For four months, President Trump has treated the 1977 International Emergency Economic Powers Act (IEEPA) as his personal, Oval Office “tariff button”—allowing him to launch trade wars as easily as ordering a Diet Coke. Last week, in V.O.S. Selections, Inc. v. U.S., the US Court of International Trade ordered the president to cut it out: “The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs.”

“Unbounded” is right: the Trump administration’s IEEPA power grab transforms a foreign-policy sanctions statute into an all-purpose trade-war weapon. No other president has ever used the law for across-the-board tariffs on allies and major trading partners. Yet in a series of executive orders starting in February, Trump has invoked IEEPA to hike duties on Mexico, Canada, and China, for failure to stem fentanyl trafficking, then to impose new tariffs worldwide—declaring the long-standing US trade deficit a “national emergency.” 

Trump has since issued threats and reprieves with head-spinning rapidity: On Truth Social, the Friday before the CIT ruling, Trump demanded that Apple move iPhone production to the United States— a notion that was funnier the first time around as a Dave Chappelle bit. An hour later, he threatened 50 percent tariffs on European Union imports. By Monday, it was “never mind”: he’d granted a six-week pause.

On Thursday, with the V.O.S. ruling temporarily stayed, the president blew up at a CNBC reporter for questioning his climbdown. She referenced an acronym making the rounds on Wall Street: “TACO,” for “Trump Always Chickens Out” on tariff threats: “Don’t ever say what you said,” the president shot back: “That’s a nasty question.” “I don’t think Trump can back down now, mainly because of this TACO theme,” a Trump ally told Politico: “He’s clearly super irritated by it, and it’s like a challenge to his very manhood now.”

It’s surreal to think somebody might provoke a global trade crisis by whispering “bawk bawk” at a thin-skinned 78-year-old man, but here we are. And as long as we’re here, maybe it’s a bad idea to bait him?

In ten years as president of Cato, I’ve come to appreciate that our work doesn’t always score immediate wins for liberty. Sometimes it’s the constancy and consistency of our efforts that move the climate of ideas a bit more each day in the direction of individual liberty, limited government, free markets, and peace. And only after years of effort are the results clear.

But yesterday was one of those great moments when two of our policy experts scored tangible and immediate victories that showcased their dedication and effectiveness.

Ilya Somin, who holds the B. Kenneth Simon Chair in Constitutional Studies here at Cato, played a pivotal role as co-counsel in VOS Selections v. United States. This case, decided by the US Court of International Trade, struck down President Trump’s extralegal tariffs. Even as the decision has been temporarily stayed by an appeals court, Ilya’s pro bono work with the Liberty Justice Center safeguarded the livelihoods of five American businesses, underscoring our belief in free markets and constitutional principles.

Ilya himself noted:

It is great to see that the court unanimously ruled against this massive power grab by the President. The ruling emphasizes that he was wrong to claim a virtually unlimited power to impose tariffs, that IEEPA (International Emergency Economic Powers Act) law doesn’t grant any such boundless authority, and that it would be unconstitutional if it did.

Meanwhile, our colleague Mike Fox saw the results of his hard work when President Trump granted a pardon to John Moore and Tanner Mansell. Mike’s advocacy, including an amicus brief and congressional testimony, helped right a grave injustice the two men faced.

Mike sums up the case neatly in a recent Washington Examiner piece he wrote:

While leading a diving charter in 2020, [Moore and Mansell] stumbled across an abandoned fishing line they believed to be the work of poachers. They reacted in a responsible manner: They hauled in the line, released the entangled sharks, and brought the rig back to the marina after notifying state officials.

You’d think Moore and Mansell deserve praise for their act of civic mindedness. Little did they know that they’d stumbled on a bona fide research project. They’d soon discover their mistake when Assistant United States Attorney Thomas Watts Fitzgerald tried to send them to prison for theft of property within the “special maritime jurisdiction” of the United States. Their crime: “stealing” the line they hauled in and left on the dock.

In Cato’s Free Society, Senior Vice President for Legal Studies Clark Neily said, “Our system was painstakingly designed to avoid injustices like the ones inflicted upon … Moore and Mansell. But the system we have today bears scant resemblance to the one so carefully set forth in the Bill of Rights .… Fortunately, we can change that, and we will.” 

