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Here’s a letter to a former undergraduate student of mine.

Curt:

Thanks for your email. It’s good to hear from you.

You counsel that I “maybe should cut Trump some slack cuz he’s using tariffs to get better deals.”

Your argument is a common one. But I believe it to be misguided. Creating leverage in order to bargain for better deals can indeed be a productive move, but only if the cost of the leverage doesn’t exceed the value of the improvement in the deals made possible by the leverage. In the case of Trump’s tariffs, this condition doesn’t hold.

First, Trump & Co. largely ignore the costs of creating this leverage. Yet even without retaliation by other governments, these costs are real. When protective tariffs are in place, Americans suffer economic losses in the form, in some cases, of consumers paying higher prices (and having reduced product selection), in other cases of American importers and retailers suffering lower profits as they eat some of the costs of the tariffs, and in yet other cases of American producers paying higher prices for the inputs that they import.

Second, even if a miracle occurred and the above-mentioned costs disappeared, the successfully concluded deals must be economically productive. Unfortunately, in the case of Trump’s tariffs, the deals themselves are too often destructive. The principal stated purpose of Trump’s “Liberation Day” tariffs is to ensure that America, from here on in, has no “goods trade deficit” with any individual country.

This goal is economic lunacy. Not only is the administration misguided to ignore trade in services – services are nearly 80 percent of U.S. GDP – the notion of a trade balance with an individual country is meaningless.

The “better deals” that Trump is trying to get would, were he actually to get them, forcibly shift a great deal of American economic activity into the production of goods for which we have no comparative advantage and away from the production of services for which we do have a comparative advantage. Trump & Co. might admire the resulting ‘balance’ in goods trade that the U.S. would have with each and every individual country, but that would be akin to quack physicians who, thinking that a person is healthiest when he’s comatose and bleeding, look with pride on a formerly healthy man lying unconscious after they’ve bludgeoned him with a sledgehammer.

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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Writing in the Washington Post, Scott Lincicome makes clear that “the Supreme Court won’t hurt America by striking down the tariffs.” Two slices:

In both legal filings and in public, President Donald Trump and his team have made fantastical claims about the calamities that would befall the nation should the Supreme Court curtail his authority to implement global tariffs under the International Emergency Economic Powers Act. They allege, in the government’s opening brief for a case that will be argued before the court in November, that an adverse decision would devastate the U.S. economy, the federal government’s fiscal position, and the president’s ability to effectuate trade and foreign policy. The goal, it appears, is to pressure the court into issuing a favorable opinion for prudential and institutional reasons, even if the law demands otherwise.

Given the legal deficiencies in the Trump administration’s case, this shock-and-awe approach is understandable. Yet it suffers from a serious flaw: The underlying policy claims are ridiculous.

First, a ruling against the tariffs would not “lead to financial ruin,” as the government’s attorneys asserted in a letter to an appeals court. Between May and September, the tariffs were only around 4.5 percent of federal receipts. But even this effect is overstated because it ignores the slower economic growth and smaller tax base that the tariffs create.

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Meanwhile, revenue from the tariff collections under consideration by the court are just $89 billion thus far — a rounding error in a $30.5 trillion economy. The tariffs’ modest fiscal effects mean that invalidating them would have a modest effect on the market for government debt and related securities.

And virtually all professional economic analyses have concluded that unilateral tariffs — and related policy uncertainty — harmed the economy during Trump’s first term. In short, it would be impossible for the “catastrophic consequences” warned of during an earlier appeal to result from invalidating the new tariffs. If anything, we should expect a small but real boost to the economy — a conclusion that rising equity markets confirmed when lower courts found the tariffs to be illegal.

