On Friday, Kevin Warsh will be sworn in as the seventeenth Chair of the Federal Reserve Board of Governors, after being confirmed by the Senate in a tight 54-45 vote last week. After a politically contentious end to former Chair Jerome Powell’s term, Warsh must find the just-right policy path to balance economic data favoring monetary cooling and political pressure to turn up the heat.

Since serving on the Board during the financial crisis, Warsh has been known as an inflation hawk. But his tune changed to secure the nod from President Trump, who has not been sheepish about where he wants interest rates: lower. The data make that a difficult deliverable for the newly minted Fed chair. 

Inflation remains persistently above the Fed’s two-percent target. According to the latest Consumer Price Index, inflation is 3.3 percent higher than a year ago. Taking out food and piping-hot energy prices due to the Iran conflict still puts inflation at 2.8 percent. And the Producer Price Index, what businesses along the supply chain pay before price pressures hit consumers and show up in CPI, came in at sizzling six percent — the highest since December 2022. 

Taken with the recent positive jobs report, the price data has markets thinking rate hikes are more likely by year’s end than cuts. What’s a Warsh Fed to do? 

Warsh’s hope had been that a productivity boom from AI would spur enough economic growth to absorb the inflation in the system and allow for the president’s desired interest rate cuts. But there are several complicating factors. 

First, the energy price shock and tariffs continue to put pressure on prices. Even if the Fed should look through these supply shocks, the calculus changes when those shocks start changing people’s expectations on the demand side. 

Second, price pressures are coming from the demand side. This can be seen in two places. Consumer services prices — which are largely driven by items not directly impacted by tariffs or energy, like shelter, medical services, and auto insurance — are up 3.3 percent. And overall spending in the economy, a good proxy for aggregate demand, is exceeding its neutral level. For both gauges of demand-side pressure, the culprit here is the Fed’s rate cuts in late 2024 and late 2025 — not the latest supply shocks. 

Between the Middle East conflict pushing up energy prices, tariff prices being passed on to consumers, and the Fed having pumped more money into the economy, it’s no surprise that inflation and inflation expectations are on the rise.

Importantly, as inflation rises, real interest rates will passively loosen monetary policy — without the Fed doing a thing. 

Since real interest rates are equal to nominal interest rates minus inflation, as inflation gets higher and nominal rates stay the same, real rates decrease and ease monetary conditions. For example, if you take the nominal federal funds rate of 3.63 percent and subtract inflation of 3.5 percent (using the Fed’s preferred PCE metric), real rates are a mere 0.13 percent. That’s more than 50 basis points lower than in January. As it stands, the Fed may need to tighten just to stay neutral. 

It’s a tough environment for Warsh to be selling rate cuts in, to be sure. It’s an even tougher pitch to convince the President that rate hikes are needed to offset growing price pressures.

Warsh is in a bit of a muddle. But he could turn it to his advantage. The Fed has multiple tools to make monetary policy less easy. Its interest rate target is only one. Another is its balance sheet. 

The Fed’s large balance sheet has long been a bugbear to Warsh. He has been critical of the Fed for not having reduced it sufficiently post-financial crisis and giving the Fed an outsized credit footprint in the economy. In an environment where tightening is called for but rate hikes are politically unpalatable, the Fed can shrink its balance sheet. It can do so gradually by resuming its passive quantitative tightening — letting maturing assets roll off, or by selling. 

On a spectrum of palatability, selling assets is probably even more sour than hiking rates to both Trump and financial markets. But choosing a passive runoff may be just the solution for an economy in need of monetary tempering, while a president demands low rates and financial markets worry. 

If his first monetary decision is between a passive balance sheet runoff or deliberate interest rate hikes, Warsh will be in much less hot water if he chooses the balance sheet path. 

Can Warsh convince other Fed officials to come along? Several Federal Open Market Committee (FOMC) voting members already wanted to remove the easing bias in the FOMC statement. With new data showing a steady labor market, inflation starting to scald, a resilient consumer, and strong economic growth, those members may support some tempering using the balance sheet.

At a minimum, as soon as the next FOMC meeting in June, the easing language in the Fed’s statement will likely come out. Signaling a passive balance sheet runoff next would be the simplest step back toward a neutral monetary policy stance and show that Warsh is already delivering on (some) of his promises.

On the other hand, if a Warsh Fed continues the Powell Fed’s “wait and see” approach, it risks repeating the Fed’s late-to-the-inflation-party performance post-pandemic. We already know that the monetary punch is hot. While the president and financial markets might complain that rate hikes are too cold, the Fed should at least water things down by letting the balance sheet run off. If it waits, the alternative will be a bucket of ice in massive rate hikes like Powell dumped in 2022. Warsh should prefer to cool the punch bowl down now before he’s forced to whisk it away.

Is libertarianism cracking up? Pick almost any contested political issue of the moment, and you’ll find prominent self-identified libertarians on opposite sides of it. On immigration, the Cato Institute’s Ilya Somin has spent the last several years arguing that libertarian principles require something close to open borders. Lew Rockwell, founder of the Mises Institute, has spent the same years arguing that they require the opposite. On Israel and Gaza, Walter Block has been an unabashed defender of Israel’s military operations on libertarian grounds; Dave Smith, working from what he takes to be the same principles, has been an equally vocal critic.

