On Capitol Hill, where memories are short, concern about open-ended military conflicts — or as one might call them, war — is now considered “hysteria.” Such was the case when Senator Tom Cotton, during hearings on the recent nomination of US Air Force Lieutenant General Dan Caine, mocked concerns about the prospect of US strikes on Iran’s nuclear program as “hysteria” while dismissively referring to concepts such as endless war or forever war in scare quotes. The Senator from Arkansas further justified the idea by invoking the Tanker War as a historical analogy; an example of a “forceful but discriminant application of military power” that led “to peace.” 

Like other historical comparisons used to justify Washington’s current or prospective war, this one too falls short, failing to account for the strategic and geopolitical differences between the present and a comparatively limited naval campaign of the late 1980s. And, like other euphemisms for war, Senator Cotton’s attempts to ignore likely contingencies that would stem from such military action, one that even hawkish think tanks have categorized as “a lengthy campaign employing military strikes, covert action, and other elements of national power.” In a town that overflows with tortured analogies and euphemisms, Cotton’s recent statements are nevertheless impressive in their myopia.     

The strategic situation in the Middle East is considerably different than during the height of the Tanker War. The maritime skirmishes that constituted that conflict with Iran were primarily defensive, meant to reestablish deterrence, and not designed to elicit escalation. This is a far cry from the prospect of a sustained air campaign on Iranian soil. Unlike the late 1980s, the United States military’s footprint in the region is considerably larger, and includes Iran’s near abroad, Syria, and Iraq. 

In the event of US airstrikes inside Iran, those troops, approximately 4,500, would present prime targets for Iranian retaliation, thereby creating incentives for an escalatory spiral, the very forever war that Cotton dismisses.  

Unlike the Tanker War or the assassination of Qasem Soleimani, another example that Cotton positively invokes, the prospect of an air campaign launched against Iran’s most cherished strategic asset, its nuclear program, is inherently escalatory. Iranian military capacities have improved significantly since the late 1980s, and, unlike the Tanker War, when Iran was embroiled in a war with Iraq, the Iranian government could focus on retaliation against US assets in the region and would assuredly do so. Assassinating a general on Iraqi soil is orders of magnitude lower than an active bombing campaign inside Iran. Cotton’s conflation of the two reflects not only poor judgment, but hubris.

Unlike the Tanker War, military strikes on Iran would be conducted without the buy-in of the Middle East’s Arab states, and thereby risks their alienation. US naval operations during the Tanker War were conducted to protect Kuwaiti and (implicitly Iraqi) shipping from Iranian interference and occurred against the backdrop of the Iran-Iraq War. Such a setting does not exist today, at least as Saudi Arabia, Qatar, and Kuwait see the current situation, as all have reportedly assured Iran that they will not allow their territory to conduct strikes. The United States would need to conduct them alone, the optics of which would undoubtedly scuttle the Trump administration’s attempts at political normalization and regional stability.  

Similarly, an air campaign against Iran’s nuclear sites would strain US relations outside the region as well and pose stiff geopolitical costs. Again, on the broader geopolitical front, Senator Cotton’s invocation of the Tanker War as a model of limited war worth emulating falls flat. Operation Earnest Will, the naval task force that protected third-party shipping from Iranian attack, had diplomatic cover via the unanimously passed United Nations Security Council Resolution 598 and was enforced in concert with British and French naval forces, as well as those of the United States. 

That is no longer the case, as Iran’s primary international patrons — Russia and China — would almost certainly condemn any US strikes on Iranian soil. As to the former, such strikes would jeopardize a core White House goal of de-escalation with the Russian Federation and retrenchment in Europe. China, too, would publicly balk at the strikes but likely view them as an opportunity for the United States to overcommit itself further and spiral into even deeper insolvency. 

Given this unparalleled risk of escalation, going to war with Iran via bombing its nuclear sites would be a foolish endeavor with no upside for American security interests. Such a prospect is especially imprudent considering that the Trump Administration’s own intelligence community “continues to assess that Iran is not building a nuclear weapon and Supreme leader Khomeini has not authorized the nuclear weapons program that he suspended in 2003.” 

War with Iran would also undermine the Trump administration’s stated objectives, including its rejection of the logic of forever war. Only two and a half months ago, President Trump declared during his second inaugural, “We will measure our success not only by the battles we win but also by the wars that we end  —  and perhaps most importantly, the wars we never get into.”

So far, the Trump White House has failed to live up to either of the first two promises and is poised to blunder itself into violating the third.

For decades, international development has been synonymous with massive aid programs, billion-dollar projects, and slow-moving bureaucracies. Governments and global institutions have spent trillions trying to address economic and social challenges in developing countries, yet these efforts often fail to deliver real impact. Why? Because they overlook the most important factor: the people themselves. 

The global aid system is broken. Instead of empowering individuals, it funnels money into bloated institutions where funds dissipate into overhead costs, corruption, and inefficiency. The intention is good, but the execution is flawed. What if we flipped the model? What if, instead of relying on top-down solutions, we placed resources directly in the hands of those who need them most? 

Consider this: trillions of dollars have been spent in places like Iraq and Afghanistan, yet the tangible outcomes are questionable. The World Bank has highlighted instances where development projects aimed at creating employment have faced criticism for high costs, with some exceeding $20,000 per job. Much of this money never reaches the intended beneficiaries; it gets entangled in administrative expenses, consultant fees, and governmental inefficiencies. 

Moreover, organizations like the United Nations, World Bank, and IMF often channel funds through the very governments whose corruption perpetuates poverty. It’s akin to attempting to cure lung cancer by partnering with tobacco companies. These governments are part of the problem, yet they’re treated as part of the solution. Funds meant for development are siphoned off by elites, squandered on vanity projects, or used to maintain power rather than uplift communities. Meanwhile, millions remain trapped in poverty without real opportunities for change. 

To compound the issue, many of these countries — due to endless war, conflict, and instability — have lost agency over their futures. They’re ensnared in a cycle where external forces dictate their progress, leaving their populations powerless. Large-scale aid programs often reinforce this cycle by prioritizing stability over self-sufficiency, keeping governments dependent on international funds rather than fostering resilience from within. 

Instead of pouring billions into this void, what if we allocated a fraction of that money to directly fund entrepreneurs, innovators, and changemakers? That’s the approach we’re taking at Ideas Beyond Borders, and the results are compelling. 

