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Writing in the Chicago Tribune, Bob Lawson explains what shouldn’t – but, alas, what always does seem to – need explaining: Government officials wield far more power over people than do even the trillionaire-iest of market entrepreneurs. Two slices:

While discussions around income inequality often target billionaires — and now a trillionaire — it is crucial to recognize that the most profound economic control lies not in the hands of a few rich Americans such as Musk, but rather within the halls of government.

Consider Congress. This joint assembly of just 535 individuals — less than 0.00016% of the U.S. population — spends approximately $7 trillion every year, accounting for about 23% of the more than $31 trillion U.S. economy. This Congress leaves just 77% of the income for the remaining 99.99984% of us. The 535 members exert economic influence that dwarfs that of the wealthiest individuals.

Based on the latest Forbes 400 list along with reasonable estimates for the next wealthiest 135 people, I estimate the combined net worth of the wealthiest 535 individuals in the United States, the same number as members of Congress, to be about $7.2 trillion, which translates roughly to around $400 billion in annual income.

Thus, the 535 members of Congress spend annually 17.5 times more than the richest Americans. But wait. It gets worse. While the richest Americans spend their time running their businesses and vacationing on their luxury yachts, they mostly leave the rest of us alone to live as we please.

These rich Americans mostly don’t even know each other, don’t have meetings to coordinate their actions and don’t meddle in our lives on a daily basis. In contrast, Congress meets regularly not only to decide how to spend those trillions but also to conspire to regulate so many facets of our lives: what drugs we can take, what health insurance we can buy and even what light bulbs we are allowed to use in our homes.

Everyone who thinks the rich should do more to solve our social and economic problems should instead be asking why Congress, with 17.5 times as much money to spend every single year, hasn’t yet solved any of these problems.

…..

If we are genuinely concerned about the concentration of wealth and power, our focus must shift — from the billionaires and trillionaire among us to our elected officials in Washington. They are the real oligarchs.

Mark Gianniny’s letter in today’s Wall Street Journal is excellent:

Your editorial “Why Does Trump Hate Anthropic?” (June 17) rightly exposes the dangerous precedent the Trump administration sets with its heavy-handed intervention in the AI market. When the White House abruptly restricts access to a model like Anthropic’s Fable 5, it accomplishes nothing but market distortion.

Government bureaucrats are ill-equipped to police the fluid boundaries of software “jailbreaks” and security safeguards. By micromanaging platforms, the administration is inadvertently picking winners and losers.

Security shouldn’t be dictated by administrative fiat; it should be treated as a critical competitive feature. Let the free market decide which platform delivers the most secure and reliable AI. The best way to outpace foreign adversaries is to unleash American enterprise, not chain it to the whims of Washington.

Sarah Parshall Perry explains that the American Bar Association’s “DEI retreat could reshape legal education.” A slice:

The irony, of course, is difficult to ignore. Legal education has traditionally prized adversarial reasoning, skepticism, and analytical rigor. But under mandates like 303(c), law schools increasingly encouraged ideological conformity on some of the most politically charged issues in American life.

Nor was the concern merely theoretical. Some state supreme courts and lawmakers began questioning whether the ABA was exceeding its proper role as an accreditor by imposing politically infused curricular requirements unrelated to minimum competency in legal practice. Others warned that mandatory bias instruction could itself create constitutional problems at public institutions, particularly where students were effectively compelled to affirm contested viewpoints as part of their professional education.

For years, diversity mandates were treated within legal education as morally untouchable and administratively irreversible. Yet the ABA’s abrupt retreat illustrates how dependent DEI enforcement always was on legal permissibility and political insulation. Once constitutional scrutiny sharpened and federal pressure mounted, the accrediting regime had to recalculate.

Todd Zywicki, a colleague over in GMU’s Scalia School of Law, writes in today’s Wall Street Journal of the recent action by Auburn University’s Board of Trustee to rein in the ideological free-wheeling of that school’s faculty. A slice:

The board began seizing the university’s academic programs—including curriculum, course offerings, degree requirements and academic credentials—at its June 5 meeting. The board also dissolved the faculty senate and replaced it with an advisory council to the president, which includes two faculty members from each of the university’s colleges and additional members appointed by the president.

