The Deceptive Statistics Behind California’s Wealth Tax

Saez and Zucman have spent years using dubious assumptions to push the case for confiscation

By Phillip W. Magness. Excerpts:

"For years the pair (Emmanuel Saez of UC Berkeley and Gabriel Zucman of the Paris School of Economics) have relied on selective accounting methods and questionable assumptions to tilt the scales in favor of confiscatory wealth taxes."

"Under the U.S. system, taxes are generally assessed on income earned over the course of a year. Since 1920, federal tax law has followed the realization principle, meaning that income must actually be realized as earnings before it can be taxed. Messrs. Saez and Zucman instead propose taxing estimated changes in a person’s net worth—including unrealized capital gains that exist only on paper. If a billionaire’s stock portfolio rises in value, they want to tax the appreciation even if the assets are never sold."

"Unrealized gains are notoriously volatile and speculative. They can disappear overnight with a market downturn. Federal courts have long viewed taxes on unrealized gains as constitutionally dubious"

"The underlying wealth estimates are deeply unreliable. Because billionaire tax returns are private, Messrs. Saez and Zucman rely heavily on outside estimates of billionaire wealth. One of their favorite sources is the Forbes 400 list."

"wealthy Americans to exaggerate rather than minimize their fortunes"

"these estimates are systematically inflated."

"the pair has repeatedly asserted that the ultrarich pay a combined federal, state, and local tax rate of only 23%, supposedly lower than the 24% working-class Americans pay."

"Messrs. Saez and Zucman’s own earlier research told a very different story. In a 2018 paper published in the Quarterly Journal of Economics, their own data files showed that the top 0.001% pay an average combined tax rate of roughly 41%."

"they changed their approach and assigned the full burden of the corporate tax to shareholders alone."

"this maneuver dramatically lowers the apparent tax rate paid by billionaires." 

"they artificially inflate the tax burden borne by lower-income Americans . . . omit the EITC from their calculations."

"Jason Furman finds that the bottom 20% of Americans face an overall combined tax burden of approximately 11%"  

Mamdani vs. Bodegas

His socialist supermarkets could put New York’s little grocers out of business

By Faith Bottum of The WSJ. Excerpts:

"Many bodega owners say the mayor has betrayed them by pushing ahead with his plan to create city-owned supermarkets. The government “should be working with us,” says Francisco Marte, 59, owner of Green Earth Food in the Bronx and president of the Bodega and Small Business Association of New York. “That type of business run by the government, they never succeed. They always fail, and they fail big and with a lot of money that could have been used for something better.”"

"But five grocers are already within a two-block radius of that proposed Harlem store, with 10 more within five blocks."

Private Property, Liberalism, and Human Flourishing

Private property enables individuals to pursue happiness through their own free choices. It also shields our individual and institutional projects from arbitrary power

By Alexander William Salter. Excerpt:

"For thousands of years, human living standards were basically stagnant: in inflation-adjusted terms, world GDP per capita fluctuated around $1,500 per year. In the nineteenth century, commercial innovations, including widespread protection for private property rights, gave rise to the Industrial Revolution. This resulted in history’s only sustained reduction in human poverty. In the United States, for example, GDP per capita in 1800 had risen to approximately $2,500 per year. It more than tripled over the next century, to $8,000 per year. Near-continuous economic growth yielded a figure of nearly $50,000 per year by 2000, and nearly $70,000 today. 

Other western nations that embraced capitalism enjoyed similar increases in material prosperity. Asian nations, such as Japan, South Korea, and (more recently) China, have also benefited from embracing private property rights. These successes strongly suggest there is something universal about the relationship between private property and economic wellbeing. It’s not culturally contingent.

Our historically unprecedented level of wealth only exists because private property enables an extensive division of labor. Exponential gains in per capita GDP would be impossible, and indeed, they have never occurred in a sustained way without productivity-enhancing specialization and trade. This decentralized process for creating and exchanging wealth requires coordination. As Ludwig von Mises recognized, private property rights are vital. Without private property, trade and markets could not exist. And without markets, there would be no market prices—critical indicators of resource value in varying lines of production. Profit and loss accounting could not be meaningful without prices, meaning businesses would have no reliable way to ascertain whether they were satisfying consumer wants. It is the system of market prices, adjusting in response to supply and demand changes, that gives commercial society its unique power to create wealth. Private property is the keystone: it holds the whole market edifice together.

The greatest benefits of the price system often emerge during times of turbulence. When war between the United States, Israel, and Iran choked off shipping through the Strait of Hormuz in early 2026, the price of crude oil spiked. Refiners, shippers, and drillers across the world rerouted and searched for new supply, responding to the price shock without needing to know anything about geopolitical stakes or possible resolutions. The price carried the knowledge so that they did not have to. 

It may seem strange to use hardship to illustrate the importance of private property and prices. But in fact, it reveals why they matter. Oil became scarcer as a result of the war. That made everyone in the world poorer. Nothing can change that so long as the conflict continues. Instead, the price system allows economic actors oceans apart to find and pursue least-cost adaptations. Non-market and non-price rationing work poorly on this scale. At least with property and prices, we know where we need to change.

Private property buttresses the market process in several other ways. Building on Mises, F. A. Hayek realized that prices allowed households and firms to benefit from each other’s private and often tacit information. The price system, founded on private property, thus functions as a powerful communication and feedback system. Ronald Coase argued that market values for owned resources allowed conflicting parties to resolve their disputes by bargaining. Armen Alchian, William Allen, and Harold Demsetz pointed out that firms’ property rights to their residual income aligned the interests of producers with consumers, and that the firm itself, as an organizational form, was possible only because private property allowed for the necessary contractual structures. The immense productive capacity of contemporary capitalism, which we often take for granted, relies on practices rooted in private property.

Human flourishing obviously depends on more than material wealth. “Man does not live by bread alone.” Yet he does need bread to live. The material abundance created by markets keeps us fed, sheltered, clothed, literate, healthy, and entertained. It also provides the means for us to pursue meaningful artistic, intellectual, and moral projects. Private property is the reason we can have all of these things."

The house doesn’t always win: Why prediction markets aren’t gambling

By Steve Swedberg of CEI. 

"“If it talks like a duck and quacks like a duck, it must be a duck.” That phrase is not reserved for ducks. It is often invoked about prediction markets, where some view them as akin to gambling. Prediction markets, after all, are exchanges where participants buy and sell contracts tied to future events, including elections, economic data releases, and regulatory decisions.

The similarities to gambling are easy to see. Both involve risk and uncertainty. Both can result in gains or losses depending on whether participants correctly anticipate future events. People put money on uncertain outcomes, some participants are chasing profits, and winners collect at the expense of losers. To many, that sounds a lot like gambling.

If that were the full picture, calling prediction markets gambling would be reasonable. Indeed, that perception has fueled calls for greater scrutiny, including the Commodity Futures Trading Commission’s (CFTC) recently proposed framework to clarify the regulatory treatment of prediction markets.

At the same time, states including Nevada, New Jersey, and Maryland have argued that prediction markets must cease and desist or obtain casino-style gambling licenses to operate within their borders. Platforms such as Kalshi dispute that view and argue that federal regulation by the CFTC preempts state gambling laws, with courts so far issuing mixed rulings.

