In the entry under “Presbyterian,” here is part of Voltaire’s reflection on how those of different religions seem to get along just fine in the Royal Exchange, that place where merchants and traders could come together, exchange information, and buy and sell. Voltaire wrote:
Enter into the Royal Exchange of London, a place more respectable than many courts, in which deputies from all nations assemble for the advantage of mankind. There the Jew, the Mahometan, and the Christian bargain with one another as if they were of the same religion, and bestow the name of infidel on bankrupts only. There the Presbyterian gives credit to the Anabaptist, and the votary of the establishment accepts the promise of the Quaker. On the separation of these free and pacific assemblies, some visit the synagogue, others repair to the tavern. Here one proceeds to baptize his son in a great tub, in the name of the Father, Son, and Holy Ghost; there another deprives his boy of a small portion of his foreskin, and mutters over the child some Hebrew words which he cannot understand; a third kind hasten to their chapels to wait for the inspiration of the Lord with their hats on; and all are content. Was there in London but one religion, despotism might be apprehended; if two only, they would seek to cut each other’s throats; but as there are at least thirty, they live together in peace and happiness.
For many of us, neither our daily job nor our neighborhood brings us into regular contact with anything resembling a cross-section of our fellow citizens. To see and interact with a broader group, we need to make a visit to a big-box retailer, or a shopping mall, or a second-hand store, a fast-food restaurant, or the food trucks aligned near a fairgrounds or an art festival. It seems to me an underrated aspect of markets that they offer an arena for cooperative behavior between very different types of people, including walking around in a shared space, standing in line, dealing with those working for sellers, and more.
For one more entry, here is a quotation from Voltaire’s entry on “Money,” touching on aspects of money, inflation, mercantilism, the business of giving financial advice, and public finance:
Provided we have a pledge of exchange for the necessary things of life, commerce will continually go on. It signifies not whether this pledge be of shells or paper. Gold and silver have prevailed everywhere, only because they have been the most rare. … I will not speak of the innumerable adventures which have happened to money since it has been stamped, marked, valued, altered, increased, buried, and stolen, having through all its transformations constantly remained the idol of mankind. It is so much loved that among all Christian princes there still exists an old law which is not to allow gold and silver to go out of their kingdoms. This law implies one of two things—either that these princes reign over fools who lavish their money in a foreign country for their pleasure, or that we must not pay our debts to foreigners. It is, however, clear that no person is foolish enough to give his money without reason, and that, when we are in debt to a foreigner, we should pay him either in bills of exchange, commodities, or legitimate coin. Thus this law has not been executed since we began to open our eyes—which is not long ago.
There are many things to be said on coined money; as on the unjust and ridiculous augmentation of specie, which suddenly loses considerable sums to a state on the melting down again; on the re-stamping, with an augmentation of ideal value, which augmentation invites all your neighbors and all your enemies to re-coin your money and gain at your expense; in short, on twenty other equally ruinous expedients. Several new books are full of judicious remarks upon this subject. It is more easy to write on money than to obtain it; and those who gain it, jest much at those who only know how to write about it.
In general, the art of government consists in taking as much money as possible from one part of the citizens to give to the other.
The last line in particular is pure Voltaire. When I tell people that I work in economics, often their first question is about my predictions for the stock market. Thus, I’m especially fond of Voltaire’s line: “It is more easy to write on money than to obtain it; and those who gain it, jest much at those who only know how to write about it.”
Back in 1974, in the aftermath of the OPEC oil embargo, the National Maximum Speed Law was passed by Congress and signed into law by President Richard Nixon. It required all states to enact a maximum speed limit of 55 miles per hour, or else to face a cutoff of federal highway funding. The goal was to reduce US oil consumption. At the time, advertising campaigns to inform the public of the new speed limit said, “It’s not just a good idea, it’s the law.”
The legislative history here goes back to the Great Depression. As Richardson and Wilcox point out, the original design of the Federal Reserve back in 1913, with 12 “regional” Federal Reserve banks and the main branch in Washington, DC, was meant to decentralize monetary power. Indeed, the regional banks had some degree of power to set monetary policy in their own district. But in 1933 during the Great Depression, Congress gave President Franklin Roosevelt temporary control over monetary policy on an emergency basis. Not unexpectedly, Roosevelt liked this control. Thus, in the lead-up to what became the Banking Act of 1935, it was proposed that the president should continue to make decisions on monetary policy.
