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Arguments for Free Trade and for Freedom

An AMA with Don Boudreaux, Professor at George Mason and author

Selections from a recent AMA with Don Boudreaux, Professor at George Mason, Getchell Chair at the Mercatus Center and author. 

Q: How can we spread the idea that capitalism has been the driving force of human progress in a way that resonates with our friends on the Left?

A: Great question.  We can do only what we can do.  As FEE’s founder, Leonard Read, often said, our tool is persuasion.  Fortunately, we’ve mountains of facts on our side.  In reality, the freer the society, the richer are not just “the rich” in that society, but also the poor – who become rich compared to ordinary people in less free societies. 

Each of us has a role to play in furthering the cause of free society.  Some do it by writing highly technical articles in economics or in law.  Others by writing op-eds.  Others by talking casually with friends.  The ways and opportunities are many, and each person must discover where he or she best fits in.

Q: You’ve inspired me through your constant/relentless letters to the editor. What is your actual goal with these?

A: My goal originally was both to relieve the personal frustration that I feel whenever I encounter some piece of economic illiteracy or gross historical misinformation, and to get each letter published in the hope that it’ll be read. My goal is not to change current policy outcomes; I don’t believe that such change is possible. Those outcomes will be what they will be given the current state of ideas and ideology. I hope to help change policy outcomes only in the future by doing my small part in helping to make free-market, classical-liberal ideas more widely understood and appealing.

Q: Can you please explain your views on property rights of Native Americans? Were property rights violated? Was it simply because natives had no means of enforcing them? Was there, in fact, no harm done by the “free market” approach to settling the Americas?

A:  I’ve no expertise in history, but my understanding is that there certainly were many rights violations by European explorers and settlers in the Americas against the native populations.  These violations continued well into the 19th century in the United States.  And the fact that the native populations in the Americas themselves often committed rights violations against each other doesn’t excuse the violations that were committed by Europeans.  Yet the question now, presumably, is: what to do about these past violations?  My answer is; nothing.  Nothing can undo the past harms and violations.

Q: With all of the conversations about health care, there seems to be very little made of a truly free market approach. Is there a reasonable way to get from where we are to where we could/should be? 

A: Health care (like money & banking) isn’t my forte, so I’ve no good and detailed answer.  I’m quite sure that reducing government’s role in health care would improve matters, but the transition costs of scaling back the state’s involvement would be huge.  So, I fear, the state will continue to be a big player in the healthcare market, causing that market to perform worse over time, and, thus, leading to calls – however misguided – for further state involvement.  I’m not optimistic about the future of the healthcare market.

Q: How much prosperity is our government costing us?

A: Good question.  There are in the literature several attempts to put a dollar value on this figure.  I am skeptical of all such attempts.  The free market is so creative that we have no way of knowing what the economy would look like in the absence of any significant chunk of government interference.  All I’ll say is that such interference is costing us “quite a lot” – almost certainly more than is offered by any existing empirical estimate.

Q: How did you develop such a strong passion for explaining the logic of free trade?

A: Trade is among the least-complicated economic matters to understand but also among those (along with monetary policy) that are most widely misunderstood by the general public.  Not having a mind deep enough to adequately grasp monetary theory, I stick to the simpler subject of trade.  The public misunderstanding of trade is so deep and wide – and the damage done by bad trade policies is so significant – that it’s worth my time to keep hammering away at all the many fallacies on this front.  The relative ease, and absolute fun, of exposing trade fallacies are made even more attractive to me by the fact that, to the extent that protectionism is thwarted, privilege-seeking producer groups are thwarted.  I have an intense aversion to cronyism.

Q: Do you think economically sound fiscal and monetary advice from Steve Moore, Larry Kudlow, and the Heritage Foundation staff can ameliorate the foolishness of the administration’s current account deficit policy?

A: Well, sound fiscal and monetary policy are good in their own right and will mitigate the ill effects of bad policies.  But this reality does not mean that we should cease our efforts to criticize the administration’s ignorant trade policies.

Q: Can you briefly discuss the relationship between fiscal deficit and debt of an economy and its impact on the balance of trade?

A: If a government borrows more (which it is likely to do if its budget deficit rises), then it’s also likely some of the additional borrowed funds will come from foreigners.  To the extent that foreigners lend more to the government, that country’s current-account (“trade”) deficit rises.

I believe, in short, that a rising government budget deficit puts upward pressure on (although it doesn’t necessitate) a rising trade deficit.  But I do not believe that the causality runs in the opposite direction; that is, I don’t believe that a rising trade deficit causes the government to run larger budget deficits.

Q: What are your all-time favorite non-fiction books that defend free-market capitalism and/or individual liberty?

A: Ah, there are so many!  Here are just a few (in no particular order):

 Economics In One Lesson (Henry Hazlitt)

 The Road to Serfdom (F.A. Hayek)

 Law, Legislation, and Liberty, Vols. 1&2 (Hayek)

 The Constitution of Liberty (Hayek)

 Economic Sophisms (Frederic Bastiat)

 The Incredible Bread Machine (R.W. Grant)

 Liberalism (Ludwig von Mises)

 Planning for Freedom (Ludwig von Mises)

 Common Sense Economics (James Gwartney, et al.)

  • Donald J. Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, and a professor of economics and former economics-department chair at George Mason University.