But stopping at the similarities obscures the features that matter most. The question is not whether prediction markets resemble gambling in some respects, but whether those similarities are their most salient features.

There is a reason why “the house always wins” is an adage for casinos: most gambling institutions are structured around a house that profits regardless of the outcome. The house acts as the counterparty to bettors and sets odds designed to ensure a profit margin, commonly known as the “vig.” This built-in advantage means the casino’s interests are fundamentally at odds with those of its customers.

Prediction markets operate differently because participants trade with one another in a peer-to-peer exchange, meaning that market participants take opposite sides of a contract instead of wagering against a bookmaker. While platforms may charge transaction fees, they do not take directional positions on outcomes or profit when users lose. Instead, they function as neutral marketplaces that match opposing views about future events.

Because of this structure, prices emerge from continuous competition among traders with differing information and beliefs. As new information arrives, participants can adjust or exit positions, allowing expectations to be rapidly incorporated into prices. In structure and operation, this mechanism more closely resembles a futures exchange than a casino floor — a distinction recognized in a CEI-led coalition letter on prediction market regulation.

The distinction between prediction markets and gambling becomes clearer when examining their economic function. Like most financial markets, they attract risk-takers who speculate on differences in expectations in search of profit.

That alone does not make prediction markets equivalent to gambling. These speculators play an essential role in stock, commodity, and futures markets by providing liquidity and improving price discovery. This structure shapes how prediction markets incorporate dispersed information.

Prediction markets can also serve a hedging function. Hedging is the practice of reducing exposure to risk by taking a position that gains value if an adverse outcome occurs. As CEI Director of Finance Policy John Berlau notes, businesses and organizations exposed to political, regulatory, or economic risks can use prediction markets to take positions that offset uncertainty in those areas, much like a farmer can hedge against crop failures or an airline can hedge against fuel price volatility.

In this respect, prediction markets more closely resemble other financial markets, such as futures, options, and foreign exchange markets.

Yet risk transfer is only part of the story. Unlike the recreational activity of gambling, prediction markets generate a powerful asset: real-time forecasting data. As Berlau has noted, prediction markets allow participants to translate dispersed knowledge about elections, sports, and other events into prices that reflect collective expectations.

Empirical research finds that these prices are as accurate as — and in many cases more accurate than — polls, expert judgment, and alternative forecasting methods in high-liquidity markets. The accuracy of these forecasts depends on the process of price discovery through which new information is incorporated into prices.

A London Business School study found that about 3 percent of traders account for most price discovery. That does not mean that the other 97 percent of traders are unhelpful. On the contrary, the remaining traders provide the liquidity necessary to maintain prediction markets and incorporate information into prices.

This structure closely resembles equity, foreign exchange, and commodity futures markets, where a small group of informed traders sets marginal prices while broader participation facilitates price discovery. By aggregating dispersed information into a single market signal, prediction markets can help traders, businesses, policymakers, and the public make better-informed decisions in the face of uncertainty.

The debate over prediction markets is not ultimately about wagering but about whether policymakers will regulate an institution according to its appearance or its function. Prediction markets transfer risk, aggregate information, and generate forecasts that can improve decision-making across society.

Treating them as gambling risks imposing regulatory burdens that could limit experimentation, forecasting innovation, and the development of new information markets. When regulators mistake a forecasting tool for a casino game, innovation becomes the first casualty."

Work and leisure over time

 Tweeted by Vincent Geloso.

 

The Effect of Online Sales Bans on E‑Cigarette Use

From Jeffrey Miron.

"Despite reports that they are less harmful than regular cigarettes, legislators have targeted e-cigarettes and vapes via crackdowns and online sales bans, citing a desire to protect young people.

A new study examines the effect of online sales bans on use of electronic nicotine delivery systems (ENDS). The study

used data from five national surveys conducted between 2013 and 2023 and leveraged the staggered adoption of the bans across states … [to] reveal no evidence that prohibiting online sales reduced youth e‑cigarette use. … Furthermore, these bans had a minimal effect on the frequency of use among continuing users.

The legislation was ineffective because

young people rarely used the internet to obtain ENDS products before the bans. … Although the bans significantly reduced online purchases of ENDS products, the overall reduction in youth use was less than 1 percentage point.

Indeed,

online purchases fell by 40–50 percent on average, suggesting that young people continued to obtain ENDS products online through illegal shipments … [and] shifted from online to in-person purchases and obtained more ENDS products from family and friends.

The bans also did not stop adults from using ENDS; the study shows

no evidence that online sales bans reduced e‑cigarette or cigarette use among adults, even though adults use these products at higher rates than young people."

Colorado’s Funeral (licensing) Mistake

By Alex Tabarrok.

"Today about a quarter of the US workforce are required to have a license to work in their chosen profession, up from just 5 percent in 1950. Almost always the trend has been to add occupational licensing over time, but in 1983 Colorado did something unusual: it delicensed funeral service workers such as funeral directors. Brandon Pizzola and I analyzed what happened in our 2017 paper, Occupational licensing causes a wage premium: Evidence from a natural experiment in Colorado’s funeral services industry.

What we found was that delicensing reduced wages, reduced prices, and caused a shift towards cremation rather than the more expensive mortuary services preferred by funeral directors. Here’s a key figure.

 

But that is not the end of the story. In 2023 a series of gruesome abuses came to light involving the sale of body parts, rotting bodies, and worse. Newspapers repeatedly noted that Colorado was the only state not to license funeral service workers. As a result, Colorado is relicensing funeral service workers as of 2027.

The problem is that there is no evidence that abuses were worse in Colorado. It’s easy to find similar abuses—including sexual abuse of corpses—in states with heavy licensing. Pizzola and I didn’t examine the rate of necrophilia among funeral workers in our paper (silly us), but we did cite the following:

A recent US government review of occupational licensing concluded that “the empirical research does not find large improvements in quality or health and safety from more stringent licensing” (CEA, 2015). Similarly, Colorado revisited their decision in a 1990 sunrise review that considered reinstating occupational licensing. The Colorado Department of Regulatory Agencies found that since the 1983 occupational delicensing: (1) “there had been incidents of malpractice within the profession but no widespread pattern of abuse,” (2) “[a]llegations of significant threats to the public health, safety and welfare perpetrated by the death care industry in Colorado regarding the improper disposal of human or infectious wastes had not been supported by verifiable evidence,” and (3) “claims that the public in Colorado had suffered or might suffer significant detriment due to a lack of trained mortuary science practitioners caused by the abolition of the Board were unsupported” (Colorado Department of Regulatory Agencies, 2007).

Moreover, the licensing requirements—mandating various hours of training and so forth—have very little to do with the types of abuses that generated public support for relicensing. How many hours of “don’t have sex with corpses” training is required? And the funeral director in the worst Colorado case was in fact sentenced to 40 years in jail. Isn’t that incentive enough?

People want what cannot be guaranteed: good behavior in all circumstances. And they will reach for a licensing regime if it promises that, even when such promises are empty."

Should we worry about the influence that wealthy individuals have on politics?

See Matt Zwolinski Makes Emmanuel Saez’s Error by David Henderson.

Mr. Henderson pointed out that many of Zwolinksi's examples were of corporate influence, not individual influence. And there is plenty of influence from unions like the NEA.

