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America’s founding generation was remarkable, but also human. David Henderson reflects on the great John Adams.

My former Mercatus Center colleague Patrick McLaughlin, now at the Hoover Institution, has this excellent letter in today’s Wall Street Journal:

Jamie Dimon identifies a promising route to his 3% growth goal before turning to foreign economic policy: removing domestic regulatory obstacles (“A Plan for the Western World’s Revival,” op-ed, Sept. 29). That opportunity deserves more than a passing mention.

In research published in the Review of Economic Dynamics, Bentley Coffey, Pietro Peretto and I showed that federal regulatory accumulation reduced U.S. economic growth by approximately 0.8 percentage point per year between 1980 and 2012. The buildup of regulatory requirements distorts investment decisions, which ultimately weakens the business-led innovation that makes workers more productive.

There is also evidence that reversing the accumulation can help. For example, the Canadian province of British Columbia reduced its regulatory requirements by roughly 36% after launching reforms in 2001. Research I conducted with Mr. Coffey estimated that those reductions increased annual economic growth by about one percentage point.

While those estimates don’t guarantee an identical result if the U.S. cuts regulations by 36%, they do make a strong case for the regulatory budgeting approach that British Columbia pioneered.

The approach involves three initial steps and then a feedback loop. First, inventory existing requirements, set reduction targets and require agencies to identify rules whose costs exceed their benefits. Then continually measure success against economic performance and the health, safety and environmental outcomes regulation is supposed to improve.

Mr. Dimon is right to seek faster growth. A serious effort to clear away obsolete and counterproductive rules should be central to that agenda.

The Washington Post‘s Editorial Board explains what shouldn’t – but, sadly, what nevertheless does again – need explaining: price ceilings create shortages and raise the costs that ordinary people incur to acquire price-ceilinged goods and services. Two slices:

In May, Kyrgyzstan imposed price controls on fuel. Gas stations reported shortages. The government repealed the price cap on gasoline in July.

In Bangladesh earlier this year, some drivers waited in line up to 14 hours for price-controlled fuel. As soon as the government allowed prices to rise, the lines in Dhaka, the crowded capital, shortened by two-thirds. Lines elsewhere disappeared entirely.

TotalEnergies, the French oil giant, announced it would voluntarily cap fuel prices at its gas stations in March. In early April, the great majority of gas stations in France had no shortages. Of the 900 that did, 700 belonged to TotalEnergies.

Also in France, universities in April capped meal prices at one euro for all students. The actual cost averages eight euros. The surge in students using cafeterias now means there is often nowhere to sit, and unions threatened to strike over the big increase in work. Some students have said that the long lines make it impossible to eat between classes.

Catalonia, in northeastern Spain, imposed sweeping rent controls in 2024. What followed was a decline in rental agreements. As of March, the supply of rental housing had declined by 23 percent.

…..

Price controls are still doing what they always do: destroy investment, encourage lawbreaking and cause shortages. Politicians would be wise to remember that voters’ opinions might change, but the laws of economics don’t.

Daniel Foster adds his voice to those rightly criticizing J.D. Vance’s wish to “undo” 40 years of globalization. A slice:

A 2024 WTO study suggests that reductions in trade costs between 1995 and 2020 increased global real GDP by about 6.8 percent. For low-income economies, the increase was much larger, about 33 percent.  As for the U.S. in particular, one estimate concludes that international trade alone led to “an increase of $7,014 in [inflation-adjusted] GDP per capita and $18,131 in GDP per household” in the United States between 1950 and 2016. A census report concludes that lower import prices under globalization held inflation down for all American groups between 1995 and 2018, relative to autarky. (The benefits were most pronounced for rural Americans, which will be relevant when you get to the paragraph after next.)

None of these studies capture the full warp and weft of globalization. They’re mostly focused on trade barriers, with some comparative advantage and diffusion of technology and ideas thrown in. But left out are the beneficial effects of foreign direct investment, labor and capital mobility, factor price convergence, multinational production chains, financial integration, and so forth, which are also well-recognized drivers of growth.

David Sergent tweets: (HT Scott Lincicome)

Defining a reduction in trade barriers and the development of technologies (containerization, global aviation) that made international trading easier as “central economic planning” is a bait and switch. No one thinks “central planning” = “globalization.” Nor should they.

