Burning Bright at Any Percentage: The Chanukah Miracle of Light, Effort, and Purpose

Chanukah is a time to reflect on one of the most miraculous moments in Jewish history: the victory of a small group of Jewish warriors over the powerful Seleucid Empire, and the subsequent rededication of the Holy Temple in Jerusalem. When Jews around the world light the menorah, which miracle are they celebrating? Is it the military victory itself or is it the fact that the oil that was supposed to last one night lasted eight nights? I asked myself this very question a couple of years ago. Much like the Talmudic rabbis (Talmud, Shabbat 21b), I sided more on the long-lasting oil theory. 

Upon delving further into the miracle of Chanukah, the answer becomes more nuanced than long-lasting oil. Was it merely that the oil lasted for eight nights? If the miracle was that the oil, which was supposed to last only one night, lasted eight nights, we should only celebrate for seven nights since the miracle was the extra seven nights. I was sitting in synagogue this past Saturday and the rabbi mentioned Rabbi Yosef Dov Soloveitchik, also known as the Beis HaLevi (19 c.), in his sermon (d'var Torah). 

The Beis HaLevi's Reframing of the Miracle

The Beis HaLevi reframed the miracle of Chanukah. The Priests (Kohanim) knew there was only enough oil for one night. The Kohanim divided the oil into eight equal portions with the intent of burning a little each night for the full eight nights. The miracle is that, even with a scarcity of oil, it burned all eight nights and with the same intensity had there been a full supply. This helps explain why we celebrate Chanukah for eight nights and not seven nights. The rabbi I was listening to then emphasized how the miracle of Chanukah was not about quantity so much as it was about quality. 

Quality Over Quantity: A Lesson from the Talmud

We find this idea of quality over quantity in the Talmud (Berachot 5b). Rabbi Elazar fell ill and he was weeping. Rabbi Yochanan asked him why he was weeping. It was not due to the suffering he endured, which makes sense given he had to give up financial security to study Torah (Berachot 28a). Rather, he was not able to study Torah as much as he would like. Rabbi Yochanan comforted him, saying that if one person brought a large sacrifice to the Temple and another one a meager one, they are both equally meritorious if their heart was directed towards Heaven. If anything, I would argue that it was because of his strife that his sacrifice was more meaningful. 

The Shema: Wholehearted and Imperfect Devotion

The connection between the menorah shining brightly in spite of limited oil and Rabbi Elazar's heartfelt effort in Torah learning is that both can shine brightly if there is the quality, i.e., devotion. But what do we do when we are not at 100 percent? The menorah in the Chanukah story did not operate at 100 percent and yet it still shone. We see this concept in one of the most iconic of Jewish texts, the Shema. In the Shema (Deuteronomy 6:5), Jews are told to love G-d with all their heart, soul, and might. The Shema's call to love G-d is not about being perfect or operating at full throttle. It is about giving your best at every moment, no matter where we are at in life. By accepting that perfection is not the goal, the Shema offers us a sigh of relief. It allows us to engage with spiritual practice not as a burden of flawless performance, but as an opportunity to be present and genuine, regardless of where we are at in life. 

Wax versus Oil: Authenticity in Action

This lesson of being our best selves finds resonance in the way we light the menorah. I brought this up in 2016 when I examined the tension between the oil candles and the wax candles. The oil candles symbolize the ideal, the pure, and unwavering devotion. As the Shema teaches us, we cannot be perfect all the time. This is where the wax candles come into play. Wax candles, like so many of us, represent that we are not pure or perfect, but that our light can shine just as bright and authentic as the oil candles. The oil candles represent the spiritual aspiration, whereas the wax candles represent the reality of doing our best within the context of our imperfections and limitations. There are moments when we burn like the oil candle and others like the wax candle. We have to remember that our life circumstances mean that we have a bit of each in our lives. 

Finding Light in Imperfection

Much like wax candles, Rabbi Elazar was unable to offer perfection, but he offered sincere and earnest devotion. This reflects the message of the Shema, which is that we are to love G-d with all of our heart, soul, and might. We are not meant to be perfectly performing automatons. What matters is that we give wholeheartedly. We do not give our best 100 percent of the time because no one is capable of that feat. We give the best in every moment, whether it is at our peak or having reached rock bottom. 

This brings us to the heart of the Chanukah miracle as understood by the Beis HaLevi. The oil that survived warfare did not merely endure. It shone just as brightly as a full supply of oil. Like the menorah, our actions can burn just as brightly if offered with sincerity and intention. Whether we burn like pure, unwavering oil or like the imperfect wax candle, the light we offer is still meaningful. This Chanukah, may we shine with the authenticity, sincerity, and effort to wholeheartedly do our best, even in the darkest of times. 

Two Years of Milei: Is Argentina's Libertarian Gamble a Miracle or Mayhem?

Two years into President Javier Milei's presidency, Argentina remains in the midst of one of the most ambitious economic overhauls attempted by any modern democracy. What began as shock therapy for an ailing economy evolved into a test of whether a country long plagued by populism, interventionism, and government spending can reinvent itself and be a thriving again. 

Argentina is moving past the initial chaos of Milei's early reforms. Expectations, results, and political reality are all colliding into an interesting intersection, especially in light of the recent midterm elections giving Milei a bigger mandate than I imagine Milei himself was anticipating. With yesterday marking the two-year anniversary of Milei getting elected into office, it is time to see where Milei stands and whether his libertarian gamble has paid off. 

Milei's Successes 

Much like I did during Milei's one-year anniversary, here are some of the indicators that show that Argentina is faring better than it was before Milei assumed the presidency: 

Inflation rate - Argentina has had a chronic inflation problem, as the country's inflation data from El Instituto Nacional de Estadística y Censos (INDEC) indicates. The increase in inflation that Argentina goes through in a month is what a typical Western nation goes through in a year, which gives an idea of the economic pain that Argentina endures. For the most recent month available, October 2025, that number was an increase of 2.3 percent. However, this is much lower than the peak of 25.5 percent that Argentina reached in December 2023 (Reuters). Argentina's annual inflation rate has not been this low since 2018. If Milei can continue with reducing inflation, it will show durable growth, investment, and social-economic stability.

GDP - As INDEC GDP data indicate, Argentina's GDP has been on an overall growth trajectory since Q4 2024. It cooled off a bit in Q2 2025 at -0.1 percent, but on a year-to-year basis, Argentina's economy expanded by 6.3 percent. Why did it not start growing before Q4 2024? Because Milei implemented shock therapy to the economy, including massive cuts to public spending, removing subsidies, a 54 percent devaluation, and tight monetary policy. These were all necessary measures to get hyperinflation under control, but they do mess with short-term economic output. 

Fiscal consolidation - Fiscal consolidation, which is the reduction of deficits through spending restraint, subsidy cuts, and  improved revenue discipline, has been one of the clearest markers of Argentina's policy shift under Milei. As this OECD report shows, Argentina achieving a primary surplus after years of chronic imbalances sharply reduced the need for money printing. Fiscal consolidation helps stabilize prices and expectations. These moves signal to investors and markets that Argentina is laying the groundwork for a more sustainable and growth-oriented economy. 

Capital markets - An August 2025 IMF report shows that Argentina regained access to capital markets ahead of schedule. Decades of defaults, capital controls, and runaway inflation effectively closed off Argentina from the global capital markets, leaving the country more reliant on domestic financing. According to the IMF, fiscal consolidation, monetary tightening, and foreign exchange rate liberalization rebuilt investor confidence enough to start opening up access once more. The reason why this is important is that it suggests restored and improving investor confidence, which is a key precondition for foreign investment, external financing, and sustainable growth. As long as there are not renewed or external shocks, this should hold for Argentina.

