I agree with the article's conclusion, but not necessarily its premise. Not sure "Hauser's Law" stands up, or is it just statistical coincidence?
But yes, raising tax rates can certainly decrease tax yields. Take one of my closest friends. He's 28 now. He's a college dropout, and self-made millionaire as of age 24. Amazing guy. He was grossing about $800,000/year in his age 24/25/26 years. He was netting out mid/low six figures, and paying $50,000-$150,000 each year in various taxes. Working (no kidding) 80+ hour weeks. Often more.
I've seen people cite the top marginal tax rate as being in the 90% range post WWII. But mobility has increased so much since then. My friend is an incredibly resourceful dude, as you can imagine. He's a good person. America wants him here, or at least should. But if the government now wanted, after writeoffs, interest deduction from taxes, etc, say... $400,000 per year from him - he'd be long gone. There's enough countries where you can get a "welcomed exceptional people" visa by putting enough money in the bank, or a resident's visa by buying a property. Dubai being one such place.
So yeah, he'd be long gone if the government wanted to tax him more. Now, I can't speak to whether that's fair, or right, or if he's neglecting his patriotic duty by not being willing to stick around in the USA even if it wasn't a smart move for him financially. But it's the way it is. He grits his teeth and pays what he has to because he reckons he'll make more money here doing it that way. If that were to change, I reckon I'd be visiting him in Hong Kong, Dubai, or wherever else pretty fast. He and I both travel pretty regularly, and both of us have lived abroad some. Heck, I'd probably leave if taxes got high enough too.
As an American citizen, you are taxed globally. Now, you may think that you can simply renounce your US citizenship, burn your passport and call it a day, but as of 1986 the IRS is able to come after you for taxes for up to 10 years after renunciation of citizenship. In addition, tax information is now shared with INS, so you can be barred entry from the US or end up getting carted off to somewhere you don't want to go if you don't have all of your ducks in a row.
Perhaps you're thinking of starting an offshore company, and keeping your money there. Well, you've got to file a special form each year with the IRS for each entity of this sort, as they are known as "Controlled Foreign Corporations." Failure to provide the IRS with this information once again causes you to run afoul of US laws, which once again puts you at risk of punishment from the country that is globally known as "the world's policeman."
You have to remember that you are a citizen of the world's smartest country. They have pretty much thought of everything.
The global taxation feature of the US code is a double taxation on income, as you typically pay taxes in the foreign jurisdiction as well (There are tax treaties that reduce this double taxation in many jurisdictions, but only to a certain amount). It also applies to US businesses that operate globally and is a major reason so many multinationals move their headquarters offshore. The US, I believe, is one of only two countries in the world that taxes citizens globally, the other being Israel.
That's definitely not the case anymore. Canadians have to pay taxes on world-wide income unless they can demonstrate they have "severed ties" with their Canadian residence. Working abroad for a year or two in an expat job doesn't cut it.
More and more countries are moving towards world-wide taxation, unfortunately.
>you may think that you can simply renounce your US citizenship, burn your passport and call it a day, but as of 1986 the IRS is able to come after you for taxes for up to 10 years after renunciation of citizenship.
Actually, they can only do this if you give up your passport for tax purposes. If you have more than $2 million in assets then it is automatically assumed you are giving up the pass for tax reasons, otherwise it shouldn't be a problem.
> In addition, tax information is now shared with INS, so you can be barred entry from the US or end up getting carted off to somewhere you don't want to go if you don't have all of your ducks in a row.
This will be my biggest worry if I end up giving back my passport. Will the border patrol decide that anyone who is "stupid" enough to give up a US passport must be a terrorist? :)
>You have to remember that you are a citizen of the world's smartest country. They have pretty much thought of everything.
Ah, I expected someone to make this comment eventually. It's true that the United States' tax code is the only one in the world that sets tax on its citizens living in foreign countries, transacting business in foreign countries, with foreign citizens, foreign suppliers, doing business with no connection to the United States. Brits in particular have a good laugh at our international tax code. They simply don't believe it when I try explaining it to them.
