What It Costs Not to Shovel the Snow

And more from this week…

On tap this week, we’ve got it all: unplowed streets, critical mineral price floors, AI etiquette, executive power, bad education, good immigration enforcement, and the latest from Japan. That’s quite the rundown for any newsletter, but all things you need for understanding America. Oren is up first:

Watching cities recover—or, rather, fail to recover—from the late January snowstorm reminded me of a recent conversation with friends who had moved from New York City out to my neck of the (literal) woods. They were struck by something that I never would have noticed: no one was complaining about taxes. In Brooklyn, they said, a casual social gathering among young families inevitably turned to lamentations about local taxes. Here, no one seemed bothered.

Yes, tax rates in the city were higher, but that wasn’t it. People there felt like they weren’t getting anything for their money. Here, things seemed mostly to work. Of course, we had our problems too, but you could see public servants working hard to deliver public services that benefited everyone, never taking taxpayer support for granted. How can we get more involved in local government ourselves, our friends wanted to know.

Politicians tend to focus tales of government dysfunction on “waste, fraud, and abuse,” promising to vindicate taxpayers by rooting out such poor uses of their dollars. But I suspect most people care a lot more about what they do get than about what they don’t. Even stipulating that 20% of all public funds would inevitably be misspent on absurd boondoggles, a government that delivered public services well with the other 80% of the money would probably be quite popular. An expensive car repair done on time and on budget, that indeed repairs the car, typically leaves the customer satisfied. It’s when the car breaks down again on the way home that we feel ripped off and swear never to return to that garage.

Thus, while the Minnesota welfare scandal has commanded far more attention—and it is a disgraceful scandal, indeed—the Fairfax County Public Schools remaining closed more than a week after a winter storm’s end is in many ways the bigger deal. We tolerate the many costs, inconveniences, and petty tyrannies of a government because there are many things we need it to do, that only it can do. If it cannot do them, what’s the point? Much public spending goes to preparedness for something that might rarely occur. If, when disaster strikes, we are not prepared, what’s the point?

For all the talk of “running government more like a business,” the reality is that we ask government to step in precisely where problems cannot be solved by the market, where we need things beyond the goods and services provided by businesses. And while ideologues speak of drowning government in a bathtub, American Compass research has found that Americans across the political spectrum tend to want the government to do most of what it is already doing, and more of other things as well.

Efforts to protect taxpayers by haphazardly slashing headcount and funding (see: DOGE) are neither wise nor conservative—they may save some money in the short-run, but if they do so by further degrading service capacity and quality, we are left worse off than before. If the goal is in fact to turn people against their government, justifying a downward spiral of further slashing, the strategy does have a certain logic, but it’s not one that serves the American people well or the conservative vision of limited government. The same, of course, could be said about progressive efforts to solve the problems left unaddressed by ineffective programs simply by loading more programs and more spending on top, or to “protect” public sector workers by insulating them from the requirement that they do their jobs well and maintain the public’s trust.

If government cannot deliver the basics, none of our debates about the public sector’s proper role in sustaining supportive communities and productive markets will matter much. At every level, the leaders who emphasize and get right the most pressing and visible government functions will be the ones who earn the right to implement their broader visions. — Oren

AND NOW FOR SOMETHING COMPLETELY DIFFERENT

Last week, we highlighted reporting from Reuters that “the Trump administration is stepping back from plans to guarantee a minimum price for U.S. critical minerals projects, a tacit acknowledgment of a lack of congressional funding and the complexity of setting market pricing,” giving the move a thumbs-down. In fact, it turns out, a robust critical-minerals strategy was about to be unveiled, as Daniel now explains:

Throughout 2025, an escalatory tit-for-tat tariff spiral with China culminated in the Chinese Communist Party weaponizing its rare-earth dominance—restricting exports of critical materials and magnets essential to everything from fighter jets to wind turbines. Beijing’s message to the United States—and the rest of the world—was clear: mess with us and your factories go dark. The detente struck by President Donald Trump and Xi Jinping in October provided breathing room, preventing a de facto trade embargo and a sudden break in economic relations. But the underlying vulnerability was exposed for all to see.

In response, Treasury Secretary Scott Bessent called for a new “Operation Warp Speed” to secure the supply chain—invoking the pandemic-era program that compressed vaccine development from years to months through advance commitments, risk-sharing finance, and relentless coordination. As I wrote in October in “America Gave Away Rare Earths,” Bessent understood what should have been obvious all along: in a hyper-globalized economy, in which adversaries like China deploy an industrial policy to monopolize global commodity markets, the United States cannot opt out of industrial policy—it can only decide where that policy is designed. For decades, we pretended otherwise and ended up living under the industrial policy imposed by the Chinese government. The question was not whether the United States should have an industrial policy, but whether we’d wake up and start executing our own before it was too late. (The issue is one that Secretary of State Marco Rubio has been working on for almost a decade.)

