When prices rise because *demand* is hot, wages usually follow. When prices rise because tariffs raise costs -- a *supply* shock -- there’s no reason paychecks catch up. That’s why tariff inflation hurts a whole heckuva lot more. It's a permanent reduction in living standards.

Nov 9, 2025 · 5:46 PM UTC

33
699
24
2,450
0
Replying to @JustinWolfers
Just to highlight the OTHER policy leading to stagflation: When labor is scarce because demand is hot, employment rises and wages mostly keep up with inflation. When labor is scarce because of deportations and falling labor supply, employment and real wages both fall.
1
3
Replying to @JustinWolfers
Tariff increase undoubtedly decrease living standard in the short run but may comes with a long run net positive ripple effects if and only driven by sound economics insights against some political interests
Replying to @JustinWolfers
This maybe the worst description of economics I’ve ever heard
Replying to @JustinWolfers
How dare you inject common sense into this debate!
5
Replying to @JustinWolfers @tyillc
But there’s no jobs if manufacturing is gone to China. The rest of business w follow bc manufacturers will have the leverage. Tenured professors have no skin in the game to what they talk.
2
1
Replying to @JustinWolfers
How were "prices" impacted when untold Billions were dumped into the Economy by the Biden Administatration. How does printing money to cover deficits impact prices? Come on, Professor, show us your stuff.
Replying to @JustinWolfers
Tariffs are simultaneously inflationary when you collect them (even though curiously a sales tax isn't) and inflationary when you rebate them. Magical creatures.
Replying to @JustinWolfers
Can the business of Ai earn enough revenue to justify the investment in it? To earn the normal return on capital investment so far the eight biggest Ai companies would have to make revenue of one trillion dollars a year.
Replying to @JustinWolfers
Correct, however in theory, the government should receive more income through tariffs and could reduce taxes.
2
2
Replying to @JustinWolfers @tyillc
That’s why people feel squeezed - wages are stagnating. Calling inflation wage price is backward. It is really price wage. As prices go up workers demand higher wages. But in today’s economy the companies treat workers as widgets and say too bad, I can find someone else.
2
Replying to @JustinWolfers
That’s why Trump and Trump-compliant Senators and Reps. have to pretend they don’t know this about the effect of tariffs. They are constantly required to patronize their supporters in the MAGAsphere.
5
Replying to @JustinWolfers
I don’t about you, but “a permanent reduction in living standards” doesn’t sound good.
Replying to @JustinWolfers
smart guy
Replying to @JustinWolfers
All countries should drop their tariffs rt Justin
1
Replying to @JustinWolfers
Yes
Replying to @JustinWolfers @Ghostzapper0406
This is what middle class republicans voted for. The most gullible people in America middle class republican voters.
Replying to @JustinWolfers
Basic economics.
Replying to @JustinWolfers
5
1
16
Replying to @JustinWolfers
To clarify. Demand didn't rise during COVID. Supply decreased. Demand > Supply. Prices increase. Costs the same. Profits increase. Wages can increase to compensate. Now. Tariffs increase cost. Prices increase to cover those costs. No additional Profits. No wage increases possible
1
2
Replying to @JustinWolfers
Rather obvious to those outside the trumpian cult...a nation led by economic donkeys ...can't you offer your services fella?
Replying to @JustinWolfers
The post highlights why policy responses must consider the source of inflation. Supply shocks like tariffs demand targeted interventions to protect households’ real incomes.
Replying to @JustinWolfers
THERE'S NORMALLY NO #EASY #FIX TO #STAGFLATION (NOT SEEN SINCE LATE 1970'S). BUT OUR CURRENT STAGFLATION IS A SELF-INFLICTED ECONOMIC CRISIS TRIGGERED BY TRUMP'S #UNCONSTITUTIONAL #TARIFF #TAXES THAT CAN EASILY BE REVERSED. PRICES WOULD FALL OR STABILIZE W/O WAGES OVERINFLATING.
Replying to @JustinWolfers
Ok then where does the extra revenue go, always follow the money
GIF
Replying to @JustinWolfers
Americans thinking they can compete with $6 a day third world. You’re living standards are too high
Replying to @JustinWolfers
But are the tariffs permanent? Maybe they’re a negotiation tool. Then why is inflation—CPI not showing significant inflation?
Replying to @JustinWolfers
Overall inflation is 3%. Tariffs have not added to the cost of goods. Real wage increases under Trump for hourly workers has risen at a record pace. The significant increases in costs occurred during the Biden administration. Real wages did not keep pace. Tariffs had nothing to do with it. You are nothing but a con
Replying to @JustinWolfers
But you said nothing about 4 years of Biden inflation is much worse than tariffs
1
Replying to @JustinWolfers
1