They've been suffering prior to trade war tarrifs. Lived through multiple once in a generation economic calamities myself. The prior global trade arrangement ushered in the economic hard times we are navigating now. The elevator pitch was hard, fast, strategic, and also opportunistic tactical tarrifs would crack the whip on these corporations beholden to no nation to pivot for profit. First couple months of Orange man had a display of global businesses parading around their promises of hundreds of billions of investments.

It's a short term misery play for a chance of long term boon. We'll see in a few years

This post was edited by RedFromWinter on Jul 9 2025 09:38am

Whether or not the "liberation day" tariffs result in price increases has everything to do with what you're talking about, though. If they do, lower income people will suffer, if they don't, they don't.

The minimum wage is a price floor, but it plays out in a similar fashion. Companies can either pass on the price increase, reduce their use of labor, or absorb the costs in the form of lower margin. It's for the business to figure out the most profitable combination of the three, if there's sufficient margin it may not make sense to increase prices, if their demand for labor is inelastic they not be able to reduce labor, and if they exist in a very low margin industry (think grocery stores), it may be impossible to accept margin lower than it already is. What's interesting, though, is that minimum wage paying businesses are often most frequented by the poor. The average household that shops at Walmart (minimum wage) is far less affluent on average than the household which shops at Costco (not minimum wage). The impact of minimum wage increases are therefore primarily born by the poor. Worse, most minimum wage earners are not primary bread-winners, and ~44% of minimum wage employees are in the 16-24 age bracket. These workers may actually come from middle and upper-middle income families, e.g. a student earning spending money for college, and the minimum wage is effectively redistributing money from lower to higher income households.

Costco pays those wages with higher costs and membership fees which is kind of my point. The consumer or Employee (little guy) gets ripped off either way.

This post was edited by T3XBOT on Jul 9 2025 11:08am

we dont actually have true capitalism though, we have capitalism for profits where profits are privatized, but when there are losses, those losses are socialized and passed down to consumers via taxpayer funded bailouts.

true capitalism would allow businesses who over extend or engage in unsustainable practices to fail.

This post was edited by Budgeting on Jul 9 2025 02:06pm

Trump is trying to fuel growth in wholesale and manufacturing in the US
He knows his tariffs are bad
He knows without all these corporate tax breaks they won't invest.
He knows if the fed doesn't lower the benchmark interest then they won't borrow to build

I understand what he's trying to do
BUT

The middle class and lower class are so far fucked. The only people surviving his trade war are the big boys like Amazon and Walmart. Small businesses can't afford the tariffs.
Most Americans can't afford a house. Most Americans spend 1/2 to 2/3 of their paychecks on rent.
His no taxes on tips and overtime aren't saving anyone
All that extra money will be used to help their family pay down Healthcare expenses because he just took a huge bite out of Medicare.

But let's keep giving breaks and more deductions to Fortune 100 players. Give breaks to players that hide money in offshore accounts. Give breaks to players that buy properties with excess gross profits so they can dodge taxes. Those same properties that get out of reach for the middle class and lower because our government let's wealthy entities treat houses like stocks.

Let's slowly choke the consumers so we are forced to eat ourselves.

American leaders aren't ignorant, they are profiting off the ignorance of Americans

The root issue is that when China joined the WTO back in 2001, it started a wave of globalization that hurt American manufacturing and moved those jobs overseas where labor is cheaper. In exchange, America received cheap goods and electronics that helped to spur technology dominance. The American economy grew overall because of technology, but it hurt red states while helping blue states. Politically, America was scarred in red states and they never recovered. They saw blue states growing trillion dollar tech companies while jobs disappeared in red states

This will never be fixed. Red states will resent blue states, and American leaders will try to give them what they want (manufacturing jobs) because they aren't incentivized to make long term decisions. As a result, America will lose technology dominance to China over the next 10-20 years, and will maybe get some low wage manufacturing jobs in return, which will be net negative. There are obviously other factors, like how more than 50% of the world's AI researchers are Chinese, but the end result is the same

This post was edited by dannywanghere on Jul 9 2025 03:11pm

Red states are poor because the Civil War decimated the plantation system which was the backbone of the South's economy. Blue states are rich because they industrialized early and the United States is blessed with the raw material resources necessary to fuel their growth.

You're seeing that wealth gap shift in real time as education declines in blue states and wealth and industry moves south. Tech and finance will increasingly move to Texas and NC. Massachusetts has been more competitive keeping talent and wealth, but NY and CA are seeing it leave in droves.

Your second paragraph is completely wrong, the opposite is happening by any metric. Blue states are growing at an accelerating rate, they are separating ahead of red states faster than ever before, because of AI. The speed will increase this year and next year

To give some obvious examples, OpenAI and Anthropic are based in CA. Nvidia is CA. Literally the entire AI industry is eating America and it's almost all in CA

Blue States also have cities full of drugs, crime and homelessness.
Alot of people are leaving blue states just because of how expensive it is to live in them. The average home in a Democratic state in September 2024 was $554,000. Compared to a Red state which is still kind of unaffordable at $371,000. If you aren’t making 120k+ net a year, you basically can’t even afford a house at the current mortgage rates. 5 years ago you could easily afford a home, and the home would have been nearly half the price too.

There are many negative aspects of blue states for individual people. That's irrelevant for the question of economic growth at a state level

In terms of overall economy, the AI industry was born in CA and it's being built in CA. There are factories and data centers being built everywhere, but the high paying jobs are being created in CA

CA is great for many people. Many people are getting pushed out of CA but the people who remain will profit off the rest of America