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… is from page 4 of GMU Econ alums Matthew Mitchell’s and Peter Boettke’s superb 2017 book, Applied Mainline Economics: Bridging the Gap between Theory and Public Policy:

Prosperity matters. Greater wealth, of course, buys us nicer vacations and fancier gadgets. But it also buys us longer life spans. It buys us better nutrition and lower infant mortality. It buys more time with family and less time at work. It buys greater self-reported happiness. It makes us better stewards of the environment. And it even buys intelligence, for as societies grow wealthier, their average IQs seem to rise.

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Sarah Thomas sings the praises of globalization. A slice:

An economic order based on comparative advantage is more efficient and productive than economic nationalism. As a result, societies that have liberalized economically have seen the strongest growth, where growth often drives democratization and, ultimately, peace. But comparative advantage has less to do with a country’s technical ability for production and more to do with the efficiency of its production—so even the countries with the fewest resources can grow.

This dynamic intersects with opportunity cost, meaning that even if a country had superior technical skills in producing, another country could produce and sell the good to the first country at a lower cost than if that country produced it itself. In doing so, the other producer can be said to have a comparative advantage. A real-world example of this is Germany and Saudi Arabia. Germany has superior technical know-how but channels those skills toward the production of cars—its comparative advantage. Meanwhile, Saudi Arabia has the reserves and sufficient skill to extract and refine oil, giving it a comparative advantage as the world’s largest exporter of oil.

Hence, comparative advantage drives the international division of labor, which cultivates a peaceful world order of trading partners. But this peace is not limited to the modern globalized era. Indeed, earlier societies also embodied the peace of commerce—even prior to the Industrial Revolution. As Johan Norberg notes in Peak Human, history attests to seven “Golden Ages” of civilization where economic dynamism and peace prevailed.

The Editorial Board of the Wall Street Journal decries Trump’s “tariff gift to Abdul El-Sayed.” A slice:

President Trump’s trade war with Canada is harming both countries, but it’s helping American Democrats who are using his border taxes to attack Republicans. Ground zero is Michigan, where competitive races could decide control of Congress in November.

A new Ipsos poll conducted for the business coalition M finds that Mr. Trump’s tariffs are overwhelmingly unpopular in the state, especially the tariffs on Canada. While the President says other countries pay the tariffs, 80% of Michigan likely voters say American consumers do. They’re right.

Businesses that import goods embed the tariffs into their prices, sometimes in stealthy ways. Cox Automotive this spring found that Mr. Trump’s tariffs drove a 10.4% increase in the average suggested retail price for new cars. Michigan Smart Trade Alliance estimates tariffs have cost the state $26 billion since January 2025, or about $6,419 per household.

A large share of this tax bill comes on imports from Canada, which exports about $40 billion in goods to Michigan every year. Vehicles and parts make up roughly half of that. Because of its significant car manufacturing, Michigan depends heavily on cross-border supply chains with Canada and Mexico. Michiganders understand that.

Some 81% of Republicans and 92% of Democrats and independents say the U.S. trade relationship with Canada is crucial to the state economy, according to the Ipsos poll. About three-quarters of both parties want the U.S. to focus on combatting China’s mercantilist trade practices while at the same time maintaining strong trade ties with Canada and Mexico.

National Review‘s Daniel Foster, noticing the positive reaction of fans at Thursday’s Buffalo Bills – Detroit Lions game to the playing of Canada’s national anthem along with the Star Spangled Banner – and noting also the unpopularity in the U.S. of Trump’s tariffs punitive taxes on Americans’ purchases of imports from Canada – understandably wonders what effect Trump’s belligerence toward Canada will have on the November elections.

Incoming tourism is an export industry because the domestic economy is thereby selling goods and services to foreigners. Economic theory makes clear that restrictions on imports are also restrictions on exports. In 2025 Trump dramatically increased U.S. restrictions on imports. Unsurprisingly, therefore, in 2025 a major U.S. export industry – tourism – took a big, bad hit, as shown in this graph shared by Scott Lincicome.

My Mercatus Center colleague Satya Marar explains that “Trump’s MFN price controls aren’t the answer to America’s high patented drug pricing, but trade deals may be.”

Eric Boehm reports this: “The Trump administration paid federal workers $9.5 billion to skip work.”

