Government is presently “shut down” for failure of Congress to pass a budget for the start of the fiscal year. It is a relatively rare event, having happened just 21 times previously. Thus, politicians and pundits are presently telling us what to make of it: identifying immediate impacts, foretelling enduring consequences, and measuring the macroeconomics. 

There are just two ways out of this shutdown: approval of a full Fiscal Year 2026 budget or the more easily accomplished interim “stopgap” budget called a “continuing resolution” (CR). As pressure mounts for the easy fix, it is time to hear the truth: CRs can be worse than shutdowns.

Shutdowns Are Not All That

There will be thousands of genuine stories of hardship and frustration that will emerge from this shutdown. There will be waste, interruptions, and inefficiency. Still, from a whole-of-society perspective, shutdowns have historically been much ado about little. Government is not shut and it is usually only moderately and briefly down. 

Several myths about shutdowns prevail which make them seem dire. First: government must cease spending. In truth, spending may continue, first, with residual funds from prior years (e.g., research and development, procurement of large items, and working capital operations); and second, when required or implied by law (e.g., Social Security).

Another myth: government must cease activity. In truth, the government may conduct activity deemed essential. The result is that about 75 percent of all federal employees continue to go to work. And there they are met by a large contractor workforce. Contracts, which amount to about 47 percent of all discretionary spending, will have had lengthy periods of performance funded with last year’s budget — for moments just like this.

A final common myth: the economy suffers. In truth, while GDP does fall during a shutdown, government plays ready catch up after a shutdown. Plans swish from one month to another. When all is said and done, macroeconomic indicators will show nary a blip in the data.

The only truly unsettling predictable and regular impact is to federal employees. Whether working or furloughed, they cannot get paid for these days of shutdown until a resolution. That is indeed unfortunate.

When Washington’s Quick Fix Becomes a Slow Bleed

A CR avoids a shutdown. It grants an interim budget — one that mirrors last year’s spend rate and plan. It basically says, “Keep calm and carry on like last year!”

A CR seems like a commendable fix. However, the effects on one governmental function, the military, expose the many problems.

The first problem is that we do not live in a static world. Right out of the gate, inflation and additional sectoral price growth take a roughly 4 percent chunk out of last year’s spending power.

Then misalignment of plans quickly emerges. Each year, as the military adapts to new threats, they plan for hundreds of different acquisition and construction projects as well as various increases and decreases in production. During a CR, these changes are forbidden. Money-in-hand (usually about 6 percent) ends up sitting idle during a CR.

Unfortunately, catch up is not readily feasible as it is after shutdowns. CRs occur almost every year and last on average over a third of a year. With such recurring delays, the integrated coordination of complex projects falls apart: submarines come to dry dock and leave without updates, aircraft get built but cannot securely communicate with each other, and launch windows open and close for a satellite that is not ready. 

At the end of the year, the military often is left maintaining an island of misfit toys, while the future of warfare remains just over the horizon.

Fiscal Uncertainty Promotes Waste

CRs introduce uncertainties as to what may be purchased and when the CR will be superseded by an actual budget. Uncertainties change organizational behavior in deleterious ways.

Starting at the Treasury, each level of authority becomes protective of its funds. Managers parcel out money to lower organizations the way survivors on a life raft parcel out morsels of food.

Between price growth, restrictions on change of plans, and an organizational possessiveness that would make Gollum blush, spend rates for lower-level program offices often fall to 75 to 80 percent of last year’s. 

Tough decisions about priorities must happen: hiring slows, training is put on hold, military moves are held off, and leaders get pitted against each other.

In this environment, financial managers repeatedly must justify short-term spend plans and execution performance. To avoid money being clawed away, they spend expediently instead of necessarily effectively. Small-batch purchases replace the harder but more efficient large-batch purchases; the immediate gets preference over the optimal.

Similarly, contracting officers must repeatedly let contracts with small periods of performance. Because of the churn, they tend to choose contract types based on simplicity of execution instead of effectiveness.

When a full budget does arrive, yet more trouble occurs. Financial managers race with their belated windfall into frenzied end-of-the-year spending, often on low-value items.

A lengthy CR (as occurs in most years) undermines plans and produces many colors of waste. 

Stopgaps and Jacklegs: Euphemism for Failure

A continuing resolution is commonly called a “stopgap.” But is “stopgap” an appropriate term?

Modern dictionaries define stopgap as a “temporary expedient,” a solution “until something better or more suitable can be found.” Etymological dictionaries trace it to the literal plugging up of openings — dikes, hedgerows, and shield walls used against restless seas, impertinent cattle, and bloodthirsty Vikings.

Calling a CR a stopgap makes it seem a commendable act. But in truth, CRs are applied too frequently and lengthily. As a result, they swamp the land year after year, leaving it salted. This swamping, no doubt, does more damage than the brief political theater of shutdowns

The public should start to stigmatize CRs. To that end, I propose a different metaphor for a CR. I suggest we dig up an old slang word of American origin, an “Americanism” suited to this uniquely American malpractice. I suggest we call a CR a “jackleg.”  A jackleg is a temporary fix like a stopgap, but it is a fraudulent one from those who are “incompetent, unskillful, or dishonest.”

Congress’s License to Miss Deadlines

Each year, Congress has from February to October (about the length of time of the gestation of a human being) for its members to agree on terms. Nearly every year they fail.

A CR came about as an invention by Congress. It is their self-approved license to fail at the constitutional duty granted them. For such an insidious invention, a “jackleg” is perhaps the only appropriate epithet.

The public should demand that Congress does its job and passes a budget by October 1 each year. If it cannot, there should be only one tolerable outcome — the embarrassment of a shutdown instead of the illusions and deceptions of jacklegs.

Several incidents in the COVID pandemic’s first two years forced me to confront the uncomfortable reality that American society had cracked apart, fleeing the comfort and safety of accepted knowns to float untethered from logic in a foreign ether far from planet Earth. Welcome to Mars.

But prior incidents had already trained and prepared my mind to expect a coming derangement. During the Persian Gulf War and the Northridge Earthquake, I had near-death experiences that lingered for years in memory, forever shaping my future actions. Just as scary as thinking I was about to die were the frightening behaviors I witnessed in those around me. During the Gulf War, a soldier in my division came across an Iraqi mine. Instead of calling for engineers to destroy the device, he decided to flip it away from himself, blowing off his own head. After the 1994 earthquake stopped shaking my condo so hard the refrigerator fell over and the walls seemed close to caving in, I stepped outside to smell gas leaking from the major pipeline that ran beneath our complex and a nervous neighbor lighting a cigarette to calm his nerves.

Terrified someone we couldn’t see might be lighting up a smoke elsewhere in the condo complex, my roommates and I fled for safety, driving through a surreal cityscape of gas line fires, while I rode in the backseat with a loaded pistol.

Both wars and natural disasters upend the laws and rules that govern our normal existence. Experience has taught me that such tectonic shifts in society’s rules leave many unprepared to adapt and navigate a new ecosystem. My safety and survival, I’ve learned, sometimes depend on putting my back against a wall to watch those around me whose thinking refuses to acclimate.

The rules are changing dramatically, I posted on Facebook, back in the summer of 2020. And some people won’t be able to adapt. You’re gonna see people you have long trusted and respected lose their absolute minds, drop trou and show the whole world their entire ass. Be careful.

I knew crazy was coming. I did not expect that crazy to destroy so much trust in our government, media, and social institutions.