Take Hakim Hashim from Mosul, Iraq. After his city was devastated by ISIS, he envisioned a female-only taxi service to aid women’s mobility. Traditional banks wouldn’t lend him money, and aid agencies overlooked his vision. So, we provided him with $3,000. Today, he employs 57 people and is transforming transportation for women in his city. 

Or consider Hany Hamada, a Syrian refugee in Turkey. Observing that new refugees struggled to learn Turkish, he established a language school. With a modest grant, he expanded his business to employ 33 people—all refugees. These aren’t isolated incidents; they’re examples of what happens when we trust individuals to shape their own futures. 

One of the greatest advantages of the microgrant approach is its capacity for immediate self-correction. Traditional aid programs can take years to adjust, but microgrants allow for rapid feedback and pivots, minimizing waste and maximizing impact. This method also reduces corruption; by limiting grants to one per person, we eliminate opportunities for centralized exploitation. Leveraging AI and statistical modeling, we can analyze outcomes in real-time, continuously refining the model to ensure resources are allocated effectively. For instance, organizations like GiveDirectly have employed AI to identify disaster-affected households, enabling swift and direct cash transfers. 

The numbers speak volumes. Traditional aid programs may incur costs exceeding $20,000 per job created. In contrast, our microgrant model reduces that cost by more than 90 percent, creating thousands of jobs. It’s not even a competition. The microgrant model succeeds because it eliminates bureaucracy, empowers local talent, and delivers real, measurable outcomes. Beyond its efficiency, microgrants offer a low-risk, high-impact approach to development. Unlike large-scale projects where failure can result in substantial losses, microgrants provide a low-barrier path to opportunity. If a project doesn’t succeed, the loss is minimal; but when it does, the rewards are transformative. This strategy ensures that even in highly unstable regions, risks are contained while the potential for economic growth remains substantial. 

This isn’t solely about aid; it’s about global influence and leadership. The Microgrant Revolution isn’t just an effective economic model—it’s a strategy for America to enhance its soft power. China’s approach to foreign aid is large-scale, centralized, and infrastructure-focused, constructing roads, ports, and railways through top-down, state-controlled projects that often leave recipient countries indebted and reliant on Beijing. Their model emphasizes control, not empowerment. 

In contrast, America’s greatest strength lies not in central planning but in its entrepreneurial spirit, innovation, and individual empowerment. Microgrants embody the American ethos in development aid, focusing on freedom, self-reliance, and grassroots growth. This is what makes America exceptional, and it’s how we can build a better world — by equipping people with the tools to forge their own futures, rather than making them dependent on government assistance. By investing in microgrants, America can redefine its role in global development, demonstrating that true empowerment arises from enabling individuals, not controlling them. This approach fosters goodwill, strengthens alliances, and builds genuine, lasting economic resilience in partner nations. 

If we aim to fund social change, it must originate from within. The experiences in Iraq and Afghanistan have taught us that you can’t impose democracy through force. However, local organizations that advocate for democratic values have a significantly higher chance of long-term success, especially when they’re accountable to their communities and must compete for support, rather than relying on Western aid. Social movements that develop organically, rather than being externally imposed, are far more resilient and impactful. 

Aid doesn’t have to be expensive to be effective. We don’t need more billion-dollar programs that yield minimal impact. We need bold, direct investments in individuals who already possess the ideas, drive, and capability to transform their communities. If we genuinely want to revitalize struggling economies and post-conflict societies, we must shift from funding bureaucracy to funding talent. The question isn’t whether we can afford to do this; it’s how can we afford not to? 

It’s time to stop waiting for governments and institutions to solve the world’s problems. The individuals who can effect change are already here. All they need is an opportunity. Let’s provide it to them. 

Fears about tariffs causing a recession are high right now. Betting markets pretty clearly favor the claim of a forthcoming recession.

Businesses do have a lot to fear – tariffs tend to increase input prices which would make them less competitive on foreign markets. It would also increase prices for domestic consumers and thus reduce sales. Tariffs also have effects on exchange rates that end up making exports harder. Finally, and more generally, when domestic production expands due to import taxes, producers must use resources that are less efficient or better suited to other uses. This raises opportunity costs, as increased output in one sector comes at the expense of producing other valuable goods and services. This leads to price increases for consumers.

These costs of tariffs, however, are only the tip of the iceberg. Focusing solely on them suggests that the American economy would contract temporarily before returning to its previous growth rate — a scenario known as a “level shock,” not a “trend shock.”

But protectionism — the broader policy goal tariffs are meant to serve — does produce a trend shock by slowing long-run growth. This is because protectionism functions like a disease on institutions, undermining their effectiveness over time.

Industries seeking protection have reasons to do so – they profit even if the wider society is made poorer. They must, however, overcome two problems. The first one is to successfully organize politically to lobby for protection. Members of the industry are not always perfectly aligned and may disagree. They also have to expend considerable fixed costs to set up the lobbying operations and develop contacts with politicians and their staff.

The second is that they must be able to find politicians who will act on their behalf – in exchange for some political rewards (or outright bribes). This process, developed by Anne Krueger and Gordon Tullock and known as rent-seeking, is essentially one where resources are expended to lobby to redistribute wealth without creating any. In fact, there is a net loss in the process.

If industries cannot organize because the costs of organizing are too high, even if there is a willing politician, rent-seeking will not happen. If politicians are constrained from giving rents – either because of ferocious political competition or constitutional limitations – then there is no point in organizing.

Once an industry succeeds in organizing and convincing a politician, however, a vicious and pernicious cycle starts. At the sight of exceptional profits, other industries enter the bidding game with politicians, and more and more resources are spent lobbying to reallocate increasingly smaller levels of wealth. In the end, society is poorer. Entrepreneurs are no longer in the business of thinking about consumers as much as they are in the business of thinking about patrons in political offices.

In practical terms, this means less will be spent on innovation, research and development, new products, or the adoption of improved production techniques. Entrepreneurs, fixated on political favor, lose sight of the importance of these choices. This is what slows down economic growth.

When a politician signals openness to tariffs, interest groups quickly line up to argue why tariffs should be set at level X or Y, or structured in way A or B. Justifications — political covers, to use a less Orwellian term — will be crafted in the name of national interest, security, cultural prestige, or moral imperatives. In short, the politician who signals openness to tariffs signals that the rent-seeking bar is open. That helps sets the rent-seeking process in motion.

