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The McKinley Years

jasonsteinhauer.substack.com

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Re: The McKinley Years

#21

Post by jgalt212 »

fatbird wrote: post #6
A_D_E_P_T wrote: post #4

> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…

I think you're correct about the importer paying the tariff, but it doesn't really matter, does it? If I sell into the US and have to pay the tariff, I'm going to raise my prices to cover the additional expense. Regardless of who pays, the importer's final cost is higher, who then passes it onto the consumer.

> 'm going to raise my prices to cover the additional expense.

Only if the market will bear such expense. If your product sells at $100 and the tariff is $15, what makes you think the importer will be able to sell the same number of units at new price of $115? Depending on the demand, the $15 cost will be born by a combo of the importer and consumer.

Re: The McKinley Years

#22

Post by potato3732842 »

saghm wrote: post #20
llamaimperative wrote: post #19

Earlier quoted context omitted.

Why were you skeptical of it?

People seem to be willing to go out of their way to rationalize around having to take threats beyond a certain magnitude seriously. I think something similar seems to be happening with all of the discussion around Greenland (and Canada, for that matter); the idea of us actually getting into a serious territorial dispute with Denmark or Canada would be such a divergence from what anyone is familiar with that it's easi…

Sure, on one hand there's normalcy bias.

But on the other hand screeching about every little thing is just as stupid.

At the end of the day you can't use brain dead rules of thumb to alleviate the need to actually think things though. You actually need to consider the political and economic realities the various moves that various parties might make.

Re: The McKinley Years

#23

Post by potato3732842 »

ChrisArchitect wrote: post #14

Just searched Google Maps for Mt. Denali, Alaska only for it to return results for Mount McKinley immediately. Note I'm not really sure if that's anything to do with an executive order or that it was Alaskans wanting it called Denali while many elsewhere in the country incl at the Federal level called it McKinley. Related: Google Maps now shows the 'Gulf of America' https://news.ycombinator.com/item?id=43007052

Punching in Burma gets me Myanmar and Czechoslovakia gets me the Czech Republic. I assume google maps silently redirects you if you use an unofficial or former name so long as it's parsable without significant ambiguity.

Re: The McKinley Years

#24

Post by harimau777 »

Assuming that a nation was able to come up with good policy goals and metrics, would a tariff that was directly tied to those goals be as problematic as a more open ended tariff?

For example: A tariff on clothing pegged to the difference in median salary for a garment worker in their country versus our country.

I guess I'm thinking of something that is the equivalent for economic goals to what sanctions are for foreign policy goals.

Re: The McKinley Years

#25

Post by jschveibinz »

One aspect of the use of tariffs not yet discussed here is national security. We saw during COVID-19 that domestic production capacity for critical products is very important. Infrastructure products like aluminum and steel should be at the top of the list for tariffs if the goal is to incentivize domestic capacity. But as mentioned elsewhere in this discussion, government financial support is also a good strategy--but the politics of that approach conflict with the current attempt to downsize the government.

Re: The McKinley Years

#26

Post by tacitusarc »

ChrisArchitect wrote: post #14

Just searched Google Maps for Mt. Denali, Alaska only for it to return results for Mount McKinley immediately. Note I'm not really sure if that's anything to do with an executive order or that it was Alaskans wanting it called Denali while many elsewhere in the country incl at the Federal level called it McKinley. Related: Google Maps now shows the 'Gulf of America' https://news.ycombinator.com/item?id=43007052

The change back to Mt McKinley may be the stupidest executive order (not the most harmful). McKinley never even visited the mountain, it was named after him by some people trying to ingratiate themselves with the President.

Re: The McKinley Years

#27

Post by fatbird »

jgalt212 wrote: post #21
fatbird wrote: post #6

Earlier quoted context omitted.

I think you're correct about the importer paying the tariff, but it doesn't really matter, does it? If I sell into the US and have to pay the tariff, I'm going to raise my prices to cover the additional expense. Regardless of who pays, the importer's final cost is higher, who then passes it onto the consumer.

> 'm going to raise my prices to cover the additional expense. Only if the market will bear such expense. If your product sells at $100 and the tariff is $15, what makes you think the importer will be able to sell the same number of units at new price of $115? Depending on the demand, the $15 cost will be born by a combo of the importer and consumer.

Well, yes, that's the point: it doesn't matter who pays up front, it affects the supply/demand equation, typically hurting everyone. Regardless of where I am in the chain, I'm not going to run at a loss and hope to make it up in volume.

Re: The McKinley Years

#28

Post by jgalt212 »

fatbird wrote: post #27
jgalt212 wrote: post #21

Earlier quoted context omitted.

> 'm going to raise my prices to cover the additional expense. Only if the market will bear such expense. If your product sells at $100 and the tariff is $15, what makes you think the importer will be able to sell the same number of units at new price of $115? Depending on the demand, the $15 cost will be born by a combo of the importer and consumer.

Well, yes, that's the point: it doesn't matter who pays up front, it affects the supply/demand equation, typically hurting everyone. Regardless of where I am in the chain, I'm not going to run at a loss and hope to make it up in volume.

It doesn't hurt the government, though. The first order effect is new tax revenues they don't have to source elsewhere.

Re: The McKinley Years

#29

Post by llamaimperative »

potato3732842 wrote: post #22
saghm wrote: post #20

Earlier quoted context omitted.

People seem to be willing to go out of their way to rationalize around having to take threats beyond a certain magnitude seriously. I think something similar seems to be happening with all of the discussion around Greenland (and Canada, for that matter); the idea of us actually getting into a serious territorial dispute with Denmark or Canada would be such a divergence from what anyone is familiar with that it's easi…

Sure, on one hand there's normalcy bias. But on the other hand screeching about every little thing is just as stupid. At the end of the day you can't use brain dead rules of thumb to alleviate the need to actually think things though. You actually need to consider the political and economic realities the various moves that various parties might make.

All big things are actually just series of little things.

This is unfortunately a fact that’s easily obscured by the “clarity” of retrospection, through which big things look like obviously big things.

Re: The McKinley Years

#30

Post by fatbird »

jgalt212 wrote: post #28
fatbird wrote: post #27

Earlier quoted context omitted.

Well, yes, that's the point: it doesn't matter who pays up front, it affects the supply/demand equation, typically hurting everyone. Regardless of where I am in the chain, I'm not going to run at a loss and hope to make it up in volume.

It doesn't hurt the government, though. The first order effect is new tax revenues they don't have to source elsewhere.

As you pointed out, demand will drop, so there's fewer sales, and it drives inflation, slowing the economy, leading to (ultimately) a reduction in revenue all around. Also, it's basically a heavy sales tax, since it's through purchasing that's it's implemented, and sales taxes are always regressive (the poor spend all their money on consumables, the rich spend only a portion, so the poor pay more proportionate to their income).

There's a reason no economist these days is in favour of tariffs.

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