Sifting Through the Wreckage of An Ill-Informed War
And a presidency that favors extraction over growth
Now that the war with Iran is maybe(?) over, I dig into the lasting economic damage with Slate’s Mary Harris.
So far, oil prices have been where Americans have felt the costs of war most acutely. But while they will certainly decline with the re-opening of the Strait of Hormuz, we should expect a bill for years to come.
To truly understand the full price tag, we have to get the counterfactual right. The correct comparison is not today’s situation compared to yesterday’s. But today versus what it would have been without the war. So yes, energy prices will fall, but futures markets tell us that they'll still remain a lot higher than they would have been without the war.
But there are broader costs, too — an estimated $200-$400 hit to U.S. output due to rising geopolitical risk. (We can extrapolate this estimate combining estimates of how sharply risk has grown from the Federal Reserve’s Geopolitical Risk Index, with historical estimates of the growth-risk nexus.)
We also know the consequences are much greater elsewhere in the world, in places that had even less say than the American people in starting this conflict. That’s particularly true in the world’s poorest regions where a significantly larger portion of household income is spent on energy and food — the two commodities hit hardest by war-fueled inflation.
Ultimately, this war is a symptom of something even larger — a “post-contract presidency” defined by Trump’s habitual lying and unreliability. While often a source of nihilistic humor, it has real, measurable economic costs. Progress is not guaranteed, particularly when institutions begin to falter and prioritize extraction over growth.
Our conversation ends with a point I’ve been trying to emphasize recently: being pro-market is not the same thing as being pro-business. Competition — not business itself — is the true engine of prosperity. Unfortunately, Trump’s second-term economy has consistently favored business over competition — undermining very forces that drive innovation and deliver for the American people.
Great discussion. I am so glad I subscribed!
So by trump forcing the service industry workers to leave from rolls like harvesting crops, childcare, landscaping, building, cleaning etc. Who's going to do those jobs now? Of course nobody will or maybe those white collar workers that are being forced out because AI is doing their job will now have to start cleaning offices. Because there's no one to take care of the kids they'll have to stay home and live on those dreaded government handouts. Oh except they can't because DOGE already discontinued them. Sounds like "poetic justice" to me but of course it's not going to be that harmless in the long run. People in the middle of the ladder will lose their position and the ones on the lower rungs will lose everything. All this whilst the technology industry cleans out your water and electricity grid. All the resultant homeless people will be swept up and put into "detention centres" because homelessness is a crime now and will probably be forced to labour for free and will be fed just enough to keep them alive to keep toiling away for the Epstein class. Which of course will become ever richer until they can afford a seat on Musk's rocket to Mars where they will kick out all the "Martians" and take over. So just more colonisation only this time off the planet earth. What a wonderful world they hope to create. Everybody will be blonde white skinned and rich. They'll couple/marry incestuously until they become dribbling idiots. Then the Martians will come back and kick them out and so on and so on.