Anyway, as someone that knows quite a few expats and international businesspeople - practically speaking, it doesn't always go down like you say.
There is a standard expat deduction -- I want to say it's something like $72,000 per year. If you make less than that, you don't have to pay anything. "Quite a few expats and international businesspeople" who make more money, and hide it, are constantly getting in trouble -- see, for example, the recent move with the US against UBS. It's becoming harder with every passing day to flout the rules, so it's really a lot better for people to design their lives with the rules in mind.
And we're not the only country - there's always Bangladesh!
It's $80k/year. Anything over that is taxed, but at the higher bracket. That is, if you make $85k, the $5k isn't taxed at the 0-25k (or whatever it is) bracket, but the one that $85k is in.
If you would still have to pay after this deduction you can forfeit the $80k deduction and use some other form. I don't know much about the other form, only that it's incredibly complex and changes enough every year that if you live in a foreign country you'll simply have to pay a tax guy to fill it out. I've been making over $100k/year since I left the states (a year after that, actually) and I haven't owed any U.S. taxes yet.
Well the easy way to do this is to start a foreign corporation (say Dubai) As long as companies are doing business with the foreign corporation (which you are an employee of), you won't have to pay taxes on that amount- you will only pay taxes on the salary that your Dubai corporation pays you.
However, if you ever try to move the money to the United States, you're screwed. The moment you transfer the money from Dubai Bank and Trust to Bank of America, you'll owe taxes on it.
So, the easy way to avoid paying taxes is to have the foreign corporation, and make everything you purchase overseas a business expense.
This doesn't work. You still have to report your holdings in the company to the IRS as a CFC, regardless of whether the company generates a profit / pays you income / etc. This, of course, puts a red flag on you, which leads to a higher chance of being audited, which thus would cause the IRS to go over each and every transaction from which you benefited (meaning, if the company bought a car and you used it for personal use; if the company bought a plane ticket which was for a trip for which a portion of time was spent on non-work-related leisure, etc) to see where it can be counted as income for which you are liable.
You can, of course, keep a foreign company, file the CFC with the IRS, and keep an accountant on hand to keep the balances separate; there are plenty of people who do this. If done properly, however, it is somewhat of a pain in the ass, and only enjoyable if you're an obsessive-compulsive tax-avoider like John Malone. Remember, life is short, time is money, and money is meaningless once you have enough of it.
so essentially, your argument is that it DOES work, but it's just a huge pain in the ass.
I agree whole-heartedly with that- but the bottom line is it does work- you just have to keep everything separate (which is really not that big of a deal).
And the easy to avoid reporting it as a CFC is to not have it be a CFC. If you have a brother/relative from another country, you can each have 50%, and voila! it's not a CFC.
It's becoming harder with every passing day to flout the rules, so it's really a lot better for people to design their lives with the rules in mind.
For some reason that reminds me of the phrase "the tighter you squeeze your grip, the more that will slip from your fingers"
E-gads! Now I'm quoting Star Wars!
But really, countries can make all the rules they want. Getting every other country on the planet to enforce quirky U.S. Tax laws is more of a wet dream than reality. It reminds of Thomas Paine, who was put on trial in absentia by authorities in Great Britain who were also tightening their grip. They charged him with libel.
""If, to expose the fraud and imposition of monarchy . . . to promote universal peace, civilization, and commerce, and to break the chains of political superstition, and raise degraded man to his proper rank; if these things be libellous . . . let the name of libeller be engraved on my tomb""
As far as I'm concerned, you can say the thing about "unpatriotic" tax evasion by rich people choosing to move away. This country was founded on a tax revolt, and trying to tax people for leaving what they feel to be an overly burdensome system is the height of bureaucratic arrogance.
Good points Numair - also probably pretty useful to people who don't know the law, deductions, exceptions. I know a lot of it off the top of my head but I think we've built a better thread together.