Areas for Improvement

While I commend Milei for these accomplishments, there is still work that needs to be done for Argentina to truly reform. I am not going to be able to cover everything, but these are a few that caught my eye.

Labor Market Pressure - INDEC measures what is "labor market pressure," which is a combination of unemployed, underemployed, and those seeking another job. This aggregate figure is at 30.5 percent, when it was at 29.7 percent the year before. This figure is concerning for Milei because it signals labor stress beyond the official unemployment rate. Essentially, it implies that Milei's reforms have yet to translate into widespread labor market confidence. This is an issue because without contracts, benefits, or stable incomes to make formal employment more attractive, Milei's economic growth will happen more slowly than he would like. 

Corruption and Civil Liberties - There was no improvement of Argentina's scoring in Transparency International's Corruption Perceptions Index (CPI). This can suggest that Milei's approach has not translated into stronger accountability, transparency, or control over corruption. PEN International also expressed concerns about freedom of expression declining since Milei came into power. On the other hand, Argentina's Freedom House score remains steady at 85 and Argentina is still classified as a Free Nation. Considering that Argentina was run by a military junta that was kidnapping citizens about half a century ago, this is a good thing. 

Cost of Living Pain - Even as inflation has decreased considerably by Argentinean standards, that does not mean that everything is hunky-dory. This was a paradox I experienced when I visited Argentina a couple of months ago, that the macroeconomic figures looked good, but things are still quite unaffordable. First, lower price increases do not ignore that prices continue to rise and that it's still expensive. Second, there are certain goods that skyrocketed. For example, the public services basket, which includes gas, transport, water, and electricity, increased by about 526 percent since December 2023. This is in contrast to the 164 percent by which the overall Consumer Price Index increased. In other words, the public services basket increased about three times the overall inflation. 

Food Prices and the Poor - This is also the case for food prices. Meat, dairy, and bread saw particular spikes in 2025. Food inflation is a persistent problem in Argentina, especially for the poor and those working in the informal labor market. Since these staples remain expensive for many households, it does not feel like gains are being made. Food prices rose to a new high plateau during the initial economic shock therapy in 2024, which hits the poor harder because a larger percent of their income goes to food. Milei is fixing the macroeconomy and doing so faster than anticipated. This is not unique to Argentina's economic shock therapy. It follows the same moral geometry that happens with any economic shock therapy. Why? The poor feel the costs the most because they are the least able to absorb those shocks. The question is how longer it will take for Milei to complete the transition, and how longer the poor can endure the associated costs.

Postscript

Given the mess that Milei inherited, I would say that he has done an outstanding job. Milei's first two years have shown that fiscal consolidation, tight monetary policy, and reducing public spending can bring inflation down, balance the budget, and increase economic growth. While these are major successes in comparison to what Argentina was like in 2023, there are still considerable challenges. The formal labor market has shrunk, informal labor remains large, and many households face economic stress, regardless of what official poverty statistics have to say. 

I brought this up when analyzing Argentina's monetary policy vis-à-vis the crawling band last October. Argentina needs to go beyond macroeconomic headline numbers. For Argentina to have long-term growth, Milei will need to address deep structural challenges alongside his macroeconomic reforms. This includes deregulating labor to encourage more formal hiring, simplifying the tax code, liberalizing trade to boost competitiveness, and phasing out subsidies and price controls, to name a few. Even with a stronger mandate from the midterms, Milei's reforms still face political pushback, social resistance, and institutional inertia that could slow or complicate the path to longer-term stability. But If Milei can navigate the landmines entailed in implementing these next steps, the foundations for long-term prosperity will be established and economic stability will become a norm for Argentina.

¡Viva la libertad, carajo! 

Another Silent Cost of Lockdowns: Language and Social-Cognitive Delays That Threaten Children’s Potential

It is hard to believe that the COVID-19 pandemic began nearly six years ago. In some respects, it feels like it happened yesterday. I remember shortly before the lockdowns started to take effect in the United States, I wrote about how we should have relied more on voluntary social distancing instead of lockdowns. Unfortunately, politicians across the country (and indeed the world) panicked and imposed lockdowns in the name of "following the science," even in spite of the fact that pandemic guidance from the likes of the World Health Organization and Johns Hopkins was to not implement lockdowns. 

Children Paid the Price

Many warned that such unprecedented restrictions would come with considerable costs, myself included. Years later, the ramifications of those lockdowns are playing out. I wrote a three-parter on it earlier this year (see here, here, and here). What is sad is that children bore the brunt of these costs. I first discussed in 2022 how lockdowns, school closures, and other pandemic measures would impose heavy costs on children. Sadly, the evidence continues to mount. 

Scotland's Shock: The Lancet Study

A study published at the Lancet (Hardie et al., 2025) last month adds something more alarming to the ledger, even more so when I covered a British study in 2023 about lockdowns and social-emotional development. It examined the relationship between COVID-19 public & social health measures (PSHM) and developmental concerns among about 258,000 Scottish children. This is significant since it is the largest known analysis of population-level statistics to assess the relationship between PSHM and development concerns in Europe, which is a great sample size. What did the study find? The study's most pronounced findings were a reduction in language acquisition and social-cognitive skills. These delays were more pronounced in children from families with fewer resources, i.e., the poor. The proportion of toddlers flagged with at least one developmental concern increased by up to 6.6 percentage points compared with pre-lockdown trends.

Not an Isolated Incident: A Global Problem

You can say that this was an observational study, so it is not as good as an experimental study in respect to proving causation. You can also say that it was limited to Scotland, so you cannot extrapolate too much. Here's the thing. This is not the only study to find such delays:

• A cohort comparison study found that 3.5-5.5-year-old children tested after the lockdowns performed significantly worse on "false-belief" tasks (a measure of social cognition) the similar pre-pandemic children, even after controlling for age and language ability (Scott et al., 2024).
• A meta-analysis of 10 studies across six countries from the Journal of Developmental & Behavioral Pediatrics found significant impairment of language and communication skills in early childhood development (O'Connor et al., 2025).
• A cross-sectional study conducted in Turkey of 709 children found incidents of increased delays in linguistic and personal-social skills in children assessed during the pandemic relative to pre-pandemic (Özkan, 2025).
• A study from South Korea found that children aged 30-36 months during the pandemic had a higher risk of neuro-developmental delays in the communication and social interaction domains compared with pre-pandemic children, especially for those of low socio-economic status (Lee et al., 2024).
• A broad systemic review of lockdowns in the U.S. generally found detrimental effects on child development (Taylor et al., 2025).

Why Early Development Matters

There is increased evidence of the adverse effects that lockdowns and school closures had on early childhood development. This is serious because these sorts of delays are not temporary. Developmental psychology research suggests that early language and social-communication deficits correlate with persistent behavioral, social, and academic difficulties later in life. 

Socioeconomic Inequality Widened

As some of these studies indicate, the impact was disproportionately felt among lower-income households. That makes intuitive sense. Most people of low socioeconomic status are not part of the "laptop class." They faced greater economic stressors during the pandemic. For children in lower-income families, lockdowns were compounded by smaller living spaces, limited access to digital learning tools, heightened parental stress, and fewer extracurricular opportunities. When you couple the unequal starting point imposed by socioeconomic differences with delays in foundational developmental skills, this creates a feedback loop that magnifies inequality. 

The Left and the Lockdown Lovers

I remember a time before the pandemic when income inequality was a cause célèbre for many on the Left. During the pandemic, those on the Left were more supportive of strict COVID measures than those on the Right (Pew Research). I bring this up because there is a sad irony here. During the pandemic, there was a strong correlation between political leanings and support for lockdown policies. Many of those who decried income inequality before the pandemic were some of the most enthusiastic of the Lockdown Lovers. Yet they overlooked how these COVID measures widened the very gaps they claimed to oppose. In effect, the group of people most concerned with income inequality were the ones who supported interventions that deepened the intergenerational divide that they had opposed pre-pandemic.

