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“When the dust settles, Tesla may be a Chinese company. Tencent is the latest big investor.” This is something people don’t understand about the trade deficit.

“When the dust settles, Tesla may be a Chinese company. Tencent is the latest big investor.” This is something people don’t understand about the trade deficit. Most people think the trade deficit means that China sends the US way more stuff than the US sends to China. That is not true. Of course China doesn’t send stuff without asking for things in return. China sends stuff and then has the right to buy pieces of American companies and future cash flows of those companies (and government entities). The US is getting a bunch of stuff and giving away little pieces of it’s future. This is just a visible example

godzillabrennus 7y ago
Then old white people voted to change that and Trumped the status quo.
- robocat 7y ago
  There is plenty of variation within "old white people": using blatant stereotypes is just plain offensive. "All black people are _____" is equally unacceptable.
djsweet 7y ago
Forgive my ignorance, but how does the trade deficit in favor of China necessarily entitle China to acquire ownership of US companies? The best explanation I could think of is that China is using the liquid capital obtained by US trade to turn around and purchase ownership stakes in US companies the same way pretty much anyone within the US would, which means there’s no special arrangement outside of China having money to spend and the US being in need of investments. If my hypothetical explanation is correct then the implicit goal of “fixing the deficit” ends up reading as ultimately somehow ensuring China has less money, and just that China has less money, when I think that the legitimate national security concerns around the trade deficit would be better addressed by some actual investment oversight. But, again, maybe there’s something about the deficit entitling China to stakes in US companies that I’m not seeing.

godzillabrennus 7y ago

Then old white people voted to change that and Trumped the status quo.

robocat 7y ago
There is plenty of variation within "old white people": using blatant stereotypes is just plain offensive. "All black people are _____" is equally unacceptable.

djsweet 7y ago

Forgive my ignorance, but how does the trade deficit in favor of China necessarily entitle China to acquire ownership of US companies? The best explanation I could think of is that China is using the liquid capital obtained by US trade to turn around and purchase ownership stakes in US companies the same way pretty much anyone within the US would, which means there’s no special arrangement outside of China having money to spend and the US being in need of investments. If my hypothetical explanation is correct then the implicit goal of “fixing the deficit” ends up reading as ultimately somehow ensuring China has less money, and just that China has less money, when I think that the legitimate national security concerns around the trade deficit would be better addressed by some actual investment oversight. But, again, maybe there’s something about the deficit entitling China to stakes in US companies that I’m not seeing.