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Here’s a note to a new correspondent.

Mr. P__:

Thanks for your feedback on Phil Gramm’s and my piece, in yesterday Wall Street Journal, on trade deficits. You believe that I “and Sen. Gramm omit that every US trade deficit means Americans are consuming more than they are producing, a habit that is unsustainable.”

With respect, U.S. trade deficit mean no such thing, as evidenced by the fact that the U.S. has run annual trade deficits every year since 1976, the year I graduated from high school. In 2023 I reached the conventional retirement age of 65. During those years –  from 1976 through 2023 – the real net worth of American households and nonprofit organizations rose by 537%.* (I’m unable to find pre-1987 data on household net worth alone.) It’s practically impossible to square this fact with the claim that U.S. trade deficits mean that “Americans are consuming more than they are producing.”

Consider a simple example. Suppose that Americans this year produce $1,000 worth of bricks and other outputs. Americans spend $100 of their income – income earned from this production – buying wine from France. The French vintner immediately turns around and uses the $100 that he earned on his exports to America to buy bricks from America, bricks that uses to expand his facility in Bordeaux. In this case, American exports equal American imports; there is no U.S. trade deficit.

Now tweak the example. As before, Americans produce $1,000 worth of bricks and other outputs. But now they buy from France, not wine, but $100 worth of machine tools for use in U.S. factories. And the French machine-tool seller buys $100 of American-made bricks, but not for shipment to France but instead to build a new factory in Alabama. In this case, the U.S. has a $100 trade deficit: Americans imported $100 worth of stuff (specifically, machine tools) and exported nothing.

I challenge you to tell me how, while in the former example we Americans are living within our means, in the latter example we are, as you insist is implied by trade deficits, “living beyond our means.”

Balance-of-trade accounting is accounting, not economics. Unfortunately, because most people misunderstand both the accounting conventions and the economic forces that generate the monetary figures, balance-of-trade accounting is a never-ending source of confusion – confusion that fuels sympathies for self-destructive protectionism.

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

* I used this site to find net worth then converted 1976 dollars into 2023 dollars using this Personal Consumption Price Index deflator.

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Some Links

David Henderson explains some of the harm destined to be done by Trump’s protectionism. Two slices:

Economists who write about trade have tried to offset the information asymmetry by noting the high cost per job saved that comes about due to restricting imports. The costs are often gargantuan.

The table in this 2017 study by Mark J. Perry, an economist with the American Enterprise Institute, shows that in every examined case of protectionism in the 1980s, the benefits created for the protected workers and companies were less than the costs to consumers. That makes sense. Because protectionism substitutes higher-cost domestic production for lower-cost foreign production, the benefits to domestic producers are necessarily less than the costs to domestic consumers.

The table shows something else interesting. The losses to consumers per job saved, in 2016 dollars, can be greater than $1 million per year. Protecting carbon steel production from foreign competition, for example, cost $1,642,500 per job saved. Protecting specialty steel cost a whopping $2,190,000 per job saved.

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Trump has made a superficial argument: namely, that the United States should have reciprocal tariffs. If country A has 10 percent tariffs against their imports of our goods, then we should have 10 percent tariffs against our imports of their goods. But calling it an argument is too generous. He hasn’t made an argument for reciprocal tariffs. Such an argument would be hard to make. As noted earlier, when our government imposes new tariffs, we are hurt, no matter what the other government is doing. As Reason writer Eric Boehm noted, if Trump’s claims about the expected tariff revenues are correct—they’re not—he would be imposing the largest tax increase since World War II.

Moreover, I don’t think Trump believes in his own proposal. As Cato Institute scholar Scott Lincicome recently pointed out, forty-four countries have average tariff rates that are less than America’s average tariff rate. Most of those are small countries, but they also include Canada, France, Germany, Italy, and Japan. Will Trump start to lower tariffs against those countries? I’m betting not.

