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On this week’s episode of The David Frum Show, The Atlantic’s David Frum opens with his thoughts questioning whether the Trump administration has any plan at all to meet the challenge of debt and deficits.
Then, David is joined by Vincent Smith, director of agricultural policy studies at the American Enterprise Institute and professor emeritus of economics at Montana State University. Frum and Smith discuss the high price of groceries, Trump’s lack of a plan to address it, and whether any relief is coming to Americans.
Finally, David ends the episode with a discussion of Edith Hamilton’s Mythology.
The following is a transcript of the episode:
Vincent Smith: The story that you have heard from many Trump-administration officials—that the tariffs will lower the prices, people who import goods from other countries will pay for those goods —that is simply empirically nonsense. This is Economics 101, by the way. And I’m afraid that some of the Trump officials, if they actually believe what they’re saying, have flunked Economics 101.
David Frum: Hello. Welcome to The David Frum Show. I’m David Frum, a staff writer at The Atlantic. My guest this week will be Vincent Smith, a professor of economics at Montana State University. We’ll be discussing the high price of groceries and whether there is any hope that those prices will cease to rise so rapidly anytime soon.
This week’s book is Edith Hamilton’s Mythology, a book selected in homage to the recent release of Christopher Nolan’s movie The Odyssey. But before either the dialogue with Vince Smith or the discussion of Edith Hamilton’s mythology, some opening thoughts building on last week’s discussion with Maya MacGuineas about the burden of debt and deficit created and bequeathed by the Trump administration.
One of the questions you might have left over from last week’s discussion about the crushing burden of debt and the danger of the inter-interest cost to the American taxpayer is whether the Trump administration has any plan at all to meet the challenge of debt and deficit. It says it does. Secretary of the Treasury Scott Bessent has been promoting a plan he calls “three plus three plus three.”
The idea is: If the United States can somehow raise its growth level to 3 percent, if it can produce 3 million more barrels of oil per day, then by the time the Trump administration ends, the deficit will have been driven down to about 3 percent of GDP, which is a sustainable level. Right now, if you wanna have—if you wanna collect the numbers, the deficit is running at about 5.7 percent of GDP, a figure that is not considered sustainable.
So that’s his promise. If you can get the growth up to 3 percent, if you can produce 3 million barrels a day more oil than the United States is now doing, then there is hope that the deficit numbers can be brought down to 3 percent of GDP, a level that is sustainable, that doesn’t continue to accelerate and get worse.
In other words, the plan is to grow our way out of it. Now, more growth would be a good thing, but let’s talk about whether this plan is feasible or not. Three percent is not an impossible growth number for the United States, and when the United States came out of the pandemic under President Biden, there were quarters when the growth rate neared 3 percent annually. And it was not beyond imagination that the United States might actually achieve 3 percent annually.
It hasn’t achieved that kind of figure in the second Trump administration, and the Trump administration badly wants it to. But the policies don’t line up with anything they say they wanna do. Economies grow for two reasons. They grow because they add more factors of production, typically more population or maybe more resources of some kind. Or they grow by becoming more efficient—by using the resources they have more efficiently.
So one is called extensive, and the other is called intensive growth. Add more factors of production, you get more growth. Use them more efficiently, you get more intensive growth. The Trump administration’s policies crush both extensive growth and intensive growth. They have an anti-immigration policy that is making the labor force grow very, very slowly and, in fact, probably shrink in an aging population. And their protectionism means that the economy operates less efficiently.
So they have fewer resources to use, and they’re using them less efficiently. That is why the growth rate has been so disappointing in the first year plus of the Trump administration. The Trump administration is gambling everything on an AI-productivity miracle. By applying the new technologies of artificial intelligence, the American economy will get so much more efficient that even though the population isn’t growing—and even though the efficiency of every other part of the economy is being damaged by Trump’s protectionism, his high tariffs—the AI miracle will add so much to growth so fast that it will overcome the slow growth in population because of the immigration crackdown and the inefficiencies of protectionism.
It might, but it isn’t, and it isn’t happening soon. But there’s a little caveat that the Trump people don’t tend to notice. Which is: Supposing this AI miracle does show up and the economy suddenly becomes much more productive, one of the immediate consequences of the AI miracle will be an elimination of many, many categories of jobs.
