My Weekly Reading for May 4, 2025

May the fourth be with you.

Understanding the Effects of Tariffs

by Kyle Pomerleau and Erica York, AEI Economic Perspectives, April 23, 2025.

Excerpt:

In 2023, the US applied a simple average tariff of 3.4 percent on imports; that’s the result of 734 distinct tariff rates, the highest of which is 350 percent on some beverage and tobacco imports. While 46.5 percent of US imports were duty-free, certain categories of imports faced high average rates. For example, average rates were 16.1 percent for dairy, 11.6 percent for clothing, 15.0 percent for sugars and confectioneries, and 6.5 percent for petroleum. However, only 2.7 percent of imports (measured by share of import value) faced duties greater than 15 percent (WTO et al. 2024).

And:

A tariff would make untaxed, domestically produced goods more attractive to consumers than foreign-produced goods. As discussed above, this would shift labor and capital out of the export sector and into the import-competing sector of the economy. Although shifting means goods would not face direct taxation, it would produce inefficiencies. Labor and capital would move to less productive uses, leading to lower output and incomes than in the absence of tariffs.

You Autor Know

by Scott Winship, First World Problems, April 28, 2025.

Excerpt:

ADH [Autor, Dorn, and Hanson] first assessed what they called the “China Syndrome” in a paper published in 2013.[ii] They leveraged the fact that different geographic areas (“commuting zones,” or CZs) had more or less susceptibility to import competition from China depending on their pre-Shock mix of industries. ADH assigned Chinese import growth in different industries to CZs based on the areas’ initial share of national employment in each industry. In other words, they assumed a CZ that initially had 4 percent of US employment in some manufacturing industry was hit twice as hard by increased Chinese imports within that industry as a CZ that initially had 2 percent of employment in the industry.

ADH summed these amounts across all manufacturing industries to get a measure of each CZ’s overall exposure to Chinese import growth. Finally, they scaled the growth in imports for each CZ by the area’s initial employment level. (Absorbing $1 million in imports is a bigger deal in a CZ with 50,000 workers than in one with 500,000 workers.) They found that stronger growth in Chinese imports in some CZs than in others caused those CZs to have worse manufacturing employment trajectories relative to the others than would have been the case absent the China Shock. If this seems like a very particular way to word the conclusion, the reason will become clearer below.

Assume for now that ADH’s estimates are unassailable. Do they suggest effects large enough to cause the economic, social, and political outcomes that are often blamed on the China Shock? To put them into context, imagine two large commuting zones each with 200,000 working-age people and 20,000 manufacturing workers in 2000.[iii]Imagine one of them was at the 10^th percentile of exposure to the China Shock—meaning that it was relatively unexposed to rising Chinese imports—and the other was on the other end, at the 90^th percentile. For simplicity, imagine further that they experience no population growth, and that in the absence of the China Shock, they would both have continued to have 20,000 manufacturing workers.

The 2013 paper implies that the CZ with the greater import exposure would have had about 2,700 fewer manufacturing workers than the other in 2007. [iv] On the one hand, that means that one out of every seven manufacturing workers would have lost their job in the one place but wouldn’t have in the other. On the other hand, it would mean a relative decline in the manufacturing employment rate of 1.4 percentage points—14 would-have-been manufacturing workers for every 1,000 working-age people.

DDF vs BHL

by David Friedman, David Friedman’s Substack, March 20, 2023.

Excerpts:

While I agreed with many of his points, that was not one of them. If “social justice” has a definite meaning in philosophy, philosophers should be able to offer clear definitions and the definitions offered by different philosophers should be consistent with each other. As the quotes above from two philosophers from the same faction of the same political movement demonstrate, they are not. The first specifies that it is about coercive institutions, the second about institutions in general. The second makes the evaluation of a society depend on how well it serves the interests of the poor and least advantaged, the first makes it depend on maintaining a minimal standard for “conscientious people.” The poor and disadvantaged are not all conscientious, conscientious people are not all poor and disadvantaged. Both definitions look more like political rhetoric than political philosophy.

Not only are the definitions not consistent with each other, neither has a clear meaning. Consider, for instance, “minimally decent lives.” A modern making a list of the requirements would almost certainly include access to decent medical care. By that definition no human being prior to 1900 lived a minimally decent life, since what we consider reasonable medical care did not then exist.

And:

To continue … . “Advocates of social justice believe the moral justification of our institutions depends on how well these institutions serve the interests of the poor and least advantaged.” Depends entirely? Two societies are equally justified if they equally serve the interests of (say) the bottom 10% of the income distribution even if in one of them the rulers live a life of luxury supported by the taxes of everyone else above the bottom or if, in one, almost everyone above the bottom 10% is a (well taken care of) slave? Does Brennan think there is any human being who thinks none of that matters, that the moral justification of the institutions depends only on how well they serve the bottom of the distribution?

The obvious response is that advocates of social justice believe that the justification of the society depends in part on the implications for poor people. But so does very nearly everyone else. Utilitarians believe that the justification of the society depends on how well it serves everyone’s interests, the poor and disadvantaged included. Similarly for most alternative candidates. The concept that, according to Brennan, has a definite meaning in philosophy either has a meaning that nobody could take seriously or a meaning that distinguishes it from practically none of the alternative concepts. I agree with Jason that consequences matter, but that agreement does not define social justice.

California’s Environmental Regulations Are a Mess. Why Won’t Lawmakers Fix Them?

by Steven Greenhut, Reason, May2, 2025,

Excerpt:

And if you think these cynical efforts to gum up the construction process help the environment, then consider this alarming point from that analysis: “Projects designed to advance California’s environmental policy objectives are the most frequent targets of CEQA lawsuits.” These include transit projects, multi-family housing, parks, schools and libraries. It notes that 80 percent of the CEQA lawsuits are in infill locations, which is where environmentalists want us to build.

CEQA criticism has grown even on the political Left thanks largely to the law’s stifling effect on new housing construction. As everyone here knows, California faces a severe housing crisis as the median home price statewide has soared above $800,000 and well over $1 million in many coastal metros. That has led to massive rent spikes and has exacerbated our homelessness situation. Lawmakers have—to their credit—passed targeted exemptions and streamlining provisions for particular types of housing projects (infill, multi-family, duplexes), but it’s not enough.

A 2022 report for the Center for Jobs and the Economy by Holland & Knight attorney Jennifer Hernandez notes that despite those new laws, “CEQA lawsuits targeting new housing production, in contrast, continue to expand—with 47,999 housing units targeted in the CEQA lawsuits filed just in 2020.” The California Air Resources Board (CARB) “acknowledges that two-thirds of CEQA lawsuits allege violations of climate impacts.”

Free Markets Did Not Fail the Middle Class

by Norbert Michel and Jerome Famularo, Cato at Liberty, May 2, 2025.

Excerpt:

Here’s just one more example of how wrong the populists’ income stagnation story is. Real median household income, for all American households, increased 73 percent from 1968 to 2024. That’s not stagnation. Interestingly, that figure is biased downward because of changing household characteristics, such as smaller families, an aging population, and more single folks.

As Figure 1 shows, real median income for married couples with children increased by 132 percent from 1968 to 2024. That’s pretty much the polar opposite of stagnation.