The Province of Ontario passed a controversial piece of legislation in early June that allows the government to create Special Economic Zones (SEZs) in certain designated regions, among other things. Known as Bill 5, which is called the Protect Ontario by Unleashing Our Economy Act, the legislation aims to remove regulatory hurdles to economic development in specific parts of the province.

“We need to get rid of unnecessary red tape, make it easier for companies to invest, to hire and to grow, and that’s exactly what Bill 5 is going to do,” said Vic Fedeli, Minister of Economic Development, Jobs and Trade. The legislation was brought forward by Premier Doug Ford’s Progressive Conservative Party, which was re-elected to a third consecutive majority government earlier this year.

While this legislation is the first of its kind in Canada, the idea of governments creating special zones with relaxed regulations to attract investment is nothing new. The Ford government points to countries like Singapore, South Korea, Poland, and Panama, which have experimented with SEZs in recent decades.

Part of the justification for this move is the threat that Trump’s tariffs pose to the Canadian economy. If Canada can strengthen its economy through selective deregulation, Ford reasons, then the damage that might come from the trade war can be mitigated. In particular, the idea is to use SEZs to speed up major resource and infrastructure projects, such as mining initiatives in the Ring of Fire — a rich mineral deposit in northern Ontario — and a possible tunnel under Highway 401 through Toronto to help with traffic congestion.

A Three-Pronged Pushback

The pushback on Bill 5 has predominantly come from three main groups: First Nations leaders, environmentalists, and labor unions. “Essentially, the cabinet could give corporations a free pass to circumvent all sorts of important protections,” said Anaïs Bussières McNicoll, a director of the Canadian Civil Liberties Association.

First Nations leaders have been especially vocal opponents of this legislation, arguing that it infringes on their treaty rights.

“The breathing lands are within the peatlands, the muskeg in Treaty Nine territory, where the Ring of Fire is proposed, and already over 30,000 claims have been staked without the consent of any Indigenous communities,” says Kerrie Blaise, legal counsel for Friends of the Attawapiskat River.

At a Queen’s Park rally outside the Ontario legislature in late May, protestors pushed back directly against Ford’s rhetoric, chanting “Indigenous rights are not red tape.”

Environmental groups, meanwhile, are raising concerns about the government relaxing environmental protection laws. “Bill 5 would, if passed, deal a body blow to the environment and hopes for energy sovereignty in Ontario,” said the group Environmental Defence in a statement before the bill was passed. “This Bill represents a direct attack on species at risk, clean and healthy communities, clean energy and the rights of Indigenous peoples.”

Labor unions have echoed these sentiments, adding that worker protections are also weakened with this legislation. “Existing Ontario labour law won’t apply in these special economic zones,” noted CUPE Ontario President Fred Hahn. “Under the cloak of an impending economic crisis and the guise of fighting tariffs, Doug Ford plans on delivering workers to the wild west of working conditions, all to the benefit of big business.”

While the concerns of these three groups seem overstated, many Ontarians are sympathetic to the general points that are being made. There is widespread fear that relaxing regulations, even only slightly, could allow large corporations to run roughshod over Indigenous people, the environment, and workers.

But while those concerns are worth taking seriously, the other side of the trade-off also needs to be weighed: the threat of a stagnating economy.

Unleashing the Entire Economy

The Ford government has made an interesting admission with the introduction of the SEZ law: the regulations that they themselves have been maintaining have been detrimental to the economy. In other words, they are explicitly recognizing that there is a trade-off between regulation and economic growth.

What this means, plainly, is that slow economic growth is really a policy choice; it is not simply unavoidable bad luck. The government is fully aware that they are putting a sizable check on our well-being, that with their mountains of regulations and lengthy permitting schemes they are holding us back from more affordable groceries, healthcare, housing, better education, and so on — and their justification for this notable hindrance on public welfare boils down to “well, sorry, we had other priorities.”

Just how much of an impact do regulations have? It’s hard to measure, but there’s no doubt it’s significant. “Most Ontarians would be surprised by the magnitude, scope, and costs of the province’s regulatory burden,” write researchers Charles Lammam and Sean Speer in a 2018 policy report for Ontario 360. “The Ontario government’s own count, which was performed back in 2012, pegs the number of regulatory requirements on businesses and individuals at over 386,000. According to one analyst, that number is twice as many as the next closest province.”

Lammam and Speer cite a 2018 report from the Canadian Federation of Independent Business (CFIB), which put the cost of government regulation in Ontario for 2017 at $15 billion, the highest of all the provinces both in absolute terms and on a per-business basis (which provides a more apples-to-apples comparison between different-sized provinces). According to the latest CFIB report, that number had risen to $20.4 billion in 2024.

Here’s another way to think about it: if the government is bragging about all the economic benefits that will result from relaxing just a few regulations in a few designated zones in the province, why wouldn’t they unleash trillions in growth by relaxing a lot of regulations in the entire province?

What if we unleashed the entire Ontario economy, and not just a tiny percentage of it?

To be sure, this doesn’t mean companies should be allowed to do whatever they want. Protections for legitimate property rights and enforcement of contracts are an important part of a free market, so those should never be on the table.

But we need to start questioning just how much special interest groups should be allowed to hold the economy back. Whether it’s Indigenous groups, environmentalists, labor unions, or some other body, these groups always want more privileges, more power, more special legal protections at the expense of others — which often come in the form of economic restrictions. And as sympathetic as their case may sound, there has to come a point where freedom and economic welfare are simply deemed too important to give up. Everyone in these groups is entitled to their property rights, but special favors from the government should be viewed with considerable suspicion.

And to those who point out that giving a company an SEZ is itself a special favor from the government, my response is simply: I agree, and let’s fix that by extending the deregulation to the entire province.

President Trump’s Secretary of Health and Human Services (HHS), Robert F. Kennedy Jr., has drawn criticism for his desire to remove fluoride from the water supply. 

According to PBS, the American Dental Association president said, “When government officials like Secretary Kennedy stand behind the commentary of misinformation and distrust peer-reviewed research, it is injurious to public health.” 

Similarly, headlines out of outlets like Politico say that “Dentists are struggling to counter [Kennedy] on fluoride.”

Much of the recent criticism cites a new study estimating a sharp rise in cavities if fluoride were removed. But the enamel-strengthening mineral is not added to water supplies in most of the world, and even countries that had done so stopped when fluoride toothpaste became commonplace. 

To understand the relative merits of removing fluoride from the water, we’ll need to review some of the arguments from science, then discuss how markets adjudicate competing claims.

The Fluoride Controversy

There are upsides and downsides to the use of fluoride. Fluoridation tends to improve dental health, especially in children. That’s why fluoride is used in toothpaste and dental cleanings. If it helps in these scenarios, why wouldn’t it help when included in water?

The problem is, fluoride also has downsides. Several studies in recent years have found negative relationships between fluoride intake and infant IQ. These are peer-reviewed articles in highly regarded journals, so the research cannot be summarily dismissed as inconclusive. 

IQ isn’t the only worry with fluoride. Parneet Singh Sohi, a pediatric dentist writing for The Wall Street Journal, argues that, although targeted use of fluoride is beneficial, there are clear scientific downsides. For example:

An expanding body of research has associated chronic ingestion with skeletal fluorosis, diminished bone resilience and elevated fracture risk. These findings are no longer theoretical abstractions: Geriatric and adolescent fracture rates are surging, and orthopedic practices in numerous regions have reported exponential growth, suggesting a possible link to cumulative fluoride burden.

He argues that while water fluoridation may have made sense in an era before widespread access to toothpaste, it’s no longer necessary in the US. 

In short, experts are split. So how should we adjudicate this issue when experts disagree? Well, that’s where the benefits of markets shine.

Markets Allow for Individual Values

Scientific research indicates both costs and benefits to fluoride, and the value of each is subjective.

Political processes often allow us only an all-or-nothing result. If 51 percent of people vote for (or against) fluoride in the municipal water, then their decision is imposed on the other 49.

Markets, however, allow for more granularity. If individuals believe fluoride will be good for themselves or their children, they have the option of buying fluoride and frequently using it in the form of toothpaste, rinses, and dental cleanings. Those willing to take the risk of lower IQ are free to buy and use it. 

But if someone else thinks even a slight possibility of lower mental functioning is worth avoiding — and is willing to take the risk of more cavities — it makes sense to let them run that tradeoff.

