Posts Tagged ‘economy’
“Jobs in factories will come roaring back into our country”*…
When President Trump announced sweeping tariffs on “Liberation Day” last spring, the promise was that manufacturing– and the jobs it provides– would return to the U.S. Scott Lincicome (from the conservative Cato Institute) assesses the “progress” to date…
US manufacturing ended 2025 with a thud, capping a rough year for the sector. To recap, manufacturers shed 63,000 jobs, according to the latest data from the Bureau of Labor Statistics. It wasn’t just labor that was hurting. The Institute for Supply Management’s manufacturing index clocked in at 47.9 for December, marking the 10th consecutive month of contraction as new orders were especially weak and costs at historically elevated levels.
Then there’s the Federal Reserve’s Beige Book of regional economic conditions and surveys from the regional Fed banks, which have repeatedly documented cases of manufacturers delaying hiring and investment amid weak market conditions, rising costs, shrinking profit margins and persistent uncertainty. As for the “hard” data, manufacturing capacity and output, while incomplete, sagged through the Fall.
Overall, the evidence reveals a sector that’s stagnant at best, and a long way from the manufacturing renaissance President Donald Trump promised when he took office for a second time a year ago. No wonder administration officials have pivoted from predicting a factory boom in 2025 to now saying it will happen in 2026 and beyond.
Better tax, regulatory, and monetary policy should indeed provide a tailwind for manufacturing, but the sector will probably continue to struggle. If so, Trump’s tariffs will be a big reason why…
[Lincicome unpacks the several ways that Trump’s tariffs have confounded domestic manufacturing: increased costs (especially on materials/compnents not available in the U.S.) and tariff and policy/regulations that might be politely called “inconsistent” (or less politely, “flighty”); last year, the US tariff code was amended 50 times)– which has added management/coordination costs (Federal Reserve economists estimate that domestic manufacturers will pay $39 billion to $71 billion annually to comply with the new regime, representing time and money they can’t spend on their businesses); but perhaps even more damagingly, has created uncertainty that has slowed corporate action/investment. Lincicome concludes…]
… The harms to manufacturers are consistent with research on past tariff episodes and help to explain why the sector struggled in 2025 — and why things might not get much better this year. Recent forecasts also suggest caution, with manufacturers and supply chain professionals predicting continued headwinds due to the costs, uncertainty and complexity of tariffs. And the Supreme Court won’t save them. If it invalidates Trump’s “emergency” tariffs in the coming days, administration officials have promised to invoke alternate authorities to recreate them.
Global supply chains took years to develop. They’ll take even longer to reorganize and will do so at great cost if, that is, they don’t break altogether in the meantime…
“America’s Manufacturing Renaissance Is Missing in Action,” (gift article) by @scottlincicome.bsky.social in @opinion.bloomberg.com.
Relatedly, Trump’s immigration policy was (like the “manufacturing boom”) supposed to have reduced the federal deficit. The Administration is deporting immigrants at a brisk clip– but at an extraordinary cost, both economically and constitutionally. That’s not to mention the costs to the targeted immigrants themselves, to their familires and to the companies and economies of which they have been preponderantly positive and productive parts. Indeed, a different group at Cato recently published a thorough study demonstrating that– far from being a drag on the economy– immigrants have reduced federal (and state and local) deficits by $14.5 Trillion since 1994… though, of course that contribution is now, thanks to the ICE storm, slowing down.
The immigration crackdown was also supposed to turbo-charge job growth (for the U.S.-born); it has not. Indeed, the climate of fear and the difficulty in securing visas has led to a hiring boom abroad: “Silicon Valley can’t import talent like before. So it’s exporting jobs.”
