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Just to put it in perspective, the 30% tariff on imported cells resulted in a net impact of about a 5% cost increase to the end consumer. [1] The basic macroec

• sbierwagen 7y ago
  Free trade is optimal... assuming you're optimizing for the greatest number of goods manufactured at the lowest price. Given that all the developed economies have been demand-constrained since World War 2, that might not actually be the best variable to optimize for.
  • arcticfox 7y ago
    That's an interesting take that I (total non-economist) had never considered, where does the demand-constrained philosophy lead to in terms of variables to optimize for, and eventually, policies?
    • rogerkirkness 7y ago
      There's no such thing as demand constraints if you are talking about the whole economy: the supply of money is the constraint.
• Retric 7y ago
  > basic macroeconomic equations Only in oversimplified models. Food production for example is generally a low margin business. However, that’s only the case with a surplus. Price shocks can wipe away even decades of minor savings very quickly. Free trade creates more centralized production which is more likely to result in such price spikes. Thailand flooding resulting in a HDD prices doubling is a very recent example.
  • hamilyon2 7y ago
    That is interesting. Where can I read more about price shocks and their influence on economy?
• rory096 7y ago
  > The "hollowing out" of American manufacturing was a result of globalization spurred by free trade. Putting aside the question of whether domestic manufacturing is more desirable than domestic production in other industries, this claim is not borne out by the data. Real manufacturing output is at an all-time high, passing the 2007 peak last year: https://fred.stlouisfed.org/series/OUTMS https://fred.stlouisfed.org/series/OUTMS Perhaps you mean manufacturing employment?
  • zaroth 7y ago
    Doesn’t the fact that we’re just now catching up to 2007 levels support my point rather than refute it?
    • rory096 7y ago
      When are you arguing globalization happened?
      • zaroth 7y ago
        The watershed moment would be China admission to the WTO in 2001. We’ve been going basically sideways since 2000. In the same period (2000-2018) that real manufacturing output increased 10%, US real GDP doubled.
        • rory096 7y ago
          What makes China's convergence different from those of postwar Europe, Japan, Korea, etc?
          • adventured 7y ago
            Scale, simply put. China went from an economy of $1 trillion (1999) to ~$14 trillion (2019) at warp speed. It's the largest economic expansion, in the shortest amount of time, that has ever occurred. South Korea has a good economy with a seemingly bright future, however it's still only a $1.5t economy today. That's sub 2% of global GDP. The US post civil war industral boom (~1890-1930) and Japan from 1970 to 1995 ($200b to $5.5t), would be the two closest, most recent comparable extreme booms. Japan of course topped out in 1995 and in real terms has never surpassed that economic output since. When you add $13 trillion in manufacturing-tilted economic output in 20 years, it's going to be very likely to dent the largest manufacturing economy at that point in time (the US). Considering the huge scale of that Chinese expansion, the US weathered it remarkably well and continued to expand its economy while retaining one of the highest GDP per capita output figures. I'd argue it harmed Europe far more than the US, suppressing their growth to a far greater degree than the US (the US economy has continued to grow over the last 15-20 years consistently, Europe has struggled to produce any net growth in the last ~12 years). Over those 20 years China rapidly built out a massive technology sector, with global giants, Europe has badly failed at keeping pace with the US and China on that front (one of the reasons Europe's growth has been so poor over recent decades).