Harold Black reflects wisely on Trump’s new steel mill in Iowa. A slice:

Ohio State is playing Iowa today, and the president is busy patting himself on the back – a sport in which he remains undefeated. The occasion: a new $15 billion steel mill, the first in 50 years, coming to Iowa.  Naturally, he credited his 50% tariffs. The project is expected to create 1,750 permanent jobs and support up to 6,000 construction jobs. Trump added that it would also create 2,000 new manufacturing and mining jobs. Over the next decade, it is projected to generate $95 billion for the U.S. economy. He took credit, saying his “powerful 50%” tariffs on steel imports last year meant that “our steel industry is roaring back to life. Everyone’s building their plant here because they don’t want to pay tariffs. It’s really not that complicated.”

Actually, it is a bit more complicated than that. The president is a short-timer. If the next president lowers or scraps the tariffs, will the math on a $15 billion plant still work, or does Iowa end up with one of the world’s most expensive machine sheds?  Although not as apparent as beef or energy, Trump’s tariffs have made Americans to pay more for steel than any other country in the world. And while the president bragged that the steel will be “mined, melted, and made completely in the U.S.,” calling it “something very unusual,” he skipped a small detail: the mine’s owner is Mesabi Metallics, a Minnesota-based company owned by India’s Essar Group. Made in America, owned by India – which, to be fair, is “something very unusual.” The plant will be fed by a newly developed $2.5 billion iron ore mine that Mesabi opened on September 17 on Minnesota’s Mesabi Iron Range. And the Export-Import Bank of the United States (EXIM) will provide up to $10 billion in financing for the new Iowa steel mill. Hold that thought. Also keep in mind (mine?) that the US steel industry is being dominated by foreigners – US Steel is a wholly owned subsidiary of Nippon Steel. I thought Trump’s policy was America First?

But what is the Export-Import Bank and why is it providing financing for an Indian company? This is from its website: “The EXIM Bank is the official export credit agency of the United States. Our mission is to support American job creation, prosperity and security through exporting. We accomplish this by unlocking financing solutions for U.S. companies competing around the globe. We help level the playing field and fill gaps in private sector financing.” https://www.exim.gov

So let me get this straight: a U.S. government bank is putting up $10 billion of the $15 billion so an Indian corporation can set up shop in Iowa. And once this foreign-owned mill is running, Trump’s 50 percent tariffs will protect it from… foreign competition. Sounds like a sweet deal to me – sweet as Iowa corn. And timing, of course, is everything. The announcement comes just before the midterms. Between the tariffs and the price of fertilizer and diesel, Iowa is suddenly in play. The governorship, a U.S. Senate seat, two of the four congressional districts, and the attorney general’s office are all suddenly competitive in races where the republicans should have been favored. Surely that had nothing to do with the announcement. Right?

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… is from page 306 of my late Nobel-laureate colleague James Buchanan’s 1962 essay “Marginal Notes on Reading Political Philosophy,” which is an appendix to Buchanan’s and Gordon Tullock’s seminal 1962 book, The Calculus of Consent; the page number here is from Liberty Fund’s 1999 edition of Calculus:

Indeed the only purpose of science is its ultimate assistance in the development of normative propositions. We seek to learn how the world works in order to make it work “better,” to “improve” things: this is as true for physical science as it is for social science.

DBx: Jim Buchanan was born on this date – October 3rd – in 1919.

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Mr. Vance:

Yesterday, you boasted to Jack Posobiec that the Trump administration is “trying to undo 40 years of bad policy, of globalization, of shipping American jobs overseas.”

How curious. Please tell me which of the following results of the “bad policy” and globalization over the past 40 years do you wish to undo?

Unemployment rate
1985: 7.2%                        2025: 4.3%

Total nonfarm employment
1985: 97.53M                  2025: 158.43M

Real avg. hourly wage of production and nonsupervisory workers (2025$)*
1985: $22.10                    2025: $31.34

Real per-capita GDP (2017$)
1985: $35,793                 2025: $70,020

Real median household income (2025$)
1985: $63,090               2025: $87,460

Real median household wealth (2022$)**
1983: $87,859               2022: $192,700

Percentage of manufacturing workers laid-off
1985: 19%                        2025: 11%

Median sq. footage of newly built single-family homes
1985: 1,620 sq. ft.          2025: 2,142 sq. ft.

Life expectancy at birth
1985: 74.6 years            2025: 79.4 years

Perhaps you have other evidence that justifies your insinuation that, over the past four decades, Americans have been – to use a favorite expression of your boss – “ripped off.” If so, please do share that evidence with the American people. A man with your intellect surely doesn’t want to make bold claims that are unsubstantiated by the facts.

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

* 1985 dollars converted into 2025 dollars using the personal-consumption-expenditure index.

** Calculations performed by economist Jeremy Horpedahl and shared with Bryan Caplan and me, to appear in Bryan’s and my forthcoming book, Blockade (Cato Institute, 2027).

