Even though the COVID-era inflation surge is in the past, Americans are right to remain concerned about the state of our money. Contention over America’s monetary policy is nothing new, however, and sound money advocates can find inspiration in revisiting the prominent money debate, which enraptured much of American politics at the end of the nineteenth century. This period, known as the Gilded Age, was in many ways a captivating and busy time. In the years following the American Civil War, there was remarkable economic growth and productivity, but also a litany of issues facing the country, not the least of which revolved around monetary policy.  

By the final decade of the nineteenth century, amid the Panic of 1893 and political factionalism, the debate over America’s money reached a climactic showdown. As this uneasy situation was unfolding, agrarians and Western miners wanted an inflationary “free silver” policy to relieve their debts and benefit their economic interests. In contrast, many classical liberals and conservatives favored a firm adherence to the gold standard on the grounds of prudence, stability, and connection with international trade. These diverging perspectives were personified in the rhetorical battle between William Jennings Bryan and Carl Schurz during the 1896 presidential campaign. The resulting war of words offers meaningful insights for those who support sound money and markets in our own time. 

In 1896, the chief spokesman for inflation was the young Nebraskan William Jennings Bryan. At just 36 years old, Bryan was the presidential candidate for both the Democratic and People’s (Populist) parties. While he did not invent the concept of free silver, he was by this time its most potent advocate after delivering his captivating “Cross of Gold” speech at that summer’s Democratic National Convention. This famous speech reflected the inflationist position as Bryan referred to the gold standard as a “crown of thorns” upon the “brow of labor,” and concluded with the declaration, “you shall not crucify mankind upon a cross of gold.” Once nominated, Bryan toured the country in support of his inflationist and interventionist platform, which proclaimed that “the money question is paramount to all others at this time.” Bryan utilized a variety of tactics in his campaign, such as invoking class and regional rivalries, as well as frequent references to his Christian faith. Despite his oratorical energy and outward allegiance to the “plain people” of the country, not all Americans were sold on Bryan and free silver, however, as classical liberals were quick to demonstrate. 

One outspoken Bryan critic was Carl Schurz, a German immigrant, Civil War veteran, Senator, political commentator, and determined classical liberal. Schurz was involved with several classical liberal causes in the Gilded Age, one of which was his firm advocacy of sound money. In direct response to Bryan, Schurz delivered a speech of his own in September 1896 in Chicago, the same city where Bryan had made history with the “Cross of Gold” in July. Schurz’s response was entitled “Honest Money and Honesty,” and it was a detailed rebuttal to multiple arguments Bryan employed in his campaign. Schurz’s speech served as a powerful case for sound money, the importance of which carried beyond the nineteenth century and into ours. 

One of the concerns Schurz sought to address was the perceived instability that many sound money advocates thought a Bryan victory would have meant for the economy. Americans were already dealing with the continuing economic debacle stemming from the Panic of 1893, and it was unclear whether free silver would cause a resolution of these issues or more of the same, if not worse. Although Bryan pitched his free silver campaign as a method to relieve the suffering of many Americans, others saw it as a sign of impending inflation, instability, and national dishonor. There is even evidence to suggest that Bryan’s pro-inflation campaigning itself further fueled economic uncertainty as the future of the American economy seemed unclear. In this atmosphere Schurz took aim at the economic risk posed by Bryan and his calls for free silver inflation. 

The issue, as Schurz saw it, was that Bryan’s calls for inflationary policy were addressed primarily to lower-income Americans such as farmers, miners, and urban laborers. Schurz called these “deceptive appeals” to wage-earners “the most heartless and damnable” of Bryan’s tactics because he recognized that these were also the people who stood to be most negatively impacted by an increase in the money supply and the attendant rise in prices. Schurz aptly recounted the momentous increase in prosperity which characterized the nineteenth century, a situation which has been borne out by economic studies of the period, despite the efforts of some academics to maintain the image of the Gilded Age as one simply of inequality and cartoonish Robber Barons. Rather, Schurz understood that only through the preservation of sound money, and not the freewheeling inflation of free silver, could the American economy continue the growth which had improved people’s lives throughout the nineteenth century.  

Additionally, Carl Schurz countered Bryan’s argument on moral grounds, further demonstrating that the “money question” was as much an ethical disagreement as an economic one. He offered a religious metaphor of his own in a direct response to Bryan’s frequent invocation of Christian imagery on the campaign trail. Schurz likened Bryan and free silver to a “temptation” presented to the American people and noted: “Mr. Bryan has a taste for Scriptural illustration. He will remember how Christ was taken up on a high mountain, and promised all the glories of the world if he would fall down and worship the devil. He will also remember what Christ answered. So the tempter now takes the American people up the mountain and says, ‘I will take from you half of your debts if you will worship me.’” Yet, despite Schurz’s allusion to Bryan as a dangerous “tempter” akin to the devil, he was confident that the American people would see through his scheme and that “the Stars and Stripes will continue to wave undefiled, honorable, and honored among the banners of mankind.”  

While William Jennings Bryan ultimately lost the 1896 election and the pro-gold McKinley became the president, the arguments employed in the debate over monetary policy reach beyond the confines of the late-nineteenth century and into our present day. It is true that the question no longer revolves around disputes over silver and gold, but the principles of sound money advanced by classical liberals like Carl Schurz are worthy of consideration because of their timeless insight into the nature of inflation and the moral and economic hazards it invites. As Americans in our own era have experienced the harmful effects of inflation in the wake of COVID, perhaps we can stand to benefit from learning from previous generations of sound money advocates. 

In a recent column, Paul Krugman marvels at Brazil’s Pix system, a government-run digital payment network that has rapidly overtaken other non-cash methods in the country. He uses Pix to mock opponents of central bank digital currencies (CBDCs) and to scorn the supposed failure of cryptocurrency to deliver on its promises. But in doing so, Krugman misses nearly everything that matters about crypto — and about liberty itself.

Let’s start with the core of Krugman’s argument: Brazil built a fast, cheap, and accessible public payment system, so the US should do the same. He frames Pix as a superior version of Zelle, made better by the fact that it’s run by the central bank. And since 93 percent of Brazilians have used Pix, he takes that as proof that public systems outperform private ones and that government-run digital money is the future.

But then comes a misleading comparison. Krugman contrasts Brazil’s 93 percent Pix usage with the two percent of Americans who used crypto for payments in 2024, using that gap to declare crypto a failure. This is a textbook apples-to-oranges fallacy, and it betrays a deeper misunderstanding of what crypto is even trying to do.

Bitcoin was never designed to replace fiat in a world where fiat is propped up by legal tender laws, enforced monopolies, and taxpayer-subsidized infrastructure. Of course people in Brazil use Pix more than Bitcoin — just like they use Brazilian Reais (R$) more than gold. Popularity under state compulsion is not the same as voluntary preference. Adoption tells us little about legitimacy when one option is legally mandatory and the others are actively discouraged or shut out.

Krugman also blurs the lines between stablecoins, CBDCs, and cryptocurrencies as if they’re all interchangeable. But this conflation is lazy at best. A stablecoin like USDC, backed by private institutions and used voluntarily, is not the same as a state-issued CBDC that can be surveilled, censored, or politically weaponized. And none of these is equivalent to Pix, a government-owned retail payment system built on top of an existing fiat monopoly. Comparing Bitcoin to Pix is like comparing gold to Venmo. They solve completely different problems and are not competing on the same terms.

Krugman seems to think that because Pix is easy to use, it has solved the very problem crypto was meant to address. That’s like saying the DMV solved the transportation problem because it issues driver’s licenses quickly. What crypto offers is something fundamentally different: the ability to opt out of systems controlled by the state. That means privacy. That means financial sovereignty. That means not needing a government.

In fact, the very success of Pix reveals the danger Krugman refuses to acknowledge. When a government controls not only the money supply but also the rails for all digital payments, you have a monopoly in both the asset and its transmission. That’s absolute power — and it’s incompatible with individual liberty.

Brazil is already showing what this can look like. 

In 2020, WhatsApp — used by virtually everyone in the country — attempted to launch its own payment system. It was blocked by the central bank. Not because it posed a risk to consumers, but because it competed with Pix. This is not innovation. It’s protectionism dressed in state robes. How can a private company possibly compete with a system the government both operates and regulates?

Krugman waves off fears of surveillance by assuring readers: “If we ever do create a CBDC, it will surely involve comparable privacy protection. Either you trust in rule of law or you don’t.” But history and economics tell us that power tends to expand until something stops it. Giving the state even more centralized control over money, payments, and financial infrastructure is not progress. It’s regression into a system where every transaction can potentially be tracked, every dissenter can be punished, and every private alternative can be crushed.

And let’s be clear: this isn’t a partisan concern. It’s a structural one. Once the infrastructure is in place, it doesn’t matter which party is in charge, what matters is that the government can now monitor, freeze, or block your financial life at the flip of a switch.

Ironically, Krugman’s celebration of Pix and dismissal of crypto will likely do the opposite of what he intends. As more people realize the extent of government control over fiat rails, the demand for alternatives will only grow. Pix doesn’t kill crypto — it vindicates it. Despite much less developed capital markets, Brazil got its first bitcoin ETF before the US, and it also has access to an altcoin ETF, which the SEC has blocked twice.

Krugman seems stuck in a worldview where all money must be politically managed, where value comes from government authority, and where freedom is something granted, not assumed. But the core idea behind crypto — especially Bitcoin — is not low transaction fees or financial inclusion, as Krugman narrowly defines it. The real innovation is the creation of a monetary system that no one controls, and no one can shut down.

