The FDA’s New Leaders Can Unleash Innovation

Streamlining effectiveness evaluations à la Operation Warp Speed would unlock trillions in economic value

By By Tomas J. Philipson. Excerpts:

"Cutting a year off the FDA’s decade-long approval process would generate about $10 trillion in economic value, according to a new study"

"speeding up development by one to six years for FDA-approved medical products (small-molecule drugs, biologics and medical devices) would unlock between $10 trillion and $49 trillion in economic value."

"If you are willing to pay $100 to brush your teeth for a year but a toothbrush costs $5, the multiple of consumer gains above price is 20. A substantial base of economic evidence puts this multiple around 15 for medical products, which had aggregated U.S. net sales of about $676 billion in 2024. Multiply these sales by 15 and you get into multiple trillions"

"effectiveness trials that provide evidence on how well medical products work for an imaginary average patient, as opposed to real heterogeneous patients who differ in their assessments of the risks and rewards. This one-size-fits-all clearance applies to products already proven safe."

"The FDA could unleash trillions in value by taking six steps to shorten effectiveness assessments, akin to the methods of Operation Warp Speed during Covid-19."

"Under current procedures, once a product is cleared for safety, the FDA can take up to a decade to establish effectiveness for one particular use of a drug. But it then allows the private sector to judge effectiveness for subsequent off-label uses." 

School Choice Benefits Low-Income Families

Vouchers and scholarships help children from cash-strapped families achieve the American dream

Letter to The WSJ. 

"Mr. Kelly argues that Arizona’s education savings accounts program forces trade-offs in state spending, even though he concedes that ESAs represent only 8% of the state’s education budget. He then criticizes the $50 billion price tag on the federal scholarship tax credit for education. The 2025 federal budget was $7 trillion, making the scholarship program less than 0.75% of federal spending. The idea that these scholarships will result in significant “lost revenue” is ridiculous.

Mr. Kelly laments that when students leave public schools in a choice system, public schools lose money. “Hold harmless” arrangements can blunt the blow of enrollment shifts, but even if such options didn’t exist, what would the senator propose we do? Shouldn’t funding vary with enrollment? Would he propose not increasing funding when enrollment rises? He can’t have it both ways.

Finally, Mr. Kelly links to a story in the Washington Post that associates vouchers with declining enrollments in Arizona. Recent projections from the National Center for Education Statistics predict declining student populations due to birth dearth, not school choice, as we see the largest losses projected in states like California that don’t have choice programs. Even if choice was driving declines in enrollment in public schools, that should be a wake-up call that public schools are only viable with a captive audience.

Michael Q. McShane

EdChoice" 

Expanding 340B Won’t Fix a Broken System

Including community practices in the discount drug program would make a bad problem worse

Letter to The WSJ. 

"Regarding “Is the 340B Discount Drug Program Working?” (Letters, May 13): The American Society of Clinical Oncology’s proposal to expand 340B drug discount program eligibility to community practices will only worsen existing problems with the program.

What began in 1992 as a modest safety-net program intended to help vulnerable patients has evolved into a multibillion-dollar institutional revenue stream that too often benefits hospitals and health systems more than patients.

Expanding participation in a flawed program isn’t reform. It simply broadens access to the same distorted financial incentives that have fueled consolidation, higher costs and migration of cancer care into more expensive hospital settings.

The problem with 340B isn’t that too few institutions can profit from it. It’s that hospitals and covered entities can purchase drugs at steep discounts while receiving reimbursement from commercial payers, often without demonstrating that savings directly reduce costs for financially vulnerable patients.

Discounts should follow patients in need—not institutions. If a patient is uninsured, underinsured or financially vulnerable, the value of the discount should be directly tied to that patient’s care through lower out-of-pocket costs, financial assistance and improved access to treatment. That’s what Congress intended.

Ted Okon and Lucio Gordan, M.D.

Community Oncology Alliance and

Fla. Cancer Specialists & Research Inst." 

The Proxy Advisers Strike Back

ISS and Glass Lewis join New York City in trying to stop Exxon from moving to Texas

WSJ editorial. Excerpts:

"Activists with little stake in companies have abused the shareholder proxy process to drive their environmental, social and governance (ESG) political agenda. This includes resolutions requiring CO2 emission cuts and workforce diversity audits. Plaintiff firms and government pension funds are using shareholder lawsuits to shake down companies.

It’s often less expensive for companies to settle lawsuits than defend against them. One reason is courts in states like Delaware and New Jersey have become unpredictable. Recall how a Delaware judge in 2024 invalidated Tesla CEO Elon Musk’s pay package—which shareholders had twice approved—on the dubious rationale that it violated the state’s “fairness” standard. 

All of this explains why Exxon is joining a parade of companies, including Tesla, Space X, Coinbase and Dillard’s, that have moved their legal homes to Texas."

"Glass Lewis and ISS, which control 90% of the proxy advisory market, also fear their power over companies will wane if activists face a higher burden to bring ESG resolutions."

"Limiting access to the proxy ballot for political activists who don’t have a stake in a company’s long-term success is in the interest of shareholders."

"“substantial portion of the S&P 500 including the majority of Delaware incorporated issuers, maintain exclusive-forum provisions designating a single court for internal affairs litigation.”" 

Pope Leo’s AI Manifesto

His defense of human agency is welcome but not his faith in the state

WSJ editorial. Excerpts:

"When it comes to AI, his encyclical mostly recites the most pessimistic prophecies. He largely dismisses AI’s potential benefits, such as faster and less expensive drug development and medical cures. His call for more government regulation of AI echoes opponents of capitalism like Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez."

"We’ve been around a while and don’t recall when anyone relied “solely” on the free market. Western governments now snatch as much as half of GDP and regulate nearly every part of business life."

"Throughout history the diffusion of technology has democratized information and improved living standards, especially for the poor. The internet and social media have enabled people living under repressive regimes to share information"

"He calls for regulation of algorithms that “influence credit distribution, personnel selection or access to services and opportunities” and “measures to ensure equity: taxation, social protection and industrial policies.”"

"government control is likely to result in an even greater concentration of power. Regulation tends to protect incumbents and retard competition." 

