Economics Thread

[chop2chip]

https://reason.com/2024/02/07/elizab...lame-shifting/

Do you hate it when the big bag of chips you bought turns out to contain mostly air inside? Well, Sen. Elizabeth Warren (D–Mass.) does, and she's crusading to end this injustice.

In a series of tweets and videos over the past few days, Warren has come out swinging against the "shrinkflation" of Doritos, Oreos, and other store-bought products whose sizes have shrunk even as their prices remain the same.

"These big corporations are shrinking how much they give us, but they're charging the same amount or sometimes even more. Corporate executives thought we wouldn't notice, but they're wrong," said Warren in a video posted to X (formerly known as Twitter) earlier this week.

Another word for shrinkflation is an obscure concept economists call "inflation"—where general price increases erode the purchasing power of consumers' dollars. Inflation can appear when the price of a same-sized bag of chips increases, and when the size of a same-priced bag of chips decreases. Both phenomena are still just the per-unit cost of a good increasing.

Warren's rant about shrinking Oreo packages is just the senator's way of adding a conspiratorial gloss to the painfully obvious effects of decades-high inflation the country's lived through during and after the pandemic.

But one doesn't need conspiracy theories to explain recent inflation. The federal government's $4 trillion in fiscal stimulus during the pandemic put a lot of cash in people's hands right as production was falling. The inevitable result of more money chasing fewer goods is higher inflation.

The Biden administration and a Democratic Congress made things even worse by passing a $1.9 trillion American Rescue Plan in March 2021, when an economic recovery was already underway.

Warren supported all these massive spending bills and at times even advocated for more generous spending on things like rent subsidies. If the senator is looking for someone to blame for shrinking cookie packages, she need only look in the mirror.


—————

Another gem from Elizabeth Big Sandwich Warren

But just imagine how many new bureaucrats we could put to work counting the amount of Doritos per bag, ensuring the government set Dorito per bag minimum is properly reached. Jobs!

Speaking of awful candidates that were thoroughly exposed in the debates.

[Tapate50]

Now she’s rolling on Big Chip!

What a joke of a legislator

[acesfull86]

Moron

[thethe]

Inflation isn’t up!

But you’re getting less for your dollar!

Wut?

[Tapate50]

Chip flation!

Glasses of water

[acesfull86]

https://thedispatch.com/newsletter/c...Tariff+Follies

Hang around the trade game long enough and you’ll frequently encounter examples of how bad law, policy, and politics hurt American businesses in infuriatingly dumb ways. What’s going on right now in the U.S. aluminum market ranks up there with some of the dumbest.

I found myself deep in this particular rabbit hole thanks to Magnitude 7 Metals, a Missouri-based primary aluminum smelter whose sudden closure last month pushed Missouri Sen. Josh Hawley to demand that President Joe Biden use the wartime Defense Production Act to magically save the factory. As Reason’s Eric Boehm patiently explained shortly thereafter, the senator’s demand—in somewhat typical fashion—never made much sense because the DPA isn’t some sort of magic “get out of economics free” card that can fix whatever market event politicians don’t like. For Hawley to pretend otherwise is pretty ridiculous stuff.

Dig a little deeper, however, and this is more than just another case of a politician screaming “DEFENSE PRODUCTION ACT” out a Capitol Hill window like Michael Scott declaring bankruptcy. Instead, it’s another teachable lesson regarding the sordid reality of modern U.S. tariff policy, and the high costs, unintended consequences, gratuitous system-gaming, and failed objectives that too often accompanies it.

…

As we now know, none of this “cascading protectionism”—following tariffs on upstream inputs with tariffs on downstream products—saved M7. And that’s because, as is so often the case, the mill’s problems had little to do with allegedly “unfair” imports and almost everything to do with its own specific challenges.

As Reuters’ Home informs us, the plant suffered from two huge flaws. First, it “was built in 1971 and had the dubious distinction of producing the worst quality air in the United States in 2019.” As a result, the plant was under a state consent decree for sulfur dioxide pollution and had recently lost out on a state subsidy that would’ve financed a $7 million emissions reduction system to fix the problem. Second, the M7 factory was powered mostly by coal, which is not just dirtier than modern aluminum smelters but also more costly. Because energy is critical to primary aluminum production, the M7 facility just wasn’t competitive. Being dirtier and more expensive than the competition is not a recipe for success.

