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… is from page 237 of George Will’s 2021 book, American Happiness and Discontents: The Unruly Torrent, 2008-2020 – a splendid collection of many of Will’s columns over these years; (the essay from which the quotation below is drawn originally appeared in the Washington Post’s print edition on March 26th, 2015):

Actually, Americans incessantly “outsource” here at home by, for example, having Iowans grow their corn and dentists take care of their teeth, jobs at which Iowans and dentists excel and the rest of us do not. LeBron James could be an adequate NFL tight end, but why subtract time from being a superb basketball player? The lesson, says [John] Tamny, is that individuals – and nations – should do what they do better than others and let others do other things.

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In my latest column for AIER I reflect on my now-long career of teaching introductory microeconomics at the collegiate level. A slice:

I’ve taught Principles of Microeconomics (“ECON 101”) regularly now for nearly a half-century. The first such course I taught was in the Fall Quarter of 1982 at Auburn University, my first year of graduate school there (after having received an M.A. in economics earlier that year from NYU). And except for a few years in the 1990s, I’ve taught ECON 101 every semester since, including in many summers. The total number of “micro principles” students whom I’ve taught over these years is likely in the neighborhood of 12,000. Mostly, I teach this course in auditoriums that hold between 200 and 350 students.

I never tire – and I’m sure that I never will tire – of walking into a classroom to introduce mostly 18-year-olds to the economic way of thinking. It’s still great fun and immensely rewarding, for I do regularly see the proverbial light bulbs being lit over many students’ heads.

My ECON 101 course is taught as if it’s the only economic course my students will ever take. Unlike many professors, I do not teach Principles of Microeconomics to prepare my students for Intermediate Microeconomics, which is the next course up in the curriculum. Some such preparation occurs, I’m pleased to report, but that’s all incidental. My chief goal is to inject my students with the rudiments of the economic way of thinking in order to inoculate them against the most virulent fallacies that are likely to try to infect their minds as they go through life.

What does that inoculation look like in practice? It begins with lessons such as these:

• Those of us alive in the modern, industrial world are among the materially richest human beings who ever lived, by far.
• There’s no such thing as a free lunch.
• In economic matters, there are no solutions, only trade-offs.
• Prices and wages set on markets are not arbitrary; market prices and wages reflect underlying economic realities as they also guide buyers, sellers, employers, and workers to better coordinate their plans and actions with each other.
• Profits in markets are not ‘extracted’ from workers or consumers; profits are the rewards for creatively using resources in ways to better satisfy consumer desires.
• Trade across political borders differs in no relevant economic respects from trade that occurs within political borders.
• Collective or political decision-making is done by the same imperfect and self-interested human beings who decide and act in private markets.

The above list is only a sample; it doesn’t exhaust the topics that I cover in the course. But were I to make an exhaustive list of those topics, some of what most other ECON 101 teachers teach would not be found on my list. I long ago stopped drawing cost curves and teaching the theories of so-called “perfect competition” and “monopolistic competition.” Whatever insights into the real-world economy and market processes are offered by these theories, if they exist at all, are too meager to justify the time required to ‘teach’ them. I instead spend far more time than is conventional teaching both basic public-choice economics and international trade.

No student passes my course without learning that real-world market processes must be compared to real-world political processes rather than to ideal political processes. Likewise, every student who passes my ECON 101 course learns that protectionism neither increases nor decreases domestic employment, and that trade deficits are balanced out by capital inflows.

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Phil Magness explains how Justice Clarence Thomas went awry in his dissenting opinion in Learning Resources. Here’s his conclusion:

In 1774, Thomas Jefferson prepared a lengthy legal treatise outlining the causes of the colonies’ protest against the crown. Its text became something of a rough draft for the Declaration of Independence’s list of reasons for their separation from Britain. As Jefferson wrote, “The exercise of a free trade with all parts of the world, possessed by the American colonists, as of natural right, and which no law of their own had taken away or abridged, was next the object of unjust encroachment.” Jefferson followed this indictment with a detailed survey of the acts of the British Parliament that intruded upon American commerce with the world, both by taxation and regulatory restriction. Jefferson clearly situated these offenses under the legislative acts of a parliament in which the colonists had no representation. As he concluded his section on trade restrictions, “The true ground on which we declare these acts void is, that the British parliament has no right to exercise authority over us.”

Justice Thomas and his defenders would be wise to consult Jefferson’s words as they apply to the present tariff controversies.

Also unimpressed with Justice Thomas’s Learning Resources dissent is John Grove. A slice:

By overtheorizing the textual basis of nondelegation, Thomas’s vision would seem to allow Congress to drastically transform the constitutional order authorized by the document’s ratifiers.