As for me, I've never tried to slough off my taxes because I've wanted to show the income to improve credit and be able to get bank loans and show track record later. I was putting the view out that higher taxes could equal lower yields, which is, like, a doubly bad thing. Certainly, the IRS/INS duo means something. An American renouncing and not paying taxes they know about means you really can't come back, which is ugly. If you don't like living here, there's still some really amazing places here worth coming back to every so often. I really root for our government, partially because I live here right now, and partially because of some latent patriotism going on. If taxes went up and yields went down, I'd really be shaking my head.
Anyways, cheers for having the international tax discussion with me, hope everyone can learn a thing or two from it.
Agreed, and I feel the exact same way. Hopefully some of what has been outlined here will help those who come across this thread and start thinking of strategies to "get out of it." You really can't, and I agree that you really shouldn't try. Love your country enough to openly criticize it, and try to find a way to make it better.
We're still the best country in the world, which is plainly evident once you've spent enough time running around the world. Yeah, it's somewhat ridiculous that it costs 45% of your income (and rising) to have a California license plate and a US passport, but there's something enjoyable about the notion of being "too rich to care," which is likely to come into vogue if taxes go up; the highly-taxed wealthy in Sweden and Denmark are examples of what I'm talking about.
With all due respect, I disagree. Life is about you and the people you care about (which could be the whole world, but generally isn't). IMHO, you don't owe anything to some country you happen to be born in. They should be treated exactly like a business (as far as is practical of course): i.e. if you can get a better deal somewhere else, I would take it. (note: "better deal" doesn't just mean lower taxes, there are many issues to consider)
>We're still the best country in the world, which is plainly evident once you've spent enough time running around the world.
I've spent a few years out of the U.S. and I strongly disagree. The fact is, I disagree with the idea of a "best country in the world". I think which one is best for you depends on what you want.
> We're still the best country in the world, which is plainly evident once you've spent enough time running around the world.
Sure, the US is the best country in the world... unless you like democracy, equality, high standard of living, low rate of crime and corruption, universal access to high-quality education and medical care, and civil rights.
The list of countries that score above the US on those metrics is very long, including a healthy chunk of the EU, non-EU European nations and Scandinavian states, and major former British colonies (Canada, Australia).
I'm an American who has "spent enough time running around the world" to see what a farce this is, and I've settled in a non-US country which is, in my opinion, vastly superior in every way but shopping and the costs of setting up a business and the friendliness of waitstaff.
I feel almost exactly the same [1], and I too would love to have a reasoned, non-emotional debate about this with someone to see if I am indeed missing something. But I think lionheart is correct that it's probably not realistic. I think pg gives a good explanation as to why this is the case in [2] and I find this unfortunate. If you can't see any flaws in what you have, how can it be fixed?
[1] Well, actually I'm not convinced setting up a business is that much more expensive if at all. It depends on living expenses. Getting investors is harder, but the trend seems to be going away from investors anyway.
I'm also not convinced on shopping. The selection is obviously better in the U.S. but all the places I've lived in the U.S. seem to have utterly abandoned quality in favor of "cheap". The worst of these for me is the food.
Patriotism is not something you're going to have a reasoned debate on. Also, I upvoted you to "make you whole", and you got downed again. In this case, it's not likely about the quality of your arguments/discussion.
One of the more insightful Overcoming Bias pieces I've read:
"Politics is an extension of war by other means. Arguments are soldiers. Once you know which side you're on, you must support all arguments of that side, and attack all arguments that appear to favor the enemy side; otherwise it's like stabbing your soldiers in the back - providing aid and comfort to the enemy. People who would be level-headed about evenhandedly weighing all sides of an issue in their professional life as scientists, can suddenly turn into slogan-chanting zombies when there's a Blue or Green position on an issue."
Small point: Dubai is finished. It is bankrupt. It was a classic boomtown. All of the building was done on debt. Foreigners are leaving their cars at the airport, flying out, so that they do not end up in debtor's prison (yes, Dubai has debtor's prison). Not exactly friendly to entrepreneurs - take a risk, take on some debt, and land in jail.
Every major country is going to have to spend to stop from falling into complete depression. Taxes will be higher everywhere. And the US will likely get through this crisis better than anywhere else. Having the reserve currency has its benefits after all. I really do not think going somewhere else to avoid higher taxes will make sense in the future.
