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Such is the ludicrous ‘logic’ of Trumpian trade policy.

Editor, Wall Street Journal
1211 6th Ave.
New York, NY 10036

Editor:

Ed Gresser rightly ridicules the Trump administration’s ridiculous assertion that a country violates the rules of trade whenever that country produces more of any particular good than the citizens of that country purchase for their own consumption (“The ‘Overproduction’ Excuse for Trump’s Tariffs,” May 11). Such allegedly ‘excess’ production, of course, is the norm in trade for countries just as it is with firms. Yet according to Trumpian reasoning, the Ford Motor Company unfairly restricts the commerce of General Motors by producing more automobiles than Ford workers and shareholders purchase – and GM inflicts an equal unfairness on Ford! The government must prevent such injustice!

The logical implication of this Trumpian case for protectionism is that no individual should produce anything beyond what he or she personally uses. In such an ‘economy,’ every person, as a producer, would never be threatened by the excess production of other producers. But as a consumer, each person would be unimaginably destitute.

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 UVA Lawyer.

Editor:

In a recent speech at UVA Law, U.S. trade representative Jamieson Greer agreed with the notion that U.S. trade needs “rebalancing” (“U.S. Trade Representative Jamieson Greer ’07 Delivers VJIL Keynote,” Spring 2026).

This alleged need is mentioned much, as if it’s a fact as well established as are the laws of thermodynamics. Indeed, U.S. trade deficits are said to be a crisis that triggers presidential powers to impose tariffs under Section 122 of the Trade Act of 1974.

Mr. Greer might be a fine lawyer; he was, after all, trained at UVA Law! But he’s apparently not so fine an economist. Every cent of U.S. trade deficits – more precisely, current-account deficits – is a cent of U.S. capital-account surpluses. That is, U.S. capital-account surpluses exactly balance U.S. current-account deficits, so there’s nothing economically that needs “rebalancing.”

And not only is U.S. trade not unbalanced, America’s decades-long streak of capital-account surpluses means that America is a net recipient of global capital. Investors from around the world have for decades placed, and continue to place, their bets on the U.S. economy. This net inflow of capital enriches not only foreign investors, but also us Americans by increasing the size and productivity of our capital stock, as well as by being a channel through which non-Americans’ entrepreneurial ideas are tested and put to productive use in America.

The administration’s efforts to halt these capital inflows – which is what it means by ‘rebalancing’ trade – reflects a profound misunderstanding of economics and international commerce. If the administration succeeds, we Americans will pay a steep price.

Sincerely
Donald J. Boudreaux (UVA Law ’92)
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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… is from Michelle Clark Neely’s excellent April 1993 paper, “The Pitfalls of Industrial Policy”:

When a government directs resources toward some industries, however, it effectively takes them away from others. Economic theory and practical experience teach us that individual entrepreneurs and firms are better equipped to make these choices.

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GMU Econ alum Meg Tuszynski, writing in the Dallas Morning News, explains what states like Texas can teach states like New York about inequality. Two slices:

When Americans talk about inequality, they usually mean outcomes — who has more and who has less. But a deeper divide runs beneath those outcomes: the growing gap between states that enable economic mobility and those that quietly restrict it.

The Economic Freedom of North America report, from market-oriented think tank Fraser Institute, captures this divide. It measures how much freedom people have to make economic choices — where to work, what to invest in and how to build a life. It evaluates states across three areas: government spending, taxation and labor market regulation.

The results are striking. States like New Hampshire, Tennessee, South Dakota and Texas consistently rank near the top, thanks to relatively light fiscal burdens and flexible labor markets. States like New York, California, Hawaii and New Mexico rank near the bottom. Policy ideas like Mamdani’s proposed rent freezes and raising corporate taxes, along with higher minimum wages, threaten to keep New York perennially stuck at the bottom.

These rankings aren’t just abstract scores. They correlate strongly with real-world outcomes. States with higher levels of economic freedom tend to see faster income growth, stronger job creation and larger inflows of new residents.

…..

No state is perfect. But the pattern is clear. States that allow people to work, invest and build with fewer barriers tend to generate more opportunity — not just for some, but for everyone.

