American consumers will pay for Trump’s trade war

As Paul Krugman pointed out, it’s a fallacy to think that foreigners are the only ones paying the tariff bill. U.S. consumers pay as well. Believing that tariffs are a tax on foreign countries is like believing that sales taxes are a tax on Wal-Mart.

It’s also makes little sense for Trump to brag about the tax revenue his tariffs are creating, when his own tax cuts have increased the deficit by enormous amounts. So far the tariffs have raised a few billion in revenue, while the tax cuts are expected to cost about $100 billion every year.

…The burden of tariffs falls mostly on domestic consumers — in other words, Americans — because the prices of many traded goods are set in world markets. Suppose a Chinese company is selling a washing machine in the U.S. for $1,000. Trump then sets a tariff of $200 on the washing machine. The Chinese company knows that it can go sell its washing machine somewhere else without the tariff — France, or Japan, or Russia — and still get about $1,000 for it. So in order to make it worth the Chinese company’s while to sell the machine in the U.S., it’s going to have to raise the sticker price to $1,200.

That’s an idealized example, of course — in fact, the U.S. domestic market is large enough where it has some power to affect global prices, so Chinese merchants will pay some small portion of the tariff. But much of the cost of the tax will be borne by the American consumer.

Nothing new here. Incompetent economists like Peter Navarro – and crooked politicians like Trump and Reagan have been pushing models like this for decades. They fail to grow our economy every time. American taxpayers pick up the tab every time.

Facebook’s email dump in the UK

❝ As expected, the UK Parliament has released a set of internal Facebook emails that were seized as part of its investigation into the company’s data-privacy practices. The 250-page document, which includes conversations between Facebook CEO Mark Zuckerberg and other high-level executives, is a window into the social media giant’s ruthless thinking from 2012 to 2015 — a period of time when it was growing (and collecting user data) at an unstoppable rate…

❝ If Facebook was hoping to close the year without any more controversies, these internal documents certainly won’t help. They’re yet another example of the company’s old, ambitious motto to “move fast and break things,” one that it’s desperately trying to get away from.

Some of the folks I respect the most – like Om Malik – have wholly nuked their Facebook presence. The only reason I retain a site there is to maintain minimal contact with old friends and family back in New England and round about this tired planet. Frankly, I’m the worst in the world at actually staying in touch. I never get round to answering “how are you doin'” inquiries from folks I still love as comrades fighting bigotry and war. Hopefully, they remember I was always craptastic at that.