… is from this recent post at Marginal Revolution by my colleague Alex Tabarrok:
The trade accounts are among the most pernicious statistics ever collected.
But corporate greed or price gouging has never been a plausible theory of price changes, let alone inflation. Corporations with substantive market power don’t need pretext. They can always extract high prices by artificially limiting supply. And firms without market power that try to pocket a windfall invite undercutting by rivals; that’s especially true of hypercompetitive retail gas stations. When prices rise simultaneously across an entire industry—nay, across the entire world—the far simpler explanation is either a demand shock or a common cost shock—precisely the sort a war-driven supply shock produces. Consumers have to be willing and able to pay the higher prices, after all.
A lot of politicians around the world seem to get upset if prices for retail gas spike on inventory that was acquired at lower cost. They regard that as unfair “gouging.” Few of them, I suspect, insist on selling their homes for the price they paid for them. But fundamentally, this misunderstands the role of market prices, which reflect the relevant scarcity of the products in each new context. The opportunity cost for firms of selling oil below what the market will bear today is the price that could be obtained elsewhere in the world. Firms also need to replace inventory at the new market price. So, yes, they might make a short-term accounting profit on some inventory, but this is quite transitory.
Timothy Taylor shares insights from Richard Baldwin’s new monograph, World War Trade. Two slices:
We have been living through the silly season of Trump’s tariff policy for some months now. Baldwin lays out the details: here’s my own summary. The Trump administration has made innumerable announcements about tariff policy, and you will be stunned to learn that every single one of them is a greater triumph than the one before, natch. High announced tariffs? A triumph. Announcing an agreement that would reduce those tariffs? Another triumph. Creating exceptions and loopholes in the lower tariffs to ease the pain on US consumers and on US firms importing inputs to production? Yet another triumph. Announcing a new round of high tariffs? One more triumph. A new tariff policy has a completely different reason than the previous tariff policy? Yet another triumph of statesmanship. Indeed, every time a previous tariff policy is changed, or even abolished, it simply demonstrates that all previous tariff policies were triumphs. Then the US Supreme Court ruled that most of the tariffs imposed since April 2, 2025, were all unconstitutional to begin with. And President Trump reacted by imposing yet another round of tariffs with another pretextual legal rationale.
As US manufacturing firms struggle to deal with higher prices and cutoffs and heightened uncertainty of their global supply chains for inputs, and US consumers face higher prices as a result of tariffs, what’s the rest of the world doing? Baldwin argues persuasively that other nations of the world are pursuing regional free-trade agreements that pointedly leave out the United States–so that US firms have no voice in the negotiations. Baldwin calls it the “domino theory of regionalism,” which is the idea that regional free trade agreements benefit those who are inside, and thus disadvantage those who are outside. Every time an outsider decides to join up, it’s one more domino falling into place.
…..
Baldwin writes of Trump’s “Liberation Day” tariffs announced on April 2, 2025: “Donald Trump’s Rose Garden tariffs were historic in the most disruptive sense of the word. By raising tariffs on almost everything from almost every nation, he broke most of the trade promises America had ever made.” That epic level of promise-breaking will echo into the future of US diplomacy on all subjects.
Alan Beattie compares Tariff Man to Nixon. Two slices:
Donald Trump came into office as the self-styled “Tariff Man” superhero who would tear apart global trade and refashion it under the muscular doctrine of America First. He seems likely instead to be remembered as the supervillain “Epic Fury”, who set the Middle East ablaze and endangered worldwide prosperity and the US’s standing with it.
A year on from his supposed “liberation day”, which imposed sweeping tariffs across the board, Trump has certainly delivered a rupture from the multilateral system which came before. But rather than regressing to the protectionism of the 1930s — not least because other countries have declined to join in — he seems to have stumbled back only to the early years of President Richard Nixon.
…..
Two Republican presidents who started with a somewhat similar attitude to trade both hit the real-world limits of fighting a trade war. Yet it’s revealing how toxic the US attitude to trade has become that the 1970s original shifted towards liberalisation bounded by agreements, while the 2020s redux continues to regard open and rules-based trade with unremitting hostility. It’s not often that historians look back to Nixon’s presidency with nostalgia, but his legacy seems like a golden era of multilateral openness compared with the destructive economic nationalism of Trump.
