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Here’s a different angle on Greg Ip’s flawed column on China’s “industrial policy of everything.”

Editor:

Greg Ip warns that the American and other economies will be left “in the dust” by China’s “industrial policy of everything” (“Beijing’s ‘Industrial Policy of Everything’ Leaves Rest of the World in the Dust,” May 15).

For two related economic reasons, Mr. Ip is mistaken.

The first reason is scarcity. Beijing cannot expand all of China’s industries simultaneously. To pump more resources today into the production of, say, rare-earth minerals and steel is necessarily to pump resources out of other industries, say, petroleum and aluminum. Therefore, Beijing’s mandarins can increase the productive capacity of some Chinese industries only by decreasing the productive capacity of other Chinese industries.

The second reason is comparative advantage. Even if, by some miracle, Beijing were to increase the productive capacity of all industries in China, some of these industries would nevertheless produce their outputs at higher costs than are incurred by their foreign competitors. These relatively higher-cost Chinese producers would thus be unable to compete successfully in global markets.

In short, basic and inescapable economic realities ensure that we Americans have nothing to fear from Beijing’s “industrial policy of everything” – which is a policy that attempts to achieve that which is economically impossible.

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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My former Mercatus Center colleague Walker Wright explains how trade promotes peace. Two slices:

While the liberal peace theory remains influential, a growing wave of empirical research over the last three decades suggests that markets may play a bigger role than the ballot box. This shift in consensus toward what’s known as the capitalist peace theory posits that trade openness and economic interdependence are among the primary forces that mitigate war. Of course, scholars continue to debate over how much trade and economic freedom contribute to peace. But liberal peace theorists now include economic interdependence as an essential element within the broader liberal peace project. Economic interdependence s “part of the glue that cements the ‘liberal peace’ together.” As trade has grown worldwide, so has peace.

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Over two centuries ago, German philosopher Immanuel Kant wrote, “The spirit of trade cannot coexist with war, and sooner or later this spirit dominates every people. For among all those powers (or means) that belong to a nation, financial power may be the most reliable in forcing nations to pursue the noble cause of peace[.]” Others echoed this sentiment. “PEACE,” Montesquieu argued, “is the natural effect of trade.” In Rights of Man, American revolutionary Thomas Paine described commerce as “a pacific system, operating to unite mankind, by rendering nations, as well as individuals, useful to each other … If commerce were permitted to act to the universal extent it is capable of, it would extirpate the system of war, and produce a revolution in the uncivilized state of governments.”

These philosophers and revolutionaries were correct. In the end, trade steers us away from war and brutality and toward peaceful cooperation. If we care about a future that is richer, freer, and more humane, then keeping markets open and people connected through trade is one of the surest paths to a more peaceful world.

Here’s a short clip, from a talk that I gave for AIER this past Wednesday, on why trade reduces the chances of hot shooting wars.

Inu Manak and Allison Smith describe Trump’s trade ‘policy’ as “self-defeating” and as an “illusion of reciprocity.” Three slices:

But the Trump administration’s approach is not reciprocity at all. It is coercive unilateralism dressed up as reciprocity. The United States has pursued reciprocal trade for the past 90 years, but what Trump is doing breaks from this tradition. Under the threat of tariffs and, in some cases, territorial expansion, the administration has pressured U.S. trading partners to accept unbalanced trade concessions. Washington’s goals are to rebalance trade by tilting the playing field in favor of U.S. firms and producers, to force partners to pay for what Trump perceives as past unfairness, and to realign trade policy with foreign policy goals that preserve U.S. hegemony. Other countries are expected to give a lot but get little in return.

The United States, however, cannot remake the entire international trading system on its own. Any structural change to the international order requires others to buy in to the vision that is being sold. U.S. trading partners may be willing to try to appease Trump in the short term, but they do have other trading options—and they are already starting to pursue alternatives to the United States. Trump will need to offer them a few carrots along with using sticks if he wants these trade arrangements to last. Otherwise, the trust and order that the United States built through decades of careful trade compromises will quickly run out. An “America first” trade policy will leave America behind.

