Trump won't make lobster tails cheaper. By Matthew Yglesias

www.slowboring.com

Dec. 17, 2023

11 - 14 minutes

Last Wednesday, we got an amusing intervention into the “real economic pain” vs “bad media vibes” debate from Sean Trende, who observed that it now costs about $125 dollars to have a multi-course restaurant meal featuring steak and lobster tails delivered to your home.

I think this illustrates an important subsidiary point in this dialogue: Leftists talking down the economy does not help progressives causes. Trende is not a leftist. He’s a Republican who wants Joe Biden to lose the election, Mike Johnson to expand his House majority, and Republicans to gain control of the senate. Like most partisans, he has sincerely held and deep-seated beliefs about American politics that have nothing to do with the ups and downs of the business cycle, and he believes — rightly — that emphasizing the negative aspects of the Biden’s economy will serve those ends. And that’s what he’s doing here.

Looking on the brighter side, I think what we’re seeing here, at least in part, is life in a society where incomes and spending power are high. Like everyone else, I prefer a cheap lobster tail to a pricey one. But we’re talking about a scenario in which a restaurant is charging its customers a high price for meal because it believes its customers can and will pay.

Inflation-adjusted spending on food services and accommodations is at an all-time high. We saw something quite different during the Great Recession — people spent less on restaurant meals in 2008 than they did in 2007, and restaurant spending fell even further in 2009. It rose in 2010, but was still below the 2007 level. Not until the third quarter of 2011 did inflation-adjusted restaurant spending exceeded its Q4 2007 level.

I don’t think it makes sense for me to tell people how to feel about the economy.

What I can say is that there’s a clear difference between “people are so flush with cash that they are dining out more than ever despite higher prices” and “people are so squeezed financially that they’re cutting back on dining out,” and to me, the former feels like a better economic situation than the latter. If you feel differently, that’s fine — you do you. But if your idea is that you want to inspire people to be frustrated with longstanding features of the American social and economic model and interested in advocating instead for a more comprehensive European-style welfare state, then I don’t think this whining about the cost of DoorDash is really going to help. If Democrats defy the polls, win back the House, hold the Senate, and keep Joe Biden in the Oval Office, they will expand the welfare state at least a little bit (maybe more, depending on what happens). If they lose, Republicans will pare it back to some extent (maybe a lot, depending on what happens).

But if you have no ideological motives and just sincerely wants to pay less for lobster tails at Outback Steakhouse, it’s important to understand that electing Donald Trump isn’t going to help with that.

Most of the attention paid to immigration in recent years has focused on the over-clogged system for dealing with people arriving with no visa at the southern border and claiming asylum status.

This generates a fundamental dilemma for policymakers:

    You can let people with asylum claims work, which is economically beneficial but incentivizes more people to come make asylum claims.

    You can ban them from working, which creates a burden on public services and/or encourages the claimants to do illegal stuff to get money. 

This is all very bad, I agree with people who are frustrated with this situation, and I will only note that I wrote way back in March 2021 that Democrats should admit to themselves that they didn’t particularly want to welcome a flood of asylum claims and adjust policy accordingly.

Trump’s immigration vision, by contrast, is a lot more expansive than “we should shut down asylum claims,” though it does include that. For a flavor, here’s Steven Miller, trying to sound like a badass:

    “Any activists who doubt President Trump’s resolve in the slightest are making a drastic error: Trump will unleash the vast arsenal of federal powers to implement the most spectacular migration crackdown,” Mr. Miller said, adding, “The immigration legal activists won’t know what’s happening.”

What does this mean in practice? According to Maggie Haberman, Charlie Savage, and Jonathan Swan, Trump wants to do the following:

    Revoke Temporary Protected Status and humanitarian parole for over 600,000 people who legally reside in the United States but are not green card holders.

    “[S]cour the country for unauthorized immigrants and deport people by the millions per year,” obtaining the logistical resources to achieve this by “reassign[ing] other federal agents and deputiz[ing] local police officers and National Guard soldiers voluntarily contributed by Republican-run states.”

    “To ease the strain on ICE detention facilities, Mr. Trump wants to build huge camps to detain people while their cases are processed and they await deportation flights. And to get around any refusal by Congress to appropriate the necessary funds, Mr. Trump would redirect money in the military budget, as he did in his first term to spend more on a border wall than Congress had authorized.”

Their piece on this is very good and looks at the issue primarily through a lens of authoritarianism and the rule of law.

