I am trying to avoid the word “clownish,” but it is not easy. Forgive my failure. What less controversial term would describe a discourse that is pure sophistry defending naked self-interest in the sycophantic service to a political ruler? At the G-20 meeting, Treasury Secretary Scott Bessent, reportedly “the adult in the room,” the serious guy in the current American administration if not the only intellect there, declared (“G-20 Squabbling Overshadows Summit as Global Bond Markets Strain,” Wall Street Journal, September 1, 2026):

“I say sometimes I feel like an emergency-room doctor, and the economy is the patient, and the American people were backed over by the Biden Mack truck. We have stabilized the patient, and now we are in the healing portion.”

The American economy is seen as a biological organism, just like Rome was in the fable of Menenius Agrippa 26 centuries ago. “The American people” is also a biological organism, although it is not clear how it relates to the economic organism. Perhaps the two are monstrous twins sharing a common heart or head? This biological organism has been hit by a truck driven by the former president, Joe Biden, whose relation to the double biological organism is not crystal clear either. What is clear is that the economy-cum-the-people social organism has been wounded by Biden’s truck and has been rushed to the hospital where, during the past year and a half, Dr. Bessent himself, part of the same wounded organism (or is he?), has been mending it. The organism has been healing while killing two of its cells (Renee Good and Alex Pretti), waging a disastrous trade war, starting and losing a war in Iran, botching a renovation of the Reflecting Pool and blaming it on vandals, seriously undermining the rule of law, pursuing happy corruption, adding generously to the government debt, which has reached 100% of GDP, neglecting inflation, and fueling a smoldering recession. Or so does Mr. Bessent suggest is happening in his brave new world.

In Aldous Huxley’s Brave New World, John the Savage, observing the grotesque and clownish people in that society, repeats the exclamation of Miranda in Shakespeare’s The Tempest:

“O brave new world, that has such people in it!”

It is not a brilliant idea for the Canadian government to impose a tariff on Canadians who purchase American appliances, for example, in order to retaliate against the American ruler who has imposed a tariff on Americans importing Canadian whisky.

A tariff on imported goods is a border tax that’s mostly or wholly paid by the residents of the country whose government imposes it—which is why the Trump administration reimburses Americans, not “foreign countries,” for its illegal tariffs.

No surprise there. Several economic studies have shown that the tariffs imposed by the US government have had a pass-through of 90% to 100%. American companies and, ultimately, American consumers have paid them. In the same way, of course, Canadians pay the tariffs their government imposes on American goods.

Except in totalitarian ones, “countries” in the sense of “states” don’t trade: individuals and their corporate intermediaries do. Free trade is about individuals being free to trade on their own or through free private intermediaries. President Trump obviously does not understand that. People who have studied the topic and read Adam Smith and David Ricardo or the economists who came after them typically do understand, whether they are “on the right” like Milton Friedman or James Buchanan or “on the left” like Paul Krugman.

Trade managed by governments is not free trade. In candour not characteristic of contemporary politicians, the expression “free trade” doesn’t even figure in the name of the now impotent “United Sates-Canada-Mexico Agreement.”

All-around free international trade is the best situation, multilateral autarky the worst, and unilateral free trade the second-best. If countries around yours are protectionist, retaliation is nearly always an inefficient response. The government of a truly free country would declare unilateral free trade, that is, let its citizens import what they want and export what they can, with very few exceptions. Comparative advantage will determine what will be imported and exported. The balance of trade is a false problem: ultimately, products (goods and services) exchange against products, as French economist Jean-Baptiste Say (1767-1832) emphasized. Currency exchange rates, investment flows and other economic variables will adjust in response to any unsustainable equilibrium.

It is true that free trade, whether inside or outside a country’s border, frequently generates disruptions, just as free technological development and individual liberty do. But such disruptions are conducive to economic growth and greater opportunities for most people. Trade controlled by governments also creates disruptions (as Trump is proving) but not ones that help create general prosperity.

Unilateral free trade is not a fantasy. In the middle of the 19th century, the British government basically declared it. Another famous example, closer to us in time, is Hong Kong, whose government, led by British administrators, levied no import tariffs after World War II, generating fast growth even as many people in neighbouring China were starving—literally starving—under Mao Zedong. Both China and Hong Kong started from dire poverty but in 1996, the year before the handover of the territory to the Chinese state, per capita income in Hong Kong was 96% of the U.S. level, while China was still at only 8%. (The number for China is now about 30%.)

As Mao’s Selected Works confirm, he—and the Chinese Communist Party with him—thought foreign trade was an instrument of subjugation and tariffs were necessary for Chinese development.

