Is the Supreme Court Really That Divided? The Facts Say No. by Billy Binion, Reason, June 5, 2025. Excerpt: The gist is simple. That issue focused “on what appears to many to be an existential threat to democracy,” the magazine wrote, which is “the far-right shift of the Supreme Court, and the conservative movement’s plans to commandeer it.” That critique has persisted for some time now. Some decisions today from the Court help show, once again, why it is neither fair nor accurate. First up was Ames v. Ohio Department of Youth Services, in which the justices reversed a lower court decision and sided with a woman who said she was the victim of reverse discrimination, ruling that members of a majority group do not have to clear a higher bar to prove such claims. The opinion, written by Jackson, was unanimous. Here’s the money quote from Justice Jackson’s opinion: The Sixth Circuit’s “background circumstances” rule requires plaintiffs who are members of a majority group to bear an additional burden at step one. But the text of Title VII’s disparate-treatment provision draws no distinctions between majority-group plaintiffs and minority-group plaintiffs. The provision focuses on individuals rather than groups, barring discrimination against “any individual” because of protected characteristics. Congress left no room for courts to impose special requirements on majority-group plaintiffs alone. DRH comment: I disagree with the concept of “reverse discrimination.” It’s discrimination, plain and simple.   Is the ABA’s Accreditation Monopoly Coming to an End? by Jonathan H. Adler, Civitas Institute, June 2, 2025. Excerpts: The American Bar Association (ABA) is the nation’s largest lawyers’ organization. While representing only a small fraction of lawyers, it is also the sole accrediting body for law schools. Whereas universities generally are accredited by regional accrediting organizations, the ABA’s Section of Legal Education and Admissions to the Bar is the only game in town. Federal student loans are only available to accredited institutions, and the vast majority of states require a degree from an ABA-accredited school to take the bar exam. Could this soon change? As the cost of legal education continues to rise and technological changes threaten to transform the delivery of legal services, the ABA’s de facto monopoly on legal accreditation is under siege. Texas and Florida, the states with the third and fourth-most lawyers in the country, are both considering whether to stop requiring bar applicants to have attended an ABA-accredited school. At the same time, the Trump Administration is pushing to expand accreditation options. An April Executive Order directed the Department of Education to step up scrutiny of existing accrediting institutions while simultaneously expediting approval of new accreditors so as “to increase competition and accountability in promoting high-quality, high-value academic programs focused on student outcomes.” And: Whether the ABA sees itself as a cartel today, much of its accreditation behavior aligns with what a self-interested cartel would do. Accordingly, many of the ABA’s accreditation requirements focus on costly inputs, such as the number of books in the library or the number of full-time, tenured faculty, that have no demonstrated relationship to a student’s ability to pass the bar or become an effective lawyer. These requirements, however, have helped inflate the cost of obtaining a law degree and stifled innovation in legal education.   Nathan Fielder’s 737 Stunt Involved Elaborate Workaround of Ridiculous 1,500-Hour Rule by Christian Britschgi, Reason, June 5, 2025. Excerpt: What can be said for Fielder’s idea is that it would be at least as effective as the 1,500-hour rule (which is to say, not at all) and much less costly. No other country in the world requires airline pilots to rack up as much flight time as the U.S. currently does. Neither the Federal Aviation Administration (which regulates aviation safety) nor the National Transportation Safety Board (which investigates crashes) has found anyrelationship between the 1,500-hour rule and improved safety. (The two pilots in the Colgan disaster notably had over 1,500 hours of experience each.) Critics charge that the 1,500-hour rule reduces safety by forcing pilots to spend endless hours performing routine flights at the expense of time spent training in more productive simulators. Regional airlines complain that it’s made recruiting pilots much more difficult, leading to a shortage of pilots and reduced regional airline service. DRH comment: A better way to train pilots, on a benefit and cost per hour basis, is to have them fly simulators for a lot of hours. Why? Because simulators can simulate. That is, they can put the trainee in an emergency situation that he probably will never see in his 1,500 flight hours. And, moreover, it can do so for many emergency situations. This point was made to a good friend of mine by a retired American Airlines pilot who teaches trainees.   