Today, Niall Ferguson reminds readers of the wild roller-coaster ride Americans have been on over the course of the war in Iran, before identifying the most consequential decision President Trump has made during the conflict; John Cochrane provides an economist’s perspective on narratives of AI job-loss doom; and a group of Hoover scholars examines whether the claimed fiscal premise of the proposed California wealth tax actually justifies the measure.
War with Iran
[Subscription required.]
In a column published yesterday at The Free Press, Senior Fellow Niall Ferguson reviews the course of the Trump administration’s war against Iran to date. Ferguson charts the serial vacillations between forceful American strikes and threats on the one hand, and repeated attempts to negotiate a settlement to the conflict on the other. Ferguson argues that despite much inconstancy from President Trump, he did make “one genuinely important decision” approximately six or seven weeks ago, in choosing not to “proceed with a forcible military reopening of the Strait [of Hormuz].” Ferguson says deploying thousands of Marines and special operations troops, along with additional Navy assets, was the one pathway the president had “to avoid the prolonged battle of the blockades that has since unfolded.” Trump declined to take this action, Ferguson concludes, for fear of US casualties and the backlash from the public and media that would likely result. Read more here.
Artificial Intelligence
In this week’s Grumpy Economist Weekly Rant, Senior Fellow John H. Cochrane examines current fears that artificial intelligence will destroy jobs, destabilize society, and require sweeping new government intervention. He argues that AI is simply the latest in a long line of productivity-enhancing innovations—from the printing press and steamship to the telegraph and airplane—that created disruption but ultimately expanded human capability and economic output. Cochrane argues against treating AI as an imminent civilizational emergency. The US labor market, he notes, constantly creates and destroys jobs, and the deeper barriers to opportunity lie in failing schools, weak higher education, labor regulation, occupational licensing, and other institutional constraints. Rather than launch a regulatory crusade around an imagined future catastrophe, Cochrane argues, policymakers should first address the problems already limiting work, growth, and institutional performance. Watch here.
California Wealth Tax
A new analysis from Hoover Institution scholars suggests California’s proposed one-time billionaire wealth tax is a fiscally incoherent response to federal Medicaid funding changes, despite proponents’ claims that the levy would address a “$19 billion-per-year budget hole” caused by Washington. The paper, released May 27 by Hoover fellows Joshua D. Rauh, Benjamin Jaros, Daniel Heil, and Tom Church, and Research Analyst John Doran, examines the proposed 2026 California Billionaire Tax Act and contrasts its effects with reforms contained in the One Big Beautiful Bill Act of 2025. The proposed state tax would impose a 5% levy on billionaires’ accumulated wealth, collected over five years, with proceeds devoted primarily to healthcare spending. In the paper, the scholars argue there is a basic mismatch between the tax instrument and the spending problem it purports to solve. “The proposal uses a one-time revenue source to finance what proponents describe as a recurring annual shortfall,” the authors write. “This structural disconnect creates predictable fiscal pressures for future wealth taxes once initial revenue is exhausted.” Read more here.
USA@250
On May 12, three leading economists from the Hoover Institution gathered to define the roots of American prosperity and debate whether the nation’s best economic days still lie ahead. The panel, moderated by Washington Post columnist Megan McArdle, featured Senior Fellows John H. Cochrane, Ross Levine, and Valerie Ramey. As part of Hoover’s featured speaker series celebrating 250 years of American independence, Ideas That Made U.S.: Dialogues on Freedom, this panel tackled fundamental questions about what propelled the United States to become the world’s most dynamic economy and whether the institutions and culture that created that success could sustain it in the coming decades. The economists expressed concern that the very growth engine that powered American prosperity shows signs of slowing. “It’s going to require us demanding leaders that will solve problems rather than give us these platitudes that make us angry at some make-believe villain,” Levine said. Read more here.
Confronting and Competing with China
Writing for The Washington Times, Visiting Fellow Miles Yu presents 10 key takeaways from the recent summit between President Trump and Chinese autocrat Xi Jinping. Pushing back against Xi’s invocation of the “Thucydides trap” concept, which suggests US resistance to China’s rise will inevitably spark a military conflict, Yu argues that this theory is “not only intellectually bankrupt, but also historically erroneous.” Yu also points out that China is rife with internal problems, not least “demographic collapse, economic stagnation, mass unemployment, popular disenchantment and elite political instability.” But “the biggest falsehood of all,” writes Yu, “is the claim that the CCP represents China and the Chinese people.” The scholar reminds readers that “millions of Chinese citizens themselves seek freedom, dignity and opportunity outside party control.” Read more here.
Related Commentary