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Mike Munger describes the American way of zoning.

The Wall Street Journal Editorial Board is right that Trump’s (relatively) government-hands-off approach to AI is commendable. A slice:

Companies also have strong business incentives to pace and police themselves to avoid costly lawsuits and government enforcement actions. “I have a guardrail. You know what the guardrail is? The Department of Justice,” Mr. Trump said this week.

He’s right that new laws aren’t needed to punish wrongdoing or negligence. Companies know the government sword is hanging over them. To reinforce the point, Federal Trade Commission officials this week let it be known they have opened a probe of frontier AI models.

Democrats nonetheless want to put the federal government in charge of AI. That’s the real reason Senate Democrats on Wednesday blocked the Ratepayer Protection Act, which the House passed last month on an overwhelming bipartisan 417-3 vote.

The bill would require state public utility commissions to consider adopting a federal standard under which large data centers pay the incremental costs of new grid infrastructure to support their power loads. In our view, the legislation is unnecessary since most states are already doing this. AI companies are building their own power generation and paying for grid upgrades to connect data centers.

Yet Senate Minority Leader Charles Schumer objected to the bill because it isn’t binding. “Senate Democrats want to make it mandatory for data centers to cover their own costs, by law, not by suggestion or hope or whim,” he said. No—they want to block data centers to put AI development under political control.

See Bernie Sanders’s bill, which would pause data-center construction until the government ensures they don’t “exacerbate the threat of climate change” and their models “do not threaten the health and well-being of working families, privacy and civil rights, and the future of humanity” or cause “job displacement.”

His legislation reflects the growing Democratic consensus. Had Kamala Harris won the 2024 election, it’s likely the federal government would have used its power to impose a de facto AI moratorium. When it comes to AI, Mr. Trump has superior intelligence.

Jason Sorens explains that “public sector unions undermine accountability.”

GMU Econ alums Caleb Fuller and Scott Burns keep the case for free trade simple (yet strong). A slice:

First, people reverse the logic of bargaining when they begin thinking of “nations,” instead of “individuals.” In our everyday exchanges, we all want to get as much as we can with the least sacrifice. Some might even call this “the art of the deal!” But in international trade, people’s rhetoric shifts, as if the objective were to “give, and not to get” — to produce and export (give) as much as we can while importing (get) as little as possible. That anti-import sentiment is the essence of mercantilism, the very doctrine Adam Smith set out to dismantle 250 years ago when he penned The Wealth of Nations.

If you slip into this first fallacy, you’ll inevitably fall into a second: treating cheap imports as bad news. In everyday life, it seems obvious that we are better off if we can sell our exports for very high prices and buy our imports at very low prices. We want to sell our output for a high price, and we hope to find “Always Low Prices” when we stroll through the sliding doors at Walmart. Protectionism teaches us to lament in foreign trade what we celebrate at our local checkout counter: low prices. American consumers rarely complain when domestic companies offer Black Friday or Cyber Monday discounts. So why should they object when foreign governments do the same?

It follows from this second point that foreign subsidies are not inherently injurious to us. For a government to subsidize, it must first tax. Suppose a foreign power taxes its own people, then subsidizes some domestic industry that, in turn, sells us cheaper goods. In effect, these foreign governments are taxing their citizens to sell cheaper goods to ours.

Justin Stapley makes the case that constitutionalism helped to fuel free markets.

Todd Zywicki, a GMU colleague over in the Scalia School of Law, warns that “Democrats are trying to politicize a process that has been apolitical: supervisory oversight of bank holding companies.” Here’s his conclusion:

Now is the time for the Fed to exercise the independence that the Supreme Court affirmed this summer by articulating clear, consistent standards for bringing innovative financial products under federal regulatory scrutiny. Otherwise, the success of this political pressure campaign will embolden activists to scuttle efforts to bring other innovative entities and products such as crypto issuers and payment processors within the regulatory perimeter. Several applications from a variety of nontraditional entities are currently pending with both the Fed and the Office of the Comptroller of Currency. If Messrs. Warsh and Gould don’t stand up for their agencies’ apolitical rule of law, it will rapidly erode.

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… is from page 87 of Samuel Gregg’s forthcoming book, The Civilization of Commerce:

The focus of commercial civilization is on the long term rather than on the immediate. Commercial society makes no promise of immediate well-being to anyone. Its operating claim is that by allowing many invisible hands to work unimpeded by excessive regulation and intervention, the result will be incremental, steady, and generally lasting improvements that slowly but surely increase people’s well-being in economic terms and continually release the energies of which Hume spoke into other sectors of society.