Sometimes the provision of goods from the government is argued on the basis of what economists call positive externalities. If an individual purchasing a good benefits his neighbor somewhat, but he doesn’t get to absorb the benefit himself, this may result in him purchasing less than he would otherwise. 

You can stretch almost any example to have externalities, but in the case of fluoride, externalities seem small. If someone chooses to buy fluoride, she personally receives the benefit of cleaner teeth, but the positive externalities of her pearly white smile are negligible.

Some might argue that fluoride is beneficial because it helps prevent the negative externality of people delaying dental care and leaving the public to cover the cost. While that’s possible in theory, the numbers tell a different story. Americans make over 155 million emergency room visits each year, but only about two million — just over one percent — are dental-related, and even fewer go unpaid. Dental spending is a relatively small piece of the broader US healthcare puzzle. To the extent that costs of quasi-socialist dental care are imposed on taxpayers, that’s a separate issue from whether fluoride should be imposed on us instead.

The beauty of markets is that individuals can weigh costs and benefits themselves and make judgments according to their values. Since the natural sciences are value-free, there will never be a study to confirm people ought to use fluoride. Given this ambiguity, we should allow people to purchase fluoride if they want it. Let’s stop treating fluoride as the default. Rather, let’s encourage individuals to take responsibility for their own health.

[T]he most significant and enduring material legacy of the Great Awokenings has been the proliferation of what I have taken to calling ‘social justice sinecures’ — well-remunerated symbolic capitalist jobs explicitly oriented around helping organizations conspicuously conform with the latest fads in social justice signaling (thereby reducing their vulnerability to subsequent attacks by frustrated elites and elite aspirants).

That is from Musa al-Gharbi’s stinging post-mortem of our most recent national craze of social justice warriors fashioning themselves as the Woke. If you are old enough to recall when the Soviet Union collapsed, you will recall people coming out of the woodwork to declare that the USSR was never truly a communist state and thus the communist paradise is still a viable goal. Al-Gharbi is here to tell us something quite similar. We Have Never Been Woke is the title. The subtitle: The Cultural Contradictions of a New Elite. Al-Gharbi documents that what we all just lived through was bad, but he insists we shouldn’t blame the Left for the actions of a large set of self-serving bureaucrats.  

Who is Woke? 

As a work of cultural taxonomy, al-Gharbi’s book is impressive. The center of his argument is that Wokeness was a handy bit of cultural capital (“demonstrating oneself as interesting, cool, sophisticated, charismatic, charming and so on”) for “symbolic capitalists,” who are: 

professionals who traffic in symbols and rhetoric, images and narratives, data and analysis, ideas and abstraction (as opposed to workers engaged in manual forms of labor tied to physical goods and services). For instance, people who work in fields like education, science, tech, finance, media[,] law, consulting, administration, and public policy are overwhelmingly symbolic capitalists. If you’re reading this book [or this book review], there’s a strong chance you’re a symbolic capitalist. I am, myself, a symbolic capitalist. 

We have always had symbolic capitalists. Think of Michael Novak’s description of Democratic Capitalism dividing power between political, economic, and moral-cultural realms. Al-Gharbi’s “symbolic capitalists” are equivalent to Novak’s leaders in the moral-cultural order. 

Symbolic capitalists are elites in a constant struggle for power and prestige with elites in the political and economic realms. They know with absolute certainty that they, unlike everyone else, could wield wealth and power without being corrupted by it. The weapon of the symbolic capitalists is words, and thus their primary base is industries whose primary traffic is in words, most obviously education and journalism. Periodically, those industries are captured by a subset of the Left, which al-Gharbi notes is likely to “skew young, white, highly educated, and urban-dwelling and to hail from relatively advantaged backgrounds.” 

We Have Never Been Woke is an extended examination of “how liberals exploit social justice advocacy to make themselves feel good.” 

The most recent wave is the fourth Great Awokening, following similar phenomena in the mid-1930s, the late 1960s, and the early 1990s. The similarities of these movements indicate their source. (It isn’t Trump.) Symbolic capitalists need patronage to provide their incomes. As the number of symbolic capitalists rises, the need for greater levels of patronage inexorably increases. Eventually, a crisis hits in which the possibilities for patronage are no longer sufficient to support the symbolic capitalist class. That crisis generates the Woke movement; symbolic capitalists wield their weapon of words to demand that society increase its support for symbolic capitalists. It is a fight for the survival of the ability to remain a symbolic capitalist and avoid the fate of having to find another occupation. 

It should come as no surprise that the Woke are pursuing their own self-interest. It perfectly explains why the primary practical changes demanded by the Woke are more jobs in the DEI Industrial Complex. But, as al-Gharbi notes, material interests are not the only motivation. As many studies have shown, symbolic capitalists have particularly high levels of depression and anxiety and suffer from imposter syndrome. As a result, symbolic capitalists are also “seeking ideal interests, like convincing themselves and others that they are good people who deserve what they have (while their opponents are bad people who deserve to have bad things happen to them).” 

The way self-interest shapes the agenda of symbolic capitalists is perfectly illustrated in the example al-Gharbi uses to open the book. After Trump was elected in 2016, many students at Columbia University were so upset that they wanted time off from their academic studies. Their trauma arose from the idea that under Trump, the poor and downtrodden would be crushed by the elites. But, as al-Gharbi points out, Columbia students are the elite. Moreover, while the students needed time off to manage their pain, there was no similar demand for time off for all the people who do the physical work at the university, the very people whom the Columbia elite said were their main concern. Similarly, when COVID-19 hit, the symbolic capitalists demanded that people should be forced to work at home, while increasing their use of Amazon, DoorDash, and other services provided by relatively poor members of society who cannot work from home and still earn an income. 

The Current Wokeness Craze 

This is clearly a strange state of affairs. How did our recent bout of Wokeness arise? In the first two decades of the 21st century, the number of people with a bachelor’s degree increased by 22 million. But the number of jobs requiring a college education only increased by 10 million. The recession arising from the financial crisis of 2008 was the breaking point. Suddenly, there was also a surge in the number of people seeking jobs in law, government, journalism, and academia, while the number of jobs in all those areas was nowhere near high enough to meet the new supply of workers. People who wanted jobs in the symbolic capitalist realm were incurring large amounts of debt with lower prospects for lucrative employment. The opening salvo of the modern Woke Movement was Occupy Wall Street, five years before Trump was elected. Recall that the complaint was about “the top one percent” of wealth, thus conveniently lumping together someone who aspired to be at the 95th percentile and someone at the 5th percentile as being equally disadvantaged. 

The rhetorical focus, though, quickly moved away from talking about income directly. Instead, the symbolic capitalists of this era “ended up settling on culture and institutions of cultural production as the most important fronts in the struggle. That is, symbolic capitalists identified themselves, their institutions, and outputs — not the workers, not the business owners — as central agents in creating a better world.” It is on the metastasizing of this aspect of the Woke that al-Gharbi unleashes his most scathing critique. 

The most potent rhetorical device in the symbolic capitalists’ quiver has been defending the victims of societal oppression. Being a victim seems undesirable, yet symbolic capitalists have been the most eager to identify themselves as victims. The goal is to acquire what al-Gharbi defines as “totemic capital”: “the epistemic and moral authority afforded to an individual on the basis of bearing one or more of these totems — that is, on the basis of claimed or perceived membership in a historically marginalized or disadvantaged group.” 

The difference between reality and the rhetoric of the symbolic capitalists is nowhere more obvious than in admissions to elite colleges, the most obvious gatekeepers to becoming one of society’s elites. The rhetoric from elite colleges is that they are seeking to help the disadvantaged. The reality? 

A recent study analyzing college admissions essays found that students from families with household incomes of over $100,000 per year were significantly more likely to tell stories about overcoming challenges related to physical disability, mental health, or discrimination and harassment on the basis of their race, gender, or sexuality than students from lower-income backgrounds. That is, the people most likely to tell dramatic stories of overcoming totemic adversity — and the people best positioned to profit from these stories — are people who are well-off. Rather than helping give needy people a leg up, a preference for tales of striving in the face of adversity tends to stack the deck in favor of elites. While claiming the existence of massive discrimination against assorted groups is endemic in society, symbolic capitalists are the most likely to claim that being a member of such groups is central to their identity, and the most likely to reap the rewards from programs designed to mitigate the harm caused by their status. 