Now, that doesn’t mean that employment will vanish forever and people will never have anything to do, the way some AI doomsters predict. I don’t agree with that at all. There will always be things for people to do. But there will be a period of shock where machines do things that people used to do, and people will have to find new things to do using the powerful new machines.
And in that period, employment will shrink, and there goes your extensive growth. And even if you believe, and maybe it’s true, that the AI revolution will create more intensive growth, and so although there are fewer people working, they’re generating more wealth—the other thing the Trump people keep forgetting is when the economy grows faster, that creates more demand for capital. And that means the Federal Reserve raises interest rates. And when interest rates rise, of course, the federal government, which owes so much money, pays more in debt service.
So they’ve got a box that—even if you believe their own theory—can’t possibly work. Their numbers really don’t add up, as the Congressional Budget Office keeps pointing out. And keeps pointing out that the United States, even under the most optimal scenario—the best case, what the CBO calls the best realistic case—is that deficit simply doesn’t get any worse than it is now and the debt continues to grow.
There’s almost no scenario where “three plus three plus three” works. Administrations often sell things, and that’s maybe not a surprise. But it is kind of alarming to realize that the administration has a plan for what it regards as one of its most important domestic problems that doesn’t make sense according to any of the experts, and that it’s hard to believe that the people pushing the plan even can really believe.
And yet they keep saying it, because they keep offering some kind of promise of a better tomorrow to make up for the bad realities of today. As you make up your mind whether the present crew can be trusted with more power in government or less power in government after the 2026 elections, keep in mind: They really don’t know what they’re doing.
And to the extent they do know what they’re doing, they know that it won’t work. And now my dialogue with Vince Smith.
[Music]
Frum: Vince Smith is professor emeritus of economics at Montana State University and director of agricultural policy studies at the American Enterprise Institute. He spent more than three decades on the Montana State faculty in the Department of Agricultural Economics, and including stints directing the Agricultural Marketing Policy Center and the Initiative for Regulation and Applied Economic Analysis.
He’s the author or editor of nine books, including multiple volumes of Agricultural Policy in Disarray, and has published well over 100 articles making the case that the federal government’s approach to supporting farmers is expensive, poorly targeted, and resistant to reform. He’s a familiar voice in The Wall Street Journal and a helpful source to me in my articles for The Atlantic about food prices and food markets.
Vince, welcome to The David Frum Show.
Vincent Smith: Oh, pleasure to be here, David. Thank you for inviting me.
Frum: Now, we are at a moment when food prices are high. Americans are suffering the cost. There’s understandably a lot of unease and a lot of complaint. Everyone is looking for someone to blame. The president of the United States has been calling on grocery stores to cut their prices. He wants to blame them. The new mayor of New York City, Zohran Mamdani, is calling for state-owned grocery stores to squeeze out price gouging and profiteering by the grocery-store industry, which he alleges is a terrible problem. Those who study agricultural economics look for broader explanations.
No one has studied these markets deeper than you. Why are food prices high? Why are they rising? Who’s to blame?
Smith: Well, it’s a fascinating question. So let me reframe the debate a little bit. We have the perception that food prices are high. And the question is: Are they high relative to other prices, given that we’re experiencing some inflation? Particularly, we saw very high rates of inflation in 2022 and 2021 during COVID. And correspondingly, we did have very high, by historical levels, rates of inflation in the basket of goods that we use to measure average food prices. And we saw, for food away from home in, for example, 2022, an 8 percent rise or approximately 8 percent rise in the price of a typical food basket. In-home food prices in COVID really surged even more. There was an 11 percent increase overall.
Subsequently, in recent years, for example, in 2022, while food away from home has continued to increase at a little bit faster rate than the overall rate of inflation—for example, in 2024, prices for food away from home, that rate of increase was about 4 percent. Whereas for food at home in 2024, prices only went up by 1 percent or thereabouts. So if we set aside on average what prices were doing for food in ’22 and ’23, the last two, three years, food prices have increased at about the rate that they have increased historically. That is, very close to the overall rate of inflation.
