Of the many philosophical questions the age of artificial intelligence has foisted onto our attention, perhaps none is more urgent for policymakers than the nature and meaning of work.

Work, we are told, may soon become distressingly hard to find. Anthropic CEO Dario Amodei famously predicted in 2025 that AI would eliminate “half of all entry-level white-collar jobs—and spike unemployment to 10-20% in the next one to five years,” a prospect Axios described as a “white-collar bloodbath.” Even blue collar work may prove no refuge. Nvidia CEO Jensen Huang suggested, also in 2025, that we would know AI was truly ubiquitous “when, literally, humanoid robots are wandering around, which is not five years away. This is not a five-years-away problem, this is a few-years-away problem.”

When that happens, Jensen added, the robots “ought to go to factories first.”

Eventually, our tech leaders say, all work may become optional, as AI delivers a post-labor reality with little need for any human employees at meaningful scale. “It’s hard to say exactly what that moment is, but there will come a point where no job is needed,” Elon Musk said back in 2023. “You can have a job if you wanted to have a job for personal satisfaction. But the AI would be able to do everything.”

Whether anything like this will in fact transpire remains to be seen. But even the prospect of such an outcome is prompting real anxiety in the American workforce. A mass political revolt by white collar workers angry that their credentials no longer secure middle class stability, for example, is a serious and sobering prospect.

Thus even the idea of a post-work future forces confrontation with a basic philosophical question: what, really, is work good for? Broadly speaking, there are two theories on offer.

The first, from sources as divergent as the Marxist and neoliberal market-fundamentalist traditions, holds that work is an unpleasant necessity, away from which each of us strives to escape as best we can. It is most archetypically represented by the Biblical passage from Genesis, still cited daily in funeral rites around the globe, in which Adam and Eve are expelled from Eden and condemned to hard toil as divine punishment for sin’s introduction to the world:

Cursed is the ground because of you;
through painful toil you will eat food from it
all the days of your life.
It will produce thorns and thistles for you,
and you will eat the plants of the field.
By the sweat of your brow
you will eat your food
until you return to the ground,
since from it you were taken;
for dust you are
and to dust you will return.

The Hebrew word used to represent work here is telling: itstsabon, meaning hard labor, pain, or sorrow.

Economic orthodoxy tends to agree with this grim view of labor. The neoclassical labor-leisure choice model posits that each of us seeks to maximize our utility (i.e. our happiness) by optimizing the tradeoff between the consumption of goods and services we want (which require money, which requires us to work), and the leisure we also want (which requires us not to work). U = f(C, L), where U is “utility,” “C” is consumption, and “L” is for leisure, sums it up nicely. The model has a genuine predictive value: it is indeed true that if I am paid $5 an hour, I will likely prefer to take the marginal hour off and relax, whereas if I’m paid $1,500 an hour an extra hour of work might seem like a good tradeoff.

The implication is, of course, that the optimal state is to have as much money as I need to enjoy every good and service I could want without having to work at all. This, too, seems to reflect an intuitive truth. Who among us, theoretically, would not wish to be born a prince, freely enjoying everything the world, the flesh, and the devil have to offer without laboring for any of it? This view, fronted by many of our AI overlords, offers a post-work society of limitless abundance, in which we want for nothing and need not earn any of it.

The Marxist tradition agrees. For the Marxist, work is not so much the bad thing you do to get the good things you want but the bad and exploitative thing you are made to do to get the things you need. When it comes to automation, this exploitative dynamic holds the seeds of its own demise.

At least according to contemporary Marxists like the British author and political commentator Aaron Bastani, Marx himself thought that by ruthlessly pursuing labor-replacing technological advancements, capitalism would unintentionally undermine itself. Marx’s “Fragment on Machines,” for example, seems to anticipate Elon Musk’s prediction. It argues that capital cannot help but seek to replace human labor with machines—and that it will eventually succeed, which “will redound to the benefit of emancipated labour, and is the condition of its emancipation.”

The vision of thinkers like Bastani, as outlined in his 2019 book Fully Automated Luxury Communism, is to realize this aspiration for liberation-via-automation:

[Even] socialism for Marx was a stepping stone to something else: communism and the realm of freedom. This, by contrast, was marked not only by an absence of economic conflict and work but by a spontaneous abundance similar to the Golden Age of Hesiod or Telecleides, or the biblical Eden…With the arrival of communism any distinction between mental and physical labour would vanish, with work becoming more akin to play.

The human condition, then, according to Marxism and Econ 101 alike, is that we are each of us yearning to return to the workless Eden; if AI can take us there, hallelujah and amen.

But there is a second option, and reflecting on it illuminates why Marx and Econ 101 are both wrong, and why we will always need meaningful work.

This view teaches that in addition to its obvious necessity under conditions of scarcity, there is also something inherently good about work. The classic ur-text for this view also comes from Genesis—one chapter earlier, in which God creates human beings not for limitless leisure, but to place them “in the Garden of Eden to work it and take care of it.”

In this interpretation, work is constitutive of human thriving and inherent to human happiness. As my colleague Daniel Kishi likes to say, labor is not punishment but purpose—calling rather than curse. J.R.R. Tolkien called this the theory of the human being as sub-creator. To be fully human is to actively shape the world we are given. “We make in our measure and in our derivative mode,” Tolkien wrote, “because we are made: and not only made, but made in the image and likeness of a Maker.”

This taps into a philosophical tradition dating back at least as far as Plato. In the Republic, Plato delineates categories of goods. Some goods are good in themselves but do not have much instrumental use—harmless pleasures, for example. Other goods have instrumental value but are hard to call good in themselves, like surgery.

But some things are good in both senses at the same time: good because they have utility, and intrinsically good in themselves, like the act of knowing, or of seeing. As the philosopher Jeffrey Hanson explains, work is exactly this kind of good. Like knowing and seeing, it is good for its results, but also intrinsically good. In fact, work is itself a way of knowing and seeing:

[A] job is for Plato a kind of knowing. It is not the whole of knowledge and cannot be, but it is a mastery of some part of reality and a constructive response to it that repairs a genuine need and secures a worthwhile good. The carpenter, for example, knows wood, what it can bear, how it can be shaped and cut and joined in order to produce a worthwhile object that in its small but inimitable way partakes of the eternal verities of form and beauty.

The Catholic tradition similarly teaches that work “is a good thing for man—a good thing for his humanity—because through work man not only transforms nature…but he also achieves fulfilment as a human being and indeed, in a sense, becomes ‘more a human being’.” The impulse to act on the world—in other words, to work—is intrinsic to the human spirit, and it will profit us nothing to gain the whole world if we lose it.

If America wants to survive whatever level of automation our AI future delivers, we need to embed Option Two in our societal source code—with urgency.

The loss of meaningful, dignified work has already visited immense damage on millions of American families. The response of America’s technological barons is not encouraging—like the argument venture capitalist Marc Andreesen is said to have made when pitched on the idea that struggling local communities might merit saving: “I’m glad there’s OxyContin and video games to keep those people quiet.” Video games, that is, to offer the simulacrum of mastery and autonomy, and opioids to anesthetize the felt need for it.

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Channeling George Orwell’s fight with his own socialist compatriots, the sociologist Musa al-Gharbi draws a bright line under the nightmare of Andreesen’s post-work society:

[A society] wherein machines have largely eliminated not just privation and disease but also obviated the practical need to work…would be hell. We can see this…in workers who are unable to work but have their material needs provided for: they aren’t happy. They’re often quite miserable. And the reason that they’re miserable is that the desire to be useful, to produce, to transform, to add value – these are fundamental human drives that people satisfy through various forms of labor….[without that] people would likely have a void in their life where there used to be meaning and purpose. They’d try to fill it getting high or getting drunk, through gluttony, sexual licentiousness, and other forms of hedonism, or by playing games or consuming ever-more entertainment just to fill up their hours. But spending one’s life just killing time in this way is a horrible way to live — empty and unsatisfying.

Video games and Oxy, indeed.

It is intrinsic to our nature to want to encounter the world directly—to address ourselves to it, take it in hand, and exercise agency on it. Something important to our own flourishing is lost if we abandon that impulse. We risk turning inward, away from reality and toward the self-involved gratification and self-anesthetization that the Andreesens of the world envision for us.

This is already a feature of our economic model. The social segmentation of blue-collar and white-collar work, the motorcycle mechanic and philosopher Matthew Crawford argues, has exacerbated the tendency of “knowledge” workers to overestimate how well they do in fact know the world. “The moral significance of work that grapples with material things,” Crawford writes, “may lie in the simple fact that such things lie outside the self.” He goes on to denounce the arrogance of a narcissistic laptop class that mistakes its abstractions for true knowledge.

Francis Fukuyama puts it even more bluntly: “most forms of real knowledge, including self-knowledge, come from the effort to struggle with and master the brute reality of material objects — loosening a bolt without stripping its threads, or backing a semi rig into a loading dock.” This kind of knowing through encounter, leading to real agency, is a central element of human thriving. Research on the psychology of human happiness routinely finds that a sense of agency (or self-efficacy, or mastery, or competence) correlates strongly with a sense of well-being.

It is also a prerequisite to being useful to other people—or to being in genuine relationship with them at all. Other people, too, are external to ourselves, and encountering them means turning outward rather than inward. The shared project of useful work, in which we discover our mutual interdependence, is fundamental to learning to respect each other as fellow citizens and members of a shared society.

When the book of Genesis describes God creating human beings to “care for and work” the garden of Eden, it does not use the term for “sorrowful toil” that is introduced later. Here, the Hebrew term evokes agency and reverence—of causing something to happen and of rendering worship, a double meaning perhaps best captured in English by the word service. Societies work when we encounter the world with agency, each other with respect, and both with an eye toward useful service.

If the social structure of work becomes even more a matter of societal and political choice than it already is, because economic necessity no longer plays a shaping role, there will be nothing more important than what beliefs guide that choice. Forestalling a future in which we further lose touch with the concrete realities of our own world—and thus with our own best selves and with one another—requires reclaiming an understanding of work as good in itself, as fundamental to human nature, not just as a bulwark against scarcity.

Otherwise we risk letting slip entire ways of knowing, seeing, and realizing our capacity to engage the world, becoming sedated and passive rather than active and alive, dependent on machines we have forgotten how to build.

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The saying goes, “you are born short housing.” We all need somewhere to live in our adult years, but few of us start with any equity in a home.

The situation is similar to that of the speculator with a “short” position in a stock, meaning he has borrowed shares and sold them, betting their value will decline. But if the stock goes up, he is on the hook—he will have to repurchase the shares at some point, paying more than he received from the sale. Every day the stock rises, he falls further in the hole. Likewise, every day the housing market rises without you owning a piece of it, your financial position worsens whether you are looking to buy or just want to rent. This is the crux of the housing affordability crisis.

What makes the crisis intractable is the other side of the trade. Where people trying to buy their first home want to see a “decrease in housing prices,” the people who own homes are looking for a prosperity-advancing “increase in home values.” Politicians try to tell both groups what they want to hear. But that latter group is more than twice as large and also votes at a much higher rate. In the 2024 presidential election, homeowners cast nearly four votes for every vote cast by a renter. Notwithstanding the drumbeat in the media, most people are about as excited about lower home prices as they are about seeing their 401(k)s take a dive. Notwithstanding the polling that shows “affordability” in general to be a top issue, most policymakers understand this.

A hilarious example of the confusion on this point came last week, after President Trump returned housing legislation passed by the Senate but stuck in the House to the front burner. The bill’s most controversial elements would sharply restrict ownership of single-family homes by large institutional investors. (Daniel Kishi wrote about this a couple of months ago.)

Enter Marc Short, Mike Pence’s chief of staff in the West Wing and now chair of his Old Right think tank, Advancing American Freedom. Short wrote an op-ed for the Washington Examiner rejecting the notion that Wall Street firms could possibly maximize their profits in a way harmful to ordinary Americans. I expressed skepticism about his blind faith that more private equity firms buying houses means more affordable houses for young families. He responded that supporters of the bill “will have to explain to home sellers they passed legislation to limit number of buyers in marketplace.”

Take a moment to parse this. Short appears to be saying that restrictions on Wall Street will “limit number of buyers” in the housing market, which is precisely the point of the restrictions. He appears to be saying that home sellers will be upset by this, presumably because it means less demand and therefore lower sale prices, which are, again, precisely the point. Maybe Short is focused less on price and more on the dream shared by so many sellers of passing their houses on to nice private equity firms with internal rates of return to deliver, which would be frustrated if they instead had to sell to some damn family that’s going to just move in, act as stakeholders in their community, and raise kids there. But he likely means price.

In the op-ed, he rejected the notion that “institutional investors are responsible for pricing ordinary Americans out of the market.” To the contrary, he wrote, they provide “capital needed to construct new homes.” The bill “will be a dead-end, leaving families with both unaffordability and fewer options.” But pressed on those points, he just flipped to precisely the opposite position. Apparently, institutional investors do drive up prices for home sellers, and that’s good.

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It’s a thrilling, downright acrobatic display of market fundamentalism. Upon realizing that the bill would, in fact, improve affordability by intervening in the market, he does not grudgingly support the intervention, rather he switches to the view that improving affordability is bad. I know I harp on this point often, but it’s important to understand the character and quality of the Old Right’s economic thinking, and then to reject it.

With that said, it’s worth considering whether a path does exist to reconciling what seem like zero-sum positions for buyers and sellers. One argument, which has a lot of truth but is probably a political stinker, is that we should support lower home values as a form of redistribution. Yes, more people will see their wealth decline than will benefit from more affordable housing, but the former group is much wealthier, and, particularly insofar as it has come from home value appreciation, that wealth is a windfall rather than a result of any value created. Lower home values are fairer, do much more to improve the lives of buyers than to harm the lives of sellers, and strengthen the social fabric by helping young families form and build decent lives. This argument will satisfy some, but infuriate others.

So let me try a second: Homeowners shouldn’t worry about falling home values. We think of the act of buying a house as creating huge exposure to the housing market. But recall the notion of being born with a short position in housing. The person who buys a house closes that position. Think in terms of the stock market for a moment. A short-seller who buys back the shares does not create a position in the stock and root for it to go up. He becomes indifferent.

Likewise, it is the person who does not yet own a home who cares most deeply whether prices are rising or falling. The typical homebuyer should care much less, because if he is going to sell a home, he will have to use the proceeds to buy another one (or rent at a price set by the broader market). What does it matter to him whether the median price at that point is $200,000 or $400,000? Indeed, the joke is somewhat on all Americans who think, “housing prices have doubled, I’m twice as rich!” Sorry, but you owned one home, and you still own one home, and if you sell it, you’re going to need another home.

Of course, this is an oversimplification in some respects. There are reasons a homeowner prefers a higher home value. (There are also reasons a homeowner should prefer a lower one, for instance, insurance and property taxes.) The Baby Boomer eager to downsize in retirement and use the proceeds to fund a life of cruises would prefer to downsize with the biggest possible difference in absolute value between the larger house and the smaller condo.

But as a matter of broader political economy, thinking in these terms could help to shift the calculus. We have non-owners in America who benefit when home values decline. We have late-in-life owners who will be selling for the last time and benefit if home values go up. In between is an enormous pool of Americans who do own homes but, if they want to sell, would properly consider themselves seller-buyers. They care as much about a low price for their next residence as they care about a high value for their current one. They may not be indifferent, exactly, but they should be close enough to indifferent that fairness, the well-being of their neighbors, and the quality of the social fabric become more salient considerations. A growing family looking for a larger house might actively prefer to see the value of both their current and next house held down.

So long as the typical American sees his home value as a central measure of his wealth, the politics of bringing down housing prices will be extraordinarily difficult. If we could see ourselves as closer to market-neutral in most situations, we could turn our focus to whether we care more about maximizing windfall gains at the end of life or providing a clear pathway to middle-class security at the start. We will all be young at one point in life and, hopefully, old at another, but we need one of those opportunities much more than the other.

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We find that households had very different experiences with gasoline spending: in March, high-income households increased nominal spending the most and kept real consumption essentially unchanged, while low-income households decreased real consumption of gasoline but still saw sharply increased nominal spending because of the rise in gas prices.

Thanks, Captain Obvious, I hear you say. When gas prices go up, rich people just pay more for their gas. Poor people use less gas, still end up paying more, and have to cut back elsewhere in their budgets, too. No kidding.

But pause a moment to consider the implications. Faith in market efficiency relies upon the price system allocating resources to their best (most valuable) use, which assumes that our “willingness to pay” provides a fair proxy for how much each of us values something. When it becomes more expensive to supply gasoline to the market, the price rises, encouraging more production and reducing purchases from people with a lower willingness to pay, until total demand and supply come into balance.

This is “efficient” according to economists. Those with a lower willingness to pay, suggesting they assign less value to the marginal gallon of gas, should cut back. Our limited supply goes to those who really value it. Lest you think that an oversimplification, here is Harvard professor Gregory Mankiw in his widely used textbook, Principles of Microeconomics:

Those buyers who value the good more than the price choose to buy the good; those buyers who value it less than the price do not. ... Free markets allocate the supply of goods to the buyers who value them mostly highly, as measured by their willingness to pay. ... Thus, given the quantity produced and sold in a market equilibrium, the social planner cannot increase economic well-being by changing the allocation of consumption among buyers.

And no, that’s not just the theory, after which the textbook notes the weaknesses in this framework. To the contrary, the real-world examples on the next page drive the point home: “If an economy is to allocate its scarce resources efficiently, goods must get to those consumers who value them most highly. Ticket scalping is one example of how markets reach efficient outcomes.”

What the Fed study shows is that this isn’t happening at all. Here on Planet Earth, your “willingness to pay” is often driven less by how much you value something and more by the total resources available to you. Does anyone believe that lower-income households are driving less because they value driving less, in the sense that it does less for their welfare? Come on. To the contrary, given that they already had to make tradeoffs that higher-income households did not before the spike in gas prices, it is safe to assume that the marginal gallon of gas they were consuming was already more valuable to them; when they have to cut back, it is surely more painful.

Colloquially, we can think of this as the Learjet problem. When gas prices go up, families take fewer trips to visit grandma. Corporate executives do not reduce their private jet flights to Davos. That may be “efficient,” but it obviously is not efficient in the sense of allocating resources to their best uses and maximizing welfare. Or, to take Mankiw’s example, when concert and baseball tickets get bid up to the level that real fans are priced out and the front rows are filled with lobbyists and their clients, “changing the allocation of consumption among buyers” would quite obviously “increase economic well-being.”

