No one claimed that you can't increase productivity and income on average under some circumstances by increased capital investment. What was being made fun of was the simplistic misunderstanding of what the underlying mechanisms are. Prices, including the price of labor, are set purely by the marketplace.Under some circumstances, incomes will be determined by investment levels made by employers. Under others,

Impediments to trade create wastes of capital just as surely as burning cash in the marketplace does. If you were really an Austrian, and not a confused person, you would know

Perry Metzger wrote: they will not. The important feature is the market principle, not the capital investment. The point of my "green pylons" posting was to note that it is the market direction of the investment and not the investment that is important.< If you mean to say that in a society where the government directs the 'investments' (confiscates the wealth of its citizens and spends it for its own purposes), wages could be lower than in a society where there is less capital accumulated but where private parties direct the investments, then you are right. But Austrian economists like Murray Rothbard, Hans Hermann Hoppe, etc. don't consider government expenditures to be *investments* of capital; they consider all government expenditures to be *consumption*. As an Austrian, you should know this. To quote Murray Rothbard about resource-using expenditures by the government ('Power and market', p. 173, 2nd ed.): "all of this expenditure must be considered *consumption*. Investment occurs where producers' goods are bought by entrepreneurs, not at all for their own use or satisfaction, but merely to reshape and resell them to others - ultimately to the consumers. But government redirects the resources of society to its ends, chosen by it and backed by the use of force. Hence, these purchases must be considered consumption expenditures, whatever their intention or physical result. They are a particular wasteful form of 'consumption', however, since they are generally *not* regarded as consumption expenditures by government officials" Etc. By the way, Jean-Baptiste Say, the French economist, already had the same view a long time ago. that all the Austrians and Chicago School people are for completely free trade, something you don't seem to get in your expositions on capital flows. Perry< You're setting up a straw man again. As I said several times before, I *am* for completely free trade. Even if the investment of American capital in foreign countries would lead to a lower standard of living for workers in the US, I still would support completely free trade, simply because I support the non-aggression principle. But, as I also said before, I don't believe that investment of American capital abroad would lead to a lower standard of living for American workers (it would lead to relatively lower wages, but I think the advantages of investing abroad would compensate for this). I just don't know how to *prove* this belief. I like to have proof for my beliefs, if only to be able to rebut socialist arguments. That's why I asked my question: how can you prove that the investment of American capital abroad would not hurt workers in the US? Bart Croughs