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Here’s a letter that I sent on March 9th to the New York Times.

Editor:

Rep. Chris Deluzio (D-PA) calls for the impossible: a “smart” use of tariffs to strengthen the U.S. economy (“I’m a Rust Belt Democrat From a Swing District. Anti-Tariff Absolutism Is a Mistake.” March 7). All such tariffs are inherently stupid.

By restricting Americans’ access to low-cost goods and services, U.S. tariffs prevent Americans from stretching their incomes as far as possible. Of course, tariffs enrich owners and workers in protected industries, but they do so in exactly the same way as hurricanes enrich owners and workers in the construction industry. In both cases – because of the net loss of resources – the overall wealth of the nation is reduced, implying that the higher incomes earned by the lucky few who benefit from the natural disasters that are the hurricanes, and from the manmade disasters that are the tariffs, are overwhelmed by the victims’ losses.

Rep. Deluzio’s apparent ignorance of this basic reality about tariffs is matched by his mistaken ‘facts.’ He’s simply wrong, for example, when he complains of “bad trade deals” and of “a chronic trade deficit that deindustrialized our nation.” The nation has not been deindustrialized; industrial capacity is today larger than it has ever been, and is 12% larger than it was when China joined the WTO in December 2001, 66% larger than when NAFTA took effect on January 1, 1994, and 146% larger than when America last ran an annual trade surplus, in 1975.

Nor is it true that Vietnam has practiced “wage suppression” in a beggar-thy-neighbor move to take manufacturing jobs from the U.S. Between 2019 and 2023 (the latest year for which I can get data), the average inflation-adjusted manufacturing weekly earnings in Vietnam rose by an astonishing 38 percent.*

It’s easy to make a case for protectionism by ignoring economics and reality. But if these phenomena are taken into account, protectionism is exposed as being a farce grounded in questionable logic and facts.

Sincerely,
Donald J. Boudreaux
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

* Data on average weekly manufacturing earnings in Vietnam are here. I converted these earnings into constant currency values using data found here.

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GMU Econ alum Abby Hall points out that among the many harms inflicted on the American economy by Trump’s lunatic trade ‘policy’ is what the great economic historian Bob Higgs describes as regime uncertainty. A slice:

Tariffs are implemented, suspended, increased, decreased, not open for discussion, and then up for negotiation. Other nations retaliate. The U.S. doubles down. It feels like watching an unruly game of dodgeball where the players switch teams at random, the “ball” is an economic grenade, and no one knows when they’ll take that grenade to the face.

All this back-and-forth and uncertainty is a problem—a big problem.

I’ve discussed elsewhere how tariffs—taxes on foreign goods—are harmful to domestic and foreign consumers as well as domestic and foreign businesses. They provide opportunities for special interest to gain immensely at the expense of everyday consumers, foreigners, and domestic businesses that use foreign goods.

These costs are massive. Study after study finds that tariffs are bad news economically. U.S. consumers alone spend billions more as the result of tariffs. It is estimated Trump’s tariffs on Canada and Mexico could cost the average U.S. household over $1,200 a year.

These costs we can measure, or at least estimate, but what about the costs we can’t measure? How do we measure the effects of the uncertainty surrounding trade policy? We could look at stocks. Since mid-February, the U.S. stock market is down significantly. Global markets are down too. But even these measurements underestimate the costs of the uncertainty introduced by our game of “tariff dodgeball.”

The Editorial Board of the Wall Street Journal, while recognizing that Trump’s tariffs raise some prices, correctly puts most of the blame for today’s inflationary pressures on the Fed. A slice:

President Trump likes to blame Federal Reserve Chairman Jerome Powell for any trouble in the economy, but on Wednesday Mr. Powell was able to blame Mr. Trump’s tariffs for at least some of an anticipated inflation rebound.

The Federal Open Market Committee on Wednesday held short-term interest rates steady, but the bigger news concerned the Fed’s updated economic projections. Policy makers now expect GDP growth of 1.7% this year, down from the 2.1% they estimated in December, and they think their preferred measure of core inflation will hover at 2.8% instead of 2.5% as they predicted three months ago.

