This letter in today’s Wall Street Journal by AIER’s Ryan Yonk is excellent:
Thomas Duesterberg writes powerfully about tariff negotiations (“Trump Heads to Beijing With a Strong Hand,” op-ed, May 12). But he overlooks a key reality: Countries around the world are turning to Beijing as a primary trading partner not because China earned that position but because U.S. trade policy last year signaled that America is retreating from longstanding alliances.
American tariffs and the unpredictability they signal have pushed traditional allies to seek deals elsewhere, and China has been eager to oblige. We did not weaken Beijing’s negotiating position. We helped create it.
China depends on economic performance to sustain legitimacy and maintain power, but it is likely to negotiate patiently while building alternative partnerships. The U.S. should do the same. As Mr. Duesterberg notes, America still holds most of the economic cards. We don’t need protection from Chinese competition as much as we need domestic policies that unleash the potential of the American worker—and foreign policies that remind our allies the U.S. is a better partner than China.
Policy Tensor debunks the “Pettis-Miran hypothesis.” (HT Scott Lincicome) Two slices:
The thesis, most cogently argued by Michael Pettis, is that countries with high savings and attendant trade surpluses hog manufacturing—they are able to secure a larger share of the world’s manufacturing output, value-added and employment. Conversely, countries that have low savings and attendant trade deficits pay the price for the perfidy of the high savings nations in terms of a lower share of global manufacturing. What is truly mind-boggling about this thesis is that it is so easily debunked. No serious economist buys it. The only people peddling it are fake economists who have not published a single paper in an economics journal, ever.
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It is simply not the case that higher current account surpluses imply higher shares of manufacturing value added. Ask any serious economist or statistician: this is dispositive refutation of the Pettis hypothesis. The relationship that the Pet
The problem is not merely that the government makes for a lousy investor. Government investing changes the moral relationship between risk, reward, and accountability.
In markets, investment is disciplined by consequences. Private investors deploy capital that belongs to them or that’s voluntarily entrusted to them. If they make bad bets, they lose money, reputation, clients, and sometimes even their careers. Prices communicate information. Profits reward value creation. Losses punish mistakes.
This discipline is central to what makes markets work. Government, however, investing operates under entirely different rules – rules that virtually eliminate discipline.
Government officials allocate resources extracted through taxation or borrowing backed by taxpayers. If projects fail, these officials rarely bear meaningful personal consequences. The losses are socialized. The incentives instead are political. Success is often measured not by financial returns but by press releases, ribbon cuttings, strategic narratives, or vague, untestable claims about resilience, competitiveness, and national greatness.
Wall Street Journal columnist Jason Riley writes here with his usual deep wisdom. A slice:
Theories about the need for a “philosopher king” or “great man” to advance society date back centuries. Intellectual figures from Plato to Machiavelli and Thomas Carlyle emphasized personal traits such as superior wisdom and exceptional moral character in choosing leaders. The idea was to find these extraordinary men, put them in charge, and align policies with their understanding of the common good. Adam Smith, by contrast, argued that free enterprise and the uncoordinated pursuit of individual self-interest would lead to better outcomes for more people. Societies should rely on market forces and voluntary exchange rather than on do-gooders.
March marked the 250th anniversary of Smith’s seminal text, “The Wealth of Nations,” published the same year as the Declaration of Independence. As we reflect on America’s milestone, it’s worth noting that the Founders shared Smith’s skepticism of philosopher-kings and the approach to choosing leaders that today’s AI poohbahs seem to have embraced.
“What the American Constitution established was not simply a particular system but a process for changing systems, practices, and leaders, together with a method of constraining whoever or whatever was ascendent at any give time,” Thomas Sowell wrote in his book on social theory, “The Quest for Cosmic Justice.” “Viewed positively, what the American revolution did was to give the common man a voice, a veto, elbow room and a refuge from the rampaging presumptions of his ‘betters.’ ”
Perhaps there’s a lesson here for our high-tech “betters” who are leading the revolution in artificial intelligence. Disruptive AI is coming sooner or later, in one form or another. The transition may be unpleasant for some, but the U.S. would be wise to embrace the technology and stay ahead of global rivals. And the private sector ought to lead the effort. Still, Elon Musk, Sam Altman and other entrepreneurs shouldn’t presume that people of superior virtue will always be in charge and can be counted on to do the right thing. Thankfully, our Founders had a deeper understanding of human nature.
Andrew Biggs makes clear that “the GOP’s entitlement math doesn’t add up.”
In most other rich countries, the provider of air traffic control is a separate organization from the regulator of air traffic control. That’s in accordance with guidance from the International Civil Aviation Organization, which says that separating those functions “has encouraged a business approach to service delivery and an improved quality of service.”
The most common model is a government corporation, funded by user fees rather than general taxes. A few countries, including Canada, have a nongovernment and nonprofit ATC provider. Either way, the provider is financially self-sufficient and institutionally separate from the bureaucratic agency that regulates it.
The proper role for the FAA in air traffic control should be setting safety standards and ensuring they are upheld. The provision of services should be spun off into a separate organization that only does air traffic control. It would be freed from the constraints of the federal budget and procurement rules to improve according to the best practices of business, not the demands of politicians
