George Will is correct: “Exploding U.S. indebtedness makes a fiscal crisis almost inevitable.” A slice:
[Kenneth] Rogoff warns that many believers in “lower forever” interest rates express the human propensity to believe in a “supercheap” way to expand “the footprint of government.” The nation is, however, “running deficits at such a prolific rate that it is likely headed for trouble.”
He rejects “lazy language” about U.S. government debt obligations being “safe.” Debt is a temptation for inflation, which is slow-motion repudiation of debt compiled in dollars that are losing their value. (Ninety percent of U.S. debt is not indexed for inflation.) When President Franklin D. Roosevelt abrogated the gold standard backing the currency, the Supreme Court ruled it a default. Also, holders of U.S. bonds were not safe from significant losses during this decade’s post-pandemic inflation, or from huge losses during the 1970 inflation.
Investors watching U.S. fiscal fecklessness might increasingly demand debt indexed to inflation. “How sure are we,” Rogoff wonders, “that no future president would seek a way to effectively abrogate the inflation link out of frustration” that it impeded “partial default through inflation.” A president could call this putting America first.
Eric Boehm reports that “Trump’s trade war is failing on its own terms.” A slice:
When President Donald Trump announced the “Liberation Day” tariffs on most imports in early April, his trade advisors promised it was the prelude to new, better trade deals with dozens of other countries.
“We’re going to run 90 deals in 90 days,” Peter Navarro, the White House’s top trade advisor, told Fox Business on April 12, shortly after Trump paused those tariffs—ostensibly to allow negotiations to take place.
It’s been 76 days since then, and there have not been 76 new trade deals. Not even close. The actual tally is two, and that’s only if you count the “framework” deals with China and the United Kingdom—neither of which amounts to a full trade deal at the moment.
Vance Ginn explains that Trump’s “‘art of the deal’ politics undermines America’s future.” A slice:
In business, unpredictability might create bargaining power. In government, it creates instability. That’s because public policy affects long-term decisions across millions of households and firms. Public choice theory explains how politicians often respond to the wrong incentives — seeking short-term wins instead of long-term outcomes.
We saw it with proposals to block Nippon Steel’s acquisition of U.S. Steel. It’s a private deal, but political posturing — under both Trump and Biden — has turned it into a nationalist spectacle. It’s great that Trump recently approved it, but not after making it politically charged, more restrictive, and an agreement that presidents shouldn’t get involved in. Likewise, new tariffs on $18 billion in Chinese imports will raise prices, reduce output, not solve perceived trade problems, and be a drag on other pro-growth efforts by Trump.
“The idea that someone rich or privileged would use their social capital to make others’ lives better can cause an intense reaction,” said Northwestern University psychology professor Michael Kraus. “You can see the intensity of this reaction in other contexts in history, such as the violence perpetrated against white civil rights workers.”
Where in the world did that come from? What is the thought process that leads anyone to conclude that those who warn of the unfeasibility of “free” bus fare, universal rent freezes, abolishing prisons and police, and waging war on the Jewish state from Gracie Mansion are the modern-day equivalent of the Klan? It is, perhaps, the same logic that led the professor to presuppose that it’s only conservatives who believe that Mamdani can’t “really be a socialist if he didn’t suffer economic insecurity.”
It’s safer to wager that it’s only conservatives who understand that socialism’s loudest proselytizers tend to be comfortable, well-educated theorists. From London’s Toynbee Hall and the Guild Movement in America to the young revolutionaries who decamped from universities to descend on the Russian peasant classes to lecture them about the virtues of socialism, class envy has often been a philosophy taught from above. Indeed, the fact that Mamdani owes his victory to New York’s most well-heeled residents advances the theory.