These victories underscore Cato’s commitment to independence and non-partisanship, as well as our ability to influence meaningful and positive change at the highest levels of government. This is why Cato was founded in 1977, and this is why we continue to pursue our vision: a free and open society in which liberty allows every individual to pursue a life of prosperity and meaning in peace.

Number ten in our series of occasional roundups on election law and policy:

• The Federal Election Commission has long since considered and ruled on the circumstances under which entertainers’ appearances at political rallies might count as a campaign contribution, which sheds light on President Trump’s demand for an investigation of Bruce Springsteen and other celebrity Harris supporters [Bob Bauer, Executive Functions]
• Some critics portray stricter deadlines on ballot receipt as motivated primarily by myths about voting fraud. Yet the move pursues goals of quintessential public interest, above all speedier ascertainment of who won, which can itself help curtail conspiracy thinking [Kansas City Star via Election Law Blog, earlier here, here, and here]
• “Unduly Burdensome Public Records Requests and Their Effects on Local Election Officials” [Shelley Kimball, EVIC]
• So-called sore loser laws, on the books in all but three states, are rationalized as a way to limit voter confusion, prevent spoiler candidacies, and, not least, shore up political parties. But they restrict voter choice and hobble candidates who might assemble cross-party coalitions [Eli Lehrer, R Street/​The Hill]
• “New Oklahoma Curriculum Requires Students To Learn 2020 Election Fraud Conspiracies” [Emma Camp, Reason; Associated Press] 
• Married women and birth certificates: sorting out claims about what the proposed SAVE Act on voter ID would do [Peter Gattuso, The Dispatch; earlier]

In a decision that surprised me in its rapidity, but not its outcome, the Supreme Court deadlocked four to four, leaving in place an Oklahoma Supreme Court decision against the creation of a Roman Catholic cyber charter school. The tie vote was possible because Justice Amy Coney Barrett recused herself from the case, likely because she is close friends with Nicole Stelle Garnett, the University of Notre Dame law professor who was instrumental in moving the case forward. While the case should elicit conflicted emotions for anyone who desires freedom and equality in education, the charter school going down was probably the right outcome.

Why right? Petitioners were correct that a charter excluding religious options, but at least theoretically allowing all others, discriminates against religious Americans. But chartering is too government-entangling a way to fix the problem. A charter school is a public school typically approved to exist by a government entity such as a state board, and that is too much government control. Chief Justice John Roberts, who was the likely conservative swing vote, addressed that concern directly in oral arguments, saying, “This does strike me as a much more comprehensive involvement” than school choice programs that allow families to use public funds at private schools, the subjects of much of the precedent cited by petitioners.

It is inherently dangerous to put the government in the position to declare, “This proposed religious school is OK, and this one is not.”

Because the decision was a tie, it sets no legal precedent, but it does send a message: Charter schooling is likely not the right way, legally, to address very real discrimination against religion by our public education system. The solution, as I have argued and as precedent points to, is private school choice, at least constitutionally required for religious families.

The battles over President Trump’s revenge orders against big law firms seem, on the surface, to have entered a quiet period. It has been weeks since Trump has entered any new decrees of this sort, and the list of firms settling with him by agreeing to donate pro bono services to causes he finds agreeable has been stable since April 11, at nine (most of which he never actually targeted in decrees). While it seems likely that his expectations differ from those of the law firms on exactly what they were committing to, we have not had the benefit of a full clarification on that point. 

Perhaps most significantly, one firm, Perkins Coie, has obtained a permanent injunction on summary judgment from Judge Beryl Howell broadly blocking its decree, subject to appeal, and two other firms, WilmerHale and Jenner & Block, have won temporary restraining orders. 

All of which might make you imagine the danger is fading. It shouldn’t. What judicial relief we’ve seen has only partial reach and would be hard to enforce under the best of circumstances. The present circumstances are anything but the best, given the Trump administration’s willingness to flirt (and more than flirt) with contempt of court and outright defiance of court orders, and given approaching threats in Congress to courts’ ability to enforce their orders at all (see below).

