by Scott Sumner, The Pursuit of Happiness, February 5, 2025.
Excerpt:
I recently spoke to some Bentley University students (via zoom) about my views on the Great Recession. In this post, I summarize the substance of my talk. Long-time readers will have seen these arguments, but this blog has attracted some new readers who have asked me to justify contrarian claims such as, ”Tight money caused the Great Recession.” Here (in bold print) are 18 common misconceptions about the Great Recession:
DRH note: Like his long-time readers, I’ve seen Scott make these arguments. This is the first time I’ve seen them in one place.
by Alex Tabarrok, Marginal Revolution, February 4, 2025.
Excerpt:
My take is that there is an evolving new consensus on the minimum wage. Namely, the effects of the minimum wage are heterogeneous and take place on more margins than employment. Read Jeffrey Clemens’s brilliant and accessible paper in the JEP for the theory. A good example of the heterogeneous impact is this new paper by Clemens, Gentry and Meer on how the minimum wage makes it more difficult for the disabled to get jobs:
Alex quotes Clemens, Gentry, and Meer:
We find that large minimum wage increases significantly reduce employment and labor force participation for individuals of all working ages with severe disabilities.
DRH note: I’m glad to see that Clemens, Gentry, and Meer looked at the bad effects of the minimum wage on severely disabled people. From July 1986 to January 1987, I was the economics editor of National Review. My job, assigned to me by William F. Buckley, Jr., was to write two short unsigned pieces for every biweekly issue. They took all my pieces but one and rarely changed them. One of the two exceptions was my editorial on this issue: I expressed upset at the effect of the minimum wage on disabled people and gave an example from my hometown, Pacific Grove. The editor kept the piece but edited out the emotion: I still think that was a mistake.
by Ezra Klein, New York Times, February 2, 2025.
Excerpt:
I had a conversation a couple [of] months ago with someone who knows how the federal government works about as well as anyone alive. I asked him what would worry him most if he saw Trump doing it. What he told me is that he would worry most if Trump went slowly. If he began his term by doing things that made him more popular and made his opposition weaker and more confused. If he tried to build strength for the midterms while slowly expanding his powers and chipping away at the deep state where it was weakest.
But he didn’t. And so the opposition to Trump, which seemed so listless after the election, is beginning to rouse itself.
There is a subreddit for federal employees where one of the top posts reads: “This non ‘buyout’ really seems to have backfired. I’ll be honest, before that email went out, I was looking for any way to get out of this fresh hell. But now I am fired up to make these goons as frustrated as possible.” As I write this, it’s been upvoted more than 39,000 times and civil servant after civil servant is echoing the initial sentiment.
In Iowa this week, Democrats flipped a State Senate seat in a district that Trump won easily in 2024. The attempted spending freeze gave Democrats their voice back, as they zeroed in on the popular programs Trump had imperiled. Trump isn’t building support; he’s losing it. Trump isn’t fracturing his opposition; he’s uniting it.
DRH comment: I’m not sure Klein is right, but it’s an interesting perspective. Time will tell.
by Joanne Jacobs, Thinking and Linking, February 3, 2025.
Excerpts:
Louisiana, never known for education excellence was the big winner on the 2024 NAEP when it comes to progress in the last few years, writes Chad Aldeman. “It was the closest state to recovering from COVID-related declines in 8th grade reading and math, and it was the only state in which fourth-grade reading scores were higher in 2024 than in 2019.”
And:
The state will not waste time “chasing shiny things,” says Brumley. Teachers will not be asked to serve as social workers or nurses. “Smart, responsive school systems are thinking about ways to be more efficient and allow their teachers as much time on task as possible.”
Some of the NAEP reporting assumes Louisiana’s success is all about teaching the phonics part of the “science of reading,” writes Natalie Wexler. There’s a lot more. The state has ensured that “educators understand the connection between reading and knowledge.”
DRH comments: First, I love the phonics part. That’s how I learned to read, before I got to Grade One. (Thank goodness we didn’t have kindergarten in my small rural Manitoba town. That way I got one additional year of freedom.) Second, I’ve been impressed by Joanne Jacobs, and her focus, for a few decades. I first met her at a Hoover conference on education in the mid-1990s. Here’s her bio. When I met her, she was with the San Jose Mercury News.
Recommended Readings on Free Trade Versus Protectionism
by Williamson M. Evers, January 24, 2025.
Economists, going back to Adam Smith and David Ricardo, are virtually unanimous that free trade benefits consumers and the overall economy. But there exist special interests who would gain in the short run from protectionist barriers. And there is a large segment of the public that doesn’t understand the arguments for free trade. Not surprisingly, there are politicians who are all too willing to gain votes by catering to protectionist interests.
People, farms, firms, and factories in America should be able to trade freely with people, farms, firms, and factories across international boundaries. You should, for example, be able to buy shoes made in Ethiopia. Economist William Niskanen stresses the moral case for free trade: Individuals have the right “to make consensual arrangements across national borders.” Without governmental interference, such voluntary interaction is harmonious and mutually beneficial. People don’t trade unless they believe they will be better off afterwards.
Much international trade can be explained by comparative advantage. Economist Donald J. Boudreaux explains that “the chief nontrivial insight” found in the idea of comparative advantage is that an economic concern’s “technical ability to produce a product” is, by itself, “irrelevant” for resolving whether “that entity should produce that product itself” or “acquire that product by first producing something else and then trading that something else” for the desired product.
DRH comment: As with everything Bill Evers does, this set of readings is extensive and impressive.
by Jack Nicastro, Reason, February 6, 2025.
Excerpts:
President Donald Trump announced his promised tariffs on Saturday and paused those levied against Mexico and Canada on Monday for 30 days. In addition to threatening to impose double-digit duties on all products imported from Canada, Mexico, and China(whose tariffs took effect on Tuesday), each of the president’s executive orders eliminates duty-free exemptions for low-dollar-value imports, known as de minimis exemptions. Eliminating these exemptions would increase the price of goods from international bargain brands enjoyed by cash-strapped consumers.
De minimis is Latin for “concerning trifles,” per Merriam-Webster. The aptly named exemption applies to shipments “imported by one person on one day having an aggregate fair retail value in the country of shipment of not more than $800,” according to U.S. Customs and Border Protection (CBP). The Congressional Research Service (CRS) reports that the U.S. imported $54.5 billion worth of de minimis products in 2023, 34 percent ($18.4 billion) of which came from China.
Chinese e-commerce firms Temu and Shein had grown to make up 17 percent of the entire American discount market by 2023, according to the CRS. These discount brands contract with Chinese firms to make and ship goods directly to consumers, avoiding expensive tariffs via de minimis, explains Bloomberg. This business model caters to lower-income Americans who are willing to wait weeks instead of days to save more of their hard-earned dollars. Eliminating the de minimis exemption means that the cheap consumer goods sold by these brands will be subjected to the additional 10 percent duty on Chinese products, some fraction of which will inevitably be passed on to American consumers.
The rule announced by CBP to carry out Trump’s executive order imposing duties on China goes even further, requiring formal inspection for all mail shipments from China “without regard to their value.” Christine McDaniel, senior research fellow at the Mercatus Center, tells Reason that this will require CBP to subject roughly 917 million more parcels to formal entry, a process so complex that CBP recommends importers outsource it to third-party brokers (whose services cost around $100). McDaniel says processing so many more parcels “could be prohibitively costly in terms of resources for CBP.”
The accompanying pic is of Joanne Jacobs.