Peter Earle takes a close and critical look at Trump’s proposal for “reciprocal tariffs.” A slice:

Even when one country implements tariffs, unilateral free trade remains beneficial. Avoiding counter-tariffs keeps domestic prices lower, benefiting consumers and businesses reliant on imported goods. Not retaliating also prevents damaging trade wars, which have historically had negative economic consequences (consider the Smoot-Hawley Tariff Act, which exacerbated the Great Depression). In addition, there is the not-inconsiderable moral high ground: a nation committed to unilateral free trade can position itself as a stable, open-market economy, attracting investment and diplomatic goodwill. From this perspective, free trade is the ideal arrangement regardless of how other nations act.

Clark Packard reveals “the high costs of eliminating de minimis shipping.”

Charles Cooke is understandably fed up with the absurd attempted justifications for Trump’s incoherent ‘policies.’ Two slices:

Trump plays 4D chess on lots of different boards. Sometimes, for example, he says that tariffs are excellent and wealth-generating and that the United States should impose them so widely that it is able to replace the income tax with them. At other times, he says that tariffs are really bad, obviously, and that this is why he’s not imposing them, but that he had to say they were good for a while to get other countries to do the unrelated things that he wanted them to do. That’s classic 4D chess, whichever way you look at it, and, unless you internalize that and recall it at every juncture, you might end up confused by his behavior.

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Occasionally, Trump has been known to play 5D chess, and even 6D chess, and there’s a rumor that he’s working on his 7D skills. This is mostly a good thing, but it does make it quite difficult for the citizens of the republic to judge him, as, over the years, they have become accustomed to doing with their presidents. Historically, Americans were able to say that they liked or disliked this or that part of the president’s conduct, and that, in their estimation, he had got some policies right but erred with others. Now, they cannot. Sometimes, this is because they are suffering from Derangement Syndrome, which is a disease that only affects critics of this administration and has never been seen before anywhere in the world. Most of the time, though, it’s because Trump is playing chess in a whole host of complicated dimensions, and because you, the lowly voter, are simply incapable of following along.

Some of what Trump & Co. are doing is indeed applause-worthy, as explained here by the Editorial Board of the Wall Street Journal. A slice:

A century of evidence refutes Wilson’s premise, and Mr. Trump is now challenging it head-on. His argument, echoed by many modern conservative scholars, is that insulation from presidential authority runs counter to Article II’s command that the President “take Care that the Laws be faithfully executed.” If Congress has charged such agencies with enforcing laws, then the President should be able to supervise how they do their job.

As Mr. Trump’s order explains, “previous administrations have allowed so-called ‘independent regulatory agencies’ to operate with minimal Presidential supervision. These regulatory agencies currently exercise substantial executive authority without sufficient accountability to the President, and through him, to the American people.”

No more. His order requires these agencies to submit proposed and final rules to the Office of Information and Regulatory Affairs in the White House. OIRA, which is part of the Office of Management and Budget (OMB), will review rules to ensure their cost-benefit and legal analysis is rigorous and that they hew to Mr. Trump’s priorities. His order notably includes the Fed’s financial regulation, though not its interest-rate or monetary policy functions.

Mr. Trump’s order also states that OMB “shall establish performance standards and management objectives for independent agency heads” and adjust their funding “by activity, function, project, or object, as necessary and appropriate, to advance the President’s policies and priorities.”

This will give the President enormous leverage over agency leaders and their priorities. OMB could block agency money for rule-makings or enforcement activities—say, crypto regulation—that don’t jibe with Mr. Trump’s policies.

Progressives are calling this a power grab, but if so it is restoring the vision of the Founders who gave the President control over the executive branch.

Jack Nicastro is rightly critical of Trump’s unfortunate Biden-esque choice of FTC chairman. (See also here.)

Juliette Sellgren talks with Get Married author Brad Wilcox.

Brian Albrecht busts the myth that egg prices are being driven higher by “market power.”

David Henderson isn’t much worried about an asteroid hitting earth in 2032.

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Quotation of the Day…

is from page 145 of Johan Norberg’s superb 2023 book, The Capitalist Manifesto (original emphasis):

Socialism for capitalists is no better than other forms of socialism, and few reforms could be more important than once again making capitalism a system of profit and loss. The market-liberal logic is merciless: either a business is competitive and so does not need support, or it is not competitive and so doesn’t deserve support.

