Car price predictions in view of tariffs?

Democrat-run media says car prices will go up 25% due to Trump’s new tariffs. My prediction: average transaction price goes up 3% and if we hold the car model and trim level constant, up 5%. What’s the basis of my prediction? Americans spend every penny they can earn, borrow, win in family court, inherit, or steal. There simply isn’t any way for people to spend more on cars. (Prices did go up during coronapanic, but interest rates were low and the government was handing out $trillions in free money.)

Readers: who wants to take the other side of this?

(I’m personally in favor of free trade (zero tariffs) based on standard Econ 101 arguments. I believe that the classical Econ belief is that the U.S. is best off with zero tariffs even if other countries erect tariff barriers to our exports. In other words, we would be better off exporting nothing if it came to that so long as we could get cheap imports. However, if other countries blink first in the trade war that Donald Trump has started we might be better off than we were a few months ago.)

What happened to out family so far? The imported bicycles that we wanted to purchase have gone down by nearly 17 percent compared to a week ago:

REI (expanding in Florida, while closing stores in Portland, Oregon and Cambridge, Maskachusetts) and some independent bike shops all wanted to sell us XS adult bikes, which have enormous 700C wheels and weigh about 7 lbs. more than this Trek 26″ bike. Supposedly the kids won’t outgrow the XS adult bike as fast. My position is that road bike nerds will pay $thousands to shave 7 lbs. off a road bike so we should be happy to buy these with the expectation of reselling them in 2 years.

Loosely related…

And from today at Sun ‘n Fun, a Nash Metropolitan (it actually made economic sense to build cars in England back then!):

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Immigrant-poor Japan vs. immigrant-rich Germany

Pierre Poilievre, the potential replacement for Mx. Trudeau as Canada’s leader, recently highlighted this chart showing the stagnation of the Canadian economy from an individual’s perspective (the economy grew with the population, though, so politicians had more money to spend every year). Let’s look at Japan, a frequent example of a worst-case outcome for Population Doomsayers and Open Borders advocates:

Japan is right in the middle of this chart, with superior economic performance compared to immigrant-rich nations such as Canada, Germany, the UK, Australia, and France. In other words, Japan retained their language and culture, supported a growing fraction of the population that is elderly, and managed to achieve substantial per-capita GDP growth despite a falling percentage of the population being of working age.

There is a Scientific consensus that immigration is the only viable path to prosperity, especially for countries with low native birth rates and high median age. Yet the above chart, especially the bar for Japan, is completely inconsistent with Proven Science (TM).

Circling back to Canada, Aporia has some interesting charts on this best-case scenario for immigration.

Unlike in the US or Europe, where most immigrants are either illegals, refugees or persons brought in through family reunification, Canadian immigration is designed to be selective. Most permanent Canadian immigrants are granted that status through employment, while the (supposedly) temporary immigrants comprise about one-third students. I say “supposedly” because this group makes up a full 7.3% of the entire population of Canada, and there’s no plan or real mechanism to remove them from the country. Note that Canada has birthright citizenship, giving “temporary” immigrants an easy path to permanent residency and citizenship through anchor babies.

Unlike most countries, Canada has imported humans who do better on academic tasks than its natives do. Given the correlation between academic performance and later earnings, Canada’s economy should be doing quite well.

Canada chucked its culture, value system, and religion in hopes of achieving economic growth. What they achieved instead is a society of incel males living in apartments:

Despite the miracle of 2SLGBTQQIA+ Science, apparently it isn’t practical for an incel male to produce a baby:

Canada will thus have to double down on immigration in order to keep its politicians supplied with taxpayers. Support for this program is particularly confusing to me with respect to Quebec. The Québécois fought for two centuries to preserve their distinctive culture, religion, and language. In the past 10-20 years, though, they gave it all up because of their passion for open borders. Is there any scenario in which a Muslim from India would want to learn French, convert to Catholicism (punishable by death, traditionally, in Islam), and follow Québécois customs? If not, Quebec is guaranteed to lose its distinctive character and will become just another poorer-than-anywhere-in-the-US random assemblage of humans, cultures, and religions in which the English language is the only thing that people have in common.

Loosely related… a friend’s comment: “Canada will obliterate us in this kind of trade war because they are already poor and are happy staying that way.”

Related:

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Trump listens to at least one African in shutting down USAID

Folks are upset that Trump and DOGE may shut down USAID and cut U.S. foreign aid spending (state-sponsored NPR). This is consistent with a classic 2005 interview “For God’s Sake, Please Stop the Aid!”. Quotes below, but not in quote style for improved readability (my highlights in bold).

The Kenyan economics expert James Shikwati, 35, says that aid to Africa does more harm than good. The avid proponent of globalization spoke with SPIEGEL about the disastrous effects of Western development policy in Africa, corrupt rulers, and the tendency to overstate the AIDS problem.