The board’s assertion of authority mirrors incoming mandates by the Alabama Legislature restricting the role of faculty senates in the state’s public university system. Predictably, Auburn’s faculty has responded with howls of outrage, decrying these intrusions on the faculty’s authority over academic operations. How could outsiders appointed through a political process have the expertise to make such delicate decisions?

I’ve been a professor at a state university for almost 30 years, and I am sympathetic up to a point. But before becoming a professor I was a bankruptcy lawyer. And bankruptcy law teaches an important lesson for how academia can respond to this moment.

Bankruptcy gives businesses an opportunity to admit mistakes, reform and emerge stronger. Successful enterprises don’t need bankruptcy lawyers. But when an enterprise loses its way, it goes into receivership. Most universities aren’t financially bankrupt but have lost their mission and direction.

Society has long recognized certain institutions’ authority to manage their own affairs. Two notable examples are licensed professionals—such as doctors and lawyers—and universities. Universities, even state universities, have run their enterprises with minimal external oversight.

Faculties enjoyed substantial rights of self-governance because they committed to higher standards than those required by ordinary jobs. Professors would establish and maintain standards of scholarly integrity, freedom of speech and inquiry, and rigorous dedication to merit-based assessment of research in specialized areas. They policed their own house, enforcing norms of truth-seeking, maintaining scholarly integrity and rigor, and ensuring that students emerged with basic knowledge, employable skills and civic competency.

But over the past several decades, commitment to those values collapsed. Surveys by the Foundation for Individual Rights and Expression consistently reveal fear among students and faculty around expressing unfashionable ideas. Universities have seen shout-downs, cancellations and even violence against speakers. Merit and quality yielded to “diversity” and “equity.” Truth-seeking has been displaced by faddish theories and ideologically charged teaching and research. Professors design esoteric departments and teach niche classes to cliques of activist students while the needs of other students and taxpayers for real education go unaddressed.

Citing a new Cato Institute study by Andrew Gillen, the Editorial Board of the Washington Post busts some myths about the budgets of U.S. colleges and universities. Two slices:

While states cut back spending after the 2008 financial crisis hammered their budgets, those subsidies resumed their long-term upward trend by 2019. Last year, they averaged $12,081 per student, up from $7,677 in 1980, adjusted for inflation.

There is considerable variation between states: 26 consistently increased funding, 19 held roughly steady and five cut spending. But, on the whole, government is spending more on higher ed.

…..

College administrators desperate to protect bloated budgets will insist in the coming years that they need big state bailouts. But more spending hasn’t kept higher education affordable and, even worse, hasn’t necessarily led to better student outcomes.

Wall Street Journal columnist Andy Kessler is rightly contemptuous of ignorant claims, by progressives such as Alexandria Ocasio-Cortez and Bernie Sanders, that capitalism is failing to raise the living standards of ordinary people. Here’s his conclusion:

Progressives have a relative prosperity problem: envy. Yes, housing is expensive (see progressive policies). Billionaires and now a trillionaire are tantalizing targets even if they bring us the prosperity Ms. Ocasio-Cortez and Mr. Sanders are reluctant to see—or more likely politically forced to ignore. Remember, the future arrives via diffusion, at a different pace for everyone. But it happens. Worrywarts miss it.

To enjoy prosperity, you have to participate in prosperity. Sadly, the progressive money train runs through our teachers’ unions. Students are woefully unprepared for college and life. Realtor.com noted recently that a third of adults under 35 lived with their parents last year—a higher rate than during the pandemic. Maybe the free market should confiscate half of public schools. That’s a prosperity-popping idea I can get behind.

National Review‘s Dan McLaughlin celebrates Benjamin Franklin. A slice:

We were fortunate to have men of genius such as Franklin at the Founding of the country. And we were fortunate to have men of his virtues, too. Any serious book on the American founding will not omit the flaws, foibles, and sins of Franklin and his contemporaries. Yet, in an inversion of the line that Shakespeare gives to Marc Antony, it is their virtues that have endured. Over and over, Franklin put his own good name and accumulated respect and goodwill on the line in service of his country — and not the other way around. He set his considerable ego aside to make compromises, secure a united front, and make room for dissenting views to be reconciled. It is not only Franklin’s inventiveness and vision that contributed so much to the making of America, but also his wisdom, humility, unselfishness, and congeniality.

