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… is from page 59 of the late Gordon Wood’s marvelous 1991 book, The Radicalism of the American Revolution:

In such a small-scale society [as colonial North America], privacy as we know it did not exist, and our sharp modern distinction between private and public was as yet scarcely visible. Living quarters were crowded, and people who were not formally related – servants, hired laborers, nurses, and other lodgers – were often jammed together with family members in the same room or even in the same bed.

DBx: And by the world standards of the day, residents of Britain’s North American colonies were among the richest people then alive. Ponder this reality when you next hear some Democratic Socialist or collectivist pundit or professor announce, from the comfort of their cubby or study – having slept the previous night with no unwelcome strangers – that “capitalism has failed.”

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George Will continues to argue eloquently against all government restrictions on contributions to political campaigns and on the spending of such contributions. Two slices:

Any adequate history of human shortsightedness, which would pretty much encompass all of human history, would mention America’s half-century dalliance with “campaign finance reform.” The Supreme Court recently issued another decision distancing itself, but not nearly enough, from its original 1976 sin of not invalidating limits on coordinated expenditures by parties when it invalidated expenditure limits on candidates.

Academia has been egregious in diminishing the First Amendment, but this began in Congress. All campaign finance laws are written by incumbent legislators, and, unsurprisingly, serve their interests. Ostensibly responding to Watergate, but primarily codifying its members’ interests, Congress imposed limits on the quantity, content and timing of political (campaign) speech, the First Amendment’s core concern. Limits on campaign contributions and spending magnify the importance of incumbents’ many communications advantages.

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Campaign regulations and their rationales about “appearance” breed the sort of cynicism they are supposed to combat. Consider the following:

The largest political spending that today could raise quid pro quo “appearance” probably is by teachers unions, whose support goes almost entirely to Democrats. But do we want corruption sniffers trying to establish where politics ends and corruption begins? Does a recipient’s opposition to school-choice programs cause a union’s contributions, or do the contributions flow to the recipient because he or she opposes school-choice programs? Supporting a party or candidate because one supports particular policies is called politics.

Quid pro quo corruption has long been illegal. Restricting speech in order to deter such corruption also should be illegal. It is, under the First Amendment (“Congress shall make no law …”) properly construed.

Actually, any doctrine that permits limits on contributions and spending for political advocacy is inconsistent with the constitutional proscription of laws abridging freedom of speech. The court could have spared the country much trouble if in 1976 it had responded to Congress’s speech-rationing regime with a three-word opinion: “You’re kidding, right?”

Who says that capitalism impoverishes workers? A slice from a Wall Street Journal report:

Cashier Tony Barzar unloaded his lunch in the breakroom, clocked in and headed for the checkout, just as he has for much of the past four decades.

That day, like most days, the 60-year-old Barzar was assigned to the self-checkout area, a cluster of six registers. At 9:02 a.m., the first shoppers were ready to ring themselves up.

“Right here, ma’am!” Barzar said, gesturing for a customer in line to move to an open register. “How ya doing today, sir? Find everything alright?” he said to another as he circled the registers with a scanning gun.

Long-tenured workers like Barzar are Costco’s secret weapon. They are reliable and experienced, able to speed shoppers through a checkout line and serve as mentors to newer workers, passing down the company’s unique culture, Costco executives say.

Barzar’s pay and benefits reflect his value to the company. He earns $32.90 an hour, and the holdings in his 401(k) have boosted his retirement savings to over $1 million, he said. His Costco-sponsored healthcare has a regular visit co-pay of $15, and a specialty visit co-pay of $25, well below the national average. In 2009, Barzar’s family bought a three-bedroom, two-bath house with a pool, and they have been able to travel to Europe twice over the past decade.

As a younger person, “I didn’t think me and my family would reach where we sit now,” he said. “I could retire, but what would I do? Costco has been good to me.”

Costco has long paid more than most U.S. retailers to help keep turnover low, a strategy the company’s founders believed would reduce costs associated with training new hires and lead to better customer service. Turnover after one year of employment at Costco is around 7%, a fraction of industry averages.

Research generally supports the idea that happy employees stay longer and lead to happier customers. In one 2023 study, consulting firm McKinsey looked at online reviews of over 100 retailers by both customers and employees. Retailers with the top 25% highest employee-satisfaction scores were more than twice as likely to fall in the top 25% of customer-satisfaction scores, said the firm.