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Richard Stern writes wisely about AI. Two slices:

There is an intelligence loose in the world that has no respect for humanity. It seeks to manipulate us, pit us against one another, and harness us to its own purposes, and it is certain it can run your life better than you can.

It’s not what you’re thinking: The intelligence is that of every socialist and collectivist who has ever lived, from Karl Marx to Bernie Sanders. Whether or not misaligned artificial intelligence truly poses a threat, misaligned human intelligence, seeking to concentrate unlimited power in the hands of government bureaucrats, remains the greatest threat we face.

…..

Government-enforced monopolies don’t just threaten liberty; they stifle innovation. When AI leaders beg the government to regulate away competition, it’s the oldest trick in the book, and we shouldn’t be fooled by it. The central holding of technological power — in this case, of AI — is never a good solution. Perhaps these tech leaders and politicians fear AI will replace exactly one job: their own, as self-anointed high priests of central planning and moral arbiters of society. Many of them have spent decades preaching climate alarmism and a de-growth agenda, while portraying humanity as a parasite feeding off the Earth.

Are these the people you want to speak for all of us and control our future? If the world’s most gifted mathematicians and programmers couldn’t build a perfect AI sandbox, do you think the regulators who gave us Covid lockdowns and cars that shut off at red lights will do better?

Meanwhile, the private sector is already harnessing AI to solve our greatest problems. Hospitals adopting AI have cut mortality rates, and the first AI-designed medicines are already in human trials.

The risk of a rogue AI agent doing serious damage is far higher if we turn over control of the technology to bureaucrats and a few favored business executives. To outsource the right to develop AI is to leave the rest of us beholden to the imperfect foresight and murky motives of the few.

Eric Boehm explains “how regulation, immigration policy, and tariffs made your BLT more expensive.”

Colin Grabow makes clear that “the Jones Act delivers high costs but little maritime security.” A slice:

The national security case for the Jones Act, which restricts domestic waterborne cargo shipments to vessels that are US-flagged, US-built, and US-owned, is fairly straightforward. Theoretically, such measures provide the United States with ships in wartime to transport equipment and supplies for the military, the trained mariners to crew them, and shipyards that can both build new vessels and repair existing ones. The problem is that the law delivers only a fraction of its advertised benefits, at a wildly disproportionate cost.

Start with the fleet. Under decades of Jones Act protection, the number of US-built and US-flagged oceangoing cargo ships has declined from 257 in 1980 to 119 in 2000 to just 92 today. Of those, only 74 are deemed militarily useful, and it’s uncertain how many might actually be available in times of conflict. In 2020, for example, a DoD-directed study warned that accessing a significant portion of the Jones Act tanker fleet could unacceptably disrupt the US economy. A year later, the head of the US Transportation Command testified before Congress that wargaming suggested economic considerations might preclude the military from relying on Jones Act vessels.

Scott Lincicome tweets a Bloomberg headline: “Korea Disputes Trump’s Claim It Agreed to Invest in Alaska LNG.”

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… is from page 39 of Razeen Sally’s superb 2008 book, New Frontiers in Free Trade: Globalization’s Future and Asia’s Rising Role:

It is always difficult to gauge the influence of ideas (or ideology) in policy. But practical observation teaches us that the prevailing climate of ideas, interacting with interests and events, can entrench or sway this or that set of policies.

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Here’s a note to a long-time correspondent.

Mr. McKinney:

Thanks for sharing the report on the Trump administration’s announcement of a new steel plant to be built in Iowa.

By now, you should know what I’ll say: If this plant is being built in response, not to government intervention, but rather to market signals, then it’s not – contrary to your claim – “evidence of the success of our president’s tariffs.” But if this plant is being built because of government intervention, then while the administration can correctly credit Trump’s interventions for the plant, the administration cannot credibly claim that this plant will be a net benefit to Americans.

The workers and other resources used to build and operate this plant have alternative uses, which are sacrificed if the plant is built and operated. This steel plant will reduce American production in other sectors. Mr. Trump wishes us to believe that the value of the plant is greater than the value of the outputs forgone elsewhere in the economy, but he has no way to know that this wish is warranted. Insofar as the plant is built and operated as a result of government overriding market signals, the best bet is that the plant will be a net drain on Americans’ wealth.

One more point. I was struck by this comment by Rep. Mariannette Miller-Meeks (R-IA) at the White House announcement of the steel mill: “For too long, Iowa families have watched their jobs shipped overseas and their communities hollowed out. Not anymore.”

