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… is from page 26 of the late Tom Wolfe’s brilliant 1981 book, From Bauhaus to Our House:

In fact, here was the great appeal of socialism to architects in the 1920s. Socialism was the political answer, the great yea-saying, to the seemingly outrageous and impossible claims of the compound architect, who insisted that the client keep his mouth shut. Under socialism, the client was the worker. Alas, the poor devil was only just now rising out of the ooze. In the meantime, the architect, the artist, and the intellectual would arrange his life for him. To use Stalin’s phrase, they would be the engineers of his soul.

DBx: Collectivists of whatever stripe are marked by their arrogance, by their imagined superiority to ordinary people. They, the collectivists, know how income should be distributed. They, the collectivists, know just what kinds of jobs ordinary people should hold. They, the collectivists, know how best to provide schooling for the children of ordinary people. They, the collectivists, know what is the minimum hourly monetary wage ordinary people should be allowed to accept in exchange for labor services. They, the collectivists, know how political campaigns should be funded. They, the collectivists, know what goods and services, and in what quantities, are best for ordinary people to purchase from foreigners. They, the collectivists, know which medicines and medical devices peaceful people should be prevented from consuming. They, the collectivists, know what are ‘the industries of the future’ and how best to ensure that the domestic economy has a comparative advantage in those industries. They, the collectivists, know how best to arrange for the provision and payment of health care.

They, the collectivists, are nothing if not arrogant.

……

Although Ayn Rand’s The Fountainhead is no brief for collectivism, I must say that I’ve never liked that novel. I first read it only after learning economics. And so the architect Howard Roark’s refusal to design a building according to the preferences of the persons who pay for his services and for the building immediately struck me as arrogant. The fictional Mr. Roark and his real-world counterparts certainly have a right to regard themselves as brilliant artists who never stoop to satisfy the tastes of hoi polloi and to refuse to design anything except that which they – the architects – fancy. But it’s a darn good thing that the profit motive is powerful enough to enable people spending their own money to get supplied with whatever peaceful goods and services they desire.

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Here’s a letter to a commenter at my Facebook page.

Mr. Beveridge:

In a comment on this Facebook post of mine – a post in which I criticize Trump’s tariffs – you write that my post “seems to ignore the fact that we are tariffed to the max by other countries. What gives, sir?”

Other readers’ several responses to your comment do much to remedy your misunderstanding – for example, by noting that we are not, and we were not, “tariffed to the max by other countries.”

But another point is worth making. If (also contrary to fact) Trump and his fellow protectionists are correct to incessantly insist that free trade harms the American economy by “hollowing out” our industrial base and making us dangerously dependent for supplies on foreign countries, then other countries would do us a great favor by tariffing us “to the max.”

Extremely high tariffs abroad would dramatically reduce demand for American exports. This reduced demand for American exports would, in turn, reduce the global demand for U.S. dollars. As a result, the value of the dollar against other currencies would fall. As the dollar’s value falls, it takes more dollars to buy any given amount of foreign currency – meaning that, as the dollar’s value falls, foreign goods would become more expensive for Americans to purchase. Americans would import less.

In short, as American exports fall, so too do American imports.

Being tariffed to the max by other countries would achieve Mr. Trump’s and other protectionists’ goal of reducing America’s imports and her ‘dependence’ on foreign countries for supplies. It’s unclear, therefore, why protectionists complain about (what they falsely believe to be) differentially very high foreign tariffs.

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

P.S. For a more comprehensive treatment of the connection between imports and exports, see here. I also recognize that my conclusion assumes that extremely high tariffs abroad would not raise foreigners’ demand to invest in America by so much as to offset the foreign-tariffs’ depressing effect on the value of the dollar. If this assumption were to prove unjustified in reality, however, the other Trumpian bête noire – U.S. trade deficits – would grow even more bête noire-ish.

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The Editorial Board of the Washington Post explains what shouldn’t – but, alas, what today nevertheless does – need explaining: U.S. tariffs are taxes on Americans. A slice:

Many American companies are asking for exemptions from President Donald Trump’s latest round of tariffs. That’s because, even though the administration insists otherwise, American businesses bear the burden of the president’s taxes on trade.