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Gramm and Boudreaux on Trade Deficits

In today’s Wall Street Journal, Phil Gramm and I bust some myths about so-called “trade deficits.” Two slices:

Trade deficits don’t stifle growth, nor do trade surpluses foster it. In the 29 years after the end of World War II, during which the U.S. had a virtual monopoly in heavy manufacturing and regularly ran trade surpluses, real per capita gross domestic product grew 2.1% a year. Over the next 29 years, from 1976 through 2004, the U.S. ran chronic trade deficits, and the average annual growth rate of real per capita GDP was virtually identical: 2.2%.

During the Reagan administration, as economic growth surged, foreign investment flooded into the country and the trade deficit soared. The trade deficit similarly grew during the economic boom of the Clinton administration. In the high-growth years from 1998 to 2001, when the federal government ran a budget surplus, the annual trade deficit more than doubled. And when economic growth ramped up in 2017 and 2018 due to Mr. Trump’s deregulation and tax cuts, foreign investment surged and the trade deficit rose—despite Mr. Trump’s 2018 tariffs.

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Has the expansion of global trade “hollowed out” U.S. manufacturing, as Joe Biden claimed in 2022? No. U.S. industrial production today is more than double what it was in 1975, the last time we ran a trade surplus. It’s 55% higher than in 1994, when the North American Free Trade Agreement went into effect, and it’s 18% higher than it was when China joined the World Trade Organization in 2001. Real wages are up 19% from 1994 and 10% from 2001. The inflation-adjusted value of America’s capital stock is 36% higher today than it was in 2001, 66% higher than it was in 1994, and 178% higher than it was in 1975.

Manufacturing as a share of total nonfarm employment peaked during World War II and has declined ever since, following the pattern of employment in agriculture, which fell from 40% of the labor force to 2% over the course of the 20th century. This is attributable not to globalization, but to the spread of modern technology and the rise in demand for services relative to goods. Neither Nafta nor China’s membership in the WTO notably increased the secular rate of decline in the share of workers employed in manufacturing.

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Some Links

Scott Lincicome explains some of the many problems that infect Trump’s proposal for so-called “reciprocal tariffs.” Two slices:

Among the now-regular Trump tariff announcements is his plan for eventual “reciprocal tariffs”—a concept championed by the president and his loyal trade adviser Peter Navarro that would, if enacted, set U.S. tariffs on goods from foreign counties at levels approximating the countries’ tariff and nontariff discrimination against American exports of the same products. The idea, repeatedly teased by Trump and officially announced last week, has a certain seductive simplicity: Isn’t it only fair that “we” charge “them” what “they” charge “us,” and that if “they” want duty-free access to “our” market, then “we” should have the same in “theirs”?

Alas, you will be shocked to learn that it is not actually that simple, and that—in the real world—“reciprocal tariffs” would be a catastrophically bad idea for all sorts of reasons, most of which have nothing to do with one’s stance on tariffs, free(ish) trade, or U.S. trade agreements.

Those other concerns have been covered at length—here at Capitolism and elsewhere by trade experts of all stripes—so instead we’ll focus today on the mainly practical reasons why the Trump/Navarro plan for reciprocal tariffs makes little sense.

(And that’s being kind.)

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Then there are domestic government policies with highly uncertain and indirect trade effects. Economists will tell you, for example, that value-added taxes are—contra the Trump team—trade neutral in theory, but whether a nation’s VAT system affects imports and exports in practice can  depend on the tax’s structure and whether, for example, local currency adjusts fully and quickly. Labor, environmental, intellectual property, and other domestic policies also can have indirect trade effects, even though they’re non-discriminatory on their face. Heck, even the metric system can be a nontariff barrier. Mimicking the CVD process for 150-plus countries, thousands of products, and thousands of government programs—not just tariffs and subsidies!—is simply impossible. So, either the Trump team will fake it, or they’ll give up.

Let’s hope it’s the latter.

My intrepid Mercatus Center colleague, Veronique de Rugy, talks with the Tax Foundation’s Erica York about the true costs of tariffs.