But I think what matters here is that food is different than some of the other commodities that we purchase, in that we go to the store every day. So if the price of coffee goes up a little bit, we notice that because we are so regularly at the grocery store. If the price of bread is 20 cents higher this week, I notice that, and I feel the pain in some important way.
The other thing that makes food different and makes us more aware of what’s going on with the price of food is that it is an essential. It is something we cannot do without. So especially for lower-income consumers, when the price of food goes up and their incomes do not change—which is very typically the case, whether they’re on a fixed income or whether they’re in a moderate-income job—you have to buy bread, you have to buy protein, and so on. And so you’re aware that the share of your fixed income that goes to food is going up, especially when you’re low income.
And then there are individual commodities where when the price jumps, everybody screams. And the classic example of that are eggs. And over the last four years, we’ve had two very significant periods where avian-flu disease has affected the domestic supply of eggs very significantly, and we’ve seen those prices—in 2022 for example—more than double. And fairly recently in 2025, we saw very sharp increases in the price of eggs, which almost everybody buys almost all the time.
So we feel the pain. The callous economist would say, Well, food prices are really not going up that much faster than anything else. But the compassionate economist would say, It’s a pain that is felt, and it’s particularly felt by people on modest and low incomes.
Frum: So the contention, if I can reduce what you just said, is that we have an inflation problem, and food prices are part of the inflation problem. But we don’t have a food-price-inflation problem separate from the general inflation problem.
Smith: Fundamentally, that’s a very fair interpretation. There are fractions of a point at which food prices over the last few years have gone up a little bit faster annually [over] the overall inflation rate. Food is one of the places where every household notices when the price in dollar terms—in nominal terms, as economists say—goes up, because we just go to the grocery store a lot, as compared to, say, the home-improvement stores like Lowe’s or whatever. So we notice things more with food than with many other commodities.
Frum: There is one price, one food price that has been outrunning the rest and maybe rising faster than inflation. And you and I have talked about this before, and that’s the price of beef. And beef plays—
Smith: Yes.
Frum: —a very special part in American diet, in American culture. I mean, eating beef is part of almost what it means to be an American. The steak, the hamburger. And the fact that beans or pork may not be rising as much is cold comfort to Americans who say, That’s why we work as hard as Americans do, harder than anybody in the world works. We work so hard in order to enjoy the American way of life, which begins with that cut of beef.
And beef prices have been going quite bonkers over the past half decade. During the Biden administration, there were accusations of all kinds of collusion and price-fixing. You and I spoke about that at the time. Tell us the story of what is happening with beef prices.
Smith: Well, very quickly, last year beef prices on average, beef and veal prices, rose by almost 12 percent compared to an overall inflation rate of somewhat a little bit less than 3 percent. And a food-inflation rate overall of about 3 percent, just under 3 percent. So yes, and if you look at food, beef prices on average, they’ve been going up almost twice as fast as the average rate of inflation for several years.
The story here is, at least in my view, and I think the view of many economists who very carefully look at issues of market power among beef-processing plants, is that they are not the cause of the problem.
The beef-processing-plant story is pretty straightforward. Yes; there are only four major processors of meat, in particular beef, in the country. And yes, that might imply they have some market power, both on the buying side and on the selling side. What that means—buying animals from feedlots and farms, and selling meat to Costco or Safeway or any other outlet. But because they are operating very large facilities, their actual average cost of producing cuts of beef from the animals is way lower than for small-scale, essentially boutique, processors. The sort of process actually that currently the Trump administration and the secretary of agriculture want to subsidize. Those are high-cost operations. They are boutique operations because they deal with specialty meats. Because processing costs for those meats are going to be high no matter where you send them, because the runs are so small in creating product for the consumer. They are, in the view of almost all economists who look carefully—these subsidies for small-scale operations are effectively a complete waste of federal dollars if the goal is to reduce the price of hamburger at your local grocery store.
So if I look at the big producers, consumers—and to some extent, farmers—lose on the swings where the swings are market power. But they gain in terms of lower prices for consumers and higher prices for cattle. And one of the ironies, by the way, here is that there are some cattle-farm groups that want to blow up all the large-scale operations in the belief that then they will get a higher price for their beef, either at the feedlots or if they sell direct to processors at the processing plant. The evidence is, they’re entirely wrong. And frankly, on a bad day, I would describe the position of those producers, from an economic perspective, taking a double-barrel shotgun, pointing it at their feet, and unloading both barrels. It’s a financially really bad idea for them. And that’s not my view; that’s the view of numerous studies.
