Piketty has, more accurately, placed an unexploded bomb within mainstream, classical economics. If the underlying cause of the 2008 bank catastrophe was falling incomes alongside rising financial wealth then, says Piketty, these were no accident: no product of lax regulation or simple greed. The crisis is the product of the system working normally, and we should expect more.
One of the most compelling chapters is Piketty’s discussion of the near-universal rise of what he calls the “social state”. The relentless growth in the proportion of national income consumed by the state, spent on universal services, pensions and benefits, he argues, is an irreversible feature of modern capitalism. He notes that redistribution has become a question of “rights to” things – healthcare and pensions – rather than simply a problem of taxation rates. His solution is a specific, progressive tax on private wealth: an exceptional tax on capital, possibly combined with the overt use of inflation.
All that social democracy and liberalism can produce, with their current policies, is the oligarch’s yacht co-existing with the food bank for ever.
Piketty’s Capital, unlike Marx’s Capital, contains solutions possible on the terrain of capitalism itself: the 15% tax on capital, the 80% tax on high incomes, enforced transparency for all bank transactions, overt use of inflation to redistribute wealth downwards.
a game changer even if you never read it..
[ha. one i have not read. yet/ever.]
Thomas Piketty’s ‘Capital’ in 3 minutes – Newsnight
Thomas at tedsalon (berlin germany) june 2014:
Published on Oct 6, 2014
French economist Thomas Piketty caused a sensation in early 2014 with his book on a simple, brutal formula explaining economic inequality: r is greater than g (meaning that return on capital is generally higher than economic growth). Here, he talks through the massive data set that led him to conclude: Economic inequality is not new, but it is getting worse, with radical possible impacts.
New thoughts on capital in the twenty-first century
been working on income and wealth redistribution for the last 15 yrs
15 min – what if another way is with no money..? w/o talking gdp..?
more on Thomas:
Besides these surveys, which make up the core of his work, Piketty has published in other areas, often with a connection to economic inequalities.
He took an interest in inequalities in schools, in which he sees a major cause for the persistence of inequalities in wages, and therefore in the economy, and he surveyed the impact of class sizes on success at school.
? success in school?
there is an even simpler solution, by which I mean a more realistic solution, a solution that builds on familiar American traditions,that works by empowering average people, that requires few economists or experts, that would involve a minimum of government interference, and that proceeds by expanding democracy and participation rather than by building some kind of distant and unapproachable global tax authority: Allow workers to organize. Let people have a say on the basic issues affecting their lives.
review by Cory Doctorow:
Piketty’s thesis has been shorthanded as r > g: that the rate of return on capital today — and through most of history — has been higher than general economic growth. This means that simply having money is the best way to get more money.
Piketty challenges the idea that modernity somehow led to “merit” asserting itself as the new determinant of wealth. Instead, he makes a very convincing case that the increasing size of the capital class — which expanded comfortably during the period of colonial expansion — created a hunger for wealth that turned the aristocracy on itself in a squabble over who got to loot the colonies, which was World War I.
This war was incredibly destructive of capital, and left many of the aristocracy holding onto potentially worthless government bonds issued by states that had nearly bankrupted themselves during the Great War. These states were so beholden to the rich that they couldn’t contemplate inflating or taxing or defaulting their way out of debt, and so they took heroic and improbable measures to keep bondholders whole, which led to the economic chaos of of which WWII was born.
WWII destroyed so much accumulated wealth that in its aftermath, a raft of previously unimaginable policies became the norm.
This is a crisis. The reason for capitalism is that it is supposed to allocate reward based on “merit” — it is supposed to move capital into the hands of the people who can do the most with it — and if all our policy decisions are made in service to a class of supermanagers whose wealth comes from squatting on a fortune managed by some green-eyeshade quants who grow it without its owner ever doing a notable thing apart from being born to dynasty, there is no more reason for capitalism. Piketty darkly hints that the last time this happened, the world tore itself to pieces, twice, in an orgy of destruction that left millions dead and whole nations in ruin.
In view of today’s very high inheritance flows, it is quite likely, if current trends continue, that the share of inherited wealth will continue to grow in the decades to come, surpassing 70 percent by 2020 and approaching 80 percent in the 2030s.
The logic of r > g implies that the entrepreneur always tends to turn into a rentier.
By comparing various sources of data, moreover, it is possible to estimate that the average income of the parents of Harvard students is currently about $450,000, which corresponds to the average income of the top 2 percent of the US income hierarchy.
there’s one criticism I have a lot of time for: Suresh Naidu‘s critique of the politics of Piketty’s analysis. Piketty treats the rate of return on capital as largely financial, while Naidu argues (convincingly) that it’s political. The rules of property and the willingness of the state to support those rules through everything from guard labor to anti-default/anti-inflationary policies are political decisions, not laws of nature, and they are the crux of the rate of return. And since the relative positions of the rate of return versus the rate of growth (r > g) is at the crux of his theory, this is a significant challenge to his analysis.
Piketty, in Naidu’s view, is limited by his unwillingness to challenge capitalism itself.
