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In my latest column for AIER I use the supermarket to celebrate the super market. A slice:

Like the typical American, I go to the supermarket a lot. But probably unlike the typical American, every time I go to the supermarket I silently rejoice at my good fortune to be able to frequent this beautiful testimony to the immense productivity of the market economy. Literally, in the past 40-plus years, I’ve never gone into a supermarket without at least once consciously marveling at the economic processes that reliably, yet without ostentation, keep that emporium of affordable material wonders constantly stocked.

Indispensable to the seemingly commonplace modern supermarket is the system of market prices. How do prices work to stock supermarkets? The analogy that I’m about to offer isn’t perfect, but it’s nevertheless instructive.

Think of a supermarket as an anthill. And think of yourself — a customer of that supermarket — as a queen ant. Everyday countless worker ants scurry around the surface of the earth in search of food and other goods to bring to you for your sustenance and convenience.

How do the workers know what to bring? Market prices! Each of the hundreds of millions of individuals who exerted some effort to make possible the bounty that now resides in your favorite supermarket had to be accurately informed about what to do to make his or her contribution, and sufficiently motivated to do it. Just as actual ants follow pheromones to lead them to sources of food to bring back to the colony, entrepreneurs and workers follow market prices to direct their efforts that result in food and other goods being brought to supermarkets. Like each individual ant, no entrepreneur or worker does what he or she does as a self-sacrifice to the group. The ant is programmed by nature to follow pheromones in a way that causes that little creature’s efforts to be coordinated with those of his fellow ants to support a thriving colony that no ant designed and is of such complexity that no ant could possibly comprehend it.

We humans aren’t programmed by nature to do what we do in our roles as producers. But we are programmed by nature to be able, rather reliably, to distinguish courses of action that promote our individual interests from courses of action that don’t.

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GMU Econ alum Dave Hebert explains that so-called “trade deficits” are “accounting masquerading as economics.” Two slices:

Trade deficits are one of, if not the, most misunderstood concepts in all of economics. The Build America Buy America Act, which this month celebrates its second anniversary of taking effect, seeks to reduce trade deficits by restricting the use of imported goods for certain infrastructure projects. Last month, President Biden suggested reducing our trade deficit with China by “tripling the tariff rates for both steel and aluminum imports from China.” Former President Donald Trump has stated that he also seeks to reduce trade through aggressive tariffs, floating a “10 percent tariff on all imports, and a more than 60 percent tariff on Chinese imports” to create a “ring around the country.” The former President and his advisors have even gone so far as to suggest devaluing the US dollar as a means of reducing trade deficits. The misunderstanding of the effects of trade deficits on economies pervades Washington, DC. It is time to correct this misunderstanding.

A trade deficit is merely an accounting identity, not an economic identity.

Despite this truth, policymakers of all stripes fundamentally treat trade deficits as if they were a source of economic harm to the nation.

…..

Policy makers and the would-be-intelligentsia of both the American Right and the American Left who carp on about the trade deficit and use it as a means of speaking authoritatively on the state of the US economy reveal one thing: a stunning lack of understanding about which they speak. Trade deficits are merely an accounting number, nothing more and equally, nothing less.

Claude Barfield corrects Robert Lighthizer’s distortion of the historical record on U.S. government trade policy.

The Editorial Board of the Wall Street Journal reports on yet another instance that reveals just how authoritarian the green religion can make people. A slice:

The United Nations has lousy ideas about nearly everything these days, but sometimes even Turtle Bay outdoes itself. Secretary-General Antonio Guterres did that last week when he said countries should ban advertising for fossil fuels.

“Many in the fossil fuel industry have shamelessly greenwashed—even as they have sought to delay climate action,” Mr. Guterres said. “I urge every country to ban advertising from fossil-fuel companies. And I urge news media and tech companies to stop taking fossil-fuel advertising.”

“Greenwashing” is the word climate alarmists use to attack anyone who disagrees with them. Mr. Guterres lacks the power to enforce an advertising restriction, and thank goodness. But he is using his bully pulpit to call for what amounts to global censorship of anyone speaking on behalf of the industry that supplies most of the world’s energy. He wants to censor anyone who doesn’t sign up to the U.N. climate agenda.

Phil Gramm and Terrence Keeley have edited a new book on the folly of ESG “investing.”

Let’s hope they succeed: “‘Anti-Woke’ shareholders are going after corporate boards.”

Jeffrey Miron reports possible good news about reining in the banana-republic practice of civil asset forfeiture.

