
China’s New Silk Road: Implications for the US - istvan__
http://yaleglobal.yale.edu/content/china%E2%80%99s-new-silk-road-implications-us
======
contingencies
The US's post-WWII global dominance is dead. It has been eaten by changing
technology, changing political landscape, its own aggression, the natural
exhaustion of resources following the US-backed global expansion of unbridled
capitalism, and dynastic powers lurking and pulling strings within its own
political and economic sphere. The only question is, how fast will it adapt
and how vindictive will the rest of the world be over the next century. News
at 9.

~~~
igravious
As a European I would like to see Europe begin afresh to pull its weight as a
collective entity on the world stage. The first time Europeans went abroad was
as colonialists, the second as neo-colonial capitalists, next time it will
have to be as equals.

The cynic might point out that (geopolitically) Europe has no other choice but
to go abroad as equals. Europe has been eclipsed by its former American colony
in the West and the Middle Kingdom's re-ascendancy eclipses Europe to the
East.

Where does that leave Europe? Once the global engine of growth for ideas,
innovation, trade, you name it... Europe nowadays is looking a tad stale.

Economics: Europe needs to close down tax havens within European borders and
sphere of influence. Needs to negotiate a fiscal transfer framework to save
the € and work to make the € more of a global reserve currency, that means
fixing the € project so that the UK gives up the £. Implement a variant of the
Tobin tax.

Science: Europe needs to bulk up ESA and promote a private space industry.
Needs to double down on projects like CERN and ITER. Needs to get Galileo up
and running. Needs to invest more in nuclear and renewable power, wean itself
off coal.

Politics: Needs to re-make the UN security council. Needs to work harder
towards sorting out Israel/Palestine. Needs to disengage from NATO. The
accession of Turkey to the EU needs to happen soon.

Welfare: Needs to move Europe as a whole towards the Scandanavian model which
has shown itself to be fairer, more progressive, and more forward thinking.
Perhaps needs to experiment with basic income because tech automation seems to
be replacing jobs faster than they are being created.

~~~
tajen
I don't agree.

Once you've experienced the creation of a company, you realize that when a
company gives 25€ to an employee, 68€ was was given to the tax and 7€ to
people who help dealing with the tax complexity (accountants, lawyers,
inspections). Total 100€, the price the customer pays. And I think those 68€
are too much. So:

Tax Heavens: In Argentina you're not allowed to transfer your money abroad,
unless approved by the government. I call that a dictatorship. We must not do
the same. Tax heavens exist for a reason. We must rather fight tax complexity.
Complexity is a weight on every CEO, it's a hidden tax on every worker.

No to Tobin tax.

Science: Stop exploring the outer space. Let the money for each company/person
to hire more employees. When you're old but not disabled yet, don't you want
to hire an Au Pair to take care of your laundry? Our people needs money to pay
for their local jobs, not for space rockets.

Politics: Dismembering NATO and UN is not any kind of solution. We need our
own successful startups (I mean the size of Google and Apple) - Why wouldn't
we have those in EU? Then we can equally deal at a worldwide level, menace of
spying on the world's emails and businesses, or better, we can equally
negociate with US a worldwide non-spying treaty.

Welfare: The Scandanavian model has become a gimick. My flatmate in Australia
was born in Thailand on the countryside and at 22 he was making $1000 a week
as a waiter in a hotel. That's what I call: One person, one chance.

~~~
jacquesm
No company has to pay 68% employer wage taxes in Europe. I'm saying that as an
employer who has looked into this at some point to figure out if there was any
major advantage to running a company in one country or another, the bigger
differentiator is simply that in some countries wages are simply far lower
than in others.

Tax havens (not heavens) exist as a form of legal arbitrage and allow those
with lots of money to dodge taxes at the expense of those without and as such
are a real problem.

Nike and Google combined paid less tax in NL last year than I did, which is
quite wrong given their massive turnover and profits.

[http://qz.com/240511/heres-how-much-tax-google-paid-on-
its-e...](http://qz.com/240511/heres-how-much-tax-google-paid-on-its-european-
operations-last-year/)

Not exploring outer space is the equivalent of shutting down one of the more
productive avenues of basic research, if you took away all of the spin-offs of
space research from your house it would dramatically change your quality of
life.

Your NATO/UN start-up link makes no sense, the EU governments are _very_ much
complicit in the spying scandal.

The Scandinavian model can only be compared to other models if you wish to
criticize it meaningfully, your anecdote is meaningless, a better alternative
will certainly be given more consideration.

~~~
tajen
VAT 20%, Social contributions 46%, income tax 10-15%, residence tax 5%.
Mandatory accountant (2000€/year), corporate yearly registration fees,
corporate local tax. Assuming no expense at the company level, the employees
can buy 25€ of new products.

Total burden: 75€ out of 100€ sales (since some tax are compounded and others
have an excess/floor system). Did I make my point? I know you'll keep arguing,
but please reckon first that the 75% burden is a fact.

~~~
true_religion
VAT if you're paying it is a tax that adds to input costs.

Income tax is a tax calculated over profit.

You can't just sum the percentages together as a simplification.

It's (Sales Price - (Cost of Goods * VAT + Cost of Goods))*Income Tax Rate = Y

~~~
tajen
Correct, and when you do that, you get 68%. Make the calculation yourself:

100€ sales,

17€ VAT,

15€ various corporate tax and mandatory accountant in average,

No other corporate spending (no office obviously),

Remains 68€ to pay the employee. 31€ for social contributions.

Net salary 37€.

Employee pays 4-6€ income tax.

Employee is left with 32€.

