Is economics a real /sci/ence? Do tariffs work?

[Anonymous No.16573988]

>picrel.

I hear Republicans say that Burgerstan's new tariffs are going to "hurt in the short run but work in the long run" or something like that. I'm a little skeptical that these work any better than Tarasoff warnings or triple talaq. What does /sci/ think? Are we going to see egg prices expressed in /sci/entific notation soon?

[Anonymous No.16573995]

I will consume all eggs in the world.
I will cause the egg shortage.
I will not be stopped.

[Anonymous No.16574003]

can't believe drumpf ate all the eggs. reddit must be fuming

[Anonymous No.16574010]

>>16573988
According to real economic science (austrian) tariffs are taxes and taxes can only reduce productivity and creation of value

[Anonymous No.16574012]

>>16574010
>austrian is the real economic science

lel

[Anonymous No.16574015]

>>16574012
What about other part of my post? Can you disprove it?

[Anonymous No.16574019]

>>16573988
>I hear Republicans say that Burgerstan's new tariffs are going to "hurt in the short run but work in the long run"
The problem is what the "long run" means in this context and reality vs fiction. It's an educational examples that reveals the problems with economics as a science: The impact of system boundaries are too great.
Sure, you can place ruinous tariffs on goods and eventually it will no longer be viable to import at all, leading to people spending money to build new industries and the like domestically. But, this will certainly be a process that takes longer than the four years the republicans have to control the opposition and it is ruinous during that time.

The other problem is the more insidious profit motive:
Consider two companies, A sources all parts domestically and sells a commodity for 100 dollars. B, by using imports, can sell the same commodity for 80 dollars. Introduce a 50% tariff and where does the price go?
B goes to 120 dollars, but so does A. Because now that the market price of the commodity has increased, there is no reason for A to keep their prices lower, they can increase their margin by 50%, just like that. They have no incentive not to just do that.

This is the other reason why tariffs are a problem.

[Anonymous No.16574026]

>>16574019
>They have no incentive not to just do that.
If they do that new competitor will get to business and produce commodity for 80. Now company A must again produce for 80 but only now they have more competition. I'm not supporting tariffs but that example is bad at disproving them

[Anonymous No.16574031]

>>16574026
I read the post in wrong way but the same principle remains. New competitor will produce at price 100 so company A would not be able to sell the product for 120 anyway they would sell 100 and have new competition then they wouldn't have if they didn't raise price to 120

[Anonymous No.16574034]

>>16574026
>If they do that new competitor will get to business and produce commodity for 80.
No, they can't because of the tarrif. That's the whole issue. They can rise prices with impunity.

>>16574031
>New competitor will produce at price 100 so company A would not be able to sell the product for 120 anyway they would sell 100 and have new competition then they wouldn't have if they didn't raise price to 120
In theory, but C would then have a 50% smaller margin than A and they have associate risk as they are not established in the market.
C has a hard time competing with A and B, who can crush them by playing chicken with the prices and taking lower margins/losses for a while. A and B, as established market players are less vulnerable than newcomers.

This is the key issue with economics, wherever you place your system boundaries, there is always something more.

[Anonymous No.16574040]

>>16574034
>C has a hard time competing with A and B, who can crush them by playing chicken with the prices and taking lower margins/losses for a while
Yes that would work for some time but you ignore some advantages that small firms have in comparison to big especially in sectors that are not capital intensive such is producing eggs.
Even capital intensive sectors like oil can't keep up for long is there are no heavy regulations by the state.
Rothbard talks about history of USA oil monopoly. Rothschild tried to make monopoly by price dumping and buying out all new competitors but it was big fail until he involved the state to introduce new regulations that only big companies can fulfil

[Anonymous No.16574043]

>>16574040
>Rothschild tried to make monopoly by price dumping and buying out all new competitors but it was big fail until he involved the state to introduce new regulations that only big companies can fulfil
And that's your A and B, the only ones who have enough leverage to crush any emerging competitiors.
This isn't an internet business. This hard economic, with real goods. The little guy doesn't have a chance, because the big players can outspend them significantly.

