Elon Musk, the First Trillionaire: A Capitalist Success Story with Some Caveats

Just when you thought Elon Musk could not have gotten any richer, he announced the initial public offering (IPO) of SpaceX, an aerospace manufacturing company. The SpaceX shares combined with Tesla made Musk the world's first trillionaire. 

There were those, particularly on the Left, flipping out. The Institute for Policy Studies called it a dark day for democracy. Senator Elizabeth Warren decried it while making a call for a wealth tax, which is a bad idea. Senator Bernie Sanders thought it was absurd and pitched the idea of removing the cap on taxable income for Social Security. It is certainly a reminder that the income inequality debate is not dead, and neither is envy for success or rich people. 

Forget what I think about his missed opportunity to reduce government largesse with DOGE, the man's accomplishments are remarkable. He helped the foundations for PayPal, built Tesla into a transformative company, and founded SpaceX. If he is successful in making routine space travel possible, it would rank among one of the biggest entrepreneurial achievements in human history. 

More importantly, Musk is creating value. And that brings us to a point often lost in this discussion. Elon Musk is not sitting on a trillion dollars in cash. A net worth is not a bank account. It is largely an estimate of the value of investments, businesses, and other assets. 

Nor is he hoarding wealth. The economy is not a fixed pie in which one person's gain necessarily comes at another person's expense. Wealth is created through innovation, investment, and productivity. Musk's fortune reflects the belief of millions of investors that the companies he built have generated enormous value and may generate even more in the future. 

His rise to trillionaire status is a reminder of what can be accomplished through ideas, perseverance, risk-taking, and a market economy that allows individuals to create wealth on a massive scale. That being said, I would say that there are two important caveats. 

The first has to do with monetary policy. The Federal Reserve spend decades expanding the money supply and eroding the purchasing power of the dollar. One consequences has been rising asset prices, which in turn have produced ever-larger fortunes on paper. Musk unquestionably created wealth, but the emergence of the world's first trillionaire is less shocking given how much the dollar has devalued. 

The second has to do with the government subsidies, contracts, or regulatory breaks received by Musk's companies as evidence of unfair advantage. This argument often misses the broader institutional point. When the government has the authority to subsidize industries, grant tax advantages, and regulate entry into markets, it inevitably creates incentives for rent-seeking.

Musk's success is best understood not as the product of government intervention, but it cannot be understood as something that happened in a purely free market either. His success and value creation took place in a system in which markets remain the dominant engine of value creation, but also where political discretion occasionally distorted outcomes at the margins. 

Musk's story is one that took place in an economy with considerable rent-seeking and monetary expansion.  The story is less about whether anyone should be a trillionaire and more about the fact that propserity depends on sound money, competitive markets, and limits on political favoritism. 

Another Reason to Dislike Obamacare: Fraud Rates Costing Taxpayers As Much As $25B a Year

Remember back nearly two decades when the Affordable Care Act, also known as Obamacare, was meant to expand coverage and lower costs? Guess what it ended up doing instead? Far from delivering on its promises, premiums and deductibles remained high, insurer competition was weakened, and Congress continues to spend money. 

As if those shortcomings weren't enough, a new study from the Paragon Health Institute suggests Obamacare may suffer from another serious problem: large-scale enrollment fraud and improper subsidy payments.

The Paragon Institute estimates that approximately 6.2 million people enrolled in Obamacare may be improperly receiving subsidized insurance, which accounts for can account for as much as one-quarter of total exchange enrollment. In fiscal terms, the report argues this could translate into as much as $20–25 billion in annual improper federal subsidy spending, depending on assumptions about eligibility verification and income reporting accuracy.

These issues are not coincidental; they are structural. First, eligibility for subsidies is heavily dependent on self-reported income, which is often based on projections as opposed to verified real-time earnings. This creates natural friction between reported income at the time of enrollment and actual income over the course of the year, especially for workers with variable earnings, gig income, or fluctuating hours.

Second, the system relies on delayed verification and post-enrollment reconciliation instead of strict upfront screening. This means discrepancies may not be corrected until after coverage has already been granted and subsidies disbursed.

Third, the growth of third-party brokers and automated enrollment platforms has increased the number of intermediaries involved in sign-ups. While many operate legitimately, the report argues that commission-based compensation tied to enrollment volume can weaken incentives for careful eligibility verification.

Finally, automatic re-enrollment mechanisms can allow previously enrolled individuals to remain in coverage even if their eligibility status has changed and was never fully rechecked.

This gets into a debate about how estimates of improper ACA enrollment vary widely depending on how “error” is defined and how aggressively small discrepancies are extrapolated across the full exchange population. Federal auditors like the Centers for Medicare & Medicaid Services and the Government Accountability Office generally focus on confirmed, verifiable errors, which tend to produce lower, single-digit to low-teens estimates.

Higher-end estimates, on the other hand, attempt to capture what those same processes are likely to miss when eligibility is based on self-reporting, delayed verification, and automatic renewal. Put simply, the lower estimates only measure what the system catches and acts as a low-bound estimate. The higher estimate is more plausible because it attempts to measure the full scale of eligibility drift.

Enrollment is frequently cited as evidence of the Obamacare’s success, but it is an incomplete metric. It captures participation in the system, not the accuracy or stability of that participation. In a framework built on self-reported eligibility, delayed verification, and automatic renewal, enrollment can rise even as underlying errors persist. The Paragon Institute’s findings highlight how large those gaps may be at scale.

The latest evidence on enrollment and subsidy error does not stand alone. It reinforces a longer pattern of structural problems that have followed the ACA since its inception, much like I pointed out in my 2017 piece listing 15 reasons we should all dislike Obamacare. Whether it is fraud rates, higher premiums, or fewer options, this latest Paragon Health report is a sobering reminder of why Obamacare should never have existed in the first place and how the American people are still paying for this boondoggle.

Illinois Finds Yet Another Ineffective Way to Raise Revenue by Implementing a Social Media Tax

Illinois' spending problems are nothing new, but how the Illinois General Assembly handles it is. Earlier this month, Illinois passed a new social media tax to help fund its proposed $56 billion budget. Platforms with 100,000 to 500,000 "Illinois users" will have to pay $0.10 per user each month; platforms with 500,000 to 1 million "shall pay $40,000, plus $0.25 per month" per user; and platforms with over 1 million users will pay $165,000, plus $0.50 per user, each month on the number of users over 1 million. 

Aside from dealing with budgetary issues, some view this tax as paying "its fair share." Some might view this as a fair and just tax. In practice, this is a complex, legally fraught tax that will cause all sorts of headache. 

Let's start with the first problem, one addressed by the Tax Foundation: no one seems to know what exactly is being taxed. For starters, what is a user? Is a user a person or an account? If a person has multiple accounts on the same social media platform, does each account constitute a separate user, or is the person one user? 

Then there is the question of whether someone with accounts on multiple platforms is taxed separately. What about who constitutes as an Illinois user? What happens if you are visiting from outside of Illinois temporarily? And what constitutes an Illinois user from whom a platform collects data? When lawmakers cannot clearly explain what is being taxed, businesses cannot reliably comply and taxpayers cannot hold government accountable.

Traditionally, governments have imposed special taxes on products that they regard as socially undesirable. Cigarettes have long been subject to punitive taxes. More recently, politicians have advocated taxes on sugary drinks, unhealthy foods, and other products they believe people consume too much of.