Maybe we don’t want to do that. For one thing, we might worry about interfering with property rights. For another, we might not have any confidence in policymakers to improve allocations in practice. For a third, we might want to preserve the incentive for people to do productive things and earn money that they can then spend as they wish, buying things that people who earn less money cannot. Those are all reasonable considerations.

What is not reasonable, however, is to pretend that—under conditions of substantial inequality—the price system is rationing resources in a way that maximizes consumer welfare (to say nothing of other forms of welfare about which we might care even more). Whether and when we can improve are important questions to ask. And we should remember that as inequality in disposable income increases, the divergence between efficiency and welfare will increase too, to the detriment of those on the lower end. — Oren

THE ART OF NO DEAL

Ahead of this week’s two-day summit in Beijing, China hawks, like us, were concerned that President Donald Trump might strike a trade and investment deal with President Xi Jinping that could reverse the trend toward decoupling he put in motion during his first term and has accelerated with his second-trade policy. What emerged, based on the initial reporting, was mercifully much less.

China has committed to or affirmed the purchase of American soybeans, beef, and Boeing aircraft. U.S. authorization for Nvidia to sell H200 chips to ten Chinese firms was the headline concession on paper, but that policy had been announced months ago and, in practice, the question remains whether China will accept the chips. A new U.S.-China Board of Trade will reportedly explore tariff cuts on “non-sensitive goods,” a potentially positive arrangement if it amounts to managed exchange in the product categories where two-way trade is genuinely benign. And that’s about it.

A nothingburger summit is, in this case, a good outcome, for the reason Oren laid out in the Financial Times on the summit’s first day: “The best plausible result is simply no deal, beyond efforts to smooth any decoupling that might proceed, giving the US time to come to its own terms with the irreconcilable differences of its great-power competitor.”

That said, the H200 chip authorization is a bad outcome on its own terms, whether or not Chinese firms ultimately take delivery. As American Compass argued last fall in Stop Selling the Rope, advanced AI chip design and manufacturing is one of the few critical sectors where the United States and its allies still hold a decisive lead. The H200 is not the most advanced chip Nvidia produces but it’s close, and exporting non-leading-edge chips still extends China’s AI capabilities by months, if not years. The so-called addiction thesis—that letting U.S. firms get a toehold in the Chinese market will lock China into dependence on U.S. technology—was wrong about China’s accession to the World Trade Organization at the turn of the century, and experience suggests it has only gotten more wrong since.

The American public agrees. New polling from American Compass and YouGov, released this week, finds that 91% of registered voters support restrictions on AI chip exports to China, with majorities in both parties favoring an outright ban. Americans are also three times more likely to view China as a rival or adversary than as an ally or potential partner, and reject by a more than two-to-one margin the idea that the United States can do business with China while steering clear of its military. Read the full report: Americans Reject Chip Exports to China.

Elsewhere in the U.S.-China economic relationship:

In Bloomberg, read about how the Pentagon’s ‘Deal Team Six’ Aims to Challenge China’s Grip on Rare Earth Power: “From an office a few blocks from the White House, a group of former Wall Streeters is at the forefront of the Pentagon’s plan to crack China’s critical-minerals stranglehold…It’s racing to put together creative deals with billions of dollars in equity stakes, long-term price floors, purchase commitments, loans and other financial tools.” And, in the same outlet, on the scale of the hole decades of failed policymaking have dug: US Needs Another Decade to Fix $1.2 Trillion Rare Earth Crisis.

Efforts to “hermetically seal” the U.S. market against the threat posed by the Chinese auto industry’s excess capacity—and the data and security risks that would come with Chinese-built cars on American roads—are gaining traction in Congress. Rep. John Moolenaar (R-MI), chairman of the House Select Committee on the CCP, and Rep. Debbie Dingell (D-MI) introduced the Connected Vehicle Security Act, legislation that would codify and expand existing restrictions by prohibiting the importation, manufacture, and sale of connected vehicles (along with the software and hardware that power them) linked to China. It’s the House companion to the bill introduced last month by Sens. Bernie Moreno (R-OH) and Elissa Slotkin (D-MI), and is backed by the United Auto Workers and General Motors. This week, Sen. Eric Schmitt (R-MO) joined as a cosponsor, and the Teamsters became the second union to issue an endorsement.

Two bonus links from the Wall Street Journal:

• China’s Cars Aren’t in the U.S., But Its Auto Parts Are Everywhere

• China Exports More EVs Than Traditional Cars for First Time in April

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ALSO ON CAPITOL HILL

It looks increasingly likely that the Republican-controlled House will, at some point during the next couple of months, vote on the bipartisan, bicameral, labor-endorsed Faster Labor Contracts Act. The legislation would impose binding mediation and arbitration timelines to ensure that workers who vote to unionize actually secure a first contract. Under current law, roughly a third never do.

Last month, Rep. Donald Norcross (D-NJ) filed a discharge petition for the underlying bill, a measure that could force a floor vote if it receives signatures from 218 members of the House. As of this writing, the petition has 214 signatures, and is supported by four of the 17 Republicans who have cosponsored the bill, including Reps. Mike Lawler (NY), Max Miller (OH), Rob Bresnahan (PA), and Brian Fitzpatrick (PA). Four more signatures and Speaker Mike Johnson will be forced to schedule a vote. You can expect the business lobby— which has spent decades making sure those workers don’t get a first contract—to mobilize in full force, urging the other 13 Republicans not to sign the petition. For why they should, read Daniel’s article in Compact back in September: Can Republicans Help Fix Labor Law?

Over in the upper chamber: Sen. Bill Cassidy, chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, is on the ballot this Saturday, facing off against President Trump-endorsed Rep. Julia Letlow and others in Louisiana’s Senate primary. If Cassidy loses, his replacement as the HELP Committee’s top Republican is an open question. Bloomberg reported this week on one possibility: “Though Republican Sens. Rand Paul (Ky.), Susan Collins (Maine), and Lisa Murkowski (Alaska) outrank him, they hold other premium committee chairs, so Sen. Roger Marshall (Kan.), who is close to the president and founded the Senate’s MAHA caucus, could be next in line.” Notably, Marshall is a Senate cosponsor of the Faster Labor Contracts Act…

In Family Policy news: Rep. David Valadao (R-CA) introduced the Supporting Newborn Parents Act, a new tax credit, separate from the child tax credit, that provides up to $2,000 for families welcoming a newborn child and functions as a de facto baby bonus. Read Patrick Brown’s advocacy of a baby bonus at American Compass back in 2024, and read Leah Sargeant over at the Niskanen Center with analysis of the proposed legislation.

THE GOOD, THE BAD, AND THE DYSTOPIAN

Good: U.S. Drug Overdose Deaths Fall for Third Straight Year (Wall Street Journal). “The number of people who died from drug overdoses dropped again in 2025, a promising trend as the U.S. emerges from a national fentanyl crisis that accelerated these fatalities….Drug-overdose deaths have now declined for three consecutive years, falling to levels closer to those not seen since before the Covid-19 pandemic, which intensified the drug-overdose crisis.”

Bad: ‘A’ Grades Are Suddenly Everywhere Since the Arrival of ChatGPT (Wall Street Journal): “The share of A’s in college classes heavy on writing and coding—in other words, work more prone to artificial intelligence use—has grown more significantly than in other classes since ChatGPT’s debut, according to a paper from the University of California, Berkeley, released Wednesday. Professors teaching AI-exposed classes gave out about 30% more A’s and fewer A-minus and B-plus grades.” Not what we hand in mind by technology improving student outcomes…

No, the real effect of technology on students can be found in this New York Times report, Why U.S. Test Scores Are in a ‘Generation-Long Decline’: “Almost everywhere in America, students are performing worse than their peers were 10 years ago…Compared with a decade earlier, reading scores were down last year in 83 percent of school districts where data was available. Math scores were down in 70 percent.”

Ugly: In Kalshi’s quest to monetize “any difference in opinion,” retail bettors on the prediction market platform reportedly lost more than $100 million on parlays in the first four months of this year. Defenders of prediction markets argue that the market price reveals truth more honestly than polls or punditry, because every trader has put money behind their view. Whatever the merits of that argument for binary contracts on elections or Federal Reserve rate-cut decisions, it is hard to see what truth is being discovered in a six-leg parlay with a 0.3% payout probability. A platform for prediction market parlays is a casino with a Hayek quote on the wall—not a source of information discovery. And as in any casino, the house always wins.

FINALLY, SOME GOOD READS FOR YOUR WEEKEND

• The Nobel-Winning Psychologist Who Believed He Found the Secret to Happiness (New York Times): “Maximizers tend to be less satisfied with their decisions and their lives. They are typically less happy, more prone to regret and more likely to compare themselves endlessly with others. Satisficers don’t necessarily have low standards. Their standard is “good enough for me” rather than “the best out there,” and that makes it possible to feel satisfied with their choices, instead of haunted by the ones they didn’t make. This is critical today because chronic maximizing has never been easier…consumer options available to citizens of modern economies exceed those of preindustrial societies roughly by a factor of 100 million. That is an almost incomprehensible multiplication of choice, and it extends well beyond consumer goods into questions of who to be, how to live, where to work and whom to love.”

• The Feed Is Fake (Vulture): That “viral” song, movie, meme, influencer, and celebrity drama was probably the product of a stealth marketing campaign.

Enjoy the weekend!

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In the months since President Donald Trump sent “Border Czar” Tom Homan to de-escalate the situation in Minneapolis, some immigration hawks have feared that the administration is backing off its commitment to large-scale removal of illegal aliens.

Everyone remembers the “Mass Deportation Now!” signs at the 2024 Republican National Convention. But long-time GOP voters also remember decades of betrayals by their own leaders, who talked tough at election time but afterward served the interests of cheap-labor employers.

Sen. John McCain (R-AZ) was notorious in this regard. He led major legislative efforts for amnesty and increased immigration during the George W. Bush and Barack Obama administrations. Yet amid a tough primary challenge in 2010, McCain ran the disingenuous “Complete the Dang Fence” ad.

Does the Trump administration’s turn away from ousted Border Patrol official Gregory Bovino’s enforcement approach mean that “Mass Deportation Now!” was just the 2024 version of “Complete the Dang Fence”?

I don’t think so—though time will tell. What’s certain is that significant reductions in the size of the illegal population are both necessary and eminently achievable. And this reduction can be done without theatrical enforcement sweeps that spur equally theatrical insurrectionary violence, which led to the deaths of two “protesters” and prompted the president to change tactics earlier this year.

Attrition Through Enforcement

Let’s start with numbers. Despite claims of much higher figures, there are probably around 14 or 15 million illegal aliens in the United States—close to half of them let in by the Biden administration.

I’m not opposed to considering amnesty in some targeted cases, especially after we’ve regained control of our immigration system, but the amnesty-centric approach that has shaped so much establishment thinking cannot work. Mass amnesty is unfair to legal immigrants, denies opportunity for low-skilled legal workers, burdens the social safety net, and is a general offense to the rule of law. Most importantly, mass amnesty incentivizes additional illegal immigration and reinforces the sense that our elected leaders prioritize the interests of foreigners over Americans.

So, if we’re not going to legalize most of the illegal immigrants, how do we go about removing them? It’s important to note that there is already significant churn in the illegal population. Even now, there are some new illegal aliens arriving, and even under the Biden administration, some left voluntarily—to retire back home, open a business with their savings, start over after failing here, or protect their kids from our toxic popular culture.

The key is to reduce the number of new arrivals while increasing departures. I call this “attrition through enforcement” rather than the catchier “mass deportation,” but the point is the same: shrinking the illegal population is a process, not an event. Fewer come, more leave, and instead of swelling, the illegal population declines over time.

The first part of this strategy has seen great success since January 2025. Under President Biden, Border Patrol agents were forced to play the role of Walmart greeter to millions of border-jumpers from around the world. Today, I think it’s likely that we have a lower number of unauthorized border crossings than at any point since the nineteenth century.

That doesn’t mean the problem of new illegal immigrants is “solved”—eternal vigilance is the price of border security. Smugglers are ferrying illegals by boat up the California coast before heading to shore, people will always try to enter through legal ports of entry by hiding in cars or using fake documents, and some foreigners admitted on visas will try to stay after their documents have expired.

The bigger challenge is the other half of the equation—maximizing outflow. Here the pithiness of “mass deportation” can lead people astray, causing them to expect the dragnets, roundups, and neighborhood sweeps that many middle-of-the-road voters found so alarming.

The majority of the public still supports “deporting all immigrants who are here illegally”, according to the latest Harvard/Harris poll, but, as my colleague Andrew Arthur notes, “they just don’t want to see or hear much about it.”

To resolve this contradiction, it helps to think of the illegal population as consisting of two groups—public safety threats, and everyone else.

Notice I did not say “criminals.” Virtually every illegal alien is guilty of multiple federal crimes. Crossing the border without inspection is just the start—a misdemeanor on the first offense and a felony on each subsequent attempt. Border-jumpers also have failed to register with the federal government, another crime. Then there’s identity theft and identity fraud, Social Security fraud, tax fraud, perjury (signing an I-9 form for employment when the documents are fake, stolen, or borrowed), re-entry after deportation, failure to depart when ordered to do so, falsely claiming to be a U.S. citizen, and even failing to register for the draft. There is no such thing as an “otherwise law-abiding illegal alien.”

But when voters say they back the deportation of criminals (which even a majority of Democrats support), they’re not thinking about someone who used his brother-in-law’s Social Security number to get a job but rather aliens who threaten public safety. Most illegal immigrants aren’t rapists or murderers, drunk-drivers or drug-dealers; they’re just working stiffs with no right to be here.

The authorities need to approach these two groups somewhat differently. I’ve described the strategies as “body-armor vs. briefcase enforcement,” with ICE-enforced deportations for the public safety threats and self-deportation for the rest.

Regarding the first category, Immigration and Customs Enforcement has a simple approach: arrest them and expel them. Police and sheriff’s departments take illegal aliens into custody every day for state and local crimes, and the fingerprints of all arrestees are scanned and sent both to the FBI and to the Department of Homeland Security. ICE identifies the illegal immigrants (or, sometimes, legal immigrants who’ve committed crimes serious enough to warrant deportation) and sends the locals what’s called a “detainer” notice in order to pick up the perpetrators.

That’s harder than it sounds because about half of illegal aliens live in “sanctuary” jurisdictions that limit communication and cooperation with federal agents. Direct ICE enforcement also requires making sure there’s sufficient detention space to hold them until their deportations can be arranged, pressuring recalcitrant countries to take their own citizens back, arranging for aliens who, for whatever reason, can’t be deported to their home countries to be sent to a third country, and much more.

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The Enforcement Key

In any case, there will never be enough ICE agents to take every illegal alien into custody. That’s where the briefcase enforcement comes in. The overarching goal is to make it untenable for ordinary, non-violent illegal aliens to live here by making them unemployable, unbankable, and unlicenseable. That way they’ll leave on their own.

Job-related enforcement is key. Removing the jobs magnet was the central promise of the Immigration Reform and Control Act of 1986, which traded amnesty for the first-ever ban on employing illegal aliens. In that event, the amnesty came first and the promised “employer sanctions” enforcement mechanism never really happened, leading to today’s record illegal-alien population.

The 1986 law’s requirement that employers check the identity and legal status of new hires was based on a paper system of I-9 forms which were easily evaded with fake or stolen IDs. That’s no longer the case. DHS has used an online system called E-Verify for nearly two decades now, and it’s successfully being used to screen millions of new hires. Yet only about half of new hires nationwide are screened this way because participation is voluntary.

A few states have their own E-Verify mandates, framed as a condition of receiving a business license, but any serious effort to reduce the illegal population has to start with universal use.

Conventional wisdom holds that only Congress can mandate E-Verify use by all employers, and lawmakers routinely introduce bills to that effect—which go nowhere. But it’s possible that E-Verify can be mandated through regulation, and if anyone can challenge the conventional wisdom, you’d think it would be President Trump. Unfortunately, the president does not seem to be a fan of mandatory E-Verify, which may doom his deportation goals.

Yet even mandatory E-Verify isn’t a silver bullet. It’s a vast improvement over a paper-based system, but can still be evaded by illegal workers or crooked employers. Luckily, there are many other ways to deter illegal hiring.

Raiding worksites filled with illegal laborers is one. This tactic blurs the body-armor vs. briefcase distinction, but it’s an important part of any deportation strategy. And in cases of particularly egregious employers, it can expose a whole slew of other law-breaking, as was the case in the 2008 immigration raid of a kosher meatpacking plant in Iowa, where authorities also uncovered widespread child-labor and safety violations.

If an administration doesn’t relish the news coverage that accompanies such raids, there are other options.

Regular audits of employer I-9s can serve as a strong deterrent to illegal hiring. A similar tactic is the use of no-match letters, which the Social Security Administration used to send to employers who submitted payroll information that didn’t match its records (usually because the Social Security numbers were fake or didn’t match the names provided). The problem here is that such letters don’t require any employer action. The key is to pair these notices with instructions from ICE about how employers should respond, and to levy fines or other punishments if they don’t.

De-banking is another option. Banks are subject to know-your-customer rules that make it difficult for criminals and terrorists to access the financial system. But a loophole created in the aughts allows banks to open accounts for people using the illegal-alien IDs that many governments issue (most famously, the Mexican matricula consular). Closing this loophole, which the Trump administration is reportedly working on, would be a major step toward making illegal residence in the U.S. untenable.

Yet another tactic is the levying of civil fines against people who have disregarded deportation orders. There are well over 1 million illegal immigrants who fit this description, and the fines can theoretically amount to almost $1,000 a day, though they’ve never been levied in the past. Now they are, and as an added incentive, they can be waived if the illegal alien uses DHS’s CBP Home app to self-deport.

The Mass Deportation Coalition Playbook details other ways the government can squeeze out illegal aliens short of high-profile sweeps through residential neighborhoods

The upshot is that reducing the number of illegal aliens in the United States requires a whole-of-government approach. Some will be arrested and forcibly removed; more will be persuaded that it’s too risky to remain and leave on their own.

Illegal immigration will never go away so long as America is a more desirable place to live than the alternatives. But we have it in our power to use normal law-enforcement means to reduce it to the level of a nuisance rather than a crisis. The Trump administration has made significant strides, but there will be real progress only with a significant increase in employment-related enforcement. Stay tuned.

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American factories do not regulate emissions voluntarily. Our food processors do not follow safety protocols out of the goodness of their hearts. Yet that is exactly the approach we’ve taken with some of our nation’s most critical infrastructure.