This week marked a turning point in the struggle for critical minerals independence. On Monday, President Trump unveiled “Project Vault”—a $12 billion strategic reserve for rare earths and other essential materials, financed through $1.7 billion in private capital and a $10 billion loan from the Export-Import Bank of the United States. On Wednesday, the State Department held a Critical Minerals Ministerial with 55 countries represented, while the president was, amusingly and perhaps not coincidentally, on the phone with Xi. In the event’s keynote address, Vice President J.D. Vance articulated the problem well:

….we know that today the international market for critical minerals is failing. Supply chains remain brittle and exceptionally concentrated. Asset and commodity prices are persistently depressed, driven downward by forces beyond any individual country’s control. Now, how many times, cumulatively, have one of us or many of us in this room heard some variation of the story that I’m about to tell? A lithium mine, a gallium recovery center—you name it—is announced, sometimes with years in planning and financing nearly in place. Then overnight, foreign supply floods the market, the prices collapse, and investors pull out. The project stalls, and eventually the project dies on the vine. We’ve all seen it firsthand in all of our countries. And the result is a global market where consistent investment is nearly impossible, and it will stay that way so long as prices are erratic and unpredictable.

The vice president then announced that the administration would work to form a preferential trade zone with allies to combat these predatory practices, protected by tariff-enforced price floors, correctly identifying an appropriate place for multilateralism—bringing allied scale to bear against a common threat. Shortly thereafter, the administration announced a plan of action with Mexico and memoranda of understanding with Japan, the EU, and the UK. Reports indicate there’s more to come.

Both initiatives directly counter China’s playbook. Project Vault will procure and store critical minerals for U.S. manufacturers—uniquely serving private sector needs, not just defense—while leveraging Export-Import Bank financing to mobilize private capital. The preferential trade zone defends against China’s predatory dumping. Beijing has repeatedly flooded markets with below-cost minerals to destroy Western competitors, then jacked up prices once rivals disappeared. Price floors enforced through adjustable tariffs within the allied bloc aim to combat that.

The administration has deployed a flood-the-zone strategy that mobilizes every available lever. Following the ministerial, the State Department published a lengthy press release—which is really worth scrolling through—detailing over $60 billion in financing mobilized across agencies—from Defense Production Act Title III grants for domestic processing to Development Finance Corporation loans for mining projects, and Treasury-backed loan guarantees for refining capacity. The breadth of mechanisms deployed—grants, loans, guarantees, stockpile purchases, tariff floors, and diplomatic coordination—reflects the scale Bessent called for last fall.

Building a mine-to-magnet ecosystem that meets the scale our economy demands will take years, billions more in investment, and sustained political will through multiple administrations. But the pieces are coming together: the stockpile, the allied trade bloc, the price floor mechanism, the financing architecture. What matters now is execution; turning memoranda into mines, announcements into magnets. Significant work remains, and implementation details will matter enormously. But this week showed we’re finally taking serious efforts to break free from China’s chokehold. — Daniel

GOOD READS FOR YOUR WEEKEND

The Problem With Using AI in Your Personal Life (Dan Brooks, The Atlantic)

“To prevent hard-core get-it-done types from inflicting slop on the rest of us, we need to agree that my sending you material written by ChatGPT is insulting, the same way you would be insulted if I were to play a recording of myself saying ‘Oh, that’s interesting’ every time you spoke.”

What a Comparison With Roosevelt Reveals About Trump (Jack Goldsmith and Samuel Moyn, New York Times)

“Roosevelt implicitly justified his approach — attacks on the judiciary, iron-fisted control of the bureaucracy, weaponization of government and opportunistic constitutional interpretation — by the ends of saving the country, transforming fundamental arrangements to serve the needy and to win World War II. Today many progressives view his imperious tactics in a benign light, if they remember them at all, because of what he accomplished. Mr. Trump and his supporters have justified their tactics on a claimed need for similar fundamental change. … but he is teaching revealing lessons about the genuine limits of executive power, not just about its nefarious uses.”

‘There’ll Be Consequences’: Trump WH Warns Defense Contractors (Philip Wegmann, RealClearPolitics… feat. Daniel Kishi!)

