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… is from page 335 of the 5th edition (2015) of Thomas Sowell’s Basic Economics:

The fact that economic consequences take time to unfold has enabled government officials in many countries to have successful political careers by creating current benefits at future costs. Government-financed pension plans are perhaps a classic example, since great numbers of voters are pleased to be covered by government-provided pension plans, while only a few economists and actuaries point out that there is not enough wealth being set aside to cover the promised benefits – but it will be decades before the economists and actuaries are proved right.

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On the first anniversary of “Liberation Day” – which was yesterday (April 2nd) – Jason Furman looks back on Trump’s tariffs and reports that these punitive taxes on Americans’ purchases of imports were unsuccessful even on their own terms. Two slices:

A year ago President Trump declared “Liberation Day,” unleashing the highest tariffs in more than 80 years in an attempt to end a system under which, he argued, “foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories and foreign scavengers have torn apart our once-beautiful American dream.” To prove that he was turning the tide, he offered one impressive statistic: In one month, he said, “We created 10,000 — already, in a few weeks — new manufacturing jobs.”

Perhaps Mr. Trump should have knocked on wood because as more information became available, the Bureau of Labor Statistics revised that number downward. In a full accounting, during the first full month of his second term, the United States lost 2,000 manufacturing jobs. Losses continued almost every month, totaling 100,000 manufacturing jobs since January 2025.

…..

When governments try to reverse the trend, they mostly succeed only in shifting jobs from one industry to another rather than expanding manufacturing overall. Tariffs on steel, for example, may protect jobs in steel production, but they cost jobs in downstream industries such as automobiles by raising costs and undermining global competitiveness.

Subsidies for targeted industries — Mr. Biden’s preferred approach, particularly for microchips and green energy — have similar trade-offs. They help the favored industries but they also drive up construction and equipment costs across the board, making it harder for companies in other arenas to compete. So instead of creating more jobs overall, the subsidized industries just crowd out unsubsidized ones.

Efforts to revive manufacturing are rooted in nostalgia. Once upon a time, manufacturing jobs provided a reliable pathway to the middle class, offering a wage premium to workers without a college degree. In 1970,roughly 80 percent of manufacturing workers had no more than a high school education. Today that figure is closer to 40 percent.

Manufacturing jobs also used to pay more than nonmanufacturing jobs with similar skill requirements. Not anymore: Today people in nonmanagerial manufacturing jobs average $30 an hour as compared with $32 for truck drivers, $33 for wholesale trade workers and $38 for construction workers. Trying to push more people into manufacturing jobs is therefore more likely to harm the middle class than help it.

Also unimpressed with the economic consequences of Trump’s “Liberation Day” tariffs is Reason‘s Jack Nicastro. A slice:

Unfortunately for manufacturers, things could get worse before they get better. After his reciprocal tariffs were voided, Trump doubled down on his protectionist policies by levying more duties under a different statute. In some cases, these tariffs, which will expire in July, are even higher than the ones they replaced. Kacie Wright, one of the owners of Houghton Horns, a musical instrument retailer based in Keller, Texas, tells Reason her business was “paying a flat 15% on everything from the European Union” under the old regime, but is now charged a total of 16.5 percent.

Clark Packard justifiably calls April 2nd, 2025, “a day of economic lunacy, not liberation.” A slice:

Earlier today, my Cato colleagues Scott Lincicome, Alfredo Carrillo Obregon, and Chad Smitson published a terrific blog post providing data and analysis on what the tariffs have produced over the last year. It is not a pretty picture. They document a lobbying bonanza driven by companies desperate to secure carveouts, which helps explain why the supposedly sweeping global tariff regime has become riddled with exemptions. Trade policy uncertainty has increased dramatically. The US tariff system has grown significantly more complex and opaque. Rather than isolating China, the tariffs have accelerated a countertrend: other countries deepening trade and investment ties, including China, with each other as a way to reduce their exposure to erratic American trade policy, with tariffs changing more than 50 times in the last year, according to the Tax Foundation (rate increases, rate cuts, exemptions, inclusions, pauses, etc). Research has shown that American consumers, individuals and firms, absorbed about 90–95 percent of the tariffs’ cost, despite the administration’s repeated statements to the contrary.

Jacob Sullum reports that “Trump’s mercurial, constantly changing import taxes took American businesses on a wild ride.”

Eric Boehm argues that “a year After ‘Liberation Day,’ Trump’s tariffs will never be legitimate without a vote in Congress.”

