Matthew Lynn’s July 31 online op-ed, “Trump’s tariffs aren’t crushing global trade,” argued that the Trump administration’s tariffs “did not work the way the Econ 101 crowd expected them to.”
It’s true that despite the tariffs, “the U.S. economy did not crash, inflation did not spiral out of control, and shelves at Walmart are not empty.” But this reality doesn’t contradict Econ 101. The case against tariffs isn’t that they invariably unleash economic Armageddon. Instead, the core economic case against tariffs is that they reduce the rate of economic growth, the effect of which compounds over time for as long as the tariffs remain in place. Tariffs make most people poorer than they would otherwise be. The recent tepid growth of real U.S. gross domestic product is consistent with what we in the Econ 101 crowd predicted.
Lynn also wrote that “in total, U.S. imports increased from $275 billion in May 2024 to $312 billion in May 2026.” But why start with May 2024, nearly a year before Liberation Day? According to the Federal Reserve Economic Data to which Lynn linked, imports hit their peak in March 2025. This was the month before Liberation Day. Since then, imports are down by about 9 percent. This fact is evidence — not defiance — of economic logic.
Donald J. Boudreaux, Fairfax
The writer is an economics professor at George Mason University.
Diego Sánchez de la Cruz reveals “the hidden economic message of Nolan’s ‘Odyssey’.” A slice:
Commerce alone, however, was not enough. These networks depended upon institutions of cooperation. The Amarna Letters reveal rulers addressing one another as “brothers,” exchanging gifts, negotiating alliances, and maintaining permanent diplomatic contacts. Greek society reflected the same logic through xenia—the sacred obligation to offer hospitality to strangers. In a world where long-distance trade depended on trust between people who had never met, such norms were not merely moral ideals; they were essential economic institutions.
Seen in this light, Nolan’s The Odyssey becomes more than an adaptation of Homer. It offers a powerful illustration of what classical liberal thinkers have argued for centuries: war destroys far more than cities. It undermines trust, disrupts commerce, and replaces voluntary cooperation with coercion. David Ricardo demonstrated why trade benefits all participants through comparative advantage, while Frédéric Bastiat captured its political significance in his famous maxim: “When goods do not cross borders, soldiers will.” Modern research broadly supports the intuition. Political scientists John Oneal and Bruce Russett have consistently found that countries with stronger commercial ties are, on average, less likely to fight one another. Trade does not eliminate conflict, but it changes incentives by increasing the costs of war.
The historical record points in the same direction. Since the Second World War, international trade has expanded at an unprecedented pace. Over the same period, extreme poverty has fallen dramatically, life expectancy has risen across the globe, and—despite many tragic exceptions—the world has experienced the longest period without direct war between the major powers in modern history. As Steven Pinker argues in The Better Angels of Our Nature, the long-term decline of violence reflects many factors, but the spread of commerce, stronger institutions, and wider networks of cooperation has undoubtedly been one of them.
Nolan’s film also offers an important reminder. Prosperity is not a permanent condition. Markets do not sustain themselves automatically. They depend upon trust, stable institutions, enforceable contracts, and the rule of law. When those foundations begin to crumble, commercial networks can disappear with astonishing speed—as they did more than three thousand years ago. That may be the deepest lesson of Nolan’s The Odyssey: civilisation is not held together by military power alone, but by a fragile web of trust and voluntary exchange that must constantly be preserved. In reminding us of that timeless truth, Nolan has done something increasingly rare: he has turned a Hollywood blockbuster into a compelling defence of the institutions that underpin peace, prosperity, and human flourishing.
When President Donald Trump first slapped tariffs on imported aluminum, the goal was clear: Increase domestic aluminum production for national security purposes.
The executive order Trump signed in March 2018 declared that aluminum was being imported in “such quantities and under such circumstances as to threaten to impair the national security of the United States.” A Commerce Department report laid out the argument in more detail: If the U.S. found itself in a major war, it would need reliable supplies of aluminum (to make weapons, aircraft, and more) and should not depend on imports to meet that need.
Tariffs, the administration insisted, would create the economic circumstances necessary for America to produce more aluminum.
