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… is from page 88 of Art Carden’s and Ilia Murtazasvili’s paper “W.H. Hutt: An Economist for the Twenty-First Century,” which is a chapter in the 2026 book Unsung Heroes of the Market: The 24 Underrated Economists You Need to Know – a volume edited by Robert Whaples, Christopher Coyne, Gregory Robson, and Diana Thomas [original emphasis; footnote deleted]:

His [Hutt’s] criticisms of strike-threats were grounded in his conviction that it was impossible to transfer wealth and income from capitalists as a class to workers as a class for several reasons. First, workers who saved and invested were themselves capitalists. Second, any gains workers enjoyed from the strike-threat system came at the expense of other workers who were shut out of the market and consumers who were paying higher prices. Throughout [Hutt’s 1973 book] The Strike-Threat System, he argued that the system’s apologists failed to answer the important ethical question about why one class (investors) should be expropriated for the benefit of another class (workers), noting further that “the easy assumption that investors are rich and workers poor is rather dubious today.” With so many Americans owning the means of production through pension funds and retirement accounts, it is even less clear in the twenty-first century.

DBx: Indeed so.

W.H. Hutt (1899-1988) was one of the finest economists – and most consistent advocates of liberalism – of the past 100 years. His work, unfortunately, is not well known. Also unfortunately, over the past few years Hutt has become the target of libelous accusations issued by pseudo-scholars who are hell-bent on falsely portraying Hutt as an illiberal racist in order to have a straw man to destroy in their dogmatic war against the liberal market order.

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Gale Pooley explains that if investors are correct about the potential productivity of Elon Musk’s firms – and if Elon Musk’s firms conform to the pattern documented by Nobel-laureate economist William Nordhaus – Mr. Musk has made himself very wealthy by increasing, on average, the wealth of every man, woman, and child on earth by $5,300.

Michael Dresdale writes wisely about charges of oligarchy in the U.S. A slice:

The danger of the left’s embrace of the oligarchy thesis is that it risks blinding the public to a genuinely valuable aspect of American capitalism. “Oligarchy” does fairly describe many economies, past and present. The Economist’s crony-capitalism index captures the difference: It measures the share of a country’s billionaire wealth drawn from state-dependent, rent-heavy sectors — telecoms, mining, casinos, defense — against the share generated in competitive ones. Unsurprisingly, the 2023 rankings put Putin’s Russia at the top, with crony wealth equal to 19 percent of GDP. In the United States, the figure was 2 percent.

The left blurs this distinction, treating inequality as equally condemnable whether it springs from cronyism or from competition. Representative Alexandria Ocasio-Cortez’s (D., N.Y.) insistence that there is no ethical way to amass a billion dollars underscores the point. Earning a billion dollars — or many times that — by building a company that hundreds of millions of people freely use is a supremely pro-social act. Of course, we can debate in good faith how much a productive billionaire ought to pay in taxes. But our scorn should be reserved for those whose path to wealth runs through a Machiavellian climb into the inner rings of power, only to use that proximity to exploit their fellow citizens rather than serve them.

One of the strongest criticisms of the Trump administration is that it, too, is blurring the lines between these two modes of capitalism through the intense personalization of the executive branch. As the Wall Street Journal has documented, Trump has taken a personal hand in the Food and Drug Administration’s drug approvals, the Federal Trade Commission’s merger reviews, and the Federal Communications Commission’s authority over broadcast licenses. The administration can offer a plausible rationale for any one of these interventions. Cumulatively, though, they leave a different impression — that the administrative state’s technocracy has been restored to a clientelist species of democratic control. Unsurprisingly, spending on lobbying targeting the White House has surged to record levels.

The Wall Street Journal‘s Editorial Board reports on new evidence that so-called ‘teachers’ unions” – and the government schools over which these unions have disproportionately large influence – obstruct actual teaching. A slice:

First comes more evidence that the lockdowns driven by teachers unions hurt student learning. Math and reading performance for 13-year-olds stagnated between 2023 and 2025 on the NAEP’s long-term trend assessment—which isn’t the same as the traditional NAEP exam—the Education Department announced Wednesday.

These children were in elementary school when Covid hit. Their scores in both subjects are lower than in 2020, before the pandemic. Some 58% performed at an intermediate level in reading in 2025 compared to 63% in 2020. In math, 70% could do “numerical operations and beginning problem solving” in 2025, down from 79% in 2020. Teachers union chief Randi Weingarten has a lot to answer for.

