Marcus Witcher is a fan – understandably so – of George Selgin’s remarkable 2025 book, False Dawn. Two slices:
Overturning the FDR as Keynesian narrative is just one of George Selgin’s contributions in False Dawn: The New Deal and the Promise of Recovery, 1933-1947. Selgin’s main argument is that Roosevelt’s New Deal did not result in economic recovery. He is critical of the New Deal as a recovery program, but is careful to note that he is not evaluating its effectiveness when it came to relief and reform, which along with recovery were the stated goals of the Roosevelt administration. Throughout, Selgin analyzes “particular New Deal policies to see how each influenced the course of production and employment,” and he concludes that most of them were not successful.
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In what is the most comprehensive, thorough, and balanced book on the subject, Selgin does more than just overturn the narrative that FDR was a Keynesian. He delves into each of the historiographical debates from 1933 to 1947 in a level of detail that intimidated my undergraduate students when I assigned this book to my American Economic History class last semester. But as my students worked through the book, at a pace much slower than they wanted, they learned to appreciate Selgin’s fair description of scholars who disagreed with him.
The result is the closest authoritative single volume on the New Deal and recovery. I plan to continue using it in class, and I recommend that anyone interested in a detailed account of the New Deal and recovery purchase a copy of False Dawn. You will not be disappointed.
My intrepid Mercatus Center colleague, Veronique de Rugy, writes that Thomas Piketty is a real-world example of an Ayn Rand villain. A slice:
Writer and philosopher Ayn Rand was often accused of inventing cartoonish villains. Rogues like Ellsworth Toohey in The Fountainhead would scheme to seize the global economy’s commanding heights in pursuit of a distorted sense of justice. But the people who hold such ideas don’t just appear in cartoons or in Rand’s novels.
Enter Thomas Piketty and company.
In early June, Piketty—the French economist whose work on inequality has made him something of a rock star even while being serially challenged for methodological errors, data imputations, and cherry-picked baselines—and his large team unveiled what can only be described as a villainous plan. It’s a comprehensive program for global managed decline dressed up in the language of climate justice and equality.
The plan is far too ambitious for most nations to accept. But given the influence of Piketty and his circle of economists on U.S. wealth taxes and prominent global policy proposals, we should take its underlying ideas seriously.
Piketty’s plan would cap gross domestic product (GDP) per capita in wealthy countries at roughly $69,000, far less than America’s current $94,430. The plan would also limit annual global economic growth to between 0 percent and 0.5 percent. Monsieur Piketty would allot only 0.115 percent annual growth to the U.S, whose GDP has expanded by more than 3 percent on average since 1930. This would hurt not just the billionaires but every American.
The plan would mandate an international three-day work week and reduce construction activity by 70 percent, manufacturing by 87 percent, and even leisure-sector activity by 58 percent. There would be massive and punishing trade actions against noncompliant countries.
It envisions a “Global Justice Fund” financed not by taxing carbon but by global wealth and income taxes. This fund would be 20 times the size of current development aid and would be administered by a new international bureaucracy answerable to heaven knows who.
Don’t be fooled by Piketty’s training as an economist. This is not economic thinking. Consider the utter inconsistency of relying on a vast stock of wealth (mostly from the U.S.) for redistribution while suffocating long-term growth to near zero. Much of the value of the assets needed to finance this scheme would be destroyed. It is also disqualifying to claim that sub-Saharan Africa will grow at 4 percent if we crush the economies that provide the capital for its investments and buy its exports.
Thomas Piketty, sadly, isn’t the only famous flesh-and-blood economist who behaves as if he or she was dreamed up as a villain by Ayn Rand – as Noah Rothman explains. Two slices:
It was an exhibition in moral blackmail masquerading as an argument. It made no attempt at persuasion. Rather, it was a fundraising pitch aimed at the already converted.
That explains why the article published Wednesday in The Guardian by Thomas Piketty, Joseph Stiglitz, and their four other left-wing economist co-authors made such a splash.
The very first sentence of the article, which contends in its headline that “growth” (bracketed with scare-quotes) is “a doomed strategy,” fatally undermines its premise: “We live in an age of manufactured scarcity.”
No, we don’t.
Globally, households consume roughly $40 trillion more today in goods and services than they did at the turn of the century, and not because those goods and services have become more expensive.
In that same period, the average price of consumer electronics collapsed. The cost of important but nevertheless discretionary goods like clothing, furnishings, and new cars is essentially flat. It’s in markets where there is substantial state intervention — food and housing, childcare and medical care, and education — that consumer costs have ballooned over the last quarter century.
