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Mike Munger describes the American way of zoning.

The Wall Street Journal Editorial Board is right that Trump’s (relatively) government-hands-off approach to AI is commendable. A slice:

Companies also have strong business incentives to pace and police themselves to avoid costly lawsuits and government enforcement actions. “I have a guardrail. You know what the guardrail is? The Department of Justice,” Mr. Trump said this week.

He’s right that new laws aren’t needed to punish wrongdoing or negligence. Companies know the government sword is hanging over them. To reinforce the point, Federal Trade Commission officials this week let it be known they have opened a probe of frontier AI models.

Democrats nonetheless want to put the federal government in charge of AI. That’s the real reason Senate Democrats on Wednesday blocked the Ratepayer Protection Act, which the House passed last month on an overwhelming bipartisan 417-3 vote.

The bill would require state public utility commissions to consider adopting a federal standard under which large data centers pay the incremental costs of new grid infrastructure to support their power loads. In our view, the legislation is unnecessary since most states are already doing this. AI companies are building their own power generation and paying for grid upgrades to connect data centers.

Yet Senate Minority Leader Charles Schumer objected to the bill because it isn’t binding. “Senate Democrats want to make it mandatory for data centers to cover their own costs, by law, not by suggestion or hope or whim,” he said. No—they want to block data centers to put AI development under political control.

See Bernie Sanders’s bill, which would pause data-center construction until the government ensures they don’t “exacerbate the threat of climate change” and their models “do not threaten the health and well-being of working families, privacy and civil rights, and the future of humanity” or cause “job displacement.”

His legislation reflects the growing Democratic consensus. Had Kamala Harris won the 2024 election, it’s likely the federal government would have used its power to impose a de facto AI moratorium. When it comes to AI, Mr. Trump has superior intelligence.

Jason Sorens explains that “public sector unions undermine accountability.”

GMU Econ alums Caleb Fuller and Scott Burns keep the case for free trade simple (yet strong). A slice:

First, people reverse the logic of bargaining when they begin thinking of “nations,” instead of “individuals.” In our everyday exchanges, we all want to get as much as we can with the least sacrifice. Some might even call this “the art of the deal!” But in international trade, people’s rhetoric shifts, as if the objective were to “give, and not to get” — to produce and export (give) as much as we can while importing (get) as little as possible. That anti-import sentiment is the essence of mercantilism, the very doctrine Adam Smith set out to dismantle 250 years ago when he penned The Wealth of Nations.

If you slip into this first fallacy, you’ll inevitably fall into a second: treating cheap imports as bad news. In everyday life, it seems obvious that we are better off if we can sell our exports for very high prices and buy our imports at very low prices. We want to sell our output for a high price, and we hope to find “Always Low Prices” when we stroll through the sliding doors at Walmart. Protectionism teaches us to lament in foreign trade what we celebrate at our local checkout counter: low prices. American consumers rarely complain when domestic companies offer Black Friday or Cyber Monday discounts. So why should they object when foreign governments do the same?

It follows from this second point that foreign subsidies are not inherently injurious to us. For a government to subsidize, it must first tax. Suppose a foreign power taxes its own people, then subsidizes some domestic industry that, in turn, sells us cheaper goods. In effect, these foreign governments are taxing their citizens to sell cheaper goods to ours.

Justin Stapley makes the case that constitutionalism helped to fuel free markets.

Todd Zywicki, a GMU colleague over in the Scalia School of Law, warns that “Democrats are trying to politicize a process that has been apolitical: supervisory oversight of bank holding companies.” Here’s his conclusion:

Now is the time for the Fed to exercise the independence that the Supreme Court affirmed this summer by articulating clear, consistent standards for bringing innovative financial products under federal regulatory scrutiny. Otherwise, the success of this political pressure campaign will embolden activists to scuttle efforts to bring other innovative entities and products such as crypto issuers and payment processors within the regulatory perimeter. Several applications from a variety of nontraditional entities are currently pending with both the Fed and the Office of the Comptroller of Currency. If Messrs. Warsh and Gould don’t stand up for their agencies’ apolitical rule of law, it will rapidly erode.

