A clay tablet from Kanesh, in what is now central Turkey, contains the founding charter of a twelve-partner trading company. Twelve merchants pooled thirty-three pounds of gold. The document specifies the partners by name, the starting capital, the profit split, and the penalty for any partner who wishes to withdraw early. Pull your share before the term ends and the firm will return silver at a steep discount to the gold you invested. Capital was locked up under prescribed terms.

The tablet is nearly four thousand years old. 

No one had yet written a sentence about markets. The word “capitalism” would not be coined for another 3,800 years. Adam Smith was 3,700 years from picking up his pen. And yet here, baked into clay by a fire that destroyed the building where it was stored (and in doing so preserved it) is a document that any modern private equity attorney would recognize on sight: defined partners, contributed capital, profit-sharing ratios, and a liquidity penalty designed to align the interests of investors with the long-term needs of the enterprise. 

The merchants of Assur, in modern-day Iraq, loaded donkeys with tin and textiles and walked them a thousand kilometers across mountain passes to Kanesh, roughly the distance from New York to Atlanta, on foot, through terrain that had no roads. Each animal carried about 180 pounds. The journey took two to three months, and yielded silver and gold in return for the trade. 

Archaeologists have recovered more than twenty thousand clay records from Kanesh. Most are business documents: receipts, loan contracts, shipping orders, correspondence, lawsuits. The economy they reveal is not primitive or embryonic, but teems with complete stories familiar to the modern mind. Partners sued each other in commercial courts. Husbands wrote home about prices. Wives wrote back, noting that the husband had been gone too long. A woman named Ahatum lent silver to four different men over nine years, keeping her own records, extending credit on her own terms, building a portfolio of receivables with no bank behind her and no theory to guide her — only prices, trust, and the accumulated discipline of knowing which borrowers repaid. 

People bought other merchants’ loan documents and used them as collateral for new loans. This was not a rough precursor to modern financial instruments — it was a modern financial instrument. Wall Street calls it securitization. The merchants of Assur called it Tuesday. One of the traders got caught smuggling tin in his undergarments to evade a ten percent import tax. 

There was, in other words, a tax. And a smuggler. And an enforcement regime capable of catching him. The full apparatus of commercial civilization, operating without a theorist in sight. 

In 2019, four economists from Harvard, Sciences Po, the University of Chicago, and the University of Virginia did something unusual. They took the Kanesh tablet records and ran them through a gravity model — the mathematical framework that modern economists use to predict trade flows between countries based on economic size and geographic distance. The model is a workhorse of contemporary international economics. Its coefficients have been estimated thousands of times using modern data. 

The Bronze Age numbers matched. 

Trade fell off with distance at nearly the same rate observed between modern nation-states. The relationship between market size and trade volume held. The paper appeared in The Quarterly Journal of Economics, which is not a venue given to romantic claims about ancient wisdom. It demands identification strategies and careful econometrics. The proposition the paper advanced was this: the fundamental structure of human commercial behavior has not changed in four thousand years. 

This is not a sentimental finding. It is a measurement. The gravity model does not care about ideology or historical narrative. It fits a curve to data, and this curve fit. 

Friedrich Hayek (1899–1992) spent much of his career trying to explain why centrally designed economic systems fail while spontaneously ordered ones succeed. His answer was the knowledge problem: the information required to coordinate a complex economy is dispersed among millions of actors, embedded in local circumstances, expressed in prices, and impossible to aggregate in any planning bureau. No designer can know what the market knows because the market’s knowledge exists only in the act of exchange itself. 

Hayek was right and received the Nobel Prize in economics. He was also, in a precise sense, describing something that had been running for at least four thousand years before he named it. 

The merchants of Assur did not read Hayek. They had prices, which told them where tin was scarce. They had interest rates, which told them what credit was worth. They had courts, which told them what contracts meant. They had penalties for early withdrawal, which told them that patient capital and impatient capital are different things with different values. They had Ahatum, who told four borrowers what her terms were and kept her own records of who had honored them. 

