Colin Grabow writes that the Biden administration’s last-minute “USTR report on China’s maritime subsidies offers thin evidence and flawed logic.” A slice:
The officials’ less-than-neutral stance would perhaps be forgivable had the new USTR report supported its conclusion in favor of the petitioners with compelling facts and argumentation. But that’s not what was delivered. While the report provides voluminous evidence of Chinese market abuses and accurately notes the depressed state of the US shipping and shipbuilding industries, it fails to establish any causal relationship between the two.
Instead, the report’s findings are based on scant relevant evidence and questionable logic. Rather than first establishing facts to inform a carefully considered judgment, the USTR report smacks of a document hastily released to advance a predetermined conclusion beneficial to the outgoing administration’s political allies.
Even the report’s press release is flawed. In it, US Trade Representative Tai states that the United States currently ranks 19th in the world in commercial shipbuilding, while in 1975 it ranked number one with an annual production of over 70 ships.
None of these numbers are correct.
In 2023 (the most recent year for which data are available), the United States ranked 14th. Notably, Tai’s 19th place figure is mirrored in the 2024 petition’s first page (the US position in 2015), while her own USTR report placed the US at 16th (the US position in 2022). As for US performance in 1975, that year’s US Maritime Administration’s annual report shows the United States ranked twelfth—a far cry from first place—with 20 ships delivered (see page 68).
Tai’s inaccurate numbers are sloppy, but they’re small beer compared to the report itself, which—while mangling some facts of its own—fundamentally errs in concluding that China plays a meaningful role in US maritime misfortunes.
Taped in late January, I here tangled – over trade policy – with Coalition for a Prosperous America’s Jeff Ferry.
Scott Winship explains that “the American dream is not a coin flip, and wages have not stagnated.” Two slices:
Sadly, debates about living standards and opportunity often bog down in technical arguments about measuring income and prices. And the measurement issues make a big difference, as we will see. However, there are good reasons to prefer some methods over others, and those methods often show that living standards have increased more than is appreciated.
Unfortunately, these debates are technical, and it is easy for doomers to dismiss the methods they do not like. Rather than get into the weeds, it is easier to claim the mantle of populism and tell Americans they “are right to believe their lyin’ eyes.”
The problem for the populists is that subjective measures strengthen the case for the methods that disprove the doomer narrative. We can see this by digging into [Raj] Chetty’s view that achieving the American dream is tantamount to a coin flip.
His claim summarized the headline finding from a paper published with his colleagues at Opportunity Insight (OI): only 50 percent of children born in 1984 ended up with higher family income at age 30 in 2014 than their parents had at the same age. That was down from over 90 percent of children born in 1940. Less conspicuously, however, the paper included other estimates, using different methods to measure income and prices, suggesting that this “absolute mobility” remained above 50 percent. As we’ll see, his data are consistent with mobility being well above that level.
Fortunately, a number of polling organizations have asked Americans directly over the years whether they believe they are better off financially than their parents were at the same age. We can compare those responses to objective measures of absolute mobility using different methods and see which are most consistent with each other. That can tell us whether the methods that technical arguments favor are also most consistent with subjective measures of absolute mobility. That, in turn, gives us information about how to measure real income and wage trends accurately.
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What do these results tell us about income and wage stagnation claims? We’ve seen that adjusting income for family size and measuring price change using the MACPI produces absolute mobility estimates that better align with what Americans say about their mobility. The OI data allow for annual estimates of the typical (“median”) 40-year-old’s family income. Using the methods that produced OI’s headline results, the income typical of a 40-year-old rose by just 15 percent between 1979 and 2019 (both business cycle peaks). However, using the MACPI to adjust for the rise in the cost of living, the increase was 52 percent. If we also adjust for changing family size, the increase was 73 percent. These estimates all involve pre-tax income and exclude government benefits.
We can also revisit [Oren] Cass’s complaint about wage stagnation using the lessons learned here. His claim comes from his data analysis using a price measure known to have major flaws for assessing long-run trends. In recent analyses, I showed that when using that price index, the hourly wages of the typical worker rose by just 2 percent from 1973 to 2023. Using the OI-preferred price index, the increase is a little better—14 percent—but not great. However, using the MACPI, the increase was 60 percent. (Wage analyses typically don’t adjust for family size.)
The doomers are left in a pickle. They want to argue that the methods with the best technical arguments behind them present too rosy a view of how Americans are doing. They want to appeal to the incongruence of these estimates with how Americans supposedly say they are doing. But it turns out that the best methods do better matching Americans’ actual views. There’s a great irony here: to maintain their position that social science is wrong about how the economy is doing, doomerists must also accuse everyday Americans of having lyin’ eyes.
