The One Big Beautiful Bill Act (OBBBA), intended to lower the tax burden for Americans and thus to stimulate growth, contains one provision that has caused much alarm in Canada — potentially imposing a punishing tax on Canadians who invest in US companies. Canadian individuals and entities could face increased US withholding tax rates of 30 percent or more on US-source dividends, interest, royalties and capital gains on real estate. The financial implications are severe, conceivably gutting Canadian pension funds that are normally tax exempt.

Section 899 of the OBBBA, passed by Congress last month and currently before the Senate, is expressly designed to hurt investors from countries that impose what the legislation terms “unfair” foreign taxes. The OBBBA defines these taxes as those which are exclusively or predominantly applicable to non-resident individuals and foreign corporations or partnerships because of the application of revenue thresholds or exemptions that ensure that substantially all residents other than foreign corporations and partnerships supplying comparable goods or services are excluded. This language could hardly be clearer; it is an obvious reference to Digital Services Taxes (DSTs).

Canada instigated its DST last year, purportedly to address the concern that the world’s biggest tech companies do not pay their fair share of tax because they are able to locate their head offices in low tax jurisdictions while serving clients around the world. Canada’s DST applies to large businesses, ostensibly foreign and domestic, that meet both of two revenue thresholds: total global revenue of €750 million or more in a fiscal year; and greater than CA$20 million in earnings in Canada in the calendar year. The tax applies at a rate of 3 percent on profits over CA$20 million.

The DST disproportionately impact US companies, an unfortunate, if not intentional, consequence of outcome-based equity-minded policymaking. The US launched a complaint against Canada’s DST last August via the United States Mexico Canada Agreement (USMCA), the Services chapter of which prohibits discrimination between foreign and local services or services suppliers.

While it is arguable that Canada’s DST is indeed discriminatory against US companies, Canada could seek to raise a USMCA complaint of its own against the OBBBA withholding tax. The USMCA’s Investment chapter prohibits discrimination against foreign investors, with investment broadly defined to include shares in US companies and various other assets which would probably be caught by the Section 899 withholding tax.

In other words, Canadian legislation that violates an international treaty will be countered by US legislation which is illegal under the same treaty. The situation does not inspire much confidence in the two countries’ respect for international law. The respective taxes are yet more levers in an age of brazen unilateralism, not to mention trade protectionism.

Investors from Canada are not the only targets of the OBBBA. Many countries impose DSTs,  using identical wording based on the OECD model. OBBBA Section 899 goes on to state that

The Secretary shall issue … regulations or other guidance which list the discriminatory foreign countries … in guidance, … update such guidance on a quarterly basis… [and] exercise the authority to provide exceptions [emphasis added].

This leaves the door open for the US to impose higher withholding taxes on investors from certain countries, much as President Trump has done with tariffs, or to exempt some countries entirely. The variable application of the measure could therefore function as “leverage” in the broader bilateral trade negotiations. It was reputed that the UK’s DST would be eliminated as part of the US-UK “deal” finalized last month, the details of which remain unclear; apparently, however, this was not the case. Exempting the UK from the “unfair taxes” designation might be one aspect of the arrangement.

Canada’s DST will almost certainly feature in the USMCA’s renegotiation next year. If it keeps the DST, Canada would need to seek an exemption from the withholding tax.

All countries imposing DSTs would be wise to abandon them, as they generate little in the way of revenue, apparently, the UK’s DST is expected to yield around £800m per year. DSTs are ultimately passed on to consumers anyway, hardly a sensible policy in an era of high inflation. It is difficult to resist the conclusion that DSTs are largely symbolic — designed to give the appearance of fairness or to convey a sense of distribution of wealth that still appeals to some segments of the electorate. Ultimately, they are anti-growth, operating as a drag on economic activity and innovation.

By pressuring foreign countries to ditch their DSTs via the threat of tax retaliation, the OBBBA could actually end up spurring growth beyond US borders.

On June 9, about 300 employees of the National Institutes of Health, representing all 27 NIH institutes, issued a letter they called the “Bethesda Declaration,” calling on NIH director Jay Bhattacharya, MD PhD, to reverse the Trump administration’s course on multiple initiatives. 

The declaration was explicitly inspired by the October 2020 “Great Barrington Declaration,” co-authored by Bhattacharya, an epidemiologist who was then a professor of health policy at Stanford. That declaration asked public health authorities to redirect anti-COVID efforts away from mandatory school and workplace closures, since children and healthy adults were at low risk of death, and focus efforts on the elderly and chronically ill. For voicing this perspective, its authors were blacklisted on Twitter (now X) and personally targeted for attack by federal health officials.

The authors of the Bethesda Declaration call on Bhattacharya to pay more than lip service to “establishing a culture of respect for free speech and dissent,” affirm that “dissent is the very essence of science,” and ensure that dissenting voices are “heard and allowed.” They accuse the Trump administration of politicizing research; cutting funding for research on health disparities, COVID immunization, health impacts of climate change, and the health needs of diverse populations; undermining global collaboration, peer review, and funding of indirect research costs; and firing essential NIH staff. 

Both parties to the dispute can agree on one thing: the NIH’s annual budget of about $50 billion makes it the world’s largest and most influential organization supporting biomedical research. To be sure, pharmaceutical firms and biomedical device manufacturers invest several times this amount in research each year, but their programs are more directly tied to future profit, while NIH can support investigations with no immediate prospects of generating revenue. Many such projects, including Watson and Crick’s discovery of the structure of DNA, have subsequently turned out to produce immense economic returns.

Yet Bhattacharya’s mission, as he conceives of it, extends far beyond cost reduction to the very ethos and culture of biomedical research. For one thing, he is focused on the contemporary “replicability crisis.” A 2016 paper published in Nature showed that more than 70 percent of over 1,500 researchers polled have been unable to reproduce the published results of another researcher. One well-known 2021 review of cancer biology research showed that among studies that had been repeated, the effect sizes were on average 85 percent smaller than what had been reported.

Bhattacharya means to combat this reproducibility crisis by reversing the current heavy bias against publishing replication studies. As things stand, biomedical journals are almost 10 times as likely to publish positive as negative results, meaning that any medical researcher who wants to get a doctorate, get published, and get funded needs to show that the therapy under investigation is effective. The culture of science must shift to recognize that studies that fail to replicate published results are as important a part of good scientific practice as positive ones. 

