Colin Grabow describes and decries the return of mercantilism. Two slices:
America’s maritime industry offers a useful lesson in the limits of economic nationalism. The United States is the world’s second-largest manufacturing country and is renowned for its competitiveness and innovation. Yet in 2024, American shipyards accounted for just 0.04 percent of global commercial shipbuilding. Not 4 percent, or even four-tenths of a percent, but four one-hundredths of a percent. This is not a recent stumble. The past decade’s high-water mark for US commercial shipbuilding, achieved in 2016, was a paltry 0.53 percent of global output.
The malaise extends to domestic shipping as well: Fewer than 100 oceangoing cargo ships serve the transportation needs of the world’s largest economy. These ships are invariably kept in service well past their normal lifespan because the cost of replacement is so punishing.
Such is the legacy of more than a century of aggressive protectionism. The Jones Act, the 1920 law requiring that cargo shipped between American ports travel on vessels that are American-built, American-flagged, American-owned, and American-crewed, is premised on the idea that such restrictions foster a robust merchant fleet and thriving shipyards. The reality, however, is a maritime industry that is expensive, shrinking, and largely irrelevant. A law ostensibly designed to build an industry has instead helped entomb it, all while inflicting high costs on the broader economy. This should not be a surprise.
Indeed, the lesson that mercantilist restrictions impoverish rather than enrich was supposed to be the American Revolution’s central economic inheritance. The Declaration of Independence itself did not settle for mere abstractions in its demand for liberty, instead itemizing specific abuses and taking aim at King George for “cutting off our trade with all parts of the world” and “imposing taxes on us without our consent.”
These were not rhetorical flourishes but responses to a mercantilist system that treated the colonial economy as an instrument of British enrichment rather than a domain of human freedom.
It would be a mistake, however, to view the Founders as simply reacting to the observed harm of British policy. They had an intellectual framework for understanding why that policy was wrong. In March 1776, just months before the Declaration, Adam Smith published The Wealth of Nations, perhaps the most thorough demolition of mercantilist theory ever written. The Founders read it. Thomas Jefferson called it “the best book extant” in political economy, and James Madison included it on a list of essential books for Congress.
Why they assigned the book such importance is easy to grasp: Smith gave philosophical coherence to what colonists had experienced as practical oppression.
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Enthusiasm for industrial policy and strategic tariffs has spread across both parties. Trump is not the disease but its most candid expression. The mercantilist instinct, the belief that governments can allocate economic activity more wisely than the people conducting it, has never been fully extinguished. It persists in the Jones Act, heavy tariffs meant to benefit particular industries such as steel and autos, and “deals” with other countries that aim to reduce imports in a benighted obsession with balanced trade.
That instinct is now making a bid for the center of American economic policy.
Mercantilist restrictions did not fail because governments executed them poorly. They failed because the premise was wrong. Two hundred and fifty years after the Revolution, that premise has returned—dressed in new language and justified by new anxieties, but recognizable in its essentials. The Founders knew what it looked like. And they wrote a declaration that led to a new nation, in no small measure because of it. The question now is whether we remember why.
Matt Yglesias tweets: (HT Scott Lincicome)
Postliberals will really be like “you believe in GDP growth? that pales in comparison to my strategy, robust communities with real human flourishing” and then not create robust communities but everyone gets poorer thanks to bad economic policy.
The Editorial Board of the Washington Post reports on what every sensible economist back in 2010 warned would happen as a result of Obamacare: One consequences of this abominable legislation is high and rising health-care costs for Americans. A slice:
If it wasn’t obvious before that the famous bill passed to make health care more affordable has done anything but, it should be now: Individual plans on the Affordable Care Act exchanges are projected to spike by about 14 percent in 2027, according to recent insurer filings.
The ACA imposed a wide array of mandates on health insurance. Those mandates are expensive. To make up for the increase in costs, the ACA distributes subsidies so consumers don’t feel the impact of the increase.
Many of these subsidies are “advance” subsidies that go directly from the federal government to insurers based on the customer’s income. That means insurers can raise premiums without customers having to pay more.
As of 2025, 93 percent of enrollees in the exchanges received subsidies, up from 86 percent in 2021. If nearly everyone on the exchanges needs subsidies, that’s a clear sign that the product being sold is not affordable.
George Will writes about the seeming itch of each major U.S. political party to ensure that the other wins elections. A slice:
[Graham Platner’s] reputation is in tatters. So should be the reputations of all those national figures who tried to put him in the Senate from Maine. The Platner debacle is just a smidgen of the Everest of evidence for two propositions:
The Democratic Party no longer has a knack for its business, which supposedly is politics. In America, this means cobbling together majority coalitions from a politically and culturally diverse continental nation. The second proposition is that the nation cannot have just one healthy party. When one welcomes contamination by the extremism and stupidity on its side of the spectrum, the other, relishing the collapse of standards, does likewise.
Platner’s campaign was born of the cynicism that permeates the Democrats’ devotion to identity politics. Never mind that Platner is a lout whose work résumé is thinner than his record of sponging off his parents. Rather than assess him as — Heaven forfend! — an individual, Democrats anointed him the embodiment of a category: the working class. He could be their favorite thing, a victim. He could make vivid their simpleminded binary of “oppressors” and “oppressed.” Oblivious of their insult to America’s working class, Democrats wonder why what once was their base has abandoned them.
