@EvolLove it’s economics-speak for who actually pays. suppose (oversimplifying) there’s a foreign exporter and domestic buyer. the government can tax 10% of the exporter’s sales, or it might tax the consumer the same 10%. economists mostly think those choices are close to equivalent. 1/
@EvolLove if consumers are much more motivated to buy the good than the exporter to sell (“inelastic demand”), a tax on the exporter will mostly be passed on to the consumer in the form of higher prices. 2/
@EvolLove if consumers are very price-sensitive in how much they buy, while producers are motivated to produce (say they have a factory, investment in which has already covered most of the cost of producing a certain large quantity), that’s “inelastic supply”, and even if structured as a 10% sales tax on the consumer, the producer is likely to reduce its selling price to maintain the quantity sold. 3/
@EvolLove in a nutshell, when demand is much less “elastic” (price-sensitive) than supply, however the tax is structured, the consumer is likely to pay for it, while when supply is much less elastic than demand, producers are likely to pay for it. 4/
@EvolLove many goods will sit between these extremes, with both producers and consumers price-sensitive to some degree. in that case, the incidence will be shared. perhaps the producer will drop prices by 4% and the consumer ends up paying a tax of 6% to cover the total 10% tax. so, in this case, the “tax (or tariff) incidence” falls 40% on the producer and 60% on the consumer. /fin
It’s absurd of Trump to pretend the incidence of tariffs falls entirely on foreign sellers of goods, but it is also disingenuous to claim the incidence would be solely on domestic consumers.
@BenRossTransit I’ll see when I’m at a computer if my jstor account gets me access to your piece!
But the main inconsistency I see is just perfect competition doesn’t recoup fixed costs, so renders firms liable to bankruptcy, and (as you pointed out previously) supply chains then grow increasingly brittle with depth.
I think excess production capacity is desirable, but not prerequisite to competition. I don’t think there’s any reason (in general) to produce in excess of demand.
@monoidmusician i’m right heeeere! 🪳
@kentwillard Yes. “Failed states” very often are better characterized as sabotaged than failed. Standing up and maintaining a legitimate state is genuinely hard under the best of circumstances. When neighbors arm militias or rivals encourage subgroups to become restive, that makes it much, much harder. Proxy wars between fully sovereign states are rare, I think. More powerful allies have a hard time persuading suicide. Usually a state is broken before its role as proxy begins in earnest. 1/
@kentwillard My hope here is that we can become more explicit and intentional about enforcing respect for Westphalian states as an international norm. This would supercede and proscribe a lot of Western human-rights advocacy and “international law”. It would also proscribe Iran-style militia-building and Russia-style frozen conflicts and use of Russian speakers as pretexts for intervention. /fin
@agocke @StryderNotavi Gack! Fixed! My whole project here is to say yes, that’s the status quo, but we can learn from China’s experience and innovate on top of it to develop a form of capitalism that is structurally both more resistant to monopoly power and more resilient to vigorous competition. See also https://drafts.interfluidity.com/2024/09/04/income-driven-repayment-of-fixed-capital/index.html
@agocke @StryderNotavi (Thanks for pointing out the broken link!)
@admitsWrongIfProven Yes. That’s a real danger. Ultimately countries that develop power and prosperity and provide for lives and cultures that seem attractive will be emulated. In the 1990s, everyone emulated the US. Going forward, countries will increasingly emulate China — including its authoritarian aspects — unless and until more liberal societies become more competitive at offering an aspirational model.
@admitsWrongIfProven yes. all manufacturing industries get subsidies one way or another, whether by more direct programs or government tolerance / encouragement of consolidation and market power.
china has found a form of subsidy that is often terrible in many respects (make bad loans and pretend they are good pretty indefinitely), but encourages rather than limits competition.
the US like Germany subsidizes in ways that do not encourage competition. i argue we should reform that. 1/
@admitsWrongIfProven China sells EVs for lower than the cost of the cheapest internal-combustion-based vehicles available in the West. Tens of firms actively compete. BYD is biggest and best known, but had nowhere near the dominance marquis firms from Germany or the US have relative to their markets. 1/
@admitsWrongIfProven There’s a broader critique about car culture generally (and I think China has made a terrible mistake by following in Western footsteps and embracing it). But conditional on that, China’s EV market is as competitive, including on price, as any automobile market except perhaps the very early, preconsolidation, days of Western industry.
@BenRossTransit Or, alternatively, fixed capital can be subsidized, all costs can be rendered variable, enabling firms to remain solvent even under a close approximation of perfect competition. https://drafts.interfluidity.com/2024/09/04/income-driven-repayment-of-fixed-capital/index.html
@StryderNotavi Granted on the data security aspect. Of all contemporary vehicles, not just China’s.
But on the rest, China’s capitalism — long on competition, light on profits — is the most successful, and therefore should be taken as the normative form of contemporary capitalism, rather than as some aberration from true Western rentier capitalism.
Sure, state-imposed incentives shape it. All capitalisms are embedded in states. China has simply stumbled upon a superior approach.
“Beijing has directed several key state-owned automakers, including VW partner FAW Group, to prioritize technology and market share over profitability. That’s hardly an option for Germany’s publicly-listed carmakers.” https://www.bloomberg.com/news/features/2024-10-14/bmw-mercedes-and-volkswagen-bmw-mbg-vow-evs-struggle-to-compete-in-china
// rents to shareholders are simply unaffordable under a dynamic, competitive capitalism
Text: “The mission of the Russian people is to realize social justice within human society, not just in Russia but in the entire world” (my translation). The salvation is accompanied by destruction. The two elements, as in John’s apocalyptic writings, go together. There can be no salvation without the destruction of all that is false, rotten and built on lies. Apocalyptic thinking is, Berdyaev writes, the most important part of the Russian idea. It is characterized by asceticism, dogmatism, and acceptance (or perhaps, search?) of suffering.
every plutocrat is a temporarily embarrassed alpha warlord.
[new draft post] A Westphalian order is project enough https://drafts.interfluidity.com/2024/10/15/a-westphalian-order-is-project-enough/index.html
a close run thing, this one. https://zirk.us/@interfluidity/113307160431520875
@BenRossTransit (i find the second point interesting and potentially persuasive, i’ve made a similar point in a link i’ll add. i find the first point not so interesting or persuasive, “changing Israel” would not be not anyone’s objective, it would be preventing profound suffering that Israel is willing to inflict but that many of the rest of us think ought not be tolerated. Israel should want to change, but that’s on it.)
( the link https://drafts.interfluidity.com/2024/05/08/the-long-fistbump/index.html )
@wim i think before October 7, you could credit the Biden administration with having begun to resuscitate it, in its handling of Ukraine especially. but then, naaah.
@John I think Netanyahu is deposed the second the United States makes clear our continuing special relationship depends on new leadership. Of course, that’d be “foreign meddling in Israeli politics”. Yes. It would be. Sometimes the superpower has to discipline the client, if it is to remain a superpower. I think we may have fatally sacrificed our capacity to act as a stabilizing global power, which has to rely on soft power backed by distant threats much more than by force.
@John The “we” here is not the electorate. It’s you and I, people who follow and intervene in politics and the shape of social institutions. The electorate has no view independent of the institutions by which we constitute it. If the way we constitute electorates is inconsistent with functional and virtuous choices, we have to reform those institutions. Holding institutions constant, political leaders and other intervenors are our locus of evaluation and accountability.