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.

SPIEGEL: Do you have an explanation for this paradox?

Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa’s problems. If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

SPIEGEL: … corn that predominantly comes from highly-subsidized European and American farmers …

Shikwati: … and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unsrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN’s World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It’s a simple but fatal cycle.

SPIEGEL: Would Africa actually be able to solve these problems on its own?

Shikwati: Of course. Hunger should not be a problem in most of the countries south of the Sahara. In addition, there are vast natural resources: oil, gold, diamonds. Africa is always only portrayed as a continent of suffering, but most figures are vastly exaggerated. In the industrial nations, there’s a sense that Africa would go under without development aid. But believe me, Africa existed before you Europeans came along. And we didn’t do all that poorly either.

SPIEGEL: But AIDS didn’t exist at that time.

Shikwati: If one were to believe all the horrorifying reports, then all Kenyans should actually be dead by now. But now, tests are being carried out everywhere, and it turns out that the figures were vastly exaggerated. It’s not three million Kenyans that are infected. All of the sudden, it’s only about one million. Malaria is just as much of a problem, but people rarely talk about that.

SPIEGEL: And why’s that?

Shikwati: AIDS is big business, maybe Africa’s biggest business. There’s nothing else that can generate as much aid money as shocking figures on AIDS. AIDS is a political disease here, and we should be very skeptical.

Shikwati: Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They’re in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria’s textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.

Shikwati: … jobs that were created artificially in the first place and that distort reality. Jobs with foreign aid organizations are, of course, quite popular, and they can be very selective in choosing the best people. When an aid organization needs a driver, dozens apply for the job. And because it’s unacceptable that the aid worker’s chauffeur only speaks his own tribal language, an applicant is needed who also speaks English fluently — and, ideally, one who is also well mannered. So you end up with some African biochemist driving an aid worker around, distributing European food, and forcing local farmers out of their jobs. That’s just crazy!


A 2017 look at the interviewee:

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What happens at the end of our trade war with Canada?

Donald Trump has demanded that Canada stop sending us fentanyl and undocumented migrants. (why wouldn’t Canada try to keep at least all of the migrants for itself since we are informed that low-skill migrants make any country richer?) Canada refused to try to do this so Trump has hit them with 25 percent tariffs and now the Canadians are retaliating with their own tariffs (NYT). Do the tariffs keep escalating until all trade stops? Then what? The Canadians (example) seem to think that the less-export- dependent country will cave in (34 percent of Canada’s GDP is exports; 12 percent of U.S. GDP is exports). Americans don’t think or care about this?

What does Canada produce that we can’t make domestically, albeit at a presumably higher price? On their side, why does Canada need the U.S. as a trade partner? If they are all about resource extraction why can’t they sell their extracted resources to the Chinese and Europeans?

To the extent that a reduction in trade with Canada harms New York, Vermont, Maskachusetts, etc., I wonder if the trade fracas will be a net positive for Florida, which doesn’t border Canada and doesn’t get any power from Canada. A righteous New Yorker who suddenly has to pay twice as much for electricity could reasonably consider that the last straw and move to Democrat-dominated Orlando.

Speaking of Florida, here are a few pictures from Juno Beach yesterday, which featured shockingly cold (to Floridians) 72-degree ocean water, a pelican sushi bar, and a lunch menu that RFK, Jr. would certainly appreciate:

Some Canine-Americans who don’t seem to be concerned about a trade war:

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Economic Reasoning 101 from the New York Times

“Hailing a Car in Midtown Manhattan is Becoming More Expensive” (NYT, January 5, 2025):

Many of the vehicles that crowd the tolling zone are taxis and cars for ride-hailing services such as Uber and Lyft.

The new tolls will not fall on the drivers of those vehicles, who are often struggling to make ends meet. Instead, passengers will be charged an additional amount for each trip into, out of and within the zone. (Even before the new pricing began, passengers already paid congestion-related fees of up to $2.75.)

Riding in a taxi, green cab or black car will now cost passengers an extra 75 cents in the congestion zone, which runs from 60th Street south to the Battery. The surcharge for an Uber or Lyft will be $1.50 per trip.

I want to focus on “the new tolls will not fall on the drivers of those vehicles”. Let’s consider Eric Cheyfitz, the Cornell professor who teaches Gaza, Indigeneity, Resistance:

The first half of the course will be devoted to situating Indigenous peoples, of which there are 476,000,000 globally, in an international context, where we will examine the proposition that Indigenous people are involved historically in a global resistance against an ongoing colonialism. The second half will present a specific case of this war: settler colonialism in Palestine/Israel with a particular emphasis on the International Court of Justice (ICJ) finding “plausible” the South African assertion of “genocide” in Gaza.