Bhattacharya himself incurred the wrath of leaders at NIH such as director Francis Collins, not only by co-authoring the Great Barrington Declaration but also by publishing results during the first months of the pandemic that showed that the prevalence of COVID infection was far higher than officials supposed (the Santa Clara study). The significance of this finding was this: calculations of mortality rates depend not just on numbers of deaths (the numerator) but also on numbers of cases of infections in the population (the denominator). Bhattacharya found estimates of the latter were systemically too low, which dramatically and incorrectly inflated COVID’s perceived lethality. 

For many, it is difficult to believe that published scientific results could be wrong. But as Bhattacharya’s colleague John Ioannidis has long argued, most findings are almost certainly wrong, due to biases built into research methodology that Bhattacharya aims to correct. This is not mainly fraud but unrecognized bias. For example, most studies have small sample sizes and low statistical power, data sets are routinely not shared, the culture of scientific publication and citation favors positive results, study results are not subjected to replication, and researchers are under tremendous pressure to “succeed.” 

The NIH has been perfectly designed to produce the results it is currently getting. What is it really good at? Keeping established researchers funded and ensuring that current research paradigms are carried forward into the future. To sit on a committee that evaluates research proposals, for example, scientists must be funded, which tends to reinforce current paradigms. Moreover, researchers must present preliminary data to show that their proposals are likely to produce positive results. Not surprisingly, the NIH culture makes it difficult for new researchers to secure funding to investigate new ideas. Likewise, it’s rare to receive funding for research that challenges or seeks to overturn NIH’s previously published findings. 

Bhattacharya also criticizes NIH’s current pattern of funding for indirect costs. While there are nearly 6,000 US colleges and universities, only a relatively small number – dozens – receive substantial amounts of NIH funding, often charging indirect costs rates of over 50 percent. Every $1 million of direct research funding needs to be accompanied by more than $500,000 of additional funding to cover costs such as facilities, maintenance, utilities, and support personnel. This concentrates research in relatively few centers, further reducing diversity among researchers, their investigations, and scientific ideas. 

The core question is this: what does the NIH, and more broadly speaking, the scientific enterprise, exist to do? Is its principal purpose to sustain funded researchers and their research programs? Or is it to promote discoveries that improve human health? If the latter is paramount, then the culture of the NIH must shift to put truth above success. What matters most is not how many grant dollars scientists garner, how many papers they publish, or how many awards they receive, but the degree to which they accurately illuminate what we really need to know. 

Much hangs on Bhattacharya’s response to the Bethesda Declaration. Will he engage in character assassination and retribution, seeking to silence or terminate those criticizing the administration’s policies? Or will he speak out and act on behalf of good science, a word with origins in the Latin root meaning “to know.” 

Science needs open and self-critical discussion that welcomes differing points of view, insists on the highest standards of evidence, shuns biases, and prizes the truth above all else. The NIH’s pursuit of knowledge has been ailing, and restoring it to good health will require strong medicine. 

One of the largest residential solar installers, Sunnova, went belly up on June 8. The company had over $10 billion in debt and a market cap of over a billion dollars less than a year ago. While aggressive spending on expansion and poor management account for some of Sunnova’s problems, they also faced significant policy headwinds: high interest rates, higher costs due to inflation, uncertainty and higher costs due to tariffs, and freezing of Inflation Reduction Act subsidies.

Those familiar with this space may remember Solyndra, a failed solar company that had received a $500 million loan from the federal government. Some people point to a $3 billion loan guarantee with Sunnova under the Biden administration as a larger version of Solyndra. This is incorrect.

A loan guarantee differs from a loan. The guarantor agrees to make up the difference of what a defaulting borrower agreed to pay and what they actually paid. Furthermore, the $3 billion loan guarantee was for consumer loans to install solar panels, not loans made directly to Sunnova itself. Finally, less than $50 million in loans were made under this loan guarantee program before the Trump administration cancelled it last month. This means, at least at the federal level, that the Solyndra bankruptcy cost taxpayers at least ten times more.

Besides the federal loan guarantee, the Sunnova bankruptcy highlights many of the distortions that governments have created in solar energy. But it is also personal: I installed solar panels on my house in New Jersey using Sunnova and can speak to how government incentives affected my decision.

The solar panel array Sunnova sold me had a sticker price of about $20,000. I estimate it saved me $80 to $120 per month on my electricity bill. So let’s call it $1200/year in energy savings. That’s a 6 percent return on investment. Not bad, but not great either — especially given the significant outlay required up front — and the fact that the panels depreciate over time. But when you incorporate federal and state subsidies, installing solar panels became a no-brainer.

At the time, the federal government was offering a 30 percent tax credit on solar panels. In effect, this reduced the price from $20,000 to $14,000. The rate of return from my $1200 in annual savings jumped to 8.6 percent. Then the state subsidy kicked in.

Some states engage in a practice called net metering where utilities must pay owners of solar energy for any electricity they put back on the grid. There are many complications and problems with this method that we need not worry about here. In my case, NJ required energy producers to “buy” solar power generation. Every additional thousand kilowatts of energy my solar panels generated, for my own benefit mind you, I could also generate something called an SREC (Solar Renewable Energy Certificate) and sell it on an exchange.

The price of SRECs ranged from about $200 to $240 while I owned the system and my system would generate 2-3 SRECS per year. So call that roughly $500/year in additional direct payments to me, the owner of the solar panels, and my rate of return rises to 12 percent — not a bad deal. So I, and thousands of others, bought solar panels.

And that’s the calculation with just two subsidies. Based on the time, location, and nature of the purchase, there are dozens of other forms of subsidies for solar panels. Which brings us back to the Sunnova bankruptcy and the state of solar power in the US.

Solar energy has become an enormous industry over the last decade. Part of this is due to rapidly improving technology and significant versatility. Improving technology has led to solar panels with higher efficiency and lower production costs. There are also solar panels being developed that can capture sunlight from both sides. Improvements in materials like organic photovoltaics and ultra-thin silicon are leading to thin, bendable, and lightweight solar modules that can be integrated into various surfaces — including windows and facades — as transparent solar panels become a reality.

