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American Focus > Blog > Economy > My Weekly Reading for March 30, 2025
Economy

My Weekly Reading for March 30, 2025

Last updated: March 30, 2025 10:56 am
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My Weekly Reading for March 30, 2025
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by Chris Edwards, Cato at Liberty, March 24, 2025.

Excerpt:

Federal spending operates on a dual front of inefficiency. On one side, there’s the tax burden that distorts individual and business decision-making, leading to what economists call deadweight loss—a phenomenon where each dollar of income tax essentially inflicts a 40 to 50 cent wound on the private sector, beyond the tax itself. Republicans often grasp this aspect and advocate for tax cuts.

Yet, a surprising number of Republicans overlook the other half of the equation: the inherent distortions caused by government spending itself. Bureaucracies are notorious for squandering resources, and the subsidy programs they administer often yield counterproductive outcomes. A significant portion of federal initiatives simply fails to justify their costs, as highlighted in a recent study.

by David Friedman, David Friedman’s Substack, March 25, 2025.

Excerpts:

My current concern revolves around how the existing political environment might lead America down a troubling path. The left has long warned of a potential right-wing dictatorship, and with the current administration’s claims of authority to deport individuals to foreign prisons without needing to prove guilt—even for illegal immigration—this fear is not entirely unfounded. They are, of course, targeting the most unsympathetic individuals first, but their interpretation of the law could easily extend to anyone, with no obligation to substantiate their allegations.

I anticipate that the courts will largely oppose these actions, likely culminating in a Supreme Court ruling against them. However, there are murmurs among some supporters about the possibility of disregarding court rulings, invoking a somewhat dubious reference to Andrew Jackson’s purported statement: “John Marshall has made his decision, now let him enforce it.” If electoral fortunes continue in their favor, this could push the administration further down that path, eventually reshaping the judiciary itself.

Conversely, there is a less obvious but equally concerning threat. If Trump’s administration falls apart amid significant economic turmoil, rising uncertainty, and foreign policy setbacks, it’s plausible that the Democrats could reclaim power. Their supporters, already incensed, might resort to lawfare against perceived enemies. While the claim that everyone commits three felonies a day may be an exaggeration, a zealous prosecutor could easily secure convictions for minor infractions, particularly in a biased environment. The mere threat of prosecution can impose heavy burdens, and virtually anyone is susceptible to legal action, as I previously discussed in an earlier post.

 

See also  Placate or retaliate? Starmer and Carney are both right on Trump

by Alex Nowrasteh and Krit Chanwong, Cato at Liberty, March 25, 2025.

In a recent interview, Ezra Klein spoke with David Shor, a data scientist at Blue Rose Research. Shor highlighted two significant points regarding immigration. First, there’s a strong correlation between the foreign-born population in a county and a shift toward Trump. Second, it appears Trump managed to capture the immigrant vote, as naturalized immigrants switched from supporting Biden by 27 points to favoring Trump by a point.

This dramatic shift undermines the common argument among immigration restrictionists that more open immigration policies will naturally tilt the political landscape to the left, a narrative that even influenced Elon Musk’s support for Trump in the 2024 election.

 

by Matthew Petti, Reason, April 2025.

Excerpt:

While the United States wields significant power to disrupt the economies of other nations, such measures often backfire. Sanctions, for instance, primarily hurt Iran’s pro-American middle class, inadvertently fostering a more paranoid regime that no longer has incentives to cooperate. The result is a lose-lose scenario where everyone suffers.

The U.S. has attempted to absolve itself of responsibility for the consequences of these sanctions on ordinary Iranians, attributing their hardships to domestic “corruption and economic mismanagement” instead. However, historical data reveals that the Iranian economy thrived from 1988, following the conclusion of the Iran-Iraq War, until 2011, when sanctions began to escalate under former President Obama.

DRH note: The article “Sanctions” in David R. Henderson, ed., The Concise Encyclopedia of Economics is excellent.

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