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Marty Curran’s letter in yesterday’s Wall Street Journal – a letter written in response to Bernie Sanders’s hysterical warnings of the alleged dangers of AI – is excellent:

Joseph Schumpeter wrote in 1942 about the “creative destruction” that arises from capitalism, entrepreneurism and innovation. The U.S. has faced the Industrial Revolution, the age of steam, steel and railways, the era of electrification and the automobile, the digital age and so on. We’re now in the AI era. In every prior case, innovation disrupted jobs and lifestyles, but our country was always propelled forward, creating more business and more value for people.

Schumpeter predicted that the rise of an “intellectual class” would lead to regulation and the decline of entrepreneurism. Mr. Sanders is proof that Schumpeter was right.

Wall Street Journal columnist Jason Riley reports on research – especially that of Stephen Rose and Scott Winship – that disprove the incessant claims, made by pundits and politicians of all stripes, that America’s middle class has suffered economic stagnation. Two slices:

Earlier this year, the Journal editorial page told you about a study from the American Enterprise Institute’s Stephen Rose and Scott Winship that pushes back on that glum narrative. This week the Journal’s news department followed up with a front-page story highlighting that research, which demonstrates upward mobility in the U.S. is alive and kicking.

Messrs. Rose and Winship divided households into five categories—poor or near poor, lower middle class, core middle class, upper middle class and rich. Technically, the middle class has been getting smaller, but that’s only because more families have ascended the income ladder.

“We find that the ‘core’ middle class has shrunk—but so too has the share of Americans with income too low to reach the middle class,” the authors conclude. “The shrinking core middle class is due to a booming upper-middle class. Only the relatively worse-off parts of the middle class have shrunk—and by less than the upper-middle class has grown.”

In 1979 the upper middle class was 10% of all families. By 2024 it was 31%. Over the same period, the share of families with income below the core middle class declined from 54% to 35%. “Family incomes rose significantly across the entire income distribution, pushing more families into higher income categories,” the study found. Other studies show similar patterns. Yes, the rich have gotten richer over the decades, but so have the nonrich. “Everybody is doing better,” Richard Fry of the Pew Research Center told the Journal.

…..

Attempts to blame the decline in U.S. manufacturing on China or the North American Free Trade Agreement gets the order wrong. Manufacturing jobs as a share of all jobs began their rapid and steady decline in the 1950s, some four decades before Nafta took effect and five decades before China joined the World Trade Organization in the early 2000s. Factory jobs decreased due to technology advancements and productivity gains—it takes fewer workers than before to produce more goods—not because of misguided free-trade arrangements. Ending those arrangements won’t bring back manufacturing jobs, which have continued to decline despite the sweeping new tariffs Mr. Trump imposed last year.

Blaming low-skill foreign labor for phantom middle-class wage stagnation also doesn’t pass scrutiny. During Mr. Trump’s first term, legal and illegal immigration were increasing before the pandemic. Yet wages were rising, fastest for less-skilled workers, while unemployment and poverty rates dropped to historic lows. According to the economist Michael Strain, U.S. wages have increased by roughly a third over the past three decades, a period that includes large-scale immigration as well as free-trade agreements with Mexico, Canada, Europe, Asia and other partners. “A 34 percent increase in purchasing power over the last 30 years is not reasonably described as stagnant growth,” Mr. Strain notes.

Crémieux tweets: (HT Scott Lincicome)

About 10% of America’s life expectancy shortfall is due to motor vehicle accidents—fixed by Waymo and Tesla. About 18% is overdoses—that’s fading now.

And the lion’s share of the rest is obesity-related.

The Editorial Board of the Washington Post decries the backward logic of pharmaceutical tariffs. A slice:

Meanwhile, the administration’s tariff strategy invites cronyism. Many larger pharmaceutical companies have already entered deals with the administration, though the details often remain hidden from the public. Some might be able to afford discounts on their drugs — and would be happy to offer them if they can get special treatment for other products facing reviews by the Food and Drug Administration.

