Category: Current Affairs
Tabarrok on the Movie Tariff
The Hollywood Reporter has a good piece on Trump’s proposed movie tariffs:
Even if such a tariff were legal — and there is some debate about whether Trump has the authority to impose such levies — industry experts are baffled as to how, in practice, a “movie tariff” would work.
“What exactly does he want to put a tariff on: A film’s production budget, the level of foreign tax incentive, its ticket receipts in the U.S.?” asks David Garrett of international film sales group Mister Smith Entertainment.
Details, as so often with Trump, are vague. What precisely constitutes a “foreign” production is unclear. Does a production need to be majority shot outside America — Warner Bros’ A Minecraft Movie, say, which filmed in New Zealand and Canada, or Paramount’s Gladiator II, shot in Morocco, Malta and the U.K. — to qualify as “foreign” under the tariffs, or is it enough to have some foreign locations? Marvel Studios’ Thunderbolts*, for example, had some location shooting in Malaysia but did the bulk of its production in the U.S, in Atlanta, New York and Utah.
…“The only certainty right now is uncertainty,” notes Martin Moszkowicz, a producer for German mini-major Constantin, whose credits including Monster Hunter and Resident Evil: The Final Chapter. “That’s not good for business.”
A movie producer is quoted on the bottom line:
“Consistent with everything Trump does and says, this is an erratic, ill conceived and poorly considered action,” says Nicholas Tabarrok of Darius Films, a production house with offices in Los Angeles and Toronto. “It will adversely affect everyone. U.S. studios, distributors, and filmmakers will suffer as much as international ones. Trump just doesn’t seem to understand that international trade is good for both parties and tariffs not only penalize international companies but also raise prices for U.S. based companies and consumers. This is an ‘everyone loses, no one gains’ policy.”
Lady Liberty of the Pacific
Instead of re-opening Alcatraz as super-max prison we should build a statue to America. I suggest “Lady Liberty of the Pacific”. The spirit of Columbia ala John Gast’s American Progress carrying a welcoming beacon-lamp in her raised right hand and a coiled fibre-optic cable in her left representing Bay Area technology.
Trump proposes 100% tariff on movies shot outside the United States
Here is one link. Of course the proposal is not easy to understand. If it is a Jason Bourne movie, do they add up the number of scenes shot abroad and consider those as a percentage of the entire movie? Does one scene shot abroad invoke the entire tariff? o3 guesstimates that about half of major Hollywood releases are shot abroad to a significant degree, with many more having particular scenes shot abroad.
Imagine the new Amazon release: “James Bond in Seattle.” And it actually would be Seattle — do they have baccarat there?
Furthermore, virtually all foreign films are shot abroad rather than in the U.S. The incidence in this case is interesting. Assuming the movie would have been made anyway, most of the tax burden falls on the producer, not the American consumer, because the marginal cost of sending the extra units of the film to America is low. Nonetheless lower American revenue will force those films onto lower budgets. Possibly Canadian and also English movies will suffer the most, because they are most likely to have the U.S. as their dominant market.
Of course the U.S: is by far the world’s number one exporter of movies, so we are vulnerable to retaliation on this issue, to say the least.
Not De Minimis
Commerce Secretary Howard Lutnick:
Ending the “de minimis loophole” is a big deal. This rule allowed foreign companies to avoid paying tariffs on small shipments, giving them an unfair advantage over American small businesses. To small businesses across the country: we have your back.
The Value of De Minimis Imports by Fajgelbaum and Khandelwal:
A U.S. consumer can import $800 worth of goods per day free of tariffs and administrative fees. Fueled by rising direct-to-consumer trade, these “de minimis” shipments have exploded in recent years, yet are not recorded in Census trade data. Who benefits from this type of trade, and what are the policy implications? We analyze international shipment data, including de minimis shipments, from three global carriers and U.S. Customs and Border Protection. Lower-income zip codes are more likely to import de minimis shipments, particularly from China, which suggests that the tariff and administrative fee incidence in direct-to-consumer trade disproportionately benefits the poor. Theoretically, imposing tariffs above a threshold leads to terms-of-trade gains through bunching, even in a setting with complete pass-through of linear tariffs. Empirically, bunching pins down the demand elasticity for direct shipments. Eliminating §321 would reduce aggregate welfare by $10.9-$13.0 billion and disproportionately hurt lower-income and minority consumers.
In other words, eliminating the de minimis rule is a significant tax on poorer Americans.
Frankly, it’s also a pain in the ass to have your international shipments delayed at broker (who often charges you exorbitant rates, more than the customs tax) and then have to go down to the customs office to pay the stupid tax. Yes, I am speaking from experience.
Driverless trucks on their way?
