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Here’s a letter to a new and very angry correspondent.

Ms. Becker:

I’m sorry that you so strongly disapprove of my recent AIER column in defense of libertarianism. Your core complaint is this:

You libertarians have ridiculously high opinions of human nature, assuming most people can approach saintliness. Serious conservatives don’t. We are sober. We are grounded in reality. We know that man is weak, fallible and most of all tempted into sin.

With respect, I disagree that we libertarians have such a high opinion of human nature. Precisely because we understand, as you put it, that humans are “weak, fallible and most of all tempted into sin,” we insist that the power of some individuals to coerce other individuals should be kept to an absolute minimum.

No serious libertarian argues that freedom produces anything close to heaven on earth, with no one succumbing to self-destructive or anti-social temptations. But we recognize two related realities that are missed by many conservatives as well as by progressives.

First, when adults are free to use their own (and only their own) private property – including their own bodies – under a rule of law, each individual personally experiences more of the costs of his or her bad behavior, and reaps more of the fruits of his or her good behavior, than is the case when that freedom is curtailed. This ‘internalization’ of consequences obviously doesn’t turn everyone into a saint – or prevent everyone from being a devil – but it does keep to a minimum the amount of ‘bad’ behavior while encouraging the greatest possible amount of ‘good’ behavior.

Second, any curtailment of libertarian freedom necessarily empowers some individuals to coerce other individuals. Given that we humans are indeed imperfect creatures, it is you – not any libertarian – who is unrealistically optimistic about human nature. I cannot fathom your faith that political power transforms individuals who cannot voluntarily manage their own affairs well into individuals who can coercively manage other individuals’ affairs well.

A truly sober and realistic assessment of human nature leads people of goodwill naturally to a wish to reduce as much as possible the power of the state.

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

Steven Koonin and Scott Atlas warn of the “consensus trap” that produced recent disasters, including the authoritarian covid lockdowns. A slice:

Beginning in 2020, policies allegedly following the science imposed lockdowns, prolonged school closings, church and business shutdowns, and vaccine mandates even for low-risk populations. But data available by the spring of 2020 showed that lethality was concentrated overwhelmingly among the elderly. Simple common sense argued instead for targeted protection. Those who said so—including one of us, Dr. Atlas, from inside the White House—faced attacks in the media and university censure. The collateral damage was sweeping, even beyond extra deaths: historic learning loss, a surge in youth self-harm, delayed and missed medical care, and economic devastation. The full human cost may never be known, yet few institutions have done after-action reviews.

Climate policy shows the same dynamic on a longer fuse. While greenhouse gases do warm the planet, the claim of inevitable catastrophe absent an energy transition—which, conveniently, would be painless—rests on implausible scenarios and on institutional incentives that reward alarm. Scientists who drew attention to that disconnect, such as Judith Curry, were assailed rather than debated.

Germany’s environment minister stated that a consumer surcharge for renewable energy would cost households “as much as a scoop of ice cream” each month; it rose more than tenfold before being scrapped altogether in 2022. The emissions reductions achieved so far have had no detectable effect on the climate. As with subprime and Covid, the architects have faced little reckoning, and because climate consequences unfold over decades, they probably never will.

Deirdre McCloskey explains what should be – but, alas, what to too many people isn’t – obvious: market economies work extraordinarily well. A slice:

Well, why do I, after 84 years on this planet (on September 11, thanks), most of it spent thinking about the evidence on how economies work, disagree with the numerous non-believers?

For one thing, as a resident of an economy, I live daily inside a massive experiment proving that it does work pretty much as supply and demand says. So do you live inside it. São Paulo is an enormous city. It exhausts me to drive across it. Yet somehow every day when you go to get a morning coffee, there it is. When you want to buy a new shirt, there it is. If you had the misfortune to live in a country that so strongly denies market forces that it makes them illegal, such as North Korea or the old Soviet Union, this would not be the case. The Soviets made endless jokes about it not being the case.

