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Although we were carelessly inaccurate in our political history – contrary to our claim, the Whigs did not go extinct after 1828 – the economic substance of Phil Gramm’s and my letter in today’s Wall Street Journal is indeed accurate: U.S. tariff rates fell – in fits and starts – in the 30 years from 1830 to 1860, and this period witnessed faster annual rates of growth in U.S. industrialization than did those periods in the 19th century when tariff rates were generally rising.

In an otherwise excellent column (“Trump’s Echo of 1829,” op-ed, Feb. 27) Karl Rove contends that President Andrew Jackson “presided over the ‘Tariff of Abominations.’” This requires some clarification.

The Tariff of Abominations was signed into law by John Quincy Adams in 1828. It was a major issue in that year’s election that swept Jackson and his new party, the Democratic Republicans, into power. Jackson supporters viewed the tariff as an elitist policy that benefited the few at the expense of the many.

That interpretation applies equally today. Not only did the Tariff of Abominations lead to a Whig party bloodbath; the election set the Whigs on a course to extinction. For the next 30 years, average tariff rates declined by 70% and America experienced an unprecedented period of industrialization. Immediately prior to the Civil War, the U.S. had one of the lowest average tariff rates in the world and a booming economy.

The lesson of the Tariff of Abominations, the ensuing Jackson landslide and the 30 years of rapid industrialization as tariffs plummeted is that such levies don’t produce prosperity or help win elections.

Phil Gramm and Prof. Donald Boudreaux
AEI and George Mason University
Helotes, Texas, and Fairfax, Va.

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Some Links

The Wall Street Journal‘s Editorial Board decries the Trump tariffs that “whack Trump voters.” Two slices:

President Trump won the Presidency a second time by promising working-class voters he’d lift their real incomes. Which makes it all the more puzzling that he’s so intent on imposing tariffs that will punish those same Americans.

Tariffs are taxes, and Mr. Trump’s latest tariffs are estimated to be about an annual $150 billion tax increase. Taxes are antigrowth. That’s the message investors are sending this week since Mr. Trump let his 25% tariffs on Canada and Mexico take effect. The President also raised his 10% tariff on China by another 10%. Canada and China retaliated, while Mexico is holding off until Sunday.

The border taxes, and the uncertainty they bring, are weighing on growth and consumer confidence. The Dow Jones Industrial Average is down 3.4% since Mr. Trump took office, erasing the ebullient gains that followed his November election.

Brace for higher prices on berries, bell peppers, and, gulp, beer. Target CEO Brian Cornell told CNBC Tuesday that tariffs on Mexico may force the company to raise prices on fruits and vegetables. About 30% of vegetables and fresh fruit sold in the U.S. come from Mexico. Modelo’s Mexican-produced Especial is the best-selling beer in the U.S.

…..

The President also professes to love American farmers, but he apparently loves tariffs more. U.S. farmers are already being squeezed by low crop prices and inflation. The American Farm Bureau Federation (AFBF) says farmers are losing money on almost every major crop planted for the third straight year.

Tariffs will increase their pain. About 85% of the U.S. potash supply for fertilizer is imported from Canada. China is hitting U.S. farm exports with a 15% tariff, which will let farmers in Brazil and Australia grab market share. “Even more costs and reducing markets for American agricultural goods could create an economic burden some farmers may not be able to bear,” AFBF President Zippy Duvall said Tuesday.

Also decrying Trump’s destructive protectionism is the Editorial Board of the Washington Post. A slice:

To see how this works, consider the auto industry, the most integrated in North America. Thirty-eight percent of the value of cars imported from Mexico comes from parts and components made in the United States. Seventeen to 36 percent of the makeup of Cadillac models assembled in the United States is sourced in Mexico. Auto parts cross North American borders several times before ending up put together on a dealer’s lot. A 25 percent tariff would boost their price on every crossing, decimating the industry’s competitiveness.

Eric Boehm reports the distressing news that, despite the tariffs’ economic destructiveness, Trump promises even more of them.

At his Facebook page, Phil Magness identifies several pro-tariff factions within the Trump administration:

I see about 5-6 different pro-tariff factions in the higher levels of the Trump admin right now, all of which are oddly in conflict with each other on certain margins.

