Earlier this week, Meta CEO Mark Zuckerberg announced sweeping changes to the social media conglomerate’s content moderation policies. Admitting that the censorship on platforms like Facebook and Instagram has “gone too far,” Zuckerberg promised to “get rid of fact-checkers and replace them with community notes similar to X starting in the US.” 

That’s good news for free speech. If the past several years have taught us anything, it’s that bottom-up regulation works far better than top-down command-and-control policies when it comes to the marketplace of ideas.

Why is top-down regulation a bad idea? For one thing, it can lead to politically motivated censorship. In October 2020, Stanford epidemiologist Dr. Jay Bhattacharya, together with Drs. Martin Kulldorf (of Harvard) and Sunetra Gupta (of Oxford) published the Great Barrington Declaration. As Bhattacharya described it, the Declaration “called for an end to economic lockdowns, school shutdowns, and similar restrictive policies on the grounds that they disproportionately harm the young and economically disadvantaged while conferring limited benefits to society as a whole.” Instead of engaging the luminaries behind the Declaration in a debate about COVID policy, the Biden regime censored them. The CDC and Biden White House pressured social media companies to shadow ban the authors. Search engines and social media companies (including Facebook) censored even mention of the Declaration. YouTube took down public policy roundtable videos that featured these scientists.

A key lesson from the COVID era is that censors are rarely noble truth-seekers. More often, they’re as partisan as the rest of us. Faced with a choice between debating their opponents in the open or censoring them, many public officials took the latter (and easier) route. The consequences for our nation’s COVID policy, which would have benefited immensely from an open debate between proponents and opponents of lockdowns, were disastrous.

It’s also true that in today’s climate, most of the fact-checkers that Facebook partnered with to decide which information ought to be allowed on the platform are partisan. Allsides, an organization that rates the political bias of different news organizations, notes that FactCheck.org, PolitiFact, Snopes, and TruthOrFiction.com all lean left. Maybe that’s why, as early as 2019, Pew reported that 70 percent of Republicans said that fact-checking efforts tended to favor one side, compared to just 29 percent of Democrats.

Two specific areas in which Meta is loosening the restrictions on what can and cannot be said are immigration and gender. This represents an essential change. Many leftists assume that the more important a debate is to peoples’ lives, the more we need censors to crack down on misinformation. In reality, the opposite is true. The higher the stakes of any given debate, the more essential it is that all sides be allowed to speak so that we as a society can better approach the truth. On topics where the impact is measured in lives, a bottom-up approach like Community Notes, in which the counter to false speech is recognized to be more speech, is essential.

The insight that a bottom-up approach works better in the marketplace of ideas than top-down censorship owes its origins to Austrian economics. Austrian economist Friedrich Hayek won the Nobel Prize in Economics in part for his deep exploration of how markets function. In his seminal paper “The Use of Knowledge In Society,” Hayek explained why markets work so well. Knowledge about the world, he said, isn’t consolidated in a few public policy experts. Instead, it is distributed. Each of us has a tiny piece of the puzzle; due to everything from our upbringing to our brains to our current work and location in the world, each of us has a small insight that no other human has. Because knowledge is distributed, we get the most efficient outcomes when we can develop systems that encourage everyone to share their piece of the puzzle with everyone else, and all work together to assemble the gigantic jigsaw puzzle that is knowledge of the world. Markets represent just such a system. When it comes to the marketplace of ideas, X’s Community Notes feature does the same thing.

Of course, the system isn’t perfect. At Tangle, journalist Isaac Saul says that Community Notes “often needs 24-48 hours before a post gets a note under it warning users that it is overtly and obviously false.” “By then,” he warns, “it usually has millions of views, and the truth never gets the chance to catch up.” That’s a real problem, and one that both Facebook and X should work to address. But 24-48 hours to correct errors is still a lot faster than the several years it took the social media companies who censored Bhattacharya to see their own mistake and allow him back on their platforms.

There’s another benefit to bottom-up regulation such as that offered by Community Notes: it empowers ordinary citizens. Saul explains that in ultimate frisbee, which he spent many years playing and coaching at a high level, some games have a bottom-up system of rules enforcement in which “Players call their own fouls and violations, following a rulebook with instructions for what to do in situations where they disagree on what happened.” Other games have formal referees. The former system, he says, “demands a level of accountability, honesty, and honor among participants that referees does [sic] not.” In refereed games, by contrast, players have “an incentive to see how much you can get away with without getting caught.”

The spread of misinformation and disinformation is a real problem in our society, but perhaps the best way to address that problem is to train ordinary citizens to spot faulty logic, to call out each others’ false statements, and to research claims before sharing them. Community Notes seems likely to help do that. Top-down content moderation, by contrast, runs the risk of outsourcing our civic responsibility to third-party censors and so atrophying the muscles that each of us need to develop in order to be good citizens of a democratic republic.

That said, we should be careful not to over-praise Zuckerberg. Commentators on left and right agree that the timing of Meta’s pivot feels tailored to take advantage of a shift in the political winds. As Saul points out, Zuckerberg hired friend-of-the-new-administration Joel Kaplan as Meta’s new Chief Global Affairs Officer, pledged to work with the Trump administration, and had Kaplan announce Meta’s shift in policy on Fox News. These actions do not paint the picture of a Meta CEO who is following his internal compass so much as one who is trying to curry favor with the new regime.

But what we sorely need is more men and women of courage. In a 2019 speech, Zuckerberg said that free expression was a paramount virtue in a democracy. If he truly believes that, then he needs to have the courage of his convictions. That courage would look like him being more open about why his companies abandoned free expression as a virtue so thoroughly just a few years ago. It would also involve him making a commitment: that in the future, his companies will continue to live out this foundational virtue no matter which direction the political winds may blow.

What explains the curious lack of economic progress in the EU over the past 16 years?

In 2008, the economies of the European Union and the United States were roughly equal in size in terms of GDP. Fast forward through a global financial crisis and pandemic and the US economy has nearly doubled while Europe’s has barely grown at all. How can we explain this?

One answer is to point out the glaring problem with comparing EU GDP in 2008 to EU GDP in 2023: Brexit. Recall that GDP is defined as the value of all the production that takes place within an economy. In 2016, the EU lost its second largest economy and with it, a significant portion of its overall GDP. Still, with a GDP of between $2.5 and 3 trillion, Britain’s exit from the EU cannot, by itself, explain the nearly $10 trillion gap in GDP.

First, we must remind ourselves that wealth does not happen automatically, bestowed from above as if it were manna from heaven. It has to be created through the conscious and deliberate efforts of workers, business leaders, and entrepreneurs. Notice one group of people missing from this list: policymakers. Despite their claims to the contrary, policymakers cannot create wealth. Indeed, they cannot do so. However, their role in wealth-creation cannot be understated, for they wield the simultaneous power to foster growth and to inhibit it.

