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In this video, GMU Econ alum – and my Mercatus Center colleague – Liya Palagashvili talks with John Stossel about the economic destructiveness of labor unions.

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Here’s a letter of mine that appears in today’s Washington Post:

As The Post reported in the Nov. 30 article “Trump tariff plan risks quick jumps in prices for food, cars and gas,” Treasury Secretary pick Scott Bessent insists that “tariffs can’t be inflationary because if the price of one thing goes up, unless you give people more money, then they have less money to spend on the other thing.”

While Mr. Bessent is correct that inflation results whenever government monetary or fiscal policy creates excess demand, the connection between tariffs and inflation isn’t as easily dismissed as he says. First, tariffs can cause buyers to so dramatically reduce their purchases of protected goods that buyers wind up having more money to spend on other goods — other goods, however, that buyers prefer less than those that tariffs make inordinately expensive. Second, by shifting resources away from industries in which Americans have a comparative advantage and toward industries in which Americans have a comparative disadvantage, U.S. tariffs cause Americans to produce less.

Both effects, even if they don’t change the measured price level, reduce the purchasing power of our incomes, which is a chief evil of inflation.

Donald J. Boudreaux, Fairfax

The writer is the Martha and Nelson Getchell chair for the study of free market capitalism at George Mason University’s Mercatus Center.

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Had space allowed, I’d have gone on to point out that in the long run tariffs are worse than at least one-off inflations. When the monetary authority stops injecting excess money into the economy, all prices and wages will eventually adjust to the new, higher money supply. While all nominal prices and wages will be higher, real purchasing power will be the same as before the inflation. But with tariffs, real purchasing power remains lower because people are denied access to lower-priced imports and more workers and other resources are tied up in industries for which the country has a comparative disadvantage.

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Tunku Varadarajan profiles, in the Wall Street Journal, Jay Bhattacharya – a co-author of the great Great Barrington Declaration, and now a nominee to head the National Institutes of Health. Three slices:

Shaken but steadfast, Dr. Bhattacharya, who is an economist as well as a physician, continued to oppose lockdowns, on Oct. 4, 2020, with the Great Barrington Declaration, of which he was one of three principal co-authors. (The others were Sunetra Gupta, a theoretical epidemiologist at the University of Oxford, and Martin Kulldorff, a statistician who has since been fired from Harvard for refusing a Covid vaccine.) The declaration dissented from the Anglo-American scientific establishment and argued for focused, age-based protection from Covid instead of universal and indiscriminate lockdowns.

Dr. Bhattacharya’s life was “completely overturned” in the months leading up to, and just after, Great Barrington. “I couldn’t eat or sleep for months,” he says. Not a big man, he lost 30 pounds. He received death threats. “There were some very, very nasty attacks.” Once-friendly colleagues stopped talking to him: “They crossed the street to avoid me.”

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Dr. Bhattacharya says a major task he faces is to help restore the trust that the American people have lost in health experts and the scientific establishment, “primarily because they utterly failed during Covid.” Scientists embraced ideas that “failed to actually protect Americans, led to countless people losing their jobs, and of course the harm to children from school closures.”

He enumerates the wrongs the scientific elite committed: “Denial of basic scientific facts like immunity. Denial of basic human rights—the rights to bodily autonomy, to informed consent, to free speech.” All of these violations, he says, were “embraced by scientists as necessary to control the pandemic, and they weren’t.” Neither were they sufficient—these draconian measures failed to prevent hundreds of thousands of deaths. Americans came to see “the scientific establishment as essentially an authoritarian power sitting over them, rather than as a force for good.”

Scientists set themselves up as “the most important arbiters of how people should live their lives during the pandemic. And they’re not very good at that.” The goal of science, Mr. Bhattacharya says, “isn’t to tell you how to live your life, it’s to discover truths about nature so that we can develop, in biomedical sciences, better ways to care for human health.”

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Any reform of America’s scientific institutions, Dr. Bhattacharya says, must ensure that they “work for the people again.” Instead of “this haughty relationship, where the scientists sit above the public and say, ‘Look, you can’t think that,’ or ‘You’ll be censored if you say that,’ they need to remember that they are servants of the American people. The people are the ones paying the bills. They’re the ones giving the $50 billion a year. We scientists serve the people, not the other way around.”