Wall Street Journal columnist Mary Anastasia O’Grady isn’t impressed with the Trump administration’s diplomacy in the Americas. Three slices:
President Trump’s second term wasn’t a month old when administration officials traveled to Latin America to break bread with two of the Western Hemisphere’s most notorious police states: Venezuela and El Salvador.
Both visits celebrated “America first,” the same logic behind the president’s threats to wage a trade war with Canada. But coddling these authoritarian regimes, both of which are hosts to China’s Belt and Road Initiative, while picking fights with Ottawa will have negative consequences for U.S. interests in the region
At the Munich Security Conference Vice President JD Vance bemoaned the status of free speech in Europe. Things are far worse in Venezuela and El Salvador.
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The endorsement of El Salvador’s President Nayib Bukele by Secretary of State Marco Rubio is more puzzling. During a visit to San Salvador, Mr. Rubio heaped praise on Mr. Bukele. A country “once known for violence and for the inability to live openly and freely with one’s family and enjoy life,” Mr. Rubio said, “has now become one of the most secure in the hemisphere thanks to his leadership.”
El Salvador’s homicide rate has come down. But it has also become one of the least free countries in the region.
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Meantime, Mr. Trump continues to treat Canada as if it’s the greatest threat to U.S. stability since the Soviet Union. And that’s fine by Prime Minister Justin Trudeau’s Liberal Party, which is rising in the polls ahead of an election it appeared certain to lose. As Canadians circle the wagons, the Liberals are the biggest beneficiary of Mr. Trump’s juvenile attacks on Canadian sovereignty and trade. A tariff war will harm Canada and he thinks he’s funny calling it a state. But under Trump foreign policy, progressives and dictators, from the Arctic to Tierra del Fuego, may get the last laugh.
Ezra Levant is correct: “Trump’s tariffs help Trudeau and Canada’s liberals.” A slice:
Even the economic pain that tariffs threaten to bring is useful for Mr. Trudeau. His policies during his nine-year tenure devastated the economy with high inflation, tax hikes, budget deficits and falling real per capita income. Now, Mr. Trudeau can blame Canada’s economic woes on Mr. Trump.
The two main candidates to succeed Mr. Trudeau as Liberal leader are even more bellicose. Chrystia Freeland, Mr. Trudeau’s longtime deputy, released a Jan. 18 ad bragging about how much Mr. Trump hates her. Mark Carney, a climate activist and former central banker, sounds as if he’s campaigning in the U.S. rather than in Canada. He tweets far more about Mr. Trump than Mr. Poilievre, calling the U.S. president a “bully.”
Mr. Trump’s talk of annexing Canada is designed to yank Mr. Trudeau’s chain. Ironically, it has strengthened Mr. Trudeau and revived Canadian anti-Americanism.
Are tariffs fit for Canada? What would an America-first trade strategy look like there? And—thinking like a real estate mogul for a moment—is there even room for the art of the deal?
Mr. Trump’s main complaint is America’s trade deficit with Canada. But that’s attributable to oil imports, by far Canada’s biggest export to the U.S. Most of that oil comes from oil sands in Alberta. Tariffs can’t relocate oil sands to America.
Megan McArdle tells truth about the MAGA Jacobinism now afoot in Washington. A slice:
The left, not the right, picked this fight. Too many institutions set themselves up as the “Resistance” to Trump and tried to make a lot of mainstream political opinions anathematic, while expecting to be protected from backlash by principles such as academic freedom that they were no longer honoring. This was politically naive and criminally stupid for institutions that rely so heavily on U.S. taxpayer support.
Academia at least should have known better, given that it has entire departments devoted to studying how politics works. It has long been clear that cuts to research funding could be the first step if Republicans were so minded. The student loans and Pell grants that subsidize tuition could be slashed, the tax rules that let elite institutions accumulate massive endowments could be changed, and in red states, government aid to public schools could be reduced. The resulting budget holes would be calamitous in many cases and would filter through the ecosystem even to schools that survived: If small schools stop hiring new faculty, that means fewer jobs for graduate students from large research universities.
Nonetheless, school administrations began issuing left-wing hot takes on news that played to the culture war, and students agitated, often successfully, to de-platform right-wing speakers and punish students or faculty who deviated from progressive orthodoxy. Milquetoast professional opinions and legitimate research were retracted under pressure from activists. Scientists marched against Trump — not as private citizens but as scientists, as if lab work gave them some special moral authority. Public health experts issued a “get out of lockdown free” card to George Floyd protesters, and the American Anthropological Association issued a statement explicitly conceiving its discipline as a form of progressive activism. What was going on in the rest of academia made it clear anthropologists weren’t alone in thinking that way.
Bob Graboyes has an interesting proposal for governing presidential pardons.
