The cascading events of the 2008 global recession, and a bipartisan $700 billion bailout of US banks, sparked a cultural backlash known as the Tea Party movement. This grassroots affiliation then swelled in opposition to more large‑scale government intervention, most notably the Patient Protection and Affordable Care Act, better known as Obamacare.

Two years later, the 2010 midterm elections proved a turning point: Republicans, branded as Tea Party supporters, won back 63 House seats and six Senate seats, the largest shift in Congress since 1948. By 2016, then‑presidential candidate Donald Trump was praising the movement: “The tea party people are incredible people. These are people who work hard and love the country.” 

Roughly a decade later, the Republican Party no longer champions small government or a laissez‑faire economy. Once the self‑proclaimed guardians of limited government, today’s GOP embraces state control across multiple fronts: steering corporate investment, micromanaging trade, spending without restraint, and ignoring entitlement insolvency. It is no isolated drift — it is a wholesale realignment toward big‑government nationalism. As Star Wars warned: “So this is how liberty dies…with thunderous applause.”

Nowhere is the GOP’s break with small‑government ideals more visible than in its willingness to dictate where and how America’s largest companies invest. Apple announced plans to invest $500 billion to expand manufacturing and AI server production across the United States. The firm originally desired to expand its footprint in India, avoiding the geopolitical squeeze of US–China tensions. The President responded to this news: “I had a little problem with Tim Cook yesterday. ‘You’re coming here with $500 billion, but now I hear you’re building all over India. I don’t want you building in India.’”

Apple isn’t alone; Google and Nvidia are making similar US‑focused investments. Alongside these investments came the AI Action Plan, declaring, “Winning the AI race will demand a new spirit of patriotism and national loyalty in Silicon Valley and long beyond Silicon Valley.” But does AI truly need a patriotism push?

As high‑tech firms show they can be corralled into government‑approved investment, the same heavy hand is now reaching into America’s old‑line industries. Last year, the proposed US Steel–Nippon Steel merger became a political flashpoint not because it threatened consumers or competition, but because the buyer was foreign. Instead of letting the merger proceed, the government prohibited the action and only let Nippon invest in US Steel. Nippon also granted the US government a “golden share” in the firm. As the Cato Institute’s Scott Lincicome argues, “The Trump administration’s ‘golden share’ control of a wide array of US Steel’s domestic business activities should be seen as a de facto nationalization of the company, given what we know about the new relationship and the very standards pushed by the US government in related contexts.” The loser in acquiring US Steel, Cleveland Cliffs, applauded Donald Trump’s June 4 decision to raise steel tariffs from 25 percent to 50 percent, as their stock rose 33 percent that same day. 

Rather than trust markets to allocate capital, Washington now treats investment and ownership as matters for political control. It is one more example of the right abandoning free‑market principles in favor of economic nationalism.

The same instinct to manage markets from Washington now drives US trade policy, with results just as costly and counter‑productive. The US government slapped a sweeping 50-percent tariff on semi‑finished copper items, such as pipes, wires, rods, sheets, and high‑copper derivative goods like electrical cables, while cathodes, scrap, ores, and concentrates were explicitly exempted. This policy, justified under national security provisions, immediately roiled the copper market: US copper futures plunged over 20 percent in a single day, erasing prior arbitrage premiums and revealing that approximately 45 percent of US copper needs now fall under the new levy. 

Tariff threats first targeted steel and automobiles; however since “Liberation Day,” imports have plunged nearly 20 percent. Deutsche Bank concluded that some American firms were eating the tariff costs and accepting smaller margins. But global head of FX research, George Saravelos, told Bloomberg, ‘The top-down macro evidence seems clear: Americans are mostly paying for the tariffs.’

In the classic pattern of political hubris — the government breaks your legs, then sells you crutches — lawmakers now want to hand you a check to offset these self‑inflicted costs. 

Republican Senator Hawley, the architect behind the American Worker Rebate Act, desires to redistribute tariff revenues to taxpayers, a true fiscal mess in which government extracts money from consumers in order to give it back to them.  Have we forgotten the failed Modern Monetary Theory (MMT) experiment that flooded households with stimulus checks during the draconian COVID‑19 lockdowns? According to the Federal Reserve Bank of St. Louis, inflation in consumer prices rose from 1.23 in 2020 to 8.0 percent in 2022, with government spending responsible for 42 percent of this inflation. The Tax Foundation suggests:

While tariffs have undoubtedly raised costs for American firms and consumers — since Americans and not foreigners ultimately pay the tariff — rebating the revenue to consumers would be fiscally irresponsible and also risk increasing inflation. Tariffs are a poor way to raise revenue generally, but the revenue that is collected should be used for deficit reduction rather than rebates.

This appetite for intervention is matched only by the willingness to spend without restraint. At the turn of the millennium, America carried about $5.5 trillion in federal debt. By mid‑2025, that figure has exploded to roughly $37 trillion, more than a sixfold increase in just 25 years. Interest on that debt now swallows over $1 trillion annually, about 17 percent of all federal spending, and the government spends roughly 20 percent more than it collects in revenue. The recently enacted One Big Beautiful Bill will only add fuel to the fire: the Congressional Budget Office projects $2.4 trillion in new deficits over the next decade, or $3.1 trillion once interest is factored in. At this pace, the United States will celebrate its 250th birthday burdened by a national debt exceeding $40 trillion. This is not just a failure of governance, it is the abandonment of the very fiscal discipline Republicans once claimed as their defining principle. 

Rather than confront this reality, Republican leaders preside over some of the largest peacetime budgets in US history. On the military side, the Pentagon’s budget alone is $820 billion, more than the next ten countries combined, and climbs to $1.2 trillion when veterans’ benefits are included. In real terms, America spends more on defense today than it did during the height of the Iraq and Afghanistan wars.

