Post Asr2uMsfcvDrdm3HOa by landley@mstdn.jp
(DIR) More posts by landley@mstdn.jp
(DIR) Post #Asqwn6RLkrlGtmQRFY by interfluidity@zirk.us
2025-04-07T16:19:56Z
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Suppose Trump had crashed the stock market by sharply raising the corporate tax rate. In a certain sense, "wealth" would have been destroyed, but our actual prosperity would not be impaired. 1/
(DIR) Post #AsqwoaCeaAfdUqG07E by interfluidity@zirk.us
2025-04-07T16:20:13Z
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It would have been a purely distributional change, stockholders would have gotten poorer but the "pie" we share would have been unchanged. 2/
(DIR) Post #AsqwqAdIcgDMlrTfFo by interfluidity@zirk.us
2025-04-07T16:20:31Z
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Highly disruptive tariff moves are not like that. The stock market is declining because long-term economic plans, on the production side as well as the sales side, have been upended. Firms that would have been productive will disappear. 3/
(DIR) Post #AsqwrS03XQMGvJjSC0 by interfluidity@zirk.us
2025-04-07T16:20:45Z
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We will in aggregate be poorer. The change is not merely distributional. 4/
(DIR) Post #AsqwtRY0Bvb26DYngG by interfluidity@zirk.us
2025-04-07T16:21:06Z
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In the long-term, of course, if the policy environment stabilizes, um, somewhere, new production arrangements will be planned, and it's possible we find a new equilibrium more prosperous than the one we left, short-term pain for long-term gain. We have no evidence this is likely, but sure. 5/
(DIR) Post #AsqwvbSeIsw1QQ5PwO by interfluidity@zirk.us
2025-04-07T16:21:27Z
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But even if so, there was no need to so sharply destroy in-pipeline production. We could have telegraphed and gradually imposed over five years a more autarkic trade policy, if that's what we want. 6/
(DIR) Post #AsqwwvZuzfTM6i7Nei by interfluidity@zirk.us
2025-04-07T16:21:45Z
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We'd have achieved the same putative long-term gain without throwing much of the existing pipeline and several years of aggregate prosperity, in the US and around the world, into the wood chipper. /fin
(DIR) Post #AsqzDNkeDMCE1g6uLw by interfluidity@zirk.us
2025-04-07T16:47:06Z
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@llimllib it seems like these two possibilities should be mutually exclusive, but there is a kind of quantum superposition of stupidity and canny malignancy to this administration, so i'll go with both.
(DIR) Post #Asr1aCfPn9r0DWflVg by landley@mstdn.jp
2025-04-07T17:13:36Z
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@interfluidity Tariffs are a tax on consumption, just like sales taxes.
(DIR) Post #Asr1vcJLdvHDpeYtUG by interfluidity@zirk.us
2025-04-07T17:17:31Z
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@landley yes, but unlike sales taxes tariffs are a discriminatory tax on consumption. so they upend patterns and plans much more than, say, imposing a universal VAT would have.
(DIR) Post #Asr2fyVnQuum0WUPtw by landley@mstdn.jp
2025-04-07T17:25:52Z
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@interfluidity Economic hysteresis was well known back in the 1980s.https://www.nber.org/system/files/working_papers/w2545/w2545.pdfKrugman was still writing about it 10 years ago:https://archive.nytimes.com/krugman.blogs.nytimes.com/2014/06/20/austerity-and-hysteresis/The theory seems obvious: "he only stopped breathing for 20 minutes, he'll be fine in a few days". Being unemployed and living off your savings for a year can permanent impact one's retirement trajectory.
(DIR) Post #Asr2uMsfcvDrdm3HOa by landley@mstdn.jp
2025-04-07T17:28:29Z
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@interfluidity Oh it's terrible in a zillion ways (hawley-smoot is taught in high school for a reason), but I suspect the dementia patient acting out plans he made back in the 80's was trying to screw over the poor back when he still had two brain cells to rub together.Alas, "this is why" is a bit like figuring out how you caught an incurable disease. Not immediately useful information...
(DIR) Post #Asr5JklUAAnGrbvK5I by interfluidity@zirk.us
2025-04-07T17:55:29Z
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@landley yes. definitely. the whole long-term thought exercise here is conceding probably false point MAGA-ists pretend to believe (that all this mayhem will lead to long-term gain) and showing that what's been done is still dumb. in reality, the likelihood of long-term gain from this is low, and hysteresis/scarring is yet another reason it is unlikely and likely to deflect downward our long-term path, even relative to more autarkic policy if it has been sanely implemented.
(DIR) Post #AsrIuGoRmosc5T3GsK by neilk@xoxo.zone
2025-04-07T20:27:42Z
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@interfluidity @llimllib 100% thisStupid: Navarro is basically RFK Jr but for the economy. Malice: I believe that Trump has an instinctive affinity for anything that allows him to unpredictably harm people in his own circle of influence.