In the January 2000 Freeman I reviewed one of my favorite books of the 1990s: Michael Cox’s and Richard Alm’s 1999 volume, Myths of Rich & Poor.  My review is below the fold.

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Debating the Virtue of Selfishness

by Don Boudreaux on January 14, 2018

in Current Affairs

On the evening of Tuesday Jan. 16th, you’ll be able to watch live, and for no charge, a debate on the virtue of selfishness.  The debaters are Yaron Brook and Gene Epstein.  It’ll start at 6:45 pm EST.  You’ll also be able to participate in the Oxford-style before-and-after voting, and write in questions that the debaters might directly address.

Click here to access the video posted by Reason Magazine for 6:45 pm on Tuesday, January 16th.

Go into the link right now and you’ll find a helpful reminder button for 6:45 on the 16th.  You’ll also find the link www.sohovote.com, which posts the resolution: “Selfishness is a virtue,” under the headline “Pre-Debate Vote.”  You’ll be able to vote right now with a “Yes,’ “No,” or “Undecided” on this resolution.  Your vote will go into the final tally only if you participate in the “Post-Debate” vote that will be held during the live event.

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Real Money Is Not Real Goods and Services

by Don Boudreaux on January 14, 2018

in Myths and Fallacies, Trade

Here’s another letter to my frequent “Trump Man” e-mail correspondent, Nolan McKinney:

Mr. McKinney:

Agitated by this letter of mine, you write that you “don’t see why Mexico has to export more to pay for [Trump’s border] wall. They’ll pay for it with just their money.”

Money has value only because it can be exchanged for real goods and service.  And so people, non-Americans no less than Americans, earn money only if and to the extent that they themselves supply to – export to – the market real goods and services.  The reason is that no one will voluntarily part with money that can be used to acquire real goods and services in exchange for nothing or (what is the same thing) in exchange for pieces of paper called “money,” such as Monopoly “money,” that cannot be exchanged for real goods and services.

If the economic proposition implicit in your claim is correct, then you can make an excellent living by quitting your current job in order to spend a few minutes each day using your office printer to print out “McKinney dollars” – little pieces of paper that you call “money.”  Your economic ‘theory’ implies that grocers, restaurateurs, department-store owners, physicians – indeed, anyone with whom you currently engage in market exchanges – will be content for you to pay for what you buy from them with ‘just your money.’

Try this manner of paying for things and let me know how it works out for you.

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

P.S. Suppose you order a meal in a Mexican restaurant and are served a plate piled high with nothing but pesos?  Would you eat that meal?

…..

Note to my fellow economists: especially – but not only – because I’m a great admirer of the work of the late W.H. Hutt, I am well aware that money performs real and genuinely valuable functions in a market economy.

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Some Links

by Don Boudreaux on January 14, 2018

in Crony Capitalism, Immigration, Regulation, Video, Work

Shikha Dalmia is from a “shithole” country; we Americans should be thankful that she and countless other Indians immigrated to America.

Nick Gillespie points out that “It’s the people fleeing shitholes who have helped to make this country great.

Also writing informatively about immigrants to America is Scott Sumner.

David Boaz gets to the heart of what’s truly embarrassing.

My intrepid Mercatus Center colleague Veronique de Rugy calls for better economic analysis at U.S. government regulatory agencies.

In this short video, John Stossel exposes some damage done by regulations in New York City.

My GMU Econ colleague Walter Williams documents some recent looney-tooneyness on U.S. college campuses.

Speaking of U.S. higher education, George Will writes about it with nuance and wisdom.

Larry Elder proposes repeal of the execrable and racist Davis-Bacon Act.  A slice:

The Davis-Bacon Act, a Depression-era measure, was designed to thwart black workers from competing against white workers. It requires federal contractors to pay “prevailing union wages.” This act sought to shut out black workers from competing for construction jobs after white workers protested that Southern blacks were hired to build a Veterans Bureau hospital in Long Island, New York — the district of Rep. Robert Bacon, one of the bill’s sponsors. It is remarkable the Davis-Bacon still lives despite its racist intent and its discriminatory effect — to this day — on black workers. Passed in 1931, two Republicans teamed up to sponsor it.