For another, as an economic historian, I know, and can show you massive evidence, that liberated people become amazingly creative and then make themselves and everyone else amazingly rich. It has happened from 1776 to the present, I’ve told you frequently, to the extent of 25 thousand percent, for the first time in history. In a century or so, if the economists and politicians don’t intervene, everyone will be twice as rich as the average Swiss person now. I mean Africa. I mean everywhere.

For another, as an economist of a mathematical and philosophical bent, I have a vision of the economy as an enormous spontaneous order, like the Portuguese language or the history of art or even the pattern of your own sweet life.

It’s lovely. Let it work.

In a new paper, Joseph Francis unpacks the “China Shock.” Here’s the abstract:

Numbers abound in the “China shock” narrative. In the Wall Street Journal, Treasury Secretary Scott Bessent (2025) claims that higher tariffs are necessary because “3.7 million Americans lost their jobs” as a result of China joining the World Trade Organization in 2001. Bessent cites the research of the economists David Autor, David Dorn, and Gordon H. Hanson, two of whom have also warned in the New York Times that the United States risks facing a “China shock 2.0” unless it reorients its economic policy. “The first time China upended the U.S. economy, between 1999 and 2007,” Autor and Hanson (2025) state, “it helped erase nearly a quarter of all U.S. manufacturing jobs.” They call for the federal government to embrace industrial policy, while also investing in “universities with vibrant STEM programs,” such as Harvard and the Massachusetts Institute of Technology.

Yet an analysis of the underlying econometrics reveals that the empirical basis of these claims is fragile. When Kirill Borusyak, Peter Hull, and Xavier Jaravel’s (2022) corrections to Autor et al.’s research design are applied, the negative effects on living standards — what Autor et al. (2013, 2121) describe as “higher unemployment, lower labor force participation, and reduced wages” — disappear. In addition, Autor et al.’s claim that Chinese imports caused “one-quarter of the contemporaneous aggregate decline in US manufacturing employment” has no meaningful empirical basis. It is a big, attention-grabbing number that the Difference-in-Differences (DiD) model used by Autor et al. cannot actually produce. Such issues recur, moreover, in various other articles that Autor et al. (2019; 2020; 2021) subsequently produced to reinforce their “China shock” narrative.

Scott Lincicome tweets a Financial Times report on how Nixon’s restrictions on soybean exports turned Brazil into a soybean powerhouse.

The Editorial Board of the Washington Post seems to be cautiously optimistic that the U.S. Supreme Court will not allow state and local governments to sue companies for climate-change reasons. Here’s its conclusion:

After Justice Samuel A. Alito Jr. recused himself last week, the energy companies’ path to a five-justice majority became more difficult. That made a punt on procedural grounds more of a possibility, but most of the questions posed Monday focused on the merits of each party’s arguments. If the justices choose to duck in this case, they will eventually need to confront a growing wave of climate litigation suits. They have an opportunity now to close the floodgates before unelected juries put American energy producers out of business.

Joshua Rauh talks goods sense about budget deficits and soaking the rich.

Daniel Foster ably defends, against Michael Brendan Dougherty,  his criticisms of J.D. Vance’s clueless characterization of the U.S. economy. A slice:

Multinational production in particular interacts with trade liberalization in a synergistic way, with one model suggesting globalized production chains more than double the benefits of trade for a given country. And take some of the others in the list: Foreign-owned multinationals operating in the United States generated $1.52 trillion in American value added in 2024, employed 8.6 million Americans, and conducted nearly $100 billion in U.S. research and development. American multinationals, meanwhile, earned $660 billion on their direct investments abroad in 2025, leaving us with about a $350 billion surplus in direct investment income. FDI also makes U.S. firms more productive. One estimate suggests that in the first decade of the period Vance is talking about made U.S. manufacturing more productive: “FDI spillovers [are] economically important, accounting for about 14% of productivity growth in U.S. firms between 1987 and 1996.”