Scott Lincicome tweets:

It really is PERFECT that several elite economists just spent several weeks debating – with detailed data/charts/analysis/etc – US/EU wealth & living standards, & then a bunch of goofy European tourists simply tweeted abt a Texan gas station & settled the debate in 30 seconds.

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… is from Samuel Gregg’s superb July 2024 paper, “A Free, Prosperous and Secure America”:

As for civilian essentials like medical supplies and food, a free and competitive economy unburdened by tariffs and unimpaired by industrial policy is invariably a more flexible and dynamic economy. This means that different industries can switch quickly to the production of other goods in emergencies. This regularly happens in time of war or national emergencies. The capacity of many American manufacturers to pivot rapidly to the production of medical equipment and supplies during the COVID-19 pandemic is a good example of such resilience.

DBx: A naive yet commonplace presumption is that a country necessarily is more secure the greater are the amounts of ‘critical’ inputs and consumer goods that it produces within its own borders (as opposed to importing these goods). Sam Gregg’s paper – which I highly recommend that you read in full – details several sound and strong reasons to reject this presumption.

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Pierre Lemieux is understandably troubled by the persistence of Luddism. A slice:

Is it possible that the AI revolution will be so radical that no work will be left for humans? If that literally happened—nobody would want more goods and services than AI robots produce—it would mean that the problem of scarcity has been solved, a blessing, not a curse. But perhaps, an objection goes, scarcity would remain for some classes of people, who would have no jobs and no income. This dystopia is impossible in a free market society since the unemployed would be incentivized to exchange among themselves—the unemployed gardener and the unemployed butcher, for example—just as current gardeners and butchers mostly exchange their goods and services among themselves instead of selling them to billionaires and robot owners. (For more on this topic, see Michael Huemer, “In Praise of Job Destruction,” Substack, May 16, 2026.)

Bob Graboyes ponders the infamous Tuskegee experiments, and decries the continuing hubris of ‘experts’ who continue to treat other human beings as subjects to be manipulated in pursuit of ‘experts” current intellectual fancies.

Emmanuel Rincon reflects on “the long tradition of wealth-extracting socialists.” A slice:

From Karl Marx to Vladimir Lenin, from Fidel Castro to Hugo Chávez, many of these figures denounced private wealth and entrepreneurship, despite the fact that few, if any, lived according to the austere principles they publicly promoted. Instead, many enjoyed lives marked by privilege, luxury, and the very economic advantages they claimed to despise.

This pattern is not confined to communist regimes. In the United States, self-described socialists have often criticized wealth accumulation — until they themselves became wealthy. Senator Bernie Sanders is among the most notable examples. For years, Sanders condemned millionaires and argued that extreme wealth accumulation was immoral. Yet after purchasing multiple homes and earning millions of dollars through book sales criticizing capitalism, his rhetoric shifted largely toward attacking billionaires instead.

Speaking of the collectivist obsession with soaking the rich, here are Megan McArdle’s thoughts on the matter. Two slices:

It is a heady moment for the left, because socialism’s tainted brand has recovered from the vivid failures of the Soviet Union. Fully 66 percent of Democrats tell Gallup they view socialism favorably, while 42 percent say the same of capitalism. This makes the left see a revolution marching toward victory, because it can promise something that the center left cannot: a disruptive break with an unsatisfying status quo.

The challenge is that socialism’s rise is spiky, concentrated in blue cities where affluent (but often downwardly mobile) college graduates cluster. That’s a problem for the Democratic Party, where the excesses of progressive governance are helping to make the party’s brand toxic in the less true-blue areas. But it’s also a challenge for the socialists, because cities are the hardest place to execute big plans for new taxing and spending.

…..