A leading figure in this argument was Marriner Eccles, a name well-known to those who have studied the history of the Fed–indeed, the Federal Reserve building in Washington, DC, is named after Eccles. He was first appointed to the Federal Reserve Board of Governors in 1934, and ended up serving until 1951–and acting as Chair of the Board from 1936-1948. Eccles pretty much wrote a bill that was introduced in the House of Representatives, proposing that the power of monetary policy should be centralized at the federal level, with the president setting that policy. In support of this position, Eccles wrote:
[A]n administration is charged, when it goes into power, with the economic and social problems of the Nation. Politics are nothing more or less than dealing with economic and social problems. It seems to me that it would be extremely difficult for any administration to be able to succeed and intelligently deal with them entirely apart from the money system. There must be a liaison between the administration and the money system—a responsive relationship.
An Eccles-type bill giving the president the power to set monetary policy passed the House of Representatives, but then ran into the opposing point of view in the Senate, where almost all the witnesses supported the idea of monetary policy being made at the national level, but opposed the idea of letting the president be the one to set monetary policy. As one example, Henry Morgenthau, who was at that time Secretary of the Treasurey, chair of the Federal Reserve Board and a close confidant of President Roosevelt, argued that monetary authority should be “concentrated in an independent Government agency” and should operate independently of “all outside influence—just as independent as you can make it . . . . [like] the Supreme Court . . . . independent of the President. . . . No member of the board could be removed except by impeachment.”
There was concern about political control over monetary policy (given that politicians always have an incentive to juice the economy before elections), and concern that political control might actually mean control by well-organized special interests like banking and financial interests. It was pointed out that central banks of other leading economies were structured to be independent of politics. Thus, the Banking Act of 1935 as passed into law and signed by Roosevelt contained the provisions for Federal Reserve independence that are familiar today: 14-year nonrenewable terms for a seven-member Board of Governors, with monetary policy decision made by a 12-member Federal Open Market Committee that incluced the Board of Governors and the heads of five regional Federal Reserve banks, chosen on a rotating basis.
One reason why Roosevelt was willing to sign this independent Fed into law was that the new Board of Governors would be phased in over time: thus, Roosevelt could continue to have a compliant Board of Governors that he had appointed for at least a few more years.
Given the current gnashings by President Trump and his advisers, who desire more direct power over setting monetary policy, this history is worth remembering. The idea of the president setting monetary policy directly was tried on an emergency basis in the early 1930s. It was then proposed on a permanent basis and thoroughly debated in Congress. However, the Banking Act of 1935 says that political independence of the Federal Reserve is not a good idea, but actually the law.
Of course, Congress retains ultimate control over the Federal Reserve. For example, the Federal Reserve Reform Act of 1977, signed into law by President Jimmy Carter is typically credited with establishing the “dual mandate” for the Fed: that is, it should seek to pursue both maximum employment and stable prices. (To be technical, the law also requires that the Fed maintain long-run growth of money and credit and seek moderate long-term interest rates, but if the “dual mandate” is successfully pursued, these other goals will tend to happen at the same time.) Congress could alter the goals for monetary policy and the Federal Reserve if it wished to do so. In addition, Congress can hold hearings and grill the Federal Reserve leadership about budgets and spending plans. Congress assuredly has the power, if it wishes, to alter the law so that Federal Reserve would be required to implement policies set by president and the executive branch.
Some legal questions involve considering very specific circumstances and shades of gray. But unless or until Congress changes the law, the political independence of the Federal Reserve and monetary policy from presidential authority is “black letter law”–that is, it is as close to clear and undisputed as a law can be.
It seems clear that China’s economy is moving from being a technological follower, primarily using technology invented elsewhere, and moving toward generating a greater share of its own technology. But other than pointing to anecdotes or stories of specific companies, how might we measure the extent of this shift? François de Soyres, Ana Maria Santacreu, and Ethan Hunt from the St. Louis Fed offer some quantitative evidence based on international royalty payments–that is, the payments made to a company in another country for using the patents owned by that company (“China’s Role in Global Innovation Is Changing,” August 14, 2025).
This figure shows royalty payments received from other countries. The US leads the way, with Germany and Japan in second and third place. China is much lower.
That said, there are a couple of additional points worth noting. Yyou can see that China has shown a substantial jump in international royalty income since about 2016, increasing by a multiple of about seven from 2016-2021. China’s royalty income has now surpassed South Korea (although of course, South Korea’s GDP is only about one-tenth as large as that of China). Thus, the story of China making a transition to being an innovator, rather than a copier of innovations of others, is true–but the extent of the transition is limited. To put it another way, total international royalty payments received by US firms are about 0.6% of US GDP; in contrast, total international royalty payments received by China are about 0.07% of China’s GDP.
I’d also add that discussions of international trade often focus on imports and exports of goods, or of goods and services combined, but often leave out financial flows like royalty payments–which is clearly one of the ways that US firms benefit from their research and development efforts.
