New Year, New Gym

Speaker 1

Welcome to Happy Hour Econ, where a comedian and an economist walk into a bar. I'm Lou Perez, the comedian. Every week, we are going to serve up shots of economic reality with a chaser of sanity. Happy New Year. Phil, I hope 2025 ended well for you. I hope it was a year of much success. and I'm Phil Magnus, The Economist.

Speaker 2

Indeed. Happy New Year, everyone.

Speaker 1

and happiness and good cheer. If it wasn't, we could talk about it off. We don't want to bum anybody out. an unexpected year in the way that it kind of played out because if you'd asked me January 1st, 2025, what the dominant political issues and economic issues of the year would have been, I would not have said tariffs. And yet that turned out to be the case. Do you foresee a 2026 of more tariffs? Well, I think the interesting thing is what's the Trump administration going to do in the international trade arena? And, you know, one thing that's different about this coming year is they have a midterm election and so far their tariff policy has been one of the least popular things about the Trump administration. So the question is, do they take the cues from voters and switch tax based on the fact that this is probably likely to harm them at the polling place if they continue on this agenda that they did in 2025? You know, something I wanted to ask you about for a while now is this idea of using tariffs as sort of a bargaining chip. Trump is sort of using this as a way to tell other countries like, play ball or else. What's your take on that?

Speaker 2

There's certainly people in the administration that have wanted to use it as a bargaining chip. And, the idea here is it's leverage. It's like a carrot stick mechanism that we offer to other countries to get them to do things or to cease doing things that we don't like. But that only works if the bargaining chip is credible. And the problem the Trump administration has had is even though there some that want to use tariffs as foreign policy leverage, there are other people in the administration that want to use tariffs to raise revenue for the government to spend. yet another faction in the administration that wants to use tariffs to divert consumption to domestic industries and protect them from their foreign rivals. And something I've been pointing out from the beginning, you can only pick one of these three goals to go with. If you try to do all three of them, two of them contradict the others. And that's the conundrum that the Trump administration has been involved in. Leverage only works if you can credibly stick to the tool. And we already saw just last year, within a week of Liberation Day, in April 2025, they changed course. And that just destroys the mechanism of leverage in the eyes of other countries, because other countries, start to see tariffs as just this bluster, as something that could change in a given week because the president, for example, doesn't like a television ad that Canada ran, or is upset about a judicial ruling in Brazil, and he just changes his mind, and suddenly that country has a new tariff rate, all the leverage is gone. Yeah, and when it comes to tariffs, think it's something that everybody feels to one degree or another. I just something like groceries. The price of groceries have just been absolutely... I'm really shocked the amount of times that I look at my grocery bill and I'm like, really? Then there's other stuff where it seems like prices everywhere have been going up on everything. And I don't know if this is attributable to tariffs, but it doesn't help. And I look at something like my car insurance and my home insurance, those rates going up Absolutely.

Speaker 1

Considerably, maybe I'm very silly or naive, but I thought hey, I've been a safe driver for over 20 years My car insurance should go down, right? My home has the the latest wiring and all of the good stuff and everything's up to code and all that It should go down, right? But it's just not it's just not the case. Everything's just going up. Well hate it.

Speaker 2

And it comes off of an election. 2024 election was basically a repudiation of the Biden-era inflation problem. Now, inflation is a different type of a mechanism than tariffs. Inflation is a monetary policy. It derives from basically what the central bank does. Tariffs are a transfer. They take money from some sector of the economy and they reallocate it somewhere else. That goes into tax revenue or it shifts prices around and it means that the producer of a good that's benefiting from the tariff gets to charge higher prices. But the mechanism plays out in ways that are felt by the consumers. You lose consumer surplus. You lose value that you could have at the store. Your dollar doesn't go as far because your groceries cost more. And that's really kind of where the pain is being felt. we see real world evidence of this. People that track retail prices have seen a sharp increase over the last year, and it almost directly coincides. with the president's tariff policies. We just came out of the Christmas season. I know several people, including family members, that tried to mail gifts to... people in the United States, family members that live in other countries. tried to mail gifts to people in the United States and it arrives with UPS or FedEx or one of the shippers and there's a tariff bill attached to it. And it's like, well the, $5 pair of socks that a cousin in Canada tried to mail as a Christmas gift comes with a $10 tariff bill attached to it. And that's a sticker shock. That's a surprise for you. But that all comes about from policy changes in the last year. And I don't think it's gone noticed.

