On Adversarial Capitalism

I’ve lately been writing a series on modern capitalism. You can read these other blog posts for additional musings on the topic:

• Most Businesses Don’t Work That Way – on the mistaken view of being the customer vs the product – and how businesses really make money
• Artisanal Slop Bowls as the Next Abstraction of Capitalism – how modern capitalism leads to the creation of new and improved version of goods/businesses that superficially, seem to be superior in all ways, but in fact, are without many critical but illegible components.
• How an Efficient Market Feels from the Inside – how even in an efficient market, there are still good and bad deals to be had.
• Why I Talk About Utopia, Not Politics – on the idea of living a happy enriched life in times of material abundance

We are now in a period of capitalism that I call adversarial capitalism. By this I mean: market interactions increasingly feel like traps. You’re not just buying a product—you’re entering a hostile game rigged to extract as much value from you as possible.

A few experiences you may relate to:

• I bought a banana from the store. I was prompted to tip 20, 25, or 30% on my purchase.
• I went to get a haircut. Booking online cost $6 more and also asked me to prepay my tip. [Would I get worse service if I didn’t tip in advance…?]
• I went to a jazz club. Despite already buying an expensive ticket, I was told I needed to order at least $20 of food or drink—and literally handing them a $20 bill wouldn’t count, as it didn’t include tip or tax.
• I looked into buying a new Garmin watch, only to be told by Garmin fans I should avoid the brand now—they recently introduced a subscription model. For now, the good features are still included with the watch purchase, but soon enough, those will be behind the paywall.
• I bought a plane ticket and had to avoid clicking on eight different things that wanted to overcharge me. I couldn’t sit beside my girlfriend without paying a large seat selection fee. No food, no baggage included.
• I realized that the bike GPS I bought four years ago no longer gives turn-by-turn directions because it’s no longer compatible with the mapping software.
• I had to buy a new computer because the battery in mine wasn’t replaceable and had worn down.
• I rented a car and couldn’t avoid paying an exorbitant toll-processing fee. They gave me the car with what looked like 55% of a tank. If I returned it with less, I’d be charged a huge fee. If I returned it with more, I’d be giving them free gas. It’s difficult to return it with the same amount, given you need to drive from the gas station to the drop-off and there’s no precise way to measure it.
• I bought tickets to a concert the moment they went on sale, only for the “face value” price to go down 50% one month later – because the tickets were dynamically priced.
• I used an Uber gift card, and once it was applied to my account, my Uber prices were higher.
• I went to a highly rated restaurant (per Google Maps) and thought it wasn’t very good. When I went to pay, I was told they’d reduce my bill by 25% if I left a 5-star Google Maps review before leaving. I now understand the reviews.

Adversarial capitalism is when most transactions feel like an assault on your will. Nearly everything entices you with a low upfront price, then uses every possible trick to extract more from you before the transaction ends. Systems are designed to exploit your cognitive limitations, time constraints, and moments of inattention.

It’s not just about hidden fees. It’s that each additional fee often feels unreasonable. The rental company doesn’t just charge more for gas, they punish you for not refueling, at an exorbitant rate. They want you to skip the gas, because that’s how they make money. The “service fee” for buying a concert ticket online is wildly higher than a service fee ought to be.

The reason adversarial capitalism exists is simple.

Businesses are ruthlessly efficient and want to grow. Humans are incredibly price-sensitive. If one business avoids hidden fees, it’s outcompeted by another that offers a lower upfront cost, with more adversarial fees later. This exploits the gap between consumers’ sensitivity to headline prices and their awareness of total cost. Once one firm in a market adopts this pricing model, others are pressured to follow. It becomes a race to the bottom of the price tag, and a race to the top of the hidden fees.

The thing is: once businesses learn the techniques of adversarial capitalism and it gets accepted by consumers, there is no going back — it is a super weapon that is too powerful to ignore once discovered.

by Daniel Frank, Frankly Speaking |  Read more:

[ed. Many great essays on his blog, and substack (not not Talmud) to keep one busy for awhile. See also: Daniel-isms: 50 Ideas for Life I Repeatedly Share (Part 1); and 50 Ideas for Life I Repeatedly Share (part 2). Also, here's a couple more: the loss of magic: why Bob Dylan can’t write great songs anymore; and, Notes on Taiwan.]

Iran War: US Strikes Kharg Island, Deploys More Marines Even as Administration Shows Desperation

Trump Administration officials besides Trump are starting to behave erratically, a sign the fact that the Iran war is not developing necessarily to US advantage is beginning to penetrate their embubblement and belief in American superiority. However, the reality that the US has put the global economy at risk of a potential depression and is on track to having its military largely if not entirely run out of the Middle East is still likely beyond what key figures in the Administration can accept, cognitively and practically. Admittedly, it seems likely that some, perhaps many, top members of the armed services are better able to grasp what is happening and could help Administration leaders work through what will come at an epic shock. [ed. if they were interested in listening.]

Today we will focus on the kinetic war.

The US is still trying to project the false impression that it has escalatory dominance via attacking Kharg Island, which is on the northern end of the Persian Gulf and a major processing/production center for Iran’s oil exports. Keep in mind that none other than Ukraine war diehard hawk, Keith Kellogg, had told Fox News that the US could still end the war quickly and easily by taking Kharg island, since per him, it accounted for 80% to 90% of Iran’s oil exports. A mere look at a map shows what a batshit idea this was; we had assumed that this was messaging directed at chumps, intended to convey that the US was far from bereft of options. But apparently this Administration is of the “No idea is too misguided to be rejected” school of operation.

Even so, the Administration had to admit that it hit only “military” targets and did not touch oil infrastructure. Team Trump has worked out that attacking any Iranian oil facilities would lead Iran to bomb oil infrastructure all over the Middle East. [...]

Now to Bloomberg’s Kharg Island report. Notice that the headline at the story proper (via the link from the current banner headline), Trump Strikes Iran’s Kharg Oil Hub and Urges Reopening of Hormuz, has not been updated to reflect Iran’s saber-rattling back. From its body:

The US struck military sites on Kharg Island, from which Iran exports almost all its oil, for the first time overnight, upping the ante in a Middle East war that’s raged for more than two weeks and shows little sign of easing.

President Donald Trump said military facilities on the Persian Gulf island had been “obliterated,” adding that he chose not to hit oil infrastructure “for reasons of decency.” He threatened to do just that should Iran “do anything to interfere with the Free and Safe Passage of Ships through the Strait of Hormuz.”

Iran reacted on Saturday morning by warning it will target American-linked oil and energy facilities in the Middle East if its own petroleum infrastructure is attacked. Iranian media said all oil-industry workers on the island, which sits about 25 kilometers (16 miles) off the mainland, are safe and unharmed.

Readers no doubt took note of Trump’s admission against interest in using the word “obliterated”. Or was he trying to signal, as with the pre-agreed strike on Fordow, that this attack was meant to be performative and it was time for Iran to back off, having made its point? I doubt it but it is hard to fathom what Trump thinks he is doing, aside from desperately needing to convey that he and only he is driving events.

However, Kharg Island may not be as essential to Iran’s oil exports as the Administration’s messaging posits:

Larry Johnson gives a long form takedown in Trump’s Kharg Island Fantasy… All Bark, No Bite. Key sections:

Late on Friday Donald Trump claimed in a social media post that military facilities on Kharg Island were targeted. Read his Truth carefully:

Trump is deep into fantasy land. Yes, I think he has lost touch with reality. He admits that the oil terminals were not attacked, just some unidentified military targets…

If you don’t know it now, only one of Iran’s 5 operational oil export terminals is located on Kharg Island. According to data from the international company Kepler, the amount of oil loaded from the tanks installed on Kharg increased by 1.5 times in the past month. This suggests that Iran, by quickly emptying Kharg’s tanks, was prepared for this attack.