Also from the Washington Post‘s Editorial Board is this just criticism of Trump’s cruel policy of mass deportations. A slice:

The Trump administration has prioritized quantity over quality in its mass deportation campaign, diverting attention from apprehending hardened criminals to removing people who positively contribute to American society. The case of Annie Ramos is worth looking at closely because it shows the human cost of this misguided approach.

Last week, Ramos, a 22-year-old biochemistry student, arrived at Fort Polk in Louisiana with her husband Matthew Blank, a 23-year-old Army staff sergeant. They came with her Honduran passport and birth certificate to get a military ID and activate her spousal benefits. Instead, she was arrested and is now being held at an Immigration and Customs Enforcement lockup.

Ramos was brought to the United States as an infant, and she did her best to follow the rules as she grew older. Yet she was detained over a 2005 deportation order that was issued in absentia when she was 22-months old.
Ramos applied for the Deferred Action for Childhood Arrivals program in 2020, but her application was never processed. She may have arrived here illegally, but clearly she has lived her life in a way that benefits the country. Ramos teaches Sunday school at her church and was months from getting her degree.

GMU Econ alum Nikolai Wenzel draws ten lessons from the works of Adam Smith. Here’s Nikolai’s conclusion:

Tyranny is the midwife of poverty; liberty, of prosperity.

Bob Graboyes is understandably not favorably impressed by Elizabeth Warren’s proposed tax on wealth.

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… is from page 206 of William Easterly’s brilliant 2025 book, Violent Saviors: The West’s Conquest of the Rest:

But the fatal flaw was that the rulers could not be trusted to put the interests of the ruled above their own self-interest.

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The Wall Street Journal‘s Editorial Page reports on inescapable reality revealing the folly of the Trump administration’s promise to create a 100% American farm workforce. Two slices:

Agriculture Secretary Brooke Rollins last summer said the Trump Administration’s goal is to create a 100% American farm workforce. Well, now the Administration is quietly conceding that too few Americans want to work these grueling jobs, and that its policies risk driving up food prices.

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Farmers report that crops are wasting in fields because they can’t find workers. DOL warns that shortages are resulting in more food imports, which have become more expensive because of Mr. Trump’s tariffs. Wholesale fresh vegetable prices have risen 48% in the past year, according to the producer price index. Americans no doubt have noticed in stores.

We’re glad the Administration is trying to make it easier to hire guest workers, but how about making the case to voters that the country needs legal immigrants for vital jobs that drive the economy.

The Editors of National Review take stock of Trump’s “Liberation Day” tariffs punitive taxes on Americans’ purchases of imports. Two slices:

First, Trump promised on liberation day that jobs and factories would come “roaring back” once a deadened U.S. manufacturing sector was protected from foreign competition. Yet after a year of high tariffs, manufacturing has shed tens of thousands of jobs, continuing a slide that began in 2023. Other blue-collar industries that rely on imports, such as construction and transportation, saw similarly weak employment.

Investment in building new factories also declined in 2025. Protectionists might contend that tariffs need more than a year to bring manufacturing home. But American manufacturers overwhelmingly view tariff policy as a headwind to manage, not a boon to celebrate. The uncertainty generated by ever-changing duties has killed their ability to plan new investments. Meanwhile, factories pay higher prices on the 56 percent of U.S. imports that serve as inputs for other products.

Research finds that tariffs are passed on to Americans at rates of up to 96 percent, rather than paid by foreign countries, as Trump claims. Tariffs have raised the prices of imported and domestic goods alike, as dampened competition allows U.S. producers to charge more. Merchandise prices are now around 6 percent higher than they would have been under pre-tariff trends.

Trump also said that the trade deals he negotiated using tariffs had brought in trillions of dollars of foreign investment. Those numbers were always fanciful. Foreign direct investment in 2025 was lower than in previous years, and most of it was in retained earnings rather than in new ventures.

