Paul Atherton

@michaelxpettis Wow! Never thought I would see the day that after decades of seeing the destructive nature of unfettered capital flow (I say this as ex-wall st and ex-EM trading) form part of (or at least more of) mainstream discussion.

Sébastien Jean and Jean-Pierre Landau: "In terms of welfare, European consumers should welcome cheap electric vehicles, batteries, and solar panels that are subsidized directly or indirectly by Chinese workers and taxpayers. But Europeans instead see them as a threat, which is rational from a dynamic perspective. Cheap imports may raise purchasing power today, but they can destroy the industrial base on which tomorrow’s income depends. The transfer is generous in the present, but costly in the future." Jean and Landau are right, and they represent a real shift in the way the world understands trade, away from the complacent (some would even say condescending) neglect still favored by mainstream economists, to a deeper grasp of how trade imbalances allow countries that exert greater control over their external accounts to export their industrial policies (in reverse) to those of their trade partners with more open external accounts. In a world in which some economies exert substantial control over their external accounts, in other words, while other countries don't, if the former decide to implement aggressive industrial policies, not only are they restructuring their own domestic economies, but they are also restructuring the domestic economies of the latter in a such a way as to accommodate their own economic needs. Jean and Landau add: "A useful complement to this strategy is capital controls. Controls on outflows keep domestic savings at home, while restricting inflows prevents the economy from rebalancing from tradable to non-tradable sectors—the opposite of what the strategy aims to achieve. Capital inflows strengthen the currency, weaken exports, and support consumption. They accelerate domestic absorption before scale and learning are secured, thus impeding the pursuit of comparative advantage." I agree, and this suggests that rather than encourage capital inflows, economies that want to strengthen their manufacturing and productive sectors and to benefit workers by raising productivity and wages should consider capital controls as a far more effective tool than tariffs. Unfettered financial inflows largely benefit the large banks and owners of movable capital at the expense of manufacturers and workers. They also force the economy to shift out of producing tradable goods (including manufacturing) and into non-tradable goods (real estate and services). ifri.org/en/media-exter…

China does much much more than Tarrifs to intervene in its external accounts. Including, suppression of currency, interest rate suppression, huuuge subsidies to specialised sectors, major transfers from the household sector and many, many more. The tarrifs were always going to be ineffective. But that doesn’t mean the US won’t eventually find the right policy leaver (intervene in the capital account would be one). When that happens look out below!

@thatwallstguy @ProfSteveKeen Are they placing tariffs on other countries at the whim of a dementia patient?

I was on Piers Morgan Uncensored this week, debating Kevin O'Leary on everything from Iran to wealth taxes to AI. But the moment that stuck with me was China. For years people have challenged me to name a single country actually doing what I argue for. I never could, but now I can. China has pulled more people out of poverty than any nation in history, and it's out-building America while it does it. Public affluence and private affluence. Turns out the combination works. Kevin's terrified of his kids "living under Chinese rule." Meanwhile I've walked those cities, and I'm not the one stepping over someone sleeping rough every five metres. Watch the full thing and tell me who won, link in the comments.

@thoughtsofchao2 @ProfSteveKeen Sure thing

@thatwallstguy @ProfSteveKeen China forced no one. Western countries under neoliberalism gave banks the power to strip their own economies for rental return. The governments and corporations of the west forced their own people into slavery but even that was not enough so now they replace them.

These subsidies / transfers also wreak havoc in counties that are forced to absorb the excess savings from China’s ‘competitive strategy’ - most notably the USA but other Anglo countries. Leading to a huuuge rise in personal debt. It’s probably no surprise that all Anglo counties suffered the same housing affordability crisis over the past 20-30 years.

