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Here’s a letter to a now-frequent correspondent.

Mr. B__:

You mistake my insistence that Americans are fortunate today not to have as many factory jobs as we had in the past – and my identifying myself as a son and grandson of pipefitters – as evidence that I’m “ashamed” of my father and grandfather.

Nothing could be further from the truth. I’m immeasurably proud of my father and grandfather, and I’m grateful that they had the economic opportunities then afforded to them. Even though I grew up in the 1960s and 1970s in a working-class American family, my siblings and I were nevertheless among the wealthiest children ever to live.

But ordinary Americans today are even wealthier, in no small part because job opportunities in the service sector (where I happily work) have expanded and improved. I assure you that my father and grandfather would have thought me mad had I dropped out of college to follow in their career footsteps.

Loretta Lynn was a famous American country-music singer-songwriter, whose anthem song, which she wrote in 1969, was “Coal Miner’s Daughter.” With unmistakable sincerity, she sang that she was “proud to be a coal miner’s daughter.” But she chose to work, not in a coal mine, but in the service sector (specifically, entertainment). In doing so, she earned a much better living than her father ever did.

Surely you wouldn’t accuse Ms. Lynn of being ashamed of her father – and you shouldn’t accuse me of being ashamed of mine.

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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Here’s a letter to National Review Online.

Editor:

With his usual excellence, Andrew Stuttaford reports on the damage inflicted by Trump’s tariffs on American manufacturing – the sector that those tariffs are meant to bolster (“Trade Goes Both Ways,” November 3).

But manufacturing is only ten percent of the U.S. economy; more than 80 percent of U.S. GDP is produced in the service sector – the sector with the highest-paying jobs. The service sector is also overwhelmingly one that, although it imports many of its inputs – for example, medical equipment used by American health-care providers – receives little protection from the tariffs. Trump’s tariffs, therefore, are nearly all cost and no benefit for four-fifths of America’s economy.

A full assessment of the tariffs cannot ignore the effects on the service sector, which is destined to contract as the prices of its inputs are artificially driven upward.

Mr. Trump and other protectionists, as they fetishize manufacturing, might applaud this outcome. But how many of these protectionists themselves work in the manufacturing sector? Certainly not Mr. Trump, whose fortune comes from real estate and marketing, and who’s now employed by the government. Also certainly not the many podcasters, pundits, and think-tank mavens who, from coffee shops or their offices, express their abstract yearnings for more manufacturing employment. And how many of these protectionists hanker for their children or grandchildren to work in factories rather than as physicians, lawyers, architects, educators, or IT specialists?

We Americans are fortunate to have such a large and productive service sector in which most of us not only do work but also want to work. I write as the son and grandson of pipefitters: Factory-floor jobs in the U.S. disappeared less because of imports than because Americans want better employment for themselves and their children – and we achieved this goal only insofar as we were economically free. Tariffs will do us no favors by forcing more American workers back into factories.

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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Thanks to my friend and former student Kim Deckant, I just realized that I’d not archived here at Cafe Hayek my April 23rd, 2013, Wall Street Journal review of Cass Sunstein’s 2013 book, Simpler. You can read my review beneath the fold.

[continue reading…]

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Here’s a letter that I sent several days ago to the New York Times. It will not be published there. (I offer here no opinion on the legality of the move to reopen this bidding.)

Editor:

Responding to Elon Musk’s objections to NASA reopening bidding on a contract for its Artimis III mission – a contract currently held by Musk’s SpaceX – Transportation Secretary Sean Duffy rightly said that “great companies shouldn’t be afraid of a challenge” (“Musk Attacks NASA Leader Over Threat to Reconsider Lunar Contract,” October 25).

It’s safe to infer, then, that the massive tariffs imposed by Mr. Trump reveal the administration’s belief that most American manufacturers are not great companies. If the president truly had confidence in the grit and ingenuity of American companies, he would welcome these companies being challenged by foreign rivals. Instead, he coddles them like weaklings behind a wall of tariffs.

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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The Editorial Board of the Wall Street Journal says about the pending U.S. Supreme Court cases on Trump’s tariffs that “it’s hard to overstate the importance of these cases for the U.S. constitutional order and economy.” Two slices:

Such arbitrary taxation without representation is precisely what the Constitution’s Framers sought to prevent by vesting power over taxes and trade with Congress. Mr. Trump likes to say other countries pay his tariffs. But the tariff is paid by U.S. importers, which have to eat the cost or pass it along to customers.