Adam Smith gave us the blueprint for growth all the way back in 1776. He writes, “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.”

Comparing the US and the EU on these dimensions reveals differences.

Peace

To classify the current US climate as “peaceful” seems disingenuous, especially considering recent attacks, murders, and the bellicose election cycle. Indeed, “reducing crime” is a growing concern for all Americans across the entire political spectrum. Interestingly, crime rates have fallen precipitously in the last several decades. Despite the growing concerns, in a very real sense, Americans have never been safer in their homes and their communities.

Internationally, the US is also much more peacefully engaged than it has been in decades. The US is not currently engaged in any large-scale, direct combat roles in any international conflicts. To the extent that the US is involved (in Ukraine or the Israel-Hamas War), it is through providing political backing, economic aid, military intelligence, and diplomatic support. In other words, the US is engaged in supportive activities, not combative.

Looking at the EU, we see similar results. Crime rates, in general, have mostly fallen throughout the Union, with some cross-country variation. Though, it should be noted that rates of some crimes have been rising in recent years in the EU and some have fallen only slightly and nowhere near the levels to which they have fallen in the US.

Advantage: United States

Easy Taxes

“Easy taxes” could be interpreted many ways. The most obvious interpretation would be the overall tax rate. Because the EU is made up of so many different countries, each of which has their own constellation of policies, direct comparisons can be difficult to make. Looking at top marginal income tax rates, the US comes in at roughly 42.3 percent. Countries in the EU range from 55.9 percent (Denmark) to 10 percent in Romania and Bulgaria, with the average being 42.8 percent. On this dimension, taxes seem to be roughly similar in terms of ease.

One could also consider taxes “easy” if the compliance costs are relatively low and do not disproportionately benefit political cronies or large corporations. Here, both countries largely fail. The US Chamber of Commerce reported in 2024 that 73 percent of small businesses spent either “a great deal” or “a fair amount” of time on issues related to tax compliance. The European Parliament itself, in a 2023 report (PDF), admits as much, saying, “smaller enterprises are burdened with relatively larger compliance costs. Such additional burden does not appear to stem from special allowances for small firms, rather from the general design of a tax system.” Smaller businesses typically do not have access to a dedicated, in-house team of tax experts who are able to handle the administrative and compliance burdens of a tax system.

Finally, we could also consider taxes to be “easy” if they are applied in a way that is equitable. In this context, “equitable” means that people or companies in similar financial or economic situations pay the same amount of taxes. In the US, it is no secret that many companies enjoy special tax abatements and exemptions and that many will choose to incorporate in Delaware for certain tax and business advantages. But the same is true of countries in the EU, especially if we consider that companies can locate their headquarters in a particularly tax-advantaged country and that workers can come from neighboring countries with relative ease. Since tax rates, exemptions, and interpretations of statute vary by country in the EU, it can easily be the case that clever companies can find (unintended or not) loopholes allowing them to save on their tax bill.

Advantage: United States (but only slightly)

A Tolerable Administration of Justice

Whenever even just two people live in close proximity, conflict will occur. This conflict need not necessarily be violent; it could be a simple disagreement between parties requiring outside adjudication. Customers and merchants can disagree on the terms of a warranty, companies can believe that they have complied with various laws and regulations where the public might disagree, or neighbors might disagree on noise levels that are permissible at certain hours of the night.

What is necessary, then, is some means of resolving conflicts in a way that is understood to be fair and impartial to both parties. This conflict resolution mechanism must also be easily accessible so that when disputes happen, a resolution can be reached quickly and at (relatively) low cost. In most countries, this service is performed by courts and other mediation services.

In the US, The National Center for State Courts provides analyses of public opinions of the court system. In their 2023 report, they find that, broadly speaking, the public trusts the court system, finds it to be generally accessible, but that there is growing concern that the court system has become politicized.

For the EU case, the European Commission publishes an EU Justice Scoreboard report, which analyzes the court system on the bases of “efficiency, quality, and independence.” While they find evidence of general improvements being made within the Union, they also acknowledge that much work remains and that there is tremendous cross-country variation in the quality of the judiciary.

We can also get a sense of the overall administration of justice by looking at The Fraser Institute’s Economic Freedom of the World Index, specifically the legal system score by country over the last twenty years. While both the US and the EU score highly in absolute terms, of the twenty-seven countries in the EU, only seven (Austria, Denmark, Finland, Germany, Netherlands, Luxemburg, and Sweden) score higher than the US and only just barely. The other twenty countries are all significantly lower than the US scores.

This matters because having reliable, affordable, and quick access to an impartial court system allows for conflicts to be resolved and for both parties to move forward with their lives — and businesses.

Advantage: United States

Conclusion

Overall, the United States has greater peace, both domestically and internationally, easier taxes, and a more tolerable administration of justice than the European Union. The disparate economic growth between the two is understandable in those terms.

What does remain a mystery, though, is the magnitude of the disparity. If we include the UK’s GDP into the EU’s GDP, there would still be a $7 trillion gap. And while some may point out that Brexit caused reduced economic growth for the entire European region, it is hard to imagine anyone seriously arguing that voting against Brexit would have nearly doubled every single EU member’s GDP. Much remains to be examined.

Still, Adam Smith remains correct: peace, easy taxes, and a tolerable administration of justice are vital for economic progress. With these securely in place, the rest, as he says, will follow and indeed it has.

For a young woman attempting to knit her first sweater, tariffs might seem like a distant concern, more suited to headlines than handmade goods. But as the Trump administration proposes new tariffs, the ripple effects could reach deep into the heart of not just the crafting world but all small enterprises, tightening a thread of economic strain through communities that thrive on creativity, craftsmanship, and small-scale commerce.

Tariffs, essentially taxes on imported goods, are aimed at encouraging domestic production by making foreign products more expensive. While they may serve as a tool for boosting domestic industries, they also inadvertently put a strain on small businesses that depend on these imports and are disproportionately impacted by price increases and supply chain disruptions. For artisans and craft business owners, many of whom rely on unique materials and tools sourced from around the globe, this means an increase in costs that can’t easily be absorbed.

The impact of the Trump administration’s proposed tariffs extends beyond imported goods. Even products made in the US aren’t immune, as heightened costs throughout their supply chains could lead to higher prices for domestically produced items. Take for example Premier Yarns, a popular choice for the fiber arts community — and my yarn of choice. While the yarn itself is manufactured in the US, the raw fibers are often sourced from Turkey, making them one of about 45 percent of businesses that depend on imported raw materials according to the National Association of Manufacturers. Tariffs on these imported fibers could lead to increased production costs, even for yarns produced domestically, affecting everything from pricing to production schedules. 