Speaker 1

Oh, and also just to remind everybody, just because you pay more for something, it doesn't mean it's better now. It's like, it's like the guys who get bottle service in the club and they're spending, you know, $500 for this bottle of alcohol. That's like 20 bucks. Exactly, it's the cheap vodka from the bottom shelf and the plastic tub. When I hear about this stuff, when I hear about tariffs and inflation and stuff, I'm just reminded of how little power I have to make any of these changes on the grand scale. But when it comes to things like, on the personal scale, obviously New Year's comes around and people have these personal resolutions. It might get to the point where my resolution has to be to just stop eating food. It's going to be too much money. Well, holidays incentivize us in the other direction, because that's when everyone brings up the big fancy meals, Thanksgiving, Christmas. But at the same time, yes, the prices have gone up. And getting beef at the store, getting ham, getting turkey, all these traditional holiday meals, the price tag was a bit higher this year. Yeah, it's too bad that you can't do all of your eating for the year on Thanksgiving and Christmas and then you're just done with it. You're like, okay, I got that over with. When we talk about resolutions, ultimately what we're talking about are choices that people are making. And I think it's important for people to start associating choices with economics.

Speaker 2

There you go.

Speaker 2

Yeah, so choices, you know, they revolve around limited resources. We all operate in a world of scarcity, but we also have subjective value on what we desire, what we want. And it's how to use those resources to best fulfill our wants and needs. That's kind of the crux of economic exchanges is, you know, what do I have? What do I want? Where's the price point that intersects with that between what I want and what I'm willing to offer for it and what a seller has to give to me and where they're willing to let it go. And that's really the crux of the exchange that you have. So much of that, you know, sort of the idea of making choices and building habits. It's so funny that every single year we've sort of decided, okay, it's going to happen in January. It could very well happen in June. It could happen in August, but yet there's something about this, like this definite starting point to like start over and start doing. You know, some of it comes from the eating around the holidays. It's like you've spent two months just gorging on all these meals with family. And what do you do in January? Well, you have a new year's resolution and you take advantage of the gym membership to join a gym. And it's like, oh, hey, I'm going to work off all the food that I ate over the last two months. So, you know, that does fit into the mindset. I think there's also kind of a cultural reset that occurs. It's like the holidays are a break. in the work year, where you have a couple weeks off. You often go on vacation. And then January 1 rolls around. It's like, all right, we'll back to work. But that's a good point for reflection and introspection. What am I going to do differently right now? Or am I happy with what I'm currently doing in life? Is it a good time to change jobs, change careers, or do something differently now that we're back to the grind?

Speaker 1

Yeah. And I just want to put this out there too, for everyone out there online who tells me to quit my day job. this is my day job. Okay. Yeah. And I'm like, you know, I'm not going to quit, anytime, anytime soon on that. you know, when we talk about like, economics and in particular, like price point, we're not just talking about, you know, money. We're also talking about time. But you enjoy doing it. that's the important thing.

Speaker 2

Absolutely. And you know, there's no objective fixed value on time. It comes down to the person. It comes down to what you want to be doing with that time versus what you need to be doing with that time. This notion that, I mean, it's just like on priced goods, there's no innate inherent value associated with them. Your time is also a scarce resource that you have and how you allocate it. And that may mean that you want to spend X number of hours a week on recreation and having fun. Maybe you need downtime to sit there and just watch TV and sink into the couch. Other times you may be exceedingly productive. If you're a writer and you find certain times of the day, and I do this all for myself because I write a lot, but there are certain hours of the day when I can sit down and hammer out like 5,000 words. Other times I could sit in front of a computer and it's just a blank screen and I don't want to put a single word down, but that all comes to my own preferences, my own needs, and my own work for the day. And I think there's something too about measuring time as we do. And here we are with this starting point of the new year. It is definitely a reminder of time ticking down. Exactly. OK, we started over again. And now you only have so much time. I think that in particular, as you get older, you start looking and you start looking back and you're like, oh my god. I just had my. Where did it all go?

