Comment by neilwilson | Hacker News Reader

Comment by neilwilson | Hacker News Reader

Because the billions aren't lost to the rich. They ain't spending it, so there is no real resource drain. It's just numbers in a bank account. Essentially the rich saving has the same economic effect as taxation. Hit them with remittance taxation and it will just sit there 'offshore' doing largely nothing other than making the rich feel rich, even though they can't spend it.

The 'scroungers' however are draining real resources for nothing apparently in return. Not that they can provide anything because there aren't sufficient jobs for them.

In other words they are not 'scroungers', they are just the 1 in 20 people who can't get a job under neo-liberalism because it requires about 5% permanently unemployed to control inflation.

What we do get annoyed about are the 'idle rich'. Those who appear to get their money 'for nothing' the same as the 'scroungers' and then flaunt it by buying expensive stuff.

There is no reduction in public service capability by the rich having vast sums of money 'offshore'. The government is never short of money - as they demonstrate everytime somebody they don't like needs bombing, or a set of new nuclear submarines need purchasing.

"There is no reduction in public service capability by the rich having vast sums of money 'offshore'. "

There is a reduction. The U.S. government runs at a deficit. Thus money is borrowed and thus interest is paid on the borrowings. This reduces public service capability since the government's borrowing capacity is finite. Plus this borrowing is in some sense a robbing of future generations.

There has never been a time in the last 150 years in which unemployment was 0%. What does having a percent of the population unemployed have to do with neo-liberalism?

Nope.

http://beta.latimes.com/opinion/op-ed/la-oe-kelton-pony-for-...

I think you have a gross misunderstanding of economics. The government doesn't just issue bonds. It sells them to buyers. It will have to pay interest on those bonds to the holders of those bonds. There is a fiscal capacity for the nation in terms of repaying bonds. Things like tax policy, public policy, and projected GDP growth come in to play when buyers look at the risk of buying U.S. Treasury bonds. Risk in the form of interest is set and bonds are purchased. The paying of interest reduces the capacity of the government to spend on other things because the government absolutely does not have an infinite capacity to sell bonds. And saying, we'll just print more money is not helpful because if too much is printed then massive inflation can take hold which reduces the capacity of the government to spend.

Yes you do have a gross misunderstanding of sovereign currencies and how they work.

Here's an explanation of how things actually work, from an actual economist: http://beta.latimes.com/opinion/op-ed/la-oe-kelton-pony-for-...

> Those who appear to get their money 'for nothing' the same as the 'scroungers' and then flaunt it by buying expensive stuff.

How someone got their money is irrelevant, but it's much better for the economy that they spend it, even on garbage, than let it sit in a brokerage account. Every person with a trust fund spending $400k on an Aston Martin is sustaining (not creating) jobs and distributing wealth to some degree.

"but it's much better for the economy that they spend it,"

Generally it isn't - because that tilts the economy towards producing goods and services that are wanted rather than those that are needed. Trickle down has been shown over the last 30 years to be largely a myth.

For example if you have public healthcare and private healthcare and there is a shortage of doctors then the wealthy "crowds out" the public healthcare system by purchasing private healthcare. Essentially they are using their wealth to jump the queue. Like the 'priority queue' at a theme park.

Consumption through spending is economically beneficial to everyone. You misunderstand what 'trickle down economics' is.

So then let's have permanent war because all that spending on bombs is economically beneficial to everyone, right?

Say hello to the military-industrial complex

We just have to have some aliens threaten to invade our planet to goose the economy. It'll be great for everyone!

And pushing people to ever more overuse of resources can't go wrong because we have an infinite supply of all resources, it can't fail. /s

>Consumption through spending is economically beneficial to everyone.

What about the externalities of destruction of the environment due to consumption?

Only if gov't didn't apply environmental regulations when they should've.

I think there were talking more about the velocity of money than trickle down. If money is in the market and it sits, there is no taxation on it (yet). If they buy a car, that money pays people and parts and taxes are paid. They spend what is left to other people who also pay taxes, etc. So money can be taxed multiple times as it powers the economy instead of sitting in an asset that is deferred.

The paradox of thrift is solved by the source of liquidity. Let them count their coins if they feel like it.

> because that tilts the economy towards producing goods and services that are wanted rather than those that are needed

Who has the authority to define what is needed?

Generally those that are elected to do so.