Frum: But we want a villain to the story. The mayor of New York proposes grocery stores. The Biden administration proposed the beef-processing plant. The Trump administration flails around and points all kinds of fingers of blame.
We want a villain here. We want an explanation. If there are no villains, what’s the explanation?
Smith: Well, if you want to call it a villain, what you have to say is pretty straightforward. Ranchers have been downsizing their herd sizes over the last seven or eight years for a whole variety of reasons. One is: Growth in global demand for beef has led to an increase in beef prices. So now you have a cattle herd, and you’ve got old cows that are not as productive in providing calves that will end up very quickly, relatively quickly, going into the supply chain about 18 months after they’re born. Do you sell that older calf that is less productive in terms of generating offspring for a relatively high price of beef? Or do you keep it so that you can sustain and expand your cattle herd? Well, the price incentives for the last few years have been: Take the money now from that older cow—cull it—because that’s the optimal from your business-plan perspective way of going.
So one story is that growth in global demand, which itself was pushing up beef prices, period, globally—and we operate in a global market—that’s, if you like, the villain. How dare other people in countries like China want to consume more beef, including American beef?
Is that a bad thing or a good thing? A very interesting question for cattle producers in the U.S., but they’re gonna say it’s a good thing. And consumers are going to say, Oh, dear, that means we’re paying relatively more for our beef, and we’re gonna adjust our consumption patterns.
Frum: Why doesn’t the growth in beef prices cause ranchers to buy more cows or raise more cows and build their herds? Why are they shrinking their herds if the demand is going up?
Smith: It’s a very intriguing question. Let me just say, you add to that in 2022, 2023, severe drought in many, many of the major cattle-producing regions in the U.S., and forage prices go up. So sustaining your herd becomes very expensive as well. And that in particular has contributed to the surge in prices that we have seen over the last two years, because high feed costs led to a reduction in herd size. Because why keep a cow that’s not that productive in the first place when you don’t really have the feed for the cow and the calf available to you, except at very high prices?
A reason why we’ve seen a shrinkage of the herd size has been because it’s economically profitable for ranchers to do that. They’re optimizing in terms of profit maximization and risk minimization by having reduced herd size. And the beef guys that I talked with, the beef economists that I talked with, are now wondering if we’re at a tipping point where we will begin to see some growth.
But it’s not going to happen this week. It’s not going to happen before the November elections—which is of great concern to the Trump administration. It’s going to happen maybe over the next three years. And for a political process that focuses on four months from now, that’s not going to help them. So these other measures that are being put about by the secretary of agriculture and other members of the administration to lower beef prices are really irrelevant to what the market price of beef will be over the next four months. They’re an irrelevance, and many economists are going to say they’re also going to lead to spending on infrastructure investments—that is, small processing plants—that long-term are not going to be economically viable.
Frum: Let me pause you there to ask you a question about the Trump [administration], since we’re talking about the administration, about its trade policies.
The Trump administration has put in all kinds of tariffs with a view to making things more expensive for Americans, to encourage more production at home. These tariffs—do they affect the cost of food? And if so, how do they affect the cost of food?
Smith: If and when the tariffs are implemented, they will raise the price of food because they’ll reduce import supply.
The story that you have heard from many Trump-administration officials—that the tariffs will lower the prices, people who import goods from other countries will pay for those goods, and it’s the producers in the other countries who will see lower prices, not the consumer—that is simply empirically nonsense. There is zero evidence to support that sort of assertion. We surveyed and published a piece that looked at the pass-through effects of tariffs, particularly on food. The studies that are being carried out almost all indicate that close to 100 percent of the tariff is passed through to consumers on the imported goods, whether it’s beef or coffee or whatever. And correspondingly, domestic producers tend to raise their prices for their competing goods.
