Steven Pinker on the disaster of communism

From Twitter.

"I spoke with @LaulPatricia about Marxism:

One is: What’s remarkable is that Marxism has been tried. Now, of course, defenders of Marxism say it hasn’t really been tried anywhere, but certainly the people who implemented it claimed they were implementing Marxism. 

And this is a massive experiment—a global experiment—with a very clear outcome. Namely, the Soviet Union was a disaster. The imposition of communism on Eastern Europe was a disaster. The imposition of communism in Venezuela was a disaster. The imposition of communism in Maoist China was a disaster. Disaster in terms of both poverty and oppression and genocide and stupid wars. So the world has told us what happens under communism, and it’s a sign of how out of touch intellectuals can be that there are still people who defend it despite the entire world giving a very clear-cut answer.

One more is: would you rather live in North Korea or South Korea? Would you rather live in the old East Germany or West Germany? We have an experimental group and a matched control group in terms of culture, language, and geography, and the answer is crystal clear. So this is a sign of, I think, the pathology of intellectual life—that Marxism can persist.

The other is, you did call attention to one of the appeals of Marxism, though, and more generally of heavy, strong influence of government guided by intellectuals, which is that there are certain kinds of reforms that you can state as principles. You can articulate them verbally as propositions—like equality, human rights, democracy—but there’s other kinds of progress that take place in massive distributed networks of millions of people, none of whom implements some policy. But collectively, there is an order, an organization that’s beneficial.

So that can happen organically through, for example, the development of a language. No one designed the English language. It’s just hundreds of millions of English speakers. They coin new words. They forget old words. They try to make themselves clear. And we get the English language and the other 5,000 languages spoken on earth.

Likewise, a market economy is something where knowledge is distributed. You don’t have a central planner deciding how many shoes of size 8 will be needed in a particular city, but rather information is conveyed by prices, which are adjusted according to supply and demand. And you’ve got a distributed network of exchange of information that can result in an emergent benefit.

Now, intellectuals tend to hate that. They like rules of language—of correct grammar. They like top-down economic planning. They like cultural change that satisfies particular ideals described by intellectuals. And so rival sources of organization, like commerce, like culture—traditional culture—tend to be downplayed by intellectuals.

And this can be magnified by the fact that many dictatorships give a privileged role to intellectuals, which may be why, over the course of the 20th century, and probably continuing to the present, there has not been a dictator that has not had fans among intellectuals—including the mullahs and ayatollahs of Iran, but also the communist dictators: Mao and Castro, even Stalin in his day. And every other dictator has had, actually, often fawning praise from Western intellectuals."

Addressing a Few Common Arguments for the Work Opportunity Tax Credit (in practice, it costs taxpayers billions of dollars and doesn’t deliver the results it promises)

By Jack Salmon of Mercatus.

"At the end of last year, the Work Opportunity Tax Credit (WOTC) finally expired, having been renewed 13 times since 1996. Even so, business groups and policymakers have continued to press for its reauthorization, both before and after its expiration.

The WOTC was originally justified as a way to help disadvantaged workers gain a foothold in the labor market, but in practice, it costs taxpayers billions of dollars and doesn’t deliver the results it promises.

The groups of disadvantaged workers that the credit targets typically include recipients of state assistance, veterans, SNAP recipients, formerly incarcerated individuals and those experiencing long-term unemployment.

The program allows employers to claim a credit of up to $2,400 per worker for most targeted groups if the employee works at least 400 hours in the first year. For some groups, such as disabled veterans or the long-term unemployed, the credit can reach as high as $9,600 per hire.

It’s easy to see why, from a high level, some believe the WOTC has an important role to play in helping disadvantaged workers. In practice, it has become yet another narrow corporate tax break that costs taxpayers billions while delivering negligible results. Below I will respond to some of the most common claims about this credit, offering empirically grounded reasons why the credit has repeatedly failed and should not be revived a fourteenth time.

Claim 1: Before WOTC, disadvantaged workers struggled to find stable jobs, and the credit was created to fix that failure.

Even before the creation of the WOTC in 1996, there was a predecessor program with many of the same goals, the Targeted Jobs Tax Credit (TJTC).

Evaluations of TJTC consistently found that it failed for the same reason WOTC fails today. General Accounting Office (GAO) reports from the early 1990s found that the majority of employers using the credit “made no special effort to identify, hire, or retain TJTC-eligible workers. … If employers’ normal employment practices happen to result in the hiring of an eligible worker, they may claim the tax credit even though they have made no specific effort to recruit, hire, or retain workers targeted by the program.”

An audit report published by the Department of Labor in 1994 similarly found that “92 percent of those individuals for whom employers could have claimed a credit would have been hired regardless of the tax subsidy.” The audit report concluded that “the program largely subsidizes the wages of those who are hired irrespective of their eligibility and the availability of a tax credit.”

For these reasons, TJTC was allowed to expire in 1994, but in 1996 it was revived and rebranded as the WOTC. A new name didn’t get rid of the same problems that the TJTC had previously faced, however.

Claim 2: Without the WOTC, businesses won’t hire disadvantaged workers.

The Department of Labor undertook a case study in 1999 that included interviews with 16 firms that used WOTC across five states. The results included the finding that “the tax credits play little or no role in [the 16 employers’] recruitment policies,” suggesting that employers would have hired members of the target groups even if the programs were not available. The report’s authors concluded: “These observations do raise a question about the extent to which the tax credit is serving the purpose for which it is intended — to serve as an economic incentive to encourage employers to hire individuals from specified target groups whom they would not have hired in the absence of the credit.”

Economist Sarah Hamersma used a combination of Wisconsin administrative data and survey data in a 2008 paper that uses panel estimates to determine if WOTC creates incentives that improve employment outcomes for targeted workers. According to her analysis:

Firms do not appear to be using the opportunity to claim tax credits for disadvantaged workers to deliberately increase the hiring of disadvantaged workers. In general, they do not have information about individuals’ status as qualifying (or not) for the tax credits at the time of hire, and even after hiring decisions are made, information about employees who are claimed is kept confidential. As one firm related in the telephone survey: “The information is sent to our corporate office, a third party processes the forms, and the tax credits come back to us like a bonus.” In effect, the firms get “bonuses” for simply putting a form in their hiring packets and sending them off to be processed.

The Inspector General of the Department of Labor has published studies on the effectiveness of WOTC in hiring disadvantaged workers. Focused specifically on veterans with disabilities, a 2012 study implies that only about 13% of WOTC benefits actually lead to new employment, meaning about 87% of benefits accrue to hires that would have occurred in the absence of the credit.

This isn’t a unique finding for WOTC but tends to be a common feature among hiring tax credits broadly speaking. Economist Timothy Bartik reviewed the effect of Michigan’s MEGA tax credit program aimed at hiring or retaining workers, especially in the manufacturing sector. He found the tax credit incentive decisive in only 8% of cases, meaning 92% of credits subsidized jobs that would have existed regardless of whether the credit was offered. Bartik’s earlier work found even larger windfall rates, up to 96%.

The most recent and perhaps most comprehensive analysis of the windfall rate for WOTC comes from a 2025 NBER study. The meticulous analysis of 13 million workers over two decades suggests that the windfall rate is around 97.1%, and the authors could not rule out the statistical possibility that 100% of the hires would have occurred in the absence of the credit.

In sum, the claim that businesses won’t hire disadvantaged workers without the WOTC doesn’t hold up to the empirical evidence. Between 90% and 100% of WOTC claims are for job hires that would have occurred whether or not the credit existed.