The euro??? The euro has a much, much better chance of ceasing to exist than it does of replacing the dollar as the reserve currency. Countries like Spain and Italy that are near depression will have huge incentives to leave the euro so they can conduct their own monetary policy. If Eastern Europe is not bailed out before it goes bust, then more Western European banks will go bankrupt - and many countries in Europe are too small to bail out their banks. There will be immense pressure on the eurozone countries to leave the monetary union.
In the land of the blind, the one-eyed man is king. The dollar does not look good, but compared to the euro or the yen, it looks great. We don't have to worry about losing reserve currency status anytime soon. We just need to figure out what to do with insolvent banks.
The banks are insolvent. Mortgages and auto loans and credit cards are all going bust. There is nothing panic driven about the depressed value of those assets. Studies they've done on CDOs show that they are worth even less than what the pessimists projected (30 cents on the dollar for super senior tranches and 5 cents for mezzanine).
If this were a matter of illiquidity, the massive liquidity the Fed has injected into the system in the last six months would have ended the crisis.
Again, I tend to agree with you, although associating the illiquidity opinion with TF is just an unnecessary swipe. Much smarter people than he support the illiquidity theory, which was what I intended to point out.
As much as I would like to see the end of the EU (or at least the Euro), Spain and Italy can't leave; they can't afford to. Imagine what the speculators would do to a new currency Spain/Italy introduced after not being able to survive in the EU.
If anyone leaves it's going to be France or Germany.
>The dollar does not look good, but compared to the euro or the yen, it looks great.
There are more currencies out there then these. The British pound seems to be down at the moment, but I expect it to recover. The swiss franc isn't looking bad either. Personally I expect the dollar to go down, but there are way too many variables out there to actually bet on it.
Oh, they'll switch. I don't know if it'll be to the Euro, but they'll switch. Right now our policymakers are throwing the kitchen sink at stopping asset price deflation. Employing inflationary policies to counter both moderates the severity, and delays the turn. But since we're in crisis mode, we're not doing any planning around how we're going to remove the inflationary policies when the time comes.
Combine that with massive fiscal deficit, and you have a recipe for inflation and dollar devaluation. It's played out exactly this way many times in many parts of the world throughout history.
Here's the thing: everyone else is doing the exact same things. And we're starting from a better place than most everyone else (lower government debt-to-GDP ratio). All currencies will likely lose value against real assets. But as far as currencies go, the dollar will probably do the best.
I think this is becoming more and more true as globalization reduces the sedentary habits of business. when you're selling things over the internet, what incentive do you have to stay in a highly taxed region?
Personally I would like to see things get to a point that people switch countries as often as they switch jobs. Anything that would force countries to compete with benefits vs. costs. Many people talk about market forces driving inefficiencies out of the market place. I don't think the Government should be so shielded from this. I would like to see the government be the best it can possibly be and no government is anywhere near that atm IMO.
I'm living in a country now that has four national languages. None of which are English, yet I know several people who've lived here for years and can't speak a word of any of those languages. English is international these days and will get you much much further then you might think.
I live in Switzerland, yes, but I have Scottish college who worked previously in Germany and several friends from South Africa who've worked all over Europe. None of them can get much past "ja" or "nein".
The thing to remember is that, outside of the U.S., most companies of any size are international. And once they're international the main language is probably going to be English because that will be the most accessible middle ground.
Comments
I agree with the article's conclusion, but not necessarily its premise. Not sure "Hauser's Law" stands up, or is it just statistical coincidence?
But yes, raising tax rates can certainly decrease tax yields. Take one of my closest friends. He's 28 now. He's a college dropout, and self-made millionaire as of age 24. Amazing guy. He was grossing about $800,000/year in his age 24/25/26 years. He was netting out mid/low six figures, and paying $50,000-$150,000 each year in various taxes. Working (no kidding) 80+ hour weeks. Often more.