The system worked not because anyone designed it, but as the residue of thousands of individual decisions by people trying to do better for themselves and their families. It was, in the vocabulary Hayek would eventually give it, spontaneous order. Pushu-ken, one of the Assyrian merchants whose correspondence survives, would have called it simply trade. 

Deirdre McCloskey has argued that the bourgeois virtues — prudence, enterprise, honest dealing, the willingness to truck and barter on agreed terms — produced the modern world. Her argument is not that these virtues were invented in Amsterdam or London, but that there, they were celebrated for the first time. The rhetorical and cultural legitimization of commercial life was the novel event of that period, not the commercial behavior itself. On that point, Kanesh cannot argue. The tablets show the behavior. They do not show a civilization that held its merchants up as an expression of human virtue. 

But they do complicate the explanation. The graph of human welfare is essentially flat from Kanesh to roughly 1750. Four thousand years of merchants practicing every virtue McCloskey names: prudence, honest dealing, contract enforcement, patient capital, and the world did not get meaningfully richer. Something else broke the graph open. McCloskey calls it rhetoric and dignity. Others point to energy density, Atlantic scale, or the dismantling of usury prohibitions. The tablets from Kanesh cannot settle that argument. What they can do is clarify the prior question: whatever the answer, it is not the birth of commerce. Commerce was already ancient when the argument began.

This matters for a reason beyond historical curiosity. 

The recurring argument for managed economies, regulated markets, and designed commercial systems rests on a premise that is rarely stated explicitly but always present: that markets are artifacts, constructed things, instruments of policy that require expert supervision to function and expert correction when they fail. In this view, the market is downstream of theory. Someone had to think it up. Someone has to maintain it. Remove the hand of the designer, and the thing collapses. 

Kanesh is a four-thousand-year refutation of that premise. The courts that enforced Ahatum’s loan contracts were not the creation of a policy commission. The interest rates that told Pushu-ken whether a shipment was worth the risk were not set by a central authority. The early-exit penalty in the founding charter of that twelve-partner company was not mandated by a regulator. These were the spontaneous products of people with things to trade, routes to travel, and enough accumulated experience to know that trust required terms and terms required enforcement. 

When the Harvard and Chicago economists ran the gravity model on the Kanesh data and got modern coefficients, they were not discovering that ancient people were clever. They were discovering that the underlying structure of commercial behavior is not a cultural achievement that can be redesigned. It is closer to a constant. 

Adam Smith described a market that had been running since before his civilization existed. Every argument for designing markets from theory has it exactly backwards. The theory arrived to explain something already there, already working, already generating the surplus that funded the theorists. 

Pushu-ken wrote a clay tablet to his business partner about a shipment of cloth. A woman named Ahatum recorded who owed her how much silver. Neither of them had a theory. They had prices and trust and the patience to walk a thousand kilometers for a net margin. 

That was enough. It always has been.

For most of modern financial history, companies entered public equity markets gradually. Firms grew, matured, and eventually earned their place in major stock indices after demonstrating profitability, competent management, and staying power. Increasingly, though, that sequence has broken down. Companies now remain private far longer, growing quickly enough to accumulate extraordinary valuations behind venture capital and private funding rounds, and then approach public markets already among the world’s largest enterprises. The consequent pressure on stock indices, and the passive investment vehicles tied to them, is forcing a reconsideration of long-standing inclusion rules.

The latest debate centers on firms including SpaceX, Anthropic, and other artificial intelligence leaders that could soon debut publicly at valuations so immense that excluding them from major stock market benchmarks may render the indices unrepresentative of economic reality. Reports that exchanges and index providers are reconsidering special treatment for a handful of unusually large new equity listings echo earlier moments in financial history when market structure evolved faster than benchmark rules.

Such pressures have emerged before. During the late 1990s and early 2000s, firms such as Yahoo!, Google, and later Meta entered public markets with extraordinary investor attention and rapidly expanding market capitalizations. That prompted index providers to reconsider how quickly exceptionally large new listings should be incorporated. Nasdaq responded by creating expedited mechanisms allowing exceptionally large IPOs to enter the Nasdaq-100 more quickly than traditional rebalancing schedules would otherwise permit. The reasoning was practical: when benchmark-tracking funds represent a growing share of capital markets, excluding economically significant companies risks generating a disconnect between passive portfolios and the financial markets they purport to represent.