James Pethokoukis tweets this line from this report in The Economist:
‘Here is an uncomfortable truth for hand-wringing policymakers: Europe’s dependency on America is in no small part Europe’s own fault. Decades of over-regulating the old continent’s economy left businesses there unable to compete with American firms’
America, Eberstadt says, has had “the most robust demographic growth of any developed society.” The Social Security Administration, predicting what it must desperately desire, projects another 100 million Americans by 2100. But intractable pathologies — including government’s fiscal incontinence and “pay-as-you-go entitlements” — spell catastrophe for a nation with an upside-down “population pyramid,” where each generation is smaller than the previous one.
“Who is Hasan Piker?” – Jim Geraghty has the unattractive answer.
Also writing about Comrade Piker and his ethically challenged ilk is Reason‘s Robby Soave. A slice:
Stealing is bad, and you shouldn’t do it. It’s really as simple as that. Children understand this, even from a young age, and it’s taught to them by their parents, grandparents, teachers, and other mentors. Some people, of course, find themselves in desperate circumstances, and are forced to steal to survive. We may empathize with them, and we may even decide that their situation mitigates the blameworthiness of the offense. That doesn’t change the wrongness of stealing, though. If you catch your kids snatching a candy bar from the grocery store checkout line, you invariably punish them. You don’t commend them for striking a blow against capitalist oppression.
Enter leftists Hasan Piker and Jia Tolentino, who have been roundly and deservedly mocked on social media after participating in a podcast interview for The New York Times titled “The Rich Don’t Play By the Rules. So Why Should I?” Already, we are on shaky ground here, since the headline—a direct quote from host Nadja Spiegelman—positions Piker, Tolentino, and Spiegelman as a trio of people that should be contrasted with the rich. This is ridiculous: All three are members of the wealthy, successful, cultural elite. Spiegelman is a culture editor for the Times, an author, a cartoonist, and the daughter of legendary cartoonist Art Spiegelman (creator of Maus, a well-known graphic novel about the Holocaust). Tolentino is a relatively famous feminist writer of not-exactly modest means. Piker is a wildly successful far-left Twitch streamer and nephew of The Young Turks‘ Cenk Uygur, who gave him his start. Suffice it to say, these are not people who need to steal to survive.
And yet, their conversation includes a full-throated defense of shoplifting.
… is from page 150 of Columbia University economics professor Arvind Panagariya’s brilliant 2019 book, Free Trade and Prosperity:
In India, Bihar is the poorest state and Kerala one of the richest. Going by the Gini coefficient, Bihar is among the states with the least inequality and Kerala among those with the highest inequality. If people truly cared about inequality as measured by the Gini coefficient, we should expect them to migrate from Kerala to Bihar. Of course, the reality is quite the opposite: much of the migration is from Bihar to Kerala.
On page 13 of their 2017 brief in support of “green industrial policy,” Tilman Altenburg and Dani Rodrik write:
However, it should be noted that consumers do not respond perfectly to price signals. Even when new products exist that are better in many ways and cheaper, many consumers stick to the bad old alternatives because they do not understand the situation well, because their neighbours have not changed or simply out of force of habit.
I know nothing of Mr. Altenburg, but I know much about Prof. Rodrik, who is among today’s most respected and prolific advocates of protective tariffs and other government interventions designed, in his view, to improve domestic economies.
So when I read the above-quoted passage, I wondered why Prof. Rodrik is so certain about his case for protective tariffs. After all, if it’s true that “many consumers stick to the bad old alternatives because they do not understand the situation well, because their neighbours have not changed or simply out of force of habit,” it’s unclear how much established domestic producers have to fear from new imports or from imports the prices of which have been cut. Stuck-in-their-ways consumers – whose numbers, according to Altenburg and Rodrik, are “many” – irrationally continue to purchase inferior goods even when better ones become available, and, rather than switch to lower-priced alternatives, continue indefinitely to pay higher prices for the goods these consumers are accustomed to buying.
While this alleged inertia on the part of many consumers isn’t sufficient to undermine the case for protectionism, it certainly makes that case less urgent and, depending on the strength of this inertia, might well make protectionism practically unnecessary (and it certainly is difficult to square with the so-called “China Shock”). The fact that, in other of his writings, Prof. Rodrik ardently endorses protectionism leads me to suppose that Prof. Rodrik regards consumers as being much more intelligent and rational than they are portrayed in the above-quoted passage.