Here’s the abstract of an important new paper by my Mercatus Center colleague Jack Salmon:

This paper examines the differential effects of tax-based versus spending-based fiscal consolidations on debt sustainability and economic growth using narrative consolidation data for 17 advanced economies from 1978 to 2016. The Adler et al. (2024) dataset, published as International Monetary Fund (IMF) Working Paper 24/210, provides a comprehensive revision of the Alesina et al. (2015, 2019) narrative data, extending coverage to 17 countries including the Netherlands and updating shock magnitudes throughout the sample period. Macroeconomic outcome variables are drawn from World Bank, Organisation of Economic Co-operation and Development (OECD), and IMF primary sources. The narrative shock sample is bounded in 2016 to ensure the three-year debt outcome window remains pre-pandemic; local projections use shocks through 2014 to guarantee all five horizons avoid COVID contamination.

Employing country and year fixed-effects panel regressions with clustered standard errors, local projections methods, and linear probability models, this paper reveals that spending-based consolidations are associated with higher probabilities of debt reduction and more favorable growth outcomes than tax-based consolidations. A one-percentage-point tax-based consolidation reduces GDP growth contemporaneously by 0.59 percentage points, versus 0.29 percentage points for spending-based consolidations. Local projections reveal that tax-based consolidations impose increasingly negative effects over time (reaching −2.94 percentage points cumulatively five years after the event), while spending-based consolidations generate a trajectory that turns positive after two years and reaches +1.81 percentage points after five years. Tax-based consolidations reduce the probability of substantial debt reduction by 9.5 percentage points and of debt stabilization (debt-to-GDP ratio does not increase over three years) by 12.4 percentage points. Spending-based consolidations significantly raise the probability of substantial debt reduction by 11.1 percentage points. These results are robust to heterogeneity by initial debt level.

The Editorial Board of the Washington Post criticizes Trump for using subsidies for the purpose of “compensating farmers partly for the damage from his own policies.” A slice:

While farmers have struggled to deal with Trump’s trade and Iran policies, the subsidies go beyond cushioning farms in a rough period. Net farm income is still above the 20-year average. If Congress manages to pass the extra $11 billion, government payment to farms would be at a record high. The handouts come on top of existing government supports such as crop insurance.

Scott Lincicome tweets:

New rule: Every wonky argument “rethinking free trade” – and defending Trump 2.0 trade policy – due to alleged “national security” concerns must conclude with–

“So, that’s why we tariffed bananas and Canadian aluminum”

“Warren’s plan to ‘fix’ Social Security would be largest tax increase in over 40 years” – so explains Reason‘s Eric Boehm.

Greg Lukianoff explains that “the government’s flagrant violations of the First Amendment threaten the heart of the American experiment.” Two slices:

The administration has aggressively pursued everyday Americans for expressing their grievances with the government. These flagrant violations of the First Amendment should frighten Americans of every political stripe, because they threaten the very heart of the American experiment: the freedom to criticize our representatives vociferously and petition our government for change.

…..

Then there is social worker Colleen Fagan. In January, Fagan was at an apartment complex in Portland, Maine, observing federal immigration enforcement operations. The agents did not like being watched. They scanned her face with a smartphone and took down her license plate number. When Fagan asked why they were doing this, a masked agent answered: “Cause we have a nice little database. And now you’re considered a domestic terrorist.”

Yet everything these Americans did is protected by the First Amendment. The Constitution protects the people’s right to criticize the government, whether by writing an email or posting to social media or observing police in action. As the Supreme Court wrote in 1987 in City of Houston v. Hill: “The freedom of individuals verbally to oppose or challenge police action without thereby risking arrest is one of the principal characteristics by which we distinguish a free nation from a police state.”

The purpose of the government’s intimidation tactics is clear: not only to terrorize the immediate critic into silence but also to send a message to others. In other words, to build the foundation of a police state.

The Editorial Board of the Wall Street Journal agrees that “the Smithsonian lost America’s plot.” Two slices:

One of the better causes of the second Trump Administration is its effort to purge the progressive political takeover of America’s national cultural institutions. A case in point is the new White House report on the bad historical turn taken by the Smithsonian Institution’s National Museum of American History.

