GMU Econ alum Dominic Pino reflects on last Friday’s ruling, by the U.S. Court of Appeals for the Federal Circuit, that the tariffs Trump imposed under IEEPA are unlawful. A slice:
The government tried to defend the tariffs as a national security measure, and the court didn’t buy it. “While the President of course has independent constitutional authority in [foreign affairs and national security], the power of the purse (including the power to tax) belongs to Congress,” the court said. “Absent a valid delegation by Congress, the President has no authority to impose taxes.”
The judge who wrote the dissent in favor of much of the Trump administration’s position was Richard Taranto, who was appointed by . . . Barack Obama in 2013. It should come as no surprise that an Obama-appointed judge could find something to like in executive overreach.
The majority could have written the kind of biased, screeching, left-wing, anti-Trump opinion that some federal judges have written over the years. Instead, it wrote a boring, measured opinion that used conservative judicial principles to get to its result.
Eric Boehm is correct: “American manufacturing needs relief from Trump’s tariffs.” Two slices:
The data are becoming impossible to ignore: American manufacturers desperately need relief from the very same tariffs that the Trump administration incoherently believes are helping American manufacturers.
That conclusion is evident from both results of a new survey of manufacturing companies’ CEOs and new economic data showing that manufacturing activity has declined for six consecutive months—the sort of slide over two economic quarters that typically meets the definition of a sector-wide recession. In short, both words and actions point to something being very wrong with American manufacturing since February, which just so happens to be when Trump announced the first of what have become many rounds of new tariffs on imported goods and raw materials.
The economic data come courtesy of the Institute for Supply Management (ISM), which tracks a combination of factors including orders, employment, and inventories. A score higher than 50 in the monthly index indicates expansion, while a score below that threshold means contractions. For August, the ISM survey showed a score of 48.7, up from 48 in July.
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No wonder so few businesses are optimistic. The bearings will continue until the White House improves its understanding of basic economics.
Alex Tabarrok reports on the simple mathematics of Chinese innovation. Here’s his conclusion:
To be clear, the rise of China and India as scientific superpowers is not per se a threat. Whiners complain about US pharmaceutical R&D “subsidizing” the world. Well, Chinese pharmaceutical innovation is now saving American lives. Terrific. Ideas don’t stop at borders, and their spread raises living standards everywhere. It would be wonderful if an American cured cancer. It would be 99% as wonderful if a Chinese scientist did. What matters is that when more scientists attack the problem, the odds of a cure rise so we should look favorably on a world with more scientists. That is progress.
The danger is not China’s rise but America’s mindset. Treat science as zero-sum and every Chinese patent looks like a loss. But ideas are nonrival: a Chinese breakthrough doesn’t make Americans poorer, it makes the world richer. A multi-polar scientific world means faster growth, greater wealth, and accelerating technology—even if America wins a smaller share of the Nobels.
Mike Munger warns of the dangers that loom because of the decline in human population. Two slices:
Earth is going to hit “peak population” before the end of this century. Within 25 years, most of the world’s developed nations will be facing sharp population declines, with shrinking pools of young people working to support an ever-aging population.
The reason is not famine, war, or pestilence. We did this to ourselves, by creating a set of draconian solutions to a problem that didn’t even exist. Fear has always been the best tool for social control, and the fear of humanity was deployed by generations of “thinkers” on the control-obsessed left.
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But there is more going here than just gulling the gullible; the overpopulation hysteria of the 1960s and 1970s had world-changing consequences, effects that are just now becoming clear. It’s not fair (though it is fun) to blame Ehrlich; the truth is that the full-blown family-size freakout emerged from a pseudo-science that held growth was a threat to prosperity. Influential organizations were founded by very worried people. The Population Council and the International Planned Parenthood Federation were both created early on, in 1952. Developing nations began promoting aggressive family planning initiatives, often with substantial support, and sometimes with coercive pressures, from Western governments and international agencies.
The United Nations, the World Bank, and bilateral donors, particularly the United States through USAID, increasingly integrated population control into foreign aid programs. High fertility rates, particularly in Asia, Africa, and Latin America, were viewed not merely as demographic trends but as Malthusian obstacles to modernization, poverty alleviation, and global security. China implemented its infamous “One-Child Policy” in 1979 with coercive measures, including forced sterilizations and abortions. India conducted mass sterilization campaigns, particularly during the Emergency period (1975–1977), often using force or extreme social pressure, including withholding ration cards. A number of countries in East Asia saw aggressive state-controlled programs, often funded by the World Bank, that sought to use questionable and coercive methods to reduce population growth quickly and permanently.