…

Tariffs on upstream aluminum products spawned tariffs on downstream aluminum products which have now spawned requests for even more tariffs on aluminum products from a politically connected company that, naturally, wants tariff exemptions for itself. At least one downstream factory in the United States is closed, while several upstream plants are too. Judging from the thousands of desperate requests from U.S. manufacturers for tariff relief, surely others are in trouble too.

But instead of blaming the tariffs for this giant mess (and, heaven forbid, simply letting American companies buy aluminum from companies in Canada, the U.K., Japan, and other nations), the tariff-loving senior senator from Missouri wants the president to save his state’s factory by magical government fiat. It’s almost all too crazy to believe … unless, of course, you’ve actually been paying attention.

[nsacpi]

Q4 GDP growth revised down to 3.2% from 3.3%.

[acesfull86]

https://reason.com/2024/02/29/americ...tariff-levels/

Former President Donald Trump's decision to impose huge new tariffs on imported steel came with an explicit promise about resurrecting the American steel industry.

But nearly six years after those tariffs were announced, government data show that America's annual steel output has fallen below the level recorded in 2017—the last full year before Trump's tariffs were imposed.

…

The USGS data show that Trump's tariffs may have helped goose domestic steel production in the first few years after they were implemented. Production rose to 86.6 million metric tons in 2018 and 87.8 million metric tons in 2019, before cratering in 2020 as a result of the COVID-19 pandemic. Production bounced back in 2021, as American steel mills produced 85.8 million metric tons of raw steel that year.

Those modest gains in the immediate aftermath of the tariffs seem to have faded away over the past two years—despite President Joe Biden's unwillingness to remove the Trump tariffs, which have hammered steel-consuming industries and have added to inflation.

That pattern—a short-term boost in production followed by a decline later—is exactly what economists would expect to happen after tariffs are imposed, wrote Ed Gresser, a former assistant U.S. trade representative and vice president and director for trade and global markets at the Progressive Policy Institute.

Gresser noted that large new tariffs typically create a four-stage chain of events: First, an increase in prices; then, a shift toward domestic production as buyers try to avoid paying the new tax; next, a decline in consumption by domestic industries that consume the tariffed product as they fall behind competitors elsewhere in the world; and finally, that decline in domestic demand rebounds onto the protected producers who see fewer orders for their products—in this case, steel.


—————

The debate should be over, but sadly, both major political parties in this country remain stubbornly attached to failed economic theories from the 1600’s.

[thethe]

https://reason.com/2024/02/29/americ...tariff-levels/

Former President Donald Trump's decision to impose huge new tariffs on imported steel came with an explicit promise about resurrecting the American steel industry.

But nearly six years after those tariffs were announced, government data show that America's annual steel output has fallen below the level recorded in 2017—the last full year before Trump's tariffs were imposed.

…

The USGS data show that Trump's tariffs may have helped goose domestic steel production in the first few years after they were implemented. Production rose to 86.6 million metric tons in 2018 and 87.8 million metric tons in 2019, before cratering in 2020 as a result of the COVID-19 pandemic. Production bounced back in 2021, as American steel mills produced 85.8 million metric tons of raw steel that year.

Those modest gains in the immediate aftermath of the tariffs seem to have faded away over the past two years—despite President Joe Biden's unwillingness to remove the Trump tariffs, which have hammered steel-consuming industries and have added to inflation.

That pattern—a short-term boost in production followed by a decline later—is exactly what economists would expect to happen after tariffs are imposed, wrote Ed Gresser, a former assistant U.S. trade representative and vice president and director for trade and global markets at the Progressive Policy Institute.

Gresser noted that large new tariffs typically create a four-stage chain of events: First, an increase in prices; then, a shift toward domestic production as buyers try to avoid paying the new tax; next, a decline in consumption by domestic industries that consume the tariffed product as they fall behind competitors elsewhere in the world; and finally, that decline in domestic demand rebounds onto the protected producers who see fewer orders for their products—in this case, steel.


—————

The debate should be over, but sadly, both major political parties in this country remain stubbornly attached to failed economic theories from the 1600’s.

A boost and then a decline (during the pandemic) hmmm........

Pretending proper analysis can happen over short periods of time (yes a few years one of which was a pandemic year is a short time) is just cherry picking at best but all know dishonest at its core intention.

[sturg33]

A boost and then a decline (during the pandemic) hmmm........

Pretending proper analysis can happen over short periods of time (yes a few years one of which was a pandemic year is a short time) is just cherry picking at best but all know dishonest at its core intention.

do you have any evidence that they were productive?

[thethe]

do you have any evidence that they were productive?

No because you need a longer time frame to evaluate. Otherwise its just cherrypicking. These are complex systems.

