Capital Accumulation

PGL at Angry Bear has a Post which bears study and contemplation. The one element of the Sowell Quote from the National Review article which bothers me comes in the distortion of the Decision-Making process in the Production cycle. Production comes from a decision to produce a saleable Product. Sale of this Product is like the Production process itself, a slow and laborious process with huge Operating Costs. Neither Production or Distribution is a rapid wealth accumulation process. What is the rapid wealth accumulation Process?

The Answer is convincing old wealth accumulation that the Production process and Distribution will provide a high Return of sustained duration if bought. The Purchase of the Process of Production and Distribution, or a percentage of it, remains the avenue for rapid wealth accumulation. Does rapid accumulation of wealth, therefore, affect the Production Decision-Making Process–only to the degree that the Producers hope to acquire great wealth rapidly by selling the Processing to old Wealth. Will such Hopes drastically alter the Decision-Making Process? No. Will such Hopes alter the Funding system of original and final Production?–No. Will fulfillment of such Hopes incite the new Wealthy to immediately enter into more significant Profit-making endeavors?–not more likely than Anyone else in the Near or Long term. It simply makes the new Wealthy into Investment Seekers, like their predecessors of old Wealth who made them wealthy by purchase rights of the Production process.

The question then must be asked if taxation of the proceeds of Production, or sale of the Production rights, can affect the Decision-Making Process of Production. The Economic answer would state Taxation could only affect Production and Distribution, if and only if it affects the percentage Profitability of the Production and Distribution process; Taxation of the Profits from sale of the Production and Distribution rights affects only the Purchase price of the sale of those Rights, not the Production process itself or it’s funding. I am sure many Economists would disagree with my assessment, but if Fed policy has ever proven anything, it has proven Liquidity is not bound by any degree of Scarcity. lgl