So, the consumer takes it in the neck in two ways, in that the import prices go up, as do, parenthetically, the prices they pay for domestic products. Because essentially the supply chain has been made more expensive, and essentially at any given price, less supply will become available from both domestic and international sources.
This is Economics 101, by the way. And I’m afraid that some of the Trump officials, if they actually believe what they’re saying, have flunked Economics 101 yet again.
Frum: It’s not just the direct input into the steer that becomes more expensive. The rancher’s truck is more expensive. The wire is more expensive.
Smith: Oh, the truck is more expensive. The wire is more expensive. And if I raise cattle, I have no incentive to want lower prices. Out of the kindness of my heart, I’m not going to keep the price of my steak at $10 if, because of a reduction in total supply to the market, I can sell it in that marketplace effectively for $20. To ask a rancher, or for that matter a beef processor, to do that strains their human compassion for people paying higher prices for food. I mean, it’s not going to happen. Markets just don’t work that way.
Frum: And it’s not just beef we’re talking about. We’re talking about vegetables, which often come from Mexico—
Smith: No, it doesn’t matter what we’re talking about.
One of the areas of concern for farmers in terms of costs of production—and it’s a legitimate concern—has been the impact of tariffs on the price of fertilizers. One of the best actions the Trump administration has taken in the last two weeks in relation to trade as it affects farmers is to remove tariffs on the importation of phosphate fertilizers from Morocco. That is actually a benefit, because it will make phosphate imports cheaper, and it will, to some very moderate degree, lead to lower prices for phosphate-based fertilizers in the United States, and that’s a plus.
But every time tariffs have been added to fertilizer imports, that has been to the detriment of the price of fertilizers in the marketplace where farmers operate.
Frum: Well, a reason that the Trump administration has been eager to countermand its own mistaken past policies of tariffs on fertilizers, and the inputs to fertilizers, is that they started a war that is driving up the price of fertilizer and inputs to fertilizer from the Persian Gulf. So how has the Iran war been felt on the farm and at the grocery store?
Smith: The direct effect of the Iran war, in a short-run sense, on farmers has been twofold. One, they’re paying way more for the diesel they use to run their tractors and farm equipment now than they were before the beginning of the war. So there’s been this spike in prices. But one has to be a little careful about claims from the farm sector that that is having a devastating effect. Because many farmers buy diesel in bulk; store hundreds of gallons on their farm. And before the war started, many of them prebought the fuel they needed to manage planting and the initial cultivation issues well before the war started, at much lower prices. And the same story holds for fertilizers.
Now, with respect to fertilizers, the impact of the war on current market prices was immediate and obvious for two types of fertilizer: nitrogen fertilizer and phosphates, where we import phosphates from areas directly affected by the closing of the Strait of Hormuz. And so unequivocally nitrogen fertilizers, on which the farm sector spends most of its money, became significantly more expensive. Once, however, there was a sign that the Strait of Hormuz would reopen, the the price of urea—an indicator of nitrogen-fertilizer prices—dropped sharply, and it has steadily dropped over the last few weeks. And the expectation would be that it will move back roughly to where it was.
In the meantime, for U.S. farmers—and I emphasize U.S. farmers—the disruptions, while unpleasant, have not really involved catastrophic costs. A Kansas City Fed recent report noted, as many others have noted, that most farmers have bought all of the nitrogen fertilizer they would need, at least for the first half of the growing season. So if prices now are moving back toward where they were pre–Strait of Hormuz, the impacts on actual costs of production expended by farmers will be relatively modest.
That doesn’t mean to say that there aren’t other implications globally. Particularly, African farmers are in deep trouble in terms of accessing fertilizer for a whole variety of reasons, but particularly related to the sharp spike that occurred in nitrogen-fertilizer prices at a time where institutions like the World Bank and the International Food Policy Research Institute have noted that governments who buy a lot of the fertilizer for their farmers in Africa were trying to buy fertilizer, and they operate with fixed budgets. So if the price of nitrogen fertilizer doubles, their farmers get half of the allocation that they might otherwise have expected.
So the fertilizer issue is irrelevant for potash, because we buy potash from Canada. Now, what an abrogation of the trade agreements between Mexico, Canada, and the United States might mean for the potash-fertilizer prices is a different story. But that’s not a story for right this second.