Notice, however, that in defining their own flourishing within the “system” as a means of increasing their capacity to help the desperate and vulnerable, symbolic capitalists provided themselves with a powerful justification for climbing as high up the ladder as they could and accumulating more and more into their own hands: the more resources they controlled, and the more institutional clout they wielded, the more they would be theoretically able to accomplish on behalf of the needy and vulnerable (and the less capital would be in the hands of the “bad” elites). 

“Doing well” was redefined as a means of “doing good.”

Whither the Left? 

The most common explanation of Trump’s reelection is that Americans were revolting against the power and excesses of the symbolic capitalists. Al-Gharbi’s book thus comes across as a post-mortem of a movement that failed. But al-Gharbi wants to rescue Leftism from the rubble. We were never actually Woke, he asserts. What everyone perceived as Leftism run amok was really just a bunch of elite white liberals trying to amass power in cushy jobs where they can wield words and accusations to gain even more wealth and influence. Al-Gharbi ends with a clarion call to the Left to remember the disadvantaged in society. He would clearly prefer a world in which good, old-fashioned socialists pushed the hypocritical Woke movement out of political discourse. 

I wish I shared his optimism that the Left can be so easily divided. From where I sit, the Trump reelection has merely hardened the rhetoric of the Left’s symbolic capitalists. They may have been on the losing side of a national election and they may have lost ground in the battleground of corporate DEI offices, but their stranglehold on their fortresses in academia and other such places shows no sign of loosening. Moreover, it isn’t at all clear that the Democratic Party is now less likely to embrace exactly the sort of rhetoric al-Gharbi skewers in this book. While We Have Never Been Woke is framed as examining a movement from the recent past, it may sadly also be an excellent guidebook to understanding the near future. 

The recent passage of the Senate’s GENIUS Act and House’s upcoming “Crypto Week” mark a seismic shift in the financial world. The bill, which passed by a 68–30 vote, establishes a federal regulatory framework for stablecoins, including reserve requirements, issuer disclosures, and consumer protections. This legislation lays the groundwork for the US financial system to break free from the monopoly that banks have long had on money, creating room for innovation and competition in financial services. 

Central to this transition is the adoption of stablecoins, cryptocurrencies designed to maintain a stable value by pegging them to a reserve asset. Stablecoins offer a stable medium of exchange and a store of value while enabling smoother digital transactions and wider blockchain adoption. 

But why will Bitcoiners, who have long championed a decentralized, non-sovereign form of money, benefit from stablecoin legislation? After all, stablecoins are issued by private companies and are pegged to a government-issued fiat currency.  

The rise of stablecoins does not diminish the value or importance of Bitcoin or other cryptocurrencies. In fact, the two complement each other. 

Regulatory clarity in this space allows crypto entrepreneurs to price risk, threatens the monopoly banks have on money, and creates additional demand for dollars.  

To many crypto entrepreneurs, any legislation is better than no legislation. The crypto world is currently suffering from a type of regulatory uncertainty paralysis. This was a central focus of May’s Bitcoin Conference, the world’s largest Bitcoin meeting, which featured speeches from JD Vance, Michael Saylor, and Donald Trump Jr. Many crypto leaders supported the passage of crypto regulations to set the groundwork for more formal rules of the road in their industry.  

Codifying crypto regulations, to which the Senate’s GENIUS Act and House’s STABLE Act are central, allows entrepreneurs to confidently price risk in the crypto industry. The legislation can always be modified in the future, but having some clear regulatory structure encourages entrepreneurs to confidently make investments in this explosive industry.  

As of now, banks effectively decide who gets access to capital and on what terms through their dominant control of checking accounts, savings accounts, and loans. The rise of stablecoins, however, offers a way out of this centralized system. Stablecoins enable individuals and businesses to bypass traditional banking by facilitating direct, peer-to-peer transactions on decentralized blockchain networks, eliminating banking intermediaries.  

With their price stability pegged to an asset, global accessibility (anyone with an internet connection can access them), and integration with smart contracts on the blockchain, stablecoins provide a cost-effective and efficient alternative to traditional financial systems. 

Adoption of stablecoins diminishes banks’ exclusive ability to control the money supply. As people and businesses use stablecoins, they are no longer contributing to the banks’ bottom line in the form of fees, loans, or deposits. Stablecoins can replace financial instruments like checking accounts, which is the most profitable part of a bank’s balance sheet. By creating a more efficient and transparent way to handle transactions, stablecoins lower the overall costs of financial services, threatening to upend the stranglehold banks have on money.  

As more people adopt stablecoins globally, the demand for US dollars and treasuries will rise. The magnitude of this increase in demand is unknown; however, more demand, on net, lowers bond yields and makes it easier to add to the US debt. If Bitcoiners’ belief that the government has little self-control over fiscal policy holds true, they will benefit from the rise of stablecoins. The more demand there is for US dollars, the more the government will be encouraged to print and borrow to meet that demand. This could lead to inflationary pressures, which would, in turn, increase the value of cryptocurrencies, particularly Bitcoin, as a hedge against inflation. 

The broad acceptance of stablecoins paves the way for more regulatory clarity within the broader crypto space. With clear rules for stablecoin issuance and use, businesses and consumers will have greater confidence in using stablecoins for everyday transactions. For Bitcoiners, regulatory clarity around stablecoin will help ensure that the entire crypto ecosystem has a fair shot at competing with traditional finance. 

The future of crypto is evolving, and stablecoins are an important part of that evolution. 

“Can you, ChatGPT, live without fossil fuels?” 

“Great question — and the honest answer is no.” 

AI is expanding rapidly — from casual consumers using ChatGPT or Grok “because it’s fun” to businesses leveraging its power to save Israeli bee populations or combat American sex traffickers. It’s hard to even wrap your head around the amount of energy required to satiate the curiosity of 5 billion people. Let’s use Business Energy UK’s explanation of the mechanics of AI energy usage: “Every time you prompt Midjourney or ChatGPT to generate an image, an explanation or an email, the host company’s servers run thousands of calculations to deliver the goods. This process uses vast amounts of energy. To keep the servers from overheating, water systems are often used to absorb the heat and carry it off to cooling towers to evaporate.”

One ChatGPT-generated email uses enough energy to power 14 LED bulbs for an hour — and enough water to fill a bottle, just to cool the servers — according to a recent study by The Washington Post and the University of California. Seem pedestrian? Consider this analysis, again from Business Energy: ChatGPT uses four times the energy needed to put on and televise the Super Bowl every week. In a month: enough to charge more than a third of a million cars. In a year: more than the energy consumption of 117 countries. Again — that’s just ChatGPT.

The scope of AI’s energy demand has significant implications for environmentalists’ dreams of hitting net-zero, especially when you consider the factors at play. First, the rapidly expanding growth of AI usage in both the private and public sectors, evidenced by all the usage data you just read about. Second, the increasing importance of AI dominance in our national security debates, requiring further innovation and energy usage, a trend that the Trump administration is laudably embracing. Thirdly, neither of those trends shows signs of reversing anytime soon.

Take those three issues, and you start to see why the madness of net-zero is being rejected so strongly. There are, quite simply, unprecedented energy questions being asked of the world. And it turns out that “what if we made less energy” isn’t a serious answer. Or an answer at all. 

The rise of AI, and its corresponding mammoth energy demands, highlights a truth that only becomes more obvious by the day: the net-zero coalition really never had workable solutions to the end of fossil fuels. There are many reasons for this, including that many of their demands were foisted by activists on companies that actually know how to manage and create energy (for a perfect example, see the entire saga of ExxonMobil vs. nuisance corporate activists incensed by the company’s audacity to do business in oil and gas). 

Demands that were half-heartedly capitulated to (as was the case for many net-zero commitments) can be easily discarded — BlackRock’s exit from the Net Zero Asset Managers (NZAM) initiatives is no great mystery unless you believe that most American companies seriously want less energy at their disposal. They don’t. Neither do most Americans. At most, the country is split evenly on whether energy reduction policies help the economy, and a majority aren’t on board with a fossil fuel phaseout. Why should they be, especially as AI continues to shape the world’s industries? All one has to do is look around to see that AI, barring some true cataclysmic setback, is here to stay, and its energy demands aren’t going anywhere. 

American leadership on AI is a crucial priority, in ordinary business and the defense industry alike. Building a pathway to that leadership relies on rejecting much of the overregulation dogma that’s come out of Europe. Perhaps it’s no accident that it involves rejecting much of Europe’s anti-energy dogma, too. These things go hand-in-hand. As former national security advisor Klon Kitchen notes, “Washington has been hesitant to challenge European regulatory overreach in the tech sector. That must change. The AI era is not one in which the US can afford to be reactive.”  

