The government has a habit of chasing simple villains for deeply complicated problems. Every few years, politicians point to either drug manufacturers, insurers, hospitals, pharmacies, or “middlemen” as key to finally lowering drug costs and cleaning up the healthcare system. 

Most recently, their scapegoat for high drug prices has become pharmacy benefit managers, or PBMs. PBMs operate as the middlemen between drug manufacturers, insurance companies, pharmacies, and employer health plans. They negotiate rebates with pharmaceutical companies, determine which drugs are covered by insurance plans, and help manage prescription drug benefits for millions of Americans. In recent years, concerns have grown about PBM business practices and increasing vertical integration within the healthcare industry. Many of the largest PBMs are owned by or affiliated with major health insurers and pharmacy chains, creating complex corporate structures that place multiple parts of the prescription drug supply chain under common ownership. Critics argue that these arrangements can create conflicts of interest and reduce market competition, while supporters contend they help coordinate care and lower costs through economies of scale. Because they sit in the middle of the prescription drug supply chain, PBMs have become powerful players in the debate over healthcare costs and transparency. 

In February, Congress passed major PBM reforms through the Consolidated Appropriations Act (CAA), requiring expanded reporting on rebates, fees, spread pricing arrangements, and financial relationships throughout the prescription drug supply chain. The law imposed substantial new oversight and transparency requirements on PBMs operating in both Medicare and the commercial market. Now, before those reforms have even had time to fully take effect, the Department of Labor (DOL) has proposed a second, overlapping disclosure regime targeting PBMs that serve self-insured employer plans. 

The DOL’s proposed PBM Fee Disclosure Rule would require PBMs and affiliated consultants to disclose extensive information regarding direct and indirect compensation under Employee Retirement Income Security Act (ERISA) fiduciary standards. The proposal is framed as a transparency measure. Transparency itself is not the problem. The problem is that Congress already established a broad federal transparency framework through the CAA just months ago. 

Instead of allowing those reforms to be implemented and evaluated, the DOL is building a parallel compliance structure with separate timelines, reporting expectations, and disclosure obligations. 

The problem of bureaucracy, which creates layers of overlapping functions, is well documented. Gary Hamel and Michele Zanini of the Management Lab and co-authors of Humanocracy estimate that the cost of excess bureaucracy in the US economy amounts to more than $3 trillion in lost economic output, or about 17 percent of GDP. 

This effect is no less significant with PBMs, who would now have to navigate overlapping systems governing many of the same financial arrangements. In some cases, the same transaction could require disclosure under multiple regulatory frameworks using different definitions and standards. 

To keep up with the layered compliance requirements, it takes staffing, legal review, auditing infrastructure, reporting systems, and operational restructuring. Large PBMs will likely absorb those costs. Smaller and mid-market PBMs may not, effectively pushing some out of the market altogether and leaving even more power concentrated among the largest players. 

Ironically, that could undermine the very accountability policymakers say they want. Less competition rarely leads to lower prices or greater responsiveness. It creates markets where fewer institutions dominate more of the system while smaller innovators and regional actors disappear under administrative burden. 

Supporters of the DOL proposal will argue that stronger transparency standards are necessary because PBMs remain opaque and influential actors in the healthcare system. They are not entirely wrong, but they’re failing to recognize that Congress already tackled that issue with CAA. For example, the CAA already requires PBMs to report information related to rebates, fees, spread pricing arrangements, and compensation structures throughout the prescription drug supply chain. The DOL proposal would require many of the same entities to disclose overlapping compensation and financial relationship data under the Employee Retirement Income Security Act (ERISA) framework. Two new sets of rules that effectively do the same things are not useful in practice. 

The better approach now is to allow the CAA reforms to take effect, assess whether meaningful gaps remain, and coordinate future oversight in a way that strengthens accountability without creating more bureaucracy and unintentionally reducing competition. 

Washington wanted more transparency in the PBM market. Fair enough. But if regulators are not careful, they may end up creating a healthcare system where only the largest firms can afford to survive, competition shrinks as smaller players are pushed out, and the high costs policymakers set out to address become even more entrenched.

America was the first country to recognize copyrights and patents in its constitution, and industries built on intellectual property produce over 40 percent of US GDP whilst supporting tens of millions of jobs. Now, however, a handful of Supreme Court decisions have excluded entire categories of invention from patentability. US investment in diagnostic technologies fell $9.3 billion below expected levels, as a result of depriving American innovators of rights and protections enjoyed by their counterparts in Asia and Europe. 

In one much-cited example, a molecular diagnostics company developed non-invasive prenatal testing that allowed fetal DNA to be collected from the mother’s blood, replacing invasive in-utero testing that risks pregnancy loss. The judge called it a “meritorious invention” but was compelled to invalidate patents because the circulating DNA is a natural phenomenon, and the test was well understood. The discovery was beyond the reach of patent eligibility. Competitors were immediately empowered to duplicate the technique.