Critically, we also sit at the center of the global financial and monetary system, a structure of our device and control. The dollar is the world’s currency of exchange, Treasury securities supply much of the world’s collateral, and demand for dollar assets dramatically expands the capital available to, and reduces borrowing and transaction costs for, the U.S. government, businesses, and households alike. This is what economists call “exorbitant privilege” and JD Vance calls “a resource curse.”

“Are prediction markets politically biased?“

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Quotation of the Day…

… is from page 146 of Thomas Sowell’s 1999 book, The Quest for Cosmic Justice [original emphasis]:

But unlike the French revolution or the Bolshevik revolution, for example, the American revolution and its resulting constitution did not center on a change in the cast of characters in high places or on a change in their political language or immediate policy agenda. Its central concern was in establishing new processes by which whoever occupied the places of power could be restrained and replaced. In short, it did not pretend to have a doctrinal truth but instead implied a deep skepticism that anyone had either a monopoly on doctrinal truth or such moral or intellectual rectitude as to be exempt from constraints, condemnations, or dismissals from office by their fellow men.

DBx: Yes. But we might also say that the one doctrinal truth that the American founders did believe in – the core truth declared in the opening lines of the Declaration of Independence – is that the best society is one in which the power of one person or group of persons to coercively impose his or its will upon other persons or groups of persons should be kept to a minimum.

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An Open Letter to Michael Brendan Dougherty

Mr. Michael Brendan Dougherty
National Review

Mr. Dougherty:

Although I’m not on X, a friend shared with me this recent tweet of yours:

Still waiting for a response to my two sentence argument against free trade that engages with it:

A global free market is necessarily indifferent to the distribution of goods, skills, technological capacities, and power among nations. Statesmen cannot be so indifferent.

Let me end your wait.

I’m unpersuaded by your statement, not least because it’s unclear what you mean by the market being “indifferent.”

If by “indifferent” you mean that the market generates processes, and outcomes, different from those chosen by “statesmen” or preferred by pundits, then your point is true but trivial. The essence of free trade is that no individuals or groups coercively override the economic choices made by ordinary people spending and investing their own money.

But I suspect that by “indifferent” you’re making a more substantive claim. Just what that claim is, however, remains unclear.

Perhaps you mean that individuals choosing and acting in free markets are indifferent to the kinds of consumer goods and services they produce and consume – to the sorts of capital goods they create – to the varieties of worker skills they reward and develop – to the technologies they foster. If this is your meaning, then I can only disagree and wonder at your poor opinion of your fellow Americans.

Are you indifferent to how you spend your money and to how your savings are invested? Do you really believe that American business owners and managers are indifferent to the skills of their workers, to the kinds of machines and technologies they use, and to the sources of their supplies? If so, how do you explain the steady increase in real per-capita income in the U.S., the steady increase in household net worth, and the real increase in the size of the U.S. capital stock from the end of WWII through 2018 – years in which trade became freer?

Or perhaps you believe that “statesmen” – politicians and bureaucrats – empowered to override the economic choices of consumers, entrepreneurs, and investors would generate outcomes superior to the outcomes generated when these economic choices aren’t overridden. If this is your belief, can you identify the sources of information your “statesmen” would use to outperform the market? From where would they get the detailed knowledge they must have in order to perform so brilliantly? And why, if your “statesmen” possess the economic acumen, entrepreneurial genius, and access to knowledge that you presume them to possess, should they have the power to impose their economic visions on the rest of us? Wouldn’t such economic virtuosi be able, in competitive markets, to persuade investors and consumers voluntarily to invest and spend their money in ways that support these economic visions?

Those of us who endorse free trade have not only reams of evidence to support our case, but also a coherent theory of how free-trading economic actors access and use the information that’s necessary for economic success. You protectionists, in contrast, have much less evidence on your side, and you have absolutely no theory of how “statesmen” will get the information they must have if protectionism is to work as advertised.

I can’t accuse you of assuming this core problem away, because you give no evidence of being aware that the problem even exists.

Your tweet boils down to the claim that, were the amiable god-like creatures of your imagination available to govern us, they’d outperform free-trading human beings. Well, yes. No argument from me on that. But serious policy analyses and statements are never populated by any such deus ex machina.

