I asked Claude to use World Bank data to calculate per-capita GDP in the median landlocked country relative to per-capita GDP in the median non-landlocked country. No surprise: Per-capita GDP in the median landlocked country is a mere 44 percent of per-capita GDP in the median non-landlocked country.
The Democratic Socialists of America’s (DSA) new platform promises a world without bills. In their utopia, you’d see no rent check. No health insurance premium. No student loan repayment. No electricity bill. Life’s basics, including food, education, medicine, and transportation, would all become “common goods and utilities.”
That might sound appealing to Americans struggling with the cost of living after a bout of high inflation. But it’s just an accounting trick. A bill reflects the price of the service you were provided and how much of it you used. The DSA can socialize that payment, charging an out-of-pocket price of zero while taxpayers cover the tab. It cannot abolish the underlying cost of providing the service.
Nor can it abolish scarcity. A doctor’s time is limited. Apartments in Manhattan are scarce. Only so much electricity-generating capacity is available at 6 p.m. on a hot day in August. All goods and services require finite resources, whether they’re skilled teachers, construction workers, bus drivers, farmland, or whatever else. This is the central constraint nonmarket systems face when suspending market prices.
Market prices help manage that scarcity by conveying information about supply and demand. If a harvest fails, a crop becomes scarcer, and its price rises. That discourages some consumption—often by shifting to similar, lower-price substitutes—while encouraging additional production.
But DSA-style socialists see rising prices as a moral failure. The virtue of prices is not that they identify who is most deserving; it is that they allow millions of strangers to coordinate what they produce and consume without the impossibility of a central authority knowing everyone’s circumstances.
So that leaves the question: if not market prices, then what? What system of rationing replaces it? And who does get the bill?
And that bill from the DSA will be huge – as is made clear by Reem Ibrahim.
Mamdani has not helped matters by singling out successful individuals. The mayor recorded a video earlier this year outside the apartment building where billionaire investor Ken Griffin lives. The stunt was an uncalled-for attack on someone whose alleged sin is owning a penthouse in the world’s financial capital.
Mamdani’s list is still live, and the mayor’s office seems to have no intention of taking it down. Podcaster Scott Galloway, who previously supported the tax, complained that the list “doxed” him, and he accused Mamdani of using it as a “wanted poster.” A Democratic City Council member said she is rethinking her support for the levy after seeing her primary residence of 30 years included on the list and hearing from many angry constituents.
Written before Jason Array’s suicide, this piece on Arday by John McWhorter is nevertheless superb. A slice:
The problem is that what is obvious is probably not very complicated—never mind that what Arday thinks is obvious is a vast and self-indulgent exaggeration. Within this mental universe, Arday’s academic focus was not on learning new things and fashioning new ways of processing existence but on criticizing others’ morals. This is not intellection but advocacy, and that is frankly much easier than thinking. The term “scholar-activist” tries to finesse this by making the two appear to be alternate forms of the same endeavor. But the scholar-activist is often more activist than scholar, and Arday was an extreme example of the type.
Nothing in his work suggests intense engagement with a body of data (Arday himself has claimed that because of his dyslexia, he can engage only one page of academic prose in a sitting) or with a challenging way of analyzing that data. In academia, what is interesting is the counterintuitive, the discovery. Arday merely reinforced long-established and simplistic pieties. He became the equivalent of a full professor at Cambridge based on doing interviews with acquaintances about the racism they experienced, and then largely just presenting what they said. At its highest level, this could be good (but not great) journalism; it could not be academic work. On the level Arday worked, my 14-year-old could best him after some quick training in Latinate, Judith Butler-esque prose.
Arday was defrocked after the revelation that most of even this incurious nattering in the guise of research was plagiarized from others’ work. Claiming that his supposed autism made him think that learning was mimicry, he composed most of his work from generous tranches of cut-and-paste from other sources, often (but certainly not always) lightly reworded. But even if this performance art disguised as thought were all his own work, his elevation to such heights by Cambridge was an abomination.
As I might say (with palms out and widened eyes), arguing for the obvious is not brilliance. Even when it’s about black people.
