Coca-Cola’s statement was that it plans to sell “an offering made with U.S. cane sugar,” but as a “complement” to its existing U.S. lineup. In other words, corn syrup isn’t being phased out. Since it’s cheaper, that’s no surprise. The federal government props up sugar prices to the benefit of U.S. producers, particularly but not exclusively in Florida, by meddling in markets with a complicated tariff-quota system.
“In 2022, U.S. wholesale refined sugar prices were more than double the world price,” the Government Accountability Office said in 2023. Its report cited estimates that U.S. sugar producers get a protectionist windfall of $1.4 billion to $2.7 billion a year. But sugar users “lose an estimated $2.5 billion to $3.5 billion of consumer benefit,” making it a net loss. Also, high U.S. sugar prices are another incentive for confectioners and food manufacturers to set up shop elsewhere.
It’s classic protectionism: The government gives concentrated benefits to sugar producers. The costs are borne by everybody, but they are diffuse. The program is a net loss for the country, but the subsidized industry becomes influential and will spend money in politics to preserve its take. The downstream jobs that never get created because of the protectionist policies don’t have anyone to stand up for them, because they don’t exist.
By the way, Mr. Trump is threatening to levy a new 50% tariff on imports from Brazil. What does the U.S. buy from there? Cane sugar.
Those who prosper by government protection can quickly end up suffering from it. The latest example is President Trump’s trade deal with Japan, which has U.S. auto makers and United Auto Workers (UAW) President Shawn Fain up in arms—and they have a point.
Mr. Trump in April slapped 25% tariffs on autos and parts with exemptions for U.S.-made content. Mr. Fain cheered. But under the Japan deal, Japanese-made cars will pay a tariff of 15%, which is lower than the 25% on imports from Canada and Mexico.
Because American auto plants rely heavily on parts from Canada and Mexico, the tariff cost on U.S.-made cars could be larger than on Japanese imports. A mooted deal with the European Union would also apply a 15% tariff on its car exports to the U.S.
…..
Tough luck, Mr. Fain. Protectionism is a fickle benefactor.
It has been clear for a while that Trump and co. don’t understand or believe in balance of payments accounting, that they want both a smaller trade deficit and more foreign investment in America. Now their basic lack of understanding is embodied in a specific deal.
Second, as I said, it appears that Trump will get to influence how Japan invests. We’re already well on the way toward an economy in which success in business depends not on how good your product is but on your political influence (and also an economy in which Trump tells Coca-Cola what ingredients it should use.) This is another step on that road.
Finally, a 15 percent tariff is still really, really high — much higher than the 1.6 percent tariff Japanese non-agricultural exports faced before Trump began his trade war.
Will Japanese exporters, rather than U.S. consumers, end up paying that tariff? Some people have looked at the relatively muted effect of tariffs on consumer prices so far and suggested that maybe Trump was right about that. But they’re looking at the wrong data.
If foreigners were eating the tariffs, we’d expect to see a large decline in the prices America is paying for imports. And the BLS does, in fact, measure import prices; its index specifically does not include tariffs.
So let’s compare the increase in average tariffs from a year ago with the change in nonfuel import prices:
Source: Yale Budget Lab, Bureau of Labor Statistics
Have import prices fallen by enough to offset the tariff hikes? No, they’ve gone up slightly.
So why aren’t we seeing big increases in consumer prices yet? Basically because for the moment U.S. businesses are absorbing much of the cost rather than passing it on to consumers. They’ve been able to do that partly because many companies rushed to bring imports in before the tariffs hit, and are still selling out of that inventory. They’ve been willing to do that because they don’t want to alienate customers and lose market share, and have been hoping that the tariffs will mostly go away.
President Donald Trump published his administration’s AI Action Plan on Wednesday. Though muchofthe reporting following the announcement of the 28-page plan focuses on its accompanying executive order on “woke AI,” the more important aspect of the plan is how it removes regulatory barriers to foster a friendly environment for American AI innovation.
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While the plan’s deregulatory agenda promotes AI innovation, its heavy-handed industrial policy will interfere with private investment and discourage productivity. The plan directs OSTP to publish a National AI Research and Development Strategic Plan “to guide Federal AI research investments.” But there’s no need for taxpayer dollars to be infused into the sector. Stanford University’s Institute for Human-Centered Artificial Intelligence calculates that the private sector invested $109 billion in American AI, “nearly 12 times higher than China’s $9.3 billion,” in 2024; it is this private investment that is responsible for the industry’s meteoric technological and economic growth.