A lot has happened since then. Aluminum prices have increased. A lot. Products made with aluminum—from beer cans to cars — have gotten more expensive as a result. Trump has raised and changed the aluminum tariff several times. The baseline tariff has gone from 10 percent to 25 percent, and there is now an additional 50 percent tariff on products made largely from aluminum.
But one thing hasn’t happened. America is not producing more aluminum.
You don’t have to trust the economic reports. Ask the Trump administration how its aluminum tariffs are working out.
“The domestic production and supply of primary aluminum, which is critical to the U.S. economy and defense industrial base, is still in insufficient supply,” the president declared last month, citing information provided by Commerce Secretary Howard Lutnick.
Jason Arday, who received media attention for becoming the youngest black professor ever at the University of Cambridge in England, has recently come under scrutiny for allegedly fabricating his professional affiliations and plagiarizing his academic work.
Now, another line on his résumé is in doubt: Arday says on his official faculty website that he is a visiting professor at The Ohio State University in the Office of Diversity and Inclusion — but Ohio State’s DEI office shuttered in 2025, and the school said he was never an employee.
“We have no record of an employee by that name,” Ohio State University spokesman Benjamin Johnson told National Review on Tuesday.
Like most E.U. laws, this one sets out broad “standards” that are meant to be hashed out by courts down the road. “Manipulative and deceptive techniques,” for example, are defined as anything that “materially” distorts behavior by “appreciably” impairing an informed decision, leading people to make choices they “would not have otherwise taken” that are “reasonably likely” to cause “significant harm.”
Which techniques? What counts as significant? The law doesn’t say.
The “vulnerable” are also broadly defined. Alongside age and disability, the protected classes include anyone in “a specific social or economic situation.” Wouldn’t that literally cover anyone?
Such broad language cripples innovation. Large technology companies waste millions on swarms of lawyers to puzzle over such ambiguities. Smaller companies, crushed by compliance costs, never get off the ground.
Embarrassingly for Europe, the continent has maybe one company that would qualify as a frontier AI lab: France’s Mistral. And its best models have fallen behind what the U.S. and China have to offer.
The mainstreaming of socialism also appears in polling, which shows that people furthest to the left tend to be younger. A Cato Institute survey published last year found that 62% of adults under 30 hold a “favorable” view of socialism. Nor is the trend limited to Democrats. The polling firm Echelon reported last month that, while “older Democrats are split on” socialism and “younger Democrats are very much in favor,” it’s “also worth noting that social democracy and socialism elicit less steadfast unfavorable views among younger Republicans compared to their older fellow partisans.”
Young people are by definition less experienced and by nature more idealistic. Hence the appeal of a political system that seeks to manufacture equal outcomes through central planning and government redistribution has a certain logic. Historically, socialism’s appeal has been especially notable among more educated and more affluent young people.
When Karl Marx and Friedrich Engels published “The Communist Manifesto” in 1848, Marx was 29 and Engels two years his junior. Marx’s father was a successful lawyer. The family owned vineyards and rental properties and employed multiple servants. Marx attended the University of Bonn, where he spent more time drinking than studying. After a year, his father transferred him to the University of Berlin, where he continued to rack up debts for his family to pay off and, according to one biographer, “became a bohemian student who merely regarded the university as his camping ground.”
… is from Samuel Gregg’s excellent July 2024 paper, “A Free, Prosperous and Secure America”:
America’s emphasis should thus be upon developing new technologies – whether military, dual-use, or civilian. Constant innovation is critical for maintaining and extending America’s military technological edge. To facilitate that growth, policymakers should consider what economic conditions are most likely to generate and incentivize such developments. As observed, we have good reason to believe that an economy characterized by liberty, entrepreneurship, competition, and dynamic trade, within the United States and between America and the rest of the world, is far more proficient at delivering this type of innovation consistently. Economic nationalist policies conversely are unlikely to do so.
But market reality is more complex than a boxing match in which one guy wins and one guy loses.
For the real winner is the customer, who gains greater choice, better prices, higher-quality goods and services or some combination thereof because people must compete for his dollar. It is the customer, not “the market,” who determines which producers win.
This isn’t how Mr. Vance sees it. Where Mr. Buchanan in the 1990s railed against the North American Free Trade Agreement, Mr. Vance attacks free-market icons such as Milton Friedman. It’s telling that in his new book, “Communion,” the chapter the vice president devotes to economics is called “A Dismal Science,” a phrase Thomas Carlyle coined in the 19th century as he opposed the coalition of evangelical Christians and economists fighting slavery.
