Thursday, November 20, 2025

Today, David R. Henderson explores the issue of trade deficits, arguing that concerns about them fundamentally misunderstand the positive impact of trade and foreign investment into the American economy. Jon Hartley interviews Henderson on his humble beginnings and joining the UCLA School of Economics. And Peter Blair Henry and coauthors find select investments in infrastructure in emerging economies have generated better returns than US equities. 

Trade

Trade Deficits Aren’t a Problem

In a new article for Defining Ideas, Research Fellow David R. Henderson argues against the idea that America’s sustained trade deficit with the rest of the world constitutes an emergency. He evaluates the benefits to the US of foreign investment, and the privilege the US holds as printer of what often appears to be the world’s de facto reserve currency. Each nation’s specialization in producing its own basket of goods and services means that trying to eliminate trade deficits makes no sense. Putting it simply, Henderson points out that, like many Americans, his household has a large trade deficit with their local grocery store. “We spend approximately $5,000 per year at Safeway and Safeway spends zero on my articles and speeches,” he writes. “More’s the pity, as the British say, but that’s the way it is.” Read more here.

Answering Challenges to Advanced Economies

Property Rights and the UCLA School of Economics with David Henderson

On the latest episode of Capitalism and Freedom in the Twenty-First Century, Policy Fellow Jon Hartley speaks with Research Fellow David R. Henderson about his career as an economist, the role of property rights and market competition in economic growth, as well as the UCLA School of Economics, Armen Alchian, Harold Demsetz, and the New Institutional Economics. Before winning the gold medal in math upon graduation from his undergraduate degree back in Winnipeg, Canada, Henderson tells Hartley how his campus club lured Harold Demsetz to come speak to them. Demsetz encouraged Henderson to come to the United States to continue his studies in economics. Watch or listen to the conversation here.

Financial Returns on Equity Investments in Infrastructure in Emerging Markets and Developing Economie

In a new paper for the World Bank Group’s International Finance Corporation (IFC), Senior Fellow Peter Blair Henry and two coauthors demonstrate the attractiveness of investments into infrastructure in emerging markets for private investors. Looking at IFC investments in core infrastructure projects between 1961 and 2020, Henry and coauthors find that project returns routinely beat the stock market. “This means that making private equity investments in emerging market infrastructure alongside IFC, a global investor would have achieved, on average over the long run, a better return than holding the S&P 500,” the authors write. Read more here.

Hoover Team Travels to World’s Largest Genetic Engineering Competition

The Hoover Institution’s Bio-Strategies and Leadership (BSL) team participated in the 2025 International Genetically Engineered Machines (iGEM) Grand Jamboree in Paris, the world’s largest synthetic biology event. The iGEM competition itself brought together 4,600 students from 400 teams across nearly 50 countries to share their efforts to leverage synthetic biology to enable people to solve local and global problems. The BSL delegation was led by Drew Endy, one of the 2003 cofounders of iGEM, who is also a Hoover Science Fellow and Senior Fellow. The delegation also included Visiting Fellow Joshua Hodges and Distinguished Visiting Fellow Mike Kuiken alongside Hoover Institution and Stanford bioengineering staff. Read more here.

Reforming K–12 Education

The Department of Education: Down but Not Out

In a new piece for Education Next, Senior Fellow Chester E. Finn Jr. argues that changes made by the Trump administration to the US Department of Education have been more of a “splintering” than outright abolition of the department. Staff have been let go, grants cut, and programs shifted, Finn notes, but he reminds readers that only an act of Congress can actually dismantle the Education Department. “Mostly, it seems, this is all for show—the illusion of carrying out a campaign promise while burdening states and districts with more doors to knock on in Washington and different bureaucracies to satisfy in order to obtain the funds and services that the White House says will continue to flow,” Finn writes. Read more here.