The administration also errs when contending that the tariffs are critical to the conduct of trade and foreign policy. Since the 1977 enactment of the International Emergency Economic Powers Act, the United States has completed 14 comprehensive free trade agreements with 20 countries, as well as two massive multilateral agreements at the World Trade Organization. (This includes Trump’s own U.S.-Mexico-Canada trade agreement, and the Trans-Pacific Partnership he jettisoned on the first day of his first term.) The United States has officially ratified 538 treaties over the same period. None of these deals involved IEEPA tariffs or the threat of them, nor did the Abraham Accords, which Trump considers a signature foreign policy achievement and framework for broader Middle East peace.

Ontario premier Doug Ford explains, in this letter to the Wall Street Journal, why his government ran the ad featuring Ronald Reagan’s endorsement of free trade:

Your editorial “Reagan vs. Trump on Tariffs” (Oct. 27) begins by pointing out that Ronald Reagan and his legacy still matter to Donald Trump. There’s nothing wrong with that. The 40th president still matters to me too.

I’m not American, but like millions of Canadians I admire Reagan and his commitment to free trade, free markets and closer ties between our two countries. His friendship with another great leader, Prime Minister Brian Mulroney, set the stage for decades of cooperation and shared prosperity on both sides of the border.

The numbers don’t lie: Last year cross-border trade between the U.S. and Canada hit nearly $1 trillion. Every day, millions of Americans wake up, go to work and earn a paycheck making something for or providing a service to a company based in Canada. Together we have built the most secure, prosperous and mutually beneficial partnership between any two countries in the history of the world.

I believe that is Reagan’s legacy—built on free trade.

It’s now at risk. Tariffs are threatening millions of American jobs. They’re making life more expensive for American families, raising the cost of everything from homes to gas and groceries. They’re driving a wedge between Canadians and Americans when we need to be united against external threats from such adversaries as Russia and China.

Our government ran an ad featuring the words of President Reagan because we all benefit from being reminded of his wisdom. As the Gipper said, “protectionism” is “destructionism,” and the “way to prosperity for all nations is rejecting protectionist legislation and promoting fair and free competition.”

In 1987, President Reagan celebrated the new Canada-U.S. Free Trade Agreement by saying that it would “strengthen the bonds between our nations and improve the economic performance and competitiveness of both countries.” The pact, he added, would “provide an enduring legacy of which both nations can be proud.”

Rather than tarnish that legacy, let’s build on it. Mr. Trump called our ad a “hostile act,” but it was meant as an encouragement to embrace what has made our nations great. Together the U.S. and Canada can usher in a new century of shared economic prosperity by dropping tariffs, rejecting protectionism and promoting free and fair trade.

GMU Econ alum Jon Murphy makes the case that Trump’s tariffs punitive taxes on Americans’ purchases of imports would not be approved by Adam Smith.

Here’s my GMU and Mercatus Center colleague Pete Boettke on “what Hayek understood about the unknowable nature of markets.” Two slices:

From President Donald Trump’s aggressive tariffs and acquisition of government stakes in industrial and tech businesses to Zohran Mamdani’s avowedly socialist New York mayoral campaign, politicians in 2025 are not shy about central economic planning. That makes the work of the acclaimed economist F.A. Hayek, including the “knowledge problem” he exposed as a fundamental flaw in such enterprises, as relevant as ever.

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Prices are the conduit through which this vital knowledge is communicated, Hayek argued, making unencumbered markets an almost-miraculous telecommunication system that aids us all in changing circumstances.

Why? Because prices are the result of the relentless push-and-pull among what consumers value, what sellers seek, plus supply chains, technology changes, resource availability, and every other conceivable factor. Setting a true market price—not having one dictated from on high—is done only after these unknowable forces have been incorporated into the marketplace and felt, directly but more often indirectly, by the seller.

The price system works because of private property and freedom of contract, which are the antithesis of central planning.

Property ownership creates high-powered incentives to husband resources efficiently. We don’t waste what we—as opposed to someone else—pays for. Profits, enabled by the freedom to buy and sell our goods or labor to whom we choose at the price the market determines, lure us into attractive ventures. Losses discipline us when conjectures prove to be mistaken.