I've seen people cite the top marginal tax rate as being in the 90% range post WWII. But mobility has increased so much since then. My friend is an incredibly resourceful dude, as you can imagine. He's a good person. America wants him here, or at least should. But if the government now wanted, after writeoffs, interest deduction from taxes, etc, say... $400,000 per year from him - he'd be long gone. There's enough countries where you can get a "welcomed exceptional people" visa by putting enough money in the bank, or a resident's visa by buying a property. Dubai being one such place.
So yeah, he'd be long gone if the government wanted to tax him more. Now, I can't speak to whether that's fair, or right, or if he's neglecting his patriotic duty by not being willing to stick around in the USA even if it wasn't a smart move for him financially. But it's the way it is. He grits his teeth and pays what he has to because he reckons he'll make more money here doing it that way. If that were to change, I reckon I'd be visiting him in Hong Kong, Dubai, or wherever else pretty fast. He and I both travel pretty regularly, and both of us have lived abroad some. Heck, I'd probably leave if taxes got high enough too.
As an American citizen, you are taxed globally. Now, you may think that you can simply renounce your US citizenship, burn your passport and call it a day, but as of 1986 the IRS is able to come after you for taxes for up to 10 years after renunciation of citizenship. In addition, tax information is now shared with INS, so you can be barred entry from the US or end up getting carted off to somewhere you don't want to go if you don't have all of your ducks in a row.
Perhaps you're thinking of starting an offshore company, and keeping your money there. Well, you've got to file a special form each year with the IRS for each entity of this sort, as they are known as "Controlled Foreign Corporations." Failure to provide the IRS with this information once again causes you to run afoul of US laws, which once again puts you at risk of punishment from the country that is globally known as "the world's policeman."
You have to remember that you are a citizen of the world's smartest country. They have pretty much thought of everything.
The global taxation feature of the US code is a double taxation on income, as you typically pay taxes in the foreign jurisdiction as well (There are tax treaties that reduce this double taxation in many jurisdictions, but only to a certain amount). It also applies to US businesses that operate globally and is a major reason so many multinationals move their headquarters offshore. The US, I believe, is one of only two countries in the world that taxes citizens globally, the other being Israel.
That's definitely not the case anymore. Canadians have to pay taxes on world-wide income unless they can demonstrate they have "severed ties" with their Canadian residence. Working abroad for a year or two in an expat job doesn't cut it.
More and more countries are moving towards world-wide taxation, unfortunately.
>you may think that you can simply renounce your US citizenship, burn your passport and call it a day, but as of 1986 the IRS is able to come after you for taxes for up to 10 years after renunciation of citizenship.
Actually, they can only do this if you give up your passport for tax purposes. If you have more than $2 million in assets then it is automatically assumed you are giving up the pass for tax reasons, otherwise it shouldn't be a problem.
> In addition, tax information is now shared with INS, so you can be barred entry from the US or end up getting carted off to somewhere you don't want to go if you don't have all of your ducks in a row.
This will be my biggest worry if I end up giving back my passport. Will the border patrol decide that anyone who is "stupid" enough to give up a US passport must be a terrorist? :)
>You have to remember that you are a citizen of the world's smartest country. They have pretty much thought of everything.
I hope this line is joking.
> Will the border patrol decide that anyone who is "stupid" enough to give up a US passport must be a terrorist?
As an American who plans to give up her citizenship at the very first possible moment, that is my fear as well.
Ah, I expected someone to make this comment eventually. It's true that the United States' tax code is the only one in the world that sets tax on its citizens living in foreign countries, transacting business in foreign countries, with foreign citizens, foreign suppliers, doing business with no connection to the United States. Brits in particular have a good laugh at our international tax code. They simply don't believe it when I try explaining it to them.
Anyway, as someone that knows quite a few expats and international businesspeople - practically speaking, it doesn't always go down like you say.
There is a standard expat deduction -- I want to say it's something like $72,000 per year. If you make less than that, you don't have to pay anything. "Quite a few expats and international businesspeople" who make more money, and hide it, are constantly getting in trouble -- see, for example, the recent move with the US against UBS. It's becoming harder with every passing day to flout the rules, so it's really a lot better for people to design their lives with the rules in mind.