It’s easy to see Trump’s election and the imposition of his economic and immigration policies as America’s Brexit. That abrupt rupture of social, cultural, and economic conventions is now about a decade old… and the results aren’t pretty…
Brexit, the United Kingdom’s decision to withdraw from the European Union, is a rare contemporary example of a major developed economy raising trade barriers and more generally pulling back from international economic integration. When the Brexit referendum took place in 2016, academic and professional economists generally forecast that the policy about-face would result in a negative hit to the United Kingdom’s economy of about 4% of GDP over the long-term. Rather than a sudden, visible economic shock following the vote, the costs of Brexit have been gradual and cumulative. Now, almost a decade later, new research aims to assess Brexit’s actual impact on the United Kingdom’s economy, which involves the challenging task of comparing the country’s economic indicators to what they would have been if the United Kingdom had remained in the European Union. This research finds that, ten years on, the economic cost of Brexit has been larger than analysts predicted and that prolonged policy uncertainty contributed importantly to the magnitude of the impact… We estimate that by 2025, Brexit had reduced UK GDP by 6% to 8%, with the impact accumulating gradually over time… Understanding the ways in which Brexit resulted in a drag on economic growth for the United Kingdom provides potential lessons about the costs of abruptly pulling back from the global economy for other countries… – “The Economic Costs of Brexit on the UK” (where there is much more detail)
* Donald Trump
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As we interrogate empty promises (and lest we think that history doesn’t rhyme), we might recall that it was on this date in 1856 that the Know Nothing Party (dba, “the American Party” and “Native American Party”) convened in Philadelphia to nominate its first presidential candidate. A nativist (and largely anti-Catholic) group composed of anti-immigrant/Old Stock breakaways from the American Republican and Whig parties, the Know Nothings nominated Millard Fillmore.
The last member of the Whig Party to serve as President, Fillmore had been a Congressional Representative from New York who was elected to the Vice Presidency in 1848 on Zachary Taylor’s ticket. When Taylor died in 1850, Fillmore became the second V.P. to assume the presidency between elections.
Fillmore’s signature accomplishment was the passage of the Compromise of 1850 passed, a bargain that led to a brief truce in the battle over slavery– but was so ill-conceived (it contained the Fugitive Slave Act) and unpopular that Fillmore failed to get his own party’s nomination for President in the election of 1852, which he sat out. Unwilling to follow Lincoln into the new Republican Party, he got the nomination of the Know Nothings– though he was not a member of the party and hadn’t sought it; he was out of the country during the convention. Fillmore finished third in the 1856 election. By the 1860 election, the Know Nothings were no longer a serious national political movement.
“Financialization is neither finance-nor enterprise-driven”…
The estimable Brad DeLong has observed that Marx was right: “all that is solid melts into air”…
Since 1870, worldwide, on average, according to our flawed standard measures, every thirty years about 4/5 of the economy have improved in technology and productivity by roughly 25%, at a rate of roughly 0.8% per year. And 1/5 of the economy has quintupled in technology and productivity, at a rate of about 5.4% per year. That leaves average productivity, worldwide, roughly twice what it was a generation before. And it is a different, although overlapping, share of the economy that undergoes this massive leading-sector push every generation.
And so, since 1870, we have seen successive Steampower, Applied-Science, Mass Production, Globalized Value-Chain, and now Attention Info-Bio Tech modes, with these transformations occurring faster and more completely in today’s rich countries and slower and incompletely in today’s poor countries, but with life even in poor countries being substantially transformed vis-à-vis life 150 years ago…
… For most people, a generation sees (i) some change in their roles as producers in the organization and productivity of their jobs and the pieces of the societal division of labor that they do, some change in their roles as consumers and utilizers of most of the products of the human division of labor, but about one-fifth or so of their life as consumers and utilizers of the products of the human division of labor completely upended, largely in a good way. And then there are the 1/5 of people whose jobs and whose roles as producers were caught up in the Schumpeterian creative-destruction leading-sector technology tsunami, for whom little is the same as it was thirty years before. That change is to their substantial detriment if they tried to do the old thing in the old way: their real incomes then would be only 1/4 or so of what they would have expected. But that change would have been to their substantial benefit had they found a way to successfully surf the wave.
