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Terence Kealey explains that “government funding of academic research does not stimulate growth.” A slice:

The most important fact in science policy is that the United Kingdom led the world through the first industrial revolution in the absence of significant government money for research. By contrast, the French and German governments were then funding their nations’ research capaciously, yet their GDPs per capita failed to converge on the UK’s. Government funding for research is thus neither necessary nor sufficient for economic progress.

The country that did converge on the UK—and in 1890 overtake it—was the U.S., whose government also did not fund research significantly. In those days, the British and U.S. federal governments then funded only “mission research,” which was research that was undertaken by government agencies such as the Library of Congress or the Coast Survey in the service of their missions. In comparison with the vast government labs funded in France and Germany, UK and U.S. mission research was always narrowly focused and modestly funded. All other research was done through private funding.

The two largest U.S. research missions were defense and agriculture, but neither was of substantial economic impact. Defense research in peacetime was always small: The federal government did create research agencies during the Civil War and WWI, but they were defunded on the resumption of peace. Equally, the Office for Scientific Research and Development, which had been established in 1941 and had funded the Manhattan project, MIT’s Rad Lab, and other vast WWII research missions, was shuttered in 1947.

The other significant mission of the day was agriculture, yet agriculture’s problem was over-production, which impoverished the farmers. But trying to raise agricultural productivity would not solve their problem. The federal and state governments’ motives in funding agricultural research were, therefore, essentially political—the farmers were poor, there were many of them, they had votes, so it seemed wise for politicians to be seen to be doing something.

In short, by as late as 1940, the federal and state governments’ investment in research amounted to only 23 percent of U.S. R&D and 10 percent of U.S. basic science, and the nature of that investment could have had little or no impact on rates of American economic or health growth: Defense R&D has almost no economic benefit, while the agricultural R&D was surplus to requirement.

Roger Ream talks with GMU Econ alum – and National Review‘s – Dominic Pino about “the false promise of government-driven growth.”

GMU Econ alum Nikolai Wenzel urges a rediscovery of Bastiat in our age of tariffs. A slice:

Many people are instinctively worried about trade deficits – somehow, it seems problematic that trade partners might sell to us more than they buy from us. But, first, the US is richer than almost every other country in the world, so it makes sense that the US would buy more.  Second, the US has deeper capital markets with greater legal protections than almost any country in the world, so it makes sense that foreigners would invest more in the US than the US invests abroad; this capital account surplus is merely the flip side of a current account deficit.  Third, all of us run trade deficits with the grocery store, the doctor, and the restaurant, who brazenly refuse to buy from us; yet we are all better off.  In his Economic Sophisms, Bastiat debunks the idea that The Balance of Trade is problematic.  Indeed, he playfully shows that the trade deficit could be erased if the ships carrying payments to foreigners were to sink… or be scuttled.

Clifford Asness and Michael Strain debunk several myths, beloved by both MAGAs and progressives, about the American economy. Three slices:

But today, both the progressive left and the MAGA right seem to run on imaginary—or at best, horribly exaggerated—grievance. The uniting theme is that the average American has it terrible these days, and only their chosen end of the horseshoe can fix it. People will go to extremes only when they are convinced things are terrible—and there’s a cottage industry, again both press and politicians, working on selling that story.

…..

There has never been a better time and place to be alive than in the United States today. We will focus on economics below, as that is our expertise, and easily the single biggest category of populist grievance.

Wages for typical American workers have never been higher. According to our calculations, after adjusting for inflation, the wages of nonsupervisory workers—roughly the bottom 80 percent of workers by pay, including manufacturing workers and service-sector workers who are not managers—have grown by around 60 percent over the past two generations. Over the past three decades, inflation-adjusted wages for typical workers have grown by 44 percent.

Wages are the most important component of the flow of financial resources households can use for consumption and savings. But households receive resources from other sources as well, including government transfer payments, social insurance receipts, and businesses. Overall household income tells the same story as wages: Real household income has never been higher than it is today.

And not just for families at the very top. According to the Congressional Budget Office (CBO), families in the 51st to 90th percentiles of the wealth distribution had an average wealth of $1.3 million in 2022, the most recent year data are available. That’s up from around $500,000 in 1990, after adjusting for inflation.

…..

