A Quote by Ludwig von Mises
History does not provide any example of capital accumulation brought about by a government. As far as governments invested in the construction of roads, railroads, and other useful public works, the capital needed was provided by the savings of individual citizens and borrowed by the government.
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As the prosperity of the nation and the height of wage rates depend on a continual increase in the capital invested in its plants, mines and farms, it is one of the foremost tasks of good government to remove all obstacles that hinder the accumulation and investment of new capital.
In almost every enterprise, government has provided business with opportunities for private gain at public expense. Government nurtures private capital accumulation through a process of subsidies, supports, and deficit spending and an increasingly inequitable tax system.
Conservatives insist that government should be "run more like a business." One might wonder how that could be possible, since government does not market goods and services for the purpose of capital accumulation.
The financial doctrines so zealously followed by American companies might help optimize capital when it is scarce. But capital is abundant. If we are to see our economy really grow, we need to encourage migratory capital to become productive capital - capital invested for the long-term in empowering innovations.
There is but one means available to improve the material conditions of mankind: to accelerate the growth of capital accumulated as against the growth in population. The greater the amount of capital invested per head of the worker, the more and better goods can be produced and consumed. This is what capitalism, the much abused profit system, has brought about and brings about daily anew. Yet, most present-day governments and political parties are eager to destroy this system.
We have provided capital here with a couple of institutions recently. The Federal government did that in the '30s for the RFC and I think there could well be a proper role for government in that.
Remember that accumulated knowledge, like accumulated capital, increases at compound interest: but it differs from the accumulation of capital in this; that the increase of knowledge produces a more rapid rate of progress, whilst the accumulation of capital leads to a lower rate of interest. Capital thus checks it own accumulation: knowledge thus accelerates its own advance. Each generation, therefore, to deserve comparison with its predecessor, is bound to add much more largely to the common stock than that which it immediately succeeds.
One of the tax systems in the US is for wage earners. The government takes money from them out of each paycheck - so it knows how much they make, and those workers can't cheat to any significant degree. But the other tax system is for capital. Those with capital get to tell the government what they want to tell. They may get audited, but if their tax returns are of any size the government doesn't have enough of the smart auditors to figure out what's really going on. And there are the rules that allow you to do things like take in money today and pay taxes on it thirty years from now.
From NASA putting a man on the moon to DARPA developing what later became the Internet, the U.S. government, through a host of different public agencies, has provided direct financing not only of basic research but also public venture capital; both Apple and Tesla have received direct public funding.
The government was set to protect man from criminals-and the constitution was written to protect man from the government. The Bill of Rights was not directed at private citizens, but against the government-as an explicit declaration that individual rights supersede any public or social power.
Republicans who controlled the government in the 1920s insisted that national prosperity depended on government protection of the rich, who they believed would plow their capital back into the economy to provide jobs and higher wages for workers.
Governments and citizens blend together only in the imaginations of political theorists. Government is, and always will be, an alien power over private citizens. There is no magic in a ballot box that makes government any less coercive.
There are respectable individuals, who from a just aversion to an accumulation of Public debt, are unwilling to concede to it any kind of utility, who can discern no good to alleviate the ill with which they suppose it pregnant; who cannot be persuaded that it ought in any sense to be viewed as an increase of capital lest it should be inferred, that the more debt the more capital, the greater the burthens the greater the blessings of the community.
Do the American voters know that the unprecedented improvement in their standard of living that the last hundred years brought was the result of the steady rise in the per-head quota of capital invested? Do they realize that every measure leading to capital decumulation jeopardizes their prosperity?
Government spending reduces the capital that could be invested to serve consumers and to produce new employment opportunities.
What is a government supposed to do for its people? To improve the standard of living, to help them get jobs, get kids to schools, and have access to medicine and hospitals. Government may not directly provide these public goods and services, but government must be accountable for whether or not they are delivered to citizens.
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