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… is from page 88 of Kenneth Boulding’s 1970 book, Economics As A Science:

In the market there are in effect a very large number of parties, there is no majority rule, and there is the possibility of a wide diversity of mixtures of commodity purchases and a wide diversity in styles of life. In the political area, where majority rule is the convention, diversity can only be achieved through coalitions offering packages, one of which will appeal to more voters than the others. It is as if in economic life we had only two firms, each of them offering a complete package of consumer goods in relatively fixed proportions, so that in effect we had a choice between two enormous packages of commodities and could not make our own selection.

DBx: Indeed so. And, therefore, if you are truly committed to diversity, you should wish to have as little as possible of life politicized, and as much as possible of life in the realm of individual liberty governed by the role of property and contract rights.

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Here’s yet one more open letter to the current president of the executive branch of the U.S. national government.

August 8, 2026

Mr. Donald J. Trump
President, Executive Branch
United States Government
1600 Pennsylvania Ave., NW
Washington, DC 20500

Mr. Trump:

The Washington Post reports that on Thursday you proceeded to “set a price floor for polysilicon, one of the key components of solar panels and semiconductors, and impose a 15 percent tariff on products made from the material. The goal is to make domestic manufacturers more competitive with inexpensive Chinese importers” (“Solar power is about to get more expensive. Thank Trump.” August 8). The Post also reports that Commerce secretary Howard Lutnick said that “this will bring the supply chain here.”

Apart from the Post’s own sound criticisms of this latest effort of your administration to deny Americans access to low-cost inputs, I have a question: Do you and your advisors ever ask yourselves which ‘supply chains’ America must abandon whenever your tariffs bring some other ‘supply chains’ here?

Mr. Lutnick might be correct that these new tariffs will prompt Americans to produce more polysilicon for the manufacture of solar panels and semiconductors. But whatever additional American workers and capital and other materials your interventions direct into producing more polysilicon in the U.S. are necessarily drawn away from producing other goods and services in the U.S. It’s impossible for tariffs, subsidies, and price ceilings to bring more of some ‘supply chains’ here without simultaneously driving more of other ‘supply chains’ away from here.

Do you know what these other ‘supply chains’ are? Are you confident that the value of increased U.S. production of polysilicon is worth the decreased U.S. production of whatever are the outputs that your interventions prevent from being produced?

Do you even recognize that this inescapable trade-off exists?

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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Here’s a letter to Foreign Affairs.

Editor:

Lori Wallach’s “The Right Way to Balance Trade” (August 5) is a blizzard of blunders, not the least being her presumption that persistent trade deficits and surpluses prove that the global trading system is rigged or otherwise failing. Never does she bother to explain why, in our world where people aren’t confined to investing only domestically, countries with relatively better investment climates shouldn’t innocently and routinely attract capital away from countries with relatively poor investment climates. Just as better-run private companies persistently attract capital away from poorly run companies – and, hence, put that capital to better use – so, too, do better-run countries persistently attract capital away from poorly run countries (and, hence, put that capital to better use).

Ms. Wallach also is careless with facts. It’s true, as she complains, that the absolute number of U.S. manufacturing jobs in 2020 was lower than in December 2001, when China joined the World Trade Organization. But even if we grant, contrary to reality, that manufacturing jobs are better than non-manufacturing jobs, the absolute number of such jobs is an inappropriate measure; a more-appropriate measure is manufacturing jobs as a share of total nonfarm jobs. And on this measure, manufacturing employment as a share of total employment has fallen more slowly since China joined the WTO than it did earlier. In the 229 months from December 2001 through December 2020, manufacturing employment as a share of total employment fell at an average monthly rate of 0.151%, but in the 229 months just prior to December 2001, manufacturing employment as a share of total employment fell at an average monthly rate of 0.197% – faster than it has since China joined the WTO.*

Using Ms. Wallach’s simplistic method of inferring cause from correlation, it appears that China’s membership in the WTO slowed the loss of U.S. manufacturing employment.