Frum: Let’s talk about the impact of another war: the Russia-Ukraine war. The United States used to be the world’s largest wheat producer. Many of us still have an idea that it is, but it’s not. The United States has dropped out of the wheat market to a really remarkable extent over the past quarter century. Russia and Ukraine have become important sources of wheat, which goes into everything: breakfast cereal, bread. And not just for Americans, but all over the world. Are we still feeling the impact on wheat prices from the Russia-Ukraine war?
Smith: Not to a massive, not to any significant degree, I think is the correct answer.
The data from USDA’s National Agricultural Statistical Service indicate that we are going to grow—we’re gonna plant fewer acres to wheat in the United States this year than we have planted since the early 1970s. The reason wheat producers have cut back on the area they have planted is that wheat prices, in real terms, are relatively low. Much lower than they were in the first two months following Russia’s invasion of Ukraine, when they jumped from around $5 a bushel to over $12 a bushel. They more than doubled. Now they’re back. I took a quick look this morning at near-term futures prices. The price of wheat is around about $6.50 right now, and projected to be around that through the end of the year. That’s in what I would say the normal range,
You’re paying a lot more for your bread today than you did in 2022, at the start of of the the war with Ukraine because of other factors. Because of inflation in transportation costs, exactly the reasons you laid out, David: higher transportation costs, higher labor costs.
One of the reasons why particularly food-away-from-home prices have gone up at a faster rate than the general rate of inflation is that wages for moderate-income workers have gone up very substantially. So, I remember vividly noting that in early January of 2022, workers were being offered $10 an hour at my local McDonald’s. A year later, they were being offered $18 to $20 an hour, which was a huge jump in the costs of providing fast food. And the similar story holds for restaurants of whatever ilk: moderate or expensive. Their costs of production have gone up more rapidly, particularly because of higher labor costs and higher energy costs.
Frum: The Trump administration is also squeezing the supply of labor through its immigration crackdowns. Immigration is down, and the Trump administration is rounding up and expelling many people who are in the United States without legal status. Farmers famously rely heavily on immigrant labor. Do the immigration policies show up on the farm and at the grocery store?
Smith: The quantitative evidence is really not there yet. But a reasonable human, a reasonable economist, would say: Look, the diminution in the availability of immigrant workers from Mexico, and other Central and South American countries, has created increases in costs of harvesting, particularly for fruits and vegetables. Ranchers who do, to quite a considerable extent, rely on “cowboys” who come from those areas as well are also facing higher labor costs associated with immigrant situations. And they’re facing labor shortages. And I personally am often critical of the farm lobbies when they lobby for larger subsidies from the public purse. But on the issue of the availability of labor, and access to labor—forget wages, worry about simple access to labor—their situation is one of concern. And it will affect, and probably has affected, the availability of particularly fresh produce in your local grocery store. And that’s a legitimate concern.
Frum: Let’s talk about that grocery store. So, Zohran Mamdani, the mayor of New York, campaigned in part on a promise to create government-owned grocery stores that would operate more humanely. I don’t know exactly what the theory was. That there was grasping profit-seeking by private-sector grocery stores. The government would run more efficiently, wouldn’t have profits, so it would be obviously cheaper. But I think a lot of people have it in mind when they see prices higher at the grocery store, that the grocery store itself did this to them.
Do you feel able to talk a little bit about the economics of grocery stores, and whether or not it’s the grocery store’s fault that you’re paying more or feel like you’re paying more?
Smith: Well, I think it depends on the grocery store and the setting in which they operate. Most of the increase in prices has been associated with increases in costs of production.
There are some stores that have local monopolies. In a sense, they operate in food deserts—not in the way that term is usually used to describe just low-income neighborhoods—but in small towns, there may only be one grocery store. And I get to see this in Montana, where we’ve got lots of small towns that are a long way apart from one another. And prices—if you go in those stores, and you want to buy anything from an apple to a donut—prices in those stores tend to be a little bit higher. There are two reasons for that. One, they have higher transportation costs, because they’re relatively isolated. But two, there’s some work that shows that those sorts of stores have a local monopoly, or semi-monopoly is a better way of describing it. And so there are some stores where they, for whatever reason—maybe because they think they have a special brand—that are charging significantly higher prices than their costs of production. But where you have competition between grocery stores within a market, that behavior goes away pretty quickly.