How “Follow the Science” Destroyed Trust in Science

Journalist David Zweig documents much of the COVID pandemic crazy in his book An Abundance of Caution. In diligent detail, he marches the horrified reader through a series of mistakes, most still unacknowledged, including the lack of scientific evidence for lengthy school closures and nonsensical “follow the science” requirements for masks and social distancing. The details he describes remain frightening because too many still deny what happened nor admit they did anything wrong.

The month after the pandemic took off in the West, the Journal of the American Medical Association (JAMA) published a February 2020, summary of Chinese data and found just 2 percent of COVID patients were less than 19 years old and no children younger than 10 had died. “Disease in children appears to be relatively rare and mild,” Zweig discovers, digging up a World Health Organization (WHO) report published that same month.

Just like the study in JAMA, WHO researchers stated that children accounted for around 2 percent of reported cases, with only 0.2 percent of children categorized as “critical disease.” This calculates to 0.0048 percent of the total population who became seriously ill.

People interviewed by the WHO investigative team “could not recall episodes in which transmission occurred from a child to an adult.”

Despite research showing that kids were at minimal risk from the virus, Zweig records what we all now know: we ignored objective science in favor of subjective values, locked down our cities, shut down our schools, and threw the kids on laptops pretending they would learn. Baseless fears that children were dying in large numbers lingered even six months into the pandemic, long after anyone with eyes could see the virus wasn’t killing kids.

Gallup released a poll in July 2020 finding that the public thought 40 times the number of people younger than 25 were dying than was actually the case.

“People were dying from a scary new disease, and my family and my neighbors were readily compliant with the governor’s orders to stay home, and stay apart from each other until some unknown time when this thing was going to go away,” Zweig writes, describing the state of his household a month into New York State’s lockdown. “And yet. This virus, which was a terror for the old, posed almost no threat to my kids or their friends.” 

A former magazine fact checker, Zweig began digging into scientific studies and calling up established researchers to try and understand how state and federal governments formulated pandemic policies that seemed to ignore scientific evidence while harming his own children. Trusted officials, he found, were failing to adequately explain the uncertainties of published research and closing their eyes to documented consequences.

But the public never learned that pandemic strategies were based mostly on values, not objective science, because journalists had abandoned all pretense of reporting. Instead of scrutinizing the scientific literature, journalists with legacy media outlets favored calling up these same trusted officials. Reporters also platformed a coterie of self-branded experts who managed to claw their way out of scientific obscurity to become overnight authorities on epidemics in the press and on social media.

Many of the plans enforced during the pandemic ignored already established contagion-response strategies. In his book, Zweig cites several researchers who warned that school shutdowns would damage children during an epidemic, such as D.A. Henderson, a much celebrated epidemiologist who led the international effort to eradicate smallpox before becoming dean of the school of public health at Johns Hopkins University.

“Disease mitigation measures, however well intentioned, have potential social, economic, and political consequences that need to be fully considered by political leaders as well as health officials,” Henderson wrote in a 2006 paper published in the journal Biosecurity and Bioterrorism. “Closing schools is an example.”

Henderson cautioned against locking kids out of school and forcing some parents to abandon work to stay at home, a policy that would place an unfair burden on certain segments of society to control virus transmission. Henderson and his co-authors also forewarned against policies based on scientific models, as they would fail to account for all social groups.

No model, no matter how accurate its epidemiologic assumptions, can illuminate or predict the secondary and tertiary effects of particular disease mitigation measures. . . . If particular measures are applied for many weeks or months, the long-term or cumulative second- and third- order effects could be devastating.

Yet models are exactly what trusted officials relied on, Zweig writes, for pandemic procedures such as school closures whose damage to children is still being assessed. As for the segments of society who were most harmed, that would be the less privileged and the working class, whose experiences and perspectives were never injected in these models formulated by “laptop liberals” who had the privilege to work from home offices. 

Zweig highlights the awful reporting by a few laptop warriors, such as New York Times reporter Apoorva Mandavilli, and a 2020 working paper by Dartmouth College and Brown University academics underlines how poor journalism was pervasive. Analyzing 20,000 news articles and TV news segments from foreign English-language and American media for positive or negative tone, they found that US major media outlet coverage was far more downbeat.

“Among topics analyzed, the researchers looked at schools coverage specifically,” Zweig writes. “They found that 90 percent of school reopening articles in American mainstream media were negative, compared to only 56 percent for English-language major media in other countries.”

Pretending Certainty, Demanding Compliance

Living in Spain, I was unaffected by much of the pandemic crazy in 2020. My wife is a physician, but we had just had a child, so she was staying at home. No worries about school lockdowns, no fears about my wife getting sick treating patients. As for me, I work from home, and ventured out every few days during the lockdown to buy food.

I didn’t realize it at the time, but I was the classic lockdown liberal, and I played the part like a skilled character actor. I followed all the rules, masking when I left the apartment and berating anyone on social media who did otherwise. But as happened with Zweig, cracks in my worldview eventually appeared.

After Trump announced pharma executive Moncef Slaoui as his Coronavirus Czar to run Operation Warp Speed, I wrote a July 2020 piece for The Daily Beast discussing my dealings with Slaoui. I had led the US Senate investigation into GlaxoSmithKline (GSK), from 2007 to 2010, and we had uncovered GSK hiding the dangers of Avandia, the company’s $3 billion a year blockbuster diabetes miracle. Slaoui was head of GSK’s research, at the time, and the Committee’s 2010 report on Avandia exposed Slaoui lying to Congress about the drug’s harmful effects.

“In the face of the most dangerous disease confronting the country today, why would Trump ask the public to trust someone with this past?” I reported for the Daily Beast in July 2020.

By late 2020, I was having serious doubts about the COVID news. When I came across an article dismissing the idea that the pandemic might have started in a Wuhan lab as a “conspiracy theory,” I shared it on Facebook with a skeptical comment, pointing out that it was absurd to use that label when none of us actually knew how the pandemic began.

I was then confronted by a couple science writers who dressed me down in Facebook comments. Didn’t I know that Trump was saying the virus came from a lab? Why was I saying the same thing as Steve Bannon, the conservative podcaster?

The response was a bit mind-boggling. I didn’t listen to Bannon’s podcast, and I didn’t care what Trump said. I certainly didn’t follow Trump on social media because I got my fill of his opinions in the news. But if Trump did say the virus came from a Chinese lab, what did that have to do with me asking questions?

Like everyone, I followed requirements to mask, even though I found masks off-putting and masking demands almost religious in their imposition. At the same time, several respected researchers told me that the scientific evidence for masking wasn’t there. So why were we all masking?

Losing Faith in the Church of COVID

I first spoke with Zweig several times in early 2023. Elon Musk had given me the greenlight to come to Twitter’s headquarters and dig through the Twitter Files for evidence the company had been censoring inconvenient COVID truths. Zweig had already published some Twitter Files and I wanted to pick his brain about what I could expect when I got to San Francisco. (Unfortunately, Zweig doesn’t cover the pandemic censorship in his book.)

I began picking Zweig’s brain about the science supporting mask mandates. Scouring the academic literature and news reporting on masks, I had found a few articles in places like Scientific American, and Wired that argued masks don’t work to stop virus transmission. Zweig had written three of these: a 2020 article in Wired, and articles in New York Magazine and The Atlantic in 2021.

Zweig lays out all the problems with “masks work” science in his book, but I had missed his articles when they were published, because his reporting had been drowned out in a tidal wave of news cheerleading for masks. Zweig’s report in The Atlantic titled, “The CDC’s Flawed Case for Wearing Masks in School” is particularly revealing about mask derangement.