Republicans Shill for Solar Subsidies

Tim Pawlenty was against them in 2012. Now he’ll head the industry association

By Isaac Orr and Sarah Montalbano They both work at Always On Energy Research. Excerpts:

"Minnesota’s electricity prices were 18.5% below the national average in 2007, bolstering the state’s energy-intensive industries like agriculture, manufacturing and mining. By 2017, when Minnesota met its 25% renewable mandate eight years early, the state’s all-sectors electricity prices were only 2% below the national average."

"new solar costs [in Indiana] increase from $76.79 a megawatt-hour to $159.24 a megawatt-hour once firming costs to maintain reliability are included. This is without generous federal subsidies."

"the cost for new natural-gas combined-cycle plants is only $65.03."

"In his 2011 presidential campaign, Mr. Pawlenty said that the government needs to get out “of the business of handing out favors and special deals” and allow “the free market, not freebies” to work." 

The Academy Rethinks the SAT

University of California faculty say that when tests were dropped, student learning fell

WSJ editorial. Excerpts:

"in . . . 2020 . . . the University of California . . . [decided to] drop standardized tests as an admissions requirement . . . The experiment has been a failure, as more than 750 professors in STEM disciplines . . . now admit"

"preparation gaps so severe that instructors must reteach middle-school mathematics"

"Test scores “add substantially to UC’s ability to predict student success” beyond high school grades, especially for minority groups, the faculty report said."

"the university “does not appear to use standardized test scores in a way that amplifies racial disparities.” Without test scores, admissions would hinge on inflated grades, extracurricular activities and essays."

"“for three consecutive years, 20-30% of UC Berkeley first-semester calculus students who participated in mathematical diagnostic testing displayed severe preparation deficits.”"

"current admissions standards cannot “reliably distinguish readiness for university-level STEM majors"

[they were] "admitting students to STEM programs “without a reliable measure of whether they are prepared to succeed."

"UC San Diego . . . found one in eight of the school’s freshmen had math skills below high-school level" 

That was "a 30-fold increase since 2020" 

Britain’s Lost Generation of Workers

Nearly a million youth aren’t working, in school or job training

WSJ editorial. Excerpts:

"one in eight of its working-age youth currently aren’t employed, in school or in job training."

"Nearly 60% of these youth aren’t even looking for work, and more than half have never held a job."

"Nearly half of Britain’s idle youth now claim to have a work-limiting disability. And more than 42% cite mental health problems as their primary condition"

"The U.K. spent £52 billion in the 2024-2025 fiscal year on overall working-age, health-related benefits, up from £36 billion five years earlier" 

"the cumulative annual cost of a million idle youth at £125 billion, or nearly $168 billion—more than Britain spends on education each year."

"opportunity costs from lost revenue and economic potential."

"Steadily rising payroll taxes for employers—and a minimum wage that has increased by as much as 84% since 2019 for some younger age cohorts—are pricing young, inexperienced workers out of the job market." 

Capitalism Delivers for Zohran Mamdani

His budget-balancing cuts to pension payments are made possible by strong stock-market returns

By Austin Berg. Excerpts:

"the single largest line item in his deficit-reduction plan: cutting the city’s payment to its pension funds by $2.3 billion over the next two years."

"The justification for changing this payment schedule is that New York City pension-fund investments have been booming"

"Investments held by New York City’s five pension systems have exceeded expectations for 10 years running, earning 10% returns last year and 7.7% over the past decade, compared with a 7% benchmark."

"What could have produced a boom of that scale? Not socialism."

"continued outperformance of the ‘Magnificent Seven’ stocks" (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla)

"Democratic socialists decry the evils of capitalism, yet they depend on strong economic growth as a magic beanstalk to pay down legacy debt" 

 

Jeff Bezos Earned His Fortune

The Amazon founder’s innovations save customers 22 hours a year on average, giving them the gift of time

By Marian L. Tupy. Excerpts:

"Amazon didn’t become valuable by force. It became valuable because hundreds of millions of people chose to use it."

"Amazon saved them [consumers] time, money, effort or uncertainty. Sellers weren’t forced to use Amazon’s marketplace. They did so because it gave them access to demand."

"The value Amazon created is harder to see because it is dispersed. A mother who doesn’t drive to a store to buy diapers doesn’t appear in an economic headline. A small business that reorders supplies in two minutes doesn’t make the evening news."

"Suppose an hour of labor is worth about $64, roughly the average gross domestic product per hour worked in the countries in which Amazon operates. If Mr. Bezos’ fortune corresponded to the total value that Amazon created, his $275 billion would represent about 4.3 billion hours of saved time. Divided among Amazon’s more than 300 million active customers, the saving comes to about 14 hours per customer over Amazon’s life."

"entrepreneurs don’t capture all the value they create. The Nobel Prize-winning economist William Nordhaus estimated that innovators keep only a small share of the social value—roughly 2%—produced by their innovations."

"A single avoided trip to a store can save 30 minutes. Finding a product online instead of driving to three retailers can save an hour. Reading reviews can reduce the chance of buying the wrong product."

"Amazon Web Services lowered the cost of starting and scaling companies. It gave firms computing capacity without the old capital expense."

"Amazon also forced competitors to improve." 

Privilege Shapes Progressive Education Choice

Black Americans are far more supportive of school choice than affirmative action

Letter to The WSJ. 

"Jason Riley is right that Democrats and their teacher-union allies often claim to champion disadvantaged minority students while defending an education system that leaves those same students trapped in failing schools (“School Choice Is a Winning Issue for Republicans,” Upward Mobility, May 13).

But there is another political irony here. Black Americans are far more supportive of school choice than affirmative action. In YouGov’s 2024 Cooperative Election Study, about two-thirds of black Americans said that their state should provide “school voucher subsidies for families to send their children to private or charter schools.” Yet less than one-third of white Democrats supported expanding the kind of school choice favored by black voters.

Democrats talk constantly about white privilege, yet one of the clearest examples occurs inside their own coalition: white progressives defending a public-school monopoly less favored by minority families than by teachers’ unions. Apparently, some forms of privilege are more politically inconvenient than others.

Michael T. Hartney

Fellow, Hoover Institution" 

Britain Versus the Laffer Curve

High tax rates push more Britons overseas—and revenue down

WSJ editorial. Excerpts:

"the number of people who repatriate each year is declining noticeably. This is down to 110,000 in the most recent year, from as much as 170,000 annually in the wake of the pandemic."

