4 ms·

You are really drifting in to largely discredited mechantilism there, the belief that money should not flow out of the nation. https://www.investopedia.com/ter

by pipes 3y ago

You are really drifting in to largely discredited mechantilism there, the belief that money should not flow out of the nation. https://www.investopedia.com/terms/m/mercantilism.asp#:~:text=Mercantilism%20was%20a%20form%20of,sought%20to%20support%20domestic%20employment https://www.investopedia.com/terms/m/mercantilism.asp#:~:tex....

fennecfoxy 3y ago
What if 100% of your economy's money goes out to foreign tax havens then? Something that works for the general case should work for both extremes, because then that better informs usage for the general case (this applies to development too, imo). If we know how to manage the economy when: no money is flowing out to foreign countries + all the money is flowing out to foreign countries, then we have a good idea of the best way to handle _some_ money flowing out to foreign countries.
bumby 3y ago
Devils advocate: what are the limits of this? I.e., does it imply any arbitrarily boundary of commerce is invalid? It strikes me that most people would feel like spending money on your own family/tribe/community may be reasonable despite what mercantilism says as an economic concept.
- JumpCrisscross 3y ago
  > does it imply any arbitrarily boundary of commerce is invalid Not invalid as much as leaves everyone in the measured system materially worse off. Mercantilism is simply a failed way to raise your own living standards. (It might be a good way to concentrate wealth within your system. But only within, not from without.)
  - bumby 3y ago
    Isn’t this just playing a trick with system boundaries though? If I hire my son to do my yard work instead of my neighbor, how does that make my son objectively worse off? Within system/family, obviously this has increased wealth compared to hiring my neighbor. Without system, it has only made me worse off to the proportion that I have "overpaid" my son. But because it's zero-sum, my son has benefited to the exact proportion that I've been made worse off. Edit: Back to the context of globalization, "overpaying" my neighbor to build my car only makes me worse off to the same proportion s/he has been helped. When you factor in the concept of preference for psychological distance, that might be a worthy tradeoff. I.e., there's a psychological basis for valuing the financial well-being of my son/neighbor over the abstract person in another country* and this action seems logically consistent with that psychological framework. * This isn't to say the decision is morally justified. That's a different argument than the economic one.
    - JumpCrisscross 3y ago
      > Isn’t this just playing a trick with system boundaries though We agree. Consider the world to be your street and your country your neighbor and your houses. Paying your neighbor more to keep the money local doesn't work to make your "country" richer. It just helps concentrate wealth with your neighbor. Mercantilist protectionism is about redistributing, not increasing, domestic resources.
      - bumby 3y ago
        Right, but isn't there value in concentrating wealth to those who you have psychological proximity with? Consider a more dire twist: you have money to pay for a life-saving operation for either your own child or another child on the other side of the world. Are you saying there is should be no personal preference in this scenario? I'm saying there are perfectly reasonable expectations to concentrate that wealth due to human psychology once you move away from the academic and abstract.
        JumpCrisscross 3y ago
        > isn't there value in concentrating wealth to those who you have psychological proximity with Yes. That's why I said the difference isn't invalid. It's just more like a hidden redistributive tax. In small doses, this is fine and a way democracies repay their patrons. In larger doses, it leaves everyone poor. Too poor to afford a life-saving operation for anyone around.
        bumby 3y ago
        Ah, I see you point. Sorry it took me awhile to get there :) Regarding "it leaves everyone poor", how is the case if it's zero sum? It seems like it comes down to how you define your metric of 'poor'. It seems like it presupposes there isn't enough money to go around, so it's better to have a few people rich and the rest destitute, rather than have everyone just be marginally poor. Or are we getting into productivity incentive territory here?
- marcosdumay 3y ago
  > does it imply any arbitrarily boundary of commerce is invalid? Yes. It says exactly that. Now, there are details that can change things either way. But the one thing about economics, that is known for about 3 centuries, is that usually arbitrary boundaries to commerce make people poorer. Usually, both on average and on the poor extreme. There is more variability of impact for rich people.
  - bumby 3y ago
    I’m not doubting that claim but do you have any further reading to back it up?
    - marcosdumay 3y ago
      You want any introductory textbook on economics. Just avoid anything advanced enough to have a small focus.