On the larger question of whether libertarianism should renew its old fusionist alliance with cultural conservatism, Reason‘s Stephanie Slade has made a careful and sympathetic case for fusionism — including in a forthcoming book of that name; her colleague Elizabeth Nolan Brown has been a consistent voice for the more “libertine,” socially liberal version of the tradition. None of these disputes is between a “real” libertarian and an impostor. Each is between recognized, self-identified libertarians who reach opposite conclusions about what libertarian principles require. Are these still the same movement?

The instinctive answer, in each of these disputes, is to say no — that whichever side has reached the unfamiliar conclusion has stopped being libertarian in any meaningful sense. Each camp accuses the other of having abandoned the tradition’s true principles, each is sure it knows what those principles require, and each writes the other out of the family. I want to suggest a less satisfying but more honest answer: that the disputants on both sides of these arguments are continuous with the libertarian tradition, and the reason none of these disputes admit of clean resolution is that the tradition was never as philosophically coherent as libertarians have tended to assume.

Coalitions and Competing Creeds

The most useful lens I’ve found for thinking about this comes from a recent book by Hyrum and Verlan Lewis called The Myth of Left and Right. The Lewis brothers argue that “left” and “right” aren’t coherent ideologies. They’re tribes — coalitions whose positions shift across time and place because the tribes come first and the philosophies get reverse-engineered to fit. Conservatives went from being free traders to protectionists, hawks on Russia to doves, opponents of federal power to its champions, and the shifts only look puzzling if you assume there’s a fixed essence underneath the label. There isn’t. The Lewis brothers aren’t writing about libertarianism. But their framework predicts exactly the kind of fracturing libertarianism is now visibly going through.

As John Tomasi and I document in The Individualists, the history of the libertarian intellectual tradition bears this out. The term “libertarian” first emerged in the 1850s as a self-description for a French anarcho-communist who thought private property and the state were two sides of the same coin. By 1913, Charles Sprading was using it to describe a tent that included Republicans, Democrats, Socialists, Single-Taxers, Anarchists, and Women’s Rights advocates. By the mid-twentieth century, under the influence of Leonard Read and the Foundation for Economic Education, it had narrowed to mean support for free markets and limited government. By the 1970s, the Nozick-Rand-Rothbard synthesis had narrowed it further still — to a particular form of rationalist, rights-based, free-market absolutism. Then, in the 1990s and 2000s, the label fragmented again. Bleeding-heart libertarians, left-libertarians, paleolibertarians, neoreactionaries — all under the same tent, none in agreement about what the tent contains. The current crackup isn’t an aberration. It’s what libertarianism has always done.

This wouldn’t be possible if libertarian principles really did the work of generating definite political conclusions. They don’t. Consider property rights, the closest thing libertarianism has to a settled core. Libertarians who all claim to be defending property rights have disagreed radically about what those rights require. Spencer and Spooner thought intellectual property was a straightforward extension of property rights; Benjamin Tucker thought it was an affront to them. Henry George thought land was categorically different from other property, justly owned by the community; Rothbard called that view “intellectually and morally beneath contempt.” Benjamin Tucker thought legitimate property in land required ongoing occupancy and use; Nozick thought original appropriation generated permanent rights. The principles do some real work — they rule out, for example, the more extreme forms of state socialism. But they aren’t powerful enough to settle the contested questions of our politics. A commitment to property rights doesn’t tell you what property is, how it gets acquired, whether it’s inheritable, or what to do when property-based claims conflict.

A Faustian Bargain?

This indeterminacy is on vivid display in the live debate now consuming much of the libertarian world: whether libertarians can legitimately make use of illiberal means to advance liberal ends. One wing of the movement has rallied behind the administration’s assault on the administrative state. Randy Barnett — the constitutional scholar who led the legal challenge to Obamacare — has urged libertarians to take the methods on display seriously rather than dismiss them. On a February 2025 Reason podcast that posed the question directly — should libertarians celebrate or be concerned about DOGE? — Barnett’s answer was substantially the former: that the regulatory state has grown so insulated from democratic accountability that breaking it open by executive action is constitutionally defensible and strategically welcome. In a New York Times op-ed with Ilan Wurman the same month, he argued that Trump’s executive order ending birthright citizenship for the children of unlawful immigrants has “the better of the constitutional argument.” Behind these specific positions lies what Barnett has elsewhere called the need for a libertarian “theory of the second best” — a libertarianism better fitted to a nonideal world of competing nations and entrenched institutions, willing to take the imperfect openings that real politics offers rather than insist on a first-best that isn’t on the menu.

The other wing has reached the opposite conclusion. In a February 2026 New York Times op-ed titled “Libertarians: We Told You So,” Reason editor Katherine Mangu-Ward argued that Trump-era governance has “vindicated libertarian warnings about executive power, civil liberties, and the risks of trading principle for partisan advantage.” The accusation cuts both ways: the wing that has cheered DOGE has, in her telling, sold the libertarian commitment to limited and accountable government for a temporary regulatory victory. Writing in The Bulwark, UnPopulist editor Shikha Dalmia put it more bluntly. Libertarians, she argued, “have abdicated just when they were most needed” — and the movement is “becoming a zombie ideology, unable to draw fresh moral sustenance even as it uses up its existing reserves.”