Assuming you're in favour of a modern democracy, rather than a technocracy, an epistocracy, or the wild west.

> Generally those that are elected to do so.

> Assuming you're in favour of a modern democracy, rather than a technocracy, an epistocracy, or the wild west.

This argumentation is pettifoggery.

The rich spend a lesser percentage of their revenue than the poor scroungers, your argument seems pretty flawed.

They invest their money though. It's not just cash in a vault somewhere. So it does benefit the economy.

Or it drives up asset prices. See housing.

Which should have a corresponding increase in quantity of housing. Why that doesn't happen in some places is hard to discern, but the investments by the rich does make the economy grow.

If you already own housing it makes a lot of sense to block new development.

Actually it is somewhere. After the portfolio adjustments are made somebody ends up with cash in a vault somewhere (or more likely bank money).

Very often on the asset side of a foreign central bank which they then use to discount into their own currency (hi China)

Literal cash and similar assets are the only dead money in the economy.

Even low and zero interest savings accounts are used by banks to back loans.

So for example, when someone buys gold or bitcoin, they are isolating that money from the productive economy. When they buy a share of a business, they are participating in the financial backing of that business (they generally aren't actually directly contributing to the business, but the business can do some types of business against its value on the stock market).

When somebody buys gold or bitcoin, they are giving money to somebody else, who will almost certainly spend it, or, failing that, at least put it in the bank.

> Even low and zero interest savings accounts are used by banks to back loans.

Only if banks have more lending opportunities than deposits, and that hasn't really been the case, (depending on which country we're discussing) since the crisis.

"Even low and zero interest savings accounts are used by banks to back loans."

No. The loans are made out of nothing. Saving is the end of the loan process, not the beginning. That has been made clear by the Bank of England. http://www.bankofengland.co.uk/publications/Documents/quarte...

Isn't this the broken window fallacy?

No

That money might well be invested in Aston Martin providing them with needed liquidity to run their business. I'm really not sure which is more productive.

I suspect what parent is talking about is the rentier class that has grown substantially in the UK over the last decade. 10% of the population now own at least one rental property.

There is nothing wrong with renting your property. Not sure why this is sold as a vice every time this discussion comes up. Somebody has to pay to buy lands and build a home.

Also these people need to answer what they think about infrastructure bonds, which is more or less the same as renting a home.

It's become a problem in the UK because housing supply is so constrained, there is a whole class (or generation) that is getting fat on the back of this constrained supply and has been voting for policies that continue the situation.

This isn't buying land and building homes, it's about people leveraging their existing housing to out bid people just looking for a home.

This has led to the age of a first time buyer reaching 32 and left many people with a precarious housing situation.

So yes, there is something wrong with it.

No, that completely depends on in what economic climate they'd be in. Exuberant spending in 2009 creates jobs, but in 1999 crowds out more sensible use of resources.

otoh there are bridges literally falling down and the country doesn't provide universal healthcare...so it seems government's pockets aren't infinitely deep.

Obviously military expenditure is a problem, but so are effective corporate tax rates of 2% and the 0.01% storing vast sums of wealth in brokerage accounts.

Building bridges and providing healthcare takes real resources, not just money. Real resources are of course scarce but money to the US government isn't.

This is why it doesn't matter (to the government-owned bridges at least) what some number in a brokerage account shows.

While you are right to take a materialist viewpoint, this is not correct. For instance, US industrial capacity is estimated to be at about 75% utilization. We are FAR richer than we pretend to be. Why is it underutilized? Probably because of monetary reasons.

https://theintercept.com/2017/10/03/donald-trumps-disgusting...

The UK does provide universal health care, although we have a problem with potholes our bridges aren't falling down and our military spending is probably a little on the low side.

There is no limit to government expenditure in financial terms. The limits are real.

The problem is US politics, not the US dollar.

http://beta.latimes.com/opinion/op-ed/la-oe-kelton-pony-for-...

> There is no reduction in public service capability by the rich having vast sums of money 'offshore'.

This is a strawman. While technically correct, it's completely ignoring the fact that NEW money entering that 'offshore' state is taxed extremely low and is thus in fact draining the system.

Nope.

http://beta.latimes.com/opinion/op-ed/la-oe-kelton-pony-for-...

Thanks for participating. Are you saying that we should pretend like 'offshore' money doesn't exist, and print an equal amount of new money for each 'lost'?

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