The Mediscare Campaign, CBO Version Editorial, Wall Street Journal, June 5, 2025 (June 6 print version.) Excerpts: Start with CBO’s estimate that 5.2 million able-bodied adults on Medicaid would lose coverage owing to the bill’s work requirements. This contradicts the Democratic claim that few able-bodied people on Medicaid don’t work. But in any case, the work requirement could spur some to find gainful private employment that provides health insurance. That’s one laudable goal of the bill. DRH comment: It appears from this quote that the CBO assumed that none of these able-bodied adults would get jobs. That’s amazing. It’s hard to believe that the CBO would be so dense. I haven’t checked the CBO study. I will later. The CBO forecast also includes 1.4 million undocumented migrants who would lose coverage, mainly because the bill reduces federal matching funds for states that extend Medicaid to illegals. The bill also bars ObamaCare subsidies for many non-permanent immigrants and asylum seekers, which CBO estimates would reduce coverage by one million. DRH comment: This is good, not bad. I’ve always advocated, along with substantially expanding the number of immigrants allowed, that the government not subsidize their health care and/or health insurance. And whatever the government does about legal immigration, it should not subsidize health care or health insurance for illegal immigrants. (0 COMMENTS)

For 35 years, I taught economics at the college level. When teaching the theory of supply and demand, I would explain how a temporary shortage of goods would lead to higher prices in the short run. The resulting excess profits would draw new firms into the industry, eventually bringing prices back down to their long run equilibrium level.  During that entire period of time, I don’t recall a single objection. No one raised their hand and told me, “That’s morally wrong, firms should not raise prices when there is a shortage of a good”. But why not? It’s not as if students never disagreed with me on anything, I can recall a number of times when I was challenged on this or that issue.  Today, I wish that college students had challenged me much more frequently, on all sorts of points. It’s clear that they left college not really believing in the things that they were being taught. Most Americans oppose price gouging. Most Americans believe imports hurt our economy and exports help our economy. Nearly half of the public supports tariffs. On a wide range of issues, most people do not accept the “economic way of thinking.” I believe students should challenge their professors far more often. Indeed I’d argue that if college has any purpose at all (which is becoming increasingly controversial in an age of AI), it is not in sitting at a desk taking notes, it is in challenging the professor. Why else would you wish to go to college? Anyone can sit at home and read a textbook. Some might argue that this proposal is unrealistic.  But I know it is not.  Students did occasionally challenge me on one point or another. As an undergrad at Wisconsin, I occasionally challenged my professors (once successfully), and they were invariably quite respectful of my criticism.   It makes me sad to think of the millions of students who sit in college economics courses, not believing what they are being taught, but somehow feeling that they need to keep quiet.  I can sort of understand how that might be the case in a sensitive area like identity politics—but supply and demand? Today, I meet many middle-aged people with very uninformed views on issues like price gouging and international trade.  If only they had challenged their professors in college, they might have avoided adopting erroneous views on these issues. PS.  Some college classes are too large to have Q&A.  But the classes I taught were generally around 30 students. (0 COMMENTS)

I don’t want to sound too paternalistic, but one thing should be said: poor Elon Musk played a game he does not understand. “This is what victory feels like,” he shouted with overexcitement at Mr. Trump’s inauguration event (it is worth watching the one-minute video). He had contributed more than $250 million to the Trump 2024 campaign. He carelessly promised that he would cut $2 trillion, or one-third, from federal government expenditures, before he cut his cutting promise to $1 trillion, and he finally achieved less than 20% of this last goal. His conspiracy theorizing did not help him, as it never does. The acrimonious crash of the Trump-Musk relationship was predictable. (See “The Trump-Musk Relationship Ruptures in Real Time,” Wall Street Journal, June 4, 2025; and “The Trump-Musk ‘War of the Roses,’” June 5, 2025.) Neither of the two men is used to being bullied around. It is not the first time that Trump has turned against a former associate. I suspect that Mr. Musk, like Mr. Trump, requires personal loyalty and fealty of the medieval sort, but neither can fathom decentralized power. They both think in