…..

Trump’s version of reciprocity has meant negotiating deals that are unlike traditional U.S. trade agreements. In line with his general ethos of moving fast and breaking things, the deals he has struck have bypassed Congress—even though it holds the constitutional authority to regulate commerce with foreign countries, including setting tariff rates. These agreements also lack neutral enforcement mechanisms, making them less durable and more likely to be seen by trading partners as nonbinding. Although a small number of deals resemble the form of typical trade agreements, with detailed commitments to abide by global trade norms such as regulatory transparency, most are loose frameworks that merely set up space for future dialogue. This means that it is not obvious what compliance looks like, leaving room for the United States to claim a deal was breached and demand retaliation.

The United States is not actually lowering tariffs in these trade deals. Instead, it is offering to reduce tariffs from punitive levels to new baseline rates that Trump set on so-called Liberation Day in April 2025. U.S. trading partners are being asked to give more access to their markets to U.S. firms and to accept more restrictions on their exports to the United States. Although the U.S. Supreme Court ruled that Trump’s emergency tariffs were unconstitutional, the administration is working to find alternate tariff mechanisms to form the basis for the agreements it struck before February 2026.

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As Washington abandons reciprocity for coercive unilateralism, the biggest victim may be the United States itself. The administration’s insistence on using tariffs as its primary trade tool will raise costs for U.S. consumers and businesses and antagonize its friends and allies. And despite the bluster from the White House, the strategy has clear limits. The cost of using economic coercion against friends is higher than the value of the new market access that can be won through the administration’s patchwork of deals. When trade deals are truly reciprocal, U.S. partners are willing to provide market access and align their policies with Washington at a relatively low cost. But a coercive approach erodes partners’ domestic support for cooperation with the United States and increases political friction.

The Trump administration’s trade agenda is not only asymmetric; it also fails to meet the moment. Countering China’s economic coercion requires a viable alternative that other countries can get behind. Yet Trump has largely wasted leverage on trading partners that were already willing to come to the table, including Japan, the United Kingdom, and Vietnam, and done little to convince some of the largest markets—Brazil, China, and India—to seriously negotiate. And the United States is losing leverage because its attempt to go it alone on trade has encouraged the rest of the world to cooperate more, not less, giving countries more alternatives to Washington.

GMU Econ alum David Hebert decries the Trump administration’s “endless search for emergency tariff authority.” A slice:

The legal foundation for taxing every import into the US has now rested, at various points in the past year, on a 1977 emergency powers law, a 1974 statute designed for a monetary system that no longer exists, and — if the administration’s next move is what trade lawyers expect — a Depression-era provision that has never once been used to impose actual tariffs in almost a century. At some point, running out of legal justifications is a signal worth heeding.

Reason‘s Eric Boehm continues to write insightfully about Trump’s tariffs punitive taxes on Americans’ purchases of imports. A slice:

Simply put: you can’t make tires without rubber, and it is impossible to buy rubber that isn’t imported—because rubber trees do not grow in the United States. (Unless you count the one at the U.S. Botanic Garden in D.C., but that’s probably not going to produce enough rubber to supply Goodyear’s needs.)

That means American tire companies import rubber from places like Thailand, which has a climate well-suited to growing rubber trees and produces a lot more rubber than its domestic industries can consume. Naturally, Thailand exports a lot of that excess rubber to other parts of the world, including the United States.

However, the Trump administration sees other countries with a surplus of rubber production as a threat to be targeted with tariffs. In March, the Office of the U.S. Trade Representative claimed that Thailand’s “trade surplus in sectors such as…rubber” was grounds for slapping higher tariffs on those imports.

That makes very little economic sense.