– Howard Lutnick (Commerce Secretary) seems to be the relative moderate protectionist who wants some combo of “strategic” protectionism and leverage on specific priority industries, but without tanking the stock market or the economy.

– Kevin Hassett (NEC) is a “pinch my nose and accept tariffs” nominal free trader who thinks that tariffs can be leveraged against bad actors abroad like China, and as a tool to deploy against currency manipulation.

– Stephen Miran (Coucil of Economic Advisors) is a “tariffs will replace the IRS!” kook, who believes that tariff incidence falls on foreign countries and that a 20%-ish overall tariff will optimize the revenue yield of the government.

– Wells King (Domestic Policy Council) is literally a 19th century mercantilist who thinks we can build a Henry Clay style wall around America and create an import-substitution scheme that forces domestic raw material providers into being the supply chains for domestic industries, irrespective of the world market (in practice this would basically amount to Peronism).

– JD Vance thinks tariffs are a tool in the culture war and wants to weaponize them against drug overdoses in Appalachia even though the policy mechanism for how that is supposed to work makes absolutely no sense, so instead he fabricates up conspiracy theories about a nonexistent fentanyl crisis at the Canadian border.

– Peter Navarro (special aid to Trump) is the craziest of them all and seems to be vacillating between extreme variations of all the other reasons listed above, including contradicting himself on a whim but never helping the situation.

The result is utter chaos and confusion, which manifests in the see-saw of tariff policy threats, reversals, executive orders, and public pronouncements that we’ve witnessed over the last month.

National Review‘s Charles Cooke notes that Congress can and should – but, sadly, won’t – end Trump’s “tariff madness” immediately. A slice:

The law that President Trump is using to cause such havoc is known as IEEPA. It’s supposed to be for emergencies, but, given that it gives the president free rein to determine when an emergency is in force, it’s effectively a non-justiciable enabling act. Congress can repeal it, amend it, or pass a separate law that supersedes it, and there’s nothing that anybody can do to stop it. Such a law could exempt Canada and Mexico from its provisions, or make clear that other tariff deals involving those countries (like the one Trump signed in 2019) have precedence, or do anything else that Congress wants it to do, because — again! — Congress has plenary power over tariffs. Heck, if Congress passed a law that simply read, “All delegation of the legislature’s Article I, Section 8 tariff powers is hereby rescinded,” that would immediately be the law of the land.

I understand that Congress does not want to do this because, despite their protestations when their guy is out of power, both parties like the imperial presidency. But that approach is dumb, shortsighted, and, in this case, obviously illegal under a plain reading of the Constitution.

GMU Econ alum Dominic Pino predicts that Trump apologists will soon mimic Biden apologists by calling  the rise in prices suffered by consumers ‘greedflation.’ A slice:

But now, some Republicans are probably going to make their own version of the argument that corporations are to blame for higher prices. Trump’s promises of tariffs have consistently been accompanied by assurances that prices will not rise because foreign corporations will lower prices to retain market access. This is unlikely to actually happen, at which point Republicans will blame those corporations and maybe even American corporations for passing the cost of the tax along to consumers.

For example, Secretary of the Treasury Scott Bessent said that China will “eat any tariffs that go on.” The idea is that China’s exports to the U.S. are so valuable that Chinese companies would cut their prices to keep the after-tariff price the same as the pre-tariff price. That way, Americans would keep buying Chinese products, and the Chinese companies would effectively bear the burden of the tax.

This could be true in theory, but we know from experience this is not how the China tariffs worked last time. Nearly the entire cost of the tax was passed on to Americans. China retaliated with tariffs of its own, hurting American exporters. Both countries were made worse off.

(As an aside, it’s worth noting that if Bessent’s theory does play out as he says, then the tariffs would serve little protective purpose for U.S. industries. If China “eats” the tariffs, then Americans would keep buying Chinese goods at the same prices they did before the tariffs went into place. With tariffs, there’s always a catch.)

This time around, China has already announced retaliatory tariffs on American agricultural products. It has also brought a case against the U.S. through the World Trade Organization, indicating that it is not content to cut prices in response. Canada, too, has announced retaliatory tariffs.

