“The merely dumb, or at least more respectable, version says that the American economy has become more monopolistic over time, and that is why businesses have been able to raise prices more. Consumers are the victims of a lack of competition. Harris nodded toward this explanation in her speech announcing the new policy, perhaps in response to early criticisms from economists.
Of course, it is absurd to believe that monopolies have developed so rapidly in the last three years that this caused the surge in inflation.
Putting that aside, while few economists would endorse price controls as a solution to insufficient competition—except for true natural monopolies—some would endorse blocking mergers through antitrust policy. The epicenter of the new optimism about antitrust is probably the Stigler Center at the University of Chicago. “The fact that you have prominent people at Chicago calling for antitrust enforcement is changing the game,” says law professor and The New York Times writer Tim Wu.
There aren’t many good case studies of successful antitrust enforcement. Indeed, mergers often create more competition, as when the recent T-Mobile/Sprint merger created a successful wireless network to compete with AT&T and Verizon. Evidence shows the merger raised wireless speeds and expanded 5G availability. Fortunately, the Obama administration did not block the merger (although they did delay it).
But one stylized fact seems to have taken hold of newly pro-antitrust economists: rising markups in the U.S. economy. Markups are the difference between the marginal cost to produce a good or service and the price at which it’s sold. A search for “markups” on the Stigler Center’s ProMarket blog yields dozens of hits. “Markups have increased because firms became better at creating product differentiation and erecting barriers to entry,” Chicago economist Luigi Zingales hypothesized in 2016.
Sounds plausible. But two new papers show that the rise in markups has nothing to do with diminishing competition. The first, a working paper published by the Federal Reserve Bank of St. Louis, finds that markups are higher in the service sector, and consumers are shifting their consumption from manufactured goods to services. Therefore, the average markup in the economy is increasing.
The second, a working paper published by the National Bureau of Economic Research, finds that markups have increased because consumers have become less price-sensitive, a mechanism also explored in the first paper. In other words, consumers have been shopping around less to find lower prices, so markups have risen. But it hasn’t happened because firms have taken advantage of inattentive consumers to raise prices; it’s just that costs have fallen faster than prices, resulting in higher markups.
The two papers have discovered complementary explanations for the rise in U.S. markups. Wealthier households consume proportionately fewer manufactured goods and more services and are also less price-sensitive. As Americans in general have become wealthier, we have all consumed more services and have become less price-sensitive.
This makes sense. As we become wealthier, the cost of our time rises. We’re more likely to quickly buy what we need without comparing prices at multiple locations. We’re also more likely to buy higher-quality versions of the same item. When it comes to food, this is definitely happening; just stroll down the grocery aisles and look at the plethora of “fair-trade,” “humane,” and organic certifications.
These results should hearten us that the U.S. economy isn’t rigged against the consumer.
Indeed, where we do see market power, it’s usually not created by really big companies. A rural hardware store has market power if the next hardware store is a long drive away. Public services like public schools and water and sewer systems have immense market power.
Moreover, big business isn’t necessarily bad. For example, Walmart, Costco, and Amazon have driven down retail prices by competing with each other.”
“trade policy. Trump’s protectionist stance is well-known, with his administration imposing tariffs on a wide range of goods, particularly from China. He has since announced that he would like to impose an across-the-board 10 percent and then 20 percent tariff on imports to the U.S., on top of the those already in place.
But Harris’ stance is hardly better. She has embraced a “worker-centered” trade policy that looks suspiciously similar to Trump’s “America First” approach. Both emphasize protecting existing American jobs and industries, even at the cost of higher prices for beleaguered consumers, fewer resources to start new firms that will lead to more opportunity for the next generation of workers, and reduced economic efficiency. And let’s not forget that during the last four years, the Biden-Harris administration has imposed its fair share of tariffs while keeping many of Trump’s.”
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“Both sides want to subsidize homeownership. The Republican platform advocates for the government to “promote homeownership through Tax Incentives.” The Harris campaign has announced a $25,000 subsidy for first-time homebuyers. Both plans would subsidize housing demand, thus putting upward pressure on housing prices. Great for people who already own homes; not so great for the new homebuyers themselves.”
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“Both Harris and Trump represent variations on a theme of big, fiscally irresponsible, hyper-interventionist government.”
“For Tim Walz, in vitro fertilization (IVF) is a deeply personal issue—or at least he made it seem that way. In several recent interviews, the Minnesota governor and Democratic vice presidential candidate implied or outright suggested that his own two children were conceived using IVF.
One problem: It’s not true. Walz’s children were conceived using intrauterine insemination (IUI), not IVF. These are two very different things, and the policy conversations about them are fundamentally distinct; many religious conservatives want to prohibit IVF—which can result in the destruction of unused fertilized embryos outside the womb—but not IUI.
Yet Walz tried to link his own personal experience with potential efforts by Republicans to ban IVF. This is misleading, since he and his wife used IUI, not IVF.
It was an oft-repeated error. On Facebook, Walz wrote that his family had taken advantage of reproductive health care options like IVF, which is true enough. But then he told the Pod Save America podcast that his two kids were born “that way,” in reference to IVF. Worse still, on MSNBC, he flatly stated: “Thank God for IVF, my wife and I have two beautiful children.”
It makes sense that some people who have little familiarity with either procedure use IVF as shorthand for both. But Walz should have a more granular understanding of what they involve. Moreover, he has accused his opponents of wanting to ban IVF. Walz attacked his rival, Republican vice presidential candidate J.D. Vance, saying: “If it were up to him, I wouldn’t have a family, because of IVF, and the things that we need to do reproductively.””
