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> Consumption is what drives the economy, not investment. That's true, but it's missing the point. Investment allows people to fund projects that drive up cons
by Aunche 8y ago
> Consumption is what drives the economy, not investment.
That's true, but it's missing the point. Investment allows people to fund projects that drive up consumption. It may not be "as important" as labor, but it still helps the economy. If the capital gains tax is too high, rent seekers will just find a safer alternative to way to park their money that is even less economically productive, like renting out real estate.
- Joeri 8y agoI’m not convinced investment ever drives up consumption, except for the investment in marketing. I see investment tailing consumption mostly, with investors preferring safe bets on goods and services that already have a market. Anyway, it’s just two ways of looking at the same economic relationship. In practice it’s more a sort of ouroboros. I’ve also never been convinced by the “big money will flee if we tax it more” argument. Nobody has ever tried leaving no ground to flee to by leveling the taxation system so there’s no loopholes. The only way to flee would be to leave the country entirely, but as long as it remains profitable to stay (taxes do not exceed profits) it would be foolish to do so.