I have been the Managing Editor of the Journal of Economic Perspectives since the first issue in Summer 1987. The JEP is published by the American Economic Association, which decided back in 2011–to my delight–that the journal would be freely available online, from the current issue all the way back to the first issue. You can download individual articles or entire issues, and it is available in various e-reader formats, too. Here, I’ll start with the Table of Contents for the just-released Summer 2025 issue, which in the Taylor household is known as issue #153. Below that are abstracts and direct links for all of the papers. I plan to blog more specifically about some of the papers in the few weeks, as well.
We argue that rising regional inequality contributes to higher average housing prices and rents. We show three key empirical facts that contribute to this mechanism: first, income growth has been faster in already high-income cities; second, people are drawn to these cities by the income growth, raising relative housing demand and relative housing prices and rents; and third, housing supply in these cities is inelastic due to density and regulation, so these cities have not produced the housing to match the rising demand. We illustrate the resulting changes using a graphical spatial model in which rising regional inequality reallocates population toward high-income, supply-constrained areas. This shift raises national average housing prices and rents.
Recent decades have seen house prices grow strongly relative to incomes, making housing ever less affordable. We develop and quantify a model of segmented housing markets to study the drivers of rising housing costs and to evaluate policies aimed at curbing these costs. We show that rising wealth dispersion, together with stagnating housing supply, can explain the observed increase in housing costs. Demand-side policies such as down payment assistance and mortgage interest deductions inadvertently cause upward pressure on house prices and exacerbate unaffordability. Supply-side policies such as tax credits for development or construction of affordable housing lower house prices by increasing the housing stock. Which type of new housing is built matters: new construction in the high-end segments improves affordability by more in all segments of the housing market compared to new construction in bottom-end segments.
Why is housing supply so severely restricted in US cities and suburbs? Urban economists offer two primary hypotheses: homeowner self-interest and political fragmentation. Homeowners, who outnumber and have organizational advantages over renters, are said to lobby against development to protect their property values. The fragmentation hypothesis emphasizes that development’s negative externalities are borne locally while most of the benefits accrue regionally or nationally, leading localities to block housing. This paper offers another explanation: ordinary people simply do not believe that adding more housing to the regional stock would reduce housing prices. Across three original surveys of urban and suburban residents, only a minority of respondents say that a large, positive, regional housing supply shock would reduce prices or rents. These beliefs are weakly held and unstable (suggesting people have given the issue little thought), but respondents do have stable views about who is to blame for high housing prices: developers and landlords. Large, bipartisan supermajorities support price controls, demand subsidies, and restrictions on putative bad actors, policies which they believe would be more effective than supply liberalization for widespread affordability. We discuss the implications of these findings for efforts to expand the supply of housing.
We take a long, broad, and theoretically agnostic view toward the connection between building costs and house prices in the US housing market. We find that building costs have never had all that much explanatory power over US housing prices, but even the imperfect correlations of the past have weakened further in recent decades along multiple dimensions.
We make the case that an international perspective on housing markets can help us understand why house prices and transactions volumes sometimes vary in ways that cannot easily be attributed to local economic factors. We first document cross-country and cross-time variation in house price-to-income ratios, and selectively discuss a growing literature which quantifies how international capital flows affect domestic housing markets. While this literature helps rationalize some of the rhetoric on globalization’s effects on housing markets, it seems difficult at first glance to attribute price variation at the aggregate housing market level to the relatively small absolute magnitudes of cross-border housing capital flows. We argue using a search and matching framework that housing market frictions can magnify the effect of seemingly modest shocks and lead to more widespread reverberation through the housing market, linking local outcomes to the global distributions of wealth, risk, and productivity.
Matthews interviews eminent international economist Anne O. Krueger, tracing her life in academia and her service at multilateral economic institutions, and explaining her myriad intellectual contributions to the field. Krueger recounts her early skepticism of import substitution, informed by her experiences in Turkey and India, culminating in her influential 1974 paper on rent-seeking. Krueger discusses her tenure at the World Bank in the 1980s and her time at the IMF in the 2000s, where she influenced the fund’s response to the financial crisis in Argentina. She also explains her career-long interest in trade liberalization efforts, her concerns about the decline of the World Trade Organization and multilateral trade negotiations, and her skepticism about the United States’ recent turn toward industrial policy. Krueger ends by reflecting on the evolution of the economics profession and offering advice for young economists.
In order to preserve cultural patrimony for future generations, most countries ban exports of antiquities. However, this may drive trade underground, particularly in low-income and low-state capacity contexts, and cause irreversible damage to cultural heritage. We argue that complementing export bans with fixed-duration, long-term leases can strengthen incentives for maintenance and revelation of antiquities, while preserving cultural patrimony. Allowing only leases rather than sales limits potential losses from corrupt deals between foreign collectors and government officials. Standardized contracts with set lease lengths, insurance requirements, and care requirements may also be necessary to limit corruption and establish a well-functioning market.
