Lying about Economics
Economist Robert Reich offers up his opinion on JD Vance’s BS claims of tariffs not raising prices. Vance also wishes the tariffs brought a significant number of jobs to or were created in the US. Wrong on both accounts. Did this guy really go to Yale?
Vance’s Trumped-Up Economics
Today, Republican vice-presidential nominee JD Vance told NBC News that the tariffs Trump imposed during his term in office had not raised prices for Americans but had brought a significant number of jobs back to the United States.
Wrong on both counts.
In a careful analysis, researchers found the cost of Trump’s tariffs were “almost entirely borne by U.S. firms and consumers.”
That’s not surprising; tariffs function like taxes by raising the costs of imported goods. Trump’s proposal to raise tariffs on all imports as a means of raising revenue to offset a tax cut is obviously absurd.
Vance is also wrong about employment. Research clearly shows that the Trump tariffs did not bring jobs back to the United States.
Tariffs may be necessary for national security to protect critical industries such as semiconductors. But no one should be fooled into thinking they’re costless for consumers, or good for workers. The 1930 Smoot-Hawley tariff made the Great Depression far worse than it already was.
That Vance would make these claims, claims which have been so convincingly debunked, should cause all of us some concern. He seems as unreliable as the person who named him his running-mate.
Vance’s Trumped-Up Economics, Robert Reich
It’s like the Energizer Bunny spinning a broken record; stretched tape, skipped CD
It’s hard to believe he even went to community college, let alone Yale. Go Griz …
That’s fine, Bill, but call out Reich too. That guy has been claiming that corporate greed is what has caused all this inflation. And that’s utter bullshit too because inflation has been driven by record levels of money printing, and there’s no collusion on the price of milk (we’re not Canada).
@David,
What’s the evidence that “inflation has been driven by record levels of money printing” and not the COVID pandemic and associated supply chain issues?
Note that inflation has subsided, COVID deaths and hospitalizations have dropped and supply chain issues have largely been addressed, but money printing continues unabated. How does your hypothesis explain this?
David:
In the 2008 debacle, we lived through something very similar. In which case prices were increased because of manufacturing shortages. Semiconductors were in high demand and as a result, companies took advantage and raised prices because they could. It had little to do with the cost of manufacturing and even if it did, the cost would still be far less than the original pricing. They did it because they could do it and I accepted a 20% price increase.
To lay the inflation increases solely on the backs of people who were receiving less in subsidies than what a paycheck would have given them is perverse. Companies took advantage of a pandemic to increase prices on staples and other needs. Decreasing the size of packaging and maintaining original pricing was but one example.
It is the same corporate greed in 2021-2024 as what was experienced in 2008-2010. In the end, I eliminated that suppler after testing of replacement product and the help of the automotive company we were supplying.
Rent taking at its finest, because they could do it, and not because they were losing money.
I think Vance’s argument was that resulting higher wages will offset tariff-related price increases. Of course by that argument, we can say that the recent bout of high inflation did not raise prices.
BKsea:
What was the cost of throughput if the process is the same?
Its almost as dumb as Kamala’s price controls to prevent
“gouging” by those evil grocery stores making 1.18% net profit margins.
@jh,
LOL! Saying people are blaming grocery stores for high food prices is almost as dumb as saying people are blaming drug stores for high drug prices. You do realize that grocery stores don’t actually *make* the foods they sell, don’t you?
Joseph:
You do deserve an answer, so I will give you one.
“commodity goods, energy, other inputs) in 2023 were up 15 percent relative to what they were in 2019, while costs for food and beverage retail stores increased 18 percent. Revenues rose 15 percent and 20 percent, respectively. For comparison, retail sales data recorded a 25 percent increase in revenue for food and beverage stores.”
Did the cost of throughput in a grocery store change in comparison to the cost of the groceries they sold? It should not have as their cost to sell the groceries are not impacted by an increase in cost to acquire other than to pass the additional cost along. This is called throughput.
We did see prices greatly exceed costs only because they could do so in the name of a pandemic. Unless there is additional cost to acquire the items sold, there is really no reason to increase a price other than because they could do so.
“To be sure, profits in dollar terms have gone up substantially. Indeed, the operating profits of the surveyed food and beverage retail stores rose from $14 billion in 2019 to $25 billion in 2023, a 79 percent increase. The jump reflects a higher profit margin applied to a higher level of operating expenses. Again, this roughly $10 billion increase in operating net income is marginal relative to the $100 billion increase in revenues reported by these firms.”
I won’t tell you how to code if you do not tell me how to do throughput analysis.