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 Washington Post explains what shouldn’t – but, alas, what nevertheless does – need explaining: Britain’s economy will not be ‘fixed’ by greater government involvement. A slice:

The “new path” proposed by British Prime Minister Andy Burnham in his debut speech at the Labour Party’s annual conference last week sounds a lot like the one that led the United Kingdom into prolonged stagnation.

Wall Street Journal columnist Mary Anastasia O’Grady warns that in Venezuela Trump “is pushing oil production over good governance and may end up with neither.” A slice:

It’s been nine months since President Trump used the U.S. military to arrest dictator Nicolás Maduro inside Venezuela, take him to New York, and promote his deputy, Delcy Rodríguez, to top despot. Venezuelans thought they were going to get elections. Instead U.S. sanctions on oil sales have been lifted and dollars are again flowing to the criminal regime. Popular opposition leader María Corina Machado desperately wants to return, but Washington won’t allow it.

The energy confab was a Trump administration idea. It’s betting that by talking up the Venezuelan petroleum industry even while a dictatorship is still signing the contracts, it can get capital flowing into the country. The rebuilding of democratic institutions is supposed to follow.

Trump critics say that’s an error in sequencing. They believe that before investors sink real money into long-term commitments in Venezuela, in amounts that matter, they will want to be dealing with a legitimately elected government operating under a rules-based system.

History is on the side of the skeptics. At a minimum, caution is in order when dealing with the chavistas, who over the past quarter-century have repeatedly “dialogued” with democrats, as they’re doing now, only to refuse to relinquish power.

The energy summit harked back to a time in the once-prosperous South American nation when oil was the engine of growth. But elsewhere in the capital and the rest of the country, things remain dire. Triple-digit inflation and persistent power outages make life miserable for most Venezuelans. Ms. Rodríguez still holds an estimated 324 political prisoners, and more than two dozen others are under restricted freedom. Venezuelans at home and abroad are souring on the Trump administration.

Team Trump says it’s still pushing for political reform through negotiations between Ms. Rodríguez’s brother Jorge, head of the National Assembly, and the opposition. The two sides have been meeting on and off for two months and are rumored to be near an agreement on an independent supreme court. After that they’re supposed to form an independent electoral council. If all goes well, some insiders say the country could hold elections by mid-2027.

Venezuelans who want to recover their country are holding onto this hope. But doubts creep in when the Trump administration attaches no importance to restoring good governance and instead makes a boom in oil production, driven by secret agreements, its priority. By continuing in this direction it’s likely it will get neither.

Attending the conference was a low-cost way for large companies to generate goodwill with the White House. Even companies with little interest in Venezuela had reason to show up to stay on Mr. Trump’s good side. Marginal players probably wanted to rub shoulders with Oil Ministry bigwigs who have discretionary power over rights to explore and exploit oil blocks. Sweetheart deals in exchange for who knows what are the way things work in Venezuela.

Venezuelans are complaining bitterly about the recent regime decision to grant proprietary rights over 17 oil fields to North American Blue Energy Partners, whose majority owner is palace insider Alejandro Betancourt. Yet rather than object to the no-bid contract, the Trump administration further eroded confidence by appropriating its own minority stake in the company.

Roger Pielke Jr. ponders Pres. Trump’s carbon tax.

Mark Mills writes wisely about AI. Two slices:

Before the telegraph, widespread information transmission had also never moved faster than a horse. In 1858, the New York Times reported that telegraphy could spread lies “too fast for truth” to catch up. Experts warned that the technology would create a “morbid appetite for startling news and a monomania for extravagant and almost incredible rumors.” In 1861, barely a decade into the telegraph era, the Morning Pennsylvanian observed that “so far as its communications for the public eye are concerned, it is almost an unmitigated curse.” The New York Times aired worries that the electricity in the first-ever proliferation of wires festooning the countryside could endanger animals and crops and quoted experts warning that “girdling the earth with electrical wires” could even risk destabilizing the planet’s rotation.

