The Editorial Board of the Wall Street Journal reports that Trump’s tariffs are hampering the performance of the American economy. A slice:
President Trump says tariffs will usher in a new era of American prosperity, but the U.S. economy isn’t sharing the anticipatory enthusiasm. A variety of indicators in recent weeks show a slowdown in first-quarter growth, which suggests this is an especially bad time to add new taxes and economic uncertainty.Initial claims for unemployment benefits jumped 22,000 last week, while consumer spending slowed sharply in January. The housing market remains in mediocre shape. A surge of imports in January, as businesses try to get ahead of tariffs, suggests how companies are trying to hedge against border taxes.
All of this has moved the Atlanta Federal Reserve’s GDPNow growth estimate for the first quarter to -1.5%. That scorecard is volatile and changes as new real-time data arrive, but Wall Street forecasters have also been reducing their growth estimates.
This isn’t cause for panic, but it is for tariff caution. Mr. Trump is promising to impose his 25% levies on Mexico and Canada this week, which will send auto and other North American supply chains into chaos. China gets hit with another 10% border tax, with European cars up next, followed by reciprocal tariffs on most of the world.
A tariff is a tax, and taxes impose costs that reduce economic activity. They also add uncertainty about where and how businesses should invest, as CEOs try to figure out where the tariffs will strike, on which goods, and for how long. Will there be exceptions?
At his Facebook page, GMU Econ alum Mark Perry offers what he accurately calls this “narrative destabilizing fact”:
Samuel Gregg explains that “a realist account of the human condition lends support to classical and conservative liberals.”
My intrepid Mercatus Center colleague, Veronique de Rugy, ponders how Milton Friedman would run DOGE. A slice:
Yet I can’t shake the feeling that the administration may not be playing the long game. It isn’t because the cuts will be minuscule compared to what truly needs to be cut. Neither is it because the DOGE team is causing chaos. Any serious effort to cut down the size of government is bound to be chaotic because it throws a wrench into the usual functioning of government and pushes against the desires of many special interests.
My trepidation boils down to two things. First, for all the talk about cutting government waste and fraud, the DOGE-Trump team seems mostly animated by rooting out leftist culture politics and its practitioners in Washington. It feels that it is less about smaller government than it is about political transformation. While the two intersect, this strategy could fall short.
That’s in part—and this is my second point—because for those of us who care about permanently downsizing government and keeping it bound by constitutional rules to prevent the exercise of arbitrary power, DOGE is mixed. While there is a small probability the approach will succeed in reining in spending or the administrative state, it will be at the heavy cost of reinforcing the power of the executive branch and opening the door to the same abuse when the left is in power.
Brian Albrecht warns against the potential move by Trump & Co. to remove the market value of government production from calculations of GDP. Two slices:
Let’s put aside Musk’s confusion about what GDP includes—it’s government production—goods and services actually produced—not spending, which is mostly transfers like Social Security payments. Defining GDP to now be “GDP – G” is a truly terrible idea.
Let’s be clear. The Bureau of Economic Analysis (BEA) tells us that GDP “measures the value of the final goods and services produced in the United States (without double counting the intermediate goods and services used up to produce them).” You may read “value” to be the giveaway, but it is really “market value” or “market sales.” GDP isn’t meant to measure consumer surplus—it measures a country’s total economic production.
The key concept is that GDP measures final output. It doesn’t matter who buys that output—consumers, businesses, the government, or foreigners. As long as it’s a final good or service produced domestically, it counts.
Government spending represents real economic activity involving real resources, producing goods and services that actually exist in the economy. When a government builds a highway, purchases military equipment, or pays teachers, these activities create actual economic value—whether you personally value them or not.
…..
Here’s the most bewildering part of this proposal: we already have exactly what these officials are suggesting. The BEA regularly publishes measures of private sector output that exclude government spending. The BEA publishes this data alongside GDP in its national accounts. Anyone who wants to track private sector performance separately from government activity can already do so.
Jon Miltimore identifies “the scientific fallacy that spawned covid absolutism.” A slice:
Economic hubris, bad science, and raw state power unleashed a period of madness. It wasn’t just that the state’s non-pharmaceutical interventions didn’t work. They often didn’t even make sense.
Near the five-year anniversary of the sudden rise of covidian authoritarianism, Phil Magness reflects on that madness and evil. Three slices:
No less than Anthony Fauci would go on record about the unwisdom of lockdowns, telling CNN on January 24, 2020, that they were “something that I don’t think we could possibly do in the United States, I can’t imagine shutting down New York or Los Angeles.” Fauci then reiterated his doubts in relation to lockdown measures being implemented in China at the time, “because historically when you shut things down it doesn’t have a major effect.”
In just six weeks’ time, nearly the entirety of the US public health profession, including Fauci, would jettison the previous century of scientific literature attesting to the ineffectiveness of lockdowns. Instead, they rushed to embrace the previously-deprecated approach of simulation modeling, and used it to place the majority of the world under mandatory quarantine. Five years later, we still have no clear answers for why this sudden, sharp reversal happened, let alone accountability for the public health officials who made the call to change course.
If any single event warrants credit for swaying the public health profession over to lockdowns, it is the publication of Report No. 9 by the epidemiology modeling team at Imperial College-London on March 16, 2020. The brainchild of Neil Ferguson, a computer scientist and physicist with no medical training, the Imperial College model forecasted catastrophic mortality figures in the coming months if the world’s leading economies did not go into immediate lockdown to contain Covid-19. The initial models projected 510,000 deaths in the UK and 2.2 million deaths in the United States by late July 2020 unless each country adopted a suite of NPI measures to shutter businesses and schools and restrict public gatherings. Ten days later, Ferguson’s team expanded their model to approximately 189 countries and other defined political boundaries. The expanded Imperial College report predicted similar levels of catastrophic death in almost every nation on earth, absent immediate measures to impose society-wide lockdowns.
…..
Neil Ferguson, dubbed “Professor Lockdown” in the press, saw himself elevated to an all-knowing sage of pandemic modeling whose careful scientific guidance to governments averted the very same astronomical death tolls that his models predicted. A simple Google search would have revealed that Ferguson was no disease-modeling Cassandra. Rather, his track record had more in common with a Y2K bug alarmist. Ferguson had a long history of publishing models with similar catastrophic projections for every public health scare of the past two decades. In the early 2000s, he hyped a Mad Cow Disease pandemic in Britain that would supposedly yield death rates in the hundreds of thousands. Then came a model for Mad Sheep Disease with similar tolls. Then, in 2009, a swine flu model predicted one-third of the earth would be infected in a matter of months. Over and over again, Ferguson’s previous models failed to pan out.
The Covid forecast from Imperial College Report No. 9 was no different from Ferguson’s previous alarmist projections, and peaking under the hood of this study revealed its fundamental shortcomings. Although it was touted to the world as the product of cutting-edge supercomputing, the “new” Covid model turned out to be a hasty and clunky adaptation of an earlier pandemic influenza simulation study that Ferguson and his team published in 2006. Its design employed a probabilistic agent-based simulation wherein estimated human contact rates in a fixed population were said to determine disease transmission. The resulting product had more in common with the “Sim City” video game of the late 1990s than an advanced supercomputer projection of Covid-19’s known characteristics.
…..
So why did public health fail to course-correct during Covid amid mounting evidence that lockdowns were not working as claimed? Allow me to suggest an answer rooted in public choice economics and a prescient observation from centuries past. In times of crisis, the public often demands action with little regard for its efficacy. Public officials, in turn, are happy to oblige in the furtherance of their own authority, prestige, and allocations from the public treasury.