On the welfare side, Social Security and Medicare already consume more than eight percent of GDP and their combined costs are projected to soar from $1.4 trillion in 2023 to nearly $3 trillion by 2033. The Social Security trust fund is expected to be depleted by 2033, after which incoming payroll taxes will cover only about 77 percent of promised benefits. Medicare’s Hospital Insurance trust fund faces insolvency by 2036, triggering automatic cuts unless Congress intervenes. 

The Republican Party once sold itself as the last line of defense against an overreaching federal government. Today, it champions state control over private enterprise, embraces protectionist tariffs that raise consumer prices, and presides over record‑shattering spending that will burden future generations with mountains of debt. What began as a movement to curb Washington’s reach has morphed into a governing philosophy that wields government power to direct markets, pick winners, and paper over self‑inflicted economic wounds. In forsaking the creed of limited government, the GOP has not merely drifted from its roots, it has become the very Leviathan it once vowed to oppose.

Washington, DC’s subsidization of the renovation of RFK Stadium  — the once and future home of the Washington Commanders — “is a BFD,” Mayor Muriel Bowser said on Wednesday, verging on an expletive to convey her enthusiasm for the proposal, to which the DC Council assented on Friday by a vote of 9 to 3. Another, final vote to approve the stadium will occur in September.

“Big” is, indeed, an apt adjective for the affaire d’RFK. The public funds to be spent — $1.7 billion in direct subsidies and $2.7 billion in indirect subsidies — are prodigious. The scope of the development plan transcends the mere renovation of an old sports venue. The stadium campus is set to include (besides the stadium) multiple parking structures, bars and restaurants, retail stores, an $89 million indoor sportsplex, a planned grocery store, a pharmacy, daycare facilities, a hotel, 6,000 or more housing units, and a “30-acre stretch of riverfront community commons.” An extension of Washington’s metro system also may be undertaken. In Bowser’s phrase: “180 acres of vacant land, activated.” In short, the deal amounts to a wholesale bid to transform a languishing portion of eastern Washington DC into a vital and bustling hub. An ambitious central-planning gambit, if not a hubristic one.

As I sat in the Council chamber on the Tuesday before the vote, waiting to testify against the subsidy package, the bigness of the moment struck me in a different sense. I was the 350th witness on a list of 503, and the hearing sprawled over 13 hours. But the hopes of the stadium-subsidy advocates were similarly expansive. In their minds, a stadium deal will yield prosperity, upward mobility, the stimulation of local business, civic pride, community engagement, youth development, affordable housing, and much else. All good things to be wished for will result from RFK’s revival; all good things will materialize together, in unity. As I recall, nobody supporting subsidies noted either the other uses to which that land could be put or the benefits likely to flow therefrom.

I heard roughly 10 hours of testimony. In the ample time for reflection afforded me, two facts became vibrantly apparent: Mayor Bowser and the DC Council have become fixated on the sort of flashy infrastructure project that has tantalized politicians dating back to Vespasian and Pericles and the pharaohs of Egypt, and they have managed to disperse perks among various of the District’s interest groups in order to obtain the needed political backing. Great municipal works require the enthusiasm of many constituencies that DC elected officials — not to mention the Commanders organization itself — have masterfully cultivated.

First, as always, is the cultivation of votes. Commanders fans, of course, wish to see their team play once again within the District. But, as was made clear during Tuesday’s hearing, many have credulously internalized the notion that a new RFK Stadium will uniquely invigorate economic activity. “The stadium redevelopment represents far more than the return of a major sports franchise or a new entertainment venue,” one witness declared, capturing the starry-eyed optimism of the proposal’s advocates. “Its capacity to shift the trajectory of underserved families…cannot be overemphasized.” Local business representatives also testified in favor of subsidization, anticipating the chance for business partnerships with the Commanders.

This confidence, although perhaps bolstered by a methodologically discredited report commissioned by Bowser, finds no grounding in the corpus of economic research on the topic. The “literature contains near-universal consensus evidence that sports venues do not generate large positive effects on local economies,” academics John Charles Bradbury, Dennis Coates, and Brad R. Humphreys report. The trio further notes that “the consensus…of economic studies” find that “the benefits of hosting professional sports franchises are not sufficient to justify large public subsidies.” Instead of spawning economic activity, new stadiums merely redistribute it. As put in a 2016 Brookings study, “any economic activity generated while attending a game, will largely if not entirely be offset by reduced spending on other local leisure activities.” Stadiums are not invested with any special magical facility for economic development, particularly when contrasted with other business enterprises that could occupy the same land. Indeed, a city report from the Office of the Budget Director indicates that higher tax revenues would flow from the businesses that would occupy a mixed-use development (sans stadium) on the RFK site than from a redevelopment of the stadium itself. Nonetheless, promises of bread, circuses, and coliseums seem once again to have proven themselves politically potent.

The proposed subsidy deal is profligate in its gift-giving to interest groups. For one, the District’s unions are assured that organized labor will man the construction sites of the stadium and its parking lots. Even that, however, has failed to satisfy all DC lawmakers. Some lawmakers — and several witnesses who testified Tuesday on behalf of labor interests — found this unsatisfactory, seeking to secure union-contract guarantees for the businesses that will operate across the developed stadium district. Nonetheless, the Commanders agreed to so-called “labor peace agreements” for many workers in the forthcoming development, securing the assent of several unions — among them the AFL-CIO — shortly before Friday’s vote.

Of course, privileging organized labor disadvantages free labor. One witness at the hearing, a CPA, noted this explicitly. By restricting contracts to unionized firms, he argued, the government “would be excluding [non-unionized] DC companies and DC residents from doing work on this project, which is a great opportunity [for them].” Moreover, in his judgment, the District will find it lacks a sufficient number of union workers to meet the forthcoming demand (just 10 percent of construction workers are union members), necessitating the hiring of out-of-towners.