(There are 476 million Indigenous people in the world, but fully half of the course will be devoted exclusively to 2 million supporters of Hamas, UNRWA, and Palestinian Islamic Jihad.)

Prof. Cheyfitz is visiting some pro-Hamas faculty at NYU and is considering taking an Uber for a 15-block trip to a restaurant. His/her/zir/their alternative is walking or taking the subway. Suppose that Prof. Cheyfitz is willing to pay no more than $20 for a car ride before he/she/ze/they will hoof it. If the city imposes an additional $1.50 fee (on top of existing congestion fees, car registration fees, taxes, etc.), doesn’t that reduce the maximum revenue that a driver can obtain for the trip? I don’t see how the money taken by the government can not come out of some combination of Uber’s pocket and the driver’s pocket. Consumers always have alternatives, not only walking and public transit but also deciding to stay put. (And, in fact, one express goal of the fee is to reduce the number of trips that Uber/Lyft customers will take. If successful, doesn’t that mean the tolls actually did “fall” on the drivers?)

As a thought experiment, suppose that the new fee were $1,000. Nearly all consumers would decide to stay put or use public transit or use a personal/family car. With the service priced only for billionaires, there wouldn’t be work for more than 10 Uber/Lyft/taxi drivers in the entire city. With no limit on who can apply for these 10 jobs there wouldn’t be any reason for the job to pay any better than it does now. The impact of a $1.50 fee is much smaller, of course, but I think the analysis works in the same way.

The Cornell class in case it is memory-holed:

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Value of not having to rub shoulders with a peasant (JetBlue Mint vs. cattle class)

I’m looking at going out to California after teaching FAA private pilot ground school (free and open to the public) at MIT. Here’s a guide to what an elite is willing to pay in order to avoid sitting with the peasants for 7 hours: $700/hr. Prices as of December 19, 2024:

Some “extra room” seats are still available on this flight:

So the alternative isn’t cramped torture.

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Does Kamala Harris propose “Socialism” or “Xboxism”?

My response to an X user who wrote “Usually it’s an exaggeration to claim that the other side is lunatic socialism. With Kamala 2024 that’s become a reality we face.”:

I don’t think that it is fair to call Democrats “socialists”. Under Socialism, e.g., in the Soviet Union, able-bodied citizens were required to work or be guilty of the crime of “Parasitism”. There were no undocumented immigrants. Certainly, a Soviet family couldn’t spend four generations living in public housing, getting free health care via Medicaid, shopping for food with EBT, and chatting on an Obamaphone. Kamala Harris and friends propose a system in which half of a country works/commutes 60 hours/week so that the other half can relax and play Xbox. That’s not a political system contemplated by Marx or Lenin. Maybe it should be called Xboxism?

Note that the above idea isn’t original. “Transferism, Not Socialism, Is the Drug Americans Are Hooked On” (Foundation for Economic Education):

Transferism is a system in which one group of people forces a second group to pay for things that the people believe they, or some third group, should have. Transferism isn’t about controlling the means of production. It is about the forced redistribution of what’s produced.

I think Xboxism is an easier term to understand, though, because it captures what government policy enables. And now that we have open borders we need a term that covers a migrant family that arrives to take up the Maskachusetts offer of guaranteed shelter forever even if nobody ever tries to work but instead enjoys a life of permanent leisure.

Related:

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Why you’re likely safer on a Panamanian- or Liberian-flagged ship than an American ship

A maritime safety lecture from Into the Storm: Two Ships, a Deadly Hurricane, and an Epic Battle for Survival by Tristram Korten…

SS El Faro’s hull, a towering wall of blue-painted steel, loomed over the wharf at the Port of Jacksonville’s Blount Island terminal as gantry cranes loaded her decks with cargo containers. She was a steamship (designated by the “SS” before her name), using two large boilers to power a single-propeller shaft. And she was old, built by the Sun Shipbuilding and Dry Dock Company in Chester, Pennsylvania, just south of Philadelphia, which rolled her into the Delaware River for service on January 1, 1975. That put her in the minority of big ships [in 2015]—less than 9 percent of the world’s merchant fleet is over twenty years old.

This doesn’t sound good for structural integrity:

Twenty years later, in the mid-1990s, she was hauled into a shipyard in Alabama, where her mid-body was lengthened to increase cargo capacity.

The 790-foot El Faro didn’t make it past her 40th birthday, sadly, but it turns out that she would almost certainly have been scrapped many years prior to the dramatic events of 2015 if not for U.S. laws to restrain maritime trade.

