Come for the politics, stay for the snark.

After dobbs, women are no longer free.

People really shouldn’t expect the government to help after they watched the GOP drown it in a bathtub.

Bad people in a position to do bad things will do bad things because they are bad people. End of story.

We need to vote them all out and restore sane Democratic government.

Republicans are the party of chaos and catastrophe.

DeSantis transforming Florida into 1930s Germany with gators and theme parks.

Speaker Mike Johnson is a vile traitor to the House and the Constitution.

The worst democrat is better than the best republican.

A snarling mass of vitriolic jackals

Take hopelessness and turn it into resilience.

Teach a man to fish, and he’ll sit in a boat all day drinking beer.

“The defense has a certain level of trust in defendant that the government does not.”

Let’s not be the monsters we hate.

Everybody saw this coming.

The words do not have to be perfect.

How stupid are these people?

I swear, each month of 2025 will have its own history degree.

“Until such time as the world ends, we will act as though it intends to spin on.”

Impressively dumb. Congratulations.

This isn’t Democrats spending madly. This is government catching up.

Is it negotiation when the other party actually wants to shoot the hostage?

And now I have baud making fun of me. this day can’t get worse.

This year has been the longest three days of putin’s life.

My years-long effort to drive family and friends away has really paid off this year.

You are here: Home / Economics / Illuminating Read: ‘The Era of Cheap Is Over’

Illuminating Read: ‘The Era of Cheap Is Over’

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Big changes, big opportunities. In the Washington Post, the Rana Foroohar (of the Financial Times) is encouraging:

… The past five years — which have featured a pandemic, the war in Ukraine and the aftermath of both — signal the end to an economy that was based on cheap everything: cheap money, cheap energy and cheap labor. All of that is going away or gone. A decade and a half of go-go speculation is finished. The era of cheap is kaput.

The first to go is the era of easy money. This isn’t a short-term response to President Biden’s much-needed post-pandemic fiscal stimulus. (In fact, that stimulus is exactly what kept the U.S. economy resilient while peers flagged, according to a recent New York Fed report.) This is a return to an economy that is more rational and hardheaded. Not all companies, or stocks, are created equal. Many have too much debt on their books.

Years of easy money propped up everything. A higher cost of capital will be painful temporarily, but it will give markets what they’ve needed for years — a reason for investors to sort out risky investments (like more than a few consumer tech and meme stocks) from safer ones (industrials set to benefit from a manufacturing boom).

Cheap energy is over, too. One outcome of Russia’s invasion of Ukraine is the realization (especially in Europe) that getting crucial commodities from autocrats is never a good idea. The United States, Europe and China are, in different ways, all speeding up the transition to a green economy…

Finally, the era of cheap labor has ended. Wages are rising, and we’ve seen more labor activity, including strikes, this year than in the past four decades. More will follow. This is an appropriate response to decades of wage stagnation amid record corporate profits. Unions, but also non-union workers in many areas of the economy including construction and manufacturing, have been buoyed by the largest infrastructure investment since the 1950s — which has given them negotiating power that they haven’t had in years. Meanwhile, companies in the service sector are reconsidering their usual hire-and-fire-fast approach, having been trained by the pandemic to hang onto employees as long as possible…

The end of cheap is a huge shift. It means Main Street rather than Wall Street will drive the economy. It will make for a more balanced and resilient economy. The bond market won’t like it, and there will be calls to return to the old ways, particularly if inflation continues to bite.

But the past few years have taught us all that cheap isn’t really cheap. It’s just putting your troubles on layaway.

Reader Interactions

113Comments

  2. 2.

    Anne Laurie

    @Baud: No, no, you’re ‘frugal’ and / or ‘modestly priced’ — depending on whether you’re buying or selling.

    The right marketing terms are  *key* to political viability!

  5. 5.

    satby

    Great article find AL!

    I’ve been reading about how the “cheap stuff from China, Dollar Tree economy” in reality is much more expensive long term for the people who can afford it least, as well as disastrous for the planet. Glad to see a good explanation I can share with my less online friends on {shudder} FB.

  6. 6.

    Sister Machine Gun of Quiet Harmony

    @Martin:

    I think ‘cheap’ works better for Bauds demographic.

    I’m not sure “Baud 2024! I’m cheaper than the competition AND Justice Thomas” really works as a campaign slogan. Maybe “He’ll put your troubles on layaway!” sounds a bit better.