The CHIPS and Science Act appropriated $53 billion to subsidize American tech businesses. The case of Intel is illustrative: Scott Lincicome, vice president of general economics at the Cato Institute, describes how the company was foundering for yearsbefore the Biden administration (unwisely) promised it $19 billion in corporate welfare in March 2024; Intel’s stock fell so precipitously that year that Taiwan Semiconductor Manufacturing Co. considered purchasing the failing company this February. Trump recognized this failure on the campaign trail, but his AI Action Plan still invokes the statute to “invest in developing and scaling foundational and translational manufacturing technologies.” The plan’s direction of the Departments of Labor and Education to “prioritize AI skill development as a core objective of relevant education and workforce funding streams” is doomed for the same reason: Federal subsidies crowd out private funding, encourage bad investment, and discourage productivity.
One thing is for sure: The pressure Trump and his people are exerting on the Fed is a push for fiscal dominance. The executive branch wants to use the central bank as a tool to accommodate the government’s frenzy of reckless borrowing. Such political control of a central bank is a hallmark of failed monetary systems in weak institutional settings. History shows where that always leads: to inflation, economic stagnation, and financial instability.
There is yet another reason to beware the use of communitarian arguments in a political setting. Just as large political societies are not families writ large, so they are not communities writ large. A community requires more than people who live side by side or individuals who owe allegiance to a single sovereign. It requires that people within the community show some concern for each other. Equal concern and respect cannot be rammed down the throats of people who wish to direct their emotional energies elsewhere. What is required is some willing acceptance and recognition of the communities by their members. Communities can be destroyed from without, but they cannot be created from without; they must be built from within. Thus any effort to use state machinery to create a sense of community is likely to backfire and to displace voluntary groups that could otherwise be formed by free and independent people.
Because 30 days have passed since the Wall Street Journal published Phil Gramm’s and my June 26th, 2025, piece, “Steel and Aluminum: These Are Trump’s Worst Tariffs,” I share the full text of this piece here, without charge, beneath the fold.
Here’s a letter to my good friend at Berry College, the economist Frank Stephenson.
Frank:
In an email this morning you ask if I’ve “considered blocking the troll” who lately, at my Facebook page, has been defending protectionism.
I’ve not. In fact, I now regret even asking him voluntarily to stop posting at my page.
I understand that encountering the troll’s many ‘arguments’ and assertions is intellectually painful. The head can’t help but hurt when it confronts blatant illogic, especially when this illogic is presented as if it’s as irrefutable as Euclidian proofs. Still, I believe that such trolls, as long as they refrain from advocating violence or overt bigotry, ought not be blocked.
First, to block such a person conveys the false impression that we’re insufficiently confident in our ideas. Let the ‘woke’ and the progressives – and now increasingly the MAGA – embrace cancelling; let them monopolize this gutless maneuver. We, unlike them, have nothing to fear from challenges to our ideas and ideals.
Second, it’s possible that the troll will occasionally raise an objection that is serious and worth considering. If the case for free trade is to be as strong as possible, its advocates should be as familiar as possible with all coherent arguments – theoretical and factual – that are marshaled against it.
Third, the troll serves our purposes by revealing to us the protectionists’ arguments and attitudes du jour. Even though most of these arguments and manners of argumentation are unserious and incoherent, even illogical, it’s precisely these arguments and attitudes, because they are widespread, that we proponents of free trade must counter. And we can’t effectively counter them unless we’re up-to-date on what they are.
Fourth, the troll also serves our purposes by revealing to intelligent yet uncommitted individuals the nature of protectionists’ thinking. No sensible person can come across protectionists’ arguments without soon realizing both that these arguments hold no water, and that many protectionists argue like undisciplined third-graders. A sensible person who hasn’t yet made up his or her mind about trade policy can compare, side by side, the arguments and manner of argumentation of free traders with those of protectionists, a distressingly large number of whom, like the troll, argue by hurling ad hominems, by repeatedly committing the post hoc, ergo propter hoc fallacy and the fallacy of composition, by suddenly shifting the argument to ground Y when checkmated on ground X, by ignoring or misrepresenting free-trade arguments that they cannot refute, and simply by showing their poor command of facts and theory – and sometimes even by throwing temper tantrums when they’re unable to escape the superiority of the case for free trade.
