Originally published at: https://boingboing.net/2014/06/10/pikettys-inherited-wealth-dy.html
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You’re not reading it right. That’s like taking a particularly hot week and saying “See? Global warming.” It remains to be seen if Piketty is right, but if his book had come out in 2007, 2008 would not have proven him wrong despite a tremendous fall in returns to capital that year.
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Unsustainable.
Piketty’s book simply points out what has been obvious for decades now - that wealth is moving more and more rapidly to the wealthy. The solution is also just as obvious - tax wealth (capital gains) as common labor is taxed. The old line that capital investment promotes growth is now as obviously bull (ha ha) as reducing taxes increases revenue. But we live in a world where that sort of BS is sacrosanct. A world where wealth has bought those with a voice and with power. We’re farked.
Consider that the so holy “jobs creators” have mainly created jobs in the most powerful communist country in the world. Jobs in America have gone to shit. Yet “jobs creators” is still considered a valid incontrovertible point pushed by the working whores of the wealthy.
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I have been reading the sci-fi novel Fall of Hyperion the last few weeks. One passage which is applicable today says something like the intergalactic civilization had become one where everyone communicated by individual instantaneous travel or via the computer/media networks. Crowds were considered gauche and uncivilized. The problem is that past a certain point without the passion of a positively aimed crowd with the inherent psychological reinforcement there is no way to counter the constant media bombardment and fatalism millions of lonely would be revolutionaries feel. Mob mentality is easy to steer to the wrong, disregard the platform, just look how easily the Republicans turned the Tea Party or how the media firewalled Occupy.
Without large scale social meeting where every conversation van be analyzed by machine how can a movement of the majority underlings ever hope to take back control from the .001%ers?
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“Job creators” in the U.S. are, in most cases, small entrepreneurial companies. Ma-and-pa stores, etc. This group stands to benefit from the ACA because now they can attract better employees: historically, working in a smaller company meant foregoing health insurance benefits, so there was a more limited pool of willing applicants.
The faux “job creators” are in fact job eliminators. Yes, there are the newly created jobs in other countries with fewer human rights to sidestep, but the sum total of jobs has gone down over time for most of the industrial leaders.
The former create jobs, consumers, and value. The latter create a platinum level of multimillionaires rising above a mountain of disposed brass cogs. The former used to grow along a continuum, with some ultimately reaching the status of the latter. A careful pruning of regulations to allow virtually unrestricted growth in what was already full grown, coupled with a convenient barrier of regulations to keep out any new saplings, has severed that continuum and resulted in the dystopia Piketty is describing.
Tearing down the fence keeping real job creators out, and re-installing the regulations that would have kept the fastest-growing weeds in check are important components in fixing this problem. Taxes alone won’t do it.
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No, it’s like taking 40 years of increasing average global temperature and saying “See? global warming.”
No, because that was a transient blip in the 40 year trend I just mentioned.
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…and make sure that taxation is progressive—in terms of income per person—or flat in terms of economic activity by all entities throughout the retail, wholesale, and financial sectors of the economy.
But redistribution is not the only component of the solution. Much of the reason for the r > g phenomenon is that excesses by market elites (market power, information asymmetry, oligopoly, monopoly) are supposed to be curbed by churn and “creative destruction”, but aren’t. Libertarians like to point the finger at democracy and governments as the enabler of this corruption, but that’s like blaming the dam for the water that comes over the spillway. What’s actually happened is that market elites are given a pass on their unethical behavior. Even though their exploitation of people fills the market with distortions, the wealthy have been able to brand their criminality as virtue, and being victimized as a vice.
As an example of how things could be better, if consumer products and services were longer-lasting, more modular and more easily upgraded, and the profit margins of their business was held down by more competition and market churn, r would lose ground to g. It might not be enough to reverse the inequality, but targeting the exploitation of market power by elites is at least as important as redistribution.
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“small entrepreneurial companies:”
Conservative memes that stick, and only stick because they’re thrown against the walls of our TVs every day, year after year.
From what I recall General Motors at one point employed about 400,000 people. Now the number is about 50,000. Big businesses are the only things conservatives care about because they’re the ones that can fund judges (elections, educational junkets, etc.), politicians and the media. Small businesses contribute some but unless their concerns are broad based (pooled and including big businesses) they’re not a factor. The “small businesses” line is just that, a line, and nothing more.
“make sure that taxation is progressive:”
Just being able to invest requires a level of wealth that few can achieve. Even those that dip their savings into the wealth casino usually are treated with little concern by the Wall Street croupiers.
“redistribution:”
Having capital gains taxed at a far lower level than common work is redistribution. Reversing that isn’t redistribution. It’s equalizing, making taxation fair, or at least fairer. So now whenever there’s the suggestion of bringing taxation of the wealthy in line with everyone else there’s the outcry of redistribution. The real redistribution has been going on since Reagan and even Nixon. It’s called tinkle on economics.
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Well, yeah, except both TFA and Cory’s blurb reference last year, not the last 40 or really even Piketty’s overall look at things. It’s one thing to say “I looked at Piketty’s data and really agree with his hypothesis”, another to say “Stock markets went up last year! Inequality! That guy is right on!”.
The article also mentions the growth in millionaire households (which all things being equal, you’d expect to increase every year due to inflation alone) but not how much of the global wealth gains that group captured, which is really what everyone is concerned about. Given that the wealthy own most stock, you’d expect a good portion of it, but there isn’t specific evidence of growing inequality here.
Whenever I see the bronze bull, I always wish that someone during the OWS protests would have made some thermite and decapitated it. Not that it would have done anything concrete, but I like the symbolism.
OK, so your problem is really with the semantics of saying this particular study “confirmed” Piketty’s hypothesis when in reality it’s one more data point among thousands confirming Piketty’s hypothesis?
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The fact that Piketty’s data is the entire context of the statement, it’s a given that it’s included. So it’s everything Piketty has already put together, PLUS the additional piece of info, which shows the trend yet continues. There’s really nothing to nitpick over here. You’re just inventing stuff to whine about by translating what was said in extremely unsupportable ways.
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