>Yes that would work for some time but you ignore some advantages that small firms have in comparison to big especially in sectors that are not capital intensive such is producing eggs.
Sure. But this analysis, as the tarrifs is more focussed on industry which is always associated with huge capex and opex.

[Anonymous No.16574047]

>>16574019
>They have no incentive not to just do that.
By the same logic B has no reason to ever sell at 80 in the first place, why not raise to 100 to match A?
In reality of course the answer is that in a capitalistic system prices are as low as they can be, otherwise someone else will swoop in and take the free money. If A operated profitably at 100 and then raises prices to 120 then C can come in sell at 100 and demolish the competition, they have no incentive not to do that.

[Anonymous No.16574049]

>>16574047
We already had this discussion. Read other posts.
In conclusion it is true if there are no more regulations by the state but if big companies introduce regulation they can sell at 120

[Anonymous No.16574054]

>>16574049
And what regulations are those? Tariffs don't give large domestic producers any advantage over small domestic producers? If anything this favors the small producers simply because eliminating foreign competition that can use slave labor is a net benefit to the domestic market. Not to mention that for most if not all Canadian and Mexican goods, there not only exists domestic producers but multiple domestic producers that are larger than their Mexican and Canadian equivalents.

[Anonymous No.16574056]

>>16574047
But C can't, because as a new player their market entry is burdened with financing the capex both A and B already paid off many years ago. Which means even if they wanted to, there is no guarantee they could match pre-tarrif A in the first place, especially since induastrial capex is almost certainly also heavily burdened by the new tarrifs.

>By the same logic B has no reason to ever sell at 80 in the first place, why not raise to 100 to match A?
Because they believe it gives them a competitive advantage which is worth the lower margin, of course.

>someone else will swoop in and take the free money
>If A operated profitably at 100 and then raises prices to 120 then C can come in sell at 100 and demolish the competition, they have no incentive not to do that.
Except, just because A and B can afford their respective pre-tarrif price points doesn't mean a newcomer can. This is why industry is very calcified in the first place.
I'll reiterate capex is enormous and not just in terms of money, but also time.
How much does a plant cost? How long does it take from the decision to spend the money until it is operational?

[Anonymous No.16574057]

>>16574054
Ecology friendly regulations, Work standards, Animal welfare regulation, Hygiene regulations... and 1000 other shit that would make hell for new competitors to implement but big firms that are established and have lot of capital can

[Anonymous No.16574058]

>>16574054
Small companies get absorbed into larger ones in a tariff scenario.

[Anonymous No.16574061]

>>16574054
>eliminating foreign competition that can use slave labor is a net benefit to the domestic market

the "fair trade" blackpill: fully eliminating quasi-slave labor will increase food prices so much that Burgers start literally starving.

[Anonymous No.16574065]

>>16574056
>But C can't, because as a new player
It's not a new player, it's bigger than B and established.

>Because they believe it gives them a competitive advantage which is worth the lower margin, of course.
Which is why A can't raise their prices, C would eat them alive.

>doesn't mean a newcomer can
It's an established player

>>16574057
This is about tariffs.

>>16574058
No they don't, except if they are foreigners of course.

[Anonymous No.16574067]

>>16574065
>This is about tariffs.
That is why I said that you are correct if state only implemented tariffs but in real world state doesn't just stop at tariffs

[Anonymous No.16574069]

>>16574065
Draw up your own scenario, if you want to have one. Don't just change mine.
A and B are established in the market, C is not. If you don't like this, please make up your own model.

[Anonymous No.16574080]

>>16574067
But the post I replied to was about tariffs. Those are entirely unrelated.

>>16574069
>Don't just change mine.
Your scenario is dumb. But again in your scenario there's "no reason" why B wouldn't just charge 100 to begin with or why won't both A and B raise prices to 500 because "They have no incentive not to just do that."
Because in your scenario you are specifically ignoring competition which is the reason why the prices stay like that.