If Iran’s oil terminal on Kharg had been destroyed, Iran would have launched missiles at identified the oil terminals in all the countries bordering the Persian Gulf. Here’s the list:

Saudi Arabia
Ras Tanura: The largest marine oil loading center in the world; capacity: 6 million barrels per day.

Ras Al-Ju’aymah: The second most important terminal; capacity 3 to 3.6 million barrels per day.

United Arab Emirates
Fujairah: Has multiple docks and is the largest fueling center in the region.

Jebel Ali: Site for crude oil and petrochemical exports.

Qatar
Ras Laffan: The largest LNG export facility in the world.

Kuwait
Mina Al-Ahmadi: Central crude oil export terminal with deep docks and high capacity.

Bahrain
Sitra Terminal: Exports refined…

There are a couple of ways to look at this. Perhaps Trump’s lie about devastating Kharg Island is the start of his PR campaign to gaslight the American public into believing Iran is defeated, which would allow Trump to declare victory and start withdrawing US forces. That’s one possibility. Alternatively, he really believes the lie and is convinced that this latest strike will convince the Iranians to surrender.

Having said that, it is not impossible that some sort of barmy scheme is in motion:

Perhaps the clever Israeli plan is if the US loses enough men in trying to take Kharg Island, it will commit to sending even more troops and treasure into this burn pit? From the Wall Street Journal in More Marines and Warships Head to Middle East as Hormuz Mission Intensifies:

The Pentagon is moving additional Marines and warships to the Middle East, as Iran steps up its attacks on the Strait of Hormuz and the U.S. prepares to escort tankers through the waterway.

Defense Secretary Pete Hegseth has approved a request from U.S. Central Command, responsible for American forces in the Middle East, for an element of an amphibious-ready group and attached Marine expeditionary unit to head to the region, according to U.S. officials...

An amphibious-ready group is a fast-response unit used to conduct sea-based amphibious assaults, humanitarian aid missions and special operations. The group’s embarked Marine expeditionary unit includes more than 2,000 Marines.

In addition to the Marine unit, the Pentagon is also weighing Centcom’s request for two additional destroyers to help escort commercial ships through the strait, one of the officials said.

The New York Times reported:

About 2,500 Marines aboard as many as three warships are heading to the Middle East from the Indo-Pacific region, as Iran increases its attacks on the Strait of Hormuz, two U.S. officials said.

Now this new attempts at escalation may appear confident. Contrast this with signs of Administration officials, other than Trump, looking as if they are coming unglued. The triggers seem to be continued pounding by Iran. Larry Johnson maintains, forcefully, that the refueler that crashed in Iraq, resulting in six deaths, was the result of a strike. Shortly after that (as we will show below), Iran dropped what is purported to be a 2,000 pound bomb on the US base in Saudi Arabia. We have accounts that military and five more refuelers were severely damaged. Note more missiles may have gotten through than the one carrying the 2,000 pound munition.

by Yves Smith, Naked Capitalism |  Read more:

Images: Bloomberg; WSJ; X, TS

[ed. Israel (Netanyahu) is on a killing spree in Iran, Lebanon, Gaza, Syria and who knows where else, using American weaponry and hoping to suck the US and other countries into expanded escalation... and we've been dumb and arrogant enough to jump right in. See also: Iran has not asked for ceasefire and sees no reason for talks with US, Iranian minister says (BBC).]

The Sucker

On a Thursday evening in September, I excused myself from the family dinner table and slipped into my bedroom. I didn’t want my kids to see what I was about to do.

With the door locked behind me, I pulled out my phone and downloaded the DraftKings betting app. I felt a certain thrill as I typed in my debit-card information and deposited $500. The first game of the NFL season was a few minutes away. Anything seemed possible.

I am not, by temperament, a gambling man. As a suburban dad with four kids, a mortgage, and a minivan, I’m more likely to be found wrestling a toddler into a car seat than scouring moneylines or consulting betting touts. And as a practicing Mormon, I am prohibited from indulging in games of chance. Besides, I had always thought of gambling as a waste of time. This makes me an outlier among my generational peers: Since 2018, Americans have wagered more than half a trillion dollars on sports, and roughly half of men ages 18 to 49 have an active account with an online sportsbook.

When I set out to report on the sports-betting industry—its explosive growth, its sudden cultural ubiquity, and what it’s doing to America—my editors thought I should experience the phenomenon firsthand. Mindful of my religious constraints, they proposed a work-around: The Atlantic would stake me $10,000 to gamble with over the course of the upcoming NFL season. The magazine would cover any losses, and—to ensure my ongoing emotional investment—split any winnings with me, 50–50. Surely God would approve of such an arrangement, my editors reasoned, because I wouldn’t be risking my own hard-earned money.

This spiritual loophole intrigued me. But for the sake of my soul, I decided I’d better consult a higher ecclesiastical authority than The Atlantic’s masthead.

A few days later, I sat across from my bishop, explaining the experiment and watching a look of pastoral concern come over his face. After some consideration, he said (a bit tentatively, if I’m being honest), “I don’t think you’re doing anything wrong.” He grasped the difference between gambling with my own money and using my employer’s for research purposes. But he had also seen too many lives wrecked by vice to let me leave without a warning. He told me stories he’d heard about upstanding family men who had let an initially modest gambling habit ruin them, and a cautionary tale about a churchgoing lawyer who developed an unhealthy curiosity about sex work after handling a prostitution case and wound up devastating his family.

I promised the bishop that I would steer clear of slippery slopes. “This will really just be a journalistic exercise,” I assured him.

Fifteen minutes before kickoff, I scrolled through the available wagers on DraftKings in wide-eyed bewilderment. Struggling to make sense of the terminology—Profit boosts? Alternative spreads?—I punched in bets almost at random. I bet that the Eagles would beat the Cowboys by at least nine points, based on the sophisticated premise that the Eagles had won the previous Super Bowl and the Cowboys had not. I placed a bet that Eagles quarterback Jalen Hurts would throw for more than 200 yards, and wagered on something called a “same-game parlay” that would pay out if both Hurts and running back Saquon Barkley scored touchdowns.

Then, after tucking in my kids for the night, I turned on the TV in our bedroom and settled in next to my wife, Annie.

Watching the game was unexpectedly stressful. Toggling among my five different bets—monitoring their progress, weighing live “cash out” options—left me feeling harried and sweaty. Four seconds into the game, I got a taste of the capriciousness of the enterprise when the Eagles’ best defender inexplicably spit on the Cowboys’ quarterback and got himself ejected. Had the Eagles’ chances of beating the spread, and my chances at winning $75, just been expectorated away?

Ever since the advent of sports, humans have found ways to lose money gambling on them.

But the experience was also strangely mesmerizing. For 200 bucks, I had purchased an artificial rooting interest in a game I had no reason to care about. I kept watching even after a weather delay pushed it late into the night, scrolling frenetically next to my sleeping wife in search of angles to exploit with late-game bets. Most of my bets ended up losing, but the long-shot Hurts-Barkley parlay hit, and when the game ended, I calculated that I was up $20.

The next morning, I proudly shared the news with Annie, who high-fived me and immediately began to fantasize about how we would spend my winnings for the season. Could we replace our dying KitchenAid mixer? Remodel the kitchen pantry? Like so many wives before her, she had looked upon my foray into sports gambling with a bemused air of exasperation; now she was seeing a potential upside.