  7. 7.

    smith

    If we can get green energy to scale, I think there is a possibility that energy will be cheap again, this time without the environmental and health costs, and with the added bonus of gutting the power of foreign autocrats and homegrown oil oligarchs.

  8. 8.

    Scout211

    But the past few years have taught us all that cheap isn’t really cheap. It’s just putting your troubles on layaway.

    Are we talking about Elon Musk yet again?!
    🤣

  11. 11.

    satby

    @smith: there is a possibility that energy will be cheap again, this time without the environmental and health costs, and with the added bonus of gutting the power of foreign autocrats and homegrown oil oligarchs.

    “you may say I’m a dreamer, but I’m not the only one…”

    Actually, stuff like this fires up the youngs, who will inherit the mess if we don’t make progress.

    God I hate autocorrect

  15. 15.

    Ohio Mom

    Phooey. Cheap being over and Ohio Family entering its “fixed income” years is not a good combo for us. Oh well, we will manage.

    I always find the euphemism “fixed income” annoying. Most people are on fixed incomes, no matter what their age. You get the fixed amount your employer decided on. I think pensioner is more fitting for this stage of life.

  20. 20.

    trollhattan

    @Anne Laurie: ​
    I recall a Taxi episode when Louie was describing an encounter to Reiger: “She was beautiful Reiger; no, she was better than beautiful, she was cheap!”

  23. 23.

    Yarrow

    @Ohio Mom:  I agree. I have no idea why “fixed income” is used for old people. Younger people might not be on a fixed income but that likely means their income is unpredictable, which in a lot of cases is worse than a fixed income.

  26. 26.

    satby

    @Yarrow: Well, sweeter than regular Special K, but not as sweet as the yucky freeze dried fruit and yoghurt ones. I don’t like sweet stuff generally. More cinnamon/spices flavor.

  27. 27.

    satby

    @Geminid: I mainly use cereal to accentuate the black- or blueberries it accompanies each morning. So unsweetened is my normal too. But I love the Pumpkin Spice. Already finished my Pumpkin Spice Cheerios box.

  32. 32.

    Jay

    @satby:

    Panda’s in the US were part of China’s “Panda Diplomacy”.

    Their presence was leased from China.

    With relations turning sour, leases are not being renewed.

  33. 33.

    Geminid

    @satby: I try to eat cereal every morning, Special K or corn flakes. I pour half and half milk/cream on it for more nutrition. Bland, but good

    I’ve neglected to buy blueberries lately, but maybe I’ll get some Saturdayevening at the Stanardsville Grest Value. I believe in the precept that it’s good to have some fresh vegetable or fruit with each meal. I often stray though.

  37. 37.

    Old Dan and Little Ann

    @MomSense: I am.  My wife’s making us watch it.  Ramaswami made a crack about a Dick Cheney in 3 inch heels and I started laughing because I thought it was a dig at DeSantis.  But Haley clapped back saying they were 5 inch heels she was wearing so I was a bit bummed.

  39. 39.

    Poe Larity

    Was picking olives at a Kurdish family vinyard last weekend. He said all the seasonal migrants wanted $25/hr for the grapes but he’d given to the cause and a bunch of undocumented Ukrainians showed up with more reasonable demands.

  40. 40.

    scav

    Would fixed be more a holdover from the days of (legendary?) yore where one actually could count on raises (even annual ones!) without changing jobs?

  41. 41.

    Another Scott

    Dunno.

    I’m reminded that 20% interest rates on credit cards have been really common for a few decades now. And multi-hundred % interest rates on car title/payday loans similarly.

    On the way home I heard a bit of NPR ATC on the radio. There was a segment on TIFG’s trial and the Goya spokesmodel’s testimony. The reporter said that one of the issues was that he wanted a big loan for his resort/golf course, but the banksters were only willing to do it at 9%. He then talked to Deusche Bank’s private bankers who were more than happy to make it a personally guaranteed loan at 2%.

    There’s plenty of cheap money out there for people in the club…

    Cheers,
    Scott.

  42. 42.

    cain

    @smith:

    Or the shit foreign policy that goes with it. I would love to ignore Saudi and Iran and just let them play sit and spin.

  45. 45.