Another side to the argument deserves more scrutiny than it receives amid enthusiasm for technological innovation and market capitalization milestones. Institutional incentives have changed radically since index inclusion became a major event. And the mechanism by which being a component of a stock index has become important is beyond merely symbolic. The growth of passive investing now triggers billions of dollars in mechanical purchases from index funds and exchange-traded funds benchmarked to major indices. In effect, index decision committees now exercise considerable influence in private capital allocation decisions that were once determined more organically through decentralized management decisions and market processes.

Since the early 2000s, trillions of dollars have migrated into passive vehicles benchmarked to major indices such as the S&P 500 and Nasdaq-100. It’s an innovation that has vastly lowered costs and broadened individual access to equity ownership, but simultaneously elevated the stakes surrounding index membership. Admission can materially alter demand for a stock independent of changing fundamentals. Exclusion can similarly suppress ownership by institutional investors required to follow benchmark mandates.

It raises important economic questions. Markets, at their best, are discovery mechanisms. Prices emerge through dispersed information, entrepreneurial judgment, and risk-taking. Index providers traditionally functioned as passive observers of these processes, codifying outcomes rather than shaping them. But when trillions of dollars in stock purchases hinge on index inclusion — and index committees alter rules to accommodate particular firms — benchmarks begin to look less descriptive and more directive, intentionally or not. 

Economically speaking, this creates a feedback loop. Firms now have an incentive to achieve immense scale in private markets; policymakers and investors argue, credibly, that benchmarks cannot ignore them; indices bend their methodologies; tremendous passive capital flows follow; and valuations receive an upward burst from non-discretionary buying pressure. The process begins to resemble administrative allocation rather than competitive market selection.

To be clear, this does not imply that companies such as SpaceX or Anthropic are unworthy of either their current valuations or inclusion in certain indices. Indeed, if publicly listed, those and other firms would almost certainly deserve substantial representation in broad equity benchmarks. Nor is the type of flexibility being employed by indexing firms inherently undesirable. Historical precedent demonstrates that markets periodically require methodological adjustments. Berkshire Hathaway’s unusual capital structure posed problems for index designers decades ago, and both Google and Meta entered benchmarks relatively quickly due to their sheer size, liquidity, and strategic importance. Tesla’s eventual inclusion in the S&P 500 required unusually careful handling owing to concerns surrounding the sheer magnitude of benchmark-driven buying.

But there is a meaningful difference between updating a methodology to reflect structural market changes and habitually creating exceptions for firms deemed “too important to exclude.”

A deeper issue pertains not to index rigidity, but the extraordinary transformation of corporate finance itself. Firms now remain private for longer periods because private capital is extraordinarily abundant, regulatory burdens associated with public listing are increasingly onerous, and founders/early investors increasingly prefer governance structures insulated from public shareholders and the costs associated with investor relations. Today, by the time many firms consider going public, they have already attained scales once associated only with mature public corporations.

If American markets increasingly produce private trillion-dollar companies that seek to undertake initial public offerings, benchmark methodologies will face mounting pressure to evolve. One should remain cautious about how far those adaptations go. Indexes derive legitimacy from transparency and consistency. If rules become excessively discretionary or increasingly, indeed predictably, cater to marquee names, the neutrality that made those benchmarks trusted in the first place will steadily decline. The recurring temptation to bend index rules for giant corporate newcomers is not merely a wonky equity market issue. It reflects a broader economic reality: capital markets are rapidly changing, and infrastructure built for earlier eras is struggling to adapt.

Any effort to modernize the relationship between public issuers, indices, and financial markets must preserve the market discipline and decentralized decision-making that make equity markets and their discounting function valuable in the first place.

“Economists have successfully predicted seven of the last three recessions….”