Claim 3: The WOTC provides workers with stable jobs and good pay. Without the credit, workers would instead be more likely to rely on public assistance or turn to crime.

For at least two decades, economists have been exploring whether the WOTC improves long-term labor market outcomes for targeted workers. Using propensity score matching estimations, economist Sarah Hamersma of Syracuse University found that WOTC led to no measurable effect over the long term.

While Hamersma found small improvements in employment after two quarters, when she extended the analysis to four and six quarters, WOTC had no impact. She also found that less than 10% of eligible workers get certified for WOTC. When estimating the effect of WOTC on workers’ tenure in a given position, Hamersma found it to be near zero and statistically insignificant.

Using a similar approach, Hamersma and economist Carolyn Heinrich examined how temporary help agencies use WOTC. The authors do not find evidence that WOTC certification brings about improvements in worker job outcomes, earnings, or labor market attachment.

For worker tenure specifically, they find that workers are employed for just 26 weeks on average if hired by temporary help service firms and 40 weeks if hired by end-user firms. This finding is hardly a strong signal of a job subsidy that provides stable jobs and long-term labor market attachment.

Similarly, the 2025 NBER research paper compiled summary statistics from more than 426,000 WOTC certifications and found an average job tenure of about 10 months. Using administrative micro-data on all WOTC applications in Wisconsin between 2005 and 2020, the study found that certified WOTC hires had jobs lasting longer than 9 months only 23% of the time.

The average starting wage of WOTC-certified workers was just $9 an hour. Among successful certifications who were SNAP beneficiaries, the median quarterly earnings were about $1,800, or less than $140 a week.

The authors of this 2025 study also construct measures of social assistance and indicators of criminal activity to determine whether WOTC reduces welfare dependence or criminal conviction. WOTC is found to have null effects on both outcomes, suggesting that these wage subsidies are unlikely to generate any savings for the government.

Claim 4: Small businesses depend on WOTC and will struggle to hire workers without it.

Despite WOTC’s populist branding, the vast majority of benefits accrue to large corporations, not small businesses or mom-and-pop employers.

A report by the U.S. General Accounting Office analyzed data from agencies in California and Texas on the number of WOTC-certified employees hired by each employer. The report found that just 3% of participating firms accounted for 83% of all WOTC certifications, and that the top 5% of firms (measured by gross receipts) claimed two-thirds of all WOTC dollars.

Hiring credits like the WOTC are less about encouraging new employment and more about subsidizing companies that have the administrative savvy to claim the credits.

That pattern persists today: NBER research found that among WOTC certifications in Wisconsin, 52% were hired by temporary hiring staff agencies, 24% were hired by publicly traded firms with a median market cap of over $30 billion, and 16% were large fast-food franchises.

The same research found that half of all WOTC subsidies in Wisconsin went to just 48 firms, even though they only accounted for 9% of hires. The authors note: “Our results imply that hiring subsidies through WOTC operate as a pure transfer to firms” and “that these transfers are heavily concentrated.” What’s more, even when the program made it easier and more salient to claim the credit, there was no increase in hiring, employment or earnings.

The claim that small businesses will struggle to hire without the WOTC is inconsistent with the empirical findings that hiring does not respond to WOTC eligibility, expansions, or reductions in application costs. Firms hire the same workers regardless of the subsidy, and more than 90% of subsidized hires would have occurred anyway. The program functions as a transfer to a small set of large firms, not as hiring support for marginal employers.

Claim 5: WOTC is an important subsidy for hiring veterans.

Supporters often defend the Work Opportunity Tax Credit by invoking veterans. Senator Cassidy (R-La.), for example, argues that WOTC must be extended because “veterans and military spouses deserve every opportunity to build stable, rewarding careers.” That sentiment is laudable, but it does not describe what WOTC does.

First, veterans are a small share of certified WOTC workers. Even in recent years, veterans account for only 6-7% of WOTC certifications, compared with roughly 70% for SNAP recipients. In earlier years, the veteran share was closer to 1–2%. Whatever WOTC is, empirically, it is not primarily a veterans’ policy.

Second, and more importantly, the best evidence shows that WOTC does not meaningfully affect hiring outcomes at all, regardless of targeted group type. Employers hire the same workers with or without the credit, and most of the certified hires are for low-paid jobs with short tenures.

Even studies focused specifically on veterans find similar windfall rates: A 2012 Department of Labor Inspector General report concluded that roughly 87% of WOTC benefits subsidized veteran hires that would have occurred anyway.

The institutional reasons WOTC fails—lack of screening, legal risk concerns and siloed HR processes—apply equally to veterans.

Conclusion

Across every claim used to justify its renewal—hiring, job quality, small business support and veteran employment—the Work Opportunity Tax Credit consistently fails empirical scrutiny. Decades of evidence show that it does not change hiring behavior, does not improve worker outcomes and overwhelmingly subsidizes jobs that would have existed anyway. Reauthorizing WOTC yet again would not be a bold commitment to disadvantaged workers or veterans. It would be an admission that policymakers prefer symbolic tax credits to policies that actually work."

Democrats’ Nonprofit Problem

A vast, monied network of activist groups keeps the public inflamed.

By Barton Swaim. Excerpts:

"The Democrats’ nonprofit problem began more or less in 2010, when a cap-and-trade bill died in the Senate. Wealthy foundations and donor-class ideologues, animated by fears of global catastrophe, decided they couldn’t achieve their goals by democratic persuasion and had to create an army of nonprofit groups to wage legal and political war on the imagined enablers of climate change.

The money soon flowed to other areas, as money does. Particularly since the pandemic and the George Floyd riots in 2020, the progressive donor class has spread its largess to advocacy and activist organizations pushing social justice, immigrant rights, Palestinian statehood, LGBTQ rights, indigenous people’s rights and—as ever—climate sustainability. MacKenzie Scott, ex-wife of Jeff Bezos, has given $26 billion since 2019. Other billionaires with left-leaning proclivities—Michael Bloomberg, Pierre Omidyar, George Soros, Tom Steyer—have pumped enormous sums into progressive nonprofits."

"the anti-ICE protests in Minneapolis aren’t primarily, or maybe at all, the spontaneous uprisings of an outraged citizenry. Gov. Tim Walz . . . urged viewers to record ICE operations on their phones."

"Ordinary people don’t do that. Nor do they park their cars to obstruct law-enforcement operations or gather outside hotels in the wee hours to chant and bang drums because those hotels rented rooms to ICE agents. Activists do these things."

"The campus protests since 2023 were similarly orchestrated by a latticework of “anti-Zionist” organizations, many larded with money from left-wing foundations: Open Society, Kaphan, Tides and others."

Why the Supreme Court Tariff Case Is Such a Big Deal

President Trump’s weekend spree shows how unlimited his claim of power is.

WSJ editorial. Excerpts:

"he has claimed is his power in an “emergency” under the International Emergency Economic Powers Act. But what emergency? Greenland isn’t under threat of invasion, and Denmark has said the U.S. can have more or less free run of the island for defense purposes."

"how open-ended Mr. Trump’s claim of tariff emergency authority is."

"he can use tariffs essentially whenever he wants for whatever reason he wants. Congress gave him no such expansive power under IEEPA or any other statute.'

"'the taxing power is Congress’s under the Constitution unless expressly delegated to the President."

American Studies Can’t Stand Its Subject

Eighty percent of articles in the field’s leading journal were negative, while not one was positive

By Richard D. Kahlenberg and Lief Lin. Mr. Kahlenberg is director of the American Identity Project and Mr. Lin is a policy research fellow at the Progressive Policy Institute. Excerpts:

"almost 100 articles we examined from over a three-year period in American Quarterly, the flagship journal of the American Studies Association. Published by Johns Hopkins University, it’s widely considered the country’s premier journal of American studies."