Bitcoin’s strength lies in its incorruptibility. Its rules are enforced not by men but by math — by cryptographic guarantees, not political compromise. It offers what no CBDC ever will: monetary and financial freedom backed not by laws, but by code.

And yes, maybe only two percent of Americans used crypto for payments in 2024. But that’s beside the point. Bitcoin thrives where it’s needed most: among Venezuelans escaping hyperinflation, Ukrainians fleeing invasion, and Nigerians bypassing capital controls. It gains value where the system fails, and that is precisely what makes it valuable.

Paul Krugman sees Pix as the future of money. But what he’s really celebrating is the future of state control. For those of us who value liberty, privacy, and competition, that’s no future at all.

From tariffs to student debt “forgiveness,” from corporate welfare to border chaos, America’s political class — right and left — has lost its economic compass. What’s missing? Econ 101.

Progressives promise government programs to create “equity.” Conservatives now support tariffs and special favors for certain businesses. Both are forms of economic socialism — central planning that shifts control from the people to politicians. That’s why the US economy feels stuck: a $37 trillion national debt, a bloated Federal Reserve balance sheet, and growing doubts about the American Dream.

It doesn’t have to be this way. We need a return to the basics of economic freedom. That’s why I launched an Econ 101 series — to explain simple, timeless principles about how people make choices, work together, and meet their needs in a world with limited resources.

If every policymaker — and voter — understood these 20 simple ideas, the whole nation could be freed to be its best self.

1. People act with purpose
   
   Whether it’s a parent budgeting for groceries or a business hiring workers, people make choices based on incentives, constraints, and values. Policies that ignore this, like assuming people won’t adjust their behavior when welfare expands, always backfire.
   
   
2. Trade always benefits both sides
   
   Trade isn’t about countries — it’s about people. When Americans buy clothes from Bangladesh or semiconductors from Taiwan, both sides benefit. Blocking trade with tariffs is like trying to grow prosperity by taxing yourself.
   
   
3. People dislike uncertainty
   
   Small business owners delay hiring. Families delay big purchases. Entrepreneurs sit on the sidelines. And why? Because Washington keeps creating policy chaos — from Biden’s inflationary spending to Trump’s tariffs. Clarity is key.
   
   
4. Entrepreneurship drives growth
   
   It’s not government spending or stimulus checks that create jobs — it’s innovation. From Henry Ford to Elon Musk, it’s entrepreneurs who take risks to solve problems. Washington should stop crowding them out with red tape and cronyism.
   
   
5. Nothing is free
   
   From “free” college to “free” COVID tests, the truth remains: every dollar must come from somewhere. Usually, it’s from taxpayers — or worse, borrowed from future generations. Opportunity costs are real, and they’re often ignored in DC.
   
   
6. Free markets create prosperity
   
   Look around the world. Free economies prosper. Controlled ones collapse. See Venezuela, Cuba, and North Korea versus Singapore, Switzerland, and Texas. Markets deliver what bureaucracies only promise.
   
   
7. Voluntary exchange works best
   
   When people can freely trade, they innovate, cooperate, and thrive. When politicians impose price controls — like on credit card interchange fees or energy — they distort behavior and punish both consumers and producers.
   
   
8. Price signals matter
   
   Prices aren’t arbitrary — they communicate supply and demand. When the government distorts them, like through drug price controls or green energy subsidies, it creates shortages, surpluses, and dysfunction.
   
   
9. Every choice has opportunity costs
   
   Every decision has a tradeoff. A dollar spent on bureaucratic boosterism is a dollar not spent on defense, or — better yet — not taxed in the first place. 
   
   
10. Government power reduces liberty
    
    Each regulation, each subsidy, and each tax is a restriction on what people can do with their own lives. As Ronald Reagan said, “The most terrifying words in the English language are: ‘I’m from the government, and I’m here to help.’”
    
    
11. Inflation comes from money creation
    
    Deficits fuel it, and the Federal Reserve enables it. As Milton Friedman reminded us, “Inflation is always and everywhere a monetary phenomenon.” CPI rose 2.7 percent in July over the last year, and the 3.1 percent core inflation remains above target. Until spending is restrained and the Fed shrinks its balance sheet, inflation will persist.
    
12. Destruction is not growth
    
    The economy doesn’t improve when a riot breaks a window or the government rebuilds after a hurricane or war. That’s not growth — it’s replacement and lost resources for other things. Destruction does not drive prosperity.
    
    
13. Trade fosters peace
    
    Sanctions, embargoes, and trade wars escalate tensions. Trade fosters peace. China’s rise comes with real challenges — but the answer is not less economic freedom, but more. Tariffs harm Americans more than Beijing.
    
    
14. Institutions make markets work
    
    From strong property rights to a reliable legal system, good institutions enable markets to function effectively. That’s why we must resist the weaponization of agencies or the rewriting of laws to favor one group over another.
    
    
15. Socialism always fails
    
    Because it tries to make us care about everyone else’s welfare as much as our own, socialism always ends in tyranny and poverty. Today’s policymakers want to rebrand it as “equity” or “industrial planning,” but it’s the same road that led to Venezuela’s collapse, the Berlin Wall, and Cambodia’s killing fields.
    
    
16. Profits and losses guide progress
    
    Profits signal value creation. Losses signal failure, freeing up resources for the next experiment. Government bailouts and subsidies break this feedback loop, rewarding inefficiency. Investing in progress should always pay better than buying political favors.
    
    
17. Prosperity comes from freedom
    
    When the government steps back, families, workers, and entrepreneurs build thriving communities. School choice and right-to-work laws show how freedom creates opportunity. “Let people prosper” is not just a slogan — it’s a strategy for conquering poverty by unleashing humanity.
    
    
18. Markets solve problems
    
    One-size-fits-all systems, like those the US government created in healthcare and education, become costly debacles that serve special interests but leave ordinary people out. Problems are solved and inventions emerge when lots of individuals make their own choices, and share information about what works (prices).
    
    
19. People deserve dignity
    
    People aren’t widgets in a spreadsheet. They have hopes, beliefs, and talents. Trusting them to make their own decisions, based on the real circumstances of their own lives, creates better outcomes than distant ‘experts’ making decisions for them.
    
    
20. Government spending can’t add to the economy
    
    Government spending only redistributes existing resources. Printing money and handing out checks doesn’t “stimulate” the economy (Keynesian Multiplier), it just makes goods expensive and harder to get.

America didn’t become the most prosperous nation in the world through central planning. What distinguished the American model was offering choices to individuals, protecting their private property, making free enterprise appealing and profitable, encouraging personal responsibility, and respecting people’s rights to cooperate on whatever voluntary projects they chose.

That model still works — if we have the courage to return to it.

Advocates of free markets must do more than critique failed ideas. We must lay out practical, principled alternatives — and push those in power to adopt them, even when it’s politically inconvenient.

Politicians often do what benefits them, not what benefits us. The solution isn’t found in Washington. It’s found in communities, in businesses, in homes, and hearts and minds. If we want Americans to prosper, we must return to the basics of economics.

In December 1934, The American Family Robinson came to the radio airwaves. The new show, like many of its competitors, featured a combination of mystery, family life, romance, drama, adventure, comedy, and intrigue. But it also had something unique to offer. Unlike other radio soap operas, The American Family Robinson openly celebrated free markets, private property, and self-reliance. 

The American Family Robinson was part of a strategy by the National Association of Manufacturers (NAM) to sway public opinion against the New Deal. Acting through a front group, the National Industrial Council, industry interests created a radio soap opera weaving together entertainment, promotion of entrepreneurship, and opposition to big government.

But the big networks showed no interest. NBC executives were typical in fearing that the series, though potentially profitable for the bottom line, might flout the mandate of the Federal Communications Commission to promote the “public interest, convenience, and necessity.” Network executives even banned local affiliates from carrying the show. “You would probably not find in the entire series any specific sentence that could be censored,” summarized a scriptwriter for NBC, “but the definite intention and implication of each episode is to conduct certain propaganda against the New Deal and all its work.” 

The producers responded with a strategy to bypass the networks through syndication to local stations, a practice that was still quite rare. The National Industrial Council recruited local employers to fund transcription of the program onto 16-inch phonograph discs and mailed them to stations weekly or bi-weekly. 

The American Family Robinson is set in the fictional town of Centerville. The main characters are Luke Robinson, who edits and publishes the town’s newspaper, the Centerville Herald; his wife Myra, who hosts her radio show, their daughter Betty, and Betty’s husband, star reporter Dick Collins. In nearly every episode, Luke good-naturedly and patiently explains (in a manner anticipating the sagacious Judge Hardy in the later hit movie series) the importance of thrift, low taxes, property rights, self-reliance, and limited government. 

The production was helmed by professionals including Martha Atwell (a rare example of a female director) and the script-writing husband-and-wife team of Douglas Silver and Marjorie Bartlett Silver. The actors had extensive stage and radio experience. On the strength of the writing and characterizations, the show developed a significant fan base. Many tuned in for the intricate plots, including cliffhangers about murder and kidnapping, as much as for the ideas. 

