They’re both wrong. Who is? Trump supporters who’ve long defended mindless tariffs, along with economists wisely against mindless tariffs, but who now claim they didn’t really mean what they said about President Trump’s tariffs at the time.
Take a recent letter-to-the-editor at the Wall Street Journal by economists Scott Burns and Caleb Fuller, professors respectively at Southeastern Louisiana University and Grove City College. Among other things, they write that “Higher import costs give consumers less bang for their buck.” Yes, very true.
It brings us to the letter’s most important line: “If iPhone prices double because of tariffs, for instance, consumers enjoy less real income. Tighter budgets mean consumers have less to spend on other goods.” Yes, even more true, though perhaps not in the way that Burns, Fuller, and most economists want it to be.
As has been written repeatedly in these columns over the years, and also in my 2022 book The Money Confusion, higher prices are decidedly not the cause of “inflation.” To say they are is like saying suntans cause the sun. Causation is being reversed. Inflation is one thing: a shrinkage of the monetary unit, in our case the dollar, with higher prices to varying degrees (or not) the effect.
If the price of one good soars for whatever reason, it naturally shrinks the dollars available to purchase other goods. This matters with Burns and Fuller top of mind, and economists generally, simply because it’s evident they want it both ways. They use the iPhone example to show that they never really meant what they said about Trump’s tariffs and “inflation,” but by extension why didn’t they and other economists defend Joe Biden against charges that he caused inflation? With the latter, there was no notable decline in the value of the dollar in 2021-22, which means so-called “Bidenflation” would have to be the first inflation in the history of mankind that occurred sans currency devaluation.
Were some prices elevated? Of course they were. Except that it was basic Adam Smith and his pin factory that informed the higher prices. The more hands and machines working together to produce goods, the more plentiful and cheap they are, only for politicians to panic in 2020 on the way to lockdowns that eviscerated the very global cooperation that made goods so affordable to begin with.
You can’t recreate overnight or over many years what took decades to fashion in the first place, and prices both reflected and reflect this. Except that the effects of command-and-control have nothing do with inflation. It was just higher prices following political panic that sapped global symmetry, and as Burns and Fuller are clear about, higher prices for certain goods limit what we can spend on others. Without defending Biden’s policies, or the Democrats more broadly, their “inflation” quite simply wasn’t.
Except that a Google search of Burns and Fuller doesn’t reveal either saying “Bidenflation” was a myth, that higher prices arrived at as a consequence of fractured global cooperation would logically be balanced by lower prices elsewhere since artificially high prices mean "consumers have less to spend on other goods.” Unknown is whether Burns, Fuller, and most other economists will now make a case that “Bidenflation” commentary was nonsensical as a way of bolstering their cases against Trumpist commentary about inflation.
