Foreign Investment

Discussion in 'Economy' started by Wiseacre, Jul 6, 2011.

  1. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    The following is taken from or based on an op-ed in yesterday's WSJ, "America's Troubling Investment Gap". It's talking about how more US investment is gong overseas and less foreign investment in our economy is coming here. We're still getting a lot of foreign buyers (up to now) of our gov't treasuries and bonds, but not os much in our private sector.

    "Huge net inflows during the 1980s and 1990's helped finance the 25-year boom in jobs and broad-based prosperity from 1982-2007. Over that period, foreigners invested 6 trillion more in the US than American investors did abroad, according the the Bureau of Economic Analysis, most of it going into businesses."

    " In 2010, US investment abroad was $351 billion, $115 bilion higher than foreign invesntment here."

    "Since this weak economic recovery began in the middle of 2009, the US has lost more than $200 billion in foreign investment capital, which is the equivalent of approx 2 million jobs that don't exist here and are now located in China, Germany, India, and other places."

    Why? This is one reason why the GOP does not want to raise taxes on the rich or anybody else, it disincentivizes investment and economic growth. Money flows naturally to places where it can earn the most return, you don't have to like it but that's the way it is. Bitch about the unfairness of it all as much as you want, but you're going to have to prioritze your goals: Do you think the highest priority is fairness or is it creating more jobs and growing the economy? Lib/Dems say both, but it's mutually exclusive - something has to be at the top of your list.

    Taxes ain't all of it of course, the cost of compliance with regulations, energy costs, healthcare costs, and other factors influence job creation too. All of which IMHO we are not doing good enough at to be conducive to getting things going. The demand siders had their shot, it didn't work as well as it should have or was advertised. I think it's time to try a different tack.
     
  2. B. Kidd
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    B. Kidd Gold Member

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    One mitigating factor that may bring some investment back home is that natural castastrophes (like what happened in Japan recently) cause major disruption in the global supply chain causing multinationals to lose mucho money. Relocating a broader manufacturing base at home and/or closer to home makes more sound economic sense for those companies who have spread out their supply chains globally. Add corporate tax reform to this, and there is a strong argument for this being 'a new tack'.
     

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