“Tariffs on natural rubber, no matter how high, won’t bring rubber-tree plantation jobs to Minnesota or North Carolina, but will raise costs and reduce sales for every U.S. manufacturer of airplane and truck tires, vibration dampers in bridges, specialized medical equipment, and so on,” wrote Ed Gresser, a former assistant U.S. Trade Representative, in a prescient piece published earlier this week by the Progressive Policy Institute, where he is a vice president.

George Will writes about Rep. Don Bacon (R-NE), one of the relatively few serious legislators in today’s Congress; Bacon has had enough and is not seeking re-election. A slice:

In the making of laws, Bacon has occasionally made himself a nuisance to people who deserve to be tormented. As he did in February.

The Republican-controlled House was doing its job as it miserably understands this: tugging its forelock and doing the president’s bidding. The president’s confidence in his arguments for his tariffs can be gauged by his eagerness to squelch debate about them.

The House Republican leadership was determined to pass a gag rule to prevent a debate on ending the “emergency” that supposedly justifies the tariffs. The GOP leadership could not afford to lose even three Republicans. Bacon was one of three recalcitrant.

The White House tried to buy Bacon’s compliance by promising tariff and other special benefits for three businesses in his district. Bacon thought the legality of this was dubious, and its unseemliness obvious.

During hours of pressure, a member of his party’s leadership said, “Don, look me in the eye before you vote ‘no.’” Bacon said: “I did before the vote.” The gag rule having failed, the next day the ungagged House rebuked Trump for his tariffs against Canada.

Raymond Niles makes clear that so-called “perfect competition” is highly imperfect; we denizens of market economies ought to give thanks daily that we are at no risk of experiencing it in practice. [DBx: A few years ago, I wrote similarly.]

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… is from page 71 of Deirdre McCloskey’s forthcoming book, Equality of Permission:

“Gimme,” says the voter, believing in the promises by socialists or New Liberals that her benefit is easily achieved by a little pillaging of scapegoats – the bourgeoisie or the rich or the Jews or the foreigners. “Let us have more goodies at other people’s expense.”

DBx: Yep. Far too many politicians – left, right, and center – promise to give voters stuff that is asserted to be either free or paid for by other people who don’t deserve to have what the government takes from them. And far too many voters swallow this convenient excuse for agreeing to receive goodies from the government.

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In my latest column for AIER I use a personal experience from my childhood to launch a discussion of the ubiquity of competition and the damage done by government regulation. Two slices:

Sometime in the early 1970s, when I was 12 or 13 years old, amazing news swept through my family: Uncle Malcolm was going to fly to a business meeting in Baltimore. I’d never known anyone who flew commercially, so this development struck me as stupendous. And stupendous it was.

To see Uncle Malcolm off from the airport on his exotic journey were my parents, my three siblings and me, my maternal grandparents, and my Uncle Eddie with his wife and two daughters. An entire clan gathered at the airport just to watch Uncle Malcolm board the plane. (This was long before non-passengers were prohibited from going through security.)

I remember it well. It was a nighttime flight. I stood at the airport-terminal window looking out at the nose of the big jetliner that Uncle Malcolm had just boarded, envying him for doing something that I’d never done and had no reason to think that I would ever do. Standing next to me, gazing at the plane, was my Uncle Eddie.

“I hope,” I told him without much real hope, “that one day I’ll get to fly in an airplane.”

“I bet you will one day,” Uncle Eddie replied kindly, although with how much sincerity I cannot say.

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Here’s the view from 30,000 feet. When producers are allowed to compete on all margins, including price, they discover the optimal mix of prices and amenities that best satisfy their customers. When governments obstruct that competition, it gets redirected into changing the quality of goods and services such that the resulting price-quality mixes are less desirable than would be the mixes that emerge without government intervention.

