The host of MSNBC’s show, “All In,” Chris Hayes, authored a thoughtful book, “The Siren’s Call.” His central point is that the scarcest resource is “attention.” Whether it’s for sales, persuasion, attainment of stardom and much more, the race is for the limited supply of attention. The world’s primary demonstration of the importance of winning the war for attention is Donald Trump. How else could this flawed individual have become the world’s most dominant and most powerful figure of the past decade? His ultimate goal is power, even if induced by cruelty and fear.
Outrageous promises, including retribution on his adversaries, are one of his methods of attaining and holding attention. Other promises, equally outrageous but enticing, are those key to his 2024 election victory. For example, consider his promise to lower food prices on day one. Prices of groceries were still high following the pandemic and central to voters’ minds. Promising to reduce food prices on day one, however impossible, got him the attention he capitalized on.
When voters are in a funky mood, it doesn’t seem to matter how unrealistic, even impossible, some campaign promises are, especially in the hands of one who has mastered the art of attaining attention, and dominating the mass media. In reality, politicians of any stripe have little direct control over food prices, and no instantaneous control.
Meats, dairy products, eggs, fruits and nuts, berries, and the whole range of specialty crops all have their individual requirements of climate, capital, land, and labor. However specialized the individual product requirements, producers need prices high enough relative to input costs to make production profitable.
Trump promised to reduce food prices while raising tariffs, incompatible simultaneous goals. Many of our food and beverage products, including nuts and berries, vegetables, fruits, and some wines and cheeses are imported in significant quantities. These are produced domestically but not in sufficient quantity to satisfy domestic demand at reasonable prices. Tariffs, that is, taxes on imports are paid by importers. These additional costs not absorbed by the importer are passed on to consumers and will raise prices.
Other foods and beverages are totally imported and cannot be produced domestically at all. These include bananas, chocolate, and the nation’s favorite beverage, coffee, except for a minuscule amount produced on Hawaii’s Kona Coast. Tariffs on these products cannot increase domestic production; the sole effect will be to increase consumer prices.
On the production side, a major cost is labor, much of which is the kind that will not be supplied by native-born Americans. For example, harvesting vegetables in the hot California Central Valley, and picking fruit requires labor that native born people are not willing or able to do.
Secretary of Agriculture, Brooke Stevens, a member of the most unqualified malevolent collection of incompetent misfits to staff a cabinet in recent history, has opined that millions of adult Medicaid participants facing stricter work requirements should replace deported farm workers. Really? Replacing workers willing and able to do stoop labor for long hours that a conditioned athlete couldn’t do even if willing? She has a law degree; how do some of these people ever get through law school?
While promising to reduce food prices, Trump promised to deport immigrant labor, a substantial portion of which is undocumented. Agricultural producers, many of which support Trump, are already complaining of a shortage of agricultural workers. Amidst the chaos and cruelty exhibited by Immigration and Customs Enforcement (ICE) some workers remaining in the country are afraid to show up.
The same goes for the miserable work of slaughtering animals and processing and packaging the meat. We don’t see native born labor lining up for this work.
Present dairy farm workers are not the farm kids like some readers of this column — and this scribe for instance — were decades ago. Over half the nation’s dairy production and processing workers now are foreign born. The last thing today’s dairy managers want is to lose the dependable foreign born workers that are just happy to do that work.
Another major agricultural input is fertilizer. Our potash supply comes largely from Canada. Last we heard, things are not going well between our largest trading partner, Canada, and President Trump. With tariffs on steel, farm equipment costs only have one direction to go: up.
Inflation of food prices is but one factor affecting the total economy. Let’s review some other economic signals. Trump has been pressuring Fed Chair Powell to reduce interest rates. U.S. presidents generally prefer lower interest rates that reduce costs of borrowing for business and consumer spending. Wall Street likes lower interest rates that are seen as favorable for financial markets. But the role of an independent Fed is to use its limited tool, managing short term interest rates, to keep inflation in check while keeping close to full employment. Even corporate CEOs supporting Trump are opposing Trump’s desire to control the Fed.
Disturbing reports indicate that although consumer spending is strong, it’s mainly by those on the upper income end of the scale — some ninety percent of consumer spending by the upper ten percent of income recipients. Delinquency on auto loans and credit card debt is rising. Higher income earners are doing well while the lower income earners are falling behind once again.
Powell has been clear about not reducing interest rates until the inflation rate is at or approaching two percent. Instead of the inflation rate falling, it has been rising once again — think tariff and deportation madness. The job situation of late has been “little firing and little hiring.”
A softening job market would suggest that the Fed reduce interest rates. But lower rates, while expansionary, could raise inflation. That poses the classic Fed dilemma, a lagging economy with rising inflation — stagflation.
A longer run, very drastic, risk is loss of independence of the Fed should Trump appoint a lackey who will obey his inappropriate orders. Even Trump’s corporate supporters are savvy enough to oppose this.
A combination of inflation, a softening economy, uncertainty regarding tariffs, reduced supply of labor willing to do unglamorous and difficult work at low wages, the likelihood of Trump supporting an obedient lackey to the Fed, along with financial markets seen as extremely high and vulnerable, suggests that there is plenty to worry about.
— John Waelti of Monroe, a retired professor of economics, can be reached at jjwaelti1@tds.net. His column appears monthly in the Monroe Times.