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“What is different today is that the majority of the world’s poorest people are stuck in economies that have been stagnating for a long time,” wrote Our World in Data’s Max Roser.
Countries like Madagascar cannot redistribute their way to wealth because there is little to distribute. Mozambique and the Democratic Republic of Congo have stagnated for decades as they cling to policies that discourage foreign investment and domestic enterprise. The Central African Republic cannot attract wealth because it is beset by the corruption and caprice that flourishes in state-managed economies that are more vertically than horizontally structured.
The Guardian’s cavalcade of progressive economists accurately note that sticky poverty is a product of “policy choices.” After all, “If governments can manufacture poverty, they can also dismantle it.” They’re right, as the post–Cold War era has amply proven. But they’re not talking about the governments who maladminister their countries and deprive their people of the opportunity to flourish. They’re talking about the Western world, which they assume (there is no effort to prove the claim) owes its largess to the exploitation of the developing world.
At this point, the article devolves into a dog’s breakfast of Marxian tropes and appeals to global proletarian camaraderie.
Here’s Scott Lincicome on Adam Smith. Three slices:
The Wealth of Nations is also a deeply, savagely political book, with practical insights into how commercial policy really gets made—insights that found a home in modern public choice theory and are evident across generations of U.S. trade politics.
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In the early days of the republic (back when government was really small), tariffs were the primary means of both raising revenue and doling out “rents” to businesses that organized and lobbied for them. The wonderfully named Tariff of Abominations (1828) was heavily influenced by Northern textile and iron producers. The post-Civil War decades were a golden age of tariff rent-seeking, with the U.S. iron, steel, wool, and sugar industries essentially writing U.S. tariff schedules. As I’ve documented at Cato and as Dartmouth economic historian Douglas Irwin thoroughly chronicles in his great book, Clashing Over Commerce, 19th-century tariff lobbying was in many respects an incubator for the entire U.S. lobbying and interest-group machine that exists today. And it began because American trade policy was openly auctioned off to the highest bidder.
The pinnacle of 20th-century congressional tariff cronyism is the infamous Smoot-Hawley Tariff Act of 1930. As economic historian Phillip Magness has documented, tariff-loving congressional Republicans gave industry lobbyists an opportunity for even more price-hiking import protection, and the latter descended on Congress en masse: “Special interests flooded committee rooms, exchanging cash under the table for favorable rates to insulate themselves from foreign competitors amid the unfolding [economic] downturn.” Almost everyone got his own tariff line item, and average tariff rates on dutiable imports hit almost 50 percent, triggering a retaliatory spiral that deepened the Great Depression.
The Reciprocal Trade Agreements Act of 1934 (RTAA) was Congress’ institutional attempt to restrain itself by delegating trade negotiations and tariff authority to the executive, and it was a move Adam Smith would likely have applauded. The idea was to reduce corporate rent-seeking in Congress by taking tariff rate-setting out of legislators’ hands and by getting U.S. exporters to balance protectionist interest groups by conditioning new market access abroad on continued openness to imports.
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Contrary to the common characterization of Adam Smith as a naïve ideologue, we see here that he understood well the deep structural obstacles to free trade from both the public and, more importantly, from organized industry. The latter’s resistance is classic public choice: Protectionism’s concentrated benefits and diffuse costs mean that protected industries will fight like hell for trade protection—and against reforms. Companies and workers, as well as their communities, suppliers, and political representatives, also capitalize gains from tariffs as higher asset values, wages, and political capital—meaning that these groups all stand to lose real money if protection is removed (the so-called “transitional gains trap”).
Meanwhile, the benefits of trade liberalization—lower prices, more efficient resource allocation, dynamic gains, economic growth, etc.—are surely real and, in fact, much larger in the aggregate than those won by the protectionist groups. But these improvements are smaller per person, invisible, and unorganized. So, we don’t lift a finger.
This dynamic means that it’s extraordinarily hard to repeal protectionist policies, even ones that are universally acknowledged as costly and failed. And the U.S. record again bears this out. We still impose tariffs of almost 50 percent on cheap shoes even though the policy clearly harms American consumers (especially poor and large households) and the U.S. has essentially no cheap shoe industry. Big Steel has won a century of protective measures yet remains a global laggard while downstream manufacturers shrivel due to artificially high input costs. The Jones Act has presided over the long and slow degradation of U.S. commercial shipbuilding and the merchant marine, but even emergency waivers are hard to come by because of a notorious Big Ship blockade (get it?). Heck, even after it was clear that U.S. tariff and nontariff barriers helped cause the 2022 baby formula crisis, those barriers snapped right back into place once most people stopped paying attention—thanks in large part to the efforts of Big Dairy.