Ilya Somin, a GMU colleague over in the Scalia School of Law, writes about the legal challenges to Trump’s latest attempt to unlawfully impose tariffs punitive taxes on Americans’ purchases of imports. Two slices:

Today, the Liberty Justice Center filed, Burlap and Barrel, Inc. v. Trump, a lawsuit challenging Donald Trump’s massive new Section 122 tariffs. LJC is the same group that I worked with on V.O.S. Selections v. Trump, the IEEPA tariff case decided by the Supreme Court last month. I am not one of the attorneys on this new case. But I completely support it and its objectives. This case is the second challenging the Section 122 tariffs, following one filed by 24 state governments, last week.

…..

In a recent Boston Globe article, I explained why the enormous Section 122 tariffs are illegal. In addition to going beyond the statutory text, they also run afoul of the “major questions” doctrine, and nondelegation limits on Congress’ power to delegate its authority to the executive.

Phil Magness tweets: (HT Scott Lincicome)

At a 1984 Senate Finance Committee hearing they asked Marty Feldstein if Section 122 could be used to impose tariffs to counteract the trade deficit. He answered no, and succinctly explained why this was a confusion of terms.

Trump’s new tariffs are illegal.

Mary Julia Koch – a freshman at Harvard in Spring 2020 – remembers the horror of covid hysteria that began six years ago this week. A slice:

But for those beginning adulthood when the virus hit, Covid is impossible to forget. I spent 17 months of college at home, enduring a blur of camera-off Zoom classes and unmuting to “raise one’s hand.” When I returned in fall 2021 for my junior year, Harvard allowed no more than 10 people to socialize in a dorm room at once, despite mandatory vaccination, weekly testing and 10 days of isolation in a hotel room if we got sick. We had to wear masks at all times, including in the dining halls. It was harder to recognize people, communicate with friends and understand lectures.

It didn’t help that my college and a slew of others launched anonymous hotlines for students to report Covid rule violations. Most students shrugged off the mask mandate, but some stared daggers if your mask wasn’t perfectly fitted—or if you flashed a bare face on a walk outdoors. Campus inched closer to a surveillance state than a college community.

Kimberlee Josephson writes wisely about economic productivity.

Ben Zycher, in this recent letter in the Wall Street Journal, expresses his understandable frustration with “science guy” Bill Nye’s poor grasp of the science:

Bill Nye “The Science Guy” invokes everything except science in his criticism of the Environmental Protection Agency’s rescission of its 2009 finding that greenhouse-gas emissions endanger public health (“The EPA Is Wrong About Greenhouse Gases,” Letters, Feb. 25).

Contrary to the EPA 2009 predictions: There has been a decline in smog levels from 1980 to 2024. There has been no trend in hurricane numbers or intensities since 1973. The Intergovernmental Panel on Climate Change finds no change in global flooding. There has been no trend in the EPA heat wave index since 1895, except for the 1930s. Several studies show a decline in net mortality from heat and cold. U.S. wildfires have declined sharply since 1926, and global wildfire acreage declined 24% between 1998 and 2015. Global droughts have declined about 0.5% per decade since 1950. Global per capita food production has increased 40% since 1980. And the latest peer-reviewed research reports no acceleration globally in sea-level rise. The Science Guy’s argument is fact-free.

David Henderson exposes “Ellen Wald’s misunderstandings about gasoline shortages and oil markets.”

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… is from page 337 of the “Random Thoughts” section of Thomas Sowell’s 2010 book, Dismantling America:

What is especially disturbing about the political left is that they seem to have no sense of the tragedy of the human condition. Instead, they tend to see the problems of the world as due to other people not being as wise or as noble as themselves.

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Tom Hazlett, writing in the Wall Street Journal, explains the dangers of the Radio Act of 1927’s “equal time rule” – a rule now being wielded to no good purpose by Trump’s Federal Communications Commission. A slice:

Proponents say the Equal Time Rule fosters media coverage of politics and affords political candidates greater public access. Critics say it has outlived its usefulness, as today’s media landscape offers a cornucopia of platforms unknown in 1920s America. The critics are right, except for one thing: The rule has never been useful and has always functioned mostly to suppress coverage for challengers.

As University of Texas law professor Lucas A. Powe Jr. wrote in his 1987 book, “American Broadcasting and the First Amendment,” the Federal Communications Commission and courts “have virtually always . . . interpreted the statute, despite its precision, to assist those who hold power. Moreover, when it has come time to legislate, the Congress has blatantly used section 315”—the Equal Time statute — “to bolster the position of those already holding political office.”