"We found that 80% of articles published between 2022 and 2024 were critical of America, 20% were neutral, and none were positive. Of the 96 articles we examined, our research identified 77 as critical, focused on American racism, imperialism, classism, sexism, xenophobia, homophobia and transphobia. Some articles went to absurd lengths to identify sins. One essay posited that thermodynamics—the science dealing with the relationship between energy, heat, work and temperature—is “an abstract settler-capitalist theory that influenced the plunder of Indigenous lands and lives.”" 

"we couldn’t find a single positive article over a three-year period. There were none on American ingenuity. Readers wouldn’t come to understand why as of 2020 the U.S., representing about 4% of the world’s population, won 42% of the individual Nobel Prizes since the awards’ creation in 1901. Or why the U.S. was the first country to land a man on the moon. There wasn’t a single article about America’s vanquishing Nazi Germany in World War II or the Soviet Union in the Cold War. There was no discussion of why the U.S. is rated as the most desirable destination for immigrants across the world."

"the complete lack of gratitude on the part of scholars who write for the leading journal of American studies and benefit every day from the country’s commitment to liberty."

"we contacted University of Texas at Austin historian Steven Mintz, who has analyzed the field of American studies. He told us: “A field that once asked, ‘What is America?’—exploring its myths, music, monuments, and contradictions—now too often narrows its focus to a different question: ‘Whom has America silenced, failed, or harmed?’”" 

By focusing on phonics, Mississippi's public schools rocketed from 49th place in the nation to ninth

See The ‘Mississippi Marathon’ Is Teaching Kids to Read by Rahm Emanuel. Excerpts:

"The Magnolia State’s reading scores haven’t only bucked the national trend—they’ve been rising for years. Mississippi once ranked 49th in fourth-grade reading. It’s now ninth. Yet the average fourth-grader in Mississippi today outperforms the average fourth-grade Californian. Half of black fourth-graders read at grade level in Mississippi, while barely more than a quarter do in the Golden State."

"What is Mississippi’s secret?" 

"It’s actually very simple and—given that Louisiana, Tennessee and Alabama have pursued similar paths—replicable. Mississippi chose to spend less time on topics that dominate Washington’s education agenda and instead maintained a focus on what happens inside the classroom. It focused on the fundamentals."

"It abandoned the hokum that convinced educators that they could teach kids to read through pictures and context clues rather than decoding words. The state restored phonics-based systems that rigorous scientific studies have shown to work."

"the Magnolia State constructed a system to train teachers so that they are effective at teaching students to read."

"It also imposed systems of accountability to ensure that administrators, teachers and students alike meet their marks."

"As Principal Morris [Felica Morris of F.B. Woodley Elementary School] made clear to me, we can’t make progress without measuring it. For all the complaints in my party about “teaching to the test,” Ms. Morris argued that, without accountability, we can’t drive results." 

If the media really cared about climate change, it would start telling the truth about it

See Trump the Climate Nonentity by Holman W. Jenkins. Excerpts:

"Even very large events, such as Covid or the collapse of Soviet industry, at most leave a noticeable indent only on the varying annual rate of emissions increase, not overall atmospheric CO2."

"The largest human CO2 event in history, the emergence of China as an industrial power, on an emissions graph appears only as a continuation of an uninterrupted upward trend since the Industrial Revolution."

"Last April came a small but telling explosion in the climate community. On behalf of the prestigious Council on Foreign Relations, a former John Kerry climate aide, Varun Sivaram, inaugurated a program dedicated to “climate realism.”"

"It conceded many long-obvious points: U.S. emissions have become too small a share of the global total to affect the climate outcome. With or without U.S. leadership, countries aren’t going to abandon a resource from which they’re profiting. The internationally agreed targets for restricting future warming are wholly chimerical." 

Florida’s Insurance Reform Lesson for New York

DeSantis’s success, with auto insurers slashing premiums, could be a model for Hochul

WSJ editorial. Excerpts:

"premiums are falling in states that have eased burdensome insurance rules and taken steps to curb excessive litigation and fraud."

[Florida] "enacted a package of legal reforms in 2022 and 2023 that cracked down on unscrupulous medical providers who work with plaintiff attorneys to bilk insurers. In 2021 Florida insurers faced claims of $7.8 billion in damages, versus $2.4 billion in the other 49 states combined."

"several auto insurers have filed for premium reductions"

"State Farm has slashed premiums by 20% in total since 2024. Progressive said last fall it would refund policyholders $1 billion."

"the state’s [New York] no-fault rules, which let individuals claim damages for injuries and vehicle damage from their insurer regardless of who’s to blame for an accident. Get this—a shooter can claim damages from his insurer if he gets into an accident while fleeing from a crime." 

"Injuries are often faked or exaggerated. Unethical doctors bill insurers for expensive and unnecessary treatments." 

A special income tax on high earners in France last year raised only a fraction of what the government had hoped for

By Dan Mitchell. 

"Which leads me to share this report from the U.K.-based Financial Times. Written by Leila Abboud, it has what I’m calling the world’s least surprising headline.

Here are some excerpts.

A special income tax on high earners in France last year raised only a fraction of what the government had hoped for…and proceeds this year are again expected to be lower than budgeted. The French finance ministry said that a so-called “differential contribution” applying to those earning more than €250,000 a year raised only €400mn for the 2025 tax year instead of the €1.9bn it initially projected. …For 2026, the tax is expected to raise €650mn, €1bn less than planned, the ministry said, creating a budgetary hole… The shortfall from the extra income tax on high earners…also shows the challenges of crafting taxes on the rich that work. Wealthy people often turn to “optimisation” or avoidance techniques to reduce their exposure, such as moving assets or keeping them in holding companies. In the 1980s, about half of OECD countries had some form of wealth tax, while only a handful now do so, and they raise modest revenue for state coffers.

What’s happening in France could be called “Revenge of the Laffer Curve.” Greedy politicians can target the rich, but such initiatives always backfire.

What bothers me most is that tax increases backfire by hindering growth.

In this case, the class-warfare tax backfired by collecting only a fraction of the revenue politicians wanted. As the French would say, “Quelle surprise.”

Except anyone who understands economics knows it is not a surprise."

The Tyranny of the Complainers II

By Alex Tabarrok.

"The Los Angeles City Council recently voted to increase the fee to file an objection to new housing. The fee for an “aggrieved person” to file an objection to development is currently $178 and will rise to $229. Good news, right? But here’s the rest of the story: it costs the city about $22,000 to investigate and process each objection. This means objections are subsidized by roughly $21,800 per case—a subsidy rate of nearly 99%.

Meanwhile, on the other side of the equation:

While fees will remain relatively low for housing project opponents, developers will have to pay $22,453 to appeal projects that previously had been denied.

In other words, objecting to new housing is massively subsidized, while appeals to build new housing are charged at full cost—more than 100 times higher than aggrieved complainer fees. This appears to violate the department’s own guidelines, which state:

When a service or activity benefits the public at large, there is generally little to no recommended fee amount. Conversely, when a service or activity wholly benefits an individual or entity, the cost recovery is generally closer or equal to 100 percent.

Expanding housing supply benefits the public at large, while objections typically serve narrow private interests. Thus, by the department’s own logic, it’s the developers who should be given low fees not the complainers.

Addendum: See also my previous post The Tyranny of the Complainers."

Free trade did not reduce American industrial production

By Donald J. Boudreaux.

