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… is attributed to Leslie Ford:

The colonists understood their obligation to defend their families, their homes, and their town. Fathers and sons, young and old, the men of Lexington were the first to pledge their lives, fortunes, and sacred honor. They hoped to prevent a war, but they would not surrender their liberties.

DBx: 251 years ago today, at Concord, there was “fired the shot heard round the world.” The American Revolution began in earnest on this date in 1775 at Lexington and Concord.

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Here’s a letter to my long-time protectionist correspondent.

Mr. M__:

Thanks for sharing Oren Cass’s latest comments on trade. You’ll be unsurprised to learn that I’m unimpressed.

Oren laments “our failure to attend to industrialization.” What failure? When Pres. Trump returned to the White House in January 2025 America’s industrial capacity had been on the rise since the pandemic and that month reached an all-time high. This capacity has continued to grow. Today, America’s industrial capacity is 13 percent larger than when China joined the World Trade Organization in December 2001, 66 percent larger than when NAFTA took effect in January 1994, and 148 percent larger than in 1975, the last year the U.S. ran an annual trade surplus.

Oren might respond that the precise kind of capacity that we now have prevents us from producing the most-important stuff. Using the example featured in the piece you sent, Oren would likely point out that because we import many transformers of the sort used in data centers, our reliance on foreign producers for transformers is slowing our completion of data centers and, hence, hampering our development of AI. Perhaps. (Never mind that domestic politics is now the highest obstacle to data-center construction, and also threatens to thwart AI directly.) Oren’s solution is to produce more transformers domestically.

How simple! This conclusion appears to be a no-brainer. But appearances here deceive. Like all protectionists, Oren never asks: What outputs will America therefore produce less of? He supposes that the capital and resources that tariffs or subsidies draw into transformer production will be drawn away only from domestic industries producing goods or services that are less important (according to criteria preferred by Oren) than are transformers. But Oren can’t possibly know just what other domestic industries will shrink as a result of transformer tariffs or subsidies, or by how much they’ll shrink.

We might all agree that an engineered increase in the production of transformers would be worthwhile if the only consequence were reduced American production of deodorant and dog biscuits. But what if increased production of transformers reduces American production of semiconductors or jet engines or software for running AI?

Of course, I have no idea what we Americans would produce less of if the government uses tariffs or subsidies to increase American transformer production. But nor does Oren have any idea. He naively points to something – transformers – that would be good to have more of were that something costless, and then he leaps to the unwarranted conclusion that free trade has failed because we currently don’t have more of that something.

To overcome, for any product, the strong presumption in favor of a policy of free trade – a policy with a proven record not only of raising living standards but also of enhancing national defense – requires compelling argument and solid evidence. But all that Oren gives here, as in his other writings, are half-told tales detached from the important considerations that serious economists habitually take note of.

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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Check out the Cato Institute’s new Handbook on Affordability.

My Mercatus Center colleague Salim Furth shares a new paper that, as summarized by Salim, “demonstrates that mayoral elections have a large influence on housing supply outcomes. It also shows that developer’s political contributions pay off in ways that sound like corruption.”

Murray Sabrin’s letter in yesterday’s Wall Street Journal is excellent:

Sen. Bernie Moreno’s op-ed, “Trump Gave the GOP a New, Populist Soul,” (April 14), rests on a series of deeply flawed economic premises. The claim that American workers are being ripped off by corporate greed ignores a basic reality: In competitive markets, firms must bid for labor, driving wages in line with productivity. Government intervention is what truly erodes workers’ purchasing power.

Equally troubling is the redefinition of free enterprise as federal micromanagement. True free markets rely on voluntary exchange and price signals, not industrial policy directed from Washington. When the government substitutes its judgment for that of millions of people, inefficiency and cronyism inevitably follow.

Furthermore, the op-ed’s nod to “fiscal discipline” is difficult to take seriously as federal deficits continue to balloon. Similarly, while tariffs are portrayed as a path to manufacturing strength, they actually function as taxes on American consumers and invite retaliation, distorting trade rather than revitalizing it.

Sound economic policy requires a stable dollar, low tax burdens, constitutionally limited spending and the removal of unnecessary regulations. Sen. Moreno’s piece contains echoes of ideas more commonly associated with Sen. Bernie Sanders than with a genuine commitment to free enterprise.

George Will warns of dire consequences if California’s proposed wealth tax is enacted. A slice:

Although the wealth tax is a cafeteria of unintended economic consequences, even cumulatively they are less ominous than one predictable, and perhaps intended, political consequence. The tax would effect a radical, and probably irreversible, change in the relationship of the individual to any government that enacts such a tax.

Laura Williams of the American Institute for Economic Research, writing for Reason, says the tax would give government a roving license “to inventory every item in our possession.” This would likely be a prelude to repeated confiscations of percentages of the possessions’ value. Even worse, the infrastructure for administering the tax would mean a permanent enlargement of the government’s intrusiveness. This would contract the sphere of individual autonomy, and subtract from the security of liberty.