Ramesh Ponnuru isn’t optimistic about DOGE’s chances of significantly cutting the federal government down closer to appropriate size. Here’s his conclusion:

DOGE is the kind of initiative that both political parties have opposite incentives to hype: The Republicans say it will revolutionize government, the Democrats that it will destroy it. Musk has generated enough news and controversy to provide the illusion of long-term impact. But the conventional wisdom of just a few weeks ago — that DOGE will not substantially alter the trajectory of the federal government — remains likely to prove true. Before we conclude that Musk will curtail government in a way no one else has, let’s wait to see the receipts.

And see also this follow-up by Ponnuru.

Veronique de Rugy is not favorably impressed with the GOP’s budget plans. A slice:

It’s not as if there isn’t lots to cut—there is, especially considering the unhinged government expansions of the last four years—but it remains politically tough. As the Manhattan Institute’s Jessica Riedl notes, achieving the assumed level of cuts in the plan would require Congress to deliver the lowest discretionary spending share of GDP since the 1930s while simultaneously increasing defense and border security spending. Why would we expect Congress to have the stomach for that?

Many Republicans are putting their faith in Elon Musk’s cost cutting, but it’s not enough. Much of what needs to happen requires Congress, which apparently prefers to once again kick the can down the road.

The blueprint makes other questionable assumptions. I doubt we’ll find $2.6 trillion in extra revenue from a highly improbable 2.8 percent annual GDP growth rate, considering the approximately 1.8 percent growth baseline.

In this podcast with Reason, Randy Barnett discusses the legality of DOGE’s efforts as well as of some other of Trump’s measures.

John Sailer describes one of the many ways that institutions  of “higher learning” recruit unscholarly “activists” into ostensibly scholarly positions.

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Quotation of the Day…

… is from page 335 of the “Random Thoughts” section of Thomas Sowell’s 2010 book, Dismantling America:

Many colleges claim that they develop “leaders.” All too often, that means turning out graduates who cannot feel fulfilled unless they are telling other people what to do. There are already too many people like that, and they are a menace to everyone else’s freedom.

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Some Links

George Will hopes that the U.S. Supreme Court will agree to hear a case that will allow it to overturn the egregious 2005 Kelo ruling. Two slices:

In Kelo, the court further diluted the concept of “public use,” making it mean “public benefit.” The court upheld (5-4) the New London (Connecticut) Development Corp.’s condemnation of a not-at-all-blighted blue-collar neighborhood so some unknown bigger taxpayer might benefit. After the condemnation, the Pfizer pharmaceutical corporation proposed, for a while, building a research facility where feral cats now roam.

Justice Sandra Day O’Connor, dissenting with William H. Rehnquist, Clarence Thomas and Antonin Scalia, presciently warned that the consequences of the decision “will not be random.” Affluent, articulate, well-lawyered factions would prey upon vulnerable, less sophisticated people.

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The Kelo decision that diluted property rights was denounced by Vermont Sen. Bernie Sanders, a self-described socialist. It was, however, celebrated by — speaking of the predictable — a developer who, like others of his ilk, sees moneymaking opportunities in collaborations with rapacious governments empowered to expropriate the property of less isolated, not-well-connected individuals. Said Donald Trump of Kelo: “I happen to agree with it 100 percent.”

Kevin Gentry talks about the U.S. economy with Phil Gramm.

Writing in the Los Angeles Times, my intrepid Mercatus Center colleague, Veronique de Rugy, argues for cuts in taxes and government spending. Two slices:

It’s a common, politically fueled mistake to talk about cutting taxes without also talking about our fiscal situation. We’re $37 trillion in debt — going on $59 trillion in a decade — and after years of alarming growth, the annual spending deficit is roughly $2 trillion. We also must grapple with the looming entitlement crisis, and interest payments on government debt are the fastest-growing budget item. Times are changing, making fiscal responsibility more crucial than ever.

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A new Hoover Institution study reveals that businesses are more responsive to corporate tax changes than previously thought. Analyzing the 2017 cuts, Kevin Hassett (the National Economic Council’s new director), Jon Hartley and Josh Rauh found that a one-percentage-point reduction in the cost of capital can boost investment rates by up to 2.4%, surpassing earlier estimates.

