The US tax system has become much more progressive

Tweet from Stefan Schubert.

"The US tax system has become much more progressive (notice the X-axis). The richest pay half their income in tax, the poorest nothing."

  

The age-standardized cancer mortality rate in the US has fallen by almost 40% since 1990

Tweet by Jeremy Horpedahl.

"The age-standardized cancer mortality rate in the US has fallen by almost 40% since 1990. Technological progress and economic growth is not just new entertainment gadgets that fit in our pockets!"

  

19 years ago the Guardian said we have "ten years to save the planet from mankind"

A tweet from James Melville. Click here to see the original article.

 

What’s Across the Border? Re-Evaluating the Cross-Border Evidence on Minimum Wage Effects

By Priyaranjan Jha, David Neumark & Antonio Rodriguez-Lopez. 

"Dube, Lester, and Reich (2010) argue that state-level minimum wage variation correlated with economic shocks generates spurious evidence that higher minimum wages reduce employment. Using minimum wage variation within contiguous county pairs sharing a state border, they find no relationship between minimum wages and employment in the U.S. restaurant industry. Using the same research design, we show that this result is overturned if we use instead multi-state commuting zones, which provide superior definitions of local economic areas. These contrasting results are explained by a positive bias in the county-pair specification when using pairs formed by counties from different commuting zones." 

The Trouble With MedPAC

A federal advisory board tries to undermine Medicare Advantage.

WSJ editorial. Excerpts:

"MedPAC last month estimated the government will spend $76 billion more this year for seniors on Medicare Advantage than if the same seniors were covered by traditional Medicare fee-for-service. It estimated excess payments to Medicare Advantage plans at $84 billion in 2025 and $88 billion in 2024. That’s a lot of money, but its estimates are based on faulty assumptions."

"MedPAC claims that seniors in Medicare Advantage are healthier than those in fee-for-service because they incur less spending. Ergo, insurers must be coding them as being sicker than they are. Maybe, but that’s hard to square with the fact that Medicare Advantage enrollees are also more likely to be low-income and have poor self-reported health status.

A more likely explanation is that plans do a better job of ensuring conditions are diagnosed and treated, thereby reducing unnecessary spending and hospitalizations. In a new study published in Health Affairs Scholar, Centers for Medicare and Medicaid Services officials found excess risk-adjusted payments on the magnitude of 1.5% to 2%, about $5 billion to $6.6 billion a year—far less than MedPAC’s estimates."

Texas’ Self-Defeating H-1B Pause

The MD Anderson Cancer Center is one of the institutions that will feel the pain

By Collin Levy of The WSJ. Excerpts:

"the claim that work visas take jobs from American citizens doesn’t hold up. The Texas unemployment rate was 4.3% as of December, and in Austin—where high-tech jobs cluster—it was just over 3%. Foreign workers in the U.S. typically fill gaps in the labor market that aren’t met by American citizens. A 2020 study by the National Foundation for American Policy found that an increase in H-1B visas within a profession was associated with a decrease in the unemployment rate in the profession."

"Mr. Abbott’s visa ban directs the heads of state agencies and public universities to inform the Texas Workforce Commission how many H-1B petitions they submitted in 2025—as well as “documentation” that Texas candidates had a “reasonable opportunity to apply for each position.” It also asks for the “countries of origin of all H-1B visa holders the entity currently sponsors.” When I asked the governor’s office why it is asking for countries of origin and if there are particular countries of concern, I was directed back to his press release and letter, which don’t address the questions." 

DEI Is a Threat to Americans’ Health

By Stanley Goldfarb. Excerpts:

"They changed [medical schools] their curricula to teach economic and social lessons that ladder up to the false claim that America is systemically racist. The LCME [Liaison Committee on Medical Education] has tacitly approved this shift by issuing vague standards that give medical schools far too much leeway. The resulting lack of rigor allows unprepared students to slide through undemanding courses while undercutting the preparation needed to become excellent doctors."

"The traditional two years of pre-clinical education required to become a doctor has been significantly reduced at more than a third of medical schools. This gives short shrift to the foundational curriculum in genetics, biochemistry, biostatistics and epidemiology."

"At 80% of M.D.-granting schools, the foundational courses in basic science and clinical skills are now graded pass/fail"

"The first part of the national licensure exam that determined residency placement has also been changed to pass/fail"

"a growing number of medical students lack a strong grasp of basic medical knowledge."

"At UCLA’s David Geffen School of Medicine . . . more than 50% of students failed basic tests on family medicine, pediatrics and emergency medicine. Nationwide, the percentage of medical students who pass the first part of the licensure exam has fallen every year since 2020, dropping from 97% to 89%"

"Even liberal medical journals have begun to question the state of medical education. A 2025 New England Journal of Medicine article on the use of pass/fail in medical school asked, “Is ‘Good Enough’ Good Enough?”" 

Two Confusions About the California Wealth Tax

Unrealized capital gains aren’t classified as taxable income in the U.S. for good reason

Letter to The WSJ. 

"At least two confusions discredit Mayra Castañeda’s attempted defense of California’s proposed wealth tax in her letter “Billionaire Tax Would Save Calif. Healthcare” (Feb. 4). She claims that “billionaires pay less in taxes on their overall wealth than working families do.” She gets away with this because the research that she cites, although it postures as measuring the taxation of incomes, in fact measures the taxation of paper wealth by classifying unrealized capital gains as taxable income.

But unrealized capital gains aren’t classified as taxable income in the U.S. for good reason. Were these gains treated as such, taxpayers—including many middle-class families—would have to liquidate assets whenever tax season rolled around to pay their bills. One result, in addition to this annual hardship, would be a shrinkage of America’s capital stock which, in turn, would slow wage growth as workers, having less capital to work with, would be less productive than otherwise.

Ms. Castañeda also ignores the most prominent argument against the proposed tax—namely, that it will drive billionaires, along with their taxable incomes and wealth, to states that are less greedy to seize the fruits of high-earners’ efforts. This exodus of billionaires would occur even if, contrary to fact, counting unrealized capital gains as taxable income were a sound idea.

Prof. Donald J. Boudreaux

Mercatus Center

George Mason University" 

Declining labor share is sometimes attributed to businesses underpaying workers. In fact, it is more due to a shift in the sorts of businesses that dominate the economy.

See The Big Money in Today’s Economy Is Going to Capital, Not Labor by Greg Ip. Excerpts:

"Declining labor share is sometimes attributed to businesses underpaying workers. In fact, it is more due to a shift in the sorts of businesses that dominate the economy. Today’s fastest-growing “superstar” companies pay well, but don’t have many workers. In the past three years Google parent Alphabet’s revenue has grown 43%, while head count has remained flat. Amazon is a major employer because of its fulfillment centers, but even it is eliminating jobs.

In such companies, the line between capital and labor blurs. Employees who design the technology are a form of human capital, and are compensated in stock to reflect that. Some corporate acquisitions dubbed “acquihires” are aimed primarily at talent, such as when Meta Platforms paid $14 billion for a stake in Scale AI to nab founder Alexandr Wang."

