Argentina’s recent $20 billion currency swap agreement with the US underscores the delicate balance of economic reform and the vital need for liberalization. Last month, there was a sudden run on the Argentine peso, fueled by a series of political setbacks, including Buenos Aires provincial elections in which Peronists won many of the congressional seats. Following this tumult, the Argentine Central Bank burned through more than $1 billion in just two days to keep the exchange rate within the government-backed currency band. 

Soon after, President Javier Milei was in New York securing a deal with the US Treasury Secretary Scott Bessent for what amounted to an effective bailout to prevent the sudden surge of the peso. While critics view Milei’s request for support as a vulnerability, stabilizing the Argentine peso is essential to propel his austerity agenda into the latter half of his term.

Indeed, Argentina is on the brink of transformation, driven by the bold reforms of its libertarian President Javier Milei. Not since the early 1990s has the nation seen such rapid policy shifts. After spending nearly a month in Argentina this summer, I observed a country brimming with potential, yet weighed down by its historical burdens.

Milei’s La Libertad Avanza party has pushed through significant market reforms, achieving eye-popping results. Annual inflation, which soared at 289 percent when he took office, dropped to under 40 percent. In early 2025, Argentina recorded its first fiscal surplus in 14 years, and poverty rates fell from 53 percent in early 2024 to 31.6 percent by mid-2025. These accomplishments mark a sharp departure from decades of economic mismanagement.

However, Argentina’s progress is hampered by a legacy of Perónist policies fueled by bureaucratic control and special interests. Milei’s efforts to liberalize the economy face fierce resistance from labor unions and career bureaucrats who view his reforms as a threat to their existence. Market liberalization, as I’ve noted before, is far easier in theory than in practice. Success stories like Poland and Chile, which transformed into thriving market economies, are exceptions. They succeeded by restructuring institutions to protect property rights and unleash human potential. Argentina, despite its wealth of talent and resources, struggles to follow suit.

The nation’s universities, among the best in Latin America, produce highly skilled graduates who could drive economic growth. Yet, a dense web of regulations stifles their potential and limits the human capital that is the backbone of prosperity. In cities like Córdoba, where I spent much of my time, this tension is palpable. The taxi industry, for example, has lobbied to ban ride-sharing services like Uber, yet drivers operate in defiance of these laws. This rent-seeking, rooted in Perón’s mid-20th-century policies, continues to choke innovation and entrepreneurship.

The mounting pressure from public sector workers to bolster pension funding has reached a tipping point. After the Libertarian Party’s decisive defeat in last month’s provincial elections, President Milei relented, approving legislation to increase allocations for pensions, disability, health, and education. While political compromises are inevitable, entrenched interest groups continue to wield disproportionate influence over Argentina’s electoral politics. To counter this, Argentines must prioritize grassroots reforms, starting at the local level and extending to provincial governance. Leaders across the spectrum should champion a culture of openness and free enterprise to drive meaningful change.

Adding to Milei’s challenges, a recent scandal has cast a shadow over his administration. Alleged audio leaks implicate his sister and top aide, Karina Milei, in a bribery scheme involving hundreds of thousands of dollars for pharmaceutical contracts. The accusations, tied to Diego Spagnuolo, former head of Argentina’s National Disability Agency, have given Milei’s opponents — particularly the Perónist Fuerza Patria party — ammunition to push for a return to high-spending policies that fueled inflation over a decade ago.

In his 1981 book, Structure and Change in Economic History, Nobel laureate Douglass North introduces the role ideology plays in economic transformation. North argued that individuals shift their ideological perspectives when their experiences contradict their beliefs. For Argentina to embrace freer markets, its institutions — government, industries, and civil society — must credibly commit to protecting property rights and fostering individual liberty. Without this, reforms risk remaining superficial.

Argentina’s challenges reflect North’s central question: how do nations transition from economic stagnation to prosperity? Milei’s administration must not only pass reforms but also ensure that institutions across society reflect a commitment to freedom. The taxi industry’s resistance in Córdoba is just one example of how entrenched interest groups block progress. These groups — spanning agriculture, energy, transportation, and education — perpetuate a system that favors cronyism over competition.