Instead of taxing economic activity neutrally, Illinois has singled out a particular industry for unique taxation. The state is effectively saying that because social media companies are viewed as problematic, they should bear additional financial burdens.

This approach suffers from the same flaw that afflicts most sin taxes. It substitutes political judgments for sound tax policy. Whether one believes social media has positive or negative effects is beside the point. Tax systems should raise revenue in the least distortive manner possible. They should not be designed to reward favored industries and punish disfavored ones.

One of the most troubling aspects of the social media tax debate is how quickly constitutional concerns are dismissed. Many people dislike social media companies, but constitutional protections do not vanish simply because the target lacks public sympathy.

The First Amendment issue is particularly significant. Social media platforms have become central venues for political discussion, news dissemination, and public debate. When government imposes a special tax on a particular category of communications platform, courts may reasonably ask whether the state is burdening speech-related activity in a manner that raises constitutional concerns.

The tax also raises questions under the Commerce Clause. Social media companies serve users across state lines, and internet activity rarely respects geographic boundaries. If Illinois can impose a unique tax based on user activity within the state, other states may adopt competing systems that subject the same activity to multiple layers of taxation.

Illinois’ social media tax is not really about social media. It is about a state government that has become structurally dependent on finding new revenue sources to support an ever-expanding set of spending commitments.

The problem is not that Illinois lacks creativity in taxation. The problem is that it rarely shows restraint in spending. When budgets become tight, the solution is rarely reform or prioritization. Instead, lawmakers turn to new, narrowly targeted taxes that are politically easier to justify than broader fiscal discipline. Matters end up being even worse when the tax is poorly defined and designed.

That pattern has consequences. Targeted taxes on unpopular industries may be politically convenient, but they do little to address the underlying fiscal imbalance. Worse, they risk creating a tax system that is increasingly fragmented, unstable, and vulnerable to legal challenge.

Social media companies may be unpopular today, just as smoking, fatty foods, and sodas have been in other political moments. But fiscal policy built on shifting political fashions is not a substitute for structural reform. Illinois does not need more inventive taxes. It requires a serious conversation about the scale and scope of government itself.

Social Security’s 2032 Cliff: The Countdown That Congress Would Prefer to Ignore

Social Security is an insolvent and unsustainable retirement program. That much I wrote about last year during Social Security's 90th anniversary. It has become that much more apparent with the latest Trustees Report that was released earlier this week. The big finding from that report is that the retirement benefits, under the Old-Age and Survivors Insurance (OASI), is set to expire at the end of 2032. This is one year sooner than was projected last year. 

Why was this deadline accelerated? To quote the Peter G. Peterson Foundation, "Legislation includes the January 2025 passage of the Social Security Fairness Act that repealed the Windfall Elimination Provision and the Government Pension Offset, and the July 2025 One Big Beautiful Bill Act that expanded the income tax deduction for seniors. The former legislation increases program outlays, while the latter decreases revenues." 

What does this mean once the Trust Fund is depleted? All beneficiaries regardless of age, income, or need will see their benefits slashed by 22 percent. This decrease in benefits is to allow Social Security to keep going for the next 75 years. But here's the thing: even after the depletion of the Trust Fund, "Social Security will still spend more than it earns in payroll tax revenue. Over the next decade, Social Security will spend $3.8 trillion more than it collects, which is 2.7 percent of taxable payroll or 0.9 percent of GDP." 

Additionally, lower fertility and lower immigration are both contributing to Social Security's deteriorating state. The Cato Institute argues that the Social Security Administration is being overly optimistic on their fertility rate assumptions, which creates rosier financial projections for Social Security.

The Trustees Report reinforces a familiar but uncomfortable reality: Social Security’s imbalance is no longer marginal. Even after the Trust Fund is depleted, the program is projected to spend trillions more than it collects over the following decade.

What makes this particularly consequential is that the system does not gradually adjust as insolvency approaches. It waits, then it cuts. That design choice means policymakers are not managing a slow-moving problem. They are managing a countdown. 

In that sense, the choice facing policymakers is not whether Social Security will change, but whether change will be deliberate or forced. And the window for choosing the former is closing.

When Housing Meets Immigration: Is the Swiss Referendum Capping Its Population Asking the Wrong Question?

Next week, Swiss voters are going to head to the ballot box to decide whether to cap the Swiss population at 10 million by 2050. Supporters of immigration caps can often be presented as Far Right, fearful, and parochial. I have felt this way in a U.S. context. But then I have to remind myself that the U.S. and Switzerland have two different contexts. Switzerland does not even have the integration issues that many of its European neighbors have. This is in part that Switzerland is able to integrate its immigrants better because they mainly come from countries like France, Italy, and Germany. Although the primer on the initiative lists Islamic culture as a reason, the main reasons for the Swiss ballot is a combination of housing and infrastructure strain.

In 2014, I expressed concerns about a similar Swiss referendum for a quota on immigration. Switzerland's immigration quota was a self-defeating policy because immigration is driven by labor demand and it is empirically shown to strengthen employment and economic performance. Less immigration means less economic output and less revenue. 

But I keep coming back to the housing component. In the United States, J.D. Vance wrongfully blamed housing affordability on immigrants. In the U.S. case, it is true that immigrants consume housing, but they also disproportionately build housing, so much so that stifling off the construction labor with strict immigration policy makes matters worse. I cannot help but think that something similar is going on here. It seems like Switzerland is trying to solve a housing problem with immigration policy. 

On the one hand, Zurich has made strides by boosting housing supply by 9 percent with upzoning. On the other hand, only land inside designated "building zones' can be developed, and done so over a 15-year demand rule (Swiss Spatial Planning Act [RPG], Article 15). The RPG also has agricultural zoning laws that further limit sprawl (Art. 16) to construct more housing. On top of that, each canton has their own zoning regulations and permitting rules that get in the way of housing construction. 

The Swiss case against immigration is not reactionary restrictionism. Switzerland faces housing and infrastructure strains. At the same time, Swiss housing scarcity is not occurring in a vacuum. The land use restrictions, zoning regulations, and permitting laws fundamentally limit Switzerland's housing supply. If this referendum passes, Switzerland will be treating a housing supply problem as a population problem, and will be doing so to its own detriment. 

The Retirement of the RCP8.5: Why Apocalyptic Modeling Should Not Dictate Climate Change Policy

While I was on vacation in Portugal last month, I really made sure I wasn't paying attention to politics or the media circus. One of those moments that I missed around that time was this post from President Trump:

It was in reference to some recent news about climate change modeling. In its 2014 Intergovernmental Panel on Climate Change (IPCC) report, the United Nations prepared four main scenarios. The gloomiest of these scenarios was the RCP8.5 scenario. 

In late April of this year, the IPCC retired the RCP8.5 scenario as a plausible future emissions pathway. There are those who believe, including the authors of the IPCC paper, that this is being scrapped because there has been enough progress with climate change policy intervention to merit its retirement. I did not buy in 2018 that the RCP8.5 scenario was plausible back then. 

