George H. W. Bush would say, "Tariffs, bad."

Aaron Flaaen and Justin Pierce, two economists for the Fed, find that tariffs decrease employment and raise prices (Flaaen, Aaron, and Justin Pierce (2019). “Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector,” Finance and Economics Discussion Series 2019-086. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2019.086).

Tariffs on Imports => Shoppers Buy Direct from China

An unintended consequence of imposing tariffs on imports from China is that consumers purchase directly from Chinese producers than from US importers. (WSJ, Dec. 2019.)

Don't Make Landlords Act like Jerks

"Let’s take rent control. The primary reason why I oppose rent control, minimum wages and similar laws has little to do with the standard pros and cons in an econ textbook. Rather these restrictive controls encourage landlords and bosses to act like jerks.

"I suspect that people in Stone Age tribes treated each other with a certain degree of respect. (Albeit only within the tribe). As population boomed, humanity developed political structures that caused people to be mean to each other. Feudalism, slavery, communism, fascism, etc., encourage people to act like jerks.

"I see liberalism as a way of returning to the Stone Age, where we treat each other with some respect. When people are free and transactions are voluntary, then people will be incentivized to treat each other well.

"One side effect of classical liberalism is that it makes societies richer. But that’s not the main point.

"So you could argue that political liberalism is a sort of 'progress', making us progress back to where we were in the Stone Age. But I hope we can advance beyond cavemen in one respect. Get rid of tribes, get rid of nationalism, and treat everyone on Earth as belonging to a single global tribe" (https://www.themoneyillusion.com/further-thoughts-on-progress-and-happiness/).

The real question is whether an economic system is based in liberty or coercion

This commentary in the WSJ (Dec. 2019) argues that whether socialism or capitalism is good or bad depends on whether it relies on liberty or coercion.

Evidence that Increases in the Minimum Wage Hurts Small Businesses

This review describes a study that finds that small businesses in states that raise the minimum wage suffered “lower bank credit, higher loan defaults, lower employment, a lower entry and a higher exit rate.”

I Was Once a Socialist. Then I Saw How It Worked.

The subtitle of this opinion by in the NYT (Dec. 2019) is, "Two cheers for capitalism, now and forever." Here are some money quotes.

• "government officials I was covering were not capable of planning the society they hoped to create. It wasn’t because they were bad or stupid. The world is just too complicated."
• "capitalism is really good at doing the one thing socialism is really bad at: creating a learning process to help people figure stuff out. If you want to run a rental car company, capitalism has a whole bevy of market and price signals and feedback loops that tell you what kind of cars people want to rent, where to put your locations, how many cars to order."
• "that kind of knowledge does produce enormous wealth."
• "capitalism has brought about the greatest reduction of poverty in human history."
• "planned economies have produced an enormous amount of poverty and scarcity. What’s worse is what happens when the political elites learn what you can do with that scarcity. They turn scarcity into corruption."
• "we need more and better capitalism."
• "We need a massive infusion of money and reform into our education systems, from infancy through life."
• "We need worker co-ops, which build skills and represent labor at the negotiating table. We need wage subsidies and mobility subsidies, so people can afford to move to opportunity. We need tax subsidies for health care, to make it easier for people to switch jobs. We need a higher earned-income tax credit, to give the working poor financial security so they don’t get swept away amid the creative destruction. We need a carbon tax, to give everyone an incentive to reduce carbon emissions without pretending we know the best way to do it."

Incentives in Organ Transplants

This essay describes an unintended consequence in organ transplants. 

"Transplant programs are not evaluated by regulatory agencies to determine how well they use the organ donors available to them. Instead, they are judged primarily on how many of the patients they transplant are alive one year after surgery—an important but limited metric. The emphasis on one-year survival makes transplant programs overly cautious, letting viable organs go unused instead of using organs that they fear might harm their report card."

The essay includes an example. A surgery team turned down lungs that were good but not great matches for Patient A because another Patient B who had received a transplant had recently died. Patient A subsequently died while waiting for a match.

The emphasis on survival rates also reduces the propensity of doctors to transplant organs into patients who are likely to die within a year; e.g., patients who are old and weak and patients who suffer from other life-threatening diseases. 

Why did the Price of EVO decrease?

This article in the WSJ (Dec. 2019) uses supply and demand analysis to explain why the price of EVO has decreased recently. It points to two mail culprits: a bountiful harvest and Trump's tariffs. The effect of a bountiful harvest is easy to illustrate: a bountiful harvest increases supply. The effect of tariffs is trickier. 

When consumers pay a tariff, the demand curve shifts down by the amount of the tariff. For example, if the quantity demanded is 100 when the price is $25 and the tariff = $0, the quantity demanded is 100 when the price is $15 and the tariff = $10. The height to the new demand curve is the price paid to the producer. The difference is heights between the old demand curve and the new demand curve is the tariff. The height to the original demand curve shows the price paid by consumers when the tariff applies. It equals the sum of the price paid to the producer and the tariff. 

The tariff decreases the price received by producers and increases the price paid by consumers. The decrease in the equilibrium price means that the price paid to the producer falls. However, the decrease in the equilibrium quantity means that the height to the old demand curve increases. Therefore, the price paid by consumers increases: the sum of the new equilibrium price and the tariff is greater than the original equilibrium price. 

Evidence that more reliance on the market system => higher standard of living

Each year the Fraser Institute rates the economic freedom of 162 (or so) countries. The executive summary for 2019 reports that

"Nations that are economically free out-perform non-free nations in indicators of well-being

1. Nations in the top quartile of economic freedom had an average per-capita GDP of $36,770 in 2017, compared to $6,140 for bottom quartile nations (PPP constant US$). 
2. In the top quartile, the average income of the poorest 10% was $10,646, compared to $1,503 in the bottom quartile in 2017. Interestingly, the average income of the poorest 10% in the most economically free nations is two-thirds higher than the average per-capita income in the least-free nations. ¢ In the top quartile, 1.8% of the population experience extreme poverty (US$1.90 a day) compared to 27.2% in the lowest quartile. 
3. Infant mortality is 6.7 per 1,000 live births in the top quartile compared to 40.5 in the bottom quartile. 
4. Life expectancy is 79.5 years in the top quartile compared to 64.4 years in the bottom quartile. 

"A number of other outcomes are more positive in economically free nations than in those that lack economic freedom. For example: 

1. Political and civil liberties are considerably higher in economically free nations than in unfree nations. 
2. Gender equality is greater in economically free nations. 
3. Happiness levels are higher in economically free nations."