Re: [DMCForum] Re: The Constitution Is an Illusion Part II

[Bob Brandys <BobB@xxxxxxxxxxxxxx>]

Lauren,

I agree with you that buying real estate can be a good investment. 
 However, when I use the term "investing in the economy"  the classical 
macroeconomics theory applies.

 Investing money into a manufacturing facility will generate far more 
jobs than buying and renting a piece of real estate.  This deals with 
the concepts of money "turning" and money "multiplication" in the economy.  

This is better understood using the concept of a VAT or value added 
tax,  something that widely used in the EU rather than a sales tax.

For example,  an item is manufactured and the value of in the investment 
capital and the raw materials significantly increase.    Say an item 
cost 10 cents to produce (including the investment cost)  and it sells 
for 1 dollar.  That is a 90% increase in value and this sales price is 
taxed accordingly,


On the other had, lets say you produce an item for 10 cents and can only 
sell it for 25 cents.   In that case the VAT is much lower because there 
is not as much profit involved.


Certainly, the item that sells for 1 dollar adds much more growth and 
value to the economy, than the item that only sells for 25 cents.  

The same parallel applies to real estate capital verses manufacturing 
capital.  

Manufacturing capital investment is much better for the economy,    Real 
estate and other "capital accumulation"investments are not as good for 
the economy.
If rich people constantly hoard capital the economy suffer.  
   

Since 1980 over 40,000,000,000,000 (40 trillion dollars) of investment 
capital has shifted to the top 1% of people in this country. 
 Unfortunately, as the CBO and FR research has shown,  this money has 
not been reinvested in manufacturing capability.   It has only be 
invested in "capital accumulation" investments.

BOB

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