The press is attacking the report as an attempt to censor independent museum curation, but that’s not how we read it. The 162-page “Saving America’s Story,” produced by the White House Domestic Policy Council, lays out in persuasive detail how the museum offers a largely critical view of American history that “no longer treats the American story as a shared national inheritance to be taught or celebrated.”

Instead, the museum offers the message, captured in one exhibit, that when they founded the U.S., “early leaders envisioned a country that promised opportunity and freedom—but only for some.”

The report isn’t a cheerleading document seeking to hide America’s warts. What it seeks is a history of the U.S. that doesn’t resemble the 1619 Project in its partisan bias.

…..

The Smithsonian American Art Museum and Smithsonian Learning Lab created a poster that says, “Whiteness as a concept is foundational to the history of the United States, actively shaping this country’s social, cultural, political and economic structures.” Whiteness? This is today’s leftwing identity politics imposed on the past.

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… is from page 81 of Eamonn Butler’s excellent 2021 book, An Introduction to Trade & Globalisation:

Because a country’s balance of payments with the world is the result of so many different factors and may be perfectly benign, the mere existence of a deficit is a bad excuse for protectionism. A country’s deficit with any single other country is an even worse excuse – though politicians use it often. US President Donald Trump, for example, cited his country’s trade deficits with China and Mexico as reasons to renegotiate deals and raise import barriers.

DBx: Indeed so.

Take the following to the bank: Anyone who talks about one country’s trade deficit or trade surplus with another country or region as if that “deficit” or “surplus” has even the slightest relevance for policy, or as if that “deficit” or “surplus” signifies a problem or a boon, is someone who is either utterly ignorant of the economics of trade, or is someone who assumes that you, the audience, is utterly ignorant of the economics of trade. Either way, such a someone isn’t to be trusted to comment on, and much less to have power over, trade policy.

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In the print edition of tomorrow’s Wall Street Journal, Phil Gramm and I defend Alexander Hamilton against the uninformed charge that he would support Trump’s tariffs. Two slices:

Since Hamilton can’t defend himself, we’d like to defend him against the claim that he would support Mr. Trump’s protectionism. In Hamilton’s 1791 Report on the Subject of Manufactures, he made the case for government encouragement of American manufacturing in a world dominated by European powers that, he worried, could easily refuse to export their manufactured goods to America in exchange for American agricultural products. As Hamilton explained, “if Europe will not take from us the products of our soil, upon terms consistent with our interest, . . . there is no other expedient, than to promote manufacturing establishments” at home. Promotion of U.S. manufacturers could be provided by protective tariffs or, even better in Hamilton’s view, by subsidies.

Messrs. Bessent and Greer claim that the Trump administration is simply reviving the Hamiltonian trade policy that created the American economic colossus. But in the 21st century, when the average trade-weighted tariff rate of Organization for Economic Cooperation and Development member countries was below 3% and almost identical to that of the U.S., and the OECD found that the nontariff barriers of U.S. trading partners aren’t significantly higher than America’s nontariff barriers, it’s highly doubtful that Hamilton would support Trump policies. Hamilton in essence rejected Mr. Trump’s tariffs when he argued in his report that “if the system of perfect liberty to industry and commerce were the prevailing system of nations, the arguments which dissuade a country in the predicament of the United States, from the zealous pursuits of manufactures would doubtless have great force.”

…..

Especially noteworthy is Hamilton’s conviction that among the greatest forces fostering U.S. industrialization was its trade deficit and resulting capital surplus, while Mr. Trump sees the U.S. trade deficit as a crisis and net foreign lending and investment in the U.S. as a “hemorrhaging of America’s lifeblood.” Hamilton described net inbound foreign capital as “a precious acquisition . . . a most valuable auxiliary, conducing to put in Motion a greater Quantity of productive labour, and a greater portion of useful enterprise than could exist without it.” During the country’s first century, we routinely ran trade deficits as the British and Dutch invested heavily in America. They grew wealthy on those investments, and so did America.

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Reflecting on World Cup visitors’ amazement at American affluence, Rick Reilly rightly renews his pride in being American – pride, that is, in the American people acting privately, not politically. A slice:

Suddenly, I was — dare I say it? — proud of my country.