terms of power, not in terms of liberty. And both are more emotional than rational. Musk is certainly a great visionary and entrepreneur, but he does not mind getting or requesting assistance from governments. As we have seen in the last election, he is also a daring political entrepreneur, although his bad bet on Trump may haunt him for a long time. Although he did oppose the deficit-happy “Big Beautiful Bill” and (less openly) the trade war, Musk is certainly not a libertarian or classical liberal. The classical liberal tradition entertains an economic and philosophical theory of politics that excludes the Princess-Mathilde view—that the criterion of a good government is that it serves my immediate interest at the cost of others. At best, Musk’s political ideology looks like naïve democratism based on a “will of the people” that even lawyers dare not oppose. He probably has never read any structured libertarian argument. Some of us may have hoped that Musk would eventually discover the liberal ideal of liberty. If any hope remains, it will likely be frustrated. At any rate, few people in their fifties (even in their thirties, John Maynard Keynes believed) are able to seriously consider new ideas. I doubt he will take the red pill. (See my post “Elon Musk, Edward Luce, and Libertarianism,” June 5, 2023.) The stronger the embrace of Leviathan, the more politics becomes what Anthony de Jasay described: a game of coercively harming some people in order to favor useful clientèles. Mr. Musk thought he had positioned himself on the right side of the divide; he may now, poor man, have fallen on the other side. Trump wrote on his social media: The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. Musk’s billions will help him survive on the wrong side of the adversary and discriminatory state, if only Leviathan does not seriously get on his case. As Lavrentiy Beria, Stalin’s secret police chief, reportedly said, “Show me the man and I’ll find you the crime.” According to the Wall Street Journal, Steve Bannon “suggested that Musk’s immigration status be investigated.” According to The Economist, Bannon wants him to be stripped of American citizenship. Other threats have been voiced. Musk may end up wishing there are judges to block the “will of the people” against him. If one chickens out between the king and the courtier, it will nearly certainly be the latter. In the meantime, some chaotic surprises and reversals are not impossible. As Trump also has much to lose, it is possible that the two warriors will bury the war hatchet, at least publicly or for a time. As William Riker noted, in democratic choices insufficiently constrained by institutions, “anything can happen.” ****************************** In this fictional future, Elon Musk would need a companion (2 COMMENTS)

‘Men of good will, will be called upon to use the power of government to solve our problems of all the social ills: poverty, ignorance, squalor. We as economists are entrusted with these tools and with this now power to be able to achieve that.’ ~Paul Samuelson In this episode, Peter Boettke of George Mason University joins host Russ Roberts to delve into the historical and contemporary relevance of the socialist calculation debate. The discussion reminds us why a centrally planned economy can allocate resources as efficiently as a market-based system, but raises more questions about the debate’s resurgence today. The conversation begins with Boettke recounting Ludwig von Mises‘s 1920 critique of socialism, where he argued that without market prices for capital goods, rational economic calculation is impossible. He then walks listeners through Friedrich Hayek‘s subsequent expansion on Mises’s ideas, in which he emphasized the dispersed nature of knowledge and how market prices communicate information necessary for efficient resource allocation. Following these seminal contributions, economists like Oskar Lange and Abba Lerner proposed models of market socialism, suggesting that central planners could simulate market outcomes through trial-and-error pricing. Boettke and Roberts then turn how the debate remains relevant today; what once may have been considered an “archaic academic debate,” has risen anew, particular with the advent of technologies like artificial intelligence. Below are some questions that occurred to me that I hope might spark conversation and deepen what we might learn together from this episode: 1- What are the “three P’s” Boettke points to that are key to combating the Romanticism of socialism, and what is the significance of each? 2- How does Boettke apply Thomas Sowell’s famous Conflict of Visions to the socialist calculation debate? What do you think this implies about the possibility of settling the debate once again? 3- Boettke describes Hayek’s critique  as deeper and more insightful than Mises’s. For what reasons does he say this, and to what extent do you agree? What does Boettke mean when he says that Hayek teaches us that the problem with socialism is a generative (rather than computational) one? 4- The conversation turns to the role of Ronald Coase in the story of the debate. Where do firms sit in relationship to the debate- or why do we need firms if we have markets? 