The study looked at the

Act to Reform Nationality Law … [under which] children born in Germany on or after January 1, 2000, automatically acquired citizenship if at least one parent had legally resided in Germany for at least eight years at the time of birth.

Researchers found

a sharp decline in offenses committed by non-Germans born after the reform. … [T]he actual increase in offenses committed by Germans was smaller than the decline in offenses committed by non-Germans, suggesting that birthright citizenship reduced crime among immigrant children. Specifically, [the] calculations reveal a 70 percent reduction in youth crime among children who obtained citizenship because of the reform.

Altogether, these

findings suggest that inclusive citizenship policies can reduce crime and its associated costs, which could strengthen social cohesion. Moreover, other research has shown that the German reform improved the educational outcomes of immigrant children and promoted their social integration.

One study looks at

how zoning regulations in the Boston metropolitan area of Massachusetts have affected the long-run supply, prices, and rents of single-family and multifamily homes (apartments).

For one,

loose density restrictions paired with multifamily zoning in the same neighborhood increased the average number of housing units per lot. … looser height restrictions did not affect housing supply or prices, even when paired with multifamily zoning. These findings suggest that density restrictions limit housing construction in the Boston metro area while height regulations do not.

The

research also finds that differences in housing prices and rents across boundaries primarily stemmed from strict zoning regulations increasing the average size of housing units. [Thus,] zoning regulations have increased the size of housing units and driven up housing prices and rents in large portions of the Boston metro area.

Eliminating these distortions would allow better, market-driven outcomes.

Decades of evidence, however, suggest this impact is modest, partly due to the “waterbed effect:” enforcement efforts aimed at shrinking the market mainly causes it to shift, in various ways, without much impact on its overall size. Just as pushing down on one part of a waterbed merely forces the water somewhere else, rather than reducing the overall quantity.

Two recent news stories provide textbook illustrations. From the Washington Post,

The Trump administration’s deadly military strikes on alleged drug trafficking boats have not reduced the amount of cocaine entering the United States, but they’re prompting criminal organizations to develop new strategies and tactics and undermining traditional investigative methods, according to a previously unreported assessment by the Drug Enforcement Administration, a closed-door congressional briefing and interviews with current and former U.S. and foreign officials.

In a recent assessment reviewed by The Washington Post, DEA analysts found the strikes had failed to affect the supply or price of cocaine in the United States and had led traffickers to diversify beyond go-fast boats and to avoid international waters, opting instead for larger boats and hemming close to coastlines, where U.S. forces are less likely to open fire. In a closed-door briefing last month, Pentagon officials told lawmakers the strikes in international waters off South and Central America had not reduced its purity.

And from the Financial Times,

In the battle for the seas, drug traffickers are often coming out on top — making Europe, in the words of the UN, the new “primary destination” for cocaine. The drug, once the preserve of rich European partygoers, has gone mainstream, with street prices falling by an average of 18 per cent between 2014 and 2024 while the products sold became 44 per cent purer, according to the EU’s drugs agency.

…

As authorities have stepped up interceptions at major ports, traffickers have kept ahead through sophisticated drop-offs at sea, enabled by encrypted communications, powerful speedboats, unmanned submersibles and GPS spoofing, which involves vessels faking their locations.

“You always have to stay up-to-date, because there’s always a new modus operandi,” says Jürgen Ebner, acting chief of Europol, the EU’s law enforcement agency. He warns of a “waterbed effect” — when authorities come down hard in one area it can just push problems somewhere else.

Exactly.

new “temporary exhibits or signage” … outside the National Museum of American History (NMAH), “warning” visitors about “the Ideological Capture” of the museum.

The “ideological capture” is a reference to allegations that the White House made against leaders … in a blistering July 4 report[,] … accusing the museum and its leaders of presenting “a radical view of American history.”

The Smithsonian, naturally, disagrees with the administration’s characterization. Is there a way to resolve this debate?