As Nikolai Wenzel outlines in his AIER primer on Argentina’s economic history, the nation’s highs and lows are tied to its institutions. Since Perón’s rise in the 1940s, government involvement has grown, stifling private initiative. Milei’s election, fueled by a surge of classical liberal sentiment, challenges this status quo. Yet, as economists like North, Joel Mokyr, and Deirdre McCloskey emphasize, institutional reform is not just about passing laws — it’s about creating a culture that rewards entrepreneurship and empowers individuals.

Milei’s achievements are significant, but lasting change requires more than policy wins. Argentina needs a societal shift toward innovation and deregulation, where individuals are free to pursue their ambitions. McCloskey illustrates that economic prosperity flourishes when societies embrace the “dual ethical change of dignity and liberty” for ordinary people. Argentina’s future hinges on embedding these values beyond the political sphere.

The bribery allegations against Karina Milei threaten to undermine this vision. By defending his sister, Milei risks eroding his credibility as a reformer. If he is to solidify his legacy, addressing these allegations decisively — potentially by removing Karina from her privileged perch — would signal his commitment to reform and transparency. Without such action, the opposition may gain traction, reversing the progress made.

Argentina’s vast potential is shackled by its Perónist past. Milei’s reforms lay a bold foundation, but the path to a thriving market economy demands relentless action across society, from the grassroots level to the Casa Rosada. Argentina must embrace a broader culture of innovation and individual drive by shattering barriers impeding growth. Only then will the nation exit the road to serfdom and embark on the path to prosperity. 

Creating a long list of the familiar flaws in protectionists’ thinking is easy. Protectionists don’t realize that, although trade ‘destroys’ some particular jobs in the domestic economy, trade simultaneously creates other – and better – particular jobs in the domestic economy. (Foreigners sell us stuff only because they want to buy other stuff from us.) 

Protectionists seriously misconstrue so-called “trade deficits.” Protectionists don’t understand the principle of comparative advantage. Protectionists see the act of importing stuff as the burden a people must unfortunately bear in order to obtain the privilege of exporting stuff. (It would be as if you were to see your act of accepting paychecks from your employer as the burden you must unfortunately bear in order to obtain the privilege of toiling for your employer.)

The rest of this column could be filled with literally nothing but further additions to this list of well-known protectionist misunderstandings and fallacies. And because of space constraints, there would be many misunderstandings and fallacies left unmentioned.

But I instead want to focus on one infrequently mentioned protectionist fallacy – namely, the protectionist presumption that their fellow citizens regularly spend and invest their own money stupidly.

That protectionists have such a low opinion of their fellow citizens becomes obvious upon inspection of protectionists’ many assertions about the current state of the economy. In the United States, we Americans are constantly told by protectionists that as international trade grew freer and more frequent from the mid-1970s until around 2018, America’s industrial economy was “hollowed out,” especially by imports of cheap T-shirts and trinkets. We’re also told that the now half-century-long run of annual trade deficits has transferred much of our wealth to foreigners. Protectionists further insist that American producers have been out-competed by wily foreigners — and simply can’t compete unless our government handicaps US imports and subsidizes US exports. And protectionists never tire of complaining that American workers, although desperate for jobs in manufacturing plants, have lost such jobs to low-wage workers abroad.

The fact that none of these empirical claims made by protectionists is even remotely true is not my central point. Instead, I wish to emphasize that each of these protectionist claims implies that we Americans are dismayingly dull-witted — that we are childishly irresponsible with our own money, and that, at least in comparison with non-Americans, we are buffoons in matters of commerce, industry, and entrepreneurship.

Do note, however, that when protectionists tell their tales they speak and write as if the only actors who take initiative in international commerce are foreigners. In these tales, we Americans are inert; we’re passive players and, as such, become victims. Foreigners cheat us… foreigners take our jobs… foreigners outcompete us… foreigners destroy our industries… foreigners buy up our assets and load us down with debt… foreigners enrich themselves at our expense. But of course each and every one of the international commercial transactions in which foreigners allegedly inflict these nefarious consequences on Americans is a transaction to which an American (or group of Americans) is a voluntary party.