In the 1960s, the poverty rate was above 20 percent. Using the government’s official poverty measure, poverty has fallen to 11.1 percent as of 2023, the most recent year data are available. This measures poverty on a relative basis. Of course, a relative standard will always find relative poverty. But using an absolute standard finds that income poverty is below 6 percent. On a consumption basis, well over 20 percent of households were in poverty in the 1960s, and 11 percent were in poverty in 1990. Today, the consumption poverty rate is around 1 percent.

Eric Boehm points out that the greatest threat to America’s fiscal health isn’t immigrants; it’s Congress. A slice:

The debate over the OBBBA has revealed (once again) that the uniting principle in Republican politics is not fiscal responsibility. The bill that passed the Senate on Tuesday afternoon, with Vance as the tie-breaking vote, will add nearly $4 trillion to the national debt over the next decade. It is not, under any circumstances, a fiscally responsible piece of legislation.

Instead, the fulcrum for conservative politics is—and for quite some time has been, even before Vance and President Donald Trump rose to prominence—immigration. If you want to keep the GOP coalition together for a tough vote, it makes more sense to pitch the bill as an immigration measure.

Vance understands this. He also understands that the facts don’t really matter when conservatives are talking about immigration within their own tribe.

Indeed, he’s completely wrong about “the thing that will bankrupt this country more than any other policy.”

It’s not immigrants who are doing that. It’s Congress.

Ilya Somin dives into yesterday’s court ruling thwarting Trump’s declaration that almost all migrants who cross the U.S. southern border are ‘invaders’ and, thus, subject to presidential efforts to keep them out.

Jeff Luse decries a fact worthy of being decried, namely, “the ‘Big, Beautiful Bill’ keeps most of Joe Biden’s energy subsidies.”

And Dominik Lett reports more ugliness stirred up on Capitol Hill: “The Senate’s big beautiful blunder could increase the debt by $6 trillion.”

How much government are you willing to fund?

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Quotation of the Day…

is from page 5 of Norbert Michel’s excellent 2025 book, Crushing Capitalism: How Populist Policies are Threatening the American Dream (original emphasis):

Industrial policy advocates view the market as a policy device that government officials can manipulate, but in fact, the market is a group of people cooperating to get what they need while offering each other something in exchange. And in the United States, the market is a very large group of people. Even to “redirect” this market would require persuading – or forcing – hundreds of millions of people to so something they would otherwise not do. It’s a core reason that so many experiments with government-directed economies have failed.

DBx Yes.

Note the hubris of those persons who call for industrial policy. Whether, in the U.S., it be Oren Cass on the right or Robert Reich on the left, industrial-policy advocates point to a handful of large, visible features of our vast and intricate economy – an economy dependent upon getting countless unseen details correct – and conclude not only that they, these advocates, know better how these large, visible features should look, but also that their schemes for changing the appearance of these large, visible features will work to improve the welfare of ordinary Americans.

But ask an industrial-policy advocate how he or she came to possess this knowledge. You’ll get lots of criticism (most of it mistaken) of modern economics and of “market fundamentalists.” You’ll be assured (without warrant) that free traders are wedded to a too-narrow and materialistic understanding of humankind. You’ll hear false claims about the current and the past state of the American economy. It’s also likely that you’ll be bazookaed with statistics that are either out of context or simply don’t mean what the pundits who are blasting these statistics at you think they mean.

What you’ll not get is a substantive answer to your question beyond the insistence that this or that sector of the economy is allegedly doing worse than it ‘should’ be doing – with the standard for making this assessment being some (often fabricated or doctored) picture of the past. Yet press on by asking “How can you be sufficiently sure – sufficiently sure, that is, to justify greater government control over the way people spend their incomes – that more manufacturing jobs [or more manufacturing output, or smaller trade deficits, or a smaller financial sector, fill-in-the-blank] will improve the well-being of Americans?” You’ll get no satisfactory answer. You’ll simply be told to put your faith in these divines.

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Bonus Quotation of the Day…

… is from page 31 of the late Fred McChesney’s 1995 essay “In Search of the Public-Interest Model of Antitrust,” which serves as the Introduction to Part One of the 1995 collection edited by Fred S. McChesney and William F. Shughart II, The Causes and Consequences of Antitrust (footnotes deleted):

In the long run, expected antitrust penalties just become costs of doing business. Prices will eventually increase to the extent that the conditions of demand and supply allow sellers to pass these higher costs on to consumers. The end result is fewer producers selling at higher prices – just the opposite of antitrust’s intended effect.

