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Comment by imtringued | Hacker News Reader

It's just an excuse to justify selfish tax policy that favors the wealthy. It obviously doesn't work because the wealthy don't have to invest into domestic jobs. They can also use their money abroad. If you give them more money they are just going to spend more of it outside your country.

The opposite is also true. The vast majority of consumers spend their money domestically. Yes the products they buy are often imports but in many cases a big chunk of the money goes to cashiers, delivery drivers and so on.

Of course I am simplifying this a bit. In theory the roles can switch and business owners spend more domestically and consumers spend more abroad but as it is right now the rich just invest into Chinese businesses or production capacity in China. Think of companies like Tesla building factories in China.

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"It obviously doesn't work because the wealthy don't have to invest into domestic jobs. They can also use their money abroad."

They can also just hoard most of it and pass it on to their descendants -- this is how you get dynasties. Tax havens and creatively constructed foundations are another way of making sure the government never gets ahold of their money.

Sure the rich hold some gold & BTC but most of their wealth is in investments (stocks, bonds, infrastructure etc.) to generate positive real returns - given inflation. This is far from hoarding

What the paper shows is that the increment in potential investments by the wealthiest don't seem to improve growth, but does worsen inequality.

The individually wealthy are not required for the aggregation and allocation of capital. Governments and financial systems are typically more capable at achieving this requirement in a welfare-maximising manner.

In fairness, we could and should also charge adjustments for goods and services produced that don’t meet some standard for labor and environmental standards so American companies can compete (for example, a border-adjusted carbon tax). Similarly, end the subsidies that allow for cheaper shipping from China than a neighboring state.

If anything, I would expect “trickle-down economics” to have reduced globalization, since it allows for cheaper American labor. Of course this doesn’t mean we should embrace trickle down policies, but that we should make sure we prevent jobs from flooding overseas as we dismantle them.

Buying from cheap places will help them get out of poverty though. Which would in turn solve most problems.

It only creates extreme inequality in both countries. In the wealthier country, managers make lots of money by outsourcing labor, causing the cost of labor in the wealthier country to plummet.

In the poorer country, it creates a class of ultra-rich businessmen who rule over the ultra-poor laborers (and those laborers must remain ultra-poor otherwise the jobs would flow back to the laborers in the wealthier country).

Not only that, but the poorer country isn't going to adhere to environmental standards of the wealthier country (absent coercion a la border adjustments), and so it basically becomes a way for businesses in the wealthier country to continue to enrich themselves by way of pollution (and otherwise mismanagement of environment).

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