Under any other circumstance, investors might have spent the rest of the afternoon fretting about stagflation, especially given persistent concerns in markets about a possible recession. Instead, Mr. Powell shifted the focus to the tariffs Mr. Trump keeps threatening against all and sundry as an explanation for whatever might ail the economy this year. This provides Mr. Powell convenient cover as it becomes clearer that last autumn’s series of interest-rate cuts, totaling one percentage point, were premature.

And in response to Trump irresponsibly calling on the Fed to loosen monetary policy further, Phil Magness observes, on his Facebook page,

And there you have it. Supercharge inflationary pressures to facilitate the admin’s crackpot tariff agenda.

Despite today’s economic turmoil and troubles, it’s untrue – as explained here by GMU Econ alum Jeremy Horpedahl – that ordinary Americans have not increasingly prospered over the past few decades.

George Will isn’t favorably impressed with the new Trump administration’s first two months in office. Three slices:

If the remaining 46 months of Donald Trump’s resurrection resemble the first two, this administration will have a remarkably high ratio of theatrical action to substantial achievement. And it will exacerbate the fiscal incontinence that is the nation’s foremost domestic crisis.

…..

In this fiscal year’s first five months, beginning Oct. 1, the government borrowed $1.1 trillion — almost $8 billion a day. In February, the first full month of the Musk’s government-pruning “revolution,” borrowing was $308 billion because spending was $40 billion more — a 7 percent increase — over February 2024.

…..

Trump lost in 2020 because voters, weary of a political diet consisting of huge dollops of turmoil smothered in a gravy of malice, thought Joe Biden promised tranquility. Trump won in 2024 partly because Biden whisperers convinced him that voters craved high-octane progressivism, from trillion-dollar spending tranches to innumerable pronouns.

In 2025, one party is prostrate before its Dear Leader, and the other is unembarrassed about pathetically waving a sign proclaiming “This is not normal.” This has become normal: In our two-party system, when one party drives itself into a ditch, the other swerves into the opposite one.

Wall Street Journal columnist Gerard Baker decries anti-semitism. Two slices:

Joe Rogan, the podcaster with the biggest audience, last week hosted a man who has made a living spreading sympathetic falsehoods about Nazi Germany. I won’t dignify his sham scholarship by naming him, but he became famous recently when Tucker Carlson called him America’s “most honest popular historian.” He told a credulous Mr. Carlson that Winston Churchill was the “chief villain” of World War II and that the Jews who were murdered in Nazi concentration camps somehow “ended up dead” there, as though six million all experienced freak fatal outcomes: accidentally stepping on rakes as they tilled the lush Buchenwald gardens, perhaps, or overindulging on Auschwitz cuisine.

One quote captures the substance of the latest colloquy: “When did Hitler start going after the Jews?” Mr. Rogan asks. A rambling answer punctuated with elementary historical errors ends with this gem: “His antisemitism is what allowed him to love the German people.” Greater love hath no man than this: to hate the Jews for his own compatriots.

…..

Sheer dumbness is part of the problem. Our culture is dominated by people with epic levels of historical, economic and scientific ignorance. Mr. Rogan is unimaginably successful and doesn’t need my critical approval, so he won’t mind when I say I doubt he has read a book of real history in his life or can see the difference between the charlatans he promotes and actual historians of the Third Reich such as Richard Evans or Ian Kershaw. Nor would he or his followers understand the difference between the historiography required of a genuine authority and the kind of drivel produced by a dilettante opportunist.

The larger problem is the steady undermining of truth itself. So much contemporary ideology rests on eradicated standards of objective reality, so people can believe all kinds of impossible things. The abandonment of academic truth is partially to blame. The tendentious and dishonest nonsense that holds sway at most of our top universities and the intolerance with which its adherents exclude dissent have undermined faith in academic truth and debased the currency of scholarship so that anyone with access to a social media account can propagate his own “learning.”

Tom Savidge criticizes attempts by several members of Congress to restrict access of poor Americans to credit.

