Economic Pauline Kael Syndrome

News Report:   BMW dealers in Hollywood report that import car tariffs aren’t affecting sales to their multimillionaire clients at all.  

Not a big shock, right?  The more money people have, the less price points matter to them.  

It’s Economics 101.  

Which is why “journalists” and progressives (ptr) never, ever get it. 

Remember Obama’s 2014 State of the Union?  When he praised Saint Paul’s “Punch Pizza” for paying its employees well above the minimum wage?    Of course, as I pointed out at the time, Punch is a high-end pizzeria in a posh neighborhood that aims toward a high-value clientele on Grand Avenue in Saint Paul; I wouldn’t doubt that in a neighborhood full of “living wage” activists, starting people at $10 an hour at above the minimum wage is good marketing.  But Punch Pizza is no Taco Bell; its dozen or so outlets are located in upscale areas, where people think nothing for dropping $20 for lunch  and a lot more for dinner and drinks.  It’s a tony niche retailer that gives a robust markup for an uptown dining experience.   And I’m gonna guess they an pick and choose their hires, even now, unlike the McDonalds and White Castles they’re not actually in competition with. 

I thought about that in reading this piece, claiming NYC’s $15 minimum wage is a net gain…

in the Manhattan restaurant scene:

As New York raised the minimum wage to $15 this year from $7.25 in 2013, its restaurant industry outperformed the rest of the US in job growth and expansion, a new study found.

The study, by researchers from the New School and the New York think tank National Employment Law Project, found no negative employment effects of the city increasing its minimum wage to $15.

Restaurant workers in the city saw a pay increase of 20% to 28%, representing the largest hike “for a big group of low-wage workers since the 1960s,” James Parrott, a director of economic and fiscal policies at the New School and an author of the study, told Gothamist.

While the city’s restaurant growth is likely a result of the city’s overall strong economy, the report’s findings might suggest that paying workers more won’t immediately lead to job loss or other negative business consequences as previously thought.

And when the current boom in people with disposable income tails off, the artisanal chicken will come home to their $5K a month walkups to roost.

31 thoughts on “Economic Pauline Kael Syndrome

  1. Here’s why US importers and consumers pay Trump’s tariffs, not China

    “Trump’s tariffs on Chinese imports raised $20.8 billion through Wednesday, according to data from United States Customs and Border Protection. Mr. Trump has already committed to paying American farmers hurt by the trade war $28 billion.”

    US businesses paying these tariffs on Chinese goods or paying tariffs on Canadian, Mexican or European goods will treat the tax as added costs of doing business and will pass along as much of the added cost as they possibly can. They may partially take a hit to their own balance sheet to maintain business relationships and market share, but overall it will inevitably be the American consumer who will pay for these tariffs.

    Whether we are talking about the direct costs of tariffs, the lost market share from retaliation or the damage done by becoming less competitive and efficient, it is the US economy bearing the damage of protectionism and wayward trade wars lacking strategy or focus.

    Trump is learning that it is hard to punish someone else by taxing yourself.

  2. Buried in the report is this paragraph:
    New York restaurant prices have risen faster than the overall consumer price index One of the ways some restaurants have responded to higher minimum wages is by increasing menu prices. Since January 2014, the first full month when the first increase in the State minimum wage was in effect, the consumer price index for “food away from home” (primarily food purchased in restaurants) has risen by 2.9 percent annually. That is considerably higher than the 1.3 percent average consumer price index increase for all items (Figure 11). In contrast, during the five years prior to January 2014, the consumer price index for food away from home rose more slowly (1.8 percent annually) than the all-items consumer price index (2.2 percent). Raising menu prices modestly is an understandable response to an increase in the wage floor. Considering the better-than-national-average performance in both full- and limited-service New York City restaurants, modest price increases do not seem to have deterred customers. To the extent that most full-service restaurant sales likely are to households with above-average incomes, particularly in Manhattan, part of the cost of the minimum wage increase is disproportionately borne by higher-income households through higher dining-out prices.46

    Wage increases passed on to consumers. All well and good. For now. Stayed tuned

  3. If tariffs are so bad, it’s a wonder any nation employs them to protect domestic industries from foreign competition. And yet, every nation does.