5- Roberts and Boettke also discuss Michael Polanyi’s turn from science to philosophy, and Boettke stresses Polanyi’s work on the importance of science to a free society. Why is science so important to a free society? What is (or should be) the role of wonder, surprise, and admiration (cue Professor Smith) in both the physical and social sciences? 6- Toward the end of the episode, Roberts poses two questions to Boettke. I’d like to hear your answers to each of these questions: a. Why won’t AI be able to solve the problem of economic calculation? Or will it??? b. Why has socialism come into vogue again? What is it about today’s culture and/or economy that has rendered socialism an attractive option again? 📖 Further Reading: Ludwig von Mises’s “Economic Calculation in the Socialist Commonwealth” Friedrich Hayek’s “The Use of Knowledge in Society” Oskar Lange’s On the Economic Theory of Socialism Ronald Coase, “The Nature of the Firm“   (0 COMMENTS)

An Econlib article by Peter Boettke on “Virginia Political Economy: James Buchanan’s Journey” shows how political philosophy and economics were enmeshed in Buchanan’s work. It also reminded me of an interesting two-part video of an interview of Buchanan by Geoffrey Brennan. The two economists often worked together and were notably co-authors of The Reason of Rules: Constitutional Political Economy (1985), which provides a summary of the contractarian and constitutional construction that is central to their work. (This classic book is available online; I recently reviewed it for Econlib.) The video gives a less technical and more conversational overview of the work of Buchanan, who died in 2013. At the very end of the two-hour conversation, Buchanan disserts on what he believes, à la Albert Camus, is the ultimate absurdity of life, except for one sort of consideration. He confesses a departure from methodological individualism as if death and the meaning of life (or at least of his life) require an exception. I wish the whole conversation were transcribed, if only because a Southern accent is not exactly a French accent. In my own transcription of that passage below, the ellipses indicate conversational hesitations, details, or simply words that I could not identify; Buchanan continues about life: The whole thing may be absurd. What is it all about? … Why is it that I am interested in what’s going to happen when I am no longer around. In my case, it can’t be genetic because I don’t have any children. … But yet then I am intensely interested in that. … It seems to me that—and this does get me a bit away from the methodological individualism … we, or at least I, feel like I am a kind of member of a kind of a tribe, what we might call a tribe that is a continuing tribe, it doesn’t die … it may die, but it does not necessarily die, but it does beyond my mortality, it’s kind of a tribe that would called, described as the spirit of liberty or the spirit of classical liberalism. And it seems to me as a participant in that game … furthering those ideas … and I live as long as those ideas live in a way. I am just a part of a stream and in a sense that stream is moving on. Now it takes people to keep pushing and keep motivating that stream, or else the stream can die, it’s not necessarily immortal. On the other hand, it transcends human life … it provides meaning to ordinary life. … It seems to me the spirit of liberalism, the spirit of classical liberalism, or the spirit of liberty if you want, can be a kind of justification that sort of gets you away form this ultimate absurdity in a way. There are great mysteries in the universe that lie much beyond political philosophy. But whether life is meaningful or absurd, whether eternal life exists or not, it is always the individual who experiences life or death. “Tho’ there is a God or not,” sang poet Leonard Cohen. ***************************** Buchanan’s family farm in Tennessee (0 COMMENTS)

Models are indispensable.  Reality is insanely complex.  Mapping every possible interaction would be computationally impossible and utterly useless for understanding the world.  Instead, we flatten things down to key causal variables and use them to help us make predictions and decisions.   But models come in different shapes and sizes.  Which model is useful depends on what one is trying to do.  Take, for example, the following two maps.  Both of these maps are of the same area: Nicholls State University in Thibodaux, LA, my employer.  The first of these is the campus map we have on our website.  The second is a topographical map of the same area.  Let me ask you, dear reader: if you wanted to get to Powell Hall, which of these two maps would you prefer?  Obviously, the campus map would be most helpful.  