Economy
Nighttime light intensity exposes failure of autocratic regimes

From the Fraser Institute
When people have more economic freedom, they are allowed to make more of their own economic decisions, free of constraints imposed by others. During the 1960s and 1970s, despite the relative economic success of most western democracies, most of the rest of the world rejected strong pro-market policies, with the notable exception of Hong Kong. Milton Friedman said Hong Kong offered “an almost laboratory experiment in what happens when government is limited to its proper functions and leaves people free to pursue their own objectives.” Hong Kong’s success served as the primary example of the uplifting potential of economic freedom.
However, without a quantifiable measure of economic freedom, it was difficult to generalize these claims. This led to the conception and production of the Economic Freedom of the World (EFW) index by the Fraser Institute. Armed with a measure of economic freedom, researchers could test the claim that economic freedom leads to prosperity.
Since its inception, the multiple editions of the dataset routinely confirmed that economically freer countries have higher income levels, enjoy faster economic growth, are more resilient to shocks, and produce great reductions in poverty and income gains all along the income ladder.
But in fact, in a recent article published by the European Journal of Political Economy and co-authored with Macy Scheck and Sean Patrick Alvarez, I offer evidence that the EFW report often underestimates the potency of economic freedom.
Why? Because the economic statistics produced in countries ruled by autocrats are not believable.
In autocratic regimes, rulers must bolster their legitimacy to prevent coups or uprisings, so they produce statistics that exaggerate their country’s performance. And since neither the opposition nor independent authorities are allowed to challenge these claims, autocrats can get away with lying about the size of their economies.
Autocrats also repress economic freedom (along with other freedoms), so any estimation of the effects of economic freedom on economic development will likely be exaggerated due to the lies of dictators.
How can we correct these lies? It’s not as if the autocrats would let us check their books. But fortunately, we don’t have to. We simply need a measure of economic activity that correlates with economic development and cannot be manipulated. Namely, nighttime light intensity, as measured by satellites orbiting the Earth.
Satellites provide accurate and unbiased information, which dictators cannot manipulate. Nighttime light is artificial (manmade) and its level should depict (all else being equal) levels of development. It’s why one can often see images of North and South Korea at night where the former is in utter darkness and the latter sparkles like a Christmas tree.
By examining the relationship between light intensity and economic development as measured by GDP in democracies—where data is generally reliable—one can estimate the extent of inaccuracies in the economic data reported by dictatorships and then create corrected data.
In our article, based on satellite data, we found that in more than 110 countries (including dictatorships), the association between economic freedom and income levels was between 10 per cent and 62 per cent greater than previously estimated. We also found that when using the corrected data, one extra point of economic freedom (on a 10-point scale) generated between 5 per cent and 24 per cent more economic growth from 1992 to 2012.
These results are a powerful answer to those who doubt the value of economic freedom. And they offer a way to see past the lies of dictators.
Business
Americans rallying behind Trump’s tariffs

