Capital in the Twenty-First Century

[Valmy]

I think that is a misreading.  The proposal is not to replace meritocracy but to make a system that is based on merit.  If everyone has access to education and capital cannot be transferred between generations then the people who succeed are more likely to be the most meritorious.

Is there really a way to make capital not transferable between generations without making it not transferable period?

[crazy canuck]

I think that is a misreading.  The proposal is not to replace meritocracy but to make a system that is based on merit.  If everyone has access to education and capital cannot be transferred between generations then the people who succeed are more likely to be the most meritorious.

Is there really a way to make capital not transferable between generations without making it not transferable period?

Taxing wealth above a certain amount as proposed is probably the most effective way.   Estate taxes would not avoid inter vivos gifts.

[Malthus]

According to the article, Piketty proposes two things.

1. That the notion of meritocracy has become fragile, because it has been captured by the rich.

2. That the very notion of meritocracy as a justification for wealth inequality is merely an ideological choice, and that other ideological choices are preferable.

The problem is that these two proposals pull in opposite directions. The first (which I believe has considerable merit) suggests that what is necessary is to re-enforce meritocracy by doing things to avoid the effects of the wealthy capturing it, such as universal equal education (proposed in the article). The second suggests we abandon meritocracy in favour of some new ideology.

Thing is, not all ideologies are equally workable. Here the article is dismissive of objections such as 'communism doesn't work'. Problem is, it is completely unclear whether abandoning meritocracy can create a society that actually functions or will simply lead to other sorts of self-interested "capture of the system" by others - as in, "all of us are equal, but I, who administer the system, am more equal than others". 

I think that is a misreading.  The proposal is not to replace meritocracy but to make a system that is based on merit.  If everyone has access to education and capital cannot be transferred between generations then the people who succeed are more likely to be the most meritorious.

This proposal would, however, still result in inequality. Just inequality that is arguably more merit-based. It would still allow beggars to freeze outside while the well to do sleep comfortably. Only in this proposal, the beggars would arguably be more deserving of their destitution - something the article mentions as a common ideological trope:

Every unequal society, he says, creates an ideology to justify inequality. That allows the rich to fall asleep in their town houses while the homeless freeze outside.

In short, his proposal would, if implemented, add weight and substance to the very ideology he is apparently decrying.

...

I remember the "100% estate tax" argument being raised years ago, in law school in fact.

[crazy canuck]

According to the article, Piketty proposes two things.

1. That the notion of meritocracy has become fragile, because it has been captured by the rich.

2. That the very notion of meritocracy as a justification for wealth inequality is merely an ideological choice, and that other ideological choices are preferable.

The problem is that these two proposals pull in opposite directions. The first (which I believe has considerable merit) suggests that what is necessary is to re-enforce meritocracy by doing things to avoid the effects of the wealthy capturing it, such as universal equal education (proposed in the article). The second suggests we abandon meritocracy in favour of some new ideology.

Thing is, not all ideologies are equally workable. Here the article is dismissive of objections such as 'communism doesn't work'. Problem is, it is completely unclear whether abandoning meritocracy can create a society that actually functions or will simply lead to other sorts of self-interested "capture of the system" by others - as in, "all of us are equal, but I, who administer the system, am more equal than others". 

I think that is a misreading.  The proposal is not to replace meritocracy but to make a system that is based on merit.  If everyone has access to education and capital cannot be transferred between generations then the people who succeed are more likely to be the most meritorious.

This proposal would, however, still result in inequality. Just inequality that is arguably more merit-based. It would still allow beggars to freeze outside while the well to do sleep comfortably. Only in this proposal, the beggars would arguably be more deserving of their destitution - something the article mentions as a common ideological trope:

Every unequal society, he says, creates an ideology to justify inequality. That allows the rich to fall asleep in their town houses while the homeless freeze outside.

In short, his proposal would, if implemented, add weight and substance to the very ideology he is apparently decrying.

...

I remember the "100% estate tax" argument being raised years ago, in law school in fact.

You are assuming that a truly meritocratic system with a wealth tax would have homeless people.

[grumbler]

A society that won't let you provide for your children sounds horrible.

It's probably a good thing that no one is proposing this, then.

[Valmy]

There is no such thing as a true platonically meritocratic system. I mean I do not even know how to really measure how meritorious somebody is.

But even if that was possible, how would that plus a wealth tax eliminate all homeless people? Those strike me as two different issues.

[grumbler]

This proposal would, however, still result in inequality. Just inequality that is arguably more merit-based. It would still allow beggars to freeze outside while the well to do sleep comfortably. Only in this proposal, the beggars would arguably be more deserving of their destitution - something the article mentions as a common ideological trope:

Every unequal society, he says, creates an ideology to justify inequality. That allows the rich to fall asleep in their town houses while the homeless freeze outside.

In short, his proposal would, if implemented, add weight and substance to the very ideology he is apparently decrying.

...

I remember the "100% estate tax" argument being raised years ago, in law school in fact.

You are assuming that a truly meritocratic system with a wealth tax would have homeless people.

Actually, Malthus is only assuming inequality.  Truly meritocratic systems will have inequality or else merit cannot be rewarded.

[crazy canuck]

There is no such thing as a true platonically meritocratic system. I mean I do not even know how to really measure how meritorious somebody is.

But even if that was possible, how would that plus a wealth tax eliminate all homeless people? Those strike me as two different issues.

So just keep the broken system currently in place?

[Malthus]

You are assuming that a truly meritocratic system with a wealth tax would have homeless people.

It may not - and indeed, there is no reason for an imperfectly merit-based system to have them either. The issue of having homeless or not is not, strictly speaking, based on merit, but on choices in redistribution.