Zweig’s article discusses a paper published in the CDC’s Morbidity and Mortality Weekly Report and found that schools without mask mandates were three-and-a-half times more likely to have COVID outbreaks than schools with mask mandates. The findings were so stunning that CDC Director Rochelle Walensky flacked them during interviews, including an appearance on CBS’s Face the Nation.

Zweig, however, discovered the study was rife with errors, one scientist calling it “so unreliable that it probably should not have been entered into the public discourse.” First, many of the schools cited in the paper were not even open during the study period. Furthermore, the researchers didn’t control for student vaccination status, which would have changed the incidence of COVID illness. Zweig also found that some of the schools that were supposed to have mask mandates never had mandates, while others were virtual schools where students never attended in person.

Back when I called Zweig in 2023, he told me he found reporting on the CDC study for The Atlantic in 2021 still painful, two years later. After documenting all the flaws in the CDC paper, he told me he sent the list to the CDC for comment. The agency didn’t dispute his reporting, yet they stood by the study.

“I was just banging my head on the floor, ‘Oh, my God. What is going on!” he told me at the time.

Zweig also documents a paper that researchers at Arizona State University published in April 2020 that alleged if 80 percent of people wore masks it could reduce COVID mortality by 24 percent to 65 percent. But did they arrive at this conclusion by running a study? Of course not.

Zweig found the paper was based on a model that was based on another model and a whole slew of assumptions. Only when you delve into the details do you realize how shoddy the research was that guided us through the pandemic:

The authors arrived at this conclusion by assuming masks had, at worst, a 20 percent effectiveness. Where did they get 20 percent from? They cite another modeling paper, “Mathematical Modeling of the Effectiveness of Facemasks in Reducing the Spread of Novel Influenza A.” This paper, however, cites a study that found surgical masks can have a performance as poor as just 15.5 percent effectiveness at blocking virions. The study also found that, depending on particle size, nine out of ten N95 masks, which are supposed to block 95 percent of particles, failed to meet that benchmark. Some of the tests in the study also used aerosolized salt, which has different characteristics from viruses. And, importantly, the study was conducted in a laboratory on manikins, with the masks “sealed to the manikin’s face.” The authors noted the obvious: “in real life leaks may lead to considerably increased penetration.”

Hundreds of subsequent studies, Zweig discovered, then cited this modeling paper, as did many governmental reports. But on social media, the “model” morphed into a “study” that was “proof” that masks work.

The Perils of Predictive Modeling

“Models bury assumptions,” one expert tells Zweig. As he notes in the book, many models have little or no power in predicting the future:

It was like a football coach showing his team a complex offensive play and insisting it would result in a touchdown, without acknowledging that each of the opposing team’s defensive players might not do what he expected them to do. Even the most elegantly designed plays by the best coaches often turn out ugly on the field. Like their human counterparts, the scientific models were a beautiful ideal.

Halfway through the reading, I sent Zweig a text, complaining how mad his book was making me. This is my only warning to readers. Zweig’s book is smart, well-written, and superbly researched, but as he recounts his own experiences page after page, it will dredge up your memories of the pandemic. Like mine, like Zweig’s, they are certain to be laden with confusion and laced with certainty that the world, however briefly, had gone mad.

Unfortunately, if you’re searching for some sort of resolution that An Abundance of Caution has set history right, restored a sense of truth, and resurrected faith in our leaders, think again. As the pandemic wound down, Zweig recounts how the media and left-leaning establishment dreamed up a new narrative to hide their prior mistakes: “those decisions were regrettable, yet they were understandable during a time of fear and uncertainty.”

There is no going back to a time before COVID-19 made our world crazy. You are right to be mistrustful of trusted officials and respected institutions. Zweig’s writing lays out all the evidence you need to feel this way.

By every official measure, the economy seems to be doing well. Personal income, disposable income, and consumption expenditures all increased. GDP growth has been revised upward by both the Bureau of Economic Analysis and the Atlanta Fed. As if that weren’t enough, the stock market continues to climb to historic highs. 

Despite these positive reports, there are still concerns. The University of Michigan’s Index of Consumer Sentiment continues its downward trend. Job openings, hires, and total separations are holding relatively constant. This suggests that actual job growth has leveled off, meaning that Americans are likely to face harder times finding a new job should they lose their job or otherwise get furloughed. And while manufacturing seems to be growing in certain regions, it’s also declining in others, and there is evidence of declining producer spending, which could portend hardship down the line as businesses shift toward hoarding cash instead of building capacity. Finally, there’s the concern about America’s agricultural sector, with President Trump promising to divert some of the tariff revenue to farmers in a bid to help them weather the challenges they are facing and are likely to face ahead. 

With all of this in mind, economists’ least favorite question, “how is the economy doing?” has but one answer: who knows? The more detailed answer, and one that famously drew the ire of President Truman, “on the one hand, official data looks pretty good. But on the other hand, there are some serious concerns that, going forward, may or may not cause some real problems.” 

Understanding this is key to understanding why the talking heads on television news networks seem to be so wrong. Plenty of indicators suggest that things are and have been fine in the American economy for a long, long time. And yet, for years we heard about the “vibecession” where almost every economic indicator was pointing toward a great economy but consumers were inexplicably acting as if we were in a recession. The problem wasn’t with the consumers and, paradoxically, the problem was not with the fancy government statistics. The problem was with the talking heads and their refusal to ask why consumer behavior might be more telling than aggregate indicators. 

To help cut through the noise, we can look to other, less obvious sources combined with economic theory. The New York Times, for example, reports that Hamburger Helper sales have risen 14.5 percent just since the start of the year. The theory is that Hamburger Helper sales are loosely correlated with economic recessions; when Hamburger Helper sales rise, it is a sign that consumers might actually have less disposable income and are seeking to stretch their money as far as possible. 

Hamburger Helper is far from the only fabled example of quirky statistics that economists use to clarify our supposed crystal balls that allow us to peer into the future. Warren Buffet famously popularized the “men’s underwear index,” reasoning that men are more likely to buy underwear only when flush with cash, which happens during a boom. The Baked Beans Index, similar to the Hamburger Helper theory, suggests that baked bean sales spike during a recession. 

The reason behind this is straightforward according to economic theory: these goods, and plenty of others, are often characterized as inferior goods. Here, “inferior” does not necessarily mean “of low quality.” Instead, it refers to the idea that when a person’s income rises, their demand for any given product will change. For inferior goods, income and demand move in opposite directions: when one increases, the other decreases. For so-called “normal goods,” like beef, fresh vegetables, and new cars, income and demand move in the same direction: when one increases or decreases, the other moves in the same direction. 

Consider a college student, toiling away late at night, working on esoteric papers and assignments foisted upon them by their malevolent professors. What is their diet likely to consist of? Instant ramen noodles, spaghetti, and (hopefully) some vegetables, though probably not the “organic” kind. But as their incomes rise after graduation, notice what happens: they stop eating instant-anything and shift toward healthier, tastier, and more expensive options. This reflects the idea that instant ramen noodles, spaghetti, and non-organic vegetables are inferior goods. Indeed, the hit song, “If I Had a Million Dollars” by the Barenaked Ladies is really just a song about normal and inferior goods. Chesterfields, ottomans, K-Cars, pre-wrapped sausages, fur coats (but not real fur coats), and exotic pets (like a llama or an emu)? All normal goods. Kraft dinners, in a subversive twist, also considered a normal good by Barenaked Ladies, provided, of course, that they come with “Dijon ketchup.” 

