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… is from pages 286-287 of Johan Norberg’s marvelous 2023 book, The Capitalist Manifesto:

[C]ompetition for resources and positions does not disappear because they are distributed politically instead of according to supply and demand. On the contrary, in capitalism we search for opportunities for mutual gain, while in economies based on distribution from the top we begin to see other groups as threats because what they take is something we do not get.

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Here’s another letter to a protectionist who, alas, is of a type that is all-too-common today.

Mr. Seligman:

With respect, your continuing efforts to defend protectionism get weaker and weaker. Now you accuse us economists of being in error when we point out that resources are scarce. Your evidence for the remarkable proposition that resources aren’t scarce is that fracking and other innovations have made petroleum and other resources more abundant than they were in the past.

You’re seemingly unaware that economists (who you admit to holding in disdain) have long recognized that innovation in market economies makes resources more abundant over time. Indeed, one of my great heroes is the late Julian Simon, who featured this reality front and center throughout his work. But greater abundance over time no more enables society to escape the bounds of scarcity than your rising income over time allows you to escape those bounds. A dollar that you spend on a loaf of bread is a dollar that you can no longer spend on anything else – a reality that is no less true today when your income is higher than it was yesterday when your income was lower.

Every barrel of petroleum, every roll of steel, every ton of copper, every square foot of every factory and every farm, every hour of every worker’s time, every exertion of ingenuity by every entrepreneur, and every quantum of every investor’s willingness to bear risks – every unit of every input that you can name other than air – is scarce. No particular unit of any resource can be in two places at one time. Using a unit of any resource to produce output X necessarily prevents that resource-unit from being used to produce countless other outputs – other outputs that, were that resource-input superabundant, would have been produced.

But suppose I’m wrong, and you’re correct that resources aren’t scarce. Your case for protectionism remains invalid.

If, as you say, resources aren’t scarce, then there’s no obstacle to increasing the domestic production of whatever outputs you fancy, by as much as you fancy. In your world of no resource scarcity, the outputs of the U.S. steel industry, of the U.S. automobile industry, of the U.S. chemical industry, of any U.S. industry you can imagine (and even of those that you can’t imagine) can be expanded as far as you please without the government having to impede Americans’ purchases of imports. It is precisely because you realize, if only in your gut, that resources are indeed scarce that you perceive a need for protectionism to draw resources into the industries that you believe should grow.

You, of course, will dismiss the above argument because it comes from – gasp! – a professor of economics. But as a fellow human being, not as a professor, I challenge you to identify the flaw in my argument above. Dismissing my argument solely because I’ve spent most of my career in a classroom puts your case for protectionism in a very poor light.

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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In a new paper published by AIER I do my best to clear up the confusion that leads Oren Cass, Robert Lighthizer, and many other protectionists to mistakenly conclude that the case for a policy of free trade overvalues consumption and undervalues production. Two slices:

Discounting consumption and elevating production is superficially appealing. Cass, Lighthizer, and others who do such discounting achieve, in many eyes, an aura of mature sophistication and gravitas that seems unavailable to people who insist that, ultimately, economic activity’s only goal is consumption. Consumption is enjoyable and easy, and we willingly pay to do it. Working, in contrast, is often hard and is never so enjoyable that we willingly do it without being paid. Consumption is an activity that we naturally want to engage in. Unlike laboring, consumption is its own reward and, hence, its own motivation. Because consumption is naturally attractive to humans, we’ll do too much of it if we’re not properly incited to control our urge to consume. In contrast, working — the exertion of time and effort to produce — is not its own reward; we’ll do too little of it unless we’re properly incited to put forth productive effort.

Furthermore, consumption requires neither skill nor self-control. We consume from the moment we’re conceived and continue to be only consumers throughout childhood. But to produce, we must have at least minimal skill and self-control. While even the most aimless and immature individuals can and do consume, production requires maturity and competence. Not everyone does it. Unsurprisingly, prosperous societies develop norms and attitudes that laud and encourage dispositions toward productive activity as they also temper our natural eagerness to consume.