    It’s weird that every nation in the entire world is so dumb, while certain comment writers are so smart.

    And by the way, perhaps one of those smart comment writers could explain why a Bavarian car company built a plant, hired American workers, and started making its cars in South Carolina in 1994 instead of shipping in those cars from Europe and paying the tariff.

  4. BMW’s US boss slams tariffs as South Carolina factory approaches record production numbers

    JD: If tariffs are so good for the US economy, why not make them permanent? Why negotiate some agreement that eventually results in China once again exporting products to the US without tariffs? If American companies see an eventual return to normal trade with China, they won’t reinvest in the US. Especially if less expensive agreements can be made elsewhere in Asia.

    There’s a disconnect in the logic among tariff supporters. The Chinese probably see through it. China survived centuries of western colonialism. China survived the Japanese occupation. China’s communist government outlasted the Cold War.

    I’d bet it can outlast this presidency

  5. An overlooked element of this trade war is that it takes a lot of money for China to create those islands in the China Sea and Pacific and stock them with military hardware to extend Chinese “influence” in the major shipping areas, especially those through which Japanese, Korean and Taiwan imports and exports move. Putting a crimp in this expansion is, I think, an unspoken element of the tariffs. It really isn’t just a “trade” war.

  6. China called Trump’s bluff by stopping all agricultural imports from the U.S.. The phrase “getting whipped like a rented mule” comes to mind when China “deals” with Trump.

    As is always the case with Trump, ineffective policies are enacted for the sake of propaganda, circuses for his voter base, nothing more.

  7. Well, Emery, the corroborating links for your screeds, are from a left wing source, that usually isn’t usually correct in their economic prognosticators.

    Because you yourself are economically illiterate on past policies, you might want to see how the U.S. paid for government operations BEFORE the Democrats stuck us with the personal income tax. Hint; it was done with tariffs!

  8. It’s Economics 101

    Thats where you lose anyone left of center. Hell Bernie Sanders or Fauxhauntus couldnt pass a Econ 101 class if their lives depended on it.

  9. But PoD, AOC is a graduate in econ if I recall correctly. So, clearly, passing that class or getting that sheepskin is not really an indicator of anything.

  10. Remember PoD, US policy is no longer based on any sort of facts or data. It is based on whatever will make Trump seem popular.

  11. Its short term pain for us. China can ill afford to play this game of chicken. Especially with Hong Kong acting up. The commies are playing a dangerous game of chicken except they arent driving towards another car, they are driving to a wall, that could see the biggest populist uprising in human history (in terms of raw numbers of people). Remember China has as many peasants as we do people. We might lose a couple GDP growth points for a few quarters. Their system could collapse. Its nice to see a president who has the balls to play hardball with the cheating Chicomms.

  12. Emery, you’re threatening me with Constitutional government and you expect me to quail? Please don’t throw me in that briar patch, Brer Fox!

    When the federal government confined itself to doing its job, the entire government ran on tariffs. Forcing it to do so again would mean eliminating almost all of the federal budget, which would force individual Americans to become self-reliant or to look to family, friends, and voluntary associations for help. It would cause a massive social restructuring away from living on ‘other people’s money.’ It would force us to realistically assess our place among nations.

    It would be a horrible, painful, traumatic, probably violent transformation, and that’s if we do it intentionally, rather than waiting for China to cause a world-wide economic collapse that brings down our economy with it.

    It’s coming anyway, E. Might as well do it intentionally, systematically, strategically, while we still have a chance.

  13. Let me explain something 1/4 wit D_K is surely incapable of understanding.

    I know that BMW plant. I live within 20 miles of that plant. I’ve contracted to do projects at that plant through 2 scheduled shutdown periods.

    The property that plant is located on is contained within a barbed wire fence with scary looking US Government signs warning people that the area is a foreign trade zone.

