Trump Halts the Blockade of U.S. Ports

His waiver of the Jones Act is helping U.S. oil supply, so why not repeal the 1920 law?

WSJ editorial. Excerpts:

"So far, about two dozen waiver voyages have been reported complete as of April 30, according to the Maritime Administration."

"Mr. Trump’s initial suspension of the Jones Act was for 60 days, but late last month he extended that for another 90 days, with the White House calling it a great success. “New data compiled since the initial waiver was issued revealed that significantly more supply was able to reach U.S. ports faster,” a spokeswoman said. “This extension will help ensure vital energy products, industrial materials, and agricultural necessities are maintained.”"

"Funny, it also sounds like a good argument for permanent Jones Act relief. In a crisis, such as a hurricane in the Caribbean or a menacing in the Persian Gulf, the archaic law becomes an acute problem, because it limits the flexibility of American supply chains to respond."

"The Jones Act’s defenders call it an America First policy to protect a U.S. shipbuilding industry and merchant marine. A century later, that clearly hasn’t worked." 

Entrepreneurs Flocked to Colorado. Now Red Tape Is Driving Some Away

Proposed AI bill has many wondering whether state’s regulations killing its entrepreneurial spirit

By Owen Tucker-Smith of The WSJ. Excerpts:

"A widely circulated report last month from the state’s chamber of commerce reported a loss of publicly traded companies based in the state, estimating that Colorado had lost workers from some 98 firms to relocations or failed site-selection opportunities since 2019."

"Companies’ latest complaint is over a landmark state bill regulating artificial intelligence. A previous version of the bill would have required companies to take steps to reduce the risk that AI-based algorithms used for high-stakes decisions such as employment or healthcare discriminate against users."

"The state added half a million jobs in the mid-2010s as startup culture and domestic migration drove explosive growth, but the economy has recently grown sluggish."

"Blake Scholl, chief executive of the Denver-based aviation company Boom Supersonic, moved to Colorado a decade ago, inspired by its thriving business climate, but said the pileup of regulations has delayed his construction projects."

"the AI bill would add compliance costs and distract attention from companies when they need to focus on winning the AI race." 

Globalization’s Overlooked Economic Benefits

Antiglobalist ideas have motivated many Trump voters, but free trade benefits the average American

Letter to The WSJ.

"In his column “What Happened to the Pragmatic Trump of the First Term?” (Editor At Large, May 5), Gerard Baker wisely decries President Trump’s second-term pursuit of a misguided and extreme ideological agenda. Mr. Baker points out that antiglobalist ideas motivated voters in 2016—views that globalism “facilitated mass migration and the elevation of international capital that ravaged communities at home.”

A better name for “the elevation of international capital” is “free trade.” This term reveals the increased freedom of ordinary people to spend their incomes as they choose, while avoiding the mistaken suggestion that lowering trade barriers benefits only Davos-vacationing capitalists at the expense of the masses.

And where are these “ravaged communities at home” that voters were so worried about? Politicians and pundits still talk incessantly about these communities, but scholars who make serious attempts to locate them encounter difficulties. Economist Jeremy Horpedahl studied the 10 metropolitan statistical areas in the U.S. that suffered the largest negative hits during the infamous “China Shock” of the early 2000s. According to Mr. Horpedahl, all of the metropolitan statistical areas “hit hard by the China Shock still managed to have significant and positive real wage growth across the distribution since 2001 . . . Wage gains in several of these places, in fact, are better than the national trends.”

Whenever economic change occurs, some particular workers lose jobs, and some particular locations lose business and population. Economic growth requires economic change and adjustment. This has always been and will continue to be the case. But the story of America is that ordinary people recover over time and become wealthier. It’s an error to single out the freer trade of the past few decades as a unique source of economic change that justifies greater skepticism of globalization.

Prof. Donald J. Boudreaux

George Mason University

Fairfax, Va." 

Airlines and Overzealous Antitrust Enforcers

It’s a mistake to blame deregulation for Spirit Airlines’ demise

Letter to The WSJ. 

"Regarding your editorial “Spirit Airlines and the Antitrust Left” (May 4): Many people think that because carriers like Spirit Airlines have lower costs, they should be able to compete with the major airlines by offering lower fares. That’s a fallacy.

On any route involving a hub city of a major airline, the major airline’s network will support more flights (and therefore more possible connection options) than the low-cost carrier, which relies on point-to-point traffic. This product advantage, among others, generally allows the major airlines to charge and receive higher ticket prices than the low-cost carriers.

The revenue from these premium tickets will normally cover the cost of a network carrier’s flight before all the seats are sold. This means the remaining seats can be sold profitably at any price necessary to fill them. Unless travel demand is so high, or industry capacity so low, that major airlines can fill their planes at premium prices, it will generally make economic sense for them to match any price that a low-cost carrier offers if doing so is necessary to fill a seat.

The antitrust left is now blaming deregulation for Spirit’s demise. But there are far more airline flights, with more destinations served, at lower prices in real terms, than before deregulation. This is because deregulation allowed airlines to develop networks, that efficiently aggregate and distribute traffic through mergers, international alliances and organic growth.

During the era of deregulation, I was on the staff of the Civil Aeronautics Board, which regulated airline routes and prices until 1978. The architects of deregulation, Michael Levine and Alfred Kahn, didn’t know what form airline competition would take. They were confident, however, that business executives, freed from regulatory constraints, would find the most effective ways to increase output and reduce price. That is what has happened, despite resistance from regulators and occasional missteps by misguided judges. Unfortunately, the Biden administration’s antitrust enforcers and Judge William Young prevented Spirit Airlines and JetBlue from helping airline competition continue to evolve.

Ben Hirst

Wayzata, Minn.

Mr. Hirst is former executive vice president of Delta Air Lines." 

The U.S. Indicts a Mexican Governor

Charges made in New York mean President Sheinbaum will have to choose a side

By Mary Anastasia O’Grady. Excerpts:

"Mexican civil-society groups have long accused the political class of aiding and abetting cartels. Activists, family members whose loved ones are among the 130,000 gone missing since 2006, and journalists are some of the brave Mexicans who have tried to raise the consciousness of their nation about what they allege is a link between the gangsters who terrorize them and the state. It’s dangerous work."

"For more than a decade, the Cartel, under the rule of the Chapitos Leaders, and, before them El Chapo and El Mayo, has paid cash bribes to public officials at each level of the government, in exchange for protection of the Cartel’s drug trafficking operations. These corrupt government and law enforcement officials, including the defendants, are essential to the Cartel’s drug trafficking operations.”" 

Spirit Airlines and the Antitrust Left

A case study in how Lina Khan’s theories about competition failed in the real world

WSJ editorial. Excerpts:

"In 2022 JetBlue offered Spirit a $3.8 billion merger lifeline so the combined companies could offer more competition for the four U.S. airline giants. Mr. Kanter’s Antitrust Division sued to block the merger in 2023 and prevailed in court in January 2024"

"Federal Judge William Young admitted Spirit’s financial troubles. He also agreed that “an expansion of all aspects of JetBlue’s business—including network, fleet and loyalty program—would allow for more vigorous competition with the Big Four, which carry most passengers in the country.”"

"He still ruled the merger an antitrust violation because it would eliminate one low-fare option on some routes."

"Spirit declared bankruptcy in November 2024, long before the Iran war fuel spike. Now it’s shutting down for good."

"there will be less competition than if the merger had been allowed." 

Malta: A Free-Market Success Story

By Dan Mitchell. 

"I’m in Malta for a bit of research before speeches in Amsterdam and Reykjavik as part of the Free Market Road Show. 

So today is a good opportunity for a column on Malta’s rather-successful economy (something I’ve done for other countries, such as Poland, Chile, Botswana, Singapore, and Estonia).