DBx: I offer this quotation on this, the 135th anniversary of the signing of the Sherman Antitrust Act – an event that, in my view, is unfortunate. Fred McChesney shared my view – or, more accurately, because I learned from him – I share Fred’s view. With his final few words above, Fred was being facetious, for he knew that the real intention behind the Sherman Act and other antitrust statutes is to protect politically powerful producer groups from the competition of producers that are more efficient or more entrepreneurial but less politically powerful.

It is unfortunate that the Trump administration is continuing the Biden administration’s economically harmful revival of active antitrust ‘enforcement.’

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Here’s the next part of my exchange with a new correspondent.

Mr. D__:

Thanks for your reply to my email of yesterday. In your reply you write that “it is majorly unfair that foreign countries subsize exports sold here at below cost prices.”

I agree. But the unfairness isn’t to Americans; it’s to those foreigners who are taxed in order to increase the purchasing power of Americans. Just yesterday at my blog I featured a quotation from Milton Friedman who makes the case more eloquently than I can.

With respect, you seem to hold the implicit protectionist presumption that American producers are ethically entitled to a portion of the incomes earned by their fellow Americans. Putting aside concerns about national security (which you don’t raise), please explain why, say, an automobile producer in Michigan is so entitled to that portion of your income that you spend buying a car that, should you choose to buy a car from a producer in Japan or Germany, the government acts ethically if it punitively taxes your exercise of your freedom to choose. How is it morally acceptable for the government to improve the economic well-being of some Americans (those producing automobiles) by worsening the economic well-being of other Americans (car buyers, as well as those Americans not involved in producing automobiles)? As I see it, such government action is morally outrageous.

You’ll answer that it’s wrong to allow Americans to lose jobs to subsidized foreign goods – to which I respond: Why, exactly? Where is the ethical offense to Americans? I submit that there is none.

Suppose a wealthy foreign philanthropist donates two billion of his own euros to a German university, and, as a result, researchers at that university develop a technique for lowering the production cost of automobiles by 25 percent by dramatically reducing the number of workers required in automobile factories. Would it be wrong to allow Americans to buy foreign cars made with this new technique? Would it be wrong to allow U.S. auto factories to adopt this production technique? In both cases, note, many American autoworkers would lose jobs in exactly the same way they do when automobile production is subsidized by foreign governments. If you answer ‘no’ to these questions, I challenge you to explain why foreigners act unethically toward Americans by offering to sell us subsidized exports.

Why should we refuse to accept what Milton Friedman accurately describes as “reverse foreign aid” – aid that goes directly into the pockets of American producers that import some inputs, and American households who purchase imported consumer goods? How is it ethical for the U.S. government to prevent you from accepting such gifts?

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

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Some Links

Wall Street Journal columnist Matthew Hennessey summons more people to the cause of basic economic enlightenment. A slice:

Yet each generation somehow produces naïfs who are certain that collectivism is the true longing of the human heart. They know they can make it work this time. The young voters who supported Mr. Mamdani were primed by their expensive educations to buy his line that capitalism is rigged in favor of the rich. All they’ve ever been told—by teachers, professors, TV and TikTok—is that markets are inhumane. Capitalism is rapacious and bad for the climate. They may never have heard a single word to the contrary.

This is a failure of education, yes. Basic economics is rarely taught in high school or required in college. But it’s equally a failure of public relations. Who is making a sustained and coherent public case for American-style capitalism? The field is wide open. We need new Milton Friedmans and Thomas Sowells.

The product itself isn’t the problem. Free markets have made life better, healthier and more prosperous in demonstrable ways for billions of people. Anticapitalists on both left and right struggle to make a serious case that things are worse now than they were 100 or 150 years ago. Take a moment to imagine life without washing machines or chemotherapy.

Competitive markets foster innovation and allocate resources with remarkable efficiency. They work. Even when markets come up short or create externalities like pollution, the incredible wealth they generate can be used to fill the gaps. When socialism fails, as it inevitably does, the only option is brutality. This always gets glossed over on MSNBC and CNN. I’d like to hear Mr. Mamdani explain how he plans to keep New Yorkers captive when his experiment goes south.

