Category: political economy

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Accountability folly political economy

Inflation & the Infirm Incumbent

Joe Biden, inflation, economy

“From President Joe Biden’s point of view, Americans ought to be thrilled with the recent trends in inflation,” writes Eric Boehm at Reason, who quotes the president: “Wages keep going up and inflation keeps coming down.”

True enough, but, Mr. Boehm goes on, “pointing at the charts and regurgitating economic figures doesn’t seem to be as convincing as the president might hope.”

You’ve seen the left-of-center memes mocking Americans for thinking the economy is bad when it is, instead, g-gr-great!

But prices for food and gasoline, after the big bulge caused by all those COVID checks and subsidies, did not go back down to previous levels. And rising wages after the “Great Suppression” of the lockdowns seem at best a verypartial return to better times.

Boehm offers some context. “It makes sense that the recent run of inflation would leave a psychological scar. After all, the peak inflation rate of 9.1 percent in June 2022 was not only the highest annualized rate seen in more than four decades, it was also more than twice as high as the average inflation rate in any year since 1991. . . .” And inflation has not stopped. “In March, the annual inflation rate was 3.5 percent. Yes, that’s 60 percent lower than the peak rate in June 2022, but that’s still higher than the average annual rate in every single year between 1991 and 2021, except for 2008.”

And then there’s the higher interest rates, which, Boehm plausibly asserts, compounds our perceptions that “inflation is a major problem.”

This is a huge issue for Biden. Boehm cites the political lore: “If you’re explaining, you’re losing,” and notes that, “unfortunately for Biden, his task in the run-up to November’s presidential election is explaining to people that they shouldn’t feel like inflation is still a problem.”

Who you gonna believe: Your cash register receipts or a feeble, corrupt, multi-millionaire lifelong politician?

This is Common Sense. I’m Paul Jacob.

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free trade & free markets political economy subsidy

When the CHIPS Are Weighed Down

Taiwan, computer chips, regulations, DEI, race, racism

Has DEI “killed the CHIPS Act”?

The CHIPS and Science Act of 2022 created a giant package of subsidies that shouldn’t exist to begin with and is made even worse by all the strings attached.

The Act authorizes giving $52 billion of taxpayer money to microchip manufacturers to make chips in the U.S. The boost to domestic production will supposedly help us if China invades Taiwan and disrupts Taiwan’s globe-leading microchip industry.

But chipmakers eligible for the largesse are recoiling from all the embedded DEI mandates. “DEI” means “diversity, equity, and inclusion.” It’s a collectivist mantra and ideology designed to make employers fret about racial and gender quotas and DEI indoctrination at the expense of hiring qualified people and making high-quality microchips.

According to Matt Cole and Chris Nicholson, writing for The Hill, nineteen sections of the Act are devoted to DEI. One gives the Department of Commerce a mission that Commerce describes as “strengthening the U.S. semiconductor ecosystem” by ensuring “significant investments to create opportunities for Americans from historically underserved communities.”

The authors believe that CHIPS is “so loaded with DEI pork that it can’t move.” Worse, it’s making it hard for chipmakers to move, forced to focus away from making microchips and, instead, onto the wasteful exercise of appeasing regulators.

Now that they are finally about to get CHIPS funding, Intel and others are delaying announced factories and foundries on U.S. sites and instead going ahead with more overseas plants.

I guess they want to get stuff done.

This is Common Sense. I’m Paul Jacob.

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ideological culture national politics & policies political economy

Shrinkflation, Shrunk Nation

Joe Biden, inflation, ice cream, economics

In another pathetic pre-recorded speech, played before Sunday’s Super Bowl, President Joe Biden lambasted America’s corporations for “shrinkflation.” 

“As an ice cream lover,” he explained in the vid, “what makes me the most angry is that ice cream cartons have actually shrunk in size but not in price.”

The Guardian expands upon the president’s gripe: “Inflation dropped to 3.1% in December but some companies are thought to have responded to rising costs by marginally shrinking the size of products — shrinkflation — as well as changing recipes to reduce the amount of more expensive ingredients — sometimes known as ‘skimpflation.’”