I laughed at her sudden enthusiasm—but I was starting to get ideas myself. I had made $20 on my very first night of gambling. Scale up the wager sizes, multiply across all 272 games in the NFL season, throw in some NBA and college football, and I stood to make—what, $10,000? $20,000? More?

I knew, of course, that I wouldn’t win every bet. But I didn’t see the harm in dreaming. As Annie and I traded home-improvement fantasies, I tried my best not to dwell on the last thing the bishop had said to me: “Be careful.” 

Practically overnight, we took an ancient vice—long regarded as soul-rotting and civilizationally ruinous—put it on everyone’s phone, and made it as normal and frictionless as checking the weather. What could possibly go wrong? [...]

Week Two

Total gambled: $376.00
Down $58.15

If I was going to do this, I decided, I would need a gambling guru—someone to talk me through the basics of sound sports betting (if such a thing existed) and teach me best practices.

The obvious choice was Nate Silver, America’s most famous statistics nerd. Silver first made a name for himself as the founder of 538, an election-forecasting website that accurately predicted the winner of all 50 states in the 2012 presidential campaign. A few years ago, Silver, citing a midlife crisis and political fatigue, discarded the pundit suits, threw on a baseball cap, and started writing more about gambling. He launched a newsletter full of sophisticated sports-betting models and wrote a book about the psychology of successful gamblers. He estimates that he has netted in the “mid–six figures” over the course of his gambling life. If anyone could turn me into a respectable bettor, I figured, it was him.

Before our first call, I sheepishly sent Silver my week-one bet slips. After that first triumphant game, things had gone downhill. Scrolling through DraftKings’ offerings, I had turned into a little kid at a carnival, emptying my parents’ wallet into any ring toss or high striker that caught my eye. I’d taken fliers on games without doing any research, and placed live bets on whatever ESPN happened to be showing when I turned on the TV. On Saturday afternoon, while casually watching a random college-football game with my brother, I bet $10 that the point total wouldn’t go over 52.5, lost, tried to make my money back with a new bet that it wouldn’t go over 61.5, and lost that one too. Of the 14 wagers I’d placed in my first week, I’d won three.

Silver pulled up my slips when we got on the phone, and began to audibly react as he scrolled:

“Okay …”

“Oh.”

“Oh no.” He started laughing.

Is it possible to be emasculated by Nate Silver? Apparently, yes.

Perhaps sensing my humiliation, he tried to soften his assessment. “Look, the nice way to put it is that you’re betting like a recreational bettor.” I took this as a withering insult.

Silver laid out some basic realities of the sports-betting economy. The books effectively charge you about 4.5 percent for every bet you place, he explained, which means it isn’t enough to win 50.1 percent of the time; you have to win 52.5 percent of your bets just to break even, and that’s before taxes. My most obvious mistake, he said, was that I was using only DraftKings. To find edges, I would need to shop for lines across at least three or four books every week.

He gave me other tips, too: Avoid “prop bets” on individual players (Josh Allen to rush for more than 50 yards) and multi-leg parlays, which pay out only if every outcome hits (the Chiefs cover the spread, the Ravens win, and the Chargers score more than 24 points). Props and parlays are how sportsbooks generate most of their profits. “They’re suckers’ bets,” Silver said, which made sense, given that I had already placed several of them.

Live betting—placing wagers in the middle of games—was also a bad idea, he told me, because it leads to gambling based on emotion more than logic. Also, televised games are broadcast on a delay, which means the sportsbooks can adjust lines before you even see what has happened on the field. You are, in effect, betting against people who live 20 seconds in the future.

To guard against emotional betting, Silver suggested a Tuesday-morning ritual: I should sit in a quiet place, study the lines for that week’s games, gather information on injury reports and weather forecasts, and then place $100 bets on the six or seven games I liked best.

Before we hung up, I asked Silver what kind of profit would make it a successful season for me.

He seemed confused by the question. “If you make one penny, that would be better than 98 percent of people over an entire season,” Silver answered, as if this were obvious.

I was taken aback. Hadn’t Silver himself made hundreds of thousands of dollars gambling? Yes, he said, but that was mostly from poker tournaments. Sports betting was a game of razor-thin margins and microscopic edges. NFL football was among the hardest sports to win money on—the lines were too sharp, the teams too evenly matched. Silver told me that, even with his quantish models and prognosticatory brilliance, he would consider it cause to celebrate if he broke even on the season.

by McKay Coppins, The Atlantic |  Read more:
Image: Tyler Comrie/Getty

[ed. See also: The Online Sports Gambling Experiment Has Failed (DS).]

Insider Trading Is Going to Get People Killed

War markets are a national-security threat.

Ayatollah Ali Khamenei was not, it’s safe to assume, a devoted Polymarket user. If he had been, the Iranian leader might still be alive. Hours before Khamenei’s compound in Tehran was reduced to rubble last week, an account under the username “magamyman” bet about $20,000 that the supreme leader would no longer be in power by the end of March. Polymarket placed the odds at just 14 percent, netting “magamyman” a profit of more than $120,000.

Everyone knew that an attack might be in the works—some American aircraft carriers had already been deployed to the Middle East weeks ago—but the Iranian government was caught off guard by the timing. Although the ayatollah surely was aware of the risks to his life, he presumably did not know that he would be targeted on this particular Saturday morning. Yet on Polymarket, plenty of warning signs pointed to an impending attack. The day before, 150 users bet at least $1,000 that the United States would strike Iran within the next 24 hours, according to a New York Times analysis. Until then, few people on the platform were betting that kind of money on an immediate attack.

Maybe all of this sounds eerily familiar. In January, someone on Polymarket made a series of suspiciously well-timed bets right before the U.S. attacked a foreign country and deposed its leader. By the time Nicolás Maduro was extracted from Venezuela and flown to New York, the user had pocketed more than $400,000. Perhaps this trader and the Iran bettors who are now flush with cash simply had the luck of a lifetime—the gambling equivalent of making a half-court shot. Or maybe they knew what was happening ahead of time and flipped it for easy money. We simply do not know.

Polymarket traders swap crypto, not cash, and conceal their identities through the blockchain. Even so, investigations into insider trading are already under way: Last month, Israel charged a military reservist for allegedly using classified information to make unspecified bets on Polymarket.

The platform forbids illegal activity, which includes insider trading in the U.S. But with a few taps on a smartphone, anyone with privileged knowledge can now make a quick buck (or a hundred thousand). Polymarket and other prediction markets—the sanitized, industry-favored term for sites that let you wager on just about anything—have been dogged by accusations of insider trading in markets of all flavors. How did a Polymarket user know that Lady Gaga, Cardi B, and Ricky Martin would make surprise appearances during the Super Bowl halftime show, but that Drake and Travis Scott wouldn’t? Shady bets on war are even stranger and more disturbing. They risk unleashing an entirely new kind of national-security threat. The U.S. caught a break: The Venezuela and Iran strikes were not thwarted by insider traders whose bets could have prompted swift retaliation. The next time, we may not be so lucky. [...]

Any insiders who put money down on impending war may not have thought that they were giving anything away. An anonymous bet that reeks of insider trading is not always easy to spot in the moment. After the suspicious Polymarket bets on the Venezuela raid, the site’s forecast placed the odds that Maduro would be ousted at roughly 10 percent. Even if Maduro and his team had been glued to Polymarket, it’s hard to imagine that such long odds would have compelled him to flee in the middle of the night. And even with so many people betting last Friday on an imminent strike in Iran, Polymarket forecasted only a 26 percent chance, at most, of an attack the next day. What’s the signal, and what’s the noise?