It will, however, continue to have inequality.

I took the "homeless freezing outside" notion to mean something like 'we choose not to redistribute wealth to them because they are not deserving of it - because our system assigns wealth to the deserving'. The presumptive counter-argument based on this article, in our current society, is 'that position is unjust, because in fact, our system is not truly merit-based and so someone can become homeless through no fault of their own'.

Thus, the more truly merit-based the system gets, the more force the 'they deserve their destitution' position has.

The other counter-argument - that 'we should not allow any human to suffer if we can avoid it, regardless of "merit"' - is orthogonal to the debate; it is present in both systems ...

[crazy canuck]

This proposal would, however, still result in inequality. Just inequality that is arguably more merit-based. It would still allow beggars to freeze outside while the well to do sleep comfortably. Only in this proposal, the beggars would arguably be more deserving of their destitution - something the article mentions as a common ideological trope:

Every unequal society, he says, creates an ideology to justify inequality. That allows the rich to fall asleep in their town houses while the homeless freeze outside.

In short, his proposal would, if implemented, add weight and substance to the very ideology he is apparently decrying.

...

I remember the "100% estate tax" argument being raised years ago, in law school in fact.

You are assuming that a truly meritocratic system with a wealth tax would have homeless people.

Actually, Malthus is only assuming inequality.  Truly meritocratic systems will have inequality or else merit cannot be rewarded.

Sure, but that need not result in extreme inequality Malthus used as his example.

[crazy canuck]

You are assuming that a truly meritocratic system with a wealth tax would have homeless people.

It may not - and indeed, there is no reason for an imperfectly merit-based system to have them either. The issue of having homeless or not is not, strictly speaking, based on merit, but on choices in redistribution.

It will, however, continue to have inequality.

I took the "homeless freezing outside" notion to mean something like 'we choose not to redistribute wealth to them because they are not deserving of it - because our system assigns wealth to the deserving'. The presumptive counter-argument based on this article, in our current society, is 'that position is unjust, because in fact, our system is not truly merit-based and so someone can become homeless through no fault of their own'.

Thus, the more truly merit-based the system gets, the more force the 'they deserve their destitution' position has.

The other counter-argument - that 'we should not allow any human to suffer if we can avoid it, regardless of "merit"' - is orthogonal to the debate; it is present in both systems ...

I see.  Yes that is a danger but not what is being proposed here.

[grumbler]

Sure, but that need not result in extreme inequality Malthus used as his example.

What example did you see Malthus use?  He mentioned a trope Piketty mentions and quotes him on that, but a trope is "a figurative or metaphorical use of a word or expression," not an expression of evidence or example.

[Malthus]

You are assuming that a truly meritocratic system with a wealth tax would have homeless people.

It may not - and indeed, there is no reason for an imperfectly merit-based system to have them either. The issue of having homeless or not is not, strictly speaking, based on merit, but on choices in redistribution.

It will, however, continue to have inequality.

I took the "homeless freezing outside" notion to mean something like 'we choose not to redistribute wealth to them because they are not deserving of it - because our system assigns wealth to the deserving'. The presumptive counter-argument based on this article, in our current society, is 'that position is unjust, because in fact, our system is not truly merit-based and so someone can become homeless through no fault of their own'.

Thus, the more truly merit-based the system gets, the more force the 'they deserve their destitution' position has.

The other counter-argument - that 'we should not allow any human to suffer if we can avoid it, regardless of "merit"' - is orthogonal to the debate; it is present in both systems ...

I see.  Yes that is a danger but not what is being proposed here.

I see it as a basic problem with his argument.

Argument: 'inequality is an ideology. It is supported by a notion of fairness - that those who are unequal, in effect deserve it, because of meritocracy. However, the meritocracy we have is not true meritocracy, because of X and Y. I propose we change X and Y'.

Response: 'if we change X and Y, as you recommend, we will have true meritocracy - or at least, more like true meritocracy. In that case, would not the inequality that results be more fair'?

[grumbler]

I took the "homeless freezing outside" notion to mean something like 'we choose not to redistribute wealth to them because they are not deserving of it - because our system assigns wealth to the deserving'. The presumptive counter-argument based on this article, in our current society, is 'that position is unjust, because in fact, our system is not truly merit-based and so someone can become homeless through no fault of their own'. 

I think it goes even further than that.  The justification for sleeping soundly in a warm bed while the beggars freeze outside can be just as firm in systems not based on "merit" per se.  It could be based on malignant divine will or curse (as in  Oedipus) or just bad luck (Hamlet).  These types of people had flaws, but their flaws didn't merit the misfortune they suffered... but the rich can't do anything about curses or bad luck.  Ditto the racist argument:  some races were just inferior, not matter how much merit members of it had.  A member of the "advanced race" would be wealthier not by individual merit, but by racial superiority.

The key is that every rich man sleeping soundly in his bed had a reason to believe that he deserved to be sleeping warmly while the beggars froze.

[The Minsky Moment]

I would hesitate to comment about Piketty's new book before reading it.  It's an unfortunate reality that book reviewers do not always really read the texts they review and Piketty's last book was an extreme manifestation of that phenomenon.  I read reviews of the last book that made extensive accusations of matters Piketty overlooked or failed to consider when in fact upon reading the text he did consider and address those very issues.  That book was one of the most non-read books of the century.  This one I gather is even longer and is likely to suffer from the same problem.

Based on his last book I would say that Piketty is more the inheritor of the intellectual tradition of the Annales school then a disciple of Gramsci; his critique is based on meticulous gathering and review of economic and social data.  Of course it's possible the new book is completely different.