Let Eddie Murphy In 'Trading Places' Explain 'The Economy', You Are Welcome!

No not 'Trading Spaces,' remember when the designers would put hay on the walls in that crazy old show?

You might not have heard anything about this, what with it coming out a couple of days before Christmas and also because it interferes with the current vogue for judging the state of the economy based solely on vibes, but technically speaking, the economy continues to solidly recover from its pandemic-induced, near-total collapse almost four years ago.

From badass historian Heather Cox Richardson:

Data from the Bureau of Economic Analysis released today showed inflation continuing to come down. In November the Personal Consumption Expenditures (PCE) price index was 2.6% over the previous November, down from 2.9% in October. The Federal Reserve aims for 2%. Falling gas prices meant that overall, prices actually dropped in November for the first time since April 2020. 

Presumably to keep people from screaming “BUT THE VIBES” at her, Richardson connects this to the larger picture:

The administration is highlighting economic numbers not just because they are good … but also because they illustrate the administration’s return to an economic theory under which the U.S. government operated from 1933 to 1981.

That simple theory, which smart Wonkers know but we’re going to economexplain again anyway, is that our economy gets stronger when policymakers focus on the demand side of the economy instead of the supply side. The country had decent economic growth, more or less, during that above-mentioned 50-year period because the government was working to make sure that demand for goods and services by people up and down the economic ladder was strong.

Or, to put it more succinctly, Eddie Murphy had it right in Trading Places:

But, starting right around the time that Trading Places was entertaining cinemagoers across America,

[A] different economic theory took hold. People in power believed that what drives growth is not the demand side, but rather the “supply side” of the economy: the people who create goods and services. This theory means that the government should work to make sure that producers can concentrate wealth and use it however they wish, because they will invest in the economy, producing more goods more cheaply and thus creating more jobs at better wages. 

We’ve now had 40 years to evaluate this theory, and hoo boy do the results suck. You’ve got record inequality, weak unions that are only now becoming attractive to a wider range of workers, and corporate boards trying to create eternal growth in their stock prices with constant mergers and round after round of layoffs. That last one is good for the stockholders but sucks for the lower-level dweebs who would like to afford such luxuries as food and rent, and who can’t afford to buy your “supply.”

One piece of evidence for the “demand” over “supply” arguments for the economy can be boiled down to this: In December of 2017, the Trump administration and its plutocratic lackeys in Congress passed massive tax cuts for those same corporations and wealthy stockholders. Afterwards, deficits exploded while growth was more or less nonexistent.

Donald Trump likes to claim that the economy hummed along much better during his presidency, but the truth is that even with his massive tax cuts, the rate of GDP growth was pretty flat during his term, and was 2.5 percent in the last quarter before the pandemic knocked everything out.

GDP growth in the third quarter of 2023, on the other hand, after a few years of Bidenomics stimulating the economy, was 4.9 percent. Not only is that much better than 2.5 percent, and in fact is just about double it, but it’s also higher than the GDP growth Mitt Romney, back in 2011 when that poor old sap ran for president, promised he would bring to bear with his magnificent personal knowledge of business-fella-ing (borrowing the money to buy companies from the companies and then seizing all their assets before bankrupting them).

It likely won’t change any minds because people would prefer to not do that. (See Meathead, Joe Rogan the). But in a just world, this economic data would convince America to load Paul Ryan and anyone who thinks he was ever on to something into a rocket and fire it directly into the sun.

In fact, Trump and his advisers are pushing for even bigger tax cuts if he gets back into office in 2025, and the GOP agrees with him:

Republican representative David Schweikert (R-AZ), vice chair of the Joint Economic Committee of Congress, who is deeply concerned about the budget deficits, believes that what is driving those deficits is that Americans are aging. Like many of his colleagues, including Republican presidential candidate Nikki Haley, he believes the answer to fixing the budget is cutting Social Security, Medicare, and other services. 

In other words, take money away from people who have proven they can goose the economy by spending it. Good plan, idiots. (Also, Joe Biden just appointed Martin O’Malley to be Social Security commissioner, a role which bizarrely is usually almost exclusively filled by Republicans, so that will help! Now please replace US Postmaster General Louis DeJoy.)

None of this is to say that things are rosy. Shit is still expensive and people who are feeling it are not likely to listen to egghead historians and economists who keep pointing out that we’re trending in a good direction and also by the way the rest of the entire world is considerably worse off. But we are, and it’s good to point that out occasionally, even if it makes Paul Ryan sad.

[Letters From an American]

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