Protectionists’ opinion of their fellow citizens could hardly be lower. As protectionists see matters, most of us wind up poorer after each commercial transaction with non-Americans, despite the fact that we continue voluntarily to engage in such transactions. Perhaps we are too senseless to realize the deepening impoverishment that each of us suffers after each economic engagement with a foreigner. Or maybe we are so delusional that we continue to hope that, although we have consistently been harmed by foreigners when trade is free, we’ll soon turn the tables on those cunning merchants who ship us their goods from abroad.

It’s easy to understand why, in protectionist tales, foreigners act with initiative and astuteness while Americans react passively and dully. Ironically, were protectionists to portray their fellow citizens as being the intellectual equals of foreigners – to portray their fellow citizens as being as active and as intelligent as foreigners – protectionists would forsake the ability to blame foreigners for the mythical damage that trade does to America.

In most protectionist fables, the good guys and gals – domestic citizens – must also serve as the fables’ dolts, who fall victim to devious and smarter foreigners.

In complete contrast to protectionists, we free traders have a high opinion both of foreign merchants and of our fellow citizens. We trust that our fellow citizens spend and invest their own money prudently and productively. Although mistakes sometimes are made – both by our fellow citizens and by foreigners – people learn from their errors and adjust their decision-making accordingly. The result is that nearly all of the commercial transactions that our fellow citizens make with foreigners are ones in which both the foreign traders and our fellow citizens gain.

How, then, can it be that if almost all of the countless individual commercial transactions that Americans have with non-Americans are transactions in which Americans gain, the overall result of these transactions is that Americans as a group lose? This question should be put straight-on to protectionists much more frequently.

How might they answer? One possible response of the protectionists would be to deny that we individual Americans gain in most of the transactions that we have with foreigners. But protectionists can’t explicitly respond in this way because to do so would clearly reveal their low opinion of their fellow citizens’ intelligence.

An alternative answer would be to insist that when all the positive gains from these international trades are summed together, the result is a negative number, as in 114+76+9+101+958+5+10 = -1,970. Protectionists, of course, would also avoid this answer, as not even they will confess to rejecting basic arithmetic.

The answer that protectionists give, often only implicitly, is that the gains that each American reaps when trading with foreigners are more than offset by losses that those trades allegedly inflict on other Americans. When, for example, Joe in Jacksonville buys a car from Sven in Sweden, Molly loses her job at the automobile factory in Michigan. But this answer doesn’t acquit protectionists of the charge that they hold a very low opinion of their fellow citizens’ intelligence.

If so many of us Americans are losing business and jobs — and, thus, are thrown indefinitely into unwelcome idleness — because our fellow citizens are dealing commercially with foreigners, why don’t Americans step up to the economic plate and compete better against foreigners? Are Molly’s abilities so limited that she is capable of working only in an automobile plant? Are American businesses so inept that they can find no way to employ Molly in some other capacity to produce outputs that can be sold at profitable prices? Is the United States so destitute of entrepreneurship that no one here can invent new products or new methods of production that put American workers and resources to productive uses? Are we Americans so myopic and frivolous that whenever we sell assets to non-Americans we blow all the sales proceeds on satisfying our immediate sensual desires rather than reinvest these proceeds in assets and entrepreneurial ventures that have more economic promise than did the assets that we sold?

Is it really true that when it comes to entrepreneurship, business administration, investing, and managing both our commercial and household finances, Americans as a group are outclassed by the Chinese, the Europeans, the Mexicans, and other foreigners?

Free traders know that the answer to each of the above questions is an unambiguous “no!” And in support of our answer, we have reams of evidence on the performance of the American economy.

Protectionists, in contrast, in addition to having to torture the data to elicit from them a false anti-free-trade confession, cannot escape the charge of believing that their fellow citizens, when participating in market exchanges, are dumb as dirt. Americans should pay no attention to those who hold them in such low regard.

Activists from the left have tried to “cancel” me multiple times. I lost an academic job opportunity despite the support of a large majority of the department and the dean because two self-described Marxists in the department threatened to “go to war” if I were given an offer (the search committee chair told me this!). An elected official tried at least twice to get me fired from different jobs by calling the Board of Trustees and the executive leadership of my employers. When that didn’t work, he called my wife’s employer and accused her of belonging to a militia.