In both cases, someone adept at parsing prediction markets could have known that something was up. “It’s possible to spot these bets ahead of time,” Rajiv Sethi, a Barnard College economist who studies prediction markets, told me. There are some telltale behaviors that could help distinguish a military contractor betting off a state secret from a college student mindlessly scrolling on his phone after one too many cans of Celsius. Someone who’s using a newly created account to wager a lot of money against the conventional wisdom is probably the former, not the latter. And spotting these kinds of suspicious bettors is only getting easier. The prediction-market boom has created a cottage industry of tools that instantaneously flag potential insider trading—not for legal purposes but so that you, too, can profit off what the select few already know.

Unlike Kalshi, the other big prediction-market platform, Polymarket can be used in the U.S. only through a virtual private network, or VPN. In effect, the site is able to skirt regulations that require tracking the identities of its customers and reporting shady bets to the government. In some ways, insider trading seems to be the whole point: “What’s cool about Polymarket is that it creates this financial incentive for people to go and divulge the information to the market,” Shayne Coplan, the company’s 27-year-old CEO, said in an interview last year. (Polymarket did not respond to a request for comment.)

Consider if the Islamic Revolutionary Guard Corps had paid the monthly fee for a service that flagged relevant activity on Polymarket two hours before the strike. The supreme leader might not have hosted in-person meetings with his top advisers where they were easy targets for missiles. [...]

Maybe this all sounds far-fetched, but it shouldn’t. “Any advance notice to an adversary is problematic,” Alex Goldenberg, a fellow at the Rutgers Miller Center who has written about war markets, told me. “And these predictive markets, as they stand, are designed to leak out this information.” In all likelihood, he added, intelligence agencies across the world are already paying attention to Polymarket. Last year, the military’s bulletin for intelligence professionals published an article advocating for the armed forces to integrate data from Polymarket to “more fully anticipate national security threats.” After all, the Pentagon already has some experience with prediction markets. During the War on Terror, DARPA toyed with creating what it billed the “Policy Analysis Market,” a site that would let anonymous traders bet on world events to forecast terrorist attacks and coups. (Democrats in Congress revolted, and the site was quickly canned.)

Now every adversary and terrorist group in the world can easily access war markets that are far more advanced than what the DOD ginned up two decades ago. What makes Polymarket’s entrance into warfare so troubling is not just potential insider trading from users like “magamyman.” If governments are eyeing Polymarket for signs of an impending attack, they can also be led astray. A government or another sophisticated actor wouldn’t need to spend much money to massively swing the Polymarket odds on whether a Gulf state will imminently strike Iran—breeding panic and paranoia. More fundamentally, prediction markets risk warping the basic incentives of war, Goldenberg said. He gave the example of a Ukrainian military commander making less than $1,000 a month, who could place bets that go against his own military’s objective. “Maybe you choose to retreat a day early because you can double, triple, or quadruple your money and then send that back to your family,” he said.

by Saahil Desai, The Atlantic | Read more:
Image: Matteo Giuseppe Pani/The Atlantic
[ed. For other examples, see also: Mantic Monday: Groundhog Day (ACX). Also: How to Prevent Insider Trading on Trump’s Wars (New Yorker); and, America Is Slow-Walking Into a Polymarket Disaster (Atlantic).]

The China Vibe Shift

A year ago came what, for lack of a better term, we dubbed the DeepSeek moment. That was followed fairly quickly by the curious migration of “TikTok refugees” to Xiaohongshu, and not long after that by the first conversations Jeremy Goldkorn and I had about what felt like a changing American — or even Western — mood toward China.

Today, freshly back from Switzerland after covering the World Economic Forum (where the chatter was, not surprisingly, fixated on Trump’s covetous pronouncements on Greenland and Mark Carney’s “rupture” speech), with Keir Starmer now in Beijing to continue talks about restoring some version of the UK–China “Golden Age,” it feels like a decent moment to look back and ask what, if anything, all of that amounted to.

Jeremy and I recorded a podcast episode in which we tried to describe something we were both sensing in the early months of 2025 but couldn’t quite pin down. It wasn’t a policy shift, or even a clear change in opinion. It was more atmospheric than that — a change in tone, in default assumptions, in the emotional register through which China was being discussed in Western discourse. We eventually settled, somewhat sheepishly, on calling it a “vibe shift.” (Less sheepishly, we reconvened in November to gloat about how we’d gotten that right!)

The phrase was imprecise and was intended to convey imprecision. But it did seem to capture something real. Multiple polls have since borne it out, and the feeling has only grown stronger. What’s become clearer to me, looking back, is how that shift relates to a larger argument I’ve been making for some time now — what I called the “Great Reckoning” in a piece I published in The Ideas Letter.

The two are not the same thing. The vibe shift is not the reckoning I’m looking for. But it may be making one more possible.

The change I’m describing is not a sudden outbreak of admiration for China, nor a reversal of long-standing concerns about human rights, political repression, or democracy (though admittedly I’ve seen some of that in some quarters). Those issues remain very much part of the picture. What’s changing is something more basic: the set of assumptions that have long structured how China is interpreted in Western public life.

For years, a relatively stable narrative did a lot of work. China’s successes were provisional; its failures were fundamental. Growth would eventually give way to crisis. Political liberalization was assumed to be inevitable, even if perpetually deferred. Moral condemnation often stood in for empirical assessment. China could be criticized without being fully understood, because history, it was assumed, would take care of the rest.

That narrative hasn’t exactly been replaced. One only has to look at how eagerly some commentators declared Party rule “brittle” following the purges of Zhang Youxia and Liu Zhenli, or how quickly far-fetched rumors were embraced, to see that the old habits die hard.

But the narrative has lost much of its force, mainly because the U.S. — Gaza to Greenland — no longer commands the moral authority it once assumed. Increasingly, when I hear it, it sounds less like analysis and more like reassurance. I know I’m not alone in this.

You can see this erosion in small but telling ways: in the growing reluctance to predict imminent collapse; in the uneasy acknowledgment that China is capable of building complex systems at scale; in the fact that younger audiences, and people closer to technology, manufacturing, or logistics, are less willing to treat China as a purely derivative or temporary phenomenon.

None of this amounts to endorsement. But it does suggest a loosening of reflexes.

A year of small shocks

The past year offered no shortage of moments that helped crystallize this shift.

The emergence of DeepSeek was only one of them. The reaction it provoked wasn’t really about a single large language model. It was about the dawning realization that China was not merely following at the technological frontier, but participating in shaping it. That realization sat awkwardly with long-standing assumptions about where innovation could — and could not — come from.

Then there was the strange but revealing episode of Western “TikTok refugees” making their way onto Xiaohongshu. Tens of thousands of users encountered a Chinese social media environment directly, without mediation by think tanks, policy papers, or cable news. The result wasn’t mass admiration so much as something more disarming: familiarity. China appeared less opaque, less exotic, and therefore harder to keep at a safe analytical distance. (In a strange coda to that episode a year on — not something I’ve looked into too closely, but from what I’m hearing — people are once again abandoning TikTok for Chinese apps, TikTok being under new and apparently very censorship-happy American management).

Around the same time, a steady trickle of firsthand accounts — from executives, engineers, investors, and travelers — described a China that didn’t fit neatly into prevailing narratives. Infrastructure that worked. Manufacturing ecosystems that functioned smoothly. A sense of momentum that was hard to reconcile with predictions of stagnation or decay.

Some of this material was shallow. A fair amount of the so-called “China-pilled” content circulating online is overwrought, unserious, or plainly wrong. I don’t endorse it. But even that excess is revealing. It suggests that people are groping, sometimes awkwardly, for ways to make sense of realities that just don’t fit the narrative they’ve been sold.

