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

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

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

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

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

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My friend and former Mercatus Center colleague Dan Griswold has this excellent letter in today’s Wall Street Journal:

In his review of “Red Dawn Over China,” (“A Maoist Myth Debunked,” Books, Feb. 14), Tunku Varadarajan asserts that China’s admission to the World Trade Organization in 2001 had “devastating consequences for every economy except China’s own. (Thank you, Bill Clinton.)” The facts say otherwise.

It’s true that the U.S. economy shed a net five million manufacturing jobs in the years that followed, but even the “China shock” analysis attributes only one million of those to expanding trade with China. Most of the rest were lost due to automation and productivity gains. Meanwhile, tens of millions of U.S. households gained from lower prices for shoes, clothing and other household necessities. The painful recessions of 2001-02 and 2008-09 were homegrown.

If Congress had rejected the accession protocol negotiated by the Clinton administration in 2000, China would likely have joined the WTO anyway, but U.S. companies would have lost out on the increased market access it required. From 2001 to 2017, before the Trump trade wars began, the average duty China applied to goods imported from the U.S. dropped from 25% to 7%. U.S. exports to China during that time grew eight-fold and sales by U.S. majority-owned affiliates in China soared more than 10-fold—totaling more than $500 billion annually.

Trade with China has been tough on certain U.S. companies, but for most Americans—including farmers, high-tech exporters and consumers—the consequences have been positive.

Phil Magness tells the tale of how a tariff fight gave rise to the U.S. federal income tax.

The Wall Street Journal‘s Jack Butler reports Intel’s ‘public-private’ partnership in Ohio, while in progress, is turning out to be slower and less smooth than anticipated. A slice:

Intel selected New Albany for a large semiconductor facility that was supposed to begin making chips by 2025. But Ohio One, as the project is known, has faced repeated delays. Completion now isn’t expected until the early 2030s. “I’d be lying if I didn’t say I was a little disappointed,” Mayor Sloan Spalding said.

Local officials remain confident the project will come to fruition, but its struggles show that public-private partnerships, however welcome, can’t be insulated from market forces and politics.

State actors from economic-development groups to Gov. Mike DeWine worked to secure Ohio One. The state gave $2 billion in “public incentives,” according to U.S. Sen. Bernie Moreno, who in September 2025 released a letter demanding Intel prove this “investment” wasn’t a “charade” or even “potential fraud.”

States compete to land such projects in what Greg Lawson, a senior research fellow at the free-market Buckeye Institute, has called an “arms race.” Gov. DeWine speaks in similar terms, saying, “I can’t unilaterally disarm, and I’m damn well not gonna do it.”

No one disputes chips are essential. They’re in everything from consumer products to military hardware. For backers of Ohio One, they are too important for our supply ever to be in doubt. “There are a lot of things that we don’t make in America that we need to make in America. Chips are part of that,” says U.S. Sen. Jon Husted. As lieutenant governor, Mr. Husted played a role in securing the Ohio One deal.

Ohio leaders backed Intel, but the market has favored Nvidia and other chip makers, who took the lead as Intel’s stock fluctuated and its leadership changed.

The Editorial Board of the Washington Post rightly criticizes what it calls “the dumbest way to lower beef prices.” A slice:

Senate Minority Leader Charles E. Schumer (D-New York) and a dozen of his most liberal members introduced a bill on Thursday aimed at forcing meatpackers to process only one type of meat. In other words, a company that sells chicken can’t also sell beef. That arbitrary rule would force big firms like Cargill and Tyson Foods to shrink as they sell or spin off different divisions.

Four companies, including two Brazilian-controlled firms, currently process about 80 percent of America’s beef. The Democrats want to give power to the Federal Trade Commission to compel foreign-owned meat companies to divest U.S. assets, and President Donald Trump has made noises about investigating the industry.

Ground beef prices went up 17 percent last year, and Democrats see political upside where Trump senses danger. Yet it’s not market consolidation or dastardly foreigners keeping prices high. Big companies, on average, sell at more competitive price points than a shopper could get directly from a farm.

It’s already a notoriously difficult business. Tyson’s net profit margin last fiscal year was just 0.9 percent. Cargill’s estimated profit margin was just over 2 percent in 2023.