Christopher Snowdon asks: “Why was George Orwell as socialist?” A slice:

Orwell could clearly see the dangers of socialism, but since he believed that capitalism was doomed and socialism was the only game in town, he had to believe that these dangers could be avoided and that his own brand of libertarian collectivism could prevail. And so he reached for the same comforting explanation for Big Brother’s tyranny as he had for the Bolsheviks’ – that they were bad actors from the outset and had never really believed in socialism.

Axel Kaiser describes Joseph Stiglitz as the “patron saint of Latin America’s radical left.” A slice:

Stiglitz’s involvement in the 2021 Chilean presidential election followed the same pattern of ideological alignment with radical left-wing populism. Shortly before the second round of the election, Stiglitz, along with other left-wing economists such as Mariana Mazzucato and Thomas Piketty, signed an open letter expressing support for socialist candidate Gabriel Boric in the following terms: “We see in the program of candidate Gabriel Boric that openness to the future, that way of creating a new economy that delivers these ambitious goals. Its objectives are viable and help to sustain democratic values. It is a modern strategy to mobilize a dynamic and sustainable productive agenda capable of achieving growth, equity, and development.”

Central Michigan University economist Jason Taylor’s letter in today’s Wall Street Journal is superb:

While I have a great deal of respect for Prof. Blinder, the flaw in his distributionist logic is staring him in the face. He complains that government social spending targeting the nation’s low-income households, elderly, disabled, sick, unemployed and youth is a lower proportion of GDP in the U.S. than it is in France and Germany.

But U.S. GDP per capita far exceeds those of France and Germany, so that the amount of U.S. social spending per person surpasses that of both these traditionally redistribution-focused nations—over $19,000 in the U.S. versus than $15,000 in Germany and France. (If the GDPs are compared under purchasing power parity, social spending per capita is closer in the three countries but the U.S. still comes out ahead.)

Distributionists (whether re- or pre-) focus so intently on making sure that everyone’s slice of pie is identical that they neglect the most important factor in the human condition: How much pie is everyone actually getting? History shows that policies that focus too heavily on equity result in there being far less to go around over time, and the most vulnerable suffer from this greater scarcity. As Milton Friedman liked to say, “There’s nothing that does so much harm as good intentions.”

Phil Magness understandably tolerates no excuses for any of Karl Marx’s many idiotic scribblings.

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… is from page 260 of Matt Ridley’s deeply insightful 1997 book, The Origins of Virtue:

[O]ur dim and misty understanding of the human social instinct can be translated into a political philosophy. For a start, it teaches us that Utopia is impossible, because society is an uneasy compromise between individuals with conflicting ambitions….”

DBx: The quest for Utopia-on-earth – which is to say, the stubborn insistence that all social interactions conform to the particular norms, or achieve the particular outcomes, that you personally deem to be exclusively acceptable – leads, as many wise people in the past have noted, to hell-on-earth. Inevitably so. If by some freakish accident your particular Utopia is established, the result would be hellish for the great majority of people, for they would not share your idea of Utopia. If – as is far more likely – neither your nor anyone else’s Utopia is established, the fight to impose this or that Utopia will itself unleash hellish consequences.

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Mr. Jeff Ferry
CPA
Washington, DC

Mr. Ferry:

You write:

But what if you don’t have to work? What if international lenders will lend you the money so you can buy as many imports as you like? Then if a nation has an absolute disadvantage in all major goods, it can run a persistent trade deficit, lose all its industries, and build up debts for years.

This is the U.S. plight. In the age of hyperglobalization, where multinational corporations are determined to produce in low-cost, low-wage nations, and sell those products in high-wage nations, the U.S., one of the highest-income nations in the world, may have an absolute advantage in almost nothing. The U.S. may have a theoretical comparative advantage in certain goods, and we can calculate it mathematically, but this is entirely irrelevant because foreign nations will take our paper (Treasury bonds or equities) instead of demanding goods.

We have had 48 consecutive years of trade deficit so far, reaching close to a trillion dollars a year now. But it could go on for another 48 years, and double to say $2 trillion, leading to further deindustrialization and job loss.

What world do you have in mind? Not, it seems, the actual one. Here are some facts that are either impossible or very difficult to square with your portrait of modern America:

– The inflation-adjusted value of annual American exports has risen rather consistently over the past 75 years, and accelerated in the mid-1980s. It is today at an all-time high.

– The inflation-adjusted value of American industrial output has risen rather consistently over the past century, without slowing when annual U.S. trade deficits began in the mid-1970s or when China joined the WTO in 2001. The value of this output reached its all-time high in September of 2018, and is today only a minuscule fraction below this peak.

