GMU Econ alum Erik Matson ponders the (supposed) warmth of collectivism. A slice:
One doesn’t need to point to the obvious failures of the Soviet Union or the economic tragedies of modern-day Venezuela to establish the negative economic consequences of collectivism. They are apparent in the very problems Mamdani seeks to address. One of his first acts as mayor, he says, will be to intervene to protect tenants of a deteriorating Brooklyn building run by the now-bankrupt Pinnacle Group. The irony is that the units in the building are rent-controlled—hence their deterioration. Doubling down on rent controls and other measures of price-fixing will do nothing to make New York City prosper.
The Editorial Board of the Wall Street Journal reveals the sloppy research method behind the study that allegedly shows that the U.S. Supreme Court is “pro-rich.” A slice:
It’s barely 2026, and there’s already a contender for the year’s worst Supreme Court story. Three economists claim in a new paper that the Justices are biased in favor of the rich. How did they make this discovery? By starting with progressive assumptions, while ignoring the Constitution and the law. Yet the study has received flattering publicity from journalists eager to believe.
If that synopsis sounds unfair, here’s how the academic authors put it: “Rather than examining a justice’s ideology or purported method of statutory and constitutional interpretation, our focus is on outcomes.” The study concludes that Justices on the High Court over seven decades have been increasingly polarized regarding the wealthy, “mostly due to Republican appointees whose decisions rise from about 50% pro-rich share to a 70% pro-rich share.”
Now look at their methodology. They hired “undergraduate and graduate research assistants” to read and categorize High Court opinions in divided cases since 1953. Their instructions gave several reasons to code a ruling as “pro-rich,” including if it “finds in favor of firms against the government,” sides with employers against workers, or “decreases tax payments by individuals or corporations.”
The baked-in assumption is that regulations are good and businesses are shirkers. Don’t fret about who’s legally right, whether the government is overreaching, or what the economic impact might be. As an example, the instructions said that a decision blocking a new gas pipeline—i.e., a company losing to an environmental agency—should be labeled as a win for the poor. But don’t high energy prices disproportionately hurt the working man?
Wall Street Journal columnist Allysia Finley warns of the frigid chill many New York City tenants are destined to suffer if Comrades Zohran Mamdani’s and Cae Weaver’s scheme to collectivize rental housing proceeds. A slice:
Ms. Weaver has advocated government seizure of properties that are in distress or foreclosure so that they can become socialized housing. A majority of New York’s left-wing City Council last year signed on to legislation that would empower the mayor to do so.
Never mind that the New York City Housing Authority says it requires “$78 billion in capital investment due to decades of insufficient funding and deferred maintenance.” Or that the city’s dilapidated public-housing units have 40% more maintenance deficiencies than older rent-stabilized units and 150% more than market-rate ones, according to a city analysis.
New Yorkers don’t need to fly to Caracas to see “decommodified” housing in practice. There’s a model right around the corner.
The Washington Post‘s Editorial Board applauds efforts to reduce the U.S. government’s fiscal incontinence. A slice:
After years of neglect, four members of Congress are trying to set a target to get back not even to a balanced budget, but just to a sane one. A resolution introduced Thursday by Reps. Lloyd Smucker (R-Pennsylvania), Scott Peters (D-California), Bill Huizenga (R-Michigan) and Mike Quigley (D-Illinois) would direct Congress to target a deficit of 3 percent of GDP by 2030
This effort is not chest-thumping by budget hawks demanding a balanced budget immediately. It is bipartisan recognition that the path the deficit is on undercuts the federal government’s ability to function.
Writing at National Review, John O. McGinnis explains “why democracy needs the rich.” Three slices:
But what exactly is wrong with the wealthy? Two-thirds of the Forbes 400, a list of the richest people in America, built their own businesses. These entrepreneurs still greatly benefit the other 99 percent, contributing far more to the welfare of consumers, employees, and other shareholders than they retain in personal wealth. Highly paid chief executive officers also increase the wealth of others. For instance, the morning of August 13, 2024, Starbucks stock jumped $19 billion because one man, Brian Niccol, accepted the CEO job.
Inherited wealth often faces heightened skepticism because its beneficiaries did not perform the hard work necessary to earn it. Nevertheless, these resources typically fuel investments and propel innovation, benefiting society as a whole. Most fortunes do not simply exist as idle reserves for a privileged few. Instead, they fund philanthropic ventures and fuel the ambitions and dreams of many.
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Nor are the rich even the group with the most outsized voice. The intelligentsia, broadly defined as including journalists, intellectuals, and entertainers, wields more significant power: The chattering class shapes the short-term agenda through the media and the long-term agenda through universities. It directs the cultural currents that flow into politics through books, television, movies, and music. And bureaucrats hold substantial sway over the day-to-day operation of government: like an unseen current in a river, their influence is constant, even as often relatively inexperienced political appointees with different views struggle to control the flow. These groups have homogeneous political viewpoints. Academics and civil servants overwhelmingly favor Democrats; their standing thus drives politics systematically to the left.
The rich fortify American democracy in part because they counter the leverage of such groups. The intelligentsia wields substantial power in democracy because, unlike all other citizens, shaping public opinion either directly or indirectly is part of their job. This gives them an enormous advantage in shaping democratic outputs over other groups whose work focuses on material, not ideological, production. The wealthy have both the independence and the resources to influence public debate and therefore assure that politics and policy aren’t solely driven by the intelligentsia and bureaucrats.