History is legion with examples of what we view in hindsight as hysterical and even amusing reactions to new technologies. But it seems wired into human nature to ignore the implications because, well, “this time it’s different.” It’s always the case that every new technology is different in the particulars and that otherwise smart people have said exceptionally silly things about new technologies. Reflexive presentism is hard to escape.

Cataloging history’s episodes of techno-hysteria doesn’t mean that new technologies were free of negative consequences and disruptions. But as history also shows, it’s apparently too much to expect that we will react much differently this time than we did last time.

…..

As for water and land, data centers use far less of both than golf courses, never mind agriculture. Where were the protesters when Congress enacted mandates and subsidies for corn-ethanol in gasoline? Nearly 200 times more water is used per gallon to produce ethanol than gasoline.

Finally, on land use: the total square footage of warehouses in America is, at present, almost 100-fold greater than for data centers. Again, where were the demonstrators when politicians and promoters started subsidizing solar power installations that blanket farmland and fragile deserts by the square mile with black, glass-covered silicon?

Also writing insightfully about AI, but from a very different angle, is Bob Graboyes.

National Review‘s Jim Geraghty decries “the rise of dumb, anti-innovation, job-saving laws in blue cities and states.” Here’s his conclusion:

Rhode Island passed its law; starting January 1, 2027, any grocery store in the state that provides self-service checkout stations must have a ratio of one manual checkout station for every three self-service stations. Heaven forbid we let the grocery stores decide for themselves! Heaven forbid we allow customers to decide which option they want to use!

Joseph Steinberg tweets: (HT Scott Lincicome)

I think it’s very clear that ADH [the “China Shock” work of David Autor, David Dorn, and Gordon Hanson] and its follow-ups have led many people to believe that trade with China was a net negative for American jobs in the aggregate, when it’s not at all obvious that was the case. If you read their abstract & intro, and those of many other similar papers, there are no caveats whatsoever about relative vs absolute effects. In ADH, it’s relegated to a footnote. And their extrapolation to aggregate effects is totally inappropriate—a practice they have continued through all their work and propagated to the broader set of papers building on their work.

Allen Mendenhall’s thoughts about economics and economics training are excellent. (HT Arnold Kling)

Peter Suderman describes the new Tom Cruise movie, Digger, as a “disaster.”

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Quotation of the Day…

… is from page xvi of Samuel Gregg’s forthcoming book, The Civilization of Commerce:

The act of situating the case for markets within a wider argument about civilization reminds us, moreover, that much more is involved in the defense of market economies than emphasizing their ability to create wealth. Distinctly nonmaterial goods like liberty and justice are equally at stake.

DBx: Sam is correct.
…..
I’ve lost count of the number of times I’ve witnessed the following: The case for free markets is made on consequentialist grounds – for example, markets supply greater material prosperity to ordinary people, including better health, longer lives, and access to more leisure – only to be met with the objection that market-oriented scholars are blind to the nonmaterial dimensions of human flourishing. The market-oriented scholar then declares that he or she does indeed value nonmaterial goods – above all, liberty – so highly that he or she would, if necessary, willingly sacrifice much material wealth in exchange for greater liberty. This declaration is then met with the objection that the market-oriented scholar isn’t to be trusted because he or she is an ideologue.

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Vance Asserts Actual Decline

Here’s another letter to a long-time correspondent.

Mr. McKinney:

Thanks for sharing John Carney’s tweet in response to my recent open letter to J.D. Vance – a letter in which I document some of the many ways that ordinary Americans’ economic condition is far better today than it was 40 years ago. Mr. Carney writes:

Dear Don Boudreaux,

You have frequently complained that “the state” is too big and argued more should have been done to constrain its growth. You’ve argued that we need a balanced budget amendment to prevent government from financing its growth with debt.

Since 1985, the annual federal budget deficit is about 8.4 times larger in nominal dollars than in fiscal year 1985, roughly 2.8 times larger after inflation. Gross federal debt has grown far more — from about $1.8 trillion at the end of FY1985 to roughly $40 trillion by the start of October 2026.