Protesting against Adam Smith’s insistence on the primacy of consumption thus seems to be merited, and perhaps even praiseworthy. Consumption, it appears, is valued above all and exclusively only by the frivolous, myopic, and childish. People who are serious, prudent, and mature understand that production is no less important — and perhaps even more important — than consumption.

A Category Error

Protestors against Adam Smith’s insistence on the primacy of consumption are mistaken. They commit a category error. They presume that production is in the same category of activities as consumption. Specifically, these anti-Smithians presume that production and consumption are alternative, competing human ends. It follows from this presumption that prudent societies aim to achieve an optimal mix of production and consumption, while imprudent ones aim for excessive consumption and too little production. But, as noted, this presumption is mistaken. As economic activities, production and consumption differ from each other categorically. Production is a means toward the fulfillment of human ends (whatever these might be); consumption is the satisfaction of these ends. Production (the means) and consumption (the ends) are not traded off against each other as a consumer trades off one good against another good.

…..

Any activity that will be performed only if the persons performing it are paid to do so is obviously not an end in itself; that activity is not its own reward or its own motivation. That activity is obviously a means. Activities that people pay to engage in are ends. These activities are what Adam Smith meant, and what all sensible economists today mean, by “consumption.” If work in a particular job were an end in itself, the individuals performing that job would not only not have to be paid to do it, they would pay to do it. The need to pay people to work — the need to pay even those persons who enjoy their jobs to work — proves that work is not an end in itself. Likewise, the need to pay firm owners to produce the outputs they produce and make available for sale proves that those production activities are not ends in themselves. As indispensable and praiseworthy as they unquestionably are, work and production are not ends. Work and production are means. Consumption is the end.

To Be Productive, Workers and Other Input Suppliers Must Heed the Demands of Consumers

The end is consumption: “To produce” is necessarily “to increase individuals’ ability to satisfy their consumption desires.” Those activities, and only those activities, that further people’s ability to consume are productive. To spend time, effort, and resources baking sawdust-and-maggot pies would be wasteful, not productive. To be productive, therefore, workers and resource owners must have some way to determine which of the gazillion possible different ways these inputs can be put to use has the greatest likelihood of satisfying as many actual consumption desires as possible. Without this knowledge, work effort and resource use will almost certainly be wasteful rather than productive.

Free to spend their own (and only their own) money expressing their demands for different goods and services, “sovereign” consumers interact with suppliers who are equally free to use their own (and only their own) resources to produce and offer outputs for sale. The resulting exchanges result in market prices that simultaneously inform and incite resource owners to use their resources in ways that generate outputs of the greatest value to consumers. F.A. Hayek’s 1945 paper “The Use of Knowledge In Society” is justly credited as showing that prices — including wages and interest rates — allow enormous amounts of knowledge, dispersed today across billions of minds and millions of square miles, to be used in ways that generate modern prosperity. The knowledge put to daily, productive use in markets could not possibly be gathered, sent to a central location, and processed usefully by government officials. Therefore, to override markets in an attempt to allocate resources by conscious design in units larger than small bands is little better than an attempt to usefully allocate resources by throwing dice or by using some other method of random chance.

One consequence of this reality is that if genuine production is to occur in a group of people larger than a few dozen, the only reliable means of getting sufficient information about which uses of resources are productive and which aren’t is the market price system. By responding to market prices, individuals in their capacity as producers combine different resources into outputs for sale to consumers. Outputs bought by consumers in sufficient quantities and at prices sufficiently high to keep the production operations going are more valuable than the outputs that would have been produced had inputs been used differently. Using inputs to produce outputs sold at prices that cover their costs of production is productive; using inputs to produce outputs sold at prices that do not cover their costs of production is wasteful. Although in both of these cases workers exert effort to transform physical matter from some forms into other forms, production occurs only when outputs exceed costs.