Similar fault lines have opened up over tariffs, deportation, and the administration’s treatment of universities and law firms. Reason senior editor Brian Doherty wrote that Trump’s first year had been “a libertarian nightmare.” Jack Hunter, writing in AIER’s own Fusion, called the same year “a libertarian triumph.” Both sides cite libertarian principles. Both believe themselves to be the legitimate heirs of the tradition. The dispute isn’t a disagreement about whether liberty matters; it’s a disagreement about institutional pathways, empirical bets, and which sociological anchors a libertarian’s instincts should track.

That’s the live form of the indeterminacy. It can’t be resolved by appealing to first principles, because the first principles are exactly what both sides claim to be defending. It can only be resolved — to the extent it can be resolved — by careful argument about particular questions: what executive power actually does to constitutional order over time, what immigration restrictions actually do to economic and political freedom, what alliances with the cultural right actually do to the prospects of liberty in the long run. Those are empirical and prudential questions. They aren’t axiomatic ones, and treating them as if they were is what gives the current crackup its bitter, unproductive character.

The Case for Intellectual Humility

What does all this mean for those of us who still call ourselves libertarians? Not, I think, that we should give up the label. The libertarian tradition contains real philosophical insights and remains a powerful corrective to the centralizing instincts of modern politics.

It does mean, however, that we should hold our libertarian views in a somewhat different spirit — less as conclusions deduced from a single axiom, more as provisional positions arrived at through careful thinking about particular issues, with libertarian principles as one important input among others. On some questions that thinking will yield confident conclusions. On many it will yield humility. That, I’ve come to believe, is the stance that actually follows from taking libertarian principles seriously, once you see that they were never powerful enough to do the work that ideological certainty requires of them.

High school history curricula often portray feudalism as a quaint medieval relic — a cautionary archetype of concentrated power, conditional rights, and extractive hierarchies that suppressed human flourishing for centuries. As ever, though, the deeper lesson of history is its recurring nature: when property rights erode and rent-seeking supplants open competition, societies reliably drift back toward feudal arrangements. 

American medicine today offers a vivid illustration of this pattern, as government-created barriers sustain local monopolies, nonprofit hospital systems function as modern lords, and physicians relinquish professional autonomy in exchange for the illusory security of salaried fiefdoms. The result is contemporary serfs in white coats serving within tax-exempt citadels.

A Primer On Feudalism

In the medieval manor, a lord granted a vassal a fief — a plot of land — in exchange for loyalty, military service, and a share of the harvest. Serfs tilled the soil with little claim to its fruits. The system was rigid, hierarchical, and extractive. Today, a parallel structure has emerged in American healthcare, not through sword and oath but through certificates of need, Medicare payment rules, and tax-exempt status amidst the backdrop of massive mergers and acquisitions.

Non-profit hospital systems function as modern feudal lords. Physicians have become their vassals, granted small fiefdoms — department chairs, service-line leadership roles, or simply in employed practices — in return for allegiance to the system’s revenue machine. This is the neofeudalism of medicine, born out of crony capitalism and regulatory capture.

Feudalism’s formal titles — king, duke, baron, knight, vassal, serf — reflected a chain of reciprocal obligations rooted in land tenure. Lords owned the means of production; vassals administered justice and defense; serfs provided labor. The system endured for centuries because property rights were conditional and fragmented. Allodial title — true private ownership free of feudal dues — was rare. Markets were stifled. Innovation lagged. The decline of feudalism accelerated in the late Middle Ages and early modern period precisely because secure private property rights emerged. The rise of towns, the enclosure movement, and the commercialization of agriculture allowed individuals to own, improve, and trade land outright. Money economies replaced barter and service. The bourgeoisie accumulated capital. Centralized monarchies and later liberal states enforced contracts and reduced arbitrary exactions. As Douglass North and other institutional economists have shown, well-defined, transferable property rights unleashed entrepreneurship and growth. Serfdom withered not because of royal decree alone, but because free exchange proved more productive. Feudal ties dissolved when individuals could keep the full fruits of their labor.

Medicine’s Drift to Neo-Feudalism

Medicine once mirrored this liberalizing trend. Post-World War II, most physicians owned or partnered in independent practices. They controlled their schedules, negotiated directly with patients and insurers, and bore the risks and rewards of their craft. Private property in medical practice — autonomy over one’s office, staff, and patient relationships — fostered competition and innovation. That world is vanishing. Today, nearly 78 percent of US physicians are employees of hospitals, health systems, or corporate entities. Private practice has collapsed into a shrinking remnant.

The new lords are sprawling tax-exempt “non-profit” health systems. These entities enjoy at least $37 billion  annually in federal and state tax breaks — property, income, and sales tax exemptions — while operating with margins and executive compensation packages that rival for-profit corporations. Many run massive investment portfolios and for-profit subsidiaries. Their community-benefit spending often falls short of the value of their exemptions when measured rigorously; some profitable systems deliver minimal charity care relative to their tax windfall. 

Government policy supplies the moat around these castles. Rule after rule and regulation after regulation favors the big conglomerates. The regulatory reach adds to the lords’ dominion.