– The inflation-adjusted value of American industrial capacity has risen rather steadily over the past nearly 60 years, without slowing when annual U.S. trade deficits began in the mid-1970s. It reached its all-time high in December 2016, and is today nearly equal to that peak value.

– The U.S. Department of Commerce reported in April that “the United States has been ranked as the top destination for foreign direct investment for the 12th consecutive year.”

– Except for the spike during covid, the unemployment rate has been near half-century lows for the past six years.

– The inflation-adjusted value of the net worth of all U.S. households is today 113 percent higher than when China joined the WTO in 2001 and 220 percent higher than when NAFTA took effect in 1994. It is today at an all-time high.*

Not one of these facts – and certainly not the collection of them – is consistent with your false tale of woe about American trade.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

* I adjusted these nominal values on household net worth for inflation by using this inflation adjuster.

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George Will offers much evidence for the proposition that “the Biden administration is the most progressive in U.S. history.” A slice:

Having unleashed the worst inflation in 40 years, Biden is banning (through a 100 percent tariff) Chinese electric vehicles. This will keep U.S.-made EVs prohibitively expensive for most consumers, giving Biden a reason to continue subsidizing purchasers. Protected U.S. vehicle manufacturers will raise prices, enabling Biden to call this “reindustrialization.” This artificial (because government-subsidized) manufacturing “revival” will stop if the subsidies do, so they won’t.

Progressives focus on jobs protected or provided by government, especially since the 2000-2015 “China shock,” although the Economist calls this supposed shock “insignificant”: “A plausible upper limit for American jobs lost … is around 2m. That is a small fraction of the size of the workforce (130m in 2000). Over that period people left jobs about 900m times … The vast majority found work again quickly … ‘Despite some localised hardships, the China shock is really a rounding error for the US workforce overall,’ says Adam Posen of the Peterson Institute.”

The “shock” is the gift that keeps giving progressives an excuse to socialize the economy through government “partnerships.” While denouncing “tax breaks” for “Big Pharma” and “Big Oil,” Biden (notes the Cato Institute’s Chris Edwards) favors trillions of dollars for “Big Semiconductor, Big Wind, Big Solar, Big Battery, Big Automaker, Big Utility.”

Automakers are now public utilities, whose future investments and product decisions are dictated by government. Twenty-first-century progressives preserve the shell of the (formerly) private sector as government’s appendage, but any vestiges of private autonomy are subordinated to the “existential” urgency of decarbonizing, which makes everything the government’s concern.

Jake Sullivan — technically, Biden’s national security adviser; actually, a roving savant-without-borders — says government dispensing trillions of dollars is “not picking winners and losers,” it is merely picking “sectors vital to our national well-being.” This is a distinction without a difference because “well-being” encompasses everything.

Physicist Steven Koonin always – as he does in today’s Wall Street Journal – writes sensibly about the so-called “climate crisis.” A slice:

The challenges in reducing emissions have long been evident to the few who cared to understand demographics, economics and energy technologies. As more people have come to appreciate those factors, there are signs that the “climate crisis” has entered Downs’s Phase III, when ambitious goals collide with techno-economic realities.

In Europe, consumers are rebelling against measures to reduce emissions (fiascoes of home heating requirements had electoral consequences in the U.K., Germany, and the Netherlands), and industry is decamping in search of cheaper energy. Despite generous subsidies, U.S. deployment of low-emission technologies can’t meet near-term goals, let alone the projected surge in electricity demand owing to data centers, artificial intelligence and electric vehicles. “Green” investments aren’t yielding competitive financial returns, and the annual cost of a 30-year decarbonization effort, estimated to be upward of 5% of the global economy, weighs on national budgets. Simultaneously, the scientific rationale for the transition is weakening as expectations of future warming are moderating.

Bruce Yandle asks: “From the Boston Tea Party to today’s targeted tariffs: What happened?”

My Mercatus Center colleague Christine McDaniel, writing in Forbes, argues against over-eagerness to blame free trade.

Ramesh Ponnuru has a history lesson, about inflation, for Zach Carter.

Ilia Murtazashvili isn’t impressed with Joseph Stiglitz’s new book. A slice:

Unfortunately, Stiglitz is too comfortable claiming that the solution to these problems is “regulation,” without adding much explanation of how regulation should address such issues. Here he should have engaged more deeply with the insights of another Nobel laureate in economics, Elinor Ostrom. Stiglitz does mention Ostrom’s research on the regulation of the commons—that is, of shared resources that anyone can use (and overuse, in the absence of rules governing how people can draw on them). But he sees her work as a defense of “regulation” and a critique of private property.