Lockdowns: A Disaster for Children and Society 

This brings us to the tragic punchline. The Lancet study, with a growing mountain of research, shows that lockdowns simply did not slow down child development. They did so most for the kids whose families had the fewest resources to weather the pandemic. These early delays increase the likelihood of reduced educational attainment, higher rates of special educational needs, and potential long-term economic consequences. These early developmental delays can echo through a child's entire life, affecting academic achievement, social skills, mental health, and even future economic productivity, with consequences that could persist for decades. While not all children will experience these outcomes, these risks are real, measurable, and consequential. Meanwhile, the lockdowns and the subsequent developmental delays directly widened the socioeconomic gaps that had historically been derided by the Left. The "lockdowns should protect the vulnerable" narrative did not simply fail. It harmed the people it was meant to protect. 

To call the lockdowns a policy misstep would be a woeful understatement. They were one of the worst peacetime public-policy decisions enacted in human history because it was an unprecedented social experiment recklessly implemented with disastrous results and very few benefits. At this point, what we as a society can do is acknowledge the harm done, do our utmost to help the children whose developmental skills were delayed with mitigation and remediation programs, hold decision-makers accountable for their failures, raise awareness of how public policy enacted in an emergency and done in the name of fear can backfire, and make sure that we never hand over power to people who are so addicted to their moral superiority that they cannot even be bothered to do a basic risk assessment or cost-benefit analysis before wreaking havoc on the people they swore to serve and protect. 

Open Borders Require Integration: Illiberal Immigrants and European Policies Create a Perfect Storm in Europe

Immigration has the potential to unleash freedom and economic progress. That is more than textbook theory. At least in a U.S. context, I am all in favor of more immigration. Immigrants to the United States make a net positive contribution to the U.S. economy, including low-skilled immigrants. Immigrants to the United States also help improve fiscal health. In spite of the politics surrounding immigration in the United States, the case for immigration for the United States is a no-brainer. When I look across the Atlantic, it makes me stop and wonder. 

Immigration Tensions in Europe

In a European context, there is a deep fault line between many natives and immigrant communities, whether those rifts are caused by fears of cultural displacement, economic competition, or the burden on the welfare state. A number of natives worry that the immigrants will erode a sense of shared identity while straining public services. This tension is amplified by the fact that immigrants might not fully adopt local norms and might vote for more illiberal policies and influence culture to be more illiberal. These anxieties are not merely theoretical. 

Religious Law Versus Secular Institutions

The French polling and market research firm Institut français d'opinion publique (IFOP) released quite the eye-opening poll about three weeks ago. This IFOP poll looked at the connection that French Muslims have to Islam and Islamism. One disturbing finding was that 46 percent of French Muslims believe that sharia law should rule France. It is down from the 54 percent in 2008, but it is still high. 

Another jarring finding is that 57 percent of French Muslims from the age of 18 to 24 years old said the rules of Islam are more important than France's secular laws. (see below). This is in contrast to the 44 percent of all French Muslims, thereby suggesting that France's Muslim youth is more extreme in its beliefs. Even a minority today can shaper future trends, particularly among younger generations, which has the real potential to shift community expectations or voting patterns over time. Even worse, 38 percent of French Muslims sympathize with at least some positions of Islamism. To think this is happening in a country that has valued secularism (laïcité) to the point where separation of civil and religious society is in  Article I of the French Constitution. 

Muslim Immigrants with Extremist Views Is a Problem Throughout Europe

France is not the only country that is having problems with integrating its Muslim immigrants. An inability of Sweden to integrate its Muslim immigrants was the takeaway of my 2023 trip to Sweden. Take a look at this JL Partners poll of British Muslims last year (see below). 32 percent of British Muslims want sharia law, which is the same percent of British Muslims who believe that Islam should be the national religion of Britain. 65 percent believe the Muslim holiday of Eid-al-Fitr should be a public holiday in Britain. 27 percent of British Muslims are okay with outlawing homosexuality, which is not quite double of the overall British public. 57 percent of British Muslims want the compulsory use of halal food in all schools and hospitals. Then there is the 52 percent of British Muslims that want to make it illegal to show a picture of Mohamed. These findings indicate some authoritarian views in which Muslim immigrants want to impose their way of life onto Britain. 

A high prevalence of Islamism was also a finding in a study from Criminological Research of Lower Saxony: 67.8 percent of Muslim schoolchildren believe that the Koran should take precedent over German secular law (Dreißigacker et al., 2023). This trend of believing that religious rules are more important than secular ones dates back at least to 2008 when the Berlin Research Agency for Social Research (WZB) conducted a survey of over 9,000 Muslims throughout Europe (Koopmans, 2008). The WZB also showed that European Muslims are more fundamentalist than European Christian counterparts, whether it is believing that there is only one true interpretation; Islam should not be modernized; you should not have gay friends; or the Jews should not be trusted. 

In 2024, the European Union's Agency for Fundamental Rights (FRA) conducted a survey of 10,000 Muslims in Europe and details the discrimination that Muslims face in Europe. This discrimination is worth mentioning because if a sizable portion of European Muslims perceives profiling and discrimination that can and does lead to lower trust in secular legal institutions. All things considered equal, that could make sharia law more attractive to Muslims that can feel that the system is not working for them.  

Integration Challenges Across Europe

As I brought up earlier this year in my criticism of using "Islamophobia" as a cudgel to silent dissent, this illiberalism that a significant number of these immigrants import from their home country and attempt to implement in Western society is quite problematic. For a free democracy to work, the institutions that protect individual liberty (e.g., women's rights, gay rights, minority rights, freedom of religion) must remain intact. Looking at Muslim-majority countries, there is a general lack of freedom of speech, LGBT rights, and gender equality norms, all of which has me concerned about Europe. 

The societies of Muslim-majority nations by and large have sharia-based legal expectations in an honor-based culture. Bringing in immigrants en masse that do not respect liberal and democratic norms, institutions, or mores causes societal erosion and create institutional friction when religious practices clash with liberal, democratic values. Even if a small subset support at least some Islamist positions, their presence can influence schools, neighborhoods, and political discourse, thereby creating pressures that affect broader society. 

From a libertarian standpoint, the concern is not cultural differences themselves, but rather how voter preferences translate into state power. In majoritarian systems, large groups favoring restrictions on speech, gender equality, religious freedom, or market exchange can shift electoral outcomes that democratically erode liberal institutions faster than they can be rebuilt. When those illiberal preferences translate into illiberal laws, the outcome is predictable: expanded state authority and fewer individual rights.

Why a More Liberal and Open Immigration Policy Works Better in the United States Than Europe

It is not only immigrants with illiberal views that are to blame here. I can throw shade at European governments and how they govern. The cultural, linguistic, fiscal, and economic reality of Europe in contrast to the United States can explain why open immigration does not work nearly as well in Europe as it does in the United States. American institutions are built around economic absorption and adaptability, whether that is a more flexible labor market, greater geographic mobility, or a skills-oriented immigration system that accelerates integration. The United States also has historically maintained a long-standing assimilationist culture that encourages new citizens to adopt a shared civic identity. 

Europe cannot make such a claim. Europe is plagued by rigid labor markets and large universal welfare states. After all, Nobel Prize winner Milton Friedman argued that you cannot have both a large welfare state and open immigration. Furthermore, the linguistic and cultural fragmentation in Europe, not to mention the economic rigidity, slow integration and increase fiscal and social pressures in Europe. Aside from linguistic fragmentation, the complex licensing and labor laws along with a relatively regulated housing market make it more difficult for immigrants to move around to better job opportunities, which creates demographic mismatch. 