The economic question, though, is not only about how impressive solar technology is, but whether the cost of producing, installing, and maintaining solar panels can be justified based on their direct benefits to consumers. Environmental activists and opportunistic politicians and the solar lobby obscured the answer to this question by asserting massive indirect benefits for the climate from solar energy and subsidizing solar installation at every opportunity they could find — which leads to my story.

Solar power (and wind power for that matter) has several major problems as a large-scale source of electricity for the grid. The most important problem is its intermittent nature. Solar panels don’t generate electricity at night. Nor do they generate much when it is cloudy. Furthermore, power generation is unreliable — it changes over seasons and can’t be dialed up or dialed down based on people’s demand for electricity — such as during severe weather events. The main way to deal with this problem entails massive energy storage (in effect, giant batteries) that are prohibitively expensive to build at scale.

Another oft-overlooked problem is the cost of transmission. The best locations for solar power installations are not necessarily near places with high demand for electricity. In fact, cities with high demand for electricity also have much higher opportunity costs for land than rural areas. But building transmission lines is expensive and not usually factored into the cost/benefit analysis of solar installations because regulators require utility companies (really their rate payers) to foot the bill of building transmission lines.

The explosion of solar energy has been driven by heavy government subsidization around the world. As those subsidies dry up or are cut off, such as with the current administration’s freezing of Inflation Reduction Act funds or the Big Beautiful Bill’s aggressive retiring of renewable energy subsidies, the cost/benefit calculus for solar changes, too. There will still be a market for solar energy without subsidies. It will just be much smaller. If that’s the case, we can expect stormy skies ahead for solar companies of all stripes. Sunnova’s bankruptcy is likely the beginning, rather than the end, of solar investors’ troubles.

People understandably have misgivings when someone injects the Bible into a discussion of economic issues. The Bible certainly is not an economics text. Its treatment of economic themes is desultory and brief, lacking in detail and depth. Not surprisingly, then, the Bible’s economic implications are perceived in many different ways. 

The Bible touches upon economic themes in ways that are sometimes descriptive (value-free) and sometimes prescriptive (value-laden, normative). These distinctions are crucial. 

For example, the Bible is being purely descriptive in relating an episode that features the law of supply and demand in operation during the Syrian siege of Samaria (2 Kings 6:24-7:18). When supply decreases, prices rise; when supply increases, prices fall. The Bible offers no value judgment about the operation of supply and demand. The economic law is neither right nor wrong; it is simply the way the world works, as value-free as to say that fire burns wood. 

The Bible is also merely descriptive in its treatment of voluntary exchanges, treating transactions that buyers and sellers make at mutually acceptable prices as a commonplace feature of life on Earth – e.g., Abraham’s purchase of a tomb for Sarah (Gen. 23:15) and King David’s purchase of supplies for a burnt offering (1 Chron. 21:24-25). Even usury (the charging of interest) is treated in a nonjudgmental way when Jesus, in his parable of the talents, tells the unproductive servant that he should at least have used the money entrusted to him to earn interest (Matt. 25:27). 

It is when we turn to the prescriptive (normative) aspects of economic phenomena in the Bible that controversies about how to interpret the Bible sometimes arise. Central to Bible teachings are what Jesus called the two great commandments (Matt. 22:36-40), telling how humans are to relate to the Deity and how they are to relate to each other. Indeed, those two commandments are a condensed version (early CliffsNotes?) summarizing the Ten Commandments (Ex. 20:3-17), four of which tell us what we owe to God and six which provide rules for how humans are to treat each other.  

Of particular relevance to economics are the Eighth and Tenth Commandments, “Thou shalt not steal” and “Thou shalt not covet.” Those are unequivocal statements mandating adherence to the principle of private property. (Incidentally, you don’t have to believe in God or the Bible to endorse the principle of private property. Ludwig von Mises, for example, through his entirely value-free economic analysis, concluded that it was logically demonstrable that if people desired prosperity, then an economy based on private property was the most effective means of achieving that end. It is interesting, though, that Mises came to the same conclusion via analysis that Moses came to via revelation – namely, that human beings are better off by honoring private property.) 

Some individuals have invented a concept called “Christian socialism” that is built on sophistries. They cite Bible verses such as Jesus’ statement in the Sermon on the Mount to give your cloak to the person who has stolen your coat, or the passage in Luke where the rich Lazarus suffered in the afterlife because he had not shared his earthly wealth with the poor. It is certainly true that Jesus repeatedly warned us about becoming too entangled in material comforts and that he urged us to be charitable toward others.  

Note, though, that humans were to be subject to the dictates of their own conscience about how much wealth to accumulate and not subject to the dictates of other humans. For example, when a man asked Jesus what he needed to do to inherit eternal life, Jesus told him to give all his wealth to the poor. When the man declined to do so, Jesus let him depart in peace. Jesus had essentially offered him a voluntary contract, and he respected the man’s right not to accept that contract. (See Mark 10:17-23.)   

Similarly, when another man pleaded with Jesus to tell his brother to share his inheritance with him, Jesus declined, saying, “Man, who made me a judge or divider over you?” (Luke 12:14) If the Son of God (or the most loving, moral person who ever lived, if you are more comfortable with that characterization) wouldn’t deny a man his property rights, then who are we to deny anyone those rights? 

Where many self-described Christians err is in regard to helping the poor. They assert that Christians should support government programs, whereby taxpaying citizens are compelled by law to support the less fortunate. Again, Jesus undoubtedly would endorse helping the poor, but the end does not justify the means. Try as you might, for all the exhortations in the Bible to be charitable, you will find no verse telling believers that the way to get into heaven is to make other people perform good works. Charitable deeds are to be done voluntarily, out of an inner impulsion of a loving spirit and heart, rather than in response to external compulsion, such as governments using the threat of fines or incarceration to raise taxes to fund welfare programs. 

Jesus provided the model of Christian charity in the parable of the good Samaritan (Luke 10:30-37).  When he encountered a man who had been badly hurt by robbers, the Samaritan personally attended to his wounds and spent his own money to provide food and shelter to the victim. When he had to leave to attend to his own pre-existing commitments, he promised to pay the innkeeper to care for the man.   