"In “Trump Credits ‘Mister Tariff’ for the Country’s Strength. Economists Beg to Differ” (January 14), long-time protectionist Jeff Ferry is quoted as saying that “the aim of the tariffs is to rebuild U.S. production.” The implication is that American industrial production declined as trade became freer. This implication, however, is mistaken.

Helped by U.S.-led post-war efforts to open global markets, American industrial production rose steadily, during non-recessionary times, from the end of WWII until the first Trump administration. This production hit its all-time high in September 2018, just as the first of Trump’s tariffs were kicking in – tariffs largely maintained by Biden. Industrial production was then 18% higher than it was in December 2001, the month China joined the World Trade Organization, 60% higher than it was in 1993, the year before NAFTA took effect, 154% higher than in 1975, the year when America last ran an annual trade surplus, and 650% higher than in 1947, the year before the first round of tariff cuts under the General Agreement on Tariffs and Trade.

But since mid-2018, U.S. industrial production has largely flatlined, being today 2.2% below that all-time high.

Informed individuals who wish to spur U.S. industrial production reject protectionism."

Preventing climate change versus adapting to it: History shows that societies can adapt to changing climate conditions

By Kenneth P. Green of The Fraser Institute.

Adapting to Climate Change around the World

• This study explores what climate adaptation might look like in modern societies, based on measures taken in the past to adapt to projected climate changes, including higher temperatures, shifting precipitation patterns, and more frequent extreme weather events such as floods.
• The study examines the history of adaptation to flooding in the Delta Works of the Netherlands; the reduction of flood risk in the rivers of Europe; the success of the Thames Barrier of London; and the barriers protecting the canals and city of Venice.
• The study also examines the history of adaptation to extremes of heat by reviewing two very different examples of extreme heat management, in Ahmedabad, India, and the United States.
• The Netherlands Delta Works, the Thames Barrier, the canal control system of Venice, and river controls in Europe show that changes to these ecologic systems, even fairly rapid ones, can be successfully controlled by societies at the local-to-regional level using conventional engineering technologies and government warning and notification systems.
• Similarly, the effects of extreme heat in Ahmedabad, India, and in the United States are being controlled with currently available engineering and social organization rather than distant global greenhouse-gas emission reductions.
• The United States took a somewhat higher-energy, more technological approach—the wider spread of HVAC technology—while Ahmedabad relied more on passive environmental cooling systems and institutional changes such as public heat notifications and response systems.
• The two distinct approaches show the broad applicability of adaptation in managing climate risks.

Are Institutions Buying Up Single-Family Homes?

Institutional investors own less than one percent of single-family homes, and their impact on prices is modest. New evidence suggests their presence may reduce rents.

By Jason Sorens of AIER. Excerpts:

"Institutional investors, defined as those owning 100 or more homes in their portfolios, own less than one percent of the single-family housing stock nationally and only about three percent of single-family homes for rent. Their purchasing activities have declined since 2022, but even at the peak the largest (1000+ homes) investors accounted for under three percent of single-family house purchases nationally. Institutional investors matter more in some markets than in others, but in no metro area do companies with 100+ home portfolios own more than five percent of the single-family stock."

"Places with more large institutional investor ownership of single-family homes saw larger price declines over the most recently available 12-month period"

"Institutional investors help make the housing market more liquid and less cyclical. They upgrade the quality of the housing stock, typically at lower cost than smaller renovation outfits. They make desirable neighborhoods accessible for households that could not afford to buy in those neighborhoods. Increasingly, they are directly increasing housing supply."

"Most institutional investors tend to focus on particular neighborhoods or cities to reduce the per-unit costs of property management."

"Mortgage underwriting standards tightened dramatically after the Great Recession, making it difficult for younger Americans and those with a lot of income from “side gigs” and self-employment to qualify. As a result, homeownership rates declined. By making more single-family homes available to renters, buy-to-rent institutional investors have helped families that could not afford to buy or qualify for a mortgage to move into desirable neighborhoods."

"The most recent and careful paper on the subject finds that large institutional investors slightly raise house purchase prices and reduce rents. The effect on prices is truly tiny: for every percentage point of the total single-family housing stock owned by large institutional investors, house prices go up 1.7 percent. Since these investors own less than one percent of the single-family housing stock nationally, counterfactually eliminating all large investor ownership of single-family housing would decrease national house prices by less than 1.7 percent."

"for every percentage point of the single-family rental stock that institutional investors own, rents fall 0.7 percent. Since institutional investors own about three percent of the national single-family rental stock, the total effect on rents is around negative two percent. While small investors substitute to some extent for large investors, the Coven paper still finds that large investors increase the total supply of single-family rental homes by 0.5 for every home that they purchase."

"Typically, large investors renovate homes before renting them out. Invitation Homes reported spending about $39,000 per purchased home on renovations in 2021. Large investors may have a comparative advantage in buying and renovating homes because they have full-time teams working in specific regions according to established procedures and buying materials in bulk. Thus, large institutional investors increase the average quality of the US housing stock."

"Increasingly, large institutional investors expand total housing supply directly, through build-to-rent developments. In the Q2 2024 last year, build-to-rent (BTR) developments were 7.2 percent of all single-family house starts. BTR isn’t useful for getting renter households access to desirable neighborhoods, but it is especially useful for increasing overall housing supply, decreasing both sale prices and rents because the rental and for-sale markets are connected. When BTR drives down rents through new supply on the market, that encourages some households to rent rather than buy and reduces for-sale prices for buyers of the remaining homes on the market. BTR has been especially desirable in unfreezing a housing market challenged by mortgage lock-in."

"In the past year, housing prices have declined the most in markets where large institutional investors are concentrated. If we look at the largest 15 metro areas in the country, house prices have grown 0.5 percent in the markets with under one percent institutional ownership and fallen 3.6 percent in the markets with between one and three percent institutional ownership. In the only market with over three percent ownership (Atlanta), prices have fallen 2.9 percent."

Medicaid Fraud in New York

By Chris Edwards of Cato. 

"Medicaid waste is huge. Officially, the federal-state health program loses 6 percent of benefits to errors and fraud a year, or $37 billion in 2025. But some analysts argue that the waste is much larger because the official figures exclude certain types of improper payments.

Medicaid theft seems straightforward to execute. No brilliant scheme is required, as the Minnesota scandals illustrate. You submit fake paperwork to the state Medicaid agency for services not provided, and the government drops money in your bank account. Scams often last for years before authorities finally investigate.

Recently, seven individuals in Brooklyn were found guilty of stealing $68 million from New York’s Medicaid program. The theft began in October 2017 and continued until July 2024. State administrators were paying a lot of money for a long time to three fake health care businesses before law enforcement finally caught up.

Zakia Khan and Ahsan Ijaz owned and operated two social adult day cares (SADCs)—Happy Family Social Adult Day Care and Family Social Adult Day Care—as well as Responsible Care Staffing, which was a consumer directed personal assistance program (CDPAP). These entities billed New York Medicaid, and the two ringleaders paid people to recruit fake patients with bribes to pretend to receive services from the scam health care companies.

Why did it take seven years to bust this racket? Did state administrators ever inspect the facilities, call customers to check if services were actually delivered, or interview the business owners, Khan and Ijaz? After all, they were getting about $10 million a year of taxpayer money.

New York Post reporters recently visited 13 SADCs in New York City and “found little evidence of any medical support being offered or administered.” Apparently, the program’s rules are loose, government administrators don’t seem to audit much, and facilities appear to offer free lunch and games to able-bodied individuals. More ping pong tables than wheelchairs.

