This interview was absolutely absurd. Trump simply does not understand micro or macroeconomics. These are basic principles that just go over his and his supporters' heads.
This is a supply and demand curve from the most basic microeconomics 101 courses. What happens to p when the supply contracts? P increases. What happens when broad tariffs are applied across all industries? Supply contracts.
The only way prices stay the same is if demand goes down, and if demand is going down, that means your economy is slowing down.
Now, if your country has a strategic need for something, usually for national security reasons, then you apply tariffs to help domestic production in that area. But doing so does not make your economy more efficient, it makes it more robust against variability. We do not need to protect every single industry from variability and in fact, the massive efficiency loss from doing so will make things much worse.
On top of that, it betrays everything we know about comparative advantages. The most value added for most products comes from the engineering and R&D. That's why those are higher paying jobs. We do not need to make the components for every single product - doing so would be a waste of our workforce and essentially our education system. If you have a restaurant with world class chefs, why would you want them wasting time pressing their own olive oil, baking their own breads, slaughtering and butchering their own animals? Leave that to the experts in those areas and let your chefs focus on the things they're experts in. That's exactly what a comparative advantage is and there's no reason to force 100% of your ingredients/components/whatever to come from in house.
Forced domestic production for the entire supply chain also severely limits the scale at which you can produce (again, we come back to limited supply) and less competition means less innovation. These are very basic ideas that nearly every economist from Keynesian to Chicago to Hayekians agreed with. There are disagreements from these schools on the role of regulations and the types of social protections we want to enable, but nowhere in the centuries since Adam Smith did economists start believing blanket tariffs would spur growth or make your economy more efficient. Trump is straight up lying when he declares tariffs will do that.
This was about the point he told Micklethwait he was wrong about "everything" when Micklethwait told him economists and business leaders all think his tariff ideas are off the wall, even disastrous, and the crazy free stuff he keeps promising randomly would explode the deficit.
Temporary_Tune5430 on October 16th, 2024 at 00:24 UTC »
Why was there a maga crowd in attendance?
Jaerba on October 16th, 2024 at 01:05 UTC »
This interview was absolutely absurd. Trump simply does not understand micro or macroeconomics. These are basic principles that just go over his and his supporters' heads.
https://cdn.britannica.com/90/164690-050-33BD0AC9/Illustration-increase-decrease-equilibrium-price-quantity-shift.jpg
This is a supply and demand curve from the most basic microeconomics 101 courses. What happens to p when the supply contracts? P increases. What happens when broad tariffs are applied across all industries? Supply contracts.
The only way prices stay the same is if demand goes down, and if demand is going down, that means your economy is slowing down.
Now, if your country has a strategic need for something, usually for national security reasons, then you apply tariffs to help domestic production in that area. But doing so does not make your economy more efficient, it makes it more robust against variability. We do not need to protect every single industry from variability and in fact, the massive efficiency loss from doing so will make things much worse.
On top of that, it betrays everything we know about comparative advantages. The most value added for most products comes from the engineering and R&D. That's why those are higher paying jobs. We do not need to make the components for every single product - doing so would be a waste of our workforce and essentially our education system. If you have a restaurant with world class chefs, why would you want them wasting time pressing their own olive oil, baking their own breads, slaughtering and butchering their own animals? Leave that to the experts in those areas and let your chefs focus on the things they're experts in. That's exactly what a comparative advantage is and there's no reason to force 100% of your ingredients/components/whatever to come from in house.
Forced domestic production for the entire supply chain also severely limits the scale at which you can produce (again, we come back to limited supply) and less competition means less innovation. These are very basic ideas that nearly every economist from Keynesian to Chicago to Hayekians agreed with. There are disagreements from these schools on the role of regulations and the types of social protections we want to enable, but nowhere in the centuries since Adam Smith did economists start believing blanket tariffs would spur growth or make your economy more efficient. Trump is straight up lying when he declares tariffs will do that.
straylight_2022 on October 16th, 2024 at 01:16 UTC »
This was about the point he told Micklethwait he was wrong about "everything" when Micklethwait told him economists and business leaders all think his tariff ideas are off the wall, even disastrous, and the crazy free stuff he keeps promising randomly would explode the deficit.
Every interview with Donald should go like this.