Guys...

Guys, I had an argument with a roommate trying to explain how an import tax on goods from Mexico actually means that American consumers are paying for a wall. He was trying to argue that trade deficits are inherently bad because goods and services have no inherent value, where as money does. Any others have experiences with otherwise smart people not understanding economics?

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Mexico is paying for the wall you idiot.

Do you really think they won't capitulate if Trump puts a tariff on?

American consumers won't pay more because **NO ONE WILL BUY THE PRODUCTS FROM MEXICO**, this will force businesses to relocate to the US (or other country without a tariff), this will create US jobs and provide more wages to US citizens. Also if all the businesses left Mexico post-tariff, think of all the jobs and investments that would flee Mexico, it would create political and economic turmoil in a country which is already poor. Also the US can pull foreign aid and other resources from Mexico.

Believe me, Trump is negotiating this well and Mexico WILL end up paying for the wall.

It's like you've never read the Art of the Deal.

It's all just threats, anyway.

Trump is just saying, "Control your fucking populace! I'm sick of all these drug traffickers and refugees!" to Mexico.

Peña is saying, "I don't see any reason to do so."

Trump is saying, "You'd better fucking do it, or I'm going to tax the everloving shit out of your stuff so that no one will buy it. And with the taxes, we're going to build a giant middle finger out in the middle of the desert"

Peña is saying, "I don't want to be seen talking with you while I work on complying to your demands."

>goods and services have no inherent value, where as money does.

Is this a joke? Money has no value. trade deficits are good. let them have our fiat money, we'll take the cheap goods, which have real value.

While you make a convincing point, businesses relocating to America would charge higher prices, meaning the American people still pay higher prices for their goods and services. And if no one buys products from Mexico, you're either getting less stuff as a country, or buying more expensive goods from someone else. There's no way where you're actually better off by taxing yourself.

That was what I was saying, but he kept saying that goods from Mexico were worthless.

>People unironically believe protectionism is sound economics simply because President Meme supports it

His policy isn't pure protectionism though. He's also said he wants to reduce corporate taxes and deregulate quite a bit.

Actually the US does a lot of business through Mexico. Mexico has more FTAs than America, so Mexico is used as basically a port for American businesses to reach far flung markets

More like American companies will be hurt in the long run. Trump is not negotiating this well, his diplomatic teams are resigning in shame. Their replacments have vowed not to stay long either, so Trump is actually in a bad position. I'll give it a month before USTR staffers/managers start resigning too, cap this

independent.co.uk/news/world/americas/us-state-department-senior-management-team-quit-resign-rex-tillerson-secretary-donald-trump-cabinet-a7547916.html

>>>>>>THIS
user if that's you in the pic I want to marry you

You kind of expect these departments to purge themselves when the new boss is appointed. It was infested with Obama people who were probably very hostile to these changes regardless of whether or not they are beneficial.

>You kind of expect these departments to purge themselves when the new boss is appointed. It was infested with Obama people who were probably very hostile to these changes regardless of whether or not they are beneficial.

Most people in these departments serve through both Democrat and Republican administrations, if you read the article a lot of those people who resigned were originally appointed during the administration of George Bush.

This level of resignation is almost unprecedented and hasn't been seen before in recent US history

Yes, the famous British actress Emma Watson is posting on the Veeky Forums board of Veeky Forums

>An article from 'The Independent' said bad things about Donald Trump.
Wow . Really firing up the ol' neurons over this one.
In other news, water is wet.

The 'team' was actually fired by Trump, a whole number of departments including, State, Intelligence agencies and even general politicians are going to have to be fired (or removed) by the incoming administration.

This is what people expect and want (see "Drain the Swamp" campaign promise). Lots of these "establishment" hacks will be axed and this is a good thing. Having them stay would only lead to them being hostile to Trump.

The concept that a trade deficit is bad is called Mercantilism, and people have been poking holes in the logic since the 1500's.

The thing is though, if your roommate is stupid enough to just blindly believe the idea, then he most definitely isn't smart enough to understand how currencies fluctuate in value in the real world, AND he also won't understand the concept of the time value of money.

It's like you haven't ever heard of what rich people do before.
Remember the Panama Papers? Elaborate proxying will just become more popular.
Producing in the US is too expensive with how high the minimum wage is.

>Any others have experiences with otherwise smart people not understanding economics?
no.
I don't talk economics with people, that would be absurd. I'm more likely to discuss the mouth morphology of bee parasites or the strategy behind digging wells deeper than your neighbors.

what kind of weirdos do you hang out with?