Speaker 1

my 25 year high school reunion. And it's a real trip to, you know, go to your high school reunion and you see people you went to high school with who still look the same kinda, but there's a little something off. And then you start, you start really, then you look in the mirror and you're like, there's a little something half about me. Hold us, Yeah, we got 25 years older. There is something about, you know, kind of starting the new year, being a little bit more introspective and then seeing like, okay, what were the habits that I formed last year? Where was I putting my time? Where was I putting my money? How can I change that, you know, for the better? is what can I do differently? What can I learn from not only good decisions that I made, but also mistakes over the last year? It's almost a chance to redo. It's a reset button in that sense. And I think, well, maybe last year I wasted a bunch of time and effort on this certain project and didn't really get anything out of it. January 1st is a good breaking point to switch gears, to do something completely different. I think for me as far as you being able to look back and feel like man I wasted a lot of time I have wasted so much time on X. Yeah. And for those who don't know what X is it is formally Twitter and I waste I waste so much time on there. Granted it's a lot of fun. For those of you who don't follow me or Phil on Twitter you don't have to follow me you should follow Phil. Look as the comedian when I get into Twitter fights with people it

Speaker 2

It is absolutely a lot of fun.

Speaker 1

Always goes ad hominem. The amount of people who point out that I'm losing my hair. It's like some, it's like, well, so what? Apparently I've lost every single argument because I have a receding hairline. Okay. So that's the kind of, that's the kind of argumentation I deal with and I dish out. But when it comes to Phil, Phil gets into, Phil gets into these arguments and he brings receipts receipts from history. He brings primary sources to it, to the point where I used to tell people, I was like, I don't, wouldn't want to get into an argument with Phil over what my birth. I look it up and here's a picture of your birth certificate Yeah, think Phil would find out, no, it's actually not February 26th. As far as, you know, it is fun, it's a nice diversion. Is it something that, you know, would you ever say you should be spending more time on social media?

Speaker 2

Probably not. know, I see it as complimentary to a lot of the things that I do because, these little frivolous debates that take place on something like Twitter often help me refine ideas. And if I am trying to turn something into a more sophisticated article or publication that I'm going to send off to, say, a major newspaper or an academic journal, it's a way to test and see how those arguments are received. It's also, I like the challenges that come from it. someone says, it will prove something that you claimed, that's an impetus. It's a good reason for me to go research and dig deeper into it. It's also a chance to part of the refinement process. I find that an argument's just not working, or maybe I discover some new evidence that someone points out to me that I didn't know about before, I can change direction on that argument. And the more important version of it is not going to be the one that I posted on Twitter or exes it's now called. the more important version of it is going to be the one that becomes a book chapter. Yeah, and I think it's really important to know what other people are thinking. Yeah, yeah. I used to work at FIRE, Foundation for Individual Rights and Expression. I used to work with their communications department and I produced some really fun videos with them. And one of the things that... that we often discussed, and this isn't giving away any secrets, is I guess what they would describe as the knowledge problem. And for those of you who don't know, but FIRE, it's the premier free speech organization. So when your whole world is free speech, of course you know about Schenck versus the United States. Of course you know about Skokie, Illinois. Of course you know about all this stuff that is centered around free speech.

Speaker 1

The reality is most people don't know about that. So when you're approaching trying to connect with people, you can't talk to them as if they also know exactly what you're talking about. They're not, you're the experts doesn't mean they're the experts and you should change the way that you're that you're communicating with them. And the stuff that I see what you're doing, Phil is you are having these encounters with people who, you know, maybe their whole line of inquiry or their whole way of debate is basically just sharing memes and expecting like, won. Like they're sharing a meme as their version of saying, hey, Lou, you're losing your hair, man. Right, right. It's, you know, insult driven. There's all sorts of things like that that happen. And let's be frank, a lot of the social media world and the online platforms, they're a sewer. They bring out some of the worst elements of society and they give them anonymity to post all sorts of garbage on the internet that you imagine if this person tried the same type of communication and a one-on-one conversation, they get punched in the face. But the internet kind of gives them that buffer of an anonymous engagement and they abuse it in ways that are often not pretty. But that's the downside of these platforms. The upside though is there are ways to get around that. There are ways to ignore it. And one thing I always point out, people ask me, why do you engage with some of these elements from the sewer? And they aren't my target for conversion normally. The guy that's posting profane memes is not the person I'm trying to win over. Rather, I'm doing it for readership, other people that are paying attention to these debates as they play out. And I'm hoping that I can offer a better version of arguments on my side, my perspective, which is often, you know, it's a free market perspective, it's economically grounded, it's historically minded. Oftentimes, the Independent Institute, where I work, we take stances on policy issues and we want to put the best face of those forward. And the idea?