Speaking of economically harmful policies in California, my Mercatus Center colleague Satya Marar makes clear that “California’s latest attack on big tech is BASED on bad economics.” A slice:

California has long been the global digital economy’s growth engine. However, Californian policymakers’ latest proposal to “promote fairness” for third-party businesses by importing European-style regulation would only hamper the goods and services that have made American tech companies like Google, Apple, Amazon and Meta so popular.

Introduced by Senator Scott Wiener, D-San Francisco, the BASED Act imports elements of the EU’s Digital Markets Act (DMA). It targets “self-preferencing,” that is where digital platforms like Amazon’s marketplace or Google Maps promote their own services or those of affiliates over third-party businesses that use their platform to reach customers. The BASED Act would treat many common product integrations, such as ranking, bundling, defaults, data use, and even some AI-driven recommendations, as presumptively illegal without asking whether they harm consumers.

Instead of promoting fairness, it would make digital tools less useful by tailoring their architectures and algorithms to regulators’ whims rather than user preferences. Far from promoting neutrality, it would “rig the game” by favoring some businesses over others.

Self-preferencing long predates the internet. Supermarkets, for example, give their own house brands prime shelf space, pushing name brands to compete on price or quality. This often increases competition, and can lead to lower prices by eliminating “double marginalization,” where multiple firms each add their own markups along the supply chain.

Eric Boehm reports this fact that should not be – but, apparently, to many people nevertheless is – surprising: “Trump ended free trade for Mexican tomatoes. Prices are up 23 percent in the last year.” A slice:

Tomato prices are now 23 percent higher than they were in March 2025, according to the BLS. That means tomato prices have risen significantly faster than overall inflation (up 3.3 percent in the past year) and food prices as a whole (which are up 2.7 percent). Even gas prices, which get more attention, are up just 18.9 percent in the past year.

So why are tomatoes suddenly much more expensive? In part, it’s because tomatoes imported from Mexico are now subject to tariffs. With the tomato trade agreement gone, Mexican tomatoes are now subject to a tariff of about 17 percent — and, like with many other products, the tariff gets passed along down the supply chain.

Linking to this Bloomberg report and quoting its headline, Scott Lincicome tweets:

“US Industrial Production Fell in March in Broad Decline”
Still waiting for that tariff boom….

Robert E. Wright details his experience as a plaintiff in a Fourth-amendment case.

The Washington Post‘s Editorial Board recounts how the Biden administration’s use of antitrust – allegedly to promote competition in the U.S. airline industry – wound up reducing competition in the U.S. airline industry. A slice:

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… is from page 39 of the manuscript of Deirdre McCloskey’s forthcoming book, Equality of Permission:

The underlying reason that modern politics in its implementation breaks bad is the unexamined though fervent belief in statism, the ancient and now nearly universal conviction that a statist top-down policy, rather than a liberal bottom-up permission, does the job of human flourishing promptly and securely, by plan. Caesar believed it, and thereby shattered the Roman Republic.

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This report on changes in the size and amenities of American houses – a report that features some of the work of GMU Econ alum Jeremy Horpedahl – is fascinating and important. Two slices:

In the past few years, online commentators have repeatedly noted how much more affordable homes were in the 1950s, citing statistics that show back then a new home typically cost about two to three times the median household income, while today one costs about six times the median household income.

They also point out that many families in the 1950s had just one household earner, while today it takes two incomes to afford a typical home.

But those statistics miss some key points. To start, American homes today are larger. Jeremy Horpedahl, an associate professor of economics at the University of Central Arkansas, recently told The Mortgage Note that new single-family homes are twice as big in terms of square footage compared to 1956.

“Believe it or not, it costs roughly the same per square foot,” Horpedahl said.

Beyond that, Horpedahl says it’s all about the amenities. For example, in 1956, only 50% of new homes were equipped with a garage. In 2024, 96% were. The percentage of homes with central air systems and appliances has dramatically increased as well.

…..

The typical amount of space required to please the average consumer has increased over the course of the last 70 years.

“Three or more bedrooms can accommodate a couple with two kids, which is considered the common family. It affords privacy for everyone in the home,” said Zaphire.  “Plus, people are doing a lot more in their homes – hosting BBQs and family gatherings. The size of homes may have doubled, but the space is being used.”

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Here’s a letter to a new correspondent.

Mr. S__:

You ask for my opinion of John Tamny’s latest expression of disagreement with those of us who warn that government borrowing poses serious problems for the economy.

John is correct about many things, but on this matter he’s deeply mistaken. And while his mind isn’t likely to be changed on this front, perhaps yours will.