My, oh my, so businesses must adjust to inflationary pressures as well. 

When the costs of their inputs go up, they do not automatically become charities. Knowing that consumers do not sport infinite incomes and demand schedules utterly “inelastic” — buying the same goods in the same quantities even at higher prices — they often adjust by reducing quality or quantity.

It is one of many ways that inflation hurts us.

Inflation has even been referred to as the sneakiest of all taxes, taking from the masses and giving to the insider class, those closest to government (those who receive newly-created money first).

Biden calls “shrinkflation” a “rip-off” and insists that “the American public is tired of being played as suckers.”

Well, that will prove true only if the American public rejects those politicians who push the policies that led to the inflation — politicians like those in the 116th and 117th Congresses, Donald Trump, and Joe Biden himself.

This is Common Sense. I’m Paul Jacob. 

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deficits and debt national politics & policies political economy

The Economy Is Great-ish

Joe Biden, economy, inflation, Bidenomics

“We have the highest share of working-age Americans in the workforce in 20 years,” Biden recently told reporters. “It’s no accident. It’s Bidenomics.”

Bidenomics being that old standby, tax-and-spend-omics.

So why do so many Americans think the economy is getting worse? Why do 84 percent say that their costs have gone up?

Well, says President Biden, the media mislead them. “You all are not the happiest people in the world [in] what you report,” is his view. “You get more legs when you’re reporting something that’s negative.”

The media do often mislead us; the negative news bias is real.

But I don’t think that our left-leaning, in-the-tank-for-Biden media can be blamed for the impression so many of us have that it’s harder to make ends meet.

Biden isn’t the only one professing puzzlement. Breitbart Business Digest observes that a “small army of establishment media types and economists” are intent on “unraveling what they take to be the great mysteries of our time.” As described by a recent Brookings Institution paper, this mystery is the “disconnect between consumer sentiment and the state of the macroeconomy.”

As BBD points out, the Brookings researchers simply start by assuming that everybody is wrong, then try to figure out why.

“A simpler explanation would be that the economy is falling short of the public’s expectations” because of things like high inflation, higher interest rates, and greater difficulty paying for groceries, Christmas presents, vacations. And rent, and medical bills, and tuition.

Saying it’s all in our heads won’t make tough times go away.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets media and media people political economy

Dollar Store Plague

dollar store, cheap food

Tucker Carlson said harsh things about “Dollar Stores” and “libertarian economics” on Glenn Greenwald’s System Update for December 16, as summarized in the show’s tweet:

“Libertarian economics was a scam perpetrated by the beneficiaries of the economic system that they were defending . . .

I think you need to ask: ‘Does this economic system produce a lot of Dollar Stores?’

And if it does, it’s not a system that you want, because it degrades people — and it makes their lives worse and it increases exponentially the amount of ugliness in your society.

And anything that increases ugliness is evil.

So if it’s such a good system, why do we have all these Dollar Stores?”

At Reason, Liz Wolfe fell for the same trap that has apparently ensnared Mr. Carlson. She defended progress in the U.S. since the time he was born. What? 

Contra Liz Wolfe, and in defense of Tucker, I’d say we are indeed living in tough times. Inflation’s way up, the birth rate is down, life-expectancy’s dropping, and a whole lot of Americans struggle to pay bills and keep even, financially, much less “get ahead.” The proliferation of dollar stores shows that the upscale stores are too expensive for too many.

They are a refuge for the poor.

But are they evilly uglifying, though? 

Perhaps not as pretty as Safeway or Target, but they’re clean and you can buy a can of soup for four bits, a dollar less than at an upscale market.

Are the rise of discount consumer goods stores, like Dollar Tree and Dollar General, especially hideous and indicative of a blow to . . . the American spirit? 

Seems more revelatory of a weird elitist streak in Tucker.

And what does libertarian — free-market — economics have to do with it? Libertarian economists have opposed all the major drivers of the current system: central banking, deficit spending, sovereign debt accumulation, taxation for redistribution, subsidy. The policies that have truly “hollowed out” the last semblance of progress.

But Tucker blames libertarian economists’ defense of equity markets for not only social decline but Dollar Stores.