"Households’ stock wealth is now equal to almost 300% of their annual disposable income, compared with 200% in 2019. At such levels, wealth starts to rival wages as the driver of consumption, at least for the affluent households who own most stocks.

Doug Peta, a strategist with BCA Research, estimates that a 10% stock return, including dividends, taxed at the highest marginal rate, boosts spending capacity as much as an 18% rise in income. No wonder tepid job and income growth aren’t holding back the economy."

Trump’s Climate Liberation Act

Removing Obama’s ‘endangerment’ finding makes it harder to ban fossil-fuel energy

WSJ editorial. Excerpts:

"in 2007 a 5-4 majority of the Supreme Court ruled in Massachusetts v. EPA that greenhouse gases qualify as pollutants under the Clean Air Act."

"greenhouse gases aren’t toxic and don’t affect air quality, unlike pollutants that the law expressly directs the EPA to regulate."

"The impact of greenhouse gases on global temperatures is intermediated by such factors as cloud cover and urbanization, and the effect on storms is disputed. In any event, curbing CO2 emissions in the U.S. will have scant impact on climate because emissions are rapidly rising in China, India and developing countries."

"The Great Scalia observed in dissent that “regulating the buildup of CO2 and other greenhouse gases in the upper reaches of the atmosphere . . . is not akin to regulating the concentration of some substance that is polluting the air.”"

"the endangerment finding also violates the Supreme Court’s major questions doctrine."

"express authorization from Congress is required for economically and politically significant executive actions. A 6-3 majority invoked the doctrine in West Virginia v. EPA (2022), which struck down the Obama-era CO2 emissions limits for power plants."

Why Unemployment is Rising Among Young College Grads

Their skills, experience and ability to function are increasingly out of step with employers’ needs

By Allysia Finley. Excerpts:

"last . . . unemployment among college grads age 22 to 27 rose to 5.6% in December, roughly what it was in February 2009 during the financial panic." 

"Artificial intelligence isn’t taking their jobs. Young grads’ struggles started before AI went mainstream. Between 1990 and 2014, unemployment for young college grads was generally 1 to 3 percentage points lower than for all workers. The gap started to tighten around 2014 and reversed in late 2018. Unemployment for young college grads is now about 1.4 points higher than for all workers."

"Government subsidies and public schools have funneled too many young people to credential mills, which churn out grads who lack the skills that employers demand."

"More than half of high-school grads matriculate to college, even though only 35% of 12th graders score proficient in reading and 22% in math on the National Assessment of Educational Progress."

"U.S. colleges awarded 2.2 million bachelor’s degrees last year, about twice as many as in 1990. That’s also double the number of associate’s degrees. Another 860,000 Americans last year received a master’s degree, nearly triple the 1990 figure. Nearly 40% of Americans with a bachelor’s now have an advanced degree."

"Colleges have added graduate programs in fields like urban planning, sustainability and fine arts to rake in more federal dollars."

"market that is saturated with heavily credentialed workers."

"Many skated through college by relying on AI to do their work."

"Some also struggle with executive functioning because of disability accommodations in high school and college that allowed them extra time to complete tests and assignments. More than 20% of undergrads at Harvard and Brown and 38% at Stanford have registered disabilities."

"31% of small-business owners had job openings they couldn’t fill, compared with a historical average of 24%." 

The problems with government mandated healthcare technology

See ‘A Giant Leap’ Review: Disruption for Doctors: Digital innovation in healthcare has proceeded in fits and starts. Will generative artificial intelligence solve more problems than it creates? by David A. Shaywitz. He is a lecturer at Harvard Medical School.

He reviewed the book A Giant Leap: How AI Is Transforming Healthcare and What That Means for Our Future by Robert Wachter. Excerpts:

"Health-policy wonks in the Obama administration tucked $30 billion into the 2009 stimulus package to accelerate EHR adoption, a move that had unanticipated consequences. The problem, Dr. Wachter points out, was that EHRs provide a mechanism for “hospital administrators, regulators, and payors” to “shape what the doctor did in real time,” generating ever more tasks requiring ever more documentation.

The introduction of patient-communication portals added another burden, creating a torrent of messages with “no workforce, workflow, or business model to sustain it,” and forcing doctors to work increasingly late hours. Healthcare systems responded by hiring more administrative staff to manage the paperwork, and more nurse practitioners to take on clinical tasks."

"He offers a useful outline of digital transformation: digitization, integration, analysis and finally acting on insights to change behavior. He argues that healthcare remains maddeningly stuck at Step 2, as practitioners struggle to connect siloed information. Such work can be “brutally difficult,” he writes, because “trying to get data from health systems or insurers often feels like dragging an anchor through the sand.”" 

How a $30 Billion Welfare Program Became a ‘Slush Fund’ for States

Republicans and Democrats alike decry the lack of oversight for America’s famous antipoverty experiment. ‘Fraud by design.’

By Cameron McWhirter, Dan Frosch and Scott Calvert of The WSJ. Excerpts:

"Temporary Assistance for Needy Families, or TANF, has long been plagued by poor financial oversight and questionable spending in states led by both Republicans and Democrats.

"Auditors in numerous states . . . . have uncovered problems with TANF"

"TANF funds flow annually through block grants to states, which have wide latitude to spend them and minimal reporting requirements—a structure critics say hampers oversight."

"States now award most of the money to nonprofits, companies and their own state agencies. An average of about 849,000 families got direct cash aid each month in fiscal 2025, federal data shows, down from about 1.9 million in fiscal 2010."

"states inaccurately reporting large expenditures and disbursing millions of dollars to contractors without tracking how the cash was spent."

"states  . . . have directed hundreds of millions of dollars to programs with tenuous—or no—connections to TANF’s goals."

"college scholarships that benefited middle- or upper-income families, antiabortion centers, a volleyball stadium in Mississippi, and an Ohio job-training nonprofit where leaders and employees were later sentenced to prison after prosecutors said they used TANF money for vacations, real estate and salaries for people who didn’t work there."

"the GAO identified 37 states where recent audits found 162 deficiencies in financial oversight, “56 of which were severe.”"

"“opaque accounting practices”"

"States often use TANF money as a “slush fund” to plug budget shortfalls and finance initiatives that don’t help poor people"

"The most prominent scandal involving TANF funds, at least $77 million, took place several years ago in Mississippi."

"officials have often failed to track where the money goes or whether it is spent properly."

"Louisiana . . . state employees didn’t verify or document the hours worked by some TANF enrollees"

"hadn’t accurately documented TANF distributions to contractors."

"In Connecticut, auditors said the state in 2024 didn’t sufficiently review the financial reports of 131 subcontractors who received $53.6 million in TANF funds"

"states don’t have to spend all their TANF money in a single year, and many have built up large surpluses. In times of fiscal pressure, such as the 2007-09 recession, many states used TANF funds for purposes that had little to do with the program’s original goals"

"Several states have also used TANF money for programs available to people well above the poverty threshold.