Congress should hence prioritize making full expensing of capital investment permanent. It could also extend it to investments in structures.

Similarly, the cuts to individuals’ tax rates should be made permanent. This provision encourages work, savings and investments, especially for high earners, fostering a more dynamic and resilient economy. Recent research by Rauh and Ryan Shyu on California tax increases shows how much more sensitive high-income filers are to rate changes than most research generally assumes. The economists looked at taxpayers’ responses after Proposition 30 increased marginal tax rates by up to three percentage points for high-income households. An extra 0.8% of these taxpayers left the state as a result, and those who stayed reduced taxable income, eroding up to 61% of expected revenue within two years. This sensitivity to high tax rates and our progressive federal tax code mean that letting individual tax cuts expire will have a bigger impact than projected, and extending them will have a smaller deficit impact than most fear.

GMU Econ alum Dominic Pino reports that Trump’s nominee for Labor secretary “supports Biden’s union pension bailouts.”

Eric Boehm explains that “Social Security’s insolvency is driven by benefits for the living, not fraud by the dead.”

Phil Magness writes sensibly at his Facebook page:

Jonah Goldberg is more hawkish than I am. But he has pinpointed the problem with the Trump-aligned faction of the “Realist” foreign policy scene, and especially JD Vance.

We are not getting principled “restraint” from this crowd, as they endlessly promised us for the past 4 years. We are getting make-it-up-as-you-go rationalizations for all sorts of foreign policy belligerence, expansionist territorial agendas, incoherent tariff crusades, selective dictator-coddling, and self-serving exceptions to the “peace” they previously touted.

None of this is surprising if you’ve followed Vance’s political career or, more importantly, the many “foreign policy expert” courtiers who have groveled their way into Trump’s orbit as a way of pursuing their pet interventionist projects.

Also writing sensibly at his Facebook page is Mark Pennington:

It may well be that there is nothing either Europe or the US can do to secure victory for Ukraine. What is sickening about the Trumpian approach to this though is the evident admiration that the US administration has for Putin and some of his methods. I agreed with most of what JD Vance said last week about the lack of commitment to freedom in Europe, and the UK specifically. The problem is, you cannot take this message seriously from an administration that admires bullies. The sad truth is that freedom is under threat from the censorious leftists who govern many European states – even if they are not actually ‘in government’ – and from this new generation of ‘conservatives’ in the US – and perhaps in the years to come in Britain too – who are a total embarrassment to Ronald Reagan and Mrs. T. It isn’t the 1930s, but it’s grim nonetheless.

George Will warns of the west’s active coddling of the Russian monster Putin. A slice:

Last week in Munich, a city closer to Ukraine than Washington is to Atlanta, Vice President JD Vance told Europeans that the principal security threat they face is insufficient free speech, exemplified particularly by the refusal of other German political parties to govern in coalition with Alternative for Germany, a fascist-adjacent party sympathetic to Ukraine’s would-be executioner, Vladimir Putin.

Vance spoke two days after President Donald Trump’s 90-minute phone conversation with Putin. The day of that call, Defense Secretary Pete Hegseth declared it “unrealistic” to hope for peace negotiations through which Ukraine regains pre-2014 territories (before Russia’s seizure of Crimea) or gains NATO membership. Perhaps those two outcomes are unattainable. But Kaja Kallas, Estonia’s former prime minister and the European Union’s foreign policy chief, tartly questioned the realism of giving the Russians “everything that they want even before the negotiations have been started.”

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Quotation of the Day…

is from page 124 of Johan Norberg’s excellent 2023 book, The Capitalist Manifesto:

Sven Norfeldt, one of Sweden’s most successful entrepreneurs, once described the market to me as a minefield. Over there, on the other side, there is new knowledge, capacities, products and services that could enrich the whole of society. But our path there is blocked by a minefield of uncertainty, technological dead-ends, unpredictable consumers, shifting business cycles, interest rate changes, capricious policies and plain bad luck. We have no idea where the mines are located. The only way to find a way to the other side is to get as many people as possible to venture out. This increases the chance that someone will find a safe path that we can all follow.

DBx: It’s rather like the New Yorker inviting anyone who wishes to submit captions in its cartoon-caption contest.

