Since being reelected, President Donald Trump has falsely claimed his tariffs will reduce the national debt. Trump is now taking this marketing pitch to sell another one of his economic policies: government ownership in private companies.
Brian Albrecht is correct: Even when used for revenue purposes, tariffs are not a good tax.
Imagine a household with $62,000 in income and $456,000 in credit card debt that threatened to “shutdown” and stop paying its bills unless the family agreed to keep spending more than they earn. Then imagine that the parents were blaming one another for the repercussions of refusing to pay their bills on time and the resulting hardships as household utilities like water, gas, and electricity are shut off one by one. Meanwhile, both parents fundraise off the crisis, each publicly telling their friends and families that only they can save the household’s finances from the other.
Unfortunately, this is exactly the situation that Washington politicians are foisting upon the American people right now. The numbers above are simply scaled-down versions of our national fiscal situation: a federal debt of $37.5 trillion, annual revenues of about $4.7 trillion, and annual spending of about $6.7 trillion. We are a nation maxing out credit cards while the parents argue about which one of them gets to go shopping first.
David Henderson is rightly much impressed with George Selgin’s remarkable new book, False Dawn. Two slices from David’s review:
In his recent book False Dawn: The New Deal and the Promise of Recovery, 1933-1947, monetary economist George Selgin addresses these questions and more. I’ve read many books and articles on the Great Depression. Selgin’s book is, by far, the most thorough treatment I’ve read, and it will likely stand for a long time as the definitive statement on the causes of, and recovery from, the Great Depression.
Selgin doesn’t score cheap points. He carefully sifts through the evidence. His bottom line is that early parts of the New Deal, such as going off the gold standard, helped the economy recover but that later parts, such as the National Industrial Recovery Act, which cartelized hundreds of American industries, set the recovery back. Later actions by the Federal Reserve in 1936 and 1937 created a “double dip.” World War II helped end the Great Depression by causing FDR to quit castigating businessmen. The biggest surprise to many, which I wrote about here, and which Selgin quotes, is that neither expansionary monetary nor expansionary fiscal policy was responsible for the postwar boom.
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One of the main contributions to economists’ understanding of why the Great Depression lasted so long is economic historian Robert Higgs’s idea of “regime uncertainty.” With the early New Deal, FDR had cartelized industries. After the Supreme Court found this cartelization unconstitutional, FDR switched to aggressive enforcement of antitrust laws and attacked successful businesspeople as “economic royalists.” This, argues Higgs, can account for the drying up of investment in the late 1930s. Selgin lays out Higgs’s argument. Selgin also points to FDR’s proposed tax on wealth, which, he argues, “was less concerned with raising revenue than with soaking the rich.”
Art Carden isn’t much impressed with Ezra Klein’s and Derek Thompson’s book Abundance. A slice:
It is maddening, then, to read over and over again that they believe more government is the solution. After chronicling example after example of how coercion creates pathological incentives that restrict even the most well-meaning civil servant’s best intentions, they conclude that they just need to fiddle with things a bit to unleash the full power of good intentions. After all, they argue, if it works in Denmark, why can’t it work here? That question, I take it, is rhetorical, but it’s akin to looking at a map of the Birmingham, Alabama, metropolitan area and asking, “If it works so well in the posh and very exclusive suburbs, why can’t it work in Birmingham proper?”
The book’s discussion of Operation Warp Speed, which delivered COVID-19 vaccines in December 2020, also rings hollow. First, giving the government credit for Operation Warp Speed is a lot like giving the government credit for ending Jim Crow. Scientists had sequenced the COVID-19 genome on January 11, 2020. Moderna had cooked up its first batch of vaccines two days later. That the FDA got out of the way just enough for Moderna to roll out a vaccine almost a whole year later is anything but a victory.
Wisdom from Walter Olson: “Protect opponents’ legal rights, and you protect your own.”