Between 2011 and 2024, Michigan faced criticism for pumping more than $750 million in TANF funds into two college scholarship programs that aided many students from middle-income and even affluent families" 

Stop Worrying, and Learn to Love Industrial Food

See We Shouldn’t Want to Eat Like Our Great-Great-Grandparents by Dr. Dutkiewicz and Dr. Rosenberg are the authors of the forthcoming book “Feed the People: Why Industrial Food Is Good and How to Make It Even Better.” From The NY Times. Excerpts:

"But before you hurl that bagel into the trash, consider that it represents much that is good about our food system: It is affordable, convenient and nutritious. Virtually all the food we eat, junk and vegetables alike, is part of an industrial system. Acknowledging that fact and embracing the system’s scale, reliability, safety standards and abundance is a far better path to improving it than chasing a fantasy of Edenic premodern food that never existed.

Your morning bagel is, in fact, a small miracle made possible by conventional, mass-produced and enriched ingredients, like flour and salt. At the turn of the 20th century, when our great-great-grandparents had no choice but to eat “real food,” malnutrition was rampant. Anemia was common, as was iodine deficiency, which could cause a disfiguring swelling of the thyroid gland known as a goiter; in one Michigan county on the eve of World War I, nearly a third of potential Army recruits were rejected because of such thyroid problems. Enrichment — such as the addition of iron to wheat flour and iodine to salt — and easier access to grain and fresh produce, made possible by productive industrial farming, reduced anemia and virtually banished not only goiters but also illnesses like rickets, scurvy and pellagra.

Perhaps you want a slice of tomato on that bagel? If it’s January on the East Coast, it won’t be local. Your tomato will come from Florida or, more likely, Mexico, where it will have been grown on high-yield farms using conventional fertilizers and pesticides. Want it organic? It will still take industrial supply chains to get it to you. Shunning those globe-spanning supply chains in favor of sparse and often more expensive local and seasonal alternatives is likely to result in everyone eating less produce.

Adding fruit will make your breakfast even healthier. Here, too, modern food technology can help. Half a century of worry about the safety of genetically modified organisms, or G.M.O.s, often derided as “frankenfoods,” has not yielded a shred of compelling evidence that they endanger human health. The genetically modified Rainbow papaya, which is resistant to the ringspot virus, saved Hawaii’s papaya crop. Arctic apples from Washington State, genetically modified to brown more slowly, reduce food waste."

"the idea that ultraprocessed foods are categorically unhealthy is an oversimplification." 

"many ultraprocessed foods, such as yogurt, whole-grain bread or ready-to-eat plant-based burgers, are not linked to worse health outcomes and may even be beneficial."

"dumping industrial food from your plate would do little to change things for the better and, in some cases, would actually make it worse. Food that is local, organic and low-tech is vastly more expensive than food grown through conventional methods. There is little evidence that it is healthier. And when it comes to environmental impact, it matters much more what is produced than how it is produced; tofu is going to have a smaller ecological footprint than beef. That holds true even if the tofu comes from soybeans grown on giant farms using pesticides, and the beef is grass-fed and organic."

"There are plenty of premade options you can grab that are just as nutritious as the fresh-cooked version, like Starbucks egg white bites, Trader Joe’s palak paneer or frozen microwavable vegetables." 

The immigration crackdown shows that immigrants were not taking jobs from Americans (or the tariffs caused the job growth slow down)

See More on Jobs Growing More Slowly in 2025 than in 2017 by Don Boudreaux. From a letter:

"You “laughed out loud” at Phil Gramm’s and my suggestion that Trump’s second-term tariffs helped cause jobs to grow at a much slower pace in 2025 – the first year of his second term, one filled with tariff hikes – than in 2017, the first year of his first term, before tariffs were raised. You credit your amusement to the fact that “the President is aggressive at deporting illegal immigrants which steal American jobs.” The slower job growth in 2025, you insist, “only happened because of the immigration crackdown.”

LOL!

If the jobs once held by deported immigrants were indeed ‘stolen’ from Americans, then the removal of immigrants from those jobs would have caused Americans to fill those same jobs, resulting in no slowdown in employment growth. But there has in fact been a huge slowdown in employment growth, which means – if you’re correct that this slowdown in employment growth was caused by the mass deportation of immigrants – that immigrants were not ‘stealing’ jobs from Americans."

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" 

No, We Shouldn’t Ban AI Chatbots

By Jennifer Huddleston and Christopher Gardner of Cato. 

"Banning chatbots would not be simple. Defining artificial intelligence (AI) is difficult, and limiting it to chatbots does not solve the problem. Even in a lighthearted debate, we had to account for the many uses of AI that are often overlooked, such as customer service and specific professional tools. In legislation, this is even more difficult, as laws lock in static definitions that could prevent both beneficial existing applications and innovative future uses of a technology.

Concerns about chatbots are often tied to their use by vulnerable kids and teens, concerns about particular types of content, like when Grok generated non-consensual sexual imagery or content linked to suicide or mental health. But attempts to limit the technology only to “beneficial” chatbots or those with more specific applications may eliminate innovative uses of general-purpose chatbots or stifle future advancements we aren’t yet aware of. 

For example, an educational purpose exception might be able to cover Khan Academy’s personal tutor, but it doesn’t take into account how a student, teacher, or parent might use a general-purpose chatbot for a similar purpose. Or worse, limit our creativity in how these tools could be used to solve problems by deeming them acceptable in only a narrow set of use cases."

"there are also positive examples of individuals who have used chatbots as a form of connection when they might not otherwise have been ready to seek help from a human or were unable to access resources. Just as some individuals have had an extremely negative experience with chatbots, others have found them beneficial in ways previously thought impossible."

"For many, chatbots offer a lifeline for those without strong support systems or access to professional help. They are available at all hours of the day, react without judgment, and represent a promising source of social support. Yet the impact of chatbots can go much further than just basic social support. For at least 30 people, GPT‑3 and GPT‑4 enabled chatbot Replika “stopped them from attempting suicide.”"

"ChatGPT’s multimodal capabilities can also help those with visual impairments by instantaneously describing their environment and answering questions."

"Chatbots, by contrast, are available on demand at any time of day. They can be accessed by one’s phone in almost any environment. And they are relatively cheap."

"A variety of solutions exist that are far less restrictive than banning chatbots more generally.

First, we are seeing the industry respond with various solutions that allow responses to common concerns. Both Meta and OpenAI have announced various parental controls on their general AI chatbot products. Other industry efforts include using red-teaming type AI models to determine potential risks and identify ways to improve models to prevent the likelihood of toxic or problematic responses. Additionally, civil society groups like Common Sense and the Family Online Safety Initiative provide resources for parents or other users who want to understand the risk of exposure to certain content. Much like the internet before it, these market-based responses can help resolve problems in ways that fit both different technologies and individual needs without governments dictating what approach or specific controls are best.

