Don Boudreaux is the master of the letter to the editor. It is my understanding (though I have never confirmed this with him) that this particular talent of his was cultivated by a personal challenge from John Stossel to Don when Don was the President of FEE. You will not impact public opinion, Stossel said, until you can explain economics is a few sentences of clear writing. Or something to that effect. A similar challenge was put to Walter Williams by Milton Friedman twenty or more years early --- as the story goes Milton told Walter you never know that you really have mastered economics until you can effectively explain economic concepts to the average person in less than 800 words. Williams took the challenge and became one of the most widely circulated op-ed writers in the US. Boudreaux took the challenge and has emerged as perhaps the most active letter to the editor writer in the US.
In today's letter --- to Newsweek --- in response to a column by Robert Samuelson, Don sums up the nature of democratic government and the dilemma it represents for sound economic policy.
29 August 2008
Editor, Newsweek
Dear Editor:
Robert Samuelson is correct: regardless of which party wins the White House or Congress, Uncle Sam is unlikely to get his fiscal affairs in order ("The Rise of Fantasy Politics," September 1).
In principle, government's core responsibility is to prevent Jones from benefiting by his imposing costs on Smith without Smith's consent. In practice, government acts as Jones's agent in securing benefits for Jones by imposing costs on Smith.
Government's modus operandi today is to bestow goodies on politically powerful interest groups, and to pay for these goodies by taxing politically unpopular groups (e.g., oil companies) and politically impotent groups (most notably, future taxpayers). The bottom line is that, through government, Jones imposes costs on Smith without Smith's consent.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
Enterprise Hall
George Mason University
Fairfax, VA 22030
703-993-1130 (office)
After listening this week to promise after promise to fix health, education and human welfare in general (which all relied on expanding the scope and scale of government) only to be followed by the same speaker claiming they will also balance the budget and make government more 'efficient' -- as was said last night you cannot expect to address 21st century challenges with a 20th century bureaucracy. Line by line will be examined candidate Obama promised and programs will be cut that are no longer relevant, and those that remain will work better and at a lower cost. How exactly that will be achieved remains a question of faith. I am sure candidate McCain and the speakers over the next few days will make similar promises about bigger, better, more effective government that will do more to meet public demands for "health, happiness, and security" and cost you less than any government ever did before.
There is a rhetoric of politics and a reality of politics. Boudreaux has captured the reality of politics in the above letter as well as anyone, and it is a reality that was described by philosophers such David Hume and Adam Smith; founding fathers like Madison; economic journalists like Bastiat and Hazlitt; and economists like Mises, Hayek, Friedman, Buchanan and Tullock.
Congratulations Don.
"In principle, government's core responsibility is to prevent Jones from benefiting by his imposing costs on Smith without Smith's consent. In practice, government acts as Jones's agent in securing benefits for Jones by imposing costs on Smith"
Warren Samuels would probably say that govt is either benefiting Jones by taxing Smith or benefiting Smith by not taxing him.
Either way govt is intervening & is acting. Is Samuels wrong?
Posted by: zippy | August 29, 2008 at 12:14 PM
This is indeed fine writing for readers with one-minute reading attention spans, or who are too busy to analyze. That is not a joke or criticism, by the way. Don is great at this.
Now, only one thing: I often cringe when government is said to provide "goodies," to extend "favors," and so on. You know, the stuff we tell our students, write in newspapers, say in a soundbyte. But boy, I don't know if that's the best way to describe the activities of a medical-military-corporate complex of the modern nation-state, even at the margin.
"Goodies" and "favors" and similar words are, of course, rhetorical devices used to persuade others, and therefore they have their purpose. But as an economist (and, I shouldn't cover up, as a libertarian, too), these particular terms might still give too weak of an impression -- government as a sophisticated Robin Hood (a character whose actions, I think, the *typical* citizen might find justifiable). The government is something much, much more than that.
I seem to recall Pete posting a picture of Goya's classic painting -- Saturn devouring one of his children -- to suggest that's the essence of the state. Even if that's a bit over-the-top, surely the state is closer to that as opposed to a redistributor of party favors.
In these times, I wonder if we should continue speaking of the state as anything less.
Posted by: DPrychitko | August 29, 2008 at 01:12 PM
Don is in a long "Austrian" tradition. Back in the early 1930s, Ludwig von Mises, Fritz Machlup, and Oskar Morgenstern frequently had weekly meetings at the home of a Vienna businessman to talk of possible article themes they might write on for the Austrian press.