So goes the humorous, if uncomfortably accurate, adage. Business cycles have been a source of fascination for centuries. Some economists attributed them to sunspots. Others to historical cycles — Kondratiev (45–60 year waves), Juglar (7–11 year waves), and Kitchin (three-to-five year waves). These views belong neither to cranks nor obscure figures; well-known economists from William Stanley Jevons to Joseph Schumpeter championed them. 

Tyler Goodspeed’s Recession: The Real Reasons Economies Shrink and What to Do About It belongs on the shelf of anyone tracking business cycles, financial markets, and economic growth. The book delivers a tour de force through US and UK economic history. Meticulously researched, it is full of data, analysis, and engaging stories about financiers, economists, politicians, and the occasional huckster.

I confess this book has done more to challenge my views of the business cycle than just about anything else I’ve read. Goodspeed argues, in fact, that the term “business cycle” is itself a misnomer. Economies do not operate according to predictable patterns or cycles. “Economic expansions don’t die of old age,” he writes, “they are murdered.”

The central claim of the book is that there are no natural or inevitable reasons why modern developed economies must experience recessions. Goodspeed, who served as acting chairman of the Council of Economic Advisers from June 2020 to January 2021 and is now chief economist at ExxonMobil, argues that there are always real shocks behind downturns — not a buildup of malinvestment, not irrational exuberance, not some self-generated collapse. He invokes Tolstoy’s famous maxim that every happy family is happy in the same way, while every unhappy family is unhappy in its own unique way.

So, he suggests, every recession is unique. Sometimes it is a drought, or locusts, or war, or unusual cold, or widespread strikes, or any number of other negative shocks. In fact, Goodspeed argues that recessions are rare precisely because they require several such shocks to occur nearly simultaneously.

Austrian economists like Mises and Hayek, and later Garrison, Rothbard, and Woods, have argued that artificial expansions of credit via central banks distort price signals around investment, its duration and sector, creating malinvestment and an unsustainable boom resulting in an unavoidable bust. Russ Roberts and John Pappola created memorable videos describing the debate between Hayek and Keynes on business cycles. One views recessions as caused by malinvestment, the other by too little spending.

Both are wrong, according to Goodspeed. Most approaches to studying or predicting business cycles — whether overconsumption, overinvestment, malinvestment, distorted price signals, or financial crisis — fall into the trap of oversimplifying historical episodes of economic contraction. These frameworks do not hold up when examining all recessions in the US and UK over the past three centuries.

With some familiarity in economic history and business cycles, I recognized many of the recessions Goodspeed highlights, though he also examines dozens of minor downturns that only specialists in economic history tend to notice. In the major cases of economic contraction and decline, he discusses the monetary policy shifts and financial crises that accompanied them — the same endpoints where many business cycle theorists stop their analysis.

Yet in case after case, significant physical shocks — often involving energy, food, or transportation — precede or accompany financial and monetary distress. Behind “malinvestment” and standard business cycle theories, then, are real, unpredictable shocks.

This aligns closely with the thesis of the New Classical economists, including Robert Lucas, Robert Barro, Thomas Sargent, Finn Kydland, and Edward Prescott. In this view, recessions and economic fluctuations are primarily driven by real physical shocks, with financial and monetary disturbances emerging as secondary effects.

The one theory of economic fluctuations that makes it through Goodspeed’s criticisms relatively unscathed was Milton Friedman’s “Plucking Model.” Friedman argued that recessions are temporary declines in economic growth below a trend line (like plucking an upward-sloping guitar string), that would eventually be reversed during recovery back to the trend line. In this model, recessions are the exception, rather than the rule, of economic dynamics.

In some ways, this makes a lot of sense. Friedman won the Nobel Prize in part due to his work distinguishing real from nominal (monetary) elements of the economy. The nominal variables shouldn’t affect real economic outcomes in the long run because people adjust their expectations and plans to changes in the money supply and the price level.

Friedman’s plucking model flips standard cycle theory. It predicts that a recovery’s speed and magnitude depend entirely on the severity of the bust, not the length of the preceding boom or the volume of artificial credit. This is exactly what Goodspeed finds across dozens of recessions. Recovery is far more predictable than recession. The worse the recession, the greater the subsequent rebound.