At the same time, politicians are rewarded for redistributing wealth rather than for adopting policies that generate it. Instead of addressing issues traditionally within the state’s purview — such as policing, courts, pollution, or the provision of public goods, all of which can foster economic growth — they focus on redistribution, which contributes nothing to growth. Institutions end up being geared to extract rents rather than create wealth. Corruption, as Toke Aidt and others note, becomes a natural byproduct. 

To illustrate the point, consider Canada and Argentina at the turn of the nineteenth century. Both countries were perceived to be the promised lands of the twentieth century. They had great economic potential in terms of natural resources, decent levels of human capital, and similar levels of income. The big difference is that Canada went down the free trade route (with some minor violations in the grander scheme of things) and Argentina went down the protectionist route.

When one considers the type of costs of protectionism that are most frequently discussed in the wake of President Trump’s announcement of “Liberation Day,” one would not have predicted anything about Argentina’s institutions after going down the protectionist route. But that route included the creation of powerfully-entrenched interest groups that resist reform and spend considerable resources doing so. It comes with politicians who act as patrons of industry rather than as serving the essential functions of the state. Corruption became a byproduct of this entire process, further worsening things.

This is part of why Argentina, in pretty much all rankings of institutional quality, scores low. Quite low compared to Canada. It also helps explain why Argentina experienced an entirely different trend than Canada. While Canada gradually closed some of the gap with the United States (starting at roughly 50 percent of the income per person seen in America and going to 82 percent on average since the 1960s), Argentina grew more slowly than the United States and Canada. It is now a relatively poor country.

Protectionism is an economic poison because it not only hurts upon ingestion but leads to lingering side effects that weaken the economic body over time.

As noted in my previous column, foreign holdings of US dollars are classified as foreign holdings of US assets and, thus, contribute to US trade deficits. But as I argued, it would be perfectly reasonable to classify foreign holdings of US dollars, not as holdings of US assets, but instead as foreign purchases of a US export — purchases, specifically, of the services of an especially useful currency to hold or for conducting global commerce.

Because the global demand to hold US dollars or to use them to conduct international commerce is high, this alternative classification would dramatically diminish the size of reported US trade deficits. These ‘deficits’ being the excess of US imports over US exports, this alternative classification would reduce US trade deficits by increasing the reported amount of US exports relative to US imports. (Because trade – or “current-account” – deficits are exactly offset by capital-account surpluses, another consequence of such a reclassification would be to decrease the reported size of US capital-account surpluses.)

Measured trade balances would change significantly with absolutely no change in the underlying economic forces and facts that give rise to international trade and investment flows. Grasping this reality helps to make clear just how silly it is for Americans to fret over the accounting artifact called “US trade deficits.”

“But,” someone might object, “because foreigners who hold US dollars do eventually intend to use those dollars to buy American goods, services, or assets, those dollars represent debts that Americans owe to foreigners. After all, dollars are claims on dollar-denominated goods, services, and assets. And so when foreigners hold US dollars, they hold claims on American stuff — meaning that for each US dollar foreigners currently hold, Americans are one-dollar in debt to foreigners.”

Although this objection is understandable — I encounter it often even from intelligent people committed to free trade — it’s mistaken. Holdings by foreigners of US dollars do not put Americans in hock to foreigners.

To see why foreign holdings of US dollars are not American debt, consider the following simple example. In March, the only international commerce that occurs is when Joe in Jacksonville buys $1 million worth of tomatoes from Mia in Mexico, and then Mia immediately uses this $1 million to buy $1 million worth of petroleum from Dave in Dallas. In this case, the US in March runs neither a trade deficit nor a trade surplus; the value of American exports equals the value of American imports. Protectionists breathe sighs of relief.

In April, however, although Joe in Jacksonville again buys $1 million worth of tomatoes from Mia in Mexico, Mia now holds on to all of her newly acquired US Federal Reserve Notes. As a result, the US in April runs a $1 million trade deficit. Protectionists emit wails of worry. Indeed, protectionists will insist that Americans have as a result of this trade deficit gone $1 million into debt to foreigners.

Yet this claim of increased indebtedness is mistaken. If Mia had actually loaned the $1 million to Americans — say, if Mia had purchased $1 million worth of US Treasuries – then this $1 million US trade deficit would indeed represent an additional $1 million of American indebtedness to foreigners. But Mia lends the dollars to no one; she holds them. (You might imagine that she stores the dollars in her underground safe in Mexico City.)

No American is obliged, as a result of Mia holding on to her US dollars, to pay to Mia anything, be it money or real goods and services. If Mia’s dollar holdings oblige no American to pay anything to her (or to anyone else), it cannot meaningfully be said that Mia’s dollar holdings are American debt owed to foreigners. It follows that the $1 million US trade deficit caused by Mia choosing to hold her $1 million US dollars does not increase Americans’ indebtedness.

This conclusion might be challenged by two possible objections. One is that US dollars, being notes issued by the Federal Reserve, are redeemable at the Fed. That is, the Fed is obliged to redeem Mia’s dollars should she present them to the Fed. And because the Fed is America’s central bank, Americans are indeed in debt to the tune of $1 million to foreigners as long as Mia holds $1 million US dollars.

Were America still on the gold standard, this challenge would have some merit. Under the gold standard, when someone presented the one million Federal Reserve Notes to the Fed, the Fed was obliged to hand over $1 million worth of gold in exchange. But America abandoned the gold standard in 1934. (Well, mostly abandoned it; US abandonment of the gold standard wasn’t complete until August 15, 1971, which is a story for another time.) If Mia in 2025 presents her one million Federal Reserve Notes to the Fed she will get in exchange one million Federal Reserve Notes. In effect, the Fed owes Mia nothing.

The second and more substantive possible challenge to the above conclusion goes like this: Because Mia can use her dollars to buy $1 million worth of goods, services, or assets from Americans, her dollar holdings represent $1 million worth of goods, services, or assets that Americans will turn over to a foreigner and, thus, not retain for themselves.

The key phrase in the previous sentence is “will turn over to a foreigner.” Were Mia’s dollar holdings actual debt, the phrase would instead have been “must turn over to a foreigner.” The difference here between “will” and “must” is crucial.

