I materially agree with the editors of the Chicago Tribune:

The provocateurs on both the right and the left over the weekend defined the narrative around the Trump administration’s immigration enforcement surge into Chicago and its suburbs.

On the right, we had Immigration and Customs Enforcement officers “patrolling” Latino neighborhoods in Chicago and tear-gassing scenes that arguably didn’t call for such heavy-handed tactics. We had the Department of Homeland Security making Hollywood-style videos of a wee-hours South Shore apartment building raid that looks more over-the-top with each passing day.

On the left, we had activists who were attempting — with cars or otherwise — to physically impede ICE and Customs Border Patrol agents from doing the work they’re legally allowed to do. With those tactics, these militant activists are imperiling the far greater number of peaceful protesters striving mightily to make their voices heard without breaking the law.

I would point out one defect in the equivalence between “right” and “left” the editors are attempting to draw in their opening passage. “‘Patrolling’ Latino neighborhoods”, being heavy-handed, and making “Hollywood-style videos” are not illegal. Physically impeding federal agents in the the work they are obliged to do is illegal. Here’s the meat of the editorial:

The entire spectacle leaves all of us distraught. In a statement over the weekend, the Civic Federation, the Civic Committee of In a statement over the weekend, the Civic Federation, the Civic Committee of the Commercial Club of Chicago, and the Chicagoland Chamber of Commerce called for cooperation from the Trump administration with law enforcement in Chicago rather than more provocations. “National Guard troops on our streets have the potential to sow fear and chaos, threatening our businesses’ bottom lines and our reputation,” they wrote. We have said much the same before, and continue to believe that military deployment against the wishes of local officeholders would be counterproductive at best and dangerous at worst. Any military deployment, if necessary, ought to be done in close coordination with local law enforcement. Under the present circumstances, that appears highly unlikely.

Unfortunately, the sort of coordination and collaboration for which the civic organizations and the editors call is expressly prohibited by Chicago’s “Welcoming City” ordinance. They continue:

We would caution Gov. JB Pritzker and, more particularly, Mayor Brandon Johnson not to encourage unlawful protests. Johnson on Monday sounded shrill and didn’t imbue with confidence.

After signing an executive order barring federal agents from city property, an order that will be difficult at best to enforce, Johnson warned that the city might have to “take even more dramatic action” if ICE raids and the like continue. Asked to elaborate on what that might entail, he responded, he responded, “Everything. Everything, whatever is necessary to ensure that we’re protecting people.”

Mr. Mayor, that’s not an appropriate response. Because “everything” isn’t legally at your disposal in response to what’s happening. Rhetoric along those e
lines can inspire the more militant among us to take actions that put themselves, innocent bystanders and first responders at risk.

To that end, we were heartened that the governor on Friday had Illinois State To that end, we were heartened on Friday had Illinois State Police present at the federal detention center in Broadview, which has been the site of protests for several weeks. Pritzker took that step in response to the growing tension and some disturbing interactions between activists and ICE there, knowing he’d be criticized by voices on the left. Those critics predictably disparaged his effort to protect the rights of peaceful protesters as collaboration with federal immigration enforcement. Being governor sometimes entails taking actions that will make people in your own political tent upset. Pritzker deserves credit for doing so.

I only wish he had done that from the outset. Continuing:

Still, we were concerned when Pritzker seemed to refer to Illinois as a “sovereign state” when understandably lamenting the potential arrival here of e of
the Texas National Guard. Perhaps he was entirely using the adjective in terms of the Guard and its authorization, which is fine. But we remind everyone that Illinois obviously is not a sovereign state in the accepted sense of the word, meaning an independent political entity with total control over of the word, meaning an independent political entity with total control over its own territory. Like it or not, there is a duly elected federal government with power over immigration laws in this state and that must be spoken to and negotiated with. There is no other choice.

Mayor Johnson and Gov. Pritzker started with the “other choice”. That produced the results we are seeing.