by pipes 3y ago

fennecfoxy 3y ago

What if 100% of your economy's money goes out to foreign tax havens then? Something that works for the general case should work for both extremes, because then that better informs usage for the general case (this applies to development too, imo). If we know how to manage the economy when: no money is flowing out to foreign countries + all the money is flowing out to foreign countries, then we have a good idea of the best way to handle _some_ money flowing out to foreign countries.

bumby 3y ago

Devils advocate: what are the limits of this? I.e., does it imply any arbitrarily boundary of commerce is invalid? It strikes me that most people would feel like spending money on your own family/tribe/community may be reasonable despite what mercantilism says as an economic concept.

JumpCrisscross 3y ago
> does it imply any arbitrarily boundary of commerce is invalid Not invalid as much as leaves everyone in the measured system materially worse off. Mercantilism is simply a failed way to raise your own living standards. (It might be a good way to concentrate wealth within your system. But only within, not from without.)
- bumby 3y ago
  Isn’t this just playing a trick with system boundaries though? If I hire my son to do my yard work instead of my neighbor, how does that make my son objectively worse off? Within system/family, obviously this has increased wealth compared to hiring my neighbor. Without system, it has only made me worse off to the proportion that I have "overpaid" my son. But because it's zero-sum, my son has benefited to the exact proportion that I've been made worse off. Edit: Back to the context of globalization, "overpaying" my neighbor to build my car only makes me worse off to the same proportion s/he has been helped. When you factor in the concept of preference for psychological distance, that might be a worthy tradeoff. I.e., there's a psychological basis for valuing the financial well-being of my son/neighbor over the abstract person in another country* and this action seems logically consistent with that psychological framework. * This isn't to say the decision is morally justified. That's a different argument than the economic one.
  - JumpCrisscross 3y ago
    > Isn’t this just playing a trick with system boundaries though We agree. Consider the world to be your street and your country your neighbor and your houses. Paying your neighbor more to keep the money local doesn't work to make your "country" richer. It just helps concentrate wealth with your neighbor. Mercantilist protectionism is about redistributing, not increasing, domestic resources.
    - bumby 3y ago
      Right, but isn't there value in concentrating wealth to those who you have psychological proximity with? Consider a more dire twist: you have money to pay for a life-saving operation for either your own child or another child on the other side of the world. Are you saying there is should be no personal preference in this scenario? I'm saying there are perfectly reasonable expectations to concentrate that wealth due to human psychology once you move away from the academic and abstract.
      - JumpCrisscross 3y ago
        > isn't there value in concentrating wealth to those who you have psychological proximity with Yes. That's why I said the difference isn't invalid. It's just more like a hidden redistributive tax. In small doses, this is fine and a way democracies repay their patrons. In larger doses, it leaves everyone poor. Too poor to afford a life-saving operation for anyone around.
        bumby 3y ago
        Ah, I see you point. Sorry it took me awhile to get there :) Regarding "it leaves everyone poor", how is the case if it's zero sum? It seems like it comes down to how you define your metric of 'poor'. It seems like it presupposes there isn't enough money to go around, so it's better to have a few people rich and the rest destitute, rather than have everyone just be marginally poor. Or are we getting into productivity incentive territory here?
marcosdumay 3y ago
> does it imply any arbitrarily boundary of commerce is invalid? Yes. It says exactly that. Now, there are details that can change things either way. But the one thing about economics, that is known for about 3 centuries, is that usually arbitrary boundaries to commerce make people poorer. Usually, both on average and on the poor extreme. There is more variability of impact for rich people.
- bumby 3y ago
  I’m not doubting that claim but do you have any further reading to back it up?
  - marcosdumay 3y ago
    You want any introductory textbook on economics. Just avoid anything advanced enough to have a small focus.