State promotion of small-holder agriculture; state promotion of manufacturing; and state controls over finance, especially capital controls DID NOT cause rapid growth in four African countries

See ‘How Africa Works’ Review: Policies and Prosperity; Four African countries—Botswana, Ethiopia, Mauritius and Rwanda—experienced rapid per capita growth. How did they manage it? William Easterly reviewed the book How Africa Works: Success and Failure on the World's Last Developmental Frontier by Joe Studwell. Excerpts:

"the successful countries were, surprisingly, not very good at following his preferred policies. Botswana’s government promoted neither small-holder agriculture nor manufacturing. Mauritius and Rwanda ended capital controls long ago. Mauritius also successfully promoted manufacturing until it did not, and the share of manufacturing in the economy fell to 11% in 2020 from 20% in the 1980s. The author gives Rwanda a tepid grade on the three policy approaches."

"Ethiopia’s government promoted manufacturing with some successes in cement and floriculture, but its leading state enterprise asked North Korea for help to build 10 sugar mills as part of a vast sugar-development project. (It did not end well.)"

"As for the nonsuccesses, Mr. Studwell notes that some of the three policies were followed there, too. Promoting manufacturing has been a popular idea throughout Africa for decades. Ghana’s enthusiasm for manufacturing contributed to the long decline of its economy, from independence in 1957 to the 1980s. As the author notes, the country encouraged the assembly of automobiles, from kits of car parts, when the value of a finished car was sometimes less than the cost of the parts kit. The author worries that Ghana is repeating this automobile nonsuccess today."

"Nigeria’s Ajaokuta steel plant, which cost billions of dollars but never got around to producing any steel."

"Capital controls were also popular among the nonsuccesses. The author notes how the International Monetary Fund insisted on removing capital controls in the majority of African countries in the 1990s, an indication that the restrictions were widespread at the time. He does not note that these capital controls often went to extremes. When inflation is high, controlled interest rates are far lower than inflation, and capital controls are fierce: Savers can’t preserve their wealth by moving it to dollar-denominated assets outside of the country. Some called such a package financial repression and suggested that savers move their wealth out of banks and into real estate or other real assets (or do not save at all). If savers don’t deposit any money in domestic banks, then the banks will have no money to lend, and borrowers will not get the subsidized bank loans Mr. Studwell favors. Destroying both savings and credit does not seem like a win." 

A Hard-Knock Life? Not for the Middle Class

Since the 1960s, the share of U.S. households earning more than $100,000 in real terms has tripled

Letter to The WSJ.

"Jordan McGillis writes in “Why the Middle Class Feels Poor” (op-ed, Feb. 12) that middle-class families feel they’re “losing ever more ground to the upper middle class.” He calls this “intensifying income stratification.” His measurement of stratification begins in 1975, which gives you a low growth rate. Virtually every other measure gives a more robust picture.

Between 1967 and 2023, the share of U.S. households earning in real terms more than $100,000 tripled, while the share earning less than $35,000 fell from 31% to 21%. Then, only 5% of American families earned more than $150,000. Today, more than a third do so.

How did this prosperity happen? We became more productive. The typical U.S. factory worker produces more in one hour than the typical 1947 worker did in a 10-hour day.

Scott Kaufmann

President, Kaufmann Financial" 

Dead people received internet subsidies

See FCC Overhauls $2.9 Billion Lifeline Subsidy Program to Curb Improper Payments: Regulators vote to tighten vetting for phone and internet subsidy after investigation found millions went to dead subscribers by Patience Haggin of The WSJ. Excerpts:

"The Federal Communications Commission voted Wednesday to advance sweeping reforms to its Lifeline program, tightening eligibility requirements and procedures for the nearly $3 billion phone and internet subsidy for low-income households."

"A government review, released by the FCC Office of Inspector General last month, found that over a nearly five-year period about 117,000 deceased individuals across California, Texas and Oregon received Lifeline benefits totaling $5 million. Thousands of these subscribers were already deceased at the time they were purportedly enrolled in the program. Another nearly $5.5 million was claimed for duplicate enrollments, in which more than one monthly benefit was claimed for a single individual, according to the report." 

Medicare Advantage Saves Taxpayer Dollars

Studies show that the Medicare Advantage program costs less than traditional Medicare

Letter to The WSJ. 