Here’s a letter to the Wall Street Journal.
Editor:
Rightly decrying Trump’s escalation of what you call his “tariff blitz,” you reveal – but don’t comment on – an internal contradiction in the administration’s excuses for punitively taxing Americans’ purchases of imports (“The Trump Tariffs Keep Coming,” April 24).
To justify these tariffs legally, the president imposes them under Sections 232 and 301, the former to protect U.S. national security and the latter to counter allegedly “unfair” trade practices. Yet Mr. Trump also boasts that his tariffs will raise enormous amounts of revenue. When properly used, however, Sections 232 and 301 keep tariffed imports out of the U.S., resulting in no revenues collected on those excluded imports.
If the purpose of the tariffs really is to enhance U.S. national security and counter “unfair” trade practices, it cannot also be to raise revenue. But if the goal instead is to raise revenue, then imposing these tariffs under Sections 232 and 301 is unlawful.
The administration either doesn’t see this contradiction, or it has such contempt for the intelligence of the American people that it thinks nothing of baldly expressing this contradiction. Either way, we Americans have no reason to trust anything this administration says or does regarding trade.
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
Wall Street Journal columnist Jason Riley writes sensibly about AI. A slice:
ChatGPT arrived in 2022, and the AI alarmists said white-collar workers were in danger. Yet the Economist reported this year that “since late 2022 America has added roughly 3m white-collar jobs—which include management, professional, sales and office roles,” while blue-collar employment has remained flat. “Some occupations regularly cast as AI’s early victims are on a tear. America has 7% more software developers, 10% more radiologists and 21% more paralegals than three years ago.”
Pay has likewise kept pace, the magazine noted. Since 2022, inflation-adjusted wages “in professional and business services (think salespeople, accountants and the like) have increased by 5%. Office and administrative workers earn 9% more.” American history is full of disruptive innovations that have resulted in higher productivity, with many more jobs being created than destroyed. Government basic-income schemes are a solution in search of a problem. And to the extent that these policies discourage work and wind up subsidizing idleness—and the associated counterproductive behavior—they will exacerbate the problem.
Start with a recap of the fiscal picture. The federal government runs large deficits so persistently that they’ve become a structural threat to price stability. As Romina Boccia and Dominik Lett argue in the handbook’s second chapter, when debt expands faster than the economy, investors begin pricing in one of three outcomes: higher future taxes, deeper spending cuts, or inflation that quietly erases the real value of what the government owes. When Congress fails to credibly commit to the first two, it chooses door No. 3 by default.
The inflation surge of 2021 was the consequence of an extraordinary flood of deficit-financed spending with no commitment to repaying it. As our money lost purchasing power, the Federal Reserve eventually had to raise interest rates sharply, further reducing purchasing power. Politicians have yet to meaningfully tighten the government’s belt, and we continue to have unnecessarily high interest rates and prices.
The Wall Street Journal‘s Editorial Board rightly criticizes the Trump administration’s bailout of Spirit Airlines. Two slices:
Who could have imagined that the U.S. government would deem a budget airline too big to fail? Yet here we are, as President Trump is flying to the rescue of the beleaguered Spirit Airlines. This is a story of how one misconceived government intervention leads to another.
Spirit last summer declared bankruptcy for the second time in less than two years. A hefty debt load and challenging business model has made a turnaround difficult. The Biden antitrust cops closed one escape hatch by blocking its merger with JetBlue in 2024. Now Spirit is getting slammed by soaring prices for jet fuel because of the war in Iran.
All of this means that the no-frills carrier could have to liquidate and lay off some 14,000 workers. Enter Mr. Trump, who floated a bailout of Spirit in a CNBC interview this week. Press reports say his Administration is negotiating a rescue that would lend the carrier some $500 million in return for warrants to buy as much as 90% of equity in the company. Is this the revival of the Trump Shuttle, circa 1989?
…..
Don’t be surprised if JetBlue seeks a rescue too. Government ownership would also lead to regulatory and political favoritism that harms competition. That’s no doubt why stocks of other airlines fell following reports of the Trump intervention.