My intrepid Mercatus Center colleague, Veronique de Rugy, decries the World Bank’s endorsement of industrial policy. A slice:

Industrial policy refers to government officials channeling resources to particular industries that the market would not. Arguments like national security or protecting “strategic” industries from competitors are often used to justify the policy. Whatever one thinks of these excuses, industrial policy is funded by taxpayers when the chosen instrument is subsidies, funded by consumers when the tool is tariffs, and always funded by the other domestic firms quietly crowded out as capital flows toward their politically favored competitors.

Every dollar directed by bureaucratic decree is a dollar that’s no longer directed by people spending their money on what most deserves it. Which, of course, is what makes markets work.

To be clear, the World Bank’s reversal wasn’t because a new generation of economists finally cracked open the historical record and discovered that state-led industrialization works. It’s because the World Bank’s most powerful shareholders, the United States and Western Europe, turned toward openly and aggressively practicing industrial policy.

With a cascade of green industrial subsidies during the Biden and Obama administrations, and protectionist tariffs and “golden shares” under the Trump administration, it became impossible to lecture developing countries about the dangers of letting governments pick winning businesses. In other words, the intellectual reversal followed the political reversal, not the other way around.

Jason Sorens tweets: (HT Scott Lincicome)

The tariffs failed, period. Investors know it. Economists know it. The American people know it. The only people who don’t know it are a few holdouts in the White House and @oren_cass.

Scott Winship warns of a prominent protectionist pundit’s recklessness with data.

My Mercatus Center colleague Jack Salmon explains why Jason Hickel’s “case against economic freedom doesn’t hold up.” A slice:

In 2024 sociology professor Tibor Rutar checked the robustness of these findings and analyzed additional sources and data that Hickel had not. Rutar concludes:

“The data mostly do not support the part of the critical narrative that suggests the spread of capitalist economic institutions was calamitous for living standards. Instead, they mostly corroborate a narrative, according to which living standards were poorer before the transition to capitalism and started improving afterwards”.

Before even considering causal empirics, correlational data is quite suggestive of what we already know about economic freedom and standards of living. Ample correlational data is available courtesy of the Fraser Institute’s Economic Freedom of the World report.

In countries with greater economic freedom, citizens enjoy substantially higher incomes. Those in the freest 25% of countries earn, on average, about 6.2 times as much as those in the least free.

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… is from page 195 of Arnold Kling‘s excellent 2004 book, Learning Economics:

Outsourcing is the basis of all economic activity. Every time we trade in the market instead of doing something ourselves, we are outsourcing.

DBx: Yes.

And the burden of persuasion lies heavily on those persons who insist that the economics of Jones’s outsourcing of tasks to persons outside of the political jurisdiction in which Jones lives differs categorically from Jones’s outsourcing of tasks to person within the same political jurisdiction in which Jones lives.

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Just after the daily close of financial markets on April 2nd, 2025, President Donald Trump announced a series of high hikes in tariffs – that is, a series of high hikes in punitive taxes on Americans’ purchases of imports – that, had these tariff hikes been announced the day before, the announcement would have been dismissed as an April Fools stunt.

Financial futures immediately tanked, and on April 3rd, 2025, the major indices all registered huge losses, with the Dow Jones Industrial Average losing 1,679.39 points (a four-percent loss), the S&P 500 index dropping by 274.45 points (almost a five percent loss), and the NASDAQ shedding 1,050.44 points (a six-percent loss). Within days, the White House announced a delay in the implementation of most of these tariffs.

Challenges to the legality of these tariffs – which were imposed under the 1977 International Emergency Economic Powers Act (“IEEPA”) – were quickly filed. These challenges were successful in the lower courts. But the risk of these tariffs becoming permanent remained until, on February 20th, 2026 – in the Learning Resources case – the U.S. Supreme Court ruled 6-3 that the administration’s use of IEEPA to impose these tariffs was unlawful. (And of course, very soon after this court ruling, the Trump administration announced its attempt to reimpose the tariffs under different statutes.)

In today’s Wall Street Journal, former U.S. Senator Phil Gramm (R-TX) and I look back on the past year and offer evidence that, contrary to Trump administration’s assertions, there is no evidence that these tariffs were a boon to the American economy. Quite the contrary. A slice:

Domestic investment also grew more slowly in 2025. Real gross private domestic investment last year grew by only 2% after growing in 2024 by 3% and 4.4% in 2017. As the global trade diversion makes our trading partners less reliant on U.S. markets and reduces our trade leverage, many of the verbal promises to invest in America are unlikely to materialize. Promised foreign investments that do materialize, being the result of political pressure and not of market forces, will further divert American resources into less-productive uses.