In 2023, US regulators proposed the “Basel Endgame,” a long-awaited overhaul of bank capital requirements. The proposal aimed to bring the United States into compliance with international standards established by the Basel Committee on Banking Supervision in response to the 2008 Global Financial Crisis. However, fierce industry opposition to what banks viewed as a costly increase in capital requirements effectively killed the proposal. In this essay, we describe the purpose of bank capital and the history of international standard-setting in bank regulation. We then highlight the most important aspects of the Basel Endgame, as well as the arguments for and against adopting the rule. We show that the debate unnecessarily conflated two distinct questions: (1) whether the United States should comply with international regulatory standards, and (2) whether the United States should raise large banks’ capital requirements. While there are strong grounds to answer both questions in the affirmative, they need not be addressed together. That is, the United States can implement international standards in a capital-neutral manner to preserve global cooperation in bank regulation, leaving the separate question of raising capital requirements for another day.
This paper documents the changing trends in US carbon emissions and discusses the main factors that contributed to the historical carbon emissions rollercoaster. We divide the discussion into four periods: up to 1920, 1920–1960, 1960–2005 and after 2005. For each period, we discuss the main drivers of national carbon emissions. We then discuss trends in carbon emissions in the electricity sector. Electricity sector emissions were initially very small, but would become the largest source of US carbon emissions over the period 1980–2015, and the largest contributor to decarbonization since 2007. In the last section, we offer some lessons for what developing economies might learn from the US experience.
“Text as Data in Economic Analysis,” by Tarek A. Hassan, Stephan Hollander, Aakash Kalyani, Laurence van Lent, Markus Schwedeler, and Ahmed Tahoun
This article discusses how to apply computational linguistics techniques to analyze largely unstructured corporate-generated text for economic analysis. As a core example, we illustrate how textual analysis of earnings conference call transcripts can provide insights into how markets and individual firms respond to economic shocks, such as a nuclear disaster or a geopolitical event: insights that often elude traditional non-text data sources. This approach enables extracting actionable intelligence, supporting both policy-making and strategic corporate decision-making. We also explore applications using other sources of corporate-generated text, including patent documents and job postings. By incorporating computational linguistics techniques into the analysis of economic shocks, new opportunities arise for real-time economic data, offering a more nuanced understanding of market and firm responses in times of economic volatility.
Conventional wisdom traces the origins of the Federal Reserve’s independence to the 1951 Treasury-Fed Accord. That rendition of history is inaccurate. The principal source of the Fed’s monetary-policy independence is the Banking Act of 1935, which created the Fed’s modern leadership structure and placed monetary-policy decisions beyond Presidential control. Congressional intent is clear in this case because the initial draft of the bill vested control of monetary policy with the President. After extensive debate, Congress amended the legislation and crafted the institutional features that enshrine the Fed’s independence. The central role of the Banking Act of 1935 suggests that only an act of Congress or a Supreme Court ruling could fundamentally strengthen presidential influence over monetary policy.
Short answer: comparative advantage is a plausible candidate. This story is an old one, but perhaps it has become old enough that some readers will not be familiar with it. It’s told in a 1969 address by Paul Samuelson (Samuelson, Paul A. 1969. “Presidential Address: The Way of the Economist.” In P. A. Samuelson (ed.), International Economic Relations. pp. 1-11.) Here’s Samuelson telling the story:
[O]ur subject puts its best foot forward when it speaks out on international trade. This was brought home to me years ago when I was in the Society of Fellows at Harvard along with the mathematician Stanislaw Ulam. Ulam, who was to become an originator of the Monte Carlo method and co-discoverer of the hydrogen bomb, was already at a tender age a world famous topologist. And he was a delightful conversationalist, wandering lazily over all domains of knowledge. He used to tease me by saying, ‘Name me one proposition in all of the social sciences which is both true and non-trivial.’ This was a test that I always failed. But now, some thirty years later, on the staircase so to speak, an appropriate answer occurs to me: The Ricardian theory of comparative advantage; the demonstration that trade is mutually profitable even when one country is absolutely more – or less – productive in terms of every commodity. That it is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.
I like Samuelson’s answer, but it also raises additional questions. If the “non-trivial” criterion can be met by any economic theory where thousands of intelligent and important people are unable to grasp or believe it, then it seems to me that many economic theories are true and (apparently) non-trivial, including the (apparently) widespread belief that governments can set prices or impose tariffs without experiencing tradeoffs, along with many more. The news headlines provide examples of (apparently) intelligent and important people who seem unable to grasp or believe economic insights pretty much every day.
