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Strategies & Market Trends : ahhaha's ahs
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To: Elsewhere who wrote (2503)6/22/2001 10:58:34 AM
From: ahhahaRead Replies (2) of 24758
 
A nice example is what happened in Germany after the reunification. The government provided tax incentives to invest in real estate projects in the former East Germany, GDR.

This is a very poor example because using tax incentives to stimulate a wasting asset, real estate, is definitely wrong. Real estate creates no future value. It's a cold loss. Tax cutting incentives should be applied to added value activity.

About DM 500 billion of private capital caused a huge real estate bubble.

What you mean is that the tax incentives provided a supply where there was little demand.

The Berlin senate collapsed as a result, and in last week's senate vote the conservative mayor was toppled with the help of the former GDR communist party PDS which tolerates a "red-green" minority coalition now. So this is what former conservative chancellor Kohl is harvesting with his tax incentives.

You blame tax incentives when the culprit was actually societal engineering. The Kohl socialists identified a theoretical good and then manipulated the private sector to throw money at it. Nowhere was the free market allowed to work, so tax cutting of all kinds gets a bad name simply because fools abuse it.

Without the misdirection the capital might have achieved a much higher return on investment by going to startups, for instance.

Startups? Germany needs to lower the corporate tax rate.

You have failed to support your original contention and instead demonstrated that capitalism isn't practiced in Europe. What is practiced can only be described as "the road to serfdom".
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