After airlines were deregulated almost 50 years ago, consumers revealed that they wanted lower prices with less quality. And by more recently rejecting the bare service offered by Spirit Airlines, consumers revealed that quality can be so low that even very low prices are insufficient compensation to put up with such low quality. These results emerged from competitive market processes and deserve respect. But alas, just as airline regulation forced American air passengers to buy what they would have preferred not to buy, the government’s continuing itch to override market processes will oblige consumers in the future — whenever such interventions occur — to suffer worse economic outcomes.

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Here’s a letter to the Wall Street Journal.

Editor:

Greg Ip warns that China’s “industrial policy of everything” will leave the “rest of the world in dust” (“Beijing’s ‘Industrial Policy of Everything’ Leaves Rest of the World in the Dust,” May 15).

We’ve seen this movie before. An authoritarian government replaces the allocation of resources by markets with allocation by mandarins. That government boasts that its brilliant central plans will unleash an economic boom that will energize all of its industries and raise them to global dominance. Politicians and pundits in countries with market economies are enchanted by the authoritarian state’s swagger, fine words, and pretty plans; they insist that the only hope for saving their economies from the superpower economy being engineered abroad is for their governments also to suppress free markets and elevate government’s role in the economy.

Yet at the end of every such flick, the governmentalization of the foreign economy is revealed to have produced, not a mighty warrior, but a corrupt, dissolute, and diseased invalid.

If politicians and bureaucrats could reliably outperform markets, China’s economy would have been at peak performance under Mao, India would have enjoyed spectacular economic growth under Nehru, and the Soviet Union would still exist, with the standard of living of its citizens being the highest in the world. We Americans, meanwhile – cursed as we are with our bumbling market economy – would be among the poorest people on earth.

But, of course, reality proved otherwise. Why does Mr. Ip suppose that the conclusion of Pres. Xi’s remake of this tired movie will be different?

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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My intrepid Mercatus Center colleague, Veronique de Rugy, explains that entrepreneurs who succeed in the market do so in large part because of market discipline – discipline that is lacking in the government sector. A slice:

Their presumption is that a government can expertly run the economy if only staffed with expert businesspeople. In a recent episode of his podcast, tech investor and venture capitalist Joe Lonsdale talked with former private equity investor Ben Black, the new CEO of the U.S. International Development Finance Corporation (DFC), about the $205 billion budget he oversees “to invest in U.S. strategic interests, build new markets, and deliver real returns for taxpayers.”

While I appreciate the optimism, it reflects a fundamental misunderstanding of what makes private markets work. The government is not some company unluckily plagued by incompetent executives. It is a different institution entirely from those beholden to the market. In the private sector, competitively determined prices, profits, and losses reveal what works and what doesn’t. These signals are ruthless and, thankfully, clear. Good investments get rewarded. Bad ones get punished. The feedback is quick and the accountability personal.

A government operates on different—and worse—incentives, constraints, and feedback mechanisms. Injecting it with private-sector knowledge and ambition does little to change the dysfunctional features of political decision making. It has no prices set by supply and demand to guide its political decisions. It has no profit signals for strategic investments and no loss mechanism to punish faulty judgment. When a government agency backs the wrong project, nobody can be expected to lose a job or salary. When a sovereign wealth fund makes a bad bet, the bill is covered by taxpayers who had no say in the matter.

Clark Packard and Alfredo Carrillo Obregon review the history of Section 122 of the Trade Act of 1974 and make a powerful case that “the Trump administration’s Section 122 tariffs require the existence of a monetary world that ceased to exist more than 50 years ago.”. Two slices:

The provisions that became Section 122 were scrutinized as the bill moved through Congress. Witnesses at hearings before the House Ways and Means and Senate Finance Committees questioned the effectiveness of using tariffs to address fundamental BoP problems in light of the US adopting a floating exchange rate. Rep. Henry Reuss (D‑WI), who would later chair the House Banking Committee, approved of the bill yet described Section 122 as “superfluous and unwise” given the dollar’s floating rate. House Ways and Means Committee Chair Wilbur Mills (D‑AR) and Nixon’s Treasury Secretary George Schultz agreed that exchange rate adjustments, rather than tariffs, would be a more effective solution for a longer-term BoP problem.