The news is better for 9-year-olds, who weren’t in school in 2020. Their scores went up from 2022 to 2025 in reading and math. Some 71% demonstrated at least “partially developed” skills in reading and 84% showed “beginning skills” in math in 2025, up from 67% and 80% respectively in 2022. Their reading scores caught up to 2020 levels, though they remain three points lower in math.

It’s notable that much of the 9-year-old rebound came from the lowest-performing students. That could be because the pandemic had “more dire consequences for the lowest scorers,” says Nat Malkus of the American Enterprise Institute. Those consequences aren’t affecting the 2025 cohort.

But the data also add to the evidence of a concerning long-term trend. With the exception of 9-year-old reading, which is about the same, scores for all age groups and subjects are lower than in 2012—including by 15 points in math for 13-year-olds. That comports with declining scores over the past decade on other tests like the traditional NAEP exams and the ACT.

My former Mercatus Center colleague Christopher Koopmans’s letter in yesterday’s Wall Street Journal is excellent:

The Journal’s editorial board is right to be wary of Pope Leo XIV’s embrace of government in his new encyclical “Magnifica Humanitas” (“Pope Leo’s AI Manifesto,” Review & Outlook, May 28). The Holy Father hasn’t upheld the long papal tradition of rejecting the false binary of the day.

In the 1891 encyclical “Rerum Novarum,” Pope Leo XIII railed against certain abuses of industrial capitalism and defended the dignity of workers before turning with equal seriousness to the socialist response then on offer.

Forty years later, Pope Pius XI, in “Quadragesimo Anno,” criticized concentrations of capital amid the widespread destitution during the Great Depression, but he also criticized the totalitarian responses sweeping Europe.

In “Centesimus Annus” in 1991, Pope St. John Paul II named the errors of “real socialism,” and then turned to the potential risks of “a radical capitalistic ideology.”

Pope Leo could have confronted the current false binary of unfettered artificial intelligence versus unfettered government control of this technology. Yet “Magnifica Humanitas” is more likely to encourage those who would stifle progress with state power. As a faithful Catholic, I hope Pope Leo’s next encyclical restores the balance that befits such important moral documents.

Mike Munger tweets: (HT Scott Lincicome)

Econs of the Left, 1976: “Socialism is better than Capitalism for Growth!”

Econs of the Left, 2026: “Socialism is bad for growth, and that’s good!”

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… is from page 401 of Michael Oakeshott’s 1948 essay “The Political Economy of Freedom” as this essay is reprinted the 1991 Liberty Fund collection of some of Oakeshott’s work, Rationalism in Politics and Other Essays:

Collectivism is indifferent to all elements of our freedom and the enemy of some.

DBx: Although he understates the portion of our freedom to which collectivism is an enemy, Oakeshott is correct that – contrary to the wishful thinking of so many progressives – collectivism by its nature is no friend of individual freedom. Collectivism necessarily suffocates individual freedom. Trusting collectivism to protect and nurture individual freedom makes no more sense than trusting a hungry shark to protect and nurture a seal.

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Mr. Charles Benoit
Coalition for a Prosperous America

Mr. Benoit:

In your attempt to justify punitive taxation by the U.S. government of Americans’ purchases of imports, you get much wrong, both economically and factually (“Adam Smith’s Enemy Was the East India Company, Not the Tariff of 1789,” June 12). Here, though, I address only one of your errors – namely, your insistence that Scott Lincicome erred in suggesting that Adam Smith would have opposed U.S. protectionism.

If you read – in full – Smith’s Inquiry Into the Nature and Causes of the Wealth of Nations, you’ll find that, while Smith did indeed powerfully oppose the British East India Company, his case for free trade went far beyond opposition to monopoly trading companies. Smith was an ardent free trader who would have warned against the protectionism in America that you celebrate.

This fact about Smith is perhaps best established by pointing to his four, and only four, exceptions to his case for free trade: national security; using tariffs to pressure other governments to lower their duties; ensuring that imports are taxed at the same rate as domestically produced substitutes; and sometimes removing tariffs gradually, rather than all at once, in order to ease workers’ adjustment to a free-trade regime. None of these exceptions justifies what you allege Smith would support: a permanent tariff wall around a nation.

Furthermore, the Wealth of Nations is filled with passages that are impossible to square with your attempt to portray Smith as a man who would have supported protectionism. Here’s just one example:

All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord.  Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men.  The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society.