Given these experiences, you might think I would cheer demands by some on the right to start “canceling the left.” Federal Communications Commission chair Brendan Carr called for the suspension of late-night host Jimmy Kimmel after Kimmel’s false remarks about the killing of Charlie Kirk. Vice President JD Vance has said that those who celebrated Charlie Kirk’s death should lose their jobs, with Donald Trump, Jr. even deploying the excuse-phrase once used by the woke left — “Consequence Culture” — to describe the cancellations. Again echoing woke-left terminology, Attorney General Pam Bondi has claimed that “hate speech” is not protected by the First Amendment. Conservative gadfly Chris Rufo advocates a broader censorship campaign against the left: “The ‘shoe has been on the other foot’ for at least a hundred years. Turnabout is fair play. . . The only way to get a good equilibrium is an effective, strategic tit-for-tat.”

The whole controversy is yet another opportunity for the nationalist New Right to accuse the traditional right of timidity, of being too bound by norms of civility and adherence to the Constitution. In this case, they have a kernel of plausibility: if those who practiced cancel culture in the first instance never suffer any consequences for their overreach, what is their incentive not to do it again when they have the opportunity?

The fatal flaw in the pro-cancellation right’s position is its collectivization of the left. If cancellations are justified only in retaliation for previous cancellations, then they need to be directed toward those individuals who carried out cancellations, not the more than 100 million Americans who might identify as left-of-center. I haven’t heard even allegations that Jimmy Kimmel ever got anyone fired for his political views.

When Elon Musk took over Twitter, he fired some executives who were responsible for decisions to ban conservatives for their sincere expression of political beliefs. This is the only kind of “tit for tat” that makes sense. We can’t even call Musk’s actions “cancellations,” because the executives were fired not for their speech but for their actions that harmed users and undermined the platform.

How should we treat the expression of opinions we find abhorrent? John Stuart Mill got this question mostly right over 150 years ago in On Liberty. In that essay, Mill defended the freedom of the individual to think, speak, and act freely so long as he causes no definite harm to any other person. “The only freedom which deserves the name,” Mill wrote, “is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it.”

Importantly, Mill understood that “the moral coercion of public opinion” could be as harmful as government-imposed punishments and censorship. Mill opposed the “cancel culture” of his day, though then it had less to do with firing people for their political views and more to do with shunning people for their views and lifestyles.

Mill’s essay isn’t perfect — he gets very mixed up about what “coercion” means and which types of voluntary acts are exempt from social control — but he gives us strong reasons to think that both public censorship and private punishment of the expression of viewpoints will have harmful consequences. First, canceling people for their views will prevent us from hearing views that may be true, or at least that may contain part of the truth. Second, preventing people from speaking falsehoods will prevent us from acquiring a lively understanding of the truth and will make people more susceptible to falling into error. The way left-wing cancel culture caused some young people, especially young men, to experiment with “forbidden” far-right ideologies is an example of this. If the right starts canceling the left across the board, then it may well revive the left’s interest in free speech, but it will also make the left “cool” again. (See: the 1950s and 1960s.)

Is it ever appropriate to fire someone for speech? Of course. If you go into the public square and shout negative things about your employer, it’s reasonable for your employer to fire you. If your speech gives us good reason to think you will do your job poorly, then it is reasonable to fire you. Churches shouldn’t be required to employ preachers who profess atheism, for example. For this same reason, it seems reasonable to fire schoolteachers for expressing support for the Charlie Kirk killing. Many kids, especially high schoolers, admire Kirk and share his views. We don’t want them to have to be taught by someone who wants them dead.

Universities are different from K-12 institutions in this respect. Universities are supposed to be engaged in a no-holds-barred search for truth. If that’s the goal, they need to follow the same standard of free speech that the government is supposed to follow. Members of the university community are all adults and should be expected to “put on their big-boy pants” and deal with whatever speech they may encounter on campus. College students making uninformed TikTok videos shouldn’t be punished for the views they express, no matter how odious. Neither should professors.

If private institutions should not generally “cancel” expressions of political opinion they disagree with, then so much more should the government stay out of it. Furthermore, if private institutions do err and “cancel” speech they shouldn’t, the government should also stay out of those decisions. Society benefits from a rough-and-tumble process of debate and learning from a multiplicity of examples. If a big company starts canceling conservatives, then conservatives’ appropriate response is to boycott them, not run to the government for help. Then other companies will learn what risks they run by acting unreasonably against a political out-group. 