He’s fallen for the progressives’ perennial scam: see a problem in our mixed economy and blame the freer part . . . not the role of elitist schemers with political power.

This is Common Sense. I’m Paul Jacob.

dollar store, decadence

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free trade & free markets political economy too much government

The Not-Unintended Consequences

Gavin Newsom, California, fast food, regulation

When bad outcomes are obvious, we can no longer call them “unintended consequences,” can we?

Take the case of California’s double-barreled attack upon “fast food”: last year’s push through the legislature of Assembly Bill 102 and Assembly Bill 1228. These regulatory schemes would have introduced collective bargaining into fast food franchises and enforced much higher minimum wage rates.

The two laws sparked an industry backlash, in the form of ballot referendums to halt the regulatory onslaught, which Steven Greenhut writes about at Reason. “In September, Gov. Gavin Newsom announced a ‘truce,’” Greenhut explains. “The industry pulled its ballot measure and agreed to a $20 minimum wage. In return, Newsom and unions limited the power of the Fast Food Council and removed joint-liability provisions.”

The concession on hiking the legal wage minimum was agreed to, notice, by the fast food lobbyists. Not the workers. 

As those familiar with elementary economics understand, when the costs of an input (like labor) are increased, alternatives to those inputs will be sought. So we can expect more replacements of workers with automation — as we’ve seen all around the country in fast food, especially at McDonald’s — as well as higher prices.

Which, in a state sporting huge homelessness and unemployment problems, will only hobble the one industry that helps the poorest members of society both in terms of consumer products (inexpensive food) and entry-level jobs (at fast food joints).

Perhaps California’s Democrats know full well what they are doing. They push crazy policies not because the negative outcomes are “unintended” or unforeseeable.

You see, it’s not disastrous for them.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets media and media people political economy too much government

Incredulity Doesn’t Cut It

dumpster fire, regulations, privatization

One of the objections people often make to the idea of private enterprise as a solution to government inefficiency is The Argument from Incredulity.

It’s not an argument at all, actually, just a harrumph and a guffaw: we cannot have free-market police, or fire suppression, or . . . garbage collection!

But of course all those things are successfully managed in the private sector.

No media outfit has a longer history of pointing this out than Reason magazine. So when the editors of Reason brought us Joe Lancaster’s “Government Waste Monopoly Pits Private Dumpster Business Against Garbage Bureaucrats,” yesterday, I hope they took a moment to revel in a little nostalgia. For this is the kind of story that made Reason what it is today, one of the best sources for retail political economy.

The tale tells of Steven Hedrick, an Arkansas man who put together a business renting out dumpsters — like you often see on construction sites, but smaller — which he would haul away after customers filled them. He built the business without ever going into debt, and then . . . came the government. 

“[I]n April 2022, the City Council in Holiday Island passed Ordinance 2022-004, which required all residents and businesses within the city to contract with the county sanitation authority, Carroll County Solid Waste (CCSW), for trash pickup and disposal services,” Reason informs us. “Anyone using private companies would have to switch, and anyone who did not have contracted trash service would have to sign up.”

And Hedrick’s little business must be . . . dumped.

What this is, at base? Sheer bigotry: preferring monopoly government to competitive private services.

For those of us who’ve been reading Reason for decades, it sports a familiar smell.

Just not a good odor, for the drive to monopolize everything stinks.

This is Common Sense. I’m Paul Jacob.

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Big Oil, Big Profits — Big Deal?

Joe Biden, oil, inflation

When President Joe Biden accused oil companies of excessive profiteering, and those profits as a cause of inflation, reactions were . . . mixed.

Democrats love that kind of talk. Ronald Reagan, back in his Democrat days, pitched precisely that sort of rhetoric when he campaigned for Truman’s re-election.

Republicans, along with most other Americans, are skeptical. Or just plain incredulous.

Meanwhile, what did Big Oil say?

Chevron’s CEO, Mike Wirth, took special care to complain of the president’s rhetoric, characterizing the administration as having “largely sought to criticize, and at times vilify, our industry.”