    That means nothing in the zone gets taxed or is subject to tariffs until it leaves the zone. And nothing can enter or leave without going through customs.

    Raw materials enter the plant via an inland port, finished goods destined for foreign consumption leave via the port. Customs are carried out at the port.

    The Germans are sniveling because their cars will get hit with a tariff. The SC plant doesn’t make cars, only SUV’s. Soy based tech bros in Crapifornia aren’t paying shit in tariffs for their little X3 SUV’s, and personally, I don’t give a shit if the Germans are paying tariffs to sell their cars to China. They’re not going anywhere, anyway.

  14. Germany can suck little red doggie dick for all I care, I barely consider them a ally in all honesty.

  15. PoD,

    Just like Britain, France and Italy, there is a pretty fair conservative movement going on in Germany now. Once Merkel is out, it will probably be more visible. The peasants are waking up to the operators of the deep state central banks and they’re pissed. It’s taking longer for indoctrinated lefties in the U.S. to do so and I suspect when it happens, suicide prevention hotlines will have to staff up quickly.

  16. Trump is truly leading a worldwide populist movement to overthrow the elites. Leftists have no where to hide, in the world.

  17. Bosshoss429, I’d like to believe you but the European countries I follow closely (and I speak their languages) are filled with people who *still* think that doing the right thing means doing the same thing they’ve done for the last 40, 50 years and that the government (at any level) is filled with people who want the best for their charges and that the media is reporting honestly and fairly as to what happening at home and abroad (see? that was one sentence, a classic Danish formulation ;-))

    Italy looks to be moving along nicely, but then they’re also right on the front lines. As far as I can tell, France and Germany continue to treat their people like dirt and the majority seem to continue to say, “thank you sir, may I have another?”. This is definitely the case in Scandi-land. Especially Sweden.

    I know of the various “national conservative” movements as I have been tracking them for years, but as far as I can tell they are still considered outside the bounds of decency. Regardless of what they do (and GI is one of the most well-behaved radical movements I have ever followed – much like the Tea Party was in its original inception).

    Personally, I don’t think there is enough discomfort the lives of average Euros to really change minds. It’ll come, but it ain’t there now.

  18. Lots of Emery blather about tariff’s today. Did the new issue of the Economist hit the news stands?

  19. Pinochet Helicopter Tours is taking franchise inquiries from the EU.

    We see the market ripening nicely.

  20. PoD wrote: “Trump is truly leading a worldwide populist movement to overthrow the elites. Leftists have no where to hide, in the world.”

    As someone who had taken a course on modern Chinese history in a past life, an irony brought to my attention by the trade war is the sheer similarity between Trump and Mao: the cult of personality, the supporters waving or wearing cheap red accessories, the poor economic planning, their love of self-contradiction, and of course the King Lear style court of sycophants.

    The market reaction to Trump backing down was a tacit admission that tariffs damage your own consumers and that Trump does not have the stones to take the hit.

  21. POD, it will interesting to see how it works out. The Left cannot win without abandoning democratic and liberal principles. So far they have shown no reluctance to do so.

  22. If tariffs were good, why would Trump be delaying some of them to limit their impact on Christmas shopping?

  23. I rarely post this late but Glue Eater needs to know that comparing Mao to Trump is even dumber and more historically illiterate than comparing Hitler to Trump. I’m going to sleep now, because apparently Dr. Strangelove doesn’t know when he is beat and we got to battle again tomorrow (I’d say it’s a battle of wits, but you cant consider it that when it is absent from one side)

  24. I thought China was paying for the tariffs? So how could that influence what we pay for things at Christmas? It’s almost like Trump secretly knows the whole tariffs are good for Americans thing is a lie.

  25. Yep, inflation is through the roof right now, Emery.
    That’s why the 20 yield on a T bill is at 2.2%.
    I hope you have not fooled yourself into believing that you know a damn thing about economics.

  26. Tariffs for December, huh. This must be that War on Christmas they have been talking about.

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