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… is from page 5 of Tom Holland’s 2003 book, Rubicon: The Last Years of the Roman Republic:

To place personal honor above the interests of the entire community was the behavior of a barbarian – or worse yet, a king.

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The Washington Post‘s Editorial Board – which now includes, by the way, a GMU Econ alum – writes insightfully against banning sales of Chinese-assembled automobiles in the U.S. Three slices:

The legislation for the proposed ban gives the game away by allowing companies that have been manufacturing cars in the U.S. for five years to keep doing so. Volvo would qualify. Lawmakers don’t have a problem with Chinese cars per se. They want to ban additional competition.

…..

China’s industrial policy is not a stroke of genius. Its auto subsidies are funded by massive domestic household savings held hostage by government capital controls. The country suffers from high unemployment and underemployment, even as its population declines. China is shedding factory jobs as automation and outsourcing become more widespread there.

Beijing has been rolling back its car subsidies for the past few years, leading to numerous bankruptcies. Top firms such as SAIC, BYD and Geely, however, are globally competitive and will have lots to offer U.S. buyers, even as Chinese citizens are left worse off by their government’s myopic focus on exports.

If Chinese cars were to break through with U.S. customers, Chinese automakers would likely build factories in America. That basic pattern has played out time and again with foreign manufacturers: Honda, Toyota, Nissan, Mazda, Subaru, Kia, Hyundai, Volkswagen, BMW and Mercedes-Benz all make cars for Americans in the U.S. They do so not because the government forces them to, but because it logistically makes the most sense.

The U.S. might believe it can weaken China by denying its automakers access to the U.S. market. But that’s delusional. These Chinese companies are selling in much of the rest of the world, and they’re not going to stop. American consumers are just missing out.

…..

It is not fair to perpetually ask American car buyers to pay higher prices and have fewer options just to protect American automakers. And ignoring the realities of the global market will not help these American companies in the long run, anyway. Banning additional competition from Chinese automakers is a drastic measure that ignores existing ways to ensure national security while lowering prices for American drivers.

Sam Gregg ponders how to put the protectionist genie back into the bottle where it belongs. A slice:

Trade policy, however, is never developed in a politics-free zone. Despite the animus against protectionism presently widespread among Americans, the likelihood of a new president – let alone a fractious House and Senate – embracing unilateralism is low, at best. Even many political leaders who firmly believe in free trade may balk at adopting this approach, not least because it would be all too easily demagogued to death by free trade critics and special interests as selling out American workers to foreigners.

The alternative to unilateralism is multilateral, plurilateral, or bilateral trade agreements. Each has different mechanics and its own pros and cons. Multilateral agreements, such as those negotiated through institutions like the WTO, generally lower trade and non-trade barriers across the global economy. However, they take years (and sometimes decades) to settle on account of the large number of participating nations, not to mention the various business, union, and NGO interests trying to influence the process. Even in a post-Trump world, the WTO’s sheer size, combined with the presence in its ranks of a China committed to neomercantilist policies and with a bad record of violating or ignoring WTO rules, makes successful multilateralism via such structures a long shot.

Bilateral agreements involve only two partners in the agreement and thus are, theoretically, easier to negotiate. But the proliferation of such agreements also creates confusing, mismatched trade rules across the global economy that end up complicating trade for everyone.

That leaves us with plurilateral free trade agreements. Broadly speaking, these involve a set of countries voluntarily agreeing to rules and policies that liberalize specific areas of trade, while leaving the door open for other countries to join the group if they agree to embrace the rules.

A contemporary example is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This arose out of the ruins of the Trans-Pacific Partnership (TPP), which was scuttled by the first Trump Administration in January 2017. Among other things, CPTPP has reduced barriers on nearly all goods traded between its one European and 11 Asia-Pacific members and moved toward clearer guidelines for digital trade, investments, and services.

John O. McGinnis writes wisely about data centers.

Vitor Melo documents some of the many amazing things that AI is doing for humanity. Two slices:

Begin with the labor market, where AI’s effect so far has been minimal. In a recent study, my colleagues and I compared the occupations most exposed to AI—software developers, financial clerks, administrative assistants—with those least exposed. Job postings and layoffs showed no statistically significant change across industries regardless of AI exposure.

Other studies confirm our findings: AI adoption has no detectable effect on employment, earnings or hours worked, with exceptions so far confined to some entry-level jobs in the most exposed fields. Employers added 162,000 jobs in August, beating expectations, with unemployment steady at 4.1%. Four years after ChatGPT’s launch, the mass layoffs that everyone feared haven’t shown up in the data.

