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George Will explains what shouldn’t – but, alas, what nevertheless does – need explaining: “The Constitution doesn’t make an exception for misusing police powers.” Two slices:

In 2022, Amy Hadley, a mother in South Bend, Indiana, returned to find her home surrounded by police. They were neither in hot pursuit of anyone, nor did they believe they confronted a hostage situation. An officer’s mistaken belief was that a fugitive was active on social media from inside Hadley’s house.

According to court papers, after many commands were shouted by bullhorn at the house (Hadley wasn’t home), the officers fired tear gas grenades through the windows, entered wearing gas masks, punched holes in walls, overturned furniture, and ripped off paneling and wall fixtures, from basement to attic. The gas permeated everything porous.

The fugitive, who was never in the house, was arrested four days later. Hadley and her children slept in her car and elsewhere until the home was habitable. The more than $16,000 of damages was only partially covered by insurance. Government paid nothing because some federal appellate courts recognize (and others do not) a police-power exception to the Fifth Amendment’s takings clause.

It says private property shall not be “taken for public use, without just compensation.” Damaging property while trying to apprehend a suspected criminal is a public use, and the takings clause contains no police-power exception to the requirement of compensation.

…..

For the Institute for Justice, which is representing the plaintiffs in all these five cases, business is depressingly brisk. A 2015 report found that between 1980 and that year, uses of SWAT teams soared from 3,000 per year to 80,000. The militarization of law enforcement has been dramatized by Immigration and Customs Enforcement agents operating with too little training and too much testosterone. The Institute for Justice hopes that the Supreme Court’s textualists will eventually acknowledge the absence of a police-power exception in the takings clause’s text.

GMU Econ alum Romina Boccia, writing in the Washington Post, reveals what’s wrong with Pres. Trump’s new proposal for Americans’ retirement savings. A slice:

The proposed accounts also ignore the data on how people save for retirement. Low-income workers who live paycheck to paycheck cannot afford to lock funds away for decades.

Automatically enrolling lower-income workers in a retirement fund can create more problems than it solves. They are more likely to offset default retirement contributions by taking on debt or withdrawing money early and paying tax penalties. According to Vanguard, 6 percent of workers took hardship withdrawals from the 401(k) plans it administered last year. Households at the lowest income level have the highest early withdrawal rates, with penalties accounting for 43 percent of all taxes paid by individuals with adjusted gross incomes below $5,000.

If policymakers want to help those Trump called “often forgotten American workers” when he announced his proposal, they should focus on simplicity and flexibility. Tax-advantaged universal savings accounts, without withdrawal restrictions or government matching, would do much more to help these families. And all without increasing federal spending.

GMU Econ alum Daniel Smith is au courant on a little-known but instructive Greek economic tragedy.

Pat Lynch isn’t misled by the false allure of the “abundanauts.” A slice:

More recent research agendas, such as “nudging,” fit into this same category, as men of system try to correct “errors” in the way people think and act. Relying on recent developments in behavioral economics, Cass Sunstein and Richard Thaler have argued that choice should be taken out of the hands of individuals and given to the wise professors and researchers who know better.

Whether one is nudging, moving people around on a chessboard, or trying to “optimize” more efficiently than markets, all of these people are men of system. They wish to impose their own vision on society and the individuals who live in it. Some, like [Ezra] Klein and [Derek] Thompson, openly admit that markets freed from burdensome regulations and limits will produce abundant goods at very low costs, but they cannot simply stop there. Instead, they require large planning boards and programs to abscond with that wealth and redistribute it in ways that reflect their preferences, not the preferences of individuals engaged in voluntary exchanges.

The Abundance Agenda, such as it is, reflects the need of intellectuals to manage the lives of others, not accept the lives that normal people wish to lead. Average people would love abundance, along with the cheaper and more abundant goods and services that would be created. But to allow that and then expand the regulatory power of the state’s fiscal redistribution defeats the entire purpose. Absolutely, let abundance happen. But we already have an agenda for it: it’s called freedom and responsibility.

Eric Boehm decries Commerce secretary Howard Lutnick’s hypocritical hostility to globalization. A slice:

The first year of the second Trump administration has been defined by an economic and foreign policy that treats the movement of people and goods around the globe as not merely suspect but actively harmful to Americans’ well-being.