>Remember the Panama Papers? Elaborate proxying will just become more popular.
Theres a reason that the CEO's of Ford, VW and more went to Washington two days ago and proceeded to suck Trump's dick in front of every journalist in the world.

Trump effectively has the power to call for a national boycott of any company he chooses with just a tweet through what is known as jawboning.

If any company is found to be proxying to a significant standard and Trump singles them out, you can kiss their sweet company goodbye.

Theres a reason that he defied every other prediction and economist over the last year and still won.

>Producing in the US is too expensive with how high the minimum wage is.
Pretty sure there will still be competition between the states. Dem states with higher min wage will probably lose business to Rep states without.

You're also forgetting that if more people in the US get jobs then the overall purchasing power of the average US citizen rises, and that of the country too.

>Theres a reason that he defied every other prediction and economist over the last year and still won.
he lost the general election, so do please tell us why you think he won.

I can see some states getting the good side, but it still won't take out the fact you can pay an entire MONTH with a chink or mexican worker for what it takes to pay single american WEEK

The illegal voters won him the popular vote, you mean. Keep getting lost in MSM fantasy land, it's good for our pockets.

Holy shit, if your roommate thinks that, then he is fucking retarded. Like nigger level retarded.

A trade defecet (current account defecet) means other countries are holding more of your cash and with this cash (capital account inflows) they can buy long standing assets in your home country such as housing pipe lines power plants. So the money is not worthless your friend is just against forigen ownership.

In Australia we have a huge trade defecit with China and they are buying up all our houses in the capital cities, and our government lets them do it. So this pushes every regular Aussie out of the city because of forigen ownership or a capital account inflow. So that is an example where a trade defecit can hurt you.

I'd bet Trump's policies have to do with the people he's got around him. The people that would benefit the most from expensive goods (other than the government in order to fund his wall) would be the banks as it would make more people be in need to take out loans.

>buying up all our houses
build more houses. problem solved.

>using an inelastic demand curve
>elastic would show the high incidence on supplier see the pic related
You're room mate sounds like a smug undergraduate who's taken his first macro economics class.
We're not talking tap water or gasoline OP (which have inelastic demand), we're talking common Mexican imports, the burden would be on the supplier. The graph he made is interpreted, for the most part, correctly but he is interpreting demand wrong.

Yes, they won't. They have already said they won't. Now even assuming their entire economy is held up by the USA, which it isn't, countries value their self respect as much as their economy. And third worlders care a lot less about economic turmoil. They're used to it. Subconsciously they think it's the default state of things.

This is all that needs to be said about the issue.

There's a reason goods are imported from Mexico. Either the goods come exclusively from Mexico in which case they still will, just more expensive. Or they come from Mexico because they're cheaper than domestic goods, in which case consumers will also have to pay more.

Sure, the loss of manufacturing jobs may hurt Mexico, but fucking their shit up will not enrich the US. Financially only US consumers will pay for the wall.

>Dem states with higher min wage will probably lose business to Rep states without.

Yeah, I see a lot of jobs going to Mississippi, the Vietnam of North America.

>wants to reduce corporate taxes and deregulate

We did that before under Reagan and all it did was make the rich and corporations richer while fucking shit up for everyone else.

>He lost the general election
AHAHAHAHA
>AHAHHAHAHAHA

Fuck off with that shit just learn to take an L tbqhwyfam

Eh, I'm not too worried. Republicans are pro-business and business leaders know tariffs are bullshit so the House and Senate won't cave in to this shit.

Holding an obviously photoshopped book, no less.

>Republicans are pro-business
they're pro-large business and anti-small business.

like most libertarians they're too retarded to understand free markets destroy competition naturally.

Hmmm. Good point. Now that I think about it, I don't recall Republicans advocating for small businesses.

I always found it strange how people making under $500,000 a year keep voting for the party that hurts them more financially. Since FDR, Democratic presidents resulted in the greatest income growth across all segments while income growth under Republicans was mostly concentrated in the top 10%. Oh well, it's a self-correcting problem as the US population under 35 is majority non-white. Each presidential election, the white population declines by 3%.

Value politics. People are too stupid to realize they're voting in assholes who want to take away shit like insurance companies not being able to drop your medical coverage citing a pre-existing condition, but hey, Trump hates Mexicans and Pence electrocutes gays!

>I don't recall Republicans advocating for small businesses.
they actively try to defund the SBA and other protections for small biz.

small business owners may not care, their end-game is usually being bought anyways. And most of them are easily in the top 10% of earners.

It's possible to be pro-business-owner while being anti-business.