Real U.S. gross domestic product grew by only 2.1% in 2025, compared with 2.8% in 2024 and 2.5% in 2017. It is therefore unsurprising that job growth in 2025, at 0.5%, was slower than job growth of 1.2% in 2024 and 1.6% in 2017. Importantly, given Mr. Trump’s fixation on manufacturing, in 2025 the pace of losing manufacturing jobs accelerated to 1.2%, faster than the decline in 2024 of 0.7%. In 2017 manufacturing jobs actually increased by 0.7%.

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On this first anniversary of “Liberation Day” – that is, on this first anniversary of Trump’s efforts to liberate us Americans from some of our prosperity – Scott Lincicome, Alfredo Carrillo Obregon, and Chad Smitson look back on the past year. A slice:

Notwithstanding the tariff exemptions, the duties undeniably increased prices for American importers and consumers. Economic research shows that the higher costs from tariffs passed through to prices paid by Americans at a rate as high as 96 percent. The administration and tariff defenders often cite that tariffs did not lead to an inflationary spiral, but—as many economists have repeatedly explained — that outcome was never a serious possibility. What was likely — and what did indeed happen — is that tariffs increased the prices of tariffed goods (imported and domestic) last year, and they remain elevated today. Economists from Harvard Business School have examined thousands of items sold at major US retailers and found significant increases in their prices—especially as compared to pre-tariff trends (Figure 3). Other studies have reached similar conclusions.

David Henderson confesses – factiously – to some recent errors. A slice:

What a fraud that Adam Smith was. What the heck did he know, sitting in Scotland and pontificating about the world? Sure, he predicted that the continental congress, sitting in the 13 colonies, would bring forth a new nation that would become the most powerful in the world. And sure, even then, he knew what a fraud much of higher “education” is. But those were just lucky calls. Moreover, Smith was just trying to rationalize people’s desire to look out for themselves. Too bad he never wrote a book about morality. Then he would have figured out the limits of self-interest.

Edward Pinto and Tobias Peter make the case that what they describe as the “complex set of limits on the ability of large institutional investors (LII) owning 350 or more properties to freely purchase and own single-family rentals” will reduce the supply of housing for low-income Americans.

GMU Econ alum Julia Cartwright, writing in the Washington Post, busts the myth that wartime spending enriches the economy. Here’s her conclusion:

This is not an argument against maintaining a military or fighting necessary wars. It is an argument for honesty about what GDP measures. Economic growth is not simply the volume of spending; it is the creation of value. That means goods and services that people want, that improve their lives and expand future possibilities. By that standard, war is not a source of prosperity but a diversion from it.

GDP can tell you how much money is being spent. It cannot tell you whether that spending is making people better off.

The Editorial Board of the Wall Street Journal criticizes progressives’ efforts to coddle labor unions by violating Americans’ free-speech rights. A slice:

Public worker unions are asking more from the Democrats they help elect, and the latest demand is legal protection against critics. An Oregon law targeting a think tank that notifies workers of their right not to pay union fees is now being imitated in other states.

Oregon’s Worker Fraud Protection Act makes it illegal to “falsely impersonate” a union representative and imposes fines for infractions. The law was written to discourage the Freedom Foundation, which sends out mailers to union members reminding them they can opt out of the union and save money under the Supreme Court’s 2018 Janus v. Afscme ruling.

New York and Hawaii have now introduced copycat legislation. The Oregon law provides that a plaintiff “shall receive statutory damages in an amount of $6,250 per incident,” which could be each individual postcard sent to a union member. In the New York version, the fines are $15,000 per incident. That adds up fast. Hawaii allows for unspecified damages and appropriate relief.

The unions claim the Freedom Foundation is trying to trick workers into thinking the mailings come from the union. But the mailings all identify the foundation or its union educational outreach project in plain sight. Freedom Foundation’s Maxford Nelsen says it’s “very risky to continue our outreach efforts in the state,” and that’s the point. Democrats mean to discourage the think tank from dissuading workers from automatic union fees collection.

Joe Lancaster warns of newly proposed legislation that would codify Trump’s practice of having the U.S. government take ownership shares of private companies.

GMU Scalia Law professor Ilya Somin calls out U.S. Solicitor General John Sauer for giving a factually incorrect answer to Justice Barrett during yesterday’s hearings on the Trump administration’s efforts to overturn birthright citizenship.

Allen Guelzo defends birthright citizenship.

Iain Murray decries “the villainization of business.”

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… is from page 27 of the late Brian Doherty’s marvelous 2007 book, Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement:

In early America, commerce – that great libertarian emollient of all social ills, that creator of wealth and happiness – was breaking free of the old-fashioned strictures and attitudes that denied it respect. We were to be a great commercial republic and, to the best of our ability, a free republic. In other words, a libertarian republic.

