12 ms·

It's true that free trade is hugely beneficial to the US economy as a whole, particularly with the USD being the reserve currency. The flow of goods is balance

by svara 2y ago

It's true that free trade is hugely beneficial to the US economy as a whole, particularly with the USD being the reserve currency. The flow of goods is balanced by a flow of US dollars to other countries, which are ultimately cycled back into the US financial system - enabling budget deficits and an abundance of capital to invest in high growth industries. The flip side of this is that it also drives inequality - the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries. The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end. As such, this administration's policies are foolish, but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens. That is something that in the current American political climate seems a nearly impossible sell.

ajross 2y ago
You're arguing from a steady state. In point of fact the pain of the at-this-point-seemingly-inevitable recession is absolutely going to be concentrated on the working class. Those of us with savings and work flexibility will do just fine. Even someone making a first principles argument for a revision of US trade policy should agree that this is insane.
- smallmancontrov 2y ago
  The real pain will hit the working class harder, but the nominal pain will hit the capital class harder. Historically, this is how inequality unwinds. See: recessions, World War II. Let's hope to god that this is "just" a recession and doesn't cook into World War III.
  - TehCorwiz 2y ago
    The current spending bill has a 4.5T giveaway to corps and the ultra rich. The goal is to drive prices to the floor and then buy everything up. What's a 50% drop in value to a billionaire? Most of them would still be a billionaire and the ones that fall from that group still have more money than they could ever spend. No wealthy person will truly feel what's going on. They'll still vacation and eat their caviar. Caricatures aside, it's absurd to compare someone stock sheet numbers going down with people not able to find medical care or feed themselves.
  - timacles 2y ago
    Definitely looks like an intentional precursor to WW3. - Threats of annexations - Existing conflicts in North America, Middle East, Europe and Asia. (whats up with South America?) - Mass unemployment and poverty in US freeing up able bodied people for some soldiering - Right wing blowhards everywhere Just crazy that this is essentially because rich people dont want to pay some debts, and some crazy russian guy's ego
    - A4ET8a8uTh0_v2 2y ago
      I think the quote below attributed to Caesar is applicable here ( not only in the sense that egos play a role in most leader's process ). I am not sure I disagree with you; I just hope you are wrong. "Go on, my friend, and fear nothing; you carry Caesar and his fortune in your boat."
- svara 2y ago
  I think my comment is entirely compatible with what you said, no?
- mlinhares 2y ago
  its also assuming there is any plan here do get somewhere, they just asked chatgpt for number, it spewed them out and those became the final numbers. there's no plan for anything here.
smallmancontrov 2y ago
Yes! "Trade Wars are Class Wars" by Klein & Pettis is the book to read if you want to hear actual economists with actual data talk about this.
- no_wizard 2y ago
  Stellar book. Can't recommend it enough. Wanted to chime in on how good this book is.
  - aj_icracked 2y ago
    I just downloaded this and listened to it for the past 2 hours, this is a fantastic book. Thanks for the rec guys!
  - mywittyname 2y ago
    I purchased this book after seeing all of these glowing reviews for it.
- throwaway34903 2y ago
  For what it's worth Pettis thinks tariffs would be beneficial for the American economy: https://www.foreignaffairs.com/united-states/how-tariffs-can-help-america https://www.foreignaffairs.com/united-states/how-tariffs-can...
  - ckemere 2y ago
    I read this and I was quite disappointed that he didn’t talk about labor costs and other comparative advantages for labor-heavy manufacturing to be in a different situation trade market-wise than it was in the 1930s.
    - smallmancontrov 2y ago
      He does talk about comparative advantage, though. Extensively. The bit about Ricardo's precondition is absolutely wild and I'm more than a little scandalized by the fact that it wasn't discussed when I took econ in school. Not to mention the history with Alexander Hamilton. Are you sure you didn't just read the link? If you want a book-sized argument, you need to read the book, or at least listen to it.
piokoch 2y ago
Nope. It's true that free trade WAS hugely beneficial to the US economy as a whole. Now free trade is hurting USA economy and that's why USA play against the rules they were promoting for so long.
- klipt 2y ago
  > Now free trade is hurting USA economy Then why is the economy crashing under these new tariffs when it was recovering nicely just a few months ago?
- sekai 2y ago
  > Now free trade is hurting USA economy and that's why USA play against the rules they were promoting for so long. Explain how is it hurting US economy?
- dragonwriter 2y ago
  Free trade is not hurting the economy. American domestic policy impacting the distribution of the produce of the economy is, even in times of strong aggregate economic performance, hurting the felt effects of the economy on large swathes of the population, but throwing up protectionist policies that collapse both the global and local production possibilities curves doesn't help that; it just shrinks the pie without doing anything to deal with the bad distribution which makes people feel like the pie is shrinking even when it is growing. The results you can expect from that should be obvious without experiencing them, but it looks like we are all going to learn about them through painful experience real soon now.
zjp 2y ago
Yes! I've been consistently frustrated at both sides of the issue. It became salient for me when I read about how China had sanctioned three American drone manufacturers that were supplying Ukraine last year, and how it disrupted their supply chains and ultimately the war effort. It is unacceptable for any other country to be able to do this to any part of the western-aligned military supply chain. We needed a targeted policy -- I don't care about American cars except to the extent that those factories can be converted to aircraft and tank factories. But the conversation has been frustratingly reduced to 'reshore low skill work' vs 'save my infinite trough of cheap plastic slop'. I don't want to hear about tariffs bad, I want to hear about how subsidies are better or about how it doesn't matter anyway because of the structure of the Chinese economy (I saw it claimed without evidence that they depend on imports from places aligned with the west which is reassuring if substantiated). There's an underlying issue everyone is dancing around.
- jay_kyburz 2y ago
  I don't know why you are being down-voted, I think you raised some interesting points that add to the discussion. National security / foreign interference hadn't occurred to me, and now I'm wondering what would happen to US economy and manufacturing if it was at war with China and or the EU over Taiwan and or Greenland. How would US deal with Russian style sanctions? Can China simply ban all exports to the US? In times of war, it probably is super important that a country and manufacture all essentials.
  - zjp 2y ago
    If I were a third party downvoting my comment I would probably take issue with the characterization of the anti-tariff position as "save my infinite trough of plastic slop". Other countries do have highly skilled artisans. Tariffs are also considered bad on the merits (looking at it from a liberal [economically] world view). It's like vaccine skepticism to economists: an extremely low-status opinion for kooks and cranks. But I am open to being convinced on illiberal economics (this is not the same thing as saying I support it) because I consider military supply chain erosion a national emergency and I don't think "balloon the military budget even more with subsidies" is a politically viable position and "just build it in an allied country we now have to keep permapoor to make the economics work out" is cruel.
MR4D 2y ago
The deficit is 2 trillion. Income taxes on individuals are 2.4 trillion. How much do you expect to raise taxes to cover that gap? You double my taxes and I’m in the welfare line. Further, and this is not referenced enough - the US must rollover ~9 trillion in treasuries this year. The lower the interest rate to do that, the better. Otherwise it increase the deficit even more. The only way this ends is one of two paths - a path similar to what we are on; default. We may not like this one, but default is world destroying because of the broad use of the Dollar around the globe.