Recession delivers a powerful, accessible narrative of economic history, making significant claims about economic growth, contraction, and the nature of modern economies. It’s quite compelling. Still, I am not quite ready to abandon Austrian Business Cycle Theory.

The absence of a predictable pattern or regularity between credit booms and recessions does not mean they play no role. They may still matter as both a transmission mechanism and a source of financial fragility. Goodspeed himself emphasizes the importance of sound institutions, including free-market prices and effective financial risk management and distribution, in mitigating the severity of downturns.

It is no coincidence that many of the stories he tells center on stress, panic, or failure within the financial system. It may be true that “malinvestment” is not the primary driver of business cycle fluctuations, but financial leverage and distorted signals still matter. At the same time, Goodspeed’s warning against the hubris of market forecasting is worth taking seriously.

The economy, it turns out, is not only too complex to plan — it is also too complex to predict.

Last month, at a press conference ahead of an FA Cup semi-final, Pep Guardiola was asked about ticket prices for the 2026 World Cup. His answer was neither tactical nor diplomatic. “A long, long time ago, the World Cup was a celebration of the joy of football,” he said. “Everyone travelled across the world to watch their country. And it was affordable. Now it has become so expensive. Football is for the fans. This business doesn’t work without them.” 

FIFA president Gianni Infantino had a different answer. When confronted with reports that World Cup final tickets listed on FIFA’s own official resale platform at nearly $2.3 million each, he laughed it off and promised to personally deliver a hot dog to anyone who paid that price. His substantive defence: “We are in the market in which entertainment is the most developed in the world. So we have to apply market rates.” 

Both men are right, in their own way. Guardiola correctly identifies that something has been lost. Infantino correctly identifies the mechanism: market rates now govern a popular celebration. What neither man explains is why those market rates have drifted so far beyond what ordinary wage-earners can afford. 

For that, you need to understand what happened to money in 1971. 

The Numbers Are Not Subtle 

For three decades, inflation-adjusted World Cup final ticket prices barely moved. Available data suggests the tournaments from 1994 through 2022 priced the premium final seat at roughly $1,300 in today’s dollars. Then 2026 broke the pattern entirely: the face-value top ticket for the final at MetLife Stadium is $11,000 — a near-sevenfold real increase in a single cycle. On FIFA’s own official resale market, seats have appeared for above $38,000. General consumer prices rose by roughly 20 percent over the same four years. 

The Premier League tells a slower but structurally identical story. In the 1992-93 season, a Liverpool season ticket cost £250. Adjusted for general inflation, that ticket should cost around £534 today. Instead, Arsenal’s cheapest adult season ticket is £1,073 — twice what inflation would predict. The average matchday price has risen from £13.50 in 1992 to £83 today — sixfold, over a period when general consumer prices roughly doubled. Waiting lists for top-club season tickets now stretch 10 to 20 years. 

These numbers don’t indicate a market that has gradually become more expensive. They describe a market whose underlying economic logic has been fundamentally transformed. 

Why “Market Rates” Is Not an Explanation 

Infantino’s defence — we apply market rates — is technically accurate but analytically empty. The interesting question is not whether football now operates at market rates, but why those market rates have suddenly moved so far beyond the reach of the fans who historically sustained the game. 

In August 1971, President Nixon ended the dollar’s convertibility to gold, dismantling the Bretton Woods system and inaugurating an era of unconstrained fiat money creation. The eighteenth-century economist Richard Cantillon described the resulting dynamic: newly created money does not enter the economy uniformly. It flows first through the banking system and into financial markets, benefiting asset holders before prices adjust. Wage-earners receive the new money later, after prices have already moved. Over time, this produces a structural transfer of purchasing power from those who sell their labor to those who own assets. Whether intentional or not, it has become a recurring feature of modern monetary expansion. 

