Suppose that vicious and venomous vermin once annually infested the land, putting the comfort and even often the lives of hundreds of millions of people in danger.  Most people were saved from the scourge of these vermin, but only through the efforts of legions of skilled workers who toiled full time to track, capture, and kill these vermin.  Work in the large vermin-tracking sector of the economy was honorable.

And the wages paid to workers in this sector were steady and very good, although not astronomical.  These workers’ wages weren’t as high as the wages paid to Hollywood stars, to best-selling novelists, or even to doctors, lawyers, and business-school professors.  But these wages were indeed very good.  These wages were very good because of the combination of the high value that people put on having their and their loved-ones’ living quarters and lives protected from vicious and venomous vermin, with the reality that this work was often unpleasant, sometimes quite dangerous, and required some real skills.  (When the vermin-tracking sector long ago first arose, sensitive writers penned many novels meant to expose the terrors and terrible toils of working in this sector, and the appalling greed of the entrepreneurs who organized large venomous-vermin-tracking workforces.)

Then starting a few decades ago, entrepreneurs developed robots to track, capture, and kill these vicious and venomous vermin.  Also, at about the same time, foreign producers began to sell in the domestic market low-priced products that were quite effective in helping to protect ordinary people from the vicious venomous vermin.

The once-proud domestic venomous-vermin workers saw the number of jobs open to them and their children at their traditional very good wages shrivel.  These workers, along with pundits and politicians who identified with them, were displeased.  They complained loudly.  They worried about the disappearance of “good paying jobs.”  They argued that the steadily falling number, and even percentage, of jobs in the domestic vermin-tracking sector is conclusive evidence that ordinary people are poorer, as well as that government officials have done too little to protect the domestic economy from being impoverished.  They insisted that ordinary people in the country would once again be made as rich as they were in the heyday of the vermin-tracking sector if only there were a return of the large number of well-paid vermin-tracking jobs that existed back in the good old golden days.

The fall in domestic employment in the vermin-tracking industry is wrongly interpreted by many people as evidence that the amount of successful vermin-tracking and killing in the domestic economy also fell.  But in fact the amount of successful vermin-tracking and killing continued to increase despite the fall in the number of domestic workers employed in achieving this happy outcome.  Indeed, the amount of successful vermin-tracking continues in the domestic economy to increase to this very day.  And so today, the masses are more abundantly and inexpensively supplied than they have ever been with sound, reliable protection from venomous vermin.

Nevertheless, many are the individuals who lament the innovations in technology and in trade that have decreased the number of jobs in the vermin-tracking sector even as these innovations have increased the people’s protection from venomous vermin.  These lamentations-filled individuals mistakenly believe that a society’s wealth is found in – or is even created by – the high wages paid to workers who help people who willingly incur high costs to get some further satisfaction of some of their ‘needs,’ such as the high prices that people once paid to each of many workers in the domestic vermin-tracking sector.  These lamentations-filled people miss the fact that precisely because the people are now much better supplied with lower-cost vermin-tracking services, the society is richer, not poorer.

These lamentations-filled people do not realize that the fall in employment in the vermin-tracking sector of the economy means that the economy is wealthier, not poorer, for now the people in this society are better supplied with reliable vermin-tracking services while many workers and other resources once used to meet this demand are now free to be used to satisfy other, previously unmet desires.  These lamentations-filled people, were they consistent in their economics, must also believe that the society would become richer if nature were to somehow increase the infestation of venomous vermin that she visits on this society – if nature ensures that, absent an increase in the number of people paid to track and kill vermin, a larger number of people will be discomfited and even killed by venomous vermin.

Those who lament the loss of manufacturing jobs to market-driven innovation and to trade are akin, in all essentials, to those who, in the above tale, lament society’s success at making venomous vermin less of a threat to ordinary people.  Those who lament the loss of manufacturing jobs (or, for that matter, of any jobs) to market-driven innovation and to trade mistake one of biting-scarcity’s effects – namely, high wages – as being a cause of prosperity.  Yet because prosperity increases only as human being’s succeed in making consumer goods and services less scarce, it is clearly erroneous to interpret a market-driven fall in the number of high-wage jobs in any one sector of the economy as evidence of economic impoverishment.  Such a trend, instead, is evidence of economic enrichment.


