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… is from pages 4-5 of Chelsea Follett’s forthcoming book, The Grim Old Days: An Introduction to the Preindustrial Past:

A popular saying holds that “the past is a foreign country,” but I assure you it is not one where you would wish to vacation. If you could visit the preindustrial past, you would give the experience a zero-star rating. Indeed, the trip might leave you permanently scarred, both physically and in the sense denoting psychological trauma. You might long to unsee the horrors encountered on your adventure and to forget the shocking, gory details.

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David Henderson is a fan of the work of the most-recent Nobel laureates in economics, Robert Hall and Michael Woodford. A slice:

Among Mr. Hall’s most important works is his 1985 book, “The Flat Tax,” written with Alvin Rabushka. Messrs. Hall and Rabushka made a strong case for replacing the current income tax with a flat rate and showed that it would be much less distortionary and more pro-growth than our current tax system.

Michael Woodford’s main contributions were on monetary policy. His 2003 book, “Interest and Prices,” has been called a bible for central bankers. Keynesians, up to and including 1970 Nobel laureate Paul Samuelson, argued that monetary policy was ineffective at lifting economies from recessions. Friedman, on his own and with co-author Anna J. Schwartz, showed that monetary policy, for good and ill, was quite effective. Friedman had focused on the money supply. Mr. Woodford showed how the Federal Reserve could affect the economy by targeting the federal-funds rate. As Hoover economist John Cochrane notes, the Taylor rule, named for economist John Taylor, is central to the framework Mr. Woodford developed. According to that rule, to reduce inflation, the Fed should aggressively raise interest rates.

The Nobel committee said the prize was awarded for “demonstrating how economic models could be reconstructed to revitalise stabilisation policy.” That leaves out two important points. First, Mr. Hall’s work on consumption shows that using Keynesian fiscal policy wouldn’t work. Second, the work of both Messrs. Hall and Woodford shows how government policy, especially monetary policy, has at times erred and caused instability. The Nobel committee has an unfortunate tendency to attribute implicitly almost all problems of unstable economies to the economies themselves and almost none of the problems to bad government policy. Fortunately, the work of this year’s winners offsets this tendency.

Reason‘s Eric Boehm reports this: “Michigan congressman proposes using tariff revenue for tariff relief fund.”

GMU Econ alum Dave Hebert reports that “manufacturing surged when tariffs were lifted.” A slice:

The combination of high tariffs with uncertain start dates and unclear goals proved disastrous for firms looking to make long-term investments. As a result, the manufacturing sector shrank. The ISM’s Manufacturing PMI fell into contraction and stayed there for ten months. Factory payrolls fell for eleven straight months, resulting in a loss of about 92,000 manufacturing jobs. Economists had predicted these outcomes and warned that the tariff agenda would produce them.

Ross Levine imagines how Adam Smith would warn us Americans in 2026 of the folly of the U.S. government’s fiscal incontinence.

My GMU Econ and Mercatus Center colleague Pete Boettke makes clear that America grew rich because of (true) liberalism – the liberalism of the likes of Adam Smith, America’s founders, and F.A. Hayek. Two slices:

The great historian of the American Revolution, Gordon Wood, argued in The Radicalism of the American Revolution that what is most overlooked in discussions is the radical transformation of society that resulted. Colonial America was a society of status, of privileges, of station. Patronage and personal favoritism by those with power played a major role in social mobility—to the extent that it existed. This social system would all be transformed by the Revolution. One prominent example of the legal transformation was the abolition state by state of the practice of primogeniture between 1777 to 1798. Not only did this change the laws of inheritance, but transformed the meaning and use of property, encouraged entrepreneurship, credit markets and social and geographic mobility. Legal distinctions based on rank disappeared, and economic opportunities were based in interest, aptitude and talent rather than birth. Certainly not perfectly, it must be acknowledged. But in a far more sweeping nature than anywhere else in the world, ordinary individuals were enabled to “give it a go,” as the historian Deirdre McCloskey likes to stress about the ascendancy of the Bourgeois Era. Almost overnight, Wood argues, Americans became “the most liberal, most democratic, most commercially minds, and most modern people in the world.”