When Americans start to feel the higher costs from the goods affected by tariffs, and start to wonder why American exporters are being harmed by supposedly pro-export policies, the temptation will be very strong for Republicans to blame the corporations for not doing what they wanted.

Joe Lancaster is correct: “Trump Loves Tariffs. Fentanyl Is Just an Excuse.” A slice:

Indeed, if the tariffs are primarily intended to halt fentanyl, then it’s strange to include Canada in the first place.

Of the 7,793 pounds of fentanyl seized in the U.S. since September, the BBC reports, citing U.S. Customs and Border Protection statistics, 98 percent “was intercepted at the southwest border with Mexico. Less than 1% was seized across the northern US border with Canada. The remainder was from sea routes or other US checkpoints.”

My Mercatus Center colleague Jack Salmon explains that the Trump administration “cares a lot about the wrong deficit.” A slice:

If the administration genuinely wanted to improve America’s economic future, it would focus on reducing the fiscal deficit, not the trade deficit. The path to a sustainable economy does not lie in restricting imports or attempting to “win” at trade through tariffs and protectionism. Reducing the trade deficit is not achieved by forcing foreign competitors to buy more U.S. goods; it requires fostering a higher domestic savings rate, including higher government savings. The only meaningful way to shrink the trade deficit without distorting markets is for the United States to save more and borrow less. This means controlling federal spending, reforming entitlements, deregulating, and moving towards a simplified tax structure with lower rates and broader bases.

Rightly applauding spending cuts announced by Trump, Christian Britschgi also rightly complains that these cuts are smaller than the new spending.

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Quotation of the Day…

is from page vii of the late Kenneth Minogue’s 1999 “Preface to the Liberty Fund Edition” of his 1963 book, The Liberal Mind:

As the liberal mind came to dominate Western culture, it turned out to be marvelously fertile in discovering more and more abstract classes of people constituted by their pain, people whom “we” had treated badly. These included not only the poor, but also indigenous peoples, women, victims of child abuse, gays, the disabled – indeed, potentially just about everybody except healthy heterosexual white males.

DBx: Yep.

Minogue immediately explains that he is here not denying wrongdoing by we Westerners or that some people have been unjustly discriminated against and harmed. His point, instead, is that liberalism metastasized in many minds into an illiberal project of exaggerating harm where it did exist, and even imagining it where it didn’t exist, in order to create abstract groups of victims who allegedly require salvation by these new ‘liberals.’ As Minogue writes  later (page ix) of this 1999 Preface – writes about what is more accurately today called the progressive mind – “the politics of the liberal mind is a melodrama of oppressors and victims.”

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Say What?

Here’s a letter to City Journal.

Editor:

The usually sound Joshua Hendrickson’s attempt at “making sense of the Trump tariffs” makes no sense (“Making Sense of the Trump Tariffs,” March 3). It’s filled with factual and logical fallacies.

Start with the fact that trade has not, contrary to Prof. Hendrickson’s assertion, “hollowed out America’s industrial base.” One expects protectionist pundits and politicians to ignore reality by repeating this convenient yet false sound bite, but one also expects a professional economist to know better – to know, for example, that U.S. industrial capacity is today at an all-time high, as is U.S. manufacturing value-added.

Prof. Hendrickson also mistakenly says that, because of the dollar’s role as a global reserve currency, it “tends to be overvalued.” No it doesn’t. Foreigners demand dollars for use in international commerce precisely because the dollar is especially valuable in this role. The value of the dollar reflects its utility as a global reserve currency – a valuable service that we Americans currently have a comparative advantage at supplying. Saying that the dollar is overvalued because foreigners have a high demand for dollars makes no more sense than saying that gold is overvalued because people have a high demand for gold – because people demand gold not only as jewelry but also as an investment instrument.

Nor is it true that foreigners’ high demand for dollars causes them to specialize at producing outputs for which they have no comparative advantage. That Prof. Hendrickson suggests otherwise is, frankly, inexplicable. It’s true that the dollar’s role as a global reserve currency reduces Americans’ costs of acquiring foreign goods. But not only is this reality a benefit to Americans rather than a cost, it does nothing either to prompt foreigners to specialize in producing for sale to Americans outputs that we Americans can produce for ourselves at lower costs, or to prompt Americans to pay to foreigners higher prices for outputs that we can produce for ourselves at lower costs.