Since 1971, central banks have repeatedly expanded their balance sheets — particularly after 2008 and again during the pandemic. The result is exactly what Cantillon predicted: asset prices have inflated dramatically faster than wages. Between 2008 and 2025, the US M2 money supply rose by more than 150 per cent, while US real median weekly earnings grew by less than 10 percent over the same period. Those who own financial assets have seen their real purchasing power grow enormously relative to those who depend on wages. 

The Club as an Inflation Hedge 

Football clubs are assets. Broadcasting rights are assets. The experience of attending a World Cup final — scarce, globally resonant, emotionally irreplaceable — is precisely the kind of good that asset-enriched capital seeks out. 

When sovereign wealth funds began acquiring Premier League clubs — Saudi Arabia’s Public Investment Fund at Newcastle football club, Abu Dhabi’s City Football Group at Manchester City — they were not being irrational. In a world of low real interest rates, a globally recognised football club offered brand value, soft power, and a genuine store of value simultaneously. Football, in this light, increasingly behaves less like a public cultural institution and more like a luxury asset market. 

Of course, monetary policy is not the only force reshaping football. The Premier League’s globalisation, the explosion of broadcasting revenues, the rise of corporate hospitality, and the emergence of football as a worldwide entertainment product all contributed to rising prices. But these developments themselves unfolded inside a monetary environment that systematically inflated financial assets and expanded the purchasing power of capital relative to wages. The Cantillon mechanism does not replace these explanations — it is the deeper structure within which they all operate. 

This is why Infantino’s market-rate defence inadvertently damns itself. Football fans do not set the market rates he invokes. They are set by a global pool of capital systematically enlarged relative to wages over five decades of monetary policy. Dynamic pricing responds less to what supporters can pay than to what global asset holders are willing to pay. Monetary policy created that gap. 

Infantino’s defence also fails on its own terms. He argues, not unreasonably, that selling tickets cheaply hands the premium to scalpers — that if FIFA priced the final at $500, touts would resell at $10,000 and pocket the difference. He is correct. 

But whether FIFA captures the premium or a scalper does, the ticket ends up in the same hands: those with the greatest purchasing power. Lowering the face-value price does not return the World Cup to its fans. It just changes who profits from their exclusion. Pricing policy is downstream of monetary policy. FIFA can shuffle who captures the surplus. It cannot, by itself, change who has the surplus to spend. 

What Guardiola Understands That Infantino Doesn’t 

Guardiola’s remark — “this business doesn’t work without them” — is an economic observation, not a sentimental one. The atmosphere that makes a World Cup final worth broadcasting, the intensity that prices broadcast rights in the billions, the following that makes sponsorships valuable — all of it originates in the cheap seats. It was generated by working-class fans who built the sport’s culture over a century. The premium product that global capital now bids for is inseparable from that culture. And that culture is being priced out of its own creation. Football is one of the clearest examples of a cultural institution built by labor and increasingly consumed by capital. 

Football Supporters Europe filed a formal complaint with the European Commission in March 2026, calling FIFA’s pricing structure “extortionate” and a “monumental betrayal.” The England Supporters Travel Club estimated that following England to the final would cost a fan more than $7,000 in tickets and basic expenses alone, before flights or accommodation — roughly two months of take-home pay on a median British wage. 

Behind the statistics are real people. Anne-Marie Carr, a 54-year-old from York, told BBC Sport: “I have diligently attended England matches to earn the caps to get tickets for major tournaments, only to find that I, as so many others, am being priced out. WC 26 will be for the few, the sponsors and the glory hunters who’ve got the money.” From Ghana, Jojo Quansah told BBC World Service that supporters who had spent three years saving for their first World Cup experience were being forced to abandon those plans. “It’s been overshadowed,” he said, “by pricing those same fans out of a chance to watch their country play.” 

Football Isn’t the Exception. It’s the Rule. 

Football is a vivid case of a pattern running through the entire post-1971 economy. Housing in desirable cities, university education, and quality healthcare — all have inflated far faster than wages over this period. The goods with the deepest social meaning are often the first that asset-price inflation prices beyond wages. Official consumer price indices capture the falling cost of televisions and sneakers. They do not capture the rising cost of being present at the things that matter. 

