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The 2.5% tax doesn't mean country B is growing 2.5% faster. The 2.5% in country B could be sitting in a vault doing nothing or being spent on yachts. Conversely
by confidantlake 6y ago
The 2.5% tax doesn't mean country B is growing 2.5% faster. The 2.5% in country B could be sitting in a vault doing nothing or being spent on yachts. Conversely the 2.5% in country A is being invested in making the workforce more productive.
- R0b0t1 6y agoIn general it is right to assume that free capital will be used as productively as possible.
- thyrsus 6y agoPlease provide evidence.
- webmaven 6y ago> In general it is right to assume that free capital will be used as productively as possible. Only if you define 'productive' as 'generating more capital'. Yes, over the very very long term, externalities that aren't accounted for (it doesn't matter whether we're talking about negative externalities not mitigated, or positive externalities not invested in) will eventually exact their toll on capital, but in the short, medium, and even moderately long term, any externalities that can possibly be dismissed as irrelevant to the fundamental mission of turning large piles of money into larger piles, will be. It is also worth noting that by ignoring externalities until some crisis forces the issue, opportunities are opened up for capital to (quite profitably) address the resulting crisis. Whereas addressing an externality in a more timely manner, while reducing overall costs, even more sharply reduces those opportunities.
- R0b0t1 6y agoAll of those things are true, but they are things you believe after you have evidence to believe them. That you should assume free capital is being used in the most productive way possible is the null hypothesis and something generally recognized as true, despite how much HN doesn't like it.