If a Pres. Trump (or a Pres. H. Clinton, or a Pres. Whoever) genuinely succeeds in bringing high-wage manufacturing jobs back to America, he (or she) will succeed only in making Americans poorer no less than if that president succeeds in bringing back to America the best-paying agricultural jobs of the early 19th century.

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Quotation of the Day…

by Don Boudreaux on October 21, 2016

in Myths and Fallacies, Seen and Unseen, Trade

… is from page 249 of the 1991 Robert Schalkenbach Foundation edition of Henry George‘s eloquent 1886 volume, Protection or Free Trade:

51ir6nbut9l-_ac_us320_ql65_ The habit of looking on the giving of employment as a benefaction and on work as a boon, lends easy currency to teachings which assume that work is desirable in itself – something which each nation ought to try to get the most of – and makes a system which professes to prevent other countries from doing for us work we might do for ourselves seem like a system for the enrichment of our own country and the benefit of its working classes. It not only indisposes men to grasp the truth that protection can operate only to reduce the productiveness of labor; but it indisposes them to care anything about that. It is the need for labor, not the productiveness of labor, that they are accustomed to look upon as the thing to be desired.

And so matters remain today, 130 years after George penned the above words.  Most people mistakenly regard jobs and exports as benefits, and regard imports and labor-saving processes as costs.  Of course, at the end of the day what a person regards as benefits, and what that person regards as costs, is a matter of that person’s subjective value judgment.  But what is a matter of objective economic science and not value judgment is the conclusion that policies that aimed at promoting exports and discouraging imports make the domestic labor force, on the whole, less productive than it would be otherwise and, therefore, make people materially poorer than they would be under a policy of free trade.

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GMU Econ alum, and now Troy State econ professor, David Hebert explains that exports are not benefits but costs.  (Like Dave, I wonder how many are the opponents of free trade who volunteer to pay higher prices at supermarkets and department stores, or who eagerly offer to contribute for free their work efforts to their employers.  I’m pretty sure that the answer is “none” – which implies that these anti-free-traders are intellectually inconsistent.  Calling Mark Perry!)

I was going to blog on Marc Levinson’s recent and badly mistaken Wall Street Journal essay that joins in the chorus alleging loudly in minor chords that the middle-class has stagnated for the past few decades.  But John Cochrane offers a far better response than I can offer.

Nelson Lund, a GMU colleague of mine from over in the law school, champions Americans’ right to bear arms against conservatives who threaten not to recognize that right in full.  Here’s Nelson’s conclusion:

The American right to keep and bear arms, and its continuing value, reflect the reality of human nature and a reasoned response to that reality. The same cannot be said for the views of conservatives who would gut or even repeal the Second Amendment.

George Will explores the perils of (and some reasons for) collegiate “safe spaces.

I don’t agree with Charles Krauthammer on all issues, but I agree that neither H. Clinton nor Trump is fit to work in the Oval Office.  Krauthammer is voting for neither of these creepy people.

GMU Econ alum Mark Perry is correct: trade restrictions and minimum-wage legislation are morally reprehensible means of legitimized plunder.

My Mercatus Center colleague Dan Griswold shows how “Progressive” trade policies – such as those endorsed by Jared Bernstein and Lori Wallach – neglect the poor.

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… is from pages 121-122 of MIT Econ-PhD alum Arnold Kling’s new book, Specialization and Trade: A Re-introduction to Economics – which is one of the two or three best books, page for page, published in 2016 (original emphasis; link added):


Mainstream economics in the MIT tradition can be very interventionist with regard to policy.  They look at markets as machines that generate predictable outcomes.  Policymakers can tinker with those machines to improve the outcomes.  The economist’s task is to advise the policymaker.

That approach makes two troubling assumptions.  One assumption is that the economist’s model is sufficiently powerful to justify overriding market prices.  The other assumption is that the political process is sufficiently clean to implement the policy correctly.  Instead, I would argue that, as Peter Boettke would have it, the economist’s task is to explain to the public how one might compare the institutional processes of market and of government.

Those of us who emphasize specialization see markets as trading networks that are constantly undergoing evolution.  Rather than look for particular interventions, we raise the question of which institutional mechanisms serve to support the process of specialization and enable it to continue to evolve in a favorable direction.