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… is from page 87 of Samuel Gregg’s forthcoming book, The Civilization of Commerce:

The focus of commercial civilization is on the long term rather than on the immediate. Commercial society makes no promise of immediate well-being to anyone. Its operating claim is that by allowing many invisible hands to work unimpeded by excessive regulation and intervention, the result will be incremental, steady, and generally lasting improvements that slowly but surely increase people’s well-being in economic terms and continually release the energies of which Hume spoke into other sectors of society.

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Richard Stern writes wisely about AI. Two slices:

There is an intelligence loose in the world that has no respect for humanity. It seeks to manipulate us, pit us against one another, and harness us to its own purposes, and it is certain it can run your life better than you can.

It’s not what you’re thinking: The intelligence is that of every socialist and collectivist who has ever lived, from Karl Marx to Bernie Sanders. Whether or not misaligned artificial intelligence truly poses a threat, misaligned human intelligence, seeking to concentrate unlimited power in the hands of government bureaucrats, remains the greatest threat we face.

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Government-enforced monopolies don’t just threaten liberty; they stifle innovation. When AI leaders beg the government to regulate away competition, it’s the oldest trick in the book, and we shouldn’t be fooled by it. The central holding of technological power — in this case, of AI — is never a good solution. Perhaps these tech leaders and politicians fear AI will replace exactly one job: their own, as self-anointed high priests of central planning and moral arbiters of society. Many of them have spent decades preaching climate alarmism and a de-growth agenda, while portraying humanity as a parasite feeding off the Earth.

Are these the people you want to speak for all of us and control our future? If the world’s most gifted mathematicians and programmers couldn’t build a perfect AI sandbox, do you think the regulators who gave us Covid lockdowns and cars that shut off at red lights will do better?

Meanwhile, the private sector is already harnessing AI to solve our greatest problems. Hospitals adopting AI have cut mortality rates, and the first AI-designed medicines are already in human trials.

The risk of a rogue AI agent doing serious damage is far higher if we turn over control of the technology to bureaucrats and a few favored business executives. To outsource the right to develop AI is to leave the rest of us beholden to the imperfect foresight and murky motives of the few.

Eric Boehm explains “how regulation, immigration policy, and tariffs made your BLT more expensive.”

Colin Grabow makes clear that “the Jones Act delivers high costs but little maritime security.” A slice:

The national security case for the Jones Act, which restricts domestic waterborne cargo shipments to vessels that are US-flagged, US-built, and US-owned, is fairly straightforward. Theoretically, such measures provide the United States with ships in wartime to transport equipment and supplies for the military, the trained mariners to crew them, and shipyards that can both build new vessels and repair existing ones. The problem is that the law delivers only a fraction of its advertised benefits, at a wildly disproportionate cost.

Start with the fleet. Under decades of Jones Act protection, the number of US-built and US-flagged oceangoing cargo ships has declined from 257 in 1980 to 119 in 2000 to just 92 today. Of those, only 74 are deemed militarily useful, and it’s uncertain how many might actually be available in times of conflict. In 2020, for example, a DoD-directed study warned that accessing a significant portion of the Jones Act tanker fleet could unacceptably disrupt the US economy. A year later, the head of the US Transportation Command testified before Congress that wargaming suggested economic considerations might preclude the military from relying on Jones Act vessels.

Scott Lincicome tweets a Bloomberg headline: “Korea Disputes Trump’s Claim It Agreed to Invest in Alaska LNG.”

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… is from page 39 of Razeen Sally’s superb 2008 book, New Frontiers in Free Trade: Globalization’s Future and Asia’s Rising Role:

It is always difficult to gauge the influence of ideas (or ideology) in policy. But practical observation teaches us that the prevailing climate of ideas, interacting with interests and events, can entrench or sway this or that set of policies.

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Here’s a note to a long-time correspondent.

Mr. McKinney:

Thanks for sharing the report on the Trump administration’s announcement of a new steel plant to be built in Iowa.

By now, you should know what I’ll say: If this plant is being built in response, not to government intervention, but rather to market signals, then it’s not – contrary to your claim – “evidence of the success of our president’s tariffs.” But if this plant is being built because of government intervention, then while the administration can correctly credit Trump’s interventions for the plant, the administration cannot credibly claim that this plant will be a net benefit to Americans.