This is the structural logic of the Cantillon effect operating across generations. No one sat in a boardroom and decided to price the working class out of football. No conspiracy was required. The monetary architecture of the modern world advantages asset owners over wage earners — steadily, automatically, and without malice — and football, being an asset, followed the system’s logic. The sport built by the working class has become a luxury product through the slow, compounding arithmetic of who gets new money first.

Pennsylvania and Virginia recently passed legislation to increase their minimum wage to $15 per hour, closing the gap with Oregon ($15.55 as of July 1) and California ($17.90 in some places). In all, 34 states mandate a minimum wage higher than the federal minimum wage of $7.25 per hour. The potential economic detriments of a minimum wage — namely, job losses — are well known. But the trend toward higher and higher minimum wages ought to prompt us to reconsider their purpose. 

The standard assumption about progressivism is that it’s intrinsically good — after all, who would oppose progress? Progressivism in the twentieth-century, though, had a much more squirrely history. Many progressives were proponents of eugenics, opponents of classical liberalism, and advocates of scientific racism. And the origins of the federal minimum wage emerged from these attitudes.

Compared to today’s progressives, early twentieth-century progressive economists were at least honest and understood the impact of a minimum wage — they knew that it would cause job losses. But they believed the job losses caused by the minimum wage were a social benefit, not a detriment. 

As the historian Thomas Leonard summarized it:

Sidney and Beatrice Webb put it plainly: ‘With regard to certain sections of the population [the ‘unemployable’], this unemployment is not a mark of social disease, but actually of social health.’

‘[O]f all ways of dealing with these unfortunate parasites,’ Sidney Webb opined in the Journal of Political Economy, ‘the most ruinous to the community is to allow them to unrestrainedly compete as wage earners.’  … A minimum wage was seen to operate eugenically through two channels: by deterring prospective immigrants and also by removing from employment the ‘unemployable,’ who, thus identified, could be, for example, segregated in rural communities or sterilized.

In other words, for progressives, race determined the standard of living and the standard of living determined the wage. Edward Ross, the American sociologist and progressive, put it more bluntly: “owing to its high Malthusian birth rate the Orient is the land of ‘cheap men,’ the coolie, though he cannot outdo the American, can underlive him.” Woodrow Wilson, echoing the same sentiment, said that Chinese immigrants could “live upon a handful of rice for a pittance.”

Women didn’t escape the implications of a minimum wage either. Many progressives held that the proper social order required women to be excluded from the workforce. A minimum wage served to push women back into the home where they belonged. For progressives, this had the added benefit of encouraging larger families among Anglo-Saxons, preventing the country from being overtaken by groups they deemed inferior.

The progressive theory of the minimum wage therefore went as follows: a minimum wage creates a barrier to entry in the labor market, which in turn freezes out the “undesirables” from the labor market who previously could compete for work by taking lower wages. To that end, a legal minimum wage, the progressives thought, would freeze out racially undesirable immigrants, the mentally and physically disabled, and women  —  all while handing a raise to deserving white Anglo-Saxon men.

Now, the sordid origins of the minimum wage are not, in themselves, an argument against it. A person’s moral character does not inevitably taint the policies they enact (the genetic fallacy). But the arguments twentieth-century progressives made in favor of the minimum wage give us insight into its actual impacts.

Progressives today are more inclusive and view job losses as a social cost, not a benefit. Yet they continue to support a minimum wage. They would argue their predecessors misunderstood its effects, and that modern support rests on different reasoning. They would say minimum wages benefit the least-fortunate Americans. 

But that claim is worth questioning. While earlier progressives held abhorrent views on race and gender, they seem more accurately to have understood economic effects: a sufficiently high minimum wage prices low-wage workers out of the market. Today’s progressives, despite their intentions, risk producing similar outcomes.

Extensive research shows that a minimum wage not only tends to raise unemployment, but that its effects also tend to fall disproportionately on the most disadvantaged workers, including the disabled, youth, lower-skilled workers, immigrants, and ethnic minorities. Another study found that job losses from minimum wage increases were much more prevalent among black workers than among white workers. 