Another fact is worthwhile to note: Ms. Wallach asserts, with no evidence, that U.S. trade deficits since China’s entry into the WTO pushed capital into wasteful speculation, resulting in “less financing available for the real economy.” Her suggestion is that the ‘real’ U.S. economy has been starved of capital. The evidence is unfriendly to her suggestion. The real size of the private nonresidential capital stock in the U.S. in 2024 (the latest year for which these data are available) was 55% larger than it was in 2001.**

It’s disappointing that Foreign Affairs published an essay so tendentious and economically uninformed.

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

* I divided monthly figures on total manufacturing employment by monthly figures on total nonfarm employment, and then used Excel to calculate the average monthly rates of change for the period since China joined the WTO and for the same-length time period before China joined the WTO.

** I used this BEA data set – “Table 2.2. Chain-Type Quantity Indexes for Net Stock of Private Fixed Assets, Equipment, Structures, and Intellectual Property Products by Type: [Index numbers, 2017=100]” – and had Claude do the calculations.

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Phil Magness and Marc Wheat examine “Trump’s tariff ‘plan B.'” A slice:

Since “Liberation Day” on April 2, 2025, the administration has pivoted from statute to statute for its tariff-of-the-month club to prolong its illegal regime of taxing imports. Many of its claims have been inconsistent and contrary to well-established economic history.

Under penalty of perjury, Commerce Secretary Howard Lutnick told the Federal Circuit that “without the viability of [International Emergency Economic Powers Act] tariffs, the United States would be weakened and lose the essential tool to address this national emergency most efficiently” (emphasis added).

Because of such claims, the courts allowed the government to collect tariff revenue while litigation continued. But the Supreme Court ultimately rejected Lutnick’s claims in February.

Yet, within hours of the Supreme Court’s decision striking down the IEEPA tariffs, the administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974. Several states and small businesses are currently challenging the Section 122 tariffs and the government’s attempts to conflate two technical terms that are not the same: a “balance of payments deficit” and a “trade deficit.” The solicitor general, representing the government, even argued in Learning Resources v. Trump that “trade deficits” are “conceptually distinct from balance-of-payments deficits.”

Section 122’s “balance of payments deficit” has never been used because the provision became obsolete in 1976 when the U.S. abandoned the Bretton Woods exchange rate system. A “balance of payments deficit” was a natural consequence of fixed exchange rates, when the value of the dollar was pegged to gold and when other foreign currencies were pegged to the dollar.

Now, not waiting for a final ruling on its Section 122 tariffs, the White House attempts to resurrect a dormant clause from the long-buried Smoot-Hawley Tariff Act, Section 338. The consequences of the administration’s tariff regime have already been similar to those of Smoot-Hawley in the Great Depression: an explosion of new or ramped-up lobbying contracts, job losses for families, and increased prices for many goods. Smoot-Hawley was disastrous then and is leading to the same problems now.

The Editorial Board of the Washington Post reports that “Trump’s tariff backup plan is teetering in court.” A slice:

“The Supreme Court blocked it. They blocked it. But that didn’t stop me.” So said President Joe Biden in 2024 after the justices ruled against his effort to cancel $430 billion in student loan debt. He tried to use another legal authority to cancel debt, but that was ultimately blocked in court, too.

President Donald Trump is trying to do much the same thing with tariffs. He first imposed sweeping worldwide levies last year using the International Emergency Economic Powers Act of 1977. The Supreme Court ruled 6-3 in February that those tariffs were unlawful.

Since then, the administration has been trying to reimpose the border taxes in other ways. The latest method is to invoke Section 301 of the Trade Act of 1974. That law authorizes tariffs if the U.S. trade representative finds that a trading partner is engaging in certain unfair practices.

But the new strategy is also legally vulnerable, as a new lawsuit by 25 states in the U.S. Court of International Trade highlights. Yes, the law gives the USTR substantial discretion to impose tariffs in some circumstances to respond to particular abuses. But it can’t be a blanket authorization for whatever tariffs the president happens to want.

Dan Hannan decries the language games played today by the likes of NatCons and Groypers. A slice:

An equivalent semantic shift is now happening over “globalisation”. Until an eyeblink ago, that word meant removing barriers so that people were not penalised for, or prevented from, buying goods or services from outside their country. But, over the past decade or so, it has taken on a new meaning. A “globalist” is now someone who wants the world to be ruled from Davos or Brussels. He wants human rights courts to strike down national governments. He wants to send entitled “gimmegrants” across every border. He wants to destroy the West.