As for the law, the U.S. has run a trade deficit for 50 years and deaths from fentanyl have been declining. How do these suddenly qualify as “national emergencies”? Even if the President deserves deference over what is an emergency, the Justices in Loper Bright (2024) stressed that courts needn’t defer to the executive’s statutory interpretation.

…..

The Trump Administration tries to leapfrog all of these statutory obstacles by citing the President’s Article II foreign-policy authority. Few conservatives are more deferential to presidential overseas authority than we are. But the power of the purse still belongs to Congress and can’t simply be wished away with the words “foreign policy.” Tariffs are taxes on Americans.

If the Court blesses this unlimited presidential tariff power, future Presidents will be able to cite emergencies to justify tariffs to pursue all kinds of policy goals. An all-too-likely example is a climate emergency to tax imports of countries with high CO2 emissions.

Clark Packard drives home this reality: “IEEPA tariffs are not essential to the president’s ability to strike trade deals.” A slice:

Since the IEEPA became law in 1977, the United States has successfully negotiated and implemented comprehensive trade agreements with countries around the world: 14 major free trade agreements (FTAs) with 20 countries, plus landmark multilateral deals like the Tokyo Round and the Uruguay Round, which converted the General Agreement on Tariffs and Trade into the World Trade Organization. The WTO now comprises 166 members, covering more than 98 percent of the global trade volume.

Not one of these agreements was completed with IEEPA tariffs being imposed or threatened. Even under the administration’s mercantilist logic about the superiority of exports to imports, these FTAs and multilateral agreements were a success: in virtually every agreement, our trading partners lowered their tariffs on American exports more than we reduced ours on their goods.

Eric Boehm continues to report on the internal contradictions in the Trump administration’s case for its tariffs punitive taxes on Americans’ purchases of imports. A slice:

When the Trump administration’s lawyers go before the U.S. Supreme Court on Wednesday to argue a crucial case that will determine the limits of presidential tariff authority, they will be asking the justices to accept contradictory claims about the value of foreign investment in the United States.

In a brief filed with the court ahead of this week’s oral argument, the government’s attorneys argue that foreigners buying up American “assets” is a serious enough threat to require emergency executive powers over trade.

“By the end of 2024, foreigners owned approximately $24 trillion more of U.S. assets than Americans owned of foreign assets,” the administration argues. That imbalance has “weakened” the United States and “created an ongoing economic emergency of historic proportions.”

In the same brief—indeed, just four pages later—those same attorneys warn that undoing Trump’s tariffs would jeopardize “trillions of dollars” in foreign investment that the president has successfully negotiated. They point to $600 billion in investments pledged by the European Union and another $1 trillion promised by the governments of Japan and South Korea. Those investments, the administration argues, will “rectify past imbalances.”

Scott Lincicome tweets:

In July, Federal Reserve economists estimated that US manufacturers will pay ~$39 – $71 billion each year just to comply with Trump’s tariffs – costs that have surely increased since then bc of new tariffs (copper, wood, etc.) & special deals.

GMU Econ alum David Hebert and his co-author Marcus Witcher make clear that – despite Donald Trump’s assertion to the contrary – Ronald Reagan was no fan of protective tariffs. A slice:

Faced with mounting pressures not just from the domestic automakers and their unions, but also a protectionist (and Democrat) Congress poised to enact sweeping protectionist legislation, Reagan had a difficult choice before him.  In his autobiography, he writes, “Although I intended to veto any bill Congress might pass imposing quotas on Japanese cars, I realized the problem wouldn’t go away even if I did.” “The problem” Reagan referred to here was not “Japanese imported cars.” It was the demand for protectionist measures from Congress and the union autoworkers.

Reagan understood that vetoing any protectionist bills that Congress sent him would only forestall the inevitable and use up valuable political capital in the process.  He understood, however, that he needed to do something, so he established the Auto Task Force. At a meeting, Vice President George H.W. Bush reportedly said, “We’re all for free enterprise, but would any of us find fault if Japan announced without any request from us that they were going to voluntarily reduce their export of autos to America?” Thus, the idea of voluntary export restraint was born.  Reagan dispatched his trade representative, Bill Brock, to help with discussions.