I have a recommendation for Prime Minister Mark Carney. Instead of retaliation—imposing a border tax on Canadians because Trump has imposed one on Americans—he could make a declaration of unilateral free trade along the following lines:

“Whatever other states do, our government has decided to eliminate all Canadian tariffs and coercive barriers to international trade. The citizens and residents of this country are free individuals who may therefore trade freely with anyone in any country who is willing and able to trade with them. Any peaceful person or organization in the world who wishes to buy from or sell to the free men and women in Canada is welcome to try. Whether the sum of their free trades results in a trade deficit or a trade surplus, more foreign investment or less, a higher or lower domestic production of automobiles or maple syrup, that is really no busybody’s business in the government of a free country. Each person and private group minds its own business in a spirit of reciprocity.”

Yes, I realize it’s unrealistic to expect that sort of declaration of Mr. Carney in 2026—just as freedom of religion or free enterprise were grossly unrealistic proposals or hopes in most of 17th-century Europe. But the ideal of unilateral free trade is desirable and economically feasible, and it is always a good thing to strive for ideals, which, with time, can be realized.

Reproduced from https://financialpost.com/opinion/trade-declaration-carney-should-make

What troubles me a bit epistemologically is the sense of humor of my AI research assistant, ChatGPT. I already mentioned that in an EconLog post one year ago when this AI bot was much less intelligent but already capable of playful humor. The featured image of the present post is reproduced from that former one, for which she drew an image of both of us having a drink at the Deux Magots in Paris. In that post, I wrote:

“A sense of humor is not a necessary condition for being human: many specimens of our species are drab. But it is certainly a frequent and distinctive feature of mankind. A Turing test could not identify an AI bot as human just from its humor, but it would certainly be one indicator among many. Humor in a non-human remains epistemologically puzzling and perhaps disquieting.”

In contrast, it seems that gorillas’ jokes are crude and unpublishable.

For some time now, my relationship with my silicon aide has been pure business with no humor on my part. She rapidly adjusted and does not try to impress me with her humor anymore. A few days ago, however, my humorous self resurfaced when I asked my research assistant to fetch some information related to a post I had just read on “Truth Social” (a website whose name covers up its contempt for the very concept of truth) “While doing this,” I told her, “keep one of your silicon eyes open to see where the genial poster may have gotten his numbers.” My ironic “genial” in the sense of the ironic “brilliant” was probably a Gallicism. (If you stay tuned, there is a chance I will do a short post on the substance of the falsehood.)

ChatGPT’s report on my research query included this bit, referring to the ignorant “Truth Social” poster: “I think I found your poster’s silicon-free research assistant.” She was referring to the journalist who had started the meme. She was telling me that I should not complain about her silicon eyes, for there is one thing worse than to have a silicon research assistant, and that is having a silicon-free one who is dumb.

The rule of law—a “government of laws, not of men”—is an institution that is more important than many of us libertarians thought (including your humble blogger) and that we undermine at our own peril. (Libertarian anarchists believe that a sort of rule of law would emerge in a stateless society, but I will ignore this issue here, if only because it is not imminent.) Friedrich Hayek was a Nobel economics laureate who forcefully argued for the rule of law to protect economic freedom and prosperity. He also explained that this institution evolved in the West as a general means to protect individual liberty against state power. (See Hayek’s The Constitution of Liberty, which I recently reviewed in Regulation, is a good introduction to what law is and what fake law is.)

First question: Why has economic growth been so brisk in the last hundred years despite two world wars, the Great Depression, and the Great Recession, as I asked in an EconLog post? I will add one point. Besides America, other advanced Western countries have followed a similar path despite growing government intervention and many socialist governments (avowed or not) along the way. A big part of the answer may be the maintenance of the rule of law at least in attenuated form. The state has been tied up by legal rules, and governments were not free to decree whatever they wanted.

Second question: Why is it crucial, contrary to what tough-on-crime rightists believe, that criminal procedures be heavily weighted against government prosecutors? Because it is part of the rule of law, which, as Hayek argued, is mainly designed—or has evolved—to protect individuals against the state, not the state against individuals.

A dramatic murder case in the Financial Times just illustrated this last point (Matthew Bremner, “Six Teenagers, a Brutal Murder and the Story they Couldn’t Take Back,” August 1, 2026). More than 20 years ago in North Carolina, five teenagers were convicted of murder on the basis of confessions obtained by non-violent but intensive and very stressful interrogations by police detectives who lied about the evidence they had, as permitted by state law. North Carolina’s law also allows the interrogation of minors without the presence of counsel or other supportive adult. A 15-year-old girl, whose life was also destroyed by these events, had been pressured by police interrogators into making false statements implicating the boys. There was virtually no evidence besides the confessions under pressure, which the boys rapidly tried to retract. Two of them are still in prison, despite a judge vacating their convictions one year ago.

