The Vice President Thinks Low Prices Are Bad

Two weeks ago the online right spent an entire week fighting about a twenty dollar burrito. Some of the loudest voices in that fight were people who spend their days defending Vice President Vance, and their complaint was affordability. Things cost too much. Working people cannot get ahead. The burrito, they said, was indicative of the burden on the young. The Vice President himself got into it, going after Washington Post columnist Marc Thiessen’s weight because Thiessen would not buy the argument. It is “quite obvious the man has never missed a burrito,” Vance posted on August 5.

Then, someone found this video of the Vice President in 2023, at an American Moment event, when he was in the Senate, arguing that things are too cheap for Americans. In his own words:

“This is like, maybe super heterodox. I am not sure that I think the reserve currency is actually good for the United States of America. I think there is a good argument that reserve currency status is akin to coal in Appalachia, it’s a resource curse, right? It allows your consumers to consume very cheaply, right? That’s been the story of the American economy for the last 15 or so years, uh, even before that, is we can just borrow basically in an unlimited way because we have the reserve currency.”

Read that a second time, because he tells you his whole theory and I do not think he heard himself say it.

Here he is again in a Senate hearing. He said:

“I’m wondering, when I hear about the history, when I think about and read about the history of Appalachia and the resource curse, I’m struck by the idea that you could make a similar argument about the reserve currency status of the United States dollar. Americans have enjoyed one of the greatest privileges of the international economy. For the last nearly eight decades, a strong dollar that acts, of course, as the world’s reserve currency. You know that better than I do. Now this has obviously been great for American purchasing power. We enjoy cheaper imports. Americans when they travel abroad benefit from lower costs. But it does come at a cost to American producers. I think in some ways you can argue that the reserve currency status is a massive subsidy to American consumers, but a massive tax on American producers.

“Now I know the strong dollar is sort of a sacred cow of the Washington consensus, but when I survey the American economy and I see our mass consumption of mostly useless imports on the one hand and our hollowed out industrial base on the other hand, I wonder if the reserve currency status also has some downsides and not just some upsides as well.”

He called your groceries, your electronics, and even your toaster “mostly useless imports,” and used the favored word of the woke, “privilege,” in doing so. Also, please note, the man who calls the reserve currency “a massive tax on American producers” is a big proponent of tariffs, which are “a massive tax on American producers” and consumers together.

The Vice President just identified two things as the problem. One, that American consumers get to buy things cheaply. Two, that Washington gets to borrow without limit. Those are not the same problem. The first one is your grocery bill. The second one is Congress. And he wants to solve both by taking a hammer to the dollar.

His own people spent two weeks telling you the burrito costs too much. He is on video calling cheap consumption the disease.

This is a pattern with the Vice President. Three years ago he said that. Two years ago, campaigning in Nevada, he told a crowd that “a million cheap, knockoff toasters aren’t worth the price of a single American manufacturing job.” First the dollar was too good to us. Then the toasters were too cheap. Now he and his own allies are hollering about the price of a burrito, while fat shaming a conservative pundit who pointed out the twenty dollar burrito is not really a thing. Every single time this man looks at an American family getting something for less money, he sees a moral failing in need of correction, and the correction always gets paid for by the family.

As I wrote Monday, populism is not a coherent governing philosophy. It is emotion and resentment masquerading as such. When populism tries to fix one thing, it breaks other things. The Vice President has clearly emoted himself into a position, and, as Jonathan Swift noted, one cannot reason another out of a position he did not reason himself into. But the rest of us should consider these things reasonably.

Put it more bluntly. Vice President Vance is to economics what Candace Owens is to conspiracy theories. He, like she, decides to go contradictory and contrarian on exactly the points where the evidence backs the other side. All the evidence pointed to Tyler Robinson killing Charlie Kirk, so Candace blamed the Jews. Economists left, right, and center recognize that the United States holds an enormous advantage with the dollar as the world’s reserve currency. So Mr. Vance decides it must be, well, not yet the Jews, but something not good.

Let me tell you what reserve currency status actually buys you.

We do not get magic interest rates, but the serious estimates of the discount we get on Treasury borrowing run around ten to thirty basis points. That is real money at our scale, but not the difference between a good life and a bad one.

Because the world treats our debt as the safest asset on the planet, we can carry a mountain of it before anyone blinks. The Atlantic Council’s people put the effect at something like a fifth more sustainable debt than we could otherwise hold. That is the difference between our fiscal problem being a slow moving disaster we can still fix and a Tuesday afternoon margin call.

And we are running out of Tuesdays. Of a projected 138 trillion dollar shortfall over the next thirty years, 109 trillion of it is Medicare. Federal debt held by the public passes its World War II record around 2030. In 1952 there were six working age adults for every senior. Today there are 2.7. The Social Security retirement trust fund empties in 2032, and the Trustees say that triggers an automatic 22 percent benefit cut. Medicare’s hospital trust fund empties in 2033.

Reserve currency status is the anesthesia. The Vice President wants to discuss removing it while the patient is open on the table.