Trump said in his State of the Union address this year that tariffs are “paid for by foreign countries.” Commerce Secretary Howard Lutnick has said businesses and foreigners “eat the tariff.” Treasury Secretary Scott Bessent has even claimed that tariffs aren’t taxes at all.

Despite their insistence that Americans benefit from tariffs, it is U.S. companies lining up to petition the government to ease them.

When the Supreme Court heard the challenge to Trump’s invocation of the International Emergency Economic Powers Act, it wasn’t foreign exporters who said they were injured by Trump’s actions. The cases were brought by American small businesses.

John Early’s letter in today’s Wall Street Journal is excellent:

Crystal FitzSimons’s letter “Fewer People on Food Stamps Isn’t Good News” (June 23) claims that SNAP lifts 3.6 million out of poverty. That is impossible because the Census Bureau refuses to count $1.6 trillion in government subsidies, including SNAP, as income. No matter how much the government might give poor families, the official measure of poverty would remain unchanged.

Ms. FitzSimons’s claim uses an experimental poverty measure that counts SNAP as income while omitting $1 trillion in other welfare, arbitrarily subtracts some spending, and capriciously raises the income defining poverty thresholds.

The $100 billion spent on SNAP in 2024 added nothing to national well-being. It merely redistributed it. If left with the original earners, it would either be consumed with the same effects, or it would be saved and invested, creating additional well-being, which it wouldn’t with SNAP.

While decrying the minimal adjustments to SNAP to prevent abuse, Ms. FitzSimons ignores the 60% of food stamp recipients who aren’t poor, even by the overstated Census metric.

Christopher Freiman explains that government funding of research does not give government a claim on the fruits of private companies. A slice:

Suppose you’re an entrepreneur in the beverage industry trying to create a new soda. One day, a rogue food scientist bursts into your office and demands money for his flavor research. He doesn’t ask politely or offer you a contract; he points a gun at you and takes your money. Years later, he develops a delicious new synthetic flavor. You discover it, add it to your soda, and your company takes off, making you a multimillionaire.

Does the food scientist now own part of your company because you used his flavor? Of course not. There’s no doubt your business benefited from his research. Without the flavor he created, your soda might never have existed. But the scientist has already been paid — and it’s worth remembering that he obtained that payment by force. The idea that he’s entitled to additional compensation because you successfully used his research is absurd. Contributing an input does not automatically confer ownership over everything built with that input. Likewise, the fact that government-funded research contributed to AI development does not automatically give the government ownership rights in AI companies.

In fact, the “government investment” argument fails even in a friendlier scenario that doesn’t involve coercion. Imagine that you voluntarily hire the food scientist to develop a new flavor. You agree to pay him $100,000 for his research, and he accepts. You then use the flavor he creates to launch a highly successful soda company.

Again, the food scientist does not own part of your company merely because he contributed to its success. He is entitled to whatever compensation the agreement specifies — nothing more and nothing less. If the contract grants him an equity stake, he has a claim to it. If it doesn’t, he doesn’t. That’s how market exchange generally works. Suppliers of inputs do not automatically acquire ownership of outputs. If the government wants to fund research in exchange for equity, it can try to negotiate those terms in advance. But that’s very different from claiming, after the fact, that successful companies partly belong to the government because some of the knowledge they relied upon emerged from government-funded research.

If merely contributing to a business entitled someone to partial ownership, every business would face endless competing claims from the countless people who helped make it possible.