Oren Cass, Robert Lighthizer, and others who attempt to justify protective tariffs on the grounds that production be given its appropriate weight (relative to consumption) are thus mistaken. Protective tariffs do, of course, protect particular producers from competition and, therefore, enable these producers to continue to be paid to perform their long-standing jobs. These work activities appear to the uncritical eye to be productive. Also, the individuals who perform these protected activities no doubt feel as though they are being productive. But here, appearances and feelings deceive.

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The Editorial Board of the Wall Street Journal busts the myth that Trump’s tariffs will bring in enormous amounts of revenue. A slice:

The truth is that tariffs are still a small share of federal revenue. Customs duties, which include tariffs, have raised $108 billion so far this fiscal year. June was the highest monthly level so far, but even on an annual basis that’s about $300 billion a year. That’s not nothing, but it won’t balance a $7 trillion spending budget, despite Mr. Trump’s occasional suggestions that tariffs might offset the income tax.

Keep in mind that a tariff is a tax, and when you tax something you get less of it. One weakness of tariffs as a revenue vehicle is that they restrain trade in goods and thus can raise less revenue than anticipated on a static basis. That’s even more likely if a trade war dampens overall economic growth.

John Puri reports that “Trump’s tariffs are not going well.” A slice:

The Budget Lab at Yale updates its estimates of Trump’s second-term tariffs every few days — almost as often as he changes them. As of July 13, the average U.S. tariff rate on imported goods is now 20.6 percent, an increase of 18.2 points from before Trump took office. Even after import patterns shift in response to existing tariffs, the average effective rate will fall only to 19.7 percent, a 17.3 point increase, which is the highest since 1933.

Assuming that existing tariffs stay in effect for ten years, the Budget Lab projects that they will transfer nearly $3 trillion from American consumers and businesses to the federal government’s coffers. They increase consumer prices by 2.1 percent in the short run, costing the typical household almost $2,800 per year.

Liz Wolfe – like everyone else not currently holding the office of President of the United States – is understandably mystified by the ever-increasing wildness of Trump’s tariff announcements. Two slices:

What’s his game plan? On Saturday, President Donald Trump threatened to impose 30 percent tariffs on Mexico and all European Union countries, for seemingly no reason whatsoever.

“Mexico has been helping me secure the border, BUT, what Mexico has done, is not enough,” Trump wrote in a letter to Mexico’s president. “Mexico still has not stopped the Cartels who are trying to turn all of North America into a Narco-Trafficking Playground.” (I suppose that’s a reason, but if his expectation was that Mexico could just stop cartels between April’s tariff announcement and now, that seems like an unrealistic goal.)

…..

But Mexico and the European Union together account for a full third of U.S. imports. And even if Trump perceives tariff levels as a useful foreign policy instrument when negotiating with Mexico and trying to reduce drug flow into the United States, it’s not clear why he’d be targeting Europe in much the same manner. What does he hope to get, exactly?

Trump’s tariff approach seems basically to be “flood the zone.” Flood the zone with chaos and constant changes, so nobody knows the current levels and so nobody can realistically plan for the future. The only certain thing is that the future will have less free trade: “Since Mr. Trump came into office in January, the average effective U.S. tariff rate has soared to 16.6 percent from 2.5 percent, according to tracking by the Budget Lab at Yale University, a nonpartisan research center,” per the Times.

Here’s the abstract of a new paper by Enghin Atalay, Ali Hortaçsu, Nicole Kimmel, and Chad Syverson: (HT Tyler Cowen)

We examine the recent slow growth in manufacturing productivity. We show that nearly all measured TFP growth since 1987—and its post-2000s decline—comes from a few computer-related industries. We argue conventional measures understate man- ufacturing productivity growth by failing to fully capture quality improvements. We compare consumer to producer and import price indices. In industries with rapid technological change, consumer price indices indicate less i

“Hundreds of ‘Alligator Alcatraz’ detainees don’t have criminal records.”

