Welcome to the Wall Street Week newsletter, bringing you stories of capitalism about things you need to know, but even more things you need to think about. I'm David Westin, and this week Nobel Prize-winning economist Paul Krugman told us how politics are getting in the way of economics, and Wharton’s John Zhang took us through the controversial world of dynamic pricing. If you're not yet a subscriber, sign up here for this newsletter.

Politics of Economics

Donald Trump came to office promising lower prices. But Nobel Prize-winning economist Paul Krugman says “everything he’s done is the opposite of that,” as the prices of good and services — from vegetables to housing — goes up. According to Krugman, who won his Nobel for work on trade patterns, the tariffs are “bad, but not as bad as legend would have it” — instead “it’s the uncertainty, the capriciousness, that are really” hurting the economy right now.

Krugman identifies as a liberal. But are there credible economists that are right of center who might see things differently? Krugman says there are, but they’re being kept out of the room when the decisions are made.

‘Everybody Gets a Trophy’

“Dynamic pricing,” where prices of goods and services change as the market changes, has gotten a bad rap recently.

But Wharton professor John Zhang says, done in the right way and at the right time, dynamic pricing can benefit buyers and sellers alike.

“Consumer willingness to pay does change over time,” giving sellers “an incentive to make sure that when you’re willing to pay a high price, I’m going to charge you a high price,” he said.

And for the buyer, having low prices at times of low demand can make it possible for those who otherwise couldn’t afford the regular price to get the good or service as a bargain.

Zhang suggests that the real issue with dynamic pricing is when it’s used and how it’s explained to the consumer. Say it’s an opportunity to raise prices, and customers will balk; but call it a variable discount and “everyone gets a trophy.”

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