4 ms·

well its an interesting question.... if 'waste' is the limiting of movement of goods or services, then every single tarrif and trade barrier is theoretically a

well its an interesting question.... if 'waste' is the limiting of movement of goods or services, then every single tarrif and trade barrier is theoretically a cause of 'waste', since at some point every single product that is under trade barrier winds up in a similar situation to this ship, does it not? even if it at a small scale. so if someone makes 25 Talos Power9 computers and the market would support 25 of them, but there is a tarriff that discourages one from being sold, then you have 1 machine sitting there, essentially on a proverbial virtual boat. Maybe its not burning fuel, but its taking up space somewhere, costing rent and overhead. Not much but a little. Now multiply that tiny amount times a billion other products ... just a thought experiment...

TheSoftwareGuy 8y ago
You’ve just discovered something economists have known for decades: free trade is generally good
- CapacitorSet 8y ago
  The logistical inefficiencies of dealing with tariffs are arguably a minor component when evaluating free trade, since they account for a small fraction of the total value of goods.
  - pjc50 8y ago
    25% tariffs involved here are not small; larger than most normal profit margins.
    - AnthonyMouse 8y ago
      > 25% tariffs involved here are not small; larger than most normal profit margins. Profit margins are set by competition. The customer might pay $5 except that your competitors are charging $1 so you can't even charge $1.10 or the customer buys from a competitor. If everybody's costs increase by 25% then everybody can increase their prices by 25%, because you can't profit at $1 anymore but neither can your competitors. Unless your competitors aren't subject to the tariff, which is kind of the point. Meanwhile the revenue the tariff generates offsets some tax that now doesn't need to be collected somewhere else and would have caused a similar inefficiency or cost increase in some other place. Tariffs suck because taxes suck and tariffs are taxes. But for a given amount of revenue generated, it's better to tax somebody else's economy than yours.
      - antidesitter 8y ago
        Meanwhile the revenue the tariff generates offsets some tax that now doesn't need to be collected somewhere else and would have caused a similar inefficiency or cost increase in some other place. Different forms of taxation can have different economic consequences. it's better to tax somebody else's economy than yours Thinking of tariffs as "taxing somebody else's economy" betrays a misunderstanding of the concept of incidence (as in https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence), since you're raising prices for your own imports.
        AnthonyMouse 8y ago
        > Different forms of taxation can have different economic consequences. Yes, of course. Car tax has different economic consequences than [real] property tax. But a tariff on cars looks a lot more like a tax on cars than it does a tariff on real property. Actually "tariff on real property" (meaning [high] property tax owed only by foreign nationals and corporations with foreign ownership) might be one of the best possible methods of generating government revenue. > Thinking of tariffs as "taxing somebody else's economy" betrays a misunderstanding of the concept of incidence (as in https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence), since you're raising prices for your own imports. It's not misunderstanding it, it's understanding it perfectly well. It's not that exactly 0% of the burden falls on the domestic economy, it's that it disproportionately falls outside of it. When you have a tariff, there are two ways for a foreign supplier to lose. The first is that there is a competitive domestic market for the same product. In that case the price won't change much if at all (minimal impact on consumers), the production will just shift to domestic suppliers who hire domestic workers. Then the tariff doesn't generate much if any direct government revenue, but it shifts a bunch of domestic citizens from collecting unemployment to earning taxable income, which is great in a different way. The second is any case where the producer has to eat a tax in general, e.g. because there are substitute goods preventing the producer from raising prices, so they can't pass the burden on to the customer. The domestic market only pays if domestic producers can't make [more of] that product and consumers are still willing to pay the higher price for it. But even then, it's not worse than generating government revenue from a purely domestic tax, it's just not any better in that unusual case. And in practice it will typically be some combination -- domestic producers will appear charging slightly higher prices (but more than making up for it by creating domestic jobs), and then the foreign producers have to compete with them (and other substitutes) so they have to eat most of the tariff but not all of it. So the burden falls disproportionately on someone else's economy, as opposed to domestic taxes that fall primarily on your economy.
- em500 8y ago
  known -> believed decades -> centuries https://en.wikipedia.org/wiki/David_Ricardo#Comparative_advantage https://en.wikipedia.org/wiki/David_Ricardo#Comparative_adva...
- Spooky23 8y ago
  Free trade is good for many market participants. Like all things, there are trade offs.
pjc50 8y ago
First thought of and written down by Bastiat.
frv103 8y ago
Why is this being downvoted? If he isn't "playing dumb" then this is an excellent realization as to the negative impact that tariffs/quotas/etc. have when compared to free trade. True that it is "common knowledge" among those who have studied markets or economics, but not everyone has given these concepts serious thought, and if articles like this lead people to make this connection, I'd say that this is an excellent outcome and don't think commenting on this newfound understanding should be downvoted.
- flak48 8y ago
  Thanks for your comment, we need more positivity in the world :)
pasta 8y ago
More food for thoughts: this trade war will have a positive effect on global warming effects caused by humans. Edit: saving ~3t/hr of oil per ship
ethagknight 8y ago
Markets quickly absorbs the elasticity. The waste you are pointing out only occurs for the goods currently in transit or in process at the time the tariff appears. Future shipments will be able to price in the tariff. Article mentions that China is searching for alternatives, but Brazil will run out of Soya this time of year.