The simple fact that no American is obliged to turn over anything to Mia in exchange for her dollars means that no American can correctly be said to be in debt to foreigners. No legal or ethical duty would be infringed if every American refused to turn over anything to Mia in exchange for her dollars. If every American acted in this way, Mia would find herself holding lots of worthless paper, and she would have no legal or ethical recourse to restore what she once believed to be the purchasing power of her dollars.

Yet of course in reality Mia can successfully spend her dollars in the US to buy goods, services, or assets. Many Americans will be eager to acquire Mia’s dollars by turning over to her goods, services, or assets. Crucially, however, precisely because no American is legally (or ethically) obliged to sell anything to Mia, no American is in debt to Mia because of her dollar holdings. When Mia spends her dollars in America, each American with whom she deals is, as a result, made better off — and made better off not in the way that a debtor is made better off by repaying a debt.

Americans who sell goods, services, or assets to Mia are not retiring any debt that they’ve contracted in the past. Unlike a genuine debtor who would be made better off if his creditor said “Tell you what, don’t bother repaying me. Give me nothing,” Americans who sell to Mia would be made worse off if, just before the sales are completed, Mia were to say “Never mind, I don’t want to buy what you’re selling.” No American who sells to Mia is obliged to sell to Mia and, therefore, is made better off as a result of selling to Mia.

“But wait!,” someone might still object, “Mia’s dollar holdings give her the practical power to get $1 million worth of American goods, services, or assets — things that, if Mia didn’t have those dollars, would be available for purchase by Americans. The result is a loss to Americans.”

So it seems. But because any goods, services, or assets that Mia buys from Americans with her dollars were produced by Americans in the hope of being sold for top dollar, were Mia to lose her dollars — or were the government to prevent her from spending or investing her dollars in the US — some Americans in their roles as producers would suffer. Whatever ‘losses’ American consumers suffer as a result of Mia spending her dollars in America are more than offset by the gains of those Americans who sell their goods, services, or assets to Mia.

How do I know that the American sellers’ gains are greater than the alleged losses of American consumers? (I say “alleged losses of American consumers” because Mia’s spending her dollars causes no American to lose anything to which he or she is legally entitled.) Easy. No American buyers were willing to pay as much as Mia paid for the goods, services, or assets that she acquired from America. The value of what the American sellers sell to Mia is obviously greater than what any American was willing to pay for those goods, services, or assets. Perhaps, for example, no American was willing to accept less than 160,000 bushels of wheat in exchange for $1 million while Mia was willing to accept 159,900 bushels. The American sellers got more in exchange from selling to Mia than any American buyers were willing to give.

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Language is important and influential. By calling foreign holdings of US dollars American “debt,” the impression is conveyed that those dollar holdings are a burden on Americans. And from this impression it’s a short if careless step to the conclusion that the US government should restrict Americans’ trade in order to protect Americans from creating for themselves such a burden. Yet this impression is false: foreign holdings of US dollars are in no way American debt.

An overwhelming majority of economists agree: protectionist tariffs harm the very nations that impose them. The notion that taxing Americans for buying foreign goods somehow strengthens our nation is no less absurd now than when Adam Smith dismantled it in the eighteenth century, when Frédéric Bastiat ridiculed it in the nineteenth, or when Milton Friedman disposed of it yet again in the twentieth (subsequently uploaded to YouTube for all of posterity to replay). Yet here we are once again, watching such policies lurch back into public life like economic zombies — this time draped in MAGA hats and nationalist fervor. 

Economists have spilled oceans of ink rebutting these ideas. But at some point, we must ask whether the efforts are misdirected. Are we treating the symptoms or the underlying disease? Is the task of the economist to divine “good” policies and “proffer advice to benevolent despots” in the hope that wisdom and power will one day align? Or is our task to examine the institutional conditions under which bad policy becomes possible in the first place? 

The economic case against tariffs is neither novel nor subtle. Trade restrictions raise prices for both producers and consumers, stifle competition, and invite retaliatory measures from outside nations. A tariff, in plain terms, is a tax on domestic prosperity masquerading as patriotism. 

Yet stylized facts, sophisticated models, endless policy reports, and decades of empirical research have done little to dislodge the protectionist zeal from US politics. 

It’s tempting (especially for academic economists) to believe that the solution lies in winning the argument — convincing the electorate, pundits, and policymakers that tariffs are destructive. But that battle has been fought and won, many times over, in journals, books, and classrooms.  

In fact, according to recent polling, 81 percent of Americans see trade as an opportunity for growth — an all-time high since 1992 — while just 14 percent consider it a threat to the economy. 

The problem isn’t a deficit of knowledge or sentiment — it’s a surplus of power. 

Constitutional Decay 

Montesquieu, writing in 1777, argued that liberty depends not on the virtue of those who govern, but on the dispersion of power among them. Madison, in crafting our constitutional architecture, advanced that insight by embedding friction into the process of governance — not to ensure that good policies would prevail, but to make it institutionally difficult for any single actor to impose their preferred policies unilaterally.  

But over time, the institutional guardrails that once restrained executive discretion have been steadily dismantled. Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974, for example, have furnished presidents with broad authority to impose tariffs without congressional approval — often under the vaguest invocations of “national security” or “unfair trade.” Under Section 232, the Secretary of Commerce can initiate investigations — sometimes at the president’s request or even unilaterally — into whether imports threaten national security. If such a threat is deemed to exist, the president has nearly unfettered discretion to act, free from oversight by the ITC or Congress. Section 301, originally intended to enforce US rights under trade agreements, likewise allows the president to retaliate against foreign practices deemed “unjustifiable” or “unreasonable.” 

The Trump administration did not create these powers; it merely applied them more boldly. His 2019 use of Section 232 to justify tariffs on steel and aluminum rested on tenuous rationale, widely regarded as such even within his own administration. Yet the underlying legal structure permitted it. The authority had been lying dormant, lacking only an actor with the will to use it.  

And in case you believe that the legislature might act as a check in the year 2025… think again. Congress has long held the power to revoke the president’s tariff discretion. It simply hasn’t. The discomforting truth is that a sufficient number of lawmakers either support protectionist measures or lack the will to oppose them.  

This is not a minor procedural defect — it is a fundamental institutional failure. The concentration of authority in the hands of the executive reflects a broader erosion of constitutional design: The shift from governance by rule of law to governance through discretionary power. As David Hume observed, any political system that depends on the virtue of its rulers is already insecure. “Every man ought to be supposed a knave,” he warned, “and to have no other end, in all his actions, than private interest.” A free nation maintains its liberty not by the character of those who hold office, but by the constraints imposed upon them. Milton Friedman echoed the point centuries later: “I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing.”  