The truth of the matter is that individuals know whether they lost their job or not. They know full well whether their industry is in decline or if it is booming. Individuals don’t need fancy government statistics to tell them what they already know. Because of this, changes in their behavior often precede changes in official government statistics, no matter how good those statistics actually are. 

So how can an average person do better economic analysis than the talking heads? Start with a basic principle from Nobel Laureate James Buchanan: “What a science does, or should do, is simply to allow the average man, through professional specialization, to command the heights of genius.”

The easiest way to do this is to recognize that the economy is not some abstract thing measured by government statisticians. It’s millions of individual people making millions of individual decisions each and every day. When people start buying more Hamburger Helper, that should tell you something that GDP figures just can’t capture. The American people are not confused or somehow acting irrationally, they’re just responding to real pressures in their own lives that haven’t shown up in the aggregate data (yet).

If you want to get a broader picture of the economy, rather than start the investigation at national level data, start local. National level data often gives an inaccurate summary of the overall economy. It’s like pointing out that everyone in a restaurant is, on average, a millionaire after Bill Gates walks in. No matter how accurate the statement, it’s still mostly meaningless. Pay attention to what people around you are actually doing. Are your neighbors buying Hamburger Helper or steaks? Are local businesses hiring or laying off? That tells you more than any GDP revision ever could.This is why Hamburger Helper sales matter more to everyday Americans than GDP revisions; they reveal what’s actually happening in people’s lives by reflecting data at the lowest level of analysis: the individual. Washington bureaucrats may carp about the fancy government statistics, but a thousand new tech jobs in California or in the hospital system in North Carolina don’t help the manufacturing workers being laid off in Michigan. The economy isn’t doing well or poorly. It’s doing differently for different people and the people living it know first and best.

Almost two years ago, the enthusiasm of the 56 percent of Argentine voters who called for “Freedom” when electing Javier Milei as President of Argentina seemed unstoppable. The pace of change also seemed unstoppable. Expectations were enormous for a government that had restored hope to an Argentina plagued by annual inflation exceeding 210 percent and a poverty rate of over 50 percent. A libertarian president took office to rescue the country from a new populist crisis.

The Argentina Milei Received

It is difficult to briefly describe the devastated country President Milei found upon taking office. Beyond the aforementioned inflation rate, an increasingly indebted Central Bank, and a public spending level of 44 percent (currently close to 35 percent), a country where 7 out of 10 children were poor, and where 7 out of 10 young people would choose to emigrate if they had the opportunity. At a glance, this was the legacy of the populism of the Kirchnerist governments.

Currently, President Milei’s greatest achievement, as perceived by the public, has been and is the reduction of the inflation rate from more than 210 percent annually to 33.6 percent by August 2025. With the drop in inflation, the economic reality of Argentines “calmed down” for ordinary citizens, and we began to look ahead, to plan, to implement dreams, escaping the perverse previous situation, one of mere defense and survival.

The elimination of regulations was also a huge achievement, although it was less visible to people with more technical training. Another important achievement was the partial end of what we call the “money trap,” which allows the international circulation of personal money, but not yet that of companies. The impossibility of taking money invested in the Argentine economy out of the country is, without a doubt, a major disincentive to foreign investment in the country.

Ideology or Interests?

But — in contrast to the hope generated by the charismatic leader Javier Milei, and the global impact of his image and message — his political power upon taking office faced significant restrictions, both at the parliamentary level (he only holds 15 percent of Representatives and 10 percent of Senators), and at the provincial governments (0 percent of governors) and municipal governments (three out of every 1,100 municipalities). This situation gives us an idea of the challenges of implementing profound reforms, which — evidently — affect the interests of powerful sectors that live off the federal government’s money.

One of the major differences between the current president and the previous president who managed to implement market-oriented reforms (Carlos Menem, president between 1989 and 1999), is that the latter (despite having taken office with hyperinflation of more than 5000 percent annually) enjoyed majorities in the House of Representatives and the Senate, and enjoyed the political support of more than half of the governors from his party.

The rigidity of possible reforms is high. Even today, and despite good intentions, 21 million Argentines (out of a total of 46 million) continue to receive salaries or payments from the Federal Government every month. This persists due to the government’s difficulties in reducing the four million public employees in a country where six million people work in the formal sector. This also stems from the legal impossibility of eliminating the four million (out of a total of eight million) “non-contributory pensions” that were given away by populist parties. And so on.

 It is not easy for a president to change the reality of a country like Argentina. It is not enough to 1) win an election. It is also necessary to 2) have the right ideas, and 3) have the capacity to implement the right ideas.

Politics Without Romance

Since the beginning of 2025, the Milei administration has faced increasing challenges. It has combined its significant achievements in reducing inflation with exchange rate and financial system measures that maintain a relatively cheap foreign currency for citizens. Argentina is now an expensive country in terms of dollars (at least compared to other Latin American countries), impacting competitiveness. The Big Mac Index reflects this.

Although some achievements — despite the limited power in parliament and state governments — have been significant, the influence of the state has not been strongly perceived by a portion of the population. As noted, the number of people receiving funds from the national government (federal government, provinces, and counties) has not significantly decreased. Faced with minimal international reserves, the government received a loan of more than $20 billion from the IMF in April 2025, which provided temporary breathing space and allowed it to buy time.

At the same time, the elimination of subsidies in some areas meant a greater burden on services such as electricity, natural gas, water, and transportation (bus, subway, train) in the budgets of lower-income sectors, generating unrest. This also led to a decline in activity in the least competitive sectors of the economy (industry), which — paradoxically — are those that generate the most employment.

Lacking a parliamentary majority has made it difficult for the government to approve sweeping reforms (tax cuts, labor deregulation, and the pension system), key to changing the economy’s major incentives.

We are currently experiencing complex times. The government has lost a symbolically key legislative election in the Province of Buenos Aires (40 percent of the population) and faces national parliamentary elections toward the end of October. In this context, country risk has increased from 800 basis points to almost 1,400 basis points, and the dollar has risen from 1,350 pesos to 1,500 pesos in just a few days (even with intervention by the Ministry of Economy to lower it).

The challenge of reversing the fate of a state like Argentina, captured for decades, is enormous. Misguided ideologies may be a justification for redistributive populism, but the specific interests of rent-seeking groups — in James Buchanan’s terms — seem to strongly explain the resistance to change. As Mancur Olson taught us, paradoxically, the economically least competitive sectors are often the strongest at defending their privileges.

The case of Argentina also prompts us to reflect on the redistributive incentives implicit in majoritarian democracies.

Governor Michelle Lujan Grisham announced in September that New Mexico will become the first state in the nation to guarantee free childcare for its residents beginning November 1. While the governor’s intentions may be admirable, her approach misdiagnoses the cause of rising childcare costs and other childcare-related challenges facing American families. Rather than serving as a model for other states or the federal government to follow, New Mexico’s plan is a trial run in the wrong direction. 

Rising childcare costs are a real and pressing problem for American families. Over the last four years, formal childcare costs have risen by 29 percent across the nation—far outpacing the general rate of inflation and placing an increasingly heavy burden on working parents. In response, more parents are likely to leave the workforce, postpone career advancement, or have additional children.  Aside from New Mexico’s bold strategy, is there any other way to address the childcare burden on families? 

Understanding Baumol’s Cost Disease 

First, it is important to take a step back to better understand why costs are rising. Much like education and healthcare, childcare is an inherently labor-intensive service that cannot easily benefit from productivity improvements through automation or productivity-enhancing technologies.  

This phenomenon is best explained through what economists call Baumol’s cost disease, named after economist William Baumol (1922 – 2017). His theory explains why certain sectors of the economy, particularly those that rely on human interaction and care, experience cost increases that outpace inflation and wage growth in other sectors. 