The result has been a decline in innovation, ceding America’s global leadership in critical areas like medical diagnostics to our foreign partners and rivals. The bipartisan Patent Eligibility Restoration Act of 2025 (PERA) attempts to rectify this by clarifying what inventions can be protected under the US Patent Act Section 101. PERA is before the Senate Judiciary Committee and would define clear statutory exceptions to patentable subject matter that would replace broad and vague judge-made exceptions. 

The Patent Act allows useful and new manufactured products, machines, processes, compositions of matter, and improvements to these to be patented, so long as they are novel and non-obvious. The goal is to incentivize inventors, researchers, and investors to allocate the substantial time, resources, and talent it takes to bring about scientific and technological advancements by granting them a temporary monopoly. 

Unlike trade secrets, patents are publicly disclosed, allowing anyone with the means to replicate and reproduce the inventions after the patent expires, or to license them from the owner during the patent period. Protections against infringement give innovators confidence to share inventions with manufacturers, distributors, and other commercial partners.

Historically strong patent rights have made America both a leader in pharmaceutical research that creates new cures, as well as a leader in speedy and abundant availability of generic drugs, which account for over 90 percent of US prescriptions. Manufacturers would have nothing to replicate if inventors and investors did not have the incentive and ability to recoup R&D investments. Patents also encourage inventors to make useful improvements to their existing works to secure new patents.

By 2014, the Supreme Court held that abstract ideas, laws of nature, and natural phenomena could not be patented even though these categories are not mentioned in the Patent Act. Alice, Mayo, and Myriad were well-intentioned rulings. Since these are discoveries rather than inventions, the court reasoned that making them patentable subjects would restrict or penalize use of the building blocks of human ingenuity. This would defeat IP’s constitutional purpose of promoting “the Progress of Science and useful Arts.” Patent claims tied to one of these categories must include an “inventive concept” placing them outside the banned category. Since these rulings, medical diagnostics, certain biotechnologies, and software and AI tools have become difficult if not impossible to patent despite their economic value and the substantial investment and research it often takes to discover them.

PERA addresses the Supreme Court’s rationale while encouraging innovation. It would replace the Court’s broad non-patentable subject categories with narrower statutory prohibitions against patenting unmodified genes and natural compounds, human thoughts, laws of nature, mathematical formulas and abstract methods. PERA affirms the patent-eligibility of diagnostic tests, extracted chemical compounds, modified genes, and computer processes requiring a “machine or manufacture.” By restricting patent protection to novel, non-obvious innovations, it maintains guardrails against weak or frivolous patents.

​Computer processes using standard programming or off-the-shelf Large Language Models (LLMs) remain difficult to patent. To qualify, computer processes must offer something novel to programmers of ordinary skill—beyond what exists in GitHub repositories, academic papers, or open-source documentation. Applicants must publicly disclose their algorithms, code, and training methodologies. This transparency encourages developers to innovate “around” existing work without infringing, similar to how Instagram replicated TikTok’s “Reels” and Google replicated Microsoft Word to create “Docs.”

The EU and China did not copy America’s 2012-13 judicial restrictions on patenting diagnostics. Since 2012, investment in diagnostics in the US has dropped $9.3 billion below what it would have otherwise been. Europe’s In-Vitro Diagnostics market, which was in decline until 2013, has subsequently grown 2.7 percent yearly on average. Today, 40 percent of molecular diagnostic kit manufacturers are in Asia, while the United States is home to just 29 percent — on par with Europe even though the United States has a significant lead in other innovation metrics. If broad patent eligibility for diagnostics stymied innovation, we would expect the opposite result.

Unlike the United States, the EU and China did not restrict patenting diagnostics in 2012–13. Europe’s In-Vitro Diagnostics market grew 2.7 percent annually following that period. Because 74 percent of investors prioritize patent eligibility, Supreme Court decisions likely drove investment away from U.S. diagnostic research firms toward Europe and Asia. Today, Asia hosts 40 percent of molecular diagnostic kit manufacturers, while the United States hosts only 29 percent. If broad patent eligibility hindered innovation, we would expect the opposite result. 

​Protecting novel, useful innovations from broad, sweeping exemptions will strengthen America’s patent system and economic competitiveness. Conversely, ceding leadership to China and Europe through overbroad IP restrictions threatens jobs and opportunities for American innovators, entrepreneurs, and researchers. 

The Supreme Court denied the President’s stay application in Trump v. Cook on June 29, allowing Governor Lisa Cook to keep her seat. This was a 5–4 decision on an emergency-docket stay, not a final ruling on the merits, and it resolved far less than the headlines suggest.

What The Ruling Settled, and What It Did Not

The Court held that the President’s removal of Cook failed on narrow procedural grounds. He gave her no notice and no chance to respond before firing her. Nothing stops him from trying again. If he does, the underlying question of whether alleged pre-office mortgage fraud constitutes “cause” to remove a sitting Fed governor remains completely open, because the Court declined to spell out precisely what “cause” requires, leaving that question to be litigated the next time a president wants a governor gone.