For example, the challenges to the penalty decrees have often omitted the provisions that arbitrarily denied security clearances to lawyers at a firm disliked by Trump. Avoiding such a challenge may have seemed prudent—no one can exactly predict how much deference courts will accord to the president’s broad authority on security clearances. But it leaves a hole that can be gaping because a BigLaw firm representing leading tech or industrial firms is inevitably going to generate a certain number of cases requiring the use of lawyers with clearances on matters such as defense procurement administration. Losing those large clients would be a heavy penalty for continued independence from Trump. 

Other parts of the decrees are more clearly subject to being enjoined. But the question is then how readily the court can enforce its will. For example, a judge may nix the part of a presidential decree that forbids federal employees from so much as speaking to lawyers from a banned firm, even to give routine regulatory guidance or negotiate the settlement of a tax or property dispute. But it could prove hard to nail down contempt if an agency aware of White House wishes doesn’t formally exclude a banned law firm but simply gives an endless runaround to its appointment requests while continuing to do business as usual with favored firms. 

The same applies to the provisions discouraging federal agencies from awarding contracts to private firms that are clients of a banned law firm— can you prove for certain that’s why your client lost its contract renewal? Clients can get the message pretty quickly. 

And if a court finds there was contempt, can it enforce it? Not if the president’s allies in the House of Representatives get their way. I wrote May 9 about the extraordinary language in the pending reconciliation bill purporting to bar courts from enforcing most contempt orders, whether on alien removals or on any other subject—a blow to efforts to hold Trump agencies accountable that would incidentally inflict massive damage more generally on the rule of law and individual rights. (See today’s coverage in the ABA Journal, which is kind enough to quote me, and an opinion piece yesterday by Erwin Chemerinsky in Just Security.) At last report, the House Rules Committee has kept the language with but one minor change. 

If you want to measure whether the danger has passed, measure by fear. When CBS’s 60 Minutes— which has come under its own pressure from Trump to temper its criticism—decided to report on the attack on law firms in a segment earlier this month, its first problem was to find anyone willing to speak on the record. “It was nearly impossible to get anyone on camera for this story,” its report began, “because of the fear now running through our system of justice.” 

Small wonder our friends Greg Lukianoff and Adam Goldstein at FIRE (Foundation for Individual Rights and Expression), which joined the same amicus brief Cato did in the Perkins Coie case, wrote in a recent account that is well worth reading in its entirety: “Of the many things the Trump administration has done in the last 100-and-change days that have impacted free speech, the threats to law firms might be the most troubling.”

Earlier in this space, from Thomas Berry (on Cato’s participation in the Perkins Coie brief) and from me here, here, here, here, and here.

Today, I’m supplementing my posts of December 24, 2024 and February 25, 2025, which discuss proposals by President Donald Trump to enlarge his own powers and those of the executive branch. I’ll be addressing the following questions: Can the president lower drug prices, suspend habeas corpus, punish sanctuary cities, cancel our refugee and asylum programs, require illegal aliens to register, demand proof of citizenship, and rescind the rights of public sector workers? Also: Are Trump’s crypto connections and his receipt of an airplane from Qatar conflicts of interest? Do Trump’s United Kingdom and China deals vindicate his tariff strategy? And can he serve more than two terms as president?

I’ll be focusing on the legal and constitutional implications of those topics, which is different than assessing whether the ideas are good or bad as a matter of public policy. It’s possible, of course, that a program can be both good for the country and yet illegal. When that happens, the options are either change the law or modify the program.

I begin with one of Trump’s key economic initiatives:

1. Can the president lower drug prices paid by Medicare and Medicaid?

On May 12, President Trump signed an executive order establishing a “Most Favored Nations” policy whereby the United States will pay the same price for pharmaceuticals as the country that pays the lowest price. Trump claims that’ll save 30 to 80 percent. But the administration will face stiff opposition from providers and hospitals concerned about continued drug access. Pharmaceutical giants Eli Lilly, Johnson & Johnson, Merck, Roche, and others had pledged to invest tens of billions of dollars in US manufacturing and research, but they now argue that price controls will mean less innovation and fewer new drugs.