Washington could wind up subsidizing Spirit’s money-losing business indefinitely. The Trump Shuttle didn’t succeed, and the U.S. doesn’t need an Amtrak of the airways.
The President said Tuesday he plans to more than compensate for the emergency tariffs the Supreme Court struck down by using other trade authorities. “We’ll end up with bigger numbers, actually,” the President told CNBC. His proposed budget forecasts $5.4 trillion in tariff revenue over the next decade—a $600 billion increase from its projection last fall.
Treasury Secretary Scott Bessent said last week that the Administration plans to complete its Section 301 investigations by July, which would let the Administration impose tariffs on countries to counter supposedly unfair trade practices. Earlier this month, the Administration boosted its Section 232 national-security tariffs on steel, aluminum and copper.
…..
Mr. Trump’s tariff escalation comes at a particularly painful time for American companies that consume metals, especially auto makers. An aluminum factory in upstate New York that supplied 40% of the U.S. auto industry caught fire last fall and is under repair. Auto makers have had to scale back production and import more aluminum at much higher cost.
Global aluminum prices have jumped nearly 20% this year owing to the war in Iran. Iranian missile attacks has damaged large smelters in Bahrain and the United Arab Emirates. The UAE is America’s second biggest source of aluminum imports after Canada. Higher natural gas prices are also raising costs for metal producers in Asia.
By the way, the border taxes undermine U.S. national security. Mr. Trump’s proposed budget includes $450 billion more for defense, but he’s undercutting his buildup by making defense contractors buy steel and aluminum at a substantial markup. That’s because the tariffs let U.S. metal producers raise their prices.
The President also recently imposed new national-security tariffs of up to 100% on pharmaceuticals. Generics, orphan drugs and large pharmaceutical companies that have negotiated “most-favored nation” price and onshoring agreements with the Administration will be exempt. Tariffs will be lower (15%) on the European Union, Japan, South Korea and Switzerland. Our sources say the tariffs will mostly wallop small biotech companies that can’t afford U.S. manufacturing. The result will be higher drug prices and less investment in cures.
Charles Cooke decries the illiberal lizard-brain ideas of Hasan Piker. A slice:
It is not, in fact, acceptable to murder people because you think they are “social murderers.” It is not, in fact, acceptable to steal cars if you can “get away with it.” It is not, in fact, acceptable to shoplift if the store in question is owned by a “big corporation.” And no, blowing up pipelines is not, in fact, a “thing that should be legal that isn’t.”
John Locke contended that all individuals possess a natural right to “life, liberty, and property,” and, as a guiding principle, this has served us pretty well. It has not, of course, ended political debate or forced us into universal accord. But it has established the rule that one does not get to infringe upon those things simply because one has deemed oneself exempt. Hasan Piker seems to believe that his reference to Friedrich Engels’s “social murder” concept is extremely clever. In truth, it represents nothing more than solipsistic special pleading. If permitted to do so, everyone could play this game. Piker’s argument is that, by allocating resources as he did, Brian Thompson “killed” people. But one could offer precisely the same justification against politicians who run the government health-care systems that Piker covets, or against contractors whose budgets do not perfectly inoculate their apartment buildings against arson — or, if one were to fixate upon his refusal to donate his wealth to the world’s poor, against Piker himself. In this country, we do not leave it up to each person to determine to what extent each individual is murderable; we insist upon a blanket rule. To chip away at that dictum, even rhetorically, is to play with ancient fire.
Here’s the abstract of a new paper in Demography by Kevin Corinth and Jeff Larrimore: (HT Tyler Cowen)
Whether each generation of Americans continues to economically surpass the previous one has recently been called into question. We construct a posttax, posttransfer income measure from 1963 to 2023 based on the Current Population Survey Annual Social and Economic Supplement that allows us to consistently compare the economic well-being of five generations of Americans at ages 36–40. We find that Millennials had a real median household income that was 20% higher than that of the previous generation, a slowdown from the growth rate of the Silent Generation (36%) and Baby Boomers (26%), but similar to that of Generation X (16%). The slowdown for younger generations largely resulted from stalled growth in work hours among women. Progress for Millennials younger than 30 has also remained robust, though largely due to greater reliance on their parents. Additionally, lifetime income gains for younger generations far outweigh their higher educational costs.