Washington, DC’s political proclivities being what they are, the interest groups that local officials and the Commanders thought necessary to placate were ideological as well as economic. One witness touted “retail space for local needs with opportunity for grocery stores and small minority-owned businesses.” According to another, “Food equity is key.”

For council members and activists, another ideologically salient condition was the 1,800 affordable housing units — a full third of the anticipated new housing. The gentleman seated beside me at the dais during my testimony, a criminal-justice advocate, urged the Council to “set aside” housing units specifically for ex-convicts. This demand was not met. Even so, on Wednesday the Commanders, seeking to cinch the deal, pledged “to hire justice-involved individuals” — or, in the verbiage of my dais-mate, “our justice-impacted neighbors” —  “for 15 percent of available construction and permanent jobs.”

Then there were the environmentalists. Myriad witnesses on Tuesday called on the Council to enforce a net-zero mandate on the stadium campus. And although the green activists failed to secure that whole kit and caboodle they sought, they did not depart empty-handed. “The Club will build and operate the Stadium to a LEED O+M Platinum standard and commits to achieving a minimum of LEED O+M Gold for the mixed-use development across all its projects constructed on the RFK Campus,” the Commanders said on Wednesday. The team also committed to investigate further clean-energy technologies. What costs this will impose upon the development area and upon the businesses that will operate within it remains to be seen.

To market its subsidization of a private business owned by a billionaire whose net worth exceeds $10 billion, the DC government and the Commanders shrouded the cronyism afoot in promises of an economic revolution. With the deal, everyone will receive just what he wants — everyone, that is, besides the taxpayers whose hard-earned money will fund a quixotic project with scant chance of success. As I said in my testimony, “There is nothing I would like better than for these benefits to materialize, and for these neighborhoods to be revitalized, but I fear that they are nothing more than a mirage.” 

Mayor Bowser was not mistaken that the RFK Stadium project is a “BFD.” But big is not always beautiful.

Imagine for a minute that I give you a jar of jellybeans and ask for your best guess at how many are in the jar. I give you ten seconds, and, in that time, you’re allowed to do whatever you want including opening the jar and taking some of the jellybeans out or perhaps even taking pictures of the jar.

After those ten seconds are up, I take the jar away and then give you one hour to come up with your best guess. You can use whatever statistical techniques you want, whatever tools you want, and you can bring in a whole team of experts to help you. After that hour, though, your guess is due. At the end, you give me a preliminary guess of 1,597 jellybeans in the jar.

I then give you the jar again with the same rules, except this time, you get five whole minutes to examine it and then I give you and your team ten hours to give me a new, revised guess. You come back and inform me that you would like to change your guess to 1,595 jellybeans.

In response, newspaper headlines across the country run the story that your revised guess was a “massive” and “unprecedented” divergence from your preliminary guess. You get accused of having an axe to grind against the jellybean industry and the president of the company very publicly and very clearly fires you from your job as jellybean counter because of your gross incompetence.

Surely, such a thing could never happen, right?

Unfortunately, if we equate each jellybean with 100,000 jobs in the US economy, this is exactly what happened to Erika McEntarfer, the now-former BLS Commissioner just last week.

Consider that there are roughly 159 million people currently employed in nonfarm jobs alone in the United States today. The change in employment would be the difference between last month’s jobs number and this month’s jobs number. Here is a table with the preliminary estimates of the total number of jobs compared to the revised estimates for the past three months:

To calculate these numbers, I used the total number of nonfarm employees in April (since that month did not see any revisions this time around), which was 159,433,000, and then added the preliminary estimates for May (+144,000) to arrive at May’s preliminary total. To calculate June’s preliminary total, I added the preliminary estimate of jobs added in June (+133,000) to the preliminary total for May.

For the revised numbers, I again started with April’s total number of nonfarm employees and added the revised job growth figures (+19,000 in May and +14,000 in June). July’s now-preliminary total comes straight from the BLS reporting that was released on Friday, August 1, 2025.

For May, BLS officials overestimated the total number of nonfarm jobs in the US by a whopping 0.07 percent. For June, they overestimated it by a 0.16 percent. For an agency struggling with budget cuts forcing the Bureau to use smaller sample sizes and overall declining response rates to the household and establishment surveys, to be less than one percent off is a phenomenal achievement.

In fact, there’s strong evidence that the BLS has only gotten more accurate over time, not less. Ernie Tedeschi of The Yale Budget Lab and former chief economist for the White House Council of Economic Advisors released this analysis the trends of revisions:

It is certainly true that these revisions come at a particularly inopportune time for the Trump Administration. One week ago, the Administration and members of the New Right were extolling the greatness of the American economy and pointing to jobs numbers and GDP growth rates as positive evidence. The commentariat was questioning economists and economics as a field, saying that it was time to end the tariff skepticism and embrace the wisdom of Trump.

Labeling these figures as “RIGGED [sic]” is a public relations Band-Aid. But if more jobs numbers like these continue to come in, even with a new, Trump-appointed head of the BLS at the wheel, it will be difficult for the tariff proponents to recover.

But if the numbers turn around and are “revised” upward, doubt will pervade the econosphere, as people will lose faith in the accuracy of the BLS and their ability to correctly interpret what is going on in the economy.

The truth is that we need accurate and politically unbiased numbers from the BLS. As has been shown, they have an incredible track record. This reputation must be maintained if we are to continue to understand the economy and make informed decisions.

Since the passage of the One Big Beautiful Bill in early July, Democrats have devoted their summer to campaigning against the bill’s cuts to various social programs. Some took to the streets, organizing nationwide “Family First” protests that took place on July 26 but barely made a ripple. Others have chosen to stoke fear, with Chuck Schumer calling the bill the “We Are All Going to Die Act.” And some left-leaning outlets are looking forward, worrying about the headaches it may cause downtrodden groups, such as the poker-playing community.