A particular favorite among listeners was William “Windy Bill” Winkle (played with aplomb by Shakespearean actor Joe Latham), Luke Robinson’s mooching brother-in-law and self-invited house guest. Originally intended to be an incidental character, he proved so popular that he became a cast regular. Windy often sparks humorous exchanges to underscore the show’s themes. He combines zealousness for socialism with an equal certainty in the brilliance of his get-rich-quick schemes. He also courts the wealthy (at least in his mind) Spinster Leticia Timmons, an entrepreneurial dress shop owner. “Look what happened to me,” Windy complains, “I’ve spent the best years of my life, trying to be an honest business man and what do I get for it? Nothing. That’s what! Take my patented Little Wonder adjustable hair cutting bowl for home use…but the barber trust and big business kept it off the market!” Brushing aside this theory of a big business conspiracy, Luke asks “Who are the big fellows anyway? They’re little fellows who worked hard enough under the same rules that apply to you and me, to become big fellows.”

Luke opines to Windy that “for a man who claims to oppose capitalism as much as you do, you’re going to an awful lot of trouble to be a capitalist yourself.”

He gets a quick response: “Quite simple my dear fellow. I advocate socialism for the good of all the people but for me personally, well, a fellow has to do the best he can for himself…If socialism ever comes to this benighted country I’ll be only too glad to share my property in return for a share in everybody else’s property”

Luke points out that under an equal division of wealth, this would amount to only forty-three dollars per person but Windy does not think this is a fatal flaw. At least, he points out, profit-centered businesspeople would no longer be calling the shots. Luke responds, “After a fairly long life of observation, I have failed to discover that politicians are more to be trusted than businessmen.”

To get rid of his annoying houseguest, Luke persuades his friend, Henry Jason, to hire Windy as a glorified office boy in his new factory, helping him become self-supporting. Jason agrees to humor Windy’s vanity by designating him as “Contact Manager.” 

“That’s fine, it doesn’t mean a thing and it sounds important,” Jason observes, “but I don’t know whether one could ask a contact manager to go and get some stamps, for instance.”

“Oh, easy, just ask him to uh… contact the post office and bring some.” 

Windy visits the factory construction site and proceeds to lecture the foreman about his job. After listening to his advice, the foreman vents: “That’s just the trouble. We got contact managers thinking they can build factories and professors running business and…smart-aleck lawyers trying to run the whole government. There’s only one thing those people can do to help business recovery and that’s the same thing a blacksmith would do if you took your watch to him to be repaired: he’d leave it alone.” 

But Windy’s confidence in his worldview never flags. In answer to the charge that he is a “utopia chaser,” Windy emphasizes that he only wants to “devote my ingenuity to the betterment of my fellow men through careful research into the possibilities of a planned economic solution.” To this, Dick Collins answers, quite overoptimistically, that “by the time you get around to it you’ll be completely out of fashion. The passing of the theorist plague is already well underway. Where’s the technocracy of yesteryear, the EPIC [End Poverty in California] plan, the public pension plan, and all the other crackpot plans? They’re all wilted under the cold light of reason.” 

Other memorable characters include the charmingly uncouth but down-to-earth ex-boxer Gus Olson. Gus knows all the “big shots” in town and is a rival with Windy Bill for Leticia’s affections. He works as little as possible and is proud of it. But Luke, impressed by his intelligence, bluntness, and resourcefulness, sees greater potential. As a kind of experiment, he hires him as a janitor with the title of “boondoggler.” Much later, Gus finds out that a distant Irish relative has willed him two million dollars. 

 The show’s defense of the “possessive instinct” anticipates the views of Ayn Rand.

Luke: I’ve just been thinking in here away from that maddening crowd that the possessive instinct is the most valuable one owned by man.

  Myra: My, that sounds greedy.

  Luke: No, far from it. The instinct to acquire possessions 

  to save them build on them is the greatest contributing 

  factor in the growth of civilization.

Myra: Well then, it’s lucky we’ve got a possessive instinct.

Luke: What I don’t understand is why our radical friends are intent on destroying that instinct. They seem to think the ideal existence would be to crush it to make way for a scheme of things that only includes the mass of dumb sheep accepting what the political overlords feel like handing down to them. 

The central role of women in the writing and production was evident in several storylines. Myra Robinson, who hosts her own radio show in Centerville, and Betty Robinson Collins are instrumental in a campaign to save the Centerville Herald from almost inevitable bankruptcy. Gus does his best to help, volunteering that the dubious Butch Scarlotti, a “pal of mine…could loan us anything up to 100 grand and not even feel it.” Dick gently rejects the offer because any association with the likes of Scarlotti would damage the paper’s reputation. Finally, the group decides to approach Robinson’s factory-owning friend Dave Markham, but only after launching a successful campaign to increase circulation and sell ads.

It is Betty who comes up with the winning strategy. She notes that people are more likely to buy a paper, and purchase ads, if it includes stories about “their worst enemy or their best friend or, better yet, has their name in it.” Anticipating social media and user-generated media, the group supports creation of a “reader column” in which three readers per day air their views.

Dick Collins observes readers would not only subscribe to see themselves in print, but “then they’ll subscribe to compare their column with those written by their friends.” With Myra’s broadcasts spreading the word, he adds that “we could keep it going we would never run out of contributors or subscribers either, while we could go right through the town directory and then go back and start over.”

The success of the fundraising campaign leaves Windy unimpressed, however: “this one case of mutual aid doesn’t make a summer. Your precious businessmen are still storing away the profits. Why, it wasn’t Private Industry that pulled us through the depression. Everybody knows that it was federal funds that kept us going.”

To this, Dick notes that these “stored away” profits provided the necessary wherewithal for rescue efforts, such as the effort that saved the Herald. “The whole country,” he adds, “has been living on Capital accumulated during the good years.”

Changes in broader political and regulatory context shaped the eventual fate of The American Family Robinson. By the late 1930s, programs deemed too “controversial” (especially those questioning the New Deal consensus) were increasingly under attack. 

The American Family Robinson was one program that suffered pressures from both the FCC and the “voluntary code” of the National Association of Broadcasters. The code prohibited stations from accepting “free offers” if the purpose was to recruit members for an organization or to foster a point of view.

“Unless the station presents the other side of the picture,” it warned, “it might be accused of bias.” In June 1939, the National Association of Broadcasters specified that both The American Family Robinson and the ACLU, which regularly sent out scripts to stations providing commentary from a civil liberties perspective, were on its list of potential offenders. It urged stations to “write to Headquarters for information about these.” 

In response to accusations that The American Family Robinson was anti–New Deal, the National Industrial Council replied defensively that it was “not ‘anti-’ anything or anybody.” Rather the goal of the program was to “present openly, and as effectively and attractively as radio will permit, the fundamental principle that freedom of speech and of the press, freedom of religion, and freedom of enterprise are inseparable and must continue to be if the system of democratic government under which this country has flourished is to be preserved.” 

By 1940, when the National Industrial Council produced a new run of shows, the content became ever more innocuous and often indistinguishable from a typical substandard soap opera. The previous eagerness of characters to question, or even discuss, the New Deal welfare and regulatory states gradually faded away. To the extent that the later episodes expressed ideas or broader social goals, they took the form of simplistic bromides on such topics as the importance of marital understanding and the need for concerted cooperation for national defense mobilization. Windy Bill, later played by a WC Fields wannabe who lacked Latham’s deft touch, became typical comedy relief, and nothing more. 

Several factors contributed to these changes, including a shift in national priorities on the eve of war and pressures from the National Association of Broadcasters which made stations more averse to politically charged topics. The National Association of Manufacturers also had an ambiguous influence. To many in that organization, a defense of the parochial interests of big business (it had supported the extremely statist National Industrial Recovery Act in 1933) took precedence over promoting the free market as such. When the final episode signed off in September 1941, the show was only a shell of its former self.

The American Family Robinson was mostly forgotten in later years. Most historians of radio mention it only as a sidelight and, despite much ideological overlap, nobody has connected it to libertarian thinkers of the period such as Ayn Rand, Isabel Paterson, Rose Wilder Lane, or people who in turn influenced a later generation of thinkers like Milton Friedman and Murray Rothbard. 

Probably the most intriguing historical link was between African-American novelist and folklorist Zora Neale Hurston (who had great affinity for libertarian ideas) and the two script writers, Douglas Silver and Marjorie Bartlett Silver. The Silvers (Douglas founded and was president of the main radio station in Fort Pierce, Florida) befriended Hurston during the 1950s. After Hurston had a stroke, Marjorie was instrumental in salvaging a copy of her biography of King Herod, which had narrowly escaped a bonfire.

During its heyday, The American Family Robinson registered an often creative, intelligent, and entertaining dissent from the New Deal consensus. The show’s exposition of the benefits of markets, self-reliance, voluntarism, and thrift, as well as the follies of bureaucracy, anticipated the later popularization of these ideas. But The American Family Robinson was also fighting against the current during a period when these ideas were on the defensive, and the welfare and warfare states were ascendant. 

Self care might sound like a purely individual concern, but healthy lifestyle choices serve a vital social function. Poor consumption patterns can lower productivity, reduce life expectancy, and inflate healthcare costs, especially those related to metabolism, heart disease, and mental health. The World Health Organization (WHO) claims Noncommunicable Diseases (NCDs) like “are collectively responsible for 74 percent of all deaths worldwide” and a large percentage of those are preventable.

In 2013, the WHO issued a Global Action Plan, making policy recommendations “for the prevention and control” of NCDs. This plan was later updated with nine global targets set for 2025. Goals included a 30 percent reduction in our global salt intake and tobacco use, along with an increase in screenings and interventions for obesity. In 2019, the plan was updated again and extended to 2030. 