One of the stranger — and more amusing — expressions of this moment was described in a recent Wired piece by Zeyi Yang, who is always worth reading. Yang wrote about the sudden popularity of memes in which Americans announce that they are in “a very Chinese time” of their lives: drinking hot water (which I do endorse), wearing slippers in the house, posting videos of themselves eating dim sum, sporting vaguely Chinese-coded streetwear, or joking about “Chinamaxxing.”

The joke, as Yang notes, is not really about China, and certainly not about Chinese people. It’s a projection — a way of gesturing at something Americans feel they’ve lost.

The meme works precisely because it’s unserious. No one is actually becoming Chinese. But the impulse behind it is telling. China, in this memified version, functions less as a real place than as a symbolic contrast: a stand-in for competence, momentum, coherence, or simply “things getting done,” set against a backdrop of crumbling infrastructure, normalized dysfunction, and institutional paralysis at home.

That selectivity is the point. The meme is disposable, ironic, and easily reversed. It allows people to flirt with an alternative without committing to understanding it. In that sense, it’s less a sign of admiration than of dissatisfaction — a sideways commentary on American malaise, filtered through a half-ironic orientalist lens.

I wouldn’t read too much into it. But I wouldn’t dismiss it either. Cultural detritus often reflects shifts in mood before more formal discourse catches up.

The reckoning beneath the surface

This is where the connection to the “Great Reckoning” comes in — and where it’s easy to sound more portentous than necessary.

The reckoning I have in mind isn’t really about China. It’s about us. More specifically, it’s about a long-standing Western habit of assuming that modern outcomes — wealth, tech sophistication, state capacity — are inseparable from Western political forms. When things don’t line up that way, the tendency has been to assume something must be temporary, distorted, or unsustainable.

China’s rise has been awkward for that story. Not because it offers the West some appealing alternative model — I don’t think it does — but because it keeps producing results that are hard to dismiss without contortions. Over time, this has encouraged a set of coping strategies: predictions of imminent collapse, confident talk of inevitable convergence, and a habit of substituting moral judgment for careful description.

For a while, that worked. Or at least it postponed the need for a harder conversation...

That’s what I mean by the vibe shift. Not that people have settled on a new story, but that the old one is starting to creak loudly enough to be noticed.

In that sense, the shift is preparatory. It doesn’t tell us what to think next. It just makes it harder to keep thinking the same way.

by Kaiser Y. Kuo, Sinica | Read more:

Image: via

[ed. I've got nothing against China, it's just doing what any superpower would do, looking out for its interests, expanding its sphere of influence for economic and security reasons, and attempting to preserve its history, culture and political system. See also: The Civilization Trap (Sinica). And, in case you missed it, Why Everyone Is Suddenly in a ‘Very Chinese Time’ in Their Lives (Wired). Oh, and this: China's power grid investments to surge to record $574 billion in 2026-2030. Maybe people are just envious that China is investing in its future, while the US self-destructs and spends $ trillions on military weapons and war mongering.]

Suno: The AI Music Race is Over

Video: Rick Beato

[ed. See also: The Truth About AI Music (Rowland's newsletter).]

For someone as profoundly unmusical as me, AI music generators are quite magical. I can barely sing a note, but in a few seconds I can make an entire track in any genre on any topic I want – like this soul song about Sky camera operator Phil Hooper. You can dismiss this as pure silliness for an audience of about five, but to me that’s the point! Thanks to AI, I get a little bit of musical joy that otherwise is completely out of reach.

Yet, as ever with technology, removing friction comes with a cost, and in this case the cost is a tsunami of musical spam. The stats on AI music are mind-boggling. In 2015, the entire US music industry made around 57,000 songs. Today, 60,000 AI tracks are uploaded to Deezer (aka French Spotify) *every single day* - that’s 21m a year, and this thing is just getting going.

The real problem isn’t the tracks, however, but the behaviour around them, because AI music is being used to try and steal from streamers (and by extension every legitimate musician on the site). Deezer estimate that 85% of listens to AI music are fraudulent – that is, made by bots set to stream the songs over and over in order to siphon royalties from the common pool. 

[ed. Do check out the soul song example mentioned above (with this accompanying video). Pretty scary... and sad.]

Why Libraries Don't Stock Many Audiobooks

Have you ever wondered …

Why can’t my library get more copies of e-books and digital audiobooks?

You’re not alone! And there are a couple of reasons you might find yourself on a long wait list for e-content:

• Most materials are licensed, not owned by the library like print books are, and publishers put limits on how long and/or how often the content can be used. Once the limit is reached, the library must re-purchase the license if we want to keep offering the e-content to our community. 
• At the same time, e-books and digital audiobooks cost libraries more than print copies and more than what consumers would pay to purchase them commercially.

Here’s a real-time example:

How can you help?

• If you finish with e-content early, please return it so the next person can jump off the waiting list and into the book! Just go to Manage Loan and select Return Early in the Libby App.
• And keep borrowing e-content from your library! The numbers help us advocate for funding.

by Hawaii State Library Association 

[ed. Would it hurt publishers or whoever's collecting these licensing fees to be a little more civic-minded by providing complimentary copies to libraries? (or at least getting rid of repurchasing requirements?) Guess so.]

The Explainer: 'The Save America Act' and Data Centers By the Numbers

What To Know About The SAVE America Act

If passed into law, the Safeguard American Voter Eligibility Act will create new barriers to voting in federal elections by requiring documentation of citizenship to register and imposing strict photo-identification rules at polling places. The Onion shares everything you need to know about the SAVE America Act.

Q: What is the goal of the bill?

A: To ensure the pristine integrity of American elections by making sure they never happen again.

Q: What form of ID can be used to confirm citizenship?

A: NRA membership cards.

Q: Is the Senate expected to pass the SAVE America Act?

A: Depends on which senators die between now and the vote.

Q: Where’s my birth certificate?

A: Did you check the bottom drawer of the living room cabinet? There should be a purple folder underneath all those old receipts.

Q: Why did Trump endorse it?

A: To stop the many thousands of immigrants who aren’t here anymore from voting.

***

Data Centers By The Numbers

The surge in AI, cryptocurrency, and other digital assets is rapidly increasing demand for computational infrastructure around the country. The Onion examines the key facts and figures behind data centers.

0.8
New pH of your groundwater

$900,000,000
What 16GB of RAM will cost next year

4,000
Palm fronds fanned to cool the servers

1
Security guard job that Mom thinks might help you get back on your feet

3-2
City council vote that could have stopped this

600 billion
Goddamn wires to untangle

7
People profiting from this

***

[ed. See also: Anyone Else Have Those Weird Dreams Where Sobbing Future Generations Beg You To Change Course? (Sam Altman, CEO, OpenAI:]

The human subconscious is such an interesting thing. No matter how much you think you’ve got it figured out, it’ll always spit out the most random stuff. Take me, for example. After coming home from a long day at the world’s most groundbreaking artificial intelligence organization, I’ll go to bed and have the weirdest dreams where people from the future are sobbing and begging me to change course.

Anyone else ever have these?

It’s funny. Some people have dreams where their teeth fall out; others where they show up to high school tests naked. But the second my head hits the pillow, I’m suddenly in a cold gray smoky void where all I can make out are broken, haunted swarms of people pleading with me to “end this now while there’s still time.” Really peculiar, right? I wish there was some way to find other people who have had them. But when I search “endless crowds of weeping silhouettes telling you this is a terrible mistake” dreams on Reddit, it turns up nada.