Republicans, however, should shed any post-Platner delusions of moral superiority. Ten years ago, they turned the louche star of the “Access Hollywood” tape, and the payer of hush money to his porn star paramour, into a president. Conjured from the populism of celebrity worship, he today is frighteningly out of his depth, dumbstruck that his son-in-law, in tandem a New York real estate crony, cannot pacify Iran and end the war against Ukraine.
America’s still-multiplying embarrassments are rank weeds fertilized by the manure of populism. And by populism’s inherent, aggressive disdain for the importance of character in politics. Populism is almost everything rejected by America’s unsentimental Founders, who, a few days ago, the nation briefly, and often uncomprehendingly, celebrated.
The clear-eyed Founders, steeped in sobering histories of short-lived republics, constructed a sophisticated constitutional architecture that blends democracy and distrust. They built a bulwark against populism because they believed this: Majorities must rule in the end, but their opinions must be mediated — and cooled — by being filtered through institutions. Those institutions must be occupied by people possessing “republican virtue,” an attribute not evenly distributed among “the people.”
What animated the Founding was the antonym of American populism. Populism celebrates popular passions incited by, and channeled swiftly into action by, an unconstrained executive.
Matthew Hennessey offers a clear-eyed look at modern American politics. Here’s his conclusion:
Next time you’re tempted to get romantic about politics, remember: It’s all showbiz.
Dan Greenberg rightly rejects Andy Craig’s myopic case for packing the U.S. Supreme Court. Two slices:
Ultimately, Craig’s insistence that the Court has rendered itself illegitimate rests on an idiosyncratic reading of a few of the Court’s decisions. I think judicial integrity and “the Court’s own professed methodology” allow for a far wider range of results—partly because it is unsophisticated to reduce the Court’s own professed methodology to a slogan. Anyone is entitled to disagree with the Court’s decisions, but political disagreements aren’t evidence of a lack of integrity—they are just a fact of life. In short, Craig’s arguments about the Court’s illegitimacy fail.
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Craig’s broader argument—that the Court is illegitimate because it is insufficiently independent—is also undercut by the Court’s decision on tariffs. Craig tries to explain that problem away by describing the tariff decision as consistent with “longstanding Republican policy preferences.” That conflates the typical voter’s partisan identification (relatively static over time) with the typical voter’s policy preferences (relatively plastic): it misunderstands, e.g., the strange new respect Republicans exhibited for tariffs that coincided with Trump’s rise. And of course Craig’s insistence that the Court is insufficiently independent will require increasingly elaborate counter-explanations when the Court’s repeated refusals to allow the president to deploy National Guard troops in states with governors who do not want them there—and the Court’s repeated refusals to allow the president to deport detainees—are considered. In short, Craig’s denunciation of “what this Court does when its side’s power is directly at stake” is hard to reconcile with the real world’s record.
Of course, there will be Democratic politicians who will find the charge that the Court has become compromised persuasive, and there will be Democratic voters who will find it persuasive as well. (People often find propositions persuasive when those propositions are useful.) But Craig’s case that the Court has been compromised will likely be unpersuasive to a neutral observer who is familiar with the whole of the Court’s record. Once partisanship is removed from the scales, Craig’s case for the Court’s legitimacy crisis is thin on evidence.
Daniel Freeman patiently reveals the ravages of rent control. Here’s his conclusion:
None of the above points is particularly controversial among economists – which is a rare thing. If you want to get a good overview of the huge amount of empirical evidence that has formed this consensus, I recommend Konstantin Kholodalin’s paper analysis of almost every study conducted around the world on the impact of rent control. Or if you’re short of time, the IEA briefing, Rent Control: Does it Work?.
Stephen Kotkin writes about the remarkable Benjamin Franklin.
Yet prosperity was slow to return to Philadelphia. Before the war, a coaster carrying merchandise arrived in port almost daily; now it was closer to monthly. Royal Navy cruisers and loyalist privateers dominated the Delaware capes, paralyzing trade…. “Goods are exceedingly scarce here,” a trader reported, “and will sell at any price a man’s conscience will let him take.”
You might think that the collapse of communism throughout Eastern Europe would be considered a decisive failure of Marxism, but academic Marxists in America are utterly undaunted. Their paychecks and their tenure are unaffected. Their theories continue to flourish in the classrooms and their journals continue to litter the library shelves.
It was here that the founders set themselves apart forever from the naïve theorists of democracy. They saw, in Burke’s phrase, that the constitution of a state is not a “problem of arithmetic.” So they refused to identify the will of the people with the transient plurality of the voters of one constituency…. They thought of “the people” as having many dimensions in space, in time, in weight, in quality. They thought, as Burke did, that a society is “a partnership in all science; a partnership in all art; a partnership in every virtue, and in all perfection,” and “as the ends of such a partnership cannot be obtained in many generations,” a civil society is “a partnership not only between those who are living, but between those who are dead, and those who are to be born.” The American founders sought to represent this many-sided people and they thought of the people’s will as an equilibrium of its many elements.
To cherish and stimulate the activity of the human mind, by multiplying the objects of enterprise, is not among the least considerable of the expedients, by which the wealth of a nation may be promoted. Even things in themselves not positively advantageous, sometimes become so, by their tendency to provoke exertion. Every new scene, which is opened to the busy nature of man to rouse and exert itself, is the addition of a new energy to the general stock of effort.
