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Comment by CSMastermind | Hacker News Reader

It's interesting to me that people worried about wealth inequality are normally also very supportive of free trade policies.

A lot of the concentration of wealth comes from the fact that economically there is capital, goods, and people. We made it super easy for capital to flow around the globe, moderately easy for goods to flow around the globe, and difficult for people to flow around the globe.

An Apple phone made in China, sold in South Africa, still sends money (capital) back to the US. This lets a few people gain extraordinary leverage at the expense of the lower ends of the curve in the United States who have seen their jobs shipped overseas.

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Because the free trade policies aren't the root of the problem (ie inequality). As given enough time, global free trade policies should lead to income/wealth equalizing across the globe. Rather its unequal access to credit, and its costs, which is the real engine/cause of inequality. US has the money printer to the world's largest reserve currency, and the government as well as those who are directly subsidized by it, are those who benefit greatest. You'd be rich too, if the government printed and handed you $50 billion and didn't do the same for anyone else.

I don't think this is at all guaranteed by free trade. You could have one country stuck in a rut where they're exporting only raw goods, and they have to buy everything from a (smaller) country making more advanced goods and selling them back. Of course, the balance has to even out, but it the money is spread between more people on one end then it doesn't mean they'll be as well off as the other country.

No, that's wealth equalizing. Raw goods moving from one country to another, means equalizing those raw materials across the globe. That is, those materials are not all concentrated in one country and forgone in another (inequality), but now spread more equally between the two countries. Same for advanced goods.

But you're not wrong, the real crux of where the inequality happens is in the bond between people - represented by money - which is nothing but an IOU, a promise of a favor. There's a reason why 2 nations are often leery about what currency to trade in, as it can easily be manipulated for unfair advantage.

I don't think currencies work the way you seem to be implying. While there are certainly economic advantages to being the currency everyone trades in (in particular for your ability to finance your way out of a recession with less impact on your currencies value), I don't think it is the source of any long term difference in economic strength, this has more to do (imo) with government policies and such. See e.g,. the wikipedia article on the resource curse.

Well no, economic strength is really a matter of labor productivity, and I do not disagree in that the difference stems from government policies, I am not sure what statement I said makes you think I disagree?

The OP questioned people's stances on wealth inequality and free trade, implying that the growing inequality stems from free trade policies. This is understandable from solely an American perspective, but globally and economically speaking, this is untrue. My argument is that it's rather government policies around credit (and its costs (ie taxes)) which fundamentally drive economic inequality.

Ah okay, I think I misinterpreted what you were saying.

That's overly simplistic. In the Apple scenario, it enriches the partners in the other countries (eg Foxconn), many retailers worldwide, and employees and shareholders. The latter might not be American. Many firms are multinational with money flying in all kinds of directions, even friendly governments.

So, what you say is correct in some ways. Some do get more leverage while others jobs are shipped overseas. Who is getting leverage is every party benefiting from these arrangements. Interesting enough, that includes companies in U.S., South Africa, and China.

I think the idea is that with some wealth redistribution (taxes) free trade allows domestic companies to bring in larger revenues which would contribute to better education (healthcare, infrastructure etc). Then the idea is that we don't have domestic sweatshops, Nikes would continue to be made cheap offshore and the country's population could benefit from better education which would contribute to better innovation and better quality jobs

  larger revenues which would contribute to better education (healthcare, infrastructure etc)

Where do you see larger revenues going besides to shareholders? If anything we've seen the opposite of better education/healthcare for the general public.

> I think the idea is that with some wealth redistribution (taxes) free trade allows domestic companies to bring in larger revenues which would contribute to...

> Where do you see larger revenues going besides to shareholders

The state takes a much larger share of your salary than the shareholders do, so no you are wrong here. Most money do not go to shareholders, it goes to the state taxes to fund programs and worker salaries, increasing those is a good thing.

  The state takes a much larger share of your salary than the shareholders do

Looking at my state taxes vs my consumer spending right here in the banking app shows otherwise.

You can support both. Most people concerned about inequality are usually in favour of some sort of wealth tax. It's a tax on individuals, not corporations.

It's more like a tax on hoarding.

> It's interesting to me that people worried about wealth inequality are normally also very supportive of free trade policies.

Huh, I’ve had the exact opposite experience, and now I’d love to talk to someone who holds the beliefs you described.

Not Bernie, but we know what happened to him when he tried to change things.

Correction: the people who pretend to be worried about wealth inequality are very supportive of free trade policies. It's just something they are supposed to say at fancy parties.

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