The coalition that produced even this narrow holding is also not built to last. Chief Justice Roberts and Justice Kavanaugh joined the three liberal justices to form the majority. 

The three dissents don’t agree with each other any more than they agree with the majority: Justice Thomas would eliminate for-cause protection for the Fed as unconstitutional; Justice Barrett objected mainly to the Court reaching a constitutional question the government never raised; Justice Alito (joined by Gorsuch) objected to deciding this much on an emergency-docket record the lower courts barely developed. 

A 5–4 majority that fragile, on a question this narrow, is not the kind of precedent that survives a change in the Court’s composition unscathed.

Independent of What, Exactly?

The majority’s defense of Fed independence leans on the Fed being “a uniquely structured, quasi-private entity” with a “distinct historical tradition,” language that treats independence as a kind of institutional mystique. Justice Thomas takes the opposite extreme view: the Fed wields executive power, so it should answer to the President like any other agency.

Yet the Federal Reserve was never independent of the government in any general sense. Congress created the Board; Congress alone can rewrite the statute that defines its powers. And the Fed chair testifies to Congress, not to the President, as a matter of statutory design. The President’s role was always a narrow one: nominate governors and remove them only for cause. In other words, execute Congress’s will. “For cause” protection is intended to insulate monetary policy decisions from a specific pressure: the incentive an elected official has to lean on monetary policy for short-term gain ahead of an election. That is a narrower and more defensible claim than either “the Fed is special” or “no agency should ever be insulated from anything.”

The Case for Insulating That One Thing

The dilemma is structural, not personal. You can have a skilled central banker serving under a president inclined to misuse monetary policy, or a poor central banker serving under a president who would never try to misuse it. The Constitution vests executive power in one person, by design, a single point of accountability, but also a single point of failure. 

Monetary policy, by contrast, is set by a committee whose members, in theory, have smaller, less coordinated, and mutually offsetting incentives to politicize decisions than a single elected official seeking reelection. Insulating that committee’s decisions from removal-by-displeasure doesn’t guarantee good policy. But it bounds how much damage one bad political actor can do to it. That is a more modest claim than the one usually made for central bank independence.

This ideal deserves a real-world caveat. A committee that votes together as often as the FOMC does is not perfectly diversified against shared error. The near-unanimous “transitory inflation” call of 2021–22 is a reminder that groupthink can exist in a body such as the FOMC as well. Insulation reduces correlated political risk. It does not eliminate correlated forecasting risk.

 What Does This Mean for Monetary Policy?

The ambiguity Trump v. Cook leaves unresolved exacts a direct cost on the very thing insulation was built to protect: the credibility of monetary policy itself. 

Modern central banking depends heavily on expectations (through forward guidance or otherwise): the Fed signals its future policy intentions to shape market expectations today. That only works if markets trust that the Fed’s signals reflect economic analysis rather than political accommodation. A Fed whose governors know they can be removed under a standard no court has defined, for reasons no statute limits, is a Fed whose forward guidance is conditional to presidential approval. The interest-rate path the Fed projects carries weight only if markets believe the governors on the Fed Board who help set it won’t be replaced the moment that path displeases the White House. Trump v. Cook does nothing to remove that asterisk. And the split vote is not very reassuring.

The Underlying Problem

Why did a case about an old mortgage application make its way to the Supreme Court? 

The Federal Reserve Board, which Congress insulated in 1913, set short-term interest rates, supervised member banks, and designed and executed monetary policy. That’s it. The Board that Cook serves on does much more. 

The Dodd-Frank Act, passed in 2010, gave the Fed consolidated supervisory authority over nonbank financial firms designated “systemically important” by the Financial Stability Oversight Council, and imposed enhanced prudential standards on every bank holding company above a statutory asset threshold. The same Board sets emergency lending policy under Section 13(3) of the Federal Reserve Act — an authority that let the Fed extend credit peaking at $710 billion in 2008 to keep firms like AIG and Bear Stearns from collapsing, and that backed a 2020 lending capacity exceeding $2.6 trillion during the pandemic, with Congress appropriating $454 billion to backstop it. In 2023, under its general safety-and-soundness authority rather than any specific congressional mandate, the Board ran a pilot climate scenario analysis (CSA) with six of the country’s largest banks; an example of how far that authority can stretch.

None of this is illegitimate; Congress authorized nearly all of it by statute. But Congress added each grant of power without revisiting whether the original case for insulating monetary policy has anything to do with insulating bank examinations, emergency lending, or systemic-risk designations, let alone climate change policies. 

The Court’s own discomfort with this gap is already on the page. 