Amid all the panic, there are indeed some major legitimate criticisms of the bill. It’s full of tax gimmicks like preferential treatment for tips and overtime or deductions for auto interest, and some estimate it will add $3 trillion to the deficit over the next ten years.

But there is one obscure provision that is an unambiguous win for all Americans: the restoration of the 1099-K threshold for third-party settlement organizations (TPSOs). This threshold was reduced to $600 in total transactions per year under Biden’s American Rescue Plan, and would have impacted peer-to-peer platforms like PayPal, Venmo, and the Cash App; intermediaries that small businesses rely on like Stripe, Square, and Shopify; and even apps that facilitate side gigs like Airbnb, Uber, and Lyft. That means TPSOs were on the hook to report to the IRS and send tax paperwork to anybody who sent or received money totaling $600 over the course of the year, split over any number of transactions. This includes contractors or small businesses that use one of the TPSO platforms mentioned, as well as anybody who uses those platforms to reimburse friends or make personal purchases.

The Biden administration was phasing in this decreased threshold, with the strict $600 requirement to go into effect during the 2026 tax year. The One Big Beautiful Bill ends that, returning the threshold to $20,000 across at least 200 transactions, as was the case prior to the Biden bill. The IRS rules caused a stir when first approved in 2021 and were themselves a step back from a proposal that sought to introduce a $600 reporting threshold for every personal bank account in the nation, instigating valid concerns that the IRS’ attempt to nickel-and-dime freelancers would sweep up more innocent Americans in the process.

Everybody should welcome the end of the $600 1099-K threshold, not only because of the inconvenience it would have caused for the self-employed, but also because of the innocent people who could have been swept up in the crossfire. Despite all the anti-corporate rhetoric on the American Left, Democrats’ support of the low threshold only contributed to the entanglement of big government with corporate power, consistent with their deputization of large companies to enforce their agenda on issues as broad-ranging as diversity, healthcare, and taxation. Democrats may be disappointed at the inability to enforce their taxation regime by disincentivizing self-employment as the Biden-era rules did, but the changes in the One Big Beautiful Bill reduce burdens on self-employed individuals, payment companies, and even the IRS itself.

The increase in the threshold also reduces the substantial room for error that was left in the hands of PayPal, Venmo, and similar platforms. Platforms generally require a memo for all payments, and these are supposed to play a role in the IRS crackdown, but this could go wrong in so many ways. A client and provider with a trusting relationship might send payments in a way that is not clearly a business expense. Meanwhile, one friend reimbursing another for a personal expense with a facetious memo — say, “Thank you for your service,” —  could come under IRS scrutiny.

The return to a far more reasonable $20,000 threshold and at least 200 transactions is a win for the self-employed and small businesses. But it’s also a win for the TPSOs who no longer have the obligation to regulate them on behalf of the government, as well as individuals who want to reimburse family or friends, or shop on Facebook Marketplace or Craigslist, without turning it into a federal tax case.

Of course, some revenue will fall through the cracks, whether taxpayers intend to underpay or not. But the marginal benefit of an invasive tax enforcement regime is likely low and the current administration’s 25 percent reduction in the IRS workforce seems to corroborate that, more than reversing Joe Biden’s net IRS expansion of 20,000 staffers and ignoring 10,000 remaining roles the Biden administration planned to fill. A government willing to waste prior taxpayer resources beyond the point of diminishing returns has really lost the plot, and this change is a welcome course correction.

A simple conversation sparked the idea for modern metered-dose inhalers, but markets made them iconic.

George Maison, President of Riker Laboratories in 1955, was talking with his daughter Susie about her asthma treatments. She was unhappy with her squeeze-bulb nebulizer and asked why her treatments couldn’t be taken like her hairspray: in an aerosolized can. She saw the connection and how much easier it might be to take her medicine. Her father also saw the potential, and he then developed the first pressurized metered-dose inhaler in 1956. 

This story about the connection between serendipity and technological innovation is more common than we might realize. It also indicates the importance of markets. Markets can help deliver goods, but they also clarify the nature of those goods, both of which improve health.

I once heard a speaker make the former argument. I forget who the speaker was, unfortunately, but the point was simply that markets are beneficial because they provide additional opportunities for people to acquire life-saving goods like inhalers. Markets provide opportunities for people to easily alleviate their symptoms by going to a shop down the street and buying an inhaler. These opportunities are especially important for children (even if rates of children with asthma are declining) and for people in lower-income households and minority groups. During the day or at night, and in person or via delivery, such services are available. Someone, likely a stranger, is willing to potentially save another’s life by selling inhalers. 

Markets can serve a vital role in improving health. Local stores and pharmacies, retail chains like Walgreens, CVS, and Target, online marketplaces like Amazon, and online pharmacies and price comparison tools like GoodRx are relevant examples where the incentives producers face to earn profits align with the goals of consumers. There might be market and government failures to consider, but market forces often help coordinate buyers and sellers in mutually beneficial ways. 

In a recent article “Reconsidering the Normative Foundations of Public Health: Market vs. Social Justice”, in a special issue of The Journal of Economic Behavior and Organization on Capitalism Evolving (edited by Ryan Yonk and Vlad Tarko), I develop the latter argument. Markets facilitate a discovery process based on the myriad goals individuals have that shapes the nature of goods (like pencils) and health-enhancing goods like inhalers. Markets help people figure out what it is they want—even if they can’t articulate what it is they want. Susie Maison just wanted an easier way to take her asthma treatments, like her hair spray, but she didn’t know how else to express that value, let alone pursue it.