This is, quite likely, the worst academic scandal of all time. There have been other academic scandals over the centuries, but nothing quite like this one. It’s the worst academic scandal not only because it indicts one of the greatest universities in the world, but because it indicts all higher education in the English-speaking world! The Arday case is the symbol and culmination of the kind of intellectual and moral rot that has been seeping into higher education for sixty-plus years.
If Cambridge University—an 817-year-old institution—is to be saved (and it’s an open question as to whether it can or even should be saved), all those administrators and faculty involved in hiring, promoting, and defending Jason Arday should be fired immediately. Nothing less will do if Cambridge is to survive.
The great tragedy of the L’Affaire Arday is that there may very well be scores if not hundreds of similar cases around the English-speaking world.
Phil Magness continues to document J.D. Vance’s astonishing economic ignorance.
… from page 21 of my Mercatus Center colleagues Chris and Rachel Coyne’s essay “The Economics of Price Controls,” which is chapter 2 of Flaws & Ceilings (2015), an excellent collection edited by Chris and Rachel:
Price controls are often implemented with the goal of fighting inflation. But this, incorrectly, assumes that all wage-price increases are the result of inflation. In an unhampered market economy, there are constant, genuine changes to supply and demand conditions that will often lead to real price increases and relative price increases. The existence of price controls distorts the ability of the price mechanism to communicate this information by treating all price changes as if they are the result of inflation. The result is that scarce resources will not be reallocated to meet changes in the real, underlying economic conditions. Thus, due to persistent resource misallocations, standards of living will suffer.
When students arrive in college, they encounter a vague sense of freedom. What they often do not realize is how controlled their campus experience is. Universities operate as a closed economy: centrally administered, collectively resourced, carefully controlled by administrators who hope their plans aid retention efforts.
Over the past several decades, the college campus has morphed into a comprehensive residential and lifestyle provider. Beginning in the 1990s, when colleges started competing more aggressively for larger enrollment numbers, investing in student life became a way to recruit students. Expanded student unions, more-comfortable residence halls, larger recreation centers, campus programming offices and improved dining choices became the norm.
By the early 2000s, colleges faced an “amenities arms race.” Rec centers were revamped with climbing walls and lazy rivers; dorms gave way to apartment lofts with expansive lounges; campus coffee bars were established with national brands.
The upgrading of amenities wasn’t only a matter of physical adjustments. Administrators, aware that nonacademic factors can influence educational outcomes, sought to provide full-scale support not only to ensure graduation (tutoring and writing centers) but also personal growth (wellness and DEI programming). Specialized administrative units and support services grew quickly, outpacing academic departments. Critics have argued that this growing array of services contributes to rising college costs and an emphasis on comforts and conveniences rather than educational value.
This transformation has been especially pronounced at America’s wealthiest and most selective colleges and universities. At elite institutions, students enter a nearly self-contained community. They ride campus buses without paying a fare. They enter expansive recreation centers without a membership card. They attend concerts, meet career coaches, reserve study rooms, download software, join student organizations, and participate in countless campus activities without ever reaching for a wallet.
None of these services are free. Their costs are embedded in tuition and fees, endowment income, donor support and government funding. Yet, because students rarely confront a price at the point of use, they experience consumption without consequence or even comparison.
This autumn, when the student-athletes who compose the University of Michigan’s football team are girding their loins in preparation for Armageddon, a.k.a. the Ohio State game, suppose some freshman players make mistakes in practice. They miss blocking assignments, fumble handoffs, run the wrong pass routes.
Do we think Michigan’s coaches will respond therapeutically? If they emulate the university’s administration, the coaches will soothe their freshmen by saying:
Golly, to err is human, to forgive is to “curb the mental health crisis unfolding among college-aged individuals.” It is unfolding even among individuals who will not line up across the line of scrimmage from Ohio State’s stress-inducing student-athletes. As your coaches, our priority is to allow you freshmen to “acclimate to the demands of college and allow intrinsic motivations to guide personally meaningful academic journeys.” So, we will not respond to your mistakes with extrinsic motivations — e.g., criticism. We coaches are here to help you transition to academia. Thrashing OSU would be fun, but first and foremost we are “investing in students’ well-being and growth by fostering a culture of connection and collaboration — rather than competition.”