The workers and other resources used to build and operate this plant have alternative uses, which are sacrificed if the plant is built and operated. This steel plant will reduce American production in other sectors. Mr. Trump wishes us to believe that the value of the plant is greater than the value of the outputs forgone elsewhere in the economy, but he has no way to know that this wish is warranted. Insofar as the plant is built and operated as a result of government overriding market signals, the best bet is that the plant will be a net drain on Americans’ wealth.

One more point. I was struck by this comment by Rep. Mariannette Miller-Meeks (R-IA) at the White House announcement of the steel mill: “For too long, Iowa families have watched their jobs shipped overseas and their communities hollowed out. Not anymore.”

Since 1997 (the earliest date for which I can find data), manufacturing output in Iowa has risen fairly steadily. It reached its peak in 2024, when it was 51% higher than in 1997 and 45% higher than in 2001 (the year China joined the World Trade Organization). (Manufacturing output in Iowa was down slightly in 2025, quite likely because of Trump’s tariffs.)

Over these same years, Iowans’ real median household income also rose. It peaked in 2018 (the first year of Trump’s tariffs) at $86,600 (in 2025 dollars), and in 2024 was slightly less (at $86,450). In 2024, Iowans’ real median household income was 36% higher than in 1997 and 23% higher than in 2001.

Where’s the evidence for the “hollowing out” of American manufacturing and income? To justify their schemes, protectionists incessantly prattle on about this “hollowing out,” but it’s a myth.

Sincerely,
Don

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Bryan Riley, applauding the reductions in some of Trump’s tariffs punitive taxes on Americans’ purchases of imports from China, points out that it would be even better for Americans if Trump cut all U.S. tariffs.

My intrepid Mercatus Center colleague, Veronique de Rugy, talks with GMU Econ alums Dave Hebert and Julia Cartwright about tariffs and other policy matters.

Scott Lincicome reports that Trump continues to want to ban exports of diesel.

Barry Brownstein is correct: The price of admission to civilization is humility.

Justin Wolfers discovers merit in what his libertarian friends have been saying. Two slices:

I count Greg Mankiw — a Harvard economist who was one of George W. Bush’s economic advisors — as a dear friend and mentor. Michael Strain at the center-right American Enterprise Institute is a good mate. Jonathan Meer texts me anytime he thinks I’m wrong about something (frequently). I’ve long enjoyed agreeing and disagreeing with libertarian economist Alex Tabarrok in a conversation that has stretched over decades (and it’s no less fun — though a bit less frequent — that I tangle with his Marginal Revolution co-blogger, Tyler Cowen). I’ve learned a lot about trade from Scott Lincicome at Cato, and about fiscal issues from Jessica Reidl who was once at Heritage, but is now at Brookings. One of the great things about economics is that we have a shared language. We can talk and figure out what leads us to to see the world differently.

Except it turned out that everyone I’d been talking to seems to have ended up on the never-Trump side of the Republican fence.

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My libertarian-leaning friends have consistently argued against a powerful federal government in favor of individual freedoms. I had — somewhat naively — never taken their views seriously enough. My friends who worked in government were good people, I reasoned, and surely that’s true more broadly.

But I’ve had to admit to my libertarian friends that they were right. Concentration of power can be abused. We’re seeing it happen right now.

And that’s led me to become more small-c conservative. The old conservative idea was that we have rules of the game that have served us well for generations. We should be slow to change them. Our children should be handed the same set of opportunities we had, if not better ones.

The foundation of American prosperity is our institutions — the rule of law, respect for contracts, and deep engagement with the rest of the world. Markets that work, rather than favors for those in power. A democracy. A democracy means that when our leaders do a bad job, we can kick the bums out.

I don’t think that’s a deeply controversial position. But it’s the foundation of our prosperity, and it’s worth defending.

George Will ponders the decline of the book. Two slices:

Supposed menaces multiply rapidly as technologies — smartphones, artificial intelligence — mutate. But the most menacing development involves no exotic technology, so it is disregarded.