Recent studies offer compelling insights into how tariffs present a complex challenge for small businesses, extending far beyond the crafting sector. A comprehensive study by the National Bureau of Economic Research shows tariffs introduced under the previous Trump administration were borne almost entirely by American consumers and enterprises. These costs disproportionately impact small businesses, who often lack the financial flexibility and resources to absorb increased costs resulting from tariffs, making them more vulnerable to shifts in policy. Reports from the Peterson Institute for International Economics also highlight how tariffs intended to protect domestic industries inadvertently act as regressive taxes that indirectly hurt lower-income consumers and increase production costs for small businesses, stifling their ability to compete both domestically and globally.

Faced with rising costs, craft business owners are often left with two choices: adapt or stagnate. The artistic compromise or scaling back of craft businesses could be a silent casualty of the trade policy. Some might seek out lesser-quality materials to keep prices stable, but at the cost of diminishing the allure of their artisanal brand. Others might raise prices to maintain their art’s integrity but risk losing customers in the process. Of small business owners surveyed, 27 percent intend to handle a tariff induced rise in costs through attempts to cut spending in other areas, with 64 percent saying they would ultimately have to increase their prices. Neither choice is appealing, and both carry the risk of stifling the creative innovation that is a hallmark of the craft business community.

The impact of these tariffs extends beyond individual crafters to the broader economy. Local economies thrive on artisan markets, craft fairs, and tourism. These micro-economies hinge on a delicate balance of supply costs, consumer prices, and discretionary spending. When tariffs disrupt this balance, reducing consumer spending up to $78 billion every year the tariffs are in place, the effects can cascade from the individual artist to the broader community, especially in communities where local artisan shops are significant contributors to economic activity.

As we assess the landscape shaped by the proposed tariffs, it becomes evident that the implications extend far beyond the studios of individual artisans, permeating every facet of small business operations in America. Protectionist policies designed to bolster large manufacturers can inadvertently harm small businesses that contribute significantly not just economically, but to the cultural vibrancy of their communities. These enterprises, from local coffee shops to tech startups, form the backbone of the US economy, driving innovation, employment, and community development. When tariffs disturb the delicate equilibrium of operational costs and consumer prices, the very vibrancy and resilience of this sector are put at risk.

As policymakers continue to debate trade measures, it is imperative that they consider their far-reaching impact on the diverse tapestry of American small businesses. The right policies can either cultivate a thriving garden of diverse artisan enterprises or trample them in the mud of unintended consequences. The hope is that policymakers will recognize the unique vulnerabilities of these small enterprises and knit policies that help rather than cripple the rich mosaic of small enterprises that bolster our economic and cultural landscapes.

Just as every stitch counts in a sweater, so too does every small business in the broader economic fabric of the nation.

On January 1, while confetti was still being swept up in Times Square, a slew of new laws took effect in New York State. Of note, New York State enacted major changes to its minimum wage policy. As of the first of the new year the Empire State minimum wage has risen to $16.50 an hour in New York City, Westchester, and Long Island, and to $15.50 an hour in the rest of the state. Under the new policy, the state minimum wage will also increase another 50 cents per hour in 2026 and then be indexed to inflation starting in 2027.

Albany continues its misguided approach to helping New Yorkers. After three years of inflation at four-decade highs, the new minimum wage policy will make it even more expensive to live, work, and do business in the Empire State. If Albany really wants to provide New Yorkers relief, politicians should set a New Year’s resolution to get out of the way.

Why The Minimum Wage is a Bad Idea

A price tells us how much of a good or service is available and how much people want that good or service. It is what economist Alex Tabarrock calls “a signal wrapped in an incentive,” using the example of oil. When the price of oil rises (all else being equal), it signals to buyers and sellers that oil has become scarcer and gives them an incentive to act on that signal (drive less, buy more fuel-efficient cars; seek, import, or refine more oil). As Tabarrock puts it, the price change informs producers, consumers, and other market watchers: “Find ways to economize on oil or develop substitutes, and you will profit.”

Wages are the price of labor, sold by potential employees and purchased by potential employers. Unlike oil, however, wages tend to be “sticky,” meaning that they do not adjust downward (even when falling wages would help end a recession) as readily as other prices do. This owes to several characteristics unique to wages. First, because wages are often contracted between an employer and employee, and a downward adjustment could result in legal consequences. Additionally, employers tend to be hesitant to cut wages as it lowers morale and, ultimately, productivity. Wages can still adjust downward when employees lose jobs and are rehired by different employers at a lower rate than in their prior position. A minimum wage law constitutes a legal price control requiring employers to pay employees at least a certain wage, complicating matters. As AIER Senior Fellow Dave Hebert put it, “The simple fact is that when the price of anything increases, people respond by purchasing less. With minimum wage legislation, reduced employment is concentrated on the very people who are supposed to be the beneficiaries.”

When employers have less flexibility on wages, they adjust on other margins. That may mean hiring fewer workers, reducing hiring of non-college employees (even when a degree is not essential to the position) or without a criminal record. Other adjustments business owners might make include shortening weekly hours of work, reducing options for customers (as is the case with Chipotle), automating jobs, or in extreme cases, opting to close the business entirely.

In the end, the minimum wage hurts people more than it helps them, and none are negatively impacted more than the poorest Americans. Since 2014, New York State has set a minimum wage higher than the federally mandated minimum of $7.25 per hour. A high minimum wage, combined with other onerous regulations and punitive taxes continues to chase New Yorkers out of the state. Minimum wages are also arbitrary, affecting some businesses more than others. Only a political mind could or would think that setting a single price for labor across the vast spectrum of firms, products, and services makes sense.

Why Indexing the Minimum Wage to Inflation is an Even Worse Idea

The problems associated with minimum wages worsen substantially when increases are indexed to inflation. When the minimum wage is set by legislation, there is at least an opportunity for businesses to increase productivity and wages above the minimum wage. If a minimum wage is indexed to inflation, minimum wage increases could outpace productivity. That means businesses will struggle to keep up with the costs of employment, driving employers to hire less, automate faster, and shrink the number of goods and services their businesses produce. 

An inflation-index minimum wage will disproportionately damage small businesses operating on thin profit margins, such as grocery stores, which have a just over a one-percent profit margin. For every sales dollar a grocery store receives in revenue, it earns around one and one-half cent. As businesses shut down or leave the Empire State because of their inability to keep up with the inflation-indexed minimum wage, perhaps lawmakers in Albany will finally learn Thomas Sowell’s lesson: “[T]he real minimum wage is always zero, regardless of the laws…” (When it comes to waiting for learning in the political sphere, it’s best not to hold one’s breath.)

How Can New York Get Back on Track? 

Also recently, New York State Governor Kathy Hochul announced that New Yorkers may receive a one-time $500 “Inflation Refund” check from Albany in 2025. It’s a gimmick funded by tax hikes, spending cuts, and/or taking on more debt (read: tax hikes and/or spending cuts in the future) and won’t help struggling New Yorkers.