Granted, the quoted words do not sound like coach-speak from those responsible for filling the Big House, the nation’s largest stadium (capacity 109,901). The words sound like what they are, an emanation of today’s academic mind.
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The rhetorical goo celebrating “connection” and “collaboration,” and disparaging “competition” (an implicit reproach of “capitalist culture”?), has a practical as well as ideological function. A pass/fail first semester will partially obscure an embarrassing aspect of today’s “college for all” culture: the proliferation of remedial classes for students whose high school “experience” left them ill-prepared academically.
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Is it not possible that Michigan’s postulated “mental health crisis unfolding among college-aged individuals” is a self-fulfilling diagnosis? Tell young people that their professors presume them to be crisis-afflicted, and young people might conform to authority figures’ expectations.
And if “intrinsic motivations” are sufficient for learning, and are, as Michigan implies, somehow superior to dictated motivations, such as grades, supplied by professors, the university itself seems almost superfluous. Other than as an excuse for the football team.
Phil Magness, on his Facebook page, shares this bit about our economically clueless VP:
Old clip I found of JD Vance at the start of his Senate career.
He wants to end the US dollar’s position as a global reserve currency, because he thinks it allows Americans to consume too much and do so too cheaply.
Keep that in mind the next time you order a $20 burrito on door dash.
The justices have repudiated the president on key issues in his second term including tariffs, birthright citizenship, Federal Reserve independence and National Guard deployments. If Trump got to pick four additional justices, he might have won all those cases.
GMU Econ alum Dave Hebert reveals the real economic lesson of the rust belt. Here’s his conclusion:
Left to their own devices, markets tend to produce diversity. No single industry dominates indefinitely, and rational actors spread their bets rather than concentrating them. Detroit’s monoculture did not emerge from markets. It was constructed through politics. Union contracts that locked in labor rigidities, tariffs, and voluntary export restraints insulated incumbents from competition, and government subsidies favored existing industries rather than enabling new ones. Every act of protection deepened the monoculture and narrowed the viable alternatives within the community. The first-best prescription remains the same: let markets work.
Prices, not politics, are better suited to directing capital and labor toward their most productive uses. But the second-best prescription, that takes seriously the political realities that policymakers face, is equally clear: policymakers should avoid concentrating support on a single industry. Economic resilience comes from economic diversification.
… is from page 3 of Menzie Chinn’s and Douglas Irwin’s superb 2025 textbook, International Economics:
Our food supply is globalized, too. We happily eat locally harvested fruits and vegetables when they are in season, but the rest of the year we enjoy asparagus from Peru, grapes from Chile, apples from New Zealand, and avocados from Mexico. We eat sushi wrapped in seaweed grown in China or South Korea. We top our salads, or stuff our pita sandwiches, with chickpeas grown in India or Australia. For dessert, we indulge in a little chocolate made from cocoa beans grown in Côte d’Ivoire or maybe Ecuador. Whatever your favorite meal or snack might be, these days it is likely that some of what is going into your mouth cam from a country far away.
DB: Reasonable people celebrate this reality, realizing – as they do – not only that globalization makes our food supply far more diverse than it would otherwise be, but also far more secure (given that, with globalization, our nutrition isn’t held hostage to the vagaries of our own country’s weather, or other, problems).
I almost didn’t believe what I heard. Samuel Moyn, a professor at Yale Law School, told an interviewer that parents can’t be trusted because they have a “divergence of interest” with their own children. He suggests assigning extra weight to the ballots of “the youngest eligible voters”—strangers to the children—lest children continue to be “hostages of their parents.”
Maybe I associate too much with loving, devoted parents and not enough with intellectuals who think parents are holding their kids hostage. In my own life, I recognize that my children’s interests and my own regularly diverge—that’s part of being a parent.