Although John mentions James Buchanan’s classic 1958 book, Public Principles of Public Debt, it’s clear that he hasn’t read this pioneering work carefully.

Buchanan’s core point is that creditors do not bear the burden of paying for the spending undertaken by debtors. That burden is borne by whoever repays the creditors.

Consider a simple example. Suppose that in 2026 your sister borrows $50,000 from Acme Bank to upgrade her kitchen, promising to repay the principal and interest in 2030. To enable your sister to secure the loan, you agree to assume and honor her debt if she dies before 2030. Alas, your sister dies penniless in 2029, leaving you nothing in her will. One year later, you send to Acme Bank a check for $60,000 (principal plus interest) to retire the loan.

Who paid for your sister’s kitchen upgrade? To be consistent in his argument, John Tamny must answer either “Acme Bank” or “your sister.” But clearly, neither answer is correct. The person who paid for that kitchen upgrade is you.

And so it is with government debt. Government debt is taken out today to fund current spending, with the responsibility of repaying loaded onto future generations. The only essential difference between the Acme Bank example and real-world government debt is that, unlike you who voluntarily assumed responsibility for your sister’s debt, future citizens-taxpayers did not agree to be burdened with the responsibility of repaying the debt that they are nevertheless obliged to repay.

As for the example that John uses to discredit Buchanan’s argument, that example supports Buchanan’s argument. John writes:

[M]erely contemplate the debt run up in 2020 by the first Trump administration to subsidize ($3 trillion Cares Act) lockdowns across the country. Were he alive, could Buchanan seriously contend that the horrors of government consumption were somehow postponed solely because borrowing, not direct taxation, informed them?

Were Buchanan alive, he would point out that the orgy of government consumption that John rightly decries occurred because Americans in 2020 did not have to pay for that consumption. Had all Cares Act spending been required to be funded with current taxes, that spending would have been only a fraction of $3 trillion because Americans in 2020 would not have tolerated such a gargantuan increase in their taxes. The need to fund current spending with current tax revenue would therefore have reduced government’s access to many of the resources that, as matters actually turned out, government used to lockdown the economy and paper over the terrible consequences with deficit spending.

The argument against deficit financing of government spending isn’t limited to the very real dangers that such financing poses to government’s future fiscal stability. That argument also includes this important feature: By preventing today’s citizens-taxpayers from foisting onto future citizens-taxpayers the costs of today’s government activities, a prohibition of deficit financing would reduce the amount of resources to which governments have access. For this reason alone, friends of limited government, including John Tamny, should oppose deficit financing.

It’s distressing that a small but vocal minority of true liberals – most notably today, John Tamny – either cannot or will not grasp this reality.

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 sent last week to the New York Times but not published there.

Editor:

You report that “ArcelorMittal, a European steel maker, is donating tens of millions of dollars of foreign steel for President Trump’s new ballroom” (“White House Secures Foreign Steel for Ballroom Project,” April 8).

“Donating” is a euphemism for “dumping” – the practice of selling foreign-made products in the U.S. at prices lower than those products sell for in their producers’ home countries. Because ArcelorMittal sells its steel in Europe at prices above $0, that company is guilty of dumping.

Given the Trump administration’s insistence on protecting Americans from foreign producers who unfairly threaten American workers, will the Department of Commerce correct this injustice by imposing antidumping duties on ArcelorMittal?

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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Clark Packard makes a powerful case that “Congress should retire Section 122.” A slice [original emphasis]:

My Cato colleague Kyle Handley has also laid out the historical case for why the administration’s Section 122 invocation doesn’t hold up. As he explains in a recent blog post, Section 122 emerged from the Bretton Woods era of fixed exchange rates, when a balance-of-payments deficit could become a direct claim on US gold reserves. Handley notes that French President Georges Pompidou literally sent a ship to New York to retrieve French gold deposits, a vivid illustration of the kind of payments crisis the statute was actually designed to address. Under today’s floating exchange rate system, no such problem exists—trade deficits are simply mirrored capital inflows. Handley also shows that the current account deficit in 2024, measured as a share of GDP, is not historically unusual and was well below the peaks registered in 2002–2008. Not even then did presidents declare a balance-of-payments emergency. As Handley, who also signed an economists’ amicus brief in support of plaintiffs challenging the Section 122 tariffs in the US Court of International Trade, surmises: “If ‘balance-of-payments deficits’ can be redefined to mean some politically salient trade imbalance, then Section 122 stops being a narrow emergency provision designed for a fixed-exchange-rate system and becomes a standing reservoir of discretionary tariff authority.”

David L. Cohen tweets: (HT Scott Lincicome)

Visual of the Week: Facts are facts. Tariffs raise prices. After a steady decline through 2024, both import and domestic prices shot up right after the 2025 tariff moves, sharply reversing the downward trend line of domestic prices pre-tariffs. Not surprising given the consistent research findings that most tariffs are passed along to American consumers. And it’s also pretty clear that higher prices cut into purchasing power for businesses and consumers which slows economic activity.