True, Trump’s perpetual lying has wrecked lives, his doorknob-brained tariffs have emptied Americans’ wallets, his thug ICE army has terrified plenty of good, hardworking people. But he can’t ruin ranch.

That got me thinking about other wonderful things in America that are Trump-proof. Like free coffee refills in giant mugs. I’ve been everywhere twice and I’ve never seen that anywhere else. Like 80,000 people sardined into a college football stadium packed with marching bands and cheerleaders and foot-long hot dogs, all over a goofy-shaped leather ball. Like barbecue — God-sent, delicious, smoky barbecue — piled too high for your Chinet plate and swimming in sweet Carolina sauce.

And CVS! What do you need this instant? Toothpaste, a Mother’s Day card and a splint? They’ve got ’em, and 100,000 other things. You think you’d find that in Europe? More likely it’s a mini-mart no bigger than the CVS chips aisle.

Paul Meany applauds this reality:

Free market capitalism is the system in which nothing is fixed permanently in place. Status, wealth, occupation, and opportunity are all made contestable by competition, entrepreneurship, and free markets. That dynamism is precisely what has drawn generations of immigrants to America.

Jon Hartley argues that Alexis de Tocqueville deserves a statue in Washington, DC. A slice:

Tocqueville looked at our “habits of the heart,” society’s ingrained cultural norms, moral beliefs, religion, and civic values. He saw the merits of a Constitution that protects individual rights from the tyranny of the majority. He also saw that the engines of American exceptionalism were its vibrant local ecosystems. He was mesmerized by America’s unique genius for association, meaning the tendency of ordinary citizens to band together to build schools and churches and to solve community problems without waiting for a king or a federal bureaucrat.

Those organic community bonds have fractured in our modern era. Since the early 20th century, the administrative state has expanded, attempting to manage local issues from the environment to education. This accumulation of centralized power mirrors the “soft despotism” Tocqueville feared, which reduces an energetic, industrious people into dependents managed by a bureaucratic class that is unaccountable even to the executive.

Jeffrey Degner reminds us of the now-obscure American founder – John Taylor of Caroline – who had an especially astute understanding of the realities of government. A slice:

Long before Buchanan and Tullock fully articulated the Public Choice school of thought and state capture had its name, Taylor warned that political power would attract organized interests seeking special privileges. Furthermore, in An Inquiry into the Principles and Policy of the Government of the United States, he argued that “faction” was not primarily caused by differences among people. Instead, it came from government-created opportunities for favored groups to profit through legislation. He also articulated how conflicts are fomented by government-granted economic privileges. These were the result of “mercantilist economic interference.”

The Editorial Board of the Washington Post rightly criticizes a Democratic proposal to raise the national minimum wage. A slice:

“We can afford it. It’s not like we can’t pay a $25 minimum wage,” [Sen. Chris] Murphy [D-CT] said on “Meet the Press” last Sunday. “We just choose not to because we’ve become okay with dozens and dozens of people in this country making hundreds of billions of dollars.”

Who’s “we”? Businesses have to cover the cost of higher wages somehow — hiking prices, shrinking hours, laying off workers or hiring fewer are all on the table. A higher minimum wage also increases the incentive for automation.

Some states already know the effects of raising the minimum wage beyond what the market can bear. California set a $20 wage for fast-food employees in 2024. That eliminated 18,000 jobs within a year, according to an analysis in the National Bureau of Economic Research.

Murphy claimed that “plenty of economic analysis” shows his plan will “create more jobs than you’re gonna lose.” Yet the nonpartisan Congressional Budget Office estimated a $17 minimum in 2029 would put 700,000 people out of work. Imagine the damage of a $25 floor.

Wall Street Journal columnist Jason Riley decries collectivism’s cancerous effects on families. A slice:

But socialists such as Karl Marx and Friedrich Engels dismissed the traditional family as a tool of oppression that advanced the patriarchy by exploiting the domestic labor of women. Similar thinking informs today’s politicians and policymakers who want to expand the welfare state to address economic inequality. For them, nuclear families in general, and fathers in particular, were an obstacle to central planning schemes. Ultimately, the state is promoted as the best provider and dads are seen as superfluous, if not part of the problem. The upshot is that preserving the family and its autonomy is less important to socialists than preserving their own ability to tell other people how to live their lives.