Marian Tupy details “Earth Day’s bad bet against humanity.” A slice:
The Simon Abundance Index, which Dr. Gale L. Pooley and I publish every year on Earth Day, is named after Julian Simon. It is a deliberate continuation of the quantitative analysis of the relationship between population growth and resource abundance that Simon’s bet with Ehrlich began. Unlike Simon and Ehrlich, who measured the abundance of resources in inflation-adjusted dollars, we look at “time prices.” Money prices are distorted by inflation and disputed deflators. Time prices solve that problem by dividing a good’s money price by hourly income, showing how long a person must work to buy it. They capture both falling prices and rising wages, require no inflation adjustment, and allow comparisons across countries and centuries. Time is universal, cannot be printed, and reflects the real cost people pay: hours of life. Time prices provide a clearer, simpler, and more meaningful measure of resource abundance than money prices for ordinary people.
By this measure, the last 45 years have been a rout for the pessimists. The 2026 report says that the Simon Abundance Index stood at 636.4 in 2025, up from a base of 100 in 1980. That means Earth was 536.4 percent more abundant in 2025 than in 1980. All 50 commodities, including fuels, such as crude oil, coal, and natural gas, food, such as chicken, beef, and lamb, and metals, such as aluminum, copper, and gold (yes, even gold!), in the dataset were more abundant in 2025 than they were in 1980. The global abundance of resources increased at a compound annual rate of 4.2 percent, doubling about every 17 years. In the 42 countries tracked by the report—accounting for 85.9 percent of global gross domestic product and 66.3 percent of the world’s population—none saw lower resource abundance in 2025 than in 1980. That is not what a species trapped in Malthus’ arithmetic is supposed to produce.
The mechanics of that gain matter. Between 1980 and 2025, time prices for the 50 commodities fell by an average of 70.9 percent. What required an hour of work in 1980 required about 18 minutes in 2025. The same hour of work that bought one unit of a typical commodity in 1980 bought 3.44 units in 2025. That is a 244 percent increase in personal resource abundance. At the same time, the world population grew by 85 percent, from 4.44 billion to 8.21 billion. Put those two changes together and you get the index’s central finding: For every 1 percent increase in global population, population-level resource abundance grew by about 6.3 percent.
… is from page 105 of the late Brian Doherty’s marvelous 2007 book, Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement [footnote deleted]:
Hayek later decided that what really separated him from his friend Keynes was that the latter always believed that certain advanced thinkers (Keynes among them, of course) could skillfully and accurately manipulate the social order to their own ends, without ill effects. Hayek was always too skeptical about the limits of human knowledge and ability to believe that.
Here’s a letter to a relatively new reader of my blog.
Mr. M__:
Thanks for your email.
You write: “The USA ran trade deficits for 50 years. Those were offset by foreigners’ investments in the USA. Foreigners expect returns on these investments. Doesn’t it mean Americans eventually have to pay those returns to foreigners?”
No.
The only Americans who are obliged to pay anything to foreigners are Americans who borrowed money from foreigners. (This number includes U.S. citizens-taxpayers whose government borrowed money from foreigners.) But no such obligation exists for other investments that foreigners made in the U.S. – those other investments being equity investments in the U.S. (for example, foreigners buying a restaurant in Houston), purchases of real estate in the U.S., and holding U.S. dollars.
If, for example, the foreign-owned restaurant in Houston goes bankrupt, the loss is fully borne by its foreign owners; no American is obliged to pay anything on that account to foreigners.
Of course, foreigners do expect positive returns on all of their U.S. investments, regardless of form. But with the exception of Americans’ repayment of principal and interest on funds that they borrowed from foreigners, no returns that foreigners earn on their investments in America are paid by Americans. If the foreign-owned restaurant in Houston is profitable, those profits are newly created wealth – wealth that’s created by that restaurant’s foreign owners.
In the international commercial accounts, when the restaurant’s foreign owners realize returns on their restaurant – say, by being paid dividends drawn on that restaurant’s profits – it appears that Americans are paying foreigners. This appearance comes from the fact that dollars flow from the U.S. to abroad, and so are recorded as payments from America to a foreign country or countries. But this appearance is misleading. America, as such, doesn’t pay those returns to the restaurant’s foreign owners. Nor do any flesh-and-blood Americans pay those returns. Those returns, again, are new wealth created by the restaurant’s foreign owners; economically, those returns are paid to the restaurant’s foreign owners by the restaurant’s foreign owners.
