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I’m happy that American voters yesterday expressed, in such a fulsome way, their disapproval of the circus act that is the Trump GOP. But I am not happy that the circus act that is today’s Democratic party has won. Just as Trump mistakenly interpreted Americans’ votes against Kamala Harris as votes for him and his economic-nationalist (and otherwise unprincipled) ‘agenda,’ the Democrats will interpret Americans’ votes against Trump and his lackeys as votes for their economically illiterate ideas and policies.

The GOP must be purged of the MAGA curse. Hopefully, the 2026 midterm slaughter of that party will prove to be the bitter medicine that achieves this exorcism. But no friend of liberty – no economically literate person – no one who understands and is committed to the liberal tradition that gave birth to the American nation – is pleased that the crop of illiberal (and indeed, in some cases openly anti-semitic) economic imbeciles who yesterday were voted into office will soon exercise power.

Disgust with Trump is understandable; I share it. But this disgust does not preclude disgust for what the Democrats will soon try to inflict upon us.

Here’s what I just wrote at my Facebook page:

Far from saving Americans from socialism and the whackadoodle, economically illiterate left, Trump has fueled their ascent to power – an ascent so quick and full that it was unimaginable just two years ago. Trump achieved this remarkable, horrible outcome not by doggedly promoting free markets and constitutionally limited government but, instead, in part by revealing repeatedly to the American people that he has no use for such principles – or, indeed, for any principles at all.

The other part of Trump’s contribution to America’s jolt toward collectivists-in-power is his obvious immaturity. No ordinary American would welcome such a clown as a neighbor. Every ordinary American cursed to have such an infantile bully for a neighbor would treat that neighbor as a curse, someone to avoid and to hope will soon move to another town – hopefully one far away.

So, yes, in 2024 Trump ‘had the libs.’ But he, in his juvenile brain, didn’t ‘have the libs’ in order to return America to a principled policy of limited government and free markets. He ‘had the libs’ as a sort of reality-show host selfishly interested only in getting a rise out of people with his ridiculous antics and schoolyard ‘humor.’

If America fifty years from now is as economically moribund as is today’s Europe – not an unthinkable prospect – with property rights held in contempt and bureaucrats intruding into every aspect of Americans’ lives and the Constitution a dead letter, a chief spark for this terrible fate will have been Trump. Fortunately for me, I’ll not be around to witness this calamity.

But, hey, despite the collectivism enabled by Trump – and in no small part practiced by him – Americans in 2076 will have a gargantuan arch at which to gaze. So there’s that.

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… is from page 137 of Steven Landsburg’s 2007 book, More Sex Is Safer Sex: The Unconventional Wisdom of Economics [original emphasis]:

When [gasoline] prices spike sharply upward, economic illiterates everywhere are quick to see evidence of collusion or monopoly power among oil companies. In fact, big price spikes are evidence of exactly the opposite. Colluders and monopolists don’t have to wait for changes in supply and demand to hike their prices; they squeeze us to the limit all year round. Sure, changes in demand and supply give them a little more leeway, so prices still fluctuate – but only a relatively small amount.

A monopolist always has price-sensitive customers – because if they’re not price-sensitive, he’ll keep raising his prices until they are. Therefore, even when market conditions change, a monopolist can rarely afford to raise prices very much. Big price fluctuations are evidence of competition.

DBx: Yes. And of course, the same economic reality holds for the prices of other goods and services, including those that spike in the aftermath of natural disasters and wars.

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Mr. McKinney’s hostility to trade is as deep as is that of his hero, Trump.

Mr. McKinney:

Your latest email is prompted by my linking at Café Hayek to Russ Roberts’s recent EconTalk episode on the China Shock.

You assert that Russ, his guest Joseph Francis, I, and other “globalists” strain to hide the truth that the US economy was ravaged by the onslaught of cheap Chinese goods.”

Oh my. I could note that even the China Shock authors make no such claim about the U.S. economy being “ravaged.” I could repeat that even the highest estimate of the number of jobs lost to increased trade with China – 2.4 million over the span of 13 years – is a mere one percent of the total number of jobs ‘destroyed’ over that span in the U.S. with its enormously dynamic, churning labor market. Or I could remind you that research that challenges empirical findings is perfectly legitimate and part of the scientific process.

But instead I’ll ask you some questions: Are you “ravaged” when the prices of things that you buy fall? Is your family devastated when clothing, furniture, appliances, and medicines become more abundant and affordable? Do you cheer when you encounter greater difficulty in finding attractively priced, desirable goods and services to purchase? And do you jeer when you hear that new deposits of petroleum, iron ore, rare earths, and other resources are discovered in the U.S.?

I’m sure that your answer to each of these questions is ‘no.’ An economy, and the people in it, are enriched, not “ravaged,” when those people gain greater and less-costly access to goods and services.