Markets are more than efficient, which would be argument enough in a head-to-head competition with socialism. They’re also moral. Markets enable willing and mutually beneficial exchange among free people. They abominate coercion. They encourage a belief that tomorrow will be better than today. No one would bother investing absent an expectation that it will pay off. Capitalism is synonymous with confidence in the future.

Arnold Kling shares insights about AI and productivity.

James Pethokoukis explains that “markets are good for a country’s pocketbook and its soul.”

Who’d a-thunk it?: “US manufacturing mired in weakness as tariffs bite.” (HT Scott Lincicome)

My intrepid Mercatus Center colleague, Veronique de Rugy, is understandably dismayed at the calamity that is the so-called “One Big, Beautiful Bill.” A slice:

Meanwhile, the bad amendments were made worse. For all the complaints and the “green new scam” label, the Senate utterly failed to terminate the Biden administration’s green subsidies. Read Alex Epstein’s summary and weep. And Senator Susan Collins (R., Maine) got all the subsidies she wanted and will pay for them by taxing the rich.

With Republicans like this, who needs Democrats?

For those of you who believe that the One Big Beautiful Bill Act will produce enormous growth, as projected by the Council of Economic Advisers, I have a bridge to sell you. There is only so much that the few good tax provisions in the bill can do.

GMU Econ alum Dominic Pino reports that the Trump administration is working to reduce the transparency of labor unions. A slice:

When President Trump appointed the Teamsters’ preferred nominee for secretary of labor, that meant unions were going to have access in a Republican administration like they haven’t had in decades.

One of the first pieces of evidence for that has surfaced in a proposed rule published Tuesday that would reduce union transparency. The administration wants to reduce the number of unions that have to file the most detailed public disclosure reports by raising the threshold for which such reports are required by law.

Bradley Smith is correct: “Campaign regulations are unconstitutional.” A slice:

But the problem goes deeper than the need to define “corruption” and balance it against the “urgency” of political speech. There is no constitutional basis for government to regulate political speech through campaign-finance laws.

When Congress passed the Federal Election Campaign Act in 1971, it claimed authority under its constitutional power to regulate the “time, place and manner” of elections. The Supreme Court accepted this premise without analysis in Buckley v. Valeo (1976). But political campaigns aren’t “elections,” and campaign-finance laws obviously don’t regulate the time and place of an election. But neither do they regulate the manner of holding an election. Dating may precede marriage, but it isn’t marriage. Similarly, campaigns precede elections, but those campaigns aren’t elections. They are speech: Americans are debating and talking about the candidates.

Elections are the casting and counting of votes. To run an election, the government must choose the date and polling places, manage voter registration, tally ballots and so on. Administering an election is far different from regulating a political campaign—a candidate or party’s conversations with voters. Campaigns consist of speech, publishing and assembly, three fundamental rights enshrined in the First Amendment.

When government regulates campaigns, it is directly and explicitly regulating protected First Amendment activity. Debate about issues and candidates happens every day in America, with or without an election pending. It isn’t possible to cabin off “election” speech from general political discourse, and there is nothing about regulating the manner of an upcoming election that allows the government to interfere in that public discussion. Congress not only lacks the enumerated power to do so but is specifically prohibited from doing so by the First Amendment.

Washington Post columnist Megan McArdle joins with the critics of Zohran Mamdani’s foolish proposal for government-run grocery stores. Two slices:

Even saving New Yorkers that percentage would be a challenge, because it’s really hard just to break even in the grocery business. It takes extensive experience and a relentless focus on implementation to keep the right stock on the shelves, to prevent theft while providing attractive and easily accessible displays, to cultivate workers who provide excellent customer service, and to keep spoilage down to acceptable levels. Order too few perishables, such as meat and produce, and your disgruntled customers will leave empty-handed; order too much and you’ll have to throw it away after it passes its expiration date, eating those narrow margins and plunging the business into the red.

…..

What’s that I hear from the back? They can save on rent by parking stores on city-owned land? My friend, let me introduce you to the economic concept of opportunity costs: A “free” location isn’t actually free if it means forgoing money you could have collected by leasing it, not to mention the tax revenue you’ll lose by substituting a city operation for a successful business.

GMU Econ alum Benjamin Powell makes the case that “Trump’s travel ban will not make Americans safer.”

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Fair Trade Is Unfree – and Unfair

Here’s a letter to a new correspondent.

