We are in a world economy which actually needs demand more than supply. This is your missing analysis.

"We need demand more than supply" is a macro diagnosis.

But tariff incidence is a micro question. Elasticity analysis doesn’t care whether the world has a demand shortfall or a supply glut. It asks: when a tax raises transaction costs, which side is less able to change behavior? In the long run, suppliers usually have more flexibility than consumers.

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tsunamifury 2 days ago | parent [-]

I can't believe I'm going to look like I'm defending this but here it goes:

The market 'offering' the most demand to the global economy right now is America, by far and away, with a distant second of Europe and Middle East. America has chosen to use tariffs in an attempt to 'tax the demand offered' to the global economy in order to stop the localize debt accumulation of that demand, along with other justifications (rightly or wrongly) of stabilizing global trade and currency.

This is at least the THEORY on Tariffs. Its makes a bit more sense than the 'grrr 1950's trade imbalance' story media keeps spinning, but whatever I'm not going to defend it any more than that.

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mlyle 2 days ago | parent [-]

I'm not talking about trade imbalance. I'm simply saying, tax incidence is predicted by elasticity, and in the long run suppliers have very high elasticity.

You can possibly improve trade imbalance with tariffs (though retaliation makes it hard). But it's hard to escape your consumers paying most or all of the costs of those tariffs.

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tsunamifury 2 days ago | parent [-]

I think we agree if I'm understanding you correctly, yes the Suppliers have more elasticity and must ultimately absorb this.

I'd say the remaining problem left in our analysis is massive inequality in America leading to enormous consumer elasticity in a small ultra-wealth portion. This I can't figure out

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mlyle 2 days ago | parent [-]

That's the opposite of how tax incidence works.

Elasticity means you can change your amount produced in response to changes in price.

Producers can’t easily change output, so they bear more of the tax burden themselves. But in the long run, producers can reallocate or exit until they’re producing at minimum(average total cost), which makes supply more elastic and shifts most of the burden onto consumers.

This is stuff that's covered in week 4 of a basic microeconomics class. It gets a little fancier with imperfect competition or heterogenous agents, etc, but predicting tax incidence is basically dominated by this even in advanced microeconomics.

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tsunamifury a day ago | parent [-]

Sure ok. You’re being weirdly belligerent.

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mlyle 20 hours ago | parent [-]

You came here in your first comment blindly disagreeing with "This is your missing analysis."

Then you seemed determined to misunderstand, e.g.

> > But it's hard to escape your consumers paying most or all of the costs of those tariffs.

> I think we agree if I'm understanding you correctly, yes the Suppliers have more elasticity and must ultimately absorb this.

This is really simple fundamental microeconomics stuff. If you want to understand it, there's plenty of sources online. If you want to argue it, you should learn the basics first.

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tsunamifury 14 hours ago | parent [-]

Literally not arguing with you, asked a few questions and made open statements and tried to listen. Consider if you see everyone around you as the asshole who the asshole might be...

	▲	mlyle 13 hours ago \| parent [-]
		I think "this is your missing analysis" is a strong assertion to make to another human-- that sounds like an invitation to argue the merits. Through text, we don't have the benefit of tone. If your intention was to be curious about it, your comments don't convey that. > Consider if you see everyone around you as the asshole who the asshole might be... And now you're just effectively calling names. If you want to talk about economic concepts in a forum like this, you should either ask questions or fill yourself in on the foundational knowledge.