Tariffs have not returned because their champions triumphed in the battle of ideas, but because the institutional levees that once held them at bay have gradually eroded.  

A Way Forward 

F.A. Hayek once observed that Adam Smith’s “chief concern was not so much what man might occasionally achieve when he was at his best but that he should have as little opportunity as possible to do harm when he was at his worst.” If leaders can act on their worst impulses, then safeguards won’t be found in more enlightened rulers but in fewer opportunities for impulsive rule. Liberty, therefore, requires a better game, not just better players.  

To view Trump’s tariff program as an aberration, as many economists now do, is to misunderstand the institutional trajectory that made this scenario possible. The same discretionary trade powers he exploited have been employed — albeit with more restraint — by his predecessors. In 2009, President Obama used Section 421 to impose tariffs on Chinese tires, a decision that economists widely criticized as politically motivated and economically counterproductive. President Biden, rather than rolling back Trump’s measures, has preserved and expanded them — particularly in industries tied to strategic competition with China — relying on the same justifications. Even Bernie Sanders, who has long advocated protectionist policies, might well have reached for the same tools had he been given the chance to occupy Trump’s office. 

What distinguishes Trump is not the power he holds, but the theatrical defiance with which he exercised it. Much of the outrage directed at Trump is, therefore, misguided. Why not blame any one of his predecessors? Why so little outrage directed at Congress? Why not blame ourselves for the sin of complacency? We knew better… we know better. Or at least we ought to. We ought to know by now that concentrated power is not rendered less dangerous because those who have held it up to now have exercised some degree of restraint. If anything, such discretion may make expansions more insidious by masking potential harms and inviting future demagogues to exploit them more fully. Seen in this light, Trump did not suddenly break the system this week; he stress-tested it, and in doing so, exposed its fragility. The moral panic he provoked says less about him than it does about the complacency of an intellectual culture that had mistaken procedural decorum for genuine constitutional safeguards. 

What has shocked the conscience of economists this week should have disturbed it long ago. This machinery did not emerge fully formed from the Trump presidency; it is the predictable result of decades of constitutional drift — tolerated, perhaps, because until recently it was exercised with a lighter touch. But if such power is intolerable in the hands of any one president, then it is indefensible in principle.  For too long, economic apology has been advanced in a vacuum, attempting to speak truth to power by virtue of its reason and evidence. Yet truth, absent constraint, rarely travels far in the halls of power. As trade barriers rise by fiat and global markets convulse in response, we are reminded that good policy is inevitably held hostage by institutions. Unless we confront the constitutional permissiveness that enables this economic sabotage, our arguments will remain epiphenomenal — sophisticated, but ultimately irrelevant. The defense of free trade, then, must be paired with a renewed constitutional dialogue: one that might “attend to the rules that constrain our rulers.”

In 1881, a president was assassinated over the future of the civil service. James Garfield, who believed in civil service reform, was shot by a syphilitic maniac, Charles Giteau, who was enraged at not being given a government job. The debate that partially led to the assassination in some way mirrors our current debates over the nature of the executive branch, and its resolution offers some guidelines we could do well to follow.  

Garfield had opposed what was called the “spoils system” (from Andrew Jackson’s claim, “to the victor belong the spoils”) where supporters, friends, and relatives of the electoral victor were rewarded with government jobs. Giteau delusionally thought he was deserving of such reward, and shot Garfield with at least a hope of Vice President Chester A. Arthur returning to the system. Arthur had been a beneficiary of the spoils system, and his place on the ticket was a sop to the “stalwarts” who supported it (Garfield’s supporters were called “half-breeds.” It is a shame our political labels are not so colorful today.) 

Yet Arthur, the accidental president, proved not to be quite so stalwart. Garfield took many weeks to die, and Arthur filled those weeks with soul-searching and remorse, spurred on by the beginnings of a long, one-sided correspondence with a young woman from New York, Julia Sand. Miss Sand urged Arthur to take up Garfield’s aim of civil service reform, and that is the path he chose, working with Congress to pass the Pendleton Act, which ensured merit-based appointments. The fascinating story of Arthur and Sand is told in a new documentary from the Competitive Enterprise Institute, Dear Mr. President. 

At issue today, however, is just how responsive the civil service should be to the president. It is generally accepted that the federal civil service is inefficient and that bad performers are almost impossible to fire. Moreover, Republicans have been complaining for decades that career civil servants are often obstructive to political appointees’ attempts to introduce change. This has led many to allege the existence of a “deep state,” an unelected branch of government that pursues its own ends regardless of the results of elections, and which actively seeks to undermine the efforts or even legitimacy of actions performed by political appointees. 

Even if the “deep state” does not exist in the way its critics allege, there is clearly something wrong with the way the career civil service operates, as these complaints are only ever one way (Democrat political appointees generally seem to get their way.) Moreover, there are genuine questions as to the constitutionality of the career civil service. The President is supposed to have the power to appoint such officials; the appropriate part of the appointments clause of the Constitution (Article II, Section 2, Clause 2) reads, “the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.” This was clearly envisaged to allow the President to staff the executive branch as he sees fit. 

It follows that arrangements that restrict this power, particularly when it comes to firing officials, raise constitutional problems. We are seeing this play out in the job security of commissioners and other officers of so-called independent agencies right now, where the President has fired such officers to whom Congress gave a degree of protection by law. Given the precedents of Free Enterprise Fund and Seila Law, it is likely that the Supreme Court will uphold these firings. 

However, the biggest obstacle to the President firing obstructive inferior officers is generally not a law protecting the positions specifically but the existence of union contracts, negotiated between government as employer and the employee unions, governed by the National Labor Relations Act. This has been the case since President John F. Kennedy issued an executive order in 1962 that allowed federal employees to join labor unions. Since then, government unions have not just rewarded their employees with job security and higher than average pay, but have become an important lobbying force, driving the move towards bigger government, which means more federal employees and therefore more union dues. 

However, before Kennedy’s order it was by no means uncontroversial to assert that collective bargaining had a place in federal employment. No less a figure than Franklin D. Roosevelt wrote in 1937 to the President of the unofficial union, the National Federation of Federal Employees, saying, 

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress.

