The Wall Street Journal just released this new video – featuring the heroic voices of, among others, Scott Atlas and Jay Bhattacharya – on the authoritarianism and terror that were imposed on much of humanity earlier this decade by covidians.
On Tuesday evening, the House of Representatives passed the Faster Labor Contracts Act (FLCA) in a 230–193 vote, with 20 Republicans crossing party lines to vote in support of the Democratic-led legislation. The bill, which aims to speed up first contract talks after workers unionize, now moves to the Senate.
The bill has been celebrated by a growing consortium of populists that has taken over the Republican Party.
Sen. Josh Hawley (R–Mo.), who has sponsored the Senate version of the bill, said he was “glad to see the House has done the right thing for working-class Americans.” He added, “We need real labor reform that puts workers first.” Rep. Pete Stauber (R–Minn.), who cosponsored the bill in the House, said he was “proud to partner” on the bill to “hold employers accountable and ensure workers have a real voice at the negotiating table,” adding that “when our workers succeed, our entire nation succeeds.” The bill has also been heralded by Oren Cass, founder of American Compass, who described it as the “best opportunity yet for conservatives to show they support strong labor laws and the rights of workers.”
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The FLCA would mandate a federally supervised arbitration panel to impose contract terms on the entire workplace, meaning that many workers would lose the ability to negotiate for themselves. Their wages, hours, benefits, and working conditions could be settled by union officials they did not support, and government bureaucrats they did not vote for.
Rep. Tim Walberg (R–Mich.) made this very point on the House floor. He argued the bill actually “erodes workers’ rights” and that a “government-appointed arbitration panel” would impose a contract if the parties do not reach an agreement within the bill’s timeline.
“Supporters of this bill assure businesses and workers that it is about worker empowerment and efficiency,” Walberg said. “I may be misremembering the definition of empowerment, but I can guarantee it does not mean taking away a worker’s right to vote on his or her own contract and giving that power to a Washington bureaucrat with no stake in the outcome.
The Editorial Board of the Washington Post reports on Donald Trump’s new love: inflation. A slice:
Fiscal policy isn’t helping. So long as Congress runs a deficit of $1.8 trillion a year, the economy will stay overheated, pushing prices higher. Reports from the Treasury Department this week confirmed that the federal government has already borrowed $1.2 trillion in the first eight months of this fiscal year and is projected to borrow at least $2 trillion by the end of September.
Artificial Intelligence (AI) policy shouldn’t begin with the presumption that an emerging technology requires new forms of government control. In fact, the history of American technology policy shows that a light-touch approach allows consumers and innovators to find the best uses for technology. The light-touch approach enables companies to respond to the problems and demands of their consumers rather than those of the government, helping American companies become industry leaders.
Yet concerningly, a new bad policy idea intended to support American leadership in AI is emerging on both the Left and the Right. President Trump has floated a possible federal “partnership” with major AI companies, in which the public could receive “pieces” of those companies and benefit from their success. The details are unclear, but all signs point to the administration seeking to acquire equity stakes, which it has done with over 20 companies starting last year.
On the Left, Senator Bernie Sanders has been more explicit. His proposed American AI Sovereign Wealth Fund Act would impose a one-time 50 percent tax on the largest AI companies, paid in stock. The government would then use voting shares and board representation to block decisions it deemed harmful and push decisions it deemed beneficial.
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If the government also becomes a shareholder, it would have financial and political incentives tied to the success of some firms over others, possibly making it harder for smaller or newer companies to challenge government-backed incumbents and weakening the market’s competitiveness.
A regulator may hesitate to enforce rules that could reduce a government-backed company’s valuation. A procurement office may favor a company in which the government has a direct interest. Or a president may pressure companies to serve political goals while presenting that pressure as stewardship of the public’s investment.
Want to know why the price of water is rising? GMU Econ alum Julia Cartwright has some answers.
Julian Simon would have loved – although not been surprised by – this development.