A penny for Mike Munger’s thoughts.

GMU Econ alum Dominic Pino is right that FDR was right about the (dangers of) public-sector labor unions:

Public employees in Philadelphia got basically the same wage increase Mayor Cherelle Parker initially offered them, but their union, AFSCME District Council 33, stunk up the city first, with garbage workers going on strike for eight days. They shouldn’t have the power to do so, I argued in my latest piece for the Washington Post:

The union can ask whatever it wants. It shouldn’t expect 1.6 million people to wallow in filth because 10,000 of its members are upset with their compensation. Yet public-sector unions can’t help but impose upon the public, which is why they should not be allowed to collectively bargain in the first place.

That might sound like a radical position, but it’s the one that prevailed in the United States until the 1960s. President Franklin D. Roosevelt, who signed the National Labor Relations Act and was one of the strongest proponents of private-sector unions in American history, opposed public-sector collective bargaining in the strongest terms.

Read the whole thing here.

Arnold Kling offers further thoughts on political realism. A slice:

Meir Kohn says that there are two types of modern societies. There are commercial societies, in which decisions and norms emerge from win-win interactions. There are tribute societies, in which the rulers tell people what to produce and what to consume. He says that these two types have existed for a long time, and the names “capitalist” and “communist” are just recent labels for these older forms of social order.

The tribute society is what North, Weingast, and Wallis call the Natural State, or a limited-access order. It is stable because all of the organized groups with a capacity for violence are bought off by their share of the tribute extracted from the population. A commercial society is what NWW would call an open-access order. It is stable because everyone in the society has a stake in its perpetuation.

Of course, the theory of Public Choice tells us that there is a lot of tribute-collection going on in democracies. I think that the main difference with a limited-access order is that in an open-access order no one is automatically excluded from starting a business or forming a political party.

Here’s wisdom from Matthew Hennessey. A slice:

As someone who consumes a lot of news, I’ve had to train myself to tune out a steady stream of new nonsense. It’s a matter of professional hygiene. Certain names and narratives go right into the spam folder. Time is precious. Nobody has infinite powers of concentration. Without these filters in place, I’d be too mentally scattered to do my job—or any job.

Jeffrey Epstein tops my list of things not to think about. The guy was a conniving, perverted blackmail artist. That’s all anyone needs to know. It isn’t news that some people can’t resist a conspiracy theory. Sad, but not news.

Also not news: Airplane contrails, the benefits of vaccines, Bill Belichick’s young girlfriend and summer heat. We need not overextend ourselves trying to deconstruct the obvious. Sadly, we sometimes need to rouse ourselves to beat back stupidity.

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… is from page 550 of Douglas Irwin’s superb essay “Adam Smith and Free Trade,” which is chapter 32 in the 2016 volume, edited by Ryan Patrick Hanley, Adam Smith: His Life, Thought, and Legacy:

Smith argued that there is no country in which “the approaching ruin has not frequently been foretold” by an unfavorable balance of trade. Yet despite all the anxiety and the vain attempts by policy makers to turn the balance of trade in their favor, Smith did not believe that any country had been impoverished because of this cause. Instead, he maintained, “in proportion as they have opened their ports to all nations; instead of being ruined by this free trade, as the principles of the commercial system would lead us to expect, have been enriched by it.”

DBx: By “the commercial system,” Smith here means what we today call “mercantilism.”

A quarter of a millennium after Smith made this observation, the antediluvian superstition surrounding so-called “trade deficits” continues to haunt the body-politic and to be regarded – by the press, pundits, politicians, professors, and the judiciary – as a scientifically relevant concept that can legitimately be taken into consideration by those who make trade policy. It’s as if those who make health-care policy still believe in the reality and centrality of the four humors of blood, phlegm, choler, and black bile – and have concluded that, in the patient, these phenomena are now out of balance with each other.