After breaking up the existing industry leaders, the Democratic bill envisions a host of government subsidies — including financial assistance and loan guarantees — to help small businesses acquire and operate meatpacking plants. Yet the real solution is expanding supply, not fragmenting the industry.

Jack Nicastro reports that “California billionaire wealth tax would cost the state $25 billion.” A slice:

In November, Californians will consider a ballot measure to implement a 5 percent wealth tax on billionaires, which proponents say will generate $100 billion in revenue. It turns out the tax would probably cost the Golden State nearly $25 billion.

That’s the result from a new study out of Stanford University’s Hoover Institution, which was published earlier this week. In this study, researchers analyzed the reported and unreported departure of billionaires from the state, as well as flaws in the tax proponents’ modeling, to find that the law would reduce revenue to the state’s coffers.

“Over 100,000 simulations with varying discount rates, wealth tax revenues, and lost income tax revenues associated with departures, we find that 71% of scenarios in which the Act is instituted yields a negative [net present value], signaling the Act would generate a net cost to the state of California,” the researchers wrote in a Thursday Substack post. The “average across these draws,” they say, “is –$24.7 billion.”

Scott Lincicome tweets:

“‘Customs does have automated systems to process refunds,’ said David Cohen, a partner at Sandler, Travis and Rosenberg. ‘Yes, the magnitude is unprecedented, but the tariff refund process takes place routinely.'”

They just don’t want to do it.

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… is from page 177 of my GMU Econ colleague Mark Koyama’s, and his co-author Jared Rubin’s, superb 2022 book, How the World Became Rich :

People living in wealthy countries who are at the bottom of today’s income distribution are better off on most fronts than almost everyone who ever lived prior to 300 years ago.

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Regardless of your assessment of the merits and demerits of the U.S.-Israeli bombing of Iran, that bombing raises the real risks faced by commercial shippers. This reality should be reflected in higher insurance rates paid by those shippers. Yet predictably – as Tad DeHaven here points out – Trump is now trying to mask this reality by using taxpayer dollars to subsidize commercial-shippers’ insurance polices. A slice:

Trump’s declarations routinely begin as sweeping assertions of personal control that immediately cause one to ask, “Can he do that?” That fundamental question then spawns a stream of additional questions as his subordinates maneuver to piece together something that resembles the president’s dream. If the DFC can’t be turned into a universal war insurer, the administration will hunt for a substitute that sounds close enough—probably something more narrow, conditional, and bureaucratic than what the president initially claimed.

That’s how you end up with government by improvisation, where the public is supposed to treat the revised and less fantastical version as proof that Trump’s original pronouncement was true—and where the legal and accountability questions keep accumulating because the governing style relies on answering them after the fact.

George Will makes a case that the U.S. president has, and should have, the authority to make war as Trump is now doing in Iran. [DBx: Conversations over the past few days with colleagues and friends who I respect have caused me to question that which I long did not – namely, Congress must pre-approve the use of military force. Will’s column contributes positively to this pondering.] Two slices:

Surprise is a substantial military asset. If the Trump administration had briefed legislators in advance, could it have achieved the targeted killings crucial to its regime decapitation objective — an objective intended to economize violence?

…..

For decades, this column has been a tireless — to some readers, a tiresome — critic of the swollen, often lawless, modern presidency. Now more than ever it is urgent to regard executive power as, in Daniel Webster’s words, “a lion which must be caged.” But conditions, threats, and capabilities change, so moral and political imperatives do, too. Changes in modern circumstances, including technologies, often strengthen, if not the argument for, then the opportunity for, executive unilateralism.

Eric Boehm argues that “Trump’s newest tariffs are an ‘exercise of completely unrestrained executive power.'” A slice:

Last week, for example, conservative legal analyst Andrew McCarthy wrote in National Review that Trump’s Section 122 tariffs are illegal because they do not meet the preconditions outlined in the law.

As McCarthy and others have noted, Section 122 allows presidents to impose tariffs of up to 15 percent for up to 150 days to “deal with large and serious United States balance-of-payments deficits.” The United States does not currently have a balance-of-payments deficit with the rest of the world, and the Trump administration’s attempt to invoke this law in response to trade deficits ignores the law’s plain language.