Again, the idea that the free flow of goods, services and ideas is itself part of the Western patrimony is not considered. Two completely contradictory notions — one to do with restricting the state’s power over the individual, the other to do with increasing it — are deliberately conflated.

For a lot of people under the age of 25, the older meanings of these words don’t register at all. Argue that tariffs are making us poorer, and they will ask why you want to flood the country with illegal immigrants.

The Washington Post‘s Editorial Board sensibly predicts that Wisconsinites will inflict much economic harm on themselves if they elect as their next governor a socialist. A slice:

But high earners in America’s Dairyland will take only so much badgering before they relocate. Wisconsin already has the second-highest top income tax rate in the Midwest, trailing only Minnesota’s 9.85 percent. And Wisconsin businesses face the third-highest rates in the region, behind Minnesota and Illinois. When businesses leave, they take with them not only tax revenue but also jobs and investment.

“Can a freely given coconut begin civilization?“

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… is from page 297 of Anne Krueger’s 2020 book, International Trade: What Everyone Needs to Know; it appears in the section of her book in which she summarizes the many lessons drawn from the actual post-WWII history of freeing or restricting trade:

Lesson 8. Protection does not create jobs. Trade destroys many fewer than is popularly believed. Protection may slow down the rate of decline of employment in a declining industry but creates many fewer jobs than expected in the protected industry and results in more job losses elsewhere. Many more jobs are lost due to capital deepening and automation than because of trade.

DBx: Yep.

Pictured here is the economist Anne Krueger (1934- ), whose June 1974 American Economic Review paper, “The Political Economy of the Rent-Seeking Society,” gave us the term “rent-seeking.”

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Here’s yet another open letter to the president of one of the three co-equal branches of the national government – co-equal, that is, at least according to that quaint document called “The Constitution of the United States of America.”

Mr. Donald J. Trump
President, Executive Branch
United States Government
1600 Pennsylvania Ave., NW
Washington, DC 20500

Mr. Trump:

On Wednesday you bragged about “taking a lot of oil from Venezuela” (“Trump Brags He’s Taking ‘Billions of Barrels of Oil From Venezuela’ Because ‘To the Victor Belong the Spoils’,” August 5). Overlooking the unseemliness of an American official boasting of “taking” – that is, of stealing – other people’s property, I have an economics question for you. To wit: Because you and your lieutenants frequently allege that America’s industrial economy has been “hollowed out” by floods of cheap imports, isn’t the “hollowing out” about which you complain only furthered by your “taking” a major industrial output, petroleum? After all, to “take” something is to pay nothing for it; it’s to acquire that product at a price far below its market value.

If, as you claim, America’s economy is harmed by foreigners voluntarily offering to sell their outputs to Americans at low prices, isn’t America’s economy harmed even more by our taking some of those outputs at ‘prices’ lower than even the lowest ones that foreigners are willing to accept?

If not, why not? I’m quite interested in being enlightened by your clarification of this apparent inconsistency in your economic pronouncements.

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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In my latest column for AIER, I make the case that not all economists are guilty of Gregory Collins’s charge of having too-narrow an understanding of human nature and motivation. I also defend my Adam Smithian distinction between consumption and production from Collins’s misunderstanding of that distinction. A slice:

Protectionists typically justify their policies by pointing to the particular jobs they save. Economists respond that protectionism also destroys particular jobs. They also note that protectionism reduces the spending power of domestic consumers. In public debates, protectionists often ignore the first point while eagerly seizing on the second to make what they believe is a “gotcha” argument against economists.

“Aha!” protectionists cry. “Economists’ view of humanity is absurdly narrow! Unlike us protectionists, who understand that people are not only consumers but also producers, economists think people are only consumers. How silly! We can therefore ignore economists.”

If economists were guilty as charged, then policy recommendations rooted in our positive analysis would indeed be worthless. But we’re innocent.