Donald Trump has for four decades proudly embraced protectionism as he has displayed his utter ignorance of the economics of trade. There is no reason to believe that his current protectionist policies – policies completely consistent with his long-expressed ignorance – are anything other than raw, unalloyed protectionism.

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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Some Links

The Editorial Board of the Wall Street Journal rightly criticizes what it calls Trump’s “dumbest tariff plunge.” A slice:

But Mr. Trump wants tariffs for their own sake, which he says will usher in a new golden age.

We’ve courted Mr. Trump’s ire by calling the Mexico and Canada levies the “dumbest” in history, and we may have understated the point. Mr. Trump is whacking friends, not adversaries. His taxes will hit every cross-border transaction, and the North American vehicle market is so interconnected that some cars cross a border as many as eight times as they’re assembled.

Mr. Trump also objected when we reported an analysis by the Anderson Economic Group that the 25% tariff will raise the cost of a full-sized SUV assembled in North America by $9,000 and a pickup truck by $8,000. Is this how the new Republican Party plans on helping working-class voters?

GMU Econ alum Dominic Pino offers his sensible predictions about the consequences of Trump’s tariffs punitive taxes on Americans who purchase imports. A slice:

• Negligible effect on the inflation rate, as measured by the CPI index or the PCE index. If inflation doesn’t budge, expect a bunch of Trump boosters to try to say they told you so, when in reality, we wouldn’t expect tariffs to have much of an effect on the economy-wide inflation rate. Tariffs make imports more expensive, which will result in less spending elsewhere in the economy. Tariffs do not increase the money supply, so we wouldn’t expect them to have a big impact on inflation.

• Higher prices for the goods to which the tariffs apply. Foreign businesses will mostly not compensate for the tax increase by lowering prices, as the Trump administration claims they will. The tax will be passed on to American consumers and businesses, as it was during Trump’s first term. Because Canada and Mexico are among the top buyers of U.S. petroleum products and sellers of U.S. crude oil imports, expect energy markets to be thrown into a tizzy if energy products are not excluded.

Erica York puts the (huge) size of Trump’s new tariffs taxes on American consumers and businesses in historical perspective.

National Review‘s Andrew Stuttaford isn’t impressed with Trump’s “tariff magic.” A slice:

The economic logic behind these tariffs being imposed on our two closest neighbors is, uh, questionable, and the geopolitical consequences are not likely to be that great either. The chances of Mark Carney, green zealot and Davos man par excellence, winning the next Canadian election just went up another notch.

Trump has started a trade war.

Warren Buffett calls tariffs ‘an act of war’.”

The Atlanta Fed is pessimistic about near-term economic growth.

Scott Lincicome, at X, nicely summarizes Trumpian hypocrisy – and political recklessness – about U.S. tariffs taxes on American consumers and businesses:

2024: BIDENFLATION IS DESTROYING AMERICA
2O25: so prices increase whatever it’s fine

Cato’s Clark Packard and Alfredo Carrillo Obregon decry the U.S. steel industry’s long and harmful dependence on protection by U.S. tariffs. Two slices:

For nearly 60 years, the United States steel industry has been one of the most protected sectors of the American economy. Policymakers have showered an unsavory mix of trade restrictions to benefit domestic steel firms including quotas, tariffs, aggressive trade remedies, and procurement preferences. With the Trump administration promising a new onslaught of protectionism, steel prices are rising even before the tariffs are implemented. As always, consumers will pay the price.

In 2018, the first Trump administration imposed 25 percent “national security” tariffs on steel imported from virtually every country in the world in a bid to boost domestic steel output (despite the Secretary of Defense noting at the time that the military only needed 3 percent of domestic steel production). Those tariffs imposed significant costs on the American economy.

…..

To be sure, there was no mystery before the recent steel tariffs announcement that they would harm domestic manufacturing and other steel-consuming industries. Multiple economic studies, including a US International Trade Commission report calculating the tariffs’ disproportionate costs to the manufacturing, construction, and energy sectors, clearly show that this has been the case ever since the tariffs were first imposed in 2018.

