinese people justify Uncle Sam’s imposition of punitive taxes on Americans.  And I continue to be dumbfounded by your bizarre Trumpian ‘ethics.’

Let me ask you: Suppose that Beijing were to use resources extracted by taxation from the Chinese people to develop an invisible, destructive substance – a substance that Beijing then requires be smeared on all Chinese exports to America.  This substance causes, say, 25 percent of all goods that we Americans import from China to dissolve into nothingness the moment those goods reach our homes, offices, and factories.  How would you react to the discovery of this scheme by Beijing to destroy some portion of Americans’ property?  How do you think Donald Trump would respond to Beijing’s tactic of reducing Americans’ prosperity by wiping out some of the goods that we buy with our hard-earned incomes?  I’m confident that you, Trump, and every other protectionist would join the rest of us in rightly condemning such destructive vandalism by a government.

And yet when Uncle Sam does effectively the same thing with punitive taxes imposed on Americans who buy imports, you and other protectionists applaud!  What gives?  Why would it be unforgivable treachery for a government sitting in Beijing to destroy some of the value of the possessions of American households and some of the value of the inputs used by American producers, but applause-worthy good service when some of the value of Americans’ possessions is destroyed by a government sitting in Washington?

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

Add a Comment    Share Share    Print    Email

Northwestern University law professor John McGinnis explains how the sharing economy is reducing economic inequality.

Barry Brownstein corrects the late Stephen Hawking’s mistaken views of the consequences of technological innovation.

David Bier busts a common myth about immigrants and crime.

David Boaz rightly applauds marijuana legalization – and rightly objects to the government diktats that attend this legalization.

Matt Ridley warns against the pessimism bias – and of how news encourages this bias.

Ilya Somin makes a strong case against the folly of giving special credence to the political views of children and of victims.

Mark Perry busts some myths about the service sector.  A slice:

It’s a great point that all of the incessant hand-wringing about the loss of US factory jobs, the decline of the Rust Belt and the supposed “hollowing out of American manufacturing,” and the subsequent attempts to save or bring back those jobs with protectionist trade policy, miss the bigger picture of the US labor market, which is a job-creating machine when it comes to the dynamic, thriving service-providing sector that has added an average of 4,500 new jobs every day to the nation’s labor force over the last half-century.

My Mercatus Center colleague Dan Griswold corrects a misunderstanding that Larry Kudlow has about value-added taxes and trade.

Add a Comment    Share Share    Print    Email

In the November 2008 Freeman I wrote about the structure of production – and distribution – of ideas.  My ideas are below the fold.

Read the full post →

Add a Comment    Share Share    Print    Email

… is from pages 390-391 of the 1982 Liberty Fund issue of the 1978 Oxford University Press edition of Adam Smith‘s Lectures on Jurisprudence; this quotation is from a lecture that Smith delivered on April 13, 1763:

The business of commerce and industy is to produce the greatest quantity of the necessaries of life for the consumption of the nation, or exchanging one commodity for another which is more wanted.  It is on the power of this exchange that the division of labour depends, which as has been shewn to the satisfaction of the whole of you is the great foundation of opulence, as it occasions the production of a greater quantity of the severall things wrought in.  The production of the necessaries of life is the sole benefit of industry.  If you do not use them, what is the benefit of the greatest abundance.  What would be the advantage of employing a number of hands and cherishing the cultivation of the arts.

DBx: Adam Smith here reminds his students – including us – that production is a means and not an end.  Production, of course, is an essential means: that which is not produced cannot be consumed.  But this truth does nothing to counter or to dilute another truth: the purpose of production is to enable as much consumption as possible.  We in our role as producers act to serve us as consumers.  Protectionists routinely deny this truth.  Protectionists nearly always have as a premise the false notion that we as consumers should act to serve us as producers.  And if, in the protectionist’s judgment, we as consumers do not so act, we should be coerced by the state until we alter our actions so that they conform to the protectionist’s fancy.

I often compare the ethics of protectionists to that of common thieves.  The comparison is apt.  But as I’ve heard my colleague Walter Williams say many times, in one significant way common thieves are superior to protectionists.  That way is this: although like protectionists, common thieves steal that which doesn’t belong to them, unlike protectionists, common thieves do not in the process insult their victims’ intelligence by asserting that their thievery will make their victims richer.

