globalization and "free" trade has become a solid argument against a tax cut for the rich

[unblock]

the usual conservative argument for a tax cut for the rich is that the private sector is best suited to figure out what the economy needs and how to best go about fulfilling those needs.

let's leave aside any argument over whether or not this is correct -- and the implicit assumption that only the rich are entrepreneurs -- let's just grant for sake of argument that the private sector is best and ignore the (many) cases in which it traditionally is not.

now that we have tremendous ease with which to move money from country to country, and rich people and corporations can easily off-shore, outsource, or just plain start up companies in foreign lands, perhaps even to cater to consumers and businesses that are also in foreign lands (e.g., the emerging middle class in china and india), IT IS NO LONGER THE CASE THAT HANDING MONEY OVER TO THE RICH MEANS AN INCREASE IN INVESTMENT DOMESTICALLY.

if you cut taxes for the rich, the argument USED TO BE that they would take the extra money and invest it and the economy would grow. even if that had been true once upon a time, AT BEST that money is invested globally, with only a portion going to the u.s.

it's one thing to say that a tax cut will lead to jobs in the u.s. in the hopes that rich people build more plants in the u.s.
it's another thing to say that a tax cut will lead to jobs in the u.s. when you know that rich people will build more plants in india.

yes, EVENTUALLY, all this investment in places like india will lead to higher wages in india and EVENTUALLY they will demand goods from overseas and EVENTUALLY the u.s. will be in a position to benefit by selling, some kind of exports to india. but that will only start to any meaningful degree a generation or so from now. certainly not any time soon.


so unless the government provides a tax cut that has VERY SPECIFIC CONSTRAINTS to ensure that the money directly benefits the AMERICAN economy, then tax cuts for the rich should be seen as a stimulus to INDIA AND CHINA, not the united states of america.


now more than ever, if you want to stimulate the american economy, put more money in the hands of the POOR and MIDDLE CLASS -- those FAR more likely to spend it right here in america.

[econoclast]

1. Oh yes, we'll spend the money in the US ... But on what?

Cars from Japan and Korea and Germany and Mexico (VW)
flat screen tv's, computers, cell phones. China Japan Taiwan Korea
shoes - china vietnam
clothes - china India Pakistan Vietnam south America
energy - middle east Norway Nigeria venezuala Canada
I pods. I pads. I phones - china


The list is endless.

Every time we complain about offshoring rember one thing. THEY moved the factory overseas. BUT. WE kept right on buying the imported stuff. It takes two to tango. And we as consumers who don't read labels or don't care, are dancing as fast as we can.

[applegrove]

2. You are so right.

:woohoo: