Let’s get real about private capital

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A commentator on this site recently said:

You talk about money as though wealth is generated by states, rather than capitalists. I know you don't actually think this, but when you say things like "Tax evasion and corruption are believed to cost poor countries at least 50 billion dollars a year." that's what it sounds like. The 50 billion is based on an idealistic figure predicated on there being no (legal) tax avoidance or (illegal) evasion at all. So Germany doesn't "lose" $46bn - it fails to gain $46 billion. That might sound semantic, but it's an important difference. If the businesses you attack didn't exist, Germany wouldn't be better off!

Almost everything about this person's logic baffles me.

Let me be unambiguous: it is a complete fallacy that capitalists create wealth and states spend it. Let me use a simple example. Within one mile of my home there are two primary schools. One is run by my local authority, the other is privately owned. Both are acknowledged to be good by Ofsted. How can it be that one of them does, according to this commentator's logic, create value whilst the other does apparently consume it? This simply cannot be true. Nor is it true that the NHS destroys wealth. I challenge anyone who thinks that is the case to justify their argument.

In addition, I would argue that most transfers of value by the State are essential.

Of course though the State is inefficient, makes mistakes, fails to allocate resources to best effect, and is in constant need of renewal. But at least I recognise that fact. It is my sorry experience from having advised many private companies that few of their managers have similar insight.

As such the first part of this hypothesis is quite straightforwardly wrong.

As for the second idea, the hypothesis is also wrong. The stated figure under estimates the total loss. It came from the Oxfam report and I know that the figure in question is substantially less than that which the theoretical calculations supported. In this case the figure is the potential gain.

As for the suggestion that this loss could not arise unless there were private capital, respectfully that is absurd. The alternative to private capital is not complete inactivity. Private capital is just one way of organising an economy. I happen to think it works reasonably well most of the time, but to argue that it is the only way to organise an economy is just wrong. If it did not exist humans would have created an alternative, and it may not have been private capital. And value would have been created as a result, just as it is right now by State activity as much as it is by private activity.

So shall we stop the nonsensensical argument that one is dependent upon the other? In a mixed economy they are mutually dependent. A fact that the Right need to realise, and for which the evidence is overwhelming.