The Trade Act of 1974 was enacted on January 3, 1975, meaning that Section 122 lay in disuse for more than 50 years until President Trump used it to impose the current 10 percent tariffs. In most of the intervening years, the US had run persistent trade deficits, yet presidents had not felt compelled to invoke Section 122. This issue came to a head in 1984, when the Senate Finance Committee asked the Reagan White House to determine the applicability of the statute for addressing the nation’s trade deficit. As [Phil] Magness explains, Martin Feldstein, the chair of Reagan’s Council of Economic Advisers, rejected this contention, arguing that because net private investment offset the US current account deficit, the country did not need to draw down its official reserves and thus the US was not experiencing a BoP deficit.

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Even though President Trump has tried to justify the tariffs as necessary “to deal with large and persistent balance of payments deficits” pursuant to Section 122(a)(1), the economics of the BoP today explain why the alternative justifications under the statute also do not hold up. Section 122(a)(2) permits tariffs “to prevent an imminent and significant depreciation of the dollar.” Measured against a basket of currencies, the US dollar indeed depreciated by 8 percent between January 21, 2025, and February 19, 2026 (i.e., the day before the Supreme Court’s IEEPA ruling), but this rate of change is not uncommon over the course of a year in the floating-rate era. (And in fact, the dollar has slightly appreciated since the ruling.)

More importantly, the depreciation since January 2025 is the result of other political and economic factors, not the US being unable to finance its current account deficit (which it does year after year through financial account surplus). Because these accounts practically offset each other, it is unnecessary to impose tariffs “to cooperate with other countries in correcting an international balance-of-payments disequilibrium” under Section 122(a)(3), notwithstanding concerns about excess surpluses and deficits across different countries’ current accounts.

Laurie Hays urges the Food and Drug Administration to treat us Americans as adults by allowing us more freedom to make our own health-care decisions. A slice:

I’ve been reading with horror about the Food and Drug Administration’s recent rejection of Replimune RP1 injection, one of the most promising drugs to fight metastatic melanoma in recent years. As a result of this decision, thousands of desperate patients have lost a chance at being among the one-third who have failed other courses of treatment and have already benefited from the drug in trials.

Numerous journalists, led by the Journal’s Allysia Finley, quote leading oncologists decrying the absurd and dysfunctional process that led to the FDA’s decision. Under the leadership of Marty Makary, who resigned this week under pressure from President Trump, the FDA twice moved the goalposts for approving Replimune RP1. One new requirement asked for an inhumane placebo control group, to which no physician could agree.

Mr. Trump reportedly lost patience with Dr. Makary and his deputy Vinay Prasad, who had been fired once already, for stalling on the approval of fruit-flavored vapes—no joke. But perhaps the FDA can revisit Replimune RP1. Replimune Group stock, which plunged after the rejection, rose with the news of Dr. Makary’s departure.

Time is of the essence. Replimune Group, a small biotech firm in Woburn, Mass., has laid off 60% of its workforce and is concentrating its limited resources on a treatment for an ocular uveal melanoma, a rare but also deadly form of the cancer.

GMU Econ alum Jeremy Horpedahl asked Google Gemini Pro to imagine a world without data centers.

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… is from page 97 of Eamonn Butler’s excellent 2021 book, An Introduction to Trade & Globalisation:

Too often, people imagine that global value chains arise naturally, by themselves. In fact, such highly sophisticated structures do not come together by chance. Someone has to decide which of the many parts of the production process are best sources from where and from whom. Are there economies of scale if manufacturing is done by a single firm, for example, or is it better divided between specialist firms and countries – technical components being made in skilled-labour countries, say, and assembly done in cheap-labour countries? Whatever the answers, all the various elements in the production chain must be designed, financed, made, assembled, finished, packaged, transported, marketed and sold into a diverse array of countries with diverse rules and diverse consumers. That all takes conscious planning and management by practitioners who have an international reach and a deep, direct and up-to-date understanding of the markets in which they operate. TNCs [transnational corporations] have all these qualifications.

