Early economists, such as James Mill and David Ricardo, theorized that the physical labor exerted to create a good is the real measure of its value. Karl Marx took the concept to its extreme: If labor creates all value, then profit must require unpaid labor, making every employer an expropriator and every fortune a crime.
Then, beginning in 1871, economists countered the labor theory of value. Carl Menger, William Stanley Jevons and Léon Walras demonstrated independently that value resides not in hours of toil but in the judgments of consumers. Writing a 500-page novel takes the same amount of physical labor as typing out 500 pages of the word “banana” repeatedly. Only the novel commands a price. Value is created whenever someone rearranges the world into a shape that others want. It is measured by the buyer, not the worker.
Entrepreneurs are the arrangers. Economist Israel Kirzner argued that entrepreneurship is alertness — noticing an opportunity that nobody else has found. The entrepreneur sees that resources combined in a certain way and priced at a certain level can be recombined into something consumers will value even more. The gap between the two is profit. Nothing is taken from workers, who are paid the wage they agree to, or from customers, who buy the product only when the purchase leaves them better off.
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A movement that believes wealth is stolen will tax it, cap it and make everyone poorer. Ideas drive growth, and ideas come from people who can profit from them. A world that cherishes entrepreneurs will enjoy advanced chips and revolutionary cures. A world that punishes its innovators will at least enjoy plenty of slogans.
“America has a huge trade surplus with Brazil. Trump just put 25 percent tariffs on Brazilian goods anyway.” Here’s a slice from another excellent piece by Reason‘s Eric Boehm:
Trump administration officials have offered a variety of overlapping and competing justifications for the new tariffs in comments to The New York Times, including “inadequate policing of deforestation” and the fact that Brazilian courts had tried to order “U.S. social media companies to take down certain political content.”
Those might be real problems, but how will tariffs address them? Forcing American businesses and consumers to pay higher prices on imports from Brazil seems like an odd way to combat deforestation or stand up for free speech.
“These tariffs are a blunt tool with a weak connection between the practices at issue and the American companies that will bear the costs,” Dan Anthony, executive director of We Pay the Tariffs, a nonprofit coalition representing more than 1,200 American small businesses, said in a statement. “Businesses buying everyday products from Brazil will now pay new tariffs because of disputes over digital payment rules and other policies they have nothing to do with.”
For all the talk about trade deficits, the new tariffs once again reveal that there are no principles underpinning the Trump administration’s trade policies. The president will use any and every justification to slap new tariffs on foreign imports and leave Americans with the bill.
When politicians do raise the issue, they make the fix sound easy. Sens. Bernie Moreno (R-Ohio) and Elizabeth Warren (D-Mass.) want you to believe that eliminating the cap on payroll taxes would fix the problem. That solution fails on its own terms.
Using data from the Social Security Administration’s own actuaries, my colleague Jack Salmon demonstrates that scrapping the taxable maximum closes only 58% of the gap. National Review’s Ramesh Ponnuru noted last month that it would push the federal marginal rate on top wages to an untenable 49.4%, and overall rates would climb past 60% in high-tax states like California and New York.
The senators aren’t alone in wanting to tax our way out of this problem. In one recent survey, 89% percent of Americans aged 65 and older favored protecting current retirees’ benefits even if doing so requires higher taxes on younger workers.
That position is popular only because it rests on the image of retirees living off nothing but Social Security. That image, partly an artifact of bad data, fails to capture the situation.
In a March 2025 government survey, 24% of seniors reported that Social Security supplies 90% or more of their income. But when Census Bureau researchers matched responses with IRS filings and benefits records, they found that retirees frequently omitted their 401(k) and IRA withdrawals, making the real figure only about 14%. Meanwhile, 58% of retirees draw less than half their income from the program.
The remaining 42% are the retirees that Social Security reform of any kind should protect. They already receive a raw deal under the current formula, which does a much better job of protecting wealthier seniors.