The Post reports that the “number of SADC centers has jumped from 40 in 2013 to almost 400 today, popping up in storefronts, apartments, and basements across the five boroughs.” Meanwhile, in New York, even “Governor Hochul has called CDPAP a racket … citing TikTok ads which reportedly attempt to recruit individuals at $37 an hour to care for their own relatives who may not actually need care.” 

Laxity in rules and enforcement helps explain why New York State spends two and a half times more on Medicaid than Florida, even though the latter has a larger population.

state, and local spending on Medicaid in New York State soared from $55 billion in 2013 to $116 billion by 2025, with federal taxpayers currently picking up 60 percent of the costs. How can we cut Medicaid fraud? Congress should block-grant the program and slash the federal payment share."

Why has Minnesota’s per capita income growth lagged that of the United States since 2014?

By John Phelan. Excerpts:

"Back in November, I noted that since 2014, Gross Domestic Product (GDP) per capita growth in Minnesota has ranked 38th out of 50 states." 

"Minnesota’s rate of real per capita GDP growth has lagged that of the United States generally (highlighted in black) in every year but one since 2014. Only Wisconsin has lagged the nation for more years."

"As a result of this persistently below average growth, the economic “premium” Minnesotans used to enjoy for living in the state in terms of a level of per capita GDP significantly above the national level, has almost disappeared." 

"In 2004 this premium stood at $4,973 per Minnesotan and was still $4,658 in 2014. Since then, however, it has fallen dramatically to just $239 per Minnesotan in 2024."

"Using a technique known as “growth accounting,” we broke down the growth rate of per capita GDP into its components; the per capita growth rate in human capital, physical capital, and Total Factor Productivity (TFP)."

"across each of the sources of real per capita GDP growth, Minnesota performed worse than the United States generally. Our state saw no growth in its per capita stock of human capital over this period while, for the country at large, it grew at an average annual rate of 0.2% annually. Minnesota’s per capita stock of physical capital grew at an average annual rate of 0.4%, but this was below that of the United States generally of 0.7%. And, again, while TFP in Minnesota increased at an average rate of 0.7% annually, across the United States it increased by 1.0%.

Of course, this only begs further questions: Why was the per capita growth rate of human capital, physical capital, and TFP slower than that of the United States generally? To investigate these questions, over the coming weeks we will delve deeper into the data behind these figures."

STATE CAPACITY AND ECONOMIC GROWTH: CAUTIONARY TALES FROM HISTORY

By Sheilagh Ogilvie.

"Abstract 

This paper uses economic history to probe the relationship between state capacity and economic growth during the Great and Little Divergences (c.1500–c.1850). It identifies flaws in the dominant measure of state capacity, fiscal capacity, and advocates instead analysing state expenditures. It investigates five key activities on which states historically spent resources: waging war; providing law and administration; building infrastructure; pursuing industrial policy; and fostering a national culture. The lesson of history, it concludes, is not to build a capacious state. Rather, we need a state that uses its capacity to help (or at least not hinder) market activity."

The image below has an excerpt that was posted on Twitter by Douglas Irwin: 

 

Irwin also says "See also @antonhowes excellent discussion of Tudor industrial policy & trade wars....

Age of Invention: Tudor Trade War The true effects of Henry VII's "industrial policy" 

"Bizarrely, Henry VII’s control of export licences and trade bans are often described as a case of early home-biased industrial policy — an idea most recently popularised by the bestselling economics author Ha-Joon Chang.17 Henry’s policies have been presented as a purposeful stimulus to England’s export of cloth, allowing English industry to rise up through protectionism before it later “kicked away the ladder” for other countries by imposing trade rules free of tariffs and import bans. But Chang based his information almost entirely on a 1720s writer, Daniel Defoe, who was seeking precedents to justify protectionism in his own time, and who got some crucial details utterly garbled."

"The reality then was that Henry’s trade ban did more to hinder the English economy than help it — which is also very clearly borne out by the data on cloth exports. It was only when he stopped declaring on-and-off trade bans with the Low Countries that England’s cloth exports finally gained a secure basis for growth. With trade allowed to grow for the next fifty years, this time with relatively few further interruptions, the weight of English cloth exports more than doubled, and increased by even more in terms of value. It was not by imposing embargoes, but by refraining from them, that England’s main manufacturing industry finally had the chance to expand."

How to Shrink Credit for the Poor

Like Bernie Sanders and AOC, Trump wants to fix prices on credit cards.

WSJ editorial. Excerpts:

"Credit-card rates are set by markets. They are based largely on the Federal Reserve’s benchmark interest rate and borrower risk. Restricting rates will limit access to credit for lower-income Americans. That’s what price controls do: They limit supply."

"The average annual percentage rate (APR) rose to 24.9% from 19.3% between 2021 and 2024 as the Fed raised interest rates to control inflation. The average APR has since ticked down to about 23.8% after the Fed cut rates last year."

"Rates on credit cards are higher than on auto and home loans because they aren’t secured by property."

"Those with lower credit scores are charged higher rates to compensate for their greater risk of default. Rising delinquencies have contributed to higher rates. About 12.4% of credit-card balances were severely delinquent in last year’s third quarter, about the same as in the 2008-09 recession."

"Capping rates at 10% would inevitably force issuers to slash rewards and curtail credit. The latter is what happened after Democrats in 2009 restricted the kind of fees that credit cards could charge and when they could raise rates. A paper by the Philadelphia Fed concluded the 2009 law “likely had an adverse effect on non-prime borrowers.”"

"Studies have also found that lenders restricted credit in states like Arkansas and Illinois after they capped interest rates."

[people then] "may turn to payday loans that charge even higher rates." 

Youngkin’s Strong Virginia Legacy

The GOP Governor leaves behind a healthy fisc and fast-growing state economy

WSJ editorial. Excerpts:

[Virginia has] "a revenue surplus likely north of $2 billion. The commonwealth has had four consecutive years of surpluses, collectively totaling $9.7 billion."

"a separate $4.7 billion rainy-day fund"

"Between fiscal years 2019 and 2024, Virginia rose to third from 14th among states with a AAA credit rating"

"Many states used the cash [federal pandemic largesse] to expand government, and when the Covid cash ran out, they raised taxes."

"Between the fourth quarter of 2021 and the first quarter of 2025, Virginia ranked 16th of the 50 states in economic growth"

"Virginia has generally outperformed neighboring Maryland"

"Since January 2022, nonfarm payroll employment has increased by 264,000, creating a broader tax base. Year-to-date growth in withholding taxes as of October was 8.6% because of wage growth." 

To Save Public Education, Look to Mississippi

The state, once a laggard, now leads the nation by many measures thanks to a back-to-basics approach

By Jason L. Riley. Excerpts:

"Yet Mississippi, which spends less per student than almost every other state, is outperforming other states with far larger education budgets."

"Adjusted for state demographics, Mississippi ranks first nationally in fourth-grade reading and math, and at or near the top in eighth grade, according to an Urban Institute analysis. Among black students, it ranks third nationally in reading, and its low-income students outperform all other states.

How did the Magnolia State pull it off? “It did not do so by relying on some of the most common proposals held up as solutions in education, like reducing class sizes, or dramatically boosting student funding,” according to the [NY] Times. “Rather, the state pushed through a vast list of other changes from the top down, including changing the way reading is taught, in an approach known as the science of reading, but also embracing contentious school accountability policies other states have backed away from.”

While other states “have gone in the opposite direction, backing off accountability and lowering proficiency standards, sometimes in the name of equity,” Mississippi raised its academic standards, held back third-graders who lacked proficiency in reading, and sent literacy and math coaches to help teachers in low-performing schools. Notably, the Times reports that Mississippi “was able to muscle through some changes, in part, because it has weak teachers’ unions, which have traditionally resisted accountability linked to standardized testing.”"

