I’ve been busy setting up my cottage in the serene landscapes of Canada, indulging in some well-deserved relaxation, which accounts for my absence this week. Rest assured, I will be ramping up my updates in the coming week.
by Joseph T. Salerno, Mises.org, July 3, 2025.
Key Insights:
Murray Rothbard, who studied under a cadre of distinguished economists, found particular inspiration in institutionalists like Arthur Burns and Joseph Dorfman. Their mutual respect was palpable; Burns predicted Rothbard would carve out a significant niche in the economic landscape. Rothbard later reflected on Burns’s lectures, describing him as a âbrilliant theoristâ whose critique of mainstream economics was nothing short of exceptional. He held Dorfman in high regard as a historian of economic thought, lauding his unparalleled source knowledge. In fact, Rothbard dedicated his two-volume work on economic thought to both Dorfman and Ludwig von Mises, acknowledging them as pivotal mentors. Dorfman reciprocated this admiration, chairing Rothbard’s dissertation committee and advocating for its publication with Columbia University Press.
And:
During a time of methodological upheaval, Rothbard enrolled in a course on the philosophy of economics taught by Ernest Nagel, a leading advocate of logical positivism. Nagel’s critiques of institutionalism struck a chord with Rothbard, who diligently took notes during the lectures. Rothbard commended Nagel for presenting âthe most convincing case for neo-classical economic theoryâ and shared his notes with Burns. The latter, impressed, forwarded them to Milton Friedman, who was then crafting his influential piece on âThe Methodology of Positive Economics.â Friedman acknowledged the notes with a note to Burns: âMany thanks. I found it interesting and, of course, agreed.â
In a personal note regarding Joe Salerno: Every time I encounter his name, I fondly recall a memorable moment he shared with Friedrich Hayek at the second annual conference on Austrian economics in June 1975 at the University of Hartford. As Joe was discussing some facet of Austrian economics, Hayek, eager to interject or expand upon a point (the specifics escape me now), took to the podium. Given Hayek’s statureâhaving co-won the Nobel Prize just the previous fallâit was only fitting to allow him the floor. Joe, momentarily taken aback, quickly composed himself and graciously acknowledged Hayek. It was a delightful exchange.
by Timothy Taylor, Conversable Economist, July 7, 2025.
Insightful Excerpt from a Relevant Study:
A recent analysis suggests that AI could boost annual aggregate Total Factor Productivity (TFP) growth in the United States by between 0.3 and 0.7 percentage points over the next decade. The projected impact is most pronounced in the U.S., with the United Kingdom, Germany, Canada, France, and Italy following, while Japan ranks lowest. These projections indicate that Generative AI is poised to be a substantial contributor to productivity growth in the coming years, though the anticipated benefits may not be as revolutionary as those witnessed during the tech surge of the 1990s, which was linked to information and communication technologies (ICT) and estimated to have added up to 1-1.5 percentage points to annual TFP growth.
Note from DRH: A growth of 0.3 percentage points annually over a decade is noteworthy, while 0.7 points annually would be a monumental leap.
by Timothy Taylor, Conversable Economist, July 8, 2025.
Insightful Excerpt:
The 1980s are often branded as a âlost decadeâ for economic growth, marked by many developing nations ensnared in cycles of debt and inflation. However, William F. Maloney, Xavier Cirera, and Maria Marta Ferreyra present a more profound assertion in their book, Reclaiming the Lost Century of Growth: Building Learning Economies in Latin America and the Caribbean (World Bank, 2025), arguing that the roots of slow growth in Latin America trace back over a century.
The Distributional Origins of the Canada-US GDP and Labour Productivity Gaps
by James MacGee and Joel Rodrigue, Staff Working Paper 2024-49, Bank of Canada, December 19, 2025.
Key Findings:
Between 1960 and 2020, Canadaâs GDP per adult hovered between 70% and 90% of that of the United States. This disparity is rooted in significant, systematic differences in income distribution between the two nations. While average incomes among lower percentiles show minor differences, substantial gaps appear at the higher end, particularly among business owners and the university-educated. Data from the World Inequality Database reveals that the top 10% of earners account for three-quarters of the GDP per adult gap between Canada and the U.S., and up to two-thirds of the labour productivity gap. Notably, while hours worked per adult in both countries were similar in 1970 and 2019, shifts in relative working hours seem to significantly impact labour productivity differences during that period. Our findings suggest that the selective emigration of high-ability workersâa phenomenon often referred to as brain drainâmay significantly contribute to the gaps in GDP per adult and labour productivity, while a lower level of innovation in Canada correlates with larger income disparities among high earners.
Shoutout to Scott Sumner for the heads up.
In a personal anecdote, the notable gap among university graduates reminds me of a summer in Winnipeg on my way to my cottage in northwestern Ontario. I was interviewed by local radio station CJOB about pressing economic issues. Following my introduction as a Canadian who had relocated to âthe states,â the interviewer pointedly asked, âWhy did you move? Was it the money?â While my motivations were varied, including financial reasons, I knew if I answered bluntly, I might be accused of dodging the question. In a split second, I opted for the straightforward response: âYes.â
Note: The accompanying image depicts a sunset from my cottage in 2024.