He’s right — and the implications of this regarding how we view energy production has become clear. This isn’t just about ChatGPT loading correctly tomorrow morning — it’s about ensuring that the free world is at the forefront of one of the most dramatic reorderings of industry in the history of our species. AI’s transformative power rests upon several large pillars, one of which is fossil fuels. Until we build a better pillar, we’re insane to consider kicking away the one that’s holding up the house right now.

AIER’s Business Conditions Monthly indicators for May 2025 point to tentative stabilization in the US economy, though underlying signals remain mixed. The Leading Indicator climbed 25 points to 63, reversing two months of declines and suggesting a modest improvement in forward-looking conditions. While still below its early-2024 highs, this rebound offers a potential early sign of firming momentum heading into the second half of the year. The stabilization may have been aided by the temporary suspension of the so-called reciprocal tariffs introduced on April 2, which had weighed on business sentiment and input costs.

The Roughly Coincident Indicator remained unchanged at 50 for the second consecutive month. This flat reading reflects a lack of clear direction in real-time economic measures, with neither widespread contraction nor convincing strength evident across the data. Meanwhile, the Lagging Indicator fell 33 points to 42, giving back all of April’s gains and reinforcing the notion that trailing metrics are beginning to match to the broader slowdown. As usual, such delayed movement in backward-looking data is consistent with late-cycle dynamics and underscores the need for caution despite the recent uptick in leading trends.

LEADING INDICATOR (63)

The Leading Indicator jumped sharply to 63 in May, driven by broad-based improvements across forward-looking indicators. Nine of the twelve components registered gains, marking a decisive shift from the contractionary readings seen in recent months.

Stock prices led the way, with the Conference Board’s 500 Common Stocks Index climbing 8.2 percent, while debit balances in margin accounts surged 8.3 percent — both reflecting renewed investor risk appetite in the wake of the “Liberation Day” market crash. Initial jobless claims fell 2.9 percent, and the University of Michigan’s Consumer Expectations Index rose 1.3 percent, pointing to improved labor conditions and household sentiment. Manufacturers’ new orders for nondefense capital goods excluding aircraft grew by 1.4 percent, and new orders for consumer goods ticked up 0.2 percent. Average weekly hours in manufacturing were unchanged, signaling a pause in deterioration. Among the declining components of the index, new housing starts dropped 9.8 percent, retail sales declined 0.9 percent, and heavy truck sales fell 1.5 percent — indicating pockets of weakness in consumer and industrial demand. The inventory-to-sales ratio rose slightly by 0.7 percent, and the yield curve remained inverted, with the 1-year to 10-year Treasury spread narrowing further by 5.1 percent. Despite these headwinds, the improvement across most leading indicators suggests a potential turning point in forward economic momentum.

ROUGHLY COINCIDENT INDICATOR (50)

The Roughly Coincident Indicator held steady at 50 in May 2025, extending its streak of neutral readings and signaling an economy still searching for directional momentum. As in prior months, the underlying components remained mixed, with three indicators rising and three declining.

Conference Board Consumer Confidence Present Situation rose a strong 3.4 percent, suggesting households are feeling somewhat more secure about current conditions. Manufacturing and trade sales edged up 0.2 percent, and nonfarm payrolls posted a modest 0.1 percent gain — both hinting at continued, if modest, economic activity. Offsetting these improvements, personal income less transfer payments slipped 0.1 percent, while industrial production contracted by 0.2 percent. The labor force participation rate also moved lower, falling 0.3 percent, a sign that labor supply may be weakening slightly. Overall, the data continue to reflect a stalled expansion: one with enough strength to prevent decline but insufficient momentum to signal a sustained upswing.

LAGGING INDICATOR (42)

The Lagging Indicator fell to 42 in May, down sharply from 75 in April, as four of the six underlying indicators registered declines — marking a clear reversal from last month’s strength.

The most significant shift came from the average duration of unemployment, which dropped 6.0 percent — typically a positive sign, though sharp changes in this metric can also reflect volatility in labor force dynamics. Commercial paper yields declined 0.5 percent, and nonresidential private construction spending slipped 0.4 percent, indicating some tightening in credit conditions and a modest pullback in capital outlays. CPI excluding food and energy was flat year-over-year, offering no inflation surprise but also no added disinflationary momentum. Manufacturing and trade inventories remained unchanged, and commercial and industrial loans rose a modest 0.6 percent. On balance, the lagging data point to emerging soft spots in credit and investment, consistent with a maturing economic slowdown.

The recent trajectory of AIER’s Business Conditions indicators reveals a landscape marked by fragility, intermittent relief, and deepening divergences beneath the surface. After a brief surge in optimism in late 2024 — driven by November’s election results and the anticipation of business-friendly policy reversals — the Leading and Coincident Indicators both spiked. But the sharp collapse of the Lagging Indicator in December underscored that foundational pressures in credit, cost structures, and long-duration unemployment were already asserting themselves.

Following President Trump’s inauguration in January, the Leading Indicator began a steady slide, falling from 54 in both January and February to a low of 38 in April. That deterioration reflected rising anxiety around the administration’s aggressive trade and industrial policies, particularly the proposed implementation of immense tariffs beginning in early April. Coincident indicators flattened out at a neutral 50 in March and April, while the Lagging Index — more sensitive to trailing effects like credit usage and commercial construction — unexpectedly rebounded, suggesting the delayed momentum of late-cycle activity.

May, however, has brought a sharp counterpoint. The Leading Indicator jumping to 63 marks the strongest monthly gain since mid-2023, a rebound coinciding with the temporary suspension of the tariff platform on May 3. This offered a reprieve for investor sentiment and forward-looking components such as stock prices, jobless claims, and new orders. Yet that burst of optimism remains uneven: the Roughly Coincident Indicator held flat at 50 for the third straight month, suggesting current activity remains stagnant, while the Lagging Index slumped again to 42 — its third sharp swing in as many months.

Taken together, the data suggest the economy may be attempting to bottom out and reestablish momentum, but any recovery remains fragile and conditional. May’s leading improvement may prove temporary unless supported by firmer labor participation, industrial output, and consistent policy clarity. The last six months reflect an environment in flux — where volatility, rather than direction, remains the dominant economic feature.

DISCUSSION, June – July 2025

June’s inflation data painted a nuanced picture of crosscurrents in pricing pressures, with core CPI coming in soft but signaling the onset of more widespread tariff pass-through. While core CPI rose just 0.23 percent, annualized metrics nudged higher and diffusion indexes showed more categories experiencing price increases, especially among tariffed goods like appliances, sporting equipment, and furniture. Used and new vehicles, hotels, and discretionary services like air travel posted notable price declines, reflecting weakening demand as consumers grow more cautious amid softening labor markets and shakier income expectations. Services inflation was mixed, with medical prices rising and shelter costs remaining stable. Though headline CPI rose to 2.7 percent year-over-year largely due to base effects, tariff-related inflation contributed visibly for the first time, particularly in core goods categories. However, the broader inflation environment remains notably more subdued than during the pandemic-era spike, with many tariff-affected goods still priced well below year-ago levels thanks in part to China’s export deflation.

Producer price data for June 2025 reinforced this mixed narrative. Headline and core PPI were both flat in June, with services costs declining, driven by steep drops in accommodation and airline services. Goods inflation excluding food and energy rose 0.3 percent, reflecting restrained but growing pass-through from trade policy. Still, wholesale margins were stable, suggesting manufacturers and retailers are treading cautiously in raising prices, likely constrained by soft demand and high inventories. With June’s core PCE expected (July 26th) to come in at 0.3 to 0.34 percent — elevated, but not alarmingly so — markets are bracing for inflation to stay sticky through summer. For now, the Federal Reserve appears set to hold rates steady at its upcoming July (29th – 30th) meeting, citing uncertainty from fluctuating trade policy and inconsistent inflation signals. While President Trump is likely to increase pressure on the Fed to cut, officials appear inclined to wait until year-end — likely December — before delivering any easing, particularly given that current inflation metrics are not materially more dovish than when the Fed last cut in 2024.