Speaker 2

hears that by holding ourselves to a standard that is significantly higher than the level of argumentation from the meme guy that's posting just nothing but garbage and insults, a typical reader will see that and they'll think, wait a minute, the person that's bringing substance and receipts to the debate, they're the ones that really won, not the person that has all these fake bot engagement clicks on their meme that they posted. Well, I think one way to fight against those anonymous bots who call out... my weight is by losing weight. So I went and I and I'm going to I'm going to show all of them I'm going to become ripped in in 2026. And I think that that is definitely a New Year's resolution that seems universal across the board people want to I'm going to this year this is the year I'm going to diet I'm going to get in shape, I'm going to be healthier, etc, etc. And something happens where gym memberships just go you know, through the roof in January and people don't stick to those memberships. They don't, they don't go after that. think like the first couple of weeks is probably like the busiest at the gym. And then after that, people just, just fall off. Are there any, any insights into that? Yeah, absolutely. And I think a good way to think of this is, know, January, that first week of January is like Black Friday week for gym memberships. It's Black Friday week for Equinox and all these other companies that have fitness programs that they can offer you because they know everyone is thinking about that. They're coming off of the holiday seasons. They've had the big meals over Thanksgiving and Christmas. They're also thinking about turning a new leaf in the new year. Now's your chance to sign up, get your discount.

Speaker 2

will lock you in at this special 20 % off rate if you commit to 12 months, even though you're only going to use it for the first two. So that's part of their business model. But you've got to think of it also on the consumer side. Well, why are people doing this? And if you purchase a gym membership, it's not just you thinking through, hey, I'm committing for the next 12 months to go every Thursday night to the gym and take this particular class. It's also you making a purchase in advance where you know that that option is available to you. And you may not use it every time. It may be July and you haven't gone to the gym in several months, but it is a personal economic investment for you. It's still a value to you knowing that, you have a free afternoon and that thing that you've been paying for for all these months, it's still there for you to go back to. So this is Part of the reason why people will purchase what looks like, at least on the surface, hey, you're only buying a few weeks in January, February to extend it across the entire year, it's actually still an economically rational decision that you're making because that gives you the option throughout the rest of the year. If and when you ever decided you want to go to the gym, it's as simple as showing up. You don't have to initiate a new membership. Also, I think out of all of the kind of subscription-based models, the gym is one of the easiest ones to just guilt people into keeping. Absolutely. Because, know, most of the times, like, you know, if you turn around and you look at your state, your credit card statement, and you're like, man, you know, I haven't watched Netflix in six months, right? You're going to be like, maybe I don't need Netflix. But there's something about a gym membership where it's no, no, no, I'm going to overcome. I'm gonna do it. I'm gonna get to the gym.

Speaker 2

You are buying the security of having that option available to you, whether it's a week from now, a month from now, later in the year, the knowledge that you have that. It doesn't mean that you're always going to act on it. In fact, most people will not act on it more often than they will act on it by the end of the year. But that knowledge that you could, you know, just hop in the car one afternoon and go to the gym because you've got some time off and you've been thinking about this. There's some security, there's some comfort, there's an ease of transaction. You no longer have to find a new gym. You have one that you know and you've been a part of. And you know that it's going to be there in the future. And you're going to get more or less the same level of service that you expected when you signed up back in January. There's kind of like this culture of like the alpha bro, alpha bro influencer, right? Where on the surface it seems like financial success and bodily success. kind of all come together and the most successful alpha bros that I see, I only see them online because all the other people I know in real life who are very successful, they're not all ripped. Some of them might have a few extra pounds on them. Is there a component to economic success and physical success? you

Speaker 2

think it's a spurious correlation. There are some instances where that's absolutely true. There's other instances where the least fit, least healthy guy is like the computer nerd sitting there programming all day, but might be a multimillionaire because he invented a new program or fulfilled a new service. I think a lot of the online influencer scene, you'll notice that a lot of these accounts, even though they project this notion of fitness or the fad diet or whatever it happens to be, of the moment. They're often anonymous accounts and I think there's some of that effect. If you remember, there was the old South Park episode about the video gamer guy who was going around a world of Warcraft and had figured out how to defeat any enemy and then they cut to the screen and it's this morbidly obese, slovenly character like surrounded by fast food just hanging out and hovering over a keyboard. I think there's also some element of that and the anonymity of the internet. allows people to play up that and adopt a fitness persona online even though they're not that in real life. I just want to point out that that guy sounds like the neoliberal. It's the ruined World of Warcraft.