Indeed, Trump’s attorneys even admitted as much during the legal battles over the IEEPA tariffs. When that case was before the U.S. Court of Appeals for the Federal Circuit, the administration’s lawyers pointedly noted that balance-of-payments deficits are “conceptually distinct” from the trade deficits and admitted that Section 122 would not apply.

In the lawsuit filed Thursday, the states’ attorneys note the federal government’s response in the previous lawsuit. When it comes to Section 122, they argue, Trump has not identified “any actual justification permitted” by the law.

“The President cannot meet the statutory requirements of Section 122, and his effort to impose tariffs under this statute is unlawful,” the states argue.

Also writing about the legal challenges to Trump’s latest round of tariffs is Ilya Somin.

Well, whaddaya know?! Beijing’s economic interventions are making China’s economy weaker – so reports the Editorial Board of the Wall Street Journal. A slice:

Various trade-in programs to subsidize household upgrades of everything from appliances to mobile phones haven’t triggered a durable shift toward greater domestic consumption. And now Beijing has cut the budget on those subsidies in the latest fiscal plan.

China’s economy can still grow despite these policy failures. And its relatively closed financial system allows it to avoid financial panics or crashes if its plans don’t work. Foreigners will continue to visit China and be impressed by corners of the economy that are working—some of which, such as AI, pose serious strategic challenges to the West.

But the Chinese economy isn’t the juggernaut of Communist myth that America should emulate. Its top-down model of political control is leading to slower growth and fewer gains for the working class.

This letter in today’s Wall Street Journal by Jeffery Wyant makes an excellent point. A slice:

The Northeast’s cost of LNG could be reduced by as much as half if the Jones Act were rescinded (“U.S. LNG Exports to the Rescue,” Review & Outlook. March 3). This 1920 law requires all cargo from one U.S. port to another U.S. port to be shipped on U.S.-built, U.S.-flagged and U.S.-owned vessels—crewed by Americans. Since no U.S.-built ships are large enough to ship LNG to the Northeast efficiently, LNG must be imported from terminals overseas.

To save nonexistent U.S. shipbuilding and crewing jobs, millions of households in the Northeast pay much higher electricity bills than if LNG were shipped directly to the Northeast from the LNG export terminals in Louisiana and Texas.

Arnold Kling ventures some guesses about what AI will bring in 2026.

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

The capitalist deal is: Let me make profits and I’ll make you rich.

DBx: Yep. And despite endless bleating and spilt oceans of ink to the contrary, it’s a darn good deal. If you doubt it, walk into a Kroger or Walmart, or visit Amazon.com, or observe the HVAC unit in your home or workplace. Ponder these apparently mundane realities and ask yourself: Where does all this stuff come from?

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Here’s a letter to the San Antonio Express-News.

Editor:

About the tariffs that President Trump recently imposed under section 122 of the Trade Act of 1974, you report that “Trump has said the tariffs are essential to reduce America’s long-standing trade deficits” (“More that 20 states sue over new global tariffs Trump imposed after his stinging Supreme Court loss,” March 5). Trump does indeed make this claim. However, either he clearly doesn’t believe it, or – if he does believe it – it reveals an ignorance of trade so profound that it cannot serve to justify these new tariffs.

Trump often brags that he uses his tariff-making power to prod foreigners to invest more in America. Because any such increased investment increases America’s trade deficits, Trump’s claim that he needs tariff-making power to reduce America’s trade deficits is wholly inconsistent with his frequent boast about needing tariff-making power to increase foreign investment in America.

In short, Mr. Trump’s express desire to have tariff-making power in order to entice more foreign investment to America belies his claim that he needs tariff-making power to reduce America’s trade deficits. If the courts understand, as they should, that to use tariffs to prod foreigners to invest more in America is to use tariffs to increase America’s trade deficits – and if they further presume that Mr. Trump is acting rationally – they must conclude that the administration’s assertion that it needs tariff-making power to decrease America’s trade deficits is a ruse.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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Phil Magness is correct: “The Supreme Court has just invalidated Trump’s tariff agenda. But the economics were already doing that.” Two slices:

Trump’s tariffs were justified on a series of claims about trade deficits, manufacturing revival, foreign countries paying the bill, and the mass economic benefits tariffs would supposedly generate. One by one, each of these claims has collided with empirical reality. The Court’s decision, therefore, does more than resolve a statutory dispute: it marks the collapse of a narrative about tariffs that had already unravelled under scrutiny.