The “balance of trade” is as foolish a concept as is the “balance of humors.”

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Here’s a letter to someone who is all-too-typical of protectionists: A person who, being utterly unfamiliar with the most basic bits of economics, mistakes his ignorance for insight.

Mr. Seligman:

Frustrated by your inability to effectively refute on Facebook those of us who oppose Trump’s tariffs, you blurt out this accusation: “Economists are All Knowing or at least they think so.”

Nothing could be sillier.

Those who fancy themselves to be all-knowing are protectionists, for it is they who insist that Americans are currently producing too few manufactured goods (or too few of whatever outputs happen to be on the protectionists’ menu du jour). It is protectionists who claim to know that more Americans should be working in manufacturing, and it is protectionists who assert that America would be better off if foreigners invested less in the U.S. and instead bought more U.S. exports.

In response to this protectionist pretense of possessing superhuman knowledge, economists point out that neither you nor any other protectionist can possibly know what you presume to know. You cannot possibly know, beyond that which actually prevails, what is the ‘right’ mix and kinds of imports and exports. Ditto for the ‘right’ mix of employment types, as well as for the ‘right’ mix of foreign investments. We economists go on to note that the only remotely reliable source of such knowledge is the market – the freedom of individuals to spend and invest their money in whatever peaceful ways they choose. By supporting free trade, economists defend the economy from protectionists, who – when they’re not simply pleading for ill-gotten gains – are inebriated with intellectual arrogance.

Although we economists never presume to be all-knowing, when discussing trade we do not shy away from expressing knowledge of two realities that protectionist routinely ignore or deny. The first is that every resource has alternative uses; more workers and capital cannot be shifted to industry A without causing the amount of labor and capital available to be used in industries B, C, …, N to be less than otherwise. The second, again, is that no one knows better than the market what is the ‘right’ mix of imports, exports, capital flows, and employment types.

If you and other protectionists came to know these two realities, you would escape the hubris that leads to you endorse government superintendence of how people spend their own money. And you would then correct the inaccuracy of your Facebook scream by replacing the word “Economists” with “Protectionists.”

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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George Will is favorably impressed with Stephen Macedo’s and Frances Lee’s In Covid’s Wake: How Our Politics Failed Us. Two slices:

The worst public health crisis in 100 years became arguably the worst public policy failure in U.S. history because of social pathologies that the pathogen triggered. The coronavirus pandemic is over. What it revealed lingers: intellectual malpractice and authoritarian impulses infecting governmental, scientific, academic and media institutions.

This is unsparingly documented by two Princeton social scientists, Stephen Macedo and Frances Lee, in “In Covid’s Wake: How Our Politics Failed Us.” The most comprehensive and aggressive mobilization of emergency powers in U.S. history, wielded with scant regard for collateral consequences, exacerbated inequalities, included “extraordinary restrictions on free speech” and constituted a “stress test” that “the central truth-seeking departments of liberal democracy: journalism, science, and universities” frequently flunked. Macedo and Lee say the “moralization of disagreements” stifled dissent, employing censorship and shaming.

Incantations to “follow the science” obscured this: Science cannot “tell us what to do” because gargantuan government interventions in society involve contestable judgments across the range of human values. And large uncertainties, requiring difficult choices demanding cost-benefit analyses that were neglected during the pandemic.

The authors, self-described as “on the progressive side,” detail how “the class biases of pandemic restrictions” favored the “laptop class” of knowledge workers and others able to work remotely. “Essential workers,” about one-third of the workforce, largely working class and disproportionately minorities, were expected to carry on. There was no historical precedent for success in what was attempted: using non-pharmaceutical interventions — lockdowns, social distancing, masking, etc. — to stifle a pandemic. And there was, Macedo and Lee report, “no relationship between the stringency of state” restrictions and covid mortality rates.

…..