I’m going to admit to being very confused and depressed over what’s going on here in Chicago. Take the “no-ICE zones” that Mayor Johnson proclaimed here in Chicago, for instance. Via WGN from the Associated Press:

CHICAGO (AP) — A new executive order issued Monday by Chicago Mayor Brandon Johnson prohibits U.S. Immigration and Customs Enforcement (ICE) agents from operating on city-owned property.

Johnson signed the “ICE-Free Zones” executive order during a morning news conference at the Westside Justice Center. It comes days after President Donald Trump authorized sending hundreds of National Guard troops to Chicago, a move that’s prompted a legal challenge from Illinois Gov. JB Pritzker’s administration.

The mayor said he considers his executive order a step toward accountability, but he said more drastic action is needed to reign in what he called “a rogue administration.”

The order makes it illegal for federal immigration agents to use city-owned property for their operation. A sign will be posted at places that include Chicago Public Schools and Chicago Park District parking lots.

My immediate reaction to that was does the mayor really want the federal government eminent domain-ing city land? That the federal government has the authority to do that is settled law under United States v. Carmack. There might be some quibbling about whether it has been authorized by Congress but I suspect that would fall under the category of “necessary and proper”.

Breaking the law in the interests of preserving the law doesn’t sound like a winning proposition to me.

I’ve been wanting to post something on this subject for some time and with what I’ve been hearing today it seemed like the right time. The graph above illustrates the effects of government subsidies on prices, particularly when the supply of whatever is being subsidized is limited or otherwise does not respond to increases in demand by increasing the supply. In this context I use “subsidy” I was taught, as economists do. It means when the government spends money on something. Full stop.

As you can see the effect of a subsidy is to increase willingness to pay. Although consumers spend less out-of-pocket than they otherwise might, demand increases and, since the supply doesn’t increase, the price goes up.

That’s what we’ve been seeing for the last 60 years and, particularly, since 2014 in healthcare.

Since 2014 the price of a Big Mac has increased by about 35%; the price of healthcare insurance has rising by about 80%.

As you can see from the above we’re in a positive feedback loop. We spend more on healthcare; the price of healthcare goes up; we spend still more on healthcare. And around and around.

That’s not a workable situation. Right now there are only a handful of solutions to our problem. The federal government can spend less which means that poor people and old people will get less healthcare and prices will be raised on healthcare insurance to take up the slack. The supply of healthcare could be substantially increased. That would require major changes in how healthcare is provided and who does the providing. Or prices in healthcare could be regulated.

I’m still trying to figure this out. From Fortune via Yahoo Finance Nick Lichtenberg reports:

One of Wall Street’s most closely watched voices delivered a blunt message to peers and policymakers: The U.S. economy is not faltering—it is accelerating. Torsten Sløk, chief economist at Apollo Global Management, said forecasts of an imminent slowdown have been repeatedly wrong, and the economics profession should start grappling with its track record of misjudgments.

“The consensus has been wrong since January,” Sløk said in a note circulated to clients Wednesday morning, adding that the average of economists’ forecasts has said the U.S. economy would slow down for nine months running. “But the reality is that it has simply not happened … We in the economics profession need to look ourselves in the mirror.”

Second-quarter GDP expanded at a 3.8% annualized rate, a strikingly strong pace given the Federal Reserve’s ongoing effort to tamp down inflation. The Atlanta Fed’s GDPNow model suggests growth may be even stronger in the third quarter, forecasting 3.9% gains. Many economists had expected the lagging impact of high interest rates, tighter credit conditions, and April’s “Liberation Day” market shock to drag growth meaningfully lower by now.

Instead, the data tells a different story. Consumer spending has continued to prove resilient, and business investment, far from retreating, has strengthened in sectors tied to artificial intelligence, energy infrastructure, and manufacturing reshoring. Housing, often sensitive to interest rates, has shown surprising stability in key regional markets. Sløk did not dive into these particulars in Wednesday’s edition of his Daily Spark, except to address slowing job growth. “This is the result of slowing immigration,” he wrote, not economic weakness.