One of the real-world experiments with this approach is the black family, which has been in disarray for more than a half-century and is the subject of an important new book, “The Vanishing Black Family: How Welfare and Feminism Made Marriage Optional and Children Vulnerable.” The author is Delano Squires, a black husband and father who focuses on marriage and parenthood at the Heritage Foundation. He spent more than a decade employed by the District of Columbia in a program aimed at reducing gun violence. The book offers something many others can’t, which is scholarly analysis alongside the astute observations of a practitioner who has lived and worked with the people he’s discussing.

Mr. Squires contends that many of the social and economic problems in low-income black communities stem from the sad fact that some 70% of black children are born to unwed parents and nearly 45% live with a single mother. “Progressives talk a lot about racial disparities in household incomes but never seem to include family structure in their calculations,” he writes. Asians are the highest earners, followed by whites, Hispanics and blacks. Similarly, Asians have the highest marriage rates, followed by whites, Hispanics and blacks. Maybe it’s no coincidence.

My intrepid Mercatus Center colleague, Veronique de Rugy, talks with Phil Magness and my GMU Econ colleague Vincent Geloso about inequality.

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… is from page 22 of Pierre Lemieux’s excellent 2018 book, What’s Wrong With Protectionism? [original emphasis; footnote deleted; link added]:

The mercantilists of the 16th and 17th centuries thought that a country should export as much as possible and import as little as possible. This is an economic error. Just as individuals sell goods or labor in order to buy something, countries export in order to import. As James Mill wrote nearly 200 years ago, “The benefit which is derived from exchanging one commodity for another, arises, in all cases, from the commodity received, not from the commodity given.”

DBx: Pictured here is James Mill (1773-1836).

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Here’s another note to a regular correspondent who, in his words, knows “for sure President Donald Trump is right about trade.”

Mr. McKinney:

Thanks for passing along U.S. Trade Representative Jamieson Greer’s recent Congressional testimony – testimony from which, you claim, I “may finally learn the truth how President Trump is rescuing the US from foreigners taking advantage of us for decades.”

Sigh.

I could go through Greer’s piece and identify each of its many errors, not the least of these being his main point that U.S. trade deficits are a problem that must be solved. In reality, these “deficits” reflect net capital inflows into the U.S. – capital inflows drawn overwhelmingly by the U.S. economy’s strength. These deficits are not, contrary to what Greer and Trump repeatedly insist, caused by foreigners having “rigged the global economy” to abuse Americans. According to UNCTAD’s hot-off-the-press “World Investment Report 2026,” the U.S. continues to lead the world as a recipient of inbound foreign direct investment, receiving in 2025 83 percent more such investment than was received by second-place Singapore (and 164 percent more than fourth-place China).

Also contributing to U.S. trade deficits is the dollar’s continued role as the global reserve currency. This role is one that Trump – inconsistently with his obsession with eliminating U.S. trade deficits – wants the dollar to continue to play.

I could, as I say, pick apart Greer’s testimony flaw by flaw, misunderstanding by misunderstanding, half-truth by half-truth. But instead, I’ll share with you this new music video by Jason Stills showing World Cup visitors to America being gobsmacked by the prosperity enjoyed by ordinary Americans.

If Trump, Greer, and the MAGA choir were correct that we Americans have been abused for decades by trade with foreigners, these visitors to America would have found us to be a relatively poor people – a people worthy more of pity rather than of our visitors’ astonishment at the wealth that for us is mundane yet for our visitors is jaw-droppingly enormous.

Sincerely,
Don

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GMU Econ alum David Hebert, writing in today’s Wall Street Journal, explains that uncertainty over the USMCA – uncertainty stirred up by that supposedly crack businessman Donald Trump – is bad for business. Two slices:

The U.S. won’t renew the U.S.-Mexico-Canada Agreement in its current form, U.S. Trade Representative Jamieson Greer said on July 1. The decision leaves North America’s trading rules uncertain. Canada and Mexico wanted a 16-year extension of the pact. Instead, the agreement now enters a cycle of annual reviews, with a hard expiration date of 2036 if the three countries never reach a resolution.