But the international commercial accounts mask this economic reality. What appears in the commercial accounts as payments by America to foreign countries are no such thing. This accounting mistakes geography for economic reality. Untold confusion is unleashed by supposing that, just because these dollar-denominated returns are created in the U.S. and then sent abroad to foreigners, these dollar-denominated returns are necessarily paid by Americans to foreigners.
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
In 2022, Amy Hadley, a mother in South Bend, Indiana, returned to find her home surrounded by police. They were neither in hot pursuit of anyone, nor did they believe they confronted a hostage situation. An officer’s mistaken belief was that a fugitive was active on social media from inside Hadley’s house.
According to court papers, after many commands were shouted by bullhorn at the house (Hadley wasn’t home), the officers fired tear gas grenades through the windows, entered wearing gas masks, punched holes in walls, overturned furniture, and ripped off paneling and wall fixtures, from basement to attic. The gas permeated everything porous.
The fugitive, who was never in the house, was arrested four days later. Hadley and her children slept in her car and elsewhere until the home was habitable. The more than $16,000 of damages was only partially covered by insurance. Government paid nothing because some federal appellate courts recognize (and others do not) a police-power exception to the Fifth Amendment’s takings clause.
It says private property shall not be “taken for public use, without just compensation.” Damaging property while trying to apprehend a suspected criminal is a public use, and the takings clause contains no police-power exception to the requirement of compensation.
…..
For the Institute for Justice, which is representing the plaintiffs in all these five cases, business is depressingly brisk. A 2015 report found that between 1980 and that year, uses of SWAT teams soared from 3,000 per year to 80,000. The militarization of law enforcement has been dramatized by Immigration and Customs Enforcement agents operating with too little training and too much testosterone. The Institute for Justice hopes that the Supreme Court’s textualists will eventually acknowledge the absence of a police-power exception in the takings clause’s text.
The proposed accounts also ignore the data on how people save for retirement. Low-income workers who live paycheck to paycheck cannot afford to lock funds away for decades.
Automatically enrolling lower-income workers in a retirement fund can create more problems than it solves. They are more likely to offset default retirement contributions by taking on debt or withdrawing money early and paying tax penalties. According to Vanguard, 6 percent of workers took hardship withdrawals from the 401(k) plans it administered last year. Households at the lowest income level have the highest early withdrawal rates, with penalties accounting for 43 percent of all taxes paid by individuals with adjusted gross incomes below $5,000.
If policymakers want to help those Trump called “often forgotten American workers” when he announced his proposal, they should focus on simplicity and flexibility. Tax-advantaged universal savings accounts, without withdrawal restrictions or government matching, would do much more to help these families. And all without increasing federal spending.
GMU Econ alum Daniel Smith is au courant on a little-known but instructive Greek economic tragedy.
Pat Lynch isn’t misled by the false allure of the “abundanauts.” A slice:
More recent research agendas, such as “nudging,” fit into this same category, as men of system try to correct “errors” in the way people think and act. Relying on recent developments in behavioral economics, Cass Sunstein and Richard Thaler have argued that choice should be taken out of the hands of individuals and given to the wise professors and researchers who know better.
Whether one is nudging, moving people around on a chessboard, or trying to “optimize” more efficiently than markets, all of these people are men of system. They wish to impose their own vision on society and the individuals who live in it. Some, like [Ezra] Klein and [Derek] Thompson, openly admit that markets freed from burdensome regulations and limits will produce abundant goods at very low costs, but they cannot simply stop there. Instead, they require large planning boards and programs to abscond with that wealth and redistribute it in ways that reflect their preferences, not the preferences of individuals engaged in voluntary exchanges.
The Abundance Agenda, such as it is, reflects the need of intellectuals to manage the lives of others, not accept the lives that normal people wish to lead. Average people would love abundance, along with the cheaper and more abundant goods and services that would be created. But to allow that and then expand the regulatory power of the state’s fiscal redistribution defeats the entire purpose. Absolutely, let abundance happen. But we already have an agenda for it: it’s called freedom and responsibility.
