Update
Only logged in members can reply and interact with the post.
Join SimilarWorlds for FREE »

Practical economics - part 1

So I have been reviewing my list of trading partners and was shocked to discover that Mr Patel, owner of our local convenience store, has been RIPPING us off for months 😡 We are running a 100% trade deficit with Mr P, due to his UNFAIR trade practices. I have therefore decided to impose a beautiful 50% TARIFF on all goods entering our home from the convenience store . . obviously this tariff will not be paid by us as that would make no sense at all 🙃

Mr Patel reacted DISGRACEFULLY by suspending our credit tab and refusing to serve our daughter her favourite marshmallows. This does not matter. We shall build a marshmallow factory. We shall make the best marshmallows in the world . . 😴

My wife then pointed out that I run a 100% trade surplus with my employer and wasn't this UNFAIR also? Of course not, because all the money is coming to me, which quite clearly is a GOOD THING. This is why the serious business of economics should not be left to WOKE simpletons 😔
This page is a permanent link to the reply below and its nested replies. See all post replies »
AuRevoir · 36-40, M
You’re trying to create a clever analogy, but it’s done so poorly. You fail to implement key factors in the supposed “economic” fictional situation you created.

In the case of who “You” represent yourself to be. “You” would be akin to an enormous business conglomerate. Such as Amazon. Where people are allowed to sell their product while using “Your” platform. Generating the largest marketplace in the world.

Meanwhile “Patel” represents a small mom and pop shop.

“Patel” sells on your platform but tells you that you can not take your dues of “50%” owed to you for selling in your Amazon marketplace. And that they should take full profit from you, while attempting at monopolizing a product on your platform. And that it will remain at “0%” because for some reason they believe they can dictate to you. The owner of the largest marketplace in the world.

Meanwhile, telling you that if you decide to sell a product in their mom and pop shop. With a very small marketplace. That virtually earns you very little customers. They then state to you the financial fee for using the “Patel” marketplace. Is a “100%” meaning that you will earn exactly $0 revenue. From the very small marketplace you have been doing a huge favor for this whole time.

This is the correct and proper version of an analogy on what’s taking place.

The fact that you don’t understand basic and simple math and yet you’re in your 40’s or at the very least, approaching it. Is another testament to how the scholastic system has failed people.

And to save on my own time I didn’t do a complete and more thorough example. I would still have to keep the base of the example o have while going into more details. But if people can’t figure out simple math with this example then there’s no hope for them.

Bob is smaller but Punches Terrance in the face every day for decades . Terrance is bigger and takes the abuse for years because he knows how small Bob is, but eventually gets fed up of Bob’s behavior and then finally says he’s going to reciprocate and punch Bob back. Bob exclaims how dare Terrance do that, and is mad at Terrance. Claiming Terrance is a bully, and remarks how Terrance wants to start a war with him.

Who is in the wrong here?

Democrat left leaning Liberals will say Terrance is in the wrong. Should not protect himself, or his own well being. And instead should submit to Bob’s daily gaslighting and abuse.

Republican right leaning Conservatives will say Bob is in the wrong and shouldn’t have been abusing Terrance who had been being kind to him for years.

This is the difference between people and how their brains work.

One type supports abuse. The other calls it out for what it is.

I did it with not only one, but two succinct analogies. You people need to learn not only basic math. But what basic self respect looks like.

The biggest flaw in your analogy is that you behave and portray the two owners/suppliers as if they are on equal footing. When they are not.

America is the largest consumer marketplace in the world. Meaning that because they’ve blocked our products for so long already with tariffs. Any attempt at increasing tariffs against us would never even harm us as we barely sell to sources outside of America.

But since they have been given extremely low, to virtually zero tariffs on all of their products for so long. Selling in America was essentially cheaper than even selling in their own country. And since America has more buyers per capita than sellers. Them being tariffed is an unsustainable battle they can not win.

It’s why the entire EU has already conceded in defeat and is trying to come to the table for zero for zero tariffs. And why eventually everyone else will follow suit with similar deals being made.

If your consumer/customer base is 80-90% American and suddenly your country is going to be held to a 25-50% tariff with the possibility of increasing reciprocally. Because you keep attempting to raise it. Which will only raise it to the exact point you raised it against the country you primarily sell in. You are bound to have all your businesses collapse within a year or 2. As it is completely unsustainable.

The fact that you people need to have your hand held and explained on how this all works. And who has more bargaining power at the table is just baffling to me.

It’s like a short skinny computer gamer talking about doing an MMA match with a man who won the champion title of a worlds strongest man competition.

They are not on equal footing. And one is obviously going to lose. And their big talks about retaliation or winning were all bluffs to begin with.
SunshineGirl · 36-40, F
@AuRevoir You are entitled to create your analogies, but I will stick with mine. I have used my household finances as an analogy to highlight why I believe Trump's "policy" to be illogical and self-defeating.