The presumption of innocence is a strong principle in the (classical) liberal legal tradition. Benjamin Franklin wrote:

“That it is better 100 guilty Persons should escape than that one innocent Person should suffer is a Maxim that has been long & generally approv’d, never that I know of controverted.”

Before him, the famous British jurist William Blackstone had written:

“All presumptive evidence of felony should be admitted cautiously: for the law holds that it is better that ten guilty persons escape than that one innocent suffer.”

Without this principle and its related rules, it would be impossible to know if someone is innocent or guilty of a crime. The rules include the independence of judges, the right to counsel, and the duty of prosecutors to pursue justice as opposed to obeying political rulers.

Maurice Garçon (1889-1967), a French attorney, jurist, author, and member of the Académie française, argued that police interrogations should simply be forbidden, as an 1897 law mandated—a law that, he maintained, was not correctly interpreted and not enforced against the police. The idea was to prevent any inquisitorial interrogation (except in flagrante delicto) and to allow only an accusatorial procedure conducted by a judge, in which a suspect accompanied by his attorney could try to prevent an indictment by challenging the evidence gathered against him. The suspect could also remain silent. We are now quite far from such a real presumption of innocence.

The Reflecting Pool affair illustrates the importance of the rule of law in protecting innocent individuals. During his second term, President Donald Trump has tried to replace standards of justice and prosecutorial processes with his own intuitions and obsession with revenge. Under pressure from him, the so-called Department of Justice prosecuted four Americans for damaging the Lincoln Memorial Reflection Pool after a pet renovation project of the president’s. What is the life and liberty of four ordinary individuals compared to the glory of the ruler-in-chief? Fortunately, the DC prosecutor finally dropped the charges and admitted that the peeling coating was caused by a botched renovation job, not by vandalism, thereby drawing the ire of the president. (See Natalie Andrews and Josh Dawsey, “Trump Has Discussed Ousting Jeanine Pirro After Reflecting Pool U-Turn,” Wall Street Journal, August 3, 2026.)

Without the rule of law, deflecting blame onto innocent scapegoats is a favorite tactic for men in power to avoid responsibility and rally the flock behind state power. Recently, immigrants have been used as scapegoats (remember Haitians eating American pets in Springfield, Ohio), but also “domestic terrorists,” “enemies of the people,” and individuals who walked by the Reflecting Pool and touched the peeling coating. And by nominating a sycophant as the Interior Department’s inspector general, Trump may be trying to revive the false vandalism accusations (Merryl Kornfield, “Trump Nominates Loyalist to Office that Would Oversee Reflecting Pool Review,” Washington Post, August 10, 2026). All that represents a clear setback for the rule of law.

Responding to the “surprise” attack on an American base in the Middle East, President Donald Trump told Fox News (“Saudi Arabia Joins US Strikes on Iran-Backed Militias in Iraq,” Financial Times, July 29, 2026):

“We’re going to beat the fucking shit out of them.”

Fox News rendered the obscenities in more standard American language: “We’re going to beat the f---ing s--- out of them” (“Trump Says US will ‘beat the f------ s--- out of them,’” Fox News, July 29, 2026).

Mr. Trump is a very vulgar person. He often shows it. Remember his “Truth Social” post on Easter Sunday, where he told his Iranian enemies (“Trump Vows to Destroy Iran’s Power Plants and Bridges Unless It Reopens Strait of Hormuz,” Financial Times, April 5, 2026):

“Open the Fuckin’ Strait, you crazy bastards, or you’ll be living in Hell.”

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In the summer issue of Regulation, I have an article on the administrative state. (The online version of Regulation is freely available, so my article is available for the clicking.) I write:

“To the extent that [the administrative state] is, and remains, constrained by rules, it may block strongmen’s ambitions. …

“The paradox of the administrative state is that it can also prepare the way for a strongman. Observe how Trump’s takeover attempt on the American state is helped by many existing regulations—products of the administrative state—that lend a sort of varnish to the strongman’s progress. Examples include the Federal Communications Commission’s jurisdiction over free speech in broadcasting, the sprawling federal antidiscrimination regulations, the flexibility of antitrust legislation, the sedimentation of government surveillance, and so forth. Given the sheer number of laws and regulations, a strongman can always find one to help him.”

We may then ask the question:

“Is mankind condemned to a choice between the Charybdis of the administrative state and the Scylla of the strongman’s state?”

I try to answer this question.

There is more in the article, including the interesting chart above.

According to Donald Trump, international trade is bad, at least from the point of view of “importing Countries.” (Note in passing how he always writes “countries” and “nations” with a capital letter. As the prayer says, “flectamus genua.”) Consequently, the blocking of the Strait of Hormuz by the Iranian government should be good for the rest of the world, a gift, since it will limit imports of oil and derived products (fertilizers, among others). So, instead of begging the Iranian government to open the Strait, Mr. Trump should be happy and boast that having it closed was precisely the goal of his war. Thinking about it, isn’t all that good for Iran itself?