A footnote in the majority opinion declines to bless Fed powers “attenuated from monetary policy.” As Alexander Salter has observed elsewhere in this publication, that footnote reads as a quiet acknowledgment that the Fed’s broader supervisory and enforcement machinery doesn’t sit easily with the Court’s own reasoning. Justice Barrett presses the same concern in dissent, asking whether all of the Fed’s current powers actually relate to monetary policy, and whether those that don’t are simply grandfathered in. Even within the majority, the tension surfaces: Justice Kavanaugh argued the Court had to settle the Fed’s categorical status immediately because leaving it open after Trump v. Slaughter would itself be too costly, and yet the same opinion left the definition of cause, the question every future removal fight will turn on, to be resolved case by case, indefinitely.

Cook’s case was never just about whether one governor said something untrue on a mortgage application. It was about who controls a Board that can move trillions of dollars and rewrite supervisory standards for the banking system, a far larger prize than the one the original insulation was built to protect, sitting behind the same undefined “for cause” standard. 

A governor’s protection from removal cannot apply to some of her votes and not others. There is an uncomfortable trade-off: either every part of the modern Board stays insulated together, and an unelected body runs a large slice of executive power outside the executive branch, or insulation comes off entirely and governors who need their monetary policy decisions to be independent from electoral pressure become removable at presidential pleasure. That choice only looks forced because it treats the Board’s expanded mandate as one indivisible office. It isn’t.

Only Congress Can Close Both Gaps

Justice Kavanaugh’s concurrence ends with the right answer to half the problem: any further change to Fed independence “must occur through the legislative process.” He’s right that courts can’t durably settle whether the Fed gets to be independent.

The dilemma dissolves once you stop treating the Board as a single office. Keep “for cause” protection exactly where the original rationale justifies it: the governors who vote on interest rates and the money supply. Move everything else — bank supervision, systemic-risk designation, emergency lending — to a separate body whose officers answer to the President under the standard Slaughter, decided the same day, already set for ordinary executive functions (for better or worse). 

The Fed’s removal fight is still contested only because it does both kinds of work under a single, undefined standard. Separating them ends that.

Congress should therefore do two things. First, define “for cause” by statute for the seat that remains insulated, with notice and a hearing required before removal. Second, move the Fed’s non-monetary powers to a body that operates under the standard Slaughter already established, rather than letting the Fed borrow protection it was never designed to need. Protect the part of the job insulation was built for. Stop pretending the rest of the job needs the same shield.

At a Palo Alto, California, record store in September 1975, the latest issue of Rolling Stone caught the eye of local high school student Charles L. Ponce de Leon. Rock band the Eagles gazed out from the cover in youthful, long-haired glory. Inside was a story by Cameron Crowe, himself only 18 at the time.

De Leon bought the issue, sparking a lasting fascination with Rolling Stone that eventually culminated in his recent book about the magazine’s first two decades. According to de Leon, a cultural historian, writing Rolling Stone and the Rise of Hip Capitalism was “an opportunity to go back in time and think about my own intellectual development.”

It was also an opportunity to assess the magazine’s influence on American culture in the decades following the sexual revolution. “Hip capitalism” was originally coined as a slur for people profiting from the counterculture. In de Leon’s telling, however, it describes how businesses such as Rolling Stone, health food stores, head shops, and others carried 1960s values into mainstream America.

For my money, his argument does not go far enough. Rolling Stone is a perfect example of how entrepreneurs enrich themselves by enriching the lives of consumers. Unfortunately, the magazine’s left-leaning editorial stance rarely acknowledged that reality.

More than personalities or anecdotes, de Leon’s story focuses on the magazine’s content. There is more detail on individual writers, articles, and editorial coverage than some readers will want. Still, he makes a compelling case for how, to quote the book’s subtitle, “a magazine born in the 1960s changed America.”

The story begins on October 17, 1967, when the first issue of Rolling Stone went to press. Its founder, Jann Wenner, was a 21-year-old University of California, Berkeley, dropout. Like many of his peers, he was into marijuana and music. But he was also passionate about journalism. With help from his mentor, Ralph J. Gleason, who had hired him as a reporter for the San Francisco publication Sunday Ramparts, Wenner decided to try his hand at entrepreneurship. Inspired by Billboard, the British weekly Melody Maker, and low-budget fanzines such as Crawdaddy!, Wenner saw an opening for a new publication.

“It would be more discriminating than Billboard,” de Leon writes, “more substantive than the teen magazines or mainstream newspapers, and more lively than Crawdaddy!”

Wenner wanted to use journalism to legitimize the counterculture and its music. But like any entrepreneur, he first had to marshal economic resources. He raised $7,500 through a letter-writing campaign, created a mock-up, and began selling advertising.

The Entrepreneur Who Sold the Counterculture

Building Rolling Stone from the ground up, Wenner was an entrepreneur in the fullest Austrian sense. He identified a niche where his own passions intersected with unmet consumer demand. For all the disdain many young people in the 1960s expressed toward “square” America, the nation’s prosperity had given them more purchasing power than previous generations. They exercised that consumer sovereignty by buying everything from transistor radios to Beatles hair spray.