The Trump administration’s new tariffs are working:
The European Union will delay tariffs on U.S. exports into the trading bloc in response to the imposition of tariffs on European aluminum and steal, a measure announced in February by the White House as a part of an overhaul of the U.S. trade policies.
Instead of taking effect March 12, these tariffs will not apply until “mid-April”, according to a European official interviewed by The Hill.
This is not the first time the EU has responded this way to U.S. tariff measures. It happened already last time Trump was in office. One of the reasons why Brussels is so accommodative is that the European Parliament emphasized negotiations already back in February. Furthermore, as Forbes notes,
The U.S. economy is the largest in the world, and many countries rely on American consumers to buy their goods. By import tariffs, the U.S. can pressure trading partners into more favorable deals and protect domestic industries from unfair competition.
More on unfair competition in a moment. First, it is important to note that Trump did not start this trade skirmish. Please note what IndustryWeek reported back in 2018:
Trump points to U.S. auto exports to Europe, saying they are taxed at a higher rate than European exports to the United States. Here, facts do offer Trump some support: U.S. autos face duties of 10% while European cars are subject to dugies of only 2.5% in the United States.
They also noted some nuances, e.g., that the United States applies a higher tariff on light trucks, presumably to defend the most profitable vehicles rolling out of U.S. based manufacturing plants. Nevertheless, the story that most media outlets do not tell is that Europe has a history of putting tariffs on U.S. exports to a greater extent than tariffs are applied in the opposite direction.
Larson’s Political Economy is a reader-supported publication.
To receive new posts and support my work, consider becoming a free or paid subscriber.
Facts notwithstanding, this trade war has caught media attention and is reaching ridiculous proportions. According to CNBC,
Auto stocks are digesting President Donald Trump’s annoncement that he would place 25% tariffs on “all cars that are not made in the United Sates,” as well as certain automobile parts. … Shares of the “Detroit Three” all fell.
They also explain that GM took a particularly hard beating, and that Ferrari is going to use the tariffs as a reason to raise prices by ten percent. This sounds dramatic, but keep in mind that stocks fly up and down with impressive amplitude; what was lost yesterday can come back with a bonus tomorrow. As for Ferrari, a ten-percent price hike is basically meaningless since these cars are often sold in highly customized, individual negotiations before they are even produced.
Despite the media hype, these tariffs will not last the year. One reason is the retaliatory nature in President Trump’s tariffs, which—again—has already caught the attention of the Europeans and brought them to the negotiation table. We can debate whether or not his tactics are the best in order to create more fair trade terms between the United States and our trading partners, but there is no question that Trump’s methods have caught the attention of the powers that be (which include Mexico and Canada).
There is another reason why I do not see this tariffs tit-for-tat continuing for much longer. The European economy is in bad shape, especially compared to the U.S. economy. With European corporations already signaling increased direct investment in the U.S. economy, Europe is holding the short end of this stick.
But the bad news for the Europeans does not stop there. They are at an intrinsic disadvantage going into a tariffs-based trade war. The EU has a “tariff” of sorts that we do not have, namely the value-added tax, VAT. Shiphub.co has a succinct summary of how the VAT affects trade:
When importing (into the European Union), VAT should be taken into account. … VAT is calculated based on the customs value (the good’s value and transport costs … ) plus the due duty amount.
The term “duty” here, of course, refers to trade tariffs. This means that when tariffs go up, the VAT surcharge goes up as well. Aside from creating a tax-on-tax problem, this also means that the inflationary effect from U.S. imports is significantly stronger than it is on EU imports to the United States—even when tariffs are equal.
If the U.S. government wanted to, they could include the tax-on-tax effect of the VAT when assessing the effective EU tariffs on imports from the United States. This would quickly expand the tit-for-tat tariff war, with Europe at an escalating disadvantage.
For these reasons, I do not see how this “trade war” will continue beyond the summer, but even that is a pessimistic outlook.
Before I close this tariff topic and declare it a weekend, let me also mention that the use of tariffs in trade war is neither a new nor an unusual tactic. Check out this little brochure from the Directorate-General for Trade under the European Commission’:
Trade defence instruments, such as anti-dumping or anti-subsidy duties, are ways of protecting European production against international trade distortions.
What they refer to as “defence instruments” are primarily tariffs on imports. In a separate report the Directorate lists no fewer than 63 trade-war cases where the EU imposes tariffs to punish a country for unfair trade tactics.
Trade what, and what countries, you wonder? Sweet corn from Thailand, fused alumina from China, biodiesel from Argentina and Indonesia, malleable tube fittings from China and Thailand, epoxy resins from China, South Korea, Taiwan, and Thailand… and lots and lots of tableware from China.
Like most people, I would prefer a world without taxes and tariffs, and the closer we can get to zero on either of those, the better. But until we get there, we should take a deep breath in the face of the media hype and trust our president on this one.
Larson’s Political Economy is a reader-supported publication.
To receive new posts and support my work, consider becoming a free or paid subscriber.
Business
Trump Reportedly Shuts Off Flow Of Taxpayer Dollars Into World Trade Organization

From the Daily Caller News Foundation
By Thomas English
The Trump administration has reportedly suspended financial contributions to the World Trade Organization (WTO) as of Thursday.
The decision comes as part of a broader shift by President Donald Trump to distance the U.S. from international institutions perceived to undermine American sovereignty or misallocate taxpayer dollars. U.S. funding for both 2024 and 2025 has been halted, amounting to roughly 11% of the WTO’s annual operating budget, with the organization’s total 2024 budget amounting to roughly $232 million, according to Reuters.
“Why is it that China, for decades, and with a population much bigger than ours, is paying a tiny fraction of [dollars] to The World Health Organization, The United Nations and, worst of all, The World Trade Organization, where they are considered a so-called ‘developing country’ and are therefore given massive advantages over The United States, and everyone else?” Trump wrote in May 2020.
The president has long criticized the WTO for what he sees as judicial overreach and systemic bias against the U.S. in trade disputes. Trump previously paralyzed the organization’s top appeals body in 2019 by blocking judicial appointments, rendering the WTO’s core dispute resolution mechanism largely inoperative.
But a major sticking point continues to be China’s continued classification as a “developing country” at the WTO — a designation that entitles Beijing to a host of special trade and financial privileges. Despite being the world’s second-largest economy, China receives extended compliance timelines, reduced dues and billions in World Bank loans usually reserved for poorer nations.
The Wilson Center, an international affairs-oriented think tank, previously slammed the status as an outdated loophole benefitting an economic superpower at the expense of developed democracies. The Trump administration echoed this criticism behind closed doors during WTO budget meetings in early March, according to Reuters.
The U.S. is reportedly not withdrawing from the WTO outright, but the funding freeze is likely to trigger diplomatic and economic groaning. WTO rules allow for punitive measures against non-paying member states, though the body’s weakened legal apparatus may limit enforcement capacity.
Trump has already withdrawn from the World Health Organization, slashed funds to the United Nations and signaled a potential exit from other global bodies he deems “unfair” to U.S. interests.
-
Alberta2 days ago
Alberta Institute urging Premier Smith to follow Saskatchewan and drop Industrial Carbon Tax
-
Addictions1 day ago
Should fentanyl dealers face manslaughter charges for fatal overdoses?
-
2025 Federal Election2 days ago
Fool Me Once: The Cost of Carney–Trudeau Tax Games
-
Alberta1 day ago
Albertans have contributed $53.6 billion to the retirement of Canadians in other provinces
-
Also Interesting1 day ago
The bizarre story of Taro Tsujimoto
-
2025 Federal Election1 day ago
Chinese Gangs Dominate Canada: Why Will Voters Give Liberals Another Term?
-
Health16 hours ago
RFK Jr. Drops Stunning Vaccine Announcement
-
Energy1 day ago
Energy, climate, and economics — A smarter path for Canada