In February, a CBS attorney alerted Stephen Colbert that interviewing U.S. Senate candidate James Talarico, a Texas Democrat, on his TV show could invite equal-time demands from other candidates. Doling out free “equal time” or risking a fine for noncompliance is expensive.

Mr. Colbert went ahead and interviewed Mr. Talarico but their conversation ran not on TV but on (unregulated) YouTube. It received about 85 million views across social media, compared with Mr. Colbert’s roughly 2.5 million household audience on CBS.

New media has been a godsend for free speech. But there is no good reason to cling to bad ideas from the Coolidge era for traditional programming. “Equal time” requirements tax free speech and turn debates into media circuses. The networks won’t broadcast them, and major-party candidates boycott them.

Also critical of the FCC – but on a different matter from the one addressed by Tom Hazlett – is the Editorial Board of the Washington Post. A slice:

The FCC wants to set caps on the number of calls that happen with people abroad while giving customers the choice to speak with someone in the United States. The bureaucracy would also like to force cable, internet and phone firms to disclose the location of whoever is taking your call and require language proficiency requirements.

A classic move by socialists looking to expand the reach of the state is to find experiences that people find frustrating and promise that bigger government can help. It’s a tactic more common among figures like Sen. Bernie Sanders (I-Vermont) than a Republican-controlled FCC, but this isn’t the first time Chairman Brendan Carr has embraced a bigger role for government.

His most aggressive tactics include threatening the licenses of networks like ABC and CBS through “news distortion” investigations, notably pressuring Disney to temporarily suspend comedian Jimmy Kimmel’s show, which had the predictable effect of making the comedian more popular.

Managing how private firms handle call centers will backfire too. More agents moved overseas because it made economic sense, and companies could find enough human capital to provide a needed level of service. (Millions of Indians and Filipinos would no doubt ace an English proficiency test.) If consumers valued native-English speakers enough, they would value companies who raise prices to provide a better call experience with more expensive agents.

Vance Ginn rightly pleads for antitrust to be made boring again. Two slices:

The Federal Trade Commission’s recent appeal in its antitrust case against Meta and the government’s new appeal in the Google search case are not just legal headlines. They are signals to capital markets about how political the federal government wants antitrust policy to be.

If we keep pushing antitrust toward populist storytelling instead of consumer harm, we will get less investment, slower innovation, and weaker competition. Antitrust works best when it is boring. Not toothless, but disciplined.

…..

In the past few years, however, antitrust laws have been turned into a political Swiss Army knife. Under the Biden administration, Lina Khan’s FTC pushed a structural, populist approach that often treated “big” companies as inherently suspicious, even when consumer harm was difficult to prove. Now, some voices on the right — in and out of the Trump administration — are tempted to copy the same playbook for different reasons, using antitrust laws to punish perceived “bias” or to settle cultural grievances.

The Biden and Trump administrations may have different slogans, but they are making the same economic error.

Phil Magness writes about Carl Schmitt, “the Nazi philosopher behind the postliberal right.” Two slices:

In Part I of this series, we examined postliberalism’s war on economics — how its proponents blame free markets for every social ill while demonstrating little grasp of the discipline they attack. But postliberalism’s ambitions are ultimately Constitutional; its deeper project is dismantling the Madisonian order (the separation of powers and checks and balances within the federal government created to prevent anyone from accumulating too much power).

The entire intellectual apparatus for this anti-constitutional attack is built on borrowed Nazi jurisprudence and historical fabrication. To understand this history, we need to follow a single intellectual thread: from Carl Schmitt to 9/11 to the White House.

The fading political memories of the George W. Bush administration have become something of a stand-in for postliberalism’s broader assault against pre-Trump conservative politics. The “neoconservative” blunders during the Iraq and Afghanistan Wars are a recurring postliberal complaint — a symbol of the wing of the Republican Party that it aims to bury once and for all under Trump and Vance, their favored successor in 2028.

Yet for all its posturing as a conservative sea change, postliberal theory has more in common with Bush-era foreign policy than it cares to admit (as we are now seeing in Iran).

The main intellectual link comes in the person of Carl Schmitt, an eccentric German legal theorist from the early 20^th century. Once a leading conservative academic figure in the Weimar Republic, Schmitt fell into disrepute after 1933 when he joined the Nazi Party and wrote the legal justifications for Hitler’s seizure of power. Schmitt’s involvement with Nazism rightfully wrecked his postwar academic career, yet he managed to retain a stream of academic interlocutors who saw flashes of brilliance, or at least provocative insight, in his writings on constitutional theory.

