Commerce Secretary Howard Lutnick joined the administration pile-on against Federal Reserve Chairman Jerome Powell, whose sin is not cutting interest rates. There are good arguments on both sides of the interest-rate question. Then there’s Lutnick’s argument.
Justifying a go-slow approach to reducing rates, Powell said that tariffs have already caused prices to increase for some products, such as personal computers. Lutnick calls that “really sad”: “You would think Powell would know there are no tariffs on personal computers. They currently don’t exist.”
This is . . . not true. Some of the data showing it’s not true come from the Department of Commerce. In fairness, tariffs have been hard to keep track of lately — but that’s not a defense that Lutnick can make.
James Pethokoukis documents and applauds the robustness and resilience of today’s global supply chains web, but warns that this robustness and resilience aren’t unlimited. Here’s his conclusion:
The bottom line is that economic actors have been betting that President Trump’s bark exceeds his bite and that neither tariff spikes nor Middle Eastern conflagration will spiral beyond control. Yet such confidence rests on shaky foundations. Should America crack down on transshipment schemes, or should geopolitical tensions flare higher still, today’s surprising resilience may prove altogether more fragile.
Mike Feinberg, who co-founded the KIPP charter school network in the 1990s, has said that Smith’s company was a major inspiration. “FedEx didn’t hurt the post office. It made it better,” Mr. Feinberg once told a reporter. “I want the monopoly mindset broken up,” he has also said. “Without competition, neighborhood schools behave like monopolies, delivering low quality at high cost.”
Empirical studies have supported these claims. Research by Caroline Hoxby, an economist at Stanford, demonstrated that schools respond positively to deregulation and competition in the same way that other sectors do. Deregulation of the trucking industry in the 1970s resulted in faster and more-specialized customer service than before at the same price. Competition from foreign automakers has enhanced the quality of domestic vehicles.
“In parcel services, the introduction of competition improved productivity not only because the private firms (United Parcel Services, Federal Express, DHL Worldwide Express, etc.) had higher productivity and productivity growth,” Ms. Hoxby wrote. “The competition also induced the U.S. Postal Service to raise substantially its own productivity.”
The goal of school reformers isn’t simply to create more alternatives for parents but also to provide incentives for underperforming schools to improve or risk losing students to better schools. The most efficient way to improve K-12 education is to make schools compete for students. As Fred Smith and so many other successful entrepreneurs well-understood, more competition makes organizations strive to do better. Less competition breeds complacency.
But the question remains: What should economists do in a free society?
Roger Koppl offers a helpful framework in his book Expert Failure, showing how experts can exist in a liberal order. He lays out four types of expert-public relationships.
First, when there is a monopoly of experts and experts decide for non-experts, we face the rule of experts — central planning is the prime example.
Second, when we have competing experts, but experts still decide for ordinary people, we get a quasi-rule of experts, such as in school voucher systems.
Third, if there is a monopoly of experts but people decide for themselves, we get expert-dependent choice — priests are a good example. But the fourth option is the one that preserves individual liberty: competitive experts and self-rule, where citizens decide for themselves. This is what Koppl calls self-rule or autonomy.
The idea that experts — including economists — should not run the world is not a critique of expertise itself. It’s about putting experts on equal footing with citizens. In a free society, experts are part of the political process — not above it. In self-rule, people are free to make their own decisions and consult experts when needed to reduce information asymmetry and make better choices.
In this system, both ordinary people and experts learn from experience and bear the costs of their mistakes — something that doesn’t happen under the rule of experts.
Trump’s philosophical promiscuity makes a mockery of those who would claim him as their own. Whether it is the product of caprice, or of a short attention span, or of a desire for ambiguity does not particularly matter. Since he arrived on the political scene, Trump has achieved the impossible feat of holding contradictory opinions on almost every imaginable topic while cultivating a reputation for conviction. In the last three months alone, he has been for and against increased taxes on the rich; enthusiastic about and irritated by the SALT deduction; in favor of “the largest deportation program in American history,” and concerned about the effect that such a policy might have on employers; so bellicose toward Iran that he flirted with regime change, and so determined to see peace that he cursed out Israel on the White House lawn. Pick a topic — abortion, guns, crime, TikTok — and you will find multiple Trumps. No wonder that those who feel obliged to defend him whatever he does look as if they are suffering from acute schizophrenia.
ICE ramps up its protection of Americans from peaceful people.
In its War of Independence (1948), the Six Day War (1967), the Yom Kippur War (1973), and its unending conflict with non-state actors (the Palestine Liberation Organization, Hamas, Hezbollah), including the fourth major war, which began Oct. 7, 2023, Israel has had material, financial, and intelligence assistance from others, but has always done the fighting. Its major departure from this policy, the 1956 British-French-Israeli attempt to seize the Suez Canal that Egypt had nationalized, was a debacle.
By joining Israel against Iran, the United States has expanded its commitments more than it can now know. The United States is waging only a proxy war in Ukraine, but its prestige and credibility are fully at risk there. And now the United States is a participant in a war the likely outcome of which is obscured by the fog of war, and the momentum and direction of which is being set by an ally that has its own agenda.
Adolf Hitler reportedly said to one of his private secretaries, “The beginning of every war is like opening the door into a dark room. One never knows what is hidden in the darkness.” He supposedly said this as he prepared to do what he did 84 years ago last Sunday. He launched Operation Barbarossa, the invasion of Russia that proved his point.
U.S. Operation Midnight Hammer began Friday. Its reverberations are far from over.
John O. McGinnis reviews Sam Tanenhaus’s biography of William F. Buckley.
