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Comment by platz | Hacker News Reader

> cut taxes, close the borders, and prosperity will result

That leads to a hot house. Targeting full employment and keeping capital local allows workers to bid up wages, which will create inflation, and investors will go on an "investment strike". It happened in the 70s.

Otoh, Open borders and targeting price stability allows capital to seek it's global return - inflation stays low, but inequality grows.

Pick one.

* explain yourselves, downvoters

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>allows workers to bid up wages, which will create inflation

Is this phrase suggesting higher wages for workers is bad? Care to spell out your argument in a few more sentences?

I'm not moralizing w/r/t good or bad. I pointed out conditions in which folks with significant assets start freaking out. It's not "higher wages" - it's the combination of targeting full employment and preventing unrestricted global capital flows. Wages will simply go up in that regime (in full employment, the highest workers/earners have no downside to negotiate and can leave any given job). Companies don't have a good counter. So employees win - yay. But employer/employee in not the only game in town. Since wages go up, if global capital flows are restricted (closed borders), inflation also goes up. The other game in town is what the folks with real serious assets want, and they absolutely hate high inflation, so there will be some political battle to decide how the situation is resolved. in the 70's it was resolved by the investor class winning the political battle, and switching the economy to neoliberalism - price stability over full employment, and globalizing capital to allow it to seek it's highest return.

Thanks, I think I misread your original comment slightly. I appreciate your clarification.

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