In January, Commerce Secretary Howard Lutnick set the bar for demonstrating how bizarre—and wrong—that logic is. While addressing the World Economic Forum’s annual gathering in Davos, Switzerland, Lutnick declared that the decades-long project of economic liberalism had been, in fact, a terrible mistake.

“The Trump administration and I are here to make a very clear point: Globalization has failed the West and the United States of America,” Lutnick said. “It has left America behind.”

Has it? It’s difficult to square that conclusion with Lutnick’s own life. His grandfather ran a dry cleaning business in the Bronx. His father was a history professor. Lutnick became the CEO of a New York–based investment bank, Cantor Fitzgerald, in 1990 and is now a billionaire (and a senior official in the federal government to boot). If that’s a trajectory that suggests failure, we should all hope to be so unlucky.

The idea that globalization has failed America is equally incompatible with the facts. The most blunt way to measure a country’s prosperity is by looking at gross domestic product per capita, which measures economic output per person. In 1990, when Lutnick took over at Cantor Fitzgerald, America’s GDP per capita was about $40,000 (in inflation-adjusted terms). Last year, after three and a half decades largely defined by the globalization that Lutnick now derides, the U.S tallied a per capita GDP of more than $70,000. In real terms, America is far wealthier today.

But workers aren’t paid with increasing GDP stats, as the illiberal right likes to point out. The good news, however, is that wages have also climbed considerably. Average hourly wages have increased from about $20 to over $36 in the past 20 years. The number of households earning over $100,000 annually (adjusted for inflation) has tripled in the past 50 years, while the number of those earning less than $35,000 has declined.

Clark Packard and Chad Smitson report on a new paper that confirms what economic theory predicts: China’s trade surplus is not caused by clever industrial policy that increases that country’s exports as it decreases its imports. A slice:

In light of comments filed by Cato’s Scott Lincicome and Chad Smitson in response to USTR’s Section 301 investigations, the new NBER working paper carries an important message: trade balances do not tell the whole story. The administration is attempting to assess foreign economies using broad, national-level macroeconomic indicators such as trade surpluses and excess capacity. However, as the authors of this paper have explored, these metrics are shaped by structural domestic forces—demographics, financial repression, and weak household demand—that tariffs cannot address.

The Editorial Board of the Wall Street Journal reports on “Virginia’s race to the Gerrymander bottom.” Two slices:

Trump’s redistricting gambit backfires as Democrats rig districts in states they run.

…..

The nationwide gerrymander upshot is that Republicans are likely to break even on new seats at best and could end up losing on net if the building Democratic wave ends up hitting ballot boxes in November. Democrats now have a six point edge in the “generic” test of which party they want to represent them in Congress.

The main accomplishment of this gerrymander free-for-all will be to further polarize the U.S. House. The number of competitive seats in the general election will shrink. Party primaries will increasingly be the only real competition, and that will drive candidates to court the most partisan voters. The result will be more fools and posers like Marjorie Taylor Greene and Jasmine Crockett in Congress.

Here’s the abstract of a new paper by my old friend Roger Koppl:

Standard economic models assume a common event space shared by all agents and the observing economist. This assumption is present in Aumann’s (1976) agreement theorem and in related work on expected utility, bounded rationality (Simon 1955), ambiguity (Gilboa and Schmeidler 1989), and unawareness (Dekel et al. 1998). It is ubiquitous. This paper argues that event spaces are often subjective, evolving, and incommensurable across agents and that assuming otherwise can obscure important economic phenomena. Recognizing subjective event spaces has concrete implications for economic analysis. It yields a principled case for institutions that sustain viewpoint diversity, illuminates the epistemic risks of monopoly expertise and the mechanisms of expert failure, undermines the confidence of paternalist interventions grounded in behavioral economics, and clarifies the long-standing difficulty of central planning and industrial policy.

Paul Mueller, Lydia Mashburn Newman, and Pete Earle discuss the 2008 financial crisis.

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… is from page 125 of Thomas Sowell’s Compassion Versus Guilt, a 1987 collection of some of his popular essays; specifically, it’s from Sowell’s November 8th, 1985, column titled “A Political Glossary”:

“equal opportunity”: preferential treatment
“non-judgmental”: blaming society
“compassion”: the use of tax money to buy votes
“insensitivity”: objections to the use of tax money to buy votes

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Reason‘s Eric Boehm explores this heap of hypocrisy: “The Trump administration is worried about high fertilizer prices. Its top trade official lobbied for them.” A slice:

With fertilizer prices spiking due to the closure of the Strait of Hormuz, a majority of American farmers now say they will have a hard time securing their needed supply this year, and President Donald Trump says he is “watching fertilizer prices” closely to prevent price gouging.