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… is from page 213 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates:

The “academic freedom” argument for tenure gets more and more threadbare as more and more scholars work in think tanks where there is no tenure. The research coming out of these think tanks is at least as independent as that coming out of universities operating under the stultifying conformity of political correctness.

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Here’s a letter to a Facebook commenter.

Mr. McNicoll:

Commenting on Jeff Singer’s Facebook page, you unjustifiably call Reason’s Billy Binion a “moron.” You level this uninformed accusation at Binion because he points out that Trump is as clueless to complain about the so-called U.S. “trade deficit” with each of many individual countries as would be an individual American to complain about her “trade deficit” with a supermarket. In fact, the supermarket example is a correct and clear way of exposing the fallacy of Trump’s economics. Yet rather than recognize this fact, you resorted to name-calling.

Name-calling is easy and childish. Making a credible argument requires thought and maturity. So I challenge you to act like an adult and offer a credible argument in response to the following:

In an economy of more than two entities – more than two individuals, firms, towns, states, or countries – there’s absolutely no reason to expect any pair of these entities to sell to each other the same amount as they buy from the other.

Suppose, for example, that the world had only three countries: the U.S., Canada, and Brazil. Suppose further that in this world the U.S., each year, imports from Canada $1M of maple syrup, paying in U.S. dollars. The Canadians then use those U.S. dollars to buy $1M of coffee from Brazil. The Brazilians, in turn, use those U.S. dollars to buy $1M of corn from the U.S. There are (for simplicity) no other international transactions.

In this example – if Trump is correct – Canada is “ripping” America off, for the U.S. has a so-called “trade deficit” of $1M with Canada. Also if Trump is correct, were he as president to stop Americans from trading with Canada, we Americans would lose nothing; indeed, we’d gain $1M.

Do you think that Trump is correct? If so, show your work – work, by the way, that would also reveal that, according to Trump’s logic, the U.S. in this example is “ripping off” Brazil to the tune of $1M annually.

Note that if we now allow also for foreigners to invest some or all of their U.S. dollars in the U.S. instead of spending them all on U.S. exports, the absurdity of Trump’s ‘argument’ is only magnified.

Billy Binion is perfectly justified in using the supermarket example, for there is no essential difference that separates one individual’s “trade deficit” with a supermarket from one country’s “trade deficit” with another country.

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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My intrepid Mercatus Center colleague, Veronique de Rugy, explains that the U.S. government’s fiscal incontinence helps to fuel inflation by making more likely future monetization of the debt.

GMU Econ alum Dave Hebert has a new paper on manufacturing in the U.S. A slice:

The lesson from the Biden-Harris years is not that their policies were successful.Instead, American manufacturing is resilient enough to perform remarkably well despite regulatory headwinds. Regardless, bad policy does take its toll and is more accurately measured in unrealized potential: factories never built, jobs never created, and investment directed elsewhere. The regulatory hangover described here is not the story of a sector that collapsed or is “dead.” It’s the story of a sector that could have been significantly stronger.

“A 5 percent wealth tax would destroy a lot more than it raises” – so explains my Mercatus Center colleague Jack Salmon.

John Early tells “how to improve the Trump administration’s tepid proposal to remove race and ethnicity from the decennial census.” A slice:

Classifying people by race is inherently unethical because it enables government to discriminate for or against individuals or groups based on their race. At its most extreme, the Nazis in Germany and the Vichy government in France used official statistics as part of their genocide campaigns. The French have learned that lesson and forbid almost all data collection by race. Less extreme use of race to discriminate is widespread in the United States today, from college admissions to housing subsidies and hundreds of other applications. (For extensive documentation of such abuses, see David E. Bernstein, Classified: The Untold Story of Racial Classification in America.

George Leef reviews Unsung Heroes of the Market: The 24 Underrated Economists You Need to Know. A slice:

Rosolino Candela contributes a chapter on Israel Kirzner, who enrolled at New York University intending to study accounting and happened to hear about a professor who gave an interesting seminar on economics — Ludwig von Mises. Kirzner decided to attend and was so captivated that he chose to pursue a PhD in economics under von Mises. Candela writes, “The hallmark of Kirzner’s scholarship has been to take his inspiration from Mises and develop his own unique appreciation of the entrepreneurial market process, not for the purpose of illustrating where mainstream economic theory had gone wrong per se, but to explain why its focus on equilibrium states painted an incomplete picture of the market process.” Kirzner’s work also illustrates the ways government regulation hinders entrepreneurs from taking advantage of opportunities for profit.

