4 ms·

The problem as I see it, and the article briefly hinted at this is illiquidity. Western Europe is extremely rich (in terms of capital stock) but has a relativel

by btcoal 15y ago

The problem as I see it, and the article briefly hinted at this is illiquidity. Western Europe is extremely rich (in terms of capital stock) but has a relatively low income (in terms of capital flow) and extremely low income growth. Without structural reforms (improving infrastructure, decreasing frictions in the labor market, reducing entitlements to incentive work, etc) you cannot increase income or income growth levels. But, by increasing public claims on private wealth and opening the country up to foreign direct investment (read: selling the Sistine Chapel to China to rent) you can tap the capital stock. This should be increasingly seen as a way out for wealthy yet cash-poor Euro countries. Without structural improvements in the US it will also be the only way forward 30 or 40 years for now. Be prepared for a "Sponsored by India" sticker on the Washington Monument.

r00fus 15y ago
Your explanation is a silly mix of right-wing tropes. You think it's going to be China that buys the Sistine Chapel, or India that purchases the Washington Monument? No, it will be crony capitalist groups (formulated by the banksters and politically connected) that do so. The fact that these groups may be involved with some sovereign wealth fund of a BRIC or other country is incidental. Then they'll rent it out at obscene prices and gouge the public further.
- btcoal 15y ago
  Hmm, well I didn't think this needed clarifying but the internet is notoriously bad at transmitting humor (or maybe I am). But I was being facetious with respect to the examples I gave. By capturing private wealth, what will most likely happen are taxes on existing wealth (national property taxes, increases in the estate tax, etc.). National debt is uncollateralized and will always be this way, so sovereign debt holders will never have claim to the physical assets of a nation. It is country themselves that can change laws to appropriate private wealth. Constitutions and laws vary in the extent to which this is allowed. There is the notion of an unconstitutional level of taxation in the US. As for the rest of your ideological rant. Anyway.
nate_meurer 15y ago
That's interesting. It immediately made me think of the way Chicago sold off its parking meter system in 2009(?) to a private company for a fraction of what it's worth. The deal is so bad for the city, I almost have to believe it was corrupt. I suspect sales of national assets are unlikely to tap their full value, subject as they are to corruption and to the likelihood that the sellers are over a barrel.
- btcoal 15y ago
  That was unfortunate. But another side of the issue in Chicago was that the city blew through the cash in record time. Even if the meters had been sold off at an above market price, the disfunction in the local government would have resulted in the squandering of the proceeds. From your well made point I infer that we should make a dispassionate evaluation of the value of public assets during good times so that they won't be sold for a song during bad times. Things usually go, "No we will not sell off pieces of our nation" (during good economic times) so nobody actually evaluates the options for doing so --> "We need cash now!" And we become subject to market forces when leveraging public assets.
  - nate_meurer 15y ago
    Some large Amercian cities -- San Fran comes to mind, Chicago maybe just as much -- are microcosms of countries like Greece. Enormous government payrolls locked up in union contracts, massive social regimes from which a large part of the population either draws upon or derives job security, and a corrupt and labyrinthine tax system.
    - nradov 15y ago
      Not really. San Francisco and Chicago are governed just as badly as some third-world kleptocracies, but those cities fortunately have relatively little general obligation debt (proportionally much less than Greece). Eventually they will probably declare bankruptcy and repudiate their ridiculous union contracts.
  - _delirium 15y ago

by btcoal 15y ago

r00fus 15y ago

Your explanation is a silly mix of right-wing tropes. You think it's going to be China that buys the Sistine Chapel, or India that purchases the Washington Monument? No, it will be crony capitalist groups (formulated by the banksters and politically connected) that do so. The fact that these groups may be involved with some sovereign wealth fund of a BRIC or other country is incidental. Then they'll rent it out at obscene prices and gouge the public further.

btcoal 15y ago
Hmm, well I didn't think this needed clarifying but the internet is notoriously bad at transmitting humor (or maybe I am). But I was being facetious with respect to the examples I gave. By capturing private wealth, what will most likely happen are taxes on existing wealth (national property taxes, increases in the estate tax, etc.). National debt is uncollateralized and will always be this way, so sovereign debt holders will never have claim to the physical assets of a nation. It is country themselves that can change laws to appropriate private wealth. Constitutions and laws vary in the extent to which this is allowed. There is the notion of an unconstitutional level of taxation in the US. As for the rest of your ideological rant. Anyway.

nate_meurer 15y ago

That's interesting. It immediately made me think of the way Chicago sold off its parking meter system in 2009(?) to a private company for a fraction of what it's worth. The deal is so bad for the city, I almost have to believe it was corrupt. I suspect sales of national assets are unlikely to tap their full value, subject as they are to corruption and to the likelihood that the sellers are over a barrel.

btcoal 15y ago
That was unfortunate. But another side of the issue in Chicago was that the city blew through the cash in record time. Even if the meters had been sold off at an above market price, the disfunction in the local government would have resulted in the squandering of the proceeds. From your well made point I infer that we should make a dispassionate evaluation of the value of public assets during good times so that they won't be sold for a song during bad times. Things usually go, "No we will not sell off pieces of our nation" (during good economic times) so nobody actually evaluates the options for doing so --> "We need cash now!" And we become subject to market forces when leveraging public assets.
- nate_meurer 15y ago
  Some large Amercian cities -- San Fran comes to mind, Chicago maybe just as much -- are microcosms of countries like Greece. Enormous government payrolls locked up in union contracts, massive social regimes from which a large part of the population either draws upon or derives job security, and a corrupt and labyrinthine tax system.
  - nradov 15y ago
    Not really. San Francisco and Chicago are governed just as badly as some third-world kleptocracies, but those cities fortunately have relatively little general obligation debt (proportionally much less than Greece). Eventually they will probably declare bankruptcy and repudiate their ridiculous union contracts.
- _delirium 15y ago