The long history of inhalers speaks to this winnowing effect, wherein the competitive market process selects for attributes consumers value, which improves the good. If Susie had been born earlier, she might have been stuck with asthma cigarettes, Wyeth pencils, atomizers, the Mudge inhaler, and so on. While these devices might have helped improve breathing, people have other values like Susie’s story indicates. Older kinds of inhalers were likely costly to produce, cumbersome to use and/or reuse, fragile (e.g., the ceramic Nelson inhaler), and difficult to transport, among other deficiencies that deterred consumption.

After 1956, competition from other producers like 3M, Schering, and Roche, as well as consumers voting with their dollars, spurred a decades-long process of innovation that produced what we commonly recognize as an inhaler. This ongoing process develops as producers respond to profit and loss signals, driven by the production of their versions of an inhaler. If consumers value one version, firms will seek to produce more, better versions of that good in cheaper ways. Profits follow as rewards for incurring the costs and risks of developing that product. If, however, people don’t value one version, firms will suffer the losses. 

With modern inhalers, moreover, there are several margins over which innovation might occur, from selecting appropriate medicines and prolonging shelf life to developing more effective propellant systems and administering more precise dosages. All of these attributes increase the value of inhalers, benefiting producers and consumers.

Competitive markets spur innovation and help bundle the values people care about. We might solely rely on scientific advances to improve health outcomes absent markets, but we would be worse off. That is, markets serve the disparate and unknown goals people have, and they help make goods like inhalers more accessible, more reliable, less prone to user error, and easier to use.

In the early hours of trading on Friday, August 8, 2025, global markets were shaken by the announcement of a 39 percent tariff on imported gold bars weighing 100 ounces or more by the Trump administration. US December gold futures reached an all-time high price of $3,534.10 per ounce shortly after the declaration was made. This sudden move injected uncertainty into the bullion market, unsettling dealers, refiners, and institutional investors trading in larger “exchange delivery” formats. While gold is rarely targeted by protectionist measures — unlike base metals, agriculture, or manufactured goods — this decision warrants close attention, both for its immediate market impact and potential implications for future monetary policy.

Likely Purposes

From an economic perspective, there are several plausible motivations (several of which may hold true simultaneously) for such a steep and sudden measure.

1. Raising Revenue
   
   The simplest explanation is fiscal. A 39 percent levy on high-value imports is a substantial revenue generator, particularly if the target is a commodity with significant daily transaction volume.
   
2. Targeting Switzerland
   
   The tariff could also be intended to primarily target Switzerland, a key player in global gold refining and bar creation. Switzerland is central to the gold supply chain, as it refines and standardizes much of the world’s gold before it’s distributed. By imposing a tariff on large gold imports, the US could limit Switzerland’s ability to sell refined gold at favorable prices, disrupting its dominance. This move would reduce reliance on Swiss refining and could be a response to recent tensions between Switzerland and the US over trade and tariff disputes. It signals the US aiming to punish Switzerland for its perceived intransigence in tariff discussions, as well attempting to wrest some control away from foreign gold pricing.

3. Restricting Supply and Controlling Markets
   
   A more strategic interpretation is that the administration may be attempting to restrict the flow of foreign gold into the US market. By making imports of 100-ounce bars prohibitively expensive, policymakers could reduce inflows, tightening domestic supply and potentially influencing prices. This approach mirrors past episodes where governments have sought to control the domestic availability of gold ahead of significant policy changes.
   
4. Countering Money Laundering and Imposing Compliance Costs
   
   Gold is often used in international transactions, particularly among institutional investors or high-net-worth individuals, as a way to move value across borders with fewer restrictions. By imposing a tariff, the US could be making it more expensive for these large transactions to occur within its borders, thereby reducing the attractiveness of using gold for these purposes. While it wouldn’t directly address outflow-related money laundering, the tariff could serve to discourage the use of gold bars in cross-border wealth transfers into the US, which could be seen as a measure to limit some money-laundering opportunities.
   
5. Positioning Ahead of a Major Policy Shift
   
   A 39 percent tariff on gold bars over 100 ounces could be a preparatory measure for the US to revalue its gold reserves, which are currently undervalued at $42 per ounce. The tariff could prevent arbitrage by limiting the ability of speculators to buy gold at lower international prices and sell it domestically at a higher future price, particularly if the US plans to revalue its gold to market prices around $3,200 per ounce. It would also help accumulate gold within the US, ensuring that domestic supply is maintained for a potential gold-backed or partially gold-backed dollar. Additionally, the tariff could stabilize domestic gold prices, mitigate speculation, and prepare the market for revaluation, signaling an intention to shift away from the dollar’s exclusive backing. This would reduce external manipulation and maintain US control over its gold supply, easing the transition to a new monetary framework while strengthening the dollar’s global position.

The Arbitrage Dimension

Ironically, if the tariff leads to a sustained domestic price premium for 100-ounce bars — either because of higher import costs or restricted supply — it could create exactly the kind of large-scale arbitrage the measure may have been intended to suppress.

Arbitrage occurs when price discrepancies for the same asset exist in different markets, allowing traders to buy low in one venue and sell high in another. In this case, if US gold prices rise sharply relative to London, Zurich, or Hong Kong due to the tariff, there will be a strong incentive for market participants to find ways to bypass the tariff or repackage gold into non-tariffed forms (such as smaller bars or coins) to import at lower cost.

At the institutional level, this could take the form of shipping gold to jurisdictions without the tariff, refining it into untaxed units, and then legally reintroducing it into the US market. On the futures side, arbitrageurs might use COMEX delivery mechanisms, swaps, or other derivative structures to capture the spread between the artificially elevated domestic price and the world market price. While such activity would eventually narrow the gap, it could generate windfall profits in the interim — ironically undermining the tariff’s supply-restriction intent and adding volatility to the very market it seeks to control.

Historical Precedents

Although the United States today operates under a fiat monetary system, the federal government has a long history of direct and indirect intervention in the gold market — often under the banner of “monetary stability” or “national interest.”