[Anonymous No.16574082]

>>16574080
>Because in your scenario you are specifically ignoring competition which is the reason why the prices stay like that.
But A and B are competing. If you'd like A and B can be 20 companies each. But it's not necessary.
The point of the scenario is to demonstrate that tariffs don't suddenly make a market entry possible for newcomers, who will then challenge the established players. They will get choked to death instead.

[Anonymous No.16574084]

>>16574082
>But A and B are competing.
Clearly not if B isn't charging 100. And if the market is competitive then there's no reason why A would raise prices.
You can't have it both ways.

>The point of the scenario is to demonstrate that tariffs don't suddenly make a market entry possible for newcomers
That wasn't the point or if you thought it was then you failed to demonstrate it.

>who will then challenge the established players.
This isn't really the case in US markets. Domestic manufacturers in USA can produce basically everything Mexican and Canadian manufacturers are making, they just have the disadvantage of not being able to hire people for cheap. Tariffs help with that immensely which is the opposite of your "point"

[Anonymous No.16574086]

>>16574084
>Domestic manufacturers in USA can produce basically everything Mexican and Canadian manufacturers are making
If you produce one thing you can't produce another thing at the same time.

[Anonymous No.16574088]

>>16574086
You aren't making a point again. There's lot of unused capacity in US manufacturing, which is just lacking customers and it's quite possible to expand production in the short term (in matter of weeks) by simply hiring more people and in the long term (months to years) by increasing capacity.

[Anonymous No.16574090]

>>16574080
>But the post I replied to was about tariffs. Those are entirely unrelated.
I will try to explain how they are related.
1. You have no tariff on egg for example.
2. Companies A are domestic companies B are forgien.
3. Forgien companies have competitive advantage so they produce for 80.
4. Companies A can only produce for 100
5. State introduces tariff so companies B (forgien) can now sell only for 120
6. Companies A have two choices: To keep producing for 100 or start waging war with new competitors so they can keep monopoly and sell for 120.
7. If they are big enough they will use the state to introduce regulations that will enable them to block new competitors and keep the monopoly
8. Maybe they are not able to introduce new regulations in that case you are right
9. If state didn't introduce tariffs company B wouldn't be affected by regulations because it has products from abroad where regulations don't hold. In other words tariffs enable state to regulate industry and create monopoly
We have examples in history where state didn't intervene and where it did. But no matter what way it intervened. State intervention always increases prices and reduces productivity whether it was tariffs or regulations or something else

[Anonymous No.16574098]

>>16574090
>I will try to explain how they are related.
Sure let's see how far you get. Mind you every post you have made so far has been incorrect.

3 and 4 can't be correct if the market is competitive. B would raise prices, "they have no incentive not to just do that." or 6 can't be correct because in competitive markets A would be demolished with 120
7 has nothing to do with tariffs. They could do this independently off tariffs so it's not an argument against tariffs, which of course means 9 is also wrong. States can regulate domestic industry without tariffs and they do that all the time.

Your argument falls apart on the outset because USA has hundreds of egg producing firms and the market is extremely dispersed. No such thing as a egg monopoly. The market is also extremely flexible, chicken quite literally replace and multiply themselves given the chance.

So yes repeating the thing you got blown out is still not an argument, you are completely grasping at straws.

[Anonymous No.16574099]

>>16574098
>3 and 4 can't be correct if the market is competitive
Can you explain this to me? You want to say that USA has competitive advantage in all sectors? You don't believe other countries can produce for cheaper if they have cheaper labor, land, materials?
>7 has nothing to do with tariffs.
If domestic companies regulated domestic markets thus increasing prices. Whit tariffs they would be safe. Without tariffs they could not sell anything because unregulated forgien firms would sell for much cheaper. How do you disprove it?