The Wall Street Journal‘s Editorial Board continues to express its well-founded opposition to protectionism – here, in particular, to eliminating the de minimus tariff exemption. Two slices:

Republicans regained the White House and Senate on a promise to beat inflation, but now they’re rallying around President Biden’s plan to make it harder to buy affordable goods. Their behind-the-scenes push to raise the tariff on low-cost imports would do little to fight China, but it would squeeze American businesses and families.

Some House Republicans want to end what is known as the de minimis tariff exemption, which lets U.S. buyers import up to $800 a day of duty-free goods. Congress first passed the exemption in the 1930s, and nearly every country in the world allows certain small shipments to enter below some price threshold.

Congress raised the U.S. exemption to $800 from $200 in 2016. And in a letter to U.S. trade rep Robert Lighthizer in 2019, Sens. Chuck Grassley and Ron Wyden wrote “our higher threshold has helped to make the United States a leader in global e-commerce—a position that we should not cede to countries, like China, that are vying for that role.”

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Smaller manufacturers would be hurt the most, as would lower-income Americans looking for affordable clothing and consumer goods. The National Association of Manufacturers, whose members compete with Chinese producers, wants to keep the $800 threshold, saying it helps American companies import specialized components without overpaying.

Most opposition to the exemption is from clothing, shoe and textile makers, and related labor unions. Yet closing the de minimis exemption would do little to revive U.S. textile production, which dropped by 47% in the two decades before Congress enacted the current threshold.

Lawmakers have been angling to sneak repeal into must-pass, last-minute bills this month, but we now hear they may wait until tax reform next year. It’s still a bad idea, especially after voters last month gave Republicans a mandate to focus on reducing prices.

“Trump vs. Cleveland: A Tale of Two Tariff Strategies.”

GMU Econ alum Byron Carson writes with great insight about James Buchanan’s pioneering and penetrating 1969 book, Cost and Choice.

Arnold Kling reviews Michael Huemer’s 2024 book, Progressive Myths. Two slices:

Progressives believe that racism is a significant problem in contemporary America. Huemer points out that a number of myths bolster this belief. For example, he examines the cases of Trayvon Martin and Michael Brown, who according to the mythology of Black Lives Matter, were killed solely because they were black. Careful investigation shows that purported witnesses were not present and/or lied, so that the details that many BLM supporters believe are false.

Why do progressives perceive racism as so important? Huemer says that the Civil Rights movement of the 1960s, which he praises, could not let go of the need to have a cause.

They ramped up their demands, and they developed increasingly sensitive racism detectors and increasingly sophisticated accounts of how one facet or another of American life… was really a form of “white supremacy” or other bigotry. p. 197

I disagree with the diagnosis that the Civil Rights movement was too filled with righteous pride to declare victory and go home. As I interpret the history, people expected that once discrimination became illegal, racial tension would vanish and racial inequalities would fade. Instead, we had urban riots from 1965-1968, and gaps persist between the black and white population in the United States with respect to average educational attainment, income, and wealth. If we are not seeing the outcomes that were expected when racism ended, then progressives infer that racism has not ended.

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Similarly, I would advise people who express opinions to show your work, giving the sources for your claims and the logic of your thought process; and debate fairly, showing an awareness of the weaknesses in your position and the best points that could be made by the other side.

Throughout the book, Huemer models these behaviors. That may be the best reason to recommend reading it.

Ivan Osorio remembers CEI founder, Fred Smith. A slice:

Fred’s passion for ideas went beyond intellectual exercises. He was always interested in how ideas mattered to people’s lives. In his work, that translated into applying the ideas of liberty to public policy in practical and principled ways by reaching people on their own terms. “People don’t care what you know,” he’d often say, “until they know you care.”

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… is from page 3 of the late Stanford University economic historian Nathan Rosenberg’s “Introduction” to the 1994 collection of several of his papers – a collection titled Exploring the Black Box: Technology, Economics, and History (original emphasis):

It is easy to conclude that, whatever the difficulties and uncertainties in developing a new product might be, anticipating the subsequent uses of the new product, once developed, would be relatively easy. Such a conclusion, however, is not borne out by history. On the contrary, it appears that it has been remarkably difficult to appreciate the potential significance of an invention at the time of its first introduction.