My GMU Econ colleague Bryan Caplan debates Simon Hankinson on ICE deportations.
Brad Thompson remembers his dissertation director, Gordon Wood.
Also remembering Gordon Wood is the historian Alan Guelzo. A slice:
Wood’s trademarks were his strict attention to written sources, and his relative indifference to social, cultural, and ethnic history. But he balanced that indifference by his exquisite attention to the most minute changes in voice by pamphleteers and newspapers, even in the use of political vocabulary. When Creation was published in 1969, Wood was considered avant-garde because his revolutionaries seemed to pay no attention to the restrained and lofty political models of Greece and Rome. But he would remain just as resistant to the import of more recent ideological fashions into history writing, and especially the attempt to convert historical process into broad binary categories of oppressed/oppressor or settler/indigenous. In 2019, he broke with a large community of historians when he expressed his skepticism toward the 1619 Project’s proposal that slavery was the dominant fact of American life and that the Revolution was a device for protecting it. In Wood’s eyes, this was absurd. The 1619 Project might be pardoned as an example of over-wrought journalism, but it should not be mistaken for sober-sided history-writing, and it was important for the life a nation for historians to say so. “We all want justice,” he wrote, “but not at the expense of truth.”
… is from page xxvii of Michael Boskin’s Foreword to the 1986 volume, edited by Dwight Lee, Taxation and the Deficit Economy:
The short-run horizon of our political process is particularly pernicious in dealing with policies that transfer resources across lifetimes and between generations. Our most important policies in this regard are our public debt, Social Security, and capital income taxation. The lack of a vote by unborn generations aggravates the political and ethical dimensions of these policies immensely.
DBx: Yes. Although written 40 years ago, Boskin’s words are today as true and relevant as they were when the ink used to print them was still wet.
Even if – contrary to fact – accumulated government debt poses no fiscal problem for the government, such debt represents today’s citizens-taxpayers living at the expense of tomorrow’s citizens-taxpayers. The ability to live at the expense of other people who do not consent to be hosts to parasites is not only a recipe for economic waste (if not necessarily to fiscal crises), it is also unethical. Financing government spending with borrowed funds is no less wasteful and no less unethical than would be financing, say, your household’s spending with funds that you drain, without permission, from your neighbors’ bank accounts.
Here’s a letter to a Facebook friend.
Keith:
Thanks for sending along Oren Cass’s and Daniel Kishi’s attempt to rationalize Trump’s punitive taxes – a.k.a. tariffs – on Americans’ purchases of imports. As you realize, their essay is filled with several fallacies, both factual and theoretical.
Let me address here the fallacy that you explicitly highlight, which is revealed in these two passages meant to justify Trump’s new rationale for raising tariffs on imports from countries that allegedly do too little to combat “forced labor”:
Capital moves not to where labor is most productive but to where it is most easily exploited. Cheap labor paid in proportion to its output is just unproductive labor; what the capitalists want is productive workers they can still pay poorly….
The new forced-labor tariffs are the leading edge of a larger ambition: a trade policy that makes capital compete on how productively it employs workers, not on how easily it can exploit them, and that restores a level playing field for Americans.
In other words, the Trump administration’s new tariffs, we are to believe, are an attempt not merely to reverse the pattern of global capital going to countries where worker productivity is high but worker pay is low, but also to ensure that more of that capital moves to the U.S. where it will employ American workers.
Overlook the fact that increasing the amount of foreign capital invested in the U.S. would increase U.S. trade deficits – the same deficits that both Oren and the president often bemoan. That Oren and Mr. Kishi seemingly are unaware of this contradiction is reason enough to dismiss their brief for the tariffs.
Instead, note that their tale is contradicted by facts.
In all but one of the ten years 2015 through 2024, the country that received the largest amount of foreign-direct-investment capital is the United States. (The U.S. ranked second in the pandemic year of 2020, receiving slightly less FDI than China.) Over that ten-year period, the U.S. received a total of $2.95 trillion in FDI, which is twice the amount receive by second-place China, and 20% of all FDI.