ICE, Minneapolis and the Rule of Law

Local officials encourage obstruction of federal agents and have now filed a meritless lawsuit

By George J. Terwilliger III. Mr. Terwilliger is a Washington lawyer. He served as deputy U.S. attorney general, 1991-93. Excerpts:

"Neither the Constitution nor any statute provides cities and states any authority over immigration matters, rendering sanctuary-city policies legally feckless. They exist only because some officials are willing to exploit the presence of illegal aliens for political gain."

"the Constitution’s Supremacy Clause (Article VI, Clause 2) forecloses Mr. Frey and his fellow exploiters from directing how ICE and any other federal enforcement officials perform their duties. Chief Justice John Marshall ruled in McCulloch v. Maryland (1819) that “the states have no power . . . to retard, impede, burden, or in any manner control, the operations . . . vested in the general government.”"

"That the ICE agents were lawfully present in Minneapolis and entitled to carry out their lawful functions without local interference doesn’t justify the agent’s use of deadly force. An investigation to assess whether the use of deadly force was legally justified is necessary. The FBI has a role under law. But by excluding the locals, the FBI has now occasioned the public to question who should be doing that investigation.

A homicide occurred within the state authorities’ jurisdiction. That gives those authorities a vital interest in the investigation. If the agent’s conduct was part of or related to his official duties, then he would be immune under the Supremacy Clause from state prosecution. If he acted outside those duties, he could lose that protection and be subject to state jurisdiction. In either case, constitutional standards for use of deadly force by a law enforcement officer will be the measure of his actions."

"Just as the federal agents’ lawful presence in the cities isn’t a justification for the use of unnecessary force, objection to their presence on policy grounds provides no justification for civilian interference in their operations, or for local officials to leave them bereft of local law-enforcement help when that occurs." 

In Defense of Share Buybacks

By Spencer Jakab of The WSJ. Excerpts:

"businesses that are told how to spend their money instead of putting it to its highest and best use ultimately hurt their shareholders and the economy by investing in dud projects. That’s especially true when politicians nudge them."

"Four large defense contractors—Lockheed Martin, RTX, General Dynamics and L3Harris—paid out $156 billion in the past decade combined via dividends and buybacks. That was more than three times their capital expenditures."

"Their return on invested capital—what they earned on the money not paid out—has averaged a little over 10% recently: good, but not as much as shareholders earned just redeploying contractors’ surplus cash into an index fund the past few years.

What would the returns have been if the companies had invested four times as much? Almost certainly lower."

"Defense companies would have had to diversify into products they didn’t understand as well."

"The overall proportion of their earnings returned to shareholders has been pretty steady over the decades" 

New York State to Loosen Environmental Rules to Speed Up Homebuilding

Review process can add two years and hundreds of thousands of dollars in costs to housing projects

By Rebecca Picciotto of The WSJ. Excerpts:

"New York is preparing to loosen its environmental law to make it faster and cheaper to build housing in the state, the latest government effort to tackle high housing costs as affordability becomes a centerpiece of this election year.

New York Gov. Kathy Hochul on Tuesday proposed new reforms to exempt the majority of housing projects from the State Environmental Quality Review Act, or Seqra. State lawmakers would need to approve the reforms.

The more than 50-year-old law requires new developments to undergo lengthy environmental reviews that can add an average of two years and hundreds of thousands of dollars in costs.

“For too long, burdensome red tape has stood in the way of progress localities want to see, making it too hard to deliver critical housing and infrastructure,” Hochul said in a statement. 

Hochul is the latest Democrat to roll back environmental protections, long a bedrock issue on the left, in favor of building more homes. Last year, California Gov. Gavin Newsom enacted similar housing exemptions to his state’s environmental-review law."

"These reviews can increase project costs by 11% to 16%"

"Some projects get stuck in Seqra lawsuits for as long as eight years."

"Sometimes, Seqra lawsuits are filed against green-energy projects meant to improve New York’s environmental sustainability."

"over the past decade, more than 1,000 housing projects in New York endured these expensive reviews despite having zero significant environmental impacts." 

Black America Needs a Moral Rejuvenation

Stop whining about racism, honor Martin Luther King’s legacy, and confront the enemy within

By Robert L. Woodson Sr. Excerpts:

"In a single year, more black lives are destroyed by this violence [black-on-black violence] than were killed by the Ku Klux Klan in four decades of terror."

"Civil-rights leaders and politicians remain conspicuously silent, waiting instead for the next police shooting or racial controversy they can exploit for media attention and moral posturing."

"Consider the massive pandemic-relief fraud in Minneapolis, where nearly a quarter-billion dollars meant to feed hungry children was stolen. Whistleblowers raised alarms early. But every question was deflected with accusations of racism"

"We once endured conditions far worse than today without losing our moral compass. During Jim Crow—when racism was written into law—black neighborhoods were safer than today. Elders were respected. Children could walk the streets without fear. Families were intact, churches were full, and black marriage rates during the Great Depression were higher than for any other group in America."

"leadership shifted from moral suasion to political patronage. Welfare replaced mutual aid. Bureaucrats replaced neighbors. Racial grievance replaced dignity. Poor blacks were told they could be redeemed only by outsiders, while a growing civil-rights industry prospered by managing their despair." 

Selling a Home Is Too Taxing

Indexing capital gains for inflation would free up the housing market and raise billions in revenue

By Jeff Yass and Stephen Moore. Excerpts:

"The tax on investment profits, which runs as high as 23.8%, is based on nominal gains. If you bought an asset 40 years ago for $2,000 and sell it for $6,000, you’ll pay tax on the $4,000 gain—even though the value of the asset has only barely kept up with inflation."

"Americans are sitting on roughly $55 trillion in nominal unrealized gains in the value of homes and other real estate. That’s one reason why, as home values rose during the recent inflationary period, sales declined from more than six million homes in 2021 to a little over four million in 2025."

"Millions of empty-nest baby boomers want to downsize and retire but are discouraged from doing so by the prospect of a huge tax bill. That’s called the lock-in effect of the capital-gains tax. It denies the government massive tax revenue and creates a perverse incentive to store wealth away untouched for decades. A 2020 Brookings Institution analysis put it this way: “Lock-in encourages investors to retain their assets when the economy would benefit from a redeployment of investment capital to higher return ventures or properties.”"

"The Steiger Amendment of 1978, which reduced the top rate from 49% to 28%, had a large unlocking effect. So did the tax cuts signed by Presidents Reagan in 1981 and Clinton in 1997, both of which cut the rate from 28% to 20%."

"When your house passes to your estate, a tax-code provision called the step up in basis at death kicks in, and your gain forever goes untaxed. When your heirs sell the house, they pay tax only on the difference between the value at your death and the sale price." 

Why are groceries so expensive in NYC?

By Tyler Cowen.

"The lowest-hanging fruit is to simply legalize selling groceries in more of the city. The most egregious planning barrier is that grocery stores over 10,000 square feet are not generally allowed as-of-right in so-called “M” districts, which are the easiest places to find sites large enough to accommodate the large stores that national grocers are used to. Many of these districts are mapped in places that are not what people have in mind when they think “industrial” — mixed-use neighborhoods with lots of housing like stretches of Williamsburg’s Bedford Avenue and almost all of Gowanus, even post-rezoning, are in fact mapped as industrial districts.

To open a full-sized grocery store in these areas, a developer must seek a “special permit,” which requires the full City Council to get together and vote for an exception to the rules. This is a long, uncertain process, and has in the past even been an invitation to corruption.