The progressivity of the tax code also complicates things on the revenue side. Socialists may wax lyrical about a Nordic-style welfare state, but those states are paid for by heavily taxing the middle class, an idea that is unlikely to gain much purchase with the educated base of the Democratic Socialists of America; today’s college-educated elite is voting for more public services, not less disposable income.

Tim Kane considers the prospects of prospect theory.

James Pethokoukis tweets: (HT Scott Lincicome)

Data centers didn’t raise electric bills nationally from 2015–24. Surprise! Actually, they modestly lowered them. That’s because big fixed grid costs get spread over more kilowatt-hours, and new demand can unlock economies of scale.

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… is from Chapter 17 of Edward Atkinson’s 1892 book, Taxation and Work: A Series of Treatises on the Tariff and the Currency:

Free Trade, on the other hand, requires no force; it is what men engage in of their own motive and for the joint benefit or mutual benefit of both buyer and seller. It is true to the definition of principle—it is “an admitted truth which requires no further proof,” that “the rule of action among human beings,” who have risen above the stage of savagery, is to trade freely; that is to say, to exchange products with each other for mutual benefit. It does away with distribution by war, slavery, and force, substituting exchange by mutual agreement for the profit of both buyer and seller. It is “an admitted truth which requires no further proof,” that this exchange of product for product is an exchange of service by which men help each other. Free Trade or commerce among men and nations tends to the maintenance of peace, order, and industry.

DBx: Pictured here is Edward Atkinson (1827-1905).

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Here’s a letter to The American Conservative.

Editor:

To justify his latest round of tariffs – that is, his latest barrage of punitive taxes on Americans’ purchases of imports – President Trump resorts to allegations of “unfair trade practices.” And to justify the president’s allegations, Jon Schweppe resorts to unfair intellectual practices (“Relax, Panicans: Trump’s Tariffs Are Just Getting Started,” June 20). Any policy can be ‘justified’ if its apologists are unconstrained by reality.

Consider, for example, Mr. Schweppe’s charge that American industry has been “hollowed out” in large part by producers fleeing to countries with weak environmental standards. He’s seemingly unaware that U.S. industrial capacity is today at an all-time high, while U.S. industrial output is a mere one percent below the all-time high that it hit in September 2018 (only months, by the way, after the imposition of Trump’s first tariffs).

Where’s the “hollowing out” about which Mr. Schweppe and other protectionists are forever bleating?

As for Mr. Schweppe’s claim that the U.S. is losing investments to other countries because of other countries’ more-lax regulatory policies, in nine of the ten years from 2016 through 2025, the country that received the most inflow of foreign-direct-investment capital is the United States. (The U.S. ranked second in the pandemic year of 2020, receiving slightly less FDI than China.) Over this entire ten-year period, the U.S. ranked first as a destination for FDI, receiving a total of $2.69 trillion, which is 18 percent of all FDI, and 84 percent more than the amount received by second-place China.

Extending our view to the past 25 years (2000-2024), the value of the stock of FDI in the U.S. increased during this time by $12.8 trillion, which is by far the largest increase in the world. China boasts the second-largest increase of $3.46 trillion – a mere 27 percent of the increase in the stock of FDI in the U.S.*

It’s easy to make any case, no matter how absurd, by misrepresenting reality and hoping that your audience won’t notice – that is, by resorting to unfair intellectual practices. It’s a bit more difficult, yet vastly more productive – and honorable – to actually consult and report the data even when they fail to tell the tale that you wish to be told.

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

* Data gathered, with Claude’s help, from various issues of UNCTAD’s World Investment Report.

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Phil Gramm and Mike Solon bust myths about Reagan’s tax cuts. Two slices:

No major economic policy in modern American history is as misunderstood or inaccurately portrayed as President Reagan’s 1981 tax cuts. According to the Encyclopaedia Britannica, “the tax cuts, in fact, produced the largest budget deficit in the country’s history,” all to finance “tax cuts for the wealthy.” That summarizes the consensus contained in virtually every historical account of the era.

