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Hack WatchNewsletter | March 18, 2024

Out of Sight, Out of Mind, Out of Touch

Economic MediaHack WatchLarry Summers

This article first appeared in our weekly Hack Watch newsletter on media accountability. Subscribe here to get it delivered straight to your inbox every week, and check out our Hack Watch website.

Really Rampell?

In a follow-up to her shambolic defense of Wendy’s, Catherine Rampell recently returned to her opinion column in The Washington Post to chide Democrats for elevating a tweet from Cookie Monster (of Sesame Street fame) complaining about shrinkflation. And in her signature style, Rampell hurled retorts from the ivory tower, always, of course, keeping from hitting the actual point. As in Rampell’s last piece, this column’s arguments are woven from a blend of misrepresentations, condescension, and flippantly (probably purposeful), horrible reading comprehension. 

Let’s begin with the argument that shrinkflation, or “stealth downsizing,” as Rampell terms it, is no big deal. There are two prongs to this argument: first, that it’s old news and, second, that complaints about it are overblown because it is already captured in inflation data. The second point is totally fair, but not central to the question of whether and how to address diminished packaging volume. (Consumers judge their shopping experience independently from government statistics). The first is ridiculous. Wage theft has been going on for a long time. So have sexism, racism, and abject poverty. That neither makes worrying about them irrelevant nor does it make policy solutions any less urgent (in fact, quite the opposite, persistent problems should be addressed!). 

To Rampell, though, the real issue is that unlike those other things, to her shrinkflation is just a minor inconvenience. According to her, it’s just one in a litany of unpleasant things about grocery stores:

But lots of irritating things happen at supermarkets, and not all of them require federal intervention. For instance: Self-checkout machines get too angry if you don’t immediately put scanned items in the bagging area. People who bring 11 items into the “10 items or less lane” should be thrown out. Also, the signage should read “10 items or fewer.” And why is whichever line I choose always the slowest one?

This is a stunningly dismissive retort to real people having real problems affording food (but very much on brand for someone who is fine with fast food surge pricing). Grocery prices have risen 25 percent since 2019. Not to mention that everything else is more expensive, especially housing. Can Rampell really not see the difference between spending more money for less food and getting peeved at a machine that beeps? One of those imperils a necessity and one of those can be forgotten when you walk out the door. If your $400 monthly shopping bill is now $500, you walk out and have $100 less that can pay for educational resources, housing, paying off debt, medical care, and any number of things that can profoundly impact your standard of living. For most people, $1,200 a year matters—a lot. 

Finally, let’s talk about Rampell’s extremely inaccurate reading of the legislative solutions proposed by Sens. Elizabeth Warren and Bob Casey. She says:

In the case of shrinkflation, the government intervention lawmakers and Biden propose to fix it would make the problem worse. Forbidding companies from changing the prices and sizes of everyday products without government say-so is a form of price controls. (Casey’s bill is actually the second introduced in recent weeks that would implement price controls; the other is an old standby led by Massachusetts Sen. Elizabeth Warren.)

Yeah, neither bill would prohibit adjusting product size or pricing, nor would either require government clearance to do so. Warren’s bill isn’t really about shrinkflation in particular, just price gouging more generally; it gives the Federal Trade Commission the power to police firms who raise prices on consumers purely to extract a higher premium from them. The Casey bill makes it illegal for a firm to reduce a product’s size without also reducing its price. So yeah, despite what Rampell goes on to claim, these are not true price controls, they just prevent mechanisms for ripping people off through deceptive pricing. Maybe we should get rid of requirements for credit cards to show you what their fees are too?

The core of the issue is that people cannot easily distinguish between similarly sized containers. If you buy a bag of chips and it looks the same as it always has, why would you bother to read the small print? As a result, corporations have an asymmetric information advantage; they know how the quantities of all of their products (and, in all likelihood, their competitors’ products) are changing, where all but the most diligent eagle-eyed readers of packaging volume sizes will not. As Rampell herself notes, shrinkflation is “especially annoying when you’re hyper aware of rising costs.” So why not make it sting less when particularly acute?

