The point is valid, and removal of this "wealth" from the economy would mean that the government could "print" an equivalent amount of currency and distribute it without generating any inflation.Wouldn't you say though that such a man would be even more unselfish if, instead of burning the honestly earned 500 million, he donated it to a non-profit cancer research institute?

While such an institute may be in competition with private enterprise, there is no assurance that private business would be willing to invest this amount in speculative research of this kind and,in any case, any results produced could be made public.

meric wrote on Mar 12^th, 2010 at 5:27am:


I'll explain this point a little more. People see this guy have 500 million and not using it, so because they think money is wealth, they introduce taxes to share it around. But money collected from taxes are usually fully spent, (In other words, used to fuel consumption.) rather than saved and invested.

The only reason governments feel the need to give everyone money to sustain confidence in the economy in recessions is because when prices and wages fall, the price of their house, cars and shares fall. People mistakenly feel like their "wealth" is reduced, and reduce their spending likewise. Reduced spending, in the short term, will mean some businesses will crash and result in further unemployment... This again results in less spending (unemployed people are frugal), and prices fall further, leading to a spiral (Like the great depression).

On the other hand, if everyone realises that money is only a representation of wealth, they would be using up their savings to buy more of the stuff that is actual wealth in recessions, temporarily propping up the economy....

Because of all the money collected from taxes (or taken from money for investments) is used up, it means less money is invested and the society suffers over the long term. I.e bridges, factories, research centers aren't being built.

Investments generate wealth. The 500 million the guy put in the bank would have been loaned to developers, engineers, and factory operators, used to produces houses, factories and machines.

Inefficient government spending means labor and resources are wasted. E.g Buying cars for everyone in the country and chucking the old ones out. It's like hiring 100,000 people to paint portraits of George Washington; those 100,000 people become locked up doing nothing.

Yet when government is "forced" to spend as quickly as possible this is what happens. It would be infinitely better to be spending money in investment-worthwhile projects like bridges, housing, infrastructure, railways, AIDS research, etc that actually produce returns (societal or economical) instead.

Giving handouts to people has a similar effect, but maybe slightly better because some of it might actually might actually be invested in good investments.

I apologise for sort of rambling... I just woke up.