Postscript

Muslim immigrants who do not accept Western values combined with the lack of economic freedom and linguistic & cultural fragmentation on Europe's part create a cultural powder keg waiting to go off. Some potential policy solutions towards integration can include language programs, vocational training, and civic education, much like I suggested when providing alternative options to a burqa ban last month. Even though effective integration policies are theoretically available, Europe's institutional, cultural, and political realities have shown that widespread implementation is challenging.

In a free society, open borders are ideal. Human movement, voluntary exchange, and cultural pluralism are foundations of a free society. However, these ideals depend on institutional compatibility. A libertarian analysis cannot ignore that Europe's rigid markets, expansive welfare systems, and centralized governance structures prevent the kind of spontaneous-order integration that open borders require. Given Europe's current institutional design, the choice is not between "freedom" and "restriction," but rather between preserving and losing basic liberal order itself.

I would personally prefer a scenario in which Muslim immigrants can integrate into their respective newly founded country, but outside of some rare exceptions (e.g., Norway), that process has been quite elusive and hardly inspires confidence in me that matters will improve. 

Given the political reality and Europe's assimilation failures, there is a part of me tempted to say that restricting immigration, at least for now, seems to be one of the least-worst options available for safeguarding liberal institutions. I know such restrictions come with considerable tradeoffs, including the real potential for government expansion. But seeing how Europe is declining, it’s still tempting. Alternatively, scaling back the welfare state or a guest-worker or temporary-visa regime for sectors with high demand could also help with the matter, but that would be one option that would need other alternatives.

One thing for certain is that the status quo in Europe is untenable. Without such measures to improve integration or economic freedom, the resulting political, social, and legal friction continue to erode individual rights and push Europe towards an even more illiberal and authoritarian trajectory. 

Moody's Boosted Italy's Credit Rating, But Does Rome Really Deserve It?

For the first time in 23 years, the credit rating agency Moody's upgraded Italy's credit rating, from Baa3 to Baa2. Moody's finds that Italy has a "consistent track-record of political and policy stability which enhances the effectiveness of economic and fiscal reforms and investment implemented under the National Recovery and Resilience Plan (NRRP)." Moody's also anticipates greater growth and fiscal consolidation, as well as a gradual decline in Italy's government debt burden. This is a small but significant vote of confidence from international markets that Italy desperately needs. At the same time, Italy's economic foundations and long-running economic challenges tell a more nuanced story. This begs the question of whether Moody's upgrade is in alignment with the economic reality in Italy. 

Short-Term Positives

Before delving into my skepticism of Moody's upgrade, I do want to address some of the positives in favor of the upgrade: 

• As the International Monetary Fund (IMF) noted in its most recent Article IV Consultation with Italy, Italy's economy has remained resilient and has shown modest GDP growth and output that has surpassed pre-pandemic levels (IMF, p. 4). 
• Given the political instability of frequent elections, it is refreshing to see policy stability relative to Italy's post-WWII historical norms. 
• Labor market reforms have led to a rise in permanent contracts. The permanent contracts contributed to an increase in the employment rate to a record of 62.7 percent (IMF, p. 5). 
• Volatility in Italy's financial markets in early 2025 has largely subsided (IMF, p. 8).
• The fiscal deficit shrunk by more than half to 3.4 percent in 2024 (ibid.), and the deficit is projected to shrink further (European Commission). Italy was able to return to a primary surplus, which helps contain the growth of government debt relative to GDP, though overall debt dynamics also depend on interest payments and growth. 

Long-Term Structural Issues

I am glad that Italy is putting in effort to avoid a disaster in the short-run. At least for now, Italy's economic stability helps the rest of the Euro Area since Italy is the third largest economy in the Euro Area. However, much like I detailed in 2018 when analyzing the Italian economy, Italy still has long-term structural issues that make it difficult to justify a long-term optimistic view:

• One of Italy's main issues to date is its large debt-to-GDP ratio at around 135 percent. Aside from Greece, it remains one of the highest in the developed world (IMF). A literature review and analysis released by the Mercatus Center this past October suggests that once the debt-to-GDP ratio gets above around 80 percent, investment may become hampered, interest-rate risk could become heightened, and long-term growth could slow down. This is not to say that Italy is disadvantaged, but Italy has its work cut out for it. 
• While it is not negative, Italy's GDP growth is modest, at 0.6-0.8 percent (Istituto Nazionale di Statistica). This is far from adequate if one of the main goals is to reduce debt burden or improve the living standards for Italian citizens. 

• Weak productivity growth has resulted in subdued GDP growth, below-target inflation, and high public sector debt, all of which create challenges for public finances (IMF, p. 4). 

• Industrial production has been on the decline. In March 2025, output was 1.8 percent lower than it was the previous year (OECD). This decline in output exposes a weakness in Italy's manufacturing base.
• Much of the growth in Italy's economy depends on the Recovery and Resilience Facility (RRF) financing the NNRP program (European Commission). It is plausible that the economic growth could falter after this time-limited investment. Even worse, if the investments are not properly implemented, the debt dynamics might reassert themselves.
• There is a further drag in the declining birth rates and decline in the working-age population (IMF, p. 10-11).

Postscript

Moody's upgrade is defensible from a short-term perspective since fiscal consolidation, NRRP investment, recovery in consumer demand, and stable macroeconomic conditions lower the likelihood of an immediate crisis. However, weak growth trajectory, high debt, and structural rigidity all indicate that any optimism for the Italian economy should remain cautious at best. The upgrade reflects improved resilience as opposed to a legitimate, lasting transformation. Italy earns one, maybe two cheers, for macroeconomic stability, especially given its history. Nevertheless, Italy has quite the hill to climb if it hopes to achieve true economic strength.

Parsha Vayetze: Thanksgiving and Experiencing Gratitude in the Unexpected

Across the United States today, families are gathering to celebrate the holiday of Thanksgiving. While a huge feast is common, Thanksgiving is a rarity in U.S. culture when people collectively sit down and acknowledge the good in their lives. There is a tacit truth about Thanksgiving that few mention: it is significantly easier to feel gratitude when all is well, whether it is a table full of food for Thanksgiving or when you are living moments that are picture-perfect for Instagram. In reality, gratitude can be quite complicated. 

That complexity is illustrated in this week's Torah portion. Jacob does not experience gratitude from a place of plenty, but from a place of discomfort. Jacob stole the birthright from his brother, Esau (Genesis 27:18-29). Esau is so angry he wants to kill Jacob (27:34-41). As a result, Jacob is on the run (27:41-43) and ends up wandering the wilderness (28:10-12) with no support system whatsoever and uncertain of what his future will look like. Jacob not only hits rock bottom metaphorically. He literally uses a rock as a pillow to fall asleep (28:11). 

It was during this low point when Jacob had the famous dream of the ladder reaching heavenward. In the dream, Jacob was promised four things: that G-d is with Jacob; that G-d will protect Jacob; that Jacob will eventually return back to the Land promised to the Patriarchs; and G-d reconfirmed the covenantal blessings (28:13-15). What was Jacob's response?