In a 1980 book, Minds, Brains, and Programs, the philosopher John Searle used what has become known as the “Chinese room analogy” to discuss the relationsihip between artificial intelligence and learning. Searle set up his discussion this way:
Suppose that I’m locked in a room and given a large batch of Chinese writing. Suppose furthermore (as is indeed the case) that I know no Chinese, either written or spoken, and that I’m not even confident that I could recognize Chinese writing as Chinese writing distinct from, say, Japanese writing or meaningless squiggles. To me, Chinese writing is just so many meaningless squiggles.
Now suppose further that after this first batch of Chinese writing I am given a second batch of Chinese script together with a set of rules for correlating the second batch with the first batch. The rules are in English, and I understand these rules as well as any other native speaker of English. They enable me to correlate one set of formal symbols with another set of formal symbols, and all that ‘formal’ means here is that I can identify the symbols entirely by their shapes. Now suppose also that I am given a third batch of Chinese symbols together with some instructions, again in English, that enable me to correlate elements of this third batch with the first two batches, and these rules instruct me how to give back certain Chinese symbols with certain sorts of shapes in response to certain sorts of shapes given me in the third batch. Unknown to me, the people who are giving me all of these symbols call the first batch “a script,” they call the second batch a “story,” and they call the third batch “questions.” Furthermore, they call the symbols I give them back in response to the third batch “answers to the questions.” and the set of rules in English that they gave me, they call “the program.”
Like any good philosophical thought-experiment, Searle’s Chinese room is meant a way to explore the underlying questions. In particular, Searle is perfectly willing to say that computers “think,” but would argue against “the claim that the appropriately programmed computer literally has cognitive states and that the programs thereby explain human cognition.” For Searle, “understanding” involves “intentionality,” which in turn is rooted in a biological presence. Here, I’ll sidestep these concepts and focus instead on one place where the rubber meets the road on these issues: how do we interpret the “cognitive state” that occurs when a student uses an AI tool to complete an assignment?
The recent case of William A., as he was known in court documents, illustrates the threat. William was a student in Tennessee’s Clarksville-Montgomery County School system who struggled to learn to read. (He would eventually be diagnosed with dyslexia.) As is required under the Individuals With Disabilities Education Act, William was given an individualized educational plan by the school system, designed to provide a “free appropriate public education” that takes a student’s disabilities into account. As William progressed through school, his educational plan was adjusted, allowing him additional time plus permission to use technology to complete his assignments. He graduated in 2024 with a 3.4 GPA and an inability to read. He could not even spell his own name.
To complete written assignments, as described in the court proceedings, “William would first dictate his topic into a document using speech-to-text software”:
He then would paste the written words into an AI software like ChatGPT. Next, the AI software would generate a paper on that topic, which William would paste back into his own document. Finally, William would run that paper through another software program like Grammarly, so that it reflected an appropriate writing style.
This process is recognizably a practical version of the Chinese Room for translating between speaking and writing. That is how a kid can get through high school with a B+ average and near-total illiteracy.
A local court found that the school system had violated the Individuals With Disabilities Education Act, and ordered it to provide William with hundreds of hours of compensatory tutoring. The county appealed, maintaining that since William could follow instructions to produce the requested output, he’d been given an acceptable substitute for knowing how to read and write. On February 3, an appellate judge handed down a decision affirming the original judgement: William’s schools failed him by concentrating on whether he had completed his assignments, rather than whether he’d learned from them.
Searle took it as axiomatic that the occupant of the Chinese Room could neither read nor write Chinese; following instructions did not substitute for comprehension. The appellate-court judge similarly ruled that William A. had not learned to read or write English: Cutting and pasting from ChatGPT did not substitute for literacy. And what I and many of my colleagues worry is that we are allowing our students to build custom Chinese Rooms for themselves, one assignment at a time.
I agree that AI poses real challenges for education. The idea behind traditional pedagogy is that a student starts off by producing imperfect or incorrect work, but then makes progress to producing better work. At some point in this process, the quality of the “better work” is deemed sufficient, in which case the student gets a passing mark or promotion to the next grade. But with many assignments, AI is able to produce output that, in the past, would have sufficed for a passing grade. So where does that leave educators? I have no simple answer, but here are three thoughts:
1) In the story of William A., as told above, he apparently has the capability to use speech-to-text software, and then to work with that output using ChatGPT and Grammarly. In the modern economy, these are not trivial skills. I know young peoploe working for consulting firms who conduct interview and produce a cleaned-up writen transcript with a list of main points listed at the top. In the case of William A., the true complaint about the education system is not that he did not learn to do anything, but that the education system lied about what he had actually learned.