In fact, I’d say that’s just what happened over the last half-decade; as a result, businesses are now much more likely to stay out of political controversies.

Let’s trust the marketplace of ideas and stop trying to punish people for their thoughts, only for their harmful actions against others.

Five years ago, The CARES Act authorized the Federal Reserve to create emergency lending facilities in the name of aiding the US Economy during the COVID-19 economic downturn. In a 2021 appraisal of the Fed lending facilities, several AIER Sound Money Project (SMP) scholars observed:  

Although some facilities likely helped to promote general liquidity, others were primarily intended to allocate credit, which blurs the line between monetary and fiscal policy. These credit allocation facilities were unwarranted and unwise.

One such facility was the Municipal Liquidity Facility (MLF), which loaned money to state and local governments. In my recent AIER White Paper “Enabling Bad Behavior,” I examined the two entities that took loans from the MLF: the State of Illinois and the New York Metropolitan Transportation Agency (MTA). I find that, while the MLF loans do not show any effect on the fiscal health of these entities during or after 2020, the MLF distorted the boundary between fiscal and monetary policy.  

How Did the Fed’s MLF Work? How Did It Compare to What a Central Bank Should Do? 

The MLF loaned to state and local governments by purchasing municipal bonds directly from state and local governments, a historic first for the Fed. 

For context, in their 2021 book Money and the Rule of Law, economists Peter Boettke, Alexander Salter, and Daniel Smith outline and discuss “Bagehot’s Principles,” for a central bank serving as a lender of last resort:  

1. Only lend to solvent banks.  
2. Accept only marketable collateral. 
3. Lend at above-market interest rates to discourage unnecessary borrowing. 
4. Publicly and credibly commit to this role before a crisis occurs. 

When it comes to Bagehot’s Principles, the Fed establishing the MLF did not meet any of those standards:  

• Non-bank lending: this facility extended credit to non-bank entities, namely state and local governments.  
• High-risk borrowers: the MLF was open to loans on municipal entities with below-investment grade ratings. As financial analyst Marc Joffe noted in 2020,  

Although the lending program is called a ‘liquidity facility’ – suggesting that it is a device for creditworthy governments to secure funds in difficult market conditions – it is open to junk-rated entities, meaning that the Fed could be taking on credit risk as well.

So much for only lending to solvent banks with collateral that is “marketable in the ordinary course of business.” Fed officials, however, did not lose any sleep about taking on such risk because the CARES Act promised that the US Treasury would cover the Fed’s losses up to $35 billion, passing the risk over to taxpayers. 

• Perverse Interest Rate Structure: The MLF structured borrowing rates so that the worse a government’s credit rating, the more favorable the interest rate it would receive. AAA-rated entities would face above-market interest rates (in line with Bagehot’s principle) while BBB-rated entities would receive below-market interest rates.  
• Crisis-Driven Creation: the facility was created in the midst of the pandemic and ceased operations December 31, 2020. Its sudden emergence amid the crisis failed to meet the criterion of pre-crisis credibility. 

Moreover, the SMP scholars found that the MLF was among several emergency lending facilities that were fiscal policy tools, not monetary ones. If Congress wanted to enact those fiscal policies, they argue, these policies should have been approved by Congress and executed by the proper executive branch agency. Having the Fed handle something like loans to state and local governments “blurs the line between monetary and fiscal policy.” 

Lending to the Worst of the Worst and Changing the Rules Along the Way  

The MLF first purchased general obligation bonds from the State of Illinois. Illinois’s general obligation bonds were BBB-/Baa3, one notch above junk. This was due to years of fiscal mismanagement leading up to 2020, not the pandemic. 

Using the Hoover Institution Municipal Finance Database, I found that Illinois entered 2020 with poor fiscal strength relative to states with similar economy sizes, population sizes, and poverty rates. By the time the MLF closed, the State of Illinois borrowed $3.2 billion from the facility. 

Originally, the MLF was set to lend only to state and local governments. In April 2020, however, Senator Charles Schumer (NY) pressured the Fed to expand the MLF’s list of eligible borrowers to multistate entities, specifically the Port Authority of New York and New Jersey (PANYNJ). In the end, the PANYNJ did not take an MLF loan, but the financially distressed New York MTA did.  

