September 3, 2012

Leaning Against the Privileged Place of Investments

Justin Katz

Readers shouldn't be surprised to hear that I'm largely in agreement with Peter Ferrara's "Obama's Accelerating Downward Spiral for America," but he happens to voice one bit of center-right common wisdom with which I have growing disagreement:

There is no secret or magic as to how to turn around these declining incomes.  Increased investment in business expansion and start ups increases demand for labor, which drives up wages.  That investment buys new tools and capital equipment for workers, making them more productive, which provides the cash flow to increase wages.

Increasing investment results from reducing the tax rates on investment, which enables investors to keep a higher percentage of what they produce, increasing incentives for investment.

My resistance to this suggestion — notwithstanding Ferrara's positioning of it as a statement of the obvious — has three sides.

Continue reading on the Ocean State Current...

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"Generally, I have to question the assumption that investors need the incentive of discounts in order to make investments. Yes, yes, the more you tax something, the less you get, as the saying goes, but investors who don’t invest have no income."

"Tell me how a man is paid and I'll tell you how he works" J.P. Morgan

Posted by: Warrington Faust at September 4, 2012 11:20 AM
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