Aurora Innovation, Inc. (NASDAQ: AUR) has successfully launched its commercial self-driving trucking service in Texas. Following the closure of its safety case, Aurora began regular driverless customer deliveries between Dallas and Houston this week. To date, the Aurora Driver has completed over 1,200 miles without a driver. The milestone makes Aurora the first company to operate a commercial self-driving service with heavy-duty trucks on public roads. Aurora plans to expand its driverless service to El Paso, Texas and Phoenix, Arizona by the end of 2025.
Here is the story, via Joe Brenton.
Has international travel to the U.S. really collapsed?
But despite some ominous signs, a close look at the data shows that travel to the United States is largely holding up — at least so far.
Nearly as many foreign travelers have arrived at American airports this year than during the same period last year, according to an analysis by The New York Times of entry data collected from every international airport in the country.
International arrivals did drop more than 10 percent in March compared with last year, but this was largely because Easter fell unusually late this year, pushing back a popular travel window for European tourists. More recent figures from April show that travel over the holiday looked similar to previous years.
Here is more from the NYT. The main major difference is for Canadians, who are indeed more skittish, and their ticket sales are down 21 percent.
That was then, this is now
In late 2022, Daisy Rodriguez, a U.S. citizen and owner of a small restaurant in the town of Sweetwater, Tennessee, said goodbye to her husband for what she thought would be a short stay in Guatemala. He had recently received approval to attend an immigration interview that would grant him a green card to live in the United States. Little did Rodriguez know her husband would not be returning to the U.S. Upon arriving at the consulate in Guatemala, her husband, Santos Maudilio Saucedo Rivas, was accused by U.S. consular officials of membership in a gang based on a tattooed set of initials on his body.
The officials denied Rivas a green card, separating him from his American wife and the restaurant they ran together, while cutting him off from the U.S., the country where he had spent nearly his entire adult life.
Rivas’s case is now the subject of a lawsuit filed today by the American Immigration Council and Consular Accountability Project, which is suing the U.S. State Department in the Eastern District of Tennessee. The lawsuit alleges that U.S. officials failed to review evidence showing that Rivas was never part of the “Barrio Azteca” gang and that the government violated the U.S. Constitution by denying him a green card after having him travel to Guatemala for the interview.
Here is the full story. Precedent matters. I had never heard of this 2022 case until I came across it randomly. One lesson is simply that U.S. treatment of migrants has been unfair for a long time.
Democracy in danger
Germany’s domestic intelligence agency on Friday designated the far-right Alternative for Germany party, or AfD, as an “extremist endeavor,” a move that lowers hurdles for the spy agency in conducting certain kinds of surveillance on the party, the second-largest in Germany’s parliament.
The reclassification — AfD was previously designated a “suspected” extremist group — is likely to reignite debate over potentially banning the party via Germany’s Constitutional Court. Such a move would initiate a lengthy legal process lasting years that experts and even the AfD’s fiercest critics say may carry greater risks than rewards.
The decision could put public funding of the AfD at risk, while civil servants who belong to an organisation classified as ‘extremist’ face possible dismissal, depending on their role within the entity, according to Germany’s interior ministry.
Here is the first story. Although I do not like the AfD, there is an alternative solution here. Other German parties, including the ruling coalition, could move closer to median voter sentiment on migration issues. (Whether or not one agrees with the median voter stance, it is, believe it or not, an alternative democratic strategy.) Heaven forbid!
And didn’t France just stop Le Pen from running in the next election? I am very much opposed to the efforts of the Trump administration to intimidate the U.S. judiciary, but I find it weird when Europeans tell Americans concerned with democracy to move to Europe.
We are solving for the equilibrium
White House officials have in recent weeks brainstormed strategies for enshrining into law the government cuts implemented by billionaire Elon Musk’s team, aiming to turn the U.S. DOGE Service’s moves into lasting policy shifts.
So far, however, administration officials are running into resistance not just from Democrats, but also from congressional Republicans, who have in private conversations made clear that it would be difficult to codify even a small fraction of the measures that Musk’s team unilaterally implemented, according to lawmakers and several other people familiar with the discussions.
Here is more from The Washington Post.
Tabarrok on the Not My Generation Podcast
Political Scientists James Davenport and Craig Dawkins interview me on everything from tariffs to the Borda Count. Here is one bit I wish to underline:
Q. In your opinion, what is the biggest economic myth or misconception that is holding the U.S. back?
What worries me most is that we’re treating China like an enemy—and that mindset risks becoming a self-fulfilling prophecy. What I want people to understand is this: we have a lot to gain from a rich China.
In my 2009 TED Talk, I gave one of my favorite examples. As China grows wealthier, it invests more in thinking—research, science, and development—that benefits the entire world. Richer countries face diseases of aging, not poverty. As China shifts its focus to diseases like cancer, it ramps up investment in drug development. That raises the odds of a cure—something worth trillions to humanity. If an American cured cancer, I’d be thrilled. If a Chinese citizen cured cancer, I’d be 99.9% as thrilled.