The entity, which serves New York State and City, Long Island, Southeastern New York State, and Connecticut, is what is known as an “Off-Budget Enterprise” or a “Component Unit,” which operates outside New York State’s formal budget yet depends heavily upon transfer payments from governments whose areas they serve. New York State’s financial reports describe component units (including the MTA) as:  

“[F]iscally dependent upon, and has a financial benefit or burden relationship with the State…the nature and significance of their relationships with the State are such that it would be misleading to exclude them.”  

I applied Hoover’s Fiscal Strength calculations to the New York MTA and PANYNJ, as well as Chicago Transit Authority (CTA), and the Washington Metropolitan Area Transportation Authority (WMATA) for comparison. From 2012-2020, the MTA consistently ranked at or near the bottom in fiscal strength.  

In addition to the Hoover Fiscal Strength variables, I examined operating revenue (revenue earned through normal business operations) as a percentage of total transit authority revenue for all agencies. This is a sign of an agency’s dependence on debt-financed spending and transfer payments from governments.  

The MTA’s operating revenue made up a smaller share of total revenue than all but one other agency in the sample (CTA), underscoring financial vulnerability. By the end of 2020, the MTA borrowed $3.35 billion from the MLF. 

The Aftermath: Bad Behavior Enabled  

While both Illinois and the MTA paid the MLF loans back, they did so by paying back the debt by issuing new bonds sold on the municipal bond market, akin to someone using their Visa card to pay their MasterCard bill. The loans did not require Illinois or the MTA to make structural reforms or budget changes, allowing the same problematic fiscal behavior to continue unchecked. 

Fiscal strength indicators showed no significant improvement in Illinois or the MTA compared to peers in their designated samples. Interestingly, the PANYNJ, the reason for the expanding MLF eligibility, did not borrow from the facility and is in a much stronger position than the MTA. 

I also examined each mass transit authority’s total ridership as a percentage of 2015 ridership (a pre-pandemic benchmark for stable transit use). None of the authorities in the sample have fully recovered ridership except the MTA’s Bridges and Tunnels. While external factors influence demand for transit, ridership trends are a key variable for revenue forecasts and budget planning. 

While the MLF loans did not seem to have a noticeable impact on fiscal strength, it did make waves in fiscal and monetary policy. In the same 2020 commentary mentioned earlier, Joffe also noted that the MLF risked permanently federalizing local debt finance, undermining the discipline of balanced budget requirements and other fiscal rules keeping state and local fiscal policy in check. He also noted that the program could crowd out traditional municipal bond market investors and invite moral hazard by enabling politically favored jurisdictions to access subsidized credit. 

Joffe’s concerns align with economist George Selgin’s 2020 book The Menace of Fiscal QE, specifically that the Fed creating these emergency lending facilities creates a backdoor fiscal policy and raises the risk of political credit allocation. State policymakers (incentivized to look outside their own sources of revenue by decades of dependence on federal transfers) are more than happy to use these backdoors to ensure the status quo in fiscal policy is maintained.  

While the federal government is infamous for interfering with monetary policy, the MLF creates a new rent-seeking group in monetary policy: state and local governments. Seeking favorable loans from the Fed again will come naturally for state and local policymakers who, on average, receive 35 percent of their expenditures from federal transfers. Meanwhile, Fed officials who regularly embrace mission creep and consider the MLF “a clear success story of the pandemic policy response” will likely be happy to oblige.  

Ultimately, this behavior will damage fiscal and monetary policy. These loans will come at the cost of the Fed’s public perception as an independent agency and damage institutional legitimacy, threatening long-term price stability. Additionally, these loans will weaken state fiscal discipline by providing yet another avenue for state policymakers to circumvent fiscal rules. 

What Can Be Done? 

The best way to rectify these mistakes is to establish strong institutional rules among federal and state fiscal policy as well as for monetary policy. 