This week my daughter wanted to play Uno while I was in the middle of working, a clear divergence of interest. We played Uno. That’s what parents do—sacrifice for their children.
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Living in a free society requires us to begin by assuming that parents act in their children’s best interests. If we stop trusting parents with their children, someone must take their place. Schools? Government? Law professors and 19-year-olds? Each—except the “youngest eligible voters” Mr. Moyn favors—may possess valuable knowledge. But all inevitably carry their own biases, and none have the intimate understanding, sustained commitment or enduring responsibility that parents have for their children.
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Trusting parents isn’t naive. It’s an acknowledgment of a simple truth: No government official, no school administrator, no distant expert, no random young voter will ever match a parent’s depth of understanding, love or willingness to sacrifice when navigating the inevitable “diverging interests” between parent and child.
Since March, America has been running an accidental experiment and glimpsing what the country might look like without one of its dumbest statutes. The results are in, and they embarrass a century’s worth of U.S. lawmakers and defenders.
The statute is the Jones Act, passed in 1920 to rebuild and protect the U.S. merchant marine fleet after World War I disrupted American shipping capabilities. It requires that any vessel moving cargo between two American ports must be built in an American shipyard, be American-owned, and be at least three-quarters American-crewed. Miss any one of these marks and the shipper is barred from carrying a single barrel of fuel from Houston to Honolulu.
The stated justification for the act is national security. We need American ships and American sailors to fight wars. But 100 years in, it’s hard to repeat this justification with a straight face.
An American-built cargo ship costs $190 million to $250 million to build; the same vessel costs about $30 million from a foreign shipyard. U.S. shipyards now build less than 1 percent of what China and South Korea do, and roughly 300 U.S. shipyards have closed since the early 1980s. Legislation meant to sustain a merchant fleet has presided over its collapse.
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The lobby mobilized against a limited waiver as if the republic were under siege. [Colin] Grabow described a national ad campaign drawing millions of views from an account with just a few hundred subscribers, a 10-state media blitz, a form-letter-writing machine, and roughly one op-ed or letter per week, mostly written by people on the industry payroll.
Two influencers who had never mentioned shipping policy, Kaya Jones and Olivia Krolczyk, posted identical lines about “protecting 650,000 Americans” a day apart, and one disclosed a paid partnership. A commissioned study for the Transportation Institute warned, with gross exaggeration, that 100,000 jobs were “at risk.” Fifty-two House Republicans, the speaker among them, bought into the economic illiteracy and urged the White House to let the waiver die.
Such machinery does not stop at persuasion. A few years ago, documents pried from the Maritime Administration revealed that an advisory committee meeting participant suggested, probably half in jest, that every past and present Cato Institute and Mercatus Center scholar (presumably including me) be charged with treason for criticizing the Jones Act. As economist Art Carden observed, that dragnet would have to be enormous, since the critics run from free-market economists to the far-left Nobel laureate Joseph Stiglitz.
Alan Wm. Wolff and Warren Maruyama predict that Trump’s newest tariffs will also fail in court. (HT Scott Lincicome)
John Puri explains that “3.4 percent is not a good inflation rate.” A slice:
The difference between 2 percent and 3 percent inflation may not seem that significant, but compound interest is a tricky thing. Inflation at 2 percent means that the dollar loses half its value in 35 years, whereas inflation at 3 percent cuts that time frame to 24 years. All the distortionary effects of excess money creation are amplified accordingly.
Jacob Smith reveals “when ‘consumer protection’ protects producers from competition.”
How impressive! Trump is also an expert in the details of modern aircraft-carrier equipment!
The laws of economics do not put “profits over people.” They dictate which policies will help poor workers and which policies will harm them.
DBx: Yes.
And pick any randomly chosen policy today peddled by either the progressive left or the MAGA right and you will likely pick a policy that, although marketed as helping the poor, actually hurts the poor.
Phil Magness is no fan of J.D. Vance’s new book. Two slices of Magness’s review:
JD Vance’s disdain for economists has become a pronounced and recurring theme of his political career. In his new book Communion, the vice president devotes an entire chapter titled “A Dismal Science” to attacking the way that mainstream economists have allegedly distorted our entire political system for the worse.
