Alex Nowrasteh and Adam Michel make the case for private provision of economic data. A slice:
President Donald Trump recently fired Bureau of Labor Statistics (BLS) Commissioner Erika McEntarfer hours after the agency released unexpectedly weak job growth figures, accusing her of manipulating the data without evidence. He has now nominated E.J. Antoni, chief economist at the Heritage Foundation, and a well-known statistical charlatan, to lead BLS.
Antoni would be seen as a partisan head of BLS who risks politicizing its economic data and sinking the reputation of a justifiably respected government statistical bureau. Yet this partisan attack raises a deeper question: Should the federal government produce economic statistics at all?
The answer is no. Statistical offices, like the BLS and the Bureau of Economic Analysis (BEA), do not supply public goods, but rather crowd out private production of statistics and create a pretense for government economic intervention in the private economy to our detriment. Ending the BLS and other government statistical agencies would likely improve the quality of economic information, encourage innovation, and reduce government-caused economic distortions. Devolving these functions to private markets would insulate them from the political corruption, congressional funding battles, and institutional rot that accompany centralized control.
This letter in today’s Wall Street Journal by AEI’s Scott Winship is great:
Mike Haugen is correct that we shouldn’t subsidize stagnation and that policymakers ought to expand opportunity so all Americans enter adulthood with the skills to ensure their families live securely (Letters, Aug. 16).
But all evidence is that Americans live better materially than almost ever before. It is true that by one commonly used measure, child poverty in 2023 was higher than it was between 2019 and 2022. But in 2022 the rate was the lowest in history, save the Covid years of 2020 and 2021, which featured a flood of safety-net expansions that contributed to the inflation that hurt poor families well into 2023.
Had those temporary expansions been made permanent, moreover, they likely would have reduced employment among single parents, threatening to block upward mobility out of generational poverty. Some worry about recently enacted federal spending cuts, but when tougher work requirements were imposed on the 1996 cash welfare program—as this year’s tax bill did for food and medical benefits—child poverty fell to new lows.
Regardless, the 2023 child poverty rate was lower than in any year prior to 2018. By at least one measure, it was at an all-time low in 2022, with 2023 the second best year ever.
Meanwhile, it is becoming easier, not harder, for families to reach the middle class. Research by Stephen Rose for the Urban Institute found that in 1979 48% of families had income that put them short of that bracket. That share fell to 37% in 2014, and 29% in 2019.
Portraits of individual struggle can’t replace the best big-picture evidence about the state of the nation. Our policymakers would do well to worry less about material hardship and more about expanding opportunities and restoring family life.
Scott Winship
The Trump Administration is reportedly negotiating to take a 10% stake in Intel Corp., in what would amount to a de facto nationalization of the storied but struggling semiconductor firm. Does President Trump really believe that the same government that has so mismanaged air-traffic control can turn around the chip-making giant?
News reports say the Trump team is looking to take an equity stake in Intel in return for funding for the company promised under the 2022 Chips Act. This is how industrial policy so often works in practice. Step one: Subsidize a struggling business. Step two: When subsidies aren’t enough, nationalize it. Step three: Make sure it never fails.
Former Intel CEO Pat Gelsinger lobbied hard for the Chips Act subsidies to support his expensive bet on expanding U.S. manufacturing to compete with TSMC and Samsung. But unlike most semiconductor companies, Intel both designs and manufacturers chips and it has fallen behind in both. Its chips have been plagued by quality problems, while its enormous investment and focus on manufacturing hasn’t helped its ability to compete in AI chip design with Nvidia and others.
The Biden Administration tried to ride to the rescue last year with up to $8.5 billion in direct grant funding and $11 billion in low-cost loans for Intel from the Chips Act. But as always with government largesse, it came with political strings attached. The Commerce Department press release touted in great detail Intel’s plans to expand child care for its workers. Scant mention of its plans to improve manufacturing.
Most of Intel’s award hasn’t been disbursed because the company has slowed its expansion plans amid weak demand for its chips. Biden Commerce Secretary Gina Raimondo tried to drum up demand from tech companies but found few takers.
