- How Trump is economically illiterate;
- Personal aside about buying my first car in 1982;
- Wondering again if humanity has hit a conceptual limit;
- For example: Trump claims prices have been cut by 1500%;
- An essay by George A. Akerlof asks, “What Do We Do When the President Acts Like a 5-Year-Old?”
- With thoughts about how conservatives mistrust the “deep state.”
I never took an economics course in college. But most of what I’ve learned about everything, except for the relatively basic matters of physics, chemistry, math, and music, that I learned in college, I’ve learned on my own in adulthood, over the past 45 years. And I’ve read lots of essays, even a few books, about economic subjects and how opinions split along political lines (i.e. fact- vs ideologically-driven). These days I trust Paul Krugman and Robert Reich on economic matters.
NY Times, guest essay by Steve Rattner, 4 Aug 2025: Our President Is Economically Illiterate
When my kids were in college, I insisted that they each take at least one economics course. Being economically illiterate ranks, in my mind, just below not being able to read or write.
Now we have a president who is fundamentally ignorant of the most basic and incontrovertible economic principles, as evidenced in his latest round of foolhardy tariffs (and in so many other ways).
President Trump has been told over and over again by economists of all political persuasions that tariffs are much like a sales tax and will ultimately be paid by American consumers; he likely would have been taught that concept during his time at the University of Pennsylvania’s Wharton School.
And while the overall inflation rate has only been edging up since Mr. Trump began imposing tariffs, the cost of many imported items has been escalating. In June, prices for furnishings and durable household equipment — a category with high import exposure — rose by 1.3 percent, the biggest increase in more than three years. Prices for recreational goods and vehicles, which are also frequently manufactured abroad, increased by 0.9 percent, the largest jump since February 2024.
And tariffs likely played a role in the sudden slowdown in payroll growth announced on Friday, with the economy having created just 106,000 jobs in the last three months, far less than its monthly average in recent years.
Mr. Trump’s response? Shoot the messenger: He directed his team to fire the head of the Bureau of Labor Statistics, which compiles the figures.
As with many conservatives, Trump focuses on a single measure and refuses to understand anything the least bit more complex.
Mr. Trump’s ignorance goes far beyond the tariffs-are-a-tax concept. He believes trade deficits are tantamount to “losing” money to other countries. Losing money is what happens when $100 falls out of your wallet. When you spend $100 to buy new earbuds made in China, you haven’t lost it; you’ve spent it on earbuds.
And:
Mr. Trump’s fervent belief in tariffs seems to have originated in the 1980s, as Japanese cars flooded into the United States and wreaked havoc on domestic car manufacturers. Yet those same carmakers — such as Ford and General Motors — have been among the most vociferous opponents of his tariff regime today. Their latest financial results suggest that they stand to lose somewhere between $1 billion and $4 billion in earnings this year from Mr. Trump’s tariffs.
Personal aside. I was there back in the early 1980s when I bought my first car. My family were GM loyalists. My father owned two Chevrolets (a 1953 and a 1964) and then a Buick or two (1968 Sport Wagon and a used 1964 Skylark, IIRC), and later a Saturn. (My grandfather bought Chevys too, with absolutely no options, not even a radio or power windows, which were options at the time. My grandmother on my mother’s side had a ’50s Pontiac and then a 1966 Chevelle. Both manuals, because they were the cheapest.) When it came time to consider buying my own car, I did my “research,” as well as one could in those days. I read the car magazines, and the reviews, where it was apparent that the recent Japanese imports were achieving levels of quality exceeding the traditional American car models. Which, I gathered, were taking their markets for granted. I decided on a Honda Accord — 1982, the hatchback model, which I think cost $8000 some. My father told me the imports were “killing the country.” But later read up about Honda and decided it was an OK choice after all.
Here’s what my first car looked like, a photo copied from the web:
I made this decision with the background understanding that mutual trade, especially between nations who had once been at war, provided an economic incentive not to go to war again. And it’s worked out so far: I owned four Hondas over my first 18 years of owning cars (one was stolen), and three BMWs over the past 25 years. The current BMW, a 2011 M3, for nearly 15 years now.