The rich also serve as a vital counterweight to special interest groups, such as unions and trade associations, which often have a stranglehold on specific public policies using their organized clout against the interests of the unorganized majority. The rich ameliorate this inherent democratic deficit by funding broader, diffuse interests that may resonate with the majority but are difficult for the majority to effectively advocate on their own. In this way, the influence of the rich amplifies the voice of the many against the concentrated power of the few. In serving as a counterweight to both the intelligentsia and special interests, the wealthy contribute to one of the virtues of democracy as a political system: its openness to contestation.
It is said that the wealthy are biased by their desire to retain their wealth, but every group has its own interests. Concentrated interest groups lobby to protect their own stakes, bureaucrats benefit from an expanded state, and academics thrive in a world where their status rises compared with those who create wealth. In fact, the wealthy can be focused on longer-term public interests because they have ample provision for themselves.
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Today’s attack on the rich is often not simply an attack on a particular class or the result of envy. The deeper aim is to change America’s system of government from a commercial and civic republic to a more collectivist society, where the state holds greater and more unchecked authority. The effect will be not only to disempower the rich but also to shift power to others — bureaucrats, special interest groups such as public sector unions and professional guilds, and journalists and academics. Like a magician’s misdirection, the focus on the rich distracts from the real objective: to concentrate power in the hands of those who claim to speak for the people, while sidelining a diverse and decentralized group that has kept American democracy vibrant and resilient.
Jeb Hensarling and Michael Solon make clear that “raising the FDIC limit risks repeating the S&L crisis.” A slice:
Government insurance programs are often tied to budget-busting bailouts and economic crises. But political pressures are again driving their expansion—and when these programs fail, taxpayers are left with the bill.
Washington’s latest bad idea is the Main Street Depositor Protection Act, offered by Sens. Bill Hagerty (R., Tenn.) and Angela Alsobrooks (D., Md.) and endorsed by Treasury Secretary Scott Bessent. The bill would increase the Federal Deposit Insurance Corp. limit on all non-interest-bearing accounts from $250,000 to $10 million. But the change would apply only to midsize and community banks—not to global, systemically important banks. Smaller banks wouldn’t have to pay the estimated $42 billion for the increased insurance; the premium increases are largely shifted to bigger banks. Banks under $10 billion in assets don’t have to pay any additional premiums.
To hide the price shock from big banks inevitably passing the costs on to their customers, the bill would phase in higher deposit-insurance fees and increased required reserves over the course of a decade. Consequently, the FDIC’s ratio of guaranteed deposits to reserves—a critical indicator of the fund’s ability to protect taxpayers—would be dangerously distorted for 10 years.
We’ve seen this before. A similar lack of reserves prevented the shutdown of troubled savings-and-loan associations in the 1980s. Regulators lacked the resources in their insurance fund to close bankrupt S&Ls, forcing an era of “forbearance” when thrifts stayed open despite insolvency. It dramatically drove up the resolution cost of the S&L crisis from an estimated $25 billion had the problem been addressed in 1983 to an actual cost of $160 billion by the 1990s.
The newly proposed FDIC deposit hike resembles Congress’s 1980 increase of the insured deposit limit from $40,000 to $100,000. In its review of the S&L crisis, the FDIC said the increase “added substantially to the potential costs of resolving failed financial institutions” and worsened the moral hazard problem. The increase Congress is now considering would be more than 160 times the size of the 1980 hike.
The 2008 financial crisis represents another infamous example of expanding liabilities without necessary capital.
In the wake of the U.S. Justice Department’s newly announced criminal investigation of Federal Reserve chairman Jerome Powell, even some GOP members of Congress, including Sen. Thom Tillis (NC), warn of the resulting damage done to the rule of law. A slice:
Sen. Thom Tillis (R-N.C), a member of the Senate Banking Committee, quickly opposed the DOJ move.
“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis said. “It is now the independence and credibility of the Department of Justice that are in question.”
Tillis went further, saying he will “oppose the confirmation of any nominee for the Fed—including the upcoming Fed Chair vacancy—until this legal matter is fully resolved.”
Even a large swath of Republicans in the MAGA-friendly House were stunned.
“Will they stop at nothing to force their way on everything?” one senior House Republican said. “The administration is setting a standard they cannot achieve themselves and will haunt us all for a generation.”
Much of what are called “social problems” consists of the fact that intellectuals have theories that do not fit the real world. From this they conclude that it is the real world which is wrong and needs changing.
Some people imagine that economics and finance are complex, mysterious and almost incomprehensible subjects; but they really constitute the science of common sense, and their central truths are plain and simple. Of these, free trade stands first in practical importance, and once you have mastered the free trade principle in all its bearings you possess the elements of political economy. Free trade, or free exchange, is in reality the internal law of every pro- gressive and prosperous human society. The most reactionary Protectionist in England does not propose to “safeguard” the manufacturers and farmers of Yorkshire from their competitors in Lancashire by a tariff. The most reactionary of American Tariff-mongers does not suggest that the forty-eight states of the Union should be protected from one another. Within the Union free competition and free exchange are the touchstone of prosperity and progress. Thus in a limited sense the wisdom of free trade is universally acknowledged, and there is no logical argument against its extension from counties to countries or from interstate to international commerce.
There is something obscene about people holding protest rallies in order to try to keep getting money that someone else has worked for.
