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Don Boudreaux

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Don Boudreaux is an economics professor at George Mason University and the author of the blog Cafe Hayek. He appeared as a guest on The Bob Zadek Show in episodes on insider trading, the debt ceiling, and trade and price gouging, where he argued free-market positions on each topic. Host Bob Zadek introduced him as a professor at George Mason University in Fairfax, Virginia, who had chaired the economics department from 2001 until August 2009, and described Cafe Hayek as must-reading for listeners Legalize Insider Trading (2009).

Insider trading

In the October 2009 episode on insider trading, Zadek framed the topic by defining the crime as a situation in which someone who works for a publicly traded corporation acquires material non-public information about that company and uses it to buy or sell the stock. He noted that a company called Galleon and its president had just been indicted on an alleged $2 billion insider trading scam, and stated his own position that insider trading should not be a crime, invoking Milton Friedman’s words that “we don’t have enough insider trading” Legalize Insider Trading (2009).

Zadek opened the discussion with a history question, asking Boudreaux who was the first insider trader in American history. Boudreaux guessed George Washington and then John Winthrop before Zadek’s hint that the man’s picture is on the $10 bill led him to Alexander Hamilton. Zadek then told the story: Hamilton, the first Secretary of the Treasury, proposed that the federal government buy up and honor the states’ Revolutionary War debt, and at the Great Dinner Bargain among Jefferson, Madison and Hamilton, northern states agreed to let the nation’s capital be in the south in exchange for southern agreement to let Hamilton buy up the script. According to Zadek, Hamilton told his friends to buy Continentals for pennies on the dollar, and when the federal government guaranteed them they cashed in at 100 cents on the dollar. Boudreaux responded that he had not known the story, and that the wrong in it was not the insider trading but the bailout, adding that it was history he was not familiar with and that they probably should not go down that road Legalize Insider Trading (2009).

Later in the episode, Zadek raised Boudreaux’s article “Learning to Love Insider Trading” and asked him about insider non-trading, which Zadek described as not yet against the law because there are no electrodes plugged into people’s brains. Boudreaux explained that according to the logic of the Securities and Exchange Commission insider non-trading should be illegal, but that a person can change his mind about buying or selling: someone who planned to buy 100 more shares of his employer’s stock and then learns from inside information that the company is in worse financial shape than most people believe can cancel the purchase and thereby avoid a bad investment. He noted that only active trades can even conceivably be prosecuted, and that inside information affects decisions not to trade no less than decisions to trade. In his view this creates a fundamental unfairness in the law: the person who actively trades on inside information and is prosecuted is treated unfairly relative to the person who used inside information not to trade and cannot be punished — though in his view none of it should be illegal Legalize Insider Trading (2009).

Debt ceiling and government spending

In a July 2011 episode, Zadek introduced Boudreaux as an economics professor at George Mason University and his favorite blogger at Cafe Hayek, and framed the hour around deficits and jobs at what he called the 11th hour. The episode’s summary states that the two discussed the political battle over the debt ceiling and government spending, arguing that the narrative of “default” is a political tool and that the real issue is the unsustainable growth of the administrative state and its interference in the free market The Second American Revolution – NOW (2011).

Trade, supply chains and price gouging

In a January 2022 episode, Zadek argued that economic woes are not existential events that happen to Americans but the result of conscious, albeit wrongheaded, decisions by government, and asked Boudreaux to what extent a misunderstanding of basic economics causes problems in trade and the supply chain. Boudreaux answered that a naive belief that supply chains can simply be “repatriated” knows no political boundaries, appearing on the left, middle, right, progressives and hardcore conservatives alike. He said this view overlooks that making more of one thing at home means making less of other things, because workers, capital and raw materials cannot be shifted into producing masks, food or steel without reducing output of what they previously produced. He attributed the global pattern of production overwhelmingly to cost, or what economists call comparative advantage, explaining that steel from Brazil and clothing from Thailand are bought abroad because they can be obtained at lower cost there, freeing American workers and resources to produce things of even higher value. He named Elizabeth Warren and Donald Trump as figures ready to demagogue the issue, said blaming foreigners is second only to blaming speculators and investment bankers, and cited a high correlation between freedom to trade and prosperity and between protectionism and low economic growth Liz Warren’s Crusade against “Big Grocery (2022).

Zadek responded that he tells people who talk about exporting American jobs that he agrees with bringing jobs home so long as the salary comes home too, and that he would support bringing back a 25-cent-an-hour job if someone in the U.S. would work for that wage. Boudreaux agreed, describing a false nostalgia for the 1950s and 1960s and recalling that his father, who had a sixth-grade education, worked most of his life as a pipefitter in a shipyard, a job that is less and less common today and that his father would have been appalled to see his son take. Boudreaux said he supports free trade ultimately because it is the only ethical system: someone who earns income honestly should have complete freedom to spend it in whatever peaceful ways he or she chooses, and if someone in Toronto makes a better offer than someone in Buffalo, the American should be free to buy from the Canadian Liz Warren’s Crusade against “Big Grocery (2022).

On price gouging, Zadek asked Boudreaux to explain what he called the ridiculously fake issue, noting accusations of hoarding and gouging on masks and medicine and that statutes in the majority of cases make price gouging a crime. Boudreaux explained that the issue usually becomes relevant in the aftermath of a natural disaster such as a hurricane, earthquake or tsunami, when supplies are reduced and demand increases simultaneously. Using a hurricane hitting his hometown of New Orleans as an example, he said supplies get reduced as inventories are destroyed and roads and communications are knocked out, while people need plywood to patch roofs and fix doghouses. When goods become more scarce they become more valuable and prices naturally rise, and those high prices signal the rest of the world to rush more supplies to New Orleans. Price gouging statutes prevent prices from rising and so prevent that signal, which he characterized as speech control in a very real way — a prohibition on people expressing how desperately they need something — and said such statutes exacerbate the shortage and deny people access to the goods they need Liz Warren’s Crusade against “Big Grocery (2022).

Across episodes

The excerpts show Boudreaux applying a consistent free-market framework across three episodes spanning 2009 to 2022 — insider trading, the debt ceiling, and trade and price gouging — but they do not show the same question argued in more than one episode, and no development between an earlier and later treatment appears in the sources.

What the sources do not cover

The excerpts do not state Boudreaux’s educational background, the date or circumstances of his birth, or any academic publications beyond the article “Learning to Love Insider Trading” mentioned by Zadek. They do not describe his departure from the George Mason economics chairmanship beyond the August 2009 end date, nor any position he held afterward. The debt ceiling episode survives only as a summary and an introduction, so Boudreaux’s specific arguments there are not recorded in the excerpts.

Episodes

4 appearances, 2009–2022.

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