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… is from page 180 of Thomas Sowell’s 1983 book, The Economics and Politics of Race: An International Perspective:

Unions are a major factor making labor markets noncompetitive. They have both direct and indirect effects on discrimination. Directly, they have at various times excluded various groups from membership – in the United States, the Irish, the Italians, the Chinese, and blacks perhaps most pervasively of all. Some unions have limited entry to relatives of existing members. This, in effect, excluded members of other racial and ethnic groups.

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Mike Munger offers some wise advice about states and markets to us liberals. (HT Arnold Kling) A slice:

Liberalism has two mutually reinforcing aspects. The first is humility: I can’t assume I’m right. The second is toleration: I can’t assume you’re wrong.

The practice of liberalism therefore rests on a strong, but rebuttable, deference to individual agency. That practice requires a deep skepticism of concentrations of power. Historically, the different flavors of liberalism have privileged some kinds of power and handicapped others. Left liberals have been concerned about corporate power, but optimistic about the state; classical or right liberals downplay concentrations of market power but want sharply to limit the state.

I work and write in the field known as public choice. Public choice began as an antidote to the naïve application of the “market failure” paradigm, in which deviations from perfectly competitive markets always led directly to inefficiencies that markets themselves could never solve. This view was unchallenged in the 1950s and 1960s, and it worked to identify (mostly legitimate) problems with private, decentralized commercial processes. Markets are not perfect, so state action is required.

What was missing was any theory of government failure. Under what circumstances—if ever—would state action likely be counterproductive? Government policy results from the digestion of imperfect inputs: the rational ignorance of voters, the concentrated interests of organized groups, and the principal-agent failures of unaccountable bureaucracies. Why would we expect imperfect government control and direction to be better than imperfect markets? This concern extended worries about market power to concentrations of power more generally.

Damon Root reports on Trump’s unconstitutional attack on birthright citizenship reaching the U.S. Supreme Court. A slice:

A decade ago, I wrote a cover story for Reason magazine titled “Trump vs. the Constitution.” It explained how then-candidate Donald Trump’s call to abolish the constitutional guarantee of birthright citizenship for millions of U.S.-born children ran afoul of the text, history, and original meaning of the 14th Amendment. It also noted the dismaying fact that so many Republicans appeared ready to support Trump’s unconstitutional agenda.

“Most Republicans claim to revere the Constitution,” I wrote. “Yet when it comes to the issue of birthright citizenship, far too many Republicans, from Ed Meese on down to Donald Trump, seem willing to ignore the text and history of the 14th Amendment. Not exactly a reassuring indication of the GOP’s fidelity to originalist constitutional principles.”

Tomorrow, the U.S. Supreme Court will hear oral arguments in Trump v. Barbara, the case arising from Trump’s 2025 executive order on birthright citizenship. And just as I warned a decade ago, the Republican Party is effectively marching in lockstep under Trump’s unlawful direction.

My Mercatus Center colleague Yuliya Yatsyshina asks if the new $100K H-1B fee is protecting American workers.

Stefan Bartl writes that “Earth Hour misses civilization’s true triumph: Human innovation.”

Kimberly Blanton, of Alva, FL, has a letter in the Washington Post that’s worth reading:

My husband and I own a small remodeling business. Tariffs increased costs on many materials and items used in kitchen and bath remodels. We are too small to absorb the tariffs, so we had to raise our prices. Many people have decided not to remodel with prices increasing, so we have had fewer leads and prospects. We had to lay off most of our employees. I had semiretired; I’m 69. I’ve had to return to work in our business full time to replace employees we couldn’t afford to keep. I’m doing the work that four employees used to do. My husband and I cannot even afford to pay ourselves a consistent salary. We are living off of our Social Security benefits and doing our best not to go out of business.

Ed Carson tweets: (HT Scott Lincicome)

The U.S. has made lobbying a key focus of its industrial policy.

The lobbying industry is booming – thanks to the government!

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… is from pages 78-79 of my late, great colleague Walter Williams’s 1995 volume, Do the Right Thing; specifically, it’s from Walter’s December 8th, 1994, column (for which I cannot find a link) “Leviathan Run Amok”:

Any catastrophe attracts vultures to feed off carcasses. In the case of regulations, it’s consultants, lawyers, and accountants. Businessmen know about business, but they know little about all the government mandates that can destroy their business. In come the vultures to advise and counsel them to the tune of thousands of dollars a day. Again, who pays? And again, it’s consumers and workers.

DBx: Were he still alive, Walter would today – March 31st, 2026 – celebrate his 90th birthday. Although he’s been gone now for more than five years, I still intensely miss his good humor, piercing insight, and unyielding principle.

He is pictured here on the evening in May 2017 when he was presented with the Bradley Prize.