DBx: Take heed of this reality if you’re sympathetic to arguments in favor of industrial policy. The future is not for us to know in sufficient detail to suppose that large-scale efforts to plan whole economies, or large swathes of an economy (for example, “the manufacturing sector”), will succeed in improving the economy for the masses of its denizens. This fact is only strengthened by the realization that such government interventions are carried out by politicians and bureaucrats who spend other people’s money – and hence are not tightly inspired or constrained by the profit motive – as well as intentionally ignore or suppress the information conveyed by prices and other market signals.

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This piece endorsing conscription is terribly weak.

Editor, Discourse

Editor:

Michael Ard’s case for military conscription rests heavily on a fatal economic error – namely, his claim that conscription would lower the cost of manning America’s military (“Is It Time To Reconsider the Draft?” Dec. 6). Conscription would, without doubt, raise that cost.

With an all-volunteer force, the cost of the military is explicit; it’s reflected in the budget numbers because the government must fully compensate each enlistee for his or her time and effort. With conscription, in contrast, the cost of the military is hidden. Because the government doesn’t have to fully compensate each enlistee for his or her time and effort, many draftees are paid less in the military than they would earn in the private sector.

A draftee who would earn, say, $100,000 annually by working as a plumber but who is paid, say, $20,000 annually for his or her military service, is someone who is taxed at least $80,000 annually to help fund the military. The fact that this tax doesn’t show up in budget numbers doesn’t make it less of a tax. It’s just a tax that is not only camouflaged but grotesquely unfair: by forcing this draftee to pay a tax of at least $80,000 annually enables non-conscripted citizens to enjoy lower tax burdens.

Moreover, because the value to the country of this draftee’s military service is less than $100,000 annually, conscription – by shifting this person from producing at least $100,000 of output in the private sector to producing some amount less in the military – lowers the net value of economic output and, thus, raises the full economic cost of the military higher than it would be absent conscription.

Mr. Ard might try to refute my argument by saying that the value to the country of this draftee’s military service is greater than $100,000 – to which I would reply, then let the citizens, through their representatives, prove it by offering to pay this person something more than $100,000 to entice him or her voluntarily into the military. If Americans taxpayers aren’t willing to pay fully for each military member’s service, economics screams that it’s wasteful – and ethics screams that it’s unjust – to unload on young men and women a disproportionately large chunk of this cost by threatening to cage them if they refuse to ‘serve.’

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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My intrepid Mercatus Center colleague, Veronique de Rugy, calls for the U.S. government to end its worse-than-banana-republic practice of taxing the incomes of American citizens living and working abroad. A slice:

Here is how it works: If you live and work exclusively outside of the United States, you must file a U.S. tax return reporting your income, foreign bank accounts containing over $10,000, retirement accounts, investments, and other financial details. You’re responsible for paying U.S. taxes on income above certain thresholds and navigating complex forms and rules to avoid or minimize double taxation.

This is not only unfair but uniquely so. The United States is the only developed nation that taxes based on citizenship rather than residency. We are in terrible company. As the Cato Institute’s Adam Michel writes, “Eritrea’s brutal dictatorship is the only other country to come close, imposing a 2 percent levy on all expatriates.”

David Henderson makes the case against cancelling student debt.

Timothy Taylor – inspired by a recent paper by Clark Packard and Scott Lincicome – asks if Trump will have the power to impose tariffs on day one.

Daniel Cameron applauds Walmart for bidding adieu to DEI. A slice:

American corporations don’t have to yield their corporate governance to any activist group. The era of virtue signaling is over. We are entering a new age of good, sound business decisions. Walmart, Tractor Supply and John Deere are leading the way. Others should join.

Noah Rothman criticizes RFK Jr.’s officiousness. A slice:

RFK Jr. has previously expressed his desire to see the U.S. impose legal restrictions on the ability of pharmaceutical manufacturers to air direct-to-consumer advertisements. He even seems to believe that the laws protecting the right of private firms to retail (provably true) claims to the public can be accomplished via presidential pen-stroke. On “my first day in office, I will issue an executive order banning pharmaceutical advertising on television,” Kennedy wrote when he was still running for the presidency.  “We are one of only two countries in the world that allow pharmaceutical companies to advertise directly to consumers on television,” he added. “Not surprisingly, Americans consume more pharmaceutical products than anyone else on the planet.”

