Mr. Trump says the strong GDP growth is evidence his border taxes are working. Sorry, no. Tariffs are a drag on growth. Investment in manufacturing plants declined 4% in the third quarter and has fallen 36% in his second term. Border taxes have increased uncertainty and business costs, which make it harder for manufacturers to invest.
While the President might point to a new steel plant owing to his 50% steel tariffs, how much investment isn’t happening because of tariffs? U.S. steel prices have increased 52% over the past year and are about two-thirds higher than in Europe. That’s a killer for U.S. makers of appliances, machinery and electric power equipment.
The other major drag on growth is housing, which subtracted 0.12 percentage points from third-quarter GDP. Higher interest rates are the main culprit, but the silver lining is that the housing slowdown has freed up workers for other projects like data centers. Construction firms say they struggle to find workers because of an aging workforce and deportations.
Nearly two-thirds of builders said immigration enforcement is affecting their workforce, compared to 13% a year ago, according to a John Burns Research and Consulting survey. Immigration raids have forced beef processing plants to reduce production. One result: Higher beef prices. The raids have also become a liability for Kansas GOP Sen. Roger Marshall.
“These ICE operations are having a massive chilling effect on the legal, documented, skilled workers that put beef on the table and keep the cattle supply chain moving,” cattle industry groups in Texas, Oklahoma and Kansas warned last month. “These types of disruptions will lead to higher beef prices for consumers.”
Companies seeking protection are immune to shame – as is made clear by this Politico report that’s headlined “Europe’s coffin-makers warn Chinese imports could be death knell for industry.” (HT Scott Lincicome)
Richard Fulmer decries the smearing, led by the “historian” Nancy MacLean, of GMU’s late Nobel-laureate economist, James Buchanan. [DBx: I put “historian” in quotation marks because, rather than report and interpret history, MacLean – as Fulmer shows – distorts history with fallacies generated by such maneuvers as out-of-context quotations. Whether MacLean’s maneuvers are mendacious or the result of astonishing intellectual incompetence is for you to decide – but it’s one or the other, or perhaps a combination of both. And – also astonishing – there are “scholars” who still today defend MacLean’s “scholarship.”]
I’m not saying corporations aren’t greedy, because they are. But greed can’t explain why food producers change their recipes; corporations were just as greedy in 1928, when the Reese’s Peanut Butter Cup was invented. They were greedy in 1978, when I was cramming their product into my 5-year-old mouth. Greed is a constant, like the speed of light. It can’t explain why candy formulas have changed, or why candy bars have shrunk, to the frustration of many consumers who feel they’re being cheated out of their full chocolate fix.
So why do companies shrink the product, cheap out on ingredients and stuff our candy with preservatives? One answer is that they can: Food technology has created possibilities that didn’t exist in 1928. But the other answer is that we kind of want them to.
Now, I know you don’t want a tiny, artificial-tasting substitute — you want a full-size, full-chocolate experience, full of natural ingredients. We all want lots of things, from world peace to sporty convertibles. Often, we aren’t willing to pay for what we want.
When cocoa prices skyrocketed between 2022 and 2024, did we want to pay significantly more for a bar of chocolate? Maybe you would, but odds are you’re an affluent professional for whom candy bars are a rare indulgence, so a price spike may not matter much. For many consumers, it matters a lot.
Think about preservatives and stabilizers. They certainly sound awful — who wants their candy embalmed? No one. But who wants a stale Reese’s Peanut Butter Cup? No one. If it’s a choice between that and the preservatives, well…
We could rejigger our modern supply chains, delivering fresh food more frequently instead of engineering it for eternity. But this would make food more expensive — and, as our inflationary era keeps demonstrating, that would anger a lot of people.
Corporations have to juggle trade-offs we’d rather not think about. They often make choices I wouldn’t, but I am not the average consumer. Companies have to guess whether that average consumer would rather have a more expensive chocolate bar or one that is smaller, cheaper to make and designed for a longer shelf life. They apparently reckon most of us hate sticker shock more than the gradual degradation of our favorite products.
You can argue that this is irrational, but many human emotions are, including nostalgia. You can also argue that the companies are guessing wrong (and in this case, Hershey seems to agree). Either way, you’re not arguing against corporate greed. You’re arguing against human fallibility. Alas, that too is a constant.
Sad new: 2018 Economics Nobel laureate, and long-time professor at Yale, William Nordhaus has died. (He is justly famous for, among other things, his 2004 paper “Schumpeterian Profits in the American Economy: Theory and Measurement,” in which he found “that only a minuscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers.”)
Nick Gillespie is correct: “For libertarians, election day is the cruelest day of the year.”
