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… is from page 3 of Menzie Chinn’s and Douglas Irwin’s superb 2025 textbook, International Economics:

Our food supply is globalized, too. We happily eat locally harvested fruits and vegetables when they are in season, but the rest of the year we enjoy asparagus from Peru, grapes from Chile, apples from New Zealand, and avocados from Mexico. We eat sushi wrapped in seaweed grown in China or South Korea. We top our salads, or stuff our pita sandwiches, with chickpeas grown in India or Australia. For dessert, we indulge in a little chocolate made from cocoa beans grown in Côte d’Ivoire or maybe Ecuador. Whatever your favorite meal or snack might be, these days it is likely that some of what is going into your mouth cam from a country far away.

DB: Reasonable people celebrate this reality, realizing – as they do – not only that globalization makes our food supply far more diverse than it would otherwise be, but also far more secure (given that, with globalization, our nutrition isn’t held hostage to the vagaries of our own country’s weather, or other, problems).

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Jeffrey Miron makes clear that California’s recent minimum-wage hike generated the ill-results predicted by sound economics.

Lincoln Fillmore reports an instance of supposedly serious ‘scholars’ – in this case, Yale’s Samuel Moyn – peddling ideas so detached from reality that they would make Robespierre blush. Three slices:

I almost didn’t believe what I heard. Samuel Moyn, a professor at Yale Law School, told an interviewer that parents can’t be trusted because they have a “divergence of interest” with their own children. He suggests assigning extra weight to the ballots of “the youngest eligible voters”—strangers to the children—lest children continue to be “hostages of their parents.”

Maybe I associate too much with loving, devoted parents and not enough with intellectuals who think parents are holding their kids hostage. In my own life, I recognize that my children’s interests and my own regularly diverge—that’s part of being a parent.

This week my daughter wanted to play Uno while I was in the middle of working, a clear divergence of interest. We played Uno. That’s what parents do—sacrifice for their children.

…..

Living in a free society requires us to begin by assuming that parents act in their children’s best interests. If we stop trusting parents with their children, someone must take their place. Schools? Government? Law professors and 19-year-olds? Each—except the “youngest eligible voters” Mr. Moyn favors—may possess valuable knowledge. But all inevitably carry their own biases, and none have the intimate understanding, sustained commitment or enduring responsibility that parents have for their children.

…..

Trusting parents isn’t naive. It’s an acknowledgment of a simple truth: No government official, no school administrator, no distant expert, no random young voter will ever match a parent’s depth of understanding, love or willingness to sacrifice when navigating the inevitable “diverging interests” between parent and child.

My intrepid Mercatus Center colleague, Veronique de Rugy, reports that suspension of the cronyist Jones Act proves that that piece of protectionism is bad for Americans. Two slices:

Since March, America has been running an accidental experiment and glimpsing what the country might look like without one of its dumbest statutes. The results are in, and they embarrass a century’s worth of U.S. lawmakers and defenders.

The statute is the Jones Act, passed in 1920 to rebuild and protect the U.S. merchant marine fleet after World War I disrupted American shipping capabilities. It requires that any vessel moving cargo between two American ports must be built in an American shipyard, be American-owned, and be at least three-quarters American-crewed. Miss any one of these marks and the shipper is barred from carrying a single barrel of fuel from Houston to Honolulu.

The stated justification for the act is national security. We need American ships and American sailors to fight wars. But 100 years in, it’s hard to repeat this justification with a straight face.

An American-built cargo ship costs $190 million to $250 million to build; the same vessel costs about $30 million from a foreign shipyard. U.S. shipyards now build less than 1 percent of what China and South Korea do, and roughly 300 U.S. shipyards have closed since the early 1980s. Legislation meant to sustain a merchant fleet has presided over its collapse.

…..

The lobby mobilized against a limited waiver as if the republic were under siege. [Colin] Grabow described a national ad campaign drawing millions of views from an account with just a few hundred subscribers, a 10-state media blitz, a form-letter-writing machine, and roughly one op-ed or letter per week, mostly written by people on the industry payroll.

Two influencers who had never mentioned shipping policy, Kaya Jones and Olivia Krolczyk, posted identical lines about “protecting 650,000 Americans” a day apart, and one disclosed a paid partnership. A commissioned study for the Transportation Institute warned, with gross exaggeration, that 100,000 jobs were “at risk.” Fifty-two House Republicans, the speaker among them, bought into the economic illiteracy and urged the White House to let the waiver die.