FDR was correct. Binding the government as employer by means of union contracts also binds the government as sovereign, which is a problem for representative democratic government. 

The first step, therefore, in reinstituting legitimate presidential authority over the staffing of the executive branch, must be to cancel collective bargaining arrangements with government unions. President Trump has already done this with unions at agencies that deal with national security, using powers under the Civil Service Reform Act. The President cited various forms of contract-related obstructionism in announcing the order, including the filing of grievances and blocking the implementation of the VA Accountability Act, thereby directly inconveniencing the President’s constitutional responsibility to faithfully execute the laws. 

Congress needs to back up the President by banning collective bargaining in the federal government entirely. 

However, this is just the first step. The next step, as recommended by Judge Glock and Renu Mukherjee of the Manhattan Institute, should be to make federal employment explicitly at-will. President Trump’s Schedule Policy/Career does this for certain policymaking positions, but that only represents a small fraction of the federal workforce. Glock and Mukherjee examine civil service reforms at the state level that have introduced at-will employment. They find that, “States that have created at-will employment and kept employee grievances inside departments have seen improved management and limited evidence of politicization or patronage.” 

That last point is crucial, for it speaks to the spirit that motivated Sand, Arthur, and the Pendleton Act. To allow legitimate Presidential discretion over the staffing of offices of state instead to return to the spoils system would get us nowhere. There must be a role for permanent career civil servants, not least to ensure continuity and needed expertise for each new administration. While at-will employment could theoretically lead to that situation, the states show that in practice it has not, and that state administrations of both parties have reaped the benefits. What it does allow for is the firing of poor performers, thereby lifting the overall competence level of the civil service. 

Moreover, civil servants are also protected by the First Amendment. As Glock and Mukherjee say, “Supreme Court jurisprudence from Elrod v. Burns (1976) onward states that the First Amendment forbids governments from making personnel decisions based on patronage or party membership unless personnel are in policymaking positions.” This should ensure that the spirit of Pendleton lives on. 

Yet even without union contracts and protected employment status, some might fear that the spirit of the deep state might encourage some to obstruct the President’s will, while others might worry that the President or his deputies might ask the civil servant to do something illegal. For this, I suggest that something akin to the Armstrong Memorandum, that governed my actions when I was a UK civil servant, should be written into the terms and conditions of federal employment.  

Briefly, the Armstrong Memorandum said that the duty of the civil servant is to the political representative of the government of the day and that should the civil servant feel unable to carry out instructions, they were expected to resign. An appeals process was in place for those who felt that they were being asked to do something illegal. As the memorandum says, “When, having been given all the relevant information and advice, the Minister has taken a decision, it is the duty of civil servants loyally to carry out that decision with precisely the same energy and good will, whether they agree with it or not.” 

Finally, one aspect of the Pendleton Act that could do with revival is the return of competitive examination for civil service positions. Such examinations ensure that the civil service is staffed with people with cognitive abilities to understand complex situations and reach difficult decisions. They were, however, the target of the idea that testing is somehow racist that infested the 1970s and so fell victim to the Carter administration’s discretion following the Civil Service Reform Act.  As entrepreneur Joe Lonsdale says, it was merit that enabled NASA to get to the moon, build the Pentagon quickly, and create the atomic bomb. Reinstituting merit as a central element of the civil service will not only make our government efficient, it will also return us to the spirit that motivated Arthur to reform the executive so thoroughly after the national tragedy of Garfield’s death.

The high degree of focus on tariffs under the new Trump administration has led to a flurry of new analyses attempting to determine their economic effects. One of the most prominent contributions comes from Stephen Mirran — formerly of Hudson Bay Capital and soon-to-be Chairman of the Council of Economic Advisers (CEA) — who published an influential piece titled A User’s Guide to Restructuring the Global Trading System. This plan, dubbed the “Mar-a-Lago Accord” in reference to the Plaza Accord’s attempt to manipulate the dollar, argues that tariffs need not cause harm, provided that currency offsets occur to counterbalance their effects. Mirran’s proposal, which draws upon a currency offset/tariff model, suggests that properly managed tariffs can be effective tools without significant negative repercussions. This assumption is critical to the broader strategy of the Mar-a-Lago Accord.

However, this theory rests upon a number of key assumptions about how tariffs interact with exchange rates and other economic variables. Understanding these assumptions and their limitations is essential for evaluating the validity of Mirran’s broader proposal.

The analysis of tariffs frequently hinges on the extent to which currency exchange rates adjust to offset changes in international tax regimes. As described by Jeanne and Son (2021), the conventional wisdom is that tariffs improve a nation’s balance of trade, which then exerts upward pressure on its currency. Currencies may also adjust due to monetary policy responses aimed at countering inflation or demand shifts, or simply due to altered growth prospects between trading partners, which can attract or repel investment flows. The model further suggests that if the tariffing nation’s currency strengthens by an amount proportional to the tariff, the net price paid by importers remains unchanged, effectively nullifying the impact of the tariff.

This theory can be illustrated with a simple formula:

pm = e(1 + tau)px

Where:

• pm is the price paid by importers, denominated in their currency (USD).

• e is the exchange rate (dollars per foreign currency unit).

• τ is the tariff rate.

• px is the price of the good charged by exporters in their own currency.

For example, if the tariff rate is 10 percent and the foreign currency depreciates by an equivalent 10 percent, the price paid by importers remains almost unchanged. This suggests minimal inflationary impact for the tariffing country, although the same is not true for the exporting country.

What the Model Assumes

The simplified tariff and currency offset model used in the Mar-a-Lago Accord proposal is built upon several critical assumptions. Evaluating these assumptions reveals limitations and potential flaws when applying the model to real-world scenarios.

1. Perfect Currency Adjustment

The model assumes that foreign currencies will depreciate precisely in response to tariffs, counterbalancing their effects. However, exchange rates are influenced by a wide range of factors beyond trade policy, including monetary policy, geopolitical events, speculative flows, and investor sentiment. Variability and lagged adjustments can result in considerable deviations from the expected offset, undermining the model’s reliability.

Example: In 2018, U.S. tariffs on Chinese imports did not result in a clean, offsetting depreciation of the Chinese yuan. Instead, the yuan’s adjustment was inconsistent, heavily influenced by government intervention and broader economic factors. As a result, import prices rose for American consumers despite expectations of a currency offset.

