by Nickel » Wed 24 Dec 2008, 10:31:27
$this->bbcode_second_pass_quote('cube', 'A') rich man can only eat so much so therefore, He may put 10% of his money into consumption and 90% into investment.
For the middle class it may be the reverse.
Ah, you get a fire hose from the least-expected sources sometimes... even a pyromaniac.
Investment and consumption are very, very simplistic generalities, but they do serve to illustrate the point. They're not unrelated; one wise and one foolish. They're the exact flip sides of the same coin. In our society, very little can be consumed that is not the investment of someone or something. And investment that promotes no consumption fails -- it generates no profits or even sustainability. Growth, generally speaking, occurs in the markup placed on the consumption of investment. It's necessarily inflationary but so long as it's gradual enough, it doesn't present problems that outweigh the benefits.
Now, you yourself have come to the crux of the matter: the rich man can only, as you say, "eat so much". One model of what to do with the rest is to suppose it is entirely his, to do with as he wishes. Another model is to suppose that any excess at all beyond his needs is surplus derived from, and therefore accruing to, the people. Somewhere in the middle is the idea that some of the excess should enrich the individual, but some should return to the greater society to become "investments" for the general good, rather than the private good. This is taxation.
It's often been suggested that taxation is the other extreme from free enterprise; it is not. Wholesale expropriation is. Taxation is median course that permits some individuals to continue to use their advantages to acquire more, while at the same time society is enabled to retain some of the wealth generated by its own general activities to the betterment of society.