Certificate-of-need (CON) laws are still on the books in about 35 states plus DC, requiring regulatory approval before new hospitals, surgery centers, or even MRI machines can open. Incumbent systems predictably oppose competitors’ applications, turning state boards into tools of rent-seeking protection. Without CON, independent physicians and ambulatory centers could challenge hospital dominance. With it, local monopolies flourish.

Once entrenched, these systems wield two powerful economic weapons: the 340B Drug Pricing Program and site-of-service payment differentials. Enacted in 1992 to help safety-net providers serve low-income patients, 340B allows qualifying hospitals to purchase outpatient drugs at steep discounts — often 20-50 percent or more — then bill insurers or Medicare at full list price. In 2024, covered entities purchased $81.4 billion in 340B drugs. But studies and reports show the windfall frequently funds facility expansion, acquisitions, and executive pay rather than expanded charity care for the intended populations. Contract pharmacies amplify the arbitrage. The program has become a hidden tax on patients, employers, and manufacturers, with limited transparency on how savings reach the vulnerable.

Site-of-service differentials complete the trap. Medicare — and many commercial payers — reimburse the identical service at dramatically higher rates when performed in a hospital outpatient department (HOPD) instead of a physician’s independent office. A clinic visit, imaging study, or minor procedure in an HOPD can command 125 to 300 percent more reimbursement. Hospitals therefore acquire physician practices, rebrand them as HOPDs, and capture the facility-fee markup. Patients are sometimes seeing the same doctor in the same building but for twice as much.

Physicians are increasingly likely to be employed by these healthcare entities — not because they want to, but because the structure and rules are tilted that way.

The physician receives a salary or production bonus but loses ownership. The patient pays higher coinsurance. Independent practices cannot compete on price because the payment rules themselves favor the hospital flag. Vertical integration explodes. Horizontal mergers compound the effect. Markets once served by several competing hospitals see them consolidate into single dominant systems: one or two health systems control the entire market for inpatient care in half of American cities. Research consistently shows that such mergers raise prices five to 20 percent or more — with little or no improvement, and sometimes deterioration, in quality. Cross-market mergers demonstrate similar price effects after several years.

The physician-vassal’s daily reality reflects the bargain. A neurosurgeon or cardiologist may receive a competitive base salary, malpractice coverage, and administrative relief from his affiliation with a hospital. In return, the doctor must (directly or indirectly) refer patients only within the system, meet RVU targets that prioritize volume over value, and accept corporate dictates on electronic health records and formulary restrictions. They must accept care pathways optimized for margins, rather than patient outcomes. Dissent risks contract non-renewal, often triggering noncompete clauses. 

True entrepreneurship — opening an ambulatory surgery center or cash-pay spine clinic —  requires profound courage and near-inevitable litigation within the framework of CON. The independent doctor who once embodied the free professional has become a salaried cog in a revenue-extracting machine.

A Freer Alternative

Reversing neofeudalism in medicine demands restoring property rights and competition — the very forces that ended medieval feudalism. Policymakers should repeal CON laws nationwide, as several states already have with measurable price reductions and new market players. Implement full site-neutral Medicare payment for outpatient services, leveling the field so independent practices can survive. Reform 340B with transparency mandates, patient-definition tightening, and caps on windfall profits unrelated to charity care. Stop the unnecessary ban on physician-owned hospitals that provide better care at cheaper costs. Antitrust enforcement must scrutinize both horizontal and vertical mergers with renewed vigor. Tax-exempt status for hospitals should be performance-based, tied to verifiable charity care and community benefit exceeding the exemption’s dollar value.

Physicians are not serfs by nature; they are highly trained entrepreneurs stifled by regulation. Patients deserve choice, not tribute to the local castle. The same free market principles that dismantled feudalism can dismantle this one — if policymakers have the courage to let property rights and competition do their work. The alternative is a healthcare system where lords grow richer, vassals grow compliant, and everyone else pays the price.

Judging by the headlines, Ted Turner, who died earlier this month at age 87, will be remembered as an adventurer and visionary: creator of CNN, and with it the 24-hour news cycle, the inventor of the satellite-supported national TV superstation, a distinguished sailor, a generous conservationist, and a reputed playboy. He adored women so much that he produced five children with them, incidentally breaking faith with one of his core values: population control.  

When Turner was born on the eve of the Second World War, just over two billion people inhabited the earth. That number increased three-fold by 2000. For Turner, who had internalized the cataclysmic “overpopulation” fears of the Cold War, such growth in living, breathing souls was not a success, but a looming catastrophe. His goal was to first “stabilize the population,” then ideally reduce it to around two billion.  

Toward his vision of a world with fewer children, Turner was a generous donor to the United Nations Population Fund (UNFPA), Planned Parenthood, and the Guttmacher Institute. In 2004, the Planned Parenthood Federation of America presented him with the Margaret Sanger Award, which recognizes “leadership, excellence, and outstanding contributions to the reproductive health and rights movement.” 

Turner wasn’t the only billionaire philanthropist pouring money into population control. In 2009, he met privately in New York City with Bill Gates, David Rockefeller, George Soros, Warren Buffett, and others to discuss how they could use their wealth to curb overpopulation and fight climate change. They were known as the “Good Club,” The Guardian reported, and they wanted to “save the world.” 