If politicians in Albany want to help New Yorkers increasingly besieged by the adverse consequences of workplace interventionism, and make the Empire State a place where people want to live and work, there would be no better place to start than with reversing disastrous minimum wage policies. That won’t fix all the problems in New York, but people are more likely to keep their New Year’s Resolutions when they set defined, targeted goals.

Consider the fictional little country of Dynamia. Although, strictly speaking, this place is a product of my imagination, my imagination here sticks closely to essential facts of reality. Dynamia is very much like a real-world country in a modern market-oriented society.

The citizens of Dynamia are secure in their property and contract rights, and they have among their numbers several entrepreneurial types – individuals with creative ideas about how to earn profit by offering attractive deals to their fellow Dynamians and, increasingly, to foreigners. The great majority of Dynamians admire hard work and entrepreneurial gumption and grit.

The Dynamian currency is the dynam. When the people of this country import goods, they pay in dynams, and when they export goods, they are paid in dynams.

In 1985, Dynamians had relatively little trade with foreigners. In that year, a large number of Dynamians worked in the country’s two lumber mills, Westside Lumber and Universal Lumber. These workers, and others, spent much of their income at the movie theater, Phillips’s Hardware Store, Buddy’s Diner, and Boo’s Tavern. Things weren’t perfect – they never are – but Dynamians today who can recall their nation of forty years ago remember it as peaceful, prosperous, and happy.

Around 1990, one of the Dynamanians, Alex, invented a material – Woodlike^© – that serves as an excellent substitute for plywood. Alex opened a factory in Dynamia to produce this product. Largely because the production of Woodlike uses less labor than does the production of actual plywood, to produce one sheet of Woodlike costs about half of what it costs to produce a sheet of actual plywood. Alex therefore charged lower prices for his product than were charged by the lumber mills for theirs. Dynamians who were building or refurbishing their homes switched heavily from using actual plywood to using Woodlike.

Losing business to Woodlike, the lumber mills downsized. Some of the former mill workers found new jobs immediately, but most of them took several weeks or months to find new employment. For many of them, the times were difficult. (Yet one of these former mill workers, Ron, eventually converted an abandoned part of a mill into a potato-chip factory and, as result, made a fortune as a potato-chip entrepreneur!) Some workers retired. Some searched for opportunity by moving to other parts of Dynamia.

Some of the money that Dynamians saved by buying Woodlike was spent on more evenings dining out. Several new upscale restaurants opened in Dynamia. These new venues enjoyed a brisk business as Buddy’s Diner and Boo’s Tavern served fewer and fewer customers. Buddy’s and Boo’s eventually went bankrupt, with Buddy himself finding a new job as assistant manager of one of the new restaurants.

The buildings that housed Buddy’s Diner and Boo’s Tavern were torn down, as were several other nearby structures, and in their place was built a Home Depot. The Phillips family, who had operated their hardware store in Dynamia for three generations, were understandably worried. They knew that they couldn’t possibly match Home Depot’s low prices. Sure enough, Phillips’ Hardware soon went the way of Buddy’s Diner. These two once-beloved Dymanian establishments exist today only in older Dynamians’ memories.

By the year 2000, one of the lumber mills, Universal Lumber, had gone out of business while Westside Lumber survived by switching to producing specialty woods, much of which was sold in Dynamia’s Home Depot. As with the still-thriving Woodlike Corporation – which expanded and branched out into producing two-by-four studs and other products that substitute for wood – Westside by 2000 was producing its output using far fewer workers than it used fifteen years earlier. Many of the mill’s tasks that in 1985 were done manually came to be done by machine. In 2000, workers at both Woodlike and Westside produced more value per hour for their employers than did workers in 1985 at the older mills. With each company fearful of losing its workers to the other, the real wages of these workers were bid up to reflect their higher productivity.

The low prices and high quality of the products manufactured by Westside and Woodlike attracted the attention of foreigners, whose demand for these companies’ outputs skyrocketed. Dynamia became a major exporter of specialty wood and faux wooden products. But this increase in Dynamia’s exports was made possible only because Dynamia’s government followed a policy of free trade: Producers in Dynamia could export more only because foreigners had more dynams to spend on goods produced in Dynamia – and foreigners acquired this greater number of dynams by selling more of their wares to Dynamians. (Economics students at Dynamia University learn that this connection between exports and imports is sometimes called “Lerner symmetry.”)

The innovations that gave rise to Woodlike, that prompted Westside to change what it produced, and that increased the productivity of workers at both firms made these Dynamian workers more prosperous. These workers and their families increased their demands for the likes of health care, entertainment, and household furnishings. Dynamian entrepreneurs took advantage of these higher demands to create firms that supplied what these consumers, with rising incomes, wanted. Some of the former mill workers – and especially many of their children – found employment with these new enterprises. Competition ensured that these new firms operated efficiently, using the latest, economically feasible production and distribution techniques.

Dynamia’s growing wealth also attracted immigrants. These new denizens of Dynamia increased not only the supply of labor but also (because they spend and invest their incomes) the demand for goods and services. And as the demand for particular goods and services rises, so, too, does the demand for labor to produce those goods and services. This increased supply of labor encouraged and enabled Dynamian producers and merchants to make their workers more specialized. For example, as Dynamia’s population and wealth grew, that little country soon could afford physicians with narrower specialties. Whereas in 1985 Dynamia had only a few family-practice physicians, at the dawn of the 21^st century it had not only pediatricians, dentists, and gastroenterologists, it had a pediatric gastroenterologist, a pediatric dentist, and a doctor specialized in sports medicine.

As Adam Smith correctly taught, when the market incents workers to become more specialized, they become more productive. This increased specialization of Dynamia’s labor force – again, fueled by Dynamia’s rising population of hard workers – further raised Dynamians’ wealth.

Some of the higher wages earned in Dynamia were invested in pension plans, but most were spent on goods and services – larger and larger amounts of which were imported –  that enriched the lives of Dynamian families. (Some professors at Dynamia U. publicly scorned the new consumption habits of their fellow citizens, calling this consumption “frivolous” and “wasteful.” Most Dynamians ignored these intellectual scolds.)

Today, Dynamia – although still not without problems, some serious – remains prosperous and entrepreneurial. As a result, foreigners are more eager than ever to invest in Dynamia. Because these investments are made using dynams, large numbers of the dynams that Dynamians spend on imports return to Dynamia, not as demand for Dynamian exports, but as investments in Dynamia.

Of course, these investments enlarge and improve the capital stock of Dynamia no less than do investments made in Dynamia by native Dynamians. And also like investments in Dynamia made by her own citizens, these foreign investments destroy particular jobs and create others. Nevertheless, pundits at a new Dynamian thinktank – Dynamian Sextant – are forever warning that, because these foreign investments in Dynamia bring about a situation that accountants call a “Dynamian trade deficit,” Dynamian trade with foreigners is stripping Dynamia of its wealth.