The topographical map, while it contains useful information, would be useless for navigating the campus.  Likewise, the campus map would be useless if one wanted to, say, hike in Thibodaux. Using an incorrect map (an incorrect model) can lead to disaster.  One such example comes from the US Invasion of Grenada in 1983.  The US invasion was planned, not with military maps, but with tourist maps with military grids superimposed, bought earlier that day from a shop in Fayetteville, NC.  The maps were not helpful: 4 SEALs died due to water hazards not on the maps, coordination between soldiers and their air cover could not occur as they were using different maps, and so on. It almost became a disaster on the scale of the Iran Hostage Crisis.   All because the military used inappropriate models. The same is true of economic models.  As we have seen over the course of this second Trump Administration, their models of trade have been disastrous.  Absolutely nothing has gone right: interest rates are rising, countries are retaliating, the dollar is weakening, prices are set to rise once these stockpiles run out, American firms are laying off or slowing hiring, major factory plans have been cancelled, the stock market tanked, and China is stepping into American markets.  It’s so bad that the president and his team now admit that prosperity is no longer a goal (but it’s ok, because prosperity is bad).  Indeed, these tariffs were supposed to bring in almost $60 billion in revenue per month.  April’s tariff revenue (which is high because of stockpiling) was just $17 billion.   When the Trump Administration gives models, they give bad models.  It’s like invading Grenada with a tourist map or using a topographical map to navigate a college campus.  Their models have unrealistic, often contradictory, and usually unsupported assumptions.  Their models give unrealistic, often contradictory expectations.  And, consequently, the American people pay the price. What is important to note is that most models are at least mathematically coherent.  But that mathematical cohesion does not imply the model is useful for the purpose.  A model’s use is not determined by the mathematical sophistication, but rather its application and ability to provide useful insight.  Consequently, a model that might be more “realistic” by incorporating more elements of reality or mathematical sophistication may be all but useless to a model less “realistic” for being more simple.  If the more complex model provides limited (or incorrect) insights, then it is not useful, no matter how mathematically coherent it is.  Science is not merely about manipulating models.  Much of it is having the knowledge to choose the right model. (1 COMMENTS)

Don Boudreaux reminds us that this is Adam Smith’s birthday or, at least, the birthday announced on his tombstone. For that reason, I’m sharing one of the first articles I wrote for antiwar.com. A version will appear in a book on foreign policy that I’m working on. Here it is. Adam Smith’s Economic Case Against Imperialism Antiwar.com, November 28, 2005 Sometimes, when I recommend that people read Adam Smith’s Wealth of Nations (the full title is An Inquiry into the Nature and Causes of the Wealth of Nations), I am met with a supercilious snort, as if nothing that was written in 1776 could be relevant to today. A very common attitude seems to be, “That is sooo 18th-century.” I think what it really shows is that the “snorter” has simply not read Adam Smith. Smith’s book is chock-full of insights: that when competitors get together they often collude; that governments can’t stop such collusion but should refrain from facilitating it; that countries with private property, free trade, and low taxes are the ones that do well; that the incentives of universities are so messed up (yes, even back then) that much less learning takes place than could; and, of more immediate interest, that imperialism doesn’t work. You read it right. Adam Smith was one of the most outspoken, clear-thinking, and well-reasoning spokesmen against imperialism in the 18th century. One particular imperialist this Scotsman took on was Britain, and one particular instance was Britain’s trying to hold on to the 13 colonies. Smith didn’t chant some 18th-century version of “No blood for oil.” Instead, he calmly and numerately toted up the costs of imperialism to the British people, estimated the benefits to Britain, and concluded that the costs greatly exceeded the benefits. The benefits, in Smith’s estimate, were the monopoly profits that British merchants had on sales to consumers in the colonies. The costs that Britons bore were the costs of using the military to defend that monopoly. Here’s an excerpt from Smith: The maintenance of this monopoly [on trade with the American colonies] has hitherto been the principal, or more properly perhaps the sole end and purpose of the dominion which Great Britain assumes over her colonies. … The Spanish war, which began in 1739, was principally a colony quarrel. Its principal object was to prevent the search of the colony ships which carried on a contraband trade with the Spanish Main. This whole expence is, in reality, a bounty which has been given in order to support a monopoly. The pretended purpose of it was to encourage the manufactures, and to increase the commerce of Great Britain. But its real effect has been to raise the rate of mercantile profit. … Under the present system of management, therefore, Great Britain derives nothing but loss from the dominion which she assumes over her colonies. 