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Comment by WalterBright | Hacker News Reader

Capital gains taxes resulting in less efficient resource allocation does not imply that it is instead allocated in an ethical way, nor distributed more equitably, or any of the other notions mentioned.

Having a more efficient economy means there's a surplus that enables resources to be expended on environmental and social concerns. Hungry people don't care about those things. There's a reason poor countries tend to be the worst polluted.

Lastly, efficiency isn't about maximizing production. It's about maximizing productivity, i.e. production/cost.

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I never said that less efficient resource allocation would result in more utility. That's a straw man. My claim is the argument that more efficient resource allocation would result in greater utility is almost certainly false in a hypothetical situation where capital gains tax is eliminated.

What evidence have we ever seen that allowing wealthy individuals to make more money results in increased utility? There is literally no reason to believe that any of the marginal increase in resources would be expended on environmental and social concerns.

The only reason you could justify eliminating capital gains is if you literally believe all government is evil.

> What evidence have we ever seen that allowing wealthy individuals to make more money results in increased utility?

SpaceX is a modern example.

Historically, people of great wealth have been able to invest in great projects. Scientists historically have been wealthy people. The guy who won WW2 was a wealthy man who invested his fortune into developing radar. Many historians believe that radar shortened the war considerably and saved an awful lot of lives. Wealthy people donate a ton of money to universities to fund research. (UW has a Gates building and an Allen building.)

> on environmental and social concerns

The Gates Foundation, for a modern example. For a historical one, see the Carnegie libraries.

I can't think of worse examples of industries supposed to benefit from reducing funds available for government investment to ensure more funds are available for private investment than space and defence, which have depended almost entirely on government investment.

Similarly, charitable donations are generally tax deductible so again, if anything, capital gains taxes serve to encourage people to allocate more of their returns to it.

SpaceX shows that people with great wealth can embark on successful space programs.

> charitable donations are generally tax deductible

I find it ironic the complaint that wealthy don't use their money to help social causes and yet complain that such help is tax deductible.

SpaceX took enormous amounts of funding from the government, which also happens to be its only customer for most of its services. Virtually all the technological advances which made it feasible for Elon Musk to found a rocket company were based on enormously expensive state funded programmes which private companies would neither have had the fundraising ability nor the realistic expectation of returns to embark upon.

Arguing that the space industry would be better off with less government funding and more private wealth is akin to arguing the earth is flat.

And I'm not "complaining" that private charitable donations are tax deductible, I'm observing that because they are tax deductible they're not particularly likely to be reduced by the existence of taxes.

SpaceX has saved the government boatloads of money by breaking the monopoly ULA had on government launches. It's one of the wiser investments the government has made recently as not only has it saved the government money but made a US company dominant in the commercial market to the point the market is expanding because costs are so low.

SpaceX could not have been started by your or I, because we are not mega wealthy. It never would have happened without the ability for Musk to accumulate great wealth.

If you want only government funded research, take a look at the old USSR. They produced a few notable advances, but nothing like the quantity produced in the US.

"Rich people fund research universities after getting rich" seems like a far less efficient way to fund research universities than not letting them get so rich in the first place.

I'd prefer the direct route of funding them from the public coffers than waiting on the largess of rich people to fund them decades after their fortunes have been made.

Wealthy people have often funded very valuable research that the government had no interest in:

1. rockets

2. radar

3. jet engines

Government research is directed by politics, which usually means safe, non-controversial topics, and money directed at politically connected scientists. There's nothing "efficient" about that.

Privately funded research is directed by one person's politics, which is far, far less good than the politics of a democratic state.

Or maybe you trust rich folx to call the shots? I don't. The world's moved on from monarchy.

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