As succinctly put by Dr Rupert Read, a Green politician and Chair of the Green House think-tank, the truth is “that growth is an alternative to egalitarian redistribution, an alternative to any serious effort to create a more equal society. The promise of growth is a replacement for the need to share.”
There is much cause for optimism, however, as more and more activists, academics and engaged citizens are participating in the crucial debate over how to truly share wealth and resources for the benefit of present and future generations. This is particularly evident in the vibrant discussions around the revived concept of the commons, which is increasingly being embraced as a place to start envisioning a democratic alternative to neoliberal capitalism that can liberate us from structural inequities.
This curious mind is what leads us to pay attention to the world around us
actually this is an important narrative nugget of Piketty’s work, the fact that the establishment of universal taxes on income and capital is as interesting for financial purposes as for information and transparency ones,
This is why it is in the public’s interest to make Thomas Piketty’s story accessible to a large audience. However well written and substantiated it is, and however successful it has been, it may be feared that the 700-page book remains somewhat too thick for many a reader. Even though wholly unscientific and prone to bias, the “study” conducted by the Wall Street Journal of the most unread best selling books indicates that most readers have not gone beyond page 10 of “Capital in the Twenty-First Century”, putting it at the top of this infamous class. Even journalists or decision makers such as Hillary Clinton, putative candidate in the 2016 U.S. presidential elections, or Michel Sapin, French Minister of Finance, have said they had not (yet) read the book or don’t intend to, an abstention that does not keep many pundits from expressing strong opinions, albeit with a caveat that often goes like “Although I haven’t read it, I can safely say…”
We’ve therefore decided we will do our best to help everyone understand the story told in “Capital in the Twenty-First Century,” to gain some insights on the subject-matter at hand, and to feel better armed in a debate that will certainly remain at the centre of the public space and in major upcoming political campaigns, in the USA for the 2014 mid-terms in November or in the UK for the May 2015 general elections. In a spirit of openness, according to our Lab’s common practice and to Thomas Piketty’s own “open data” approach, we will publish our work in various instalments, taking feedback and hopefully improving our work as we go, until we reach a final artefact — or series of artefacts — that faithfully tells the story in a comprehensive and comprehensible manner.
what if campaigns aren’t the point
oct 2014 – why inequality matters – bill gates on piketty:
To be clear, when I say that high levels of inequality are a problem, I don’t want to imply that the world is getting worse. In fact, thanks to the rise of the middle class in countries like China, Mexico, Colombia, Brazil, and Thailand, the world as a whole is actually becoming more egalitarian, and that positive global trend is likely to continue.
The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth.
A common view is that high and rising inequality within nations brings political trouble, maybe through violence or even revolution. So one might argue that a nationalistic perspective is important. But it’s hardly obvious that such predictions of political turmoil are true, especially for aging societies like the United States that are showing falling rates of crime.
Imagine three types of wealthy people. One guy is putting his capital into building his business. Then there’s a woman who’s giving most of her wealth to charity. A third person is mostly consuming, spending a lot of money on things like a yacht and plane. While it’s true that the wealth of all three people is contributing to inequality, I would argue that the first two are delivering more value to society than the third. I wish Piketty had made this distinction, because it has important policy implications, which I’ll get to below.
wait – what if we are seeing many philanthropic ventures and businesses perpetuating inequality..
inequality. Dambisa Moyo. Matt Taibbi. ….
But rather than move to a progressive tax on capital, as Piketty would like, I think we’d be best off with a progressive tax on consumption. Think about the three wealthy people I described earlier: One investing in companies, one in philanthropy, and one in a lavish lifestyle. There’s nothing wrong with the last guy, but I think he should pay more taxes than the others. As Piketty pointed out when we spoke, it’s hard to measure consumption (for example, should political donations count?). But then, almost every tax system—including a wealth tax—has similar challenges.
whoa. what about much of microsoft research initial funding coming from military/tax money.. et al.. but now it belongs to a person/family.
help me with that. struggling with that. is that not correct info? Steve Blank, Naomi Klein, Bill McKibben, et al.
jan 2015 – posted by Michel on fb:
there is a contradiction between his belief, and all the data that he has collected; and further between the unsustainability of the current global infrastructure, in material and ecological terms; and the advantages of global sharing and exchanges, of ideas and persons; thus, it is a strawman argument to think there are no alternative between the current form of neoliberal globalization, and nationalistic retrenchment; for physical and ecological reasons, ” when it is light it is global and when is heavy it is local”, makes more sense today; i.e. a relative (of course not absolute) deglobalization of physical streams in favour of more localized production … many urban regions have started this process, if not in practice then already in planning … Barcelona’s fabcity project comes to mind, or Amsterdam as PrintCity ..
Xeni Jardin (@xeni) tweeted at 8:16 AM – 12 Feb 2017 :
Piketty: Poorest half of U.S. saw “total collapse” in their share of the America’s wealth https://t.co/ckjh6i1J3o(http://twitter.com/xeni/status/830797610172743680?s=17)
so… how is that better
esp if split is worse than no money