Soon they were buying Rolling Stone. By 1970, paid circulation had climbed to nearly 200,000. The magazine combined growing professionalism with fierce editorial independence. Its reviewers were unafraid to criticize work they disliked, even by revered artists such as Bob Dylan and Led Zeppelin. The coverage felt authentic, and readers responded.

Writers such as Hunter S. Thompson and Tom Wolfe soon joined the masthead. They were pioneers of “New Journalism,” which broke with the detached, objective style that had long dominated the profession. Thompson’s now-classic Fear and Loathing in Las Vegas first appeared in Rolling Stone in 1971. Wolfe’s 1972 article on the final Apollo lunar mission became the foundation for his later book—and the eventual film—The Right Stuff.

With work like this, Wenner expanded Rolling Stone beyond music into culture, politics, and crime through long-form coverage such as its reporting on the Manson murders. Circulation reached 466,000 by 1976. The following year, Wenner relocated the magazine’s headquarters from San Francisco to New York City, still the journalistic capital of the nation.

The 1980s brought cultural change and a new president, Ronald Reagan. Rolling Stone continued to evolve. A redesign transformed it into a traditional glossy magazine. Coverage expanded to include personal computers and even video games. Music coverage was briefly deemphasized before readers made their dissatisfaction known. Entrepreneurship is a continual negotiation between entrepreneurs and consumers, and consumers always hold the stronger hand. A business must continually earn their loyalty or be displaced by one that will.

One thing that did not change was Rolling Stone‘s politics. From the beginning, both the magazine and Wenner leaned reliably left. Even so, Wenner made one notable concession to the more conservative climate of the 1980s by hiring libertarian humorist P. J. O’Rourke as a writer and editor. A former dope-smoking longhair turned necktie-wearing Reaganite, O’Rourke was, in many ways, the Republican answer to Hunter S. Thompson. He quickly became one of the magazine’s most popular voices.

O’Rourke and Wenner also became friends. In the acknowledgments to All the Trouble in the World, O’Rourke thanked Wenner for allowing him “the latitude to rave and vociferate, although he disagrees with almost all my opinions.” He then vowed to make a Republican of Wenner yet.

That never happened. But their friendship speaks well of Wenner’s openness to dissenting viewpoints. Perhaps he even recognized that his own career embodied many of the entrepreneurial principles O’Rourke admired. Either way, theirs was the kind of friendship — like that of Antonin Scalia and Ruth Bader Ginsburg — that feels increasingly rare today. 

Capitalism, Culture, and Consequence

De Leon’s story of Rolling Stone ends with the publication’s twentieth anniversary in 1987. By that point, issues often ran over 100 pages, and paid circulation had surpassed 1.1 million.

The magazine’s story, of course, continued into the twenty-first century. But it became one of decline, and not only because of the usual challenges facing legacy print media. In 2014, more concerned with aligning itself with the cultural establishment than with getting the story right, the publication botched a now-discredited report of gang rape involving members of a University of Virginia fraternity. With that, Rolling Stone became “what it once claimed to abhor,” according to writer Mark Judge.

De Leon does not cover this episode. But in the epilogue, he does go somewhat starry-eyed for the sexual revolution values Rolling Stone helped mainstream. He connects capitalism to the ongoing victory of those values, a process he sees continuing until conservatives are left with “little recourse but to impose their increasingly unpopular social agenda through antimajoritarian and even authoritarian means.”

Some would argue that the political left is itself quite adept at such means. But de Leon gets this much correct: capitalism, rightly understood, can transcend politics. The progressive ownership of Ben & Jerry’s ice cream has as much right to earn a profit by appealing to consumers as the conservative ownership of Hobby Lobby does.

Rolling Stone is an example of the grassroots power of capitalism. It could not have emerged in an economy without individual initiative, private property, and free markets. And it made Wenner — who sold his remaining ownership stake in 2020 — considerably wealthy, powerful, and professionally successful.

Now 80, Wenner’s life has included plenty of faults. But in the end, the value he brought to the American economic table was both journalistic and entrepreneurial. And, as with free markets themselves, millions benefited from it.

Watching the branded Freedom250 celebrations in DC, I was reminded of the quote attributed to C.S. Lewis: “When I sat with my anger long enough, she revealed her real name was grief.”

Initially, I was angry to see this solemn remembrance of the greatest-ever attempt to operationalize Enlightenment values taken over by a pay-per-view spectacle, with its conspicuous advertisements for beer and energy drinks. I was troubled by taxpayer-backed Rededicate250 prayer rallies that claimed American citizenship should require Christian identity. And I’m deeply worried about a domestic military apparatus increasingly treating civil liberties and due process as inconveniences rather than first principles. The celebration isn’t just tacky — it’s hollow. We seem to have forgotten what, exactly, the United States is supposed to be about. 

