Wall Street Journal columnist Mary Anastasia O’Grady writes insightfully about the USMCA – the successor trade agreement, negotiated by Trump, to NAFTA – and Trump’s bellicose assaults on it. Two slices:
“We don’t need anything that Canada has, we don’t need anything that Mexico has,” President Trump told reporters this month as he ruminated on the possibility that he might soon terminate the 2020 U.S.-Mexico-Canada Agreement. He could try, but not without legal challenges and not without losing crucial support in Texas and Middle America.
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U.S. agriculture produces more every year than Americans and their livestock can eat. In 2025 the value of its exports across the northern and southern borders reached almost $59 billion, more than one-third of total U.S. ag exports. Nothing would make Canadian and Mexican farmers happier than an end to the USMCA and the competition from the highly efficient American food producers they face. U.S. agriculture and Republican senators across the heartland are begging Mr. Trump to preserve that market access.
American manufacturing also has a lot at stake. In public comments delivered to the U.S. trade representative in November, the National Association of Manufacturers called the USMCA “the most pro-U.S. manufacturing trade agreement in history.” The association said the pact has “boosted manufacturing in the U.S. to unparalleled levels.” North American manufacturing output, it noted, now accounts for close to one-third of global gross domestic product, almost double China’s share.
Marian Tupy – copying a phrase coined by the late Tom Wolfe – writes that Americans will now go through “the Great Relearning” as Zohran Mamdani and other “democratic socialists” replay in the U.S. the sorry history of collectivism. A slice:
When the Berlin Wall fell in 1989, a set of propositions seemed settled beyond dispute. Central planning had impoverished half of Europe while markets enriched the other half. Prices were not arbitrary impositions but signals carrying more information than any ministry could gather. The right to own a business, to keep the fruits of one’s labor, and to trade freely across borders had lifted more human beings out of poverty than every charity in history combined. They were the conclusions of an experiment run across a continent, with a control group on either side of a barbed wire line.
A generation later, those conclusions have been forgotten. Voters in wealthy democracies, and the young above all, are electing self-described democratic socialists who promise to repeal economics by decree. In New York, a democratic socialist won the mayoralty in November on a platform of frozen rents, city-owned grocery stores, and an expropriation of someone else’s wealth. The voters in Washington, D.C., are all but certain to elect a similar candidate. The 20th-century socialists buried hecatombs of corpses. Yet it is the intellectual corpse of socialism that is being revived.
What are the lessons that the voters have forgotten? Free trade is desirable because it lets Vietnamese seamstresses and Iowa farmers prosper by doing what they do best, while protection taxes a nation’s own citizens for the privilege of buying less. Rent control is ruinous because a price pinned below the market ensures that fewer apartments are built and maintained. Public ownership of factories fails, because the managers risk no money of their own and answer to no customer free to walk away. A municipal grocery cannot serve you, because a shop that is forbidden to fail has no reason to stock what you want. Confiscatory taxes defeat themselves, because capital, unlike the wage earner, has feet. Chronic deficits and the inflation they summon are cruelest of all, for they levy a tax that no legislature ever votes on and that the poor can least afford to dodge.
None of that should surprise us. We are not blank slates onto which empirical argument permanently writes. We are the descendants of small bands of chimpanzees who survived by raiding neighbors and dividing a fixed supply of meat. The zero-sum intuition that one man’s gain must be another’s loss is older than agriculture and far older than Adam Smith. Markets are recent and counterintuitive. Human nature does not change, and so the case for liberty must be made afresh in every classroom of every generation.
Arpit Gupta explains what shouldn’t – but, alas, what once again unfortunately does – need explaining: Rent control reduces both the quantity and quality of rental housing. Two slices:
In 1971, the Swedish economist Assar Lindbeck offered a famous critique of rent control: “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”
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Jason Furman, who chaired President Obama’s Council of Economic Advisers, has put the professional consensus more bluntly: “Rent control has been about as disgraced as any economic policy in the tool kit.”
The most immediate effects of a rent freeze appear in maintenance and building quality. Around 10 percent of rent-stabilized buildings currently have negative net operating income, meaning that their operating costs exceed their revenues. Housing violations, one indication of poor building conditions, are also more common in buildings with larger shares of rent-stabilized units.