You may disagree with Smith, thinking him to have been mistaken to support free trade. But you cannot credibly assert that he would have supported American protectionism.

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

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Writing in today’s Wall Street Journal, Phil Magness reveals “the deceptive statistics behind California’s wealth tax.” Two slices:

The first problem lies in how Messrs. Saez and Zucman measure taxable wealth. Under the U.S. system, taxes are generally assessed on income earned over the course of a year. Since 1920, federal tax law has followed the realization principle, meaning that income must actually be realized as earnings before it can be taxed. Messrs. Saez and Zucman instead propose taxing estimated changes in a person’s net worth—including unrealized capital gains that exist only on paper. If a billionaire’s stock portfolio rises in value, they want to tax the appreciation even if the assets are never sold.

Unrealized gains are notoriously volatile and speculative. They can disappear overnight with a market downturn. Federal courts have long viewed taxes on unrealized gains as constitutionally dubious, which is why Messrs. Saez and Zucman have shifted their efforts to the state level. California’s proposal is an attempt to circumvent the constitutional constraints that would doom a federal wealth tax.

Another problem is even more basic: The underlying wealth estimates are deeply unreliable. Because billionaire tax returns are private, Messrs. Saez and Zucman rely heavily on outside estimates of billionaire wealth. One of their favorite sources is the Forbes 400 list.

What they rarely acknowledge, though, is that the Forbes rankings were never designed to function as a tax database. The list has long suffered from what might be called the Donald Trump Problem. In the 1980s and ’90s, Mr. Trump repeatedly called Forbes reporters, at least once under a fake name, to lobby for higher estimates of his fortune.

…..

At the same time, they artificially inflate the tax burden borne by lower-income Americans. The federal income tax is intentionally progressive, and one of its most important antipoverty mechanisms is the Earned Income Tax Credit. The EITC frequently reduces federal income-tax liability for low-income workers to zero and in many cases provides net refunds.

Messrs. Saez and Zucman simply omit the EITC from their calculations. That creates the illusion that low-income Americans pay far more in taxes than they actually do. Harvard economist Jason Furman finds that the bottom 20% of Americans face an overall combined tax burden of approximately 11%—less than half the figure Messrs. Saez and Zucman claim.

The billionaire-tax movement depends heavily on stoking public outrage fueled by misleading statistics. Americans should be skeptical anytime activist academics present enormously complicated tax calculations as simple moral certainties.

My intrepid Mercatus Center colleague, Veronique de Rugy, reports on the arrogant and dangerous collectivist motivations – motivations utterly detached from economic reality – of the Piketty-Saez-Zucman crowd. A slice:

It’s worth noting that Piketty, Saez, and Zucman have been repeatedly caught by economists across the political spectrum, including Obama’s Treasury Secretary Larry Summers, inflating wealth-concentration figures, using nonstandard methods to manufacture desired, errors, and in at least one case quietly scrubbing prior data from the internet when new numbers told a more convenient story. Their work is less a research program than policy advocacy dressed up in academic clothing.

In this case, their paper argues that the California billionaire wealth tax could raise around $100 billion, and that mobility responses would be manageable. But Josh Rauh has run the same numbers and arrived at a sharply different conclusion. Jack Salmon and I have written about this matter in the past, but here is the basic problem with the Saez-Zucman projections: they counted billionaires who had already left. Larry Ellison departed California in 2020. Larry Page and Sergey Brin left before the proposed liability date of January 1, 2026. These departures were public record. Yet the Berkeley paper’s $100 billion figure does not adequately account for a tax base that was already walking out the door before the vote was cast.

Rauh’s team found that those confirmed departures alone reduce projected revenues by nearly 40% before a single dollar is collected. Apply the mobility elasticities that the academic literature actually supports. Factor in the future California income taxes permanently foregone from departed taxpayers, and the tax produces a net present value loss to the state of at least $25 billion.

These economists should know better, because the French government has already run this experiment. Encouraged by Piketty and Zucman, France tried to tax the very rich. From Fortune: from 2000 to 2017, around 60,000 millionaires chose to leave the country. The revenue collection took a hit. France largely repealed its wealth tax in 2018.

Charles Cooke rightly celebrates the first trillionaire – and rightly criticizes the economically ignorant pols and pundits who, predictably, are expressing outrage. A slice:

Elon Musk is the world’s first trillionaire. I think that this is marvelous.