How curious. Please tell me which of the following results [the ones in the open letter to Vance] of the growth of a growing government and ever-larger debt over the past 40 years do you wish to undo?

Sincerely,
John Carney

PS: See how this works?

Contrary to your prediction, I actually believe that Mr. Carney’s point is fair. I (like many others) have indeed complained for decades that government is too big and intrusive and, hence, harmful to the U.S. economy. And yet despite the continued growth of government on many fronts, ordinary Americans are today much better off economically than they were 40 years ago. Mr. Carney is justified in seeing in my arguments a potential inconsistency.

For two related reasons, however, I plead innocent to the charge of being inconsistent. First, my classical-liberal consequentialist argument against big government is not that such government necessarily makes the economy absolutely worse off over time; rather, the classical-liberal argument is that big government prevents the economy from performing as well as it would were government smaller and less intrusive.

Second, although I’ve no doubt that the increased government spending – especially that which is funded by debt – over the past 40 years worsened economic growth, on other fronts there’s been liberalization which fueled economic growth. For example, much of the Carter-Reagan deregulation of communications, energy, banking, and surface and air transportation remains in place today. The top marginal income-tax rate was cut dramatically starting in the early 1980s and has since remained well below its rate when Reagan first took office. And until 2018, average tariff rates had fallen.

For the above two reasons, the absolute improvement in the U.S. economy is not inconsistent with the arguments that I and other market-oriented economists have made over the years against large and intrusive government.

However, this improvement in the U.S. economy is inconsistent with J.D. Vance’s argument, which is that the U.S. economy has performed abysmally over the past 40 years. Vance repeatedly talks of America’s “hollowed out” industrial base and middle class. Vance describes the economy as having suffered 40 years of “decline” – which is a categorically different claim from saying that the economy has done well over the past 40 years but could have done even better.

In short, my and other market-oriented economists’ complaints about large and intrusive government are that such a government prevents the economy from working even better than it currently does. Vance’s complaint is that the market-oriented policies of the past 40 years have caused the American economy to suffer actual decline. The data are consistent with the former complaint, but disprove the latter.

Sincerely,
Don

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Some Links

Charles Cooke gives details of just how much of our modern, convenient lives depend upon data centers. A slice:

Certainly, we wildly underestimate the extent to which we rely on data centers. Take my actions today. This morning, I sat down with my coffee and looked through National Review’s website. To get there, I typed “nationalreview.com” into my browser, and before I’d even hit “Enter,” my computer used a data center to look up where that site was located on the web. Once that location had been discovered, my browser then contacted the website via its primary IP address — which, in the case of a popular site such as National Review, meant a digital “visit” to whichever one of the many “proxy” data centers happened to be geographically closest to me. After a secure connection to that data center had been established, my browser then started assembling the text, images, videos, podcasts, fonts, scripts, advertisements, and other elements that made up the page I hoped to see. Because this involved all manner of different content types — some cached, some dynamic, some streaming — and required the use of application servers, database servers, and distributed content-delivery networks, it invariably required trips to multiple data centers, all playing different roles. Thus, before I had read a single word, my computer had been served 150 web requests, across 34 domains, having contacted roughly ten data centers spread across networks operated by nine different companies. Because everything worked as it should have, this process was invisible. But that doesn’t mean it wasn’t happening. Without seeing it, I had taken a remarkable journey around the world.

And that’s just for a visit to the homepage of a website. Presumably, like me, you have a smartphone. Have you ever thought about how it works? At the same time that I was visiting nationalreview.com today, my phone was relentlessly pinging data centers across the globe. An email arrived, a message appeared in the family group chat, a video from yesterday finished uploading to the cloud: those actions were the result of data centers, data centers, and — yep — data centers. When my weather widget refreshed its forecast, my calendar picked up a change to an appointment, one of my apps downloaded an update, and my stock ticker moved: data centers did that. Each one of the little conveniences that I have slowly stacked over time involved computers in one or more data centers doing work on my behalf. Magic? Not on your life.