"These [those who delay returning to Britain] are some of Britain’s most entrepreneurial people, and they’re spending their prime tax-paying years out of the country."

"One-sixth of the people on the list [of Britain’s wealthiest] two years ago have dropped off, and 111 of the British citizens on the 350-name list live offshore."

"Only one foreign billionaire moved to Britain: Warren Stephens, the U.S. ambassador." 

The US is Building a Lot More Data Centers Than Five Years Ago, But We Are Still Building More Warehouses

By Jeremy Horpedahl.

"Data centers seem to be popping up everywhere. And based on the value of current construction, the US is indeed building a lot more data centers than we were in 2020 or 2021, about four times as much data center construction (inflation adjusted).

But… did you know that we build a lot more good-old manufacturing than data centers? Almost four times as much in recent months. And that’s even after a decline in manufacturing construction over the past year and a half.

The US also builds about the same amount of warehouses and chemical plants as we do data centers. Data centers may exceed those two categories in a few years, but for now they are pretty similar.

Keep in mind that manufacturing and chemical facilities also use a lot of electricity and water, and have plenty of local negative externalities! Warehouses probably have a lot less resource consumption and external effects, but it’s not zero either.

Are data centers popping up everywhere? Well, people are certainly noticing them. But so are lots of other types of buildings, which rarely register more than a peep from concerned citizens and local media, unless there is some clear and obvious external effect."

 

 

The Railway Safety Act would shift freight from safer rails to deadlier roads

By Steve Swedberg of CEI.

"More than 36,000 Americans died on US roads in 2025. Fewer than 1,000 died on the rail system. Yet while highway fatalities rarely attract sustained attention, a single freight-train derailment can dominate national headlines for weeks.

The 2023 East Palestine derailment has remained in the news for years and has helped prompt Congress to make another attempt to pass the Railway Safety Act (RSA). As previously illustrated, the RSA’s major provisions have not been shown to meaningfully improve safety outcomes. However, beyond the merits of individual mandates lies a broader problem.

Washington repeatedly treats transportation modes as isolated silos rather than parts of a unified transportation network. The result is a fixation on safety within one mode while ignoring how freight, costs, and risk shift across the system as a whole. The RSA fits squarely into that pattern. In reality, freight is allocated across competing systems based on relative cost, reliability, and regulatory friction.

As I have previously argued in the context of the recent TSA security delays, constraints on one mode of transportation do not reduce overall passenger demand. They shift some travelers onto highways, where risks are significantly higher.

A similar substitution effect exists in freight transportation, although it is not uniform across all categories of freight. Bulk commodities, for example, are often rail-captive because trucking them is typically cost-prohibitive.

When rail does compete, it does not compete against an idealized version of itself under perfect safety conditions. It primarily competes against trucks. And trucking is often the default alternative when rail becomes more expensive or operationally constrained.

For the sake of argument, let us assume that this substitution effect applies only to intermodal. Intermodal accounts for a quarter of rail ton-miles, which would be 375 billion ton-miles for intermodal in 2025. The next question is how shippers might react to these regulatory burdens.

For a conservative illustrative estimate, I apply a cross-price elasticity of 0.5 drawn from the Congressional Budget Office (CBO) freight demand modeling to the intermodal share of rail traffic. The CBO example typically reflects policies that increase trucking costs relative to rail, inducing diversion toward rail.

Here, I assume symmetry in cross-price elasticities and apply the inverse relationship. While actual elasticities vary by route, commodity, distance, service quality, and trucking capacity, this assumption implies that a 10 percent increase in rail shipping costs would divert roughly 5 percent of price-sensitive freight toward trucking.

Other rail regulations illustrate how sweeping safety mandates can impose multi-billion-dollar shocks. Positive Train Control (PTC) ultimately exceeded $10 billion. The RSA’s prescriptive wayside bearing detectors alone are projected to cost up to $2.2 billion.

Unlike those one-time capital expenditures, however, the RSA’s operational mandates, such as the prescriptive inspection protocols, would impose recurring compliance and labor costs, thereby creating sustained upward pressure on shipping rates. Taken together, these examples suggest a low- to high-single-digit increase in rail shipping rates over time, depending on the degree of cost pass-through.

Applying a cross-price elasticity of 0.5 consistent with CBO freight demand modeling to the intermodal baseline yields four illustrative diversion scenarios under 5, 10, 20, and 30 percent cost increases, plus a long-run compounded case, ranging from 2.5 to 15 percent diversion rates from rail to highways (9.38 to 56.25 billion ton-miles).

To evaluate the net safety impact of this modal shift, federal transportation data can be normalized by ton-mile exposure. Because the relevant question involves systemwide safety externalities, the numerator includes all fatalities in crashes involving large trucks in order to capture risk to all road users from increased truck exposure. Dividing 5,340 large-truck-involved fatalities by 2.4 trillion highway ton-miles yields a commercial motor carrier fatality rate of 2.23 deaths per billion ton-miles.

Ton-mile normalization provides a useful first-order approximation of exposure, though actual risk varies with vehicle-miles traveled, road class, congestion, payload, and operating conditions. These factors are held constant for purposes of this illustrative comparison.

By contrast, rail had about 1.5 trillion annual ton-miles in 2024. Excluding trespassers, rail recorded 111 rail deaths that year. This adjustment with trespassers ensures consistency with the trucking measure, which captures systemwide crash externalities from freight activity instead of unrelated fatalities outside the transportation function.

Trespasser deaths are not typically affected by marginal changes in freight volumes, which makes operational rail fatalities the more comparable measure for assessing risk from modal shifts.

On this basis, rail exhibits a fatality rate of approximately 0.07 deaths per billion ton-miles. Freight trucking is thus roughly 32 times riskier than freight rail on this ton-mile measure, a result that is directionally consistent with federal data showing that freight trucks are responsible for 84.4 percent of freight fatalities despite moving 44.9 percent freight ton-miles.

This implies a net risk premium of 2.16 additional deaths per billion ton-miles. Under the 2.5 percent diversion scenario, this translates into roughly 20 additional fatalities per year, rising to more than 120 under the 15 percent scenario. These estimates likely understate the effect because they assume no diversion of manifest or other carload freight.