It’s unclear if Vance knows that his chosen pejorative for economics — “the dismal science” — originated in a notorious pro-slavery essay by Thomas Carlyle. The abolition-inclined economists of the 19th century were “dismal” in Carlyle’s mind precisely because they wedded the tools of “supply and demand” to the “sacred cause of Black Emancipation,” and thereby upended what he saw as a natural social order. Vance largely misses that lesson, although he shares other dimensions of Carlyle’s famously acerbic disdain for measurements of economic prosperity.
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Unsurprisingly, Vance’s claims do not hold up under empirical scrutiny.
For several decades, the Bureau of Economic Analysis (BEA) has provided detailed estimates of the economic value of household production, including unpaid work such as “cooking, cleaning, and child care.” Note that these are the very same “unmeasurable” tasks that Vance considers to be the Achilles heel of GDP. And yet, easily accessible reports from the BEA’s website not only measure them with a high degree of accuracy — they also estimate an “adjusted GDP” growth rate that incorporates these measurements.
Ryan Bourne makes clear that “JD Vance’s feared “Cult of Growth” has never run America.” A slice:
The vice president’s criticism is mostly a strawman. I don’t know any economists who advocate GDP maximization. In fact, most economists talk about ill-defined concepts like “social welfare” all the time. The limits of GDP as a proxy for human welfare are emphasized in any 101-level economics course, including this study aid for high schoolers. As my colleague John Cochrane tweeted last month: “GDP answers the question posed to it…. What is the total value of goods and services produced in the market economy…. It is a terrible measure of things it wasn’t designed to measure: consumer surplus, welfare, non-market activity, happiness, etc.”
What economists have emphasized is that GDP is highly correlated with many non-economic outcomes we care about, including life expectancy, literacy, sanitation, and a host of other obviously good things. In other words, GDP is not and doesn’t pretend to be synonymous with human welfare, but formal economic activity appears highly related to that. Anyone proposing policy that crushes output in the name of another objective should therefore be wary of dismissing falling incomes or consumption as mere accounting trivia.
In any case, it’s especially laughable to claim that policymakers prioritize maximizing GDP over all else. A quick review of Congressional Budget Office and Joint Committee on Taxation bill scorings shows that GDP projections have little bearing on whether a bill becomes a law. Of 17 bills scored with respect to GDP since 2000, four passed, one of which was thought to produce a long-term drag on GDP. Of the 13 that failed, nine were projected to boost GDP, including three bills to liberalize immigration. Imagining what America would look like if a true GDP-maximizer had been at the reins drives the point home: Vance’s appraisal of economic policy is off the mark.
Sooner or later in today’s America, if you are successful in business you will be targeted as guilty of some alleged political sin. It doesn’t matter how many jobs you create or what services you provide. Ask Amazon.
On Monday New York City Mayor Zohran Mamdani endorsed the Teamsters-backed Delivery Protection Act. Introduced by Democratic Socialists of America council member Tiffany Cabán, the bill would force Amazon to reclassify subcontractors and workers in its delivery network as employees. It could also potentially hit those of other delivery companies such as FedEx.
The Teamsters and its left-wing allies are using New York City to test-drive the ban on subcontracting, which they hope to take nationwide. Mr. Mamdani’s office says Amazon and others use subcontractors “to shield them from responsibility,” which “leaves workers vulnerable and corporations free to avoid accountability for reckless conditions on city streets.”
That’s a misdirection. Amazon’s last-mile delivery network relies on some 40 subcontractors, which employ more than 5,000 workers. This sophisticated network is what can get the goods you order to your doorstop in hours, and it provides flexibility for workers who have irregular schedules such as college students and home caretakers.
Amazon requires its subcontractors to provide full-time employees health coverage and paid time off. Subcontractor drivers earn on average roughly $24 an hour. Many subcontractors offer additional benefits, including tuition assistance and paid vacation.