Yes, Branko, but because it would politically disruptive (and bad for the global economy) if Europe were also to compress wages and transfers by enough to regain competitiveness, the alternative for Europe is to intervene in its external accounts for the purpose of reversing the advantage enjoyed by economies that compete by suppressing household income. This was what Joan Robinson warned about. In a global economy in which some economies are relatively open, while others intervene to increase their competitiveness, the persistent surpluses of the latter will eventually force the former themselves to intervene, at the cost of global trade. Michael Kalecki made a similar point. He showed that if a country suppresses wages relative to productivity, household consumption tends to weaken. The country can nevertheless maintain high production if the resulting shortfall in consumption is offset either by higher investment (as was the case in China in the 1990s and during the final stage of the housing bubble in the 2010s) or by a trade surplus. The problem he noted, is that this only works if some countries do it. In an open trading environment, if my wages are lower (relative to productivity) than yours, my products will be more competitive, and I can grow faster by absorbing part of your demand (leaving you to choose between growing more quickly or boosting domestic demand with more debt). But this only works as long as you don't reduce your own wages relative to your own productivity. If we both do it, we are collectively worse off because, as Kalecki argued, it is wages that drive demand which, in turn, drives business profits (and growth). The key point is that if a country can reduce the prices of its manufacturing goods across the board by suppressing wages and subsidizing production, its lower prices are not evidence of greater efficiency. They are mostly evidence of the extent to which workers and the financial system are subsidizing prices. On the other hand, if – consistent with comparative advantage – some of its goods are relatively cheaper while others relative more expensive, and these are exchanged through trade, then you might be able to argue that it produced the former goods more efficiently while its trade partner produced the latter more efficiently. michaelpettis858496.substack.com/p/comparative-…

Although I agree with much of Milanovic says about inequality, I disagree with him here. I think he is confusing "efficient" manufacturing with "competitive" manufacturing. China is not necessarily building things better and more cheaply than Germany or France, but it is certainly selling them far more cheaply, and the difference shows up both in the extremely low share households receive of what they produce and in the astonishing rise in China's debt-to-GDP ratio. This was the same strategy Japan followed in the 1980s, and not only was it unsustainable, but the high debt and low consumption share ultimately forced Japan into an extraordinarily difficult adjustment. If Germany and France were willing to suppress wages (or, which is the same thing, to eliminate social transfers), or if they were willing to borrow comparable amounts to subsidize the competitiveness of their manufacturers, it is pretty obvious that French and German manufacturers would also be able to sell much more cheaply in global markets. But while these policies would increase manufacturing competitiveness, they would not make manufacturing any more efficient. They would simply shift part of the economic costs of production onto the rest of the country. michaelpettis858496.substack.com/p/mckinsey-con…

@DavidMcNab17 It doesn’t need it - closer to the point - the uk doesn’t want it. It’s massively distortive.

If Gary came armed with the correct economic lens, he would have derailed Niedle’s theatrics with two words: “who cares”? The UK is self funding. It doesn’t need foreign investment. Two neoliberal goldfish circling Thatcher’s bowl thinking this is all there is.

@PoliticoTeacher It’s not only bad. It’s the source of all that is bad with the Anglo economies. If investing doesn’t come with expertise - we shouldn’t except it.

Important to understand that 2/3rds of FDI is foreigners buying up assets that already exist. Not only is this not good for the economy, it's actively bad because it's often driven by 'investors' buying up assets to extract economic rents.

@james_roe @PatriciaNPino Awesome. Couldn’t agree more.

@thatwallstguy @timwido @PatriciaNPino Yeah, I agree with that too, the point of taxing the wealthy is not to generate revenue, it's to limit their participation in governance to a more meaningful level. And should be paired with policies designed to take money out of politics, and to reduce corruption in general.

The problem here is focusing on a wealth tax as a revenue raising mechanism. Frame excess wealth as a threat to democracy, the environment, and to fairness. Then a wealth tax only needs to raise enough to remove excess wealth.

@james_roe @timwido @PatriciaNPino Totally agree. My point of difference is that tax is not revenue. It’s not needed to spend. So, and I know this makes me an odd one out here. I think we should both lower tax on a much larger part of the population but ALSO increase spending.

@thatwallstguy @timwido @PatriciaNPino The exact mechanism for pairing back that wealth is certainly worth debating, but in a post Citizen's United world, a ruling also bought with wealth, I don't think it's beyond the pale to note that it's screwing things up for us.

