Terrible news: Reason‘s Brian Doherty has died at the age of 57.
The White House recently released America’s Maritime Action Plan (MAP) to revitalize America’s maritime industry. It proposes a variety of regulatory modifications, subsidies, government financing options, and fees to encourage domestic shipbuilding. Although it includes a wide variety of proposals, two of them, when taken together, show the Trump administration’s hostility to free trade, as well as a general naïveté about the plan.
The first is the proposed “universal fee” on foreign-built ships; the second is the proposed regulatory change to the definition of a “U.S.-built” ship.
The universal fee is laughable in its imprecision. The MAP suggests a fee of anywhere from one to 25 cents per kilogram of imports brought on foreign-built ships. The MAP authors expect the fee to generate anywhere from $66 billion to $1.5 trillion over the next decade.
Essentially, this would be a tax by weight on all foreign commerce, as less than 2 percent of imports are carried on U.S.-flagged vessels, and even those vessels are foreign-built. The Jones Act restricts shipping between ports to U.S.-built, U.S.-owned, U.S.-flagged, and U.S.-crewed ships. On the high end of the proposed range, the fee would be a considerable barrier to trade. The tariffs put in place under the International Emergency Economic Powers Act (IEEPA) are projected to generate $1.4 trillion to $2 trillion over the next decade, so the upper estimate of the universal fee ($1.5 trillion) could come close to those tariffs in terms of both trade barriers and revenue.
My GMU Econ colleague Bryan Caplan reports on his epiphany about Trump’s ‘theory’ of trade. A slice:
While I agree that Trump is terribly wrong about international trade, there’s a big difference between being wrong and being confused. While I doubt I’m ready to pass an Ideological Turing Test for Trumpian trade theory, I recently had a weird epiphany on the topic. After said epiphany, I feel capable of articulating roughly what Trump is thinking.
- Above all, Trump wants the rest of the world to buy as much stuff from the U.S. as possible. He wants the world to buy our current output — and he wants them to buy our assets, too! His dream is piles of dollars flowing into the U.S. from all directions.
- If piles of dollars flow into the U.S. from all directions, he thinks this will boost U.S. sales and employment.
- Trump doesn’t know and doesn’t care about the “trade deficit” as economists define it. When he hears “trade deficit,” Trump imagines that U.S. dollars leaving the U.S. exceed U.S. dollars entering the U.S. Foreign investment means U.S. dollars entering the U.S., so on his implicit definition, foreign investment reducestrade deficits.
Why would anyone find this story plausible? Simple: It’s unadorned, old-fashioned Keynesianism. Trump wants to boost aggregate demand. The more money foreigners spend here, the more American business will sell, and the more American workers they’ll hire.
Judge Glock explains that “private credit is still safer than banks are.” A slice:
Private credit rose to prominence following the Great Recession, when new regulations made it harder for normal banks to lend money. The amount of money in private credit has grown by about 300 percent over the past decade. Today, private credit funds control more than $1 trillion in assets. They’ve attracted investors by providing high returns: over 8 percent a year in recent years, a far higher rate than a basket of typical corporate bonds yields.
These funds fill a vital economic need. Commercial and industrial loans constitute only a bit over 10 percent of all bank assets. By contrast, private credit is almost entirely devoted to lending to working companies that need money to grow. Though still a small part of the financial world, private credit now constitutes over 15 percent of all private company debt.
In an increasingly intangible world, private credit is also showing willingness to take on tech and other new-economy companies. According to a survey by a team of academic economists, the most important reason companies could not get bank credit and had to use private credit instead was that the companies lacked physical capital to put up as collateral. According to an estimate from the International Monetary Fund, about 40 percent of private credit was going to technology companies as of 2024.
Most private credit funds are semi-liquid, meaning that investors can withdraw their investments—much like withdrawing a deposit from a bank. But unlike a bank, these funds have withdrawal caps, usually set at about 5 percent of all assets in a fund per quarter. After that amount is hit, the fund can “close the gate,” as funds like those at BlackRock have recently done.
Sydnexis has spent a decade developing atropine eye drops that slow the progression of pediatric myopia, a growing problem. Myopia typically develops in early childhood and progresses until a child stops growing. Genetics plays a role, and screen-time increases the risk. Rates have soared with smartphone use.
The company’s three-year randomized controlled trial succeeded on the key benchmarks the FDA set years earlier, reducing progression by about a third among children under 12 and more among the fastest progressors at the start. Yet the FDA rejected Sydnexis’s drug last October because benefits weren’t “clinically meaningful” in its view.
Why not? Because some children would still need glasses since the eye drops don’t completely stop or reverse nearsightedness. Maybe, but children wouldn’t have go to the eye doctor as often to get prescriptions for new lenses. Severe myopia increases the risk of cataracts, glaucoma and retinal detachment later in life. Reducing nearsightedness can prevent these eye diseases.
In any case, the FDA’s job is to review drugs for safety and efficacy. Let doctors and patients decide whether the benefit is meaningful. The FDA’s rationale echoes the paternalistic mindset of Dr. [Vinay] Prasad. He has scuttled rare disease drugs because, in his view, they aren’t worth the cost since they don’t cure all patients, even if they slow progression and reduce symptoms.
[DBx: Hey, but at least the arrogant, overbearing FDA under Trump isn’t woke, so it must be doing its part to rescue Americans from arrogant, overbearing progressives!]
Zohran Mamdani doesn’t want to soak only the rich; he also wants to soak middle-class New Yorkers. (HT S. Kaufman) [DBx: New Yorkers of a certain age will recall the Crazy Eddie’s television commercials, which I paraphrase here: “Mayor Mamdani! His taxes are INSANE!!!”]