And we're not the only country - there's always Bangladesh!
It's $80k/year. Anything over that is taxed, but at the higher bracket. That is, if you make $85k, the $5k isn't taxed at the 0-25k (or whatever it is) bracket, but the one that $85k is in.
If you would still have to pay after this deduction you can forfeit the $80k deduction and use some other form. I don't know much about the other form, only that it's incredibly complex and changes enough every year that if you live in a foreign country you'll simply have to pay a tax guy to fill it out. I've been making over $100k/year since I left the states (a year after that, actually) and I haven't owed any U.S. taxes yet.
Well the easy way to do this is to start a foreign corporation (say Dubai) As long as companies are doing business with the foreign corporation (which you are an employee of), you won't have to pay taxes on that amount- you will only pay taxes on the salary that your Dubai corporation pays you.
However, if you ever try to move the money to the United States, you're screwed. The moment you transfer the money from Dubai Bank and Trust to Bank of America, you'll owe taxes on it.
So, the easy way to avoid paying taxes is to have the foreign corporation, and make everything you purchase overseas a business expense.
This doesn't work. You still have to report your holdings in the company to the IRS as a CFC, regardless of whether the company generates a profit / pays you income / etc. This, of course, puts a red flag on you, which leads to a higher chance of being audited, which thus would cause the IRS to go over each and every transaction from which you benefited (meaning, if the company bought a car and you used it for personal use; if the company bought a plane ticket which was for a trip for which a portion of time was spent on non-work-related leisure, etc) to see where it can be counted as income for which you are liable.
You can, of course, keep a foreign company, file the CFC with the IRS, and keep an accountant on hand to keep the balances separate; there are plenty of people who do this. If done properly, however, it is somewhat of a pain in the ass, and only enjoyable if you're an obsessive-compulsive tax-avoider like John Malone. Remember, life is short, time is money, and money is meaningless once you have enough of it.
so essentially, your argument is that it DOES work, but it's just a huge pain in the ass.
I agree whole-heartedly with that- but the bottom line is it does work- you just have to keep everything separate (which is really not that big of a deal).
And the easy to avoid reporting it as a CFC is to not have it be a CFC. If you have a brother/relative from another country, you can each have 50%, and voila! it's not a CFC.
It's becoming harder with every passing day to flout the rules, so it's really a lot better for people to design their lives with the rules in mind.
For some reason that reminds me of the phrase "the tighter you squeeze your grip, the more that will slip from your fingers"
E-gads! Now I'm quoting Star Wars!
But really, countries can make all the rules they want. Getting every other country on the planet to enforce quirky U.S. Tax laws is more of a wet dream than reality. It reminds of Thomas Paine, who was put on trial in absentia by authorities in Great Britain who were also tightening their grip. They charged him with libel.
""If, to expose the fraud and imposition of monarchy . . . to promote universal peace, civilization, and commerce, and to break the chains of political superstition, and raise degraded man to his proper rank; if these things be libellous . . . let the name of libeller be engraved on my tomb""
As far as I'm concerned, you can say the thing about "unpatriotic" tax evasion by rich people choosing to move away. This country was founded on a tax revolt, and trying to tax people for leaving what they feel to be an overly burdensome system is the height of bureaucratic arrogance.
Good points Numair - also probably pretty useful to people who don't know the law, deductions, exceptions. I know a lot of it off the top of my head but I think we've built a better thread together.
As for me, I've never tried to slough off my taxes because I've wanted to show the income to improve credit and be able to get bank loans and show track record later. I was putting the view out that higher taxes could equal lower yields, which is, like, a doubly bad thing. Certainly, the IRS/INS duo means something. An American renouncing and not paying taxes they know about means you really can't come back, which is ugly. If you don't like living here, there's still some really amazing places here worth coming back to every so often. I really root for our government, partially because I live here right now, and partially because of some latent patriotism going on. If taxes went up and yields went down, I'd really be shaking my head.
