Posts Tagged ‘Capital good’

The more rich there are, the better off the poor

October 1, 2013

“The more rich there are, the better off the poor are” is a consequence of allowing the free market and investment to CREATE wealth (in general terms of what people want) where it did not exist before.

Allowing people to keep what earnings they can save and then invest and therefore also accumulate, results in increased acquisition (or creation) of “capital goods“. “Capital goods” convert “natural goods” into “consumable goods”.

Poverty is by definition a suboptimal availability of “consumable goods”. When there are lots of capital goods, it’s because there are people who are “rich enough” to acquire them (or have them made). It also means that there is more demand for labor and more “money” paid out to the laborer for his work. It means there are more “finished goods” (produced using capital goods).

Every dollar any government confiscates directly from the resources available for investment in capital goods (in taxes on capital property or capital gains), kills the investment it would bring and kills the increased wealth and kills incentives for hiring labor. The poor suffers worse than anybody under such conditions.