So I welcome the troll to continue to comment at my Facebook page, and you should welcome him to do so at yours. The annoyance at encountering his ignorance is more than repaid by the value that he unwittingly contributes to the cause of free trade.
During a debate that I participated in at the Harvard Club of New York in December, Oren Cass, founder of the think tank American Compass, tried to draft President Ronald Reagan into the ranks of trade protectionists. Mr. Cass quoted a claim that Reagan was “the greatest protectionist since Herbert Hoover” and said that he “took repeated aggressive protectionist trade actions against the Japanese in particular.”
Mr. Cass’s argument, now a standard protectionist claim, was that because Reagan in 1981 agreed to a temporary voluntary restraint deal limiting the number of Japanese automobiles that could be imported into the U.S., he was a protectionist. I pointed out to Mr. Cass that I saw Reagan “at least once a week” during that period while I was working on the president’s budget, which I co-authored in the House, and could attest that the president hated the deal. He agreed to the compromise only to prevent lawmakers from passing more extreme protectionist legislation.
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President Reagan’s support for free trade wasn’t based on any of the economic arguments that have dominated informed opinion on trade policy for 250 years. To Reagan, free trade was simply an economic extension of freedom. In his view, except in limited circumstances involving national security, government had no right to tell people that they had to buy a product so that someone else could benefit from producing it. In a 1988 radio address, he said that “open trade policy . . . allows the American people to freely exchange goods and services with free people around the world.”
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Protectionists argue the restraint agreement brought foreign auto investment to America, but Volkswagen—which wasn’t under the auto agreement—built its first U.S. plant in Pennsylvania in 1978. Foreign investment in U.S. auto plants between 1981 and 1994, when the restraint agreement was in force, averaged only $671 million a year in 2017 dollars but averaged $6.6 billion between 1995 and 2008 after the voluntary restraint ended.
It wasn’t protectionism but lower taxes, a more favorable regulatory climate and right-to-work policies that brought foreign auto investment to the U.S. and created a vibrant auto industry in the American South. Alabama, which didn’t produce a single automobile when the restraint ended, is now the fifth-largest auto-producing state due to foreign investments by Mercedes-Benz, Hyundai, Toyota and Honda.
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Reagan warned America to reject “the siren song of protectionism” and instead to embrace peaceful trading partners. “We should beware of the demagogues who are ready to declare a trade war against our friends . . . all while cynically waving the American flag,” he said. “The expansion of the international economy is not a foreign invasion; it is an American triumph, one we worked hard to achieve.” Americans would do well to remember his words.
These tariffs were supposed to protect American jobs and strengthen domestic manufacturing. Instead, they’re shrinking margins, reducing profits — and hence investment — and setting the stage for higher consumer prices.
If the goal is to strengthen American manufacturing, this probably isn’t the way. Douglas Holtz-Eakin reminds us how tariffs have repeatedly failed to save the steel industry.
Computer code isn’t unloaded from ocean vessels. No customs agent ever has to collect a tariff on an app before it appears in an app store. High tariffs provide yet another advantage to technology companies relative to manufacturing companies in government policy.
As Greg Ip of the Wall Street Journalpointed out, this is actually one of the reasons why the stock market hasn’t been affected as much since the initial shock of the April tariff announcement. Fifty years ago, a terrible GM earnings report like the one we just saw would have done a number on the stock market. Today, GM only has a market cap of $50 billion. The biggest tech companies are over $1 trillion. The “old economy” that is hurt more by the tariffs simply doesn’t factor as much into overall stock market performance as the “new economy.”
Punishing the “old economy” is not what populists want, but if you want to continue to have an economy that structurally favors technology companies, tariffs are a great way to do that.
Politicians simply can’t allow GM to go under, even though it deserved to in 2009, and its financial situation will probably merit it again in the future. Between their mismanagement and a torrent of government regulations — safety rules, green rules, and trade rules — it’s going to eventually become impossible to keep going. In some sense, it’s an arm of the government already, meekly complying with every new mandate under the knowledge that it only continues to exist because of the bailout.
It’s possible for a company to reinvent itself, and many have. Barnes & Noble, for example, is actually doing quite well despite competition from Amazon. It realized it needed to change and executed a strategy to do that. GM has not demonstrated that kind of leadership or innovation. And it can’t because it is locked into onerous union contracts.