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Although Trump’s country-by-country levies were struck down, he is reconstituting his tariff regime piecemeal — first through a temporary 10 percent duty across the board, then through phony investigations into foreign trade practices. Alas, the new tariffs will have the same impoverishing effects as the old ones for no discernible benefit. What were we supposed to be “liberated” from, again?

Bryan Riley tweets: (HT Scott Lincicome)

A Federal Reserve study found that >50% of intermediate inputs used to produce pharmaceuticals in the U.S. are imported. (Mostly from Europe, not China). Putting big tariffs on intermediate goods used by U.S. manufacturers discourages domestic production.

Roger Pielke Jr. looks back on the publication, 20 years ago, of Al Gore’s best-selling sermon, An Inconvenient Truth. A slice:

Climate science, in the years following An Inconvenient Truth, increasingly took on the role of secular exegesis — the interpretation of extreme weather events, polar bear photographs, and pretty much anything-that-just-happened as signs confirming a narrative of planetary emergency requiring repentance.

Arnold Kling ranks Douglass North’s, John Wallis’s, and Barry Weingast’s 2009 book, Violence and Social Orders, as “of all of the works in political theory, I think it is the most under-rated.”

The “post-liberals” attract characters of dubious intellectual and ethical merit, including the one profiled here. (HT Phil Magness)

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… is from page 256 of the original edition of Walter Lippmann’s sometimes deeply flawed but profoundly insightful and still-important 1937 book, The Good Society:

James Madison would not have been astonished at Hitler. He had studied carefully the classical demagogues. That is why the Constitutional Convention attempted to set up truly representative government; in order to protect the masses from the hypnosis of the moment, they invented devices for balancing the constituencies and delaying their decisions.

DBx: Yes. Save, perhaps, in the case of actual war, Madison and the other framers of the U.S. Constitution generally regarded the ability of the executive branch to act more quickly than the legislative branch as a bug to fear and squash rather than a feature to cheer and encourage.

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Here’s the abstract of John Veroneau’s new Maine Law Review paper, U.S. Trade Law and Policy at a Crossroads.

The past decade has witnessed significant changes in U.S. international trade policy. In his first presidential term, Donald J. Trump moved the United States away from long-standing policies of lowering trade barriers to facilitate global commerce and replaced them with a more restrictive version not seen since the early twentieth century. President Trump’s more trade-restrictive policies were largely extended by his successor, President Joseph R. Biden. The first year of President Trump’s second term has indicated a strong desire to restrict imports further in an attempt to create U.S. manufacturing jobs and reduce reliance on Chinese imports. This Article seeks to (a) situate recent changes in U.S. trade law and policy in a historical context, (b) argue that free trade policies are more consistent with America’s traditions of individual liberty than protectionist ones, (c) argue that free trade policies on balance better serve U.S. economic interests, (d) recommend changes to U.S. trade policies to enable their benefits to be more broadly shared, and (e) argue that changes in certain non-trade policies are needed to address real and perceived problems with post-World War II trade policies.

Vance Ginn reports from last week’s AIER conference, in DC, on trade.

In his contribution to a symposium, Benn Steil describes Trump’s tariffs as “made in America, paid in America.” A slice:

According to a recent study by New York Federal Reserve Bank economists, Americans bore 94 percent of the tariff cost in August 2025. In contrast, foreign exporters only bore 6 percent of the tariff incidence in the form of lower import prices. By the end of the year, that figure was up to about 14 percent—indicating that U.S. importers were having some modest success passing on a portion of their tariff burden to foreign suppliers.

According to the Yale Budget Lab, the pass-through of tariff costs to U.S. consumers has increased over time. By the end of 2025, it was about 76 percent, and as high as 100 percent for many consumer durables. At his press conference on March 18, Fed Chair Jay Powell said that tariffs were adding between half a percent and three quarters of a percent to the inflation rate. This accounts for much of the Fed’s overshoot of its 2 percent Personal Consumption Expenditures (PCE) inflation target. Estimated using another standard inflation metric—the Consumer Price Index (CPI)—the tariff contribution is slightly higher, averaging 0.87 percentage points in February.