But if the president is worried about high fertilizer prices, he might want to have a conversation with his top trade official.

Before joining the Trump administration last year, U.S. Trade Representative Jamieson Greer lobbied for policies that limited fertilizer imports and drove up prices for American farmers. Greer represented the J.R. Simplot Company as it successfully persuaded the first Trump administration to impose higher tariffs on fertilizer—despite the opposition from farmers and agricultural interests, who warned that those tariffs would create higher prices and potential shortages.

That part of Greer’s career is not a secret. He testified in front of the U.S. International Trade Commission (ITC) in favor of those tariffs and later represented Simplot in court as it fended off challenges to them.

Scott Lincicome, Alfredo Carrillo Obregon, and Chad Smitson explain that “IEEPA tariff refunds are far from ideal — and could get farther.”

The Washington Post‘s Editorial Board urges the Trump administration to understand that the wisdom of “trade not aid” applies also to trade that happens to cross political borders. A slice:

Many of the world’s poorest countries threw off colonialism in the mid-20th century only to replace it with variants of socialism. They have high barriers to cross-border trade and capital flows, state-owned enterprises, stifling regulations and corrupting favoritism, all based on the idea that government knows best how to make people rich. In truth, the only people who get rich are the governments and their cronies.

“The most effective economic development assistance is mutually beneficial and profitable trade partnerships between the private sectors of countries,” the declaration of principles says. That’s correct, and the tariff-friendly administration could benefit from listening to its own advice.

The principles the U.S. wants other countries to adopt go both ways. Blaming foreign trade or immigrants for economic problems is shirking America’s responsibility for its own economic development. Taxing imports makes it harder to develop the mutually beneficial relationships that the U.S. says it wants.

Poverty doesn’t go away by transferring money from the people who have it to the people who don’t. That’s true between countries, and it’s true within countries. “Trade over aid” is a message the U.S. government should feel confident expounding to domestic audiences as well as international ones.

Phil Magness calls postliberalism “the most dangerous intellectual movement in American (and world) politics.” A slice:

The postliberals argue that—whatever public opinion says—the worldly authority of government is inherently subordinate to the spiritual authority of the Church, seeking to return us to the time when medieval popes asserted their authority over kings (indeed, some prominent postliberals have even fantasized about a bizarre scenario where the Pope appoints Melania Trump as a Queen of America). There wasn’t any polling from that time, but I’d expect attitudes were different toward this sort of thing.

But beyond public opinion, what’s damning for the postliberal Integralist theorists is that the Catholic Church wants nothing to do with them!

Cardinal Christophe Pierre, the Pope’s Nuncio to the United States, recently published a scathing assessment of postliberal political doctrine, characterizing it as a far-right counterpart to the “wokeism” of the far-left.

Steve Patterson’s letter in today’s Wall Street Journal is superb:

Mark L. Clifford and L. Gordon Crovitz put it perfectly in their op-ed about the confiscation of Jimmy Lai’s assets (“Now China Is Taking Jimmy Lai’s Property,” April 17): “Businesses know better than to invest in a place where private assets are seized on the whims of the Chinese Communist Party.”

They’re right that “Hong Kong’s seizure of Mr. Lai’s assets is a warning to other companies.” First China arrested him and took his freedom. Now it’s his assets. Mr. Lai risked much and made much.

And how is it less of a pointed message to businesses and entrepreneurs when U.S. states do the same thing and call it a wealth tax?

California and New York, are you listening?

Although I believe that Deirdre McCloskey pushes her case against the importance of institutions a bit too far, there nevertheless remains much important truth in her insistence – such as is expressed in this new essay of hers – that the dominant social force is ideas (and the way people talk and write about ideas). One flaw of most neo-institutionalists is indeed, as Deirdre notes, to give excessive credit to consciously designed legislation imposed by a central authority.

My colleague Bryan Caplan is betting that AI will not doom humanity to extinction.

Let’s hope that the courts overturn Virginia’s obnoxious new gerrymandered map.

