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It's an economic theory - https://en.wikipedia.org/wiki/Mercantilism https://en.wikipedia.org/wiki/Mercantilism The general idea is that when you buy stuff you

It's an economic theory - https://en.wikipedia.org/wiki/Mercantilism https://en.wikipedia.org/wiki/Mercantilism The general idea is that when you buy stuff you're losing wealth so if you never buy anything then you never get poorer. Since we constantly dig gold up from the ground we still get richer over time even if nobody buys our stuff. This is also why its importantly to gain colonies (Greenland/ Canada) or mineral rights from other countries so that the amount of stuff we have increases. IMO, it's a theory that's missing the forest for the trees but it's historically very popular.

mindslight 2y ago
Maybe if we're lucky, one of these sophomores will have an epiphany that military protection and a stable currency are some of the most complex exports, and that getting imports by trading away a self-created currency is a pretty great way to not give away any gold or silver... Just sayin'.
- Avicebron 2y ago
  > military protection and a stable currency are some of the most complex exports And how come that always seems seem to come wrapped in ways that inexorably seems to concentrate wealth, so that the benefits of those exports seem to be less evenly distributed?
  - lazide 2y ago
    People like to get rich, so any system they create tends to get the people best at creating systems richer. That has been true for every economic system ever - some are just more transparent and fair about it. Would you rather it be people taking bribes, a king, a hereditary merchant class, oligarchs, or people setting up companies? It has been as true about the USSR and Cuba as it has been about Venice, Canada, the USA, etc.
  - mindslight 2y ago
    Because they're centralized sources of power, and power corrupts. In my younger days I used to argue for a non-inflationary currency, and how that would have gone a long way towards not concentrating the wealth from offshorting and technological progress (instead enough money was printed to make price inflation keep occurring in spite of the fundamentals, and most of that new money was just given to banks to pump up the asset bubbles) These days I've kind of just accepted the monetary inflation (cf Gresham's law), like other centralizing but perhaps inevitable dynamics like the economies of scale for electronics manufacturing.
  - runako 2y ago
    This was not true in the immediate postwar period. The turning point was roughly the 1980s. Wealth concentration has been a deliberate US domestic policy for decades. This is, to a large degree, separate from the stability of our currency or military protection. It's the stated intent and logical result of relaxing taxes on the rich while enacting policies designed to hurt the working classes (e.g. reducing union power, not indexing minimum wage to inflation, refusal to address healthcare & housing costs, increasing fees at public universities, cutting existing safety net programs, etc.). Concentration of wealth is a choice. America is a very rich country and has not always chosen to distribute our wealth this way. Other countries make different choices. We are also allowed to make different choices.
    - deleted 2y ago
      [deleted]
    - WalterBright 2y ago
      > Wealth concentration has been a deliberate US domestic policy for decades. Wealth is not concentrated in a market society. It is created. Some people creating more wealth than others is not "concentrating" wealth in their hands. Another way to put it is it is not a fixed pie, where if one gets more another necessarily gets less. If I buy some art supplies for $20, and paint a masterpiece I sell for $100,000, wealth was not "concentrated" in me.
      - PaulDavisThe1st 2y ago
        Two societies. In each one, someone buys $20 of art supplies, paints a masterpiece and it sells for $100,000. In one society, a marginal tax rate system taxes the artist with an upper rate of 92%, and they end up retaining about $50,000 of the income, with the rest flowing back into the control of the society (via its government). In the other society, a margin tax rate system taxes the artist with an upper rate of 28%, and they end up retaining about $70,000 of the income. In this society, the artist retains control over twice as much of the income as flows back into the control of society. "Wealth concentration" is not a policy related to markets, production, and trade. It's a policy related to taxation.