    CaseyL

    I think the dangers and drawbacks of a “cheap” economy have been known for a while, but it’s hard to avoid buying cheap shit from China when that’s all the major retail outlets will sell (and stagnating wages meant, even if you could find US-made items, they were terribly expensive).

    I can’t remember exactly when it became difficult to find US-built things like tools, clothing, and appliances, but I absolutely did notice how US-made stuff vanished.

    I

  54. 54.

    CaseyL

    @cain: And they’re taking over eBay, and even Etsy.  It’s maddening.

    @cain:  Do you mean Nichols’ Twitter feed? That’s how I’m following things.

  55. 55.

    citizen dave

    @smith: I work in regulation of electricity–wholesale/federal side.  I get the hope, and compared to the other ways, solar and wind production is nearly free.  But, we have huge legacy costs of the current system, transmission, distribution systems.  And very large ongoing costs to replace the aging facilities, and add on when needed.  The utilities never never ever even broach the possibility of a world where the price of electricity is going to fall.

    There is a great zeigeist right now that we need to spend tens, or actually a couple hundred billion dollars on transmission lines going everywhere so we can move the renewable production around.  Personally, I think storing and time-shifting will be the way, as storage costs continue to fall and we figure it out.  (The DOE has a moonshot project to lower long duration storage costs by 90% in 10 years (we’re in year 2))  If you think about it, electricity could look more like a water utility in the future.  I’m not sure the big electric grids will be needed or useful to the extent the current GroupThink does.

  56. 56.

    Martin

    You can come to this same conclusion from a different direction.

    The dynamic that made things ‘cheap’ was externalizing costs. Guns are cheap because no part of the gun buying economy pays for the damage that guns cause. Estimate is that gun violence costs in the US are about $500B per year – that’s in lost GDP from fatalities, medical bills, the cost to harden facilities against guns, increased security in schools, and so on. Given about 100 million gun owners in the US, this would represent a ‘tax’ of about $5,000 per year per gun owner. If those costs were transferred to the source of the cost, guns would instantly stop being cheap. They’re only cheap because someone else pays.

    This is why climate change is a thing – we externalize pollution, putting those costs on others, mostly on people in the future. Much of the work that my state California is doing is trying to remove those externalities, and move those cost back on the source. It’s FAR from comprehensive, and far from complete, but you can see the trajectory. And a lot of economists are shifting their view toward the need to do this relative to even 10 years ago. So from a policy perspective, every effort which seeks to do this does indeed make things not cheap, but also makes things more fair because people now need to evaluate the full cost of the good or service. And yeah, sometimes it sucks because this thing that was cheap isn’t any more, but in reality, it never was. It was only cheap to me, and it was expensive to people that didn’t benefit from the item I bought or the service I used. They were the ones paying for the health consequences of my car or plane flight, etc.

    So yes, I think this is going to continue. But I think for most people it’ll just mean lifestyle changes, because we are getting some progress on wages for folks at the bottom. We’re not really getting progress on clawing back from the folks at the top though.

    I keep seeing these polls that people think the economy is going in the wrong direction and I have to wonder, after seeing some GOP focus groups talking about how the economy isn’t fair, too favorable to the rich, etc (which they all blame on immigrants)  that at least on some economic issues if there isn’t consensus for some policies to the left of Democrats. Bernie was pretty popular with a lot of Trumpers.

  57. 57.

    Ohio Mom

    @Another Scott: I went and read the whole column Anne Laurie excerpted and I couldn’t help but think it’s really about reminding the middle class it’s shrinking away. Poor people are already poor and the wealthy aren’t going to feel any pinches.

  58. 58.

    Shalimar

    @Old Dan and Little Ann: 3-inch and 5-inch heels both sound like digs at DeSantis.  Ranaswamy was reminding people that DeSantis is short and Haley is a woman.  Haley replied that at least she’s tougher than DeSantis.

  59. 59.

    NotMax

    @cain

    Methinks you’re maybe conflating them with alibaba or (shudder) wish.com.

    There’s a difference between products made in China and Chinese companies.

  60. 60.

    Brachiator

    … The past five years — which have featured a pandemic, the war in Ukraine and the aftermath of both — signal the end to an economy that was based on cheap everything: cheap money, cheap energy and cheap labor. All of that is going away or gone. A decade and a half of go-go speculation is finished. The era of cheap is kaput.