The only way GM doesn’t get nationalized is if it hangs on long enough that all the old politicians and voters who are nostalgic for the heyday of the company die first. But either Trump or Biden would nationalize GM in an instant if that’s what was necessary to save the company. And they’d act like they were doing you a favor by spending your tax dollars to prop up a zombie firm that the government played a part in killing.
The trade deal President Trump announced with Japan Tuesday evening is good news—in the narrow sense that it defuses what could have been an extended tariff war with America’s most important ally in Asia. But if this is winning a trade war, we’d hate to see what losing looks like.
Mr. Trump hailed the pact with characteristic modesty as “perhaps the largest Deal ever made.” Details remain sparse, but the core appears to be a Japanese commitment to invest $550 billion in the U.S. while reducing barriers to imports of American agricultural products such as rice. In exchange, Mr. Trump will reduce his “reciprocal” tariffs on Japan to 15% from 25%—including, apparently, on autos.
The new tariff rate is good news only as relief from 25%. This is still a 15% tax increase on imports from Japan. And don’t believe the White House spin that Japanese exporters will pay this tax. They might absorb some of it, depending on the product and the competition. But American businesses and consumers will pay more too and thus be either less competitive or have a lower standard of living.
That $550 billion in new Japanese investment also sounds better than it may be once we know the details. Japanese Prime Minister Shigeru Ishiba suggested Tokyo will offer government loans and guarantees to support these “investments,” with the aim “to build resilient supply chains in key sectors.”
This raises the prospect that this money, if it arrives, will be tied up in Japanese industrial policy. And American industrial policy, since Mr. Trump said Japan will make these investments “at my direction” and the U.S. “will receive 90% of the Profits.” Yikes.
By the way, more investment inflows by definition mean a larger trade deficit in the U.S. balance of payments. Has someone told the President about this?
The U.S. could have had more Japanese investment all along, except Mr. Trump helped chase it away. The current President and President Biden did their best to thwart a $14.9 billion acquisition of U.S. Steel by Nippon Steel ahead of last year’s election, before Mr. Trump acquiesced in June. Perhaps if Japanese companies were more confident they’d get a fair shake in the U.S., we wouldn’t need all these loan guarantees and trade deals to unlock capital commitments for American jobs.
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As for the claim that Mr. Trump is “winning” this trade war, that depends on how you define victory. It’s true Mr. Trump is showing he can bully much of the world into accepting higher tariffs. The size of the U.S. market is powerful negotiating leverage. The pleasant surprise so far is that most countries haven’t retaliated, which has spared the world from a 1930s-style downward trade spiral.
But Mr. Trump is showing the world that the U.S. can change access to its market on presidential whim. Countries will diversify their trading relationships accordingly, as they already are in new bilateral and multilateral deals that exclude the U.S. China will expand its commercial influence at the expense of the U.S. Beijing has also shown that two can play trade bully ball. It retaliated against Mr. Trump’s 145% tariffs with export restraints on vital minerals, and Mr. Trump agreed to a truce.
By the time this trade war ends, if it ever does, the average U.S. tariff rate may settle close to 15% from 2.4% in January. That’s an anti-growth tax increase.
But, as with earlier “deals” struck with the United Kingdom and Vietnam, this agreement looks like a bad one for the United States. Not only does it raise taxes on American consumers, but it leaves American automakers at a distinct disadvantage relative to their Japanese competitors.
Under the terms outlined by Trump in a Truth Social post on Tuesday, imports from Japan will be subject to a 15 percent tariff when they enter the United States. Yes, that’s lower than the 25 percent tariff that the president has been threatening to impose on Japanese imports, but it is still a huge tax increase relative to existing tariffs on Japanese goods.
Previously, the average tariff rate on American imports of Japanese goods was less than 2 percent, according to the World Bank’s data. In other words, Trump’s “deal” amounts to roughly a 650 percent tax increase on those imports. Those taxes, like all tariffs, will be paid by Americans.
By any serious measure, and certainly by every economic metric, the claim that the United States has been “ripped off” or “mistreated” by its trading partners over the past several decades is incoherent. The rhetorical scaffolding upon which the Trump administration’s protectionist tariff regime rests is a fundamentally flawed understanding of international trade. It substitutes a mercantilist worldview — discredited since the eighteenth century — for evidence-based economic policy, and in so doing risks sabotaging the very system that has helped drive US prosperity, innovation, and leadership in global commerce.