These small businesses reflect the diversity that progressives claim to favor. Amazon says “25% are owned by Black or Hispanic entrepreneurs, 10% are veteran-owned, and 10% are graduates of our Road to Ownership program”—a company initiative that helps high-performing employees become business owners.
Subcontractors also provide workers’ compensation for workers injured on the job. Vans are equipped with technology that notifies subcontractors of unsafe driving behavior. The cargo e-bikes that couriers peddle around Manhattan cannot travel faster than 12 miles per hour. If New York City streets are becoming more perilous, don’t blame Amazon.
One goal of the bill is to aid plaintiff attorneys who figure they can obtain bigger legal payouts for accidents from Amazon than they could from its small-business partners. Directly employing subcontractors could also impel Amazon to carry more expensive insurance coverage, which would raise delivery costs.
George Will conveys this happy news: “Chicagoans are getting fed up with the city’s teachers union.” A slice:
The CTU’s president, Stacy Davis Gates, who likes her son’s private school, vows to “create the crisis by which the boss … the government can no longer ignore you.” But the CTU is the government’s boss, having engineered the election of a former CTU organizer, Brandon Johnson, as mayor.
Johnson’s guileless candor indicates the CTU’s sense of invulnerability: “I personally don’t give a lot of attention to grades. … My responsibility is not simply to grade the system, but to fund the system.” So, deciding “whether or not our public school system is working” depends not on measuring cognitive outcomes. Rather, it depends solely on the amount of taxpayer money that flows into the system, ultimately to the CTU.
The list of victimless crimes is unfortunately long and quite ugly—covering everything from arranging flowers without a state-issued permission slip to selling booze at certain times of the day.
Make some room near the top of the list for this one. A Canadian trucker was reportedly arrested by the Border Patrol in New Mexico for “unauthorized domestic freight operations.”
Agents in Las Cruces, New Mexico, arrested the driver (who has not been identified publicly) for allegedly hauling cargo in violation of a nonimmigrant visa, Border Patrol Chief Rosario Vasquez wrote in a post on X. Vasquez said the driver faces “prosecution and subsequent deportation.”
Truly, a serious crime that demands the federal government’s attention. What kind of country would America be if people were freely allowed to peacefully deliver goods that had been consensually bought and sold? I bet this guy was getting paid for his labor too! The horror.
This is illegal because of some nakedly protectionist laws that restrict “cabotage,” the transportation of goods within the United States. As TruckNews.com, a trade publication, explains: foreign truck drivers “are permitted to enter the United States to transport international freight…but generally may not haul cargo that is both picked up and delivered within the U.S.”
Trucks and roads work the same way in Canada as they do in the U.S., so this restriction has nothing to do with safety and everything to do with limiting competition for truck driving jobs in America.
Who’d a-thunk it? (HT Scott Lincicome)
A year after New York City barred landlords from passing their broker fees on to renters, a new kind of paywall has emerged in one of the nation’s most competitive rental markets. Renters are now paying brokers thousands of dollars simply to learn which apartments are available.
Moreover, one of the defining features of the recent period is record levels of cross-border holdings of assets – everything from factories and other real estate to stocks and bonds. This means that someone from Poland might take out a mortgage on her house from a Swiss bank, or an American credit card holder might pay a record low interest rate because of China’s eagerness to lend to the rest of the world.
DBx: Yes.
Always remember that, by the rules of accounting, U.S. trade deficits (or, more precisely, current-account deficits) are a necessary accounting result of U.S. capital-account surpluses – that is, of net inflows of capital to the United States. The arithmetic behind the accounting is that all U.S. dollars that are invested by foreigners in the U.S. are U.S. dollars that foreigners cannot also use to purchase U.S. exports.
Next time you encounter some government official or media pundit talking or writing as if U.S. trade deficits are necessarily a problem, remember that these ‘deficits’ keep interest rates in the U.S. lower than they would otherwise be, and thus these ‘deficits’ not only reduce the burden of debt for American consumers, they also spur investment in American businesses (which, over time, raises American workers’ real wages).