Now consider what the jobs debate leaves out. In 2024, the Nobel Prize for Chemistry went to three scientists for work on protein structures enabled by AI. Many medications work by binding to the shape of proteins in the body, and for more than half a century, determining that shape could require years of lab work for a single protein. Now an AI platform called AlphaFold predicts it in hours. Its makers in 2022 released the structures of almost all 200 million proteins known to science, and more than three million researchers in 190 countries have used them, a third of them to better understand disease. Years of work that once stood between a patient and a cure could see a breakthrough in an afternoon.

New drugs are already arriving. In 2022 South Korea approved a Covid-19 vaccine built with a computer-designed protein, the first medication of its kind. Last year patients with a fatal lung disease who took a drug designed by generative AI saw their lung function improve in a randomized trial, while patients on a placebo declined. And as some bacteria resist antibiotics, AI has identified a new class that kills drug-resistant staph.

…..

Human flourishing has never been measured in job titles. It is determined in suffering avoided, time returned and problems solved that once seemed intractable. Ask whether AI will take our jobs, and the honest answer is: not yet. But ask whether it is helping people prosper, and the answer is an easy yes.

Steven Greenhut is also an AI optimist.

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Here’s a letter to the Wall Street Journal.

Editor:

Mike Sommers makes excellent arguments against banning diesel exports (“The Diesel Export Ban Folly,” Sept. 25). But he leaves one out. By shrinking the market that U.S. refiners serve, an export ban, which raises the likelihood of future bans, will cause refiners to invest less in capacity over time. Why build to serve the global market for an average of 365 days a year when your market in the future is likely to be global for an average of only, say, 300 days a year?

As capacity shrinks, the real long-run price of diesel and other petroleum products will rise. Even if the ban lowers diesel prices today, the cost of that price cut will be higher energy prices tomorrow and long into the future.

Doubters should consider a parallel. Suppose Sacramento, reacting to rising global wine prices, banned wine exports from California for 90 days. What would this ban do to winemakers’ incentives to plant vineyards and build wineries? Knowing that the government is likely to restrict their market again, winemakers would scale back, and Californians would pay more for wine over the long run.

The same is true of diesel.

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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… is from page 88 of David Schmidtz’s chapter “But Is It Just?” in David Schmidtz and Robert E. Goodin’s wonderful 1998 book, Social Welfare and Individual Responsibility: For and Against:

To be sure, what people care about is sensitive to social context, and we should applaud institutions that encourage people to care for each other. But telling people that they are required to tend someone else’s garden rather than their own does not encourage people to care for each other. It does the opposite. It encourages spite.

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Here’s a letter to a Facebook commenter.

Mr. Edinger:

Commenting on my Facebook page, you ridicule me for criticizing Trump’s proposal to ban exports of diesel from the U.S. In your opinion, Trump is a brilliant strategist who understands that “limiting exports of US diesel will ultimately lower domestic prices by increasing our supply, which will ripple through prices for a wide variety of commodities and finished goods since diesel is extensively used in our trucking industry.”

Well.

The price of diesel has risen globally because of the war in Iran. Prohibiting U.S. exports of diesel will only further raise the global price of that fuel. Because the proposed export ban is only 90 days, U.S. oil companies – as Justin Wolfers points out – are not going to sell diesel today at prices in the U.S. lower than they can fetch in 90 days by selling that diesel abroad.

But let’s assume, contrary to fact, that this proposed export ban would indeed cause the price of diesel today in the U.S. to fall below the global market price. By shrinking the size of the market served by U.S.-based oil producers, the export ban – which raises the chances of future export bans – will likely cause these producers to allow the scale of their operations in the U.S. over time to shrink. Why optimize to produce to serve the global market an average of 365 days annually when your market in the future is likely to be the global market an average of only, say, 250 days annually?

As the scale of operations shrinks over time, the real long-run price of diesel (and, by the way, also the real prices of other fuels and products made from petroleum), will rise. At best, the export ban will achieve lower diesel prices today in exchange for higher energy prices tomorrow and long into the future.

If you doubt this analysis, answer me this: Suppose the State of California, in an attempt to lower the prices Californians pay for wine, prohibits the exportation of wine from that state. What effect would this export prohibition have on California winemakers’ incentives to produce wine and invest in additional vineyards and wineries? Do you really not see that shrinking the market available to California winemakers would discourage them from producing more wine and investing in wine production? And do you really not see that such a ban on wine exports would result in Californians paying a higher price of wine over the long run?

What’s true for wine is true for diesel.

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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