2) The pedagogy of arithmetic offers some lessons for what educators should be doing with regard to AI. We teach students how to do the tasks of arithmetic by hand (ah, the satisfaction of calculating a square root with a pencil and paper!), but with the understanding that students will use calculators in the future. Thus, the actual goal is not to teach arithmetic per se, but instead to teach students how to apply arithmetic to real-world “story problems” like how much paint to order for a given job or what the photocopying budget will be. The hope is that students don’t become phobic when they see an explanation involving numbers or a table of numbers.The hope is that all students develop some internal warning bells about arithmetic problems: If you are told that someone was born in 1950 and is now more than 100 years old, someone who can apply arithmetic should have an immediate questioning response. If you are told that some quantity went up 10%, and doubled in size, then you should have a quick reaction that either it went up 100%, or it didn’t double–but either way, something is wrong with the calculation.
3) For educators, the new AI tools are bringing the issue of the calculator to written work, as well as to computer programming and other fields. Yes, it probably remains important to teach and test the basics in a way that doesn’t use AI, as we do with arithmetic. But the actual skills desired here are not about generating workable text on a blank screen, whether that is producing the classic five-paragraph essay (intro, three points, conclusion) or a workable computer program. The skills are that students should be able to look at what has been generated with a skeptical eye, consider how well it matches what is actually desired and needed in the specific setting, and make changes–in many cases, aggressive and far-reaching changes–as needed. One hopes that students learn how to be skeptical and even suspicious of text generated by others, and recognize the need to fact-check, to look references up, to test what actually works.
I comment here as someone who has spent a career as an editor, but in my own mind, AI challenges teachers to move away from an emphasis on “authorship,” or whether a student is able to produce a minimally acceptable draft on on a blank screen, and instead to “editorship,” which is whether a student is able to interrogate and take specific action to improve an earlier draft.
My tradition on this blog is to take a break (mostly!) from current events in the middle and later part of August. Instead, I pre-schedule daily posts based on things I read during the previous year about three of my preoccupations: economics, editing/writing, and academia. With the posts pre-scheduled, I can then relax more deeply when floating on my back in a Minnesota lake, staring up at the sky.
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From the pianoforte to the smartphone, almost every innovation has sparked fears that people will be forever changed, their social skills diminished, their analytical skills eroded. Among these grim predictions, one of my personal favorite is the lament that the author Nathaniel Hawthorne wrote about how people would be forever changed by the shift from fireplaces as a place to cook and a source of heat to those dastardly modern innovations of ovens and furnaces. This quotation is from Hawthorne’s 1843 essay, “Fire Worship.” Sure, smartphones may have their problems, but are they nearly as bad as this?
It is a great revolution in social and domestic life … this almost universal exchange of the open fireplace for the cheerless and ungenial stove. On such a morning as now lowers around our old gray parsonage, I miss the bright face of my ancient friend, who was wont to dance upon the hearth and play the part of more familiar sunshine. …Alas! blindly inhospitable, grudging the food that kept him cheery and mercurial, we have thrust him into an iron prison, and compel him to smoulder away his life on a daily pittance which once would have been too scanty for his breakfast. Without a metaphor, we now make our fire in an air-tight stove, and supply it with some half a dozen sticks of wood between dawn and nightfall.
I never shall be reconciled to this enormity. Truly may it be said that the world looks darker for it. In one way or another, here and there and all around us, the inventions of mankind are fast blotting the picturesque, the poetic, and the beautiful out of human life. …
While a man was true to the fireside, so long would he be true to country and law, to the God whom his fathers worshipped, to the wife of his youth, and to all things else which instinct or religion has taught us to consider sacred. With how sweet humility did this elemental spirit perform all needful offices for the household in which he was domesticated! He was equal to the concoction of a grand dinner, yet scorned not to roast a potato or toast a bit of cheese. How humanely did he cherish the school-boy’s icy fingers, and thaw the old man’s joints with a genial warmth which almost equalled the glow of youth! And how carefully did he dry the cowhide boots that had trudged through mud and snow, and the shaggy outside garment stiff with frozen sleet! taking heed, likewise, to the comfort of the faithful dog who had followed his master through the storm. When did he refuse a coal to light a pipe, or even a part of his own substance to kindle a neighbor’s fire? And then, at twilight, when laborer, or scholar, or mortal of whatever age, sex, or degree, drew a chair beside him and looked into his glowing face, how acute, how profound, how comprehensive was his sympathy with the mood of each and all! He pictured forth their very thoughts. To the youthful he showed the scenes of the adventurous life before them; to the aged the shadows of departed love and hope; and, if all earthly things had grown distasteful, he could gladden the fireside muser with golden glimpses of a better world. And, amid this varied communion with the human soul, how busily would the sympathizer, the deep moralist, the painter of magic pictures, be causing the teakettle to boil! …
It is my belief that social intercourse cannot long continue what it has been, now that we have subtracted from it so important and vivifying an element as firelight. The effects will be more perceptible on our children and the generations that shall succeed them than on ourselves, the mechanism of whose life may remain unchanged, though its spirit be far other than it was. The sacred trust of the household fire has been transmitted in unbroken succession from the earliest ages, and faithfully cherished in spite of every discouragement such as the curfew law of the Norman conquerors, until in these evil days physical science has nearly succeeded in extinguishing it. But we at least have our youthful recollections tinged with the glow of the hearth, and our life-long habits and associations arranged on the principle of a mutual bond in the domestic fire. … We shall draw our chairs together as we and our forefathers have been wont for thousands of years back, and sit around some blank and empty corner of the room, babbling with unreal cheerfulness of topics suitable to the homely fireside. A warmth from the past—from the ashes of bygone years and the raked-up embers of long ago—will sometimes thaw the ice about our hearts; but it must be otherwise with our successors.
