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Comment by Danieru | Hacker News Reader

What I find most interesting is how this plays into Warren Buffet's complaints about the American trade deficit: America has been selling long term assets to buy short term toys.

In Warren Buffet's explanation he uses selling farm land as this exact example.

Of course under free trade we would expect foreign buyers to own bits of land. The challenge for America: these are not land swaps. America is not buying up bits of land elsewhere. Instead America is selling these bits of land for trinkets.

The US Dollar is a global reserve currency. Which in the abstract sounds nice to have other countries sell US things in exchange for more US debt: but in practice that means selling assets. US Government Bonds or US Farm Land. Both are assets openly traded.

The issue is not foreigners. The issue is America is running up a debt and is selling the farm.

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You're touching on the Triffin Dilemma [1]. Basically, running a trade deficit is almost inevitable with any global reserve currency. There's not much you can do about that other than ot be a global reserve currency and there's simply no way that's going to happen voluntarily. The US derives too much power from the status of the US dollar.

The other issue you've touched on is a mistake that even economists make, which is to conflate the freedom of trade with the free movement of capital. These are two entirely different things. If you buy something, that's trade. If you sell land, that's the movement of capital. You can and should have policy that honors that distinction.

About the time the TPP was being rejected, I saw this comic [2], which honestly is worth a read as it explains pretty accurately this distinction.

Another angle to this is debt trap diplomacy [3].

[1]: https://en.wikipedia.org/wiki/Triffin_dilemma

[2]: https://economixcomix.com/home/tpp/

[3]: https://en.wikipedia.org/wiki/Debt-trap_diplomacy

> America is not buying up bits of land elsewhere

American investors incl. Private Equity are still owning and buying up quite a lot of foreign companies. European countries are quite afraid of the pockets of American PE and VCs to gobble up the most promising or profitable businesses.

Cite?

A great many countries don’t allow foreign nationals or foreign corporations to own land. Most you can get is a long term lease.

And not only the farm assets, but the other natural assets, not to mention the know-how of manufacturing (the stupidest thing we ever did was follow the MBA's recommendations that "labor is just fungible, ship it off to the lowest-cost markets").

>>"You can't take water and export it out of the state, there's laws about that," said Arizona geohydrologist Marvin Glotfelty, a well-drilling expert. "But you can take 'virtual' water and export it; alfalfa, cotton, electricity or anything created in part from the use of water."

Seems it is time to put a stop to a LOT of that. Fortunately we already are returning semiconductor & other mfg. Must keep this up...

What about labor that is fungible insofar as it is easily done by robots?

Not to be rude, but you don't work much with manufacturing or robots, do you?

Even if, and especially if, a mfg process is highly automated, it takes myriad layers of expertise to get it right. That is the LAST thing you want to ship overseas to your adversaries, which both increases their expertise in the field and your dependence on them.

Economically, it is long-term-stupid. Strategically, it is suicide.

Not rude, but i did work for a while on robot automation using expensive swiss industrial robots for a FAANG, in the US btw, for years.

The purpose aligned pretty much with your observations and the utility of this was involved in building a billion+ of devices.

Then you, of all people, should understand how massive is the value and expertise chain all the way from the product, to the CNC machine tool, to the CAM programming, to the CAD software, and the other forks up through the materials, the robot assembly. Even if you worked only in robotic final assembly, that is NOT stuff we want to offshore.

I did see one case where it sort of made sense to offshore to China, and then only to have production near some other markets. The company literally prepared and shipped only the final secret input chemical and it's curing agent, to be mixed in a certain ratio, poured into a big vat, then cut into slabs. They were still wicked nervous about it, and I don't think the arrangement lasted long.

Even if all the components are made here, with all the materials engineering, CNC machining, molding, forming, fabrication, etc. done here, and only final robotic assembly done in China, that is still a non-trivial skill to program and maintain those robots. And at that point, it's only a few experts, so why ship it and not keep it here?

China did something prescient roughly a couple decades ago which the US missed the ball on: they set up that entire manufacturing zone, famous for the contract manufacturers used by Dell, Apple, ...., Google etc., such that one critical aspect unrelated to tech savvy was optimized.

They made sure that the availability of components for all these global (mostly US it seems) companies wanting to rent time in their factories would face minimal supply chain difficulties, by making the component availabilities a local thing.

It's very orthogonal to all you mentioned, which I agree is logical. Also, programming the robots could be done domestically, then binaries of the programs run in the contract manufacturing facilities. Point is, I think what you emphasize actually has long been a priority.

High tech manufacturing is even more important to keep domestic.

> America is not buying up bits of land elsewhere.

I can't comment for the rest of the world, but US corporations are certainly buying up farming and forestry land in my country, New Zealand:

https://www.nzherald.co.nz/business/united-states-buying-up-...

The great thing about selling land to foreigners is that foreigners can’t vote and we can just eminent domain it back. See Kelo vs. New London.

Incidentally the debt America is running up is ultimately owed to the Federal Reserve, which is a creature of the US government. There are major unsustainable problems with US economic policy, but Congress borrowing from a bank that it controls[1] isn’t one of them.

[1] As Dune taught us the power to destroy a thing is the power to control it, and Congress can assuredly destroy the Fed.

> America is not buying up bits of land elsewhere.

What I always said about the Bush wars. For the cost of those wars, we could have bought all of rural Canada.

I don't think that would work; 89% of Canada is owned by the Crown. I doubt the Crown would allow even a substantial fraction of Canada to be sold to America. It's not as though they're strapped for cash, so what's in it for them?