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by Don Boudreaux on October 20, 2016

in Seen and Unseen, Work

An on-line friend who I know only by the name “Rafael” sent to me a link to a comment, on this thread, by “Economist 7e26”.  (I’ve no idea who this Economist 7e26 person is.)  Rafael asks that I respond.  I normally don’t respond to people such as Economist 7e26, but because Rafael has been for several months now a treasured correspondent, I did as he asked.

Here’s the remark by Economist 7e26 that Rafael asked me to address:

go back to reddit. don is a complete moron. have you ever seen his dumb posts on the minimum wage? he’s a worse russ roberts.

And here (slightly edited) is my response to Economist 7e26 (links added):

I’ve a sincere request that you help me out here by alerting me to the parts of my posts on minimum wages that are (as you describe them) “dumb.” Is it my pointing out that raising the cost of taking some action reduces the attractiveness of taking that action – and that this truth holds even if the action is employing low-skilled workers? Or maybe it’s my pointing to – and insisting on the relevance of – recent academic empirical researches by economists such as David Neumark, William Wascher, Jonathan Meer & Jeremy West, Jeffrey Clemens & Michael Wither, and Richard Burkhauser that find that raising minimum wages does indeed seem to reduce low-skilled workers’ employment options? Perhaps instead (or in addition) it’s my acknowledgment of the well-known economist’s argument higher minimum wages tend to favor less-risky workers (such as white teens from leafy suburbs who own their own cars) over more-risky workers (such as single moms from the inner city without their own cars). Or maybe it’s my argument that some workers who remain employed at the minimum wage are likely to find that their jobs are made more difficult as employers adjust, by intensifying minimum-wage-workers’ job duties, to the higher costs of employing those workers?

I understand that I’m “a complete moron,” so you must be patient with my imbecility. If not for my benefit – I’m a lost cause – specify in detail my dumbness for the sake of readers who seek enlightenment. – Don Boudreaux

I might also have asked Economist 7e26 if he or she believes my emeritus Nobelist colleague Vernon Smith to be “dumb,” for Vernon, too, publicly makes at least some of the arguments against minimum wages that I and other opponents of this legislation make.

(By the way, being “a worse Russ Roberts” is hardly, without more, a condemnation.  I admit right readily, with complete sincerity, and without qualification to being a worse economist – much worse – than Russ.  Russ is so very good, knowledgeable, smart, talented, and accomplished that one can be a far worse economist than Russ and still be quite passable as an economist.)  [On another note altogether: what’s with the refusal of so many people these days to use capitalization?  Is pressing the ‘shift’ key really all that burdensome?]

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Quotation of the Day…

by Don Boudreaux on October 20, 2016

in Foreign Aid, Hubris and humility, Man of System

51idyta9tml-_sx324_bo1204203200_… is from pages 39-40 of GMU Econ alum Abby Hall Blanco’s comment that appears as part of William Easterly’s superb 2016 monograph, The Economics of International Development: Foreign Aid versus Freedom for the World’s Poor (links added):

A planner, according to Easterly, ‘thinks he already knows the answers.’  A searcher, by contrast, ‘admits he doesn’t know the answers in advance; he believes that poverty is a complicated triangle of political, social, historical, institutional and technological factors’ (Easterly 2006: 6).

Many economists and other development experts are clearly best described as ‘planners’ in this sense.  The dominant narrative in current development agencies is that enlightened experts can design reforms and other programmes to fix development problems.  Just as Hayek and Mises warned, this planning has often resulted in failure.  While experts may have a general idea of what conditions are necessary for economic development, they lack the knowledge of how to develop these conditions where they are not present.

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Open Letter to Commenter Bret Wallach

by Don Boudreaux on October 19, 2016

in Other People's Money, Trade

Bret Wallach

Mr. Wallach:

I close my recent “Elemental Case for Free Trade” with the following ethical argument: “if you work and earn income honestly, that income is yours to use as you choose.  You may use it to buy tomatoes from your neighbor or to buy tomatoes from a farmer in Mexico.  It’s your money.  It belongs neither to the state nor to any domestic producer.  Yet protectionist arguments rest on the premise that your tomato-growing neighbor has some positive claim on your income.  If you are prohibited from buying tomatoes from Mexico, or – more commonly today – penalized with a tariff for doing so, the state is insisting that domestic tomato growers have an ethical claim on part of your income.”