American Enterprise Institute scholar Roger Pielke, Jr. and Competitive Enterprise Institute scholar Marlo Lewis Jr. explain why the scenario was never plausible to begin with. For one, coal production would have had to implausibly increase by 900 percent and become the predominant form of energy, which is peculiar given that coal was already declining as a form of energy in the 2010s. The RCP8.5 also assumed that the population would reach 12 billion, which is a far cry from the 10.2 billion that is projected. And the idea that low-income countries would stay considerably poorer than other countries? Then there are the assumptions of unabated fossil fuel use and no negative emissions technologies. 

The problem here was not mere theoretical modeling for its own sake. As this article from Carbon Brief details, RCP8.5 was treated as a "business as usual" and likely outcome when it came to climate change policy and activism. At best, it was meant to be an upper-bound, highly improbable stress test. When such scenarios are used as a baseline, they exaggerate projections of future warming and damages. 

This exaggeration leads to a form of policy overcorrection, and results in regulatory and fiscal responses that are larger, faster, and more intrusive than would be justified if a more accurate model were being used. That is how we get such policies as emission standards for electric vehicles, gas stove bans, carbon capture & sequestration mandates, and energy efficiency standards.

Trying to prevent a scenario that is essentially not going to happen is a waste of money, time, and resources. If we are basing policy on false assumptions, it means that we cannot begin to understand the costs and benefits of each policy decision. As we learned during the COVID pandemic, a miscalibration at that scale is a form of harm in which the cure is worse than the disease. Retiring RCP8.5 is a "better late than never" moment, but this whole debate acts as a reminder that we should let skepticism be at the helm of energy and climate policy instead of hyperbole and alarmism. 

Portugal's Economic Recovery Looks Real, But So Do the Warning Signs of Another Crisis

Last week, I went on a lovely trip to Portugal. I went cycling and surfing. I tried the extreme sport of coasteering for the first time. I got to try pastel de nata, bacalhau, and frango piri-piri. Being there for a week, I got notice the way things work, from public transportation and work ethic to housing and health care. 

Then you learn things like Portugal needed a €78 billion bailout during the eurozone crisis last decade. In response, Portugal was able to reduce its deficit spending and close the gap on its bond spreads with fiscal restraint. The Organization of Economic Co-operation and Development (OECD) recently called Portugal's fiscal performance "among the strongest in the OECD and the Euro Area in the past few years." Continued debt reduction, disciplined budgets, strong nominal GDP growth all help explain why both Fitch's and Standard & Poor's have a positive outlook for Portugal. 

These are certainly reasons to be hopeful. Yet there are some concerns about the Portuguese economy:

• Portugal has a birth rate of 1.4, which is well below the replacement rate of 2.1. 
• Portugal is the third country in Europe with the lowest proportion of young people, which makes it more difficult to pay for social programs and to keep the economy growing with a stable labor force. 
• A study from the University of Lisbon reminds us that brain drain is compounding these effects. Up to 40 percent of Portugal's graduates emigrate to other countries.
• A recent report from the European Commission found that Portugal has the most overvalued housing prices, which makes it that much more difficult for everyday Portuguese citizens to afford housing.
• If the conflict in the Middle East is prolonged, it could weaken economic growth and exacerbate inflation for Portugal. 

Portugal does not fit neatly into an optimistic or pessimistic narrative. On the one hand, Portugal has made impressive fiscal strides since requiring a bailout just over a decade ago. Compared to some larger European economies, Portugal's fiscal trajectory actually looks relatively disciplined. 

On the other hand, strong tourism, balanced budgets, and improved credit ratings do not solve deeper structural problems. Low birth rates, emigration of educated workers, and housing affordability issues could create significant economic pressures in the years ahead. Portugal seems to have escaped one crisis while gradually wading into another one. 

Trump's Golden Dome Is More Costly Than Simply Not Striking Gold

There is something alluring about the idea of a "Golden Dome": a single, encompassing shield that can render a nation like the United States untouchable. Missile defense systems have long made that psychological appeal that enough technology can be a security risk and neutralize all potential risks. Similar to Reagan's "Star Wars" initiative, the result is a cycle of ambition, technical constraints, and spiraling costs. The question is whether Trump's Golden Dome is a sincere military strategy or a political blunder wrapped in a security blanket. 

Trump's recent "Golden Dome" proposal is a multilayered missile defense system intended to shield the U.S. from ballistic, hypersonic, cruise, and potentially space-launched missiles. The most controversial part of this proposal is thinking about missile defense from space because it would place interceptors in orbit. The idea is to technologically be at the cutting edge while expanding the strategic military scope of the United States.

There are a few reasons to question the proposal, one of them being technological feasibility. As the Cato Institute points out in its Golden Dome analysis, this proposal is based on Israel's Iron Dome. Israel only has to worry about covering 8,500 square miles, as opposed to the U.S.' 3.8 million square miles. Also, ballistic missiles are much more difficult to intercept than short-ranged missiles, which is noteworthy because the U.S. would be more likely to be attacked by long-range missiles. 

Furthermore, this report from the American Physical Society details how defending a country even from a few ballistic missiles is a challenge due to timing and geometry limits, as well as the ability for a defense system to discriminate the warhead from the rest of the "threat cloud." Once a missile is launched, a defender only has minutes to track, detect, and intercept the missile. Even under highly simplified scenarios, reliability drops quickly as the number of missiles increases. The challenge is developing a system at scale.

Even if proponents were to bypass the physical limitations, there is the issue of the price tag. According to a recent report from the Congressional Budget Office (CBO), this system will cost $1.2 trillion over a 20-year period, an amount significantly higher than Trump's estimated $175 billion. In terms of composition, up to $540 billion of that $1.2 trillion is due to the deployment and operation of the space-based interceptors.

The price tag also begs the question about opportunity cost. A trillion-dollar-plus commitment to missile defense necessarily crowds out other investments, including conventional force readiness, cyber defense, or a call towards greater fiscal restraint from the government more generally. This goes beyond the actual price tag. It is a question of whether such a large investment is justifiable given other priorities. 

Aside from the costs, a core issue that such a system might actually provoke adversaries to escalate their military behavior. As the Cato Institute argues, the U.S. upping its interception architecture could incentivize other countries to expand missile inventories, more sophisticated decoys, or systems that would be designed to saturate and overwhelm the U.S.' missile system.

We already have seen this escalatory spiral take place. The situation between the U.S. and the USSR became so destabilizing during the Cold War that they needed to create the Anti-Ballistic Missile Treaty of 1972. Similarly, MERV development and Reagan's Star Wars initiative also escalated tensions rather than de-escalating. History "dealt" with these issues through arms control agreements and strategic stabilization to counter the escalatory nature of enhanced defense systems. 

The Golden Dome tries to soothe people by promising the promise that enough technology can help avoid all risk. However, such promises provide a false sense that we can avoid all risk, much like during the COVID pandemic. The truth is that the Golden Dome cannot override the physical limitations, the absurdly high costs, and the escalation dynamics. A golden dome may project strength, but projection is not the same thing as protection of the American people. 

It Would Be a Gas If Trump Took the Fast Lane and Eliminated the Gas Tax

Every few years, when gas prices get high enough to be politically dangerous, politicians "discover" the idea of a gas tax holiday. Senator John McCain proposed it in 2008, President Joe Biden in 2022, and now President Donald Trump this week. It is peculiar to have politicians tacitly admit that high taxes harm consumers, but I will set aside that irony. Nevertheless, it does set an uncomfortable question: If temporarily suspending the tax would help consumers, why should the tax exist in the first place?

