Archive for Dwight R. Lee

Dwight R. Lee is the the O’Neil Professor of Global Markets and Freedom in the Cox School of Business at Southern Methodist University.

Freedom of the Price

Last month I explained why our liberties will be steadily eroded without a genuine commitment to liberty in general. Fortunately some liberties are widely recognized as crucial and have influential interests protecting them from political violation. An interesting example is freedom of speech—freedom against government censorship. Recent examples of the censorship of politically incorrect speech [...]

1May2000 | | 2 comments | Continued

The Economic Advantages of a Commitment to Liberty

In my last column I discussed the bias toward excessive government caused by the dead-weight costs of taxation. Because these costs go unseen, while the benefits from government spending are readily apparent, government expands beyond reasonable limits.

1Apr2000 | | 0 comments | Continued

The Hidden Cost of Taxation

The costs of taxation are dispersed widely. Everyone pays taxes, so when a general tax is increased it is spread over so many people that no one individual will find the increase very burdensome. Conversely, if the tax is decreased, no one may perceive a significant benefit.

1Mar2000 | | 6 comments | Continued

Spreading the Work to Create More Jobs

Last month I emphasized that job creation is not a sensible objective for economic policy. The purpose of economic activity is not to do work for its own sake. What’s the point of creating jobs to produce goods or services that consumers don’t want as much as other things that could have been produced? Yet there is a widespread view that having government create more jobs is the best way to promote economic progress. Wrong.

1Feb2000 | | 0 comments | Continued

Creating Jobs vs. Creating Wealth

Government policies are commonly evaluated in terms of how many jobs they create. Restricting imports is seen as a way to protect and create domestic jobs. Tax preferences and loopholes are commonly justified as ways of increasing employment in the favored activity. Presidents point with pride to the number of jobs created in the economy [...]

1Jan2000 | | 18 comments | Continued

Politics and Foreign Trade

The case for free trade is overwhelming, both theoretically and empirically. My last two columns developed the theoretical case, which is based on the concepts of opportunity costs and comparative advantage. Even if the people of a country have an absolute advantage in producing everything, they still gain from foreign trade because they cannot have [...]

1Dec1999 | | 0 comments | Continued

Comparative Advantage Continued

The concept of comparative advantage, which I began discussing last month, is a straightforward application of opportunity cost and is almost embarrassingly simple. Certainly people have no trouble understanding and recognizing the importance of this concept in their own personal lives.

1Nov1999 | | 0 comments | Continued

Comparative Advantage

One of the most powerful and straightforward economic concepts is “comparative advantage.” As important and simple as this concept is, however, it seldom seems to inform public discussions of international trade. Almost everyone “knows” that we can’t compete with countries that have cheap labor—if we have free trade with such countries either wages will be [...]

1Oct1999 | | 12 comments | Continued

Speculation and Risk

Last month I showed that speculators are best thought of as conservationists. They are constantly looking to the future and conserving resources they believe are becoming more valuable. Since no one can predict the future with full confidence, speculators necessarily take risks. And when a speculator misjudges the future, he moves resources from periods when [...]

1Sep1999 | | 4 comments | Continued

Conservation and Speculation

I often ask my students, “How many of you are in favor of conservation?” Except for those who are asleep, every hand goes up. I then ask, “How many of you are in favor of speculators?” and almost no one raises his hand. The students see conservation as a noble activity that prevents people from [...]

1Aug1999 | | 0 comments | Continued

In the Absence of Private Property Rights

We commonly benefit from things we neither understand nor appreciate. Obviously there are advantages in benefiting from a wide range of things without having to give them much thought. But the danger is that such neglect can often cause us great harm. Good health is an example. For most people, good health is easy to [...]

1Jul1999 | | 0 comments | Continued

Private Property and Opportunity Costs

In three previous columns I discussed opportunity cost and the importance of this concept to understanding economics. We have considered the advantage the market has over government at incorporating opportunity costs into the calculus of decision-makers. Markets promote the general interest by revealing costs while governments commonly favor special interest by concealing those costs. In [...]

1Jun1999 | | 0 comments | Continued

Costs Should Be Revealed, Not Concealed

Making sound economic decisions is impossible without information about opportunity costs. Thinking about the cost of doing anything is crucial; it amounts to considering the value of the alternatives. A major advantage of the market process is that it gathers up information on costs and transmits it to market decision-makers through prices that cannot be [...]

1May1999 | | 0 comments | Continued

Opportunity Cost and Hidden Inventions

Few people think about opportunity cost as systematically as economists do, but all of us are constantly guided by the opportunity costs we face. If, as you are reading this article, you learn that someone a few blocks away is giving $1,000 to anyone who comes by, I predict with confidence that you will quickly [...]

1Apr1999 | | 1 comment | Continued

Opportunities and Costs

My previous columns have been devoted to an overview of how markets work by facilitating social cooperation: providing people with the information and motivation to pursue their own advantages in ways that best create opportunities for others. My emphasis has been on the forest rather than the individual trees of economic understanding. Now I shall [...]

1Mar1999 | | 3 comments | Continued

The Market for Honesty

The recurring theme of all my columns has been that economics is a study of how people cooperate with each other and that market economies succeed because of the incredible amount of cooperation they promote. Market cooperation, like all cooperation, depends on a high level of honesty. People who cannot trust each other cannot cooperate [...]

1Feb1999 | | 0 comments | Continued

Distrust and Verify

Perhaps the most positive legacy of the Clinton administration will be that it further eroded the public’s trust in the federal government. Trust has declined significantly since the Great Society programs of the Johnson administration. According to University of Michigan surveys, the number of people who responded that the federal government does what is right [...]

1Feb1999 | | 3 comments | Continued
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