This system, always adjusting and unfurling, gives us, as economic decision-makers, constant feedback. It allows us to plan—to know whether to rent an apartment for the next year or buy a house that will last us a lifetime, go to trade school or college, hire five employees or 10, to build 100 cars or 200—and have the best possible chance of success.

The key point Hayek was trying to get across to his fellow economists was that the ability to mobilize the ordinary behavior of individuals in society, to make the most of our physical resources, and to utilize the knowledge and talent scattered throughout society requires not more.

The Wall Street Journal‘s Editorial Board is correct about health-care-insurance premiums: “Rising premiums are the result of Affordable Care Act flaws.” A slice:

Democrats keep voting against opening the government or even for GOP bills to pay some federal workers. They assume they can extort the GOP into extending enriched ObamaCare subsidies that were sold as temporary pandemic support. You can understand how Democrats got this idea.

Since the GOP failed to repeal the Affordable Care Act (ACA) in 2017, Democrats and the press have shut down GOP debate about healthcare by warning that those with a pre-existing condition will be uninsured and destitute without ever-growing subsidies. Yet this Democratic doom loop isn’t having its usual effect this time, and that’s in part because the party is unintentionally reminding voters of the law’s manifest failures and bad incentives.

Take a recent social-media post from Democratic Sen. Amy Klobuchar of Minnesota. If Republicans don’t extend the turbocharged subsidies, she warned, “early retirees like Bill & Shelly will see their health insurance premiums increase nearly 300%—from $442 to $1,700.”

Wait. Early retirees? This is a tacit admission that ObamaCare encourages Americans to stop working. The Biden subsidies turbocharged that incentive by making subsidies larger and available even to those with incomes above 400% of the poverty line. The couple in Ms. Klobuchar’s example had north of $130,000 of income in 2024, mostly from pensions, according to the media article.

Arnold Kling offers these sobering thoughts.

Norbert Michel and Jerome Famularo reveal “how federal policy locked homeowners — and the housing market—in place.”

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… is from page 77 of the original edition of IHS-founder F.A. “Baldy” Harper’s 1949 tract, Liberty: A Path to Its Recovery:

Truth, when newly born, is always an ugly stranger amidst the untruth and superstition of its time; it cannot live except as it is allowed the protection of liberty, which serves to protect newly-discovered truth in the same way as a mother protects the new-born child.

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Here’s a letter to a long-time reader of my blog.

Mr. W__:

Thanks for your email.

You ask what you can tell your “pro-tariff Trump supporting friend” who “contends that tariffs in the 80s to protect Harley-Davidson worked.”

You can ask your friend to support his contention by offering evidence. And the evidence that he must offer is not that those tariffs helped Harley-Davidson; no one doubts that particular producers can reap net benefits when government grants those producers some measure of monopoly power by restricting consumers’ options to shop elsewhere. The evidence your friend must offer is that net benefits were reaped by Americans as a whole. As this 1984 study by my GMU Econ colleague Dan Klein suggests, your friend will have difficulty finding and offering such evidence.

Further, even if (contrary to fact) those motorcycle tariffs somehow managed to improve the American economy overall, the economic case for free trade doesn’t require that every instance of protectionism fails to help the economy. Rather, the economic case for free trade rests on the recognition that protectionism as a general rule will damage the economy – and that politicians are neither sufficiently motivated nor informed to identify the rare instances when protectionism might ‘work.’

I’ve always liked this observation by the late economist Harry Johnson: “To the primitive mind, one case of magic’s working (or seeming to work) is sufficiently impressive to confirm faith in magic against a long series of experienced failures.”* Protectionism’s history is a long series of experienced failures.

While I can’t say about your friend, I can say that most protectionists – on matters of trade policy – have primitive minds.

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

* Harry G. Johnson, “Mercantilism: Past, Present, and Future” (1973), as reprinted in Johnson, On Economics and Society (Chicago: University of Chicago Press, 1975), page 274.