It’s astonishing that so many people who discuss the China Shock focus so intently on the costs of the economic adjustments it required – adjustments identical in kind to those required to every other source of economic change – while giving short shrift to the enormous benefits Americans enjoy from the resulting greater abundance of goods. By this logic, we Americans would have benefited had the Chinese, rather than ‘shock’ us with a greater abundance of goods, instead shocked us by stealing or destroying some of our household possessions, along with inventories at Walmart and other retailers and supplies used by American producers. Think of all the American jobs that would have been created by such a destructive shock! Even better, ponder the research opportunities that would have been presented to econometricians to measure, document, and debate the precise size of this windfall!

I confess to being dismayed that oceans of ink and gazillions of pixels are consumed debating whether or not our increased trade with the Chinese people, and the greater abundance of goods this trade makes available to us, helps or hurts us. How can it not help us?

Unless and until you walk into a supermarket or visit Amazon and can honestly report that you’re unhappy to find prices lower than you expected and the selection greater than you anticipated, please stop complaining about the imaginary harm done to Americans by our having greater access to imports.

Sincerely,
Don

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Charles Lane describes Trump’s self-destructive politics. A slice:

Putting more upward pressure on costs, Trump intensified an impulsive trade war, including import surcharges of up to 12.5 percent on dozens of countries. He targeted Canada with verbal abuse and a 50 percent levy on $20 billion worth of imports — which Canada matched (minus the verbal abuse). Maine and Michigan, both pivotal to control of the Senate, got hurt. Trump walked back some tariffs to help Collins, but it might have been too little, too late.

So much for ending “Bidenflation.” Then there was Trump’s ego-driven meddling in GOP candidate selection. Not since Caligula tried to make his horse a consul has a leader chosen so unwisely. Incumbent Sen. Thom Tillis of North Carolina could have won reelection. But the president threatened to punish his occasional deviations from the Trump line by backing a primary challenger, and Tillis opted not to run. Now, Democrat Roy Cooper is well ahead of the nonentity Trump supported, Michael Whatley.

In Texas, Sen. John Cornyn could have coasted to a fifth term; Trump backed the scandal-plagued but “loyal” Ken Paxton, who won the GOP primary. Paxton is struggling, predictably, against Democrat James Talarico.

Dan Hannan warns of Trump’s fiscal incontinence. A slice:

Mitt Romney memorably pointed out that Obama had borrowed more than all his White House predecessors put together. Donald Trump was emphatic about Obama’s record. “Barack Obama has doubled our national debt. Doubled it.”

That was in 2016. Where are we 10 years on? Well, it turns out that Trump has now borrowed more than all his White House predecessors put together, including Obama. Trump, one might say, has doubled the national debt. Doubled it.

Both presidents might plead mitigating circumstances. Obama could point to the banking crisis, Trump to the pandemic. But neither man was ultimately prepared to make the unpopular decisions, including on Medicare and Social Security, that would allow the federal government to live within its means again.

Russ Roberts talks with Joseph Francis about the alleged “China Shock.”

Ilya Somin, a colleague over in GMU Scalia School of Law, explains that “Trump is using a trade law relic to illegally punish Canada.” A slice:

They are illegal for multiple reasons, part of an ongoing effort by this administration to usurp Congress’ constitutional authority over tariffs. In addition, they harm the U.S. economy and poison relations with a key ally. Section 338 of the 1930 Tariff Act has never been used by a president to enact tariffs before; Philip Zelikow, a conservative trade policy expert and former Bush administration official, has shown that Section 338 was superseded by legislation enacted in 1962 and 1974.

Even if Section 338 is still operative, Trump’s tariffs on Canadian goods violate its requirements. As the complaint explains, the Canadian trade measures cited by Trump as justification for the new tariffs do not discriminate against U.S. goods; Section 338 can only be used against discriminatory policies. Some retaliate against previous tariffs imposed by Trump. Most do not actually treat U.S. goods less favorably than imports from many other countries. In addition, the Section 338 tariffs go well beyond “offsetting” Canadian measures, violating another requirement of the law. They impose the maximum 50 percent rate on all covered goods, even though the Canadian tariffs in question are lower and do not cover as wide a range of products. Some of the Canadian measures are not even import restrictions at all, but merely decisions by Canadian provincial governments to stop purchasing U.S. alcoholic beverages for their government-owned liquor stores. Consumer decisions to stop purchasing a given product are not discriminatory restrictions on trade. Otherwise, such “discrimination” would occur anytime a foreign government chooses to buy anything from a non-American producer when there are U.S. producers that sell similar products.