- hijodelsol 2y ago
  The deficit is not in fact 2 trillion. Source: https://www.bea.gov/system/files/trad0225.png https://www.bea.gov/system/files/trad0225.png (and many other official documents) Also, this is a false dichotomy.
  - disgruntledphd2 2y ago
    I believe the OP was talking about the fiscal deficit, your chart shows the trade deficit.
  - izend 2y ago
    In CBO’s projections, the federal budget deficit in fiscal year 2025 is $1.9 trillion. Adjusted to exclude the effects of shifts in the timing of certain payments, the deficit grows to $2.7 trillion by 2035. It amounts to 6.2 percent of gross domestic product (GDP) in 2025 and drops to 5.2 percent by 2027 as revenues increase faster than outlays https://www.cbo.gov/publication/60870 https://www.cbo.gov/publication/60870 IMO, 5%+ percent of gross domestic product (GDP) in a country with massive trade deficits is not sustainable.
    - croemer 2y ago
      Nominal GDP growth was 5% in December. As long as share of GDP is constant things are sustainable.
keithxm23 2y ago
> but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens. Agreed. However, by imposing tariffs it is not the privileged who are going to be affected the most. The pain is felt most by the low-skill workers you mentioned earlier. If the solution was instead along the lines of changing tax-brackets to tax the 'privileged' more, that might have better addressed the problem you mention in the beginning.
- DSingularity 2y ago
  Nobody has faith in the governments ability to put that money to good use. The US gov uses significant amounts of its budget to fund weapon development, promote weapon sales, change unfriendly foreign governments, support friendly foreign governments, and genocide troublesome foreign populations. Who will support raising more taxes to maintain and expand such efforts?
  - mjevans 2y ago
    Offhand, I'm unaware of where to even look to get an easy to digest version of 'where tax dollars go'. Would the GAO make such a report? Something for Congress otherwise? Would there be a classified and an public version? Even better would be a tool that, E.G. with your IRS filing number, shows how much 'you' paid in, breaks down where that went, and shows how 'you' compare to other areas. Such tools and reports would cost money, but making them is practically an audit anyway which is a good use of resources in a bureaucracy (part of the self-calibration system).
    - LaffertyDev 2y ago
      https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/ https://fiscaldata.treasury.gov/americas-finance-guide/feder... What you seek is available and has been available for a very long time. Mathing out how your individual tax dollars map to these buckets is a fairly straightforward (IMO) exercise.
      - 2y ago
mistrial9 2y ago
this glib analysis neglects the part where decades of plans and budgets have been addressing " build out social systems" while simultaneously building crony networks of political appointees, guarding the hen house. Short term pain is loudly announced for the purpose of defeating the political opponent, not addressing the long standing inefficiencies in a swollen and obese wealth exchange centered in the USA. tons of cynical one-liners from partisans drown out efforts to really examine the impacts over medium and long term. A horrible problem with this move is that it is not entirely wrong from a fundamentals point of view? It certainly creates winners and losers, no question about it.
- wesapien 2y ago
  The political class and plutocrats always wins regardless of the election outcome. The two party system guarantees they come out unscathed regardless of their jousting.
api 2y ago
> for the government to lower the cost of high-quality education Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee? Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs. For some reason, with intellectual labor, we are able to pretend that there is no threshold and everyone can do it. It's an idea that makes people feel good but what if it's just not true? Can everyone be made above average in something with enough education? If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that? How do we maintain a democracy? Sometimes people float the idea of UBI, but that could turn out extremely dystopian with a huge underclass of UBI-collecting people in a state of hopelessness and boredom. That doesn't work much better for democracy than a huge underclass of under-employed and unemployed people. To make matters worse: the fact that our past strategy works so well for increasing GDP means it it tends to inflate assets, including things like housing prices. The end result is a country that looks, to more than half its inhabitants, like a vacation town where outside capital inflates the cost of everything way above what local wages can support. It might not be a coincidence that San Francisco, New York, and other capitals of high margin high skill industries have real estate prices that lock ordinary people out of even "starter homes." I absolutely do not support Trump's execution here -- it's ham-fisted, reckless, and badly thought out. If we are exiting this neoliberal model, Trump's exit from it is a little bit like Biden's exit from Afghanistan. Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind. We can't keep doing that if we want a democracy. If we exclude 50-80% of the population from anything meaningful or any economic stability, we will get one of two things. Either we'll get the kind of totalitarian state that is required to maintain that kind of inequality in perpetuity, or we will get a string of revolutions or a failed state. People will not just sit around in hopelessness forever. Eventually they will be recruited by demagogues. Ironically Trump has been one of the most effective at this. I'm sure more will eventually show up though. There's a big market for them.
- ckemere 2y ago
  I’ve reflected that resource extraction jobs often end up in the high wage / low educational investment category, and I’ve wondered if that motivates the whole “annex Greenland” bit as much as “securing critical resources” does…
ein0p 2y ago
> lower the cost of high-quality education And how do you propose we do that? By giving schools even more money at taxpayer's expense? > raising taxes at the high end 40.1% of US taxpayers on the low end of income distribution pay no income tax, 16.5% pay neither income nor payroll taxes. Top 1% pays 40.4% of all income tax (while holding about 30.8% of net worth, 13.8% of the total is held by top 0.1%). Top 1% (with the possible exception of a few billionaires) already pays through their nose.
- matthewdgreen 2y ago
  Funding public universities and giving them the mission to keep tuition costs low. Public universities are capable of providing enormous value to students, but over the past two decades their funding has been substantially cut. The result is that those schools became more reliant on expensive out-of-state tuition, which in turn means competing with private institutions for students, which in turn means building more luxuries (awesome gyms) and not focusing on value for money.
  - ein0p 2y ago
    So, giving even more taxpayer money to the education cartel, then. Got it. Good luck with that. Over the past several decades staffing in administrative positions has exponentially ballooned all across the education system, starting with grade schools, while academic metrics moved in the opposite direction. Now the question is, do we continue setting even more taxpayer money on fire, or is there a better way?
- supplied_demand 2y ago