National Review‘s Dan McLaughlin busts the myth that housing prices in the U.S. are driven to heights too high by foreigners and outsiders. A slice:

Markets, however, are very good at responding to demand — unless they are unreasonably restricted from providing supply. (To be fair, Vance has also talked about the supply problem, and even Mamdani, as little as he understands markets, has been pushing for more housing construction, even with funds the city is supposed to be investing for its pensioners.) Imposing new tax costs on second-home housing, and trying to stifle demand by excluding institutional buyers from the market, is not the way to incentivize more housing construction.

My Mercatus Center colleague Satya Marar explains how to get bureaucracy out of broadband.

Jordan McGillis points out that the so-called “Great Decompression” of household incomes in the U.S. is driven largely by greater economic opportunities for women. A slice:

What’s the secret of affluence? In modern America, high-income households are powered not by a single breadwinner, but by two sustained professional careers. The Great Decompression—the phenomenon of incomes rising faster for families above the median—is often blamed on slow wage growth for middle-class men since the 1970s. But the rise of educated women is the true driver of the change.

Fifty years of progress in women’s education and career opportunities have led to professional men and women marrying each other, staying in the workforce and leaving traditional couples behind. Inequality between the sexes has declined, but inequality between classes has increased.

The two-income model is generating significant household wealth. The median two-income family today earns about $140,000, double what the median single-income family earns. Roughly 30% of two-income families have an income of more than $200,000 a year, compared with only 11% of single-income families. Today, more than two-thirds of young couples buying homes are dual-income. In the 1970s, the opposite was true.

The Editorial Board of the Washington Post reveals “what most predictions miss about AI job loss.” A slice:

Many people believe that there’s a fixed amount of work to be done, so changes in how the work is allocated are zero-sum. One person’s gain is another person’s loss.

This is not how labor markets actually work. The amount of work is never fixed because humans’ desire for goods and services is unlimited. AI will allow for new production opportunities that weren’t possible before, which will create new jobs that didn’t exist before.

Further, there’s no guarantee that a job will be automated simply because it can be.
It’s technologically possible to grow pineapples in Alaska. Heated greenhouses, with artificial lighting during the dark winter months, could yield fruit. But Hawaiian pineapple growers don’t have to worry about their jobs being taken by Alaskan rivals because it would be so much more expensive to grow pineapples there than in Hawaii.

That’s an extreme example, but the principle holds: something being technologically possible doesn’t mean it’s economically possible. AI is expensive, and it won’t make financial sense for companies to automate many jobs that perhaps could be automated in theory.

My intrepid Mercatus Center colleague, Veronique de Rugy, debunks five zombie myths about taxation. A slice:

Corporations write checks to the IRS, but they don’t bear the tax burden. Every dollar collected for corporate tax comes from a human: the worker who’s paid a lower wage, the shareholder who earns less, and the consumer who pays higher prices at checkout. Research shows that workers bear somewhere between one-third and two-thirds of the corporate tax burden through lower wages. If you have a 401(k), you’re paying it too, quietly, through lower returns on every stock in the fund.

Further, corporate profits are returns on investment. Tax them and you get less investment. Less investment means lower productivity, which leads to lower wages over time. Decades ago, economists Robert Hall and Alvin Rabushka showed a better way: Replace the corporate income tax with a consumption-based system under which businesses deduct all wages and capital investment immediately. No double taxation, no penalty on investment, and revenue without unintended economic damage.

The corporate tax survives because voters mistakenly believe someone else pays it. This belief is expensive.

Stefan Bartl writes insightfully about the three ways governments finance themselves. A slice:

The second way America pays for government is through borrowing. If taxation is the visible bill presented to the public today, debt is the bill postponed until tomorrow. Public choice economics helps explain why this method is so politically attractive. Elected officials seek reelection, and few build careers on openly imposing higher taxes. Borrowing lets them preserve the benefits of spending while muting the immediate pain. The cost is not removed, only transferred. As James Buchanan argued in Public Principles of Public Debt, “The primary real burden of a public debt is shifted to future generations.” That is precisely what makes debt so tempting in democratic politics. Present officeholders get the benefit of spending, while later taxpayers, often not yet born, inherit the obligation.

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… is from page 66 of the late Brian Doherty’s marvelous 2007 book, Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement:

Modern libertarianism is a vision of a radical and just future – but one whose contours are inherent in the meaning of the American Revolution, arising from European traditions of natural law, natural rights, a relationship between man and the state that ought to be contractual and reciprocal; and a vision of man that is rooted in the best of the Western Christian tradition. That vision sees the individual soul as so worth saving that God-made-man would sacrifice himself to do so. And that individual soul is responsible for the choices that can guarantee its own salvation.