If the government were to set policy, there are many steps that would be less restrictive than a total ban on a particular technology or application. Many of these would raise their own speech concerns, such as banning certain lawful, if distasteful, content. In many cases, the content in question, like non-consensual intimate imagery, is likely already covered by existing law, or those laws could be updated to ensure it is. While Jennifer has discussed concerns about mandatory AI disclosures, particularly when they are applied more generally, requiring a chatbot to disclose that it is a chatbot is certainly less restrictive than banning the technology entirely." 

The Price of the Lockdown

How the COVID era fettered science and liberty.

By K. Lloyd Billingsley of The Independent Institute. 

"“The COVID era, to me, represented a fundamental break in my understanding of how science and public health operated.” That was Dr. Jay Bhattacharya, director of the National Institutes of Health, in a recent interview with Ross Douthat of the New York Times. With memories of that same era, the people have good reason to hear him out. 

“I thought public health had the best interest of the working class, the poor, in mind,” the NIH director explained. “And the COVID era shattered my illusions on all of those fronts. In particular, what happened in March of 2020 represented a fundamental break that public health authorities had with the public.” In the face of deep uncertainty, “something had to be done to guide people,” but the effort went wrong. 

“What you’re not allowed to do is assume that the thing you’re doing is going to work,” the NIH director explained. “You’re also not allowed to assume that the thing that you’re doing will have no harms. So you close the schools. You know for certain that you’re going to harm a generation of children. That’s a certainty.” 

Dr. Bhattacharya saw the need for “honest calculations” and “you could see the relative risk really easily in the data. It was really older people that were at high risk of dying from the disease. So that key epidemiological fact was known, I’d say, by January 2020.” The infection fatality rate on average for the whole population was “much lower than we thought.” Dr. Bhattacharya assumed that would change the approach but “instead, I faced, essentially, attacks on my character, an attempt to destroy my career, questions about the integrity of my work that were completely spurious.”

Targeting the Dissenters

In an email to Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases (NIAID), former NIH director Francis Collins called Dr. Bhattacharya a “fringe epidemiologist”. It tasked Fauci to attack the Great Barrington Declaration. Bhattacharya co-authored that declaration with other medical scientists, most, if not all, more qualified epidemiologists than Fauci and Collins. 

Dr. Bhattacharya called for “a scientific debate and discussion,” but instead, “the ethos of public health was that just having the debate at all was a dangerous thing.” And that was bad news for the people. 

“If all of the basic promises that we have about our civil liberties are premised on there not being uncertainty over the spread of an infectious disease,” the NIH director said, “then you just don’t have a free country.” That is Dr. Bhattacharya’s description of white coat supremacy, rule by medical bureaucrats who never face the voters and are seldom, if ever, held accountable. In the current era, the politician most dedicated to rigid bureaucratic rule is California Gov. Gavin Newsom. 

In 2020, Gov. Newsom imposed the most draconian COVID-19 regime, with shelter-at-home orders, school lockdowns, and rigid rules for family gatherings. “Don’t forget to keep your mask on in between bites,” said the governor, who partied sans mask with lobbyists at the upscale French Laundry.  

In a June 2020 appearance with Dr. Anthony Fauci, Gov. Newsom said, “If you can’t practice physical distancing, are you practicing love?” During the COVID era, by all appearances, Gov. Newsom never contacted Dr. Bhattacharya, then a professor of medicine at Stanford University, and never endorsed the Great Barrington Declaration. In the current era, the governor’s stance has not changed. 

In 2025, California’s Department of Public Health maintained that infants and toddlers were “higher-risk” individuals and called for the same vaccine requirements, with no attention to possible side effects. Gov. Newsom set out to, in effect, create a new Centers for Disease Control in an alliance of western states. 

The governor hired public health officials who had been dismissed from the CDC, allegedly “politicized” in the Trump administration. After the administration cut loose from the World Health Organization, Gov. Newsom did his best to keep California attached to the globalist bureaucracy. 

The NIH

Dr. Fauci, a big fan of the WHO, maintained that the COVID-19 virus arose naturally in the wild, a matter of speculation, not science. Others saw the source as a lab leak, and as Dr. Bhattacharya told Ross Douthat, “If you just focus on the scientific evidence alone, I would say it’s certain.” The NIH director will double down on replication, “essentially democratization of who gets to decide what’s true and false in science,” and as such, “a second scientific revolution.”

Dr. Bhattacharya has eliminated a huge conflict of interest by removing Christine Grady, Dr. Fauci’s wife, from her post as chief bioethicist of the NIH Clinical Center. The NIH also cut loose Jeanne Marrazzo, Dr. Fauci’s successor at NIAID. 

On his last day in office, Joe Biden pardoned Anthony Fauci without indicating any crime he had committed. As Dr. Bhattacharya sees it, if our civil liberties depend on unelected bureaucrats who shun debate, force draconian polices on the people, and disregard possible harm, “then you don’t have a free country.” That’s something to remember moving forward."

Immigration Restrictions Cause Enforcement Excesses

By Jeffrey Miron.

"Recent ICE operations in Minnesota, marked by large-scale raids and civilian harm, are less a local controversy than a predictable product of U.S. immigration institutions. When lawful entry is heavily restricted, enforcement becomes the policy margin. That margin is exercised by armed agents with wide discretion, weak accountability or legal recourse, and strong incentives to demonstrate “control” rather than minimize error. Minnesota is an illustration of how restriction necessarily operationalizes coercion.

Ilya Somin has long argued that immigration restrictions are best understood as limits on individual liberty, with unusually poor cost-benefit justification. Movement across borders, just like movement within them, generates large economic gains and modest, manageable externalities. When the presumption flips, and entry requires permission rather than being the default, the state substitutes centralized coercion for decentralized choice. This manifests downstream in enforcement practices that must be visible, forceful, and discretionary in order to sustain the restriction itself.

This dynamic complicates debates over “better” or “smarter” enforcement. Any restriction regime requires taking a stand on how much coercion is acceptable and how much harm to civilians is an unavoidable cost rather than a failure of execution. Whether enforcement is aggressive or restrained, it operates under incentives that prioritize demonstration over precision. The result is not a binary choice between humane and inhumane enforcement, but a continuum in which civilian injury costs are present to varying degrees regardless of approach.

The Minnesota raids underscore a broader point that often goes unaddressed: immigration restriction is not merely a policy choice followed by enforcement, but an enforcement regime in itself. So long as entry is treated as an exception rather than a baseline liberty, coercion becomes structural rather than accidental. In that context, tragedies like Minnesota’s are not policy failures in need of better messaging or marginal reform; they are foreseeable outcomes of a system that relies on discretionary force to sustain its underlying premise."

The economics of mass deportation

From Marginal Revolution. 

