“Mostly, the economy spins ever onward because individuals show up for work and produce something that other people—their employers, customers, clients, donors, etc.—value and are willing to pay for, and then they do it again the next day.”
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“If nothing changed, Springfield would simply experience an ongoing slide into oblivion. The city has been losing population since the 1960s and more than a fifth of those who remain are below the poverty line. Translation: Anyone who had better economic prospects somewhere else was already gone, or on their way out.
“The real story is that for 80 years we were a shrinking city, and now we’re growing,” a local pastor told NBC News.
In other words, immigration isn’t the cause of Springfield’s problems. Stagnation is.
Is the influx of thousands of foreign-born workers going to be smooth? Of course not. Some culture clash is inevitable. More workers willing to pay market rates for housing and a more competitive local economy might make life marginally more difficult for, as Williamson writes, “a reliable Trump-voting constituency: marginally employed white people on the dole.”
Vance and former President Donald Trump have rushed to amplify those culture clashes—and knowingly exaggerate them too, as Reason’s Jacob Sullum explained yesterday. In doing so, they’ve demonstrated how little they understand about what make an economy work and what makes a place successful. Thriving cities, even small ones, are home to a constant churn of cooperation and competition between newcomers and natives. Places that don’t grow are doomed to die.”
Sanctions against Russia made their ability to wage war weaker than it otherwise would have been, but only had limited effectiveness due to poor execution and other powers not going along.
Surely, Trump won’t dishonestly take credit for this.
“The oil market could see a major supply glut in 2025 thanks to booming production from non-OPEC states like the US and sagging demand in China, according to the International Energy Agency.
The IEA said in its November Oil Market Report that the world’s oil market is on track for a one-million barrel-a-day surplus next year.
The excess is largely being driven by a weakening economy in China. Demand for oil in the world’s second-largest economy contracted for six straight months in a row as of September, IEA data shows. This accounted for the “main drag” on demand this year, the report said.
Meanwhile, the agency is predicting strong oil production among non-OPEC producers led by countries like US, Guyana, Argentina, and Brazil.
Altogether, non-OPEC producers are on track to expand oil production by 1.5 million barrels a day, it estimated. That amount is more than the agency’s forecast for world oil consumption to grow by 990,000 barrels a day next year.”
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“The US has become the largest oil producer in the world, pumping out more crude than any other country in history for the last six years in a row, according to the US Energy Information Administration. Domestic production hit a record 13.4 million barrels a day in August, according to data from the Energy Information Administration.”
His plans increase the deficit, which is inflationary.
Large and broad tariffs are inflationary.
A massive crackdown on illegal immigration will also be inflationary as without cheap labor, making products will be more expensive or won’t happen here at all–particularly agricultural goods and housing.
Trump wants to end the independence of the Federal Reserve. Trump has been in favor of lower interest rates, which will increase inflation.
“Capitalists create new wealth. They don’t take a big slice of the pie and leave us a sliver. If they get rich, it’s because they find ways to bake lots of new pies.
That’s what’s happened in America. Its why today, even poor Americans have access to things European kings only dreamed about.
Capitalists can get rich only by making all of us better off.
Actual economist Dan Mitchell explains, “Billionaires only kept 2.2 percent of the additional wealth they generated….The rest of us captured almost 98 percent of the benefits.””
“Argentina’s 2020 Rental Law, intended to protect tenants, ended up making housing unaffordable for the average Buenos Aires resident. The issue isn’t unique to Argentina—rent control measures have had similar outcomes elsewhere. In San Francisco, expanded rent control laws led to in a spike in evictions. Meanwhile, in the Netherlands, rent caps have prompted property owners to sell their buildings and exit the rental market, according to Reason’s Christian Britschgi.
Argentina’s experience should serve as a cautionary tale for policymakers: Well-intentioned policies aimed at protecting tenants can sometimes backfire, causing more harm than good.”
“Start with that $30 toaster made overseas. Now, slap a 10 percent tariff on it, so that consumers must pay $33 to buy it. That means the Treasury Department collects $3 in new revenue, but it also means that domestic toaster-makers can sell their wares for $32 and undercut the imported models.
If tariffs cause consumers to switch to those domestic-made toasters, Cass acknowledges that consumers are out two bucks. This is what economists call a “deadweight loss” and it’s one of the major reasons why tariffs harm the economy.
Cass, the head of American Compass and a prominent proponent of the conservative moment’s shift toward central planning, wants to focus on the benefits of those higher prices. “The share of the $32 purchase price that would once have gone to a Chinese factory and its workers now goes to an American firm and its workers instead,” he argues. “It pays American taxes and supports American families in American communities.”
All of that for just $2 more. Wow, what a great deal!
Unfortunately, Cass is wrong about the math and wrong about the underlying economics.
Tariffs can, of course, be used to make foreign-produced goods (like toasters) more expensive. That doesn’t mean that manufacturing firms will radically redesign their supply chains to produce more toasters in the United States. And if they did do that, those new toasters wouldn’t cost a mere $2 more than the ones available at Home Depot now. Cass is making several wild logical leaps here, and offers no evidence to substantiate this claim of a hypothetical $32 American-made toaster.
How much would that toaster actually cost? More than $250.
That’s the figure offered by Ed Gresser, the former assistant U.S. Trade representative who is currently the director of trade and global markets for the Progressive Policy Institute (PPI). Unlike Cass, Gresser understands how tariffs and trade work.
More importantly, he also shows his work. Because there are no kitchen appliance manufacturers making toasters in the United States right now, he examined the prices of toasters made in other wealthy, western countries like Italy, Japan, and the United Kingdom. At the lowest end, those toasters cost the equivalent of $250, and some would be significantly pricier.