The characterization of the tax cuts as “for the wealthy” is easily refuted by comparing relative income tax burdens before and after. Since the top 40% of income earners in America pay some 90% of income taxes, reductions in tax rates would be expected to give a larger dollar-value tax cut to people who pay the most taxes. But data from both the Internal Revenue Service and the Joint Committee on Taxation show that when Reagan took office in 1981, the top fifth of income earners paid 64% of all federal income tax, the next-highest fifth paid 21%, and the bottom three-fifths paid 15%.

By 1985, the 1981 tax cuts, including inflation indexing of the tax brackets, had been fully implemented. The share of the individual income-tax burden had increased to 67% for the top fifth and dropped to 19% for the next fifth and 14% for the bottom 60%. By 1988, Reagan’s last year in office (and after the 1986 tax reforms), the figures were 71%, 17% and 12%.

Incredibly, by 2022, the top fifth paid 88% of income taxes, the next fifth 13% and the middle fifth 4%. That adds up to 105%, but the arithmetic works because the bottom 40% received checks from the Treasury thanks to refundable credits like the earned-income tax credit, on net paying them a total of 5% of all income-tax collections.

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The day Reagan left office, the American economy was one-third bigger than when he arrived. Tax rates had been cut and tax brackets indexed to eliminate bracket creep. Nondefense spending was 2.5% of GDP less than it had been the day Reagan took office, and defense spending was 0.9% bigger.

The deficit was 3% of GDP—up from 2.6% in 1980. But revenue from bracket creep narrowed the 1980 deficit by half a percentage point. That means the entire increase in the deficit during the Reagan presidency resulted from the abolition of bracket creep—which by definition doesn’t help anyone rich enough to be already paying the top rate.

The untold story of the Reagan era is that the cost of financing the welfare spending explosion of the 1970s was always there but much of it did not show up in the federal budget deficit. Inflation-created bracket creep took the money from taxpayers to cover much of the cost without Congress ever voting to raise taxes. The full cost of making America a welfare state wasn’t fully recorded in the federal budget deficits of the 1970s because inflation and bracket creep tax increases transferred much of the cost to the family budget.

Murray Sabrin’s recent letter in the Wall Street Journal is excellent:

Arthur Laffer and Stephen Moore argue in “The Big Bob Packwood Tax Reform” (op-ed, June 11) that lower tax rates—the hallmark of the 1986 tax reform bill spearheaded by the late Sen. Bob Packwood—generate higher tax revenues. But the deeper issue isn’t tax rates; it’s federal spending.

Every dollar Washington spends is a dollar removed from the private sector, the true engine of prosperity, innovation and job creation. If tax revenues increase because of economic growth, lawmakers shouldn’t view it as an invitation for the government to spend even more. A growing economy should require less government intervention as private-sector employment and opportunity expand. Why should Washington continue absorbing an ever-larger share of the nation’s resources?

As we approach the 250th anniversary of the Declaration of Independence, Americans can reflect upon the Founders’ vision of a nation built on self-reliance and limited government. Today, tens of millions of Americans, businesses and institutions depend on federal dollars for income and benefits. This dependency is far removed from the spirit of independence that animated the American Revolution.

America needs a constitutional budget that phases out unauthorized federal programs. The goal should be to restore economic independence by reducing Washington’s reach and allowing citizens to keep more of what they earn while relying less on the government for their livelihoods.

Brian Albrecht warns us not to reason from an accounting identity, and in doing so, Brian exposes the economic ignorance that is typically served up by Oren Cass’s protectionist outfit, American Compass. Two slices:

If you ever come across an economic argument that seems to make sense but goes completely against conventional economic wisdom, it’s probably “reasoning from an accounting identity.” Run in the other direction. Accounting does not explain anything. That’s why we have price theory.

Take the following example. We all know that “Growth in real GDP depends on only four factors: consumption, government spending, business investment and net exports (the difference between exports and imports).” That comes from the definition of GDP as GDP = C + I + G + NX, so any growth in GDP comes from growth in one of those factors.

From there, one may mistakenly believe that, as Peter Navarro suggested, “Reducing a trade deficit through tough, smart negotiations is a way to increase net exports — and boost the rate of economic growth.” After all, there’s an equal sign there! Y EQUALS C + I + G + NX. It’s just math losers. QED.

No. Wrong.