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Wall Street Journal columnist Gerard Baker decries the moral relativism now busily further corroding U.S. public policy. Two slices:

Moral relativism is enticing. It enables me to establish the moral value of everything I do by reference to the behavior of others. It allows me to avoid censure by judging my intentions, choices and actions not on the basis of whether they are intrinsically right or wrong, but by the lesser standard of whether someone in a similar position might have done something similar.

It is deeply corrosive of personal mores and social trust. Over time it dulls the conscience to any moral hierarchy. It is never a legal defense and shouldn’t be a moral one.

Moral relativism is hardly new in public life. Self-exoneration through false moral equivalence by public figures is as old as time itself. But when it becomes the controlling ethical architecture of public behavior, we are in serious trouble. Its effect is to give leaders permission to do just about anything they want, unconstrained by guilt, shame or political sanction. Moral relativism and the ratchet effect will ensure that there is always some precedent close enough to persuade people to shrug even when confronted with some evidence of genuine turpitude on their own side.

We’ve been descending this spiral for a long time, but as with just about everything to do with the gargantuan figure of Donald Trump, his behavior has accelerated the descent.

His corrosive effect on norms of ethics, language and, for that matter, conservatism, has been amplified by the eager acquiescence of the Republican Party in the process.

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Misdirection is a convenient tool of relativism. Look at the latest mind-numbing assault on sanity of the president’s new tariffs on Canada. The obvious legal, political, moral, diplomatic and economic monstrosity of a president unilaterally imposing a tax on imports because he was upset by something that a Canadian provincial government decided to show on television is literally without precedent. Yet a lot of people on the right have spent the last week explaining how Mr. Trump was essentially right to say Ronald Reagan “loved” tariffs more than those wicked Canadians claimed. (He didn’t, but truth is another casualty of moral relativism.)

GMU Econ alum David Hebert has this great letter in today’s Wall Street Journal:

Shyam Sankar’s recommendation that the U.S. copy China’s industrial policy is compelling but misguided (“Why the China Doves Are Wrong,” op-ed, Oct. 18). State-led industrial policy makes economies weaker, not stronger.

Researchers at Stanford found that receipt of billions of dollars in direct subsidies from Beijing was “linked with lower firm productivity growth and only modest growth in R&D spending in subsequent years.” A recent International Monetary Fund working paper argues that China’s industrial policy has led to reduced aggregate productivity.

To beat Beijing, we ought to allow its products to reach the hands of productive Americans. We have 12.7 million workers employed in manufacturing; China has some 212 million. That they only produce twice as much “manufacturing value” as we do despite having more than 16 times as many workers is evidence enough that we needn’t embrace their policies.

David Hebert
American Inst. for Economic Research

Scott Lincicome explains why Cato Institute trade scholars are writing to the U.S. Supreme Court. A slice:

In particular, President Trump and his administration have made fantastical claims in both legal filings and in public about supposed calamities that would befall the nation’s economy and foreign policy if the Court were to strike down the president’s ability to impose tariffs under the International Emergency Economic Powers Act (IEEPA). As my Cato colleagues Colin Grabow, Clark Packard, and I explain in our brief, the administration’s claims—including that an adverse decision would bring about another “1929-style” depression, bankrupt the US government, and leave the United States at the mercy of foreign adversaries—are groundless. Yet we worried that their repeated utterance—and a lack of correction from people who know better—risked shifting the Court’s attention away from the legal arguments that should dictate the cases’ outcome, misinforming the Court about the IEEPA tariffs’ effects, and manufacturing public outrage in response to a Court ruling against them.

So, we felt compelled to respond in an official amicus filing.