In many other industries, technological advances allow workers to produce more output with the same amount of labor, driving down per-unit costs. Baumol’s cost disease helps explain why service sectors like childcare, education, and healthcare appear slow to adapt and benefit from technological changes. A teacher can only effectively instruct so many students, and a doctor can only see so many patients a day while maintaining quality interactions.  

As wages rise in the broader economy, these labor-intensive sectors must compete for workers by raising wages, but they do not experience the same productivity gains that offset higher wages. The result is that costs in these sectors rise faster than the general price level, which is exactly what we are seeing in the childcare market today. 

Lessons from Universal Healthcare and Education 

The similarities between childcare and other labor-intensive sectors allow us to make some pattern predictions about New Mexico’s approach. Consider, for example, proposals to establish universal healthcare and universal higher education in the United States. 

Medical for All proposals have been estimated to cost between $28 and $32 trillion over 10 years, depending on the specific plan. More modest universal healthcare proposals have price tags in the tens of trillions. Similarly, plans for universal higher education—such as making all public colleges and universities tuition-free—have been estimated to cost the federal government between $28 and $75 billion annually. 

The enormous cost estimates reflect not only the inherent labor-intensive expense of these services, but also the additional demand that universal access would create among people who do not currently purchase these services. New Mexico’s childcare proposal faces the same economic pressures.  

The Supply Problem 

New Mexico’s own estimates reveal a huge supply-side problem. The state’s announcement of the new program acknowledges it will need approximately 5,000 additional childcare professionals to accommodate the increased demand that free childcare will generate. This is a massive expansion of physical infrastructure and childcare workers that cannot be achieved overnight, if at all. 

The state’s proposal also includes a plan to address quality concerns by incentivizing providers to pay higher wages—they will offer higher rates to providers who pay at least $18 per hour to entry-level staff. This raises the question of if New Mexico will have enough qualified providers to meet the surge in demand, especially if parents aren’t paying higher wages than can be found in other sectors. Currently, New Mexico requires that all childcare workers first receive training in 11 topic areas and maintain 24 hours of additional training each year.  

Looking to healthcare policy is particularly instructive here. In higher education, increased availability through government subsidies is causing many students and families to rethink the value of a college degree. Demand for higher education has begun to decrease in many segments, providing some natural correction.  

The healthcare scene more closely mirrors what we expect from universal childcare policy. Despite rising costs, demand for healthcare services continues to expand from government-sponsored insurance coverage for select age and income groups. The result has been persistent supply shortages and long waiting lists, especially for specialists and for all different kinds of healthcare services in rural areas.  

Much like childcare, healthcare suffers from regulatory constraints that limit supply expansion. Licensing requirements, facility regulations, certificate-of-need laws, and professional credentialing create barriers to entry from responding efficiently to increased demand. Government measures are simultaneously increasing demand while keeping a cap on supply. 

Regulation and Childcare Costs 

Despite the inherent labor-intensive features of childcare services, regulation also plays a major role in determining the cost of care. This becomes clear when examining cost variation at the state level. For example, Massachusetts, with some of the most stringent childcare regulations in the nation, sees average annual childcare costs exceeding $25,000 per infant per year—nearly double the national average. While often well-intentioned, regulations on child-to-staff ratios, maximum group size, and education and training requirements create substantial barriers to entry for potential providers and drive up operating costs for existing centers.  

The contrast between states with heavy regulatory burdens and those with relatively less oversight demonstrates that policy choices significantly impact both cost and availability of childcare services.  

A wider range of childcare options would better serve families. Parents are uniquely positioned to understand their children’s needs and developmental requirements, as well as their family’s schedule. They benefit from access to a diverse array of childcare options, including home-based alternatives that can be more flexible and cost-effective than traditional center-based care.  

Current regulations often create unnecessary barriers to these alternatives. Many states require childcare center directors to have college degrees, despite limited evidence that formal credentials correlate with better care or child outcomes. Instead of making childcare more uniform, states should create pathways for entrepreneurs who have gained expertise working in childcare to open their own centers on the basis of practical experience.  

A More Sustainable Model 

New Mexico’s “model for the nation” fails because it ignores fundamental economic principles. In making childcare “free” to all residents while failing to address inherent supply constraints, New Mexico is likely to create persistent shortages and frustrating waiting lists. The state’s Early Childhood Education and Care Department will have to respond with costly expansion projects currently estimated at around $20 million per year. This funding will go toward building up infrastructure that was formerly sponsored by business owners, and it ultimately passes the tab along to taxpayers.  

A more sustainable model for childcare reform involves reducing burdensome regulations that prevent new, diverse facilities from opening, creating more career progression opportunities for non-degree holders, and allowing parents to make informed choices about their children’s care. Solutions that increase competition will prove far more effective at lowering costs and improving access than creating a free-for-all over a limited number of “free” childcare services.

Donald and Melania Trump are eating breakfast together at Mar-a-Lago on the morning of January 21, 2029. At noon on the previous day, Gretchen Whitmer was sworn in as the forty-eighth president of the United States.

Donald Trump to Melania: “How much did our family spend last year on food, clothing, furniture, and other stuff for Mar-a-Lago?”

Melania: “About two million dollars.”

Donald: “How much stuff – tangible stuff, stuff with mass, stuff you can touch – did our family sell?”

Melania: “Well, we sold only that used golf cart for $5,000.”

Donald: “This is bad. Very bad. It’s a family emergency. The people we trade with are taking advantage of our kindness. I’m so disappointed in them. They let me down. It ends now!”

Melania: “What do you mean?”

Donald: “Simple. From now on, we won’t buy any stuff – no food, no clothes, no golf carts, no anything – from anyone who doesn’t buy at least an equal amount of stuff from us. I’m tired of being ripped off!”

Melania: “What should I do?”

Donald: “Not much at the moment. I’ll handle it. I’m the master artist of the deal, you know! Just bring me a list of the merchants that we’ve been buying all this stuff from and the amount of money that we spent last year on what we bought from each of them.”

Later that day, Melania brings the requested list to Donald, who studies it carefully.

After several minutes, Donald asks Melania to arrange a meeting first thing in the morning with the butcher from whom the Trumps have been purchasing their meat.

The next morning, the butcher – conveniently named “Butcher” – is escorted into the former president’s office at Mar-a-Lago.

Trump: “Have a seat and take a look at this document.”

Butcher (studying the document): “It’s a record of all the beef, pork, and lamb I sold to you last year.”

Trump (handing another sheet of paper to Mr. Butcher): “That’s right. Now look at this list.”

Butcher: “It’s a blank piece of paper.”

Trump: “Right again. That blank piece of paper shows how much stuff you bought from us last year!”

Butcher (looking confused): “I’m sorry. I don’t follow. Was I supposed to buy something from you?”

Trump: “Don’t play innocent with me. All last year, you knowingly ripped us off by selling stuff to us, taking our money week after week, but you never bought anything from us in return! Never intended to! You got our money, we got only your meat. A real trick!”

Butcher (looking more confused): “You voluntarily bought all the meat I sold to you. How’d I rip you off?”

Trump: “And don’t play dumb with me either. You and I are businessmen. What’s the mark of a good deal? Money rolling in! Money rolling out more than rolling in means losses. Out of the goodness of our hearts we trusted you. And how did you treat us? You took our money and didn’t return it by buying stuff from us. That’s very bad behavior!”

Butcher: “I have three kids in college. The single biggest chunk of my spending is on tuition. Do you have at Mar-a-Lago some college instructors who I can hire?”