Today Mr. Vance says that while Friedman’s ideas might have worked “in a world where there are Christian guardrails on everything,” they are ill-suited for our more secular age.
“The caricature of Milton Friedman as one who advocated for selfishness or a sort of chaotic freedom that undermined the common good is a classic straw man,” says David Bahnsen, a National Review trustee and managing partner of the Bahnsen Group, a $10 billion wealth-management firm. “Friedman’s love of free enterprise was rooted to his argument that it optimized conditions for social cooperation—not that he was apathetic about such.”
If we’re going to have an honest talk about justice, human dignity and social harmony, do we really believe any third party—especially the government—will make better choices than we ourselves would make?
While market critics are quick to point out the limitations of the market and its participants, they place extraordinary trust in the people they think will fix it. The beauty of capitalism is it is designed for imperfect people. Competition limits the harm they can do and provides real alternatives.
“The danger begins not when men compete to serve,” says the Rev. Robert Sirico, president emeritus and a co-founder of the Acton Institute, “but when they conspire—privately or politically—to prevent others from competing with them.”
In the nineteenth century, barbed wire sold for four cents a pound, but allowed farmers to prevent considerable losses from animal escapes and to protect high-value crops. By reducing the cost and increasing the utility of fencing, barbed wire is estimated to have increased the value of farmland by a full one percent of GDP. National food brands charge a few cents more by offering consumers the assurance of reputation. Others pioneered preservation methods, eliminating many costly problems of adulteration and food poisoning. The same logic applies to computers, cellphones, landline phones, telegraphs, meatpacking, pharmaceutical drugs, automobiles, fax machines, tractors, coal engines, electrical utilities and appliances, air conditioning, and hundreds more inventions.
Each of these innovations produced massive gains to society, and most of the value is captured by the consumer, not the inventor or even the producer. Nobel laureate William Nordhaus tried to calculate how much value is captured by innovators and producers, and relative to how much is passed on to consumers. Using different assumptions and approaches, he found that 1.3 to 2.2 percent of the total value generated is captured by innovators of the technology, and the rest is passed on to consumers. Buyers ultimately receive this value in lower costs, time savings, better quality goods and services, and entirely new opportunities.
Surse Pierpoint writes insightfully about the legacy of Karl Marx. A slice:
So why does Marx remain one of the most cited authors in the humanities and social sciences, a century and a half after his death, in fields far removed from the one where his core claims were actually tested?
In a 2023 paper in the Journal of Political Economy, Phillip Magness and Michael Makovi offer an answer that is uncomfortable for anyone who assumes Marx’s academic prominence reflects the strength of his ideas. Using Google’s Ngram data, Magness and Makovi built a “synthetic Marx” — a weighted composite of contemporaneous socialist writers, including Ferdinand Lassalle, Johann Karl Rodbertus, and Oscar Wilde — chosen because their citation trajectories tracked Marx’s closely before 1917. Then they watched the lines diverge. After the Bolshevik Revolution, Marx’s citations broke sharply away from those of his peers, while the synthetic composite did not. Before 1917, Marx was known among rival socialist factions and the economists who had already rejected him. After 1917, the Russian state needed a founding philosophy for what was, in plain terms, a seizure of power. It got one, retroactively, by making Marx a household name.
The Washington Post‘s Editorial Board reveals “the hidden cost of the government’s corporate buying spree.” Two slices:
This is not the proper role of government. The free market is always better than politicians at efficiently allocating investment capital. Republicans once understood the dangers of the federal government picking winners and losers, but the Trump administration has been hoovering up shares of private companies at a rate that would’ve made Democratic predecessors blush.
The Biden administration used the Chips Act to throw money at companies but did not take ownership stakes — perhaps because the legislation did not explicitly allow for equity purchases.
That omission from the law isn’t stopping Lutnick’s Commerce Department, which has purchased nearly $4 billion in ownership stakes since December. After this latest round of investments, the federal government’s total equity portfolio has ballooned to 30 companies, up from zero before President Donald Trump’s second term.
…..
The Commerce Department claims the equity stakes will “enhance the return for the U.S. taxpayer.” What it does not say is that taxpayers are on the hook if these companies collapse.
