The Financial Riddler 10-19-24

You know these in theory.

1. What does May Day commemorate for Communists?

   a. The start of the Russian Revolution

   b. The return of Lenin to Russia during WWI

   c. Karl Marx’s birthday

   d. The Haymarket Massacre

And the answer is …

The answer is the Haymarket Massacre that occurred in Haymarket Square, Chicago on May 4th, 1886. It was part of nationwide labor demonstrations in support of a 40 hour workweek when 60 hours was the norm. In the course of the Chicago demonstration, a worker threw a bomb at the police who then fired at the demonstrators. Seven police and four civilians died. The Soviet Union’s annual May 1st Red Square parades were, it seems, a celebration of a labor uprising in the United States.

2. President Trump is considering imposing 10 to 20 percent tariffs on all imports and 60 to 100 percent tariffs on Chinese imports. At the estimated revenue-maximizing rate of 50 percent for a uniform tariff, what share of income tax revenues would a 50 percent tariff produce?

   a. 10 percent

   b. 25 percent

   c. 40 percent

   d. 65 percent

   e. 80 percent

And the answer is …

The answer is 40 pecent. Thus, “tariff” may be the President elect’s “most beautiful word,” but we can’t rely on tariffs to replace the federal income tax, reduce the corporate tax to 15 percent, retain the 2017 Tax Cut and Jobs Act, exempt tips from federal and FICA taxation (which will cost tips-workers more in lost Social Security benefits than they save in taxes, in present value), or exempt Social Security benefits from taxation. We can achieve all these things via fundamental tax reform, but not with tariffs, which generate too little revenue, are highly distortionary, invite retaliation, and will trigger inflation.

2. What is the collective market value of AI companies?

   a. $500 billion

   b. $1 trillion

   c. $5 trillion

   d. $9 trillion

   e. $11 trillion

   f. $13 trilion

And the answer is …

The answer is $9 trillion. This is almost a third the size of our economy. NVIDIA, by itself, is worth $3 trillion.

4. What share of American food consumption is imported?

   a. 33 percent

   b. 27 percent

   c. 15 percent

   d. 9 percent

   e. 7 percent

And the answer is …

The answer is 15 percent.

5. What share of American apparel is imported?

   a. 81 percent

   b. 59 percent

   c. 49 percent

   d. 37 percent

   e. 14 percent

And the answer is …

The answer is none of the above. It’s 98 percent.

6. In 1940, which country was the world’s leading watch maker?

   a. The U.S.

   b. Switzerland

   c. England

   d. Germany

   e. Czechoslovakia

And the answer is …

The answer is the U.S. The Waltham Watch Company, located in Waltham, MA, was the world’s largest single watch maker. In 1940, U.S. watch makers produced 54 percent of the world’s watches. Today, the Watham Watch Company building houses multiple companies, none of which make watches.

7. What share of GDP did the EU spend on defense in 2023?

   a. 1.8 percent

   b. 2.1 percent

   c. 2.6 percent

   d. 2.9 percent

And the answer is …

The answer is 1.8 percent. The corresponding 2023 U.S. share was 3.3 percent. Total U.S. 2023 defense spending was $916 billion, which equaled 40 percent of worldwide defense spending.

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