a lot of easy assumptions there

Reader comment on: Krugman on Millionaires' Money

Submitted by Drewv (Japan), Aug 10, 2010 00:42

"Most millionaires don't keep money in their mattresses." Maybe not a mattress but surely Swiss banks and offshore bank accounts are really attractive options. If I were a millionaire, that is what I'd do. "They spend it on cars and houses and private jets and yachts." Probably German and Japanese cars (those are the finest, after all), and the jets and yachts are not necessarily made in America either. "They invest it in corporate stocks and bonds or in venture capital funds or in private equity funds or real estate partnerships that build businesses that create employment and growth." But again, not necessarily American ones. Asia is attracting the most investment. "They deposit the money in banks that make loans to businesses and homeowners." If the whole financial crisis proved anything, banking has become a lot more complicated than that. "The money isn't going to sit idle whether taxes are high or taxes or low; the only question is whether the money will be allocated by private individuals or by politicians." No, there are other important questions: where it will be spent, how it will be spent, when it will be spent. The politicians at least retain control over those factors. In the end, Krugman is still right. Keeping a public sector employee employed is a direct guaranteed benefit to the economy. Letting rich people pay less taxes is, at best, a throw of the dice and betting on low odds of return.

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The Future of Capitalism replies:

A lot of those German and Japanese cars are now made in America and sold by American auto dealers. And again, the money in the Swiss bank doesn't just sit there. CS and UBS have huge American operations that lend and underwrite in America. It's not a zero-sum game.

Other reader comments on this item

Title By Date
⇒ a lot of easy assumptions there
[w/response] [243 words]
DrewvAug 10, 2010 00:42
Trickle down strikes again!
[w/response] [97 words]
benjaminAug 9, 2010 21:26
Intro Econ [85 words]benjaminAug 9, 2010 21:47

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Mark my comment as a response to a lot of easy assumptions there by Drewv

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