[redahs]

> "But when money is invested it is used to buy capital goods–houses or office buildings or factories or ships or motor trucks or machines. Any one of these projects puts as much money into circulation and gives as much employment as the same amount of money spent directly on consumption.

This is nice in theory but certainly false in practice.

In practice much of the price paid for capital-goods is not for capital at all, but for land and monopoly priviliges. In real estate, the land share of real estate value can be 60% of the total investment.

Payments for land and investment in land purchases are always surplus payments beyond what is necessary to bring land into use as a factor of production, because land is a fixed natural resource which does not have a labor cost of production.

When investment in land increases through land banking, this increases the opportunity cost of investing in businesses which employ labor to produce goods and services, which decreases the demand for labor and lowers wages.

Policies which are designed to increase investment and savings over consumption typically decrease economic output and slow growth, because while increased consumption of labor produced goods and services increases the profits for investing in productive businesses supplying these services and the demand for labor, increased investment does not necessarily increase the demand for labor or the supply of labor produced goods and services at all.

It's possible for policies promoting increased investment and savings to promote nothing more than land banking and investors holding empty parking lots while waiting for a speculative increase in price.

[erulabs]

You’re not wrong - certainly land is one of the long term investments - but I have a hard time saying land purchases from other humans is more or less “productive” than latte-purchases - for varying definitions of productivity of course. I also fully agree waste to curription, monopolies, violence, etc etc are real things, but again I’m not sure how to measure that between land and coffee (just to keep the mental experiment going).

If all land was owned by one evil monopoly, and it was slowly being sold, even at insane prices - is that not productive in the sense that land in the future is more distributed than land in the past? Certainly it seems to me to be at least as worthy as short term entertainment and luxury - particularly ecologicaly - but purely economically too?

Anyhow - you’re not wrong at all - investment in land is certainly one of the things being favored instead of coffee - but this seems exclusively like a value judgment to me (who is to say what the price of land ought to be but the owners of the land?)

[AstralStorm]

Per se, land is not productive as neither is any capital good. What is productive is people utilizing that capital good - and the rate of converting the capital good into money is actual labor efficiency. Many capital goods have total capital efficiency close to 1 but exceeding it. (e.g. homes)

Factories producing a lot of income have capital efficiencies much higher than that.

Consumer goods do not have any kind of capital efficiency. This means that typically their total economic efficiency is lower, sometimes much lower, than 1.

(note that certain goods can be considered both capital and consumer, e.g. cars - it depends on use)