- cmrdporcupine 2y ago
  It's funny because the US right wing (and a huge part of it's so-called left, too) keeps trying to portray US global military power as the opposite. As charity for us ungrateful Canadians and Europeans It's completely backwards from how people usually perceive empires. And from what it is. Which is a projection of power to ensure the supremacy of American capital interests. Which is why US GDP per capita etc is incredibly high compared to the rest of the G7. It's not because they're smarter or better than the rest of us. It's because they've built the world order around themselves. By, as you say, exporting that military protection. The US exports military dominance, and it gets paid in having its currency, regulatory needs / environment, etc. dominate almost everywhere. (Whether this actually benefits the regular American worker vs its own wealthy business class is a whole other discussion, and may explain why this has become such a fertile ground for rage and frustration among Americans)
  - ta20240528 2y ago
    GDP per capita is also a lot larger because the USA has convinced the rest of us into thinking hedonic and imputed GDP is real.
    - cmrdporcupine 2y ago
      The GDP per capita comparison talking point keeps getting brought up as "why Canada is an economic failure" -- frustrating because it really isn't a good analysis.
bitmasher9 2y ago
It is really effective at increasing the amount of gold in your vault, but The Wealth of Nations (Admin Smith) made a strong case against that primary goal. Crucially for the HackerNews crowd, Mercantilism increases the value of physical goods relative to services, and services becomes a smaller portion of the overall economy. Most of us sell server-time wrapped in software that performs a service…
- dalemhurley 2y ago
  Ironically, Adam Smith would be called a socialist in modern USA with his views on preventing monopolistic behaviours, the need for government oversight and controls, and the need for strong public goods where the private market fails. So many people would benefit from reading his works.
  - WalterBright 2y ago
    Adam Smith died in 1790, a time when the world had little experience with free markets. He was a pioneer in economic thought, but that doesn't automatically mean all of his prognostications about the future are correct.
    - PaulDavisThe1st 2y ago
      His prognostications were not necessarily considered by him to be "about the future". Smith believed that most of what he was writing was about things that were true for all time. He may (or may not) have been wrong about that, just as he may have been wrong about any of the specific things he wrote. But he was generally not predicting the future in any real sense.
      - mmooss 2y ago
        > Smith believed that most of what he was writing was about things that were true for all time. Theory is incredible - when it's right, it's right everywhere for all time. I don't know why people disparage it (other than to signal their anti-intellecutallism).
consumer451 2y ago
My main concern is that de-globalizing trade will remove a large barrier for real kinetic war. Bombing your economic partner is generally a dumb move, and that has been pretty nice for humanity in the last ~50 years.
- toomuchtodo 2y ago
  This is a fair take, but also consider that Germany attempted to use purchasing fossil gas from Russia to prevent aggression, and it did not.
  - consumer451 2y ago
    That's an extremely good point, which hits really close to home. I wonder if Putin would have still invaded Ukraine, knowing the extent of sanctions that would hit them. He might have been lulled into thinking that the EU would not care, given the existence of people like Gerhard Schröder and his ilk. edit: I am not sure that the reason for the Russian-German energy alliance was an attempt at pacification. It seems more likely to me that it was simply in the economic interest of Germany. Countries which are East of Germany certainly complained about it, for strategic reasons.