Sun Shipbuilding has since closed, a casualty of America’s decline in manufacturing, leaving a dwindling number of shipyards able to construct big cargo ships in the United States, which also means a dwindling number of shipyards capable of fulfilling the requirements of the Jones Act, a 1920 law requiring that any cargo transported from one U.S. port to another must travel on ships that are American built, American crewed, and American owned. (Puerto Rico, being a U.S. territory, counts as a U.S. port.) The law was designed to protect America’s supply routes during times of war. Today its primary effect is to protect the jobs of American sailors, preventing companies from hiring much cheaper crews from Third World countries. But there is a cost—and it is steep. To build a Jones Act ship costs $120 million to $140 million. To build the same ship in South Korea, which is a developed nation, would cost about $32 million, according to Court Smith, an industry analyst with Shipping Intelligence and Analytics. It’s even cheaper to build one in India or China. South Korea builds roughly two hundred commercial ships a year, according to Smith. America puts out maybe four. As a result, shipping companies pushed the life spans of their expensive American-made ships to the absolute limit. The average age of the U.S.-flagged cargo fleet is thirty-three years, compared to thirteen years for the global fleet, according to UN statistics, and most shipping experts say the average age a cargo ship is retired worldwide is around twenty years. El Faro was a product of this dynamic. Due to its age, it was allowed to remain outdated in certain areas. For example, a regulation requiring new ships to carry enclosed lifeboats was waived for older ones, for which compliance would require a costly retrofit. Grandfathered in, El Faro continued to carry two old-fashioned open-top lifeboats. Likewise, the ship’s emergency position-indicating radio beacon, or EPIRB, did not have to be encoded with GPS, which would give the ship’s position in a time of distress.

In addition to putting American sailors lives’ at risk, the Jones Act dramatically drives up costs for businesses and individuals in Puerto Rico, Alaska, and Hawaii. In addition to the obvious costs described above, there is the non-obvious cost that the closed market facilitates collusion:

For two decades, Sea Star had been one of several shipping companies that sailed supplies to Puerto Rico on a regular schedule. All that competition meant slender margins and low profits. But companies stayed with the route to Puerto Rico—travel between a U.S. state and a U.S. territory—because they had invested so much to comply with the Jones Act. There were no dodgy flags of convenience for El Faro; she flew the Stars and Stripes. That was a high barrier to entry for would-be competitors—they would need an American-built ship, crewed by U.S. sailors. Then, in 2002, one of those firms, Navieras, went bankrupt. Suddenly the companies still afloat—including Sea Star, Crowley, Trailer Bridge, and Horizon—started seeing increased business and profits for the first time in decades. Rather than risk losing their newfound earnings to any potential newcomers, the companies bought Navieras’s ships, and executives from at least three of the companies, Sea Star, Crowley, and Horizon, conspired to fix their prices. They created secret email accounts to communicate, and set up spreadsheets that kept track of their rates, which increased by as much as 30 percent—so that, as Forbes magazine wrote, “they could assure that nobody was cheating, while they were cheating.” They weren’t clever enough to fool the FBI, however, which got involved after learning of a meeting between executives from the competing firms.

Even a newly built South Korean ship would have had some trouble handling what the American captain and crew did with El Faro, but the new ship might not have sunk and, if it had, the modern lifeboats would have given the crew a chance to survive.

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The fraud in GDP growth statistics continues

New York Times, today:

The U.S. economy remained resilient early this year, with a strong job market fueling robust consumer spending. The trouble is that inflation was resilient, too.

Gross domestic product, adjusted for inflation, increased at a 1.6 percent annual rate in the first three months of the year, the Commerce Department said on Thursday. That was down sharply from the 3.4 percent growth rate at the end of 2023 and fell well short of forecasters’ expectations.

The word “population” doesn’t occur in the article, though it is critically important. If the population is growing at a 1.7 percent annual rate, for example, Americans are currently on track to become poorer on a per capita basis.

How much did the population grow? It’s almost impossible to say because our population growth is driven by undocumented migration and the error bars on estimates are huge (see “Yale Study Finds Twice as Many Undocumented Immigrants as Previous Estimates”).

Separately, the GDP of Harvard Square is growing. An “essential” marijuana retailer seems to have opened up on Church Street. Photos from this evening:

It’s also a great time to be a tent retailer. The “Free Palestine” encampment in Harvard Yard, view from outside Harvard’s police-guarded border wall:

Here are the stickers that supporters of Hamas/UNRWA/Palestinian Islamic Jihad have added to Harvard’s “the Yard is closed” signs:

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The Admin Fee at a restaurant

Happy Tax Day for those in the U.S. and also U.S. citizens who live abroad and get no services from the U.S. but still must pay taxes (consider the U.S. citizens held hostage by Gazans, for example).

How about a new 3 percent tax from a restaurant on the restaurant and kept by the restaurant, couched as an “Admin Fee” on the receipt?

One of my companions asked what it was for. The waiter responded, “It’s a fee that we incur to keep our prices competitive.”

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