TheSoftwareGuy 8y ago

You’ve just discovered something economists have known for decades: free trade is generally good

CapacitorSet 8y ago
The logistical inefficiencies of dealing with tariffs are arguably a minor component when evaluating free trade, since they account for a small fraction of the total value of goods.
- pjc50 8y ago
  25% tariffs involved here are not small; larger than most normal profit margins.
  - AnthonyMouse 8y ago
    > 25% tariffs involved here are not small; larger than most normal profit margins. Profit margins are set by competition. The customer might pay $5 except that your competitors are charging $1 so you can't even charge $1.10 or the customer buys from a competitor. If everybody's costs increase by 25% then everybody can increase their prices by 25%, because you can't profit at $1 anymore but neither can your competitors. Unless your competitors aren't subject to the tariff, which is kind of the point. Meanwhile the revenue the tariff generates offsets some tax that now doesn't need to be collected somewhere else and would have caused a similar inefficiency or cost increase in some other place. Tariffs suck because taxes suck and tariffs are taxes. But for a given amount of revenue generated, it's better to tax somebody else's economy than yours.
    - antidesitter 8y ago
      Meanwhile the revenue the tariff generates offsets some tax that now doesn't need to be collected somewhere else and would have caused a similar inefficiency or cost increase in some other place. Different forms of taxation can have different economic consequences. it's better to tax somebody else's economy than yours Thinking of tariffs as "taxing somebody else's economy" betrays a misunderstanding of the concept of incidence (as in https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence), since you're raising prices for your own imports.
      - AnthonyMouse 8y ago
        > Different forms of taxation can have different economic consequences. Yes, of course. Car tax has different economic consequences than [real] property tax. But a tariff on cars looks a lot more like a tax on cars than it does a tariff on real property. Actually "tariff on real property" (meaning [high] property tax owed only by foreign nationals and corporations with foreign ownership) might be one of the best possible methods of generating government revenue. > Thinking of tariffs as "taxing somebody else's economy" betrays a misunderstanding of the concept of incidence (as in https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence), since you're raising prices for your own imports. It's not misunderstanding it, it's understanding it perfectly well. It's not that exactly 0% of the burden falls on the domestic economy, it's that it disproportionately falls outside of it. When you have a tariff, there are two ways for a foreign supplier to lose. The first is that there is a competitive domestic market for the same product. In that case the price won't change much if at all (minimal impact on consumers), the production will just shift to domestic suppliers who hire domestic workers. Then the tariff doesn't generate much if any direct government revenue, but it shifts a bunch of domestic citizens from collecting unemployment to earning taxable income, which is great in a different way. The second is any case where the producer has to eat a tax in general, e.g. because there are substitute goods preventing the producer from raising prices, so they can't pass the burden on to the customer. The domestic market only pays if domestic producers can't make [more of] that product and consumers are still willing to pay the higher price for it. But even then, it's not worse than generating government revenue from a purely domestic tax, it's just not any better in that unusual case. And in practice it will typically be some combination -- domestic producers will appear charging slightly higher prices (but more than making up for it by creating domestic jobs), and then the foreign producers have to compete with them (and other substitutes) so they have to eat most of the tariff but not all of it. So the burden falls disproportionately on someone else's economy, as opposed to domestic taxes that fall primarily on your economy.
em500 8y ago
known -> believed decades -> centuries https://en.wikipedia.org/wiki/David_Ricardo#Comparative_advantage https://en.wikipedia.org/wiki/David_Ricardo#Comparative_adva...
Spooky23 8y ago
Free trade is good for many market participants. Like all things, there are trade offs.

pjc50 8y ago

First thought of and written down by Bastiat.

frv103 8y ago

Why is this being downvoted? If he isn't "playing dumb" then this is an excellent realization as to the negative impact that tariffs/quotas/etc. have when compared to free trade. True that it is "common knowledge" among those who have studied markets or economics, but not everyone has given these concepts serious thought, and if articles like this lead people to make this connection, I'd say that this is an excellent outcome and don't think commenting on this newfound understanding should be downvoted.

flak48 8y ago
Thanks for your comment, we need more positivity in the world :)

pasta 8y ago

More food for thoughts: this trade war will have a positive effect on global warming effects caused by humans. Edit: saving ~3t/hr of oil per ship

ethagknight 8y ago

Markets quickly absorbs the elasticity. The waste you are pointing out only occurs for the goods currently in transit or in process at the time the tariff appears. Future shipments will be able to price in the tariff. Article mentions that China is searching for alternatives, but Brazil will run out of Soya this time of year.