Of course if you take a partial lifecycle, like "The income tax is only
10-15%", it looks like nothing. You need to take the full lifecycle of the
money, from the customer to the company and back to the employee.

~~~
true_religion
In the USA, sales-tax is deductible from your income so you're not required to
submit to double taxation.

In Europe, is VAT not tax-deductible?

My initial reaction was "wait.. no one looks at the full lifecycle of money",
but after that first double-take, I'm starting to think that you might be onto
something.

~~~
jacquesm
It's complete poppycock and mixes corporate taxes and private income taxes.

If you want a 'full cycle' accounting then you'd have to know what the money
gets spent on, for instance, if you buy fuel you'll pay a lot more tax
depending on which country you are in (or very little, that's how the rates
differ).

If you really want to do 'fully cycle' taxation you're going to conclude that
_all_ money eventually ends up in the tax coffers but clearly that's not how
it works because people actually end up with certain goods and services.

An example:

A business turns over 10M, makes a net profit of 20%, so 2M. Depending on the
country it will pay roughly 35% corporate income tax, so 1.2M left. That 1.2M
can then be paid out as dividends @ (again, depending on the country) 10% to
25% dividend tax, so the individuals owning the stock will receive anywhere
from 800K to 1.1M.

So on that level you're paying anywhere from 45 to 55% tax.

If you're earning a wage then the above does not apply (because for a company
wages are a cost), so the company will pay your social security, corporate
component, quite a bit of which is your pension, social security and various
healthcare components (depending on the location). You could see these as
'taxes' but in fact they will benefit you in a very direct way.

Your income tax will be anywhere from 25% to 50% depending on your country of
origin and your income level (assuming staggered scales).

After that the situation for both forms of income is roughly the same (we're
now on the expense side of things):

If you spend that money to buy a house VAT does not apply.

If you spend that money to buy food then VAT will be typically a low rate (4
to 10%, again, depending on the country).

If you use it to buy consumer goods, you'll be paying 15% to 25% VAT depending
on the location.

If you use it to buy energy or fuel you may end up paying no VAT to a terrible
amount depending on your location.

VAT is typically _not_ tax deductible in the EU, but to avoid double (or
n-fold) VAT taxation companies can in fact reclaim their VAT.

VAT is an end-user tax and the purpose of it would be totally defeated if it
were deductible for private individuals.

Note that in many countries VAT was instigated after WWII as a 'rebuilding
tax' that had a 15 year sunset clause, but (of course...) the money was too
good and the tax remained (and climbed substantially in %age).

~~~
tajen
Good pount that there are different flows, like buying a house where there is
no VAT.

Note that dividends are taxed at the corporate level (IS, 15.5%), then the
recipient must pay his income tax on top. The rest of your calculations is
correct.

~~~
jacquesm
> Note that dividends are taxed at the corporate level (IS, 15.5%), then the
> recipient must pay his income tax on top.

Not in every country, for instance in NL you only pay 10% private on top the
15% dividend tax, foreigners don't even pay the 10%.

------
nshung
Do not forget that China has already completed two massive pipelines(one gas
and one oil) from western port of Myanmar to Kunming, Yunnan, China to bypass
the Strait of Malacca and they are already fully operating.[1]

And for your conspiracy thirst, there has been massive shoutout
internationally for people known as Rohingyas from Myanmar who face
persecution, discrimination and pre-genocidal acts being committed by Myanmar
government lately. And you know where Rohingyas people actually live in
Myanmar? It is at the very start of the two Chinese pipelines and the province
is called Rakhine State in Myanmar.[2] So the US is pressuring Myanmar very
very hard on this case. [3]

Two things can happen from this. 1) If Myanmar resists US pressure and doing
the same things just as they are treating these people now, US can just say,
"hey buds, we've told you. Human rights to these people or they will human
rights you". So any violence that might arise from this can be justified.
Actually Myanmar government has been exceptionally stupid in handling Rohingya
case. This mess has now become an international case. Thats their fault.

2) Myanmar succumbs to US pressure and grant some human rights to Rohingya(eg.
giving them ethnic status, grant citizenship and that shit). Rohingya may
rises and clashes with ethnic Rakhine group there to take the revenge. The
region will be destabilised and this will give Chinese a huge headache for
their hardcore investments.

[1] [http://www.forbes.com/sites/ericrmeyer/2015/02/09/oil-and-
ga...](http://www.forbes.com/sites/ericrmeyer/2015/02/09/oil-and-gas-china-
takes-a-shortcut/)

[2]
[https://www.google.no/maps/place/Rakhine,+Burma/@19.4183961,...](https://www.google.no/maps/place/Rakhine,+Burma/@19.4183961,93.5491945,5z/data=!4m2!3m1!1s0x30b0c1a60a38ad3b:0x2ef2881316474753)

[3] [http://www.msnbc.com/msnbc/state-department-rohingya-
refugee...](http://www.msnbc.com/msnbc/state-department-rohingya-refugee-
crisis-emergency)

------
recychlore
Unfortunate title, considering the recent Ross Ulbricht life sentence. I
thought the topic was going to be about internet black markets.

~~~
chobo
I've had Google alerts for "Silk Road" for the past 3 or 4 years. My focus is
on black markets but I've inadvertently learned a lot about China's
development plans (and a few cool historical articles as well).

------
mark_l_watson
Great article. I was listening to a Katherine Austin Fitts interview on
solari.com last night and she and her guest were making the same points: it is
not possible for the USA to contain developing markets. There is too much
energetic development in emerging countries, all of them wanting to get out
from under the USA dollar and military hegemony.

She equates central planning activities by my government, the federal reserve,
etc. to Soviet Union style central planning. Neither works long term. Free
markets are more efficient than central planning.