    - toomuchtodo 2y ago
      https://www.theguardian.com/world/2022/jun/02/germany-dependence-russian-energy-gas-oil-nord-stream https://www.theguardian.com/world/2022/jun/02/germany-depend... > The relationship would benefit both sides: Germany would supply the machines and high-quality industrial goods; Russia would provide the raw material to fuel German industry. High-pressure pipelines and their supporting infrastructure hold the potential to bind countries together, since they require trust, cooperation and mutual dependence. But this was not just a commercial deal, as the presence at the hotel of the German economic minister Karl Schiller showed. For the advocates of Ostpolitik – the new “eastern policy” of rapprochement towards the Soviet Union and its allies including East Germany, launched the previous year under chancellor Willy Brandt – this was a moment of supreme political consequence. Schiller, an economist by training, was to describe it as part of an effort at “political and human normalisation with our Eastern neighbours”.
mmooss 2y ago
> historically very popular When? Not for a long time. Slavery and witchcraft were historically very popular ... > when you buy stuff you're losing wealth That's a incredible failure of understanding. I can't believe that's the basis of mercantilism. Why would anyone buy something? If you buy a house for $100,000, your wealth remains the same - you replace $100,000 in cash with a $100,000 house (ignoring complexities like a mortgage, transaction costs, etc.). That is basic accounting, of course. In fact, your wealth probably increases: The house's value is <$100,000 to the seller and >$100,000 to the buyer, or else they would be disinclined to make the effort of making the deal - it would be like trading a $10 bill for a $10 bill, with lots of time and transaction costs. Market value - the value to others - may remain the same or vary, of course. The economy works because people make these value-increasing transactions. I take $10 of inputs, manufacture $20 worth of output, and sell it to you for $15. We both gain $5. If your business isn't producing more output than its input, you're going to be out of business soon. Many transactions are better with people who happen to be outside the borders of your country - why wouldn't they be?
- arrosenberg 2y ago
  You are thinking about it as an individual instead of as a state. If you put yourself in the position of Louis XVI as the King of France, it makes more sense.
  - mmooss 2y ago
    I agree there's a big difference between individuals and states economically. And I understand why Louis (do you mean XIV?), in the absence any modern economic theory, pursued mercantilism. But if Louis had known modern economic theory, it would have been ridiculous. He would know that the wealthiest, most powerful nations ever on Earth - universally, with no others competing - were built on free trade.
    - DeathArrow 2y ago
      >He would know that the wealthiest, most powerful nations ever on Earth - universally, with no others competing - were built on free trade. It really depends on the context. Roman Empire wasn't built on free trade.
wqaatwt 2y ago
When the global economy was close to being a zero sum game and the concerns about too much of your silver/gold flowing to China/etc. were real (Great Bullion Famine) it wasn’t that absurd. These days.. yeah..
cryptonector 2y ago
Mercantilism is certainly what we have today, with much of the world exporting to one perennial importer. Perhaps Trump means to reverse that state of affairs (i.e., make the U.S. mercantilist), which I surmise from your comment that you think would be bad (certainly I think it would be bad!), or perhaps he means to not have mercantilism at all, which I surmise you think would be good.
- mmooss 2y ago
  > much of the world exporting to one perennial importer There are lots of importers all over the world, some very large.
pyrale 2y ago
> This is also why its importantly to gain colonies (Greenland/ Canada) or mineral rights from other countries so that the amount of stuff we have increases. So, basically, blueprint for the new opium wars. Or, more likely, WW3.