John Phelan warns the State of Minnesota not to impose a wealth tax.

George Will accurately describes many of the freshly minted college graduates who are now receiving their diplomas as “little Lenins.” A slice:

[Noam] Scheiber’s “Mutiny: The Rise and Revolt of the College-Educated Working Class” is an overexcited presentation of a tragicomic phenomenon: a new, self-imagined proletariat’s revolution. The revolt is not against conditions akin to those in the “dark Satanic Mills” of early 19th-century industrialism.

“Mutiny” usually denotes a rebellion of soldiers or sailors against a military authority. Against what comparable hierarchy are Scheiber’s little Lenins waging insurrections? Against Apple and Starbucks stores, and Hollywood studios. These boys and girls are hardly horny-handed sons and daughters of toil.

Although some were, Scheiber writes, “straining their tendons as they churned out … Frappuccinos.” Really. Page 56.

An unhappy employee of an Apple store consulted with an organizer for the International Association of Machinists union who had been, Scheiber says, “trying to unionize a group of yoga instructors.” Think about that: What banner would yoga instructors brandish at the barricades? Meet our demands (what are yoga instructors’ demands?) or we will strike, inflicting pain. (On whom? Of what sort?)

[DBx: I quickly note that the students taught and trained by those of us at GMU Econ are cured of all such ignorance and of the arrogance that such ignorance breeds.]

Stephanie Slade is right: “Right-wing influencers don’t understand what makes America great.” A slice:

The Dissident Right is furious after Supreme Court Justice Neil Gorsuch told Reason and several other outlets that America is a “creedal nation.”

“The Declaration of Independence had three great ideas in it,” Gorsuch said in a recent interview with Nick Gillespie. “That all of us are equal; that each of us has inalienable rights given to us by God, not government; and that we have the right to rule ourselves. Our nation is not founded on a religion. It’s not based on a common culture, even, or heritage. It’s based on those ideas. We’re a creedal nation.”

Anyone tempted to reject modernity in order to live the ‘simpler’ life on the pre-20th-century American frontier should listen to this engaging podcast. (HT Katherine Mangu-Ward)

The Editorial Board of the Washington Post is understandably critical of Alexandria Ocasio-Cortez’s economically illiterate hostility to Airbnb. A slice:

Ocasio-Cortez argued that Airbnb’s business couldn’t exist without destabilizing housing markets and rapaciously evicting millions: “Now young people are planning for a future where they will never be able to afford to own a home while others have 20 and live off renting it out to them at extortionate rates with zero protections.” A few make billions while millions of Americans bear the cost, she insisted.

Airbnb has achieved impressive scale, but it’s nothing compared to the government. Fewer than 2 percent of American homes are listed on the platform. While there is some evidence it affects home prices in extremely high-tourism areas, it can’t come close to explaining the national rise in home prices.

The housing crisis visible around the country is a result of government simultaneously constricting supply while stoking demand.

For decades, federal tax law has subsidized demand with policies like the mortgage interest deduction and government-backed mortgage securities. Easy monetary policy from the Federal Reserve also contributed to home-price inflation.

Meanwhile, zoning laws and excessive regulations constrain supply much more than renting out a room on Airbnb ever could. Tariffs on building supplies and restrictive immigration policies drive up construction costs. Big cities like New York impose rent controls that discourage new construction or rehabilitation of existing units.

My former GMU Econ colleague Tom Hazlett remembers Ted Turner. Three slices:

Ted Turner, who just graduated from this earthly academy at age 87, was a bon vivant, Playgirl‘s man of the year, and a public embarrassment. He made billion-dollar deals when, you know, a billion was a really big number. He sailed the seas as a champion of the yachting crowd, winning the 1977 America’s Cup aboard the Courageous. He married a beautiful actress, made her do the politically incorrect Tomahawk chops to cheer his Atlanta Braves, and cycled through the ideological spectrum from Randian to Mouth of the South to globalist U.N. benefactor to environmentalist rescuing bison. Jane Fonda, his third wife, deemed him a “romantic swashbuckling pirate” and “my favorite ex-husband.”