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… is from page 388 of my GMU Econ and Mercatus Center colleague Peter Boettke’s 2012 volume, Living Economics:

Truth in economics, as in all scientific endeavors, ultimately matters much more than popularity and power. And the task of teaching that truth in economics to generations of students is a worthy and honorable vocation. In fact, it is a calling that demands our most careful attention and dedication to the craft of scholarship and teaching. The best economists read widely and deeply, think hard, speak directly, and write clearly.

DBx: Yes. Pictured here is one of history’s greatest examples of such an excellent economist.

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I thank John Stossel and his team, including Kristin Tokarev, for inviting me to talk with him about Phil Gramm’s and my book, The Triumph of Economic Freedom.

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Here’s the abstract of a new paper by Ling Feng, Qiuyue Huang, Zhiyuan Li, and Christopher Meissner [emphasis added]:

This paper investigates the causal impact of international trade on interstate military conflicts using global bilateral data from 1962 to 2014. To address endogeneity concerns, we exploit exogenous spatial-temporal variation in international trade stemming from technological advances in air relative to maritime transport. Empirical results demonstrate a strong “peace dividend” of international trade: that is, increased trade significantly reduces the probability and intensity of conflicts between nations. This effect remains robust across specifications and withstands a wide range of potential confounders. Such findings highlight how economic interdependence shapes international conflict—a relationship that is especially relevant amid escalating geopolitical tensions and the global shift toward “decoupling”, “de-risking”, and greater trade protectionism.

Scott Lincicome tweets:

Ignore for a minute that beef prices aren’t actually “down”. Here’s the president’s top economic adviser [Kevin Hassett] saying US beef prices have improved “enormously” because “we opened up imports to beef.”

How interesting!

U.S. Supreme Court Associate Justice Clarence Thomas, in a speech excerpted in the Wall Street Journal, eloquently explains that progressivism is a political ideology incompatible with the U.S. Constitution. Three slices:

The Constitution is the means of government; it is the Declaration that announces the ends of government. The Constitution achieves this purpose by protecting our natural rights and liberties from concentrated power and excessive democracy. Our Constitution creates a separation of powers and federalism—truly for the first time in modern history—to prevent the government from becoming so strong that it threatens our natural rights. Federalist No. 10 proposed the idea that the great threat to our rights comes from majority faction.

Human history teaches us, alas, that numerical majorities frequently seek to control government, and use the state to violate the rights of the minority. Because man is fallen and the desire for power was, as James Madison described it, “sown in the nature of man,” government had to be limited. For, as Madison said, “if men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.” But men are not angels. The slaveholders used the power of government to deny the fundamental natural rights of the slaves; the segregationists used the state to oppress the freed men and women—including my ancestors.

…..

Progressivism was the first mainstream American political movement—with the possible exception of the pro-slavery reactionaries on the eve of the Civil War—to openly oppose the principles of the Declaration. Progressives strove to undo the Declaration’s commitment to equality and natural rights, both of which they denied were self-evident. To [Woodrow] Wilson, the inalienable rights of the individual were “a lot of nonsense.” Wilson redefined “liberty” not as a natural right antecedent to the government, but as “the right of those who are governed to adjust government to their own needs and interests.” In other words, liberty no longer preceded the government as a gift from God, but was to be enjoyed at the grace of the government. The government, as Wilson reconceived of it, would be “beneficent and indispensable.” Progressives such as John Dewey attacked the Framers for believing that “their ideas [were] immutable truths good at all times and places,” when instead they were “historically conditioned, and relevant only to their own time.” Now, Dewey and the progressives argued, those ideas were to be repealed.

Progressivism seeks to replace the basic premises of the Declaration of Independence, and hence our form of government. It holds that our rights and our dignities come not from God, but from the government. It requires of the people a subservience and weakness incompatible with a Constitution premised on the transcendent origin of our rights.

You will not be surprised to learn that the progressives had a great deal of contempt for us, the American people. Before he entered politics, Wilson would describe the American people as “selfish, ignorant, timid, stubborn” and “foolish.” He lamented that we “do too much by vote” and too little by expert rule. He proposed that the people be ruled by administrators who use them as “tools.” He once again aspired to be like Germany, where the people, he said admiringly, were “docile and acquiescent.”

…..