mindslight 2y ago

Maybe if we're lucky, one of these sophomores will have an epiphany that military protection and a stable currency are some of the most complex exports, and that getting imports by trading away a self-created currency is a pretty great way to not give away any gold or silver... Just sayin'.

Avicebron 2y ago
> military protection and a stable currency are some of the most complex exports And how come that always seems seem to come wrapped in ways that inexorably seems to concentrate wealth, so that the benefits of those exports seem to be less evenly distributed?
- lazide 2y ago
  People like to get rich, so any system they create tends to get the people best at creating systems richer. That has been true for every economic system ever - some are just more transparent and fair about it. Would you rather it be people taking bribes, a king, a hereditary merchant class, oligarchs, or people setting up companies? It has been as true about the USSR and Cuba as it has been about Venice, Canada, the USA, etc.
- mindslight 2y ago
  Because they're centralized sources of power, and power corrupts. In my younger days I used to argue for a non-inflationary currency, and how that would have gone a long way towards not concentrating the wealth from offshorting and technological progress (instead enough money was printed to make price inflation keep occurring in spite of the fundamentals, and most of that new money was just given to banks to pump up the asset bubbles) These days I've kind of just accepted the monetary inflation (cf Gresham's law), like other centralizing but perhaps inevitable dynamics like the economies of scale for electronics manufacturing.
- runako 2y ago
  This was not true in the immediate postwar period. The turning point was roughly the 1980s. Wealth concentration has been a deliberate US domestic policy for decades. This is, to a large degree, separate from the stability of our currency or military protection. It's the stated intent and logical result of relaxing taxes on the rich while enacting policies designed to hurt the working classes (e.g. reducing union power, not indexing minimum wage to inflation, refusal to address healthcare & housing costs, increasing fees at public universities, cutting existing safety net programs, etc.). Concentration of wealth is a choice. America is a very rich country and has not always chosen to distribute our wealth this way. Other countries make different choices. We are also allowed to make different choices.
  - deleted 2y ago
    [deleted]
  - WalterBright 2y ago
    > Wealth concentration has been a deliberate US domestic policy for decades. Wealth is not concentrated in a market society. It is created. Some people creating more wealth than others is not "concentrating" wealth in their hands. Another way to put it is it is not a fixed pie, where if one gets more another necessarily gets less. If I buy some art supplies for $20, and paint a masterpiece I sell for $100,000, wealth was not "concentrated" in me.
    - PaulDavisThe1st 2y ago
      Two societies. In each one, someone buys $20 of art supplies, paints a masterpiece and it sells for $100,000. In one society, a marginal tax rate system taxes the artist with an upper rate of 92%, and they end up retaining about $50,000 of the income, with the rest flowing back into the control of the society (via its government). In the other society, a margin tax rate system taxes the artist with an upper rate of 28%, and they end up retaining about $70,000 of the income. In this society, the artist retains control over twice as much of the income as flows back into the control of society. "Wealth concentration" is not a policy related to markets, production, and trade. It's a policy related to taxation.
cmrdporcupine 2y ago
It's funny because the US right wing (and a huge part of it's so-called left, too) keeps trying to portray US global military power as the opposite. As charity for us ungrateful Canadians and Europeans It's completely backwards from how people usually perceive empires. And from what it is. Which is a projection of power to ensure the supremacy of American capital interests. Which is why US GDP per capita etc is incredibly high compared to the rest of the G7. It's not because they're smarter or better than the rest of us. It's because they've built the world order around themselves. By, as you say, exporting that military protection. The US exports military dominance, and it gets paid in having its currency, regulatory needs / environment, etc. dominate almost everywhere. (Whether this actually benefits the regular American worker vs its own wealthy business class is a whole other discussion, and may explain why this has become such a fertile ground for rage and frustration among Americans)
- ta20240528 2y ago
  GDP per capita is also a lot larger because the USA has convinced the rest of us into thinking hedonic and imputed GDP is real.
  - cmrdporcupine 2y ago
    The GDP per capita comparison talking point keeps getting brought up as "why Canada is an economic failure" -- frustrating because it really isn't a good analysis.

bitmasher9 2y ago

It is really effective at increasing the amount of gold in your vault, but The Wealth of Nations (Admin Smith) made a strong case against that primary goal. Crucially for the HackerNews crowd, Mercantilism increases the value of physical goods relative to services, and services becomes a smaller portion of the overall economy. Most of us sell server-time wrapped in software that performs a service…

dalemhurley 2y ago
Ironically, Adam Smith would be called a socialist in modern USA with his views on preventing monopolistic behaviours, the need for government oversight and controls, and the need for strong public goods where the private market fails. So many people would benefit from reading his works.
- WalterBright 2y ago
  Adam Smith died in 1790, a time when the world had little experience with free markets. He was a pioneer in economic thought, but that doesn't automatically mean all of his prognostications about the future are correct.
  - PaulDavisThe1st 2y ago
    His prognostications were not necessarily considered by him to be "about the future". Smith believed that most of what he was writing was about things that were true for all time. He may (or may not) have been wrong about that, just as he may have been wrong about any of the specific things he wrote. But he was generally not predicting the future in any real sense.
    - mmooss 2y ago
      > Smith believed that most of what he was writing was about things that were true for all time. Theory is incredible - when it's right, it's right everywhere for all time. I don't know why people disparage it (other than to signal their anti-intellecutallism).

consumer451 2y ago

My main concern is that de-globalizing trade will remove a large barrier for real kinetic war. Bombing your economic partner is generally a dumb move, and that has been pretty nice for humanity in the last ~50 years.