For 30 years, the federal government has asked private infrastructure operators to defend themselves voluntarily against threats that now include the cyber units of hostile foreign governments. Not only is this dangerous in its own right, it leaves security decisions to a diffuse range of institutions who are ill-equipped to carry them out even if they were mandatory.

There are more than 50,000 community water systems in the United States, along with 2,000 municipal electric utilities and 6,000 hospitals. Many of these hyperlocal entities cannot afford one information technology staffer, let alone an entire cybersecurity program. These entities now find themselves on the front line against foreign cyber adversaries.

For just one example, look at the small town of Aliquippa, Pennsylvania, a community of 9,200 located 20 miles northwest of Pittsburgh. On November 25, 2023, Aliquippa became a war target. CyberAv3ngers, an organization linked to the Islamic Revolutionary Guard Corps of Iran, compromised the town’s water system by taking over the controllers that monitor and regulate water pressure. It did so because they were manufactured by the Israeli-owned company Unitronics.

The attack was mostly limited to cyber-vandalism, with the criminals posting, “you have been hacked. Every equipment ‘Made in Israel’ is CyberAv3ngers legal target.” But it revealed that these controllers, which also regulate water contaminants, can be penetrated in ways that reach far beyond simple vandalism. When adversaries breach our water systems in the future, they can expose everyday people to contaminants—or cut them off from water entirely.

The most important things for us in the physical world, including power, health care, and water, are all connected to the digital world as well. The integration of the two is both a great benefit and great risk, as digital attacks can now cause just as much destruction as physical ones.

Geopolitical conflicts have exposed the weakness of U.S. infrastructure security. Much of our water, electricity, and health care infrastructure is operated by private entities lacking both the capabilities and the incentives to prioritize security. While the big decisions are made in executive offices, the costs are paid by towns like Aliquippa. When a hospital fails to prioritize security, it doesn’t just hurt the hospital’s bottom line; it hurts patients. When a water company does the same, it doesn’t just hurt the company’s finances, it puts at risk the men, women, and children who drink, bathe, and clean using the water.

The wars of the next decade will be fought not just against American troops but also against American civilians. What bombs and missiles cannot reach, digital disruption will. Cybersecurity cannot be a line item that operators cut to protect their profit margins. The federal government must shift from the predominantly voluntary approach to cybersecurity to one that holds private owners accountable.

Defining “Critical”

The modern federal approach to critical infrastructure cybersecurity was born with the Clinton administration’s Executive Order 13010 in 1996 and Presidential Policy Directive 63 in 1998, the first of which defined critical infrastructure as that which is “so vital that [its] incapacity or destruction would have a debilitating impact on the defense or economic security of the United States.”

These documents established the voluntary public-private partnership as the standard operating model of security. That model was expanded in 2013 with the Obama administration’s PPD-21 and EO 13636, which divided critical infrastructure into 16 sectors; a framework we use today.

In practice, being designated critical infrastructure by the federal government provides the owners of infrastructure with three tools. The first is access to the federal Sector Risk Management Agency, the second is information sharing through the Cybersecurity and Infrastructure Security Agency, and the third consists of various forms of technical assistance. The designation does not provide any binding security requirement, any enforcement mechanism, or any positive incentive for the owner to absorb the costs of defense.

Of the 16 designated sectors, just three carry mandatory federal cybersecurity standards—bulk power systems, pipelines and surface transportation, and nuclear reactors. In each case, standards were implemented in direct response to a specific crisis: the 2003 Northeast blackout, the 2021 Colonial Pipeline attack, and post-9/11 nuclear concerns, respectively. Even within the energy sector, federal standards apply only to high-voltage bulk systems. The local distribution networks that actually deliver electricity to homes, hospitals, and water plants remain outside federal cybersecurity authority.

For the remaining sectors, including water, health care, food and agriculture, and communications, federal engagement is mostly done on a voluntary basis. Any exceptions tend to be both narrow and contested. For example, in March 2023, the Environmental Protection Agency tried to mandate cybersecurity assessments for water utilities under the 1974 Safe Drinking Water Act. The rule was challenged in court by state governments and water associations, leading the EPA to withdraw it that October—just one month before the CyberAv3ngers hacked the water system in Aliquippa. This is sadly what cyber regulation often looks like in practice: agencies reach back into ancient statutory authorities for powers they were never intended to confer, produce second- or third-best solutions, and hope the courts will let them stand.

This unproductive cycle continued even after the Aliquippa attack. The Biden administration’s National Security Memorandum 22, issued in April 2024, acknowledged that voluntary approaches have reached their limits and directed federal agencies to establish mandatory requirements. But as with other efforts, NSM-22 is not actually binding, and the federal government has continued publishing voluntary frameworks even after its issuance.

The only cross-cutting attempt at legislation, the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA), was passed in March 2022, but its implementation was delayed until at least May 2026. Due to shutdowns and other resource constraints, the rule is likely to be delayed further, and even when finalized it will require only that operators report incidents within 72 hours. It will not require them to do anything that could prevent the incidents from happening in the first place.

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Stepping Up

If these issues were market failures or simply a coordination problem stemming from a knowledge gap among operators, then federal efforts to convene industry and provide technical assistance would likely be enough to correct the problem.

The past three decades show that the problems facing infrastructure are something different. The EPA’s 2024 Inspector General report found that 97 drinking water systems—serving more than 25 million Americans—had critical or high-risk vulnerabilities. The same report found that the EPA itself has no incident reporting system; it relies on CISA. And, per the enforcement data, more than 70% of inspected utilities are in violation of basic security practices, often using default passwords, single shared logins, and active credentials for former employees.

The health care sector is no better. A 2024 ransomware attack against a UnitedHealth subsidiary compromised the protected health information of over 190 million Americans, disrupting $6.3 billion in health care claims in just three weeks. This is not an isolated incident: according to one survey, 67% of health care organizations were hit by at least one ransomware attack in 2024, and affected facilities have seen in-hospital mortality rise 33%. Underinvestment in cybersecurity hurts both the wealth and the health of the American people.

Some threats emanate from lone cyber-criminals, but many others come from much larger and better-funded organizations. The People’s Republic of China (PRC) has been infiltrating U.S. critical infrastructure for years. A 2024 CISA advisory found that a PRC-affiliated group known as Volt Typhoon has been positioning itself in U.S. communications, energy, transportation, and water systems for years. As FBI Director Christopher Wray told the House Select Committee on the CCP, China is preparing to “wreak havoc and cause real-world harm to American citizens and communities” if and when it decides to strike.

These are all symptoms of an underlying problem—operators lack both the will and the means to secure their critical infrastructure to the level necessary to protect the national interest.

Taking Action

Poor infrastructure cybersecurity is a standard negative externality. The operator who under-invests captures the savings, but the costs of failure are paid by everyone. The 2024 attack led to UnitedHealth paying out $3 billion (against annual revenues of roughly $400 billion), but it cost the rest of the health care system more than double that amount in disrupted claims. The Aliquippa water system’s annual operating budget is a fraction of the damages a community could incur if their water supply is poisoned. In no other area of policy would this be acceptable. We are applying a naive approach to our highest-risk industries.

To rectify the problem, we should take three actions at the federal level.

First, implement mandatory minimum cybersecurity standards across all 16 sectors, ideally enforced by a central organization that can cut through duplication and conflict. Yes, regulation imposes a cost, but in this case it will not be a new cost. It is a transfer from the families and patients who currently bear it back to the operators who externalize it.

Second, increase funding to the State and Local Cybersecurity Grant Program, which provides state and local governments with money to fix critical infrastructure, but with broader flexibility to re-allocate funds to privately owned infrastructure when needed. The fragmentation problem is one of resources, and the SLCGP provides aid to local actors who can use their insights to make improvements.

Third, Congress must act. Creative regulatory interpretation—such as the EPA’s 2023 attempt to mandate water system cybersecurity using a 1974 statute—produces ill-fitting solutions that are often struck down in court. Only Congress can authorize new requirements reflecting today’s challenges, and appropriate the funding needed to support them. In short, cybersecurity is national security, and it’s time for a policy vision that takes it seriously.

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By Mick Mulvaney

There was a time not long ago when we had a reasonably clear line in this country between investing and gambling. One was understood to be a productive, regulated activity tied to economic growth and capital formation. The other was entertainment—sometimes harmless, sometimes not—but always recognized for what it was: a wager on uncertain outcomes.

That line is now being erased.

Prediction markets, once pitched as quirky tools for forecasting elections or economic indicators, are rapidly transforming into something far more familiar: sports betting platforms. The overwhelming majority of activity on U.S. prediction markets consists of sports betting, and professional leagues are striking deals with these platforms to capitalize on the trend.

Unlike the sportsbooks that states have carefully legalized and regulated over the past decade, these markets operate in a gray zone—one that is being stretched into outright defiance of state law.

Let’s be plain about it: offering “event contracts” on the outcome of a football game or on how many points LeBron James will score is not financial innovation. It is sports betting. Calling it anything else is a linguistic trick designed to evade the rules that govern gambling in the United States.

Regulatory Arbitrage

Proponents argue that prediction markets are “derivatives,” or financial instruments akin to futures contracts. In legitimate markets, such derivatives serve important purposes: hedging risk, aiding price discovery, and facilitating efficient capital allocation. They are tied to underlying economic activity such as commodities, interest rates, and currencies.

These markets deliver tangible benefits to society. For example, oil futures contracts allow airlines to hedge the risk of volatile fuel costs and sell seats on flights months into the future, giving customers an opportunity to plan their travel. A contract that pays out based on whether America wins this summer’s World Cup is not the same. There is no underlying asset. No hedging function. No connection to economic productivity. There is only a bet—speculation for speculation’s sake.

Yet by framing these wagers as derivatives, prediction market platforms seek to place themselves under the jurisdiction of the Commodity Futures Trading Commission (CFTC) rather than state gaming regulators. In fact, that’s the whole ball game for prediction markets. Federal oversight, in this context, offers a way to bypass state laws governing legal gambling in this country. It is regulatory arbitrage.

This is a clever argument. It is also a dangerous one. If accepted, it means that any company could take what is plainly gambling, rename it as a financial product, and escape the safeguards that states have spent years building. No gambling age minimums, no state tax contributions, no responsible gaming support, and no option for states to keep gambling illegal.

States’ Rights—Until They Get in the Way

In 2018, the Supreme Court struck down the federal ban on sports betting, returning authority over the issue to the states. Since then, most states have moved cautiously, balancing the economic benefits of legalization against the social costs of problem gambling. Some have embraced sports betting, but with guardrails: licensing requirements, tax regimes, advertising restrictions, and—perhaps most crucially—age limits, often set at 21 and over. Others, including my home state of South Carolina, have chosen not to legalize it at all.

That is federalism in action. It is messy but it reflects the values and preferences of different communities. What’s right for New Jersey may not be what’s right for Utah, and that’s okay.

Yet by operating under the banner of federal financial regulation, prediction markets platforms are effectively seeking to legalize sports betting nationwide for anyone 18 and over with no guardrails in place. They are bulldozing established law, and the CFTC is happy to seize the opportunity to expand its authority in a bold regulatory landgrab.

Thankfully, states are pushing back. Attorneys general across the country, 41 in total from both major parties, have expressed opposition to the CFTC’s assertion of regulatory power over sports betting. They see the stakes clearly: if this federal overreach is allowed to stand, states will lose their ability to control gambling within their own borders.

Republican and Democratic AGs alike have sued prediction market operators like Kalshi to stop them from offering sports event contracts. In an extraordinary move, the CFTC is now suing those states, alleging that they are attempting to usurp the agency’s authority. Think about that for a moment. A federal agency, tasked with overseeing financial markets, is now litigating against states to ensure that companies can offer wagers on sports outcomes without adhering to state gambling regulations.

If that sounds backward, it’s because it is. Commonsense Americans of all political stripes can agree that this is an audacious attempt to hijack states’ authority and hand it to the federal government.

A Backdoor to Underage Gambling

There is ample evidence to suggest that prediction markets platforms are targeting those most at risk. Many states have countered by restricting participation to adults, typically those 21 and older. But the platforms say they don’t need to comply, which means that teenagers, who would otherwise be barred from placing a bet with a licensed sportsbook, can still access sports event contracts with relative ease.

The platforms understand their advantage and are now targeting teens. Kalshi and Polymarket, the two biggest companies in the space, are paying teenage influencers to pump out social media content promoting their products and sponsoring clubs on college campuses.

The platforms are marketing themselves in online spaces where younger audiences are highly active. The messaging emphasizes ease of use, quick returns, and the thrill of participation—all hallmarks of traditional gambling advertising, but without the same regulatory constraints. The result is a backdoor to underage gambling.

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A Global Casino

Even President Trump has raised concerns about prediction markets, despite his own agency’s fierce advocacy on their behalf.

“The whole world, unfortunately, has become somewhat of a casino,” Trump told reporters last month. “I don’t like it, conceptually, but it is what it is. No, I think that I’m not happy with any of this.”

The president’s remarks strike at the core of the issue. Under the federal law that governs CFTC-regulated derivatives, the Commodity Exchange Act, futures contracts are supposed to provide some societal value. Gambling for the sake of gambling should not exist on regulated exchanges, but the CFTC has refused to use its authority to reject such contracts, like player props and sports parlays, which do not provide societal benefits.

Some markets offered under prediction platforms may deliver tangible benefits to society, but sports betting is not among them. It’s time for CFTC Chair Mike Selig to listen to the president and rein these markets in. Failure to act risks permanently associating prediction markets with the kind of casino-like behavior the president has criticized.

The House or The Street

Prediction markets firms say they are distinct from licensed sportsbooks because they allow traders to bet against one another, whereas with sportsbooks users bet against the house. Sportsbooks profit when users lose; prediction markets have no skin in the game, they say.

The data tells a more complicated story. A recent Wall Street Journal investigation found that the overwhelming majority of profit made on prediction markets goes to a tiny fraction of traders with sophisticated data and software to optimize their trading.

It may be true that prediction market users aren’t betting against the house, but they are betting against Wall Street shops cropping up to take advantage of amateur gamblers. In fact, some of the easiest pickings for these institutional traders come on sports betting. Michael Boss, a former professional poker player and a statistician by training, told WSJ, “you’re going to find that the easiest money is going to be in sports.”

“Sports has the attention of all the sick young men, I guess,” he added. By “sick,” he clarified, he meant gambling addicts.

A Path Forward

None of this is inevitable, and it doesn’t have to continue. Policymakers at both the state and federal levels have options. The CFTC can and should clarify that sports event contracts fall outside the scope of legitimate derivatives markets.

Congress can step in to reaffirm that such contracts constitute gambling and that it is up to the individual states, not the CFTC, to regulate the practice. States, for their part, should continue to assert their authority, both in the courts and through coordinated action. The fact that 41 out of 50 attorneys general have already spoken out suggests there is broad, bipartisan recognition of the issue. There are already many lawsuits working their way through the courts, and I believe judges will ultimately reinforce the established decisions on sports betting—that it is state jurisdiction.

The public, including consumers, parents, and voters, should demand transparency. If a platform offers what is effectively sports betting, it should be regulated as such. No exceptions and no rebranding. If you agree, write to your representatives and ask them what they are doing to protect your children from underage, unregulated, and unsafe sports gambling on prediction markets.

We already have a framework for regulated gambling in this country. It is imperfect but reflects years of experience and hard-earned lessons about the risks involved. We should not allow that framework to be quietly dismantled through semantic sleight of hand.

The line between investing and gambling matters. It matters for consumer protection, for state sovereignty, and for the integrity of our markets. Right now, that line is being tested. We would be wise to hold it.

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Mick Mulvaney, former Chief of Staff to President Trump, is Executive Director of Gambling is Not Investing, a coalition committed to stopping prediction markets from offering sports event contracts.

But how to get from here to there? Daniel takes a look this week at key steps the administration is taking that don’t necessarily make the headlines, but do position the United States well to win the long-term competition:

President Trump arrives in Beijing next week for a much-anticipated two-day summit with Chinese President Xi Jinping. The commentary in the lead-up and aftermath of the meetings will focus on whether the détente they struck in Busan, South Korea, last October will hold, and whether they will reach an agreement on trade, investment, and other issues of importance, or lay the groundwork for one.

The summit comes at the end of a rollercoaster year for the bilateral relationship. The Trump administration’s tariff regime drove China’s share of U.S. imports down to 7.5%, erasing more than two decades of growth since China entered the WTO. At the same time, Beijing demonstrated the leverage it has amassed in the intervening decades. Trade disputes led to a series of escalation spirals, with each round of U.S. actions prompting Chinese reactions and additional U.S. actions in turn. The hostilities peaked in October, when Beijing tightened export controls on rare earths and permanent magnets, inputs that China dominates in mining and, more decisively, in processing, and that are foundational to the U.S. industrial base. The Busan summit and the ceasefire that followed began a cooling-off period that has largely held since.

To critics, the ceasefire has confirmed a charge that has dogged the administration ever since: that President Trump, for all his first-term trade hawkishness, has gone soft on China. But that charge mistakes restraint for capitulation. Tariffs and industrial policy cannot quickly reverse decades of failed policy that left the United States badly exposed. Climbing back out of the hole will take years. Even for those like us at American Compass who want to decouple sharply from China, a ceasefire that buys time for that work and minimizes the cost of transition is defensible, as long as that work is in fact proceeding as quickly as practicable.

In many areas, beneath the headline drama, it is. We have been documenting the administration’s critical minerals strategy here at Understanding America as it has unfolded, work designed to release China’s chokehold. And in “A Great Wall Around China,” I wrote about the China-containment architecture the administration has embedded in its reciprocal trade agreements to counter Beijing’s industrial overcapacity.

A third front, less remarked upon, runs through the Federal Communications Commission (FCC). The agency’s authority over electronic devices, telecommunications carriers, and corporate ownership disclosure has given it unusual leverage over China-related risks, and, over the past year, it has used that leverage.

In December, the FCC barred all foreign-made drones (overwhelmingly made in China) from receiving the equipment authorization required to enter the U.S. market, and in March, it did the same for foreign-made routers. Companies can apply for conditional approval by submitting a credible plan to anchor production in the United States. Drones and routers are sectors in which U.S. supply chains have grown deeply dependent on Chinese hardware, and in which a sudden cutoff would have functioned the way the rare-earth squeeze did last fall. Without the FCC’s action, drones and routers could have been the next rare earths. Instead, Skydio, the leading U.S. drone maker, has just announced a $3.5 billion investment to accelerate R&D and expand manufacturing.