None of this, of course, was an improvement on the principles of the Declaration. Tocqueville’s “Democracy in America” is largely about how America owed its superiority over Europe to its conscious decision to reject central planning and administrative rule root and branch. Progressivism, in other words, is retrogressive. As Calvin Coolidge said on the 150th anniversary of the Declaration:

“If all men are created equal, that is final. If they are endowed with inalienable rights, that is final. If governments derive their just powers from the consent of the governed, that is final. No advance, no progress can be made beyond these propositions. If anyone wishes to deny their truth or their soundness, the only direction in which he can proceed historically is not forward, but backward toward the time when there was no equality, no rights of the individual, no rule of the people.”

Richard Menger explains “how an Obama-era restriction strengthens hospital monopolies.” Two slices:

Less than two decades ago, a growing number of hospitals in the United States were at least partially owned by physicians. Known as POHs, for physician-owned hospitals, these institutions made up the majority of new hospitals, providing higher-quality care at lower costs than their corporate-owned counterparts.

The 2010 passage of the Affordable Care Act halted that progress. The hospital industry, led by the American Hospital Association and the Federation of American Hospitals, had lobbied aggressively to impose strict limits on POHs. These Medicare restrictions — embedded in Section 6001 of the ACA — blocked the formation of new POHs and largely froze the expansion of existing ones, preventing them from adding beds and operating rooms without navigating a bureaucratic exceptions process.

…..

POHs consistently outperform traditional hospitals by aligning physician incentives with efficient, patient-centered outcomes — often through specialized “focused factory” models that emphasize streamlined processes and specialization. They rank among the top hospitals for quality of care and patient satisfaction, and a study of more than 1,400 hospitals nationwide found that patients paid up to 15 percent less for services delivered in POHs compared with non-physician-owned hospitals.

National Review‘s Andrew Stuttaford isn’t super-excited about Mayor Mamdani’s government-built and owned supermarkets. A slice:

Mamdani boasted that “at our stores, eggs will be cheaper. Bread will be cheaper.” Not so “cheap” for taxpayers.

Meanwhile, Elsie Encarnacion, the city council member for the part of Manhattan where that borough’s store will be located, commented that “this means access to affordable, healthy food that is hopefully culturally relevant.”

So, this store will be in a food desert?

According to the New York Post, there are “already five grocery stores within a two-block radius” of the lot where the store will be located and 15 within five blocks. I wonder how they have survived without selling “culturally relevant” fare.  I also wonder how they will manage to deal with the challenge posed by a heavily subsidized competitor (which, incidentally, will not have to pay rent or real estate taxes).

Elizabeth Nolan Brown warns of the Heritage Foundation’s enthusiasm for having government intrusion into marriage and family matters.

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… is from page 50 of the late Arthur Seldon‘s 1998 monograph, The Dilemma of Democracy:

The leading responsibility for the diminishing respect for democracy and observance of its governing processes is that of the politicians. Even when well-meaning they are misled by the political scientists who have over-estimated the beneficence and intention of democratic government. Political leaders have been interminably invited or incited to expand government, its powers, functions and services, beyond their necessity, beyond their innate low quality, and, not least for the lowest-income families, beyond their sheer cost.

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Here’s a letter to the Washington Examiner. (I thank Prof. Harold Black for alerting me to this piece by Chaffetz.)

Editor:

Former Rep. Jason Chaffetz’s defense of Trump’s tariffs is a mayhem of misunderstanding (“USMCA renewal: American manufacturing is a nonnegotiable,” April 19).

By writing of “bringing manufacturing back home,” Chaffetz sneaks in the baseless conclusion that manufacturing in the U.S. has gone away or otherwise suffered in the few decades leading up to Trump’s presidency. In fact, manufacturing output in the month before Mr. Trump began his second term was, although 10% lower than the all-time high it hit in December 2007, 9% higher than when China joined the World Trade Organization, 51% higher than when NAFTA took effect, and 164% higher than in 1975, the last year the U.S. ran an annual trade surplus.

Even these numbers don’t adequately convey the strength of U.S. manufacturing. On an absolute basis, the U.S. trails only China in the value created by its manufacturing sector, yet on a per-capita basis U.S. manufacturing value-added is 158% higher than China’s.