Scott Lincicome explains that “like his tariffs on goods, Trump’s huge tax on overseas talent will harm the economy and fail its stated objective.” Two slices:

Last September, the Trump administration imposed a staggering $100,000 fee for new H-1B visas via presidential proclamation—up from just a couple hundred dollars previously. Subsequent guidance from the U.S. Citizenship and Immigration Services clarified that the $100,000 charge applies only to new H-1B petitions filed on or after September 21, 2025, for workers outside the United States and lacking a valid H-1B visa (so-called “initial employment” petitions). The fee does not apply to renewals, extensions, amendments, or visa holders already here and switching over to an H-1B—a significant carve-out that limits the fees’ damage but certainly doesn’t eliminate it. The fee also must be paid before a petition is filed, with no guarantee of a refund even if the application is denied. (This hints at a broader problem with many immigration-related fees today, as my Cato colleague David Bier just documented.

As one immigration lawyer put it: “The easiest way to think of this fee is as a tariff on the importation of labor.” The analogy couldn’t be more apt.

For starters, the fee’s rollout was a chaotic mess. The proclamation dropped on a Friday evening and was so vague that it created immediate panic among H-1B holders and their employers, with some confused workers demanding to deplane flights out of the U.S. or cutting trips abroad short to rush back here before the Sunday deadline. Clarifications about the fee’s coverage and implementation tumbled out over the following days, and they continued for weeks thereafter, generating needless legal costs and uncertainty and disrupting hiring plans for thousands of U.S. employers.

Those problems, unfortunately, were just the tip of the iceberg.

The most obvious issue is that, contrary to White House claims in September that “all big companies” were on board with the new fee and that it’d raise lots of money, almost no one has actually been willing to pay it. As Bloomberg Law reported in late February, in fact, only 70 U.S. employers have thus far paid the fee for just 85 workers—an 87 percent decline in these H-1B petitions versus the same period last year, representing thousands of workers not getting hired.

…..

Big companies, meanwhile, have more options than the little guys do, and that includes moving work offshore. As we’ve discussed here, research consistently finds that large firms respond to U.S. restrictions on H-1B visas not by hiring more Americans but instead by expanding their operations in India, Canada, and elsewhere. History appears to be repeating, with news of large U.S. firms in tech/AI, retail, finance, pharmaceuticals, and other R&D-heavy industries responding to the new visa fee by freezing or restructuring U.S.-based hiring and by increasing headcounts in India, Canada, and elsewhere. Increasing the cost of foreign hiring doesn’t automatically increase demand for domestic hiring, and it appears we’re relearning this lesson again.

Michael Bahnsen is correct: “The very prosperity created by capitalism can obscure its benefits, fueling discontent even when we’re much better off.”

The Washington Post‘s Editorial Board warns against government subsidization of sports stadiums. A slice:

The usual argument for stadium subsidies is that they bring new economic activity to cities and help create jobs and revitalize neighborhoods. This argument is usually specious; football stadiums are empty most days of the year, and the money people spend at stadiums probably would have been spent at other businesses anyway. Economic research consistently finds that stadium subsidies are terrible public investments.

Arnold Kling encourages us to think in terms of the moral-dyad model. A slice:

If you think of Meta and Google as unfeeling, all-powerful agents and you think of the woman as helpless and hurt, then you are seeing the case in Moral Dyad terms. In my opinion, the Moral Dyad is the most under-rated model in all of social psychology. I think everyone should know about this model, which is why I am writing yet another essay about it.

The Moral Dyad model was propounded by Daniel Wegner and Kurt Gray in their book The Mind Club, published in 2016. (I reviewed their book here.) Their research sought to determine how we view the minds of other human beings.

What they found was that there are two clusters of beliefs that we hold about other humans. One cluster concerns agency. We think of other humans as having the ability to make choices, form plans, and work toward goals.

