From: ald@clipper.ingr.com (Al Date)
Newsgroups: sci.econ
Subject: Re: Capital 'R us
Date: 9 Apr 92 19:24:24 GMT
Article-I.D.: clipper.1992Apr9.192424.25722
Organization: Intergraph Advanced Processor Division - Palo Alto, CA

In article <45818@dime.cs.umass.edu> yodaiken@chelm.cs.umass.edu (victor yodaiken) writes:
>In article <1992Mar31.015439.6303@clipper.ingr.com> ald@clipper.ingr.com (Al Date) writes:
>>In article <45269@dime.cs.umass.edu> yodaiken@chelm.cs.umass.edu (victor yodaiken) writes:
>>>In article <9203221937.AA09230@xuucp.ch.apollo.hp.com> nelson_p@APOLLO.HP.COM writes:
>>Good point, Victor.  Capital is capital.  Everybody's money is the
>>same color.  Absolutely.  And we all agree that capital formation
>>is crucial to allow investment in future production, 
>>and should be encouraged, right?
>>
>>So why in the name of Heaven do we have confiscatory taxes on
>>such things as capital gains, wages, dividends and savings???
>
>Well, Al, as you say, capital formation is capital formation, and 
>if the government manages to collect investment capital then its
>still investment capital. The question is: who should make investment
>decisions?  

I dont think anyone can determine that in advance.  You have to let
the chips fall where they may.  The Hunt family invested everything they
had in silver contracts, and lost $3 billion.  The heirs of Cornelius
Vanderbilt squandered thir inheritance over 2.5 generations.  OTOH,
who could've determined that Jobs / Wozniak were on to something in their
garage?

What I am saying is that it is just as irrelevant who makes investment
decisions as it is who accumulates capital.  Everyone who has capital,
no matter how large or how small, has to manage it.  Those who succeed,
whether by luck or genius, will then have more capital.  Those who
fail will have less.  This is an ongoing process--fortunes are made
and lost every day, every week, every month.  The number of capitalists
who fall into the Boesky/Milken category are small, and they often end
up in jail.  Even libertarians would outlaw fraud.

A lot of people laugh at the fact that Bill Gates is one of the richest
men in the world, pointing out how lucky he was in many respects.  But
I could care less, frankly, because Bill Gates' fortune is now the
slave of millions of computer users.  
If Bill doesnt continuously rally Microsoft to meet
the needs of the "sovereign" computer users, his capital is substantially
jeopardized.

So it is for the capitalists/entrepreneurs/technologists
who have large stakes in HP, Intergraph, Sun, Amgen, Apple, SGI/MIPS, 
Borland, etc etc.  

Victor, I think you are overly distracted by the actions of the leverage
artists and scam artists of the 80's, who were on the fringes of 
both ethics and law,
and you tend to ignore the capitalist mainstream, which continues to
focus on meeting the needs of customers and competing in a global
marketplace.


>The usual argument for cutting capital gains taxes etc. boils
>down to an argument that those who already have investment capital should be
>encouraged to set investment strategies. But, as the Reagan years have
>shown, we cannot rely on the wealthy to invest in areas which are necessary
>for national economic health. 

I would argue that this was the direct result of the excessive federal 
borrowing of the 80's, which created real interest rates far in excess
of the historical norms, and thereby induced 3 trillion dollars of capital 
into govt bonds/govt projects instead of into private investment. 
There was no recession in Washington, DC.  They all took raises and
kept hiring, while the rest of us were trying to figure out where we
could find a job.


>Of course, we cannot rely on the current
>government to invest in anything useful either --- instead of spending money
>on education, infrastructure, or environmental proteciton, our government
>invests in useless weapons, corporate welfare, and a massive 
>prisons-and-food-stamps war on the poor. 
>

We agree on that.  I would argue that it is difficult for the govt to spend
money wisely, but not impossible.

>>Your friend, who just bought a JS Mill book 
>
>Keep at it, kid.
>

So when are you going to read some Mises?

>BTW, I recommend Kozol "Savage Inequalities". Should be required reading for
>anyone who wants to comment on educational reform.

Me?  Oh, I would *never* do that... (8-)


--Al Date