And high-value-added manufacturing in the U.S. is expanding, while much of the moderation in the 21^stcentury in the growth of U.S. manufacturing is due to the steep decline in American production of textiles and leather goods – a low-value-added segment of manufacturing that’s typically performed in low-wage countries that are just beginning to industrialize. It’s only because American workers in these industries encountered better opportunities in other occupations that American textile and leather-goods production fell so dramatically. We should be pleased, not perturbed, at this development. (If you doubt this conclusion, ask: How many people do you know who long for their children and grandchildren to spend their lives working in textile mills?)

A final point: By subsidizing their countries’ exports to the U.S., foreign governments compel their citizens to bestow gifts on us Americans. We are enriched by such gifts no less than we are enriched by technological advances that reduce the amount of American labor required to produce manufactured goods. Especially if we take a stance now fashionable in some conservative circles and reject “cosmopolitanism” in favor of what is called ‘putting America first,’ we should welcome rather than reject foreign countries’ self-destructive practice of ‘putting America first’ by selling to us goods at prices below cost.

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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Alfredo Carrillo Obregon’s and Scott Lincicome’s letter in today’s Wall Street Journal is superb:

Paul Rahe’s justifications for tariffs fail under scrutiny (“There’s a Case for Tariffs,” op-ed, April 16).

Mr. Rahe assumes tariffs boost resiliency, but recent history shows the opposite. National security might justify narrow trade restrictions, but tariffs have not insulated Americans from economic disruptions and have frequently made things worse. The baby-formula crisis of 2022 and automakers’ recent struggles to obtain aluminum, each triggered by the sudden closure of a tariff-protected U.S. factory, show that localized supply chains are vulnerable to local shocks—and tariffs block alternatives. Research from the pandemic finds that globalized supply chains performed better and adjusted faster than nationalized ones.

Mr. Rahe also errs on tariffs’ ability to promote manufacturing. Decades of protection failed to create thriving U.S. steel, shipbuilding, textile and footwear industries. More recent duties on solar panels did the same. With around half of imports being manufacturing inputs, tariffs raise American producers’ costs and undermine competitiveness. Combined with uncertainty surrounding executive branch tariffs, this explains why surveys consistently reveal manufacturers opposed to new protectionism.

Mr. Rahe is correct about the intrusiveness of income taxes, but tariffs can’t replace them because import volumes are far too small. Their invisibility, meanwhile, isn’t the benefit Mr. Rahe thinks. Since the 19th century, tariffs have been a breeding ground for rent-seeking and corruption and have persisted after decades of failure, precisely because their costs are hidden and diffuse. Transparency is a hallmark of good tax policy; opacity is its enemy.

Also from Alfredo Carrillo Obregon – here writing at National Review – is this accurate assessment of Trump’s tariffs punitive taxes on Americans’ purchases of imports. Three slices:

Even before the Court scrapped the Trump administration’s reciprocal tariffs, however, these duties were riddled with tariff-rate reductions and exemptions. First, the president paused the implementation of the tariffs for 90 days following a stock market plunge in reaction to his liberation day announcement, and he invited countries to negotiate lower rates during that time. Several U.S. trading partners (including the European Union, Japan, and South Korea) proceeded to negotiate agreements (or frameworks for agreements) with the administration, locking in lower reciprocal tariff rates in exchange for trade concessions and investment pledges. Then the president issued many rounds of exemptions from the reciprocal tariffs, most notably for semiconductors and certain electronics, including smartphones and computers, products from countries that negotiated agreements or framework agreements, and agricultural products.

As a result, the applied U.S. tariff rate fell from 21.5 percent, at its highest point in 2025, to 13.6 percent before the Supreme Court ruling. Most notably, only 42 percent of U.S. imports (based on 2024 import levels) were subject to IEEPA tariffs by the end of 2025. While these numbers help explain why the tariffs were not as harmful as many experts feared in April 2025, they also demonstrate that the president’s policies, from the outset, were hampered by economic realities and influenced by political considerations.

…..

The emerging economic literature on the tariffs imposed in 2025 broadly finds that Americans paid for most of the tariffs’ higher costs. Studies published by the National Bureau of Economic Research, Goldman Sachs, and the Brookings Institution, among others, find that, in the aggregate, Americans bore 77 to 96 percent of the 2025 tariffs’ higher costs, with American companies paying for most of this tariff pass-through. At the same time, a Harvard Business School survey of products sold at large U.S. retailers found that tariffs led to higher retail prices of both imported and domestic goods in the same product categories. Not only did U.S. consumers pay for about 43 percent of the tariff-induced increase in the cost of imported goods, but import-competing U.S. producers also marked up their prices.