And if the government decides these companies are too important to fail and must be propped up, it further distorts the market. The most innovative and economically feasible projects might not succeed if the government plays favorites.
As to appeals to the superior wisdom of disaffected youth or the need to bend truth to fashion, I think it preferable to stand for what we already know and instead seek to pass it on. One of the things I find mystifying, in reading the proponents of these ideas, is the alternative history in which the decades between 1913 and 1979 were somehow the Long March of libertarianism and small government through American society, in comparison to the expansive bureaucracy and social welfare states of the 1790s. Another is the idea that, say, the education and home ownership sectors have been tragically bereft of government involvement over the past several decades. That’s not an America I recognize. To Michael [Brendan Dougherty]’s charge that markets have replaced private civil society, I am inclined to think that in most cases markets have stepped in only to sell things people previously didn’t need to buy. Wet streets do not cause rain.
Joey Politano tweets: (HT Scott Lincicome)
American factory construction continued declining in official data released today as CHIPS Act projects finish, IRA projects get cancelled, and tariffs weigh on nearly all industries
Total US factory construction is down 32% from its 2024 highs and 22% over the last year alone
… is from page 59 of Jacob Viner’s indispensable 1937 volume, Studies in the Theory of International Trade:
Freedom for themselves, restrictions for others, such was the essence of the usual program of legislation of the mercantilist tracts of mercantilist authorship.
DBx: Pictured here is the great economist Jacob Viner (1892-1970).
In its Proclamation announcing the new tariffs, the administration claimed that Canada’s 25% tariff on U.S. autos and auto parts—enacted days after Trump’s April 2, 2025 “Liberation Day” Executive Order announcing new U.S. tariffs on Canada and virtually every other country in the world—unfairly discriminates against the American auto industry, thus “disadvantaging the commerce of the United States compared to the commerce of other countries.”
In support of this view, the administration claims that Canadian imports of U.S. autos “fell precipitously” by more than $5 billion, or “approximately 22%,” while Canada’s imports from Mexico, Japan, Korea, and Germany increased by nearly $3 billion.
A closer look at actual trade flows tells a different story, however. As the chart below shows, Canadian imports of U.S. autos historically have far exceeded those from the other listed countries. Since April 2025, Canada’s auto imports from the other countries have increased slightly or stayed the same, while Canada’s imports of U.S. autos have bounced around, falling sharply late last year, rebounding sharply during the first quarter of this year, then trending downward again—ending up, most recently, around the level they were in April ’25.
Moreover, it’s not clear that the tariffs are the cause of the modest decline in American auto exports to Canada. A more likely explanation is that Canadians, like Americans, are holding on to their existing cars longer, resulting in fewer new car purchases overall, which would affect both U.S. and foreign imports.
…..
Canada’s tariffs may harm the Canadian economy, but they’re not harming America’s—at least not the auto sector, which is the focus of the administration’s Section 338 retaliatory action.
The announced new U.S. tariffs on Canada are responding to a problem that American tariffs started. Trying to get back at Canada with new tariffs because Canada is trying to get back at America for the tariffs we unilaterally imposed is a fool’s errand. A tariff war with Canada is another potential U.S. war with no winner and no end. But there are likely losers: U.S. and Canadian consumers and the U.S. and Canadian economies.
For eight decades, the U.S. led the world toward open markets and open trade. In barely two years, Trump has transformed it into effectively the most protectionist major advanced economy. The result has not been a manufacturing renaissance. It has been higher prices, weaker investment, fewer manufacturing jobs — and a government increasingly willing to make falsehood official policy in order to defend a failed economic creed.
The grandeur of the Roman Empire was built on the aggregation of wealth. Using its superior military organization, Rome conquered its neighbors, took their gold and silver and sold their populations into slavery. When the empire ran out of neighbors, the Roman economy began to falter.
Today America is in the midst of the greatest epoch of wealth creation the world has ever known. Our history is one of innovation, and we are all richer because of it.
…..
Billionaires don’t keep their wealth locked in Scrooge McDuck-style money bins. They invest it in ever more wealth-creating enterprises.
Capital and labor are the two fundamental inputs into an economy. Many on the left, unable to distinguish between wealth aggregation and wealth creation, want to tax wealth heavily, which would reduce the available capital needed to make the economy grow. If there was ever a prime example of ideology blinding people to reality, this is it.