Despite their anxieties about other people’s fecundity, the neo-Malthusian billionaires in attendance had, like Turner, been quite fruitful in their own reproductive behavior: Rockefeller had six children; Soros had five; and Gates and Buffett each had three. While sources described Gates as the “most impressive” speaker, Turner was the most outspoken and attempted to “dominate” the meeting.

His outspoken rhetoric certainly wasn’t limited to elite secret gatherings. At a climate luncheon in 2010, he urged world leaders to adopt China’s one-child policy, insisting that, “If we’re going to be here [as a species] 5,000 years from now, we’re not going to do it with seven billion people.” 

While lauded as an optimist, Turner believed humans were headed for a nightmare future unless they took drastic action against alleged overpopulation and climate change. He predicted a doomsday scenario of civilizational collapse, with famine, death, cannibalism, and very few survivors living in a “failed state like Somalia or Sudan.” The earth’s temperature is rising, he claimed, because “too many people are using too much stuff.”  

Meanwhile, as an adventurer, he afforded himself a lavish and abundant lifestyle, flying his Bombardier Challenger 300 private jet a distance of nearly 80,000 miles in 2022 alone. His aircraft that year surpassed the combined emissions of 34 average Americans.

Turner’s hypocritical and apocalyptic mindset reflected the zero-sum ideology of twentieth-century neo-Malthusians such as Stanford biologist Paul Ehrlich, co-author of the 1968 bestseller The Population Bomb, which boldly asserted that hundreds of millions of people would starve to death in the 1970s due to overpopulation. Turner admired Ehrlich and derived his two-billion world population ideal from Ehrlich’s estimation of earth’s “carrying capacity.”   

This outlook received bipartisan support in Washington throughout the 1960s and 1970s among “Rockefeller Republicans” like Gerald Ford and Henry Kissinger as well as environmentalist Democrats like Jimmy Carter. Neo-Malthusian ideas were institutionalized within the State Department and USAID, operating under the misguided assumption that rapid population growth inhibited economic development and constituted a threat to US national security and economic interests. Food aid was even conditioned on developing countries’ willingness to implement population control policies.  

The neo-Malthusian consensus wasn’t shattered until the Reagan administration declared rapid population growth a “neutral phenomenon” rather than a barrier to development at the UN’s 1984 World Population Conference in Mexico City. Economist Julian Simon, who argued that “the ultimate resource is people,” was instrumental in shaping the Reagan administration’s renewed approach to population policy.  

In 1990, Simon triumphed over Paul Ehrlich in a ten-year wager on the prices of five metals. Ehrlich, betting that population pressures would diminish resources and spike commodity prices, lost to Simon’s more optimistic view that human knowledge, innovation, and resource substitution would produce greater abundance and lower prices over time.  

Simon is no less correct today than he was in 1980 when his wager against Ehrlich began. The “time prices” of basic commodities — denoting the amount of time someone must work to earn enough money to purchase a given item — have continued to shrink, owing much to population growth and the expansion of the rule of law, property rights, and economic freedom.  

Contrary to the assumptions of Turner and the neo-Malthusians, population growth hasn’t exacerbated famine, poverty, and disease. Nor has it necessarily hastened global warming. As economists Dean Spears and Michael Geruso documented in their 2025 book After the Spike: Population, Progress, and the Case for People, no theoretical or historical relationship exists between population size and particulate air pollution. Whether the human population stabilizes or declines, global warming is forecast to proceed. “Billions of lives lived would make a small difference to this big problem,” they said.  

Addressing and overcoming challenges like climate change requires sustained technological progress, which is enabled by more free minds, not fewer. Turner wanted to limit both human numbers and human freedom, but his Malthusian views embodied a discredited consensus that applied a yeast-in-a-petri-dish model to the study of human population.  

This dismal perspective, which assumes people will breed themselves into oblivion, doesn’t take into account the better angels of our nature: our rationality, ingenuity, and adaptability unparalleled by any other species. But it reveals a lot about how Malthusians think about their fellow humans — not as sovereign individuals possessing inherent rights and dignity, but rather as an infestation requiring systemic control. As Julian Simon pointed out, this worldview isn’t predicated on scientific facts but on “value judgments about the worth of human life.”  

Simon’s intellectual archnemesis, Paul Ehrlich, preceded Turner in death by less than two months. These two Malthusian giants departed our resourceful earth at a time when roughly two-thirds of people live in countries with sub-replacement fertility rates, meaning the average woman is having fewer than 2.1 children. The depopulation they so fervently sought — and funded — has at last become a reality. 

But it comes at a price. Countries are not only facing spiraling debt and deficits spurred by population aging and worker shortages, but also a dearth of love, care, and support for the elderly. In countries like Japan, those who fulfilled Turner’s wish and had only one child — or perhaps none — are increasingly dying alone and undiscovered for days, weeks, or even months. It’s a sad and overlooked outcome of depopulation, but luckily for Turner, who suffered from Lewy body dementia, he had five children, along with billions of dollars, to support him in his final years of decline and dependency.

When Henry Hazlitt wrote in Economics In One Lesson that “Economics is haunted by more fallacies than any other study known to man” he knew what he was talking about. Economic fallacies abound — and are even popular. What’s worse, economic illiteracy seems to only increase. In part, this is due to economists trying too hard to be scientific and help policymakers engineer the economy.