Regardless of the specific baseline assumptions one chooses to employ (see Appendix below for more detail), the structural conclusion remains as clear as it does ironic: policies that reduce rail competitiveness and shift freight onto highways impose transportation risks of their own.

Freight diverted from rail does not disappear. A significant amount ends up on America’s highways. More truck traffic and greater exposure to trucking risk necessarily imply more fatalities relative to rail. Paradoxically, a bill intended to improve rail safety will likely leave the transportation system as a whole more dangerous."

 

Personalized Pricing Isn’t All Bad for Consumers

By Christopher Gardner and Juan Londoño of Cato. Excerpts:

"The novelty of IDP (individualized dynamic pricing) lies in the ability to autonomously set prices by using an individual’s data to infer how much they are willing to pay for a product. Many industries, from car sales to higher education, practice some sort of individualized pricing. The primary distinction for IDP is that it can adjust prices cheaply, autonomously, and without bias. This arrangement allows companies to increase profits while offering lower prices to consumers."

"Dynamic pricing can best be understood as the adjustment of prices in response to changing market conditions."

"Algorithmic pricing’s recent turn in the spotlight is not a function of its increased use. Rather, technological advancement, which has enabled greater speed and individualization, has made the reality of those price changes more apparent to the average consumer."

"individualized pricing. This practice has been around since the dawn of commerce, when merchants and customers haggled over the price of a given product."

"A common example of individualized pricing is buying a car."

"IDP can be less subjective than a human salesperson."

"the practice has been in use for years across an array of industries, from insurance to retail. Each instance represents an effort to increase company profits, but it also helps allocate goods and services more effectively to those who need them."

"Most of the time, businesses use these tools as an extra nudge to lure in potential customers who are on the fence over a product. 

An example of how businesses commonly use IDP, particularly in online retail, is to combat “cart abandonment,” a term for when a user adds a product to their virtual shopping cart but ultimately decides not to buy it. When the website realizes that the customer is wavering in their resolve to buy a product or is browsing a competitor’s website to compare prices, it might “sweeten” the deal by offering a personalized discount hoping that the deal might convince the customer to complete the purchase."

"the best protection for consumers is a competitive market. In competitive markets with no supply constraints, IDP has proven to largely benefit consumers. Any time a firm uses IDP to raise prices for a given consumer, that automatically allows a competing firm to undercut those prices and take that consumer away. The nature of these structural protections is borne out as new technologies are implemented, such as electronic shelf labels. In spite of regulatory concern, there is virtually no evidence that electronic shelf labels are intended or used for surprise price increases."

"certain definitions of dynamic or personalized pricing would lump in popular pro-consumer discounts such as happy hours."

"Existing regulations often provide consumers with ample protection, given that the conduct underlying IDP is not novel despite technological advances. Aside from antitrust law covering concentrated markets, existing regulations on deceptive pricing directly address concerns about fictitious high baseline prices."

The Bitter Lessons of Sugar Control in World War I

By Daniel J. Smith. He is a Professor of Economics at Middle Tennessee State University.

"As German forces launched what would become their final major offensive on the Western Front in March 1918, President Woodrow Wilson’s Food Administrator, Herbert Hoover, identified what he called “one of the most vital problems confronting the nation”: a shortage of sugar. Demand had surged. Soldiers needed sugar in their rations, while producers and civilians relied on it to preserve and can food for the war effort. At the same time, supply had collapsed due to Europe’s engulfment in war, the disruption of Cuban cane fields during the 1917 Chambelona War, and German U-boats threatening Atlantic shipping.

What followed became one of the clearest examples in American history of price controls spiraling into creeping interventionism — and a textbook demonstration of why such schemes fail, even when administered by capable and patriotic officials pursuing a common wartime goal.

Hoover was commissioned as Food Administrator of the United States on August 10, 1917. A successful mining engineer and humanitarian, he seemed the ideal public servant for such an important task. He wasted little time, setting out to “assure to the American consumer a fair and just price” of sugar. Blaming rising prices on speculators rather than on underlying economic conditions, he ordered the suspension of trading in sugar futures on August 16 until “further notice.” And, by the end of the month, he had pressured American beet sugar producers “to limit the price of their product” with an expected savings of $30 million within the next year.

But replacing the flow of information and the structure of incentives supplied by the price system was far more difficult than Hoover, a graduate of Stanford University, imagined. Hoover’s attempts to adjust the system to unexpected changes in economic conditions were frustrated by the sugar industry’s attempt to divert the program to their own benefit. Hoover ultimately created a tripartite bureaucratic apparatus: the Sugar Division of the Food Administration, the International Sugar Committee, and the Sugar Distributing Committee. He set prices by signing agreements with producers and refiners under the threat of revocation of their license if they charged “excessive” prices.

But artificially low prices did exactly what economics textbooks predict: they encouraged consumption while discouraging production. Pre-war per-capita consumption stood at roughly 85 pounds annually, much of it in candy, soft drinks, condensed milk, canned goods, ice cream, and ketchup. Even at the beginning of the program, administrators acknowledged the predictable difficulties of holding prices low by urging consumers to limit consumption in the face of increased demand and decreased supply. By mid-October, a sugar famine was already causing sugar-using factories to shut down, and Hoover was forced to order cuts in candy production. The low price of sugar discouraged retailers from stocking it, especially given that it would not cover the increasing costs of transporting it from refineries. 

Under Hoover’s informal price ceilings, demand stayed high while beet growers watched competing crops become more profitable. As economist Joshua Bernhardt (1919) noted, mounting production costs and unregulated prices for other foods made sugar beets progressively less attractive. In desperation, Hoover tried to enlist schoolchildren and boys’ and girls’ clubs in sugar production, offering families an allotment of sugar in exchange for planting an acre of sugar beets. Pledge cards, circulars, and monetary incentives were deployed with patriotic fervor.

Hoover also formed local commissions to investigate spiraling production costs, producing thousands of pages of testimony from planters, nearly all of whom recommended higher prices. Testimonies from over 100 planters in California alone filled nine thick volumes (Bernhardt 1919). Planters rejected a flat price because it gave an advantage to low-cost producers, especially foreigners. Cuba could deliver sugar for about 5.5 cents per pound, while domestic beet sugar planters required nine cents and Louisiana cane sugar planters needed ten. Hoover’s political solution to these competing special interest groups was to buy cheap foreign sugar, along with domestic output purchased at higher prices, and then resell it to American refiners at an average price.