Excerpt:

"There were so many things to pursue here. I’ll take two. First, I live in a highly NIMBY area and I don’t notice that particularly wealthy people dominate the discussion in favor of hampering housing construction. If anything, the wealthiest people in the debate tend to be developers who want to build.

Second, Matt is quite comfortable taking away wealthy people’s money with the estate tax, which really is a death tax. What would he feel comfortable taking away from teachers and their unions so that they would be less effective in pushing in an anti-liberty direction? Their freedom of speech? I doubt it, but I don’t know his answer.

But making those points takes us away from my main point, which is that most of the lobbying is done by corporations, not wealthy individuals. There is little doubt that Disney, to take his example, would have lobbied heavily for the extreme extension of copyright even if no Disney shareholder had been particularly wealthy.

While researching my next article for Hoover, I came across something I wrote in which I had linked to a discussion in which Larry Summers asked the same question of Emmanuel Saez. Saez had failed to make the simple distinction between high-market-value corporations and wealthy people. Go to this link and follow Larry’s reasoning from the 1:06:00 point on. It’s masterful. Larry calls on Saez to give one example of a wealthy person having much less political power because the government has reduced his wealth from a very high number to a lower, but still very high, number. When Saez answers, he gives an example of a corporation, just as Zwolinski responded to me.

There is one way in which Zwolinski probably has more understanding of the relevant economics than Saez does. At the 1:10:10 point, Saez mentions robber barons as if it’s a slam dunk, showing that he doesn’t understand that the major characters listed as robbers and barons were neither. (Other than that, it’s a great expression.) My guess is that Zwolinski understands the true facts about robber barons better than Saez does."

Wealth tax equilibrium accounting

By John H. Cochrane.

"The recent Piketty-Saez-Stiglitz revival of wealth taxes, ostensibly to improve the lot of the poor, makes many mistakes. I’ll focus on one: the difference between wealth and consumption. The poor wish consumption. Turning capital into consumption must destroy the capital that produces consumption. Taxing wealth in the name of inequality will make the world, including the poor, much poorer.

Why should billionaires live high on the hog while so many still live such wretched lives? “Tax the rich, feed the poor / Til there are no rich, no more” sang the rock band 10 Years After in 1971. It’s a centuries-old answer looking for new questions. (They made a lot of money on that song! The song is more like Lennon’s “Revolution,” expressing some skepticism. I remembered the lyrics as “till there are no poor no more,” but the actual lyrics are more accurate descriptions, both of the intention and the likely effect.)

However, the vision of high lifestyle amid destitution imagines great inequality of consumption. The current outrage, and demand for confiscatory taxation, is over inequality of wealth. (And that, largely mark-to-market wealth driven by high prices.) There is a big difference.

The hard fact: Our billionaires, and now trillionaire, own wealth that is almost exclusively stock in companies they created. That wealth is almost entirely left reinvested in those companies. And the companies produce great products, innovate, and employ thousands. Just what is the problem, you might ask, but that’s not our point today.

For example, suppose Elon Musk consumes $10 million a year. It’s hard for any human to consume that much. Still, that’s 1/1000 of 1% of a trillion. At 10% per year, Musk earns that much in less than an hour.

The wealthy do not swim in Scrooge McDuck pools of money that can be handed out. And even if they did, that money, redistributed, would swiftly drive up prices rather than feed everyone. Musk’s trillion is not the ready inventory of a huge grocery store that can be handed out to feed people. And if it were, once the store was empty, the poor would be hungrier again, and there would be no store to buy from.

What would the government do if it took over Musk’s SpaceX stock? At best, the government would use SpaceX earnings to buy and hand out, say, food, rather than invest in the company. Others must then produce food and not rocket ship parts. That means reorienting the productive capacity of the economy away from investment and to consumption. It means less capital going forward. Certainly no rocket ships or AI, and all the benefits those stand to bring.

But most of SpaceX value is not a stream of profits like a railroad’s. Most of its market value is investor’s hope that in the future SpaceX will dream up new and profitable ventures. That value would go poof the minute the government took it and stopped investing. It may go poof anyway.

Perhaps you think the government, by taxing Musk and demanding cash, can force Musk to sell his stock to others who won’t implode SpaceX’s value. But where do others get money to buy SpaceX stock? In the end, it must come from other company’s earnings that won’t be invested in other companies. Again, the economy reorients from investment to consumption. Tax the rich feed the poor, till there are no businesses no more.

Perhaps you think the government can manage SpaceX “for people, not for profits.” It used to. And NASA, though one of the best government agencies, was never able to do what SpaceX can do. Socialism never did turn much of a profit for consumers.

The world’s rich consume very little of their wealth. The worlds’ poor consume a lot of whatever they have. Being poor is not fun. If we split up Musk’s $1 trillion and gave about $100 in Tesla stock to each of the world’s nearly 10 billion people, it’s a good bet they would not be content to consume only 1/10 of a cent extra per year.

There are plenty of other reasons that wealth taxation will not help. Even the billionaires’ wealth, even if it could be transferred and consumed without destroying the seed corn of our economy, is trivial. 

 

This is simply false, and innumerate. 15% of a Trillion is $150 billion. The US alone spends $1.8 Trillion on anti-poverty programs each year, to little effect. (Wolfgang Richter is probably a parody account but alot of people have been saying things like this-CM)

The biggest reason it will not work is the simple one: incentives. If you tax wealth, you tax the activities that create wealth.

Taxing billionaires is not enough. Piketty, Saez, and Stiglitz now want the rest of us to “degrowth” in order to transfer resources to the poor. That doesn’t add up either. Degrowth means producing less too. What are the poor to eat? Penury and depopulation used to be embarrassments of the socialist left. I guess they now features.

I too would love to raise the prosperity of the world’s poor. The goal is not the issue. The issue is whether the wealth tax will help or hurt.

What helps? This graph from Max Roser at Ourworldindata makes the point beautifully: 

 

The x axis is GDP per capita, not time. The y axis is the share living in extreme poverty. In fact, our lifetime has seen the greatest decline in global inequality and global poverty ever seen. What helps the poor? Growth. Capitalism and growth. Degrowth and wealth taxation will push us right back up that slope."

There was a huge collapse in wealth inequality in the UK between 1900 and 1980 (another refutation of Piketty)

By Sylvain Catherine.

"The UK graph is one of the most interesting because the historical graph with the correct denominator — % of total wealth rather than % of GDP — from the World Inequality Database, Piketty’s lab, looks so different.

There is a clear upward trend since the 1980s, but:
1⃣ The levels are far less impressive, since the top 0.001% owns roughly 2% of the nation’s wealth.
2⃣ In retrospect, levels remain much lower than the average for the 20th century.

This, of course, does not take into account that the UK has since developed a large welfare state. In particular, these graphs leave out the value of accrued pension claims from the UK state pension, something that most workers in the early 20th century could not count on.

If, instead of looking specifically at the top 0.001%, we look at the top 1%, which is more relevant for 99% of people, there was a huge collapse in wealth inequality in the UK between 1900 and 1980, and basically no change since then. And that is before taking state pensions into account. The same thing is true when you look at the top 10%.

Again, these are not my numbers, but those reported by Piketty and Zucman’s lab. The only difference is that I compute the shares correctly: the wealth of the top 1% as a share of total wealth of the UK rather than its GDP.