1. The Federal Reserve must be bound by a constitutional monetary rule to prevent Fed officials and fiscal policymakers from engaging in credit allocation.
2. Federal policymakers must make an explicit commitment not to bail out financially distressed states. 
3. Both federal and state governments must embrace a strong fiscal rule that constrains spending growth and encourages policymakers to properly prioritize budget items. 
4. State policymakers must establish rules that require state agencies to seek legislative approval before accepting federal grants or funding. 
5. State policymakers must reform their relationship with Off Budget Enterprises. State leaders must either bring these entities fully on-budget and subject them to the same budget rules as other state entities, or end transfer payments and make them truly independent. These entities can no longer have their cake and eat it too. 

These reforms will face political and institutional resistance. Without them, however, we risk further entrenching bad policy.

President Donald Trump recently revived a proposal he first raised during his earlier time in office: eliminating the requirement for publicly traded US companies to release quarterly earnings reports, instead mandating semi-annual disclosures. The idea is framed as a way to reduce compliance costs and allow firms to focus on long-term strategy rather than the next three months of results. While the notion has intuitive appeal, it also raises serious questions about transparency, market efficiency, and the balance of power between corporate managers and investors.

Quarterly reporting has long been criticized for reinforcing what economists and corporate governance experts call short-termism. Executives are often compelled to manage earnings targets rather than allocate capital in ways that maximize long-term value. Research has shown that managers sometimes defer or cancel value-accretive projects — such as investments in research and development, plant expansion, or workforce training — because the costs depress quarterly earnings per share, even when the long-term benefits are clear. Moreover, the cycle of “earnings season” can distort managerial incentives. Companies issue forward guidance, analysts build consensus estimates, and then the market reacts sharply to whether results beat or miss expectations—sometimes by mere pennies per share. This fosters a culture of earnings management, where discretionary accounting choices or one-off cost cuts are used to smooth results. For firms, particularly smaller ones with limited resources, the compliance burden of quarterly filings adds costs in legal, accounting, and investor relations functions.

Critics argue that the US practice places firms at a competitive disadvantage relative to companies in Europe, where semi-annual reporting is the norm. If managers are less tethered to near-term EPS performance, they can operate with a longer horizon, aligning corporate strategy more closely with innovation cycles, capital investment horizons, and structural shifts in the global economy. Trump himself emphasized this when he contrasted America’s “quarterly mentality” with China’s ability to take a multi-decade view.

But while quarterly reporting is imperfect, reducing disclosure frequency to twice a year also carries risks. The most immediate concern is the information gap that would emerge between formal disclosures. Markets function best when information flows efficiently; semi-annual reporting would leave investors with fewer data points on which to assess performance and risk. For institutional investors, this would complicate portfolio management, while retail investors might face heightened uncertainty. A longer gap between reports could also encourage information asymmetry. Corporate insiders would continue to have access to detailed, current data, while public shareholders would have to wait several more months for official numbers. This creates greater potential for insider trading and selective disclosure. Regulators might respond with stricter interim disclosure requirements — undermining the very cost savings the proposal seeks.

Another trade-off lies in the effect on market discipline. Quarterly scrutiny provides a form of ongoing accountability, pressuring management teams to correct underperformance swiftly. With only two reporting windows each year, underperforming strategies could persist unchecked for longer, leaving shareholders less empowered to intervene or apply pressure. 

Finally, the reporting cycle serves an important signaling function. Frequent results allow the market to incorporate new information into valuations in a timely way, making securities prices more reflective of underlying fundamentals. Lengthening the reporting interval could increase volatility around the semi-annual dates and weaken the process of continuous price discovery that is central to modern financial markets.

The choice, therefore, is not a simple one between costly, short-termist quarterly reporting and efficient, long-termist semi-annual reporting. It is instead a trade-off between transparency and accountability on the one hand, and managerial flexibility and cost savings on the other. Moving to six-month reporting would relieve companies of some compliance burdens and potentially encourage longer-term thinking, but at the expense of efficient pricing and access to information. It is also worth noting that many of the most pernicious aspects of quarterly reporting stem not from the reporting itself, but from the ecosystem of earnings guidance, analyst estimates, and media scrutiny that has grown up around it. Companies are not legally required to issue quarterly guidance; many do so voluntarily. Some firms have already chosen to scale back on forward guidance or to emphasize alternative performance metrics better aligned with long-term value creation.