    Is the author talking about the US or the global economy? Either way, this is nonsense. Dumb punditry and fatuous economics. When are pundits most full of it? When they get into deep predictive mode.

    Not all companies, or stocks, are created equal. Many have too much debt on their books.

    I had to laugh at how utterly empty this was. It’s just been noted that estimated annualized interest payments on the US government debt pile climbed past $1 trillion at the end of last month. Is this too much debt? Probably not.

    Cheap energy is over, too. One outcome of Russia’s invasion of Ukraine is the realization (especially in Europe) that getting crucial commodities from autocrats is never a good idea. The United States, Europe and China are, in different ways, all speeding up the transition to a green economy…

    Energy doesn’t care if you are good or bad. Russia still has a lot of gas to sell to eager buyers. Are the Saudis autocrats? If the green economy is not reasonably priced, it will stall worse than a junky car.

    Finally, the era of cheap labor has ended. Wages are rising, and we’ve seen more labor activity, including strikes, this year than in the past four decades. More will follow. This is an appropriate response to decades of wage stagnation amid record corporate profits.

    This is very true. Wages are still too low, especially wages going to lower income groups. But there are also worrisome imbalances with respect to jobs and prices. And the ultimate cheap labor is automation, which is accelerating in a number of industries, which may give rise to waves of layoffs.

  63. 63.

    Jeffro

    I’m shocked there isn’t an official debate thread?

    Ramaswamy is revealing himself, question by question, as a puppet of Putin/trump

    STILL no questions about abortion, 5/8 of the way in!

  64. 64.

    Martin

    @citizen dave: I agree. You mitigate a decent bit of the need for transmission if you can establish a culture of conservation. California took this approach in the 70s when it simply couldn’t build infrastructure as fast as people were moving here. The result was a rethinking of how to design a lot of stuff, that we now view as totally normal here, which was actually cheaper than the previous way of building it, and avoided the need for the infrastructure entirely.

    The problem isn’t the costs, the problem is that the costs accrue to a different part of the economy and away from a currently powerful part of the economy – and its the loss to the powerful part of the economy which is what holds it up.

    I was a little discouraged in the auto union strike that one of the issues the union was advancing was the shift to EVs because they require less labor to build. Now I know they weren’t saying not to build them necessarily, but it was hard to look at that and not see not building them as being the easiest path to resolving the conflict.

    I mean, this was the fundamental dynamic in the cost of higher education – faculty would not tolerate any kind of shifting of costs away from faculty wages, and so you have an economic segment (higher ed) which is increasingly inflationary because there are NO productivity gains able to take place. This is why the argument ‘addressing climate change will be incredibly expensive’ because the oil industry will not tolerate their income going down, so renewables need to be spending above what we currently spend on them, ditto for coal, ditto for anything else that might be replaced with a cheaper alternative. That is, conservation is not allowed, only increased spending is allowed. And that’s the cycle we’ve been caught in and have to fight constantly.

  69. 69.

    smith

    @Elizabelle: Usually, someone over at Dkos takes one for the team and live blogs the debates, so the rest of us can point and laugh from a safe distance, but not this time. I was curious to see if they would be asked to respond to the GQP’s electoral disaster last night, but not enough to actually watch the thing.

  70. 70.

    Jeffro

    @Elizabelle: Ok.  I wouldn’t…buuuuuuut…this one is interesting, listening for the divisions, the red lines, the thin tremolo of Vivek’s puppet strings being tensed…

  71. 71.

    cain

    @NotMax: No, I don’t think so. There are entire companies whose only store presence are on Amazon who are located in China. Especially when it comes to some things like technology related things.

  72. 72.

    cain

    @CaseyL:

    @cain:  Do you mean Nichols’ Twitter feed? That’s how I’m following things.

    Yep, Tom Nichols has the best feed when it comes to anything related to things like GOP debates or Trump rallys and press conferences. That guy can make me laugh while still feel like I should be crying.

    ETA Vivek has shown himself to be a vile asshole even more than the others.

  75. 75.

    Formerly disgruntled in Oregon

    @Martin: Too bad white populists as a group are full of the folks that LBJ (sorry, Raven) described as follows…

    If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.

    Some of these folks say they are fine with Bernie, but would they feel the same about a non-white or non-male Democrat with similar views?

    Do you really think they would vote for AOC for President, for example?

    Patriarchal white supremacy is a helluva drug.