Perhaps Biden’s worst vilification was that Exxon had “made more money than God” — as if spending more money than God were his job and that he resented any money he couldn’t spend. 

EXXON responded by noting that the multinational had continued investing in infrastructure even during the pandemic lockdowns when the company “lost more than $20 billion and had to borrow more than $30 billion to maintain investment to increase capacity to be ready for post-pandemic demand.”

In a helpful mode, the company offered that “government can promote investment through clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines.”

Biden, who ran on decreasing oil production by regulatory crackdown, received a square hit.

Nonetheless, the Democrats double-down on their worn-out “windfall profits” alarmism. 

After a huge hit to consumption during the lockdowns, the profits are there not as recompense for Big Oil’s regrettable big losses, but as incentives to get out of the Great Suppression. 

We should want profits to entice more investment.

Could it be that Biden wants neither?

This is Common Sense. I’m Paul Jacob.

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Unconscionable Greed!

Bernie Sanders, Elizabeth Warren, price gouging, inflation

It’s easy to blame others for greed. And when prices rise, I suppose I can imagine being so upset that . . . well, if not my mind, Bernie Sanders’ mind . . . would become unhinged:

“Greed. Greed. Greed. While Americans are struggling at the pump,” the senator tweeted on Friday the 13th, “in the first three months of this year, oil and gas companies made over $41 billion in profits, more than double their profits from last year. The problem is not inflation. The problem is corporate greed.”

That’s Bernie Sanders for you. It’s not government profligacy or Federal Reserve monetary policy or the Biden Administration’s anti-fossil fuels agenda . . . or supply-line problems, persisting COVID-lockdown effects, or anything else.

Just greed.

But is greed somehow cyclical? Why were greedy corporations providing cheap gas a year ago and then able to raise it only under Democrats’ rule?

Alas, Bernie isn’t the only low-brow demagogue in the Senate. There’s Senator Elizabeth Warren pushing a new “price gouging” bill.

So, just as Bernie never answers “why is greed so successful at gouging now?,” how does Liz answer the burning question “how can we objectively define ‘price-gouging’?”

As journalist Catherine Rampell observes on Twitter, the senator’s definition in the bill is less than enlightening: “price-gouging” is “just pricing that is ‘unconscionably excessive.’”

Now that, Senator Warren, is unconscionably vague.

And incidentally, aren’t both senators on the record as demanding higher gas prices to usher in “green energy” to “save the planet”? This all seems unconscionably . . . deceptive.

This is Common Sense. I’m Paul Jacob.

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Accountability folly national politics & policies political economy

Whip Producers Now

inflation, shock

The Biden administration is siccing agencies like the Federal Trade Commission, Department of Agriculture, and the Federal Maritime Commission onto the producers of stuff who have recently dared to raise prices.

Stuff like gas. Higher prices at the pump must be an oil-company conspiracy.

It has nothing to do with (and don’t even think it!) governmental actions that impede production, including shutting down the Keystone oil pipeline on Biden’s first day in office or calling a halt to new oil leases on public lands. Etcetera.

Nothing to do with mammoth expansion of the supply of money and credit to facilitate trillion-dollar government spending sprees.

In case you hadn’t noticed, meat costs more, too. So obviously that must be the fault of malicious meatpackers. Rest assured that beef price inflation is utterly unrelated to pandemic-policy-induced labor shortages and delays.

Or to any recent increase in efficiency-impairing trucking regulations.

Same with sundry supply-chain problems, like the ships and crates piling up at ports. Greater consumer demand, new pandemic-induced screening protocols, union rules that prevent ports from operating 24/7 or improving automation — all irrelevant.

Must be. That’s the script from 1600 Pennsylvania Avenue, anyway.

But if companies can hike prices at will, ignoring whether regulations ease or obstruct production, why doesn’t the meat industry, for example, charge a thousand dollars per pound of flesh?

Well, we know why. 

Demand for a pound of ground beef would slide to zero, or close to it.

If only the government people knew! 

Or would stop pretending they don’t know. 

A consistent recognition of the laws of economics would sure make a great gift — in any season. Instead of bullying and making things worse, government could get out of the way.

This is Common Sense. I’m Paul Jacob.

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