Eric Boehm decries Commerce secretary Howard Lutnick’s hypocritical hostility to globalization. A slice:
The first year of the second Trump administration has been defined by an economic and foreign policy that treats the movement of people and goods around the globe as not merely suspect but actively harmful to Americans’ well-being.
In January, Commerce Secretary Howard Lutnick set the bar for demonstrating how bizarre—and wrong—that logic is. While addressing the World Economic Forum’s annual gathering in Davos, Switzerland, Lutnick declared that the decades-long project of economic liberalism had been, in fact, a terrible mistake.
“The Trump administration and I are here to make a very clear point: Globalization has failed the West and the United States of America,” Lutnick said. “It has left America behind.”
Has it? It’s difficult to square that conclusion with Lutnick’s own life. His grandfather ran a dry cleaning business in the Bronx. His father was a history professor. Lutnick became the CEO of a New York–based investment bank, Cantor Fitzgerald, in 1990 and is now a billionaire (and a senior official in the federal government to boot). If that’s a trajectory that suggests failure, we should all hope to be so unlucky.
The idea that globalization has failed America is equally incompatible with the facts. The most blunt way to measure a country’s prosperity is by looking at gross domestic product per capita, which measures economic output per person. In 1990, when Lutnick took over at Cantor Fitzgerald, America’s GDP per capita was about $40,000 (in inflation-adjusted terms). Last year, after three and a half decades largely defined by the globalization that Lutnick now derides, the U.S tallied a per capita GDP of more than $70,000. In real terms, America is far wealthier today.
But workers aren’t paid with increasing GDP stats, as the illiberal right likes to point out. The good news, however, is that wages have also climbed considerably. Average hourly wages have increased from about $20 to over $36 in the past 20 years. The number of households earning over $100,000 annually (adjusted for inflation) has tripled in the past 50 years, while the number of those earning less than $35,000 has declined.
In light of comments filed by Cato’s Scott Lincicome and Chad Smitson in response to USTR’s Section 301 investigations, the new NBER working paper carries an important message: trade balances do not tell the whole story. The administration is attempting to assess foreign economies using broad, national-level macroeconomic indicators such as trade surpluses and excess capacity. However, as the authors of this paper have explored, these metrics are shaped by structural domestic forces—demographics, financial repression, and weak household demand—that tariffs cannot address.
The Editorial Board of the Wall Street Journal reports on “Virginia’s race to the Gerrymander bottom.” Two slices:
Trump’s redistricting gambit backfires as Democrats rig districts in states they run.
…..
The nationwide gerrymander upshot is that Republicans are likely to break even on new seats at best and could end up losing on net if the building Democratic wave ends up hitting ballot boxes in November. Democrats now have a six point edge in the “generic” test of which party they want to represent them in Congress.
The main accomplishment of this gerrymander free-for-all will be to further polarize the U.S. House. The number of competitive seats in the general election will shrink. Party primaries will increasingly be the only real competition, and that will drive candidates to court the most partisan voters. The result will be more fools and posers like Marjorie Taylor Greene and Jasmine Crockett in Congress.
Here’s the abstract of a new paper by my old friend Roger Koppl:
Standard economic models assume a common event space shared by all agents and the observing economist. This assumption is present in Aumann’s (1976) agreement theorem and in related work on expected utility, bounded rationality (Simon 1955), ambiguity (Gilboa and Schmeidler 1989), and unawareness (Dekel et al. 1998). It is ubiquitous. This paper argues that event spaces are often subjective, evolving, and incommensurable across agents and that assuming otherwise can obscure important economic phenomena. Recognizing subjective event spaces has concrete implications for economic analysis. It yields a principled case for institutions that sustain viewpoint diversity, illuminates the epistemic risks of monopoly expertise and the mechanisms of expert failure, undermines the confidence of paternalist interventions grounded in behavioral economics, and clarifies the long-standing difficulty of central planning and industrial policy.
Paul Mueller, Lydia Mashburn Newman, and Pete Earle discuss the 2008 financial crisis.
… is from page 125 of Thomas Sowell’s Compassion Versus Guilt, a 1987 collection of some of his popular essays; specifically, it’s from Sowell’s November 8th, 1985, column titled “A Political Glossary”:
“equal opportunity”: preferential treatment
“non-judgmental”: blaming society
“compassion”: the use of tax money to buy votes
“insensitivity”: objections to the use of tax money to buy votes
