re: National Socio-Economic Security Need for Encryption Technology
Sandy Sandfort wrote:
Been there, done that. I repeat, the error that Bart made is assuming that because some US-source capital gets redirected overseas, that the total amound of capital investment will decline thus producing the wage drop he is fretting about. Unless he can show that foreign capital investment will not flow to US workers who are "forced" into working in industries where they have a comparative advantage, his argument must fail. After all, I--like the economists Bart cite--think international free trade, the free flow of capital in persuit of the highest return and division of labor are a GOOD thing.
I also belief that international free trade, the free flow of capital in pursuit of the highest return and the division of labor are a GOOD thing. But in specific cases, I want to know the specific reasons. You claim that I must show that foreign capital investment will not flow back to US workers. But in my original post, I said: "Of course there are advantages also for the US (shareholders will get higher returns, trade will increase), but how can you proof that these advantages will offset the disadvantage of the lowered amount of capital in the US? " You haven't answered this question yet. I don't claim that the U.S. is worse off when US capital moves abroad. I only ask: how can you proof that the US isn't worse off when US capital moves abroad? If you don't know the answer, there's nothing to be ashamed of. I don't know the answer either. That's why I asked my question, in the hope that somebody could provide the answer, so that in the future I would be able to rebut arguments against the free movement of capital. Another thing: I don't assume that the *total amount* of capital will be lowered in the US when US capital moves abroad. I assume that the amount of capital in the US will be *relatively lower*. So the wages will be *relatively* lower (lower than when the capital wouldn't have left the US), but not necessarily lower in any absolute sense. I thought this was obvious, but since Arun Mehta also misunderstood me, maybe I should have been more explicit here. Bart Croughs
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SANDY SANDFORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C'punks, On Tue, 13 Aug 1996, Bart Croughs wrote:
You claim that I must show that foreign capital investment will not flow back to US workers. But in my original post, I said:
"Of course there are advantages also for the US (shareholders will get higher returns, trade will increase), but how can you proof that these advantages will offset the disadvantage of the lowered amount of capital in the US? "
You haven't answered this question yet. I don't claim that the U.S. is worse off when US capital moves abroad. I only ask: how can you proof that the US isn't worse off when US capital moves abroad?
The movement of capital from the US was an *assumption* in Bart's argument. He has done nothing to show that it would in fact happen. When he proves that, they it would be reasonable to expect me to offer proof that foreign capital will flow to the US. It seems just as likely to me that US source capital will NOT flow overseas if it can be profitably invested in other US industries that retain--or gain--competitive advantage from relative changes in productivity, supply and demand, or whatever. In my experience, Americans are loathe to invest money overseas unless it is highly profitable. The reason is obvious. They understand--or think they understand--the rules here. In historical terms, US investments have been more stable and safer than investments overseas. (Which is why, by the way, that the US is the worlds largest tax haven in the world, but I digress.) Thus, until Bart can support his highly dubious assertion that capital that flows away from some non-competitive US industries will necessarily flow offshore, there is no need for me to prove that such a situation will probably lead to a counterbalancing foreign capital flow into the US. So far, Bart has not yet met his burden of proof. While I'm sure per capita capital investment is a *factor* in determining how high wages are, it certainly is not the only factor. It appears that Bart has fixated on this one to the exclusion of other (probably more important) factors.
If you don't know the answer, there's nothing to be ashamed of.
It is just this sort of unnecessary condescending snottiness that create the clear impression that Bart is an asshole. Perhaps he is a fine chap and this is just his style, but I find it very offensive an counter-productive in this discussion. S a n d y ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
On Tue, 13 Aug 1996, Sandy Sandfort wrote:
In my experience, Americans are loathe to invest money overseas unless it is highly profitable. The reason is obvious. They understand--or think they understand--the rules here. In historical terms, US investments have been more stable and safer than investments overseas. (Which is why, by the way, that the US is the worlds largest tax haven in the world, but I digress.)
Which is why it is possible to be angry about NAFTA and the Mexican bailout without being a protectionist. Why should I pay taxes to my government so it can protect capital investments in Mexico, thereby reducing one of my selling points as an American worker? ... and while I'm ranting... Can somebody explain why: 1. Good jobs of the future are knowledge jobs which require little capital investment. and 2. We need a capital gains tax cut to encourage capital investment to stimulate the growth of good jobs of the future. ? bd
Brad Dolan asks:
... and while I'm ranting...
Can somebody explain why:
1. Good jobs of the future are knowledge jobs which require little capital investment.
a) Knowledge jobs require tremendous capital investment, as in degrees, training, continual updating of skills, etc. If the knowledge worker cannot recoup these investment costs via a higher salary, she will not invest in the training. b) Knowlegde jobs require computers, automation equipment, etc. for the knowledge to be applied to in order to create wealth. These also require capital investment. c) As rote manufacturing jobs are replaced by "quasi-intelligent" machinery, human job focus switches to designing, caring for, and replacing those machines. Example: The ATM replaces the bank teller, requiring new jobs in ATM design, manufacturing, repair, and the control of the computer network in the back- ground. Good jobs of the future may be knowledge jobs, but they require tremendous capital investment, both by employee and employer.
2. We need a capital gains tax cut to encourage capital investment to stimulate the growth of good jobs of the future.
In theory, this results in less spending and more saving. More saving results in more investment capital (instead of spending on consumption), lowering borrowing costs and resulting in business expansion, stimulating both hiring and salaries to grow (at least until the Federal Reserve gets into the act). The second argument is that corporate earnings are actually taxed twice, once at the corporate level, and again when they are distributed to share-holders as either dividends or as capital gains. In actual practice, well, your mileage may vary. For further info, see any Macro Economics 101 textbook. -- Checkered Daemon cdaemon@goblin.punk.net Delirium: There must be a word for it ... the thing that lets you know that TIME is happening. IS there a word? Sandman: CHANGE. Delirium: Oh. I was AFRAID of that.
participants (4)
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Bart Croughs -
Brad Dolan -
Checkered Daemon -
Sandy Sandfort