Trump: “Stuff. You gotta buy stuff – things you can touch. College instruction is a service. It doesn’t count.”

Butcher: “What stuff do you sell? I thought Mar-a-Lago is a residence, not a factory or a store.”

Trump: “Doesn’t matter what you call it. Mar-a-Lago is an economic entity. My family is an economic entity. We can’t survive if we keep getting ripped off like this.”

Butcher (glancing around the room): “Look, Mr. President, let’s say I want to buy those gold cherubs there on your mantel piece, I….”

Trump (interrupting): “They’re yours for 250 grand.”

Butcher: “That’s just about how much money you spent last year buying meat from my shop.”

Trump: “Right! We’d be even.”

Butcher: “But if I bought those cherubs at that price, I’d have to pull my kids out of college. I can’t afford it.”

Trump: “Your problem; not mine. Here’s the bottom line: We’ll stop doing business with you until you start doing the same amount of business with us.”

Butcher: “Sir, I already do the same amount of business with you as you do with me: I supply you every year with about $250,000 worth of meat and in exchange you pay that amount of money to me.”

Trump: “I said don’t play dumb! You know what I mean: We won’t buy any meat from you unless you buy at least an equal amount of stuff from us. Now scram. I have to meet my tailor.”

The tailor – conveniently named Taylor – is escorted into Trump’s office.

Trump: “Please be seated and look at this list.”

Taylor (studying the document): “It’s a record of all the pants, shirts, and coats that I made for you and your sons last year. $50,000 worth.”

Trump (handing another sheet of paper to Mr. Butcher): “Correct. Now look at this list.”

Taylor: “It’s blank.”

Trump: “Also correct. It’s a list of all the things you bought last year from my family. What’s your excuse?”

Taylor (befuddled): “Excuse? I don’t follow.”

Trump: “It’s simple: You’re ripping us off. We kindly buy $50,000 worth of stuff from you and you buy nothing from us. What gives you the right to mistreat us this way?!”

Trump then delivers to Taylor the same ultimatum that he delivered to Butcher.

Trump spends the rest of the day meeting with other merchants who supply Mar-a-Lago, from Melania’s dressmaker to grocers to the owner of the lumberyard that supplied the wood for a new addition to the mansion.

At dinner, Trump proudly announces that he’s tired of being a nice guy – that from this moment forward no one at Mar-a-Lago will buy anything from anyone who doesn’t buy at least an equal amount of stuff – “stuff you can actually touch!” – from Mar-a-Lago.

Melania: “Uhm…. We don’t produce a lot of tangible things to sell. Your company pretty much sells only services. How do you expect the likes of Mr. Butcher and Mr. Taylor to buy stuff from us if what we produce is only services?”

Donald: “I offered Butcher those cherubs. He refused. I think he’s trying to bargain the price down.”

Melania: “Look, sweetheart, if we stop buying food, clothing, and other stuff from merchants who don’t buy stuff from us, we’ll starve, and we’ll never again wear a stitch of new clothes.”

Donald: “I wrote The Art of the Deal, right? And I’m a rich businessman. I know what I’m doing. Even better, our household has huge spending power; those merchants will kill to access it. What sellers can resist buying access to it?! It’s just a matter of time before they come begging to strike trade deals with Mar-a-Lago that bind each of them to buy as much from us as we buy from each of them. You’ll see. We’ll be even richer!”

….

Several months later, Mar-a-Lago’s many cupboards, fridges, and freezers all run bare. And the water to the magnificent mansion is cut off because Trump’s stopped paying the water company for water because that company refused to buy as much stuff from Mar-a-Lago as Mar-a-Lago bought water from that company.

One of the world’s richest families is living in poverty.

….

If the above tale sounds fantastically unrealistic, that’s because it is. No one – literally no one, rich or poor, not even Donald Trump – would even think about attempting to conduct his or her household’s economic affairs as described above. And yet, Trump is actually trying to conduct America’s economic affairs in a similar way. The economic ‘logic,’ such as it is, that motivates his invocation of emergency powers to impose tariffs rests on Trump’s belief that U.S. goods trade deficits with individual countries is an economic emergency, and evidence that foreign exporters or governments have long gotten away with economically ripping America off.

If it would make economic sense for Trump to run Mar-a-Lago in the fantastical way portrayed above, then Trump’s “Liberation Day” tariffs might make economic sense for America. But if it makes no sense – if it is downright crazy – for Trump to run Mar-a-Lago as described above, then his “Liberation Day” tariffs are the height of economic insanity. And they are.

Why do people vote, protest, or boycott, when their individual actions almost never change political outcomes? Economists have long emphasized that the probability that your single vote will swing a national election is around one in sixty million at the national level. The costs of becoming fully informed are immense, yet the payoff is virtually nil.

And yet, millions of people participate in politics. They show up to polling places, wear partisan badges, attend rallies, donate to campaigns, and argue online with strangers. The economist Anthony Downs called this rational ignorance: it doesn’t pay to be deeply informed about politics. Bryan Caplan goes further by arguing that voters are often rationally irrational, choosing to indulge flattering illusions and tribal loyalties because the personal cost of doing so is small and the emotional return can be substantial.

If politics is so inefficient, why bother? Because politics is not just about changing outcomes. It is also about signaling to tribal members. Voters and politicians alike use public acts not only to influence policy but to declare identities, loyalties, and values. This often looks corrosive—virtue signaling, rationalization, motivated reasoning—but there’s an invisible-hand dynamic at work. Just as in economics, where private greed can be channeled into public benefit, politics can turn even our vices into accidental virtues.

Let us back up a bit. Adam Smith’s original invisible hand insight was that markets transform private motives into social benefits. For example, the butcher, brewer, and baker do not serve us from benevolence, but from self-interest. It is easier for them to sell us stuff, to encourage us to voluntarily part with our money than to use deceit or coercion. They seek profit, and in doing so, they provide goods and services that meet the needs of others.

Markets do not eliminate greed. They discipline it. Institutions like competition, property rights, and prices channel self-interested behavior into productive forms. A generic takeaway here is that under the right conditions, bad motives can yield good outcomes. There is an abundance of food in my refrigerator in part because the market incentives food production for sale. A business that mistreats customers or delivers shoddy goods will lose reputation, revenue, and market share. The profit motive, filtered through competition, becomes a tool for cooperation.

As it happens, a similar dynamic occurs in politics. The filtering mechanism here is not price and competition, but publicity and reputational dynamics. And here, Jon Elster’s account of political hypocrisy offers a compelling parallel to Smith:

Generally speaking, the effect of an audience is to replace the language of interest by the language of reason and to replace impartial motives by passionate ones. The presence of a public makes it especially hard to appear motivated merely by self-interest. Even if one’s fellow assembly members would not be shocked, the audience would be. In general, this civilizing force of hypocrisy is a desirable effect of publicity… Publicity does not eliminate base motives, but forces and induces speakers to hide them.

This is the political invisible hand at work. Public debate doesn’t purge selfishness from our discourse any more than markets do from transactions. However, it can sometimes discipline it. Politicians, activists, and partisans are forced to translate narrow interests into reasons that appear universal when their words and deeds are publicly available to voters, special interest groups, politicians, activists, and so forth. And once those public justifications are out there, they can become constraints. Opponents, constituents, and observers can seize upon them, cite them, and demand consistency. A self-serving policy must now survive in the harsh light of impartial reasoning. Hypocrisy becomes a form of moral collateral for the simple reason that people hate hypocrites, and they are good at detecting them, and punishing them in the form of a damaged reputation and fewer, if any options, in the cooperation market.

