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. He holds the Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center. He specializes in globalization and trade, law and economics, and antitrust economics.
Boudreaux is committed to making economics more accessible to a wider audience. He is the author of the books Hypocrites and Half-Wits: A Daily Dose of Sanity from Cafe Hayek and Globalization. His articles appear in such publications as the Wall Street Journal as well as numerous scholarly journals. He writes a blog (with Russell Roberts) called Cafe Hayek. He has appeared numerous times on John Stossel’s Fox show to discuss a range of economic issues.
Ed’s Questions
Segment One
Thank you for mentioning the Ronald Reagan quote that begins the show!
Editor's note: Donald Boudreaux is the first Guest to have mentioned it. The quote is from President Ronald Reagan's Remarks at Moscow State University, Mikhail Gorbachev's alma mater, on May 31, 1988. Here is the speech in it entirety. It is remarkable!
You post on your blog (with Russ Roberts) CafeHayek, quite a bit. Are you always in your blog?
A constant theme on this show is the misapplication of the labor theory of value in business. About a month ago, I heard a rather famous economist say the reason Bitcoin has value is because it takes a lot of electricity to mine Bitcoin, and that’s why it’s valuable.
Why is Friedrich Hayek one of your heroes? (See Episode #141, Memorable Mentors: Friedrich Hayek).
One of the subtleties of Hayek’s notion of the difference between law and legislation. Can you expound on that?
Segment Three
This crazy notion that we need to break up Facebook, Amazon, Apple, Google—what are people thinking?
I’ve gotten invited by no less than three new social media sites that are based on blockchain and bitcoin and their mantra is you will own your information on this site. Disruption is already happening?
Who is James Buchanan and why is it important that people know about him? (Co-founded Public Choice economics).
Public Choice can even be applied to group decision making in business. One person one vote is often not the best way to make decisions in business.
Why not create a voting system around social media?
Ron’s Questions
Segment Two
Continued: Elaborate on the difference between law and legislation.
Trump’s Tariffs
Talk about widespread economic misunderstanding, such as countries don’t compete, companies do: Why are we talking and caring about trade deficits?
It’s an accounting fiction that doesn’t describe economic reality, isn’t it?
It’s a good thing our founders established a free-trade zone among the 13 colonies, so we don’t track the deficit between California and Iowa.
Thomas Sowell in Basic Economics, the USA ran trade surplus every year of the Great Depression (See Episode #25, our interview with Thomas Sowell, discussing his book, Basic Economics).
As George Will wrote regarding fair trade and level playing field: “fields are leveled by bulldozers.”
Trump’s Tax Reform
What did you think of Trump’s tax legislation? (Don gives it a “C”).
What is your preferred alternative to replacing the federal income tax: flat tax, sales tax, VAT, etc.? (Don prefers a flat tax. A consumption tax is preferable, but he doesn’t trust the political process to get rid of the income tax if a consumption tax were implemented).
Segment Four
All over the news we hear about Artificial Intelligence (AI), Robotics, Deep Learning, Driverless Cars, etc., and how they could destroy 50-90% of jobs. You wrote a great article on the Foundation for Economic Education (FEE) website on April 26, 2017: “Robots Substitute for Jobs, Not Human Creativity,” wherein you argued:
What’s more human-like than humans? Shouldn’t we worry about fellow humans taking our jobs?
Yet from the 1950s, the USA workforce increased 160%, from 62 million to 160 million.
Yet the unemployment rate in 1950 was 5.3%; today it’s 4.5%. The labor force participation is 63% today but was 59.2% in 1950.
Believing robots take jobs is based on an incorrect presumption: that the number of productive tasks we can perform for each other is limited.
Boudreaux believes that number is practically unlimited. We agree.
We like to say here that the point of an economy is not to create jobs—but to create wealth! If General Motors could produce 8 million cars in one year with one employee, they would. Jobs are a cost, not a benefit. Milton Friedman said if jobs are important “give them spoons.” In your book, Hypocrites & Half-Wits, you say that if public transportation project benefits rise with the number of jobs created, then public transportation should be Rickshaws since there is a 1:1 job for every passenger!
What’s your take on the Universal Basic Income? (See Episode #95 for our discussion of UBI). [Don opposes it because he believes it would not replace the current welfare system].
Also in Hypocrites and Half-Wits, you quote Bill Gates: “Slowing population growth has proven to be critical to long-term economic growth.” This is insane, isn’t it?
What happens when the world’s population starts to decline, since there’s no economic model for this and it’s never happened in human history?