Sam Gregg is favorably impressed by Pope Leo’s humanity, but not so much with Pope Leo’s economics. A slice:

Yet wealth inequalities are not unjust in themselves. For instance, some people are wealthier than others because they worked harder than others or chose to take risks that others declined to take. Such people are surely in an entirely different category than, for instance, the individual whose wealth proceeds from being the president of a country that he has systematically looted

Then there are important features about the nature of wealth in modern economies that MH [Magnifica Humanitas] does not recognize. For instance, very little of the wealth possessed by the “billionaires and trillionaires” regularly denounced by politicians of all stripes is actually consumed by such people. A great deal of this wealth takes the form of stock. That means it is not easily turned into liquid cash. It also reflects the market value of companies in which many immensely wealthy—and countless numbers of far less wealthy people—have invested, or, in the case of someone like Elon Musk, played an indispensable role in creating and then scaling. Many of these companies are also able to provide employment and, therefore, work and income for millions of people, precisely because they possess so much wealth. Small and medium-sized businesses cannot perform this function on anything like the same scale.

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… is from page 431 of Rick Atkinson’s remarkable 2025 book, The Fate of the Day: The War for America, Fort Ticonderoga to Charleston, 1777-1780, which is the second volume of Atkinson’s Revolution Trilogy:

Yet prosperity was slow to return to Philadelphia. Before the war, a coaster carrying merchandise arrived in port almost daily; now it was closer to monthly. Royal Navy cruisers and loyalist privateers dominated the Delaware capes, paralyzing trade…. “Goods are exceedingly scarce here,” a trader reported, “and will sell at any price a man’s conscience will let him take.”

DBx: If protectionists are correct to assert that a country becomes wealthier when a government restricts its citizens’ access to goods from other countries, the British would have unintentionally done the American revolutionaries a favor by restricting Americans’ access to imports. Reports from Philadelphia would have noted the growing abundance of goods and the fall in their prices. But the opposite happened.

Now, if only there were some body of knowledge to explain why Philadelphians were made poorer by having their access to imports restricted.

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See also Veronique de Rugy, “New Protectionism: Still Protectionism and Bad Economics,” Mercatus Center, November 6, 2019.

Editor, Wall Street Journal
1211 6th Ave.
New York, NY 10036

Editor:

Reviewing Soumaya Keynes’s and Chad Bown’s How to Win a Trade War, Theodore Bunzel repeats the popular claim that South Korea “used [trade] barriers to turbocharge manufacturing in the postwar era” (“‘How to Win a Trade War’ Review: The Times of Tariffs,” July 6). But as shown by Arvind Panagariya, this claim is false: The Korean economy grew faster when it was more open and had less government direction of industry than when it was more closed and saddled with industrial policy. In his data-rich 2019 book, Free Trade and Prosperity, Professor Panagariya concludes that “once we look at the evidence carefully, Korea supports the case for outward orientation rather than protection, interventionism, and infant industry protection.”*

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

* Arvind Panagariya, Free Trade & Prosperity: How Openness Helps the Developing Countries Grow Richer and Combat Poverty (Oxford University Press, 2019), page 232.

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Alex Tabarrok warns of the Trump administration’s “nationalization of American science.” A slice:

OMB, joined by some forty grantmaking agencies—NSF, HHS, DOE, NASA, DOD among them—has proposed a sweeping rewrite of the rules governing all federal grants, the Regulation for Federal Financial Assistance.

American science has long been state funded but not state directed. Since Vannevar Bush, money has flowed through many agencies to independent universities, allocated largely by peer review. The system has flaws—conformity, gerontocracy, waste—but it had one great virtue, the system was decentralized and not under state control. This rule proposes to bring science funding under top-down, state control.

Program goals must now be “aligned with administration policies and priorities” (§ 200.202). Merit review is subordinated to politics: “senior appointees must conduct these reviews,” ensuring “that discretionary awards advance the President’s policy priorities,” while “peer review remains advisory and does not replace agency discretion” (§ 200.205). And every grant becomes terminable at will, whenever it “no longer effectuates program goals, Federal agency priorities, or the national interest *as they exist at the time of the termination*” (§ 200.340, emphasis added). Universities must even ensure their subrecipients don’t “significantly damage the reputation of… the Federal Government” (§ 200.332)—a loyalty clause for scientists.