"When It comes to the Medicare Payment Advisory Commission (MedPAC), Matthew Fiedler and Benedic Ippolito get it wrong in “The Higher Price Tag on Medicare Advantage” (Letters, Feb. 18).

In claiming that the Medicare Advantage program costs taxpayers 20% more than if the same patients were in traditional Medicare, MedPAC makes no attempt to separate out the different kinds of enrollees. For example, many people in traditional Medicare are also in an employer plan. (Those people are probably relatively healthy.) Some Medicare Advantage enrollees are in special-needs plans. (Those people are less healthy.)

A true apples-to-apples comparison would separate out 16 categories of enrollees and compare the taxpayer cost for each. Yet for that to happen, the government has to do something it has never done: release the data.

Rep. Aaron Bean (R., Fla.) has introduced a bill in Congress that would force that very kind of disclosure. In the meantime, a rigorous study by Milliman estimates that taxpayers save $576 per enrollee per year when an enrollee joins a Medicare Advantage plan. This is consistent with an industry-financed study by Elevance Health.

The Elevance study also found that as Medicare Advantage penetration in a market increases, all doctors in the area begin to practice more efficient medicine. Owing to these “spillover effects,” a 10% increase in market share by Medicare Advantage plans leads to an average decrease in spending on all Medicare beneficiaries of between $105 and $127 per person per year.

John C. Goodman

President and CEO, Goodman Institute for Public Policy Research"

Don’t Mourn the Washington Post’s Decline

Information is richer and more accessible than ever

Letter to The WSJ.

"I have a lot of respect for Peggy Noonan, and I share her view expressed in “A Lament for the Washington Post” (Declarations, Feb. 7) that a robust, inquisitive press is an essential part of a functioning democracy. But I don’t see the end of the Washington Post (if that’s what happens) as much of a loss.

The journalism practiced by the Post in recent years has mainly been of the sort lately taught in journalism schools. Woke, ideological, biased—a loyal ally of the Democratic party. It told us Russia-gate was real, ignored Joe Biden’s decline, hewed unquestioningly to the establishment line on Covid, and reportedly had at least a dozen reporters covering climate change, all reporting the same deeply flawed story as “settled science.” The death of that sort of journalism is something to celebrate, not mourn.

The information ecosystem is vastly richer and more accessible than ever. There is plenty of misinformation on social media. But it also conveys facts, often supported by real-time video, and instantaneous access to underlying truth. You can read the report, watch the congressional hearing, listen to the cockpit voice recording. It’s all there, in real time. This is the way to hold government accountable.

Ms. Noonan is right to call out the media executives leading Big News for their failure to adjust to the technological realities of the 21st century. But most of them fail because they are incumbents, not new entrants, managers, not entrepreneurs. They lack the vision to imagine a path forward and the incentive to change.

Journalism, like any other craft, is constantly evolving. In every era it has had strengths and weaknesses, virtues and faults. The reality is that every human being sees the world through his own unique lens. Better to live in a world where freedom of expression is ubiquitous than one where the “truth” is told to us by a few ennobled journalists.

Jeff Eisenach

Nonresident senior fellow

American Enterprise Institute" 

Who Pays for Trump’s Tariffs? Americans Do

It’s U.S. companies and consumers, not foreigners, that bear most of the economic burden

Letter to The WSJ.

"Peter Navarro’s “Foreign Countries Bear the Burden of Tariffs” (Letters, Feb. 11) on foreigners indirectly paying U.S. tariffs is correct in theory yet detached from reality.

If the U.S. actually had the market power he describes, foreign exporters would in many cases lower their prices to keep selling their goods here, thus offsetting the tariffs’ domestic costs. In practice, however, the U.S. hasn’t been hegemonic in global markets for many years, thanks to the proliferation of regional supply chains and growing economies outside our borders.

Given the relatively low and declining U.S. share of global merchandise trade, economists predicted in 2024 that producers abroad would respond to U.S. tariffs not by lowering their prices here but by diverting trade elsewhere and forcing Americans to bear the tariffs’ costs. This is exactly what’s happened. China, for example, saw its U.S. exports decline in 2025 yet had strong overall export growth and a record trade surplus thanks to higher sales in other markets.

U.S. nonfuel import prices, which include discounts and rebates but exclude tariffs, would show major declines if exporters were eating Mr. Trump’s tariffs, but they were slightly up in 2025.