I elaborate on these points in a short article in the just-published Summer issue of Regulation: “Did Trump’s Blockade Make Iran Great?” Just click on the link: the online version of Regulation is not paywalled.

The Wall Street Journal obituary of Alan Greenspan states, as if it goes without saying (“Alan Greenspan, Influential Fed Chairman Whose Legacy Was Dimmed by the Financial Crisis, Dies at 100,” June 2, 2026):

“Yet a greater sensitivity to the irrationality of free markets and the dangerous cycles of finance could have led Greenspan to better respond to the hazards brewing in the 2000s.”

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The insults hurled at Italian prime minister Giorgia Meloni by American president Donald Trump remind us not only of his deficient moral character, but also of two important points. First, nationalists of different countries cannot easily unite, for they are collectivist worshippers of different collectives. Second, Trump’s embrace is a Judas kiss, as I previously argued: if he doesn’t actually turn against an ally, he is likely to hurt any good idea that the latter may be defending.

Speaking precisely is essential in rational—logical or scientific—discourse. (Poetry is different because the words and their combinations are meant to generate music, images, and emotions.)

In reporting on the increase in the prices of memory chips, the Wall Street Journal writes (Rolfe Winkler, “Apple to Raise Prices Due to Memory Chip Crunch, Tim Cook Says,” June 17, 2026):

“But now AI servers are gobbling up rapidly increasing volumes of those chips, so even a company as rich and powerful as Apple is struggling to secure supply.”

Memory chips have not somehow ceased to exist and Apple is not “struggling to secure supply”—although, like any private producer, it is always looking for lower input prices. The company will get the supplies it is willing to pay for, given that AI-server operators and builders have bid up memory-chip prices. The opportunity cost of producing memory chips for computers and smartphones has thus risen. If Apple is not willing to pay more than it did before, chip manufacturers will allocate their current or future production capacity to other chips. Although memory chips for electronic devices (such as Apple’s) and those for AI servers are not identical, there is some substitutability in production. When the price of AI-server memory chips rises, the opportunity cost of producing Apple-bound memory also rises, and it will now need to be paid by Apple to purchase memory chips.

Of course, Apple could absorb the cost increase to keep its customer base, but its Board of Directors and shareholders would stop that when the marginal cost increase exceeds the expected increase in the discounted future marginal revenues. In fact, the CEO of the company warned customers that price increases for its products are coming soon.

This is an example of how markets coordinate, through prices, the production and consumption decisions of millions of individuals. Except perhaps in exceptional cases, governments—politicians and bureaucrats, or even democratic mobs—cannot provide better coordination through central planning or industrial policy, as economic history shows. A further benefit of market coordination is that it respects consumer sovereignty and does not require constant government coercion. Coordination by government requires continuing commands contrary to the rule of law. (The last two sentences are perhaps difficult to understand in the current zeitgeist. Low-risk antidotes can be found in Friedrich Hayek’s The Road to Serfdom and The Constitution of Liberty. The links refer to my Regulation reviews of these books.)

Although the rest of the WSJ report is not inconsistent with the explanations above, the phrase “struggling to secure supply” may leave some readers (the least economically literate) thinking that there is, in some warehouse, a large stock of memory chips to be purchased at a predetermined price, and the evil chip manufacturers are allocating more of them to evil AI-server owners than to the good people in computer and smartphone manufacturing. But I confess it is not the worst example of economic illiteracy one can find even in the financial press.

Kalshi is one of the firms or platforms that offer event prediction contracts, the typical product bought and sold on the broader prediction market. This market is tightly “regulated” (government-controlled) in the US, including by the Commodity Futures Trading Commission (CFTC). Kalshi, an American platform, announced that it will “start collecting customer employment information for trading in certain markets that are at heightened risk of insider trading” (AP, June 9, 2026).

Some people get utility (in the economic sense) from gambling, either in its pure roulette form or in the mixed form of events that are not purely random. Many make bets with friends. If you believe in equally free individuals, there is, at first sight, not much else to say: one party has an opinion on the probability of an event, the other party has a different opinion, and they voluntarily take opposite sides of the bet, often through an intermediary like Kalshi.

In fact, there is something more to say. Even if we admit that betting is a private vice, we can see how, here too, private vices turn out to be public benefits, as Bernard Mandeville would say. When a bet is made on the market, it contributes to influencing the price (the expected monetized gain or loss) of the related event. So, prediction markets are useful for the same reason as other markets are: they contribute to prices transmitting useful signals.

