3 ms·

Something about that analysis seems suspect to me. Imagine that I own a house. You stay at my house for a night and pay me $1. Let's call it rent or whatever.

Something about that analysis seems suspect to me. Imagine that I own a house. You stay at my house for a night and pay me $1. Let's call it rent or whatever. I then spend $3 on bricks and stuff and improve my house. My cash outflow is -$2. The work done on my house improves the value of my house by $4 (consider this to be the "internal economy"). In that year then, my net worth has increased by $2. That is to say that it seems possible to me that you could have a negative trade balance and still be winning as you're increasing your wealth at a rate faster than you give it away. Am I missing something?

AnthonyMouse 6y ago
You didn't have the $3 you spent, so after you made $1 you had to borrow $2 and now have to pay interest on the debt until the balance of trade goes the other way and you can pay it back. If that never happens or takes too long, you've lost more than $2 to interest payments.
boomboomsubban 6y ago
>That is to say that it seems possible to me that you could have a negative trade balance and still be winning as you're increasing your wealth at a rate faster than you give it away. This would still be losing when compared to growing without giving away so much of it. Besides, it was being used as evidence that resources are moving from the poor to the rich globally.
- esotericn 6y ago
  Yeah, but if you need the imports, that's not an option. If you own gold, I need gold, and there's none on my land, I have to pay you. I'm not claiming there is no issue here, but rather that this situation seemingly can arise with no ill will at all assuming countries exist.
  - boomboomsubban 6y ago
    >but rather that this situation seemingly can arise with no ill will at all assuming countries exist. No matter the reasons, this situation arising supports the claim that that global resources are flowing from the poor to the rich. That said, even if that were possible it is clearly not what is happening. No country needs this capital flight.

AnthonyMouse 6y ago

You didn't have the $3 you spent, so after you made $1 you had to borrow $2 and now have to pay interest on the debt until the balance of trade goes the other way and you can pay it back. If that never happens or takes too long, you've lost more than $2 to interest payments.

boomboomsubban 6y ago

>That is to say that it seems possible to me that you could have a negative trade balance and still be winning as you're increasing your wealth at a rate faster than you give it away. This would still be losing when compared to growing without giving away so much of it. Besides, it was being used as evidence that resources are moving from the poor to the rich globally.

esotericn 6y ago
Yeah, but if you need the imports, that's not an option. If you own gold, I need gold, and there's none on my land, I have to pay you. I'm not claiming there is no issue here, but rather that this situation seemingly can arise with no ill will at all assuming countries exist.
- boomboomsubban 6y ago
  >but rather that this situation seemingly can arise with no ill will at all assuming countries exist. No matter the reasons, this situation arising supports the claim that that global resources are flowing from the poor to the rich. That said, even if that were possible it is clearly not what is happening. No country needs this capital flight.