Beyond my own misgivings, this summer is such a loss for my daughter. Her nuanced picture of the United States is not a people or a plot of land but a set of ideas, consecrated in a civil creed: that all men are created equal, and are endowed with inalienable rights; that unchecked power is a threat to liberty and just powers are constitutionally constrained; that governments derive their power from the consent of the governed, and govern best when they govern least. She is a little classical liberal, and largely shielded from the grim realities of our current political dysfunction.

An American Inheritance

Last July, on a family road trip, we prepared for this momentous anniversary together. A quarter millennium of human progress is hard to appreciate when your own age is in the single digits. We began in Jefferson’s study at Monticello, where he wrote the words that would transform the political vocabulary of the world. We talked about Jupiter Evans, the enslaved man who almost certainly was in Jefferson’s earshot at that moment and who, thanks to later edits made to Jefferson’s drafts, would not be included in “all men” for another ninety years. We walked the waterfront of Alexandria and stood in the assembly room of Independence Hall in Philadelphia, in the stifling heat, just as the founders did while haggling over the future of political relations. We bowed our heads at battlefields and war memorials, and we read those words — “all men are created equal” — as they now appear beneath the dome of the Jefferson Memorial in Washington. 

I want her to believe in America, the idea. Not the empire, with its overseas meddling and wars of choice. Not the extraction machine, with its scalpel blade slicing off a share of every dollar she’ll ever earn, spend, invest, or save. Not the incarcerator, with its web of police and administrative lawyers, feeding citizens into prisons after failing them in the schoolhouse. But the American ideal. The one we celebrate. 

And the project was always unfinished, imperfect. The Founders recognized that future generations would face new challenges and provided a path to amend the nation’s governing charter. Some of those amendments have strengthened, and some weakened, the principles the Constitution embodies, but each was adopted through channels built into the original. The system of laws and separated powers gave Americans a procedure to update the Constitution as practical need (Twelfth and Twentieth Amendments) and moral imperative (Thirteenth and Nineteenth) required. 

The constitutional order, despite its noble intentions, began to break down almost immediately. Humans are capable of aspiring to significantly higher standards than we are generally capable of meeting, compounding our shortcomings with hypocrisy. George Washington used the military to put down a violent tax rebellion, whose motivating claims uncomfortably echoed those that galvanized the Sons of Liberty a generation before. John Adams betrayed free speech by backing the Sedition Act, making it a federal crime to publish “false, scandalous, and malicious” speech against the government. Thomas Jefferson defeated Adams in the next election and pardoned those convicted, but then made the Louisiana Purchase, while privately acknowledging he lacked the authority. “An amendment of the Constitution seems necessary for this,” he wrote, but found it more expedient to use executive treaty power. And these champions of individual liberty, as is often noted, saw no pressing need to extend the same natural rights to the women, enslaved people, and indigenous individuals all around them. While many constitutional framers acknowledged that contradiction in private, few confronted it politically. They left that work to future generations.

The Long Work of Liberty

And future generations arrived to take up the American challenge. Frederick Douglass saw the Constitution as an anti-slavery doctrine and demanded inclusion in its liberties, asking, “What to a Slave is the Fourth of July?” After fully two percent of the US population died in a Civil War to decide the point, Thaddeus Stevens embraced the amendment process to help abolish slavery. Rabbi Isaac Mayer Wise and “The Great Agnostic” Robert Ingersoll each appealed to the Constitution to insist on the rights of Catholics, Jews, Jehovah’s Witnesses, Mormons, nonbelievers, and other religious minorities as full participants in the American project. Suffragists Alice Paul and Ernestine Hara Kettler lit fires outside the White House gate and went on hunger strike, enduring imprisonment and force-feedings to claim the promise of equal citizenship and representation for women. Martin Luther King Jr. famously described the Declaration and Constitution as a “promissory note” that had yet to be redeemed. Like suffragists before him, King wrote poignantly from behind bars, imploring the very nation that imprisoned him to fully embrace her own ideals: life, liberty, and equality before the law. These great American revolutionaries didn’t fight against her, but for her. They were constitutional radicals who insisted protections and promises apply to “all of us,” even as that understanding evolved.

The American miracle might be that its greatest reform movements demanded not the rejection of the nation’s founding ideals, but their fuller realization. The exceptionality of the American experiment was recognized, and often craved, by those who wanted to be a part of it. 

“I love America more than any other country in the world,” wrote James Baldwin, “and exactly for this reason, I insist on the right to criticize her perpetually.” The idea of America is difficult. It requires struggle. Great victories in protecting and expanding the ideals of America have required great personal sacrifice. Citizens seeking to hold governments accountable to their stated purpose are often attacked by the very architecture that purports to protect them. 