  ==40.1% of US taxpayers on the low end of income distribution pay no income tax== According to 2022 IRS data, average deductions for those who itemized totaled $43,686 in tax year 2022 [0]. The 2022 bottom two quintiles of income were under $44k [1]. That means in 2022 rich people AND poor people didn't pay income taxes on their first $45k of income. Is that unfair to rich people? Worth noting, the 25 richest Americans paid an average effective tax rate of 13%, as of 2018 when IRS data was leaked [2]. ==Top 1% (with the possible exception of a few billionaires) already pays through their nose.== "While average effective tax rates barely changed in the US from 1945 to 2015, the average tax rates of high-income households fell sharply—from about 50 percent to 25 percent for the highest income 0.01 percent and from about 40 percent to about 25 percent for the top 1 percent." [3] If the average effective rate hasn't changed, but the effective rate paid by the top 1% has fallen by ~40%, how is the difference made up? The 99% pay more. [0] https://www.pgpf.org/article/7-key-charts-on-tax-breaks/ https://www.pgpf.org/article/7-key-charts-on-tax-breaks/ [1] https://data.census.gov/table/ACSDT1Y2022.B19081?q=income+quintile https://data.census.gov/table/ACSDT1Y2022.B19081?q=income+qu... [2] https://www.propublica.org/article/you-may-be-paying-a-higher-tax-rate-than-a-billionaire https://www.propublica.org/article/you-may-be-paying-a-highe... [3] https://taxpolicycenter.org/taxvox/effective-income-tax-rates-have-fallen-top-one-percent-world-war-ii-0 https://taxpolicycenter.org/taxvox/effective-income-tax-rate...
huevosabio 2y ago
> the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries. This is true only if we impose barriers to geographic mobility, which we do via artificial scarcity of housing in our major cities. If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor. > the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end. We don't need more high-quality education nor do we need to onshore. We need to deregulate the housing market, we make it easier to migrate to the US (funny enough, yes that would help with inequality). And I do agree we need better social systems. There is no way to frame this admin's policies that makes it look reasonable. It's a Crony Clown Club show.
- frumplestlatz 2y ago
  > If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor. Why would they want to do that? Their priorities are myriad, but raising a family, having a degree of autonomy and space to themselves, and remaining a part of their community are all generally on the list. What’s generally not on the list is living in a tiny rabbit hutch, owning nothing, working a dead-end service job, trying to raise a family in a city (or just not trying at all), and paying a higher price for the privilege.
  - dalyons 2y ago
    Because that’s where the money is. The world over people have exhibited their revealed preferences for living in a city, as everywhere continues to urbanize
- bilbo0s 2y ago
  all the "low-skill" people would be able to move to the city and find a job That this doesn't work is self-evident. Cities are currently filled with low skilled people. The vast majority of whom find no employment or employment in illegal activities. Also: We don't need more high-quality education The idea that the world, and the US in particular, has no need for more and better education is laughable. Considering the fact that a lack of education is, arguably, what got the US into the current situation in the first place.
MichaelMoser123 2y ago
Thanks for your comment, it explains why there seems to be a high degree of support for these measures in some quarters (was looking at the youtube comments to the liberation day speech) vs the consensus here at HN. Let's suppose these policies are to the benefit of some Americans over other the benefit of other Americans. The open question now is: does it matter? does it really have an influence on the gross profit numbers? Will an isolationist foreign policy destroy the international order and how could this effect the US in return?
bill_joy_fanboy 2y ago
> It's true that free trade is hugely beneficial to the US economy as a whole, particularly with the USD being the reserve currency. It's true that free trade is hugely beneficial to large cap U.S. companies and their shareholders. If you are U.S. worker without a lot of equity in the market all you notice is that your job gets outsourced.
- elcritch 2y ago
  This “free money” also inflates housing prices. It’s one application of “trickle down economics” that works; except it’s housing prices. Even for highly paid Silicon Valley engineers what does it matter if much of that money goes right back to landlords?
jerrygenser 2y ago
This is a regressive tax that hurts low skill and low wage workers proportionately more since basic necessities of life are going to increase in price - it will be a much larger share of wallet than rich. This will not materially change purchasing behavior of very rich (save maybe waiting to buy a car due to increased pricecs) It would be beneficial to increase taxes on the massive service economy and use the proceeds to subsidize lower wage industries. In trumps first term after tariffs affected farmers, they had to subisidize them to keep them afloat. It didn't quite work the way it was intended. The trade war relief program in the first term spent $30bn keeping farmers afloat.
honkycat 2y ago
> As such, this administration's policies are foolish, but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens. Very few people who work as full-time devs are so wealthy that they are totally insulated from general social decline.
waffletower 2y ago
As a highly skilled and comparatively highly paid worker, I feel it is outrageous to suggest that I am within the class that needs to give up any reputed "wealth" when I am nowhere near the 1% who hold more than 50% of it. Such a claim just contributes to the wealth making of the 1% misers even more. Class warfare! I have already had to give up significant amounts of college and retirement savings from these tariffs.
AnthonyMouse 2y ago
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end. You're proposing to tax an international supply chain. To tax something it has to be in your jurisdiction to begin with, and then you have several problems. The most obvious of these is, what happens when the stuff just isn't there anymore? Suppose the US isn't competitive with China for manufacturing certain goods, e.g. because the US has a higher cost of living as a result of a purposeful housing shortage and then has higher labor costs, or for any other reason. So manufacturing moves to China, not just to sell to the US but also to sell to the domestic market in China and to Europe and India and the rest of the world. No part of those other transactions is in the US, so the US can't tax them and use the money to help the people in the US who used to be doing that manufacturing and selling those products to the rest of the world. Whereas if you sustain domestic manufacturing through some means then it exists and can make products to sell to the rest of the world because the fixed costs of establishing a manufacturing base can be covered by the domestic market and then it only has to compete in the international market on the basis of variable costs. Next consider the industries where the US still makes stuff. You could tax those things because they're still in the US. But that makes the US less competitive in the global market for investment capital, which is highly mobile. If higher US taxes cause returns to be lower in the US than they are in other countries then investors go invest in the other countries instead, and then the thing stops being in the US. So that doesn't really work. You can see this in the case of e.g. Europe, which has even worse problems with the loss of manufacturing than the US. Which leaves the activity where it's the other half of the transaction happening in the US, i.e. China is manufacturing something but the customer is in the US. That you could tax without a huge risk of capital flight, because companies can rarely change the location of their customers, but that still leaves you with two problems. First, either of the countries participating in the transaction could levy the tax. In the case of China, then they can levy a tax (or some tax-equivalent) to only such an extent that it consumes the surplus in the transaction attributable to the competitive advantage of their country. China can do this because they have a lower cost of living etc., which doesn't work for the US. But because they do that, the US can't tax that portion of the surplus, which was the gain from moving manufacturing to China. And second, a tax on imports is called a tariff. Which the US can impose to tax that portion of the transaction surplus that isn't attributable to the foreign country's cost advantage, i.e. the preexisting transaction surplus where it costs $8 to make something someone is willing to pay $10 for regardless of where it was made. But tariffs are the thing you don't like.
fifilura 2y ago
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end. Like... Scandinavia?
- JensRantil 2y ago
  As an example, yes.
- AnthonyMouse 2y ago
  Scandinavia is using oil and gas reserves as a captive tax base. It doesn't really generalize to markets where capital is mobile.
  - fifilura 2y ago