And Jacob woke up and said, "'Surely the Lord was in this place, and I did not know.' And he was afraid and said, 'How awesome is this place! This is none other than the house of G-d, and this is the gate of heaven.'" - Genesis 28:16-17

One thing we see here is that gratitude is not about abundance. It is a recognition of goodness without certainty. To quote Pirke Avot (4:1), "Who is rich? The one who rejoices in their lot." Abundance is not a prerequisite for gratitude because if it were, the vast majority of humanity throughout history could not express it. Although abundance can enhance gratitude, gratitude is more about perspective and noticing the good in life. Jacob was not thankful because his problems disappeared or that he actually received anything. After all, Jacob still was homeless, penniless, and wandering around the wilderness without knowing what was in store for his future. At that moment, he was able to admit that the goodness and divine presence were there all along, and wished that he saw it sooner. There are blessings if we slow down enough to see and experience them. Jacob realized that all was not lost and that there was still hope, and that was enough to express gratitude. 

If anything, gratitude requires an acceptance that life includes an element of hardship. I recently spent the past three months traveling around Peru, Argentina, Uruguay, and Colombia. While there were some upscale neighborhoods, for the most part, I would not consider Latin America a place of material abundance like I do with the United States or the rest of the western world. I talked with a number of people on this voyage. While they had a myriad of challenges, they still said "todo está bien," that everything is okay. I do not think they say that because they believe that literally every aspect of their life is hunky-dory. Cultures with less material abundance often show more gratitude, joy, and connection because they realize that life has meaning, that good can still be found, and that in spite of uncertainty, we are held by something larger than ourselves. Simplicity, trust, and awareness matter much more than being a millionaire. 

What we see in this week's Torah portion is a Jewish moment of "todo bien." What is even more remarkable is what Jacob does after expressing gratitude. He took that stone, built a pillar, and poured oil on the stone to anoint it (Genesis 28:18). This is very remarkable for a few reasons: 

1. It was transformative because what felt uncomfortable and painful at the time was able to become a monument of meaning. Jacob took something both painful and seemingly mundane as a stone into a literal stepping-stone towards blessing. 
2. Jacob received this dream outside the land of Israel (Ramban's commentary on Genesis 28:18), thereby reminding us that G-d truly is everywhere. 
3. This altar embodies spiritual simplicity. It did not need silver, gold, or a bunch of religious laws. It was a real, grounded, and unpretentious expression of gratitude and spiritual connection. 
4. Jacob elevated the mundane into the holy. Jacob did not merely sit with his feelings. He took his feelings and had them transformed into action. Gratitude is actionable, tangible, and grounded, not merely feeling. It reminds us that actions speak much louder than words or mere emotions. 

The holiday of Thanksgiving encourages us to encounter blessings in the otherwise seemingly mundane, whether it is warmth, a home, or relationships. Judaism takes this concept a step further: we are called to lean into the blessing when life is unsettled, tumultuous, or downright rocky. True gratitude does not wait for perfect moments. Like Jacob wandering the wilderness, the most beautiful and holiest forms of thanksgiving entail a simple acknowledgment of the good that exists alongside unanswered questions, unsolved problems, and challenges. By seeing and acting on that goodness, we transform the ordinary into the sacred and recognize that hope, meaning, and spiritual connection are within reach. 

Autism, Vaccines, and Why the CDC Cannot Be Trusted to Separate Fact from Fear

Having access to accurate and evidence-based healthcare information is an essential ingredient for a well-functioning society in the 21st century. People rely on trusted sources to understand risks and make well-informed decisions for their health and that of their loved ones. As such, even subtle shifts in public-health messaging can have seismic effects. For instance, last week the U.S. Centers for Disease Control and Prevention (CDC) changed its website on "Autism and Vaccines." 

The CDC's update claims that "The claim 'vaccines do not cause autism' is not an evidence-based claim because the studies have not ruled out that infant vaccines cause autism." The CDC did not update the website because there was a shift in the research that found something completely different, such as the case with smoking not being good for your health. No, this was merely a shift in messaging from an HHS Secretary with an axe to grind when it comes to vaccines. Needless to say, the Autism Science Foundation, Infectious Diseases Society of America, and Scientific American did not react positively to the change, and rightfully so. Before delving into what this debacle reveals about the CDC, it helps to start with the scientific reality of vaccines and autism itself.

The Scientific Consensus on Vaccines and Autism

In case it is not clear, it behooves us to iterate that decades of rigorous research has studied the topic and found that vaccines do not cause autism, as the American Academy of Pediatrics has illustrated. The National Academy of Medicine reviewed epidemiological data and found no association or causal mechanism between vaccines and autism (Casadevall, 2016). More recently, a large Danish study covering over 1 million children show that there is no link between aluminum in childhood vaccines and autism (Andersson et al., 2025).

The Burden of Proof and the CDC's Messaging

This piece today is not a treatise on the science of vaccines and autism, but is in part to show that the CDC doing is a classic sleight of hand by shifting burden of proof. While the CDC may claim to act out of precaution, its phrasing shifts the burden of proof unfairly and creates unnecessary fear. If someone claims that vaccines cause autism, they must be the ones to present evidence of that claim. Decades of research have been conducted and consistently found zero association, which means that the burden was met and failed. By saying that the link "has not been ruled out," it has developed a standard so vague that anything is possible. By that "logic," that would mean that Bigfoot, Santa Claus, or the Flying Spaghetti Monster are unresolved scientific questions simply because there is no evidence that disproves their existence with absolute metaphysical certainty. That is not how evidence-based research works, and that is certainly not how the CDC should communicate risk, although the CDC shifted the burden of proof in such a fashion during the pandemic when it came to face masks. 

The CDC's History of Mistrust: The COVID Pandemic

Although the University of Minnesota said that the CDC is no longer trustworthy in light of this website change, I would argue that the CDC has not been trustworthy for a long while when it comes to disseminating evidence-based health information. If there was any time to show that the CDC could not be trusted with such a task, it was during the COVID pandemic. In 2021, I wrote a piece entitled Let's Go Back to Ignoring CDC and Federal Health Guidance Like We Always Have. As my piece shows, there were multiple missteps, but I will cover two today.

The first is with face masks. At the beginning of the pandemic, the CDC said face masks were unnecessary. Then in April 2020, the CDC did an about-face and pushed for face masks, even though the science did not change. I do not want to debate the details, but do want to point out that the CDC's approach increased public confusion while eroding trust when the guidance shifted. 

The second is about school closures. As I illustrated as early as July 2020, schools did not need to close down during the pandemic. The CDC went into fear mode instead of realizing that children have low COVID transmission rates. As a result, the school closures delayed children's educational attainment while eroding their social and mental health for a statistically insignificant benefit, especially relative to the costs.  

Other Historic Examples of CDC Risk Aversion and Bad Advice

The pandemic was not the only time that the CDC took missteps out of risk-aversion or fear. This trend has existed for a number of years and well before the pandemic. Here are a few examples of this phenomenon:

• Raw milk: The CDC has strongly warned against the consumption of raw milk. This zero-risk approach limits personal choice and voluntary risk management, which is something I advocated for in 2016.
• Blood donation of men who have sex with men (MSM): Since the 1980s, the CDC had consistently categorized MSM as a "high-risk" donor group and maintained conservative deferral recommendations even when modeling studies show that shorter deferrals would only minimally increase residual risk. By clinging onto the precautionary principle instead of assessing individual risk, what happened was that the CDC contributed to unnecessarily reducing the donor pool while increasing stigma of gay men.  
• Zika travel bans: In 2016, the CDC recommended a blanket travel ban for pregnant women. It didn't matter that a CDC study showed that risk was minimal above 2,000 meters (Cetron, 2016). As a result of this zero-risk approach, it ended up having an impact on tourism upwards of $63.9 billion.
• West Nile Virus (WNV): In the early days of WNV (1999-2002), the CDC's guidance was highly risk-averse, emphasizing worst-case outcomes while recommending extensive outdoor avoidance and large-scale pesticide spraying. Aside from the insecticide-related illness caused by the spraying, the large-scale pesticide spraying diverted resources from other more targeted and sustainable measures (e.g., larval source reduction, biological control, trap-based adult mosquito control).
• Tuberculosis (TB): In the 1990s, the CDC recommended TB screening for all healthcare workers. This policy led to widespread unnecessary testing, strained resources, and minimal additional benefit in low-risk groups (e.g., Larsen et al., 2002). As a result, it prompted later revision to a risk-based strategy instead of a one-size-fits-all approach. 

