Writing in the Wall Street Journal, my GMU Econ and Mercatus Center colleague Dan Klein uses the Swedish economist Ingemar Ståhl’s 1979 satirical essay “It Will Soon Be 1984 . . .” to warn of the terrible dangers of a central bank digital currency. Two slices:
In their putrescent 2020 book, “COVID-19: The Great Reset,” Klaus Schwab and Thierry Malleret write: “This transition towards more digital ‘of everything’ in our professional and personal lives will also be supported and accelerated by regulators.” They add: “In banking, it is about being prepared for the digital transformation.”
In 1979, Ingemar Ståhl warned about this in a satirical essay, “It Will Soon Be 1984 . . .” Ståhl, an economist and professor at Sweden’s Lund University, was active in public debate on such issues as industrial policies, rent control, defense, taxation and healthcare. Originally on the left, Ståhl’s thinking migrated toward a market approach.
“It Will Soon Be 1984 . . .” was first published in a Swedish daily, Svenska Dagbladet. The newspaper provided photos and ironic captions, one saying: “The point of the cashier’s [scanning] pen will be the eye of the State on your consumption.” The essay satirically proposed tracking every transaction in the Swedish economy, including the identities of the buyer and the seller. Cash would be taken out of circulation.
Methods and means evolve, while human nature and tendencies toward despotism remain the same. CBDC is a solution in search of a problem, like many other despotic innovations of late.
You would think that “more stuff” would be the easiest political sell in the world. People love stuff; it overflows our cupboards, our closets and our ample garages into the nation’s booming self-storage industry.
Sure, the Kondo acolytes and the environmentalists might grouse that we have too much, but “stuff” doesn’t mean just dusty bread makers and seven barely distinguishable pairs of black pumps. Hospitals have stuff, such as vaccines and MRI machines. Wind turbines are made of stuff. And building this stuff requires even more stuff, like heavy machinery, and roads and rails to get things to your site.
All of these things are at the heart of a growing recognition that we need an “abundance agenda,” a term coined by Atlantic writer Derek Thompson last year. America is plagued by supply-side restrictions that make everything from doctors to housing to charging stations for electric cars scarcer than they should be. Many promoters of the abundance agenda would add that we’ve become increasingly prone to shortchanging future progress in favor of current consumption — for example, by slapping price controls on new drugs even if that weakens incentives for further drug development.
It might be tempting to argue that people can still manage selected areas of progress without committing to broad growth, but in practice this is hard to manage. In stagnant economies, investments in medical research are locked into zero-sum competition with current consumption. A quick look at Americans’ savings rate and the government’s finances suggests that future-oriented investment will not win the contest. If so, the real loser will be humanity, forever deprived of the better things that might have been.
“When companies come in and they dump their products in the United States, they should pay, automatically, let’s say a 10 percent tax,” Trump said on Fox Business. “I do like the 10 percent for everybody.”
On Tuesday, The Washington Post reported that the same topic was discussed Monday night at a Trump campaign strategy meeting in Bedminster, New Jersey. According to the Post, the plan being discussed would include a “‘universal baseline tariff’ on virtually all imports to the United States” and figures to be a major plank in Trump’s 2024 presidential campaign.
For starters, kudos to Trump for correctly describing his plan as a tax. Because that’s exactly what this would be: a tax hike on American businesses and consumers who purchase products from abroad. Currently, the average U.S. tariff is about 3 percent—though they vary widely depending on what item is being imported and from where.
That’s the only detail worth praising, however.
As Trump should have learned after hiking tariffs on steel, aluminum, and loads of goods imported from China during his term in office, import taxes do little more than hike costs for American consumers and businesses. A recent report by the International Trade Commission concluded that Americans “bore nearly the full cost of these tariffs because import prices increased at the same rate as the tariffs.” Economists Mary Amiti, Stephen J. Redding, and David Weinstein have calculated that the tariffs directly reduced Americans’ income by a cumulative $1.4 billion per month.
Adam Posen, president of the Peterson Institute for International Economics (PIIE), a trade-focused think tank, told the Post that Trump’s proposal was “lunacy” and “horrifying.”
Trump is a Republican running for office against an incumbent Democrat whose policies have contributed to rising inflation—and yet his tariff plan amounts to a promise to raise taxes, and prices, on Americans. Any other Republican would be laughed off the campaign trail for promising to raise taxes by 10 percent.
You have to laugh or cry when the Congressional Budget Office issues an occasional reminder that lawmakers use bogus accounting to hide from taxpayers the true cost of federal programs. Give CBO credit for honesty as it points out how required official estimates are at odds with real-world bookkeeping.
The budget office scores only budget effects of regulations, not their full economic effects. For example, the harm from reduced innovation caused by recent price controls on drugs are magnitudes larger than the CBO-scored budget savings.