
How prices changed at a Walmart in a year - ilamont
https://www.npr.org/2019/09/16/753712449/npr-shopping-cart-economics-how-prices-changed-at-a-walmart-in-1-year
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defertoreptar
> At the same time, higher prices of garlic — they soared 53% — actually
> illustrate tariffs working as intended.

> China had been the biggest exporter of garlic to the U.S. and domestic
> garlic growers have long argued they were being undercut by cheaper Chinese
> competition. Now that Chinese garlic faces higher tariffs, domestic
> companies can charge higher prices.

Domestic companies being able to charge higher prices was not the goal of
tariffs. Labor is cheaper in other Asian countries, and that also results in
their being able to undercut America producers. However, the trade war is
against China and not low labor cost countries like Vietnam and Malaysia.

~~~
blisterpeanuts
Why would garlic prices rise 53% if the tariffs are only 30%?

Are there really no other factors at play?

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rubber_duck
>Why would garlic prices rise 53% if the tariffs are only 30%?

One purely theoretical explanation is demand elasticity - if you can sell 20
items at 3$ now your costs increase to 5$ - you can sell 10 items at 5$ but 8
at 10$ it makes sense to sell at 10$ - not saying that's the case with garlic
- but it explains how a 30% cost increase could cause higher price increase.

~~~
logfromblammo
Percentage-based taxes stretch the supply curve upward along the price axis.

Adding a 30% tax means that if you draw a line down from the new equilibrium
point to zero price, that line will cross the original supply curve at 30% of
the way down. But the new equilibrium point may also be at a different (likely
lower) quantity, where the demand curve could have a different slope.

For a perfect commodity, where the supply curve is nearly flat, the percentage
tax has the effect of raising that flat line higher. A 30% tax raises prices
30% higher. The shape of the demand curve only determines the reduction in
trade volume.

For a fixed-supply good, where the supply curve is completely vertical, the
price remains exactly the same, and the tax is paid entirely by the supplier.
The shape of the demand curve isn't very relevant.

If the demand curve is perfectly vertical, consumers pay all the tax, and
quantity remains the same.

In order for an x% tax to produce an x+y% increase in price, there has to be
some other effect in play. The demand curve has a positive slope, as with a
Veblen good. The demand curve shifts upward or rightward, as though the tax
serves as advertising. A 30% tariff on similar goods or general inflation
produced a substitution effect that drove more people to demand garlic.

Pure demand elasticity can't account for it all.

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mywittyname
Here's a more comprehensive list: [https://www.bls.gov/regions/mid-
atlantic/data/averageretailf...](https://www.bls.gov/regions/mid-
atlantic/data/averageretailfoodandenergyprices_usandmidwest_table.htm)

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oftenwrong
Here is the text-only version:
[https://text.npr.org/s.php?sId=753712449](https://text.npr.org/s.php?sId=753712449)

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thekevan
As someone who has done buying and selling of used furniture, I wonder how
much of the variance had to do with increasing or waning popularity of an
item.

When I heard this on the radio, one of the first items they listed was a
Better Homes and Gardens lamp. My impression of their research on that one was
immediately to discount what they found because they are particularly subject
to fad and fashion, especially with the proliferation of " XX stylish lamps
that make you look like you have an interior designer for under $YY!!" type of
blog posts.

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gzu
Yet somehow our consumer price index shows inflation rising at only 2%

~~~
tom_mellior
As the article notes, some things like consumer electronics are still getting
cheaper.

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cco
File those under "basically irrelevant" in my opinion. Once you have a
relatively cheap phone, you're basically satisfied your Maslow hierarchy for
technology, i.e. you can accomplish most of the requirements of existing as a
digital citizen albeit you may not be as efficient as those with more devices.
The real labor saving devices, dishwasher, clothes washer, refrigerator etc.
were/are very meaningful but haven't moved much in the last 20 years.

Education, housing, food, clothing, etc. are far more important and relevant
to what it means to live a decent life in the 21st century.

~~~
tom_mellior
I agree that you don't _need_ a TV and I don't have one either. But other
people keep buying them anyway, so it makes sense to include them in a
statistical measure of average households.

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d--b
the cart doesn't make sense, it's too small and has too specific things in it.
cod filet are pricier, shrimps are way cheaper. Great.

~~~
zaroth
> _To create NPR 's basket, we consulted the lists from 2018 of tariffs the
> White House imposed on imports from China, but also Mexico and Canada — as
> well as China's retaliatory tariffs on U.S.-made products._

The products were picked not to represent an average shopping cart at Walmart
(because we already do that and it’s called the CPI), but to specifically
target items which they thought would be hardest hit by tariffs.

It’s an entirely unscientific report showing price changes at a single store
with an artificial basket of goods with no attempt whatsoever to control for
independent variables. In short, it tells us nothing at best, and is
misinformation at worst. It’s hard to tell if the effort was even done in good
faith.

Then again, TFA’s first sentence is “Shoppers beware.” Maybe that tells us all
we need to know. I am actually a bit surprised that first sentence made it to
print.

~~~
droithomme
> but to specifically target items which they thought would be hardest hit by
> tariffs

In that case we can draw some conclusions. Even trying to game the basket,
most of the items either stayed the same price or went down. So the effect of
tariffs on prices appears to be negligible.

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hsnewman
When the recession comes, it will be interesting how it will be spun.

~~~
vibrio
It will be, but it not that hard to guess the major themes, depending on who
is in the driver seat when it hits.

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festivehealer
Kruschev in the 1950s wondered how capitalism worked without a price
committee. Looks like NPR forgot about this with this rather pointless article
extrapolating prices in one Walmart to the trade war between China and the US.

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chrischen
The goal of the tariffs is to improve the bargaining position of America in
getting better trade deals with China... not to move manufacturing back to the
US.

That might be what’s fed to the average Joe the plumber Trump supporter but
common sense easily precludes that motivation. To actually move manufacturing
back you’d have to tariff every country with a lower cost of living than the
US, and that’s most of the world. You’d have to massively reduce consumption
in the US since such a policy will greatly redistribute wealth to domestic the
physical laborer. And in the long term, because of the unsustainable labor
costs here eventually automation and robotics R&D will catch up to destroy
those jobs anyways.

~~~
klingonopera
It's even more likely that China will switch to a higher level of automation
and robotics before the West does. They already have the production, and can
incrementally adapt and upgrade, whereas in the West, it would have to be
(re-)built from the ground-up with intent to directly compete against low-
labor markets (though arguably, in some industries this would probably be an
advantage), and that would require far more investments up front, which
carries a higher risk.

~~~
chrischen
The west is an information and trchnology economy. If it has specialties in
anything it’s in high tech. As fast rising and impressive as Chinese tech is,
it’s still generally inferior. We’re not _not_ scrambling for Chinese devices
because of tariffs, they’re just usually coming in on the low end.

Manufacturing is also the low-value end of the supply chain. Building up
expertise at the top (Apple, Microsoft, Google, Intel, AMD, Nvidia—level tech)
is exponentially harder than building up the bottom end.

~~~
klingonopera
The first iPhone rattled the headlines, but I'd argue the third or fourth
generation is what really settled it into the mainstream.

In other words, the West may the first to have fully automated factories and
warehouses, but China is likely to be the first to deploy them on a large-
scale.