Michael Chapman explains what shouldn’t – but, alas, what today nevertheless does – need explaining: “Democratic Socialist plans will only make NYC worse.”

The Editorial Board of the Washington Post describes Obamacare subsidies as “a Band-Aid for a fundamentally broken health care system.” A slice:

The ACA exchanges also didn’t work. The mandate was copied from European systems in which hefty penalties forced people to buy insurance, but the American version was defanged to make it more palatable. In 2010, the Congressional Budget Office projected that 21 million people would buy exchange policies in 2016. The actual number was 12.7 million. In 2017, Republicans effectively repealed the mandate entirely.

Because the mandate was so weak to begin with, this made less difference than many expected, but the number of people buying exchange policies still declined slowly. Democrats could have tried to reimpose a real mandate when they regained power in 2021, but they found it more politically expedient to just massively boost the subsidies, including offering them to families that made 400 percent of the federal poverty line. They did so under the guise of pandemic exigencies.
This had an electric effect on the exchanges, which saw enrollment more than double between 2019 and 2025. The lavish subsidies increased demand for health care while failing to increase the supply. Inevitably, this raised total costs. And now the bill is coming due.

Andrew Weintraub’s letter in the Wall Street Journal is spot-on correct:

Roland Fryer’s op-ed “The Economics of Culture” (Oct. 31) is an important reminder that the Nobel Prize committee again ignored the monumental contribution that Thomas Sowell, 95, has made to the history of economic thought. What are they waiting for?

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… is from page 259 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

What a wonderful world this would be if there were as many wise people as there are clever people.

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Phil Gramm and Mike Solon credibly predict that “the AI revolution will bring prosperity.” A slice:

In the 19th century the U.K. and U.S. governments were small and largely noninterventionist. Today both governments are large and filled with political interests eager to expand government’s role in the economy. Sen. Bernie Sanders has embraced the Luddites’ cause, calling for taxes on robots. President Biden issued an executive order imposing government oversight of the use of AI and requiring AI to promote unionism, improve the environment and advance “equity” and civil rights. The AFL-CIO president has said “working people are fighting back against artificial intelligence and other technologies used to eliminate workers or undermine and exploit us.” And this is only the beginning.

Almost every discussion of AI calls for extensive economic assistance for those who are displaced, and a growing chorus calls for a guaranteed income. These proposals show no awareness that while trade adjustment assistance, extended unemployment and our welfare system were no doubt well-intended, they have impeded workers’ transition to new jobs. Impediments are already being raised to AI. Mr. Biden launched a wave of antitrust actions against big tech that the Trump administration largely has continued.

American exceptionalism—in which Americans are more productive and have higher living standards—depends in part on our extraordinary ability to adjust to change. Europe makes it hard to lay people off, which constrains the ability to create jobs. In China, most industrial subsidies go to noncompetitive industries, not to the potential winners of the future.

Speaking of AI, John O. McGinnis makes clear that “a legal regime of strict liability standards for AI safety is not in the interest of either innovation or our national security.”

Megan McArdle warns that nostalgia for the past – a past seen through rose-tinted lenses that blind wearers to the full picture – fuels bad public policy. Two slices:

Or take travel nostalgia, a perennial favorite among lower-tier white-collar workers. As we cram into cattle class and contemplate our grim bags of stale pretzels, we salivate over those old ads featuring steak dinners or cut-to-order charcuterie being served to grinning passengers dressed to the nines. We forget why those passengers were dressed in their Sunday best rather than their sweatpants. Air travel was extremely expensive, so it was an elite experience that people dressed up for. (In the 1950s, my mother was required to wear a hat and gloves just to pick people up at the airport.)

In 1951, Trans World Airlines would fly you from New York to Los Angeles for only $110 — almost $1,400 in today’s dollars, for an 11-hour trip on a noisy propeller plane. That’s one way. Today American Airlines, which bought TWA in 2001, will sell you a round trip for $427 that goes nonstop in half the time. The food was in part compensation for the cost and experience — the quality of the food matters more if you are going to be stuck in your seat for an entire day, which is why long international flights still offer better food and amenities than short domestic hops.