"Following the removal of 50% of unauthorized immigrants, in the short run average native real wages rise 0.15% nationally, driven by an increase in the capital-labor ratio. In the long run, however, native real wages fall in every state, and by 0.33% nationally, as capital gets decumulated in response to a lower population. Consumer prices in the sectors intensive in unauthorized workers – such as Farming – rise by about 1% relative to the price of the average consumption basket, while most other sectors experience negligible relative price changes.

That research result is from Javier Cravino, Andrei A. Levchenko, Francesc Ortega & Nitya Pandalai-Nayar."

 

What Zimbabwe Can Learn From Chile: A Tale of Two Data Series

By Paul McDonnold of AIER. Excerpts:

"In 1996, the Economic Freedom of the World (EFW) Index debuted. The model aggregated dozens of variables into a single figure for each nation, between 0 (the least economic freedom) and 10 (the most economic freedom)."

"In 1970, for instance, Chile’s EFW Index was in the bottom quartile globally at 4.69. This was the year socialist Salvador Allende won the presidency with only 36 percent of the popular vote (no candidate having won a majority, the legislature chose him). A slew of socialist reforms followed. Banks were nationalized, price controls were instituted and money printed like there was no tomorrow. Predictably, private investment plummeted and inflation spiked as the nation plunged into a recession.

A military coup overthrew Allende in 1973, with an alleged but uncertain level of help from the Nixon Administration and in particular Secretary of State Henry Kissinger. The new Chilean leader, Augusto Pinochet, was no socialist. But he did wield power like one—through brutal repression. And while his advisors included free-market economists such as Hernán Büchi, the regime’s policies were at best a burlesque of economic freedom.

Consequently, in 1975 Chile’s EFW Index reached an all-time low of 3.82. But after Pinochet was defeated in a 1988 plebiscite, the nation began to liberalize its society and its economy. In 1990, it moved into the top quartile of EFW rankings for the first time, with a reading of 6.89. While the nation’s economic and political path since has not always been smooth, Chile has stayed in the top quartile every year. What does such economic freedom mean on the ground? 

According to the current CIA World Factbook, since the 1980s Chile’s poverty rate has fallen by more than half."

"Zimbabwe is another story. It began 1970 in a slightly better position than Chile, with an EFW reading of 4.96. It was known as Rhodesia then, a new republic trying to transition from British rule. The decade of the 1970s was one of political instability as a government led by Prime Minister Ian Smith contended with both Marxist and Maoist communist groups for the country’s future. The Maoist Zimbabwe African National Union (ZANU) prevailed, changing the nation’s name to Zimbabwe in 1980. ZANU has been in control of Zimbabwe ever since, with Robert Mugabe serving as prime minister or president from 1980-2017.

While ZANU has not remained strictly loyal to the Maoist model of communism, and has attempted some pro-business policies, government intrusion in the economy remains high. Property rights are not well enforced. Corruption is systemic and regulations stifle both new business formation and foreign investment. Consequently, since 2000 Zimbabwe has remained in the bottom quartile of EFW Index scores, with a 2023 reading of 3.91, a 21 percent decline from 1970. 

These numbers have tragic implications, especially for the least privileged. In 2023, Zimbabwe’s poverty rate was over 70 percent and an estimated half the population lived on less than $1.90 per day."

Trends in Competition in the United States: What Does the Evidence Show?

Carl Shapiro and Ali Yurukoglu. In Journal of Political Economy Microeconomics.

"Abstract

Has the US economy become less competitive in recent decades? One might think so, based on a body of research that has rapidly become influential for antitrust policy. We explain that the empirical evidence relating to concentration, markups, and mergers does not show a widespread decline in competition. Nor does it provide a basis for dramatic changes in antitrust policy. To the contrary, the evidence indicates that many of the trends are likely to reflect competition in action. We identify opportunities for future research in the cross-industry evidence-at-scale paradigm, the industry-specific study paradigm, and their intersection."

 

Report: Arkansas Education Freedom Accounts students test well in ‘fiscally modest’ program

Scores for math, language outdo nationwide averages, UA Department of Education Reform says

By Josh Snyder of the Arkansas Democrat-Gazette. Excerpts:

"Arkansas students who participated in the Educational Freedom Accounts program last school year outperformed on average 57% of students nationwide in math and 59% of students in English language arts on nationally norm-referenced exams, a new report indicates.

The figures are part of a 92-page report on the Educational Freedom Accounts program for the 2024-25 school year that was published Wednesday by the University of Arkansas Department of Education Reform"

"The program significantly expands state taxpayer funding of student tuition and other costs related to private schools and some homeschool expenses. While it is often referred to as a voucher program, some advocates argue it works differently than traditional vouchers. The 2025-26 school year is the first in which the program is open to all Arkansas students; during the initial 2023-24 school year, enrollment in the program was capped at 1.5%, while in 2024-25 enrollment was capped at 3%."

""The program remained fiscally modest relative to the state's K-12 budget while continuing to build operational capacity and provider choice statewide," it states."

"Of those participants in the 2024-25 school year, 76% attended participating private schools, while 24% used program funds to support their homeschooling."

"Students completed a total of 5,317 tests using the NWEA Measure of Academic Progress. Those students outperformed 58% of students nationwide in math on average and 60% of students nationwide in English language arts" 

"A total of 2,380 tests were completed using the Iowa Test of Basic Skills. On average, students who took that assessment outperformed 62% of students nationwide in math and 64% of students nationwide in English language arts.

Homeschool students outperformed 63% of students nationwide in math on average, and outperformed 68% of students nationwide in English language arts."

"a greater percentage of students participating in the accounts program demonstrated mastery in English language arts, math and science than the statewide aggregate for the exam" 

"The report also argues the Educational Freedom Accounts program saved the state as much as $22 million."

"Students receiving an account get 90% of what public schools get per student in state funding from the previous school year."

Gavin Newsom Opines on Wealth and Taxes

The California Governor finally admits who pays for Sacramento’s spending—billionaires. 

WSJ editorial. Excerpts:

"He now admits that taxes affect where people choose to live and invest."

"The union claims the measure would raise $100 billion in revenue. That’s doubtful given that it has already spurred many billionaires to decamp."

"“The impact of a one-time tax does not solve an ongoing structural challenge,” the Governor said Thursday. “You would have a windfall one time, and then over the years, you would see a significant reduction in taxes because taxpayers will move.”"

"Mr. Newsom said he is very “mindful” that “we rely on a very small number of people that allows us to do historic things”—i.e., spend at historic levels. His recently proposed budget includes $539 billion in spending, up 68% from 2019."

"the top 1% of earners pay about half of state income tax."

"California’s federal Medicaid dollars this year are projected to increase by $18 billion (15%)." 

Moving from socialism to capitalism greatly improved Poland's economy

See Poland’s Economy Set to Enter Global Top 20 Following Another Strong Year by Don Nico Forbes of The WSJ. Excerpt:

"Poland’s economy topped $1 trillion last year, punctuating a decades-long boom that is in stark contrast to the faltering economies of its much bigger European neighbors.