(Smith’s lectures – which are student notes taken of many of the lectures that Smith delivered – are available free-of-charge here on-line.)

Add a Comment    Share Share    Print    Email

The Wall Street Journal‘s Mary Anastasia O’Grady exposes some of the Trump administration’s trade follies.  A slice:

After the fact, Mr. “Art of the Deal” figured out that his opening tariff bid was on track to blow up the two best foreign markets for American-made steel and significant markets for American-made aluminum. It’s a good bet that the same producers who are lobbying for protection asked the president to back off the neighbors.

The gaffe exposes the Trump administration’s failure to grasp the complexity of the supply chains that interconnect the global economy. A few exemptions won’t clean up the mess he has created with his tariff gambit. The new duties will clobber American fabricators, which rely on these imports to manufacture at competitive prices. Retaliation by injured trading partners will hurt U.S. exporters.

Pierre Lemieux joins in the fun of reviewing White House trade shaman Peter Navarro’s hilariously awful movie “Death by China.

Erica York adds her voice to those who oppose Trump’s punitive taxes on Americans who purchase steel and aluminum.

Shikha Dalmia reveals the hateful agenda of the Southern Poverty Law Center.

Robert Samuelson beautifully busts the myth that poverty is unrelated to the prevalence of single-parent households.

Richard Rahn reviews some of the ranks of the corrupt.

Ryan Bourne explains a problem with Pigouvian taxes.

Over on the monetary-policy front, George Selgin walks us through New Zealand’s experience with “a ‘floor’-type operating system.

Here’s Bob Higgs on two forms of socio-economic problems.  (Well, really only one form.)

Add a Comment    Share Share    Print    Email

Here’s a letter to BloombergMarkets:

You report on a new “study” by the anti-free-trade Coalition for a Prosperous America that finds that Pres. Trump’s punitive taxes on Americans who buy steel and aluminum will create 19,000 jobs and reduce U.S. GDP by only $1.4 billion (“U.S. Tariffs May Add 19,000 Steel and Aluminum Jobs, Study Says,” March 20).  It’s unclear if this jobs figure of 19,000 is net or merely the number of jobs that the CFPA finds will offset jobs that the tariffs will destroy elsewhere in the U.S. economy.  No matter; in order to make the case for the tariffs as strong as possible, let’s assume (contrary to what economics predicts) that the additional 19,000 jobs created in steel and aluminum mills will be a net addition of 19,000 to all U.S. jobs.

By the CFPA’s own reckoning, then, each job created will cost $73,684 (which is $1.4 billion divided by 19,000).  The typical worker in a steel mill earns in annual wages about $55,556.  If we assume that this worker gets another 20 percent of this pay in the form of fringe benefits, each steel-mill worker, on average, is annually paid about $66,667.  It appears, therefore, that the price we Americans will pay per job created will be roughly $7,000 more than each of these jobs is worth.

The CFPA’s dodge that $1.4 billion is only a tiny percentage of GDP doesn’t justify the CFPA’s conclusion that the tariffs are therefore economically warranted.  Here’s why.  First, this same reasoning, were it valid, would also justify pickpocketing, as the negative impact of pickpocketing on U.S. GDP is likewise very tiny.  Second, not only is the cost of the tariffs a tiny percentage of GDP, the number of jobs created by the tariffs is also a tiny percentage of something relevant, namely, of the number of annual job openings.  Over the past three years the average number of job openings in the U.S. was about 67.8 million annually.*  And so 19,000 jobs is a mere 0.028 percent of the number of job openings annually today in the U.S. – hardly an impact that warrants Mr. Trump’s violation of Americans’ rights to spend their incomes as they choose.

Finally, as my Mercatus Center colleague Dan Griswold asked, in personal correspondence, when he read your report, “If the number of workers goes up, and total output goes down, is it not simple math that output per worker (or per hour worked) has gone down?” – and, thus, because worker pay is ultimately determined by worker productivity, isn’t it true that even by the CFPA’s own calculations these tariffs will reduce Americans’ wages?  The answer is yes.