The cartoon character he cultivated was for fun and to amortize the lithium load. His real role was Entrepreneur of His Age. Turner held the lead spear when the Late 20th Century Barbarians stormed the gates of the Old Order in American media. Meeting the moment at the perfect instant—when a “deregulation wave” was opening doors long shut—Turner flipped the script on “public interest” regulation concocted during the Progressive Era. Intellectuals largely bemoaned the passing of the administrative state, and the Cronkite audience it favored, devoid of controversy and offered as the “news from nowhere” (as a CBS executive bragged). But the closed-loop spoon feeding was inimical to freedom, open inquiry, and honest debate.

Even before he was finished, the creative destruction triggered by Ted Turner’s wild gambits had left the tyranny of licensed, bureaucratic TV in rubble. What came next may not always look pretty. But freedom of expression has a renewed life, as soon even the chatbots will discover.

…..

Before then, American broadcasting had been trapped in a pre-constitutional political model. Instead of open competition and robust debate, licensed media reigned. Radio and television were not only limited by regulations, such as the equal time rule and the fairness doctrine, but constrained to artificial scarcity by bureaucratic fiat and then subjected to license renewals under the watchful eyes of powerful congressmen and commissioners. Turner came along when a shard of light was about to shine; he spied the illumination and ran to it at a time when the conventional wisdom missed it.

Ted Turner arbitraged the past into the future. Buy low (UHF licenses regulated into oblivion) and sell high (satellite beams forming the new mass media). The regulated wasteland blossomed into a competitive cornucopia.

…..

Turner had a belief about the future and took a string of incredible gambles. He saw what others did not. And with it, he poked a hole in the 1952 TV Allocation Table and put American media on a new, less regulated path that seamlessly melded into the Internet of today: unregulated, unlicensed, and unleashed. It’s not nirvana. But it gives the First Amendment a fighting chance, and it beats the News from Nowhere. Nice work, Ted. You one crazy bastard.

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… is from page 407 of the 2016 second edition of Thomas Sowell’s excellent volume Wealth, Poverty and Politics:

Monstrously appalling things done by some peoples to others darken the history of every region on the planet, but descendants of peoples guilty of the worst or most extensive villainies of the past are by no means always the most prosperous peoples today. Conversely, few peoples have been persecuted for so many centuries, in so many parts of the world as the Jews, who today prosper and achieve. None of this suggests that persecution has no economic effects, but only that how much is an empirical question, not a foregone conclusion.

DBx: Yes.

If the ‘logic’ (such as it is) were valid of those persons who today argue that justice requires white Americans to be taxed more in order to pay reparations to the descendants of American slaves, then it follows that gentiles in most parts of the world should be taxed more in order to pay reparations to Jews.

I, of course, would oppose any proposal to pay reparations to Jews – and my opposition comes from the same logical, empirical and ethical place that produces my opposition to pay reparations to blacks.

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… about economic history and freedom.

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Here’s a letter to the New York Times.

Editor:

Oren Cass’s case against increased Chinese investment in America rests exclusively on fears that Beijing will use such investments to undermine U.S. national security (“Is Trump About to Invite In the Biggest Predator in the World?” May 8). If these fears are warranted, Mr. Cass’s larger case for protective tariffs – a case that he has relentlessly offered for many years – is especially unwarranted.

Mr. Cass portrays the Chinese government as a devious “predator” with virtually unlimited willpower and access to resources. Facing such an enemy, the U.S. government should do all it can to strengthen America’s economy as well as those of America’s allies. This goal is best served by promoting free trade with Latin America, Canada, Europe, the Middle East, Africa, India, Oceania, and most of East Asia. Such free trade would enrich the U.S. economy and those of our allies and thereby enhance our national security. It would also entice governments whose allegiances are now torn to ally more firmly with the U.S. and against China.

Yet in countless other writings and interviews, Mr. Cass proposes the use of protective tariffs to eliminate U.S. trade deficits, raise revenue, create more manufacturing jobs, and simply to protect American workers from imports – a protectionist program that would require raising tariffs not only on U.S. imports from China, but on imports from nearly all other countries, including our closest allies. Indeed, Mr. Cass has praised Pres. Trump’s embrace of such extensive tariffs. This sort of U.S. protectionism, however, weakens U.S. national security and strengthens Beijing’s hand.