The milestone, confirmed by data released Friday by the country’s statistics agency, likely lifted Poland into the world’s top 20 economies for 2025. It is expected to supplant Switzerland, which hasn’t yet released its end-of-year tally. Poland now sits right behind No. 19 Saudi Arabia’s $1.3 trillion economy.

Three-and-a-half decades ago, under an isolated communist regime, the purchasing power of an average Pole—adjusted for local prices—was on par with Jamaica. Now, it’s higher than Japan."

New York’s Charter Schools Live Up to Their Promise

Success Academy in the Bronx has a 90% poverty rate yet has reached a 96% proficiency rate in reading

By Jason L. Riley. Excerpts:

"we know from decades of empirical research that public charter schools often outperform their traditional counterparts. The problem is that the American Federation of Teachers, the National Education Association and other opponents of school choice see charters as a threat—not to kids but to unions."

"the decline in the quality of public education in the U.S. predates the advent of charters in the 1990s. Charter schools are being blamed for a pre-existing trend"

"A study of reading outcomes in New York state public schools that serve high concentrations of economically disadvantaged children found a disproportionate number of charter schools winning the highest marks. Charters were 9.5% of the study’s sample but “earned 38.5% of the spots on our list of exemplars.”" 

"The 10 highest-scoring schools were located in New York City, and seven of those were charter schools in the Bronx, which is home to some of the poorest ZIP Codes in the country. “All serve a high concentration of low-income students, with 66% to 92% of children qualifying for free or reduced-price lunch,” the report noted. “And yet, 90% to 97% of their third graders were proficient readers in 2024, the year of our analysis. In comparison, the proficiency rate for all third graders across the state was just 43%.”"

"The top-scoring school was a Success Academy charter school in the Bronx, where the student-body poverty rate is 90% and 94% of students scored proficient in third-grade reading in 2024."

"A wait list in New York City runs to 163,000 students, yet lawmakers have placed an arbitrary limit on the number of charters" 

Are Trump’s Tariffs Winning?

He says yes, but let’s look at the evidence that voters feel judging by their views of the economy.

WSJ editorial. Excerpts:

"How much better would the economy be now without the tariffs and their on-again, off-again imposition? Prices on many goods would be lower, for one thing. Tariffs don’t cause general inflation, but they do raise relative prices."

"the authors [researchers at Harvard] note that the “retail pass-through” of the tariffs has been 24%—a measure of the extent to which a given tariff rate feeds through to consumer prices, given that the cost of the good at the border is only one part of the final price. This pass-through rate is higher than under Mr. Trump’s 2018-19 China tariffs." 

"The Harvard economists note in the same paragraph that U.S. consumers are bearing up to 43% of the tariff burden, with U.S. companies absorbing most of the rest.That aligns with other research"

"Americans pay one way or the other—via higher prices or less choice."

"The rates he declared on “Liberation Day” created a market swoon that quickly caused him to back down"

"most of those are far below his “liberation” rates."

"a major carve-out for consumer electronics"

"exceptions have since included bananas, coffee, cocoa, jet engines and rare-earth minerals"

"China. Beijing called Mr. Trump’s bluff with hefty retaliatory tariffs of up to 140% on American goods and a squeeze on rare-earth exports. The result has been a crisis for American soybean farmers"

"stock market . . . tends to rise when Mr. Trump dials back a tariff threat" 

"manufacturing employment declined by some 63,000 jobs in 2025"

"employment in steel production has barely budged during his year in office, and employment in industries that use steel such as auto manufacturing is declining." 

Mass Deportation and Florida Jobs

The state passed an E-Verify law. Job growth quickly declined

WSJ editorial. Excerpts:

"The Sunshine State’s job growth was consistently among the highest in the U.S. during the pandemic and the prior decade thanks to low taxes and a pro-business environment. Covid lockdowns in progressive states supercharged Florida’s population and workforce growth. But in May 2023, Florida Republicans passed legislation aimed at countering Joe Biden’s porous border policies.

The law’s centerpiece requires private employers with 25 or more employees to use the federal government’s E-Verify system to confirm the work authorization of new hires. Violations could result in $1,000 daily fines and suspension of a business’s license. Gov. Ron DeSantis claimed to be “fighting back against reckless federal government policies.”"

"the E-Verify mandate makes it harder for migrants to work to support themselves, and it adds a burden on employers. E-Verify can also be unreliable because it relies on federal records that aren’t always up to date."

"The state ranked 26th in the country in job growth over the past 12 months"

"One farmer told Spectrum News in early 2024 that he needed more workers to pick strawberries but that he purposefully limited the size of his workforce to less than 25 workers"

Virginians Will Pay, and Keep Paying, for ‘Affordable’ Energy

A judge overrules Trump’s effort to cancel CVOW, an offshore wind project, that will cost more than $20 billion.

By Judge Glock. Excerpts:

"the electricity produced by this Project will be among the most expensive sources of power” in the U.S., whether measured by total capacity created or by actual electricity delivered. It is also the “costliest project being undertaken by a regulated utility in the United States.”"

"The state expected the cost of construction at about $10 billion, but once financing and other long-term costs are included, the total will be more than $20 billion."

"These costs don’t include the billions of dollars in federal tax credits for the project"

"offshore wind is the most expensive type of energy generation available—besides a type of gas turbine used mainly during emergencies—and is more than twice the cost per megawatt hour of onshore wind."

"the Virginia Clean Economy Act mandated that several fossil-fuel generators shut down."

"It will make the most power in spring and fall, when demand is lowest, and the least in summer afternoons, when demand is highest."

"the project would typically produce less than half its full power capacity." 

Government Won’t Help the AI Job Transition

By Phil Gramm and Michael Solon. Excerpts:

"our ability to generate and sustain higher living standards, has come in part from developing new technology and benefiting from being the first to implement it, and in part from our ability to move labor and capital dislocated by the wave of creative destruction efficiently into higher and better uses."

"On average, every month since 2000 some 5.1 million American workers were separated from their jobs or were laid off and more than 5.2 million new jobs were created. In 2025, three times as many Americans changed jobs as did workers in the European Union."

"most industrial subsidies in China are used to sustain noncompetitive businesses."

 "The 1962 Trade Adjustment Assistance program, which provided training, job-search and income support to workers harmed by foreign trade, has provided benefits to more than five million people. Numerous public and private studies have highlighted TAA’s failure by comparing the transition of TAA beneficiaries with workers who lost their jobs during the same period but didn’t receive TAA."

"TAA is insufficient in supporting dislocated workers to re-enter the labor market. It didn’t improve earnings. Benefits were used mostly as income support, and nonparticipants were re-employed faster than those who participated in TAA."

"for every week of extra benefits [of unemployment insurance], the covered worker was unemployed for as much as an extra day."

"many workers find jobs in the weeks immediately before and after their benefits run out."

"on average the longer unemployment insurance is provided, the longer the worker will remain unemployed."

"as the annual federal welfare spending surged to more than $70,000 per poverty family, labor-force participation among able-bodied persons in the lowest income quintile collapsed to 36%, from 68% in 1967." 