Most famously, the City Council uses this power to keep out Walmart at the behest of unions and community groups. Thwarted in its plans to open a store in East New York — a low-income Brooklyn neighborhood that could desperately use more grocery options — the nation’s largest grocer instead serves New Yorkers with a store just beyond the Queens/Nassau line in Valley Stream, rumored to be the busiest Walmart in the country. New Yorkers with a car and the willingness to schlep beyond city limits — or pay the Instacart premium — get access to cheaper groceries; the rest get locked out.

When politicians are willing to approve a grocery store, the price can be high.

That is by Stephen Smith, via Josh Barro."

Blame Statism for Mexico’s Economic Stagnation

By Dan Mitchell.

"With so many bad things happening in Washington, I almost feel guilty writing about another country.

But since I’m in Mexico City teaching at Universidad de la Libertad, I want to write at least one column about Mexican economic policy.

Based on this recent chart from Robin Brooks at the Brookings Institution, something has gone wrong in recent years.

 

As you can see, Mexican growth was keeping pace with U.S. growth from about 2006-2017.  But then Mexican growth ground to a halt, pre-pandemic, during the pandemic, and post-pandemic. 

 

There are two possible explanations for this Anti-Convergence-Club example.

• First, U.S. politicians might be doing something smart. But American growth has not been spectacular over the past eight years, so that explanation doesn’t hold water.
• Second, Mexican politicians might be doing something dumb. And since economic freedom is lagging in Mexico, this explanation seems very reasonable. 

In his column, Brooks mostly focuses on explaining that Mexico has stagnated, so I have no idea whether he would agree or disagree with my hypothesis. 

But here’s some evidence for my viewpoint. Here’s a chart, based on IMF data, showing that the fiscal burden in Mexico has increased over time.

Both taxes and spending are now a heavier weight on Mexico’s economy, and note that most of the additional spending burden has been imposed since Mexico opted for populist-left rule in 2018 (AMLO followed by Sheinbaum).

 

Fiscal policy is just one of many variables that determine economic output.

And the EFW data clearly shows that rule of law and red tape are the biggest problem areas. Nonetheless, it is bad news that those mistakes are now being exacerbated by fiscal mistakes.

Since I was combing through the IMF database, I also created this chart that shows per-capita GDP levels over time.

The overall picture is weak growth over the past 45 years, though there was improved performance after 1985 thanks to some pro-market reforms.

In recent years, however, per-capita GDP has been completely flat.

 

The bottom line is that Mexico is caught in the “middle-income trap.” A few nations have shown how to break past that barrier, but there’s is almost no hope (at least in the next few years) that Mexican politicians will adopt a Milei-style agenda.

P.S. Trump’s trade taxes are bad news for Mexico, and that’s not the fault of Mexican politicians. So weak Mexican data in 2025 (and future years) is partially the fault of the United States.

P.P.S. The chart comparing U.S. and Canadian growth is eerily similar to the U.S.-Mexico chart at the beginning of this column. Which sort of makes sense given Canada’s statist policies over the past 10 years."

Vandalism and America’s Anti-Business Climate

When wealth producers are perceived as ‘owing’ to society, the pointless defacement and theft directed toward them soon follows.

By Scott Beyer of The Independent Institute. 

"When people talk about America’s “anti-business climate,” they frame it as a policy problem, centered on high taxes, suffocating regulations, and labor mandates. But America’s anti-business climate is also a cultural disposition. Long before any legislation passes, a deeper attitude takes hold that frames wealth producers as, at best, lucky beneficiaries of an unfair system, and at worst, moral wrongdoers who have taken more than they deserve. Once that premise is accepted, a troubling chain reaction follows. If success is illegitimate, then harms committed against successful people and businesses begin to feel justified. Vandalism becomes “punching up”; theft becomes “redistribution”; and other street-level maladies are similarly rationalized. 

Whether this mindset originates in culture and seeps into politics, or vice versa, is a chicken-and-egg question. In practice, the two reinforce each other. Political rhetoric demonizes wealth, cultural resentment intensifies, and politicians respond to that resentment, resulting in disorder.

No state better embodies this dynamic than California.

At a policy level, California checks every box associated with hostility toward business. The state has a tough regulatory regime, and the highest top marginal income tax rate in the nation. Now there is a ballot measure that proposes a “wealth tax” of 5% on anyone worth $1 billion or more, which has already caused several billionaires, including the founders of Google, to move operations from the state. 

This policy environment does not exist in a rhetorical vacuum; California’s political leadership has actively framed wealth creation as suspect. It’s unsurprising, then, that California is also a place where widespread vandalism and petty crime are directed at symbols of wealth and commerce.

Consider the ubiquitous graffiti in cities like Oakland and Los Angeles. This is not random teenage mischief; much of it explicitly targets businesses, housing developments, and commercial corridors, and sometimes even has anti-gentrification messages. In that sense it is a form of ideological vandalism.

Or take the case of In-N-Out Burger, a famously apolitical, working-class-friendly company that almost never closes locations. In January 2024, the company permanently shut down its Oakland restaurant, citing relentless crime. According to In-N-Out’s own statement, employees and customers were subjected to repeated car break-ins, robberies, and vandalism.

Then there are the mass car break-ins and smash-and-grab retail store thefts that have become part of San Francisco’s reputation. Of course, so-called quality of life crimes were deprioritized by former city District Attorney Chesa Boudin. While California’s other law enforcement bureaucrats may not be as extreme as Boudin, the soft prosecutions that occur across the state show that they are similarly unbothered by such theft.

A similar dynamic exists closer to home in Charlottesville, Virginia—a city that, in many ways, functions like a mini San Francisco.

Charlottesville is saturated with social justice language: wealth redistribution, climate justice, systemic oppression. One recent, twice-elected mayor built her political brand around racial agitation, framing the city’s present-day inequalities as ongoing moral crimes committed by one racial group against another. Another councilor has used his platform to stage protests against a beloved local business, demanding “living wages”.

Homelessness illustrates the issue most starkly. Charlottesville’s downtown pedestrian mall has seen a visible increase in homelessness, along with the predictable antisocial behavior. Yet the prevailing attitude is that the homeless are owed space, tolerance, and resources—while the businesses operating nearby are expected to absorb the costs. During a recent debate over an anti-camping ordinance, a business advocate attempting to speak during public testimony was shouted down.

In such an environment, disorder is inevitable. Loitering, vandalism, and break-ins have become increasingly common in areas where the homeless concentrate. I work for a company that has operated successfully in Charlottesville for decades. Our company vehicles have suffered slashed tires and keyed doors. We have even considered removing our signage, because merely being visibly successful appears to invite hostility.

The widespread keying of Tesla vehicles over the past year provides the ultimate example. These acts were pure zero-sum destruction, with the only “gain” being that perpetrators could attack a symbol— Elon Musk—that represents everything they hate: wealth, intelligence, and productive success. 

The broader takeaway is clear. When society frames certain successful people or institutions as illegitimate, it creates a premise for harming them. While outright violence remains rare and widely condemned—the Luigi Mangione case being a counter-example—smaller clandestine harms proliferate: vandalism, theft, intimidating protests, reputational smears, and ultimately confiscatory taxation. Each step becomes easier once the initial moral judgment has been made.

Left-wing politicians often stoke these sentiments, sometimes cynically, sometimes sincerely. In either case, the results are visible in the crime and economic stagnation found in many progressive cities. An anti-business culture does not stay abstract for long." 