2. Incomplete Passthrough from Exchange Rates to Exporter Prices

The model presumes full passthrough from exchange rate changes to exporter prices. In practice, passthrough is often incomplete due to price stickiness, pre-existing contracts, and firms’ strategic pricing decisions. Many international transactions are invoiced in U.S. dollars, which can result in currency fluctuations affecting exporter profit margins rather than import prices.

Example: During the U.S. dollar appreciation from 2014 to 2016, many exporters absorbed some of the currency-related cost increases rather than fully passing them on to consumers, in order to maintain market share.

3. Incomplete Passthrough from Wholesale to Retail Prices

Even if exchange rate changes affect exporter prices, the assumption that wholesale price changes directly impact retail prices is often unrealistic. Retailers may absorb part of the cost increases to remain competitive, especially in markets with highly elastic demand. Moreover, tariffs often create friction in supply chains, resulting in delays and other inefficiencies that further distort prices.

Example: Retailers such as Walmart, which source heavily from China, have sometimes chosen to absorb tariff-related cost increases rather than raising prices, preserving their competitive edge and avoiding customer loss.

4. Overlooking Invoicing Currency Effects

The assertion that exchange rate adjustments will fully offset tariffs neglects the fact that many international transactions are invoiced in U.S. dollars. This means that currency fluctuations might impact exporter profit margins rather than retail import prices, weakening the expected offsetting effect of depreciation.

5. Ignoring Supply Chain Complexities

The model oversimplifies value-added origins, assuming that most inputs are produced domestically within the exporting nation. In reality, global supply chains are complex and intertwined. Tariffs applied to one country can have cascading effects through intermediate goods produced elsewhere, diluting the impact of currency adjustments.

Example: Apple’s iPhones, assembled in China but containing components sourced from Japan, South Korea, and the U.S., illustrate how tariffs imposed on Chinese goods can affect upstream suppliers and complicate currency adjustment mechanisms.

6. Revenue vs. Trade Balance Conflict

The argument suggests that if tariffs lead to higher prices, they may reduce consumer welfare and economic growth. However, if currency adjustments nullify price increases, tariffs generate revenue without rebalancing trade flows, potentially undermining the intended economic objectives.

These assumptions — perfect exchange rate adjustment, pure national value-added origin, complete passthrough from exchange rates to exporter prices, and complete passthrough from wholesale to retail prices — are rarely, if ever, fully met. Models relying on these assumptions are prone to producing oversimplified and unrealistic projections.

Tariff models relying on the assumptions outlined above offer an extremely limited and entirely misleading view of economic realities. As justifications for broad, sweeping trade measures, particularly when those measures interact with complex, modern supply chains, they are inadequate. The number of factors that must not only align precisely but also remain consistently aligned to minimize the economic impact of tariffs is considerable enough to be dismissed as unlikely. 

In 1979, Governor Ronald Reagan was getting ready for his third presidential campaign, having mounted a late challenge to Nixon in 1968 and directly challenging Ford in 1976. The reality then was that American manufacturing had been strained, struggling to adapt to a changing global economy.  Making matters worse was the high inflation and the recent bout of stagflation, leaving an economy mired in disaster. By this point in his career, Reagan was an avid advocate for free enterprise, limited government, and free trade — the hallmarks that would later come to define his presidential legacy.  He had read Friedman and Hayek and was a regular reader of Hazlitt and The Freeman. He clearly understood that protectionism wouldn’t pay. 

However, he also appreciated the fact that understanding the economic realities of trade and translating them into a persuasive political position are two very different tasks.  The Reagan campaign addressed the issue of trade head-on.  In its Reagan and Bush on the Issues, they mapped out a way to address the challenges facing American manufacturing through market reforms.  This approach is worth revisiting in the wake of President Donald Trump’s second term and his embrace of protectionism, particularly tariffs, as a means of reviving American industry. 

Reagan’s free market approach began with an acknowledgment of the successes that free trade had brought America—something sorely missing from today’s political discussion.  The campaign insisted (see below) that “international trade has increased substantially over the past two decades, helping to improve the standard of living of all trading partners.”  Trade provided “many of the luxuries that we now enjoy and many of the necessities that we need.” They recognized the importance of manufacturing for export, noting that “American exports provide about one-sixth of our private-sector jobs.”  Further, they emphasized that “one of our best ways to promote economic growth in the future is to continue to expand our trade with other nations.” 

For all the prosperity that expanded trade had brought the US, the Reagan campaign did demand that “free trade must be fair trade.” Much like today’s administration, they condemned other nations that were imposing “barriers to our exports and unfairly [subsidizing] their own industries.” Similarly, the Reagan campaign insisted that they would “work to prevent such unfair trade practices.” Unlike the current administration, however, they insisted that the answer was entrepreneurship, lower taxes, and deregulation, not protectionism.  The campaign noted that “Governor Reagan believes that it far better serves our own interests, and those of the world, to aggressively pursue a reduction in foreign nations’ trade barriers rather than erect more barriers of our own.” In short, Reagan recognized that tariffs (and other trade restrictions) would harm American consumers by raising prices and harm American manufacturers through higher costs and stifled innovation, making us less competitive on the global stage, not more. 

To accomplish this, the campaign laid out a multi-faceted plan. Reagan’s initiatives included making “changes in present regulatory code and tax laws that make US industry more efficient and competitive.” This meant deregulation and an easing of the tax burden. The campaign promised that the Reagan administration would “review all government regulation that adversely affects our international competitiveness, revising necessary regulations to make them less costly and eliminating unnecessary and overly burdensome regulations altogether.” Going further, the Reagan team envisioned making American industry more competitive by supporting the “acceleration of our overly long depreciation schedules, which would greatly increase the amount of capital available to our industry for modernization and retooling.” Additionally, the campaign emphasized Reagan’s support of a “stable dollar” which they viewed as “an important factor in promoting US trade.” Finally, the campaign promised that Reagan would promote exports by imposing a review of all “domestically imposed barriers to US trade, such as extranational application of regulations and delays in granting licenses, in order to maximize the ability of US firms to sell overseas, whenever possible.”  

Taken together, these initiatives amount to a free-market agenda to make American industry more competitive, adaptable, and innovative. Unlike the most popular protectionist policies, tariffs and various degrees of industrial policy, they are also free of the potential for rent-seeking and corruption that often occurs when governments attempt to manage and guide economies.  