The administration’s argument is built on the premise that large bilateral trade deficits — particularly with China, Mexico, Germany, and Japan — represent exploitation. In fact, a trade deficit is not a measure of being “taken advantage of;” it is a simple macroeconomic identity. It reflects the fact that the United States consistently imports more than it exports, with capital inflows from abroad financing both private investment and public debt. This inflow — recorded as a capital account surplus — signals that global investors view the US as a safe and attractive destination for capital. Far from being a symptom of decline, this pattern is a reflection of economic strength and international confidence in US institutions. Trade deficits are not inherently bad; in fact, they often correlate with periods of strong growth and low unemployment.
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Moreover, the assertion that past trade agreements — such as NAFTA, the WTO accession of China, or the US-Korea FTA — were one-sided giveaways is economically unserious. Those agreements were negotiated to promote mutual gains through the reduction of barriers to trade and investment. Some industries contracted, as expected in any process of specialization and reallocation. But far more jobs were created in sectors where the US holds competitive advantages: high-tech manufacturing, advanced services, and capital-intensive production. Consumers have benefited from lower prices, and American firms gained access to global supply chains that improve productivity and innovation.
… is from page 212 of Virginia Postrel’s marvelous and more-relevant-than-ever 1998 book, The Future and Its Enemies:
Once the rulers of a society – in a democracy, the citizenry – become hostile to decentralized, trial-and-error processes, legal institutions will change accordingly. The sclerosis [Joel] Mokyr fears comes not because dynamism destroys itself but because people abandon it, either because they do not understand what is at stake or because they do not care.
DBx: Until not very long ago, only American “progressives” longed to turn the U.S. economy into a version of the sclerotic and nannying European economy. Today, alas, this longing is now shared by many American conservatives.
Two chief promises of a Trump victory in last November’s election were reduced U.S. trade deficits, and salvation from socialism. Yet as the new U.S.-Japanese trade agreement makes clear, these promises – the first, admittedly economically asinine, but the second economically all-important – are dashed (“U.S. and Japan Reach Trade Deal,” July 23). Under this agreement, as the president boasted on Truth Social, “Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits.”
Not only will this increased investment by Japan in the U.S. swell the U.S trade deficit, with the president personally directing this investment – and with the government laying claim to ninety percent of whatever profits emerge – the Trump administration moves the U.S. closer to genuine socialism. It now appears that the real winner last November was Bernie Sanders.
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
Consider Lourenco Goncalves, the Cleveland-Cliffs CEO who tried but failed to block Nippon Steel’s acquisition of U.S. Steel. Now he’s using tariffs to pitch his steel plants to foreign buyers.
Cleveland-Cliffs, one of the largest U.S. steelmakers, on Monday reported a $247 million loss in the second quarter. That’s nothing to celebrate. But the company’s stock price surged 12% because the company said U.S. tariffs have led to record shipments and buoyant prices, which cut the company’s first-quarter loss by half. Political intervention to limit competition tends to do that.
Mr. Trump in February eliminated steel tariff exemptions for trading partners like Canada. Last month he doubled the steel tariffs to 50% when he blessed the Nippon-U.S. Steel deal, ostensibly to please the United Steelworkers union. Cleveland-Cliffs is “uniquely positioned to benefit from this new reality,” Mr. Goncalves said.
He also said Mr. Trump’s 25% tariffs on autos and auto parts will help domestic car makers, which could boost demand for American-made steel—that is, unless higher car prices depress sales. Cleveland-Cliffs is the U.S. auto industry’s biggest steel supplier.
Tariffs could have another benefit for Cleveland-Cliffs: They will make its factories more attractive to foreign buyers. “Going forward, foreign competitors need to acquire steel capacity within the United States if they want to participate in this desirable market,” the CEO said.
The U.S. market for steel is especially desirable now because tariffs let domestic manufacturers pad their margins.
One narrative goes like this: China joined the WTO with U.S. support in 2001. This worked great for the U.S. economy as a whole and helped China get rich, but it hollowed out specific U.S. communities affected by trade, especially those with many manufacturing jobs, which have been turned into economic wastelands where no one can find work, and the jobs that do exist are poorly paid. This “China shock” is responsible for dissatisfaction with the U.S. economy and needs to be corrected through robust protectionism and manufacturing subsidies.