    That is only Norway. Maybe a little bit of Denmark, but Denmark is not considered an oil economy. And I don't know what you mean with "captive tax base" but Norway just piles up the wealth they are too afraid to use it since it will increase the inflation.
    - AnthonyMouse 2y ago
      Norway is the one that actually makes it work. Their GDP per capita is slightly higher than the US and more than $30,000 higher than the other Scandinavian countries. "Captive tax base" means the industry can't move to another country as a result of high taxes. You can move factory jobs to China by moving the factory. You can't move oil and gas extraction jobs to China by moving the oil field.
      - redeeman 2y ago
        and a basic sandwich costs 3x that of in denmark :)
        2y ago
solfox 2y ago
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end. You are assuming that this administration has the same goals as you, just different ("foolish") methods of arriving there. I'd posit that they have very different goals that these methods are solving for.
maxnevermind 2y ago
Your problem statement is missing "national security" angle. As I understand the current administration sees US de-industrialization as a threat to it and tariffs as a soution.
solatic 2y ago
> The obvious solution is... for the government to lower the cost of high-quality education Not everyone is smart enough to land in the professional class. The US does its young population an enormous disservice by pushing low academic performers to go to college. There needs to be, somehow, a way for people to make a living with their hands, because for some people, that is genuinely all they are capable of. > ... build out social systems... The way you build out the social system is by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program. You don't take those jobs away by offshoring them. I'm not saying I'm against offshoring in general or that I support Trump's tariffs - I don't. But it's not exactly controversial to point out that, since the end of the Cold War, the US prioritized the recommendations of economists over social cohesion and socially harmonious policy. A lot of people were thrown out of work and were left to fend for themselves. Many of them ended up as victims of the opioid epidemic. I'm not convinced that the prior system was completely peaches as cream.
- ryan_lane 2y ago
  > by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program Like building out clean energy infrastructure? Modern "ditch digging government programs" aren't necessarily low-skill. Even at the time, the new deal government programs were massively beneficial for society while also providing jobs for folks who needed it, at reasonable wages. Let's not shit on good government programs just because the right has been feeding us propaganda demonizing it for decades.
  - solatic 2y ago
    Building out clean energy infrastructure provides value. That's perfectly fine. There is plenty of need for hands to maintain American road infrastructure that is falling apart and build new infrastructure like high-speed intercity rail and more subway lines to help support additional population growth. The reference is to how a government can pay people to literally dig ditches then refill them. This nominally increases GDP (due to additional government expenditure) but it does not produce value and, more importantly, does not give people the dignity they would ordinarily achieve through their labor because they know such work is bullshit.
Swoerd 2y ago
[dead]
rayiner 2y ago
You can’t make everyone above average.
deleted 2y ago
[deleted]
donatj 2y ago
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education I'm always skeptical of the idea that we can just educate ourselves out of problems. As I see it, that would only raise people's wage expectations which would make us even less competitive on a global market? The need for blue collar workers doesn't just evaporate, and there's frankly only a finite demand for white collar workers. You give everyone expectations of a white collar job, and they end up working blue collar because there's no job for them, you're just setting society up for mass disappointment and resentment. You give your average blue collar worker today a degree, are they actually more valuable to their current position? Probably not.
jalapenos 2y ago
So basically: the solution is "do more of the same". I suppose that's the point, people were tired of hearing the same old crap by leftists who fancy themselves as smarter, as their quality of life continued to drop, so they figured "screw it let's try the opposite". Guess we'll see where it lands.
hello_moto 2y ago
what you're saying in short is that the US economy has changed from Manufacture-based to Service-based, just like China. People don't realize this but China is moving toward Service-based, naturally, as they raised their standard of living, thus education. What's missing is not raising tax on Income but taxing Wealth: the super rich has their wealth sitting and growing unproductively (house appreciating is not productive, buying farm lands and rent it to other farmer isn't productive). Holding Limited version of a Ferrari isn't productive. Feel free to find other Assets. Once the super rich completed their journey in this world, they will inherit billions to their kids, whose productivity output does not match the wealth they inherited, again, not productive. Tax their Wealth.
- mizzao 2y ago
  Even if this were implemented, any country taxing wealth would see a flight of capital to other countries not taxing it.
  - vuurmot 2y ago
    So? Less capital chasing after housing means housing prices fall. If the capital was not destined to be used in the first place, then it only serves to inflate the economy
  - antifa 2y ago
    Good, I'll help you pack your factory into your suitcase.
  - disgruntledphd2 2y ago
    The US wouldn't as it taxes global income. More generally, you'd probably get the OECD together and make a deal if you wanted to do this. Not many billionaires will move to the Congo, regardless of how much they are taxed.
  - hello_moto 2y ago
    The other countries will bear inequality and servitude. Let them swallow that pill. The rich can’t bring their assets without divesting and get taxed first. Can you imagine if someone like Elon Musk got wealth taxed at 75% of his $400Bn? He’s still a billionaires and USA coffers will increase by $300Bn. He can’t replicate his success outside USA because USA has the market and the appetite to spend. You wanna cut income tax? Get Wealth Tax in place. Not Tariffs and cutting Govt. That’s billionaires playbook.
raxxorraxor 2y ago
Tariffs will probably be bad, but on the other hand the old system didn't really work either in the long run. Perhaps he can bring some manufacturing back and I don't really believe consumer goods getting more expensive will be immediately felt. Could be wrong though. Well, at least it might get interesting if you like crazy. I don't really believe those crying the loudest that they are particularly interested in combating inequality or are too interested in protecting low income people. Yes, maybe they need industries protected by tarrifs instead of cheap t-shirts. Maybe this perspective is rather stupid though. We will find out if that works or not. Economics projecting the next depression aren't really sources to trust either.
Imustaskforhelp 2y ago
I mean , if money is going to go to the rich. There is a simple mechanism to distribute the money from the rich back to middle class / poor. Its called taxes. Basically, Trump shouldn't have done tariff and instead just taxed the rich after a certain point. Oh wait, I think that sounds familiar. Of course I am not saying tax them 90% and of course, you might say that there are loopholes. How are we going to distribute money from stocks? And you are right. But the thing trump is doing isn't working or maybe its working as intended by trump being a chatgpt wrapper. If even trump literally just sat and did nothing, it would have been more beneficial. I mean, Europe also has a high tax rate, its not that bad to have a high tax rate if you genuinely want equality, though I presume nobody really wants that. And Lobbying is legal in america which really shocks me. I had said it time and time again. Trust is like a glass ball,once broken it can't be recovered. I feel like people are however still in shock of that glass ball being fallen and are in disbelief, But you guys gotta know whom y'all elected is doing harm. Polymarket and even goldman sachs etc. are predicting 60% chance of US recession
Slava_Propanei 2y ago
[dead]