But not by James Marriott. This British thinker warns us: An artifact that enabled modernity — skepticism, rationality, science, democracy — is now of rapidly dwindling importance. This artifact, which onlookers said “addicted” its early adopters, was: the book.

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“On the page,” Marriott says, “invective quickly becomes tedious.” On screens, “intransigence and madness” proliferate. We are attempting “to run a democracy without a grown-up conversation.” We are learning this: Reason, tolerance and progress are contingent, not inherent, facets of humanity’s story.
Is it possible, Marriott wonders, “to run the most advanced civilisation in the history of the planet with the intellectual apparatus of a pre-literate society”? He notes that, in proposing a grotesquely gargantuan Arc de Trump, “the first post-literate president reached instinctively for a visual style that defined autocratic politics before the age of mass literacy.”

Jeffrey Blehar reflects on the sorry story of Jason Arday and Cambridge University. A slice:

It ought to be the end for Cambridge’s credibility. Realistically, we know it will not be. But once more I am reminded of emeritus Cambridge don (and former chair of the school’s Politics department) David Runciman’s archly resigned take on the scandal, written back in August: Of course Arday was a transparent fraud who deserved exposure, Runciman writes, but all in all nothing of great value was lost by him holding his position because nothing of value has ever been created by departments like Arday’s; it’s merely a question of who wins the lottery and gets to fill out the academic position. (Somebody is going to do it.)

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… is from page 9 of the 2024 4th edition of Henry Butler’s, Joanna Shepherd’s, and James Cooper’s Economic Analysis for Lawyers:

Individuals are creative. They are able to conceive of changes in their environment, foresee the consequences thereof, and respond by creating new opportunities.

Although an individual’s opportunity set is limited at any instant in time by his or her knowledge and the state of the world, that limitation is not immutable. Human beings are not only capable of learning about new opportunities, they also engage in resourceful, creative activities that expand their opportunities in various ways.

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The Editorial Board of the Wall Street Journal wisely refuses to swallow Democrats’ claims that their policies will reduce Americans’ cost of living. A slice:

Both parties contributed to the initial burst of inflation during the Biden years with their spending splurge in late 2020. But Democrats in March 2021 fueled the fire with their $1.9 trillion spending blitz, largely for transfer payments and for states and localities. The Federal Reserve made the mistake of accommodating the spending binge. Yet as inflation heated up in 2021, Democrats urged the central bank not to raise interest rates.

The Biden team also relaxed mortgage underwriting standards, which enabled borrowers to qualify for bigger mortgages and turbocharged the surge in home prices. Housing prices rose 5.3% a year on average during the Biden years, compared to 2.7% during the first Trump term and 3.7% so far in the second.

Prices initially shot up more in Sun Belt areas during the pandemic owing to a demand shock from population migration. But as housing supply caught up, prices have stabilized in these markets. By contrast, home prices and rents are now growing fastest in the Northeast, West Coast and areas of the Midwest where local zoning regulations and burdensome permitting make it harder to build. Rent control and “just cause” eviction laws in progressive cities also deter new housing.

Over the last year, housing prices have grown significantly faster in metro areas like Boston (4.4%), New York City (4.4%), Minneapolis (3.7%) and Los Angeles (3.4%) than Dallas (1.9%), Atlanta (1.4%), Houston (0.3%) and Tampa (-0.6%).

It costs on average about 2.8 times as much to build an apartment in California as in Texas, according to the RAND Corp. Some “affordable” housing projects in the Golden State cost more than $1 million per unit to build. One reason is state and local prevailing wage mandates, which Democrats want to require for all projects that benefit from federal funds.

Democrats also want to raise the $7.25 an hour federal minimum wage to $15 or higher. Most Democratic-run states already impose minimum wages of at least $15 an hour, so this would mainly slam states with lower wage mandates, many of which have contested Senate races this year like Texas, Iowa and New Hampshire (all $7.25) and Ohio ($11). Businesses pass on higher wage costs to consumers to the extent they can.

The Washington Post‘s Editorial Board continues to warn of the dangers of the U.S. government’s fiscal incontinence. A slice:

To be credible, fiscal reforms must have bipartisan buy-in. Bondholders will not treat reforms as serious if they believe they’ll be repealed when the other party retakes power, and they’ll price that risk into interest rates.