@timwido @james_roe @PatriciaNPino My take is - @james_roe is making general directional statements not specific budget tax position. I think that's perfectly reasonable.

@james_roe @thatwallstguy @PatriciaNPino Seems like you don’t know the answer though. You prove my point by being condescending.

@james_roe @timwido @PatriciaNPino Yes, i do agree. But also think tax should be signifcantly lower right across the spectrum. But that is another loooong conversation. I wouldnt even tax the first $100k

@thatwallstguy @timwido @PatriciaNPino There were lots of exemptions and loopholes that got people down to around 42%, but glad we can agree that taxes can be much higher on the wealthy without negatively impacting the US, and that we can sustain rapid growth under those conditions.

@jamespriceglos @K_Niemietz Govt wealth - what a f@cking ignorant knob. As if a govt shoves money into a bank account.

It’s incredible what happens when you put an actual economist next to this fraud. Well done to @K_Niemietz for demolishing Gary Stevenson’s entire schtick in seconds. Share this video with all your famous and friends. A total masterclass.

@james_roe @timwido @PatriciaNPino This is not true. Persuming you are talking about the post war decades. Top 10% was approx 42% and those very rare in the 90% bracket were 1% - about 1/4000 i think are the numbers...but the expansion was the baby boom anyway...

@timwido @thatwallstguy @PatriciaNPino Well given we had the strongest expansion of the US middle class in history when marginal tax rates on the top 10% were over 90% I'd say we have quite a bit of wiggle room before that's a real concern.

@cdglove98 @james_roe @PatriciaNPino I would slight disagree. I don’t think your point illustrates this but I generally agree that things merge / look similar at the extremes. As the saying goes - there are no trends only vectors.

@thatwallstguy @james_roe @PatriciaNPino It’s simple but it illustrates the point. I want *more* capitalists, not fewer. The less distributed ownership is, the less distributed decision making is and past a certain point, it doesn’t look too different from central planning. I think we’ve crossed that threshold.

@Adam_Creighton Yes, absolutely. But it is distributed differently. As they say.

Is there any empirical evidence for "diversity is our strength"? Genuine question.

Australian Super is 'sending australian's hard earned' super to USA to the tune of (back of the enevelope) about $120billion PLUS another $53billion in Europe. Give or take. So 240x times (usa) and 106x (Europe). But i don't see any equivalent note on that? do we just invest in Australia?

@thatwallstguy You know exactly what I’m asking. It’s obvious.

It’s bad enough Australian companies are giving jobs to India by outsourcing their back office roles. Now Superannuation Funds are giving away your hard earned wages to India while you struggle to pay down your mortgage. People First is the only party that will let you keep your superannuation, because we believe in putting Australians First. Sign up today if you want to stop politicians selling Australia out. Peoplefirstparty.au

That is waaaay to simple. Just add time as another dimension to your exmaple. When you are young - min wealth but max potential. As you get older max wealth but min potential. And that is for the same individual. Dynamics needs to be built into economic models (which they are not). What then?

@thatwallstguy @james_roe @PatriciaNPino How about this. At one extreme everyone has the same wealth. Perfect equality. At another, one person owns everything. Both are probably bad. How close to one person owning everything do we need to get before it’s bad?

@james_roe @PatriciaNPino Oh yes, that make sense. So, like a Lagrange point. But for finance. How many dimensions would you suggest?

@thatwallstguy @PatriciaNPino You get taxed back to that inflection point.

@JessicaJinxxx @WillKingston Ha! That made me laugh

@WillKingston You can always spot morons by the amount they want to talk compared with how much they are prepared to listen. He probably left that interview forgtteing everything that was said.

Whenever the media wheel out Gary Stevenson, watch this clip. He’s a fraud.

@RennickGBR I’m not sure what you are asking here, @RennickGBR - nor how that relates to your ‘giving away money’ comment?

@thatwallstguy Are you a financial advisor/funds manager that charges fees for your service? And if so do you guarantee the capital that you manage? If not why not?