The agency is also rebuilding the system that authorizes the sale of electronic devices in the United States in the first place. During peak globalization, the FCC had begun recognizing labs from anywhere. The predictable result was that Chinese labs, many owned or controlled by the Chinese government, came to handle around 75% of the testing for U.S. electronics, from drones to phones to baby monitors. Rules adopted last year and a proposal advanced in April will bar labs owned or controlled by foreign-adversary governments from testing and certifying U.S.-bound electronics, and labs in countries that do not extend reciprocal treatment to American testing will lose recognition. China, predictably, has not—and will not—sign a reciprocity agreement, as it prohibits any foreign-based testing. An evenhanded reciprocity does the explicit work; deconcentration from China does the rest.

The agency has also moved to bar Chinese state-owned carriers from the domestic U.S. telecom market, voting in April to issue a notice of proposed rulemaking that would prohibit them from operating data centers and points of presence in the United States and bar U.S. carriers from interconnecting with them. And in January, the agency finalized a disclosure rule requiring nearly every license and authorization holder in the U.S. tech, media, and telecom sectors to certify whether they are owned, controlled, or directed by a foreign adversary, with Chinese ownership of as little as 10% triggering disclosure. The rule builds a public map of where China’s leverage in the American technology stack actually sits.

Taken together, the FCC’s actions form a coherent program. The agency can, and likely will, use the drones-and-routers tool against any sector in which Chinese supply concentration creates the kind of leverage Beijing exercised last fall. The lab rules harden the gate through which devices enter the market in the first place. The telecom action targets legacy footholds. The disclosure rule provides transparency to identify the next pressure points.

Across critical minerals, trade agreements, and the work at the FCC, China containment is advancing on multiple fronts at once. The work is real, and the work can hold. But as Oren warns in the Times, a grand bargain would undermine all of it. — Daniel

DATA BUMP

The April jobs report released this morning delivered a surprisingly strong number, with payroll employment up 115,000 atop the 185,000 increase last month. Those are relatively healthy numbers in any environment—for instance, choosing ranges that exclude the COVID disruptions, the first three years of the Trump administration averaged 178,000 new jobs per month and the last two years of the Biden administration averaged 146,000 jobs per month.

But as Understanding America readers know better than anyone, we must calibrate job figures during the second Trump administration to the unprecedented reductions in prospective workers caused by rigorous immigration enforcement. AEI’s Stan Veuger and Brookings colleagues Wendy Edelberg and Tara Watson estimate, “in the second half of 2025, breakeven employment growth of 20,000 to 50,000 jobs each month was consistent with immigration flows. That number could dip into negative territory over 2026.” Adding 300,000 jobs in a couple of months against that backdrop is remarkable.

Kudos to Ben Casselman at the New York Times, though, for coming up with this downbeat assessment of an unemployment rate holding steady at 4.3%: “looking out a couple more decimal points, the unemployment rate edged up from 4.26 percent in March to 4.34 percent in April.”

Meanwhile, in the manufacturing sector: “Manufacturing sector labor productivity increased 3.6 percent in the first quarter of 2026, as output increased 3.3 percent and hours worked decreased 0.4 percent. In the durable manufacturing sector, productivity increased 5.3 percent, reflecting a 5.4-percent increase in output and a 0.1-percent increase in hours worked. … Unit labor costs in the total manufacturing sector increased 2.4 percent in the first quarter of 2026, reflecting a 6.1-percent increase in hourly compensation and a 3.6-percent increase in productivity.”

GOOD READS FOR YOUR WEEKEND

In the New York Times, Ross Douthat writes about Slouching Toward Kamala Harris. “The Democrats’ fundamental condition is a late-Trumpian stasis—in which the president’s stark unpopularity encourages his opponents to imagine that they can keep everything basically as it was in the Biden era, with the same broad priorities and deference to activists and interest groups, and float back to power automatically.”

The Wall Street Journal tells the story of The Secret Team Blowing Up Ford’s Assembly Line to Make a $30,000 Electric Truck. “Then they attacked Ford procedures and mandates the team deemed obsolete or even nonsensical. Field described one such rule. All Ford vehicles must be built with a slight lip above the opening to prevent rain from spilling in the window when a driver or passenger cracks it to smoke a cigarette. Nicknamed “smokers window,” it added aerodynamic drag, costing battery range. The new truck won’t have it.”

This is a long one, but if you’re interested in the Department of Justice indictment against the Southern Poverty Law Center, Bits About Money has the details on what the non-profit was doing and its, um, rather poor fit with our nation’s laws is fascinating: Notes on a Non-Profit Indicted for Bank Fraud.

Politico has a great profile of U.S. Trade Representative Jamieson Greer, “The Man Trying to Make Trump’s Tariffs Go on Forever.” It’s a story of the past year’s trade policy too. “He’s secured nine agreements on reciprocal trade so far, deals that trade lawyers say are thorough and gain significant concessions for the U.S.” And it has a great ending:

Of course, one person who loves tariffs is the president. “Almost every day I’m in the Oval Office,” Greer told a crowd at the Whirlpool factory in Clyde, Ohio. “And almost every day, President Trump says, ‘Do you think the tariffs should be higher, Jamieson?’”

“We’re working on it, sir,” he replies.

DEFICITS EVERYWHERE

Trade deficits, budget deficits, logic deficits, oh my… Michael McNair has an excellent essay, “A Surplus of Confusion About America’s Deficits,” that comprehensively rebuts Maurice Obstfeld’s recent argument, “Don’t Blame America’s Current Account Deficit on the Dollar.” Michael Pettis comments on the exchange:

Investors, business managers, workers, policymakers and even the IMF (albeit kicking and struggling) increasingly understand the adverse impacts of large, persistent trade imbalances driven by wage-and demand-suppressing policies, even if it will still be many years before mainstream economists do. The latter seem ideologically averse to any explanation of global imbalances that don’t conclude with calls for more fiscal and wage discipline in the US.

That said, fiscal discipline remains an enormous problem here in the United States, where the national debt now officially exceeds gross domestic product. Of course, that’s an entirely arbitrary marker, but it’s notable that this was the case during only two other years in American history, 1945 and 1946, which you may recall followed after some rather extraordinary one-time expenses.

Will AI help us dig out? Of course, if we suddenly see 10% annual GDP growth, debt and deficits will quickly become a thing of the past. In more likely scenarios, it will contribute some to growth, but not fundamentally change the fiscal picture. Unless, that is, AI itself becomes a significant source of government revenue.

Back in 2017, Bill Gates famously proposed a “robot tax.” Today, the talk is instead of a “compute tax.” See the Wall Street Journal: “What Is a ‘Compute Tax’ and Why Is the Idea Gaining Traction?” These taxes are generally framed and pitched as a way to slow automation or account for the negative externalities associated with rapid job displacement. In other cases, the goal is redistributive: if the AI companies are going to capture all the economic value, let’s collect some of that and mail it out to everyone as a “universal basic dividend.”

But framing automation as a bad thing outright, or telling people its benefit accrues to others and they just get a handout, is neither the right way to think about technological progress nor the right way to sell it. Rather, we should think of AI as a productive force that can help to serve the common good. If a data center cranking through gigawatts of electricity on hundreds of thousands of GPU processors can participate productively in the economy, we can choose to allocate some share of that value toward public goods: better roads, higher pay for teachers, solvent social insurance programs, even as we close our deficits, then reduce our debt, then begin lowering the tax burden on workers… if that were AI’s promise, one imagines the public might be more enthusiastic.

In the Journal, economists offer the usual complaints. “If you ask economists, most of them think this is unnecessary or too blunt,” says one. But any tax, evaluated in isolation, looks bad. If the income tax, or the corporate tax, or the payroll tax, or the sales tax didn’t exist and you proposed it, economists would presumably say the same thing. (Absurdly, organizations like the Tax Foundation actually evaluate taxes without considering how the revenue would be used or what the effect on debts and deficit would be, so all taxes automatically score as unwise and simply eliminating all taxes is predicted to deliver the strongest economy.) The reality is that we need tax revenue, indeed more tax revenue than we collect now. AI’s role as a tax base thus deserves serious consideration.

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DO YOU WANT THE GOOD INDUSTRY NEWS FIRST, OR THE BAD NEWS?

The bad news? OK. “Storied Toolmaker Closes Its Last Hometown Plant—and Blames Its Tape Measures” (Wall Street Journal). While economists will continue to insist that globalization is an inevitable and productive consequence of “comparative advantage” and the relentless pursuit of efficiency gains and economic growth, looking under the hood often reveals the simple laziness of corporate executives doing things like shutting down American production because they installed a machine that prints one-sided tape measures in Connecticut and one that prints double-sided tape measures in Thailand, and people like the double-sided ones better.

But here’s some good news: “Apple Explores Using Intel and Samsung to Build Main Device Chips in the US” (Bloomberg). The economics is important here, but so is the symbolism. Apple’s move away from Intel as the latter fell behind on mobile chips in the 2000s is the inflation point in the latter’s decline. Apple considering a return is a turnaround few would have envisioned until very recently.

Speaking of which, let’s check in on Intel’s stock price since the United States purchased 433 million shares at $20.47 per share in August.

Trading above $125 as of midday Friday, the U.S. government is up about $45 billion. For reference, the entire cost of CHIPS Act support to the semiconductor industry is about $53 billion.

Now look, does this prove that equity investments like these are a good idea? Obviously not. It’s fun, though, to think about what the folks opposed to industrial policy would be saying if Intel were declaring bankruptcy today. One suspects they would consider the case study highly valuable in assessing whether such policy can work.

BACK TO THE LABOR MARKET

If you can’t get a job at Intel, “These Are the Hiring Hot Spots Where College Grads Are Landing Good Jobs” (Wall Street Journal). Birmingham, Alabama is number one. Tampa, Florida is number two. The diffusion of economic opportunity across the United State is one of the most important economic trends to watch, and one where signs continue to be positive.

Also in the Journal, an especially clear articulation of a point we make frequently at American Compass about automation. As Oren put it in Two Cheers for Automation: “A factory that automated half the steps in the production of 10,000 widgets sounds like one poised to eliminate half its jobs. But a factory that trained its workers to produce widgets twice as fast sounds like one poised to double its output to 20,000 widgets daily.” In the Journal’s reporting:

Spotify Technology co-CEO Gustav Söderström puts the choice companies face like this: They can translate productivity improvements right away into cost savings by trimming staff. Or, “the other thing you could do is to say we’re going to be roughly the same amount of people—we’re just going to do more.”

Spotify is doing the latter: “We’re keeping our head count roughly flat and just doing much more shipping, more value to consumers,” he said.

Business leaders risk missing out if their use of AI is overly focused on efficiencies, said Nickle LaMoreaux, chief human resources officer at International Business Machines.

“In your leadership discussions, are you having this idea of moving from AI to productivity to AI to growth?” she said in a recent interview. Though it is hard to predict how many people IBM will employ three years from now, “if I had a crystal ball,” LaMoreaux said, it would be “more.”

That said, the headline here is odd: “AI Is Forcing CEOs to Make a Stark Choice: Lay Off Workers or Make Them Do More.” Rising productivity does not mean “making workers do more.” It means with the same effort they can produce greater output. The actual choice is between “lay off workers or grow their companies.” That is indeed a stark choice, but it shouldn’t be an especially hard one.

In the Financial Times, Gillian Tett writes, “Humans Still Matter More Than AI in Finance.” Expect to see versions of this story a lot over the next year:

A few months ago a New York financier told me he had just experienced a “first”: his 2025 summer interns “were the first true AI natives I have seen”. This meant they had grown up not only among digital tech, but AI too.

So how did it go? He winced. While those wannabe masters of the universe initially seemed wildly impressive, when senior financiers later probed their ideas they found them alarmingly shallow.

Consequently this person’s company made fewer return offers and is now focusing less on graduates in science, technology, engineering and mathematics — and more humanities students instead.

KIDS THESE DAYS

Speaking of the humanities, this is good news: Florida Creates a More Conservative U.S. History Course to Rival A.P.,” (New York Times). Get this: it “recommends a textbook written explicitly to build patriotism.”

Congratulations to Clare Morell on winning a Christian Book Award for The Tech Exit! In “The Christian Book I Didn’t Know I Was Writing,” she reflects on how she “had worked deliberately not to write a ‘Christian book’” although it “did arise from my Christian understanding of the world, of what children are, what true freedom is, what human dignity requires, and the purpose for which human beings are ultimately made.”

And finally, read Clare’s new blockbuster report from the Ethics and Public Policy Center: The Impacts of Digital Technology on Human Relationships: How Smartphones, Social Media, Pornography, and AI Chatbots Threaten Sex, Marriage, and Fertility.

Enjoy the weekend!

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The World Trade Organization’s meeting earlier this year in Yaoundé, Cameroon, confirmed what has long been obvious: the organization is under increasing pressure—especially, albeit in very different ways, from its two largest members, the United States and China—to the point where it risks becoming merely a bystander in the emerging global reorganization of trade.

This should not come as a surprise. The WTO was organized in 1995 to enforce a set of global trade rules, but investors, businesses, and policymakers in recent years have become increasingly skeptical of them and of the wider organization. This is not because rules are unimportant, but because the rules themselves have become disconnected from the economic realities they were meant to govern.

The economic purpose of trade is to enhance global welfare. In a well-managed trading regime, countries should expand the value of their exports mainly to maximize the value of their imports. The former means shifting production to where it is most efficient, while the latter means converting higher domestic production into greater global demand.

This, however, is not the world we live in. For decades, a number of large economies have used rising exports primarily as a way of externalizing weak domestic demand, which itself resulted from industrial policies designed to expand domestic manufacturing, usually by shifting the associated costs onto the household sector. Because more production is incompatible with less demand, these countries balance the two by running trade surpluses and acquiring foreign assets in exchange for exports.

While this is the textbook definition of mercantilism, it has also been perfectly acceptable under WTO rules governing trade. It is not only direct trade policies that affect trade—any industrial or financial policy that shifts income from the household sector to subsidize the manufacturing sector can do so. Whether financial regulators control the direction of credit allocation in the banking system, or repress deposit and lending rates; or when labor officials impose restrictions on the ability of workers to unionize or migrate; or when policymakers subsidize production, research and land sales; or when local government officials overspend on logistical infrastructure—these actions might not seem like forms of trade intervention, but all of them can boost production relative to consumption, creating domestic imbalances which in turn result in trade imbalances. There is, after all, no meaningful distinction between trade policies and industrial policies, and the latter are often far more effective in distorting trade than the former.

But WTO rules address mostly the former—with rules on most-favored-nation dealing and national treatment, and limits on tariffs and quantitative import restrictions—while largely sidestepping the latter. That is why the organization risks becoming irrelevant as the global economy loses its tolerance for mercantilist surpluses. When the rules restrict some trade-distorting policies but allow others that result in even more serious trade distortions, it is hard to see what purpose the rules serve.

While these trade distortions have been in place for decades, they were largely ignored by the WTO and rest of the world so long as countries like the U.S., the United Kingdom, and Canada—driven by misguided economic theory and the interests of their financial sectors—were willing to accommodate the surpluses of economies like Japan, Germany, China, and South Korea. The three anglophone economies absorbed most of the imbalances in the form of rising household and fiscal debt, stagnant wage growth, and deindustrialization.

For a time, this arrangement appeared stable, but only because the costs were concentrated and politically underappreciated. But the wider system was always unsustainable. This is the point British economist Joan Robinson made all the way back in 1937, when she warned that at some point major deficit countries would become unable and unwilling to continue accommodating what she was the first to call “beggar-thy-neighbor” trade surpluses.

When that happens, she wrote, the system must adjust, usually in disruptive ways. If surplus countries refuse to boost domestic demand, “the burden of unemployment upon any country which refuses to join in the game will become intolerable, and the demand for some form of retaliation irresistible”. In that case the deficit countries will intervene in their own trade and capital accounts to reduce the extent to which their domestic demand leaks abroad.

It should be noted that in Robinson’s day credit expansion was still constrained by the gold standard, which is why she described beggar-thy-neighbor surpluses as a way of exporting domestic unemployment. Since the breakdown of Bretton Woods, however, deficit countries can replace demand exported to trade surplus countries with demand generated by rising debt. Thus, the cost of these deficits no longer comes mainly through rising unemployment but instead through rising household and fiscal debt and a shift in production out of manufacturing and into services.

Our current global trading system seems to have arrived at the point Robinson predicted. The breakdown of consensus around globalization is not primarily due to a recent rise in protectionism, as is often claimed, but rather the consequence of a system that has failed for decades to contain destabilizing imbalances, and whose harmful effects are increasingly becoming recognized.

The WTO, in other words, has presided over a global trading system in which some major economies have gamed its rules by implementing aggressive—but nonetheless WTO-compliant—industrial and financial policies that boost domestic manufacturing competitiveness at the expense of domestic consumption. These countries then externalized their weak domestic demand by exporting excess production to the rest of the world. The rules have been followed, but the outcomes are increasingly problematic.

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For the WTO to remain relevant in a world where deficit economies no longer want to absorb global imbalances, it must radically rethink its purpose. This means recognizing that trade imbalances matter, and that rather than regulating a limited number of trade practices, the WTO should work to constrain the imbalances themselves. Put differently, the objective should shift from implementing regulations to ensuring that outcomes are consistent with a stable and sustainable global system.

The WTO can begin by recognizing which imbalances are benign or even beneficial, and which are harmful to the global economy. In the former case, when saving in advanced economies is directed toward productive investment in developing economies, the former’s trade surplus can lead to a welcome rise in global output and welfare. These are the kinds of imbalances that reflect efficient capital allocation and genuine development needs.

But other forms of imbalance do the opposite. When surplus economies recycle excess savings into economies like the U.S., where investment is constrained by weak demand rather than scarce saving, the result is not higher global growth but rising debt, asset bubbles, and/or higher unemployment. These are not coincidental, they are central features of a beggar-thy-neighbor trading system.

That is why the WTO must shift its focus. Rather than enforce an arbitrary set of rules, it should prioritize welfare-enhancing outcomes. This means greater scrutiny of persistent trade surpluses, coordination on exchange rate policies, and more consideration of the distributional effects of domestic trade policies.

It also means acknowledging that domestic imbalances in one country often reflect opposite imbalances in other countries. Put another way, it means recognizing that industrial policy in a country that controls its external accounts becomes industrial policy in reverse among its trade partners that don’t, whether or not the latter approve of those policies.

Why not abolish the WTO altogether, as many skeptics propose? The reason is because an optimal global trading system is not a fragmented market in which large economies hide within their borders and smaller economies look to find protective shoals. It is one in which global productivity is maximized through the expansion of global trade, but within a regime in which individual economies cannot use trade to externalize the cost of their domestic policy distortions.