Many of our public officials, it seems, do not. California’s governor, Gavin Newsom, responded to the news by saying that “the rich get richer and everyone else gets shafted.” Senator Ed Markey complained that it was “disgusting.” Senator Elizabeth Warren suggested that it was a “wake up call.” Would-be Senator Graham Platner wrote that “Elon Musk just became the world’s first trillionaire. Let’s make sure he’s also the last.” And so on and forth.

I find this viewpoint revolting. Repulsive. Grotesque. Un-American. I hate it. As far as I’m concerned, Newsom, Markey, Warren, Platner, and those who agree with them are members of an impotent envy cult. Elon Musk has been responsible for PayPal, Starlink, Tesla, SpaceX, Neuralink, and more. If your primary reaction to his stewardship of these endeavors is to wonder how quickly you can confiscate the money he has tied up in them, you are a loser and you do not deserve the blessings that this country has bestowed upon you. That sort of thinking is at home in Belgium or Canada or Russia. It is not at home in the United States of America. There are many, many reasons that I wanted to move to this country, and one of them is that it is the sort of place where people such as Elon Musk are able to do great things. England has become sclerotic and its politics have become narrow and covetous. But America? America is a different beast. Elon Musk is the world’s first trillionaire? Hell yeah he is.

Also rightly applauding an economic system that allows entrepreneurs to become trillionaires is Reason‘s Joe Lancaster. A slice:

But SpaceX has pioneered innovations in space travel that very recently seemed like science fiction. “SpaceX’s ability to lower launch costs by roughly 90 percent—through reusable first-stage boosters, but also a vertically integrated manufacturing process and a high-cadence flight rate—is mega innovation equal to any of the past quarter century,” writes James Pethokoukis of the American Enterprise Institute. “That massive cost decline, with another 90 percent or more potentially on the way through full reusability, has fundamentally altered the economics of space and finally made possible the dreams of the original Space Age: orbital cities, deep-space habitats, space-based solar, asteroid mining.”

Besides, economics is not zero-sum. Musk’s balance sheet growing to a trillion dollars does not mean other people lose money; it means the economy as a whole is growing.

And growing economies are good for everybody, not just the uberwealthy: Between 1990 and 2025, the global share of people living in “extreme poverty” declined by nearly two-thirds, from 2.31 billion to 808 million, even as the global population increased by nearly 3 billion—an accomplishment J.D. Tuccille called “nothing short of miraculous.” It’s not a coincidence that over that same period of time, global gross domestic product (GDP) roughly quadrupled, boosting countless thousandaires into millionaires and millionaires into billionaires in the process.

Peter Earle, too, writes about Elon Musk becoming a trillionaire. A slice:

That Elon Musk is an immigrant to the United States who arrived without wealth, status, or elite connections in America will likely be lost amid the inevitable class-warfare point-scoring. Less remarked upon is that the companies he has founded or helped build — including Tesla, Inc. (134,000), SpaceX (22,000), Neuralink (300), xAI (1200), X (formerly Twitter) (1000), and The Boring Company (400) — now collectively employ on the order of 150,000 people worldwide, directly supporting a workforce larger than many midsized American cities. The temptation will be to generate interpretations of such a milestone in resentment-driven, zero-sum political terms. The more useful and accurate lenses are both financial and structural. An individual with a trillion-dollar net worth ultimately reflects markets allocating vast amounts of equity capital not to an individual, but toward uncertain but potentially transformative ideas; and, in the process, generating benefits extending across billions of lives and potentially generations beyond.

GMU Econ alum Dominic Pino tweets: (HT Scott Lincicome)

Today is a great example of why taxing unrealized gains is insane.

If Musk had to face a massive tax bill for paper gains from taking SpaceX public, he likely wouldn’t have done it, and the wealth SpaceX creates would be more concentrated in his hands.

Jim Bacchus criticizes Trump’s latest economically ignorant outburst about trade.

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… is from page 313 of Richard Salsman’s 2021 book, Where Have All the Capitalists Gone? [original emphasis]:

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.

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Here’s a letter to the Wall Street Journal.

Editor:

Writing about U.S. trade deficits, Greg Ip declares that “by exporting so much, China effectively forces its trading partners to run deficits” (“The Global Economy Is Threatened Again by Trade Imbalances,” June 12).

Wrong.

U.S. trade deficits occur whenever foreigners sell more to us than they buy from us, with the difference being made up by net inflows of foreign investment funds into the U.S.