As a result, America became the richest country in history over the next 250 years. It did so without an aristocracy, and without central planning or a comprehensive blueprint by the governmental authorities. The Revolution succeeded because it created the institutional conditions for commercial civilization. It unleashed the creative powers of a free people to a greater degree than had ever been experienced before. As Hayek would stress, the transformation for a society of status to one of contract is critical to experiencing modern economic growth. And this is only possible if the governing system seeks to eliminate privileges and instead binds itself to the rule of law.

…..

This to me is the enduring lesson in political economy that we should derive from reflecting on the twin 250th anniversaries and allow to guide us through our contemporary debates which too often seem to have forgotten these. Let me add one other aspect that is too often overlooked. When Hayek founded the Mont Pelerin Society, one of the names he toyed with was the Acton-Tocqueville Society. This was rejected by the original group for a variety of reasons, but it does reflect Hayek’s thinking. In the context of this article, I think we can argue that Alexis de Tocqueville provides a bridge between Wood’s historical account of the American Revolution and Hayek and Friedman’s theoretical accounts of economic and political freedom. Tocqueville observed what Wood described as the transformation of American society: a social order characterized by vibrant civil society of voluntary associations, social mobility, local initiative, and unbounded energy. Hayek explains to us why this decentralized dynamism is a source of discovery and continuous learning how to better pursue productive specialization and realize the gains from peaceful social cooperation. Friedman explains how the constitutional structure of government, by limiting power and privileges, preserves the open society and its properties of creativity, innovation and social and material progress.

Both the left and right in our current political and intellectual culture have abandoned these principles, at least in their rhetoric. New York Mayor Zohran Mamdani and Vice President J. D. Vance have recently gone out of their way in respective speeches to dismiss the ideas of Hayek and Friedman. Critics of neoliberalism repeatedly target Hayek and Friedman without seemingly any sense of understanding the subtleties and nuances in their arguments. Post-liberals are even worse. Thinkers like Patrick Deneen argue that free market policies result in the erosion of community, destroy the social fabric, and increase inequality. The individual becomes isolated and lacks any great purpose as a result. The remedy offered is the abandonment of the free market system with its emphasis on material growth and the adoption of public policies that stress virtue, local obligations, and the moral community. Scholars under the New History of Capitalism movement see the coercion and abuse of corporate and state power as attributes inherent in capitalism. To both groups of critics, support for capitalism must either elide over these abuses or even justify them as the lesser evil to growth.

These criticisms are grounded in a misunderstanding of the argument for the liberalization of markets from David Hume and Adam Smith to F. A. Hayek and Milton Friedman. Markets are no doubt vehicles for efficiency in exchange and production and the creation of great material abundance, but that isn’t the side of markets that was stressed by Hayek and Friedman, let alone Smith. Smith was a champion of the doux commerce thesis that commerce civilized. Thomas Paine, of American Revolution fame, wrote that: “If commerce were permitted to act to the universal extent it is capable of, it would extirpate the system of war…” Commercial life civilizes people. Peaceful social cooperation among strangers replaces violence and conquest. Montesquieu wrote that “wherever the ways of man are gentle, there is commerce; and wherever there is commerce, there the ways of men are gentle.”

George Will writes eloquently about Pete Hegseth’s barbaric proposal to live-stream an execution. Two slices:

Might this live-streaming desensitize the audience and coarsen society? Benjamin Rush, the Philadelphia physician and signer of the Declaration of Independence, thought capital punishment “lessens the horror of taking away human life,” thereby fostering murders. Today, it neither encourages nor deters. Death sentences are handed down so capriciously and administered so glacially (Hasan’s is scheduled for 17 years after his crime), its deterrent effect, if any, is vanishingly small.

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Put aside the question of whether the soldiers who will be in the Fort Hood firing squad anticipated such an assignment when they enlisted. But credit Hegseth with usefulness. His idea of live-streaming the infliction of death comes as the nation approaches midterm elections widely considered a referendum on the Republicans’ national administration. Hegseth has clarified what should be the preeminent issue: Fill the government with barbarians, you get barbaric government.

Revulsion is not an argument. But regarding Hegseth and the administration he vividly exemplifies, it is a virtue.