Yes; by eliminating government funding and oversight of the Smithsonian. No “market failure” justifies such intervention; the private sector can and does supply museums when sufficient demand exists.

Some might believe government control of history promotes the “right” view. That is precisely the negative of government support.

The study used

data from the Fraser Institute’s Economic Freedom of the World index for 1950–2023 … [and] identified one reform episode in each of 30 countries by finding the shortest window over which its index score increased by two or more points.

The evidence

suggest[s] near-zero effects or modest declines [in GDP per capita] in the first few years following a reform. However, approximately 3–5 years after a reform, growth effects turned positive and increased steadily over time.

The timing varied somewhat by reform type:

[R]eforms related to trade and financial-sector liberalization tended to produce positive effects sooner … [while] reforms involving privatization or broader institutional restructuring had more gradual effects.

All things considered,

market reforms can promote economic growth, but their benefits take time to materialize as capital and labor reallocate. … [So while p]olicymakers may face political and economic pressure in the immediate aftermath of reforms, … the long-run gains from market liberalization can [still] be substantial.

Welcome news for Javier Milei, who took office about 2.5 years ago!

Is this plausible? And does it imply that prohibition is better than legalization?

Yes, and no.

Decriminalization means elimination of criminal penalties for drug possession. Legalization means elimination of criminal penalties for production and sale.

Standard economics suggests that decriminalization, by reducing the full price of purchasing drugs, shifts demand outward, implying greater use.

This causes, since production and sale are still illegal, a larger underground market and therefore more of the associated negatives. These include increased violence, because black market participants cannot resolve disputes with courts and lawyers; and additional overdoses, because quality control is difficult in black markets.

Thus the study’s result makes sense. But rather than supporting prohibition, it shows that full legalization – rather than decrim – is the right path. Indeed, if policy legalizes only one side of the market, it should be supply rather than demand. A related point is that legalization must not include too much regulation and taxation; that just re-creates the black market.

A possible qualification is that some decrims seem to have avoided increased violence or overdoses. The likely explanation is that in these instances, policy de-escalated supply side enforcement along with decriminalizing.

addressed this challenge by analyzing all major US tariff rate changes from 1840 to 2024. Drawing on historical research, congressional records, and statutes, we identified … 21 tariff rate changes, which we used to examine the macroeconomic effects of tariffs.

These examples

reveal that increasing tariff rates contracted the US economy. … tariff increases did not shield domestic industry despite their protective intent. Additionally, trade contracted markedly.

While tariffs might be expected to cause large price increases,

[o]verall prices increased [only] by around 0.5 percent at their peak. … [T]he simultaneous presence of supply-side inflationary pressures and demand-side pressures that slowed price growth could explain the muted overall change in aggregate prices.

To sum up, the

research indicates that tariff increases reduce domestic output and trade. While tariffs may protect some domestic industries, they ultimately reduce aggregate output, manufacturing activity, and the global competitiveness of US goods.

The study

examines the effects of a rent control ballot measure passed in Saint Paul, Minnesota, in November 2021, on property values. … [Researchers found that t]he law decreased rental property values by reducing expected future rental income and landlords’ incentives to invest in maintenance.

In addition,

the effects of Saint Paul’s rent control law varied significantly by the income levels of renters, landlords, and owner-occupants. On average, rent control generated financial gains for renters and losses for owners, as expected. However, higher-income renters gained more than lower-income renters. … [Also,] lower-income landlords lost more wealth relative to their income than higher-income landlords. Finally, owner-occupants, despite not directly participating in the rental market, bore the greatest share of the total losses.

The study

shows that the benefits of Saint Paul’s rent control law are distributed regressively to renters, while the costs are distributed regressively to landlords.

First,

enacted policies remain much smaller than announced policies. This is a key reason why the price effects of the tariffs remain below many forecasts made in April 2025.