To summarize: Since 1770, the modern economy changes by puncture, not glide. Every thirty years these days, a sector explodes—lifting productivity, reorganizing firms, and scrambling career ladders. Roughly four-fifths inch forward, while one-fifth quintuples and redefines the frontier. Those leading sectors—steam, mass production, information—rebuild institutions and stress politics as they march. Most people experience partial gains in consumption and workflow; the unlucky fifth face brutal displacement unless they pivot fast. Past waves forged industry, mass production, suburbia, microelectronics; each remapped the social order, often painfully. Average living standards rise, but the distribution is jagged, and the politics volatile. Today’s leading edge runs through data centers and cognitive work: prompts, context engineering, evaluation, and synthesis. The liberal arts—long buffered—now sit at ground zero. Survival means translation: turn judgment, clarity, and taste into leverage over machines and markets, while rebuilding public capacity to manage the turbulence…
– “All That Is Solid Melts into Air”: Since 1870, Roughly One-Fifth of the Economy Is Transformed Every Thirty Years,” from @delong.social
And how’s that going? Two dispatches from the front, on separate but fundamentally-related phenomena emerging in our current “puncture.” First, Luke Goldstein on the way in which a great many major corporations — from airlines to social media platforms — now aspire to become unregulated banks. As he explains, “bankification” today accounts for the highest profit margins in the US economy, crippling productive capacity and setting the stage for the next crash…
The US economy is turning into one giant bank.
Starbucks holds nearly $2 billion of customers’ money in its rewards program. That’s more than the total deposits managed by 85 percent of chartered banks, making the coffee chain one of the biggest financial institutions in the country.
Conversely, Capital One, one of the world’s top banks, now operates its own cafes on city street corners.
Airlines are now little more than flying banks, given that they make more money from selling frequent-flyer points to credit card companies than they do flying passengers.
More Americans than ever are in debt to their nearby grocery store due to predatory “buy now, pay later” loans offered during checkout.
As you’re wheeled into an emergency medical procedure, the nurse may ask if you’d prefer to pay on a deferred-payment loan plan, an increasingly common way to finance health care expenses.
And if you can’t pay your rent on time, it could soon become common for your apartment building owner to lend you the money, putting you in debt to your landlord.
These are snapshots of the new wave of financialization sweeping across the country, where the lines between finance and commerce are being blurred.
Upward of 40 percent of Americans now pay for basic items like groceries and health care using borrowed money — and this excludes credit cards. A third of younger Americans hold their savings on nonbank tech platforms like Venmo, and industries from retail to transportation derive anywhere from 14 percent to half of their profits from partnerships with credit card companies.
While this new type of financialization takes many different forms, the endgame is the same: Most major corporations now aspire to become unregulated banks, opening up new avenues to make even more money hand over fist. Banks operating credit cards are the highest-profit-margin enterprises in the economy. Every company wants a share of the loot, amassed from high fees and low overhead costs.
This development has been supercharged by the Silicon Valley investor class, under the Orwellian term “embedded finance.” Others call it “bankification.”
The peddlers of embedded finance promise a world of “frictionless transactions,” providing consumers efficiency and convenience by integrating financial and nonfinancial services.
But these new profit streams come with a range of potential harms….
– “Everything Is Becoming a Bank” from @jacobinmagazin.bsky.social
Next, Ted Gioia on the rise of our gambling culture. He begins by recounting the grimy details of the recent gambling bust that rocked professional basketball (includsing the roles of ESPN and the NBA itself… though…)..
… It’s not just sports. Two weeks before the FBI arrests, the New York Stock Exchange invested $2 billion in the Polymarket betting operation. As Gordan Gekko says in the movie Wall Street: “It’s all about bucks, kid.”
Does the NYSE now count as the sixth family running gambling in New York?