It’s tough, because I don’t have much time during the day to think about them. I asked my spouse, Oliver, if he’s ever had the old “people screaming for help from the devastated wreckage of a future world” dream, and he said he didn’t know what that was. I even joked about it while I was out grabbing morning coffees with some venture capitalist buddies. I said, “Sorry if I’m a little off the ball today, guys—I had another one of those dreams where you’re on a scorched, desolate landscape desperately pushing past men who grab you by the lapel, shake you, and cry out, ‘Please understand: This isn’t a dream. It’s a warning.’”

They just looked at me like I was crazy, though... [read more:]

All Show, No Dough

DOGE’s Final Failure (Wake Up To Politics)

Image: NYT

As of this month, President Trump has signed nearly all Fiscal Year 2026 spending into law, across three legislative packages (see here, here, and here). According to a Wake Up To Politics analysis of these laws, Congress rejected 44 out of Trump’s proposed 46 eliminations. In most cases where Trump sought to zero out an agency’s funding, the agencies were instead given around the same level of funding as in previous years; in some cases, the targeted programs even saw funding boosts. [...]

The lesson is not that tearing things down requires any less of a legislative majority than building things up does, as shown by the fact that Trump’s only truly successful tear-downs — the ones not still snarled in court battles — are the ones he was able to get a congressional majority to support. Tearing things down unilaterally can generate a lot of chaos, and a lot of headlines, and even a period where things grind to a halt or are consumed by confusion, giving the appearance of victory. But it is much too early to say that tearing things down unilaterally works.

Strangely, one lesson from the Trump era (for those willing to learn it), may end up being the importance of respecting process. Accomplishments are only secure when codified by legislation, and even more secure when codified by bipartisan legislation, which means they have garnered the support of a broad-based majority and are unlikely to soon be overturned. This is something our most successful presidents have understood, and it’s something that has become clear once again in the Trump era, even as the president has tried to promote the appearance of success via unilateral action. Cutting corners (mostly) hasn’t worked; Trump’s most successful efforts to tear down agencies have still happened through a congressional process. [...]

It turns out that if you want to successfully run a government — whether “success,” to you, means expanding bureaucracy or slashing it — it helps to have people who know about the government.

And the same is true of Trump’s attempts to slash the government, which were similarly foiled by a lack of expertise.

[ed. Recommended. See also: The Best-Kept Secret in Washington (NYT):]

***

These days, Congress, which hosted President Trump’s State of the Union address on Tuesday night, is often seen as the third wheel of the federal government, forever overshadowed by the presidency and Supreme Court, with a truly dismal approval rating.

But Kevin R. Kosar, a senior fellow at the American Enterprise Institute, thinks Americans might have gone a little too far in their Congress bashing. Congress — or at least the “secret Congress,” as he calls it — is not nearly as gridlocked or incompetent as its reputation suggests. The “toxic Congress,” on the other hand …

John Guida: You recently called Congress “both deeply dysfunctional and surprisingly functional.” While it frequently fails even to pass a budget on time, it also does plenty of “valuable things that are nearly invisible to Americans,” like raising the compensation and benefits for veterans last year to keep up with inflation.

At the heart of your qualified defense of Congress is what you call the “secret Congress.” What is that?

Kevin R. Kosar: The secret Congress is the Congress that operates mostly in plain sight but that the average American simply does not see. This is not because our legislators are spending time squirreled away in a secret, plush room in the Capitol with leather chairs and covertly governing the country. (Although they do have some private rooms where they haggle.)

No, most of what the secret Congress does is readily visible, but most of us do not look. Very few of us, for example, surf to Congress.gov to see how many laws have been passed by Congress in recent weeks or months or spend much time watching hearings on C-SPAN. [...]

Guida: The flip side of the coin is what you call the “toxic Congress.” I take it that is where you identify the biggest shifts over the years in how Congress operates.

Kosar: The toxic Congress is the Congress we Americans are all too familiar with. It is the Congress that does not make much policy, and when it does, it passes laws by party-line votes. The toxic Congress is the Congress where legislators behave in truly awful ways to one another, where partisans openly speak of members of the other party as radicals and fascists. The toxic Congress is mostly what we see when we open X or Bluesky. It’s individuals refusing to do what Congress was built to do: bring diverse people together to bargain out policy the country can live with.

Guida: Who are the heroes of the secret Congress?

Kosar: Certainly Representative Tom Cole, Republican of Oklahoma, and Representative Rosa DeLauro, Democrat of Connecticut. These are not household names, like the right-wing firebrand Representative Lauren Boebert of Colorado and the democratic socialist Representative Alexandria Ocasio-Cortez of New York. Cole and DeLauro sit atop the House Appropriations Committee. They are in charge of initiating trillions of dollars in spending legislation. They are two very different individuals with distinct views about government, and yet they quietly worked together to get pending bills to President Trump’s desk, which he signed, and these bills, I’ll add, do push back on the executive branch in various ways.

There are many others who are workhorses, not show horses. And I should add that many legislators behave as both — raging partisans on high-salience issues that get lots of media coverage and that are core to the party brand (like immigration) and professional lawmakers on boring, low-salience, wonky matters.

[ed. Also highlighted here: The House’s ‘Odd Couple’ Reasserting Congress’ Power of the Purse (NOTUS). Reps. Tom Cole (R) and Rosa DeLauro (D).]

Thanks For All the Fish

We were honored as Alaska Teachers of the Year. Now we can no longer stay.

In 2019, after being selected as Alaska’s 2018 State Teacher of the Year, I worked with other award-winning educators to pen an op-ed: “Why teach in Alaska?” At the time, we eagerly co-signed as we believed in dedicating a career to Alaska students and that our legislators and community wanted a thriving public education system.

My answer now is a heavy “I can’t.” My wife, Catherine Walker — the 2024 Alaska Teacher of the Year and one of four National Teacher of the Year finalists — and I are leaving. When two people recognized among the most dedicated by the state itself decide they no longer see a future, the “Alaska is a great place to teach” narrative hasn’t just frayed; it has disintegrated.

Leaving Alaska isn’t a choice made lightly. It is a heartbreaking conclusion forced by two decades of witnessing leadership denigrate and undervalue the profession we love. Let’s start at the top: Gov. Mike Dunleavy is possibly the most anti-public education governor in the history of Alaska. Over eight years, he has done little to improve the educational experience of the 95% of young Alaskans coming through public schools every day. He has vetoed nearly every bill aimed at bettering public education, whether it be funding, improving the lives of public school teachers or even taking care of the one school directly in the state’s care. While he pulls a public pension from our state coffers as a public school educator, he has systematically torn down public education through administration hires, funding vetoes, rhetoric and policy changes, and has been outwardly anti-teacher with the not-so-hidden purpose of funneling public money to inequitable and unaccountable private and religious schools. [...]

The reality is that Alaska is the only state in the union that offers its teachers neither a defined-benefit pension nor Social Security. This retirement crisis is fueling the fire of our education system’s collapse. We have the worst educator turnover in the country, and it is proven that high teacher turnover directly impacts student outcomes. When a student loses a teacher midyear or when a school replaces 30% of its staff annually, the continuity of learning is shattered...

In Alaska, our retirement is not only the worst in the nation for teachers, it is the worst in the nation among all professionals. If any of us worked in the private sector with the educational level we have, we would have a 401(k) with an employer match. This is basically what we have with the state of Alaska. But that is where it stops. In the private sector, we would also be paying into Social Security, as would our employer. This is not an option for Alaska teachers. So we end up dead last in not only teacher retirement but retirement in general. And it is not just teachers; all public service areas, including state troopers and firefighters, are being decimated and finding it impossible to staff at the levels needed to provide a high quality of life to Alaskans.