Immigrants are a boon to the U.S. economy.

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… is from page 218 of Thomas Sowell’s 2008 volume, Economic Facts and Fallacies (original emphasis; footnote deleted; link added):

[T]he growth of international free trade has been said to increase inequality among nations because the 23-to-one ratio between the twenty richest and twenty poorest nations in 1960 rose to a 36-to-one ratio in 2000. But the nations constituting the 20 richest and 20 poorest were different in 1960 and 2000. Comparing the same twenty richest and twenty poorest nations of 1960 over those decades shows that the ratio between the richest and the poorest declined to less than ten-to-one.

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Here’s a letter to American Greatness.

Editor

Victor Davis Hanson rightly decries the U.S. government’s budgetary incontinence, but critics can too easily dismiss his arguments because his pronouncements about international trade reveal profound economic misunderstanding (“What Are the Left’s Solutions for the Problems They Created?” March 17).

Supposing that U.S. trade deficits are akin to U.S. government budget deficits in putting Americans further into debt, Prof. Hanson believes that trade deficits are not sustainable. This belief is mistaken. While U.S. trade deficits could indicate that Americans’ net worth is decreasing – either through greater net indebtedness, or net asset sales, to foreigners – trade deficits, contrary to Prof. Hanson’s presumption, do not necessarily indicate such an outcome.

Because the size of the world’s capital stock can and does grow, global investors can increase their net investments in the U.S. (thus increasing U.S. trade deficits) while Americans’ net worth also increases, both through Americans’ increased investments made possible by access to global capital markets, and through these inward investments from around the world making American workplaces more productive. And as it turns out, evidence over the past 50 years, during which America ran an unbroken string of annual trade deficits – a.k.a. capital surpluses – is far more consistent with the account of U.S. trade deficits helping to improve Americans’ economic fortunes than with the account of these trade deficits reflecting American economic misfortune.

Prof. Hanson errs even more egregiously when he decries America’s so-called “trade deficits” with Canada and Mexico. In a world of more than two countries there is absolutely no reason to expect any pair of countries to have ‘balanced’ trade with each other. None. Naught. Zilch. Therefore, bilateral trade balances in our world of nearly 200 countries have no policy-relevance whatsoever. Nada. Nil. Zero. Worrying, as Prof. Hanson does for example, that “Canada currently runs a $60 billion surplus” with the U.S. is thus as silly as worrying about an unfavorable horoscope.

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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Bob Poole remembers Manny Klausner.

Also remembering Manny Klausner is Brian Doherty. A slice:

On returning to America, he taught at the University of Chicago Law School in 1964–65, where he also did editing work for the early libertarian student magazine New Individualist Review and The Journal of Law and Economics. “Chicago was an exciting place to be because of the quality of faculty, the intellectual atmosphere, and a serious tradition of liberty among people there,” Klausner said in that 1999 interview. “It turned out to be an extraordinary experience for me to be part of that community of scholars and the rich intellectual tradition at Chicago, both law and economics and philosophy and history—there were many great scholars there who take liberty seriously.” He credited Aaron Director and Ronald Coase as particularly rich influences in his Chicago time.

The Editorial Board of the Wall Street Journal rightly decries the politicization – which is to say, the destruction – of law:

Democrats in the Biden years tried to politicize the judiciary, even proposing legislation to pack the Supreme Court. Now Republicans are getting into this disreputable racket, calling for the impeachment of judges who rule against President Trump. On Tuesday Chief Justice John Roberts rightly rejected such calls.

Paul Sracic explains that the president cannot cut tariff rates without a renewed Congressional delegation of power. A slice:

President Trump’s vision for reciprocal trade hinges on a simple-sounding idea: The U.S. should mirror the trade policies of other nations to level the playing field. But there’s a fundamental issue to implementing it that goes beyond the challenges of determining fair, country-by-country parity for trade restrictions.

When Mr. Trump signed the memorandum to establish the rapid review process for reciprocal tariffs, he said, “On trade, I have decided for purposes of fairness, that I will charge a reciprocal tariff—meaning whatever countries charge the United States of America, we will charge them. No more, no less.”