Let’s start by looking at Malta’s score from the latest edition of Economic Freedom of the World.

Malta is ranked #18, putting it easily in the top quartile.

It gets very good scores in every category other than fiscal policy (somewhat similar to Nordic nations).

What are some of the best features of Maltese economic policy? Let’s look at some excerpts from a column in The Business Picture by Nima Sanandaji.

"…while the big economies of Europe are stagnating, several of the smaller ones are outpacing the US. Malta is the best example, since it led the European growth league in 2024 with a five per cent growth. …Malta is succeeding thanks to competitive taxes and regulations, combined with talent supply, which make it a growing brain business jobs hub. …The share of adults employed in these jobs has increased substantially over time. Currently 9.5 per cent of adults in Malta are employed in highly knowledge intensive jobs. After Switzerland, Ireland and the Netherlands, this is the highest rate in Europe. …Large economies like Greece, Spain, Italy and France have due to regulatory and tax burdens stagnation in share of adults in knowledge intensive jobs. The same countries also struggle with economic growth and job creation."

I’m not surprised that Malta is growing faster than the United States. It’s a classic example of convergence.

What’s more interesting is to look at examples of divergence.

Here’s a chart, based on the Maddison database, showing Malta’s long-run performance (in red) compared to regional competitors, as well as a sampling of other nations.

 

"A few years after World War II ended, Malta was very poor. It ranked lower than Madagascar and its level of per-capita GDP was less than half of Greece.

Now it is has shot way past those two nations, as well as other countries that used to be richer.

Amazingly, Malta has almost caught up with Italy, which had nearly four times as much per-capita GDP back in 1950.

Does this mean Malta has perfect economic policy? Of course not. But it does have better economic policy than most other nations, especially its Mediterranean neighbors.

The moral of the story is that there’s a recipe for growth and Malta is doing a decent job of following the recipe. Assuming they want prosperity, other nations should do the same thing."

AI and the future of labor demand

See You are not a horse by Brian Albrecht. Excerpts:

"For simplicity, suppose human labor demand goes to zero. Not low. Zero. What does that require? It means no dollar you spend, anywhere in the economy, passes through a human hand at any point in its supply chain. Not the person who made the thing. Not the person who shipped it. Not the person who designed it, sold it, maintained it, or cleaned the building where it was assembled. Zero human labor embodied in final expenditure. That’s the target. That’s what I’m going to take “humans become horses” to mean, stated precisely. [tractors replaced horses and horses did not find employment elsewhere-the number of horses in the USA fell greatly after tractors came in]

This is the input-output idea Leontief built his career on. You can trace any final purchase back through its supply chain and add up all the human labor that went into it, direct and indirect. A cup of coffee has the barista, but also the roaster, the trucker, the farmer, the person who made the truck. “Embodied labor” means all of it. For labor demand to collapse, every one of those links has to go to zero, in every product anyone buys

The economy is not one production function. It is many activities. When AI makes some of them cheaper, people don’t just buy more of the same thing. They buy something else.

Every dollar you spend lands somewhere. Some dollars land in activities with lots of human labor inside them: a restaurant, a therapist, a roofer. Some land in activities with almost none: a streaming subscription, an automated checkout, cloud storage. So when we are tracing out what happens when AI gets cheaper, it’s not just “Can AI do my job?” It is “When everyone saves money because AI did my job cheaper, what do they buy next?”

Aggregate labor demand depends on three things: how much people spend in total, how much of that spending lands on activities with human labor inside them, and how much labor is embodied in each of those activities. For human labor demand to collapse, it’s not enough for AI to displace workers inside some activities. Every dollar of spending, wherever it lands, must lose all its embodied human labor. That’s three channels, and the horse argument needs all three to go wrong simultaneously.

The important starting point for thinking about labor is te idea that nobody wants labor. A restaurant doesn’t want waiters; it wants orders taken, customers reassured, mistakes corrected. So labor demand is derived demand. How does AI change how much firms demand?

When AI can do the things firms are actually buying, cheaper AI does two things at once. Firms substitute AI for workers, which reduces labor demand per unit of output. But cheaper AI also lowers output prices, output expands, and the expansion pulls labor demand back up. Whether labor demand rises or falls depends on which effect is larger. This is the Hicks-Marshall decomposition of derived demand into substitution and scale effects.

This is going to be the organizing principle for everything. When a dollar is saved, where is it redirected? To new tasks? To new jobs? To new sectors? It must go somewhere

This is obviously true for many things. Early models had this even. For example, the early GPT exposure paper by Eloundou, Manning, Mishkin, and Rock estimated that roughly 80% of the U.S. workforce could have at least 10% of tasks affected by LLMs. With complementary software, 86% of occupations cross the 10% exposure threshold

And lots has been done on this. The task-level evidence backs this up. In a large customer-support setting, access to generative AI raised issues resolved per hour by about 15%. In a professional writing experiment, ChatGPT reduced average task time by 40% and raised measured output quality by 18%. In a controlled GitHub Copilot experiment, developers completed a coding task 55.8% faster. These aren’t tiny effects.

But they’re effects on tasks. The saved dollar doesn’t vanish when a task gets automated. It creates new tasks within the same job, such as more review, more client management, more judgment calls. Just as there’s not some fixed amount of demand so the scale effects matter, there is not some fixed job.

There’s a ritual in AI discourse where someone posts a demo, the demo does a task associated with a job, and people conclude the job is doomed. Sometimes they’re right. But the inference skips about fifteen steps. What does it actually cost to deploy, errors included? Do customers trust it? Does management know how to reorganize around it? A chatbot demo can appear overnight. A hospital reorganizing clinical liability around AI cannot.

We need to think not just about jobs but organizations. Often the result is a team, not a replacement. A human-AI pair produces output. But complementarity is not free. A pair that produces only slightly more than the AI alone doesn’t justify the human wage. The human has to add something the AI can’t replicate cheaply.

Surgery, aviation, structural engineering, fiduciary advice, for legal reasons alone are areas where we can expect the damage from an error dwarfs the savings from cheaper production. Again, that can always change one day but not soon. When failure on one component destroys the value of all others, you don’t care about the sticker price. That’s the O-Ring logic. You care about cost per unit that actually works. When damage stakes are high enough, human-supervised production wins regardless of how cheap AI becomes.

Suppose substitution wins inside most jobs. The saved dollar escapes the workplace entirely. Where does it go? Most standard models aggregate into a single final good, so this question plays no role. The real economy has many sectors, and the dollar has to land somewhere.

Start with software as a microcosm. This is a sector that has already been heavily automated by digital inputs for decades. If substitution were going to drive labor out of a sector, this is where you’d see it first."

"The most software-intensive industries don’t just retain human labor;they have a higher labor share (67%) than the least software-intensive ones (55%). Heavy digital inputs didn’t drive out human labor. If anything, the industries that automated the most are the ones that spend the most on workers. BLS projects U.S. employment to increase by 5.2 million from 2024 to 2034. Software-developer employment? Up 17.9%, despite direct AI exposure.

The scale effect won within the sector most exposed to digital automation. The BLS could be completely off but the evidence so far points strongly toward the scale effect dominating in software-intense industries.

Software is one extreme but we basically have the same pattern holds across the whole economy, over a much longer period.

For another angle on the problem, let’s go bigger and look across the biggest sectors in the economy: services vs. goods. In 1929, most consumer spending went to physical goods. Today, roughly two-thirds goes to services. As manufacturing got cheaper, people didn’t just buy more stuff. They shifted spending toward healthcare, education, restaurants, personal services. That’s the saved dollar in action at a more not-quite macro but close level — the savings from cheaper goods flowed toward services.

In terms of our guiding decomposition, coods got cheaper."