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“The best major media exposé on Walz’s incautious truth telling came from CNN’s Andrew Kaczynski, who revealed that Walz repeatedly lied about his 1995 arrest for drunk driving when he ran for Congress a decade later.
Walz was stopped for driving 96 mph in a 55 mph zone and admitted to police that he had been drinking. His blood alcohol level was .128.
“But in 2006, his campaign repeatedly told the press that he had not been drinking that night, claiming that his failed field sobriety test was due to a misunderstanding related to hearing loss from his time in the National Guard,” wrote Kaczynski. “The campaign also claimed that Walz was allowed to drive himself to jail that night. None of that was true.”
These were direct lies, and there’s no excuse for them.”
“it’s misleading to suggest that the president—and by extension, the major political party to which the president belongs—is singularly or even primarily responsible for the success or failure of the job market. Rather, individuals in dynamic economies operate independently of the political party that happens to occupy the White House.
Clinton’s numbers are technically right: According to the U.S. Bureau of Labor Statistics, the economy added 2.63 million nonfarm private sector jobs while George H.W. Bush was president. During Clinton’s two terms, the economy added 22.9 million jobs. Only 1.37 million jobs were added during George W. Bush’s terms, with another 11.57 million during Barack Obama’s tenure. During Donald Trump’s single term, the economy lost 2.72 million jobs, and in Joe Biden’s term through July 2024, the economy has added 15.81 million.
In total, that equals 51.56 million net jobs added since January 1989—50.28 million under Democratic presidents and 1.28 million under Republican presidents. That’s not the whole story, though.
Many of the presidents’ terms coincided with substantial external forces. Trump left office during a recession caused by the COVID-19 pandemic: In his first three years in office, the economy actually added 6.4 million jobs. Similarly, George W. Bush left office amid the Great Recession, during which the economy shed nearly 7.4 million jobs. Calculating Bush’s term up to December 2007, the economy added 5.7 million jobs.
On the other hand, Clinton served during the dot-com boom. The tech-heavy Nasdaq composite more than doubled between January 1999 and March 2000. But then the bubble burst: The economy entered a recession in March 2001, just weeks after Clinton left office, and the Nasdaq would lose 78 percent of its value between its March 2000 high and October 2002.”
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“National economies—particularly those as large and complex as ours—are dynamic, with an infinite number of inputs and externalities. “Month-to-month job creation is just a function of the dynamic U.S. economy that’s bigger than one person,” Chris Douglas, associate economics professor at the University of Michigan–Flint, told Marketplace in 2022. Central planning fails for this reason: Dynamic economies are driven by individuals, each operating only with his or her own knowledge and interests in mind.”
“About a decade ago, the FAA developed a plan to address the understaffing at N90 (and perhaps regain some level of management control). The idea was to shift responsibility for approaches and departures for the five New Jersey airports to a well-staffed facility in Philadelphia. This would ease the extent of the controller shortage at N90, by reducing the air traffic they manage by about one-third.
The controllers’ union branch at N90 declared war on the plan, backed by Schumer and his New York congressional allies. So it sat on the shelf for years—until a new FAA Administrator, Mike Whittaker, took office last year. Additional discussions with airlines and the national controllers’ union leadership led to agreement (at last) on this sensible reform, set to take effect on July 28, 2024. On July 17, 17 controllers who’d been slated to transfer to Philadelphia refused to relocate. But 14 others volunteered, and another 10 agreed to a temporary relocation to assist in training the Philly controllers. The airlines (and I) breathed a sigh of relief. This long-standing problem was on the way to being solved, though it would take a few years to get Philly fully up to speed.
But—wouldn’t you know it—on August 2, Schumer, along with Sen. Kirsten Gillibrand (D–N.Y.) and five House members from New York, sent the FAA a letter demanding the plan be rescinded. Airlines serving the three main N.Y./N.J. airports support the plan, knowing that it will take a year or two before the transition is completed and FAA flight restrictions can be lifted. A senior airline executive told Politico, “Doing nothing to fix the most chronically understaffed and also busiest airspace in the system was not an option. Long-term, this is the most effective solution.”
Most Americans are unaware that this kind of political meddling is rare in most developed countries. Since 1987, more than 60 countries have depoliticized their air traffic control systems. Instead of being part of a government transportation agency funded by the legislative body, these systems have been converted into self-supporting public utilities. They charge airlines and business jets for their services and can issue revenue bonds to finance facility replacements or expansions. (In contrast, the FAA depends solely on whatever Congress appropriates each year and is not allowed to issue bonds.)
Freeing U.S. airspace from political micromanagement has been proposed many times over the past 50 years but has never come close to happening. The latest effort (between 2016 and 2018) got an air traffic corporation bill through the House Transportation and Infrastructure Committee, but it went no further. The large coalition (airlines, controllers’ unions, pilots’ unions, and others) that got us that far no longer exists. But someday, our anachronistic system of managing air traffic will be depoliticized as a self-supporting air traffic utility. Perhaps then it can build its way back to being the world’s best, instead of just the world’s largest, air traffic management system.”
“The concept of nutritional and ingredient labeling is even more complex in the alcohol space since the TTB uses a pre-approval system for alcohol labeling, meaning that alcohol producers have to submit their proposed labels to the agency for approval before the product ever hits the market. No approval, no market access. This is in marked contrast to most food labeling, which the Food and Drug Administration enforces after a product goes to market.”