On the most favorable supposition, they will be acquainted with the fireside in no better shape than that of the sullen stove; and more probably they will have grown up amid furnace heat in houses which might be fancied to have their foundation over the infernal pit, whence sulphurous steams and unbreathable exhalations ascend through the apertures of the floor. There will be nothing to attract these poor children to one centre. They will never behold one another through that peculiar medium of vision the ruddy gleam of blazing wood or bituminous coal—-which gives the human spirit so deep an insight into its fellows and melts all humanity into one cordial heart of hearts. Domestic life, if it may still be termed domestic, will seek its separate corners, and never gather itself into groups. The easy gossip; the merry yet unambitious jest; the life-like, practical discussion of real matters in a casual way; the soul of truth which is so often incarnated in a simple fireside word,—will disappear from earth. Conversation will contract the air of debate, and all mortal intercourse be chilled with a fatal frost.
Some jobs can be traced to export industries: thus, reduce trade and these jobs are at risk–at least their current form. The International Labour Organization offers an estimate of how much employment in countries around the world is linked to their exports to the United States (World Employment and Social Outlook: May 2025 Update).
As of 2023, an estimated 84 million workers have jobs linked directly or indirectly through supply chains to final demand from the United States in the 71 countries with available data (see Table 1). That amounts to 4.3 per cent of total employment in these countries. Most of those workers – 56 million – are in Asia and the Pacific, though the share of total employment is highest in Canada and Mexico, at 17.1 per cent. While some of those workers are already at risk of being affected by higher tariffs, a cloud of uncertainty is affecting a wider swath of workers. The final employment impact will depend on the evolution of US demand for imports, trade diversion effects and employment shifts into other sectors. The latter effect could cause a deterioration in employment quality, since trade-related sectors tend to have higher average job quality – measured by indicators such as lower informality – than many non-trade-related alternatives.
Here’s the key table:
There’s not much surprise in these numbers, although their magnitude is worth considering. The US higher-tariff policies are putting 4.3% of jobs in the rest of the world at some degree of risk–17.1% of all jobs in Canada and Mexico. Concern over these jobs is part of what makes other countries willing to negotiate with the US tariffs.
Is 4% of jobs “a lot”? For perspective, the US unemployment range has been roughly 4% for the last year or so. If some policy step posed a risk of doubling that rate, the US would certainly view it as “a lot” of jobs.
On the other side of the scale, US jobs are linked to US exports, as well. Estimates from the US International Trade Commission for 2022 suggest that 10.2 million US jobs are linked to US exports. The US economy had about 158 million total jobs in 2022, so 10.2 million of those jobs linked to exports works out to 6.4% of the total. If US exports were to decline, those jobs would be at risk.
I’ll add two thoughts here:
These estimates of how many jobs are linked to exports are relatively solid. After all, we can measure trade flows, and we can measure how many workers are involved in a given industry. Yes, there’s some additional calculation involved if, say, an industry exports 30% of its output. But the numbers are plausible if imperfect estimates.
In addition, imports are tied to jobs as well. For example, US workers have jobs at retail stores that have imported products on their shelves, US manufactures often use imported products (like aluminum or steel) or machinery, the US-based transportation industry ships imported products, and so on. The estimates of how many US jobs are involved with imports–not in competition with imports, but as part of what their employer provides–are much more vague. With jobs tied to both imports and exports, it’s easy to wave one’s hands and say that workers whose jobs are linked to international trade can just shift to jobs that aren’t linked to international trade. But shifts that potentially involve millions of workers, both in the US and around the world, will not be a seamless, non-disruptive, and cost-free process.