In a labor market dominated by exclusionary unions that demanded above-market wages, blacks, at the time, competed by working for less money than the unionists. Davis-Bacon stopped this by requiring federal contractors to pay prevailing local union wages, causing massive black unemployment. Lawmakers made no secret of the law’s goal.

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In this December 1999 Freeman column I argued that many of the slogans used by opponents of markets are not only factually inaccurate, but these slogans often also mask a preference for the very ills that they are allegedly meant to cure.  My column is below the fold.

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… is from page 113 of Deepak Lal’s 2013 book, Poverty and Progress:

One of the abiding failings of “development economics” has been its fascination with theoretical curiosa and the dirigiste policy conclusions that can be drawn from them.

DBx: Indeed so.  And, unfortunately, development economics isn’t the only venue in which such a fascination is in play.  Every other branch of economics is infected, to one degree or another, with this dangerous fascination.  One of the branches that I know best, antitrust economics, has long been the playground of academics who – impressed with their abilities to conjure hypotheticals and then to model those hypotheticals using geometry, mathematics, or game theory – eagerly call upon the state to deploy force in order to recreate real-world markets in the image of their whiteboard models.

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In my November 1999 Freeman column I made the case, with the background being Uncle Sam’s antitrust harassment of Microsoft, against a government policy of policing against price cutting.  To put the matter in lawyers’ lingo, price cutting that is not in violation of contract terms should be per se legal.  My column is below the fold.

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13 January 2018

Pres. Donald Trump
1600 Pennsylvania Ave., NW
Washington, DC  20500

Mr. Trump:

In my open letter to you yesterday (regarding your plan to renegotiate NAFTA in order to get revenue from Mexicans to pay for your border wall) I was intent on making the case that the only way Mexicans can possibly pay for such a wall is for them to export real goods and services – and for Americans to import real goods and services that are used, either directly or indirectly, to build the wall.  That is, I was intent on exposing the contradiction between, on one hand, your belief that imports harm Americans and, on the other hand, your desire to have Mexicans pay for the wall.

I stand by my point that your hostility to imports is inconsistent with your desire for Mexicans to pay for the wall.  Yet in my haste to make this point I neglected to analyze with sufficient care the distribution of the burden of tariffs.  (Presumably, the money that you boast that you’ll get from Mexicans to pay for the wall will come from tariff revenues.)

The burden of a tariff is shared by domestic buyers and foreign sellers.  The tariff hikes that you must have in mind will raise the prices of imports from Mexico.  We Americans will thus buy fewer of these goods and, for the ones that we continue to buy, we’ll pay higher prices.  Some portion of these higher prices will be remitted to Uncle Sam as part of the revenue received from this tariff.  (The precise dollar amount will depend on the size of the tariff and on the relative elasticities of the demands for, and supplies of, these imports.*)  So except in the extreme case of higher tariffs causing no increase in the price of imports, some portion of the revenues that you’ll use to pay for the border wall will unavoidably come Americans.

The other part of the revenue from the higher tariff will indeed come from Mexicans.  On each good that they export to America, Mexican exporters will, after they remit the tariff revenues to U.S. Customs, clear fewer dollars than they cleared before the tariff hike.  For each of the goods that Mexicans continue to export to America, we Americans will, in effect, export to Mexico fewer goods and services.  Thus will Mexicans pay for part of your abominable wall.

In the likely event that you don’t see the obvious, I’ll spell out for you here this relevant reality: because higher tariffs will result in Mexicans clearing fewer dollars on their sales to Americans, Mexicans will have fewer dollars with which to buy American exports.  And, therefore, your protectionist renegotiation of NAFTA will do what you claim to abhor about free trade: destroy particular jobs in the United States.

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

* I was at first tempted to say ‘Ask your trade advisors to explain to you this basic economic point,’ but given who your trade advisors are, they likely will be unable to help you.  So find a competent economist – or even a good principles-of-economics student – to explain this matter to you.

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Cafe Hayek reader Scott Quinn asked me to reprise this post, from September 20th, 2013, comparing Milton Friedman to Paul Krugman.  I’m happy to do so.  It’s below the fold.

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In this October 1999 Freeman column I challenged the notion that consumers are chronically and harmfully “locked in” to particular technologies – although I do identify a source of genuine lock-in.  My column is below the fold.

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