Congress has not granted Trump authority to force price controls on private pharmaceutical companies. Medicare and Medicaid purchases, however, are a closer call. During Trump’s first administration, a federal judge in Maryland issued a nationwide injunction against his “Most Favored Nations” rule. The judge held that the Center for Medicare Services failed to follow required procedures for notice and comments before imposing such sweeping changes. During Trump’s interregnum, the proposal was dropped by the Biden administration. This time around, the legal outcome is likely to be the same. The president cannot act unilaterally without following proper administrative procedures.

Next, a series of immigration-related questions:

2. Can the president suspend habeas corpus?

White House Deputy Chief of Staff Stephen Miller has indicated that the Trump administration is actively considering the suspension of habeas corpus—the right of individuals to challenge their detention in court. The Constitution, in the sections that specify what Congress can and can’t do, provides that habeas corpus “shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it.”

The administration has argued that we are facing an “invasion” of illegal immigrants, even as the president takes credit for a 95 percent decline in illegal crossings. The courts have repeatedly found no proof of an invasion—much less one that threatens public safety. And even if the administration had such proof, habeas can be suspended only by Congress, not unilaterally by the president. Moreover, Miller has stated that suspension depends “on whether the courts do the right thing.” That suggests his real complaint is with judges who have consistently ruled against Trump. That’s not a legitimate reason to suspend a foundational American right.

More generally, what are the rights of illegal aliens? First, they’re limited by national security concerns—as are the rights of US citizens. Beyond that, illegals have speech and due process rights; the right to contact a lawyer, remain silent, refuse unreasonable searches, request bond, appeal deportation, ask for asylum, and claim protection under the Convention Against Torture. But they can be detained without a warrant and have no right to a government-appointed attorney. Moreover, immigration courts are under the executive branch. Judges can be fired at will; and the usual criminal protections don’t apply. The president insists that the United States couldn’t possibly hold trials for each deportee. But there were 2.5 million deportations during the Obama administration, without (to my knowledge) denial of due process.

3. Can the president withhold federal benefits to shut down sanctuary cities?

A number of cities have refused to cooperate with federal authorities in detaining and deporting illegal aliens. In response, President Trump threatened to cut their federal funding. That threat ignored several principles of federalism. Most important, although federal law supersedes conflicting state law, and although states may not impede federal enforcement, neither the president nor Congress can commandeer state officials to execute federal law. So, if the feds want their laws enforced, and local jurisdictions refuse to cooperate, then federal enforcement personnel must be used. 

In other words, states don’t have to cooperate with the feds, but officials in sanctuary cities cannot obstruct federal enforcement. The difficulty, of course, is to distinguish active obstruction from refusal to cooperate.

With respect to the denial of federal benefits: No city or state has a “right” to receive federal funds. But once the feds have authorized a program that dispenses benefits, there are certain rules that apply when receipt of the funds is conditioned on the recipient’s conduct. Broadly, the conditions must be clearly stated; they can’t be coercive; and they must be related to the purpose for which the benefits are being dispensed. Additionally, the conditions may not depend on relinquishment of a constitutionally guaranteed right. In the case of sanctuary cities, the key requirement is for a logical connection to exist between any federal funding to be withheld and the law that the feds want enforced. For example, if Congress were to withhold highway funds when a state refuses to prosecute illegal aliens, the linkage would not be sufficient. And of course, if the president tried to do that without Congress’s approval, it’s even more likely that the Court would step in.

4. Can Trump shutdown our refugee and asylum programs?

In March, the Ninth Circuit allowed the Trump administration to impose a partial, temporary ban on refugee admissions, which Trump had completely shut down in January. The bi-partisan program was designed to admit up to 125,000 refugees in 2025, mainly from Communist countries and the Middle East. A federal judge had stated that Trump exceeded his statutory authority, which limited him to setting a ceiling on admissions and favoring certain geographic areas. But the Ninth Circuit allowed Trump to go forward pending a final rule on the merits. 

