Say what you will about 2025, the year is off to a rocky start for anyone who needs to figure out how to fund a government. Bond yields are rising across the developed world, raising some awkward questions about when politics will catch up with new economic realities.
In the U.S., 10- and 30-year Treasury yields are rising again with the 10-year above 4.6% and the 30-year around 4.9%. Yields already had lifted off from their pandemic-era lows as the Federal Reserve increased short-term rates and reduced its bond holdings to fight inflation. But the yield rise of recent weeks is happening after the Fed cut short rates substantially starting in September, and as the pace of its balance-sheet reduction has slowed since the spring.
As go U.S. bonds, so go borrowing costs in the rest of the world. The 10-year Japanese government bond, at nearly 1.2%, is at a level last seen in 2011. The German 10-year bund, the eurozone’s benchmark, is at a five-month high above 2.5% after a steep ascent in the past month.
You can pick from among several theories to explain this, all of which may play some role. In the U.S., a benign explanation is that investors expect stronger economic growth under President-elect Trump’s tax and regulatory policies. Less benign is concern that the Fed has cut rates too much, too soon and is willing to accept more inflation than its 2% target.
Bruce Yandle decries Trump’s “shoot from the hip agenda.” A slice:
President-elect Donald Trump and his close advisers, at the threshold of another presidency, are deeply engaged in America’s policy battles. Yet, I can’t identify one principles-based “north star” to shed much light on the agenda. Maybe that will soon emerge, or maybe there will never be one. For now, the policy pronouncements say there’s a new sheriff in town who shoots from the hip. That means it’s up to us to navigate the uncertainty.
Bob Graboyes offers some quick takes on Trump’s hemispheric ambitions.
GMU Econ alum Nathan Goodman tweets a truth about so-called “bilateral trade deficits.”
Corbin Barthold argues that “age-verification laws are a verified mistake.”
[SEIU president April] Verrett told [Joy] Reid that unions need to “write new rules” because “we work with a set of laws in this country that are not written for working people to get ahead.” Let’s be clear about what that means, too: The repeal of right-to-work laws currently on the books in 26 states (25 of which voted for Trump in 2024), the full expansion of collective bargaining to all government employees in all states (including the mostly red states that currently don’t allow it or restrict it), and the restriction or elimination of freelance work for millions of workers (even though 80 percent of them say they prefer independent contracting over traditional employment).
Variously described as “libertarian” and “populist,” Poilievre supports cutting government spending and lowering taxes. “We will cap government spending with a dollar-for-dollar law that requires we find one dollar of savings for every new dollar of spending,” he argued in a September speech in Canada’s House of Commons. Poilievre has said his government would remove the federal sales tax on homes under $1 million. Last June, he came out against a proposed capital gains tax increase and promised to form a “tax reform task force” soon after forming a government if elected. He owns and uses bitcoin and promotes cryptocurrencies as a hedge against inflation.
Inflation is immoral, Poilievre told Peterson, because “nobody votes on it.” Rather, “inflation is adopted secretly, and you blame the grocer because groceries are more expensive or your local gas station because gas is more [expensive]…when in fact it was actually the government that bid up all of those things with money printing, and you didn’t even know about it.”
Here’s the abstract of a new paper by Michael Strain and Kerry Paaps:
This paper studies how output prices are affected by increases in the minimum wage. To the best of our knowledge, we provide the first examination of how the prices of an entire menu of items at a single business adjust in response to a minimum wage increase. Using data we gather from a fast-food chain, we find that a $1 minimum wage rise increased average prices by 7 cents, implying a pass-through elasticity of around 0.13. We also study how the price response across individual goods varies with the labor intensity in production of those goods. Consistent with a theoretical framework we describe, the prices of items that require more labor to produce increased by more due to the minimum wage increase. A $1 increase in the minimum wage raised the item price by an extra 0.3 cents for every additional preparation step. We also find that more price adjustment takes place at the store level than at the item level, and that it takes longer for prices to respond to a minimum wage increase than the existing literature suggests.
David Inserra writes about Meta’s “major moves to advance free expression on its platforms.”
Left-wing critics were not wrong that this represents a major shift in how some of our biggest media companies do business — mirroring changes that happened at X after Elon Musk acquired the company. They’re also not wrong that these changes are more palatable to conservatives than to liberals. And they’re right that Donald Trump has no interest in promoting free speech as a principle; he just wants different people deciding what gets throttled.
That said, Zuckerberg is correct to recognize that the fact-checking industry leans well to the left (though outlets like the Dispatch are an exception) and that political bias inevitably creeps in to the decisions about what facts to check and about how those facts are contextualized. And the right can fairly complain that conservative ideas have been suppressed under the guise of ostensibly neutral information hygiene.
Checking the veracity of information circulating online is a worthy project. But when you use those checks to decide what other people are allowed to say, you turn fact-checkers into censors, a power that’s inevitably open to abuse and error. Which is why it’s so revealing that a fairly minor change to moderation policies felt so apocalyptic to progressives.