Thus, Jesus illustrated the two forms of Christian charity – first, giving aid personally and directly; second, rendering assistance indirectly by donating to those who have the time and skills to minister to those in need when we can’t do it ourselves. 

Let’s try a thought experiment: Suppose that the Samaritan, after spotting the wounded man, raised the funds he subsequently spent caring for the victim by imposing a toll on passersby on the road – a toll that they had to pay if they didn’t want theSamaritan to bash them on the head with his staff. The man in need still would have received the help he desperately needed, but would we still regard the Samaritan as a paragon of Christian virtue and charity? Is it genuine charity to be generous with other people’s money? Is it charitable to help some by threatening to hurt others? 

This is the murky moral territory into which many Christians stray in the name of “social justice” or the social gospel. The desire to help those in need is laudable, but the means employed by advocates of “social justice” are not. They vitiate a Biblical principle when they call for government to redistribute wealth to the poor, the sick, the widow.  Government necessarily introduces the additional factor of compulsion into the equation, for government is organized force. While it is Christian to be charitable, Jesus never mixed charity with compulsion, nor did he teach his followers to resort to force. 

For the Christian, private property is one of the central pillars of God-directed social morality. For the economist, private property offers maximum utility for promoting social prosperity. In that crucial sense, the Bible and economics do not conflict, but harmonize. 

1984 is back in the news. Orwell’s estate recently authorized a 75th anniversary edition of the timeless classic, with a new introduction by literature professor Dolen Perkins-Valdez. 

Perkins-Valdez’ introduction spends little time talking about authoritarianism, and a lot of time talking about race and gender in the story. She complains about Winston’s misogyny. She bemoans the fact that the story doesn’t focus on matters of race, writing that “a sliver of connection can be difficult for someone like me [Perkins-Valdez is black] to find in a novel that does not speak much to race and ethnicity.”

Perkins-Valdez’ introduction has sparked a firestorm. Novelist and essayist Walter Kirn calls it a “trigger warning” and blasts the imposed “permission structure” of an introduction designed to tell readers how they should feel about Winston’s sexism and Orwell’s statement that racism didn’t exist in Oceania. 

I actually disagree with Kirn’s characterization. Perkins-Valdez does grapple with Winston’s sexism and the lack of nonwhite characters, but in both cases she chooses to press on and gives her reasons for doing so. If that’s a trigger warning, it’s a very strange one. But nonetheless, Perkins-Valdez’ introduction represents an enormous missed opportunity.

The past several years of American life have been some of the most authoritarian in living memory. Online life created a digital panopticon not unlike the two-way televisions in every home in Oceania: everyone is being surveilled, all of the time. Many people, especially on the far left, used this surveillance and the new power of the online mob to silence their political opponents. People were fired for supporting J.K. Rowling or for dissenting from the Black Lives Matter agenda or even for not knowing what a bodega is. Yelp flagged businesses that disagreed with BLM, and PayPal and Etsy froze the accounts of center-right authors. Like the Inner Party, this new online movement punished people for Thoughtcrime. It found and made examples of its own Winstons and Julias, over and over and over again.

And like the citizens of Oceania, most of us were cowed into silence. In 2020, 62 percent of Americans agreed that “the political climate these days prevents me from saying things I believe because others might find them offensive.” 

In an example eerily reminiscent of the Party’s rewriting of history, academic papers were unpublished and memory-holed, not because they were academically flawed, but because they violated certain left-wing shibboleths.

It’s not just culture; top government officials have acted in increasing Orwellian ways. The Biden administration and its allies in the media spent years gaslighting Americans about Biden’s deteriorating health. They dismissed videos of Biden acting his age as “cheap fakes” and mocked first-hand accounts of Biden’s decreasing cognitive ability as right-wing propaganda. Why? There were several reasons, but a big stated one was the fear that, if voters knew the truth, then Trump would get reelected in 2024. In Wisdom of Crowds, political philosopher Samuel Kimbriel reported that, right after Biden’s disastrous debate performance, “Mike Madrid, co-founder of the Lincoln Project, gave a hot-in-the face two minute rant about how anyone made uncomfortable by what they’d seen on the debate stage was ignoring the actual danger to democracy.” This was Orwellian doublespeak at its finest: in order to save democracy, we have to lie to the American people. Saving democracy requires not letting the democratic process function.

And then there was the previous administration’s attacks on free speech. The Biden administration leaned on social media companies to blacklist or shadowban prominent opponents of its lockdown policy. The same administration sought to create a Disinformation Governance Board so that the government could decide what was true and what was false. What is that but an American version of Oceania’s Ministry of Truth?

And then there’s the Orwellian behavior on the right. Trump, who ran against political correctness run amok and who put out an executive order proclaiming his support for freedom of speech, has sued news outlets and law firms for the supposed crime of supporting his political opponents. As the right reacquires political and social power, it’s rediscovering the utility of cancel culture and of using the power of government to punish Wrongthink.

And of course there’s the behavior of Trump himself. Orwell describes doublespeak this way: “to know and not to know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which cancelled out, knowing them to be contradictory and believing in both of them.” 

That’s a good description of many of Trump’s antics. As Jonathan Rauch writes in The Constitution of Knowledge:

One day he said his impeachment was hurting the stock market, then the very next day he bragged that the market was reaching new heights. He called government statistics showing unemployment declining under Obama ‘phony,’ but said the statistics showing unemployment declining in his own tenure were ‘very real.’

Believing all of Trump’s contradictory statements at the same time requires the same self-hypnosis as believing that Freedom is Slavery or that 2+2=5. 

On the left and right, in government and in our popular culture, we are starting to manifest disturbing echoes of the world of 1984.

A better introduction to Orwell’s masterpiece might try to grapple with our recent lurch towards authoritarianism. It might ask us questions: what causes a rise in authoritarianism? What psychological conditions led the people of Oceania into totalitarianism, and what psychological conditions kept them there? If we want to curtail so-called “hate speech” (as many Americans do), where’s the line between that and the government persecuting people for Thoughtcrime—or is there a line?