On taking office, Trump had also declared a national emergency at the Mexican border and issued executive orders effectively suspending our asylum system—allegedly to stop an invasion of immigrants. Now, would-be applicants are either deported or detained under rules that have not been published or even formalized. Legal challenges are pending and, in my view, they are likely to succeed.

To clarify: The refugee program admits migrants who apply from their home countries after rigorous security and health screenings. Then it provides support for resettling the migrants here. By contrast, persons seeking admission at the border are not part of the refugee program. They may be here for asylum, or for other reasons, but they have not been through the refugee process.

5. Can the Department of Homeland Security require all illegal aliens to register?

Registration as an illegal alien effectively compels someone to admit the crime of illegal entry. That process may violate Fifth Amendment protections against self-incrimination. In United States v. Sullivan (1927), the Court ruled that registration requirements for routine government regulatory purposes are okay, but not if registration explicitly compels self-incrimination. It seems to me that Trump’s proposal to require registration under the 1940 Alien Registration Act falls into the latter category. It’s less likely that Trump plans merely to track the status of illegals, and more likely that he intends to prosecute (or deport) them for being illegal.

6. Can the president require proof of citizenship at voter registration in federal elections?

The US Constitution gives state legislatures control over the manner of conducting federal elections, subject to congressional override. The executive branch plays no role in that process. By federal statute, only citizens can vote in federal elections, but most states simply require a sworn written statement, and no other documentation. Noncitizens who sign can be deported. So, the cost-benefit calculus is a powerful incentive not to lie when you register. The benefit of lying is one more vote for your candidate; the cost might well be that you’ll be removed from the United States.

Still, the president plans to withhold grants to states that don’t require proof of citizenship. Those grants come from the Election Assistance Commission, which is an independent agency created by Congress to improve voting administration. Under current law, Trump has limited authority—only to appoint commission members. His proposal to deny funds is unlawful.

There’s also a separate provision of the same Trump executive order that bars states from counting mail-in ballots received after Election Day. Again, the president has no authority in this area. Congress, not the president, can specify the time of federal elections—including any restrictions on mail-in ballots.

7. Can the president rescind rights of public sector unions and workers?

Trump signed an executive order in March revoking union contracts and selected employee rights at more than two dozen departments. The rights of federal workers were already limited. For example, they can’t strike or bargain over pay. And the 2018 Janus decision held that extraction of agency fees (i.e., dues) from non-consenting employees violates their First Amendment right to advocate for their own interests.

In constraining the unions, Trump cited national security concerns pursuant to the 1978 Civil Service Reform Act. But his order applies not only to the Departments of Defense, State, and Homeland Security, but also to Veterans Affairs, Justice, Health and Human Services, Interior, Treasury, and Commerce, as well as the EPA, FCC, and FDA—which have little or no connection to national security.

Interestingly, the order excludes police and firefighters, whose unions endorsed Trump in 2024. The American Federation of Government Employees has sued; and the AFL-CIO has denounced the order as “union-busting” and retaliatory.

Notably, however, public sector bargaining is not always even-handed. Negotiations consist of a government employer, using other people’s money to pay government employees, who belong to a union, that spends lots of dollars to elect the politicians, who set the bargaining rules. The potential conflict of interest couldn’t be clearer. On one side of the table sit union officials with substantial political clout. On the other side of the table sit government administrators who are appointed via the political process. And the two sides are divvying up taxpayer money that doesn’t belong to either of them. So, Trump’s policy arguments may be valid; but his invocation of national security is dubious.

8. Can the president accept an airplane gifted by the Qatari government?

Many questions arose when foreign governments spent big bucks at Trump hotels. And now, Saudi Arabia will be promoting Trump-branded apartments; Qatar is building a golf course jointly with one of the Trump companies; and the UAE, Saudi Arabia, and Qatar are investing billions in a private-equity fund run by Trump’s son-in-law.

Yes, the president is exempt from conflict-of-interest laws; but he is subject to the Constitution’s Emoluments Clause, which states that US officeholders may not, “without the Consent of the Congress, accept … any present [or] Emolument … from any King, Prince or foreign State.” Lower courts had previously ruled against Trump during his first term; but when he left office in 2021, the litigants realized that the lawsuit was moot, and the Supreme Court agreed. So, the issue is still open.

