Last week, Don Boudreaux, an economics professor at George Mason University, delivered an enlightening Zoom presentation to the Stanford Classical Liberals group, which I am fortunate to be a part of. What strikes me about Don’s discussions is not only his robust data-driven approach but also his ability to weave insights from economic history and theory—a rarity in today’s fast-paced discourse. This historical lens enriches his arguments, particularly during the Q&A segment that kicks off around the 52-minute mark. His extensive knowledge often reminds me of George Stigler’s remark about Milton Friedman: “Milton is the best economist in a bad century,” suggesting that the 19th century laid the groundwork for modern economic thought far more than the 20th century did.
1:50: Don’s Virginia license plate becomes a quirky talking point.
5:00: U.S. industrial capacity is currently at an unprecedented peak.
6:50: Industrial production is hovering just under 1% of its historical high.
7:35: Manufacturing output in the U.S. is currently 5.4% shy of its all-time high.
8:25: Manufacturing capacity is only marginally below its peak—an encouraging sign.
8:50: A striking revelation: while we’ve suffered significant losses in apparel and leather goods, we’ve seen monumental gains in computers and electronics, a fact that merits further exploration.
13:20: Although manufacturing employment as a share of total jobs has significantly declined since 1944, pinpointing the exact impact of China remains elusive.
16:18: Manufacturing productivity has surged since the late 1940s—a clear indicator of progress.
17:40: Both wages and productivity have experienced upward trends.
18:30: Average real wages faced stagnation from the early 1970s until the early 1990s, but post-1990, they soared.
20:30: A closer examination of assets, liabilities, and net worth suggests that trade deficits do not erode our wealth as commonly believed.
21:30: The average net worth has seen a remarkable increase.
27:40: An intriguing quiz regarding the “China Shock” highlights current economic dynamics.
32:40: Jobs lost due to the influence of Jonah Salk—an ironic twist; my father would have appreciated if those job losses had occurred 13 years earlier, while my sister would have preferred 3 years earlier.
34:00: A look back at the 1963 Buick Skylark illustrates how keeping used cars longer impacts new car sales, ultimately affecting new car producers’ employment.
A slightly related anecdote: During my time at the University of Rochester in the late 1970s, my colleague Ronald Schmidt posed an intriguing question to his class: “What is General Motors’ most significant competitor?” Despite knowing the market shares, I mistakenly answered “Ford.” The correct answer? The used car market. If every used car owner could extend their vehicle’s life by just a year, major car manufacturers would face a significant drop in demand.
35:20: Job losses attributed to imports aren’t a unique phenomenon; they are part of a broader economic narrative.
36:00: Don expresses a desire for economists to abandon a particular habit he finds unproductive.
40:00: It’s hard to argue that anyone in the U.S. hasn’t benefited immensely from trade.
DRH comment: I previously made a similar point in a talk at Hoover, only to be misinterpreted by a fellow presenter—whose name I can’t disclose due to Chatham House rules. She paraphrased my argument, suggesting I claimed those disadvantaged by trade should be thankful for Walmart. My actual point was about the benefits of over two centuries of trade, of which Walmart is but a fraction. She persisted in her misrepresentation. Sigh.
41:20: Don laments the existence of the trade deficit concept—an opinion I wholeheartedly share. For further context, see what the late Herb Stein articulated in my Concise Encyclopedia of Economics.
43:40: Are we saving sufficiently?
45:00: Insights into why investors are drawn to the U.S. market.
46:00: Who knew that Ikea is Dutch-owned? This fact underscores Don’s overarching point: there’s nothing inherently magical about national borders.
52:00: A reflection on how relaxing price controls can distort the growth of real wages.
53:50: A question arises regarding trade with hostile nations.
55:30: Are clothes pins essential for national security?
58:00: The influx of foreign students in the U.S. contributes positively by reducing trade deficits.
1:04:20: The optimal tariff theory, first posited by Robert Torrens two centuries ago, is revisited. DRH note: I was introduced to this concept through a paper by Grant Reuber at the University of Western Ontario in early 1972, leading to a fruitful discussion.
1:06:50: A discussion on Edgeworth and the implications of poison.
1:07:20: Trade with China and the treatment of its workers come under scrutiny.
1:09:00: Are Chinese manufacturing wages keeping pace with productivity growth?
1:15:50: A critical look at industrial policy.
1:16:45: Oren Cass’s characterization of the free market as a “drunk donkey” prompts further discussion.
1:20:00: The question of government subsidies for R&D arises. When queried about subsidizing industries with substantial positive externalities, Don responds critically: (1) How can the government accurately identify those industries? (2) Alfred Marshall noted, upon returning to Britain from the U.S., that subsidizing nascent industries tends to fall flat.