  77. 77.

    dmsilev

    @Jeffro: What’s the point. Unless TFG drops dead, he’s the nominee.

    In actual important news, SAG-AFTRA has announced that they’ve tentatively reached an agreement with the studios. Actor’s strike is over starting tomorrow, at least for the moment.  No details yet on the particulars, so we can’t say whether the actors did as well as the writers in negotiations.

  78. 78.

    Jeffro

    You know what would be interesting?  Let left-leaning reporters/pundits grill the shit out of the GOP candidates and vice versa.  Much better than these softballs from relative amateurs.

    Also: where is the question that American politics has been missing for 4 decades (and especially since W’s and trumpov’s tax cuts for the wealthy): if you’re so concerned about the deficit and the national debt, candidates, what’s your position on going back to those higher tax rates on the super-rich?

  79. 79.

    Mr. Bemused Senior

    @Old Dan and Little Ann: I’m not watching, just perusing TPM’s live blog.  I don’t understand Ramaswamy’s dig — I thought the Rs like Dick Cheney.  TPM says the audience response was “boo.”

    ETA I mean, sure, Ramaswamy is trying to create “action”, but this seems overly stupid to me.

    Also, Dark Brandon has already excerpted another of his rants (we’re losers).  Fun!

  80. 80.

    Jeffro

    @dmsilev: I think I noted my point – the divisions here are interesting.  I’m not evaluating them as potential presidents, I’m looking for where the fractures are.

  82. 82.

    Suzanne

    @CaseyL:

    but it’s hard to avoid buying cheap shit from China when that’s all the major retail outlets will sell (and stagnating wages meant, even if you could find US-made items, they were terribly expensive). 

    Truth.

    Although I had a great experience this week! A couple of years ago, I bought a hoodie from American Giant. Stupidly expensive, like $130. But made in the USA, and just amazing quality and fit. Just my favorite thing….. until the zipper broke. BUT! Lifetime warranty! Took three pictures and sent an email, and within two business days, my replacement was on its way.

    I like to buy better quality things.

  83. 83.

    NotMax

    @cain

    Yeah, but it’s a fraction of the total And easy enough to spot by the name of the concern and/or the fractured text.

    Hundreds and hundreds of the worst actors among such entities have been booted once their miscreantatiousness became evident.

  84. 84.

    barbequebob

    @Yarrow:  I’m guessing that the term is based on the idea that your income from that point on is based on whatever pensions and social security payments you may get, which, while they usually get a COLA (Cost of Living Allowance) are not like when you got a promotion or switched to a better job during your working years ). But, many of today’s boomers are sitting on large 401K balances that will be subjected to RMD (Required Minimum Distributions). So their income in retirement may actually increase. That what AARP and Kiplingers says.

  85. 85.

    Fair Economist

    Cheap energy isn’t over. It’s going to get really cheap over the next decade – if you can use solar. And that’s going to change a lot of businesses.  Uses that can time or delay energy uses are going to have great possibilities.

  86. 86.

    cain

    @NotMax: But more often than not the origin of either the product or the company is in China.

    it’s somewhat appalling how much we’ve offshored everything to a single country.

    I want to go back to getting products locally (in any country) and have the right to repair.

  87. 87.

    Jeffro

    Fwiw, Nikki Haley just staked out a somewhat sensible position on reproductive rights – in detail – and the party is going to have an absolute shit fit about it tomorrow.

    Read the transcript, non-debate-watchers.    =P

  88. 88.

    Scout211

    @dmsilev:

    Fran Drescher tonight:

    Terms of the deal, which still needs to be ratified by the union’s members before it can take effect, were not immediately disclosed. The union said it would not reveal them until the union’s board has reviewed the deal.

    But union president Fran Drescher posted some highlights on Instagram Wednesday night, and the studios said the agreement “represents a new paradigm” for Hollywood, TV and the actors.

    “We did it!!!! The Billion+ $ Deal! 3X the last contract! New ground was broke everywhere! Ty sag aftra members for hanging in and holding out for this historic deal!” Drescher posted.

    Drescher also thanked the AMPTP “for hearing us and meeting this moment.”

    In a statement to members, the union called the scope of the deal “extraordinary.” It includes significant increases in pay minimums, AI protections, and a streaming participation bonus, along with better benefits

  89. 89.

    barbequebob

    @Jeffro: it already has multiple layers of that already.