Such machinery does not stop at persuasion. A few years ago, documents pried from the Maritime Administration revealed that an advisory committee meeting participant suggested, probably half in jest, that every past and present Cato Institute and Mercatus Center scholar (presumably including me) be charged with treason for criticizing the Jones Act. As economist Art Carden observed, that dragnet would have to be enormous, since the critics run from free-market economists to the far-left Nobel laureate Joseph Stiglitz.

Alan Wm. Wolff and Warren Maruyama predict that Trump’s newest tariffs will also fail in court. (HT Scott Lincicome)

John Puri explains that “3.4 percent is not a good inflation rate.” A slice:

The difference between 2 percent and 3 percent inflation may not seem that significant, but compound interest is a tricky thing. Inflation at 2 percent means that the dollar loses half its value in 35 years, whereas inflation at 3 percent cuts that time frame to 24 years. All the distortionary effects of excess money creation are amplified accordingly.

Jacob Smith reveals “when ‘consumer protection’ protects producers from competition.”

How impressive! Trump is also an expert in the details of modern aircraft-carrier equipment!

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… is from page xvi of the Second Edition (2025) of GMU alum Benjamin Powell’s excellent book Out of Poverty: Sweatshops in the Global Economy:

The laws of economics do not put “profits over people.” They dictate which policies will help poor workers and which policies will harm them.

DBx: Yes.

And pick any randomly chosen policy today peddled by either the progressive left or the MAGA right and you will likely pick a policy that, although marketed as helping the poor, actually hurts the poor.

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Phil Magness is no fan of J.D. Vance’s new book. Two slices of Magness’s review:

JD Vance’s disdain for economists has become a pronounced and recurring theme of his political career. In his new book Communion, the vice president devotes an entire chapter titled “A Dismal Science” to attacking the way that mainstream economists have allegedly distorted our entire political system for the worse.

It’s unclear if Vance knows that his chosen pejorative for economics — “the dismal science” — originated in a notorious pro-slavery essay by Thomas Carlyle. The abolition-inclined economists of the 19^th century were “dismal” in Carlyle’s mind precisely because they wedded the tools of “supply and demand” to the “sacred cause of Black Emancipation,” and thereby upended what he saw as a natural social order. Vance largely misses that lesson, although he shares other dimensions of Carlyle’s famously acerbic disdain for measurements of economic prosperity.

…..

Unsurprisingly, Vance’s claims do not hold up under empirical scrutiny.

For several decades, the Bureau of Economic Analysis (BEA) has provided detailed estimates of the economic value of household production, including unpaid work such as “cooking, cleaning, and child care.” Note that these are the very same “unmeasurable” tasks that Vance considers to be the Achilles heel of GDP. And yet, easily accessible reports from the BEA’s website not only measure them with a high degree of accuracy — they also estimate an “adjusted GDP” growth rate that incorporates these measurements.

Ryan Bourne makes clear that “JD Vance’s feared “Cult of Growth” has never run America.” A slice:

The vice president’s criticism is mostly a strawman. I don’t know any economists who advocate GDP maximization. In fact, most economists talk about ill-defined concepts like “social welfare” all the time. The limits of GDP as a proxy for human welfare are emphasized in any 101-level economics course, including this study aid for high schoolers. As my colleague John Cochrane tweeted last month: “GDP answers the question posed to it…. What is the total value of goods and services produced in the market economy…. It is a terrible measure of things it wasn’t designed to measure: consumer surplus, welfare, non-market activity, happiness, etc.”

What economists have emphasized is that GDP is highly correlated with many non-economic outcomes we care about, including life expectancy, literacy, sanitation, and a host of other obviously good things. In other words, GDP is not and doesn’t pretend to be synonymous with human welfare, but formal economic activity appears highly related to that. Anyone proposing policy that crushes output in the name of another objective should therefore be wary of dismissing falling incomes or consumption as mere accounting trivia.

In any case, it’s especially laughable to claim that policymakers prioritize maximizing GDP over all else. A quick review of Congressional Budget Office and Joint Committee on Taxation bill scorings shows that GDP projections have little bearing on whether a bill becomes a law. Of 17 bills scored with respect to GDP since 2000, four passed, one of which was thought to produce a long-term drag on GDP. Of the 13 that failed, nine were projected to boost GDP, including three bills to liberalize immigration. Imagining what America would look like if a true GDP-maximizer had been at the reins drives the point home: Vance’s appraisal of economic policy is off the mark.

The Editorial Board of the Wall Street Journal reports on Comrade Mamdani’s support for an effort to harm workers. A slice:

Sooner or later in today’s America, if you are successful in business you will be targeted as guilty of some alleged political sin. It doesn’t matter how many jobs you create or what services you provide. Ask Amazon.