The administration and proponents of protectionism often point out that tariffs did not lead to an inflationary spiral. A low bar, to be sure, yet many economists doubted this could happen from the outset. Even many economists opposed to the tariffs doubted such a spiral, in part because imports of goods accounted for only 11 percent of U.S. GDP in 2024.

These economic analyses consider tariffs’ visible costs — that is, their effects on prices — yet tariffs also impose invisible costs on Americans that, while harder to quantify, compound their economic damage. One of these unseen costs is the uncertainty surrounding U.S. tariff policy. The U.S. tariff code underwent 50 changes in 2025, most of them related to tariffs imposed and modified by the executive branch. That is double the average number of tariff changes in the preceding five years. It is no surprise, then, that researchers have quantified that uncertainty surrounding U.S. trade policy reached its highest point on record in April 2025. For businesses with global networks of suppliers that took years to build, this uncertainty is crippling.

…..

Most notably, a tariff-induced “manufacturing renaissance” has not materialized. While industrial capacity indeed increased in 2025, this is only a continuation of a trend that started in early 2022. Real manufacturing output is unchanged from 2022. Real manufacturing value-added (i.e., output minus costs of intermediate inputs) appears to be on track for a historic high, yet this record has been broken nearly every year since the Great Recession in 2009. Meanwhile, inflation-adjusted spending on manufacturing facilities precipitously declined throughout 2025. The post-2022 decline in manufacturing capacity utilization continued, and the economy added no manufacturing jobs in 2025.

While the U.S. manufacturing sector, as a result of many factors, has gone through fits and starts since 2022, the recent tariffs clearly have not reversed the sector’s fortunes. On the contrary, they probably worsened them. Industry surveys during 2025 indicated that higher, tariff-induced prices and tariff uncertainty depressed activity and growth for firms throughout most of the sector. Re-shoring, though appealing as political rhetoric, is not a viable business strategy for many of these businesses.

Richard Menger makes clear that, like international-trade protectionism, domestic protectionism – specifically here, certificate-of-need (“CON”) legislation – also reduces competition, restricts output, raises prices, and lowers quality.

My former Mercatus Center colleague Adam Thierer tweets: (HT Scott Lincicome)

What have information and communications technology companies done for us lately?

Well, here’s one of the most underappreciated things. It remains remarkable​ just how fast information technology platforms and application providers responded to the COVID shutdowns with rapid-fire deployment of new services that helped many sectors and workers muddle through​ using new work from home​ (WFH) technologies​.

This innovation and workplace revolution continues marching forward according to this new study, which reveals: “The share of patent applications that advances technologies in support of WFH rose by about two thirds within three years after the pandemic struck and remains about 50% above pre-pandemic levels five years later. [. . . ] It is driven overwhelmingly by US corporations rather than foreign assignees or universities. In short, we find evidence that a sudden, lasting rise in WFH redirected innovation to technologies that support it.​”​

This has opened the door to more remote work / flexible work arrangements for a huge number of people, including me. 🙏

“Trump Proved to be Unimaginably Bad for the Free Market Cause: A Conversation with Veronique de Rugy.”

The Editorial Board of the Washington Post warns against the childish belief that government should supply health-care free of direct charges to users of health care. A slice:

Rep. Alexandria Ocasio-Cortez (D-New York) visited a park with a podcaster recently to seek policy advice from elementary school students. Surprise: The children agreed with AOC – and brought the same level of sophistication to political and economic questions that Americans have come to expect from the four-term congresswoman.

One child suggested that the United States should have free health care. But why talk to children, who should never be used as political props, when there is plenty of empirical data about health policy around the world?

Putting the government in charge of giving out “free” health care inevitably leads people to look elsewhere.

Consider Britain and its National Health Service, which for decades has been the beau ideal for American progressives

Despite the government funding and running a universal health care system, private hospital admissions in the United Kingdom reached their highest level ever in 2024, according to fresh data from the Private Healthcare Information Network.

The number of people opting to buy private health insurance rose to 6.5 million in 2024, the highest number in a quarter-century, according to the Association of British Insurers.

GMU Econ alum Caleb Petitt looks at the nations in Adam Smith’s Inquiry Into the Nature and Causes of the Wealth of Nations.