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In an article titled “Trump’s Empire of Debt” (Financial Times, June 4, 2026), columnist John Plender reflects on the apparent decline of American financial weight in the world. Here are six must-read paragraphs:

“But foreign investors are now moving out of Treasuries because of the debt problem, threats to the independence of the US Federal Reserve, the weaponisation of the dollar through financial sanctions and the erosion of political checks and balances under Trump. …

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The progress of economic knowledge (methodological individualism, rational choice, autoregulated phenomena) in understanding social matters has lagged far behind technological knowledge, whose development was itself generated by the kind of free society that accompanied economic knowledge. An example of this lag was provided by Financial Times columnist Camilla Cavendish (“The New Luddite Movement,” May 23). She suggests that if voters don’t restrict AI, mobs of machine smashers “may take matters in their own hands” as happened with the early-19^th-century Luddites.

But what exactly is the problem—in a free society? Suppose some entrepreneur thinks that AI will allow him (including “her,” of course) to sell some good or service at lower prices. Suppose some entrepreneurial AI producer consequently thinks that the demand for its product will increase. Suppose it obtains financing from voluntary investors, contracts for future supply with an electricity provider, and buys a large piece of land to build a data center. All that is just private property and contractual freedom in action. If the outcomes are not satisfactory for electricity producers or data-center builders, the latter still have the option of producing their own energy or, perhaps, to build data centers in space. Mankind already had, at the dawn of liberty, a free-market Industrial Revolution, remember?

Granted that, if several such data-center entrepreneurs bring large electricity demands on the market, the risk and therefore marginal cost of producing electricity will increase much more than in the usual case of households or factories (see Lynn Kiesling, “You Can’t Just Plug in a Data Center,” Substack, May 19, 2026). But who doubts that free markets will find ways to price these risks correctly and that competition will distribute the burden to those willing to support it? Current top-down regulation interferes with these market processes.

The ideal should not be a mercantilist or Colbertist goal of trying “to win the AI race with China on national security,” to quote Cavendish. It should be to keep—nay, to reinforce—a society where individuals are free, contrary to the Chinese authoritarian model. As Anthony de Jasay notes, referring to the “brilliant but passing nineteenth century,” the “private fortresses” of property and individual liberty are indispensable to avoid the Chinese model.

“It might help if we asked what society actually wants from this transformative technology,” the Financial Times columnist pontificates. Of course, “we” might ask any question about what unicorns or lizards or “society” want, but it won’t help understand what is happening. Society is not a big biological organism able to want anything. And if we mean obeying what 50%+1 of society want via some voting process, we are also out of luck: even without any voter changing his preferences, the result can vary depending on the voting system, political or bureaucratic intermediaries, or simply because of the Condorcet paradox or its contemporary generalizations. (See my “The Impossibility of Populism,” Independent Review, Vol. 26, No. 1 [Summer 2021].)

Besides journalists, even some trained economists did not get the memo or, at least, did not show they had at least read it. Political failures are very often worse than market failures (externalities). In the 1930s, American economist Rexford Guy Tugwell argued that the individual “must subordinate himself ... consent to function as part of a greater whole and to have his role defined for him by the exigencies of this group.” In this context,

“[n]ew industries will not just happen as the automobile industry did; they will have to be foreseen, to be argued for, to seem probably desirable features of the whole economy before they can be entered upon.”

Tugwell ended up teaching political science, but the term “science” looks purely rhetorical in that context.

Is it possible that the AI revolution will be so radical that no work will be left for humans? If that literally happened—nobody would want more goods and services than AI robots produce—it would mean that the problem of scarcity has been solved, a blessing, not a curse. But perhaps, an objection goes, scarcity would remain for some classes of people, who would have no jobs and no income. This dystopia is impossible in a free market society since the unemployed would be incentivized to exchange among themselves—the unemployed gardener and the unemployed butcher, for example—just as current gardeners and butchers mostly exchange their goods and services among themselves instead of selling them to billionaires and robot owners. (For more on this topic, see Michael Huemer, “In Praise of Job Destruction,” Substack, May 16, 2026.)

The Financial Times columnist further reveals her misunderstanding when she writes that “[t]he White House’s proposed new executive order on AI safety ... shows the libertarians are waking up.” If she really thinks that Trump is libertarian, I have a data center to sell her in Vermont.

As for catastrophic AI scenarios, that sort of fear (from the gods’ viewpoint) was prefigured in the myth of Prometheus. As the chorus sings in Aeschylus’s Prometheus Bound, “What! Do creatures of a day now have flame-eyed fire?” Catastrophic scenarios are not implausible, but neither are extraordinary benefits as the Industrial Revolution provided. Alternatively, AI, although impressive, may be close to reaching its peak. What is almost certain is that giving the control of AI to political authority (say, to the mob, to the Central Committee, or to Trump) will minimize the probability of extraordinary benefits and maximize that of catastrophes. As Friedrich Hayek argued, “[i]t is because we do not know how individuals will use their freedom that it is so important.” There is no economic nor moral equivalence between coercive bans and laissez-faire with respect to voluntary human interactions.