"Demand for physical stuff didn’t explode. Instead those freed-up dollars migrated to services, and the scale effect showed up there. The substitution effect won inside goods-producing industries. The scale effect won across sectors. Output overall expanded. So if you’re thinking as a macroeconomist, the scale effect dominated."

"But migration alone doesn’t help workers unless the destination still has human labor inside it."

"Services consistently pay a higher share to labor than goods-producing industries. Spending didn’t just migrate. It migrated toward sectors where more of each dollar ends up in someone’s paycheck."

"there is a margin of adjustment, there is an escape hatch when you are looking at an economy as diverse as the modern U.S. economy."

"comparative advantage always pops up fighting against this. When automation makes some things cheap, the things that remain expensive tend to be the things that are hard to automate. And the things that are hard to automate are, almost by definition, the things where humans still have comparative advantage. The saved dollar drifts toward where humans are still worth paying. That’s not optimism. That’s what comparative advantage means.

"In early textiles, power looms cut labor per yard of cloth. But cloth got so cheap that demand exploded, and total employment in textiles rose for decades. Same in early steel, early autos. Eventually demand saturated, prices stopped falling fast enough, and automation reduced employment in each sector. The question for AI isn’t “does automation destroy jobs?” It’s “which phase are we in, for which sectors?”

Where might the AI-saved dollar land today? Healthcare is already 18% of GDP and rising. Elder care will grow as populations age."

"this time isn’t different: new tasks appeared, comparative advantage held, products we couldn't imagine created new work." 

"If AI keeps inventing new varieties of goods that compete with human-produced ones, even a strong initial preference for human labor gets diluted by expanding choice.

I take this seriously. It’s a possible scenario.But notice what it requires. Not just that AI-produced variety expands (which it will) but that it expands fast enough and broadly enough to pull spending away from every human-intensive category at once. The question isn’t whether AI competes with some human goods. It’s whether any human-intensive island survives. Does anyone still spend money on something with a person inside it?

The numbers still have to be extreme. Suppose AI eats 85% of the economy. Software, accounting, law, medicine, logistics, most management, most media. All gone or nearly gone as human labor categories. Suppose the remaining 15% of spending goes to things with at least 30% human labor inside them. Elder care, in-person education, surgery, live performance, skilled trades, therapy, status goods. Then the aggregate human labor share is at least

S ≥ 0.15 × 0.30 = 0.045

That may not sound great but I’m literatlly just putting a bound. Knowing nothing else, we can sustain this. Not large. Not utopia. But not zero, and that’s the absolute lowest possible bound. And remember, labor share declining is not the same thing if the pie is growing much larger."

"As AI makes commodities cheap, real incomes rise, and richer people systematically shift spending toward what he [Alex Imas] calls “relational” goods 

 There's a huge literature in economics on structural change, the long-run pattern where spending shifts from agriculture to manufacturing to services as countries get richer. The big question is why. Is it because prices change and people buy more of whatever got cheaper? Or is it because incomes rise and people just want different stuff? Comin, Lashkari, and Mestieri, for example, decompose the two and find that income effects account for over 75% of the shift. That matters here. If spending migration were mostly about chasing cheap goods, AI making things cheaper would pull dollars toward AI-produced stuff. But it's mostly about what richer people want. And richer people have consistently wanted more services with humans in them."

"Human-created artwork gains 44% in value from exclusivity, versus 21% for AI-generated artwork. AI-made goods feel copyable. Human-made goods feel scarce even when they aren’t. People want what other people can’t have. That wanting doesn’t run out, and it sticks to things a person made."

"income effects dominate price effects by three to one. When basic needs get cheaper, humans don’t say “good, I’m done wanting.” They invent new ways to compare themselves with neighbors. Whether the new wants land on human-made goods or AI-made goods is the open question, and the experimental evidence so far favors humans.

A falling labor share is not falling labor demand. There is a range where labor’s share of income is declining but total labor demand is still rising, because the pie is growing faster than labor’s slice is shrinking. That range may be where we are right now. It would look like “AI is taking over” in share terms while employment keeps growing. The popular argument runs these together and they are not the same claim.

We already see that. Higher income people consume more services. Services tend to be high labor share. Again, that can always flip in the future but this is the evidence we have."

Affordable manufactured housing versus unaffordable climate regulations

By Ben Lieberman of CEI.

"The Biden administration had a field day piling on one costly climate-related regulation after another, not knowing – or caring – that affordability would emerge as a much more pressing concern for Americans than climate change ever was. But now, the Trump administration and Congress have the opportunity to undo these ill-advised rules that are driving up costs for everything from utility bills to cars and light bulbs. We have already seen some progress, but there is much more to do. Next on the list should be Department of Energy (DOE) regulations targeting manufactured housing.

The housing affordability challenges are real, and government is a big part of the problem.  According to the National Association of Home Builders, regulations at all levels of government account for almost 25 percent of the cost of a new single-family home. This includes a growing contribution from federal climate measures, such as those raising the price of major home appliances like air conditioners and furnaces. Worst of all are rules that make the most affordable homes less affordable, thus threatening the dream of homeownership for low-income and younger households. That is why the 2022 DOE energy efficiency rule for manufactured housing warrants a second look. 

The DOE sets energy efficiency standards for manufactured housing. And, as with appliance standards, the agency has a knack for rules that raise up-front costs beyond what is likely to be recouped through energy savings. In this case, the agency admitted that the 2022 rule raised home prices up to $4,500, though manufacturers fear higher costs will outweigh any energy savings.

For perspective, estimates suggest that every $1,000 increase in a median-priced home disqualifies about 156,000 prospective homebuyers. And the effects may be more severe at the lower end of the home spectrum, including manufactured homes, which are the choice of the most price-sensitive buyers. Indeed, it is quite possible that the DOE rule alone is enough to place the dream of homeownership out of reach for hundreds of thousands of lower-income Americans.

As was often the case for the Biden DOE, climate change was a finger on the scale favoring its draconian energy limits on manufactured housing. In fact, the final rule mentions the social cost of carbon dioxide and other greenhouse gases a whopping 50 times. By the agency’s own estimates, the rule’s climate benefits fell short of the claimed consumer savings. Even so, they undoubtedly played a role in the agency’s decision to adopt such stringent standards, despite their effect on prices.   

Fortunately, the president and Congress have not ignored the regulatory plight facing manufactured homes and their prospective purchasers. President Trump’s March executive order titled Removing Regulatory Barriers to Affordable Home Construction, specifically mentions manufactured housing in its section urging regulatory reforms.

Both the House and Senate have passed bills addressing housing affordability, and both contain provisions specific to manufactured housing. Importantly, both bills eliminate the costly and unnecessary requirement that manufactured homes have a steel chassis, however they also fell short of repealing the DOE rule.

A separate House-passed bill, H.R. 5184, the Affordable HOMES Act, would have completely repealed the DOE rule, but it has not been taken up by the Senate. Total repeal deserves consideration if Congress is serious about addressing housing affordability."

How Measurement Choices Shape the Housing Debate—and the Charts in the President’s Economic Report

By Norbert J. Michel and Jerome Famularo of Cato. Excerpts:

"The Council of Economic Advisers’ 2026 Economic Report of the President tells a familiar story: The American dream of homeownership is slipping away. Chapter 6, in particular, leans heavily on a series of charts meant to show that housing has become less affordable, less attainable, and more distorted by regulation.

While it is true that regulation adds unnecessary costs and distortions to the housing market, much of this “unaffordability” narrative depends on how the data are presented. Change the framing, even slightly, and the story starts to look very different.

Take the report’s central claim that housing has become dramatically less affordable because home prices have outpaced income. That conclusion rests on a simple comparison of real house prices to real median income. Among other problems, this comparison ignores the fact that homes being built in recent years are not the same as those built in years past: They have more standard features and, most notably, are larger in size on average."

