Scott Lincicome debunks several myths about tariffs. Two slices:
It’s similarly misguided to claim, as some misguided souls recently have, that protective tariffs don’t increase U.S. prices. The basic logic and economics here are again straightforward: If tariffs didn’t increase import prices, then they wouldn’t protect U.S. companies from that foreign competition; and if those U.S. companies were already selling at or below the import price, then they wouldn’t need a tariff to change American importers’ and consumers’ behavior. (Nobody—not even me—is “buying foreign” just for the fun of it.) By forcing importing firms to either pay a tariff or switch to more expensive U.S.-made goods, protective tariffs will push the domestic market prices of those goods higher than they’d otherwise be. If they didn’t, then they wouldn’t protect anything.
Furthermore, high or unpredictable tariffs can reduce potential supply and give domestic producers more market power over U.S. consumers who, thanks to the tariff, have fewer alternatives, and this can and often does increase the prices of the American-made goods even higher than they were before the tariff. These kinds of price-boosting effects are precisely why U.S. manufacturers—like this guy—lobby for tariff protection. And we see them all the time in the economic data.
For example, Obama-era tariffs on washing machines, a recent paper showed, didn’t raise U.S. prices because they weren’t protective. (Korean companies simply moved to other countries to avoid the tariffs.) Trump-era tariffs on those same goods, by contrast, were global and did significantly raise U.S. prices of both washers and dryers by about $90 each.
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The empirical literature from dozens of countries over many decades again confirms the theory: In case after case after case—and regardless of the model used—economists have found that tariffs reduce national economic output and make a nation worse off on net, while tariff liberalization generally does the opposite. (One of the more popular trade models, if anything, understates the output gains from trade liberalization.)
More important, however, black graduation rates rose sharply after racial preferences ended and more students were funneled into schools throughout the University of California system that better matched their academic qualifications. The obsession with the racial composition of first-year students at elite schools is misplaced. The more consequential metric is what percentage of black students in the Class of 2028 make it to senior year and graduate with a degree in their intended major.
Before California’s prohibition on racial preferences, black enrollment at UC Berkeley had been growing, yet only about a quarter of black students were graduating within five years, compared with two-thirds of white students. The end of racial preferences prompted a redistribution of students. System-wide, the number of black and Hispanic freshmen who graduated in four years increased by more than 50%, as did the number who earned STEM degrees and graduated with grade-point averages of 3.5 or higher.
Bruce Yandle decries politicians’ promises of free lunches.
Ask any budget expert in Washington to explain the ballooning deficit and debt, and Social Security and Medicare will be high on the list of causes. That’s wrong. The real driver, the elephant in the room, is means-tested social-welfare spending—Medicaid, food stamps, refundable tax credits, Supplemental Security Income, Temporary Assistance for Needy Families, federal housing subsidies and almost 100 other programs whose eligibility is limited to those below an income threshold.
True, Social Security and Medicare are a drain on general revenue and will become big fiscal problems if not reformed. But they aren’t the major source of our current fiscal crisis, because both are financed in large part by dedicated payroll taxes. Since its inception, Social Security has produced cash surpluses 60% of the time. In 2023 Social Security payroll taxes funded 88.9% of benefits. The cost of Social Security’s Old-Age, Survivors and Disability Insurance program, net of payroll tax collections, was only $88.1 billion. Medicare payroll taxes and premiums funded 49.7% of Medicare expenditures, producing a net cost of $509 billion.
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Demand for reform would be even stronger if the public understood how generous social-welfare benefits are. In reporting household income, the Census Bureau doesn’t count 88% of transfer payments made to households that are defined as being poor. The census doesn’t count refundable tax credits (for which the beneficiary receives a check from the Treasury), food-stamp debit cards, free medical care through Medicaid, or benefits from about 100 other federal transfer payments as income to welfare recipients. When those benefits are counted as income, 80% of those who are today counted as being poor are no longer poor, and almost half have incomes equivalent to American middle-income earners.
Chelsea Follett draws lessons from the history of food.
Emma Camp documents yet further evidence that Donald Trump is unfit to hold power:
“ABC took a big hit last night,” Trump said during an interview on Fox and Friends Wednesday morning. “I mean, to be honest, they’re a news organization. They have to be licensed to do it. They ought to take away their license for the way they did that.”
[DBx: To anticipate negative reaction that I know is forthcoming from some Cafe patrons, I again note that to point out that Mr. X is unfit to hold political power is not to imply that some or even any of Mr. X’s political opponents are fit to hold political power.]
Here’s my intrepid Mercatus Center colleague, Veronique de Rugy, on the Harris-Trump “debate.”
