Private goods vs. investment capital

In an earlier blog, I discussed how I think we need a mixed economic system (although I did not call it that; I hope to make another posting soon discussing in detail what I mean by this term), in which goods are private, but investment capital is heavily taxed and used to fund a basic income.

I think what I meant might be self-evident to some. However, I want to give two examples here of the difference between a ‘private good’ and an ‘investment.’ It is not as simple as what an object of possession is. Rather, it is the manner in which it is used.

Let us consider if I own a house. If I live in the house with my family, or let my friends use it or visit it, or if I use it for vacations, then it is a private good. It becomes an investment when I begin using it for the purpose of making a profit, for example, by renting it out.

As a second example, suppose that I own a plot of land. If I use it to go camping on vacation, that is a private good. If I charge other people to use it for camping, it becomes an investment. If I sell the logging or mineral rights, it becomes an investment.

I hope that helps clarify what I meant. Of course, there are subtleties, like the fact that automobiles could be used sometimes for private uses and sometimes as investments, but those are the kinds of details that I think are best left to the politicians and economists who implement these general principles to figure out.

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