[Anonymous No.16574100]

>>16574099
>Can you explain this to me?
According to your own logic and I quote
"there is no reason for A to keep their prices lower, they can increase their margin by 50%, just like that. They have no incentive not to just do that."
According to this same logic if B is able to sell at 80 but the competition is selling at 100 then they can just raise prices to 100 and increase their margins. They have no incentive not to just do that.
This is of course wrong but this is "your scenario" so we must abide by this.
There's also no reason why both A and B wouldn't just raise prices to 500 or 1000 or 5000 because why not. There's apparently no competition and consumers are willing to buy no matter what so they may as well.

>If domestic companies regulated domestic markets thus increasing prices
Has nothing to do with tariffs.

>How do you disprove it?
USA is perfectly capable of regulating it's industry even without tariffs. There's plenty of regulation on industry on industries that have no tariffs or had no tariffs prior to this. This is the reality which disproves your claim. Further more USA is perfectly capable of regulating foreign industry without tariffs. They can apply the same food safety standards on all products being sold in the USA and all the other regulations you mentioned. They can ban products that use slave labor or source materials from hostile powers etc. This is again something USA already does.
Again has nothing to do with tariffs. Please stop repeating arguments you already lost.

[Anonymous No.16574104]

>>16574100
you are the one who lost and is now throwing a fit.
enjoy your eggs while you can

[Anonymous No.16574107]

>>16574100
>"there is no reason for A to keep their prices lower, they can increase their margin by 50%, just like that. They have no incentive not to just do that."
I didn't say that that was other anon.
>There's also no reason why both A and B wouldn't just raise prices to 500 or 1000 or 5000 because why not
You can't raise monopoly prices to infinity but you can inflate them significantly if there is a monopoly. Monopoly is only possible if two conditions are met 1. You need to protect yourself from forgien firms that you cant regulate. For that you use tariffs
2. You regulate the market to prevent competition from forming
>Has nothing to do with tariffs
Its related to tariff because if there is no tariff they are reducing their competitiveness and destroying themselves instead of forming monopoly prices
>This is the reality which disproves your claim. Further more USA is perfectly capable of regulating foreign industry without tariffs. They can apply the same food safety standards on all products being sold in the USA and all the other regulations you mentioned. They can ban products that use slave labor or source materials from hostile powers etc. This is again something USA already does.
They can do that up to a point. But it is now clearly shown that China and some other countries doesn't care about their regulations so they are now crying that you need to tariff evil China and other countries to protect domestic industry

[Anonymous No.16574111]

>>16574107
>I didn't say that that was other anon.
Your points 3 and 4 and 6 are still incorrect for the same reason. They can't be simultaneously true.

>monopoly
There's no egg monopoly, and you can regulate foreign firms just the same as you can domestic ones.

>Its related to tariff
Has nothing to do with tariffs once again

>They can do that up to a point.
Which again disproves you.

>But it is now clearly shown that China and some other countries doesn't care about their regulations so they are now crying that you need to tariff evil China and other countries to protect domestic industry
Yes that's one way to protect domestic industry. I fail to see how this relates to your post.

Again please stop repeating points, I will stop replying to the issues that were already blown out.

[Anonymous No.16574115]

>>16573988
Checked! And not really. They work to some extent but it really is a gamble. It works better if the nation is rich and has the population and money to MAYBE be able to produce what they lack. But overall tariffs don't really work aside from being an experiment into seeing how much people are willing to suffer to buy what they previously had at now marked up prices.
>>16574019
This.

[Anonymous No.16574124]

>>16574111
>Your points 3 and 4 and 6 are still incorrect for the same reason. They can't be simultaneously true.
I explained it if you don't get it I can't help you. You didn't even try to disprove it. Monopoly prices are not infinitely inflated but just up to a point
>There's no egg monopoly, and you can regulate foreign firms just the same as you can domestic ones.
Eggs are not capital intensive so there isn't clear monopoly like one big firm but same principle applies on lots of smaller producers. Regulation prevents new small producers who are not established to produce eggs for much smaller price. There are agricultural cartels. They must oblige to regulations and its not free market.
> Has nothing to do with tariffs once again
Here you are the one that just repeats same shit without disproving me or explaining
>Yes that's one way to protect domestic industry. I fail to see how this relates to your post.
It relates to my post by showing that in the end you can't regulate other countries. USA tries that but in the end only way is to introduce tariffs to prevent free market for forming prices. It's bad for country in general and raises prices and only benefits state employees and established producers who sell at higher prices