The most famous episode came in 1933–34, when the Roosevelt administration, facing a banking crisis and deep deflation, first prohibited the private ownership of most gold coins and bullion, then revalued gold from $20.67 per ounce to $35 per ounce. This represented a devaluation of the dollar’s gold content by nearly 41 percent and transferred substantial wealth from private holders to the government’s balance sheet. Importantly, the sequence began with restrictions on ownership and movement of gold — control first, revaluation second.

In the early 1970s, as the Bretton Woods system frayed, President Nixon “closed the gold window,” ending the dollar’s convertibility into gold for foreign central banks. While framed as a temporary suspension, it effectively severed the last formal link between the dollar and gold, freeing the Federal Reserve to pursue more accommodative monetary policies without the discipline of a fixed parity.

Even after the dollar floated freely, interventions persisted. In the late 1970s, as inflation accelerated and gold prices surged, the Treasury engaged in large-scale gold sales and swaps — sometimes in coordination with other central banks — to temper upward price movements. These efforts were often more symbolic than decisive, but they reinforced the notion that US authorities considered gold prices a matter of policy concern.

The 39 percent tariff on gold imports highlights the core concern that led EC Harwood to found the American Institute for Economic Research’s — the ongoing threat posed by governmental interventions in personal freedom and sound money. While the gold market should reflect private demand, mining supply, and global investment flows, it is often distorted by policies that serve short-term political goals. This tariff, with its abrupt implementation and targeted impact, risks distorting market pricing and suppressing economic freedom. It underscores the truth that, in times of fiscal strain or geopolitical risk, governments often turn to gold as a convenient target for intervention.

The immediate effects will likely be felt most by large bullion traders and institutional investors, with wider price differentials and reduced liquidity in the US market. History shows such measures rarely occur in isolation, and this could signal a broader shift in US monetary policy — whether revenue-driven or something more substantial. What’s clear is that AIER’s mission, focusing on defending financial freedom and sound money, remains as relevant as ever. The risks to market integrity that inspired our founding persist, and defending open markets and sound money continues to be an urgent, vital necessity.

In November 1974, New York Times film critic Vincent Canby wrote that the city had become “a metaphor for what looks like the last days of American civilization.” 

“It is run by fools,” he wrote. “Its citizens are at the mercy of its criminals who, often as not, are protected by an unholy alliance of civil libertarians and crooked cops. The air is foul. The traffic is impossible. Services are diminishing and the morale is such that ordering a cup of coffee in a diner can turn into a request for a fat lip.”  

The following year, New York City ran out of money.

Spending 

New York’s descent occurred as city government spending surged.    

Since 1965, its operating budget had more than tripled, with expenditures rising at an average of 12 percent annually. Treasury Secretary William E. Simon reported that “From 1963 to 1973, per capita municipal expenses of other large US cities increased, on the average, 2.2 times. During the same period, New York’s expenses increased about 3.5 times — a 50 percent greater rate.” 

As a result, “New York was spending in excess of three times more per capita than any city with a population of more than 1 million.” New York’s “level of spending on welfare (public assistance and Medicaid), higher education, and hospitals was virtually unique,” author Charles R. Morris wrote. 

“On a per capita basis, only Washington DC, which doubles as a state government, exceeds New York City’s rate of spending in these areas, and no other government comes close to the New York City level,” Morris wrote, with spending of $584 per capita in New York compared to $105 in Detroit, $234 in Los Angeles, $89 in Chicago, and $76 in Philadelphia. The average grant paid to recipients of Aid to Dependent Children (ADC) — $351 a month — was the highest in the country, with the second-, third-, and fourth-ranked states paying $340, $295, and $289, respectively. 

The city’s wage bill was another strain. While city workers were not lavishly paid relative to other cities, there were many more of them. New York employed 49 people per 1,000 residents, Simon noted. Across other major cities, the figure was between 30 and 32 employees per 1,000 residents.    

Taxes and Revenues  

Aside from federal and state grants, the city government had only two sources of funding for these expenses: taxing and borrowing. Regarding the former, there was ever less to tax. 

Between 1966 and 1973, writes author Kim Phillips-Fein, “the city raised income taxes multiple times, while property taxes climbed, and business taxes were extended to cover a variety of small businesses and partnerships.”

As a result, Gotham’s taxes became much higher than other US cities. Rather than pay, many businesses and individuals simply left. Johnny Carson took The Tonight Show to California in 1972. Pepsi and Shell also departed.

“Parts of the garment industry, large bakeries, and food processors and breweries left the city,” Simon wrote, “and by 1969 they had taken about 140,000 jobs with them. The flight accelerated at a frightening pace…between December 1974 and December 1975 alone…143,000 jobs disappeared. A cautious estimate suggests that between 1970 and 1977, some 400,000 jobs vanished.”   

Between 1970 and 1980, the city’s population fell by 10 percent: it was literally decimated. It was easy to see why. As taxes climbed, so did the number of murders, by 248 percent between 1960 and 1973. “[B]y 1975,” Morris wrote, “the city had 41 percent of the state’s population, but 68 percent of its welfare recipients, and with 44 percent of the state’s personal income, the city had to pay 73 percent of the local welfare costs.” 

“A ‘city’ of businesses and taxpayers as large as San Francisco has packed its bags and left New York,” New York magazine reported in 1976. “We have conducted a noble experiment in local socialism and income redistribution,” Ken Auletta noted in October, “one clear result of which has been to redistribute much of our tax base and many jobs out of the city.”   

As a result of the disappearance of its tax base, the city’s revenues were rising at a rate of just 5 percent annually.  

Borrowing  

The city covered the shortfall by borrowing short-term to finance current spending.   