[acesfull86]

No because you need a longer time frame to evaluate. Otherwise its just cherrypicking. These are complex systems.

Gresser noted that large new tariffs typically create a four-stage chain of events: First, an increase in prices; then, a shift toward domestic production as buyers try to avoid paying the new tax; next, a decline in consumption by domestic industries that consume the tariffed product as they fall behind competitors elsewhere in the world; and finally, that decline in domestic demand rebounds onto the protected producers who see fewer orders for their products—in this case, steel.

[thethe]

Gresser noted that large new tariffs typically create a four-stage chain of events: First, an increase in prices; then, a shift toward domestic production as buyers try to avoid paying the new tax; next, a decline in consumption by domestic industries that consume the tariffed product as they fall behind competitors elsewhere in the world; and finally, that decline in domestic demand rebounds onto the protected producers who see fewer orders for their products—in this case, steel.

Cool - So what is this timeframe?

And what actual historic timeframes were analyzed?

[acesfull86]

Cool - So what is this timeframe?

And what actual historic timeframes were analyzed?

https://www.progressivepolicy.org/bl...-same-as-2017/

^ that’s the link from the article…there are some add’l links in reference section

[thethe]

https://www.progressivepolicy.org/bl...-same-as-2017/

^ that’s the link from the article…there are some add’l links in reference section

You're literally taking conclusions from an analysis that included two outlier years (2021 should also be included) and trying to pretend that anything is conclusive. I mean...seriously?

[acesfull86]

You're literally taking conclusions from an analysis that included two outlier years (2021 should also be included) and trying to pretend that anything is conclusive. I mean...seriously?

K, throw away any real world examples, throw away the consensus of modern economics…clearly you want to believe what you want to believe

Do we get to draw conclusions on Biden’s immigration policies, or what timeframe do we have to wait before we feel like we have enough data?

[thethe]

K, throw away any real world examples, throw away the consensus of modern economics…clearly you want to believe what you want to believe

How about you dont' take a conclusion from an analysis that includes a global pandemic event whereby aggregate demand plummeted for two years as evidence for effectiveness of trade policy?

Seems pretty reasonable...guess not.

[57Brave]

HEATHER COX RICHARDSON
MAR 3



On February 25, 1901, financier J. P. Morgan’s men filed the paperwork to incorporate a new iron and steel trust, and over the weekend, businessmen waited to see what was coming. Five days later, on March 2, the announcement came: J. P. Morgan was overseeing the combination of companies that produced two thirds of the nation’s steel into the United States Steel Corporation. It was capitalized at $1.4 billion, which at the time was almost three times more than the federal government’s annual budget.

While the stock market was abuzz with news of the nation’s first billion-dollar corporation, Vice President–elect Theodore Roosevelt was on his way from New York to Washington, D.C., where he and his family arrived at 5:00 in the evening. The train was an hour behind schedule because the crowds coming to see the upcoming inauguration, scheduled for Monday, March 4, 1901, had slowed travel into Washington.

Two days later, President William McKinley took the oath of office for the second time, and Roosevelt became vice president.

McKinley was a champion of big business and believed the role of government was to support industry, dismissing growing demands from workers, farmers, and entrepreneurs for the government to level the economic playing field that had tilted so extraordinarily toward a few industry leaders. McKinley had won the hard-fought election of 1896 handily, but by 1900, Republicans were so concerned about the growing demand for reform that party leaders put Roosevelt, who had won a reputation for standing up to business interests, on the ticket, at least in part because they hoped to silence him there.

Roosevelt hoped he could promote reform from the vice presidency, but he quickly discovered that he couldn’t accomplish much of anything. His only official duty was to preside over the Senate, which would not convene until December. He was so bored he asked the chief justice of the Supreme Court if it would be unseemly for him to enroll in law school to finish his degree. (Horrified, the justice offered to supervise Roosevelt’s studies himself.)

But then, in September, an unemployed steelworker assassinated McKinley, and Roosevelt became president. “I told McKinley it was a mistake to nominate that wild man at Philadelphia,” one of McKinley’s aides said. “I told him what would happen if he should die. Now look. That damned cowboy is president of the United States.”

Two months later, on November 13, J. P. Morgan and railroad magnates brought together the nation’s main railroad interests, which had been warring with each other, into a new conglomerate called the Northern Securities Company. Even the staunchly big business Chicago Tribune was taken aback: “Never have interests so enormous been brought under one management,” its editor wrote.