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

* Calculated from here.  Here’s a screenshot of what I pulled up at this BLS site:

(I thank my intrepid Mercatus Center colleague Veronique de Rugy for alerting me to this BloombergMarkets report.)

Add a Comment    Share Share    Print    Email

Students are encouraged to check it out and apply to attend.  It’s a great program.  I share here Public Choice Center director Alex Tabarrok’s advertisement for the seminar:

The 2018 Public Choice Outreach Conference, a crash course in public choice for students planning careers in academia, journalism, law, or public policy will held June 9-10 in Arlington VA. Graduate students and advanced undergraduates are eligible to apply. Students majoring in economics, history, international studies, law, philosophy political science, psychology, public administration, religious studies, and sociology have attended past conferences. Speakers include Robin Hanson, Bryan Caplan, Shruti Rajagopolan and many others.

You can find an application and more information here. If you are a professor please invite your students to apply.

Here are some quotes from past attendees of the Outreach Conference:

It was so useful to hear such varied and intriguing aspects of public choice thought. The other members of the conference were fantastic to meet and now I’m sure we all have so many new paper ideas and updated perspectives on our original interests, thank you!

Clara Jace, Creighton University

 I found the conference insightful into many different topics. What I think was most unique about the conference was the diversity of ideas, theorems and most importantly, ideas for solutions to these prevalent problems. I think my favorite part of the econ conferences is how quick presenters are to say “I don’t know” to questions and proceed to give the analytical reasoning for both sides of the argument instead of giving a BS answer that may or may not be true. Overall, I have loved this conference.

 Jalee Blackwell, West Texas A & M, School of Business

 Wow, this conference was absolutely exceptional. It provided some of the most interesting and thought-provoking Econ lectures and conversations I have ever had the privilege of engaging in. The opportunity to have one on one discussions with some of the world’s leading minds in these fields was truly an eye opening, educational, and inspiring experience that I won’t soon forget.

 Daniel Corley, University of Texas School of Law

Add a Comment    Share Share    Print    Email

While laying back this morning in a chair at my dentist’s office having my teeth expertly checked and cleaned, I thought of my grandparents, each of whom I knew.  Each was born in the United States, and three of the four were born in a city (New Orleans).  (My paternal grandfather was born somewhere deep in the swamps of south Louisiana, although when 15 years old he ran away from home to New Orleans and lived in that city until he died 60 years later.)  The years of their lives are: 1900-1975; 1905-1967; 1914-1991; 1917-1996.

For as long as I knew my grandparents, each wore dentures…. which prompted me to reflect on all the jobs that have been destroyed by better dental care.

Losing one’s teeth, even in rich America, was far more common in the good ol’ days than it is today.  And while most of us celebrate this victory over tooth decay and other dental ailments, someone of a protectionist bent is likely unhappy about this improvement in living standards.

“After all,” wonders the protectionist, “what about all those unfortunate workers who lost their jobs as a result of this advance in dental health?  What about the hard-working men and women – all of whom played by the rules – who were laid-off from their jobs making dentures?  What about the honest, rule-following workers who once made and marketed products such as Polident and Poligrip?  Fewer such workers are needed today than would be needed had Americans not suffered this curse of improved dental health.”  The protectionist’s ire rises when he is informed that no small part of this improved dental health can be blamed on government interventions – interventions such as government subsidies for the training of dentists, tax-funded fluoridation of drinking water, and the U.S. Government’s complicity in USA Hockey’s requirement that all players wear facemasks.

The protectionist – ever-vigilant in keeping an eye on jobs destroyed by greater abundance – hurries off to his laptop (too bad he doesn’t hire a secretary who knows short-hand and how to type) to write a proposal to punitively tax Americans who purchase toothpaste, floss, electric toothbrushes, and dental care.  “Only thus will we level the playing field!” the protectionist tells his audience.

Add a Comment    Share Share    Print    Email

In the September 2008 Freeman I wondered why so many people seek salvation through politics.  My thoughts are below the fold.

Read the full post →

Add a Comment    Share Share    Print    Email