Recent business activity data from ISM surveys showed signs of modest resilience in services and policy-driven noise in manufacturing, underscoring the economy’s sensitivity to shifting trade conditions. The ISM Services PMI edged back into expansion at 50.8, buoyed by a rebound in new orders and business activity as firms raced to front-run tariff implementation delays. However, customer hesitation and elevated input costs weighed on employment, which slipped back into contraction at 47.2, echoing broader hiring softness across the economy. The prices-paid index remained high at 67.5, underscoring persistent cost pressures in service industries, with several respondents reporting suppliers “testing” price increases amid tariff uncertainty. On the manufacturing side, the ISM headline index rose to 49.0 due to stronger production and inventory management, but the fundamentals — new orders, employment, and backlog — continued to weaken. Firms appear to be stockpiling inputs in reaction to evolving tariff policy rather than true demand growth. Employment fell further, while the prices-paid subindex accelerated to 69.7, pointing to rising input costs even as demand softens.

Regional data provided an early look into July and hinted at further inflationary tension building beneath the surface. The Philadelphia Fed’s manufacturing survey, which often leads national ISM trends, surged unexpectedly, with all major categories — new orders, shipments, and employment — snapping back into expansion. Most strikingly, forward-looking price expectations soared, with the index for prices paid over the next six months hitting 75.3, the highest since early 2022, indicating that firms widely expect inflationary pressure to intensify through year-end. A similar tone came from the Empire State survey, reinforcing the idea that July’s ISM Manufacturing PMI could push above the neutral 50 level. Together, these reports signal that even as headline inflation metrics remain contained for now, underlying price pressures are re-emerging, especially in goods. For the Fed, this complicates the picture: easing price momentum in services offers some relief, but tariff-fueled cost acceleration and renewed pricing pressure in manufacturing suggest a wait-and-see approach remains prudent. Policymakers are therefore likely to stay on hold in July, with a cautious eye toward wage softness, tariff pass-through, and the risk of reacceleration in the back half of 2025.

The May-to-June labor market narrative reflects a transition from surface-level resilience to underlying softening, particularly in private services. While June’s unemployment rate declined unexpectedly to 4.12 percent, this was driven by labor force exits, not a genuine strengthening in employment. Payroll growth beat expectations at 147,000, but that figure was inflated by the BLS’s birth-death model, which likely overstated business formation-driven job gains. Adjusted for that, underlying job growth may be closer to 70,000 per month. Private payrolls added only 74,000, weighed down by losses in professional and business services and sharp slowdowns in education and health sectors, the latter partly due to canceled federal contracts. Meanwhile, average hourly earnings rose just 0.2 percent and the average workweek fell to 34.2 hours, resulting in a near-zero gain in aggregate labor income. The U-2 unemployment rate (layoffs) ticked down slightly, but the duration of unemployment rose to 23 weeks, and continuing claims have steadily increased, suggesting it’s becoming harder for displaced workers to find new jobs. These dynamics imply a labor market no longer a source of strength for consumption and increasingly vulnerable to policy-driven shocks.

Incoming data through mid-July reinforced the message of a fragile labor backdrop. Initial jobless claims again fell unexpectedly, but this reflected seasonal noise tied to auto retooling, not a genuine improvement. Continuing claims — a better barometer of reemployment difficulty — continued their upward creep, consistent with rising average unemployment durations and stagnating weekly earnings. Job openings in May rose to 7.77 million, largely due to a surge in leisure and hospitality, likely in anticipation of Trump administration immigration policy shifts, while other sectors showed mixed hiring trends. Quits and layoffs remained stable, but hiring slowed in sectors like healthcare and manufacturing, and the vacancies-to-unemployed ratio ticked up to just 1.1 — well below its 2022 peak. The ISM’s manufacturing employment index fell again in June, consistent with regional Fed surveys showing weaker headcount and reduced hours. Together, these data point to a labor market that is loosening gradually beneath the surface, supporting the Fed’s patient stance. While headline payrolls remain positive, Fed officials are likely to focus on stagnant income growth, shrinking workweeks, and deteriorating reemployment prospects — factors that argue for caution rather than urgency in monetary policy adjustments.

Consumer sentiment improved modestly in early July, buoyed by rising stock prices and improved personal balance sheets, though the gains were uneven and politically polarized. The University of Michigan’s preliminary reading showed sentiment rising to 61.8 from 60.7, with respondents more optimistic about current and future conditions, particularly around vehicle and housing purchases. Inflation expectations also eased, with one-year and long-run projections falling to 4.4 percent and 3.6 percent, respectively — though Fed officials have emphasized more subdued market-based expectations. However, sentiment among Democrats slipped, likely in response to the Trump administration’s recent wave of tariff announcements and the passage of the One Big Beautiful Bill Act, widening the partisan gap in consumer views to a striking 37-point spread. In contrast, small-business sentiment continued to soften in June, with the National Federation of Independent Business (NFIB) optimism index slipping slightly to 98.6. Business owners cited poor sales, weak hiring plans, and a reluctance to invest in inventories: interestingly, despite relatively low concern over tariffs. Taxes remained their top reported problem, though that concern is likely to abate following the passage of the Trump administration’s “One Big Beautiful Bill.”. In sum, while consumers are cautiously more upbeat thanks to asset gains and easing inflation fears, small businesses are growing more defensive, signaling divergent sentiment paths and an overall environment of heightened economic uncertainty.

June’s retail sales rose a better-than-expected 0.6 percent, marking a broad-based rebound from May’s sharp 0.9 percent decline and reflecting strength in categories like motor vehicles, building materials, and general merchandise. However, the gain is difficult to interpret cleanly, as rising prices — particularly in tariff-impacted goods — likely inflated nominal sales, blurring the line between real demand and price pass-through. Electronics and furniture sales, which are among the categories most exposed to tariffs, fell modestly, reinforcing that price-sensitive discretionary demand is faltering even as nominal totals rise. The control group, used to estimate real consumption in GDP, rose 0.5 percent, though downward revisions to prior months suggest that second-quarter real consumer spending may undershoot current forecasts. Meanwhile, sales at bars and restaurants rebounded but remained below their three-month average, aligning with consumer sentiment surveys showing improved balance-sheet optimism but weaker income-related confidence, particularly among Democrats reacting to tariff news. The divergence between modestly stronger spending and weakening small-business sentiment — combined with evidence of slowing job growth and shorter workweeks — suggests the consumer is still spending but increasingly selective, and likely vulnerable to further price shocks. This dynamic is consistent with June’s CPI report, which showed mild core inflation overall but rising prices in tariff-sensitive categories, suggesting the apparent consumption resilience may prove short-lived.

The July 2025 Beige Book depicted a modestly improving economy, with overall activity characterized as having “increased slightly” — a meaningful upgrade from the prior report’s “slight decline.” Labor markets also showed mild improvement, though hiring remained cautious amid rigid policy uncertainty. While inflation was broadly stable, all 12 districts reported tariff-related input cost pressures, with many firms either raising prices or absorbing costs through compressed margins. Notably, the report highlighted expectations for elevated cost pressures through late summer, suggesting that tariff-driven inflation risks are mounting even before the latest rounds of duties take effect. Taken together, the Beige Book reinforces the Fed’s wait-and-see posture, as officials monitor whether rising input costs spill over into faster consumer price inflation in the months ahead.

Industrial production surprised to the upside in June, rising 0.3 percent on the back of a 2.8 percent surge in utilities output, which was powered by a 3.5 percent increase in electricity generation amid seasonal demand. Manufacturing output edged up 0.1 percent, reflecting weak momentum: production of durable goods was flat, and consumer durables declined due to a sharp 4.6 percent drop in motor vehicle output, which alone shaved 14 basis points off the headline. Notably, the largest utilization increases were in petroleum and coal products (up 2.4 points to 90.7 percent) and aerospace manufacturing (up 1.2 points to 74.8 percent), likely tied to summer energy consumption and ongoing defense or aviation activity. In contrast, electrical equipment (-2.1 points to 79.0 percent) and motor vehicles (-2 points to 69.3 percent) saw the steepest declines, consistent with tariff-induced price effects and softening demand in big-ticket goods. Total capacity utilization inched up to 77.6 percent from 77.5 percent, but underlying factory momentum remains mixed. The data suggest that while headline numbers are buoyed by non-manufacturing components, the core of the USindustrial base is still grappling with uneven demand, persistent trade policy uncertainty, and selective sectoral weakness.