Having had my coffee, I ran some errands in my car, and as usual, I used Waze to avoid the traffic. In so doing, I blithely connected to an unfathomably impressive piece of infrastructure — all of which remained out of sight. My phone accurately calculated its position on Earth by listening to a series of precisely timed signals sent from a bunch of satellites up in space and comparing the data issued by each to determine where I was. At the same time, its internet connection linked it to a host of servers that, among other things, supplied the requisite maps, calculated optimal directions, and processed real-time traffic information that had been collected from other drivers. To obtain even the simplest of instructions — “turn left” — I was the beneficiary of signals from space, mathematics in my pocket, and information that had been processed by distant computers in data centers across the world. While driving, I turned on Apple Music, and thanks to a data center nearby, I had at my disposal virtually all of the music that has ever been recorded. On my way home, I made a phone call to my wife and thereby relied on a data center in my carrier’s network to connect us and route my conversation to the right place. Had I driven through a toll, a data center would have matched my transponder to my billing record. If I’d stopped for gas or lunch and paid by card, the payment would have been authorized by my bank’s data centers. All this, for a simple trip to the barber!

We take all this for granted. Once, we had to go to the bank to cash a check, wait on the phone to buy a plane ticket, take a trip to a shop to buy a light bulb, drive to a video store to rent a movie, call theaters for showtimes, and consult encyclopedias to find the most elementary of facts. We don’t now — because of data centers. On Sundays, during NFL season, I watch the games over the internet on my TV, which requires a lot of data centers; I participate in two fantasy football leagues and one pick ’em league, all of which are hosted in data centers; and, like many others, I text my friends during the games — via a data center, naturally. So reflexive is this behavior that we have forgotten how it works. But we’d notice if it went away. If, during the next Super Bowl, even 10 percent of the nation’s data centers were to be summarily switched off, the people of the United States would be on the verge of revolution.

The term we have chosen to describe the technology I have discussed here is “the cloud.” But, of course, there is no such thing. There are just data centers and the computers that run inside them. Conceptually, “the cloud” is a useful abstraction. But if taken too literally, it blinds us to an important reality: Each one of the 5,427 data centers in the United States is a real place, full of rows of real machines, that run on real electricity, and that are maintained by real people. Your data — by which I mean your emails, your bank account, your business files, your photographs of your kids — are sitting somewhere on a real hard disk. If I drove to where that hard disk is and smashed it up with a pickaxe, it would break, and the only reason that you probably would not permanently lose the data that it once held is that the data also exist in some other real location, on another real disk, in another data center, that is maintained by another real person. Bluntly put: The integrity of your data — and of your ability to access it whenever you want — is the result of your having cheap access to lots of different data centers, in lots of different places, so that if something bad happens to one of them, your stuff is backed up elsewhere.

Paul Schwennesen isn’t impressed with the new book by Eric Beinhocker and Nick Hanauer. A slice:

Hanauer and Beinhocker describe “Market Humanism” as a new paradigm “grounded in twenty-first century thinking.” What that means isn’t clear, but they argue that the “old paradigm” — economics as the study of how society manages its scarce resources — has “constrained economic thinking for the past 150 years.”  They propose instead an economics centered on human flourishing, in which “markets are servants, not masters,” and argue that the real genius of markets lies less in their efficiency at allocating existing resources, but rather in their ability to generate innovation. Erm… paging Dr. Schumpeter to address the blindingly obvious. He wrote, way back in 1942, of the “perennial gale of creative destruction” that allows continuous innovation across the entire economy.

There is, moreover, an odd tension at play.  Hanauer himself readily acknowledges that market capitalism has been astonishingly successful. “No social technology,” he writes, “has done more to create prosperity and raise living standards” than market capitalism. Human beings, he notes, are now leading substantially longer, healthier, more comfortable, more fulfilling lives than at any other time in history.