To see why requires that the analytical distinction between “consumption” and “production” be made clear. “Consumption” is a label for ends; “production” is a label for means. The particular content of the ends (and of the means) isn’t specified. “Consumption” can refer to the wise pursuit and embrace of the true and the beautiful as defined by Aristotle or Aquinas (or by Adrian Vermeule, Pope Leo, the Dalai Lama, Hasan Piker, Nick Fuentes, whoever) no less than to myopic attempts to gratify the most fleeting desires of the flesh.

When economists say that individuals act to satisfy as many consumption desires as possible, we describe a category of human action; we prescribe nothing. We simply mean that individuals act to achieve as many of their ends as possible. When challenging protectionist policies and other government interventions, we explain that such policies increase some individuals’ ability to achieve their ends only by reducing the ability of others to achieve theirs. Economics imposes no restrictions on what those ends are or ought to be, and it makes no value judgment about one set of ends compared with another.

Nor do economists elevate consumption over production. Rather, we point out that production is a means to consumption, whatever the particular consumption desires might be. To argue for policies that treat production as an end in itself is therefore to commit a category error.

It is akin, for example, to mistaking an emergency appendectomy for an end on par with the patient’s goal of good health. The successful performance of the surgery has genuine value, and the surgeon may rightly take satisfaction in performing her craft with skill and care. Yet no sensible person would wish to protect the surgeon’s job by opposing a pharmaceutical breakthrough that ensures appendixes never again rupture. The dignity and satisfaction the surgeon derives from her work come from restoring patients to health. If patients are already healthy, the surgeon would be perverse — and most undignified — to insist on performing unnecessary operations.

No competent economist denies that work has dignity or that individuals find satisfaction and meaning in their work beyond the incomes they earn. What economists deny is the practical possibility of using government to protect some individuals’ pursuit of dignity and other nonmaterial goals without obstructing other individuals’ pursuit of the same.

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David Henderson warns of “the deadly focus on income and wealth inequality.” Three slices:

You might think that the focus on wealth inequality has come about because of the huge growth in wealth of the 100 or so wealthiest people in the world, many of whom live in the United States. While that surely has made the issue more prominent, the upset about inequality began well before that. I date it at 1992. In 1992, Jeff Bezos, whose wealth is close to $300 billion, had not yet even started Amazon, the source of his wealth. He and his then-wife MacKenzie Scott started Amazon two years later, in a rented garage. In 1992, Elon Musk, now the world’s wealthiest man, was a twenty-one-year-old undergraduate at Queen’s University in Kingston, Ontario, who was about to transfer to the University of Pennsylvania.

…..

There are many myths about inequality. While I don’t have space to dispel all of them here, I’ll point to two that are highly relevant.

The first is the idea that increases in income inequality mean that the poor are worse off. French economist Thomas Piketty, author of Capital in the Twenty-First Century, often writes as if he thinks that wealth is zero-sum so that increases in various groups’ wealth and income must come at the expense of others. In discussing the United States in the late twentieth century, for example, he calls an increase in the income share of the top 10 percent an “internal transfer between social groups.” Yet, on the very same page, he admits that income for the bottom 90 percent slowly grew over that same period.

Consider Piketty’s statement about the United States and France: “And the poorer half of the population are as poor today as they were in the past, with barely 5 percent of total wealth, just as in 1910.” That is nonsense. If the poor have the same percentage of wealth as they had in 1910, they are much richer because wealth is much greater.

…..

Lower economic growth means more deaths

With real wages and real incomes growing more slowly due to higher taxes on wealth, people would invest less in safety. We wouldn’t demand that our jobs be quite as safe because, with lower real income, we would value safety less. We wouldn’t make our homes quite as safe. We might not replace that old Camry with a new safer-driving Tesla. We wouldn’t spend quite as much on medical care that raises our probability of living longer.

In short, higher taxes on wealth lead to more death. Even though they might not know it, and probably don’t, those who focus on reducing wealth inequality by reducing the wealth of the wealthy are advocating a system in which more people die.

Let’s not do that. Let’s have an economic system in which people live longer. To get there, we need to reject plans to have the government take more of people’s wealth.

My GMU Econ and Mercatus Center colleagues Tyler Cowen and Alex Tabarrok put together this splendid primer on rent control. Follow the actual science and read it.