Yes, China is not a democracy. But by global standards, it hasn’t been especially militaristic. There have been border disputes, but no major invasions in over 50 years. China isn’t sending troops to the Middle East or Latin America.
That could change. But nothing inescapable says the U.S. and China must be enemies. We have far more to gain from peace, trade, and prosperity than from conflict.
What Should Classical Liberals Do?
My little contretemps with Chris Rufo raises the issue of what should classical liberals do? In a powerful essay, C. Bradley Thompson explains why the issue must be faced:
The truth of the matter is that the Conservative-Libertarian-Classical Liberal Establishment gave away and lost an entire generation of young people because they refused to defend them or to take up the issues that mattered most to them, and in doing so the Establishment lost America’s young people to the rising Reactionary or Dissident Right, by which I primarily mean groups such as the so-called TradCaths or Catholic Integralists and the followers of the Bronze Age Pervert. (See my essay on the reactionary Right, “The Pajama-Boy Nietzscheans.”)
I do not think Mr. Rufo would disagree with me on this point, but he has not quite made it himself either (at least not as far as I know), so I will make it in my own name.
The betrayal, abandonment, desertion, and loss of America’s young people by conservative and libertarian Establishmentarians can be understood with the following hypothetical.
Imagine the plight of, let us say, a 23-year-old young man in the year 2016. Imagine that he’s been told every single day from kindergarten through the end of college that he’s racist, sexist, and homophobic by virtue of being white, male, and heterosexual. Further imagine that he was falsely diagnosed by his teachers in grade school with ADD/ADHD and put on Ritalin because, well, he’s an active boy. And then his teachers tell him when he’s 12 that he might not actually be a boy, but rather that he might be a girl trapped in boy’s body. And let us also not forget that he’s also been told by his teachers and professors that the country his parents taught him to love was actually founded in sin and is therefore evil. To top it all off: he didn’t get into the college and then the law school of his choice despite having test scores well above those who did.
In other words, what this oppressed and depressed young man has experienced his whole life is a cultural Zeitgeist defined by postmodern nihilism and egalitarianism. These are the forces that are ruining his life and making him miserable.
Let’s also assume that said young man is also temperamentally some kind of conservative, libertarian, or classical liberal, and he interns at the Heritage Foundation, the Cato Institute, or the Institute for Humane Studies hoping to find solace, allies, and support to give relief to his existential maladies.
And how does Conservatism-Libertarianism Inc. respond to what are clearly the dominant cultural issues of our time?
Well, the Establishment publishes yet another white paper on free-market transportation or energy policy. The Heritage Foundation doubles down on more white papers on deficits and taxation policy. The Cato Institute churns out more white papers on legalizing pot and same-sex marriage. The Institute for Humane Studies goes all in to sit at the cool kids’ lunch table by ramping up its videos on spontaneous order featuring transgender 20-somethings.
Is it any wonder that today’s young people who have suffered the slings and arrows of outrageous fortune are stepping outside the arc of history yelling, “stop”? At a certain point, these young people let out a collective primal scream, shouting “I’m mad as hell and I’m not going to take it anymore.” And when the “youf” (as they refer to themselves online) realized that Establishment conservatives and libertarians did not hear them and lacked the vocabulary, principles, power, and courage to defend them from their Maoist persecutors, they went underground to places like 4chan, 8chan, and various other online discussion boards, where they found a Samizdat community of the oppressed.
Having effectively abandoned late-stage Millennials and Gen Z, Conservatism and Libertarianism Inc. should not be surprised, then, that today’s young people who might be otherwise sympathetic to their policies have left that world and become radicalized. News flash: Gen Z is attracted to people who are willing to defend them and attack social nihilism and egalitarianism in all their forms.
Hence the rise of what I call the “Fight Club Right,” which calls for a new kind of American politics. Gen Z rightism is done with what they call the Boomer’s “fake and ghey” attachment to the principles of the Declaration of Independence and the institutions of the Constitution. In fact, many young people who have migrated to the reactionary Right have openly and repeatedly rejected the principles of the American founding as irrelevant in the modern world.
More to the point, this younger generation is done with the philosophy of losing. They’re certainly done with the Establishment. They also seem to be done with classical liberalism and the American founding. (This is a more complicated topic.) Instead, what they want is political power to punish their enemies and to take over the “regime.” They want to use the coercive force of the State to create their new America.
…Conservatism and Libertarianism Inc. seemed utterly oblivious to the fact that the Left had pivoted and changed tactics after the fall of the Berlin Wall in November 1989. By the 1990s, the Left had abandoned economic issues and the working class and was doubling down on cultural issues. Rather than trying to take over the trade-union movement, for instance, the postmodern Left went for MTV and the Boy Scouts, while the major DC think tanks on the Right went for issues too distant from the lives of young people such as the deficit, taxation, and regulatory policy.
