Category: Politics, Economics & Current Affairs

Hey, foreigners! Want some money?

I had this brainstorm as I was walking to work through the snow, listening to NPR about the newly passed tax bill in the US Congress. So here's a rare 2nd blog post for this day.

I have seen plenty of discussion of the way the new tax "reform" bill is essentially a wealth transfer from the poor and middle class to the wealthy. What seems less commonly commented upon is that it also will be a wealth transfer from US citizens to non-US citizens. This is remarkably dissonant with the Republican platform. I wonder what's going on.

Let's think about it. Who holds US equities? Who are the owners of stock in US companies? Some brief googling found numbers from 2015, that stated that foreign ownership of US equities was 21%. While this may be not exact, it hardly seems that far off, either.

The point would only be – that means 21% of the huge corporate tax break is benefitting wealthy non-Americans. Since the tax cuts are being financed by losses to government spending or by government debt, under best-case scenarios, or, by eventual higher taxes on US workers under darker scenarios, it becomes irrefutable that what the tax bill represents is not just a wealth transfer from the middle class (and poor) to the wealthy, but from Americans to foreigners.

Is that what they want? I can't imagine they're really so ignorant as to not realize that. Who are the international wealthy who own all these equities? Russian oligarchs, Saudi princes, China's party-member nouveau-riche.

Interesting, right?

Further, to the extent the tax bill is being financed by increased government debt, we need to also ask, who holds US government debt? One quick google search showed me that as much as half of US debt is held by foreigners. Now, to the extent that that debt is… debt, it's not really an asset transfer. But debt-holders are acquiring access to streams of future US revenue, in the form of interest payments on the debt (which come from taxes, right?), so again, this boils down to a wealth-transfer from US coffers offshore. Who are these US debt holders? #1: China. #2: Japan. The Cayman Islands is high on the list – which is just a proxy for people who are rich but don't want you to know about it. You get the picture.

They say this is going to help the US economy, right? How? Even if there's trickle-down (which is of course empirically questionable), it seems that a large chunk will be trickling into other countries' economies.

Indeed, to the extent that super-wealthy South Koreans (e.g. the Chaebol families, such as the owners of Samsung or Hyundai) hold US equities or debt (which I'm sure they do), I may benefit more from this tax plan as a resident of South Korea than I do as an American citizen.

And here's the snow I walked through.

There's been a major earthquake in Mexico City, 32 years to the day after the 1985 quake. I didn't experience the 1985 earthquake, but I moved to Mexico City in January, 1986, and the city was still full of rubble and broken buildings at that time. I experienced a major delayed aftershock during my first months there, which was a bit scary.

Now, I read through the news and see buildings with addresses that could very well be places I visited during my time living there. I'm not well in touch with anyone from that period of my life, but I hope they are OK. The Delegación Benito Juárez ("delegación" is like a borough in NYC or a 구 [gu] in Seoul) was apparently particularly hard-hit. My recollection is that that same delegación was also hard-hit in the 1985 event – I think it's related to the underlying geology combined with the age of the neighborhoods – the buildings are in the majority low-rise (5-10 story) apartment buildings built during the city's rapid growth in the 1930's-1950's. They're old, poorly built, crowded, and not well-maintained. Benito Juárez is working class.

When I lived in Mexico City, I used to take the subway to random subway stations throughout the city and then walk home (often 5-10 km distance). I'm sure I've walked many parts of Benito Juárez – the subway station names are intimately familiar to me, especially along line 3 (olive green): Etiopía, División del Norte, Coyoacán… 

For nostalgia's sake, here's a rather bad picture of me in the garden at Leon Trotsky's house (now a museum), which happens to be right on the southern boundary of Delagación Benito Juárez. I visited there with my dad in 2007. Maybe that rickety brick tower fell down?

I very much love Mexico City. In many respects, it remains my favorite city in the world. So I feel very sad.

[daily log: walking, 7km]

I have been wondering, since the election of Moon Jae-in in May, if the new president would attempt to resurrect the "Sunshine Policy" toward North Korea. Given the changed political context, both with a less sympathetic international regime (i.e. populism and resurgent nationalism in various countries) and with the North's nuclear and ICBM efforts, I don't quite see how this would work.

His recent speech given while in Germany is short on details (of course), but it does seem to outline a return to his party's roots as established by Kim Dae-jung and Roh Moo-hyun from 1998-2008. The one major policy aspect I most question is his focus on reunification. I should think that emphasizing reunification – especially on the German model – would be more likely to annoy the North than encourage it. It's not like the German reunification played out as if between equals. But I suppose Moon was sincerely trying to adapt his message to his audience, in this case, and reflecting that post-Soviet 1990s moment that was undoubtedly formative for him, personally.

[daily log: walking, 11km]

Yesterday after working in the morning, I took the subway into Seoul and met my friend Peter. We hung out for a few hours.
There were a lot of protests going on in downtown Seoul. Along Jong-no (the ancient, main east-west drag in downtown Seoul), we saw these protesters and a very disproportionate number of police.

I guess some are protesting about the president’s impeachment. Others are protesting the endemic corruption that the president’s impeachment seems to represent. There will be elections in about 6 weeks, so some people are protesting just because it seems like a good time to protest. It’s part of Korean culture, to a certain extent.
The group above is “leftish” – the red banner with yellow letters, on the right, reads 노동자연대 [nodongjayeondae], which means “Workers’ Solidarity.”
[daily log: walking, 1km]

98 years ago, today, Korea declared independence from Japan, which had imperialistically annexed the country 9 years prior, in 1910. There were also a lot of Koreans in positions of power who felt they benefited from Japanese control, and the Japanese took increasingly draconian measures to maintain their control of the country, eventually attempting complete ethnocide, banning the Korean language and Korean indigenous culture. This effort was cut short by Japan's loss to the Allies in 1945. So the Koreans have an "Independence Day" on March 1st, and a "Liberation Day" on August 15th. 

[daily log: sitting independently]