A bit more from the article:
The president barely seems to comprehend supply and demand, which are among the most basic concepts in economics. He evangelizes for lower oil prices but simultaneously calls on the energy industry to “drill, baby, drill.” Lower prices discourage drilling; the number of rigs in operation has been falling as oil prices have softened.
In a similar vein, while he acknowledged that tariffs would raise the prices of imported cars, he argued that Americans could avoid tariffs by buying cars made in America. But it is well documented that when the price of an imported item goes up, domestic producers are then free to increase their own prices — and often will.
\
I keep wondering if humanity — or at least its populist contingent — has hit a conceptual barrier, unable to understand anything the least bit complex. Their survivalist protocols dismiss complexity. That there are some people who do understand won’t matter if the majority of the population overwhelms them at the ballot and dismantles the government, the universities, and the institutions, that don’t comply with simplistic populist intuitions.
\
On the same theme:
JMG, 4 Aug 2025 (from Huffington Post): Trump: “We’ve Cut Drug Prices By 1500%” [VIDEO]
“You know, we’ve cut drug prices by 1,200, 1,300, 1,400, 1,500%,” said Trump. “I don’t mean 50%. I mean 14, 1,500%,” he added.
But as many on social media pointed out, that would mean all drugs are free and people actually get paid to receive them. Also, drug prices haven’t actually reduced yet, despite Trump’s pressure on pharmaceutical companies.
Yet another example, if you need one, that Trump spews out random numbers to claim that his policies are working that don’t actually mean anything. If you cut prices 100%, you’re down to 0, free. Cutting prices by 1500% is meaningless.
\\
One more, on the same general theme.
NY Times, guest essay by George A. Akerlof (a Nobel-winning economist), 3 Aug 2025: What to Do When the President Acts Like a 5-Year-Old?
Imagine a group of 5-year-olds playing a board game. The rules are clear, the goal is fair, and one child edges ahead — until, suddenly, another child starts losing. That’s when the trouble begins. “He cheated!” the losing child yells. “I’m the winner anyway!” he declares. And then, like clockwork, he flips the board. In the world of kindergarten conflict resolution, we expect this kind of behavior. We chalk it up to development. We teach better sportsmanship.
What do we do when the president of the United States behaves this way? On Friday, President Trump fired the head of the Bureau of Labor Statistics — the nation’s workaday scorekeeper of employment, wages and productivity. Why? Because the data didn’t make Mr. Trump look good. The statistics were inconvenient. So the president didn’t just challenge the findings; he fired the statistician. That’s not governing. That’s board flipping.
For over a century, the integrity of U.S. economic data has rested on a fragile but vital precept: independence. Agencies like the Bureau of Labor Statistics, the Census Bureau and the Bureau of Economic Analysis operate under the executive branch, but their mandates are to serve the truth, not the administration. Their job is to report what is, not what the White House wishes were true.
And,
Past presidents respected this boundary. Ronald Reagan didn’t fire the head of the agency when it reported double-digit unemployment during his first term. Bill Clinton, George W. Bush and Barack Obama took bad news from official statistics on the chin. Mr. Trump has charted a different course. This is not his first tangle with truth. He has questioned unemployment numbers and dismissed Covid fatality figures as inflated. Removing the Bureau of Labor Statistics chief because the numbers were off narrative is a new breach. It is not only attacking the game; it is removing the referee.
Conservatives have always mistrusted government statistics, because of their fear of complexity that they dismiss as the machinations of the “deep state”, and the frustrating situation that reality doesn’t conform to their ideology. But what are they to do now with an *obvious* attempt to reject actual statistics? If anyone trusted government statistics, no one can trust them anymore. They will always be in Trump’s favor, just as in past totalitarian regimes.
When a government fires the umpire, we all have reason to wonder: What game are we playing? One danger certainly is that a future Bureau of Labor Statistics head might feel political pressure to fudge a jobs report. The deeper risk is cynicism, the quiet corrosion of faith in institutions. If we can’t believe the numbers, how do we believe anything?
Most children learn that flipping the board doesn’t make them the winner. It just means the game is over. In a democracy, the same lesson holds. We need our referees. We need our scorekeepers. And most of all, we need leaders who understand that losing the game fairly is far more honorable than winning by force.