“[B]y the early 1970s, [New York] regularly accounted for about 25 percent of all outstanding short-term state and local paper in the country,” Morris wrote, and by the end of 1974, it was selling $600 million of bonds every month, many backed by anticipated revenues that didn’t materialize. In November, outstanding short-term debt totaled $5.3 billion, up $1.9 billion since June, a fourfold increase in four years. By the end of 1974, New York City accounted for over 40 percent of short-term tax-exempt borrowing in the United States.

“By 1974, per capita debt in New York City was $1,767,” Daniel Patrick Moynihan noted, “while in Chicago it was $427.”  

This avalanche of bonds drove prices down and yields up. In November, city notes, which went for 4 percent in the late 1960s, were going for 8.34 percent; In December, the rate rose to 9.48 percent. In February, it emerged that the city did not have the tax receipts legally required to secure a $260 million bond issue, and Bankers Trust and Chase Manhattan refused to underwrite it. On March 13 and 20, the city offered $912 million of short-term, tax-free notes at up to 8 percent, an effective yield three times greater, on a tax equivalent basis, than that available in a savings bank.

Weeks later, more than half remained unsold.   

The Crash  

New York City had reached the end of the fiscal road.  

With federal and state funds and via a Municipal Assistance Corporation, the city refinanced its debts and the state government took effective control of its finances. In effect, the city had defaulted.  

Many of the problems New York faced in the 1960s and 1970s were not unique. Cities across America struggled with suburbanization and cuts to federal aid, and those in the Northeast with a migration of businesses to the South and West. But only New York went bust. As Phillips-Fein writes in her Pulitzer Finalist book Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics, “the scope of the city’s public sector brought [those problems] to the fore.”  

New York’s bankruptcy might not seem to offer any lessons above the state level. The federal government can print whatever money is necessary to finance its operations: It need never default in the “hard” terms of failing to pay its bills because it has the option to default in “soft” terms by paying them with money that is worth less. Ultimately, however, default is default. 

New York’s bankruptcy stands as an example of what happens when a government persistently spends more than it collects and throws itself at the mercy of the bond markets to keep itself going.

As New Yorkers ponder a re-run of what Morris called “the liberal experiment” of 1960 to 1975, or what Auletta termed its “noble experiment in local socialism and income redistribution,” it is an example they would do well to remember. So would the rest of us.

Japan eats a lot of rice. And it imposes tariffs on foreign rice to protect domestic producers — sometimes as high as 700 hundred percent. The result has been a disaster for Japan’s rice industry: the opposite of what tariffs are supposed to achieve.

In the early 1990s, Japan was forced to liberalize its rice market and did so reluctantly. But tariffs and subsidies designed to protect the domestic industry and keep prices high have instead corroded it by weakening incentives to be productive and innovative, among other problems. Because tariffs shield domestic producers and subsidies prop up prices while suppressing domestic output, Japan’s rice industry is inefficient and under-mechanized compared to Korea’s, which wasn’t as heavily protected and now thrives by comparison.

Consider now the political situation in the United States. Since January, the US and international markets have been subjected to ongoing tariff threats, many of which are later walked back. Admittedly, there are a few cases where tariffs might be justifiable, such as protecting nascent industries or those vital for national security. Trump and the MAGA crowd, however, generally appeal to four main justifications for tariffs:

1. To boost American manufacturing and jobs.
2. To address trade imbalances and promote trade reciprocity.
3. To protect national security.
4. To generate revenue and reduce taxes.

The difficulty — especially with rationales 1), 2), and 4) — is that tariffs tend to weaken the very industries they are supposed to protect. That is because they undercut the very forces that keep industries strong and competitive. Markets are antifragile systems: they require competitive stress and pressure to function properly, and they languish without it. A helpful analogy is the human immune system. Without regular stressors from infections and pathogens, it fails to flourish and develop. It is worth remembering that immune systems, like any system, can be overwhelmed. And they can also be under-stimulated. The immune system is trained and fine-tuned by challenge, and without that challenge, it atrophies.

The same lesson applies to industries insulated by tariffs. Protection from international competition weakens the incentive to innovate, discourages outside investment, and rewards rent-seeking and regulatory capture over genuine progress. Before reviewing the broader mechanisms, it’s worth considering a few concrete examples where tariffs backfired.

In the early 2000s, US steel received tariff protections. The results were dismal: more jobs were lost than saved, and US steel companies used the tariff shield to consolidate rather than to expand or innovate. Meanwhile, global competitors kept innovating and capturing market share at America’s expense.

With few exceptions, tariffs should be expected to weaken protected industries over time. The mechanisms are well understood. First, tariffs artificially raise prices, which dulls the incentive to innovate — to do more with less or to develop better products and services. Over time, these industries fall behind their international counterparts, unable to keep pace with firms exposed to real competition. The gap grows until the protected industry becomes fragile and inefficient.

Second, tariffs reduce incentives for long-term investment. Investors are less likely to back industries dependent on political protection rather than genuine performance. That means less capital for innovation, productivity gains, and market resilience.

Finally, protected industries often lobby to preserve those protections. The longer tariffs last, the stronger the signal that government will force consumers to pay higher prices and bail out weak firms through subsidies. Over time, these industries grow more dependent on political favors and less capable of competing on merit.

In the end, tariffs may sound patriotic, but they almost always dull the very industries they’re supposed to protect. By stifling competition, undercutting innovation, and rewarding political maneuvering over market success, tariffs leave industries brittle and taxpayers holding the bag. Competitive pressure is essential for efficiency and innovation. With a few rare exceptions, tariffs simply don’t deliver and mostly do harm.