Wall Street Journal columnist Joseph Sternberg is correct in this: “Few deceptions in American politics are quite so pernicious as the notion that the Social Security trust fund exists.” A slice:
Technically, there is a line item in the ledger of the Social Security Administration marked “trust fund.” Two, actually—one for the old-age retirement benefit and one for the working-age disability program. Superficially, reports of the trust funds’ declining fortunes are alarming. The old-age fund will have run dry by late 2032, several months sooner than previously estimated, the Social Security Trustees warned in an annual report this week. Combined, the two trust funds will be empty by 2034.
But this is all fictional, or notional if you want to be polite. The programs for several decades received more income via payroll-tax revenue than they paid out in benefits. Congress directed the surplus into the trust funds, on the theory that the pot of money would be available later if tax revenues fell below benefit payouts. But rather than invest those surpluses into the private sector as a large defined-benefit pension manager would, Congress directed that Social Security “invest” only in special-issue U.S. Treasury bonds.
The trust funds therefore represent borrowing by one hand of government from another. This transferred the cash to Congress to spend in the flush years, while putting the Treasury on the hook to redeem the bonds out of general revenue or borrowing once Social Security payouts began to exceed payroll-tax revenue. The Treasury already has been funding a portion of Social Security benefits since 2010, the year in which benefit payouts exceeded payroll-tax collections for the first time. The cost in 2025 was $160 billion and will hit $300 billion a year by 2030.
So when you get word that the trust funds will “run out of money” soon, that’s a political rather than a fiscal warning. The previous political-economy equilibrium regarding Social Security is expiring, and a new one will have to be found.
William Watkins urges us Americans to “celebrate the Fourth of July. But don’t forget the Twelfth of June.” Two slices:
Naturally, the main event of America’s 250th anniversary celebrations will be the Fourth of July, in honor of the Declaration of Independence. But a little tailgate party would be appropriate for the Twelfth of June. For it was on that date, 250 years ago, that Virginia’s Declaration of Rights was adopted.
Written primarily by George Mason, Virginia’s declaration inspired Thomas Jefferson in writing the nation’s founding document. It set forth in plain language America’s first principles and provided guideposts for the establishment of a republican government.
It’s no accident that this seminal declaration originated in Virginia. Jamestown, founded in 1607, put many of those principles and structures into action well before 1776. As Lyon Gardiner Tyler — son of President John Tyler and himself president of William & Mary from 1888 to 1919 — observed, “jury trial, courts for the administration of justice, popular elections in which all the ‘inhabitants’ took part, and a representative Assembly” were created in the Old Dominion “before any other English settlement was made on this continent.”
In the first section of the Declaration of Rights, Enlightenment thought and Christian principles intersect to affirm the equality of all men and their possession of rights such as “the enjoyment of life and liberty, with the means of acquiring and possessing property, and pursuing and obtaining happiness and safety.” If this language sounds familiar, it’s because another Virginian — Jefferson — borrowed from it when composing the second paragraph of the Declaration of Independence.
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So, yes, on July Fourth, by all means heartily cheer the 250th anniversary of the Declaration of Independence. But to understand the principles behind the American Revolution and republican government, dust off George Mason’s Virginia Declaration of Rights and study its plain language. It is essential to discerning the pillars of America’s government and the purpose of the nation’s independence.
GMU Econ alum Bryan Cutsinger argues that May’s increased rate of inflation in the U.S. is “more than an energy story.” A slice:
Taken together, the May data point to something more than a passing energy shock. Above-target inflation that keeps drifting higher, alongside a labor market near full employment, is hard to square with the view that oil alone is to blame. Supply shocks change relative prices; they do not, by themselves, push the overall price level up year after year. That requires excess nominal spending, which grew 5.9 percent over the year through the first quarter — well above the roughly 4 percent pace that prevailed before the pandemic. By that standard, the recent run of inflation looks less like a temporary disruption and more like a monetary phenomenon.
Mr. Trump also repeatedly words his policy as “slapping tariffs on China” and others that export to America, but of course it’s Americans – importing households and firms – who pay his tariffs. In this way, Mr. Trump is a tax-hiker.
National loans of every kind are attended with the universal disadvantage of withdrawing capital from productive employment, and diverting it into the channel of barren consumption.
The short-run horizon of our political process is particularly pernicious in dealing with policies that transfer resources across lifetimes and between generations. Our most important policies in this regard are our public debt, Social Security, and capital income taxation. The lack of a vote by unborn generations aggravates the political and ethical dimensions of these policies immensely.