What I want people worried about the price of lobster tails to do, though, is think about it through the lens of economics. Trump is talking about spending a bunch of money on some big construction and federal personnel undertakings. That’s going to tend to be inflationary. Not necessarily massively so. But directionally, building a series of huge detention camps raises the price of construction labor and construction materials. The way the National Guard works is that personnel mostly hold full-time civilian jobs and volunteer for the Guard part-time. Mobilizing them reduces the labor supply available in the civilian economy and tends to worsen inflation. Not a huge deal, obviously, but the sign of the change is clearly inflationary.

But the big impact comes from getting rid of the immigrants themselves.

Even though many people pretend to have a big disagreement about this, it’s pretty clear that the economic impact of foreign-born labor is to raise GDP, raise GDP per capita (by a smaller amount), and shift relative wages. In other words, if you made it easier for foreign-born doctors to move here and practice, then the average wage of native-born doctors would fall and the average wage of everyone would rise, because the price of medical services would fall.

So what do immigrant workers do? Well, lots of things, but more than anything else they work on farms. Of course, Trump isn’t promising to deport all immigrants, but unauthorized immigrants are especially concentrated in farm work. For those with TPS who Trump wants to deport, construction is the number one sector and food service is number two.

The absence of those agricultural workers is going to have two impacts on food prices. One is that because the availability of labor is a factor in determining how much land goes into cultivation, fewer workers means fewer crops will be grown and food will be more expensive. The other is that the cost basis of producing the food that is grown will be higher, leading to higher prices.

Restaurants like Outback Steakhouse will be dealing with higher food costs and higher labor costs due to their smaller labor force. Again, prices will rise.

You could argue for framing this is a policy success story. I don’t believe that hostility to immigration is driven by economic concerns, but some people claim that it is. If you want to raise the wages of farm workers relative to the wages of cops, teachers, nurses, and factory and office workers, then this mass deportation will accomplish that. It’s arguably a form of agrarian populism. And again, it’s not my place to tell people how to feel. If that’s what you want, that’s what you want. But if what you want is a cheaper meal from Outback, this policy mix is not going to give it to you. The good news for people who eat food, of course, is that agricultural commodities are traded in a global marketplace. So it’s not like you’re going to have a scenario where Americans are all starving due to lack of farm workers. We can import. But of course, Trump hates trade. His plan for 10 percent across the board tariffs — tariffs not just on food but on agricultural machinery, fertilizer, and other farm inputs — isn’t going to make food cheaper.

I feel a little bit silly having spent so many words explaining why electing Donald Trump won’t help Sean Trende get cheaper lobster delivered to his house, since as I said at the top, it’s pretty clear that Sean Trende doesn’t particularly care about this.

But I do think it’s important for people who don’t want Trump to become president again to ask this question, both of Republicans in your life who are complaining about the price of Outback and of political (not economic) journalists who mention inflation. Some people are voting for Trump because they want more restrictions on abortion and fewer on handguns. God bless. But some of those people are out there telling the world that if you want cheaper steaks, you should vote for Trump. But should you? I think this is a more important and ultimately more definable question than “is the economy actually bad or is it just bad vibes?”

The economy is what it is. It has certain features. The results of the election could alter some of those features. If Joe Biden wins, for example, the relative price of prescription drugs will fall, whereas if he loses, Republicans will try to rescind the policies responsible for that.

Will Donald Trump make your DoorDash cheaper? I’m deeply skeptical.

To be clear, I can absolutely think of a conservative policy idea that would accomplish this: steep cuts to Social Security and Medicare. These two programs exist to help older people live comfortable lives without working. That sounds like a nice idea to a lot of people, but it reduces the supply of workers available to do unpleasant and unglamorous jobs. Now, Trump says he doesn’t want to do this; he says he’s just going to cut taxes without addressing the major elements of spending, raise the budget deficit, and push interest rates and inflation up. Personally, I would rather address public discontent with food prices by expanding legal immigration, but that’s not Trump’s bag.

So what’s the plan? Trump is not a particularly rigorous thinker, but it’s worth asking the question. A big thing Trump is doing now is pretending gasoline costs $8/gallon when the correct number ranges from about $2.50 in Texas to about $4.60 in California.

This is a convenient lie for Trump, not just because it paints an unrealistically bleak portrait of the national economy, but because he pretends to have a plan to address it by ending Biden’s fake crushing of the American oil and gas industry. The high price of groceries, by contrast, is real.

But does he even have a fake plan on this? Ask people about it and see what they have to say. Because if you are sincerely motivated by worries about the price of food, you should vote for a candidate who will make it better. And if you’re just bullshitting, the people you’re talking to should know that.