[Anonymous No.16574125]

>>16574124
>I explained it if you don't get it I can't help you
Yes and your explanation was wrong once again

>You didn't even try to disprove it.
It's self contradictory

>Monopoly prices
There's no egg monopoly

>Eggs are not capital intensive so there isn't clear monopoly like one big firm but same principle applies on lots of smaller producers.
If you believe you have a real example then please provide one. Your post so far has been incorrect.

>Regulation
Has nothing to do with tariffs once again

>same shit without disproving me or explaining
It's disproven because it has nothing to do with tariffs once again

>It relates to my post by showing that in the end you can't regulate other countries.
Absolutely can, this was addressed already

[Anonymous No.16574127]

Does your refutation only work when considering eggs, an industry with rather low capex?

[Anonymous No.16574130]

>>16574127
So far it has worked with 100% of the examples provided. The one who claims it doesn't work has managed to provide 0 examples where it doesn't work.

I mean it's fairly easy to understand. The other guy operates under assumptions like "competition doesn't exist" and then tries to do all sorts of retarded slippery slope fallacies on top. When the foundations are rotten the arguments are bound to crash immediately when prodded.

[Anonymous No.16574131]

>>16574127
It doesn't even work with eggs. Prices will rise even with eggs if state regulates it and introduce tariffs but I will not argue with him anymore because he just repeats himself

[Anonymous No.16574132]

>>16574130
>competition doesn't exist
and you say capex doesn't exist

[Anonymous No.16574135]

>>16574132
Where do I say that?

[Anonymous No.16574193]

I like news reporters saying "IF the manufacturer puts the costs on the consumer" as if there is a fucking chance in hell that they would eat the cost themselves. Rich aren't going to lose money, the customer eats the cost 100% of the time.

[Anonymous No.16574204]

>>16573988
>Is economics a real /sci/ence?
Only free markets. The rest is governments paying someone to lie. Reminder that Keynes' and Hitler's view of how economies function is very similar. This is also why Hitler's economics are rarely discussed.

[Anonymous No.16574207]

>>16574012
>toddler who just realized printing money makes him richer

[Anonymous No.16574208]

>>16574057
This. 99.9% of all regulations should be removed.

[Anonymous No.16574219]

>>16574082
>They will get choked to death instead.
A,B,C's are based in the USA. Thus their operating costs are similar (Bar gov't regulations).
If A+B agree not to compete (for some reason they stay faithful) post tariffs, thus reap a high profit margin, C will compete against A+B.
If C goes bust, D will form, because there is a high profit margin to extract wealth from. If D goes bust, E comes along. This process repeats until competitors attenuate the profit margin to a reasonably low level.

This is irrefutable. It works the same way as evolution. If there is an evolutionary niche to be exploited, a species will inhabit it. If there is profit to be made, a company will inhabit it.

[Anonymous No.16574223]

>>16574086
>If you produce one thing you can't produce another thing at the same time.
There is more than one person inhabiting the USA. Bob will produce widgets, Sally will produce umbrellas.
The economic pie is not a fixed size. Socialists fall into this trap.

[Anonymous No.16574226]

>>16574090
>6. Companies A have two choices: To keep producing for 100 or start waging war with new competitors so they can keep monopoly and sell for 120.
This never works in a free market.

[Anonymous No.16574227]

>>16574090
>7. If they are big enough they will use the state to introduce regulations
Correct. Not a free market.
If we hold the view that governments are anything other than evil parasites, we must hope there is a way to prevent this process.
Is there?
If not, you must agree that the things government can do must approach zero.

[Anonymous No.16574236]

>>16574098
>Your argument falls apart on the outset because USA
His argument requires the native government will produce regulations that prevent competitors from competing against A.