Not to be left out, the United Nations 2030 Agenda for Sustainable Development — humbly titled “Transforming our World” — also featured NCDs as a global challenge to be addressed. Implementing action steps for self-care, however, is a finicky matter: it really depends on the individual, his unique situation, the resources available, and personal preferences. 

Self-care is defined by the National Institute of Mental Health (NIMH) as “taking the time to do things that help you live well and improve both your physical health and mental health.” Exercising, eating healthy, and getting plenty of rest are core aspects of self-care. The NIMH also recommends relaxing activities like “listening to music, reading, spending time in nature, and engaging in low-stress hobbies.” 

If this all sounds a bit obvious or squishy, think of the impact of a lack of self care. It can be hard to find a quiet moment to enjoy a good book, and access to affordable, healthy foods can be a real challenge for many households. For those with the luxury of time, awareness, and extra income, investing in forest bathing or improving gut health are appealing endeavors. 

Self-care and wellness strategies online are often reduced to sales initiative. TikTok posts boast products for #cozymaxxing, and viral marketing of products from skin care to sound machines to massage oils may actually make us feel worse about ourselves. 

Options for super green powders are plentiful and despite my love for good old-fashioned black coffee, mushroom based brews have piqued my interest. I now regularly purchase edamame snacks that pack a protein punch, and I prioritize foods that allow me to “eat the rainbow” at meal time – a far cry from my younger years when I didn’t think twice about having Cookie Crisp for breakfast. 

Now that I know better, I am doing better. The WHO would likely approve most of the healthy lifestyle changes I’ve made (and have the income, education, and interest to make), but still be disgusted by my overall salt intake (I salt just about everything). The NIMH asserts that “self-care looks different for everyone,” and that’s okay. Certainly what self-care means to me is likely very different from what it means to the members of the WHO. 

Beyond quick fixes and bath bomb fizzes, genuine business opportunities exist for those who discover new ways to make their fellow citizens more comfortable. We better understand our bodies, and entrepreneurs develop new tools to manage our health and even our emotions. 

Weighted plushies have become a trendy toy for kids, and the brand Hugimals World is leaning into the self-care craze with its product line of “meaningful self-care gifts.” I recently got a weighted turtle for my daughter, and while my main interest was in satisfying my daughter’s obsession with turtles, many customers are likely more interested in the benefits of weighted pressure for reducing anxiety.

Commercial markets test things through experience and experimentation, and that means a significant error rate. Take, for example, my grandfather’s smoking, which he began before cigarettes’ health risks were well known. Doctors actually endorsed, and even prescribed the use of cigarettes until the 1960s. Health “standards” derived from top-down planning should be taken with a grain of salt. I remember memorizing the food pyramid in grade school, only to learn as an adult that the framework was not only poor nutritional advice but the result of political corruption.

When it comes to encouraging us to care for ourselves, mandates and policies pale in comparison to our own desires and understanding. Self-care is about being informed, being self-aware, and the ability to be self-directed.

While the action plans derived by the WHO and the UN may have laudable goals, the imposition of any practices or prohibition of any products should not go unchallenged, and one-size-fits-all standards should be scrutinized. Junk food bans tend not to change people’s choices much, warning labels and calorie lists are of mixed utility, and even outright prohibitions on harmful substances don’t work. Black markets and the Iron Law of Prohibition mean attempts to curb harm can even make bad choices more dangerous.

In short, self-determination is key to motivating healthy lifestyle choices. Ludwig von Mises could easily have predicted that, writing, in Socialism: An Economic and Sociological Analysis: “All rational action is in the first place individual action. Only the individual thinks. Only the individual reasons. Only the individual acts.”

As for my self-care strategies, I will continue to be open to new products and practices that will improve my wellbeing while abiding by the classic rule of ‘All things in moderation’ – except for salt of course.

Rare is the day that passes during which I don’t, at least once (and usually more than once), say to myself, “Omigosh, I do wish that HL Mencken were still alive and active; he’d have a field day commenting on this particular politician or that tempest du jour.” There’s no question that if I could bring one American back to life for an evening of good food, stiff drink, and sterling conversation, that person would unquestionably be Mencken (1880-1956).

Mencken was a Baltimore newspaper reporter, magazine editor, literary critic and expert on what he called “the American language.” But he was and remains, in my view, above all, this country’s unmatched observer and recorder of politics. So sit back and feast on this small sampling of intellectually nutritious and tasty tidbits of Mencken’s political wisdom.

As Mencken observed him, the typical politician is a “merchant of delusions,” a “pumper-up of popular fears and rages.”

The politician is seldom to be trusted:

What is a political campaign save a concerted effort to turn out a set of politicians who are admittedly bad and put in a set who are thought to be better? The former assumption, I believe, is always sound; the latter is just as certainly false. For if experience teaches us anything at all it teaches us this: that a good politician, under democracy, is quite as unthinkable as an honest burglar. His very existence, indeed, is a standing subversion of the public good in every rational sense. He is not one who serves the common weal; he is simply one who preys upon the commonwealth. It is to the interest of all the rest of us to hold down his powers to an irreducible minimum and to reduce his compensation to nothing; it is to his interest to augment his powers at all hazards, and to make his compensation all the traffic will bear.

But ours is a democratic republic where We the People choose our leaders freely in fair elections. Doesn’t the need to secure a majority of votes ensure the victory of candidates, most of whom are honorable?

No:

The only way to success in American public life lies in flattering and kowtowing to the mob. A candidate for office, even the highest, must either adopt its current manias en bloc or convince it hypocritically that he has done so while cherishing reservations in petto. The result is that only two sorts of men stand any chance whatever of getting into actual control of affairs – first, glorified mob-men who genuinely believe what the mob believes, and secondly, shrewd fellows who are willing to make any sacrifice of conviction and self-respect in order to hold their jobs.

But some politicians are reformers or “change agents.” And many others are professional policy wonks, devoted to the dull yet important detailed chore of steering the ship of state. Surely these office-seekers are more nobly motivated than is the run-of-the-mill office-seeker.

Nope, says Mencken:

Reformers and professionals are alike politicians in search of jobs; both are trying to bilk the taxpayers. Neither ever has any other motive. If any genuinely honest and altruistic politician had come to the surface in America in my time I’d have heard of him, for I have always frequented newspaper offices, and in a newspaper office the news of such a marvel would cause a dreadful tumult. I can recall no such tumult.

We must come to grips with the fact that “politics, as hopeful men practice it in the world, consists mainly of the delusion that a change in form is a change in substance.”

Alas, though, we continue — despite mountains of evidence that should scare us off – to entrust ever more of our lives and riches to politicians.

Mencken blamed this excessive trust in government for:

the survival into our enlightened age of a concept hatched in the black days of absolutism – the concept, to wit, that government is something that is superior to and quite distinct from all other human institutions – that it is, in essence, not a mere organization of ordinary men, like the Ku Klux Klan, the United States Steel Corporation or Columbia University, but a transcendental organism composed of aloof and impersonal powers, devoid wholly of self-interest and not to be measured by merely human standards.

Even my late, great Nobel-laureate colleague, James Buchanan — a pioneering public-choice scholar — never said it as well.

Mencken recognized that, from time to time, truly honorable people manage to rise to the pinnacle of politics. These individuals, however, are rare:

After damning politicians up hill and down dale for many years, as rogues and vagabonds, frauds and scoundrels, I sometimes suspect that, like everyone else, I often expect too much of them. Though faith and confidence are surely more or less foreign to my nature, I not infrequently find myself looking to them to be able, diligent, candid and even honest. Plainly enough, that is too large an order, as anyone must realize who reflects upon the manner in which they reach public office. They seldom if ever get there by merit alone, at least in democratic states. Sometimes, to be sure, it happens, but only by a kind of miracle. They are chosen normally for quite different reasons, the chief of which is simply their power to impress and enchant the intellectually underprivileged. It is a talent like any other, and when it is exercised by a radio crooner, a movie actor or a bishop, it even takes on a certain austere and sorry respectability. But it is obviously not identical with a capacity for the intricate problems of statecraft.

Among the few honorable politicians, in Mencken’s view, was Grover Cleveland, who he described as “a good man in a bad trade.” A bad trade, of course, attracts a disproportionately large number of bad people. I can think of a tiny handful of successful politicians today for whom Mencken would likely have the same respect he had for Cleveland. But not many.

Mencken’s suspicion of politicians wasn’t superficial; it was rooted deeply in his liberalism – a natural-rights liberalism that was closely akin to that which motivated the American founders. As Mencken said: “Every right that anyone has today is based on the doctrine that government is a creature of limited powers, and that the men constituting it become criminals if they venture to exceed those powers.” Although he was no anarchist, he well understood that government’s proper function is strictly limited:

Is government, then, useful and necessary? So is a doctor. But suppose that the dear fellow claimed the right, every time he was called in to prescribe for a bellyache or a ringing in the ears, to raid the family silver, use the family toothbrushes, and execute the droit de seigneur upon the housemaid?

Unsurprisingly for a man who seemed incapable of allowing hope to cloud his view of reality, he did not overflow with optimism:

For people in the mass soon grow used to anything, including even being swindled. There comes a time when the patter of the quack becomes as natural and as indubitable to their ears as the texts of Holy Writ, and when that time comes it is a dreadful job debamboozling them.

I close with this insight – one that, were it more widely seen, would save humankind from all manner of mischief:

When we say that it [government] has decided to do this or that, that it proposes or aspires to do this or that – usually to the great cost and inconvenience of nine-tenths of us – we simply say that a definite man or group of men has decided to do it, or proposes or aspires to do it; and when we examine this group of men realistically we almost invariably find that it is composed of individuals who are not only not superior to the general, but plainly and depressingly inferior, both in common sense and in common decency.