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The Spectacular Economic Ignorance of Peter Navarro

Here’s a letter to the New York Times.

Editor:

Encountering, in David Leonhardt’s report, a summary of Peter Navarro’s attempted justifications of Trump’s tariffs makes the head spin (“A Disagreement on Tariffs,” February 18). Navarro’s arguments are so illogical, self-contradictory, and economically ignorant that they’d be merely laughable were he not an advisor to the President of the United States.

For example, Mr. Leonhardt writes that “Navarro argues that the U.S. is such an important market that foreign companies will cut their prices and accept lower profits rather than pass along the cost of tariffs to consumers. He also predicts that suppliers, such as those that sell parts to automakers, will relocate to the U.S.”

Where to begin? Tariffs that don’t cause American buyers to pay higher prices protect no jobs in import-competing industries. Therefore, if the goal of trade policy is to stop foreigners’ alleged ‘stealing’ of American jobs – and if Navarro is correct that U.S. tariffs are completely absorbed by foreign suppliers – then the tariffs about which Navarro boasts are utterly ineffective at promoting that goal.

It gets worse. Navarro has long complained that foreign suppliers charge “unfairly low prices” – that foreigners ‘dump’ too many goods into the American market. Yet now he tells us that Trump’s tariffs are an ingenius tool for pushing the prices charged by foreign suppliers even lower. If – contrary to fact, but consistent with Navarro’s long-time position – “unfairly low prices” of imports hurt Americans, why is Navarro bragging that Trump is muscling foreign suppliers to cut their prices even further?

Finally, Navarro – like his boss – incessantly warns of U.S. trade deficits. Yet now he crows that Trump’s tariffs will incite foreign suppliers to set up shop in the U.S., seemingly ignorant of the fact that all such moves by foreign suppliers increase the U.S. trade deficit.

In 2017 Ryan Bourne described “the spectacular economic ignorance of Peter Navarro.” In 2025 that ignorance, if anything, has grown even more spectacular.

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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Some Links

Thomas Friedman – no doctrinaire free trader – warns wisely against Trump’s incoherent tariff ‘policy.’ Four slices:

The scariest thing about what President Trump is doing with his tariffs-for-all strategy, I believe, is that he has no clue what he is doing — or how the world economy operates, for that matter. He’s just making it all up as he goes along — and we are all along for the ride.

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Trump is threatening to impose tariffs on rivals and allies alike, without any satisfactory explanation of why one is being tariffed and the other not, and regardless of how such tariffs might hurt U.S. industry and consumers. It’s a total mess. As the Ford Motor chief executive Jim Farley courageously (compared to other chief executives) pointed out, “Let’s be real honest: Long term, a 25 percent tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen.”

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There is no single country or company on earth that has all the knowledge or parts or manufacturing prowess or raw materials that go into that device in your pocket called an iPhone. Apple says it assembles its iPhone and computers and watches with the help of “thousands of businesses and millions of people in more than 50 countries and regions” who contribute “their skills, talents and efforts to help build, deliver, repair and recycle our products.”

We are talking about a massive network ecosystem that is needed to make that phone so cool, so smart and so cheap. And that is Beinhocker’s point: The big difference between the era we are in now, as opposed to the one Trump thinks he’s living in, is that today it’s no longer “the economy, stupid.” That was the Bill Clinton era. Today, “it’s the ecosystems, stupid.”

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Instead, there is a global web of commercial, manufacturing, services and trading “ecosystems,” explains [Eric] Beinhocker. “There is an automobile ecosystem. There’s an A.I. ecosystem. There’s a smartphone ecosystem. There’s a drug development ecosystem. There is the chip-making ecosystem.” And the people, parts and knowledge that make up those ecosystems all move back and forth across many economies.

Scott Sumner is correct: “A VAT is not a tariff.” A slice:

The sky is not green, it’s blue. And a value added tax is not a tariff.  President Trump once suggested that ‘tariff’ is the most beautiful word in the dictionary, hence you might expect him to know what a tariff actually is.

You can argue that the president should have a lot of power in order to “get things done.”  You can argue that a president cannot be expected to understand basic economic principles.  But you cannot argue both points at once.