This is what John Maynard Keynes proposed at Bretton Woods in 1944. He argued that instead of trying to identify and prohibit the wide variety of trade and industrial policies that create beggar-thy-neighbor surpluses—an impossible task—we should contain the surpluses themselves, because these are the mechanisms by which countries force the costs of their distorted policies onto their trade partners.

The WTO, in other words, must become an institution focused on results rather than processes. It must concern itself with the overall health of the global trading system rather than a limited set of rules. If it fails to do so, it risks becoming little more than a bureaucratic relic—one that endlessly debates procedures even as the system it was meant to govern fragments around it. In a world increasingly defined by strategic competition and persistent imbalances, WTO’s relevance will depend not on its adherence to rules for their own sake, but on its ability to ensure that global trade actually delivers broadly shared economic benefits.

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The problem with market fundamentalism is not so much its principles as its lack of any. Yes, yes, we’ve all heard about “the knowledge problem,” “public choice,” and “the invisible hand.” But while, miraculously, in every case some long-ago sage has already proved exactly what the fundamentalists want to believe, those insights never extend to situations where they might rather believe something else.

Policymakers cannot possibly be expected to develop reforms that would strengthen markets, you see, and even if they could, the legislative sausage-making process ensures that what comes out will make things worse. Unless the subject is tax cuts, in which case elaborate tax reform plans should definitely be Congress’s focus. Likewise, notwithstanding the boogeyman of “industrial capture,” the time is always right for another 5,000-page trade agreement.

And while the fundamentalists never cease to amaze, it will be difficult to improve upon National Review’s latest cover story, by David Bahnsen, on “The Next Supply-Side Battle.” Bahnsen, you’ll recall, delivered a 30-minute, straight-to-camera soliloquy earlier this year for a National Review podcast responding to my New York Times essay on financialization. The argument that Wall Street’s leveraged buyouts and hedge-fund speculation do not create value, or indeed are economically counterproductive, was “utter juvenile insanity,” he said, “too stupid of a view for any grown adult,” and “absolutely mind-numbingly stupid.”

Surprisingly, then, though it’s not really surprising at all, Bahnsen and his National Review editors wish to call your attention to “the greatest threat to economic productivity” in this country: a group of highly paid professionals pursuing profit in a way they consider unproductive. “Excessive legal costs, the prevalence of frivolous lawsuits, and the fear of legal action all massively impede pro-growth decision-making,” the cover story reads. “Legal reform must become the next cause of the supply-side movement. Our economic well-being depends on it.” What follows is an in-depth case for policymakers to rewrite the rules of our court system on behalf of businesses beset by frivolous litigation.

How big is the problem? “The direct costs of tort expenses can be quantified through settlements, disclosed payouts, jury awards, defense legal fees, and insurance costs. A conservative estimate places the annual cost above $500 billion.” But settlements, disclosed payouts, and jury awards are transfers of assets from one party to another, not direct economic costs. Where they are warranted, the work of defense counsel facilitates that process and improves market incentives. Insurers would create value in that context as well. It’s true that “when corporate America wastes money defending itself against predators and charlatans — money that could be put to productive use — the invisible opportunity costs are immense,” but when corporate America acts responsibly because it knows a system exists to turn back on them costs they might try to impose on others, the invisible gains are immense too.

Unfettered by the bonds of consistency, Bahnsen flips his own argument against financial regulation on its head. Before, he observed how well the American economy was performing, especially compared to peers. “Who are these countries that are out-competing us, that are more resilient than us, that are more innovative than us?” he asked on his podcast. “I want to know who’s eating our lunch.” Now, he finds much to learn from other countries, especially seeing as our economy “has fought stagnation and subpar economic growth for nearly 20 years.”

Likewise, his frustration with unproductive litigation leads him to call for “bad actors” to be “properly ostracized” as “parasites and thieves.” But that’s only for someone else’s profession. When it comes to his own, investment management, “the idea that we want to demonize those in the financial services, it has all kinds of neo-Marxian flair, but it is economically disastrous.”

Any good market fundamentalists would presumably retort that financial markets are “private,” profit-driven activities where the invisible hand can work its magic, while lawsuits involve the heavy hand of the state. But that’s not quite right. The kind of tort litigation that Bahnsen laments is a centuries-old feature of the common law, and in fact falls under the heading of “private law,” alongside disputes over contract and property. If I sue you, I am claiming that you owe me something, whether it be payment for services or a duty of care in operating your business. I demand to be made whole. The lawyer providing me the service of representation contributes to GDP just like your private equity executive charging ten times the fees for below-market performance.

Our court system is constituted by the law to adjudicate these private claims, just as our markets are so constituted to facilitate private transactions. And of course, those markets only work with the backstop of recourse to those courts. The legal proceeding is an effort to determine who owes what and, if you cannot reach agreement amongst yourselves, the final decision rests with a jury of your peers. (Ironically, one of Bahnsen’s proposals is to create panels of experts to make these decisions instead, to which one can only insert a quizzical emoji.)

An entire academic field called “law and economics” seeks to configure legal procedures and substantive norms of liability to create the most efficient incentives for all parties. Each party can inevitably claim to be a vital contributor to greater prosperity for all. The plaintiff’s lawyer, who insists that his willingness to bring any case deters unfair practices by unscrupulous businesses, precisely parallels the high-frequency trader who explains that he is “providing liquidity” and the corporate raider who is “disciplining management.”

The most obvious proof that the litigation-finance contradiction cannot be squared is the rapidly growing field of, well, “litigation finance.” Alternative asset managers now raise funds to “invest” in lawsuits, giving law firms the backing to pursue a case and claiming a share of any favorable judgment. Individual “investments” run in the tens of millions of dollars and the “asset” class as a whole is headed past $20 billion.

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Is this excessive litigation (boo, squash it), productive litigation (how to tell?), or finance (yay, so much value creation)? Once everyone acknowledges that a certain kind of litigation is among the many ways to generate profit without creating value, there is no getting around the fact that the financing of litigation represents the same. Nor is ambulance chasing the singular form of unproductive economic activity.

Distressed debt investors are pursuing favorable proceedings in bankruptcy court. Paul Singer’s Elliott Management famously used legal processes to force bond payments by the Argentinian government. Private equity firms bought emergency-room staffing companies in hopes that surprise medical billing would remain legal. Hedge funds buy and sell shares in companies involved in pending mergers, betting on whether the deals will get approval. Investment banks engineer derivatives so that everyone can gamble on each other’s loans.

In the real world, even the most ardent market fundamentalist is left with two lines he must ask policymakers to draw, because the market offers no answer. First, economy-wide, which activities actually create value, and which aim merely to extract it? Second, within the courts, which cases have merit and which do not, and what legal framework best selects for one but not the other? Surprisingly, but not really a surprise at all, Bahnsen’s solution is a range of policy reforms that he has sudden confidence in himself to advocate and politicians to implement.

I should say, I agree entirely about the problem of litigation finance and the need for tort reform broadly, though my diagnosis and remedies would be somewhat more cognizant of the enormous imbalances favoring large corporations today. But the real difference is that I believe these kinds of problems are important to consider across economic contexts, while market fundamentalism is premised on insisting that they don’t exist, except when they do, and that nothing can be done, except when it must.

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Tim Cook stood inside Apple’s newest Shanghai store, the second-largest Apple Store in the world, and was explicit about the company’s bargain with China. “There’s no supply chain in the world that’s more critical to us than China,” he told China Daily. Apple’s relationship with Chinese suppliers, Cook said, was almost 30 years old. “We’ve been building up and investing more and more.” That was in March 2024.

Two years later, in April 2026, Apple announced that Cook will hand the CEO title to John Ternus on September 1. As executive chairman, Cook will, in Apple’s words,
“assist with certain aspects of the company, including engaging with policymakers around the world.”

Cook was right about the supply chain. Every multinational operates by some government’s permission. Apple’s problem, under Cook, is that it became entirely dependent on China’s goodwill. The Chinese Communist Party has declared technology a national project, not a market handled by private companies alone: at the 2022 Party Congress, President Xi Jinping told delegates that China must “resolutely win the battle in key core technologies.” Apple sits at the center of that battle.

The result is that Apple now operates as two different companies—one in the United States, where it speaks freely and uses every lever that democracy allows, and one in China, where it complies, stays silent, and ships what Beijing approves.

Strategy Risks, a firm that quantifies corporate exposure to China for institutional investors, ranked Apple as tied for second with Carrier Global, an air conditioner manufacturer, among 250 of America’s largest companies for China exposure, behind only Ford. The ranking was weighted across supply chain, alleged forced labor exposure, partnerships and politics, and regional risk. Cook has made this a part of his legacy.

Cook arrived at the company in March 1998 as senior vice president of worldwide operations. Apple nearly went bankrupt the year before; Steve Jobs had recently returned as interim CEO. Jobs had already tried building computers in-house at his previous company, NeXT, and watched the costs eat it up. Cook’s job was to make sure Apple did not repeat that failure.

Cook soon closed Apple’s high-cost, company-owned plants in California, Singapore, and Ireland, sold off factory inventory, and moved production of the iMac to contract assemblers in Asia who could spread their overhead across many clients, lowering costs.

Beginning in 1996, Hon Hai, the Taiwanese assembler the world would come to know as Foxconn, built a campus in Shenzhen large enough to house, feed, and employ a quarter of a million workers. After Apple shipped the iPhone 4 in 2010, a Foxconn complex in Zhengzhou—an inland provincial capital of roughly 10 million people—was scaled up over the next several years into what the industry came to call iPhone City. At peak, it produced roughly half of the world’s iPhones.

Patrick McGee’s book Apple in China shows that Apple did not merely move its supply chain to China, but effectively built China’s electronics industry. McGee argues that Apple ended up “sending thousands of engineers across the Pacific, training millions of workers, and spending hundreds of billions of dollars.” By 2005, he writes, Jobs understood that Apple could not easily unwind the system Cook had built.

Cook drove the strategy and won the internal disagreement with Jobs, who had long believed Apple should build its own products. McGee reports that Apple invested $275 billion in upgrading Chinese suppliers between 2016 and 2021.

Compare that to the U.S.’s CHIPS and Science Act, passed by Congress in 2022, which authorized $52.7 billion in spending over five years. A single American company, Apple, invested more than five times the act’s total—but in China, not the United States.

In October 2019, Cook became chairman of the advisory board of Tsinghua University’s School of Economics and Management. The board is one of the venues the Chinese state uses to stay close to foreign business, and its honorary chairs are often senior Communist Party officials. The appointment was announced as a three-year term, and Cook has continued to appear at the board’s annual meetings.

He also attends the China Development Forum, Beijing’s annual gathering with foreign CEOs. During his March 2024 trip, Cook told China Daily that he supported Xi Jinping’s economic doctrine called “new quality productive forces”—the campaign for China to lead in chips, artificial intelligence, and advanced manufacturing. Cook called it “essential” and “the future.”

Cook has said, in his own words, how he handles all this. In July 2017, Apple removed dozens of virtual private network apps from the Chinese App Store at Beijing’s request. VPNs are how Chinese citizens reach the open internet—how they get around the Great Firewall, the state system that blocks foreign news, social media, and search engines, and monitors what people say online. Apple’s compliance closed one of the largest doors to escape China’s surveillance state.

On Apple’s earnings call that August, Cook defended the decision: “We would obviously rather not remove the apps, but like we do in other countries, we follow the law wherever we do business.”

Four months later, Cook went further. In December 2017 he traveled to China to keynote the World Internet Conference, the Chinese government’s annual showcase for its model of a censored, state-controlled internet. Speaking afterward at the Fortune Global Forum in Guangzhou, Cook defended the appearance: “From my American mindset, I believe strongly in freedoms. They are at the core of what being an American is, and I have no confusion on that. But I also know that every country in the world decides their laws and regulations.”

This is a false equivalence. China is an authoritarian one-party state. The Chinese Communist Party is not elected and is not accountable to its citizens. American laws are written by an elected Congress, debated in courts, and challenged by a free press. Chinese laws are issued by a party that does not allow any of that. To treat the two as equals—as Cook does—is to treat compliance with Beijing’s censorship and surveillance demands as morally identical to complying with the U.S. tax code.

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In a 2018 keynote in Brussels, Cook told an audience of privacy regulators, “we at Apple believe that privacy is a fundamental human right”—more than a year after Apple removed dozens of VPN apps from the Chinese App Store, the tools Chinese citizens used to escape state surveillance. For Cook, privacy is a fundamental human right in Brussels. In Beijing, he treats it as a regulatory matter.

The same pattern holds for forced labor. In July 2020, Cook told Congress: “Forced labor is abhorrent. We would not tolerate it at Apple.” Four months later, the Washington Post reported that Apple was paying the lobbying firm Fierce Government Relations $90,000 to lobby on multiple bills, and that congressional staffers said the company was working against provisions of the Uyghur Forced Labor Prevention Act, the bill aimed at blocking American companies from importing goods made with forced labor from Xinjiang.

I have reported from Xinjiang, and I have written a book about the monstrosity the Chinese state has built across that region—one of the most technologically sophisticated police states in history, complete with concentration camps and an AI surveillance system called “Sky Net.” The Chinese state also runs coercive labor-transfer programs that move Uyghur workers from Xinjiang into factories across the country. Investigations by The Information, the Tech Transparency Project, and the Washington Post have linked Apple suppliers to those programs. Apple denied the findings.

Since then, Cook’s posture has held, and yet Apple has not been rewarded. Apple’s iPhone sales in mainland China fell 24% in the first six weeks of 2024, according to Counterpoint data reported by Reuters. And Apple’s China revenue declined through much of 2024 and 2025.

But falling sales do not give Apple an exit. JP Morgan estimates that roughly 95% of Apple products are still assembled in mainland China and Taiwan; nearly half of Apple’s top 200 suppliers have facilities there. Even if Apple loses Chinese consumers it still needs Chinese factories.

The leverage Cook handed Beijing shows up most clearly in AI development, where Apple is being shut out of the Chinese market in plain view. Apple Intelligence runs on American iPhones. It does not run on iPhones in mainland China. Chinese rules require generative-AI services offered to the public to obtain regulatory approval. In February 2025, The Information reported that Apple and Alibaba had submitted co-developed AI features for approval by China’s Cyberspace Administration. The approval has yet to come.

Under China’s regulatory regime, AI systems are tested against roughly 2,000 sensitive questions touching Tiananmen Square, Taiwan, Xinjiang, and challenges to Communist Party authority. The Apple Intelligence that Chinese citizens will eventually use is the version that, to no surprise, refuses to discuss the same points that Cook himself has refused to discuss.

One could argue this is good for the United States—that being shut out of China’s AI market will force Apple to consolidate at home. It would be, if that were Apple’s choice. But it is not. Apple is not retreating from the Chinese AI market. It is partnering with Alibaba to build a censored version of Apple Intelligence that Chinese regulators will probably accept.

This is the quagmire that new CEO John Ternus inherits, and it cannot easily be undone. An iPhone has hundreds of components, and the suppliers, engineers, and trained workers who make and assemble them are concentrated in China. India and Vietnam, which handle final assembly, cannot replicate that ecosystem at the precision the iPhone requires.

The most valuable American consumer-technology company now operates, in the strategic technology of this decade, under the permission of an adversarial police state. The supply chain Cook built was once seen as Apple’s greatest achievement. Now it has become its chain.

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American Compass’s “Cost of Thriving Index” emphasizes that even as particular products and services get cheaper, making ends meet can become harder if you need new or different products and services to participate fully in American life. A wireless plan has been a quintessential example. Yes, the inflation data shows a declining cost every year for having that amazing computer in your pocket. It keeps getting more advanced. It can transfer more data than ever. But that’s a chunk out of the family budget that simply didn’t exist in a prior generation. You can be “better off” in one sense, and find life unaffordable in another, simultaneously.

But… once something does become established in a baseline budget, it’s great to see the price come down. A report from the wireless industry (yes, it’s an industry report, but the data seem reasonable) highlights the real decline in the cost of a phone plan (even as data usage rises) and, most importantly, its declining share of household budgets.

As AI tools become integrated into everyday life—and their cost in at least the short- to medium-term may rise substantially—it’s worth thinking about the effect that will have on household economics. From the perspective of inflation, there will be no price increase relative to a pre-AI baseline. Your wages go further than ever! But if paying large sums for AI access becomes important to participating in everyday life, or succeeding in the competitive races that our schools and workplaces inevitably become, the result will be economists insisting that life has never been better while families feel more squeezed than before.

And because this apparently needs clarifying, “rising cost of flying to France for a wedding” is not what “squeezed” means. Much has rightly been made of the bizarre New York Times story, “These Couples Wanted to Have Children. Rising Costs Are Stopping Them.” One couple, living in a 2,000-square-foot house that probably cost about $500K “realized that even with one child, they would most likely need more space…”

For a second couple, “the decision not to have children came down to the life they’ve built and what it would take to change it. Married in 2023, they have shaped their relationship around exploring new places together, such as Japan, Bali and Morocco.” You see, “A flight to France for a wedding in September cost them $1,600 round trip. … With a child, they added, going to that wedding would have been more difficult and meant fewer trips this year.”

The third couple, two women, were confronted by the high cost of in vitro fertilization. Let’s put that one aside for a moment.

In none of these cases are “rising costs” the obstacle. The home our first couple seems to own has four bedrooms and three baths, which kind of, by definition, is enough space for one child, or two, or three. Likewise, “we’d rather go to Bali” is a lifestyle choice, not a constraint on achieving economic security in the American middle class. It’s good to tell these stories because everyone should be aware that attitudes like these exist, and perhaps even are prevalent. It’s bad that these couples are hiding behind the very real challenges faced by so many American families, as a way to justify their obvious preference for not having kids. (But galaxy brain, maybe it’s good that these couples feel the need to hide their preference because that means our culture still imposes some negative judgment on such prioritization, and what’s bad is that the Times wants to help them get away with it.)