As we explain in the brief, the government’s policy claims are not only inaccurate but also ridiculous. Our arguments—citing decades of US trade policy and history and reams of economic analysis—show that the president’s ability to impose tariffs under IEEPA is, contrary to the government’s assertions, not essential for 1) negotiating and finalizing trade agreements; 2) imposing so-called “reciprocal” tariffs; 3) conducting US foreign policy; 4) reversing the nation’s fiscal trajectory; 5) preventing a US economic collapse; 6) blocking retaliation by foreign governments against US trade and investment; or 7) restoring American manufacturing and the defense industrial base. We also explain that, again contrary to the government’s claims, 8) IEEPA tariff refunds need not be administratively difficult; 9) the government would not be obligated to repay foreign investment commitments; and 10) the IEEPA tariffs are rewriting US trade law without Congress.

Jack Nicastro reports on a Virginia-based company that says that Trump’s tariffs punitive taxes on Americans’ purchases of imports makes business planning impossible. A slice:

Bill Crutchfield founded his company in 1974 as a car stereo mail-order business operating out of his mother’s basement in Charlottesville, Virginia. Despite nearly filing for Chapter 7 bankruptcy the year of its founding, Crutchfield successfully pivoted from a traditional retail business to an audio equipment information company in 1975. Since then, the company has grown to over 600 employees, and last year, the consumer electronics retailer celebrated its semicentennial, but Trump’s International Emergency and Economic Powers Act (IEEPA) tariffs threaten the future of this American success story.

Like many American businesses, “the only available suppliers and vendors” for many of Cruthfield’s products “are overseas,” according to the company’s brief. China alone accounts for 60 percent of Crutchfield’s products, making the 145 percent tariff on Chinese imports threatened in April particularly galling. Although this triple-digit duty was lowered to 55 percent in June, the initial tariff rate and the trade war that has escalated since have impacted Crutchfield, which makes “decisions to cancel or scale back purchase orders from overseas vendors…long before retailers know if their worst fears are realized.”

Crutchfield explains that “tariffs imposed today, and the threat of additional tariffs imposed tomorrow, matter.” If the president has “unprecedented, unilateral, and unreviewable authority to set tariffs…then Crutchfield cannot plan for the short term [or] the long run because it cannot possibly predict what the household electronics it sells will cost.” Compounding the unseen cost of unrealized revenue, Trump’s tariffs could amount to a $200 billion annual tax on small businesses, according to the Chamber of Commerce.

Charles Lane, writing at The Free Press, explains that “the tariff case being heard next week might be the biggest test of the court’s legitimacy in over 200 years. And the Constitution is clearly not on Trump’s side.” Four slices:

Today’s justices should not be swayed by the undeniably huge short-term stakes. Instead, they should take the long view, as did Justice Robert H. Jackson, who described how not to decide such a case in his opinion on another monumental clash between the judiciary and the executive.

“The tendency is strong,” Jackson wrote in a 1952 opinion concurring with a six-justice majority that rejected President Harry S Truman’s wartime seizure of the U.S. steel industry, “to emphasize transient results upon policies. . . and lose sight of enduring consequences upon the balanced power structure of our Republic.”

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If the Supreme Court endorses Trump’s theory and IEEPA stays on the books, it would license future presidents—of either party—to declare “emergencies” and use them to levy tariffs with no debate or vote by the people’s elected representatives. One man would have the power to shape and reshape the entire global economy by decree. If the framers intended the Constitution to prevent anything, it was that.

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True, courts generally give the president latitude on matters of foreign policy and international negotiations. But the Constitution specifically carved out “duties” and “imposts”—tariffs—as Congress’s purview in the section of the Constitution devoted to the legislative branch. And it did so in part because tariffs are not a purely international matter. In fact, Americans, like the small importers who are suing to block Trump’s levies, pay them.

The Supreme Court should not bend and stretch IEEPA’s words to fit Trump’s actions, as the president and his defenders are urging. They should heed the words of Justice Jackson, whose experience as a former adviser to President Franklin D. Roosevelt made for a better guide to the contours of presidential power “than the conventional materials of judicial decision which seem unduly to accentuate doctrine and legal fiction,” as Jackson put it in his 1952 opinion.