Second,

most of the incidence of recent US tariff hikes has fallen on US consumers. And given the significance of imported inputs in US manufacturing, domestic producers have also shouldered much of the burden.

Third, the tariffs have also

led to striking changes in sourcing patterns. … [For example, t]he share of Chinese goods in US imports collapsed from 22 percent at the end of 2017 to about 12 percent at the end of 2024.

Lastly, while

[e]conomic theory posits that increasing US import tariffs should appreciate the dollar … [it instead] depreciated significantly after the 2025 tariffs. … [This may be because] other policies and macroeconomic forces counterbalanced the effects of tariff hikes on the dollar exchange rate.

Trump’s actions have created controversy, with artists canceling performances and patrons leading weekly protests. This politicization illustrates the cost of federal involvement. And it raises a broader issue neither Trump nor his critics have addressed: whether the government should be involved in the Kennedy Center at all.

The usual justification for government intervention is market failure. A polluting activity, for example, imposes costs on individuals outside of the relevant transaction. National defense requires government involvement because everyone benefits from protection, regardless of who pays, creating a free-rider problem.

Conversely, the private sector is perfectly capable of supplying performing arts, assuming demand is sufficient. Individuals who participate in the arts receive the benefit, and those who do not can be excluded; there is no externality or public-goods problem that requires government intervention.

The way to avoid controversy about the Kennedy Center, therefore, is to eliminate all government involvement.

One study, however, considers a new approach: Conduct Adjustment Agreements (TACs), under which cattle-buying plants are

forgiven for past violations but could be penalized for future livestock purchases from illegally deforested areas. … [B]efore TACs were introduced … slaughterhouse openings significantly reduced the area of natural forest … [because] ranchers increased their pastureland … through deforestation.

But when

an existing slaughterhouse signed a TAC, new slaughterhouse openings … did not result in additional forest loss or severe pasture degradation. Instead, ranchers increased the number of cattle on existing pastureland and earned a price premium for their production. Slaughterhouses that signed TACs … monitored ranchers more closely to avoid purchasing cattle from illegally deforested areas.

All in all,

[t]hese factors may have led ranchers to increase the productivity of existing pasture by improving management instead of expanding pastureland.

The pattern appeared early. Federal land grants built the transcontinental railroad and delivered real economic development — alongside spectacular corruption, fraud, and overbuilding. That combination has recurred often. Republican administrations have imposed tariffs and subsidized fossil fuels; Trump’s 2018 steel tariffs protected a narrow producer class while raising costs across industries that use steel, on net destroying jobs. Democratic administrations built the Tennessee Valley Authority — which brought electricity to rural Appalachia but became a major coal-burning polluter — and invested in green energy under Obama, producing high-profile failures like Solyndra alongside modest successes at considerable taxpayer cost. Biden’s CHIPS Act commits hundreds of billions to semiconductors; it is too soon for a full verdict, but early reports show significant cost overruns.

Proponents point to South Korea, Japan, and Taiwan as proof that industrial policy can work. But for every South Korea there is a Brazil or India, where decades of protection have produced inefficiency rather than competitive industries. Some economists question the Korean case even more directly: the industries the government subsidized were not the ones most correlated with growth, suggesting the policy may have been targeting the wrong sectors. Economists also debate how much credit belongs to government direction versus stable macroeconomics, high savings rates, and openness to foreign technology.

It helps to place industrial policies on a spectrum, with targeted subsidies and trade protection at one end, and fully planned economies at the other. The Soviet Union and Maoist China were the paradigmatic examples, and their failures were catastrophic — chronic shortages, misallocation, and collapse. Defenders of modern industrial policy argue that targeted interventions are different from central planning, and formally that is true. But the underlying problem — that officials lack the information markets generate and face political pressures that distort allocation — does not disappear because the intervention is more modest.