Dynamian Sextant calls on the Dynamian government to severely restrict Dynamians’ freedom to purchase imports.

To bolster their case against free trade, the pundits at Dynamian Sextant remind their fellow citizens of the Dynamia of 1985. Nostalgia for those seemingly simpler, happier times prompts some Dynamians to join with Dynamian Sextant in supporting high tariffs as a means of restoring the Dynamia of the past. Yet serious Dynamians know that even if, contrary to fact, high tariffs could transform the Dynamia of 2025 into the Dynamia of 1985, Dynamians of 2025 would, upon finding themselves with the economic opportunities and standard of living of their forebears of 40 years ago, clamor for an immediate and complete return to 2025.

After all, the country’s name is Dynamia, not Stagnatia.

As beltway watchers intently debate the incoming administration’s cabinet picks and White House appointments, the more jaded observers of our economic condition have good cause to wonder: what difference does it make? The political order is dominated by high-dollar special-interest lobbyists and power-hungry bureaucrats, and lacks the incentives to reduce intervention and return decisions to the people. Can bureaucracy be made useful by better bureaucrats, or only restrained by the resurgence of individual choice? 

How will Robert Kennedy Jr., if confirmed in his proposed role as Secretary of Health and Human Services reduce obesity in America? Will he promote new regulations and taxes, which will invariably look after entrenched interests, at the expense of individual and experimental solutions? Will he, as others have, look to regulators to ban this or that ingredient, without knowing the economic or health costs of replacing them? Will he reduce the barriers to healthy food options and stop the subsidies that contribute to obesity? Will he reduce the unintended consequences generated by previous “solutions” to public health and diet fears? Will he, in short, battle political sclerosis with exactly the tools that brought us here, asking advice from those who benefit from the status quo? Or will he challenge bureaucratic-corporate collusion and reawaken a competitive market?

If he does, he’ll face a stiff fight. The building blocks of ultra-processed food — corn, wheat, soybeans, and sugar — are subsidized by the US Department of Agriculture to the tune of about $6 billion dollars per year. High-calorie food loaded with cheap soybean oil and sweeteners appears cheaper than they are relative to more nutritious and less calorie-dense foods. The magnitude of the impact on consumer choice is unclear, but here is one thing we can count on: If Kennedy, with the backing of the Trump administration, goes after subsidies, lobbyists for corn, wheat, soybeans, and sugar will turn Congress upside down to thwart him.

Trump’s nominee for energy secretary is Chris Wright. Will he be able to help reduce government spending by eliminating subsidies for solar and wind energy? I would not bet on that occurring without an epic battle in Congress.

Many might wish it were different, but in reality, crony firms will continue to exist during Trump’s presidency. The revolving door between industry and regulators will continue to revolve. Past programs’ policy blunders will continue to be propped up, often with bigger budgets. Whether Trump’s presidency is successful will hinge, in part, on his ability to break longstanding government alliances with crony firms and resist new calls for corruption. 

Let’s ask the big question. Can genuine change be achieved through political means?

In his classic book The State, the late German sociologist Franz Oppenheimer observed that there are two ways to wealth: the peaceful “economic means” and the coercive “political means.” Non-coercive wealth creation is an economic process where businesses and people fulfill consumer needs. Wealth through political maneuvering involves firms and individuals using government power to obtain unearned riches. According to Oppenheimer, economic means demand “work,” unlike political means, which demand “robbery.”  

In “Profit and Loss,” Ludwig von Mises reflected on how the “ballot of the market” forces entrepreneurs into an endless process of working to serve consumers: “The ballot of the market elevates those who in the immediate past have best served the consumers.”

Unlike politics, in a market process, people freely and easily change their minds. Mises added, “Choice is not unalterable and can daily be corrected. The elected who disappoints the electorate is speedily reduced to the ranks.”

Some businesses, unable or unwilling to adapt and serve, rely on the government to restrict consumers’ choices as a means to gain profits they could not have earned otherwise. Rather than compete to win the “election” in the “ballot of the market,” they seek to elect politicians who will support their schemes to forcibly appropriate the wealth of others, and that is robbery.

Oppenheimer’s choice of the word robbery wouldn’t have surprised Ralph Waldo Emerson. 

In his essay Politics, Emerson wrote, “Every actual State is corrupt.” He then added, “What satire on government can equal the severity of censure conveyed in the word politic, which now for ages has signified cunning, intimating that the State is a trick?” 

Emerson was writing in 1844 when the government was a tiny fraction of the size it is now. The exact size of the federal budget in 1844 was hard to come by, but in 1837 the budget was approximately $39 million dollars. (Or roughly $1.6 billion in 2024, since the dollar has lost 98 percent of its value since 1844.) Federal spending in fiscal year 2024 is around $6.75 trillion.

In short, Federal spending in 1844 was about 0.024 percent of what it is today. But, if Emerson is right, politics had already become irredeemable.

Emerson observed, “Of all debts, men are least willing to pay the taxes. What a satire is this on government! Everywhere they think they get their money’s worth, except for these.” Remember, there was no federal income tax in 1844.

Emerson railed against taxes: “A man who cannot be acquainted with me, taxes me; looking from afar at me, ordains that a part of my labor shall go to this or that whimsical end, not as I, but as he happens to fancy.” 

Emerson was clear: “The less government we have, the better — the fewer laws, and the less confided power.” 

Similar to other classical liberals, Emerson advocated for voluntary cooperation to solve mutual problems: 

Whilst I do what is fit for me, and abstain from what is unfit, my neighbor and I shall often agree in our means, and work together for a time to one end. But whenever I find my dominion over myself not sufficient for me, and undertake the direction of him also, I overstep the truth, and come into false relations to him.

Those who used coercion met with Emerson’s disapproval. He always advised working towards “self-control.” It was wrong “to make somebody else act after [our] views.”  When others “tell me what I must do” their commands are absurd. “Therefore,” Emerson wrote, “all public ends look vague and quixotic beside private ones.”

Wisely, Kennedy should consider those words, ending subsidies while preserving consumer choice. But removing self-seeking interest from government power may be among the most quixotic goals we could undertake. Can Leviathan restrain itself?

Instead of demanding government solutions, Emerson expected us to attend to our spiritual growth: “The antidote to this abuse of formal Government, is, the influence of private character, the growth of the Individual.”

You cannot change an effect without changing its cause. The consciousness of Americans is the cause; government robbery and overspending are the effects.

Emerson wrote: “Cause and effect, means and ends, seed and fruit, cannot be severed.” He argued we need “a reliance on the moral sentiment, and a sufficient belief in the unity of things to persuade [people] that society can be maintained without artificial restraints.” 

Do we get upset at the behavior of politicians? It’s unwise to be angry about the predictable. Emerson chided, “We might as wisely reprove the east wind, or the frost, as a political party, whose members, for the most part, could give no account of their position, but stand for the defense of those interests in which they find themselves.”