The path to the Court’s ruling began in March 2025, when President Trump advanced a novel legal theory: that the United States faced an international “emergency” caused by its trade imbalance, defined as the country importing more goods and services than it exports. Trade deficits of this kind, however, have been the norm in the United States since the mid-1970s. What had long been treated as a feature of a globally integrated economy was suddenly reclassified as a national emergency.

On that basis, the administration argued that the IEEPA—originally designed to address foreign threats and sanctions—granted the president authority to “regulate” international commerce by taxing international trade. Tariffs, the argument went, were simply one tool of regulation. Starting with the so-called “Liberation Day” orders issued in April 2025, the administration then implemented sweeping tariffs. These orders were revised, expanded, and recalibrated over the following months, effectively rewriting large parts of the US tariff schedule through executive action.

…..

The “big three” producers in the US car industry—as well as foreign companies that operate plants inside the United States, such as Toyota and Mercedes—have all faced substantial hits. The total price tag for Trump’s tariffs in the automobile sector is currently estimated to be in the tens of billions of US dollars range. Many of these companies have faced higher costs on imported parts and raw materials, even though they were already producing their finished products in the United States.

Here’s GMU Scalia Law professor Ilya Somin on the court order to repay the unlawfully collected tariffs. A slice:

Stepping back from the more legal issues, I would note that the Trump Administration can easily resolve the refund issue simply by giving up this legal fight and issuing refunds to all those forced to pay the illegal tariffs. That would not be hard to do. The government has a record of all the payments and who made them. Calculating interest also is not difficult. The government could just make electronic payments or send checks to all those entitled to them.

Ultimately, the government illegally seized billions of dollars and therefore must pay them back. If I unjustly and illegally take your property, I have a duty to give it back, and pay interest. The same principle applies when the federal government does it. You don’t have to be a legal theorist or a tariff expert to grasp this simple point.

“If you’re a New Yorker in trouble with the law, it might soon be impossible for you to consult your favorite chatbot for legal advice” – so reports Reason‘s Jack Nicastro.

The Editorial Board of the Washington Post is understandably fed up with the unserious Kristi Noem. A slice:

It’s embarrassing that Congress can’t agree on common sense reforms for Immigration and Customs Enforcement to end the partial government shutdown. It might be more embarrassing that the department’s boss doesn’t make much of an effort to act like a responsible steward of that funding.

Walter Olson writes that “we’re not out of the woods on the law firm revenge orders.”

George Leef reviews Lawrence Eppard’s, Jacob Mackey’s, and Lee Jussim’s The Poisoning of the American Mind.

Regardless of your assessment of the wisdom or wantonness of the recent U.S-Israeli bombing of Iran, you surely should have no laments that the evil Ayatollah Khamenei is now no more. Here’s a slice from Jeff Jacoby’s latest column:

Why were Iranians rejoicing? Because for nearly four decades, Khamenei made their lives a waking nightmare. He imprisoned women for showing their hair, hanged gay men in public squares, executed dissidents by the thousands, and ran Evin Prison — where rape and psychological torture were standard practice — as an instrument of state terror.

When 22-year-old Mahsa Amini died in custody in 2022 after being arrested for wearing her hijab improperly, and millions took to the streets in protest, he responded by killing more than 500 of them and imprisoning 22,000 more. When a fresh uprising erupted this past January, he massacred tens of thousands.

Arnold Kling makes the case that “banning social media for children and teens is a FOOL’s errand.”

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… is from page 375 of the original edition of Walter Lippmann’s sometimes deeply flawed but profoundly insightful and still-important 1937 book, The Good Society:

It is just here, I submit, that the ultimate issue is joined, on the question of whether men shall be inviolable persons or as things to be disposed of; it is here that the struggle between barbarism and civilization, between despotism and liberty, has always been fought. Here it must still be fought.