Wall Street Journal columnist Andy Kessler is correct: “We often take liberty for granted, but it is a prerequisite for everything great.” A slice:
The biggest enemy of freedom can be government itself. Remember the Declaration’s grievances? No. 10 stated that the king “sent hither swarms of Officers to harrass our people, and eat out their substance.” Sounds like California.
We were warned. Pamphleteer Mercy Otis Warren, often called the “Conscience of the American Revolution,” wrote after the war that while we may need a federal government, “we have struggled for liberty and made costly sacrifices at her shrine and there are still many among us who revere her name too much to relinquish the rights of man for the dignity of government.” Sadly, this is long forgotten.
Ronald Reagan worried in his 1964 “A Time for Choosing” speech that “we abandon the American revolution and confess that a little intellectual elite in a far-distant capitol can plan our lives for us better than we can plan them ourselves.”
The Washington Post‘s Editorial Board reports this happy news about some of the world’s poorer countries (who will become richer) and unhappy news about some of the world’s richer countries (who will become poorer):
A surprising role reversal is underway in the global economy: As Western powers increasingly play footsie with nationalism and protectionism, many developing countries are finally following the tried-and-true playbook of liberalization and privatization to ignite growth.
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Alas, very few global leaders are as ideologically committed as [Javier] Milei. Mostly, the others have embraced reforms out of necessity. The era of cheap money left countries with crushing debt that consumed state budgets, and government monopolies are huge fiscal anchors. Whatever the motivations, they’re rightly recognizing that private capital and open markets are the surest ways to grow their economies.
Vance Ginn exposes some of the nuttiness – well, it would be merely nuttiness were it not so lethal for humanity – of rich, “progressive” intellectuals and bureaucrats proposing to improve humanity by putting a lid on economic growth. [DBx: Truth is indeed stranger than fiction. The “de-growth” movement would be a Saturday Night Live skit were it not a policy proposal seriously offered by unserious people.]
Roger Pielke, Jr., decries “Europe’s deadly aversion to air conditioning.” A slice:
In his excellent post, Kohler well frames the issue: A continent that enjoys both comparative wealth and, by latitude, fewer hot days than most inhabited regions nonetheless records the world’s highest per capita heat-death rate. Age explains some of it — but the United States and Japan also have aging populations and yet have far fewer heat-related deaths.
A more important difference: air conditioning: European household penetration sits near ~19%, versus ~76% in North America and more than 90% in Japan.
Yes.
Price controls have been tried on every inhabited continent and for 4,000 years of recorded history. Few policies have been tried among more races or in so many different cultural settings. Yet the results have been remarkably similar.
Thus, self-interest is the indomitable individual force that drives us to seek progress, makes us achieve it, and spurs us on, but which also makes us inclined to monopolize it. Competition is the no less indomitable humanitarian force that snatches progress as it is achieved from the hands of the individual in order to make it part of the common heritage of the great human family. These two forces, which can be criticized when considered separately, constitute social harmony when taken together because of the interplay of their elements in combination.
It is a well known fact, that there are parts of Europe, which have more Capital, than profitable domestic objects of employment. Hence, among other proofs, the large loans continually furnished to foreign states. And it is equally certain that the capital of other parts may find more profitable employment in the United States, than at home. And notwithstanding there are weighty inducements to prefer the employment of capital at home even at less profit, to an investment of it abroad, though with greater gain, yet these inducements are overruled either by a deficiency of employment or by a very material difference in profit. Both these Causes operate to produce a transfer of foreign capital to the United States. ’Tis certain, that various objects in this country hold out advantages, which are with difficulty to be equalled elsewhere; and under the increasingly favorable impressions, which are entertained of our government, the attractions will become more and More strong. These impressions will prove a rich mine of prosperity to the Country, if they are confirmed and strengthened by the progress of our affairs. And to secure this advantage, little more is now necessary, than to foster industry, and cultivate order and tranquility, at home and abroad.
Even if a subsidized industry appears to have developed a technology that gives State A military advantages over State B, that does not mean that the government assistance which accompanied this goal was effective or worth the cost from either an economic cost or national security perspective. One must ask whether the breakthrough might have happened regardless of subsidy or protection, and also what might have happened to those industries that did not receive help or benefits. It may well be that the industrial policy actually directed resources away from other companies that may have produced even better technology in more cost-effective ways.