No, it’s not that simple. There are lots of gambling businesses in New York, starting with the government. The NY State Lottery brings in more cash than all the Mafia families combined. So the NYSE is a johnny-come-lately to the gaming tables, like country rubes visiting the Statue of Liberty…
[Gioia unpacks the “ideas”seven rules of casino design and management” of casino design expert Bill Friedman (“a former gambling addict who wrote a very influential (and expensive) book on casino design”]
… Of course, the real insidious process is happening online, where every big web platform is imitating a gambling casino. And they rake in gangsta profits bigger than any gangsta has ever made.
How bad is it? Consider this fact: Among the eight largest companies in the world, at least half of them promote addiction with screen interfaces that mimic slot machines…
– “Why Is Everything Turning into a Casino?” from @tedgioia.bsky.social
The last word, which applies to both pieces, from Gioia:
Of course, none of this demands your participation. You can leave the casino at any moment—or never enter in the first place. Even if gambling is addictive, most people refuse the bait.
That’s especially true right now. Las Vegas tourism has fallen dramatically. And when you interview consumers, they will tell you why—they are upset at the casinos. The gambling business has become too exploitative and manipulative.
So people just walk away.
The exact same thing is starting to happen with social media. And for the same reason—folks are fed up with the apps. Many stop using them, and brag about it to their friends. So the trend of walking away feeds on itself…
… Maybe businesses need to find a different role model than a casino. It’s not hard to think of a few examples.
So let me close with a wild idea.
Perhaps they can design web apps to serve people—instead of controlling, manipulating, and surveilling them. After all, many businesses once thrived with that simple formula. It’s not too late to return to that practice…
By way of understanding “casino design and management” techniques at work online, see also “Catalog of Dark Patterns, “a variety of dark pattern examples, sorted by category, to better understand deceptive [consumer experience] design practices,” from Dark Patterns.
And by way of context: “The Invisible Economic Crisis,” (Louis Hyman interviewed in TNR), “It Is Trump’s Casino Economy Now. You’ll Probably Lose,” from Kyla Scanlon. and Scanlon’s follow-up piece in her newsletter: “How Bible Sales and Chipotle Explain the Economy.”
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As we just say no, we might recall that it was on this date in 1834 that the first mention of the card game poker was published, a reference to an account by English actor Joseph Cowell, who reported that the game was played in New Orleans and on Mississippi River boats (as recounted in Jonathan H. Green‘s book, An Exposure of the Arts and Miseries of Gambling.
Poker itself originated in the late 18th century, and had probably spread throughout the Mississippi River region by 1800. It was played in a variety of forms, with 52 cards, and included both straight poker and stud. 20 card poker (the variety referenced by Cowell) was a variant for two players. (It is a common English practice to reduce the deck in card games when there are fewer players).
“Wheat feeds the West, rice sustains the East”
Tomas Pueyo on why this is so… and what that has meant for culture and history…
What’s your staple, bread or rice?
This is a momentous fact, for it might have determined politics, culture, and wealth.
How? Well, bread comes from wheat, and rice from… rice…
… Wheat and rice are not harvested in the same places. Rice and bread are the predominant food where rice and wheat are respectively the predominant crops. Here’s another way to look at the same data:
This, in turn, is determined mainly by this:
… But this doesn’t fully explain it since it also rains a lot in Ireland, for example, but nobody grows rice there. You need the heat found closer to the equator: Rice grows in hot, wet, flat, floodable areas, whereas wheat prefers cooler, drier, better drained areas.
Flooding rots wheat but can 3x the yields of rice. That makes wheat well adapted to hills, whereas rice can only survive on hills when they are terraced.
This sounds like just a fun fact, but it ain’t. Because rice generates twice as many calories per unit of area.
This means that rice nourishes families on half the land that wheat requires. Which means population density in rice areas can be twice as high as in wheat areas, or four times with double cropping. A hectare of land can feed 1.5 families with wheat and 6 with rice.