After seeing capitalism’s alternative firsthand for two decades, the Bolivian people seem to have decided capitalism isn’t the absolute worst.
A few years of relative success on economic measures seemed to vindicate Morales, but things have been going downhill for many years. Politically, the socialist movement has fractured, with Morales leaving his old party and encouraging his supporters not to vote for it. In the first round of this year’s presidential election, which concluded on Sunday, the Movement for Socialism candidate received just 3 percent of the vote. The party could potentially lose all of its seats in the Bolivian legislature.
On a per capita basis, Bolivia is the poorest country in South America besides Venezuela. Bolivia’s 1990 GDP per capita of $5,124 was about $1,000 behind neighboring Peru’s. Today, Peru is more than $5,000 ahead, and Peru’s growth hasn’t been exactly stellar either. Inflation is about 25 percent.
In recent times, Bolivians have been dealing with persistent fuel shortages. Fuel is price-controlled, of course, which has caused a steep decline in production and exploration in what was once South America’s natural-gas powerhouse. When the ruling-party candidate went to cast his ballot on Sunday, other voters shouted that he should wait in line to vote like they have to wait in line for fuel.
Nearly every week, someone writing for a major news outlet argues that economics has failed. Our models are too abstract. Our predictions are always wrong. President Trump’s recent firing of Bureau of Labor Statistics Commissioner Erika McEntarfer is the latest notable example of this anti-economics sentiment.
Let me make what appears to have become a radical argument: Simple economics is surprisingly good at making real-world predictions.
When Mr. Trump imposed steel and aluminum tariffs in 2018, the University of Chicago surveyed dozens of top economists. These weren’t partisan hacks; they included Nobel laureates and advisers to both parties. Not one of them thought that Americans would be better off because of the tariffs.
Seven years later, what have we learned? Study after study—using customs data, retail prices and scanner data from stores—has found that American businesses and consumers bore virtually 100% of the tariff burden. The economists were right: As consumers, Americans weren’t better off.
….
No model captures everything. Sometimes, supply and demand aren’t the only factors at play. When Russia invaded Ukraine, a simple supply-and-demand model wasn’t enough to predict what would happen. But even with something as uncertain as war, the basics went a long way. To predict what would happen, economist Rüdiger Bachmann and colleagues constructed a model to map how gas flowed through Europe’s economy.
The model was intricate, but its foundations came straight from Economics 101: When prices rise, people and businesses economize. The feared catastrophe never materialized. European gas storage filled ahead of schedule, and the Continent avoided the worst outcomes. Markets didn’t erase the pain, but they softened it, as many economists had predicted.
Eric Boehm exposes as false the Trump administration’s claim that its tariffs are “reciprocal.” A slice:
So are the tariffs actually reciprocal? Not even close.
Consider Switzerland. Last year, the average Swiss tariff on U.S. goods was a minuscule 0.2 percent, while the U.S. charged an average tariff of 1.4 percent on goods imported from Switzerland.
To make trade with Switzerland “reciprocal,” then, Trump would have had to lower American tariffs on Swiss goods. In fact, he’d have to lower them even more, because in January the Swiss government abolished all of its tariffs on industrial goods from America—an arrangement that Swiss officials said would allow more than 99 percent of American items into the country duty-free.
Trump responded to that by imposing a staggering 39 percent tariff on imports from Switzerland. This is reciprocity?
The Swiss tariffs are where the Trump administration’s claim of reciprocity is most disconnected from reality, but it is hardly the only example.
Singapore does not charge any tariffs on imports from the United States. Nevertheless, Trump’s 10 percent baseline tariff applies to anything that Americans want to purchase from individuals or businesses in Singapore. The average tariff charged by the European Union on American goods is a scant 1.7 percent, but imports from there will now face a 15 percent tariff here. Vietnam charges an average tariff of less than 3 percent on American goods, but Vietnamese goods will face a 20 percent tariff when coming into the U.S.—and that’s after Vietnam negotiated with Trump to lower what had been a 46 percent rate announced in April.
