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PaperclipPerfector  4d ago (text post)   21065 thread views

Culture War Roundup for the week of January 27, 2025

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Let's play a game.

  1. My wife cuts my hair. I pay her zero dollars.

  2. I go to a barber down the street. I pay him $30 for the haircut. He uses it to buy groceries.

  3. I go to the barber down the street. I pay him $30 for the haircut. He pulls out a lighter and lights the money on fire.

  4. I go to the barber down the street. I pay him $30 for the haircut. He sends $20 to his family in Thailand.

  5. I go to the barber in the next state over. I pay him $30 for the haircut.

  6. I go to a barber in Mexico. I pay him 30 pesos for a haircut.

In which of these cases is the "increased value" of the haircut staying inside the country? What is the stack rank of these possibilities?

You value a haircut.

You get a haircut from your wife. You benefit $X, the equivalent amount you would pay for a haircut.

You go to a barber, who you pay $30 for a haircut. This is you exchanging your marker of value for a service. You get a haircut and lose $30, and so your value is the same $X - $30. The barber gets $30 and spends his time, valued at $Y, and so captures value of $30 - $Y.

You get your haircut, and your barber lights the money on fire. You have the same value. Your barber still has the value, and he destroys it. This is no different than burning a house down or breaking a window. Value can easily be destroyed.

You get your haircut, and $20 goes to Thailand. Compared to the counterfactual, that $20 would have been spent on food, gas, housing, or whatever you want, but it would go to other people in your town and county and state and country. Instead that same $20 gets spent on the same things, but in Thailand. American loses $20 for nothing, Thailand gains $20 for nothing.

You go to a barber in Mexico. You pay him 30 pesos for a haircut. You gain the same $X - 30 pesos in value. The Mexican barber gets 30 pesos, and that money circulates in Mexico. The net loss for America is 30 pesos, as that's what you left in the foreign country. You're also charged a $30 tariff at the border, to discourage you from doing that again, and to make sure your local barber isn't undercut by Mexicans.

So which one is preferable? Should I get my wife to cut my hair? That way all the value stays within my household, surely that's better than the money going to some other dude. Maybe I give my wife $30 to complete the fiction.

Your barber still has the value, and he destroys it. This is no different than burning a house down or breaking a window. Value can easily be destroyed.

The barber destroys the value for himself because he can't buy anything with the $30, but this doesn't materially hurt anyone else in the same way that breaking a window or burning a house does. The $30 is removed from the money supply, decreasing the price level.

Instead that same $20 gets spent on the same things, but in Thailand.

They don't use dollars in Thailand. The recipients either don't spend the dollars, or the dollars are converted into bahts and the dollars are eventually spent on something in the US (where dollars can actually be exchanged for goods and services).

American loses $20 for nothing, Thailand gains $20 for nothing.

The barber didn't lose it for nothing, he places more value on his family having that $20 than him. He gains value by sending $20 overseas.

Is this better or worse than if the barber lights $30 on fire?

The net loss for America is 30 pesos, as that's what you left in the foreign country.

But you forget that I got a haircut, and I keep the haircut when I come back to America. At best, the net loss for America is 30 pesos minus (how much I value the haircut). Of course, I value the haircut at more than 30 pesos, because otherwise I wouldn't have gotten my hair cut - so in fact this "net loss" is a gain.

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