DBx: Yes.

Pundits, professors, and politicians talk glibly about ‘reshoring’ supply chains and about the need to take account of the risks of sourcing inputs from this or that foreign country. The pundits, professors, and politicians who talk this way presume either that existing supply arrangements are random or that the private firms that rely upon various sources for their supplies are myopically motivated exclusively to pay the lowest monetary prices today for their supplies.

Each of these presumptions is mistaken. Private business people have strong incentives to correctly assess the various risks and rewards of alternative sources of supplies and to choose those particular sources that are most likely to work best over the long run. Of course, they won’t always get it right, but what’s the realistic alternative? The notion that elected officials and their bureaucratic underlings in government will outperform private decision-makers – the belief that think-tank pundits, professors of this, that, and the other thing, or government officials have more expertise, information, skill, and incentive to correctly determine how to arrange supply sources – is ludicrous. Yet this belief is so commonplace that it strikes few people as odd.

The likelihood of pundit Oren Cass, professor Dani Rodrik, politician Donald Trump, or political appointee Jamieson Greer having deeper insight than do business people spending their own money into the most appropriate ways to source supplies is no higher than is the likelihood of me having such deeper insight. And I assure you that I have no such insight. This likelihood, in short, is practically zero.

A more-general point here is that all proponents of industrial policy suffer a from the arrogant pretension that they have information – or access to information – not only that they simply do not have, but that is impossible for anyone to have independently of an on-going competitive discovery process.

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Here’s a letter to the Financial Times.

Editor:

Daire MacFadden parrots what is perhaps the single-most repeated line in today’s discussions of international trade and U.S. trade deficits: “persistent imbalances have hollowed out domestic manufacturing” (“A Keynesian solution to global imbalances,” May 10).

Although this claim about the alleged hollowing-out of domestic industry echoes hither and yon as if it’s beyond doubt, it is false.

It is false theoretically because a country can run persistent trade deficits (as the U.S. has done now for 50 consecutive years) as a result of that country attracting global capital that enlarges that country’s industrial base directly – for example, Kia building a factory in West Point, Georgia. An influx of global capital can also enlarge that country’s capital base indirectly by lowering domestic interest rates which, in turn, spurs domestic investment.

What’s so carelessly called “imbalances” in today’s world of flexible exchange rates are not imbalances at all, for trade (or “current-account”) deficits are exactly offset by capital-account surpluses.

MacFadden’s claim is also false empirically. Since 1975 – the last year when the U.S. ran an annual trade surplus – both inflation-adjusted U.S. industrial production and U.S. industrial capacity have grown by 148 percent (as U.S. population has grown by 59%). It’s true that industrial production in America has been flat for the past 15 years, but the same is true, for example, for industrial production in Germany – which has run persistent trade surpluses.*

And the U.S. today produces more manufacturing output than does any country on earth except China – a country with more than four times the population of the U.S. Per-capita, Americans today produce 150 percent more manufacturing output than do the Chinese.

These assertions of the U.S. economy being “hollowed out” are, well, hollow.

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

* See these figures, the first showing German industrial output, and the second showing Germany’s trade balances.

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The Cato Institute’s Colin Grabow reports that “waiver data reveal how the Jones Act blocks American trade.” Three slices:

Since the Trump administration waived the Jones Act on March 17 for energy products, fertilizer, and related inputs, the US Maritime Administration has been publishing voyage-level data on every domestic cargo movement that has utilized the 1920 law’s suspension. We’ve turned that data into an interactive infographic that lets readers explore all 45 voyages completed thus far, including the vessels involved, cargo carried, and ports visited.