Just as we never reason from a price change, we need to never reason from an accounting identity. My income equals my savings plus my consumption: I = S + C. But we would never say that if I spend more money, that will cause my income to rise.

It all depends on what caused the change. In my income example, more spending could cause me to work more to cover those expenses. Or I could save less. It depends. In the GDP example, we need to know what caused the change in net exports (or any other part of the equation). We need to be explicit about what actually caused the change in net exports. Exports don’t simply fall from the sky, and move up and down based on our wishes. We need to know the causes. There is an added complication in this example since the reason we subtract imports from GDP is that they are already part of consumption (C) and shouldn’t have been since imports are not domestic production.

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Every semester I make sure to include “Never Reason from an Accounting Identity” in my courses. The reason I’m mentioning trade policy today is that there was a recent “handbook for conservative policymakers” released by American Compass. One of their policy proposals was to eliminate the trade deficit. To accomplish this, we should:

Establish a uniform Global Tariff on all imports, set initially at 10% and adjusted automatically each year based on the trade deficit. After any year when the trade deficit has persisted, the tariff would increase by five percentage points for the following year. After any year when trade is in balance or surplus, the tariff would decline by five points the following year.

The essays defending this general position (although not necessarily the exact policy proposal) are just a series of reasoning from accounting. There is no economic content. As one essay put it,

For decades, the implicit and explicit subsidies to manufacturers that have driven surpluses in countries like China and Germany have caused global manufacturing to migrate from deficit countries to surplus countries, and from none more so than the largest deficit country by far, the United States.

The argument above supposes that there exist countries out there in the ether called surplus countries, and manufacturing moves to them. In reality, when you’re not just playing with definitions but looking at causation, Chinese subsidies increase manufacturing which increases the trade surplus (in some cases). The causal arrows point from subsidy to manufacturing and trade surplus, not from surplus to manufacturing.

The essay goes on to say that “American trade deficits force Americans to choose between higher unemployment, more household debt, or greater fiscal deficits.” Ignore the unemployment red-herring. The trade deficit doesn’t force (or cause) household debt or fiscal deficits. Something else causes both trade deficits and fiscal deficits to go up together.

Noah Rothman reports on “the fantastical abstract world of Democratic Socialists.” Three slices:

If you were looking for an excruciating experience, the New York Editorial Board — a Substack — has you covered.

The outlet recently posted a lengthy interview with Darializa Avila Chevalier, the Zohran Mamdani-endorsed candidate mounting a primary challenge against the Democratic Party’s Hispanic Caucus chair, Representative Adriano Espaillat. In it, Chevalier’s interlocutors tried valiantly to drag the self-described socialist candidate down from the clouds, albeit to no avail.

…..

Their aggravation now palpable, another interviewer asked if it was possible for Chevalier to be “a little less abstract.” But, of course, it was not. Her contention that it is her goal to “create systems where that’s not even the possibility” — by which she meant the act of murder, an evil so intrinsic to the human experience it is literally Biblical.

Chevalier could not “be a little less abstract” because she deals with the world as though it were an abstraction — really, one big metaphor that an intrepid constructivist could reshape with the right combination of words and concepts.

…..

To ask Chevalier to abandon abstractions and descend to ground level with us mere mortals is to abandon her entire worldview. Politics is, to her, an abstraction — an extension of a poetic struggle against the American civic and social compacts. And it must forever be an abstraction. Because when you ask her to make concrete sense of it all for anyone who doesn’t subscribe to her outlook, she can’t do it.

[DBx: Ms. Chevalier is typical of the intellectuals who Hayek described as being guilty of “constructivist rationalism.” This mouthful of a term applies to those persons who are convinced that if they can think of a concept (details are unnecessary) – if they can describe a concept in words or graphs or equations – then that concept is therefore not only possible to achieve in reality, but achievable in a way that has no unforeseen negative consequences.]

Jacob Sullum applauds – and clearly describes – the U.S. Supreme Court ruling that constrains prosecutors’ ability to extract agreements from persons accused of crimes to waive their right to appeal the terms of their plea bargains.

