However, as has been pointed out, the success or failure of the investment in preferred stock, bonds, debentures, mortgages, and other loans depends ultimately also on the same factors that determine success or failure of the venture capital invested. If taxation were to strengthen the supply of loan capital at the expense of the supply of venture capital, it would make the gross market rate of interest drop and at the same time, by increasing the share of borrowed capital as against the share of equity capital in the capital structure of the firms and corporations, render the investment in loans more uncertain. The process would therefore be self-liquidating. He wants to improve his chances of earning profits. Nobody embarks upon any investment if he does not expect to make a good investment.
Nobody deliberately chooses a malinvestment.
It is only the emergence of conditions not properly anticipated by the investor that turns an investment into a malinvestment. As has been pointed out, there cannot be such a thing as noninvested capital. Neither is he free to deviate in the choice of his investments in capital goods from the lines determined by the most urgent among the still-unsatisfied wants of the consumers. He must try to anticipate these future wants correctly. Taxes may reduce the amount of capital goods available by bringing about consumption of capital.