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It’s all further confirmation that the law has been suppressing intra-US trade. But that’s just from a higher level. Some of the granular data produced by the waiver provides arguably even more noteworthy insights.

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For an administration committed to “America First” economics, the early results clearly show that the law is not protecting American commerce but blocking it. No wonder the Jones Act’s supporters are so adamant that the waiver go away.

My intrepid Mercatus Center colleague, Veronique de Rugy, writes not only about John Maynard Keynes and his advocacy of deficit spending during economic downturns, but also about Jim Buchanan’s and Dick Wagner’s explanation that Keynesian economics is politically unworkable. A slice:

Public choice economist James Buchanan made this point with characteristic clarity. In Democracy in Deficit, co-authored with Richard Wagner, he argued that the most important legacy of John Maynard Keynes was not a specific policy prescription but a shift in fiscal norms. Before the Keynesian revolution, there was a widely held expectation, though imperfectly observed, that governments should balance their budgets over the business cycle, running deficits only in exceptional circumstances. The old Hamiltonian norm. And Keynesian economics, properly understood, also called for deficits in recessions and offsetting restraint or surpluses in expansions. But Buchanan’s and Wagner’s insight was that democratic politics would not implement the symmetry embedded in that prescription. Deficits in downturns are politically attractive; surpluses in good times require tax increases or spending cuts on a satisfied electorate and are therefore systematically avoided. The result is a persistent deficit bias: deficits in recessions, insufficient surpluses in expansions, and a gradual accumulation of debt over time.

Buchanan and Wagner’s conclusion was institutional rather than merely descriptive. Because ordinary political incentives tend to produce this asymmetry, they argued for fiscal rules, such as a balanced-budget requirement, to better align policy with long-run sustainability. The continued growth of large, unfunded commitments in programs such as Social Security and Medicare reflects, in part, the same underlying political dynamics Buchanan and Wagner identified: not a deliberate embrace of permanent deficits as theory, but the predictable outcome of a system in which the discipline required to run surpluses is politically fragile.

The Washington Post‘s Editorial Board offers sound reasons for tamping down hostility to data centers. A slice:

But energy doesn’t have to be a zero-sum game. Many data centers are motivated to build out their own energy capacity, which would help insulate nearby residents from price shocks while also ensuring steady supply for themselves. Government can help by getting out of the way of energy producers and embracing an all-of-the-above approach to production.

In Gallup’s poll, 18 percent of data center opponents now cite water usage as a reason they would oppose a data center, but that’s a less defensible worry. Much of the alarm traces to Karen Hao’s 2025 bestseller “Empire of AI,” which claimed a Google data center in Chile could consume more than a thousand times a town’s water supply. That figure is off by a factor of a thousand, due to a unit conversion error Hao later acknowledged.

Jason Sorens busts the myth of an ‘oversupply’ of housing in the U.S.

Michael Strain explains that “the war on billionaires is dangerous nonsense.” A slice:

Moreover, like tech entrepreneurs, hedge-fund managers create value that accrues to all of society. Apart from building projects and tax revenue, firms like Citadel help to ensure that capital is allocated efficiently throughout the economy, which ultimately makes workers throughout the entire economy more productive, increasing their wages and living standards.

Here’s the abstract of a new paper by Daniela Vidart:

This paper examines correspondence education as an alternative educational pathway in early 20th-century America. Using newly digitized records from the International Correspondence Schools—the largest such institution, with over 4 million students by 1940—linked to census data, I show that enrollment increased the likelihood of skilled employment by 6-10pp within 3-10 years, particularly among younger students who used it as a substitute for high school. I develop a general equilibrium Roy-style model where individuals sort into educational options by ability. Consistent with the model, correspondence education facilitated skill acquisition for lower-ability individuals and improved selection into high school, amplifying its returns.

[DBx: Note that the International Correspondence Schools were private, for-profit enterprises and, thus, they are an historical example of how private-sector entrepreneurs supplied valuable education.]