Thread by @JWMason1

This @AlanaSemuels piece on what exactly is involved in getting a stuffed giraffe toy from a Chinese factory to a house in the US is a smart and interesting way of thinking about inflation. time.com/6088033/why-in…

In general, I think tracking a single commodity along its path from production to consumption is a great and underused tool for clarifying all kinds of economic arguments. The documentary Mardis Gras: Made in China is one of my favorites. What are some other examples?

A big part of the story here is bilateral negotiations between the many different players: Amazon; Viahart, the "seller" (who neither manufacture the toy nor collect the money); the freight forwarder; shippers and carriers; port operators; and the manufacturer.

I think it's generically the case that there are many transactions along these chains where stuff trades for money, but (except for primary commodities) none of them looks like a textbook market with multiple buyers facing multiple sellers.

As a story about current inflation specifically, the piece is slightly off target, since - one stuffed giraffe notwithstanding - toy prices have been falling for a long time and are in fact lower today than before the pandemic. But it's still very worth reading.

Where the piece ends up is a point that is politically a bit uncomfortable but I think is right: Many of the prices that are rising now are for things that really need to get more expensive on the way to a better world.

One little wrinkle: The biggest component of the price increase isn't any cost, but the seller's profit. That plus Amazon's commission makes up the majority of the increase. Adam Smith thought of profits as a cost contributing to price - it's funny to see that reinvented today.

Meant to include: toy prices have fallen 25% over the past five years.