Also warning of the dire consequences of the U.S. government’s fiscal incontinence is Doug Bandow.

Wall Street Journal columnist Kyle Smith rightly applauds the demise of “land acknowledgments.” Two slices:

Anguished white liberals tend to get society to rearrange itself to manage their neuroses regardless of what others think. That’s how the Washington Redskins lost their name; polls showed actual indigenous folks didn’t find it insulting. But it’s starting to sink in, even among the strenuously sensitive, that actual indigenous folks find these sanctimonious “We gather on the ancestral lands of the Tongva, Tataviam and Chumash peoples, the traditional caretakers of this water and land”-type statements to be somewhere between cringey and insulting. The writer Lionel Shriver notes that progressives want to be seen as good, whereas conservatives want to be seen as right. Land acknowledgments can’t be very good if indigenous people hate them.

As for whether land acknowledgments are right: of course not. Every piece of land on this planet has been conquered, reconquered and re-reconquered innumerable times going back to when Thok first hit Bok over the head with a club and stole his cave. It can’t be the case that all land belongs, morally, to whatever group was the second-to-last one to occupy it. Moreover, all cultures across civilizations and all the way back in time agreed, until very recently, that conquest was simply a law of nature. The indigenous inhabitants of North America, who were in many cases extremely warlike people, never disputed that.

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Instead of land acknowledgments, I offer another way to display gratitude for what came before us. What follows is my bank acknowledgment.

We produce this newspaper in a building that was recently recapitalized with a loan from Apollo Global Management. I write in an apartment financed by the JPMorgan Chase bank. We honor and respect these firms, who are wise ancestral caretakers of the streams of money.

In so doing, we channel the cooperative spirit in which businesses needing offices and people needing housing don’t need to put up the entire value of a building up front, but rather work together with a lender to agree on a rate of interest that each party believes will lead to a beneficial result. Neither side does this because of coercion, but out of self-interest. To quote Adam Smith on the actions of a hypothetical businessman, “he intends only his own gain, and he is in this, as in many other cases, led by an Invisible Hand to promote an end which was no part of his intention.”

So we could replace land acknowledgments with invisible-hand acknowledgments. People fulfill each other’s needs simply by looking after their own: one gets a building, the other gets profits. Isn’t that spirit of working together a nicer thing to contemplate than the history of conquest?

Good news reported by Reason‘s Jacob Sullum: “The 5th Circuit rejects qualified immunity for cops who searched a driver after a bogus traffic stop.”

The Daily Dish is correct: (HT Scott Lincicome)

It is time to stop treating the outcome of tariff policy as a hypothetical. The experiment was run in 2001 and failed. It was re-run on a grand scale since 2017 and failed. It is not good economic policy. And in a month it will prove to be poor politics as well.

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… is from page 65 of the 2006 Liberty Fund edition of Ludwig von Mises’s 1956 volume, The Anti-Capitalistic Mentality:

Freedom must be granted to all, even to base people, lest the few who can use it for the benefit of mankind be hindered.

DBx: Yes, although Mises misses by describing those who use freedom for the benefit of humankind as “few.” In a free society, they are most people. Everyone who performs honest production in the market, without special privileges granted by the state, uses his or her freedom to benefit not only himself or herself – and not only his or her family – but also countless strangers.

It’s true that some individuals use their freedom to create especially large benefits for strangers. Think of Gustavus Swift, John D. Rockefeller, Henry Ford, Sam Walton, Warren Buffett, Steve Jobs, and Jeff Bezos. But most of us, known only to our families, friends, neighbors, and co-workers, also use our freedom to benefit others. Think of the person who picked the cabbage you’ll have for dinner, the clerk at Burger King, the accountant at Home Depot, the receptionist at your dentist’s office, the pilot for FedEx, the pilot for United Airlines, the supervisor at an Amazon warehouse, a maintenance technician at a data center, the security guard at a nearby strip mall…. the full list would be, literally, billions of individuals. Each and every one of these individuals, operating in the market, uses his or her freedom to benefit himself or herself by benefitting others.

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Mises was born on this date – September 29th – in 1881.