1 Later, Smith elaborated, showing that the costs to the British government of defending the 13 colonies were greater than the benefits to the British. He wrote: A great empire has been established for the sole purpose of raising up a nation of customers who should be obliged to buy from the shops of our different producers all the goods with which these could supply them. For the sake of that little enhancement of price which this monopoly might afford our producers, the home-consumers have been burdened with the whole expence of maintaining and defending that empire. For this purpose, and for this purpose only … a new debt of more than a hundred and seventy millions has been contracted over and above all that had been expended for the same purpose in former wars. The interest of this debt alone is not only greater than the whole extraordinary profit which it ever could be pretended was made by the monopoly of the colony trade, but than the whole value of that trade…. 2 Adam Smith as Early Public Choice Theorist That’s not all. Smith pointed out that the costs and benefits of maintaining the colonies were not symmetrically distributed and that this accounted for why the British wouldn’t give up their colonies voluntarily. Consider this justly famous passage: To found a great empire for the sole purpose of raising up a people of customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers. Such statesmen, and such statesmen only, are capable of fancying that they will find some advantage in employing the blood and treasure of their fellow-citizens to found and maintain such an empire. Say to a shopkeeper, ‘Buy me a good estate, and I shall always buy my clothes at your shop, even though I should pay somewhat dearer than what I can have them for at other shops’; and you will not find him very forward to embrace your proposal. But should any other person buy you such an estate, the shopkeeper would be much obliged to your benefactor if he would enjoin you to buy all your clothes at his shop. 3 In other words, Smith was saying, the costs of maintaining colonies in order to maintain a preferential trade arrangement exceeded the benefits – thus his statement that the project is unfit for a nation of shopkeepers. But the cost to the shopkeepers is a small fraction of the cost to Britain – they pay only their pro rata share – whereas the shopkeepers get the lion’s share of the benefits. If the shopkeepers had to bear the whole cost of the arrangement, the benefits would not be worth it. Thus his analogy to the sucker deal that someone hypothetically offers a shopkeeper: buy me a house and I’ll promise to buy all my goods from you from now on. The shopkeeper would quickly reject such a deal. But if the shopkeeper can find others to pay for the house and he pays only a fraction, the deal might be in the shopkeeper’s interest. Using the asymmetric distribution of costs and benefits to explain why governments take actions that are not in the general interest – whether the special interest benefited be farmers, seniors, or Northrop Grumman – has become part of the tool kit of the modern economist, due to the “public choice” revolution started by James Buchanan and Gordon Tullock. But notice that Smith had the idea two centuries earlier. Smith believed the British government would try to hang on to colonies by force. Smith wrote: To propose that Great Britain should voluntarily give up all authority over her colonies, and leave them to elect their own magistrates, to enact their own laws, and to make peace and war as they might think proper, would be to propose such a measure as never was, and never will be adopted, by any nation in the world. No nation ever voluntarily gave up the dominion of any province, how troublesome soever it might be to govern it, and how small soever the revenue which it afforded might be in proportion to the expence which it occasioned. Such sacrifices, though they might frequently be agreeable to the interest, are always mortifying to the pride of every nation, and what is perhaps of still greater consequence, they are always contrary to the private interest of the governing part of it…. 4 Smith even predicted the Revolutionary War and implicitly predicted its outcome. He wrote: [I]t is not very probable that they will ever voluntarily submit to us; and we ought to consider that the blood which must be shed in forcing them to do so is, every drop of it, blood either of those who are, or of those whom we wish to have for our fellow-citizens. They are very weak who flatter themselves that, in the state to which things have come, our colonies will be easily conquered by force alone. 5 Wise words from a wise man. (0 COMMENTS)