by svara 2y ago

ajross 2y ago

You're arguing from a steady state. In point of fact the pain of the at-this-point-seemingly-inevitable recession is absolutely going to be concentrated on the working class. Those of us with savings and work flexibility will do just fine. Even someone making a first principles argument for a revision of US trade policy should agree that this is insane.

smallmancontrov 2y ago
The real pain will hit the working class harder, but the nominal pain will hit the capital class harder. Historically, this is how inequality unwinds. See: recessions, World War II. Let's hope to god that this is "just" a recession and doesn't cook into World War III.
- TehCorwiz 2y ago
  The current spending bill has a 4.5T giveaway to corps and the ultra rich. The goal is to drive prices to the floor and then buy everything up. What's a 50% drop in value to a billionaire? Most of them would still be a billionaire and the ones that fall from that group still have more money than they could ever spend. No wealthy person will truly feel what's going on. They'll still vacation and eat their caviar. Caricatures aside, it's absurd to compare someone stock sheet numbers going down with people not able to find medical care or feed themselves.
- timacles 2y ago
  Definitely looks like an intentional precursor to WW3. - Threats of annexations - Existing conflicts in North America, Middle East, Europe and Asia. (whats up with South America?) - Mass unemployment and poverty in US freeing up able bodied people for some soldiering - Right wing blowhards everywhere Just crazy that this is essentially because rich people dont want to pay some debts, and some crazy russian guy's ego
  - A4ET8a8uTh0_v2 2y ago
    I think the quote below attributed to Caesar is applicable here ( not only in the sense that egos play a role in most leader's process ). I am not sure I disagree with you; I just hope you are wrong. "Go on, my friend, and fear nothing; you carry Caesar and his fortune in your boat."
svara 2y ago
I think my comment is entirely compatible with what you said, no?
mlinhares 2y ago
its also assuming there is any plan here do get somewhere, they just asked chatgpt for number, it spewed them out and those became the final numbers. there's no plan for anything here.

smallmancontrov 2y ago

Yes! "Trade Wars are Class Wars" by Klein & Pettis is the book to read if you want to hear actual economists with actual data talk about this.

no_wizard 2y ago
Stellar book. Can't recommend it enough. Wanted to chime in on how good this book is.
- aj_icracked 2y ago
  I just downloaded this and listened to it for the past 2 hours, this is a fantastic book. Thanks for the rec guys!
- mywittyname 2y ago
  I purchased this book after seeing all of these glowing reviews for it.
throwaway34903 2y ago
For what it's worth Pettis thinks tariffs would be beneficial for the American economy: https://www.foreignaffairs.com/united-states/how-tariffs-can-help-america https://www.foreignaffairs.com/united-states/how-tariffs-can...
- ckemere 2y ago
  I read this and I was quite disappointed that he didn’t talk about labor costs and other comparative advantages for labor-heavy manufacturing to be in a different situation trade market-wise than it was in the 1930s.
  - smallmancontrov 2y ago
    He does talk about comparative advantage, though. Extensively. The bit about Ricardo's precondition is absolutely wild and I'm more than a little scandalized by the fact that it wasn't discussed when I took econ in school. Not to mention the history with Alexander Hamilton. Are you sure you didn't just read the link? If you want a book-sized argument, you need to read the book, or at least listen to it.

piokoch 2y ago

Nope. It's true that free trade WAS hugely beneficial to the US economy as a whole. Now free trade is hurting USA economy and that's why USA play against the rules they were promoting for so long.

klipt 2y ago
> Now free trade is hurting USA economy Then why is the economy crashing under these new tariffs when it was recovering nicely just a few months ago?
sekai 2y ago
> Now free trade is hurting USA economy and that's why USA play against the rules they were promoting for so long. Explain how is it hurting US economy?
dragonwriter 2y ago
Free trade is not hurting the economy. American domestic policy impacting the distribution of the produce of the economy is, even in times of strong aggregate economic performance, hurting the felt effects of the economy on large swathes of the population, but throwing up protectionist policies that collapse both the global and local production possibilities curves doesn't help that; it just shrinks the pie without doing anything to deal with the bad distribution which makes people feel like the pie is shrinking even when it is growing. The results you can expect from that should be obvious without experiencing them, but it looks like we are all going to learn about them through painful experience real soon now.

zjp 2y ago

Yes! I've been consistently frustrated at both sides of the issue. It became salient for me when I read about how China had sanctioned three American drone manufacturers that were supplying Ukraine last year, and how it disrupted their supply chains and ultimately the war effort. It is unacceptable for any other country to be able to do this to any part of the western-aligned military supply chain. We needed a targeted policy -- I don't care about American cars except to the extent that those factories can be converted to aircraft and tank factories. But the conversation has been frustratingly reduced to 'reshore low skill work' vs 'save my infinite trough of cheap plastic slop'. I don't want to hear about tariffs bad, I want to hear about how subsidies are better or about how it doesn't matter anyway because of the structure of the Chinese economy (I saw it claimed without evidence that they depend on imports from places aligned with the west which is reassuring if substantiated). There's an underlying issue everyone is dancing around.

jay_kyburz 2y ago
I don't know why you are being down-voted, I think you raised some interesting points that add to the discussion. National security / foreign interference hadn't occurred to me, and now I'm wondering what would happen to US economy and manufacturing if it was at war with China and or the EU over Taiwan and or Greenland. How would US deal with Russian style sanctions? Can China simply ban all exports to the US? In times of war, it probably is super important that a country and manufacture all essentials.
- zjp 2y ago
  If I were a third party downvoting my comment I would probably take issue with the characterization of the anti-tariff position as "save my infinite trough of plastic slop". Other countries do have highly skilled artisans. Tariffs are also considered bad on the merits (looking at it from a liberal [economically] world view). It's like vaccine skepticism to economists: an extremely low-status opinion for kooks and cranks. But I am open to being convinced on illiberal economics (this is not the same thing as saying I support it) because I consider military supply chain erosion a national emergency and I don't think "balloon the military budget even more with subsidies" is a politically viable position and "just build it in an allied country we now have to keep permapoor to make the economics work out" is cruel.

