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> as the billionaire holds on to whatever financial product they bought forever as long as it appreciates faster than inflation. Another word for that is inves

• JKCalhoun 5y ago
  I assume it goes overseas.
  • ImprobableTruth 5y ago
    Why would you assume that? Most stock people buy is of American companies. And hell, even if it was true, what is wrong with investing in foreign companies (of presumably underdeveloped nations)? That money still isn't "doing nothing", but rather giving the funding to companies that need it.
    • romwell 5y ago
      Whats wrong is that this money was generated domestically, and people who generated it are screwed by lack of healthcare, education, housing, infrastructure, transportation, etc.
      • goohle 5y ago
        Can you name the country, please?
        • deleted 5y ago
          [deleted]
        • romwell 5y ago
          I'll name quite a few: https://en.wikipedia.org/wiki/Panama_Papers https://en.wikipedia.org/wiki/Panama_Papers
• SamoyedFurFluff 5y ago
  > Where do you think that money goes? You don’t earn returns on money that isn’t doing anything. Yes you do? That’s what assets are.
  • ImprobableTruth 5y ago
    ... do you not know what risk is?
  • OneTimePetes 5y ago
    Thats ghost towns were noone lives.Art that nobody really appreciates. Companys that produce nothing anyone can really afford. Value is artificial scarcity and the power to uphold it. To trade a investment, is to dig a hole and sell the void.
• romwell 5y ago
  >Where do you think that money goes? Offshore. I think that money goes offshore. I even said it in the previous sentence, which you didn't quote. >Another word for that is investment. Well let's entertain the fantasy that the money doesn't flow away into offshore accounts for a second. So you're saying that investing is good? Then instead of giving money to rich people (e.g. by tax cuts), the government should do what rich people do and invest. Domestically. What do we have here? Ah, stocks and real estate. Got it. The government should buy companies and houses, the way the rich people invest. Didn't expect HN to argue that we should socialize housing and nationalize corporations, but I'll take it.
  • ImprobableTruth 5y ago
    I'm curious as to what you even mean by "money goes offshore" and how does that cause it to appreciate? And of course investing is good - how could you even argue against that? Businesses need funding. And yes, governments in fact do invest in both companies and private housing, I don't understand why you think this is some gotcha. It's just that on average governments tend to do worse at investing, so it's generally restricted to areas where the private market fails to provide.
    • romwell 5y ago
      >how does that cause it to appreciate? Seems like you missed a step. The thing that appreciates is the financial product that this money buys. >I'm curious as to what you even mean by "money goes offshore" Buying stock in an IPO in a multinational corporation based in Taxhavenlandia would be one example.
      • JackFr 5y ago
        A financial product is ultimately a claim on real assets. That is their essence. Buying stock in an IPO in a multinational corporation based in Taxhavenlandia is capitalizing a presumably enterprise which will generate a positive return. I can understand that you might be concerned about capital leaving the country rather than being invested domestically, but I'm not sure you've been advocating capital controls.
• api 5y ago
  In addition to flooding offshore it mostly goes into rent extraction schemes. That in turn raises the cost of living for everyone else, generally to no benefit. I've heard it called the "slumlord economy." A small percentage of it does get re-invested in actual production, but productive investments tend to be higher risk than rent extracting "investments." Conservative holders of wealth are not going to dump it into private space programs or <5nm microchips. They're going to buy up vast amounts of housing and collect rent. Edit: In my opinion entrepreneurs and investors in actual productive work should be against "trickle down" economics as it makes it much harder to build substantial new ventures. You can't build new products and services if there are no customers. Productive capitalism (as opposed to a rentier economy) requires a fully capitalized consumer base. Personally if I were a VC I would be in favor of dropping money on the poor and middle class from helicopters, especially if my portfolio had many consumer or small business focused companies in it. "Trickle down" economics primarily benefits the non-productive rich, the rentier class. It even hurts the productive rich. I'm a huge fan of Georgism: https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism TL;DR: zero income tax, zero sales tax, zero capital gains tax on productive investments, high taxes on the "ownership" of land and other things human beings do not produce. A modern take would also include pollution taxes such as a fossil carbon fuel tax.
  • cloverich 5y ago
    I would guess income tax and sales tax account for a far larger amount of tax dollars than ownership dollars -- Not well read but I'd wager it is a 100x difference or more. I.e. if so for that to work we'd have to vastly reduce government services. Either that or land tax would go way up, e.g. you have much more money from a lack of income and sales tax, but then 100x higher rent (as landlords could raise rent to cover the taxes). (FWIW I think I would be pro high taxes on multiple home ownership, investors purchasing and parking in home real estate on the surface seems like a bad thing, but then commercial real estate and dense urban housing seems like it would require investment-driven development so not really sure)
    • mecha_ghidorah 5y ago
      You could probably make exceptions to the high tax rate for high density commercial real estate ownership so you could own a suite of offices without it kicking in as well as providing temporary tax brakes (as in, for X years after construction) to people who own multiple homes in a single new development. That way people investing in the construction of new apartment buildings aren't paying extra tax so long as they sell them in say, 5 years.