So what, exactly, is the old paradigm failing to explain?

Despite the window dressing, I suspect Hanauer’s answer is that it fails to justify the political case for greater taxation of the uber-rich. The simplest way to summarize Hanauer and Beinhocker’s “very different model,” then, might be “market capitalism with socialist characteristics.” And maybe they have a point — if the basic problem with traditional market capitalism is that it has been too successful, and that the risk of toppling our social edifice at the altar of envy is acute, then maybe we should take the argument seriously.

Tad DeHaven and Chad Smitson report on the increasing number of private companies with shares now owned by the U.S. government.

Reem Ibrahim is right that “Rand Paul was right to block the Senate’s attempt to censor the internet.”

The Endangered Species Act hinders the building of housing.

Jonathan Allen tweets: (HT Scott Lincicome)

I am sorry to learn that North Carolina-based women’s budget fashion retailer Cato Fashions is closing 120 stores because of tariffs, rising fuel prices, and weakening family budgets.

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Quotation of the Day…

… is from page 258 of F.C. Benham’s 1932 paper “The Balance of Trade,” which is Chapter XVIII of the 1932 report of a commission in the U.K., chaired by Sir William Beveridge; the title of the collection is Tariffs: The Case Examined:

A tariff does not leave consumers free to select which imports they can best do without. It makes the selection for them, or, at least, strongly influences their choice. This may be thought wise. We think it a loss. Nor is a tariff as flexible an instrument as a free exchange-rate. It creates vested interests and can only be readily altered in an upward direction. Further, by reducing imports it tends to make the rate of exchange higher than it would otherwise be. This places export industries at a disadvantage, even if wages and other internal costs do not rise.

DBx: Yes.
…..

I can find no link to a copy of this book. The hard copy that I own, and from which the above quotation is taken, was given to me as a gift by the generous Doug Irwin.

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More on J.D. Vance’s Economic Cluelessness

Here’s a letter to National Review Online.

Editor:

Michael Brendan Dougherty completely misses the point of Dan Foster’s excellent response to J.D. Vance’s express desire to “undo” 40 years of globalization (“Undoubtedly 6.8 Percent Is Less than 70 Percent,” October 2). Contrary to Mr. Dougherty’s portrayal, Mr. Foster’s argument is not that the many improvements in America’s economy over the past four decades are due overwhelmingly to globalization, with little to no role played by domestic factors. Instead, as is clear from reading Mr. Foster’s post, he’s challenging Vance’s premise about the condition of America’s economy today compared to its condition in the mid-1980s.

Mr. Dougherty treats Vance’s premise as being this: such a small share of America’s enormous economic improvement over the past 40 years is due to globalization that we can afford to “undo” globalization. But Mr. Dougherty is mistaken. Vance’s actual premise is that there has been no such improvement over the past 40 years in America’s economy. It is that this economy has been so severely damaged over the past 40 years that we must “undo” the economic policies, including globalization, that Vance alleges caused this supposed calamity.

Yet as the facts mustered by Mr. Foster make clear, America’s economy – including the lot of ordinary Americans – has dramatically improved since the mid-1980s. He thus disproves Vance’s premise that the economic liberalization of the past 40 years has failed ordinary Americans.

By the way, I, too, offered evidence against Vance’s clueless premise about the condition of the U.S. economy. And here are yet other bits of evidence against Vance’s ignorant belief:

– America today has 93% more industrial capacity than it had in 1985 (even though U.S. population today is only 44% larger).

– The real value of America’s capital stock was, as of 2023 (the latest year for which I have data), 138% larger than it was in 1985.

– U.S. industrial output is today 85% higher than it was in 1985.

– Americans’ exports of goods and services are nearly 600% greater, in inflation-adjusted dollars, than were Americans’ exports in 1985.

Lusting for greater power, both the MAGA right and the ‘progressive’ left continually insist that the failure of government over the past 40 or so years to further squelch free markets has inflicted deep and unambiguous damage on America’s economy. That’s Vance’s message. It is utterly without foundation.

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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