    1. The amount you receive decreases rapidly as your income increases. It is the inverse of how income tax works with tax brackets.
    2. Amount you receive in SS Benefits that is subject to income tax is a function of overall income. It is not necessarily tax free and the btter off you are the more it is taxed.
  90. 90.

    Scout211

    Here’s another something good:

    Tracy Chapman won song of the year at the Country Music Awards tonight. Link

    Tracy Chapman continues to make history with her 1988 hit “Fast Car” after winning song of the year at Wednesday’s Country Music Awards.

    Chapman was not present during the telecast, which took place at Nashville’s Bridgestone Arena, but country star and the category’s presenter Sarah Evans read a message on Chapman’s behalf after announcing her as the winner.

    “I’m sorry I couldn’t join you all tonight. It’s truly an honor for my song to be newly recognized after 35 years of it’s debut. Wow. Thank you to the CMAs and a special thanks to Luke (Combs) and to all of the fans of ‘Fast Car,’” Evans said on behalf of Chapman.

    The CMA win is a remarkable achievement given “Fast Car” debuted 35 years ago, and saw a resurgence in popularity in July after country star Luke Combs released a cover of the hit single.

    Combs’ cover went on to reach No. 1 on the Country Airplay chart, making Chapman the first Black woman to top the chart since it came into existence in 1990.

    I love both versions of her song.

  92. 92.

    cain

    @Jeffro: Actually, I think that goes to Christie who said that if you are going to be pro-life it needs to be for the entire life. Christie would be a dangerous opponent if he was running in the general.

  93. 93.

    Steeplejack

    @Martin:

    We’re not really getting progress on clawing back from the folks at the top though.

    How do we do that, or get them to “pay their fair share” on an ongoing basis? Not changes to the income tax, apparently, since so much of their “revenue” (wealth) doesn’t come from what we peasants recognize as income. I’ve seen mentions of a small transaction tax on stock trades, but I don’t know if that would hit the rich—or much of anything else about it. It’s probably a solution to a different problem.

    So what is the answer?

  94. 94.

    CaseyL

    @barbequebob:

    But, many of today’s boomers are sitting on large 401K balances

    Many, not all.  I’m a Boomer, and I’ll be lucky if my 401K pays off my (small) mortgage.  I won’t be getting distributions from it; all my income will be SocSec and a state pension.

    There’s a reason I’m not taking SocSec until I’m 70, and not retiring until I’m 72.

  95. 95.

    mrmoshpotato

    @Jeffro:

    Fwiw, Nikki Haley just staked out a somewhat sensible position on reproductive rights – in detail

    I don’t believe that.

    and the party is going to have an absolute shit fit about it tomorrow.

    Possibly.  To Hell with them all – her too.

    Read the transcript, non-debate-watchers. =P

    No.  But thanks for the offer of eyeball, brain, and stomach puking.

  97. 97.

    mrmoshpotato

    @Jeffro:

    Chris Christie just (effectively) called for means-testing of Social Security(!) 

    I’m good with him means-testing himself into an erupting volcano.

  98. 98.

    Gvg

    @Frankensteinbeck: it results in costs for regular people. All costs to produce a saleable product get paid by the consumer in the end. They are not separate. The rich owners or managers taking a smaller slice happens when demand drops because the price rises or customers look for alternate products. Then they lower prices by cutting their take because they have to.

    Everything is connected. It’s never unrelated.

  102. 102.

    YY_Sima Qian

    I find Rana Foroohar a real mixed bag. She has been a long time critic of Neoliberal orthodoxy & has been consistently opposed to kleptocratic capitalism, but her recent analysis has a strong sniff of unseemly & IMO incorrect US boosterism, & even more unseemly schadenfreude at the ROW (including rest of the West). Her arguments against globalization has nothing to offer to the developing world that is seeking to break out of their low income status.