“The bottom line is that the U.S. economy remains remarkably resilient,” Sløk emphasized. “It is becoming increasingly difficult to argue that we are still waiting for the delayed negative effects of what happened six months ago,” referring to President Trump’s Liberation Day and the imposition of sweeping reciprocal tariffs. One top analyst has been arguing for years that most of Wall Street was wrong, and that Liberation Day represented the end of the beginning, rather than the beginning of the end.

Hiring is basically stalled. Consumer credit is rising but not extraordinarily so. Possible explanations that occur to me are:

• We’re still feeling the residual effects of the Biden Administration’s appropriations. A lot of that is just being spent now.
• We’re still feeling the effects of the spending spree that the Trump Administration, the Biden Administration, and the second Trump Administration have been on.
• No matter what’s happening here they’re worse everywhere else.
• Animal spirits
• There’s a lot of investment in the U. S., both by domestic companies and overseas
• Neoliberals have been wrong about globalization all along.
• The Chinese are dealing with their own economic issues by increasing production and exports.
• There are basic flaws with how we measure GDP, unemployment, etc.
• The effects of intergenerational wealth transfer

and those are just off the top of my head. I’m open to other ideas.

I found this critique of the Bureau of Labor Statistics’s monthly Labor Situation at Kitco News by Ernest Hoffman interesting. The bottom line is that it’s neither accurate nor timely enough to be of use to investors, the Federal Reserve, or policymakers. Particular issues he takes note of include loss of confidence due to large revisions, decline in participation by employers from 60% to 40%, failure of the probabilistic model, and the complexity of dealing with immigrant labor. I would add the issue of outsourcing.

The piece has a number of salient quotes.

Grady said the Trump administration’s criticisms on this front are well-founded. “They’re using 1970s metrics to get this data,” he said. “You can’t run an economy based on that. It just doesn’t work.”

I don’t think that’s quite right. They’re 1990s metrics devised by people who went to school in the 1970s.

“They have to be perfect, all the data that goes into the system, because the markets are trading on it,” Grady said. “But when it comes to the government, they don’t have the same criteria. It’s just wrong.”

Grady said he’s certain that if the Federal Reserve had had the correct data, if they had known about the 911,000 decrease in net jobs, they would have cut rates earlier.

I don’t think he quite captures the difference in incentives between investors and analysts working for the BLS.

“It’s based on a voluntary survey, voluntary participation,” he said. “It used to be 60% [participation rate] and now it’s 40%. The trading is with algorithms; they’re trading numbers in the milliseconds, but you’re trading based off year-old data. Who does that like this? It’s just wrong. There has to be a better way to calculate this data, because it’s too important. You can’t run an economy on it.”

That’s a point that I have made on more than one occasion. Perhaps the question that should be considered is whether the Labor Situation report is performing a useful function at this point. Or the BLS for that matter. There’s an old expression they might consider: “a miss is as good as a mile.”

Adam Button, head of currency strategy at Forexlive.com, also believes traders and Fed officials are being led astray by the monthly jobs report, but he thinks it’s the Trump administration’s immigration policies that have rendered it all but useless.

“We may have entered the post-payrolls era,” he said.

In a Sept. 26 interview with Kitco News, Button said the fundamental assumptions on which the health of the jobs market is built no longer apply.

“I think the market has realized, or will soon realize, that low employment growth in the headline non-farm payrolls number in the United States is no longer really indicative of anything, because of immigration changes,” he said. “Ken Griffin was talking about it this week, and [Richmond Fed president Thomas] Barkin today mentioned it, that flat U.S. jobs growth may be enough to keep the unemployment rate low.”

I don’t think it’s just immigration. I think that offshore outsourcing is considerably greater than they recognize. When even mom and pop shops are offshoring some of their functions (they are), it adds up.

Button said all the models currently in use – whether by the government, the Federal Reserve, or the private sector banks and hedge funds – are built around a set of parameters about demographics and population growth that can’t account for mass immigration OUT of the United States.