Fast forward to 2025. The Qatari royal family wants to gift a plane valued at $400 million—maybe for Trump’s use even after he leaves office—despite the rule that valuable gifts are transferred to the National Archives when a president steps down. Here’s the plan: First, the plane goes to the Air Force for Trump’s official use (after taxpayers incur the cost of upgrades and security). Then the plane will be donated to the Trump Presidential Library Fund, where it might become a perk for Trump’s personal use. That scheme is unhealthy and arguably unconstitutional. One possible remedy: Make it illegal for a president’s library to raise funds from foreign sources until after his term ends.

Trump argues that the Qatari plane is similar to the Air Force One that’s on display at the Reagan library. But that plane, according to media accounts, was used from 1973 to 2001, by every president from Nixon through George W. Bush. It wasn’t displayed at the library until after Reagan died. And it wasn’t a gift from a foreign government.

My prediction: The Supremes won’t decide this issue. Either: (1) the gift will be canceled; (2) Congress will consent (although that’s unlikely); (3) Trump will recognize the negative optics and pledge that the plane will not be used for personal purposes; or (4) one or more lower courts will find that plaintiffs lack standing, and the Supreme Court will decline to review that finding. 

9. Do Trump’s cryptocurrency dealings create a conflict of interest?

The president has been accused of misusing his office for personal gain because of his family’s involvement with cryptocurrencies. Newspapers have reported that World Liberty Financial (WLF) was started by a Trump family affiliate; and Trump was the firm’s “Chief Crypto Advocate.” When WLF launched, Trump family interests received more than $1 billion in coins. Ironically, Trump had derided crypto as a haven for drug dealers and scammers. His change of heart coincided with millions of dollars in campaign contributions from the crypto industry, which faced nearly 100 SEC enforcement actions. In addition, Trump’s sons are principals in a company that owns 60 percent of WLF and receives 75 percent of specified revenue from coin sales. Trump reminds us that his assets are in a trust managed by his children. Still, the trust benefits him directly.

Here are some of the potential conflicts: (1) Trump has announced a federal crypto stockpile that will include a digital currency in which WLF has invested. (2) WLF has sold crypto to foreign investors, who now have an indirect (and potentially illegal) path to curry favor with the president. (3) WLF swapped cryptocurrencies with five start-ups, signaling to the market that the startups were worthy of investment. He used the Trump name to solicit payments totaling $550 million as part of the deals. A large, undisclosed cut was reserved for the Trump family. (4) At Trump’s urging, the House and Senate introduced bills easing the way for firms to issue stablecoins. A week later, WLF announced its own stablecoin, with commitments exceeding $1 billion. If those news reports are reliable, the president’s involvement is highly suspect.

10. Do Trump’s United Kingdom and China deals vindicate his tariff strategy?

Trump’s open-ended bargain with the UK and his prospective deal with China amount to small steps back from the edge of the cliff—in effect, a retreat from Trump’s “liberation day” tariffs. The United States already had a trade surplus with the UK (which is a minor trading partner). And the president’s across-the-board 10 percent tariffs—actually, 30 percent for China—remain in effect. In return, the UK will lower barriers on ethanol, buy $10 billion of Boeing jets, and expand beef trade.

In retrospect, Trump started a trade meltdown in April that triggered a stock market debacle, flight from the dollar, and a surge in bond yields. The economic damage wasn’t politically sustainable, so Trump backtracked—classic damage control, not the Art of the Deal. His haphazard, seat-of-the-pants policies created confusion, planning problems, and supply line uncertainties that have had global impact on government, investors, businesses, and consumers.

11. Can Trump serve a third term?

The 22nd Amendment states, “No person shall be elected to the office of the President more than twice.” So, Trump has floated the idea that he could serve as vice president with Vance as the president. Then Vance would quit, to be succeeded by Trump, who would not have been elected. But … the 12th Amendment says “no person constitutionally ineligible to the office of President shall be eligible to that of Vice-President.” Is Trump thus ineligible to the office of President? Maybe not. He’s ineligible to be elected, but not necessarily ineligible to the office, providing he gets there by succession. Farfetched; but constitutionally unsettled. My guess: The Supreme Court would reject such an obvious intent to circumvent the two amendments.