After all, nobody proposes a hiatus from something that is harmless or helpful. The very existence of multiple calls for a gas tax holiday should give us good reason to pause. Much like emergency waivers of the Jones Act after natural disasters, gas tax holidays inadvertently expose the hidden costs of a policy that politicians generally insist is reasonable. 

Before delving into issues about the gas tax, it would be worth noting that the gas tax is 18.4 cents per gallon, which will not do that much to alleviate the average cost of a gallon, which is $4.50. Now let's get into the main issue of its regressive nature, meaning that it takes a larger share of income from lower-income households than from higher-income ones. That is hardly a surprise for a consumption tax tied to a necessity like transportation fuel. For many Americans, driving is a price of participating in the labor market. 

The burden is uneven because transportation is not evenly substitutable. Higher-income households are more likely to have flexible work arrangements, shorter commutes, and/or access to multiple modes of transportation. Conversely, lower-income households are more likely to rely on older vehicles, need to take longer commutes, and have jobs that require physical presence. Rural commuters similarly have constraints, whether with longer baseline distances or fewer substitutes for automobile travel. 

The broader economic problems with the gas tax are longstanding. I previously examined its inefficiencies in detail, including its distortion of transportation choices, weak alignment with actual road usage, and broader market-side effects. Much like the Cato Institute argues, this is why state governments should  meet their infrastructure needs instead of the federal government.

The recurring gas tax holiday debate implicitly admits that the tax is burdensome. The question should be what to replace the federal gas tax with. States could implement their own, especially since most roads are not federally owned. But greater fuel efficiency and higher prevalence of electric vehicles is making the gas tax more passé. There is the option of mile-based user fees, as well as a "quant" framework that accounts for usage. Regardless of what it is replaced with, one thing is for certain: it is difficult to call a gas tax "necessary infrastructure funding" when it regularly needs a vacation to survive public opinion. 

You Can't Deport Supply and Demand: How ICE Enforcement Contributes to Labor Shortages

For years, advocates of mass deportation insisted that aggressive immigration enforcement would strengthen the economy and help natives born in the U.S. find a job. The theory is that you remove enough workers, somehow businesses, customers, and local economies adjust without any pain. Beyond this political rhetoric begs an important empirical question: what actually happens to labor markets when Immigrant and Custom Enforcement (ICE) enforcement increases? Is ICE actually making the labor market better? A recent paper from the National Economic Bureau of Research (NBER) using data from areas affected by immigration raids and related enforcement policies. 

Instead of relying on simple "before-and-after" comparisons, the author of this NBER paper use regional differences in ICE enforcement to examine how labor market outcomes diverged over time. One of the big conclusions is that greater ICE enforcement led to less employment for undocumented workers. But the effects did not stop there. The study found little evidence that this enforcement helped native workers. Meanwhile, businesses with immigrant-heavy sectors experienced labor shortages and operational disruption. The fact that this study compared changes across regions, as opposed to simple national trends, provides a stronger analysis than a basic correlation analysis.  

Broader economic literature on immigration explains why this NBER study's findings are unsurprising. Despite the political rhetoric of immigrants taking jobs from native-born workers, economists have found very little evidence that immigration substantially reduces native employment overall. If that claim were true, we would have seen ICE enforcement generate clear increases in employment opportunities for native workers. Yet no such clear increase emerged in the study. As a matter of fact, the study points toward labor-market disruption and spillover effects. 

That is because the economy is not a fixed pie. Economic literature already indicates that immigrants are often complements rather than simple substitutes for native labor. In industries such as housing construction, hospitality, agriculture, and food processing, different categories of workers frequently depend on one another to maintain production. Removing that part of the workforce can and does reduce productivity and labor demand elsewhere in the economy. 

There is also evidence that immigrant workers can increase wages for native workers. That is because immigrants are not only workers competing for jobs. They are also consumers, renters, entrepreneurs, and customers. When policymakers treat the labor market like a fixed pie, they ignore this high level of interconnectedness. 

It is that level of interdependence that makes these findings unexpected. Large-scale immigration enforcement acts as a supply shock. That shock propagates throughout supply chains and affects firms, consumers, and workers beyond the targeted population of the mass deportation. The fact that the pro-mass deportation argument is based in a simplistic view of the economy is part of why I was against mass deportation in 2024. 

None of this determines the question of how much immigration enforcement is appropriate. What it does show is that mass deportation is not costless or uniformly beneficial. While "deport them and it will work out" is a snazzy political slogan, it still does not repeal arithmetic or basic laws of economics.

Grounded by Government: How Blocking a Merger Helped Sink Spirit Airlines

Last Saturday, Spirit Airlines announced that it is shutting down its doors. Some were treating this bankruptcy as if it came out of nowhere or it were simply an issue of a poor business model. It is true that there are businesses that go under because they made poor life choices. With Spirit, however, the beginning of its demise was made with a key decision well before last Saturday. 

The earlier decision did not happen in Spirit Airlines' boardroom or from the fact that Trump decided not to bail out Spirit (which would have been a terrible idea), but in Washington. Starting in 2022, Spirit Airlines and JetBlue attempted to merge. But Senator Elizabeth Warren (D-MA) wouldn't have any of that. She led the charge that would ultimately block the merger in 2024. The argument used was that Spirit needed to remain independent to maintain a competitive market in what a concentrated market. 

Warren thought she was helping Spirit, but was in fact hurting it. Why? Because she had a static view of how the market worked. She thought the main factor for competition was the number of firms. But in a capital-intensive market like the airline market, there are times when mergers can help make the market more competitive. 

When firms are structurally fragile as was the case with Spirit, consolidation can be a way to stabilize capacity, preserve service networks, and sustain price discipline over time. By focusing on firm count instead of capacity (e.g., routes, seats, financial viability), the policy gave the appearance of preserving competition. In practice, Spirit and JetBlue were less equipped to compete in the market while further solidifying the market concentration of the big four airlines: American, Delta, Southwest, and United.

If Spirit and JetBlue were able to merge, they would have created a larger and more financially resilient airline in the low-cost segment of the market. In industries like aviation, fixed costs are high and margins are thin. Scale can be the difference between restructuring to grow and failure. But Spirit and JetBlue were not given that opportunity to become a strong mid-tier competitor. 

Spirit's employee count went from 11,331 employees in 2024 to 7,482 employees in 2025 before it went under. That decline reflects more than normal business cycles. It signals a firm in financial distress heading toward bankruptcy that could have been saved had it had the chance to merge. As Spirit's revenue weakened and restructuring pressures mounted, the airline reduced capacity, scaled back operations, and cut labor costs to stay afloat. Yet that was not enough to save Spirit. 

While Spirit's ultimate demise is the most visible part of this unnecessary demise, the effects on JetBlue are still important. Without the merger, JetBlue was unable to expand. It remained in a constrained capacity focused on cost constraints and modest route expansion. In a capital-intensive industry, the absence of economies of scale shaped JetBlue's long-term competitiveness. 

These firm-level decisions also made their way downstream. Changes in route activity affect airport activity, especially those who relied on these low-cost routes. Tourism flows are expected to feel a hit, especially those leisure-heavy destinations. This all affects airport revenue, local travel demand, and the availability of affordable travel destinations for travelers. 