In the US monetary policy hemisphere, Federal Reserve officials are increasingly divided over the path of interest rates, with most citing tariffs as a key inflation risk despite soft June CPI and PPI data. While a minority view tariffs as a one-time price shock, the majority believe they could drive more persistent inflation — especially as core PCE, the Fed’s preferred measure, is tracking at a hot 0.30 percent month over month and 2.75 percent year over year. Ten of 19 FOMC members now project at least two rate cuts by year-end, but seven foresee none at all, reflecting uncertainty over how tariffs will filter through prices and demand. Despite President Trump’s public pressure and growing criticism (which now includes politicized scrutiny of a $2.5 billion Fed building renovation, while the Fed sits on massive operating losses), policymakers maintained rates at 4.25–4.50 percent at the June meeting and signaled a cautious approach ahead. Some officials, like Governors Waller and Bowman, have opened the door to a cut as early as this month, but most favor waiting to assess the durability of tariff-driven inflation. Recent data suggest pass-through effects are intensifying in goods like furnishings, apparel, and recreational equipment, with further upside risks tied to the August 1 tariff hike. Labor markets remain stable but not accelerating, giving the Fed cover to remain on hold. Until clearer evidence emerges on how deeply tariffs are embedding into prices, the central bank appears poised to stay patient — with September shaping up as the next meeting for possible action.

And on the fiscal side, in a feat that at one point seemed doubtful, Trump’s “One Big Beautiful Bill” was signed into law on July 4, marking a sweeping fiscal package that combines permanent extensions of the 2017 tax cuts with deep spending cuts and a massive increase in defense and immigration funding. Though pitched as a pro-growth plan, the bill is projected to add between $3.4 trillion and $6 trillion to the federal deficit over the next decade, depending on accounting assumptions, pushing USdebt from 100 percent to as high as 130 percent of GDP by 2034. While the White House projects a GDP boost of up to 5.2 percent from the combined effects of tax cuts, deregulation, and tariff revenues, most independent analysts warn the bill’s fiscal imbalance will likely raise long-term borrowing costs, erode investor confidence, and potentially constrain monetary policy flexibility. The Federal Reserve, already facing internal division over the inflationary impact of tariffs and eyeing hot core PCE inflation prints, now must navigate a landscape in which fiscal expansion could counteract disinflationary pressures and delay rate cuts. With June’s inflation data showing tariff pass-through and upward momentum in core services, the Fed remains in wait-and-see mode — complicating Trump’s calls for immediate rate relief. In the short term, economic growth may benefit from stimulus effects, but elevated deficits, policy uncertainty, and rate rigidity pose serious medium-term risks. Ultimately, the bill has intensified the clash between expansive fiscal policy and cautious monetary stewardship, heightening the stakes for both inflation management and future financial stability.

Last month we characterized the growth path as a balancing act on a narrow ledge. Although passage of the One Big Beautiful Bill removes some uncertainty, the recent jawboning about higher average US tariffs on global imports, extra duties on BRICS nation imports for continuing to explore dedollarization, and a 50 percent tariff on imported copper — despite the US being a decade or more away from resource independence — bring us to the same conclusion. While growth may receive a near-term lift from the bill’s stimulus effects and a modest uptick in consumer sentiment, the combination of mounting trade friction, rising input costs, and a gradually weakening labor market suggests that any expansion will be uneven and fragile. Inflation pressures remain a central concern, with tariff pass-through increasingly visible in goods categories and forward-looking manufacturing surveys pointing to renewed cost acceleration. The Federal Reserve, navigating internal division and politically charged scrutiny, is likely to maintain a cautious stance through summer, awaiting clearer evidence of either embedded inflation or labor market deterioration. Meanwhile, equity markets near all-time highs reflect optimism that may prove overstretched if inflation re-asserts or monetary easing is delayed. The resulting divergence between buoyant asset prices and tepid-to-deteriorating real-economy indicators underscores how precarious current conditions are. Barring a major positive shock, the second half of 2025 is likely to remain marked by policy-driven crosscurrents, narrow growth margins, and elevated downside risks.

LEADING INDICATORS

ROUGHLY COINCIDENT INDICATORS

LAGGING INDICATORS

CAPITAL MARKET PERFORMANCE

By any serious measure, and certainly by every economic metric, the claim that the United States has been “ripped off” or “mistreated” by its trading partners over the past several decades is incoherent. The rhetorical scaffolding upon which the Trump administration’s protectionist tariff regime rests is a fundamentally flawed understanding of international trade. It substitutes a mercantilist worldview — discredited since the eighteenth century — for evidence-based economic policy, and in so doing risks sabotaging the very system that has helped drive US prosperity, innovation, and leadership in global commerce.

The administration’s argument is built on the premise that large bilateral trade deficits — particularly with China, Mexico, Germany, and Japan — represent exploitation. In fact, a trade deficit is not a measure of being “taken advantage of;” it is a simple macroeconomic identity. It reflects the fact that the United States consistently imports more than it exports, with capital inflows from abroad financing both private investment and public debt. This inflow — recorded as a capital account surplus — signals that global investors view the US as a safe and attractive destination for capital. Far from being a symptom of decline, this pattern is a reflection of economic strength and international confidence in US institutions. Trade deficits are not inherently bad; in fact, they often correlate with periods of strong growth and low unemployment.

The administration’s use of tariffs as a blunt-force tool to “correct” these deficits reflects a fundamental misunderstanding of comparative advantage, one of the most basic principles in economics. By imposing tariffs on imports, the government reduces consumer choice, raises input costs for American firms and the cost of living for households, and invites retaliatory measures that harm US exporters. The idea that protectionism leads to economic strength has been discredited repeatedly — whether during the Smoot-Hawley debacle of the 1930s or more recent empirical studies on the costs of steel and aluminum tariffs imposed in March 2018 under Section 232.

Moreover, the assertion that past trade agreements — such as NAFTA, the WTO accession of China, or the US-Korea FTA — were one-sided giveaways is economically unserious. Those agreements were negotiated to promote mutual gains through the reduction of barriers to trade and investment. Some industries contracted, as expected in any process of specialization and reallocation. But far more jobs were created in sectors where the US holds competitive advantages: high-tech manufacturing, advanced services, and capital-intensive production. Consumers have benefited from lower prices, and American firms gained access to global supply chains that improve productivity and innovation.

It is undoubtedly emotionally comforting and politically expedient to tell out-of-work machinists, demagogues, and nativists that the only reason their jobs disappeared is because America was “ripped off” by cunning foreigners. It’s a narrative that flatters the ego and assigns blame elsewhere, suggesting that American workers were betrayed and that blue-collar workers in the US are too noble, too skilled, or too moral to compete in a crooked game. But the truth is more mundane and more painful.

While it’s true that high union wages in the American Midwest were easily undercut by equally capable workers abroad, the deeper force was the relentless advance of automation and technological change, which rendered entire job categories economically obsolete. Scapegoating trade agreements for this transformation ignores that the greatest dislocation came not from container ships, but from code and machines. And for all the wailing about dignity and livelihoods, the fact remains: American consumers, including many of those simultaneously lamenting lost factory jobs, consistently choose cheap goods over preserving high-wage, low-efficiency employment in their own communities. They vote with their wallets at Walmart, not at the ballot box — and what they’re currently voting for, consciously or not, is the dismantling of the very economic world they claim to miss.

The Trump administration also frequently complains about “unfair” trade practices, but fails to distinguish between legitimate grievances — such as intellectual property theft or forced technology transfers — and the broader reality of global competition. Instead, it lumps all trade imbalances into the same narrative of betrayal, ignoring the role of domestic policy failures. Blaming Mexico or China, for example, for deindustrialization in the US ignores the effects of automation, underinvestment in education and infrastructure, and a tax code that rewards rent-seeking over productive enterprise. Consider as well that the same government that extended hundreds of billions in loans for unproductive, ideological college degrees is now bemoaning the fact that populations an ocean away are frequently more ready and able to occupy and support massive industrial and manufacturing sectors. 

In fact, contrary to what the Trump administration claims, if there has been a shift away from free trade and toward coercive, erratic, and protectionist trade behavior, it has mostly been undertaken by the United States. Over the past three decades, the United States has steadily shifted toward unfree trade, even before Donald J. Trump took office. According to the Fraser Institute’s Economic Freedom of the World, US trade freedom peaked in the 1990s — ranking eighth globally — before entering a long-term decline. By 2000, the US had slipped to 22nd in trade freedom — and today, it has dropped even further, ranking 53rd.

Similarly, the Heritage Foundation’s Index of Economic Freedom shows a downward trend in the US trade-freedom score from the early 2000s to the present.

