Platypus Economics with Justin Wolfers

As incomes rise, spending patterns change.⁣ ⁣ People don't keep buying more wheat or endless washing machines. They spend more on health care, education, child care, and aged care.⁣ ⁣ Check out the full analysis here: https://newsletter.platypuseconomics.com/p/the-pink-collar-economy-is-here

If men's job growth is lagging, one response is straightforward: move toward the occupations that are growing.⁣ ⁣ Labor markets change. Successful workers and societies adapt to those changes.⁣ ⁣ Check out the full analysis: https://newsletter.platypuseconomics.com/p/the-pink-collar-economy-is-here

Care work is often treated as somehow less "real" than making tangible goods. Nonsense. It's physically demanding, emotionally demanding, and often highly skilled. That's real work, mate.⁣ ⁣ Check out the full analysis here: https://newsletter.platypuseconomics.com/p/the-pink-collar-economy-is-here⁣

Since Trump returned to office, 86% of net new payroll jobs have gone to women. Women now hold slightly more nonfarm payroll jobs than men — 50.02%.⁣ ⁣ The labor market has shifted. The question is whether our policies and politics have noticed.

A windfall profits tax sounds great as a one-off.⁣ ⁣ But once investors expect it to happen again, it's no longer a windfall tax—it's just a profits tax. And that can discourage the investment you actually want.

“There is no price tag in the economy as tall as gas prices, and that you pass as often.”⁣ ⁣ Visibility matters. Economics isn't just about prices; it's about attention. Gas prices shape how people feel about the economy because they're impossible to ignore.

The problem with a gas tax holiday? Lower gas prices encourage more driving.⁣ ⁣ If the goal is relief, send checks based on last year's gas spending instead. Similar help for households, without increasing demand.

A gas tax holiday talks about 18.4¢ while ignoring the $1.50 problem. That's politics, not policy. And half of it likely goes straight to oil company profits. Congress knows this. Some just hope you don't.

Economists call this diminishing marginal utility. The first dollars change your life. The billionth doesn't. So the argument stops being about consumption and starts being about power.

"If what you want is rate cuts, here's the thing you don't do. You don't go and bomb a country in the Middle East upsetting global energy markets and pushing prices up across the board."

Politicians love visible gestures. Economists ask the annoying follow-up: does it work? ⁣ ⁣ On gas tax holidays, the answer was basically no then, and no now.

If there’s a water shortage, don’t subsidize showers. If there’s a blackout, don’t make AC cheaper. If there’s an oil shortage, don’t cut gas taxes. Prices are helping signal scarcity. A gas tax holiday weakens that signal right when it matters most.

Even if Middle East tensions ease, futures markets are signaling oil prices will stay elevated for months — maybe years.⁣ ⁣ That's the "Iran tax." And it's not going away anytime soon, regardless of what the White House says about prices coming down.

A 60-year low in sentiment is a big deal because the baseline is already tough: this survey has lived through recessions, inflation, wars, and financial crises. And yet this is worse.⁣ ⁣ Read the full analysis on Substack: https://newsletter.platypuseconomics.com/p/consumer-sentiment-hits-a-record

The lesson here isn’t just about phones in schools. It’s about human behavior: Take something away, and people usually replace it with something else.⁣ ⁣ Economists call this substitution.

Short-run discomfort ≠ long-run harm.⁣ ⁣ Phone bans make students feel worse at first — then better. By year two, well-being rebounds above baseline. Turns out kids (like all of us) just needed time to adapt.

Right now, the AI boom mostly shows up as investment: chips, data centers, infrastructure. ⁣ ⁣ The real question is whether those foundations eventually help workers and firms do more with less.

"The big story right now is oil. The next story is food." ⁣ ⁣ That's the transmission channel people miss: if fertilizer is "caught on the wrong side of the Strait of Hormuz," food prices can be next.

The key distinction is between nominal wages and real wages. Nominal wages are the dollars on your paycheck. Real wages are what those dollars can actually buy.⁣ ⁣ If prices rise faster than pay, you’re going backwards.

Think of an oil shock like a stone tossed in a pond. First splash: gasoline. Then the ripples: airfares, delivery costs, packaging, groceries, construction materials.⁣ ⁣ The ripples are real. Just give them a moment to spread.

Pete Hegseth’s focused on the cost of the bomb. I’m more interested in the size of the economic crater.⁣ ⁣ And that crater may be 10 to 100 times larger.⁣ ⁣ For many families, that translates into thousands — perhaps tens of thousands — of dollars.

"If we don't have immigration and population growth, the number of people who can pay off that debt just went down." That's the key mechanism.

Kids often pick up on something economists downplay: people care not just about prosperity, but about whether technologies like AI are changing the world in ways that no longer feel predictable or secure.

“He failed to understand the interconnectedness of the world economy.” ⁣ ⁣ That was true in the trade war, and it’s true now.

Extremely serious economic analysis for your Friday.

Consumer sentiment is near a 75-year low.⁣ ⁣ But increasingly, these surveys may be measuring partisanship as much as economics.⁣ ⁣ In other words, they may be asking “Do you like the president?” as much as “Do you like the economy?”

"You can't say the cost of a puppy is $200 because that was the adoption fee." The Pentagon's $25B price tag does exactly that — it ignores veterans' care, disability payments, and decades of interest. The true cost of war shows up long after the fighting stops.

Kevin Warsh once argued for rates that were too high for the economy, and he now seems politically reluctant to contradict Trump. That's a worrying combo.⁣ ⁣ We'll find out soon enough which one shows up to work.

Why oil? Because worsening war news tends to threaten energy supply. That pushes oil prices up. So rising oil isn’t just about petrol; it’s a signal about geopolitical risk hitting the global economy.

Opportunity cost is Econ 101 with real stakes: the cost of a choice is not just dollars spent, but what you gave up. For war, that means not only destruction, but all the prosperity that never gets a chance to exist.

Two things can be true at once: the U.S. is more energy independent than in the 1970s, and an energy shock can still raise inflation. Independence isn’t immunity.

$42 million raised sounds enormous. It is. But economics is about compared with what? If the Met Gala creates far more value for fashion brands than for the museum, then the ticket price is probably too low.

Lemme ’splain: calling it a “big beautiful bill” doesn’t make the maths prettier. If you cut taxes and don’t cut spending, the deficit goes up. That’s not ideology. That’s just arithmetic wearing sensible shoes.

Here’s the thing: debt isn’t exploding tomorrow, but the trajectory matters. If you enter the next war, recession, or pandemic already heavily indebted, you have less room to respond when you actually need it.

Debt by itself is a lousy guide. A $500,000 mortgage can be manageable or terrifying depending on salary, rates, and future earnings. Same with countries: the real question isn’t “how much debt?” but “can they carry it?”

Deficits aren’t inherently good or bad. They’re a tool. The real question is: what problem are they solving? Econ is annoyingly context-dependent like that.

Economics. Explained. Clearly. That's the mission of Platypus Economics. We’re launching today with big ideas, full hearts, and a lot of hope. Join us on our journey to see the world more clearly.

One more sleep until I can tell you what I've been working on. Can't wait.