All this is sold as cutting “burdensome conditions,” a goal I would support, but sadly that is bullshit. The proposed rules add more paperwork and many more layers of bureaucratic review. Payment requests must include written justifications. Every disbursement gets screened through Treasury’s “Do Not Pay” system. Every recipient must run E-Verify. Applicants must disclose any employee who worked at the awarding agency within two years. And on top of the existing review machinery sits a new pre-issuance review committee of “senior appointees” second-guessing the experts. Fixed amount awards—pay for outputs, not inputs—an innovative reward mechanism are *eliminated*, so every award now gets routine cost monitoring and financial reporting.

Political review of every award, peer review demoted, agency review promoted, termination whenever “priorities” change. Chilling. It’s a nightmare of petty low-trust review of the kind that is already drowning science. I must deal with this kind of nonsense all the time. More is not better.

The Editorial Board of the Wall Street Journal identifies one reason for Zohran Mamdani’s electoral success: economically successful people are moving out of Gotham and thus leaving disproportionately more political power with the young and economically ignorant. A slice:

While out-migration has slowed in the last couple of years, high earners and married people continue to leave in large numbers. The data show that 13,662 taxpayers—roughly 1 in 1,000 resident taxpayers—on net left the state in 2024.

“The greatest net loss of taxpayers was among married filers with incomes between $100,000 and $500,000—a net loss of 8,200, or more than half of the total net out-migration, in 2024,” the comptroller’s office says. The highest out-migration rate was for households making $500,000 or more—about one in 100 of whom moved out that year.

The data underscore how the state’s high taxes and cost of living drive out top earners as well as middle and upper middle class families. Other flight propellants include New York City’s poor public schools and disorderly streets. Enrollment in New York City public schools has fallen 117,800 since 2019.

But here’s the political irony, which the comptroller’s office calls “one positive post-pandemic trend”: An influx to the state of single tax filers. These include the young urban progressives who form New York City Mayor Zohran Mamdani’s base and propelled his socialist comrades to victory in Democratic primaries last month.

Progressive policies in New York City and other big cities are driving out the moderate and conservative voters who have historically been an electoral check on bad governance. The New York voters who made George Pataki Governor in 1994 and Rudy Giuliani mayor in 1993 now live elsewhere.

These are the taxpayers who pay the bills for the welfare state and public unions. Good luck funding universal child care and socialist housing with the taxes from graduate students and community organizers.

Lethal ignorance of economics and history is certainly having a day in the United States, as reported by the Washington Post. A slice:

Democrats want to regulate and reform capitalism to curb its excesses and make the results fairer to everyone. The DSA, by contrast, seeks in the long term to replace capitalism, which the group sees as “a system designed by the owning class to exploit the rest of us.” They want workers to “run both the economy and society democratically to meet human needs, not to make profits for a few.”

And as National Review‘s John Puri notes, lethal ignorance of economics and history also now runs rampant among many Republicans. A slice:

One month later, Trump blew his first equity deal out of the water. He eyed an ownership stake in the struggling chip giant Intel, which was bleeding money and jobs despite billions of dollars in federal subsidies under the Biden-era CHIPS Act. Trump noticed that $5.7 billion in grants had previously been awarded to Intel but had not yet been paid. In exchange for releasing the promised funds, the administration asked for 10 percent of the company. Intel was happy to accede, winning the most powerful ally in the world.

Before 2025, economic analyst Scott Lincicome notes, the federal government had not made an indefinite, noncrisis investment in a healthy private company since at least the 1950s. The Trump administration has now taken more than 20 such stakes, targeting a range of industries from minerals and semiconductors to nuclear energy and quantum computing. There is no limiting principle at work; the government is taking equity in any company it can, on any terms, in any amount. It’s a scheme that progressives can fall in love with: Bernie Sanders is now clamoring to take government stakes in artificial intelligence companies.

This endeavor is enabled by a mix of old and new legislative appropriations written with few constraints on their deployment for stretchable ends: bolstering the defense-industrial base, accelerating innovation, etc. Congress clearly did not anticipate the current president’s cleverness.

