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Phil Gramm and Me: Trump's Trade War Was a Loser - Cafe Hayek
TweetI just realized that I never shared in full the complete text of Phil Gramm’s and my September 12, 2023, Wall Street Journal piece, titled “Trump’s Trade War Was a Loser.” You can read the full text beneath the fold. Trump’s Trade War Was a Loser Tariffs destroyed jobs in Michigan, Pennsylvania and Wisconsin and […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 133 of Norbert Michel’s excellent 2025 book, Crushing Capitalism: How Populist Policies are Threatening the American Dream; it’s the conclusion of his data-rich book: Economic freedom is the sturdiest ladder out of poverty. Extensive government involvement in the market, whether under the name of industrial policy or central planning, destroys the […]
Rodrik Misses the Pencil's Point - Cafe Hayek
TweetHere’s a note to a new correspondent. Mr. B__: Thanks for sending along Dani Rodrik’s new paper “What the Mercantilists Got Right.” As usual, Rodrik writes engagingly. But I’m afraid I don’t share your positive assessment of his attempt to find merit in mercantilism. He immediately gets off on the wrong foot by arguing that […]
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TweetEconomists at the St. Louis Federal Reserve report this unsurprising fact: (HT Jon Murphy) While headline PCE inflation has increased only modestly in recent months, the categories of goods most exposed to international trade tell a different story. In the U.S., prices for durable goods—such as vehicles, electronics and furniture—have increased noticeably. These price movements […]
Did U.S. Trade Deficits Mostly Fund Americans' Consumption? - Cafe Hayek
TweetHere’s a letter to the Wall Street Journal. Editor: John Cochrane is always worth reading, and his “Trump’s Monetary Policy Desires Aren’t Crazy” (Oct. 22) is no exception. But as even Homer sometimes nods, so, too, does Mr. Cochrane at the end of his essay. He’s correct that “countries that run perpetual trade deficits to […]
Understanding Trump's Misunderstanding of Trade - Cafe Hayek
TweetAs this report reveals, Trump thinks that he’s CEO of America, Inc., and that his job is to ensure that America, Inc., sells as much as possible to – and buys as little as possible from – China, Inc., Mexico, Inc., Canada, Inc., India, Inc., Australia, Inc., EU Inc., and on and on for all […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 340 of Gordon Wood’s great 1991 book, The Radicalism of the American Revolution (footnote deleted): If everyone in the society was involved in moneymaking and exchanging, then to that extent they were all alike, all seeking their own individual interests and happiness…. All this commercial activity did promote equality, yet not, […]
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TweetEric Boehm reports on the inaccuracy of Donald Trump’s and Oren Cass’s predictions about the effects of Trump’s tariffs punitive taxes on Americans’ purchases of imports. Two slices: A week later, during an interview with two reporters from Vox, Cass was asked whether the Trump administration was making an error by imposing a global tariff […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 53 of the original edition of Walter Lippmann’s sometimes deeply flawed but profoundly insightful and still-important 1937 book, The Good Society (footnote deleted): There has been no point in the expansion of tariffs, bounties, bureaucracies, inspectors, censors, police, and armies, no point in the contraction of markets, the disintegration of states, […]
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TweetAdam Michel’s and Veronique de Rugy’s letter in today’s Wall Street Journal is excellent: Paul Ryan and Kyle Pomerleau propose a destination-based cash-flow tax as “A Tax-Reform Alternative to Trump’s Tariffs” (op-ed, Oct. 15). But their argument mistakes a novel blackboard theory for sound policy. A DBCFT would grant Washington a new money spigot while […]
Let's Worry About Heaven On Earth When That Prospect Is Closer - Cafe Hayek
TweetHere’s a letter to the Washington Post. Editor: Fabien Curto Millet and Diane Coyle wisely note that, contrary to the fears of many people, AI poses no more of a threat to the prospects of human beings finding gainful employment than was posed by the harnessing of steam power, electrification, and other labor-saving technological advances […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 311 of Richard Salsman’s 2021 book, Where Have All the Capitalists Gone?: By first defining America’s trade gains as “losses” and then pledging to curb or end them, Trump effectively pledges to terminate gains…. Since Trump defends an actual gain (net imports) as a “loss” for Americans, he’s equally comfortable with […]
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TweetWall Street Journal columnist Allysia Finley hits an important nail square on its head: “Burden the wealthy too much and they flee. That’s how socialists run out of other people’s money.” A slice: Say this for Zohran Mamdani, New York City’s probable next mayor: At least the young socialist Democrat is candid about his intention […]