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To preserve the separation of powers, the rationality of economic policymaking, and the Supreme Court’s own legitimacy, the justices should rule crisply and cleanly that IEEPA gave President Trump no authority to impose the tariffs he decreed to deal with the fentanyl crisis or on Liberation Day.

Such a ruling would not “destroy America,” as Trump warned but, in a very real sense, preserve it. The American Revolution was fought—and the Constitution written—to inhibit one-man emergency rule, not to facilitate it.

Corey DeAngelis reveals “the perverse incentives of teachers’ unions.”

Aidan Grogan reviews Dean Spears’s and Michael Geruso’s After the Spike. A slice:

Echoing the economic insight of Julian Simon, the co-authors note that “a good idea does not get used up.” The world is not a fixed pie, and population growth contributes to an increase in “non-rival innovation,” which benefits everyone through greater technological progress. One person’s good idea “gets copied and reapplied, endlessly.” The results of the famous wager between Julian Simon and Paul Ehrlich have demonstrated that we aren’t going to run out of resources and starve to death in a Malthusian catastrophe. As Simon correctly predicted in his 1981 book The Ultimate Resource, a rising number of “skilled, spirited, and hopeful” people results in more ingenuity, abundance, and lower prices over time

In the years 1990–2019, global food production surged by 61 percent as the world population increased by 45 percent. In that same period, global extreme poverty fell from over one-third to less than 10 percent, and the prices of commodities became much cheaper, as Simon anticipated. Apart from wars or government mismanagement, famines have virtually disappeared.

Despite these vast improvements in material well-being, many are still gravely worried about climate change and the impact of 8.2 billion people on the earth’s ecosystems. Spears and Geruso take the threat of global warming seriously, but they also showcase how depopulation is not a path to decarbonization. Nor is there a theoretical or historical relationship between population size and particulate air pollution. Whether the population stabilizes or declines, the global temperature is still forecast to rise. “Billions of lives lived would make a small difference to this big problem,” they said.

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… is from pages 179-180 of Mark Zupan’s 2011 Cato Journal paper, “The Virtues of Free Markets” (link added):

In his award-winning The Invisible Hand of Peace, [Patrick J.] McDonald (2009) undertakes a painstaking empirical analysis of hundreds of conflicts between nations over the past two centuries. He finds that the propensity of nations to promote free markets when it comes to matters of international trade is positively correlated with a reluctance to resort to war. Furthermore, a laissez-faire attitude with regards to international trade is a better predictor of peace than democracy. McDonald argues that this is because democracies still can be associated with systems of poorly defined private property rights that lead to greater zero-sum redistribution and unproductive rent-seeking. Waging war against other nations is but an extension of such a zero-sum mentality.

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The Wall Street Journal‘s Editorial Board ably defends Ronald Reagan’s free-trade creds against the Trump administration’s baseless efforts to conscript Reagan into its protectionist ranks. Two slices:

The MAGA crowd likes to dismiss Ronald Reagan as irrelevant today, but apparently he still matters to President Trump. How else to explain Mr. Trump’s tantrum against Canada after the province of Ontario invoked the Gipper on trade in a television ad?

The Ontario government had the temerity to buy ad time to run clips of Reagan’s 1987 remarks warning about the dangers of protectionism. Mr. Trump pitched a social-media fit in response late Thursday, claiming Ontario “fraudulently used an advertisement, which is FAKE, featuring Ronald Reagan speaking negatively about Tariffs.”

The President said the ad was intended to interfere with the Supreme Court as it considers the legality of his claim that he can levy tariffs on anything he wants, for any amount he wants, whenever he wants. He immediately declared an end to trade talks with Canada.

Ontario then said it would pull the ad, but when it still ran during sporting events on the weekend, Mr. Trump escalated with an additional 10% tariff on Canadian goods on top of the taxes he has already imposed.