Anyways, cheers for having the international tax discussion with me, hope everyone can learn a thing or two from it.
Agreed, and I feel the exact same way. Hopefully some of what has been outlined here will help those who come across this thread and start thinking of strategies to "get out of it." You really can't, and I agree that you really shouldn't try. Love your country enough to openly criticize it, and try to find a way to make it better.
We're still the best country in the world, which is plainly evident once you've spent enough time running around the world. Yeah, it's somewhat ridiculous that it costs 45% of your income (and rising) to have a California license plate and a US passport, but there's something enjoyable about the notion of being "too rich to care," which is likely to come into vogue if taxes go up; the highly-taxed wealthy in Sweden and Denmark are examples of what I'm talking about.
With all due respect, I disagree. Life is about you and the people you care about (which could be the whole world, but generally isn't). IMHO, you don't owe anything to some country you happen to be born in. They should be treated exactly like a business (as far as is practical of course): i.e. if you can get a better deal somewhere else, I would take it. (note: "better deal" doesn't just mean lower taxes, there are many issues to consider)
>We're still the best country in the world, which is plainly evident once you've spent enough time running around the world.
I've spent a few years out of the U.S. and I strongly disagree. The fact is, I disagree with the idea of a "best country in the world". I think which one is best for you depends on what you want.
> We're still the best country in the world, which is plainly evident once you've spent enough time running around the world.
Sure, the US is the best country in the world... unless you like democracy, equality, high standard of living, low rate of crime and corruption, universal access to high-quality education and medical care, and civil rights.
The list of countries that score above the US on those metrics is very long, including a healthy chunk of the EU, non-EU European nations and Scandinavian states, and major former British colonies (Canada, Australia).
I'd love to have a reasoned debate over this.
I'm an American who has "spent enough time running around the world" to see what a farce this is, and I've settled in a non-US country which is, in my opinion, vastly superior in every way but shopping and the costs of setting up a business and the friendliness of waitstaff.
Come out, masked downvoter.
I feel almost exactly the same [1], and I too would love to have a reasoned, non-emotional debate about this with someone to see if I am indeed missing something. But I think lionheart is correct that it's probably not realistic. I think pg gives a good explanation as to why this is the case in [2] and I find this unfortunate. If you can't see any flaws in what you have, how can it be fixed?
[1] Well, actually I'm not convinced setting up a business is that much more expensive if at all. It depends on living expenses. Getting investors is harder, but the trend seems to be going away from investors anyway.
I'm also not convinced on shopping. The selection is obviously better in the U.S. but all the places I've lived in the U.S. seem to have utterly abandoned quality in favor of "cheap". The worst of these for me is the food.
[2] http://www.paulgraham.com/identity.html
Patriotism is not something you're going to have a reasoned debate on. Also, I upvoted you to "make you whole", and you got downed again. In this case, it's not likely about the quality of your arguments/discussion.
One of the more insightful Overcoming Bias pieces I've read:
http://www.overcomingbias.com/2007/02/politics_is_the.html
"Politics is an extension of war by other means. Arguments are soldiers. Once you know which side you're on, you must support all arguments of that side, and attack all arguments that appear to favor the enemy side; otherwise it's like stabbing your soldiers in the back - providing aid and comfort to the enemy. People who would be level-headed about evenhandedly weighing all sides of an issue in their professional life as scientists, can suddenly turn into slogan-chanting zombies when there's a Blue or Green position on an issue."
I got to say, "too rich to care" isn't quite the vibe I'm getting from the yanks I know right now ...
I think it's $85,000 and that's USD, which is, of course, a lot less than it used to be.
> world's smartest country
South Korea?
Small point: Dubai is finished. It is bankrupt. It was a classic boomtown. All of the building was done on debt. Foreigners are leaving their cars at the airport, flying out, so that they do not end up in debtor's prison (yes, Dubai has debtor's prison). Not exactly friendly to entrepreneurs - take a risk, take on some debt, and land in jail.