Further, as examination of the top-ten recipients of FDI reveals (see attached), nearly all of these countries – places such as Canada, the U.K., France, Germany, and the Netherlands – are wealthy, high-wage countries.
The U.S.’s #1 position isn’t unique to those ten years. Over the 50-year period since the U.S. began running annual trade deficits (in the mid-1970s), the country that received the most FDI is the U.S. By far. Its 20% to 25% percent of all FDI over this half-century is at least double the amount of FDI received during those years by the country that received the second largest amount of FDI, the U.K.*
These data are neither esoteric nor difficult to access. And they refute, as surely as economic data can refute any claim, Oren’s and Mr. Kishi’s assertion that global capital has been avoiding the U.S. and other high-wage countries in order to take advantage of low-wage “forced labor.”
Sincerely,
Don* Data gathered, with Claude’s help, from various issues of UNCTAD’s World Investment Report.
Courts keep knocking down President Trump’s border taxes, but he keeps imposing them, no matter the economic or (soon) the political harm. His tariff fixation is as unmovable as Bernie Sanders’s loathing for the rich.
The U.S. Trade Representative last week teed up new tariffs of 10% to 12.5% on some 60 countries. After the Supreme Court struck down the President’s emergency tariffs in February, the Administration invoked Section 122 to impose a 10% across the board tariff. A federal court last month ruled those tariffs unlawful, and they are also time-limited to 150 days.
So Mr. Trump is dusting off Section 301, which lets him impose tariffs in response to “unfair foreign acts, policies, or practices affecting U.S. commerce.” The first Trump Administration used the law to slap tariffs on China as punishment for its mercantilist policies, including intellectual property theft and forced technology transfers.
But rather than perform detailed investigations for each country, the trade office simply declares that they all engage in unfair trade practices by failing to “impose and effectively enforce a forced labor import prohibition.”
“This creates a dynamic where American workers are forced to compete globally on an unlevel playing field,” says U.S. Trade Rep. Jamieson Greer. Sorry, forced labor isn’t why companies manufacture products outside the U.S. Other countries have comparative advantages, but we know there’s no point informing the President about David Ricardo.
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Mr. Trump’s tariff obsession is a self-defeating act. There’s been no surge in domestic manufacturing, and they are contributing to rising prices. They are also unpopular, especially in the farm belt. That’s presumably why he reduced the Section 232 tariff rate on farm equipment recently to 15% from 25%.
Tariffs are a major reason voters aren’t happy with Mr. Trump and Republicans on the economy and inflation. A recent Fox News poll showed that 71% of voters disapprove of his handling of the economy, including 42% of those who voted for the President and 67% of whites without college degrees. Good luck in November, Republicans.
Either way, Section 301 tariffs are intended to secure the removal of foreign barriers, not to impose long-term tariff increases on Americans. President Trump and former US Trade Representative (USTR) Robert Lighthizer imposed the biggest Section 301 tariffs in history to encourage China to modify its investment and intellectual property policies during President Trump’s first term. Unfortunately, those tariffs failed to achieve their stated goals. The tariffs were supposed to expire after four years, but the Biden Administration took the unprecedented action of extending them, and the Trump Administration is now considering whether to extend them again.
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According to Greer, “The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field.”
His statement may appear to be relatively innocuous. In reality, it represents a massive power grab designed to give USTR unlimited control over imports.
If allowed to stand, the new template for future tariffs will be:
- Announce: “The failure of our most important trading partners to ______ is unacceptable. This creates an unlevel playing field.”
- Fill in the blank with anything that can be dreamed up.
- Assert the stated foreign action is unreasonable and burdens US commerce.
Section 301 then gives USTR blanket authority to impose duties, limitations, or even import prohibitions, unless the courts or Congress intervene. Future USTRs, regardless of political party, may inherit essentially unlimited tariff power
A reasonable response would be for Congress to change our trade laws to require a vote on Section 301 tariffs. After all, in 1776, the American colonists declared their independence in part to escape the authority of a King who cut off our trade with all parts of the world.