The main value of a trade agreement isn’t that it lowers tariffs but that it eliminates doubt. USMCA’s greatest achievement was never a slate of tariff rates, exceptions and rules. It was the confidence that the rules would stay stable long enough for companies to make plans and act on them. A parts supplier in Michigan could sign a 10-year lease and order supplies because the terms governing what crossed the border were set.

Consider a manufacturer trying to determine whether to build a plant. The investment takes 15 years to pay off. The rules that determine whether it is profitable are now up for renegotiation every 12 months. The rational move is to wait, to build smaller or to build elsewhere. The cost of that uncertainty won’t make headlines. It will show up as factories never constructed, expansions delayed and workers never hired.

Annual reviews destroy confidence in business. Canadian and Mexican officials as well as members of Congress saw this coming, warning during the original hearings that a mandatory review clause would create the uncertainty that discourages investment.

The administration argues that recurring reviews will strengthen America’s bargaining position and create leverage to reduce trade deficits. But trade deficits have never been a score card. Your persistent trade deficit with the grocery store doesn’t mean you are losing.

…..

Investment requires confidence, and confidence requires stability. That stability is what the administration chose not to renew.

Washington Post columnist Marc Thiessen warns against buying “the snake oil of the ‘blood and soil’ right.” A slice:

Is America just another country?

That may seem like an odd question to ask as we celebrate the 250^thanniversary of our Declaration of Independence, the greatest testament to individual liberty and popular sovereignty the world has ever known. But, amazingly, some on the right are making just that claim. America, they tell us, isn’t an idea; it is a nation built by a distinct people based on shared ancestry, shared soil, shared history and shared culture — and that these, not the lofty ideals of our Declaration, are what make us great.

This is dead wrong. We are the first nation in human history built not on blood and soil but on an idea: the idea of human freedom. What unites us as a people is not a common bloodline, but our common creed.

“There is at present no American ethnicity,” historian Gordon Wood explained earlier this year at the American Enterprise Institute, and “there was no such distinctive ethnicity even in 1776.” In 1790, Wood said, only 60 percent of the White population was English. The citizenry was what John Adams called a “Hotch potch of people such an omnium gatherum of English, Irish, German, Dutch, Sweedes, French, &c. that it is difficult to give a name to the Country, characteristic of the people.”

What gave us that defining characteristic was our creed. Most European states, Wood said, “were created out of a prior sense of a common ethnicity or language.” But in the United States “the process was reversed.” We were united as one people by a shared belief in a set of ideas — that “all men are created equal” and are “endowed by their Creator with certain unalienable Rights” and that governments derive “their just powers from the consent of the governed.” This unique patrimony is the reason Americans can make the audacious claim that we are an “exceptional” nation.

Whether they realize it or not, the blood-and-soil nationalists reject the very idea of American exceptionalism. If what makes us a country is shared land, language and culture, well, that is true of every country. They appear to agree with President Barack Obama, who infamously declared, “I believe in American exceptionalism, just as I suspect that the Brits believe in British exceptionalism and the Greeks believe in Greek exceptionalism.”

In other words, he did not believe in American exceptionalism. And neither do these conservatives. Indeed, by seeking to graft European-style “blood and soil” nationalism on the American body politic, they are inadvertently making common cause with the far left, which also rejects American exceptionalism through its insistence that America’s founding ideals were always a lie told in the service of slavery and oppression.

Eric Boehm points out this: “If President Donald Trump had his way, the breakout star of the United States’ World Cup” – Folarin Balogun – “run would not be an American citizen.”

GMU Econ alum Jeremy Horpedahl corrects an egregious error, committed by Fox Business, about immigration’s effect on U.S. housing prices. (HT Scott Lincicome)

Francois Melese’s letter in today’s Wall Street Journal is excellent:

Newly elected Democratic socialists on their way to Washington would do well to read Phil Gramm and Michael Solon’s excellent op-ed debunking the myth that Ronald Reagan’s tax cuts heavily favored the rich (“The Surprising Truth About Reagan’s Tax Cut,” June 20).

The familiar refrain that the rich should “pay their fair share” overlooks a basic fact: They already do. The authors note that in 2022 the top 20% of taxpayers paid 88% of all federal income taxes. But it’s important to add that they earned little more than half of total income that year. In other words, their share of taxes far exceeded their share of income.