Moreover, as some of these studies also indicate, steel-consuming industries employ at least 46 times more workers than those employed in domestic manufacturing, so far more Americans stand to be hurt than helped by the tariffs. If President Trump is truly interested in boosting American manufacturing, fueling the long-running price disparity between US and global steel prices through misguided and demonstrably ineffective tariffs is not the way to do it.

Scott Atlas, writing in the Wall Street Journal, argues that “America still needs a covid reckoning.” Two slices:

The mismanagement of the pandemic hit us personally and exposed a massive, across-the-board institutional failure. It was the most tragic breakdown of leadership and ethics that free societies have seen in our lifetimes.

…..

Especially in the U.S.—where the Declaration of Independence proclaims that all men are “endowed by their Creator with certain unalienable rights”—it is stunning that liberty fell so quickly and thoroughly by government decree and with public assent.

Why did free people accept Draconian and illogical lockdowns? The answer reveals the reason for the silence on the pandemic. Censorship and propaganda are part of the explanation, tools of control that convinced the public of two lies—that there was a consensus of experts in favor of lockdowns, and that dissent from that false consensus was dangerous.

Yet that alone doesn’t explain today’s silence about that extraordinary collapse. It is also that so many smart and influential people were complicit. They bought into and even advocated irrational measures that defied data, biology and common sense. That acquiescence—frankly, cowardice—and the failure to grasp reality are inconvenient truths that, understandably, no one wants to revisit.

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Quotation of the Day…

… is from page 34 of Dartmouth economist Teresa Fort’s important 2023 Journal of Economic Perspectives paper, “The Changing Firm and Country Boundaries of US Manufacturers in Global Value Chains” (references removed; emphasis added):

[T]rade statistics and theory need to expand to capture the realities of goods production across firm and country boundaries. These activities affect our understanding of trade and foreign direct investment, as well as aggregate measures of domestic value added and GDP. The potential implications are far-reaching: increased specialization within the production of a particular industry or good provides additional gains from trade. When such specialization entails reallocation into early production stages, like design and innovation, offshoring can even lead to dynamic gains, as the returns to innovation rise, inducing growth in R&D and ideas that beget more ideas.

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Another Open Letter to Pres. Trump

Pres. Donald J. Trump

Mr. Trump:

Earlier today on social media you posted this item:

To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!

Given the inescapable consequences of these tariffs, you should post a follow-up item reading:

To the Great Families of the United States: Get ready to start paying a lot more for your food due to my restricting your access to agricultural product from OUTSIDE of the United States. My punitive taxes go on your purchases of lower-cost agricultural imports on April 2nd. Have fun!

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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Some Links

The Editorial Board of the Wall Street Journal reports that Trump’s tariffs are hampering the performance of the American economy. A slice:

President Trump says tariffs will usher in a new era of American prosperity, but the U.S. economy isn’t sharing the anticipatory enthusiasm. A variety of indicators in recent weeks show a slowdown in first-quarter growth, which suggests this is an especially bad time to add new taxes and economic uncertainty.Initial claims for unemployment benefits jumped 22,000 last week, while consumer spending slowed sharply in January. The housing market remains in mediocre shape. A surge of imports in January, as businesses try to get ahead of tariffs, suggests how companies are trying to hedge against border taxes.

All of this has moved the Atlanta Federal Reserve’s GDPNow growth estimate for the first quarter to -1.5%. That scorecard is volatile and changes as new real-time data arrive, but Wall Street forecasters have also been reducing their growth estimates.

This isn’t cause for panic, but it is for tariff caution. Mr. Trump is promising to impose his 25% levies on Mexico and Canada this week, which will send auto and other North American supply chains into chaos. China gets hit with another 10% border tax, with European cars up next, followed by reciprocal tariffs on most of the world.

A tariff is a tax, and taxes impose costs that reduce economic activity. They also add uncertainty about where and how businesses should invest, as CEOs try to figure out where the tariffs will strike, on which goods, and for how long. Will there be exceptions?

At his Facebook page, GMU Econ alum Mark Perry offers what he accurately calls this “narrative destabilizing fact”:

Samuel Gregg explains that “a realist account of the human condition lends support to classical and conservative liberals.”