That “no more” presents a legal problem. As the Cato Institute’s Scott Lincicome points out, there are many instances in which other countries’ tariffs are lower than America’s. But if Mr. Trump truly wants to impose tariffs no higher than other nations’, he doesn’t have the authority to do so on his own.

GMU Econ alum Holly Jean Soto busts “the never-ending myth of the ‘rich getting richer’.”

George Selgin warns of governments’ involvement in cryptocurrencies. A slice:

Of course, champions of a Strategic Bitcoin Reserve don’t say that its only purpose is gratifying the bitcoin lobby. The White House says its plan is aimed at “positioning the United States as a leader among nations in government digital asset strategy.” Others say that a bitcoin reserve will help the government pay down its debt. Still others believe that a bitcoin reserve will directly strengthen the dollar.

The list of justifications for a government bitcoin stockpile is long, not because there are many good ones, but because there are none, so the schemes’ apologists must keep trying. Just what “digital asset strategy” the Trump administration has in mind, apart from pleasing bitcoin enthusiasts, is anybody’s guess. The other justifications are less vague, but no less inadequate.

Take the BITCOIN Act’s claim that a bitcoin stockpile will help the government pay off its debt. For that to be true, two things have to happen. First, bitcoin’s value must go up — a lot. For example, at today’s interest rates, the plan’s million-coin stash would have to more than double in value during its 20-year holding period just to compensate for the plan’s implicit interest cost. Second, the stockpile must eventually be sold to realize the gains, and you can bet that the same bitcoin holders who have managed to get the government to keep the bitcoin it already has will cry foul if it ever tries to sell any new coins it acquires.

The claim that an official bitcoin hoard will strengthen the dollar is just as dubious. It assumes, first, that a bitcoin hoard will serve the same purpose as the 8,133 metric tons of gold mostly kept at Fort Knox, and second, that all that gold is itself propping up the dollar. Even granting the first assumption, the second is false: Gold hasn’t propped up the dollar since Richard Nixon ended the gold standard in August 1971. Were the government serious about paying down its debt, it could do it easily enough just by selling some or all of that no longer necessary gold, instead of creating other useless stockpiles. And the dollar would be none the worse (and probably better) for it.

GMU Econ alum Dominic Pino reports on the connection between easy money and DEI and ESG. A slice:

Interest rates in the 2010s were held down by central banks around the world. An interest rate is the price of money, so a 0 percent interest rate basically means money is free. It was free, or nearly free, for the better part of the past 15 years.

Now, interest rates are at a more normal level. The near-zero rates were a historical aberration — the 4,000-year low point in interest rates, according to interest-rate historian Jim Grant — engineered by central banks conducting trillions of dollars worth of open-market operations.

Interest rates are a reflection of the simple fact that people would rather have a dollar today than a dollar a year from now, so you need to charge something to make up the difference. Holding interest rates at zero is essentially denying that fact. As usual, denying facts creates problems, and they often show up in unexpected places.

As [Russ] Greene puts it: “When money is free, crazy ideas get funded. When money has a price, funders and investors want to see a direct link to value. That means ideological pet projects are the first to go.”

As a result of more responsible central-bank policy — and I stress that is a relative term — many companies are less able to afford to indulge progressive activists’ demands. When money stops being free, you have to start making money. The retreat from DEI and ESG is a resurgence in capitalism, spurred by the conclusion of absurdly easy monetary policy.

According to Sam Kazman, “a bedrock document of climate alarmism may soon be cracked, and it’s about time.” A slice:

In 2021 Steven Koonin, a highly credentialed physicist, former provost of Caltech and former undersecretary of science at the Department of Energy under Obama, published “Unsettled: What Climate Science Tells Us, What It Doesn’t, and Why It Matters,” a detailed critique of climate alarmism and the politics behind its ascendency. It received an overwhelmingly harsh reception from climate activists and the popular press, with little attention paid to its detailed technical content. As one examination of Koonin’s treatment noted about his critics’ failure to deal with his scientific arguments, “[W]hy engage with a heretic when he can be banished from the church altogether?”