Another skeptic of Trump’s latest excuse for tariffing Americans is Jim Bacchus. A slice:
But there is scant logic in some of the distinctions the administration has made in doing so. Especially, nothing appears to have been done to set tariffs at different levels for different countries, depending on the seriousness of the alleged human rights violations. Tariffs of 10 percent will be imposed on a group of countries that have supposedly imposed a partial prohibition on imports made by forced labor, while tariffs of 12.5 percent will be applied on a group of countries that have not imposed any legal prohibition at all. But there has seemingly been no attempt to distinguish between these countries based on the extent of their actual imports of products tainted by forced labor.
If justifiable distinctions have been made here based on human rights failures, why is the same tariff of 12.5 percent being applied to imports from China and Switzerland? In addition, why have countries such as Afghanistan, Belarus, and Myanmar—where the United States has identified significant abuses of forced labor—been excluded from these new tariffs? And is it only a coincidence that these new tariffs seem for some reason to add up to sums approaching the previous Trump tariffs that were struck down by the Supreme Court of the United States in its ruling under the International Emergency Economic Powers Act of 1977 and by other federal courts since?
It can, of course, be assumed that the president and his trade team do oppose forced labor. Their record thus far supports that assumption. But all these questions about these new tariffs suggest that they are being applied more as a means of finding a new way to help replace the tariffs that the courts have ruled illegal than as a means of combating the human rights abuses of forced labor.
The important lesson is more philosophical than technical. The shale revolution was not centrally planned into existence. It emerged from decentralized experimentation, private investment, risk-taking, and a government that respects property rights and otherwise gets out of the way. In other words, it emerged from the exact kind of society Simon believed produced human progress.
Few public officials understand that lesson better than Secretary of Energy Chris Wright.
Long before entering government, Wright argued that abundant energy is the foundation of modern human flourishing. Clean cooking, refrigeration, transportation, clean water systems, modern medicine, industrial production, and computing power all depend on enormous amounts of energy.
The optimistic worldview shared by [Julian] Simon and Wright has taken decades to reach the mainstream and influence policymakers. However, today, it looks like the future.
George Will writes wisely. Two slices:
Jonathan Alpert, a therapist uneasy about the professional company he keeps, writes in “Therapy Nation” that between 2011 and 2023, the number seeking mental health treatment “skyrocketed” from 31.6 million to 59.2 million — about 1 in 6 Americans. Alpert believes in therapy, but blames the booming “therapy industry” for a “therapy-obsessed culture” of dependence, self-absorption, self-pity, complaining, blaming, venting and cultivated misery. Proudly fragile as victims of their circumstances, more and more Americans regard every discomfort as a “trauma” (the Greek root of the word is “wound”) to be healed by therapy laced with pharmacology. Resilience wanes and the concept of responsibility blurs.
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The English language has been infused with such categories from one precinct of the therapy profession. It teaches that disagreeable character traits are jumbles of curable “disorders” for which the individual is not responsible. Before this enlightenment, people had to make do with primitive categories. For example, someone with [Graham] Platner’s array of disorders would have been diagnosed as: a jerk.
… is from page 63 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:
The worry has been that Microsoft would be “unfair” to competitors or use its “market power” to “monopolize” the industry or do other equally vague and often undefinable things. At the heart of all this is a confusion between injuring competitors and injuring competition.
When competition is working as a process, some competitors are almost certain to be hurt. Those for whom equality is not just an ideal but a dogma cannot accept this. Sinister theories are one result of their attempts to reconcile their dogma with a reality that repeatedly mocks it.
DBx: Yes. And today, such sinister theories are spun not only by economically uninformed progressives, but also by economically uninformed “national conservatives.”
Thanks again to John Stossel for interviewing me a couple of months ago – and to his excellent team for somehow making me appear to be more articulate than I am. This is the full-length interview, which has just been released.