Cookie Monster knows what’s up. Maybe if pundits like Rampell didn’t present this as Democrats coopting his point, and instead acknowledged this is a Democratic issue because they’re the ones trying to address the kitchen table concerns, we could spend more time making people better off and less scolding Biden for policy priorities that are so obvious that a puppet can recognize them.

For Real, Furman?

Early last week, Nobel Laureate Angus Deaton published a piece titled “Rethinking my Economics” where Deaton succinctly and thoughtfully walks through assumptions he’s had to rethink to better understand the world, though it has flaws of its own (Deaton has faced criticism for associating immigration to the U.S. with higher inequality). Harvard’s Jason Furman that same day quipped “The world would be better off with less rethinking economics and more thinking economics.” 

Yeah, because mainstream economics has had a really great track record recently. It failed to diagnose the underlying cause of heightened inflation, failed to identify real solutions, justified punishing rate hikes that are now threatening the economy, and called for millions of people to be thrown out of their jobs (which turned out to be not only sadistic, but also wildly unnecessary). Not to mention that it was coming off of a hot streak including pushing bank deregulation, being caught unawares by the financial panic in 2008, allowing market concentration, and destroying American industry through globalization (they did a great job predicting how it would democratize China!). No school of thought bats 1000, but we should expect them to hit the ball every once in a while, at least. 

I strongly suggest folks read Deaton’s piece, it’s very good and we should all be open to reevaluations of our beliefs so that we stay attuned to reality. Furman’s tweet is a call to blithely keep listening to the same prophets who helped the US economy fail most Americans for decades. As the NYT’s Talmon Joseph Smith put it, this is very much of a kind with “priest says catholic church good.” Furman here is calling for blind faith in a mode of analysis that has chronically failed both to explain the world and to help bring about positive change. He’s the Doctor Pangloss of economics; everything is the best it possibly can be, stop looking for improvements! 

Trust in the invisible hand. Or, maybe, don’t.

Sure, Summers, Sure…

Last week, Larry Summers submitted a letter to the editor of The Harvard Crimson, furious that an op-ed from our executive director, Jeff Hauser, had been published without any request for comment. Huh? Larry has published more than enough opinion pieces to know that it isn’t a standard practice for the subjects of those articles to reach out for comment. It’s not reporting, it’s a statement of the author’s perspective. Summers knows that, but glad he got to chide some college students for doing nothing wrong. 

The piece Summers objected to was a brief overview of Larry’s many undisclosed corporate ties. For a more thorough rebuttal, be sure to check out my colleague Henry’s response to Summers up on our blog. Briefly though, Summers raises three complaints, all of them totally irrelevant to our position, which, by the by, we’ve been trying to get him to engage with for years now: that he should be disclosing everything. Let’s walk through his would-be rebuttals:

Summers opens with “my biography, which is prominently displayed on my personal website (and linked on my Harvard Kennedy School faculty page), references my extensive consulting and board work in the financial and technology sectors and specifically names the most significant of my involvements, including OpenAI.” True, but that specifically sidesteps multiple issues including that most of his corporate ties are not on that bio and that he has, at least once, specifically scrubbed a disclosure off of his website when asked about it. 

After that, Summers takes issue with the example Jeff gave in the op-ed of Summers having material interest in Silicon Valley Bank when he was advising a full bailout. The argument is twofold. First, Summers acknowledges that “firms with which I had minor advisory relations that themselves had minor positions” were involved. You know where none of that was disclosed? In his bio. Additionally, though, the “minor advisory relations” were serving as a Board Advisor for a decade, so that’s not entirely honest. Regardless, this is still a violation of Harvard’s own rules for disclosing conflicts of interest.

The second part of the second argument is that Summers’ position on SVB bailout was in line with most other experts. We never said it was the wrong decision, just that a firm he worked for benefitted from it. And being in line with majority opinion in no way precludes personal conflicts of interest. If it really has no bearing on the decision-making, why won’t Larry just release a more comprehensive bio?

Finally, Summers insists that he has pushed “public policy positions adverse to the economic interests of businesses I advise.” That’s great, we’re glad to hear it! All we ask is that this be publicly verifiable. Put all of your corporate work on your website. If what you say rings true, it can only benefit your reputation by letting the public observe it themselves. 

Economic MediaHack WatchLarry Summers

More articles by Dylan Gyauch-Lewis

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