Pretty sure all of economics is just using greek/roman letters to make the most basic and irrelevant equations seem smart.
Quality use of that meme, all I can say.
What offends me most about this is using the convolution operator * for multiplication in a typeset equation
Any symbol can be chosen for any variable including operations. It depends entirely on context.
I doubt economists use the convolution operator in this context or probably ever.
It's been a long time, but isn't this the default for the Graphical Formula Editor in Microsoft Word? (As in you could just use the * operator and word would print it as-is, not replace it with the multiplication sign)
I don't hate myself enough to use microsoft software, so idk
The meme is referencing the official US Trade Representative's explanation1 of the tariffs, where yes, the math really is as stupid as it seems, but it gets worse.
The research that Trump's team used to determine that "calculation" flat out states that when the US tries to tariff other countries:
- American importers pay for the US tariff AND
- American exporters pay for the foreign retaliatory tariffs.
The source clearly demonstrates that American tariffs are paid directly by Americans in both directions, meaning out of everyone on Earth the tariffs screw the US the most. Trump's administration legitimized the source by citing that research for its calculations on the tariff rates.
The explanation freely admits that the stupid parameters were chosen more or less arbitrarily, and they cited the paper (Cavallo et al 2021)2 but conveniently didn't list it in their "References" section.
Our analyses indicate that the price incidence of US import tariffs falls largely on the United States... Our results suggest that retailers are absorbing a significant share of the increase in the cost of affected imports by earning lower profit margins on those goods... [These analyses reveal] that the recent tariffs applied by foreign governments on US exports have affected total foreign import prices far less than was the case for the recent US tariffs
Didn’t they also mark EU VAT as a tariff?
They forgot to multiply the whole thing by -e^(i*pi)
So you’re saying they named a recession after me? I can do better! I’ll give them the Donpression! It’ll be the greatest Donpression there ever was. It’ll be in the history books, folks. No Donpression will ever be greater!
You do realize that's all of what he's after, right? He wants to be remembered in such a way that no American will ever be able to forget him. He doesn't care why he's remembered, only that he is. We don't remember the name of the pilot of the Enola Gay, but we remember the plane, Fat Man, Little Boy, Hiroshima, Nagasaki, and Truman. Recognition and memory, for him, is more important than context.
Let's not refer to trump instead to the fact Thomas Matthew Crooks missed.
It's the Great Crooks Depression!
Can someone please provide the context what epsilon and phi suppose to represent and why they are 4 and 1/4?
To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25. The recent experience with U.S. tariffs on China has demonstrated that tariff passthrough to retail prices was low (Cavallo et al, 2021).
Thanks
Ah but you see, 0.25 is only the inverse of 4 in base 10 ... Checkmate atheists!
The symbols represent smarts, and they are 4 and 1/4 because that mean multiply by 1.
It's a made up formula to make trumpsters look smarter than they are.
I'm surprised that actually had someone with enough math skills to accomplish that.
Their pal gippidy
There is so much in this that is going way, way, WAY over my head, to an extend that I can barely phrase what it is I don't understand. I guess that's why I don't get to decide these things.
What is it that you don't understand? You're probably just put off by the "scary" Greek letters, if you force yourself to look at it, you'll find it's rather simple.
(ε) and (φ) are constants, and since their values are 4 and 0,25, when multiplied together they give 1. Multiply mi by 1 and you simply get mi
The Greek letters are not the issue. I can even understand the maths itself, despite sucking at it all my life (which is clear evidence that it's dumb). It's the entire affair, not the formulas.
White House publishes a table of steep percentage fees charged on imports from various countries that make little sense, claiming it's based on a rigorous and complex system of economic calculations
Somebody notices the percentages for all these countries are just the trade deficit divided by imports, which is a formula as simple as it is arbitrary
White House lackey says "Nuh uh, we have a totally complex formula for this" and publishes an imposing equation full of Greek symbols and letters
Turns out the Greek symbols refer to arbitrary values set by the White House that cancel each other out, and the letters just represent... the trade deficit divided by imports.
tl;dr: They used a dead-simple, arbitrary formula for their economy-wrecking trade war and tried using fancy-looking math to cover it up
It's not just math, but economic theory. There's a lot of historical context here, going back to mercantalism in the 1600s, where countries were obsessed with trying to maximize exports. You may remember this from history class, and how they figured out it was, ultimately, not the best idea.
https://en.wikipedia.org/wiki/Mercantilism
Anyway, ignore the greek letters. The Trump administration is using trade deficit (how much other countries buy from us vs. how much we buy from them) as the number for how how much to tax those imports, with the idea being to this tax will "punish" and incentivize countries to not have such a big trade deficit with the US. Per mercantalism, buying more than we sell from someone is a "loss," as we are losing money to them. And US manufacturers will take up the slack.
...In practice, that's not how it works, as Europe learned in the 1600s/1700s and the US learned in the great depression, among many other times. There are a lot of fallacies, including:
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"the popular folly of confusing wealth with money," aka assuming the trade deficit is unprofitable "loss."
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Overestimating the US's importance. It's a big world with a lot of easy shipping, and countries have many other places to ship stuff if the US gives them a big enough middle finger.
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Ramping up manufacturing locally is hard, depending on the industry. Could take years and billions, and in some cases is not practical at all. That's why we buy stuff from other countries, where it's easier to make. It's like the core tenant of free trade.
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Other factors are not static. Slap a gigantic tarrif on something, and the supply/demand/pricing is not going to stay the same.
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It's also ignoring how being the world's #1 consumer cemented the US's power across the world, and arguable stabilized a lot of geopolitics (with some unsavory complications, though). This was largely the idea behind the post-WWII world order.
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