Many consider the well-known words of Lord Kelvin obvious, that “when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.” That sentiment has been taken to heart by many in the sciences, both natural and social, and also in economics. 

After all, without the ability and use of mathematics and statistical data analysis, science would not be able to contribute much knowledge at all. Yet there are limits to the usefulness of measures, as Goodhart’s Law suggests: “When a measure becomes a target, it ceases to be a good measure.”

It is actually even worse in economics, where the use of measures can arguably be a cause of widespread economic illiteracy.

An example of this is the frequent references to inflation in the business press. Experts eagerly note how anything from weakening demand to supply shocks and trade policy will change the inflation rate. The same can be claimed about economic growth, which apparently can not only be generated by economic policy but where government spending “causes” or is essential for economic growth — regardless of how the money is spent.

Both are examples of how economic understanding suffers from what Charles Goodhart recognizes. Inflation is real and so is economic growth, but both are economic concepts with real meaning. In order to investigate them, economists invented statistical constructs — the CPI and GDP, respectively — to simulate approximate measures of the concepts. But both are imperfect. 

Inflation used to be understood by economists as the general rise in prices due to the dilution of money. Hence Milton Friedman’s claim that “inflation is always and everywhere a monetary phenomenon.” Prices always fluctuate, but that is just the market’s price mechanism. Inflation was distinct: the effect on prices overall from meddling with money (basically, counterfeiting).

Economic growth explains the increase in the wealth of a nation, which economists understand as the productive capacity. When this capacity increases, the economy can more easily satisfy consumers’ wants. We are richer as a result. 

In both cases, the measures are fundamentally flawed but provide some insight into change over time. The CPI captures some of the general rise in prices, but looks at the outcome without recognizing the cause. This has misled people, experts and laymen alike, to believe that increasing prices means inflation. But rising prices can have many causes, often entirely normal upstream effects. A sad result of attempting to measure the outcome is that, for example, a war that affects production “creates inflation.” But higher oil prices are not inflation. This is something that no reasonable economist would have even considered, but now it is presented as a supposed “insight.” 

Similarly, the GDP gives an indication of an economy’s productive capacity, but also includes government spending on supposed public goods that are heavily subsidized or provided “for free.” In other words, it appears as if government spending, regardless of what the money is spent on, “creates growth” because it increases GDP. Such spending does not need to actually increase productive capacity — it can even harm productivity — yet still be interpreted as “economic growth” because of its effect on statistics.

Both are examples of how Goodhart’s Law applies — and in fact undermines our economic understanding. This is readily recognizable in how supposed experts claim that price ceilings, or any government effort to control prices (usually by prohibiting high prices), “fights inflation” or that government waste (by virtue of spending) “contributes to economic growth.” They focus entirely on the official statistic, which was originally a poor measurement of a well-understood economic concept, and anything that affects this statistic. But the understanding of the concept is all but lost. And, in fact, they run with it and in the process invent new economic fallacies in order to come across as insightful.

Economics thus remains haunted by fallacies. Rather than dispelling the fallacies or informing policy, some economic indicators and their analyses generate economic illiteracy.

The legal foundation for taxing every import into the US has now rested, at various points in the past year, on a 1977 emergency powers law, a 1974 statute designed for a monetary system that no longer exists, and — if the administration’s next move is what trade lawyers expect — a Depression-era provision that has never once been used to impose actual tariffs in almost a century. At some point, running out of legal justifications is a signal worth heeding.

In February, the Supreme Court ruled that President Trump’s sweeping IEEPA tariffs were unlawful. The Court’s rebuke was clear: Congress had not clearly delegated that kind of sweeping tariff power to the executive branch, and the President “enjoys no inherent authority to impose tariffs during peacetime.”

Before the ink was even dry on that opinion, the White House signed Proclamation No. 11012 and imposed a new 10-percent tariff on basically every imported good. This time, the administration cited Section 122 of the Trade Act of 1974 and the so-called “balance-of-payments authority.”

In a 2–1 decision, the Court of International Trade struck that one down, too.

Section 122 and the Next Legal Fight

Section 122 of the Trade Act of 1974 was written for a monetary world that no longer exists. Prior to this statute, several foreign currencies were pegged to the dollar, and the dollar was, in turn, pegged to gold at $35 per ounce. This changed in 1971 when President Nixon severed the dollar’s link to gold and, in turn, hit the world with a 10 percent surcharge on imports. Congress, watching all of this happen in real time, wanted to give the president a narrow, carefully-defined emergency power to impose temporary tariffs when the US faced specific, identifiable, and measurable monetary crises.

The statute authorizes the President to act to deal with “larger and serious United States balance-of-payments deficits.” This phrase had a precise, technical meaning. Economists measured the balance of payments using three specific metrics: the liquidity balance, the official settlements balance, and the basic balance. Without going into too much detail, these tools were designed to track whether the US had enough gold and reserves given the dollar’s fixed exchange rate.

With a floating exchange rate system and fiat money, however, these measures are all but obsolete. The Bureau of Economic Analysis stopped reporting them in 1976, just two years after the Trade Act of 1974 (and with it, Section 122) was enacted.