"A similar framing issue shows up in the report’s treatment of homeownership rates. By comparing 2000 to 2023, the report suggests a worrying decline, especially for younger Americans. But 2000 was not just any year—it had higher than average homeownership rates relative to other years.

Zoom out, and the trend looks much less alarming. For instance, the homeownership rate for Americans under age 35 is roughly in line with where it was throughout much of the 1990s. The overall rate shows a similar pattern. You can make the numbers look bad by picking convenient endpoints, but that doesn’t tell you much about the underlying trend (Figure 2)." 

 

"More broadly, federal policymakers are overly concerned with so-called housing shortages. 

In reality, as communities grow and people earn higher incomes, higher demand for housing can put upward pressure on prices. (Even if that demand comes mainly from “rich” people, it can put upward pressure on average housing prices.) Viewing this kind of price increase as a shortage or market failure is counterproductive. Over time, this demand tends to be met, keeping up with the needs of a growing population.

Either way, the supply of housing is not the sole determinant of house prices. Ignoring this lesson and implementing policies that merely focus on boosting supply (especially through federal subsidies, grants, tax credits, etc.) can lead to depressed home values and oversupply, just as implementing demand-boosting policies can distort markets. The best thing for the federal government to do is to stop interfering with the market.

Of course, certain policies make it more difficult and expensive for builders to meet new demand, and state and local officials should implement the best policies for their local growth conditions. To be clear, supply constraints and regulations matter. Zoning rules, permitting delays, and other restrictions make housing more costly. However, if rising housing costs partly reflect larger homes and higher incomes, then policies aimed at forcing down prices (such as mass deportations and bans on institutional investors) could have unintended consequences. 

Sure enough, recent research from the San Francisco Fed suggests that faster income growth, not supply constraints, explains much of the differences in house price trajectories across metro areas. This finding makes sense because, for the past few decades, Americans have been earning higher incomes. All else equal, this fact should help explain higher housing prices.

Ultimately, policymakers should be wary of solutions built on a misleading diagnosis. In housing, as in economics more broadly, how you measure the problem often determines how poorly you solve it."

ICE has not improved U.S. labor markets

From Tyler Cowen.

"We provide the first causal, national empirical analysis of the labor market impacts of heightened immigration enforcement during the second Trump administration. Enforcement increased everywhere, but, we take advantage of the fact that the increases have been uneven across geographic areas to classify areas as treated or control and then implement an event study and difference-in-differences design. Areas that experienced particularly large increases in the number of arrests also experienced a decrease in work among likely undocumented immigrants who remain in the U.S., compared to areas with smaller increases in arrests. We find no evidence of positive spillover effects to U.S.-born workers and U.S.-born workers who work in immigrant-heavy sectors are harmed.

That is from a new NBER working paper by Elizabeth Cox & Chloe N. East."

The "Great Awokening" Had a Strong Upper-Class Accent

From Marco M. Aviña.

Abstract 

"Recent scholarship hails rising racial liberalism among white liberals as a racial reckoning and even a “Great Awokening.” I find that affluent white liberals led these changes. I develop a status-signaling account in which members of this group, embedded in dense, politically homogeneous social environments, face competing reputational and gatekeeping incentives to express alignment with racial equality in principle but not in policy. I leverage the murder of George Floyd and the ensuing Black Lives Matter protests as a focusing event when anti-racist norms surged. Using regression-discontinuity-in-time and event-study designs on national public opinion surveys and local public meeting transcripts, I show that post-Floyd movement was concentrated among high-income white liberals, centered on symbolic engagement rather than material policy commitments—whether universalistic or group-targeted—and short-lived. Finally, I provide evidence consistent with this account: post-Floyd, an income gap emerges in implicit bias testing, a form of self-monitoring, but not in implicit bias scores, which are less amenable to impression management. These findings complicate narratives of racial progress and recast the “Great Awokening” as recognitional politics without commensurate redistribution, consistent with concerns about elite capture in identity politics."

Capitalism does a far better job than socialism of feeding people.

A tweet from Chris Freiman. 

 

Lessons for Anna Paulina Luna (on farm policy)

Why would a Florida Republican stand up for an overbearing California farm rule?

By Kimberley A. Strassel. Excerpt:

"Where to start unpacking? Several GOP offices tried to do just that in the forum. One office began by (politely) setting Ms. Luna’s office straight on basic facts: Under this fix, California can still regulate its own agricultural practices. Also, the Supreme Court in its Proposition 12 decision said several times that Congress has “considerable power to regulate interstate commerce and preempt contrary state laws.”

That office then patiently provided a refresher in Federalism 101, explaining why California’s initiative is the opposite of states’ rights, since it doesn’t concern itself with only California. It imposes its mandate on 49 other states, none of whose citizens had any vote, or any recourse, through California’s process. They might have added that California has been using this trick—flexing its markets to impose national rule, under the perversion of “states’ rights”—with increasing boldness for decades. Republicans are supposed to understand such basic stuff.

The same office also tried to impart basic economics. It noted that the producers most able to swallow California’s mandate costs are giant concerns, like “Chinese-owned Smithfield.” Those hardest hit are U.S. farms and ranches, which are being pushed out of the market. It provided Ms. Luna’s office with U.S. Department of Agriculture data, estimating that the cost for pork producers of complying is about $3,500 to $4,500 a sow, one reason 12% of small pork operations have exited since Proposition 12. It further noted the demonstrated rise in consumer prices (especially in California) since the initiative’s passage.

Ms. Luna’s staffer said he “appreciated” the “viewpoints”—before banging on anew about “state authority.” California voters have a right to decide what “consumer” products are sold in their state. They should have “choice.” Another catchy word, if again totally backward, since California eliminated everyone’s “choice”—and unnecessarily. As one GOP office noted, there is an easier, freer, less costly answer. California consumers can exercise choice via what they buy. Under Congress’s new fix, morally superior Californians are free to choose to buy only costly, grass-fed California-produced chops, leaving on the shelves all the cheaper, yummier pork for the hoi polloi."

Charges of a Covid Coverup

The Morens indictment reveals an effort to hide facts about the U.S. role

WSJ editorial. Excerpts:

"the facts in the indictment, which say he [David Morens] intentionally sought to obfuscate the NIH role in funding the nonprofit EcoHealth Alliance, which may have contributed to the virus leaking from a Chinese lab."

"The NIH last decade provided some $8 million in grants to EcoHealth, some of which funded the Wuhan Institute of Virology’s gain-of-function virus experiments."

"Between February and March 2020, Dr. Morens and a co-conspirator—whom press reports say is Mr. Daszak—co-authored articles arguing that the virus most likely emerged from the wild."

"On June 17, 2021, the indictment says, he warned Mr. Daszak and “others” that he had received a document production request by five Senators investigating the virus’s origins. Dr. Morens assured his correspondents that he had “retained very few documents on these matters.” Public officials are required by federal law and instructed to retain all such documents." 

You Can’t Trust ‘Climate Economics’

Governments, banks and other institutions have based policies on models unconnected to reality

By Roger Pielke Jr. Excerpts:

"Nature in December retracted one of the most influential climate economics papers of the past decade. The paper, by Maximilian Kotz, Anders Levermann and Leonie Wenz, claimed that unmitigated climate change would cost the global economy $38 trillion a year (in 2005 international dollars) by midcentury." 

"The authors acknowledged that its errors were “too substantial” for a correction."

"The retraction, however, isn’t a one-off. It revealed a crack that runs much deeper into the foundation of climate research."

"Can researchers actually measure how climate affects the economy from the historical record?"

