You can't spend more on everything, not on a percent of GDP basis. This is a stupid idea since every GDP is limited to 100%. If you spend more you have to take debt and spend future GDP
Also while I agree that 100% of a GDP is a reasonable approximation of an upper limit in practice, that's not necessarily strictly true either. GDP measures domestic production, not the income available to residents. The income available to residents can certainly be much less than GDP (e.g., Ireland, Luxembourg, etc), so the reverse can be true in principle too.
Since healthcare is priced into every salary, I'd expect at least some big portion to come through on non-imported goods (though if it was 2X it wouldn't on its own bring every other thing to 2X).
I’m not sure what you’re getting at. Obviously, healthcare must be paid for somehow and it’s a fair assumption workers bear most of the incidence. However, the role of real incomes and relative prices are generally under appreciated here.ie. It’s not so much that health benefits are something extra as part of total remuneration (ultimately a reflection of rising productivity elsewhere which frees up spending to be allocated to health and other services)
Without putting much analysis into it, IMHO whenever Apple would sell an iPhone in Germany the effects are as follows:
Goods export worth the "wholesale price" from China to EU;
An EU company (Apple entity in Ireland or Netherlands? the 'double Irish sandwitch' arrangement which IIRC is still used is a bit tricky, but one of these) earning almost all of the profits of that deal;
The shares of publicly traded USA company 'Apple' appreciating in value because the value of the EU company that they fully own increased because they gained profit and cash (but which won't be repatriated to USA due to tax reasons).
IMHO that sale wouldn't have any direct effect on USA trade balance and on USD supply/demand.
Does this make sense? Am I getting something substantially wrong?
iPhones or whatever gets produced in China, likely by Foxconn. Profit margins are small.
I iphones get sold to Apple HK, apple HK sells them to Apple US or Apple Germany for a huge mark up. iphones are sold in the US or Germany for a small mark up.
I don't know if this is apples setup but profits would be accrued in HK tax free. In the end it does not matter since.
On the balance sheet China or HK is exporting goods to the US or Germany but all the profits land at a US company - apple.
Amazon, Google, eba, Microsoft is big in Europe. Where do you see their products in the trade balance sheets? YOU DON'T. Microsoft is not shipping Windows CDs from the US to the UK or France or Germany.
The bottom line: While the huge trade deficit of the US is not healthy, it is highly distorted and probably much lower than you think.
"IMHO that sale wouldn't have any direct effect on USA trade balance and on USD supply/demand."
People buy stocks in the US. They buy them with US dollars. Why are they buying US stocks? Because these companies are highly competitive. Why are they highly competitive? Most pay hardly any taxes and their products don't appear in any trade balance sheet.
Double Irish Dutch sandwich. Apple would have entity in both Netherlands and Ireland for sales in EU. Money is transferred to Netherlands and then to Irish subsidiary and then further to other countries.
1. That prince Salman is a serious politician? I mean, give or take a bown saw?
2. That the conclusion of the former news is wrong? It looked more and more unlikely that this war can be won by Saudi Arabia. Now it looks, it might get lost.
By the way, the Emirates left the war already. Wonder why. If I had to take a guess I would say that a drone attack on the Dubai airport would do wonders to their air traffic. But you never know.
"The Houthi have clown prince Mohammad bin Salman by the balls and can squeeze those at will."
Of course he's a serious politician, and a skilled one at that. He has managed to greatly strengthen ties with the US, outmaneuver most of his political 'enemies', keep the flow of western weapons coming into his country and get the entire western world to kind of shrug and forget that he had a journalist murdered and cut up with a bone saw.
I wouldn't really go as far as qualifying him as a successful politician for the simple reason that it not really challenging for dictators to consolidate power and build alliances using unethical means, like money and intimidation and in this case murder. For MBS his father is already the monarch of one of the wealthiest nations on earth, which I'm pretty sure helps a lot.
I don't know Saudi Arabia well enoughto judge about this political enemies. I have read he has made some progress in modernization. Hi megalomaniac "neom" project seems to have failed, at least stalled. He has alienated Qatar, he has sided with the Israelis which could backfire easily from Muslim extremists.
It exists, as I noted, but is nowhere near reliable enough or able to deal with the punishment and extreme conditions. That said, it may improve over time to a point where it doesn’t matter - but that is not yet the case.
In 1947, António de Oliveira Salazar initiated a rent freeze for Lisbon and Porto, which remained in force for over 40 years and ensured that for some old-style apartments in the late 1980s, <5 euros/month had to be paid. After the freeze, rent increases remained limited to inflation until 2006, so that rents remained very low. Many homeowners let their old apartments become derelict because the money was missing for renovations. Sanitary facilities with shower and toilet were missing in many buildings. In the center of Lisbon, about 20 houses per year collapsed at the end of the 1990s due to poor condition.
It seems much more likely that these assumed acts of God were a misunderstood natural phenomenon rather than extraterrestrial beings who we have yet to capture on camera. Considering how closely the depictions of the event match pictures of sun dogs leaves it as the most reasonable solution.
”I often think the big challenge of economics now is perhaps not managing overall growth but managing sort of "decline" overall with demographic changes.”
You are a quick thinker my friend. If you figure out how capitalism can work on a shrinking or even steady state economy you will get the Nobel price. No kidding.
Doesn't the need for continuous growth come from the interest charged on newly created money? We always have to grow to be able to afford the ever growing amount of money we owe.
With a non debt based currency, capitalism could do just fine in a shrinking economy no?
I'm not an economist by a long shot, but I would like to propose an alternative model: Whenever a bank gives out a loan, it not just creates the money that is given to the debtor. It also creates the money that will have to be paid as interest, and gives that money to the government. That could be the government's primary income stream, instead of taxes. And it guarantees that there is always enough money in the system to pay all outstanding debts.
(Looking forward to more knowledgable people pointing out the inherent flaws in this idea.)