Bob Graboyes asks: Who are these historical figures in modern garb?

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… is from chapter 1 of William Graham Sumner’s 1885 book, Protectionism: the -ism Which Teaches that Waste Makes Wealth (original emphasis):

This is the fundamental fallacy of protection to which the analysis will bring us back again and again. Scientifically stated it is that protectionism sins against the conservation of energy. More simply stated it is that the protectionist either never sees or does not tell the other side of the account, the cost, the outlay for the gains which he alleges from protection, and that when these are examined and weighed they are sure to vastly exceed the gains, if the gains were real, even taking no account of the harm to national growth which is done by restriction and interference.

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Here’s a letter to the Wall Street Journal.

Editor:

Reporting on the president’s trade policy, you write that “Trump has repeatedly said reciprocal tariffs would mean ‘what they charge us, we charge them’” (“Trump Team Explored Simplified Plan for Reciprocal Tariffs,” March 18).

Because protective tariffs are taxes designed to raise the prices that fellow citizens pay for imports – and, hence, for import-competing domestic alternatives – Trump would be more accurate if he said “what they tax their citizens, we’ll tax our citizens.” Were the president to be this frank, fewer Americans would be enthusiastic about his self-destructive scheme for off-shoring U.S. tax policy.

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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The Review of Austrian Economics has a new special issue devoted to the work of the great economist W.H. Hutt (1899-1988) who, among many other important contributions, in 1936 coined the term “consumers’ sovereignty.” When I was asked to contribute to this special issue, I eagerly accepted, not only because of my life-long deep appreciation of Hutt’s work but also because it gave me an opportunity to explore in some depth the connection between consumption and production. This exploration is important because the relationship between these two concepts is often misunderstood – and this misunderstanding fuels unwise and counterproductive policy proposals (such as, for example, that trade policy should pay less attention to consumer welfare and do more to promote the welfare of producers).

You can read the paper in full here, but pasted below are some slices from it.

Although William Hutt coined the term “consumer sovereignty” in 1936, the concept is rooted in this observation by Adam Smith in 1776:

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident that it would be absurd to attempt to prove it ([1776] 1981, p. 660).

While the first sentence in this passage from Smith’s Inquiry Into the Nature and Causes of the Wealth of Nations is correct, the latter is uncharacteristically mistaken. The reason is that the claim that “consumption is the sole end and purpose of all production” continues to be denied by influential pundits.

….

Discounting consumption and elevating production is superficially appealing. Those who do such discounting achieve, in many eyes, an aura of mature sophistication and gravitas that seems unavailable to people who insist that, ultimately, economic activity’s only goal is consumption. Consumption is enjoyable and easy, and we willingly pay to do it. Working, in contrast, is often hard and is never so enjoyable that we willingly do it without being paid. Consumption is an activity that we naturally want to engage in. Unlike laboring, consumption is its own reward and, hence, its own motivation. Because consumption is naturally attractive to humans, we’ll do too much of it if we’re not properly incited to control our urge to consume. In contrast, working – production – is not its own reward; we’ll do too little of it unless we’re properly incited to exert productive effort.

Furthermore, consumption requires neither skill nor self-control. We are consumers from the moment we’re conceived and continue to be only consumers throughout childhood. But to produce we must have at least minimal skill and self-control. While even the most aimless and immature individuals can and do consume, production requires maturity and competence. Not everyone does it. Unsurprisingly, prosperous societies develop norms and attitudes that laud and encourage dispositions toward productive activity as they also temper our natural eagerness to consume. Protesting against Adam Smith’s insistence on the primacy of consumption thus seems to beat least plausibly merited, and perhaps even praiseworthy. Consumption is valued above all and exclusively only by the frivolous, myopic, and childish. People who are serious, prudent, and mature understand that production is no less important – and perhaps even more important – than consumption.

