Leave that debate aside and examine the premise of the complaint that we don’t do all-encompassing collective efforts anymore. Maybe we don’t do them because they generate more ruin and folly than good.
The one great exception to that rule—the abolition of racial discrimination in 1964-65—involved the dismantling of state power more than its imposition. The War on Poverty, launched at the same time, succeeded in boosting the unearned income of the poor, but at the cost of making welfare dependency and its ill effects permanent features of American life. Six decades later, taxpayers spend well over $1 trillion a year to prosecute this metaphorical war. As John Early, Robert Ekelund and Phil Gramm showed peremptorily in “The Myth of [American] Inequality” (2022), average real income in the bottom fifth of earners grew by 681% from 1967 to 2017 when you include government benefits. Yet nobody claims the War on Poverty succeeded or that the poor have escaped immiseration. A well-meaning attempt to mitigate suffering by collective effort instead perpetuated it.
More recent salvific efforts also flopped. The 2009 “stimulus” bill—“the most sweeping economic package in U.S. history,” as President Obama called it—sent $825 billion sluicing through the economy in an effort to stave off recession and bring down jobless claims. The country moved out of recession, technically defined, and into a long era of anemic growth and stubbornly high unemployment. Later attempts to vindicate the 2009 stimulus almost always involve the conveniently unfalsifiable claim that the economy would have deteriorated further without it.
As for the most recent catastrophe, the 2020-21 pandemic, you have to search hard for robust defenses of lockdowns, school closures and blowout spending.
“Trump’s light AI touch keeps getting heavier” – so explains James Pethokoukis.
As such, the most important question for poor countries is not who gains most from growth. It is whether growth happens at all. The countries that are home to most of the world’s remaining extreme poor — places like Madagascar, the Democratic Republic of the Congo, Mozambique, Malawi and Burundi — have not grown for decades. Our World in Data’s Max Rosen points out that Madagascar’s GDP per capita today is roughly the same as it was in 1950.
The reason isn’t a lack of development aid. These are among the world’s most aid-dependent economies. The DRC has received tens of billions of dollars in foreign aid over decades and $1.3 billion in 2024 from the U.S. alone. In past years, Mozambique received as much as half of its government budget from foreign aid. These countries have been the focus of development programs, nongovernmental organization activity, World Bank projects, bilateral donor attention and charitable intervention for generations.
Countries don’t get stuck in extreme poverty because the world has ignored them. They get stuck because they do not produce. And they do not produce because the institutional conditions that make production possible — secure property rights, the rule of law, open markets, protection from predatory government — are largely absent. Countries ranking at or near the bottom of economic freedom indexes are also the poorest. Those that liberalize experience across-the-board income increases.
Economist Vincent Geloso’s research finds that economic freedom is one of the strongest predictors of who escapes persistent poverty and who stays trapped. Colin Doran and Thomas Stratmann have found much the same. The mechanism is straightforward: Property rights give people an incentive to produce. Lower regulatory barriers let businesses form and labor move toward opportunity. Freedom from predatory government encourages long-term investment. Remove these conditions and countries stagnate, no matter how much aid they get.
Scott Winship understandably continues to be skeptical of the empirical claims of Piketty-Saez-Zucman. (HT Scott Lincicome)
David Henderson argues that “Matt Zwolinski makes Emmanuel Saez’s error.”
At the auto dealership, Anderson Economic Group estimated that for a domestically assembled vehicle, the combined effect of steel and aluminum input tariffs and the 25-percent tariff on imported parts adds $2,500 to $4,500 to the sticker price of a new vehicle.
For a fully imported car, S&P Global Mobility put the figure as high as $12,000. The National Automobile Dealers Association estimated an average increase of $3,000 to $4,000 across the new-car market. This is the inevitable result of taxing the steel used for every brake rotor, exhaust system, and engine block assembled in the United States.
A transmission set at $2,000 wholesale faces $500 in new tariff costs. An engine block at $5,000 will have $1,250 tacked on top.
…..
Tariffs also reach the grocery aisle. Steel and aluminum tariffs are estimated to increase the cost of canned food by 15 to 20 percent, and the same trend hits the beer fridge. The Beer Institute has documented that aluminum is the single largest input cost in American brewing. The US beverage industry paid more than $1.7 billion in excess costs through 2023 from Section 232 tariffs alone — and that was before the 2025 escalation.
The Senate Armed Services Committee appears ready to do what the Republican-controlled Congress should have put a stop to: write the Trump administration’s equity stake power grab into law.
Buried in the Senate-reported version of the latest National Defense Authorization Act is a new subtitle on “Equity Investments and Related Matters.” Its central provision, Section 1051, would give the Department of Defense’s Office of Strategic Capital (OSC) explicit authority to make equity investments in private companies. The bill would establish a new “Department of Defense Equity Investment Account” in the Treasury and authorize OSC’s director to use that account to make equity investments.
Democrats, of course, continue to be fond of wasting other people’s money.
Arnold Kling explains why systems get gamed. A slice:
Systems decay as people learn to game those systems.
I think that one could extend this into a general theory of institutional decay. Every business, religion, political system, or set of social norms is subject to being gamed. People will figure out how to use the rules and practices of the institution to gain personal advantage, at the expense of the overall health of the institution. If the institution manages to adapt and renew itself so that its incentives deter the worst sorts of gaming, it will survive. Otherwise, it will rot.
Protectionism … gradually dulls our awareness of our comparative advantages as well as opportunities to pursue them. Tariffs and import quotas seek to offset foreign competition’s impact on a given domestic industry. For a time, they may even succeed. But such measures also discourage that industry from adapting and becoming more efficient. The more you protect an industry, the more inflexible and inefficient it will become. If protectionist measures are thus systematically applied to more industries across a state’s economy, the same inefficiencies and inflexibility will emerge everywhere, thereby weakening that economy and therefore a state’s ability to resource its national security needs.
With nearly every member of both Houses professing belief in the principle of protection, the question as to what sort of protection is proper and what is not proper was frequently raised. The tests that were advanced to separate the just from the unjust were many, and often conflicting. Despite a pretense in the debates that there was some objective test of national welfare, the record of voting on individual items furnishes much evidence in support of the cynical proposition that sound protection was that which raised the prices of things produced by one’s constituents, and unsound protection that which raised the prices of things made by someone’s else constituents.
Most Americans embraced the view that commerce was naturally beneficial and required no central direction, in part because they did not want to create an overly powerful national government that might play favorites with certain producers.
There is this grand distinction between an individual borrower and a borrowing government, that, in general, the former borrows capital for the purpose of beneficial employment, the latter for the purpose of barren consumption and expenditure. A nation borrows, either to satisfy an unlooked-for demand, or to meet an extraordinary emergency; to which ends, the loan may prove effectual or ineffectual: but, in either case, the whole sum borrowed is so much value consumed and lost, and the public revenue remains burthened with the interest upon it.
His [Hutt’s] criticisms of strike-threats were grounded in his conviction that it was impossible to transfer wealth and income from capitalists as a class to workers as a class for several reasons. First, workers who saved and invested were themselves capitalists. Second, any gains workers enjoyed from the strike-threat system came at the expense of other workers who were shut out of the market and consumers who were paying higher prices. Throughout [Hutt’s 1973 book] The Strike-Threat System, he argued that the system’s apologists failed to answer the important ethical question about why one class (investors) should be expropriated for the benefit of another class (workers), noting further that “the easy assumption that investors are rich and workers poor is rather dubious today.” With so many Americans owning the means of production through pension funds and retirement accounts, it is even less clear in the twenty-first century.