…..

Old things were better in certain ways, but they were not better, period, unless you ignore critical dimensions such as convenience, safety and cost. Dreaming of the past while imagining all the drawbacks away is … well, a dream.

While dreams are fine, in their place, I’m afraid we’re not doing a great job of keeping them there. Those fantasies belong to the realm of pure imagination, along with fairies, elves and Powerball tickets. But my social media feed is filled with people who seem to take them seriously, including the vice president, who has a thing for old refrigerators, and the president of the United States, who wants to tariff our way back to the McKinley administration. We can’t go back to those days, but more importantly, no one would want to, if they actually understood what it would cost.

Will Rinehart tweets: (HT Scott Lincicome)

There’s a fascinating contradiction at the heart of Trump’s economic team: some advisors want de-dollarization to fix trade imbalances, while Trump himself threatens any country that tries it.

Robert George, writing at National Review, explains why he rejects ‘No enemies to the right.’ A slice:

So, while I understand and appreciate that politics is about “adding and multiplying, not subtracting and dividing,” and though I welcome conservatives representing a range of viewpoints on a wide swath of issues, I will not — I cannot — accept the idea that we have “no enemies to the right.” The white supremacists, the antisemites, the eugenicists, the bigots, must not be welcomed into our movement or treated as normal or acceptable.

Is this a call for “cancellation”? No. It’s a reminder that we conservatives stand for something — or should stand for something. We have core principles that are not negotiable.

The Wall Street Journal‘s Editorial Board decries the bigotry, intolerance, and sheer ignorance of the likes of Tucker Carlson and Nick Fuentes. Two slices:

Mr. Fuentes has free speech and uses it to fantasize about killing and deporting Jews. Is it now “cancel culture” to criticize Mr. Carlson for treating Mr. Fuentes like a political truth-teller and feeding him softball questions? This is a parody of what “cancel culture” meant when the campus left shouted down conservative judges and scholars. Mr. Cruz nailed the point when he said Friday that “if you say nothing when someone tells you that Adolf Hitler was cool, you are a coward and complicit in evil.”

…..

If conservatives—and Republicans—don’t call out this poison in their own ranks before it corrupts more young minds, the right and America are entering dangerous territory.

Michael Cannon sensibly asks: “What will it take for Congress to admit Obamacare has failed?”

Tyler Cowen reflects on 2025’s freshly minted economics PhDs. A slice:

The number of people on the market seems much lower this year, perhaps because of the lag with Covid, as well as more general demographic trends.  Even adjusting for the lower number of candidates, I found fewer interesting papers this year than usual, as research interests continue to narrow.  There is too much emphasis on showing quality technique by answering a small question well, rather than addressing more important questions more imperfectly. Harvard had by far the most interesting students, as most of them were considering questions I cared about. LSE looked pretty good too.  In terms of topics, I saw a lot of papers on educational testing, urban economics and mobility, and AI.  Theory seems to be permanently on the wane.  The number of co-authors continues to rise.

Overall I came away with a bad feeling from this year’s perusal, noting there are some departments I have not looked at yet.

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… is from pages 250-251 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

People who talk about helping “the little people” give me a pain. People are the same size, and have the same importance as human beings, whether they are rich or poor. Paternalism toward others has long been camouflage for power and an ego trip for oneself.

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Ben Zycher’s letter in the Wall Street Journal is superb:

Alex Flint and Kalee Kreider admit that ordinary central planning won’t reduce greenhouse-gas emissions. Yet despite “the incredible ingenuity of people and markets,” they suggest a different form of central planning is needed: namely, adaptation in the form of “changing where and how we grow crops, and where people can safely live,” among other government-driven dislocations (“We Can’t Stop Climate Change, So We Need to Prepare for It,” op-ed, Oct. 20). Do Mr. Flint and Ms. Kreider believe people and markets can’t adapt over time without the diktats of officials and experts?

In any case, none of the “dire predictions” to which they allude has come to pass. The purported “safe” limit on warming of 1.5 to 2 degrees Celsius is a political construct. There is no “science” underlying it.

Despite the authors’ assertion that “climate is easy to forecast,” the Intergovernmental Panel on Climate Change models predicting massive temperature increases by 2100 have overstated the satellite temperature record by a factor of more than two. They are driven by assumptions that even the IPCC describes as unlikely.