Protestors against Adam Smith’s insistence on the primacy of consumption are mistaken. They commit a category error. They presume that production is in the same category of activities as is consumption. Specifically, these anti-Smithians presume that production and consumption are alternative, competing human ends. It follows from this presumption that prudent societies aim to achieve an optimal mix of production and consumption, while imprudent ones aim for the corner solution of maximum possible consumption. But, as noted, this presumption is mistaken. Aseconomic activities, production and consumption differ from each other categorically. Production is a means toward the fulfillment of human ends (whatever these might be); consumption is the satisfaction of these ends. Production (the means) and consumption (the ends) are not traded off against each other as a consumer trades-off one good against another good.

…..

Yet much more straightforward evidence exists to prove that production, unlike consumption, is not an end in itself: People are paid to produce; people pay to consume. Any activity that will be performed only if the persons performing it are paid to do so is obviously not an end in itself; that activity is not its own reward or its own motivation. Activities that people pay to engage in are ends. These activities are what Adam Smith meant, and what all sensible economists today mean, by “consumption.” If work in a particular job were an end in itself, the individuals performing that job not only would not have to be paid to do it, they would pay to do it. The need to pay people to work proves that work is not an end in itself. Likewise, the need to pay firm owners to produce the outputs they produce and make available for sale proves that those production activities are not ends in themselves. Work and production are means.

…..

One upshot of this reality is that if genuine production is to occur in a group of people larger than a few dozen, the only reliable means of getting sufficient information about which uses of resources are productive and which aren’t is the market price system. By responding to market prices, individuals in their capacity as producers combine different resources into outputs for sale to consumers. Outputs bought by consumers in sufficient quantities and at prices sufficiently high to keep the production operations going are more valuable than are the outputs that would have been produced had inputs been used differently. Using inputs to produce outputs sold at prices that cover their costs of production is productive; using inputs to produce outputs sold at prices that do not cover their costs of production is wasteful. Although in both of these cases workers exert effort to transform physical matter from some forms into other forms, only in the former case does maximum production occur.

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This letter in today’s Wall Street Journal, by Melissa Newsham of Hawaii’s Grassroot Institute, is superb:

As reported in “U.S. Lags Far Behind Rivals Like China in Building Oceangoing Containerships” (Business News, March 3), America’s shipbuilding industry is minuscule compared with the rest of the world. But relying on protectionist policies as a solution is a mistake. We’ve already tried that with no success. Take the Jones Act of 1920, which requires goods transported between U.S. ports to be carried on domestically built vessels, among other requirements. Advocates claim the law is essential for protecting the maritime industry, but as the article documents, the industry has declined under the act’s watch, largely because U.S. shipyards enjoy a captive domestic market with no real competition. There are dedicated lobby groups whose sole purpose is to block even the most narrowly tailored exceptions to the law.

Meanwhile, as Matson builds three overpriced vessels in the Philly Shipyard, residents of my home state of Hawaii can expect to foot the bill through higher freight costs. The inflated cost of U.S.-built ships, which has risen faster than international counterparts, acts as a barrier to entry for potential competitors. Protectionist policies such as the Jones Act are more effective as de facto taxes than as a legitimate strategy for strengthening American shipbuilding.

My Mercatus Center colleague Jack Salmon warns that Trump’s trade ‘policy’ is pushing the U.S. economy into a recession. Two slices:

Any hope of robust economic growth resulting from unleashing energy abundance, deregulating the private sector economy, or pro-growth tax policy may now be doused by the economic fallout of a pointless trade war.

It started as a murmur—a slight downward revision, nothing alarming. But within five days, the Federal Reserve Bank of Atlanta’s GDPNow forecast for the first quarter of 2025 went from mild optimism (2.3 percent growth) to outright recessionary territory (-1.5 percent). By March 3, the number had plunged to -2.8 percent, the kind of contraction that doesn’t just signal weakness but outright economic distress. Eight months of stock market gains were wiped out in less than four weeks.

Yet there is deafening silence from Washington. The Trump administration remains deeply committed to its protectionist crusade, under the misguided belief that tariffs and trade barriers come at no cost to Americans. But reality is setting in, and the numbers don’t lie. The ongoing trade war, with its uncertainty and economic distortions, is now visibly hammering investment, exports, and consumption—three pillars of growth.