Jeremy Horpedahl tests this narrative against the facts from the ten metropolitan areas that “China shock” scholars said were most affected by trade with China. Most of them have more jobs today than they did in 2001, and all of them have higher real wages for workers at every income level.
Trump’s trade letters, posted on Truth Social and detailed by the White House are a clownish display of economic ignorance, fixating on bilateral trade deficits as evidence of America being “taken advantage of.” These letters reveal a shocking fundamental misunderstanding of trade and deficits, risking inflation, retaliation, and economic chaos.
The Congresswoman [Rep. Anna Paulina Luna, a Trump-aligned Republican from Florida] is trying to criminalize what at its core is an argument over monetary policy. Mr. Powell’s term as Chair ends next May and it’s certain he won’t be reappointed. Whatever Mr. Powell’s rhetorical inexactitude, it’s madness to create a new precedent for prosecuting officials for policy disagreements. Doing so is the road to the hyper-politicized monetary policy you’d expect in Argentina.
Before Amazon.com existed, you had to buy books — and any number of other things — at physical stores. If you wanted a new washer or refrigerator, you had to go to a Sears store.
Now imagine if, even worse, there were different stores for different manufacturers of refrigerators: one store for Whirlpool, another for LG, yet another for Bosch, and so on.
That’s just how most of us are forced to buy cars in the United States. Twenty-eight states, including Georgia, prohibit car manufacturers from selling directly to consumers with only narrow exceptions.
… is from page 338 of the “Random Thoughts” section of Thomas Sowell’s 2010 book, Dismantling America:
There are too many people, especially among the intelligentsia, who will never appreciate the things that have made this country great until after those things have been destroyed – with their help. Then, of course, it will be too late.
Here’s a letter that I sent on July 13th to the New York Times; it was not published.
Editor:
In your interview with economist Pietra Rivoli, she conveys much-needed wisdom about trade and tariffs (“Policy or Cudgel? A Trade Economist on Trump’s Hardball Tariffs.” July 13). But she’s mistaken to say – obviously referring to the Voluntary Export Restraints on Japanese automobiles negotiated by Pres. Reagan – that “the reason we have Japanese auto manufacturing plants in the United States is because of the actual or the threat of trade barriers, quotas, tariffs and so forth. Ronald Reagan scared the Japanese manufacturers.”
Volkswagen began building manufacturing plants in Pennsylvania in 1978 and Honda built its first plant in Ohio in 1979, two years before the VER, building motorcycles. Seeing their successes, Honda then announced more plants being built in 1980, which began opening from 1982 to 1986…. In fact, if we look at the data, we see about $652 million of foreign direct investment in 1981 versus $5.3 billion in 1994 when the VER ended. In other words, a 700 percent increase in foreign investment. That sounds like a lot until we see that from the increase from 1994-1999: a 770 percent increase in just five years as compared to the fourteen years of the VER, increasing foreign investment in the US auto sector from $5.3 billion to a staggering $46.1 billion.
Also worth noting is the fact that, even if the threat of trade restrictions was the chief driver of most foreign automobile manufacturing in the U.S., it’s doubtful that this development was good for the U.S. economy as a whole. The workers and inputs in those automobile factories were drawn from other firms and industries. There’s good reason to believe that resources used in facilities that are profitable only because of tariffs generate less economic value than those resources would have generated in their pre-tariff uses.
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
There is yet another reason to beware the use of communitarian arguments in a political setting. Just as large political societies are not families writ large, so they are not communities writ large. A community requires more than people who live side by side or individuals who owe allegiance to a single sovereign. It requires that people within the community show some concern for each other. Equal concern and respect cannot be rammed down the throats of people who wish to direct their emotional energies elsewhere. What is required is some willing acceptance and recognition of the communities by their members. Communities can be destroyed from without, but they cannot be created from without; they must be built from within. Thus any effort to use state machinery to create a sense of community is likely to backfire and to displace voluntary groups that could otherwise be formed by free and independent people.
Once the rulers of a society – in a democracy, the citizenry – become hostile to decentralized, trial-and-error processes, legal institutions will change accordingly. The sclerosis [Joel] Mokyr fears comes not because dynamism destroys itself but because people abandon it, either because they do not understand what is at stake or because they do not care.
There are too many people, especially among the intelligentsia, who will never appreciate the things that have made this country great until after those things have been destroyed – with their help. Then, of course, it will be too late.