MR4D 2y ago

The deficit is 2 trillion. Income taxes on individuals are 2.4 trillion. How much do you expect to raise taxes to cover that gap? You double my taxes and I’m in the welfare line. Further, and this is not referenced enough - the US must rollover ~9 trillion in treasuries this year. The lower the interest rate to do that, the better. Otherwise it increase the deficit even more. The only way this ends is one of two paths - a path similar to what we are on; default. We may not like this one, but default is world destroying because of the broad use of the Dollar around the globe.

hijodelsol 2y ago
The deficit is not in fact 2 trillion. Source: https://www.bea.gov/system/files/trad0225.png https://www.bea.gov/system/files/trad0225.png (and many other official documents) Also, this is a false dichotomy.
- disgruntledphd2 2y ago
  I believe the OP was talking about the fiscal deficit, your chart shows the trade deficit.
- izend 2y ago
  In CBO’s projections, the federal budget deficit in fiscal year 2025 is $1.9 trillion. Adjusted to exclude the effects of shifts in the timing of certain payments, the deficit grows to $2.7 trillion by 2035. It amounts to 6.2 percent of gross domestic product (GDP) in 2025 and drops to 5.2 percent by 2027 as revenues increase faster than outlays https://www.cbo.gov/publication/60870 https://www.cbo.gov/publication/60870 IMO, 5%+ percent of gross domestic product (GDP) in a country with massive trade deficits is not sustainable.
  - croemer 2y ago
    Nominal GDP growth was 5% in December. As long as share of GDP is constant things are sustainable.

keithxm23 2y ago

> but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens. Agreed. However, by imposing tariffs it is not the privileged who are going to be affected the most. The pain is felt most by the low-skill workers you mentioned earlier. If the solution was instead along the lines of changing tax-brackets to tax the 'privileged' more, that might have better addressed the problem you mention in the beginning.

DSingularity 2y ago
Nobody has faith in the governments ability to put that money to good use. The US gov uses significant amounts of its budget to fund weapon development, promote weapon sales, change unfriendly foreign governments, support friendly foreign governments, and genocide troublesome foreign populations. Who will support raising more taxes to maintain and expand such efforts?
- mjevans 2y ago
  Offhand, I'm unaware of where to even look to get an easy to digest version of 'where tax dollars go'. Would the GAO make such a report? Something for Congress otherwise? Would there be a classified and an public version? Even better would be a tool that, E.G. with your IRS filing number, shows how much 'you' paid in, breaks down where that went, and shows how 'you' compare to other areas. Such tools and reports would cost money, but making them is practically an audit anyway which is a good use of resources in a bureaucracy (part of the self-calibration system).
  - LaffertyDev 2y ago
    https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/ https://fiscaldata.treasury.gov/americas-finance-guide/feder... What you seek is available and has been available for a very long time. Mathing out how your individual tax dollars map to these buckets is a fairly straightforward (IMO) exercise.
    - 2y ago

mistrial9 2y ago

this glib analysis neglects the part where decades of plans and budgets have been addressing " build out social systems" while simultaneously building crony networks of political appointees, guarding the hen house. Short term pain is loudly announced for the purpose of defeating the political opponent, not addressing the long standing inefficiencies in a swollen and obese wealth exchange centered in the USA. tons of cynical one-liners from partisans drown out efforts to really examine the impacts over medium and long term. A horrible problem with this move is that it is not entirely wrong from a fundamentals point of view? It certainly creates winners and losers, no question about it.

wesapien 2y ago
The political class and plutocrats always wins regardless of the election outcome. The two party system guarantees they come out unscathed regardless of their jousting.

api 2y ago

> for the government to lower the cost of high-quality education Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee? Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs. For some reason, with intellectual labor, we are able to pretend that there is no threshold and everyone can do it. It's an idea that makes people feel good but what if it's just not true? Can everyone be made above average in something with enough education? If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that? How do we maintain a democracy? Sometimes people float the idea of UBI, but that could turn out extremely dystopian with a huge underclass of UBI-collecting people in a state of hopelessness and boredom. That doesn't work much better for democracy than a huge underclass of under-employed and unemployed people. To make matters worse: the fact that our past strategy works so well for increasing GDP means it it tends to inflate assets, including things like housing prices. The end result is a country that looks, to more than half its inhabitants, like a vacation town where outside capital inflates the cost of everything way above what local wages can support. It might not be a coincidence that San Francisco, New York, and other capitals of high margin high skill industries have real estate prices that lock ordinary people out of even "starter homes." I absolutely do not support Trump's execution here -- it's ham-fisted, reckless, and badly thought out. If we are exiting this neoliberal model, Trump's exit from it is a little bit like Biden's exit from Afghanistan. Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind. We can't keep doing that if we want a democracy. If we exclude 50-80% of the population from anything meaningful or any economic stability, we will get one of two things. Either we'll get the kind of totalitarian state that is required to maintain that kind of inequality in perpetuity, or we will get a string of revolutions or a failed state. People will not just sit around in hopelessness forever. Eventually they will be recruited by demagogues. Ironically Trump has been one of the most effective at this. I'm sure more will eventually show up though. There's a big market for them.

ckemere 2y ago
I’ve reflected that resource extraction jobs often end up in the high wage / low educational investment category, and I’ve wondered if that motivates the whole “annex Greenland” bit as much as “securing critical resources” does…

ein0p 2y ago

> lower the cost of high-quality education And how do you propose we do that? By giving schools even more money at taxpayer's expense? > raising taxes at the high end 40.1% of US taxpayers on the low end of income distribution pay no income tax, 16.5% pay neither income nor payroll taxes. Top 1% pays 40.4% of all income tax (while holding about 30.8% of net worth, 13.8% of the total is held by top 0.1%). Top 1% (with the possible exception of a few billionaires) already pays through their nose.

matthewdgreen 2y ago
Funding public universities and giving them the mission to keep tuition costs low. Public universities are capable of providing enormous value to students, but over the past two decades their funding has been substantially cut. The result is that those schools became more reliant on expensive out-of-state tuition, which in turn means competing with private institutions for students, which in turn means building more luxuries (awesome gyms) and not focusing on value for money.
- ein0p 2y ago
  So, giving even more taxpayer money to the education cartel, then. Got it. Good luck with that. Over the past several decades staffing in administrative positions has exponentially ballooned all across the education system, starting with grade schools, while academic metrics moved in the opposite direction. Now the question is, do we continue setting even more taxpayer money on fire, or is there a better way?
supplied_demand 2y ago
==40.1% of US taxpayers on the low end of income distribution pay no income tax== According to 2022 IRS data, average deductions for those who itemized totaled $43,686 in tax year 2022 [0]. The 2022 bottom two quintiles of income were under $44k [1]. That means in 2022 rich people AND poor people didn't pay income taxes on their first $45k of income. Is that unfair to rich people? Worth noting, the 25 richest Americans paid an average effective tax rate of 13%, as of 2018 when IRS data was leaked [2]. ==Top 1% (with the possible exception of a few billionaires) already pays through their nose.== "While average effective tax rates barely changed in the US from 1945 to 2015, the average tax rates of high-income households fell sharply—from about 50 percent to 25 percent for the highest income 0.01 percent and from about 40 percent to about 25 percent for the top 1 percent." [3] If the average effective rate hasn't changed, but the effective rate paid by the top 1% has fallen by ~40%, how is the difference made up? The 99% pay more. [0] https://www.pgpf.org/article/7-key-charts-on-tax-breaks/ https://www.pgpf.org/article/7-key-charts-on-tax-breaks/ [1] https://data.census.gov/table/ACSDT1Y2022.B19081?q=income+quintile https://data.census.gov/table/ACSDT1Y2022.B19081?q=income+qu... [2] https://www.propublica.org/article/you-may-be-paying-a-higher-tax-rate-than-a-billionaire https://www.propublica.org/article/you-may-be-paying-a-highe... [3] https://taxpolicycenter.org/taxvox/effective-income-tax-rates-have-fallen-top-one-percent-world-war-ii-0 https://taxpolicycenter.org/taxvox/effective-income-tax-rate...

