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Comment by abdullahkhalids | Hacker News Reader

> The article posits extraction of resources from the poor to the rich, including globally, and this is just wrong.

You might consider looking at the study reported here https://www.theguardian.com/global-development-professionals...

> In 2012, ... developing countries received a total of $1.3tn, including all aid, investment, and income from abroad. But that same year some $3.3tn flowed out of them. In other words, developing countries sent $2tn more to the rest of the world than they received. If we look at all years since 1980, these net outflows add up to an eye-popping total of $16.3tn – that’s how much money has been drained out of the global south over the past few decades.

No comments on how good the study is, because I am not an economist.

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this addresses a fundamentally different issue. The article concerns outflow of capital surplus from the developing world to the developed world.

The fact aside that the "16 trillion since the 80s" which sounds staggering is one year of economic activity by China, this isn't about someone forcibly extracting wealth out of the developing world. It's the newfound class of wealthy people in the developing world transferring export surpluses and wealth to places they consider more safe. (which if anything is an indication of their total increase in prosperity).

from the article

"But by far the biggest chunk of outflows has to do with unrecorded – and usually illicit – capital flight. GFI calculates that developing countries have lost a total of $13.4tn through unrecorded capital flight since 1980."

>this addresses a fundamentally different issue. The article concerns outflow of capital surplus from the developing world to the developed world.

The report is about the total flow of money, the article just highlights capital flow. Why is this a different issue than the "extraction of resources?"

because rich people in China moving their money to the US is a matter of accounting, not a transfer of resources from one nation or citizens, to another. The same person still owns the same stuff. This has nothing to do with extractive feudalism, or extractions of any kind.

Both foreign and domestic companies are doing this, so some portion of that is a direct transfer of resources to a different country. Even when domestic companies are the ones engaging in this, the impoverished nations are losing the tax on the money and their banks are losing the capital to provide loans.

BTW, the number's quoted do not include China for reasons contained further in the paper than I read.

Something about that analysis seems suspect to me.

Imagine that I own a house.

You stay at my house for a night and pay me $1. Let's call it rent or whatever.

I then spend $3 on bricks and stuff and improve my house. My cash outflow is -$2.

The work done on my house improves the value of my house by $4 (consider this to be the "internal economy").

In that year then, my net worth has increased by $2.

That is to say that it seems possible to me that you could have a negative trade balance and still be winning as you're increasing your wealth at a rate faster than you give it away.

Am I missing something?

You didn't have the $3 you spent, so after you made $1 you had to borrow $2 and now have to pay interest on the debt until the balance of trade goes the other way and you can pay it back. If that never happens or takes too long, you've lost more than $2 to interest payments.

>That is to say that it seems possible to me that you could have a negative trade balance and still be winning as you're increasing your wealth at a rate faster than you give it away.

This would still be losing when compared to growing without giving away so much of it.

Besides, it was being used as evidence that resources are moving from the poor to the rich globally.

Yeah, but if you need the imports, that's not an option. If you own gold, I need gold, and there's none on my land, I have to pay you.

I'm not claiming there is no issue here, but rather that this situation seemingly can arise with no ill will at all assuming countries exist.

>but rather that this situation seemingly can arise with no ill will at all assuming countries exist.

No matter the reasons, this situation arising supports the claim that that global resources are flowing from the poor to the rich.

That said, even if that were possible it is clearly not what is happening. No country needs this capital flight.

It's mostly because everyone needs energy and they buy it in form of petroleum, gas and coal.

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