Brian Albrecht continues to write insightfully about market prices and the many different margins on which individuals make adjustments to changes in economic constraints and opportunities.

Here the concluding paragraph of Noah Rothman’s reflections on Trump’s asinine proposal to give every American adult $5,000 if, in November, Republicans retain control of both houses of Congress:

If the president were surrounded by folks with a little more faith in voters’ intelligence, he might not have insulted them with the promise of a greasy payoff. He should find himself a few people who don’t hold their fellow Americans in contempt. That might make the next two years a little easier on this White House, the GOP, and whomever Republican voters pass the party’s baton to in 2028.

Scott Lincicome draws the logical conclusion from Trump’s latest ‘explanation’ of the meaning of bilateral trade deficits and surpluses:

Just think how rich you’ll be when you stop eating altogether!

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… is from page 24 of the new CL Press printing of the 1954 Revised Edition of Eli Heckscher’s 1931 book, Mercantilism [original emphasis]:

Without deviating from the relationship of mercantilist policy to the state, we may ask further, what was the object of mercantilism in using economic forces in the interests of the state? The answer is primarily that it wanted to make use of them not directly in the interests of the subject but to strengthen the state authority itself; it concentrated on the power of the state.

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Wall Street Journal columnist Barton Swaim decries Americans’ loss of an ethos of risk-taking. Two slices:

Evidence abounds that most college-educated Americans have lost the ability to assess risk. An exaggeration, maybe, but that thought has haunted me since the pandemic years of 2020-21, when otherwise sane people embraced draconian interventions of minimal benefit while showing no interest in costs. The very few advocates of shutdowns and school closings willing to acknowledge those policies as misjudgments mostly excuse themselves by noting how little we knew of the virus in its early days.

Well, sure—although some of us knew folly when we saw it. Anyway, the maniacal demand for a clinically neat solution to the pandemic, and the concomitant failure to acknowledge cost-benefit trade-offs, suggests a cultural pathology predating Covid-era safetyism. In fact, its roots go back nearly a century, as Manhattan Institute economist Allison Schrager makes clear in “Worth the Risk,” to be published next week by Yale.

America’s global economic dominance, achieved in the 1950s and enduring still, is largely thanks to the young country’s risk-welcoming ethos. The few provisions that shielded economic actors from ruin in the 19th century—bankruptcy protections, limited-liability laws—didn’t deter risk-taking but encouraged it.

Then came the New Deal’s dramatic expansion of the welfare state. Social Security, unemployment insurance and an assortment of jobs programs aimed to make economic life less risky and more predictable. Three decades later, beginning with the Great Society and its attendant War on Poverty—Medicare, Medicaid, expanded food stamps, school lunch programs, housing vouchers—the federal government tried to abolish risk for the working class: the class, that is, from which the country’s boldest entrepreneurial risk-takers had always sprung. The trend continued when consumer-protection and product-liability laws made America a more litigious society and forced companies and public institutions to think constantly about safety and risk-avoidance.

After the 2008-09 financial crisis and the shutdowns of 2020-21, wealthy democracies all over the world, including the U.S., expanded their role as citizens’ primary insurer. “Regulatory policy changed to restrain banks from lending and taking on risk, and industrial policy, tariffs, and reshoring efforts were billed as ‘de-risking the economy,’ ” Ms. Schrager writes. Rather than insuring against a specific risk that went badly in the past, “the government started heading off opportunities for risk altogether, explicitly forfeiting growth in exchange for safety.”

…..

Ms. Schrager debunks several myths that she says keep Americans of all ages and stations from taking healthy chances. Among those myths: the belief on the progressive left and populist right that U.S. workers face more economic risk than they did two or three generations ago. The odds of being laid off, for example, haven’t changed appreciably since the 1950s. Or this: “Conventional wisdom says that Millennials don’t have the cash to buy a home because, unlike their parents’ generation, they have too much student loan debt. But there is actually a positive correlation with student debt and homeownership, since people with more student debt tend to earn more.”

And bear in mind, Ms. Schrager says, the reason millennials carry that debt in the first place: because politicians starting in the ’80s presented college as a risk-free road to financial security. Federal and state governments made loans easy, borrowers felt less price sensitivity and colleges responded rationally by bumping up tuition. “When college is touted as a ticket to a certain lifestyle,” she writes, “it seems smart to agree to almost any price tag and any amount of debt.”

