Is it Friday already? God, I gotta catch up!
Here we discuss the second chapter of Thomas Piketty’s Capital in the 21st Century. I hope/plan to chime in!
I hope to, too!
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I read chapter 2…
I don’t have much to say, though. What he said seemed reasonable, I guess. I’m good at this reviewing lark, eh?
Edit: I did have some thoughts, to be honest. Mostly along the lines of what it means if our ‘recent’ growth is ahistorical. What will that mean for pensions, housing etc.
E.g. I know my parent’s house is worth 50-100 times what they paid for it in the 70s, and my dad’s final salary was about 30 times what his first one was, will the same be true for us - and if not, what then?
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This chapter opened several cans of worms in my mind. Indefinite cumulative growth at the higher rates described would indeed bring problems. But the projected rapid return to small fractions of a percent seems pessimistic and somewhat frightening as well.
The description of inflation and monetary stability was interesting. Our base unit of measurement - the dollar - does have a relatively rapidly fluctuating value, and one that changes inconsistently depending on what it’s being used to measure. In analogy, I imagine trying to get parts to fit together properly and trying to communicate about distances and sizes in a world where a meter is sometimes no more than the width of your finger and other times as long as a bus and each time you measure something you always get a different result.
That, along with the inherent difficulty/inaccuracy of the purchasing power measurements and per-capita/productivity growth, seems to make all of our formula and the numbers little more than potentially-deceptive illusions.
There was some mention of how hours worked have decreased and of the shift to the increasingly-meaninglessly-named Service Sector in the recent past, but I hope the author will have more to say about the future of employment and how that fits into the other projections.
the most recent waves—including the revolution in information technology—have a much lower growth potential than earlier waves, because they are less disruptive to modes of production and do less to improve productivity across the economy.
I believe that we haven’t seen the full effects of the information age yet. Already whole industries of middlemen, agents, and clerks have become obsolescent, and that’s just the beginning. More people are able to work in more decentralized ways, which is definitely disruptive, and that’s barely beginning. In the previous waves of innovation, agricultural workers who were no longer needed could switch to manufacturing, and manufacturing workers could then switch to service jobs. But where do unneeded service workers go? If this revolution is less productive, it may be because we’re running out of productive things to do and/or sticking people in less-productive jobs. We haven’t found a new sector yet.
Thinking forward - what if growth does drop off sharply but the rate of return on capital doesn’t, or trails that dropoff substantially?
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That’s a great analogy!
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Listening to Bad religion while commenting on this book seems strangely relevant. (“I want to conquer the world”)
I expected this book to be challenging, and It has been but not in any of the ways I expected.
Piketty’s done a great job of explaining a lot of concepts in a short period of time and its clear there’s still a lot more to explore before he’s sure everybody’s up to speed and ready to tackle inequality.
In the meantime, what I’ve found challenging is trying to understand the concepts explained here as they are presented and attempt to keep politics as the only framework where I map these concepts onto before I make the mistake of applying too little learning to too big a problem.
(“You are (the goverment)” plays next followed by “Modern man”)
But then Piketty goes and draws a line directly between GDP growth rates, Margaret Thatcher and Ronald Reagan. Not a causal relationship but as a consequence of misunderstanding (or is it misrepresenting?, Flat earth society plays next) of historical growth patterns. I guess politics is fair game after all.
(Faith alone)
I won’t try to guess what sort of recommendations will be made at the end of the book as promised but at least now, I think from this its fair to view capital and politics as two distinct entities that together shape said capital into an ism.
I’d rather not think about this for a couple of days, but it’s already Monday, gotta keep up!
(21st Century (digital boy))
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Novels as a source of ecomic data? Interesting thought.
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That struck me as well. The range of sources he’s drawn on is impressive.
I have the feeling that the book is being constructed like a wall. The introduction was the overview and now we’re getting to examine the individual bricks. It could mean there’s not a huge amount to discuss with each chapter …
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A lot of archeological, anthropological, and even linguistic info has been gleaned from ancient invoices, inventory lists, accounting ledgers, etc. In a similar way, we can learn something about what was considered important or common in a given society based on how it is represented in the literature of a particular time period. We know a lot about the economic classes in Dickens’ England, for example.
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A number of economists, including, I believe, Krugman,have argued that deflation is much more dangerous than mild inflation, simply because the Central Bank has no easy way of correcting the economic problems that result. Picketty seems to be saying that deflation was a 19 th century norm-- though of course, monetary policy was a rather more recent i novation.
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Happy Friday again, everyone! Your weekend entertainment is assured!
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Now all I need to do is read the chapter.
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Yeah, I was actually right on time with my reading of this chapter, but haven’t said anything because I was waiting to actually think of something worthwhile. Well argued and well sourced is harder to comment on. (At least if you’re not a specialist in the field.) Perhaps later chapters will contain opportunities to cry, “Au contraire, mon frère.”
I’m a week late and haven’t quite caught up with the chapter we’re on this week. But I was struck by two things. On page 85, he starts discussing what’s happening with the “new information economy” (interesting, because I’m reading another book, “Capitalism and Communications” from the early 80s that is also focused on the shift to an information economy, in part), because of what he says about how our notions of a meritocracy are often an excuse to allow for extremes in economic inequality and “defend privileges of the winners…” which he’s going to come back to… which I’m super-excited about. The idea that the economy we have just happens is an important point that I think he’s attempting to combat more broadly. It’s a social construct, and can be changed.
Second, how on page 104, he discusses how inflation on prices of scarce resources can eventually benefit only those who own the resources (I’d argue, hence, that explains the struggle over resources in Africa, yay?). In general, this creates greater inequality. He also says that inflation allowed “wealthy countries to get rid of public debt” after WW2, but it led to redistributions “in a chaotic and uncontrolled manner.” Again, I like his insistence that these are created evetns/conditions, and something that were very different from before…
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