You disagree with my argument.  That is, you apparently believe that the state acts ethically if, in its efforts to increase sales made by existing domestic tomato growers, it penalizes you for using your own income to buy foreign-grown tomatoes.  Do you, then, also believe that the state would be acting ethically if, in its efforts to increase sales made by those same domestic tomato growers, it penalized you for using your own income to buy potting soil, fertilizer, and tomato seeds that you use to grow your own tomatoes?

If you believe that there’s nothing ethically objectionable about Uncle Sam penalizing you for spending your income in ways that cause the sales of some domestic producers to be lower than otherwise, surely you then have no objection to Uncle Sam penalizing you for growing your own tomatoes.  Nor must you object if Uncle Sam were to penalize you and other Americans for buying used rather than new cars (or, indeed, for putting off buying new cars by keeping your existing cars in good repair) – or for buying previously owned rather than newly build homes – or for growing beards rather than shaving daily (think of all the sales that Gillette loses because more men today wear facial hair!) – or for recycling aluminum cans and plastic cartons – or, indeed, for doing anything with your own resources that Uncle Sam judges to wrongfully reduce sales made by its favored domestic producers.

Do you, in short, believe that you have an ethical right to grow your own tomatoes with your own resources if you choose – a right that trumps other tomato-growers’ insistence that you instead buy your tomatoes from them?  If so, how do you square this belief with your insistence that it is ethically acceptable for the state to penalize you and others for spending parts your incomes on the purchase of imports?

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

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Quotation of the Day…

by Don Boudreaux on October 19, 2016

in Civil Society, Trade

… is from pages 373-374 of Benjamin A. Rogge’s 1967 essay titled “East-West Trade,” as this essay is reprinted in A Maverick’s Defense of Freedom, the 2010 collection of Rogge’s essays that is edited by Dwight Lee:


The process of voluntary exchange tends to be “civilizing” in its social impact on the parties involved, including a greater awareness of each other’s basic humanity and a reduction in sheer uninformed prejudice. This civilizing influence, combined with economic interdependence created by trade, tends to reduce conflict between the parties involved and to make for more peaceful relationships, both within a country and between countries.

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Bonus Quotation of the Day…

by Don Boudreaux on October 18, 2016

in Hubris and humility, Myths and Fallacies

… is from page 539 of the final (2016) volume – Bourgeois Equality – of Deirdre McCloskey’s soaring trilogy on the essence of bourgeois values, on their transmission, and on their essential role in modern life:

Lives spent trying to figure out what customers want and how to get the item to them in a nonruinous way and how to improve service and quality at lower cost, one could argue, lead the bourgeoisie to ethical attitudes superior in some ways to those of a haughty aristocracy or an envious peasantry or a proud clerisy.  Or at least [Adam] Smith argued.

This Smithian-Montesquieuian-McCloskeyan argument is certainly correct.  How saddening and maddening it is, then, that so much applause, even from citizens of bourgeois societies, is reserved not for those who risk their own funds in efforts to try, peacefully, to better satisfy other people’s voluntarily expressed desires but, rather, for those who arrogantly order other people about using threats of violence.

For example, John D. Rockefeller, Sr., is to this day called a “robber baron” and is thought by many to have been an anti-social scoundrel as a businessman.  In contrast, Teddy Roosevelt has his face carved famously into a mountain and is widely celebrated as a great and “Progressive” seer.  How mistaken and backward!   During any one ordinary day of his business career J.D. Rockefeller produced more net good for humanity than Teddy Roosevelt did over his entire lifetime.  Indeed, the case is even stronger for Rockefeller: he was without question a huge net contributor to humankind; in contrast, T.R. was quite likely, on net, a wrecker.

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The Elemental Case for Free Trade

by Don Boudreaux on October 18, 2016

in Trade

Last week I participated on a panel, dedicated to trade, at Hillsdale College’s 10th annual Free Market Forum; the Forum this year was held in Atlanta.  (I thank Anita and Burt Folsom for inviting me, and Ian Fletcher and Alfred Eckes for also being on the panel.)  Below the fold is the prepared text of my remarks.

Read the full post →

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