Job growth has slowed sharply; the question is why

Sure, but my point is that there are people that reason like "such and such an elected official is bad, therefore everything they do is bad and will have drastic results", and that's not particularly informative even when I agree about the elected official being bad.

Krugman does a decent job of not letting his opinions about the political aspects color his analysis too much.

Things like

"Contrary to what many people believe, tariffs don’t necessarily lead to high unemployment. America had a high average tariff even before Smoot-Hawley — 15.8 percent in 1929 — but the unemployment rate in 1929 was under 3 percent."

He doesn't like the tariffs, he (and pretty much any serious economists) think they're bad, but he tries to be clear about why they're bad rather than just waving his hands at everything.

Politics and economics are two different lenses on the same subject matter, because “wealth” and “power over others” are two different ways of saying the same thing.

This is also why capitalism and democracy become progressively more clearly opposed the farther the status quo environment you are working in gets from feudalism or absolute monarchy, under which both seem to be changes in the same direction.

> If the political angle is not relevant to the analysis, then why do you enjoy it?

The politics angle is unavoidable because Krugman is commenting on the impact that the economic policies of the current US administration is having on the US economy.

This is the same US administration that fires staticians for reporting numbers that render bare the impact of their own economic policies, which they are actively trying to censor.

We live in a day and age where in the US reporting facts leads to political persecution. Of course mentioning stagflation, as Krugman does, is deemed political.

As thankyoufriend said, "economics is political".

Personally, I would feel like a discussion about economics that completely avoids politics would be missing something, and I would enjoy it a lot less.

Some people enjoy things that others do not

The fact that he left the NYT because it wasn't letting him be partisan enough cracked me up so hard.

That’s basically the plot of Stardew Valley. Programmers yearn for the fields.

>Reduced demand in tech due to constraints of capital

That's it, really. All the "hiring" money is being spent on building data centers, at least in the US tech field. Better hope AGI is really around the corner, or that's a lot of money chasing nothing that could have been put to productive use.

> just ship 100k software developers from the bay to the central valley and it just work

But you could pitch a startup idea to replace those workers with agricultural robotics and collect some of that sweet AI venture capital!

I think that security/stability for a country as big as the US requires at least some localization. For example, IMO all medications, medical devices, infrastructure systems (such as telecom, power, etc.), hardware and materials should be at least 50% domestically produced and have at least dual sourcing.

I realize that not all countries are big or diverse enough to accomplish this, and that's a reason why loose confederations like the EU exist. The US started much closer to that itself.

> Even if deglobalization were a great idea, then the execution is haphazard, incompetent, rushed.

Doesn't this apply to globalization as well? Saying "learn to code" to people who lose their jobs due to globalization is not great execution either and sets the stage for backlash.

Please don't conflate what the left has done (actual economic plans and policies that resulted in economic growth) with what the right has done (pointlessly destroyed relations with multiple countries because they didn't get their way in 2020).

The execution and evaluation (granted, that's part of the execution).

If for some reason someone smart (with an education and who did something other than default to praise Trump's ego in press conferences) were to decide we should go to the mattresses wildly with tariffs to fight globalization:

I would hope they would care to actually evaluate if it is working / the impact, and not fire government workers when they report one thing that didn't sound good.

If you're not bound by any results you don't like then you can't know if you're even winning.

Granted ... that might not matter as I suspect market manipulation and bribes is the only real measurement with this administration.

Personally, I would say you are both, to some extent, wrong.

I don't think it's true that there's no other goal than to cause harm, at least with the tariffs.

By the same token, though, while I think deglobalization is something that people around Trump would say they're shooting for, it's not really something Trump cares about in that sense.

No; I think Trump's primary goal with the tariffs is to flex his power and enjoy the feeling; he doesn't really care what the effect is on everyone else. With the ICE crackdowns, he definitely wants to hurt everyone nonwhite in America.

I, on the other hand, believe that it's not causing harm or deglobalization, but rather a way to generate cash for Trump himself. He or his lieutenants get cryptocurrency for either imposing tariffs on competitors, or not imposing threatened tariffs, or maybe shorting entire industries before the tariff is announced.

I think the claim is that the rich can overpay for whatever they want, driving up the price for everyone else. And that's true.

It's hard to square that with "less consumption", though...