In my view, tariff is one of our ugliest words, associated with ignorance, xenophobia, statism and nationalism.

The Wall Street Journal‘s James Taranto ponders the mainstream media’s tenuous relationship with free speech. A slice:

On “Face the Nation” Sunday, the network’s Margaret Brennan quizzed Secretary of State Marco Rubio about Vice President JD Vance’s speech in Munich faulting Europe for political censorship. When Mr. Rubio rebuffed her complaint about “irritating our allies,” she invoked the reductio ad Hitlerum: She said Mr. Vance “was standing in a country where free speech was weaponized to conduct a genocide.”

Ms. Brennan would have benefited from a fact-checker. Weimar Germany had laws limiting speech, but their application against the Nazis failed to prevent Hitler’s January 1933 rise to power. His regime suspended civil liberties less than a month later via the Reichstag Fire Decree. Free expression was a distant memory by the time the Nazis begin killing on an industrial scale.

On its own, Ms. Brennan’s comment reflects ordinary inconsistency—she wants to censor speech she finds disagreeable or dangerous.

This latest podcast by GMU Econ alum Dominic Pino is worth a careful listen.

Also from Dominic Pino is this excellent criticism of what he describes as “one of the strongest displays in recent memory of the bipartisan impulse to pretend economics doesn’t exist.” A slice:

You could demagogue this as some sort of unfair scheme by greedy financiers against the little guy, as [Bernie] Sanders and [Josh] Hawley are doing. But it’s really just a commonsense intuition that banks, which have large sums of money and borrow all the time, are going to be a lot better at paying back loans than are individuals, who have comparatively little money and don’t borrow as often. Money isn’t free, and it needs to be priced somehow. Pricing by risk makes a lot of sense, and you’re a bigger credit risk than a bank is.

Jack Nicastro applauds the advent of economically sensible supersonic air travel.

Wall Street Journal columnist Jason Riley writes insightfully about the constitutionality of birthright citizenship. Two slices:

The Citizenship Clause of the 14th Amendment, which was ratified in 1868, states in part: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States.” The Trump administration argues that the phrase “subject to the jurisdiction thereof” excludes children born to people in the country unlawfully or temporarily. Although the Supreme Court has never addressed the issue directly, lower courts have interpreted birthright citizenship to include the children of illegal immigrants.

The court typically decides to hear a case when there are conflicting lower-court rulings on an issue, but so far there has been little if any such disagreement. Last week, U.S. District Judge Leo Sorokin became the fourth federal judge to block Mr. Trump’s order. “In a lengthy 1898 decision, the Supreme Court examined the Citizenship Clause,” he wrote, “rejecting the interpretation expressed in the [Trump executive order]. The rule and reasoning from that decision were reiterated and applied in later decisions, adopted by Congress as a matter of federal statutory law in 1940, and followed consistently by the Executive Branch for the past 100 years, at least.”

Judge Sorokin was appointed by Barack Obama, but judges appointed by Ronald Reagan, George W. Bush and Joe Biden have offered the same interpretation of the Citizenship Clause in blocking Mr. Trump’s order. The “Executive Order contradicts the text of the Fourteenth Amendment and the century-old untouched precedent that interprets it,” wrote U.S. District Judge Joseph N. Laplante, a Bush appointee, in a ruling earlier this month.

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Mr. Trump and his supporters see birthright citizenship as a reward for breaking the law. Yet the Citizenship Clause concerns children, not parents. The undocumented parents’ status doesn’t change after having a child in the U.S. Parents are still subject to fines, imprisonment and deportation depending on the circumstances.

The administration has said it will appeal the lower-court rulings, and the Supreme Court may yet decide to weigh in. Liberals are in a state of panic, but Mr. Trump campaigned on challenging the policy and there’s nothing wrong with seeking guidance from the judiciary. Most of Mr. Trump’s efforts to secure the border are polling well, but an NPR/Ipsos national survey published this month found that just 31% of respondents backed ending birthright citizenship. Mr. Trump’s gambit doesn’t amount to a constitutional crisis, but that doesn’t make it a wise use of his political capital.

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