Emerson would agree with the old saying, we get the government we deserve. He said, “The State must follow, and not lead the character and progress of the citizen… the form of government which prevails, is the expression of what cultivation exists in the population which permits it.”

Individual spiritual evolution is a prerequisite for political change. Emerson wrote, “Under the dominion of an idea, which possesses the minds of multitudes… the powers of persons are no longer subjects of calculation. A nation of men unanimously bent on freedom… can easily confound the arithmetic of statists.”

In 1837, Emerson spoke to the Phi Beta Kappa Society at Harvard. It was later published as  The American Scholar. He ended his talk with a rousing call to stand for principles and not cave to expediency. He warned, “The spirit of the American freeman is already suspected to be timid, imitative, tame. Public and private avarice make the air we breathe thick and fat.”

Emerson, of course, couldn’t have imagined how much avarice would bloat government and make our political discourse “thick and fat.” The consequences are severe when private interests exploit political processes for theft. 

Some people, Emerson said, “very naturally seek money or power; and power because it is as good as money — the ‘spoils,’ so called, ‘of office.’” Such people are “sleep-walking.” Emerson advised, “Wake them, and they shall quit the false good and leap to the true, and leave governments to clerks and desks.”

Emerson knew the choice to awaken is a choice made by an individual. 

Is political change a realistic hope? Let’s start change with ourselves; societal flourishing doesn’t come from politics. The time to begin is now. For, as Emerson reflected, “This time, like all times, is a very good one, if we but know what to do with it.”

As we enter 2025, inflation remains a primary concern, frustrating consumers and confounding policymakers and Economists alike. From 2019 to 2023, the Consumer Price Index (CPI) rose by 25.7 percent, reflecting a broad increase in the cost of goods and services. Grocery prices (not included in CPI) also rose by more than 25 percent and put additional strain on household budgets. 

Amid this economic strain, the term “greedflation” has gained traction, fueling public frustration and influencing even PhD economists to misinterpret inflation’s roots and offer misguided solutions. The paper Prices, Profits, and Power: An Analysis of 2021 Firm-Level Markups by economists at the Roosevelt Institute found market power is a key driver of inflation due to corporate markups and profits skyrocketing in 2021, their highest levels since the 1950s. Their proposed “all-of-government administrative, regulatory, and legislative approach to tackling inflation” — encompassing interventions in demand, supply, and market power — reads more like a recipe for an economic nightmare than sound policy.

This narrative overstates the role of corporate markups in inflation, grossly underplays the impact of government fiscal and monetary policies, and disregards basic economic principles. Worse still, the proposed interventions risk exacerbating economic instability. It’s time to move past the sensationalized ‘greed’ narrative and focus on the true drivers of inflation and why free market solutions are key to recovery.

Markups Only Explain 10 Percent of Grocery Inflation

The greedflation argument claims that markups are the primary driver of inflation, but a closer examination shows their role, particularly in rising grocery prices during and after the pandemic, was relatively minor. 

To determine whether market power significantly contributed to grocery price inflation, it is crucial to analyze the relationship between prices and markups before and after the pandemic. Data shows that while grocery markups did increase during the pandemic, their impact on overall price inflation was limited. Had grocery stores maintained their 2019 markup levels, prices would have risen by 22 percent rather than 23.5 percent, indicating that markups accounted for less than 10 percent of the total price increase. 

Instead, the primary drivers of grocery price inflation were supply chain disruptions, increased production costs, and shifting consumer behavior. Shipping costs soared by as much as 200 percent during the pandemic, while transportation labor shortages pushed wages up by 25 percent. Rising input costs, such as a 50 percent surge in fertilizer prices and a 30 percent increase in packaging material costs, further strained supply chains. Pandemic-induced bottlenecks, like prolonged port delays, exacerbated supply constraints, contributing significantly to higher prices.

Additionally, the perception of increased profits and markups in the grocery sector is partly explained by evolving consumer behavior. For example, the growing demand for private-label brands — which are more affordable for consumers but offer higher margins for retailers — has influenced profit margins. These shifts in consumer purchasing patterns may create the illusion of higher profits, but they underscore how evolving shopping habits and preferences shape the grocery sector’s economics.

Attributing inflation in grocery prices to corporate greed oversimplifies a complex issue driven by structural and economic factors beyond just markup adjustments.

Greedflation Distracts from the True Driver of Inflation — Government Policies

The greedflation argument wildly underplays the government’s significant role in driving inflation, particularly through its expansive fiscal and monetary policies. Beyond corporate markups, fiscal policies injected massive amounts of money into the economy, fueling excessive demand while supply chains were still constrained. For instance, the CARES Act, costing approximately $2.2 trillion, not only carried a hefty price tag but also incentivized Americans to stay home longer than necessary, delaying workforce recovery. Similarly, the $1.9 trillion American Rescue Plan further flooded the economy with stimulus. Adding to this, $1,400 checks were sent to 165 million Americans, totaling over $230 billion, further increasing demand pressures. 

What’s more, while large government spending bills significantly contributed to inflation, the Federal Reserve amplified these effects through its monetary policies. To accommodate the influx of fiscal spending, the Fed increased the money supply, flooding the economy with liquidity that allowed consumers to bid up prices — more money chasing fewer goods. At the same time, the Fed slashed interest rates to historically low levels, making borrowing cheaper for consumers and businesses, which boosted demand for goods, services, and housing. 

This surge in aggregate demand came at a time when supply chains were crippled by lockdowns, worker shortages, and regulatory bottlenecks. 

The combination of ultra-loose monetary policy, excessive liquidity, and delayed tightening created a perfect storm of inflationary pressures. Expansive fiscal and monetary measures, coupled with supply chain disruptions, injected unprecedented amounts of money into an economy with constrained production capacity. 

Centralized Inflation ‘Solutions’ Disregard to Basic Economic Principles

Finally, the call for an “all-of-government administrative, regulatory, and legislative approach to tackling inflation,” developed by some economists, stems from the observation that global markups — an indicator of market power — have risen by 33 percent since the 1980s. In their view, the surge in “excess profits” following the COVID-19 pandemic underscores the need for policy interventions to curb inflation.

Their proposed solutions focus on limiting profit-driven price increases through measures such as excess profits taxes, stronger competition policies, and price controls in key sectors. What makes this proposal particularly troubling is that it comes from economists — those expected to understand basic economic principles — who not only ignore fundamental market mechanisms and the true drivers of inflation but prescribe policies that will lead to an economic collapse. These interventions aim to force businesses to absorb rising costs instead of passing them on to consumers, intending to stabilize inflation and ease its burden on wage earners. However, this approach disregards fundamental market dynamics.