Every major country is going to have to spend to stop from falling into complete depression. Taxes will be higher everywhere. And the US will likely get through this crisis better than anywhere else. Having the reserve currency has its benefits after all. I really do not think going somewhere else to avoid higher taxes will make sense in the future.
You've just got to pray that everyone keeps using Dollars to buy/sell oil and doesn't switch to the Euro.
The euro??? The euro has a much, much better chance of ceasing to exist than it does of replacing the dollar as the reserve currency. Countries like Spain and Italy that are near depression will have huge incentives to leave the euro so they can conduct their own monetary policy. If Eastern Europe is not bailed out before it goes bust, then more Western European banks will go bankrupt - and many countries in Europe are too small to bail out their banks. There will be immense pressure on the eurozone countries to leave the monetary union.
In the land of the blind, the one-eyed man is king. The dollar does not look good, but compared to the euro or the yen, it looks great. We don't have to worry about losing reserve currency status anytime soon. We just need to figure out what to do with insolvent banks.
I agree with you, and wanted to add this Marginal Revolution post which is tangentially related. Are the banks insolvent or illiquid?
http://www.marginalrevolution.com/marginalrevolution/2009/03...
The banks are insolvent. Mortgages and auto loans and credit cards are all going bust. There is nothing panic driven about the depressed value of those assets. Studies they've done on CDOs show that they are worth even less than what the pessimists projected (30 cents on the dollar for super senior tranches and 5 cents for mezzanine).
If this were a matter of illiquidity, the massive liquidity the Fed has injected into the system in the last six months would have ended the crisis.
here's more: http://hedgedbet.blogspot.com/2009/03/friedman-toxic-assets-...
Again, I tend to agree with you, although associating the illiquidity opinion with TF is just an unnecessary swipe. Much smarter people than he support the illiquidity theory, which was what I intended to point out.
Fair enough on TF. But plenty of smart people also thought housing prices would never go down...
As much as I would like to see the end of the EU (or at least the Euro), Spain and Italy can't leave; they can't afford to. Imagine what the speculators would do to a new currency Spain/Italy introduced after not being able to survive in the EU.
If anyone leaves it's going to be France or Germany.
>The dollar does not look good, but compared to the euro or the yen, it looks great.
There are more currencies out there then these. The British pound seems to be down at the moment, but I expect it to recover. The swiss franc isn't looking bad either. Personally I expect the dollar to go down, but there are way too many variables out there to actually bet on it.
Oh, they'll switch. I don't know if it'll be to the Euro, but they'll switch. Right now our policymakers are throwing the kitchen sink at stopping asset price deflation. Employing inflationary policies to counter both moderates the severity, and delays the turn. But since we're in crisis mode, we're not doing any planning around how we're going to remove the inflationary policies when the time comes.
Combine that with massive fiscal deficit, and you have a recipe for inflation and dollar devaluation. It's played out exactly this way many times in many parts of the world throughout history.
Here's the thing: everyone else is doing the exact same things. And we're starting from a better place than most everyone else (lower government debt-to-GDP ratio). All currencies will likely lose value against real assets. But as far as currencies go, the dollar will probably do the best.
I think this is becoming more and more true as globalization reduces the sedentary habits of business. when you're selling things over the internet, what incentive do you have to stay in a highly taxed region?
Personally I would like to see things get to a point that people switch countries as often as they switch jobs. Anything that would force countries to compete with benefits vs. costs. Many people talk about market forces driving inefficiencies out of the market place. I don't think the Government should be so shielded from this. I would like to see the government be the best it can possibly be and no government is anywhere near that atm IMO.
...and learning a new language every few years isn't an inefficiency?
I'm living in a country now that has four national languages. None of which are English, yet I know several people who've lived here for years and can't speak a word of any of those languages. English is international these days and will get you much much further then you might think.
Switzerland? Or is there another?
I live in Switzerland, yes, but I have Scottish college who worked previously in Germany and several friends from South Africa who've worked all over Europe. None of them can get much past "ja" or "nein".
The thing to remember is that, outside of the U.S., most companies of any size are international. And once they're international the main language is probably going to be English because that will be the most accessible middle ground.