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The reason US tech salaries are high is because the 5 most valuable public companies in the world are Apple, Amazon, Alphabet, Microsoft and Facebook [0] which are all tech based American companies headquartered in 2 areas (bay area and seattle). They all compete for talent and bring up salaries for American software engineers (and they can still easily pay a lot more).

[0]: https://en.wikipedia.org/wiki/List_of_public_corporations_by...

I am aware of the competition between these companies. I live in Silicon Valley and spent a couple of years at Apple.

But I hardly think the investment environment in the Valley is irrelevant. Companies do use capital to get big.

> My theory of why tech salaries are higher in the US: the US, public and private, borrows trillions of dollars. It consumes more than it produces. Wages are higher. And so are imports and immigration. It's all a consequence of the borrowing. If the US stopped borrowing so much and stopped inflating bubbles and re-inflating them after they collapse, consumption, wages, imports and immigration would fall.

Just so everyone is clear, this is a heterodox (fringe) theory that is not accepted by economists, mostly because it flies in the face of both macroeconomic theory and empirical research.

> Just so everyone is clear, this is a heterodox (fringe) theory that is not accepted by economists, mostly because it flies in the face of both macroeconomic theory and empirical research.

It has its bases in reality, though. Remember Yo? 1.5M at 10M$ valuation for an app that broadcasts "yo". This is only made possible because borrowing money is extremely cheap in the US compared to Europe.

> It has its bases in reality, though. Remember Yo? 1.5M at 10M$ valuation for an app that broadcasts "yo". This is only made possible because borrowing money is extremely cheap in the US compared to Europe.

This is itself reductive and doesn't really represent the full story (venture capital in particular is itself already largely sourced from foreign money).

In any case, the statement "low interest rates encourage investment" isn't fridge (in fact, it is literally tautological). The fringe part is the idea that the US is fueling cycles this way, and the implication that the US economy would somehow be better off by paying off debt instead of printing money.

> The fringe part is the idea that the US is fueling cycles this way

I thought that the entire point of lowering interest rates is to fuel the economy? Problem is when the markets have become addicted to cheap money, and politicians don't have the guts to force them to give up the cheap money, so eventually the bubble bursts...

It exaggerates the cycles for sure. If the Fed let interest rates be set by the market after the next bubble collapse, the recovery would be slower, less bubbly and growth would be based on the value of things, rather than how easily a sector is stoked by interest rates. And it would be more likely to be sustainable and stable.

The fringe theory is that those four consequences are good things, not that they would happen. Perhaps I’m misunderstanding and you are saying borrowing has no effect on consumption, wages, imports and immigration, or even suppresses it?

Living in Berlin is absurdly cheaper than leaving in San Francisco. Think small appartments for 500 euros a month.

Good to know.

But....

https://www.thelocal.de/20170411/germany-has-second-biggest-...

For most California engineers, moving to Germany with the same salary would effectively reduce their taxes. California taxes for high earners are very high, even by European standards.

That could be true. A lower rate on double the salary could still mean a higher tax bill.

And in California, the state income tax is an additional burden.

Of course, it's the final take home pay that matters.

Unfortunately for most United States citizens, there's a double taxation system. Which means that even if you're living and working in another country, you're still required to report your income and pay taxes in the United States which means that even if the tax bill is lower in the country you live in, you've still gotta pay the difference in taxes to the U.S... unless you're willing to give up your U.S. citizenship in favour of your country of residence, which is a long and arduous process in a lot of cases.

Moving to Germany wouldn't be enough. You'd have to emigrate to Germany, become a German citizen and give up your U.S. passport in order to escape the U.S. tax system.

The sweetest deal, at least for capital gains, seems to be in Puerto Rico. They're exempt from US federal taxes and there's no tax on capital gains there.

Peter Schiff talked about it on Joe Rogan's podcast recently.

That's correct, but you'd still escape the state income tax, which is really what would make a difference. I specifically said "for California engineers", since for engineers in Washington or Texas, the move would be most likely be detrimental from the tax perspective.

>> It consumes more than it produces

One of the things the US produces with it's huge military spending is stability. The way the rest of the world pays for that stability is through buying T bills that pay <2% Every empire throughout history has demanded taxes from client countries, the way the US collects those taxes might be unique. All that is a long way of saying: don't worry about all that debt, it will never be paid back.

THere's a big difference being paying a tax and lending somebody money. And an even bigger difference between having cash in the bank and being unable to borrow.