“Between 1994 and 2018, prime defense contractors returned $240 billion to shareholders via stock buybacks and dividends but made less than $90 billion in capital expenditures, a recent American Compass analysis found. … ‘These companies receive up to 70% of their revenue from the government. They’re not state-owned enterprises, but they have chosen to become state-dominated given their heavy reliance on taxpayer money. The American people are the customers. The government can dictate the terms of their contracts, and then it’s up to the businesses to meet those terms if they want the revenue,’ Kishi said.”

• Bonus Read, from the Department of Sticks Work: US Defense Firms Boost Spending After Trump Calls for Expedited Arms Deliveries (Reuters)

“Major U.S. defense contractors are significantly ramping up capital expenditure this year in response to President Donald Trump’s threat to limit dividends and share buybacks in his push to speed up weapons deliveries. Despite ballooning demand for arms due to rising geopolitical conflicts, capital expenditure growth at large defense firms has stayed sluggish since 2022. However, companies have reversed course and now expect capital reinvestments to increase by more than a third this year.”

THE SOFT BIGOTRY OF LOW EXPECTATIONS

Fascinating to see these essays both run in The Atlantic over the past week. First, Rose Horowitch laments The Film Students Who Can No Longer Sit Through Films:

After watching movies distractedly—if they watch them at all—students unsurprisingly can’t answer basic questions about what they saw. In a multiple-choice question on a recent final exam, Jeff Smith, a film professor at UW Madison, asked what happens at the end of the Truffaut film Jules and Jim. More than half of the class picked one of the wrong options, saying that characters hide from the Nazis (the film takes place during World War I) or get drunk with Ernest Hemingway (who does not appear in the movie). Smith has administered similar exams for almost two decades; he had to grade his most recent exam on a curve to keep students’ marks within a normal range. The professors I spoke with didn’t blame students for their shortcomings; they focused instead on how media diets have changed.

But then, Walt Hunter suggests, Stop Meeting Students Where They Are:

Two things became clear in the early weeks of class. First, the students were reading. They were reading everything, or most of it. I know this because I had them identify obscure passages, without notes, devices, or books at hand. Second, they were experiencing life in a way that was not easy outside the class and its assignments. They were expected—required—to give huge chunks of time to an activity, reading, that was not monetizing their attention in real time. They had, in effect, taken back their lives, for an hour or two each day. … I agree with those who argue that universities find themselves in a state of crisis. But narratives about the “end of reading” strike me as self-inflicted, the manifestation of a collective depression.

Who would have thought, giving students passing grades when they don’t even know which World War the film was set during leads to… students not watching the films. Drilling students on whether they have in fact done the reading leads to… students doing the reading.

Unfortunately, the therapeutic and “gentle professoring” style is pervasive in higher education, and has led to further erosion of the exercise’s value. Further contributing to the trend that…

For the First Time in 50 Years, College Grads are Losing Their Edge (Washington Post):

For nearly 50 years, research has shown that having a bachelor’s degree or higher led to better employment prospects, from higher pay to greater job security. Now, with the stability of white-collar work in question as U.S. companies embrace artificial intelligence, federal data suggests that’s beginning to change. The unemployment gap between workers with bachelor’s degrees and those with occupational associate’s degrees — such as plumbers, electricians and pipe fitters — flipped in 2025, leaving trade workers with a slight edge for six months out of the past year, according to the Bureau of Labor Statistics. It’s the first time trade workers have had a leg up since the BLS started tracking this data in the 1990s.

BUT WHAT CAN YOU DO, WITH A B.A. IN SPECULATION?

Axios has a good rundown of how Gen Z Is Playing the Economy Like a Casino, because “in a world where AI can take your job, a global pandemic can disrupt your future, home ownership is the most expensive it has ever been, and the return on investment in a college education is increasingly murky, betting no longer seems like a risk.”

Commonplace had a more in-depth treatment of this phenomenon in Young Men Refuse to Fight in the Hunger Games Economy, where John Ehrett argued:

Gambling is not symptomatic of an amorphous social problem; it is, in fact, the essence of the underlying “metacrisis” facing young men. Over the last few decades, more and more domains of life have been quietly subjected to the zero-sum logic of a Hunger Games-style lottery, in many ways thanks to powerful digital technology that allows this to occur at scale. In the simplest terms: everything seems random all the time, with no clear logic behind who wins and who loses.

The New York Times puts a peculiarly positive gloss on all this, suggesting that “making a living betting on prediction markets just might be one of those era-defining occupations — like being a Wall Street trader in the 1980s, a dot-com founder in the 1990s or an influencer in the 2010s.” Except, of course, betting on prediction markets is not an occupation at all, in the sense of being a job or profession through which one contributes to the world and earns a living. It is merely less-than-zero-sum speculation, with the house taking a cut at each step. “Most users on the two big platforms lose money, and losing it on sports (which accounts for 90 percent of trading volume on Kalshi) has become the newest way for a cohort of young men, many careerless and laden with student or credit-card debt, to make long-shot bets through frictionless, gamified apps.”