This gradual move toward trade restrictions has intensified sharply under Trump’s ascendancy. The implementation of Section 232 tariffs on steel and aluminum, along with escalating tariff campaigns against China, the EU, and other major partners, pushed the US into one of the most protectionist positions among its top ten trading partners. While other advanced economies have maintained or increased trade openness, America reversed course — undermining its own leadership in the rules-based trading system and fueling policy volatility. This shift not only weakened American credibility but also raised costs for domestic consumers and firms, all at a time when the global trend favored liberalization rather than retreat.

Perhaps most damaging is the abandonment of multilateral frameworks in favor of a transactional, zero-sum approach to trade. The imposition of tariffs on allies and strategic partners, much under the absurd guise of “national security,” has undermined American credibility in institutions like the WTO and alienated countries that share America’s long-term interests in a rules-based global system. Rather than using these institutions to enforce rules and settle disputes, the administration has opted for ad-hoc coercion, making trade policy unpredictable and undermining business confidence.

The notion that America’s trading partners have been “laughing at us” or “getting rich at our expense” is empty demagoguery, but not only that. It is economically backward as well. Trade is not a zero-sum game. When American consumers buy foreign goods, they do so voluntarily, because those goods offer better value. When foreign nations sell to the US, they often reinvest the proceeds in US assets — Treasury securities, real estate, and factories. That flow of goods and capital has enriched the US economy, not impoverished it. 

(The idea that trade deficits with foreign nations are to blame for the $37 trillion tower of US government debt is a textbook abdication of responsibility. That debt wasn’t imposed on us — it was voluntarily offered, eagerly purchased, and politically normalized, with the proceeds spent on the two “fares”: welfare and warfare. From allies to adversaries, the world simply bought what the US government was all too willing to issue.)

The tariff-centric trade doctrine currently dominating the policy landscape is built on interest group pandering and economic myth. The idea that America has been systematically exploited by its trading partners over the past 30 years is not supported by data, logic, or the historical record. What has actually happened is that US policy has until recently embraced open markets, competition, and global integration. Doing so resulted in enormous gains in productivity, innovation, and consumer welfare as a result. 

To reverse this trajectory in the name of imagined victimhood is to embrace decline, not renewal. A nation with a $21 trillion consumer economy, in the top ten of proven oil reserves worldwide, home to seven of the top ten universities on the planet, and unmatched global reach claiming to be a victim of smaller, mostly economically undifferentiated nations — many of them developing countries — is not so much unconvincing as it is pathetic.

Before Amazon.com existed, you had to buy books — and any number of other things — at physical stores. If you wanted a new washer or refrigerator, you had to go to a Sears store.

Now imagine if, even worse, there were different stores for different manufacturers of refrigerators: one store for Whirlpool, another for LG, yet another for Bosch, and so on.

That’s just how most of us are forced to buy cars in the United States. Twenty-eight states, including Georgia, prohibit car manufacturers from selling directly to consumers with only narrow exceptions.

Georgia’s Motor Vehicle Franchise Practices Act (MVFPA) generally prohibits manufacturers from owning or operating car dealerships, and a few years ago legislators carved out a special exception for Tesla. New car companies, like Lucid Motors, that want to sell directly to consumers? They’re out of luck.

These protectionist policies are a relic of a bygone era, and they hurt not just carmakers like Lucid, but every consumer who wants more choice, better prices, and a modern buying experience. That’s why we at AIER filed an amicus curiae brief in support of Lucid’s legal challenge before the Georgia Supreme Court.

We took this step because Georgia’s law is an economically harmful, constitutionally suspect violation of freedom of contract, equal protection, and the principle of legal uniformity.

Georgia’s MVFPA is a straightforward restriction on competition in the automobile retail industry. It protects dealerships from facing competition in the form of direct-to-consumer sales. As such, the law harms not only manufacturers, but consumers as well.

None of the traditional economic justifications for enacting state regulations in the automotive context apply to direct-to-consumer (“DTC”) business models. The primary justification advanced in support of such laws, like the MVFPA, is that, without them, manufacturers will abuse and undercut auto dealerships. In particular, the expressed concern is that manufacturers will be able to use the services dealers provide without paying for them and then sell cars directly to consumers, cutting out the independent dealers altogether. While this argument might provide some justification for banning direct auto sales for manufacturers who also have franchised dealerships, it has no application to manufacturers (like Lucid) whose entire business model is premised on DTC sales. In this context, these laws serve only to stifle competition, drive up the cost of cars, and disadvantage consumers.

In fact, the argument doesn’t really provide a justification for banning direct auto sales even for existing manufacturers. After all, manufacturers aren’t going to want to undercut their own dealerships. If they did that, their dealerships would quickly switch to selling other brands. Manufacturers have to compete for dealerships too. At most, if the law allowed, manufacturers would be able to use the option of direct sales to make sure that their dealerships treat customers fairly and set prices competitively.

And again, the law makes no sense whatsoever when applied to manufacturers that do not have dealerships.

To understand better the effects of DTC sales bans on consumers, we investigated the empirical evidence on state restrictive franchise regulations, which limit manufacturers from ending contractual relationships with dealerships and/or establish by law exclusive dealership territories. (Because all states banned DTC sales until very recently, there is no evidence yet specifically on how legalizing DTC sales affects consumers, but the effects should be similar to other pro-dealership regulations.)

We found no credible, independent studies that found consumer benefits of limits on dealer competition. In fact, several credible studies have found that these regulations raise prices and reduce sales, just what you would expect from an uncompetitive market.

The losses are big. The most comprehensive study of anticompetitive franchise regulations found that these laws transferred more than $30 billion annually nationwide from consumers to dealers. They also created about $2 billion of deadweight loss to the American economy — value that has been completely destroyed.

Dealerships can provide value; that’s why the auto manufacturers adopted the franchise model in the first place. Manufacturers couldn’t feasibly build nationwide retail networks, so they outsourced sales to local dealerships, who bore the cost and risk of showcasing cars, arranging test drives, and offering repairs.

That model made sense — in 1925. But in case the Georgia legislature hasn’t noticed, it’s 2025. We want to buy stuff online!

When was the last time you went to a car dealer’s lot, and they had the exact model you wanted with all the features you wanted and none of the ones you didn’t? Never, right?

Well, if online sales were legal, you could go online and customize your car just the way you want it. In fact, GM pioneered its economy Celta as a build-to-order model in 2008 — in Brazil, where this wasn’t illegal. The Celta quickly became one of the top-selling cars in Brazil.

If these laws are so harmful, why do they exist? The short answer is the political power of dealerships. Auto dealerships are highly organized, deeply entrenched, and politically influential in every state. They fund campaigns, lobby legislators, and fiercely protect their privileged position. They have a strong incentive to lobby because these laws make a vital difference to their profits, and politicians have an incentive to pay attention, because there are car dealerships in every district. Manufacturers, by contrast, are fewer in number and geographically concentrated with global revenues, so they have less incentive to lobby state legislatures. Consumers largely aren’t even aware of how these laws affect them, and even if they were aware, have little incentive to get politically active about something that affects them only once in a while.

The Georgia state legislature isn’t likely to solve this problem on its own, given the political power of dealerships. That’s why it’s important for the courts to step in to rule against a law that limits competition, harms consumers, and provides a narrow exemption for one single company.

In July 2024, after a shocking massacre at a children’s dance class in Southport, UK, speculation about the identity of the killer sparked widespread unrest across the country. Riots erupted, fueled by public anger over immigration policy. Amid the chaos, Lucy Connolly, a mother from Northampton, posted a tweet calling for “mass deportation” while expressing her indifference to the riots.   

She is now serving a 31-month prison sentence for that tweet. Across Europe, this increasingly appears to be the new normal: expressing an opinion the state deems immoral or “hateful” has become a punishable offense. 

European citizens have been losing their freedoms, bit by bit, as integration advances. The Lisbon Treaty, signed in 2007 and in force since 2009, gave legal personality to the European Union, allowing it to act as a State in international treaties, increasing its global weight and reducing the power of member countries, centralizing important decisions.

One acquired competence was the harmonization of certain crimes across all member states, regardless of their national legislation. Article 83 of the Treaty on the Functioning of the European Union (TFEU) provides that serious crimes such as terrorism, human trafficking, and sexual exploitation of minors be treated in a uniform manner.

The problem is not in the nature of these crimes but in the power given to a central entity. It was predictable that the scope could be extended to increasingly subjective matters.