Price controls on sugar gradually expanded the scope of intervention. Transportation priorities, refinery allocations, export quotas, and distribution zones were imposed. Louisiana sugar failed to reach New England refineries because regulated prices made it more profitable for Louisiana mills to sell lower-grade sugars directly to confectioners than to ship to Atlantic refiners. Centrally prioritizing sugar allocation without market prices led to accusations of misallocation. While households went without sugar for canning and baking, Hoover argued in Senate testimony that the candy industry employed 250,000 Americans and that further diversion of sugar would put them “entirely out of work.” Yet, as Blakey (1918) notes, the knowledge problem cuts the other way: candy might have deserved a higher priority “in view of the national campaign for prohibition,” given its potential as a substitute for alcohol.

The Food Administration proudly claimed it had saved consumers millions. Yet as Roy Blakey (1918) observed, gratitude evaporated when sugar simply sporadically disappeared from tables in regionalized shortages. Senator Henry Cabot Lodge’s mocking refrain captured the public mood: “What comfort is there in a low price when no sugar can be obtained?” Searches for “Sugar Famine” on Newspapers.com yield over 20,000 matches during the years 1917-1920, the years Hoover’s sugar programs were operative, yet only 284 in 1916 and 370 in 1920.

The dilemma Hoover faced was classic: he needed “capable and informed representatives” who inevitably had skin in the game, or “uninformed ones who were disinterested.” Neither produced efficiency. Instead, the plan spawned a clerical army, including state-level certificate systems classifying industrial sugar use into five categories (A through E), population-based allocations, and transportation zones, which required a system of prioritization as well, designed to match supply to “equitable” demand. As Frank Rutter (1902) earlier recognized about attempts to regulate the sugar industry, any regulation would pit the concentrated interest of producers against the dispersed costs faced by consumers, “Opposed to these demands [of the sugar industry] there is only the diffused interest of the consuming public, with no detailed knowledge concerning trade conditions or the inner workings of the tariff, and without organization….”

The sugar episode was not an isolated wartime curiosity. It was a microcosm of the broader logic of Ludwig von Mises’ interventionism. Regulate the price of one commodity and you must regulate its inputs, its substitutes, its transport, and its distribution. “From the few instances cited,” Blakey wrote, “as well as from one’s daily observation, it is easy to see that the regulation of the price of one thing involves the regulation of the prices of all constituent factors and competing commodities, which in the last analysis means the regulation of wages, as well as the regulation of the prices, the supply and the distribution of everything else.”

Today’s policymakers would do well to revisit this forgotten chapter before reaching for price controls, “equitable allocation” schemes, or industrial policy boards. Price ceilings create shortages, which in turn necessitate rationing. Rationing requires bureaucracy, which opens the door to lobbying and favoritism. The consumer — the very citizens Hoover was commissioned to serve — ultimately pays in empty shelves and higher overall costs.

Herbert Hoover was a brilliant engineer and a sincere public servant. He believed he could “stabilize” markets through expert administration. The sugar famine suggested otherwise. Markets are not problems to be solved by committees; they are discovery processes that coordinate millions of decisions without central direction. When governments try to override that process, even with the best of intentions and the full powers of wartime emergency, the result is not order but the very chaos they sought to prevent."

The corporate tax rate really matters (improvements in aggregate tax competitiveness are positively and significantly associated with real GDP per capita growth)

From Tyler Cowen.

"Three findings emerge. First, improvements in aggregate tax competitiveness are positively and significantly associated with real GDP per capita growth, robust to a wide range of controls. Second, this aggregate effect is driven entirely by the corporate tax pillar; no other component displays a significant growth effect. Third, the corporate tax effect materializes contemporaneously and accumulates over time, with a statistically significant three-year cumulative effect of approximately 0.16 percentage points per one-point improvement in the corporate tax score. These results suggest that the full architecture of the corporate tax system, not merely the headline statutory rate, is what matters for growth.

That is from a recent paper by Michael Christla and Monika Köppl–Turyna." 

Do Immigration Quotas Benefit Natives?

From Jeffrey Miron.

"In 1921 and 1924, Congress set nationality-based quotas for immigration.

Recent research looks at the impact

on the intergenerational mobility of US-born men. [The authors use] county-level measure[s] of exposure to the quotas … [and] census data … to link US-born sons to their adult outcomes and trace family background, geographic location, and occupational status over time.

Outcomes differed by race:

[T]he quotas slowed intergenerational mobility among US-born white men. … For [them] the negative effects of the quotas were smaller for sons of wealthier fathers. … US-born white men from more exposed counties [also] earned substantially lower wages in adulthood.

Alternatively,

[f]or black men, quota exposure was associated with increased intergenerational mobility, although [the results] … cannot rule out the possibility of no effect. [T]he quotas may have reduced competition for lower-skilled urban jobs, modestly improving occupational prospects for black men.

The most likely explanation for the quotas’ effects

is that immigrants complement native workers by raising their productivity and enabling them to specialize in higher-quality tasks. … [Indeed,] the negative mobility effects were nearly twice as large for white men living in counties with more reliance on non-English-speaking immigrant workers."

Research even shows that closing down nuclear plants increase local emissions by 6-8%

A tweet from Justin Callais. 

 

DATA CENTER MYTH V. REALITY

From Taxpayers Protection Alliance. They used 0.06 percent of water in 2025 in Maryland and 2.5 percent of electricity.

 

L.A. Mansion Tax Has Yet to Pay Off

See Los Angeles Tried to Tax Mansions. Apartment Construction Tanked. Developers say the levy is making L.A.’s housing shortage worse. The city is considering changes by Paul Kiernan of The WSJ. Excerpts:

"In 2022, Los Angeles voters approved a new levy on sales of the city’s most expensive properties. Proponents dubbed it a “mansion tax.” Revenue was earmarked to help struggling renters and build low-income housing"

"Opponents of the tax—including some former supporters—said the levy is making Los Angeles’s housing shortage worse. Local and state policymakers are now considering whether to modify the tax and ease some of its complicated requirements."