A new study examines the effect of online sales bans on use of electronic nicotine delivery systems (ENDS). The study

used data from five national surveys conducted between 2013 and 2023 and leveraged the staggered adoption of the bans across states … [to] reveal no evidence that prohibiting online sales reduced youth e‑cigarette use. … Furthermore, these bans had a minimal effect on the frequency of use among continuing users.

The legislation was ineffective because

young people rarely used the internet to obtain ENDS products before the bans. … Although the bans significantly reduced online purchases of ENDS products, the overall reduction in youth use was less than 1 percentage point.

Indeed,

online purchases fell by 40–50 percent on average, suggesting that young people continued to obtain ENDS products online through illegal shipments … [and] shifted from online to in-person purchases and obtained more ENDS products from family and friends.

The bans also did not stop adults from using ENDS; the study shows

no evidence that online sales bans reduced e‑cigarette or cigarette use among adults, even though adults use these products at higher rates than young people.

reveal[s] that the reform reduced the share of these prisoners who returned to prison within one year by 9–10 percentage points … This reduction was almost entirely due to a lower rate of technical revocations of supervision.

Further, there was

no evidence that the reform affected crime rates among released prisoners … [as] the absence of supervision reduced the likelihood of parolees committing crimes, offsetting any increases in crime associated with fewer technical revocations. … [Also,] longer terms of parole supervision diminish the benefits of lawful behavior because parolees face the ongoing threat of technical revocation.

The researchers also

conducted policy simulations to estimate the impact of reducing existing … [parole for low-to-medium offenders] by half. … [The] findings indicate that such a reform would reduce the average prison population by roughly 3 percent and likely cause no harm to public safety.

Altogether, the study

demonstrate[s] that existing parole systems increase reincarceration rates through technical violations of supervision conditions without bolstering public safety.

This onslaught is an unsurprising extension of the war on drugs, in which the United States has filled prisons, expanded surveillance, militarized policing, and dedicated enormous resources to interdiction at home and abroad. Yet because criminal organizations adapt, drugs remain widely available and overdose deaths remain tragically high.

The ineffectiveness of military force follows from basic economic logic. Markets respond to incentives. When governments try to limit supply, drugs become scarcer and prices rise. Higher prices create stronger incentives for suppliers to pursue new strategies and for new suppliers to enter the market. Smuggling routes shift. Traffickers adopt new technologies and tactics. Criminal organizations become more sophisticated. Excessive military force thus causes not the elimination of the drug trade but its adaptation.

This pattern has repeated itself throughout the history of drug prohibition. Cocaine, heroin, methamphetamine, and fentanyl have all remained available despite aggressive enforcement campaigns. Each major crackdown has been followed by innovation from traffickers rather than the disappearance of the market.

Military strikes will not alter this reality. Destroying a boat may eliminate one shipment and one group of smugglers, but not the underlying demand that makes trafficking profitable. Military officials acknowledge as much. As long as consumers are willing to pay, suppliers will emerge to meet that demand.

The irony is that policies intended to suppress drug markets often strengthen the most ruthless organizations operating within them. Large criminal groups are better equipped than smaller competitors to absorb losses, evade enforcement, and replace personnel. The result can be greater concentration of power among the very organizations policymakers claim to be fighting.

Rather than escalating the war on drugs, policymakers should ask whether the benefits of prohibition justify the costs. These include elevated violence and corruption (because underground markets cannot resolve disagreements with standard legal means); erosions of civil liberties (because enforcement of crimes with no natural complainant requires invasive police tactics, like no-knock warrants); limitations on legitimate medical uses of banned substances (because authorities fear legitimization of these substances); elevated overdoses (because quality control is difficult in underground markets); and tens of billions annually in expenditure on enforcement. Prohibition also risks diplomatic tensions throughout Latin America and stimulates out-migration as residents of source countries flee the violence and chaos caused by prohibition.

After decades of experience, we should know that military force cannot repeal the laws of supply and demand. A war at sea will not succeed where every previous phase of the war on drugs has failed. Instead of doubling down on an ineffective strategy, the United States should finally do the right thing: legalize all drugs.