A probe by the Commodity Futures Trading Commission (CFTC) and a Wall Street Journal investigation have raised the suspicion that “people connected to the administration” might have used inside information about Donald Trump’s changes of mind on the Iranian war to make very profitable trades on oil prices (David Uberti et al., “Flurry of Suspicious Oil Trades Worth $800 Million Triggers Regulatory Probe,” Wall Street Journal, May 19, 2026).

How is that the business of a financial “regulator” (that is, a controller) such as the CFTC? Legally, the 2010 Dodd-Frank Act extended from stock markets to futures markets the prohibition of insider trading (trading on the basis of private information). Two things need to be carefully distinguished.

It is one thing for a private trader to buy or sell a financial instrument (such as a futures contract) because his entrepreneurial intuition or private (inside) information tells him that he will personally benefit from the trade. The financial trader acts like the merchant in general: he endeavors to buy low and sell high according to his information. By doing so, he transmits the information he has, or thinks he has, and allows his counterparties—for each sale there is a purchase, and vice versa—to express theirs. Insider trading is efficient: it is inherent in any exchange.

This approach combines F.A. Hayek’s general argument for market prices as essential signals for coordinating individual actions in the presence of varying degrees of scarcity (see his “The Use of Knowledge in Society,” American Economic Review, Vol 35, No. 4 [1947]), and Henry Manne’s argument against the prohibition of insider trading with non-stolen private information (Insider Trading and the Stock Market, 1966). Those with a taste for French literature may have a look at my 1991 polemical essay in defense of honest insider traders, Apologie des sorcières modernes [“In Defense of Modern Witches”] (Paris: Les Belles Lettres).

It is a completely different thing for a trader to use information acquired as a crony of corrupt government rulers and related to what the latter will force their subjects to do or not to do, whether it is about “industrial policy” or war strategy (even if the war is otherwise justified). This use of “private” information is antithetical to a free society, that is, to a society of equally free individuals. Instead, its existence characterizes an arbitrary government that manipulates information for the benefit of the rulers or as a privilege to their favored cronies.

A free society cannot exist if information about its government is not widely accessible in principle. But private information is necessarily private. Even government information itself, which is only a small part of the information circulating in a free-market economy, cannot be equally accessible except in a purely formal sense. Estimates built for me by ChatGPT and Curunir suggest that the 30,000+ public-facing federal websites show, at the very least, 5 billion words of “relatively easily accessible” information, equivalent to 14,000,000 pages (of 350 words each)—and without attempting to count every observation in the federal bulk datasets.

Despite this, perhaps little more than one in three Americans can name his representative in Congress. Less than half know that the federal government spends more than it collects in taxes, and more than 40% don’t know that the national debt has increased as a percentage of GDP. The typical voter has no incentive to invest in gathering and studying government information, which can only be brought to bear on his non-decisive vote; the phenomenon is called “rational ignorance.” Imagine how absurd it is to think that the government can impose the use of only “public” information on financial markets!

My argument for private insider trading and against government insider trading is not original. Trading with private information is a special case of the general idea formulated in the 18^th century: personal interest exercised on free markets results in general prosperity. People, including intermediaries, serve you because it is in their interest to do so, otherwise they will earn no income. Think of all the individuals and companies that are working to offer you better prices and lower interest rates than their competitors. In politics, on the contrary, rulers’ self-interest is to exploit non-favored subjects, which can only be limited (if it can) by strong checks and balances and by private property.

Of course, we don’t know yet whether the cases reported by the Wall Street Journal exemplify the first or the second use of private information. But government corruption is not an implausible hypothesis.

Protectionists should wonder why the tariffs collected (about $166 billion) under the 1977 International Emergency Economic Powers Act (IEEPA), and declared illegal in February by the Supreme Court, are being reimbursed to business importers in America and not to the “foreign countries” who supposedly paid them. (It is difficult to find and reimburse the tens of millions of American consumers who ultimately pay through higher prices most of, if not all, these taxes collected at ports of entry.)

The steel and aluminum tariff rates under the 1962 Trade Expansion Act (what a name!), which were increased last year and equalized at 50% for each metal, are not affected by the Supreme Court’s decision. Many people think that domestic manufacturers who want to avoid them simply have to buy the domestically produced substitutes. Trump often has said, including about products made with steel and aluminum:

“If it’s made in the United States, however—United States of America—there is no tariff—zero.”