Our Freedom Isn't Contingent On Other People's Freedom - Cafe Hayek
TweetHere’s a letter to a new correspondent. Mr. L__: You find my recent letter in the Washington Post to be, as you call it, “a perfect specimen of neoliberal apologetics.” (Having never before done anything perfectly, I’m rather proud of myself on this score!) You go on: “What the president sees which market fundamentalists do […]
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TweetWall Street Journal columnist James Freeman is correct: The idea that the center of the world’s capital markets may be about to elect a socialist mayor could cause people to laugh or cry. New Yorkers may need to laugh through their tears if self-proclaimed democratic socialist Zohran Mamdani wins the November election. Fortunately Gotham residents […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 111 of Anne Krueger’s 2020 book, International Trade: What Everyone Needs to Know: Advocates of industrial policy believe that there are some promising new industries that are essential to countries and that these should have support (usually in the form of protection) to raise domestic prices and let domestic production be […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 261 of Thomas Sowell’s 1999 book, Barbarians Inside the Gates: The American public schools’ preoccupation with promoting “self-esteem” has been an overwhelming success. All sorts of people have tons of self-esteem, even when they are ignorant or incompetent. Share Tweet Share Email Print
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TweetCharley Hooper and Solomon Steiner, writing in the Wall Street Journal, explain that deregulation would lower the cost of medical care. A slice: When politicians such as President Trump and Sen. Bernie Sanders want to lower pharmaceutical prices, they resort to heavy-handed approaches through mandates. While that approach is direct and at least superficially logical, […]
How About a National-Security Exception to the National-Security Exception? - Cafe Hayek
TweetHere’s a letter to National Review Online. Editor: Writing about the U.S. Mexico Canada Agreement (USMCA) on trade, Ed Fast correctly notes that “the Trump administration’s renewed use of Section 232 of the U.S. Trade Expansion Act — claiming “national security” to justify punitive tariffs on Canadian steel, aluminum, and, more recently, copper — reveals […]
The Stock Market and the Tariffs of Trump 2.0 - Cafe Hayek
TweetA – perhaps the – chief source of comfort to the pro-tariff crowd has been the recent performance of the stock market. But it’s unclear just how comforting this performance should be. Take the following for what it’s worth. I just calculated that on October 20th, 2017 (the same number of days into Trump 1.0 […]
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TweetJack Butler, writing in the Wall Street Journal, decries efforts by J.D. Vance and some other conservatives to excuse some young Republicans’ expressions of vile sentiments. A slice: Besides, internal hygiene is good politics. Abigail Spanberger, the Democratic nominee for Virginia governor, has refused to withdraw her endorsement of Jay Jones, the nominee for attorney […]
"Unfair Trade" Is Unfair Only to Foreigners - Cafe Hayek
TweetHere’s a letter to a new correspondent. Mr. D__: Thanks for your email. You accuse me of having “a blind devotion to free trade fundamentalism which ignores foreigners’ unfair trade practices like subsidies.” With respect, I do not ignore those practices. Like every serious advocate of free trade, I’m well aware that foreign governments often […]
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TweetI fear that, contrary to the opinion the editors of the Wall Street Journal, Georgetown law professor Stephen Vladeck’s assessment of the Roberts Court is closer to the truth – an assessment that Prof. Vladeck offers in this letter to the Wall Street Journal: Your editorial “The Triumph of the Roberts Court” (Oct. 4) celebrates […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 7 of the late William Riker’s 1982 book, Liberalism Against Populism : No government that has eliminated economic freedom has been able to attain or keep democracy, probably because, when all economic life is absorbed into government, there is no conceivable financial base for opposition. But economic liberty is also an end […]
Responding to Matthew Lynn on Economists on Tariffs - Cafe Hayek
TweetI’m delighted that the Washington Post published this letter of mine – a letter in response to Matthew Lynn’s recent unjustified criticism of economists on trade: Though a few economists carelessly exaggerated the likely ill effects of President Donald Trump’s tariffs, economists’ overwhelming consensus was not that “inflation would surge. Supply chains would crash. And […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 513 of Thomas Babington Macaulay’s magisterial The History of England, abridged edition, Hugh Trevor-Roper, editor (New York: Penguin Books, 1968): He, after the fashion of all the false prophets who have deluded themselves and others, drew new faith in his own lie from the credulity of his disciples. DBx: History is […]