And consumers will vote with their feet over time. If I can buy a Campbell’s Chunky Soup, for example, to confess one of my bad behaviors, at one store for $2 and at the other store for only $3, that gives me a pretty good incentive to go to the cheaper store. Especially if that pattern is mirrored across a broad array of commodities.
Frum: So would you agree that if we’re concerned about food prices, the place to start thinking is with general inflation? And a general anti-inflation policy would look something like this: We’re going to need somewhat higher interest rates to blot out money. We’re going to need a more balanced federal budget to produce less fiscal demand. We need to get rid of all of these crazy Trump tariffs. And there’s going to have to be more immigration flows to bring more labor to work in the United States. Would that be sort of a summary of what an anti-inflation policy would look like?
Smith: Yes. Yeah. Another way of putting it is: We need [former Fed chairman] Paul Volcker again, and we need [former Fed chairman] Alan Greenspan’s attitude toward trade again. And we don’t have that right now. It’s disturbing how poorly thought out the current administration’s trade policy is. And it’s disturbing to me, just as a person who lives a normal life, that the most damage in terms of economic welfare, from tariff policy in particular, is being done to the poorest households in the country. Because those are the households that are least able to cope with rising prices—and this disconnect between when prices go up and then only, with a pretty significant lag, will incomes adjust to those higher prices.
Free trade—or freer trade is a better way of putting it—in general benefits the economy as a whole. And it benefits the household as a consumer in particular. Getting rid of any tariffs that have been introduced by the Trump administration, going back to reestablishing meaningful trade agreements, would benefit the average citizen enough that it would make a difference to their lives. And it would be one component of an anti-inflation policy.
Having a rational immigration policy that is not based on fundamentally racial prejudice—and I know that sounds harsh, but I think it’s probably fair—would be a real step in the right direction. Working effectively with employers and how we handle immigration would be a part of any anti-inflationary policy.
Monetary policy, tightening the money supply, and, to use an old-fashioned term, tightening credit conditions would certainly help in the short run to bring down inflationary expectations.
What you haven’t mentioned—which it should also be a part of an anti-inflationary policy though—is to deal with the feckless budget deficit. We’re running a budget deficit—and we’ve done so over both the Biden and Trump administrations, and going back before them—in a reckless way. And Congress is not trivially responsible for the recklessness. Congress is happy to hand out goodies to win votes in their constituencies. They’re not happy to pay for those goodies in a way that reasonably protects the long-term fiscal security of the United States.
So large budget deficits are a component of an inflationary program. Shrinking the deficit is a way to reduce inflationary pressures in the economy, as well as having other longer-term effects.
Frum: We’ve been talking about farm prices from the point of view of the consumer. But the farmer also is—the farmer and the rancher are, of course, participants in this dialogue as well.
America’s largest farm export, if I’m not wrong, has been for a long time, soybeans. But one of the things that has happened in consequence of the Trump tariffs is Chinese retaliation against American soybean exports. And we have seen since the first Trump administration, back in 2017, the United States lose its primacy as the world’s largest soybean exporter to Argentina and Brazil, because China won’t buy American soybeans anymore. And the Chinese retaliation is having an impact on the farm family, that the Trump administration tries to compensate for with direct subsidies to farmers. To basically buy their votes, having taken away their markets.
Smith: That story is correct. In the first Trump administration, when tariffs were implemented, particularly draconian tariffs against China, China’s simple response was to say, Oh, we’ll stop buying soybeans. And then they went to Brazil, and essentially made long-term covenants with Brazil that if Brazil expanded their production of soybeans, China would make space over the long term in their import strategy for those soybeans. And China does need to import animal feed, which is really what we’re talking about more than anything else. As per-capita incomes have surged over the last 25 years in China, and the demand for meat protein has correspondingly jumped dramatically. Particularly for poultry and pork, less so for beef.
So the losses were not just the short-term diminution of exports to China, which meant that new markets had to be found for roughly a quarter of the U.S. soybean crop in 2018 and 2019. Which meant prices fell from as much as $14 a bushel pre-Trump to as low as $8.60 or thereabouts per bushel, post the first tariff round.