I work in finance and my labours impact on the economic wellbeing of thousands of ordinary people. My personal view of economics is that it is a potential force for social stability and harmony between nations. The global economic system was far from perfect, but order and the rule of law is much preferable to what is apparently being proposed as an alternative. I completely refute Trump's world view of a zero gain, winner-takes-all system.

The EU has not "conceded defeat". If zero tariffs are agreed (which I would be delighted with as a liberal economist) Trump will find something else to whinge about and explain away the failures pf hos "vision". Already he is seeking to interfere in VAT regimes, which are a purely domestic matter.
BlueVeins · 22-25
@AuRevoir The US's tariff rates aren't based on foreign tariff rates, and in fact, we're placing tariffs on countries that have no tariffs on the US at all. It's just max((net imports/total imports)/2,10). For a lot of the countries we actually do have a trade imbalance with, it's just because the US is much wealthier, and thus more able to buy the poorer country's products.
AuRevoir · 36-40, M
@BlueVeins You’re wrong. Nor are you in line with any of the context of the analogy I made. So your point is made moot.

The new tariffs are made based on being completely reciprocal based off 2 things. Their behavior in how they’ve treated the US. Or their own tariffs they’ve held against the US.

These countries have also highly benefited for decades from USAID. All the while never giving our country any kind of aid.

Again my analogy stands. Others are not on equal footing with America. And we’ve been taken advantage of for too long. The majority populace of this country recognizes it and is sick of it.

And the smaller nations hardly matter for what Tariffs they’re enduring or not enduring. The primary focus is the big key players at the table. China, Canada, Mexico, Europes countries etc…

You don’t even make a compelling argument with your post. You have no real point you’re making. It’s all just a bunch of empty words. Why you bothered to make such a post is beyond me.
This message was deleted by its author.
BlueVeins · 22-25
@AuRevoir The US government released their methodology. Foreign tariff rates & other trade barriers aren't in the equation at all. You can see it yourself.



https://ustr.gov/issue-areas/reciprocal-tariff-calculations
AuRevoir · 36-40, M
@BlueVeins They’re not explaining anything in proper context. Which I already explained. Multiple times.

This person is not using the math properly in the explanation that accounts for all kinds of factors. But instead is cherry picking factors that they don’t understand and attempting to present them as facts when it’s more ignorance on their part than anything.

I swear it’s like you people read posts but and don’t absorb anything people say within their posts.

I already explained this in my analogy. America is the biggest marketplace in the world. It’s akin to you selling on Amazon, Apple, or Google. Where they take upwards of 30% just so that you can use their marketplace.

It’s the same effect. They are a tiny insignificant mom and pop shop. We are Amazon.

So of course it’s weighted! Because we are of a higher value. That’s where terminology such as “Quality” makes something more valuable.

Because our marketplace is more valuable. If they were to only sell products to their own citizens do you know how much money they would make? All those companies would be on the verge of bankruptcy within a year.

We are NOT ON EQUAL footing. It is basic economics.

The tariff itself is reciprocal in terms of MARKET VALUE. Not base product value. You’re going to make significantly more wealth in our country. Hence the scaled weight. Those systems have always been applied the world over.

Man it feels like I’m talking to fourth graders all the time on this website who don’t understand how economics work. It’s a social structure that’s dependent upon multiple factors. That loves and breathes upon a consumer base. Which America is explicitly known for due to its embracing of Capitalism.

None of which is taken into account within the equation presented. So their explanation of it being nonreciprocal. Is incorrect.

A person opening a lemonade stand in front of the or house. Compared to a person signing a contract deal with Walmart to sell their bottled lemonade in their store. Which is more valuable? Will there be costs to selling it there compared to owning your own lemonade stand that’s in front of your house? Where Walmart charges you percentages and factors based on their projected sales marketing in which they know their worth worldwide compared to the worth of someone’s home based lemonade stand, Yes. Does this somehow make it unfair that they’re paying in to use said marketplace? No, absolutely not. They know their value, they also know the value of your product. So they sign you a deal. Maybe they’re getting a large portion of the cuts being made. But you would make next to nothing if you were to stick to your home based lemonade stand.

I don’t know why economics is so hard for you people to understand. It’s a fluctuating principle based upon the health of a marketplace.

It’s the same reason why Hollywood keeps losing money while making a lot of their films. Because they keep thinking that the value resides within themselves, narcissistically. Instead of understanding where the proper market resides, it’s worth, and where actual value comes from.

I could give multiple analogies on these subjects but I doubt anyone on SW is going to understand. Either because they blatantly refuse to learn because they’re set on a warpath to remain adversarial, or because they’re just incapable of learning.
SunshineGirl · 36-40, F
@AuRevoir It was only a light-hearted satirical sketch . . no need to quote an entire White House briefing to me 🙂
This comment is hidden. Show Comment