Yet rice paddies also require a lot of work—twice as much as wheat. And that work is almost year-round: preparing paddies, raising seedlings in nurseries, transplanting every single seedling by hand into flooded fields, managing water, pumping it, weeding, harvesting, and threshing—often followed by a second rice crop or a winter crop. These tasks peak during transplanting and harvest, creating critical seasons where a huge amount of work must be done in a short window of time.
Crucially, this labor cannot be delayed—if you miss the planting window or harvest late, the crop is ruined. As a result, rice farmers developed reciprocal labor exchange: neighbors help each other transplant and harvest in time. The timeliness pressure meant rice villages became tightly cooperative communities to ensure everyone’s fields were tended before it was too late.
Wheat farming historically had a more seasonal rhythm with periods of relative quiet. Wheat is typically sown in the fall or spring and then mainly just left to grow with the rain. Aside from episodic weeding or guarding the fields, there was less continuous labor until harvest time. Harvest itself was a crunch period requiring many hands with sickles—European villages would collaborate during harvest, and farmers might hire extra reapers.
These differences made these regions diverge across politics, culture, and economy…
Read on: “How Bread vs Rice Molded History,” from Pueyo’s Uncharted Territories.
* adage
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As we deliberate on our diets and their destinies, we might recall that it was on this date in 1887 that Chester A. Hodge of Beloit, Wisconsin received patent No. 367,398 for ‘spur rowel’ barbed wire (consisting of spur shaped wheels with 8 or 10 points mounted between 2 wires). It was one of many patents for barbed wire (e.g., here), which spread across the American West rapidly (thanks, in no small measure to the guy featured in the alamanc entry here)– and (by protecting farmers from foraging open-range cattle) paved the way for the expansion of wheat (and other kinds of) farming.
“The sacred moon overhead / Has taken a new phase”*…
As Oliver Hawkins and Peggy Hollinger report, an analysis of commercial radio spectrum filings shows a growing number of players– government agencies, but increasingly private companies– bettting on the emergence of a lunar economy…
Private companies are staking claims to radio spectrum on the Moon with the aim of exploiting an emerging lunar economy, Financial Times research has found.
More than 50 applications have been filed with the International Telecommunication Union since 2010 to use spectrum, the invisible highway of electromagnetic waves that enable all wireless technology, on or from the Moon.
Last year the number of commercial filings to the global co-ordinating body for lunar spectrum outstripped those from space agencies and governments for the first time, according to FT research. The filings cover satellite systems as well as missions to land on the lunar surface.
“We will look back and see this as an important inflection point,” said Katherine Gizinski, chief executive of spectrum consultancy River Advisers, which has filed for lunar spectrum for three satellite systems on behalf of other companies since 2021.
Although total registrations were lower in 2024 than the previous year, the increased proportion of commercial filings reflects a race to build the infrastructure that will enable the “cislunar economy”, the area between the Earth and Moon…
More on the players and the game: “The race to claim the Moon’s airwaves” (gift article), from @financialtimes.com. See also:
* William Butler Yeats, “The Cat and the Moon”
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As we linger over the lunar, we might recall that it was on this date in 1971 that NASA accomplished the third lunar EVA: Commander Alan B. Shepard and Lunar Module pilot Edgar D. Mitchell became the fifth and sixth men to walk on the Moon (in the lunar highlands near the crater Fra Mauro) as part of the Apollo 14 mission.
During this four-hour “activity,” they deployed the Apollo Lunar Surface Experiments Package (ALSEP)– scientific experiments that were left on the lunar surface and other scientific and sample collection apparatus. B efore lifting off on the next day, the astronauts went on another moonwalk almost to the rim of nearby Cone crater, collecting 42.9 kg of samples along the traverse. At the end of this 3.45 km walk, Shepard used a contingency sampler with a Wilson 6-iron connected to the end to hit two golf balls.