So why do the Chinese sell us so much? Every good that Americans buy from China is bought voluntarily by Americans, implying that American purchasers obviously find the prices and qualities of Chinese goods to be attractive. Unlike in Mr. Ip’s unintentionally demeaning portrayal of Americans, in reality we Americans are no more “forced” to buy goods from China than we are “forced” to buy goods from supermarkets.

And why do the Chinese (and other non-Americans) not buy from us as much as we buy from them? The answer is straightforward: Foreigners are especially keen to invest in America. Because they need dollars to carry out their investments, foreigners cannot spend all of their dollars buying American exports. The result is U.S. trade deficits.

U.S. trade deficits aren’t caused by “overproduction” abroad but, instead, by America continuing to be both an attractive market for foreign merchants to offer their wares to us on easy terms and a place that promises relatively high returns on invested capital.

Would Mr. Ip care to explain why these qualities of America are ones that we should lament?

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

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In my latest column for AIER, I offer data that debunk Trump’s boast that the tariffs he imposed in 2025 fueled a “stunning economic turnaround, the biggest in history.” Trump’s boast is demonstrably false.

Specifically, I compare the U.S. economy’s performance during the first 365 days of Trump 2.0 (a year filled with enormous tariff hikes) to the U.S. economy’s performance during the first 365 days of Trump 1.0 (a year with no tariff hikes, or even specific announcements of such hikes).

I am, however, under no delusions that Trump’s cheerleaders will credit these data. The president’s cheerleaders will continue to insist dogmatically that, if Trump says it, it must be true. The belief seems to be that Trump’s saying X is itself proof of X’s accuracy. And furthermore, the data that I report here are reported by what I am often told is an elitist, out-of-touch, brainwashed, “globalist” college professor who doesn’t know what time it is. Anyway…. here are three slices from my column.

In his State of the Union address earlier this year, President Trump boasted that “one of the primary reasons for our country’s stunning economic turnaround, the biggest in history, where the Dow Jones broke 50,000, four years ahead of schedule, and the S&P hit 7000 where it wasn’t supposed to do it for many years, were tariffs.”

The facts tell a different story. First, because there is no schedule for stock-market gains, it is meaningless to say that the Dow Jones or S&P 500 rose “ahead of schedule.” The reality is that the US economy during the first year of President Trump’s second term simply did not perform a “turnaround,” much less one that could be ranked as “the biggest in history.”

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Let’s begin by looking at the performance of the three major US financial-market indices: the Dow Jones Industrial Average (DJIA), the S&P 500 index, and the NASDAQ index. These indices are especially telling because they reflect the expectations of people investing their own money. These investors have strong incentives to take account of as much available information as is worthwhile, and not to be misled by political bluster or by reality-distorting hopes and fears.

In the year from January 20, 2017 (the day Mr. Trump was first inaugurated) through January 20, 2018 (two days before the announcement of Mr. Trump’s first tariffs), the DJIA rose by a stunning 31.5 percent. In the corresponding period of Mr. Trump’s second term — January 20, 2025, through January 20, 2026 — the DJIA rose by 11.5 percent. This latter rise in the DJIA is impressive, to be sure, but it’s just over a third of the size of the rise in this index during the first year of Mr. Trump’s first term.

Like the DJIA, both the S&P 500 and the NASDAQ rose by less in the year following Mr. Trump’s second inauguration than they rose in the year following Mr. Trump’s first inauguration. Specifically, during the first year of Trump 1.0, the S&P rose by 24.1 percent and the NASDAQ by 32.1 percent, while during the first year of Trump 2.0, the S&P rose by 13.3 percent and the NASDAQ by 17.0 percent.

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Two of the most familiar economic gauges are the unemployment rate and the inflation rate. Each of these measures, alas, performed worse during the first year of Trump 2.0 than during the first year of Trump 1.0. Between January 2017 and January 2018, the unemployment rate dropped from 4.7 percent to 4.0 percent, yet between January 2025 and January 2026, this rate rose from 4.0 percent to 4.3 percent. Total nonfarm employment, from January 2017 through January 2018, rose by 1.4 percent, but from January 2025 through January 2026, it rose only by an anemic 0.2 percent.

And although the fall in the rate of inflation was a bit steeper during the first year of Trump 2.0 than during the first year of Trump 1.0 — declining from an annual rate of 3.0 percent in January 2025 to 2.4 percent in January 2026 — in January 2026 inflation was still running at an annual rate higher than the annual rate of 2.1 percent that prevailed in January 2018.

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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.

…..

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.

…..

“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.

…..

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, 19^th-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 20^th-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.