Nobel laureate economist Milton Friedman argued that the “real tragedy of minimum wage laws is that they are supported by well-meaning groups who want to reduce poverty. But the people who are hurt most by higher minimums are the most poverty-stricken.” 

While the intentions of today’s minimum wage proponents are certainly better than their historical roots, how different are they from the original progressives if the effects remain the same? Intentions certainly matter, but results matter more. In effect, the minimum wage continues to disadvantage the most marginalized in our society.

The Trump Administration has proposed coercive new tariffs that would not only raise costs during a national affordability crisis, but would also set a dangerous precedent for executive power. 

The new tariffs of 10 percent to 12.5 percent would be imposed on Americans who import goods from countries that allegedly fail to take adequate action against the use of forced labor. It has been illegal to import goods made with forced labor since 1930, as USTR acknowledges. The new tariffs, which would apply to countries that provide 99.4 percent of US imports, would be based on whether other countries maintain and enforce similar measures. 

The proposed tariffs, imposed under Section 301 of the Trade Act of 1974, are remarkably similar in scope to the Trump Administration’s illegal 10.8 percent International Emergency Economic Powers Act (IEEPA) tariffs and its illegal 10 percent Section 122 tariffs. 

IEEPA tariffs were imposed because the United States allegedly faces a national economic emergency. Section 122 tariffs were imposed because the United States allegedly faces fundamental international payments problems. Section 301 tariffs have been proposed in response to foreign policies regarding forced labor that are allegedly unreasonable and burden US commerce. 

Despite the three different justifications, the ultimate tariff actions are nearly identical. But the newly proposed Section 301 tariffs are particularly dangerous. 

Section 301 actions can be either mandatory or discretionary. Mandatory actions include measures designed to address foreign actions that are unjustifiable or that violate our trade agreements. These measures must be roughly proportional to the foreign restriction imposed on the United States.

Discretionary actions include measures designed to respond to foreign actions that are unreasonable or discriminatory and that burden or restrict US commerce. There is no explicit requirement for these measures to be commensurate with the burden imposed by foreign actions. 

Either way, Section 301 tariffs are intended to secure the removal of foreign barriers, not to impose long-term tariff increases on Americans. President Trump and former US Trade Representative (USTR) Robert Lighthizer imposed the biggest Section 301 tariffs in history to encourage China to modify its investment and intellectual property policies during President Trump’s first term. Unfortunately, those tariffs failed to achieve their stated goals. The tariffs were supposed to expire after four years, but the Biden Administration took the unprecedented action of extending them, and the Trump Administration is now considering whether to extend them again. 

Because these proposed Section 301 tariffs are discretionary, not mandatory, current USTR Jamieson Greer arguably has the authority to pluck tariff levels out of thin air. 

According to Greer, “The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field.” 

His statement may appear to be relatively innocuous. In reality, it represents a massive power grab designed to give USTR unlimited control over imports. 

If allowed to stand, the new template for future tariffs will be:

1. Announce: “The failure of our most important trading partners to ______ is unacceptable. This creates an unlevel playing field.” 
2. Fill in the blank with anything that can be dreamed up. 
3. Assert the stated foreign action is unreasonable and burdens US commerce. 

Section 301 then gives USTR blanket authority to impose duties, limitations, or even import prohibitions, unless the courts or Congress intervene. Future USTRs, regardless of political party, may inherit essentially unlimited tariff power. 

A reasonable response would be for Congress to change our trade laws to require a vote on Section 301 tariffs. After all, in 1776, the American colonists declared their independence in part to escape the authority of a King who cut off our trade with all parts of the world. 

Two-hundred and fifty years later, Congress should embrace our heritage by passing legislation like the No Taxation Without Representation Act, introduced by Sen. Rand Paul (R-KY). His bill and similar proposals requiring Congress to vote on tariffs are needed to fend off new threats to our freedom to trade, including the unprecedented expansion of Section 301 tariffs.