Charles Lane describes Trump’s self-destructive politics. A slice:
Putting more upward pressure on costs, Trump intensified an impulsive trade war, including import surcharges of up to 12.5 percent on dozens of countries. He targeted Canada with verbal abuse and a 50 percent levy on $20 billion worth of imports — which Canada matched (minus the verbal abuse). Maine and Michigan, both pivotal to control of the Senate, got hurt. Trump walked back some tariffs to help Collins, but it might have been too little, too late.
So much for ending “Bidenflation.” Then there was Trump’s ego-driven meddling in GOP candidate selection. Not since Caligula tried to make his horse a consul has a leader chosen so unwisely. Incumbent Sen. Thom Tillis of North Carolina could have won reelection. But the president threatened to punish his occasional deviations from the Trump line by backing a primary challenger, and Tillis opted not to run. Now, Democrat Roy Cooper is well ahead of the nonentity Trump supported, Michael Whatley.
In Texas, Sen. John Cornyn could have coasted to a fifth term; Trump backed the scandal-plagued but “loyal” Ken Paxton, who won the GOP primary. Paxton is struggling, predictably, against Democrat James Talarico.
Dan Hannan warns of Trump’s fiscal incontinence. A slice:
Mitt Romney memorably pointed out that Obama had borrowed more than all his White House predecessors put together. Donald Trump was emphatic about Obama’s record. “Barack Obama has doubled our national debt. Doubled it.”
That was in 2016. Where are we 10 years on? Well, it turns out that Trump has now borrowed more than all his White House predecessors put together, including Obama. Trump, one might say, has doubled the national debt. Doubled it.
Both presidents might plead mitigating circumstances. Obama could point to the banking crisis, Trump to the pandemic. But neither man was ultimately prepared to make the unpopular decisions, including on Medicare and Social Security, that would allow the federal government to live within its means again.
Russ Roberts talks with Joseph Francis about the alleged “China Shock.”
They are illegal for multiple reasons, part of an ongoing effort by this administration to usurp Congress’ constitutional authority over tariffs. In addition, they harm the U.S. economy and poison relations with a key ally. Section 338 of the 1930 Tariff Act has never been used by a president to enact tariffs before; Philip Zelikow, a conservative trade policy expert and former Bush administration official, has shown that Section 338 was superseded by legislation enacted in 1962 and 1974.
Even if Section 338 is still operative, Trump’s tariffs on Canadian goods violate its requirements. As the complaint explains, the Canadian trade measures cited by Trump as justification for the new tariffs do not discriminate against U.S. goods; Section 338 can only be used against discriminatory policies. Some retaliate against previous tariffs imposed by Trump. Most do not actually treat U.S. goods less favorably than imports from many other countries. In addition, the Section 338 tariffs go well beyond “offsetting” Canadian measures, violating another requirement of the law. They impose the maximum 50 percent rate on all covered goods, even though the Canadian tariffs in question are lower and do not cover as wide a range of products. Some of the Canadian measures are not even import restrictions at all, but merely decisions by Canadian provincial governments to stop purchasing U.S. alcoholic beverages for their government-owned liquor stores. Consumer decisions to stop purchasing a given product are not discriminatory restrictions on trade. Otherwise, such “discrimination” would occur anytime a foreign government chooses to buy anything from a non-American producer when there are U.S. producers that sell similar products.
Here’s the abstract of a new paper by Richard Baldwin:
This paper argues that globalisation’s frontier has shifted from manufacturing GVCs to services GVCs: from the Global Factory to the Global Office. While the Factory remains larger in gross trade, the Office is growing much faster. A heatmap of trade in intermediates shows that the Factory is bloc-shaped and dominated by China, whereas the Office is star-shaped and dominated by America. Gravity estimates show that distance matters less for Office exports, but time zones matter more: each hour of time-zone separation reduces Office exports by roughly 4%, while having no effect on Factory exports. Importantly, all of the world’s export-linked net job creation between 2008 and 2022 occurred in digitally delivered services rather than manufacturing, and trade-linked service jobs command higher average pay globally. The Factory-to-Office shift is also reshaping development. Most emerging economies have seen export-led growth tilt towards services, but their service exports are not yet large enough to drive overall GDP growth the way manufacturing did historically. The big picture is that globalisation’s second unbundling is running out of steam even as its third unbundling is powering ahead. The paper, which raises more questions than it answers, closes with the conjecture that the future of trade is services.