Such an introduction might prompt us to reflect on our own tendency towards authoritarianism. It might talk about the importance of courage, and whether Winston and Julia’s rebellion was wise or ultimately foolish. It might wrestle with that peculiar feature of American exceptionalism, the idea that we and we alone could never fall into authoritarianism; and prompt us to see that for the comforting lie that it is. Such an introduction might prompt us to be more on our guard against authoritarianism, both from the online mob and from the government. It might tie the story’s eternal themes to our current circumstances, so that the novel can help inculcate us against authoritarianism in the way that Orwell intended.

Instead, Perkins-Valdez chose to focus on the novel’s depiction (or lack thereof) of minorities and the main character’s (temporary) sexism. It focused on minutiae that Orwell himself seemed to consider unimportant, rather than on the enduring need to heed Orwell’s warnings and protect ourselves from falling into an authoritarian regime. That’s an enormous missed opportunity.

Last week, Alex Shieh, a student in Brown University’s class of 2027, testified before Congress. The hearing was focused on antitrust violations in higher education and surging tuition prices.

Shieh’s testimony came just weeks after Brown University opened an investigation into him for creating a website that scrutinized how the $93,064-a-year institution allocates its funds.

Shieh, inspired by Elon Musk, launched the DOGE-style project in March. Working from the basement of his dormitory — a “room that floods whenever it rains and thus has plastic tarps, industrial fans, and wet floor signs permanently set up” — he discovered a “small army” of administrative staff who work at the Ivy League school. 

Using AI, he compiled a comprehensive list of university positions, then ranked them by operational importance with a custom-built program. He published the results on a site called Bloat@Brown — but Shieh didn’t stop there. Identifying himself as a journalist, he emailed staff members asking them to describe their roles, detail recent tasks, and explain how students would be affected if their positions didn’t exist. 

Shieh’s project was no doubt cheeky. Anyone who has seen Mike Judge’s movie Office Space knows employees don’t like having to justify their jobs. (Who can forget the Bobs?) And its results were predictable. Only twenty or so employees responded, two of whom told Shieh he could perform a sexual act on himself (one suggested he use “an entire cactus”).

Less predictable was Brown University’s response. 

First, Brown sent out a memo to employees instructing them not to respond. Then, according to The New York Times, officials informed Shieh “he was under investigation for possible violations of the university’s code of student conduct, including its prohibitions on invasion of privacy, misrepresentation, and emotional or psychological harm.”

Though Shieh and his associates were eventually cleared of wrongdoing, the episode is yet another demonstration of the intellectual and bureaucratic rot that afflicts America’s elite universities. As Joshua Pederson, a professor of humanities at Boston University, wrote in Slate, the intent of Brown was clear: “They came to bury Shieh, not to praise him.”

The university took this action even though Shieh was highlighting a genuine problem. Pederson cites a report by Paul Weinstein Jr. of the Progressive Policy Institute, which documents a dramatic rise in non-faculty hiring at the top 50 US colleges. There is now one administrative employee for every four students.

“The results of this research underscore that non-faculty employees at universities, both public and private, have grown considerably and without necessary oversight, under college presidents and their boards,” Weinstein wrote. “While some of this growth may have been necessary, there is no doubt that much of it has not.”

The problem is particularly acute at Brown, where the non-faculty employee-student ratio reportedly is 1 to 3. 

Officials at Brown may not like their hiring decisions being questioned by a mere undergrad, but it’s not outside the boundaries of academic inquiry. Indeed, Pederson says Shieh deserves applause for launching a project that is quite impressive for an undergrad. 

“If I’d had the opportunity to work with Mr. Shieh, I would have begun by praising him for identifying and focusing on a pressing problem for American higher education in a time of rising tuition costs: administrative bloat,” writes Pederson, adding that he doesn’t necessarily agree with Shieh.

Brown, unfortunately, chose another route, opting to launch a clumsy investigation into the rising junior. In doing so, the university elevated Shieh’s research, highlighting the administrative bloat that is putting college out of reach of many students and leaving countless others saddled with immense debt.

The surging cost of higher education stems from various factors, but Shieh’s project homed in on one of them. 

“I discovered that much of the money is being thrown into a pit of bureaucracy,” Shieh wrote at Pirates Wire.

Shieh — as a student, journalist, and taxpayer — was well within his rights to investigate how Brown University spends his and others’ tuition dollars. But instead of defending his academic freedom, Brown University chose to launch a punitive investigation, going so far as to accuse Shieh of trademark infringement for using the word “Brown” in an article headline!

It’s hard to imagine a more self-defeating response. What began as a student research project became a full-blown PR disaster. Brown was publicly rebuked by The Foundation for Individual Rights and Expression(FIRE), which stated that the university’s actions “clearly infringe on his expressive freedoms and further violate Brown’s robust guarantees to protect free expression consistent with First Amendment principles.” Shieh’s work has since attracted national attention, including his invitation to provide congressional testimony.

Like many elite universities, Brown receives hundreds of millions in federal funding each year despite its $7.2 billion endowment. Unfortunately, the university’s response is the latest evidence that US universities are broken, dysfunctional, and unworthy of public trust and support.

In a recent speech delivered in Seoul, South Korea, Federal Reserve Governor Waller offered unique insights into how monetary policymakers should think about the effects of tariffs on both inflation and inflation expectations. His remarks come at a time when trade policy is once again at the center of national debate, and concerns about inflation remain top of mind for households, firms, and policymakers alike. 

Waller focused on three key areas: the immediate inflationary effects of tariffs, why those effects are unlikely to persist, and the divergence between household inflation expectations and market-based measures.

To frame his discussion on tariffs and inflation, Waller revisited the two tariff scenarios he introduced earlier this year: one large and one small. In both cases, he assumed — consistent with standard economic theory — that the tariffs would lead to a one-time increase in the price level, temporarily raising the inflation rate as the economy transitions to a higher price path. Once this adjustment occurs, Waller explained, inflation should return to its underlying trend, based on his view that longer-term inflation expectations remain anchored.

