President Trump imposed the tariffs, in his own words, to close a trade deficit which he deemed a “national emergency.” To his mind, when the United States imports more goods than it exports, it loses money to foreign countries. His original tariff schedule was based on a cockamamie formula that divided bilateral trade deficits by overall imports from each country. The numbers it produced were supposed to represent the cumulative effect of all foreign trade barriers, apparently assuming that, with completely fair trade, the United States would have zero trade deficit (or perhaps a surplus) with every country in the world. Trump then chopped those made-up rates in half as a generous “discount.”
All of this was complete nonsense.
First, the nation does not lose money when it imports more goods and services than it exports. If you focus exclusively on these two kinds of transactions, then yes, Americans are sending more dollars abroad than foreigners send here. But we are no more “losing money” on imports than you are “losing money” when you buy groceries or pay for a haircut. Companies and individuals purchase imports because they have value. There is no loss in mutually beneficial transactions, even when aggregated.
Perhaps Trump and Bessent are smarter than we lowly economists. Maybe they’ve discovered that trade exists in a quantum realm where it can be both enriching and impoverishing at once. “Schrödinger’s shipping container,” if you will. Or maybe — just maybe — they’re economic grifters, peddling long-debunked fallacies and saying whatever they need to survive a hostile news cycle.
Regardless, reporters should ask Trump and Bessent how the same tactics meant to “liberate” the US economy can “asphyxiate” Iran’s. Inquiring economists would love to know.
Until they can answer that riddle, Trump and Bessent will have to sell voters a tale of two trade wars — one of which promises “the best of times” for Americans while the other portends “the worst of times” for Iranians.
Nick Gillespie talks with Nobel-laureate economist James Heckman.
In 1990, practically yesterday for an economic historian, the median person on Earth lived on $4.29 a day. Two centuries earlier, it was roughly $2 a day — a figure that had changed little for millennia. But in 2026, the median person lives on about $11.66 a day.
Matt Ridley asks: “Will anything be a luxury in a richer world?” A slice:
Napoleon III liked to show off his wealth by laying aluminium cutlery at his table and decorating his empress with aluminium jewels. The metal was new, rare and fascinating and for a while people pretended to find it beautiful. Today aluminium is seen as cheap, common and functional. Mass producing a luxury good can destroy its fascination in a flash. But innovation will always find new luxuries to celebrate.
John Stossel makes a sound case for trillionaires. A slice:
People who hate the very rich tend to assume that there’s a finite amount of wealth. So if Musk has a trillion dollars, everyone else must have less.
“That’s simply not true,” explains business ethics professor Chris Freiman. In a free market, businesses create new wealth, because consumers give up dollars only “because they got stuff that they valued more in return.”
Car buyers voluntarily give Musk money because he created a car they value more than other cars.
Likewise, “Steve Jobs became a billionaire, but the rest of the world got a billion iPhones,” says Freiman. Since the exchange was voluntary, “that seems like something to celebrate, not resent.”
Scott Lincicome shares news of the Trump administration’s latest step toward socialism.
Arnold Kling continues to write intelligently about AI.
Bjorn Lomborg makes clear that “most recycling is a waste.” Two slices:
Valuable materials were long recycled without government programs to make it happen. A century ago, scrap supplied about 30% of America’s copper, close to the 32% recycled globally today. Iron, steel and construction debris are recycled because businesses find it profitable.
Yet governments have increasingly pushed citizens to recycle paper, glass and plastics worth less than the cost of collecting and processing them. Sometimes the environmental benefits made up the difference. But over time the means became the end.
…..
Official accounts ignore a cost every household pays: the time spent sorting. Peer-reviewed studies from Sweden and Finland find it takes 26 to 29 minutes a week per person. Value that time at half the minimum wage in each country and it comes to €43 billion to €47 billion a year across the EU, about as much as the entire cost of Europe’s municipal waste system. Across the Organization for Economic Cooperation and Development’s member states, it amounts to $111 billion to $123 billion.
Recycle what is worth recycling. Then throw away the idea that more recycling is always better.
