ε<0
🤣 they did the meme
this post was submitted on 03 Apr 2025
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Economics is fake math
Aside: I really hate "elasticity." We already have a term for it, it's just a slope of a linear curve.
Explanation: What the equation is saying is the tariff level they chose is equal to the exports minus imports (trade deficit when less than zero) divided by the slope of the import demand curve (so the relative change in demand for imports in response to a unit change in import prices, the measurement of which is apparently an exercise for the reader) times the slope of the price/tariff curve (so the change in overall prices in response to a unit change in tariff rates) times the value of imports.
Someone calls out the Poindexter who came up with this equation for just setting the tariff rates at the trade deficit divided by total imports, he says no and posts the equation I just went over, then it turns out that they chose 4 for the first elasticity and 0.25 for the second (how? Divine inspiration?), so the elasticities exactly cancel each other out and we're left with trade deficit divided by value of imports.
So essentially what they're assuming they can do is charge US buyers of imported goods (ie everyone) the balance of the trade deficit and that'll fix... Something? The base level reasoning is that it makes imported goods more expensive and so offshore manufacturing repatriates, yada yada yada (the challenges associated therewith being obvious), but I have no clue what they're attempting to wrap it up in to make it seem smarter.
So essentially what they're assuming they can do is charge US buyers of imported goods (ie everyone) the balance of the trade deficit
this is it. perfect framing 10/10 no notes
I'm not ashamed to admit I needed this explanation, and it's a rare example of the explanation making the joke much funnier
Setting aside this dogshit model (which is no better than me claiming that the rainfall in the amazon rainforest = 15 * "temperature to cloud formation elastcity" * "cloud formation to precipitation elasticity"), I do have an actual simulation which could probably be modified to try to predict the influence of tariffs on trade deficits. It's the MK2 of the sim I posted recently (think of this as an advert 
).
This is why I find it hard to believe there's a plan and they expected this outcome. These are not sharp people.
I met a financial investor last night who was going in about how she believes in Trump and knows that he is 8 steps ahead. She said she wished he wasn't foing this right now, but has full confidence in the plan.
Truss the plan
Let ε < 0 represent the elasticity of imports ...
How to piss off mathematicians and physicists with a single sentence.
Economist are just political science sociopaths wearing the flayed skin of a math student.
You couldn't be more precise
So that's gotta be a typo, right? Not that this asshole deserves any benefit of any doubts, but since they then set epsilon to 4 (which is greater than 0), they must have simply put "<" instead of ">", right? It's not a typo one is likely to make, but I think it must be one.
Apparently, it's not a typo. In finance math, they just quote the absolute value of epsilon (because it is always negative). The equation presented doesn't work regardless of whether or not they got the signs correct, because the logic behind it is wrong (epsilon and phi aren't constants)
Huh. Well, that's fun. Economists can eat my whole ass, those fuckers absolutely suck. Thanks for the info!
well, this shit was probably written by an LLM
That would make a lot of sense! It's very like an LLM to say something and then several lines later contradict that thing. Seems possible!
Presumably why it has raw LaTeX-style subscripting like tau_i but isn't actually rendering it. When you ask an LLM to regurgitate academic-sounding math it's gonna reproduce patterns from both unicode rendetings and source LaTeX.
What's funny there is he drops the signs and doesn't say anything about it because otherwise it would imply that the government should be giving rebates on goods imported from countries where we have a trade surplus (if any such countries exist)
What's the point of pretending this is more complicated?
The average Trump supporter is rabidly anti-intellectual. They hate anything they can't immediately understand, and if something's too complicated to be explained to a 5 year old to it's probably part of an evil child-murdering conspiracy. Trump chosing the numbers based on the simplest possible math is a positive to them.
As someone who absolutely institutes heavy protectionist tariffs in Victoria 3 spreadsheet simulator, what is this
They formula they used to calculate tariffs
(Trade deficit)÷((4)(1/4)(imports))
Which is totally different and not just (trade deficit)÷(imports)
Alternatively, you can also write it as exports/imports - 1