Would that today we Americans possessed even a quarter-measure of such clarity of vision.

AIER’s Business Conditions Monthly indicators for June 2025 point to a sharper divergence in the US outlook. The Leading Indicator rose 8 points to 71, extending May’s rebound (from 63) and marking a year-to-date high. While still shy of early-2024 peaks, the upswing suggests firmer forward momentum heading into the second half of the year, even as policy uncertainties — especially around tariffs and rising input costs — create headwinds.

By contrast, the Roughly Coincident Indicator fell to 21 from 50 in a stark deceleration of near-term traction in real-time activity. The Lagging Indicator also declined to 25 from 42, giving back prior gains and indicating that backward-looking metrics are mirroring the slowdown visible elsewhere. As is typical late in the cycle, the delayed softening in lagging data counsels caution: leading signals are improving, but current conditions have deteriorated, and the gap between the two will need to close, whether through a genuine pickup in activity or a reversal in the forward indicators.

LEADING INDICATOR (71)

The Leading Indicator rose to 71 in June, with eight of twelve components improving, one unchanged, and three declining. 

Gains were led by the University of Michigan Consumer Expectations Index (up 21.3 percent) and a steeper 1-Year to 10-Year US Treasury Yield Spread (bps) (wider by 11.5 basis points). Financial risk appetite firmed as Debit Balances in Customers Securities Margin Accounts increased 9.4 percent, while labor-market tone improved with US Initial Jobless Claims SA falling 6.5 percent. Real-economy forward gauges also advanced: US New Privately Owned Housing Units Started by Structure Total SAAR rose 4.6 percent; Conference Board US Leading Index Stock Prices 500 Common Stocks gained 3.8 percent; Adjusted Retail & Food Services Sales Total SA edged up 0.9 percent; and Conference Board US Leading Index Manuf New Orders Consumer Goods & Materials ticked up 0.2 percent. US Average Weekly Hours All Employees Manufacturing SA was unchanged. Offsets came from a lower Inventory to Sales Ratio Total Business (down 0.7 percent), softer Conference Board US Manufacturers New Orders Nondefense Capital Goods Ex Aircraft (down 1.2 percent), and weaker United States Heavy Trucks Sales SAAR (down 1.6 percent). Netting these moves, breadth improved across expectations, markets, housing, and claims, even as capex proxies and freight remained soft.

ROUGHLY COINCIDENT INDICATOR (21)

The Roughly Coincident Indicator fell to 21, reflecting a contraction in real-time activity: two of six components improved, one was unchanged, and three declined. 

Gains were modest — US Industrial Production SA rose 0.4 percent and Conference Board Coincident Manufacturing and Trade Sales increased 0.3 percent — while US Employees on Nonfarm Payrolls Total SA was flat. Offsets dominated, with US Labor Force Participation Rate SA down 0.2 percent, Conference Board Coincident Personal Income Less Transfer Payments down 0.2 percent, and Conference Board Consumer Confidence Present Situation SA lower by 1.8 percent. The pattern points to current conditions losing traction: small production and sales advances are being outweighed by softer participation, income, and present-situation sentiment.

LAGGING INDICATOR (25)

The Lagging Indicator slid to 25, with breadth split three up, three down. 

Price pressure persisted as US CPI Urban Consumers Less Food & Energy Year over Year NSA rose 3.6 percent, while financing and balance-sheet measures inched higher — Conference Board US Lagging Commercial and Industrial Loans (0.3 percent) and US Manufacturing & Trade Inventories Total SA (0.2 percent). Offsetting that, activity and short-rate proxies softened: Census Bureau US Private Construction Spending Nonresidential SA (-0.3 percent), US Commercial Paper Placed Top 30 Day Yield (-0.4 percent), and an outsized drop in Conference Board US Lagging Average Duration of Unemployment (-5.5 percent) weighed on the composite.

Through 2024 the three diffusion indexes painted an expansion with periodic soft patches. The Leading Indicator oscillated between 54 and 79, spending most of the year above the 50 line (notably 71 in April/September and 79 in November), consistent with forward momentum despite mid-year dips. The Roughly Coincident Indicator stayed elevated (58–92), pointing to solid current activity into year-end. By contrast, the Lagging Indicator drifted lower, sliding from 50 in January to 17 in December, a late-cycle pattern in which backward-looking gauges soften even as leads remain constructive.

The setting has flipped in 2025. The Leading Indicator initially sagged (54 to 38 from January to April) before staging a sharp rebound to 63 in May and 71 in June, among its strongest readings in 18 months. Meanwhile, the Roughly Coincident Indicator faded from 67 in early 2025 to 21 in June, signaling a marked loss of near-term momentum. The Lagging Indicator has whipsawed, spiking to 83 in January, easing to 75 in February, then sliding to 42 in May and 25 in June, a considerable reversal of the expansion visible earlier in the year.

Historically, such gaps do not persist; the economy will either re-accelerate toward the leads or the leads will prove a headfake as coincident/lagging softness asserts itself. For now, the balance tilts toward caution; near-term risks are accumulating, and the second half will hinge on whether June’s Leading Indicator bounce translates into actual activity amid the headwinds outlined in the discussion below.

Discussion, July – August 2025

Through mid-summer 2025, price signals split between a still-soft consumer read and a hotter upstream profile. June CPI undershot consensus even as tariff pass-through quickened: headline rose 0.29 percent m/m (2.7 percent y/y) and core 0.23 percent m/m (2.9 percent y/y), with core running at roughly 2.8 percent (1-mo), 2.4 percent (3-mo), 2.7 percent (6-mo) annualized — levels comparable to or below those prevailing when the Fed eased last fall. Energy added a few basis points, food-at-home firmed, and core goods turned up (notably apparel, appliances, audio, furniture) while vehicles and lodging softened; core services edged higher on medical services with rents/owner-equivalent rents still muted. Inflation diffusion measures point to broader — but not runaway — pressures, consistent with tariff effects spreading even as several tariff-exposed lines that led earlier appear near peak pass-through. In contrast, July PPI strengthened across all major buckets — goods the firmest since early 2023 and services the strongest since 2022 — implying pipeline cost pressure hasn’t fully fed through to consumers and broad margin absorption is unlikely. 

Historically, core PPI leads core PCE with a tight directional link; last month’s benign PPI pointed to core PCE in the mid-2s, whereas this month’s jump implies re-acceleration toward about 3 percent by September. As of the end-July release, the Fed’s preferred inflation benchmark, PCE, had already firmed — headline PCE rose 0.3 percent month over month and 2.6 percent year over year, core PCE rose 0.26 percent month over month, prior months were revised higher, lifting the three- and six-month annualized core trends to 2.6 percent and 3.2 percent, and year-over-year core printed 2.79 percent — while income advanced faster than expected on transfers and spending grew modestly as consumers tilted toward necessities. Netting CPI’s “compositional” softness against a firming PPI backdrop and a firmer prior PCE print, the inflation mix points to late third quarter consumer inflation edging higher — more visibly in core PCE than CPI — and argues for policy makers to favor caution over an imminent cutting cycle. 

From a dual-mandate vantage point, the price level side argues against accommodation for now, but on the employment side a cut has rarely looked more urgent: July’s nonfarm payrolls rose a seasonally adjusted 73k, and massive back revisions knocked a further 258k off prior months (June to 14k; May to 19k), leaving three-month average job growth near 35k — well below the estimated 80k–100k breakeven for a steady unemployment rate and likely negative after adjusting for an estimated 80k per month birth-death overstatement since the April 2 tariff announcement; private payrolls were 83k (health care led), key drags included manufacturing, professional and business services, and government (notably local government −3k), with the unemployment rate up to 4.25 percent from 4.12 percent even as the labor force contracted for a third month and participation slipped again to 62.22 percent, the household survey showing a 260k drop in employment; average weekly hours ticked up to 34.3 from 34.2 and hourly earnings rose 0.3 percent, lifting weekly pay 0.6 percent, but the composition of gains, the shrinking labor force, and the scale of revisions indicate labor demand is falling faster than supply — contradicting the notion of a “solid” market Powell referenced — while forward risks skew toward government and education propping up headline prints into fall amid expected cuts to DOGE-related grants, all of which raises the probability of an earlier and potentially larger easing than a single December move.

Consulting other data points on the state of the US labor market yields a mixed but, on net, confirming picture of July’s dour BLS signal: ADP reported private payrolls up 104,000 in July versus a 76,000 consensus estimate, with wage growth steady for job stayers at 4.4 percent and job changers at 7 percent and a second-quarter GDP print of 3 percent suggesting underlying demand, while service industries added 74,000 and goods producers 31,000; however, JOLTS showed openings falling by 275,000 to 7.44 million with the vacancies-to-unemployed ratio slipping to 1.06, quits holding at 2.0 percent after downward revision, and evidence that firms are managing headcount via slower hiring and hours rather than pink slips. Weekly claims likewise point to slack building through weaker re-employment rather than rising layoffs: initial claims edged down to 224,000 but continuing claims remained elevated at 1.953 million, the exhaustion rate has been climbing, and the rise is concentrated in places like Washington, DC amid government-related cuts, including roughly 292,000 announced layoffs tied to DOGE actions this year. Taken together, the ADP upside and steady pay gains modestly temper the narrative, but the deterioration in openings, quits, and continuing claims — and the sectoral and geographic pattern of weakness — largely corroborate the BLS message that labor demand is fading faster than supply.