“Adaptation” driven by central planning will yield more misery.

Andrew Follett reports that “New England’s deep-blue states may become all too familiar with energy rationing and blackouts this winter, courtesy of the region’s overreliance on green energy.” Two slices:

The Northeastern states face an immense shortfall in conventional electrical generation capacity, leaving the power grid extremely vulnerable at times when wind and solar power are offline. This precarious situation is expected to continue for at least the next decade.

“We cannot operate the system in the wintertime without a dependable energy source that can balance the system when the sun doesn’t shine and the wind doesn’t blow. I think policymakers sometimes lose sight of that fact,” Gordon van Welie, president of Independent System Operator (ISO) New England, which manages the region’s power grid, said at a recent energy conference in Washington, D.C.

In order to function, power grids require demand to exactly match supply, which is an enormous problem for variable wind and solar power, as the amount of energy they produce cannot easily be predicted in advance. Wind and solar can burn out the grid if they produce too much — or not enough — electricity, leading to brownouts or blackouts.

…..

Blackouts have previously killed hundreds of New Englanders, especially in the winter. Until New England’s political leaders rediscover the value of reliable power, their citizens will keep paying the price for ideological energy experiments, sometimes with their lives.

Even Bill Gates is cooling his overheated rhetoric on the climate. Two slices:

The climate conformity caucus is breaking up at long last, and the latest evidence is a change of mind by none other than Bill Gates. The Microsoft billionaire turned liberal philanthropist now says the “doomsday view” about the climate is wrong, and “it’s diverting resources from the most effective things we should be doing to improve life in a warming world.”

…..

Now, on the cusp of the latest COP30 climate conclave in Brazil next month, Mr. Gates offers different advice. An essay released on his website promises “three tough truths about climate,” the first of which is that rising temperatures are “a serious problem” but “will not be the end of civilization.”

Wait—this is a hard truth? You mean humanity isn’t doomed? The only people for whom this is a “tough” message are the climate zealots who remain committed to the idea that rising temperatures are a totalizing emergency. They say this to intimidate politicians into giving them billions of dollars in green subsidies, along with other powers to remake the modern economy and society.

Mr. Gates now sounds like Bjorn Lomborg, the “skeptical environmentalist” whose writing often runs in these pages. Mr. Lomborg has been arguing for years that while warming temperatures are a reality, the world’s poor in particular face far more urgent challenges. He believes, as these columns have also long argued, that the best way to cope with rising temperatures is through innovation, adaptation, and policies that continue to spread economic growth and prosperity.

Washington Post columnist Jason Willick reports this unsurprising reality: Democrats have plans to use the increase in discretionary power that the Trump White House is seizing for the executive branch. Two slices:

Democrats will inherit the expansive presidency Trump is modeling and turn it to their own ends.

For an idea of how some members of the Democratic elite are thinking about how to use executive power, see a new report from the Roosevelt Institute, a progressive think tank. The authors interviewed 45 “senior political appointees from the Biden-Harris administration” in agencies including the Justice Department, the Consumer Financial Protection Bureau and the White House Domestic Policy Council. The focus was “lessons learned,” especially on economic policy. One takeaway: Trump’s break-glass presidential model holds significant appeal on the left, including on some surprising specifics.

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The Roosevelt Institute report reflects the appetite in influential circles for an executive after Trump who is much more willing to break procedural norms to achieve progressive ends. As one former official said, “The process should support the goal, or you blow up the process.”

This populist, presidentialist vision of governance now seems entrenched in the elites of both parties. Some of the ideas in the report — such as subjecting fewer executive branch officials to Senate confirmation, curbing forum-shopping in lawsuits and creating agency offices in the heartland — might even earn bipartisan support in a populist era.

Jason Sorens writes about amending the U.S. Constitution to require that the government’s budget be balanced.

C. Jarrett Dieterle reports on progressives’ stubborn ignorance of the nature of prices and their resulting on-going efforts to prevent the operation of the price system.

Justin Amash tweets: (HT Scott Lincicome)

“The Constitution vests the power of declaring War with Congress; therefore no offensive expedition of importance can be undertaken until after they shall have deliberated upon the subject, and authorised such a measure.”
—George Washington