Gleaning from the court’s ruling, the Trump administration argued that the “balance-of-payments deficit” is a living concept that should be updated for modern conditions. Today, they said, the correct measure is the current account deficit.

Courts Question the President’s Premise

The Court of International Trade was not convinced by this argument. The court reasoned that Congress used specific words that had specific meaning in 1974, and that their job is to interpret what those words meant when they were written, not to update their meaning in light of the world today. As the court put it, “the ‘balance of payments’ as an accounting principle always nets to zero. 

To the extent that is the case, if the President has the ability to select among the sub-accounts to identify a balance-of-payments deficit, unless every sub-account is balanced, the President would always be able to identify a balance-of-payments deficit.” In footnote 33, they go further, saying, “Defendants argue that ‘the balance-of-payments current account [is] the only reasonable measure of a balance-of-payment deficit.’ This argument lacks support in either the statute’s text or legislative history. Defendants’ position is the President has discretion to identify any actionable deficit for purposes of Section 122(a)(1). But Section 122 would lack an intelligible principle if the President could simply identify any deficit account, or if the phrase ‘balance-of-payments deficits’ could change with context.”

In other words, the court pointed out that if it accepted the government’s premise, any President could always point to a “deficit” somewhere and, on that basis, justify tariffs. In a system with an unconstrained imagination, that is no real limit on presidential power. As we have seen in recent years, courts have been increasingly reluctant to accept broad, open-ended delegations of Article II authority to the executive.

Why Most Plaintiffs Lost

The court’s ruling issued a permanent injunction — essentially an order to “stop it” — but it applies only to the actual importers who brought suit, not to every plaintiff in the case. Specifically, the injunction covers the State of Washington, which imported goods through the University of Washington, a small New York spice company called Burlap and Barrel, and a Florida toy company called Basic Fun.

The other plaintiffs were dismissed for lack of standing because they could not show they directly paid the tariffs, only that they might face higher costs as downstream purchasers. The court found that too speculative. Those claims were dismissed without prejudice, however, meaning the plaintiffs are free to refile if they can later establish proper standing.

The Latest Legal Theory: Section 338

The game of whack-a-mole that we have seen vis-à-vis tariff policy is certainly not going to stop. The Section 232 tariffs on products such as steel and aluminum remain in place and could still be expanded or modified, and the administration has already begun the process of implementing Section 301 tariffs. But there is another tariff authority that could be used as well: Section 338 of the Tariff Act of 1930.

This section gives the President the authority to impose tariffs of up to 50 percent on imports from any country that “discriminates” against US commerce. Unlike IEEPA and Section 122, this is an unambiguous statute that allows the president to do so. The very first line of the section reads, “the President when he finds that the public interest will be served shall by proclamation specify and declare new or additional duties as hereinafter provided.”

This as-yet-unused authority has three features that make it the likely next step in the tariff saga. First, it allows for tariff rates up to 50 percent. This is already higher than most of the IEEPA tariff rates that were imposed before they were struck down. Second, it only requires that the President “finds as a fact” that a foreign country is discriminating against US commerce, with no mandatory investigation, no notice-and-comment period, and no notification to Congress required. Third, it allows the President to issue a total ban on imported goods from a country that does not relent in response.

Given all of this, the obvious question is “why didn’t the President use this authority to begin with?” There are a few potential reasons. First, any tariff rates announced are not allowed to be implemented for a period of at least thirty days after the proclamation is issued. While the president famously issued extensions, pauses, and delays in rolling out several of the tariffs he announced throughout 2025, this thirty-day period does mean that the authority granted here is not as immediate as the President may have liked.

Second, the statute assigns the US International Trade Commission with the duty to “ascertain and at all times to be informed whether any of the discriminations against the commerce of the United States…are practiced by any country; and… to bring the matter to the attention of the President, together with recommendations.” Because of this, it’s not clear that the President can act unilaterally and at his discretion or if he needs some pro forma report from e.g. the US Trade Commission before he can act. Could he, for example, raise tariffs on Switzerland because he didn’t like the way their former president talked to him without US Trade Representative Jamieson Greer recommending that he do so? It’s unclear.

Finally, sweeping tariffs of the sort that the administration seems to prefer are legally difficult under Section 338. The statute requires that the tariffs be country-specific and must be designed to “offset” any damages done. This makes it harder to implement broad, sweeping tariffs, though, as we saw last summer, the White House is perfectly able to use mail-merge to send letters to numerous countries announcing new tariff rates, perhaps obviating this concern.

Which Will Run Out First — Courts’ Patience, or the President’s Claims to Authority?

The problem the President is going to run into is that he has now tried and failed to claim open-ended tariff authority twice. It is clear that courts are reading congressional delegations very carefully and very narrowly. If the President tries to use a Depression-era statute designed to address discrimination to reconstruct the IEEPA tariffs, he will almost certainly face a very skeptical bench. If it looks like IEEPA, walks like IEEPA, and sounds like IEEPA, we shouldn’t be surprised if the court treats it like IEEPA.

Even great economists can make poor or incomplete arguments. George Stigler, a titan of the Chicago school alongside luminaries like Milton Friedman, Gary Becker, and half a dozen other Nobel Laureates, wrote an essay about what he saw as a surprising inconsistency in Adam Smith’s Wealth of Nations.

