Mark Zuckerberg of Facebook and Sergi Brin of Google both became very young billionaires from the companies they created. Yet hundreds of millions of consumers benefitted by getting incredible products for free.
When we participate in the class warfare we seek to balance the interests of those who own the means of production and those they employ, but we too often forget about the interests of consumers.
Investing capital is fraught with risks. Today’s Facebook is at risk to become next year’s MySpace. Investors accept losses and redeploy capital into more promising products. While a few investors make fortunes, the competition for capital limits the returns. Furthermore the aim of capital is to either create new products consumers want or to make products more efficiently that will reduce costs to the consumers. Either way the hordes of consumers benefit greatly from the investment risk.
When investments are made that reduce costs, demand responds, and further production is required. This is why polices that overemphasize stimulating demand will yield much less effective results than policies that stimulate investment. Furthermore policies that stimulate investment continues to stimulate demand and economic growth. Stimulus aimed at demand must end.
We are currently viewing the results of reckless spending to stimulate demand while at the same time promoting policies that stifle investment. We are viewing the worst recovery in modern history.
Recent Comments