Americans can trade futures contracts for any agricultural product — except onions. Onion futures have been forbidden since 1958. Buy and sell class IV milk or 90 percent lean beef trim futures to your heart’s content, but dare to trade in expected onions and you can be fined up to $5,000.
In 1955-56, a pair of commodities traders named Vincent Kosuga and Sam Siegel worked to corner the market on onions. They bought massive quantities of the bulbs, raising the price. Then, they bet in the futures market that onion prices would fall — which they knew would happen because they sold off all their onions at once.
In 1955-56, a pair of commodities traders named Vincent Kosuga and Sam Siegel worked to corner the market on onions. They bought massive quantities of the bulbs, raising the price. Then, they bet in the futures market that onion prices would fall — which they knew would happen because they sold off all their onions at once.
Rep. Robert Griffin (R-Michigan) stressed the onion industry’s support for banning onion futures. “The onion growers have never had a Government subsidy or price support and they are not asking for one,” Griffin said. “In light of the millions of dollars we appropriate annually to support the price of other commodities, surely this one request on the part of the onion farmer is entitled to the sympathetic ear of Congress.”
It was an impressive political accomplishment. Restricting futures trading had been fertile ground for legislation, with around 200 bills introduced between the 1880s and the beginning of federal regulation in 1922. But the ban on onion futures was the first to become law.
Proponents understood the value of futures markets in general. They help stabilize markets and enable price discovery. But they argued that onions were different. “Futures trading in onions, because of the small volume and perishable nature of the crop is not an economic tool, but a gambling device for professional speculators,” said Rep. Gracie Pfost (D-Idaho). The Agriculture Department told Congress that only 5 percent of the volume of onion futures trading involved hedging by onion growers.
But Kosuga was an onion grower, and Siegel was a produce wholesaler. And the Commodity Exchange Authority, the Agriculture Department agency that regulated futures trading at the time, punished them. In an administrative proceeding, they were found to have engaged in market manipulation and were suspended from participating in contract markets.
Congress, however, had settled on a simple story: honest farmers versus reckless speculators. Once that was established, onion futures were cooked.
Agustina Vergara Cid rightly criticizes the collectivism espoused by the illiberal and economically illiterate J.D. Vance. Here’s her conclusion:
If Vance identified the essence of socialism, he would have to condemn both his own policies and the worldview that subjugates individuals to his nationalist agenda.
You can’t defeat socialism with an alternative form of collectivism, only with its opposite: the principle that the individual is not a means to any group’s end. That means protecting each person’s right to trade, hire, and associate with whomever they choose, and to live by their own judgment so long as they respect others’ rights. This is America’s founding premise, and we should embrace it instead of Vance’s or anyone else’s rehashed versions of the very premise it stands against.
After 18 years at the Institute of Economic Affairs, Kristian Niemiętz is moving on. Here’s a slice from his retrospective:
Individually, most of our opponents make little difference, because they promote ideas which are already fashionable, and which would be there with or without them. The marginal benefit of one more socialist, one more Greta Thunberg fan or one more person defending the NHS is close to zero. Classical liberalism and free-market economics, on the other hand, are so unfashionable and so counterintuitive that every supporter counts. These causes could very easily drop out of the national conversation altogether, and had there been no IEA over the past 18 years, they might very well have.
As such, commercial society demands much of us: to decline to enslave ourselves to immediate desires, short-term considerations, and the lies of relativism; to embrace the virtues of prudence, magnanimity, and benevolence, especially when it seems expedient to set such habits aside; and to be wise and virtuous people, however exalted or humble our place in society might be.
There has never been a shortage of people eager to draw up blueprints for running other people’s lives.
A core component of classical liberalism has always been a belief that people should be allowed by law to pursue their own interests as they see fit, so long as they are respecting the rights of others.
National policy in the economic sphere, as in all other spheres, should be directed to ensure permanent advantages for the population as a whole. The presumption in favour of a policy of Free Trade is that it is so directed – it secures in the long run the use of the national resources of a country in the way shown by experience to be most economical, that is to say, to yield the greatest results for the least effort: the certain advantage of Free Trade is both permanent and general. The advantages, on the other hand, to be obtained by tariffs are either sectional if they are certain, or uncertain if they are general; in each case a strictly temporary gain, if any gain, is far more probable than a permanent one.