“So much is model-driven in markets right now,” he said, “and the models get all out of whack. Whatever rule they have around jobs, or correlation, or anything else like that, it looks like a recession. And [the impact of net migration] might not come all at once; this might unfold over a number of years.”

Button said all this adds up to a very challenging situation for the Fed and other policymakers – and a very risky situation for investors and traders. “I just think you need to be really cautious with the headline jobs number right now.”

I saw several article the other day claiming that LLM AI wasn’t claiming many jobs in the U. S. Clearly, they hadn’t looked at the numbers coming out of India, where the unemployment rate among information technology workers has become quite severe, becoming worse over each of the last three years and much attributed to AI.

Last year Cook County voters replaced Cook County States Attorney Kim Foxx (who declined to run for re-election) and her handpicked successor with Eileen O’Neill Burke, a former judge. What a difference changing the Cook County States Attorney makes! At CBS News Carol Thompson and Megan De Mar report:

Former Cook County State’s Attorney Kim Foxx pushed for bail reform and the SAFE-T Act. It took effect in September 2023, the year before she left office.

The goal of the new law: to take money out of decisions regarding which defendants remain in custody while awaiting trial and which can go home, possibly being put on electronic monitoring.

“Mothers, grandmothers, sisters, partners, should not be making decisions about whether I should pay for my loved one’s freedom or pay the rent,” said Sharone Mitchell, Jr. He is the Cook County Public Defender and believes in the benefits of the two-year-old no cash bail system.

When Eileen O’Neill Burke took over the top prosecutor’s office in December 2024, she vowed to be tougher on violent criminals.

A new CBS News Chicago Investigators analysis of State’s Attorney detention dashboard data shows key differences in the way some defendants were handled under the two administrations.

continuing:

Under Foxx last year, prosecutors requested detention in 38% of first appearances. Under O’Neill Burke this year, the request was made in 39% of cases.

But, when it comes to the court granting those requests, there’s a bigger gap. 70% granted under Foxx and 80% under O’Neill Burke.

“I think our higher detention numbers are reflective of the additional work that we have put into first appearance court to make sure that we have access to every bit of information, which indicates whether someone is a danger, and we present that information to judges,” said O’Neill Burke.

and

Foxx championed her high domestic violence conviction rate in her administration’s Final Report. She claimed a conviction rate in the mid to high 80% range over her 8 years in office.

But, when it comes to asking for detention to keep the alleged abuser away from the victim, the data shows a different story.

Prosecutors under Foxx asked for detention in 84% of cases in the first 6 months of 2024. But, prosecutors under O’Neill Burke requested it 96% of the time over the same time period in 2025.

And, like with violent crimes, detention was granted more often under O’Neill Burke than Foxx. 85% compared to 61% respectively.

I’m going to admit to being somewhat perplexed by this. If you’re requesting detention in 84% or 96% of cases what’s the point of including cases that fit that description under the SafeT Act? Sounds like a defect in the law to me, one that adds to the workload of prosecutors.

I also concur with Matt Yglesias’s conclusion about the present federal shutdown:

It genuinely does not make sense to ask for 60 votes for an appropriation that you can claw back with just 50. There are so many profound issues being fought over in American politics right now, but the proximate cause of the shutdown is a dumb and illogical aspect of congressional procedure.

I concur with the editors of the Chicago Tribune:

What we haven’t seen until now is Donald Trump appearing before a gathering gathering of the nation’s military commanders — summoned to Quantico, Virginia, from all over the globe for what turned out to be a bizarre made-for-TV rally of sorts — and describing our fellow citizens as “the enemy within” and who and adding our city to his list of potential “training grounds” for troops who enlist enlist to defend America from foreign adversaries.

Trump speaks illiberally as a matter of habit. It’s sad to say that many Americans, whether supporters or opponents, at this point are inured to the schoolyard taunts and cartoonish bravado from our nation’s commander in chief.

But context in this case makes all the difference. It made these words — as Chicago braces for an incursion of federal troops over the objections of Gov. JB Pritzker — disturbing.

I urge Chicago’s elected leaders not to sink to Trump’s level. I also urge them to think twice before defending conduct including throwing things at law enforcement officers or assaulting them as “protected speech”.