The Pattern of CDC Mismanagement

There are other examples of CDC incompetence. What I will say is that the CDC changing its "Autism and Vaccines" website is not an anomaly. It demonstrates how the CDC has mismanaged public health information over the years and how it is slow to update guidelines due to bureaucratic inertia. Recommendations should weigh both risks and benefits, and the CDC's embrace of the precautionary principle above all else shows that it is incapable of doing so. This behavior shows how a top federal agency can mislead millions on scientifically proven topics and how healthcare can become propagandized, whether it was with the COVID pandemic or the latest anti-vaccine crusade. 

When political influence seeps into scientific communication, it undermines public trust in scientific guidance. This certainly was the case when the Biden administration politicized the COVID vaccines, which resulted in the spillover effect of people having less trust in all vaccines. Plus, trust of various health authorities is in decline (KFF). The CDC's recent website change can make parents delay or avoid vaccines, which could increase the risk of preventable disease. More generally, this erosion of trust from the CDC can make matters more difficult in future disease outbreaks.

Recommendation: Reassessing CDC Authority

At a minimum, the CDC should have greater scrutiny and auditing to make sure its information with regards to health recommendations is accurate. However, I do not think that is sufficient given its history because the CDC has proven time and again that federal government health messaging cannot be taken at face value. The CDC should go back to its original role of tracking and containing outbreaks of diseases. The CDC's mission creep is costing lives because precaution without nuance creates harm, needlessly consumes resources, and erodes public trust. Having such a fallible institution in charge of providing evidence-based information is clearly not its forte. 

If the CDC should not be in charge of providing public health directives, who should be? There is the possibility of entrusting it to private organizations. Alternatively, local- or state-level public health agencies can be responsible. At least that way, accountability is higher since the impact is more localized. Why is that the case? 

Ultimately, public health guidance should be accurate, measured, and accountable. Centralizing authority in a single, risk-averse federal agency has shown time and again that even well-intentioned directives can produce harmful unintended consequences. By decentralizing responsibility, we can ensure that the guidance is closer to the populations it affects, is more transparent, and is more responsive to real-world risk (e.g., Rigby et al., 2024; Sessions, 2012). Only by aligning responsibility with accountability can we hope to provide public health recommendations that are both scientifically sound and practically effective, rather than by bureaucratic impulse or political whim. 

Property Tax Abolition Won’t Fly in Florida: A Pragmatic Call for Property Tax Reform

Across the United States, homeowners are feeling the squeeze not only in terms of housing costs, but also in terms of increasing property taxes. The National Mortgage Association pointed out that since 2019, the median American has experienced a property tax increase of 27.4 percent (Cotality). The state of Florida is not an exception to this trend. Major Florida cities, such as Tampa, Miami, and Jacksonville, have experienced above-average property tax rate increases. Florida Governor Ron DeSantis seized on the public frustration, leading him to propose abolishing the property tax last month. 

Why Economists Prefer the Property Tax

On some level, I can see why the property tax is preferred over other taxes. A paper from the Organisation for Economic Co-operation and Development (OECD) found that property taxes provide a more stable source of revenue relative to most other taxes (Blöchliger et al., 2015). Property tax is less sensitive to economic downturn because people still need property, regardless of the level of economic prosperity. In terms of distortion, the immobile nature of land can have some influence on homebuilding decisions (Arnott and Petrova, 2002), but is less distortive than the income or sales tax. Out of local tax sources, property tax is the least distortive. While property taxes can be moderately regressive, they are not as bad as sales taxes, excise taxes, or capped payroll taxes. 

Why Homeowners Despise It

I can also see why people despise the property tax. It is not only because about two-thirds of taxpayers believe that the property tax is too high (Harris/AP NORC). The property tax is a large, lump-sum payment that is more visible than the sales tax. Because of the opaque assessment system to determine the property tax amount, taxpayers feel like they have little over a system that seems quite arbitrary. For DeSantis, he views property taxes as oppressive and ineffective, which is why he wants to eliminate them. 

The Libertarian Dilemma

From a libertarian lens, property tax can be viewed as a violation of private ownership because property taxes are a partial seizure of the property one owns. Property tax is like perpetually paying rent to the government. I understand a libertarian impulse to want to eliminate it because it would mean less coercion and more freedom. Upon further examination, abolition is not a viable option because property tax is embedded into local government finance. 

Fiscal Reality Check

The Right-leaning, pro-free-market Tax Foundation released a piece called There's No Good Way to Pay for Property Tax Repeal last month. The first point of consideration is that property taxes account for 70 percent of all local tax revenue. One of the reasons why DeSantis' plan is problematic that he does not have an answer to how he would replace that tax revenue. This gets at the heart of the issue: which tax would replace the property tax? It is not as if the idea of abolishing a tax is unprecedented. There were multiple countries that eliminated the wealth tax because it was so ineffective, yet there are no examples of property tax abolition. We can take a look at why. 

Income tax is collected at the state level. Aside from being a more distortive tax than property tax, relying on income tax revenue would make local governments more dependent on state government. Greater reliance on the state government risks having less liberty, not more. Plus, the Florida state constitution prohibits a state income tax.

What about the sales tax? The sales tax is subject to volatility, whether seasonal cycles, economic cycles, or disasters, such as hurricane season in Florida. Texas was considering the idea of abolishing the property tax. To do so, the Texas Taxpayers and Research Association calculated that replacing all the property tax would require a sales tax of 19 percent, which would be an approximate increase of 11 percentage points. Even when Idaho reduced property tax, it was offset by a sales tax increase. For Florida to replace property tax revenue, the Florida Policy Institute estimates that Florida would need $50 billion. 

Local government does not have many other tax levers aside from the property tax. Whether it is sales, income, excise, or corporate tax, that would in most cases come from the state level. Taking away property tax would make local government more dependent on state government. A reason why property tax abolition has not happened at scale is because no feasible replacement maintains fiscal balance and local autonomy. 

If Florida were to abolish the property tax, cities and counties across the state would face a multi-billion dollar gap. It would either require a collapse of local government or local government would lose autonomy to the Florida state government. Would Florida honestly be more free with fiscal collapse or if local governments decide to rely on more regressive forms of taxation? Property tax abolition would likely increase coercion because local choice would disappear, state bureaucracy would grow, and taxation would become less transparent. 

A Libertarian Case for Reform, Not Abolition

Property tax is the structural foundation that keeps local government going. They fund schools, police departments, roads, and local services. A pragmatic libertarian approach is not to fantasize about abolition, but rather reform tax policy. The James Madison Institute (JMI), which is Florida's conservative/free-market think tank, takes this approach. JMI views the property tax as increasingly burdensome, but stops short of abolition. A few suggestions that JMI provides include homestead exemptions, appraisal caps, levy caps, sales tax swaps, and gradual elimination of school-property tax millages. Other structural reforms, including assessment reform, zoning modernization, and spending caps, would help make the property tax reform options more lasting. With firm spending restrictions, property taxes and limited government can co-exist. But the way for that co-existence to occur needs to be with arithmetic and solid reform ideas, not alchemy or wishful thinking. 