Mr. D__:

Thanks for sending along Rep. Beth Van Duyne (R-TX)’s tweet that “Free trade must ALWAYS mean fair trade.” Endorsing this tweet, you say that “fairness in trade should always be our guide.”

I respectfully disagree.

My disagreement comes from no opposition to fairness; be assured that I endorse fairness just as fervently as do you and Ms. Van Duyne. Instead, my opposition comes from the fact that “fairness” is too inexact and open-ended a concept to serve as a practical guide to the making of public policy – evidence of which is that I can very easily make a credible case that the tariffs that you and Ms. Van Duyne think to be fair are quite unfair.

Is it fair that the U.S. government imposes protective tariffs (that is, punitive taxes) on key inputs used by American manufacturers of machine tools and farm equipment in order to increase the sales of American manufacturers of steel and aluminum? Is it fair for Trump to use part of your income as a bargaining chip to raise the incomes of American farmers? Is it fair for Trump – president of a country in which services are nearly 80 percent of its output – to ignore U.S. exports of services when complaining that we Americans import more goods than we export? Is it fair for Trump and other protectionists, in order to increase public tolerance for higher tariffs, to repeatedly falsely assert that America’s industrial economy has been “hollowed out”?

Is it fair for the government to decrease the purchasing power of your income in order to increase the purchasing power of some other American’s income for no reason other than that other American happens to produce outputs that compete with outputs offered for sale in America by non-Americans?

If you answer ‘no’ to the above questions, then you should intensify your skepticism of Trump’s tariffs.

One enormous advantage of free trade over fair trade is that the concept of free trade, compared to that of fair trade, is far more objective. Either the U.S. government does or doesn’t impose artificial obstructions on your ability to purchase from foreigners goods and services that are perfectly lawful for you to purchase from Americans. If the standard is free trade, public debate and litigation over how well this standard is being met will be much less frequent, intense, and inconclusive than if the standard is fair trade.

Moreover, because we Americans boast that ours is the land of the free, it’s only fair that our government should leave us free to 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

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Some Links

Jim Dorn exposes the immorality of protectionism. A slice:

But beyond making everyone worse off in material terms, tariffs and protectionism also violate the principles of freedom and justice that are the hallmark of a free society, or what Adam Smith called a “great society.” Limiting the range of choices open to people via protectionist measures clashes with the fundamental, natural right to be free to choose, bounded by a just rule of law. When the law is used to coerce people and prevent mutually beneficial exchanges rather than safeguard persons and property, the moral fabric of society is eroded.

The utilitarian argument for free trade is essential, but the moral and strategic case for free trade must be vigorously emphasized and defended. The best way to make America great again is to safeguard free trade and show the world that voluntary market exchange under a liberal constitutional order is a surer path to human dignity and progress than protectionism.

While reporting that “foreign investment in U.S. plummets amid trade uncertainty,” Bryan Riley also reveals the foundational inconsistencies in Trump’s ‘policies.’ A slice:

According to Commerce Secretary Howard Lutnick, “President Donald Trump is committed to bringing in trillions of dollars in new investment into the United States.”

Unfortunately, Trump’s advisors do not seem to share that goal. Peter Navarro, Trump’s senior counselor for trade and manufacturing, says foreign investment in factories like BMW’s in South Carolina is a “scam” that “doesn’t work for America.” Such factories are responsible for more than half of all vehicles assembled in the United States.

If they remain in place, Trump’s tariff hikes will continue to be a big roadblock to foreign investment. Tariffs on raw materials and imported components drive up the cost of producing goods in the United States, discouraging new international investment here.

More fundamentally, U.S. tariffs and quotas that restrict imports leave our trading partners with fewer dollars to invest in our economy and to purchase U.S.-made exports. The more we import, the more dollars our trading partners have available to invest in the United States. The less we import, the less international investment we receive.

The Wall Street Journal wisely includes George Selgin’s False Dawn among the ten best books that were reviewed in the WSJ in June.

Gary Saul Morson and Julio Ottino make clear that AI does nothing to reduce the truth or relevance of Hayek’s warning that social conflicts and economic problems have no scientific solution. Two slices:

It keeps happening—some shiny new idea or technology promises to solve all our problems. Give power to experts to arrange affairs “scientifically,” and poverty, oppression, disease, war and all human ills will disappear. Today, we are asked to trust artificial intelligence.

