Tariffs Catch-All

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nycfan said:
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FLASHBACK YESTERDAY

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Not to mention Trump fucking Cucknik on a daily basis.


Commerce Secretary Howard Lutnick said on Sunday that President Trump would not grant any further extensions to countries wishing to negotiate trade deals ahead of the Aug. 1 deadline.

“No extensions, no more grace periods. Aug. 1, the tariffs are set,” Lutnick said in an interview on “Fox News Sunday.”
 
Heck, with strong economic growth (3% - the CBO assumed 1.8% growth), the revenue being generated by tariffs, and the money the Ivy League is paying, or will pay, the US due to its discrimination against Jews, we’re on our way to solving the deficit problem.

Harvard is leaking to the press that it is dying to settle its dispute with the US for $500,000,000. More to follow.
 
Ramrouser said:
Heck, with strong economic growth (3% - the CBO assumed 1.8% growth), the revenue being generated by tariffs, and the money the Ivy League is paying, or will pay, the US due to its discrimination against Jews, we’re on our way to solving the deficit problem.

Harvard is leaking to the press that it is dying to settle its dispute with the US for $500,000,000. More to follow.
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Economic growth has been 1.3% this year. WTF are you talking about? And it's going to get worse, not better. Did you see that business investment was DOWN last quarter? That's a leading indicator (look it up).

Meanwhile, GM and Ford together lost about $2B because of tariffs. Why do you hate American car companies so much? How long do you think they can go on losing that kind of money?
 
“The revenue being generated from tariffs” is being paid by you and me, the consumer, genius. This is how you can know that Republicans are no longer conservative: they’re cheering on higher taxes. The tarrifs are being paid by American businesses importing goods from abroad, and the cost is being passed along to American consumers. This is literally day 1 ECON 101 stuff, man. Why the hell do we keep having to explain the most basic, elementary, fundamental principles of both law and economics to someone with an advanced degree? Insane.
 
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CFordUNC said:
“The revenue being generated from tariffs” is being paid by you and me, the consumer, genius. This is how you can know that Republicans are no longer conservative: they’re cheering on higher taxes. The tarrifs are being paid by American businesses importing goods from abroad, and the cost is being passed along to American consumers. This is literally day 1 ECON 101 stuff, man. Why the hell do we keep having to explain the most basic, elementary, fundamental principles of both law and economics to someone with an advanced degree? Insane.
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Because you like to learn:

1. Econ 101 stuff rarely tells an accurate story about the world. It doesn't in this case either. Well, it gets the outcome right but not for the right reasons.
2. What we're talking about here is incidence analysis -- i.e. a subfield of economics that assesses when and how much price increases get passed along to consumers. Importantly, the incidence of a price increase depends on the elasticity of demand, and thus on market power.

Let's take a couple of simple examples. Let's say we're in a small town where there are three ball bearings manufacturers and precisely one heroin dealer. Somehow Trump managed to tariff both steel and heroin -- say, 15%. What happens to their prices?

Ball bearings plants -- ball bearings will increase in price by 15%, relatively quickly. Why? Because the ball bearing market is super-competitive. It's a commodity product, meaning none of those companies are making an economic profit (see below). They literally have no ability to eat any costs, because if they did, they'd go under. The price will be fully passed on, because there was no fat in the system at all.

What about the heroin dealer? Well, addicts tend not to base purchasing decisions on costs. So the heroin dealer is already charging the maximum price he can -- basically, the limitations on his costs are the abilities of his customers to steal money without being caught. I'm simplifying of course, but you get the point. So if his raw materials increase in price by 15%, what's he going to do? Charge 15% more to people who literally cannot pay and would end up in jail, consuming no heroin, if he jacked up prices? He would eat the entire cost increase.

This seems counter-intuitive because we speak of it as it's a discrete moment in time, but actually the real work has been done before. In the competitive industry, the inefficient producers have already been weeded out. Everyone has the same efficiency, meaning there are no corners left to cut. In the heroin example, nobody has been weeded out based on efficiency. There's one guy in town, and there's not room for two, so one of them will win and the one who does can charge whatever maximizes his revenue -- and thus, costs play no role in his price or production function.

This is, by the way, one reason that drug cartels tend to be vertically integrated. Not the only or even primary reason, but anyway.

*** "Economic profit" is a bit of a slippery concept. Think about it this way: you own a law firm and you employ some lawyers. You get what is left over after you pay your employees. Well, what happens if there's only $50,000 left over? You're going to close your firm and join another where you can make $150K, right? That is to say, the owner needs a satisfactory return on the assets that varies with the owner's opportunity cost.

In a monopoly, like our heroin dealer above, the dealer's time is worth maybe $40K on the open market. Not too many marketable skills. But he might be making $140K because he has market power. His business is making an economic profit, not just matching his opportunity cost.

In a perfectly competitive market, prices continue to drop until they are essentially equal to the marginal cost of the product. If the business is only making $50K a year and it's owned by a PhD in artificial intelligence -- well, that's not going to cut it and the AI guy will sell and go work in Silicon Valley. The ones who will continue to make ball bearings are the ones for whom the profits meet their opportunity costs: they can't do better elsewhere, so they stay. Their businesses aren't making profits; they are making just enough for the business owner to eke by.

There are no perfectly competitive industries, but some are close. And there are of course real world complexities -- some people value being their own boss, so they would accept a lower income from their company. There are labor frictions. There's a question of compensation for risk, which depends in part on how risky the business actually is. So what I've described is stylized, but abstractly correct.
 
farce© said:
Heroin is exempt from tariffs
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Yes. That's why it's a hypothetical. You get the point, though, I hope. I used that example because it's the purest example of a firm with market power. Even monopolists usually have to compete with the decision not to buy (which is why even monopolists cannot charge just anything they want -- MS Word doesn't cost $2000 because nobody would pay that, even if there was no real alternative). The drug dealer has as captive a market as they come.
 
Ramrouser said:
Heck, with strong economic growth (3% - the CBO assumed 1.8% growth), the revenue being generated by tariffs, and the money the Ivy League is paying, or will pay, the US due to its discrimination against Jews, we’re on our way to solving the deficit problem.

Harvard is leaking to the press that it is dying to settle its dispute with the US for $500,000,000. More to follow.
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Post in thread 'Economic News' Politics - Economic News

Why do you want taxpayer money to support "radical Islamic indoctrination "? Why won't you answer the question?
 
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