“The ‘pandemic,’” write Macedo and Lee, “was routinely said to have closed schools, businesses, theaters, travel, and so on, rather than government officials’ decisions.” The authors have produced the most dismaying dissection of U.S. policymaking since David Halberstam’s Vietnam War policy autopsy, “The Best and the Brightest.”

Their book is more dismaying, but also exhilarating. Vietnam revealed the insularity and hubris of a small coterie of foreign policy shapers. Macedo and Lee identify much broader and deeper cultural sicknesses. But their meticulous depictions and plausible explanations of the myriad institutional failures demonstrate social science at its finest.

Wall Street Journal columnist Mary Anastasia O’Grady is unfavorably impressed with Trump’s tariffs on Brazil punitive taxes on Americans’ purchases of goods from Brazil. Two slices:

President Trump fired off a letter to Brazilian President Luiz Inacio “Lula” da Silva Wednesday announcing new 50% tariffs on imports from the South American behemoth. Lula immediately pledged to retaliate.

If both sides carry through on their threats, a trade war is on between the two largest countries in the Western Hemisphere. Lucas Ferraz, a former Brazilian secretary of foreign trade, estimates that the new tariffs could spark a 75% drop in Brazilian exports to the U.S. But it won’t be a party for American businesses either. Brazilian commodities fuel American consumption and production. Notwithstanding Mr. Trump’s assertions to the contrary, the U.S. has a trade surplus with Brazil. American exporters, particularly industrial manufacturers, will be harmed if they lose market access to this huge middle-income economy.

…..

Three months after Mr. Trump’s “Liberation Day,” announcing a spike in U.S. tariffs, we still don’t know the objective of White House trade policy. Some weeks it’s about ridding the U.S. of current account deficits. Sometimes the administration seems happy enough to be collecting “billions and billions” in new tax, er tariff, revenue to offset fiscal deficits. In other instances the big, beautiful endgame appears to be autarky.

Peter Earle makes clear that “Trump’s copper tariffs will hurt US industry — and help China.”

Jason Willick reports on a new study that finds that suppressing shareholder capitalism and enlarging “stakeholder capitalism” allows – among other negative effects – corporate managers to feather their nests unjustly. A slice:

And far from unleashing egalitarianism and social nirvana, the relaxation of shareholder oversight in Nevada appears to have prompted CEO pay to increase and become less tied to business performance. Environmental, social and governance (ESG) scores — which try to measure responsible business practices — fell by 15 percent.

As the authors put it: “If insiders pursued more actions favorable to stakeholders as a result of the law, we would expect the ESG performance of firms to increase. We find that instead ESG performance worsens significantly.” Liberating corporate officers from the tyranny of the shareholder oversight does not necessarily make them more socially enlightened.

The Editors of National Review argue that “the Milei ‘miracle’ is a vindication of free markets.” A slice:

Argentina’s economy is growing at 7.7 percent, according to the latest year-over-year data. It grew by 1.9 percent in April, the most recent month for which data are available. The Chinese economy is growing at a rate of about 5 percent per year (if you believe the official statistics, which there are good reasons to doubt).

Argentina is achieving this growth not through a strategic industrial policy or a mercantilist trade policy. It’s achieving it by rolling back the overextended public sector, slashing the government budget, controlling the money supply, and removing price controls.

Milei eliminated rent controls in Buenos Aires, and the apartment market was flooded with new properties and the average real price went down. He turned a budget deficit into a surplus in his first full year in office. He eliminated half of the country’s cabinet departments.

When Milei took office in December 2023, inflation was 25 percent per month. In May, it was 1.5 percent. The initial shock of the policy change led to a spike in the poverty rate, but it has been falling since the second half of last year and is now lower than when Milei became president.