“Alaska is open for business” seems to be a favorite refrain of those refusing to fulfill their constitutional duty to fund services while also refusing to get Alaskans’ fair share from resource extraction. The funny thing is, 49 other states are also open for business, and all 49 arguably have better environments for teachers than Alaska. Alaska is a beautiful state and was a great place for us to raise our children outside and be active. But Alaska needs to realize you can kayak and fish in plenty of other states while also being treated like a professional and earning a secure pension, in addition to having a high quality of life due to funded and respected public sector services and employees.

Cat and I didn’t want to leave. I’ve lived in Alaska since I was 2, and Cat was born here. We’ve raised two kids here and have family here. We wanted to stay and help build the world-class education system our leaders love to talk about. But you cannot have a world-class system when your leaders treat people like a disposable commodity or are actively working to destroy it.

We are the products of Alaska public schools and eagerly enrolled our kids in Anchorage public schools. All we have ever wanted, and all any of the thousands of families we have worked with over the years have ever wanted, is a robust public school experience for our children like we had growing up — one in which they have teachers who are experienced, feel supported and want to stay their entire career in one community and retire with security; schools with electives like art and music; and extracurriculars like sports, theater and clubs. Buildings that are safe and well maintained. At the same time, as community members, Alaskans deserve all public services to be well-funded and maintained and public sector workers to be compensated and taken care of after a lifetime of service to Alaskans. As adults and parents, we have been front-row witnesses to the callous degradation of the quality of life in Alaska, where corporate interests come before residents, where we choose companies over sustainability, and out-of-state workers and tourists over our children. The criminal underfunding of education may be the canary, but unless Alaskans wake up and vote to retake control from corporations and those in power who do their bidding, Alaska as so many of us have known it growing up will no longer exist.

The most maddening part is that there are solutions and other options. This is not the only way. Other resource-heavy states and countries do not have continual deficits and treat public sectors with dignity and pay and benefits requisite with their experience. This problem of billions of dollars flowing through our state but continually having fiscal problems is a uniquely Alaska experience. But when this is the case for a large chunk of someone’s lifetime, like it has been for Cat and me, you realize it is time for us to change, as it is quite possible this state never will.

There really isn’t much more to say that thousands of teachers, troopers, firefighters, families, students, business leaders and concerned community members haven’t said year after year after year about funding, retirement, rhetoric and a complete disregard for the valuable contributions of public schools, public school teachers and all public service employees.

So I’ll just end with, as Douglas Adams wrote, “Goodbye and thanks for all the fish.”

by Ben Walker, Anchorage Daily News |  Read more:

Image: Bill Roth

[ed. Sad. It's no surprise that Anchorage, and Alaska in general, has declined precipitously since its former glory days. Many reasons, but here are just a few: Republican skin flints who do nothing but advocate for more government spending cuts each year, along with big tax breaks for industry, and subsidies for any new harebrained, get-rich quick scheme; elimination of the state income tax; an annual Permanent Fund dividend from the state's oil royalty account that attracted a bunch of free-loaders and installed a sense of entitlement in the voting electorate. Many other examples. All that wealth down the drain, even with federal spending that, per capita, tops every other state in the country. See also: Anchorage School Board approves ‘severe’ budget with hundreds of staff layoffs and 3 school closures (ST); and, Lawmakers press for cuts to Department of Corrections spending amid big increases (ADN):] [ed. priorities]

***

Though the number of inmates has remained largely stable since 2019, state spending on the Department of Corrections is up more than 54%, far outpacing inflation. The budget has grown every year since Gov. Mike Dunleavy has taken office, commanding an increasing share of annual state spending. This year’s budget request exceeds $500 million for the first time. [...]

The department’s budget is driven in part by its inflexible staffing formulas. Every correctional facility must be manned by a set number of officers and support staff, determined by the department based on the type of prison and inmates housed in each facility. On average, there are between four and five inmates for every correctional officer in the department. If there aren’t enough employees to meet the requirements, the department doesn’t simply slacken the staffing ratios. Rather, it demands that existing employees work overtime. [...]

The overtime mandates led the department last year to spend over $22 million on more than 329,000 overtime hours, the equivalent of more than 158 full-time employees. Nearly 1,700 individual employees reported working at least one hour of overtime in 2025. Of them, 179 reported at least 500 hours of overtime. Two employees reported more than 2,200 overtime hours each — meaning they worked more than the equivalent of a full-time job, on top of their full-time job.

Of its more than 2,100 funded staffing positions, more than 300 are vacant. The number of filled positions went down last year compared to the year before.

Does Anyone Know Why We're Still Doing Tariffs?

The ridiculous policy has taken on a life of its own.

In case you haven’t heard, the Supreme Court just ruled many of Donald Trump’s tariffs illegal:

[T]he Supreme Court ruled that the unilaterally imposed [tariffs] were illegal…No longer does Trump have a tariff “on/off” switch…Future tariffs will need to be imposed by lengthy, more technical trade authorities — or through Congress…

In a 6-3 ruling, the Supreme Court said that affirming Trump's use of the International Emergency Economic Powers Act (IEEPA) would "represent a transformative expansion of the President's authority over tariff policy."…Chief Justice John Roberts said that IEEPA does not authorize the president to impose tariffs because the Constitution grants Congress — and only Congress — the power to levy taxes and duties. [...]

What was the point of these tariffs? It has never really been clear. Trump’s official justification was that they were about reducing America’s chronic trade deficit. In fact, the initial “Liberation Day” tariffs were set according to a formula based on America’s bilateral trade deficits with various countries. But trade deficits are not so easy to banish, and although America’s trade deficit bounced around a lot and shifted somewhat from China to other countries, it stayed more or less the same overall:

Economists don’t actually have a good handle on what causes trade deficits, but whatever it is, it’s clear that tariffs have a hard time getting rid of them without causing severe damage to the economy. Trump seemed to sense this when stock markets fell and money started fleeing America, which is why he backed off on much of his tariff agenda.

Trump also seemed to believe that tariffs would lead to a renaissance in American manufacturing. Economists did know something about that — namely, they recognized that tariffs are taxes on intermediate goods, and would therefore hurt American manufacturing more than they helped. The car industry and the construction industry and other industries all use steel, so if you put taxes on imported steel, you protect the domestic market for American steel manufacturers, but you hurt all those other industries by making their inputs more expensive.

And guess what? The economists were right. Under Trump’s tariffs, the U.S. manufacturing sector has suffered. Here’s the WSJ:

The manufacturing boom President Trump promised would usher in a golden age for America is going in reverse…Manufacturers shed workers in each of the eight months after Trump unveiled “Liberation Day” tariffs, according to federal figures…An index of factory activity tracked by the Institute for Supply Management shrunk in 26 straight months through December…[M]anufacturing construction spending, which surged with Biden-era funding for chips and renewable energy, fell in each of Trump’s first nine months in office. [...]

Macroeconomically, the tariffs haven’t been as big a deal as initially feared. Growth came in slightly weak in the final quarter of 2025, but that was mostly due to the government shutdown, and will rebound next quarter. Inflation keeps bumping along at a little bit above the official target, distressing the American consumer but failing to either explode or collapse. The President’s cronies have taken to holding up this lack of catastrophe as a great victory, but this sets the bar too low. If you back off of most of your tariffs and the economy fails to crash, you don’t get to celebrate — after all, the tariffs were ostensibly supposed to fix something in our economy, and they have fixed absolutely nothing.