Pow! Slam! Art Carden wrestles successfully with myths about so-called “trade deficits.” A slice:
In their textbook, Modern Principles of Economics, Tyler Cowen and Alex Tabarrok ask what happens when Walmart buys toys from a Chinese supplier. I decided to test this once by going to my local Walmart and buying an action figure of All Elite Wrestling’s Brody King, which is part of the Jazwares “Unrivaled” collection and a Walmart exclusive. After tax, the figure cost me $21.82. The figure was manufactured in China for a company (Jazwares) based in Florida, represents an athlete who lives in Georgia and works for a company also based in Florida, and was purchased (and taxed) in Alabama. There is value added at every stage and by people around the world, but let’s focus strictly on the share of the figure that goes to the Chinese manufacturer.
What does the manufacturer do with the dollars he earns by selling me (via Jazwares and Walmart) a wrestling figure? He wants the dollars for dollar-denominated transactions. First, he might want to buy American goods and services. In the Chinese context, one of the services they seek to purchase is American higher education. Second, he might want to invest in the United States by (for example) buying new bonds issued by American corporations. Third, he might want to lend to the U.S. government by purchasing new Treasury bonds. In both cases, he might also want to purchase dollar-denominated assets, such as existing stocks and bonds. Fourth, he might want to increase his dollar reserves for several reasons. The US dollar is the world’s reserve currency; it is famously stable and widely used for transactions in the United States.
Fifth and finally, the Chinese manufacturer might want to sell the dollars to someone who wants to do any of these things.
How does the transaction affect the balance of payments? The trade deficit widens because we imported the figure. That receives considerable attention, but I think the attention the trade deficit receives is overstated. In the long run, countries pay for their imports with their exports. Additionally, the dollars “come back” to the United States as foreign direct investment. The current account deficit (the trade balance) is identical to the capital account surplus.
Matthew Lau is correct: “Protectionists live in economic wonderland.” A slice:
In recent years, the White House’s Protectionist-in-Chief has turned much of the political landscape into an upside-down Wonderland. Among the things that are now topsy-turvy is that the Republican Party increasingly practices socialism, while actual socialists, at least on international trade, champion freer markets.
Under socialism, government owns the means of production, which the U.S. government increasingly wants to do. In June, through $750 million in investments, it took minority equity stakes in two semiconductor companies. In July, through up to $874 million in additional funding, it took minority equity stakes in six more and increased its ownership of a seventh. The Cato Institute counts 30 companies in the federal government’s expanded corporate portfolio. “Republicans warning that communists are taking over the Democratic Party might first ask why their own administration is so eager to have the government acquire pieces of private companies,” Cato analyst Tad DeHaven suggested.
Not every argument is equally strong. Still, “What Happened to Liberal Democracy?” is a book for these times, when many Americans sense that the nation is at an inflection point. Acemoglu’s answer is neither despair nor nostalgia. It is a rallying cry to return to liberal democracy, the system that turns individual freedom into prosperity for all. Right, left or center, the tasks laid out are for everyone: Invest in your community, demand institutions that answer to their citizens and defend the freedoms of people you disagree with.
David Henderson on Hayek on power.
Shiv Parihar decries the economic ignorance of proponents of legislated minimum wages. Two slices:
This issue is personal for me. The jobs that these policies kill once helped keep me alive.
At 5, I was living in a Utah shelter at the height of the Great Recession. My single mother had little education or experience, but she needed work. Low-wage, entry-level positions were her path into the job market. She didn’t have a job that paid $15 an hour until 2023. If the minimum wage had been $15, she might not have had one at all.Minimum-wage jobs were even more helpful to my father. He was a high school dropout who had been to jail. Had the minimum wage been $15, far fewer employers would have been willing to gamble on an applicant like him, especially one with a child to take care of half the week.
Utah has never raised its minimum wage above $7.25 an hour, the current federal floor. That isn’t much. But for my family, it was the difference between dinner and an empty stomach.
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The well-intentioned supporters of minimum wage hikes think of themselves as battling for everyday Americans, and I’m sure that can feel good. But hundreds of thousands of the poorest Americans have stories like mine. The fight for $15 is a fight against us.
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