Definitely bad, while we’re here: The GOP hiding behind the affordability crisis to justify its preference for… a capital gains tax cut: “Republicans Eye Capital Gains Tax Cut to Ease Voters’ Anxieties” (Bloomberg). I am speechless. — Oren

LET’S START WITH SOME GOOD NEWS FOR ONCE

As Commonplace’s Drew Holden reminded us in a recent essay, “Cities Really Can Just Enforce the Law.” The latest example: San Francisco’s BART. Since spending $90 million to install non-jumpable fare gates, crime has plummeted and the need for intensive maintenance to address rider-caused damage is down about 99%. As Aakash Gupta notes, the real return on investment isn’t from getting people to pay their fares. “The $10 million in recovered fares is the smallest line in the return. Fare revenue used to cover 70% of BART operations. After the pandemic it collapsed to 22%. The gates won’t fix that gap directly. They fix the precondition for fixing it: a system that office workers, families, and tourists are willing to use again. Ridership growth at stations with new gates outpaced ungated ones before the rollout finished.”

There is so much low-hanging fruit available to policymakers in simply enforcing the law and fixing the preconditions for fixing our communal problems. And voters will reward them for it.

For even more optimism, read Ivana Greco on, well, The Case for American Optimism. “I was recently talking about a friend about reasons to be optimistic about America, and Lisa came to mind. The fact that she’s been driving around with a carseat for decades is an incredible testament to the amount of love and care she’s poured into other people’s lives.”

GOOD NEWS IN AN UNLIKELY PLACE: FINANCIALIZATION

Maybe one reason we’re in a good mood this week is the remarkably wide range of positive stories coming from the overfinancialized economy this week in the Wall Street Journal. We’ve got:

• U.S. Senators Vote to Ban Themselves From Trading on Prediction Markets. “A representative for Sen. Bernie Moreno (R., Ohio), who introduced the resolution, said the rules apply to senators, officers and staff.”

• Saudi Arabia Pulls Funding From LIV Golf. Its Star Players Face a Painful Road Back. LIV “paid exorbitant fees to put on tournaments with lucrative purses featuring elite players such as Bryson DeChambeau and Jon Rahm. … And one thing has already become clear: The mainstream golf world isn’t ready to simply welcome them back.”

• Bill Ackman’s Stock-Picking Fund Drops 18% in Trading Debut. “Billionaire investor sought to harness his social-media following to attract everyday investors.”

Meanwhile, in the House of Representatives, Chairman Jason Smith had some tough talk for hospital CEOs in his opening statement at a Ways & Means Committee hearing: “Simply put, hospitals are charging an insane amount for care. Hospital prices have skyrocketed 300 percent in just over two decades—more than any other sector of our economy. Hospital consolidation and mergers, that lead to ever-growing market power, are fueling the borderline extortionary prices hospitals charge patients.”

And finally, the Roosevelt Institute published a nice paper on financialization, complementing many of the arguments Oren advanced recently in his New York Times essay: What Is “Financialization” and What Is It Doing to Our Country?

GOOD READS FOR YOUR WEEKEND

Self-recommending from Brian Potter at Construction Physics: How an Oil Refinery Works

Scott Bessent is the Wall Street Journal weekend interview: Donald Trump’s Economic Engineer

A wonderful essay from Brad Littlejohn at Commonplace: The Economics of Vice

In the New York Times, Craig Fuller writes: Truckers Kill More Than 5,000 People a Year. Regulators Are at Fault:

In the Financial Times: What is a city without children?

And for your listening pleasure, Congressman Riley Moore joins Teamsters President Sean O’Brien on his Better Bad Ideas podcast: Can a Republican Be Pro-Union?

And with that, on to the bad news.

WHERE BETTER TO START THAN TECHNOLOGY?

The Wall Street Journal has the best look yet at the unintended consequences of Chromebooks in schools, “How YouTube Took Over the American Classroom.” A few of the anecdotes:

“When [his mother] signed into his school Google account, she was aghast: Her son Ben had accessed more than 13,000 YouTube videos during school hours from December 2024 through February 2025, according to viewing data she provided the Journal.”

“YouTube during snack time, dismissal and indoor recess. YouTube to teach drawing to first-graders. YouTube to read a book to class.”

“A second-grader in New York watched more than 700 videos in two months during school hours, including one featuring pole dancing. A tenth-grader in Oregon scrolled through more than 200 between 9 and 11:40 a.m. on March 6.”

“In Ben Warren’s science class, nearly all educational content has been on the iPad: instead of live science experiments, the teacher showed a YouTube video. ‘Everything is a simulated experience,’ the now-eighth grader says. ‘I would rather use paper and pencil. It’s easier to focus.’”

“YouTube sought to close the 80 million-hours-per-day viewing gap between school days and weekends, according to a 2016 document entitled ‘YouTube edu opportunities’: ‘Increasing usage in schools M-F could decrease this gap!’”

Just read the whole thing. And then call your superintendent. Because…

New York Times: “In Backlash Against Tech in Schools, Parents Are Winning Rollbacks.” See, look at that, even in our bad news section we’ve got good news this week!

Of course, another area where we’re now seeing robust pushback is data-center construction. The idea that we’d slow development and deployment of this revolutionary technology is driving the accelerationists and efficiency hounds mad. But read Tonya Nickol, writing in Commonplace about why “Data Center Proposals Rock Trump Country.” Nickol and her neighbors live in a rural area going through one of these fights… look at things from their point of view and see which, if any, pro-data-center arguments you’d still find convincing.

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JENSEN HUANG HAPPY HOUR

A rough week for our leather-jacketed friend, so sidle up to the bar.

SHOT: Jensen on the BG2 podcast last fall: “They also publicly say, and rightfully I believe they believe this, that they want China to be an open market. They want to attract foreign investment. They want companies to come to China and compete in the marketplace and believe that. I hope, I believe, and I hope that would return to that in our context. Answering your question, what do I see in the future? I do hope because they say it—their leaders say it. And I take it at face value. And I believe it because I think it makes sense for China that what’s in the best interest of China is for foreign companies to invest in China, compete in China, and for them to also have vibrant competition themselves.”

CHASER: “China Bans Meta’s Acquisition of Manus on National Security Grounds” (Wall Street Journal). As Friend of the ‘Stack Chris McGuire explains:

Ultimately, this is a much larger defeat for the Chinese AI ecosystem than for the United States. Meta will be fine without Manus. But Chinese nationals looking to found AI companies will increasingly just start them overseas. The message from the Chinese government here is that every AI company founded in China will forever remain subject to Chinese government regulatory pressure and manipulation, regardless of its legal status or location.

Lastly, given the Chinese government clearly believes that the US and Chinese AI ecosystems should be completely separate, we should stop helping their ecosystem succeed!

SHOT: Also last fall, Jensen told Bloomberg, “Of course, over the years people have speculated about diversion. We chase down every single concern and we’ve repeatedly tested and sampled data centers around the world and found no diversion.”

As Senators Jim Banks and Elizabeth Warren noted in a March letter to Commerce Secretary Howard Lutnick, Jensen has also said previously that “there’s no evidence of any AI chip diversion” and “the important thing is that the countries and the companies that we sell to recognize that diversion is not allowed and everybody would like to continue to buy Nvidia technology. And so they monitor themselves very carefully.” In his proud tradition of condescending non-sequiturs, he has also argued that smuggling Nvidia chips is impossible, because “these are massive systems. The Grace Blackwell system is nearly two tons, and so you’re not going to be putting that in your pocket or your backpack anytime soon.”

CHASER: Epoch AI has a new paper: “How much AI compute has been smuggled to China? We estimate between 290k and 1.6M H100-equivalents by the end of 2025 — representing ~20% to ~60% of China’s total compute.”

The line between vigorously pursuing profit for your company and lying on behalf of the Chinese Communist Party is not a thin one. We should reasonably expect American executives to remain on the right side of it.

SPEAKING OF CHINA, LET’S TALK ABOUT CHINA

With the planned Beijing summit between Presidents Trump and Xi less than two weeks away, it was very encouraging to see “Senators Introduce Bipartisan Bill to Ban Chinese Vehicles and Auto Parts” (NBC). The press release from Senators Bernie Moreno and Elissa Slotkin announcing the bill is notable for the supporters quoted: a Democrat, a Republican, the United Auto Workers, General Motors, and American Compass.

In the House, meanwhile, “Lawmakers Urge Trump to Prohibit China’s Automakers From Building Cars in the U.S.” (Wall Street Journal). This letter was signed by more than 70 Democrats. Speak up, House Republicans!

And good for the FCC: “US Telecom Agency Votes to Expand Tech Crackdown on China” (Reuters). Did you know that electronics made in China could be tested in Chinese labs to win U.S. approval? In fact, the majority of all U.S. electronics are tested in China? No longer!

And the global realignment proceeds apace... on critical minerals, where “Trump Admin Touts 27 Mineral Deals in Bid to Counter China” (Politico). A particularly good case study of the ongoing efforts comes from Malaysia, where the Wall Street Journal reports:

The Pentagon’s push to get its hands on the rarest of the rare-earth elements leads all the way to this small port city in Malaysia. Here, Lynas Rare Earths, an Australian company, has begun pumping out heavy rare earths, the elusive kind that China dominates. “No one had made a separated heavy rare earth outside of China in 20 years,” said Amanda Lacaze, Lynas’s chief executive. The company’s chief operating officer, Pol Le Roux, said it had actually been 30 years. When China cut off exports of heavy rare-earth elements during trade tensions last year, automobile factories in the U.S. and Europe were forced to stop production. Now, Lynas is at the vanguard of an effort by the U.S. and allies to prevent Beijing from using its monopoly power to squeeze the rest of the world. The Pentagon is opening its wallet in unusual ways to ensure supplies. In March 2026, Lynas announced a preliminary $96 million deal in which the Pentagon would purchase Lynas’s rare earths.”

Back on this side of the globe, “The US Geological Survey (USGS) has identified an estimated 2.3 million metric tons of undiscovered, economically recoverable lithium in the Appalachian region. This volume is equivalent to 328 years of US lithium imports based on 2025 levels.”

…and in Europe, China is unhappy with the EU’s rising barriers, according to the Financial Times: “China has warned the EU that it will take ‘countermeasures’ if its companies are hurt by a proposed new European law aimed at bolstering the bloc’s industry against cheaper imports. The law is one of the EU’s most serious attempts yet to push back against Chinese high-tech imports and their perceived threat to important local industries, such as automotives.”

Enjoy the weekend!

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Small towns are often defined by what they are not. They are not overcrowded, not overly industrialized, and not dominated by large corporate development. Instead, they are places where neighbors know each other, where families settle down for peace, stability, and a manageable pace of life.

Trenton, Ohio is one of those places. Located in southwestern part of the state, not far from JD Vance’s birthplace of Middletown, people are drawn to Trenton because it still feels personal—not yet overtaken by the large-scale development that defines bigger cities. Many families can trace their origins in the town back several generations.

That’s one reason opposition is so strong to a massive proposed data center in the city that will be used to power artificial intelligence. Area residents—myself included—are intensely skeptical of the project and don’t feel our voices are being heard either locally or nationally.

The data center, to be developed by California-based Prologis, will span 220,000 square feet and use 250 megawatts of electricity. But it’s not just the size of such projects that’s an issue, it’s the speed at which they’re being developed. Even while news of this massive project is rocking Trenton, another data center has been proposed over in Hamilton, just eight miles away. That one, proposed by a company named Logistix, could use another 240 megawatts if the developers have their way.

The rapid proliferation of these projects at the local level is why there are now efforts to ban data centers larger than 25 megawatts statewide in Ohio. It’s an issue that pits President Donald Trump and his administration against many of his biggest supporters. Trump is a big backer of both data centers and AI, which he says will create jobs and keep the United States ahead of China in a global development rate.

But that’s now how things feel to us. “I support President Trump, but I don’t support this,” is a common refrain around Trenton. For us, the town is more than just a point on a map or an investment opportunity, it’s a place shaped by the generations of families who have built their lives here. For just one example, take Marla and Michael Gorman, who are the sixth-generation owners of a local farm. The couple told news station WCPO they were offered $75,000 per acre for 110 acres of land by a data center developer last year. While that totals to a nearly eight-figure sum, they turned it down, saying they want to preserve what they already have.

Our community is built around local schools, small businesses, and community events. There’s the Barn-n-Bunk farmer’s market where my older kids are hoping to work this summer, the annual Pickin’ in the Park bluegrass festival, and a July 4th celebration held each year called Let Freedom BOOM. Neighborhoods are not just collections of houses, they are places where families put down roots and children play outside. You can still see plenty of farmland, open fields, and wooded areas easily, which are threatened by the massive new development built for a purpose—AI—that many locals are also not sold on.

AI entrepreneurs like Sam Altman and Elon Musk say the technology can be used to cure cancer or eliminate poverty, but what we see so far in our daily lives is much less promising.

“It’s creating a world where we don’t know if we can trust what we’re looking at,” David told me. An interviewee named Judy added, “my feed has been absolutely swamped with ridiculous AI-generated images.” Another local, Willard, works in programming and worries about being replaced by a bot.

“AI is going to ruin our future children’s perspective on the world,” a resident named Cassie told me.

My concerns hit closer to home. I have lived in the unincorporated community of Overpeck, Ohio for the past two years, just three miles from the proposed Trenton data center. Overpeck is quiet, with a small public school and a peaceful, rural atmosphere. It is the kind of place where families move to escape from noise and industrial expansion. My family chose to live here because of the strong local schools and clean air—especially important because I have five children at home, including one who suffers from asthma.

Now, that sense of security feels uncertain. Despite living only minutes away, I fall just outside Trenton’s city limits, which means I do not have a vote or a voice in decisions about the data center that could directly affect my family. “I live three miles away. My kids breathe the same air,” I keep thinking, “but I don’t get a say in what happens here.”

Concerns about the data center go far beyond politics or simple resistance to change. For many locals, including myself, the issue begins with health and environmental safety. With children who already struggle with asthma, even small changes in air quality can have serious consequences. I do support growth, but not at the cost of my kids’ health.

This concern is echoed by others in the community. Ashlynn, one of the residents I spoke with for this piece, expressed fear about contamination risks, worrying about environmental damage from the facility. “We are not stewarding our land with respect for wildlife,” she told me.

Other residents focused on infrastructure and economics. Wayne, a heavy equipment operator who has worked on data center construction projects, explained to me that data centers consume massive amounts of electricity and water, saying that “the grid gets pushed hard.” He warned that if infrastructure upgrades aren’t fully paid for by the developer, locals often end up footing part of the bill, and said that “99% of the work is temporary construction,” leaving few long-term jobs once the center is complete. Prologis says it will cover the cost for power upgrades and all utility costs, but many Trentonians remain unconvinced.

Leann, another interviewee, worries about noise pollution from the data center. “Are people going to be able to sit outside and talk?” She asked. “Open their windows? Listen to the birds?”

Growth Versus Long-Term Cost

While developers emphasize economic growth and job creation (Prologis says the Trenton project will create 140 jobs and bring in $120,000 a year in utility fees), many residents are skeptical about whether those benefits will truly stay within our community.

The Trenton area is largely conservative, and I and many other residents support Trump, who won nearly 63% of the vote in surrounding Butler County. Having Vance hail from our region is another tie that we have to the administration. But the proposed data center reveals a divide that is not strictly partisan.

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Technology is already deeply integrated into everyday life, and it is reasonable to ask whether rapid expansion is actually needed now or is being driven more by ambition and greed than by necessity. As I see it, the issue is not opposition to new technology itself, but concern about the speed and scale at which it is growing. Yes, existing data centers already power the many online tools we use today, but that doesn’t mean we have to sign on for unlimited construction of new projects, especially when so many questions remain about how these massive projects will impact our town.

Ashlynn, for example, questioned whether increased reliance on AI will truly improve people’s lives, or if it mainly benefits large corporations which are headquartered in other states.

Other residents like Wayne and Leann were less focused on the role of AI itself and more concerned with direct impacts from the data center project. Even if technological expansion is accepted in a general sense, many residents are not convinced that this project is necessary—or worth the cost to our community.

Overall, I’d estimate that 98% of the people I spoke with oppose the new data centers, with only an occasional comment about new jobs weighing in their favor. A lot of people in town still don’t know about them at all, but when they find out, the most common reaction is, “I don’t want this.”

In recent months, opposition to the project has become more organized. Community members have begun signing petitions calling for delays, additional environmental studies, and greater transparency. One petition specifically calls for a moratorium on data center development until detailed evaluations can be completed regarding water usage, energy demand, farmland preservation, infrastructure strain, and public health risks.

While the Trenton planning commission has approved the center there, locals still hope the Ohio statewide ban being discussed could go into effect in time to halt it. In Hamilton, a feasibility study of the development has been paused, and there is optimism that the center can be canceled or at least built with more input from the people who live there.

Together, these efforts show a community that is not clinging to the past but actively trying to regain a voice in decisions that will shape its future. In some places, though thankfully not here, resistance has even turned violent, as people confront what seems to them like an existential crisis.

What Residents Want

Many Trenton residents say they actively want growth, just of a different kind. Trenton is already home to industrial facilities such as a Duke Energy substation and a MolsonCoors brewery. Some older factories in the area have closed and are in disrepair. Ashlynn suggested reusing that existing infrastructure and repurposing land that has already been developed, saying that we should take what’s already there and make it useful again. Wayne wants to see community-centered projects such as a park or sports complex, “something families can use.” Leann emphasized the need for “something more realistic and reasonable,” reflecting a desire for balance rather than outright rejection.

Data centers are often justified as essential for expanding AI development and digital services, but from a local perspective, that reasoning can feel distant at best when our community will face a massive new drain on electricity and, potentially, noise and environmental pollution while also losing green space.

The proposed data center is more than a construction project. It is a decision that will shape the identity and future of this community. For me, that reality is deeply personal. I chose this area because it was quiet, safe, and healthy. Now, I am faced with the possibility that all of that could change without my having any real say in the outcome.

This is not just about a building. It is about how a community defines itself, who gets a voice in that definition, and what is ultimately valued more—growth or preservation.

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The issue of federalism has once again emerged in public debate as the Trump administration and industry allies push for national regulation of artificial intelligence platforms that would preempt state laws. While there is certainly a precedent for federal preemption and a national standard may sound promising when it comes to emerging technology, allowing states to operate as laboratories of democracy may still help us arrive at better outcomes, especially when they are working from a shared set of principles.

Two attempts were made at federal preemption last year, the first failing in a 99-1 Senate vote last summer and the other being withdrawn from the National Defense Authorization Act after strong opposition by the public. President Trump then released an executive order, “Ensuring a National Policy Framework for Artificial Intelligence,” and the White House issued a federal AI policy framework last month outlining the administration’s legislative priorities.

The new document, intended to provide scaffolding for congressional legislation, delivers on the administration’s promise for a “minimally burdensome” national standard. It outlines specific yet minimal protections for children, communities, and creators while also prohibiting censorship, prioritizing innovation through things like regulatory sandboxes, and promoting workforce readiness by incorporating AI into education.