Midwestern governors, whose constituents depended on the railroads to get their crops to market, suggested that their legislatures would find a way to prohibit such a powerful combination. Northern Securities Company officials retorted that they would simply keep all business transactions and operations secret. When Roosevelt gave his first message to Congress in December, industrialists watched to see what the “damned cowboy” would say about their power over the government.

They were relieved. Roosevelt said the government should start cleaning up factories and limiting the working hours of women and children, and that it should reserve natural resources for everyone rather than allow them to be exploited by greedy businessmen.

But Roosevelt did not oppose the new huge combinations. He simply wanted the government to supervise and control corporate combinations, preventing criminality in the business world as it did in the streets. He asked businessmen only for transparency. Once the government actually knew what businesses were up to, he said, it could consider regulation or taxation to protect the public interest.

Senators and businessmen who had worried that the cowboy president would slash at the trusts breathed a sigh of relief that all he wanted was “transparency.” According to the Chicago Tribune, the “grave and reverend and somewhat plutocratic Senators immediately admitted in the most delighted fashion that the young and supposedly impetuous President had discussed the trust question with rare discrimination.”

But they were wrong to think Roosevelt did not intend to reduce the power of big business. In early January 1902, Minnesota sued to stop the Northern Securities Company from organizing on the grounds that such a combination violated Minnesota law. While the Supreme Court dithered over whether or not it could rule on the case, the Roosevelt administration put the federal government out in front of the issue. In February, Roosevelt’s attorney general told newspapers that the administration believed the formation of the Northern Securities Company violated the 1890 Sherman Antitrust Act and that he would be filing a suit to keep it from organizing.

Businessmen were aghast, not only because Roosevelt was going after a business combination but also because he had acted without consulting Wall Street. When J. P. Morgan complained that he had not been informed, Roosevelt coolly told him that that was the whole point. “If we have done anything wrong,” said the astonished Morgan, “send your man [the attorney general] to my man [one of his lawyers] and they can fix it up.” The president declined. “We don’t want to fix it up,” explained the attorney general. “We want to stop it.”

“Criticism of President Roosevelt’s action was heard on every side,” reported the Boston Globe. “Some of the principal financiers said he had dealt a serious blow to the financial securities of the country.” For his part, Roosevelt was unconcerned by the criticism. “If the law has not been violated,” he announced, “no harm can come from the proposed legal action.”

In late February, the Supreme Court decided it would not hear the Minnesota case; on March 10, the United States sued to stop the organization of the Northern Securities Company.

In August 1902, Roosevelt toured New England and the Midwest to rally support for his attack on the Northern Securities Company. He told audiences that he was not trying to destroy corporations but rather wanted to make them act in the public interest. He demanded a “square deal” for everyone. As the Boston Globe put it: “‘Justice for all alike—a square deal for every man, great or small, rich or poor,’ is the Roosevelt ideal to be attained by the framing and the administration of the law. And he would tell you that that means Mr Morgan and Mr Rockefeller [sic] as well as the poor fellow who cannot pay his rent.”

In 1904 the Supreme Court ruled that the Northern Securities Company was an illegal monopoly and that it must be dissolved, and by 1912, Roosevelt had come to believe that a strong federal government was the only way for citizens to maintain control over corporations, which he saw as the inevitable outcome of the industrial economy. He had no patience for those who hoped to stop such combinations by passing laws against them. Instead, he believed the American people must create a strong federal government that could exert public control over corporations.

In a famous speech at Osawatomie, Kansas, in 1912, he called for a “new nationalism.”

“The citizens of the United States must effectively control the mighty commercial forces which they have called into being,” he said. He warned that “[t]here can be no effective control of corporations while their political activity remains…. We must have complete and effective publicity of corporate affairs, so that the people may know…whether the corporations obey the law and whether their management entitles them to the confidence of the public.”

Roosevelt had come to believe that a strong government must regulate business. “The absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power,” he said.

After all, he said, “[t]he object of government is the welfare of the people.”

[goldfly]

just a reminder, there's almost nothing happening right now that republicans wouldn't be celebrating as economic victories if they were fully in charge


the wing of the left that thinks you have to be full blown communism holds back democrats so much on celebrating the same **** "pro business republicans" would be praising 24/7

[Garmel]

just a reminder, there's almost nothing happening right now that republicans wouldn't be celebrating as economic victories if they were fully in charge


the wing of the left that thinks you have to be full blown communism holds back democrats so much on celebrating the same **** "pro business republicans" would be praising 24/7

The clown who thinks this economy is good is accusing me of being a cult member. lol