Groceries in November 2025 are the Most Affordable They Have Ever Been

By Jeremy Horpedahl.

"In surveys more than two-thirds of Americans say they are are struggling with the cost of groceries. And yet, relative to average wages:

 

The chart shows a simple measure of relative grocery affordability. Starting with the levels of wages and grocery prices in 1947, if in any year wages increase more than prices, the line goes up (it can also go down, as it does in some years). Cumulatively, you can see that today groceries are over twice as affordable as in 1947.

You could reasonably complain that there hasn’t been much progress since the early 1970s. Fair enough. But there has been significant progress since the 1990s. Even if the progress is less than we would have liked, groceries are still, right now, the most affordable they have ever been in the US relative to average wages. And since US consumers spend by far the lowest share of their income on groceries in the world, we might be tempted to say that right now groceries in the US are the most affordable they have ever been in human history. Period.

This is not just a trick of using average wages, which can be distorted by outliers. First, we are already using an average wage series that strips out the highest earners (supervisors, managers, etc.). But we can show this more clearly by using a median-wage series, such as the CPS series (calculated by EPI) starting in 1973. Notice this affordability trend gets slightly better if we use median wages from 1973-2024

 

It’s true that using the median wage series, 2020 and 2021 look more affordable than 2024 — but that’s because the compositional effects of the job losses in the pandemic really throw off the median wage. But the growth rate since 1973 is slightly better for median rather than average wages — it’s not a trick! And when we have the median wage data for 2025, it will also likely be the most affordable measure on this chart.

So why are people so pessimistic if wages have been rising faster than grocery prices? One theory: availability bias. People focus on the prices where they notice goods becoming less affordable, but ignore the ones that are more affordable. Many consumers could probably tell you that a dozen eggs increased from $1.40 per dozen in November 2019 to $2.86 today, and at times was much higher, topping $6 briefly in early 2025. Likewise they could tell you that a pound of ground beef soared from $3.81 in late 2019 to $6.54 today. Both of these prices increases vastly exceed wage increases over the same timeframe (about 33 percent for wages), but most consumers probably couldn’t tell you that these were outliers and most major categories of food increased by less than average wages since late 2019:

 

While the “beef and veal” category has clearly outpaced wages — by almost twice as much! — nearly every other category of meat and as well as other food product prices increased less than wages. Poultry is the one exception, though here it is almost equal to wage increases. But if we are talking about pork or fish, or the non-meat categories, most food is more affordable than in late 2019 relative to wages. Consumers won’t as easily identify these more affordable categories, and they probably have no idea how much average wages increased." 

Setting the Record Straight on Arizona’s ESA Program

By Colleen Hroncich of Cato.

"In her recent State of the State address, Arizona Governor Katie Hobbs painted the state’s Empowerment Scholarship Account (ESA) program as an unaccountable “entitlement” riddled with fraud. This is a flawed portrayal that ignores the benefits of the program. ESAs enable parents to use state education funds to choose educational options that work best for their children.

Interestingly, Governor Hobbs seems to be using the “entitlement” framing pejoratively. In the same speech, she bragged about protecting Medicaid and school meals, both of which are federal entitlement programs. I don’t think it was an accident that she did not refer to them as the “Medicaid entitlement” or “school meal entitlement.”

If ESAs are entitlements then so are conventional public schools. Both receive taxpayer funding to educate children. The difference is that ESAs allow families to direct those education dollars toward the schools and services that best fit their children’s needs, rather than being assigned to a school based solely on their address. Denigrating one as an entitlement while praising the other is disingenuous at best.

Governor Hobbs highlighted extreme examples of ESA misuse. While these stories make headlines, they don’t represent the bulk of the program. Audits have consistently shown that ESA fraud rates are significantly lower than other government programs. While no program is perfect, these results show that most Arizona families are using these funds as intended: for educational purposes such as tuition, tutoring, curricula, and therapies.

This shouldn’t be surprising given the program’s built-in accountability measures. Unlike public school spending, where districts handle billions of dollars with limited transparency about individual expenditures, every ESA purchase requires a receipt or invoice. Parents must document how they spend their education funds, and the state reviews these transactions. That level of oversight doesn’t exist in conventional public schools.

The governor’s claims about a lack of accountability reflect a worldview that prioritizes the system over individual kids. By equipping parents to take their children—and funding—to a new provider, the accountability inherent in an ESA program is far superior to the public school system. Rather than engaging in political and legal battles or waiting for a school board to change a policy, ESAs enable parents to quickly choose the educational options that work best for their children.

Keep in mind, we aren’t talking about abstract statistics. ESAs are benefiting diverse families across Arizona. Whether children with special needs who weren’t thriving in their assigned schools, military families dealing with frequent relocations, or lower-income parents seeking alternatives they couldn’t otherwise afford, ESAs have opened doors that were previously locked to many families.

Rather than restricting a program that’s working for hundreds of thousands of children, Governor Hobbs should embrace it. Arizona families deserve the freedom to pursue the educational paths that work best for them."

Kuttner’s Clunker of a Defense of Tariffs

By Don Boudreaux.

"Here’s a letter to The American Prospect.

Editor:

Robert Kuttner argues that U.S. tariffs on imports from China help Americans economically (“Tariffs: Maybe Not So Crazy,” January 14). But for many reasons, his argument cannot be taken seriously. Here are four of those reasons.

First, Kuttner mistakenly assigns economic meaning to China’s trade surplus with the U.S. In a world of more than two countries, one country’s trade ‘balance’ or ‘imbalance’ with another country is utterly meaningless. Even if every country’s trade were ‘balanced’ – that is, no trade deficit or surplus with the rest of the world – every country might nevertheless have so-called ‘trade deficits’ with each of dozens of other countries, and ‘trade surpluses’ with each of dozens of yet other countries.

Second, Kuttner wrongly presumes that China’s trade surplus with the rest of the world is unambiguously an advantage for China and a disadvantage for other countries. When a country runs a trade surplus it suffers a drain of capital. While this drain isn’t necessarily evidence of economic problems, it’s also not necessarily evidence of economic health: The more promising the economy, the greater the desire of both domestic and foreign citizens to invest in that economy rather than outside of it.

Third, Kuttner erroneously claims that countries that run trade surpluses “cost the U.S. and other nations jobs” – that is, reduce employment in countries that run trade deficits. Although protectionists parrot this claim ad nauseam, the evidence contradicts it. The U.S. has run annual trade deficits in each of the past fifty years. Over this half-century, the U.S. unemployment rate has trended downward. Today this rate is 4.4%; in 1973 – the last non-recessionary year during which America ran an annual trade surplus – it was 4.9%. And over these years the number of nonfarm jobs in the U.S. more than doubled, from 77,071,000 in 1975 to 159, 526,000 today – as real wages rose.

Why the U.S. and other market-oriented countries that run trade deficits should worry about net inflows of capital remains a mystery.

Fourth, Kuttner incorrectly writes about the tariffs that “the evidence suggests that most costs are being absorbed by foreign exporters or by domestic sellers accepting lower profit margins.” Benn Steil calculates that most of the costs of Trump’s tariffs are paid by American consumers. Foreign exporters pay at most 25% of the tariffs’ costs, with domestic U.S. sellers ‘eating’ around 10% of these costs. (It’s worth noting that, given the competitiveness of the global economy, foreign exporters and domestic sellers – to the extent that they remain unable to pass along to American consumers the full costs of the tariffs – will over time supply even fewer goods than otherwise to us Americans, thus raising consumer prices even higher in the future.)

It’s telling that attempted defenses of protective tariffs invariably rely on faulty reasoning and factual inaccuracies."