Every group’s wealth has increased as a percentage of GDP since 1980 because asset prices have increased: house prices notably. Using GDP as the denominator does all the heavy lifting here and is a fallacy."

 

 

The Myth of Dynastic Wealth: The Rich Get Poorer

By Robert Arnott, William Bernstein,and Lillian Wu. 

"Thomas Piketty’s Capital in the Twenty-First Century rocketed to the top of the best-seller lists the moment it was published in 2013, and remained there for months. While this feat is quite remarkable for a weighty tome on economics, it’s no mystery why Piketty’s magnum opus created such a sensation; it is clearly articulated, is accessible to the non-economist, and contains a trove of historical insights. 

We believe Piketty’s core message is provably flawed on several levels, as a result of fundamental and avoidable errors in his basic assumptions. He begins with the sensible presumption that the return on invested capital, r, exceeds macroeconomic growth, g, as must be true in any healthy economy. But from this near-tautology, he moves on to presume that wealthy families will grow ever richer over future gener- ations, leading to a society dominated by unearned, hereditary wealth. Alas, this logic holds true only if the wealthy never dissipate their wealth through spending, charitable giving, taxation, ill-advised invest- ments, and splitting bequests among multiple heirs. As individuals, l as families, the rich generally do not get richer: after a fortune is first built, the rich often get relentlessly and inexorably poorer."

Even Californians Are Saying No to New Taxes

Across the state, county and city ballot measures raising levies are trailing or have been defeated

By Allysia Finley.  Excerpts:

"the city (LA) routinely deploys firefighting crews to respond to 911 medical calls that could be handled by emergency medical technicians at much lower cost."

"In Contra Costa County . . . employee salaries and benefits have risen 47% since 2020."

"Even San Francisco liberals rejected a union-backed gross-receipts tax hike on large companies with more than $1 billion in sales in the city."

"Unions dressed up their measure as an “Overpaid CEO tax” because it would hit companies whose highest-paid executive makes more than 100 times its median employee’s pay. This political sales job worked in 2020, when two-thirds of San Francisco voters approved a similar tax. But voters weren’t about to get swindled again."

"Following the 2020 tax hike, businesses reduced their workforces in the city to minimize their tax liability. Business groups championed a 2024 ballot measure to slash the tax, which passed." 

$264 of Stuffed Flounder and Fancy Hotels: The Rising Fury Over Government Spending

‘I feel cheated.’ Purchasing-card use by public officials, including waste and alleged fraud, is stoking taxpayer backlash in cities and towns across the U.S.

By Scott Calvert of The WSJ. Excerpts:

"Municipalities routinely grant p-cards to elected officials and other employees as a way to streamline business-related purchases. What’s being targeted now is purported misuse and lax oversight. Watchdogs’ findings range from claims of wasteful spending to alleged fraud. Some local officials have pushed back, though many say they have beefed up rules for p-cards."

"In Richmond, Va., a city audit last year identified $5 million in questionable transactions out of about $21 million over roughly two years. Among them: $1,423 on a catered lunch for a training session attended by 14 employees; $738 on “drinks, desserts, popsicles, and supplies” for an appreciation event attended by 11, and a $480 business suit for an employee to wear to court." 

Requiring the SAT Test Boosts Student Success

After we started requiring entrance exams at Chapman University, graduation rates more than doubled

Letter to The WSJ. 

"I well understand the frustration of the University of California’s math and science professors who are urging that college-entrance exams be reinstated as an admission requirement (“California Professors Want Entrance Exams Back,” U.S. News, June 2).

When I became president of Chapman University in 1991, we didn’t require college-entrance exams. Many considered that a badge of honor. If, however, academic success is measured by a school’s ability to nurture its students through graduation, we were failing. Only 38% of the students who started as freshmen at Chapman graduated four to six years later. That compared to a 62% graduation rate for the top 10-ranked colleges in our U.S. News & World Report category.

The reason for our low graduation rate wasn’t hard to find. We found across a large sample of competing schools that the correlation between entrance-exam scores and graduation rates was more than double that for any other admission requirement, including high-school GPAs and class standing.

Those findings led us to require SAT/ACT entrance exams. We steadily increased the minimum admission score over the 25 years I served as president. That strategy worked: Our graduation rate more than doubled to 79% over that same period. Even more important, our faculty told me that raising the academic bar resulted in a more vibrant classroom experience and a richer campus life.

Jim Doti

Former president, Chapman University"

Why the ‘Hormuz Shock’ Isn’t the ’70s All Over Again

Things would be a lot worse absent our current energy diversity

Letter to The WSJ.

"Daniel Yergin’s analysis of the worldwide oil market in his op-ed “Energy Markets Limit the Hormuz Shock” (June 3) is right on target. Diversification of energy sources, together with normal supply and demand responses, is limiting the Hormuz shock. We are experiencing pain, but this is clearly not, as many have claimed, a historic energy crisis. Today’s oil prices, adjusting for inflation, are more than 15% below their peak four years ago, indicating that markets worked then and are working now.

Two implications follow. First, whatever Iran’s degree of control over the strait going forward, its incentive will be to keep oil flowing. Continued restrictions on shipments through the strait will erode Iran’s future influence on energy markets, much as the Organization of Petroleum Exporting Countries’ clout diminished after the shocks in the 1970s. Second, the priority must be eliminating Iran’s nuclear capability rather than reopening the strait: Closing the strait is causing a temporary energy shock, whereas a nuclear-armed Iran would pose a permanent global threat."

Edward A. Snyder

William S. Beinecke professor of economics and management

Yale University" 

Related post:

Energy Markets Limit the Hormuz Shock (2026) 

The Food Stamp Rolls Decline—Hurray

GOP reforms are paying off as more recipients work or volunteer

WSJ editorial. Excerpts:

"the food-stamp program is now returning to the levels of the bad old days of . . . 2019. Some 42.8 million Americans were enrolled in the program in January 2025, which is more than 12% of the U.S. population. The figure in January 2026 was 38.5 million. The social safety net scholar Angela Rachidi notes the program was “due for a decline” after elevated enrollment during the pandemic."

"those who receive help should hold up their end of the social contract—and work, train or volunteer at least 20 hours a week. That’s the work requirement in the program for able-bodied adults without children."

"those who leave the program because of the expanded work requirement do so for one of two reasons. One: Their earnings increase. That’s good news. Two: They refuse either to work, look for a job, or volunteer at a place like the local library part-time."

"The Agriculture Department ferreted data from 28 states and says it found nearly 186,000 dead recipients. Some 355,000 recipients were enrolled in more than one state." 

A ‘Millionaire’s Tax’ Is a Tax on Main Street

Wealth taxes like Hawaii’s disproportionately fall on small-business owners

Letter to The WSJ. 

"Your editorial “The Tax Collector’s Paradise” (May 28) is right to warn that Hawaii’s new “millionaire’s tax” won’t stop with high-income earners. In reality, higher income tax rates often disproportionately fall on small-business owners whose companies are organized as S corporations, partnerships, LLCs and other pass-through entities.

The consequences extend beyond individual taxpayers. A Stanford University study examining 30 years of Census Bureau data found that increases in individual income tax rates led to job losses, business relocations and even business closures among pass-through firms. Those are real-world costs borne by workers, families and local communities.

