"Ideally, all those savings would be channeled into productive investments such as research and development, or practical equipment, or new roads, or even new
yachts--investments that would promote growth in the economy."
It's important to keep in mind that even when that money is spent, there's no guarantee it'll be spent domestically.
Just as an example, Jeff Bezos bought his $500 million superyacht from Oceanco, a Dutch yachtmaker.
Increasingly, the ultra-rich are, like many of the companies they control, multinational.
Yeah, but you can't really look at economies from that protectionist viewpoint. The US primarily exports services like software, consulting, tourism, etc. that rely on strong foreign economies.
So if that Dutch shipbuilder needs AUTOCAD and Slack to function and then the employees vacation in Miami, the US still benefits despite the final product being produced elsewhere.
Do you believe that this trade imbalance makes it likely that a significant part of the US$500M Bezos reportedly spent on the boat will return to the US?
The trade numbers mean that the Netherlands spent about 4.5% of its GDP (US$1T) in trade with the US. That would imply that if the boat fits into those patterns, about 22M of the 500M cost might come back to the USA.
One possibility is that despite not having the boatyards in the US that could build such a vessel, the majority or even just a substantial fraction of the components that are used for the boat originate in the USA, and that in reality significantly more of the US$500m will flow back to the USA.
I don't know enough about the construction of contemporary mega-yachts to know if that's likely or not.
I'm just saying that, sure, that $500mn purchase doesn't exclusively benefit Americans, but if you want to force all Americans to 'Buy American,' don't be surprised when your employer's earnings/valuation go down because foreign customers stop buying their products as their economies shrink.
If your argument is that we should 'Buy American' to subsidize low-skill/low-income workers while limiting the earning potential of high-skill/high-income workers, then I dig it, but honestly the easier/better solution is a more progressive tax regime/welfare state.
We're talking about tax and the ultra-wealthy. We're talking about what happens when the world's richest person (+/- 2) spends US$500M of realized capital gains outside of the country of residence.
I am not talking about "forc[ing] all Americans to "Buy American".
> It's important to keep in mind that even when that money is spent, there's no guarantee it'll be spent domestically.
This is literally the comment I was replying to. As far as I can read, the parent comment was about the location of consumption and the effect that has on an economy (which I think is significantly more nuanced than the parent implied)
It’s also 100% worth noting that we have no idea who bought those shares from Jeff (ignoring the fact that his liquidity is mostly from loans against his holdings). The US majorly benefits from foreigners buying shares in our companies and (surprise) that’s one of the major reasons we can support our trade imbalance.
So I’m mostly just confused about your point, I guess?
I think we agree that progressive taxation is probably good, but do we disagree about the effect that non-domestic consumption has on the US economy?
The US doesn't need to produce yachts (or this particular type of yacht), thats the whole idea of trade, you specialise in some things not others, and everyone ends up better off. There are a huge number of components in a yacht, many American. And financing and so on.
That's not relevant to the point (although I'd also disagree with this entire premise, the root of tariff-free global trade). The point is that when someone (e.g. Bezos) spends US$500M of realized gain, it doesn't necessarily get spent in the USA. That's all.
I get where that question comes from, but I think it's the wrong question. The real question is, how would any realistic action that would cause US companies and people to spend more of their money in the US affect global trade in the aggregate?
While all participants in global trade are net beneficiaries, the US has done particularly well. Protectionism is usually a two-way affair; if we make it harder for us to spend money abroad, other countries will likely reciprocate. This doesn't somehow even out to make us (or them) better-off for doing it -- it simply contracts the global division of labor and introduces deadweight loss, decreasing the overall efficiency of the system and making all parties worse-off... except for a few well-connected companies that get artificially protected from competition and have enough connections to lobby successfully for price supports or other pork benefits.
It's not about making it harder to spend money abroad (at least not in this context).
It's about a tax structure that some mitigates against the downsides of the ultra-rich realizing capital gains and spending the proceeds outside their country of residence.
It's more important to keep in mind that Amazon created hundreds of thousands of new jobs, raised minimum wage in many areas, and brought many people out of absolute poverty. No matter which way you look at it, a net positive rather than a negative.
"It's more important to keep in mind that the CCP created hundreds of thousands of new jobs, raised minimum wage in many areas, and brought many people out of absolute poverty. No matter which way you look at it, a net positive rather than a negative."
The CCP created hundreds of millions of new jobs and brought hundreds of millions of people out of absolute poverty.
The CCP has its problems, but you must respect that so much economic growth has never happened so quickly for so many people in human history. A lot of people are living happier, more productive, more interesting lives because of the actions of the CCP.
The question is would a similar number jobs have been created had there been another ruling party. It’s like giving trump credit for investing in the vaccine, it’s a near guarantee given America’s economy that the vaccine would have been invested in even if Mickey Mouse had been president. In my mind, neither Biden nor Trump get any credit for the vaccines.
China saw massive famines due to the Great Leap Forward, ccp policy, killing millions. How do we know that had a different government been in power the jobs wouldn’t be created, perhaps faster like with Taiwan, and at the same time the famines avoided? So no, I’m not going to give the ccp credit for creating jobs that like as not would have anyway been created.
Obviously, there are drawbacks with the CCP (and Amazon), but I can tell you one damn thing for sure: those people would not have been lifted out of poverty under the socialist/communist regime of Mao. Under that regime, people were mocked and tortured for working harder than others and trying to innovate. Deng Xiaoping embraced free markets and their own flavor of capitalism to bring this net positive to China.
When a government drastically restricts economic freedoms and then restricts them less than they did, you shouldn't praise that government for causing the increased prosperity that results -- it was their fault it wasn't happening in the first place, and they "helped" by getting out of the way. Sure, you can say the Deng Xiaoping CCP isn't the same as Mao's CCP, and there are aspects of that which are true. But at most, Deng's CCP was simply reducing the drastic limits on economic freedoms that the party had put in place. They're not causing the prosperity -- they're declining to continue stopping that prosperity from happening.
Yes, I heard the Uighurs lives got a lot more interesting — but not quite yet as interesting as did the Jews of Germany, when the Nazi regime lifted a nation broken by war out of its funk.
It's simply monstrous that we would compare Amazon — whatever criticisms someone might have for the company's business practices — with Communist China, and something like that needs to be called out.
You mean without Amazon, we would not be buying at Whole Foods for example? You mean there are net new jobs not just jobs that may have been lost in my company? I understand Amazon's benefits, and I know someone else may not have executed as well thereby slowing progress, but who knows maybe YouTube tv with it's bundled benefit of YouTube shopping would be ruling the world and we would be discussing that :)
As vile as the robber barons were, at least they were bounded by the confines of their environment to care at least a bit about their countrymen and have some patriotic tendencies.
I think compared to the Gilded Age they're doing a 1000x better job. Even if it's because they were dragged into doing it. It's easy to point out shortcomings, but don't ignore progress.
Think of America as a giant venture-funded experiment in equality. Even if we're 200 years in without a showing a profit, we've had steady revenue growth and loyal customers. Profits will come eventually.
It's important to keep in mind that even when that money is spent, there's no guarantee it'll be spent domestically.
Just as an example, Jeff Bezos bought his $500 million superyacht from Oceanco, a Dutch yachtmaker.
Increasingly, the ultra-rich are, like many of the companies they control, multinational.