Many studies—not only from Harvard and the Kiel Institute, which Mr. Navarro blithely dismisses, but also the St. Louis Federal Reserve Bank, the Tax Foundation, economists Gita Gopinath and Brent Neiman, and Goldman-Sachs, among others—have examined real-world transactions and found that U.S. companies and consumers are bearing almost all the tariff burden via higher retail prices or input costs. There are exceptions, but the data confirm they’re not the rule.

Mr. Navarro needn’t, however, read wonky economics papers to see that Americans are paying Mr. Trump’s tariffs (and the higher prices for U.S.-made alternatives that tariffs encourage). Instead, he could ask the thousands of American business owners and farmers who say they’re suffering under the weight of Mr. Trump’s ill-conceived trade wars. They have voiced these concerns in shareholder earnings calls, media interviews, court challenges, bankruptcy filings, regulatory comments and town hall meetings. Hundreds of small-business owners from across the country have even formed a coalition called “We Pay the Tariffs.” These good folks would jump at the chance to go to the White House and tell Mr. Navarro who, exactly, is paying these taxes—if, that is, they had enough lobbying clout to get through the front door.

Scott Lincicome

VP of general economics and trade Cato Institute" 

State accounts of the triumph of the Chinese Communist Party have whitewashed the atrocities that were central to Mao’s rise to power

See ‘Red Dawn Over China’ Review: A Maoist Mythology by Tunku Varadarajan. He reviewed the book "Red Dawn Over China: How Communism Conquered a Quarter of Humanity" by Frank Dikötter. Excerpts:

"Mr. Dikötter sums up the Maoist fable that traces the triumph in 1949 of the Chinese Communist Party, established in 1921 under the direct tutelage of the Bolsheviks in Moscow: “the country is racked by an unholy alliance of ‘imperialist powers’ and ‘reactionary forces,’ the Communists mobilize the ‘peasants’ by taking the land from the rich and distributing it to the poor, then they gradually unite the people in their fight against the Japanese invader and the fascist Nationalist Party.” In the end, “nobody remains standing except Mao, armed with ideological conviction.” The purity of the party’s mission triumphs, and with the liberation of China comes at last the end of an ugly chapter of Chinese history and of a long series of humiliations.

This storyline follows Mao’s “historical vision,” Mr. Dikötter tells us, and is almost entirely bogus. Mao after 1949 has been thoroughly reassessed by historians and is now regarded as a monster by most right-minded people; but views of early Mao—from 1921 until 1949—remain stubbornly rose-tinted. Mr. Dikötter wants us to think again."

"Mr. Dikötter finds evidence of “how marginal the Communist Party was in the history of China” from its inception until the end of World War II."

"In Wuxi, an industrial city west of Shanghai with 100,000 workers, the party had only 25 members in 1929. In April 1927, the province of Zhejiang (population 20 million) had 2,600 members. In the desperately poor province of Gansu (population 6.7 million) in 1939, the party had a mere 264 adherents." 

"many party branches existed only on paper, and that membership statistics were inflated to claim resources from central authorities (bankrolled by Moscow)"

"Before 1940, only one in 1,700 Chinese (itself likely a faked statistic) was a Communist, roughly equivalent to Communist membership in the U.S."

"the Communists took power . . . but through the violent subjugation of China’s countryside and cities. Mr. Dikötter attributes the bulk of their success to Joseph Stalin, who armed and funded them and, in 1945, sent a million-strong army into Manchuria to help the beleaguered Communists. These Soviet troops stayed until May 1946"

"The methods  . . . were simple: scorch the earth and conquer a cowering, starving population."

"they laid siege to towns, burning government buildings, killing so-called ‘class enemies,’ seizing their property and distributing it to the troops.”"

"It was a takeover by havoc and terror."

"“nowhere during the civil war did anyone ever witness people fleeing a region controlled by the [Nationalist] government towards the Communists.” In fact, all flight was in the opposite direction."

"In every village the Communists took, the first task was to divide villagers into landlords, rich peasants, middle peasants, poor peasants and laborers. The next task: “to turn hardship into hatred,” with the poor dispossessing, beating and killing the notionally rich, whose advantage often amounted to a few more sacks of rice, or rudimentary windows on their house."