The Supreme Court isn’t likely to be influenced by anything other than the law, but Mr. Trump’s Canada eruption is a good argument for the Justices to rein in his tariff power. The President gets angry at a TV ad and imposes on a whim a 10% tax on Americans who buy goods from their northern neighbor. Mr. Trump claims he’s not “a king,” but on tariffs he is acting like one, and without a proper delegation from Congress as the Constitution requires.

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Mr. Trump has been fortunate that his tariffs haven’t triggered much retaliation, which has spared us from a global trade war. But the tariffs are doing economic damage by raising costs for consumers and businesses and by dampening animal spirits that should be soaring with his tax bill and deregulation. He can boast about tariffs all he wants, but he shouldn’t get away with taking Reagan’s trade beliefs in vain.

Katherine Mangu-Ward reports on the Trump administration’s abuse of “emergency powers.” Two slices:

But the intense acceleration of the quest to aggregate power in the White House is now unambiguously the more immediate threat to liberty. It’s visible every day on my commute to work, as National Guardsmen linger in my D.C. Metro stop. It’s visible in the September gathering of the nation’s top military officials for something between a pep rally and a company retreat. It’s visible everywhere Immigration and Customs Enforcement is staging raids and setting up warrantless checkpoints. It’s visible in the administration’s moves to take a stake in Intel and broker a TikTok sale.

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The emergency is now the default. Most of the knobs and levers a modern president uses to bully companies, police speech, or move bodies around aren’t new laws—they’re standby powers that switch on with a magic word: emergency. Congress littered the U.S. Code with these shortcuts; the Brennan Center for Justice has cataloged 137 statutory powers that spring to life the moment a president declares one. (Many never fully turn off.) As of mid-2025, there were roughly 50 simultaneous national emergencies still in force; they are renewed annually, spanning everything from sanctions to tariffs. That architecture lets the White House reach for trade controls, financial blockades, and tech blacklists without returning to Congress. If you like your powers separated, this is the opposite.

Washington Post columnist Jason Willick urges the opponents of Trump’s IEEPA tariffs to choose, as the person to argue their November 5th case before the U.S. Supreme Court, Michael McConnell rather than Neal Katyal. A slice:

McConnell is bookish and not at all bombastic. He is one of the leading originalist scholars in the United States, especially on executive power and its limits. His 2020 book, “The President Who Would Not Be King,” was cited multiple times in Justice Neil M. Gorsuch’s dissent (joined by Justices Clarence Thomas and Samuel A. Alito Jr.) in a related separation of powers case last term.

McConnell might not be a fan of Trump’s tariff approach, but he also is not reflexively opposed to the president politically. He strongly criticized the criminal cases against then-candidate Trump during the 2024 election season and rebuked at length the efforts to have him removed from the ballot for “insurrection.”

At 70, McConnell is the same age as the chief justice — the most likely hinge vote in the tariff case. They came up together in conservative legal circles; both held legal roles under President Ronald Reagan, and McConnell was also considered for a Supreme Court seat during the George W. Bush administration. (He served on the same appeals court as Gorsuch from 2006 to 2009.)

In short, McConnell speaks the conservative and originalist language of the court’s majority more fluently than Katyal. That matters. As Justice Amy Coney Barrett wrote in her recent book defending her originalist philosophy: “Occasionally, argument has changed my mind even when I had a relatively strong view before entering the courtroom. And even when it doesn’t change my bottom line, argument has prompted me to rethink certain aspects of a case or reframe the path of decision.”

I’m proud to be among the signers of this amicus brief submitted to the U.S. Supreme Court in opposition to Trump’s IEEPA tariffs.

After studying tariffs on imported solar panels, Todd Gerarden, Bryan Bollinger, Kenneth Gillingham, and Daniel Xu report that “the tariffs generated modest gains for domestic manufacturers and for government revenues, but larger losses in domestic consumer surplus and environmental benefits, thereby reducing domestic welfare.”