Trump’s 50-Year Mortgage Plan: Slow-Walking Americans Into Generational Debt

Housing costs in the United States continue to skyrocket, which makes homeownership an increasingly elusive endeavor. Especially since owning a home is one of the essential staples of the American Dream, politicians are even more gung-ho on finding new ideas to ease the burden of buying a house. One of the proposed ideas that has grabbed headlines is Trump's idea of extending the standard mortgage term from 30 years to 50 years. The Trump administration is pitching this idea as a way to lower monthly mortgage payments and to open the door to homeownership. Before passing such a policy, the Trump administration should ask what sort of economic or policy implications a 50-year mortgage would have for the housing industry. 

Trump's Illusion of Affordability

Lowering monthly mortgage payments sounds like a dream come true. The problem is that it is too good to be true and comes with a steep tradeoff. Although the principal is spread out over a longer period, so are the total interest payments. Because of that longer time horizon, interest payments will be much higher. One estimate from Realtor.com puts the total at approximately double of that of a 30-year mortgage. An estimate from the Associated Press calculates that the average home will cost an extra $389,000 in interest payments in comparison to a 30-year mortgage. Lower monthly payments today come at the cost of decades of additional debt. 

Another Hidden Cost: Slower Equity and Higher Interest

A longer time horizon creates another issue. Since the majority of a mortgage payment goes to interest instead of the principal, it can take decades to reduce the loan balance. This means that the home equity stays minimal while most of the debt remains outstanding. What Trump is selling as "affordability" becomes deferred wealth-building. The tradeoff is lower monthly payments today for higher interest payments over time and a weaker financial position in the future. This does little to build lasting financial security. For decades, the borrower's wealth is trapped under the weight of interest and debt. 

Similar experiments abroad show the limitations of ultra-long mortgages. In Japan, some regional banks have offered 50- to 60-year home loans, yet these loans have not meaningfully improved affordability. Homeowners simply remain in debt longer, often into retirement (Harimaya and Jinushi, 2025). In the United Kingdom, 35- to 40-year mortgages have grown in popularity, but they have not lowered the overall cost of housing. They have only extended the period during which borrowers are highly leveraged (Franklin et al., 2017). 

A study of 17 advanced economies over more than a century shows that expanding mortgage credit does not reliably increase housing construction. Instead, the financialization of housing markets can inflate prices without producing more homes (Kohl, 2020), a dynamic that a 50-year mortgage would most probably amplify. The lesson here is clear: stretching debt over decades does not address home affordability.

Source: Kohl, 2020, Socio-Economic Review

Additional Financial Risks of Ultra-Long Mortgages

There is another tradeoff aside from 21st-century serfdom and paying more in interest payments. The Federal Housing Finance Agency (FHFA) shows that longer terms increase exposure to interest-rate changes, housing market downturns, and default risk (Larson et al., 2019). In other words, there are additional financial harms due to the longer time horizon that Trump is not thinking about because regardless of his motives, the political appeal does not change its economic flaws. 

Freedom of Contract versus Government Distortion

On the one hand, adults should have freedom of contract and the ability to voluntarily enter a contract, no matter how stupid it might seem. More options could theoretically create a more competitive market. On the other hand, this proposal is not about independent private loans. It is about government-backed loans. The problem with government-backed loans is that the upside is privatized, whereas the downside is subsidized and underwritten by taxpayer dollars. This creates moral hazard while artificially creating demand for housing.

Conclusion: A Policy That Misses The Real Problem

Ultimately, a 50-year mortgage has the illusion of "helping" with a lower monthly payment, but does a fine job of hiding the costs and trade-offs. Like with many government policies, this 50-year mortgage idea treats the symptom instead of the disease. It does nothing to address the main culprit, which is a manufactured housing shortage caused by well-intentioned government meddling. This is a topic I have covered multiple times, whether it is in the context of land-use regulations, rent control, redlining, the mortgage interest deduction, or making single-room occupancy all but illegal. The policy might be different but the outcome is the same: Government steps in to "help" the housing market and somehow manages to make matters worse. Funny how that works. 

Paying Americans to Pay More: The Economic Nonsense of Trump’s Tariff Dividend Plan

Very few things can be more alluring to voters than "free" money. Whether it is COVID-era stimulus checks, student loan forgiveness, or the child tax credit expansion, the idea that the federal government can cut a check and make everything hunky dory is populist hokum. To quote Milton Friedman, "there is no such thing as a free lunch." The latest twist on this handout scheme comes from the White House. This past Sunday, President Trump posted such a proposal on Truth Social: a $2,000 tariff rebate for low- and middle-income households. He frames it as a "dividend" to present it as a reward for his tariff policy. I would frame it as an insincere policy that, much like the rest of his tariff policy, is poorly thought out.

Mismatch Between Dividend Cost and Tariff Revenue

Trump is promising a $2,000 check funded by the tariff revenue. Similar to his proposal to replace the income tax with tariff revenue, the MAGA math does not math. According to the bipartisan Committee for a Responsible Federal Budget (CRFB), Trump's tariff dividends will cost $600 billion per year. This far exceeds the projected $300 billion in revenue from Trump's new tariffs. This math refutes Trump's claim that there is so much tariff revenue that he can both pay out these dividends and "substantially pay down national debt." This does not pay down the debt, but rather adds to it. This proposal is also within the context of the federal government racking up a $1.8 trillion deficit this past fiscal year. 

When the Dividend Defeats the Tariff

Even if the numbers somehow balanced, the policy would still fail on principle. This past April, I discussed Trump's tariff rationales. I detailed how none of them made sense on their own, never mind when combined. One of those rationales from the Trump administration was to increase government revenue. Especially since the rebates exceed the revenue by about $300 billion, rebating it directly to citizens defeats the Trump administration's purported fiscal purpose.  

It also undermines his goal to revive domestic manufacturing. Why? The point of the tariff with the manufacturing revival rationale is to make domestic goods or services cheaper relative to foreign ones. With the dividend check, it offsets the increase in import prices, which means that the consumer sees the same effective cost as they did pre-tariff. Some might still opt for the cheaper domestic option, but the dividend blunts the intended goal of boosting domestic manufacturing. 

Even worse, tariffs rarely go unanswered. Trading partners routinely implement retaliatory tariffs in response with tariffs of their own, targeting such industries as machinery, farm goods, and manufactured products, which are some of the industries that Trump purports to champion. Those retaliatory tariffs squeeze American producers, blunt the competitive edge gained from tariffs, and further illustrate how tariffs are an economic example of metaphorically shooting oneself in the foot. 

Trump Inadvertently Admits That Tariffs Harm Americans

This dividend is more perturbing than the dividends subverting his own administration's rationales for the tariffs. Trump claims that the tariffs will "make America rich again." If tariffs were truly enriching, there would be no need for a dividend in the first place. The fact that there is a dividend is a tacit admission that tariffs are harmful to the everyday American. It distracts from the reality that it is the U.S. consumers that pay for Trump's tariff tomfoolery. Last May, I covered how over a dozen studies confirm that Trump's tariffs from the first term increased consumer prices. On top of that, a working paper from the National Bureau Economic Research (NBER) released last month illustrates how domestic consumers paid the price of Trump's tariffs from his first term and that the cost of the tariff exceeded the government revenue collected (Flaaen et al., 2025).

Consumer price increases were not only observed during Trump's this first term. They are showing up in Trump's latest round of tariffs. Estimates from the Tax Foundation suggest that tariffs imposed under the current regime have already pushed retail prices up by about 4.9 percentage points relative to the pre-tariff trend. Part of the price increase comes indirectly when domestic firms raise their own prices after tariffs on imports make foreign goods more expensive and less competitive. 

