Saturday tour of the blogosphere

1. Here's a hearty sample from Peter Klein's latest O&M post:

Hate to keep flogging a dead horse, and perhaps preaching to the choir, but the point can’t be made often enough: relative prices matter. The childish Keynesianism of people like DeLong and Krugman, like Bernanke and Geithner, understands only aggregate concepts like “national output,” “employment,” and “the price level.” A consistent theme of this blog’s rants is that resources are heterogeneous (1, 2) and, consequently, relative prices must be free to adjust to changes in demand, technology, market conditions, and so on. When government policy generates an artificial boom in a particular market, such as housing — drawing resources away from other parts of the economy — the key to recovery is to let resources flow out of that market and back to the sectors of the economy where those resources belong (i.e., to match the pattern of consumer demands). It’s quite simple: home prices should be falling, interest rates should be rising, savings rates should be going up, and debt levels should be going down. The Administration’s policies, like that of the last Administration, are designed to achieve exactly the opposite. Why? Because relative prices don’t matter, the allocation of resources across activities doesn’t matter, all that matters is to keep any sector from shrinking, any prices from falling, any firms from failing, any consumers from reducing their consumption. A child thinks only about what he can see. The unseen doesn’t exist.

Click for more, and for omitted links.

2. Don Boudreaux, always a fount of clear thinking (and speaking/writing), addresses some critics of free trade:

Persons who, fancying themselves observant realists, insist that "free trade doesn't exist" have their visions and brains distorted by political boundaries.

It is quite true that national governments almost universally erect barriers that hinder their citizens' freedom to trade with citizens ruled by other national governments. Some governments erect higher barriers than do other governments. But, indeed, it's rare to find a national government that doesn't indulge the greed of politically powerful interest groups, as well as the prejudice and economic ignorance of much of its population, with trade barriers.

And yet free trade is ubiquitous. Freedom to trade generally reigns within political borders. For example, the 50 U.S. states are united on one very large and very successful free-trade zone.

Barring state barriers, this is a valuable thought. Boudreaux gives examples of (mostly) free trade conducted between himself and grocers in California, for instance. It works just fine, and there's far less geographical distance between Fairfax and Montréal; the only difference is an imaginary but sadly influential line between them. El Paso and Juárez form one large metropolitan area, but politicians prefer that El Pasoans trade with people in San Antonio, Albuquerque, and Phoenix, hell, even with Boston, Miami, and Seattle, rather than with their fellows a few miles away. His personal example continues:

And yet no one, not even Lou Dobbs, insists that the Boudreaux family would be richer if only the government in Richmond could fine a successful way around the U.S. Constitution and managed to slap stiff tariffs on California wine, Florida citrus fruits, cajun seasoning from Louisiana, and you name it.

3. Mary Theroux points out how pervasive tax errors are among the powerful, and the lesson rarely learned:

If rich, smart people like Treasury Secretary Geithner, Tom Daschle, and the Obamas don’t have to comply with tax laws until they want a high-profile government job, can those of us who don’t want such jobs ignore them too?

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