My Mercatus Center colleague David Beckworth talks with Brian Albrecht about the 2025 Nobel laureates in economics.

Nathalie Janson and GMU Econ alum Nikolai Wenzel ponder “Argentina’s midterm moment.”

Also writing about the Argentine election is Ian Vásquez.

“Milei Wins Mandate for Free-Market Revolution in Argentina’s Election.” A slice:

With nearly 99% of votes counted, Milei’s Freedom Advances party won almost 41% of the national vote, more than doubling its representation in Congress. That means his party and allies secured at least one-third of the seats in both chambers—the critical threshold that allows Milei to preserve his veto power and defend his sweeping decrees.

The result, stronger than most polls had predicted, gives Milei fresh political momentum after months of unrest over deep spending cuts and a grinding recession last year. It also shores up his standing with Washington and the International Monetary Fund, which have tied future financial support to the survival of his austerity experiment. Market analysts expect Argentine bonds and the peso to rally when trading opens Monday, reflecting relief that Milei still has political traction after taking office two years ago.

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… is from pages 191-192 of my GMU Econ colleague Mark Koyama’s, and his co-author Jared Rubin’s, superb 2022 book, How the World Became Rich (references omitted; links added):

In fact, the existence of slavery slowed Southern industrialization and urbanization. Southern elites held their wealth primarily in the form of slaves. Investing in slaves was profitable, and it took resources away from other, industrial, pursuits. This limited local market size, making industrial production all the less attractive. As [John] Majewski notes, “slavery severely limited the size of markets for southern manufacturers. Cities such as Richmond, Norfolk, and Charleston, serving sparsely populated hinterlands, lagged behind northern rivals. The southern economy certainly generated substantial profits for the region’s many planters and farmers, but slower growth of cities, industry, and population created a sense of relative decline.”

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Here’s a note to Duke University economist Ed Tower.

Ed:

Thanks again for your email in which you correctly note that “we should subtract the whole government debt from the accounting figure for the net worth of households, not just the government debt owed to foreigners.” (As for private debt owed to foreigners, that debt – unlike each household’s share of the public debt – already shows up, or so I assume, as liabilities in calculations of households’ real net worth.)

Total U.S. publicly held debt is now approximately $30.4 trillion. When divided by the number of U.S. households (132,216,000), we find that the average share of the public debt per household is $229,927. (Unlike domestically held U.S. government bonds, none of the roughly $7.6 trillion in intergovernmental U.S. government debt shows up as assets on American households’ balance sheets; there is, therefore, no need to subtract intergovernmental debt from households’ net worth.)

The average household’s net worth today (not counting public debt) is $1,224,686. Subtracting from this net worth each household’s average share of the total public debt leaves the average American household’s real net worth today at $994,759.

Today (last quarter of 2024), therefore, the average American household’s real net worth, after subtracting what’s owed through the government to all public holders of its bonds, is 173% higher than in 1975, the last year America ran an annual trade surplus (and 97% percent higher than in 1994, the year NAFTA took effect, and 46% higher than in 2001, the year China joined the WTO).

The figures in the previous paragraph actually underestimate the growth in real household net worth. The reason is that, in calculating these figures, I did not adjust for the share of public debt owed by American households in those previous years (1975, 1994, and 2001). Because making this adjustment would only strengthen my case that 50 consecutive years of annual trade deficits didn’t result in a net drain of wealth from Americans’ pockets, I rest content at the moment to use the above figures to make my case.

To be clear: I’m a budget-deficit hawk. The U.S. government’s fiscal incontinence makes us Americans poorer than we’d otherwise be. Fortunately, our economy, at least until now, has been so entrepreneurial and open that the depredations wrought by Washington have been swamped by market forces – market forces that, fortunately, prompt foreigners to invest heavily in America (and, thus, generate that calamitously misleading accounting artifact known as “trade deficits”).

Sincerely,
Don