Notice the difference between Reagan’s approach and the current approach of President Donald Trump.  Rather than risk starting a trade war by imposing “reciprocal tariffs,” Reagan encouraged domestic manufacturing by doing everything he could to make it easier for other countries to import our manufactured goods.  Today, we see the opposite, with President Donald Trump seeking to make it harder for other countries to export to the United States in the hopes that they will change their tune vis-à-vis trade policies against the US.  This is not the first time that tariffs have been used as a “negotiating tool” and their history in this capacity is mixed at best. 

Of course, we know that Reagan was successful in negotiating multiple trade deals and setting the stage for NAFTA. The reduction of barriers to trade resulted in a massive expansion of international economic activity which contributed to a reduction in global absolute poverty from forty percent to around nine percent today. This is an incredible achievement.  

At the same time, American manufacturing has become leaner in terms of the number of people employed, falling from about 19.5 million in 1979 to about 12.8 million, according to the latest figures. However, the jobs lost were due almost exclusively to increases in productivity and technological change, not due to increased or unfair foreign competition.  In fact, according to Sam Gregg, “manufacturing’s contribution to America’s GDP actually increased between 1997 and 2016, while real manufacturing production grew by 180 percent between 1972 and 2007.”  Alarmists will point to the rise of China as the world’s manufacturing superpower as evidence that US manufacturing has declined. These fears are misplaced. 

First, China as a country faces constant fears of economic collapse due to their unsustainable and heavily centralized economic system of party-state capitalism.  Second, while it is true that China’s manufacturing output is three times that of the US, it is also true that their population is six times ours and their manufacturing sector comprises a much larger share of their labor force than ours.  Frankly, that a command-and-control economy with several times as many (and far cheaper) workers employed in manufacturing is only producing three times as much output stands as evidence that we have nothing to worry about “Chinese manufacturing” as an economic threat.  The American worker remains the envy of the world precisely because of our incredible productivity.  There is no evidence that this is changing anytime soon. 

As President Trump tries to manage and manipulate the US economy to promote American manufacturing, it’s important to revisit alternative approaches. This is especially true of approaches that made us more free, more prosperous, and better respected on the world stage.

[Editor’s Note: The images above are courtesy of Reagan and Bush on the Issues, Paul Manafort files, Box 382, Subseries XI: Regional Political Files, Ronald Reagan 1980 Presidential Campaign Paper, 1964-1980, Ronald Reagan Presidential Library]

Over the last two days of the past week, US equity markets crashed as a result of the rollout of a tariff program that was not only non-reciprocal but also applied using a formula resulting in the most severe duties since World War II. The formula calculated tariffs based on the ratio of trade deficits to total imports, penalizing countries with the largest trade imbalances. This approach deviates from traditional “reciprocal tariffs,” which typically involve matching foreign tariff rates. Instead, it appears designed to reduce the US trade deficit by raising the cost of imports, ostensibly encouraging domestic production while severely disrupting supply chains.

The tariffs imposed by President Donald Trump in April 2025 have elevated the United States’ average effective tariff rate to approximately 22 percent, the highest level recorded since 1909. This escalation exceeds the tariff rates established under the Smoot-Hawley Tariff Act of 1930, which previously set average duties at around 20 percent. By surpassing both the protectionist measures of the early 20th century and those implemented during the Second World War, the current tariff regime represents the most severe and comprehensive imposition of trade barriers in over a century. An indication of how broadly and haphazardly the new tariffs were inflicted is evident in their application to desolate and economically marginal areas, including remote, essentially tradeless polities like Norfolk Island.

From the “Liberation Day” announcement after the market close on April 2 to the closing bell on April 4, the S&P 500 dropped from 5,670.97 to 5,074.08—a decline of approximately 10.5 percent. (This is the first stock market crash since March 16th, 2020, and only the second since the October 1987 crash.) The Nasdaq 100 entered bear market territory, falling 21 percent from its record high, while the Magnificent Seven stocks posted their worst week since March 2020 with a 10.1 percent loss. Treasury yields dropped below four percent for the first time since October, as investors flocked to safe havens, but the bond rally faltered amid reports of countries willing to negotiate reduced tariffs.

S&P 500 (April 2 – 4, 2025)

The US imposed a 10-percent baseline tariff on all imports, with additional punitive levies targeting around 60 countries, including China, Vietnam, and Bangladesh. China retaliated quickly, imposing 34-percent tariffs on US imports, while other nations threatened similar measures. Investors are now reassessing portfolios to gauge vulnerabilities to heightened costs and reduced demand, particularly in consumer-facing sectors like travel, leisure, and retail. Amid widespread panic, market volatility spiked to multi-year highs, and credit default spreads widened to levels not seen since the regional banking instability of March 2023.

The unpredictability of the tariffs, their scope, and their duration has significantly undermined investor confidence. By invoking Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962, the administration exerted broad authority to impose tariffs for reasons ranging from intellectual property theft to national security concerns. But the formula’s focus on penalizing countries with large trade deficits instead of reciprocating tariffs represents a sharp departure from established norms.

Broader economic indicators are also reflecting the strain. Concerns about economic resilience have been exacerbated by existing issues such as slowing growth and weakening consumer sentiment. While tariffs alone may not trigger a recession, they contribute to an environment of heightened uncertainty and diminished corporate earnings.

Bloomberg Economics Global Trade Policy Uncertainty (2015 – 2025)

Despite market turmoil, the Federal Reserve has struck a hawkish tone. Powell’s comments reinforced a “wait-and-see” approach, dampening hopes for immediate rate cuts. Meanwhile, Fed rate cut expectations have now priced in nearly four cuts by the January 2026 FOMC meeting. The administration’s approach, rooted in discouraging foreign capital flows to the US in order to lower the US dollar’s value, appears to be inadvertently accelerating a larger crisis of confidence in American assets.

Numerous old saws were vindicated this week. Foremost among them is the apocryphal claim that of the few things which are both true and nontrivial in economics, the Law of Comparative Advantage is one of them, and one that the people who should know it often do not. Furthermore, while knowledge in most sciences is cumulative, in economics and perhaps finance, it remains cyclical — rediscovered and then discarded only to resurface again when the same errors are repeated. We face another stark reminder that economic policy crafted in defiance of established principles may provide temporary relief or political appeal, but it ultimately invites far greater disruption and instability. Americans are justified in questioning exactly what they are being liberated from — and with growing unease, wondering what they may find themselves freed from next.