What are the means by which dollars produced in America leave the US and go to other countries? I can list a bunch of them -- I don't think my list is exhaustive, and would welcome your additions to it.
- We buy foreign-made goods -- e.g., Wal-mart goods made elsewhere
- We buy foreign-extracted natural resources -- e.g., oil
- Foreign aid
- War
- Remittances by foreign-born workers to their families overseas
- Interest on loans made by foreign lenders
- Return on capital to foreign investors in US business
- Rent paid to foreign owners of property in the US -- both on land itself (economic rent) and on buildings (more properly called interest)
- Profits
In the first case, foreign-made goods, we are paying for foreign labor, and some portion of what we pay lands in -- or at least passes through -- the pockets of the laborers who produced the product. (Where it goes after that depends on the arrangements in those countries.*)
In the second case, foreign-extracted natural resources, a portion goes into or at least through the pockets of laborers, but the bulk of it goes into either the personal portfolios of the countries' rulers or plutocrats.* (To the best of my knowledge, in no country does the oil revenue flow into anything that resembles the commons, as it does in Alaska, where a large share of revenue is used to pay for the costs of government and another large share goes into the Alaska Permanent Fund, which provides an annual dividend to every man, woman and child in Alaska, currently in the range of $1100 to $1700.
In the third case, foreign aid, it may seem that the aid goes to the people at the bottom of the income and wealth spectrum, but I suspect that it is ultimately people closer to the top of the pyramid who gain. Winston Churchill described, in 1909, the ways in which even charity for the poor benefits a particular class of our society.
War is a fourth way that funds get sent overseas. Some of the dollars go into corporate pockets** domestically -- those which produce arms, military supplies, provide services to the military -- and some go -- at least briefly -- into the pockets of our military employees.* But in the process, other countries' infrastructure and individual property gets damaged or destroyed, as well as lives -- ours and theirs -- being lost.
Remittances by foreign-born workers to their families overseas are another way in which US funds leave the country. People come here to work, leaving behind family members in countries where wages are much lower. They live frugally, often under conditions that most native-born Americans would reject, sharing rooms, even sleeping in shifts. They pay rent here, and send home as much of their earnings as they can manage.
Foreign investors frequently find that the US is one of the best places for them to invest, particularly when the dollar is weak. Their investment might be in the form of lending money here. The interest leaves the country.
Foreign investors also invest in other kinds of things in the US.
- They might, as an Australian company called MacQuarrie has done, buy up local water companies in the US, along with the land they owned.
- They might buy up a toll road in Indiana.
- They might buy companies that have leases to run one or more US ports.
- They might buy a choice site in Manhattan -- a single block, an acre worth $400 million to $1 billion -- with a business which provides some profits -- and continue to operate it, gathering relatively small profits, while they wait for the land to appreciate further.
In each of these cases, Americans end up paying economic rent -- payment for the use of the commons -- (land, water, right-of-way, ports) into the pockets of foreign entities. American taxes on economic rent are low, and the vast majority of economic rent stays in the pocket of whomever owns the resources, without regard to nationality or where that money goes. Much of it goes overseas, never to reappear in the US except to purchase more choice US urban land, or natural resources, or other assets which give their holders a command over the wages of others.
Does it make a difference whether American individuals, corporations, trusts, real estate investment trusts, pension funds own these kinds of assets, or foreign individuals, corporations, sovereign funds, trusts, own them?
Or is the real question whether such things should rightly be subject to privatization, or should their economic value rightly be treated as our common treasure, something we should subject to royalties or heavy taxation -- instead of taxing sales, or wages, or buildings, or gains on genuine investments in manmade capital?
* Whether it stays in workers' pockets depends on what happens to economic rent in that country. If it is treated as private treasure, as it is here, the flow is to those who own the land. They collect the economic rent, and treat it as their own windfall -- giving them the means to buy up more of it.
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