The other cluster concerns feelings. We think of other humans as having the capacity to experience sensations. We are especially inclined to notice when other humans feel pain.

Gene Healy makes clear that “there are far too few checks left on executive power.”

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… is from page 125 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

Ironically, both affirmative action and the argument for genetic inferiority of blacks use the same logic. They assume that statistical results not explainable by obvious gross differences must be explainable by the underlying factor they prefer to believe in.

DBx: Indeed. Affirmative action and other ‘woke’ policies are as well-grounded in science and logic as are astrology and eugenics.

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Pierre Lemieux looks in detail at three new pieces of research into industrial policy. A slice:

The second area of concern that [Dani] Rodrik sees illuminated by mercantilism is the backlash against globalization. The so-called “China shock” in the United States (and other advanced countries) from the increase of imports from China between 1999 and 2011 led to “negative externalities” for “society at large” whoever “society at large” is—and eventually to the rise of the “rightwing populist movement.” I agree that this last development is worrisome, as would be the rise of a left-wing populist movement, but any industrial policy that could have prevented this economic adjustment would have entailed a very high cost in terms of general prosperity.

Consider the job losses attributed to the China shock. Change and creative destruction are a permanent feature of a free and dynamic economy responding to consumer demand. It is estimated that of the 5.8 million manufacturing jobs lost in the United States during that period, between 1 million and (at most) 2.4 million were due to the China shock. During the same period, so many new jobs were created in other industries that the net number of jobs increased by more than 6 million. Moreover, it is estimated that most of the decrease in manufacturing jobs was due to technological progress, automation, and higher productivity; it simply took many fewer workers to manufacture the same amount of goods as in generations past. An industrial policy to stop that would have hit other workers in industries not favored by the government.

John Puri wonders who benefitted from Trump’s tariffs punitive taxes on Americans’ purchases of imports. A slice:

When we broaden our view of employment to include all blue-collar jobs, not just manufacturing, the picture is even worse. Blue-collar employment numbers turned negative in 2025 after years of gains, driven by sudden losses in transportation and warehousing and stagnation in construction jobs.

Scott Lincicome shares this quotation from The Economist:

“Since Mr Trump took charge, most of the comments from manufacturers that ISM has published along with its surveys have mentioned tariffs. Not one has been positive. Many of the unpublished ones are more forceful still.”

The Wall Street Journal – relying on new research by Stephen Rose and Scott Winship – reports that, in the United States, “ranks of higher earners have grown markedly over last 50 years, while lower rungs of middle class have shrunk.” A slice:

America’s middle class is becoming wealthier as more families scale the economic ladder into higher-earning groups. New research shows that the ranks of the affluent have grown markedly over the last 50 years or so, while the lower rungs of the middle class have shrunk.

In 2024, about 31% of Americans were part of the upper middle class, up from about 10% in 1979, according to a report released this year by the right-leaning American Enterprise Institute.

There is no single, standard definition of middle class, or upper middle class, and what counts as a hefty income in one city can feel paltry in another. The AEI report, by Stephen Rose and Scott Winship, classified a family of three earning $133,000 to $400,000 in 2024 dollars as upper middle class. Households earning more were categorized as rich. The analysis looked just at incomes, not assets such as stocks or real estate.

Arnold Kling writes insightfully about the role of financial intermediaries – and about some economists’ excessively simplified assumptions that hide reality’s reasons for such intermediaries. A slice:

What if individuals do not all have visibility into the risks of investment projects? In that case, I argue that firms and banks can add value as financial intermediaries. Individuals want to hold short-term, riskless assets. A firm that funds a data center can issue bonds that will pay off in most circumstances. This concentrates the risks of the data center project in the hands of shareholders, allowing some of the investment in the project to involve lower-risk bonds.

A bank can buy the bonds of the data center firm as well as debt from other firms. By owning debt with different maturities, the bank can issue short-term deposits to individuals and be able to handle occasional withdrawals by depositors.