"no"

"Federal agencies . . . estimate the “social cost of carbon” when assessing the costs and benefits of proposed environmental policies. This framework has shaped regulations governing appliance standards, pipeline permitting and vehicle emissions."

"the method underlying this subfield of economics can’t do what researchers claim it can. The problem . . . is that the statistical procedure strips out nearly everything that would allow researchers to identify a climate signal, then mistakes the residual noise for that signal. Lumping together countries with similar average temperatures but entirely different institutions, histories and natural resources and then calculating a single damage relationship for all of them doesn’t work; it describes the average but fails to describe a single real place on earth accurately."

"there’s no way out of this methodological predicament; the future effects of climate change are irreducibly uncertain"

"researchers built many of their climate projections on the back of a hypothetical standardized scenario called Representative Concentration Pathway 8.5—a vision of the future which required coal consumption to quintuple by 2100 based on assumptions about future energy use. Those assumptions have already diverged sharply from actual energy trends, and we know today that the scenario is implausibly extreme."

"many scientists continue to emphasize RCP8.5 in climate research"

"Projections of flood damage, heat mortality, agricultural disruption and wildfire risk have rested on an implausible baseline that describes an imaginary, modeled future."

"An insurance company modified a hurricane loss data set by starting from my team’s carefully collected data. Many of those modifications have no documentation and no basis in research."

"papers that have used the corrupted data set remain in the literature today." 

What Happens When Europeans Find Out How Poor They Are?

The Continent trails far behind U.S. economic output. Politics is bound to catch up sooner or later

By Joseph C. Sternberg. Excerpts:

"per capita gross domestic product: $94,400 in the U.S., according to the International Monetary Fund, compared with $65,300 in Germany, $61,000 in the U.K. and $52,000 in France."

"From a fairly narrow edge throughout the 1980s, the gap widened a bit in the 1990s. Since 2007, however, European per capita incomes have more or less stagnated while the U.S. has enjoyed another growth spurt."

"Switzerland amps up its per-capita GDP to $126,000 by attracting finance and pharma."

"The wealth skewing American per capita economic data is a result of innovation and entrepreneurship. Europe lacks America’s per capita output not because it lacks American tech companies and billionaires but because it lacks American-style productivity growth capable of creating tech companies and billionaires in Europe."

"On average, [British] respondents thought that if the U.K. were a state, it would be the seventh-richest in terms of per-capita GDP, behind the likes of New York and California. The reality is that Britain is toward the bottom of the table, roughly on the level of Mississippi." 

"Using the PPP metric, U.S. GDP per capita is $94,400, Germany’s is $76,800, Britain’s is $67,600, and France’s is $68,600."

"That means, broadly, that a nominal per capita income of $61,000 in the U.K. allows a Briton to consume the same amount of goods and services that would cost $67,600 in America. But that’s merely a different way of stating Europe’s problem. Europe’s economies look healthier in PPP terms to the extent a lower price level allows households to stretch their euros and pounds further. Those lower prices reflect Europe’s lower productivity. Meanwhile nominal GDP expresses Europe’s ability to consume global resources, which is lagging." 

Taxes make gas more expensive in other countries

See Why Gasoline Is So Much Cheaper in the U.S. Than Overseas by Chao Deng and Alana Pipe of The WSJ. Excerpts:

"American consumers paid an average $3.64 a gallon in March, with only about 60 cents of that made up of federal and state taxes. The average hit $4 a gallon at the end of that month."

"In most places in Europe, tax composes 50%-60% of the retail price of fuel"

"Germans paid an average of $8.75 a gallon in March, more than half of which stemmed from value-added taxes and fuel excise duties."

"In Mexico, gas averaged $5.07 a gallon in March, of which nearly $2 was tax." 

Glyphosate isn’t likely to be carcinogenic

See Supreme Court Grills Bayer Over Failure to Warn Consumers About Roundup Risks by Patrick Thomas and Lydia Wheeler of The WSJ. Excerpts:

"Bayer has maintained that Roundup is safe to use. Governments globally and the Environmental Protection Agency in the U.S. have repeatedly determined that glyphosate isn’t likely to be carcinogenic in humans and approved Roundup labels that didn’t include cancer warnings."

"plaintiffs argue the company should go further in how it warns farmers and landscapers of the risks the herbicide may pose. But Bayer argues that those claims supersede the EPA’s authority and would cause a patchwork of rules imposed by individual states.

The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) prohibits states from imposing different or additional warnings from those required under the federal law."

Also see MAHA Moms Are Protesting Against Pesticides by Sabrina Siddiqui and Sara Ashley O’Brien of The WSJ. Excerpts:

"“The fact is that no health regulator anywhere in the world has ever found glyphosate to pose a threat to human health,” the company said in a statement. Bayer said that the Environmental Protection Agency and the European Union have repeatedly found that glyphosate products can be used safely according to the product label directions."

"Pressure around the issue has mounted for months. When a review paper that concluded glyphosate wasn’t a risk to people’s health was retracted last year by the scientific journal that published it 25 years ago over concerns about Monsanto’s involvement, a firestorm went off among those concerned with the chemical’s safety. The Environmental Protection Agency has said the government did not rely solely on the paper when evaluating glyphosate.

“Monsanto’s involvement with the Williams et al paper did not rise to the level of authorship and was appropriately disclosed in the acknowledgments,” Bayer said in a statement."

The Warmth of Cooperation

By Chris Freiman.

"New York City Mayor Zohran Mamdani recently caused something of an uproar when he contrasted the “the frigidity of rugged individualism” with the “warmth of collectivism.” This framing echoes the familiar criticism that capitalism forces people to go it alone as “atomistic individuals.” The thought goes like this: markets do real damage to the social fabric and our relationships because they organize our economic lives around competition and self-interest. Organizing our lives around competition encourages people to see each other as rivals rather than partners. In brief, capitalism pits us against each other, while socialism brings us together. Setting aside the fact that collectivist regimes haven’t exactly been warm to those living under them, this view gets capitalism backward.

Start with a simple observation about your own economic life under capitalism. Think about this week: how many cooperative interactions have you had, and how many competitive ones?

You probably didn’t compete with anyone when you bought coffee at Starbucks this morning. You didn’t enter a zero-sum struggle when you paid your phone bill, purchased groceries and gas, or caught a movie. Instead, you took part in a series of mutually beneficial, voluntary transactions. You gave someone money and they gave you something you wanted more than the money. Everyone walked away better off. In the words of Adam Smith, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.”

Competition, by contrast, rarely pops up in your day-to-day economic life. A business competes with other businesses for customers and you’ve probably competed with others for a job at some point. But you cooperate far more often than you compete. And notice what market competitions really are—they’re competitions to see who’s best at serving others. You might say that they’re competitions to discover the best ways to cooperate and who the best cooperators are (more on this below).

Unsurprisingly, Smith understood the cooperative nature of markets well. He writes that a wool coat

is the produce of the joint labour of a great multitude of workmen. The shepherd, the sorter of the wool, the wool-comber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser, with many others, must all join their different arts in order to complete even this homely production. How many merchants and carriers, besides, must have been employed in transporting the materials from some of those workmen to others who often live in a very distant part of the country! How much commerce and navigation in particular, how many ship-builders, sailors, sail-makers, rope-makers, must have been employed in order to bring together the different drugs made use of by the dyer, which often come from the remotest corners of the world!

Smith goes on, but I’ve got a word limit here—the point is that markets don’t atomize us. On the contrary, they lead strangers all over the world to cooperate.

Think back to the last time you bought a coffee. Starbucks has to coordinate with bean farmers, shipping companies, truck drivers, warehouse workers, roasters, equipment manufacturers, electricians, plumbers, accountants, and baristas. None of these people know you, and yet they manage, every day, to cooperate in ways that reliably get caffeine in your hand at 7:43 a.m. And this isn’t accidental—the prices provided by markets give people the information they need to figure out what others want, and they provide the incentive to give it to them.