As far as I can tell, the fact that the United States extends (relatively) unique liberties to the pharmaceutical sector is the closest thing to a rationale for such a ban: America should be more like Europe. If America continues to behave like America, however, the idiots who populate this country (not you and I, of course, but them) will languidly persist in their addiction to self-harm. In the absence of a benevolent government sherpa to hold Americans’ hands and tell them not to swallow fistfuls of anti-depressants and avoid consuming Cap’n Crunch and Cheez-Its exclusively, the country cannot survive. The GOP owes Michelle Obama an apology.

This is the sort of patronizing narcissism we should expect from a lifelong progressive Democrat. But sentiments like these should have no place within the party of individual liberty and personal responsibility.

The pharmaceutical industry — indeed, medical innovation generally — is one of this country’s most profitable enterprises for a reason. Unlike much of the rest of the world, the U.S. does not regulate pharmaceutical prices, making drug development a worthwhile endeavor. Its legal structure is designed to encourage public-private pharma research and development projects — a condition anathema in countries where access to pharmaceuticals is treated as a right and, thus, where innovation is all but entirely stagnant. Those countries rely on U.S. medical exports as well as the clinical trials it conducts overseas. If America were to make itself more like Europe, it would produce fewer medical miracles, develop and export fewer life-saving innovations, and make less money.

“The PPP was a COVID-Era disaster. Trump wants to promote the guy who ran it.”

Craig Eyermann reports that the U.S. government’s debt “passes new grim milestone.”

John Sailer decries the lunacy of DEI on campus. A slice:

At the University of Michigan (UM), professor Jessica Kenyatta Walker specializes in “critical food studies” and helped develop “in-class activities” on the “racialization of food in the United States.” Professor Adi Saleem’s recent book, Queer Jews, Queer Muslims: Race, Religion, and Representation, focuses on “triangulating the Jewish-Muslim dyad with a third variable: queerness.” Jennifer Dominique Jones, meantime, teaches courses in “Black Queer Histories” and “Black Intimacies.”

These scholars share more than an affinity for critical theory: each was hired through the university’s Collegiate Fellows Program. Established in 2016, the CFP hires postdoctoral fellows who show a “commitment to diversity, equity, and inclusion.” The fellows are guaranteed a tenure-track position after two years, bypassing the rigors of a normal competitive job search.

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… is from page 100 of philosopher Michael Huemer’s excellent 2024 book, Progressive Myths (original emphases):

The gender pay gap statistics do not control for occupation or other relevant factors. In other words, they are not, in fact, about the same work or equal work. Rather, almost all of the gap is due to men and women doing different work.

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Eric Boehm is understandably unimpressed (to put it mildly) with Trump’s decision to employ the hyper-protectionist Peter Navarro as a trade advisor. A slice:

Shortly after then-President Donald Trump launched his “good and easy to win” trade wars in 2017, Peter Navarro sat down with CNN’s Jake Tapper to defend the use of tariffs.

Asked whether Americans would end up paying the brunt of the tariff cost, Navarro told Tapper to “look at the data.”

“China is bearing the entire burden of the tariffs,” Navarro said. “There is no evidence whatsoever that American consumers are paying any of this.”

The data, of course, say the exact opposite. American consumers and businesses bore roughly 93 percent of the cost of Trump’s tariffs, according to one analysis by Moody’s. The U.S. Trade Commission concluded in 2023 that American companies and consumers “bore nearly the full cost” of the tariffs Trump levied on steel, aluminum, and many goods imported from China.

Then again, analytical rigor and an understanding of basic economics have never been all that important to Navarro—who will serve as “Senior Counselor for Trade and Manufacturing,” President-elect Donald Trump announced on Wednesday.

The Wall Street Journal‘s Editorial Board warns that RFK Jr.’s nomination to head HHS “is a threat to American medical innovation.” A slice:

The danger is that RFK Jr. would use his regulatory power at HHS to further discourage biopharmaceutical investment and undermine innovation. He says he wants to end alleged corruption between drug makers and government—by which he seems to mean curbing pharmaceutical profits by making it harder for medicines to come to market.