The way that I like to put it is that households want to hold short-term, riskless assets. Borrowers, like the data center builder, want to issue long-term, risky liabilities. Financial intermediaries accommodate this by taking on long-term risky assets and issuing short-term, riskless liabilities. Intermediaries achieve this by being very selective in choosing their asset portfolios, by managing assets carefully, and by diversifying their assets and liabilities. A risky, long-term project like a data center ends up financed in part with riskless, short-term bank deposits.

The Editorial Board of the Washington Post reports on the success, at least so far, of Javier Milei’s freeing of many of Argentina’s markets. A slice:

The share of Argentines living in poverty was 28 percent at the end of 2025. That’s no small improvement. Since he entered the Casa Rosada in December 2023, one of the biggest criticisms of Milei’s free market agenda has been that poverty figures remained stubbornly high. Thenational poverty rate peakedvat 53 percent in the first half of 2024, but it’s been plunging since.

The self-proclaimed libertarian president has made a priority of tackling hyperinflation to kick-start economic growth. His reforms included slashing state subsidies and dramatically reducing the public-sector payroll to create Argentina’s first full-year fiscal surplus in effectively 123 years. Annual inflation fell from a staggering 200 percent when he took office to 33 percent on the year to February.

Formerly an economist — and a disciple of Milton Friedman and Adam Smith — Milei has long understood that socialism leads to poverty and capitalism leads to prosperity. He moved swiftly after his surprise win to break the socialist hold on Argentina, taking up the chainsaw he wielded on the campaign trail against a bloated bureaucratic state.

Chris Jacobs describes the effects Obamacare as “disastrous.” Here’s his conclusion:

After 16 years of seeing the failure of government-supervised healthcare in action, Democrats still want to convince voters that more spending, regulation, and government control will somehow solve the problems created by just those things.

Chelsea Follett reminds us of how very bad, by today’s standards, were the good old days in New York City.

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… is from page 162 of Richard Epstein’s magnificent 1995 volume, Simple Rules for a Complex World:

The entire regulatory process [of wrongful dismissal of workers] shows the constant preoccupation with the direct effects of decisions on named persons, without regard to the vastly greater indirect effects on other persons similarly situated. The effort to preserve a single job for one discrete, named individual results in the nonformation of numerous other jobs for other people.

DBx: Yes – or results instead in reduced pay for all workers covered by this regulatory doctrine.

The particular setting in which Epstein here warns of the unseen ill consequences of efforts to achieve a good seen result is an example of a more general phenomenon. Protectionism, for example. often wins the day politically because it saves the jobs of seen workers, while workers who, as a result of the protectionism, lose jobs or suffer lower wages – not to mention the consumers who pay higher prices – are unseen and, hence, ignored.

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Here’s a letter to the Wall Street Journal.

Editor:

Seldom do I agree with Bernie Sanders, but I share his conviction that “the future of AI must be decided by the American people” (“AI Is a Threat to Everything the American People Hold Dear,” April 4). Mr. Sanders errs, however, in his preferred means of achieving this outcome. The senator wants control over AI’s future to be monopolized by himself and other government officials – meaning, he wants to deny to hundreds of millions of ordinary Americans the ability to vote with their own dollars on which particular features of AI, and which specific AI vendors, deserve support and which don’t.

In free markets, unlike in political elections, candidates – that is, suppliers – need not first win party support, and they may enter the contest to win public approval whenever they wish. Voting is daily and continuous, not once every few years. Further, voting in markets is done with one’s own, not other people’s, dollars, and is quickly followed for each voter by personal feedback that’s concentrated and reliable. Selection in markets allows the blooming of as many flowers as consumers wish, with no individuals forced to patronize firms they dislike. In contrast, even under the most ideal circumstances, selection by government denies satisfaction to voters with minority preferences, obliging everyone to deal only with the majority-preferred ‘winners.’

The only way to ensure that the future of AI is decided by the American people is to have that decision made in free markets unsullied by what the great economist Thomas Sowell calls the “rampaging presumptions” of politicians and bureaucrats.

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