There is a broader lesson to be had. Look at Dodd-Frank's "too big to fail" approach. It was supposed preserve competition and market stability. Instead, smaller banks exited at larger rates, the number of new banks declined substantially, and larger banks increased their market share through consolidation. Instead of playing by the regulators' rules, markets adapt in a way that often benefits that largest market players. In retail and tech, the government had similar impulses of "the size of the firm matters" when blocking the Albertsons-Kroger merger and scrutinizing whether Amazon was a monopoly. 

The airline industry was no exception. Spirit and JetBlue had a chance to be a better contender in the airlines market. Instead, the government stepped in to help in the name of "market protection" and ended up making the market less competitive. The deeper question is whether this "government knows best" model can meaningfully help if they misread the dynamic, evolving nature of markets. In case we did not have enough examples, Spirit Airlines is another casualty to remind us that the answer to that question is a resounding "No!"

Hotter Doesn't Always Mean Worse: The Value of Healthy Skepticism Towards Climate Change Activism

A senior fellow from the American Enterprise Institute, Roger Pielke Jr., took aim at climate change economics. It was not enough for Pielke to point to a redacted paper that claimed doing nothing with climate change would cause a whopping $38 trillion in damage. Keep in mind that this paper was quite influential in climate change policy, much like Neil Ferguson's COVID lockdown model was an abject failure. Pielke pointed out a recent study from the University of Wyoming entitled The Empirically Inscrutable Climate-Economy Relationship.

Why does this new study come with an inconvenient truth? Most climate change activists do not simply say that global temperatures are increasing. They posit that each increase in global temperature means that it will produce immeasurable harm. It is from this assumption that you get policy suggestions like Net Zero or the Paris Agreement. A lot of climate change modeling translates temperature into dollar losses. The problem, as this new study details, is that it is based on shaky ground. 

There are countries out there that have similar temperatures and affluences. The authors point to El Salvador and Iraq as examples to remind us that there are a number of confounding factors that influence economic growth beyond temperature: institutions, education, technology, trade, and culture. Certain adaptations also change the relationship to heat, including air conditioning, crop switching, migration, and infrastructure changes. It means climate change scientists are trying to estimate a moving target, not a stable law. 

This does not even get into the fact that reliable economic data goes back only a few decades, especially for more developing countries. The problem is not only with imperfect data. It is impossible to isolate temperature as the sole factor, which makes the house of climate change economics built on quicksand. 

Is this to say that climate change is a hoax? No, it does not. To quote Mercatus Center scholar Jack Salmon, "they [the authors of the study] are not claiming that climate change is harmless or that reducing emissions lacks value. The existence of a negative carbon eternality remains well-established. What they are challenging is the confidence with which economists, and especially policymakers, treat specific numerical estimates of climate change."

Good policy is supposed to weigh the costs and benefits. However, if the benefits of avoided damage is highly uncertain, model-dependent, and sensitive to assumptions, as is the case with climate change economics, then you cannot reliably say that a given policy is worthwhile. 

Does it sound familiar? We dealt with this during the COVID pandemic. Lockdown Lovers kept forcing lockdowns down our throats during the pandemic. They claimed that skepticism of the lockdowns meant that you wanted Granny dead. How did that weaponization of kindness turn out? You can read more here, but it meant trillions in economic damage, causing even more health problems than the lockdown solved, and helping society writ large take a nosedive. 

What does that mean for climate policy? If this core relationship between temperature and economic output is fragile, then the foundation for confident, large-scale climate policy like carbon taxes, cap-and-trade, or energy-efficiency mandates is tenuous. 

This does not mean we should do nothing. It means getting off the moral high horse and stopping virtue-signaling the fake certainty. It means injecting a little humility into the conversation. After all, we have seen this movie play out with the COVID pandemic. Uncertain models get translated into certain policy prescriptions, dissent gets quashed, and tradeoffs get shunted to the side because it is too inconvenient to address. 

The sad irony is that the more uncertain the underlying assumptions become, the more confident climate change activists come in with sweeping mandates and regulations. What emerges is not better policy, but simply more confidence where it becomes less and less defensible. But don't worry. We're still told to "follow the science."

Why Trump's $500M Bailout of Spirit Airlines Won't Make Air Travel Great Again

Flying Spirit Airlines has come with the philosophy of "you get the lowest fare possible, and everything else costs extra." That is not merely a pricing model. Apparently, it has been the government's way of doing business lately. The government promises it won't cost that much, it hides the true costs, and when the system fails (as it often does), tack on extra costs in the form of subsidies, tax credits, bailouts, and "emergency" spending. President Trump's proposal to bail out Spirit Airlines is not an anomaly. It would be another line item in a very long balance sheet of the U.S. federal government. 

I think the first point to mention is that we would not be in this mess if the government did not intervene in the first place. Spirit Airlines was looking to merge with Jet Blue in 2024. But guess what happened? The Biden administration led the initiative to ultimately block the merger. American Action Forum President Douglas Holtz-Eakin said that there were already private-sector solutions of mergers or bankruptcy. A bailout is not necessary. 

More than being unnecessary, it harms the airline industry. As Competitive Enterprise Institute Director of Technology & Innovation Jessica Melugin reminds us, blocking the merger of smaller competitors to scale up when the industry is dominated by four major airlines makes little sense. CEI Policy Analyst Steve Swedberg details how the airline industry is suffering from a lack of competition and how competition helps keep the airline industry thriving instead of stagnating. All this bailout would do is have the airline industry flounder while making sure the Big Four (Delta, American, United, and Southwest) maintain their 70-plus-percent market share over the industry. 

As Holtz-Eakin is right to mention, this is reminiscent of the Soviet Union. Trump is using the power of the state to allocate capital. It does not take much imagination to see how political interference could get in the way of Spirit's management and operational decisions. 

Senior Fellow John Berlau points out, this sort of bailout creates a moral hazard because it incentivizes companies like Spirit Airlines to take excessive risks. Why should the taxpayers have to pay to bail out a failing airline, especially when there are other remedies available? This won't stop at Spirit. As a matter of fact, Frontier and Avelo are already seeking $2.5 billion in bailouts, as well. 

Cato Institute policy scholar Ted DeHaven illustrates how the Defense Production Act (DPA) angle to provide this Spirit bailout borders on the absurd. DPA is aimed at reducing shortfalls in goods essential to national defense. This is the Trump administration pursuing a bailout under the guise of bailouts, much like it has pursued tariffs on trucks and furniture under a flimsy national security argument. At least with other bailouts that I did not agree with, there was at least an argument of systemic risk. There is no such pretext. It is simply a first step towards greater nationalization of the airline industry. 

Strip away the rhetoric and the proposal is hard to justify on any grounds. The government creates the conditions for Spirit's instability, blocks private-sector measures to remedy it, and comes in to "fix" the problem that it caused in the first place. This decision distorts competitive markets, rewards risky behavior, and invites a litany of companies to beg for a handout and corporate welfare in the name of "national security." 

The bailout is not a solution. It merely masks an issue while expecting the taxpayers to clean up the mess. If a company is not doing well, it should be allowed to fail. If it wants to stay alive, that is what bankruptcy, restructuring, and acquisition are there for. The state is blocking voluntary exchange while preventing firms from adapting. It is a sober reminder that it does not matter who is in the White House. The underlying hubristic assumption is the same: the government can outguess the markets and improve upon an economic system that is second to none. 