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… is from page 424 of Liberty Fund’s 2011 collection of Frédéric Bastiat’s writings, The Man and the Statesman: The Correspondence and Articles on Politics – which is the first volume of what will eventually be six volumes, expertly edited by David Hart, of The Collected Works of Frédéric Bastiat [original emphasis]:

No, the privileged groups had a clearer view of what might prolong their existence. They understood that they could continue peacefully to pick the pockets of the public so long as contrived antagonisms would prevent the drawing together and merging of nations. This being so, they harnessd their forces, influence, capital, and activity to national hatred. They, too, adopted the mask of patriotism. They bribed such newspapers as had not yet adopted the banner of false national honor, and it may rightly be said that this monstrous alliance stopped the march of civilization.

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… is from page 13 of Leland Yeager’s and David Tuerck’s still-vital 1966 volume, Trade Policy and the Price System:

The economic case is the same for free trade as for allowing technological progress: both increase the yield of useful goods and services from available labor and other resources.

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Here’s a letter to USA Today.

Editor:

Paul Osterman claims that 35% of workers in America today are “disposable” – a status that renders them both underpaid and easily dismissed (“The job crisis is more than AI. Gig work makes you disposable,” October 6). Odd, that. Workers who produce for their employers value that’s far higher than these workers’ wages are workers that employers – greedy as they are for profit – should be especially keen to continue employing. Underpaid workers are practically nondisposable.

Let’s assume for the moment, however, that Mr. Osterman has his facts straight. If so, he personally can help to remedy this problem of underpayment and earn big bucks in the process. Underpaid workers are like hundred-dollar bills strewn on the sidewalk. Mr. Osterman can open businesses and bid these workers away from their current exploiters, offering them a package of pay and perks superior to what they now receive yet still leaving him a substantial profit on each worker. Mr. Osterman’s handsome profits will attract other entrepreneurs to follow in his footsteps. As Mr. Osterman and these other entrepreneurs bid for workers, the workers’ existing employers – again, motivated by their own self-interest – will raise these workers’ pay.

The fact that Mr. Osterman doesn’t put his money where his mouth is strongly suggests that he either doesn’t understand the labor market about which he writes, or that he’s really not confident about his empirical claims. Either way, policymakers should be very skeptical of his policy recommendations.

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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… is from page 25 of the Second Edition (2025) of GMU Econ alum Benjamin Powell’s excellent book Out of Poverty: Sweatshops in the Global Economy:

Passing a law that mandates higher pay does nothing to make workers more productive, nor does it create new alternatives to bid workers away from their current jobs. Legal minimum wages simply outlaw potential gains from trade between employers and workers. Paraphrasing liberal Nobel laureate Paul Samuelson, it does a potential sweatshop worker, who can create $2 per hour of value, no good to know that by law he must be paid $3 per hour if that very law keeps him from getting a job.

DBx: Yep. And of course, the same holds true for low-skilled workers in rich countries such as the U.S. Minimum-wage legislation effectively makes it illegal for workers whose productivity is below the minimum to be employed.

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Here’s a letter to MarketPlace.

Editor:

Sabri Ben-Achour plausibly identifies U.S. government budget deficits as contributing significantly to U.S. trade deficits (“The cause of the U.S. trade deficit might not be what you think,” October 5). Foreigners’ annual net purchases of U.S. Treasuries averaged just under half the annual U.S. trade deficit over the ten years from 2016 through 2025. It’s quite possible, as Mr. Ben-Achour’s report suggests, that had the U.S. government’s demand for borrowed funds been lower, more dollars would instead have been spent on U.S. exports, resulting in smaller U.S. trade deficits.

But maybe not.

Insofar as U.S. government borrowing diverts resources away from productive investments and into wasteful spending, it both weakens America’s economy and raises the likelihood of future tax hikes or inflation. As our economy weakens – and as future tax hikes or inflation become more likely – our economy becomes a less attractive place for both Americans and foreigners to invest.

We cannot know how much more foreign direct investment and private portfolio investment would have been made in the U.S. economy had Washington been more fiscally responsible. Perhaps with greater fiscal responsibility over the past several years, U.S. trade deficits would have been higher as even more private investment funds poured in.