    On her specific points:

    1. Whether the era of cheap consumer goods is over depends on whether/how the rest of the Global South industrializes, there are still plenty of desperately poor people in Sub-Saharan Africa & South Asia who are willing to work for very low wages to improve their lot by just a little. OTOH, labor hasn’t been cheap in the PRC for a decade, & places like Vietnam are starting to see shortages of skilled/semi-skilled labor. The end of cheap, disposable trinkets is undoubtedly good from a sustainability perspective.
    2. I think we are in the era of cheap “high tech” goods that is set to deepen further, as Chinese industries climb the value chain & enter more sectors hitherto dominated by Western MNCs (often monopolies or oligopolies) w/ their stable, fat margins. Such stable, fat margins are ripe for disruption & are enticing targets for Chinese entities who can clear the technological entry barrier (encouraged by Chinese government industrial policy, which significantly reduces entry barriers for capital, & the PRC has plenty of human STEM capital) & willing to accept much lower margins. Once they do, history has shown that what follows is a mad rush to enter the sector by all kinds of players, massive overcapacity, brutal price wars (among Chinese companies & against Western MNCs), razor thin or negative margins, desperate search for export markets to absorb the excess capacity, before painful shake out & consolidation. This dynamic generates a lot of wasteful investment, results in poor capital efficiency (at least for a time), & inevitably precipitates blow back from the PRC’s developed country trade partners. OTOH, this dynamic is great for quickly generating production capacity, rapidly driving down cost/prices, enabling deployment at scale for the global masses (in both developed & developing economies). The latter effects are important if the products/technologies are crucial to quality of life or addressing global threats like AGW. The reason green energy transition is gathering steam around the world is because Chinese firms have driven down the cost of solar, wind & batteries by 90% or more over the past decade. If it had been left to the Western incumbents, these green energy/green tech. would likely still be niche. We have already seen the dynamic at play in flat panel displays, EVs, & ship building, & we will likely see it in non-bleeding edge semiconductors & medical imaging equipment.
    3. Cheap hydrocarbons is unquestionably a good thing for the environment, but energy transition needs cheap green energy & cheap green forms of transportation.
    4. Foroohar never clarifies whether she means US GDP growth in “real” (constant prices) or “nominal” (current prices) terms. The US GDP grew by ~ 25% from 2018 to 2022 in nominal terms, but only 7.5% in real terms, due to high inflation. The slightly less than 2% average annual real GDP growth (2023 real GDP growth is expected to be ~ 2.1%) in that period is actually a bit lower than the pre-pandemic/post-GFC baseline for the US. That’s not bad given the shock of the pandemic, but it is also not showing a notable acceleration, either.
    5. US manufacturing investment is seeing a boost from the IRA & the CHIPS Act. That could be a very good thing. However, US industries (semiconductors, EVs, batteries, etc.) are starting to face shortages in skilled labor & engineers to staff the factories, which the xenophobic turn by some of the red state governments will make worse. Then there is the question of cost competitiveness of these new factories. The TSMC plant in AZ making 5 nm chips will likely cost 5X as much to construct as its plant in TW making 3 nm chips on a per wafer basis, & > 50% more expensive to run. Toyota is building a 30 GWh battery plant in NC, CATL has already built a 30 GWh battery plant in the PRC (among many). The Toyota plant will require 14X the capital investment compared to the CATL one, & 3 times longer to build. We have to wait to see if the IRA/CHIPS driven investments will result in a sustained revitalization of US manufacturing, or just a sugar high, or something in between. The US can shield its industries by tariff barriers and/or provide even generous subsidies, but that just increases inflation and/or increase the amount of debt that USG has to service (& servicing cost has structurally increased).
    6. US wages has grown rapidly in nominal terms, but they had to grow rapidly to keep up w/ inflation. If wages are still barely keeping up w/ inflation, then the rapid increase in nominal wages will not necessarily assuage the sense of precarity among the middle & working classes that they have had for decades. Since wage increase has not been uniform, nor inflation, I think there are parts of the US population whose lives have become materially worse over the past 5 years, & they will naturally hold negative sentiments toward the economy & the elites in power.
    7. Higher inflation will be bad for retirees, who will see the value of their retirement savings drop. It will also be bad for the new entrants into the job market who have less bargaining power, & the housing price inflation will hit them doubly hard (it’s not a “slow moving problem” that is “no surprise” to them).
    8. US economic performance looks great against the rest of OECD because the rest of the OECD, especially the EU & Japan, have done so poorly over the past decade. Rest of OECD economies look even worse in nominal USD terms due to the recent USD strength. That is cause for some unseemly schadenfreude in some quarters in the US, but cold comfort & irrelevant to the vast majority of Americans.
    9. End of cheap credit is a double edged sword everywhere. High interest rates will discourage households from taking on unsustainable debt, & encourage industries & investors be more discriminating in their bets. However, higher interest rates will make it more expensive for everyone (households, companies & USG) to service their existing debts, which crowd out other more productive spending. The era of cheap credit, driven by the money printing in the US & the EU following the GFC, allowed many Global South countries to load up on commercial loans denominated in USD & Euros (for most of them far exceeding the amount they borrowed from the PRC) at some of the highest interests rates around. The end of cheap credit means it will be much more difficult for developing economies to be financially irresponsible. OTOH, low income countries have to take on financing to build capacity, if they are to break out of low income status. Lack of financing options from the West, coming at a moment when the PRC is downsizing the BRI (at least in monetary terms), makes the future prospects of the developing countries that much bleaker. Worse, some of these developing countries had been issuing USD/Euro denominated bonds to finance day to day operations. Turn that spigot off & they fall into cash-flow insolvency, socio-political disorder follow.
  104. 104.