Never understood this. I do find the sterotypical SJW's annoying but I vote based on my wallet. Why so many ignore their wallet and vote based on feelings instead of fact is beyond me.

Shit. A good 10% of my bank's loans are SBA 504 and 504 and 7a loans.

>Shit.
fortunately the GOP is largely ineffectual. They concentrate on battles they can't possibly win, that way they can pretend to represent the morons without having to prove how stupid their goals actually are.

>I always found it strange how people making under $500,000 a year keep voting for the party that hurts them more financially.

As far as I know this is something a bit particular to the US. It must be some difference in mindset - the going theory is that in the US people still believe in the American Dream. And if your own hard work can get you to the top, why would you want to make life harder for the top 10%? You'd be destroying your own future. And why bring down on people who "deserve" to be rich?

It seems like a delusion to outsiders, but there's also some positives to it. This optimism and willingness to work in pursuit of better conditions has turned the US into a powerhouse through-out the 20th century.

Are you dumb, some hick in the midwest is not voting republican because he's gonna be rich some day. He's voting republican because democrats are niggers, gays, and terrorist that are trying to destroy America.

I love Bill Maher; I remember a stand up routine he did when I was a kid:

>Republicans: You're going to get pissed on but one day it might be YOU doing the pissing.
>Democrats: You're going to get pissed on but here's an umbrella.

Sums it up perfectly. Sadly, most Americans hold out for the hope they will do the pissing.

My family is sadly from West Virginia. They voted Trump because he said he would bring "coal back." That's it; he didn't have a plan. Coal isn't coming back because natural gas and renewable energy sources are much cheaper even if you abolish coal regulations. Meanwhile Hillary had a 4,300 plan with $33 billion in total spending to retool the coal workers to new industries. Yet my family was cheering Trump and hissing at Hillary.

We're not talking about racial aspects, we're only talking about economic policy. And the fact of the matter is that poor Americans are disproportionately against redistribution of wealth compared to other parts of the world.

Name one other country where "Socialism" is considered an abominable fringe policy by large parts of the poor electorate.

Actually economist here. This guy is correct on OP's post. There are many substitutes to mexicos goods, that if were 20% more expensive would see a sharp decline in quantity sold to us since Americans would by the now cheapest compatible good, which maybe only be 1% more expensive than they are paying now for Mexican goods.

We have the leverage and trump knows this. He is using this as an example for the rest of the world to show them that we aren't going to get fucked in trade. We are going to fight for the best deals for he people now and this is gr first step in winning. The wall will be built and Mexico will pay for it.

Where did you get your degree?

>There are many substitutes to mexicos goods
which means their goods won't sell and he won't collect his 20%

on the other hand if the goods sell, it's US consumers that will pay the tax, not Mexican manufacturers.
>Actually economist here
you're a retard larping. probably underage.

>Meanwhile Hillary had a 4,300 plan with $33 billion in total spending to retool the coal workers to new industries. Yet my family was cheering Trump and hissing at Hillary.
You are clueless.

"Retool" them for what? To be CNAs?

Seems like the swamp is draining itself then.

it is.

but the swamp is better than the muck that it covers.

Pretty sure people were sucking his dick so hard they elected his proxy for a 3rd term.

Yeah I'd love to see the mess created by appointed yes-men occupying the same positions for 10+ years. Keeping them on for another 4 doesn't seem like a solution.

>Keeping them on for another 4 doesn't seem like a solution.
replacing them with even worse incompetents isn't the answer.

this will soon be clear. Conservatives have convinced themselves that things are so bad we'd be better off tearing it all down and starting over.

they haven't seen bad yet.

USA isn't even the biggest market. Good luck being the 'tough' guy negotiating the deals LOL

2 spooky

No, you obviously have no idea what you're talking about.

>third worlders care a lot less about economic turmoil

This isn't true, maybe in an African third world country where there is no sign of industrialization, economic growth, etc. But in Mexico (which is basically 2nd world), they are far enough along that if their economy fucked up they'd just lose there shit, riots, coups, etc.

Did you even see what happened when the price of fuel went up just 20% in Mexico. they were looting shops and protesting like crazy. Look it up.

That is just a drop in the ocean compared to what would happen if Trump decided to trade war them.

University of Washington

>which means their goods won't sell and he won't collect his 20%

Exactly. Which is why this hurts Mexico more than us and Trump now has bargaining powers to create a deal that will pay for the wall and Mexico is able to sell its goods to us without a 20% tax. Win win for both countries. Trump has a long track record of doing this.

I live in a second world country you idiot. When the recession hit we barely changed anything.

That protest was for government corruption retard.