In Waller’s large tariff scenario, he assumed that the trade-weighted tariff on goods imports would be 25 percent, which, he noted, was not far off from where things stood following the 90-day suspension the administration announced on April 9. In this scenario, Waller assumed the tariff would remain in effect for some time, which he predicted would lead to inflation — as measured by the personal consumption expenditures (PCE) price index — peaking at around 5 percent annualized later this year, assuming firms passed through the full tariff to consumers. If, on the other hand, firms passed on only part of the tariff, he projected inflation would peak at around four percent. Regardless of the degree of pass-through, Waller believed that the unemployment rate would rise to 5 percent in 2026 under the large tariff scenario.

In his small tariff scenario, Waller assumed a 10 percent tariff on goods imports that would remain in place indefinitely, with higher country- and sector-specific tariffs falling over time as the administration negotiated trade deals. In this case, Waller predicted that inflation might rise to an annualized rate of three percent but, as before, would eventually return to trend. While output growth would slow, Waller thought it unlikely that unemployment would rise, as it would under the large tariff scenario. 

Given recent developments in trade negotiations, Waller noted that his base case for tariffs is a 15 percent rate on goods imports — splitting the difference between his large and small scenarios. In his view, the likelihood of the large tariff scenario has fallen, given the administration’s recent negotiations. He noted, however, that there remains significant uncertainty about the ultimate outcome of the administration’s trade policy, making it difficult to know exactly what the economic outlook will be.

Making matters more uncertain is the divergence between “hard” and “soft” data on the tariffs’ effects. Waller observed that the hard economic data so far is generally positive, showing little evidence that tariffs have meaningfully affected inflation or overall economic activity. By contrast, surveys of households, firms, and investors point to slower growth and higher prices. Waller appears to share those concerns, noting that he sees downside risks to both sides of the Federal Reserve’s dual mandate in the second half of this year — especially on the employment side, as tariffs are likely to reduce spending and prompt firms to cut payrolls. He emphasized, however, that these risks will depend on how the administration’s trade policies evolve in the coming months.

On the price-stability side of the mandate, Waller noted that before the recent upheaval in US trade policy, the Fed had been making progress — albeit uneven — toward bringing inflation back down to its 2-percent target. Waller now expects that tariffs will push inflation higher later this year, but observed that the surge in imports earlier this year makes the precise timing of that increase difficult to predict. Nonetheless, whatever effect the tariffs have on inflation, Waller expects it will be temporary. The size of the rise, he emphasized, will depend not only on the ultimate scale of the tariffs, but also on how both importers and exporters respond — something that remains highly uncertain.

One aspect of that uncertainty is the extent to which firms will pass on the cost of tariffs to consumers. Based on his conversations with business leaders, Waller expects the burden of a 10 percent tariff would be shared roughly equally among consumers, importers, and exporters. Under that assumption, the tariffs would temporarily raise inflation by 0.3 percent. If tariffs end up being higher than 10 percent, however, he expects firms will pass more of the cost on to consumers — which he sees as likely, given the limits on how much of the additional cost businesses can absorb. In that case, the effect of tariffs on inflation would be greater.

Waller also addressed concerns that firms might use tariffs as an excuse to opportunistically raise prices — i.e., “greedflation.” He argued that such behavior is unlikely, since firms that raise prices without justification risk losing market share to competitors and alienating loyal customers. In short, Waller does not see greedflation as a significant driver of inflation beyond the direct effects of the tariffs themselves.

The term “transitory” has become something of a dirty word in inflation debates, Waller acknowledged, given the controversy surrounding the Fed’s use of the term during the post-pandemic inflation surge. Nonetheless, he believes that any inflation caused by the tariffs will, in fact, be transitory. He pointed to three factors that contributed to both the severity and persistence of COVID-era inflation — none of which, he argued, are likely to apply in the current context. First, the pandemic led to a significant and prolonged reduction in labor supply, which drove wages — and prices — higher. Second, the associated supply chain disruptions lasted much longer than expected. Third, the scale of fiscal stimulus, combined with the Fed’s accommodative stance, overstimulated aggregate demand.

Waller concluded his remarks with a discussion of diverging inflation expectations. He noted that surveys of household expectations differ significantly from both market-based measures and the projections of professional forecasters. Recent surveys suggest that households anticipate inflation as high as seven percent in the near term. If those expectations were accurate, Waller argued, we would expect to see workers demanding higher wages, along with a rising quits rate as they search for better-paying jobs. We would also expect to see a pickup in household spending as consumers try to make purchases before prices rise further.

As Waller explained, these patterns are not evident in the data. Although wages are rising, they are doing so at a pace consistent with long-run trends. Moreover, the quits rate is now below its pre-pandemic level, and Waller notes that his business contacts have not reported an uptick in wage demands. Similarly, there has been no surge in consumer spending; in fact, it is growing more slowly than in the second half of 2024.

Market-based measures of expected inflation, along with projections by professional forecasters, are much lower than those reported in household surveys. These indicators point to inflation averaging between 2.2 and 2.4 percent over the next few years. Waller explained that financial institutions have strong incentives to forecast inflation accurately, since their profitability depends on incorporating expected inflation into the interest rates they charge. If they were failing to do so, he argued, we would expect to see a surge in loan demand for interest-sensitive goods like homes, automobiles, and other durable goods. But current data from the financial sector shows no such surge. For these reasons, Waller places greater weight on market-based measures and professional forecasts.

The upshot is that, in Governor Waller’s view, inflation expectations remain well anchored — despite the divergence across different measures. Given that, and his expectation that any tariff-induced inflation will be temporary, he believes the Fed should look through the effects of tariffs on the price level when making policy decisions. He concluded by stating that, if tariffs settle closer to his small-tariff scenario and underlying inflation continues converging toward the Fed’s 2 percent goal, he would support cutting the policy rate later this year.

There is no more important international relationship than that between the United States and People’s Republic of China. At stake is not just the present but the future, especially relations between rising generations in both nations. The Trump administration has put this at risk by targeting Chinese students.

Relations between the two countries have declined sharply since controversies over COVID and battles over trade during the first Trump administration. Security concerns, highlighted by Beijing’s pressure on Taiwan, raised fear of actual conflict. Ties seemed close to rupture in April when President Donald Trump launched a dramatic assault against Chinese commerce, but the two governments drew back from the brink after talks in May, agreeing to reduce the debilitating tariffs imposed by both sides. Observers expressed cautious optimism about the two governments stabilizing their relations. Trump even described the relationship as “important” and said he was ready to travel to China to meet President Xi Jinping.

