EconLog Archive
Trade and Exchange
Largest tax increase in US history?
The recently announced auto tariffs are expected to raise roughly $100 billion per year in revenue. How does that compare with other major tax increases? According to the Tax Foundation, the previous record was $76.8 billion for the 2011 tax increase to finance the ACA (Obamacare). In real terms, the auto tariffs are not as .. MORE
Economic and Political Philosophy
The Strangers Who Live Among You
I wonder how Christians who favor the current US government’s war on immigrants can reconcile their stance with Leviticus 19:34, which reads (King James version): But the stranger who dwelleth with you shall be unto you as one born among you, and thou shalt love him as thyself, for ye were strangers in the land .. MORE
International Macroeconomics
The New China Shock
There’s a widespread perception that trade with China caused increased unemployment in America. This is false. Imports from China did reduce jobs in some industries, but this did not have any effect on the overall unemployment rate, as even more jobs were generated in other industries. Last year, the Chinese trade surplus rose to nearly .. MORE
Trade and Exchange
Don Boudreaux Responds to Me and I Respond to Don
I posted on Monday about where I agreed and disagreed with a statement by Veronique de Rugy about imports and exports, particularly about exports. In doing so, I was also disagreeing with Don Boudreaux. Don responded the same day with 2 lengthy comments on my post and 1 new post on his CafeHayek. But .. MORE
International Trade
Trade Deficits Cannot be “Managed”
Writing for the Peterson Institute for International Economics (PIIE), Dr Maurice Obstfeld has a great, non-technical piece addressing some of the claims made by Michael Pettis (among others) that a trade deficit must be “managed.” Obstfeld details the theoretical and empirical issues with Pettis’s claims very succinctly. Allow me to supplement Obstfeld’s comments with my .. MORE
Adam Smith
Breaking the Symmetry – Free Trade Edition
A while back, I wrote a post criticizing Yoram Hazony’s concern that free trade, while generally good, can undermine the bonds of mutual loyalty among citizens. My claim was that “mutual loyalty” by itself does not give a positive reason to prefer intranational over international trade: Suppose I’m looking to build a house, and I .. MORE
Economic and Political Philosophy
Why Methodological Cosmopolitanism?
Cosmopolitanism is the idea that all people on the planet are part of a global community. The philosophy of cosmopolitanism is very broad, sometimes advocating universal rules, or that we should all have the same partiality to people far away than we do closer to us. By appending the modifier “methodological” to “cosmopolitanism,” I mean .. MORE
Game Theory
Pointless Wars
In previous posts, I’ve criticized ambiguity in foreign policy. I cited the example of the Gulf War (1991), which occurred because a US official gave Saddam Hussein the impression that we would not object to an invasion of Kuwait. That was clearly an incorrect signal, and as a result we were drawn into a costly .. MORE
Free Markets
TikTok: Godot, Absurd Politics, and Knaves
The TikTok saga, which will soon rebound, seems to belong to the theater of the absurd. I tell the story up to late January in the just published Spring issue of Regulation. My piece is available online in an html or pdf version. The first paragraph summarizes the absurd affair: Imagine you are watching a .. MORE
Books: Reviews and Suggested Readings
China’s Trade Surpluses are Not a Source of Strength
In his new book Dawn’s Early Light: Taking Back Washington to Save America, Kevin Roberts of the Heritage Foundation argues that, “China believes it has a mandate to rule the world,” and that it is using trade balances to accomplish this. This is an old tactic. “As far back as the Roman Empire,” Roberts argues, .. MORE
International Trade
A Rare Disagreement with Veronique de Rugy and Don Boudreaux about International Trade
Does purchase of imports necessarily imply that we must export? On March 21, 2025, economist Don Boudreaux quoted, on Café Hayek, the following passage from a chapter written by Veronique de Rugy. Here it is: One of the biggest fallacies about trade is that the ultimate value of trade for a country is .. MORE
Fiscal Policy
Is fiscal policy effective?
Valerie A. Ramey of the Hoover Institution has a new NBER paper that examines the impact of lump sum transfer payments on aggregate demand. Here is the abstract: This paper re-evaluates the effectiveness of temporary transfers in stimulating the macroeconomy, using evidence from four case studies. The rebirth of Keynesian stabilization policy has lingering costs .. MORE
Energy, Environment, Resources
My Weekly Reading for March 23, 2025
A Revolution Against Regulation by John Berlau, Law & Liberty, March 20, 2025. Excerpts: The phrase “regulation without representation” also connotes the battle that George Washington and other American patriots fought against taxation without representation. But in researching my book George Washington, Entrepreneur, I found that “regulation without representation” is more than just linguistically connected to the .. MORE
Economic and Political Philosophy
The Justice of (Classical) Liberal Anarchy
The new issue of Regulation (Vol. 48, No. 1 [Spring 2025]) features, under the rubric “From the Past,” my review of Anthony de Jasay’s book Justice and Its Surroundings (Liberty Fund, 2002). This book may appeal more to political philosophers than to economists, compared with Against Politics (Routledge, 1997) which I recently reviewed for Econlib. .. MORE
International Trade
Tariffs and Inflation
As I write this, much digital ink is being spilled on inflationary pressures from Trump’s latest round of tariffs on Mexico, Canada, and China. These are our three biggest trading partners, representing vast amounts of goods over many industries and sectors, affecting both American consumers and American firms alike. Price concerns are legitimate. But we .. MORE
Economic and Political Philosophy
One Requirement of the Rule of Law
There is something that, I think, libertarians have learned, or should be learning, from the current American administration about the rule of law. One illustration among many was provided on March 13 when Ursula von der Leyen announced the European Union’s response to Trump’s 25% tariffs on steel and aluminum imports. (See “EU and Canada .. MORE
Family Economics
Homo Economicus and Home Buying Economics
Economists are often criticized for assuming people behave like homo economicus – some kind of perfectly rational machine making emotionless decisions based entirely on money. Of course, no competent economist actually thinks this way, just as no competent physicist believes that billiard balls are perfectly round spheres operating in a vacuum on a perfectly flat, frictionless surface. .. MORE
Macroeconomics
Why Torsten Sløk was correct
Bloomberg has an article with the following title and subhead: How Torsten Slok Solved the ‘Sherlock Holmes Mystery’ of the Economy When others thought a recession was inevitable, Apollo’s chief economist correctly predicted more growth. He did it by looking at the data. Sløk seems to be one of the few economic pundits that is .. MORE
Fiscal Policy
My New Thought about DOGE
I gave an OLLI (Osher Lifelong Learning Institute) talk on Tuesday on President Trump’s economic policies and actions. As you might imagine, it was pretty negative–on failure to cut major spending programs, on cracking down on both illegal and legal immigration, and on tariffs. The one potentially bright spot was on DOGE. I led .. MORE
Business Economics
Defending Apple’s DEI Program
DEI is often criticized as a modern religion. Without getting into the weeds of that discussion, I would say that my attitude toward DEI, broadly understood, actually does fit neatly into the First Amendment’s view of religion – that the state should pass no law establishing it, nor prohibit the free exercise thereof. Many companies .. MORE
Economic and Political Philosophy
My Talk at UW – Superior
On March 4, I had the great pleasure of giving a talk at UW – Superior on my research on cascading expert failure (ungated version here). You can find a video of the talk on my YouTube channel . Thanks to Dr Joshua K. Bedi for hosting and for the Wisconsin Institute for Citizenship and .. MORE