Small-business owners feel these pressures firsthand—and the data confirms that. A 2024 survey from the Job Creators Network Foundation found that more than one in four have considered relocating to a state with lower taxes and less regulatory burdens. Meanwhile, Federal Reserve research has found that tax increases make it more difficult for small businesses operating on tight margins to cover expenses, including payroll.

When lawmakers raise income taxes, they aren’t simply taxing income. They are changing incentives for entrepreneurs, investors and employers. Hawaii’s leaders may discover that the people who create jobs and grow businesses have more options than some politicians assume.

Policy matters, and Americans will continue to vote with their feet.

Taylor Gage

Citizens for Free Enterprise" 

We’re Preparing for the Wrong AI Labor Crisis

Mass unemployment is unlikely. AI will reorganize the white-collar corporate workforce, not destroy it.

By Stephen Lewarne. He is a professor of economics at Franciscan University. Excerpts:

"the notion that the economy faces mass technological unemployment doesn’t fit the evidence"

"the broader market continues to show relatively stable aggregate demand for labor. In March, the unemployment rate stood at 4.3%, close to both the Federal Reserve’s estimate of long-run normal unemployment and Congressional Budget Office projections for the coming decade. Total nonfarm payroll employment increased by 178,000 jobs during the month, while healthcare added 76,000 jobs and averaged roughly 29,000 new jobs a month over the prior year."

"U.S. entry-level job postings have fallen roughly 35% since January 2023, with highly AI-exposed entry-level postings declining more than 40%."

"Employer surveys indicate a substantial shift away from GPA-based screening and toward skills-based hiring. Employers increasingly emphasize demonstrated competencies, project-based experience and practical problem-solving abilities." 

[there is] "a labor-market transition more complicated than conventional automation narratives suggest." 

The Road to AI State Socialism

Bernie Sanders sees Trump industrial policy and decides to raise the government stakes

WSJ editorial. Excerpts:

"Mr. Sanders wants to force companies to hand over half of their equity to the government."

"this would be a government expropriation. It would violate the Fifth Amendment’s prohibition on government taking property without just compensation. To pay this tax, companies would have to issue new shares to the government diluting current shareholders. Or they could buy back half their shares from private investors and hand them to the government."

"One model is China’s state-owned enterprises, which are an albatross on its economy. Political favoritism and government interventions have led to economic inefficiencies. Hence China’s partially state-owned Semiconductor Manufacturing International trails TSMC and Samsung in chip fabrication." 

The Big Bob Packwood Tax Reform

The Oregon senator, who died Saturday at 93, closed loopholes and cut the top rate to 28%

By Arthur Laffer and Stephen Moore. Excerpts:

"the Tax Reform Act of 1986" [led to the] "lowering the highest personal income-tax rate—which had been 70% in 1981—to 28%. The corporate rate was slashed from 46% to 34%. The number of individual tax brackets went from 14 to two (28% and 15%)."

"nearly every Democrat voted for a 28% tax rate. Now many Democrats in Congress want to soak the rich with income tax rates as high as 50%, 60% or 70%"

"The law, on top of the 1981 Reagan tax cuts, made America a magnet for capital from around the globe. It helped launch the greatest period of wealth creation in world history over the succeeding 40 years. The Dow Jones Industrial Average closed at 1,808.35 on Oct. 22, 1986, the day Reagan signed the law. Today it is over 50,000.

Tax revenue exploded with lower tax rates. The share of taxes paid by the wealthy rose as they lost their favorite tax shelters and instead put their money to productive use. Economist Martin Feldstein, who served as chairman of the White House’s Council of Economic Advisers (1982-84), wrote on these pages in 2011 that “actual experience after 1986 showed an enormous rise in taxes paid, particularly by those who experienced the greatest reductions in marginal tax rates.”"

"nearly every other nation followed suit by slashing tax rates" 

When New Housing Pays for Old Infrastructure

Impact fees that shift costs from existing homeowners to new ones has a feel of generational and class theft

By Scott Beyer of The Independent Institute. 

"Across the United States, local governments are confronting a problem that has accumulated for decades: aging infrastructure with massive deferred maintenance. Water lines, sewer plants, roads, schools, and more need modernization and sometimes replacement. In theory, the costs should be shared broadly among those who use the infrastructure. But increasingly, jurisdictions solve these budget shortfalls by charging “impact fees” and other development extractions from new construction. This amounts to an unfair shifting of costs away from existing homeowners to new ones, in a dynamic that smells of generational and class theft.

Impact fees were first conceived as a rational planning tool. If a new subdivision required an additional water main, traffic signal, or elementary school, it made sense for the development creating that growth to fund the incremental expansion on a pro-rata basis. That logic remains sound.

But over time, government agencies have gotten carried away with impact fees and similar policies (such as proffers and special assessments). The whole concept has drifted beyond paying for marginal growth-related costs, and become a piggybank for decades of underinvestment in infrastructure that mainly serves current residents.

Tracking down data is hard, given that fees are fragmented across various schedules, jurisdictions, and project types. But the costs to developers and homebuilders, who pass them onto purchasers, are very real.

One example is in San Diego and surrounding Southern California cities. Cumulative impact fees tied there to schools, transportation, parks, utilities, and affordable housing mandates have in some cases veered into six figures per home before construction even begins. School impact fees alone currently run $5.38 per square foot for residential construction within the city’s Unified School District (which is an odd way to calculate it, since larger homes don’t necessarily produce more school-aged children – often it’s the opposite).

State policies contribute to this dynamic. For example, Proposition 13 limits property tax growth by tying annual assessments to a property’s initial purchase price. This means long-time homeowners benefit from low tax burdens and dramatic home appreciation, while buyers inherit escalating infrastructure costs that get embedded into the price of newly-constructed housing.

A similar controversy emerged in Loudoun County during the suburban boom coming from Washington, D.C. The county extracted proffers from developers in exchange for rezonings, often on a case-by-case basis that had the feel of bribery. These proffers funded road widenings, intersections, schools, parks, libraries, and public safety facilities, adding an estimated $30,000-$50,000 per unit – or in many cases much more.

For context, the median home price in Loudoun County is around $800,000 and the property tax rate is $0.805 per $100 in assessed value. This means that the typical homeowner there is paying around $6,400/year in property taxes, far less than the impact fees that new homeowners pay. It should be noted that these new homeowners, upon moving in, are then required to also pay property taxes, rendering their impact fees a sort of duplicative entry tax.

In Austin and the broader Central Texas region, explosive population growth has strained water and wastewater systems. A Texas A&M study found that the city’s development fees averaged $41,303 per housing unit for infill development, which is 2.5x higher than the Central Texas average.

Such examples abound throughout America. I’ve found that fees are generally highest in areas where NIMBYism is strong; and where new development is viewed as a quality-of-life infringement rather than an economic development benefit. Fees are also frequently used as a redistribution tool, with wealthier districts funding poorer ones.

The common thread in any of these cases is political convenience. Raising taxes broadly on existing residents is unpopular, as is increasing utility bills for all users. But charging developers and future homeowners is easy—the former is a boogeyman that garners no public sympathy, while the latter is an “invincible” constituency that has no organizing ability prior to moving into a locale.