Sincerely,
Donald J. Boudreaux
Professor of Economics
andMartha 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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Phil Magness and Gabriel Giguère argue that “Canada shouldn’t give Trump ammunition for his illegal trade war.” A slice:

While Canada has legitimate grievances against the Trump administration’s policies and behaviour, the pursuit of dollar-for-dollar retaliation inadvertently strengthens Trump’s hand in defending these measures from a likely court challenge in the United States. The new measures rely on an obscure clause of U.S. law known as Section 338. While Trump claims sweeping tariff authorities under this provision, this 1930 law was likely superseded by subsequent statutes in the 1960s and 1970s that restricted its exercise. These factors render it susceptible to a legal challenge, much like the “Liberation Day” tariffs that the courts struck down earlier this year.

Trump’s legal argument for reviving this clause rests upon his claim that Canada is “discriminating” against American products. The economic arguments and empirical data behind Trump’s claims about Canada are fundamentally unsound and appear to be based on his belief that a $60-billion dollar trade deficit represents actual losses of US money to Canada. In no small irony, the Carney government’s dollar-for-dollar response breathes inadvertent legitimacy into Trump’s claims by introducing precisely the types of discriminatory restrictions that the Section 338 tariffs first posited.

Scott Lincicome and Chad Smitson ponder the fact that the U.S. “trade deficit” is back to its pre-tariff level. A slice:

As Cato scholars have repeatedly explained, the US trade deficit isn’t necessarily a “bad” thing and, in fact, is usually a sign of strong underlying fundamentals like a growing US economy and the United States’ attractiveness as an investment destination. The latest data also support this view, which again contradicts the White House’s pro-tariff, anti-deficit narratives.

Eric Boehm decries this decry-able reality: “The federal government just posted the largest annual budget deficit since COVID.” A slice:

“The economy can’t keep pace with the relentless growth of programs such as Social Security and Medicare,” David Ditch, a policy analyst at the Cato Institute, told Reason. “Seniors are receiving far more in benefits than they paid in payroll taxes. America’s leaders should stop pretending otherwise.”

Still, the single biggest factor in rising spending and growing deficits is actually the size of the national debt itself. Interest payments on the debt rose 11 percent in fiscal year 2026 and totaled more than $1.1 trillion.

George Will writes about France’s worsening economic woes. A slice:

Jean-Luc Mélenchon, 75, from the far left of the left, favors “freezing” a portion of France’s national debt, the size of which is 119 percent of the nation’s GDP. Sometimes he calls for “canceling” the portion. Or vows that as president he would “take” it. He avoids a straightforward noun that denotes the policy of borrowing money and then breaking the promise to repay it: “theft.”

Precision is not Mélenchon’s strong suit, but he is reasonably clear that he has in mind the 15 percent of French bonds held by the Bank of France. He might, or might not, have only those in mind when he talks about throwing bonds “into the fire” or putting them “in the fridge.” He says “no one will ever notice that they’ve disappeared,” and a poll shows a French plurality thinks coping with the national debt by repudiating some of it is a neat idea.

In the short — very short — term this might avoid unpleasant measures (increased taxes, decreased social benefits). A French plurality might dislike the consequences of France, the European Union’s second-largest economy, paying future interest rates appropriate for a rogue borrower and thief.

But many nations, including the United States, often have a plurality who regard many problems as Scarlett O’Hara did in “Gone With the Wind”: “I can’t think about that right now. … I’ll think about that tomorrow.” The comforting assumption is that “Annie” of the Broadway musical was right: Tomorrow is always a day away.

A few days ago, the U.S. 2026 fiscal year ended (Sept. 30). According to the Committee for a Responsible Federal Budget, with economic growth strong and unemployment low, the federal government nevertheless spent 22.9 percent of gross domestic product ($7.4 trillion) while raising revenue of just 16.7 percent of GDP ($5.4 trillion). This $2 trillion deficit is a (redundant) reminder:

The sound and fury of this autumn’s politics signifies nothing but the bipartisan determination to talk about anything (data centers are the distraction-du-jour) other than the most important thing: the ruinous consensus beneath today’s performative rancor.