Claims that market power drives inflation imply that one side of the market controls prices, a fundamental misunderstanding of the price system and market mechanisms. In a free market, prices emerge from the interaction of consumers’ willingness to pay and producers’ willingness to supply. No single player, including so-called ‘greedy’ corporations, controls prices. To mischaracterize this process is to disregard the very mechanics of how markets function. 

Their proposal disregards market mechanisms and disrupts the price system, leading to consequences that chill investment, stifle innovation, and create long-term instability. History offers stark warnings: in countries like Cuba, government interventions aimed at making prices “fair” or “cheaper” destroyed the very incentives suppliers need to produce the goods and services people rely on daily. Sweeping government controls and centralized interference destabilize markets, replacing the efficient allocation of resources with arbitrary standards and government overreach. Allowing the government to define acceptable profit levels undermines the free market’s ability to function, risking shortages, market collapses, and widespread suffering. 

Inflation was not driven by greedflation but was primarily a government-made phenomenon. The greedflation argument and its proposed remedies are not merely flawed — they are dangerous, repeating the mistakes of failed policies that have devastated economies and left entire populations starving.

Inflation Solutions Start with Free Markets

The greedflation narrative collapses entirely when tested against even the most basic economic principles. Rather than corporate greed, rising grocery prices reflect market mechanisms, evolving cost-structures, federal and monetary policies, and the unique pressures industries encountered during and after the pandemic.

Profit motivation is not the problem — it is the engine of economic progress, driving innovation and ensuring goods and services reach consumers efficiently. The real issue arises when government intervenes, attempting to dictate prices and vilify profit. 

To lower inflation effectively, we must address supply chain issues, reduce inefficiencies, and foster supply-side growth through incentives, not burdens like taxes and price controls, while reducing the fiscal and monetary interventions that have fueled inflation. 

Free markets, not government controls, provide the best path to stability and growth. 

In 2016, near the conclusion of his second term, President Barack Obama was asked by Chris Wallace about his greatest mistake as president. Obama didn’t hesitate to respond. He said his “worst mistake” was “probably failing to plan for the day after what I think was the right thing to do in intervening in Libya.”

Five years earlier, a coalition of NATO members, led by France, Britain, and the United States, intervened in the Libyan civil war and overthrew the government of Muammar Gaddafi. This resulted in Gaddafi’s death and the transformation of Libya into a failed state, a condition that persists thirteen years later, which has resulted in an ongoing civil war, countless deaths of civilians, and a humanitarian and refugee crisis. The US-led intervention in Libya was strategically misguided and ultimately harmful, providing a cautionary example for future US foreign policy. It would have been a better option for the United States to have done nothing than to trigger such a calamitous descent into chaos.

Today, Libya is essentially split between two rival factions: the Government of National Unity (GNU), based in Tripoli, which controls parts of western Libya, and the Government of National Stability (GNS), backed by the eastern-based House of Representatives (HoR), which operates in the east and south of Libya. 

Efforts to hold national elections have repeatedly failed. Numerous armed groups, militias, and foreign mercenaries regularly clash. In mid-December 2024, a battle between two rival groups led to a major fire and destruction in the country’s second-largest oil refinery, which will lead to further economic turmoil as Libya’s economy depends almost entirely on oil production.

Reports of arbitrary detentions, torture, and extrajudicial killings by various armed factions are widespread. The situation has been exacerbated by the aftermath of natural disasters, notably the floods in Derna in September 2023, which resulted in thousands of deaths and displacements. Libya’s economy, heavily reliant on oil exports, has been disrupted by the conflict and counterfeiting is widespread. Ordinary Libyans face a deteriorating economic situation. Many Libyans have fled to Europe, though severe human rights abuses against migrants, including in detention centers where forced labor, extortion, and sexual assault have been reported, are common. In short, the thirteen years since the United States and NATO invaded Libya have been nothing short of disaster.

The US-led intervention that overthrew Muammar Gaddafi in 2011 is the direct cause of Libya becoming a failed state. If the goal was simply to overthrow a tyrant, it achieved that. If the goal was to put an end to the ongoing Libyan civil war, or to alleviate the suffering of civilians, or to transform a dictatorship into a democracy, or to demonstrate that Western military power could be a force for good in the world — all goals claimed by the Western powers involved — then it failed disastrously.

Libya, post-intervention, remains undemocratic and war-torn, with countless civilian casualties. It can reasonably be argued that the average Libyan’s — those still alive — quality of life is far lower today than it was under Gaddafi. Millions have been displaced, many of whom have flooded into Europe, poverty has increased (more than 800,000 need humanitarian assistance out of a population of under seven million), and food security and the availability of basic services have dramatically decreased. These criticisms collectively paint a picture of an intervention that, while initially justified on humanitarian grounds, led to unintended and severe negative consequences for Libya and the wider region.

It is clear that the United States should never have allowed France or Britain to talk it into intervening in Libya. There was a complete disconnect between the use of military force to overthrow a minor regional power — that was the easy part — and fostering an environment in which violence would cease and an effective and democratic government would emerge. The use of military power could never achieve the desired end goals. No US nor NATO plan existed for the aftermath of Gaddafi’s overthrow. This lack of planning led to a power vacuum that was filled by competing factions and militias rather than a stable, democratic government. (Keep in mind just how poor the US track record of democracy promotion is.) Critics, including Obama himself, have acknowledged that they failed to “plan for the day after” the intervention. Even had the United States and its feckless NATO allies been willing to invade and occupy Libya for years, the cases of Iraq and Afghanistan demonstrate the folly of such an approach.

By no means should this critique be read as a defense of Gaddafi. He was an odious tyrant, a proliferator of weapons of mass destruction, a once-active sponsor of international terrorism, and a perpetual thorn in the side of the United States and Western Europe. But the US and NATO military intervention in Libya has been an unmitigated disaster for the people of Libya. Like Iraq (and many other locales before it), the military intervention in Libya began with positive, humanitarian intentions. To some Europeans and Americans, the prospect of overthrowing a violent tyrant was worth the cost of intervening militarily. But that military intervention has had, predictably, a host of negative unintended consequences.

In Libya, just like in Iraq, ideology — the desire to promote democracy and humanitarianism — trumped realism and American national interests, and has resulted in a series of costly failures for all concerned. The interests of the United States and Western Europe, not to mention those of ordinary Libyans, were in no way served by overthrowing Gaddafi.

The problem is that the US military has been, and continues to be, used to conduct operations that far exceed American national interests. The invasion of Libya not only was unnecessary and cost significant resources and lives, but it also destabilized the country and region, and has opened the door to increased Russian influence in Libya. 

US national interests would have been much better served by simply taking no action in 2011 and beyond. It is also worth noting that the Congress never authorized the use of military force in Libya; the Obama administration did not seek Congressional authorization, and justified the intervention based on the president’s constitutional powers as Commander in Chief and an international mandate from the UN Security Council. The House of Representatives even voted against a resolution (HJRes. 68) that would have authorized continued US involvement, but this did not legally bind the administration to stop the operation.