Fritz Machlup, in fact, for about three years before we moved to the U.S., wrote a regular column for one of the Vienna newspapers called "The Two-Minute Economist." His task was to write on and critique various interventionist policies proposed or implemented to "cure" the Great Depression through which Austria was passing like the rest of the world.
And, he had to do so in a number of words that would take the average reader no more than two minutes to digest.
So Don is following in the "Machlupian" tradition.
Richard Ebeling
Posted by: Richard Ebeling | August 29, 2008 at 01:59 PM
What a coincidence. I just finished reading Douglass North's essay "Structure and Performance: The Task of Economic History" published in The Journal of Economic Literature, September 1978 before reading this blog post.
In that short article, aside from questioning the usefulness of cliometrics, Professor North urges economic historians to begin explaining the changing institutional and ideological constraints that have evolved over history, particularly in the American experience.
This article is really great because it departs from the typical response by economic historians of explaining change at the constitutional (legal rules) level. Rules are not the only things that change; ideology and belief systems change too (North also calls them "tastes"). But most economists, particularly libertarian economists like Professor Boudreaux, seem to believe that the early 19th century American ideological system is still relevant and applicable today. But this approach fails to appreciate the political process. Politics and rules are a product of ideology, and as ideologies change, so do rules. We are making a mistake by explaining current economic phenomena at the constitutional (legal rules) level.
North considers his analysis radical because standard economic theory takes tastes and preferences as given while North is arguing that tastes change, and cites Jack Hirshleifer as saying that this new assumption opens up a Pandora's box.
Professor Boudreaux's short letter is almost identical to Madison's Federalist Paper #10. The trouble is that the Madisonian system has disintegrated. These economists need to get with the times. Tastes and ideologies have changed, and a big reason why libertarians have not been successful is probably because they are still living in the 18th century.
Posted by: matthew mueller | August 29, 2008 at 02:03 PM
Matthew,
I think you are missing the main point of all of this. While North brings some good criticisms in his essay, I don't feel they are very relevant to this conversation.
Dr. Boudreaux's letter is comparing what the public views versus the reality that occurs. His essay does not resemble the Federalist Papers #10 in the least, nor does it rely on the Madisonian system. In Federalist #10, Madison argues against factions and says that a republic will safeguard against such problems. Boudreaux is not necessarily wishing for an old 18th century republican style rule of law, nor is he relying on any change in constitutional rules to make things better.
Boudreaux, and many libertarians, is just trying to highlight the stark differences between what the public is thinking the government does and what the government truly does. I don't think that ideologies of the public at large have changed politics much in this respect since the 18th century; people still believe that government is still the best solution to many of their problems.
One of the reasons libertarians have not been successful is their problem in translating these issues into simple and understandable writings for the layman. We need more people to translate these often complex views into short and easy to read pieces, and
in this respect Dr. Boudreaux excels.
Posted by: Kevin Hilferty | August 29, 2008 at 10:48 PM
Matthew,
I think you are missing the main point of all of this. While North brings some good criticisms in his essay, I don't feel they are very relevant to this conversation.
Dr. Boudreaux's letter is comparing what the public views versus the reality that occurs. His essay does not resemble the Federalist Papers #10 in the least, nor does it rely on the Madisonian system. In Federalist #10, Madison argues against factions and says that a republic will safeguard against such problems. Boudreaux is not necessarily wishing for an old 18th century republican style rule of law, nor is he relying on any change in constitutional rules to make things better.
Boudreaux, and many libertarians, is just trying to highlight the stark differences between what the public is thinking the government does and what the government truly does. I don't think that ideologies of the public at large have changed politics much in this respect since the 18th century; people still believe that government is still the best solution to many of their problems.
One of the reasons libertarians have not been successful is their problem in translating these issues into simple and understandable writings for the layman. We need more people to translate these often complex views into short and easy to read pieces, and
in this respect Dr. Boudreaux excels.
Posted by: Kevin Hilferty | August 29, 2008 at 10:58 PM
Matthew,
I think you are missing the main point of all of this. While North brings some good criticisms in his essay, I don't feel they are very relevant to this conversation.