[DBx: Gordon should have instead written: “Entrepreneurial innovation is the fundamental input into an economy.” This revised claim is more consistent than is his own claim with his essay. Yes, entrepreneurs require capital and labor to put their ideas into action, just as they require gravity and oxygen and temperate climates. Yes, also, capital and labor contribute at the margin to wealth creation, which is why capital and labor earn returns. But all societies, even hunter-gatherer ones, used capital and labor. Today’s enormous productivity of capital and labor is due to entrepreneurial innovation. See the work of Deirdre McCloskey and of Julian Simon.]
A friend recently observed that many young, relatively affluent people in his New York City neighborhood—which voted heavily for Zohran Mamdani—dress like hobos and sport Carhartt workwear. Call it socialist chic. The sartorial style is also an apt metaphor for patrician progressives who feign solidarity with the proletariat.
Consider Abdul El-Sayed, the left-wing front-runner in Michigan’s Democratic Senate primary this Tuesday. Mr. El-Sayed has surged to the lead against Rep. Haley Stevens by presenting himself as a man of the people. He has called for free child care, “Medicare for all” and an 8% wealth tax on billionaires.
“I don’t think that our system should be in the business of creating billionaires,” he said during a March debate. “I think our system should be in the business of empowering everyday folks to be able to live a life with access to the basic dignities that they need and deserve, good housing, good healthcare, affordable food.”
Nobody can disagree with the latter goals. But Mr. El-Sayed’s prescriptions to achieve them would expand government control of healthcare and the private economy and exacerbate the socioeconomic inequalities he inveighs against.
David Bahnsen writes wisely about the recent spate of writing and talking about “the common good.” A slice:
The issue is not whether or not absolute standards of right and wrong exist (they do), and the issue is not whether or not the state has a role (it does). Any belief that the state ought to punish criminals and defend national security is a claim on the state’s promotion and defense of what some would call the common good. The issue is on where the lines are to be drawn and what the limiting principles are. Conservatives who loathe post-liberalism (like yours truly) recognize Kuyperian sphere sovereignty — where the primary institutional responsibility for civil society lies with the family, with church, and with robust communities. Asking the federal government to take on the role of common-good morality, manners, and virtues is a grotesque violation of jurisdiction and suitable silo. Using common-good language to rationalize some state intervention in the marketplace must contain a limiting principle, or it is better referred to by its other name: rank statism.
Also writing wisely about the common good is National Review‘s Dan McLaughlin. Two slices:
One of the problems with the common good as a standard is its vagueness. Does it mean that laws should have a moral basis? If so, that just restates reality: virtually all law is grounded in moral judgments about what is right, wrong, fair, unfair, just, unjust, etc. Does it mean that laws should aim to improve the morals of the people? That’s a very different question, and one that raises serious questions about the limits of the competence of government: government can do a lot to degrade the morals of the governed but has only limited power to improve them. That’s to say nothing of the difficulty of defining what kinds of morality are supported by a sufficient consensus to justify backing them with governmental force.
…..
The Founding Fathers understood the difficulty of defining this sort of thing. That’s why they used general terms like “establish Justice” and “promote the general Welfare” when describing the goals of government in the Constitution’s preamble, but avoided those terms when actually defining the powers of government.
We all want something that looks or sounds like the common good. But, like common sense, it’s easier to invoke as an aspiration than to define as a standard. Which means that instead of helping us sharpen our thinking, it often conceals more than it elucidates.
Paul Vaughn makes clear that many progressives are eager to weaponize government power to enforce their ideology. Two slices:
On a quiet October morning in 2022, my life changed forever. Agents of the Federal Bureau of Investigation pounded on my front door and arrested me at gunpoint in front of my wife and children. Last week, my life changed again.
After years of legal battles to clear my name, my family has reached a settlement with the government concerning the weaponization of power against us and the harm it inflicted. This settlement comes on the heels of a landmark Justice Department report that confirms what my attorneys at the Thomas More Society argued from the beginning: What happened to me wasn’t an accident or an overzealous mistake but a coordinated campaign against pro-life advocates like me.
…..