>Win win for both countries.
he artificially creates a loss for the opponent and then removes the loss and retards like you call it a win.

but he's not dealing with retards like you anymore. To mexico, the wall is a loss and paying for the wall is a double loss.

or they can call his bluff and watch him go down in flames even if it hurts them. Which is what they're doing right now.

And a 20% tarrif is a bigger loss. Call his bluff. Mexicos economy had already gone down the shitter because of trump. They will drop to his knees and beg him to take the check for the wall.

>And a 20% tarrif is a bigger loss
sure, if he could do it. Chrysler would have him assassinated if we pretend he could even get the tariff past the supreme court.

Mexico doesn't care about their economy as much as they do their pride. El presidente tried to save the economy and his people demanded he act for their pride.

Trump is an imbecile, and mexico isn't going to pay for our wall.

The USA is BY FAR the world biggest market, not in terms of population, but in terms of purchasing power it 100% is.

I'll tell you why.
1,200,000,000 Chinese, but your average chinaman is actually very poor and chinese don't have the same culture of buying as americans, plus the wealthy ones all leave and go to places like canada, australia, USA, etc.
(its, the same with indians etc.)

300,000,000 Americans. But for all the cry of the 1%, most Americans can afford a car, to buy whatever they want, many have a house and even the poor can afford to spend some of their money on things they dont necessarily need due to social security safety nets.

The only thing that could maybe compete is the EU, but they have their own protectionist methods. The US is the number 1 destination for any seller of a marketable good or service, everybody knows this.

If Trump did start a trade war with China, they would be fucked, despite all their 'tough talk'.

If US stops buying from China, they literally lose maybe a quarter or a third of the total demand for their products AND jobs. now imagine that suddenly 200 million od Chinamen lose their jobs or a significant portion of their wages.

It would be civil war.

The US would also be hit, but would be able to recover, jobs would come back, etc.

None of this will happen though because Xi Jingping will bitch out, just like he'll bitch out over the South China Sea Islands. There's a reason that Xi, who presides over the least 'free' economy in the G20 was trying desperately to promote 'free' trade and globalization at Davos last week.

If Trump does what he says he'll do, China will be having some big league problems.

>I live in a second world country you idiot.
Which one

>When the recession hit we barely changed anything
LMAO if you think that a recession is anything like a trade war.
The recession hit the first world the most anyway. Most second world countries were not harmed much.
A trade war on a specific country would be MUCH worse than "the recession"

They bid up the prices of property in the city so people have to live half an hour out of the city so they have to catch a train into work which decreases happiness, foreign ownership is a huge deal in a low population country

That's not how the Supreme Court works though.

>A trade war on a specific country would be MUCH worse

>your poverty gives you unfair advantage!
>I'll make you even poorer!

they don't have that far to fall. Not like we do if they decide to jack up the price of oil or vegetables by 200%

Are you saying USA isn't Mexico's largest trade partner?

it is.

the president has the power to impose tariffs without congressional approval only in very specific situations. You can bet your ass it will wind up before the court if he tried it.

Dude Mexican were livid about us diverting corn to ethanol production because it spiked the price of tortillas. Lot of those people are sensitive to very small price shifts.

>>your poverty gives you unfair advantage!
>>I'll make you even poorer!
true, but if it gets bad enough their will be political turmoil too. This would put Nietos party out of existence forever and possibly see the country taken over by a coup or something which will lead to bigger problems for the country itself and its people (see Cuba).

Who do you think is in charge of congress?

>Lot of those people are sensitive to very small price shifts
they're even more sensitive to being insulted as a nation and as a people.

Hope they can eat their pride.

>Who do you think is in charge of congress?
lol
not sure if ignorant American or a foreigner that has no reason to know.

you tell me, who do YOU think is in charge of congress?

food is one thing they won't be running out of.
drugs would be another.
they also have plenty of oil.
and beaches where americans used to like to vacation.

I'm pretty sure Trump keeps Mitch and Paul in gimp suits under his bed.

So you've now conceded to all my points and agree with me. Now you're last childish grasp is to doubt lord emperor trump if he could do it. Haven't you learned not to doubt him after this past 1.5 years?

stop whining and get into the housing development business, fool.

maybe, but they also don't control congress.

I've conceded none of your 'points' and noted that Mexico is currently doing the opposite of what you predict. If their president caves in it will be the last thing he does in office.

Pretty sure you're retarded.