Spirit Airlines has to earn your business. If it succumbs to incompetence, at least it costs them customers. It is worse with government because Spirit Airlines at least asks for your consent before charging you. Washington just reaches deeper in your wallet, keeps billing you for inane ideas like bailing out Spirit Airlines, and calls it reform. What ever happened to making airlines great again? 

Trump's Tomato Tax: A Tariff With Predictable Outcomes

If your grocery bill is higher than usual, one place to look is tomatoes. The price of tomatoes is up 23 percent compared to last year (see Rutgers data below). Part of that increase can be attributed to higher transportation costs or fluctuations in Florida's weather. But let's not overcomplicate this. 

The biggest change in the tomato market was not meteorological: it was policy. Last year, the U.S. changed its tariff-free policy on Mexican tomatoes and replaced it with a 17 percent tariff. When 90 percent of tomatoes come from Mexico and you tax those tomatoes, it should not be a surprise when the price of tomatoes increases. 

As a matter of fact, there were many that warned about these negative effects, myself included. It is not complicated what happened here. When the U.S. slaps tariffs on Mexican tomatoes, which is the primary source of tomatoes for the U.S., you are going to get more expensive tomatoes. Not maybe or probably. You will get more expensive tomatoes. 

Tariffs are taxes on imports. Like most taxes, they do not sit quietly in the background doing nothing. They change consumer behavior, such as having tomato imports in 2025 declined by $500 million in comparison to the previous year. The tariffs worked their way through the supply chain and made their way to the consumer, which is also not surprising since 95 percent of tariffs are paid by the consumer. 

None of this is unique to tomatoes. This is how tariffs work. When you tax imports with tariffs, you reduce supply, distort markets, and raise prices. The specifics vary by product and tariff amount, but the mechanism does not change. 

Whether it's tomatoes, steel, or washing machines, the pattern is the same: a concentrated benefit for a small group of well-connected domestic producers while everyone else pays the price. Protectionists can call that "saving jobs" all they want, but consumers experience fewer choices and higher prices. Tariffs don't protect markets. They just make them more expensive. 

Trump's Tariff Exemptions Are Harmful Protectionism with More Holes than Swiss Cheese

Tariffs have been a staple of Trump's trade policy in both of his presidential terms. When politicians propose a tariff, they make it sound like this simple tax rate because they are presented as universally applied. However, reality intervenes in the form of political discretion. As recent research from the American Action Forum (AAF) shows, that discretion creates exemptions.

AAF found that the "Liberation" Day tariffs had an exemption rate of 38 percent. With the newer Section 122 tariffs, that rate went up to 60 percent. The wider exemptions under Section 122 reduced the effective tariff rate from 14 percent to 10 percent. 

You might be wondering why I think this is a bad thing. After all, tariffs are import taxes. If the effective tax rate is lower, you would think that is better for the economy. Think again! Cato Institute trade scholar Scott Lincicome details the hellish labyrinth that tariffs have become. Tariff rates do not vary only by product. They do so by country, by statutory authority, and how multiple tariff regimes interact. 

Because Trump is trying to use multiple statutory authorities to push his tariff agenda, he has increased the number of tariff regimes in the U.S. tariff code from 3 in 2017 to 17 in 2025. More to the point, the percent of imports being subject to a tariff went from 0.02 percent in 2016 to 49.2 percent in 2025.

This has made tariff compliance a legal and logistical challenge of Herculean proportions. Rates stack inconsistently, exemptions are applied unevenly, and the rules change frequently. Tariffs become a hidden tax because firms have to devote time, hire specialists, and navigate trade uncertainty. A Federal Reserve report last year estimated that the compliance costs are the equivalent of 1.4 to 2.5 percent ad valorem tariff. Given that 95 percent of tariffs on U.S. imports are paid by the everyday American consumer, guess who is ultimately paying the brunt of those compliance costs? 

But those costs are not distributed evenly. Large firms can afford trade lawyers, customs specialists, and representation in Washington to do the rent-seeking and earn the exemptions. Smaller firms generally cannot. The asymmetry creates a divide between those who can navigate the rules and those who cannot. What is even more amusing is that the exemptions are a tacit admission from the Trump administration that tariffs are too blunt and harmful. Plus, they undermine the administration's rationales for the tariffs, particularly the rationale about generating government revenue.

While advocated for as a simple, universal tax rate, tariffs are a complex behemoth that incurs additional costs to businesses. The irony is that a policy that is presented as being straightforward ends up being a convoluted, opaque system that benefits well-connected businesses while screwing over the American people the protectionists claimed to help. 

Trump's Assault on Legal Immigration and Why the "Immigrants Should Come the Right Way" Argument Falls Short

During his 2024 presidential campaign and throughout his second term, President Trump's rhetoric on immigration has been framed around border control and illegal immigration. On the surface, he was about unauthorized entry, strengthening the border, and concerns about crime and lawlessness. In that respect, his response was straightforward: get illegal immigration under control. 

Those who self-identify as anti-illegal immigration have this common story to tell: illegal immigration is the problem, legal immigration is the solution, and anyone willing to "come the right way" has a door open to them. Too bad that the data does not support that narrative! The latest research from the Cato Institute shows that since the beginning of Trump's second term, legal immigration has be cut about 2.5 times more than illegal immigration. 

How is this possible? I thought Trump just wanted to go after the lawbreakers. One complicating factor that Cato points out is that border apprehensions were dropping by 80 percent in Biden's last year. In spite of what some might think, Biden actually tightened up border security at the end of his term. This helps explain why Trump cannot get the big mass deportation numbers that he was hoping for. 

With immigration being such a hot-button issue and Trump being so gung-ho on the matter, he grabbed for whatever policy levers he could. As I explained a couple of years ago in my argument against mass deportation, mass deportation involves detecting, detaining, and deporting individuals. Especially with how resources-strapped the U.S. government is to carry out mass deportation of every illegal immigrant, reducing illegal immigration is more operationally constrained. In contrast, the federal government has many levers on the legal immigration front:

• One I discussed last year was the $100,000 fee for the H-1B visa. That fee contributed to H-1B visas falling by 25 percent. 
• In 2025, the Trump administration eliminated the CBP One scheduling app and banned asylum, which is why asylum seekers entering legally dropped by 99.9 percent.
• With refugees, the Trump administration put a cap on refugees at 7,500. During the Biden administration, the cap was at 125,000 refugees. As a result, the number of admitted refugees declined by 90 percent. 
• Due to a visa ban on 75 countries, immigrant visas for permanent visas fell by about half, and visas for fiancé(e)s and spouses fell by 65 percent.
• As for international student visas, Trump used an executive order to cancel about 1,700 and 4,500 student visas, which contributed to a decline of 40 percent in F-1 visas.

Taken together, this shows that legal immigration is being affected through multiple entry ways simultaneously, whether that is work visas, asylum processing, refugee admissions, family-based visas, and student visas. The tools differ, but the result is the same: fewer legal entries into the United States. 