A Christian should be able to stand on a public sidewalk or in a building open to the public, pray quietly, peacefully share the pro-life message, and go home to his family without fear that a federal task force is building a file on him and taking cues from an abortion industry lobby.
That isn’t a radical request. I pray this marks a turning point—for pro-life Christians and for every American who believes that justice must be blind and speaking the truth isn’t a crime.
Matthew Continetti praises the late, great Milton Friedman. A slice:
Critiquing Friedman is a bipartisan trend. Recently, Vice President JD Vance told the Daily Wire’s Michael Knowles that, “American economic policy on the right is now much more Alexander Hamilton than it is Milton Friedman. I think that’s obviously a good thing.”
Obviously?
Leave aside the fact that current economic policy is neither Hamilton’s nor Friedman’s—it’s President Trump’s. Concentrate instead on the policy’s ambiguous results. Inflation remains above the Federal Reserve’s 2% target. Real wage growth has been lackluster. Overall manufacturing employment is down since January 2025. Furthermore, Mr. Trump’s economic agenda is unpopular. The public rejects tariffs.
It gives Mr. Trump poor marks on the economy and inflation. If this is the alternative to Friedman, it isn’t working.
Mr. Vance also told Mr. Knowles that, “Milton Friedman’s ideas made more sense in the 1980s because they were being advocated in a country that still had a very rich and powerful institutional Christianity.” Yet Friedman’s ideas—that government should secure rights and allow free people to trade with minimal interference—make sense regardless of social or historical context. They’re based on empirical data and the law of supply and demand. A rich and powerful institutional Christianity wasn’t behind Hong Kong’s or India’s prosperity, for instance. Their growth was the result of falling barriers to savings, investment and trade.
True, Friedman had little to say about culture. For him, people and nongovernmental associations such as families, churches and communities were the best transmitters of moral values. But his lack of interest in social questions doesn’t undermine his insights into economics. And no one is asking policymakers to become die-hard libertarians. Just a little Friedman would go a long way.
… is from pages 146-147 of the December 1828 Edinburgh Review article “The American Tariff,” as reprinted in volume 1 of Battles Over Free Trade (Mark Duckenfield, editor, 2008); this article is in response to U.S. enactment of the “Tariff of Abominations“:
But strange as it may seem, the best established scientific conclusions, the experience of all ages and nations, and their own progress, failed to convince the legislators of America of the expediency of pursuing that liberal line of policy, from the adoption of which they had already reaped so many advantages. Not satisfied with the progress they had already made, with the enjoyment of free and liberal institutions, and a boundless extent of fertile and unoccupied land, they resolved to call custom-house regulations to their aid! Mistaking the effusions of a few miserable pamphleteers, and the speeches of the Newcastles and Kenyons of the day, for the wisdom of the British nation, they persuaded themselves that those very restrictions which had clogged and impeded our progress, had been the main causes of our advancement. Instead of dwelling on the advantages of free competition, their statesmen deemed it productive only of poverty and ruin…. Selfishness, patriotism, and ignorance, each lent its aid to the introduction of what has been pompously designated by its more ardent supporters, as the ‘American System.’
DBx: Protectionism, then as now, is the dogma that 10-2=15.
Here’s a note to a Facebook friend.
Mr. Kartik Chandrasekhar
Kartik:
Thanks for noting, on my Facebook page, that someone put the following challenge to you: “What would be great is if you would actually take the time to study what Trump himself has to say about Tariffs, and how he uses them, rather than immediately defaulting to criticizing him, and doing so publicly.”
I get this same challenge routinely. I respond by saying that it’s precisely because I’ve actually studied what Trump himself says about tariffs that I’m confident that he doesn’t know what he’s talking about.
Although Trump offers several different, often inconsistent, rationales for tariffs, by far the rationale he offers most frequently is that tariffs are a tool to eliminate U.S. trade deficits with individual countries. Importantly, this rationale is the one that was given for the “Liberation Day” tariffs. As reported by the New York Times, a senior administration official said that those tariffs are “based on the concept that the trade deficit that we have with any given country is the sum of all the unfair trade practices and ‘cheating’ that country has done.” This NYT summary is fully consistent with Trump’s long-standing assertions about trade and trade deficits.
No more about Trump’s trade policy needs to be discovered in order to conclude that it’s a Niagara of economic nonsense.