Not according to a new study. The researchers examined a measure of poverty

that accounts for all taxes and government benefits … [and] anchored [the] poverty measure to the official poverty rate in 1963. ... [They also] adjusted income thresholds for inflation and the size of each person’s household.

Using this measure, they found that

poverty fell substantially prior to the War on Poverty, primarily due to increases in market income, without a substantial rise in the dependency of working-age adults and their children on government transfers for most of their income. … These trends were particularly stark for black people, who experienced a steep decline in poverty before the War on Poverty.

Recent research looks at the impact

on the intergenerational mobility of US-born men. [The authors use] county-level measure[s] of exposure to the quotas … [and] census data … to link US-born sons to their adult outcomes and trace family background, geographic location, and occupational status over time.

Outcomes differed by race:

[T]he quotas slowed intergenerational mobility among US-born white men. … For [them] the negative effects of the quotas were smaller for sons of wealthier fathers. … US-born white men from more exposed counties [also] earned substantially lower wages in adulthood.

Alternatively,

[f]or black men, quota exposure was associated with increased intergenerational mobility, although [the results] … cannot rule out the possibility of no effect. [T]he quotas may have reduced competition for lower-skilled urban jobs, modestly improving occupational prospects for black men.

The most likely explanation for the quotas’ effects

is that immigrants complement native workers by raising their productivity and enabling them to specialize in higher-quality tasks. … [Indeed,] the negative mobility effects were nearly twice as large for white men living in counties with more reliance on non-English-speaking immigrant workers.

New research uses

variation in the timing of when reform prosecutors took office across the country to estimate the resulting changes in criminal case outcomes, local reported crime rates, and drug overdose mortality rates.

These prosecutors implemented changes

such as presumptive declination policies for certain minor offenses and increased use of pretrial diversion programming … [This resulted in] reduced convictions for all misdemeanor types, with the largest reduction being for drug offenses at 39 percent.

Still, the study suggests

that reform prosecutors may not have affected reported crime... [, and it] finds no convincing evidence of an effect on drug mortality rates … [or] that reform prosecutors decreased prison incarceration rates.

Overall,

reform prosecutors’ less punitive approach may benefit both defendants and the justice system as a whole without imposing significant adverse effects on public safety.

To assess the long-term effects of the program, one study performed

a large-scale randomized evaluation of the OLPC program implemented by the Peruvian government in rural primary schools, using administrative and survey data from 2007 to 2019.

The study found that the program had

no effects on students’ exam or test scores or on their likelihood of completing primary or secondary school or enrolling in a university… [T]he program [also] reduced the fraction of primary students who advanced to the next grade by 1 percentage point between 2009 and 2016.

Despite lengthy teacher trainings,

the program had no significant effects on teachers’ digital skills … [and it] led to limited academic use of laptops and generated few benefits beyond basic digital literacy, which partly explains the absence of effects on achievement and attainment.

We have heard this before.

In 1946, Einstein’s Emergency Committee of Atomic Scientists warned that nuclear weapons would “surely destroy our civilization.” They have not. In 1977, Digital Equipment Corporation founder Ken Olsen declared there was “no reason for any individual to have a computer in his home.” By 2000, over a billion PCs sat in homes worldwide. In 1995, astronomer Clifford Stoll wrote in Newsweek that the internet was overhyped “baloney” and that online commerce would never work. Three years later, Nobel laureate Paul Krugman predicted the internet’s economic impact would be “no greater than the fax machine’s.” In 2007, then-Microsoft CEO Steve Ballmer told Fortune the iPhone had no chance of gaining significant market share. It now commands roughly half the smartphone market.

The pattern is consistent: catastrophic predictions about new technologies overestimate harms and underestimate adaptation. The 1960s automation panic predicted mass unemployment; instead, new industries emerged and living standards rose.

Will “this time be different?” That is possible, but we would bet against it.