I recently came across two interesting articles that got me thinking about trade balances. The first was written by Christopher Caldwell and discusses France’s rustbelt: A process that Guilluy calls métropolisation has cut French society in two. In 16 dynamic urban areas (Paris, Lyon, Marseille, Aix-en-Provence, Toulouse, Lille, Bordeaux, Nice, Nantes, Strasbourg, Grenoble, Rennes, Rouen, Toulon, Douai-Lens, and Montpellier), the world’s resources have proved a profitable complement to those found in France. These urban areas are home to all the country’s educational and financial institutions, as well as almost all its corporations and the many well-paying jobs that go with them. Here, too, are the individuals—the entrepreneurs and engineers and CEOs, the fashion designers and models, the film directors and chefs and other “symbolic analysts,” as Robert Reich once called them—who shape the country’s tastes, form its opinions, and renew its prestige. Cheap labor, tariff-free consumer goods, and new markets of billions of people have made globalization a windfall for such prosperous places. But globalization has had no such galvanizing effect on the rest of France. Cities that were lively for hundreds of years—Tarbes, Agen, Albi, Béziers—are now, to use Guilluy’s word, “desertified,” haunted by the empty storefronts and blighted downtowns that Rust Belt Americans know well. Guilluy doubts that anyplace exists in France’s new economy for working people as we’ve traditionally understood them. Paris offers the most striking case. As it has prospered, the City of Light has stratified, resembling, in this regard, London or American cities such as New York and San Francisco. It’s a place for millionaires, immigrants, tourists, and the young, with no room for the median Frenchman. Paris now drives out the people once thought of as synonymous with the city. So Europe suffers from many of the same problems that concern America’s populist right.  But do you know what Europe doesn’t have?  A big trade deficit.  Indeed the EU runs a large trade surplus.  France itself runs a tiny trade deficit, but it’s far too small to be of any economic significance. (Currently estimated by The Economist at 0.1% of GDP.) So if Europe’s rust belt is not caused by international trade, then what exactly is the problem? Think of a simple model where over a period of decades the share of workers in manufacturing falls from 20% to 10% of the workforce.  You might wonder how this could happen without a significant trade deficit.  The answer is simple—automation. That sort of process does not necessarily lead to a high overall rate of unemployment, as new jobs are created in service industries.  But the process will not be uniform.  Regions that focused on manufacturing may become depressed, while cities that feature an innovative service sector are likely to thrive. The French rustbelt suggests that international trade is not the primary issue, something that perceptive observers knew this all along.  Here’s JD Vance in Hillbilly Elegy: “We talk about the value of hard work but tell ourselves that the reason we’re not working is some perceived unfairness: Obama shut down the coal mines, or all the jobs went to the Chinese. These are the lies we tell ourselves to solve the cognitive dissonance—the broken connection between the world we see and the values we preach.” Vance is correct; we need to stop telling lies that China is to blame for our rustbelt. The second story was published in the Financial Times, and discusses Switzerland’s persistent trade surplus: The world’s richest major economy has both a strong currency and a strong manufacturing base. The Swiss franc has been the top-performing currency over the past 50 years, 25 years, 10 years and five years. It is near the top even over the past year when some of the more beleaguered currencies have staged a comeback against the dollar. Nothing can compare for durable strength.  Yet Switzerland also defies the assumption that a strong currency will undermine a nation’s trading prowess by making its exports uncompetitive. Its exports have risen and are near historic highs both as a share of Swiss GDP (75 per cent), and as a share of global exports (near 2 per cent). Protectionists occasionally claim that trade surpluses are achieved though unfair methods.  They argue that some countries achieve surpluses by engaging in “mercantilist” policies such as depressing wages with a weak currency.  In contrast, most economists believe that trade surpluses reflect the fact that high saving countries run capital account deficits, buying more foreign assets than they sell.  They see the capital account as the dog and the current account as the tail. Consider Germany and Switzerland.  