My intrepid Mercatus Center colleague, Veronique de Rugy, ponders how Milton Friedman would run DOGE. A slice:

Yet I can’t shake the feeling that the administration may not be playing the long game. It isn’t because the cuts will be minuscule compared to what truly needs to be cut. Neither is it because the DOGE team is causing chaos. Any serious effort to cut down the size of government is bound to be chaotic because it throws a wrench into the usual functioning of government and pushes against the desires of many special interests.

My trepidation boils down to two things. First, for all the talk about cutting government waste and fraud, the DOGE-Trump team seems mostly animated by rooting out leftist culture politics and its practitioners in Washington. It feels that it is less about smaller government than it is about political transformation. While the two intersect, this strategy could fall short.

That’s in part—and this is my second point—because for those of us who care about permanently downsizing government and keeping it bound by constitutional rules to prevent the exercise of arbitrary power, DOGE is mixed. While there is a small probability the approach will succeed in reining in spending or the administrative state, it will be at the heavy cost of reinforcing the power of the executive branch and opening the door to the same abuse when the left is in power.

Brian Albrecht warns against the potential move by Trump & Co. to remove the market value of government production from calculations of GDP. Two slices:

Let’s put aside Musk’s confusion about what GDP includes—it’s government production—goods and services actually produced—not spending, which is mostly transfers like Social Security payments. Defining GDP to now be “GDP – G” is a truly terrible idea.

Let’s be clear. The Bureau of Economic Analysis (BEA) tells us that GDP “measures the value of the final goods and services produced in the United States (without double counting the intermediate goods and services used up to produce them).” You may read “value” to be the giveaway, but it is really “market value” or “market sales.” GDP isn’t meant to measure consumer surplus—it measures a country’s total economic production.

The key concept is that GDP measures final output. It doesn’t matter who buys that output—consumers, businesses, the government, or foreigners. As long as it’s a final good or service produced domestically, it counts.

Government spending represents real economic activity involving real resources, producing goods and services that actually exist in the economy. When a government builds a highway, purchases military equipment, or pays teachers, these activities create actual economic value—whether you personally value them or not.

…..

Here’s the most bewildering part of this proposal: we already have exactly what these officials are suggesting. The BEA regularly publishes measures of private sector output that exclude government spending. The BEA publishes this data alongside GDP in its national accounts. Anyone who wants to track private sector performance separately from government activity can already do so.

Jon Miltimore identifies “the scientific fallacy that spawned covid absolutism.” A slice:

Economic hubris, bad science, and raw state power unleashed a period of madness. It wasn’t just that the state’s non-pharmaceutical interventions didn’t work. They often didn’t even make sense.

Near the five-year anniversary of the sudden rise of covidian authoritarianism, Phil Magness reflects on that madness and evil. Three slices:

No less than Anthony Fauci would go on record about the unwisdom of lockdowns, telling CNN on January 24, 2020, that they were “something that I don’t think we could possibly do in the United States, I can’t imagine shutting down New York or Los Angeles.” Fauci then reiterated his doubts in relation to lockdown measures being implemented in China at the time, “because historically when you shut things down it doesn’t have a major effect.”

In just six weeks’ time, nearly the entirety of the US public health profession, including Fauci, would jettison the previous century of scientific literature attesting to the ineffectiveness of lockdowns. Instead, they rushed to embrace the previously-deprecated approach of simulation modeling, and used it to place the majority of the world under mandatory quarantine. Five years later, we still have no clear answers for why this sudden, sharp reversal happened, let alone accountability for the public health officials who made the call to change course.

If any single event warrants credit for swaying the public health profession over to lockdowns, it is the publication of Report No. 9 by the epidemiology modeling team at Imperial College-London on March 16, 2020. The brainchild of Neil Ferguson, a computer scientist and physicist with no medical training, the Imperial College model forecasted catastrophic mortality figures in the coming months if the world’s leading economies did not go into immediate lockdown to contain Covid-19. The initial models projected 510,000 deaths in the UK and 2.2 million deaths in the United States by late July 2020 unless each country adopted a suite of NPI measures to shutter businesses and schools and restrict public gatherings. Ten days later, Ferguson’s team expanded their model to approximately 189 countries and other defined political boundaries. The expanded Imperial College report predicted similar levels of catastrophic death in almost every nation on earth, absent immediate measures to impose society-wide lockdowns.