First, the only “US. trade deficit” that has any economic meaning at all is the U.S. trade deficit with the rest of the world. A U.S. trade deficit with an individual country or region – for example, the U.S. trade deficit with Canada or with Europe – has no more economic significance than does Donald Trump’s trade deficit with his dentist. In a world of more than two economic entities – two people, two countries, two regions, two planets, two whatever – there is absolutely no reason to suppose that any pair of entities will have trade with each other that’s ‘balanced.’
Second, U.S. trade deficits with the rest of the world are not – again contrary to Trump’s uninformed belief – a sign of U.S. decline or of foreign ‘cheating.’ These deficits are instead evidence of the continued unusual attractiveness of the U.S. economy as a destination for global investment – investment that further strengthens America’s economy. Rather than join with Trump in bemoaning U.S. trade deficits, we Americans should be proud of these ‘deficits.’
The fact that Trump finds meaning in bilateral trade deficits, along with the related fact that he’s blind to the cause of U.S. trade deficits with the rest of the world, is sufficient reason to criticize – fervently – Trumpian protectionism. To continue to suppose that some subtle yet ingenious design lies at the heart of Trump’s trade policies is akin to supposing that some subtle yet ingenious design lies at the heart of the advice of a financial counsellor whose chief recommendation for securing your retirement savings is to feed those savings into a Vegas slot-machine.
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
This monologue by Bill Maher is spot-on, funny, and brilliant. It’s a must-watch. (HT David Henderson)
“In 2025, the Trump tariffs amounted to an average tax increase of $1,000 per US household,” write Erica York and Alex Durante of the Tax Foundation. “We estimate that the tariffs both announced and imposed, including the Section 122 tariff, Section 232 tariffs, Section 301 tariffs, and Section 338 tariff on Canada, will increase taxes per US household by $900 in 2026.”
The somewhat lower additional cost of trade protectionism on Americans projected for 2026 relative to last year comes courtesy of the changing legal landscape, not because of any loss of resolve on the part of the Trump administration. The sweeping tariffs imposed last year under the alleged authority of the International Emergency Economic Powers Act (IEEPA) were voided in February when the Supreme Court flatly ruled that “IEEPA does not authorize the President to impose tariffs.” Since then, the president and his partisans have scrambled to exploit any possible means to burden imports with high duties and to punish foreign sellers for daring to export goods to the U.S. at competitive prices.
The laws that the administration has invoked for new tariffs are limited in scope or can only be invoked under specific circumstances. Section 122 tariffs, for example, may only be put in place for 150 days. Imposed after the IEEPA ruling, they expired on July 24 and were themselves overruled in May by the U.S. Court of International Trade since there was no balance of payments deficit as required by the law.
Bryan Riley tweets: (HT Scott Lincicome)
Weird, uneducated protectionists often talk about trade as if it’s only about helping globalist billionaires. But trade has always been about lifting people out of poverty and strengthening U.S security.
George Leef explores what happens when academics deny reality (as they too often do). Two slices:
You’ve no doubt heard the expression, “That’s an idea so ridiculous only an academic could believe it.” It kept coming to mind as I read Professor John Staddon’s new book Inevitable Differences: An Inquiry into Human Variation. That individuals vary enormously in their talents and desires is an obvious fact, and yet many academics have become famous by declaring that individuals and especially groups must be treated as though they were equal.
Staddon, an emeritus professor of biology at Duke University, takes a critical look at the obsession among “progressives” for engineering equality, particularly with regard to race. Why, he wonders, are academic writings about race and “diversity” so filled with factual errors, logical fallacies, and animosity? The reason, he maintains, is that few scholars are willing to subject the work of leftists to rigorous analysis—especially black writers who claim that America’s past racism calls for a national transformation. Toxic ideas that ought to have withered on the vine have therefore spread widely and influenced policy.
…..
[Ibram X.] Kendi declares that racism and capitalism are “conjoined twins.” Leftists are apt to nod in agreement with that, but Staddon replies that his position is “crypto-Marxist nonsense.” Rejecting capitalism would have the same disastrous results as did the rejection of traditional farming in the Soviet Union in favor of Trofim Lysenko’s crackpot beliefs rooted in Marxist theory. Again, thinking through the consequences of their demands is not part of the mental toolkit of academics like Kendi, nor is it expected of them by the educational establishment.