While socialism continues to be the end of the Left, the means to the end is postmodern nihilism. That’s where the Left planted its flag and that’s the terrain that it has occupied without opposition, whereas conservative and libertarian organizations such as the Heritage Foundation and the Cato Institute were fighting for ideological hegemony in the economic realm. Between 2000 and 2025, cultural nihilism and its many forms and manifestations is where the action is and has been for a quarter century. So powerful has postmodern nihilism become that even some left-wing “libertarian” organizations have simply become left-wing.
What should I ask Annie Jacobsen?
Yes, I will be doing a Conversation with her. From Wikipedia:
Annie Jacobsen (born June 28, 1967) is an American investigative journalist, author, and a 2016 Pulitzer Prize finalist. She writes for and produces television programs, including Tom Clancy’s Jack Ryan for Amazon Studios, and Clarice for CBS. She was a contributing editor to the Los Angeles Times Magazine from 2009 until 2012.
Jacobsen writes about war, weapons, security, and secrets. Jacobsen is best known as the author of the 2011 non-fiction book Area 51: An Uncensored History of America’s Top Secret Military Base, which The New York Times called “cauldron-stirring.”[ She is an internationally acclaimed and sometimes controversial author who, according to one critic, writes sensational books by addressing popular conspiracies.
I very much liked her book Nuclear War: A Scenario. Do read the Wikipedia entry for a full look at what she has written. So what should I ask her?
Who is rising and falling in status?
That is the topic of my latest Free Press column, here is one brief excerpt, not unfamiliar to MR readers:
As great apes, we obsess over the social hierarchy. Who is being praised and who is being excoriated? Who is hot and who is not?
That may sound like gossip, but it is also a big part of our politics. If politics is fundamentally about the way we human beings organize ourselves—or, put another way, how we build and wield power—then status is the ultimate coin of the realm.
And here are some judgments about who is rising in status:
Alan Garber: The president of Harvard has said no to Trump’s demands, and the Trump administration seems to have backed down. They announced that the demands on Harvard were put and sent in a letter by mistake. Whether or not that is the true story, you have to say Garber won this round. But as is always the case, a future spill may yet be in the cards, for instance if further legal wrongdoing is discovered in the university.
Canadians: They are running two decent candidates for prime minister. Furthermore, they were able to get Trudeau out of the race and replace him with Mark Carney without the Liberal Party falling apart, or a weak candidate forcing his or her way to the front. Opposition to becoming the 51st state has given the whole country a dose of additional mojo. To keep this gain, though, they now have to translate that fervor into a much stronger economy. We will see if they manage this, but so far the place is on the upswing in terms of status.
Greenlanders: They are now the center of world attention, and I don’t see much evidence of them saying stupid things. They are making overtures to the United States and not burning their bridges to Denmark, while making it clear they desire eventual independence. Ideally they can play Denmark and the United States off each other, and arrive at a future where the United States shows up with a positive and dynamic plan for developing the nation and making them all millionaires. The chance of that is rising long-term, even if the current Trump rhetoric has turned into a public relations nightmare for the United States. Kudos to them.
The bond market: You can’t take its loyalty for granted. The evidence suggests its temporary collapse played a central role in getting Trump to reverse some of his worst trade policies.
The U.S. judicial system: It has stood up to Trump repeatedly, even with SCOTUS having a 6–3 Republican-appointed majority. Some Trump supporters are upset at the courts, but the overall repute of the judiciary—among conservatives as well as liberals—has been rising.
Daniel Lurie: The new mayor of San Francisco took office in January of this year. He inherited and then helped along a trend of falling crime rates and rising public order. The city is much nicer and safer; I saw it with my own eyes a mere month ago. He is going to get the credit if this trend continues, just as Rudy Giuliani did. He is doing good things, but this is also a story of being in the right place at the right time. Fame is not always a fair mistress.
I also consider those who are falling in status.
Markets in everything
- Authorities alleged Vong essentially rented out his U.S. identity to developers based in China who used it to get more than a dozen remote tech jobs, some of which involved contract work for sensitive government agencies.
A 40-year-old Maryland man is facing decades in prison after he allegedly worked with foreign nationals in China to get remote work IT jobs with at least 13 different U.S. companies between 2021 and 2024. The jobs paid him more than $970,000 in salary for software development tasks that were actually performed by operatives authorities allege are North Korean and working out of a post in Shenyang, China, according to the Department of Justice.
Here is the full story, via William.
The Public Choice Outreach Conference
There are just a few spots left for the Public Choice Outreach Conference! Do encourage your students to apply!