Despite the increase, the pass-through to consumers is less than the full tariff rate, which points out that firms absorbed some cost and consumers acted cautiously, making the overall price impact more modest than many initial estimates suggested. A more modest price increase does not make this a win. These smaller costs still reflect economic inefficiency (also known as deadweight loss) since resources are diverted toward less competitive domestic production and away from the most efficient global suppliers. 

Tariffs and Inflation

Individual consumer price increases were not only due to the tariffs. These tariffs would have an inflationary effect. Both the St. Louis Federal Reserve (Soyres et al., 2023) and the San Francisco Federal Reserve (Jordà et al., 2022) found that the COVID-era stimulus checks contributed to the 2021-22 inflation. The COVID stimulus checks can be used as a proxy for what would happen. Both inject purchasing power into households, i.e., aggregate demand spikes. Since it is a one-time windfall, it would more likely lead to a burst in consumption (and not saving), much like with the stimulus checks. What makes the tariff dividends worse is that tariffs raise the cost of goods, which limits supply. Given that the tariffs raise prices while the rebates raise consumer demand, this dividend could very well create even more inflationary pressure than the COVID stimulus checks.   

Postscript

When all is said and done, Trump's dividend is more than cognitive dissonance or the mental gymnastics done to be apologetic for protectionism. It is a self-inflicted parody of supposedly sound economic policy. What Trump is doing is taxing the American people, laundering that money through Washington, and giving part of it back as a "dividend" so he can pat himself on the back and pretend that he solved a problem that he himself created. This is akin to setting your house on fire and then congratulating yourself for roasting some marshmallows and creating some s'mores over the ashes of what was once your home. With tariffs, consumers get burned through higher prices, fiscal discipline goes up in flames, and economic logic goes out the window. This is what happens when the U.S. government tries to fix a problem that it created: the everyday citizen pays the price while sacrificing freedom. Sadly, this is what passes for economic "wisdom" in 2025. 

Privatizing Air Traffic Control Can Work, But Only With Smart Execution

If you live in the United States and are looking to travel by airplane domestically anytime soon, you might want to reconsider. Last Thursday, the Federal Aviation Administration (FAA) announced a proactive measure to reduce flights by 10 percent at 40 high-traffic airports across the country. The reason for this reduction is there are air traffic control (ATC) staff shortages created by the government shutdown that has yet to end. Similar to when I discussed SNAP benefits last week, it astounds me how something as essential as air travel is more vulnerable when there is a government shutdown. Unlike essential services funded independent of annual appropriations, ATC operations under the FAA grind to a halt during political impasses, which shows how dependence on government budgeting makes even critical infrastructure hostage to politics. This latest fiasco, which could have been easily avoided, is one of many reasons why air traffic control needs to be privatized. 

FAA's Failure to Modernize ATC

When it comes to ATC, the FAA has decidedly and woefully dropped the ball. Take a look at this capstone memorandum that the Office of Inspector General released in September 2025. This summary of 50 OIG audits covers the FAA's Next Generation Air Transportation System (NextGen), which was the FAA's modernization program that began in 2003. This two-decade, $36-billion program to modernize achieved only 16 percent of its intended benefits. You can read more criticism based on this OIG memorandum here. I will say that the Government Accountability Office (GAO) and its September 2024 report concurs. According to the GAO, 51 of its 138 systems are unsustainable, whether due to lack of parts, outdated functionality, or an inability to fund, the latter of which is rich is given how much money the government has already thrown at ATC modernization. 

FAA's Institutional Challenges

The GAO is correct to point out that the FAA is slow to modernize. That is not a mere glitch or an issue of throwing enough money at the problem. The Cato Institute argues in its Handbook for Policymakers that the FAA, being funded by congressional appropriations and constrained by political oversight (e.g., the FAA is re-authorized every five years), makes it inherently and systematically ill-suited to manage ATC. The reason is because the incentive is to protect such programs as NextGen instead of innovating. Because every budget line is subject o congressional oversight and political trade-offs, FAA managers face incentives to avoid risk and preserve existing programs, even when modernization would yield long-term savings. 

Instead of cost-saving reforms, Congress is incentivized to demand politically motivated programs. This does not address the cost growth, schedule delays, or performance shortfalls that are endemic within the federal procurement regulations. Whether privatization could eliminate every challenge, what is clear is that the chronic delays in NextGen highlight how the FAA's political funding model and risk-averse procurement system hinder innovation. 

Canada as a Model for ATC Privatization

The FAA's performance is a contrast to how Canada has managed ATC, a structure that the Cato Institute has championed. In 1996, Canada privatized its ATC into a self-funded nonprofit corporation called Nav Canada. ATC funding was converted from a ticket tax to a user fee. Nav Canada has won multiple awards for having modern ATC technology and for being one of the safest ATC systems in the world. To support this point, a 2005 GAO report discussed what happened when Canada, Germany, New Zealand, and Australia privatized ATC in the 1980s and 1990s. The result was that privatized systems cut costs, invested in new technologies, and either maintained or increased safety. 

Understanding the Natural Monopoly in ATC: Privatization's Limitations

There is a nuance I would like to discuss today that I did not cover in my 2015 piece on ATC privatization. Much like when I analyzed water fluoridation earlier this year, the ATC industry has components of a natural monopoly: high fixed costs, safety and regulatory barriers, and large scale. Competition is possible for the airport towers (terminal services) in terms of contracting those services out to private providers, but the en-route services have the hallmarks of a natural monopoly (Eno Center for Transportation). The en-route, national network, which is the biggest component of ATC, is going to function as a monopoly, whether private or public, due to strong economies of scale and network externalities. Even the NAV CANADA success cited by the Cato Institute is privately owned, yet it remains a monopoly because it is the only ATC provider in Canada. Plus, safety oversight is still provided by the Canadian government through Transport Canada.

This gets to another point: a private monopoly has stronger incentives to innovate and contain costs because its survival depends on performance rather than political appropriations. This allows for increased likelihood to adopt newer technology, lower costs, and improve efficiency, whether those incentives are profit motive, market discipline, customer accountability, or operational autonomy that allows for faster and smarter implementation. 

Challenges of Privatization: Why Execution is Key

At the same time, privatization by itself does not guarantee success. A private monopoly still makes ATC prone to avoiding price capture, access denial, under-investment, or over-charging. The United Kingdom semi-privatized in the early 2000s. However, due to the financial difficulties following 9/11, the UK's National Air Traffic Services (NATS) had to be bailed out by the UK government in 2002. Even the aforementioned 2005 GAO study points out that these improvements were not strictly due to privatization.  It is not privatization itself, but rather governance during a transition to help ensure success.

Principles for Successful ATC Privatization

For privatization to succeed, there needs to be an independent, stakeholder-based board structure. A user-fee system linked to transparent cost-recovery and actual usage helps. So does an independent safety and economic regulator because it ensures safety without micromanagement. Many of these privatization efforts needed contingency funds to make sure that they were solvent (GAO, 2005). As the UK example shows, the transition needs to be gradual, negotiated, and with safeguards. If not, privatization can go off the rails, so to speak. It is the managerial, financial, and regulatory reforms that the governance allows for that determine privatization's success. Privatization does not guarantee success, but it at least establishes the correct incentive structure that the FAA simply does not offer. 

Conclusion

Short of full privatization, converting ATC into a public utility while implementing a user-fee payment system is one of the best courses of action. As the Reason Foundation details, there are 98 countries that have transitioned towards a user-fee payment system. They have more advanced technology and they are independent of the government budget process, the latter of which does not make it prone to rent-seeking, shutdowns, or other shenanigans that come with government budgeting. When done correctly, privatization is a great way to improve ATC. Until the American people can demand serious FAA reform, the United States will continue to suffer from subpar air travel.