GMU Econ alum Bryan Cutsinger reflects on Kevin Warsh’s start as Fed Chairman. A slice:

Warsh inherited both the inflation overshoot and a committee still divided over how to respond. The test is whether the resolve he voiced shows up in the rate decisions to come.

Even so, Warsh has given more reason for optimism than the Fed has offered in years. A chairman who calls inflation a monetary phenomenon, rejects the idea that the Fed must accept higher prices to secure more jobs, and wants to reexamine the inflation framework from first principles is saying what the institution has long needed to hear.

Recently at UATX, my GMU Econ colleague Bryan Caplan debated my GMU Econ colleague Garett Jones on immigration – a debate moderated by Coleman Hughes. Here’s the video.

Harsh but accurate: Alan Dlugash describes Bernie Sanders as a “climate doomsday clown.”

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… is from page 13 of the 2009 Revised Edition of Thomas Sowell’s Applied Economics: Thinking Beyond Stage One [original emphasis]:

The feeling that government should “do something” has seldom been based on a comparison of what actually happens when government does and when it does not “do something.” Doing something almost always seems like such a good idea, to those who do not look beyond stage one, that they see no need to look back at history or to apply economics. The alternative to a “do something” approach is not to have the government always do absolutely nothing but, rather, to recognize that governments can only do something specific – and that these specifics must be assessed in terms of their specific effects, both immediate and long-term, as well as the general effects of extended experimentation.

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Although trucking deregulation has significantly reduced the Teamsters’ power, not a little bit of that power remains in place. Here’s a letter to the Wall Street Journal.

Editor:

Unionized truck-driver Keith Hernandez writes that, in an attempt to “put profits over people,” driverless-truck companies threaten his and other Teamster members’ “good union wages and benefits” (Letters, June 18).

Mr. Hernandez should look in the mirror, for it is he and his fellow Teamsters who put profits over people. The profits are Teamster members’ excessively high wages paid as a result of their union protecting them from competition. The people are the millions of Americans who now pay for delivery services the unnecessarily high prices that result from this restriction of competition.

If driverless-truck companies successfully break this hold of the Teamsters, these companies will indeed profit, but they’ll do so only insofar as they lower the prices that hundreds of millions of American people pay for delivery services.

Labor unions generate profits for their members at the expense of the people. Successful entrepreneurs generate profits for themselves only by enriching the people.

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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My Mercatus Center colleague Jack Salmon exposes “the methodology laundering of minimum wage research.” Two slices:

A question economist have been exploring for decades is whether we actually know what minimum wage increases do to employment. But an equally important question is whether the methods economists have increasingly relied upon to answer that question are as clean as advertised.

A new working paper by David Neumark and Antonio Rodriguez-Lopez, “Modern Difference-in-Differences, Same Old Answer,” lands a serious blow against recent high-profile research claiming that minimum wages have little to no effect on jobs. Their argument isn’t that event-study designs are bad. It’s that the null results attributed to these methods are artifacts of specific, defensible-sounding, but ultimately flawed researcher choices that, once corrected, yield the same old answer: minimum wage increases reduce employment.

…..

The most striking is the dependent variable. CDLZ measure employment as a share of a varying population, that is, the current population in each period, which itself changes in response to minimum wage policy. This matters enormously. There is a well-documented negative relationship between minimum wages and population: higher minimum wages tend to reduce population in affected areas, as workers and firms relocate. When both employment and population fall after a minimum wage hike, the ratio of the two can actually increase, making it look as though jobs were created when in fact jobs were destroyed. CDLZ never justify this choice, and it’s inconsistent with their stated goal of estimating effects on low-wage jobs.

When Neumark and Rodriguez-Lopez switch to either a constant population denominator or simply log employment, both more defensible specifications, the long-run employment elasticity shifts from a statistically negligible +/- 0.01 to a significant -0.09 (weighted) or -0.20 (unweighted).