"“There have been some unintended consequences,” said Miguel Santana, chief executive of the California Community Foundation, a nonprofit that supported the tax"

"The tax makes no distinction between a Bel-Air mansion and a market-rate apartment building. So far, 61% of its revenue has come from single-family home sales, city data shows. The rest has come from commercial, multifamily, vacant and mixed-use properties."

"The levy claims 4% of the gross value of most property sales starting at $5.3 million and then jumps to 5.5% for sales at or above $10.6 million."

"Because the property-sales tax applies whether or not a project is profitable, developers said it has led their investors and lenders to bypass Los Angeles projects."

"The city issued building permits for 7,363 multifamily housing units last year, according to federal data. That was down 46% from 2022"

"Sales of multifamily-zoned parcels above the $5.3 million threshold have fallen by nearly two-thirds in the three years since the tax passed, compared with the three years before"

"A study from Harvard Business School and others estimated that the drop in sales caused by Los Angeles’s new tax will offset 80% of the money it raises by reducing property-tax revenue."

"City officials initially projected the transfer tax would bring in $600 million to $1.1 billion in annual revenue. Over three years, city figures show total collections of $1.19 billion." 

What Would Jefferson and Madison Make of Musk and Altman?

America’s Founders and Adam Smith knew better than to entrust the future to philosopher-kings

By Jason Riley. Excerpt:

"Theories about the need for a “philosopher king” or “great man” to advance society date back centuries. Intellectual figures from Plato to Machiavelli and Thomas Carlyle emphasized personal traits such as superior wisdom and exceptional moral character in choosing leaders. The idea was to find these extraordinary men, put them in charge, and align policies with their understanding of the common good. Adam Smith, by contrast, argued that free enterprise and the uncoordinated pursuit of individual self-interest would lead to better outcomes for more people. Societies should rely on market forces and voluntary exchange rather than on do-gooders.

March marked the 250th anniversary of Smith’s seminal text, “The Wealth of Nations,” published the same year as the Declaration of Independence. As we reflect on America’s milestone, it’s worth noting that the Founders shared Smith’s skepticism of philosopher-kings and the approach to choosing leaders that today’s AI poohbahs seem to have embraced.

“What the American Constitution established was not simply a particular system but a process for changing systems, practices, and leaders, together with a method of constraining whoever or whatever was ascendent at any give time,” Thomas Sowell wrote in his book on social theory, “The Quest for Cosmic Justice.” “Viewed positively, what the American revolution did was to give the common man a voice, a veto, elbow room and a refuge from the rampaging presumptions of his ‘betters.’ ”" 

Think $6 Gas Is Bad? It’s About to Get Even Worse in California

Golden State depends more on crude-oil shipments from Middle East than any other U.S. state

By Collin Eaton of The WSJ. Excerpts:

"U.S. drillers have fled the state and dozens of refineries have closed since the mid-1980s, forcing California to import 75% of the oil it consumes. Almost one-third of that comes from the Middle East"

"The energy crunch in California is worsening by the day. Gasoline prices averaged $6.16 a gallon Friday, the highest in the U.S. and about $1.61 above the national average. Diesel cost $7.48 a gallon, about $1.82 over the U.S. average."

"two of the state’s major refineries closed in the past six months, cutting off almost one-fifth of its fuel-making capacity."

"In mid-March, the Trump administration issued a 60-day waiver of the Jones Act, a rule put in place by then-President Woodrow Wilson in 1920 that prohibits foreign vessels from carrying goods between American ports. The waiver allows companies to ship oil and fuel to California on bigger tankers"

"The Trump administration also used the Defense Production Act, a Cold War-era law allowing presidents to speed up the flow of goods in emergencies, to allow oil producer Sable Offshore to restart an offshore pipeline. California regulators had kept the pipeline closed following a 2015 oil spill that fouled the coastline. It is now pumping 50,000 barrels a day of crude into the state." 

The Panic Industry’s New Target

A generation coached to fear climate change is now fretting over AI and data centers

By Barton Swaim. Excerpts:

"Where does Mr. Schmidt think young people got the idea that “the climate is breaking”? Where did the “fear” he laments come from? In part from the scores of climate-panic groups to which the Schmidt Family Foundation’s 11th Hour Project has granted hundreds of millions of dollars over the last 20 years. One detail particularly amuses: When 11th Hour first appeared, in 2006, it funded screenings of Al Gore’s “An Inconvenient Truth,” a documentary designed to terrorize viewers with 90 minutes of bleak prophecies, now happily exploded. The outfit, like scores of others founded and funded by other progressive billionaires, spends its resources opposing fossil-based energy and trumpeting the dangers of a warming world."

"Last year Bill Gates posted an essay on his website purporting to scold alarmists and express his own moderate view of the climate question, namely that it is a “very important problem” but doesn’t doom civilization. You have to wonder, then, why Mr. Gates has sent so much of his money to Arabella Advisors. Arabella, a pass-through entity now called Sunflower Services, funds a dizzying array of groups that exist to alarm the public over an imminent climate apocalypse and to portray carbon-emitting energy as an existential threat to humanity."

"nobody staffing the multibillion-dollar ganglion of climate nonprofits and activist groups plans on taking a more measured view of the coming cataclysm."

"modern data centers first appeared in the 1990s, when companies learned the benefits of fast internet connectivity and information storage."

"the people showing up at county council meetings to protest the construction of a data center . . . got their talking points from national nonprofits supported by some of the same moneyed outfits the Schmidt and Gates foundations spent the last two decades bankrolling." 

Who Is Benefiting From the 340B Program?

States should stop bolstering a broken program, and Congress must close the loopholes that continue to harm patients

WSJ editorial. 

"Your editorial (“The Great 340B Healthcare Grift,” May 8) is exactly right. 340B drug discounts are fattening the coffers of large hospitals and pharmacies at the expense of patients—and it’s a scandal. The judge correctly called it a “coordinated collusion” that’s exploiting “Congress’s inattention to a federal program.”

A growing wealth of data show that profits are soaring for so-called charity-care hospitals, and that 340B hospitals with the highest share of cancer patients pursue aggressive medical-debt collection tactics against those the program was created to support. Yet state lawmakers continue to propose and pass reforms at the behest of hospitals to protect this unintended windfall.