• jcfrei 5y ago
  Those investments only benefit very few people though, who already have well paying jobs. Private investors prefer to take long bets in technology corporations (like FAANG, etc). That benefits to a small extent the few people working there because the high stock price convinces the CEO that he can afford another position here or there. It does nothing for the people in the lower income percentiles, because the additional money earned by the people in the higher percentile is not spent on consumables. It's mostly just spent on financial assets (that is housing, equity and bonds). Unsurprisingly the people in the lower percentiles have very few financial assets and mainly live off of their labor. Of course it won't benefit them. Instead the government needs to invest in projects that create jobs for everyone. But since the biggest voting base consists of older people with lots of savings they don't want the government to spend more, which could cause inflation and increase their tax rate. QE by the Fed on the other hand increases their portfolio value. So it's ultimately a political decision.
  • goohle 5y ago
    > Those investments only benefit very few people though Buy stock and benefit (or take a loss) with them. > Instead the government needs to invest in projects that create jobs for everyone. Vote for such government or immigrate to a socialists country, Venezuela or North Korea. They have the lot of jobs.
    • romwell 5y ago
      >Buy stock and benefit (or take a loss) with them. Buy stocks, and explain to your children why they won't get to eat for the year to come. It will pay off in the long run! And if they starve to death, well, that's savings right there! .... You do realize that millions — if not most people under 40 in the US — don't have spare money to invest into papers that they can't eat today, do you? Rent, food, transportation, medical expenses, educational expenses, and a small amount of spending on something that makes that life feel like it's maybe worth living — and oops, there goes the paycheck. Funny how the rent is larger than mortgage, but you can't get a mortgage unless you save money, but you can't save money because you have rent to pay. And everyone who's working to make a living is one car accident away from a medical bankruptcy. A fun lottery nearly all of us get to play, funny that. >Vote for such government Yay, I voted, and FPTP ensured that meant nothing. I voted for ranked choice, but peculiarly, the vote for that was based on the same system that I was trying to replace. >or immigrate to a socialists country, Venezuela or North Korea. They have the lot of jobs. False dichotomy much? And these are the only two countries in the world with universal healthcare and government providing housing and services to its citizens, I guess? Not Sweden, no? Not even the UK, or any EU country? Oh wait, nobody is waiting for me there. But more importantly, what basis do you have for telling people what to do? Especially when you tell someone to move to another country. How about... No. What the parent commenter is doing, and what I'll do, is we'll be damn sure to talk about what the government should do in all public forums whenever the opportunity presents itself, to raise the awareness ans steer the public discourse in the direction we want our country to move into, rather than shutting up and moving if our vote gives us nothing this election cycle. And we'll make it obviously, blatantly clear that opinions like the one you presented — ”vote or leave" — are rubbish. Bad faith rubbish that doesn't belong on HN. So I'll ask you to stop. My basis for that are the guidelines of this forum. We could do with less trash here.
• wilkommen 5y ago
  Yes you absolutely do earn returns on money that isn’t doing anything. If I buy a share of Apple and the share price goes up, I’ve just made a return on money that isn’t doing anything. The money I spent on that share didn’t enable any real economic activity other that me buying that share. My money didn’t go to Apple to enable them to grow their business. It went to some other investor who is primarily engaged in the same activity as me - investing.
  • deleted 5y ago
    [deleted]
  • ImprobableTruth 5y ago
    What you're doing is providing liquidity to earlier investors and taking on their risk, that's absolutely your money doing something. Without this, investing in an IPO would be a much more risky endeavor.
  • goohle 5y ago
    For example, I raised some money from Alice, so I have obligation to pay $1M(+%) to Alice. In other words, Alice invested $1M into me. Now, my business grows, risks are reduced, so Bob paid $1.25M to Alice. Now, I have obligation to pay $1M(+%) to Bob instead of Alice. What's wrong with that?
  • JackFr 5y ago
    I buy a liquor store for $1 million. A year later someone offers me $1.25 million for the liquor store. Would you argue that my million dollars was doing nothing? The income the liquor store earned was income on my $1 million. The $250,000 may have been because of a change in tastes for liquor, or improvements I've made to the business through efficiency or reinvesting the icnome. But what of the original owner who took my $1 million. He is retired and he has most of it in the bank (who will use it to make loans) while he spends the rest over the years as his retirement income. The share of Apple is no different.
• dandanua 5y ago
  > Where do you think that money goes? Offshores, real estate, stocks, cryptocurrencies and other speculative bubbles. Probably on slaves, in a couple of decades.