University of Michigan economist Justin Wolfers criticized President Donald Trump after his claim that families with young children could simply buy far fewer dolls this holiday season.
“They’re having tremendous difficulty because their factories are not doing business. They made a trillion dollars with [former President Joe] Biden … selling us stuff. Much of it, we don’t need,” Trump said about goods coming from China.
Trump, who imposed a 145 percent tax on Chinese goods coming into the United States, then turned his attention to American consumerism.
“You know, someone said, ‘Oh, the shelves, they’re going to be open.’ Well, maybe the children will have two dolls instead of 30 dolls, and maybe the two dolls will cost a couple of bucks more than they would normally," Trump said during a Cabinet meeting Wednesday. "But we’re not talking about something that we have to go out of our way. They have ships that are loaded up with stuff, much of which — not all of it — but much of which we don’t need. And, we have to make a fair deal.”
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"If people can afford to buy fewer dolls — that idea, how much you can afford to buy with the income you have, is a concept that we economists call 'real income,'" explained Wolfers. "Real income — sometimes we call it GDP as well. Real income is what we're trying to build. To build the spending power of American households. And, so, in that example, he just said the real income of American households, you're spending power, your material well-being, is going to fall. You know, when we see real income fall, we call that a recession."
He compared it to income. So, if a family drops from $30 a household to $2 a household, Wolfers explained that would be a 94% decline of "real income."
"Which we'd call a depression," he said. "Look, it's fine for a billionaire to joke about this, and maybe he doesn't care. But some of us have kids, and even those of us who don't have kids realize the same forces that make plastic from China more expensive, make machinery for manufacturing firms just as expensive."
The same could be true for a company that might need 30 machines but can only afford two.
"This is economic vandalism, and he's harming people's quality of life," said Wolfers. "And the joke here is, oh, these are made in China dolls. If your kid loves them, I don't care where they're made."
All of this was possible because Trump claimed a "national emergency," which gave him the power to institute the trade war. Wolfers said that Americans can look around and ask whether they're suffering from a "national emergency."
"I know that when I read the order, the executive order where Trump used the power delegated to him by Congress under a national emergency, he declared the national emergency was the bilateral trade deficits we have with specific other countries," he continued.
"Simply to say that it's an incoherent and absurd idea that we have had bilateral trade deficits with countries around the world since our founding. Every country has them. They've not got an unusually large, and they pose zero economic threat. So, I'll leave it to the lawyers, but I will say that there's no — as an economist, I can be absolutely sure that the claimed economic emergency simply doesn't exist," Wolfers closed.
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