Sadly, this is not a new development. As I pointed out in 2018, Trump targeted chain migration, the Temporary Protected Status (TPS) program, DACA, low-skilled immigrants, and high-skilled immigrants on the H-1B visa during his first term. The current situation and the past act as a reminder that the U.S. immigration system is not a single, orderly queue, but a patchwork of pathways that each have its own constraints, caps, and eligibility criteria.

I want to bring this to something even more important, which I covered in 2023. Back then, the Cato Institute released a report showing how 99.4 percent of immigrants had no legal realistic legal avenue to do so, in no small part due to the complexity of the immigration system. Remember that 2023 was during the Biden administration, which was relatively more friendly towards immigrants. With all of these bans and caps from the Trump administration, the implication is very difficult to escape: the path to legal immigration to the United States is rapidly vanishing and next to impossible. 

Trump said that he will welcome those who come into the U.S. legally. However, it does not matter what his stated intent is. His policies have considerably restricted legal immigration to the U.S. In practice, telling immigrants to "wait in line" and "come in the right way" rings hollow when the Trump administration's actions actively constrain the queue as much as humanly possible. It makes the American Dream into less of an achievable goal and more of an empty slogan that is detached from reality and borders on the farcical. Meanwhile, would-be immigrants across the world are expected to wait in a line that mostly takes them nowhere except deeper in debt with all the processing fees in an effort towards futility. 

The Fed Finds That Trump's Tariffs Are Propping Up Inflation

In the United States, we have been told a simple story about inflation: the pandemic hit, the government intervened, and prices went up. As I argued before, quantitative easing from the Federal Reserve combined with high levels of government spending set up the U.S. for high levels of inflation in 2022-23. What this does not explain so well is why prices have not come back down. 

According to a recent study from the Federal Reserve, there is a reason why: Trump's tariffs. Even as the pandemic faded in the distant memory, the tariffs kept the inflation hangover lingering beyond the pandemic. This is not a mystery. Tariffs raise consumer prices because they are a tax on imports. Business then pass on the majority of that cost to consumers. As long as the tax remains, the tariffs create a pre-tax and post-tax price, which keeps prices elevated. 

What the Federal Reserve study does is calculate the counterfactual of "what would have happened if there were no tariffs?" The answer is bonkers when you think of the political hoopla about affordability. If Trump's 2025 tariffs were never implemented, consumer prices would be back to pre-pandemic levels (see below). 

As frustrating as this is, this is far from surprising. Last August, I discussed what the economic effects from these tariffs would be. Those costs ranged from a lower GDP and higher unemployment to....you guessed it: higher consumer prices. This is additional evidence to show that it is the everyday American that is paying for Trump's tariffs, not China, Mexico, or any other foreign country. It was lousy government policy that got us into this mess, and it was the tariffs that kept the inflation sticking around much longer than necessary. 

This problem was avoidable as it was predictable. If Congress wants to do something about affordability, it can reclaim its tariff powers enumerated in the Constitution. It turns out that "America First" pricing means that it is the everyday American that first and foremost pays the costs for Trump's tariff folly. 

Europe's Asylum Dilemma and Why Return Hubs Are a Second-Best Immigration Policy

I have spent a lot of time here at Libertarian Jew discussing immigration policy. In concept, I believe that immigration should work more like free trade: people moving across borders, creating value, and making both sides better off through voluntary exchange. In a U.S.-specific context, I still believe in that ideal that immigration is welfare-enhancing. However, that framework is not unconditional or universal. I have serious reservations about that ideal with regards to Europe because of what is observable in that part of the world. I examined this topic of integrating immigrants in Europe at length last December. 

What I discussed in December were a few things. One was that the influx of Muslim immigrants that hold illiberal views can and will shape how voter preferences shape state power in Europe. The second aspect is describing how the U.S. has better capabilities to integrate its immigrants than Europe, whether that is due to institutional, linguistic, economic, or cultural reasons. When these factors of immigrant culture, weak integration of immigrants, political backlash, economic & labor market rigidity, and lax immigration enforcement collide, it is unsurprising that there is considerable tension in Europe. 

This tension in Europe represents a scenario in which conditions are considerably more constrained. In response to that tension, European lawmakers voted for a proposal late last month to deport rejected asylum seekers to return hubs outside of the European Union. Although not official law, this vote in March overcame a major legal hurdle. While awaiting official enactment, five countries (Germany, the Netherlands, Austria, Denmark, and Greece) are already negotiating pilot arrangements outside of the EU framework. 

This is understandable given the context. Before continuing, I want to say that return hubs are not the same as Trump wanting mass deportation, the latter of which I thought was a terrible idea. For the U.S. context, mass deportation has a high marginal cost because of how much it would need to expand to enforce, low marginal efficiency due to its scale, and the high disruption per unit enforcement. 

With Europe, the return hubs are not about mass deportation. The policy is targeted at asylum seekers that were rejected and decided not to leave. About 20 percent of rejected asylum seekers actually leave Europe. Given that there have been 7.4 million first-time asylum seekers from 2016 to 2025, 80 percent of people staying would mean about 5.9 million people staying. These return hubs be seen as a second-best by attempting to restore enforceability to an asylum system that has been de facto turned into open immigration to Europe.

I do have some concerns about whether this can work. The closest proxy we have to such a policy is Australia's offshoring process in which Australia intercepted asylum seekers at sea and forcibly transfer them to Nauru and Papua New Guinea. It might not have turned out so well. Aside from being costly and violating human rights, it did not necessarily deter asylum seekers, especially after looking at the numbers of arrivals. The Australian case is more border control, whereas in this European case, they have already arrived and might have settled down in Europe. 

I understand the political impetus for this asylum policy, which is why this will likely be part of Europe's approach to immigration more broadly. There has been a greater clash of civilizations between Europeans and immigrant communities. There has been an emergence of the Far Right in Europe, in no small part of Europe's general incapability to control migration. 

And when I say Far Right, I do not mean it like a stereotypical woke person does to insult anyone who disagrees with them. I am referring to a political right that is more nativist, nationalistic, and Euro-skeptic, especially relative to the center or moderate conservatives in Europe. Integration of immigrants is not taking place throughout much of Europe, and the political backlash and the emergence of anti-immigrant sentiment is showing, including through this push for return hubs. 

I personally believe that there are significant cultural and religious frictions that make integration of Muslim immigrants more difficult, if not downright impossible, and that is on top of the institutional constraints of European governments and markets. Whatever what one believes about long-term cultural compatibility, the overall policy direction in Europe indicates that many European countries are not willing to bet their future that these integration challenges are temporary or fixable. 

Irrespective of my take on the political dynamics throughout Europe, I think return hubs could function as a second-best option to the current restraints in the European asylum system. Return hubs operate at the post-adjudication stage. Completing removals makes the designation of "rejected asylum seeker" a meaningful legal endpoint. By externalizing processing arrangements, Europe can restore faith to a system where return enforcement is presently weak. Broadly, this does not reflect an ideal policy choice. It an adaptive institutional response given high migrant inflows, present low enforceability, and rising political backlash.

To reiterate, the European case study is not the same as the U.S. I previously made the case for letting in Afghan refugees in response to Biden pulling out of Afghanistan, and similarly did so for Syrian refugees coming to the U.S. My default belief is that migration can create significant economic and humanitarian gains when properly governed and managed. In Europe, however, there is institutional failure that has made lower-intensity enforcement of immigration law non-credible. Removal of rejected asylum seekers is the exception, not the norm, thereby making the European example one of system-level limitations. 