John Stossel writes wisely about AI.

GMU Econ alum Dave Hebert ponders Canadian membership in the EU.

Also from Dave Hebert: He exposes yet another foundational inconsistency in Trump’s (mis)understanding of trade.

From a new poll by the Cato Institute:

74% Say President Trump’s Tariffs Have Raised Prices; 53% Say Tariffs Have Weakened the Economy, 70% Say the President Needs Congressional Approval to Impose Tariffs.

“US-Canada trade war further taxes small businesses as costs rise during the Iran war.” (HT Scott Lincicome)

National Review‘s John Puri applauds the tightening of U.S. monetary policy and hopes that it remains tight long enough to actually whip inflation. Here’s his conclusion:

Americans should be worried that, for a second time, the Fed will declare victory at the first sign of easing inflation and quit before the task is done. As Warsh said last month, no self-executing law of the universe requires inflation to revert to 2 percent. Inflation is a function of monetary policy, and policy must be sufficiently restrained over time to keep the money supply in check.

“Inflation is a choice,” Warsh reiterated today. The Fed has finally begun to do its job of restoring some semblance of price stability. It needs to make sure that it finishes the job this time.

Jacob Sullum reports on a court ruling against the DHS’s proposed changes in visas for students and journalists. A slice:

“The damage to the higher education system and to the economy of the United States is likely to be catastrophic,” U.S. District Judge F. Dennis Saylor IV, a former President George W. Bush appointee, writes in response to a lawsuit filed by organizations representing universities, educators, and journalists. “Notwithstanding the scale of the likely harm, the government’s proffered rationales for the rule are exceptionally weak, and the connection between the rule and the problems it purports to address is exceptionally attenuated.”

Although the DHS estimated that complying with the rule would cost about $250 million in the first year, “the real expected costs go far beyond” that figure, Saylor notes. Under prior regulations, foreign students could remain in the United States until they completed their educational programs, including “authorized practical training following completion of studies.” For people earning one or more advanced degrees, that process often takes longer than four years. By ignoring that reality, the DHS rule would undermine the huge scientific and economic benefits generated by international students.

“How Socialism Destroyed Venezuela in 16 Charts.“

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… is from James Madison’s Federalist 47:

The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, selfappointed, or elective, may justly be pronounced the very definition of tyranny.

DBx: Indeed. Yet today, leaders of, and cheerleaders for, both major U.S. political parties seem to believe that as long as politicians are chosen democratically, any such concentration of power in one branch of government is not only acceptable, but desirable.

Happy Constitution Day, fellow Americans.

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Deirdre McCloskey proposes to replace the term “capitalism” with “innovism.” I agree with her that the former term, because of decades of ignorant propaganda – and because the essence of “captialism” isn’t capital, but entrepreneurial innovation – unfortunately conveys negative impressions to too many people. (For alerting me to the Barron’s piece I thank Steve Kaufman.)

Don
……..

Editor, Barron’s

Editor:

You describe Trump’s vision of the American economy as “state-directed capitalism” (“How a Trade Deal With Japan Could Change the Face of U.S. Energy,” September 16). Although the “state-directed” part is unfortunately accurate, the “capitalism” part is inaccurate if by “capitalism” is meant the innovative and competitive free-market process that alone is responsible for modernity’s prosperity.

Genuine capitalism, by its very nature, cannot be state-directed. It is driven by entrepreneurs and investors, in competition with each other, spending their own (and only their own) money to create goods and services to offer for sale to consumers who are unmolested in choosing how they spend their own (and only their own) money. The result is economic dynamism that incessantly improves the living standards of almost everyone.

What you call “state-directed capitalism” is categorically different. It’s politicians and bureaucrats, facing virtually no competition, spending other people’s money to produce goods and services that these same government officials decide ahead of time must, by hook or crook – through the use of the likes of tariffs, subsidies, and regulatory mandates – be purchased by consumers. The result is economic stagnation that improves the living standards only of politicians, their apparatchiks, and special-interest groups.

“State-directed capitalism” might appear on the surface to be a version of genuine, free-market capitalism. But like a Potemkin village, behind the façade stands only rickety scaffolding held together with the equivalent of spit, string, and children’s glue. Just as no informed person would choose to live in a Potemkin village, no informed person would choose to live under “state-directed capitalism.”

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