That wasn’t what Ostrom was arguing. Rather than rail against private property, Ostrom argued that it is an empirical question as to whether private property, communal arrangements outside the state, or government control is the most appropriate way to manage the commons. And nothing in Ostrom’s work implies a wide-ranging critique of private property. Her work is fully within the same classical liberal tradition that includes Hayek and Friedman.

Wall Street Journal columnist William McGurn decries “the sliming of Byron Donalds.” A slice:

As Brad Wilcox of the Institute for Family Studies says, “There is no question that marriage was stronger in black America prior to the 1960s than it was after the 1960s.”

Mr. Donalds might have pointed out that the destructive effects of the Great Society weren’t limited to the black community. Charles Murray wrote a whole book about how the War on Poverty’s expansion of the welfare state had devastating results for America’s white working class as well. These include dysfunctions sometimes erroneously considered unique to poor African-Americans: the collapse of family and marriage, dependency on government, and young male alienation from work.

Jack Solowey and Jennifer Huddleston correctly label these words as ones to fear: “I’m from the state government, and I’m here to help with AI risk.”

Ilya Somin remembers the late David Boaz.

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… is from page 135 of my colleague Tyler Cowen’s brilliant 2002 book, Creative Destruction (original emphasis):

Critics of cross-cultural exchange face an awkward question. If diversity at any point in time is desirable, why is intertemporal diversity not desirable as well? Intertemporal diversity, like intratemporal diversity, contributes to experimentation and to whatever intrinsic value variety may possess.

DBx: Many critics of trade, especially on the political left, bemoan those consequences of globalization that make different regions look more alike (e.g., Athens, Greece, has McDonald’s restaurants as does Athens, Georgia). But as Tyler points out, globalization makes any one place more diverse over time. The latter diversity is no less important than is the former.

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David is remembered by Shikha Dalmia, Jonathan Rauch, Aaron Ross Powell, Andy Craig, Radley Balko, Tom Palmer, and my intrepid Mercatus Center colleague, Veronique de Rugy. A slice from Vero:

To say that he will be missed is an understatement. I worry where future generations of young libertarians will look for guidance and direction without him. But then I remember that he has trained and influenced so many people who are now walking in David’s footsteps—none more than his beloved staff writers, some of them right here on this screen—that I am hopeful together we can continue what he started.

Tim Miller. A slice:

In what I believe was his last major public address, a speech he delivered in February, David sent a message to his fellow libertarians about resisting the allure of populism:

When you see self-proclaimed ‘freedom advocates’ talking about blood and soil, or helping a would-be autocrat overturn an election, or talking about LGBT equality as ‘degeneracy,’ or saying we shouldn’t care about government racism against black people, or defending the Confederacy and the cause of the South, or joining right-wing culture wars in supporting politicians who want to use the state to fight their enemies, or posting Holocaust jokes and death threats on Twitter, recognize that for what it is. Speak up. Fight back. Tell people: That’s not America and it’s certainly not libertarianism.

Amen to that.

Libertarianism.org.

Arnold Kling.

Philip Klein.

NORML.

Eammon Butler.

Students for Liberty.

Alex Nowrasteh.

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… is from page 335 of the “Random Thoughts” section of Thomas Sowell’s 2010 book, Dismantling America:

Since this is an era when many people are concerned about “fairness” and “social justice,” what is your “fair share” of what someone else has worked for?

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Here’s a letter to the Wall Street Journal:

Editor:

My former George Mason University colleague Joshua Wright deserves severe censure, if allegations against him are true, for using his position to extract sexual favors from students (“For Years, an Esteemed Law Professor Seduced Students. Was He Too Important to Fire?” June 8). It’s important, however, not to infer from Mr. Wright’s personal failings that his intellectual opposition to active antitrust intervention is misguided. Reasons for questioning the efficacy of antitrust go back to its origins more than 130 years ago, and were expressed nowhere more powerfully and completely than in Robert Bork’s 1978 book, The Antitrust Paradox.

The late Judge Bork would disagree with your description of Mr. Wright’s bases for defending Amazon and other companies from the likes of Lina Khan’s FTC as “a business-friendly view of antitrust.” Bork argued that antitrust should be guided by a standard that is now explicitly rejected by the antitrust regulators fought by Mr. Wright, namely, the consumer-welfare standard. Bork explained that antitrust assaults against successful companies such as Amazon are really assaults against consumers, for these assaults protect less-efficient businesses by restricting their more-efficient rivals from competing as vigorously and as creatively as possible for consumers’ dollars.

Those persons with a business-friendly view of antitrust view are the antitrust regulators against whom Mr. Wright fought. His view of antitrust, which is that of Judge Bork, is consumer-friendly.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030