It’s not rocket science to conclude that whatever lowers the cost of capital formation, such as lowering the cost of investing in earthmovers, enables contractors to purchase more of them. Workers will have more capital to work with and as a result enjoy higher wages.
-Prof Walter Williams (American Contempt for Liberty – Politicians Exploit Economic Ignorance)
We know that Leftists / Socialists / Democrats have made “capital” a dirty word and denigrate its importance but Prof. Williams shows the insanity of that. His example of “earthmovers” (and I don’t think that he’s just talking about those humungous dump trucks but ANY vehicle that help move dirt – excavators, loaders, graders, and other mechanized) shows what capital really is:
A means to gain Productivity.
In other words, having financial capital, money, really could be called “get me some better tools”. Better tools are what the military calls “a force multiplier”. A bulldozer can move far more dirt more efficient than a 100 men with shovels and wheelbarrows. One person becomes more efficient at their job, accomplishes more – and receives a higher pay for being more productive.
Without such capital, all we’re left with is shovels. More capital, generally from banks and rich “angels” allows ordinary people the ability to become more efficient – and reaping that reward.
Williams then makes that very important observations that Politicians only care about themselves and Government (emphasis minemine):
Policies that raise the cost of capital formation such as capital gains taxes, low depreciation allowances and corporate taxes, thereby reduce capital formation, and serve neither the interests of workers, investors nor consumers. It does serve the interests of politicians who get more resources to be able to buy votes.
Cui bono – who benefits? Taxation is theft (by legal means). While there are legitimate uses for Government, too often the waste ends up, for instance, that politician’s name on some building or structure. Or worse, “bringing home the bacon” to his district (and expects supporters to rejoice, pat them on the back, and allow the pol to exclaim “what a good boy am I! Vote for me again for enriching y’all with other peoples’ money!” just as other pols are exclaiming the same thing about giving YOUR money to others.
And that next earthmover will never be made or sold because the money that COULD have been used to provide more Productivity and more wages into that earthmover’s pocket.