Since 1997 (the earliest date for which I can find data), manufacturing output in Iowa has risen fairly steadily. It reached its peak in 2024, when it was 51% higher than in 1997 and 45% higher than in 2001 (the year China joined the World Trade Organization). (Manufacturing output in Iowa was down slightly in 2025, quite likely because of Trump’s tariffs.)

Over these same years, Iowans’ real median household income also rose. It peaked in 2018 (the first year of Trump’s tariffs) at $86,600 (in 2025 dollars), and in 2024 was slightly less (at $86,450). In 2024, Iowans’ real median household income was 36% higher than in 1997 and 23% higher than in 2001.

Where’s the evidence for the “hollowing out” of American manufacturing and income? To justify their schemes, protectionists incessantly prattle on about this “hollowing out,” but it’s a myth.

Sincerely,
Don

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Bryan Riley, applauding the reductions in some of Trump’s tariffs punitive taxes on Americans’ purchases of imports from China, points out that it would be even better for Americans if Trump cut all U.S. tariffs.

My intrepid Mercatus Center colleague, Veronique de Rugy, talks with GMU Econ alums Dave Hebert and Julia Cartwright about tariffs and other policy matters.

Scott Lincicome reports that Trump continues to want to ban exports of diesel.

Barry Brownstein is correct: The price of admission to civilization is humility.

Justin Wolfers discovers merit in what his libertarian friends have been saying. Two slices:

I count Greg Mankiw — a Harvard economist who was one of George W. Bush’s economic advisors — as a dear friend and mentor. Michael Strain at the center-right American Enterprise Institute is a good mate. Jonathan Meer texts me anytime he thinks I’m wrong about something (frequently). I’ve long enjoyed agreeing and disagreeing with libertarian economist Alex Tabarrok in a conversation that has stretched over decades (and it’s no less fun — though a bit less frequent — that I tangle with his Marginal Revolution co-blogger, Tyler Cowen). I’ve learned a lot about trade from Scott Lincicome at Cato, and about fiscal issues from Jessica Reidl who was once at Heritage, but is now at Brookings. One of the great things about economics is that we have a shared language. We can talk and figure out what leads us to to see the world differently.

Except it turned out that everyone I’d been talking to seems to have ended up on the never-Trump side of the Republican fence.

…..

My libertarian-leaning friends have consistently argued against a powerful federal government in favor of individual freedoms. I had — somewhat naively — never taken their views seriously enough. My friends who worked in government were good people, I reasoned, and surely that’s true more broadly.

But I’ve had to admit to my libertarian friends that they were right. Concentration of power can be abused. We’re seeing it happen right now.

And that’s led me to become more small-c conservative. The old conservative idea was that we have rules of the game that have served us well for generations. We should be slow to change them. Our children should be handed the same set of opportunities we had, if not better ones.

The foundation of American prosperity is our institutions — the rule of law, respect for contracts, and deep engagement with the rest of the world. Markets that work, rather than favors for those in power. A democracy. A democracy means that when our leaders do a bad job, we can kick the bums out.

I don’t think that’s a deeply controversial position. But it’s the foundation of our prosperity, and it’s worth defending.

George Will ponders the decline of the book. Two slices:

Supposed menaces multiply rapidly as technologies — smartphones, artificial intelligence — mutate. But the most menacing development involves no exotic technology, so it is disregarded.

But not by James Marriott. This British thinker warns us: An artifact that enabled modernity — skepticism, rationality, science, democracy — is now of rapidly dwindling importance. This artifact, which onlookers said “addicted” its early adopters, was: the book.

…..

“On the page,” Marriott says, “invective quickly becomes tedious.” On screens, “intransigence and madness” proliferate. We are attempting “to run a democracy without a grown-up conversation.” We are learning this: Reason, tolerance and progress are contingent, not inherent, facets of humanity’s story.
Is it possible, Marriott wonders, “to run the most advanced civilisation in the history of the planet with the intellectual apparatus of a pre-literate society”? He notes that, in proposing a grotesquely gargantuan Arc de Trump, “the first post-literate president reached instinctively for a visual style that defined autocratic politics before the age of mass literacy.”

Jeffrey Blehar reflects on the sorry story of Jason Arday and Cambridge University. A slice:

It ought to be the end for Cambridge’s credibility. Realistically, we know it will not be. But once more I am reminded of emeritus Cambridge don (and former chair of the school’s Politics department) David Runciman’s archly resigned take on the scandal, written back in August: Of course Arday was a transparent fraud who deserved exposure, Runciman writes, but all in all nothing of great value was lost by him holding his position because nothing of value has ever been created by departments like Arday’s; it’s merely a question of who wins the lottery and gets to fill out the academic position. (Somebody is going to do it.)