As much as I support the principle of allowing people to migrate and pursue a better life, the European experience is making it clear that a comprehensive immigration system is only as strong as its enforcement mechanisms. Without basic governance over boundaries, immigration becomes self-sabotage in the guise of compassion.

In Its Conversion "Therapy" Ruling, the Supreme Court Draws the Wrong Line in the Sand

Conversion "therapy" has long occupied a fraught space in public debate, and rightfully so. Historically, it referred exclusively to therapeutic efforts at changing an individual's sexual orientation. Many critics argued that not only they are ineffective, but they actively harm the patient. More recently, the term conversion "therapy" has expanded to include gender identity. Over the past decade, a growing number of states banned such practices for licensed therapists working with children. 

The Supreme Court threw a wrench in that approach. In a decisive 8-1 ruling, the Court struck down Colorado's conversion "therapy" ban, holding that even controversial or disfavored therapeutic conversations are protected by the First Amendment. In other words, the government does not get the ultimate say on what viewpoints a therapist is allowed to express. 

At first glance, this case seems like a familiar clash between freedom of speech and government regulation. Many are inclined to either view this simply as a free speech victory or a rollback of protections for vulnerable children, pick a side, and go on their merry way. Neither of these gets at the core issue here. The harder truth to accept is that this ruling lumped together two fundamentally different issues. Until those are disentangled, it will be hard to draw the line where it actually belongs. 

Stop Messing With Kids' Sexual Orientation

In 2018, I wrote about how conversion "therapy" was harmful for those trying to change sexual orientation. The research for sexual orientation-specific conversion "therapy" spans decades. Multiple studies, including the 2009 APA Task Force review and various retrospective reviews, show that the practice fails to change sexual orientation and is associated with such harms as depression, low self-esteem, and suicidal ideation. 

For minors, the state has a narrow, legitimate role in preventing harm. Just as we intervene in response to murder, fraud, arson, or assault, protecting children from conversion "therapy" is defensible, even under a libertarian framework. 

I have argued that adults should be allowed to make decisions I might not agree with, such as having children before marriage, entering a polygamous marriage, regularly smoking cigarettes, eating fast food daily, or not exercising. I also believe that as long as they are not harming anyone else, adults should make whatever decision, even if it harms themselves. Conversion "therapy" for an adult is not an exception. As for a minor, that is a whole different matter, as previously discussed.  

Gender Identity: Affirmation Isn't a Prescription

Unlike the decades of research on sexual orientation-specific conversion "therapy", the evidence base on gender identity-specific conversion therapy is much thinner and only goes back to 2018. Plus, many studies lump together sexual orientation and gender identity conversion "therapy," which means that research on gender identity-specific conversion "therapy" is scant. Meanwhile, the practices that so many call "affirming," whether that is social transitioning, puberty blockers, hormones, gender reassignment surgery, are experimental, risky, and often harmful:

• A Finnish study released just this week showed that transgender children have increased psychiatric morbidity as a result of gender reassignment surgery. 
• The Cass Review, which is the most comprehensive review on the subject, concluded that gender affirming medical interventions do not improve long-term outcomes, reduce suicide risk, or reliably address gender distress. 
• A long-term Dutch study found that over 80 percent of adolescents grow out of gender dysphoria by adulthood without intervention, which is to say that most adolescents who experienced gender dysphoria were never truly transgender to begin with. 
• England banned puberty blockers because they are shown to have some nasty side effects, like lower fertility, decreased bone density, deteriorating mental health, and a lower IQ.
• The American Society of Plastic Surgeons refused to endorse gender reassignment surgery because of insufficient evidence for long-term benefit, concerns about irreversible harm, and performing these procedures on developing bodies without clear, robust evidence. 

Here's an unpleasant truth. If gender "affirming" "medicine" is untested and harmful, then pressure to delay or question a minor's self-professed gender identity is not inherently evil. If anything, it is most likely a protective measure. Given that gender identity itself is conceptually incoherent, and medical interventions to affirm it carry real risk, withholding affirmation could plausibly spare children unnecessary harm. 

Protecting Children without the U.S. Becoming a Nanny State

Many of the Justices in this ruling framed this strictly as a First Amendment issue, claiming that the Colorado law was regulating speech based on viewpoint. If it were mere abstraction, I would wholeheartedly agree. Some might see my stance on conversion "therapy" in conflict with me defending abstract speech, such as opinions, insults, or political rhetoric. That apparent paradox dissolves once we recognize a core principle: speech is protected unless it is inseparable from conduct that reliably and objectively causes harm. 

Last year, I presented my case that words are not violence because abstract speech by itself does not cause objective harm. In 2018, I argued for the protection of hate speech because "hate speech" is often a cudgel for "opinion I dislike." I even argued for the First Amendment rights of pro-Palestine protesters protesting peacefully, which is quite the litmus test because I view them as the modern-day equivalent of Nazis. Where I drew the line with the pro-Palestine crowd was when their speech crossed over into the realm of harmful conduct. 

That concept applies here. Conversion "therapy" is not abstract speech or merely expressing an idea. It is a professional intervention in which a therapist uses speech as a tool with the goal of changing a child's sexual orientation. Even if conversion "therapy" has a component of speech, it is an embedded professional practice that has a direct, predictable record of causing harm. 

Conversion "therapy" is not the only scenario in which speech is a component of harmful conduct. With fraud, speech is inseparable from the act of taking someone's money under false pretenses. With direct threats and incitement, the harm is embedded into the speech itself. With perjury on the stand, the false statements can cause harm and legal or financial injury. Doctors or therapists giving advice or treatment that foreseeably harms clients is considered malpractice, and conversion "therapy" for sexual orientation falls under that category of malpractice.  

From a libertarian standpoint, this distinction is ultimately consistent. We protect words when they are abstract, subjective, and speculative in harm (which is the vast majority of words), but we allow narrow state intervention when speech is inseparable from predictable, harmful action. Regulating conversion "therapy" is not an attack on free expression. It is a principled defense of vulnerable children against a practice with a long-documented record of harm. At least for sexual orientation, it would sit comfortably alongside other recognized exceptions to the First Amendment.....if the Supreme Court ruled as such. 

The Wrong Line in the Sand

Instead, the Court chose to frame the case purely as a free speech issue while missing the crucial distinction between abstract expression and professional conduct that causes predictable harm. By choosing to protect conversion "therapy" for both sexual orientation and gender identity, the Court drew the wrong line when they should have drawn the line by protecting the speech for gender identity only.  

This decision has another dimension beyond the harm caused to children. It is a reflection of a broader problem in how LGBT discourse has evolved. By lumping sexual orientation together with gender identity in legal, social, and research contexts, the unique experiences and vulnerabilities of gay people ends up being overshadowed. The result is policies, rulings, and societal practices that leaves gay people more harmed, a concept I discussed in 2024 when arguing for the gay rights movement to divorce from the trans rights movement.

For sexual orientation-specific conversion "therapy," SCOTUS' ruling is a missed opportunity to defend minors while protecting libertarian principles, especially when it comes to the intersection of freedom of speech and the nonaggression axiom. It is a reminder that conflating distinct issues can have real-world implications for those who should, even under a libertarian framework, be protected.