This is an error long recognized by economists. A tariff raises the price of a domestically produced substitute (of the same quality) just as it raises the price of imports. (This will also be true mutatis mutandis if foreign producers “eat” part of the tariff because America is a crucial market for them. America only accounts for 13% of goods imports in the world, so other alternatives generally exist for potential exporters.) The explanation of the error lies in the law of one price: for a given good on a given market, there can be only one price, except for transportation costs, government-imposed constraints, and the time required for market adjustments. If a 50% tariff increases the price of imported aluminum by 50% (or by X%) on the American market, buyers of the metal will turn to domestic suppliers. Such arbitrage will bid up the price of domestic aluminum until it reaches the tariff-inclusive import price (always, of course, for equivalent quality).

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After a third attempt on his life, President Donald Trump expressed an idea that looks like the opposite of what was conveyed by an action of Gelon I, a tyrant of Syracuse in the 5th century BC. Responding to a journalist’s question, Trump said (YouTube or click above; see timestamps 20:32-21:26):

“Well, you know, I’ve studied assassinations and I must tell you the most impactful people, the people that do the most ... the people that make the biggest impact, they’re the ones that they go after. They don’t go after the ones that don’t do much ... they’re very impactful people. ... And uh I hate to say I’m honored by that, but I’ve done a lot.”

In her instructive book Greek Tyranny (Bristol Phoenix Press, 2009), Sian Lewis tells us that Gelon I “summoned the people to an assembly fully armed” (meaning that people could come fully armed). As later reported by the Greek historian Diodorus Siculus, the tyrant

“appeared before them not only unarmed, but without a tunic, wearing only a cloak, and stepping forward he gave an account of his life and deeds on behalf of the Syracusans. The crowd shouted their approval at each deed that he mentioned and were amazed that he had entrusted himself unarmed to anyone who might wish to kill him, so much so that they not only did not punish him for having taken the tyranny, but with one voice hailed him as their benefactor, savior, and king.”

Trump seems to think that a political ruler is hated by some to the very extent that others love him for what he does for them. Gelon’s ideal tyrant (the word “tyrant” comes from ancient Greece) is that he does good for everybody and is loved by all. Consequently, he needs no bodyguard or other protection.

The theory underlying Trump’s intuition is that politics is a sort of Hobbesian war under and within the state: the most powerful or most numerous group oppresses the less powerful. Some of the oppressed (“very sick” people, “losers”) resort to violence. That a ruler is hated by some proves how useful he has been to “the people,” the good people, against the “enemies within.”

This justification of politics is why a liberal anarchist such as Anthony de Jasay rejects all politics. Governing is, by definition, harming some of the governed in order to favor the others. The state is necessarily an “adversary state” that takes sides among its subjects or “citizens.” (See de Jasay’s book Against Politics: On Government, Anarchy, and Order [1997], which I reviewed at Econlib under the title of “Princess Mathilde and the Immorality of Politics.”)

Which intuitive political theory is the most realistic, Gelon’s or Trump’s?

The Syracusan tyrant’s idea that he could earn unanimous love from his subjects was perhaps not entirely implausible at the dawn of civilization, when the idea of efficient social coordination without a ruler’s commands had not yet been thought through. Mankind would have to wait until classical liberalism to hear about it (think of Adam Smith). In a modern society, where individuals have different preferences and have had a taste of liberty to satisfy them, unanimity in day-to-day choices is inconceivable. Moreover, the technology of assassination has much improved and become accessible to ordinary individuals and even to social misfits: almost everyone has the means to buy a firearm and a train ticket, to rent a car, etc. It is difficult to imagine that even the nicest, most benevolent, and least self-interested ruler would appear without praetorians among his armed subjects.

As for Trump’s intuition, it points to the sort of conflictual society theorized by Anthony de Jasay. The more politicized and conflictual a society is, the more people hate the ruler. He needs to be surrounded by praetorians.

What is the most desirable political regime in a post-18th-century society? Is the only alternative between the impossibility of a universally loved tyrant and one who is hated by assassins to the extent that he is loved by other people? Is it impossible that the state obtains the consent of all the citizens? Can politics be redeemed? These questions are more difficult to answer seriously than many people think.

The approach proposed by the school of Constitutional Political Economy, developed since the middle of the 20th century by James Buchanan and his collaborators (notably Geoffrey Brennan and Gordon Tullock), has provided a third option between the two naïve and dangerous alternatives represented by Gelon I and Trump. Perhaps—perhaps—it also provides an answer to Anthony de Jasay’s challenge.

To summarize a complex theory in one paragraph, imagine that a unanimous social contract is at least conceptually possible because everybody realizes the benefits of living in society as opposed to the anarchic state of nature. At that “constitutional” level, politics resembles ordinary (“economic”) exchange: individuals bargain for general rules that will underlie the workings of society. At that stage, any individual has a veto, which is the flip side of contractual unanimity. Once general rules are unanimously agreed on, the state created to enforce them will—without violating them, of course—reach decisions through day-to-day democratic political processes. We have both unanimity on rules beneficial to everybody and the peaceful discord of democratic politics limited by these rules. Of course, to receive unanimous consent, such rules must of necessity be general and abstract, “minimal” in some sense, although they don’t exclude some forms of insurance or “public goods” that the market cannot provide. The basic constitutional rules represent a true common interest.