Instead, the tariffs have mostly just caused inconvenience for American consumers, who have been cut off from being able to buy many imported goods. The Kiel Institute studied what happened to traded products after Trump put tariffs on their country of origin, and found out that they mostly just stopped coming:

The 2025 US tariffs are an own goal: American importers and consumers bear nearly the entire cost. Foreign exporters absorb only about 4% of the tariff burden—the remaining 96% is passed through to US buyers…Using shipment-level data covering over 25 million transactions…we find near-complete pass-through of tariffs to US import prices……Event studies around discrete tariff shocks on Brazil (50%) and India (25–50%) confirm: export prices did not decline. Trade volumes collapsed instead…Indian export customs data validates our findings: when facing US tariffs, Indian exporters maintained their prices and reduced shipments. They did not “eat” the tariff. [emphasis mine]

So it’s no surprise that the most recent polls show that Americans despise the tariffs:

Source: ABC

A Fox News poll found the same, and Trump’s approval rating on both trade and the economy is underwater by over 16 points despite a solid labor market. Consumer sentiment, meanwhile, has crashed:

Trump has belatedly begun to realize the hardship he’s inflicting on voters. But instead of simply abandoning the tariff strategy, he’s issuing yet more exemptions and carve-outs in an attempt to placate consumers:

Donald Trump is planning to scale back some tariffs on steel and aluminium goods as he battles an affordability crisis that has sapped his approval ratings…The US president hit steel and aluminium imports with tariffs of up to 50 per cent last summer, and has expanded the taxes to a range of goods made from those metals including washing machines and ovens…But his administration is now reviewing the list of products affected by the levies and plans to exempt some items, halt the expansion of the lists and instead launch more targeted national security probes into specific goods, according to three people familiar with the matter.

Tariffs — or at least, broad, blanket tariffs on many products from many different countries — are simply a bad policy that accomplishes nothing while causing varying degrees of economic harm. But despite all his chicken-outs and walk-backs and exemptions, Trump is still deeply wedded to the idea. When news of the Supreme Court ruling reached him, he flew into a rage and accused the Justices of serving foreign interests:

He called the liberals a “disgrace to our nation.” But he heaped particular vitriol on the three conservatives [who ruled against him]. They “think they’re being ‘politically correct,’ which has happened before, far too often, with certain members of this Court,” Mr. Trump said. “When, in fact, they’re just being fools and lapdogs for the RINOs and the radical left Democrats—and . . . they’re very unpatriotic and disloyal to our Constitution. It’s my opinion that the Court has been swayed by foreign interests.”

Why are the President and his loyalists so incensed over the SCOTUS decision? The tariffs are a millstone weighing down Trump’s presidency, and his various walk-backs confirm that he realizes this. It would have been smarter, from a purely political standpoint, to just let SCOTUS do the administration a favor and cancel the tariffs. Instead, Trump is going to the mat for the policy. Why?

One possibility is simply that Trump hates having his authority challenged by anyone. Tariffs were his signature economic policy — something he probably decided on after hearing people like Lou Dobbs complain about trade deficits back in the 1990s. To give up and admit that tariffs aren’t a good solution to trade imbalances would mean a huge loss of face for Trump.

Another possibility is that Trump ideologically hates the idea of trade with other nations, viewing it as an unacceptable form of dependency on foreigners. Perhaps by using ever-shifting uncertainty about who would be hit by tariffs next, he hoped to prod other countries into simply giving up and not selling much to the United States.

A third possibility is that tariffs offer Trump a golden opportunity for corruption and personal enrichment. Trump issues blanket tariffs, and then offers carve-outs and exemptions to various companies and/or their products. This means companies line up to curry favor with Trump and his family, in the hopes that Trump will grant them a reprieve.

But the explanation I find most convincing is power. If all Trump wanted was to kick out against global trade, the Section 122 tariffs and all the other alternatives would surely suffice. Instead, he was very specifically attached to the IEEPA tariffs that SCOTUS struck down. Those tariffs allowed Trump to levy tariffs on specific countries, at rates of his own choosing, as well as to grant specific exemptions. That gave Trump an enormous amount of negotiating leverage with countries that value America’s big market.

This is the kind of personal power that no President had before Trump. It allowed him to conduct foreign policy entirely on his own. It allowed him to enrich himself and his family. It allowed him to gain influence domestically, by holding out the promise of tariff exemptions for businesses that toe his political line. And it allowed him to act as a sort of haphazard economic central planner, using tariffs like a scalpel to discourage the kinds of trade and production that he didn’t personally like.

In other words, I think that although the tariffs had their origin in 1990s-era worries about trade deficits, they ended up as a way to make the Presidency more like a dictatorship. That is almost certainly why the Supreme Court struck the IEEPA tariffs down, citing concerns over presidential overreach instead of more technical considerations.

For much of the modern GOP, I think, autocracy has become its own justification. To many Republicans, tariffs were good because they made the President powerful, and SCOTUS’ ruling is anathema because it pushes back on the imperial Presidency.

by Noah Smith, Noahpinion |  Read more:
Images: Joey Politano/ABC

[ed. Look at the charts. Nothing penetrates with some people. See also: February 23, 2026 (LFaA).]

IRS: First Time Penalty Abatement

Always an adventure calling the IRS 

Me: "Hi, I'm calling about penalty relief for my client. He's disabled and --" 

Agent: "What's the account number?" 

Me: "He lost his job. Couldn't afford to file. He has severe anxiety and --" 

Agent: "I see. The penalty is $847. Next?" 

Me: "His anxiety is documented. He's been struggling for years. He literally couldn't handle opening the mail from you guys." 

Agent: "Understood. The penalty stands." 

Me: "He's on disability income. This is going to hurt him badly." 

Agent: "I hear you. Still $847." 

Me: "He was literally unable to function during this period. His doctor can verify --" 

Agent: "That's unfortunate. The penalty is assessed." 

Me: "So there's nothing we can do? No hardship exception? No compassion?" 

Agent: "Not without something to base it on, sir." 

Me: *long pause* 

Me: "I mean - unless I..." 

Agent: "You could...." 

Me: "Could what?" 

Agent: "Well. You'd have to say it." 

Me: "Say..." 

Agent: "THE words, sir." 

Me: "What words?" 

Agent: "I can't say them for you." 

Me: "It's not even a sure thing though. Could it work?." 

Agent: "Only one way to find out sir." 

Me: *long pause* 

Me: "I'm going to say it." 

Agent: "I'm bracing, sir." 

Me: "First time penalty abatement." 

Agent: "Excellent. Your client is eligible. I'm releasing the penalty now. We're all set." 

Me: "Wait. That's it? Just like that?" 

Agent: "Yes sir. The penalty is gone." 

Me: "It's automatic?" 

Agent: "Exactly." 

Me: "So why all the drama? Why couldn't you just tell me?" 

Agent: "Because most people don't understand how serious a decision it is to say THE words." 

Me: "It's that serious? Why?" 

Agent: "You just used your one shot." 

Me: "What do you mean my one shot?" 

Agent: "First time penalty abatement. You can only invoke it once per client. Ever." 

Me: "...once?" 

Agent: "That's right. Once... And then it resets again in three years." 

Me: "Wait, it resets? So we can do this again in a few years?" 

Agent: "Is there anything else I can help you with?"

by Roger Ledbetter, CPA, X |  Read more:

Image: Getty

[ed. Can you believe it? This is really a thing. Have some catastrophic medical bill (or windfall?) and can't or don't want to pay taxes this year? First time penalty abatement. See also: The IRS’s First-Time Penalty Abatement: What It Is And How To Get It (Forbes); and, other types of penalty relief (IRS). Also this.]