Virtue signaling in politics plays a similar role. When someone posts a hashtag, marches in protest, or loudly denounces the villain of the week, they may be more interested in status than substance. But that doesn’t mean the act is meaningless. In fact, virtue signals function like prices in a market. And like prices, these signals are shaped by incentives and feedback. A person caught virtue signaling without backing it up risks reputational damage. Just as a company can’t long survive by advertising what it doesn’t deliver, neither can a person long enjoy moral prestige while violating the norms they espouse. The result is a rough reputational market that keeps moral signaling tethered, if loosely, to rational and moral consistency. The person who champions inclusion or charitable giving to effective charities to look good may still help move the culture toward greater inclusion with positive social and moral unintended consequences.

And like virtue signaling, rationalizations are common in politics. These are explanations that sound plausible but are actually false. Rationalization is often viewed as a kind of self-serving dishonesty. People offer flattering but false reasons for their behavior to look good to others. But rationalizations, once uttered, create reputational costs. If someone says that they oppose policies that harm the poor, they are then vulnerable, when their actions are inconsistent with that moral standard, to plausible charges of hypocrisy and reputational damage.

This creates a powerful consistency pressure. Over time, people may actually come to believe their own rationalizations and to act in ways that make them true. Social psychologists call this self-signaling, a process whereby we infer qualities about ourselves we may not know because we are partial strangers to ourselves.

The parallels between economics and politics are striking when seen via the idea of an invisible hand. On the one hand, market greed and the profit margin via institutions—by means of prices, contracts, competition—to redirect those impulses into productivity rewarded by profit. On the other hand, a similar, but somewhat distinct, form of invisible hand operates in politics, where self-interest is filtered through public institutions—via publicity, reputational and consistency pressure—to yield public justifications and reasons, norm enforcement, and even sometimes moral and societal progress.

In both spheres, the individual is free to act selfishly. But in both, the institutional structure disciplines behavior and channels it into forms that—at least sometimes—serve the public good. From there it doesn’t follow that systems are foolproof, but rather that the incentives are aligned with better outcomes.

Publicity forces politicians to speak in the language of reasons. Virtue signaling reinforces social expectations. Rationalization creates commitments that later constrain behavior. None of this requires noble motives. This is the other (political) invisible hand at work, not one that builds wealth, but one that disciplines virtue signaling, rationalization, and self-interest in politics. And like the market version, it depends less on individual virtue and more on institutions and incentives.

No president in American history had greater skill in the political uses of radio than Franklin Delano Roosevelt. His warm voice was called “sincere . . . and good natured even in attack,” and gained easy access to millions of living rooms. But just as importantly, and far more lastingly, Roosevelt finished the regulatory edifice begun by Calvin Coolidge and Herbert Hoover, changing American consumption of radio content forever. 

Prior to the 1927 creation of the Federal Radio Commission (the predecessor of the Federal Communications Commission, or FCC), radio was arguably freer than the printing press. Short-range audio broadcasts not only gave listeners mass entertainment but also provided a way to share and access diverse opinions: socialists, labor unions, religious evangelists, and political populists. Well-publicized problems of interference between frequencies were often engineered politically to bolster calls for regulation, but court rulings were sorting through confusion. Affirming the doctrine of prior use, courts were able to determine de facto ownership in the electromagnetic spectrum.

Roosevelt was determined to silence dissenting voices on the radio. He adeptly manipulated the revolving door of regulators and industry executives and executed behind-the-scenes intrigue using intermediaries to conceal the appearance of censorship while embracing its effects. 

By 1933, big broadcasters eagerly aligned themselves with the new administration, and in many cases became regulators themselves. Former FRC commissioner — CBS vice president — Henry A. Bellows was a Democrat and Harvard classmate of FDR’s. In his official role, he promised to reject any broadcast “that in any way was critical of any policy of the Administration,” and announced that all stations were “at the disposal of President Roosevelt and his administration.” Bellows specified that CBS had a duty to support the president, right or wrong, and privately assured presidential press secretary Stephen Early that “the close contact between you and the broadcasters has tremendous possibilities of value to the administration, and as a life-long Democrat, I want to pledge my best efforts in making this cooperation successful.”

The day after Roosevelt took office, the networks and the National Association of Broadcasters (NAB) jointly announced that all broadcasting facilities could be put to the service of the administration on “an instant’s notice.” They adopted a “right of way” policy requiring affiliates to break into regular broadcasts for the president’s speeches. In the first year alone, the networks carried 51 of Roosevelt’s speeches, far more than they had for his Republican predecessor Hoover in a similar period. This near carte blanche access to the airwaves extended to the president’s political allies and family members. At NBC’s invitation, key presidential advisor Louis Howe hosted a weekly series that often floated “useful trial balloons” for the president.  

Both Roosevelt and the networks prioritized the president’s fireside chats, an ideal format to personally pitch to the voters and bypass often-critical newspapers. According to Betty Houchin Winfield, these cast FDR (much like social media posts did for President Donald J. Trump) as “the newsgatherer, the reporter, as well as the editor…without any intermediate journalistic filter to interpret or change his words.” When Roosevelt later proposed a weekly newspaper to publisher J. David Stern to refute the “poisonous propaganda of the conservative press,” Stern quipped that he did not need “such a vehicle. You did it alone on the radio.”

Radio proved indispensable for the promotion of the National Recovery Administration, the lynchpin of the First New Deal. In August 1933, FRC Commissioner Harold A. Lafount warned that stations had a “patriotic…and legal duty,” to reject advertisements from those “disposed to defy, ignore or modify the codes established by the N.R.A.” Lest the consequences were insufficiently plain, he elaborated that “radio stations, using valuable facilities loaned to them temporarily by the government,” must “not unwittingly be placed in an embarrassing position because of greed or lack of patriotism on the part of a few unscrupulous advertisers.” In her study of radio censorship in 1937, Not to Be Broadcast, Ruth Brindze pointed out that “any similar effort to control the [print] press would have created a sensation.”

The administration secured aid from the Federal Communications Commission in another realm as well. As most of the print press lined up against the president in the 1936 campaign, radio remained securely in his corner. Because of FCC pressure, including the tense waiting for that six-month license renewal, broadcasters often erred on the side of favoring the administration when in doubt. Republicans complained in vain.

The major networks had a standard policy of carrying Roosevelt’s speeches gratis as news or “civic affairs,” thus skirting the FCC’s provisions to give other candidates equal time. That category encompassed such highly politicized utterances as the bare-knuckle State of the Union Address on January 6, blasting the “economic autocracy” who “engage in vast propaganda to spread fear and discord among the people.” When Henry P. Fletcher, the head of the Republican National Committee, tried to respond through a series of anti-New Deal skits, NBC president Lennox Lohr turned him down under the pretext that “such dramatic programs as you have offered would place the discussion of vital political and national issues on the basis of dramatic license rather than upon a basis of responsibly stated fact or opinion.” Fletcher also met a rebuff from CBS President William S. Paley, who, overlooking the partisan tenor of some of Roosevelt’s own speeches, explained that “appeals to the electorate should be intellectual and not based on emotion, passion or prejudice.” In the end WGN (an independent station owned by the anti-Roosevelt Chicago Daily Tribune, carried the skits.