Cut Entitlements, Not Immigration

By Jeffrey Miron and Eric Jin.

"President Trump’s suspension of immigrant visas for 75 countries took effect on January 21. The pause affects those who seek to immigrate to the US permanently, not short-term visitors like tourists or students. The administration’s rationale for the freeze is to reduce the fiscal burden of immigrants, asserting that “[foreign nationals]...extract wealth from the American people.”

However, America’s fiscal issues don’t arise from the impacts of new immigrants; rather, they stem from existing, overly generous transfer programs. A recent financial report by the Bureau of Fiscal Service warns that entitlement spending, Medicare and Social Security in particular, are on an unsustainable path. Indeed, the CBO projects that spending on Medicare and Social Security as a percentage of GDP is increasing at a far higher rate than federal revenue growth due to aging demographics.

It is important to clarify that the unsustainable nature of such transfer programs is independent of the participation of immigrants. According to this study, legal immigrants consumed “24% less welfare and entitlement benefits than native-born Americans” in 2023. This is largely because immigrants arrive young, thus entering entitlement programs later, and take many years to naturalize.

Moreover, the same legal immigrants actually reduce the strain on transfer programs as their tax contributions far outweigh their fiscal burden. A 2024 study states that “legal immigrants increase natives’ welfare [because their] tax contributions…greatly exceed the benefits they receive, thereby reducing the tax burden on natives.” Quantitatively, this study examining the net fiscal effect of immigration found that in 2023, immigrants paid $1.3 trillion in taxes while only receiving $761 billion in benefits. In fact, over the 30-year period from 1994 to 2023, immigrants had a positive net fiscal impact of $14.47 trillion. Even after considering second-generation-immigrant children, the figure remains positive at $7.93 trillion.

Finally, most transfer programs already exclude immigrants partially or fully. For example, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 bars legal immigrants from federal benefits for 5 years or until they naturalize while programs like Medicare require 40 quarters of Medicare taxes before eligibility.

In conclusion, America’s fiscal challenges arise not from public spending on immigrants but from the unsustainable generosity of its transfer programs. Even as legal immigrants consume fewer benefits and contribute more via taxes, an aging population and increasing structural costs only increase the federal deficit. The root causes of spending imbalances are missed by the Trump Administration’s immigration restrictions and are better addressed by reducing the welfare state—independent of immigration—or by further restricting immigrant access to the welfare system."

Banning Investors Won’t Fix America’s Housing Shortage

By Edward P. Stringham.

"President Trump just signed an executive order intended to reduce housing costs by imposing a government ban on private equity firms and institutional investors from participating in the single-family homes marketplace. Not only does this proposed overreach interfere with market forces that want to spur more investment in housing, and increase supply, but it will do little to improve housing affordability. 

It is a perfect example of the adage: don’t just do something; stand there. Renters would be better off without this proposal. 

At present, only 3% of all single-family homes are owned by institutional investors. Forcing those investors to sell, or blocking new ones from entering the market, would do little to lower prices. In fact, investment in housing helps increase supply. When you cut off investment, you get less construction and fewer homes. When supply falls, prices rise. It’s that simple. 

Trump states, “People live in homes, not corporations.” True enough. But the main point of having investments in housing is so investors can rent them out, such that only “people in live [those investment] homes, not corporations.”  

Moreover only “people” invest in investment firms, so why is government excluding whole groups of people from investing more in housing markets? Banning institutional investors or private equity firms from investing in housing makes as much sense as banning institutional investors or private equity firms from investing in stocks.  

Consider this analogy from fractional, and often institutional, ownership of companies (ie, the stock market): If I want to invest in high tech, I could show up in Silicon Valley to buy an entire company, but the only problem is I don’t have a trillion dollars sitting around. Even if I could afford it, I do not want to buy all of a small firm. 

Instead, stock markets allow millions of people like me to invest small amounts of money to own a small fraction of a company. I can buy just one share through my stockbroker or even through a mutual or index fund that holds small pieces of many companies. Private equity brings many investors and even the richest investor Elon Musk needed to use private equity when he led a team of investors to purchase Twitter. 

Private equity and institutional investments are simply a set of tools and ownership structures that people use to expand investments. Private equity and institutional investments also make markets run more smoothly, and that is good for everyone. 

The same holds true for real estate, and we should be encouraging more investment in the real estate industry not less. 

Economists recognize that at present many zoning laws interfere with the supply of housing and that drives prices more than where they should be. Another set of problems arises with Mamdani-style price controls on housing that encourage landlords to invest less in their housing and sometimes even abandon their housing. But the solution is to reduce those government restrictions, not to reduce investments in housing.  

I personally have benefited from private equity firms investing in housing on more than one occasion. When I moved to Hartford 18 years ago, I did not want to pony up a few hundred thousand dollars for a home when I was unsure where I wanted to live. Instead, I had the benefit of interacting with a Boston-based private equity firm that had gathered institutional money and built the tallest residential building in Connecticut. All I had to do was show up with one month’s rent deposit.  

I was always grateful for that private equity firm, and at the beginning of each month I would write them a thank you card in the form of my rent. I, paying customer, benefited them and the private equity funded landlord who fronted all of the costs benefited me. Denying the idea that investments can be mutually beneficial for investors and consumers is entering Mamdani territory. 

Would Trump retroactively apply this new ban on institutional investments to the residential projects he worked on in the past? I imagine that at least some, but more likely most, of Trump led real estate projects involved him lining up investors including institutional ones to pay for the costs up front and ideally get compensated with profits later. That’s the American way. 

The people who live in apartments, multi-family, or single-family homes made possible by institutional investors and private equity real estate funds all benefit. Adam Smith’s invisible hand coordinated the investors, architects, builders, and workers spending years getting the property in great shape for me and all of my neighbors. We should not ban investments and institutional investing in real estate and instead be grateful for what they do."

Certificate-of-Need Laws Still Fail Patients — Even After a Decade of Reform

hospital charges in states without CON are 5.5 percent lower five years after CON repeal 

By Thomas Savidge of AIER. Excerpts:

"Certificate-of-Need (CON) laws require the approval of states’ health planning agencies for health care providers to engage in regulated actions such as opening or expanding facilities or purchasing equipment. Additionally, in many states with CON regulations, the decision to grant a CON is made by a board whose members may work for incumbent providers. This is sometimes referred to as a “competitor’s veto.” [economist Matthew] Mitchell also notes that in all but six CON states, incumbent providers are allowed to participate in the process and object to the application of a would-be competitor and often use the objection as leverage against the potential competitor from encroaching on their territory. Mitchell calls it “a type of territorial collusion that would be a per se violation of the Sherman Antitrust Act were it not facilitated by the state.”

CON laws were first applied to healthcare by New York State in 1964, and by 1970, 25 additional states had similar regulations. In 1974, Congress passed the National Health Planning and Resources Development Act (NHPRDA), where the federal government threatened states into adopting CON regulations by saying they would withhold federal funding for healthcare for any state without CON laws. 