    eclare

    @satby:

    I try to have blueberries every day.  I use frozen, it’s easier and cheaper than fresh.  I buy Wyman’s brand, which is family owned.

  106. 106.

    YY_Sima Qian

    @YY_Sima Qian:

    Cheap hydrocarbons is unquestionably a good thing for the environment, but energy transition needs cheap green energy & cheap green forms of transportation.

    Should be “End of cheap hydrocarbons”.

  108. 108.

    Brachiator

    @Sister Machine Gun of Quiet Harmony:

    Also best way to defund Russia is to make their gas and oil reserves worth less.

    Oil and gas are global commodities. The value is not set by any particular country.

    If we can come up with an alternative to oil and gas, then the old fuel may become worth less.

    However, the goal of an energy supply that is clean, reliable, sustainable and cheap may not be realizable. That is, you might not be able to attain all these goals. But we know, or reasonably have determined that new energy must be clean and not contribute to climate change.

  109. 109.

    Lyrebird

    @CaseyL: I can’t remember exactly when it became difficult to find US-built things like tools, clothing, and appliances, but I absolutely did notice how US-made stuff vanished.

    We can thank Reagan (“service economy!”) and Romney (Bain Capital) and many of their fans.

  110. 110.

    BellyCat

    @YY_Sima Qian: Riveting. Thank you!

    Until the minimum standard of living equalizes globally, countries with lower wage pools will fiercely attempt to disrupt any market which involves significant labor.

    Not being an economist, my take is that manufacturing is going to be a shitshow for countries with high standards of living for the foreseeable future.

  111. 111.

    YY_Sima Qian

    @BellyCat: That assumes the low income economies w/ the dirt cheap labor can find a way plug into the global market for tradable goods. That requires the dirt cheap labor be organized & employed in factories doing labor intensive manufacturing, for the manufactured goods to reach a physical access point to be exported, & stable utilities so the factories can continue operation. These attributes requires stable polities, decent level of governance, & physical infrastructure. Otherwise, this dirt cheap labor pool is no more relevant to the global economy than the hundreds of millions of Mainland Chinese were before Reform & Opening. That is why I consider it an open question in #1 of my comment.

    That is why the PRC has been slow to shed much of the lower value added manufacturing to other developing economies, despite government industrial policy incentivizing this direction. The PRC has stable polity (for the short to medium term), decent governance even by middle income country standards, & 1st world infrastructure, not to mention expansive, complex, & vertically integrated value chains. The primary beneficiaries of “China+1” supply chain strategies have been countries such as Vietnam, which can more easily integrate itself into the existing Chinese value chain & ecosystem by doing the final assembly.

  112. 112.

    VeniceRiley

    I practically gave myself away, but the special replacement cartridges are very expensive. Hope the wife doesn’t have buyer’s remorse. 😘

  113. 113.

    Matt McIrvin

    I’ve always been a bit suspicious of the line “we are going to go through a time of suffering, but it’s actually good, it will make us better people”. And that’s kind of what’s going on here.

    Suffering never makes us better people. It’s more likely to send us into killing rages, make us elect dictators and demagogues. Half of us seem willing to put a disturbed criminal who seeks to eliminate the other half back in the White House because gasoline got slightly more expensive.

    Anyway, I think this article is lumping together several things that aren’t deeply related to one another, and some of them might be transitory. It reminds me of the theorizing about Peak Oil back in the 2000s.

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