The result is an unequal arrangement in which Gen Z and Millennial households—who account for nearly half of home purchases but have far lower net worth than older generations—are forced to shoulder disproportionate infrastructure burdens.

A better approach would fund infrastructure through direct user fees and broad-based revenue sources that distribute costs among everyone who benefits from the system. Water and sewer infrastructure should be financed primarily through utility rates tied to usage; roads through fuel taxes, tolls, or mileage-based fees; and stormwater systems by charging properties based on their impervious surface or other impacts. There should also be a clearer distinction between capital improvements that expand system capacity and routine maintenance or replacement of existing infrastructure. The latter should be funded primarily by the residents and businesses already served by those systems, not newcomers.

By blurring these categories and treating new development as a convenient source of revenue, many local governments have shifted infrastructure costs from existing users onto future residents, increasing housing costs and creating an inequitable transfer of financial responsibility from one group to another."

To Cut Taxes, You Need to Do So for People Who Pay Taxes

David R Henderson. Excerpts:

"In a June 7 post, Eugene Steuerle writes:

"That calculation gives a middle-income taxpayer receiving a $100 tax cut the same weight as a high-income taxpayer receiving a $30,000 cut."

Henderson replied "Nothing in the sentence says they get the same benefit. How would they when someone paid $100,000 in taxes and someone else paid $100, all before the tax cut?"

The Tax Policy Center had a post titled, “The 2025 Tax Bill Was Not Targeted Toward Low-Income Families.”

"Of course it wasn’t targeted toward low-income families. How could it be, when most low-income families pay little or no federal income tax and, in some cases, actually get a subsidy from the tax system? If you want to cut taxes substantially, you need to cut them for people who are paying substantial taxes."

"When I rooted around on the Tax Policy Center’s web side, I found a post that carried this:

"Consider a household that earns $20,000 and pays $1 in taxes and another that earns $2 million and pays taxes of $500,000. Suppose that legislation is enacted that provides a $1 tax cut for the low-income household and a $100,000 tax cut for the high-income household. The percentage change in tax liability is 100 percent for the low-income household but only 20 percent for the high-income household. In terms of its effect on current household resources, such a tax cut increases the after-tax income of the poor household by only 0.005 percent while increasing after-tax income of the wealthy household by 5 percent."

"Did you get that? Even if the low-income household’s tax liability were cut by 100%, the tax cut would not be tilted toward the low-income household. Why? Because that household’s after-tax income is hardly affected.

The only good thing about this statement from the Tax Policy Center is that they admit that they don’t judge tax cuts by the percentage by which taxes are cut. They implicitly judge them by whether they substantially increase after-tax income, even for people who pay almost no taxes."

Inequality at WSJ

By John H. Cochrane.  

"Andrew Blackman at Wall Street Journal asked several economists for ideas on “what to do about inequality?” As you can imagine, I argued with the question. If there is a question, it is opportunity not inequality.

Don’t kill the golden goose

It’s easy to reduce income inequality: Imprison the billionaires. Burn the evil capitalist businesses that generate their wealth and seduce us with wonders—iPhones, software, electric cars, Amazon, Walmart, miracle drugs, and so on. There, feel better?

Our billionaires kept a fraction of the benefit they generated for us by starting these innovative businesses. Their great wealth remains reinvested in those companies to serve us even better in the future. Just what is the problem?

It is right to worry about people of lesser means. But how does a kid who works at a carwash in Fresno even know how many billionaires there are, or what their net worth is?

We should worry about opportunity. Teachers’ unions destroyed his schools. Construction restrictions make moving to good jobs impossible. Business regulations, taxes, minimum wages and occupational licenses limit his opportunities. Social programs trap him by taking away a dollar of benefits for each dollar of earnings. To provide opportunity, start by getting out of the way.

Many people who worry about inequality hope to improve this kid’s life by taxing the innovators to send him a few more government checks—so long as he stays poor. But there aren’t enough billionaires to make a dent in the government’s ravenous appetite. And what a horrible vision: entrenched misery and idleness, in a stagnant society devoid of innovators, made only a bit better by a dwindling government check and dysfunctional social-service programs.

"Others who decry inequality want taxes to reduce the political power of the wealthy. But that hands even more power to the government. Fairly won inequality does not threaten democracy. Confiscatory taxation does. Don’t kill the golden goose.

*****

Forgive my brevity, there was a severe word count limit on this one. For an older and more comprehensive view, see this essay.

The other contributors were Emanuel Saez: “Tax the billionaires,” (to whom my first sentence is dedicated, with initially more colorful options), Raj Chetty: “Focus on upward mobility” (yes), Heather Boushey “Break monopolies” (Unions, more government spending), and Glenn Hubbard “Retrain workers for an AI-dominated economy” (I like Glenn a lot, but it was only 5 years ago that there was huge enthusiasm for retraining everyone to learn to code.) But you’ll have to go to WSJ for those."

Why Water Prices Are Rising

America’s water crisis is a governance problem, not a scarcity problem

By Julia R. Cartwright of AIER. 

"America is good at solving problems, but less good at recognizing when the “solutions” become the problem. Nowhere is this more evident than on your water bill, which has risen more than 27 percent over the past five years and is increasing at roughly twice the rate of inflation. Politicians and journalists point to aging infrastructure, climate change, and per- and polyfluoroalkyl substances (PFAS) contamination. They are not entirely wrong. What they often omit is how decades of well-intentioned government intervention have systematically weakened the market mechanisms that might otherwise help keep costs in check.

Consider gasoline. Drivers may not like what they pay at the pump, but the price is determined in global markets where no single regulator sets it. The market aggregates information from millions of producers and consumers and generates a price that, whatever its imperfections, reflects underlying conditions of scarcity and demand. Water operates very differently. Its price is shaped by a maze of legal doctrines, regulatory mandates, utility commissions, and interstate compacts accumulated over more than a century. Each layer places additional distance between the resource and the consumer, making prices less transparent and less reflective of underlying realities. 

This is what makes the situation so puzzling. Markets are remarkably effective at directing resources to where they are most needed. Hong Kong, Singapore, and Japan are three of the world’s most prosperous economies, yet they share one notable characteristic: a scarcity of natural resources. They possess little oil, coal, or rare earth minerals, and yet they thrive because markets reveal prices, coordinate investment, and allocate resources to their highest-valued uses. Scarcity, it turns out, is not an obstacle markets cannot overcome. It is often the very incentive that drives innovation and efficiency.

Water, by comparison, is an unusually ordinary resource. It is more abundant than oil, easier to treat than rare earth minerals, and across much of the United States, it literally falls from the sky. So why is America facing a slow-motion water crisis while Singapore can recycle wastewater to semiconductor-grade purity? The answer is not geology or climate. It is governance.

Some will argue that water is fundamentally different—a natural monopoly with relatively inelastic demand and pervasive externalities, where actions upstream affect everyone downstream. Those characteristics are real. Yet similar challenges exist in markets for oil, coal, and rare earth minerals, and markets have still found ways to move those resources across oceans to countries that possess little or none of them. To understand America’s water challenges, we must go back to a series of legal and political decisions that began before the Civil War and have compounded ever since. Let’s dive in (pun intended).