My intrepid Mercatus Center colleague, Veronique de Rugy, is rightly alarmed by the prospect of a U.S. sovereign wealth fund. Two slices:
When President Donald Trump announced in August that the federal government took an equity stake in Intel, he bragged that taxpayers had “paid zero” for part of a company now “worth $11 billion.” In reality, taxpayers paid plenty: $8.9 billion in subsidies with potentially more to come. The government simply dressed up the giveaway as an investment, which some leaders see as only the beginning.
If you’re not deafened by Commerce Secretary Howard Lutnick’s cheers, you’ll hear economists from the right and the left expressing alarm. Politicians picking winners, subsidizing favored firms and now grabbing government ownership stakes create the market distortions that conservatives once decried.
Also, acting as both regulator and shareholder generates conflicts of interest on an epic scale. Will Washington regulate Intel as forcefully as the company’s competitors or tilt the field? The question answers itself.
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SWFs are political institutions and unlike private investors, governments are never disciplined by profit and loss. As then-presidential-candidate Barack Obama once warned in 2008, they can be “motivated by more than just market considerations.” Their portfolios, as [Jack] Salmon documents, have become playgrounds for lobbying, regulatory capture and ideological crusades.
J.D. Tuccille applauds the increase in alternatives to K-12 government-supplied “education.”
Phil Gramm and Jeb Hensarling defend the independence of the Federal Reserve. A slice:
The Fed is independent only in its conduct of narrowly defined monetary policy. When the Federal Reserve Board became one of the nation’s most vocal supporters of massive federal spending during and after the pandemic, it was operating outside its remit. That was also true when the Fed allowed itself to get caught up in climate politics and created internal climate committees. It also jumped on the DEI bandwagon: It sponsored a diversity conference and redefined its maximum employment mandate to be “a broad and inclusive goal.”
By involving itself in the political process, the Fed undercut the argument that it should be independent of that political process. Political independence, like virtue, is hard to reclaim once lost.
Despite the Fed’s failings, we continue to support its independence in conducting monetary policy and oppose the president’s attacks on it. We don’t take this stance because we support the actions of the current board but because those principles hold true regardless of who holds office at the Fed.
In 2017 we both urged President Trump to appoint as chairman John Taylor of Stanford’s Hoover Institution. Jerome Powell’s monetary record is mixed. He deserves credit for bringing inflation down from its 40-year high and, at least so far, reducing the Fed’s balance sheet without disrupting economic activity. On the other hand, he helped cause that inflation when he refused to respond to rising prices based on the argument that the inflation was the result of a supply shortfall and therefore transitory. That argument wasn’t credible given that the federal government was spending more in two years than it had ever spent in three and the Fed during the pandemic was expanding the money supply faster than in any other year since World War II ended. But again, the issue isn’t Mr. Powell’s record—it’s monetary-policy independence.
That brings us to Gov. Lisa Cook. We don’t have sufficient information to judge whether she violated the law or engaged in unethical conduct worthy of removal. There has yet to be a formal investigation, and she has not been formally charged, much less convicted, of anything. Her “for cause” firing appears to be another assault on monetary policy independence.
Does the president have the authority to fire Mr. Powell or any other member of the board at his discretion? We believe that in creating the Federal Reserve, Congress delegated an enumerated power that Article I, Section 8 of the Constitution had given it. The Founding Fathers knew the long history of executives abusing the power to create money. As with other potentially dangerous powers, such as the power to tax, spend public money and declare war, the Founders concluded that the safest bet was for Congress to hold “the power to coin money and regulate its value thereof.”
How very agreeable it must be to sit at a table in a casino where nobody seems to lose, and to play with a big stack of chips furnished to you by other people, and to have the further assurance that, if anything should ever chance to go wrong, you yourself are guaranteed by the tax dollars of those whose money you are throwing about in the first place! It’s enough to make a cat laugh.
A careful definition of words would destroy half the agenda of the political left and scrutinizing evidence would destroy the other half.
It depends. 