toomuchtodo 2y ago
This is a fair take, but also consider that Germany attempted to use purchasing fossil gas from Russia to prevent aggression, and it did not.
- consumer451 2y ago
  That's an extremely good point, which hits really close to home. I wonder if Putin would have still invaded Ukraine, knowing the extent of sanctions that would hit them. He might have been lulled into thinking that the EU would not care, given the existence of people like Gerhard Schröder and his ilk. edit: I am not sure that the reason for the Russian-German energy alliance was an attempt at pacification. It seems more likely to me that it was simply in the economic interest of Germany. Countries which are East of Germany certainly complained about it, for strategic reasons.
  - toomuchtodo 2y ago
    https://www.theguardian.com/world/2022/jun/02/germany-dependence-russian-energy-gas-oil-nord-stream https://www.theguardian.com/world/2022/jun/02/germany-depend... > The relationship would benefit both sides: Germany would supply the machines and high-quality industrial goods; Russia would provide the raw material to fuel German industry. High-pressure pipelines and their supporting infrastructure hold the potential to bind countries together, since they require trust, cooperation and mutual dependence. But this was not just a commercial deal, as the presence at the hotel of the German economic minister Karl Schiller showed. For the advocates of Ostpolitik – the new “eastern policy” of rapprochement towards the Soviet Union and its allies including East Germany, launched the previous year under chancellor Willy Brandt – this was a moment of supreme political consequence. Schiller, an economist by training, was to describe it as part of an effort at “political and human normalisation with our Eastern neighbours”.

mmooss 2y ago

> historically very popular When? Not for a long time. Slavery and witchcraft were historically very popular ... > when you buy stuff you're losing wealth That's a incredible failure of understanding. I can't believe that's the basis of mercantilism. Why would anyone buy something? If you buy a house for $100,000, your wealth remains the same - you replace $100,000 in cash with a $100,000 house (ignoring complexities like a mortgage, transaction costs, etc.). That is basic accounting, of course. In fact, your wealth probably increases: The house's value is <$100,000 to the seller and >$100,000 to the buyer, or else they would be disinclined to make the effort of making the deal - it would be like trading a $10 bill for a $10 bill, with lots of time and transaction costs. Market value - the value to others - may remain the same or vary, of course. The economy works because people make these value-increasing transactions. I take $10 of inputs, manufacture $20 worth of output, and sell it to you for $15. We both gain $5. If your business isn't producing more output than its input, you're going to be out of business soon. Many transactions are better with people who happen to be outside the borders of your country - why wouldn't they be?

arrosenberg 2y ago
You are thinking about it as an individual instead of as a state. If you put yourself in the position of Louis XVI as the King of France, it makes more sense.
- mmooss 2y ago
  I agree there's a big difference between individuals and states economically. And I understand why Louis (do you mean XIV?), in the absence any modern economic theory, pursued mercantilism. But if Louis had known modern economic theory, it would have been ridiculous. He would know that the wealthiest, most powerful nations ever on Earth - universally, with no others competing - were built on free trade.
  - DeathArrow 2y ago
    >He would know that the wealthiest, most powerful nations ever on Earth - universally, with no others competing - were built on free trade. It really depends on the context. Roman Empire wasn't built on free trade.

wqaatwt 2y ago

When the global economy was close to being a zero sum game and the concerns about too much of your silver/gold flowing to China/etc. were real (Great Bullion Famine) it wasn’t that absurd. These days.. yeah..

cryptonector 2y ago

Mercantilism is certainly what we have today, with much of the world exporting to one perennial importer. Perhaps Trump means to reverse that state of affairs (i.e., make the U.S. mercantilist), which I surmise from your comment that you think would be bad (certainly I think it would be bad!), or perhaps he means to not have mercantilism at all, which I surmise you think would be good.

mmooss 2y ago
> much of the world exporting to one perennial importer There are lots of importers all over the world, some very large.

pyrale 2y ago

> This is also why its importantly to gain colonies (Greenland/ Canada) or mineral rights from other countries so that the amount of stuff we have increases. So, basically, blueprint for the new opium wars. Or, more likely, WW3.