Wall Street Journal columnist Andy Kessler explains that the results of Europe’s interventionist policies are not a vindication of economic interventionism. Three slices:

In 2008, the U.S. and Eurozone economies were about the same size. Since 2010, Europe’s per capita gross domestic product has basically flatlined. Today, the U.S. nominal GDP per capita is almost twice as large as Europe’s. Why? Recently, this paper ran side-by-side headlines: “EU Moves to Extend Climate Goals” and “Eurozone Joblessness Reached 6.3% in May.” (It’s 4.1% in the U.S.) As the Romans used to say: Causae et effectus.

I never thought I’d write these words, but Al Gore is responsible for America’s success in leaving Europe in our dust. He spewed climate-change rhetoric based on flawed models, and Europeans believed him. The German Renewable Energy Sources Act pushed solar panels in not-always-sunny Düsseldorf and elsewhere. High-cost renewables are 55% of the Germans’ energy generation—a burdensome tax on citizens. And Russian natural gas is their backup strategy!

…..

Quick, name a valuable European technology company. Nokia? Ericsson? OK, how about this century? Here you go: Germany’s SAP is growing again because of cloud computing. Great. Dutch ASML, which makes specialized equipment to manufacture semiconductors, is worth $313 billion, down 20% from its year-ago peak. Novo Nordisk and its diabetes-busting weight-loss drug, Ozempic, was for a while worth more than the GDP of Denmark but has since halved due to competition from Eli Lilly and others. Meanwhile, search, social networks and artificial intelligence are a multitrillion-dollar U.S. phenomenon. Our top four publicly traded companies are worth more than all 402 in the MSCI Europe Index. Ouch.

…..

Despite self-inflicted wounds like last week’s copper tariffs and our on-again, off-again going goo-goo for greens, the U.S. is a relative free-market paradise. Whatever the Europeans did on their road to stagnation, let’s make sure we don’t. The ingredients include large government, socialized medicine, limited-hour workforce, anti-innovation Luddite policies, rabid regulatory mandarins, unaccountable plutocrats and antirisk capital markets controlled by large banks.

Shedding central planning’s jackboot works. Ask Poland, which instituted market reforms and a digital focus. Its nominal GDP per capita has grown approximately eightfold since the last Soviet troops left in 1993. It is Europe’s sixth-largest country by GDP and the EU’s fastest-growing large country.

In April, in a discussion about currencies, Larry Summers said, “Europe’s a museum in some ways, Japan’s a nursing home, China’s a jail and Bitcoin’s an experiment.” Sadly, I think Europe is the jail—at least its economy is stuck in a Bastille-like prison, ruled by climate despotism. Where is the key to unlock Europe’s economy?

Kihwan Bae, Conor Norris, Morris Kleiner, and Edward Timmons explore the effects of occupational licensing on earnings differences within the U.S.

Roger Pielke Jr. reports on “what Americans really think about energy and climate.”

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… is from pages 250-251 of Johan Norberg’s marvelous 2023 book, The Capitalist Manifesto [footnotes deleted; links added]:

Long-distance trade is often blamed for creating more emissions and we are encouraged to buy local products. After reviewing the research, Hannah Ritchie from Our World in Data writes: ‘While it might make one intuitively – after all, transport does lead to emissions – it is one of the most misguided pieces of advice.’ The reason it sounds intuitive is that we overestimate the environmental impact of transport compared to other factors. According to a review of the average European diet, transportation does not account for more than 6 per cent of the average grocery bag’s climate impact, and much of it is the last mile – from store to home. The rest coms from land use, production and storage. Surveys of such diverse goods as shoes, beer and iPads show similar results – nine-tenths of the emissions come from something other than trade. This means that the green choice may counter-intuitively be to buy something from the other side of the globe if it can be produced in a little more environmentally friendly way than it can locally, such as onions from New Zealand or roses from Kenya instead of from the Netherlands, where the same rose gives rise to emissions more than five times larger.

DBx: Indeed so. See also this short video.

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Alex Tabarrok shares this telling graphic from the Financial Times.