On Monday New York City Mayor Zohran Mamdani endorsed the Teamsters-backed Delivery Protection Act. Introduced by Democratic Socialists of America council member Tiffany Cabán, the bill would force Amazon to reclassify subcontractors and workers in its delivery network as employees. It could also potentially hit those of other delivery companies such as FedEx.

The Teamsters and its left-wing allies are using New York City to test-drive the ban on subcontracting, which they hope to take nationwide. Mr. Mamdani’s office says Amazon and others use subcontractors “to shield them from responsibility,” which “leaves workers vulnerable and corporations free to avoid accountability for reckless conditions on city streets.”

That’s a misdirection. Amazon’s last-mile delivery network relies on some 40 subcontractors, which employ more than 5,000 workers. This sophisticated network is what can get the goods you order to your doorstop in hours, and it provides flexibility for workers who have irregular schedules such as college students and home caretakers.

Amazon requires its subcontractors to provide full-time employees health coverage and paid time off. Subcontractor drivers earn on average roughly $24 an hour. Many subcontractors offer additional benefits, including tuition assistance and paid vacation.

These small businesses reflect the diversity that progressives claim to favor. Amazon says “25% are owned by Black or Hispanic entrepreneurs, 10% are veteran-owned, and 10% are graduates of our Road to Ownership program”—a company initiative that helps high-performing employees become business owners.

Subcontractors also provide workers’ compensation for workers injured on the job. Vans are equipped with technology that notifies subcontractors of unsafe driving behavior. The cargo e-bikes that couriers peddle around Manhattan cannot travel faster than 12 miles per hour. If New York City streets are becoming more perilous, don’t blame Amazon.

One goal of the bill is to aid plaintiff attorneys who figure they can obtain bigger legal payouts for accidents from Amazon than they could from its small-business partners. Directly employing subcontractors could also impel Amazon to carry more expensive insurance coverage, which would raise delivery costs.

George Will conveys this happy news: “Chicagoans are getting fed up with the city’s teachers union.” A slice:

The CTU’s president, Stacy Davis Gates, who likes her son’s private school, vows to “create the crisis by which the boss … the government can no longer ignore you.” But the CTU is the government’s boss, having engineered the election of a former CTU organizer, Brandon Johnson, as mayor.

Johnson’s guileless candor indicates the CTU’s sense of invulnerability: “I personally don’t give a lot of attention to grades. … My responsibility is not simply to grade the system, but to fund the system.” So, deciding “whether or not our public school system is working” depends not on measuring cognitive outcomes. Rather, it depends solely on the amount of taxpayer money that flows into the system, ultimately to the CTU.

In light of the Trump administration’s suppression of Americans’ economic freedoms, Reason‘s Eric Boehm asks: “What kind of country would America be if people were freely allowed to peacefully deliver goods that had been consensually bought and sold?” A slice:

The list of victimless crimes is unfortunately long and quite ugly—covering everything from arranging flowers without a state-issued permission slip to selling booze at certain times of the day.

Make some room near the top of the list for this one. A Canadian trucker was reportedly arrested by the Border Patrol in New Mexico for “unauthorized domestic freight operations.”

Agents in Las Cruces, New Mexico, arrested the driver (who has not been identified publicly) for allegedly hauling cargo in violation of a nonimmigrant visa, Border Patrol Chief Rosario Vasquez wrote in a post on X. Vasquez said the driver faces “prosecution and subsequent deportation.”

Truly, a serious crime that demands the federal government’s attention. What kind of country would America be if people were freely allowed to peacefully deliver goods that had been consensually bought and sold? I bet this guy was getting paid for his labor too! The horror.

This is illegal because of some nakedly protectionist laws that restrict “cabotage,” the transportation of goods within the United States. As TruckNews.com, a trade publication, explains: foreign truck drivers “are permitted to enter the United States to transport international freight…but generally may not haul cargo that is both picked up and delivered within the U.S.”

Trucks and roads work the same way in Canada as they do in the U.S., so this restriction has nothing to do with safety and everything to do with limiting competition for truck driving jobs in America.

Mani Basharzad makes this powerful case: “We need to do nothing about AI” – with “we,” of course, meaning “the government.”

Who’d a-thunk it? (HT Scott Lincicome)

A year after New York City barred landlords from passing their broker fees on to renters, a new kind of paywall has emerged in one of the nation’s most competitive rental markets. Renters are now paying brokers thousands of dollars simply to learn which apartments are available.

My Mercatus Center colleague Garrett Brown talks with my former GMU Econ colleague Bart Wilson about humanomics.

Should economists continue to credit Joan Robinson with the ‘should we put rocks in our harbor’ criticism of protectionism? Timothy Taylor weighs in.