Trump is reaping the benefits of the industrial policy pushed by his predecessor. The CHIPS Act and Biden’s green-energy law, the Inflation Reduction Act, gave the executive tens of billions of dollars that he could dangle. Last year’s reconciliation bill gave the Defense Department billions more to dole out, and the administration’s recent budget request would supercharge the military’s investment accounts.

Trump related his extralegal investment philosophy in an interview last December: “We should take stakes in companies when people need something. I think we should take stakes in companies. Now, some people would say that doesn’t sound very American. Actually, I think it is very American.” To call this approach transactional may sound trite — every equity deal is a transaction, of course. But conservatives have long insisted that government be the neutral arbiter of the marketplace, not an active participant. And, under law, the executive branch was never meant to trade special favors and taxpayer money for profit.

Eric Boehm reports this sorry but unsurprising fact: “More than $1 of every $10 in SNAP benefits went to people who didn’t qualify in 2025.”

Writing about fears of AI, Victor Menaldo explains that the predicted apocalypse isn’t coming. A slice:

But a job is not a to-do list of separable chores. Firms employ people for bundles of work held together by judgment, coordination, client trust and accountability. When a job’s tasks complement one another, automating the pieces does not reduce the job’s scope. It raises the value of the human work that remains.

When power looms automated much of weaving in the 19th century, they devastated many handloom weavers. But in the mechanized mills, the workers who learned to tend the new looms grew more valuable, not less. They still had to tie the weaver’s knot, swap a spent shuttle in seconds, adjust the warp tension so the threads wouldn’t snap and mind several looms at once. The workers who mastered these skills earned more even as the looms multiplied and cloth grew cheap.

For all its fluency, AI is not an all-knowing mind that does your job for you or better than you. It is a prediction engine that has digested a vast share of human writing.

That gives this machine astonishing reach — and several crippling gaps. It cannot tell you how biased its sources are, cannot show its work in a way you can audit, and can sound just as confident when it invents a citation as when it reports a fact. It is, in this sense, the near opposite of its closest ancestor, statistics, the tool that shows how much to trust a prediction. Statistics implies error bars; AI offers none.

Because AI cannot flag its own margins of error, an organization that deploys it widely can find itself operating in a fog of uncertainty — and that is where the true economic bottleneck emerges. When plausible-sounding output becomes cheap and instant, the premium shifts to the judgment required to tell whether a flawlessly formatted answer to a chatbot query is a breakthrough, a dead end or a hallucination.

Ryan Yonk and Ravi Roy remember Art Denzau.

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… is from page 104 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

You might think that the collapse of communism throughout Eastern Europe would be considered a decisive failure of Marxism, but academic Marxists in America are utterly undaunted. Their paychecks and their tenure are unaffected. Their theories continue to flourish in the classrooms and their journals continue to litter the library shelves.

DBx: And their students continue to seek and gain political power.

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Richard Baldwin documents this reality: (HT Scott Lincicome)

So, the sclerosis story had it backwards. The sclerotic economy keep the factory jobs better than the dynamic economy. The dynamic economy shed factory share faster for the one reason that has nothing to do with sclerosis: its own consumers shifted spending away from manufactures. Europeans did not stop buying manufactures, and they did not stop making them. Their factories lost value added because they spent more of imported inputs.

GMU Econ alum Daniel Smith uncovers the origins of a commonplace economics-textbook example of tradeoffs – the example being guns and butter. Two slices:

Paul Samuelson’s popular textbook Economics (1948) was the first apparent depiction of a guns versus butter graph, making it a permanent staple of introductory courses. Samuelson was introduced to the first production possibilities frontier graph, depicting the tradeoff between two goods, by his Harvard professor Gottfried von Harberler, a student of Friedrich von Wieser and Ludwig von Mises, who had introduced it in his book Theory of International Trade (1936).

Yet the underlying insight, arguably, reaches back much further. In Book IV of Wealth of Nations, Adam Smith meticulously documented the economic costs of Britain’s imperialism. Subduing, protecting, and administering far-flung territories had enormous costs and few benefits. Contrary to the prevailing wisdom of his day, he argued that empire, once all the tradeoffs were considered, diminished the wealth of nations rather than increasing it.