My intrepid Mercatus Center colleague, Veronique de Rugy, decries this decryable fact: “The GOP Is warning about socialism while quietly embracing it.” Two slices:

The socialist program would be a catastrophe. So, here’s an awkward question: Why is a Republican administration quietly doing the public ownership of businesses part on its own?

Last week, the Commerce Department announced that letters of intent have been signed to provide federal incentives to seven more companies under the CHIPS program. Each letter of intent is conditioned on the government taking an equity stake. By a Cato Institute count, that brings the federal corporate portfolio to roughly 30 firms.

A year ago, these deals looked like improvisation—one-offs stitched together under pressure with President Donald Trump’s fluid negotiating style. Now, the department announces them in batches. Federal ownership of private companies has become routine, and it is happening on the right even as members busily point fingers at the left for its socialism.

To be sure, this is not the abolition of private property that some in the DSA would love to see. But strip away the label and look at the mechanism. Socialism’s defining move is to put ownership and decision making in the same collective hands. A government equity stake does exactly that. Washington already regulates these firms, buys from them, and subsidizes them. Now, it owns pieces of them. Every lever it controls—tariffs, permits, contracts, the next tranche of subsidies—moves the value of its own holdings.

Colorado Gov. Jared Polis, a Democrat, sees the implication of the government stake ownership more clearly than most Republicans do. “When government owns part or all of private companies,” he writes, “government is no longer just setting the rules—it becomes a player in the game and sets the rules to its own advantage and against the people.” Polis adds: “Socialism concentrates political and economic power in the same hands.” He is right, and it ought to sting.

…..

Finally, you can spare me the national-security argument about needing the domestic chip capacity, steel, and rare-earth materials that these companies provide. Government ownership is not the instrument. Procurement contracts and long-term purchase agreements can secure supplies without making the Commerce secretary a shareholder.

The DSA at least tells Americans clearly what it wants. The danger on the right is quieter: a government acquiring the means of production one letter of intent at a time, and a political party acting as though socialism is something only the other side can do.

Speaking of Trumpian government ownership of the means of production, here’s Bill Anderson.

Alex Tabarrok summarizes J.D. Vance’s economic philosophy: “Socialism is evil … now let me tell you all about my socialist policies to fix the economy.”

Scott Lincicome tweets:

US imposes 50% aluminum tariff.
Canadian aluminum imports collapse.
US aluminium prices increase (by ~50%).

If only we could tease out a connection!

James Talevich’s letter in today’s Wall Street Journal is excellent:

Regarding Rob Arnott’s op-ed “Thank You for Your Success, He Said” (July 29): As my first economics professor at California State University, Fullerton, told us, “The beauty of capitalism is that all these greedy people milling about pursuing their own self-interest make life better for everyone.” Every high-school graduate should be able to articulate this principle, because its application is universal.

Every impoverished nation on earth suffers from a shortage of competent capitalists. With no capitalists, you starve. With one capitalist, you are underpaid and overcharged. With a hundred capitalists bidding for your labor and competing for your disposable income with lower prices and higher quality, everyone has a steadily increasing standard of living. With a million, you get America.

HumanProgress.org reports this happy reality:

Real median family income in the U.S. has roughly tripled since 1947, climbing from about $34K to over $105K in today’s dollars.

Despite all the doom and gloom, American families are far more prosperous than their grandparents were.

Tim Carney reports on a recent example of the importance of Bruce Yandle’s insight into coalitions of bootleggers and Baptists.

Here’s blue-sky insight from my GMU Econ and Mercatus Center colleague Bryan Caplan.

“It sounds like they’re talking about you, David Schmidtz.”

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… is from page 39 Lawrence W. Reed’s soon-to-be-published book, Born of Ideas [link added]:

So much of sound economics reduces to what Pelatiah Webster would likely regard as common sense: Don’t spend what you haven’t got. Don’t mortgage your children’s future. Leave people alone to produce and create. Refrain from cheating your creditors or your customers. Be honest with money. Let trade be unfettered by superstition, fallacy, or the arrogance of officials. Work hard. Save and invest wisely. Honor your contracts. Establish a stable framework under the rule of law so that people can go about their business. Follow the Golden Rule. Keep the peace.