Ignorant of Economics AND of History

September 16, 2017
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Here’s a letter to a critic of mine on Facebook (who is not the famous filmmaker):

Mr. Michael Moore

Mr. Moore:

About my opposition to government prohibition of “price gouging,” you write sarcastically on Facebook: “Sounds like you trained at the Economic School of Robber Barons.”*

Bad example.  Contrary to popular myth, the so-called “robber barons” were reviled not by consumers because they raised prices but by competitors because they lowered prices.  John D. Rockefeller drove the prices of kerosene and other products made from petroleum down.  Cornelius Vanderbilt drove the price of steamboat transit down.  A&P founder George Gilman, with help from George Huntington Hartford, drove the prices of groceries down.  James J. Hill drove the quality-adjusted price of long-distance rail transportation down.  Gustavus Swift drove the price of meat down.  Andrew Carnegie drove the price of steel down.  James Buchanan Duke drove the prices of cigars, cigarettes, and most other tobacco products down.  Richard Sears and Aaron Montgomery Ward drove the prices of consumer dry goods down.  Henry Ford drove the prices of automobiles down.

To find the relatively few ‘robber barons’ who profited by exploiting consumers (and taxpayers) rather than by improving consumers’ lives one must turn to those, such as Daniel Drew and Leland Stanford, who secured subsidies and other special privileges from government.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

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