To the extent that this system can be maintained, it happily works without a universally loved Gelon or a Trump fighting the (his) “enemies within.”

To go deeper into these issues, the readings I usually recommend, besides de Jasay’s anarchist challenge cited above, are (by increasing order of complexity, in my evaluation): Geoffrey Brennan and James Buchanan, The Reason of Rules: Constitutional Political Economy (1985); James Buchanan, The Limits of Liberty: Between Anarchy and Leviathan (1975); and James Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy (1962). For an introduction and some keys to these books, I am biased toward my (ungated) reviews, to which the links above refer.

In the Spring issue of Regulation, I have a short comment on a topic I have often treated: high prices (from somebody’s viewpoint) are not the same as a shortage. From my article:

“We need two expressions for the two different phenomena: high price on one hand and unavailability at any price (except on black markets) on the other. That’s what economists do by specifically calling the latter a shortage. …

“High wages and a labor shortage are two different things. …

“There is no shortage of fiber-optic workers; their wages are high because they are much in demand.”

At these wages, employers can hire as many as they want, until market demand increases in a noticeable way, which means that they need to bid up the price of labor (their wages) if they want to hire more. Begging potential workers (as the businessman does on the featured image of this post) will not do.

I also raise questions about the cry for more vocational training.

Regulation is not gated, so the post is for the taking, that is, the clicking.

Under the “From the Past” rubric in the just-published Spring issue of Regulation, I review Friedrich Hayek's book The Constitution of Liberty 66 years (two-thirds of a century) after its publication. My review is titled “Today, through Hayek’s Eyes” as I try to see how the famous political philosopher and economist (and Nobel laureate) would see the current political situation in America (and the world).

The article explores how classical liberals viewed the rule of law and how different it is from what we now have, even in so-called free countries. It is an ideal worth pursuing.

It is available free online in both pdf and html formats.

My (non-gated) cover feature in the Spring issue of Regulation tries to answer the question. Assume you admit, as we are supposed to know, that externalities are as numerous as the sand on the seashore. Further assume that your ideal and angelic government is in power and will solve all externalities. Then, the third definition of industrial policy is probably the neatest one:

“It is simply a set of good government interventions. This characterization may remind us of a line that future California governor Jerry Brown used as a high school debater. Whatever the debate topic, he would end his speeches with, ‘What we need is a flexible plan for an ever-changing world.’ Yes, we want that!”

Vice President J.D. Vance recently stated (“Vance Backs Trump on Iran,” Wall Street Journal, March 16, 2026):

“Vice President JD Vance said he supported President Trump’s action in Iran despite his skepticism of previous U.S. military interventions.

“‘We have a smart president, whereas in the past, we’ve had dumb presidents, and I trust President Trump to get the job done, to do a good job for the American people, and to make sure that the mistakes of the past aren’t repeated,’ Vance told reporters Monday at the White House.”

This is, at best, a naïve or sycophantic statement of the sort: “everybody is dumb except my lord.” It is useful to contrast it with the approach of the Public Choice school of economics, developed since the 1950s.

In short: To understand politics, we must presume that a head of state or other political ruler is, like the rest of us, primarily concerned with his own interests. When he does favor somebody else’s interests, it is as he interprets them (as a normal human being does toward his children), or simply because he thereby buys the beneficiary’s support. Thus, political and social institutions should be such that when a ruler acts foolishly or self-interestedly, he still furthers the common interests of his subjects (“citizens”), instead of the interests of a favored group or his own interests against other people. The field of Constitutional Political Economy, an offshoot of Public Choice, specifically studies the design of institutions that achieve that outcome (see Geoffrey Brennan and James Buchanan’s The Reason of Rules: Constitutional Political Economy, and my Econlib review of the book).

The expression “common interest” emphasizes the normative (moral) ideal of a free society, where all individuals are equally free and the interests of each are equally protected. The only way to protect the interests of all is to protect their common interest in being individually and equally free, which defines a free society.

We know from economic theory that equal liberty for all is possible. Not only possible, but it is the only social system conducive to general prosperity. Adam Smith, whose The Wealth of Nations was published 250 years ago, is generally recognized as the first theorist to express this idea clearly. Even if it may look ambiguous at its edges, it is, at least currently, more realistic and more respectful of individual dignity than any other social ideal. Roughly along the same lines, the small book of James Buchanan Why I, Too, Am Not a Conservative is enlightening. It is worth pursuing the goal of a free society and approaching as closely as possible.