“Is this a holy thing to see / In a rich and fruitful land / Babes reduced to misery / Fed with cold and usurous hand?”*…
David Stein explains how the Democratic party abandoned New Deal Keynesianism in favor of balanced budgets, what that’s yielded, and how we might chart a saner, more humane path forward…
In the 1940s, liberals debated various means of direct and indirect government investment, but they took as a given that the private sector was ill-equipped for the task of stabilizing investment across business cycles, and thus stabilizing the production of needed goods and services (Harris 1948, 372). The ascent of Democratic deficit hawks ratcheted down the expectations of governments, suggesting that the most important thing policymakers could do is not to provide for the public, but to satisfy private investors.
Democratic deficit hawks believed shrinking the deficit would encourage the Federal Reserve to lower interest rates, which would catalyze private investment and ultimately create new jobs (Rubin and Weisberg 2004, 355–56). Producing a public good or service ceased to be the key metric of sound economic policymaking. Instead, a policy’s cost-effectiveness or impact on the deficit took precedence. The government’s role was thus mainly to create a climate that pleased private businesses and investors, upon whom, they believed, the social and economic vitality of society overall now rested. As this form of politics became entrenched within the Democratic Party, the deficit hawks constrained social spending proposals at all times, even during recessions.
To be clear, the deficit is important to economic policy, though not in the way that deficit-hawk rhetoric represents it. According to sectoral-balance analysis, developed by British post-Keynesian economist Wynne Godley, a federal government deficit will be offset with a surplus in the nongovernmental sector, and vice versa: A government surplus will be counterbalanced with a nongovernmental or private deficit (Godley 1999). Sectoral-balance analysis emphasizes governmental and nongovernmental sectors as different accounting identities.
Versions of this viewpoint were influential within New Deal–era economic debates. When he was at the Treasury Department in 1934, economist Lauchlin Currie developed a data series called the “Net Contribution of the Federal Government to National Buying Power.” This series would render the net surplus or deficit of government expenditures minus tax receipts to analyze the government’s impact on the economy. If the government took in more tax receipts than it spent—i.e., reducing the budget deficit—it would generally operate as a contractionary force on the economy. And by contrast, if the government received less in taxes than it spent—increasing the deficit—then it would serve to stimulate the economy (Currie 1938). Decades later, economist Alan Sweezy, Currie’s Keynesian compatriot, emphasized the importance of Currie’s innovation: “This was both a technical improvement on the official deficit as a measure of the impact of the government’s fiscal operations on the economy, and even more important a semantic triumph of the first magnitude,” he stressed (Sweezy 1972). Yet, this perspective was never able to become hegemonic in the Roosevelt administration or beyond, as Currie’s boss, Treasury Secretary Henry Morgenthau, adhered to more traditional fiscal conservatism (Zelizer 2000).
Instead, relative intellectual incoherence would become a hallmark of post–New Deal economic policy, with the disjointedness on the issue of public debt a particularly salient feature of this general dynamic (Smith 2020, 59). While most Democratic policymakers after the New Deal generally agreed that some degree of ameliorative countercyclical economic policy was necessary during a recession, there was never firm agreement on the specific role deficits and their composition should play. Additionally, even from a sectoral-balance—or Currie-inflected “net contribution”—perspective, the composition and distribution of specific fiscal policies would shape their impacts.
In exploring how deficit hawks came to dominate Democratic policymaking between the 1970s and the 2000s—and what was lost as a result—this paper argues that we need a new approach…
Rethinking fiscal responsibility: “The Deficit-Hawk Takeover: How Austerity Politics Constrained Democratic Policymaking,” from @DavidpStein and @rooseveltinst. The full brief is here.
* William Blake, Songs of Experience
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As we reengage our roots, we might recall that it was on this date in 1897 that The (New York) Sun ran an editorial entitled “Is There a Santa Claus?” Written by Francis Pharcellus Church in response to a letter from 8 year-old Virginia O’Hanlon, it is now remembered best by one of its lines: “Yes, Virginia, there is a Santa Claus.”
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