The assumption that a government will create such monopolistic regulations is reasonable, it's happened and is happening frequently.

But you're also correct that this process is a separate issue from tariffs. If we were able to magically prevent the government producing such favorable regulations, A would reduce prices in response to competition.

[Anonymous No.16574240]

>>16574099
>If domestic companies regulated domestic markets thus increasing prices. Whit tariffs they would be safe. Without tariffs they could not sell anything because unregulated forgien firms would sell for much cheaper. How do you disprove it?
Lets assume that a government (native or foreign) always produces monopolistic regulations that favor one producer (usually because corruption inherent to gov't).

Knowing this were so, would you prefer that the "excess monopoly profit" is produced in the foreign land, or your native one?
If we accept the assumption, it is better to have tariffs, at least the monopoly is increasing your economy, not the foreign.

I expect Trump knows this.

[Anonymous No.16574247]

>>16574100
>There's also no reason why both A and B wouldn't just raise prices to 500 or 1000 or 5000 because why not. There's apparently no competition and consumers are willing to buy no matter what so they may as well.
In this scenario, we assume the government has engineered monopolistic regulations. To remain electable, and keep the facade going, the gov't will engineer these regulations to ensure some degree of competition which keeps prices at 120 (allowing A a vast profit) but no higher.

[Anonymous No.16574248]

>>16574107
>You can't raise monopoly prices to infinity but you can inflate them significantly if there is a monopoly.
You did not state the reason for this. I have done so:>>16574247

[Anonymous No.16574249]

>>16574019
This totally discounts the native producers C through Z that compete with A to reduce the profit margin. Very silly.

[Anonymous No.16574253]

>>16574040
>who have enough leverage to crush any emerging competitiors.
This discounts another large established company realizing A has an enormous profit margin, then moving it's plentiful resources to establish itself in A's market.

A free market through time, always erodes monopoly prices. The only exception is when a single produce is producing genuinely excellent value, in which case there is no injustice.

[Anonymous No.16574256]

Honestly I'm amazed this thread has so many posts saying sensible things. People actually realizing gov't is to blame for high prices. A beautiful thing, usually these arguments never get beyond basic supply and demand.

[Anonymous No.16574308]

>>16573988
I'm a 3rd year economics student and I don't give a shit about the economy. My sole purpose in life is to construct and solve dynamic stochastic optimization problems and I will not build a model for an egg market. Fuck you.

[Anonymous No.16574334]

egg yolks are very unhealthy

[Anonymous No.16574380]

>>16574236
Which is not happening and is insane slippery slope argument that has nothing to do with the thread.

>>16574247
Has nothing to do with tariffs

[Anonymous No.16574647]

>>16574249
In this example A represents the set of native producers in the abstracr

[Anonymous No.16574659]

>>16574256
>Domestic company A produces product for $100
>Foreign company B produces product for $90
>Trump adds 10% tariff on company B products
>Company A raises prices to $110 and decides it's in the Giffen goods market
Government *can* screw shit up.

[Anonymous No.16574902]

>>16574098
>No such thing as a egg monopoly
female fingers typed this.
(((big egg))) wants to keep you in the dark!

[Anonymous No.16574939]

>>16574659
>Government *can* screw shit up.
It essentially always does. It's default state of being is to screw shit up. Only in rare cases does it refrain from doing so. These cases are characterized by a lack of government interfering in that niche of the economy.
That is,times when governments are not screwing shit up, is when are governments is small.

[Anonymous No.16574945]

>>16574380
>Which is not happening
What isn't? That government produces regulations that (deliberately or not) reduce competition?
I think you're wrong: The US government has made loads of anti-competition regulations. Whether those regulations are less than other governments (e.g EU), I'm not sure. Just look at US insulin prices to see regulations destroying competition.

>Has nothing to do with tariffs
I agree. But it does explain why A&B haven't already raised prices far above 120.

[Anonymous No.16574946]

>>16574647
Then imagine I typed B instead of A.