Rather than imposing a one-size-fits-all mandate, regulators could consider a more flexible approach. Boards of directors, executives, and shareholders could be empowered to decide the frequency and form of reporting most appropriate to the firm’s business model, shifting strategies, and unique investor base. In such a system, one company might continue to issue quarterly results to signal discipline and transparency, while another might opt for semi-annual or even annual disclosures coupled with robust narrative reporting. Some firms might even experiment with ad hoc, event-driven earnings releases, providing updates only when material developments warrant disclosure rather than on a fixed timetable. Investors, in turn, could vote with their dollars, allocating capital toward the firms whose disclosure practices best match their preferences for transparency and time horizon. This would effectively turn reporting cadence into a new dimension of corporate competition.

In the end, the question is less about whether quarterly or semi-annual reporting is “better” and more about whether disclosure practices can themselves evolve into a competitive advantage in attracting and retaining shareholder capital.

 New York City, the bastion of global capitalism, is on the verge of electing its first socialist mayor, Zohran Mamdani. Many of his socialist visions for the metropolis fail basic economics. Worst of all is his proposal to freeze the price of rent. It ignores decades of empirical evidence that rent control harms the very residents Mamdani hopes to help. 

Socialists are infamous for stubbornly rejecting the laws of economics in pursuit of utopian fantasies. Yet rent control has led to such obvious and abysmal failures around the globe that even hard-core socialists have disavowed it. The broad consensus among economists is that rent control, by mandating a price below the market level, will reduce both the quantity and quality of housing, leading to long waitlists, the dilapidation of rental units, and misallocation.   

The immediate effect of freezing rents below their market price in The Big Apple will be to reduce the incentive for investments in expanding the housing supply. Laws, such as parking space requirements, single-family zoning, and density limits, already artificially restrict opportunities in major cities like NYC. They drastically increase the costs and risks of new construction or the conversion of commercial properties into residential housing. Reducing the price that landlords can charge tenants to justify these onerous costs will only compound the problem, further disincentivizing investment.   

Freezing rents below their market price can also be expected to cause a misallocation of apartments. Normally, major life events, such as children moving out or an elderly person losing their spouse, result in people moving to more affordable, smaller apartments. Artificially low rents encourage inefficient use of apartment space. New York City residents retiring to sunny Florida might hold on to their rent-controlled apartment for return visits. Similarly, wealthy individuals starting a family and moving out to the suburbs would find it more affordable to keep their apartment for a pad to crash at a few times a year after catching a Yankees game.   

The experience of rent control in Sweden offers a stark warning that even policies made under the best of intentions cannot avoid the consequences of ignoring the laws of supply and demand. Average waiting times for apartments have extended to an astounding nine years. The situation is so bad that underground markets have emerged, giving disproportionate power to landlords to engage in favoritism and discrimination. Even under limitations that simply restrict the growth of rents, as those implemented in Ireland, have led to hundreds of people lining up for a single apartment.   

Existing landlords, similarly, can be expected to reduce their maintenance and repair budgets to recoup or eke out a return on their investment under the lower revenue mandated by the rent freeze. Ironically, one of the key examples of this happening in practice comes from New York City, where rent-controlled apartments have deteriorated into squalor. The return is so bad that many landlords in the city simply quit renting or even abandon the buildings.  

Even socialist Vietnam learned this lesson the hard way. Its Foreign Minister Nguyen Co Thach reporting that rent controls led to Hanoi housing falling “into disrepair.” According to Thach, while “the Americans couldn’t destroy Hanoi…we have destroyed our city by very low rents.” The socialist Assar Lindbeck, even more provocatively observed, “In many cases, rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”  

A recent survey of the empirical literature on rent controls published in the Journal of Housing Economics confirms these examples as the expected outcomes of attempts to lower prices by decree. While the policy can reduce expenses for some tenants, it does so at the cost of systematically reducing construction, lowering the quality, and increasing the misallocation of housing.   

If Mamdani wants to truly help the budget-constrained residents of New York City, he needs to embrace markets, not socialism. Reducing unnecessary and overly burdensome zoning regulations that artificially restrict the supply of housing is a proven solution to increase the quality, quantity, and affordability of housing. Ultimately, New York City’s path to affordable housing lies not in disproven and harmful rent control, but in the liberating force of free markets and deregulation.