However, at May’s end the administration declared war on the 277,000 Chinese students, down nearly 100,000 pre-Covid, attending US universities, and the many more hoping to come to America in the future. Secretary of State Marco Rubio announced: “Under President Trump’s leadership, the US State Department will work with the Department of Homeland Security to aggressively revoke visas for Chinese students, including those with connections to the Chinese Communist Party or studying in critical fields. We will also revise visa criteria to enhance scrutiny of all future visa applications from the People’s Republic of China and Hong Kong.”

Trump downplayed the significance of his administration’s plans, but the Chinese government denounced Washington for “unjustly” barring students based on “the pretext of ideology and national security.” Chinese students have seen the administration’s ruthless immigration enforcement elsewhere and many applying to study in America were distraught. 

Reported The New York Times: “In the hours after the Trump administration announced that it would begin ‘aggressively’ revoking the visas of Chinese students, the line to apply for new visas at the United States Embassy in Beijing still stretched down the block on Thursday. But for many of the hopefuls — including some who walked out of the embassy with their visa applications approved — any celebration was laced with a mix of anxiety and helplessness.”

The administration’s campaign will discourage Chinese students from even considering America. An 18-year-old whose application was approved observed that “in the future, if I can avoid going to the United States to study, I will. They make people too scared.”

The new restrictions will compound the administration’s previous decision to deport critics of Israel’s Gaza war and more recent plan to review visa applicants’ social media accounts. Reported Reuters: “The US administration ordered its missions abroad to stop scheduling new appointments for student and exchange visitor visa applicants as the State Department prepared to expand social media vetting of foreign students.”

Even students from US allies are at risk. Some South Korean applicants have been unable to schedule interviews. One who was studying in America and had hoped to find work after graduation worried about the future.

“I think what is now the United States is a lot different than the United States in the past,” he lamented. 

Students are the most obvious victims of the Trump administration’s escalating war against foreigners, irrespective of their home country. However, in the long-term the most significant victim will be the US. The economic benefits of hosting foreign students are obvious. Taking advantage of this revenue inflow is ever more important after Trump began imposing massive taxes on trade.

Education autarky will be costly in other ways. Reported the Association of American Universities: “International students, scientists and engineers help drive cutting-edge research and development, fill job openings in critical STEM fields, advance national security and bolster the US economy by generating new domestic startups and businesses.” Other nations’ universities are already preparing to take advantage of Washington’s act of educational seppuku. Unfortunately, the administration is closing America’s door precisely when many disillusioned young Chinese want to go abroad.

Most Chinese PhD students want to remain in America. Beijing, though criticizing Washington, may actually welcome the administration’s move, since the PRC is attempting to attract well-educated Chinese home. Reported The Washington Post: “Over the past two decades, China has ramped up efforts to lure home students and scholars educated abroad. Known as haigui, or ‘sea turtles,’ these returnees are prized as vital assets in Beijing’s push for industrial and technological dominance.” Beijing is even approaching non-ethnic Chinese scholars. Driving Chinese home proved costly in the past — as the Eisenhower administration discovered after it deported Qian Xuesen, who became the celebrated “father” of the Mao regime’s missile and space programs.

America’s gains from hosting foreign students go far beyond financial and technological. For decades, much of its international influence came from its attraction to people from around the world. For some the US offered seemingly unbounded economic opportunity; for others, human liberty, especially freedom of speech and democratic governance were paramount. The result was a steady flow of students from around the world, many coming for high school as well as university.

They often end up as America’s best friends. For years I’ve participated in a summer economic education program at a Chinese university. We avoid politics for obvious reasons, but many students hope to study in America. They would enrich the lives of those they meet and befriend. Some would adopt the US as their own, contributing to their adopted nation. Others would return to their homelands, changed and revitalized. Zichen Wang, a research fellow at China’s Center for China and Globalization who studied in America (and who I’ve met) told CNN: “Many of China’s officials, entrepreneurs, and scientists — especially those who played key roles during the era of reform and opening-up — received their training in the US.”

Of course, there are legitimate concerns about admitting people who might encourage violence or engage in espionage. However, that does not justify anything approaching a ban. Even law enforcement admits that the number of problematic students remains low and Rubio offered no evidence of significant threats. Yet, noted the Washington Post, experience indicates that “the rules are applied opaquely and — in some instances — indiscriminately.” And elsewhere the administration has failed to tailor its immigration restrictions to address genuine problems. Indeed, membership in the Chinese Communist Party or associated organizations doesn’t necessarily reflect anything sinister. Even Beijing recognizes that many people join the party for career advancement rather than out of ideological commitment and has stepped up efforts at political indoctrination in response. Accepting party members as students also allows Americans to engage the PRC’s future rulers.

Now more than ever Americans should connect with the Chinese people, maintaining communication, contact, and cooperation even as the two governments increasingly confront one another. Rubio’s visa announcement cements his ironic role as the administration’s chief isolationist, seeking to wall Americans off from the world contrary to their values and interests. Confronting the Beijing government is a significant but necessary challenge. However, Chinese and Americans together will suffer from needless US barriers to entry.

To listen to some people, you’d think that America had been run by economists — and specifically free-market economists — for the last fifty years or so. Of course, this isn’t really true, as any glance at the ever-climbing nature of federal spending or regulations would show you, but whatever influence economists might have had is being jettisoned in favor of what my late friend, the British economist David Henderson, called “Do It Yourself Economics.” 

Henderson’s concept was developed during his time at Her Majesty’s Treasury and at the Organization for Economic Cooperation and Development, where he was Chief Economist, after keen observation of the actions of political actors across the developed world. He describes “Do It Yourself Economics” (DIYE) as “economic policies [that] have been influenced or decided by firmly held intuitive economic ideas and beliefs which owe little or nothing to economic textbooks or treatises, or to the evidence of economic history.” 