“In sum, ‘developed’ high-income countries do make home toasters. But they are profitable at prices about ten times those you’d find in mainstream U.S. retail outlets.,” writes Gresser. “So to achieve Vance’s apparent goal, mainstream toaster prices would probably have to rise to Neiman Marcus levels, say $300 each.””
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“there would be far more toaster-buying consumers than toaster-making workers—and the consumers would be far worse off. Indeed, the workers would be worse off too, since they become consumers as soon as they clock out for the day.
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“Now, imagine what would happen if you told them that the price of jeans would have to increase tenfold, as would be the case with toasters. I suspect that Cass—and Sen. J.D. Vance (R–Ohio), who is making a version of this same argument on the campaign trail—is relying on faulty math and bad economics because he’s aware that the real numbers would be unpalatable to just about everyone.”
“Wage growth has caught up with inflation on average. But wage gains haven’t been uniform: The lowest-paid workers saw some of the biggest gains, particularly in the leisure and hospitality sectors, but other industries, from advertising to chemical manufacturing, saw their wages decline relative to inflation.”
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“Even if workers received raises that outpaced inflation, that doesn’t help with sticker shock. Research has shown that consumers have an internalized “reference price” — a conception of what constitutes a fair price for a good they routinely purchase. If that imagined price doesn’t match up with reality, consumers feel short-changed.”
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“Consumers also often misunderstand how inflation works. The important thing to know is that it only goes one way: When inflation decreases, that just means that prices are increasing less quickly, not that they are going down. (That can happen, though rarely.)
Prices going down, a phenomenon known as deflation, would be a potentially worrying signal about the health of the economy. If consumers pay less for a good, that can translate to less money to pay the workers who produce and distribute it, leading to less consumer spending overall and slower economic growth.”
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“people are staying unemployed for longer: 1.6 million Americans were unemployed for a period of at least 27 weeks in October, compared to just 1.3 million the same month last year.”
…
“After a brief spike in savings rates during the pandemic due to a series of stimulus checks, Americans are now saving less than they were pre-pandemic. This creates a cycle where Americans have less money, so they borrow more. Because interest rates have been high, borrowing has become more expensive, leaving them with even less money.”
“The nationalist conservative obsession with blue-collar manufacturing jobs often ignores the interests of workers and the will of consumers. Sen. J.D. Vance (R–Ohio) provided a perfect illustration in an early August campaign speech in Nevada on “the American dream.”
In it, Donald Trump’s protectionist running mate declared that “a million cheap, knockoff toasters aren’t worth the price of a single American manufacturing job.”
On its face, that’s just rhetorical silliness. Common sense says anyone should be willing to make that trade: Affordable and abundant appliances are part of the reason that 21st century America is the best place to live in the history of the human race. Jobs are abundant too—there were 7.6 million unfilled jobs in August, per the Department of Labor—and the loss of a few should not worry vice presidential candidates.
But when right-wing populists such as Vance make this argument, they mean something less literal: that America would be better off if the nation manufactured more and imported less, and Americans would be better off working in metaphorical toaster factories than doing whatever job they have now.
Both ideas are wrong.
The supposed decline of American manufacturing is wildly overstated by politicians such as Trump and Vance (and across the aisle by President Joe Biden). Yes, a lot of low-level manufacturing has been outsourced via global trade, but American manufacturing output is running at near-record highs these days. Instead of making toasters, America makes BMWs and designs the components in, and apps on, your iPhone.
That’s a good tradeoff, especially for workers. You earn more building fancy cars than you do piecing together basic kitchen appliances. The average wage for manufacturing workers (excluding managers) has doubled since 1999, outpacing inflation.
Vance and his nationalist conservative allies think that’s a problem, one they wish to solve with more tariffs and other trade barriers that they hope will incentivize low-paying toaster-making jobs to return to the United States.”
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“When Biden expanded Trump’s tariffs on imported steel and aluminum earlier this year, one of the many objections came from the North American Association of Food Equipment Manufacturers (NAFEM). In a June letter to the U.S. Trade Representative, the trade association pointed out that higher tariffs on the raw materials needed to manufacture appliances would, predictably, harm American companies.
“Even in instances of growing sales, the costs of tariffs grow with business,” NAFEM wrote. Member companies would thus be forced to “reallocate the funds that would be used for wage increases and additional employees to pay for the increased tariff costs.”
The nationalist conservatives also misunderstand Americans’ willingness to accept Vance’s deal—even if many prefer the idea of boosting domestic manufacturing.
Earlier this year, the Cato Institute polled consumers to ask if they’d support a tariff on imported blue jeans in order to increase blue jeans manufacturing jobs in America. About 62 percent of respondents said yes.
But hold on. When told that the tariff would make jeans just $10 more expensive at the store, support for that policy flipped: Now, 66 percent opposed it. And if the tariff would make jeans $25 more expensive, an overwhelming 88 percent said no.”
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“How many Americans living in the year 2024 aspire to work—or see their children and grandchildren work—in a toaster factory?
The answer is pretty close to none. That’s great. We should prefer a country where young men and women aspire to be scientists, AI developers, and tech entrepreneurs over one where the dream job is a 40-hour-per-week gig at the local toaster plant.
Vance, and his nationalist conservative allies, are selling a vision of America that’s long out of date. It’s a backward-looking economic message that assumes people would be happier if they were less materially wealthy and had fewer prospects. Most Americans seem unwilling to go along when you show them the bill.”