Here’s a letter to the Guardian.
Editor:
I was struck by a realization upon reading Jonathan Watts’s uncritical endorsement of Thomas Piketty, et al.’s, newly released “Global Justice Report: A Plan for Equality & Prosperity Within Planetary Boundaries” (“‘Happiness is not just about GDP’: ambitious plan or utopia?” June 4).
Progressives love to boast of their devotion to “sustainability.” Advertisers seeking their patronage trumpet certain foods and other consumer goods as being “sustainably grown” or “sustainably sourced” – advertisements that exploit progressives’ economically naïve conviction that the normal practice of businesses in market economies is to myopically disregard access to inputs tomorrow in order to unsustainably maximize sales today. Indeed, Messieurs Piketty and Co. share this naïve conviction: their report predicts that myopic market forces will inflict severe damage on the environment – damage that’s avoidable only by adopting their scheme for soaking the rich and harshly restricting economic growth.
This prediction is ironic. There’s nothing unsustainable about free-market activities, for the greatest protector of the environment and surest insurance against resource depletion are secure, tradeable property rights.
But if anyone wants an unambiguous example of a genuinely unsustainable policy, look no further than the scheme endorsed by Messieurs Piketty and Co. Such seizure of wealth and government central economic planning will kill golden-egg-laying geese and destroy the capital that’s necessary for ordinary workers to earn wages high enough to afford these workers the modern luxury of caring about the environment. The end result would be massive poverty, a pathetically puny tax base, and a dirtier and more dangerous environment.
Soak-the-rich taxation and economic central planning, under whatever guise, have always been, and will always be, unsustainable.
Sincerely,
Donald J. Boudreaux
Professor of Economics
andMartha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
Jack Butler remembers the late Gordon Wood. A slice:
But Wood, who died in a car accident Sunday at 92, was far more than a chronicler of this country’s founding. He did more than any other academic, and perhaps more than anyone in the past 50 years, to sustain the memory and importance of the Revolution and its principles.
Wood was born in Concord, Mass., where one of the first battles of the American Revolution was fought. He became known to the world in 1969 with his first book, “The Creation of the American Republic, 1776-1787.” It won the Bancroft Prize, one of the history profession’s highest honors.
With 1991’s “The Radicalism of the American Revolution,” Wood achieved a popular renown unusual for an academic. His thesis, defended in careful, scholarly and erudite fashion, is also right there in the title and spelled out early and plainly in the Pulitzer Prize-winning book. Our revolution “did not just eliminate monarchy and create republics; it actually reconstituted what Americans meant by public or state power and brought about an entirely new kind of popular politics and a new kind of democratic officeholder.”
Also remembering Gordon Wood is AEI president Robert Doar.
“Gordon Wood on what the Declaration meant for America.”
Here at Cafe Hayek, I featured many passages from Gordon Wood’s books as “Quotations of the Day.”
GMU Econ alum David Hebert is correct:
Treasury Secretary Scott Bessent and others argue that tariffs and industrial policy can restore America’s strength. In reality, diversified supply chains and open markets provide greater resilience than economic nationalism.
Earlier today, in the case of California v. Mullin, the US District Court for the District of Massachusetts issued a decision striking down the Trump Administration’s $100,000 fee on applications for H-1B visas (which are used by tech firms, research institutions, and other organizations to hire immigrant workers and researchers with a variety of specialized skills). Judge Leo Sorokin ruled that the plan is illegal because it usurps Congress’s power to tax.
Eighty-four years is a good, healthy life in America. How much progress has been made in reducing poverty over one person’s lifespan?
A lot, according to new research from Richard Burkhauser of the Civitas Institute and Kevin Corinth of the American Enterprise Institute. They have assembled the longest poverty data series that accounts for taxes, transfer payments and health insurance, stretching 84 years from 1939 to 2023.
It provides some astonishing good news. Over that entire time span, no matter what baseline they chose, the absolute poverty rate fell by at least three-quarters. When including the value of health insurance, poverty fell by up to 97 percent.