…..

Global supply chains are rattled, businesses are reluctant to invest in capital, and consumers are cutting back on purchases. Tariffs—pitched as a way to bring jobs back—have instead choked growth. The administration’s bet that protectionism would insulate the economy from foreign competition is proving to be precisely the opposite: a self-inflicted wound.

The very politicians who decried economic stagnation in previous decades are now actively promoting it through top-down economic planning. This is industrial policy in practice—where Washington’s heavy hand tries to override the natural forces of markets.

We can’t say that we weren’t forewarned about this possibility. My colleague Veronique de Rugy wrote back in September that we shouldn’t expect a return to the Trump economy. As she observed, “several of his policy ideas are destructive.”

Michael Strain wonders “why Trump is undermining the U.S. economy.” A slice:

In recent weeks, Trump has reversed that good start. I fully endorse the goals of Elon Musk’s Department of Government Efficiency (DOGE) to reduce the scope of government activity and eliminate wasteful spending. But DOGE’s chaos has spooked consumers and investors. Worse, Trump’s on-again, off-again tariff increases and open hostility toward crucial trading partners (Canada, Mexico, and the European Union) have soured business and consumer sentiment, increased inflation expectations, chilled investment, and sent stocks plunging. On March 13, the S&P 500 sank into a correction, falling 10% from its record high three weeks previously.

Why is Trump doing this? I’ll offer three explanations. First, we are witnessing rank incompetence. As has been widely reported, DOGE has charged into federal agencies and fired workers, only to attempt to rehire them days later when it realized how important they were. It is repeatedly posting data with significant errors about its “spending cuts.” Clearly, there is no plan here. DOGE simply has no idea what it is doing, and all its frenetic activity has amounted to nothing but confusion. There have been no material spending cuts: Federal spending in February was higher than in any previous month. If anything, DOGE’s ineptitude is likely to set back the cause of reducing the size and scope of government.

Trump’s execution of trade policy has been equally incompetent. Many Trumpologists are trying to discern a strategy, as if the president were “playing five-dimensional chess.” He isn’t. There was no master plan, for example, behind his decision to enact a large tariff increase on Canada on March 4, then exempt automobile manufacturing on March 5, and then exempt goods in compliance with the United States-Mexico-Canada Agreement (USMCA) on March 6.

My GMU Econ colleague Chris Coyne and GMU Econ doctoral candidate André Quintas expose “the false promise of populism.”

The Editorial Board of the Wall Street Journal wisely criticizes Trump’s and his lieutenants’ disregard for due process and court rulings. A slice:

To hear others in the Administration talk, however, such a refusal may be coming. “They’re not gonna stop us,” Tom Homan, Mr. Trump’s immigration czar, told Fox News on Monday. “We’re not stopping. I don’t care what the judges think, I don’t care what the left thinks, we’re coming.”

Elon Musk threatened Judge Boasberg with impeachment, and the MAGA-sphere chanted that Mr. Trump should ignore the courts. Are we already arriving at a constitutional impasse when the Administration thinks it can ignore court orders?

Jason Furman offers sound insights about AI and AI regulation. (HT Arnold Kling) A slice:

Avoid setting up regulations that become a moat protecting incumbents. History shows that well-intentioned rules can entrench existing powers, from medieval guilds to hospital certificate-of-need laws (Mitchell 2021). It is possible that regulations in the AI space could follow the same pattern. Centralized licensing bodies could easily become gatekeepers stifling competition. A super-regulator could be captured by big companies. When tech giants enthusiastically promote regulation, it should raise red flags. A regulatory framework that aims to nurture a competitive AI landscape instead of solidifying the dominance of a few early movers should avoid these types of policies.

In this video, Kevin Corinth offers insights about the “poverty line.”

Jeffrey Miron and Jacob Winter are correct: “land-use regulations make housing less affordable.”

J.D. Tuccille reports that “pandemic lockdowns made the world ruder.”