Alaska was owned by the Tsar of Russia and they sold us Alaska. Who knows what kind of deal could have been struck with the Saxe-Coburg despot.

Leading me to ask, was the land not offered to the UK or were they not interested?

Russia viewed America as an irrelevant overseas novelty, which was probably correct at that time. Britain was their great rival.

https://en.wikipedia.org/wiki/Great_Game

Here's a hot take: nobody anywhere should be able to purchase land they're not allowed to live on.

Here’s a hot take. China did it right by not selling land and only selling a 75 year land lease agreement.

US would be better off if land was owned by the people and reclaimed by the people after a generational time period.

Leasehold comes with its own problems.

Part of why China now has a imploding property market is that governments got addicted to leasehold revenues to keep taxes low, and so encouraged a lot of artificial scarcity. Affordability is much worse there; house prices in NYC are 10.5x income, SF is 12, LA is 13.

Shanghai has a house to income price ratio of 47

Singapore does this too (very little land is freehold).

It looks great in China and Singapore because, well, the leases haven’t run out yet.

They’ve just started to in Singapore and the end result is “you have until the end of the month to leave and you receive $0 compensation”.

As a result they have to spend a ton of money on social housing and create massive disruption in the lives of seniors.

There is no free lunch here.

So, like H1B but worse; if you're an immigrant but not a permanent resident, if you get stopped at the border for a visa error your house gets seized?

(it's quite bizarre how this story seems to have brought out a desire on HN for Soviet levels of state controlled farming!)

It's not bizarre, when you consider that the why of the communist revolution was driven by a popular desire for land reform. (Also Bread and Peace, neither of which could be offered by the provisional government of the February revolution. [1])

And nothing about our current land use and tax policy results in good land use. It can, at best, result in good land use for some of the people owning it, but that doesn't optimize for what is good for anyone else.

If you let the situation rot too much, the same factors that drove that revolution can result in similar political instability. I don't believe we are close to that point, though.

[1] Of course, ironically, a coup backed by a strong public desire for peace resulted in a civil war which was in every respect worse than World War I for every participant.

You think the state should own all land except residential?

Functionally they own all land. There’s just contract law blocking the direct seizure.

I would go further. No one should be able to purchase land they do not live on.

I would go further still: No one should be able to purchase a house unless they agree to live in it for at least a year. And, one at a time.

Seems like this would limit the supply of housing, though I don't know what problem it is that you're trying to solve?

I would go further and say you can only buy one house your entire life.

Same thing happened in the 90s and 00s. There was worry that the Japanese were buying everything.

Yes exactly - and the US dollar plunged afterward and sank most of those investments. Trading goods for capital investment isn’t the one-sided trade it appears to be.

A huge amount of farmland in Ukraine has been bought recently by American corporations.

They are there to help. Themselves.

The Lord helps those who help themselves; so help yourself to everything you can get your hands on.

applicable here -- "A reflection on the lasting legacy of 1970s USDA Secretary Earl Butz"

https://grist.org/article/the-butz-stops-here/

many American hippy environmentalists cried in pain, since some of these farms are their birthing grounds; but in the mix was a hopeless morass of post-Civil War small holders with provably dysfunctional operations, and the promises of Big Returns for Big Capital on the other side of that fence -- where the grass is always greener.

This reminds me of the toll roads here in America. We can’t afford to take care of our own roads so we’ve opened it up to foreign investment. Companies based internationally now own our roads too.

And unsurprisingly they're some of the best roads on which to drive. Also, I've never been able to drive faster than I have on a toll road in Texas. Also, the idea that the people who use it are the people who pay for it is pretty neat.

What about the gasoline tax that we pay for on every gallon that’s supposed to go towards our roads? Not only are we being taxed on every gallon but we have to rely on foreign investment too? It should be either or.

It doesn't cover the full cost of roads. https://taxfoundation.org/state-infrastructure-spending/. Americans have revealed through their elected representatives that they prefer to keep fuel tax low and let general taxes pick up the slack.

But thankfully we don't live in a libertarian utopia where owning all the land means that you automatically run the world.

The land remains in America subject to American law which is decided by American voters. The value of the land can be recovered for Americans by e.g. taxing it and spending the money on services for citizens.

The land is already being taxed? I suspect though the water (in this case) is not — or not effectively.

Right taxing negative externalities more would be a good thing, but I think that's kind of independent of whether the land is owned by a foreigner or a local?

> But thankfully we don't live in a libertarian utopia where owning all the land means that you automatically run the world

Not a libertarian anymore, but this sentiment has nothing to do with libertarianism. You also can't recover something like water with taxes. It takes years to refill those aquifers if you begin overusing them.

Edit: Very disappointing to see reductive politics do so well on here. Keep in mind, Libertarians only have ever garnered 1.2% of the national vote. Your dishing is literally just a signal of your own shittiness.

> It takes years to refill those aquifers if you begin overusing them.

Thousands of years if not longer in the case of fossil aquifers. In regions where the aquifers are capped by an impermeable layer, rain water does not replenish the ground water at any meaningful speed. In these regions, using ground water is unsustainable no matter how much money you're charging for it or what you're using it for. Some of these aquifers were filled thousands of years ago during climate conditions drastically different from today, and these will never refill under present or foreseeable climate conditions.

Let people farm there using the finite water supply and they'll make a lot of money up front, but that gravy train has to stop eventually. But by the time the water runs out they've made a lot of money, and probably use that money to lobby for wetter regions to hand over their water too.

Tapping fossil aquifers should be illegal. If you can't make due with surface water and/or aquifers that refill regularly from surface water, then you should go somewhere else. Don't farm in deserts.

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