The transformation was especially massive for African Americans. In 1939, 93.3 percent of Black children were in poverty. By 2023, it was 5.7 percent.
The story most Americans are familiar with would credit the reduction to the modern welfare state after President Lyndon B. Johnson announced the War on Poverty in his 1964 State of the Union address.
Burkhauser and Corinth’s research allows this claim to be tested. They find that poverty was already in rapid decline from 1939 to 1963, before the federal government’s war against it began. That decline was almost entirely due to rapid economic growth causing incomes to rise.
It’s a common refrain: The middle class is hollowing out; Americans overall are increasingly falling short financially while a few are getting exceedingly rich. There’s even a scoreboard of inequality. We’ve persuaded ourselves that many families can no longer achieve the American middle-class dream the way their parents once did. It’s a political hot button, too — both parties claim to be fighting to preserve Middle America.
But there’s another, much better way the middle class can shrink — when everyone moves up and gets richer. A nation can become so much richer that the ranks of the poor, the working class and the middle class all thin out. The “hollowing out” message requires a curious definition of progress: By its logic, if everyone’s income doubles, the same number of families fail to reach the middle class as in the past.
Thinking about the middle class in this way obscures progress because it mixes inequality with people’s living standards, and those are two different things. In a recent report, we measured class using constant, inflation-adjusted thresholds. The “core” middle class shrank, but so did the classes below the middle — the poor, the near poor and the lower middle class.
In 1979, 36 percent of families were in the middle class. At first, it looks ominous that by 2024, a smaller number — 31 percent — could claim that status. But it’s worrisome only if you overlook that over the same period, the upper middle class grew to 31 percent of families from 10 percent. Meanwhile, the number of Americans falling short of the middle class — once more than half — dropped to 35 percent of all families.
The traditional middle class shrank because so many families became better off over time, not because more people fell short. At the same time, inequality rose, too. The higher up the income ladder a family reached, the more disproportionate the improvement. Rather than the rich getting richer and the poor getting poorer, rich and poor alike grew richer — albeit at much different rates.
One objection we received to these analyses is that they would have looked very different if we had considered wealth rather than income. That’s because income reflects the remuneration people receive in a year while wealth — assets owned less debts owed — reflects resources accumulated over time. But our forthcoming research finds that the share of families whose wealth earned them upper-middle-class status increased, just as the income numbers indicate, while the proportion of families whose wealth fell short of the middle declined.
What is being abandoned is the principle that legitimate production creates legitimate ownership. Jeff Bezos did not find his wealth lying in a field. Musk did not inherit a pile of cash. Nor did these men steal their fortunes from others. Their fortunes were built through sustained judgment, risk, and entrepreneurial effort in markets where consumers voluntarily chose to spend (or not to spend) their money. (Or at least mainly so; see below.) The causal chain from effort to wealth is visible and traceable. Yet the popular conclusion is that the endpoint of that chain is somehow provisional, held subject to democratic revision whenever a current majority finds the accumulation distasteful.
A free society cannot function on such logic. Once you establish that democratic majorities may vote to claw back wealth they find excessive, you have crossed a line we had refused to cross before. The same moral grammar that justifies a wealth tax on ten-figure fortunes also justifies, with equal coherence, a wealth tax on seven-figure ones. The argument rooted in “too much” has no natural stopping point, because “too much” is always defined by whoever is doing the taking.
This discomfort is not eased by acknowledging that some large fortunes benefited from government-granted privileges and cronyism.
… is from page 244 of Deirdre McCloskey’s superb forthcoming book, Equality of Permission [original emphasis]:
I have called primary liberalism “adultism.” Primary liberalism alone among political philosophies does not treat citizens as children. The conservative wants to police and dominate the bad children called citizens. The left progressive wants to subsidize and dominate the sad children called citizens. Bad or sad, all citizens are made into figurative children, and then serfs.