Dr. Boudreaux's letter is comparing what the public views versus the reality that occurs. His essay does not resemble the Federalist Papers #10 in the least, nor does it rely on the Madisonian system. In Federalist #10, Madison argues against factions and says that a republic will safeguard against such problems. Boudreaux is not necessarily wishing for an old 18th century republican style rule of law, nor is he relying on any change in constitutional rules to make things better.
Boudreaux, and many libertarians, is just trying to highlight the stark differences between what the public is thinking the government does and what the government truly does. I don't think that ideologies of the public at large have changed politics much in this respect since the 18th century; people still believe that government is still the best solution to many of their problems.
One of the reasons libertarians have not been successful is their problem in translating these issues into simple and understandable writings for the layman. We need more people to translate these often complex views into short and easy to read pieces, and
in this respect Dr. Boudreaux excels.
Posted by: Kevin Hilferty | August 29, 2008 at 11:08 PM
The Prof has indeed found the core principle that guides both major parties.
I move that it be named "Gimme-ism".
Posted by: John David Galt | August 31, 2008 at 12:33 AM
Not Madison. Contrary to the others enumerated at the end of the post, Madison actually thought that the state can constrain itself, that there actually is an "invisible hand" in politics, once the main branches of powers are divided and balanced against each others.
Posted by: Bogdan Enache | August 31, 2008 at 12:47 AM
Bogdan,
Can you explain to me the point you are trying to make about Madison? Each of the authors I mentioned in my post were limited government classical liberals. In this sense, the fundamental beliefs are (a) government is a necessary evil in need of constraint, but due to its essential nature empowering; and (b) that constitutional designs can be constructed which in fact accomplish the balancing act of constraint and empowerment.
Modern research raises serious doubts about the effectiveness of the mechanisms to achieve this balancing act over anything but fleeting moments in time. But that research represents a challenge to this line of argument from the classical liberals that is simultaneously a continuation of it.
Pete
Posted by: Peter Boettke | August 31, 2008 at 11:46 AM
Maybe I read too much into the post - yes of course all the authors mentioned where limited governemnt liberals; however, among them Madison was the only one who articulated a theory of horizontal and vertical checks and balances within the power structure of government with the precise aim to prevent discretionary government actions, including actions of the kind Don Boudreaux describes in his letter and which are a common place of politcs everywhere today. I was only trying to point out that Madison actually thought of his theory of check and balances as a mechanism similar to the market, a mechanism that was capable to constrain the discretionary exercise of power both from ouside and from within the government, a sort of invisible hand mechanism in politics in fact. None of the other authors, not even Buchanan and Tullock I think, put forward such a theory of how - in effect - government power can constrain itself. So for Madison, this reality of politics described by Don Boudreaux shouldn't exist if politics was structured the way he envisioned. Now we can ask why the Madisonian system of checks and balances failed or if it's actually correct or if it was ever put into practice as he articulated it etc...
Posted by: Bogdan Enache | September 01, 2008 at 01:33 PM
I am probably pushing this too far, but (a) the calculus of consent is an attempt to translate Madison's message into modern economics --- they are explicit about this, and (b) Hayek's Constitution of Liberty and Law, Legislation and Liberty begin with the Madison recognition and then attempt to go further.
But perhaps I am missing something in your posts concerning the differences between Madison and the others --- or perhaps I just don't understand the point you are making because I am too blinded by my own interpretation.
Pete
Posted by: Peter Boettke | September 01, 2008 at 02:54 PM
Yes, I agree that Buchanan and Tullock build on Madison, they especially share his "pessimistic" Hobbesian premises of self-interested human behviour that might justify the existence of government. But, in the end, I think their theory does actually more to undermine than to reinforce Madison's institutional system of checks and balances which he thought necessary to prevent the strruggle of the factions that would arise in its absence as a consquences of that sort of self-interest behaviour.
This is why I think that Madison would have thought that the "unrestrained politics" we see is not a failure of politics broadely defined but of politics unstructured by a institutional system of checks and balances both vertically (separation of powers within the central government) and horizontally (federalism and local autonomy).
Anyway, here's a very recent paper along public choice lines that furthers the theoretical undermining of Madison's checks and balances system that I'm taliking about : Eric Posner & Adrian Vermeule, Constitutional Showdowns, Working paper, available on SSRN but unfortunately I can't copy-paste the link from the computer I'm writting right now, I don't know the reason why.
Posted by: Bogdan Enache | September 05, 2008 at 07:11 PM