Scott Lincicome defends free trade in a debate with Jeff Ferry.
Rich Vedder makes clear that Adam Smith was an infinitely better economist than Donald Trump. A slice:
If you put 50 randomly selected American academic economists in a room and ask them what they thought of raising tariffs as a way of increasing economic growth, I bet at least 48 of them would say that is a bad idea. That is amazing because I cannot think of ANY other major economic policy issue on which economists have such near-unanimous views. For example, if you ask those 50 randomly selected economists should the Fed lower, raise, or leave constant interest rates now to stimulate the economy, I expect you would get all sorts of different answers.
As an economic historian, I am acutely aware that the 250-year-long move towards greater material abundance beginning in earnest with the British Industrial Revolution was also generally accompanied by an abandonment of the high tariff-mercantile regime that previously dominated. Adam Smith’s Wealth of Nations (1776) is still appropriately considered the first great work in modern economics.
Smith understands that people and geographic areas have different abilities in producing goods and services, and individuals should generally do what they do best, selling most of their output and, in return, buying things from others that they cannot themselves make easily or cheaply. Smith thus realized that a division of labor induced by trade could lead to higher output and that barriers to trade, like tariffs, had a stultifying economic impact. By 1860, England was the world’s richest nation and was essentially tariff-free.
Officially known as the Merchant Marine Act of 1920, the Jones Act blocks foreign-flagged ships from transporting goods between U.S. ports. The law has historically had many detractors from both sides of the aisle. Republican Sen. John McCain was against it. Hawaii Democratic Rep. Ed Case has blamed the law for “artificially inflating the cost of shipping goods” to his state. Rep. Alexandria Ocasio-Cortez called for a “one-year waiver from the Jones Act for Puerto Rico” after Hurricane Fiona hit the island in 2022.
These pages have long editorialized in favor of the Jones Act’s repeal. The most recent attempt to do so was introduced by Utah Republican Sen. Mike Lee in January 2024. But the Senate Commerce, Science and Transportation Committee, then led by Democrats, took no action beyond reading the bill. Now the political landscape has shifted and Republicans control the committee. The time is right to revisit Mr. Lee’s bill.
The Jones Act has powerful supporters. Most of them represent constituencies that benefit financially in some way from the economic distortions the law creates. Groups such as the AFL-CIO, the Marine Engineers Beneficial Association and American Maritime Partnerships have spent heavily to preserve the Jones Act. Organizations like the Transportation Institute argue it is “critical” for national security and domestic economic stability, ensuring “reliable domestic water transportation service” and employment for hundreds of thousands of U.S. citizens. Some Republicans, including Louisiana Sen. Bill Cassidy and Florida Rep. John Rutherford, support leaving the Jones Act alone.
The Editorial Board of the Wall Street Journal identifies several Biden-era regulations that Congress should axe. Two slices:
• The Consumer Financial Protection Bureau ban on inclusion of medical debt in credit reports. Before the rule was issued, credit bureaus had removed from reports collections under $500 and those that were later paid. The CFPB rule eliminates the incentive to pay medical bills, which will harm medical providers and lead to higher healthcare costs. There’s no such thing as a free MRI.
The rule is projected to increase credit scores of some 15 million Americans with medical debt by 20 points, making those who skip out on paying medical bills look more credit-worthy. As a result, lenders could struggle to underwrite other forms of consumer debt.
• The CFPB’s effective $5 cap on overdraft fees. The biggest banks in recent years have eliminated or slashed such fees to compete with fintech firms. This rule will mostly punish smaller banks, which may compensate for lost revenue by eliminating free checking. Some may also scrap overdraft protection, forcing customers to take out higher-interest payday loans to pay bills.
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• Energy Department efficiency standards for tankless gas water heaters that will remove 40% of models from the market. Consumers would have to buy more expensive electric or condensing gas models that require costly home retrofits.
• The Environmental Protection Agency waiver that lets California impose electric-vehicle quotas. Auto makers can’t achieve the Golden State’s mandates, which a dozen or so other states have adopted. The result will be higher prices on gas-powered cars nationwide as auto makers seek to compensate for losses on EVs in California.
Steven Greenhut asks: “Has the imperial presidency arrived?”
GMU Econ alum Bryan Cutsinger isn’t swallowing Jerome Powell’s history of recent inflation.