Here’s the abstract of a new paper by Richard Baldwin:

This paper argues that globalisation’s frontier has shifted from manufacturing GVCs to services GVCs: from the Global Factory to the Global Office. While the Factory remains larger in gross trade, the Office is growing much faster. A heatmap of trade in intermediates shows that the Factory is bloc-shaped and dominated by China, whereas the Office is star-shaped and dominated by America. Gravity estimates show that distance matters less for Office exports, but time zones matter more: each hour of time-zone separation reduces Office exports by roughly 4%, while having no effect on Factory exports. Importantly, all of the world’s export-linked net job creation between 2008 and 2022 occurred in digitally delivered services rather than manufacturing, and trade-linked service jobs command higher average pay globally. The Factory-to-Office shift is also reshaping development. Most emerging economies have seen export-led growth tilt towards services, but their service exports are not yet large enough to drive overall GDP growth the way manufacturing did historically. The big picture is that globalisation’s second unbundling is running out of steam even as its third unbundling is powering ahead. The paper, which raises more questions than it answers, closes with the conjecture that the future of trade is services.

The Washington Post‘s Dominic Pino – a GMU Econ alum – peels back the layers on an effort to repeal the Onion Futures Act. A slice:

Americans can trade futures contracts for any agricultural product — except onions. Onion futures have been forbidden since 1958. Buy and sell class IV milk or 90 percent lean beef trim futures to your heart’s content, but dare to trade in expected onions and you can be fined up to $5,000.

In 1955-56, a pair of commodities traders named Vincent Kosuga and Sam Siegel worked to corner the market on onions. They bought massive quantities of the bulbs, raising the price. Then, they bet in the futures market that onion prices would fall — which they knew would happen because they sold off all their onions at once.

In 1955-56, a pair of commodities traders named Vincent Kosuga and Sam Siegel worked to corner the market on onions. They bought massive quantities of the bulbs, raising the price. Then, they bet in the futures market that onion prices would fall — which they knew would happen because they sold off all their onions at once.

Rep. Robert Griffin (R-Michigan) stressed the onion industry’s support for banning onion futures. “The onion growers have never had a Government subsidy or price support and they are not asking for one,” Griffin said. “In light of the millions of dollars we appropriate annually to support the price of other commodities, surely this one request on the part of the onion farmer is entitled to the sympathetic ear of Congress.”

It was an impressive political accomplishment. Restricting futures trading had been fertile ground for legislation, with around 200 bills introduced between the 1880s and the beginning of federal regulation in 1922. But the ban on onion futures was the first to become law.

Proponents understood the value of futures markets in general. They help stabilize markets and enable price discovery. But they argued that onions were different. “Futures trading in onions, because of the small volume and perishable nature of the crop is not an economic tool, but a gambling device for professional speculators,” said Rep. Gracie Pfost (D-Idaho). The Agriculture Department told Congress that only 5 percent of the volume of onion futures trading involved hedging by onion growers.

But Kosuga was an onion grower, and Siegel was a produce wholesaler. And the Commodity Exchange Authority, the Agriculture Department agency that regulated futures trading at the time, punished them. In an administrative proceeding, they were found to have engaged in market manipulation and were suspended from participating in contract markets.

Congress, however, had settled on a simple story: honest farmers versus reckless speculators. Once that was established, onion futures were cooked.

Agustina Vergara Cid rightly criticizes the collectivism espoused by the illiberal and economically illiterate J.D. Vance. Here’s her conclusion:

If Vance identified the essence of socialism, he would have to condemn both his own policies and the worldview that subjugates individuals to his nationalist agenda.

You can’t defeat socialism with an alternative form of collectivism, only with its opposite: the principle that the individual is not a means to any group’s end. That means protecting each person’s right to trade, hire, and associate with whomever they choose, and to live by their own judgment so long as they respect others’ rights. This is America’s founding premise, and we should embrace it instead of Vance’s or anyone else’s rehashed versions of the very premise it stands against.

After 18 years at the Institute of Economic Affairs, Kristian Niemiętz is moving on. Here’s a slice from his retrospective:

Individually, most of our opponents make little difference, because they promote ideas which are already fashionable, and which would be there with or without them. The marginal benefit of one more socialist, one more Greta Thunberg fan or one more person defending the NHS is close to zero. Classical liberalism and free-market economics, on the other hand, are so unfashionable and so counterintuitive that every supporter counts. These causes could very easily drop out of the national conversation altogether, and had there been no IEA over the past 18 years, they might very well have.

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… is from page 272 of Samuel Gregg’s superb new book, The Civilization of Commerce; this quotation follows Gregg’s mention of Hayek’s observation that “We owe our freedom to restraints on freedom”:

As such, commercial society demands much of us: to decline to enslave ourselves to immediate desires, short-term considerations, and the lies of relativism; to embrace the virtues of prudence, magnanimity, and benevolence, especially when it seems expedient to set such habits aside; and to be wise and virtuous people, however exalted or humble our place in society might be.

DBx: Yes.

For an extended investigation into the bourgeois virtues which are foundational to a peaceful and prosperous market-based society, see Deirdre McCloskey’s 2006 book, The Bourgeois Virtues: Ethics for an Age of Commerce.

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