By attempting to justify protectionism with mutually incompatible arguments, Mr. Cass undermines his credibility as an analyst of trade and trade 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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Marc Wheat and Joel Griffith report that Trump’s tariffs punitive taxes on Americans’ purchases of imports are – surprise! – raising the prices that Americans pay for automobiles. A slice:

The tariff damage is already concrete. Toyota alone expects tariff-related costs to reach $9 billion in its current fiscal year and has warned of up to three separate price increases in 2026 if tariffs continue. It comes as no surprise, then, that the Wall Street Journal recently reported that companies like Honda, Nissan, and Toyota may have to pull affordable, entry-level cars off the market if the tariffs continue because those vehicles are no longer profitable. Meanwhile, new vehicle prices overall have surged back toward all-time highs since “liberation day,” with midsize SUVs jumping 2.8 percent, adding more than $1,300 to the sticker price. Used vehicles are no refuge: The Manheim Used Vehicle Index is up 6.2 percent since March 2025, as higher new-car prices push buyers into an already tight used-car market. Keeping older cars on the road is no bargain either: Auto repair costs are up 6.1 percent since March 2025, driven by tariffs on the more than 44 percent of collision parts that are imported.

The car, particularly the affordable car, is quintessentially American. Henry Ford famously wanted to make cars his employees could afford to buy. Thanks to his breakthrough assembly line, millions of everyday Americans discovered the joy and convenience of automotive travel. More than a century later, personal vehicles enable individuals to chase employment opportunities far from their chosen neighborhoods while juggling family responsibilities and maintaining in-person friendships despite the distance. Cars equal freedom and adventure. That is why the first edition of the Independence Index, published by Advancing American Freedom (AAF), where we work, tracked car affordability as a metric indicating Americans’ ability to pursue happiness. Affordability cratered post-Covid, as the number of weeks of median income needed to buy a new car skyrocketed from 34 weeks prior to Covid to 45 weeks by mid-2022. Prices have increased further since then. With maintenance costs increasing to more than 80 cents per mile, declining car affordability disincentivizes teenagers (barely one in three of whom are in the workforce) and those without a higher education from obtaining gainful employment.

The Cato Institute’s Alfredo Carrillo Obregon talks about the recent ruling against Trump’s Section 122 tariffs. (HT Scott Lincicome)

Brian Albrecht writes insightfully about AI and jobs. Four slices:

The economy is not one production function. It is many activities. When AI makes some of them cheaper, people don’t just buy more of the same thing. They buy something else.

Every dollar you spend lands somewhere. Some dollars land in activities with lots of human labor inside them: a restaurant, a therapist, a roofer. Some land in activities with almost none: a streaming subscription, an automated checkout, cloud storage. So when we are tracing out what happens when AI gets cheaper, it’s not just “Can AI do my job?” It is “When everyone saves money because AI did my job cheaper, what do they buy next?”

…..

Start with software as a microcosm. This is a sector that has already been heavily automated by digital inputs for decades. If substitution were going to drive labor out of a sector, this is where you’d see it first…. The most software-intensive industries don’t just retain human labor; they have a higher labor share (67%) than the least software-intensive ones (55%). Heavy digital inputs didn’t drive out human labor. If anything, the industries that automated the most are the ones that spend the most on workers. BLS projects U.S. employment to increase by 5.2 million from 2024 to 2034. Software-developer employment? Up 17.9%, despite direct AI exposure.

…..

…..

Charles Cooke is harsh – rightly so – on that firehose of economic ignorance Alexandria Ocasio-Cortez, whose latest gusher of silliness is a claim that no one can really earn a billion dollars. A slice:

Properly understood, this is a confession. It is, of course, patently untrue that one “can’t earn a billion dollars” in the United States, because around 1,000 people have done it. Some of those people — Michael Jordan, Tiger Woods, Magic Johnson, and LeBron James, to name a few — are in sports. Some, such as Steven Spielberg, Taylor Swift, and Jay-Z, are in entertainment. Many, such as Elon Musk, Jeff Bezos, and Palmer Luckey, are in business. All of those people “earned” their billion dollars and did so by providing something — athletics, movies, cars, music, technology — that people wanted to buy. That isn’t a “myth”; it’s as close to a stone-cold fact as exists in our economy. What Ocasio-Cortez means when she disputes it — what she is confessing — is that she can’t earn a billion dollars.