>maximum damage control.jpg

yes, that's one of the symptoms of dunning kruger effect.

if you were intelligent you'd first wonder if you're retarded.

be that as it may, congress controls congress. Which is why it doesn't do much of anything. The majority doesn't control it, the minority doesn't control it. The house doesn't control it, the senate doesn't control it. The majority and minority leaders don't control it. The president doesn't control it.

if there's anything like one single thing that controls congress it might be the bankers, or wall street, or the defense industry. But even they don't have full control.

it's a political stunt. Trump can afford to fail and move on better than Nieto can.

Nieto probably wants to pay for the wall and avoid conflict but his people don't. So even if he agreed to it he'd just be tossed out and the next regime would refuse payment.

Two questions that I've had about this subject:

1. If production does end up moving to the US, what is stopping the exploitation of workers? If we start manufacturing things here, what is stopping companies from abolishing the minimum wage/pulling a wal mart and totally fucking them over? Trump wants to deregulate, after all.

2. Food production from Mexico. So much of America's farmland has been overtaken by housing (I am from a farm state) and do we have enough land to produce enough food?

>do we have enough land to produce enough food?
the area of the land is less of a concern than the climate and quality. Most of our food is raised domestically, Mexico just does our fruits and vegetables. Some of our meat.

If you recall a few years back when we had a tomato shortage and everyone that eats fast food was bitching about not having their tomatoes on their cheap ass burgers... that's all that would happen. Except instead of just tomatoes it would be lettuce and peppers and onions and potatoes and pretty much every other fruit and vegetable.

they currently provide about 70% of our veggies and 40% of our fruits by weight. Also of course migrant workers from mexico harvest our own crops, so we could see the complete collapse of fruits and vegie farming here as well. At the very least the prices would skyrocket since americans can't afford to harvest strawberries for ten cents an hour.

Enforcin pre-existing laws about not employing illegals would do a lot more for blue collar workers than tarrifs will.

Woof. So basically, we'll be ingesting corn and meat (and meat that might not even be from the US, since the labeling laws are fucked now.)

But even corn is mostly used for fuel. Is Trump the greatest anti vegan ever?

You had the chance to bern him tho

Where do you get your news?

>Mexico doesn't care about their economy as much as they do their pride

You have no idea what you are talking about. If they cared about their pride then they wouldn't be a laughing stock country ran by drug cartels

>"Retool" them for what? To be CNAs?

Medical, engineering, IT, etc. What do you expect? That the US can compete on a cast basis when the average Chinese manufacturing worker gets paid $8,000 a year to work 6 days a week for 12 hours a day in squalid conditions. Is that your vision of America?

*cost basis

>If Trump did start a trade war with China, they would be fucked, despite all their 'tough talk'.

The US would lose a trade war with China.

>hurr durr why?

Because the Chinese are an authoritarian government. They don't need voters. In a trade war, the US jacks up tariffs on Chinese products which make up a HUGE amount of the US marketplace. US voters aren't going to stand seeing their smartphone prices and TV prices double, triple, or quadruple.

>HURR DURR BUT MANUFACTURING COME BACK TO AMERICA

The Chinese need to last two (2) years for the next US election. Bringing back manufacturing will take considerable longer.

>DOUBLE HURR DURR MURR JOBS IN MURICA

US manufacturing is at a all time high yet US manufacturing peaked in 1979. Why your uneducated poorfag ass asks? Because of automation. US manufacturing has never been stronger yet the least amount of people are employed in manufacturing due to technological advances. Even if manufacturing was brought back to America, the employment impact would be negligible.

What's your point? Your graph clearly shows the US is beholden on Mexico for a vast amount of imports. It's like trying to boycott the only grocery store in town. You're just going to starve.

>Mexicos economy had already gone down the shitter because of trump

???

>US manufacturing production is at a all time high yet US manufacturing employment peaked in 1979**

>The US would lose a trade war with China.
No. China has much more to lose in a trade war, which is why they are panicking slightly and trying to promote free trade.

What'll happen is that there'll be "growing pains" for a few months where iPhone prices increase but then they'll come back down because Apple will relocate from China to somewhere else in order to keep their business profitable and selling products.
The prices would never quadruple or triple or etc.

Next Presidential election is 4 years. Next congressional election in 2 years, republicans usually have an advantage in these elections and will probably do well.

automation will have a severe impact I agree, on every country though

>businesses relocate to the US
>(or other country without a tariff)
>this will create US jobs

>other country
>US jobs

OKAY.

thats not emma watson you dumbass

>Hillary Clinton gathered 3 million illegal votes but not 77,000 total in the states where it matters
Senpai she won the popular election because states like NY and CA gave an overwhelming majority to her despite anything over 51% not mattering at all

In other words you're confirmed retarded.

yes it is reverse search the picture