In an article yesterday I defined the only lawful way I know to create wealth as follows:
Wealth is only created when entrepreneurs make better goods and services, satisfying more of the needs of consumers, in better and more convenient and cheaper ways, via more capitalistic and hence more efficient methods of production. Both the capital investment and the subsequent purchase of the new goods and services should be supported by real savings (forgone consumption).
No amount of creating more money units itself produces more of the above. I would usually then say that we should seriously consider ending corporation tax so that companies can invest their own money in more capitalistic methods of production to produce more goods and services at cheaper prices that people want. This is a particularly salient point at this credit starved part of the business cycle, when banks are not lending. Through excessive taxation, the government makes companies reliant on debt financing. They then use this reliance to argue that the banks must be bailed out and supported with taxpayers’ money. Despite the massive public subsidy, banks are still reluctant to lend. Why not let the companies keep their own money, and finance themselves? We would see a growth-led entrepreneurial revolution.
Another positive step the government could take would be to abolish all copyright laws. Here is a very interesting article supporting the theory that the German Industrial Revolution was significantly propelled by the absence of copyright laws.
The legal theorist Stephan Kinsella highlights the German experience in his list of “Innovations that thrive without IP“:
According to Robert Groezinger, “This article in Der Spiegel is all about how the absence of copyright in Germany led to an “explosion of knowledge” in the 19th century. The reason there was no copyright law was that there was no central government until 1871. This contrasts with the UK, where there had been copyright since 1710, and the number of publications was lower by a factor of 10 compared to Germany. Also, the number of copies printed was much, much lower in the UK (hundreds as compared to ten thousand or so). The article claims that this is the main reason that Germany’s production and industry had caught up with everyone else by 1900.”
Radical times call for radical solutions, and abolition of corporation tax and copyright laws should be given serious consideration.