huevosabio 2y ago

> the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries. This is true only if we impose barriers to geographic mobility, which we do via artificial scarcity of housing in our major cities. If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor. > the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end. We don't need more high-quality education nor do we need to onshore. We need to deregulate the housing market, we make it easier to migrate to the US (funny enough, yes that would help with inequality). And I do agree we need better social systems. There is no way to frame this admin's policies that makes it look reasonable. It's a Crony Clown Club show.

frumplestlatz 2y ago
> If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor. Why would they want to do that? Their priorities are myriad, but raising a family, having a degree of autonomy and space to themselves, and remaining a part of their community are all generally on the list. What’s generally not on the list is living in a tiny rabbit hutch, owning nothing, working a dead-end service job, trying to raise a family in a city (or just not trying at all), and paying a higher price for the privilege.
- dalyons 2y ago
  Because that’s where the money is. The world over people have exhibited their revealed preferences for living in a city, as everywhere continues to urbanize
bilbo0s 2y ago
all the "low-skill" people would be able to move to the city and find a job That this doesn't work is self-evident. Cities are currently filled with low skilled people. The vast majority of whom find no employment or employment in illegal activities. Also: We don't need more high-quality education The idea that the world, and the US in particular, has no need for more and better education is laughable. Considering the fact that a lack of education is, arguably, what got the US into the current situation in the first place.

MichaelMoser123 2y ago

Thanks for your comment, it explains why there seems to be a high degree of support for these measures in some quarters (was looking at the youtube comments to the liberation day speech) vs the consensus here at HN. Let's suppose these policies are to the benefit of some Americans over other the benefit of other Americans. The open question now is: does it matter? does it really have an influence on the gross profit numbers? Will an isolationist foreign policy destroy the international order and how could this effect the US in return?

bill_joy_fanboy 2y ago

> It's true that free trade is hugely beneficial to the US economy as a whole, particularly with the USD being the reserve currency. It's true that free trade is hugely beneficial to large cap U.S. companies and their shareholders. If you are U.S. worker without a lot of equity in the market all you notice is that your job gets outsourced.

elcritch 2y ago
This “free money” also inflates housing prices. It’s one application of “trickle down economics” that works; except it’s housing prices. Even for highly paid Silicon Valley engineers what does it matter if much of that money goes right back to landlords?

jerrygenser 2y ago

This is a regressive tax that hurts low skill and low wage workers proportionately more since basic necessities of life are going to increase in price - it will be a much larger share of wallet than rich. This will not materially change purchasing behavior of very rich (save maybe waiting to buy a car due to increased pricecs) It would be beneficial to increase taxes on the massive service economy and use the proceeds to subsidize lower wage industries. In trumps first term after tariffs affected farmers, they had to subisidize them to keep them afloat. It didn't quite work the way it was intended. The trade war relief program in the first term spent $30bn keeping farmers afloat.

honkycat 2y ago

> As such, this administration's policies are foolish, but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens. Very few people who work as full-time devs are so wealthy that they are totally insulated from general social decline.

waffletower 2y ago

As a highly skilled and comparatively highly paid worker, I feel it is outrageous to suggest that I am within the class that needs to give up any reputed "wealth" when I am nowhere near the 1% who hold more than 50% of it. Such a claim just contributes to the wealth making of the 1% misers even more. Class warfare! I have already had to give up significant amounts of college and retirement savings from these tariffs.

AnthonyMouse 2y ago

> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end. You're proposing to tax an international supply chain. To tax something it has to be in your jurisdiction to begin with, and then you have several problems. The most obvious of these is, what happens when the stuff just isn't there anymore? Suppose the US isn't competitive with China for manufacturing certain goods, e.g. because the US has a higher cost of living as a result of a purposeful housing shortage and then has higher labor costs, or for any other reason. So manufacturing moves to China, not just to sell to the US but also to sell to the domestic market in China and to Europe and India and the rest of the world. No part of those other transactions is in the US, so the US can't tax them and use the money to help the people in the US who used to be doing that manufacturing and selling those products to the rest of the world. Whereas if you sustain domestic manufacturing through some means then it exists and can make products to sell to the rest of the world because the fixed costs of establishing a manufacturing base can be covered by the domestic market and then it only has to compete in the international market on the basis of variable costs. Next consider the industries where the US still makes stuff. You could tax those things because they're still in the US. But that makes the US less competitive in the global market for investment capital, which is highly mobile. If higher US taxes cause returns to be lower in the US than they are in other countries then investors go invest in the other countries instead, and then the thing stops being in the US. So that doesn't really work. You can see this in the case of e.g. Europe, which has even worse problems with the loss of manufacturing than the US. Which leaves the activity where it's the other half of the transaction happening in the US, i.e. China is manufacturing something but the customer is in the US. That you could tax without a huge risk of capital flight, because companies can rarely change the location of their customers, but that still leaves you with two problems. First, either of the countries participating in the transaction could levy the tax. In the case of China, then they can levy a tax (or some tax-equivalent) to only such an extent that it consumes the surplus in the transaction attributable to the competitive advantage of their country. China can do this because they have a lower cost of living etc., which doesn't work for the US. But because they do that, the US can't tax that portion of the surplus, which was the gain from moving manufacturing to China. And second, a tax on imports is called a tariff. Which the US can impose to tax that portion of the transaction surplus that isn't attributable to the foreign country's cost advantage, i.e. the preexisting transaction surplus where it costs $8 to make something someone is willing to pay $10 for regardless of where it was made. But tariffs are the thing you don't like.