He also pointed out that the “leading ideas and beliefs that go to make up DIYE are sincerely held, and voiced with conviction, by political leaders, top civil servants, chief executives of corporations, general secretaries of trade unions, well known journalists and commentators, eminent religious persons, senior judges, and established professors across the whole range of academic disciplines (not excluding economics itself). That is why they have to be taken seriously as an influence on events.” In other words, DIYE is like an endemic intellectual disease. One must ensure regular inoculation against its spread. 

That’s because DIYE has a long record of leading good intentions into bad outcomes. Henderson gives as examples that profit-seeking is questionable, that the state has a role in any cross-border transaction, and that goods and services can be ranked in order of importance. Each of these beliefs is contradicted by economic thinking, yet their persistence gives rein to interventionist governments and to restrictions on freedom. What characterizes them is a reliance on central direction and even collectivism. 

What free market economists might actually have done well over the past few decades is hold back some of the worst excesses of this tendency for a while. Adam Smith told us that the economic world is governed by largely unseen forces like incentives, prices, and information that rarely coincide with our instincts, and recognizing those forces might have helped put a brake on instinctive politics. Yet today those forces are dismissed as inconvenient, and intuition is heralded over analysis. 

We see this most obviously in the return of mercantilist thinking. We are told by no less a figure than the President of the United States that a trade deficit is a bad thing and represents unfairness, and that reducing that deficit through the tool of tariffs will bring back jobs. Many, if not most, people agree with this.  

Yet economic thinking tells us otherwise. It tells us that we get substantial value for that deficit, that tariffs will do little to reduce deficits and may indeed increase them, and that tariffs kill jobs as well as create them. The objections of economists to the administration’s tariff policies are, however, dismissed as “free market fundamentalism” or worse.  

While the reaction of markets to the policies seems to have induced continuous pauses and resets in the policy, the direction of the policy remains towards much higher tariffs, despite predictions of price rises, job losses, and supply shortages. Although DIYE could never be properly described as dogmatic (it is too instinctual for that), it does seem that blind adherence to it in this case veers closer to fundamentalism than any careful warnings of empirical economic analysts. 

Yet the problem is not confined to the administration. In New York, a prominent mayoral candidate is calling for rent control and freezes. The DIYE idea is that this will make housing more affordable for everyone and prevent displacement of poor households from their neighborhoods. Yet nearly all economists, from left to right, agree that rent control leads to housing shortages, reduces investment in maintenance, hurts newcomers, and makes housing less affordable in the long run. One Swedish socialist economist once said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city except for bombing.” 

Just as with tariffs, the careful collection of evidence on the effects of rent control and its analysis are quickly forgotten when a prominent, charismatic individual emerges to champion the DIYE idea. The ill effects of the policy are easily predicted, yet economists share the pain of Cassandra when they make those predictions — always right, always disbelieved. 

We do not want for examples. Inflation has been blamed by politicians of both parties on corporate greed — and price controls are the DIYE solution. Yet economists know that inflation is caused by monetary policy, as too much money chases too few goods. Price controls lead to shortages instead. We learned this painfully in the 1970s, yet the lesson is already forgotten.  

In this case, the DIYE diagnosis of “greedflation” doesn’t even stand up to a moment’s thought. If prices rising are the result of corporate greed, aren’t falling prices the result of corporate generosity? Economic pushback does not have to include complex econometric analysis. Simply applying the economic way of thinking can be enough to cause those tempted by DIYE to think again. 

Another bipartisan example is the idea of industrial policy — that requirements of domestic sourcing and government-led reshoring can lead to more jobs, higher wages, and prosperity for all. This can be portrayed as a patriotic policy, a pro-labor policy, or even a pro-environment policy; all three were present in the glut of spending bills at the end of the Biden administration. 

Yet economics again should have given pause. These measures, whether “buy American!” or a “green new deal,” raise costs, reduce competitiveness, and, like tariffs, invite retaliation abroad. The economic literature finds government industrial policy to be largely inefficient. When we learned that lesson in the last century, rules were put in place to require rigorous cost-benefit analysis and the like, but over time those were diluted and then eventually ignored or dropped entirely. 

Back on the left, another example from the Biden administration was student debt cancellation. The DIYE idea was that college graduates were earning decent wages but this was all going into paying off student debt, so canceling it would free up their resources to boost economic growth, to the benefit of all. 

Economic thinking said otherwise. Cancellation would be a classic example of dispersed costs and concentrated benefits. The people who benefited were those already doing reasonably well, while those without college degrees (or those who had them but had paid off debt in accordance with the terms they agreed to) would see no benefit. As an economic stimulus, it would be poorly targeted. 

DIYE remains influential because it conforms closely to political instincts and moral intuitions. Moreover, its tenets are sincerely held, often by people of high status whose affirmation gives the ideas an authority (or even sanctity, when professed by religious leaders) that is hard to counter. Thus, economists might be dismissed as bean counters, people who know “the price of everything and the value of nothing,” or even followers of “the dismal science.” 

In a polarized and populist climate, the ideas of DIYE often provide a more powerful narrative than textbook economics. This makes them even more potent and, respectively, harder to counter. 

Economists must therefore have their own stories to deploy alongside their models and theories. For every rust belt town where a factory has closed, they must point to a Spartanburg, South Carolina, where trade has opened new opportunities. For every family staying in their home thanks to a rent cap, they should point to the unseen family kept out of the neighborhood, or the apartment closed for rent as unaffordable to the landlord. 

Ideally, these stories should appeal to the same values that the DIYE proponent purports to serve. A critique of green industrial policy will do no good if the critic seems not to care about the environment; an appeal to halt tariff policy will have no appeal if it fails to acknowledge the values of patriotism that motivate the mercantilist. 

Sometimes, stopping a DIYE policy once will be impossible. But stopping it from happening again is more within reach. Even just delaying a harmful program by injecting a quantum of doubt can be valuable. As Ronald Coase said, an economist who “is able to postpone by a week a government program which wastes $100 million a year (what I consider a modest success) has, by his action, earned his salary for the whole of his life.” In the face of the DIYE onslaught, then, free market economists may need to adopt a Fabian approach. This may disappoint those of us who think of ourselves as radicals or revolutionaries, but it may be the surest way to win this battle for freedom.