There’s no denying that markets involve competition. You can go to the business section of a bookstore and find titles like Business Warfare and The Warfare of Business. But businesses are competing with each other to see who can best serve consumers. Netflix beat Blockbuster by figuring out a better way to give viewers what they wanted: convenience, selection, no late fees, and eventually streaming. In brief, Netflix won because consumers preferred cooperating with Netflix over Blockbuster.

A similar point applies to competition in the job market. Maybe you don’t merely want to buy coffee from Starbucks, you want to work there, too. But this means you’ll have to compete with other applicants who also want the job. Here again, let’s look at what it takes for an applicant to win this competition. They need to demonstrate that they’ll do the best job of making customers better off—say, by being more punctual, more efficient at making mochas, or more likely to serve drinks with a smile. Market competition is competition to see who can cooperate most effectively with others.

In any case, democratic socialists can’t be opposed to all competition. After all, democracy requires competition, and democratic socialists want democracy in the workplace as well as in politics. If competing for dollars is frigid, it’s hard to see why competing for votes would be any warmer. Market competition enables millions of people with different values, plans, and priorities to work together without agreeing on much of anything by helping them to coordinate many different choices. You and your barista don’t need to agree on the principles of justice to cooperate and make each other better off. Far from being atomizing or frigid, the free market is a system of interdependence that brings strangers together to cooperate for their mutual benefit."

Youth unemployment in Canada near record highs since 2022; unprecedented levels outside of a recession

By Philip Cross of The Fraser Institute. 

The Extraordinary Increase of Youth Unemployment in Canada

• The surge in unemployment for Canada’s young people (ages 15–24) since 2022 has been extraordinary. The upturn reverses a decades-long gradual downward trend.
• Both the speed of the increase and the level of youth unemployment reached are unprecedented for an economy not in recession.
• Youths who were unemployed remained jobless for the longest period ever on record (data starts in 1976).
• The gap between the unemployment rates for youths (13.8 percent) and adults (5.7 percent) in 2025 reached a near all-time high (8.1 percentage points).
• The spread (3.8 percentage points) between the Canadian youth unemployment rate (13.8 percent) and the US rate (10.0 percent) in 2025 approached its all-time high.
• Canada’s youth unemployment rate has been higher than the US rate since 2015, indicating a sustained period of higher unemployment for Canada’s youth compared to our southern neighbour.
• Finally, the unemployment rate for 15–19-year-olds (19.5 percent) was at a near-record high, outside of the COVID-19 pandemic (2020), and the gap (8.6 percentage points) with 20–24-year-olds (10.9 percent) was also at a near all-time high.
• Several government policies contributed to the historic increase in Canada’s youth unemployment.
• Specifically, the increase in immigrant labour (increased supply) and simultaneous increases in minimum wages in most provinces (decreasing demand) are key explanations for the marked rise in youth unemployment.
• It is noteworthy that the weakness in youth employment has been concentrated in the retail trade and accommodation and food services sectors, where 70 percent of youth jobs are situated.

 

Chicago’s “Disappearing Middle Class” Can Be Found in Its Proliferating Upper Middle-Class Neighborhoods

By Scott Winship of AEI. Excerpts:

"In a recent  with Stephen Rose, I argued that the narrative of a “shrinking middle class” was based on a kernel of truth, but one that undermines economic pessimism. We showed that while 36 percent of families were part of what we called the “core middle class” in 1979, the share had fallen to 31 percent by 2024. However, the share of families who fell short of the middle class shrank even more. The middle class has not been hollowed out; rather, the overall decline stems from the net movement of families upward into the upper-middle class. That group, with incomes between 5 and 15 times the 2024 federal poverty guidelines, rose from 10 percent of families in 1979 to 31 percent in 2024.  

Analyses that find a hollowed-out middle invariably rely on definitions of the middle class that peg thresholds to how the typical family is doing. In that case, even if everyone is better off over time in inflation-adjusted terms, if the middle’s gains are stronger than those of families lower down, more people can fall short of “the middle.” The Pew Research Center, for example,  that the share of families that were “lower-income” rose between 1971 and 2023, even though the purchasing power of those lower-income families rose by 55 percent. The explanation for this seeming paradox is that “middle-income” families saw a 60 percent gain, making it harder to reach the middle-income threshold if income rose more slowly than that.  

The point of my paper with Rose was that claims of a “hollowing out” of the middle class wrongly reinterpret widespread gains across the income distribution as rising insecurity and declining living standards. Unbeknownst to us, a perfect example of this misinterpretation appeared a week before we published our report in Chicago magazine. The offending article title  that “Chicago’s Middle Class Is Disappearing.” My reanalysis of the data behind the piece indicates it would be difficult to articulate a more misleading conclusion. Fewer Chicagoans live in middle-class neighborhoods than in 1970—but only because more live in richer neighborhoods."

"the Voorhees Center methodology has the same shortcoming as Pew’s analyses of the shrinking middle class. Both define middle-class status relative to a benchmark that changes over time and is tied to typical contemporary income. If everyone’s income doubles, the middle class is no larger, yet everyone’s income has doubled."

"instead of “middle income” requiring 80 to 120 percent of the 2017 metro average income, it requires 80 to 120 percent of the 1970 metro average income (adjusted for inflation to keep income in terms of constant purchasing power). Using this approach, the share of people living in middle income tracts fell in half from 1970 to 2017—from 51 percent to 25 percent. The share living in tracts below the middle income was roughly constant—42 percent in 1970 and 43 percent in 2017. In contrast, the share living in tracts above middle income more than quadrupled, rising from 7 percent to 31 percent."   

"If we instead use 2015-2019 as the end point (average national unemployment rate of 4.4 percent), the middle income share falls from 51 percent to 26 percent, the lower-income share falls from 42 percent to 36 percent, and the higher income share jumps from 7 percent to 38 percent."

"From 1970 to 2024, the share of Chicagoans who lived in middle income tracts fell from 51 percent to 25 percent. The share living in tracts falling short of middle income dropped from 42 percent to 28 percent. Meanwhile, the share living in upper income tracts rose sevenfold—from 7 percent to a whopping 48 percent. Looking at the top group, very high income tracts were home to just 4 percent of Chicagoans in 1970 but 38 percent in 2024."

"In reality, per capita income in the median Chicagoan’s census tract rose from $29,600 in 1970 to $39,300 in 2024 (both in 2025 dollars)—an increase of one-third. Using relative thresholds and letting class thresholds increase over time, the average Chicagoan in a lower income census tract lived in a tract with a per capita income of $22,300 in 1970 but $27,800 in 2024 (25 percent higher). For Chicagoans in middle income tracts, the increase was from $32,400 to $49,900 (54 percent)."

The AI Boom Is Being Fueled by Imports—and Free Trade

By Scott Lincicome, Alfredo Carrillo Obregon, and Chad Smitson of Cato.

"Data published today by the US Bureau of Economic Analysis show that domestic investment in artificial intelligence is currently acting as a massive tailwind for US economic growth (gross domestic product). The data also show that this American investment boom is being fueled by imports of the servers and other things that datacenters and related AI technologies need:

 

Separate data show, moreover, that imports of these AI-related inputs are entering the country almost entirely free of tariffs, thanks in large part to a mid-2025 decision by President Trump to exempt these items from his global tariff regime:

 

Surely, the AI boom isn’t solely due to free trade, and we wouldn’t expect it to cause every other US industry to boom like AI is today. But one still must wonder how many other American industries might similarly benefit from the same “special” treatment that the AI industry enjoys today—i.e., the treatment almost every industry received before the Trump tariff wall was erected last year." 

