Widespread Prosperity Through Breach of Contract

by Don Boudreaux on June 11, 2011

in Crony Capitalism, Current Affairs, Myths and Fallacies, Other People's Money, Reality Is Not Optional, Seen and Unseen

Here’s a letter to the New York Times:

Paul Krugman laments that “debt relief for homeowners – which could have done a lot to promote overall economic recovery – has simply dropped off the agenda” (“Rule by Rentiers,” June 10).

If Mr. Krugman truly believes that slumping economies can be buoyed by relieving people from the obligation to pay for at least part of what they consume, why focus on mortgage debtors?  Why not instead, or also, a policy to relieve grocery buyers from having to pay for poultry and dairy products?  Or a policy to relieve Las Vegas vacationers from having to pay airfare and gambling debts?  Or – my favorite! – a policy to relieve wine drinkers from having to pay for bottles of premier cru Bordeaux?

Surely the objections that people slower-witted than Mr. Krugman will raise to such policies – objections such as ‘Those policies will artificially and unsustainably cause people to consume too much milk, chicken, Vegas vacations, or exquisite French wines – can be shown by Mr. Krugman to be as unfounded as is the oh-so-bourgeois objection that mortgage-debt relief will artificially and unsustainably cause people to consume too much housing.

Donald J. Boudreaux


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