…..

The tradeoff for the Soviet Union was even more devastating, [Adam] Tooze notes. “… the production [of military equipment] came at the expense of enormous sacrifice on the Soviet home front,” he writes, “where hundreds of thousands if not millions of people starved to death for the sake of the war effort.”

It is this bitter experience that led President Eisenhower to observe:

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some 50 miles of concrete highway. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people.

Dan Hannan is correct about Trump. Two slices:

America at 250 has never been wealthier or more powerful. It has grown two thirds faster than Western Europe over the past 20 years. Rival ideologies – Chinese authoritarianism, Islamism – are hideously unappealing.

Yet, at the same time, the US is starting to behave like a tinpot autocracy. The best way I can describe it is as Third Worldery. The attempt to browbeat the Nobel Peace Prize Committee; the obsession with building big arches; the tariffs; the annexation threats against Canada, Denmark, and Panama; the renaming of public institutions after a living leader; the successful attempt to bully FIFA over a red card. Such things are the hallmark of insecure dictatorships, not of confident democracies.

Opting for strongman government seems to have opened the way to Third Worldery across the board. Once you build your head of state into a Father of the Nation type, once dissent from his latest whims is portrayed as a form of treachery, other things follow.

It is the same pattern everywhere. When Recep Tayyip Erdoğan insists that the rest of us refer to his country in English as “Türkiye”, he invites us to treat Turkey as a post-colonial failed state rather than as the Western democracy it was before his time. I mean, we use English exonyms for serious places. No one demands that we say Deutschland or Nippon or Magyarország. But touchy third worldists demand Côte d’Ivoire, Timor-Leste and Cabo Verde – and, now, Gulf of America, the classic needy country move.

…..

Then again, as Lady Macbeth says, “What’s done cannot be undone”. Those who have downplayed, excused or ignored Trump’s venality will struggle to find grounds on which to oppose equally sleazy stuff from a successor in either party. Standards have been permanently lowered. We will look back wistfully on what was lost.

Giancarlo Sopo reviews the new movie Young Washington. Here’s his conclusion

Young Washington returns a stone founder to flesh and blood, and it does so with skill and real feeling, made without a flicker of irony by people who believe in their subject. We are badly short of films that believe in anything at all, and a nation needs heroes. This is a good one, and word that a sequel is already under way is welcome news. I only wish the film had left a little more of the man inside the marble unexplained.

Available here is the full text of Charley Hooper’s and David Henderson’s recent Wall Street Journal piece urging the Food and Drug Administration to stick to safety.

Welcome to Space Jam!

We are Rebecca, Max, and Aakrith. We are researchers at The Mercatus Center, a research organization dedicated to classical liberal ideas. Rebecca is a philosopher, Max is an economist, and Aakrith is a political scientist. Together, we are the Space Team, and this is our Substack.

We’re here to persuade you that space policy is increasingly important. And that getting space policy right offers humankind astonishing opportunities. In particular, we’re currently thinking hard about innovation, competition, federalism, property rights, and life in space.

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… is from page 253 of the original edition of Walter Lippmann’s sometimes deeply flawed but profoundly insightful and still-important 1937 book, The Good Society [footnote deleted]:

It was here that the founders set themselves apart forever from the naïve theorists of democracy. They saw, in Burke’s phrase, that the constitution of a state is not a “problem of arithmetic.” So they refused to identify the will of the people with the transient plurality of the voters of one constituency…. They thought of “the people” as having many dimensions in space, in time, in weight, in quality. They thought, as Burke did, that a society is “a partnership in all science; a partnership in all art; a partnership in every virtue, and in all perfection,” and “as the ends of such a partnership cannot be obtained in many generations,” a civil society is “a partnership not only between those who are living, but between those who are dead, and those who are to be born.” The American founders sought to represent this many-sided people and they thought of the people’s will as an equilibrium of its many elements.