HUD Says Realtors Can Now Speak the Truth (about crime rates and school quality)

By Alex Tabarrok. 

"HUD: The U.S. Department of Housing and Urban Development (HUD) sent a “Dear Colleague” letter to real estate professionals clarifying they are not violating the Fair Housing Act when they share information with prospective homebuyers about neighborhood crime rates and school quality data.

“Buying a home is one on the most significant decisions a family will ever make,” said Secretary Scott Turner. “Americans should not be left in the dark about vital facts like neighborhood safety or school quality. HUD is making clear that real estate professionals can openly and lawfully provide this information in an equal and consistent manner to American families.”

The background is that The Fair Housing Act of 1968 prohibits discrimination in housing based on race, color, religion, sex, national origin (and via later amendments) familial status, and disability. Discrimination included “steering” buyers toward or away from neighborhoods based on protected characteristics. The Biden administration ramped this up with a directive and Executive Order that essentially said the Fair Housing Act must be interpreted not just to prohibit discrimination but to redress and undo past discrimination:

This is not only a mandate to refrain from discrimination but a mandate to take actions that undo historic patterns of segregation and other types of discrimination and that afford access to long-denied opportunities.

…the [HUD] Secretary shall take any necessary steps,…to implement the Fair Housing Act’s requirements that HUD administer its programs in a manner that affirmatively furthers fair housing and HUD’s overall duty to administer the Act (42 U.S.C. 3608(a)) including by preventing practices with an unjustified discriminatory effect.

The “discriminatory effect” language reinforced that so-called disparate impact, not just intentional discrimination counted as discriminatory—and it contributed to a legal and reputational environment in which platforms and agents had strong incentives to avoid anything that could be characterized as steering. As a result, by the end of the year, Realtor.com had removed its crime map from all search results, as did Trulia, Redfin announced it would not add crime data to its platform and since Zillow already didn’t include such data, by early 2022 all the major portals had dropped crime information. Similarly, the National Association of Realtors published material instructing agents not to directly answer client questions about neighborhood safety. One article in “The Safety Series” was titled “‘Is This a Safe Neighborhood?’ Don’t Answer That” and by “Safety Series” they meant safety for the realtor not the client.

So without explicitly making such information illegal, the government created a legal and reputational climate that chilled its provision. Portals removed crime maps and realtors became reluctant to answer ordinary buyer questions about neighborhood safety and school quality. That is a degradation of service, not a civil-rights victory. The pretext was that crime information might not be accurate but the real fear was that it would accurately suggest neighborhoods with high percentages of black residents had more crime. Withholding information about crime and schools, however, does not change the facts; it just shifts the informational advantage toward buyers who are wealthy, well-connected, or sophisticated enough to find the data themselves. Moreover, it should go without saying that black homebuyers also want information about neighborhood crime rates–don’t these buyers count? Suppressing truthful information is rarely a good way to improve outcomes. As with Ban the Box, blocking direct access to relevant information encourages worse proxy-based decision-making.

Trump’s HUD is correct: fair housing law should prohibit discrimination, not prevent realtors from telling the truth."

What the Meta–Google Verdict Gets Wrong

Is a product defective if it gives you too much of what you want? And are social-scroll algorithms regulated products — or protected speech?

By Logan Tantibanchachai of AIER. 

"A few weeks ago, social media skeptics received their best news in years.

In KGM v. Meta, a jury found Meta and Google negligent for their role in fueling a youth mental health crisis. Now, six million dollars in damages is basically meaningless to companies that gross hundreds of billions in revenue annually. But the reason this case has gotten so much media attention is for what it might represent. Some have compared the case to the beginning of litigation against Big Tobacco last century, which culminated in a $206 billion master settlement with more than 40 states.

In this case, however, the jury got it wrong. It concluded three things:

• Instagram and YouTube were designed in ways that encouraged uncontrollable use and addictive behaviors.
• The companies failed to adequately warn users, especially minors, about the risks.
• The design of their platforms was a considerable factor in causing the plaintiff’s mental health problems.

All three of these things could be true, but neither Meta nor Google should be held liable for any of them. Unlike prior cases involving social media, KGM treated YouTube and Instagram as fundamentally defective products. The central question wasn’t whether malicious users could misuse these platforms, but whether the platforms themselves posed inherent risks. In general, online companies aren’t legally accountable for what users post due to Section 230 protections — Meta, for instance, wouldn’t be held liable for someone using its products to incite violence. In this case, though, Judge Carolyn Kuhl ruled that platform design elements — like algorithm-driven feeds, autoplaying videos, and push notifications — could be challenged. 

In other words, Instagram and YouTube should be held liable because they’re addictive, and too effective at providing content users want.

In a motion denying summary judgment, Judge Kuhl wrote: “The fact that a design feature like ‘infinite scroll’ impelled a user to continue to consume content that proved harmful does not mean that there can be no liability for harm arising from the design feature itself.” In other words, Meta and Google can be held responsible for designing a product that fulfills a consumer desire. Such an argument is dubious. Product innovation exists precisely to meet the demands of consumers — and that’s a good thing.

If such a conclusion holds, where could it not apply? Oreos are delicious — should Mondelez International be forced to make their product less appealing because a “design feature” of Oreos causes repeated consumption of Oreos, with negative health outcomes? Should TV shows that end on a cliffhanger be banned because such a “design feature” creates an addictive cycle, causing the viewer to continue watching? In excess, many other products besides social media can become addictive, but it’s not the government’s job to single out certain products or consumer desires as addictive. 

And then there’s the First Amendment problem. Even assuming that social media is addictive in a way analogous to tobacco, the two differ in a key respect. Social media companies are being held liable for their speech, which is protected by the First Amendment. As Erwin Chemerinsky, Dean of the UC Berkeley School of Law, put it:

The plaintiffs in these lawsuits argued that companies design algorithms that are tailored to individual users to keep them hooked. But algorithms are themselves speech, and there is no reason to treat this speech differently from the code that encourages people to keep playing video games. 

Or, as the Supreme Court Justice Elena Kagan wrote in Moody v. NetChoice, “the First Amendment … does not go on leave when social media [is] involved.” And while social media is almost certainly a drain on society — decreasing attention spans, increasing depression, and spreading misinformation — neither restricting First Amendment-protected speech nor regulating the free market is the answer.

Forcing social media companies to restrict access to social media won’t necessarily lead to meaningfully lower social media usage by teenagers. For one, even the most extreme option — simply banning social media usage by teenagers — is easily circumvented by most teenagers. Teenagers have cleared visual age checks. As one Australian teenager put it, “I scrunched my face up to get more wrinkles, so I looked older, and it worked!” Perhaps not a high-tech workaround, but it nevertheless worked, and many other techniques do, too.

And even if the current mainstream social media companies — Meta, Google, TikTok, etc. — were forced to make their products less addictive, that would just open the door for competitors to replace them. And then what? Regulate those products until they’re less addictive, too? At some point, the government will just be playing First Amendment Whac-A-Mole. 

Ultimately, this is not a problem for the courts — nor even legislatures — but rather for civil society. Regulating trillion-dollar companies out of existence won’t fix the underlying problem. If social media were intrinsically detrimental, in the way that cigarettes cause a chemical addiction and subsequent health problems, then almost every teenager who uses social media would struggle with addiction and see some demonstrable negative impact on their life. But that’s not the case. About one in five teens say social media has hurt their mental health. Another study found that social media usage beyond three hours a day increased internalizing problems (like anxiety/depression) by about 60 to 80 percent. Neither of these numbers are great. But they also reveal that a significant percentage of teenagers who use social media are perfectly fine. 