fifilura 2y ago

JensRantil 2y ago
As an example, yes.
AnthonyMouse 2y ago
Scandinavia is using oil and gas reserves as a captive tax base. It doesn't really generalize to markets where capital is mobile.
- fifilura 2y ago
  That is only Norway. Maybe a little bit of Denmark, but Denmark is not considered an oil economy. And I don't know what you mean with "captive tax base" but Norway just piles up the wealth they are too afraid to use it since it will increase the inflation.
  - AnthonyMouse 2y ago
    Norway is the one that actually makes it work. Their GDP per capita is slightly higher than the US and more than $30,000 higher than the other Scandinavian countries. "Captive tax base" means the industry can't move to another country as a result of high taxes. You can move factory jobs to China by moving the factory. You can't move oil and gas extraction jobs to China by moving the oil field.
    - redeeman 2y ago
      and a basic sandwich costs 3x that of in denmark :)
      - 2y ago

solfox 2y ago

maxnevermind 2y ago

Your problem statement is missing "national security" angle. As I understand the current administration sees US de-industrialization as a threat to it and tariffs as a soution.

solatic 2y ago

> The obvious solution is... for the government to lower the cost of high-quality education Not everyone is smart enough to land in the professional class. The US does its young population an enormous disservice by pushing low academic performers to go to college. There needs to be, somehow, a way for people to make a living with their hands, because for some people, that is genuinely all they are capable of. > ... build out social systems... The way you build out the social system is by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program. You don't take those jobs away by offshoring them. I'm not saying I'm against offshoring in general or that I support Trump's tariffs - I don't. But it's not exactly controversial to point out that, since the end of the Cold War, the US prioritized the recommendations of economists over social cohesion and socially harmonious policy. A lot of people were thrown out of work and were left to fend for themselves. Many of them ended up as victims of the opioid epidemic. I'm not convinced that the prior system was completely peaches as cream.

ryan_lane 2y ago
> by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program Like building out clean energy infrastructure? Modern "ditch digging government programs" aren't necessarily low-skill. Even at the time, the new deal government programs were massively beneficial for society while also providing jobs for folks who needed it, at reasonable wages. Let's not shit on good government programs just because the right has been feeding us propaganda demonizing it for decades.
- solatic 2y ago
  Building out clean energy infrastructure provides value. That's perfectly fine. There is plenty of need for hands to maintain American road infrastructure that is falling apart and build new infrastructure like high-speed intercity rail and more subway lines to help support additional population growth. The reference is to how a government can pay people to literally dig ditches then refill them. This nominally increases GDP (due to additional government expenditure) but it does not produce value and, more importantly, does not give people the dignity they would ordinarily achieve through their labor because they know such work is bullshit.

Swoerd 2y ago

[dead]

rayiner 2y ago

You can’t make everyone above average.

deleted 2y ago

[deleted]

donatj 2y ago

> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education I'm always skeptical of the idea that we can just educate ourselves out of problems. As I see it, that would only raise people's wage expectations which would make us even less competitive on a global market? The need for blue collar workers doesn't just evaporate, and there's frankly only a finite demand for white collar workers. You give everyone expectations of a white collar job, and they end up working blue collar because there's no job for them, you're just setting society up for mass disappointment and resentment. You give your average blue collar worker today a degree, are they actually more valuable to their current position? Probably not.

jalapenos 2y ago

So basically: the solution is "do more of the same". I suppose that's the point, people were tired of hearing the same old crap by leftists who fancy themselves as smarter, as their quality of life continued to drop, so they figured "screw it let's try the opposite". Guess we'll see where it lands.

hello_moto 2y ago

what you're saying in short is that the US economy has changed from Manufacture-based to Service-based, just like China. People don't realize this but China is moving toward Service-based, naturally, as they raised their standard of living, thus education. What's missing is not raising tax on Income but taxing Wealth: the super rich has their wealth sitting and growing unproductively (house appreciating is not productive, buying farm lands and rent it to other farmer isn't productive). Holding Limited version of a Ferrari isn't productive. Feel free to find other Assets. Once the super rich completed their journey in this world, they will inherit billions to their kids, whose productivity output does not match the wealth they inherited, again, not productive. Tax their Wealth.

mizzao 2y ago
Even if this were implemented, any country taxing wealth would see a flight of capital to other countries not taxing it.
- vuurmot 2y ago
  So? Less capital chasing after housing means housing prices fall. If the capital was not destined to be used in the first place, then it only serves to inflate the economy
- antifa 2y ago
  Good, I'll help you pack your factory into your suitcase.
- disgruntledphd2 2y ago
  The US wouldn't as it taxes global income. More generally, you'd probably get the OECD together and make a deal if you wanted to do this. Not many billionaires will move to the Congo, regardless of how much they are taxed.
- hello_moto 2y ago
  The other countries will bear inequality and servitude. Let them swallow that pill. The rich can’t bring their assets without divesting and get taxed first. Can you imagine if someone like Elon Musk got wealth taxed at 75% of his $400Bn? He’s still a billionaires and USA coffers will increase by $300Bn. He can’t replicate his success outside USA because USA has the market and the appetite to spend. You wanna cut income tax? Get Wealth Tax in place. Not Tariffs and cutting Govt. That’s billionaires playbook.

raxxorraxor 2y ago

Tariffs will probably be bad, but on the other hand the old system didn't really work either in the long run. Perhaps he can bring some manufacturing back and I don't really believe consumer goods getting more expensive will be immediately felt. Could be wrong though. Well, at least it might get interesting if you like crazy. I don't really believe those crying the loudest that they are particularly interested in combating inequality or are too interested in protecting low income people. Yes, maybe they need industries protected by tarrifs instead of cheap t-shirts. Maybe this perspective is rather stupid though. We will find out if that works or not. Economics projecting the next depression aren't really sources to trust either.

Imustaskforhelp 2y ago

I mean , if money is going to go to the rich. There is a simple mechanism to distribute the money from the rich back to middle class / poor. Its called taxes. Basically, Trump shouldn't have done tariff and instead just taxed the rich after a certain point. Oh wait, I think that sounds familiar. Of course I am not saying tax them 90% and of course, you might say that there are loopholes. How are we going to distribute money from stocks? And you are right. But the thing trump is doing isn't working or maybe its working as intended by trump being a chatgpt wrapper. If even trump literally just sat and did nothing, it would have been more beneficial. I mean, Europe also has a high tax rate, its not that bad to have a high tax rate if you genuinely want equality, though I presume nobody really wants that. And Lobbying is legal in america which really shocks me. I had said it time and time again. Trust is like a glass ball,once broken it can't be recovered. I feel like people are however still in shock of that glass ball being fallen and are in disbelief, But you guys gotta know whom y'all elected is doing harm. Polymarket and even goldman sachs etc. are predicting 60% chance of US recession

Slava_Propanei 2y ago

[dead]