AI Still Needs Some Work - Cafe Hayek
TweetMy friend Jack Nicastro sent me this screen shot of something that he got from AI. It’s not terrible, but it does contain one significant error: I have never said that a “a deficit in trade goods is necessarily a surplus in capital flows.” I often do say that a deficit in goods and services […]
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TweetMy intrepid Mercatus Center colleague, Veronique de Rugy – writing for the Cato Institute’s wonderful Defending Globalization project – explains that economic policies that reduce imports also reduce exports. A slice: The next time you hear someone talk about boosting exports while restricting imports, remember: It’s like trying to fill a bucket with water while […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 110 of Anne Krueger’s 2020 book, International Trade: What Everyone Needs to Know: Enforcing protective measures generally requires a large bureaucracy. DBx: It’s not the most poetic passage that I’ve ever featured as a Quotation of the Day, but it’s true and relevant. Protectionism is fundamentally incompatible with swamp-draining. Share Tweet […]
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TweetDavid Henderson writes in the Wall Street Journal about the 2025 winners of the Nobel Prize in economics. Two slices: The most important issue in economics is growth. That’s why Monday’s announcement of three winners of the 2025 Nobel Memorial Prize in Economic Sciences is heartening. The Nobel committee awarded it to three economists “for […]
On Securing Sources of Supplies - Cafe Hayek
TweetHere’s a letter to the Wall Street Journal. Editor: You report that, in response to increased riskiness of trading with China, General Motors “has quietly seeded the revival of the domestic magnet industry, locking down supply amid trade tensions” (“GM’s Rare-Earth Gamble Pays Off as China Tightens Magnet Exports,” October 13). This news is further […]
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TweetGMU Econ alum Dan Mitchell pushes back against Matthew Lynn’s uninformed indictment of economists on trade. A slice: Some economists overstated the damage of trade taxes. And some of them may have been motivated by anti-Trump sentiments. But that doesn’t change the fact that protectionism is bad for the economy. Here are five points to […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 38 of Edwin Cannan’s 1917 paper, “The Influence of the War on Commercial Policy,” which is Chapter 2 of the 1917 volume, Some Economic Aspects of International Relations: Much of [the dislike for reductions of particular kinds of employment] comes simply from a fundamental misconception which leads people to suppose that […]
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TweetThe Wall Street Journal‘s Editorial Board decries what it rightly calls the “madness” of today’s bipartisan lawfare – madness that terribly corrodes the rule of law. Two slices: Letitia James campaigned on a pledge to get President Trump, accused him of lying about his assets to obtain favorable loan terms, and won a whopping financial […]
Quotation of the Day... - Cafe Hayek
Tweet… is from page 185 of Edwin Cannan’s 1902 address to the British Association (Section F) – an address titled “The Practical Utility of Economic Science” – as this address is reprinted in the 1912 collection of some of Cannan’s essays, The Economic Outlook (E. Cannan, ed.): The people who are most anxious to obstruct changes […]
Sorry, But Pope Leo Is Mistaken - Cafe Hayek
TweetHere’s a letter to a new correspondent. Mr. T__: Thanks for sharing Sohrab Ahmari’s tweet, which I’d not otherwise have noticed. It is, frankly, pathetically inept. In order to criticize the pro-free-market Acton Institute, Ahmari favorably quotes Pope Leo’s assertion that “pseudo-scientific data are invoked to support the claim that a free market economy will […]
Quotation of the Day... - Cafe Hayek
Tweet… is from pages 202-203 of Matthew Hennessey’s superb 2022 book, Visible Hand: For the concept of individual rights to mean anything, the government’s power over people’s decisions about who to be, how to be, and what to do with their lives must be limited. Yes, it will produce outcomes you don’t like. Sorry, that’s […]
Bonus Quotation of the Day... - Cafe Hayek
Tweet… is the concluding paragraph (on page 38) of Robert Lawson’s and Matthew Mitchell’s superb essay “US Economic Freedom in a Trade War,” which is Chapter 2 of the newly released Economic Freedom of the World: 2025 Annual Report: For more than a century, the United States has been the most prosperous country in the […]
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TweetThe Editorial Board of the Wall Street Journal writes insightfully about Trump’s latest, massive increase in the punitive taxes – a.k.a. tariffs – he imposes on Americans’ purchases of imports. A slice: A mythology has spread in the MAGA world in recent months that the critics of President Trump’s tariffs were wrong. Few countries retaliated, […]