The first distortion predates federal regulation entirely. American water law split into two doctrines before the country was even fully defined. In Eastern and Midwestern states, riparian rights gave water access to whoever owned adjacent land; geography, not prices, determined access. In most Western states, prior appropriation, “first in time, first in right,” meant whoever diverted water first held the senior claim, regardless of the proximity of future landowners. Neither doctrine consistently allowed water to flow to its most productive use, as both locked allocation in place by accident of history. This was not a free market distorted by regulation, but one that was never permitted to form. 

On top of that foundation, Congress layered environmental mandates over many years. The Clean Water Act (1972) and the Safe Drinking Water Act (1974) set uniform standards every utility must meet, regardless of local conditions or costs. Each new regulated contaminant means a new compliance cost passed directly to ratepayers with no competitive check. PFAS regulations (2024) alone now add an estimated $1.5 billion annually in system-wide costs.

Meanwhile, most Americans cannot choose their water provider. One pipe, one utility, no exit.

Investor-owned utilities have learned to leverage that captivity through mechanisms that pass capital costs to ratepayers, combining the pricing power of a monopoly with limited cost discipline.

This dynamic, where customers have nowhere else to turn, creates a system ripe for upward price pressure with little accountability. And the Colorado River Compact (1922) illustrates just how deep this dysfunction runs: negotiated by political compromise, it divided water among states by seniority of claim, locking in agriculture’s consumption of 80 percent of the river’s flow simply because those rights are oldest. Meanwhile, cities that would generate far greater economic value per gallon are legally prevented from buying that water at any price. The result is a river stretched to its limits, serving yesterday’s economy by law, while growing urban centers go thirsty by design.

Decades of regulations that distorted water prices also resulted in them being too low in some 

municipalities. These layered laws subsidized the construction of entire cities in places that markets never would have chosen: dry desert cities like Las Vegas, Phoenix, and Tucson. The logic was circular: keep prices low enough that growth looks cheap, and the growth generates political constituencies that demand prices stay low. It is precisely the logic of subsidizing flood insurance for beachfront homes, except the moral hazard here is measured in millions of people and entire metropolitan economies that now require ongoing federal intervention just to stay hydrated. 

The solution is to move water more fully into the market, allowing prices to reflect scarcity and capital to flow toward conservation and innovation. In practice, that means a managed transition in which rates gradually move toward market levels, whether higher or lower. Most importantly, it means eliminating the policies that created the problem: below-cost agricultural water contracts, federal development subsidies that ignore water costs, and interstate compacts that lock 1922 decisions in place indefinitely. It also means stopping policies that make it artificially cheap to build the next Phoenix in the desert.

Your water bill isn’t rising because water has become more expensive. It’s rising because we’ve built a system specifically designed to ensure that price has little to do with it."

The Labor Share Fell. So What?

By Alex Tabarrok . 

"The share of Gross Domestic Income accruing to labor has been declining in recent decades while the share accruing to capital has been rising. In the graph below, I show labor compensation as a share of GDI (left axis). Labor share has indeed been trending down–some of this could be an artifact of the data, e.g. an increase in proprietor’s income (labor) mislabeled as capital income, more pass throughs and so forth—but for the purposes of this post I will accept that the labor share has declined. What does this mean?

 

The natural response is to think that because the share going to labor has fallen and the share going to capital has risen that there has been a transfer of income from labor to capital. That is possible but it is not the only interpretation and it does not follow mechanically from the share data.

I have also plotted total compensation to labor (in real terms) in the graph above and far from shrinking it is higher than ever and growing. Moreover the right axis is logged so you can also see that outside of recessions the growth rate of labor compensation looks quite steady (similar slope over time). (Labor compensation per member of the labor force is noisier but looks similar).

The recessions in 2008 and 2020 are worth noting because these are periods when the labor share was high and locally at a maximum! The reason, of course, is that GDI was shrinking in these periods more than labor compensation. In other words, capital takes a bigger hit than labor in a recession. This is a good reminder that a high share of GDI is not what workers most care about–a high absolute level of GDI is more important for the bottom line.

In short, the data are consistent—not proof of, but consistent with—a story in which capital has become more productive, raising output. More productive capital also raises the demand for labor, so while more of the new output goes to capital in the first instance, the pie is growing and labor’s absolute compensation has grown with it. Yes, if the shares had stayed constant and output had grown just as much, labor compensation would have been higher still. And if my grandmother had wheels, she would have been a bicycle."

Comment from Scott Sumner

"People often assume that if labor's share is falling then capital's share is rising. That is not always true, as GDI also includes depreciation and indirect business taxes, both of which have been rising as a share of GDI. So capital's share has risen by considerably less than labor's share has fallen.

Matt Rognlie showed that much of the rise in capital income has been the implicit rent on owner-occupied housing, which is not what most people think of when they hear "capital income". Another part of the rise is labor income being reclassified as capital income for tax purposes.

To the extent that inequality has increased, I suspect it's due more to a growing share of labor income going to the top 1% of earners."

The Impacts of Parole Supervision

From Jeffrey Miron.

"California, New York, and other states have lessened parole for exiting prisoners, hoping it will improve their reentry outcomes. One study of Illinois’ efforts

reveal[s] that the reform reduced the share of these prisoners who returned to prison within one year by 9–10 percentage points … This reduction was almost entirely due to a lower rate of technical revocations of supervision.

Further, there was

no evidence that the reform affected crime rates among released prisoners … [as] the absence of supervision reduced the likelihood of parolees committing crimes, offsetting any increases in crime associated with fewer technical revocations. … [Also,] longer terms of parole supervision diminish the benefits of lawful behavior because parolees face the ongoing threat of technical revocation.

The researchers also

conducted policy simulations to estimate the impact of reducing existing … [parole for low-to-medium offenders] by half. … [The] findings indicate that such a reform would reduce the average prison population by roughly 3 percent and likely cause no harm to public safety.

Altogether, the study

demonstrate[s] that existing parole systems increase reincarceration rates through technical violations of supervision conditions without bolstering public safety."

A cut in the corporate income tax rate leads to a larger expansion of clean firms

See The Environmental Bias of Corporate Income Taxation by Luigi Iovino, Thorsten Martin and Julien Sauvagnat.

"Abstract

We study the relationship between corporate income taxation and carbon dioxide (CO2) emissions in the U.S. We show that CO2-intensive firms benefit more from the tax advantage of debt, and pay lower income taxes on their capital income. Building on these new facts, we provide evidence that a cut in the corporate income tax rate leads to a larger expansion of clean firms. We develop a multi-sector general equilibrium model that accounts for our evidence and quantify the impact of corporate tax reforms on aggregate emissions. A policy that eliminates the tax advantage of debt could reduce aggregate emissions without affecting GDP."

After 40 Years, No One Has Produced a Workable Single-Payer Health Care Plan

Vermont passed single-payer legislation in 2011 and abandoned the plan after three years of failure. Why?

By Veronique de Rugy. Excerpts:

"Brookings Institution economist Jessica Riedl has spent years waiting for one [a workable legislative proposal for single payer]. Her challenge is simple: Show us a progressive bill that specifies (a) a provider payment system that actually saves money under America's existing, already expensive health infrastructure, and (b) a financing mechanism to replace the roughly $32 trillion in private premiums and out-of-pocket costs that would need to be covered by federal taxes over the next decade."