The week of July 28, 2025 delivered an unusually dense slate of macro releases, and through Friday, August 1 the aggregate picture still suggested ongoing expansion tempered by mounting risks; yet it was not only the July nonfarm payrolls shock that altered that assessment — soon after, the ISM Manufacturing index was released. The overall index fell one point to 48 (its fifth consecutive month in contraction and the fastest overall contraction in nine months) as the employment subindex slid to its lowest level in more than five years amid shrinking orders, softer backlogs and exports, and supplier deliveries improving with the delivery index dropping nearly five points below 50 for the first time since November; government data the same morning showed factory employment declining for a third straight month while the three-month average gain in total payrolls was the smallest since the pandemic, reinforcing survey commentary about active headcount management and cautious hiring even where production edged higher (the only main ISM component in expansion); input-cost pressure eased at the margin with prices paid falling nearly five points to 64.8, but respondent anecdotes highlighted tariff-driven uncertainty suppressing forward orders, complicating sourcing strategies, pressuring margins despite strong end-market niches, and delaying blanket purchases — dynamic likely to persist given the administration’s latest country-based tariff announcement that held many baseline rates at 10 percent while leaving potential adjustments on pharmaceuticals, semiconductors, critical minerals, and other key inputs unresolved.

The services side, released a few days later, was not substantially better than the manufacturing report: ISM Services slipped to 50.1 — below all economist estimates and effectively at stall speed — with the employment index down to 46.4 (its fourth contraction in five months and among the weakest since the pandemic) while prices paid climbed to the highest since October 2022. Business activity expanded but slowed from June and new orders eased to 50.3, with survey commentary pointing to tariff-related cost pressure, client delays, and caution in forward purchasing; breadth was mixed (eleven industries expanding, seven contracting, led by accommodation and food services), and the hiring softness reflected freezes and non-backfills rather than broad layoffs. Backlogs shrank for a fifth straight month, inventories grew at a slower pace, and inventory sentiment fell nearly four points to 53.2 (the lowest since October). The report aligned with concurrent macro signals — revised-down job growth, barely rising real consumer spending, and a June trade deficit that narrowed to its tightest since September 2023 as firms retrenched on imports — reinforcing a risk-tilted, late-cycle tone rather than a clean handoff from manufacturing weakness to services resilience.

Consumer and business sentiment diverged in tone but converged on caution over the past month. The University of Michigan’s preliminary August read showed consumers turning measurably more downbeat — headline sentiment slipped to 58.6 (from 61.7), one-year inflation expectations rebounded to 4.9 percent and long-run to 3.9 percent, 62 percent expect unemployment to rise, and 58 percent say they plan to cut back spending, with buying conditions for durables at a one-year low — even as retail sales notched a second monthly gain. Small firms, by contrast, reported a modest improvement: the NFIB Optimism Index rose 1.7 points to 100.3 (a bit above its long-run average), hiring plans ticked up and more owners intend capital outlays, yet uncertainty jumped to one of the highest readings on record, profit trends remained negative, and capex intent stayed below its historical norm. The sources of unease differ: households cite tariff-driven price risks, job security, and borrowing-cost views split along partisan lines; businesses point to trade and policy uncertainty, mixed demand, and lingering labor frictions (sector-specific hiring difficulty) even as fewer plan price hikes, implying limited near-term pass-through. Netting the two, “hard” spending data are holding up for now, but both sides signal rising precaution — consumers via intent to retrench, firms via elevated uncertainty that could restrain hiring and investment unless the policy outlook clarifies.

Do the resumption of rapidly rising prices, a deteriorating job market, cautious consumers and firms, and weakening services/manufacturing square with the latest Beige Book and retail sales data? Largely, but with timing nuance: the July Beige Book (through July 7) upgraded activity to “increased slightly,” noted employment “increased very slightly” and price growth “mostly similar” to prior reports, yet emphasized tariff-driven input costs reported as “modest to pronounced” in all 12 districts and warned those pressures could lift consumer prices by late summer — signals consistent with today’s firmer inflation pipeline and broad caution in hiring and investment. July retail sales, meanwhile, posted a solid goods read — headline up 0.5 percent month over month, ex-autos up 0.3 percent, and the GDP-relevant control group up 0.5 percent — boosted by major online promotions and broad category gains, but the figures are not inflation-adjusted and restaurant/bar spending fell, underscoring softness in discretionary services. Taken together, retail’s “hard” goods strength and the Beige Book’s slight improvement do not refute the darker employment and survey data that arrived more recently. Rather, they depict an economy that was still expanding in early July even as tariff-related cost pressures and rising uncertainty were setting the stage for the subsequent deterioration in labor demand, services momentum, and sentiment.

Continuing: do July 2025 industrial production and capacity utilization trends corroborate the ISM’s contractionary signal for manufacturing? Broadly, yes: industrial production slipped 0.1 percent in July after a 0.4 percent gain in June, manufacturing output was flat (following an upwardly revised 0.3 percent in June), and both mining and utilities declined, echoing ISM’s sub-fifty readings from March through July. The mix also rhymes with ISM details — durables (autos, aerospace) offsetting weaker nondurables (textiles, apparel, petroleum), slower consumer-goods output, and declines in construction and business supplies — leaving factories effectively at stall speed. Capacity utilization eased further below its long-run average, with overall utilization down to 77.5 percent and factory utilization to 76.8 percent, consistent with building slack in survey data. After a first-half lift from pre-tariff order pulls and a Boeing restart, output has simmered as firms face cooler demand, tariff-related input costs, and policy uncertainty; and with a new Boeing strike starting August 4 threatening transportation equipment, the production side likely remains aligned with ISM’s caution even as retail sales strength and a firm New York regional survey offer limited offset.

In the aggregate, late July and early August economic data describe an economy still consuming in nominal terms but increasingly wrestling with tariff-driven cost pressure and fading labor momentum — exactly the cross-currents that narrow the Fed’s policy runway — while last month’s backdrop remains salient. Fed officials earlier warned large tariff hikes could push up prices; that concern hasn’t been put to rest, but some (e.g., Kansas City’s Schmid and Richmond’s Barkin) argue the latest CPI doesn’t justify an immediate cut, reflecting the mandate trade-off as labor softens while price pressures diffuse. Markets disagree: Fed-dated OIS fully prices a quarter-point cut in September (implied ~4.08 percent) and about 62 basis points of easing over the three remaining meetings this year. With retail sales nominally firm but sentiment weakening, equity indices near highs, and tariff pass-through increasingly evident in upstream data, the “narrow tightrope” described in our prior report has become thinner and shakier — pipeline inflation is re-accelerating just as real-economy momentum cools. These competing dynamics leave the Fed with less room to maneuver and raise the odds that any misstep reverberates across both prices and jobs. Downside risks remain elevated.

LEADING INDICATORS

ROUGHLY COINCIDENT INDICATORS

LAGGING INDICATORS

CAPITAL MARKET PERFORMANCE

Care for the poor is an essential part of a virtuous life in the Jewish and Christian traditions, and other traditions as well. 

In the book of Deuteronomy, in the Old Testament, Moses instructs the Israelites to give generously to those in their community, with the reminder that “There will always be poor people in the land. Therefore, I command you to be openhanded toward your fellow Israelites who are poor and needy in your land.” This is repeated in the New Testament when, in the Gospel of Matthew, Jesus, when being anointed in Bethany, tells His disciples that “the poor you will always have with you.”  

This command came with rules that govern how the poor are treated and what is asked of them, and is predicated on truths about the world and human nature. The first is that people have inherent dignity. In the Judeo-Christian tradition, this stems from our creation; we are imago Dei, image-bearers. As such, we are created to work, and in this serve ourselves and others and bring God glory. Thomas Aquinas saw that our telos, purpose, is to understand and contemplate God, and that we achieve happiness when we fulfill our God-given purpose. That includes our work in the world. Only God can create ex nihilo, but we are commanded to create something out of something. We are to use our gifts and skills to serve one another, and through this, we are fulfilled and can create greater material abundance. 

Work, human dignity, cooperation, and human flourishing are key assumptions and features in ancient solutions to poverty assistance and alleviation. Those who have more are asked to give generously to those who are vulnerable, but those who are vulnerable are asked to make productive contributions, if they are able. The story of Ruth demonstrates the inherent value of work both for the haves and the have-nots.

Ruth was a Moabite widow who, with her mother-in-law, Naomi, returned to Bethlehem and relied on gleaning to survive. Gleaning is the process of gathering leftover grains from the fields after the harvesters have finished, and was provided for through gleaning laws as part of the ancient Israelite social safety net. The productive capacity of the fields was necessary both for the economy and for gleaning. The productive capacity of Ruth and the poor in general was required to participate in the gleaning, creating value by picking up food which would otherwise be impractical to gather. The initiative and effort of both parties are key to poverty alleviation.

This is one example of a local solution to poverty that required the poor to be active participants in the charity they received. The goal was not dependency, nor was it an unintended consequence. Some would never be able to even work in the field for charity due to physical limitations. This is also true today. We should not require work if one is not able to work, but they are few and far between. Able-bodied people were required to work to reap the benefits of the productive labor of others. 

In ancient Israel, it was to be expected that there were many poor people and little income mobility, particularly for women and children. This was many centuries before the onset of the first Industrial Revolution. Yet the mechanisms by which societies cared for the poor worked because they treated the poor with dignity and asked them to be active participants in the local social safety net. 