Cato Adjunct Scholar and New York Times bestselling author Bryan Caplan has published a new book, Pro-Market AND Pro-Business: Essays on Laissez-Faire. In this volume, Caplan, a professor of economics at George Mason University, explains how free markets, government regulation, and government ownership actually work. One of Caplan’s main lessons is that free markets don’t run on autopilot—they run on people: entrepreneurs and businessmen who are heroic because they solve problems and drive progress. An excerpt of the book is published below. 

Pro-Market AND Pro-Business

Both economists and libertarians often emphatically state, “I’m not pro-business. I’m pro-market.” What does this slogan really mean?

Sometimes, they’re just saying, “I oppose mandatory cartels, bailouts, subsidies, protectionism, licensing, and other government intervention on behalf of politically favored firms.” This is a perfectly sensible position. But why would anyone call such favoritism “pro-business”? Sure, these policies help some businesses, but they’re a burden on the rest. If you put a tariff on steel, you hurt domestic businesses that use steel. If you subsidize steel, you hurt businesses that make substitutes for steel. If you bail out the steel industry, other businesses will ultimately bear much of the cost.

Often, though, the “pro-market, not pro-business” slogan is more about attitude than policy. It’s a quick way to announce, “I don’t favor markets because I like businesspeople. Contra Ayn Rand, they’re no heroes. Indeed, I’m quite suspicious of their motives. I favor markets because competition makes greedy, amoral businesspeople toil for the social good.”

This is a coherent position. But on reflection, it is deeply misguided. Yes, businesspeople are flawed human beings. But they are the least-flawed major segment of society. If any such dog segment deserves our admiration, gratitude, and sympathy, it is businesspeople. We should be pro-market and pro-business.

Why, you ask? My prima facie case begins with this basic fact: Businesses produce and deliver virtually all of the wonderful, affordable products that we enjoy. Contrary to millennia of economic illiterates, businesses rarely do so by “exploiting” their workers. Instead, businesses provide gentle but much-needed leadership. Left to our own economic devices, most of us are virtually useless; we don’t know how to produce much, and we don’t know how to find customers. Businesspeople solve these problems: they recruit workers, organize them to vastly raise their productivity, then put these products in the hands of customers all over the world. Yes, they’re largely in it for the money, but — unlike every government on Earth — business rarely puts a gun to your head. Businesses assemble teams of volunteers to meet the needs of willing consumers—and succeed wildly.

But doesn’t every business benefit from some act of government favoritism? Sure, but who doesn’t? Before you dismiss anyone as a parasite, look at their net contribution — the difference between the government benefits they receive and the taxes they pay. I’m amazed by the chutzpah of professors at public universities who sneer at Walmart for negotiating with local governments for tax breaks. Walmart gets a modest discount from a government monopoly. You professors enjoy tax-funded dream jobs for life! Complaints about government favoritism carry a lot more weight, I’ll admit, when businesses are close accomplices of the politicians who are handing out the favors. The defense industry bears no small part of the blame for the bloated defense budget; the health industry bears no small part of the blame for Medicare and Medicaid. But we should remember the many businesses that push in the direction of freedom. Imagine how hard it would be to build housing if the construction industry weren’t constantly lobbying for permission to build. Imagine how little immigration there would be if employers weren’t constantly lobbying for permission to hire. Populists may seethe with rage when business thwarts the will of the nativist, NIMBY majority, but economists and libertarians should cheer.

To their credit, both economists and libertarians routinely acknowledge that businesses provide good customer service. After all, firms have to protect their reputations. But this gives businesses too little credit. I love businesses because they treat me the way I like to be treated. When businesses want me to buy their products, they almost never nag, shame, preach, condescend, or troll. They make offers, politely say “If you have any questions, you can reach me here”—and then leave me in peace. I know business doesn’t love me, but it would be awkward if it did. What I seek is common decency—and that’s what business almost always offers.