"Despite hundreds of legislative proposals and multiple presidential campaigns built around the issue, no one has met the challenge."

"the proposals are only aspirational. They enumerate generous new benefits with great enthusiasm and then instruct the secretary of Health and Human Services to figure out the rest. The phrase "The Secretary shall" appears 62 times in the Sanders bill alone."

"European countries built modest, government-controlled health infrastructures from the ground up over several decades. They contained costs—meaning, among other things, they rationed care—as they expanded access. America did the opposite.

We built the most expensive, technologically advanced, sprawling health system in human history, which consumes nearly 20 percent of gross domestic product (GDP), under mostly private incentives and market pricing. As Riedl puts it, "We cannot simply pay European prices for the more vast American health infrastructure that exists."

The central theory of single-payer savings has always been this: Slash payments to providers to offset the surge in the use of universal, no-cost-at-point-of-service coverage. The Congressional Budget Office (CBO) took a serious look at this fantasy. Its conclusion was that national health expenditures might actually rise, and demand for care would outrun supply. The final result would be European-style rationing, delays, and forgone services, all leading to worsening health care.

Then there's the inconvenient question of how to get the tax revenue needed for a single-payer system to replace private health care premiums, out-of-pocket expenses, and state health programs. Although neither Sanders nor Jayapal has an answer, the Committee for a Responsible Federal Budget does. Financing a Sanders-style system would require a new 32 percent payroll tax, a 25 percent income surtax, or a 42 percent value-added tax, more than doubling every individual and corporate income-tax rate.

The CBO found that such a system would reduce GDP by 6 percent to 10 percent by 2030. From a movement that claims to care about working Americans, that number deserves more than silence.

The state-level record confirms what the nasty arithmetic and voters' disgust tell us. Vermont passed single-payer legislation in 2011 and assigned an expert commission to make the numbers work. After three years of failure, Gov. Peter Shumlin abandoned the plan, admitting that the required 11.5 percent payroll tax per company plus the 9.5 percent income tax per Vermonter (with small businesses paying both) would be politically unsurvivable even in Sanders' home state. Colorado voters rejected their single-payer initiative in 2016 after analysis showed that even tripling taxes wouldn't cover the costs.

Back in California in 2022, the state's nonpartisan legislative analyst estimated that the proposed single-payer system created by the California Guaranteed Health Care for All Act would cost between $494 billion and $552 billion annually. Imagine the taxes needed to more than double that state's spending overnight.

After the bill died without a vote, Assemblymember Ash Kalra (D–San Jose) reintroduced it in February 2026, and it failed to advance again a few months later. California has now killed single-payer twice in four years."

American Idle: The Work Ethic Goes Out of Style

One in 3 working-age American men aren’t so much as looking for a job

By Jason Riley. Excerpts:

"1 in 3 men were neither working nor looking for a job in April. Among males 20 and older, the 66% labor-force participation rate is down from 73% in 2006"

"the work rate for men 20 and older fell by more than 13 percentage points between 1965 and 2015."

"the fraction of men without jobs of any sort in the broad twenty-to-sixty-four group went from 10 percent of the total to almost 22 percent"

"the percentage of wholly jobless prime-age men shot from 6 percent to nearly 16 percent"

"It results . . . from an unwillingness to search for work" 

"work rates and LFPRs for white men today are decidedly lower than they were for black men in 1965"

"labor participation rates of married black men twenty-five-to-fifty-four are higher than for never-married white men in the same age group"

"foreign-born males who come to the U.S. in search of work also tend to have higher work rates"

"Neither married men nor immigrants are stealing these jobs"

"The more likely culprit is a social safety net full of generous government benefits that allow men who won’t work to subsist"

"Welfare and disability programs . . . are easily gamed by design" 

"Good" union contracts lead to job losses

See JD Vance Courts Sean O’Brien and the Teamsters by Allysia Finley. Excerpts:

"In the 2023-24 election cycle, 92% of Teamsters PAC donations to federal candidates went to Democrats, as did 91% of the union’s contributions to party committees."

[there was] "a report in February accusing two former Teamster officials of treating the union credit card “as a blank check to permit them luxury living without limit,” including restaurant tabs for meals with friends topping $3,000."

"In 2023, Yellow Corp., one of the country’s largest trucking companies, sought financial concessions from the Teamsters to stay in business. Mr. O’Brien refused and tweeted an image of a gravestone reading “Yellow 1924-2023.” The company filed for bankruptcy, and 22,000 Teamsters lost their jobs.

After threatening UPS with a strike that summer, Mr. O’Brien won a deal that increased average compensation for full-time drivers over five years to $170,000 from $145,000, including zero healthcare premiums and as much as seven weeks of vacation. Rising labor costs prompted UPS to cut 34,000 nonmanagement jobs last year, with another 30,000 planned for this year."

 

Free market policies lowered poverty in Peru

See The Left Aims for an Andean Comeback by Mary Anastasia O’Grady. Excerpt:

"Peru’s shift over the past 20 years toward policies that support open markets, private initiative and macroeconomic stability has dramatically improved living standards. The share of Peruvians living below the poverty line fell to 25.7% in 2025 from 58.7% in 2004." 

Energy Markets Limit the Hormuz Shock

The world’s supply of fuel is much more diversified than it was during the energy crises of the 1970s

By Daniel Yergin. Excerpts:

"Today there is much more variety in world oil and natural gas than during the 1970s. The shale revolution has transformed the U.S. from the world’s largest importer of oil to the world’s largest producer of oil and natural gas and largest exporter of liquefied natural gas.

Overall, the Western Hemisphere now produces more oil than the Middle East did before the crisis. Canada is the world’s fourth-largest oil producer. Brazil produces four times as much oil as Venezuela; and in Guyana, where production began only seven years ago, output almost equals Venezuela’s. In Argentina’s Vaca Muerta region, shale oil production has grown sixfold since 2020. The current disruption will propel more oil and gas investment in the Western Hemisphere and Africa."

"Saudi Arabia built variety in the form of a pipeline system that now moves 7 million barrels of oil a day west to the Red Sea. Abu Dhabi built a pipeline looping around the Strait of Hormuz and plans to double capacity by 2027. France, which once depended on oil for electric generation, now relies mainly on nuclear. Japan led the development of the LNG industry to push oil out of its electric generation."

"Previous crises showed that markets themselves also contribute to energy security. They adjust faster than governments intervening to manage markets, which can make matters worse.

The U.S. gasoline lines of the 1970s weren’t the result of the crises themselves. Rather they were manufactured by government policies: price controls and clumsy, bureaucratic allocation systems that dispatched gasoline to well-supplied regions and yanked it from regions in short supply."

Global Warming or Just Getting Old?

A World Health Organization panel calls climate change a global health emergency but forgets to adjust its data for age

By Bjorn Lomborg. Excerpts:

"Heat mortality risk rises sharply with age, and Europe has aged dramatically. Since 1990, the share of Europeans over 70 has increased by 78%. Aging alone explains virtually all the observed increase in heat deaths."

"Any honest analysis of mortality in a rapidly aging society uses age-standardized death rates"

"Europe’s standardized heat-death risk has changed only marginally since 1990"

"the increase amounts to fewer than 850 additional heat deaths"

"Age-standardized data shows that cold death rates in Europe have declined by nearly 50% since 1990"