As the Cato Institute’s Romina Boccia and Ivane Nachkebia documented last month, seniors aged 65 to 74 had a median net worth of $410,000 in 2022, compared with only $135,600 for those aged 35 to 44 (who pay a significant share of the taxes). Roughly 34% of Social Security dollars go to filers with adjusted gross incomes above $100,000. Too often, Social Security is less a need-based program than a transfer of wealth from the young and unpropertied to the old and comfortable.
“Beijing wants to lock down AI. Washington should open it up” – so argues Mark Jamison. A slice:
America has repeatedly become the world’s technological leader not by keeping its innovations at home, but by making them indispensable abroad. American operating systems, cloud computing, software platforms, financial services, entertainment, and internet companies became global standards because businesses and consumers everywhere wanted to use them. This meant enormous profits for U.S. companies—and expanded influence for the U.S. It also ensured that America remained the top destination for global talent, and set the stage for future innovation that would further U.S. dominance.
We have the opportunity to do this again with AI. The United States leads the world in AI innovation and investment. Our frontier models have always been best-in-class. But the gap is narrowing.
Speaking of AI…. (HT Brian Mannix)
On Friday, Thinking Machines released its first manifesto, outlining its vision for a future in which AI was decentralized and built on local knowledge. The company, whose CEO, [Mira] Murati, witnessed the collapse of communism in her native Albania as a child, compared the current dominant AI paradigm of close-source frontier labs to “central planning”—great for bounded tasks like chess and math, but not for the real work humans do every day.
Stu Smith takes us “inside the rise of the anti–data center movement.” A slice:
Across the country, DSA chapters are taking up the data center cause. In Seattle, that has meant calls for a statewide moratorium on AI development, targeted at Microsoft and Amazon facilities in particular. In the Washington, D.C., region, Metro DC DSA has focused on blaming facilities in Maryland and Virginia for rising utility costs while advocating for community control of electrical infrastructure. A similar effort is underway in Arizona, where DSA activists are pushing to take over Tucson Electric Power, which has shown a willingness to work with data-center developers.
In New York State, these campaigns have found tangible political backing and influenced policy discussions and outcomes. At the DSA Ecosocialism event, State Senator Kristen Gonzales noted that the legislature had approved a bill establishing a one-year moratorium on data-center construction, allegedly to shift power away from Big Tech. In Ithaca, the local DSA is actively opposing a TeraWulf data center project—an opposition effort that has won the backing of New York State Representative Anna Kelles. Now that DSA has gained representation on Ithaca’s city council, members have said they intend to “electorally punish” those who supported and enabled the project, while continuing to push for a moratorium and pursuing legal action against TeraWulf.
Charlie Trumbull makes the case that “Trump’s boat strikes are crimes against humanity.”
It’s genuinely amusing how all of the leading “intellectuals” of the new right – Deneen, Pappin, Hazony, Pecknold, Pinkoski – are complete lightweights.
Their “research” invariably shows signs of being way out of their depth and lacking even minimal competence in what they purport to describe. It could not pass peer review at even a 3rd tier journal specialized in the same subject areas. So they create their own publication ecosystem of blogs, vanity journals, and “popular” outlets that insulate them from basic scrutiny. And when they put something into print, it repeats basic errors that betray its shallowness.
So you get Deneen making sweeping claims about the American founding that contradict the founders themselves, or Pappin mistaking LaRouchie conspiracy theories for economics, or Pecknold claiming Catholic theological sanction for positions that senior Vatican officials have explicitly denounced, or Pinkoski peddling white nationalist dystopian novels as serious policy analysis, or Hazony trying to repackage incoherent right-Hegelian babble as if it was a derivative of Burkean political writings that he does not understand and has probably never even read beyond a superficial glance.
A functional scholarly ecosystem would have flushed these buffoons out a while ago. Then again, a functional scholarly ecosystem would have also flushed out Nancy MacLean etc.
Virginia Postrel tweets: (HT Scott Lincicome)
People getting sick from cyclospora or avoiding fresh produce to avoid sickness are all casualties of the superstition against irradiating food.