Safeguarding the legacy of liberty we have inherited from the framers and later liberators feels foreign to a generation that grew up enjoying its fruits without effort. But we cannot rest. The threats to the people are perpetual: power consolidates, it tears down its constraints, it seeks to extract resources from the docile and imprison the dissident. Even now, tyranny is executed in the name of “liberty.” Privacy and dignity are gutted for “security.” Free people are subjugated and their wills and consciences violated constantly. 

More recent occupants of the White House may have more in common with Mad King George III than with the statesmen who crafted our constitutional order. But the American legacy isn’t perfection — it is self-correction. 

Responsibility and Redemption

So that has become my lesson to my daughter in the coming days and years. The United States is remarkable not because it has emerged victorious, but because it has continually struggled to live up to its ideals.

The American story is not simply the story of enduring principles, but of generations struggling to live up to them. Our greatest figures did not expand liberty by abandoning the nation’s founding, but by demanding that we fully honor its promise. Our American identity is forged not just of Washington and Jefferson, but of Frederick Douglass, Robert Ingersoll, Alice Paul, and whomever comes next.

And that, I realized, is what I want her to inherit. The real work of the American anniversary is commitment: to refuse to surrender liberty for expediency, to insist on the Constitution’s protections, and to shape institutions that pass that inheritance intact, for the next generation to improve. The nation isn’t perfect. We haven’t always — or ever — fully lived up to the true meaning of our creed. 

That commitment warrants neither hagiography nor cynicism. Every generation inherits an unfinished republic. By recognizing our responsibility to live up to the founding, we can rededicate ourselves to the principles that actually underpin the nation. Each of us has the chance — and the responsibility — to move us a little closer to the promise that all are created equal, that liberty belongs to everyone, and that government is the servant, not the master, of a free people.

Speaking in January at Davos, US Trade Representative Jamieson Greer said that President Trump’s protectionism revives the policy first proposed by Alexander Hamilton. Like countless attempts to justify US protectionism and industrial policy, Greer’s effort praises Hamilton’s Report on Manufactures (“Report“). 

More recently, Scott Bessent, now holder of a job first held by Hamilton — US Treasury Secretary — also boasted of the administration’s Hamiltonian creed. Given the fame of Hamilton’s Report, and Hamilton’s key role in America’s founding, a close look at his Report is warranted.

Impetus for the Report

Requested by the US House of Representatives in January 1790, Hamilton submitted his Report on December 5, 1791. It was the longest and most famous of four major reports submitted to the House by Secretary Hamilton.

According to Hamilton, the House requested that he devote attention to “the subject of Manufactures; and particularly to the means of promoting such as will tend to render the United States, independent on foreign nations, for military and other essential supplies.” He complied.

America’s Economy Should Have a Strong Manufacturing Sector

The Report opened by making the case that America would benefit from a larger manufacturing sector despite America being unusually rich in land. Without naming Thomas Jefferson, the Report‘s opening was a challenge to Jefferson’s conviction that America should remain a nation mostly of yeomen farmers.

Offering this challenge, Hamilton relied on Adam Smith (also without naming him) to expose the errors of physiocracy — that is, the belief that net economic value is produced only by agriculture. Yet Hamilton went further, arguing that manufacturing can be more productive than agriculture. In making this argument, Hamilton was impressive; one might even sense in it an anticipation of some insights revealed by economists’ marginal revolution of 80 years later.

Regardless of how much or little Hamilton intuited of marginalism, he deserves credit for emphasizing the reality and significance of opportunity costs. To produce some increment of agricultural output requires that some increment of manufacturing output not be produced. And that increment of agricultural output is worthwhile to produce only if its value exceeds that of the foregone manufacturing output. Thus did Hamilton defuse the arguments of persons who believed that, to establish the case for keeping America an agricultural nation, it’s sufficient to point to the positive market value of agricultural output.

In this way, and some others, Hamilton revealed a keen ability to think insightfully about economic matters. Nevertheless, on a full assessment, Hamilton in the Report got more wrong about economics than he got right. Not content to support only the removal of artificial barriers in the US against domestic manufacturing, Hamilton argued strenuously that the government must actively promote American manufacturing. That promotion should consist chiefly of subsidies (“bounties”) supplemented by protective tariffs.

Hamilton Respected But Rejected Adam Smith

The renown of Smith’s Wealth of Nations obliged Hamilton to try to refute Smith’s argument that, in Hamilton’s summary, “industry, if left to itself … without the aid of government will grow up as soon and as fast, as the natural state of things and the interest of the community may require.” For Hamilton, what Smith called “the obvious and simple system of natural liberty” was too simple, at least for a young country without much industry. Here’s Hamilton:

Against the solidity of [Smith’s] hypothesis … cogent reasons may be offered. These have relation to — the strong influence of habit and the spirit of imitation — the fear of want of success in untried enterprises — the intrinsic difficulties incident to first essays towards a competition with those who have previously attained to perfection in the business to be attempted — the bounties premiums and other artificial encouragements, with which foreign nations second the exertions of their own Citizens in the branches, in which they are to be rivalled.