Libya should be seen as a cautionary tale for future American policymakers and strategists. In deciding whether or not to use US military force to affect some outcome abroad in the future, we should return to first principles. Does taking military action, and expending our precious, finite military resources, meaningfully advance significant US interests? If not, we should take no military action. 

The best arguments mustered by supporters of military intervention, including Bill Kristol, were that Gaddafi was committing humanitarian violations and that he had once sought nuclear weapons and supported terrorism (though we should note that long before 2011, Gaddafi seems to have given up his weapons of mass destruction programs and support for international terrorism). In this neoconservative mindset, such actions justified US military action. Ironically, deposing Gaddafi only seems to have increased the amount of violence and suffering within Libya, which is likely only to exacerbate the terrorist threat. 

We should always follow the advice of past American leaders and strategic thinkers like George Washington and George Kennan: avoid unnecessary wars, defend and maintain our constitutional order, and ensure that every American has the opportunity to achieve economic prosperity. 

We can do that, placing the national interest at the core of everything we do as a nation, and remain perfectly secure, while doing no harm abroad.

Philanthropic contributions are a quiet but integral part of American education funding.

In 2016 (the most recent year for which good data are available), philanthropists contributed nearly $5 billion to US public schools, with $800 million stemming from  the Bill and Melinda Gates Foundation and the Walton Family Foundation alone. Private schools are not much different — the National Association for Independent Schools reported in 2023 that their member schools secured $4.87 billion in philanthropic funds to continue their missions. 

This might seem like a drop in the bucket. After all, American schools received nearly $800 billion from all sources last year. But most education spending gets tied up in paying off debt, subsidizing pension funds, or paying salaries. Schools never see the vast majority of revenue their districts collect. Philanthropic donations, on the other hand, carry real value. If the Kennedy Center comes in and says “here’s $20 million, create an arts program for disadvantaged students,” more often than not, it gets done. That said, the evidence on whether educational philanthropy really works is, at best, mixed. 

This state of affairs has generated a lot of criticism. Many scholars claim that educational philanthropy harms “democracy” because it directs schools’ attention away from liberal or pluralist values and more toward market interests. Others attribute educational philanthropy’s woes to the knowledge problem, as many foundations naively assume that they alone can solve education’s intractable problems. Others still argue that philanthropy harms liberal education by injecting wokeness and other shenanigans into America’s schools. 

To a certain extent, all these critiques are valid, but they miss the bigger picture. Of course educational philanthropists are going to pursue programs and policies that benefit them — whether or not their activities are good for those of us who value human freedom depends on a given philanthropist’s values and aptitudes. Neither is this a new problem; schools and communities have been dealing with this for as long as there have been schools and communities. 

Take, for example, San Antonio, Texas back when it was under Spanish and Mexican administration. In 1811, after a failed revolution against the Spanish crown, a group of the town’s well-to-do citizens decided to found a school together. The school’s purpose was to take the riff-raff’s children and turn them into loyal Spanish citizens who would never even think to question the crown’s authority. Spain, so the school would teach, was a benevolent actor who only had their best interests at heart. The Spanish royalists would meet any resistance or misbehavior with harsh discipline. 

One Don Bicente Travieso — a prominent cattle rancher who had business interests with the Spanish government — offered to invest his own wealth, as well as take custody of public funds, to make the school a reality. What happened next is unclear. Some historians claim that Travieso ran off with the funds, purchasing only the worst-quality materials in order to retain his wealth. Another view is that Travieso made an honest effort to supply the school, and encountered unforeseen difficulties in planning the endeavor. Regardless, the school failed, and it may have never even operated. 

This school would not have been liberalism’s friend. It was meant to indoctrinate a revolutionary community’s youth to secure an authoritarian regime’s political and economic interests. In that sense, educational philanthropy can harm a liberal democracy. But that’s not the only reason it failed — and many of the reasons for its failure are still reflected in modern educational philanthropy. 

The royalists failed because they overpromised, assumed they could control all possibilities, and didn’t care what anybody in the surrounding community had to say. Modern educational philanthropists do exactly the same thing, and yet are surprised when they experience similar outcomes. 

Look no further than the Bill & Melinda Gates Foundation, which contributes hundreds of millions of dollars a year to charter schools, accountability schemes, and teacher performance metrics. When parents, schools, and teachers complained that the Gates Foundation was not listening to them, and misunderstood the situation on the ground, the Foundation ignored them, arguing instead that their models and know-how held all the answers. 

The results were predictable — everything they’ve tried hasn’t worked. The Gates Foundation took some responsibility, but mostly blamed others. For example, when technology investments failed to generate meaningful results, Bill Gates called students “unmotivated.” When the group’s Common Core project met resistance and performance failures, Bill’s response was to double down. In effect, the Gates Foundation repeatedly attempted to slam a square peg in a round hole, much to the chagrin of all other stakeholders.  

Fortunately, San Antonio’s history offers another path forward. In 1828, after the Mexican War of Independence, the city wished to promote its new Catholic-democratic bonafides. To that end, six leading men, along with the powerful General Anastacio Bustamente, resolved to found a new school. These students, they reasoned, would be the ones to steward the young, fragile democracy into a new age. In this effort, they had widespread community support, and also received funding from the state government. Everybody shared the same fundamental values, and everyone wanted their new, democratic society to prosper. 

Unlike the Spanish royalist school, this one had a firm, independent curriculum — reading, writing, math, arithmetic, and the values and virtues needed to live a good life in a liberal-democratic society. The school’s teacher was primarily left alone, and discipline was no harsher than what might be expected in the United States at the time. The goal (a free society) and the means (a solid education) were clear, but the execution lacked resources. In other words, the philanthropists’ role was to facilitate what the community already wanted. 

The school operated from 1828 to 1834, a good run by nineteenth century Mexican standards. Towards the end, after funding from the state government dried up, the school sustained itself almost entirely on donor funds. Many of its alumni became fervent liberals who actively resisted tyranny in Mexico and beyond. If the school’s goal was to cultivate a liberal body of citizens, it was an outrageous success. In this sense, it greatly benefited liberal democracy by creating citizens who actively wanted to live in a free society. 

This model worked because the philanthropists acknowledged and acted within the community’s values. It also worked because the philanthropists did not try to coerce outcomes, nor did they intervene in the school’s day-to-day operations. Even today, a handful of educational philanthropists get this stuff right. Those investing in leadership development, for instance, often garner a significant amount of community support — something that’s helped kids in Columbus, Ohio, across Florida, and even in China. 

Educational philanthropy is a complex but important field, and there’s a great deal of ambiguity as to what’s happening now and what comes next. When applied detrimentally, educational philanthropy can do a lot of damage to human freedom. But those of us worried about the future of liberalism need not despair. There are ways to do it right, and ways to fix the damage — even within the same community.