Both parties are committed, behaviorally if not ideologically, to running huge deficits at every point in the business cycle. As a result, interest costs, which were $241 billion in fiscal 2016, have more than tripled in 10 years, to $1.1 trillion.

Wall Street Journal columnist Allysia Finley talks with Zack Korman about “effective altruism” and AI doomerism. Two slices:

Effective altruism purports to be a practical approach to doing good and is inspired by utilitarianism, a philosophy that Jeremy Bentham (1748-1832) summed up as follows: “It is the greatest happiness of the greatest number that is the measure of right and wrong.”

Effective altruists add to utilitarianism the concept of “longtermism”—spelled with no hyphen—which Mr. Korman defines as the idea “that future lives matter the most, so to speak, because there’s so many more of them.”

That leads in wildly speculative directions: “So yes, there’s eight billion people alive today, but over the next thousand years, we might have hundreds of billions of people that come and go. And if something bad were to happen to prevent those hundred billion people from coming into existence, we’ve effectively committed genocide.” This flight of fancy implies a moral imperative: “So basically if you can do something to change the risk a little bit of that happening, you’ve committed the greatest act of humanity ever.”

Effective-altruist organizations are “very committed to this concept of catastrophic risk and how do you prevent it. And one of the big areas of catastrophic risk would be AI kills everyone.” That, Mr. Korman concludes, is why “effective altruists as a community are extraordinarily doomer.”

Many of this ideology’s adherents have ties to large AI companies. Anthropic’s president, Daniela Amodei, sister of CEO Dario Amodei, is the wife of Holden Karnofsky, who co-founded two large effective altruist nonprofits. Anthropic received early funding from effective-altruism adherents including Sam Bankman-Fried, founder of the FTX cryptocurrency exchange, who is serving a 25-year term in prison after conviction on federal fraud and conspiracy charges. Mr. Bankman-Fried misappropriated billions in client funds. With so many effective altruists on the payroll, it’s little wonder that AI labs are filled with doomers.

…..

He also worries that a government agency or private entity tasked with regulating AI could be captured by big AI labs. He points to the nonprofit Model Evaluation and Threat Research, which Anthropic employs to review its models. METR employs many former employees of AI labs and has taken money from effective-altruist groups.

Regulation could also become a get-out-of-jail card that relieves companies of consequences for harm caused by their AI models that they could have prevented. It “becomes sort of an excuse, like, ‘Well, the regulatory body signed off on our security practices and we still killed someone.’ Whereas at the end of the day, the obligation has to be on the company to not kill people. . . . I think that’s why I’m hesitant to recommend actual regulatory measures—because I believe we already have the correct one, which is legal liability.”

GMU Econ alum Wayne Crews assesses the economic-policy performance of Trump 2.0.

David Henderson sings the praises of consumer surplus. Two slices:

Indeed, one of my students gave an example that I hadn’t previously considered but that I have since used in speeches to illustrate the concept of consumer surplus. It goes like this: You go to a store and find a shirt with a price tag of $50. You try it on and decide you like it. You go to the cash register to pay. The salesperson points out something you hadn’t noticed: the shirt is on sale for 40 percent off and so the price is actually $30. My student pointed out that a minimum estimate of your consumer surplus is $20 because you would have been willing to pay $50 but instead paid only $30. Of course, that’s a minimum estimate because you probably would have been willing to pay at least somewhat more than $50. How do we know? Because you probably weren’t indifferent between buying the shirt at $50 or keeping your money.

Once you understand and really appreciate consumer surplus, you can start looking around and appreciating what you have.

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What I like most about consumer surplus is not all the technical details and measurements, however important they are. What I love is that consumer surplus is a way of making us realize just how lucky and fortunate we are as Americans. Even those in the bottom 20 percent of the income distribution enjoy modern conveniences that make everyday life easier than it was for our parents—and considerably easier than it was for our grandparents.

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… is from page 73 of The Thomas Sowell Reader (2011):

An economy exists to make trade-offs, and a market economy makes the terms of those trade-offs plain with price tags representing the relative costs of producing different things. To have politicians arbitrarily change the price tags, so that prices no longer represent the real costs, is to defeat the whole purpose.