Here’s the abstract of Sinem Hacıoğlu Hoke’s and Leo Feler’s new paper, titled “Paying More and Buying Less: 2025 Tariffs and U.S. Household Spending”:

This paper estimates the effects of the 2025 U.S. tariffs on household spending using transaction-level data linked to tariff exposure and a tariff sentiment survey. Comparing high versus low tariff-exposed categories, we find 15 to 20 percent price pass-through. At the mean increase in tariff exposure, prices rise by 1 to 2 percent while spending falls by roughly 4 percent. Survey evidence linking stated intentions to revealed behavior identifies a mechanism for the large spending response: reallocation toward essentials and trade down within categories, concentrated among middle-income households with discretionary slack who express tariff concerns. Low-income households bear a disproportionate welfare burden through regressive pass-through.

Noah Rothman is right: Attacks on Elon Musk’s wealth are attacks on one of America’s finest foundational institutions. A slice:

From the moment that the news of Musk’s deserved prosperity broke, all that Democrats and progressives could think of was how they could get their hands on his money.

Sometimes, they’d tell themselves they need to expropriate his wealth because America’s unsustainable entitlement programs are faltering, as though Democrats hadn’t spent decades demagoguing every meaningful reform to the country’s unfunded liabilities.

Or they’d say that Musk owes his success to government contracts. Therefore, his net worth is fair game — as though federal contracts were a beneficence that Washington can capriciously revoke at will.

In moments of candor, some on the left would argue that it’s simply unethical to allow Musk to enjoy the fruits of his own labor. “Trillionaires shouldn’t exist in a moral society,” argued Representative Jim McGovern.

What’s immoral here is the rapacity to which the Democratic left succumbed. It’s also downright un-American.

As John Locke conceived it, the right to property was as God-granted as the rights to life and liberty. The Lockean ideal is codified in the nation’s founding documents. It is an ideal that protects the individual against being coerced or suborned into sacrificing her talents, efforts, and time to others or the state. As Locke wrote in Two Treatises of Government, “Where there is no property, there is no justice.”

The American foundation is built upon Lockean bedrock, and respect for individual labor and its rewards has contributed in no small measure to America as a force for good in the world.

Charles Cooke writes insightfully about California’s proposed “Billionaire Tax.” A slice:

Why has this happened? There are many reasons, but one of them is that the state’s residents have become all too comfortable having it both ways. Californians want to rely upon the rich to pay almost all of the taxes in the state and to vilify those rich people and to suggest that they shouldn’t exist. By design, California’s budget is heavily reliant upon the wealthy. This is why California collects far more revenue than usual during tech booms and periods of impressive market gains, while during busts and downturns it faces drastic budget deficits. Under the current system, the top one percent of Californians pay around half of all personal income taxes in the state, while the top five percent pay around 70 percent. And unlike in the federal tax code, capital gains are treated as ordinary income in California, which means that when a founder sells his company or an investor realizes his gains, he is taxed at the full rate. The Democrats who run the state insist that this is “fair,” which is their prerogative. But when combined with their open hostility toward those who are paying the bills, it is unsustainable.

A few years ago, the head of the California Federation of Labor Unions, Lorena Gonzalez Fletcher, tweeted “F*ck Elon Musk.” In response, Musk wrote “Message received” and relocated Tesla to Texas. While less profane, the “billionaire tax” has sent the same message, and, whatever its fate, it is now guaranteed to have had the same results.

GMU Econ alum Adam Michel reports that “AI panic is producing terrible tax ideas.” A slice:

In theory, productivity-increasing technologies can replace or complement human labor. New technologies have always replaced some jobs, but in the process, they have created entirely new industries, expanded overall output, and enhanced the value of human inputs and, thus, their wages.

As I explain in a new piece for GIS Reports, the labor is losing to capital story does not show up in the data:

In standard economic models, output is attributed to the combination of labor, capital and technology. Each component can be thought of as earning a share of national income. If, over time, capital became more important for economic output, capital’s share of national income would increase. Empirical evidence does not support this claim.

Figure 1 (below) uses data from the United States Bureau of Economic Analysis to show that the labor share of net income (net of taxes and depreciation, which better captures income actually available to workers and capital owners) is within its historical range, fluctuating above and below the average of 69 percent. Labor’s share rose gradually from the mid-20th century through the early 2000s, declined modestly thereafter and has since returned near its historical average.