…..

Postliberals have spent years denouncing the 1619 Project as a radical assault on American identity — so have I. They were right that it was radical; the 1619 Project declared America’s founding irreparably tainted by slavery.

Patrick Deneen, the subject of the first installment of this series, makes an identical move. He just has a different original sin: not slavery, but individual liberty itself.

Both are refounding projects. Both treat 1776 as a problem. Both have serious historical errors. And both reject political liberalism.

At this point, Vermeule, Deneen, and other postliberals run into a practical branding problem for their ideology. Tearing down the Madisonian constitutional order and recasting it as a relic of past errors smacks of Critical Race Theory, or the 1619 Project, “Cultural Marxism,” or any number of similar political bugbears to the American right. Founder-bashing has never had a particularly receptive audience among conservatives.

J.D. Tuccille reflects on Adam Smith’s Inquiry Into the Nature and Causes of the Wealth of Nations. A slice:

Environmental fetishes are recent justifications for interfering in market transactions, but old fears that international trade is somehow unfair also, once again, underlie political interference in commerce. Last April, the protectionist Trump administration published a trade report promising that the president’s policies would “reduce our destructive trade imbalance…by putting America First” with tariffs and other restrictions on trade.

Adam Smith was familiar with such arguments and dismissed them as nonsense.

“To lay extraordinary restraints upon the importation of goods of almost all kinds, from those particular countries with which the balance of trade is supposed to be disadvantageous, is the second expedient by which the commercial system proposes to increase the quantity of gold and silver,” he wrote. “Nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost all the other regulations of commerce, are founded….Trade which, without force or constraint, is naturally and regularly carried on between any two places, is always advantageous, though not always equally so, to both.”

Whether for novel environmental reasons or in the name of old-fashioned nationalism, government interference in economic activities is often justified on the grounds that people are “selfish.” By that, of course, politicians mean that people act for their own reasons and not to advance the priorities of those in office. But to Smith, that was part of the productive glory of a free society.

Also celebrating the 250th anniversary of the publication of Adam Smith’s great 1776 book is my GMU Econ colleague Dan Klein.

Mark Skousen, too, marks the 250th anniversary of the publications of Smith’s marvelous 1776 study.

Bjorn Lomborg makes clear “how reality destroyed Europe’s green energy dreams.” A slice:

Stagnant or sluggish economic growth persists as a chronic problem, exacerbated by high energy costs, regulatory burdens, and demographic pressures, limiting prosperity and the ability to fund public services or innovation. Pensions and aging populations pose a looming fiscal crisis, with pay-as-you-go systems strained by longer life spans, lower birth rates, and insufficient reforms, threatening unsustainable debt burdens on future generations. Lack of constraints on immigration and integration failures have fueled social tensions, security concerns, and political polarization, ranking high in recent surveys alongside irregular migration flows as a top worry for many citizens.

These overlapping crises and concerns explain why the EU’s once near-obsessive focus on climate has receded so precipitously—Europeans now demand balanced attention to a full spectrum of threats that directly impact security, prosperity, and their daily life—the world is becoming scarier, while more costs are coming into focus.

David Bier tweets: (HT Scott Lincicome)

Ask: “Should Americans be allowed to accept free stuff from foreigners?”
Then ask: “Should Americans be allowed to accept almost free stuff from foreigners?”

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… is from page 456 of the Book IV, Chapter ii, of the 1981 Liberty Fund edition of Adam Smith’s 1776 masterpiece, An Inquiry Into the Nature and Causes of the Wealth of Nations, which was first published 250 years ago today. Today’s “Quotation of the Day” is a rare repeat, but the occasion justifies it. The 947 pages of Smith’s 1776 book is stuffed with brilliant passages; choosing one as a favorite is quite difficult. But if forced to pick my single favorite passage from this work, the one below is it :

What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

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Megan McCardle explains well the powerful economic case against taxing wealth. Two slices:

If you want to give people real goods and services, look at the supply of those goods and services, not paper wealth. Wealth is a claim on future resources, such as corporate profits, or the right to occupy a certain house. Those claims are valuable, and people are willing to sacrifice some current consumption to acquire them — as you do when you divert your salary into a 401(k). But while you can turn your 401(k) into consumption in an emergency (or in retirement), that’s only possible because you sell the stock to someone else who is willing to reduce their consumption to buy the stock.

…..