The bottom quintile, by contrast, had an average effective income tax rate of minus 10%. Thanks to refundable tax credits like the Earned Income Tax Credit and Child Tax Credit, they got more back from Washington than they paid in income taxes. The U.S. federal income tax code that Democratic socialists attack and demonize is already the most progressive in the developed world.

Matt Ridley writes that “for me the most momentous happening in 1776 was the inauguration of James Watt’s first practical steam engine” – an event that occurred literally within days of the publication of Adam Smith’s Inquiry Into the Nature and Causes of the Wealth of Nations. Two slices from Ridley’s essay:

We have the industrial revolution backwards. We tend to think that clever people in powdered wigs came up with ideas – democracy, free enterprise, stock markets, science, intellectual property – that enabled men with dirty fingernails to set about changing the world. But I think it was more that the fingernail fellows made the wig wearers possible. Smith’s division of labour and Jefferson’s democracy were all very well. But Thomas Newcomen and Watt mattered more. Thermodynamics – the science of heat and work – was invented to explain steam engines, not vice versa.

…..

If hydrocarbon energy was vital to Britain’s pioneering rise in living standards through industrialisation, the war on hydrocarbons is the chief cause of Britain’s pioneering stagnation through de-industrialisation. The first country into the industrial revolution is now the first deliberately to drop out of it.

Our deceleration is accelerating. Britons are now consuming just 61 per cent as much energy per capita as they did in 2001 – almost halving the practical work we can do. China is consuming twice as much as us per head, or 350 per cent as much as it did in 2001. One by one, we have closed most of our productive industries: oil and gas, aluminium, steel, heavy engineering, mining, cement, chemicals, pharmaceuticals, fertiliser, ceramics. Now even artificial intelligence is leaving or shunning our shores.

The worst part of this is that we have done it deliberately. We set out to pretend we are reducing emissions of carbon dioxide when all we are doing is exporting them. We ban shale gas – but import shale gas from America at much higher cost and much higher carbon footprint. We ban North Sea oil exploration – but import North Sea oil from Norway. We subsidise wood burning at Drax power station – but don’t count the emissions because the wood comes from North Carolina. We load emissions trading taxes on to oil refineries, then wonder why two out of six closed last year and we must import most of our jet fuel, diesel, ethylene and fertiliser.

Alex Tabarrok warns that the U.S. is increasingly showing signs of practicing the dark arts mastered by the British at impoverishing its citizens. Here’s his conclusion:

It is discomforting to watch the birthplace of the Industrial Revolution, individual rights, and free speech—the nation that once built the railways, the steam engines, the factories that remade the world—lose the capacity to build much of anything, or even to tolerate people speaking their minds. In parallel, instead of dealing with our real problems—almost all of our creation—the right gets literally hysterical over symbolic culture-war questions like birthright citizenship, while the left nominates candidates with Marxist-Leninist sympathies. The abundance and progress movements are some of the few shining lights. It’s not too late. But Great Britain is a warning.

My Mercatus Center colleague Jack Salmon busts Mamdanian myths about grocery stores. A slice:

The most common argument for government grocery stores is that they’ll be cheaper because they won’t have to satisfy shareholders. The logic sounds plausible until you look at how razor thin grocery store profit margins actually are.

Grocery stores, on average, operate on net profit margins of about 1–2% after taxes. During the pandemic, when supply chains were a mess and demand was unusual, margins briefly hit 3%. These are not the fat profits of a cartel; they are the thin margins of an intensely competitive industry. Of those profits, roughly 35–40% is returned to shareholders in the form of dividends. The rest is reinvested into operations, capital expenditures, expansion, and debt reduction.

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… is from page 79 of the great Columbia University trade economist Jagdish Bhagwati’s 2002 book, Free Trade Today:

The trade sanctions approach, as I have indicated, is likely to be counterproductive (e.g. by pushing children into worse occupations) and therefore, while inspired by good intentions, could well be wicked in its effects.

DBx: So true.

Trade sanctions are nearly always justified by an alleged need for “us” to help right a wrong committed abroad. Sometimes, as Bhagwati notes, such justifications are issued by people with good intentions but with poor economic understanding. Other times, such justifications are issued by rent-seekers with bad intentions but with correct economic understanding. In both cases, the alleged foreign wrongs are not righted.

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Beware of economically uninformed good intentions … and of economically informed bad intentions.