Last month, like many, I went to see the newly released Superman movie by James Gunn. As a kid, I loved the 1978 Superman film with Christopher Reeve and the scene when he takes Lois Lane for an evening flight is one of my favorites. Margot Kidder portrayed Lane as smart and quirky — and I wanted to be just like her — and I was intrigued to see that Rachel Brosnahan is now playing the role. I’m a big fan of Brosnahan, after binging The Marvelous Mrs. Maisel, and her portrayal of Lois Lane did not disappoint.

The film itself was enjoyable, but later, I kept thinking about the whole moviegoing experience.

Over the years, I’ve had many types of movie viewing experiences. As a kid, my parents would treat us by going to the drive-in, and I remember being so excited about my first IMAX film. Now that I’m older, I’ve enjoyed seeing older flicks in nostalgic settings, like at The Allen Theatre, and I’ve enjoyed an adult beverage during a show at The Alamo Drafthouse Cinema. I’ve been to theaters that have seats like folding chairs and others that have couches. When it comes to timing, I prefer matinee shows not only due to minimal crowds and cost-effective ticket prices, but also because there are fewer restrictions for early showings. Usually there is no ticket-taker upon entry and heading into the theater works on something of an honor system. At early shows I can bring in a Yeti full of coffee and a bag full of snacks without fear of being reprimanded.

I decided to go to a 10:10am showing of Superman at Flagship Cinemas, where the seats are spacious, heated recliners. And I was thankful for the extra space when, despite the theater being largely empty, other audience members showed up and sat down right beside me. I thought it funny that neither the new guests nor I felt like moving from the seats we were assigned, even though we could claim a whole row all to ourselves. 

Sticking to an assigned seat isn’t always my forte. I have tried to make my way closer to a concert stage and have moved up in the bleachers at an ice hockey game. But that morning the seats were big enough and spaced out enough that having someone beside you didn’t matter much and, truth be told, I felt a bit compelled to stay seated so as to not insult the moviegoers beside me. For some reason I thought it would make it seem like they weren’t worth sitting next to (though, in reality, they might have preferred it if I moved).

As I remained in my designated spot and the movie progressed, it was fun to hear the gasps and laughs, and oohs and aahs, alongside my own. When audience members are engrossed in a scene that prompts a reaction, it makes for a more interactive experience. When audience members distract from what’s on the screen, however, it can be beyond off-putting. 

Theater companies, as well as movie makers, want any film experience to be a positive one. That means seeking quality not only in the movie but in the viewing environment, and ensuring both is no easy task. Individuals have different preferences for what they want to watch, how they want to watch, and with whom they watch it. The subjective value placed on each experience will inevitably vary with each individual.

Indeed, human action is a complex matter. The decisions we make, behaviors we partake in, and what rules we bend or break are predominantly self-determined (if not to be bound by rules of law). My decision to stay in my seat while watching Superman was based on the options available, my personal preferences, and my thoughts on how it might impact the other movie-goers. As for the snacks I brought in, I didn’t hold back from pulling them out from my handbag or drinking my brought-from-home beverage. I’ve become rather resourceful with refreshments over the years, and my kids are always mortified when I bring food into entertainment events to avoid concession stand prices. Fortunately, some places have embraced the idea of letting guests bring in their own food — ranging from amusement parks like Disney World to concert venues like Bethel Woods — and this option has added to my level of satisfaction. Venues tend to leverage the fact that they have a captive market, and so prices for a mere hotdog can be shocking. I’m more than happy to splurge on treats but less enthused to overspend just on fighting hunger pangs. It would be good for such venues to remember that they are not just selling tickets but fan experiences, and positive experiences can lead to repeat attendees and glowing reviews. 

I can afford going to various events and shows because I’m savvy about spending, particularly when it comes to little things like coffee and snacks. And while I may sneak in snacks to morning movie showings (since the theater’s popcorn machine isn’t even turned on yet), I still adhere to societal norms. I would never bring in any food item that had a strong smell or was loud or obnoxious to eat (for a hilarious example, see Mr. Bean trying to eat candy during a church service). 

A good society is derived from respectful and rational individuals more so than top-down restrictions and impositions. The curious nature of human action and social order is directly discussed in Leonard Read’s 1975 publication, Castles in the Air.

In Chapter 2, “Freedom: A New Vision,” Read explains that freedom is a means to social order.

In brief, the freedom philosophy or the free market is a way of life. But it differs from most philosophies in that it does not prescribe how any individual should live his life; there are no fixed concepts. It allows freedom for each to do as he pleases—live in accord with his own uniqueness as he sees it—so long as the rights of others are not infringed, which is to say, so long as no one does anything which were everyone to do would bring all of us to grief or ruin. In short, this way of life commends no controls external to the individual beyond those which a government limited to keeping the peace and invoking a common justice might impose. Each individual acts on his own authority and responsibility. 

And in Chapter 3, aptly titled “The Mystery of Social Order,” Read conveys the power of individuals and the importance of autonomy.

Why is social order so mysterious? It is mysterious because no one can describe it in advance. Opposed to the perfect cadence of the goose step is the blessing that flows from everyone peacefully pursuing his own goals, going his way, that is, every which way, in constant flux, milling around, each person responding to his own ever-changing aspirations, abilities, uniqueness. Instead of our being carbon copies of some know-it-all, we are what we were meant to be: originals!

So, in closing, let me refer back to Clark Kent, almost definitionally ‘unique.’ Just as Superman takes pride in using his abilities for good, we can choose to use ours in accordance with promoting a rational, respectful, and free society — while aiming to be the best version of ourselves.

In fact, my favorite scene in the new Superman is when Clark Kent revisits his childhood home and discovers the love he received from his human parents, in addition to the lessons they instilled in him during his upbringing, matter more than that of the planet he came from. ‘Pa Kent’ puts things in perspective for Clark by plainly stating “Your choices, your actions, that’s what makes you who you are.” And when (spoiler alert) Superman defeats Lex Luthor, Clark proudly proclaims that despite being different, he is human after all.