So what explains how one teen could use social media and neither become addicted nor have their mental health suffer, and another teen could experience the opposite? Very likely having access to a robust civil society — family, activities, community organizations, religious groups, and other social supports. Social media accounts for about one percent of the variation in life satisfaction. By contrast, family situations explain about a third of life satisfaction for young adults. Running to government for legislation to fix our minor woes allows these important community bonds to atrophy. An important aspect of the liberal political order is the recognition that voluntary, robust civil society can play a much more effective role in addressing these societal problems than can even well-intentioned meddling by the government. Social media is no exception."

Earth Day’s Bad Bet Against Humanity

The Malthusian mind does not see the human capacity to cooperate, trade, discover, invent, and adapt

By Marian L. Tupy of Cato. Excerpts:

"Malthus had already lost his main argument before his essay even appeared in print. Between 1700 and 1798, the population of England rose from 5.2 million to 8.44 million, an increase of 62.3 percent. Over the same period, nominal GDP per person rose from 12.37 British pounds to 23.97 pounds, an increase of 93.8 percent. The nominal price of a four-pound loaf of bread, a staple that fed much of the poor, rose from 5.2 pence to 7.4 pence, or 42.3 percent. Because incomes rose much faster than the price of bread, the latter became 36.2 percent more abundant, not less."

"Human beings are not trapped in the same ecological logic as bacteria in a dish or buffalo on a plain. We exchange with one another. We build institutions. We create tools. We improve production methods. We substitute one material for another. We grow more from the same soil—sometimes much more. In other words, we create new knowledge."

"Higher prices signal a problem. Those higher prices then encourage knowledge creation, and new knowledge leads to greater abundance."

"The Simon Abundance Index, which Dr. Gale L. Pooley and I publish every year on Earth Day, is named after Julian Simon. It is a deliberate continuation of the quantitative analysis of the relationship between population growth and resource abundance that Simon’s bet with Ehrlich began. Unlike Simon and Ehrlich, who measured the abundance of resources in inflation-adjusted dollars, we look at “time prices.” Money prices are distorted by inflation and disputed deflators. Time prices solve that problem by dividing a good’s money price by hourly income, showing how long a person must work to buy it. They capture both falling prices and rising wages, require no inflation adjustment, and allow comparisons across countries and centuries. Time is universal, cannot be printed, and reflects the real cost people pay: hours of life. Time prices provide a clearer, simpler, and more meaningful measure of resource abundance than money prices for ordinary people."

 

"By this measure, the last 45 years have been a rout for the pessimists. The 2026 report says that the Simon Abundance Index stood at 636.4 in 2025, up from a base of 100 in 1980. That means Earth was 536.4 percent more abundant in 2025 than in 1980. All 50 commodities, including fuels, such as crude oil, coal, and natural gas, food, such as chicken, beef, and lamb, and metals, such as aluminum, copper, and gold (yes, even gold!), in the dataset were more abundant in 2025 than they were in 1980. The global abundance of resources increased at a compound annual rate of 4.2 percent, doubling about every 17 years. In the 42 countries tracked by the report—accounting for 85.9 percent of global gross domestic product and 66.3 percent of the world’s population—none saw lower resource abundance in 2025 than in 1980. That is not what a species trapped in Malthus’ arithmetic is supposed to produce.

The mechanics of that gain matter. Between 1980 and 2025, time prices for the 50 commodities fell by an average of 70.9 percent. What required an hour of work in 1980 required about 18 minutes in 2025. The same hour of work that bought one unit of a typical commodity in 1980 bought 3.44 units in 2025. That is a 244 percent increase in personal resource abundance. At the same time, the world population grew by 85 percent, from 4.44 billion to 8.21 billion. Put those two changes together and you get the index’s central finding: For every 1 percent increase in global population, population-level resource abundance grew by about 6.3 percent. Resources growing at a faster pace than the population is what Pooley and I call superabundance. It is the opposite of Malthus’ conjecture that each additional person leaves less for everyone else.

The critics sometimes retreat to complaining about the short-term noise, as though any temporary spike in prices confirms the Malthusian creed. Our report addresses that, too. In 2025, 27 commodities became more abundant, and 23 became less abundant. The abundance of oranges rose the most, by 65.6 percent, while coconut oil’s abundance fell the most, by 36.3 percent. But commodity markets always swing because weather changes, disease hits crops, wars disrupt transport, and investment arrives late or early. Simon never argued that every price falls every year in a straight line. He argued that scarcity signals provoke adjustment. A temporary setback is not a vindication of Malthus. It is often the first stage of a correction. That is why the long trend matters more than the annual changes.

Our findings do not show that pollution is imaginary or that every environmental question has been solved. It has not. But environmental problems should be addressed as side effects of human flourishing, not as evidence that human flourishing itself is a mistake. The Earth Day mentality blurred that distinction. It converted planetary stewardship into misanthropy. It taught millions to look at a growing population and see only a burden, never a contribution. It treated the human animal as uniquely destructive when, in fact, people are the only animals who can recognize ecological damage and fix it. It is new knowledge—human knowledge—that gives societies the capacity to clean rivers, regulate toxins, build sewage systems, improve fuel efficiency, and move from dirtier technologies to cleaner ones. A poor society burns what it can find and dumps what it cannot manage. A rich society can afford scrubbers, pipelines, wastewater treatment, research labs, and better rules.

The green extremists often speak as though abundance is the disease, when in fact abundance is usually what makes environmental improvement possible. And so, despite half a century of doomsaying, the Earth is not collapsing under the weight of humanity. It is supporting far more people who can command far more resources with far less labor than their predecessors could. That is not the picture of a planet in terminal decline. It is the picture of a planet made more habitable by the one species clever enough to improve it. The Earth is not a museum piece. It is a working planet inhabited by learning beings who desire and are entitled to flourish." 

Quantitative easing and the Fed’s free lunch problem

By Steve Swedberg of CEI. Excerpt:

"QE operates primarily through asset price channels, which means that it compresses risk premia and increases market responsiveness to central bank communication. This can create artificially elevated asset prices, encourage greater risk-taking during periods of accommodation, and also increase financial system exposure.

Over time, this weakens the informational role of prices. Capital allocation becomes increasingly shaped by policy-driven conditions instead of market-based signals. That shift can reduce the efficiency of investment, thereby directing resources less consistently to their most productive uses.

Because productivity is the primary driver of long-run growth, wages, and economic resilience, even incremental distortions in capital allocation can weigh on the economy’s underlying performance over time. What begins as a stabilization tool can, if sustained, alter the structure of financial decision-making.

Setting the stage for the hard part

Against this backdrop, balance sheet reduction is a means of re-establishing clearer price discovery and restoring policy space for future downturns. It is a step toward rebalancing the role of the Federal Reserve’s balance sheet in monetary policy. QE has altered financial markets in ways that persist well beyond the crisis it was meant to address. Sustained intervention weakens the role of market signals and makes financial conditions more reliant on policy-driven forces. As these effects become embedded in market behavior, stepping back from QE becomes more difficult. The central challenge is whether the balance sheet can be reduced without severe consequences."

Yale Takes Itself to Reform School

A faculty study agrees with many of academia’s critics, believe it or not

WSJ editorial. Excerpts:

"the critique: rising tuition that prices out the middle class; an explosion in bureaucracy that steals resources from instruction; runaway grade inflation; an opaque admissions process that prizes race, gender and identity over achievement; disdain for America’s founding and its abiding principles; and a largely left-wing monoculture that discourages honest (or any) debate, among other sins."

"Yale’s report by an internal Committee on Trust in Higher Education treats those criticisms with respect and in many cases agrees with them."

"Trump. They essentially agree with the criticism about rising costs, admissions that lack transparency, and the failure to support free speech on campus and genuine academic freedom."