Columnist offers tips to commencement speakers on economics | Jeffrey Scharf, Everybody’s Business

It’s college graduation time. Commencement speakers from President Biden to Jerry Seinfeld doled out pearls of wisdom to the leaders of tomorrow. Given the astounding economic illogic displayed by many leaders of today, maybe someone should offer up some Econ 101 pearls. Such as:

• Corporations don’t pay taxes. Corporations pass taxes through to consumers in the form of higher prices, workers in the form of lower wages and shareholders in the form of lower profits. It is complete nonsense to raise corporate taxes and maintain that anyone earning less than $400,000 per year will not be affected.

• Ditto for tariffs. The Chinese do not pay the tariffs on goods exported to America. Americans do.

• You have to own Boardwalk and Park Place to have a monopoly. A company with a 60% share of the U.S. smartphone market and a 29% share of the worldwide market is not a monopoly. Neither is a company with a 40% share of ecommerce sales and a 4% share of overall retail sales.

• Raising prices to reflect higher costs is not price gouging. If the price of potatoes goes up, the price of potato chips is going to go up. This is true whether the increase shows up as a higher price for a 12 ounce bag or as “shrinkflation” charging the 12 ounce price for a 10 ounce bag.

• Vendors do not have a right to shelf space. Retailers are not obligated to carry every product under the sun. Nor are they prohibited from selling house brands at less-than-brand-name prices or giving house brands favorable shelf space.

• We already have a wealth tax in this country. It’s called estate tax. Estates valued at more than $14 million per person (falling to $7 million per person in 2026) pay federal tax of about 40%. Some states levy estate taxes as well. Those who think that 40% or more is not a “fair share” have legislative options including reducing the exemption amount, raising the tax rate, eliminating the cost basis step-up on death or limiting tax-free charitable contributions.

• There’s no such thing as a free lunch. Exhibit A is the $20 per hour minimum wage for workers at major California restaurants. Predictably, some restaurants are reducing staff and/or working hours. Collateral damage is spreading as other restaurants and businesses compete for the same workers. Meanwhile, fast-food restaurant patrons – who skew less wealthy – pay more for their meals. And for those who lose their job or never get hired, the minimum wage is zero.

• To every action there is a reaction. Eliminate or reduce “junk” fees like credit card late charges or bounced check fees and banks will replace the lost income with higher credit card interest rates or monthly account fees.

• You want to help? Don’t help. Subsidize the purchase of a Tesla, a house or a college education and watch the price go up offsetting the subsidy.

• The law of supply and demand cannot be repealed. Neither can the law of unintended consequences.

Jeffrey Scharf welcomes your comments. Contact him at jeffreyrscharf@gmail.com.