Today, Ross Levine channels Adam Smith to explain why monopolies, privilege, and injustice corrode the proper functioning of markets; Paola Sapienza speaks with an immigration law expert about pathways for STEM talent to come to the US; and Matt Turpin evaluates the state of China’s economic statecraft in relation to Europe and the United States.
Freedom Frequency
Senior Fellow Ross Levine, continuing his series of letters to modern America in the voice of Adam Smith, focuses on the obstacles that interfere with the marvelous workings of the “invisible hand.” The problem is not competition, this letter argues—rather, it is the subversion of competition. The causes of breakdowns in competition? They include political capture (often accompanied by lofty justifications), the setting up of cartels and regulation, and an erosion of respect for laws, customs, and justice. This last problem may run the deepest, Levine writes, because “what people honor, and what they condemn” can set whole societies on a corrupting path that may never be reversed. What Smith puts forth in defense of the invisible hand, reports Levine, are “simple but strict rules—no coercion, no fraud, no theft; and laws that are applied impartially.” Read more here.
Immigration Policy
How can US companies hire top international STEM talent without relying on the unpredictable H-1B lottery? In this conversation with Senior Fellow Paola Sapienza, immigration expert Amy Nice reveals two powerful, underutilized immigration pathways for technical talent—the J-1 researcher visa and the O-1A extraordinary ability visa—that offer longer stays, no numerical caps, and far fewer restrictions. Sapienza and Nice explore practical strategies to make the current immigration system work smarter for businesses and high-skilled immigrants alike. This discussion is part of Hoover’s J-P Conte Initiative on Immigration, which fosters cutting-edge research to facilitate informed academic and policy debates on the economic effects of immigration. Read more here.
Confronting and Competing with China
In his weekly China Articles newsletter, Visiting Fellow Matt Turpin analyzes the state of play in US-China economic and strategic competition. Turpin argues that Beijing’s export-oriented strategy is confronting unexpected challenges as the US and Europe grow increasingly concerned about the effects of Chinese “dumping” of goods in their domestic markets. “Chinese leaders believed that American commitment to ‘free trade’ was absolute and therefore they could pursue a strategy of making the United States dependent on the PRC,” he writes. But what they did not expect, Turpin says, “is that Washington would so rapidly jettison its religious commitment to ‘free trade’ and the maintenance of the liberal, rules-based international order.” This leaves Xi Jinping in the “horns of a dilemma,” according to Turpin, because the Communist Party can’t rely on increased domestic Chinese consumption to sustain its economy and high levels of production. Read more here.
Entrepreneurship
Jensen Huang arrived in America as a child knowing no English. He was mistakenly sent to a school for juvenile delinquents. He faced rampant prejudice. Yet Huang, the under-the-radar CEO of Nvidia, became a catalyzing figure behind the AI revolution and built the most valuable company in the world. Listen as journalist Stephen Witt speaks with EconTalk host Russ Roberts about how Jensen pivoted from manufacturing processing units for video games to leveraging their capacity into astonishing computing power and speed. Witt and Roberts analyze why Huang bet so heavily on AI when no one else did, and why Nvidia processors enjoyed almost unrivalled market dominance for so long. They also explore Huang’s unique way of thinking and problem solving—as well as his temperamental leadership style. Watch or listen here.
Economics
Why are people on weight-loss drugs “upgrading” to eat “more, and more-expensive chocolate” while “cutting down on lower quality carbs”? And what does this have to do with the price of oranges in New York and Florida? At his Substack, Research Fellow David R. Henderson explains a core economic concept that he’s been teaching for decades, centered around the “added” costs goods incur via transportation expenses or negative health effects. When such added costs are passed to the consumer, many opt for higher-cost (and often higher-quality) goods. Henderson explains how this effect impacts trade in oranges and defective manufactured goods, as well as personal health and consumption decisions. Read more here.
Related Commentary