…..

Neil Ferguson, dubbed “Professor Lockdown” in the press, saw himself elevated to an all-knowing sage of pandemic modeling whose careful scientific guidance to governments averted the very same astronomical death tolls that his models predicted. A simple Google search would have revealed that Ferguson was no disease-modeling Cassandra. Rather, his track record had more in common with a Y2K bug alarmist. Ferguson had a long history of publishing models with similar catastrophic projections for every public health scare of the past two decades. In the early 2000s, he hyped a Mad Cow Disease pandemic in Britain that would supposedly yield death rates in the hundreds of thousands. Then came a model for Mad Sheep Disease with similar tolls. Then, in 2009, a swine flu model predicted one-third of the earth would be infected in a matter of months. Over and over again, Ferguson’s previous models failed to pan out.

The Covid forecast from Imperial College Report No. 9 was no different from Ferguson’s previous alarmist projections, and peaking under the hood of this study revealed its fundamental shortcomings. Although it was touted to the world as the product of cutting-edge supercomputing, the “new” Covid model turned out to be a hasty and clunky adaptation of an earlier pandemic influenza simulation study that Ferguson and his team published in 2006. Its design employed a probabilistic agent-based simulation wherein estimated human contact rates in a fixed population were said to determine disease transmission. The resulting product had more in common with the “Sim City” video game of the late 1990s than an advanced supercomputer projection of Covid-19’s known characteristics.

…..

So why did public health fail to course-correct during Covid amid mounting evidence that lockdowns were not working as claimed? Allow me to suggest an answer rooted in public choice economics and a prescient observation from centuries past. In times of crisis, the public often demands action with little regard for its efficacy. Public officials, in turn, are happy to oblige in the furtherance of their own authority, prestige, and allocations from the public treasury.

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Quotation of the Day…

… is from page 81 of the 2010 Revised Edition of James D. Gwartney’s, Richard L. Stroup’s, Dwight R. Lee’s, and Tawni H. Ferrarini’s Common Sense Economics (footnote deleted):

Trade restrictions neither create nor destroy jobs; they reshuffle them. The restrictions artificially direct workers and other resources toward the production of things that we produce at high cost compared to others. Output and employment shrink in areas where our resources are more productive – areas where our firms could compete successfully in the world market if it were not for the side effects of the restrictions. Thus labor and other resources are shifted away from areas where their productivity is high and moved into areas where it is low. Such policies [imposed by the U.S. government] reduce both the output and income levels of Americans.

DBx: Yes.

Keep the above elementary yet key point in mind when you next hear – as you will if you pay attention to debates over trade – a protectionist dismiss us economists as naive for our alleged glorification of consumption and ignorance of the importance of production. Such claims by protectionists are meant to convince uninformed listeners and readers that protectionists are far more realistic and sophisticated than are economists and other advocates of free trade. ‘Those silly free traders ignore production while we serious protectionists recognize the importance of production’ – that’s a favorite line of protectionists. Protectionists either haven’t actually read much that is written by serious proponents of free trade or they hope that their audiences haven’t done so.

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More Deficient Economic Thinking

Here’s a letter to the Wall Street Journal.

Editor:

Anthony deBarros and Peter Santilli report on “the countries fueling America’s $1.2 trillion goods trade deficit” (March 1).

With respect, what’s the point of such a report? Eighty percent of U.S. GDP is produced by the service sector – implying that the vast majority of Americans have a comparative advantage at producing services. Given this reality, it would be bizarre if America did not have a large so-called “goods trade deficit.”

I write “so-called goods ‘trade deficit’” because, in fact, this accounting artifact is no more an economically meaningful concept than is Taylor Swift’s “goods trade deficit” with the merchants from whom she – a service provider – acquires her lipstick, clothing, houses, and private jet.

Just as Ms. Swift would make herself much poorer if she adjusted her economic activities to reduce her “goods trade deficit,” so too would we Americans be made poorer if our government – misled into thinking that a “goods trade deficit” run by a country highly specialized in services is a problem requiring correction – forced us to adjust our economic activities to reduce America’s so-called “goods trade deficit.”

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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