One of those facts that “everyone knows” is that the US auto industry has been crushed by foreign competition. As Adam Ozimek points out in “Myths and Lessons from a Century of American Automaking” (Economic Innovation Institute, August 1, 2025), while the US car industry certainly no longer features large manufacturing plants in the city of Detroit, there are a number of ways in which the US-based industry is doing just fine. Consider some figures:
Here is a figure showing total motor vehicles assembled in the US each year. The current level is a little lower than the 1980s, but the total has not fallen off a cliff.
A more sophisticated measure of auto industry output looks as “motor vehicles and parts.” Also, it looks at “value added”–that is, the value that is created in US production plants not counting imported products–and the industrial production index, which basically looks at physical output as distinct from prices. By these measures, the US motor vehicles and parts industry has had fairly strong growth since about 1990–albeit with a plunge during the Great Recession in 2008-09.
Is this a case where greater output has been accompanied by a dramaticallly rused number of jobs in the industry. Not really. The number of jobs in the motor vehicles and parts industry is down from levels in the 1980s and 1990s, but it still at about one million.
But as you might guess behind these overall numbers are some substantial shifts. For example:
Total motor vehicle and parts employment in the city of Detroit actually fell from 220,000 in 1950 to 100,000 in 1970. But during this time, motor vehicle and parts employment in Michigan, but outside of Detroit, was increasing by even more. In this sense, what many people view as the “glory days” of the US auto industry are actually the same time period when the industry was moving away from its Detroit-based roots.
But a bigger shift was that total US employment in motor vehicles and parts was shifting out of Michigan as well. Again, the “glory days” of the US auto industry in the 1960 and 1970s were a time before the gale-force winds of rising globalization, and also a time when the big US auto manufacturers were relocating to the rest of the US–often to escape what they perceived as a militant Detroit-based and Michigan-based anti-business climate, including conflict-seeking labor unions.
Of course, there’s more to the story. The number of imported cars does rise in the 1980s. But in addition, carmakers from around the world started following the example set by the big US car companies from the 1950s to the 1970s and making cars in non-Michigan, non-Detroit parts of the United States. The result has been substantial disruption for Ford, GM, and what used to be Chrysler but is now Stellantis. But we have come a long way from the claim that “what is good for General Motor is good for the economy.” The competition from imported cars forced the US carmakers to up their game, and both US consumers and the US workers at these foreign-owned but US-based auto plants benefited. It’s worth remembering that the anti-import Trump administration keeps trumpeting plans by foreign investors to build plants here, so it would be odd for devotees of that agenda to see the foreign-owned but US-based car manufacturer as a mistake.
But along the way, the most profitable part of the US auto industry has been light trucks, in part because they have hidden behind tariffs for six decades now. As Ozimek points out:
Originally intended as a temporary policy, a retaliation against Europe for their tariffs on American chicken imports, the United States has upheld a 25 percent tariff on imported light trucks since 1964. The result has been less competition, fewer choices, and higher prices for American buyers of these vehicles. … The light truck tariff reveals the danger of implementing a policy that initially is not meant to be permanent but turns out that way nonetheless. A new protectionist policy can be sticky, leading to political apathy and status quo bias as policymakers accustom themselves to it, fearing the backlash from the protected industry if they try to undo it. In the case of the truck tariff, a policy response in an unrelated trade war ended up remaining in place for more than six decades — and counting.
Back in 1975, 45% of all 25-34 year-olds had all four markers of adulthood. Another 22%–many of them stay-at-home moms–were out of the parents’ home, married, and with children, but not in the workforce. In 2024, only 21% of the 25-34 year-olds could check off all four markers of adulthood.
A big part of what’s happening here is a greater emphasis on economic goals (working and out of the parents’ house) and a lesser emphasis on family goals (married and children). Hemez and Vespa have also authored a working paper, “Changes in Milestones of Adulthood,” with a focus on the changes in the markers of adulthood from 2005-2023 (US Census Bureau, Social, Economic, and Housing Statistics Division, SEHSD Working Paper Number: FY 2025-03). For that paper, they have reframed the four markers of adulthood into five: “living away from their parents, completing their education, labor force participation, marrying, and living with a child.”
Here’s the similar figure comparingi 2005 and 2023. Even in this relatively shorter time, the share of 25-34 year-olds meeting all five markers drops substantially, while the share meeting only three economic markers–that is not including marriage or living with children–rises substantially.
This figure shows the trendlines for the five markers of adulthood separately, rather than in combination.
In a way, these figures just put numbers behind broader patterns that are already familiar to many of us. Underlying realities like greater freedom for women to pursue education and careers, as well as greater control over fertility, seem to me to be real social gains. But I also wonder to what extent the outcomes of a smaller share who are married, or who have children, reflects an actual personal preference, or is a result of crowding-out by the economic markers of adulthood and a shift in social expectations.