…..

Hayek called this “the fatal conceit”—the assumption that central authority can gather and use all relevant knowledge. Just as Soviet planners couldn’t capture the distributed knowledge embedded in economic decisions, today’s AI systems can’t aggregate and optimize all relevant social knowledge. Human behavior is too complex. Cultural context is too important and can’t be formalized.

This isn’t an argument against AI, but rather for humility about its limits. AI works best as a tool that enhances rather than replaces human judgment. It can help us process information, identify patterns and generate options. But it can’t substitute for the irreducibly human work of navigating competing values, managing trade-offs and living with uncertainty.

History suggests that attempts to engineer human complexity away don’t eliminate it. They merely drive it underground, where it erupts in unpredictable and often destructive ways.

Ramesh Ponnuru, unfortunately, is correct: “Republicans continue to profess deep concern about the federal debt even as their top priority is to pass a bill that will increase it by trillions of dollars.” Two slices:

But that’s not what the Republicans are doing. They’re not cutting projected spending by nearly enough to bring it in line with revenue — and they’re cutting that revenue further. The main driver of increased federal spending is not benefits for illegal immigration or “woke” programs, as Republicans sometimes suggest. It’s Medicare and Social Security. They get costlier every year without any active decision by Congress and the president. Existing law puts their growth on autopilot. Republicans have ruled out most ways of changing it.

They don’t want to pay the political price that would come from trying to rein in the growth of those programs. But they are making a choice to keep spending at a level they are not willing to fund.

…..

It would have been better if the tax cuts of the last several decades had accompanied spending restraint that kept the debt in check. But deficits were tolerable a generation ago. As the debt and the population of retirees rise, cutting taxes while increasing spending has become more and more reckless. The cynical take is that Republicans keep coming up with one phony argument after another to evade the fiscal truth. The more alarming truth is that they have done a good job of fooling themselves.

GMU Econ alum Adam Michel explains that “fossil fuel subsidies are mostly fiction, but the real energy subsidies should go.” A slice:

You’ve probably heard the claim that fossil fuels are heavily subsidized by the federal government. The Biden administration estimated there were at least $35 billion of fossil fuel subsidies in the tax code alone. Elon Musk recently expressed a similar sentiment, insinuating that oil and gas receive subsidies comparable to those received by electric vehicles and solar.

This common refrain simply doesn’t hold up. Official government data show that renewables are subsidized 30 times more than fossil fuels. Most of the subsidies are in the tax code, where 94 percent of the fiscal cost goes to green energy technologies. And even this breakdown is overstated. Most of what critics label as fossil fuel subsidies are standard tax treatments available to many industries.

In reality, the claim that fossil fuels are heavily subsidized simply doesn’t withstand scrutiny. While a few narrow subsidies exist and should be eliminated, the real outlier in the tax code isn’t fossil fuel subsidies but the scale of preferential treatment granted to renewable energy technologies.

Jay Schalin decries “the antisocial mind of the “Land Acknowledger.” (HT George Leef)

Yep – Zohran Mamdani does indeed talk like an unreconstructed communist.

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Quotation of the Day…

… is from page 45 of Milton & Rose Friedman’s great 1980 book, Free To Choose:

Another source of “unfair competition” is said to be subsidies by foreign governments to their producers that enable them to sell in the United States below cost. Suppose a foreign government gives such subsidies, as no doubt some do. Who is hurt and who benefits? To pay for the subsidies the foreign government must tax its citizens. They are the ones who pay for the subsidies. U.S. consumers benefit. They get cheap TV sets or automobiles or whatever it is that is subsidized. Should we complain about such a program of reverse foreign aid? Was it noble of the United States to send goods and services as gifts to other countries in the form of Marshal Plan aid or, later, foreign aid, but ignoble for foreign countries to send us gifts in the indirect form of goods and services sold to us below cost? The citizens of the foreign government might well complain. They must suffer a lower standard of living for the benefit of American consumers and of some of their fellow citizens who who own or work in the industries that are subsidized.

DBx: Yes.

It cannot be said too often that if you are truly a believer in “America First!,” you should – in addition to applauding rising U.S. trade deficits, which represent foreigners investing disproportionately in America rather than elsewhere – welcome foreigners’ selling to us Americans goods at prices below cost.

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