People see Musk’s $670 billion fortune and imagine turning that into $670 billion worth of services — say, the health care and education mentioned in the wealth tax bill. But Musk is not sitting on hundreds of billions worth of dentists and primary school classrooms. He has a bunch of stock certificates, which are not useful in health care or education. They do not make good bandages or scratch paper.

That doesn’t mean we can’t transfer consumption from billionaires to other people. But their paper wealth is irrelevant to that conversation. What matters is how much they currently consume: about a third of their annual income, according to one paper published by the University of Michigan Law School last year, or about 3 percent of their total wealth. Notice that that’s less than 5 percent.

John Puri writes insightfully about Friday’s disappointing jobs report. A slice:

The statistical hits keep coming: Blame can’t be pinned on federal layoffs anymore, because, of the 92,000 net jobs lost in January, 86,000 were in the private economy. Downward revisions to December and January numbers lowered the U.S. jobs total by another 69,000. Manufacturing continues to bleed jobs, despite (or, partly because of) Trump’s tariffs that were supposed to spark an industrial resurgence.

My intrepid Mercatus Center colleague, Veronique de Rugy, explains how a tax loophole is making healthcare in the U.S. ever-more unnecessarily expensive. A slice:

This fiasco didn’t happen naturally. It was built by the tax code—specifically, the exclusion of employer-sponsored health insurance from taxable income. As Michael Cannon of the Cato Institute has documented, the exclusion is roughly as old as the income tax itself, rooted in early Treasury rulings that predated modern health insurance.

In the early 1940s, wartime wage controls gave the concept practical force. Employers who couldn’t compete to hire workers with wages started using health benefits, which were exempt from the controls, as a workaround. But employer-purchased health insurance did not see robust growth until after wage ceilings were lifted in 1953. Congress then codified the exclusion in 1954, cementing employer-based insurance as the dominant model, a consequence few anticipated at the time.

The tax break is projected to reduce income- and payroll-tax revenue by $487 billion this year. The consequences have been a calamity. [Michael] Cannon has convinced me that this single provision is the most damaging in the entire tax code. And it’s not just because of the fiscal cost—it is three times larger than the next tax break in the code—but because of the behavior it has shaped over eight decades.

The provision has chained workers to their employers. It has practically eliminated consumer price sensitivity. It’s suppressed wages that could have been paid in cash instead of in the form of health insurance. Altogether, it’s systematically crowded out the direct, consumer-driven health care spending that creates genuine market pressure to limit costs.

In response to a discussion among market skeptics of the alleged failure over the past few decades of capitalism in America – as one of these skeptics put it, “American capitalism is failing most Americans” – Scott Winship tweets this: (HT Scott Lincicome)

File this under academics torching their credibility. Capitalism failing most Americans? C’mon, man. Median hourly wages (for men and women), annual earnings (for men and women), and family and household incomes are at all-time highs!

Paul Mueller talks with Sam Gregg and Dave Hebert about the tariff ruling in Learning Resources.

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… is from page 103 of Historical Impromptus, a 2020 collection of some of Deirdre McCloskey’s work on economic history; this quotation, specifically, is from McCloskey’s 2000 review, in the Minnesota Journal of Global Trade, of Thomas Friedman’s The Lexus and the Olive Tree and John Gray’s False Dawn [original emphasis]:

Globalization encourages the capitalist engine of growth. If people understood how generous that engine has been they would have less enthusiasm for protectionism or socialism or environmentalist or economic nationalism in any of their varied forms. Most educated people believe that the gains to income from capitalism’s triumph have been modest, that the poor have been left behind, that the Third World (should we start calling it the Second?) has been immiserized in aid of the First, that population growth must be controlled, that diminishing returns on the whole has been the main force in world economic history since 1800. All these notions are factually erroneous. But you’ll find all of them in the mind of the average professor of political philosophy.

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In today’s National Post I celebrate the 250th anniversary – which is this coming Monday, March 9th – of the publication of Adam Smith’s An Inquiry Into the Nature and Causes of the Wealth of Nations. A slice:

Smith then inquired into wealth’s causes. He didn’t inquire into the causes of poverty. Smith understood that that poverty is humanity’s default mode. Nearly all people before Smith’s time — and still most people during his time — were mired in poverty. Poverty is simply the condition we suffer when wealth isn’t created. Wealth, not poverty, demands explanation because wealth, not poverty, has causes.

For Smith, the principal cause of wealth is the division of labor — specialization. The more each worker and firm specializes, the more productive they are. The jack of all trades, mastering none, produces relatively little of each output. But let each of those trades become the task of specialized workers or firms, and the resulting mastery raises the output of all the trades. The economic pie grows, with more output available per person.