Nearly all Americans have been raised in the belief that individuals should be treated fairly and judged on the basis of their actions, not their race. Nevertheless, large numbers of them still harbor racist thoughts. That, at least, is the contention of numerous academics who declare that whites suffer from “color-blind racism.” They may think of themselves as good people who “don’t see color,” but they’re mistaken. How do we know? Because of a test devised at Harvard that supposedly reveals their “implicit bias.” Based on the dubious results of this strange “test,” the notion that many Americans harbor racial bias took hold. Staddon points out that although this test has been debunked, scholars persist in repeating that America is still awash in racism and that we need lots of education and training programs to combat it.
One of the hallmarks of the “thinking” of the academics Staddon surveys is that they refuse to consider non-racist explanations for social phenomena. A good example is the newly invented sub-field of economics called “Stratification Economics.” That’s the brain-child of Duke professor William Darity, who says that it studies why different racial groups have unequal incomes. Astoundingly, he forthrightly declares that he explicitly excludes any factors relating to the abilities of individuals. Ruling out a class of explanations is flagrantly unscientific, but Darity’s unintellectual approach is meant to support the “progressive” agenda of economic transformation and thus gets a pass.
George Will recommends David S. Reynolds’s new book, Two Ships. A slice:
Reynolds, a City University of New York historian, uses his subtitle — “Jamestown 1619, Plymouth 1620, and the Struggle for the Soul of America” — to assert this: The White Lion, the ship that first brought slaves to Virginia, and the Mayflower, which brought to New England Puritans in flight from monarchical absolutism and Anglican bossiness, incubated two ultimately incompatible American futures. Reynolds’s powerful demonstration is that his story — the symbolism of the two ships — is not his. It was ubiquitous in American political rhetoric until, happily, it no longer was, as the nation transcended old categories.
Here’s the abstract of Dora Costa’s and Matthew Kahn’s review of John Cassidy’s Capitalism and Its Critics: (I’ve not yet read the full review, but the abstract promises a solid analysis.)
John Cassidy’s Capitalism and Its Critics surveys 250 years of capitalism’s history through the eyes of roughly thirty critics, from the Luddites, early utopians and Marx to modern communitarians, antigrowth proponents, free trade opponents, and scholars of inequality. The result is a vivid, sympathetic reconstruction of left-of-center dissent. We argue, however, that the book reproduces two analytical weaknesses shared by the critics it profiles. First, it commits Harold Demsetz’s Nirvana Fallacy, evaluating imperfect real-world markets against idealized regulatory alternatives rather than against equally imperfect real-world governments. Second, it underestimates capitalism’s most distinctive self-correcting mechanisms: endogenous technological change and entrepreneurial creative destruction, all coordinated by the price system. The result is a catalogue of capitalism’s failures unaccompanied by any comparable accounting of the alternatives.
A realistic short-term prediction is that the stores will become havens for half-criminal resale markets, outright thievery, the homeless, and the mentally ill — that is, generally the same basket of issues that plague so many urban spaces where “discounted and/or free” stuff is on offer. Rather than relieve the very real affordability burden on the law-abiding working class, eliminating minimal barriers to entry, like normal prices and competition, that keep out the most antisocial elements of the city instead will force those workers to share space with the drug-addled, criminal, and dangerous. As surely as blood in the water attracts sharks, handouts of free or deeply discounted goods, in the melee of a populous city like New York, attract the worst kinds of crowds.
The importance of these small barriers, and correspondingly, the results of giveaways, can be affirmed all over New York and America’s other urban cores. For example, a “free” public pool in Central Park that opened in 2025 quickly became a hotbed for fights, disorder, and homeless “bathing.” The city has quietly stopped crowing about its success. “Free” gift stunts by companies or livestreamers in the city frequently result in unsafe mob scenes that further degenerate into violence.
The [New York] city’s plan rests on the assumption that it can control who buys subsidized goods. Yet Venezuela’s experience with government-run grocery stores suggests that assumption deserves scrutiny.
When Venezuela’s socialist president, Hugo Chávez, created a nationwide network of government-run grocery stores called “Mercal” in 2003, he faced the same conundrum of how to control excess demand when prices are set artificially low.