It’s hard to think of two more similar countries.  Both countries focus on producing high quality manufactured goods such as precision machinery.  Both have high saving cultures.  Most Swiss people even speak German.  And both countries tend to run persistent trade surpluses.  Protectionists occasionally accuse the Germans of achieving this surplus by artificially depressing their currency (the euro).  But Switzerland achieves a similar result with the strongest currency in the world and exceedingly high wages.  When you look at these two cases side by side, it seems far more plausible that high savings rates in Germany and Switzerland are leading to a trade surplus.  Only Germany has anything remotely close to a weak currency (and even the euro is not all that weak.) (0 COMMENTS)

Fittingly enough after writing an extended review about a book about the pitfalls of rules that don’t allow for exceptions, I came across a recent news story about a recall issued for the recent ID.Buzz electric van from Volkswagen. Vehicles can be recalled for all kinds of reasons, of course. A vehicle I bought a couple of years ago recently had a recall issued to address a software bug that could make cruise control unexpectedly accelerate to dangerous levels in rare cases. This was clearly a good basis for a recall and for a fix to be issued. So, what was the critical flaw afflicting the ID.Buzz? Well, it turns out Volkswagen had given passengers in the back row too much space. In most three row vehicles, the seats in the last row tend to be small and cramped, but Volkswagen designed their vehicle to make the seats comfortable and spacious, allowing for a pleasant seating experience. Regulators, however, would have none of this. You see, the back row consists of two seats, both wide enough to comfortably seat two full size adults. In fact, the seats were so spacious that regulators argued people might decide to squeeze a third person in the back row, between the two designated seats. But that third person wouldn’t have a seatbelt! Therefore the only acceptable option according to regulators is to make sure that the seats can only barely fit two people. If you let car manufactures provide space to safely and comfortably fit two passengers, people might take the opportunity to unsafely and uncomfortably squeeze in three passengers. So the rules require you only allow enough space to seat two people uncomfortably. In order to bring things in line with what The Rules Require™, Volkswagen will take in the recalled vehicles and install a barrier in between the two seats in the back row, effectively shrinking the seating space available to convert it into the kind of cramped seating the law demands. I imagine a lot of current ID.Buzz owners will decline to get their car “fixed” in this way and just ignore the recall, but future owners will not be so lucky. Of course, it is possible that some people will attempt to do something foolish like squeeze three people into a seating area designed for two, leaving one person without a seatbelt and placing themselves at risk. On the other hand, the list of ways people can make equally foolish and risky decisions is approximately infinity pages long. There really does come a point where sensible rules takes a turn into living a life where Mrs. Grundy is hovering over you at every moment, constantly yelling “No stop it stop it stop it you might hurt yourself!” at your every move. And when the day-to-day life of citizens looks less like “give me liberty or give me death!” and more like “please regulate my seating space to stop me from hurting myself with bad choices,” I’d say we’ve long since crossed that point. (0 COMMENTS)

  I’ve noticed with increasing frequency that various commentators on the media talk about who runs the country. Many right wingers think that Joe Biden was supposed to run the country but didn’t and, instead, he deferred to a troika who ran the country. Many people across the spectrum think that Donald Trump currently runs the country. They’re all wrong. No one runs the country. Think of all the decisions that you make in a day. On how many of them does the U.S. president decide? Close to zero. He can influence your decisions, but he doesn’t run your life. And if he doesn’t run your life and doesn’t run the lives of over 300 million other residents of the United States, how could he run the country? What people may mean is that the U.S. president runs the federal government. But that’s not true either. Recall your civics class. There are 3 branches of the federal government: executive, legislative, and judicial. The president runs the executive branch and even there, there are executive agencies with some autonomy. Think of the Federal Reserve, for example. So at most the president runs one third of the federal government. On a related note: People often say that the president is the commander in chief of the country. No, he’s not. He’s the commander in chief of the military, which is less than 1% of the country.   (0 COMMENTS)