In December 2021, the European Commission proposed including “hate speech and hate crimes” in the formal extension. Brussels justified the move by citing the rise of politicians and activists it classifies as far-right in several member states—figures whose rhetoric centers on immigration and criticism of multiculturalism, which the Commission deemed alarming.

The European Parliament explicitly referred to the so-called “Great Replacement” theory as a conspiratorial narrative that was being normalized in the political discourse of these political actors, demanding a coordinated response.

Among those targeted are parties from the new European right, vocal on matters of uncontrolled immigration, and many of which have grown as part of national governments or at least with significant parliamentary representation.

By attacking democratically elected parties, Brussels enters the domain of ideological control over its member states, imposing a singular ideology. In this framework, artificial intelligence emerges for European institutions as a tool at the service of censorship.

The AI Act, under discussion in Brussels, intends to regulate the use of AI, imposing automatic filters to identify and eliminate speech considered offensive or hateful. Cathy O’Neil, author of Weapons of Math Destruction, warns that algorithms are not neutral; they reflect the values of those who program them. Subjectivity is inevitable.

Also, Evangelia Psychogiopoulou, in the German Law Journal, warns about the risks of a common definition of hate speech and the dependence on digital platforms for moderation, which can lead to inconsistent interpretations, abuses, and undue removals, affecting freedom of expression.

It is not up to governmental institutions to define what can be said. Freedom of expression is essential so that the success or failure of ideas is measured at the polls. Brussels tries to criminalize political opposition, curtailing it by all means: despite the sharp growth of the new European right, there is a deliberate quarantine imposed against the Patriots for Europe group, which includes most of these parties, and despite representing already the third-largest European group, they are excluded from posts and influence.

Although the extension of Article 83 has not yet been approved, due to the requirement of unanimity and opposition from some member states, the European Union has circumvented the issue with instruments that do not require unanimity, such as the Digital Services Act and regulations against “disinformation,” which pressure platforms, companies, and citizens.

In Germany, a mega-operation in June 2025 targeted 140 people for online comments, with home searches and arrests, reflecting a fourfold increase in hate speech prosecutions since 2021.

In the United Kingdom, despite being outside the European Union, Keir Starmer follows the same regulatory logic faithfully. Since becoming Prime Minister, he has intensified online repression: over 3,500 arrests in six months for alleged incitement to hatred or offensive content on social networks, with home searches triggered by the expression of opinions on immigration, national identity, or criticism of the government.

In summer 2024, the lack of official information about the identity of a killer who murdered three children in Southport led to thousands of clashes in streets and social media. The result: 1,280 arrests, with the government creating more than 600 prison places to handle the volume, many related only to online posts.

In Spain, Isabel Peralta was sentenced to one year in prison for words at a demonstration; in Portugal, Mário Machado was the first convicted for a tweet. The controversial past of nationalist movements softens the social impact of these convictions, but Europeans realize they could be next. What was once called censorship is now normalized as a “greater good” for inclusion.

In the United States, progressive sectors have considered the European experience as a model to combat disinformation and hate speech online, especially after events like the 2021 Capitol riot. Organizations like the Center for Democracy & Technology (CDT) Europe have actively participated in the European Commission’s public consultation on the “European Democracy Shield,” highlighting the importance of balancing freedom of expression with the need to fight “disinformation.”

Although the First Amendment of the US Constitution offers broader protection of free speech, the growing influence of American tech companies in Europe, such as Google, Meta, and TikTok, and the implementation of regulations like the EU’s Digital Services Act (DSA), have raised concerns about the extraterritorial application of these laws.

Therefore, it is crucial that Americans remain alert to global digital regulation trends and actively defend freedom of expression, avoiding the adoption of European models, as freedom is lost gradually, slice by slice, through centralized decisions.

In 2023, Americans used Buy Now, Pay Later (BNPL) services to finance over $100 billion in US retail transactions, up nearly fivefold since 2020. This surge has alarmed personal finance professionals and media commentators. Their concerns fall into two related categories. First, overall levels of consumer debt are rising. Second, the way these loans are designed and advertised — buy now, pay later — encourages consumers to take on more debt, increasing the risk of overextension. 

“Buy now, pay later programs are a scam,” Douglas Boneparth, a certified financial planner and founder of Bone Fide Wealth, said on LinkedIn. “They encourage overspending, destroy credit, saddle you in debt, and target consumers who are most susceptible to borrowing when they shouldn’t. Society would be better off without them.”

So far, Consumer Financial Protection Bureau rulemaking has focused on holding BNPL companies to the same dispute resolution and credit bureau reporting requirements as credit cards. But it’s easy to see how critics of payday loans might go after BNPL short-term credit as well.

Concerns about BNPL center on two main issues. First, these programs make it easy for consumers to justify impulsive or unaffordable purchases—buying things they don’t need at prices they can’t afford. Second, market observers see BNPL being utilized more frequently as a sign of broader economic stress. In this case, people living paycheck to paycheck may be using BNPL programs to afford basic goods. 

Regulators and financial professionals worry that BNPL fuels rising consumer debt, burdening the already financially struggling and pilfering from the savings accounts of hard-working individuals, does so largely unnoticed by government or markets.

Despite these concerns, BNPL is a rapidly growing alternative to traditional credit, offering consumers the ability to split purchases into smaller, manageable installments, often with zero interest if paid off in the short term. 

So how does it work?

In the checkout window online, a consumer may elect to utilize a BNPL service like Klarna or Affirm. The BNPL provider and that specific business have entered into a contractual relationship, with the lender charging a fee (typically 2 to 8 percent) to advance the full sum of the consumer’s payment to the business, taking on the responsibility of repayment itself. 

BNPL providers earn income from business fees, interest charged on longer term products, such as six or 12 month offerings, late fees, and occasionally a percentage of the total payment financed. Those business fees tend to be larger than those charged by traditional credit card companies, sometimes double. Repayments usually cannot be made with a credit card. Short-term plans, such as four installments or 30-day terms, tend to be entirely free of interest if repaid within the agreed upon window.

If this sounds familiar, good. It should.

BNPL services operate nearly identically to traditional credit cards. The only material difference is the expressed flexibility BNPL offers consumers. Where a traditional credit card offers interest-free financing of purchases over the course of a single billing cycle, BNPL offers this same service over a potentially longer period of time (two months in Klarna’s ‘pay in four’ plan). 

Consumers choose BNPL services for much the same reason they use credit cards — ease of transacting, quick access to credit and loans, and membership perks. But BNPL can offer more. The APR charged by BNPL services for longer-term repayment plans is cheaper than the average APR charged by credit cards for carrying a balance — 19.99 percent for Klarna, 24.33 percent for credit cards, saving consumers nearly five percent. BNPL also gives consumers more control over timing their purchases. A consumer who needs to make a $300 purchase immediately at the end of their credit-card billing cycle might face full repayment in just a week or two. Using BNPL instead allows them spread the payment out interest-free, like resetting the clock on their billing cycle. It’s a flexible way to manage spending without incurring additional costs.

Here’s the rub — BNPL is credit, not a paycheck advance. They aren’t debt, in the traditional sense, they’re credit. And consumers who use the service agree: 53 percent of users choose the BNPL service for convenience and 23 percent use it to avoid incurring credit card debt. Consumers in general still prefer store credit offerings, but younger shoppers are driving BNPL growth: 59 percent of Gen Z say they prefer it. 

That survey reveals a simple, reassuring fact: BNPL is viewed by consumers to be an alternative to store credit offerings. They choose between financing through banks, stores, or BNPL firms, and approach each with similar caution. Late payment data supports this: while 41 percent of adults report being charged a late fee for a BNPL purchase over the past year, this rate is roughly the same for credit card users — 37 percent.

If swiping a credit card for groceries is considered normal, choosing BNPL shouldn’t raise any eyebrows — especially when it offers clearer terms and more inclusive access. People don’t use BNPL because they’re broke, they use it because it makes sense to do so. It’s not a sign of economic distress, but of evolving consumer choice. Just as credit cards became a staple of everyday transactions despite initial skepticism, BNPL gives people more flexible and transparent ways to manage their money. For many, it provides short-term liquidity without revolving debt or hidden fees. If no one questions the middle-class shopper swiping a credit card for essentials, why rush to judge someone using BNPL for the same purpose?

Financial tools should empower, not penalize, everyday consumers. Consumers are telling us BNPL deserves a fair shot.