Anyone who lives in a city with a significant hospital presence has likely noticed the steady expansion of hospital names and buildings—often concentrated in affluent communities rather than areas with large numbers of uninsured or low-income patients. States should stop bolstering a broken program, and Congress must bring transparency to 340B to close the loopholes that continue to harm patients.

Sally Greenberg

CEO, National Consumers League" 

The California Grift Goes On

Eighty percent of improper Medicaid payments nationwide reflect failures of eligibility, not bad-actor providers

Letter to The WSJ. 

"The California fraud story is even worse than your editorial points out (“The Great California Medicaid Grift,” May 16). The story’s central theme is that state leaders don’t care about fraud.

According to my organization’s freedom of information requests, California’s Department of Health Care Services referred only 127 Medicaid providers for fraud investigation between January and March. Yet CBS News found 89 hospice providers at a single address, 75 of which have racked up a combined 400 violations since 2021. The federal government has also suspended 800 hospice providers in the state this year. Is California even looking for fraud?

The real fraud story is that 80% of improper Medicaid payments nationwide reflect failures of eligibility, not bad-actor providers. California contributes to this crisis by letting people self-attest to key aspects of their eligibility, which is to say, it tolerates lying. The Trump administration should get California to start caring about fraud—to say nothing of every other state.

Hayden Dublois

Foundation for Government Accountability" 

America’s IPO Mini-Boom

Too bad SpaceX and others didn’t go public sooner, but they are a tribute to the U.S. capitalist system

WSJ editorial. Excerpts:

"Companies are staying private longer because of the 2002 Sarbanes-Oxley Act’s burdensome regulations, shareholder litigation and abundant financing available in private markets. The number of public companies has shrunk by half in three decades.

This means ordinary Americans who invest in the stock market, either directly or through retirement accounts, are sharing less in America’s wealth creation."

"One reason the U.S. boasts the world’s most valuable companies and promising startups is because the government doesn’t seek to punish success—or handcuff entrepreneurs with regulation as the Europeans do. China boasts enormous human capital, but Beijing’s financial markets are stunted by the desire for political control." 

Woman at center of sprawling Minnesota fraud gets nearly 42-year prison sentence

By TIM SULLIVAN of AP. 

"A judge on Thursday handed down an extraordinary prison sentence — nearly 42 years — to the former leader of a Minnesota nonprofit who was convicted in a staggering $250 million fraud case that helped ignite an immigration crackdown by the Trump administration.

Aimee Bock ran Feeding Our Future, which had claimed it helped provide millions of meals to needy children during the pandemic. The U.S. Justice Department, however, said she was atop the “single largest COVID-19 fraud scheme in the country.”

“I understand I failed. I failed the public, my family, everyone,” Bock, 45, said in federal court.

After the hearing, authorities announced charges against 15 more people accused of fraud in receiving federal payments for a variety of social services administered through Minnesota’s state government. The FBI said one man jumped from a fourth-floor balcony to avoid arrest.

“We will claw back every dollar you have stolen from the American people,” Assistant Attorney General Colin McDonald said, noting that the government sent more prosecutors and agents to Minnesota this year.

President Donald Trump used the fraud cases against Bock and many others to initially justify a massive surge of federal agents to the Minneapolis-St. Paul area last winter to target immigrants, leading to repeated confrontations between residents and those officers and the deaths of Renee Good and Alex Pretti.

Fake lists, lavish spending

COVID-19 brought changes to a federal program that typically fed children through schools. Restaurants could participate, and food distribution was extended to sites outside schools.

Investigators said Bock’s nonprofit was at the center of a crime network that included a web of partner organizations, phony distribution sites, kickbacks and fake lists of children. Feeding Our Future recruited people to create sites throughout Minnesota, and claims for reimbursement quickly followed, according to the government. 

“Aimee was a god,” a witness testified at trial.

Bock had long proclaimed her innocence but was convicted of conspiracy, fraud and bribery. Investigators said she and co-conspirators enriched themselves with international travel, real estate, luxury vehicles and other lavish spending.

“This was a vortex of fraud and you were at the epicenter,” U.S. District Judge Nancy Brasel told Bock.

A co-defendant was sentenced last August to 28 years in prison. Abdiaziz Farah claimed to be serving meals to thousands of children per day, investigators said, but the sites turned out to be parking lots or empty commercial space.

Bock’s lawyer, Kenneth Udoibok, had argued for no more than three years in prison, saying she had provided key information to investigators. He said Bock, a former teacher, had been unfairly portrayed as the mastermind and insisted that two co-defendants were responsible for running the scams.

State auditors found that the Minnesota Department of Education received numerous complaints about Feeding Our Future, but often told the group to police itself. In January, Democratic Gov. Tim Walz said he would not run for reelection after being pounded by Trump about theft in programs that rely on federal cash.

Trump, who has long derided Somalis, last year blasted Minnesota as “a hub of fraudulent money laundering activity.”

“Somali gangs are terrorizing the people of that great State, and BILLIONS of Dollars are missing. Send them back to where they came from,” Trump wrote on social media.

Bock is white, and the U.S. Attorney’s Office says the overwhelming majority of defendants in the cases are of Somali descent. Most are U.S. citizens.

At least 65 people have been convicted in a series of overlapping food fraud cases. Investigations began during the Biden administration.

“This case has changed our state forever,” Joe Thompson, formerly the lead prosecutor in the case, said outside the courtroom. “Aimee Bock did everything she could to earn this long sentence.”

Fraud cases grow

In a fresh batch of criminal cases filed this week in Minnesota, the government said alleged fraud involved $90 million across seven state-managed Medicaid programs.

The defendants include Fahima Mahamud, who was CEO of Future Leaders Early Learning Center, a childcare center in Minneapolis. Over three years, Mahamud’s organization was reimbursed approximately $4.6 million for services on behalf of people who didn’t make a required copayment, prosecutors allege.

A message seeking comment from her lawyer was not immediately returned Thursday. Mahamud earlier this year pleaded not guilty to fraud related to meals.

Two other people were charged with conspiring to get $975,000 in Medicaid subsidies for housing services that were not provided.