The first-mentioned impediment to American manufacturing was Americans’ alleged lack of entrepreneurship. Habit-bound and excessively risk-averse, too many Americans would stick with familiar agricultural pursuits and refrain from launching new manufacturing endeavors. Further discouraging Americans from venturing into manufacturing were the established competitors abroad who would out-compete upstart rivals. 

For Hamilton, simply being long-established was, in free markets, a nearly insurmountable competitive advantage. But in addition, foreign manufacturers might also practice what we today call “predatory pricing,” as well as enjoy their own subsidies. Therefore, Hamilton believed that manufacturing would arise and thrive in America only if the rates of return on these enterprises were boosted by the government.

Hamilton here forgot his own counsel to attend to opportunity costs. He simply presumed that whatever additional manufacturing activities were encouraged by the government would increase the net value of US economic output. He also ignored both the knowledge problem (How do politicians know which particular industries to encourage?) and the public-choice problem (With subsidies and protection being doled out by politicians, what prevents this doling from being distorted by interest-group politics?).

Hamilton also had a cramped understanding of economic competition. (In fairness, this understanding still infects economics textbooks today.) For him, competition consisted of firms producing a largely given set of outputs with largely identical technologies. Although he can’t be faulted for not reading Joseph Schumpeter’s 1942 work on creative destruction, even in 1791 evidence was growing that the major source of economic growth was entrepreneur-driven creative destruction. Such innovation introduced not only new products, but also completely new and improved means of producing existing products. 

In such an innovative economy, being long-established wasn’t the great advantage that Hamilton assumed it to be. Just ask, for example, the American millers whose traditional manner of milling flour was rendered obsolete starting in the 1780s in Delaware by Oliver Evans‘s automated flour mill.

Hamilton’s Curious Evidence

Attempting to augment his case for active government encouragement of manufacturing, Hamilton offered curious evidence. Responding to opponents who insisted that America’s economy was unfit for manufacturing, he boasted that America’s economy was already demonstrating an impressive ability to support manufacturing.

Writing about the prospects of profitable investment in manufacturing, Hamilton said that “it is certain that the United States offer a vast field for the advantageous employment of capital; but it does not follow, that there will not be found, in one way or another, a sufficient fund for the successful prosecution of any species of industry which is likely to prove truly beneficial.” He continued: In addition to America’s “multiplying” banks, another ready source of funding for manufacturing was foreign capital, which he wisely welcomed as “a precious acquisition.” Indeed, “the attraction of foreign Capital for the direct purpose of Manufactures ought not to be deemed a chimerical expectation. There are already examples of it.”

Question for Hamilton: If it was certain that the US offered vast opportunities for profitable investments in manufacturing, and if such investment was already occurring, why did such investment need to be further stimulated by the government? Hamilton’s inconsistency is evident.

Another example of Hamilton’s inconsistency is worth mentioning. When he argued for subsidies and protective tariffs for goods produced with iron, his evidence for the worth of such government assistance was the fact that such manufacturing had significantly grown in the US since the American Revolution and was flourishing. His argument was that this industry deserved protection precisely because it had proven itself capable and successful. Presumably, Hamilton would defend this inconsistency by maintaining that, without government assistance, this industrial growth — and that of other critical manufacturers — would stop short of its optimal point.

Here’s where Hamilton-as-economist faltered most seriously. He made the incorrect presumption that markets fail to generate optimal economic growth because, in the end, he didn’t appreciate just how effectively resources are allocated by market signals and incentives — by competitively determined prices, profits, and losses. 

At least for fledgling nations with relatively little industrial capacity, he believed that intervention from the top was required.

The Lasting Lesson

Studying the Report on Manufactures makes clear that Hamilton, contrary to the assertions of Greer and Bessent, was far from being a protectionist in the mold of Donald Trump. 

Not only was Hamilton’s case for protection confined to the need to stimulate industrial capacity in a country lacking such capacity, he also preferred subsidies over tariffs (because tariffs, unlike subsidies, reduce supplies of targeted goods), and he welcomed, rather than bemoaned, net inflows of foreign capital. 

Nevertheless, Hamilton ultimately had too little confidence in free markets. The late Gordon Wood’s assessment of Hamilton-as-economist is accurate:

Hamilton was so wedded to a hierarchical view of society that he could only imagine industrial investment and development coming from the top down. Thus he was incapable of foreseeing that the actual source of America’s manufacturing would come from below, from the ambitions, productivity, and investments of thousands upon thousands of middling artisans and craftsmen who eventually became America’s businessmen. Hamilton’s historical reputation as the prophet of America’s industrial greatness therefore seems somewhat exaggerated. He certainly wanted a powerful and glorious nation, but he was no more capable of accurately foretelling the future than the other American leaders.