> How does increasing wealth inequality drive price increases?

i'm not the person you asked, and i'm just spit-balling, but here's a way: wealth inequality means there's a group that has substantially more wealth than normal, let's call that group A, and the complimentary group of people who don't have substantially more wealth than normal, let's call them B. A's wealth ultimately comes from B-- you know, you got workers who make you more money than you pay them, you extract rent from them, they buy your stuff.

past a certain point of inequality, A controls so much wealth that they could exert power over the market to squeeze B even more-- wages lag further behind productivity, rents go up, goods cost more. this is inflation, yeah?

> How does increasing wealth inequality drive price increases?

When poor people receive money, they tend to put it to circulate in the economy, by spending it. When super-rich people receive money, it goes mostly to tax havens, removing it from circulation. Business lose scale, as there is less consumers, raising unitary prices.

> How does increasing wealth inequality drive price increases?

Increasing wealth inequality means fewer owners of more assets and market share, which means there's less competition and more monopoly pricing that cause higher inflation.

If you will please allow me an oversimplified example:

A restaurant is limited by the amount of food a person can eat in a meal. So this hypothetical restaurant can sell a $20 meal to 100 people (with $20 expendable income to spend,) and thus will generate $2,000 revenue for that meal service.

However, if fewer and fewer people have $20 expendable income, then obviously it becomes harder and harder for that restaurant to generate that same $2,000. Especially as the cost of bills, ingredients, and employee wages increase, for example.

So they are left with a dilemma of: 1) Raise prices knowing that there will be fewer customers with enough expendable income to buy the expensive food, or 2) Lower prices and hope that more customers will offset the lower prices (this usually does not happen.)

Also it's important to point out that 1 person with a lot of money won't come in and order 100 people's worth of meals. The human stomach doesn't scale in that way.

This example is obviously oversimplified for the sake of showing the point

If the majority of wealth is centralized to a small group of people, why would you bother trying to extract smaller amounts of money from the other group?

Presumably because there's a perception that if there are lots of rich people, they can afford to be gouged.

This begs the question of how many rich people there actually are, though.

The missing dynamic is that businesses are encouraged to increase growth in profit YoY.

Each year, a business needs to grow faster than it did the previous year.

If business owners get wealthy more rapidly than workers, then eventually the business will not be able to maintain increasing rates of growth, as its profit velocity exceeds the wage velocity of households. Think of a car fuel pump: you can accelerate all you want, at least your until the engine explodes, but if your fuel pump can’t pump more than 50mph of fuel, uour acceleration will crater into the negative and then flatline at 50mph when you hit that threshold — unless your efficiency gearbox has another upshift in it.

The only solutions that maintains profit growth velocity in that scenario is for the business to decrease wage velocity relative to profits velocity, and to decrease labor dollars per product. Namely, wage stagnation (which leads to wealth inequity), enshittification (which reduces customer brand investment), and layoffs (which decreases customer spending).

If, instead, businesses ensured that wage velocity matched profit velocity, then households wouldn’t have increasing wealth inequity and would be able to continue funding the growth velocity through spending. Businesses are prohibited from this by their fiduciary duty to shareholders.

AI is a last ditch attempt to discard 95% of the human creative labor force in all industries rather than face the rapid deceleration of profit growth going negative market-wide as household spending power (after inflation) continues to decrease. If AI succeeds, the eventual crash of growth velocity is delayed a few years until AI saturates the market. If AI fails, the market crashes, as investors can no longer expect positive growth acceleration from the market as a whole.

For any economic system where business profit growth acceleration exceeds wage growth acceleration, the eventual collapse of business is assured unless a miracle of productivity delays it. That’s why AI workers can get paid a quarter billion dollars: pocket change, compared to the wage inequality reckoning. That’s also why economists can’t explain inflation: they’re not yet willing to confront profit growth vs wage growth acceleration inequity as a primary cause of inflation.

Job growth has decelerated rapidly because otherwise profit growth decelerates rapidly. If this seems like killing the golden goose, that feeling typically correlates with a lack of faith in AI providing the necessary efficiency factor to permit sustaining profit growth after the one-time, profit-accelerating, inflation-spiking layoffs.

Interest rates, supply chain issues, and monetary policy also play a role