From: Bart  Croughs <bart.croughs@tip.nl>
Date: Fri, 16 Aug 1996 02:02:29 +0800
To: "'cypherpunks@toad.com>
Subject: Re: National Socio-Economic Security Need for Encryption Technology
Message-ID: <01BB8AC5.1B326AE0@groningen10.pop.tip.nl>
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Perry Metzger wrote:

>No one claimed that you can't increase productivity and income on
average under some circumstances by increased capital investment. What
was being made fun of was the simplistic misunderstanding of what the
underlying mechanisms are. Prices, including the price of labor, are
set purely by the marketplace.Under some circumstances, incomes will
be determined by investment levels made by employers. Under others,
they will not.  The important feature is the market principle, not the
capital investment. The point of my "green pylons" posting was to note
that it is the market direction of the investment and not the
investment that is important.<

If you mean to say that in a society where the government directs the 
'investments' (confiscates the wealth of its citizens and spends it for its 
own purposes), wages could be lower than in a society where there is less 
capital accumulated but where private parties direct the investments, then 
you are right. But Austrian economists like Murray Rothbard, Hans 
Hermann Hoppe, etc. don't consider government expenditures to be 
*investments* of capital; they consider all government expenditures to be 
*consumption*. As an Austrian, you should know this. To quote Murray 
Rothbard about resource-using expenditures by the government ('Power 
and market', p. 173, 2nd ed.): "all of this expenditure must be considered 
*consumption*. Investment occurs where producers' goods are bought by 
entrepreneurs, not at all for their own use or satisfaction, but merely to 
reshape and resell them to others - ultimately to the consumers. But 
government redirects the resources of society to its ends, chosen by it 
and backed by the use of force. Hence, these purchases must be 
considered consumption expenditures, whatever their intention or physical 
result. They are a particular wasteful form of 'consumption', however, since 
they are generally *not* regarded as consumption expenditures by 
government officials" Etc.
By the way, Jean-Baptiste Say, the French economist, already had the 
same view a long time ago.

 >Impediments to trade create wastes of
capital just as surely as burning cash in the marketplace does. If you
were really an Austrian, and not a confused person, you would know
that all the Austrians and Chicago School people are for completely
free trade, something you don't seem to get in your expositions on
capital flows.

Perry<

You're setting up a straw man again. As I said several times before, I *am* 
for completely free trade. Even if the investment of American capital in 
foreign countries would lead to a lower standard of living for workers in the 
US, I still would support completely free trade, simply because I support 
the non-aggression principle. But, as I also said before, I don't believe that 
investment of American capital abroad would lead to a lower standard of 
living for American workers (it would lead to relatively lower wages, but I 
think the advantages of investing abroad would compensate for this). I just 
don't know how to *prove* this belief. I like to have proof for my beliefs, 
if only to be able to rebut socialist arguments. That's why I asked my 
question: how can you prove that the investment of American capital 
abroad would not hurt workers in the US? 

Bart Croughs