A rare remaining dissident voice on radio, and thus a prime target for Roosevelt’s animus, was the widely listened-to CBS commentator Boake Carter. On behalf of the president, White House Press Secretary Stephen Early made an appeal in November 1937 to his friend, Marjorie Merriweather Post, a director of General Foods, and a veteran of Democratic causes, to restrain Carter’s critical commentary of FDR. According to Harold Ickes’s diary in February 1938, the “President told Miss Perkins [Secretary of Labor Frances Perkins] that he would be happy if she could discover that Boake Carter, the columnist and radio commentator, who has been so unfair and pestiferous, was not entitled to be in this country. It appears that an investigation of his record is being made.”

It was, indeed. The Department of the Treasury was scrutinizing Carter’s background and his tax forms, while the State Department searched (unsuccessfully) for a pretext to deport him back to the United Kingdom. When a noticeably rattled Carter got wind of these efforts, he asked: “Who said that I should be Deported? Beware! Libel me at your peril.”

Roosevelt revealed his true intentions during a dinner conversation with Jerre Mangione, then working for the Federal Writers’ Project of the WPA. Mangione recalled that as the evening wore on, the president volunteered that he was having Carter “thoroughly investigated” and that the results, when revealed, “would put an end to his career.” Mangione was crestfallen: “That Roosevelt, the statesman I had admired, should admit to such vindictiveness came as the greatest jolt of all.”

As pressures bore down from the administration, Carter’s commentary became distinctly more tepid. “I pulled my punches,” he later admitted, and because of this and other contributing reasons, “my radio rating, which had been at the top, began to drop.” In August 1938, CBS discontinued the program. In a subsequent lecture tour, Carter accused the “Great White Father in Washington” (Roosevelt) of bullying station owners worried about six-month license renewals and for intimidating CBS into firing him. Freedom of speech, to the extent it was genuine, he reported regretfully, applied only to the print press. At the end of 1938, not a single anti-New Deal radio commentator remained on the major networks.

Meanwhile, the Roosevelt administration was launching a similar pressure campaign against the smaller stations and regional networks. A leading illustration was a radio voice, Father Charles E. Coughlin, whom FDR had initially encouraged. Coughlin had begun broadcasting his sermons in 1928 and rapidly gained listenership. He purchased time on dozens of hookups of independent stations and reached millions of listeners (including presidential candidate Roosevelt) who tuned in for his populist jeremiads against the “international bankers.” Alan Brinkley observes that “Once Roosevelt had decided that Coughlin would be useful to his political strategy, he showered the priest with attention and compliments and soon won him over completely.” Reciprocating, Coughlin was fulsome in his praise, proclaiming “Roosevelt or Ruin!” and “The New Deal is Christ’s Deal” but he was also a loose cannon. After months of tension, he broke completely with Roosevelt in 1936. The administration responded with a quiet, but determined, search for ways to silence the radio priest.

When Coughlin’s broadcasts began to feature antisemitic content in late 1938, the size of the constituency to take him off the air increased throughout the political spectrum. Frank R. McNinch, the FCC chairman, was the most prominent example. With Coughlin clear in mind, he pledged to “employ every resource” to stop radio from becoming “an instrument of racial or religious persecution.”

Similarly, FDR’s press secretary, Stephen Early, admonished broadcasters not to “permit the individual or group with the greatest financial resources to utilize radio to peddle their own particular brand of social or economic philosophy.” More ominously, Early subsequently announced that in the event of war, radio must prove itself a “good child” or the government might have to teach it “manners.”

The perceived futility of trying to read FCC or administration tea leaves prompted the National Association of Broadcasters (NAB) to adopt a landmark “voluntary code” in July 1939. While the most obvious goal was to align with the real or perceived FCC goal of forcing Coughlin off the air, it also served as an entering wedge for more comprehensive censorship. For example, the code imposed permanent “voluntary” bans on the sale of commercial time for discussing “controversial issues” (except for party electoral broadcasts), editorializing by either newscasters or commentators, and “attacks upon another’s race or religion.” The Code Compliance Committee showed the two-faced double standard by stating that it had no intention to bar anyone “from using radio. It simply denies the right to buy time.”  Rigid compliance was the safest response for normally cautious broadcasters. “By citing its ban on self-sponsorship of controversial views,” historian Richard W. Steele observes, “broadcasters could more comfortably rid themselves of a long-standing nuisance [Coughlin] while demonstrating the industry’s oft-expressed commitment to neutral programming.”  

The American Civil Liberties Union gave no encouragement to efforts to apply the First Amendment to radio. That organization subscribed to the general view that the electromagnetic spectrum was uniquely scarce and, hence, that it was impossible to apply to radio the comparatively “laissez faire” approach used toward the print press. In 1935, for example, ACLU publicity director Clifton Reed, matter-of-factly described the “doubtful social validity” of applying free speech to radio, because stations had a “lucrative monopoly” and that their “single obligation is to present programs in ‘the public interest, convenience, and necessity.’”

David Lawrence, the publisher of US News, was almost alone in standing up for free speech in the new medium. Radio, he argued, was “no more ‘affected with the public interest’ than is the newspaper business.”  Regarding claims of scarcity, Lawrence observed that the “vast majority” of communities had only one newspaper, and ongoing technical improvements promised a rapid increase in the number of stations that could be accommodated by existing wavelengths. He predicted that the future offered even more potential for competition, including innovations such as “‘wired radio’ [which] will make possible millions of outlets in the homes of America and an unlimited number of transmitters can be built for this purpose.”

But Lawrence was fighting a losing battle. Citing the NAB Code as justification, the Yankee and Colonial networks dropped Coughlin and other stations in key local markets soon followed suit. In September 1940, Coughlin, venting his frustration, left the air.

The Code brought other significant changes to radio content. As discussed in an earlier article, it helped to undermine the “American Family Robinson,” a popular anti-New Deal soap opera. It was also instrumental in shaping, or more accurately stifling, the great debate over U.S. intervention before World War II.  Writing in November 1941 to his ally in the anti-war America First Committee, John T. Flynn, Socialist Party leader and civil libertarian Norman Thomas reported that a New York station had reneged (on advice of the NAB) on a contract for a series of speeches against US intervention. Thomas had raised the money himself to pay for the speeches. (Coughlin had done the same, of course!)

Thomas agreed that “the speeches are controversial and do violate a strict interpretation of the Code, but they are neither more nor less in violation of the Code than the continual [pro-administration] remarks of Walter Winchell and Eleanor Roosevelt on sponsored programs.” Ironically, Thomas had vigorously supported the original creation of the Code. Its actual enforcement had hoisted him by his own petard and he probably knew it. He complained to Flynn “that we are dealing with a situation on the radio in which practically all commentators are on one side, in which people who talk on public affairs on sponsored programs are almost, without exception, interventionists.”

The NAB code was also a precursor to the much better-known Mayflower Doctrine of 1941, under which the FCC mandated “full and equal opportunity for the presentation to the public all sides of public issues.” Radio, to be truly free, the statement continued, must never “be used to advocate the causes of the licensee….The public interest—not the private—is paramount.” The effect of the doctrine was often to discourage station managers to avoid all controversial issues, rather than take any chances.

In retrospect, the Mayflower Doctrine exemplified continuity with FDR’s earlier policies toward radio than a break from the past. It also reflected longstanding practice both by the FCC and the subsequent NAB broadcasting code.  While the effort to restrict free speech sometimes took the form of formal regulation, FDR more commonly relied on indirect methods. By World War II, the freewheeling radio discourse that had prevailed before the establishment of the Federal Radio Commission was becoming a distant memory. In its place came the emergence of a sanitized medium which left little room for dissident voices, especially those challenging the administration in power.

The author explores these and similar themes in his soon-to-be released book, FDR: A New Political Life.