And we saw similar, not as exaggerated, shocks to soybean prices in 2025. Interestingly, soybean prices have recovered quite considerably, to about $12 now a bushel. But there’s been a long-term loss in market share. Particularly in the Chinese export market, which is the market for the export market for U.S. soybeans. You’re exactly right, David.
Frum: Vince, thank you so much for this education on farm policy, farm prices. I think a lot of us, we live very far away, in the big cities, from the life of the farmer or the rancher. But as you’ve made us see, we are exposed at the grocery store, every time we go there, to the vicissitudes of the farm economy.
It’s important to understand it, and to understand it from a system way, so that we are not deceived by those who want to point in some simpleminded way to some villain, whether it’s the grocer or the farmer or the meat processor. The villains here are the choices that we are all politically making to have more inflation. Which affects the food we buy at the grocery store and the prices received by the farmer and the rancher.
Vince, thank you so much for joining me today on The David Frum Show.
Smith: Thank you so much for having me. It’s a real pleasure.
[Music]
Frum: Thanks so much to Vincent Smith for joining me today on The David Frum Show. As I mentioned at the top of the program, this week’s book is Edith Hamilton’s Mythology: a book I selected in homage to the recent release of Christopher Nolan’s movie The Odyssey. Many of us got our introduction to Greek mythology from Edith Hamilton’s book.
It has sold millions of copies since it was published in 1942. Edith Hamilton was an American educator, the headmistress of a school, who on her retirement began writing about Greece and Rome. And Mythology is the most astonishingly successful of all of her books. She published it when she was 74 years old.
It has been translated into many languages and has been in continuous publication. There’s a 75th-anniversary edition of the book available now. I can’t remember when I got my copy of Mythology. It would’ve been most likely a present from my hyper-literate grandmother, Florence Rosberg. But it has been on my shelf, tattered, battered, read over and over again since my childhood.
Mythology introduces the stories of the Greeks, Romans, also the Norse gods, in a much more orderly way than the Greeks and Romans ever had them. Hamilton devoted herself to making sense of the stories, arranging them in some kind of order and sequence, ironing out contradictions. She drew on Homer; on the Greek poet Hesiod; on the Greek tragedies from Aeschylus, Sophocles, and Euripides; and to Roman sources as well, notably Ovid.
And she gathered them all into some kind of framework, which she narrated in a clear and simple style that is accessible to readers in their teens and even to children. I still remember, when I think of these stories, I still remember many of them in Edith Hamilton’s telling, in Edith Hamilton’s version.
And even as you go on to more sophisticated readings in later life, Edith Hamilton provides a framework that lasts the whole lifetime. It’s important to think about why these stories are so important. You know, we sometimes have a kind of fact-based model of literature, and we say, Well, you need to know these things. These are the foundations of Western civilization. You need to know them as factual information. And there’s something to that. But I think the most important, the most necessary, the most indispensable, especially for a child, value of these stories—and the stories from other sources, the Norse stories that Edith Hamilton talks about, the Iranian stories, and of course, the stories from Shakespeare and the Bible—is that these are the stories that educate our imaginations, that let the mind roam.
The great Canadian critic Northrop Frye said that the value of literature is that it takes us into a different realm, a realm that is separate from the realm of the material and the fact. And by letting our imagination develop into its own entity, it can protect us from the pressures and some of the degradation that comes from dealing only with the world of numbers and realities and facts—and allows us to think what might be, what could be, and therefore, what should be.
When the imagination is educated, the moral imagination is also strengthened. As I said, there’s a 75th-anniversary edition out, so I think I can finally say goodbye to my battered, tattered, old paperback from 1968 or 1969 and put the new 75th edition on my shelf—where I hope my new granddaughter will have her imagination educated, as mine was, by the wonderful tales of Edith Hamilton.
Thanks so much for joining me this week on The David Frum Show. If you– I hope you will subscribe to the show, share it on whatever platform you use. If you are minded to support the show, the best way to do that and to support all of us at The Atlantic is by subscribing to The Atlantic. See you next week on The David Frum Show.
Bye-bye.
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