Pierre Lemieux looks in detail at three new pieces of research into industrial policy. A slice:
The second area of concern that [Dani] Rodrik sees illuminated by mercantilism is the backlash against globalization. The so-called “China shock” in the United States (and other advanced countries) from the increase of imports from China between 1999 and 2011 led to “negative externalities” for “society at large” whoever “society at large” is—and eventually to the rise of the “rightwing populist movement.” I agree that this last development is worrisome, as would be the rise of a left-wing populist movement, but any industrial policy that could have prevented this economic adjustment would have entailed a very high cost in terms of general prosperity.
Consider the job losses attributed to the China shock. Change and creative destruction are a permanent feature of a free and dynamic economy responding to consumer demand. It is estimated that of the 5.8 million manufacturing jobs lost in the United States during that period, between 1 million and (at most) 2.4 million were due to the China shock. During the same period, so many new jobs were created in other industries that the net number of jobs increased by more than 6 million. Moreover, it is estimated that most of the decrease in manufacturing jobs was due to technological progress, automation, and higher productivity; it simply took many fewer workers to manufacture the same amount of goods as in generations past. An industrial policy to stop that would have hit other workers in industries not favored by the government.
When we broaden our view of employment to include all blue-collar jobs, not just manufacturing, the picture is even worse. Blue-collar employment numbers turned negative in 2025 after years of gains, driven by sudden losses in transportation and warehousing and stagnation in construction jobs.
Scott Lincicome shares this quotation from The Economist:
“Since Mr Trump took charge, most of the comments from manufacturers that ISM has published along with its surveys have mentioned tariffs. Not one has been positive. Many of the unpublished ones are more forceful still.”
America’s middle class is becoming wealthier as more families scale the economic ladder into higher-earning groups. New research shows that the ranks of the affluent have grown markedly over the last 50 years or so, while the lower rungs of the middle class have shrunk.
In 2024, about 31% of Americans were part of the upper middle class, up from about 10% in 1979, according to a report released this year by the right-leaning American Enterprise Institute.
There is no single, standard definition of middle class, or upper middle class, and what counts as a hefty income in one city can feel paltry in another. The AEI report, by Stephen Rose and Scott Winship, classified a family of three earning $133,000 to $400,000 in 2024 dollars as upper middle class. Households earning more were categorized as rich. The analysis looked just at incomes, not assets such as stocks or real estate.
What if individuals do not all have visibility into the risks of investment projects? In that case, I argue that firms and banks can add value as financial intermediaries. Individuals want to hold short-term, riskless assets. A firm that funds a data center can issue bonds that will pay off in most circumstances. This concentrates the risks of the data center project in the hands of shareholders, allowing some of the investment in the project to involve lower-risk bonds.
A bank can buy the bonds of the data center firm as well as debt from other firms. By owning debt with different maturities, the bank can issue short-term deposits to individuals and be able to handle occasional withdrawals by depositors.
The way that I like to put it is that households want to hold short-term, riskless assets. Borrowers, like the data center builder, want to issue long-term, risky liabilities. Financial intermediaries accommodate this by taking on long-term risky assets and issuing short-term, riskless liabilities. Intermediaries achieve this by being very selective in choosing their asset portfolios, by managing assets carefully, and by diversifying their assets and liabilities. A risky, long-term project like a data center ends up financed in part with riskless, short-term bank deposits.
The share of Argentines living in poverty was 28 percent at the end of 2025. That’s no small improvement. Since he entered the Casa Rosada in December 2023, one of the biggest criticisms of Milei’s free market agenda has been that poverty figures remained stubbornly high. Thenational poverty rate peakedvat 53 percent in the first half of 2024, but it’s been plunging since.
The self-proclaimed libertarian president has made a priority of tackling hyperinflation to kick-start economic growth. His reforms included slashing state subsidies and dramatically reducing the public-sector payroll to create Argentina’s first full-year fiscal surplus in effectively 123 years. Annual inflation fell from a staggering 200 percent when he took office to 33 percent on the year to February.
Formerly an economist — and a disciple of Milton Friedman and Adam Smith — Milei has long understood that socialism leads to poverty and capitalism leads to prosperity. He moved swiftly after his surprise win to break the socialist hold on Argentina, taking up the chainsaw he wielded on the campaign trail against a bloated bureaucratic state.
Chris Jacobs describes the effects Obamacare as “disastrous.” Here’s his conclusion:
After 16 years of seeing the failure of government-supervised healthcare in action, Democrats still want to convince voters that more spending, regulation, and government control will somehow solve the problems created by just those things.
