By Jeffrey A. Tucker
It looked for all the world like a cold open for Saturday Night Live.
President Biden already declined to give the traditional pre-game interview for the Super Bowl. He said that Americans need a break from politics. That’s unpersuasive but fine. Sure enough, he couldn’t help himself. Or maybe some stupid interns couldn’t help themselves.
Instead, he made a short video that was released on YouTube and X that denounced companies for shrinkflation. He said these companies are reducing packaging and thus trying to pull a fast one on the American consumer. In particular, he said, it is affecting snacks for the game.
I’m not sure who goaded him into this, but it is probably the most insulting message ever crafted by an American president and delivered to the people he claims to rule.
One, everyone already knows this. We’ve been talking about it for three years. It’s been an unbearable reality. Everything has shrunk, from sausages to shampoo. It’s happened to services too. Nothing happens any more for which you do not pay extra. If you don’t pay fee after fee for upsells when you travel you are going to ride in the luggage rack.
Two, as the president with access to the White House dining hall, he doesn’t have any personal experience with shrinkflation. It doesn’t affect him at all (unless it pertains to mental functioning too; sorry to be cruel). So we know for sure that this is just pretend, an affectation born of something someone happened to report to him.
Three, shrinkflation is another way in which we experience inflation, and that is born of government mismanagement of the money stock. The history of 6,000 years proves this. That the U.S. president stands up and acts like this is some new ripoff scheme born of corporate greed is deeply insulting to the intelligence of the American people. President Biden is merely deflecting blame.
Four, shrinkflation is a consequence of companies desperately attempting to keep their companies afloat in times of rising costs on every front, from labor to materials to transportation. The balance sheet never lies. In order to make it work, companies have bet that they are better off shrinking the amount they deliver rather than raising the price of the product. It’s a guess but a good one. They aren’t ripping people off; they are trying to stay alive in grim times.
It’s either higher prices or smaller containers. The merchants are making these decisions based on their own estimations/perceptions of the price elasticity of demand. It’s a dangerous game that government has forced them to play.
Five, by making this video, the U.S. president is spreading ignorance of the most basic economics. It also begs the question: if this is such a great way to scam consumers, how come it only became a major issue under the Biden presidency? Truly, to claim that shrinkflation just came out of nowhere is a claim worthy of the movie “Idiocracy.”
Elon Musk was so startled by the video that he exclaimed: “Whoa, this is real!”
Then every single comment on the video denounced President Biden, without exception so far as I can tell. The response was overwhelmingly negative. This truly does seem to be one for the history books. And it comes only days after President Biden was deemed not fit to stand trial, an accusation he denounced in the course of mixing up Egypt and Mexico. True story.
Look, I get that it is not pleasant to see this happening to this great country. We are being ruled by fools who are too stupid even to know that they are daily advertising this fact to the world. I don’t know who is more incompetent, President Biden or his staff managing his public messaging.
It really does beg the question: how is it possible that these people are in charge of our lives?
The answer is complex and satisfying. When you step away from it all, it’s so disgraceful that something like this could happen to a country born of such high ideals at the height of the Enlightenment, with such high aspirations for what life could be like on earth with a government dedicated to liberty and the pursuit of happiness. And yet here we are.
Let’s take apart a bit of the mechanics behind shrinkflation. The difference between the money supply at the beginning of 2020 and today is an increase of 39 percent. Consumer prices according to official measures are up 20 percent. The GDP in real terms is up 8.1 percent. Money velocity is up too but not enough to account for the difference.
There is every reason to suspect that the difference here of some 10 percent is showing up in other forms. Producer commodities are up 35 percent, far more than consumer prices. That’s a serious problem for every manufacturer. Those costs bleed through the whole production sector and finally hit consumers. But how they hit precisely is a matter of judgment.
In addition, the excess could be coming in the form of higher prices for financials: this too is inflation, and it benefits those who are heavily invested. But it also shows up in other ways, mostly with new fees or shrinkflation that are either not tracked or only tracked with some difficulty by the Bureau of Labor Statistics.
The watering down of money’s value, regardless, is going to show up somewhere. There is simply no way to game the system otherwise. The relationship between inflation and the money stock is as sure as gravity, conditioned on a few other factors like economic growth and velocity. But in the long run, there is no getting around it. Something has to give.
What Joe Biden could have done in his presidency is stop the spending and stop the printing. There would have still been a price to pay in terms of inflation because of the monetary antics of 2020 but it would have ended by now. In this case, we would not be dealing with the very problems on which President Biden is wrongly blaming free enterprise.
What does the Biden administration expect companies to do? Not shrink packages and raise prices instead? Ignore accounting entirely? Go broke? This seems like a scene from “Atlas Shrugged.”
This failed presidency—surely one of the worst in American history—is getting more ridiculous by the day. It’s so bad that even the mainstream press, even the New York Times, is no longer able to deny it. The front page today is packed with articles finally coming to terms with what everyone knows.
If President Biden is genuinely serious about this, and there is every reason to believe his advisors are this ignorant, it paves the way for all sorts of controls on industry, not only hitting prices (as he has threatened in the past) but now even to the size of packaging. This is the path toward a fully controlled economy.
To see how this trajectory works, I highly recommend F.A. Hayek’s 1944 book “The Road to Serfdom.” Here we see how frustrated central planners resort to increasingly brutal methods of control and end up using government power in egregious ways to dismantle the function of freedom itself. Does anyone really doubt that President Biden would take this path if he hung around long enough?