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… is from page 7 of Menzie Chinn’s and Douglas Irwin’s excellent 2025 textbook, International Economics:

Moreover, one of the defining features of the recent period is record levels of cross-border holdings of assets – everything from factories and other real estate to stocks and bonds. This means that someone from Poland might take out a mortgage on her house from a Swiss bank, or an American credit card holder might pay a record low interest rate because of China’s eagerness to lend to the rest of the world.

DBx: Yes.

Always remember that, by the rules of accounting, U.S. trade deficits (or, more precisely, current-account deficits) are a necessary accounting result of U.S. capital-account surpluses – that is, of net inflows of capital to the United States. The arithmetic behind the accounting is that all U.S. dollars that are invested by foreigners in the U.S. are U.S. dollars that foreigners cannot also use to purchase U.S. exports.

Next time you encounter some government official or media pundit talking or writing as if U.S. trade deficits are necessarily a problem, remember that these ‘deficits’ keep interest rates in the U.S. lower than they would otherwise be, and thus these ‘deficits’ not only reduce the burden of debt for American consumers, they also spur investment in American businesses (which, over time, raises American workers’ real wages).

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Pow! Slam! Art Carden wrestles successfully with myths about so-called “trade deficits.” A slice:

In their textbook, Modern Principles of Economics, Tyler Cowen and Alex Tabarrok ask what happens when Walmart buys toys from a Chinese supplier. I decided to test this once by going to my local Walmart and buying an action figure of All Elite Wrestling’s Brody King, which is part of the Jazwares “Unrivaled” collection and a Walmart exclusive. After tax, the figure cost me $21.82. The figure was manufactured in China for a company (Jazwares) based in Florida, represents an athlete who lives in Georgia and works for a company also based in Florida, and was purchased (and taxed) in Alabama. There is value added at every stage and by people around the world, but let’s focus strictly on the share of the figure that goes to the Chinese manufacturer.

What does the manufacturer do with the dollars he earns by selling me (via Jazwares and Walmart) a wrestling figure? He wants the dollars for dollar-denominated transactions. First, he might want to buy American goods and services. In the Chinese context, one of the services they seek to purchase is American higher education. Second, he might want to invest in the United States by (for example) buying new bonds issued by American corporations. Third, he might want to lend to the U.S. government by purchasing new Treasury bonds. In both cases, he might also want to purchase dollar-denominated assets, such as existing stocks and bonds. Fourth, he might want to increase his dollar reserves for several reasons. The US dollar is the world’s reserve currency; it is famously stable and widely used for transactions in the United States.

Fifth and finally, the Chinese manufacturer might want to sell the dollars to someone who wants to do any of these things.

How does the transaction affect the balance of payments? The trade deficit widens because we imported the figure. That receives considerable attention, but I think the attention the trade deficit receives is overstated. In the long run, countries pay for their imports with their exports. Additionally, the dollars “come back” to the United States as foreign direct investment. The current account deficit (the trade balance) is identical to the capital account surplus.

Matthew Lau is correct: “Protectionists live in economic wonderland.” A slice:

In recent years, the White House’s Protectionist-in-Chief has turned much of the political landscape into an upside-down Wonderland. Among the things that are now topsy-turvy is that the Republican Party increasingly practices socialism, while actual socialists, at least on international trade, champion freer markets.

Under socialism, government owns the means of production, which the U.S. government increasingly wants to do. In June, through $750 million in investments, it took minority equity stakes in two semiconductor companies. In July, through up to $874 million in additional funding, it took minority equity stakes in six more and increased its ownership of a seventh. The Cato Institute counts 30 companies in the federal government’s expanded corporate portfolio. “Republicans warning that communists are taking over the Democratic Party might first ask why their own administration is so eager to have the government acquire pieces of private companies,” Cato analyst Tad DeHaven suggested.

Writing in the Washington Post, GMU Econ alum Julia Cartwright reviews Daron Acemoglu’s new book, What Happened to Liberal Democracy? A slice:

Not every argument is equally strong. Still, “What Happened to Liberal Democracy?” is a book for these times, when many Americans sense that the nation is at an inflection point. Acemoglu’s answer is neither despair nor nostalgia. It is a rallying cry to return to liberal democracy, the system that turns individual freedom into prosperity for all. Right, left or center, the tasks laid out are for everyone: Invest in your community, demand institutions that answer to their citizens and defend the freedoms of people you disagree with.

Paul Meany makes this ever-important point: “Economic liberty begins where government privilege ends.”

Reem Ibrahim reveal yet another front on which the Trump administration is protecting Americans from arrogant and overreaching bureaucrats – not!