Controversially, the order concludes with a renewed call for Congress to “preempt state AI laws” in order to ensure a “national standard consistent with these recommendations, not fifty discordant ones.” The reasoning here is familiar to those who have followed the debate. White House AI Czar David Sacks has repeatedly argued for federal preemption by citing a “patchwork” of state AI policies that threatens technological innovation and would put us behind adversaries like China. According to Sacks, the introduction of “1,200” AI-related state bills this year is an indication of “50 states going in 50 different directions.”

If that were the case, federal preemption would certainly be useful (provided, of course, that preemption set a floor and not a ceiling for state-level children’s safety and consumer protections). However, while the U.S. should certainly promote technological innovation and national security, Sack’s characterization of the state AI policy landscape is flawed, and the urgency of federal preemption is overstated.

According to an Institute for Family Studies survey, a consensus among states appears to be emerging about the kinds of issues and concerns Americans want addressed when it comes to AI. As indicated by the significant overlap across the states, Americans want lawmakers to prioritize AI policies that ensure inquiry, humanity, transparency, safety and security, and accountability.

To start, the number of bills introduced is not indicative of the state of AI regulation. Last year, for example, only 136 of the proposed 1,136 bills became state law. And only 26 of those regulated private AI use or development.

To gain more clarity on the state-level AI policy landscape and thus the need for federal action called for by the Trump administration, the IFS report surveyed and identified such laws enacted between 2023 and 2025. According to the report, only 276 AI-related laws were enacted over those three years. This number may seem large, but the overwhelming majority of these laws only address AI in general ways, such as appropriating funds for AI-related research, creating task forces to establish policies around AI use by government employees, or clarifying that existing child pornography laws also include AI-generated content.

Only 33 of the 276 regulate the development or use of AI tools by private businesses, the issue on which the White House is most concerned. This is a far cry from the thousands of bills cited by Sacks or a “burdensome” patchwork that threatens to undermine America’s AI leadership. Here’s how the states are following the principles mentioned above.

Inquiry

Between 2023 and 2025, 39 states enacted laws that invested in AI-related research. Such laws include million-dollar appropriations to state flagship schools such as the University of Wyoming, the establishment of research centers like the Rhode Island Life Science Hub and the Sunshine Genetics Consortium, the creation of committees like Tennessee’s AI Advisory Council and West Virginia’s Task Force on Artificial Intelligence, and the authorization of state agencies to create policies for AI use.

These policies indicate a shared appetite for an increased understanding of AI, which is especially important as public trust remains one of the greatest hurdles to the technology’s acceptance. (According to an NBC News Survey, Americans hold a lower opinion of AI than of Donald Trump, Kamala Harris, or Immigration and Customs Enforcement.) Inquiry is also important because AI technologies remain opaque, even to chief developers and engineers, some of whom have described AI as “alien biology.”

While the Trump administration’s AI framework would not necessarily prevent states from pursuing AI research, it’s important that states retain as much freedom as possible so as to build safer tools and greater public trust. Such freedom allows for a variety of research approaches and projects, including the kinds that could help protect consumers and children—which voters desperately want. Additionally, investments in universities and research centers are likely to counterbalance the rapid pace and insularity of frontier AI safety labs, with longer-term academic research yielding deeper understanding and trust.

Humanity

A majority of states have also enacted legislation aimed at protecting the dignity and humanity of Americans from AI-related harms. Such laws address everything from companion chatbots and deepfakes to personal rights and automated decision-making tools used in health care or employment. Whether it’s the Texas Responsible Artificial Intelligence Governance Act (TRAIGA) that prohibits AI products from encouraging harm, self-harm, and other illegal activity, Tennessee’s ELVIS Act that includes one’s voice as a protected personal right, or the 23 states that have updated child pornography laws to include AI-generated material, states repeatedly demonstrate a will to protect Americans from abuses of AI that threaten their dignity and humanity.

To be sure, some of these laws have drawn criticism from the Trump administration and its pro-accelerationist allies. For example, Colorado’s Artificial Intelligence Act (CAIA) will create, amongst other things, extensive reporting requirements for an AI product’s disparate impact and discrimination risks when used in high-risk contexts such as hiring. According to AI policy expert Dean Ball, the requirements of this particular law are overly broad and vague and will be incredibly burdensome for AI developers. Moreover, there is concern that such laws, if enacted in states with large populations like California or New York, will have an outsized impact on the market, establishing a de facto national standard.

Indeed, CAIA and other “woke” blue state laws are amongst the chief reasons the Trump administration wants a federal standard. However, no enacted state laws approach AI regulation with a breadth that comes close to that of CAIA, which itself has yet to go into effect and is in the process of being revised. Instead, most state-level automated decision regulation is fairly narrow.

For example, a Maryland law enacted in 2025 prohibits AI-driven recommendations from being the sole basis for denying, delaying, or modifying health care services. At least six states have enacted similar laws. Moreover, these kinds of laws are not limited to blue states. Red states such as Texas, Utah, Nebraska, Arkansas, and Florida have passed laws regulating the use and development of commercial AI to ensure that these tools do not replace human judgment.

At their best, these laws reinforce Americans’ desire for tech design that ensures people are treated with dignity. While the White House is right to be worried about overly broad regulations such as CAIA, the administration’s push for a “minimally burdensome” framework and opposition to red state laws such as Utah’s HB 286 and Florida’s AI Bill of Rights indicates a laissez-faire approach that is out of step with Americans’ desire to protect their humanity.

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Transparency

A number of states have also enacted what are commonly referred to as “transparency” laws. From 2023 to 2025, at least ten states enacted 19 such laws requiring risk assessments, safety protocols, and disclosures for AI developers and deployers. For example, laws such as California’s AI Transparency Act and New York’s RAISE Act require AI developers to publish safety protocols and mitigation strategies for serious harms and catastrophic risks (defined as either 100 serious injuries or $1 billion worth of damages).

In Utah, a new law requires businesses using consumer-facing AI to disclose that the tool is not human. Other states have enacted transparency requirements for the use of AI by government (e.g. TX HB 149) or health care professionals (e.g. IL HB 1806).

Again, some of these laws have faced criticism for creating burdensome reporting requirements or insufficient protections. Nevertheless, they convey that American citizens want to understand the risks of these products and desire to protect users, which ultimately can bolster public trust in AI tools.

Safety, Security & Accountability

Americans want AI to be safe and secure. Between 2023 and 2025, states enacted a host of laws addressing safety and security concerns. For example, two states—Kansas and Oregon—enacted laws prohibiting the use of AI products owned or developed by a foreign corporate entity or country of concern. At least five states have expanded data privacy laws with respect to AI.

On the safety front, 38 states now regulate the creation of AI-generated deepfakes, including deepfake political ads, intimate images, and child sexual abuse material (CSAM). These laws create civil and criminal penalties for bad actors who misuse generative AI, establishing a critical mechanism to address AI-related dangers, especially for child victims.

Eight states have enacted AI chatbot safety laws. Some of these laws simply require the disclosure of a chatbot’s non-human status. But others, like California, New York, and New Hampshire, require that companion chatbot developers establish protocols preventing the bot from encouraging suicide and self-harm. New Hampshire and California’s laws also prohibit chatbots from engaging in sexually explicit conduct with minors. And Texas’s TRAIGA prohibits AI chatbots from engaging in or encouraging self-harm, harm to others, or any otherwise illegal behavior.

As with other areas of online safety, liability is critical for AI—not just for individual bad actors who dispense deepfake sexual imagery without consent, but for the companies whose products facilitate harm. A number of the laws create liability for AI product developers, especially when it comes to chatbots harming minors.

A number of the state-level concerns are reflected in the Trump AI policy approach. Indeed, the administration’s framework is at its strongest when prioritizing children’s safety regulation, especially its recommendation for age assurance requirements, along with its commitment to national security. However, these priorities must be realized through legislative language that creates real accountability for tech companies and adequate protections for users, absent any loopholes or carveouts for industry.

The emerging AI policy consensus from the states offers a critical foundation for the AI regulation Congress and the Trump administration should consider at the federal level. Such consensus is not a repudiation of the need for any federal preemption. While many states are addressing similar concerns in similar ways, the exact language and requirements of these laws do in fact vary. A federal standard will almost certainly become necessary for the sake of clarity and consistency, and the implementation of such preemption is not outside the ordinary course of action for Congress.

With that said, the specifics of federal preemption matter greatly. When it comes to emerging technologies like AI, an overly broad preemption could be counterproductive, stifling states’ ability to respond to unforeseen challenges and harms. As laboratories of democracy, the states play a critical policy role, providing test cases for different approaches and thus allowing federal lawmakers to determine which are most effective and where there is the greatest consensus.

At best, a federal standard should address not only the shared concerns of Americans as reflected in state-level policies; it should also establish narrow preemptions that create a floor, not a ceiling, for regulation that allows states to adapt to new challenges. As we venture further into the artificial intelligence age, the laboratories of technology will continue to need all 50 laboratories of democracy if AI is to be governed by the people and for the people.

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As manufacturing employment continues to lag, economic optimists have pointed to health care as a way to replace those jobs, often at similar or even higher salaries. Yet major structural barriers related to both gender and class will make this a difficult transition—if it can be carried out at all.

The Wall Street Journal, for example, reported earlier this month that health care, and nursing in particular, will become the “surefire new path to American prosperity” over the next decade, promising six-figure salaries and excellent benefits. In some respects the article is right: health care is projected to account for a huge share of job growth, especially for the working class. However, the picture it paints is incomplete.

Since the early 1980s, the United States economy has lost over 7 million manufacturing jobs. These positions have largely been replaced by jobs in service industries and especially health care, which is now America’s largest employment sector and only stands to grow in the future.

By my estimates, health care will account for roughly 35% of all job growth between 2025 and 2035. That growth is driven primarily by demographics: Baby Boomers are now elderly, increasing demand for health care services through sheer numbers alone, and they are retiring with significant wealth and generous Medicare benefits. Meanwhile, government and private industry are pouring over $200 billion into health care research every year.

WSJ is correct that nursing jobs are among the best in this growing sector: providing good wages, stability, and solid career prospects. But two important structural barriers complicate the picture of nursing as a model for prosperity. The first is gender, and the second is class.

The Gender Problem

Only 20% of health care jobs are held by men, a fact that matters enormously when considering what types of employment the sector is being tasked with replacing. Manufacturing, historically, was the primary source of middle-class jobs for workers without college degrees, and it was overwhelmingly male. Shifting to a health care-driven economy is therefore not a simple transition. It is a gendered one, coming at a time when men are less likely to pursue higher education than their female counterparts and workforce participation rates among men are declining.

Home health aid is the fastest-growing occupation in the United States, expected to add 740,000 jobs over the next ten years. This is a field that carries a strong female occupational identity, but given the projected increase in demand, employers must boost recruitment efforts to meet the needs of the workforce.

While high-profile efforts have been made to recruit racial and ethnic minorities into these fields, there are virtually no national initiatives aimed at getting more men into direct care work. This stands in sharp contrast to the sustained policy efforts that brought more women into male-dominated STEM fields. The federal government, as well as philanthropic and corporate funders, have made recruiting women into engineering and science jobs a national priority. The absence of any parallel effort for men in health care is telling.

Male representation in professional nursing has grown modestly, from roughly 5% in 2000 to between 11-15% today. But men remain a small minority, and male enrollment in nursing educational programs has plateaued in recent years. One initiative in Oregon—“Are You Man Enough to Be a Nurse?”—featured highly masculine imagery aimed at rebranding the profession by making men more visible. There has been no formal evaluation of the program, but my sense is that it was not particularly successful.

Research suggests that men resist entering female-coded occupations not because few men are visible in them, but because the skills associated with the work are perceived as feminine, particularly direct patient care. Trying to change the public face of health care jobs like nursing does little to address that perception.

Instead, a better rebrand could showcase the opportunity for traditionally masculine skills to flourish: emphasizing the technical dimensions of modern nursing such as medication management or the use of complex machinery. Men who enter nursing tend to gravitate toward disciplines like anesthesia that require technical skills. Evidence also suggests that men are drawn to these jobs when they can see genuine recognition and advancement potential—not simply when they are shown that other men do it. We must emphasize that health care jobs like nursing are stable and well-compensated.

Not only that, men who enter female-dominated fields like nursing are often disproportionately rewarded. The “glass escalator” effect—in which men are more likely to be promoted and tend to earn higher salaries than their female counterparts—is well documented. Research I conducted found that male nurses are more likely than females to become supervisors. This is the kind of messaging that might draw more men into the field: not that nursing is gender-neutral, but that it offers men promising career trajectories.

However, there is an important caveat. The glass escalator effect may not hold if a significant number of new men stream into the health care profession. As more men enter the field, they are more likely to be slotted into relatively low-paying positions that compare poorly with the manufacturing and transportation jobs that once anchored working-class male employment.

My research found that among men without college degrees, those employed in health care rank near the bottom in marriage rates. This suggests that these jobs, as currently structured, do not provide the economic or social foundation that blue collar men need to build stable lives.

This brings us to the second structural barrier that prevents health care from becoming a source of widespread prosperity: class.

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The Class Problem

Even setting aside gender, nursing’s promise as a middle-class engine is complicated by its increasingly steep educational requirements. This matters in two distinct ways. At the top of the health care ladder, nursing is becoming more credentialed and therefore less accessible to those without a bachelor’s degree. Non-college health care jobs, which represent the bulk of growth in health care, are often simply not very good jobs.

Start with nursing itself. Unlike the manufacturing jobs it is notionally replacing, professional nursing demands extensive formal education. Apprenticeship programs no longer exist, and hospital-based diploma programs have essentially disappeared. Associate degree programs continue to produce nurses, but the dominant pathway is now a four-year bachelor’s degree.

That shift toward bachelor’s degrees has been deliberate: over the past two decades, the Robert Wood Johnson Foundation and others mounted a sustained campaign to make the BSN (Bachelor of Science in Nursing) the professional standard. The Magnet Recognition Program has reinforced that push by requiring 80% of nurses at Magnet-designated hospitals hold bachelor’s degrees; those that do not meet this requirement must offer a plan to reach the goal. For many workers looking for a path to the middle class, time, money, and circumstance rather than any lack of aspiration prevents the attainment of a bachelor’s degree. It is, for many, genuinely out of reach.

At the other end of the spectrum are jobs that do not require a college degree, which represent a majority of projected health care growth. Over 50% of today’s health care jobs do not require one, and over 60% of projected growth over the next ten years falls within non-college occupations. These are home health aides, nursing assistants, patient care technicians, and personal care workers—roles that do not carry the high wages or career trajectories that made manufacturing the backbone of the middle class.

Home health aide, the fastest-growing occupation in the country, typically pays around $15 an hour, with limited benefits and few pathways to advancement without a bachelor’s degree. The WSJ piece showcased how someone can rise from nursing assistant to nurse to nurse practitioner. While this is a promising pathway, it likely involves six or more years of formal university education—time that many working-class men simply do not have.

The Journal is right that health care, and especially professional nursing, is one of the best job categories in America right now and will power employment growth over the next decade. But a health care-centered growth strategy is not a one-for-one replacement for the manufacturing economy.

It is a female-dominated sector, and without deliberate efforts both to bring more men into the field and to raise wages for non-college jobs so that they provide a viable economic foundation, health care employment growth will do little to address the workforce detachment and economic marginalization that characterize too many working-class men today.

Resolving the class issue demands a two-pronged approach: first, we must find ways to make better health care jobs accessible to the working class. Second, we must make existing health care jobs better paths to flourishing.

Credential barriers make more and more health care jobs inaccessible to non-college employees, and should be removed where possible. In nursing, there is some evidence that bachelor’s-level education can modestly improve care quality—though much of this evidence is not causal. Hospitals with more BSN-prepared nurses may have better patient outcomes for reasons independent of their nurses’ education, such as institutional resources or staffing levels. What is clear is that requiring a bachelor’s degree makes nursing less attainable for many Americans. The tradeoffs are real.

Removing arbitrary credential barriers, allowing experience to substitute for credentials, and offering quicker and more affordable training could make entry-level health care jobs much more attractive for those looking to enter a growing field.

Solutions to the gender gap are more fraught, as it’s marked by intangible issues of social stigma and stereotypes. Ultimately, all of these problems return to the basic issue that good health care jobs are not widely accessible for working-class men.

Celebrating job growth numbers without confronting these structural realities risks mistaking sector growth for broad-based prosperity. They are not the same thing.

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A recent Los Angeles Times report begins with an account of an unauthorized worker from Mexico in his mid-50s. After more than two decades working on dairy farms in the United States, he details the conditions under which he has toiled: frequently laboring for 10 hours without breaks; cleaning milk tanks with harsh chemicals and no protective gear; and being electrically shocked when he stepped into a puddle created by a broken water pump. At his latest job, a dairy farm in Kings County, his boss issued a warning during the height of last summer’s immigration raids in California: if anyone tried to take legal action against him for workplace violations, he’d make sure they ended up in Tijuana. That threat, the worker said, was the final straw. He called it quits and packed his bags, telling the Times, “what if they sent someone after me, or they wanted to get rid of me all of a sudden? I couldn’t bear living there anymore.”

The report frames this as the cruel consequence of immigration enforcement. The Trump administration’s deportation campaign, it argues, has “upped the frequency” of such threats and “the fear they create.” But that framing gets the causality backward. The dairy farmer’s leverage over his workers grew out of years of non-enforcement that allowed him to build a business model on unauthorized labor and to wield the possibility of enforcement as a weapon.

As I explained last year in (Labor) Law and Order, failure to enforce our immigration law undermines enforcement of our labor and employment laws. A porous border, combined with a low risk of consequences for hiring the illegal immigrants who arrive, distorts the U.S. labor market by creating a large pool of employment relationships where employment and labor law cannot readily apply. Workers who fear deportation are less likely to report wage theft, safety violations, or retaliation. That fear, in turn, gives unscrupulous employers a ready-made instrument of discipline: the threat of calling ICE.

These distortions reward companies whose business models are built on unlawful employment, low pay, and substandard working conditions, and undermine the bargaining power of American workers. They also penalize law-abiding employers, who must compete in the marketplace against firms whose labor costs are suppressed by fear. And this will be the case regardless of whether ICE is out patrolling the streets or sitting politely in an office waiting for the phone to ring. It is an inevitable consequence of failing to enforce immigration law in the first place, as Oren discussed on the American Compass podcast last year with Seema Nanda, the Biden administration’s Solicitor of Labor.