 Scholar Glenn Sunshine argues that four principles made these ancient poverty alleviation systems effective, and they are the importance of work, giving, moral proximity, and subsidiarity. We’ve addressed the importance of work and giving. Relationships determine moral proximity. We have a greater moral responsibility to those who are close to us.

Remember, Moses commanded the Israelites to care for the poor in their covenant community. Today, if your house burns down or you lose your job, the local church or community has the highest moral responsibility to care for you during this time and others in the community who are poor for various reasons, whether it’s long-term or short-term poverty. Subsidiarity means that solutions are best at the most local level possible and has roots in Catholic social teaching and the natural law philosophy of Thomas Aquinas.

Now, let’s fast forward to the modern welfare state. One does not have to be Jewish or Christian to apply these timeless and practical solutions, as they are predicated on the realities of human nature and economics. Instead, poverty alleviation in the United States is ineffective mainly because it creates negative incentives to work and discourages the poor from escaping poverty. Global humanitarian aid is riddled with the same perverse incentives.

Moral proximity and subsidiarity help us see that we need to know the poor and the conditions that lead to their poverty to support them best now and help them permanently escape these conditions. This requires relationships. American welfare creates dependencies and discourages income mobility as it forces the poor to avoid the “cliff effect,” where a sudden reduction in government benefits results from a slight increase in earnings. Moreover, it is a bureaucratic behemoth and can only work by treating individuals as generic, which they are not. It breaks up families and discourages advancements in human productivity. 

Welfare and charity are a necessary but insufficient condition for permanently escaping poverty. If someone is hungry, homeless, or in need of medical care, we can and should help them. Yet, the only long-term solution to poverty is economic growth fostered by capitalism, the most productive and extraordinary poverty elimination program the world has ever seen. Moral philosopher Adam Smith saw the potential of capitalism when he wrote An Inquiry into the Nature and Causes of the Wealth of Nations, in 1776.

At the time of the book’s release, average life expectancy was under 40, which was low because of high child and maternal mortality rates. For most of human history, child mortality was 48 percent. Healthcare was managed at home with no specialists and no access to antibiotics or over-the-counter pain relievers. Food abundance was tied to weather conditions, and diseases like smallpox, dysentery, and typhoid fever ravaged the populations. War was a typical and expected part of life, as was illiteracy. Most women could not vote, and slavery was common. Poverty was miserable and normal; it was an exception to be wealthy and have a long life. 

Today, global child mortality is about 4 percent, global literacy rates are almost 90 percent, and for the first time in human history, we can reasonably predict an end to sustained poverty. Adam Smith understood why we could achieve such colossal gains in human prosperity and well-being, and it serves as an essential lesson for poverty alleviation and charity. Smith argued that the wealth of a nation is tied to worker productivity. When we can divide the labor among people, we create the conditions for specialization, which allows us to learn, innovate, and improve our skills. Specialization allows us to lower the opportunity costs of production, and trade will enable us to rely on the skills of others. Smith saw that the division of labor is limited by the extent of the market, or the number of trading partners we can access. 

Advances in worker productivity and access to markets enable people to escape the chains of poverty. There is a role for charity and a local safety net, but it must be predicated on these truths and respect the dignity of the individual and the existential value of work. We must think about breaking the dependencies so often found in charity and welfare, and focus on the interdependencies of people through the market. 

Ancient lessons in poverty can take us a long way in reforming how we both view the poor and make efforts to help them escape poverty.

Finding consensus among economists is an occasional treat. Last week’s firing of Bureau of Labor Statistics (BLS) commissioner Erika McEntarfer by President Trump was one such occasion. With few exceptions, the reaction has been that the claims she was dismissed for producing “low-quality” data or displaying “partisanship” are mere cover — a simple case of machine-gunning the messenger.

There is little to substantiate the claim that the BLS produces low-quality data. The BLS (and every other statistical agency) frequently issues preliminary reports from surveys it conducts. 

As such, revisions are common. How big are those revisions? Pretty small! 

The graph below (courtesy of my co-author Gary Wagner at the University of Louisiana at Lafayette) shows error rates in monthly payroll employment estimates. It plots the percentage difference between the initial and final estimates. On this graph, a positive value means the initial estimate was lower than the final one. As can be seen, the errors (since 2000) are generally between ±0.5 percent. Most of the time (more than 90 percent), it’s within ±0.25 percent. On a pure absolute benchmark, this is not bad. In fact, if anything, the errors are getting smaller relative to the early period.

In the graph, the red and blue shaded areas represent the political party of the sitting US president. As can be seen, the errors don’t differ much by administration. The big spikes are what one could argue we should be looking at. Take the five instances where the difference is greater than ±0.5 percent. Two of those are clearly tied to economic shocks — the onset of a recession and the outbreak of COVID-19. Of the remaining three, one benefited a sitting Democratic president, one benefited a sitting Republican president, and one hurt a Republican president. Not particularly strong evidence of a “partisan” bias.

One more sophisticated answer would be to point to survey response rates. It is true that response rates in surveys such as the ones that underlie the highly publicized employment surveys have fallen in recent years. However, it is hard to pin this on the BLS’s own structure. Most countries are facing that problem. 

In fact, my native Canada seems to be seeing more dramatic declines in survey response rates. In 2019, the response rate to Canada’s labor force survey was 87 percent. In 2023, it was down to 71 percent. This is quite telling since that survey is mandatory. On non-mandatory ones, such as the survey of household spending, the response rate is below 30 percent (compared to above 60 percent before COVID-19). In the European Union, the range of non-response varies between less than 3 percent (Denmark) to more than 60 percent (Luxembourg). In other words, the BLS is no better or worse than others (the worst indictment would be that it is a “middling” agency), and it faces the same issues as the others.

All of this says little about partisanship at the BLS. But here is a “dirty secret”: bureaucracies can’t afford to be partisan. This is something that the economics of bureaucracy teaches us.

An analogy to set the table is useful here. In the 1980s, the British Broadcasting Corporation (BBC) aired an immensely popular show entitled Yes, Minister, which told the story of a minister (in charge of the nebulous Department of Administrative Affairs) and his civil servant (known as a permanent secretary in Britain). The civil servant always acted deferentially toward the minister but, in reality, saw it as his mission to protect the civil service itself — and its interests. That often meant hoodwinking the minister.

In one famous episode, he’s speaking with another civil servant who asks whether they should actually believe in the policies they enact. The response is classic:

“I have served eleven governments in the past thirty years. If I had believed in all their policies, I would have been passionately committed to keeping out of the Common Market, and passionately committed to going into it. I would have been utterly convinced of the rightness of nationalizing steel. And of denationalizing it and renationalizing it. On capital punishment, I’d have been a fervent retentionist and an ardent abolitionist. I would’ve been a Keynesian and a Friedmanite, a grammar school preserver and destroyer, a nationalization freak and a privatization maniac; but above all, I would have been a stark, staring, raving schizophrenic”

The accumulation of avoided contradictions illustrates the point well: the bureaucracy sees whatever it does as the output — regardless of what that output actually is. Unlike private firms, however, bureaucratic agencies cannot extract profits. Thus, the “profit” of the bureaucrats comes from job security, salaries, prestige, perks (e.g., nice offices). All of these are tightly correlated with one thing: the size of the bureau’s budget. Thus, a bureaucrat’s primary goal is not to maximize efficiency or output — it is to maximize the agency’s budget, because that’s what increases their own utility.

Most importantly, bureaucrats have a certain ability to deflect politicians. They have more information than the political principals they report to. That allows them to exaggerate needs, withhold information, frame budget increases as necessary to avoid catastrophe, and present cuts as threats to public welfare. This asymmetry gives them a layer of insulation from both political pressure and accountability.

The potency of this insulation has limits, however. If the bureaucracy becomes “visibly” bloated, underperforming and inefficient, politicians and voters can react. This can lead to performance reviews, budget cuts, and firings. The same outcome can occur if the bureaucracy appears partisan. If voters perceive it as a biased player, they might become immune to threats of service reductions or insensitive to claims of catastrophe. In other words, the insulation is eaten away.

That is why bureaucratic agencies typically act to maintain a neutral façade. It strategically preserves the insulation. If they lose it, they risk real consequences — tighter oversight, performance audits, even calls for abolition. The underlying motive of preserving the interest of the bureaucracy requires avoiding subservience to a political party. It is why the civil servant in Yes, Minister could say that he helped implement all the contradictory policies he mentioned.

The claims that the BLS is systematically partisan and incompetent collapse under scrutiny. 

Not only is the empirical evidence thin, but it is also a tenuous claim when one considers the economics of bureaucracies. For all their flaws, bureaucracies tend not to serve parties; they serve themselves. 

To survive, they must appear neutral and stay above the fray. The moment they are seen as partisan tools, they lose the political cover that protects their budgets, their staff, and their relevance. In that sense, the best reason to trust the non-partisanship of agencies like the BLS is not their virtue, but their self-interest.

Eighty years ago, Japan was brought to its knees by the atomic bombings of Hiroshima and Nagasaki, on August 6 and 9, respectively. On August 15, Japan surrendered unconditionally, following the ultimatum set forth by the Allied powers in the Potsdam Declaration.

Since then, Japan has been a steadfast constitutional democracy. Although decimated by the war, it was already the world’s fifth economy by 1950, rising to the rank of second for about a decade in the 1990s, then falling to fifth today. Since the 1970s (the earliest year measured), Japan has consistently ranked among the “most free” countries in the Index of Economic Freedom.