David Henderson on Hayek on power.

Shiv Parihar decries the economic ignorance of proponents of legislated minimum wages. Two slices:

This issue is personal for me. The jobs that these policies kill once helped keep me alive.
At 5, I was living in a Utah shelter at the height of the Great Recession. My single mother had little education or experience, but she needed work. Low-wage, entry-level positions were her path into the job market. She didn’t have a job that paid $15 an hour until 2023. If the minimum wage had been $15, she might not have had one at all.

Minimum-wage jobs were even more helpful to my father. He was a high school dropout who had been to jail. Had the minimum wage been $15, far fewer employers would have been willing to gamble on an applicant like him, especially one with a child to take care of half the week.

Utah has never raised its minimum wage above $7.25 an hour, the current federal floor. That isn’t much. But for my family, it was the difference between dinner and an empty stomach.

…..

The well-intentioned supporters of minimum wage hikes think of themselves as battling for everyday Americans, and I’m sure that can feel good. But hundreds of thousands of the poorest Americans have stories like mine. The fight for $15 is a fight against us.

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… is from page 109 of Robert Higgs’s Summer 1995 Critical Review paper, “Coercion Is Not a Societal Constant,” as this paper is reprinted in the superb 2004 collection of some of Bob’s essays, Against Leviathan (footnote deleted; link added; original emphasis):

[G]overnment stipulation of private-property rights differs fundamentally from government command and control. In the former case, the government sets rules regarding only what may not be done – namely, a person may not take actions that violate the established rights of another. Therefore, the choices people make and hence the outcomes of the socioeconomic process remain open-ended to an enormous degree. The concept of “spontaneous order” – a pattern of socioeconomic arrangements, transactions, and realizations unforeseen and unforeseeable by anyone, including those who establish the prevailing private-property rights – nicely expresses the workings of a society based on private-property rights. In the command-and-control case, however, the authorities stipulate what must be done.

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Now that 30 days have passed since the Wall Street Journal published Phil Gramm’s and my piece arguing that Alexander Hamilton would almost certainly not approve of Trump’s tariffs punitive taxes on Americans’ purchases of imports, I can share our piece here in full and without charge. It’s beneath the fold. (Note that authors choose neither these titles nor subheadings. For this article, I wouldn’t have chosen either of these. The reason is that Hamilton did indeed see a significant role for protective tariffs,  although – as Gramm and I argue – not for the conditions under which Trump imposes tariffs.)

[continue reading…]

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Ryan Bourne explains that “burrito-gate reflects inflation’s toxic legacy.”

Brian Albrecht carefully lays out the likely consequences of Mamdani’s government-run grocery stores.

National Review‘s Jim Geraghty is right: “Both parties embrace what’s popular and abandon what’s right.” A slice:

The Republican president keeps taking a government stake in private companies, now up to 30 firms. As the Cato Institute observes, the U.S. government taking an ownership stake in private companies is now routine, and a Republican-controlled House and Senate are ready to make it official federal policy under law, not just some rogue administration’s actions. Zohran Mamdani wants to “seize the means of production”; today’s Republicans want to establish a federal ownership stake in the means of production. A future President Alexandria Ocasio-Cortez or some other progressive Democrat will appreciate Trump-era Republicans establishing the precedent and the legitimacy of the federal government strong-arming many kinds of companies into giving them ownership shares.

Justin Amash tweets:

One of the worst things about Trump is that he’s ushering in more corporate welfare, cronyism, and socialism while parading it under the banner of capitalism, so we end up with all the failings of those ideologies but with a generation of young people blaming the market economy.

Although commonly described as a “non-renewable resource,” petroleum continues to become more abundant. Gale Pooley tells us why.

Although never described as a “non-renewable resource,” elevators in the U.S. are more limited in number than they would be under freer markets. Eric Boehm tells us why.

The Washington Post‘s Editorial Board warns of the U.S. government’s fiscal incontinence. A slice:

The fiscal challenges scheduled to arrive in the 2030s are actually based on optimistic assumptions. They are from the CBO’s baseline estimates, which assume no wars, no recessions, low and stable inflation and no new government programs or tax changes.

Imagine how much worse the debt will look when there is a recession. If, heaven forbid, the U.S. needs to boost defense spending for a protracted war, it doesn’t have much room to grow.

Starting with World War II levels of debt and exceeding Great Depression levels of annual deficits, the U.S. is not prepared to face the demographic-induced challenges that loom, let alone world events nobody can predict.

Budget hawks have been talking for years about many of these problems, and it may have felt like not much has happened. The federal budget has been able to withstand more than many expected. But the 2030s is when the bill comes due.