To put it simply, most products and services are capital goods. They are produced, they are consumed, and they are traded for other people’s money. You may have heard of the “law of diminishing returns” where it has been said that as a society we have to keep spending money to keep producing more and more goods and services.
There is a lot of confusion about this law. For example, the saying is that the law says that as society’s consumption of a product grows, so does its value. But it is important to understand that the law does not say that the value of a product declines over time. The law is actually saying that the value of a product does not grow or decline with the same rate as the amount of people who consume that product.
Another example is that the law says that as people spend more on clothing, that the value of clothing declines. But the law is actually saying that the value of clothing doesn’t decline with the amount of people who wear the clothing. The law is saying you cannot say that clothing value declines because of the amount that people wear it, but you can say that clothing value is decreasing because of the amount that people spend on it.
We can’t say that an increasing amount of people spend more on clothing is a good thing, but we can say that the same amount of people who spend more on clothing are buying more clothing. At least that is how it is with certain consumer goods like wine and cheese. But with other things like clothing, it’s a different story. Because clothing doesn’t necessarily decrease in value the more people wear it.
Clothing is often used as a means of capital. It is useful to have access to stuff like clothes, but it is also useful to have the capital to buy it. We all know that when you buy something, you usually do so because you need it to either perform a service or because you have some need. But if I’m to buy an expensive jacket for my wife, I might not be able to buy it for her.
Yes, that is a very valid point. Clothing is often a capital investment. But it is also a necessary part of our culture. When your country needs a lot of clothing, it may have to import clothing from other countries.
The same is true for buying a car. But when you buy a car, you have to buy the parts that go in it. It’s a capital investment in buying a car. But it can also be a capital investment because you have to pay a lot of money to fix the car’s problems.
In my opinion, the only way to have a good time is to buy something you can’t afford. This is a general principle that the majority of people tend to ignore. When you have $20 left in the bank, it’s easy to spend on entertainment items that will save you money. But when you have $20 in the bank, it’s easy to spend on things that will kill your bank account.
I don’t know that capital goods are necessarily bad for the economy, just the way they are treated by the government. Governments are supposed to be neutral and unbiased, and capital goods are goods that a person can buy legitimately. This causes an imbalance in the economy because the government is giving out too many capital goods and not enough consumer goods.