Speaker 1

For those of you don't know the reference, you gotta listen to all of our episodes to get all the inside jokes. You know, I think there's something about like, you know, the New Year's resolutions, like, you know, obviously... You know, most people want to want to make more money and they will they might fall, I think, fall victim to more of these kind of like online, you know, scams, pyramid schemes and and whatnot. There's this one guy that I've seen where his pitch is basically if you're an executive who makes one hundred and fifty K or more and you're out of shape, a woman will never respect you. Your children will never respect you. You will be laughed at your whole life. You need my program. It's just like and I'm like. It's a marketing boy. It's like there's gotta be at least five guys who are gonna be like, oh man, I make 150K a year and I want people to respect me. I want my kids to respect me and they're gonna fall for this thing, you know? playing on it because the person that makes 150K a year, part of that message is you can afford this. You can afford to sign up for my program or my nutritional supplement, even though it's snake oil, and this is going to change your life. I just view that as kind of a marketing point. It's part of the way that advertising works. And it's appealing to something that sounds instinctive. But again, buyer beware.

Speaker 1

I think one of the next moves that we have to make is we have to come up with a supplement that we could. Yeah, we need a happy hour econ supplement, something that you could just slip into your own beer and it just gets, you know, it's like, man, this beer has never been healthier. I'm going to get totally, totally jacked. There's our sponsor.

Speaker 2

as the electrolytes that plants need or something like that. So, you know, obviously, you know, we talk about resolutions being choices on the personal level. What are some choices that you'd like to see, you know, perhaps those in power that you think would make for a great 2026? And you can name names. I know a lot of people you might name are fans of the show, big fans of the show, so just going directly to them. get the government out of the economy, quit trying to fix problems of their own creation. You we saw this a lot in 2025. It kind of became a cultural narrative that the U.S. economy was in like the worst shape that it had ever been, that young people can't buy homes, that there are no jobs, that there's a crisis of fentanyl and other opioid abuses that have afflicted all of middle America, that our economy's testing away and manufacturing's in decline. And if you look at the statistics of this, almost none of it is valid. None of it's true. So there was a disconnect between this narrative about society. I often point out, we in recent history have been through much worse economic times, including in 2020 when they shut the entire government, shut the entire economy down for lockdowns during COVID. Look at the unemployment then compared to today. Look in the aftermath of the financial crisis of 2008 when we hit 10 % unemployment nationwide and it remained at a pretty high level until the end of the Obama administration really. So we had three, four, five years of really stagnant, slow economic growth. It was not a great time to work. Or look 40 years ago, the end of the Carter years and beginning of the Reagan administration, the late 70s, early 1980s, we had a stagnationary economy.

Speaker 2

There are periods in recent history where things have been much worse than today and yet this narrative that's been driving a lot of our policy choices is to supposedly fix a problem economy that just doesn't seem to be all that real. Well, I do wonder, know, how much of it is about, you know, what stories we're consuming, you know, and what stories we're choosing to tell ourselves. You know, in question what the politicians are telling you, because a lot of times the narratives that they are fostering are self-serving around policies they wish to enact that are not really addressing current issues, current problems, and in some cases they're making them worse. So we spent the last year pursuing this tariff agenda that was supposedly constructed around rebuilding manufacturing. And what happened between Liberation Day and the present? Well, manufacturing jobs and output in the United States have suffered. It actually made the problem worse. And it wasn't really all that big of a problem to begin with. And yet this narrative just somehow stuck in the political world precisely because not enough people questioned it or pushed back against it. And I have a New Year's resolution that everyone can make right now, and that is to listen to some Happy Hour Econ. Make sure to sign up at happyhourecon.org so you never miss an episode.