You could reply, “I understand your admiration and gratitude for business. But why sympathy?” Simple: Despite its many virtues, business remains a go-to scapegoat. Yes, business leaders are rich, but we unjustly treat them like our moral inferiors. Until business has society’s respect, it has my sympathy.

Many will think me naive, but there are few more disillusioned than I am. I don’t believe that good or truth wins out in the end. I don’t believe in the American system of government. I don’t believe in the wisdom of the doggone American people. I don’t believe in religion. I don’t believe in the media. I certainly don’t believe in our education system. I believe in my immediate family, my closest friends, my own ideas. And business. It’s not perfect, but it’s still nothing short of a miracle.

August 2, 2018

Who Loves Bastiat and Who Loves Him Not

Thanks to everyone who responded to my query about Bastiat’s “What Is Seen and What Is Not Seen.” For me, his essay is the pinnacle of economic profundity. You can call it obvious. But when I first started learning economics at the age of 17, none of Bastiat was obvious. I was an honors student at a well-regarded California high school. Yet as far as I can remember, I had never heard any argument against the minimum wage, Social Security, or the FDA in my entire life.

Every teacher and book I ever encountered treated naïve populism like the Law of Gravitation. Evil businesses aren’t paying workers enough? Raise the minimum wage; problem solved. The elderly are poor? Increase Social Security payments; problem solved. Evil businesses are selling people bad drugs? Impose more government regulation; problem solved.

If you favor these programs, you can call these arguments straw men. But I assure you: These “straw men” were never presented by opponents of these policies. On the contrary, these “straw men” were invariably presented by people who favored these policies. How is that possible? Because during my first 17 years of life, I never encountered an opponent of any of these policies! You might assume I grew up in a weird Berkeley-esque leftist enclave, but bland Northridge, California, hardly qualifies.

What was going on? The best explanation is pretty simple: I only heard straw man arguments in favor of populist policies because virtually everyone finds these straw man arguments pleasantly convincing. Regardless of the merits of the minimum wage, Social Security, and the FDA, economic illiteracy is the reason for their popularity. If someone like Bastiat convinced people that the pleasantly convincing arguments are inane, proponents would have to fall back on arguments that are intellectually better yet rhetorically inferior.

Take the minimum wage. Normal people like it because the government waves a magic wand and makes mean employers give helpless workers extra money, with zero blowback. So inane, yet so convincing to a psychologically normal human. An intellectually serious argument, in contrast, begins by conceding the theoretical possibility of a disemployment effect, then defends low estimates of labor demand elasticity. This is a huge improvement in intellectual substance, yet it persuades only wonks.

This is the real root of Bastiat’s differential ideological appeal. Friends of the free market love him because Bastiat destroys the inane arguments that make the modern welfare state popular. Once you deprive the median voter of these inane arguments, friends of the modern welfare state have to resort to intellectually serious arguments to make their case. Alas, these arguments are utterly beyond the median voter’s comprehension. Most college students can’t even grasp them.

So what are friends of the modern welfare state to do when confronted with Bastiat? They can’t really argue with him. They know what he says is largely true. Yet if they make a big deal out of Bastiat, they risk destroying popular support for the policies they favor. Sure, they could run a big economic education campaign to explain, “Stop making terrible arguments for great policies. The intellectually serious arguments are as follows.… Blah blah blah.” But what’s the point? It’s far easier to trivialize Bastiat—to pretend that everyone (or “everyone who counts”) already knows what Bastiat’s trying to teach. If you only discuss policy with your fellow wonks, this pretense might even convince you.

My thesis, however uncharitable, is entirely consistent with friends of the welfare state being correct. Maybe trivializing Bastiat is the Noble Lie that has to be told to keep the welfare state alive. Maybe. But ponder this: Suppose I’m right that almost everyone initially supports populist policies for inane reasons. If some of these people grow up to be sophisticated intellectuals, what do you think they’re going to do when they realize that the arguments that originally convinced them are just plain stupid? Are they going to dispassionately put aside the worldview that inspired them to become intellectuals in the first place, then calmly weigh the intellectually serious arguments for and against every feel-good policy on the books? Or are they going to act like defense attorneys — to use their powerful intellects to zealously defend the populist policies they’ve always loved?

August 15, 2012

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