>Interesting argument, but surely you don't think the world needs less investment?

Right now it does. There is far too much money chasing too few investment opportunities. This is causing bubbles all over the place. Money that would have been productively invested were there demand is being funneled into property, gold, the equities market, fixed income & even bitcoin.

>Or do you think the state is a more efficient investor of capital?

Sometimes it is. It's a myth that the state is incapable of efficiently allocating capital and the private sector always does a better job. Sometimes the private sector does an atrocious job (e.g. see the massive overbuild of housing in the last decade).

If your issue is the social problems associated with extreme inequality, it's ultimately just a question of whether the tradeoff is worth it, rather than whether it grows the GDP faster or slower. There are a million ways we could restructure society, with a million consequences for the economy and the social good. It's all a matter of picking the tradeoffs we can all live with.

That being said, wealth redistribution doesn't necessarily need to mean less private sector capital investment. If you take a billion dollars away from someone who would have invested it and give a thousand each to a million people (whether through highway robbery or through raising taxes here and lowering them there), there's no reason they can't invest it all. Hell, they could invest it in a fund managed by the former billionaire, and you'd have the same amount of investment managed by the same people.

That situation is unlikely, but it also discounts the value of investments besides the sort that billionaires tend to make. While some redistributed wealth might be reinvested or 'wasted' on consumption, there are also be a lot of small investments that happen when you share the wealth. Children eat better, which improves their futures in pretty much every way. People start more small businesses, bodegas and farm stands and hair salons and startups. People spend money on education, for themselves and their children.

That sort of investment is also vital to our economic future, no less than the capital liquidity provided by the billionaires.

Investment in what, though?

We do need investment in transport infrastructure, renewable energy, health in the developing world, etc; but that doesn't offer a direct return to the investor as the benefits are distributed. In those cases arguably the state can be better. Provided the money isn't siphoned away. This is more of a rule of law / public trust issue.

Yes, the state is a more efficient investor of capital. Counterintuitive as it may be, just taking money and giving it to poor people is a very good investment in terms of the public good that results. A rich individual investing into a funded company is much more visible, but that same money spread more widely might launch hundreds of "lifestyle businesses" that would ultimately be more productive.

>"the state is a more efficient investor of capital."

Do you have evidence for this claim?

If this is the case, shouldn't the countries with the biggest governments (as a percentage of total economy) also be the ones which grow the fastest, and if not, why? How can states be so efficient when they never admit to making mistakes, (almost never) give up on failed projects, or go out of business like private investors do?

There's no evidence needed because it's a political opinion. Efficiency doesn't boils down to having the biggest GDP growth, sometimes it's not at all about the money. The HDI is probably a better metric.

Do you have evidence that states with higher government spending as a percentage of the economy have a more quickly increasing (or even a higher) HDI? It seems that efficiency of spending would influence the trajectory of your metric of interest more directly than the metric's current level (this seems obvious to me, but I can explain why in detail, if required). I can think of a few examples which would support your case, and many counterexamples, but would be happy to hear your case.

I would also think that a system's efficiency would affect the economy as well as all other indices of interest (though perhaps in varying proportion), as a healthier, happier citizenry or one with more capital goods, and better investments would grow economically as well as in other metrics.

> Or do you think the state is a more efficient investor of capital?

Absolutely! The number of inventions that was created by government investments absolutely dwarfs the number of privately funded inventions. Internet, GPS, cancer research, nuclear power.. I've never heard a logical explanation to why companies should be more efficient than states. Everyone just seem to take it as a given because "everyone knows" that governments are buerucratic and inefficient.

Your statement is fallacious. If governments are more efficient at creating inventions and advancing science, then according to that logic, a big government with greater power should be more efficient at advancing technological and scientific progress.

Yet, the majority of important technological and scientific inventions usually come from free-market based capitalistic societies. I don't see countries like North Korea, Russia and China making any scientific and technological breakthroughs, and I think it's easy to argue that they have very powerful governments.

Private sector has and always will drive the majority of progress. How much exactly, usually varies by era and political structure of the global society, but the fact that the free market ultimately drives innovation is indisputable.

USA has a larger government compared to GDP than both China and Russia (42% vs 36% and 24%). There are no stats for North Korea. If you want to argue the free-market gospel, then you have to explain why almost all third world countries have small governments and very low taxes.

Lol no they don't. Most third world countries actually have very strong authoritarian governments where any serious dissent is highly discouraged or even impossible. And even if they have low taxes, they sure compensate for that with regular currency debasement, widespread kleptocracy and stealing wealth from their citizens on a regular basis. This free-market "gospel" is based on hard facts, not some Marxist drivel.