The Editorial Board of the Wall Street Journal also rightly praises Trump’s inspired – truly so – pick of Paul Atkins to serve as Chairman of the Securities and Exchange Commission. A slice:

Donald Trump partisans want to drain the Beltway swamp, but it helps to have nominees with the knowledge and experience to do it. That applies to Paul Atkins, whom Mr. Trump said Wednesday is his choice to replace Gary Gensler as Chairman of the Securities and Exchange Commission.

Mr. Atkins served as a Republican Commissioner from 2002 to 2008 during the post-Enron climate when the SEC sought to expand its reach in the name of preventing fraud. He frequently criticized the agency for needlessly meddling in markets by issuing rules that raised costs for public companies and investors.

He notably dissented from a 2004 rule that sought to expand the agency’s authority over hedge funds under New Deal era laws. The rule was blocked by the D.C. Circuit Court of Appeals, though Mr. Gensler tried to take another swipe at hedge funds with his private funds disclosure and dealer rules. Those, too, were jettisoned by courts. Mr. Gensler may have the worst record in court of any regulator in history.

The Editors of the Free Press rightly applaud the nomination of Jay Bhattacharya – one of three co-authors of the great Great Barrington Declaration – to head the National Institutes of Health. Two slices:

We know now that the authors of the Great Barrington Declaration had it exactly right—a reality we can plainly see given that many European countries, such as Sweden, followed exactly their guidance and had far fewer excess deaths than the United States. Lockdowns, school closings, mandatory masks for first graders—these were disastrous policies. So it’s only natural to view Bhattacharya’s nomination as karma.

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Amazingly, to this day, Bhattacharya’s critics still refuse to acknowledge that their authoritarian approach to ending the pandemic was wrong—and that Bhattacharya was right. “Trump’s NIH Pick Guaranteed to Destroy Country’s Health,” read the headline in The New Republic. According to The New York Times, his critics are now accusing those who, having considered the data and decided to give his ideas a second look, of “sane-washing.”

Rubbish.

It is Dr. Bhattacharya who is the sane one—and who kept his head and his humility while his critics lost theirs.

Under his leadership, we expect there will be no more gaslighting of patients, no more suppression of dissenting views, no more blacklisting of scientists who don’t toe the majoritarian line. For these reasons, his nomination is something all Americans should applaud.

“End, Don’t Mend DEI.”

Jonah Goldberg writes insightfully about 21st-century America’s tribal politics. Two slices:

History rarely lines up perfectly with the calendar, but politically, the 21st century neatly began in 2000, when the presidential election ended in a tie and the color coding of electoral maps became enshrined as a kind of permanent tribal color war of “red vs. blue.”

Elite understanding of politics has been stuck in this framework ever since. Politicians and voters have leaned into this alleged political reality, making it seem all the more real in the process. I loathe the phrase “perception is reality,” but in politics it has the reifying power of self-fulfilling prophecy.

Like rival noble families in medieval Europe, American elites have been vying for power and dominance on the arrogant assumption that their subjects share their concern for who rules rather than what the rulers can deliver.

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It’s worth noting that red vs. blue America didn’t emerge ex nihilo. The 1990s were a time when the economy and government seemed to be working, at home and abroad. As a result, elites leaned into the narcissism of small differences to gain political and cultural advantage. They remain obsessed with competing, often apocalyptic, narratives.

That leaves out most Americans. The gladiatorial combatants of cable news, editorial pages and academia — and their superfan spectators — can afford these fights. Members of the exhausted majority are more interested in mere competence.

I think that’s the hidden unity elites are missing.

This is why we keep throwing incumbent parties out of power: They get elected promising competence but get derailed — or seduced — by fan service to, or trolling of, the elites who dominate the national conversation.

“What Cass Sunstein omits in discussing DOGE.”

Jason Taylor reminds us the good service done for Americans by FDR when he asked Congress to declare beer to be “non-intoxicating.”

David Bernstein remembers the late Ken Kersch.

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… is from page 129 of David Schmidtz’s excellent 2023 book, Living Together:

We may want officials to have the power to win ultimate victory for our vision of justice in a world of rival visions, but, among corruptible human beings, the power to weaponize a vision of justice and impose it on a world of alternative visions is toxic.