There is more. When the world panics, money runs toward our dollars, not away from them. We are the fire exit. And Scott Bessent is reportedly preparing unprecedented measures against Iran, including a blockade of its ports, all of which works because Iran has to touch dollars to sell oil and we own the plumbing. China is watching Taiwan right now. The dollar as the global reserve currency is itself the deterrent on that front. It is somewhat ironic that the Vice President thinks the United States should not have the world’s reserve currency and Beijing agrees with him. China is actively working to persuade the BRICS aligned nations to walk away from the dollar as the global reserve currency, just like the Vice President. Beijing has been at this for a decade and hit a wall, because the world will not trust a currency backed by capital controls and a court system that answers to a party. What China cannot win, the Vice President proposes to give away. I should note, too, that Alexander Dugin, the Russian philosopher often called Putin’s brain and a favorite of the post-liberal right, is on record demanding the very same thing. “We must raise the question,” Dugin wrote, “of the creation of a system of regional currencies as well as the rejection of the dollar as the world reserve currency.”

The Vice President also brings up the “resource curse,” which is a real idea, though he misses a key point. Economists have spent forty years noticing that oil states and diamond states often turn out poor and rotten.

But the resource curse is not a curse of resources. It is a curse of bad government. The economics literature is not ambiguous on this. Economists Mehlum, Moene and Torvik settled the question in the Economic Journal twenty years ago, and the work since has confirmed it. Push institutional quality above a threshold and the curse does not merely weaken, it reverses. Resources become a blessing. Below that line, money gets grabbed. Above it, money gets invested.

Nigeria has oil and it has misery. Venezuela is sitting on the largest proven reserves on earth and people ate zoo animals. Sierra Leone had diamonds and got a civil war.

And then there is Norway. It has the same hydrocarbons as Nigeria, five and a half million people, and a sovereign wealth fund that has passed two trillion dollars. Botswana has diamonds and became one of the best governed countries in Africa. The resource did not decide. The institutions decided.

Nobody in Oslo, outside the fringes of their political landscape, has ever proposed capping the wells to save the Norwegian soul.

Which brings us back to the thing the Vice President said and then walked right past. He told us the problem: “we can just borrow basically in an unlimited way.” Mr. Vice President, that is not the dollar doing that. That is Congress doing that. That is Medicare on autopilot and a Senate that has funded this government by continuing resolution since Obama. You are the President of the Senate. You have the tie breaking vote. The tool for fixing an unlimited borrowing problem is a budget, not a currency crisis.

He is right that something happened to American manufacturing. Employment peaked near 19.5 million in 1979 and sits at about 12.6 million now. I will go further than most of my free trade friends: the China shock was real. The scholars Autor, Dorn and Hanson put it around a million manufacturing jobs, up to 2.4 million counting the towns that died around them. Those are real places, real people, and real funerals. Some of them, we should be mindful, are in the backyard of where the Vice President grew up.

But Autor, Dorn and Hanson’s research found the China shock was under a fifth of manufacturing job losses in that window. The rest is productivity. And none of it is a reserve currency story. If a strong currency killed factories, Germany, Japan and Switzerland would be industrial wastelands instead of three of the most formidable manufacturing nations alive. They built what they built on hard money.

This administration already ran a version of this experiment. Tariffs are a tax and they landed on the exact working families we claim to champion. On February 21 the Supreme Court struck the emergency tariffs 6 to 3, holding that a 1977 statute never handed the President the power to tax imports, because that power belongs to Congress. Two of the three justices Trump appointed were in the majority. Customs had collected around 133 billion dollars, and the refunds are flowing to corporations now, Apple alone for about 2.2 billion. The same populists who swore tariffs would not raise prices are now clamoring for America’s corporations to give them the rebates — the rebates from tariffs that they said did not raise their purchase prices.

Lastly, notice how the Vice President opened. “This is like, maybe super heterodox.” That is not an economist talking. That is an internet troll flagging his own contrarianism so you will grade him on daring instead of accuracy. J.D. Vance is a creature of the internet and he does not stumble into these positions. He believes them. He picked this up the way a lot of men under fifty picked up theirs, in reply threads and podcast clips, inside a world where a theory never has to survive contact with a payroll or a bond auction. You float the resource curse take, the timeline nods, and you never sit with a family in Middle America and explain what happened to their mortgage.

The socialist left wants Washington to decide what the common good is. The post-liberal right wants Washington to decide what the common good is, only with better manners at church. Both are certain they know your household better than you do. The family and the neighborhood, not the Vice President’s group chat, are supposed to make that call.

I would rather you keep the cheap money and decide for yourself what to do with it. These people want to hand you expensive toasters and thirty dollar burritos and call it dignity.

The common thread in all of J.D. Vance’s views, both foreign and domestic, is that the United States is in decline and some strong person must manage that decline. We should retreat from world leadership, bring home all the troops, recognize a tripartite system with China and Russia as equals, exert control over the Western Hemisphere, and diminish. China, Russia, and even the Democratic Socialists of America agree with that position. The rest of us do not have to. Decline is a choice.

God’s got this, y’all. But we should probably stop electing the internet’s comment section.