His article, “Smith’s Travels on the Ship of State,” makes the case that “The Wealth of Nations is a stupendous palace erected upon the granite of self-interest.” This seems uncontroversial, given Smith’s famous description of how the market harnesses self-interest to benefit society. People are “led by an invisible hand” to benefit their fellow man, even without plannning to. 

Indeed, markets create order through the signals and incentives created by prices, profit, and loss. Stigler praises Smith for his clear-eyed analysis of self-interested behavior in the market. Smith undeniably cast politicians, rulers, and the ‘man of system’ as self-interested actors.

Besides the profit-seeking of the butcher, the brewer, and the baker through voluntary exchange, Smith also recognized that business could (and would) seek profit through government protection, government subsidies, and government regulations. Smith famously said: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices.”

Smith warned that governments tend to play a hand in this political profit-seeking – sometimes unintentionally. For example: 

A regulation which obliges all those of the same trade in a particular town to enter their names and places of abode in a publick register, facilitates such assemblies. It connects individuals who might never otherwise be known to one another, and gives every man of the trade a direction where to find every other man of it.

But, Professor Stigler argues, Smith did not apply the assumption of self-interested behavior consistently: “Smith gave a larger role to emotion, prejudice, and ignorance in political life than he ever allowed in ordinary economic affairs.” Smith’s vision becomes clouded when he analyzes political actors and behaviors. And that’s a symptom of a deeper malady in Smith – his failure to rigorously and consistently apply self-interest in all human behavior:

“It is in the political arena that Smith implicitly locates the most numerous and consistent failures of self-interest in guiding people’s behavior, but this is not the only place where self-interest fails….Every failure of a person to make decisions which serve his self-interest may be interpreted as an error in logic: means have been chosen which are inappropriate to the person’s ends.”

Stigler argued there was no meaningful distinction between market behavior and political behavior: “no clear distinction can be drawn between commercial and political undertakings: the procuring of favorable legislation is a commercial undertaking.” This sounds similar to “Politics Without Romance,” in which James Buchanan argues for “symmetric” assumptions about people in politics and people in markets. We should not assume that people become more altruistic or less self-interested when they engage in political activity. But Buchanan makes this point:

“The public choice theorist should, of course, acknowledge that the strength and predictive power of the strict economic model of behaviour is somewhat mitigated as the shift is made from private market to collective choice. Persons in political roles may, indeed, act to a degree in terms of what they consider to be the general interest. Such acknowledgment does not, however, in any way imply that the basic explanatory model loses all of its predictive potential, or that ordinary incentives no longer matter.”

Such a point seems straightforward and modest, yet Stigler sees the world differently. Stigler contends that because political actors thrive on self-interest, exhorting them to altruism is a futile exercise. After all, one could not really lower the price of eggs by encouraging egg producers to lower their prices. Why bother asking politicians to ignore their constituents, snub their friends, or abandon the pet projects that secure their power?

“Why tell the sovereign that free trade is desirable, if one has no method of disarming the merchants and manufacturers who have obtained the protectionist measures….Why believe that better turnpikes await only the appointments of a better class of commissioners?”

And Stigler has a point. The experience of politics is not pretty. Public Choice economics elaborates the theory of special interests and collective action, and documents why political activity is best explained by self-interested behavior. When Smith encourages the sovereign to act in principled, rather than self-aggrandizing, ways, Stigler understandably asks, “how now Professor Smith?”

Smith was optimistic about the force of self-interested behavior leading to social benefit, and also correcting miscalculations and errors, because of competition given the incentives of profit and loss and the signals transmitted by prices. There’s a whole literature about the efficiency and inefficiency of political markets. Bryan Caplan’s Myth of the Rational Voter and Donald Wittman’s The Myth of Democratic Failure are two prime examples along with the public choice literature.

Hayek, however, claims that “the facts of the social sciences are what people think and feel.” So, is it possible to change what people find to be in their self-interest? I’m not referring to changing the material payoffs or benefits they receive, say through greater monetary or physical penalties, but to their valuing states of the world differently. In a famous article written with another Nobel Laureate (Gary Becker), Stigler rules such a question out of bounds for economists. After all, with tastes there is no arguing.

But there is an obvious distinction between politics and commercial arenas: prices! For our purposes, we don’t need to determine how efficient or inefficient political signals and competition are to recognize it does not have a market price system. Therefore, we should be more cautious about assuming that self-interested behavior will operate as efficiently and effectively as it does in private markets.

Stigler and Becker flatten the landscape of human motivation, treating our inner drives as static one-dimensional data points. While analytically clean, this approach eviscerates the complexity of human beings. This is not what Smith would (or did) do.

As a moral philosopher, Smith believed that people (whether in markets or in government) can and should be reasoned with. Our morals form through social interaction, and those morals then shape our behavior. Smith famously criticized Mandeville’s assertion that all human action is, by definition, self-interested and therefore inherently self-oriented and vice-ridden.

Smith correctly points out that the moral weight of our decisions does not rest on the existence of the self, but on what the self takes an interest in. And presumably human beings can choose their interests. Smith reasons accordingly, even if it seems like he fails to apply a narrow self-interest lens at times. But let me tell you from personal experience, not all commissioners are made equal. Smith would encourage us to exhort public officials to do well and hold their feet to the fire when necessary.