The desire to push CON came from a misguided belief that such regulations could, in Mithcell’s words, “cause hospitals to acquire fewer beds, fill them with fewer patients, and therefore spend less money.”

The threats to withhold federal funding never materialized, but by the early 1980s every state had a CON program for healthcare. As Medicare reimbursement switched from retrospective (hospitals get paid whatever they spend with little incentive to control costs) to prospective reimbursement (hospitals are paid a fixed, predetermined amount for services), CON policies were reexamined. 

Finding that CON laws did little to control costs, especially under prospective reimbursement, policymakers in DC rolled back CON requirements. While the federal CON requirements were repealed, most states maintained CON regulations, which led to greater variation among state CON regulations. By 1990, eleven states had followed suit and repealed CON laws, with only Wisconsin reinstating the program. By 2000, Indiana, North Dakota, and Pennsylvania had repealed most CON laws. 2000 Wisconsin has since re-repealed its CON regulations. In 2016, New Hampshire was the last state to fully repeal CON.

In their 2025 review of the academic literature on CON, Courtemanche and Garuccio find “in at least some cases, CON laws restrict both entry of new competitors and expansion of existing hospitals. The reduction in competitors increases the number of procedures in hospitals.” They continue by noting such findings provide

“[L]ittle evidence that this translates to increased prices or higher hospital profitability, and hardly any research tests for reduced closure rates. Studies on hospital efficiency and quality of care for procedures performed exclusively at hospitals mostly point to null or negative effects, but evidence on quality is more favorable for services that can be provided outside of hospitals.”

While there may be other factors at play (such as government subsidies, the Affordable Care Act implementation, or the variation of CON laws among states), costs can still be passed onto patients without changing prices. Higher costs may look like longer wait times (whether in a hospital or fewer scheduling options), staffing shortages, or the opportunity cost of patients traveling to see a specialist either on the other side of their state or in other states.

If one thing is clear, CON regulations have failed to deliver on the promise of affordable and accessible healthcare.

As of December 2025, 15 states have fully repealed CON regulations. Additionally, numerous states have reformed their CON regulations to shrink the healthcare services that require a CON."

"Arizona, Minnesota, and New Mexico limit CON requirements to ambulatory services while Indiana, Ohio, and South Carolina (as of 2025) only apply CONs to nursing homes. Hawaii regulates the most activities, requiring CON approval for 28 services and technologies. Mitchell finds that nursing home beds are the most frequently regulated, followed by psychiatric services, new hospitals, and intermediate care facilities for individuals with intellectual disabilities. Investment thresholds triggering CON review vary from state to state and are generally lower for non-hospital providers (a $3 million expenditure trigger for ambulatory services in Maine) than for hospitals (excess of $12.365 million in capital expenditures in Maine).

From Mitchell’s findings and his survey of the academic literature, he finds that CON laws are generally associated with high variable costs in general acute hospitals, fewer available hospitals, higher Medicaid costs for at-home care and long-term care, and higher health expenditures. The more stringent and numerous the CON laws in the state, the worse access and affordability for healthcare.

In states that did repeal CON laws, Mitchell found that hospital charges in states without CON are 5.5 percent lower five years after CON repeal. Additionally, safety-net hospitals in states without CON had higher margins than similar hospitals in states with regulation. While repealing or reforming CON will not fix all healthcare policy challenges, doing so can help increase affordability and healthcare access."

TrumpRx: When Government Tries to Build a Market

By Jeffrey A. Singer.

"This evening at 7:00 p.m. Eastern Time, President Trump announced the launch of TrumpRx, the government-run direct-to-consumer (DTC) drug purchasing platform. Essentially, TrumpRx will act less as a pharmacy and more as a portal directing patients to manufacturers’ cash-price sales platforms negotiated by the administration. Supporters view the initiative as a way to eliminate intermediaries and offer patients lower prices.

President Trump is correct that DTC sales of prescription drugs can put downward pressure on prices. We’ve seen this dynamic repeatedly when medications transition from prescription-only to over-the-counter status.

As Michael F. Cannon and I discuss in our Cato white paper Drug Reformation, third-party payment arrangements tend to drive up drug prices. When insurers or government programs are paying most of the bill, patients have little incentive to resist high prices. In fact, they often push back when payers try to steer them toward lower-cost drugs or pharmacies because any savings go to the insurer, employer, or government—not to them. Insurers, for their part, know that denying coverage or refusing to pay list prices can cause backlash from beneficiaries who feel entitled to whatever their plan covers.

Coverage decisions by both public and private insurers greatly influence drug pricing. This inflationary cycle is more apparent in the prescription market than in the over-the-counter (OTC) market because insurance typically covers prescription drugs but usually stops covering them once they become OTC. When that happens, consumers pay out of pocket—and prices often decline because purchasing becomes more sensitive to cost.

When consumers control the money, they comparison shop and weigh price against benefit. When deep-pocketed third parties cover most of the cost, price sensitivity diminishes—and producers face less resistance to higher pricing.

The problem isn’t the DTC model. It’s the assumption that the federal government needs to run it. A growing private marketplace already exists, including platforms such as Mark Cuban’s Cost Plus Drug Company, Amazon Pharmacy, and GoodRx, as well as pharmaceutical manufacturers that sell directly to patients through their own websites. 

PhRMA (the Pharmaceutical Research and Manufacturers of America), the trade association representing the country’s pharmaceutical industry, is also getting into the act. It recently announced the launch of Amer​i​c​as​Med​i​cines​.com, a website that connects patients with manufacturers’ direct-purchase programs.

Injecting government into this space risks crowding out private innovation and inviting the familiar problems of political favoritism, coercion, and regulatory corruption. Some lawmakers are raising concerns about conflicts of interest, transparency, and whether the platform’s structure could violate federal anti-kickback rules—especially given its reliance on partnerships with drugmakers and its connections to existing online pharmacy and telehealth fulfillment channels.

If the administration wants to expand direct-to-consumer drug purchasing, the most effective role it can play is not to build a federal platform but to eliminate policy barriers that hinder private actors from competing, innovating, and lowering prices on their own. That involves rolling back regulations that restrict manufacturer-to-patient sales, removing contractual and regulatory obstacles that prevent pharmacies and wholesalers from offering transparent cash prices, easing restrictions on telehealth prescribing tied to online fulfillment, and lowering the tax and compliance penalties that discourage patients from buying medicines outside third-party payment systems.

As Michael F. Cannon has shown in his work on the tax exclusion for employer-sponsored insurance, federal tax policy actively discourages patients from operating outside third-party payment systems by penalizing those who try to control their health care dollars outside employer- and insurer-managed systems.

The lesson of every market touched by third-party payment is the same: when patients control the dollars, prices fall, and value rises. TrumpRx risks moving policy in the opposite direction—substituting political allocation for consumer choice in a space that is only now beginning to function like a real market—one where patients, not payers or politicians, make the purchasing decisions."