To be sure, Japan was already a world power in the early twentieth century (it’s estimated to have ranked ninth by GDP in 1913). It also had a bout of constitutionalism, with the Meiji restoration in 1889. 

But a post-1945 liberal democracy with strong economic growth was far from the most likely scenario. Indeed, most of Japan’s neighbors endured chaos or poverty in the second half of the twentieth century. The Philippines (which also adopted a new constitution after the war) enjoyed a mere 25 years of democracy before lapsing into brutal dictatorship from 1972 to 1986; it still faces problems of strongman rule, and is sputtering along with a GDP per capita of about $5,000 to Japan’s $33,000. South Korea now enjoys the same GDP per capita as Japan — but suffered through a brutal civil war and a military dictatorship that lasted until 1987. China and Vietnam fell to communism. Japan itself — while it had enjoyed an early taste of constitutional democracy from the 1890s to the 1930s — had lapsed into stratocracy, fascism, and war. 

The history of constitutional adoption is paved with failure. We can look at most of Latin America in the nineteenth and twentieth centuries, with coups, military dictatorship, despite constitutions modeled on Madison’s document. In more modern times, Iraq and Afghanistan offer a cautionary tale in nation-building and constitutional adoption.

What, then, is the reason for Japan’s eight decades of democracy, constitutional constraint, political stability, and economic growth?

 Western Roses and Eastern Soil: Choosing the Right Constitution

The simple answer to this question is wise constitutional choice in 1946. Many countries have blindly adopted the ‘correct’ paper constitution, which turned out to be the wrong constitution in practice. A vast literature can be summarized in two illustrative examples. 

In 1853, Argentina adopted an almost-verbatim translation of the US constitution. Alas, Madison’s document, based on Scottish Enlightenment philosophy and a tradition of local self-governance, was a poor fit for Argentina’s infelicitous medley of Rousseauvian philosophy, caudillo rule, and the atavism of Spanish colonialism, with its top-down governance and lack of rule of law. After a brief civil war, Argentina enjoyed prosperity under oligarchy, between 1860 and 1930. Then came the first of a dozen military coups, Peronism, and a centurial economic decline that Javier Milei is just starting to reverse. 

In 1946, the Philippines selected its first constitution (recall that it had been a Spanish colony from the 16th century until the Spanish-American war of 1898, then a US possession until Japanese occupation from 1942 to 1945). Like other former Spanish colonies, the Philippines lacked a tradition of constitutionalism, democracy, or individual rights. Spanish colonial culture, the caudillo tradition, absence of a tradition of rule of law and local self-government, and a strong communitarian tradition, all clashed with the aspirations of a constitutional text — heavily influenced by the US constitution — that was supposed to jump-start the path towards constitutional democracy. The honeymoon lasted a mere 25 years.

By contrast, Japan did not seek to adopt the “perfect” constitution. As early as August 29, 1945 — before the formal instruments of surrender had been signed — the US government announced its broad-stroke, postwar objectives for Japan: 

(a) To insure that Japan will not again become a menace to the United States or to the peace and security of the world. 

(b) To bring about the eventual establishment of a peaceful and responsible government [which] should conform as closely as may be to principles of democratic self-government but it is not the responsibility of the Allied Powers to impose upon Japan any form of government not supported by the freely expressed will of the people.

The US insisted on basic principles (separation of powers, judicial review, civilian control of the military, popular sovereignty), but not the details or the language, which were left to the Japanese drafting committee.

American military authorities rejected the first draft in February 1946 because it left too much power to the Emperor. In turn, the Japanese constitutional committee expressed concern that the American counter-proposal wouldn’t work for Japan. It is worth quoting the Japanese worries at length, because they express the exact same reservations that constitutional scholars — in hindsight — describe as the causes of failure of so many other transplanted constitutions: 

[The Japanese memorandum of rejection] reviewed the making of the Weimar Constitution after World War I and its ‘disastrous consequences’; the centuries-long development of the common law of England; the failure of presidential democracies in Latin America; the differences in the civil codes of France and Germany, notwithstanding that both were based on Roman law, and in their constitutions, notwithstanding that both were patterned on the English parliamentary system. [The memorandum] declared that the ‘arbitrary transplantation of a constitutional system unadapted to the condition and circumstance of the nation concerned’ was bound to fail, just as some ‘roses of the West, when cultivated in Japan, lose their fragrance totally.’… [It] expressed… fear that ‘the internal friction which may be brought on by an attempt at too sudden and a move…may beget reactionarism and in the end retard the smooth and wholesome progress of democracy.’

Bearing in mind the US hardline conditions, the Japanese drafting committee proposed a constitution that was accepted by the US occupying forces in November 1946 and came into effect a few months later. 

Like the US constitution, the Japanese constitution of 1947 established a constitutional democracy. It also established a Bill of Rights — but within Japanese cultural parameters. Indeed, the Japanese constitution juxtaposed citizen obligations with citizen rights, and balanced individual rights and collective rights within Japan’s communitarian tradition. Unlike the US constitution, the Japanese constitution kept an Emperor — but the new chrysanthemum throne was ceremonial. Japan borrowed a parliamentary system from the British tradition, with executive powers vested in a cabinet responsible to Parliament. But instead of the weaker constitutional council typically associated with parliamentary systems, it also established a US-style supreme court. 

Back to the Roots

The genius of the 1947 constitution did not just lie in its balance. There were two other crucial elements. First, it built on earlier Japanese constitutional experience. Second, it completed the unfinished work of that earlier constitution.

Japan, unlike most of its neighbors, had already had a modern constitution in the late 1800s. That constitution blended several legal and political traditions: British constitutional monarchy with a parliamentary model; a cabinet based on the German model; executive independence inspired by the US; and a civil code based largely on France’s Napoleonic code. It also respected Japanese traditions, especially in its adoption of indigenous legal practices. The 1947 constitution retained the earlier parliamentary system, rather than imposing US-style presidentialism. It also preserved Japan’s centralized system, a Meiji-era antidote to warring feudal powers, rather than attempting to impose US-style federalism. Thus did Japan have the important advantage of returning to a constitutional tradition, rather than starting from scratch. 

Second, the 1947 constitution resolved some unfinished — and lethal — problems in the Meiji experiment. 

To understand these shortcoming, we turn to Douglass North (1993 Nobel laureate in economics) and his work on violence and social orders. In his last book, he and his co-authors classify human governance into three social orders: foraging, limited-access orders and open-access orders. Setting aside foraging as pre-civilization, they focus on the latter two. 

Limited-access orders manage the problem of violence through elite coalitions. They typically lack generalized consent of the governed, and business is governed by personal relationships. As a consequence, they typically grow slowly, as entrepreneurship and capital accumulation are thwarted by the lack of general rules. Examples range from weak orders (Haiti, Iraq, Afghanistan) to limited orders with a durable and stable organizational structure (Venezuela, Russia), all the way to mature limited-access orders (Mexico). 

By contrast, open-access orders manage the problem of violence through impersonal rules and organizations. They have high levels of political and economic development, vibrant civil societies, and widespread impersonal relationships (anonymous commercial society, rule of law, property rights, contract law.) Examples include the US, United Kingdom, and France (which made the transition from limited to open in the early nineteenth century), or South Korea and Taiwan (which made the shift in the late twentieth century).

The big question proposed by North et al. involves the transition from limited- to open-access orders. Transition occurs when relations within the dominant coalition are transformed from personal into impersonal; the change must then extend to the larger population. North et al. identify three conditions for the transformation: (1) rule of law for elites; (2) impersonal organizations in both the public and private sphere; and (3) consolidated control of the military.  Jedidah Pida-Reese, a young scholar (and former AIER summer graduate fellow), operationalizes these theoretical foundations in a series of working papers. His research shows that Japan, under the Meiji constitution, successfully fulfilled only the first two conditions for a transformation to an open-access order. He writes:

Despite broadening suffrage, an active press, and strong political parties, Japan never established firm civilian control of the military…. Japan satisfied the first two [conditions] but not the third (consolidated control over violence). The Constitution placed the armed forces directly under the emperor, effectively sidelining the [Parliament] and leaving the Army and Navy Ministries as veto players. Economic shocks and diplomatic crises in the 1930s further emboldened military officers, who toppled civilian cabinets and steered policy with limited resistance. Japan’s experience underscores that democratization hinges on bringing the means of violence under accountable civilian authority, lest partial gains be undone.

In a process of constitutional learning, Japan’s drafting committee recognized that the Meiji constitution had gone a long way towards establishing democracy, rule of law, and an impersonal order. It had, however, failed to place the military squarely under civilian control. This was the fatal flaw in the Meiji constitution — and one that was resolved in 1946.

What Does a Free Society Require?

As always, there are many other factors. One of them is, of course, dumb luck. Lack of communist invasion or revolution also helped. So did US economic and military aid. And, whereas Meiji Japan had invited Western military advisors, post-war Japan focused on commercial development. As early as 1950, management gurus Edward Deming and Peter Drucker coached Japanese industrialists in effective management techniques. (This was, incidentally, the same year that my French grandfather, then a 26 year-old chemical engineer, was sent to Japan on a one-year mission to rebuild factories near Osaka.)

But — beyond luck, geopolitics, and a desire to become a commercial society — Japan’s constitutional choice was key. Constitutional choices made in 1945 formed the basis for 80 years of rule of law, democracy, stability, economic freedom, and economic growth.

Once again, Adam Smith was right: “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.”