Speaking of which, if you haven’t seen it already, be sure to read Oren’s feature essay in the New York Times today: The Finance Industry Is a Grift. Let’s Start Treating It That Way.

IMMIGRATION ENFORCEMENT WORKS

Migrant Encounters At the U.S.-Mexico Border Are At Their Lowest Level In More Than 50 Years (Pew Research)

“The Border Patrol recorded 237,538 encounters with migrants at the U.S.-Mexico border in the 2025 fiscal year, which began in October 2024 and ended in September 2025. That was down from more than 1.5 million encounters in fiscal 2024, more than 2 million in fiscal 2023 and a record of more than 2.2 million in fiscal 2022. The 2025 total was the lowest in any fiscal year since 1970.”

Amazing how quickly the Trump administration succeeded in solving so many root causes that eluded border czar Kamala Harris’s efforts!

Also amazing, people continue not to understand that absolute job growth will be much lower in an economy experiencing out-migration. We’ve been explaining this here for months, and it turns out the Federal Reserve Bank of Dallas has made the point too. We missed this at the time, but thought it worth highlighting: “The goalposts have moved. A break-even rate of around 30,000 appears to be the new reality for the U.S. labor market. This means modest payroll gains, which might have seemed alarming in 2023, are now indicative of a stable and balanced market.” Economics. Not that hard, folks. At least, if you’re trying to get it right, which, perhaps, many people are not.

Like, for instance, the people asking in the Wall Street Journal, Do More Deportations Mean Lower Housing Costs? You’d think lower demand for housing might have an effect on a supply-constrained market, but no, “economists and housing industry analysts largely attribute price declines in those and other markets to oversupply…” Really? “Oversupply” seems like a relative term. Relative to what?

TRADE NEGOTIATIONS WORK TOO

One finds a similar pattern, of course, on matters of trade. Credit where due to the Peterson Institute, an inveterate opponent of Trump administration policy, for a pretty balanced analysis of the investment commitments made by other countries in The America First investment pledges: How are they structured and are they realistic? “It is likely,” they conclude, “that if implemented, the deals will lead to more growth and employment in the United States—with some positive fiscal effects, too. It is also likely that they will improve the US balance of payments in the long run.”

Some goods news may be on the horizon from Japan, in particular, reports the Financial Times:

At least three deals, making plausible inroads into Japan’s overall commitment of $550bn, are now due to be unveiled once the election on February 8 is over, according to several people familiar with the matter. Their main purpose is to keep an implacable White House from slapping punitive tariffs back on its closest ally in Asia. Many of those involved in the dealmaking in late October would later conclude they were also part of something bigger: the opening act in a fundamental recasting of the US-Japan alliance that has underpinned American power in Asia for nearly eight decades.

Pity the Wall Street Journal, though, which had clearly invested substantial effort in a big feature on how manufacturing is weakening in the United States, only to get surprisingly good news in January as the story went to print. What to do? Carry on, apparently, with “an index of factory activity tracked by the Institute for Supply Management shrunk in 26 straight months through December, but showed a January uptick in new orders and production that surprised analysts.” (It wasn’t an uptick, it was the strongest reading in years.) And also, “Lehner and other economists also say there are signs output has stabilized, if not inched higher, though gains in efficiency could limit the number of new jobs. A White House spokesman noted that manufacturing productivity ticked upward in recent quarters and that workers’ wage hikes outpaced inflation over the past year.” Sounds promising.

Listen to Harold Bevis, CEO of metal-component market NN. He:

believes tariffs will ultimately benefit NN by curbing Chinese competition for precision parts that appear in steering systems, audiovisual controls and more. But meanwhile, import taxes have helped push up costs for steel and aluminum, adding to pressures from soaring market prices for the gold and silver NN uses in some products.

That has squeezed how much cash the firm has to invest in new, potentially lucrative sectors such as data centers and electrical equipment. “So you take a hit,” Bevis said. NN is trying to recoup costs by raising prices in subsequent orders.

Bevis said business has accelerated while Ford and GM, which recently took multibillion-dollar write-downs on their EV businesses, have pushed for domestic parts.

Almost as if rebuilding domestic industry would unavoidably impose short-term costs, those will lead to long-term benefits, and we are headed in the right direction.

Enjoy the weekend!