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Power & Market
Phil Duffy
03/13/2025
Extraordinary Popular Delusions and the Madness of Crowds is an early study of crowd psychology by Scottish journalist Charles Mackay, first published in 1841 under the title Memoirs of Extraordinary Popular Delusions. The book was published in three volumes: “National Delusions”, “Peculiar Follies,” and “Philosophical Delusions.”
The first three chapters address economic events to include:
Were Mackay alive, he would probably recognize today’s trade war and the tariffs enacted by President Trump as being nothing more than the madness of crowds. Specifically, he would note that many today believe that the United States’ economic growth has been limited because other nations have taken advantage of the United States. A deeper look at the numbers would demonstrate that claim to be nonsense.
On March 4, 2025, President Trump officially declared a tariff war by the United States against its two neighboring nations, Mexico and Canada. Predictably, both nations reciprocated, as nations around the world reciprocated to the Hawley-Smoot Tariff in 1930, signed by President Herbert Hoover. As a result of the latter act, the United States lost 67 percent of its imports and exports, causing further grief to Americans during the Great Depression. This is only one example of a failed tariff policy. United States tariff policies have been a disaster since The Tariff of Abominations (1828), the Morrill Tariff that brought on the War between the States (1861), and the McKinley Tariff (1890).
Never mind that few economists believe that tariffs can improve a nation’s economy. It is the politicians and media that speak directly to voters. The average supporter of tariffs today hears little of the disasters caused by them.
How should the situation be corrected? Economic education is the ideal solution, because the answer to tariff proposals is clear to one reading the literature of the Austrian (free market) school of economics. But the crowd’s mind is not inclined to Hazlitt’s Economics in One Lesson (211 pages), much less Mises’s Human Action (885 pages) where the answers to tariff proposals may be found. A faster route is necessary, and it need only effectively raise doubts now about the implications of an American president unilaterally establishing tariff levels.
The Constitution of the United States is approximately 26 pages in length, but a person has only to refer to two pages to learn which branch of the federal government has been empowered to create tariffs:
The media today is fixated on presenting the economic and emotional cases for and against tariffs. As a result, politicians are free to spew their propaganda and the people become roadkill. With the exception of career politicians, ultimately, most elected officials pass through the revolving door of the federal government to comfortable jobs among their friends in the private sector, often lobbying them for the special interest they then represent. Ordinary citizens are left holding the bag.
The Constitution is a remarkable document, but it still retains systemic flaws. Its structure, including the separation of powers and balance of powers principles come directly from Montesquieu’s The Spirit of Laws, published in 1748. 236 years after forming a government under the Constitution, it should be obvious that it has not worked to protect the liberties of United States’ citizens. However, Americans need not create a new constitution. Instead, they need first to take the first steps toward sanity concerning tariffs. They merely need to insist that Congress has the power to enact tariffs, not a president.
No nation employing a representative government can thrive on economic ignorance, so warding off the immediate tariff crisis is not a longer-term solution. But that would reveal that President Trump’s tariff actions would place this nation on the road to dictatorship. Once Americans realize this, a broader audience for Economics in One Lesson may materialize.
mises.org
Phil Duffy
03/13/2025
Extraordinary Popular Delusions and the Madness of Crowds is an early study of crowd psychology by Scottish journalist Charles Mackay, first published in 1841 under the title Memoirs of Extraordinary Popular Delusions. The book was published in three volumes: “National Delusions”, “Peculiar Follies,” and “Philosophical Delusions.”
The first three chapters address economic events to include:
- The Mississippi Scheme
- The South Sea Bubble
- The Tulip Mania
Were Mackay alive, he would probably recognize today’s trade war and the tariffs enacted by President Trump as being nothing more than the madness of crowds. Specifically, he would note that many today believe that the United States’ economic growth has been limited because other nations have taken advantage of the United States. A deeper look at the numbers would demonstrate that claim to be nonsense.
On March 4, 2025, President Trump officially declared a tariff war by the United States against its two neighboring nations, Mexico and Canada. Predictably, both nations reciprocated, as nations around the world reciprocated to the Hawley-Smoot Tariff in 1930, signed by President Herbert Hoover. As a result of the latter act, the United States lost 67 percent of its imports and exports, causing further grief to Americans during the Great Depression. This is only one example of a failed tariff policy. United States tariff policies have been a disaster since The Tariff of Abominations (1828), the Morrill Tariff that brought on the War between the States (1861), and the McKinley Tariff (1890).
Never mind that few economists believe that tariffs can improve a nation’s economy. It is the politicians and media that speak directly to voters. The average supporter of tariffs today hears little of the disasters caused by them.
How should the situation be corrected? Economic education is the ideal solution, because the answer to tariff proposals is clear to one reading the literature of the Austrian (free market) school of economics. But the crowd’s mind is not inclined to Hazlitt’s Economics in One Lesson (211 pages), much less Mises’s Human Action (885 pages) where the answers to tariff proposals may be found. A faster route is necessary, and it need only effectively raise doubts now about the implications of an American president unilaterally establishing tariff levels.
The Constitution of the United States is approximately 26 pages in length, but a person has only to refer to two pages to learn which branch of the federal government has been empowered to create tariffs:
- Article I, Section 8 - The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;
- Article II, Section 2 is where a president’s powers are described. The power to establish tariffs is not mentioned and thereby reserved to Congress. A president may sign a tariff bill passed by Congress, or refuse to sign it, but that is the limit of the president’s power.
The media today is fixated on presenting the economic and emotional cases for and against tariffs. As a result, politicians are free to spew their propaganda and the people become roadkill. With the exception of career politicians, ultimately, most elected officials pass through the revolving door of the federal government to comfortable jobs among their friends in the private sector, often lobbying them for the special interest they then represent. Ordinary citizens are left holding the bag.
The Constitution is a remarkable document, but it still retains systemic flaws. Its structure, including the separation of powers and balance of powers principles come directly from Montesquieu’s The Spirit of Laws, published in 1748. 236 years after forming a government under the Constitution, it should be obvious that it has not worked to protect the liberties of United States’ citizens. However, Americans need not create a new constitution. Instead, they need first to take the first steps toward sanity concerning tariffs. They merely need to insist that Congress has the power to enact tariffs, not a president.
No nation employing a representative government can thrive on economic ignorance, so warding off the immediate tariff crisis is not a longer-term solution. But that would reveal that President Trump’s tariff actions would place this nation on the road to dictatorship. Once Americans realize this, a broader audience for Economics in One Lesson may materialize.
The Madness of Presidential Tariffs | Mises Institute
The media today is fixated on presenting the economic and emotional cases for and against tariffs. As a result, politicians are free to spew their propaganda