And, indeed, she cannot, because, to put it bluntly, she is useless. I have never understood why AOC’s critics like to razz her for having been a bartender. There is nothing at all wrong with being a bartender. Bartenders are useful. Bartenders supply a service that is in demand and, at the high end at least, are able to do things that most people cannot. The problem with AOC is that she is a socialist politician, and socialist politicians are to a dynamic economy as rice is to a garbage disposal. Were all the bartenders to disappear in a puff of smoke tomorrow evening, the United States would be a considerably worse place. Were all the socialist politicians to disappear, we would have occasion for the mother of all celebrations.

Also rightly critical of Ocasio-Cortez is Reason‘s Christian Britschgi.

David Henderson makes a strong case against the provision of TSA-style security for Amtrak.

The Wall Street Journal‘s Editorial Board wisely applauds the Virginia Supreme Court’s finding against that state’s recent gerrymander. A slice:

It’s a gutsy decision, two weeks after 3.1 million Virginians voted to adopt the gerrymander, 51.7% to 48.3%. But don’t blame the court for this timing. All along, Justice Kelsey says, the state “insisted that we cannot lawfully decide this case prior to the referendum.” Democrats were betting that if the amendment won at the ballot box, the court would flinch at countermanding the will of the people.

Yet as the majority rightly holds, if the state Supreme Court can’t decide the constitutionality of the amendment before the vote, then it has to make the legal call afterward, unless Virginia is going to give up on judicial review. The upshot is that Virginia’s midterms will be held under the old House map, which is split 6-5 in favor of Democrats, more or less fairly reflecting the state’s purple politics.

Bill Conerly is a fan of Tyler Goodspeed’s Recession. A slice:

Tyler Goodspeed, Recession’s author, is unusual in not focusing on one particular issue. He describes a market economy as generally resilient in the face of small shocks. But an unusually large shock, such as the pandemic of 2020, can cause a recession. More commonly, the unlucky coincidence of several small shocks occurring at once will trigger recessions. Some economies are more resilient—handling the shocks better—especially with regards to their banking systems, a point Goodspeed emphasizes.

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… is from pages 171-172 of Menzie Chinn’s and Douglas Irwin’s excellent 2025 textbook, International Economics:

The Lerner Equivalence Theorem – that an import tariff is equivalent to an export tax – carries a powerful message: a country that tries to protect import competing industries from foreign competition may be able to help those industries expand, but it will also force other industries to contract. High trade barriers will harm export-oriented industries, erase some of the gains from trade, and reduce national income.

DBx: Yes. And such import restrictions might also reduce foreign investment in the ‘protected’ country, denying to the citizens of that country many of the fruits of the savings and entrepreneurial ideas of their fellow human beings who happen to live abroad.

…..

Protectionists point with pride to the firms and jobs that their trade barriers help to create and sustain. These firms and jobs are real, but these firms and jobs are not – contrary to protectionist mythology – evidence of the success of protectionism. These firms and jobs represent wasted resources – workers, capital, and other inputs that, absent the protectionism, would have been used to produce outputs elsewhere in the country. And these foregone outputs – these outputs that are not produced – would almost certainly have had higher values than those of the additional outputs made possible by protectionism.

It is the rare protectionist who even acknowledges that protectionism cannot protect particular firms and jobs without destroying, elsewhere in the domestic economy, other firms and jobs. Most protectionists believe in free lunches – miracles – manna from heaven – rabbits pulled from hats – 10 minus 2 equalling fifteen. But even those rare protectionists who do acknowledge the inescapability of this trade-off never tell us how they know that the value to the people of the home country of the protected firms and jobs is, or will be, greater than the value of the destroyed firms and jobs.