Trump needs to learn the meaning of TANNSTAAFL
There ain’t no such thing as a free lunch - whether. you pay for it in taxes or tariffs
My friend Zeke the mechanic is a big Donald Trump fan.
He has several pro-Trump bumper stickers that he put on his car before the last election. One reads, “How’s that Biden thing working out for you?”
Another reflects inflation under the Biden administration:
“Gas 48 %, food 9 percent; lumber 275 percent.”
But it also sets a standard against which Trump’s second term can be measured.
He’s going to do fine on gas prices. But that’s not a tough task when measured against Democrats who wants to phase out oil drilling.
But as for food, that old line, “What does that have to do with the price of eggs?” comes to mind. I’ve seen them as high as $7.99 a dozen.
Of course, that may reflect that outbreak of bird flu. But it’s still bad luck for Trump.
And then there’s lumber.
The U.S. imports a lot of it from Canada, and Trump Increased the import tax on it to 35 percent, effective this week.
That’s expected to create inflation in the housing field. But that’s not bad luck; that was a bad decision by the Donald.
His tariffs will raise prices across the board.
Trump seems to believe that the companies hit with this tax will “eat it,” as he told the head of Walmart recently.
But he replied that Walmart has a profit margin of about 1 percent. That doesn’t leave room to consume a 35 percent tax.
Trump seems to be forgetting the key tenet of economics popularized by the late Milton Friedman.
Friedman, who was the leading progenitor of free-market economics of the 20th Century, liked to remind politicians of the saying “TANSTAAFL.”
That stands for “There Ain’t No Such Thing As A Free Lunch.”
The Donald seems to have convinced himself that tariffs will give him a major source of revenue – with no negative effects.
But a tariff is a tax, and every tax has negative effects.
The Donald’s mistake is that he fails to understand his tariffs will be paid by people, not businesses.
I suspect this misunderstanding comes from Trump’s career in the hospitality industry.
Unlike a manufactured item, a hotel room loses all of its value after a certain date. The more hotel rooms Trump sells by that date, the more profit he makes.
From the hotel owner’s perspective, every extra room sold, up to full capacity, looks like a free lunch.
I suspect Trump thinks the economy works the same way.
But it doesn’t. Every tariff paid to the government has to be paid by some consumer. That increases prices. And that contributes to inflation.
In defense of the Donald, at least he has said he would use the revenue to pay down the national debt.
But who created that debt? Both he and Joe Biden added about $7 trillion to it.
Biden’s a Democrat so tax-and-spend is natural for him. But the Donald is a Republican, supposedly a conservative one. But there was nothing conservative about borrowing trillions of dollars with no plan to pay it back.
That’s where TANSTAAFL comes in. There ain’t no such thing as a free lunch - whether. you pay for it in taxes or tariffs.
The public gets that, even if Trump doesn’t.
Trump is now inflicting a 50 percent tariff on goods from India. He’s punishing them for buying oil from Russia.
But why is it any of our business who India buys its oil from?
I thought we elected Trump to stop that internationalist meddling.
So did Rick Shaftan.
Shaftan is a conservative political consultant and pollster who works on many Republican campaigns.
Shaftan says polls show that tariffs are the only issue working against Trump in many key races.
“Democrats are even using it in their ads,” he said,
So why is Trump still pushing tariffs?
“I don’t know,” he replied. “I can’t answer it.”
Neither can I.