The Times report illustrates how this mechanism operates in practice: Roughly 60% of California’s farmworkers are unauthorized. These are the workers most vulnerable to the coercion described above. But consider what this means for the other 40%—the workers who are authorized to work in the United States. In a mixed-status workplace, the leverage an employer holds over his unauthorized workers puts downward pressure on conditions for everyone. When an employer can gesture at an ICE vehicle and say he could easily call it over—as farmworkers in the report described as having occurred—every worker in that field, regardless of their immigration status, receives the message, whether or not the threat is directed at them personally. Any legal worker who threatens to create a headache knows he can be replaced by a more compliant illegal one. The predictable result is concealment and underreporting of labor violations. The California Labor Commissioner acknowledged as much to the Times, noting that the roughly 30,000 complaints her office receives each year do not capture the full picture in a state with more than 18 million workers. Of course they do not. In a labor market where so many workers fear deportation, low complaint volumes reveal very little about the actual frequency of violations.

The United States has created a two-tiered labor market in agriculture, one in which hundreds of thousands of workers harvest the nation’s food while facing serious practical barriers to vindicating rights that the nation’s labor and employment law codifies as the baseline for any worker. This is a political and moral failure, repeatedly defended as an unfortunate necessity to keep grocery prices low and fill “jobs Americans won’t do.” But the fact that the Times’s lead anecdote centers on a dairy farm is especially revealing, because the dairy industry already offers a concrete example of how stronger enforcement can change firm-level incentives.

The Kings County dairy farmer should face enforcement action for employing unauthorized workers and for using the threat of deportation to suppress his employees’ labor and employment rights. But enforcement doesn’t just punish bad actors; it reshapes everyone’s incentives. Earlier this year, in Self-Milking Cow Machines, I wrote about another dairy farmer in upstate New York who, after immigration authorities arrested one of his workers, installed milking robots to mitigate disruptions in his dairy operations. His farm now produces 2.5 million pounds of milk per worker per year, up from 800,000 before mechanization. His remaining employees earn more, work shorter hours, and perform less grueling labor. Faced with enforcement pressure, that farm reorganized around labor-saving technology. The contrast with Kings County is instructive. In one case, lawlessness sustains a low-road labor model; in the other, enforcement pressure pushes investment in technology that makes workers more productive, better paid, and less expendable.

Vigorous front-end enforcement of our immigration law—especially workplace enforcement directed at law-breaking employers—is the most effective way to break the leverage that makes the coercion described by the Times possible. The Kings County dairy farmer and the upstate New York dairy farmer are not two different stories. They are the same story at two different points in time, separated by the presence or absence of immigration enforcement. One shows how a labor market functions when the law is not enforced. The other shows how American workers benefit when it is. — Daniel

ROTTEN APPLE

Tim Cook announced he will step down as Apple’s CEO, a position he has held since 2011, when he succeeded the late Steve Jobs. The business press published countless retrospectives of his tenure, many of which concluded, as the New York Times put it, that Cook was “very, very good at making money.” Under his leadership, Apple’s market capitalization grew from roughly $350 billion to $4 trillion, annual revenue quadrupled, and profits did too.

But over in the newspaper’s opinion pages, Patrick McGee—friend of the podcast and author of the excellent Apple in China—contemplates the other aspect of his legacy. McGee argues that Cook’s financial record is extraordinary but that his legacy “grows more complicated” when measured against American interests, because that success was built by consolidating virtually all of Apple’s manufacturing in China. Since 2008, McGee writes, “Apple has worked with suppliers to train 30 million workers, principally in China. It has invested hundreds of billions of dollars in the mainland and facilitated an epic transfer of practical knowledge in how to make things to hundreds of Chinese factories.” His conclusion: no single company has done more to strengthen China’s industrial base and advance President Xi Jinping’s economic ambitions.

Cook’s instrumental contribution to the buildout of China’s tech ecosystem earns him election to the Corporate America Hall of Shame, alongside the likes of General Electric’s Jack Welch, who pioneered the offshoring and financialization strategies that hollowed out American manufacturing. But as Brad Setser of the Council on Foreign Relations notes, his global legacy isn’t limited to China. Apple pioneered a corporate tax system that other firms have emulated, “explain[ing] why Ireland is flush with corporate tax revenues—and the U.S. is not.”

MORE ON CHINA AND TRADE

Earlier this month, we highlighted U.S. Trade Representative Jamieson Greer’s recent comments that seemed to pour cold water on the prospect of Chinese foreign direct investment as part of any forthcoming U.S.-China trade deal—an eventuality that we strongly oppose. Said Ambassador Greer: “I don’t think we are at the point in our relationship with the Chinese where we want to talk about investment programs either way.” On Chinese autos specifically, he said existing regulations prohibiting connected vehicle technology and software made by so-called foreign entities of concern would likely keep Chinese automakers out of the U.S. market for the foreseeable future: “It would probably be difficult for certain countries to establish new production here, given those sets of rules.”

Now, another cabinet official in the Trump administration is dismissing the possibility: Lutnick Shuts Down Talk of Any Chinese Investment in US Autos. In a recent interview, Semafor’s Ben Smith said, “There are voices in China who want to see Chinese investment in the US and specifically [joint venture] BYD factories in the United States” and asked him if that was “on the table?” Secretary Howard Lutnick responded with a firm “No.” Good answer.

And so, less than a month before President Trump meets President Xi in China for their long-anticipated summit, Semafor reports that the “mood of top White House policymakers responsible for negotiating summit outcomes seems subdued” and that “the Chinese government is in no mood to compromise” with the upshot that there will be “more, rather than less, tension on the horizon.” The fundamental incompatibility between the American and Chinese economic systems means there is no deal worth having—only a divorce.

One potential source of “tension on the horizon”: the Wall Street Journal reports that Rules of Origin Set Up U.S.-China Clash in Asia: “Many countries are caught in a vise: Washington wants them to strip Chinese content from their supply chains, and Beijing is warning them not to.” The article captures well the implications of the China-containment architecture embedded in the Trump administration’s reciprocal trade agreements that Daniel recently wrote about in A Great Wall Around China.

The Financial Times reports that the White House Accuses China of ‘Industrial-Scale’ Theft of AI Technology, with Office of Science and Technology Policy Director Michael Kratsios warning that Chinese entities are using tens of thousands of proxy accounts to distill U.S. frontier AI models. Perhaps a good reason to restrict the sale of advanced semiconductors to China…

Meanwhile, Ambassador Greer continues to make his case to our trading partners for a coordinated response to break free from China’s chokehold on the critical minerals supply chain. “When trading partners express concerns about the economic cost of price floors or mechanisms, I just say: what you’re talking about, which is cost efficiency, this is why we are in the situation we’re in,” Greer told the FT. “There is a premium we pay, and I call it the national security premium, and we will all pay a national security premium to have a secure supply chain.” Godspeed.

And in other reindustrialization news:

• USA Rare Earth to Acquire Serra Verde in $2.8 Billion Deal (Wall Street Journal): “USA Rare Earth has agreed to acquire the owner of a rare-earth mine and processing plant in Brazil, a move that would strengthen its mine-to-magnets supply chain amid geopolitical tensions between the U.S. and China.” The mine is a “one-of-a-kind asset and the only producer outside Asia capable of supplying all four magnetic rare earths at scale.”

• US Steel to Restart Gary Tin Mill Production (Manufacturing Dive): “The company said it will spend up to $20 million to support 225 jobs, as well as pay for costs related to equipment inspections, maintenance and materials to resume operations” in order to “serve growing demand for domestic materials.”

• America’s First Commercial Nuclear-Power Projects in a Decade Just Broke Ground (Wall Street Journal): “The first commercial nuclear-power projects in a decade are now under construction in the U.S., a potential turning point for a segment of the power industry that has been stuck in neutral for years.”

And, “The S&P Global US Manufacturing PMI rose to 54.0 in April, up from 52.3 in March and its highest since May 2022. The expansion means factory business conditions have improved continually since last August. Production growth accelerated to the fastest since April 2022 as new orders showed the largest rise since May 2022.”

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BIPARTISAN LABOR REFORM

On Tuesday, Senator Josh Hawley (R-MO) introduced the Know Your Labor Rights Act, legislation that would require employers to post and maintain notices of workers’ rights under the National Labor Relations Act and to inform new employees of those rights upon hiring. Senator Maggie Hassan (D-NH) is the lead Senate cosponsor; Representatives Riley Moore (R-WV) and Marie Gluesenkamp-Perez (D-WA) introduced companion legislation in the House. The Teamsters have endorsed the bill.

It is the second piece of bipartisan, bicameral labor legislation with organized labor’s backing to be introduced in the 119th Congress. The first was the Faster Labor Contracts Act, which would require employers to reach a collective bargaining agreement with newly organized workers within a defined timeframe. That legislation is also sponsored by Senator Hawley, and is cosponsored by Senator Bernie Moreno (R-OH) and, as of this week, Senator Roger Marshall (R-KS), who, along with Senator Hawley, sits on the Senate Committee on Health, Education, Labor, and Pensions, which has jurisdiction over it. This week, Representative Donald Norcross (D-NJ), the legislation’s champion in the House, filed a discharge petition. This measure could, if it receives 218 signatures from his colleagues in the House, force the legislation onto the floor for a vote, even without the support of House Speaker Mike Johnson. The end-around approach has the support of the House Minority Leader Hakeem Jeffries, the AFL-CIO, and the Teamsters. Notably, 17 House Republicans have cosponsored the underlying legislation. Together, the two developments suggest that bipartisan coalition-building for labor law reform continues apace.

THIS WEEK IN DYSTOPIA

• Trump Administration Reclassifies Marijuana as Less Dangerous Drug (Wall Street Journal), providing an occasion to re-read Oren on Vice President Donald Trump.

• Bonus link: The Marijuana Backlash Is Here by Kevin Sabet in Compact

• AI-Generated Child Pornography Is Overwhelming Law Enforcement (Bloomberg): “Today, law enforcement must parse through abusive material ranging from conversations with AI chatbots like OpenAI’s ChatGPT—where offenders fantasize about sexual acts with kids, or seek advice about how to groom them—to photos and videos generated by AI tools…which can create graphic content from a simple text request. Often, investigators can’t easily tell whether the children in pornographic images are real kids in imminent danger, AI adaptations of regular child photos, or outright fakes. That distinction is important, as it can determine which cases demand urgent attention.”

• DOJ Arrests Soldier Who Made $400,000 Betting on Maduro’s Removal (ABC News): “Federal authorities arrested a special operations soldier who was involved in the capture of Venezuelan President Nicolas Maduro for allegedly pocketing more than $400,000 by betting on his removal from office, the Justice Department announced Thursday.”

And to end the newsletter with some GOOD WEEKEND READS:

• Saving a Lost Generation of Young Men—with Chop Saws | In the New Yorker, Emma Green profiles the College of St. Joseph the Worker, which “combines the trades with a liberal-arts education, is trying to restore its students’ sense of their own competence, and to revive the city of Steubenville, Ohio, along the way.”

• The New Trade Order | In Foreign Affairs, Ambassador Robert Lighthizer writes about what broke the international trading system, and what it will take to build a better one.

• Also writing in Foreign Affairs, A. Wess Mitchell argues for A Grand Strategy of Consolidation: “Going forward, Washington must fully commit to the consolidation blueprint; future administrations need to stay the course to ensure the strategy bears fruit. That means not getting sucked into big wars or lulled back into old policy habits that reinforce the U.S. strategic predicament. If it focuses on consolidation, the United States has a historic chance to regain its bearings as a great power and prevail in a sustained competition with China, the most powerful adversary in U.S. history.”

Enjoy the weekend!

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The right-of-center views itself as the protector of families. GOP leaders have dubbed it “the party of parents.” A new Heritage Foundation report is titled, “Saving America by Saving the Family.” At the 2025 March for Life, Vice President JD Vance said he hopes for an America in which the “benchmark of national success is not a GDP number or our stock market, but whether people feel that they can raise thriving and healthy families.”

These are correct and noble ambitions, but making them a reality will require more than slogans and pledges, no matter how sincere. Specifically, it will require giving moms—and high chairs—a seat at the family policy table. Doing so demands that we recognize the complications of having babies both in the room and in the wider world. And despite notions to the contrary, the New Right is leading the way in this space.

When it comes to having and raising children, the perspective of young families—and especially young mothers—is invaluable. No sensible person would try to overhaul the trucking industry without the input of truckers. Military strategy is not planned without the expert input of military members. Crafting family policy is no different, and doing so without mothers is as ridiculous as fighting a war without generals.

Moreover, involving moms in policymaking is a direct rebuke to the small number of loudmouthed misogynists on the Right who argue that women have no place in public life. Figures like Dale Partridge have achieved notoriety using catch-phrases like “Repeal the 19th”, referring to the constitutional amendment that gave women the right to vote. “A great way to destroy a place is to put women rulers in charge,” he once claimed.

No durable, electable, right-of-center coalition should have anything to do with those who believe repealing the 19th Amendment is desirable, and including mothers at the table is a great way to combat them directly. Let them froth at the mouth about removing women from the Supreme Court on their own time. The New Right’s priority should instead be helping a typical working-class mother of three in Ohio who’s losing sleep over whether she can pay her electricity bill.

Here is the hard reality: The United States must pay more attention to family policy. For decades, federal officials and politicians professed interest in supporting American families while only erratically providing real help. Declining family formation underscores the urgency of this issue, and moms who spend their days changing diapers, driving kids to baseball or ballet practice, and folding laundry must be able to share input on the decisions that will impact them the most.

For example, when deciding what (if any) funding to provide for external childcare options, we should listen to mothers who understand that a plurality of families would rather care for their young children at home. Ditto mothers who can explain why many working moms would rather have their children cared for by grandma or someone with a shared religious background rather than an external childcare center that bills itself as better for “kindergarten readiness.”

Even with regard to larger questions—manufacturing policy, war, immigration, etc.—moms often bring valuable insight on the home front that sophisticated experts may lack. In my own research, I was surprised to hear an incredibly insightful analysis of the Affordable Care Act’s “family glitch“ from a married stay-at-home mom who was dealing with the fallout. She may not have been a health care professional, but her assessment was sounder than that of many experts I’ve heard, because she had real-world experience with what the glitch actually meant for families.

Some mothers have a seat at the federal policy table now, but typically only those who follow a narrow path: work full-time for a think tank or in Congress, find childcare, and pursue policy aims through the job. There’s nothing wrong with this—moms who work full time are a valuable resource in policymaking, and we should all be grateful for them.

But the New Right should go further and think broader. Questions about marriage, children, and the spousal division of labor are among the most intimate any family will face. Good policymaking in this area requires sustained and thoughtful input from the people in the trenches: young moms raising little ones while also balancing the family budget and getting dinner on the table.

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The Road Map

Any introductory political theory class will teach that “a political decision [is] legitimate only if it has been made in a process that allows for equal participation of all relevant persons.” Research indicates that policy is often more effective and better targeted when it includes input from those it seeks to impact. Both philosophically and practically, good family policy isn’t solely driven top-down by elites; it instead draws on the experience and preferences of ordinary people.

A number of religious, centrist, and right-of-center groups have already made serious efforts to include moms and their young kids at professional events, a good first step on the road toward better family policy.

Young mothers are often troubled both by isolation and a loss of identity as they adjust to life with a new baby. Dixie Dillon Lane, a homeschooling mom of four and author of the forthcoming book Skipping School, feels that professional culture, even on the Right, often intensifies these issues.

“I think we have a habit of presuming that children and their mothers are not really part of the public—we treat them as private ‘goods’ that should be hidden away as a sort of embarrassing underclass,” she told me. “That’s so shortsighted.”

The most obvious way to help is simply to allow mothers to bring their kids along to events. Leah Sargeant, author of The Dignity of Dependence, noted that some conference organizers provide child care enabling her to visit with children in tow. Plough magazine, for example, has a dedicated playroom with sitters at their writers’ conferences. The Ethics and Public Policy Center offered childcare to young moms attending a recent family policy conference, and Capita, the independent think tank at which I am a fellow, allows me to bring my babies to work events and tolerates (usually all of) my four children interrupting essentially every work Zoom meeting at which I’m present.

Nadya Williams, who homeschools her children and is the author of several books, told me that the presence of children can even change the professional environment in positive ways. Heated tempers, ego clashes—these often melt away in the presence of a child. Events that explicitly welcome families often take on a different dynamic from the typical sterile conference room. American Compass hosts an annual retreat that is overtly family friendly, with presentations frequently including a handful of babies and their mothers, and plenty of programming designed for kids and spouses. This encourages a network effect: A critical mass of young children makes it much easier for moms to attend compared to one that is otherwise absent of little ones.

To be clear, attending events with kids in tow is challenging. Babies cry, and obviously should be taken out of the room if they start to cause a disruption. I’ve missed portions of speeches or events because of fussy kids. At one Baron Public Affairs event, I missed almost all of the formal proceedings because I was trying (unsuccessfully) to calm down an irate little one.

I’ve even presented several times while holding one of my babies—including, on a very memorable occasion, at a side proceeding on motherhood at the United Nations headquarters in New York City.

Public speaking with a baby is much harder than public speaking without one, since your attention is necessarily divided. Once they are toddlers you’ll probably need child care of some sort to participate until your child becomes old enough to sit through short events. Still, with flexibility and thoughtfulness on both sides, it is possible to have moms and their children present.

Welcoming moms and babies to in-person events, while important, is not the only way to include them. Virtual or hybrid events can be a boon for any mom who usually is a full-time caretaker. I’ve been grateful for the many family policy discussions that allow for virtual participation, such as those hosted by the Niskanen Center. As Nicole Ruiz at The Third Oikos points out, this technology allows households to reshape their day in a way not seen since the Industrial Revolution. Likewise, moms with small children at home have for decades participated in public policy through writing. Phyllis Schlafly, the most prominent example, raised six kids amid a prolific career as a writer and conservative grassroots organizer.

None of this, by the way, is to imply that dads aren’t also important in family policy discussion. Dads are, of course, vitally important to creating and effectuating well-designed family policy. So are single people, who often play vital roles in caring for elderly parents and communities. But statistically speaking, those caring for young children, the elderly, and others are likely to be mothers.

The media loves to allege that the New Right, the Old Right, and orthodox religious groups are hostile to women and mothers in public life. While acknowledging there are indeed issues, especially among very online conservatives, that is far from the full story. Conservatives and those holding traditional religious beliefs are in many ways charting a course that the Left and secular groups would do well to follow when it comes to bringing moms and their children to the literal policy table.

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