Update

And I agree with the editors of the Washington Post:

America’s cities ought not to be training grounds for preparing troops for future conflicts. That’s not why soldiers serve. Defending the homeland is different from policing it.

There are ways of blurring the difference and we should avoid them.

I have no opinion on Secretary of War Hegseth’s and President Trump’s addresses to the generals and flag officers yesterday other than to observe that I have long held that there are too many of the latter. At the Washington Post David Ignatius remarks:

The implicit message of Tuesday’s “key leaders all-call,” as it was officially termed, was to get on board with Team Trump or get out. “If the words I’m speaking today are making your heart sink, then you should do the honorable thing and resign,” said Hegseth. Hopefully, those gathered at Marine Corps Base Quantico will ignore that guidance. It would be a national disaster to lose the battle-tested leaders who understand the military’s true challenges in the decades ahead.

For Trump and Hegseth, the issues facing the military seem more symbol than substance. Thus, their emphasis on rebranding the enterprise as the Department of War. And their endless rehashing of culture-war issues: “No more identity months, DEI offices, dudes in dresses. No more climate change worship. No more division, distraction or gender delusions,” said Hegseth.

Okay, got it. Clear away the modest elements of “woke” culture that developed in the Pentagon. But what are you building for the future?

Hegseth is so intent on creating a tough military that having a smart one appears secondary. He wants to restore the old-time, gung ho imagery. Basic training that’s “scary, tough and disciplined.” Drill sergeants who can “instill healthy fear” and “put their hands on recruits.” Hegseth seems convinced that how soldiers fight depends on how they look. “The era of unprofessional appearance is over,” he said. “No more beardos.” Maybe he doesn’t remember the unshaven “dogfaces” of Bill Mauldin’s cartoons during World War II.

Hegseth wants to overturn more than grooming standards. Among the 10 directives he issued Tuesday is a review of standards for bullying and hazing, so that leaders can “enforce high standards without fear of reprisal.” Yikes. That sounds like a blank check for behavior that could drive away, say, the math-and-science whiz who could design and operate future combat systems.

Another unpinned grenade is Hegseth’s directive to revise an inspector general process that he claimed has been “weaponized, putting complainers, ideologues and poor performers in the driver’s seat.” If a commander makes “honest mistakes,” those can be expunged from their record. For the military, Tuesday was “liberation day,” he said. “We are attacking and ending the walking on eggshells and zero-defect command culture.”

Hegseth’s vision of a hard-ass military might be compelling if you believed that future combat would be a reprise of landing on Omaha Beach or Iwo Jima. But the nature of military conflict is changing — on the drone-saturated battlefields of Ukraine and in the scenarios for deterring a tech-savvy China in the future. Beijing would be delighted if America focused on how many push-ups a soldier can do rather than how many computer tools he or she can use.

Based on what I’ve heard all of the generals and admirals can probably use PowerPoint. I don’t think that asking them to be able to do some push-ups is too much to ask.

Actually, I’m a bit confused about Mr. Ignatius’s observations. Based on my review of the biographies of generals and admirals (a tedious and time-consuming exercise) 20-30% of them are “battle-tested”. Relatively few in the Navy, Space Force, Air Force, or Coast Guard are “battle-tested” in the sense that I would use the term (came under fire and commanded troops in combat). Is Mr. Ignatius implying that they should be? I don’t oppose that. What does he mean?

I found his comments about Beijing thought-provoking. I know that Beijing has recently been emphasizing the importance of “informatization” and “intelligization” in the PLA and that recruitment standards have been raised and training adjusted accordingly. Most PLA recruits these days are university students which pretty much guarantees literacy and a reasonable degree of computer literacy. Given their ages I would expect them to be “digital natives”.

I’ll take this opportunity to repeat something I’ve said before: very few PLA generals and admirals are “battle-tested” (as I would use the term). I would say that we have very little idea how Chinese military doctrine would perform in actual combat situations (and neither does Beijing).