My intrepid Mercatus Center colleague, Veronique de Rugy, calls on Congress to wake up. A slice:
If you want to complain about the CBO, here is a constructive criticism rather than the nonsense that I am hearing all day long on TV. CBO projections right now have the government’s interest rate never getting above 3.6 percent over 30 years. As Jessica Riedl reminds us, “If rates remain at 4.5%, that adds $40 trillion more to interest costs over 30 years—as much as adding a second Defense Department.” In other words, after years of assuming rates would go up, and they didn’t, the CBO is likely underestimating the growth in interest rates. That’s a super big deal, and it doesn’t help the spendalcoholics in Congress.
After holding the tax bill hostage, House Republicans from high-tax states have extorted an enormous increase in the state-and-local tax deduction—not that they will get much credit for it. Unlike the bill’s pro-growth provisions, this giveaway to the affluent will have no economic payoff and subsidizes profligate Democratic-run states.
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Few voters in other states will benefit because the standard deduction (which the House bill increases to $32,600 for couples) is bigger than their itemized deductions. Texans pay no income tax and on average $3,872 in property tax. Why should they subsidize Democratic spendthrifts in Albany?
Don’t be surprised if Democrats who run high-tax states take advantage of Republican generosity by raising taxes even more. It will also relieve political pressure on Democrats to reduce taxes to prevent high earners from fleeing. Don’t expect Gov. Kathy Hochul to send her thanks to Messrs. LaLota and Lawler.
James Pethokoukis explains that “AI optimists are more pragmatic than you think.” A slice:
The dismal record of populist utopianism greatly informs my view of technological utopianism, at least as described by Charles T. Rubin in his lead essay. Consider: President Donald Trump’s ever-evolving tariff regime imagines a world where America can unilaterally reshape global commerce without meaningful downside consequences to the US economy. It’s a dreamtime where complex trade imbalances yield to simple solutions, supply chains reorganize quickly and more or less painlessly, and a manufacturing golden age returns through sheer force of presidential will. Likewise, these protectionist utopians disregard modern realities: automation’s relentless march, intricate global interdependencies, and inevitable retaliatory measures. And like all utopian projects, theirs offers an appealingly simple narrative that glosses over messy complexities.
The result is hardly surprising. Trump’s long-held belief in the wonderworking power of trade barriers has run headlong into the wall of reality: corporate chaos, market meltdown, and rising recession odds. The pattern is depressingly predictable, as economists Rudiger Dornbusch and Sebastian Edwards demonstrated in their seminal 1991 paper on Latin American populism. Such governments, led by leaders who wishcast away the existence of any type of constraints on economic policy, initially disregard fiscal discipline while pursuing rapid growth. We inevitably watch their experiments flounder as bottlenecks emerge and inflation accelerates. Capital flight and economic collapse is the ultimate result.
The next chapter mines Ludwig von Mises’s back catalogue for hints of racial prejudice. Slobodian has done this before in two journal articles (Slobodian, 2019a; 2019b), which have been strongly criticised by Phillip Magness and Amelia Janaskie (2022, p. 67) for “inverting Mises’s meaning in a light that erroneously casts him as sympathetic to racism or colonialism”. Their critique is difficult to argue against. For an Austrian in the first half of the twentieth century, Mises was remarkably free of racial prejudice. He was contemptuous of the racial science and eugenics that were popular at the time, particularly on the political left, and was a prominent advocate of open borders.
One does not need to be familiar with all of Mises’s writings to see that Slobodian is guilty of selective quotation. It is only necessary to read the whole paragraph from which the quote is taken. For example, Mises is quoted as writing in 1944: “There are few white men who would not shudder at the picture of many millions of black or yellow people living in their own countries” (p. 76). Slobodian puts this in a context that implies that Mises shared this revulsion and cites it as evidence that Mises had “partially legitimized closed borders for nonwhite migrants as a near-permanent feature of the world order” (p. 76). But the very next sentence of Mises’ text reads: “The elaboration of a system making for harmonious coexistence and peaceful economic and political cooperation among the various races is a task to be accomplished by coming generations” (Mises, 1944, p. 107). It should be obvious that Mises was not endorsing the prejudices of the majority, nor was he recanting his lifelong belief in free immigration. He was merely acknowledging the existence of racial prejudice – which was unmistakable in 1944 – and hoping that it could be overcome.
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We are then introduced to a cast of characters, some more objectionable than others, who Slobodian sees as the godfathers of America’s modern ‘Far Right’ (always capitalised): paleolibertarians, paleoconservatives, race scientists, IQ researchers, nativists, gold bugs, white supremacists and assorted populists who are united in their scepticism about the benefits of mass immigration if nothing else. I confess that I had never heard of most of them before reading this book. After working in the world of free market think tanks for 15 years, this may be a ailing on my part, but it might equally be because they are not significant figures in the ‘neoliberal’ movement.
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My argument is not that anti-capitalists and right-wing populists are peas in a pod. There is a world of difference between opposing free trade because you think it will make your trading partner worse off and opposing free trade because you think it will make you worse off. But in the final analysis, both the populist right and the woke left are opposed to globalisation and neoliberalism and, whatever reasons they have for wanting to rip up trade agreements and to subsidise their domestic industries, the outcome could not be further away from what Mises, Hayek and several generations of free market economists and libertarians have argued for.