Two additional people were accused of receiving $21.1 million by billing Medicaid for autism therapy that was either unnecessary or not provided. Investigators said the two paid families as much as $1,500 per child per month to add their names to the program and get reimbursement. 

Minnesota’s Department of Human Services said it helped build the cases. Inspector General James Clark said payments to more than 600 providers have been halted since 2025 because of fraud allegations."

The Case Against Socialism, Part V

By Dan Mitchell. Excerpts: 

"here is the most compelling comparison of a pure socialist economy and a mostly capitalist economy."

 

The chart is based on the Maddison database, and there are data gaps during World War II as well as several decades of missing North Korean data.

But the lesson is blindingly obvious. South Korea has become a rich nation while North Korea is mired in grinding poverty. Heck, you can see the difference from outer space.

It makes the East Germany-West Germany comparison seem trivial by comparison.

South Korea is definitely not perfect and its long-run outlook is worrisome because of demographics.

But pretty good is definitely better than totally awful.

Another win for capitalism over socialism.

You can peruse previous editions in this series by clicking here, here, here, and here."

Almost 50% of Preventable Cancers Linked to Just Two Lifestyle Habits

By Carly Cassella of ScienceAlert. Excerpts:

"According to a recent analysis from the World Health Organization (WHO), more than a third of all cancer cases globally are preventable.

Lung, stomach, and cervical cancers make up nearly half of those cases.

This means that millions of deadly cancers every year could be prevented through medical intervention, behavior changes, reducing occupational risks, or tackling environmental pollutants."

"n 2022, there were nearly 19 million new cases of cancer. Roughly 38 percent of those diagnoses were related to 30 changeable risk factors."

"These included tobacco smoking, alcohol consumption, high body mass index, insufficient physical activity, smokeless tobacco (like chewing tobacco), a traditional stimulant known as areca nut"

"The number one preventable factor associated with cancer? Smoking tobacco. It was linked to 15 percent of all cancer cases that year."

"After tobacco smoking, the runner-up among changeable lifestyle factors was drinking alcohol. It accounted for 3.2 percent of all new cancer cases (approximately 700,000 cases)."

"smoking tobacco and drinking alcohol account for almost half (around 48 percent) of all cases of preventable cancer."

Related posts:

Physical exercise and a nutritious diet can fight dementia (2025) 

Regular physical exercise is the single, most effective intervention that can improve brain and physical health (2025) 

Can weight-lifting promote empathy? Can aerobic exercise improve memory? (2025) 

Facing a Cancer Diagnosis? Exercise and Diet Could Make a Difference (2025) 

For a long and healthy life, diet and regular exercise are a better bet than trendy supplements and expensive longevity clinics (2025)

How Your Midlife Eating Habits Can Help You Live Longer and Healthier: A plant-rich diet with some fish and dairy might make the biggest difference, new research suggests (2025)

Self-Control as a Performance-Enhancing Drug: Like cognitive ability, self-control predicts health, wealth, and all things good (2024)

Does Exercise Improve Survival After a Cancer Diagnosis? An Encouraging New Study (2024)

Life expectancy can increase by up to 10 years following sustained shifts towards healthier diets in the United Kingdom (2023)

Even Short Runs Have Major Health Benefits (2023)

What if the Most Powerful Way to Live Longer Is Just Exercise? (2023) 

Exercise Helps Blunt the Effects of Covid-19, Study Suggests (2023)

Carry Your Groceries, Take the Stairs: Short, Intense Movement Can Improve Your Health (plus non drug ways to fight diabetes and Covid) (2022)

Almost half of cancer deaths globally are attributable to preventable risk factors, new study suggests (2022)

New research leads to doubt over the extent or even existence of the ego‐depletion effect (the theory of the exhaustible willpower muscle) (2019)

How lifestyle changes can reduce the risk of dementia (2019)

Good health begins with individual decisions (2018)

Nearly half of U.S. cancer deaths blamed on unhealthy behavior (2017)

Regular Exercise: Antidote for Deadly Diseases? (2016)

Is Willpower An Untapped Resource? (2011) 

Fuel Costs Are Way Up, But It’s Still Pretty Affordable to Fill Up Your Tank (relative to wages)

By Jeremy Horpedahl.

"Two months ago I wrote about gasoline prices and tried to give the current prices some historical context. Gas prices have, of course, only continued to increase since then. Here’s a chart I created to give a bit more context, using an idea from Ryan Radia: how much does it cost to drive a car 250 miles? Since fuel efficiency has increased over time, we might be understating how much it costs to drive today relative to the past. And of course, to give the “cost” proper context I have stated in terms of hours worked at the average wage (note: the final data point is from April 2026, as we don’t have wage data for May yet):

 

In April 2026 it took about 1.4 hours of work at the average wage ($32.23) to purchase enough gasoline to drive 250 miles (10.7 gallons) at the average fuel efficiency (23.4 miles per gallon). That average fuel efficiency figure is from 2024, the latest available, so it could be a bit higher today. Maybe it’s a little easier than 1.4 hours of work to buy it, but even if fuel efficiency had crept up to 25 mpg (that would be a big increase in 2 years, historically speaking), it would still be 1.3 hours of work.

1.4 hours of work is certainly a big jump from earlier in 2026, but you’ll notice it is still on the low end in this chart, and well below the peak we saw in June 2022 of just over 2 hours of work to buy 250 miles worth of gasoline.

But 23.4 miles per gallon is pretty low, as this is includes lots of trucks and SUVs with pretty bad fuel efficiency. What if we looked at some more fuel efficient vehicles?

Here’s a few I checked on (all for 2026 models, with gas and electricity at current national averages):

• Toyota Camry: 0.71 hours of work
• Chrysler Pacifica Hybrid: 0.61 hours on electric, 1.18 hours on gasoline
• Tesla Model Y: 0.37 hours of work

It will probably not surprise you that the all-electric Tesla Model Y is cheaper than the average car to operate at current prices, but you may not have realized that it is almost four times cheaper. But the Toyota Camry, with all models operating as hybrids now, also comes in pretty good at about half the cost of the average vehicle to operate (and the Camry is a very affordable car to purchase). The Chrysler Pacifica hybrid minivan does pretty well too, though even operating only on electricity (30 miles at a time), it’s only slightly more fuel efficient than the Camry."